Four Seasons Fund Ii L P 10-Q 2002 Q3 Quarterly report

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2002
OR
o	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 0-21286
THE FOUR SEASONS FUND II L.P. (Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization)		# 54-1640874 (I.R.S. Employer Identification No.)
c/o JAMES RIVER MANAGEMENT CORP. 103 Sabot Park Manakin-Sabot, Virginia (Address of principal executive offices)
23103 (Zip Code)
(804) 578-4500 Attention:  Mr. Paul Saunders (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 l5(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 o

FORM 10-Q     PART 1   ITEM 1     FINANCIAL STATEMENTS

THE FOUR SEASONS FUND II L.P.

COMBINED CONDENSED STATEMENTS OF FINANCIAL CONDITION AS OF SEPTEMBER 30, 2002 AND DECEMBER 31, 2001.

			September  30, 2002			December  31, 2001
			(Unaudited)			(Audited)
ASSETS:
	Cash		$	130,658		$	—
	Net Receivable From Commodity Broker:
		Receivable For Cash Retained		200,574			255,047
		Net Unrealized Gain (loss) on Open Futures Contracts		(17,691	)		21,390
		Net Unexpired Option Premiums		(13,800	)		—
Receivable from General Partner				3,824			—
Accrued Interest Receivable				131			193
Other				470			355
	U.S. Treasury Strip Securities (Cost plus Accrued interest)			1,368,414			1,512,065
TOTAL ASSETS			$	1,672,580		$	1,789,050
LIABILITIES:
	Accrued Brokerage Commissions		$	19,613		$	21,683
	Accrued Advisory Fees			2,760			5,793
	Accrued Sponsor Fees			—			6,447
	Distributions payable			4,000			—
	Other Accrued Expenses			11,007			15,803
				37,380			49,726
	Minority interest in Trading Company			4,756			3,591
TOTAL LIABILITIES				42,136			53,317
PARTNERS’ CAPITAL:
	General Partner  (22.717 units - 09/30/02) (22.717 units - 12/31/01)			28,013			26,631
	Limited Partners  (1299.4883 units - 09/30/02) (1457.909  units - 12/31/01)			1,602,431			1,709,102
TOTAL PARTNERS’ CAPITAL				1,630,444			1,735,733
TOTAL LIABILITIES AND PARTNERS’ CAPITAL			$	1,672,580		$	1,735,733
PARTNERSHIP UNITS OUTSTANDING				1,322.205			1,480.626
NET ASSET VALUE PER PARTNERSHIP UNIT			$	1,233.12		$	1,172.30

The accompanying notes are an integral part of these combined condensed statements.

2

FORM 10-Q     PART 1   ITEM 1     FINANCIAL STATEMENTS

THE FOUR SEASONS FUND II L.P.

COMBINED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001.

					9/30/02			9/30/01
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net Income				$	132,554		$	2,528
	Adjustments To Reconcile Net Income To Net Cash Provided by (Used in) Operating Activities:
		Net Change In Unrealized losses On Open Futures Contracts				39,080			29,996
		Net Change In Unrealized Option Premiums				13,800			(14,400	)
		Accrued Interest From U.S. Treasury Strip Securities				(69,935	)		(73,138	)
		Gain on Sale of U.S. Treasury Strip Securities				(4,665	)		—
		(Increase) Decrease In Operating Assets:
			Net Receivable From Commodity Broker For Cash Retained			54,358			63,334
			Net Receivable From Commodity Broker For Interest Receivable			62			653
			Receivable from General Partner			(3,824	)
		Increase (Decrease) In Operating Liabilities:
				Accrued Brokerage Commissions		(2,070	)		(18,373	)
				Accrued Advisory Fees		(3,033	)		(9,457	)
				Accrued Sponsor Fees		(6,447	)		(6,649	)
				Other Accrued Expenses		(4,796	)		10,791
				Distributions Payable		4,000			—
		Allocation of Income to Minority Interest				1,166			(1,129	)
				Net cash provided by (used in) operating activities		150,250			(15,846	)
NET CASH FLOWS FROM FINANCING ACTIVITIES
		Limited Partner Redemptions				(178,606	)		—
		Partner Distributions				(59,237	)		(59,225	)
				Net cash used in financing activities		(237,843	)		(59,225	)
NET CASH FLOWS FROM INVESTING ACTIVITIES
		Maturity of U.S. Treasury Strip				60,000			60,000
		Sale of U.S. Treasury Strip Securities				158,251			—
				Net cash provided by investing activities		218,251			60,000
NET INCREASE (DECREASE) IN CASH						130,658			(15,071	)
CASH AT BEGINNING OF PERIOD						—			18,013
CASH AT END OF PERIOD						130,658			2,942

The accompanying notes are an integral part of these combined condensed statements.

3

FORM 10-Q     PART 1   ITEM 1     FINANCIAL STATEMENTS

THE FOUR SEASONS FUND II L.P.

COMBINED CONDENSED STATEMENT OF PARTNERS’ CAPITAL (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002.

									UNITS OF PARTNERSHIP INTEREST			LIMITED PARTNERS			GENERAL PARTNER			TOTAL
PARTNERS’ CAPITAL, DECEMBER 31, 2001										1,480.626		$	1,709,102		$	26,631		$	1,735,733
					Capital Distributions					—			(58,328	)		(909	)		(59,237	)
				Capital Withdrawals						(158.4207	)		(178,606	)		—			(178,606	)
			Net Income							—			130,263			2,291			132,554
PARTNERS’ CAPITAL, SEPTEMBER 30, 2002 (UNAUDITED)										1,322.205		$	1,602,431		$	28,013		$	1,630,444
	December 31, 2001:
								Amount	$	1,172.30
								Units outstanding		1,480.626
		September 30, 2002:
						Amount			$	1,233.12
							Units outstanding			1,322.205

The accompanying notes are an integral part of these combined condensed statements.

4

FORM 10-Q     PART 1   ITEM 1     FINANCIAL STATEMENTS

THE FOUR SEASONS FUND II L.P.

COMBINED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30,  2001.

					Three months ended 09/30/02			Three months ended 09/30/01			Nine months ended 09/30/02			Nine months ended 09/30/01
REVENUES
		Trading Profit (Loss)
			Net realized gains (losses)		$	144,244		$	(45,353	)	$	143,839		$	14,247
			Net option premiums			37,725			(10,909	)		37,178			(65	)
			Net change in unrealized gains (losses) on open futures contracts			(76,717	)		55,084			(39,080	)		(29,996	)
			Net change in unexpired options			7,050			26,200			(13,800	)		14,400
				Total Trading Results		112,303			25,022			128,137			(1,414	)
		Gain on sale of U.S. Treasury Strip Securities				0			0			4,665			0
		Interest income				21,678			25,837			70,773			77,634
				Total Revenues		133,981			50,859			203,574			76,220
		Brokerage commissions				10,205			10,839			30,732			32,552
		Management fees				4,017			4,269			12,042			12,802
		Sponsor fees				3,019			3,177			9,047			9,590
	Administrative expenses					7,539			4,415			18,034			19,880
				Total Expenses		24,781			22,701			69,854			74,823
INCOME BEFORE ALLOCATION OF MINORITY INTEREST						109,200			28,158			133,720			1,397
ALLOCATION OF MINORITY INTEREST						(1,602	)		(56	)		(1,166	)		1,129
NET INCOME:					$	107,598		$	28,102		$	132,554		$	2,526
	Limited Partners				$	105,749		$	27,671		$	130,263		$	2,487
	General Partner					1,849			431			2,291			39
	Net income (loss) per unit					81.38			18.98			100.83			1.71

The accompanying notes are an integral part of these combined condensed financial statements.

5

EXHIBITS

None

PART II

None

SIGNATURES

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.

THE FOUR SEASONS FUND II L.P.Z
(Registrant)
By	JAMES RIVER MANAGEMENT CORP.
	(General Partner)
By	EDWARD M. JASINSKI
	Director of Fund Administration

6

Form 10-Q   Part 1  Item 2   Management’s Discussion

THE FOUR SEASONS FUND II L.P.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001:

(A)

	SEPT 30, 2002		SEPT 30, 2001
PARTNERS’ CAPITAL	$	1,630,444	$	1,700,946

For the nine month period ended September 30, 2002, Partners’ Capital decreased $105,289 due primarily to capital distributions of $59,237, capital withdrawals of $178,606 and operating expenses of  $69.854.  The decrease in capital resulting from capital distributions and operating expenses was partially offset by the U.S. Treasury Strip Securities’ interest of $69,935. Realized and unrealized results from the trading of futures, options on futures, and currency forwards amounted to a gain of $8,092 for the period ended September 30, 2002.  Largest gains in futures trading were recognized in the trading of Ten-year notes, Five-year CBOT notes, and US Treasury bond futures, while largest losses were recognized in the trading of S&P500 futures contracts.

In comparison, for the nine month period ended September 30, 2001, Partners’ Capital decreased $56,699 due primarily to capital distributions of $59,225, and operating expenses of $74,823.  The decrease in capital resulting from capital distributions and operating expenses was partially offset by the U.S. Treasury Strip Securities’ interest of $73,138. Realized and unrealized results from the trading of futures, options on futures, and currency forwards amounted to a loss of $1,414 for the period ended September 30, 2001.  Largest losses in futures trading were recognized in the trading of S&P500 futures and Lite crude oil and  Heating oil futures contracts.

(B)	The U.S. Treasury Strip Securities are valued at the lower of cost plus accrued interest or market value.  As of September 30, 2002, the cost plus accrued interest value (as shown on the Combined Statement of Financial Condition) of the U.S. Treasury Strip Securities is $1,368,414 and the value of said securities at market value is $1,377,843. As of September 30, 2001, the value of the U.S. Treasury Strip Securities at cost plus accrued interest was $1,486,757 and the market value was $1,543,999.
(C)	The condensed consolidated financial statements include the accounts of Four Seasons Fund II LP (the “LP”) and the Four Seasons Trading Fund LP.  James River Management Corp., a Delaware Corporation, is the general partner of the Partnership and the Trading Company and is a registered commodity pool operator. ED&F Man. International Inc. is the commodity broker for the Partnership.  All trading activity of the Partnership and Trading Company (collectively the Fund) take place through the Trading Company. The remaining proceeds from the partnership’s initial public offering were used to purchase Zero coupon U.S. Treasury securities (the Guaranteed Distribution Pool).
	Effective November 15, 2002, the final Zero coupon US Treasury security matures, and effective November 30, 2002 the Trading Fund L.P. and the L.P. will cease operations and distributions of capital will be allocated to the remaining partners of record.

7

	The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from these estimates.
	Operating results for the three and nine months ended September 30, 2002, are not necessarily indicative of the results for the year ending November 30, 2002 (Cessation of Operations).  The notes to the consolidated financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2001 should be read in conjunction with these condensed consolidated financial statements.  All significant intercompany balances and transactions have been eliminated.
Form 10-Q   Part 2  Item 5   Other Information
	In connection with the closing of Arthur Andersen LLP, James River Management Corp., the general partner, has engaged Ernst & Young LLP as their independent auditors for any future accounting.

8