<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED September 30, 1996 .
- --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION
PERIOD FROM __________________ TO ____________________.
Commission File number: 0-17680 (formerly 33-20255)
SOUTHEAST ACQUISITIONS II, L.P.
(Exact name of registrant)
Delaware 23-2498841
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 King of Prussia Road, Radnor, PA 19087
(Address of Principal Executive Offices)
Issuer's Telephone Number: (610 964-7234)
Indicate by check mark whether the registrant (a) 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> 2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
The unaudited financial statements of Southeast Acquisitions II, L.P.
(the "Partnership") at September 30, 1996 are attached hereto as Exhibit A.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Background
The Partnership was formed to acquire, own and realize appreciation in
the following properties by holding them for investment and eventual sale (each
a "Property," collectively the "Properties"): 353 acres of undeveloped land in
Henry County, Georgia; 91 acres of undeveloped land near Greenville, South
Carolina; and 135 acres of undeveloped land in Rutherford County, Tennessee.
However, there can be no assurance that the Partnership's objectives will be
realized.
Results of Operations
The Partnership had no operations from the date of its formation on
December 14, 1987 until June 24, 1988 when it acquired the first property and
had sold 3,165 Units of limited partnership interest. During 1988, the
Partnership acquired three additional Properties and sold 6,485 additional Units
of limited partnership interest.
During the third quarter of fiscal year 1996, the partnership sold 7
acres of the Greenville, South Carolina property for a gain of $524,409.
Revenues for the third quarter of 1996 consisted of interest income of $1,160
and partnership transfer fees of $2,247. Expenses for the third quarter of 1996
consisted of general and administrative costs of $5,415, real estate taxes of
$5,570 and insurance costs of $87.
The Partnership's activities during the second quarter of 1996 were
primarily focused on selling the properties. Revenues for the second quarter of
1996 consisted of interest income of $173 and partnership transfer fees of $350.
Expenses for the second quarter of 1996 consisted of general and administrative
costs of $3,948, management fees of 4,686, real estate taxes of $4,599 and
insurance of $88.
During the first quarter of fiscal year 1996, the Partnership sold 2
acres of the Greenville, South Carolina property for a gain of $215,288.
Revenues for the first quarter of 1996 consisted of interest income of $2,384
and partnership transfer fees of $408. Expenses for the first quarter of 1996
consisted of general and administrative costs of $5,079, management fees of
$4,688, real estate taxes of $4,538 and insurance costs of $87.
2
<PAGE> 3
During 1995, the Partnership sold 6 acres of the Henry County, Georgia
property, 4 acres of the Rutherford County, Tennessee property and 3 acres of
the Greenville, South Carolina property for a gain of $920,590. Also, during
1995, the Partnership sold 19 acres of the Henry County, Georgia property for a
loss of $10,389. Other revenues consisted of interest income of $14,175 and
partnership transfer fees of $725. Expenses for 1995 consisted of general and
administrative costs of $21,847, management fees of $18,753, real estate taxes
of $18,964 and insurance costs of $528.
During 1994, the partnership sold 73 acres of the Henry County, Georgia
parcel for a gain of $99,765. Other revenues consisted of interest income of
$8,297 and partnership transfer fees of $725. Expenses for 1994 consisted of
general and administrative costs of $29,603, management fees of $18,753, real
estate taxes of $22,528 and insurance costs of $6,717.
Inflation did not have any material impact on operations during 1995
and it is not expected to materially impact future operations.
The General Partner is in the process of having appraisals performed
and if there is any impairment to an asset, it will be recorded during the
fourth quarter of 1996.
During the months of October and November, 1996 the Partnership sold
4.6 acres of the Greenville, South Carolina property for a gain of $255,000.
Liquidity and Capital Resources
The Partnership has cash reserves of $719,809 at September 30, 1996.
The current cash reserves , adjusted for limited partnership distributions, will
be used to cover the following estimated annual costs: $9,374 annual
administration fee to the General Partner, $20,000 per year for auditing,
accounting, tax, legal and other administrative services, $350 per year for
insurance and $19,600 per year for real estate taxes. In the General Partner's
opinion, the Partnership's reserves will be sufficient for an additional two
years. However, if additional expenses are incurred or if the property cannot be
sold within two years, the reserves may be inadequate to cover the Partnership's
operating expenses. If the reserves are exhausted, the partnership may have to
dispose of a portion of the Properties or incur indebtedness on unfavorable
terms.
3
<PAGE> 4
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Partnership is not a direct party to, nor is the Partnership's
property directly the subject of, any material legal proceedings. However, on
November 6, 1992, the Commonwealth Court of Pennsylvania issued an order placing
The Fidelity Mutual Life Insurance Company ("Fidelity Mutual"), the indirect
parent of the General Partner of the Partnership, into rehabilitation under the
control and authority of the Pennsylvania Insurance Commissioner pursuant to the
provisions of the Pennsylvania Insurance Department Act, 40 P.S. Section 221.1
et seq. The Partnership is not a direct party to the order, but ownership of the
stock of (and consequently control of) the General Partner is vested in the
Insurance Commissioner pursuant to the Order.
Item 2 - Changes in Securities
There was no change in the Partnership's securities during the third
quarter of 1996.
Item 3 - Defaults Upon Senior Securities
There was no default in the payment of principal, interest, a sinking
or purchase fund installment or any other default with respect to any
indebtedness of the Partnership. The Partnership has issued no preferred stock;
accordingly, there has been no arrearages or delinquencies with respect to any
such preferred stock.
Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted to the Partners for a vote during the third
quarter of 1996.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Reports on Form 8-K
None
4
<PAGE> 5
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
<TABLE>
<CAPTION>
Exhibit Numbers Description Page Number
- --------------- ----------- -----------
<S> <C> <C>
3.1(a) Certificate of Limited *
Partnership
3.1(b) & (4) Restated Limited Partnership **
Agreement
9 not applicable
</TABLE>
* Incorporated by reference to Exhibit 3.1 filed as part of the Exhibits
to the Partnership's Registration Statement on Form S-18, Registration
No. 33-20255.
** Incorporated by reference to Exhibit 3.2 filed as part of the
Partnership's Registration Statement on Form S-18, Registration
No. 33-20255.
<TABLE>
<S> <C>
11 not applicable
12 not applicable
13 not applicable
16 not applicable
18 not applicable
19 not applicable
22 not applicable
23 not applicable
24 not applicable
25 not applicable
28 not applicable
29 not applicable
</TABLE>
5
<PAGE> 6
SIGNATURE
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.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ James W. Kelican, Jr. Vice President, 11/12, 1996
- ----------------------------- Director of -----
James W. Kelican, Jr. Southeast
Acquisitions,
Inc.
/s/ Margaret Tamasitis Assistant 11/12, 1996
- ----------------------------- Secretary of -----
Margaret Tamasitis Southeast
Acquisitions,
Inc.
</TABLE>
6
<PAGE> 7
EXHIBIT A
SOUTHEAST ACQUISITIONS II, L.P.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30,
1996 December 31,
(Unaudited) 1995
----------- ----
<S> <C> <C>
Land $2,707,404 $2,963,920
Cash and cash equivalents 719,809 86,137
---------- ----------
$3,427,213 $3,050,057
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accrued expenses $ 19,187 $ 16,877
Due to affiliates - 4,688
Partners' Equity 3,408,026 3,028,492
---------- ----------
$3,427,213 $3,050,057
========== ==========
</TABLE>
1
<PAGE> 8
SOUTHEAST ACQUISITIONS II, L.P.
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Interest income $ 1,160 $ 3,066 $ 3,717 $ 13,338
Gain on sale of land 524,409 176,583 739,697 920,590
Other income 2,247 350 3,005 625
----------- ----------- ----------- -----------
527,816 179,999 746,419 934,553
----------- ----------- ----------- -----------
EXPENSES:
Loss on sale of land -- 10,389 -- 10,389
General and administrative 5,415 4,978 14,442 9,418
Management fee -- 4,688 9,374 14,065
Real estate taxes 5,570 4,074 14,707 14,304
Insurance 87 146 262 440
----------- ----------- ----------- -----------
11,072 24,275 38,785 48,616
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 516,744 $ 155,724 $ 707,634 885,937
Partners' equity,
Beginning of period 2,891,282 3,231,446 3,028,492 3,610,983
Capital distribution -- (337,750) (328,100) (1,447,500)
----------- ----------- ----------- -----------
Partners' equity,
End of period $ 3,408,026 $ 3,049,420 $ 3,408,026 $ 3,049,420
=========== =========== =========== ===========
Weighted Average Number
of Limited Partnership
Units Outstanding 9,650 9,650 9,650 9,650
=========== =========== =========== ===========
Income (Loss) from Operations
per Limited Partnership
Interest $ 53.01 $ 15.98 $ 72.59 $ 90.89
=========== =========== =========== ===========
</TABLE>
2
<PAGE> 9
SOUTHEAST ACQUISITIONS II, L.P.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30
---------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Interest income $ 3,717 $ 13,338 $ 5,054
Gain on sale of land 739,697 920,590 25,206
Other income 3,005 625 550
-------- -------- --------
746,419 934,553 30,810
-------- -------- --------
EXPENSES:
Loss on sale of land -- 10,389 --
General and administrative 14,442 9,418 22,817
Management fee 9,374 14,065 14,065
Real estate taxes 14,707 14,304 18,803
Insurance 262 440 6,570
-------- -------- --------
38,785 48,616 62,255
-------- -------- --------
NET INCOME (LOSS) $707,634 $885,937 $(31,445)
======== ======== ========
</TABLE>
3
<PAGE> 10
SOUTHEAST ACQUISITIONS II, L.P.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30
-----------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Proceeds from sale of land $ 996,276 $ 1,111,474 $ 86,063
Cash paid for operating expenses (41,226) (35,858) (72,240)
Interest income received 3,717 13,338 5,054
Other income received 3,005 625 550
Distribution to Limited Partners (328,100) (1,447,500) --
----------- ----------- -----------
Net cash flows (used in)
operating activities 633,672 (357,921) 19,427
Cash, beginning of period 86,137 467,018 250,147
----------- ----------- -----------
Cash, end of period $ 719,809 $ 109,097 $ 269,574
=========== =========== ===========
</TABLE>
RECONCILIATION OF NET INCOME(LOSS) TO NET CASH FLOWS FROM OPERATING ACTIVITIES:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net income (loss) $ 707,634 $ 885,937 $ (31,445)
Adjustments to reconcile net income(loss)
to net cash provided by
operating activities:
Decrease in land 256,516 201,272 60,857
Increase (decrease) in due to
affiliates (4,688) (4,688) (4,688)
Increase (decrease) in accrued
expenses 2,310 7,058 (5,297)
Distribution to Limited Partners (328,100) (1,447,500) --
----------- ----------- -----------
Net cash provided by (used in)
operating activities $ 633,672 $ (357,921) $ 19,427
=========== =========== ===========
</TABLE>
4
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000829905
<NAME> SOUTHEAST ACQUISITIONS II, L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 719,809
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 719,809
<PP&E> 2,707,404
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,427,213
<CURRENT-LIABILITIES> 19,187
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,408,026
<TOTAL-LIABILITY-AND-EQUITY> 3,427,213
<SALES> 746,419
<TOTAL-REVENUES> 746,419
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 38,785
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 707,634
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 707,634
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
