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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 2002 Commission file number 2-90654
AMRECORP REALTY FUND II
(Exact name of registrant as specified in its charter)
TEXAS 75-1956009
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification
Number)
2800 N. Dallas Pkwy Suite 100
Plano, Texas 75093-4707
(Address of principal executive offices)
Registrant's telephone number, including area code: (972)836-8000.
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
(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: Y No:
REGISTRANT IS A LIMITED PARTNERSHIP
TABLE OF CONTENTS
Item 1. Financial Statements
The following Unaudited financial statements are filed
herewith:
Consolidated Balance Sheet as of June 30, 2002 and
December 31, 2001 Page 3
Consolidated Statements of Operations for the Three and
Six months Ended June 30, 2002 and 2001 Page 4
Consolidated Statements of Cash Flows for the Six months
Ended June 30, 2002 and 2001 Page 5
Item 2. Results of Operations and Managements Discussion and
Analysis of
Financial Condition Page 6
Liquidity and Capital Resources Page 7
Other Information Page 8
Signatures Page 9
The statements, insofar as they relate to the period subsequent
to December 31, 2001 are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Balance Sheets
June 30, December 31,
2002 2001
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $580,045 $580,045
Buildings and improvements 4,678,271 4,678,271
5,258,316 5,258,316
Less: Accumulated depreciation (3,398,996) (3,302,996)
Real estate, net 1,859,320 1,955,320
Cash including cash investments 203,439 142,797
Escrow deposits 198,967 208,514
Deferred Costs and Fees 50,073 21,667
Other assets 1,150 10,444
Total assets $2,312,949 $2,338,742
LIABILITIES AND PARTNERS'
EQUITY:
LIABILITIES:
Mortgage and notes payable $2,212,331 $2,240,377
Payable to Affiliates 1,126 1,242
Interest payable 0 17,410
Real estate taxes payable 57,498 0
Security deposits 20,856 19,501
Accounts payable and accrued 87,063 158,274
expenses
Total liabilities 2,378,874 2,436,804
PARTNERS CAPITAL (DEFICIT):
Limited Partners 8,010 (23,806)
General Partners (73,935) (74,256)
Total Partners Capital (65,925) (98,062)
(Deficit)
Total Liability and Partners Equity $2,312,949 $2,338,742
See notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
Rental income $215,722 $214,907 $435,300 $420,658
Other property 5,567 8,930 9,910 15,615
Total revenues 221,289 223,837 445,210 436,273
Salaries & wages 18,478 16,868 39,928 36,191
Maintenance & repairs 6,724 14,474 11,760 28,013
Utilities 6,978 7,844 16,118 16,270
Real estate taxes 28,749 25,500 57,498 51,000
General administrative 19,803 8,831 26,414 15,046
Contract services 10,429 10,528 20,484 20,949
Insurance 8,869 5,285 15,433 9,899
Interest 51,766 52,848 103,811 105,951
Depreciation and amortization 48,000 48,000 96,000 96,000
Property management fees 10,907 10,957 22,206 21,467
Amortization of deferred
costs and fees 1,710 1,710 3,421 3,421
Total expenses 212,413 202,845 413,073 404,207
NET INCOME (LOSS) $8,876 $20,992 $32,137 $32,066
NET INCOME PER SHARE $0.61 $1.44 $2.21 $2.20
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Unaudited
Six Months
Ended June 30,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) $32,137 $32,066
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 96,000 96,000
Net Effect of changes in operating accounts
Escrow deposits 9,547 46,142
Deferred Costs (28,406) (19,744)
Accrued real estate taxes 57,498 51,015
Security deposits 1,355 1,050
Accounts payable (71,211) (70,751)
Other assets 9,294 6,811
Net cash used by operating activities 106,214 142,589
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used by operating activities 0 0
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (28,046) (25,558)
Proceeds from amounts due affiliates (116) 3,310
Increase in accrued interest (17,410) (17,757)
Net cash provided by investing activities (45,572) (40,005)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 60,642 102,584
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 142,797 210,193
CASH AND CASH EQUIVALENT, END OF PERIOD $203,439 $312,777
See Notes to Condensed Consolidated Financial Statements
Basis of Presentation:
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the
Partnership believes that the disclosures are adequate to make
the information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the
Partnership's latest annual report on Form 10-K.
Item 2. RESULTS OF OPERATIONS AND MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
Results of Operations
At June 30, 2002 the Partnership owned one property, Chimney
Square Apartments located in Abilene Texas with approximately
126,554 net rentable square feet.
The occupancy of Chimney Square averaged 96.9% during the
second quarter of 2002 as compared to 98.4% for the second
quarter of 2001.
SECOND QUARTER 2002 COMPARED TO SECOND QUARTER 2001
Revenue from property operations decreased $2,548 or 1.14%, for
the second quarter of 2002, as compared to the 2001 second
quarter. Rental income increased $815 or 0.38% from higher
rental rates. Other income decreased $3,363 or 37.66%
primarily due to decreased late charges and other fees. The
following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income $815 0.38%
Other property (3,363) 37.66%
($2,548) 1.14%
Property operating expenses increased $9,568 or 4.72%, for the
second quarter of 2002, as compared to the same period in 2001.
This was primarily due from increased general and
administrative costs. General & administrative costs increased
primarily due to partnership mailings. Insurance costs
increased $3,584 or 67.81% from increased premiums.
Maintenance and repairs decreased $7,750 or 53.54% due to lower
preventive maintenance repairs needed on the property. Real
estate taxes increased due to higher assessments on the
property. The following table illustrates the components by
category:
Increase Percent
(Decrease) Change
Salaries & wages $1,610 9.54%
Maintenance & repairs (7,750) 53.54%
Utilities (866) 11.04%
Real estate taxes 3,249 12.74%
General administrative 10,972 124.24%
Contract services (99) 0.94%
Insurance 3,584 67.81%
Interest (1,082) 2.05%
Depreciation and amortization 0 0.00%
Property management fees (50) 0.46%
Net Increase $9,568 4.72%
(Decrease)
SECOND QUARTER 2001 COMPARED TO SECOND QUARTER 2000
Revenue from property operations decreased $1,067 or 0.47%, for
the second quarter of 2001, as compared to the 2000 second
quarter. The increase in rental income of $3,186 or 1.50% is
primarily due to higher rental rates. Other income decreased
$4,253 or 32.26% primarily due to decreased late charges and
other fees. The following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income $3,186 1.50%
Other property (4,253) 32.26%
($1,067) 0.47%
Property operating expenses decreased $6,099 or 2.92%, for the
second quarter of 2001, as compared to the same period in 2000.
This was primarily due to a decrease in general &
administrative due to decrease postage from partner mailings.
Insurance costs increased $1,215 or 29.85% from increased
premiums. Utilities increased $1,303 or 19.92% due to higher
gas costs. The following table illustrates the components by
category:
Increase Percent
(Decrease) Change
Salaries & wages $300 1.81%
Maintenance & repairs (3,040) 17.36%
Utilities 1,303 19.92%
Real estate taxes 1,749 7.36%
General administrative (5,231) 37.20%
Contract services 734 7.49%
Insurance 1,215 29.85%
Interest (1,176) 2.18%
Depreciation and amortization (2,000) 4.00%
Property management fees 47 0.43%
Net Increase ($6,099) 2.92%
(Decrease)
LIQUIDITY AND CAPITAL RESOURCES
While it is the General Partners primary intention to operate
and manage the existing real estate investments, the General
Partner also continually evaluates this investment in light of
current economic conditions and trends to determine if these
assets should be considered for disposal. Accordingly, in 1996
the Partnership sold its investment in the shopping center
located in Lancaster, Texas, recognizing a loss of $10,177.
Shorewood Apartments, an apartment complex located in
Charlotte, North Carolina was sold in January 1997. Net
proceeds from the sale were 1.3 million dollars resulting in
cash distribution of $100.00 per unit.
As of June 30, 2002, the Partnership had $203,439 in cash and
cash equivalents as compared to $142,797 as of December 31
2001. The net increase in cash of $60,642 is principally due
to cash flow from operations.
The property is encumbered by non-recourse mortgage as of June
30, 2002, with an interest rate of 9.325%. Required principal
payments on this mortgage note for the three years ended
December 31, 2004, are $49,029 $53,082 and $59,039
respectively.
For the foreseeable future, the Partnership anticipates that
mortgage principal payments (excluding balloon mortgage
payments), improvements and capital expenditures will be funded
by net cash from operations. The primary source of capital to
fund future Partnership acquisitions and balloon mortgage
payments will be proceeds from the sale, financing or
refinancing of the properties.
On February 7, 1995 the Partnership refinanced the loan on
Chimney Square Apartments. The original loan matured and a new
$2,475,000 loan bearing interest at 9.325% per year was secured
from Newport Mortgage Company L.P. The loan matures on March 1,
2005. In connection with this loan, the lender required, and
the Partnership provided, a new single asset partnership known
as Chimney Square Apartments, owned 99% by the Fund.
In February 1991, Amrecorp Realty Inc., resigned as the
Managing General Partner of the Partnership. As was
communicated to all limited partners, this step was taken in
order to minimize any effect that Amrecorps financial
difficulties might have on the partnership. Management of the
Partnerships assets is performed by Univesco, Inc., a Texas
corporation, Robert J. Werra, CEO.
Management intends to continue operating the Partnership in its
present form while investigating options to improve operations
of the Partnership.
Part II
Other Information
Item 1. Legal Proceedings
See Part I Item 2. Managements Discussion
and Analysis of Financial Conditions and
Results of Operations.
Item 2. Changes in Securities.
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matter to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
None.
(A) The following documents are filed herewith or
incorporated herein by reference as indicated
as Exhibits:
Exhibit Designation Document Description
Limited Partnership Agreement
incorporated by reference to
Registration Statement No. 2-90654
effective July 6, 1984.
Limited Partnership Agreement
incorporated by reference to
Registration Statement No. 2-90654
effective July 6, 1984.
11 Not Applicable
15 Not Applicable
18 Not Applicable
19 Not Applicable
20 Not Applicable
23 Not Applicable
SIGNATURES
Pursuant to the requirements 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.
AMRECORP REALTY FUND II
a Texas limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: August 1, 2002