UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
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 X No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
BALANCE SHEETS
URBAN IMPROVEMENT FUND LIMITED - 1973-II
(A Limited Partnership)
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
September 30, December 31,
1998 1997
Cash $ 16,256 $ 11,750
Investments in and advances
to Local Limited Partnerships
accounted for on the equity
method 4,449,631 4,612,279
Total Assets $ 4,465,887 $ 4,624,029
LIABILITIES AND PARTNERS' (DEFICIT)
Management fee payable $ 1,103,167 $ 1,068,167
Due to affiliates 732,923 732,923
1,836,090 1,801,090
Partners' (Deficit):
General Partner - 100
Partnership units
authorized, issued
and outstanding (345,009) (335,352)
Limited Partners - 11,335
partnership units authorized,
issued and outstanding 2,974,806 3,158,291
2,629,797 2,822,939
Total Liabilities and
Partners' (Deficit) $ 4,465,887 $ 4,624,029
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
CAPITALIZATION AND PARTNERS' (DEFICIT)
URBAN IMPROVEMENT FUND LIMITED - 1973 II
(A Limited Partnership)
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, December 31,
1998 1997
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, 1997 (7,369,388) (7,369,388)
Loss for nine-month
period ended
September 30, 1998 (193,142) -0-
(7,562,530) (7,369,388)
Partners' (Deficit) at
End of Period $ 2,629,797 $ 2,822,939
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
STATEMENTS OF INCOME
URBAN IMPROVEMENT FUND LIMITED - 1973-II
(A Limited Partnership)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1998 1997 1998 1997
Revenues $ 418 $ 95 $ 729 $ 739
Cost and expenses:
Professional fees 3,650 8,032 10,025 18,492
Management fee 17,500 17,500 52,500 52,500
Amortization
expense 4,216 -0- 12,648 -0-
Other -0- 515 805 7,450
25,366 26,047 75,978 78,442
Loss before equity
in loss of
Local Limited
Partnerships (24,948) (25,952) (75,249) (77,703)
Equity in loss of
Local Limited
Partnership (50,000) 57,220 (117,893) 57,233
Net loss $ (74,948) $ 31,268 $(193,142) $ (20,470)
Allocation of
net loss:
Net loss allocated
to General
Partner $ (3,747) $ 1,563 $ (9,657) $ (1,024)
Net loss allocated
to Limited
Partners (71,201) 29,705 (183,485) (19,446)
$ (74,948) $ 31,268 $(193,142) $ (20,470)
Net loss
allocated to
Limited
Partners per
Limited Partner-
ship Unit (11,335
units outstanding
at September 30,
1998 and 1997) $ (6) $ 3 $ (16) $ (2)
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
STATEMENTS OF CASH FLOWS
URBAN IMPROVEMENT FUND LIMITED - 1973-II
(A Limited Partnership)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1998 1997 1998 1997
CASH FLOWS
FROM OPERATING
ACTIVITIES:
Net income (loss) $ (74,948) $ 31,268 $(193,142) $ (20,470)
Adjustments to
reconcile net
loss to net cash
used by
operating activities:
Amortization 4,216 -0- 12,648 -0-
Equity in net
loss of local
limited partnership 50,000 (57,220) 117,893 (57,233)
Increase (decrease)
in accounts payable
and accrued
management fees (6,349) (22,168) 35,000 27,244
Total adjustments 47,867 (79,388) 165,541 (29,989)
Net cash provided
by operating activities (27,081) (48,120) (27,601) (50,459)
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Distributions received -0- 57,221 -0- 57,220
Advance repayment
from local
limited partnership -0- -0- 32,107 13
Net cash provided
by investing
activities -0- 57,221 32,107 57,233
NET DECREASE
IN CASH
AND CASH
EQUIVALENTS (27,081) 9,101 4,506 6,774
CASH BALANCE
AT BEGINNING
OF PERIOD 43,337 2,549 11,750 4,876
CASH BALANCE
AT END
OF PERIOD $ 16,256 $ 11,650 $ 16,256 $ 11,650
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
NOTES TO SUMMARIZE FINANCIAL INFORMATION
September 30, 1998
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 ninety-five 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.
<PAGE>
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.
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
<PAGE>
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 $753,167 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>
<S> <C> <C>
Date PSI Became
Local Limited Partnerships General Partner
Community Circle 1975
808 Memorial Drive 1978
</TABLE>
During 1997, 808 Memorial Drive changed the name of the partnership to
808 Investments L.P. In addition, PSI was removed as general partner and
converted to a limited partner.
<PAGE>
Note 4 - Investments in Local Limited Partnerships - As of September 30,
1998 and 1997, 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.
The investments in Local Limited Partnerships are comprised of:
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, 1998 December 31, 1997
Capital contributions $6,831,192 $6,831,192
Distributions (901,102) (901,102)
Equity in losses (2,380,439) (2,262,546)
Advances 59,842 91,949
Unamortized costs
of acquisitions 840,138 852,786
$4,449,631 $4,612,279
</TABLE>
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:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1998 1997 1998 1997
Advance made to
(repaid from)
Local Limited
Partnership $ -0- $ -0- $ (32,107) $ 13
</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, 1998 and 1997.
The components of the Partnership's equity in net loss of the Local
Limited Partnerships for September 30, 1998 and 1997, is summarized as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1998 1997 1998 1997
Advance to
Partnership with
zero investment:
Community Circle $ -0- $ -0- $ 32,107 $ (50)
808 Investments L.P. -0- -0- -0- 37
-0- -0- 32,107 (13)
Income from
investments with
non-zero investment:
808 Investments L.P. (50,000) -0- (150,000) -0-
$ (50,000) $ -0- $(117,893) $ (13)
</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, 1998.
<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 November 16, 1998 Michael Fulbright
(Signature)
By: Michael Fulbright, Secretary
Date November 16, 1998 John M. Orehek
(Signature)
By: John M. Orehek, Senior Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998 DEC-31-1997
<PERIOD-END> SEP-30-1998 SEP-30-1998 DEC-31-1997
<CASH> 0 16,256 11,750
<SECURITIES> 0 0 0
<RECEIVABLES> 0 0 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 4,465,887 4,624,029
<PP&E> 0 0 0
<DEPRECIATION> 0 0 0
<TOTAL-ASSETS> 0 4,465,887 4,624,029
<CURRENT-LIABILITIES> 0 1,836,090 1,801,090
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 0 0 0
<OTHER-SE> 0 2,629,797 2,822,939
<TOTAL-LIABILITY-AND-EQUITY> 0 4,465,887 4,624,020
<SALES> 0 0 0
<TOTAL-REVENUES> 418 729 0
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 25,366 75,978 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> (74,948) (193,142) 0
<INCOME-TAX> (74,948) (193,142) 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (74,948) (193,142) 0
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
