UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 Q
[ XX ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] 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 0-7771
URBAN IMPROVEMENT FUND LIMITED 1973 II
(Exact name of registrant as specified in its charter)
California 95-6398192
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1201 Third Avenue, Suite 5400, Seattle, Washington 98101 3076
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code: (206) 622-9900
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 and (2) has been
subject to such filing requirements for the past 90 days.
Yes ___XX____ No _______.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
BALANCE SHEETS
URBAN IMPROVEMENT FUND LIMITED 1973 II
(A Limited Partnership)
ASSETS
<TABLE>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Cash $ 6,701 $ 34,577
Investments in and advances to Local
Limited Partnerships accounted for
on the equity method -0- -0-
------------ ------------
Total Assets $ 6,701 $ 34,577
============ ============
LIABILITIES AND PARTNERS' (DEFICIT)
Management fee payable $ 1,015,667 $ 980,667
Advance from General Partner 24,243 24,243
------------ ------------
1,039,910 1,004,910
Partners' (Deficit):
General Partner 100 Partnership units
authorized, issued and outstanding (528,160) (525,016)
Limited Partners 11,335 partnership
units authorized, issued and
outstanding (505,049) (445,317)
------------ ------------
(1,033,209) (970,333)
------------ ------------
Total Liabilities and Partners' (Deficit) $ 6,701 $ 34,577
============ ============
</TABLE>
Unaudited. See accompanying notes.<PAGE>
CAPITALIZATION AND PARTNERS' (DEFICIT)
URBAN IMPROVEMENT FUND LIMITED 1973 II
(A Limited Partnership)
<TABLE>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
General Partner Interest 100
Partnership units issued
and outstanding $ 95,000 $ 95,000
Limited Partners' Interest 11,335
Partnership units issued and
outstanding 11,335,000 11,335,000
------------- ------------
Total 11,430,000 11,430,000
Offering Expenses (1,237,673) (1,237,673)
Accumulated loss through
December 31, 1995 (11,162,660) (11,162,660)
Loss for nine-month period ended
September 30, 1996 (62,876) -0-
------------- ------------
(11,225,536) (11,162,660)
------------- ------------
Partners' (Deficit) at End of Period $ (1,033,209) $ (970,333)
============ ============
</TABLE>
Unaudited. See accompanying notes.<PAGE>
STATEMENTS OF INCOME
URBAN IMPROVEMENT FUND LIMITED 1973 II
(A Limited Partnership)
<TABLE>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Revenues $ 1,950 $ 2,023 $ 6,371 $ 6,849
Cost and expenses:
Professional fees 1,300 249 14,650 16,607
Management fee 17,500 17,500 52,500 52,500
Other 250 -0- 2,097 817
-------- -------- -------- ---------
19,050 17,749 69,247 69,924
Loss before equity in income of
Local Limited Partnerships (17,100) (15,726) (62,876) (63,075)
Equity in loss of Local Limited
Partnerships -0- (100) -0- 479
-------- -------- -------- ---------
Net loss $ (17,100) $ (15,826) $ (62,876) $ (62,596)
======== ======== ======== =========
Allocation of net loss:
Net loss allocated to General
Partner $ (855) $ (791) $ (3,144) $ (3,130)
Net loss allocated to Limited
Partners (16,245) (15,035) (59,732) (59,466)
-------- -------- -------- ---------
$ (17,100) $ (15,826) $ (62,876) $ (62,596)
======== ======== ======== =========
Net loss allocated to Limited
Partners per Limited Partner-
ship Unit (11,335 units out-
standing at September 30, 1996
and 1995) $ (1) $ (1) $ (5) $ (5)
======== ======== ======== =========
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
STATEMENTS OF CASH FLOWS
URBAN IMPROVEMENT FUND LIMITED 1973 II
(A Limited Partnership)
<TABLE>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (17,100) $ (15,826) $ (62,876) $ (62,596)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Equity in net loss of local
limited partnership -0- 100 -0- (479)
Increase (decrease) in
accounts payable and
accrued management fees 17,500 17,500 35,000 35,000
-------- -------- -------- ---------
Total adjustments 17,500 17,600 35,000 34,521
-------- -------- -------- ---------
Net cash provided
(used) by operating
activities 400 1,774 (27,876) (28,075)
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions received -0- -0- -0- 17,052
Advance to local limited
partnership -0- (100) -0- (16,573)
-------- -------- -------- ---------
Net cash provided
(used) by investing
activities -0- (100) -0- 479
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 400 1,674 (27,876) (27,596)
CASH BALANCE AT BEGINNING OF
PERIOD 6,301 7,375 34,577 36,645
-------- -------- -------- ---------
CASH BALANCE AT END OF PERIOD $ 6,701 $ 9,049 $ 6,701 $ 9,049
======== ======== ======== =========
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
NOTES TO SUMMARIZE FINANCIAL INFORMATION
September 30, 1996
URBAN IMPROVEMENT FUND LIMITED 1973 II
(A Limited Partnership)
Note 1 - Organization
- ---------------------
Urban Improvement Fund Limited 1973 II (the Partnership) was formed
under the California Uniform Limited Partnership Act on July 1, 1973, for the
principal purpose of investing in other limited partnerships (Local Limited
Partnerships), which own federal and state-assisted housing projects. The
Partnership issued 11,335 units of limited partnership interest pursuant to
a public offering of such units which terminated on December 31, 1973. The
Partnership also issued 100 units of general partnership interest to
Interfinancial Real Estate Management Company (the General Partner).
The Urban Improvement Fund Limited 1973 II prospectus, dated
October 24, 1973, specified that the General Partner has five percent
interest in profits, losses and special allocations, and the limited
partners will share the remaining 95 percent interest in profits, losses
and special allocations in proportion to their respective units of
limited partnership interests.
Note 2 - Method of Accounting
- -----------------------------
Initial rent-up fees paid by the Partnership to the General Partner,
deducted when paid for income tax purposes, are capitalized as acquisition costs
of the Local Limited Partnerships for financial reporting purposes. These costs
and other costs of acquisition are amortized using the straight-line method over
the lives (fifteen to forty years) of the Local Limited Partnership Properties.
Amortization is discontinued when the investment is reduced to zero.
Repayment of advances and cash distributions by the Local Limited
Partnerships, after the Partnership investment has been reduced to zero, are
recognized as income by the Partnership in the period received. Additional
advances to Local Limited Partnership, after an investment is reduced to zero,
are recognized as losses in the period paid.
The unaudited interim financial statements furnished in this report
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim periods
presented. All such adjustments are of a normal recurring nature.
Taxes on Income
- ---------------
No provision for taxes on income has been recorded, since all taxable
income or loss of the Partnership is allocated to the partners for
inclusion in their respective tax returns.
<PAGE>
Cash Equivalents
- ----------------
Marketable securities that are highly liquid and have maturities of
three months or less at the date of purchase are classified as cash
equivalents.
Note 3 - Management of Urban Improvement Fund Limited 1973 II
- ---------------------------------------------------------------
Under the terms of the Limited Partnership Agreement, the Partnership is
required to pay the General Partner an annual management fee equal to
one-quarter of one percent of invested assets or $136,548 (the fee will not be
more than fifty percent of the Partnership's annual net cash flow as defined,
subject to an annual minimum of $70,000). This fee was not payable during the
first six years unless annual tax deductions plus cash distributions aggregated
$550 per unit. The required level of tax deductions was not achieved in these
years, and accordingly, the fee was not paid for those years. However, fees of
$350,000 have been recorded as a liability to the General Partner. Management
fees payable totaling $665,667 for subsequent years have been accrued to the
General Partner because cash flow was not sufficient to pay the fees. The
Partnership will also pay the General Partner a liquidation fee for the sale of
projects.
The General Partner of the partnership is a corporation in which Paul
H. Pfleger has a majority interest. Partnership Services, Inc. (PSI), another
corporation in which Paul H. Pfleger is a majority shareholder, has contracted
with the General Partner and the Partnership to provide certain management and
other services in any projects in which the Partnership has an interest. In
addition, as shown in the following table, PSI has become the General Partner in
two of the Local Limited Partnerships in which the Partnership has investments:
<TABLE>
Date PSI Became
Local Limited Partnerships General Partner
-------------------------- ---------------
<S> <C>
Community Circle 1975
808 Memorial Drive 1978
</TABLE>
Note 4 - Investments in Local Limited Partnerships
- --------------------------------------------------
As of September 30, 1996 and 1995, the Partnership has investments in ten
active real estate Limited Partnerships (Local Limited Partnership), which are
accounted for on the equity method. The investment account represents the sum
of the capital investments and unamortized costs of acquisitions less the
Partnership's share in losses since the date of acquisition. The Partnership
discontinues recognizing losses when the investment in a particular Local
Limited Partnership is reduced to zero, unless the Partnership intends to commit
additional funds to the Local Limited Partnerships.
<PAGE>
The investments in Local Limited Partnerships are comprised of:
<TABLE>
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Capital contributions $7,069,998 $7,069,998
Distributions (921,532) (921,532)
Equity in losses (8,208,702) (8,208,702)
Advances 972,375 972,375
Unamortized costs of acquisitions 1,087,861 1,087,861
----------- -----------
$ -0- $ -0-
=========== ===========
</TABLE>
<PAGE>
Item 2 - Management's Discussion and Analysis of
- ------------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
The Partnership has followed the practice of investing available funds
not used in the purchase of properties or in operations into short-term
investments. Revenue resulted from such short-term investments. The
Partnership is dependent upon interest earned and the distributions and
repayment of advances from Local Limited Partners for cash flow. The
Partnership has advanced funds to selected partnerships. The General
Partner does not believe these net advances will significantly affect the
operations of the Partnership. The activity of advances is as follows:
<TABLE>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Advance made to Local Limited
Partnership $ -0- $ 100 $ -0- $ 16,574
======== ======== ======== =========
</TABLE>
Under the terms of the Limited Partnership Agreement, the Partnership is
required to pay the General Partner an annual management fee equal to
one-quarter of one percent of invested assets or $136,548 (the fee will not be
more than fifty percent of the Partnership's annual net cash flow as defined,
subject to an annual minimum of $70,000). The Partnership recorded management
fee expense of $52,500 for the nine-month period ended September 30, 1996 and
1995.
The components of the Partnership's equity in net loss of the Local Limited
Partnerships for September 30, 1996 and 1995, is summarized as follows:
<TABLE>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Advance to Partnership with
zero investment:
808 Memorial Drive $ -0- $ (100) $ -0- $(16,575)
Distributions received from
Partnership with zero
investment:
Southern Boulevard I -0- -0- -0- 17,054
-------- -------- -------- ---------
$ -0- $ (100) $ -0- $ 479
======== ======== ======== =========<PAGE>
</TABLE>
<PAGE>
PART II OTHER INFORMATION
Items 1 through 5 not applicable
Item 6 Exhibits and Reports on Form 8 K
a) None
b) The registrant has not filed a report on Form 8 K during the
quarter ending September 30, 1996.
<PAGE>
SIGNATURES
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.
URBAN IMPROVEMENT FUND LIMITED 1973 II
(Registrant)
By: Interfinancial Real Estate Management
Company, General Partner
Date 11/15/96 Michael Fulbright
------------------------------------
(Signature)
By: Michael Fulbright, Secretary
Date 11/15/96 John M. Orehek
------------------------------------
(Signature)
By: John M. Orehek, Senior Vice President
