SECURITIES AND EXCHANGE COMMISSION
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004. |
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM JANUARY 1, 2004 TO MARCH 31, 2004. |
Commission File number: 0-17680 (formerly 33-20255)
SOUTHEAST ACQUISITIONS II, L.P.
| 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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
The unaudited financial statements of Southeast Acquisitions II, L.P. (the “Partnership”) at March 31, 2004 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. There can be no assurance that the Partnership’s objectives will be realized. At March 31, 2004 there remains approximately 45 acres of Rutherford County, Tennessee property.
Results of Operations for First Quarter of 2004 Compared with First Quarter of 2003
The Partnership activities for the first quarter of 2004 and the first quarter of 2003 were focused on the sale of Partnership property. The Partnership had no sales of property in the first quarter of 2004 or in the first quarter of 2003. During the first quarter of 2004, the Partnership entered into a sales contract to sell approximately 1.88 acres of its Rutherford County, Tennessee Property for a sales price of $995,000. As part of the contract the Partnership has agreed to give the purchaser a $30,000 underground storm detention allowance and a $20,000 landscaping allowance. The storm detention allowance and landscaping allowance would both be credited to the Purchaser at closing. This sale could close as early as July 2004, but there are contingencies that could allow the purchaser to terminate the agreement. There can be no assurance that this transaction will close. In the first quarter of 2004, the Partnership earned interest income of $242 as compared to $685 of interest earned in the first quarter of 2003. The decrease in interest earned is a result of having a lower average cash reserve during the quarter compared to the same quarter of 2003.
Expenses in the first quarter of 2004 included general and administrative expenses of $8,594 versus $6,060 in the first quarter of 2003. The 2004 amount includes $1,284 paid for a land title survey associated with a sales contract that was signed during the same quarter. There was no such fee in the first quarter of 2003. There was also a $1,025 increase in the accounting fees in the first quarter of 2004 as compared to the same quarter of 2003. This is due to new auditing standards. The Partnership had Tennessee franchise and excise taxes of $(103) in the first quarter of 2004 as compared to $559 in the same quarter of 2003. The Partnership paid $297 for quarterly taxes in the first quarter of 2004, but also had to adjust for an over-accrual of taxes of $(400) from the prior year. The first quarter of 2003 included $159 for additional taxes due in relation to the fourth quarter sale of the Rutherford County, Tennessee Property in 2002 in addition to the quarterly taxes due of $400. Real estate taxes in the first quarter of 2004 were $426 compared $23 in the first quarter of 2003. At the time the 2003 first quarter real estate tax accrual was made, it was not yet known that two parcels of land were being reclassified as commercial property, which subsequently resulted in higher taxes. Insurance in the first quarter of 2004 was $72 as compared to $57 for the same quarter in 2003.
Inflation did not have any material impact on operations during the first quarter of 2004 and it is not expected to materially impact future operations.
Liquidity and Capital Resources
The Partnership had cash reserves of $109,603 at March 31, 2004, which will be used to cover the following estimated annual costs: accounting fees of $16,500, legal fees of $5,000, insurance costs of $211, property taxes of $1,613, Tennessee franchise and excise taxes of $1,200 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 2004.
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 2004.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
None
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Exhibit Numbers
|
Description | Page Number | ||
31.1
|
Certification Pursuant to section 302 of the Sarbanes-Oxley Act of 2002 | |||
32.1
|
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 11, 2004 | ||
| Richard W. Sorenson |
Southern Management Group, LLC |
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
BALANCE SHEETS
| MARCH 31, | DECEMBER 31, | |||||||
| 2004 | 2003 | |||||||
| (Unaudited) |
||||||||
ASSETS |
||||||||
Land held for sale |
$ | 369,365 | $ | 369,365 | ||||
Cash and cash equivalents |
109,603 | 128,583 | ||||||
Accounts receivable |
1,385 | 734 | ||||||
Prepaid insurance |
158 | — | ||||||
| $ | 480,511 | $ | 498,682 | |||||
LIABILITIES AND PARTNERS’ EQUITY |
||||||||
Accounts payable and accrued expenses |
$ | 10,396 | $ | 19,820 | ||||
Partners’ equity: |
||||||||
General partner |
47,696 | 47,783 | ||||||
Limited partners (9,650 units outstanding) |
422,419 | 431,079 | ||||||
| 470,115 | 478,862 | |||||||
| $ | 480,511 | $ | 498,682 | |||||
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 | ||||||||
| 2004 |
2003 |
|||||||
REVENUES: |
||||||||
Interest income |
$ | 242 | $ | 685 | ||||
EXPENSES: |
||||||||
General and administrative |
8,594 | 6,060 | ||||||
Real estate taxes |
426 | 23 | ||||||
Insurance |
72 | 57 | ||||||
Tennessee franchise and excise tax |
(103 | ) | 559 | |||||
| 8,989 | 6,699 | |||||||
NET INCOME (LOSS) |
(8,747 | ) | (6,014 | ) | ||||
Partners’ equity,
Beginning of period |
478,862 | 527,293 | ||||||
Capital distribution |
— | — | ||||||
Partners’ equity,
End of period |
$ | 470,115 | $ | 521,279 | ||||
Weighted average number
of limited partnership
units outstanding |
9,650 | 9,650 | ||||||
Income (loss) from operations
per limited partnership
interest |
$ | (0.91 | ) | $ | (0.62 | ) | ||
See notes to financial statements.
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
| FOR THE THREE MONTHS | ||||||||
| ENDED MARCH 31 |
||||||||
| 2004 |
2003 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Interest income received |
$ | 242 | $ | 685 | ||||
Cash paid for operating expenses |
(19,222 | ) | (10,945 | ) | ||||
Net cash used in
operating activities |
(18,980 | ) | (10,260 | ) | ||||
Cash, beginning of period |
128,583 | 176,824 | ||||||
Cash, end of period |
$ | 109,603 | $ | 166,564 | ||||
RECONCILIATION OF NET LOSS TO NET CASH USED IN
OPERATING ACTIVITIES: |
||||||||
Net loss |
$ | (8,747 | ) | $ | (6,014 | ) | ||
Adjustments to reconcile net loss to net
cash used in operating activities: |
||||||||
Decrease in accounts payable and accrued expenses |
(9,424 | ) | (4,073 | ) | ||||
Increase in accounts receivable |
(651 | ) | — | |||||
Increase in prepaid expenses |
(158 | ) | (173 | ) | ||||
Net cash used in operating
activities |
$ | (18,980 | ) | $ | (10,260 | ) | ||
See notes to financial statements.
SOUTHEAST ACQUISITIONS II, LP
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2004
(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, 2003. 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, 2004 may not be indicative of the results that may be expected for the year ending December 31, 2004. |
| 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: |
| 2004 |
2003 |
|||||||
Reimbursements |
$ | 675 | $ | 410 | ||||