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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 June 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
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(Exact name of small business issuer as specified in its charter)
Maryland 04-2742158
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Five Cambridge Center, Cambridge, MA 02142-1493
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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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_____
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT UNIT DATA) 2000 1999
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<S> <C> <C>
Assets
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Cash and cash equivalents $ 1,586 $ 1,472
Escrow deposits 209 253
Other assets 206 185
Real estate, net of accumulated depreciation
of $5,070 in 2000 and $4,919 in 1999 3,114 3,194
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Total Assets $ 5,115 $ 5,104
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Liabilities and Partners' Capital
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Liabilities:
Accounts payable, accrued expenses and other liabilities $ 231 $ 328
Distribution payable 26 26
Loan payable - affiliate 501 501
Mortgage notes payable 3,477 3,499
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Total Liabilities 4,235 4,354
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Minority interest 31 30
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Partners' Capital:
Limited Partners -
Units of Limited Partnership Interest,
$1,000 stated value per unit; 25,010 units authorized,
issued and outstanding 1,855 1,733
General Partners' deficit (1,006) (1,013)
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Total Partners' Capital 849 720
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Total Liabilities and Partners' Capital $ 5,115 $ 5,104
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</TABLE>
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Income:
Rental income $ 322 $ 315 $ 647 $ 623
Income from Local Limited Partnership cash distributions 180 34 220 67
Interest income 15 12 29 24
Other income 13 9 24 21
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Total income 530 370 920 735
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Expenses:
General and administrative 36 27 57 52
Operating 146 154 296 283
Depreciation 78 73 151 145
Interest 75 79 149 150
Management fees 42 43 85 83
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Total expenses 377 376 738 713
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Net income (loss) before minority interest 153 (6) 182 22
Minority interest (1) 2 (1) 2
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Net income (loss) $ 152 $ (4) $ 181 $ 24
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Net income allocated to General Partners $ 8 $ - $ 9 $ 1
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Net income (loss) allocated to Limited Partners $ 144 $ (4) $ 172 $ 23
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Net income (loss) per Unit of Limited Partnership Interest $ 5.76 $ (.16) $ 6.88 $ .92
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Distributions per Unit of Limited Partnership Interest $ 1.00 $ 1.00 $ 2.00 $ 2.00
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</TABLE>
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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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
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<S> <C> <C> <C> <C>
Balance - January 1, 2000 25,010 $ 1,733 $ (1,013) $ 720
Net income - 172 9 181
Distributions - (50) (2) (52)
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Balance - June 30, 2000 25,010 $ 1,855 $ (1,006) $ 849
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</TABLE>
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999
(IN THOUSANDS) --------------------- --------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 181 $ 24
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 151 145
Amortization 9 4
Minority interest 1 (2)
Income from Local Limited Partnership cash distributions (220) (67)
Changes in assets and liabilities:
Decrease in escrow deposits 37 163
Increase in other assets (30) (57)
Decrease in accounts payable and
accrued expenses (97) (60)
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Net cash provided by operating activities 32 150
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Cash Flows From Investing Activities:
Distributions received from Local Limited Partnerships 220 67
Change in replacement reserve 7 (27)
Property improvements (71) (225)
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Net cash provided by (used in) investing activities 156 (185)
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Cash Flows From Financing Activities:
Mortgage principal payments (22) (21)
Distributions to partners (52) (53)
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Cash used in financing activities (74) (74)
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Net increase (decrease) in cash and cash equivalents 114 (109)
Cash and cash equivalents, beginning of period 1,472 1,304
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Cash and cash equivalents, end of period $ 1,586 $ 1,195
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Supplemental Disclosure of Cash Flow Information:
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Interest paid in cash $ 143 $ 146
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Supplemental Disclosure of Non-Cash Financing Activities:
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Accrued Distributions to Partners $ 26 $ 26
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</TABLE>
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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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 June 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 six months ended June 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.
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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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
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As of June 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.
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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Liquidity and Capital Resources (Continued)
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The level of liquidity based on cash and cash equivalents
experienced a $114,000 increase at June 30, 2000, as compared to
December 31, 1999. The Partnership's $156,000 of net cash
provided by investing activities and $32,000 of net cash
provided by operating activities was partially offset by $74,000
of cash used in financing activities. Cash provided by investing
activities included $220,000 of distributions received from
Local Limited Partnerships and a $7,000 change in replacement
reserves which was partially offset by $71,000 of property
improvements. Cash used in financing activities included $52,000
of distributions to partners and $22,000 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 six months ended June 30, 2000, Partnership
distributions (paid or accrued) aggregated approximately $50,000
($2 per unit) to its limited partners and $2,000 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
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Net income increased by $157,000 for the six months ended June
30, 2000 as compared to the comparable period in 1999, primarily
due to an increase in income of $185,00, which was partially
offset by an increase in expenses of $28,000.
Income increased for the six months ended June 30, 2000 as
compared to the comparable period in 1999 primarily due to an
increase in distributions from Local Limited Partnerships of
approximately $153,000 and an increase in rental income of
approximately $24,000. During the six months ended June 30,
2000, the Partnership received approximately $140,000 and
$80,000 of cash distributions from the Local Limited
Partnerships which own the Honeywood Apartments and the Crofton
Village Apartments, respectively. Rental income increased by
$24,000 due to increases in rental income of Southwest Parkway
($14,000) and Brookside ($10,000). Expenses increased primarily
due to an increase in operating expenses at Southwest Parkway
($9,000) and Brookside ($4,000).
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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PART - II - OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
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(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
June 30, 2000.
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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SIGNATURES
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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,
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A LIMITED PARTNERSHIP
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BY: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /s/ Michael L. Ashner
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Michael L. Ashner
Chief Executive Officer
BY: /s/ Thomas C. Staples
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Thomas C. Staples
Chief Financial Officer
Dated: August 14, 2000
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WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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Exhibit Index
Exhibit Page No.
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27. Financial Data Schedule -
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 12
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