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, 2000
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> <C>
September 30, December 31,
2000 1999
Cash $ 1,891 $ 30,204
Receivable from affiliate -0- 930
Distribution receivable -0- 40,271
Investments in and advances
to Local Limited Partnerships
accounted for on the equity
method 3,950,466 4,009,014
Total Assets $ 3,952,357 $ 4,080,419
LIABILITIES AND PARTNERS' (DEFICIT)
Accounts payable $ 15,000 $ 1,250
Management fee payable 1,260,667 1,208,167
Due to affiliates 63,605 194,506
1,339,272 1,403,923
Partners' (Deficit):
General Partner - 100 Partnership
units authorized, issued and
outstanding (345,844) (342,674)
Limited Partners - 11,335 partnership
units authorized, issued and
outstanding 2,958,929 3,019,170
2,613,085 2,676,496
Total Liabilities and Partners'
(Deficit) $ 3,952,357 $ 4,080,419
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
CAPITALIZATION AND PARTNERS' (DEFICIT)
URBAN IMPROVEMENT FUND LIMITED - 1973-II
(A Limited Partnership)
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
September 30, December 31,
2000 1999
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, 1999 (7,515,831) (7,515,831)
Loss for nine-month period ended
September 30, 2000 (63,411) -0-
(8,816,915) (8,753,504)
Partners' (Deficit) at
End of Period $ 2,613,085 $ 2,676,496
</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> <C>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
2000 1999 2000 1999
Revenues $ 23 $ 443 $ 798 $ 943
Cost and expenses:
Professional fees 5,000 5,000 15,000 15,000
Management fee 17,500 17,500 52,500 52,500
Amortization expense 4,216 4,216 12,648 12,648
Other 46 -0- 14,869 1,931
26,762 26,716 95,017 82,079
Loss before equity
in loss of Local
Limited Partnerships (26,739) (26,273) (94,219) (81,136)
Equity in loss of
Local Limited
Partnership 22,500 19,146 30,808 (77,954)
Net loss $ (4,239) $ (7,127) $ (63,411) $ (159,090)
Allocation of net loss:
Net loss allocated
to General
Partner $ (212) $ (356) $ (3,170) $ (7,955)
Net loss allocated
to Limited
Partners (4,027) (6,771) (60,241) (151,135)
$ (4,239) $ (7,127) $ (63,411) $ (159,090)
Net loss allocated
to Limited Partners
per Limited Partner-
ship Unit (11,335
units outstanding at
September 30, 2000
and 1999) $ (3) $ (1) $ (5) $ (161)
</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> <C>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
2000 1999 2000 1999
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (4,239) $ (7,127) $(63,411) $(159,090)
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 of local
limited partnership (22,500) (19,146) (30,808) 77,954
Increase in due
from affiliates
and distributions
receivable -0- (930) 41,200 (930)
Increase in accounts
payable and accrued
management fees 22,500 (14,300) 48,750 68
Total adjustments 4,216 (30,160) 71,790 89,740
Net cash provided by
operating activities (23) (37,287) 8,379 (69,350)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Distributions received -0- 7,855 -0- 7,855
Advance to local limited
partnership -0- 59,842 (36,692) 59,842
Net cash provided by
Investing activities -0- 67,697 (36,692) 67,697
NET DECREASE IN CASH
AND CASH EQUIVALENTS (23) 30,410 (28,313) (1,653)
CASH BALANCE AT
BEGINNING OF
PERIOD 1,914 14,986 30,204 47,049
CASH BALANCE AT
END OF PERIOD $ 1,891 $ 45,396 $ 1,891 $ 45,396
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
NOTES TO SUMMARIZE FINANCIAL INFORMATION
September 30, 2000
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 cap-
italized 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 adjust-
ments 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
<PAGE>
of tax deductions was not achieved in these years, and accordingly, the fee
was not paid for those years. However, fees of $367,500 have been recorded
as a liability to the General Partner.
Management fees payable totaling $893,167 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>
<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, 2000
and 1999, 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> <C>
September 30, 2000 December 31, 1999
Capital contributions $ 6,831,192 $ 6,831,192
Distributions (1,578,618) (1,465,218)
Equity in losses (2,145,212) (2,176,020)
Advances 36,692 -0-
Unamortized costs
of acquisitions 806,412 819,060
$ 3,950,466 $ 4,009,014
</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 invest-
ments. 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.
<PAGE>
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, 2000 and
1999.
The components of the Partnership's equity in net loss of the Local Limited
Partnerships for September 30, 2000 and 1999, is summarized as follows:
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
2000 1999 2000 1999
Advance to Partnership
with zero investment:
Community Circle $ -0- $ 59,842 $ (36,692) $59,842
Distributions received
from Partnership
with zero investment:
Community Circle -0- 7,854 -0- 7,854
Income (loss) from
investments with
non-zero investment:
808 Investments L.P. 22,500 (48,550) 67,500 (145,650)
$ 22,500 $ 19,146 $ 30,808 $ (77,954)
</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, 2000.
<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 14, 2000 Michael Fulbright
(Signature)
By: Michael Fulbright, Secretary
Date: November 14, 2000 John M. Orehek
(Signature)
By: John M. Orehek, Senior Vice President
<PAGE>
