<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-11063
-------
Winthrop Residential Associates II, A Limited Partnership
---------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Maryland 04-2742158
--------------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Five Cambridge Center, Cambridge, MA 02142-1493
--------------------------------------- -------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
--------------
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
1 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
---------------------------------------------------------
FORM 10-QSB SEPTEMBER 30, 2000
------------------------------
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT UNIT DATA) 2000 1999
---------------- ----------------
<S> <C> <C>
Assets
------
Cash and cash equivalents $ 1,620 $ 1,472
Escrow deposits and replacement reserve 254 253
Other assets 200 185
Real estate, net of accumulated depreciation
of $5,151 in 2000 and $4,919 in 1999 3,080 3,194
---------------- ----------------
Total Assets $ 5,154 $ 5,104
================ ================
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable, accrued expenses and other liabilities $ 264 $ 328
Distribution payable 53 26
Loan payable - affiliate 501 501
Mortgage notes payable 3,465 3,499
---------------- ----------------
Total Liabilities 4,283 4,354
---------------- ----------------
Minority interest 32 30
---------------- ----------------
Partners' Capital:
Limited Partners -
Units of Limited Partnership Interest,
$1,000 stated value per unit; 25,010 units authorized,
issued and outstanding 1,846 1,733
General Partners' deficit (1,007) (1,013)
---------------- ----------------
Total Partners' Capital 839 720
---------------- ----------------
Total Liabilities and Partners' Capital $ 5,154 $ 5,104
================ ================
</TABLE>
See notes to consolidated financial statements.
2 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
---------------------------------------------------------
FORM 10-QSB SEPTEMBER 30, 2000
------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Income:
Rental income $ 320 $ 314 $ 967 $ 937
Income from Local Limited Partnership cash distributions 53 33 273 100
Interest income 18 13 47 37
Other income 14 15 38 36
-------------- ------------- -------------- --------------
Total income 405 375 1,325 1,110
-------------- ------------- -------------- --------------
Expenses:
General and administrative 25 27 82 79
Operating 165 163 461 446
Depreciation 81 78 232 223
Interest 73 75 222 225
Management fees 43 43 128 126
-------------- ------------- -------------- --------------
Total expenses 387 386 1,125 1,099
-------------- ------------- -------------- --------------
Net income (loss) before minority interest 18 (11) 200 11
Minority Interest (1) - (2) 2
-------------- ------------- -------------- --------------
Net income (loss) $ 17 $ (11) $ 198 $ 13
============== ============= ============== ==============
Net income (loss) allocated to General Partners $ 1 $ - $ 10 $ 1
============== ============= ============== ==============
Net income (loss) allocated to Limited Partners $ 16 $ (11) $ 188 $ 12
============== ============= ============== ==============
Net income (loss) per Unit of Limited Partnership Interest $ .64 $ (.44) $ 7.52 $ 0.48
============== ============= ============== ==============
Distributions per Unit of Limited Partnership Interest $ 1.00 $ 1.00 $ 3.00 $ 3.00
============== ============= ============== ==============
</TABLE>
See notes to consolidated financial statements.
3 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
---------------------------------------------------------
FORM 10-QSB SEPTEMBER 30, 2000
------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
<CAPTION>
UNITS OF
LIMITED LIMITED GENERAL TOTAL
PARTNERSHIP PARTNERS' PARTNERS' PARTNERS'
INTEREST CAPITAL DEFICIT CAPITAL
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Balance - January 1, 2000 25,010 $ 1,733 $ (1,013) $ 720
Net income - 188 10 198
Distributions - (75) (4) (79)
------------------- ------------------- ------------------- -------------------
Balance - September 30, 2000 25,010 $ 1,846 $ (1,007) $ 839
=================== =================== =================== ===================
</TABLE>
See notes to consolidated financial statements.
4 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
---------------------------------------------------------
FORM 10-QSB SEPTEMBER 30, 2000
------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(IN THOUSANDS) 2000 1999
------------------ ------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 198 $ 13
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 232 223
Amortization 11 7
Minority interest 2 (2)
Income from Local Limited Partnership cash distributions (273) (100)
Changes in assets and liabilities:
(Increase) decrease in escrow deposits (56) 214
Increase in other assets (26) (63)
Decrease in accounts payable and
accrued expenses (64) (44)
------------------ ------------------
Net cash provided by operating activities 24 248
------------------ ------------------
Cash Flows From Investing Activities:
Distributions received from Local Limited Partnerships 273 100
Changes to replacement reserve 55 (42)
Property improvements (118) (303)
------------------ ------------------
Net cash provided by (used in) investing activities 210 (245)
------------------ ------------------
Cash Flows From Financing Activities:
Mortgage principal payments (34) (33)
Distributions to partners (52) (79)
------------------ ------------------
Cash used in financing activities (86) (112)
------------------ ------------------
Net increase (decrease) in cash and cash equivalents 148 (109)
Cash and cash equivalents, beginning of period 1,472 1,304
------------------ ------------------
Cash and cash equivalents, end of period $ 1,620 $ 1,195
================== ==================
Supplemental Disclosure of Cash Flow Information
Interest paid in cash $ 216 $ 218
================== ==================
Supplemental Disclosure of Non-Cash Financing Activities
Accrued Distributions to Partners $ 53 $ 26
================== ==================
</TABLE>
See notes to consolidated financial statements.
5 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
---------------------------------------------------------
FORM 10-QSB SEPTEMBER 30, 2000
------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. GENERAL
The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements, related footnotes and
discussions contained in the Partnership's Annual Report on Form 10-KSB for
the year ended December 31, 1999.
The financial information contained herein is unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature. Certain amounts have been reclassified to conform to the
September 30, 2000 presentation. The balance sheet at December 31, 1999 was
derived from audited financial statements at such date.
The results of operations for the three and nine months ended September 30,
2000 and 1999 are not necessarily indicative of the results to be expected
for the full year.
2. CONSOLIDATION
The consolidated financial statements of the Partnership include the
accounts of the Partnership and two subsidiaries, Southwest Parkway, Ltd.
("Southwest Parkway") and Brookside, Ltd. ("Brookside"), which are Local
Limited Partnerships previously accounted for under the equity method of
accounting. All significant intercompany transactions and balances have
been eliminated.
6 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
---------------------------------------------------------
FORM 10-QSB SEPTEMBER 30, 2000
------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
The matters discussed in this Form 10-QSB contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) detailed in the disclosure contained in this Form 10-QSB
and the other filings with the Securities and Exchange Commission made
by the Partnership from time to time. The discussion of the
Partnership's liquidity, capital resources and results of operations,
including forward-looking statements pertaining to such matters, does
not take into account the effects of any changes to the Partnership's
operations. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a
number of factors, including those identified herein.
This Item should be read in conjunction with the financial statements
and other items contained elsewhere in the report.
Liquidity and Capital Resources
-------------------------------
As of September 30, 2000, the Partnership retained an equity interest in
six Local Limited Partnerships owning eight apartment properties. The
Partnership also owns a 97% limited partnership interest in Southwest
Parkway Ltd. ("Southwest Parkway") and a 99% limited partnership
interest in Brookside, Ltd. ("Brookside") (collectively referred to as
the "Subsidiaries"). Affiliates of the general partners of the
Partnership are the general partners of the Subsidiaries. The
Partnership's primary sources of income are distributions from the Local
Limited Partnerships and rental income from the Subsidiaries. The
Partnership requires cash to pay the operating expenses of the
Subsidiaries, management fees, general and administrative expenses or to
make capital contributions, or loans, to any of the Local Limited
Partnerships which the Managing General Partner deems to be in the
Partnership's best interest to preserve its ownership interest.
To date, all cash requirements have been satisfied by interest income
earned on short-term investments, rental income from the Subsidiaries
and cash distributed to the Partnership by the Local Limited
Partnerships. If the Partnership funds any operating deficits, it will
use monies from its operating reserves. The Managing General Partner's
current policy is to maintain a reserve balance sufficient to provide
the Partnership the flexibility to preserve its economic interest in the
Local Limited Partnerships.
7 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
---------------------------------------------------------
FORM 10-QSB SEPTEMBER 30, 2000
------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
Liquidity and Capital Resources (Continued)
-------------------------------------------
The level of liquidity based on cash and cash equivalents experienced a
$148,000 increase at September 30, 2000, as compared to December 31,
1999. The Partnership's $210,000 of net cash provided by investing
activities and $24,000 of net cash provided by operating activities was
partially offset by $86,000 of cash used in financing activities. Cash
provided by investing activities included $273,000 of distributions
received from Local Limited Partnerships and a $55,000 decrease in
replacement reserves which was partially offset by $118,000 of property
improvements. Cash used in financing activities included $52,000 of
distributions to partners and $34,000 of mortgage principal payments.
The Partnership is not obligated to provide any additional funds to the
Local Limited Partnerships to fund operating deficits. The Partnership
will determine on a case by case basis whether to fund any operating
deficits. If a Local Limited Partnership sustains continuing operating
deficits and has no other sources of funding, it is likely that it will
eventually default on its mortgage obligations and risk a foreclosure on
its property by the lender. If a foreclosure were to occur, the Local
Limited Partnership would lose its investment in the property and would
incur a tax liability due to the recapture of tax benefits taken in
prior years. The Partnership would share in these consequences in
proportion to its ownership interest in the Local Limited Partnership.
For the nine months ended September 30, 2000, Partnership distributions
(paid or accrued) aggregated approximately $75,000 ($3.00 per unit) to
its limited partners and $4,000 to the general partners. The ability of
the Partnership to continue to make distributions to its partners is
dependent upon the financial performance of the Local Limited
Partnerships and its Subsidiaries.
Results of Operations
---------------------
Net income increased by $185,000 for the nine months ended September 30,
2000 as compared to the comparable period in 1999, due to an increase in
income of $215,000, which was partially offset by an increase in
expenses of $26,000 and an increase in minority interest of $4,000.
Income increased for the nine months ended September 30, 2000 as
compared to the comparable period in 1999 primarily due to an increase
in distributions from Local Limited Partnerships of approximately
$173,000 and an increase in rental income of approximately $30,000.
During the nine months ended September 30, 2000, the Partnership
received approximately $140,000 and $133,000 of cash distributions from
the Local Limited Partnerships which own the Honeywood Apartments and
the Crofton Village Apartments, respectively. Rental income increased by
$30,000 due to increases in rental income of Southwest Parkway ($18,000)
and Brookside ($12,000). Expenses increased primarily due to an increase
in operating expenses at Southwest Parkway ($3,000) and Brookside
($12,000).
8 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
---------------------------------------------------------
FORM 10-QSB SEPTEMBER 30, 2000
------------------------------
PART - II - OTHER INFORMATION
-----------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
99. Supplementary Information Required Pursuant to Section 9.4 of
the Partnership Agreement.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the period ended
September 30, 2000.
9 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
---------------------------------------------------------
FORM 10-QSB SEPTEMBER 30, 2000
------------------------------
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WINTHROP RESIDENTIAL ASSOCIATES II,
-----------------------------------
A LIMITED PARTNERSHIP
---------------------
BY: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /s/ Michael L. Ashner
-----------------------------------
Michael L. Ashner
Chief Executive Officer
BY: /s/ Thomas C. Staples
-----------------------------------
Thomas C. Staples
Chief Financial Officer
Dated: November 10, 2000
10 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
---------------------------------------------------------
FORM 10-QSB SEPTEMBER 30, 2000
------------------------------
Exhibit Index
Exhibit Page No.
27. Financial Data Schedule -
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 12
11 of 12
