10-Q/A 1 d10qa.txt 10-Q/A DATED 9/30/2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________ FORM 10-Q /A [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2001 or [_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 33-85492 -------------------------------------------------------------------------------- CP LIMITED PARTNERSHIP (exact name of registrant as specified in its charter) MARYLAND 38-3140664 (State of incorporation) (I.R.S. Employer Identification No.) 6160 South Syracuse Way, Greenwood Village, Colorado 80111 (Address of principal executive offices) (303) 741-3707 Registrant's telephone number, including area code 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 [_] CP LIMITED PARTNERSHIP FORM 10-Q/A INDEX

PART I. FINANCIAL INFORMATION Item 1. Financial Statements CP LIMITED PARTNERSHIP CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per unit data)

The accompanying notes are an integral part of the financial statements. 1 CP LIMITED PARTNERSHIP CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)

The accompanying notes are an integral part of the financial statements. 2 CP LIMITED PARTNERSHIP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)

The accompanying notes are an integral part of the financial statements. 3 CP LIMITED PARTNERSHIP NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ________________________________________________________________________________ 1. Background and Basis of Presentation: ------------------------------------- Background - CP Limited Partnership is a limited partnership and was formed by Chateau Communities, Inc., a real estate investment trust, as general partner and Chateau Estates, as the initial limited partner, on September 16, 1993. We are engaged in owning and operating manufactured housing community properties. As of September 30, 2001, our portfolio consisted of 222 properties, containing an aggregate of 70,858 homesites and 1,790 park model/RV sites, located in 33 states. We also fee manage 40 properties, containing an aggregate of 8,734 homesites. We have prepared the accompanying interim financial statements in accordance with generally accepted accounting principles and in conformity with the rules and regulations of the Securities and Exchange Commission. In our opinion, the interim financial statements presented herein reflect all adjustments of a normal and recurring nature that are necessary to fairly present the interim financial statements. The results of operations for the interim period are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. These financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2000. Basis of Presentation - The accompanying condensed consolidated financial statements of the company include all accounts of CP Limited and our subsidiaries. Chateau and ROC Communities, Inc, are general partners. As of September 30, 2001, Chateau owned on a combined basis, an 83 percent general partner interest. Pursuant to the terms of the operating partnership agreement, we are required to reimburse Chateau for the net expenses incurred by Chateau. Amounts paid on behalf of Chateau by us are reflected in the statement of income as general and administrative expenses. The balance sheet of Chateau as of September 30, 2001 is identical to our accompanying balance sheet, except as follows:

All significant inter-entity balances and transactions have been eliminated. As of January 1, 2001, we began consolidating all our joint ventures, which we control. Reclassifications - Certain prior year amounts have been reclassified to conform to current period presentation. 4 CP LIMITED PARTNERSHIP NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued (Unaudited) -------------------------------------------------------------------------------- 2. Acquisition of CWS: ------------------ On August 3, 2001 we purchased CWS Communities Trust ("CWS"), a private real estate investment trust for $552 million, consisting of $323 million in cash (including the payoff of $20 million in debt), $151 million in assumed liabilities, 2,040,878 OP Units (valued at $30.935 per OP Unit) and $9.9 million in 7.5% Senior Unsecured Notes due 2012 (the "7.5% Notes"). The portfolio consists of 46 manufactured home communities with approximately 16,600 homesites and 1,518 expansion sites and three RV communities with 431 RV sites in 11 states. We financed the cash portion of this transaction primarily through borrowings of a $323 million bridge facility (the "Acquisition Facility"), which carries an interest rate of LIBOR plus 120 basis points, and matures August 2, 2002. In connection with the CWS Acquisition, the following related transactions occurred: . Certain limited partners in the CWS operating partnership ("CWS OP") also agreed that the terms of the loans extended to them by CWS OP in the aggregate amount of $26 million would be amended and restated effective as of the closing date of the CWS Acquisition. Prior to the CWS Acquisition, these loans were secured with the pledge of shares of stock of CWS and units of limited partner interest in CWS OP, 50% of which could be purchased by CWS at its option upon the occurrence of certain events, including certain prepayments and upon maturity. As of August 2, 2001, these loans were amended and restated to, among other things, replace the collateral with a proportionate amount of OP Units, provide for an initial purchase price for such OP Units subject to our repurchase option at $27.17 per OP Units, eliminate our right to exercise this repurchase option in the event of a prepayment of these loans in full prior to January 1, 2003 and lower the exercise price of this repurchase option in the event that certain distributions are made to the borrowers. The maturity dates of these loans vary between June 14, 2009 and September 26, 2010. These loans bear initial interest rates of 6.25% or 6.5%, increasing at increments of 25 basis points on each anniversary of each loan, but not to exceed 7.5%, and are included in Notes Receivable in the accompanying consolidated balance sheet as of September 30, 2001. . We agreed to issue to the holders of the 7.5% Notes, an aggregate of 309,371 OP Units, for an aggregate purchase price of approximately $9.6 million paid to us through the issuance of 7.5% promissory notes due 2010 secured by the OP Units held by the obligor. As of September 30, 2001, we have issued $3,028,000 of such notes/OP Units and the notes are included in Notes Receivable in the accompanying consolidated balance sheet as of September 30, 2001. The following unaudited pro forma income statement information has been prepared as if the CWS Acquisition and related transactions had occurred on January 1, 2000. In addition, the pro forma information is presented as if the acquisition of eight properties made in 2000 by CWS and the disposition of one property by us in September 2001 had occurred on January 1, 2000. The pro forma income statement information is not necessarily indicative of the results that actually would have occurred if the CWS Acquisition had been consummated on January 1, 2000. 5 CP LIMITED PARTNERSHIP NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued (Unaudited) -------------------------------------------------------------------------------- (in thousands, except per share data)

3. Rental Property: ---------------- We purchased two communities in April and May of 2001. One community was purchased for $5.4 million, is located in Indiana, and has 288 sites. The other community was purchased for $23.9 million, is located in Georgia, and has 911 sites and land for future development. In the third quarter, we began implementing a disposition plan and started identifying a number of mature properties that no longer meet company portfolio objectives. In September 2001, we sold one manufactured home community, containing 520 homesites, which was acquired as part of the CWS Acquisition and was under contract at the time of acquisition, for net proceeds of approximately $17.1 million. 4. Partners' Capital ----------------- In connection with the CWS Acquisition, we issued 2,040,878 OP Units on August 2, 2001 (see Note 2). In August 2001, we entered into a hedge transaction in relation to the $150 million in notes issued in a private placement on October 30, 2001. As of September 30, 2001, we recorded a loss in other comprehensive income of $7.1 million (see Note 7). On September 13, 2001, we declared a cash distribution of $.545 per OP Unit to OP Unitholders of record as of September 28, 2001. The distribution was paid October 15, 2001 and is included in distributions payable in the accompanying condensed consolidated balance sheet as of September 30, 2001. On May 17, 2001, we declared a cash distribution of $.545 per OP Unit to OP Unitholders of record as of June 29, 2001. On February 22, 2001, we declared a cash distribution of $.545 per OP Unit to OP Unitholders of record as of March 30, 2001. 6 CP LIMITED PARTNERSHIP NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued (Unaudited) -------------------------------------------------------------------------------- Basic and diluted earning per share ("EPS") are summarized in the following table:

5. Financing: --------- The following table sets forth certain information regarding our debt at September 30, 2001.

6. Related Party Transactions: -------------------------- Included in management fee and other income is $617,000 and $570,000, and $2,649,000 and $2,446,000 of management and transaction fee income received from N'Tandem Trust for the three months ended September 30, 2001 and 2000, and the nine months ended September 30, 2001 and 2000, respectively. 7. New Accounting Standards: ------------------------ We adopted SFAS No. 133, "Accounting for Derivative Instruments and for Hedging Activities," as amended by SFAS No. 138, on January 1, 2001. SFAS No. 133 provides comprehensive guidelines for the recognition and measurement of derivatives and hedging activities and, specifically, requires all derivatives to be recorded on the balance sheet at fair value as an asset or liability, with an offset to accumulated other comprehensive income or 7 CP LIMITED PARTNERSHIP NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued (Unaudited) -------------------------------------------------------------------------------- income. Upon adoption of SFAS No. 138, we recorded a transition adjustment of $658,000 as a cumulative effect on accumulated other comprehensive income which is included in the general partner caption in the partners' capital section of the Condensed Consolidated Balance Sheet. The cumulative effect adjustment relates to net deferred gains on prior hedges of anticipated refinancings of debt which have been completed. The amount in the accumulated other comprehensive income account will be amortized over the remaining life of the related debt instruments. In August 2001, we entered into a forward interest rate swap agreement to hedge the anticipated issuance of $150 million of senior notes, which are anticipated to be issued pursuant to a bond offering in October 2001. The purpose of the swap is to hedge future interest rate payments on the fixed rate bonds to be issued. We accounted for this swap as a cash flow hedge, in accordance with SFAS No. 133. We are subject to interest rate risk resulting from movements in the interest rate curve between August 16, 2001 (the date of the swap) and the day the bonds are priced as part of the offering. At September 30, 2001, we believe that it is highly probable that the bond issuance will occur as anticipated and that based on information available, the swap will be an effective hedge. In accordance with SFAS No. 133, we recorded a loss on the swap of approximately $7.1 million at September 30, 2001 in other comprehensive income which is included in the general partner caption in the partner's capital section of the Condensed Consolidated Balance Sheet. Under SFAS No. 133, we will begin amortizing the amounts in other comprehensive income related to this hedge once the debt is issued. Based on the loss recorded at September 30, 2001, we anticipate that we will reclassify approximately $1 million of losses from other comprehensive income to interest expense on an annual basis. In assessing the fair value of our financial instruments, both derivative and non-derivative, we use a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. Primarily, we use quoted market prices or quotes from brokers or dealers for the same or similar instruments. These values represent a general approximation of possible value and may never actually be realized. In June 2001, the FASB issued SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires all business combinations to be accounted for by the purchase method and defines criteria under which intangible assets acquired in connection with a business combination be recognized as assets apart from goodwill. SFAS No. 141 is effective for all fiscal business combinations initiated after June 30, 2001. SFAS No. 142 changes the useful life of goodwill recorded on a company's books from 40 years to indefinite and requires goodwill to be reviewed annually for impairment. SFAS No. 142 is effective for all fiscal years beginning after December 15, 2001. Adoption of SFAS No. 141 and No. 142 did not have and is not expected to have a significant impact on our financial position or results of operations. In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment on Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets and provides guidance for measuring the amount of impairment. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. Adoption of SFAS No. 144 is not expected to have a significant impact on our financial position or results of operations. 8. Subsequent Events: ----------------- On October 23, 2001, we issued $150 million of 7.125% Senior Unsecured Notes, due 2011 in a private placement. Net proceeds of $148.3 million were used to repay a portion of the outstanding indebtedness under the Acquisition Facility. In October 2001, we extended $50 million of our $70 million 7.54% senior unsecured notes scheduled to mature in November 2003 to October 2021 at 8.3%. On October 25, 2001, we purchased the remaining interests in one of our joint ventures for approximately $12 million, consisting of $1.6 million in OP Units, cash of $5.5 million and the remainder in forgiveness of a note receivable to us. This community has 400 homesites. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the financial statements and notes appearing elsewhere in this report. Certain information and statements in this discussion constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements may involve our plans, objectives and expectations, which are dependent upon a number of factors, including site expansions, acquisitions, development and other new business initiatives which are all subject to a number of contingency factors such as the effects of national and local economic conditions, changes in interest rates, supply and demand for affordable housing and the condition of the capital markets that may prevent us from achieving our objectives. As used in this Form 10-Q/A, "we", "our", "ours" and "us" refer to CP Limited Partnership and our subsidiaries. Overview In August 2001, we purchased CWS Communities Trust, a private real estate investment trust for $552 million. The portfolio consists of 46 manufactured home communities with approximately 16,600 homesites and 1,518 expansion sites and three RV communities with 431 RV sites in 11 states. This transaction extended our leading position in the manufactured housing community sector, making us substantially larger than our next largest REIT competitor. As of September 30, 2001, our portfolio comprised 222 manufactured home communities containing 70,858 manufactured homesites and 1,790 park model/RV sites, located in 33 states. We also fee manage 40 properties, containing an aggregare of 8,734 homesites. As of January 1, 2001, we began consolidating all our joint ventures, which we control. Results of Operations The following table summarizes certain information relative to our properties as of and for the three and nine months ended September 30, 2001 and 2000. We consider all communities owned by us at the beginning of the period as our

"Core Portfolio." 9 Comparison of three months ended September 30, 2001 to three months ended September 30, 2000 For the three months ended September 30, 2001, net income was $12,226,000, an increase of $467,000 from the three months ended September 30, 2000. The increase was due to the CWS Acquisition, along with increased net operating income from our Core Portfolio, offset by increased depreciation, property based operating expenses, and lower profit from CSI. Rental revenue for the three months ended September 30, 2001 was $60,884,000 an increase of $13,389,000 from the three months ended September 30, 2000. The increase is primarily due to the CWS Acquisition and rental increases in our Core Portfolio. Weighted average occupancy for the three months ended September 30, 2001 was 58,217 sites compared with 47,485 for the same period in 2000. The occupancy rate was 88.9 percent on 70,858 sites as of September 30, 2001, compared to 91.7 percent on 51,915 sites as of September 30, 2000. The occupancy rate on our stabilized portfolio was 91.4 percent as of September 30, 2001 compared to 93.2 percent as of September 30, 2000. Our stabilized portfolio includes communities where we do not have, or have not recently had, an expansion of the community. On a per site basis, weighted average monthly rental revenue for the three months ended September 30, 2001 was $333 compared with $322 in the same period of 2000. For our Core Portfolio, on a per site basis, weighted average monthly rental revenue for the three months ended September 30, 2001 was $330 compared with $318 for the same period in 2000 an increase of 3.9 percent. Management fee and other income primarily include management and transaction fee income for the management of 40 manufactured home communities and equity earnings from CSI. Included in this amount is approximately $617,000 and $570,000 of fees from N'Tandem for the three months ended September 30, 2001 and 2000, respectively. Property operating and maintenance expense for the three months ended September 30, 2001 increased by $5,884,000 or 43.6 percent from the same period a year ago. The majority of the increase was due to the CWS Acquisition, which accounted for $4,000,000. The remaining change is due to increases in our Core Portfolio, including increased bad debt, property insurance, healthcare and administrative costs. Given the slowing economy, combined with continuing system issues, we wrote off an additional $1.3 million of accounts receivable in the third quarter. The system issues include retraining our on-site management to collect rents using a lockbox system. We anticipate collections will continue to be difficult into the future. Administrative expense for the three months ended September 30, 2001 increased by $193,000 from the same period a year ago. Administrative expense in the third quarter of 2001 was 3.7 percent of total revenues as compared to 4.3 percent in 2000. Depreciation and amortization expense for the three months ended September 30, 2001, increased $1,815,000 from the same period a year ago. Depreciation expense as a percentage of average depreciable rental property in the third quarter of 2001 remained relatively unchanged from 2000. Comparison of nine months ended September 30, 2001 to nine months ended September 30, 2000 For the nine months ended September 30, 2001, net income was $35,723,000, an increase of $50,000 from the nine months ended September 30, 2000. The increase was due to the CWS Acquisition, along with increased net operating income from our Core Portfolio, offset by increased depreciation, property based operating expenses, and lower profit from CSI. Rental revenue for the nine months ended September 30, 2001, was $158,851,000, an increase of $18,961,000 from the nine months ended September 30, 2000. The increase is primarily due to the CWS Acquisition and rental increases in our Core Portfolio. Weighted average occupancy for the nine months ended September 30, 2001, was 51,527 sites compared with 47,420 for the same period in 2000. On a per site basis, weighted average monthly rental revenue for the nine months ended September 30, 2001 was $328 compared with $316 in the same period of 2000. For our Core Portfolio, on a per site basis, weighted average monthly rental revenue for the nine months ended September 30, 2001 was $328, compared with $314 for the same period in 2000, an increase of 4.3 percent. 10 Interest income primarily includes interest on notes receivable and advances to affiliates. The increase of $174,000 for the nine months ended September 30, 2001 from the same period in 2000 is due primarily to increased lending activities. Management fee and other income primarily include management and transaction fee income for the management of 40 manufactured home communities and equity earnings from CSI. Included in this amount is approximately $2,649,000 and $2,446,000 of fees from N'Tandem for the nine months ended September 30, 2001 and 2000, respectively. The decrease of $273,000 in the nine months ended September 30, 2001 from the same period in 2000 is due primarily to increased overhead expense allocations to CSI. Property operating and maintenance expense for the nine months ended September 30, 2001 increased by $8,543,000 or 21.8% percent from the same period a year ago. The increase was due to the CWS Acquisition, which accounted for $4,000,000. The remaining change is due to increases in our Core Portfolio, including increased bad debt, property insurance, healthcare and administrative costs. We recently completed the implementation of an enterprise-wide software system. In connection with the implementation, we performed a detailed review and analysis of each resident account. These reviews led us to recognize write-offs of accounts receivable of approximately $650,000 in the first quarter of 2001. Upon completion of these reviews, management bonuses for the year 2000 were recalculated and reduced by approximately $400,000. Given the slowing economy, combined with continuing system issues, we wrote off an additional $1.3 million of accounts receivable in the third quarter. The system issues include retraining our on-site management to collect rents using a lockbox system. We anticipate collections will continue to be difficult into the future. Administrative expense for the nine months ended September 30, 2001 increased by $313,000 from the same period a year ago. Administrative expense in the first nine months of 2001 was 4.3 percent of total revenues as compared to 4.6 percent in 2000. Depreciation and amortization expense for the nine months ended September 30, 2001, increased $3,808,000 from the same period a year ago. Depreciation expense as a percentage of average depreciable rental property in the nine months of 2001 remained relatively unchanged from 2000. Liquidity and Capital Resources Net cash provided by operating activities was $73,762,000 for the nine months ended September 30, 2001, compared with $64,163,000 for the nine months ended September 30, 2000. The increase in cash provided by operating activities was due primarily to the increase in net operating income. Net cash used in investing activities for the nine months ended September 30, 2001 was $348,877,000. This amount represents acquisitions, dispositions, investments and advances to affiliates, lending activity, capital expenditures, and development and acquisition costs. In the third quarter 2001, we purchased CWS for $552 million, including $323 million in cash, $151 million in assumed liabilities, 2,040,878 OP Units (valued for purposes of the transaction at $30.935 per OP Unit) and $9.9 million in 7.5% Senior Unsecured Notes due 2012 (the "August 2012 Notes"). The portfolio consists of 46 manufactured home communities with approximately 16,600 homesites and 1,518 expansion sites and three RV communities with 431 RV sites in 11 states. We financed the cash portion of this transaction primarily through borrowings of a $323 million bridge facility (the "Acquisition Facility"), which carries an interest rate of LIBOR plus 120 basis points, and matures August 2, 2002. In connection with this transaction, we agreed to issue in a private placement to the holders of the August 2012 Notes, an aggregate of 309,371 OP Units at $30.935 per OP Unit, in exchange for the issuance by such holders of 7.5% notes, due August 2010, subject to extension in certain events. These notes are collateralized by the related OP Units. In the third quarter, we began implementing a disposition plan and started identifying a number of mature properties that no longer meet company portfolio objectives. To date, we have sold one property for $17 million, and anticipate completing more sales by year-end. The sold property was acquired as part of the CWS Communities acquisition and was under contract at the time of acquisition. Development and acquisition costs were $320,261,000 (including the CWS Acquisition), capital expenditures were approximately $28,615,000 (which includes recurring cap-ex of $5,472,000 and $19,100,000 in development), 11 investments in and advances to affiliates were $7,603,000 and advances on notes receivable were approximately $9,500,000. Capital expenditures have historically been financed with cash from operations and it is our intention that such future expenditures will be financed with cash from operations. Net cash provided by financing activities for the nine months ended September 30, 2001 was $275,328,000. This was due primarily to borrowing $323,000,000 on the Acquisition Facility for the CWS Acquisition, offset by payment of distributions to OP Unitholders. On October 23, 2001, we issued $150 million of 7.125% Senior Unsecured Notes, due 2011 in a private placement. Accordingly, any such senior notes have not been registered under the Securities Act of 1933, as amended, and may not be reoffered or resold in the United States absent registration or an applicable exemption from the registration requirements under this Act. Net proceeds of $148.3 million were used to repay a portion of the outstanding indebtedness under the Acquisition Facility. In connection with the private placement, we entered into a hedge of forecasted interest payments. At September 30, 2001, there was an accumulated hedge loss of $7.1 million. In October 2001, we extended $50 million of our $70 million 7.54% senior unsecured notes scheduled to mature in November 2003 to October 2021 at 8.3%. We have a line of credit available with BankOne, N.A., acting as lead agent, for $125 million. In February 2001, we renegotiated our BankOne credit facility and increased it from $100 million to $125 million. The term of the new facility is three years and bears interest at LIBOR plus 90 basis points. In addition we have a $7.5 million revolving line of credit from US Bank, which bears interest at a rate of LIBOR plus 125 basis points, (together with our BankOne credit facility, "Credit Facilities"). As of September 30, 2001 we had approximately $83 million outstanding under our Credit Facilities and had available $49 million in additional borrowing capacity. In addition to repayment of long-term borrowings and amounts outstanding under the Acquisition and Credit Facilities, our principal long-term liquidity needs will be derived from future acquisitions of communities, acquisition of land for development, and new community development activities. We do not expect to generate sufficient funds from operations to finance these long-term liquidity needs and instead intend to meet our long-term liquidity requirements through additional borrowings under our Credit Facilities or other lines of credit, the assumption of existing secured or unsecured indebtedness, proceeds from the sale of certain assets as discussed above, and, depending on market conditions and capital availability factors, the issuance of additional equity or debt securities. We expect to meet our short-term liquidity requirements, including distributions, expansion activities and capital expenditure requirements, through cash flow from operations and, if necessary, borrowings under our Credit Facilities and other lines of credit. New Accounting Standards We adopted SFAS No. 133, "Accounting for Derivative Instruments and for Hedging Activities," as amended by SFAS No. 138, on January 1, 2001. SFAS No. 133 provides comprehensive guidelines for the recognition and measurement of derivatives and hedging activities and, specifically, requires all derivatives to be recorded on the balance sheet at fair value as an asset or liability, with an offset to accumulated other comprehensive income or income. Upon adoption of SFAS No. 138, we recorded a transition adjustment of $658,000 as a cumulative effect on accumulated other comprehensive income which is included in the general partner caption in the partners' capital section of the Condensed Consolidated Balance Sheet. The cumulative effect adjustment relates to net deferred gains on prior hedges of anticipated refinancings of debt which have been completed. The amount in the accumulated other comprehensive income account will be amortized over the remaining life of the related debt instruments. In August 2001, we entered into a forward interest rate swap agreement to hedge the anticipated issuance of $150 million of senior notes, which are anticipated to be issued pursuant to a bond offering in October 2001. The purpose of the swap is to hedge future interest rate payments on the fixed rate bonds to be issued. We accounted for this swap as a cash flow hedge, in accordance with SFAS No. 133. We are subject to interest rate risk resulting from movements in the interest rate curve between August 16, 2001 (the date of the swap) and the day the bonds are priced as part of the offering. At September 30, 2001, we believe that it is highly probable that the bond issuance will occur as anticipated and that based on information available, the swap will be an effective hedge. In accordance with SFAS No. 133, we recorded a loss on the swap of approximately $7.1 million at September 30, 2001 in other comprehensive income which is included in the general partner caption in the partner's capital section of the Condensed Consolidated Balance Sheet. 12 Under SFAS No. 133, we will begin amortizing the amounts in other comprehensive income related to this hedge once the debt is issued. Based on the loss recorded at September 30, 2001, we anticipate that we will reclassify approximately $1 million of losses from other comprehensive income to interest expense on an annual basis. In assessing the fair value of our financial instruments, both derivative and non-derivative, we use a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. Primarily, we use quoted market prices or quotes from brokers or dealers for the same or similar instruments. These values represent a general approximation of possible value and may never actually be realized. In June 2001, the FASB issued SFAS No. 141, Business Combinations and SFAS no. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires all business combinations to be accounted for by the purchase method and defines criteria under which intangible assets acquired in connection with a business combination be recognized as assets apart from goodwill. SFAS No. 141 is effective for all fiscal business combinations initiated after June 30, 2001. SFAS No 142 changes the useful life of goodwill recorded on a company's books from 40 years to indefinite and requires goodwill to be reviewed annually for impairment. SFAS No. 142 is effective for all fiscal years beginning after December 15, 2001. Adoption of SFAS No. 141 and No. 142 did not have and is not expected to have a significant impact on our financial position or results of operations. In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment on Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets and provides guidance for measuring the amount of impairment. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. Adoption of SFAS No. 144 is not expected to have a significant impact on our financial position or results of operations. Other Funds from operations ("FFO") is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as consolidated net income without giving effect to gain (or losses) from debt restructuring and sales of property and rental property depreciation and amortization. We believe that FFO is an important and widely used measure of the operating performance of REITs, which provides a relevant basis for comparison among REITs. FFO (1) does not represent cash flow from operations as defined by generally accepted accounting principles; (2) should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating, investing and financing activities; and (3) is not an alternative to cash flow as a measure of liquidity. Our FFO is calculated as follows:

13 Item 3. Quantitative and Qualitative Disclosures about Market Risks The following table sets forth certain information related to our secured and unsecured indebtness outstanding as of September 30, 2001.

Based on the average amount outstanding under our Acquisition and Credit Facilities for the nine months ended September 30, 2001 if the LIBOR rate under these facilities was 100 basis points higher or lower during the nine months ended September 30, 2001, then our interest expense (before adjustments for capitalized items), for the period would have increased or decreased by approximately $1,166,000. In August 2001, we entered into a forward interest rate swap agreement to hedge the interest rate risk associated with the anticipated issuance of $150 million of fixed rate senior notes. We anticipate that the bonds will be issued in October 2001. At September 30, 2001, we were paying a fixed rate of approximately 5.7% on the swaps and were receiving a rate of three month LIBOR. CP Limited entered into the swap to hedge movements in interest rates between the trade date on the swap and the date the bonds are issued. Interest rate movements will impact the value of the swap, but will have an inverse impact on the interest rate to be paid on the senior notes to be issued. The fair value of the swap at September 31, 2001 was a liability of approximately $7.1 million. The notional amount of the swaps was $150 million. PART II. OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities and Use of Proceeds The Acquisition Facility limits the payment of distributions by the Operating Partnership in any year to 95% of Funds From Operations for such year. Item 3. Defaults Upon Senior Securities Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders 14 Not Applicable Item 5. Other Information Property Information We classify all of our properties in either a Stable Portfolio or an Active Expansion Portfolio. Our Stable Portfolio includes the communities where we do not have, or have not recently had, expansions of the community. These communities generally have stable occupancy rates. Our Active Expansion Portfolio are those properties where we are currently, or have recently, expanded the community by adding homesites to the available homesites for rental. Generally, these communities will have a lower occupancy rate than our Stable Portfolio as they are in the lease-up phase. In addition, we own three park model/RV communities. The following table sets forth certain information, as of September 30, 2001, regarding our Properties, excluding the three park model/RV communities. * These properties are included in our Active Expansion Portfolio.

Item 6 Exhibits and Reports on Form 8-K (a) Exhibits and Index of Exhibits None. (b) Reports on Form 8-K The Company filed a form 8-K on August 20, 2001 and a form 8-K/A on October 17, 2001. 20 SIGNATURE 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, and in the capacities indicated, on the 14th day of March, 2002. CP LIMITED PARTNERSHIP By: /s/ Tamara D. Fischer ---------------------- Tamara D. Fischer Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer) 21

CP LTD PARTNERSHIP 10-Q/A