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, 2004
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 Identification Number)
incorporation of organization)
1 E. Stow Road
Marlton, NJ 08053
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(856) 596-3008
No change
(Former name and former address, 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 [ ]
Indicate by check mark whether the registrant is an accelerated filed (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [x]
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
TABLE OF CONTENTS
Page
PART I FINANCIAL INFORMATION
Item 1 Financial Statements and Supplementary
Data . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Item 2 Management's Discussion and Analysis
Of Financial Condition and Results of
Operations. . . . . . . . . . . . . . . . . . . . . 10
Item 3 Quantitative and Qualitative Disclosures
About Market Risk . . . . . . . . . . . . . . . . . . . . 11
Item 4 Controls and Procedures . . . . . . . . . . . . . . . . . 11
PART II OTHER INFORMATION
Item 1 Legal Proceedings . . . . . . . . . . . . . . . . . . . . 11
Item 2 Unrestricted Sales of Equity Securities and Use of
Proceeds . . . . . . . . . . . . . . . . . . . . . 11
Item 3 Defaults Upon Senior Securities . . . . . . . . . . . . . 11
Item 4 Submission of Matters to a Vote of Security Holders . . . 11
Item 5 Other Information . . . . . . . . . . . . . . . . . . . . 11
Item 6 Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 11
SIGNATURE
EXHIBITS
CERTIFICATIONS
2
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
BALANCE SHEETS
December 31, March 31,
2004 2004
(Unaudited) (Audited)
------------ ---------
ASSETS
Advance to General Partners $ 0 $ 871
Investments in Limited Partnerships
(Note 4) 0 0
----------- -----------
$ 0 $ 871
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL/(DEFICIT)
Accounts Payable and Accrued Expenses $ 0 $ 5,800
Amounts Payable to Related Parties
(Note 3) 0 2,309,995
Advance from Affiliates 0 40,594
----------- -----------
0 2,356,389
----------- -----------
Commitments and Contingencies
Partners' Capital/(Deficit),
per accompanying statement
General Partners 0 (72,609)
Limited Partners, $1,000 stated value
per unit, 25,000 units authorized,
5,754 units issued and outstanding 0 (2,282,909)
----------- -----------
0 (2,355,518)
----------- -----------
$ 0 $ 871
=========== ===========
The accompanying notes are an integral part of this financial statement.
3
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
-------------------------- ---------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
EXPENSES:
General & Adm. (Note 3) $ 10,271 $ 9,400 $ 29,071 $ 28,200
Equity in Net Losses of
Operating Partnership
(Note 4) 0 0 0 0
----------- ----------- ----------- -----------
10,271 9,400 29,071 28,200
----------- ----------- ----------- -----------
OTHER INCOME:
Forgiveness of debt $ 1,726,896 $ 0 $ 1,726,896 $ 0
Other income 657,693 0 657,693 0
----------- ----------- ----------- -----------
2,384,589 0 2,384,589 0
----------- ----------- ----------- -----------
Net Income/(Loss) $ 2,374,318 $ (9,400) $ 2,355,518 $ (28,200)
=========== =========== =========== ===========
Allocation of Net Income/(Loss)
General Partners $ 70,729 $ (94) $ 72,609 $ (282)
Limited Partners 2,303,589 (9,306) 2,282,909 (27,918)
----------- ----------- ----------- -----------
$ 2,374,318 $ (9,400) $ 2,355,518 $ (28,200)
=========== =========== =========== ===========
Net Income/(Loss) Per Unit of
Limited Partnership Interest $ 400.35 $ (1.62) $ 396.75 $ (4.85)
=========== =========== =========== ===========
Average Number of Units
Outstanding 5,754 5,754 5,754 5,754
=========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
4
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
STATEMENTS OF PARTNERS' CAPITAL/(DEFICIT)
December 31, 2004
(Unaudited)
General Limited
Partners Partners Total
----------- ----------- -----------
Balance at April 1, 2003 $ (72,200) $(2,242,418) $(2,314,618)
Net Loss (409) (40,491) (40,900)
----------- ----------- -----------
Balance at March 31, 2004 $ (72,609) $(2,282,909) $(2,355,518)
Net Income 72,609 2,282,909 2,355,518
----------- ----------- -----------
Partners' Capital/(Deficit)
at December 31, 2004 $ 0 $ 0 $ 0
=========== =========== ===========
Percentage Interest
December 31, 2004 1% 99% 100%
=========== =========== ===========
The accompanying notes are an integral part of this financial statement.
5
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
December 31,
--------------------------
2004 2003
----------- -----------
Cash Flow from Operating Activities:
Net Income/(Loss) $ 2,355,518 $ (28,200)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Forgiveness of Debt (1,726,896) -
Equity in net losses of operating
Partnerships - -
Change in assets and liabilities:
Decrease in due from affiliates 871 -
Decrease in accounts payable
and accrued expenses (5,800) -
Decrease in due to affiliates (623,693) 28,200
----------- -----------
Net Cash Used in Operating
Activities $ - $ -
=========== ===========
Net Decrease in Cash $ - $ -
Cash at Beginning of Period - -
----------- -----------
Cash at End of Period $ - $ -
=========== ===========
The accompanying notes are an integral part of this financial statement.
6
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
a California limited partnership
DECEMBER 31, 2004
NOTES TO FINANCIAL STATEMENTS
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"). As of December 31, 2004, the Partnership divested of its one
remaining interest in an Operating Partnership which sold its apartment rental
property in Massachusetts. As of December 31, 2004, the Partnership is no longer
active.
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 qualified 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 also received one or more forms of assistance from federal,
state or local governments, or agencies (the "Government Agencies") while others
did not receive any subsidy from Government Agencies.
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.
Effective March 18, 2005, the Partnership has been dissolved (see Note 5).
Basis of Presentation
The accompanying unaudited financial statements of Century Pacific Tax Credit
Housing Fund II as of December 31, 2004 and March 31, 2004 (the March 31, 2004
financial information included herein has been extracted from the
Partnership's audited financial statements on Form 10-K) and for the three and
nine months ended December 31, 2004 and 2003 have been prepared in accordance
with accounting principles generally accepted in the United States of America
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 accounting principles generally accepted in the United States of America for
complete financial statements. In the opinion of the Partnerships management,
all adjustments (consisting of only normal recurring adjustments) considered
necessary to fairly present the financial statements have been made.
The statements of operations for the three and nine months ended December 31,
2004 and 2003 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
years ended March 31, 2004 and 2003.
7
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
a California limited partnership
DECEMBER 31, 2004
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Investments in Operating Partnerships
The Partnership uses the equity method to account for its investment in the
Operating Partnership 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 Partnership's results of operations and by
cash distributions received. Equity in the loss of the 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 accounting principles generally accepted in
the United States of America.
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 Partnership, for financial reporting purposes, has a
calendar year. The Partnership, as well as the Operating Partnership, has a
calendar year for income tax purposes.
Estimates and Assumptions
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 and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.
Syndication Costs
Public offering costs have been recorded as a direct reduction to the capital
accounts of the Limited Partners.
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.
Net Loss per Unit of Limited Partnership Interest
Net loss per unit of limited partnership interest is calculated based upon the
weighted average number of units of limited partnership interest (units)
outstanding.
8
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
a California limited partnership
DECEMBER 31, 2004
NOTES TO FINANCIAL STATEMENTS
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 the Operating Partnership.
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). CPII has waived this
fee for the nine months ended December 31, 2004 and 2003. 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. The remaining property investment was sold in December 2004.
Partnership activity for the nine months ended December 31, 2004 and 2003,
included $28,200 in each period for general and administrative expenses payable
to the General Partners and their Affiliates. For the nine months ended December
31, 2004, the Partnership also reported $1,726,896 in forgiveness of debt income
resulting from amounts owed to affiliates of the Partnership which were
cancelled and $871 in bad debt expense resulting from amounts due from
affiliates.
NOTE 4 - INVESTMENTS IN LIMITED PARTNERSHIPS:
The Partnership's equity in net operating losses in the Operating Partnership
has exceeded the investment balance. Consequently, the investment balance has
been reduced to zero in accordance with the equity method of accounting.
At December 31, 2004, the Partnership no longer owns any limited partnership
interests in any Operating Partnerships. At March 31, 2004, the Partnership
owned a limited partnership interest in one Operating Partnership, which
invested in one property. This interest was sold before December 31, 2004 for a
taxable gain of $5,958,958 by the Operating Partnership. The Partnership
received proceeds of $657,693 from this sale. At September 30, 2003, the
Partnership owned interests in two Operating Partnerships. One of these
Operating Partnerships sold its property located in Chicago, Illinois for a
taxable gain of $984,694. There were no cash proceeds resulting from this sale.
NOTE 5 - SUBSEQUENT EVENTS
Effective March 18, 2005, the Partnership has been dissolved.
9
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
Results of Operations
For the nine month period ended December 31, 2004, the Partnership recorded
general and operating expenses of $29,071 primarily related to the reimbursement
paid to Century Pacific Equity Corporation (CPEC), an affiliate, for overhead
allocations. In addition, the Partnership also recorded cancellation of debt
income of $1,726,896 due to forgiveness of amounts owed to Affiliates by the
Partnership. The Partnership recorded $657,693 in other income as a result of
proceeds received from the sale of the investment. For the nine month period
ended December 31, 2003, the Partnership recorded a net loss of $28,200. The net
loss is equal to the reimbursement paid to CPEC for overhead allocations.
Liquidity and Capital Resources
With the sale of the remaining property in December 2004, the Partnership
cancelled its Certificate of Limited Partnership with the Secretary of the State
of California as of March 18, 2005. Proceeds of $657,693 from the sale of the
property were used by the Partnership to repay a portion of the amounts due to
affiliates. Previously, the Partnership was dependent upon its affiliates and
the General Partners for continued financial support to meet its expenses.
Allocated administrative expenses paid or accrued to affiliates and the General
Partners represented reimbursement of the actual cost of goods and materials
used for or by the Partnership, salaries, related payroll costs and other
administrative items incurred or allocated, and direct expenses incurred in
rendering legal, accounting/bookkeeping, computer, printing and public relations
services. Items excluded from the overhead allocation included overhead expenses
of the General Partners, including rent and salaries of employees not
specifically performing the services described above. The sale of the property
yielded insufficient proceeds to repay the remaining amounts owed to affiliates.
CRITICAL ACCOUNTING POLICIES
Management's discussion and analysis of financial condition and results of
operations are based upon our unaudited financial statements which have been
prepared in accordance with accounting principles generally accepted in the
United States. Such financial statement preparation requires management to make
judgments and use estimates regarding significant accounting policies. We
consider an accounting policy to be significant if it is important to our
financial condition and results, and requires significant judgment and estimates
on the part of management in its application. A summary of our significant
accounting policies is included in Note 2 to our financial statements for the
year ended March 31, 2004, which are included in the Form 10-K. Our significant
accounting estimates and the related assumptions are evaluated periodically as
conditions warrant, and changes to such estimates are recorded as new
information or changed conditions require revision. Application of the critical
accounting policies requires management's significant judgments, often as the
result of the need to make estimates for matters that are inherently uncertain.
If actual results were to differ materially from the estimates made, the
reported results could be materially affected. There have been no significant
changes in the application of the critical accounting policies, or in the
assumptions or estimates relating thereto, since March 31, 2004.
10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Due to the nature of our foregoing operations, we have concluded that there is
no material market risk exposure and, therefore, no quantitative tabular
disclosures are required.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
The Partnership's Chief Executive Officer and Chief Financial Officer have
reviewed and evaluated the effectiveness of the Partnership's disclosure
controls and procedures (as defined in Exchange Act Rules 240.13a-14(c) and
15d-14(c) as of the end of the period covered by this report. Based on that
evaluation, they have concluded that the Partnership's current disclosure
controls and procedures are effective in timely providing them with material
information relating to the Partnership required to be disclosed in the reports
the Partnership files or submits under the Exchange Act.
(b) Changes in Internal Controls
During the period covered by this report, there have not been any significant
changes in the Partnership's internal controls or in other factors that could
significantly affect these controls. There were no significant deficiencies or
material weaknesses, and, therefore, no corrective actions were taken.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - None
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS - None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None
ITEM 5. OTHER INFORMATION - None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
We have listed the exhibits by numbers corresponding to the Exhibit Table of
Item 601 in Regulation S-K on the Exhibit list attached to this report.
(b) Reports on Form 8-K
None
11
* * * SIGNATURE * * *
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.
Dated: July 5, 2005
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
a California limited partnership
By: Century Pacific Capital II Corporation,
a California Corporation
General Partner
/s/Irwin J. Deutch
By: -----------------------------
Irwin J. Deutch, President
12
EXHIBITS
Exhibit
Number Description
- ------- -----------
31.1 Certification Pursuant to 15 U.S.C. Section 7241, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2 Certification Pursuant to 15 U.S.C. Section 7241, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
*Filed herewith
13