<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1998
Commission File Number 33-19736-A
CONDEV LAND FUND II, LTD.
-------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2862457
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2479 Aloma Avenue
Winter Park, Florida 32792
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 679-1748
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 report), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
----- -----
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CONDEV LAND FUND II, LTD.
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION:
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<CAPTION>
<S> <C>
Statement of Assets, Liabilities and
Partner's Capital - September 30, 1998
and December 31, 1997 1
Statement of Income & Expense -
Three Months Ended September 30, 1998
and September 30, 1997 2
Statement of Income & Expense -
Nine Months Ended September 30, 1998
and September 30, 1997 3
Statement of Cash Flows -
Nine months ended September 30, 1998
and September 30, 1997 4
Notes to Financial Statements 5 - 6
Management's Discussion and Analysis
of Financial Condition and Results of Operations 6 - 7
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings 8
Item 6 Exhibits and Reports on Form 8-K 8
Signatures 9
Third Quarter 1998 report to Limited Partners 10
</TABLE>
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PART I. FINANCIAL INFORMATION
CONDEV LAND FUND II, LTD.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
ASSETS
------
<S> <C> <C>
September 30, 1998 December 31, 1997
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(Unaudited) *
Cash & Cash Equivalents $ 106,877 $ 168,989
Investment in Land (Note 2) 2,560,521 2,515,801
Organization Costs 7,982 7,982
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Total Assets $2,675,380 $2,692,772
========== ==========
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LIABILITIES AND PARTNER'S CAPITAL
---------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Mortgage Note Payable $ 9,333 $ -
Accounts Payable - 5,820
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Total Liabilities $ 9,333 $ 5,820
Partners' Capital -
General Partner ( 2,858) ( 2,649)
Limited Partner 2,668,905 2,689,601
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Total Partners' Capital 2,666,047 2,686,952
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Total Liabilities and
Partners' Capital $2,675,380 $2,692,772
========== ==========
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* Condensed from audited financial statements.
The accompanying notes are an integral part of these financial statements
1
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CONDEV LAND FUND II, LTD.
STATEMENT OF INCOME AND EXPENSE
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, 1998 September 30, 1997
------------------- ------------------
<S> <C> <C>
INCOME
- ------
Net Gain on Sale of Land $ - $ 517,218
Interest and Other Income 1,032 5,053
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Total Income $ 1,032 $ 522,271
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OPERATING EXPENSES
- ------------------
Professional Services $ - $ 7,470
Office Expense 1,201 1,530
Management Fees 3,021 3,021
Other 4,109 3,303
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Total Operating Expenses $ 8,331 $ 15,324
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Net Income (Loss) ($ 7,299) $ 506,947
========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
2
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CONDEV LAND FUND II, LTD.
STATEMENT OF INCOME AND EXPENSE
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, 1998 September 30, 1997
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<S> <C> <C>
INCOME
- ------
Net Gain on Sale of Land $ - $517,217
Interest and Other Income 6,183 11,437
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Total Income $ 6,183 $528,654
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OPERATING EXPENSES
- ------------------
Professional Services $ 9,493 $ 16,670
Office Expense 3,883 4,902
Management Fees 9,063 9,063
Other 4,649 3,950
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Total Operating Expenses $ 27,088 $ 34,585
---------- --------
Net Income (Loss) ($ 20,905) $494,069
========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
3
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CONDEV LAND FUND II, LTD.
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Sept. 30, 1998 Sept. 30, 1997
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<S> <C> <C>
Cash Flows from Operating Activities:
Net Income ($ 20,905) $ 464,069
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Gain on land sale ( -) ( 517,217)
Cash provided by changes in:
Accounts Receivable - 105
Accounts payable ( 5,820) ( 4,419)
--------- ----------
Net cash from Operating Activities ( 26,725) ( 27,462)
--------- ----------
Cash flows from Investing Activities:
Land development costs ( 44,720) ( 32,498)
Proceeds of Land sale, net - 1,008,463
--------- ----------
Net cash from Investing Activities ( 44,720) ( 975,965)
--------- ----------
Cash flows from Financing Activities:
Distributions to Partners 9,333 ( 978,110)
--------- ----------
Net cash provided by Financing Activities 9,333 ( 978,110)
--------- ----------
Net increase (decrease) in cash ( 62,112) ( 29,607)
----------
Cash and cash equivalents, beginning of year 168,989 169,876
--------- ----------
Cash and cash equivalents, end of period $ 106,877 $ 140,269
========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
4
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CONDEV LAND FUND II, LTD.
NOTES TO FINANCIAL STATEMENTS
Note 1. BASIS OF PRESENTATION:
----------------------
The accompanying financial statements, in the opinion of Condev
Associates, the general partner of Condev Land Fund II, Ltd.,
reflect all adjustments (which include only normal recurring
adjustments) necessary to a fair statement of the financial
position, the results of operations and the changes in cash
position for the periods presented.
Note 2 INVESTMENT IN LAND:
------------------
At September 30, 1998 land consisted of the following:
8.659 acre parcel (zoned commercial) in
southeast Seminole County, Florida $ 825,734(a)
111.64 acre parcel (zoned PUD)
in Lake County, Florida 1,733,920(b)
---------
$2,559,654
==========
(a) On May 8, 1998, the Partnership entered into a contract
for sale of this parcel with a successful area developer who has
prospective tenants for the site. The contract provided for an
inspection period of three months, with closing 10 days
thereafter. The contract was amended to extend the inspection
period to December 6, 1998 to allow both the buyer and the seller
time to work out design and engineering issues which affected the
buyer's ability to use the site. The contract has been further
amended to extend the closing date to June, 1999, with
appropriate amendments to the terms and conditions of the
contract.
(b) In January 1998, the Partnership entered into a contract
for sale of the 20-acre multi-family site in this planned
development. The buyer intends to erect 358 apartments on the
site. The contract has passed the inspection period, and the
project is now in the permitting stage. Closing of this
transaction is expected in December. The Partnership has also
signed a contract for sale of the 71-acre single family site. The
buyer is conducting its inspection of the property at this time.
Closing of the sale is currently scheduled to take place before
the end of the year. Both transactions are subject to the
extension of water and sewer utilities to the site as well as
certain other off-site improvements for which the buyers are
obligated to pay their pro rata share. Finally, the Partnership
has received an offer to purchase the remaining 20-acre parcel
zoned commercial at this location. The General Partner is
negotiating a final contract for sale and purchase of the land.
5
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Note 3 DISTRIBUTIONS TO PARTNERS:
-------------------------
Pursuant to the partnership agreement, cash flow generated each
year by the Partnership is to be distributed 99% to the limited
partners and 1% to the general partner. There were no cash flow
distributions during the first nine months of 1998.
Pursuant to the partnership agreement, proceeds realized from the
sale of properties, after the establishment of reserves for
future operating costs, are to be distributed at least annually.
There were no such distributions to limited partners during the
first three quarters of 1998.
Note 4 RELATED PARTY TRANSACTIONS:
---------------------------
The Partnership Agreement provides for the reimbursement to the
general partner for direct administrative expenses incurred in
the operation of the partnership. For the nine months ended
September 30, 1998, $3,291 was reimbursed to the general partner
for direct expenses incurred.
When properties are sold, under certain circumstances an
affiliate of the general partner may be paid real estate
commissions in amounts customarily charged by others rendering
similar services with such commissions plus commissions paid to
nonaffiliated brokers not to exceed 10% of the gross sales price.
No real estate commissions were paid to any affiliate of the
general partner during the nine months ended September 30, 1998.
The general partner is obligated to loan up to $100,000 to the
Partnership during its term to meet working capital requirements.
No such loans were made to the Partnership during the nine months
ended September 30, 1998.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
--------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS:
------------------------------------
During the periods ended September 30, 1998, the Partnership
continued to manage the portfolio properties with the objective
of selling the properties at fair market prices. As of September
30, 1998, one entire property and two separate parts of another
property were under contract for sale. Refer to Note 2.
Investment in Land for details.
------------------
The area of Lake County, Florida in which the Partnership's
111.64-acre parcel is located has experienced heightened activity
in recent months, with significant new residential and commercial
development beginning in the immediate area. The key to selling
this site appears to be the availability of utilities to support
commercial development. The Partnership completed design of the
extension of sewer and water utilities to the site, a lift
station, and a spine road into the development, and has filed for
the necessary building
6
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permits. The general partner is working with the area utility
company and neighboring landowners to insure that every
property's needs are met and that the costs of these improvements
are shared equitably. The Partnership's pro rata share of the
costs of utility extensions and other improvements will be paid
from a line of credit arranged by the general partner. Borrowings
under the line of credit will be repaid from future land sales.
Offer to Purchase Units. In September, LP Investors, LLC, an
-----------------------
investment company based in Atlanta, Georgia, exercised their
rights as a limited partner and requested a list of all
beneficial owners and the number of units owned by each. As
required by the Partnership Agreement, this information was
provided. LP Investors paid a fee of $100 to the Partnership in
reimbursement of the Partnership's costs associated with
providing the list. LP Investors subsequently wrote to each
beneficial owner offering to purchase their units for $62.50 per
unit, less the $25 transfer fee charged by the Partnership. As of
September 30, 1998, there have been no transfers as a result of
this offer. Neither the Partnership, the General Partner, nor any
of its officers, employees or affiliates is in any way connected
with this offer.
Results of Operations
---------------------
Total revenues for the nine months ended September 30, 1998 were
$6,183, compared with total revenues of $528,654 for the nine
months ended September 30, 1997. The 1997 figure includes a gain
on the sale of land in the amount of $517,217. Income is
generated from short-term cash investments, and income can be
expected to fluctuate, depending on the level of cash reserves in
the Partnership and prevailing interest rates. There were no
sales of land during the first nine months of 1998. Operating
expenses for the nine months ended September 30, 1998 were
$27,088, a decrease from $34,585 for the nine months ended
September 30, 1997. The primary reason for the decrease was a
$7,177 drop in the cost of professional services from $16,670 for
the first nine months of 1997 to $9,493 for the same period in
1998. The Partnership had a net loss of $20,905 for the nine
months ended September 30, 1998. This compares to a net profit of
$494,069 for the nine months ended September 30, 1997.
Liquidity and Capital Resources at September 30, 1998
-----------------------------------------------------
Total assets increased slightly from $2,692,772 at December 31,
1997 to $2,675,380 at September 30, 1998. This reflects the
costs of improvements to the land on US Highway 27 financed by
bank debt and the results of operations for the period. Assets
can be expected to decline in the future as properties are sold
and distributions are made to limited partners.
7
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Liquidity remained at a satisfactory level. Cash and
equivalents decreased from $168,989 at 1997 year-end to $106,877
at September 30, 1998.
As discussed above, the Partnership anticipates the need to
expend Partnership funds to extend sewer and water utilities
to one of its properties during 1998. The Partnership has
arranged a $500,000 secured line of credit with a commercial bank
to pay for its pro rata share of expenses. Borrowings under the
line of credit will be repaid from future sales proceeds.
PART II
Item 1. LEGAL PROCEEDINGS
-----------------
As of September 30, 1998, there were no legal proceedings in
process, nor to the knowledge of the general partner, threatened
against the Partnership.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K:
---------------------------------
(A) Exhibits:
Third Quarter 1998 Report to Limited Partners
(B) Reports on Form 8-K:
There were no reports of Form 8-K for the period ended September
30, 1998
8
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CONDEV LAND FUND II, LTD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned.
CONDEV LAND FUND II, LTD.
BY: Condev Associates, General Partner
October 22, 1998 /s/ Robert N. Gardner
- ---------------------- ----------------------------------
DATE Robert N. Gardner, Partner
October 22, 1998 /s/ Joseph J. Gardner
- ---------------------- ----------------------------------
DATE Joseph J. Gardner, Partner
9
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October 15, 1998
Condev Land Fund II, Ltd.
Third Quarter 1998
Dear Limited Partner:
The financial statement, on the reverse side hereof, shows a net loss for the
nine months ended September 30, 1998 of $20,905. This represents normal income
less costs of operating the partnership and managing the portfolio properties.
There were no sales of property during the quarter. As of September 30, 1998,
the net asset value per unit of limited partner interest was $89.57. The
following is a brief description of the status of each of the partnership's
remaining properties:
Alafaya Trail/McCulloch Road. On May 8, 1998, the Partnership entered into a
- ----------------------------
contract for sale of the remainder of this entire parcel with a successful area
developer. The contract holder has requested additional time to close on the
transaction now that a letter of intent has been received from a prospective
tenant for the project. The extension is requested to provide time to obtain the
necessary development permits for the site. The Partnership has extended the
Closing date on the contract to June, 1999, with appropriate amendments to the
terms and conditions of the contract, in the belief that the current contract
holder represents the best opportunity for the Partnership to sell this property
in the shortest possible time.
Glenbrook P.U.D.. In January 1998, the Partnership entered into a contract for
- ----------------
sale of the 20-acre multi-family in this planned development. The buyer intends
to erect 358 apartments on the site. The contract has passed the inspection
period, and the project is in the final permitting stage. Closing of this
transaction is expected before the end of 1998. The Partnership has also signed
a contract for sale of the 71-acre single family site. The buyer is conducting
its inspection of the property at this time, and has until October 30 to make a
commitment to purchase the site. Closing of the sale should take place before
the end of the year. Only the commercially zoned acreage is not under contract,
and we are working with a number of prospects for this parcel. Work continues on
extending sewer and water utilities to this site, with completion expected
before the end of the year.
Many of the Limited Partners have called with questions regarding the recent
tender offer for their units made by LP Investors, LLC. Please be advised that
neither Condev nor any of its officers, employees or affiliates is in any way
connected with this offer. The decision on whether or not to sell is entirely up
to each limited partner. We will be pleased to answer any questions you may have
regarding this offer or any other matters related to the Partnership.
Sincerely yours,
CONDEV ASSOCIATES
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CURRENCY> NO
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> SEP-30-1998 SEP-30-1997
<EXCHANGE-RATE> 1 1
<CASH> 106,877 140,269
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 2,560,521 2,513,665
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 2,675,380 2,663,242
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 2,675,380 2,663,242
<TOTAL-LIABILITY-AND-EQUITY> 2,675,380 2,663,242
<SALES> 0 0
<TOTAL-REVENUES> 6,183 528,654
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 27,088 34,585
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (20,905) 494,069
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (20,905) 494,069
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (20,905) 494,069
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
