10-Q 1 bclp-q2.txt BODY OF FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended December 31, 2001 _______________________________________ Commission Registrant; State of Organization; IRS Employer File No. Address and Telephone Number Identification No. ---------- ---------------------------------- ------------------ 1-14507 Boston Celtics Limited Partnership 04-3416346 (a Delaware limited partnership) 151 Merrimac Street, Boston, Massachusetts 02114 (617) 523-6050 1-9324 Boston Celtics Limited Partnership II 04-2936516 (a Delaware limited partnership) 151 Merrimac Street, Boston, Massachusetts 02114 (617) 523-6050 Indicate by checkmark 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 ----- ----- As of December 31, 2001, there were 2,703,664 Units outstanding of Boston Celtics Limited Partnership, and 2,703,664 units representing limited partnership interests outstanding of Boston Celtics Limited Partnership II. Part I - Financial Information Item I - Financial Statements BOSTON CELTICS LIMITED PARTNERSHIP and Subsidiaries Condensed Consolidated Balance Sheets

~~September~~December 3031, June 30, 2001 2001 ------------- -------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 27,~~094~~904,~~333~~559 $ 3,062,645 Other short-term investments 3028,~~400~~100,000 30,000,000 Prepaid expenses and other current assets ~~340~~464,~~454~~981 100,336 ---------------------------~~---~~ TOTAL CURRENT ASSETS 3236,~~834~~469,~~787~~540 33,162,981 PROPERTY AND EQUIPMENT, net 48,~~118~~810 4,925 OTHER ASSETS ~~321~~301,~~058~~655 351,806 ---------------------------~~---~~ $ 3336,~~159~~780,~~963~~005 $ 33,519,712 ===========================~~===~~ LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES Accounts payable and other current liabilities $ ~~501~~419,~~383~~786 $ 398,079 Accrued interest ~~873~~1,~~516~~685,490 Federal and state income taxes payable 1,162,280 1,162,280 ---------------------------~~---~~ TOTAL CURRENT LIABILITIES 23,~~537~~267,~~179~~556 1,560,359 DEFERRED FEDERAL AND STATE INCOME TAXES 9,710,875 9,710,875 NOTES PAYABLE TO BANK - noncurrent portion 10,000,000 10,000,000 SUBORDINATED DEBENTURES 34,~~316~~422,~~368~~684 34,210,381 INVESTMENT IN CAPITAL DEFICIENCY OF CELTICS BASKETBALL HOLDINGS, L.P. 3031,~~559~~954,~~976~~414 29,111,174 PARTNERS' CAPITAL (DEFICIT) Boston Celtics Limited Partnership - General Partner 93106,~~301~~454 121,546 Limited Partners (5352,~~721~~419,~~402~~268) (50,925,113) ---------------------------~~---~~ (5352,~~628~~312,~~101~~814) (50,803,567) Boston Celtics Limited Partnership II - General Partner (~~334~~312,~~195~~284) (307,387) Celtics Limited Partnership - General Partner ~~255~~241,~~739~~880 270,227 Other comprehensive loss (~~257~~192,~~878~~306) (232,350) ---------------------------~~---~~ TOTAL PARTNERS' CAPITAL (DEFICIT) (5352,~~964~~575,~~435~~524) (51,073,077) ---------------------------~~---~~ $ 3336,~~159~~780,~~963~~005 $ 33,519,712 ===========================~~===~~

See notes to condensed consolidated financial statements. 1 BOSTON CELTICS LIMITED PARTNERSHIP and Subsidiaries Condensed Consolidated Statements of Operations Unaudited

Six Months Ended Three Months Ended ---------------------------- ---------------------------- ~~September~~December 3031, ~~September~~December 3031, December 31, December 31, 2001 2000 2001 2000 ------------ ------------ ------------ ------------ Equity in net income of Celtics Basketball Holdings, L.P. $ 1,987,944 $ 290,513 $ 3,436,746 $ 1,665,310 Costs and expenses: General and administrative $1,784,533 ~~(610~~3,~~494)~~784,440 $1,174,039 ~~(997~~2,~~320)~~787,120 Depreciation and amortization (40,922 31,822 20,~~211)~~711 ~~(13~~18,~~688)~~134 ----------------------------------------------------------- ~~(630~~1,~~705)~~825,455 (3,816,262 1,~~011~~194,~~008)~~750 ~~Equity~~2,805,254 in----------------------------------------------------------- ~~net loss of Celtics Basketball Holdings~~162,489 ~~L.P.~~ (13,~~448~~525,~~802~~749) 2,241,996 (1,~~374~~139,~~797~~944) Interest expense (2,210,168) (3,965,029) (1,~~106~~104,~~086~~082) (21,~~074~~890,~~080~~949) Interest income ~~319~~553,~~763~~399 2,915,395 233,636 1,~~530~~385,~~166~~229 ----------------------------------------------------------- ~~Loss~~Income (loss) before income taxes (21,~~865~~494,~~830~~280) (24,~~929~~575,~~719~~383) 1,371,550 (1,645,664) Provision for income taxes 300,000 ----------------------------------------------------------- Net income (loss) (21,~~865~~494,~~830~~280) (34,~~229~~875,~~719~~383) 1,371,550 (1,645,664) Net income (loss) applicable to interests of General Partners (69125) (88,~~541~~226) 69,416 (7611,~~502~~724) ----------------------------------------------------------- Net income (loss) applicable to interests of Limited Partners $(21,~~796~~494,~~289~~155) $(34,~~153~~787,~~217~~157) $ 1,302,134 $(1,633,940) =========================================================== Net income (loss) per unit $ (10.0355) $ (1.1777) $ 0.48 $ (0.60) Weighted average units outstanding 2,703,664 2,703,664 2,703,664 2,703,664

See notes to condensed consolidated financial statements. 2 BOSTON CELTICS LIMITED PARTNERSHIP and Subsidiaries Condensed Consolidated Statements of Cash Flows Unaudited

~~Three~~Six Months Ended -------------------------------- ~~September~~December 3031, ~~September~~December 3031, 2001 2000 ------------- ------------- CASH FLOWS ~~FROM (~~USED IN) OPERATING ACTIVITIES General and administrative expenses $ (~~753~~2,~~802~~083,619) $ (~~894~~4,~~073~~303,582) Interest expense (~~187~~373,~~833~~625) (2,064,764) Interest income ~~361~~610,~~981~~843 13,~~339~~254,~~570~~315 Income taxes paid (~~310~~560,000) ------------------------------- NET CASH FLOWS ~~FROM (~~USED IN) OPERATING ACTIVITIES (~~579~~1,~~654~~846,401) ~~135~~(3,~~497~~674,031) CASH FLOWS ~~USED~~FROM IN INVESTING ACTIVITIES Purchases of short-term investments (90193,~~900~~700,000) (~~177~~328,~~440~~240,000) Proceeds from sales of short-term investments 90195,~~500~~600,000 ~~176~~378,~~200~~140,000 ~~Capital expenditures (829)~~ Other receipts (expenditures) 115,342 1(62,~~922~~054) ------------------------------- NET CASH FLOWS ~~USED~~FROM IN INVESTING ACTIVITIES ~~(388~~1,~~658)~~905,342 (149,~~238~~837,~~907)~~946 CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Payment of bank borrowings (50,000,000) Cash distribution from Celtics Basketball Holdings, L.P. 4,831,184 3,864,947 Cash distribution by Celtics Limited Partnership to Boston Celtics Corporation (General Partner's share) (48,211) (38,449) Cash distribution by Boston Celtics Limited Partnership II to BCLP II GP, Inc. (General Partner's share) (9,417) Cash distribution by Boston Celtics Communications Limited Partnership to Celtics Communications, Inc. (General Partner's share) (3,000) ------------------------------- NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES --4,782,973 3(46,~~817~~185,~~081~~919) ------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,841,914 (~~968~~22,~~312~~004) ~~2,713,671~~ Cash and cash equivalents at beginning of period 3,062,645 3,393,509 ------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 27,~~094~~904,~~333~~559 $ 63,~~107~~371,~~180~~505 =============================== NON-CASH INVESTING AND FINANCING ACTIVITIES: Accrued distribution by Boston Celtics Limited Partnership II to BCLP II GP, Inc. $ 361,882

See notes to condensed consolidated financial statements. 3 BOSTON CELTICS LIMITED PARTNERSHIP and Subsidiaries Notes to Condensed Consolidated Financial Statements Note 1 - The condensed consolidated financial statements include the accounts of Boston Celtics Limited Partnership ("BCLP," the "Partnership") and its majority-owned and controlled subsidiaries and partnerships. BCLP is a Delaware limited partnership that was formed on April 13, 1998 in connection with a reorganization of Boston Celtics Limited Partnership II ("BCLP II"). Pursuant to the reorganization of BCLP II (the "Reorganization"), which was completed on June 30, 1998, BCLP owns a 99% limited partnership interest in BCLP II. In addition, BCLP, through its subsidiaries, holds certain investments, including a 48.3123% limited partnership investment in Celtics Basketball Holdings, L.P., ("Celtics Basketball Holdings") which, through Celtics Basketball, L.P. ("Celtics Basketball"), its 99.999% subsidiary partnership, owns and operates the Boston Celtics professional basketball team (the "Boston Celtics") of the National Basketball Association (the "NBA"). BCLP's investment in Celtics Basketball Holdings is accounted for on the equity method, and accordingly, the investment is carried at cost, increased by equity in the earnings of Celtics Basketball Holdings and reduced by distributions received. Note 2 - The unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and with instructions to Form 10- Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included therein. Operating results for interim periods are not indicative of the results that may be expected for the full year. Such financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto of Boston Celtics Limited Partnership and Subsidiaries included in the annual report on Form 10-K for the year ended June 30, 2001 and the Form 10-Q for the three months ended September 30, 2001. Note 3 - The components of comprehensive income (loss) are as follows:

Note 4 - BCLP, through its subsidiary partnerships and corporations, owns a 48.3123% limited partnership interest in Celtics Basketball Holdings. Celtics Basketball Holdings, through Celtics Basketball, owns and operates the Boston Celtics. BCLP's investment in Celtics Basketball Holdings is accounted for on the equity method. Summary statement of operations data for Celtics Basketball Holdings for the six and three months ended December 31, 2001 and 2000 is as follows:

~~September~~Six ~~30,~~Months ~~June~~Ended ~~30,~~Three ~~2001~~Months ~~2001~~Ended ------------- -------- ~~(Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 419,763 $ 839,962 Prepaid expenses and other current assets 197,435 22,636~~ ------- ---------------------------- ~~TOTAL~~December ~~CURRENT~~31, ~~ASSETS~~December ~~617~~31,~~198~~ ~~862,598~~December ~~PROPERTY AND EQUIPMENT~~31, ~~net~~December 431,~~118~~ ~~4,925~~2001 ~~OTHER~~2000 ~~ASSETS~~2001 ~~98,182~~2000 ~~112,208~~ ------------ ------------~~------~~ $ 719,498 $ 979,731 ============================== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES Accounts payable and other current liabilities $ 347,336 $ 315,051 Accrued interest 873,516 Federal and state income taxes payable 513,201 513,201 ------------ ------------~~------~~ ~~TOTAL~~Total ~~CURRENT~~revenues ~~LIABILITIES 1~~$30,~~734~~981,~~053 828,252 DEFERRED FEDERAL AND STATE INCOME TAXES 6,812,105 6,812,105 NOTES PAYABLE TO BANK - noncurrent portion 10,~~000~~,000~~ 10$29,~~000~~679,000 ~~NOTE PAYABLE TO RELATED PARTY 3~~$30,~~000~~981,000 3$29,~~000~~679,000 ~~DUE~~Total TOcosts ~~RELATED~~and ~~PARTY~~expenses 4(25,~~800~~288,~~000~~851) 4(27,~~800~~650,~~000~~832) ~~SUBORDINATED DEBENTURES 34~~(23,~~316~~082,~~368~~529) 34(25,~~210~~529,~~381~~913) ~~INVESTMENT~~Interest INincome ~~CAPITAL DEFICIENCY OF CELTICS BASKETBALL HOLDINGS, L.P. 30,559,976 29,111,174 PARTNERS' CAPITAL~~ (~~DEFICIT~~expense), ~~Boston~~net ~~Celtics Limited Partnership II - General Partner~~ (~~334~~1,~~195~~577,331) (~~307~~1,~~387~~426,840) ~~Limited Partners~~ (90784,~~167,663~~800) (87702,~~513,679~~086) ------------------------------ ~~(90,501,858) (87,821,066) Celtics Limited Partnership~~ - ~~General Partner 255,739 270,227 Celtics Pride GP~~ - ~~General Partner 993 1,008 Other comprehensive loss (257,878) (232,350)~~ ---------------------------~~---~~ ~~TOTAL~~Net ~~PARTNERS'~~income ~~CAPITAL~~$ ~~(DEFICIT) (90~~4,~~503~~114,~~004)~~818 ~~(87~~$ 601,~~782,181)~~328 ~~------------------------------~~ $ ~~719~~7,~~498~~113,671 $ ~~979~~3,~~731~~447,001 ===========================================================

4 Note 5 - On October 31, 2000, in order to achieve certain efficiencies, BCLP II distributed to BCLP all of the outstanding capital stock of BCCLP Holding Corporation ("BCCLP Holdings"), and BCLP assumed all of BCLP II's liability for borrowings under its revolving credit agreement aggregating $50,000,000. In December 2000, BCLP repaid the $50,000,000 of borrowings under the revolving credit agreement that were assumed from BCLP II. In connection with this distribution, BCLP II issued a note payable to BCLP II GP, Inc., its general partner, in the amount of $361,882, representing its 1% share of the fair value of the distribution. The note accrued interest at 7% annually, and was paid in full on June 26, 2001. Note 6 - In July and August 1998, four separate class action complaints (the "Complaints") were filed by Unitholders in the Court of Chancery of the State of Delaware in and for New Castle County against BCLP II, Celtics, Inc., Paul E. Gaston, Don F. Gaston, Paula B. Gaston, John H.M. Leithead and John B. Marsh III, each a director or former director of Celtics, Inc. The named plaintiffs, each of whom purported to bring their individual actions on behalf of themselves and others similarly situated, are Kenneth L. Rilander, Harbor Finance Partners, Maryann Kelly and Kathleen Kruse Perry. Each of the Complaints alleges, among other things, that the Reorganization was unfair to former BCLP II Unitholders, and seeks to recover an unspecified amount of damages, including attorneys' and experts' fees and expenses. The Partnership filed a Motion to Dismiss the complaint filed by Mr. Rilander on July 29, 1998, and discovery in that case has been stayed by agreement of the parties. The Complaints have been consolidated. On August 6, 1999, the Court of Chancery issued an opinion granting in part, and denying in part, the Partnership's Motion to Dismiss, and on September 3, 1999, the plaintiffs filed an amended consolidated Complaint. On October 1, 1999, the Partnership filed an answer to the Complaint. Although the ultimate outcome of the Complaint cannot be determined at this time, management of the Partnership does not believe that the outcome of these proceedings will have a material adverse effect on the Partnership's financial position or results of operations. 5 BOSTON CELTICS LIMITED PARTNERSHIP II and Subsidiaries Condensed Consolidated Balance Sheets

~~Three~~December ~~Months~~31, ~~Ended~~June 30, 2001 2001 ------------ -------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 5,048,255 $ 839,962 Prepaid expenses and other current assets 136,221 22,636 --------------------------- ~~September~~TOTAL 30CURRENT ASSETS 5,184,476 ~~September~~862,598 30PROPERTY AND EQUIPMENT, ~~2001~~net ~~2000~~3,310 4,925 OTHER ASSETS 84,156 112,208 ------------- -------------- ~~Costs~~$ ~~and~~5,271,942 ~~expenses:~~$ ~~General~~979,731 =========================== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) CURRENT LIABILITIES Accounts payable and ~~administrative~~other current liabilities $ ~~(63~~210,~~433)~~127 $ ~~(609~~315,~~769)~~051 ~~Amortization~~Accrued ~~(17~~interest 1,~~026)~~685,492 ~~(11~~Interest payable to related party 134,~~778)~~127 Federal and state income taxes payable 513,201 513,201 --------------------------- TOTAL CURRENT LIABILITIES 2,542,947 828,252 DEFERRED FEDERAL AND STATE INCOME TAXES 6,812,105 6,812,105 NOTES PAYABLE TO BANK - ~~(80~~noncurrent portion 10,~~459)~~000,000 ~~(621~~10,~~547)~~000,000 ~~Equity~~NOTE inPAYABLE ~~net~~TO ~~loss~~RELATED ofPARTY ~~Celtics~~3,000,000 ~~Basketball~~3,000,000 ~~Holdings~~DUE TO RELATED PARTY 4,800,000 4,800,000 SUBORDINATED DEBENTURES 34,422,684 34,210,381 INVESTMENT IN CAPITAL DEFICIENCY OF CELTICS BASKETBALL HOLDINGS, L.P. (131,~~448~~954,~~802)~~414 (129,~~374~~111,~~797~~174 PARTNERS' CAPITAL (DEFICIT) ~~Interest~~Boston ~~expense~~Celtics Limited Partnership II - General Partner (1312,~~171,711~~284) (2307,~~074,080~~387) ~~Interest~~Limited ~~income~~Partners 5(87,~~677~~998,477) 1(87,~~530~~513,~~166~~679) ---------------------------- ~~Loss before income taxes~~ (288,~~695~~310,~~295~~761) (287,~~540~~821,~~258~~066) ~~Provision~~Celtics ~~for~~Limited ~~income~~Partnership ~~taxes~~- ~~300~~General Partner 241,~~000~~880 270,227 Celtics Pride GP - General Partner 979 1,008 Other comprehensive loss (192,306) (232,350) --------------------------- ~~Net~~TOTAL ~~loss~~PARTNERS' CAPITAL (~~2,695,295~~DEFICIT) (288,~~840~~260,~~258~~208) ~~Net loss applicable to interests of General Partners~~ (4187,~~311) (44~~782,~~651~~181) ---------------------------- ~~Net loss applicable to interest of Limited Partner~~ $(2 5,~~653~~271,~~984)~~942 $(2 979,~~795,607)~~731 ============================

See notes to condensed consolidated financial statements. 6 BOSTON CELTICS LIMITED PARTNERSHIP II and Subsidiaries Condensed Consolidated Statements of Operations Unaudited

Six Months Ended Three Months Ended ---------------------------- --- ~~September 30, September 30, 2001 2000~~ ------------- ------------- ~~CASH~~December ~~FLOWS FROM (USED IN) OPERATING ACTIVITIES General and administrative expenses $(238~~31,~~100)~~ $December ~~(886~~31,~~428)~~ ~~Interest~~December ~~expense (187~~31,~~833)~~ ~~Interest~~December ~~income 5~~31,~~734~~ ~~1,339,570~~2001 ~~Income~~2000 ~~taxes~~2001 ~~paid~~2000 ~~(310,000)~~------------ ------------ ------------ ------------ ~~NET~~Equity ~~CASH~~in ~~FLOWS~~net ~~FROM~~income ~~(USED~~of ~~IN)~~Celtics ~~OPERATING~~Basketball ~~ACTIVITIES (420~~Holdings,~~199)~~ ~~143,142~~L.P. ~~CASH~~$ ~~FLOWS~~1,987,944 ~~USED~~$ IN290,513 ~~INVESTING~~$ ~~ACTIVITIES~~3,436,746 ~~Purchases~~$ ~~of short-term investments (177~~1,~~440~~665,~~000)~~310 ~~Proceeds~~Costs ~~from~~and ~~sales~~expenses: ofGeneral ~~short-term~~and ~~investments~~administrative ~~176~~109,~~200~~047 2,~~000~~554,603 ~~Capital~~45,614 ~~expenditures~~1,944,834 ~~(829)~~Amortization ~~Other~~34,052 ~~receipts~~27,949 ~~(expenditures)~~17,026 116,~~922~~171 ----------------------------------------------------------- ~~NET~~143,099 ~~CASH~~2,582,552 ~~FLOWS~~62,640 ~~USED~~1,961,005 ~~IN INVESTING ACTIVITIES~~ ----------------------------------------------------------- (1,~~238~~844,~~907)~~845 ~~CASH FLOWS FROM FINANCING ACTIVITIES Cash distribution from Celtics Basketball Holdings~~(2,292,039) ~~L.P.~~ 3,~~864~~374,~~947~~106 ~~Cash~~(295,695) ~~distribution~~Interest byexpense ~~Celtics~~(2,341,418) ~~Limited Partnership to Boston Celtics Corporation~~ (~~General~~3,492,807) ~~Partner's share~~(1,169,707) (381,~~449~~418,727) ~~Cash~~Interest ~~distribution~~income by26,761 ~~Boston~~2,073,400 ~~Celtics~~21,084 ~~Limited~~543,234 ~~Partnership~~----------------------------------------------------------- IIIncome to(loss) ~~Boston~~before ~~Celtics~~income ~~Limited~~taxes ~~Partnership~~(469,812) (523,~~645~~711,446) ~~Cash~~2,225,483 ~~distribution by Boston Celtics Limited Partnership II to BCLP II GP~~(1,171,188) ~~Inc.~~Provision ~~(General~~for ~~Partner's~~income ~~share)~~taxes (9300,~~417)~~000 ------------------------------ ~~NET CASH FLOWS FROM FINANCING ACTIVITIES~~ -- ~~3,764,436~~ ---------------------------~~---~~ ~~NET~~Net ~~INCREASE~~income (~~DECREASE~~loss) IN(469,812) ~~CASH AND CASH EQUIVALENTS~~ (~~420~~4,~~199~~011,446) 2,~~668~~225,~~671~~483 ~~Cash~~(1,171,188) ~~and~~Net ~~cash~~income ~~equivalents~~(loss) atapplicable ~~beginning~~to interests of ~~period~~General ~~839~~Partners 14,~~962~~986 3(39,~~389~~860) 56,~~400~~297 4,791 ----------------------------------------------------------- ~~CASH~~Net ~~AND~~income ~~CASH~~(loss) ~~EQUIVALENTS~~applicable ATto ~~END~~interests OFof ~~PERIOD~~Limited Partners $ ~~419~~(484,~~763~~798) $(3,971,586) 6$ 2,~~058~~169,~~071~~186 $(1,175,979) ==========================================================

See notes to condensed consolidated financial statements. 7 BOSTON CELTICS LIMITED PARTNERSHIP II and Subsidiaries Condensed Consolidated Statements of Cash Flows Unaudited

~~Three~~Six Months Ended -------------------------------- ~~September~~December 3031, ~~September~~December 3031, 2001 2000 ------------- ------------- ~~Total~~CASH ~~costs~~FLOWS USED IN OPERATING ACTIVITIES General and administrative expenses $ (2227,~~206,322~~768) $ (23,~~120~~278,~~919~~295) Interest expense (373,625) (1,592,542) Interest income 26,761 2,087,313 Income taxes paid (~~expense~~560,000) ------------------------------- NET CASH FLOWS USED IN OPERATING ACTIVITIES (574,632) ~~net~~(3,343,524) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of short-term investments (~~792~~232,~~531~~840,000) Proceeds from sales of short-term investments 233,940,000 Other receipts (~~724~~expenditures) (13,~~754~~194) ------------------------------- ~~Net~~NET ~~loss~~CASH $FLOWS FROM INVESTING ACTIVITIES -- 1,086,806 CASH FLOWS FROM FINANCING ACTIVITIES Distribution by Boston Celtics Limited Partnership II to Boston Celtics Limited Partnership of investment in BCCLP Holding Corporation (23,~~998~~550,~~853~~980) $Cash distribution by Boston Celtics Limited Partnership II to Boston Celtics Limited Partnership (52,645) Cash distribution from Celtics Basketball Holdings, L.P. 4,831,184 3,864,947 Cash distribution by Celtics Limited Partnership to Boston Celtics Corporation (General Partner's share) (48,211) (38,449) Cash distribution by Boston Celtics Limited Partnership II to BCLP II GP, Inc. (General Partner's share) (9,417) Cash distribution by Boston Celtics Communications Limited Partnership to Celtics Communications, Inc. (General Partner's share) (3,000) Cash distribution by Celtics Pride GP to Celtics Capital Corporation (General Partner's share) (48) ------------------------------- NET CASH FLOWS FROM FINANCING ACTIVITIES 4,782,925 210,456 ------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,208,293 (2,~~845~~046,~~673~~262) Cash and cash equivalents at beginning of period 839,962 3,389,400 ------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,048,255 $ 1,343,138 =============================== NON-CASH INVESTING AND FINANCING ACTIVITIES: Distribution by Boston Celtics Limited Partnership II to Boston Celtics Limited Partnership of investment in BCCLP Holding Corporation, net of note payable to bank $ 34,078,155 Accrued distribution by Boston Celtics Limited Partnership II to BCLP II GP, Inc. $ 361,882

See notes to condensed consolidated financial statements. 8 BOSTON CELTICS LIMITED PARTNERSHIP II and Subsidiaries Notes to Condensed Consolidated Financial Statements Note 1 - The condensed consolidated financial statements include the accounts of Boston Celtics Limited Partnership II ("BCLP II," the "Partnership") and its majority-owned and controlled subsidiaries and partnerships. All intercompany transactions are eliminated in consolidation. Pursuant to a reorganization of its partnership structure that was completed on June 30, 1998 (the "Reorganization"), the Partnership's name was changed to Boston Celtics Limited Partnership II. As a result of the Reorganization, the Partnership's 99% limited partnership interest is owned by Boston Celtics Limited Partnership (a Delaware limited partnership) ("BCLP"). Prior to the Reorganization, BCLP II, through its subsidiaries, owned and operated the Boston Celtics professional basketball team (the "Boston Celtics") of the National Basketball Association (the "NBA") and held investments. The Boston Celtics were owned by Celtics Limited Partnership ("CLP"), in which BCLP II has a 99% limited partnership interest. Upon completion of the Reorganization, the Boston Celtics are owned and operated by Celtics Basketball, L.P. ("Celtics Basketball"), a 99.999% subsidiary of Celtics Basketball Holdings, L.P. ("Celtics Basketball Holdings"). BCLP II, through its subsidiaries, holds certain investments, including a 48.3123% limited partnership investment in Celtics Basketball Holdings. Accordingly, BCLP II's interest in the accounts and operations of the Boston Celtics is reflected in its investment in Celtics Basketball Holdings, which is accounted for on the equity method. Accordingly, the investment is carried at cost, increased by equity in the earnings of Celtics Basketball Holdings and reduced by distributions received. Note 2 - The unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and with instructions to Form 10- Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included therein. Operating results for interim periods are not indicative of the results that may be expected for the full year. Such financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto of BCLP II and Subsidiaries included in the annual report on Form 10-K for the year ended June 30, 2001 and the Form 10-Q for the three months ended September 30, 2001. Note 3 - The components of comprehensive income (loss) are as follows:

9 Note 4 - BCLP II, through its subsidiary partnerships and corporations, owns a 48.3123% limited partnership interest in Celtics Basketball Holdings. Celtics Basketball Holdings, through Celtics Basketball, owns and operates the Boston Celtics. BCLP II's investment in Celtics Basketball Holdings is accounted for on the equity method. Summary statement of operations data for Celtics Basketball Holdings for the six and three months ended December 31, 2001 and 2000 is as follows:

Note 5 - On October 31, 2000, in order to achieve certain efficiencies, BCLP II distributed to BCLP all of the outstanding capital stock of BCCLP Holding Corporation ("BCCLP Holdings"), and BCLP assumed all of BCLP II's liability for borrowings under its revolving credit agreement aggregating $50,000,000. The net assets of BCCLP Holdings at the date of distribution amounted to $87,629,000 and included, among other things, cash of $3,551,000, short-term investments of $82,000,000, an amount receivable from Celtics Investments Inc., a wholly owned subsidiary of BCLP II, of $4,800,000, and deferred tax liabilities of $2,899,000. In connection with this distribution, BCLP II issued a note payable to BCLP II GP, Inc., its general partner, in the amount of $361,882, representing its 1% share of the fair value of the distribution. The note accrued interest at 7% annually, and was paid in full on June 26, 2001. Note 6 - In July and August 1998, four separate class action complaints (the "Complaints") were filed by Unitholders in the Court of Chancery of the State of Delaware in and for New Castle County against BCLP II, Celtics, Inc., Paul E. Gaston, Don F. Gaston, Paula B. Gaston, John H.M. Leithead and John B. Marsh III, each a director or former director of Celtics, Inc. The named plaintiffs, each of whom purported to bring their individual actions on behalf of themselves and others similarly situated, are Kenneth L. Rilander, Harbor Finance Partners, Maryann Kelly and Kathleen Kruse Perry. Each of the Complaints alleges, among other things, that the Reorganization was unfair to former BCLP II Unitholders, and seeks to recover an unspecified amount of damages, including attorneys' and experts' fees and expenses. The Partnership filed a Motion to Dismiss the complaint filed by Mr. Rilander on July 29, 1998, and discovery in that case has been stayed by agreement of the parties. The Complaints have been consolidated. On August 6, 1999, the Court of Chancery issued an opinion granting in part, and denying in part, the Partnership's Motion to Dismiss, and on September 3, 1999, the plaintiffs filed an amended consolidated Complaint. On October 1, 1999, the Partnership filed an answer to the Complaint. Although the ultimate outcome of the Complaint cannot be determined at this time, management of the Partnership does not believe that the outcome of these proceedings will have a material adverse effect on the Partnership's financial position or results of operations. 10 BOSTON CELTICS LIMITED PARTNERSHIP BOSTON CELTICS LIMITED PARTNERSHIP II and Subsidiaries ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Forward Looking Statements Certain statements and information included herein are "forward-looking statements" within the meaning of the federal Private Securities Litigation Reform Act of 1995, including statements relating to prospective game, broadcast and other revenues, expenses (including player and other team costs), capital expenditures, tax burdens, earnings and distributions, and expectations, intentions and strategies regarding the future. Such forward- looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of BCLP or BCLP II to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause BCLP's or BCLP II's financial condition, results of operations, liquidity or capital resources to differ materially include the competitive success of the Boston Celtics, uncertainties as to increases in players' salaries and team expenses, uncertainties relating to the impact of the escrow system as provided for in the collective bargaining agreement between the NBA and the NBA Players Association, the Boston Celtics' ability to attract and retain talented players, the risk of injuries to key players, uncertainties regarding media contracts, the performance of certain investments by subsidiaries of the Partnership and the extent to which the Partnership's subsidiaries generate, and are able to distribute, operating cash flow. General BCLP accounts for its indirect investment in the accounts and operations of the Boston Celtics using the equity method and, accordingly, its equity in the net income (loss) of the Boston Celtics is reported on a single line item in its Condensed Consolidated Statements of Operations. Following is a general description of certain matters related to the operations of the Boston Celtics. The Boston Celtics derive revenues principally from the sale of tickets to home games and the licensing of television, cable network and radio rights. The most significant expenses of the Boston Celtics are player and coaching salaries. A large portion of the Boston Celtics' annual revenues and operating expenses is determinable at the commencement of each basketball season based on season ticket sales and the Boston Celtics' multi-year contracts with its players, coaches and broadcast organizations. The operations and financial results of the Boston Celtics are seasonal. On a cash flow basis, the Boston Celtics receive a substantial portion of their receipts from the advance sale of season tickets during the months of June through October, prior to the commencement of the NBA regular season. Cash receipts from playoff ticket sales are received in March of any year for which the team qualifies for league playoffs. Most of the Boston Celtics' operating expenses are incurred and paid during the regular season, which normally extends from late October or early November through late April. For financial reporting purposes the Boston Celtics recognize revenues and expenses on a game-by-game basis. Because the NBA regular season normally begins in late October or early November, the first fiscal quarter, which ends on September 30, generally includes limited or no revenue and reflects a net loss attributable to general and administrative expenses and selling and promotional expenses incurred in the quarter. Based on the standard NBA game schedule, the Boston Celtics historically recognize approximately one- third of its annual regular season revenue in the second fiscal quarter, approximately one-half of such revenue in the third fiscal quarter and the remainder in the fourth fiscal quarter, and recognize its playoff revenue, if any, in the fourth fiscal quarter. Accordingly, BCLP's and BCLP II's equity in the net income (loss) of Celtics Basketball Holdings, which indirectly owns and operates the Boston Celtics, will generally result in a loss in its first fiscal quarter, income in its second and third fiscal quarters and a loss in its fourth fiscal quarter unless there is significant income from playoff revenues. 11 Results of Operations The following discussion compares the operating results of BCLP and its subsidiaries for the six and three months ended December 31, 2001 with the six and three months ended December 31, 2000. Equity in net income of Celtics Basketball Holdings, L.P. represents BCLP's 48.3% interest in the net income of the entity that indirectly owns and operates the Boston Celtics. The Boston Celtics recognize revenues and expenses on a game-by-game basis, and the NBA regular season normally begins in late October or early November. As a result, Celtics Basketball Holdings' first fiscal quarter, which ends on September 30, generally includes limited or no revenue and reflects a net loss attributable to general and administrative expenses and selling and promotional expenses incurred in the quarter. BCLP's equity in the net income of Celtics Basketball Holdings amounted to $1,988,000 and $3,437,000 in the six and three months ended December 31, 2001, respectively, as compared to income of $291,000 and $1,665,000 in the six and three months ended December 31, 2000, respectively. The increases in the six and three months ended December 31, 2001 are primarily a result of increased television revenues and decreased team expenses, including the anticipated impact of proceeds from the escrow system as provided for in the collective bargaining agreement between the NBA and the NBA Players Association. BCLP's general and administrative expenses of $1,785,000 in the six months ended December 31, 2001 decreased by $1,999,000 compared to $3,784,000 in the six months ended December 31, 2000, and general and administrative expenses of $1,174,000 in the three months ended December 31, 2001 decreased by $1,613,000 compared to $2,787,000 in the three months ended December 31, 2000. The decreases were primarily attributable to the provision for certain non-recurring expenses in the six months ended December 31, 2000, including professional expenses ($1,333,000) associated with, among other things, BCLP II's distribution of its investment in BCCLP Holding Corporation ("BCCLP Holdings") and $50,000,000 of borrowings under its revolving credit agreement (see "Liquidity and Capital Resources" below) and the payment of a non-recurring sales tax at one of BCLP's subsidiary partnerships ($325,000). Additionally, the decreases in BCLP's general and administrative expenses were attributable to decreased personnel expenses. BCLP II's general and administrative expenses of $109,000 in the six months ended December 31, 2001 decreased by $2,446,000 compared to $2,555,000 in the six months ended December 31, 2000, and general and administrative expenses of $46,000 in the three months ended December 31, 2001 decreased by $1,899,000 compared to $1,945,000 in the three months ended December 31, 2000. BCLP II's general and administrative expenses in the six and three months ended December 31, 2000 included $2,058,000 and $1,830,000, respectively, related to BCCLP Holdings and CCC. As more fully described in "Liquidity and Capital Resources" below, effective October 31, 2000, BCLP II distributed to BCLP all of the outstanding capital stock of BCCLP Holdings, and, as a result, the results of operations of BCCLP Holdings and CCC are currently not consolidated with those of BCLP II. In addition, the decrease in BCLP II's general and administrative expenses was attributable to the provision for the non-recurring sales tax in the six months ended December 31, 2000 as described in the preceding paragraph. Interest expense of $2,210,000 in the six months ended December 31, 2001 decreased by $1,755,000 compared to $3,965,000 in the six months ended December 31, 2000, and interest expense of $1,104,000 in the three months ended December 31, 2001 decreased by $787,000 compared to $1,891,000 in the three months ended December 31, 2000. The decreases in the six and three months ended December 31, 2001 are primarily attributable to a decrease in borrowings under BCLP's revolving credit agreement with its commercial bank. As more fully described in "Liquidity and Capital Resources" below, $50,000,000 of borrowings under BCLP's revolving credit agreement was repaid in December 2000. BCLP's interest income of $553,000 in the six months ended December 31, 2001 decreased by $2,362,000 compared to $2,915,000 in the six months ended December 31, 2000, and interest income of $234,000 in the three months ended December 31, 2001 decreased by $1,151,000 compared to $1,385,000 in the three months ended December 31, 2000. The decreases in the six and three months ended December 31, 2001 are primarily attributable to a decrease in invested balances, combined with lower interest rates on investments. As more fully described in "Liquidity and Capital Resources" below, $50,000,000 of short- term investments were liquidated in December 2000 to repay borrowings under BCLP's revolving credit agreement. BCLP's interest income in the six and three months ended December 31, 2001 included $527,000 and $213,000, respectively, related to BCCLP Holdings and CCC, and BCLP's interest income in the six and three months ended December 31, 2000 included $842,000 related to BCCLP Holdings and CCC. Effective October 31, 2000, the operating results of BCCLP Holdings and CCC are not consolidated with those of BCLP II. 12 BCLP's provision for income taxes relates to BCLP's subsidiary corporations. Effective November 1, 2000, certain of BCLP's subsidiary corporations began filing tax returns consolidated with those of BCLP. As a result, income earned by BCLP's subsidiary corporations subsequent to November 1, 2000 is offset by losses of BCLP. Liquidity and Capital Resources BCLP used approximately $1,846,000 in cash flows from operating activities in the six months ended December 31, 2001. At December 31, 2001, the Partnership had approximately $7,905,000 of available cash and $28,100,000 of other short-term investments. In addition to these amounts, sources of funds available to the Partnership include funds generated by operations and distributions from Celtics Basketball Holdings, which through a subsidiary owns and operates the Boston Celtics. These resources may be used to repay commercial bank borrowings and for general partnership purposes, working capital needs or for possible investments and/or acquisitions. On May 20, 1998, BCLP II entered into a $60,000,000 revolving credit agreement with its commercial bank. Interest on advances under the revolving credit agreement accrues at BCLP II's option of either LIBOR plus 0.70% or the greater of the bank's Base Rate or the Federal Funds Effective Rate plus 0.50%. The revolving credit agreement is secured by a pledge of certain short-term investments of Celtics Capital Corporation, an indirect subsidiary of BCLP. BCLP II borrowed $30,000,000 under the revolving credit agreement in fiscal 1998, and borrowed an additional $22,500,000 in fiscal 1999 and $7,500,000 in fiscal 2000. As a result, at June 30, 2000, $60,000,000 was outstanding under the revolving credit agreement. On October 31, 2000, in order to achieve certain efficiencies, BCLP II distributed to BCLP all of the outstanding capital stock of BCCLP Holdings, and BCLP assumed all of BCLP II's liability for borrowings under its revolving credit agreement aggregating $50,000,000. As a result, effective October 31, 2000, BCCLP Holdings is a direct subsidiary of BCLP. In December 2000, BCCLP Holdings, through CCC, liquidated $50,000,000 of short-term investments and distributed the proceeds to BCLP. BCLP used those proceeds to repay the $50,000,000 of borrowings under the revolving credit agreement that were assumed from BCLP II. In connection with this distribution, BCLP II issued a note payable to BCLP II GP, Inc., its general partner, in the amount of $361,882, representing its 1% share of the fair value of the distribution. The note accrued interest at 7% annually, and was paid in full on June 26, 2001. As a result, borrowings under the revolving credit agreement amounted to $10,000,000 at December 31, 2001. On May 10, 2001, the revolving credit agreement was amended to reduce the amount of borrowings available under the Agreement to $10,000,000. The agreement expires on June 30, 2003. Management anticipates that amounts advanced under the revolving credit agreement will be repaid by BCLP II out of cash flows, principally distributions from Celtics Basketball Holdings. In November 2000, in order to fix the interest rate on the borrowings under the revolving credit agreement, BCLP II entered into an interest rate cap agreement with a notional amount of $10,000,000, expiring in May 2002. The interest rate cap agreement provides for the payment of interest at a fixed interest rate of 6.65%. The interest rate differential is recognized as an adjustment to interest expense. BCLP II has outstanding 6% subordinated debentures due on June 30, 2038. The subordinated debentures were recorded at $12.20 per debenture, the fair market value at date of issue, or $32,984,700. The original issue discount of $21,088,580 is being amortized over the 40-year life of the debentures using the interest method and, accordingly, the subordinated debentures are carried on the balance sheet at $34,422,684 at December 31, 2001. The subordinated debentures bear interest at the rate of 6% per annum, payable annually on June 30, and mature on June 30, 2038 at an aggregate principal amount of $54,073,280. There are no mandatory redemption or sinking fund requirements with respect to the subordinated debentures. In the six months ended December 31, 2001, BCLP and its subsidiaries received distributions from Celtics Basketball Holdings aggregating $4,831,000. Future distributions from Celtics Basketball Holdings will be determined by Boston Celtics Corporation, the general partner of Celtics Basketball Holdings, in its sole discretion subject to applicable credit agreements and based, among other things, on available resources and the needs of Celtics Basketball Holdings and Celtics Basketball, the ability of Celtics Basketball Holdings and Celtics Basketball to generate sufficient operating cash flow, and the funds available after debt service payments related to Celtics Basketball's revolving credit agreement with its commercial bank. 13 No cash distributions to unitholders of BCLP were declared or paid during the quarters ended December 31, 2001 and 2000. Future distributions will be determined by BCLP GP, Inc., the general partner of BCLP, in its sole discretion based, among other things, on available resources and the needs of BCLP, the ability of BCLP's subsidiaries to generate sufficient operating cash flow, and the funds available after debt service payments related to the revolving credit agreement with its commercial bank and the subordinated debentures. Management believes that BCLP's cash, cash equivalents and other short-term investments together with cash from operating activities and distributions from Celtics Basketball Holdings will provide adequate cash for BCLP and its subsidiaries to meet their cash requirements through December 31, 2002. ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk At December 31, 2001, BCLP had invested approximately $28,100,000 in loan participations issued by a commercial bank with maturities of less than ninety days. Due to their short maturities and applicable transfer restrictions, management believes that the loan participations are not exposed to market risk. Management further believes that the partnership has no other assets that are subject to significant market risk. In November 2000, in order to fix the interest rate on the borrowings under the revolving credit agreement, BCLP II entered into an interest rate cap agreement. See "Liquidity and Capital Resources." As a result, fluctuations in interest rates will have no effect on interest expense, or on the earnings or cash flows of BCLP II. A hypothetical 10% increase in interest rates would not materially affect the fair value of the interest rate cap agreement. 14 Part II - Other Information ITEM 6 - Exhibits and Reports on Form 8-K (a) Exhibits - None. (b) Reports on Form 8-K - None. 15 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrants have duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BOSTON CELTICS LIMITED PARTNERSHIP ---------------------------------- (Registrant) By: BCLP GP, Inc., its General Partner Dated: February 1, 2002 By: /s/ Richard G. Pond --------------------------------- Richard G. Pond Executive Vice President Chief Financial Officer and Chief Operating Officer Dated: February 1, 2002 BOSTON CELTICS LIMITED PARTNERSHIP II ------------------------------------- (Registrant) By: BCLP II GP, Inc., its General Partner By: /s/ Richard G. Pond --------------------------------- Richard G. Pond Executive Vice President Chief Financial Officer and Chief Operating Officer 16

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