10-K 1 cmif210k2.txt CENT MTG INC FUND II 12/31/02 10K FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2002 Commission File Number: 0-15448 CENTENNIAL MORTGAGE INCOME FUND II (Exact name of registrant as specified in its charter) California 33-0112106 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1540 South Lewis Street, Anaheim, California 92805 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (714)502-8484 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Units (Title of Class) 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 file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES[X] NO[ ] Indicate by check mark whether if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. YES[X] NO[ ] Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Act). YES[ ] NO[X] The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity were last sold was $0. PART I ITEM 1. BUSINESS. (a) General Development of the Business Centennial Mortgage Income Fund II (the "Partnership"), a California Limited Partnership, was organized on July 12, 1985. The Partnership's registration statement became effective January 17, 1986. The general partners are John B. Joseph, Ronald R. White and Centennial Corporation ("CC"). Beginning in the fourth quarter of 1987, the Partnership ceased accepting capital contributions and entered its operating stage of business. During the fourth quarter of 1992, 60 months after the closing of its offering stage, the Partnership ceased making new loans and entered the repayment stage. For additional information, See Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (b) Financial Information about Industry Segments Given that the Partnership is in the process of liquidation, the Partnership has identified only one operating business segment which is the business of asset liquidation. (c) Narrative Description of Business The Partnership was formed to invest in mortgage investments consisting of participating first mortgage loans, other equity participation loans, construction loans, and wrap-around and other junior loans on commercial, industrial and residential income-producing real property. The Partnership's objectives are to preserve the Partnership's invested capital, provide increased cash distributions to the limited partners as the cash flow from the properties underlying mortgage investments increases over the life of the Partnership, provide capital growth through participation in the increased value of the underlying properties and provide liquidating distributions as cash from the sale of real estate owned is no longer needed for development and operations of real estate owned. Due to the long term recession and falling real estate market values in California during the early 1990's, many of the Partnership's loans became delinquent and management of the Partnership elected to foreclose, thereby increasing real estate owned balances. As a result, the Partnership became a direct investor in this real estate. The Partnership has managed its operating properties and completed certain development processes on its raw land over the last several years in an effort to make this real estate more marketable. The improving real estate markets and development of the Partnership's assets have enabled the Partnership to liquidate the majority of its assets. As of December 31, 2002, the Partnership's assets consisted of $1,294,000 in cash and cash equivalents and $4,000 in other non-cash assets. The $4,000 is an advance to the corporate general partner to cover salary costs. It is possible that the remaining non-cash assets could be liquidated during 2003. Real estate owned by the Partnership reached a peak at December 31, 1993 and has been declining since that time. The following are the balances of real estate owned before allowance for possible losses as of December 31 for the past ten years: 1993 24,170,000 1994 11,284,000 1995 11,314,000 1996 11,316,000 1997 10,827,000 1998 4,599,000 1999 2,843,000 2000 1,511,000 2001 1,044,000 2002 --- The liquidation of assets during 1998 enabled the Partnership to make a $3,496,000 cash distribution to its limited partners in October 1998. Additional asset liquidations during 1999 and 2000 enabled the Partnership to make another $2,127,000 cash distribution to its limited partners in October 2000. The Partnership made another $583,000 cash distribution to its limited partners in September 2001. In December 2002, the Partnership made a cash distribution to its limited partners of $1,000,000. Cautionary Statements Regarding Forward-Looking Information The Partnership wishes to caution readers that the forward-looking statements contained in this Form 10-K under "Item 1. Business," "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Form 10-K involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by any forward-looking statements made by or on behalf of the Partnership. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Partnership is filing the following cautionary statements identifying important factors that in some cases have affected, and in the future could cause the Partnership's actual results to differ materially from those expressed in any such forward- looking statements. The factors that could cause the Partnership's results to differ materially include, but are not limited to, general economic and business conditions, including interest rate fluctuations; the impact of competitive products and pricing; success of operating initiatives; adverse publicity; changes in business strategy or development plans; quality of management; availability, terms and deployment of capital; the results of financing efforts; business abilities and judgment of personnel; availability of qualified personnel; employee benefit costs and changes in, or the failure to comply with government regulations. (d) Financial Information about Foreign and Domestic Operations and Export (e) Sales Not applicable. ITEM 2. DESCRIPTION OF PROPERTY. As of December 31, 2002, no properties or facilities are owned or leased by the Partnership. ITEM 3. LEGAL PROCEEDINGS. None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters have been submitted to a vote of security holders. PART II ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND RELATED SECURITY HOLDER MATTERS. (a) Securities Market Information There is no market for the Partnership's limited partnership units, nor is one expected to develop. The Partnership units were offered by the Partnership through selected dealers who were members of the National Association of Securities Dealers, Inc. (b) Approximate Number of Holders of Limited Partnership Units As of December 31, 2002, there were approximately 2,889 holders of limited partnership units. (c) Partnership Distributions The Partnership paid a $3,496,000 cash distribution to limited partners in October 1998. This distribution equaled approximately $120.00 per limited partnership unit. The Partnership paid a $2,127,000 cash distribution to limited partners in October 2000. This distribution equaled approximately $73.00 per limited partnership unit. The Partnership made another $583,000 cash distribution to its limited partners in September 2001. This distribution equaled approximately $20.00 per limited partnership unit. The Partnership made a $1,000,000 cash distribution to its limited partners in December 2002. This distribution equaled approximately $34.32 per limited partnership unit. Management's intent was to distribute cash flow available for distribution (as defined in the Partnership Agreement), if any, on a periodic basis as substantial cash balances were accumulated from property sales. However, distributions have been suspended based upon advice from legal counsel until the possibility of any unforeseen legal action against the Partnership becomes remote. See Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. ITEM 6. SELECTED FINANCIAL DATA
Years ended (dollars in thousands, except per unit data) ----------------------------------------------------------------------------- 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 ------------------------------------------------------------------------------ CONSOLIDATED STATEMENT OF OPERATIONS DATA: Total revenue $ 892 $ 313 $ 181 $ 277 $ 479 Net income (loss) 638 119 (71) (254) (754) Net income (loss) per limited partnership unit- basic and diluted 21.90 4.08 (2.44) (8.72) (25.87) Cash distributions per limited partnership unit 34.32 20.00 73.00 --- 120.00 CONSOLIDATED BALANCE SHEET DATA: Total loans before allowance for losses --- --- --- 548 598 Total real estate owned before allowance for losses --- 1,044 1,511 2,843 4,599 Total assets 1,298 1,609 2,073 4,325 4,820 Partners' equity 1,236 1,598 2,062 4,260 4,514
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. General Net income (loss) and income (loss) per limited partnership unit were $638,000 and $21.90 for the year ended December 31, 2002, up from $119,000 and $4.08 for the year ended December 31, 2001 and $(71,000) and $(2.44) in 2000. Major changes between statements of operations components from 2001 to 2002 included: 1) a $595,000 increase in gain on sale of real estate owned; 2) a $26,000 decrease in interest on interest bearing deposits; 3) a $25,000 decrease in expenses associated with non-operating real estate owned; and 4) a $85,000 increase in general and administrative costs. Major changes between statements of operations components from 2000 to 2001 included: 1) a $251,000 increase in gain on sale of real estate owned; 2) an $81,000 decrease in interest on interest bearing deposits; 3) a $32,000 decrease in provision for possible losses; 4) a $32,000 decrease in interest on loans to nonaffiliates; and 5) a $26,000 decrease in general and administrative costs. A detailed discussion of the significant changes in each component of revenue and expense for each of the years in the three year period ended December 31, 2002 is included in the following paragraphs. Liquidity and Capital Resources At December 31, 2002, the Partnership had $1,294,000 in unrestricted cash and cash equivalents. During 2002, the Partnership's principal sources of cash were $1,122,000 of cash proceeds from the sale of real estate and $30,000 in interest on interest bearing deposits. The Partnership's principal uses of cash during 2002 were: i) a $1,000,000 cash distribution to limited partners; ii) $182,000 in general and administrative costs; iii) $6,000 in real estate taxes paid; and iv) $14,000 in other expenses associated with non-operating real estate owned. During May 2002, the Partnership sold the remaining 12 acres of its land in Sacramento. The sale generated net sales proceeds of $1,122,000. The Partnership recorded an $846,000 gain on the sale. As of December 31, 2002, the Partnership had no unfunded loan commitments or notes payable commitments. The Partnership's principal capital requirements include general and administrative costs. Effective with the third quarter of 1991, the Partnership had suspended making any cash distributions to partners, due to a decline in liquidity and the uncertainty of the cash requirements for existing and potential real estate owned. Pursuant to the Partnership Agreement, 60 months after the closing of the offering, cash proceeds from mortgage investments were no longer available for reinvestment by the Partnership. Through the latter part of 1997, the general partners believed that the cash proceeds from mortgage reductions and the sale of real estate owned should be retained by the Partnership until such time as it was assured that it had sufficient cash to fulfill any potential operating requirements. Due to the substantial real estate owned balances, these potential operating costs were considered to be very significant. As a result of the substantial decrease in real estate owned which occurred in 1997 and 1998, the general partners determined that the Partnership could make a $3,496,000 distribution to its limited partners in October 1998. Additional asset liquidations during 1999 and 2000 enabled the Partnership to make another $2,127,000 cash distribution to its limited partners in October 2000. The Partnership made another $583,000 cash distribution to its limited partners in September 2001 and an additional $1,000,000 in December 2002. The general partners have had discussions with legal counsel regarding the amounts of cash balances that would be prudent to be retained by the Partnership at this time. In light of the substantial amount of real estate that the Partnership has held an interest in over the years, there is always the potential for future litigation to arise, particularly in the area of toxic contamination. Although the general partners are not aware of any other threatened litigation, or litigation that is likely to arise, they have determined that the Partnership should retain at least $1,000,000 in cash balances to be available to defend the Partnership in any future litigation which may arise. It is expected that these cash balances will be retained until such time as legal counsel advises the general partners that the potential for any future litigation is remote. Results of Operations The Partnership's non-cash assets declined from $2,286,000 as of December 31, 1999 to $4,000 as of December 31, 2002. The substantial reduction in non-cash assets between 1999 and 2002 caused many changes in the Partnership's results of operations as discussed below. Interest income on loans to nonaffiliates was $-0-, $-0- and $32,000 in 2002, 2001 and 2000, respectively. In October 1998, the Partnership received two loans in connection with the payoff of certain loans to Silverwood Homes, an unconsolidated investee. These new loans were the principal source of interest income on loans to nonaffiliates during 2000. The loans were repaid in October 2000. The real estate owned balance before allowance for possible losses at December 31, 2002, 2001 and 2000 was $-0-, $1,044,000 and $1,511,000, respectively. The following section entitled "Real Estate Owned" provide a detailed analysis of these assets. Real Estate Owned A description of the Partnership's principal real estate owned during the years ended December 31, 2002, 2001 and 2000 follows: 44 Acres in Sacramento, California The Partnership funded a loan in 1987 with a committed amount of $4,000,000 secured by a first trust deed on 43.78 acres in Sacramento, California. The loan was provided for the development of offsite improvements. The maturity date was February 1, 1991. The borrower was unable to obtain construction financing and bring interest current. The Partnership accepted a grant deed on the property on March 10, 1992. The property is zoned for multi-family and light industrial use. A portion of the property is adjacent to Highway 99 and has good freeway visibility. The Partnership rezoned and subdivided a portion of the property to facilitate one escrow on a 6.5 acre portion of the property without freeway visibility. This transaction closed escrow during the fourth quarter of 1997. There had been only limited industrial/commercial use development activity in the area surrounding this property during 1996 and 1997. In light of this limited activity and management's objective of liquidating the Partnership's remaining assets as soon as practical, the Partnership recorded an additional $504,000 provision for losses against the carrying value of this property during 1998. During the first quarter of 1999, the Partnership opened escrow on a 9.45 acre portion of the property which also did not have freeway visibility for a purchase price of $900,000. The escrow closed at the end of the second quarter of 1999, generated $842,000 in net cash proceeds and was recorded at no gain or loss. Both the parcel sold in 1997 and the parcel sold in 1999 are zoned for residential use. The balance of the property was zoned for industrial/commercial use. The Partnership sold another 7.13 acres parcel of the property in February 2000. The sale generated net sales proceeds of $846,000. The Partnership 2001. recorded no gain or loss on this sale. The Partnership sold another 2.65 acre parcel of the property in August 2000. The sale generated net sales proceeds of $486,000. The Partnership recorded no gain or loss on this sale. The Partnership sold approximately 5.58 acres of the property in December 2001. The sale generated net sales proceeds of $374,000. The Partnership recorded a $251,000 gain on the sale. The Partnership sold the remaining 12 acres of the property in May 2002. The sale generated net sales proceeds of $1,122,000. The Partnership recorded a $846,000 gain on the sale. Interest on Interest-Bearing Deposits Interest on interest-bearing deposits represents interest earned on Partnership funds invested, for liquidity, in time certificate and money market deposits. Interest on interest-bearing deposits was $30,000 in 2002, $56,000 in 2001 and $137,000 in 2000. The decreases in interest income from 2000 to 2002 are due to both decreases in average cash balances as well as reductions in the interest rates earned on those balances. Gain on Sale of Real Estate Owned As discussed above, the Partnership recorded gains of $251,000 in 2001 and $846,000 in 2002 on the sale of land in Sacramento. Provision for Possible Losses The provision for possible losses was $32,000 in 2000. There was no provision for possible losses recorded in 2001 or 2002. The 2000 provision relates to the discounted payoff of the remaining loans held by the Partnership. Other Expenses Expenses associated with non-operating real estate owned were $20,000 in 2002, $45,000 in 2001 and $45,000 in 2000. The expenses relate principally to the 44 acres in Sacramento. These expenses include property taxes of $6,000, $23,000 and $27,000 for 2002, 2001 and 2000, respectively. The decrease for 2002 is due to the sale of the property in May 2002. General and administrative expenses, affiliates were $117,000, $94,000 and $104,000 in 2002, 2001 and 2000, respectively. These expenses are primarily salary allocation reimbursements paid to affiliates for the management of the Partnership's assets. The increase in 2002 is partially the result of additional rent expense allocations. The decrease in 2001 is attributable to a layoff of the corporate partner's personnel. General and administrative expenses, nonaffiliates was $117,000, $55,000 and $71,000 in 2002, 2001 and 2000, respectively. The increase in 2002 was principally due to a tax provision related to the income recorded due to the sale of PIR. The decrease in 2001 was principally due to decreased investor mailings and a reduction in offsite record storage costs. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Since the Partnership does not invest in any derivative financial instruments or enter into any activities involving foreign currencies, its market risk associated with financial instruments is limited to the effect that changing domestic interest rates might have on the fair value of its bank deposits. As of December 31, 2002, the Partnership held fixed rate bank deposits with carrying values totaling $809,000. The bank deposits all had maturities of less than ninety days. The fair value of these bank deposits was estimated to be equal to their carrying values as of December 31, 2002 due to their near term maturities. Given the relatively short-term maturities of these assets, management does not believe the Partnership is exposed to any significant market risk related to their fair value. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Index to Consolidated Financial Statements and Schedules attached hereto. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON REPORTING AND FINANCIAL DISCLOSURE None PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Identification of General Partners The Partnership is managed by its general partners. The individual general partners' principal occupations and affiliations during the last five years are described in the following table. The general partners devote to the affairs of the Partnership such portion of their time as they consider necessary for the effective supervision of its affairs. Name, Age and Position Principal Occupation and Affiliation during Last Five Years ------------------------------------------------------------------------------ John B. Joseph Age 64 General Partner John B. Joseph is currently Vice Chairman of the Board of Directors and Vice President of Centennial Corporation. He has held these positions since 1983. Mr. Joseph also has served, in the following capacities during the past five years: he was on the board of directors for West Coast Bancorp ("WCB"), a publicly held bank holding company operating in California from its inception in 1981 through February 1999; he was Chairman of the Board of Directors of WCB since its inception in 1981 and CEO from April 1991 until 1998. Mr. Joseph has also been general partner of various public and private limited partnerships engaged in real estate development and lending activities. Mr. Joseph has 31 years of experience in asset management in both securities and real estate. Mr. Joseph has worked in all areas of real estate. In the past, Mr. Joseph has been engaged in the syndication and management of over $100 million worth of income property, including industrial complexes, shopping centers, business centers, office buildings, commercial properties and residential units. Ronald R. White Age 56 General Partner Ronald R. White is currently President and CEO of Centennial Corporation. He has held these positions since 1983. He was also Executive Vice President and Vice Chairman of the Board of Directors of WCB until 1998. Mr. White served in these capacities since April 1987. Mr. White also serves, or has served, in the following capacities during the past five years: general partner of various public and private limited partnerships engaged in real estate development and lending activities. Mr. White's career spans the financial and management fields in both securities and real estate. Mr. White has 29 years of experience in asset management. In the past, Mr. White has been engaged in the syndication and management of over $100 million worth of income property including industrial complexes, shopping centers, business centers, office buildings, commercial properties, and residential units. Centennial Corporation ("CC"), a privately-held corporation, whose stock is owned by affiliates of Ronald R. White and John B. Joseph, was voted in as new general partner in the first quarter of 1994. CC was incorporated in 1983 to engage in the real estate lending business and to provide consulting services. Identification of Executive Officers The Partnership does not have officers as such. The affairs of the Partnership are managed by the general partners noted above. ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS The following table summarizes the types and recipients of compensation paid and to be paid to the general partners and affiliates by the Partnership. Amount Earned/ Type of Reimbursable for the Compensation & Year Ended Name of Entity Description of Payment December 31, 2002 ------------------------------------------------------------------------------ Operating Stage: Application and An amount up to a maximum $ --- commitment fees of 3 percent of the gross - the general proceeds of the offering partner or on any single mortgage affiliates investment, and an aggregate maximum of 7 percent of the gross proceeds of the offering, payable to the general partners or affiliates. The application and commitment fees are payable solely from borrowers and prospective borrowers and not directly from the proceeds of the offering. General partners' The general partners or affiliates $ 117,000 (1) reimbursable shall be entitled to reimbursement expenses for certain expenses, subject to - general the conditions of the Partnership partner or Agreement. affiliates General partners' A 5 percent interest in cash $ --- interest in cash flow available for distribution distributions for any year until all limited - general partnership unit holders have partners or received an amount equal to a 12 affiliates percent non-cumulative annual return on their adjusted invested capital, and 10 percent of the balance of any cash flow available for distribution for such year Mortgage 1/4 of 1 percent of the $ --- investment maximum amount funded or to servicing fees be funded by the Partnership on mortgage investments serviced by CC Repayment Stage: General partners' One percent of mortgage $ --- share of reductions until all limited mortgage partners have received an reductions amount equal to their adjusted - general invested capital and cumulative partners or distributions (including cash affiliates flow available for distribution) equal to a 12 percent annual return with respect to their adjusted invested capital, and 15 percent of the balance of any mortgage reductions. (1) Such reimbursable expenses include salaries and related salary expenses for services which could be performed directly for the Partnership by independent parties such as legal, clerical, accounting, financial reporting, governmental reporting, transfer agent, data processing and duplication services. Such reimbursement of expenses will be made regardless of whether any distributions are made to the limited partners. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) Security Ownership of Certain Beneficial Owners No persons are known by the Partnership to own beneficially more than 5 percent of the limited partnership units at December 31, 2002. (b) Security Ownership of Management The percent of units owned by Management is less than 1 percent. Name and address Nature and Number of Percent of of Beneficial Owner Units Outstanding Units Outstanding ------------------------------------------------------------------------------ Ronald R. White 1540 S. Lewis St. Anaheim, CA 92805 Limited partnership units: 1 --- (c) Change in Control The Partnership knows of no contractual arrangements which may at a subsequent date result in a change of control of the Partnership. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. This disclosure is made in note 4 of Notes to the Consolidated Financial Statements incorporated in this filing. ITEM 14. CONTROLS AND PROCEDURES The Partnership's general partner, by its Executive Vice President and Chief Financial Officer, has conducted an evaluation of the effectiveness of our design and operation of disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934) as of a date within 90 days prior to the filing date of this annual report. Based on that evaluation, the Executive Vice President and Chief Financial Officer concluded that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this annual report has been made known to them in a timely fashion. There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date the Executive Vice President and Chief Financial Officer completed their evaluation. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a)(1) and (a)(2) - See Index to Consolidated Financial Statements and Schedules attached hereto. (a)(3) - Exhibits. (a)99.1 Certification of General Partner and Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002. (3) & (4) Articles of Incorporation and Bylaws The Amended and Restated Limited Partnership Agreement Incorporated by reference to Exhibit A to the Partnership's Prospectus contained in the Partnership's registration Statement on Form S-11 (Commission File No. 0-15448) Dated January 17, 1986, as supplemented filed under the Securities Act of 1933 (b)(4) - Reports on Form 8-K. None. Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Centennial Mortgage Income Fund II and Subsidiaries, the ("Partnership") on Form 10-K for the period ending December 31, 2002, as filed with the Securities and Exchange Commission on March 27, 2003, (the "Report") I, Ronald R. White, General Partner and Chief Financial Officer of Centennial Corporation (Corporate General Partner), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/ Ronald R. White _______________________________ March 27, 2003 Ronald R. White General Partner and Chief Financial Officer of Centennial Corporation CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Ronald R. White, certify that: 1. I have reviewed this annual report on Form 10-K of Centennial Mortgage Income Fund II and Subsidiaries, the ("Partnership"); 2. Based on my knowledge, this annual 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 periods covered by this annual report; 3. Based on my knowledge , the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Partnership as of, and for, the periods presented in this annual report; 4. The Partnership's other general partners and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Partnership and we have: a)designed such disclosure controls and procedures to ensure that material information relating to the Partnership, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b)evaluated the effectiveness of the Partnership's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c)presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Partnership's management and I have disclosed, based on our most recent evaluation, to the Partnership's auditors and the audit committee (or persons performing the equivalent function)of the Partnership: a)all significant deficiencies in the design or operation of internal controls which could adversely affect the Partnership's ability to record, process, summarize and report financial data and have identified for the Partnership'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 Partnership's internal controls; and 6. I have indicated in this annual 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. Date: March 27, 2003 /s/ Ronald R. White ___________________________ Ronald R. White General Partner and Chief Financial Officer of Centennial Corporation Signatures Pursuant to the requirements of Section 13 or 15(d) 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. CENTENNIAL MORTGAGE INCOME FUND II AND SUBSIDIARIES A California Limited Partnership By:/s/John B. Joseph _________________________________ John B. Joseph General Partner March 27, 2003 By:/s/Ronald R. White _________________________________ Ronald R. White General Partner March 27, 2003 By: CENTENNIAL CORPORATION General Partner /s/John B. Joseph _________________________________ John B. Joseph Executive Vice President March 27, 2003 /s/Ronald R. White _________________________________ Ronald R. White President and Chief Financial Officer March 27, 2003 CENTENNIAL MORTGAGE INCOME FUND II AND SUBSIDIARIES A Limited Partnership ANNUAL REPORT Form 10-K Consolidated Financial Statements Items 8, 15(a)(1) and 15(a)(2) December 31, 2002, 2001 and 2000 (With Independent Auditors' Report Thereon) F-1 CENTENNIAL MORTGAGE INCOME FUND II AND SUBSIDIARIES A Limited Partnership Items 8, 15(a)(1) and 15(a)(2) Index to Consolidated Financial Statements and Schedules Consolidated Financial Statements Page Independent Auditors' Report F-3 Consolidated Balance Sheets -- December 31, 2002 and 2001 F-4 Consolidated Statements of Operations -- Years ended December 31, 2002, 2001 and 2000 F-5 Consolidated Statements of Partners' Equity -- Years ended December 31, 2002, 2001 and 2000 F-6 Consolidated Statements of Cash Flows -- Years ended December 31, 2002, 2001 and 2000 F-7 Notes to Consolidated Financial Statements F-8 Schedules Schedule III - Consolidated Real Estate Owned F-16 All other schedules are omitted as the required information is inapplicable, or the information is presented in the consolidated financial statements or notes thereto. F-2 INDEPENDENT AUDITORS' REPORT To the General Partners Centennial Mortgage Income Fund II: We have audited the consolidated financial statements of Centennial Mortgage Income Fund II, a limited partnership, and subsidiaries as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Centennial Mortgage Income Fund II and subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG LLP Orange County, California January 21, 2003 F-3 CENTENNIAL MORTGAGE INCOME FUND II AND SUBSIDIARIES A Limited Partnership Consolidated Balance Sheets December 31, 2002 and 2001
ASSETS 2002 2001 ------------------------------------------------------------------------------ Cash and cash equivalents $ 1,294,000 $ 1,333,000 Real estate owned, held for sale (note 5) --- 1,044,000 Less allowance for possible losses on real estate owned (note 3) --- 768,000 ------------------------------------------------------------------------------ Net real estate owned --- 276,000 ------------------------------------------------------------------------------ Due from affiliate (note 4) 4,000 --- ------------------------------------------------------------------------------ $ 1,298,000 $ 1,609,000 ============================================================================== LIABILITIES AND PARTNERS' EQUITY ------------------------------------------------------------------------------ Accounts payable and accrued liabilities $ 62,000 $ 11,000 ------------------------------------------------------------------------------ Total liabilities 62,000 11,000 ------------------------------------------------------------------------------ Partners' equity (deficit) -- 29,133 limited partnership units outstanding in 2002 and 2001 General partners (56,000) (56,000) Limited partners 1,292,000 1,654,000 ------------------------------------------------------------------------------ Total partners' equity 1,236,000 1,598,000 Contingencies (note 6) ------------------------------------------------------------------------------ $ 1,298,000 $ 1,609,000 ==============================================================================
See accompanying notes to consolidated financial statements F-4 CENTENNIAL MORTGAGE INCOME FUND II AND SUBSIDIARIES A Limited Partnership Consolidated Statements of Operations Years ended December 31, 2002, 2001 and 2000
2002 2001 2000 ------------------------------------------------------------------------------ Revenue: Interest on loans to nonaffiliates $ --- $ --- $ 32,000 Interest on interest-bearing deposits 30,000 56,000 137,000 Gain on sale of real Estate owned 846,000 251,000 --- Other 16,000 6,000 12,000 ------------------------------------------------------------------------------ Total revenue 892,000 313,000 181,000 ------------------------------------------------------------------------------ Expenses: Provision for possible losses (note 3) --- --- 32,000 Expenses associated with non-operating real estate owned 20,000 45,000 45,000 General and administrative, affiliates (note 4) 117,000 94,000 104,000 General and administrative, nonaffiliates (note 1) 117,000 55,000 71,000 ------------------------------------------------------------------------------ Total expenses 254,000 194,000 252,000 ------------------------------------------------------------------------------ Net income (loss) $ 638,000 $ 119,000 $ (71,000) ============================================================================== Net income (loss) per limited partnership unit - basic and diluted $ 21.90 $ 4.08 $ (2.44) ==============================================================================
See accompanying notes to consolidated financial statements F-5 CENTENNIAL MORTGAGE INCOME FUND II AND SUBSIDIARIES A Limited Partnership Consolidated Statements of Partners' Equity Years ended December 31, 2002, 2001 and 2000
Total General Limited Partners' Partners Partners Equity ------------------------------------------------------------------------------ Balance (deficit) at December 31, 1999 $ (56,000) $ 4,316,000 $ 4,260,000 Net loss --- (71,000) (71,000) Distribution to limited partners --- (2,127,000) (2,127,000) ------------------------------------------------------------------------------ Balance (deficit) at December 31, 2000 (56,000) 2,118,000 2,062,000 Net income --- 119,000 119,000 Distribution to limited partners --- (583,000) (583,000) ------------------------------------------------------------------------------ Balance (deficit) at December 31, 2001 (56,000) 1,654,000 1,598,000 Net income --- 638,000 638,000 Distribution to limited partners --- (1,000,000) (1,000,000) ------------------------------------------------------------------------------ Balance (deficit) at December 31, 2002 $ (56,000) $ 1,292,000 $ 1,236,000 ==============================================================================
See accompanying notes to consolidated financial statements F-6 CENTENNIAL MORTGAGE INCOME FUND II AND SUBSIDIARIES A Limited Partnership Consolidated Statements of Cash Flows Years ended December 31, 2002, 2001 and 2000
2002 2001 2000 ----------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 638,000 $ 119,000 $ (71,000) Adjustments to reconcile net income (loss) to net cash used in operating activities: Provision for possible losses --- --- 32,000 Gain on sale of real estate owned (846,000) (251,000) --- Changes in assets and liabilities: (Increase) decrease in other assets (4,000) --- 5,000 Increase (decrease) in accounts Payable and accrued liabilities 51,000 --- (54,000) ----------------------------------------------------------------------------- Net cash used in operating activities (161,000) (132,000) (88,000) ----------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Principal collected on loans --- --- 520,000 Proceeds from sale of real estate owned 1,122,000 374,000 1,332,000 Advances on loans receivable-earning --- --- (4,000) Decrease in due from unconsolidated investee --- --- 2,000 ----------------------------------------------------------------------------- Net cash provided by investing activities 1,122,000 374,000 1,850,000 ----------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to limited partners (1,000,000) (583,000) (2,127,000) ----------------------------------------------------------------------------- Net decrease in cash and cash equivalents (39,000) (341,000) (365,000) Cash and cash equivalents at beginning of year 1,333,000 1,674,000 2,039,000 ----------------------------------------------------------------------------- Cash and cash equivalents at end of year $1,294,000 $1,333,000 $1,674,000 ============================================================================= Supplemental schedule of noncash investing and financing activities: Decrease in allowance for possible losses on real estate loans and on real estate owned as a result of sales and chargeoffs $ 768,000 $ 344,000 $ --- Decrease in allowance for possible loans receivable and loans receivable as a result of chargeoffs --- --- 32,000
See accompanying notes to consolidated financial statements F-7 CENTENNIAL MORTGAGE INCOME FUND II AND SUBSIDIARIES A Limited Partnership Notes to Consolidated Financial Statements December 31, 2002, 2001, 2000 (1) SUMMARY OF SIGNIFICANT ACCOUNTING P0LICIES Business Centennial Mortgage Income Fund II (the "Partnership") was formed in 1985 and initially invested in commercial, industrial and residential income-producing real property through mortgage investments consisting of participating first mortgage loans, other equity participation loans, construction loans, and wrap- around and other junior loans. The Partnership's underwriting policy for granting credit was to fund loans secured by first and second deeds of trust on real property. The Partnership's area of concentration is in California. In the normal course of business, the Partnership participated with other lenders in extending credit to single borrowers. The Partnership did this in an effort to decrease credit concentrations and provide a greater diversification of credit risk. As of December 31, 2002, all of the loans secured by operating properties have been repaid to the Partnership. However, during the early 1990's, real estate market values for undeveloped land in California declined severely. As the loans secured by undeveloped land became delinquent, the Partnership elected to foreclose on certain of these loans, thereby increasing real estate owned balances. As a result, the Partnership became a direct investor in this real estate. The real estate owned balance before allowance for possible losses at December 31, 2000 was $1,511,000, decreasing to $1,044,000 at year end 2001 and zero at year end 2002. Beginning with the fourth quarter of 1992, the Partnership entered its repayment stage and cash proceeds from mortgage investments are no longer available for reinvestment in new loans by the Partnership. Basis of Presentation The Partnership formed several subsidiaries to own and operate certain of its real estate assets. The corporations formed were PIR Development, Inc. ("PIR"), and CTA Development, Inc. ("CTA") and LCR Development, Inc., ("LCR"). All of these corporations are California corporations. Several of the Partnership's assets were transferred to these corporations, at the Partnership's cost basis, in transactions which included no cash down and the Partnership carrying 100 percent of the financing. CTA was liquidated during 2000. The Partnership reduced the carrying value of its investment in LCR to 2001. $-0- during 2000. PIR was liquidated during 2002. With the exception 2002. of LCR, all of these corporations are wholly owned corporations and have 2003. been consolidated in the accompanying consolidated financial statements. 2004. All significant intercompany balances and transactions, including the 2005. aforementioned transfers, have been eliminated in consolidation. F-8 Organization The Partnership was organized on July 12, 1985 in accordance with the provisions of the California Uniform Limited Partnership Act. The Partnership commenced operations in June 1986. The general partners are John B. Joseph, Ronald R. White and Centennial Corporation ("CC"), a privately-held California corporation whose stock is owned by affiliates of Ronald R. White and John B. Joseph. Partners' Capital Accounts Cash Available for Distribution, as defined in the Partnership Agreement, is to be allocated 95 percent to the limited partners and 5 percent to the general partners until each limited partner has received an amount equal to a 12 percent non-cumulative annual return on his adjusted invested capital (as defined in the Partnership Agreement). Thereafter, Cash Available for Distribution is to be allocated 90 percent to the limited partners and 10 percent to the general partners. All distributions of Mortgage Reductions (as defined in the Partnership Agreement) after the first sixty months following the closing date of the Partnership, shall be distributed 99 percent to the limited partners and 1 percent to the general partners, until each limited partner has received a 12 percent cumulative annual return on his adjusted invested capital, after which such amounts are to be distributed 85 percent to the limited partners and 15 percent to the general partners. In order to properly reflect the economic effect of the allocations discussed above, the Partnership has allocated financial statement net earnings (losses) 95 percent to the limited partners and 5 percent to the general partners through 1992. The Partnership had no Cash Available for Distribution during the three years ended December 31, 2002. Based upon these and various other terms of the Partnership Agreement, it is improbable that the general partners would be required to make any capital contributions to the Partnership in excess of their negative capital account as of December 31, 1992. Accordingly, since January 1, 1993, the Partnership has allocated 100 percent of the losses to the limited partners. As a result of the liquidation of the majority of the Partnership's investments in 1998, it became clear that the amount of the required deficit restoration of the General Partners would not exceed $56,000 and the capital accounts of the General Partners and limited partners were adjusted in 1998 to reflect such maximum deficit restoration. Real Estate Owned Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. Estimated fair values are determined by using appraisals, discounted cash flows and/or other valuation techniques. The actual market price of real estate can only be determined by negotiation between independent third parties in a sales transaction and sales proceeds could differ substantially from estimated fair values. An impairment loss shall be measured as the amount by which the carrying amount of the asset exceeds the fair value of the assets less costs to sell. Assets to be disposed of are not depreciated while they are held for disposal. The Partnership considered all real estate owned as held for sale during 2002 and 2001. F-9 Income Taxes Under provisions of the Internal Revenue Code and the California Revenue and Taxation Code, partnerships are generally not subject to income taxes. For tax purposes, any income or losses realized are those of the individual partners, not the Partnership. The Partnership reports certain transactions differently for tax and financial statement purposes. The following is a recap of current and cumulative temporary differences between earnings for generally accepted accounting principles ("GAAP") and taxable earnings.
Current Temporary Differences Partnership Corporations Total (Unaudited) (Unaudited) (Unaudited) ------------------------------------------------------------------------------ GAAP earnings (loss) for the year ended December 31, 2002 $ (3,188,000) $ 3,887,000 $ 699,000 Loss provision deducted --- (768,000) (768,000) Accrued expenses 1,000 (1,840,000) (1,839,000) Carrying costs expensed for books and capitalized for tax purposes --- (605,000) (605,000) Net operating loss utilized --- (674,000) (674,000) ------------------------------------------------------------------------------ Taxable loss for the year ended December 31, 2002 $ (3,187,000) $ --- $ (3,187,000) ============================================================================== Taxable loss allocable to General Partner --- ============================================================================== Taxable loss per limited partner unit $ (109.39) ==============================================================================
Cumulative Temporary Differences as of December 31, 2002 Partnership Corporations (Unaudited) (Unaudited) ------------------------------------------------------------------------------ Net operating loss carry forwards $ --- $ 3,000 ------------------------------------------------------------------------------ Total cumulative temporary differences $ --- $ 3,000 ==============================================================================
The subsidiary corporations are subject to taxation and account for income taxes under an asset and liability approach for establishing deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the corporation's assets and liabilities. None of the subsidiary corporations have paid any income taxes since their F-10 respective formations and all of them have had net deferred tax assets which have been fully offset by valuation allowances as of December 31, 2002, 2001 and 2000. Because of a change in state tax laws, PIR was not able to utilize a portion of its net operating loss carryforward for the year ended December 31, 2002. A $62,000 provision for taxes was recorded by the Partnership related to the taxable profits recorded by PIR as of December 31, 2002 that is included in general and administrative expenses. No deferred tax asset related to the corporations cumulative temporary differences shown above has been recorded in the consolidated financial statements due to the improbability of realization. Future consolidated financial statements could reflect income tax expense in the event that these corporations generate taxable profits in excess of operating loss carryforwards available. Some of the subsidiary corporations are cash basis taxpayers. Statements of Cash Flows For purposes of reporting cash flows, cash and cash equivalents include cash and interest-bearing deposits with original maturities of three months or less. Net Loss Per Limited Partnership Unit Net loss per limited partnership unit for financial statement purposes was based on 29,133 weighted average limited partnership units outstanding in 2002, 2001 and 2000. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Revenue from rental income on real estate owned was recognized on a straight- line basis over the life of the lease when payments become due under operating leases. The Partnership has recognized gains or losses on the sale of real estate owned as the gains or losses are determinable and the earnings process is complete. Credit Risk As of December 31, 2002, the Partnership had bank deposits at four different banks whose deposits are federally insured. Approximately $993,000 of the Partnership's cash and cash equivalent balance as of that same date was in excess of maximum balances covered by such insurance. Financial Information about Industry Segments Given that the Partnership is in the process of liquidation, the Partnership has identified only one operating business segment which is the business of asset liquidation. At December 31, 2002, the Partnership does not believe that there would be a material difference if it had adopted the liquidation basis of accounting. F-11 (2) FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107 "Disclosures About Fair Value of Financial Instruments" ("SFAS 107"), requires that the Partnership disclose estimated fair values for its financial instruments as well as the methods and significant assumptions used to estimate fair values. The following information does not purport to represent the aggregate net fair value of the Partnership. The following methods and assumptions were used by the Partnership in estimating the fair value of each class of financial instrument. Cash and Cash Equivalents The carrying amount, which is cost, is assumed to be the fair value because of the liquidity of these instruments. Accounts Payable and Accrued Liabilities Carrying value is considered to be equal to the fair value of these liabilities as they are due on demand. (3) ALLOWANCE FOR POSSIBLE LOSSES ON REAL ESTATE OWNED
Changes in the allowance for possible losses on real estate owned are as follows: 2002 2001 2000 ------------------------------------------------------------------------------ Balance at beginning of year $ 768,000 $ 1,112,000 $ 1,112,000 Real estate owned charged-off --- --- --- Sale of real estate (768,000) (344,000) --- ------------------------------------------------------------------------------ Balance at end of year $ --- $ 768,000 $ 1,112,000 ==============================================================================
(4) TRANSACTIONS WITH AFFILIATES The Partnership reimburses the general partner for salaries and related expenses incurred on behalf of the Partnership for services such as legal, clerical, accounting, property management and other administrative functions. The general partners and affiliates charged $117,000 $94,000 and $104,000 for such services in 2002, 2001 and 2001, respectively. At December 31, 2002, the Partnership had advanced $4,000 to the corporate general partner to cover salary costs. F-12 (5) REAL ESTATE OWNED
Real estate owned consists of the following: December 31, December 31, 2002 2001 ------------------------------------------------------------------------------ 1. Land in Sacramento, CA $ --- $ 1,044,000 ------------------------------------------------------------------------------ Total real estate owned $ --- $ 1,044,000 ==============================================================================
The Partnership sold approximately 7.13 acres of land in Sacramento in February 2000. The sale generated net sales proceeds of $846,000. The Partnership recorded no gain or loss on this sale. In August 2000, the Partnership sold approximately 2.65 acres of its land in Sacramento. The sale generated net sales proceeds of $486,000. The Partnership recorded no gain or loss on this sale. The Partnership sold approximately 5.58 acres of its land in Sacramento in December 2001. The sale generated net sales proceeds of $374,000. The Partnership recorded a $251,000 gain on the sale. The Partnership sold the remaining 12 acres of its land in Sacramento in May 2002. The sale generated net sales proceeds of $1,122,000. The Partnership 2003. recorded an $846,000 gain on the sale. (6) Contingencies There are no pending legal proceedings. F-13 (7) QUARTERLY FINANCIAL RESULTS (UNAUDITED)
Quarter Ended December 31, September 30, June 30, March 31, 2002 2002 2002 2002 ------------------------------------------------------------------------------------------ REVENUE: Interest on interest-bearing deposits $ 8,000 $ 9,000 $ 8,000 $ 5,000 Gain on sale of real estate --- --- 846,000 --- Other 2,000 1,000 6,000 7,000 ------------------------------------------------------------------------------------------ Total revenue 10,000 10,000 860,000 12,000 ------------------------------------------------------------------------------------------ EXPENSES: Expenses associated with non-operating real estate owned --- --- 4,000 16,000 General and administrative 93,000 42,000 58,000 43,000 ------------------------------------------------------------------------------------------ Total expenses 93,000 42,000 62,000 59,000 ------------------------------------------------------------------------------------------ Net income (loss) $ (81,000) $ (32,000) $ 798,000 $ (47,000) ========================================================================================== Net income (loss) per limited partnership unit-basic and diluted $ (2.78) $ (1.10) $ 27.38 $ (1.61) ==========================================================================================
F-14 (7) QUARTERLY FINANCIAL RESULTS (UNAUDITED)(CONTINUED)
Quarter Ended December 31, September 30, June 30, March 31, 2001 2001 2001 2001 ------------------------------------------------------------------------------------------ REVENUE: Interest on interest-bearing deposits $ 6,000 $ 12,000 $ 17,000 $ 21,000 Gain on sale of real estate 251,000 --- --- --- Other 1,000 1,000 2,000 2,000 ------------------------------------------------------------------------------------------ Total revenue 258,000 13,000 19,000 23,000 ------------------------------------------------------------------------------------------ EXPENSES: Expenses associated with non-operating real estate owned 8,000 12,000 9,000 16,000 General and administrative 36,000 31,000 40,000 42,000 ------------------------------------------------------------------------------------------ Total expenses 44,000 43,000 49,000 58,000 ------------------------------------------------------------------------------------------ Net income (loss) $ 214,000 $ (30,000) $ (30,000) $ (35,000) ========================================================================================== Net loss per limited partnership unit-basic and diluted $ 7.34 $ (1.03) $ (1.03) $ (1.20) ==========================================================================================
F-15 CENTENNIAL MORTGAGE INCOME FUND II AND SUBSIDIARIES A Limited Partnership Consolidated Real Estate Owned December 31, 2002 Schedule III The following is a summary of consolidated real estate owned for the three years ended December 31, 2002.
2002 2001 2000 ------------------------------------------------------------------------------------------------------------- Balance at beginning of year $ 1,044,000 $ 1,511,000 $ 2,843,000 Additions during period: Improvements --- --- --- Deductions during period: Real estate sold (1,044,000) (467,000) (1,332,000) ------------------------------------------------------------------------------------------------------------- Balance at year end $ --- $ 1,044,000 $ 1,511,000 =============================================================================================================
See accompanying independent auditors report F-16