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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 September 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 September 30, 2002 and
December 31, 2001 Page 3
Consolidated Statements of Operations for the Three and
Six months Ended September 30, 2002 and 2001 Page 4
Consolidated Statements of Cash Flows for the Six months
Ended September 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
September 30, December 31,
2002 2001
(Unaudited)
ASSETS
Real Estate assets, at cost $580,045 $580,045
Land 4,678,271 4,678,271
Buildings and improvements 5,258,316 5,258,316
Less: Accumulated depreciation (3,446,996) (3,302,996)
Real estate, net 1,811,320 1,955,320
Investments in Real Estate Held for Sale
Cash including cash investments 41,350 142,797
Escrow deposits 230,487 208,514
Deferred Costs and Fees 40,095 21,667
Other assets 1,150 10,444
Total assets $2,124,402 $2,338,742
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES:
Mortgage and notes payable $2,199,839 $2,240,377
Payable to Affiliates 1,394 1,242
Interest payable 0 17,410
Real estate taxes payable 86,414 0
Security deposits 20,665 19,501
Accounts payable and accrued expenses 83,407 158,274
Total liabilities 2,391,719 2,436,804
PARTNERS CAPITAL (DEFICIT):
Limited Partners (193,550) (23,806)
General Partners (73,767) (74,256)
Total Partners Capital (Deficit) (267,317) (98,062)
Total Liability and Partners Equity $2,124,402 $2,338,742
See notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
REVENUES 2002 2001 2002 2001
Rental income $219,561 $214,370 $654,861 $635,028
Other property 5,942 7,750 15,852 23,365
Total revenues 225,503 222,120 670,713 658,393
EXPENSES
Salaries & wages 19,351 22,433 59,279 58,624
Maintenance & repairs 9,418 14,868 21,178 42,881
Utilities 8,413 9,713 24,531 25,983
Real estate taxes 28,916 25,500 86,414 76,50
General administrative 8,383 20,069 34,797 35,115
Contract services 11,971 10,323 32,455 31,272
Insurance 9,900 5,637 25,333 15,536
Interest 51,478 52,587 155,289 158,538
Depreciation and amortization 48,000 48,000 144,000 144,000
Property management fees 11,194 10,945 33,400 32,412
Amortization of deferred
costs & fees 1,711 1,712 5,132 5,133
Total expenses 208,735 221,787 621,808 625,994
NET INCOME (LOSS) $16,768 $333 $48,905 $32,399
NET INCOME PER SHA $1.15 $0.02 $3.36 $2.23
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Unaudited
Nine Months Ended
September 30,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) $48,905 $32,399
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 144,000 144,000
Net Effect of changes in operating accounts
Escrow deposits (21,973) 22,397
Deferred Costs (18,428) (8,691)
Accrued real estate taxes 86,414 76,515
Security deposits 1,164 800
Accounts payable (74,867) (66,240)
Other assets 9,294 6,811
Net cash used by operating activities 174,509 207,991
CASH FLOWS FROM INVESTING ACTIVITIES
0 0
Net cash used by operating activities 0 0
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (40,538) (36,942)
Distribution to Limited Partners (218,160) 2
Proceeds from amounts due affiliates 152 2,712
Increase in accrued interest (17,410) (17,757)
Net cash provided by investing activities (275,956) (51,985)
NET INCREASE (DECREASE) IN CASH AND CASH (101,447) 156,006
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF 142,797 210,193
PERIOD
CASH AND CASH EQUIVALENT, END OF PERIOD $41,350 $366,199
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 MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
Results of Operations
At September 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 95.3% during the third
quarter of 2002 as compared to 99.0% for the third quarter of
2001.
THIRD QUARTER 2002 COMPARED TO THIRD QUARTER 2001
Revenue from property operations increased $3,383 or 1.52%, for
the third quarter of 2002, as compared to the 2001 third
quarter. Rental income increased $5,191 or 2.42% from higher
rental rates. Other income decreased $1,808 or 23.33%
primarily due to decreased late charges and other fees. The
following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income $5,191 2.42%
Other property (1,808) 23.33%
$3,383 1.52%
Property operating expenses decreased $13,051 or 5.88%, for the
third quarter of 2002, as compared to the same period in 2001.
This was primarily due from decreased general and
administrative costs. General & administrative costs decreased
primarily due to partnership mailings being charged earlier in
the year. Insurance costs increased $4,263 or 75.63% from
increased premiums. Maintenance and repairs decreased $5,450
or 36.66% due to fewer outside contractor repairs needed on the
property. Salaries increased $3,082 or 13.74% primarily due to
increased on-site maintenance. Contract services increased
$1,648 or 15.96% due to higher pest control and cable
television costs. The following table illustrates the
components by category:
Increase Percent
(Decrease) Change
Salaries & wages ($3,082) 13.74%
Maintenance & repairs (5,450) 36.66%
Utilities (1,300) 13.38%
Real estate taxes 3,416 13.40%
General administrative (11,686) 58.23%
Contract services 1,648 15.96%
Insurance 4,263 75.63%
Interest (1,109) 2.11%
Property management fees 249 2.28%
Net Increase (Decrease) ($13,051) 5.88%
THIRD QUARTER 2001 COMPARED TO THIRD QUARTER 2000
Revenue from property operations increased $4,310 or 1.98%, for
the third quarter of 2001, as compared to the 2000 third
quarter. The increase in rental income of $2,063 or 0.97% is
primarily due to higher rental rates. Other income increased
$2,247 or 40.83% primarily due to increased late charges and
other fees. The following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income $2,063 0.97%
Other property 2,247 40.83%
$4,310 1.98%
Property operating expenses increased $12,532 or 5.99%, for the
third quarter of 2001, as compared to the same period in 2000.
This was primarily due to an increase in general &
administrative due to increased mailing costs. Utilities
increased $2,414 or 33.07% due to higher electric and water
costs. Insurance costs increased $970 or 20.78% from increased
premiums. Salaries and wages increased $2,639 or 13.33% due to
higher salaries. The following table illustrates the
components by category:
Increase Percent
(Decrease) Change
Salaries & wages $2,639 13.33%
Maintenance & repairs (233) 1.54%
Utilities 2,414 33.07%
Real estate taxes 1,166 4.79%
General administrative 7,947 65.56%
Contract services 537 5.49%
Insurance 970 20.78%
Interest (1,047) 1.95%
Depreciation and amortization (2,000) 4.00%
Property management fees 139 1.29%
Net Increase (Decrease) $12,532 5.99%
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 September 30, 2002, the Partnership had $41,150 in cash
and cash equivalents as compared to $142,797 as of December 31
2001. The net decrease in cash of $101,647 is principally due
to a distribution made September 30, 2002.
On September 30, 2002 the partnership distributed $15.00 per
limited partnership unit to units of record September 30, 2002.
This distribution was made from excess cash on hand from cash
flow from operations.
The property is encumbered by non-recourse mortgage as of
September 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 Amrecorp's financial
difficulties might have on the partnership. Management of the
Partnership's 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. Management's 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: November 1, 2002
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Amrecorp Realty
Fund II (the Company) on Form 10-Q for the period ending
September 30, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the Report), I, Robert J
Werra, Principal Executive Officer and Paul M. Ivanoff
Treasurer of the Company, certify, pursuant to 18 U.S.C.
1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and results
of operations of the Company.
/s/ Robert J. Werra /s/ Paul M. Ivanoff
Robert J. Werra Paul M. Ivanoff
CEO Univesco, Inc. Treasurer
Management Agent Univesco, Inc.
Management Agent
November 1, 2002