<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 June 30, 1998
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.)
IJL Financial Center, 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 August 10, 1998
Page 1 of 8 Sequentially Numbered Pages
<PAGE> 2
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
Condensed Balance Sheets
As of June 30, 1998, and December 31, 1997
<TABLE>
<CAPTION>
June 30,
1998 December 31,
(Unaudited) 1997
----------- -----------
<S> <C> <C>
ASSETS:
Land Held for Sale $ 6,534,310 $ 6,534,310
Cash and Cash Equivalents 0 0
Other 34,962 34,962
----------- -----------
$ 6,569,272 $ 6,569,272
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT):
Checks Written in Excess of Recorded Bank Balance $ 3,082 $ 0
Accrued Liabilities 162,784 158,975
Note Payable 154,655 142,331
----------- -----------
320,521 301,306
----------- -----------
Class A Limited Partners' Interest 6,248,800 6,268,013
Subordinated Limited Partners' Interest 89 89
General Partners' Interest (138) (136)
----------- -----------
6,248,751 6,267,966
----------- -----------
$ 6,569,272 $ 6,569,272
=========== ===========
</TABLE>
See Notes to Condensed Financial Statements
2
<PAGE> 3
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
Condensed Statements of Operations
<TABLE>
<CAPTION>
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCOME:
Interest Income $ 30 $ 578 $ 53 $ 1,132
-------- -------- -------- --------
30 578 53 1,132
EXPENSES:
Property Taxes 43 43 87 87
Insurance Expense 351 146 351 292
Professional and Legal Fees 7,516 7,546 7,516 17,768
General and Administrative Costs 4,627 1,153 4,874 1,153
Interest Expense 2,718 3,710 6,439 7,089
-------- -------- -------- --------
15,255 12,598 19,268 26,389
-------- -------- -------- --------
NET LOSS ($15,225) ($12,020) ($19,215) ($25,257)
======== ======== ======== ========
NET LOSS ALLOCATION:
General Partners (2) (1) (2) (3)
Class A Limited Partners (15,223) (12,019) (19,213) (25,254)
-------- -------- -------- --------
($15,225) ($12,020) ($19,215) ($25,257)
======== ======== ======== ========
CLASS A LIMITED PARTNERSHIP
UNITS OUTSTANDING 7,650 7,650 7,650 7,650
-------- -------- -------- --------
NET LOSS PER CLASS A UNIT ($ 1.99) ($ 1.57) ($ 2.51) ($ 3.30)
======== ======== ======== ========
</TABLE>
See Notes to Condensed Financial Statements
3
<PAGE> 4
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
Condensed Statements of Partners' Equity (Deficit)
For the Six Months Ended June 30, 1998, and 1997
(Unaudited)
<TABLE>
<CAPTION>
Subordinated
General Limited Limited
Partners Partners Partner Total
-------- -------- ------- -----
<S> <C> <C> <C> <C>
Partners' Equity (Deficit)
at December 31, 1996 ($132) $ 6,310,092 $90 $ 6,310,050
Net Loss for the Six Months
Ended June 30, 1997 (3) (25,254) 0 ($ 25,257)
----- ----------- --- -----------
Partners' Equity (Deficit)
at June 30, 1997 ($135) $ 6,284,838 $90 $ 6,284,793
===== =========== === ===========
Partners' Equity (Deficit)
at December 31, 1997 ($136) $ 6,268,013 $89 $ 6,267,966
Net Loss for the Six Months
Ended June 30, 1998 (2) (19,213) 0 ($ 19,215)
----- ----------- --- -----------
Partners' Equity (Deficit)
at June 30, 1998 ($138) $ 6,248,800 $89 $ 6,248,751
===== =========== === ===========
</TABLE>
See Notes to Condensed Financial Statements
4
<PAGE> 5
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
Condensed Statements of Cash Flows
For the Six Months Ended June 30, 1998, and 1997
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1998 June 30, 1997
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
CASH FLOW FROM OPERATING
ACTIVITIES:
Net Loss $19,215 $ 25,257
Adjustments to reconcile net loss to net
cash used for operations:
Increase in Accrued Liabilities 3,809 15,222
Increase in Other Assets 0 (1,060)
------- --------
Net Cash Used for Operating Activities 23,024 39,419
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Note Payable 12,324 14,499
------- --------
Net Cash Provided by Financing Activities 12,324 14,499
Increase (Decrease) in Cash and Cash Equivalents 0 53,918
Cash and Cash Equivalents at Beginning
of Period 0 (95)
------- --------
Cash and Cash Equivalents at End of Period $ 0 $ 53,823
======= ========
</TABLE>
See Notes to Condensed Financial Statements
5
<PAGE> 6
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1998
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 six month period ended June 30, 1998, are not
necessarily indicative of the results that may be expected for the year to end
December 31, 1998.
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 August 10, 1998, there were 774
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 July 31, 1998,
the Partnership held all 145 acres of the Property.
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. Liquidity and Capital Resources
As of June 30, 1998, the Registrant had written checks for $3,082 in excess of
recorded bank balance. Subsequent to June 30, 1998, the Registrant increased its
funding under its note payable to the General Partner to $175,000. This note
will provide any additional funds needed for working capital and will extend
through the term of the partnership, accruing interest at prime plus one
percent.
Until the Registrant disposes of the Property, its only sources of additional
capital are additional loans and proceeds from the sale of resources on the
property.
6
<PAGE> 7
2. Results of Operations
The Registrant's net loss decreased from $25,254 for the six months ended June
30, 1997, to $19,215 for the six months ended June 30, 1998. The change is
primarily due to the following:
Interest income decreased by $1,079 due to deficit bank balance. Professional
and legal fees decreased $10,252 due to savings in tax and audit services.
General and administrative expenses were $3,721 higher due to the cost of annual
report mailings. Interest expense was decreased by $650 due to the better
interest rate calculated on the outstanding balance of the note payable. All
other costs were in line with the 1997 second quarter.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submissions of Matters to a vote of Securities Holders
None.
Item 5. Other Information.
None.
7
<PAGE> 8
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
six months ended June 30, 1998.
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: August 10, 1998
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF INTERSTATE LAND INVESTORS II FOR THE SIX MONTHS ENDED
JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,534,310
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,569,272
<CURRENT-LIABILITIES> 3,082
<BONDS> 154,655
0
0
<COMMON> 0
<OTHER-SE> 6,248,751
<TOTAL-LIABILITY-AND-EQUITY> 6,569,272
<SALES> 0
<TOTAL-REVENUES> 53
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,829
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,439
<INCOME-PRETAX> (19,215)
<INCOME-TAX> 0
<INCOME-CONTINUING> (19,215)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,215)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
