IR PASS-THROUGH CORP.
c/o Wexford Management LLC
411 West Putnam Avenue
Greenwich, CT 06830
(203) 862-7000
Fax: (203) 862-7461
Writer's Direct Dial:
862-7000
Integrated ARROs Fund II (the "Fund")
February, 1997
Dear Unitholder:
Enclosed for your review are the Fund's audited financial statements as of
December 31, 1996. As you are aware, the Funds' investments are passive in
nature and consist of interest-bearing payment obligations which originated from
a series of net lease real estate partnerships. As such, the primary source of
payment for these obligations is the lease payments received from the
partnership's corporate tenants. We are pleased to report that all tenant
obligations continue to be met and, on an overall basis, the credit ratings of
these tenants have not materially changed since the initial offering of the
Units.
As previously reported, the Fund has made arrangements with Royal Alliance
Associates (212-551- 5100) to act as a market maker and with DCC Securities
Corp. (212-527-0220) to facilitate trading, as a broker, between buyers and
sellers of Units. Please contact these firms directly if you have any questions
regarding such activities.
If you have any specific questions regarding your holdings in the Fund, please
call the Trustee, IFTC at 800-874-6205.
Sincerely,
Integrated ARROs Fund II
By: IR Pass-through Corp., Sponsor
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Unitholders, Sponsor, and Trustee of
Integrated ARROs Fund II:
We have audited the accompanying financial statements of financial condition of
Integrated ARROs Fund II (the "Trust") as of December 31, 1996 and 1995, and the
related statements of operations and changes in net assets for the years then
ended and the schedule of selected per unit operating performance, ratios and
supplemental data for each of the five years in the period ended December 31,
1996. These financial statements and per unit operating performance, ratios and
supplemental data are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and per
unit operating performance, ratios and supplemental data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per unit
operating performance, ratios and supplemental data are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected per unit operating
performance, ratios and supplemental data referred to above present fairly, in
all material respects, the financial position of Integrated ARROs Fund II at
December 31, 1996 and 1995, the results of its operations and changes in its net
assets and the selected per unit operating performance, ratios and supplemental
data for the above-stated periods in conformity with generally accepted
accounting principles.
As explained in Note 2, the financial statements include investments in payment
obligations valued at $12,510,014 and $20,033,008 for the years ended December
31, 1996 and 1995, respectively, whose values have been stated at the lower of
fair market value as estimated by the Board of Directors of the Sponsor in the
absence of readily ascertainable market values or Minimum Termination Value. We
have reviewed the procedures used by the Board of Directors in arriving at its
estimate of value of such investments and have inspected underlying
documentation, and, in the circumstances, we believe the procedures are
reasonable and the documentation appropriate. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly from
the values that would have been used had a ready market for the investments
existed, and the differences could be material.
DELOITTE & TOUCHE, LLP
New York, New York
January 14, 1997
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund II
Statements of Financial Condition
December 31,
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
Assets
Cash ............................................... $ 4,281,103 $ --
Investments in payment obligations, at
minimum termination value (cost $7,446,008) .. 12,510,015 20,033,008
----------- -----------
Total Assets ....................................... 16,791,118 20,033,008
Liabilities
Distributions Payable .............................. 4,288,244 --
----------- -----------
Net Assets ......................................... $12,502,874 $20,033,008
=========== ===========
Net Asset Value per unit (7,446 units
outstanding) ....................................... $ 1,679.14 $ 2,690.44
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund II
Statements of Operations
Year Ended December 31,
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
Investment income:
Interest and discount earned ........... $2,201,473 $2,168,123
========== ==========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund II
Statements of Changes in Net Assets
Year Ended December 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Increase in net assets from operations:
Net investment income .............................. $ 2,201,473 $ 2,168,123
------------ ------------
Net increase in net assets resulting from operations 2,201,473 2,168,123
Total declared as distributions to Unitholders ..... (9,731,607) --
------------ ------------
Net (decrease) increase in net assets .............. (7,530,134) 2,168,123
Net assets:
Beginning of period ................................ 20,033,008 17,864,885
------------ ------------
End of period ...................................... $ 12,502,874 $ 20,033,008
============ ============
</TABLE>
See notes to financial statements
<PAGE>
Integrated ARROs Fund II
Notes to Financial Statements
1. ORGANIZATION
Integrated ARROs Fund II (the "Fund") is a grantor trust created under the
laws of the State of New York and registered under the Investment Company
Act of 1940 as a closed-end, non-diversified management investment
company.
The Fund was formed in July 1987 for the purpose of realizing appreciation
in value and deferring the receipt of income through investments in a
portfolio consisting of payment obligations (the "Payment Obligations"),
issued by certain privately offered, single purpose limited partnerships
(the "Partnerships") previously sponsored by Integrated Resources, Inc.
("Integrated"). These Partnerships acquired and net leased commercial real
estate, which was sold to the Fund by IR Pass-through Corporation (the
"Sponsor"), formerly a wholly-owned subsidiary of Integrated. Pursuant to
the Consummation of a Plan of Reorganization ("the Plan"), on November 3,
1994, the Sponsor is now a wholly-owned indirect subsidiary of Presidio
Capital Corp. ("Presidio") (See Footnote 3). All capitalized terms, herein
not defined, have the same meaning as defined in the Trust Indenture.
2. SIGNIFICANT ACCOUNTING POLICIES
Security Valuation
The Payment Obligations are valued at the lower of fair market value (as
determined by the Board of Directors of the Sponsor) or Minimum
Termination Amount (as defined in the Trust Indenture).
Federal Income Taxes
The Fund is classified as a grantor trust. As a consequence, the Fund is
not subject to Federal Income Taxation.
3. CONFLICTS OF INTEREST
Entities directly or indirectly owned by former officers and/or directors
of the Sponsor and/or Integrated or its post bankruptcy successor, Presidio
are the general partners of the Partnerships. Such general partners have a
fiduciary responsibility to make decisions which are in the best interest
of their respective Partnership. There may be circumstances in which such
general partners may make decisions on behalf of the Partnerships which
could conflict with or have an adverse effect on the rights of unitholders
of the Fund. Although the Partnerships must comply with the terms of the
Payment Obligations, there can be no assurance that the decisions of the
general partners on behalf of the Partnerships would not adversely affect
the value of the units and/or the ability of the Partnerships to fulfill
their obligations under the Payment Obligations.
<PAGE>
3. CONFLICTS OF INTEREST - (CONT'D)
Subject to the rights of the Unitholders under the Trust Indenture,
Presidio is responsible for the administration of the Fund through its
indirect ownership of all of the shares of the Sponsor. Wexford Management
LLC ("Wexford") provides administrative services to Presidio, who provides
services for the Fund.
4. THE PAYMENT OBLIGATIONS
The five Payment Obligations acquired by the Fund were issued from 1981 to
1983 for the sale to the Partnerships of rights to acquire interests in
properties or for services rendered. Two of the five Payment Obligations
(Trefar and Zebon) were satisfied in full during 1996 (see Footnote 7).
Payments on the remaining three Payment Obligations are scheduled over a
period not in excess of 40 years from commencement of the initial terms
("Primary Terms") (approximately 25 years), of the respective net leases.
Interest at simple interest rates ranging from 16.5% to 19.625% accrues on
the principal amount for each Payment Obligation. Payments on the Payment
Obligations are scheduled to commence approximately 15 years after
commencement of the Primary Terms of a net lease.
If a net lease is not extended by the lessee beyond the Primary Term, the
Partnership's obligation to pay the balance of the principal of a Payment
Obligation and accrued interest does not accelerate. In such event, the
Partnership may either seek to re-lease or to sell the property, but there
can be no assurance that such a sale or new lease would be made or that it
would be made timely. If a sale is made, the balance of the principal and
accrued interest thereon may be declared by the holder of the Payment
Obligation, in its discretion, to be immediately due and payable. Upon any
disposition by a Partnership of its interest in the property, the
Partnership shall be obligated to pay the holder of the Payment Obligation
(after satisfaction of any obligations senior to that of the Payment
Obligation which are then due and payable) first, accrued unpaid interest
and then the unpaid principal balance of the payment Obligation. If such
sale is not made, so long as the Partnership continues to make timely
payments under the Payment Obligation, generally there is no right of the
Fund to accelerate payment thereof.
There are significant limitations on the amounts that the Fund may receive
in the event of a sale or other disposition of a Partnership's property.
As such, it is possible that the Fund may not realize the entire
outstanding principal and interest thereon of the related Payment
Obligation.
<PAGE>
5. COMMITMENTS AND CONTINGENCIES
The Sponsor will bear all costs of administering the Fund through the
period in which the Fund will be receiving only primary term payments.
However, upon the period when the Fund begins receiving renewal term
payments, the Fund shall bear a portion of such costs equal to the
percentage of the renewal term payments received by the Fund in such year
to all of the payments received by the Fund in such year.
The Trust Indenture provides that the above obligations of the Sponsor
were to be funded through the retention of a portion of the proceeds from
the sale of the Units. However, the Sponsor did not segregate from the
general assets of its then parent, Integrated, a portion of the sale
proceeds for this purpose. Integrated filed for bankruptcy on February 13,
1990 under Chapter 11 of the United States Bankruptcy code. While
Integrated's bankruptcy did not directly affect the Fund, and had no
effect on the portfolio of the Fund, the bankruptcy did affect the
Sponsor, which had no source of revenues other than Integrated. The
Sponsor therefore filed a claim in Integrated's bankruptcy proceedings for
the amounts necessary to fund the Sponsor's obligations to the Fund and to
Fund I. As Integrated's liabilities far exceeded its assets, and the
Sponsor's claim was that of an unsecured general creditor, it was unlikely
that amounts eventually paid on the Sponsor's claim would be sufficient to
fund the Sponsor's obligations. However, in 1994 in full settlement of the
Sponsor's claim, Integrated paid the Sponsor $450,000. The Sponsor
projected at that time, based on a present value estimate of legal,
accounting, trustee fees, and printing and mailing costs, that this amount
would enable the Sponsor to meet its obligations to the Fund, and its
similar obligations to Fund I, through approximately the year 2000.
However, at that time there was no assurance that the $450,000 paid by
Integrated, plus any interest accrued (the "Settlement Fund"), would in
fact be sufficient to fund the Sponsor's obligations through the year
2000. As of December 31, 1996, approximately $126,500 remained of the
original Settlement Fund. It was also projected at the time of settlement,
that in the year 2000 the securities held by the Fund would begin to
generate cash which could be used to administer the Fund and Fund I. There
can be no assurance that such cash will be generated or that the remaining
amount of the Settlement Fund will be sufficient to fund the Sponsor's
obligations through the year 2000.
<PAGE>
5. COMMITMENTS AND CONTINGENCIES (CONT'D)
Set forth below is certain information with respect to the Sponsor's
directors and officers. The business address for each of them is c/o
Wexford Management LLC, 411 West Putnam Avenue, Greenwich, Connecticut
06830.
<TABLE>
<CAPTION>
NAME POSITIONS WITH SPONSOR PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
---- ---------------------- -------------------------------------------
<S> <C> <C>
Robert Holtz Director and President Presidio, Vice President and Secretary since August 1994; Resurgence, Vice
President and Assistant Secretary since March 1994; Wexford Management
LLC, Senior Vice President and Assistant Secretary since January 1996;
Wexford Management Corp., Senior Vice President from November 1995 through
December 1995; Concurrency, Vice President from May 1994 through October
1995; Bear Stearns Real Estate Group Inc., Vice President from June 1993
through May 1994. Employed from 1989 to 1994.
Mark Plaumann Director and Vice President Wexford Management LLC, Senior Vice President since January 1996; Wexford
Management Corp., Senior Vice President from November 1995 through
December 1995; Concurrency, Vice President from February 1995 through
October 1995; Alvarez and Marsel, Inc., a crisis-management consulting
firm, Managing Director from 1990 through January 1995.
Jay L. Maymudes Vice President, Secretary Presidio, Chief Financial Officer, Vice President and Treasurer since
and Treasurer August 1994; Resurgence, Chief Financial Officer, Vice President and
Assistant Secretary since July 1994; Wexford Management LLC, Chief
Financial Officer and Senior Vice President since January 1996; Wexford
Management Corp., Chief Financial Officer and Senior Vice President from
November 1995 through December 1995; Concurrency, Chief Financial Officer
and Vice President from July 1994 through October 1995; Dusco, Inc. (a
real estate investment advisor), Secretary and Treasurer from December
1988, and Senior Vice President from February 1990, in each case through
June 1994.
Arthur H. Amron Vice President & Presidio, Vice President since November 1994; Wexford Management LLC,
Assistant Secretary Senior Vice President and General Counsel since January 1996; Wexford
Management Corp., Senior Vice President and General Counsel from November
1995 through December 1995; Concurrency, General Counsel from November
1994 through October 1995; from 1992 to November 1994, attorney with
Schulte, Roth & Zabel; Prior to 1992, attorney with Debevoise & Plimpton.
Guy Sansone Assistant Secretary Wexford Management LLC, Vice President since January 1996; Wexford
Management Corp., Vice President from November 1995 through December 1995;
Concurrency, employed from November 1994 through October 1995; Deloitte &
Touche LLP, Manager, employed from 1989 through October 1994.
</TABLE>
6. DISTRIBUTION PAYABLE
The Trustee declared a $4,288,244 ($575.91 per unit) distribution
payable to unitholders of record as of December 31, 1996. Such
distribution was paid on January 15, 1997.
<PAGE>
7. SIGNIFICANT TRANSACTIONS
The general partner of Trefar Associates ("Trefar") sold the sole
Trefar property on August 26, 1996 to Xerox Corporation, the lessee
of the property (a voluntary sale under the terms of the Trust
Indenture). As a result, Trefar paid $5,413,809 (the Minimum
Termination Amount) to the Fund in full satisfaction of the Trefar
payment obligation. Such proceeds along with interest earned thereon
were distributed to Unitholders in October 1996.
The general partner of Zebon Associates ("Zebon") sold all of the
eight Zebon properties on December 2, 1996 to an affiliate of the
sub-sub-lessee of the properties (a voluntary sale under the terms of
the Trust Indenture). As a result, Zebon paid $4,267,806 to the Trust
in full satisfaction of Zebon payment obligation. Such proceeds along
with interest earned thereon were distributed to Unitholders in
January 1997.
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund II
Schedule of Portfolio Investments
December 31, 1996
Partnership/
Date Payment Original Simple
Obligation Property Type of Principal Interest Accrued
Incurred Lessee Location property Amount Rate Interest
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bradall Albertson's Boise, ID Department $1,940,000 16.500% $ 4,498,000
12/16/82 Inc. Snohomish, WA Stores
Las Cruces, NM
Sioux Falls, SD
Bradenton, FL
Dalhill The Kroger Houston, TX Supermarkets 1,485,000 19.625% 4,363,000
01/15/82 Company Dallas, TX
Columbus, OH
Cincinnati, OH
Louisville, KY (2)
Trefar Xerox Freemont, CA (3) Manufacturing/ 0 17.000% 0
07/14/81 Corporation Warehouse/
(amended Distribution
03/31/84) Facility
Walmad Walgreen Windsor, WI Warehouse/ 1,500,000 18.500% 4,123,000
02/25/82 Company Distribution
Facility
Zebon (4) The Dow Creole, AL Plant 0 15.125% 0
05/01/83 Chemical Prudhoe Bay Station, AK Facilities
Company Mt. Pleasant, MI
Hebron, OH
Kellyville, OK
Tulsa, OK
Bryan, TX
Levelland, TX
========== ===========
$4,925,000 $12,984,000
========== ===========
</TABLE>
(1) Primary Term of the applicable net lease.
(2) Two properties.
(3) Property sold August 26, 1996 and payment obligation satisfied.
(4) All properties sold December 2, 1996 and payment obligation satisfied.
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund II
Schedule of Portfolio Investments -- Continued
December 31, 1996
Partnership Discount To
Date Payment Arrive at Periodic Minimum
Obligation Property Type of Minimum Termination Payment During Termination
Incurred Lessee Location property Value Primary Term (1) Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bradall Albertson's Boise, ID Department $2,049,596 7/1/98-1/1/08 $ 4,388,404
12/16/82 Inc. Snohomish, WA Stores $387,871/semi.
Las Cruces, NM
Sioux Falls, SD
Bradenton, FL
Dalhill The Kroger Houston, TX Supermarkets 1,448,090 1/31/97-12/31/06 4,399,910
01/15/82 Company Dallas, TX $57,242/mo.
Columbus, OH
Cincinnati, OH
Louisville, KY (2)
Trefar Xerox Freemont, CA (3) Manufacturing/ 0 11/1/97-10/1/07 0
07/14/81 Corporation Warehouse/ $70,823/mo.
(amended Distribution
03/31/84) Facility
Walmad Walgreen Windsor, WI Warehouse/ 1,901,299 4/1/97-3/1/02 3,721,701
02/25/82 Company Distribution $23,125/mo.;
Facility 4/1/02-3/1/07
$92,551/mo.
Zebon (4) The Dow Creole, AL Plant 0 12/1/98-6/1/03 0
05/01/83 Chemical Prudhoe Bay Station, AK Facilities $558,719/semi. (3)
Company Mt. Pleasant, MI
Hebron, OH
Kellyville, OK
Tulsa, OK
Bryan, TX
Levelland, TX
========== ===========
$5,398,985 $12,510,015
========== ===========
</TABLE>
(1) Primary Term of the applicable net lease.
(2) Two properties.
(3) Property sold August 26, 1996 and payment obligation satisfied.
(4) All properties sold December 2, 1996 and payment obligation satisfied.
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund II
Schedule of Selected Per Unit Operating Performance, Ratios and Supplemental Data
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
Per Unit Operating Performance 1996 1995 1994 1993 1992
- ------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 2,690.44 $ 2,399.26 $ 2,140.77 $ 1,902.45 $ 1,706.89
Net investment income ........................ 295.66 291.18 258.49 238.32 195.56
Distributions from net investment income ..... (1,306.96) -- -- -- --
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ............... $ 1,679.14 $ 2,690.44 $ 2,399.26 $ 2,140.77 $ 1,902.45
=========== =========== =========== =========== ===========
Total investment return ...................... $ 295.66 $ 291.18 $ 258.49 $ 238.32 $ 195.56
=========== =========== =========== =========== ===========
Ratios/Supplemental Data
- ------------------------
Net assets, end of period .................... $12,502,874 $20,033,008 $17,864,885 $15,940,158 $14,165,629
Ratio of expenses to average net assets ...... N/A N/A N/A N/A N/A
Ratio of net investment income to
average net assets ......................... 13.53% 11.44% 11.39% 11.79% 10.83%
Portfolio turnover rate ...................... N/A N/A N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTEGRATED ARROS II -- SCHEDULE OF ACCRUED INTEREST ON OUTSTANDING PAYMENT OBLIGATIONS
JANUARY 1, 1996 THROUGH DECEMBER 31, 1996
DATE AMOUNT DATE AMOUNT DATE AMOUNT DATE AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
01-Jan-96 25,422,071 23-Feb-96 25,690,831 16-Apr-96 25,959,592 08-Jun-96 26,228,352
02-Jan-96 25,427,142 24-Feb-96 25,695,902 17-Apr-96 25,964,663 09-Jun-96 26,233,423
03-Jan-96 25,432,213 25-Feb-96 25,700,973 18-Apr-96 25,969,734 10-Jun-96 26,238,494
04-Jan-96 25,437,284 26-Feb-96 25,706,044 19-Apr-96 25,974,805 11-Jun-96 26,243,565
05-Jan-96 25,442,355 27-Feb-96 25,711,115 20-Apr-96 25,979,876 12-Jun-96 26,248,636
06-Jan-96 25,447,426 28-Feb-96 25,716,186 21-Apr-96 25,984,947 13-Jun-96 26,253,707
07-Jan-96 25,452,497 29-Feb-96 25,721,257 22-Apr-96 25,990,018 14-Jun-96 26,258,778
08-Jan-96 25,457,568 01-Mar-96 25,726,328 23-Apr-96 25,995,089 15-Jun-96 26,263,849
09-Jan-96 25,462,639 02-Mar-96 25,731,399 24-Apr-96 26,000,159 16-Jun-96 26,268,920
10-Jan-96 25,467,710 03-Mar-96 25,736,470 25-Apr-96 26,005,230 17-Jun-96 26,273,991
11-Jan-96 25,472,780 04-Mar-96 25,741,541 26-Apr-96 26,010,301 18-Jun-96 26,279,062
12-Jan-96 25,477,851 05-Mar-96 25,746,612 27-Apr-96 26,015,372 19-Jun-96 26,284,133
13-Jan-96 25,482,922 06-Mar-96 25,751,683 28-Apr-96 26,020,443 20-Jun-96 26,289,204
14-Jan-96 25,487,993 07-Mar-96 25,756,754 29-Apr-96 26,025,514 21-Jun-96 26,294,275
15-Jan-96 25,493,064 08-Mar-96 25,761,825 30-Apr-96 26,030,585 22-Jun-96 26,299,346
16-Jan-96 25,498,135 09-Mar-96 25,766,896 01-May-96 26,035,656 23-Jun-96 26,304,417
17-Jan-96 25,503,206 10-Mar-96 25,771,967 02-May-96 26,040,727 24-Jun-96 26,309,488
18-Jan-96 25,508,277 11-Mar-96 25,777,038 03-May-96 26,045,798 25-Jun-96 26,314,558
19-Jan-96 25,513,348 12-Mar-96 25,782,109 04-May-96 26,050,869 26-Jun-96 26,319,629
20-Jan-96 25,518,419 13-Mar-96 25,787,179 05-May-96 26,055,940 27-Jun-96 26,324,700
21-Jan-96 25,523,490 14-Mar-96 25,792,250 06-May-96 26,061,011 28-Jun-96 26,329,771
22-Jan-96 25,528,561 15-Mar-96 25,797,321 07-May-96 26,066,082 29-Jun-96 26,334,842
23-Jan-96 25,533,632 16-Mar-96 25,802,392 08-May-96 26,071,153 30-Jun-96 26,339,913
24-Jan-96 25,538,703 17-Mar-96 25,807,463 09-May-96 26,076,224 01-Jul-96 26,344,984
25-Jan-96 25,543,774 18-Mar-96 25,812,534 10-May-96 26,081,295 02-Jul-96 26,350,055
26-Jan-96 25,548,845 19-Mar-96 25,817,605 11-May-96 26,086,366 03-Jul-96 26,355,126
27-Jan-96 25,553,916 20-Mar-96 25,822,676 12-May-96 26,091,437 04-Jul-96 26,360,197
28-Jan-96 25,558,987 21-Mar-96 25,827,747 13-May-96 26,096,508 05-Jul-96 26,365,268
29-Jan-96 25,564,058 22-Mar-96 25,832,818 14-May-96 26,101,579 06-Jul-96 26,370,339
30-Jan-96 25,569,129 23-Mar-96 25,837,889 15-May-96 26,106,649 07-Jul-96 26,375,410
31-Jan-96 25,574,200 24-Mar-96 25,842,960 16-May-96 26,111,720 08-Jul-96 26,380,481
01-Feb-96 25,579,270 25-Mar-96 25,848,031 17-May-96 26,116,791 09-Jul-96 26,385,552
02-Feb-96 25,584,341 26-Mar-96 25,853,102 18-May-96 26,121,862 10-Jul-96 26,390,623
03-Feb-96 25,589,412 27-Mar-96 25,858,173 19-May-96 26,126,933 11-Jul-96 26,395,694
04-Feb-96 25,594,483 28-Mar-96 25,863,244 20-May-96 26,132,004 12-Jul-96 26,400,765
05-Feb-96 25,599,554 29-Mar-96 25,868,315 21-May-96 26,137,075 13-Jul-96 26,405,836
06-Feb-96 25,604,625 30-Mar-96 25,873,386 22-May-96 26,142,146 14-Jul-96 26,410,907
07-Feb-96 25,609,696 31-Mar-96 25,878,457 23-May-96 26,147,217 15-Jul-96 26,415,978
08-Feb-96 25,614,767 01-Apr-96 25,883,528 24-May-96 26,152,288 16-Jul-96 26,421,048
09-Feb-96 25,619,838 02-Apr-96 25,888,599 25-May-96 26,157,359 17-Jul-96 26,426,119
10-Feb-96 25,624,909 03-Apr-96 25,893,669 26-May-96 26,162,430 18-Jul-96 26,431,190
11-Feb-96 25,629,980 04-Apr-96 25,898,740 27-May-96 26,167,501 19-Jul-96 26,436,261
12-Feb-96 25,635,051 05-Apr-96 25,903,811 28-May-96 26,172,572 20-Jul-96 26,441,332
13-Feb-96 25,640,122 06-Apr-96 25,908,882 29-May-96 26,177,643 21-Jul-96 26,446,403
14-Feb-96 25,645,193 07-Apr-96 25,913,953 30-May-96 26,182,714 22-Jul-96 26,451,474
15-Feb-96 25,650,264 08-Apr-96 25,919,024 31-May-96 26,187,785 23-Jul-96 26,456,545
16-Feb-96 25,655,335 09-Apr-96 25,924,095 01-Jun-96 26,192,856 24-Jul-96 26,461,616
17-Feb-96 25,660,406 10-Apr-96 25,929,166 02-Jun-96 26,197,927 25-Jul-96 26,466,687
18-Feb-96 25,665,477 11-Apr-96 25,934,237 03-Jun-96 26,202,998 26-Jul-96 26,471,758
19-Feb-96 25,670,548 12-Apr-96 25,939,308 04-Jun-96 26,208,069 27-Jul-96 26,476,829
20-Feb-96 25,675,619 13-Apr-96 25,944,379 05-Jun-96 26,213,139 28-Jul-96 26,481,900
21-Feb-96 25,680,690 14-Apr-96 25,949,450 06-Jun-96 26,218,210 29-Jul-96 26,486,971
22-Feb-96 25,685,760 15-Apr-96 25,954,521 07-Jun-96 26,223,281 30-Jul-96 26,492,042
<PAGE>
<CAPTION>
INTEGRATED ARROS II -- SCHEDULE OF ACCRUED INTEREST ON OUTSTANDING PAYMENT OBLIGATIONS -- Continued
JANUARY 1, 1996 THROUGH DECEMBER 31, 1996
DATE AMOUNT DATE AMOUNT DATE MOUNT
<S> <C> <C> <C> <C> <C>
31-Jul-96 26,497,113 22-Sep-96 17,196,984 14-Nov-96 17,374,350
01-Aug-96 26,502,184 23-Sep-96 17,200,331 15-Nov-96 17,377,696
02-Aug-96 26,507,255 24-Sep-96 17,203,678 16-Nov-96 17,381,043
03-Aug-96 26,512,326 25-Sep-96 17,207,024 17-Nov-96 17,384,389
04-Aug-96 26,517,397 26-Sep-96 17,210,371 18-Nov-96 17,387,736
05-Aug-96 26,522,468 27-Sep-96 17,213,717 19-Nov-96 17,391,082
06-Aug-96 26,527,538 28-Sep-96 17,217,064 20-Nov-96 17,394,429
07-Aug-96 26,532,609 29-Sep-96 17,220,410 21-Nov-96 17,397,776
08-Aug-96 26,537,680 30-Sep-96 17,223,757 22-Nov-96 17,401,122
09-Aug-96 26,542,751 01-Oct-96 17,227,103 23-Nov-96 17,404,469
10-Aug-96 26,547,822 02-Oct-96 17,230,450 24-Nov-96 17,407,815
11-Aug-96 26,552,893 03-Oct-96 17,233,796 25-Nov-96 17,411,162
12-Aug-96 26,557,964 04-Oct-96 17,237,143 26-Nov-96 17,414,508
13-Aug-96 26,563,035 05-Oct-96 17,240,489 27-Nov-96 17,417,855
14-Aug-96 26,568,106 06-Oct-96 17,243,836 28-Nov-96 17,421,201
15-Aug-96 26,573,177 07-Oct-96 17,247,182 29-Nov-96 17,424,548
16-Aug-96 26,578,248 08-Oct-96 17,250,529 30-Nov-96 17,427,894
17-Aug-96 26,583,319 09-Oct-96 17,253,875 01-Dec-96 17,431,241
18-Aug-96 26,588,390 10-Oct-96 17,257,222 02-Dec-96 12,913,301
19-Aug-96 26,593,461 11-Oct-96 17,260,568 03-Dec-96 12,915,737
20-Aug-96 26,598,532 12-Oct-96 17,263,915 04-Dec-96 12,918,173
21-Aug-96 26,603,603 13-Oct-96 17,267,261 05-Dec-96 12,920,608
22-Aug-96 26,608,674 14-Oct-96 17,270,608 06-Dec-96 12,923,044
23-Aug-96 26,613,745 15-Oct-96 17,273,954 07-Dec-96 12,925,480
24-Aug-96 26,618,816 16-Oct-96 17,277,301 08-Dec-96 12,927,915
25-Aug-96 26,623,887 17-Oct-96 17,280,647 09-Dec-96 12,930,351
26-Aug-96 17,106,629 18-Oct-96 17,283,994 10-Dec-96 12,932,787
27-Aug-96 17,109,975 19-Oct-96 17,287,340 11-Dec-96 12,935,223
28-Aug-96 17,113,322 20-Oct-96 17,290,687 12-Dec-96 12,937,658
29-Aug-96 17,116,668 21-Oct-96 17,294,033 13-Dec-96 12,940,094
30-Aug-96 17,120,015 22-Oct-96 17,297,380 14-Dec-96 12,942,530
31-Aug-96 17,123,361 23-Oct-96 17,300,727 15-Dec-96 12,944,965
01-Sep-96 17,126,708 24-Oct-96 17,304,073 16-Dec-96 12,947,401
02-Sep-96 17,130,054 25-Oct-96 17,307,420 17-Dec-96 12,949,837
03-Sep-96 17,133,401 26-Oct-96 17,310,766 18-Dec-96 12,952,272
04-Sep-96 17,136,747 27-Oct-96 17,314,113 19-Dec-96 12,954,708
05-Sep-96 17,140,094 28-Oct-96 17,317,459 20-Dec-96 12,957,144
06-Sep-96 17,143,440 29-Oct-96 17,320,806 21-Dec-96 12,959,580
07-Sep-96 17,146,787 30-Oct-96 17,324,152 22-Dec-96 12,962,015
08-Sep-96 17,150,133 31-Oct-96 17,327,499 23-Dec-96 12,964,451
09-Sep-96 17,153,480 01-Nov-96 17,330,845 24-Dec-96 12,966,887
10-Sep-96 17,156,826 02-Nov-96 17,334,192 25-Dec-96 12,969,322
11-Sep-96 17,160,173 03-Nov-96 17,337,538 26-Dec-96 12,971,758
12-Sep-96 17,163,519 04-Nov-96 17,340,885 27-Dec-96 12,974,194
13-Sep-96 17,166,866 05-Nov-96 17,344,231 28-Dec-96 12,976,629
14-Sep-96 17,170,212 06-Nov-96 17,347,578 29-Dec-96 12,979,065
15-Sep-96 17,173,559 07-Nov-96 17,350,924 30-Dec-96 12,981,501
16-Sep-96 17,176,905 08-Nov-96 17,354,271 31-Dec-96 12,983,937
17-Sep-96 17,180,252 09-Nov-96 17,357,617
18-Sep-96 17,183,598 10-Nov-96 17,360,964
19-Sep-96 17,186,945 11-Nov-96 17,364,310
20-Sep-96 17,190,291 12-Nov-96 17,367,657
21-Sep-96 17,193,638 13-Nov-96 17,371,003
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 12,510
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,791
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,288
<TOTAL-LIABILITIES> 4,288
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 7
<SHARES-COMMON-PRIOR> 7
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 12,503
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 2,201
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 9,732
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 16,272
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1,679.14
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
