<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 JUNE 30, 1998.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
----- SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM APRIL 1, 1998 TO JUNE 30, 1998.
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
incorporation or organization) (I.R.S. Employer Identification No.)
301 South Perimeter Park Drive
Nashville, Tennessee 37211
(Address of Principal Executive Offices)
Issuer's Telephone Number: 615-834-0872
------------
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 June 30, 1998 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 l35 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 for Second Quarter of 1998 Compared with Second
Quarter of 1997
The Partnership activities for the second quarter of 1998 and the
second quarter of 1997 were focused on the sale of Partnership property. During
the second quarter of 1998 the Partnership closed two sales, both in Greenville
(Simpsonville) South Carolina, which were .277 acres for $27.700 and 1.9 acres
for $315,000. These two sales, after commissions and closing costs, netted the
Partnership $309,088. During the second quarter of 1997 the Partnership sold two
properties being one acre in Greenville, South Carolina for a net amount of
$115,905 and 32.5 acres in Rutherford County, Tennessee for an amount that
netted the Partnership $1,336,273.
Expenses in the second quarter of 1998 included general and
administrative expenses of $19,690 versus $5,642 in the second quarter of 1997.
The increase was primarily due to increased legal and accounting charges. In
addition, the Partnership had $4,750 of management fees in the second quarter of
1998 as compared with no such fees in the second quarter of 1997, due to the
presence of a new general partner admitted to the Partnership in the third
quarter of 1997. Real estate taxes in the second quarter of 1998 were $10,290
compared with $4,825 in the second quarter of 1997. This increase was due
primarily to a correction to the quarterly accrual for real estate taxes.
Insurance in the second quarter of 1998 was $211 compared with $88 in the second
quarter of 1997.
Inflation did not have any material impact on operations during the
second quarter of 1998 and it is not expected to materially impact future
operations.
<PAGE> 3
Liquidity and Capital Resources
The Partnership had cash reserves of $461,298 at June 30, 1998 and
expects to receive an additional $1,687,000, which will be used to make a
distribution to the Partnership of $1,785,250 during the third fiscal quarter of
1998 and to cover the following estimated annual costs: Accounting $14,000,
legal $10,000, insurance $1,000, property taxes $41,000, management fee $19,000,
and other administrative costs $6,150. In the General Partner's opinion, the
Partnership's reserves will be sufficient for an additional three years.
However, if additional expenses are incurred or if the Properties cannot be sold
within three 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
None
Item 2 - Changes in Securities
There were no changes in the Partnership's securities during the second
quarter of 1998.
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 second
quarter of 1998.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Reports on Form 8-K
None
<PAGE> 4
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
<TABLE>
<CAPTION>
Exhibit Numbers Description Page Number
- --------------- ----------- -----------
<S> <C> <C>
27 Financial Data Schedule (for SEC use only)
</TABLE>
<PAGE> 5
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/ Richard W. Sorenson Member, August 10, 1998
- ------------------------------ Southern Management -----------
Richard W. Sorenson Group, LLC
</TABLE>
<PAGE> 6
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
ASSETS (UNAUDITED)
------ ----------- ------------
<S> <C> <C>
LAND HELD FOR SALE $ 2,227,929 $ 2,287,806
CASH AND CASH EQUIVALENTS 461,298 344,476
PREPAID INSURANCE 422 -
----------- -----------
$ 2,689,649 $ 2,632,282
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 31,643 $ 52,410
ESCROW PAYABLE - 99,000
PAYABLE TO AFFILIATE - 13,954
PARTNERS' EQUITY:
GENERAL PARTNER 11,832 9,921
LIMITED PARTNERS (9,650 UNITS OUTSTANDING) 2,646,174 2,456,997
----------- -----------
2,658,006 2,466,918
----------- -----------
$ 2,689,649 $ 2,632,282
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 7
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
-------------------- ------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
GAIN ON SALE OF LAND $ 249,211 $ 1,336,274 $ 249,211 $ 1,336,274
INTEREST INCOME 4,639 6,143 8,294 7,121
OTHER INCOME - 100 - 200
----------- ----------- ----------- -----------
253,850 1,342,517 257,505 1,343,595
----------- ----------- ----------- -----------
EXPENSES:
GENERAL AND ADMINISTRATIVE 19,690 5,642 35,512 13,502
MANAGEMENT FEE 4,750 - 9,500 -
REAL ESTATE TAXES 10,290 4,825 20,983 9,313
INSURANCE 211 88 422 175
----------- ----------- ----------- -----------
34,941 10,555 66,417 22,990
----------- ----------- ----------- -----------
NET INCOME (LOSS) 218,909 1,331,962 191,088 1,320,605
PARTNERS' EQUITY,
BEGINNING OF PERIOD 2,439,097 2,671,512 2,466,918 2,682,869
----------- ----------- ----------- -----------
CAPITAL DISTRIBUTION - (1,447,498) - (1,447,498)
PARTNERS' EQUITY,
END OF PERIOD $ 2,658,006 $ 2,555,976 $ 2,658,006 $ 2,555,976
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 9,650 9,650 9,650 9,650
=========== =========== =========== ===========
INCOME (LOSS) FROM OPERATIONS
PER LIMITED PARTNERSHIP
INTEREST $ 22.46 $ 136.65 $ 19.60 $ 135.48
=========== =========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 8
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30
----------------------------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
PROCEEDS FROM SALE OF LAND $ 309,088 $ 1,629,454
INTEREST INCOME RECEIVED 8,294 7,121
OTHER INCOME RECEIVED - 200
CASH PAID FOR OPERATING EXPENSES (200,560) (21,155)
--------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 116,822 1,615,620
CASH FLOWS FROM FINANCING ACTIVITIES:
DISTRIBUTION TO LIMITED PARTNERS - (1,447,498)
--------- -----------
INCREASE IN CASH 116,822 168,122
CASH, BEGINNING OF PERIOD 344,476 113,292
--------- -----------
CASH, END OF PERIOD $ 461,298 $ 281,414
========= ===========
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
NET INCOME $ 191,088 $ 1,320,605
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
GAIN ON SALE OF LAND (249,211) (1,336,274)
NET PROCEEDS FROM SALE OF LAND 309,088 1,629,454
(DECREASE) INCREASE IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES (20,767) 1,922
INCREASE IN PREPAID EXPENSES (422) (87)
DECREASE IN PAYABLE TO AFFILIATE (13,954) -
DECREASE IN OTHER LIABILITIES (99,000) -
--------- -----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 116,822 $ 1,615,620
========= ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 9
SOUTHEAST ACQUISITIONS II, LP
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Six Months Ended June 30, 1998
(Unaudited)
A. ACCOUNTING POLICIES
The unaudited financial statements presented herein have been prepared
in accordance with the instructions to Form 10-Q and do not include all
of the information and note disclosures required by generally accepted
accounting principles. These statements should be read in conjunction
with the financial statements and notes thereto included in the
Partnership's Form 10-K for the year ended December 31, 1997. In the
opinion of management, such financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary
to summarize fairly the Partnership's financial position and results of
operations. The results of operations for the six-month period ended
June 30, 1998 may not be indicative of the results that may be expected
for the year ending December 31, 1998.
B. RELATED PARTY TRANSACTIONS
The General Partner and its affiliates have been actively involved in
managing the Partnership's operations. Compensation earned for these
services in the first six months were as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Management Fees $9,500 ---
Accounting Fees --- ---
Transfer Fees $ 500 ---
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SOUTHEAST ACQUISITIONS II, L.P. FOR THE THREE MONTHS
ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 461,298
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 422
<PP&E> 2,227,929
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,689,649
<CURRENT-LIABILITIES> 31,643
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,658,006
<TOTAL-LIABILITY-AND-EQUITY> 2,689,649
<SALES> 249,211
<TOTAL-REVENUES> 257,505
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 66,417
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 191,088
<INCOME-TAX> 0
<INCOME-CONTINUING> 191,088
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 191,088
<EPS-PRIMARY> 19.60
<EPS-DILUTED> 19.60
</TABLE>
