<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Form 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the Fiscal Year Ended Commission File Number
December 31, 1997 #33-19736-A
Condev Land Fund II, Ltd.
-------------------------
(Exact Name of Registrant as
specified in its charter)
Florida #59-2862457
------------------------------- -------------------------------
(State or other jurisdiction (IRS Employer ID #)
of incorporation or
organization)
2479 Aloma Avenue
Winter Park, Florida 32792
- ------------------------------- ---------------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (407) 679-1748
--------------
Securities registered pursuant to Section 12(b) of the Act:
None
----
Securities registered pursuant to Section 12(g) of the Act:
None
----
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 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_______
-------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant:
Not Applicable
--------------
<PAGE>
CONDEV LAND FUND II, LTD.
Table of Contents
<TABLE>
<CAPTION>
Page No.
---------
<S> <C>
Part I
Item 1. Business 1
Item 2. Properties 2
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security Holders 3
Part II
Item 5. Market for Registrant's Common Equity and Related Security Holder Matters 4
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 4
Item 8. Financial Statements and Supplementary Data 7
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 18
Part III
Item 10. Directors and Executive Officers of the Registrant 18
Item 11. Executive Compensation 18
Item 12. Security Ownership of Certain Beneficial Owners and Management 18
Item 13. Certain Relationships and Related Transactions 19
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 20
Signatures 21
Annual Report to Limited Partners 22
</TABLE>
<PAGE>
PART I
Item l.
Business:
--------
Condev Land Fund II, Ltd. (the "Partnership") is a Florida limited
partnership formed on December 16, 1987 under the Florida Revised
Uniform Partnership Act. The Partnership was formed for the purpose of
acquiring and holding for investment pre-development land in Central
Florida. The Partnership registered with the Securities and Exchange
Commission and sold to investors a total of 29,798 units of limited
partnership interest at an initial offering price of $250 per unit.
The Partnership had collected $7,449,500 in Limited Partnership
capital as of December 31, 1989.
As provided under the terms of the Partnership Agreement the
Partnership was to be in existence until December 31, 1995. In
accordance with the Florida Limited Partnership Law and the
Partnership Agreement, after December 31, 1995 the Partnership has
been in liquidation with no change in the status of the limited
partners or General Partner.
The Partnership has purchased seven properties to be held for
investment in the Central Florida area. One parcel was purchased
during 1988, five parcels were purchased during 1989 and one parcel
was purchased during 1990. Refer to Item 2. Properties for full
details.
Since the Partnership is in liquidation, the primary objective of the
Partnership is to sell properties at current market prices and
distribute the net proceeds to partners. To this end, the General
Partner is constantly monitoring area developments which are likely to
effect the salability of each property. This includes area commercial
and residential development, comparable sales transactions, road and
highway improvements, requests for zoning or comprehensive land use
changes, and changes in the availability of utilities. The General
Partner or its representatives attend county commission meetings,
planning and zoning hearings and community information meetings as
part of this endeavor. Properties are priced after consideration is
given to all of these factors.
Properties are marketed through a combination of direct advertising,
including "For Sale" signs located on each property, constant contact
with the local, national and international brokerage communities, and
direct contact with potential purchasers. Extensive marketing
materials and relevant development information is maintained and
constantly updated for use by potential buyers.
In addition to trying to sell the portfolio properties, the
Partnership must manage the properties in the best interest of the
partners. This includes traditional property maintenance such as
insuring the property against liability, paying and appealing for
adjustment, when appropriate, real estate taxes, mowing and trash
removal. It also entails reacting promptly to area developments to
insure that vested development rights are preserved or marketability
of the property is enhanced. In some cases, it is necessary to retain
consultants to assist with this effort. In other cases, expenditure of
partnership reserves is required to keep the property properly
positioned for sale.
The Partnership has no employees. Messrs. Robert N. Gardner and Joseph
J. Gardner are the general partners of Condev Associates, a Florida
general partnership, which is the General Partner of the Partnership
(the "General Partner").
1
<PAGE>
Item 2.
Properties:
----------
Since its inception, the Partnership has purchased seven properties
for investment in the Central Florida area. During 1994, one entire
property and part of another property was sold. There were no sales of
land during 1995. During 1996, three parcels were sold, and during
1997, one entire parcel was sold. As of December 31, 1997, the
Partnership owned or had an investment in two remaining properties. At
year end 1997, the Partnership had a contract for sale of part of one
of these properties.
The following is a summary of all properties acquired by the
Partnership:
Parcel 1:
--------
This was originally a 12.04-acre parcel of vacant land located at the
northwest corner of Alafaya Trail and McCulloch Road in Seminole
County, Florida.
During the first quarter of 1994, the Florida Department of
Transportation (FDOT) condemned 2.81 acres of the 12.04-acre
commercial parcel. The FDOT paid $676,800 as compensation for the
taking. Of the compensation awarded, the Partnership received
$608,635; the balance paid attorney's fees costs and taxes.
The Partnership sued the FDOT for additional compensation for the
taking of the property. This suit was settled on September 27, 1994 by
mediation which resulted in an additional $388,200 cash payment by
FDOT to the Partnership. Of this amount, $97,050 was used to pay legal
fees. As provided by Florida State law, these legal fees were refunded
to the Partnership during the first quarter of 1995.
On November 19, 1996 the Partnership entered into an Agreement of Sale
relating to this parcel with a developer who intended to construct a
retail center on the site. The Agreement was subsequently restructured
to provide for the sale in two separate transactions. On July 31,
1997, the sale of approximately 23,690 square feet of this site was
concluded. The purchase price was $350,000. In addition, the
Partnership sold sewer capacity which had been reserved for the site.
After expenses of the sale, the Partnership realized net proceeds of
$312,120.
The Agreement for the remainder of this parcel was terminated by the
Buyer in November, 1997, at which time the property was put under
contract with another prospective purchaser. This second agreement was
canceled by the contract holder in January, 1998.
<TABLE>
<CAPTION>
Date of Purchase: August 31, 1988
<S> <C>
Purchase Price: $1,500,000
Additional Capitalized Costs: $ 130,776
Less: Sale of 2.81 acres to FDOT: ( 753,899)
----------
$ 876,877
Less: Sale of .54 acres ( 51,143)
----------
$ 825,734
</TABLE>
Parcel 2:
--------
On February 6, 1989, the Partnership purchased, in joint venture with
an affiliated partnership, Condev Land Growth Fund '86, Ltd., a 19+
-
acre tract located immediately north of the University of Central
Florida for $737,355.
On April 22, 1966, the joint venture sold this property to Royal
Apartments USA based in Champaign, Illinois. The purchase price for
this parcel was $1,190,000, which included $35,000 paid by the
purchaser as additional consideration to extend the closing date.
After expenses of the sale, the net proceeds realized by the Joint
Venture were $1,104,330. A total of $1,080,000 was distributed to
limited partners in May, 1993, $540,000 to limited partners of Condev
Land Growth Fund '86, Ltd., and $540,000 to limited partners of Condev
Land Fund II, Ltd. The balance was added to Partnership reserves.
After payment of all final expenses Condev/McCulloch Road Joint
Venture was terminated.
Parcel 3:
--------
This is a 15.938 acre, commercially zoned parcel located in Lake
County, Florida between Tavares and Leesburg on U.S. Highway 441. The
Partnership paid $1,275,000 for this parcel in March, 1989. Together
with Parcel 4, this property was sold in June, 1996. See Parcel 4
below.
2
<PAGE>
Parcel 4:
--------
This is a 1.85-acre commercial parcel which adjoins parcel 3 and
squares off the property. The property was acquired in June, 1989 for
$395,000.
On June 14, 1996, the Partnership concluded the sale of this parcel,
along with parcel 3 described above, to Home Depot USA, Inc. The
purchase price for these two parcels was $2,750,000. After the
expenses of the sale, the net cash proceeds realized by the
Partnership were $2,433,823. A total of $2,425,000 was distributed to
limited partners in July 1996. The balance was added to partnership
reserves.
Parcel 5:
--------
This parcel originally consisted of 4.6512 acres of commercially zoned
property located on the north side of U.S. Highway 27-441 in Lady
Lake, Lake County, Florida. The Partnership received an appraisal of
$2.50 per square foot or $535,000 for the property at the time of
purchase.
On June 5, 1990 the Partnership sold 1.785 acres of the total 4.6512
acre site to SunBank N.A. for $375,000.
On October 10, 1994, the Partnership sold the remaining portion of
this parcel to First Federal Savings Bank of Lake County for $475,000.
Parcel 6:
--------
This is a 111.64-acre parcel located on U. S. Highway 27 in Lake
County approximately one mile north of U.S. 192 and five miles from
Walt Disney World. The property is zoned as a Planned Development
comprised of single-family, multi-family and commercial uses.
<TABLE>
<CAPTION>
Date of Purchase: November 11, 1989
<S> <C>
Total Purchase Price: $1,574,761
Additional Capitalized Costs: $ 115,306
</TABLE>
In January, 1998, the Partnership entered into a Contract for Sale and
Purchase of 20 acres of this parcel zoned for multi-family
development. The buyer anticipates developing 359 apartment units on
the site. Closing is currently scheduled to occur shortly before year-
end 1998.
Based on developments in the immediate area of this property, it is
clear that the Partnership will be in a better competitive position to
sell the property if sewer and water service is available to the
property limits. Accordingly, the General Partner has engaged an
engineering firm to design and estimate the costs of extending such
service to the property. Preliminary estimates have been completed,
and the general partner is now in the process of obtaining the
necessary development permits. If all goes as scheduled, construction
should begin in mid-1998 with completion anticipated by September. The
costs of these improvements will be reimbursed to the partnership by
buyers of the property.
Parcel 7:
--------
Parcel 7 is a tract of land consisting of approximately 7 developable
and 15.57+ total acres in the City of Maitland. The property was
-
acquired in June, 1990 for $375,000.
On August 30, 1997, the Partnership concluded the sale of the majority
of this parcel to Highwoods, Florida Holdings, L.P. The purchase price
was $715,000. In addition the Partnership sold a small piece of this
property to a non-affiliated owner of a property abutting this
property for $30,000, making the total gross proceeds of the combined
sale $745,000. After expenses of the two sales, the net proceeds
realized by the Partnership were $696,342.57.
Item 3.
Legal Proceedings:
-----------------
As of December 31, 1997, the Partnership was not subject to any
pending legal proceedings.
Item 4.
Submission of Matters to a Vote of Security Holders:
---------------------------------------------------
No matter was submitted to Unit Holders for a vote during the fourth
quarter of the year ended December 31, 1997.
3
<PAGE>
PART II
Item 5.
Markets for Registrant's Common Equity and Related Security Holder
------------------------------------------------------------------
Matters:
-------
(a) There has not been a public secondary market and it is not
anticipated that a public secondary market for the Units will develop.
(b) As of December 31, 1997, there were approximately 973 holders of
record of the Units of the Partnership.
(c) There are no regularly scheduled distributions to limited
partners. Distributions are made subsequent to sale of Partnership
properties after provision has been made for adequate reserves to
cover anticipated future expenses of the Partnership. Unit holders
received cash distributions totaling $978,110, $2,965,000 and $-0-
during the years ended December 31, 1997, 1996, and 1995.
Item 6.
Selected Financial Data:
-----------------------
Year Ended December 31,
-----------------------
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Revenue $ 589,654 $ 913,179 $ 19,549 $ 516,468 $ 17,435
Net Income (Loss) 517,779 842,315 (62,680) 422,902 (68,683)
Total Assets 2,692,772 3,151,702 5,271,40 5,335,562 6,131,464
Partnership
Capital 2,686,952 3,147,283 5,269,968 5,332,648 6,131,464
</TABLE>
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this annual
report .
Item 7.
Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations:
---------------------
January 1, 1997 through December 31, 1997:
For the year ended December 31, 1997, total revenues were $589,654.
This compares to total revenues of $913,179 for the year ended
December 31, 1996. In 1997, gains on the sale of land totaled
$536,132, down from $737,235 in 1996. In addition, in 1996, the
Partnership's joint venture, Condev McCulloch Road Joint Venture, sold
its property and reported a gain of $146,799. Other income in 1997
included interest on cash and cash equivalents in the amount of
$10,022, essentially unchanged from $9,379 in 1996, and forfeited
deposits from potential buyers of land amounted to $40,000 in 1997 and
$13,000 in 1996.
Expenses of the Partnership increased very slightly between 1996 and
1997, rising from $70,864 to $71,875. However, the composition of
expenses incurred changed. Taxes and permits, which were $29,400 in
1996, declined to $10,159 in 1997. Real estate taxes can be expected
to decline as portfolio properties are sold. Professional fees offset
the decrease in taxes and permits, rising from $11,197 in 1996 to
$32,738 in 1997. This was the result of the need for additional
engineering work on the Partnership's property in Lake County, plus
the additional legal fees associated with terminated contracts.
Total assets of the Partnership declined from $3,151,702 at December
31, 1996 to $2,692,772 at December 31, 1997. This reflects net profit
of the Partnership for the year less distributions to limited partners
in the amount of $978,110 during the year. Liquidity remained at an
adequate level to meet anticipated costs of managing the partnership.
Cash and cash equivalents were $168,989 at December 31, 1997, compared
to $169,876 a year earlier.
The business of the Partnership is to own, manage and sell, as market
conditions permit, pre-development land in the Central Florida area.
Due to the unpredictability of the commercial real estate market in
the Central Florida area, it is difficult to project when individual
properties will sell or when the entire portfolio will be liquidated.
Because of these uncertainties, the General Partner has established
reserves to fund real estate taxes, costs associated with maintaining
the properties and other required services such as partnership
administration, accounting and legal. The reserve will be replenished
from future land sales as needed.
4
<PAGE>
For 1997, the General Partner estimates that approximately $10,000 will be
required to pay real estate taxes on the remaining properties held by the
Partnership. In addition, the General Partner estimates that property
associated holding costs will total approximately $26,000 during 1998 and
the costs of administration, legal and accounting will require
approximately $20,000. These three categories of expense, totaling $56,000,
will be paid from Partnership reserves which were $168,069 at 1997 year-
end. Interest and other income is projected at $30,000 for 1998. Should the
Partnership not successfully conclude a property sale in 1998 and add to
reserves, reserves would fall to approximately $113,000 by year end 1998.
At the level of costs associated with the Partnership's business as set out
above the Partnership has reserves at year end 1997 to fund approximately
two and one-half years of costs. In the event the Partnership is unable to
generate adequate reserves through the sale of properties, the General
Partner is obligated to lend to the Partnership up to an aggregate amount
of $100,000 to fund operating expenses. See Item 13, Certain Relationships
and Related Transactions.
The General Partner estimates that two properties will be sold in 1997,
resulting in cash to the Partnership in the approximate amount of
$2,000,000. If concluded as estimated, the sale proceeds would result in a
distribution to the limited partners in the approximate amount of
$2,000,000, as the General Partner feels the majority of sale proceeds
could be distributed. If the sale and distribution are concluded as
estimated above, Partnership assets and Partners' Capital would fall to
approximately $1,446,812 by December 31, 1998.
In addition to the projected sales above, the General Partner reasonably
expects to place the remaining Partnership properties under contract in
1998. However, it is expected that one of these contracts would not close
until 1999. Another of these sales is likely to be over an extended period
as is typical in the single-family residential market. If that is the case,
it is estimated that it will require another three (3) years to complete
the sale of properties held by the Partnership.
January 1, 1996 through December 31, 1996:
The Partnership continued to manage the affairs of the Partnership and the
portfolio properties. Emphasis was placed on positioning the portfolio
properties for sale and on preserving property development rights.
On April 22, 1996, Condev/McCulloch Road Joint Venture, in which the
Partnership had a 49.9% interest, concluded the sale of its 19.10-acre
property located on McCulloch Road in Seminole County, Florida. The buyer
was a group of investors who intend to construct a 192-unit student housing
complex on the site. The Purchase Price for this parcel was $1,190,000,
which includes an amount of $35,000 paid by the purchaser as additional
consideration to extend the closing date. After expenses of the sale, the
net proceeds realized by the joint Venture were $1,104,330. Distributions
aggregating $1,080,000 were made to limited partners in May, 1996, $540,000
to limited partners of Condev Land Growth Fund '86, Ltd. and $540,000 to
limited partners of Condev Land Fund II, Ltd.
On June 14, 1996, the Partnership concluded the sale of two parcels
aggregating 17.75 acres located on U.S. Highways 441/27 near the Lake
County Mall in Lake County, Florida. The Purchase Price for these parcels
was $2,750,000. After expenses of the sale, the net proceeds realized by
the Partnership were $2,433,823. A total of $2,425,000 was distributed to
limited partners in July 1996. The balance was added to partnership
reserves.
For the year ended December 31, 1996, the Partnership reported total income
of $913,179, including $737,235 gain on sale of land and $146,799 equity in
income of joint venture, and $29,145 in other revenues. This compares to
total income in 1995 of $19,549. The 1996 revenues reflect sale of the
Partnership's land in Leesburg (Parcel #s 3 and 4) and Condev/McCulloch
Road Joint Venture's sale of its 19.10 acre parcel in Seminole County
(Parcel #2). There were no sales of land by the Partnership in 1995.
Operating expenses totaled $70,864 for the year ended December 31, 1996,
compared to $82,229 in 1995. The primary reason for the decrease was a
reduction in taxes and permits, which decreased from $46,031 in 1995 to
$29,400 in 1996. This is a result of properties being sold during the
year. The other decrease was the elimination of the $5,124 equity loss in
the joint venture in 1995. These decreases were partially offset by slight
increases in professional fees and office expenses in 1996, and by
amortization of organizational expenses totaling $4,905. There was no
amortization of organizational expenses in 1995 because no properties were
sold.
The net profit reported for the year ended December 31, 1996 was $842,315,
compared to a net loss of $62,680 for the year ended December 31, 1995.
5
<PAGE>
At year-end 1996, total assets of the Partnership were $3,151,702, compared
with $5,271,404 at year-end 1995. This decrease reflects the sale of two
properties during the year and the net operating costs of managing the
Partnership. Liabilities at December 31, 1996 were $4,419, compared to
total liabilities of $1,436 at December 31, 1995. Partners' capital
declined from $5,269,968 at December 31, 1995 to $3,147,283 at December 31,
1996. This decline resulted from the net profit for the year less the
$2,965,000 in distributions to limited partners during the year.
January 1, 1995 through December 31, 1995:
The Partnership continued to manage the affairs of the Partnership and the
portfolio properties to position them for sale.
For the year ended December 31, 1995, the Partnership reported total income
of $19,549. This compares to total income in 1994 of $516,468, including
$499,719 recognized gain on the sale of land and $16,749 in interest and
other income. There were no sales of land in 1995. The 1994 gain on sale
of land was the net result of the sale relating to 2.81 acres of the
Partnership's 12.04 acre parcel of land in Seminole County, Florida, and
the net profit from the sale of the Partnership's 2.83 acre parcel in Lady
Lake, Florida.
Operating expenses totaled $82,229 for the year ended December 31, 1995,
compared to $93,566 in 1994. The primary reason for the decrease was a
reduction in professional fees, which decreased from $14,625 in 1994 to
$7,462 in 1995. The higher level in 1994 relates to professional services
needed in connection with the FDOT condemnation of Parcel No. 1. In
addition, there was no amortization of organizational expenses in 1995
because no properties were sold. The other expense categories remained
essentially unchanged from the prior year.
The net loss reported for the year ended December 31, 1995 was $62,680
compared to a net profit of $422,902 for the year ended December 31, 1994.
At year-end 1995, total assets of the Partnership were $5,271,404, compared
with $5,335,562 at year-end 1994. This decrease reflects the net operating
costs of managing the Partnership. Liabilities at December 31, 1995 were
$1,436, compared to total liabilities of $2,914 at December 31, 1994.
Partners capital declined from $5,332,648 at December 31, 1994 to
$5,269,968 at December 31, 1995, a decrease of $62,680. This decline
resulted from the net loss reported for the year.
6
<PAGE>
Item 8.
Financial Statements and Supplementary Data:
-------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 8
FINANCIAL STATEMENTS
Balance sheets 9
Statements of operations 10
Statements of partners' capital 11
Statements of cash flows 12
Notes to financial statements 13 - 17
7
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Partners
Condev Land Fund II, Ltd.
Winter Park, Florida
We have audited the accompanying balance sheets of Condev Land Fund II,
Ltd. (a Florida Limited Partnership) as of December 31, 1997 and 1996, and the
related statements of operations, partners' capital, and cash flows for each of
the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the General Partner. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Condev Land Fund II, Ltd. as
of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
OSBURN, HENNING AND COMPANY
Orlando, Florida
January 16, 1998
8
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 168,989 $ 169,876
Accounts receivable - 105
Land, at cost (Note 2) 2,515,801 2,972,413
Organization costs, less accumulated
amortization of $10,390 and $9,064
in 1997 and 1996 7,982 9,308
---------- ----------
$2,692,772 $3,151,702
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable $ 5,820 $ 4,419
---------- ----------
Partners' capital (deficit):
General partner (2,649) (2,465)
Limited partners 2,689,601 3,149,748
---------- ----------
Total partners' capital 2,686,952 3,147,283
---------- ----------
$2,692,772 $3,151,702
========== ==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
9
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Revenue:
Gain on land sale $536,132 $737,235 $ -
Equity in income of joint venture - 146,799 -
Interest income 10,022 9,379 7,065
Forfeited deposits - 13,000 -
Other income 43,500 6,766 12,484
-------- -------- --------
589,654 913,179 19,549
-------- -------- --------
Expenses:
Taxes and permits 10,159 29,400 46,031
Office expenses 18,746 18,819 16,794
Professional fees 32,738 11,197 7,462
Amortization 1,326 5,904 -
Other expenses 8,906 5,544 6,818
Equity in loss of joint venture - - 5,124
-------- -------- --------
71,875 70,864 82,229
-------- -------- --------
Net income (loss) $517,779 $842,315 $(62,680)
======== ======== ========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
10
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
--------- ----------- -----------
<S> <C> <C> <C>
Balances, December 31, 1994 $ 3,969 $ 5,328,679 $ 5,332,648
Net income (loss) (627) (62,053) (62,680)
------- ----------- -----------
Balances, December 31, 1995 3,342 5,266,626 5,269 968
Distributions - (2,965,000) (2,965,000)
Net income (loss) (5,807) 848,122 842,315
------- ----------- -----------
Balances, December 31, 1996 (2,465) 3,149,748 3,147,283
Distributions - (978,110) (978,110)
Net income (loss) (184) 517,963 517,779
------- ----------- -----------
Balances, December 31, 1997 $(2,649) $ 2,689,601 $ 2,686,952
======= =========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
11
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------- ----------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 517,779 $ 842,315 $(62,680)
Adjustments to reconcile net income
(loss) to net cash used in
operating activities:
Gain on land sale (536,132) (737,235) -
Equity in (income) loss of joint
venture - (146,799) 5,124
Amortization 1,326 5,904 -
(Increase) decrease in accounts
receivable 105 (105) -
Increase (decrease) in
accounts payable 1,401 2,983 (1,478)
---------- ----------- --------
Net cash used in operating
activities (15,521) (32,937) (59,034)
---------- ----------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Land acquisitions and related costs (15,719) (7,406) (52,875)
Proceeds from land sale, net of
closing costs 1,008,463 2,444,875 166,530
Distribution from joint venture - 549,200
Investment in joint venture - (3,139) (4,818)
---------- ----------- --------
Net cash provided by
investing activities 992,744 2,983,530 108,837
---------- ----------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (978,110) (2,965,000) -
---------- ----------- --------
Net increase (decrease) in
cash (887) (14,407) 49,803
CASH AND CASH EQUIVALENTS, BEGINNING 169,876 184,283 134,480
---------- ----------- --------
CASH AND CASH EQUIVALENTS, ENDING $ 168,989 $ 169,876 $184,283
========== =========== ========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
12
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Organization
------------
Condev Land Fund II, Ltd. (the Partnership) was formed on
December 16, 1987 pursuant to the provisions of the Florida
Revised Uniform Limited Partnership Act for the purpose of
acquiring and holding unimproved land in Central Florida for
investment. The Partnership was formed with an initial capital
contribution of $1,000 from the general partner, Condev
Associates, and the issuance of 29,798 units of limited
partnership interest at $250 per unit.
The terms of the partnership agreement provided that the
Partnership was to continue in existence until December 31, 1995.
However, the Partnership's operation will continue until all
investments of the Partnership are sold and proceeds distributed
to the partners.
Use of Estimates
----------------
In preparing the financial statements, management is required to
make estimates and assumptions that affect the reported amounts
of assets and liabilities as of the date of the financial
statements and revenues and expenses for the period. Actual
results could differ significantly from those estimates.
Organization Costs
------------------
The Partnership has capitalized all organization costs. Upon sale
of land, each parcel is allocated a portion of these costs based
on the ratio of total acquisition cost to the net proceeds of the
offering available to purchase properties for investment. In
connection with the sales of land during the years ended December
31, 1997 and 1996, amortization of organization costs amounted to
$1,326 and $5,904 which is reflected in the accompanying
statements of operations. No amortization of organization costs
was recorded during the year ended December 31, 1995, as no sales
occurred.
Land
----
Land, held for investment, is stated at the lower of cost or fair
value. Land is assessed for impairment when the Partnership
believes that events or changes in circumstances indicate that
its carrying amount may not be recoverable. Costs that clearly
relate to land development projects are capitalized. Interest
costs, real estate taxes and insurance are capitalized while
development is in progress. When development is complete, these
costs are expensed.
CONTINUED ON NEXT PAGE
13
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies - (Continued)
Investments in Joint Venture
----------------------------
Investments in joint ventures are accounted for using the equity
method.
Income Taxes
------------
The Partnership functions as a conduit for income tax purposes.
As such, the Partnership files an information tax return on which
it allocates its revenue and expenses among the partners as
required by the partnership agreement. The partners are required
to report such items on their individual income tax returns.
Cash and Cash Equivalents
-------------------------
For purposes of the statement of cash flows, the Partnership
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. At
December 31, 1997, cash and cash equivalents included $113,807
invested in the Goldman FS Federal Admin. Fund.
Note 2. Land
At December 31, 1997 and 1996, land consisted of the following:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
8.659 and 9.22 acre parcel, in 1997
and 1996, respectively, (zoned
commercial) in southeast Seminole
County, Florida $ 825,734 $ 876,877
111.64 acre parcel in 1997 and 1996
(zoned PUD) in Lake County, Florida 1,690,067 1,681,373
0 and 15 acre parcel, in 1997 and 1996,
respectively, (zoned office)in Orange
County, Florida (sold in 1997) - 414,163
---------- ----------
$2,515,801 $2,972,413
========== ==========
</TABLE>
14
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 3. Investment in Joint Venture
The Partnership owned a 49.9% interest (which was acquired in 1989) in
Condev/McCulloch Road Joint Venture (a Florida Joint Venture) (the
Joint Venture) whose purpose was to acquire and hold a 19 acre parcel
of land in Seminole County, Florida for investment purposes. Condev
Land Growth Fund owned the remaining 50.1% interest '86, Ltd., an
affiliate of the Partnership's general partner. During the year ended
December 31, 1996, the Joint Venture sold its parcel of land and
recognized a gain of $300,900. The Joint Venture made a complete
distribution to its venturers of $1,100,602, of which the Partnership
received $549,200, thereby terminating the Joint Venture.
The Partnership's investment in the Joint Venture as of December 31,
and its equity in loss of the Joint Venture for the years then ended
are as follows:
<TABLE>
<CAPTION>
EQUITY IN
YEAR INVESTMENT (INCOME) LOSS
---- ---------- -------------
<S> <C> <C>
1996 $ - $ (146,799)
1995 $ 399,262 $ 5,124
</TABLE>
The Joint Venture had revenue of $300,900 and $-0- during the years
ended December 31, 1996 and 1995, respectively, and net income (loss)
for each year was $295,826 and $(10,270) respectively.
Note 4. Allocations and Distributions to Partners
Operations (excluding land sales)
--------------------------------
Pursuant to the partnership agreement, cash flow and profits and
losses from operations are allocated and distributed 99% to the
limited partners and 1% to the general partner. No distributions
attributable to cash flow were made during the years ended
December 31, 1997, 1996 or 1995.
15
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 4. Allocations and Distributions to Partners - (Continued)
Land sales
----------
With respect to disposition of parcels of land, the allocations and
distributions shall be made as follows:
1. To the limited partners, an amount equal to the Partnership's
cost of the parcel disposed of.
2. To the limited partners, an amount equal to real estate taxes,
and organization and syndication expenses allocable to the
parcel disposed of.
3. To the limited partners, an amount equal to 10% per year non-
compounded return on such distributions minus previous
distributions of cash flows.
4. To the general partner and limited partners, 20% and 80%,
respectively, of the net cash proceeds after the above
distributions.
For purposes of making the above described computations, the
Partnership books will be deemed to close as of the month-end
closest to the date of sale.
The limited partners received distributions of $978,110, $2,965,000,
and $-0- attributable to net cash proceeds from the sales of land
during the years ended December 31, 1997, 1996 and 1995,
respectively.
Note 5. Related Party Transactions
The partnership agreement permits the general partner or its
affiliates to receive an acquisition fee or a real estate commission
from sellers in an amount not to exceed 5% of the gross purchase price
of land purchased by the Partnership, so long as the total acquisition
fee, including that paid to unaffiliated parties, does not exceed 10%
of the gross purchase price. No acquisition fees were paid during the
years ended December 31, 1997, 1996 or 1995, as no properties were
purchased.
CONTINUED ON NEXT PAGE
16
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 5. Related Party Transactions - (Continued)
When properties are sold, 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 nonaffiliates, not to exceed 10% of the gross sales price. In
connection with the two land sales in 1997, commissions paid to
nonaffiliates amounted to 10% and 5%, respectively. In connection with
the two land sales during 1996, real estate commissions of 10% and
5.8%, respectively, were paid to nonaffiliates. No real estate
commissions were paid during 1995 with respect to sales, as no sales
occurred.
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 years ended
December 31, 1997, 1996 or 1995.
The general partner earned certain fees for administration and
management services provided, pursuant to the partnership agreement.
Such fees amounted to $12,084 for the year ended December 31, 1997,
and $11,676 for each of the years ended December 31, 1996 and 1995.
17
<PAGE>
Item 9.
Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure:
--------------------
There were no disagreements on accounting and financial disclosures
required to be disclosed by Item 304 of Regulation S-K.
PART III
Item 10.
Directors and Executive Officers of the Registrant
--------------------------------------------------
(a) The Registrant does not have a Board of Directors. Condev
Associates, A Florida general partnership consisting of Messrs. Robert
N. Gardner and Joseph J. Gardner, is the General Partner of the
Partnership.
(b), (c), (d) and (e)
Robert N. Gardner and Joseph J. Gardner are brothers. The background
and experience of the partners of the General Partner are as follows:
Robert N. Gardner, age 63 has been president, a director and
-----------------
shareholder of Condev Corporation and it's predecessors since 1961. A
Florida licensed real estate broker and Class A Contractor, he serves
on the boards of directors of Nations Bank of Central Florida, N.A.,
and Schroeder-Manatee, Inc.
Joseph J. Gardner, age 60 has been an officer, a director and
-----------------
shareholder of Condev Corporation and its predecessors since 1961.
Prior to joining Condev Corporation, he was employed in the land
department of Continental Oil Company. Mr. Gardner is a licensed real
estate broker.
Condev Corporation, which has its offices located at the same address
of the General Partner and Partnership, has been operating in the
Florida real estate market since 1961. It has two active affiliates.
PCD, Inc. is a development company specializing in horizontal land
development. Condev Realty, Inc. is a Florida licensed real estate
broker which concentrates on site acquisition, land assemblage and
land investment.
Item 11.
Executive Compensation
----------------------
(a), (b), (c) and (d)
The Registrant has not paid and does not plan to pay any executive
compensation to the General Partners or their affiliates (other than
described in Item 13 below).
Item 12.
Security Ownership of Certain Beneficial Owners and Management:
--------------------------------------------------------------
(a) The following is a list of persons who are known to the Registrant to
be the beneficial owners of more than 5% of the total units outstanding as
of December 31, 1997:
NONE
(b) The following is a list of units beneficially owned by all partners of
the General Partner as of December 31, 1997:
NONE
18
<PAGE>
(c) There are no arrangements known to the registrant, including any
pledge by any person of security of the registrant or any of its parents or
affiliates, the operation of which may at a subsequent date result in a
change in control of the registrant.
Item 13.
Certain Relationships and Related Transactions
----------------------------------------------
(a) and (b)
The Partnership Agreement provides for the reimbursement to the General
Partner for direct administrative expenses incurred in the operation of the
Partnership. Such fees amounted to $12,084 for the year ended December 31,
1997, and $11,676 for each of the years ended December 31, 1996, and 1995.
The Partnership Agreement permits the general partner or an affiliate to
receive an acquisition fee or a real estate commission from sellers in an
amount not to exceed 5% of the gross purchase price of land purchased by
the Partnership so long as the total acquisition fee, including that paid
to unaffiliated parties, does not exceed 10% of the gross purchase price.
No acquisition fees were paid to the General Partner during 1997, 1996, or
1995, as no properties were acquired during these years.
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 the same services not to exceed 10% of the
gross sales price. No real estate commissions were paid to the general
partner or any affiliate of the General Partner during the years ended
December 31, 1997, 1996 or 1995.
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 years ended December 31, 1997, 1996, or
1995.
(c) No management person is indebted to the Registrant.
(d) Not applicable.
19
<PAGE>
PART IV
Item 14.
Exhibits, Financial Statement Schedules, and Reports on Form 8-K:
----------------------------------------------------------------
(a)(1) The following financial statements and supplementary data are
included in Part II Item 8:
Page
Independent Auditor's Report 8
Financial Statements
Balance Sheets - December 31, 1997 and 1996 9
Statements of Operations - Years ended
December 31, 1997, 1996 and 1995 10
Statements of Partners' Capital -
Years ended December 31, 1997, 1996 and 1995 11
Statements of Cash Flows -
Years ended December 31, 1997, 1996 and 1995 12
Notes to Financial Statements 12-17
(3) Exhibits included herein: 22
13 - Annual Report to Limited Partners
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant during
the last quarter of the period covered by this report.
20
<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.
CONDEV ASSOCIATES, General Partner
Date:____________________ By: /s/ Robert N. Gardner
----------------------------
Robert N. Gardner, Partner
Date:____________________ By: /s/ Joseph J. Gardner
----------------------------
Joseph J. Gardner, Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
CONDEV ASSOCIATES, General Partner
/s/ Robert N. Gardner
- --------------------------------- ____________________________
Robert N. Gardner, Partner Date
/s/ Joseph J. Gardner
- --------------------------------- ____________________________
Joseph J. Gardner, Partner Date
21
<PAGE>
Condev Land Fund II, Ltd. February 6, 1998
1997 Annual Report
Dear Limited Partner:
Enclosed is your Schedule K-1 (Form 1065) relating to the Fund's operations for
the year ended December 31, 1997. This Schedule is for your use in preparing
your 1997 income tax return.
The financial statement, on the reverse side hereof, shows a net profit for the
year ended December 31, 1997 of $517,779. This represents the income from
property sales less the normal costs of operating the partnership and managing
the portfolio properties. There were two sales of property during 1997. On July
31, 1997 the Partnership sold approximately 1/2 acre of its property at Alafaya
Trail and McCulloch Road in Seminole County, Florida. On August 20, 1997, the
Partnership concluded the sale of its 15.38 acre parcel of land in Maitland,
Florida. Net proceeds from these two sales were $1,008,463, and $978,110 was
distributed to limited partners in September. As of December 31, 1997, the net
asset value per unit of limited partner interest was $90.26. The following is a
brief description of the status of each of the partnership's two remaining
properties:
Alafaya Trail/McCulloch Road. This property consists of approximately 8.67
- ----------------------------
acres of land at the intersection of Alafaya Trail and McCulloch Road in
Seminole County, Florida. During 1997, the property was under contract with a
developer who intended to construct a retail center on the site. In November,
1997 the Partnership was advised that the prospective purchaser chose not to
proceed with closing. A deposit of $40,000 plus interest was forfeited and was
added to Partnership reserves. The property is actively being marketed at this
time.
Glenbrook P.U.D.. This is a 111-acre parcel zoned as a Planned Development and
- ----------------
located on U.S. Highway 27 approximately 1 1/2 miles north of U.S. Highway 192
in Lake County. In January, 1998, the Partnership entered into a contract
providing for the sale of the 20-acre tract of land zoned for 359 apartment
units. This contract is currently in the inspection stage. The Partnership has
completed preliminary engineering for the extension of sewer and water utilities
to the site, and is in the process of arranging a $500,000 line of credit to
finance these improvements if necessary. These improvements will accelerate the
sale of this property at higher prices.
The properties in which the Partnership has an interest are well-positioned and
in growing markets. We hope to achieve significant sales during the coming
year.
Sincerely yours,
CONDEV ASSOCIATES
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 168,989 144,871
<SECURITIES> 0 0
<RECEIVABLES> 0 105
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 2,692,772 3,151,702
<CURRENT-LIABILITIES> 5,820 4,419
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 2,686,952 3,147,283
<TOTAL-LIABILITY-AND-EQUITY> 2,692,772 3,151,702
<SALES> 0 0
<TOTAL-REVENUES> 589,654 913,179
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 71,875 70,864
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 517,779 842,315
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 517,779 842,315
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
