<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, 1998.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM JANUARY 1, 1998 TO MARCH 31, 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 March 31, 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 First Quarter of 1998 Compared with First
Quarter of 1997
The Partnership activities for the first quarter of 1998 and the first
quarter of 1997 were focused on the sale of Partnership property. During the
first quarter of 1998 the Partnership entered into contracts for the sale of 1.9
acres in Simpsonville, South Carolina for a gross price of $315,000, 2.07 acres
in Simpsonville, South Carolina for a gross price of $355,000, 15.87 acres in
Simpsonville, South Carolina for a gross price of $1,507,650 and 40 acres in
Henry County, Georgia for a gross price of $190,000. These contracts are all
subject to various conditions and contingencies and are scheduled to close in
the second and third quarters of 1998. No property was sold in the first quarter
of 1997. Income during the first quarter of 1998 consisted of interst income of
$3,655 as compared with $978 in the first quarter of 1997. The increase in
interest income was primarily due to investments of remaining cash balances from
1997 sales.
Expenses in the first quarter of 1998 included general and
administrative expenses of $15,822 versus $7,860 in the first 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 first quarter of
1998 as compared with no such fees in the first 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 first quarter of 1998 were $10,693
compared with $4,488 in the first quarter of 1997. This increase was due
primarily to a correction to the quarterly accrual for real estate taxes.
Insurance in the first quarter of 1998 was $211 compared with $81 in the first
quarter of 1997.
Inflation did not have any material impact on operations during the
first quarter of 1998 and it is not expected to materially impact future
operations.
-2-
<PAGE> 3
Liquidity and Capital Resources
The Partnership had cash reserves of $169,995 at March 31, 1998, which
will be used 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 $3,000. 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 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 first
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 of 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 1998.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Reports on Form 8-K
None
-3-
<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
</TABLE>
-4-
<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 President, 5/19 1998
- ----------------------------- Southern Management --------------
Richard W. Sorenson Group, LLC
</TABLE>
<PAGE> 6
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31
-------------------------------
1998 1997
---------- ----------
<S> <C> <C>
REVENUES:
GAIN ON SALE OF LAND $ -- $ --
INTEREST INCOME 3,655 978
OTHER INCOME -- 100
---------- ----------
3,655 1,078
---------- ----------
EXPENSES:
GENERAL AND ADMINISTRATIVE 15,822 7,860
MANAGEMENT FEE 4,750 --
REAL ESTATE TAXES 10,693 4,488
INSURANCE 211 87
---------- ----------
31,476 12,435
---------- ----------
NET INCOME (LOSS) (27,821) (11,357)
PARTNERS' EQUITY,
BEGINNING OF PERIOD 2,466,918 2,682,869
CAPITAL DISTRIBUTION -- --
---------- ----------
PARTNERS' EQUITY,
END OF PERIOD $2,439,097 $2,671,512
========== ==========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 9,650 9,650
========== ==========
INCOME (LOSS) FROM OPERATIONS
PER LIMITED PARTNERSHIP
INTEREST $ (2.85) $ (1.17)
========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 7
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31
----------------------------
1998 1997
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
PROCEEDS FROM SALE OF LAND $ -- $ --
INTEREST INCOME RECEIVED 3,655 987
OTHER INCOME RECEIVED -- 100
CASH PAID FOR OPERATING EXPENSES (178,136) (17,108)
--------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (174,481) (16,021)
CASH FLOWS FROM FINANCING ACTIVITIES:
DISTRIBUTION TO LIMITED PARTNERS --
--------- --------
DECREASE IN CASH (174,481) (16,021)
CASH, BEGINNING OF PERIOD 344,476 113,292
--------- --------
CASH, END OF PERIOD $ 169,995 $ 97,271
========= ========
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
NET INCOME (LOSS) $ (27,821) $(11,357)
ADJUSTMENTS TO RECONCILE NET LOSS
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
DECREASE IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES (33,073) (4,489)
INCREASE IN PREPAID EXPENSES (633) (175)
DECREASE IN PAYABLE TO AFFILIATE (13,954) --
INCREASE (DECREASE) IN OTHER LIABILITIES (99,000) --
DECREASE IN ASSETS -- --
--------- --------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES $(174,481) $(16,021)
========= ========
</TABLE>
SEE NTOES TO FINANCIAL STATEMENTS.
<PAGE> 8
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
(UNAUDITED)
---------- ----------
<S> <C> <C>
ASSETS
LAND HELD FOR SALE $2,287,806 $2,287,806
CASH AND CASH EQUIVALENTS 169,995 344,476
PREPAID INSURANCE 633 --
---------- ----------
$2,458,434 $2,632,282
========== ==========
LIABILITIES AND PARTNERS' EQUITY
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 19,337 $ 52,410
ESCROW PAYABLE -- 99,000
PAYABLE TO AFFILIATE -- 13,954
PARTNERS' EQUITY:
GENERAL PARTNER 9,643 9,921
LIMITED PARTNERS (9,650 UNITS OUTSTANDING) 2,429,454 2,456,997
---------- ----------
2,439,097 2,466,918
---------- ----------
$2,458,434 $2,632,282
========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 9
SOUTHEAST ACQUISITIONS II, LP
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended March 31, 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 three-month period ended
March 31, 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 three months were as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Management Fees $4,750 --
Accounting Fees -- --
Transfer Fees $ 325 --
</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 MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 169,995
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 633
<PP&E> 2,287,806
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,458,434
<CURRENT-LIABILITIES> 19,337
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,439,097
<TOTAL-LIABILITY-AND-EQUITY> 2,458,434
<SALES> 0
<TOTAL-REVENUES> 3,655
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 31,476
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (27,821)
<INCOME-TAX> 0
<INCOME-CONTINUING> (27,821)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (27,821)
<EPS-PRIMARY> (2.85)
<EPS-DILUTED> (2.85)
</TABLE>
