SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30 2004, COMMISSION FILE NUMBER: 0-13745
-------
TPI LAND INVESTORS II LIMITED PARTNERSHIP
- ------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ARIZONA 86-0483912
- ------------------------------- ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION ORGANIZATION)
3420 E. SHEA BLVD., SUITE 200, PHOENIX, ARIZONA 85028
- ----------------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING
AREA CODE: (602) 953-5298
--------------
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
--------- ---------
TPI Land Investors II, Ltd.
Balance Sheet
As of September 30, 2004
SEP 30, 04
-------------
ASSETS
CURRENT ASSETS
CHECKING/SAVINGS
CHECKING-BANK ONE 09544856 4,122.95
SAVINGS-BANKONE 43980272 685,836.82
-------------
TOTAL CHECKING/SAVINGS 689,959.77
OTHER CURRENT ASSETS
ACCOUNTS RECEIVABLE 3,000.00
N/R GENERAL PARTNERS 70,213.53
OTHER CONTRIBUTIONS RECEIVABLE 175.00
-------------
TOTAL OTHER CURRENT ASSETS 73,388.53
-------------
TOTAL CURRENT ASSETS 763,348.30
FIXED ASSETS
CG MEDICAL C LOTS 3 & 7
SHELL BUILDING/DEVELOPMENT 27,971.96
CG MEDICAL C LOTS 3 & 7 - OTHER 755,747.45
-------------
TOTAL CG MEDICAL C LOTS 3 & 7 783,719.41
LAND-91ST AVENUE 983,867.33
LAND-TOLLESON 610,437.74
OFFICE FURNITURE 170.98
-------------
TOTAL FIXED ASSETS 2,378,195.46
OTHER ASSETS
LOAN ORIGINATION FEE
ACCUM. AMORT.-LOAN FEES -30,300.00
LOAN ORIGINATION FEE - OTHER 30,300.00
-------------
TOTAL LOAN ORIGINATION FEE 0.00
ORGANIZATIONAL COSTS
ACCUM. AMORT.-ORGANIZATION COST -72,539.98
ORGANIZATIONAL COSTS - OTHER 72,539.98
-------------
TOTAL ORGANIZATIONAL COSTS 0.00
SYNDICATION COSTS 828,423.26
-------------
TOTAL OTHER ASSETS 828,423.26
-------------
TOTAL ASSETS 3,969,967.02
=============
LIABILITIES & EQUITY
LIABILITIES
CURRENT LIABILITIES
OTHER CURRENT LIABILITIES
DISTRIBUTIONS PAYABLE -1996 2,550.00
DISTRIBUTIONS PAYABLE 1999 16,160.00
TPI Land Investors II, Ltd.
Balance Sheet
As of September 30, 2004
SEP 30, 04
-------------
RE COM PAY-TPI ASSET 14,785.22
-------------
TOTAL OTHER CURRENT LIABILITIES 33,495.22
-------------
TOTAL CURRENT LIABILITIES 33,495.22
-------------
TOTAL LIABILITIES 33,495.22
EQUITY
DISTRIBUTION-1987 -143,292.93
DISTRIBUTION-1988 -1,074,396.97
DISTRIBUTION-1996 -354,470.00
DISTRIBUTION 1999 -567,280.00
OPENING BAL EQUITY 20.00
PARTNER CONTRIBUTION 7,162,646.46
PREVIOUS RETAINED EARNINGS -1,210,878.76
NET INCOME 124,124.00
-------------
TOTAL EQUITY 3,936,471.80
-------------
TOTAL LIABILITIES & EQUITY 3,969,967.02
=============
TPI LAND INVESTORS II LIMITED PARTNERSHIP
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2004
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
NATURE OF PARTNERSHIP
---------------------
TPI LAND INVESTORS II LIMITED PARTNERSHIP IS A LIMITED PARTNERSHIP
FORMED DURING 1984 UNDER THE LAWS OF THE STATE OF ARIZONA. THE
PARTNERSHIP REACHED IMPOUND ON JULY 3, 1984.
DURATION OF PARTNERSHIP
-----------------------
IT IS THE INTENTION OF THE PARTNERSHIP TO ACQUIRE PROPERTY FOR
INVESTMENT AND APPRECIATION PURPOSES. THE PARTNERSHIP MAY,
HOWEVER, SELL A PORTION OR ALL OF THE PROPERTIES IN THE FUTURE WITH
A VIEW TOWARDS LIQUIDATION OF THE PARTNERSHIP. SUCH SALE COULD
OCCUR APPROXIMATELY TWO TO SEVEN YEARS AFTER PROPERTY ACQUISITION.
AMORTIZATION OF OTHER ASSETS
----------------------------
ORGANIZATION COSTS REPRESENT COSTS INCURRED DURING THE FORMATION
PERIOD OF THE PARTNERSHIP. SYNDICATION COSTS REPRESENT COMMISSIONS
INCURRED ON THE SALE OF LIMITED PARTNERSHIP INTERESTS AND THE COSTS
OF PREPARING THE PROSPECTUSES. ORGANIZATION COSTS ARE BEING
AMORTIZED OVER 60 MONTHS. SYNDICATION COSTS ARE NOT AMORTIZED FOR
INCOME TAX REPORTING PURPOSES. LOAN ORIGINATION FEES REPRESENT
COSTS INCURRED BY THE PARTNERSHIP TO SECURE A LOAN. LOAN FEES ARE
BEING AMORTIZED OVER 36 MONTHS.
- 1 -
TPI LAND INVESTORS II LIMITED PARTNERSHIP
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2004
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
INCOME TAXES
------------
NO PROVISION FOR INCOME TAX IS MADE FOR THE PARTNERSHIP SINCE THE
REPORTING AND PAYMENT OF INCOME TAX IS THE RESPONSIBILITY OF THE
INDIVIDUAL PARTNERS.
PARTNERS' PREFERRED RETURN ON CAPITAL CONTRIBUTIONS
---------------------------------------------------
AS AN INCENTIVE TO EARLY INVESTMENT AND THE PURCHASE OF LARGER
NUMBERS OF UNITS, LIMITED PARTNERS WILL RECEIVE A PREFERRED RETURN
ON THEIR INVESTMENT. THE PREFERRED RETURN IS DETERMINED BY
APPLYING A PERCENTAGE (BASED UPON THE DATE THE CONTRIBUTION IS
RECEIVED AND THE NUMBER OF UNITS PURCHASED) TO THE LIMITED
PARTNER'S ADJUSTED CAPITAL ACCOUNT BALANCE FROM THE FIRST DAY OF
THE MONTH FOLLOWING THE RECEIPT OF THE LIMITED PARTNER'S INVESTMENT
TO THE DATE OF RECOUPMENT OF THAT INVESTMENT.
ALLOCATION OF NET PROFITS, LOSSES, AND DISTRIBUTIONS TO PARTNERS
----------------------------------------------------------------
NET PROFITS, LOSSES, AND DISTRIBUTIONS ARE ALLOCATED NINETY-NINE
PERCENT (99%) TO THE LIMITED PARTNERS IN ACCORDANCE WITH THEIR
RESPECTIVE CAPITAL PERCENTAGES AND ONE PERCENT (1%) TO THE GENERAL
PARTNERS UNTIL LIMITED PARTNERS RECOUPMENT PLUS A SIX PERCENT (6%)
- 2 -
TPI LAND INVESTORS II LIMITED PARTNERSHIP
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2004
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
ANNUAL PROGRAM RETURN. AFTER WHICH ALLOCATIONS ARE NINETY-NINE
PERCENT (99%) TO THE LIMITED PARTNERS AND ONE PERCENT (1%) TO THE
GENERAL PARTNERS UNTIL THE LIMITED PARTNERS HAVE COLLECTIVELY
RECEIVED THEIR PREFERRED RETURN ON THEIR ADJUSTED CAPITAL
CONTRIBUTIONS, THEN ONE HUNDRED PERCENT (100%) TO THE GENERAL
PARTNERS UNTIL THEY HAVE RECEIVED TWENTY-FIVE PERCENT (25%) OF THE
DISTRIBUTIONS TO PARTNERS AFTER RECOUPMENT AND PROGRAM RETURN, AND
THEN SEVENTY-FIVE PERCENT (75%) OF THE REMAINDER TO THE LIMITED
PARTNERS AND TWENTY-FIVE PERCENT (25%) TO THE GENERAL PARTNERS.
- 3 -
NOTE 2. LAND
----
COST INCURRED BY THE PARTNERSHIP FOR ACQUISITION OF LAND AS OF
SEPTEMBER 30, 2004 ARE AS FOLLOWS:
CASA GRANDE MEDICAL CENTER $ 777,807
FALCON INDUSTRIAL PARK LOTS $ 344,767****
CAREFREE-DEMILLE $ 412,664*
87TH AVENUE AND UNION HILLS $ 465,179**
CAREFREE-HUDSPETH $1,123,261*
91ST AVENUE & BELL $2,123,742***
AVONDALE $ 329,253****
TOLLESON $ 899,624*****
----------
$6,476,315
----------
LESS PROPERTIES SOLD (4,109,024)
==========
$2,367,291
* SOLD ON 04/12/94 FOR $995,000
** SOLD 1.17 OF 5.54 ACRES ON 06/29/95 FOR $150,467
SOLD 1.8 ACRES ON 01/23/98 FOR A NET OF $269,536.40
SOLD APPROX. 1 ACRE ON 07/01/98 FOR A NET OF $216,210.37
SOLD LAST PARCEL ON 12/28/99 FOR A NET OF $272,623.
*** SOLD 3.7 OF 17.5 ACRES ON 10/96 FOR $509,000
SOLD 1 OF 13.8 ACRES ON 04/23/97 FOR $228,000
SOLD LOT 1, LOT 2 AND LOT 3 ON 02/28/04 FOR $728,368.00
**** SOLD LOT 6 ON 07/30/98 FOR A NET OF $89,977.51
** SOLD PARCEL ON 2/8/99 FOR A NET OF $496,120.01
**** SOLD LOT 5 ON 4/20/99 FOR A NET OF $98,130.67
***** SOLD PAD B ON 10/31/03 FOR A NET OF $150,525.00
- 4 -
NOTE 3: IMPROVEMENT ASSESSMENTS
-----------------------
DETAILS RELATED TO IMPROVEMENT ASSESSMENTS PAYABLE ARE AS FOLLOWS:
FALCON INDUSTRIAL PARK LOTS 5, 6 AND 7
PAID IN FULL.
87TH AVENUE AND UNION HILLS
BEGINNING BALANCE OF $6,338 PAID IN FULL IN 1990.
87TH AVENUE AND BELL
ASSESSMENT #6, CITY OF PEORIA IMPROVEMENT DISTRICT
#9102. TERM APPROXIMATELY 15 YEARS AT 12% INTEREST
PER ANNUM ON UNPAID BALANCE, FIRST PAYMENT DUE
JUNE 1, 1993. SEMI-ANNUAL PAYMENTS OF INTEREST DUE
JUNE 1 AND DECEMBER 1. PAYMENTS OF APPROXIMATELY 1/15
OF PRINCIPAL SHALL BE DUE DECEMBER 1. PAID IN FULL ON
06/28/95
91ST AVENUE AND BELL
ASSESSMENT #8401 & #8201 - ANNUAL PRINCIPAL PAYMENTS OF
$21,968 & $2,312 PAYABLE DECEMBER 1 OF EACH YEAR WITH THE
FINAL PAYMENT DUE DECEMBER 1, 1994 & DECEMBER 1, 1993;
INTEREST IS CHARGED ON THE UNPAID PRINCIPAL BALANCE AT 10%
PAYABLE IN SEMI-ANNUAL INSTALLMENTS. PAID 12/01/94
ASSESSMENT #14, CITY OF PEORIA IMPROVEMENT DISTRICT
#9102. TERM APPROXIMATELY 15 YEARS AT 12% INTEREST
PER ANNUM ON UNPAID BALANCE, FIRST PAYMENT DUE
JUNE 1, 1993. SEMI-ANNUAL PAYMENTS OF INTEREST DUE
JUNE 1 AND DECEMBER 1. PAYMENTS OF APPROXIMATELY 1/15
OF PRINCIPAL SHALL BE DUE DECEMBER 1. PAID IN FULL ON
07/15/95
- 5 -
TPI LAND INVESTORS II LIMITED PARTNERSHIP
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2004
NOTE 4: COMMISSION PAYABLE
------------------
THE PARTNERSHIP SOLD PROPERTIES IN PRIOR YEARS AND THE
GENERAL PARTNER, TPI ASSET MANAGEMENT, INC. EARNED A REAL
ESTATE COMMISSION ON THESE SALES. ACCORDING TO THE
PROSPECTUS, TPI ASSET MANAGEMENT, INC. CANNOT BE PAID THE
COMMISSION UNTIL THE LIMITED PARTNERS HAVE RECEIVED THEIR
ORIGINAL INVESTMENT AND THEIR PROGRAM RETURN.
NOTE 5: NOTE PAYABLE
------------
PROMISSORY NOTE DATED MARCH 9, 1990 WAS PAID IN FULL ON
APRIL 12, 1994.
AN ADVANCE FROM TPI ASSET MANAGEMENT, INC. FOR $24,500
AND A SHORT-TERM LOAN FROM HOME EQUITY LIMITED PARTNERSHIP FOR
$10,500 WERE PAID IN APRIL, 1994.
NOTE 6: NOTE RECEIVABLE
---------------
DURING DECEMBER 2002 THE NOTE RECEIVABLE WAS PAID BY TPI LAND
INVESTORS IV BY THE DEEDING OF LOTS IN THE CASA GRANDE MEDICAL
CAMPUS.
NOTE 7: PARTNERS' CAPITAL
-----------------
PARTNERS' CAPITAL CONTRIBUTIONS RECEIVED AND
SUBSCRIBED AS OF SEPTEMBER 30, 2004 ARE AS FOLLOWS:
LIMITED PARTNERS CONTRIBUTIONS (14,186 UNITS) $ 7,091,000
GENERAL PARTNERS CONTRIBUTION (1%) 71,646
---------
TOTAL CONTRIBUTION 7,162,646
PRIOR YEAR RETAINED EARNING (1,210,879)
NET INCOME 155,293
DISTRIBUTION TO PARTNERS 1987 (143,293)
DISTRIBUTION TO PARTNERS 1988 (1,074,397)
- 6 -
DISTRIBUTION TO PARTNERS 1996 (354,450)
DISTRIBUTION TO PARTNERS 1999 (567,040)
--------
PARTNER'S CAPITAL $3,967,641
==========
TPI LAND DEVELOPMENT II LIMITED PARTNERSHIP
-------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITIONS AND RESULTS OF OPERATIONS
------------------------------------
THE PARTNERSHIP OFFERING PHASE WAS COMPLETED ON DECEMBER 27, 1985. SINCE THEN
THE PARTNERSHIP HAS BEEN IN THE OPERATING STAGE.
SINCE THE PARTNERSHIP ACQUIRED PRE-DEVELOPED LAND WHICH DOES NOT GENERATE
SIGNIFICANT INCOME, THE OPERATING STAGE CONSISTS PRIMARILY OF EVALUATING
PARTNERSHIP PROPERTIES AND ACTIVITIES IN THE SURROUNDING AREA AND PREPARING
PROPERTIES FOR DISPOSITION. THERE WERE NO MATERIAL CHANGES DURING THIS
REPORTING PERIOD. THE PARTNERSHIP'S MAIN SOURCE OF REVENUE WAS INTEREST ON
MONEY MARKET INSTRUMENTS.
THE HOLDING PERIOD FOR THE PROPERTIES IN THE PARTNERSHIP'S PORTFOLIO HAS BEEN
LONGER THAN ORIGINALLY ANTICIPATED DUE TO A LAGGING REAL ESTATE MARKET IN THE
PHOENIX AREA. THEREFORE, IN ORDER TO MAINTAIN SUFFICIENT RESERVES FOR
OPERATING EXPENSES, THE PARTNERSHIP HAS TOOK OUT A LOAN IN THE AMOUNT OF
$505,000. THE AMOUNT BORROWED WAS DETERMINED BY ESTIMATING THE AMOUNT OF
OPERATING RESERVES REQUIRED BY THE PARTNERSHIP FOR A PERIOD OF THREE YEARS WITH
A CONSERVATIVE ASSUMPTION THAT NO PROPERTIES WOULD BE SOLD DURING THAT TIME.
THE CAREFREE PROPERTIES WERE SOLD ON APRIL 12, 1994 TO PAY OFF THIS DEBT AND
- 7 -
PROVIDE OPERATING FUNDS.
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.
TPI LAND INVESTORS II LIMITED PARTNERSHIP
BY: /s/ HERVE J. R. TESSIER
---------------------------------
HERVE J. R. TESSIER
DATE: SEPTEMBER 30, 2004
- 8 -