<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, 1998.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM JULY 1, 1998 TO SEPTEMBER 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 September 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 Third Quarter of 1998 Compared with Third
Quarter of 1997
The Partnership activities for the third quarter of 1998 and the third
quarter of 1997 were focused on the sale of Partnership property. During the
third quarter of 1998 the Partnership closed three sales: Greenville
(Simpsonville), South Carolina 17.316 acres for $95,000 per acre; Henry County,
Georgia 44.325 acres for $4,750 per acre; and Greenville (Simpsonville), South
Carolina 2.049 acres for $171,498 per acre. These three sales, after commissions
and closing costs, netted the Partnership $1,985,325. During the third quarter
of 1997 no Partnership property was sold. Other receipts during the third
quarter of 1998 consisted of interest income of $6,138 compared with $4,770 in
the third quarter of 1997.
Expenses in the third quarter of 1998 included general and
administrative expenses of $5,917 versus $41,925 in the third quarter of 1997.
The latter amount included $40,000 for legal and printing costs related to the
proxy statement of September 22, 1997 which made revisions to the Partnership
Agreement including the selection of a new General Partner. 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 third quarter of 1998 were $12,123 compared with
$23,104 in the third quarter of 1997. This reduction was due primarily to owning
less property at the end of the third quarter of 1998 than was owned at the end
of the third quarter of 1997. Insurance in the third quarter of 1998 was $211
compared with $87 in the third quarter of 1997.
Inflation did not have any material impact on operations during the
third 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 $636,119 at September 30, 1998,
after making a distribution to partners of $1,785,250 during the third quarter.
The cash reserve is 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 third
quarter of 1998.
Item 3 - Defaults Upon Senior Securities
During the third quarter of 1998 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 1997.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
<PAGE> 4
Reports on Form 8-K
None
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Exhibit Numbers Description Page Number
- --------------- ----------- -----------
27 Financial Data Schedule
<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.
Signature Title Date
- --------- ----- ----
Richard W. Sorenson
- ------------------------------ Member, October 26, 1998
Richard W. Sorenson Southern Management ----------
Group, LLC
<PAGE> 6
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1998 1997
---------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
Land held for sale $1,602,084 $2,287,806
Cash and cash equivalents 636,119 344,476
Accounts receivable 28,282 --
Prepaid insurance 211 --
---------- ----------
$2,266,696 $2,632,282
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses $ 51,323 $ 52,410
Escrow payable -- 99,000
Payable to affiliate -- 13,954
Partners' equity:
General partner 25,258 9,921
Limited partners (9,650 units outstanding) 2,190,115 2,456,997
---------- ----------
2,215,373 2,466,918
---------- ----------
$2,266,696 $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 NINE MONTHS
ENDED SEPT 30 ENDED SEPT 30
---------------------------- ----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Gain on sale of land $ 1,359,480 $ -- $ 1,608,691 $ 1,336,274
Interest income 6,138 4,770 14,432 11,891
Other income -- 275 -- 475
----------- ----------- ----------- -----------
1,365,618 5,045 1,623,123 1,348,640
----------- ----------- ----------- -----------
EXPENSES:
General and administrative 5,917 41,925 41,429 55,427
Management fee 4,750 -- 14,250 --
Real estate taxes 12,123 23,104 33,106 32,417
Insurance 211 87 633 262
----------- ----------- ----------- -----------
23,001 65,116 89,418 88,106
----------- ----------- ----------- -----------
NET INCOME (LOSS) 1,342,617 (60,071) 1,533,705 1,260,534
Partners' equity,
Beginning of period 2,658,006 2,555,976 2,466,918 2,682,869
----------- ----------- ----------- -----------
Capital distribution (1,785,250) -- (1,785,250) (1,447,498)
Partners' equity,
End of period $ 2,215,373 $ 2,495,905 $ 2,215,373 $ 2,495,905
=========== =========== =========== ===========
Weighted average number
of limited partnership
units outstanding 9,650 9,650 9,650 9,650
=========== =========== =========== ===========
Income (loss) from operations
per limited partnership
interest $ 137.74 $ (6.16) $ 157.34 $ 129.32
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE> 8
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPT 30
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Proceeds from sale of land $ 2,294,413 $ 1,628,777
Interest income received 14,432 11,891
Other income received -- 475
Construction deposit -- 99,000
Cash paid for operating expenses (231,952) (20,478)
----------- -----------
Net cash provided by
operating activities 2,076,893 1,719,665
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to limited partners (1,785,250) (1,447,498)
----------- -----------
Increase in cash 291,643 272,167
Cash, beginning of period 344,476 113,292
----------- -----------
Cash, end of period $ 636,119 $ 385,459
=========== ===========
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net income $ 1,533,705 $ 1,260,534
Adjustments to reconcile net income
to net cash provided by
operating activities:
Gain on sale of land (1,608,691) (1,336,274)
Net proceeds from sale of land 2,294,413 1,629,454
(Decrease) increase in accounts payable and accrued expenses (1,087) 66,951
Increase in prepaid expenses (211) --
Increase in accounts receivable (28,282)
Decrease in payable to affiliate (13,954) --
(Decrease) increase in other liabilities (99,000) 99,000
----------- -----------
Net cash provided by operating
activities $ 2,076,893 $ 1,719,665
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE> 9
SOUTHEAST ACQUISITIONS II, LP
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Nine Months Ended September 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 nine-month period ended
September 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 nine months were as follows:
<TABLE>
<CAPTION>
1998 1997
------- ----
<S> <C> <C>
Management Fees $14,250 --
Accounting Fees -- --
Transfer Fees $ 1,125 --
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 636,119
<SECURITIES> 0
<RECEIVABLES> 28,282
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 211
<PP&E> 1,602,084
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,266,696
<CURRENT-LIABILITIES> 51,323
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,215,373
<TOTAL-LIABILITY-AND-EQUITY> 2,266,696
<SALES> 1,608,691
<TOTAL-REVENUES> 1,623,123
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 89,418
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,533,705
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,533,705
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,533,705
<EPS-PRIMARY> 157.34
<EPS-DILUTED> 157.34
</TABLE>
