<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 March 31, 1997.
--------------
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
--- ---
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
The unaudited financial statements of Southeast Acquisitions II, L.P.
(the "Partnership") at March 31, 1997 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 two additional Properties and sold 6,485 additional Units
of limited partnership interest.
The Partnership's activities during the first quarter of 1997 were
primarily focused on selling the properties. Revenues for the first quarter of
1997 consisted of interest income of $978 and partnership transfer fees of $100.
Expenses for the first quarter of 1997 consisted of general and administrative
costs of $7,860, real estate taxes of $4,488 and insurance costs of $87.
During 1996, the Partnership sold 14 acres of the Greenville, South
Carolina property for a gain of $995,155. Other revenues consisted of interest
income of $9,005, transfer fees of $1,250 and other income of $2,155. Expenses
for 1996 consisted of general and administrative costs of $31,249, management
fees of $9,374, real estate taxes of $19,116 and insurance costs of $349.
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.
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During the month of April, 1997, the Partnership sold 32.5 acres of the
Nashville, Tennessee property for $50,000 an acre. The sale will generate a gain
of approximately $1,220,000.
Inflation did not have any material impact on operations during 1996
and it is not expected to materially impact future operations.
The Partnership is actively marketing the Henry County, Georgia
property and believes that it will dispose of the Property within three years.
The Property is being divided into parcels which will be sold separately. The
Partnership placed the Rutherford County, Tennessee Properties on the market in
the fall of 1991. The timing and manner of sales will be determined by Southeast
Acquisitions, Inc., the General Partner of the Partnership. The General Partner
has the right to sell the Properties without the consent of the Limited Partners
if the net proceeds of the sale will be sufficient to return the Limited
Partners' Capital Contribution plus their non-compounded 10% Cumulative Annual
Return. The General Partner believes that the Partnership's cash reserves will
be sufficient to last for an additional two years, assuming no significant
increases in expenses. However, if the reserves are exhausted and the
Partnership is unable to borrow funds, the Partnership may have to sell some or
all of the Properties on unfavorable terms.
The General Partner has no plans to develop the Properties, except for
activities including rezoning, land planning, market surveys and other
activities necessary to prepare the Properties for sale. There can be no
assurance that necessary funds would be available should it be desirable for the
Partnership to improve the Properties to facilitate their sale.
Liquidity and Capital Resources
The Partnership has cash reserves of $97,271 at March 31, 1997 which
will be used to cover the following estimated annual costs: $25,000 per year for
auditing, accounting, tax and other administrative services, $350 per year for
insurance and $18,000 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 Properties 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 some or all of the Properties or incur indebtedness on
unfavorable terms.
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
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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 first
quarter of 1997.
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 first
quarter of 1997.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Reports on Form 8-K
None
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
</TABLE>
4
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9 not applicable
* 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.
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
5
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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/ ARTHUR W. MULLIN President, 5/12 1997
- ------------------------- Treasurer, -----
Arthur W. Mullin Director of
Southeast
Acquisitions,
Inc.
/s/ JAMES W. KELICAN, JR. Vice President, 5/12 1997
- -------------------------- Director of -----
James W. Kelican, Jr. Southeast
Acquisitions,
Inc.
</TABLE>
6
<PAGE> 7
EXHIBIT A
SOUTHEAST ACQUISITIONS II, L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
----------- ------------
<S> <C> <C>
ASSETS
Land $2,580,480 $2,580,480
Cash and cash equivalents 97,271 113,292
Prepaid insurance 175 --
---------- ----------
$2,677,926 $2,693,772
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accrued expenses $ 6,414 $ 10,903
Partners' Equity 2,671,512 2,682,869
---------- ----------
$2,677,926 $2,693,772
========== ==========
</TABLE>
<PAGE> 8
SOUTHEAST ACQUISITIONS II, L.P.
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31
-----------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Interest income $ 978 $ 2,384 $ 8,446
Gain on sale of land -- 215,288 744,007
Other income 100 408 75
----------- ----------- -----------
1,078 218,080 752,528
----------- ----------- -----------
EXPENSES:
General and administrative 7,860 5,079 2,184
Management fee -- 4,688 4,688
Real estate taxes 4,488 4,538 5,154
Insurance 87 87 147
----------- ----------- -----------
12,435 14,392 12,173
----------- ----------- -----------
NET INCOME (LOSS) $ (11,357) $ 203,688 $ 740,355
Partners' equity,
Beginning of period 2,682,869 3,028,492 3,610,983
Capital distribution -- (328,100) (1,109,750)
----------- ----------- -----------
Partners' equity,
End of period $ 2,671,512 $ 2,904,080 $ 3,241,588
=========== =========== ===========
Weighted Average Number
of Limited Partnership
Units Outstanding 9,650 9,650 9,650
=========== =========== ===========
Income (Loss) from Operations
per Limited Partnership
Interest $ (1.17) $ 20.90 $ 75.95
=========== =========== ===========
</TABLE>
<PAGE> 9
SOUTHEAST ACQUISITIONS II, L.P.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31
----------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Proceeds from sale of land $ -- $ 303,890 $ 811,423
Cash paid for operating expenses (17,108) (25,044) (10,259)
Interest income received 987 2,384 8,446
Other income received 100 408 75
----------- ----------- -----------
Net cash flows (used in)
operating activities (16,021) 281,638 809,685
Distribution to Limited Partners -- (328,100) (1,109,750)
----------- ----------- -----------
Increase (decrease) in cash (16,021) (46,462) (300,065)
Cash, beginning of period 113,292 86,137 467,018
----------- ----------- -----------
Cash, end of period $ 97,271 $ 39,675 $ 166,953
=========== =========== ===========
RECONCILIATION OF NET LOSS TO NET CASH FLOWS
FROM OPERATING ACTIVITIES:
Net income (loss) $ (11,357) $ 203,688 $ 740,355
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Decrease in land -- 53,603 76,924
Increase in prepaid expenses (175) (175) (294)
Increase (decrease) in due to
affiliates -- (4,688) (4,688)
Increase (decrease) in accrued
expenses (4,489) (5,790) (2,612)
Increase in other liabilities -- 35,000 --
Distribution to Limited Partners -- (328,100) (1,109,750)
----------- ----------- -----------
Net cash provided by (used in)
operating activities $ (16,021) $ (46,462) $ (300,065)
=========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 97,271
<SECURITIES> 0
<RECEIVABLES> 175
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 97,446
<PP&E> 2,580,480
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,677,926
<CURRENT-LIABILITIES> 6,414
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,671,512
<TOTAL-LIABILITY-AND-EQUITY> 2,677,926
<SALES> 1,078
<TOTAL-REVENUES> 1,078
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,435
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (11,357)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,357)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
