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, 1999
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)
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, December 31,
1999 1998
Cash $ 45,396 $ 47,049
Receivable from affiliate 930 -0-
Investments in and advances to Local
Limited Partnerships accounted for
on the equity method 4,034,582 4,192,881
Total Assets $ 4,080,908 $ 4,239,930
LIABILITIES AND PARTNERS' (DEFICIT)
Accounts payable $ 13,200 $ 8,200
Management fee payable 1,155,667 1,138,167
Due to affiliates 484,656 507,088
1,653,523 1,653,455
Partners' (Deficit):
General Partner - 100 Partnership
units authorized, issued and
outstanding (355,130) (347,175)
Limited Partners - 11,335 partnership
units authorized, issued and
outstanding 2,782,515 2,933,650
2,427,385 2,586,475
Total Liabilities and Partners'
(Deficit) $ 4,080,908 $ 4,239,930
</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,
1999 1998
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, 1998 (7,605,852) (7,605,852)
Loss for nine-month period ended
September 30, 1999 (159,090) -0-
(7,764,942) (7,605,852)
Partners' (Deficit) at End
of Period $ 2,427,385 $ 2,586,475
</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,
1999 1998 1999 1998
Revenues $ 443 $ 418 $ 943 $ 729
Cost and expenses:
Professional fees 5,000 3,650 15,000 10,025
Management fee 17,500 17,500 52,500 52,500
Amortization expense 4,216 4,216 12,648 12,648
Other -0- -0- 1,931 805
26,716 25,366 82,079 75,978
Loss before equity in
loss of Local Limited
Partnerships (26,273) (24,948) (81,136) (75,249)
Equity in loss of Local
Limited Partnership 19,146 (50,000) (77,954) (117,893)
Net loss $ (7,127) $ (74,948) $(159,090) $(193,142)
Allocation of net loss:
Net loss allocated to
General Partner $ (356) $ (3,747) $ (7,955) $ (9,657)
Net loss allocated to
Limited Partners (6,771) (71,201) (151,135) (183,485)
$ (7,127) $ (74,948) $(159,090) $ (193,142)
Net loss allocated to
Limited Partners per
Limited Partnership
Unit (11,335 units
outstanding at
September 30, 1999
and 1998) $ (1) $ (6) $ (14) $ (16)
</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,
1999 1998 1999 1998
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (7,127) $ (74,948) $(159,090) $ (193,142)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Amortization 4,216 4,216 12,648 12,648
Equity in net loss
(gain) of local limited
partnership (19,146) 50,000 77,954 117,893
Increase in due from
affiliates (930) -0- (930) -0-
Increase (decrease) in
accounts payable and
accrued management fees (14,300) (6,349) 68 35,000
Total adjustments (30,160) 47,867 89,740 165,541
Net cash provided
by operating
activities (37,287) (27,081) (69,350) (27,601)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Distributions received 7,855 -0- 7,855 -0-
Advance repayment
from local limited
partnership 59,842 -0- 59,842 32,107
Net cash provided by
Investing activities 67,697 -0- 67,697 32,107
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 30,410 (27,081) (1,653) 4,506
CASH BALANCE AT
BEGINNING OF
PERIOD 14,986 43,337 47,049 11,750
CASH BALANCE AT
END OF PERIOD $ 45,396 $ 16,256 $ 45,396 $ 16,256
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
NOTES TO SUMMARIZE FINANCIAL INFORMATION
September 30, 1999
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 $805,667 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>
<CAPTION>
<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, 1999,
the Partnership has investments in eight active real estate Limited Partner-
ships (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, 1999 December 31, 1998
Capital contributions $6,831,192 $6,831,192
Distributions (1,157,931) (1,150,077)
Equity in losses (2,461,954) (2,383,999)
Advances -0- 59,842
Unamortized costs of acquisitions 823,275 835,923
$4,034,582 $4,192,881
</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>
<CAPTION>
<S> <C> <C> <C> <C>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1999 1998 1999 1998
Advance made to (repaid
from) Local Limited
Partnership $(59,842) $ -0- $(59,842) $(32,107)
</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 $52,000 for the nine-month period ended September 30, 1999 and
1998.
The components of the Partnership's equity in net loss of the Local Limited
Partnerships for September 30, 1999 and 1998, 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,
1999 1998 1999 1998
Advance to Partnership with
zero investment:
Community Circle $ 59,842 $ -0- $ 59,842 $ 32,107
Distributions received
from Partnership with
zero investment: 7,854 -0- 7,854 -0-
Income from investments
with non-zero investment:
808 Investments L.P. (48,550) (50,000) (145,650) (150,000)
$ (19,146) $ (50,000) $ (77,954) $ (117,893)
</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, 1999.
<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 December 7, 1999 Michael Fulbright
(Signature)
By: Michael Fulbright, Secretary
Date December 7, 1999 John M. Orehek
(Signature)
By: John M. Orehek, Senior Vice President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999 DEC-31-1998
<PERIOD-END> SEP-30-1999 SEP-30-1999 DEC-31-1998
<CASH> 0 45,396 47,049
<SECURITIES> 0 0 0
<RECEIVABLES> 0 930 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 4,034,582 4,192,881
<PP&E> 0 0 0
<DEPRECIATION> 0 0 0
<TOTAL-ASSETS> 0 4,080,908 4,239,930
<CURRENT-LIABILITIES> 0 1,653,523 1,653,455
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 0 0 0
<OTHER-SE> 0 2,427,385 2,586,475
<TOTAL-LIABILITY-AND-EQUITY> 0 4,080,908 4,239,930
<SALES> 0 0 0
<TOTAL-REVENUES> 19,589 943 0
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 26,716 160,033 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> (7,127) (159,090) 0
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (7,127) (159,090) 0
<EPS-BASIC> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
