<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 30,1999
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:
Statement of Assets, Liabilities and
Partner's Capital - September 30, 1999
and December 31, 1998 1
Statement of Income & Expense -
Three Months Ended September 30, 1999
and September 30, 1998 2
Statement of Income & Expense -
Nine Months Ended September 30, 1999
and September 30, 1998 3
Statement of Cash Flows -
Nine months ended September 30, 1999
and September 30, 1998 4
Notes to Financial Statements 5 - 6
Management's Discussion and Analysis
of Financial Condition and Results of Operations 6 - 8
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings 8
Item 6 Exhibits and Reports on Form 8-K 8
Signatures 9
Third Quarter 1999 report to Limited Partners 10
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PART I. FINANCIAL INFORMATION
CONDEV LAND FUND II, LTD.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
ASSETS
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September 30, 1999 December 31, 1998
------------------ -----------------
(Unaudited) *
Cash & Cash Equivalents $ 181,205 $ 94,530
Accounts Receivable 335,771 3,347
Prepaid expense - 867
Land, at cost (Note 2) 1,929,435 2,571,774
Loan costs 3,094 3,094
Organization Costs 7,982 7,982
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Total Assets $2,457,487 $2,681,594
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Mortgage note payable $ 533,806 $ 33,834
Deposits on contracts 80,188 -
Accounts Payable 47,767 14,874
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661,761 48,708
Partners' Capital -
General Partner ( 2,325) ( 3,190)
Limited Partner 1,798,051 2,636,076
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Total Partners' Capital 1,795,726 2,632,886
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Total Liabilities and
Partners' Capital $2,457,487 $2,681,594
========== ==========
* 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, 1999 AND SEPTEMBER 30, 1998
(UNAUDITED)
September 30, 1999 September 30, 1998
------------------ ------------------
INCOME
------
Gain on sale of real estate $116,971 $ -
Interest and Other Income 661 $ 1,032
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Total Income $117,632 $ 1,032
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OPERATING EXPENSES
------------------
Professional Services ($ 500) $ -
Office Expense 1,643 1,201
Management Fees 3,021 3,021
Other 8,929 4,109
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Total Operating Expenses $ 13,093 $ 8,331
-------- ---------
Net Income (Loss) $104,539 ($ 7,299)
======== =========
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, 1999 AND SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
INCOME
- ------
Gain on sale of real estate $ 115,987 $ -
Interest and Other Income 2,012 $ 6,183
-------- ----------
Total Income $ 117,999 $ 6,183
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OPERATING EXPENSES
- ------------------
Professional Services $ 8,599 $ 9,493
Office Expense 4,289 3,883
Management Fees 9,063 9,063
Other 9,469 4,649
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Total Operating Expenses $ 31,420 $ 27,088
--------- ----------
Net Income (Loss) $ 86,579 ($ 20,905)
========= ==========
</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, 1999 AND SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 86,579 ($ 20,905)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Gain on land sale ( 111,987 ( -)
Cash provided by changes in:
Accounts receivable ( 332,424) -
Deposits on contracts 80,188 -
Accounts payable 32,893 ( 5,820)
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Net cash from Operating Activities ( 248,751) ( 26,725)
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Cash flows from Investing Activities:
Land development costs ( 189,996) ( 44,720)
Proceeds of Land sale, net 949,188 -
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Net cash from Investing Activities 759,192 ( 44,720)
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Cash flows from Financing Activities:
Increase in notes payable 499,972 9,333
Distributions to Partners ( 923,738 -)
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Net cash provided by Financing Activities ( 423,766) 9,333
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Net increase (decrease) in cash 86,675 ( 62,112)
Cash and cash equivalents, beginning of year 94,530 168,989
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Cash and cash equivalents, end of period $ 181,205 $ 106,877
========== ===========
</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:
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At September 30, 1999 land consisted of the following:
111.64 acre parcel (zoned PUD)
in Lake County, Florida 1,929,435(a)
8.67 acres parcel (zoned commercial) in
southeast Seminole County, Florida 0(b)
(a) This property consists of three separate parcels: multi-
family, commercial, and single-family. The multi-family parcel
has been under contract with a developer of affordable apartments
since January 1998. Originally scheduled to close in December,
1998 this contract was extended to allow the general partner time
to complete the required sewer, water and other off-site
improvements pursuant to the terms of the sales contract. These
improvements are now substantially complete. In June, 1999, the
Partnership was advised by the contract buyer that the Florida
Housing Finance Authority was in disagreement with the Buyer over
funding of this project, and the Buyer was attempting to resolve
his differences with the FHFA. During the third quarter, all of
the buyer's differences with the FHFA were resolved, and the
contract was reinstated. The latest possible closing date has
been set for December 31, 1999, but the buyer is attempting to
close in early November. The 71-acre single family site is under
contract with a closing date now rescheduled for November 30,
1999. The 20-acre commercial tract is under contract with a
developer who specializes in retail development. The inspection
period under this contract is until November 15, 1999 followed by
closing in mid-December, 1999.
As a condition of the Glenbrook contracts for sale, the
Partnership has agreed to extend sewer and water service to the
properties, to design and construct a spine road from U.S.
Highway 27 into the development, and to construct a lift station
to serve the property after development. These improvements, now
substantially complete, are being financed under a secured line
of credit established by the Partnership with a commercial bank.
The cost of these improvements has been added to the purchase
price of the contracts for sale, and borrowings under the line of
credit will be repaid from sales proceeds.
5
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(b) On July 30, 1999, the Partnership concluded the sale of the
property located at Alafaya Trail and McCulloch Road in Seminole
County, Florida. The buyer was Main Street Development Corp., and
the purchase price was $1,060,000. In addition, Main Street
Development acquired sewer capacity which the Partnership had
previously reserved for the property. After expenses of the sale,
which included legal fees, closing costs and a 10% real estate
commission paid to two non-affiliated real estate brokers, the
Partnership realized net proceeds of $949,188.28. The Partnership
distributed a total of $923,738, or $31 per unit to limited
partners in August, 1999.
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 1999.
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.
Distributions to limited partners totaled $923,738 during the
third quarter of 1999.
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, 1999, $11,029 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, 1999.
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 six months
ended September 30, 1999.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
--------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS:
------------------------------------
Since all of the property owned by the Partnership were under
contract for sale during the quarter ended September
6
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30, 1999, the General Partner's main focus was on bringing the
pending transactions to a successful conclusion. As discussed
under Note 2, Investment in Land some delays were encountered. It
--------------------------
is believed that the current obstacles to closing have been
overcome. Upon sale of the remaining Partnership properties, the
Partnership will repay all of its financial obligations and a
final distribution of Partnership cash resources will be made to
limited partners, and the partnership will be dissolved.
Year 2000
---------
The Partnership is heavily dependent upon a computer system to
accurately maintain limited partner records, including name and
address information, number of units owned, and distribution
historical records. The Partnership is utilizing a system which
was specially designed for the Partnership in 1990, and it is
possible that the system will be affected by the date change
which will occur at the end of 1999. The Partnership engaged a
computer consultant to evaluate the potential problems, and make
system changes if necessary so the operation of the Partnership
will not be affected by the date change. Work on modifying the
computer system was completed in June, 1999. The cost of
evaluating the current system and bringing it up to date to be
year 2000 compliant was less than $1,000. The Partnership's
computer records are backed up on a weekly basis, so all of the
stored information is available from a secondary source. Even if
the system were to be completely shut down by the date change at
the end of 1999, the data necessary to continue operation of the
Partnership is available and could readily be adapted to a new
system which is year 2000 compliant, so no significant
interruption in the operations of the Partnership is anticipated.
Results of Operations
---------------------
Total revenues for the nine months ended September 30, 1999 were
$117,999, compared with total revenues of $6,183 for the nine
months ended September 30, 1998. The 1999 results include a gain
on sale of real estate in the amount of $115,987 (see note 2,
Investment in Land). There were no sales of property during the
------------------
comparable 1998 period. Income is generated from sale of real
estate and short-term cash investments Income can be expected to
fluctuate, depending on the level of cash reserves in the
Partnership and prevailing interest rates. Operating expenses for
the nine months ended September 30, 1999 were $31,420,
essentially unchanged from $27,088 for the nine months ended
September 30, 1998. The Partnership had committed to certain
improvements to the site located in Lake County, and the cost of
these improvements is being financed under a secured line of
credit from a bank. See Liquidity and Capital Resources below.
-------------------------------
In accordance with applicable accounting policies, interest is
being capitalized.
7
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Liquidity and Capital Resources at September 30, 1999
-----------------------------------------------------
Total assets decreased from $2,681,584 at December 31, 1998 to
$2,457,487 at September 30, 1999. This reflects the cost of
capital improvements, specifically sewer and water service plus
the construction of a spine road in to the Glenbrook Planned
Development, offset by the net results of operations for the
period and distribution to limited partners. Assets can be
expected to decline in the future as properties are sold and
distributions are made to limited partners.
Liquidity remained at a satisfactory level. Cash and
equivalents decreased from $94,530 at 1998 year-end to $181,205
at September 30, 1999. As provided in the Partnership Agreement,
if necessary liquid reserves can be augmented from net sales
proceeds from land sales.
As discussed above, the Partnership has extended sewer and water
utilities and constructed a spine road in to the Glenbrook
Planned Development. The Partnership has arranged a $800,000
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 land sales proceeds.
PART II
Item 1. LEGAL PROCEEDINGS
-----------------
As of September 30, 1999, 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 1999 Report to Limited Partners
(B) Reports on Form 8-K
There were no reports of Form 8-K for the period ended September
30, 1999
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 26, 1999 /s/ Robert N. Gardner
- ---------------------- ----------------------------------
DATE Robert N. Gardner, Partner
October 26, 1999 /s/ Joseph J. Gardner
- --------------------- ----------------------------------
DATE Joseph J. Gardner, Partner
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CURRENCY> 1.00
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> SEP-30-1999 SEP-30-1998
<EXCHANGE-RATE> 1.00 1.00
<CASH> 181,205 168,989
<SECURITIES> 0 0
<RECEIVABLES> 335,771 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 1,929,435 2,560,521
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 2,457,487 2,675,380
<CURRENT-LIABILITIES> 661,761 9,333
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 1,795,726 2,666,047
<TOTAL-LIABILITY-AND-EQUITY> 2,457,487 2,675,380
<SALES> 0 0
<TOTAL-REVENUES> 117,999 6,183
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 31,420 27,088
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 86,579 (20,905)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 86,579 (20,905)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (86,579) (20,905)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE>
October 22, 1999
Condev Land Fund II, Ltd.
Third Quarter 1999
Dear Limited Partner:
The financial statements of the Partnership for the third quarter of 1999 are on
the reverse side hereof. The sale of the property located at Alafaya Trail and
McCulloch Road in Seminole County, Florida was concluded in July and a total of
$923,728 or $31 per unit was distributed on to limited partners on August 6. As
of September 30, 1999, the net asset value (book value) per unit of limited
partner interest was $60.34. As of September 30, 1999, the Partnership owned or
had an interest in one remaining property.
Glenbrook P.U.D.. This property, located on US Highway 27 just north of State
- ----------------
Road 192 in Lake County, Florida, consists of three separate parcels: multi-
family, commercial, and single-family. The multi-family parcel has been under
contract with a developer of affordable apartments since January 1998. Since the
last quarterly report, all of the buyer's differences with the Florida Housing
Finance Authority have been resolved, and the Partnership has been successful in
reinstating the contract for sale. The latest possible closing date has been set
for December 31, 1999, but the buyer is attempting to close in early November,
1999. The contract for sale of the 71-acre single family site has been
restructured to include an increased non-refundable deposit, a new closing date
of November 30, 1999, and consideration for the extended closing date. The 20-
acre commercial tract continues to be under contract with a developer who
specializes in retail development. Following an extension payment to the
Partnership, the Inspection Period under this contract has been extended to
November 15, 1999, with Closing to be on or before December 15, 1999.
We continue to make every effort to sell the Partnership properties at fair
market price and with reasonable terms and conditions. Unfortunately, in the
current environment of longer permitting periods taken by regulatory
authorities, delays are inevitable, and buyers are reluctant to close on
transactions until they are assured that the necessary development permits will
be issued. It is often better to grant an extension on an existing contract than
to start the entire sales process over again. In every case when an extension is
requested, the general partner requires that the partnership be compensated for
the delay, and only grants extensions where there is a strong likelihood that
the contract holder will be able to close on the contract if the extension is
granted.
Please feel free to contact the Investor Relations office if you have any
questions or would like additional information concerning your investment.
Sincerely yours,
CONDEV ASSOCIATES
