10-Q 1 c70432e10vq.txt FORM 10-Q FOR QUARTER ENDING DECEMBER 31, 2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter ended December 31, 2001 Commission file number 33-24537 CENTURY PACIFIC TAX CREDIT HOUSING FUND II (Exact name of registrant as specified in its charter) CALIFORNIA 95-4178283 (State of other jurisdiction of (IRS Employer incorporation of organization) Identification Number) 1925 Century Park East, Suite 1900 Los Angeles, CA 90067 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (800) 262-8242 No Change (Former name, former address and former fiscal year if changed since last report) Indicate by a 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 [ ] 1 CENTURY PACIFIC TAX CREDIT HOUSING FUND II TABLE OF CONTENTS Page PART I FINANCIAL INFORMATION Item 1 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . 3 PART II OTHER INFORMATION . . . .(Not Applicable) 2 CENTURY PACIFIC TAX CREDIT HOUSING FUND II BALANCE SHEET (Unaudited)
December 31, March 31, 2001 2001 ----------- ----------- ASSETS Cash $ 94 $ 2,562 Advance to General Partners 871 871 Investments in Limited Part- nerships (Note 4) 0 0 ----------- ----------- $ 965 $ 3,433 =========== =========== LIABILITIES AND PARTNERS' EQUITY Accounts Payable and Accrued Expenses $ 3,488 $ 5,800 Amounts Payable to Related Parties (Note 3) 1,883,151 1,854,951 Advance from Affiliates 40,594 40,594 ----------- ----------- 1,927,233 1,901,345 ----------- ----------- Commitments and Contingencies Partners' Equity, per accompanying statement General Partners (68,316) (68,033) Limited Partners (1,857,952) (1,829,879) ----------- ----------- (1,926,268) (1,897,912) ----------- ----------- $ 965 $ 3,433 =========== ===========
The accompanying notes are an integral part of this statement. 3 CENTURY PACIFIC TAX CREDIT HOUSING FUND II STATEMENT OF INCOME (Unaudited)
Three Months Ended Nine Months Ended December 31, December 31, 2001 2000 2001 2000 -------- -------- -------- -------- REVENUES: Other income $ 0 $ 0 $ 0 $ 300 -------- -------- -------- -------- 0 0 0 300 -------- -------- -------- -------- EXPENSES: General & Adm. (Note 3) 9,446 9,419 28,356 28,453 Equity in Net Losses of Operating Partnership (Note 4) 0 51,360 0 186,700 -------- -------- -------- -------- 9,446 60,779 28,356 215,153 -------- -------- -------- -------- Net Loss $ 9,446 $ 60,779 28,356 214,853 ======== ======== ======== ========
The accompanying notes are an integral part of this statement. 4 CENTURY PACIFIC TAX CREDIT HOUSING FUND II STATEMENT OF PARTNERS' EQUITY December 31, 2001 (Unaudited)
General Limited Partners Partners Total ----------- ----------- ----------- Balance at March 31, 2001 ($68,033) ($1,829,879) ($1,897,912) Net Income (Loss) (283) (28,073) (28,356) ----------- ----------- ----------- Equity (Deficit) at December 31, 2001 ($68,316) ($1,857,952) ($1,926,268) =========== =========== =========== Percentage Interest December 31, 2001 1% 99% 100% =========== =========== ===========
The accompanying notes are an integral part of this statement. 5 CENTURY PACIFIC TAX CREDIT HOUSING FUND II STATEMENT OF CASH FLOWS (Unaudited)
Three Months Ended Nine Months Ended December 31, December 31, 2001 2000 2001 2000 -------- -------- -------- -------- Cash Flow from Financing Activities: Increase (Decrease) in Amounts Payable to Related Parties $ 9,400 $ 9,400 $ 28,200 $ 29,881 -------- -------- -------- -------- Net Cash Provided By Financing Activities $ 9,400 $ 9,400 $ 28,200 $ 29,881 ======== ======== ======== ======== Cash Flow from Operating Activities: Transfer Fee Income Received $ 0 $ 0 $ 0 $ 300 General & Admin. Expenses (9,446) (9,419) (28,356) (28,454) Incr(Decr) in Accts Pay 0 0 (2,312) (1,521) -------- -------- -------- -------- Net Cash Used in Operating Activities $ (9,446) $ (9,419) $(30,668) $(29,675) ======== ======== ======== ======== Net Increase (Decrease) in Cash and Cash Equivalents $ (46) $ (19) $ (2,468) $ 206 Cash and Cash Equivalents at Beginning of Period 140 2,601 2,562 2,376 -------- -------- -------- -------- Cash and Cash Equivalents at End of Period $ 94 $ 2,582 $ 94 $ 2,582 ======== ======== ======== ========
The accompanying notes are an integral part of this statement. 6 CENTURY PACIFIC TAX CREDIT HOUSING FUND II a California limited partnership NOTES TO FINANCIAL STATEMENTS For the Quarter Ended December 31, 2001 NOTE 1 - DESCRIPTION OF THE PARTNERSHIP AND ITS ORGANIZATION: Century Pacific Tax Credit Housing Fund II, a California limited partnership (the "Partnership" or "CPTCHF II") was formed on September 2, 1988 for the purpose of raising capital and selling limited partnership interests and then acquiring limited partnership interests in partnerships (the "Operating Partnerships") owning and operating existing residential apartment properties (the "Properties"). The general partners of the Partnership are Century Pacific Capital II Corporation, a California corporation, ("CPII") and Irwin Jay Deutch, an individual (collectively, the "General Partners"). The General Partners and affiliates of the General Partners (the "General Partners and Affiliates") have interest in the Partnership and receive compensation from the Partnership and the Operating Partnerships (Note 3). The Properties qualify for the "Low-Income Housing Tax Credit" established by Section 42 of the Tax Reform Act of 1986 (the "Low-Income Housing Tax Credit"). These properties are leveraged low-income multifamily residential complexes and some receive one or more forms of assistance from federal, state or local governments, or agencies (the "Government Agencies") while others do not receive any subsidy from Government Agencies although some may have mortgage loans insured by a Government Agency. In September 1988, the Partnership began raising capital from sales of limited partnership interests, at $1,000 per unit. The limited partnership offering closed as of December 31, 1989, with 5,754 units having been sold. As of December 31, 2001, the Partnership acquired limited partnership interest of 90% in Washington Courts Limited Partnership and 60% in Laurel-Clayton Limited Partnership, two existing Operating Partnerships which own apartment rental properties. Basis of Presentation The accompanying unaudited financial statements of Century Pacific Tax Credit Housing Fund II (the "Company") as of December 31, 2001 and March 31, 2001 (the March 31, 2001 financial information included herein has been extracted from the Company's audited financial statements on Form 10-K) and for the three months ended December 31, 2001 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities and Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company's management, all adjustments (consisting of only normal recurring adjustments) considered necessary to present fairly the financial statements have been made. The statement of operations for the three months ended December 31,2001 are not necessarily indicative of the results that may be expected for the entire year. These statements should be read in conjunction with the financial statements and related notes thereto included on Form 10-K for the year ended March 31, 2001. 7 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Method of Accounting for Investments in Operating Partnerships The Partnership uses the equity method to account for its investment in the Operating Partnerships in which it has invested (Note 4). Under the equity method of accounting, the investment is carried at cost and adjusted for the Partnership's share of the Operating Partnerships' results of operations and by cash distributions received. Equity in the loss of each Operating Partnership allocated to the Partnership is not recognized to the extent that the investment balance would become negative. Basis of Accounting The Partnership maintains its financial records on the tax basis. Memorandum entries, while not recorded in the records of the Partnership, have been made in the financial statements to reflect generally accepted accounting principles. On August 7, 1991, management of the Partnership changed from a calendar year end to a fiscal year end of March 31 for financial reporting purposes. Accordingly, the Partnership's quarterly periods end June 30, September 30, and December 31. The Operating Partnerships, for financial reporting purposes, have a calendar year. The Partnership, as well as the Operating Partnerships, have a calendar year for income tax purposes. Syndication Costs Public offering costs have been recorded as a direct reduction to the capital accounts of the Limited Partners. Organization, Acquisition and Other Costs Costs incurred in organizing the Partnership and expenditures made by the Partnership in connection with its acquiring limited partnership interest in Operating Partnerships are deferred and amortized over a period of sixty months on a straight-line basis or capitalized as investments in Operating Partnerships. Other fees and expenses of the Partnership are recognized as expenses in the period the related services are received. Income Taxes No provision has been made for income taxes in the accompanying financial statements since such taxes and/or the recapture of the Low-Income Housing Tax Credits benefits received, if any, are the liability of the individual partners. The Partnership uses the accrual method of accounting for tax purposes. Statement of Cash Flows - Cash and Cash Equivalents For the purpose of the statement of cash flows, the Partnership considers all highly liquid instruments purchased with an original maturity date of three months or less to be cash equivalents. 8 NOTE 3 - TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES OF THE GENERAL PARTNERS: The General Partners of the Partnership are CPII and Irwin Jay Deutch. Century Pacific Placement Corporation ("CPPC"), an affiliate of the General Partners, served as the broker-dealer- manager for sales of the limited partnership interests in the Partnership. Century Pacific Realty Corporation ("CPRC"), an affiliate of CPII, is a general partner in each of the Operating Partnerships. The General Partners have an aggregate one percent interest in the Partnership. CPRC has a one-half percent interest in each of the Operating Partnerships. The General Partners and their Affiliates receive compensation and reimbursement of expenses from the Partnership, as set forth in the limited partnership agreement, for their services in managing the Partnership and its business. Pursuant to the partnership agreement, the Partnership is required to pay CPII an annual Management Fee for its services in connection with the management affairs of the Partnership. The annual Management Fee is equal to .5% of Invested Assets (as defined by the partnership agreement). The General Partners and Affiliates also receive compensation and reimbursement of expenses from the Operating Partnerships. This compensation and reimbursement include services provided to the Partnership during its offering stage, acquisition stage and operational stage. NOTE 4 - INVESTMENTS IN OPERATING PARTNERSHIPS: The following is a summary of the Partnership's investments in Operating Partnerships:
Nine Months Ended December 31, Year Ended 2001 March 31, 2001 ----------- -------------- Cash Contribution to Operating Partnerships to fund purchase of beneficial interest in Properties $4,536,020 $4,536,020 Equity in net losses of Operating Partnerships (4,536,020) (4,536,020) ----------- ----------- $0 $0 =========== ===========
The Properties in which the Operating Partnerships hold beneficial interests are as follows:
Name of Operating Partnership Property Name Location ----------------- ------------- -------- Washington Courts, L.P. Washington Courts Chicago, Illinois Laurel-Clayton, L.P. Plumley Village Worcester, Massachusetts
9 The following combined statements of operations is prepared on the accrual basis and summarizes the operations of the Operating Partnerships for the three months ended December 31, 2001 and December 31, 2000 and for the nine months ended December 31, 2001 and December 31,2000. COMBINED STATEMENT OF OPERATIONS OF PROPERTIES ACQUIRED BY THE OPERATING PARTNERSHIPS IN WHICH CENTURY PACIFIC TAX CREDIT HOUSING FUND II HAS INVESTED (Unaudited)
Three Months Ended Nine Months Ended December 31, December 31, 2001 2000 2001 2000 ----------- ----------- ----------- ----------- REVENUES: Rental Income $ 1,370,365 $ 1,331,631 $ 4,037,382 $ 3,938,624 Other 30,266 12,775 82,330 42,335 ----------- ----------- ----------- ----------- 1,400,631 1,344,406 4,119,712 3,980,959 ----------- ----------- ----------- ----------- EXPENSES: Operating, General and Administrative 1,084,607 996,468 3,209,042 3,171,251 Depreciation 263,891 289,637 791,673 870,137 Interest 115,451 106,344 346,353 338,699 ----------- ----------- ----------- ----------- 1,463,949 1,392,449 4,347,068 4,380,087 ----------- ----------- ----------- ----------- Net Income (Loss) ($63,318) ($48,043) ($227,356) ($399,128) =========== =========== =========== ===========
THIRD QUARTER 2001 PROPERTY SUMMARY PLUMLEY VILLAGE - Worcester, Massachusetts Plumley Village consists of 430 units situated on approximately 16 acres of land adjacent to Downtown Worcester. There is one 16 story high-rise and three low-rise structures on the site. The property has good freeway access and is convenient to stores, churches and hospitals. The property is 98% occupied during the quarter. Cash flow was sufficient to cover operating expenses. Property rents were last increased in May 1995, bringing the annual gross potential rental revenue to approximately $4,292,000. WASHINGTON COURTS - Chicago, Illinois Washington Courts consists of 103 units on several sites in the Austin neighborhood of Chicago. The property is convenient to banks, schools, churches and commercial areas. The property averaged a 94% occupancy rate during the quarter. Cash flow was sufficient to cover operating expenses. Property rents were increased 1.0% in May 1996, increasing the annual gross potential rental revenue to approximately $1,059,000. 10 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CENTURY PACIFIC TAX CREDIT HOUSING FUND II a California limited partnership By: Century Pacific Capital II Corporation, a California Corporation General Partner By: Irwin J. Deutch -------------------------- Irwin J. Deutch, President 11