SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR
- - - ------- 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 25, 1998
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-14941
CAMBRIDGE ADVANTAGED
PROPERTIES II LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 13-3330195
- - - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- - - -------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
Indicate by check mark whether the 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 ____
<PAGE>
PART I
Item 1. Financial Statements
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
December 25, March 25,
1998 1998
----------- -----------
<S> <C> <C>
ASSETS
Property and equipment - net of
accumulated depreciation of
$46,024,367 and $43,665,440,
respectively $68,526,908 $70,875,621
Cash and cash equivalents 829,888 1,011,604
Cash - restricted for tenants'
security deposits 648,313 563,247
Mortgage escrow deposits 2,705,136 1,815,521
Deferred costs, net of accumulated
amortization of and $1,037,792 and
$983,592, respectively 2,057,665 2,142,743
Prepaid expenses and other assets 542,803 432,170
----------- -----------
Total assets $75,310,713 $76,840,906
=========== ===========
</TABLE>
3
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Consolidated Balance Sheets
(continued)
(Unaudited)
<TABLE>
<CAPTION>
December 25, March 25,
1998 1998
----------- -----------
<S> <C> <C>
LIABILITIES AND PARTNERS' DEFICIT
Liabilities
Mortgage notes payable $ 90,230,620 $ 91,209,333
Accounts payable, accrued
expenses and other liabilities 7,591,926 6,179,587
Tenants' security deposits payable 648,313 563,247
Due to general partners of
subsidiaries and their affiliates 1,396,895 1,631,151
Due to general partners and
affiliates 5,517,970 4,660,761
------------- -------------
Total liabilities 105,385,724 104,244,079
------------- -------------
Minority interest 4,783,371 4,911,145
------------- -------------
Commitments and contingencies
(Note 5)
Partners' deficit:
Limited partners (34,192,251) (31,673,628)
General partners (666,131) (640,690)
------------- -------------
Total partners' deficit (34,858,382) (32,314,318)
------------- -------------
Total liabilities and partners'
deficit $ 75,310,713 $ 76,840,906
============= =============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 25, December 25,
---------------------------------------------------
1998 1997 1998 1997*
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Rentals, net $4,216,984 $4,252,149 $12,395,384 $12,718,978
Other 187,052 189,361 558,051 567,808
---------- ---------- ----------- -----------
Total revenues 4,404,036 4,441,510 12,953,435 13,286,786
---------- ---------- ----------- -----------
Expenses
Administrative and
management 775,764 710,772 2,301,397 2,188,639
Administrative and
management-
related parties
(Note 2) 370,153 311,082 1,132,317 1,143,415
Operating 302,784 367,038 965,915 1,063,851
Repairs and
maintenance 952,878 769,904 2,339,443 1,905,222
Taxes and
insurance 492,330 562,438 1,444,971 1,596,135
Interest 1,792,050 1,898,442 5,316,509 5,725,506
Depreciation and
amortization 860,222 862,632 2,530,047 2,606,761
---------- ---------- ----------- -----------
Total expenses 5,546,181 5,482,308 16,030,599 16,229,529
---------- ---------- ----------- -----------
</TABLE>
5
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations
(continued)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 25, December 25,
--------------------------------------------------------
1998 1997 1998 1997*
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Loss before
minority interest
and extraordinary
item (1,142,145) (1,040,798) (3,077,164) (2,942,743)
Minority interest
in loss of
subsidiaries 4,607 17,463 30,566 45,111
----------- ----------- ----------- -----------
Loss before
extraordinary item (1,137,538) (1,023,335) (3,046,598) (2,897,632)
Extraordinary item
forgiveness of
indebtedness
income (Note 3) 502,534 0 502,534 0
----------- ----------- ----------- -----------
Net Loss $ (635,004) $(1,023,335) $(2,544,064) $(2,897,632)
=========== =========== =========== ===========
</TABLE>
*Reclassified for comparative purposes
See Accompanying Notes to Consolidated Financial Statements.
6
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Deficit
(Unaudited)
<TABLE>
<CAPTION>
Limited General
Total Partners Partners
------------ ------------ ---------
<S> <C> <C> <C>
Balance-
March 26, 1998 $(32,314,318) $(31,673,628) $(640,690)
Net loss - nine
months ended
December 25, 1998 (2,544,064) (2,518,623) (25,441)
------------ ------------ ---------
Balance-
December 25, 1998 $(34,858,382) $(34,192,251) $(666,131)
============ ============ =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
7
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Decrease) Increase in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
December 25,
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,544,064) $(2,897,632)
----------- -----------
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Extraordinary item - forgiveness
of indebtedness income
(Note 3) (502,534) 0
Depreciation and amortization 2,530,047 2,606,761
Minority interest in loss of
subsidiaries (30,566) (45,111)
Increase in cash-restricted
for tenants' security deposits (85,066) (69,148)
Increase in mortgage
escrow deposits (889,615) (311,110)
Increase in prepaid
expenses and other assets (110,633) (13,889)
Increase in accounts payable,
accrued expenses and other
liabilities 1,412,339 997,719
Increase in tenants'
security deposits payable 85,066 69,148
Increase in due to general partners
of subsidiaries and their affiliates 10,000 0
Decrease in due to general partners
of subsidiaries and their affiliates (244,256) (151,981)
Increase in due to general partners
and affiliates 857,209 525,744
----------- -----------
Total adjustments 3,031,991 3,608,133
----------- -----------
Net cash provided by operating
activities 487,927 710,501
----------- -----------
</TABLE>
8
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Decrease) Increase in Cash and Cash Equivalents
(continued)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
December 25,
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from investing activities:
Acquisitions of property and
equipment (10,214) (58,812)
----------- -----------
Net cash used in investing activities (10,214) (58,812)
----------- -----------
Cash flows from financing activities:
Principal payments of mortgage
notes payable (6,281,227) (591,691)
Borrowings on mortgage notes 5,805,048 0
Decrease in capitalization
of consolidated subsidiaries
attributable to minority interest (97,208) (129,783)
(Increase) decrease in deferred costs (86,042) 8,567
----------- -----------
Net cash used in financing
activities (659,429) (712,907)
----------- -----------
Net decrease in cash and
cash equivalents (181,716) (61,218)
Cash and cash equivalents-
beginning of period 1,011,604 1,225,369
----------- -----------
Cash and cash equivalents-
end of period $ 829,888 $ 1,164,151
=========== ===========
Supplemental disclosure of non-cash activities:
Forgiveness of indebtedness
income (Note 3)
Decrease in mortgage notes
payable (502,534) 0
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
9
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 25, 1998
(Unaudited)
Note 1 - General
The consolidated financial statements for the nine months ended December 25,
1998 and 1997 include the accounts of Cambridge Advantaged Properties II Limited
Partnership, (the "Partnership"), and ten and eleven subsidiary partnerships
("subsidiaries", "subsidiary partnerships" or "Local Partnerships"),
respectively. The Partnership is a limited partner, with an ownership interest
of 98% in each of the subsidiary partnerships. Through the rights of the
Partnership and/or a General Partner, which General Partner has a contractual
obligation to act on behalf of the Partnership, to remove the general partner of
the subsidiary partnerships and to approve certain major operating and financial
decisions, the Partnership has a controlling financial interest in the
subsidiary local partnerships.
For financial reporting purposes, the Partnership's fiscal quarter ends December
25. The Partnership's fiscal quarter ends December 25 in order to allow adequate
time for the subsidiaries' financial statements to be prepared and consolidated.
The books and records of the Partnership are maintained on the accrual basis of
accounting, in accordance with generally accepted accounting principles
("GAAP"). All subsidiaries have fiscal quarters ending September 30. Accounts of
subsidiaries have been adjusted for intercompany transactions from October 1
through December 25.
All intercompany accounts and transactions have been eliminated in
consolidation.
Increases (decreases) in the capitalization of consolidated subsidiaries
attributable to minority interest arise from cash contributions and cash
distributions to the minority interest partners.
The Partnership's investment in each subsidiary is equal to the respective
subsidiary's partners' equity less minority interest capital, if any. Losses
attributable to minority interests which exceed the minority interests'
investment in a subsidiary have been charged to the Partnership. Such losses
aggregated approximately $5,000 and $0 and $9,000 and $1,000 for the three and
nine months
10
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 25, 1998
(Unaudited)
ended December 25, 1998 and 1997, respectively. In consolidation,
all subsidiary partnership losses are included in the Partnership's capital
account except for losses allocated to minority interest capital.
The unaudited financial statements have been prepared on the same basis as the
audited financial statements included in the Partnership's Form 10-K for the
year ended March 25, 1998. In the opinion of the General Partners, the
accompanying unaudited financial statements contain all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the financial
position of the Partnership as of December 25, 1998, the results of operations
for the three and nine months ended December 25, 1998 and 1997 and cash flows
for the nine months ended December 25, 1998 and 1997, respectively. However, the
operating results for the nine months ended December 25, 1998 may not be
indicative of the results for the year.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these consolidated financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Partnership's March 25, 1998 Annual Report on Form 10-K.
As of December 25, 1998, several subsidiary partnerships are experiencing
financial difficulties. There is doubt about the ability of some of the
subsidiary partnerships to continue as going concerns. Recoverability of a
significant portion of the Partnership's investments will depend upon material
improvements in the ability of each subsidiary partnership to meet its debt
service obligations. In addition, the level of cash distributions provided to
the Partnership by the subsidiary partnerships have not been sufficient, and may
not be sufficient in the future, to cover the Partnership's operating expenses.
As a result, the Partnership has required, and may in the future require,
funding from other sources for such purposes. The consolidated financial
statements do not include any adjustments that might result from the outcome of
these uncer-
11
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 25, 1998
(Unaudited)
tainties. See Note 5 and the Partnership's March 25, 1998 Annual
Report on Form 10-K for management's intentions.
Note 2 - Related Party Transactions
One of the General Partners of the Partnership, Related and Cambridge Associates
Limited Partnership ("Related and Cambridge Associates"), has a 1% interest as a
special limited partner in each of the subsidiary partnerships.
Whitney Management Corp., an affiliate of the General Partners, is the managing
agent of three properties.
12
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 25, 1998
(Unaudited)
Fees incurred to related parties for the three and nine months ended December
25, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 25, December 25,
---------------------------------------------
1998 1997 1998 1997
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Partnership manage-
ment fees (a) $161,000 $111,250 $ 483,000 $ 493,750
Expense reimburse-
ment (b) 11,000 14,000 64,643 64,176
Property manage-
ment fees incurred
to affiliates of the
General Partners (c) 135,797 128,851 398,973 408,121
Local administra-
tive fee (d) 2,000 2,000 8,000 8,000
-------- -------- ---------- ----------
Total general and
administrative-
General Partners 309,797 256,101 954,616 974,047
-------- -------- ---------- ----------
Property manage-
ment fees incurred
to affiliates of
the subsidiary
partnerships'
general partners (c) 60,356 54,981 177,701 169,368
-------- -------- ---------- ----------
Total general and
administrative-
related parties $370,153 $311,082 $1,132,317 $1,143,415
======== ======== ========== ==========
</TABLE>
(a) After all other expenses of the Partnership are paid, an annual partnership
management fee of up to .5% of invested assets is payable to the Partnership's
General Partners and affiliates. Partnership management fees have been charged
to operations and are included in administrative and management-related parties
expenses. Partnership management fees owed to the General Partners amounting to
approximately $2,335,000 and $1,877,000 were accrued and unpaid as of December
25, 1998 and March 25, 1998, respectively.
13
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 25, 1998
(Unaudited)
(b) An affiliate of the General Partners performs services for the Partnership
which include, but are not limited to: accounting and financing management,
registrar, transfer and assignment functions, asset management, investor
communications, printing and other administrative services. The amount of
reimbursement from the Partnership is limited by the provisions of the
Partnership Agreement. Another affiliate of the General Partners performs asset
monitoring for the Partnership. These services include site visits and
evaluations of the subsidiary partnerships' performance. Expense reimbursements
and asset monitoring fees owed to the General Partners amounting to
approximately $601,000 and $537,000 were accrued and unpaid as of December 25,
1998 and March 25, 1998, respectively.
(c) Property management fees paid by subsidiary partnerships amounted to
$208,025 and $195,540 and $612,216 and $611,651 for the three and nine months
ended December 25, 1998 and 1997, respectively. Of these fees $100,338 and
$102,475 and $290,471 and $316,335 were incurred to affiliates of the subsidiary
general partners. In addition, $135,797 and $128,851 and $398,973 and $408,121
were incurred to affiliates of the General Partners for the three and nine
months ended December 25, 1998 and 1997. Of such amounts incurred to affiliates
of the General Partners, $39,982 and $47,494 and $112,770 and $146,967 are also
included in amounts incurred to affiliates of the subsidiary general partners
because they were incurred to affiliates of both.
(d) Related and Cambridge Associates, a limited partner of the subsidiary
partnerships, is entitled to receive a local administrative fee of up to $2,500
per year from each subsidiary partnership.
Note 3 - Mortgage Note Payable
Sheridan Square Associates of Lawton L.P.
On September 17, 1998, Sheridan Square Associates of Lawton Limited Partnership
("Sheridan") obtained financing from NationsBank, N.A. in the amount of
$5,200,000. The new loan bears interest at 6.820%, and requires monthly payments
of $33,969, which includes interest, for a period of ten years. The
14
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 25, 1998
(Unaudited)
maturity date of the loan is October 1, 2008, when all remaining principal,
including accrued interest is due. The loan is secured by a first lien on real
estate, including an assignment of rents and profits. As a condition of the new
financing, Sheridan agreed to subordinate all remaining debt, including any
payment of interest and principal, except as defined in the loan agreement.
Proceeds of the financing were used to pay off the existing First and Second
Mortgage due to Lexington Mortgage in the amount of $4,214,883 and $89,380,
respectively. In addition, loan proceeds were used to establish certain reserve
accounts, related loan costs and a reduction of the Promissory Note due to
Whitney Sheridan in the amount of $821,092.
During 1993, the First Mortgage Loan to Lexington Mortgage was restructured,
with the former mortgage note being amended and restated. Since the total future
cash payment of all new debt was greater than the carrying amount of the old
debt, the amount of the original note was not adjusted and no gain was
recognized. The current interest rate was adjusted using the interest method.
The effective interest rate represented the discount rate that equates the
present value of the future cash payments with the carrying amount of the debt.
Due to the new financing and the proceeds used to retire the First Mortgage Loan
to Lexington Mortgage, the remaining contingent payments that existed at
September 30, 1998, net of related costs, no longer existed and was recognized
as extraordinary gain in the amount of $502,534.
Note 4 - Sale of Property
Galveston - Stewarts Landing, Ltd.
On November 12, 1997, the property and the related assets and liabilities of
Galveston - Stewarts Landing, Ltd. ("Galveston") were sold to an unaffiliated
third party for $5,030,000 resulting in a gain in the amount of $1,378,652.
Galveston used $5,000,000 of the net proceeds to settle the mortgage
indebtedness and accrued interest thereon which amounted to $8,629,807,
resulting in forgiveness of indebtedness income of $3,629,807.
15
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 25, 1998
(Unaudited)
Note 5 - Commitments and Contingencies
There were no material changes and/or additions to disclosures regarding the
subsidiary partnerships which were included in the Partnership's Annual Report
on Form 10-K for the period ended March 25, 1998.
16
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
The Partnership's primary sources of funds are the cash distributions from
operations of the Local Partnerships in which the Partnership has invested.
These sources are available to meet obligations of the Partnership. However, the
cash distributions received from the Local Partnerships to date have not been
sufficient to meet all such obligations of the Partnership. During the nine
months ended December 25, 1998 and 1997 such distributions amounted to
approximately $185,000 and $150,000, respectively. Accordingly, the Related
General Partner advanced funds to meet the Partnership's third party obligations
with remaining unpaid balances due to the Related General Partner totaling
approximately $2,464,000 and $2,060,000 at December 25, 1998 and March 25, 1998,
respectively. In addition, certain fees and expense reimbursements owed to the
General Partners amounting to approximately $2,936,000 and $2,414,000 were
accrued and unpaid as of December 25, 1998 and March 25, 1998, respectively.
Without the General Partners' advances and continued accrual without payment of
certain fees and expense reimbursements, the Partnership will not be in a
position to meet its obligations. The General Partners have continued advancing
and allowing the accrual without payment of these amounts, but are under no
obligation to do so.
During the nine months ended December 25, 1998, cash and cash equivalents of the
Partnership and its ten consolidated Local Partnerships decreased approximately
$182,000. This decrease was attributable to acquisitions of property and
equipment ($10,000), a decrease in capitalization of consolidated subsidiaries
attributable to minority interest ($97,000), an increase in deferred costs
($86,000) and net principal payments of mortgage notes payable ($476,000) which
exceeded cash flow provided by operating activities ($488,000). Included in the
adjustments to reconcile the net loss to cash flow provided by operating
activities is forgiveness of indebtedness income ($503,000) and depreciation and
amortization ($2,530,000).
For a discussion of contingencies affecting certain Local Partnerships, see
Notes 1 and 5 to the Financial Statements.
Management is not aware of any trends or events, commitments or uncertainties,
which have not otherwise been disclosed, that
17
<PAGE>
will or are likely to impact liquidity in a material way. Management believes
the only impact would be from laws that have not yet been adopted. The portfolio
is diversified by the location of the properties around the United States so
that if one area of the country is experiencing downturns in the economy, the
remaining properties in the portfolio may be experiencing upswings. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy.
Results of Operations
Excluding Galveston, which sold its property on November 12, 1997,
administrative and management, administrative and management-related parties,
operating, repairs and maintenance and forgiveness of indebtedness income, the
results of operations of the Partnership, as well as the Local Partnerships
remained fairly consistent during the three and nine months ended December 25,
1998 and 1997. The majority of Local Partnership income continues to be in the
form of rental income with the corresponding expenses being divided among
operations, depreciation and mortgage interest.
Rental income decreased approximately 1% and 3% for the three and nine months
ended December 25, 1998 as compared to the corresponding periods in 1997.
Excluding Galveston, rental income increased approximately 6% and 4% for the
three and nine months ended December 25, 1998, as compared to the corresponding
periods in 1997 primarily due to an increase in occupancy at two Local
Partnerships and rental rate increases.
Total expenses, excluding Galveston, administrative and management,
administrative and management-related parties, operating and repairs and
maintenance expense, remained fairly consistent with decreases of approximately
1% and 2% for the three and nine months ended December 25, 1998 as compared to
1997.
Administrative and management increased approximately $65,000 and $113,000 for
the three and nine months ended December 25, 1998 as compared to the
corresponding periods in 1997. Excluding Galveston, such expenses increased
approximately $109,000 and $285,000 primarily due to an increase in salary
expense due to the hiring of new employees at four Local Partnerships.
Administrative and management-related parties increased approximately $59,000
for the three months ended December 25, 1998 as compared to the corresponding
period in 1997. Excluding
18
<PAGE>
Galveston, such expense increased approximately $67,000 primarily due to the
lowering of the management fees payable to the General Partners in the third
quarter of 1997 due to the sale of Galveston on November 12, 1997.
Operating decreased approximately $64,000 for the three months ended December
25, 1998 as compared to the corresponding period in 1997. Excluding Galveston,
such expense decreased approximately $38,000 primarily due to small decreases in
utility expenses at two Local Partnerships.
Repairs and maintenance increased approximately $183,000 and $434,000 for the
three and nine months ended December 25, 1998 as compared to the corresponding
periods in 1997. Excluding Galveston, such expenses increased approximately
$241,000 and $572,000 primarily due to plumbing, painting, pool and carpet
repairs at a one Local Partnership and carpet replacement, installation of new
locks and painting at a second Local Partnership.
Taxes and insurance decreased approximately $70,000 for the three months ended
December 25, 1998 as compared to the corresponding period in 1997. Excluding
Galveston, such expense remained fairly consistent with a decrease of
approximately $22,000.
Year 2000 Compliance
The Partnership utilizes the computer services of an affiliate of the General
Partners. The affiliate of the General Partners is in the process of upgrading
its computer information systems to be year 2000 compliant and beyond. The Year
2000 compliance issue concerns the inability of a computerized system to
accurately record dates after 1999. The affiliate of the General Partners
recently underwent a conversion of its financial systems applications and is in
the process of upgrading and testing the in house software and hardware
inventory. The workstations that experienced problems from this process were
corrected with an upgrade patch. The costs incurred by the General Partners are
not being charged to the Partnership. In regard to third parties, the
Partnership's General Partners are in the process of evaluating the potential
adverse impact that could result from the failure of material service providers
to be year 2000 compliant. A detailed survey and assessment of third party
readiness was sent to material third parties in the fourth quarter of 1998. The
results of the surveys will be compiled in early 1999. No estimate can be made
at this time as to the impact of the readiness of such third parties. The
Partnership's
19
<PAGE>
General Partners plan to have these issues fully assessed by early
1999, at which time the risks will be addressed and a contingency plan will be
implemented if necessary.
20
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CAMBRIDGE ADVANTAGED
PROPERTIES II LIMITED PARTNERSHIP
(Registrant)
By: RELATED ADVANTAGED RESIDENTIAL
ASSOCIATES, INC., a General Partner
Date: January 20, 1999
By: /s/ Alan P. Hirmes
-----------------------------
Alan P. Hirmes,
Senior Vice President
(principal financial officer)
Date: January 20, 1999
By: /s/ Glenn F. Hopps
-----------------------------
Glenn F. Hopps,
Treasurer
(principal accounting officer)
By: RELATED AND CAMBRIDGE ASSOCIATES,
LIMITED PARTNERSHIP,
a General Partner
By: Related Advantaged Residential
Associates, Inc.,
its General Partner
Date: January 20, 1999
By: /s/ Alan P. Hirmes
-----------------------------
Alan P. Hirmes,
Senior Vice President
(principal financial officer)
Date: January 20, 1999
By: /s/ Glenn F. Hopps
-----------------------------
Glenn F. Hopps,
Treasurer
(principal accounting officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements for Cambridge Advantaged Properties II Limited Partnership and is
qualified in its entirety by reference to such financial statements
</LEGEND>
<CIK> 0000771996
<NAME> Cambridge Advantaged Properties II Limited Partnership
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