UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-15816 Krupp Cash Plus-II Limited Partnership Massachusetts 04-2915326 (State or other jurisdiction of (IRS employer incorporation or organization) identification no.) 470 Atlantic Avenue, Boston, Massachusetts 02210 (Address of principal executive offices) (Zip Code) (617) 423-2233 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) 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 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS KRUPP CASH PLUS-II LIMITED PARTNERSHIP BALANCE SHEETS ASSETS March 31, December 31, 1995 1994 Real estate assets: Multi-family apartment complex, less accumulated depreciation of $3,784,694 and $3,670,683, respectively $ 6,355,376 $ 6,424,540 Retail centers, less accumulated depreciation of $11,312,365 and $10,931,523, respectively 38,493,357 38,858,760 Investment in joint venture (Note 2) 21,279,753 21,339,973 Mortgage-backed securities ("MBS") (Note 3) 9,562,617 9,815,123 Total real estate assets 75,691,103 76,438,396 Cash and cash equivalents 4,972,436 7,072,127 Other investments (Note 3) 2,386,995 - Other assets 550,838 766,734 Total assets $83,601,372 $84,277,257 LIABILITIES AND PARTNERS' EQUITY Accounts payable $ 67,364 $ 221,510 Accrued expenses and other liabilities 593,800 593,123 Total liabilities 661,164 814,633 Commitments and contingencies (Note 2) Partners' equity (Note 4) 82,940,208 83,462,624 Total liabilities and partners' equity $83,601,372 $84,277,257 Companying notes are an integral part of the financial statements. KRUPP CASH PLUS-II LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 1995 1994 Revenue: Rental $1,639,328 $1,615,548 Partnership's share of joint venture net income (Note 2) 189,780 177,297 Interest income - MBS 215,214 268,598 Interest income - other 107,045 49,277 Total revenue 2,151,367 2,110,720 Expenses: Operating (including reimbursements to affiliates of $18,235 and $55,718, respectively) 206,290 247,408 Maintenance 72,389 131,610 General and administrative (including reimbursements to affiliates of $51,579 and $86,377, respectively) 71,848 112,550 Real estate taxes 218,799 241,836 Management fees paid to an affiliate 91,143 88,820 Depreciation 494,853 458,896 Total expenses 1,155,322 1,281,120 Net income $ 996,045 $ 829,600 Allocation of net income (Note 4): Net income per Unit of Depositary Receipt (7,499,818 Units outstanding) $ .13 $ .11 Corporate Limited Partner $ 13 $ 11 General Partners $ 19,921 $ 16,592 The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-II LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1995 1994 Operating activities: Net income $ 996,045 $ 829,600 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 494,853 458,896 Partnership's share of joint venture net income (189,780) (177,297) Distribution received from joint venture 250,000 164,000 Amortization of MBS discount, net (1,420) (1,572) Decrease (increase) in other assets 215,896 (9,892) Decrease in accounts payable (154,146) (86,102) Increase in accrued expenses and other liabilities 677 13,762 Net cash provided by operating activities 1,612,125 1,191,395 Investing activities: Additions to fixed assets (60,286) (10,633) Principal collections on MBS 253,926 1,017,687 Increase in other investments (2,386,995) - Net cash provided by (used in) investing activities (2,193,355) 1,007,054 Financing activity: Distributions (1,518,461) (1,528,867) Net decrease in cash and cash equivalents (2,099,691) 669,582 Cash and cash equivalents, beginning of period 7,072,127 5,622,515 Cash and cash equivalents, end of period $4,972,436 $ 6,292,097 The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (1) Accounting Policies Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this report on Form 10-Q pursuant to the Rules and Regulations of the Securities and Exchange Commission. In the opinion of the General Partners of Krupp Cash Plus-II Limited Partnership (the "Partnership") the disclosures contained in this report are adequate to make the information presented not misleading. See Notes to Financial Statements included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994 for additional information relevant to significant accounting policies followed by the Partnership. In the opinion of the General Partners of the Partnership, the accompanying unaudited financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Partnership's financial position as of March 31, 1995 and its results of operations and cash flows for the three months ended March 31, 1995 and 1994. The results of operations for the three months ended March 31, 1995 are not necessarily indicative of the results which may be expected for the full year. See Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report. (2) Investment in Joint Venture The Partnership and an affiliate of the Partnership each have a 50% interest in the Joint Venture. The express purpose of entering into the Joint Venture was to acquire and operate Brookwood Village Mall and Convenience Center ("Brookwood Village"). Brookwood Village is a shopping center containing 478,738 net leasable square feet located in Birmingham, Alabama. Under the purchase and sale agreement entered into by the Partnership, its affiliates and the previous owner, the previous owner retained an interest related to the future development at Brookwood Village. The seller is entitled to receive up to $5,000,000 of proceeds from the sale of Brookwood Village and potentially additional amounts related to expansion and development. The Joint Venture holds title to Brookwood Village free and clear from all other material liens or encumbrances. Continued KRUPP CASH PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS - Continued (2) Investment in Joint Venture - Continued Condensed financial statements of the Joint Venture are as follows: Brookwood Village Joint Venture Condensed Balance Sheets ASSETS March 31, December 31, 1995 1994 Property, at cost $ 54,934,446 $ 54,898,470 Accumulated depreciation (13,345,251) (12,854,388) 41,589,195 42,044,082 Other assets 1,526,473 1,145,125 Total assets $ 43,115,668 $ 43,189,207 LIABILITIES AND PARTNERS' EQUITY Total liabilities $ 556,162 $ 509,261 Partners' equity The Partnership 21,279,753 21,339,973 Joint venture partner 21,279,753 21,339,973 Total partners' equity 42,559,506 42,679,946 Total liabilities and partners' equity $ 43,115,668 $ 43,189,207 Brookwood Village Joint Venture Condensed Statements of Operations For the Three Months Ended March 31, 1995 1994 Revenue $ 1,585,868 $ 1,522,985 Property operating expenses (715,444) (707,720) Income before depreciation 870,424 815,265 Depreciation (490,864) (460,671) Net income $ 379,560 $ 354,594 Continued KRUPP CASH PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS - Continued (3) MBS and Other Investments At March 31, 1995, the Partnership's MBS Portfolio had an approximate market value of $9,888,000 with unrealized gains of $394,000 and unrealized losses of $69,000. The Partnership does not expect to realize these gains or losses as it has the intention and ability to hold the MBS until maturity. At March 31, 1995, the Partnership held investments in commercial paper and a bankers' acceptance, all maturing within one year. The cost approximates the market value. (4) Changes in Partners' Equity A summary of changes in Partners' equity (deficit) for the three months ended March 31, 1995 is as follows: Corporate Total Limited General Partners' Unitholders Partner Partners Equity Balance at December 31, 1994 $83,767,580 $ 1,322 $(306,278) $83,462,624 Net income 976,111 13 19,921 996,045 Distributions (1,499,944) (20) (18,497) (1,518,461) Balance at March 31, 1995 $83,243,747 $ 1,315 $(304,854) $82,940,208 KRUPP CASH PLUS-II LIMITED PARTNERSHIP Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Partnership's liquidity is derived from the operations of the Partnership's properties (Encino Oaks, Alderwood, Canyon Place, Coral Plaza and Cumberland Glen), distributions from the Partnership's interest in Brookwood Village Joint Venture, earnings and collections on MBS, and interest earned on its short-term investments. The Partnership's liquidity is utilized to pay operating costs and to fund distributions to the partners. Management has found it necessary in recent years to pay a large share of tenant buildouts to attract quality tenants to our retail centers. This policy has proven to be successful in attracting tenants and maintaining high occupancy at properties where it has been undertaken and is expected to continue through 1995. In order to remain competitive in their respective markets, the Partnership's properties are anticipated to spend $761,000 for fixed assets in 1995 most of which are tenant buildouts at retail centers. The Joint Venture is expected to spend $599,000 for capital renovations. Principal collections on MBS have slowed significantly in the first quarter of 1995 because rising mortgage interest rates have decreased the refinancing activity which led to prepayments of the mortgages underlying the MBS previously. Management will continue to monitor liquidity levels to assure that working capital levels are being maintained. Continued KRUPP CASH PLUS-II LIMITED PARTNERSHIP Distributable Cash Flow and Net Cash Proceeds from Capital Transactions Shown below is the calculation of Distributable Cash Flow and Net Cash Proceeds from Capital Transactions as defined by Section 17 of the Partnership Agreement for the three months ended March 31, 1995 and the period from inception to March 31, 1995. (In $1,000 except per Unit amounts) For the three months Inception to Ended March 31, March 31, 1995 1995 Distributable Cash Flow: Net income for tax purposes $1,148 $41,860 Items providing/not requiring or (not providing) the use of operating funds: Tax basis depreciation and amortization 421 13,525 Acquisition expenses paid from offering proceeds charged to operations - 248 Partnership's share of joint venture taxable net income (290) (5,134) Distributions from joint venture 250 7,357 Additions to fixed assets (60) (2,173) Amounts released from reserves for capital improvements - 1,020 Total Distributable Cash Flow ("DCF") $1,469 $56,703 Limited Partners' Share of DCF $1,440 $55,569 Limited Partners' Share of DCF per Unit $ .19 $ 7.41 General Partners' Share of DCF $ 29 $ 1,134 Net Proceeds from Capital Transactions: Principal collections on MBS $ 253 $35,572 Reinvestment of MBS principal collections - (3,687) Total Net Proceeds from Capital Transactions $ 253 $31,885 Distributions: Limited Partners $1,500(a) $89,318(b) Limited Partners' Average per Unit $ .20(a) $11.91(b)(c) General Partners $ 29(a) $ 1,134(b) Total Distributions $1,529(a) $90,452(b) (a) Represents an estimate of the distribution to be paid in May, 1995. (b) Includes estimate of the distribution to be paid in May, 1995. (c) Limited Partners average per Unit return of capital as of May, 1995 is $4.50 [$11.91 - $7.41]. Continued KRUPP CASH PLUS-II LIMITED PARTNERSHIP Operations Partnership Rental revenues have increased slightly for the three months ended March 31, 1995 as compared to the same period in 1994 due mainly to the fluctuations in occupancy rates at both Canyon Place and Coral Plaza between the two periods. Canyon Place experienced an 8% increase in occupancy over 1994 due to the expansion of larger tenants. Coral Plaza's occupancy decreased 4% for the three months ended March 31, 1995 as compared to the same period in 1994 due to the move out of Jazzercise in 1994. MBS interest income decreased in the first quarter of 1995 as compared to the same period in 1994 due to the large prepayments of principal which occurred during the first half of 1994. Interest income on short-term investments increased during these same periods due to higher average cash balances. Total expenses for the Partnership decreased $126,000 for the three months ended March 31, 1995 as compared to the same period in 1994. The decrease in operating expenses was due to management's efforts to reduce reimbursable operating and general and administrative expenses. Certain of these costs savings are anticipated to continue throughout 1995. Maintenance expenses have decreased as a result of increased preventive maintenance at Encino Oaks in 1994. Joint Venture Brookwood's revenues and expenses have remained relatively stable for the three months ended March 31, 1995 as compared to the same period in 1994. KRUPP CASH PLUS-II LIMITED PARTNERSHIP PART II - OTHER INFORMATION Item 1. Legal Proceedings Response: None Item 2. Change in Securities Response: None Item 3. Defaults upon Senior Securities Response: None Item 4. Submission of Matters to a Vote of Security Holders Response: None Item 5. Other Information Response: None Item 6. Exhibits and Reports on Form 8-K Response: None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Krupp Cash Plus-II Limited Partnership (Registrant) BY: /s/Marianne Pritchard Marianne Pritchard Treasurer and Chief Accounting Officer, The Krupp Corporation, a General Partner DATE: May 2, 1995