<PAGE> 1
=================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
-------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number: 0-25600
OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-1394232
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7200 Wisconsin Avenue, 11th floor, Bethesda, Maryland 20814
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 654-3100
Securities registered pursuant to Section 12(b) of the Act:
Beneficial Assignee Interests
- -----------------------------
Securities registered pursuant to Section 12(g) of the Act:
Beneficial Assignee Interests
- -----------------------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ NO / /
At June 30, 1998, the following classes of beneficial assignee
interests of Oxford Tax Exempt Fund II Limited Partnership were
outstanding: (i) 7,185,200 beneficial assignee interests
("BACs") with an aggregate market value ($27.75 per share) of
$199,389,300, and (ii) 6,946 Status Quo BACs ("SQBs").
Index to Exhibits is found on page 3.
=================================================================
<PAGE> 2
OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
FORM 10-Q
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial statements of OTEF II are incorporated herein
by reference to sequentially numbered pages 14 through 17 of OTEF
II's Quarterly Report (Unaudited).
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
A discussion of OTEF II's financial condition and results of
operations for the three and six-month periods ended June 30,
1998 is incorporated herein by reference to sequentially numbered
pages 6 through 13 entitled "Report of Management" included in
OTEF II's Quarterly Report (Unaudited).
PART II-OTHER INFORMATION
Item 1. Legal Proceedings.
Information responsive to this Item regarding putative class
and derivative lawsuits is contained in Note 8 to Financial
Statements of the Form 10-K for the year ended December 31, 1997
filed by OTEF II.
Item 2. Changes in Securities.
Information responsive to this Item regarding changes in
securities is contained in Item 2 of the Form 10-Q/A for the
quarter ended March 31, 1997, filed by OTEF II.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
In connection with the incentive option BACs, a Registration
Statement on Form S-8 was filed with the SEC on June 10, 1998,
and a Post Effective Amendment was filed with the SEC on June
12, 1998.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
For a list of Exhibits as required by Item 601 of
Regulation S-K, see Exhibit Index on page 3 of this
report.
(b) Reports on Form 8-K.
None.
No other items were applicable.
<PAGE> 3
OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
FORM 10-Q
EXHIBIT INDEX
(Listed according to the number assigned in the Exhibit Table in
Item 601 of Regulation S-K).
(20) Report furnished to Security Holders.
Oxford Tax Exempt Fund II Limited Partnership's Quarterly
Report (Unaudited) dated June 30, 1998, follows on
sequentially numbered pages 5 through 24 of this report.
(27) Financial Data Schedule.
<PAGE> 4
OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
FORM 10-Q
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Oxford Tax Exempt Fund II Limited Partnership
By: Oxford Tax Exempt Fund II Corporation
Managing General Partner of the registrant
Date: 8/14/98 By: /S/ Richard R. Singleton
------- ------------------------------------------
Richard R. Singleton
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
Date: 8/14/98 By: /S/ Francis P. Lavin
------- -------------------------------------------
Francis P. Lavin
Director and President
Date: 8/14/98 By: /S/ Robert B. Downing
------- -------------------------------------------
Robert B. Downing
Director and Executive Vice President
<PAGE> 5
OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP
Quarterly Report
(Unaudited)
June 30, 1998
CONTENTS
Report of Management
Balance Sheets
Statements of Income
Statement of Partners' Capital
Statements of Cash Flows
Notes to Financial Statements
Instructions for Investors who wish to reregister or
transfer OTEF II BACs
<PAGE> 6
- -----------------------------------------------------------------
Report of Management
- -----------------------------------------------------------------
The following report provides information about the financial
condition of Oxford Tax Exempt Fund II Limited Partnership, a
Maryland limited partnership ("OTEF II" or the "Partnership"), as
of June 30, 1998, and its results of operations and cash flows
for the period then ended. This report and analysis should be
read together with the financial statements and related notes
thereto and the selected financial data appearing elsewhere in
this Quarterly Report.
Recent Developments
Distribution for the Quarter ended June 30, 1998. The
Managing General Partner declared, on June 17, 1998, a
distribution for the quarter ended June 30, 1998 in the amount of
$0.51 per BAC for the Liquidity BAC holders, and $12.38 per
Status Quo BAC (SQB) holders. For the Liquidity BAC holders,
this represents a 3% increase in the amount of the distribution
paid for the last quarter.
Investments in New Assets. On July 20, 1998, OTEF II
acquired $10,300,000 Texas Department of Housing and Community
Affairs Multifamily Mortgage Revenue Refunding Bonds (Dallas-
Oxford Development) Series 1998 (the "Dallas Refunding Bonds").
As previously reported, on December 30, 1997, OTEF II purchased,
at a discount, $11,700,000 of tax-exempt bonds issued by the
Texas Department of Housing and Community Affairs. The bonds are
collateralized by Springhouse Apartments, a 372-unit apartment
community located in Dallas, Texas, that is owned by a privately-
held Maryland limited partnership whose general partners are
affiliates of OTEF II ("Dallas Borrower").
In connection with the recent refunding transaction, OTEF II
exchanged the bonds that it acquired on December 30, 1997 for the
Dallas Refunding Bonds. The Dallas Refunding Bonds bear tax-
exempt interest at an annual fixed rate of 7.25% for an initial
term through July 1, 2005, at which time the interest rate resets
based on various formulas. The Dallas Refunding Bonds mature on
April 1, 2018, subject to earlier redemption (optional and
mandatory) upon the occurrence of certain events.
In addition, OTEF II funded the balance of a taxable loan in
the amount of $355,000. The Dallas Borrower will apply the net
proceeds of this loan to fund certain capital improvements, and
pay transactional, bond refunding and certain other costs. The
taxable loan in the aggregate principal amount of $680,000 will
be repaid on an interest-only basis with taxable interest at an
annual fixed rate of 9.30% on the principal balance outstanding
from time to time with the principal due at maturity. The
taxable loan matures on the same date as the Dallas Refunding
Bonds and is prepayable on the same terms and conditions as the
Dallas Refunding Bonds.
<PAGE> 7
- -----------------------------------------------------------------
Report of Management
- -----------------------------------------------------------------
On May 28, 1998, Summerwalk Properties L.L.C. (the "Summerwalk
Borrower"), an affiliate of OTEF II, completed its acquisition of
Summerwalk at the Crossings Apartments, a 264-unit garden
apartment community located in a suburb of Atlanta, Georgia
("Summerwalk Transaction"). The total purchase price paid by the
Summerwalk Borrower was approximately $16.65 million. The
property is financed with $10 million of tax-exempt bonds that
bear interest at an adjustable one-year rate, which is currently
3.9%. This debt was assumed by the Summerwalk Borrower in
connection with the acquisition. The tax-exempt bonds are
secured by a first mortgage on the property and held by unrelated
third parties. OTEF II expects to purchase these bonds at a to-
be-determined future date.
At the closing, OTEF II purchased a certificate from a grantor
trust, which represents all of the economic interest of the trust
in connection with the Summerwalk Transaction. The trust made a
taxable loan to the Summerwalk Borrower in the amount of
approximately $6.9 million bearing an annual fixed accrual rate
of interest of 12%, with the option of additional advances to be
made in the future. This loan will be used by the Summerwalk
Borrower to fund the balance of the purchase price for the
property, as well as various costs, expenses, capital
improvements and reserves. This taxable loan is also secured by
a subordinated mortgage on the property.
The terms of this loan are anticipated to result in
substantially all of the property's current and expected future
increases in both cash flow and property value being paid to OTEF
II as interest on this loan. OTEF II anticipates that it will
restructure the tax-exempt bonds and the taxable loan as soon as
practicable following the closing, which restructuring may
include, among other things, a refunding of the tax-exempt bonds
and a modification of the interest rate on the tax-exempt bonds
to a higher rate. OTEF II expects to purchase the restructured
or refunded bonds, and may sell or finance all or a portion of
the taxable loan.
On April 30, 1998, OTEF II and an affiliate closed an
investment transaction ("Jacaranda Transaction") involving the
acquisition by OTEF II of approximately $7 million of debt
secured by real estate simultaneously acquired by such affiliate
from a third party. In connection with this transaction,
Jacaranda-Oxford Limited Partnership ("Jacaranda Borrower"), a
Maryland limited partnership, purchased Harbour Town of
Jacaranda, a 280-unit garden apartment community located in
Plantation, Broward County, Florida. The total purchase price
paid by the Jacaranda Borrower was approximately $18.75 million.
The property is financed with $11.8 million of senior, tax-exempt
bonds that bear interest at a weekly floating rate based on a
spread over the applicable short-term, tax-exempt securities
index. The senior bonds are secured by a first mortgage on the
property and are currently held by third parties. OTEF II may
purchase these senior bonds at a future date.
<PAGE> 8
- ------------------------------------------------------------------
Report of Management
- ------------------------------------------------------------------
At closing, OTEF II purchased from an unrelated third party
$4.2 million of subordinated, tax-exempt bonds, which currently
bear an annual fixed rate of interest of 6.25% and are secured by
a subordinated mortgage on the property. It is expected that the
interest rate on the subordinated, tax-exempt bonds held by OTEF
II will be increased to approximately 13% later this year.
At closing, OTEF II purchased a certificate from a grantor
trust, which represents all of the economic interest of the
trust. The trust made a taxable loan to the Borrower in the
amount of approximately $2.9 million, due on April 1, 2006,
bearing an annual fixed accrual rate of interest of 12%, with the
option to make additional advances in the future. This loan was
used by the Jacaranda Borrower to fund a portion of the purchase
price for the property, as well as various costs, expenses,
capital improvements and reserves. This loan is secured by a
subordinated mortgage on the property. The terms of this loan
are anticipated to result in substantially all of the property's
current and expected future increases in cash flow, remaining
after payment of debt service on the senior and subordinated
bonds, and property value being paid to OTEF II as interest on
this loan.
Financing Transactions. On May 21, 1998, OTEF II closed the
third in a series of transactions with Merrill Lynch,
securitizing approximately $11 million of Series A Bonds held in
OTEF II's portfolio. OTEF II also purchased a subordinated
interest in this securitization transaction for $0.1 million.
This transaction involved a newer and more favorable structure,
compared with prior securitization transactions completed by OTEF
II. OTEF II netted approximately $10.8 million from this
transaction, after taking into account transaction costs and the
purchase of the subordinated interest. As previously reported, a
portion of these proceeds were used by OTEF II in connection with
the Summerwalk Transaction. The remaining proceeds will be used
for additional transactions that are expected to be completed
later this year. See "Liquidity and Capital Resources -
Financing Transactions" for additional information.
Status Quo BACs. Effective April 1, 1997, OTEF II issued
SQBs, representing 12,587 shares, in uncertificated, book-entry
form. During 1997, a total of 5,494 SQBs were redeemed for a
cost of $3.0 million. During the first two quarters of 1998, an
additional 147 SQBs were redeemed at prices ranging from $540 to
$550 per share, leaving 6,946 SQBs outstanding at June 30, 1998.
The Information Memorandum states that, subject to receipt of
a fairness opinion from OTEF II's independent real estate
consultant, all outstanding SQBs will be purchased or redeemed by
OTEF II at such time as the Managing General Partner believes
that it would be in the best interests of OTEF II and the holders
of the non-tendered SQBs, but in no event later than December 31,
2006, which date may be extended under certain circumstances.
The purchase or redemption price will be the fair market value of
<PAGE> 9
- -----------------------------------------------------------------
Report of Management
- -----------------------------------------------------------------
the Status Quo Assets at the time of purchase or redemption, less
the costs of sale. The Managing General Partner has undertaken
an analysis of whether such a purchase or redemption by OTEF II
would be in the best interests of the SQB Holders and OTEF II at
the present time and, in connection therewith, is reviewing all
ownership attributes of the SQBs. The Managing General Partner
expects to complete its analysis later this year.
Liquidity and Capital Resources
Current Position. OTEF II uses the interest income it
receives from Refunding Bonds, Existing MRBs, New Assets (each as
defined below), and cash reserves to make periodic cash
distributions to its General Partners, OTEF II BAC Holders and
SQB Holders, pay administrative expenses and fund reserves, as
well as the costs and expenses associated with the implementation
of the 1995 OTEF Restructuring Plan and the acquisition of New
Assets. In connection with the settlement of the OTEF II
Litigation discussed in prior reports, OTEF II made a final
payment of plaintiff's counsel fees and expenses in the amount of
$1.54 million in the second quarter upon the expiration of all
appeal periods and dismissal of the state court action.
As of June 30, 1998, OTEF II held approximately $16.5 million
in cash and cash equivalents, an increase of $5 million, or
approximately 41%, from the $11.7 million in cash and cash
equivalents held as of December 31, 1997. This increase in
OTEF II's cash and cash equivalents was primarily the result of
the $20 million of net proceeds generated from Financing
Transactions offset by $14 million in acquisitions and loans made
as described above. Total assets were $291.7 million compared to
$270.7 million at December 31, 1997. In addition, total
liabilities of OTEF II shown on the balance sheet increased by
$18 million to approximately $52 million as of June 30, 1998 from
approximately $34 million at December 31, 1997 due to the
Financing Transactions.
Investment in New Assets. The Managing General Partner
intends to invest primarily in additional tax exempt mortgage
revenue bonds and securities of other entities, which primarily
hold tax-exempt mortgage revenue bonds. OTEF II also may invest
in multifamily real estate, senior living facilities or
residential health care facilities, or other direct or indirect
debt or equity interests in such real estate, some of which may
give rise to taxable income (all of the foregoing are referred to
collectively as "New Assets"). See "Recent Developments" for
additional information regarding New Assets.
OTEF II generally will acquire additional mortgage revenue
bonds and taxable bonds that are not rated by any of the
nationally recognized rating agencies (such as Moody's Investor
Services, Inc. or Standard & Poor's Ratings Group) and that are
not credit-enhanced at the time of acquisition, although OTEF II
<PAGE> 10
- -----------------------------------------------------------------
Report of Management
- -----------------------------------------------------------------
may seek to have all or a portion of such bonds credit-enhanced
or rated at a future date. It also is expected that OTEF II may
invest in bonds, including bonds that may be secured by bonds or
mortgages that are subordinated to senior bonds or mortgages held
by third parties, on terms that may permit it, in some cases, to
participate (either through stepped interest rates or otherwise)
in the future growth and increase in value of the properties
financed by such bonds.
Refunding Bonds. As of June 30, 1998, twelve of the fifteen
mortgage revenue bonds owed by OTEF II prior to implementation of
the 1995 Restructuring Plan ("Existing MRBs") had been refunded,
representing 88% of the combined face amounts of the Existing
MRBs and Refunding Bonds portfolio.
The refunding bonds that were issued to refund Existing MRBs
("Refunding Bonds") are structured so as to consist of senior
bonds ("Series A Bonds") and subordinated bonds ("Series B
Bonds"). This senior/subordinated structure has permitted
OTEF II to undertake one or more financings, pursuant to which it
will sell all or a portion of the Series A Bonds, or interests
therein, that are allocable to the OTEF II BACs ("Liquidity
Assets"), or issue debt that may be secured by such assets, New
Assets or both. The net proceeds from these financings will be
invested in New Assets, as discussed above. OTEF II will retain
the related Series B Bonds for the benefit of the Liquidity BAC
Holders, and will retain both the senior Series A Bonds and the
subordinated Series B Bonds, or interests therein, allocable to
the SQBs ("Status Quo Assets") for the benefit of the SQB
Holders.
Series A Bonds. The term of each Refunding Bond and,
accordingly, each Mortgage Loan is 30 years following the date of
refunding. The Series A Bonds require interest only payments
during the first three years and, thereafter, are subject to
annual sinking fund redemptions that will result in full
amortization of the Series A Bonds during the 27-year remaining
term.
Series A Bond Interest and Principal. The Series A Bonds
require pre-determined annual sinking fund redemptions based on a
27-year amortization schedule beginning in the fourth year,
calculated with an assumed rate of interest of 5.6% per year. In
the current rate mode, Series A Bond interest is set initially at
closing of the refundings and reset annually thereafter at a
market rate based upon a percentage of the then prevailing one-
year U.S. Treasury Bill rate, with a maximum rate of 5.6% per
annum. The initial interest rate on the Series A Bonds that have
been issued to date was 4.9%. The interest rate on the Series A
Bonds retained by OTEF II were reset to a rate ranging from 4.8%
- -4.95% depending on the annual reset date. The interest rate on
the Series A Bonds involved in the financing transactions
described above was converted from annual reset to a weekly
floating rate based on a spread over the PSA index. Upon a
<PAGE> 11
- -----------------------------------------------------------------
Report of Management
- -----------------------------------------------------------------
remarketing, the Series A Bonds may be converted to a different
interest rate mode (fixed or floating) and the interest rates may
be modified at that time to reflect the prevailing market
interest rates for whatever rate mode and remaining term is then
applicable.
Series B Bonds. The term of each Series B Bond and,
accordingly, each Mortgage Loan is 30 years following the date of
refunding.
Series B Bond Interest and Principal. The Series B Bonds
accrue interest equal to the product of the Combined Rate (as
defined below) multiplied by the total combined principal balance
of the Series A Bonds and the Series B Bonds for each Operating
Partnership, less the interest payable on the related Series A
Bonds; the resulting amount of interest divided by the principal
balance of the Series B Bonds equals the interest accrual rate on
the Series B Bonds. Interest-only is payable on the Series B
Bonds to the extent of available cash flow of the Operating
Partnership, with the entire principal balance and any unpaid
interest due at maturity.
Combined Rate. The Combined Rate represents that portion of
each Property's projected cash flow before debt service for each
year (projected at the time of the refunding of each Existing
MRB) that may be applied to interest on the combined Series A
Bonds and Series B Bonds. The 1998 weighted average Combined
Rate for the 12 Refunding Bonds is 6.62%. See Note 7 to the 1997
Annual Report for a schedule of Combined Rates of the Refunding
Bonds over the next ten years.
Other Sources. In connection with the closing of the Refunding
Bonds, the applicable Operating Partnerships entered into certain
pooling agreements which may provide under certain circumstances
additional sources of funds to enable them to pay their
respective debt service on the Series A Bonds and the Series B
Bonds and related fees and expenses. As of June 30, 1998, the
aggregate amount of net excess cash flow held in the Operating
Partnership escrows was approximately $1.6 million, compared to
$1.1 million at the end of 1997. As discussed in prior reports,
in connection with the closing of the Oxford/NHP transaction in
1993, Oxford committed certain proceeds of such closing to
satisfy certain obligations it had to these Operating
Partnerships. Of this commitment, $1.3 million remains as of
June 30, 1998. The Managing General Partner anticipates that the
remaining balance will be advanced to certain Operating
Partnerships to help defray the costs of refunding the remaining
Existing MRBs, increase property improvement reserves and create
operating reserves, as deemed necessary by the Managing General
Partner.
Financing Transactions. OTEF II has securitized a total of
approximately $62.6 million of its Series A Bonds and has
purchased approximately $15 million of subordinated interests.
<PAGE> 12
- -----------------------------------------------------------------
Report of Management
- -----------------------------------------------------------------
The portion of the net proceeds from these transactions that is
not invested in New Assets is temporarily invested in liquid tax-
exempt money market securities.
In connection with these transactions, OTEF II converted the
interest rate mode on the Series A Bonds from an annual reset to
weekly floaters. In the first securitization transaction on
August 22, 1997, OTEF II also purchased a three-year interest
rate cap on a notional amount of approximately $27 million to
minimize the effects of interest rate volatility. Under this
arrangement, if the average short-term, tax-exempt interest rates
for any month during the term of the cap increase above a
specified level (6%), the counter-party to the interest rate cap
transaction is required to pay directly to OTEF II the amount by
which such rates exceed the specified level.
For financial statement purposes, these transactions are
accounted for as financing transactions. The amount of the
Series A Bonds financed of approximately $62.6 million is
reflected as Securities Held in Trust, the net cash proceeds are
classified as Cash and Cash Equivalents and the difference
between the principal amount of the Series A Bonds financed and
the principal amount of the subordinated interests acquired by
OTEF II is classified as financing debt. The aggregate financing
debt at June 30, 1998 was $47.6 million as compared to $27.2
million as of December 31, 1997. The financing debt bears
interest at the Public Securities Association ("PSA") weekly
floating bond index plus approximately 80 to 85 basis points,
which averaged 4.46% from the date of closing through December
31, 1997 and 4.16% for the first six months of 1998. Costs
associated with these financing transactions are being amortized
over 10 years for financial statement purposes, and costs
associated with the interest rate cap are being amortized over
the life of the interest rate cap agreement, which is 3 years.
For federal income tax purposes, these transactions are treated
as sales by OTEF II of the applicable Series A Bonds and a
purchase of the subordinated interests. With respect to the
first transaction, the sale of the Series A Bonds resulted in a
1997 capital loss for federal income tax purposes of
approximately $3.8 million. Information regarding the federal
income tax consequences of financing transactions completed
during 1998 will be provided later this year.
Existing MRBs. As of June 30, 1998, OTEF II held Existing
MRBs for two of the Operating Partnerships. It is expected that
the refunding of at least one of the Operating Partnership's
Existing MRBs will close in 1998.
Results of Operations
OTEF II's Operations
OTEF II Distributions. Distributions to Partners will amount
to approximately $3.8 million, or $0.51 per Liquidity BAC and
$12.38 per SQB holders of record as of June 30, 1998.
<PAGE> 13
- -----------------------------------------------------------------
Report of Management
- -----------------------------------------------------------------
OTEF II's Three-Month Operations. For financial statement
purposes, Net Income and Net Income per Liquidity BAC was $4.5
million and $0.59, respectively, for the three-month period ended
June 30, 1998, compared to $4.3 million and $0.56, respectively,
for the same period in 1997. Net Income per Liquidity BAC
assuming dilution due to the incentive option plan for the three-
month period ended June 30, 1998 was $0.58. The increase in Net
Income for the comparative three-month periods is the result of
additional interest received on New Assets exceeding the costs
associated with the implementation of the Liquidity & Growth Plan
that were not incurred in the prior comparative period.
OTEF II's Six-Month Operations. For financial statement
purposes, Net Income and Net Income per Liquidity BAC was $9.0
million and $1.20, respectively, for the six-month period ended
June 30, 1998, as compared to $8.6 million and $1.12,
respectively, for the six-month period ended June 30, 1997. The
increase in Net Income is the result of additional interest
received on New Assets exceeding the costs associated with the
implementation of the Liquidity & Growth Plan that were not
incurred in the prior comparative period. Net Income per
Liquidity BAC assuming dilution due to the incentive option plan
for the six-month period ended June 30, 1998 was $1.18.
Due to OTEF II's conversion of a portion of the BACs to SQBs,
effective April 1, 1997, there were 7,499,875 BACs outstanding in
the first quarter of 1997 compared to 7,185,200 in the first
quarter of 1998. Consequently, the weighted average number of
Liquidity BACs outstanding for the computation of earnings per
share was 7,185,200 and 7,342,538, respectively as of June 30,
1998 and 1997, respectively. Beginning in 1998, the relative
portion of OTEF II's administrative costs allocated to SQB
Holders increased due to the adoption by the Managing General
Partner of a new cost allocation methodology designed to reflect
the actual time incurred to administratively service the SQB
Holders. During the period from April 1, 1997 to December 31,
1997, these administrative costs were allocated based upon the
ratio of SQB Holders to BAC Holders. After consultation with
OTEF II's professional advisors, the Managing General Partner
believes that this new methodology is more equitable to all
parties.
<PAGE> 14
Oxford Tax Exempt Fund II Limited Partnership
<TABLE>
- -----------------------------------------------------------------------------
Balance Sheets (in thousands)
- -----------------------------------------------------------------------------
<CAPTION>
June 30,
1998 December 31,
(Unaudited) 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in tax-exempt securities $199,250 $217,159
Investments in tax-exempt securities held in trust 62,565 38,820
Investment in taxable securities and loans 10,714 0
Cash and cash equivalents 16,517 11,694
Bond and other interest receivable 1,594 1,439
Other assets 1,073 1,551
- -----------------------------------------------------------------------------
Total Assets $291,713 $270,663
=============================================================================
Liabilities and Partners' Capital
Liabilities
Financing debt $ 47,614 $ 27,174
Accounts payable and accrued expenses 470 2,988
Distributions payable 3,827 3,719
- -----------------------------------------------------------------------------
Total Liabilities 51,911 33,881
- -----------------------------------------------------------------------------
Partners' Capital
General Partners' Interests (2,327) (2,356)
Limited Partners' Interests:
Beneficial Assignee Interests (7,499,875
interests issued and 7,185,200 interests
outstanding as of June 30, 1998) 158,097 156,672
Status Quo BAC Interests (12,587 interests
issued as of April 1, 1997, and 7,093 and
6,946 interests outstanding as of December 31,
1997 and June 30, 1998, respectively) 3,814 3,885
Accumulated other comprehensive income 80,218 78,581
- -----------------------------------------------------------------------------
Total Partners' Capital 239,802 236,782
- -----------------------------------------------------------------------------
Total Liabilities and Partners' Capital $291,713 $270,663
=============================================================================
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE> 15
Oxford Tax Exempt Fund II Limited Partnership
<TABLE>
- -----------------------------------------------------------------------------
Statements of Income and Comprehensive Income (in thousands,except per
Liquidity BAC amounts)
(Unaudited)
- -----------------------------------------------------------------------------
<CAPTION>
Three months Six months
ended June 30, ended June 30,
---------------- ----------------
1998 1997 1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Interest on tax-exempt securities $4,335 $4,629 $ 9,062 $ 9,234
Interest on tax-exempt securities
held in trust 669 0 1,143 0
Interest on taxable securities
and loans 153 0 173 0
Other, primarily interest 162 113 283 204
- -----------------------------------------------------------------------------
Total Revenues 5,319 4,742 10,661 9,438
- -----------------------------------------------------------------------------
Expenses
Governance and administrative expenses (207) (185) (441) (497)
Litigation and settlement costs (2) (106) (7) (204)
Liquidity and growth expenses (170) (127) (385) (147)
Finance interest expense (489) 0 (820) 0
- -----------------------------------------------------------------------------
Total Expenses (868) (418) (1,653) (848)
- -----------------------------------------------------------------------------
Net Income $4,451 $4,324 $ 9,008 $ 8,590
=============================================================================
Other comprehensive income:
Unrealized gains on investments 1,502 2,996 1,637 5,383
=============================================================================
Comprehensive income $5,953 $7,320 $10,645 $13,973
=============================================================================
Net income allocated to Liquidity BACs $4,269 $4,054 $ 8,646 $ 8,235
=============================================================================
Weighted Average Liquidity
BACs outstanding 7,185 7,185 7,185 7,343
=============================================================================
Net income per Liquidity BAC<F1> $ 0.59 $ 0.56 $ 1.20 $ 1.12
=============================================================================
Weighted Average Liquidity
BACs outstanding-assuming dilution<F2> 7,271 7,185 7,266 7,349
=============================================================================
Net income per Liquidity BAC-assuming
dilution<F2> $ 0.58 $ 0.56 $ 1.18 $ 1.11
=============================================================================
Distribution per Liquidity BAC<F1> $ 0.51 $0.476 $ 1.005 $ 0.952
=============================================================================
<PAGE> 15 (continued)
<FN>
<F1> Prior periods Liquidity BAC interest amounts have been restated to
reflect the 25-for-1 stock split which occurred on July 1, 1997
and amounts presented are after allocation of net income to General
Partners and Status Quo BAC holders. (See Note 3 for the SQB
Statement of Income).
<F2> Reflects the dilutive effect of unexercised stock options granted
in the second quarter of 1997.
</FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 16
Oxford Tax Exempt Fund II Limited Partnership
<TABLE>
- -----------------------------------------------------------------------------
Statement of Partners' Capital (in thousands)(Unaudited)
- -----------------------------------------------------------------------------
<CAPTION> Partners'
Limited Interests
------------------- Accumulated
Beneficial Status Other
General Assignee Quo BAC Comprehensive
Partners Interests Interests Income Total
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 $(2,356) $156,672 $3,885 $78,581 $236,782
=============================================================================
SQB Redemption 0 0 (55) 0 (55)
Net Income, including
$0.609 per Liquidity BAC
<F1> and $12.63 per SQB 91 4,377 89 0 4,557
Unrealized gains on
investments 0 0 0 135 135
-----------------------------------------------
Comprehensive income 91 4,377 34 135 4,637
Distributions payable to
Partners including $0.495
per Liquidity BAC<F1> and
$12.38 per SQB (74) (3,557) (87) 0 (3,718)
- -----------------------------------------------------------------------------
Balance, March 31, 1998 $(2,339) $157,492 $3,832 $78,716 $237,701
=============================================================================
SQB Redemption 0 0 (25) 0 (25)
Net Income, including
$0.59 per Liquidity BAC<F1>
and $13.31 per SQB 89 4,269 93 0 4,451
Unrealized gains on
investments 0 0 0 1,502 1,502
------------------------------------------------
Comprehensive income 89 4,269 68 1,502 5,928
Distributions payable to
Partners including $0.51
per Liquidity BAC<F1> and
$12.38 per SQB (77) (3,664) (86) 0 (3,827)
- -----------------------------------------------------------------------------
Balance, June 30, 1998 $(2,327) $158,097 $3,814 $80,218 $239,802
=============================================================================
<FN>
<F1> Liquidity BAC share amounts reflect the 25-for-1 stock split which
occurred on July 1, 1997.
</FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 17
Oxford Tax Exempt Fund II Limited Partnership
<TABLE>
- -----------------------------------------------------------------------------
Statements of Cash Flows (in thousands)
(Unaudited)
- -----------------------------------------------------------------------------
<CAPTION>
Six months ended June 30,
-------------------------
1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
Operating Activities
Net income $ 9,008 $ 8,590
Adjustments to reconcile net income
to net cash Provided by operating Activities:
Changes in assets and liabilities:
Interest receivable and other (155) (598)
Litigation settlement payment (1,538) 0
Accounts payable and accrued expenses (980) (150)
- -----------------------------------------------------------------------------
Net cash provided by operating activities 6,335 7,842
- -----------------------------------------------------------------------------
Investing Activities
Acquisitions<F2> (13,958) 0
Decrease in other assets<F1> (478) 0
Redemption of SQBs (80) 0
- -----------------------------------------------------------------------------
Net cash used in investing activities (14,516) 0
- -----------------------------------------------------------------------------
Financing activities
Net proceeds from debt refinancing 20,440 0
Distributions paid (7,436) (7,286)
- -----------------------------------------------------------------------------
Net cash provided (used) by financing activities 13,004 (7,286)
- -----------------------------------------------------------------------------
Net increase in cash and cash equivalents 4,823 556
Cash and cash equivalents, beginning of period 11,694 12,072
- -----------------------------------------------------------------------------
Cash and cash equivalents, end of period $16,517 $12,628
=============================================================================
<FN>
<F1> Other assets represent deferred costs incurred in association with the
Liquidity & Growth Plan financing transactions, prepaid items, and
short-term promissory note associated with the OTEF II Litigation
settlement, which are not recurring operating activities.
<F2> Acquisitions include new tax-exempt bonds, other tax exempt securities
and interests in taxable loans.
</FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 18
- -----------------------------------------------------------------
Notes to Financial Statements
- -----------------------------------------------------------------
Note 1. Financial Statements
The financial statements reflect all adjustments, which in the
opinion of the Managing General Partner of Oxford Tax Exempt
Fund II Limited Partnership ("OTEF II" or the "Partnership"), are
necessary to present fairly OTEF II's financial position as of
June 30, 1998 and December 31, 1997, the Statements of Income and
Comprehensive Income for the three and six-month periods ended
June 30, 1998 and 1997, the Statement of Partners' Capital as of
June 30, 1998, and the Statements of Cash Flows for the six-month
period ended June 30, 1998 and 1997, and the notes thereto, in
accordance with generally accepted accounting principles. These
statements should be read in conjunction with the audited
financial statements and notes included in the Partnership's
Annual Report for the year ended December 31, 1997.
In February 1997, the Financial Accounting Standards Board
issued a Statement of Financial Accounting Standards No. 128,
"Earnings Per Share", which changed the reporting of earnings per
share beginning in the fourth quarter of 1997. Basic earnings
per share, a measure required by the new standard, does not
include stock options as common stock equivalents. However
diluted earnings per share includes the effect of stock options.
Note 2. Business
The Partnership was formed under the laws of the State of
Maryland in February, 1995, in connection with a plan (the "1995
OTEF Restructuring Plan") to restructure Oxford Tax Exempt Fund
Limited Partnership, a Maryland limited partnership ("OTEF, "
"Predecessor, " or "OTEF II's predecessor"). Oxford Tax Exempt
Fund II Corporation, a Maryland corporation, is the Managing
General Partner of OTEF II (the "Managing General Partner").
OTEF II Associates Limited Partnership, a Maryland limited
partnership, is the associate general partner of OTEF II
(together with the Managing General Partner, the "General
Partners").
Note 3. Significant Accounting Policies
Method of Accounting. OTEF II's financial statements are
prepared in accordance with generally accepted accounting
principles. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from
those estimates.
<PAGE> 19
- -----------------------------------------------------------------
Notes to Financial Statements
- -----------------------------------------------------------------
Income Taxes. No provision has been made for federal, state,
or local income taxes in the financial statements of OTEF II
since the Partners of OTEF II are required to report on their
individual tax returns their allocable share of taxable income,
gains, losses, deductions, and credits of OTEF II.
Valuation of Bonds. The Managing General Partner estimated at
June 30, 1998 that the fair value of the 12 Series A and Series B
Bonds, the two Existing MRBs and the New Assets was approximately
$261.8 million and, accordingly, OTEF II recorded a credit to
Partners' Capital in an amount equal to approximately $80.2
million of unrealized gain on investments. This represents an
increase of approximately $1.6 million since December 31, 1997.
The Managing General Partner determined these values using the
same cash flow methodology applied by a major investment banking
firm in connection with structuring advice rendered to OTEF II
and its predecessor with respect to the 1995 OTEF Restructuring
Plan. The Series A Bonds are valued at par based on comparable
municipal bond securities, the Existing MRBs and the Series B
Bonds are valued based on a discounted cash flow analysis. For
this purpose, the applicable cash flows are based on certain
assumptions concerning the Properties and the markets in which
they are located, including the timing and realization of such
cash flows. The New Assets are also valued at their original
purchase price at date of acquisition.
Net Income and Distributions per Beneficial Assignee Interest
(BAC) and SQB. Net income and distributions per BAC and net
income and distributions per Status Quo BAC ("SQB") are based
upon the weighted average number of BACs and SQBs outstanding
during the applicable period. On April 1, 1997 there were
7,499,875 BACs outstanding, and 314,675 BACs were converted to
12,587 SQBs, leaving 7,185,200 Liquidity BACs outstanding. During
1997, 5,494 SQBs were redeemed for a total cost of $3.0 million.
In the first six-month period of 1998, 147 SQBs were redeemed at
a cost of $0.08 million, including 45 SQBs during the second
quarter, leaving 6,946 SQBs outstanding at June 30, 1998.
Comprehensive Income. In June 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income" which requires
the reporting of comprehensive income as part of a full set of
financial statements. Comprehensive income includes both "Net
Income" and "Other Comprehensive Income". OTEF's only source of
"other comprehensive income" is related to the valuation of its
tax-exempt investments to market which results in unrealized
gains or losses previously charged to an equity account under
SFAS 115 "Accounting for Certain Investments in Debt and Equity
Securities". SFAS 130 does not require presentation of
comprehensive earnings per share. For the three month period
ended June 30, 1998, OTEF recorded "Other Comprehensive Income"
from unrealized gains on its investment in tax-exempt securities
of $1.5 million and $3.0 million for the same period in 1997.
For the six-month period ended June 30, 1998, OTEF recorded
<PAGE> 20
- -----------------------------------------------------------------
Notes to Finanacial Statements
- -----------------------------------------------------------------
"Other Comprehensive Income" from unrealized gains on it's
investments in tax exempt securities of $1.6 million and $5.4
million for the same period in 1997.
Statements of cash flows. The statements of cash flows are
intended to reflect only cash receipts and cash payment activity
during the reporting period. The statements do not reflect
investing and financing activity that affect recognized assets or
liabilities that do not result in cash receipts or cash payments
during such period, including distributions payable to Partners,
SQB Holders, and OTEF II BAC Holders of approximately $3.8
million at June 30, 1998 and $3.6 million at June 30, 1997.
Cash and cash equivalents. Cash and cash equivalents consist
of all demand deposits and tax-exempt money market funds stated
at cost, which approximates market value, with original
maturities of three months or less.
Accounting for Status Quo Interests. The SQBs are designed to
replicate, to the extent possible, the economic interest that the
holders of the SQBs (the "Status Quo BAC Holders") would have had
in the Existing MRBs, as refunded, if the partnership agreement
for Oxford Tax Exempt Fund Limited Partnership ("OTEF"), OTEF
II's predecessor, had continued to govern and the Liquidity and
Growth Plan was not implemented.
For financial statement purposes, the SQBs are treated as a
separate class of security and, accordingly, net income allocated
to SQB holders, net income per SQB, and distributions per SQB are
reflected separately from the OTEF II BAC Holders on the
Statement of Partners' Capital. The SQBs were not split as were
the OTEF II BACs on July 1, 1997. The redeemed SQBs are
reflected as a reduction of Partners' Capital and were offset
against the SQB Holders' interests when redeemed.
The SQB Holders do not share in the growth or other benefits
expected to be achieved under the Liquidity and Growth Plan. In
addition, the SQBs will not be allocated any capital losses for
federal income tax purposes that may result from the disposition
of the Refunding Bonds or interests therein or new assets in
connection with a financing undertaken pursuant to the Liquidity
and Growth Plan. Set forth below is a schedule of SQB income for
the three and six-months ended June 30, 1998:
<PAGE> 21
- -----------------------------------------------------------------
Notes to Financial Statements
- -----------------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------
STATEMENT OF STATUS QUO BAC INCOME
(in thousands, except per SQB interest amounts)
(Unaudited)
- -----------------------------------------------------------------
<CAPTION>
Three Months Six Months
Ended Ended June 30,
June 30, Pro Forma
-------------- -----------------
1998<F2> 1997 1998<F2> 1997<F1>
----------------------------------
<S> <C> <C> <C> <C>
Revenues
Interest on Bonds $ 103 $ 190 $ 212 $ 380
Other Interest 3 5 6 8
- -----------------------------------------------------------------
106 195 218 388
Expenses
Governance and Administration (13) (8) (34) (21)
Litigation expenses (1) (4) (2) (8)
- -----------------------------------------------------------------
Net income to SQB holders $ 93 $ 183 $ 182 $ 358
=================================================================
Other comprehensive income:
Unrealized gains on investment
in tax-exempt securities 35 126 38 226
=================================================================
Comprehensive income $ 128 $ 309 $ 220 $ 584
=================================================================
Weighted average SQB
shares outstanding 6,961 12,587 6,993 12,587
=================================================================
Net income per SQB interest $13.31 $14.54 $26.03 $28.48
=================================================================
Distribution per SQB interest $12.38 $11.90 $24.76 $23.64
=================================================================
<FN>
<F1> Since the SQBs were issued on April 1, 1997, there are no
actual comparative results of SQB operations for the three
months ended March 31, 1997. This Pro Forma presentation
includes the SQB holders' earnings for the first quarter
of 1997, before their Beneficial Assignee Certificates
(BACs) were converted to SQBs.
<F2> The Information Memorandum states that, subject to receipt
of a fairness opinion from OTEF II's independent real
estate consultant, all outstanding SQBs will be purchased
or redeemed by OTEF II at such time as the Managing
General Partner believes that it would be in the best
<PAGE> 22
- ----------------------------------------------------------------
Notes to Financial Statements
- ----------------------------------------------------------------
<F2> (continued)
interests of OTEF II and the holders of the non-tendered
SQBs, but in no event later than December 31, 2006, which
date may be extended under certain circumstances. The
purchase or redemption price will be the fair market value
of the Status Quo Assets at the time of purchase or
redemption, less the costs of sale. The Managing General
Partner has undertaken an analysis of whether such a
purchase or redemption by OTEF II would be in the best
interests of the SQB Holders and OTEF II at the present
time and, in connection therewith, is reviewing all
ownership attributes of the SQBs. The Managing General
Partner expects to complete its analysis later this year.
</FN>
</TABLE>
Note 4. Related Party Transactions
Interests in OTEF II and the Operating Partnerships. The
General Partners own interests in OTEF II that entitle them to
receive a share of OTEF II's cash flow and possibly of sale,
refinancing and liquidation proceeds. Distributions to the
General Partners totaled approximately $0.08 million for the six
months ended June 30, 1998 and 1997.
Affiliates of the Managing General Partner that are general
and limited partners of the various real estate-owning limited
partnerships (collectively, the "Operating Partnerships") whose
property collateralizes or secures the tax-exempt bonds held by
OTEF II have an interest in the Operating Partnerships that
entitles them to receive a share of any cash flow and sale,
refinancing and liquidation proceeds of the Operating
Partnerships. In addition, in connection with the 1995 OTEF
Restructuring Plan and after the Existing MRBs are refunded, cash
flow attributable to these interests with respect to the 14
original Operating Partnerships is pledged for the benefit of
OTEF II to secure the repayment of the Refunding Bonds and
interest thereon.
Compensation and Fees. For the six-month periods ended June
30, 1998 and 1997, certain of the Operating Partnerships paid
ORFG total asset management fees of approximately $0.38 million
and $0.30 million, respectively. During the six-month periods
ended June 30, 1998 and 1997, the Operating Partnerships also
paid ORFG, in the aggregate, approximately $0.35 million of fees
pursuant to the OTEF Restructuring Plan Administration/Asset
Management Fee Agreement, which amount is equal to 0.25% per
annum of the principal amount of the Existing MRBs and Refunding
Bonds collateralized by the properties owned by the related
Operating Partnerships.
<PAGE> 23
- -----------------------------------------------------------------
Notes to Financial Statements
- -----------------------------------------------------------------
In connection with OTEF II's investment in New Assets, ORFG is
entitled to an acquisition fee of 1-2.5% of the purchase price
(depending on the type of transaction) for finding, analyzing and
acquiring New Assets, which is payable on the closing of any
transaction in which OTEF II acquires a New Asset. OTEF II also
will pay ORFG an annual advisory fee equal to 0.5% of the
purchase price for managing OTEF II's New Assets after their
acquisition.
For the six month period ended June 30, 1998, OTEF II had paid or
accrued approximately $0.35 million in acquisition fees and $0.09
million in advisory fees paid or payable to ORFG. Acquisition
fees are treated as deferred costs associated with the
acquisition and are amortized over 10 years. Advisory fees are
deducted as period costs.
Expense Reimbursements. The Operating Partnerships and OTEF
II also reimburse ORFG for certain expenses it incurs in
providing services with respect to (i) the Existing Mortgaged
Properties, (ii) the investment in New Assets, (iii) the sale or
disposition of the Refunding Bonds, and (iv) the administration
of OTEF II's affairs. Total reimbursements to the General
Partners and their affiliates for the six-month period ended June
30, 1998 and 1997, were approximately $0.285 million (of which
$0.128 million amount is included in Liquidity & Growth expenses)
and $0.117 million, respectively. Such reimbursable amount is
determined based on the actual time the officers and employees
devote to OTEF II based upon their respective salaries.
Incentive Option Plan. On May 21, 1997, OTEF II adopted an
incentive option plan (the "1997 Incentive Option Plan") in order
for the Managing General Partner to attract and retain key
employees and advisers. The Incentive Option Plan authorizes the
granting to the directors, officers and employees of the Managing
General Partner and certain affiliates of options to purchase
652,125 OTEF II BACs (on a post-split basis), representing
approximately 8.3% of the outstanding OTEF II BACs on a fully
diluted basis. Such options are exercisable for 10 years. As of
August 18, 1997 the Managing General Partner had granted all of
the OTEF II BAC options authorized under the terms of the
Incentive Option Plan. Of the 652,125 options, 613,000 were
vested immediately, 13,000 were vested as of January 1, 1998 and
26,083 are vested equally over 2 years commencing January 1,
1999. The exercise price for all options is $23.88 per BAC, which
was equal to the 20-day average market price of the Liquidity
BACs at the date the options were granted.
Note 5. Subsequent Events.
Distributions: On August 14, 1998, the Managing General
Partner paid a distribution of $0.51 per Liquidity BAC and $12.38
per SQB to holders of record as of June 30, 1998.
<PAGE> 24
- -----------------------------------------------------------------
Instructions for Investors who wish to reregister or transfer
OTEF II BACs or SQBs
- -----------------------------------------------------------------
On July 22, 1997, the American Stock Exchange began trading
OTEF II BACs under the ticker symbol, OTF. Please follow the
instructions below to expedite the reregistration or transfer of
ownership of any OTEF II BACs or Status Quo BACs ("SQB") that you
may own.
IF YOU DO NOT HOLD CERTIFICATES
Your shares are being held by your brokerage firm in "street
name". To register a change of ownership of OTEF II BACs held
in such accounts, please have your account representative or
financial consultant request the necessary transfer documents.
YOU MUST HAVE THE PROPER TRANSFER DOCUMENTS FROM YOUR
BROKERAGE FIRM. Additionally, please contact your account
representative or financial consultant for address changes.
IF YOU HOLD CERTIFICATES
Effective July 1, 1997, OTEF II appointed Registrar and
Transfer Company ("R&T") as the sole registrar and transfer
agent with respect to the OTEF II BACs and SQBs.
All notices, claims, certificates, requests, demands and other
communications relating to transfers of OTEF II BACs and SQBs
should be sent to:
Registrar and Transfer Company
Attn: William Tatler, Vice President
Stock Transfer Department
10 Commerce Drive
Cranford, NJ 07016
All phone calls relating to such transfers should be directed to:
Registrar and Transfer Company
Stock Transfer Department
1-800-368-5948
GENERAL INFORMATION
All general inquiries relating to OTEF II should be directed
to OTEF II Investor Services at 1-888-321-OTEF.
The Quarterly Report on Form 10-Q for the quarter ended June
30, 1998, filed with the Securities and Exchange Commission,
is available to SQB and OTEF II BAC Holders and may be
obtained by writing:
Investor Services
Oxford Tax Exempt Fund II Limited Partnership
7200 Wisconsin Avenue, 11th Floor
Bethesda, Maryland 20814
1-888-321-OTEF
ALSO VISIT OUR WEB SITE AT WWW.OTEF.COM
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at June 30, 1998 (Unaudited) and the Statements of Income
for the six months ended June 30, 1998 (Unaudited) and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 16,517
<SECURITIES> 272,529
<RECEIVABLES> 1,594
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,073
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 291,713
<CURRENT-LIABILITIES> 51,911
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 239,802
<TOTAL-LIABILITY-AND-EQUITY> 291,713
<SALES> 0
<TOTAL-REVENUES> 10,661
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,653
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,008
<EPS-PRIMARY> 1.20
<EPS-DILUTED> 1.18
</TABLE>
