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 June 30, 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 June 30, December 31, 1995 1994 Real estate assets: Multi-family apartment complex, less accumulated depreciation of $3,900,732 and $3,670,683, respectively $ 6,287,711 $ 6,424,540 Retail centers, less accumulated depreciation of $11,692,396 and $10,931,523, respectively 38,111,941 38,858,760 Investment in joint venture (Note 2) 20,937,256 21,339,973 Mortgage-backed securities ("MBS") (Note 3) 9,202,834 9,815,123 Total real estate assets 74,539,742 76,438,396 Cash and cash equivalents 4,740,041 7,072,127 Other investments (Note 3) 3,222,357 - Other assets 413,295 766,734 Total assets $82,915,435 $84,277,257 LIABILITIES AND PARTNERS' EQUITY Accounts payable $ 34,802 $ 221,510 Accrued expenses and other liabilities 634,759 593,123 Total liabilities 669,561 814,633 Commitments and contingencies (Note 2) Partners' equity (Note 4) 82,245,874 83,462,624 Total liabilities and partners' equity $82,915,435 $84,277,257 The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-II LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS For the Three Months Ended For the Six Months Ended June 30, June 30, 1995 1994 1995 1994 Revenue: Rental $1,606,838 $1,481,044 $3,246,166 $3,096,592 Partnership's share of joint venture net income (Note 2) 115,003 103,397 304,783 280,694 Interest income - MBS 207,446 245,152 422,660 513,750 Interest income - other 116,010 65,428 223,055 114,705 Total revenue 2,045,297 1,895,021 4,196,664 4,005,741 Expenses: Operating (including reimbursements to affiliates of $31,240, $55,718, $49,475, and $111,435, respectively) 198,808 261,725 405,098 509,133 Maintenance 124,493 124,796 196,882 256,406 General and administrative (including reimbursements to affiliates of $51,579, $90,097, $103,158 and $176,837, respectively) 88,998 130,581 160,846 243,131 Real estate taxes 209,635 (39,908) 428,434 201,928 Management fees paid to an affiliate 92,281 87,679 183,424 176,499 Depreciation 496,069 468,549 990,922 927,445 Total expenses 1,210,284 1,033,422 2,365,606 2,314,542 Net income $ 835,013 $ 861,599 $1,831,058 $1,691,199 Allocation of net income (Note 4): Net income per Unit of Depositary Receipt (7,499,818 Units Outstanding) $ .11 $ .11 $ .24 $ .22 Corporate Limited Partner $ 11 $ 11 $ 24 $ 22 General Partners $ 16,700 $ 17,232 $ 36,621 $ 33,824 The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-II LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1995 1994 Operating activities: Net income $ 1,831,058 $ 1,691,199 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 990,922 927,445 Partnership's share of joint venture net income (304,783) (280,694) Distributions received from joint venture 707,500 399,000 Amortization of MBS (discount)/ premium, net (1,539) (545) Decrease in other assets 353,439 221,008 Decrease in accounts payable (186,708) (127,875) Increase in accrued expenses and other liabilities 41,636 84,289 Net cash provided by operating activities 3,431,525 2,913,827 Investing activities: Additions to fixed assets (107,274) (106,653) Principal collections on MBS 613,828 1,965,863 Increase in other investments (3,222,357) - Net cash provided by (used in) investing activities (2,715,803) 1,859,210 Financing activity: Distributions (3,047,808) (3,053,983) Net increase (decrease) in cash and cash equivalents (2,332,086) 1,719,054 Cash and cash equivalents, beginning of period 7,072,127 5,622,515 Cash and cash equivalents, end of period $ 4,740,041 $ 7,341,569 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 June 30, 1995 and its results of operations for the three and six months ended June 30, 1995 and 1994 and cash flows for the six months ended June 30, 1995 and 1994. The results of operations for the three and six months ended June 30, 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 474,138 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 June 30, December 31, 1995 1994 Property, at cost $ 54,947,615 $ 54,898,470 Accumulated depreciation (13,854,740) (12,854,388) 41,092,875 42,044,082 Other assets 1,480,422 1,145,125 Total assets $ 42,573,297 $ 43,189,207 LIABILITIES AND PARTNERS' EQUITY Total liabilities $ 698,785 $ 509,261 Partners' equity The Partnership 20,937,256 21,339,973 Joint venture partner 20,937,256 21,339,973 Total partners' equity 41,874,512 42,679,946 Total liabilities and partners' equity $ 42,573,297 $ 43,189,207 Brookwood Village Joint Venture Condensed Statements of Operations For the Three Months For the Six Months Ended June 30, Ended June 30, 1995 1994 1995 1994 Revenues $1,470,629 $1,405,901 $ 3,056,497 $ 2,928,886 Property operating expenses (731,135) (734,820) (1,446,579) (1,442,540) Income before depreciation 739,494 671,081 1,609,918 1,486,346 Depreciation (509,488) (464,287) (1,000,352) (924,958) Net income $ 230,006 $ 206,794 $ 609,566 $ 561,388 Continued KRUPP CASH PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS - Continued (3) MBS and Other Investments At June 30, 1995, the Partnership's MBS Portfolio had an approximate market value of $9,685,000 with unrealized gains of $491,000 and unrealized losses of $9,000. 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 June 30, 1995, the Partnership held investments in commercial paper and a banker's acceptance maturing within one year. The cost approximates the market value. (4) Changes in Partners' Equity (Deficit) A summary of changes in partners' equity (deficit) for the six months ended June 30, 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 1,794,413 24 36,621 1,831,058 Distributions (2,999,888) (40) (47,880) (3,047,808) Balance at June 30, 1995 $82,562,105 $1,306 $(317,537) $82,245,874 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 $834,000 for fixed assets in 1995 most of which are tenant buildouts at retail centers. The Joint Venture is expected to spend $628,000 for capital improvements. Principal collections on MBS have slowed significantly in the first half of 1995 because of increased refinancing activity in 1994 which led to prepayments of the mortgages underlying the MBS. 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 six months ended June 30, 1995 and the period from inception to June 30, 1995. (In $1,000 except per Unit amounts) For the six months Inception to Ended June 30, June 30, 1995 1995 Distributable Cash Flow: Net income for tax purposes $2,155 $42,867 Items providing/not requiring or (not providing) the use of operating funds: Tax basis depreciation and amortization 841 13,945 Acquisition expenses paid from offering proceeds charged to operations - 248 Partnership's share of joint venture taxable net income (519) (5,363) Distributions from joint venture 708 7,815 Additions to fixed assets (107) (2,220) Amounts released from reserves for capital improvements - 1,020 Total Distributable Cash Flow ("DCF") $3,078 $58,312 Limited Partners' Share of DCF $3,016 $57,145 Limited Partners' Share of DCF per Unit $ .40 $ 7.62 General Partners' Share of DCF $ 62 $ 1,167 Net Proceeds from Capital Transactions: Principal collections on MBS $ 612 $35,931 Reinvestment of MBS principal collections - (3,687) Total Net Proceeds from Capital Transactions $ 612 $32,244 Distributions: Limited Partners $3,000(a) $90,818(b) Limited Partners' Average per Unit $ .40(a) $12.11(b)(c) General Partners $ 62(a) $ 1,167(b) Total Distributions $3,062(a) $91,985(b) (a) Represents distributions paid in 1995, except the February, 1995 distribution, which relates to 1994 cash flows and includes an estimate of the distribution to be paid in August, 1995. (b) Includes estimate of the distribution to be paid in August, 1995 (c) Limited Partners average per Unit return of capital as of August, 1995 is $4.49 [$12.11 - $7.62]. Continued KRUPP CASH PLUS-II LIMITED PARTNERSHIP Operations Partnership Rental revenues for the three and six months ended June 30, 1995 as compared to the same periods in 1994, have increased due mainly to increases in occupancy at Canyon Place and to increases in rental rates at Cumberland Glen. Canyon Place experienced a 9% increase for the three months and an 8% increase for the six months ended June 30, 1995 as compared to the same periods in 1994. The increase in occupancy at Canyon is due to the expansion of tenants and to the opening of the 4,391 square foot Payless Shoes late in 1994. The increase in rental rates at Cumberland Glen is due mainly to the strong economic environment in the Atlanta, Georgia area. MBS interest income decreased in the first half 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 and higher interest rates. Total expenses of the Partnership for the three and six months ended June 30, 1995 as compared to the same periods in 1994 have increased $177,000 and $51,000 respectively due primarily to real estate taxes. The increase in real estate taxes is due primarily to a refund of approximately $270,000 recorded in the second quarter of 1994 for prior years' real estate taxes at Coral Plaza. The decrease in operating expenses is 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 in 1995 as a result of increased preventive maintenance at Encino Oaks in the first quarter of 1994. Joint Venture Brookwood's revenues for the three and six months ended June 30, 1995 as compared to the same periods in 1994 have increased due to an increase in reimbursable tenant billings. Total operating expenses have remained relatively stable in comparing the first and second quarters of 1994 and 1995. 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: August 4, 1995