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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, 2003.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM JANUARY 1, 2003 TO MARCH 31, 2003.
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.)
3011 Armory Drive, Suite 310
Nashville, Tennessee 37204
(Address of Principal Executive Offices)
Issuers 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 (b) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
The unaudited financial statements of Southeast Acquisitions II, L.P.
(the "Partnership") at March 31, 2003 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.
There can be no assurance that the Partnership's objectives will be realized.
At March 31, 2003 there remains approximately 45 acres of Rutherford County,
Tennessee property.
Results of Operations for First Quarter of 2003 Compared with First
Quarter of 2002
The Partnership activities for the first quarter of 2003 and the first
quarter of 2002 were focused on the sale of Partnership property. The
Partnership had no sales of property in the first quarter of 2003 or in the
first quarter of 2002. In the first quarter of 2003, the Partnership earned
interest income of $685 as compared to $589 of interest earned in the first
quarter of 2002. The increase in interest earned is a result of having a higher
average cash reserve during the quarter compared to the same quarter of 2002.
The increase to the cash reserve in 2003 resulted from the sale of
approximately one half acre of the Rutherford County Property in the fourth
quarter of 2002.
Expenses in the first quarter of 2003 included general and
administrative expenses of $6,060 versus $7,432 in the first quarter of 2002.
The 2002 amount includes $927 of engineering fees related to possible
modifications to the roadway and site access to the Rutherford County,
Tennessee Property. There was no such fee in the first quarter of 2003. There
was also a $443 decrease to accounting and legal fees in the first quarter of
2003 as compared to the same quarter of 2002. The Partnership reflects
Tennessee franchise and excise tax of $559 in 2003. This tax consists of $159
for additional taxes due in relation to the fourth quarter sale of the
Rutherford County, Tennessee Property. The remaining $400 is for the first
quarter tax estimate for 2003. There was no such tax in the first quarter of
2002. Real estate taxes in the first quarter of 2003 were $23 compared with $25
in the first quarter of 2003. Insurance in each of the first quarters of 2003
and 2002 was $57.
Inflation did not have any material impact on operations during the
first quarter of 2003 and it is not expected to materially impact future
operations.
Liquidity and Capital Resources
The Partnership had cash reserves of $166,564 at March 31, 2003, which
will be used to cover the following estimated annual costs: accounting fees of
$16,500, legal fees of $5,000, insurance costs of $230, property taxes of $94,
Tennessee franchise and excise taxes of $1,600 and other administrative costs
of $21,000. In the General Partner's opinion, the Partnership's reserves will
be sufficient to cover costs during the liquidation mode. However, if
additional expenses are incurred or if the Property cannot be sold within the
next year, 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
Property or incur indebtedness on unfavorable terms.
Item 3. Controls and Procedures
(a) Within the ninety day period prior to the date of this report, we
carried out an evaluation, under the supervision and with the participation of
our management, including our principal executive officer and our principal
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rules 13a-14(c) under the
Securities Exchange Act of 1934). Based upon that evaluation, our management,
including our principal executive officer and our principal financial officer,
concluded that the design and operation of these disclosure controls and
procedures were effective to timely alert them to any material information
relating to the company that must be included in our periodic SEC filings.
(b) There have been no significant changes in our internal controls or
in other factors that could significantly affect internal controls subsequent
to the date we carried out this evaluation.
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 2003.
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 have 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 2003.
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)
Exhibit Numbers Description Page Number
- --------------- ----------- -----------
99.1 Certification Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to section 906
of the Sarbanes-Oxley Act of 2002
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following person on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Richard W. Sorenson President, May 13, 2003
- ----------------------- Southern Management
Richard W. Sorenson Group, LLC
Certification of Chief Executive Officer
Of Southeast Acquisitions II, L.P.
This certification is provided pursuant to Section 302 of the
Sarbanes-Oxely Act of 2002, and accompanies the quarterly report on form 10-Q
for the quarter ended March 31, 2003 of Southeast Acquisitions II, L. P.
I, Richard W. Sorenson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Southeast
Acquisitions II, L. P.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrants as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, is made
known to us by others within those entities, particularly
during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date:
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons
performing the equivalent function);
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
May 13, 2003 /s/ Richard W. Sorenson
- ---------------- -----------------------------
Date Richard W. Sorenson
Richard W. Sorenson
Principal Executive Officer & Member
Southern Management Group, LLC
Certification of Chief Financial Officer
Of Southeast Acquisitions II, L.P.
This certification is provided pursuant to Section 302 of the
Sarbanes-Oxely Act of 2002, and accompanies the quarterly report on form 10-Q
for the quarter ended March 31, 2003 of Southeast Acquisitions II, L. P.
I, Laura E. Ristvedt, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Southeast
Acquisitions II, L. P.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrants as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, is made
known to us by others within those entities, particularly
during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date:
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons
performing the equivalent function);
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
May 13, 2003 /s/ Laura E. Ristvedt
- ----------------- ---------------------------
Date Laura E. Ristvedt
Laura E. Ristvedt
Principal Financial Officer
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
BALANCE SHEETS
MARCH 31, DECEMBER 31,
2003 2002
(UNAUDITED)
----------- ------------
ASSETS
LAND HELD FOR SALE $ 369,365 $ 369,365
CASH AND CASH EQUIVALENTS 166,564 176,824
ACCOUNTS RECEIVABLE 734 734
PREPAID INSURANCE 173 --
--------- ---------
$ 536,836 $ 546,923
========= =========
LIABILITIES AND PARTNERS' EQUITY
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 15,557 $ 19,630
PARTNERS' EQUITY:
GENERAL PARTNER 48,207 48,267
LIMITED PARTNERS (9,650 UNITS OUTSTANDING) 473,072 479,026
--------- ---------
521,279 527,293
--------- ---------
$ 536,836 $ 546,923
========= =========
SEE NOTES TO FINANCIAL STATEMENTS.
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31
2003 2002
--------- ---------
REVENUES:
INTEREST INCOME $ 685 $ 589
--------- ---------
EXPENSES:
GENERAL AND ADMINISTRATIVE 6,060 7,432
REAL ESTATE TAXES 23 25
INSURANCE 57 57
TENNESSEE FRANCHISE AND EXCISE TAX 559 --
--------- ---------
6,699 7,514
--------- ---------
NET INCOME (LOSS) (6,014) (6,925)
PARTNERS' EQUITY,
BEGINNING OF PERIOD 527,293 460,714
CAPITAL DISTRIBUTION -- --
--------- ---------
PARTNERS' EQUITY,
END OF PERIOD $ 521,279 $ 453,789
========= =========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 9,650 9,650
========= =========
INCOME (LOSS) FROM OPERATIONS
PER LIMITED PARTNERSHIP
INTEREST $ (0.62) $ (0.72)
========= =========
SEE NOTES TO FINANCIAL STATEMENTS.
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31
---------------------------
2003 2002
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
INTEREST INCOME RECEIVED $ 685 $ 589
CASH PAID FOR OPERATING EXPENSES (10,945) (14,846)
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (10,260) (14,257)
CASH, BEGINNING OF PERIOD 176,824 137,633
--------- ---------
CASH, END OF PERIOD $ 166,564 $ 123,376
========= =========
RECONCILIATION OF NET LOSS TO NET CASH USED IN
OPERATING ACTIVITIES:
NET LOSS $ (6,014) $ (6,925)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES:
DECREASE IN ACCOUNTS PAYABLE AND
ACCRUED EXPENSES (4,073) (7,160)
INCREASE IN PREPAID EXPENSES (173) (172)
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES $ (10,260) $ (14,257)
========= =========
SEE NOTES TO FINANCIAL STATEMENTS.
SOUTHEAST ACQUISITIONS II, LP
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2003
(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 accounting
principles generally accepted in the United States of America. 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, 2002. 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, 2003 may not be
indicative of the results that may be expected for the year ending
December 31, 2003.
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:
2003 2002
---- ----
Reimbursements $410 $672