<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
for Quarterly Period Ended March 31, 1997
Commission file number 33-30312
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
NORTH CAROLINA 56-1681116
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Interstate Tower
P. O. Box 1012
Charlotte, NC 28201-1012
(Address of principal executive offices)
(Zip Code)
(704) 379-9164
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
7,650 limited partnership units outstanding at April 30, 1997
Page 1 of 8 Sequentially Numbered Pages
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
AS OF MARCH 31, 1997, AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
March 31,
1997 December 31,
(Unaudited) 1996
----------- -----------
<S> <C> <C>
ASSETS:
Land Held for Sale $ 6,534,310 $ 6,534,310
Cash and Cash Equivalents 2,259 0
Other 33,372 32,842
----------- -----------
$ 6,569,941 $ 6,567,152
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT):
Checks Written in Excess of Recorded Bank Balance $ 0 $ 95
Accrued Liabilities 136,972 129,351
Note Payable 136,155 127,656
----------- -----------
273,127 257,102
----------- -----------
Class A Limited Partners' Interest 6,296,857 6,310,092
Subordinated Limited Partners' Interest 90 90
General Partners' Interest (133) (132)
----------- -----------
6,296,814 6,310,050
----------- -----------
$ 6,569,941 $ 6,567,152
=========== ===========
</TABLE>
See Notes to Condensed Financial Statements
2
<PAGE> 3
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
March 31, March 31,
1997 1996
(Unaudited) (Unaudited)
-------- --------
<S> <C> <C>
INCOME:
Interest Income $ 554 $ 544
-------- --------
554 544
EXPENSES:
Professional and Legal Fees 8,757 9,670
Property Tax Expense 44 44
Insurance Expense 146 146
General and Administrative Costs 1,464 923
Interest Expense 3,379 3,012
-------- --------
$ 13,790 $ 13,795
-------- --------
NET LOSS (13,236) (13,251)
======== ========
NET LOSS ALLOCATION:
General Partners (1) (1)
Class A Limited Partners (13,235) (13,250)
-------- --------
($13,236) ($13,251)
======== ========
CLASS A LIMITED PARTNERSHIP
UNITS OUTSTANDING 7,650 7,650
-------- --------
NET LOSS PER CLASS A UNIT ($ 1.73) ($ 1.73)
======== ========
</TABLE>
See Notes to Condensed Financial Statements
3
<PAGE> 4
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
Subordinated
General Limited Limited
Partners Partners Partner Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Partners' Equity (Deficit)
at December 31, 1995 ($ 128) $ 6,354,010 $ 91 $ 6,353,973
Net Loss for the Three Months
Ended March 31, 1996 (1) (13,250) 0 (13,251)
----------- ----------- ----------- -----------
Partners' Equity (Deficit)
at March 31, 1996 ($ 129) $ 6,340,760 $ 91 $ 6,340,722
=========== =========== =========== ===========
Partners' Equity (Deficit)
at December 31, 1996 ($ 132) $ 6,310,092 $ 90 $ 6,310,050
Net Loss for the Three Months
Ended March 31, 1997 (1) (13,235) 0 (13,236)
----------- ----------- ----------- -----------
Partners' Equity (Deficit)
at March 31, 1997 ($ 133) $ 6,296,857 $ 90 $ 6,296,814
=========== =========== =========== ===========
</TABLE>
See Notes to Condensed Financial Statements
4
<PAGE> 5
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
(Unaudited) (Unaudited)
-------------- --------------
<S> <C> <C>
CASH FLOW FROM OPERATING
ACTIVITIES:
Net Loss ($13,236) ($13,251)
Adjustments to reconcile net loss to net
cash used for operations:
Increase in Accrued Liabilities 7,621 7,275
Increase in Other Assets (530) (530)
-------- --------
7,091 6,745
Net Cash Used for Operating Activities (6,145) (6,506)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Note Payable 8,499 10,000
-------- --------
Net Cash Provided by Financing Activities 8,499 10,000
Increase in Cash and Cash Equivalents 2,354 3,494
Cash and Cash Equivalents at Beginning
of Period 0 591
-------- --------
Cash and Cash Equivalents at End of Period $ 2,354 $ 4,085
======== ========
</TABLE>
See Notes to Condensed Financial Statements
5
<PAGE> 6
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1997
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the 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) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 1997, are not
necessarily indicative of the results that may be expected for the year to end
December 31, 1997.
2. ORGANIZATION:
Interstate Land Investors II Limited Partnership ("Registrant" or "Partnership")
is a North Carolina limited partnership. The Partnership filed registration
statements in 1989 and 1990 and offered the sale of the limited partnership
interests to persons who were admitted as limited partners. The initial offering
became effective September 29, 1989, and was terminated November 3, 1989. The
post effective amendment was filed in August 1990, approved in November 1990,
and closed November 30, 1990. Capital contributions of $100 were received from
the general partners and $7,650,000 from the limited partners. The limited
partnership units were sold in $1,000 units. On April 30, 1997, there were 772
unit holders of record. The Partnership's business now consists of holding for
investment, disposing and otherwise dealing in 145 acres of undeveloped land
("the Property") located in York County, South Carolina. As of April 30, 1997,
the Partnership held all 145 acres of the Property.
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. Liquidity and Capital Resources
As of March 31, 1997, the Registrant had $2,259 on hand in the form of cash and
cash equivalents. These funds will be maintained as working capital reserves to
fund the costs of ad valorem taxes, insurance, administrative expenses and other
costs and expenses associated with owning the Property. The Registrant
anticipates that it will incur operating expenses during 1997 in excess of the
cash and cash equivalents on hand as of March 31, 1997. The Registrant has
executed a note payable to the General Partner in the amount of $150,000 which
will provide any additional funds needed for working capital. The note will
extend through the term of the partnership and accrue interest at prime plus two
percent.
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Until the Registrant disposes of the Property, its only sources of additional
capital are loans.
2. Results of Operations
The Registrant's net loss decreased from $13,251 for the three months ended
March 31, 1996, to $13,236 for the three months ended March 31, 1997. The change
is primarily due to the following:
Interest expense increased $367 due to the increased outstanding balance on the
note payable. Professional and legal fees decreased $913 due to a timing
difference in payments made for tax and audit services. General and
administrative costs increased $541 due to one time expenses related to a change
in the Partnership's reporting service.
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In May, 1996, the Partnership filed a Complaint in the General Court of
Justice, Superior Court Division against William Garith Allen, a General
Partner, seeking in the alternative, damages for Mr. Allen's failure to purchase
the Property at the Put Price or an order, in accordance with the provisions of
the Partnership Agreement, that Mr. Allen has forfeited his right to a
distribution as the subordinated Limited Partner, that Mr. Allen is required to
withdraw as a General Partner and transfer his general partnership interest to
ISCR, and that he is required to cause Performance Investments Inc. to withdraw
as a general partner and transfer its general partnership interest to ISCR. In
the alternative, the Partnership is seeking damages equal to the difference
between the current value of the Property and the Put Price. The lawsuit is in
the preliminary discovery stage. Mr. Allen has not asserted any claims against
the Partnership and the Partnership believes that its claims against Mr. Allen
have merit. Mr. Allen has asserted that he is insolvent and will be unable to
satisfy any award that the Partnership may recover. The Partnership is
investigating that assertion and will continue to evaluate the claim and the
likelihood of any recovery based upon the information received from Mr. Allen.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
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Item 4. Submissions of Matters to a vote of Securities Holders
None. There were no matters submitted for vote during the quarter
covered by this report.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
EX-27 FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY)
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed during the
three months ended March 31, 1997.
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERSTATE LAND INVESTORS II
LIMITED PARTNERSHIP
(Registrant)
BY: /s/ J. Christopher Boone
--------------------------------------------
J. Christopher Boone
ISC Realty Corporation,
General Partner and Principal Executive
Officer, Principal Financial Officer of the
Registrant
DATE: May 10, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF INTERSTATE LAND INVESTORS II FOR THE THREE MONTHS ENDED
MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,259
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,259
<PP&E> 6,534,310
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,569,941
<CURRENT-LIABILITIES> 273,127
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,296,814
<TOTAL-LIABILITY-AND-EQUITY> 6,569,941
<SALES> 0
<TOTAL-REVENUES> 554
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,411
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,379
<INCOME-PRETAX> (13,236)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,236)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,236)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
