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.
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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.
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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:
<Table>
<Caption>
Name of Operating
Partnership Property Name Location
----------------- ------------- --------
Washington Courts, L.P. Washington Courts Chicago, Illinois
Laurel-Clayton, L.P. Plumley Village Worcester, Massachusetts
</Table>
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
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