<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 September 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 November 8, 1998
Page 1 of 8 Sequentially Numbered Pages
<PAGE> 2
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
Condensed Balance Sheets
As of September 30, 1998 and December 31, 1997
<TABLE>
<CAPTION>
September 30,
1998 December 31,
(Unaudited) 1997
----------- -----------
<S> <C> <C>
ASSETS:
Land Held for Sale $ 6,534,310 $ 6,534,310
Cash and Cash Equivalents 1,221 0
Other 34,962 34,962
----------- -----------
$ 6,570,493 $ 6,569,272
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT):
Accrued Liabilities $ 170,331 $ 158,975
Note Payable 164,655 142,331
----------- -----------
334,986 301,306
----------- -----------
Class A Limited Partners' Interest 6,235,557 6,268,013
Subordinated Limited Partners' Interest 89 89
General Partners' Interest (139) (136)
----------- -----------
6,235,507 6,267,966
----------- -----------
$ 6,570,493 $ 6,569,272
=========== ===========
</TABLE>
See attached notes to the condensed financial statements
2
<PAGE> 3
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
Condensed Statements of Operations
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCOME:
Interest Income $ 47 $ 568 $ 99 $ 1,700
-------- -------- -------- --------
47 568 99 1,700
EXPENSES:
Property Taxes 44 45 131 132
Insurance Expense 0 145 351 437
Professional and Legal Fees 1,291 5,281 8,807 23,049
General and Administrative Costs 1,290 405 8,881 1,558
Interest Expense 10,667 3,804 14,389 10,893
-------- -------- -------- --------
13,291 9,680 32,559 36,069
NET LOSS ($13,244) ($ 9,112) ($32,459) ($34,369)
NET LOSS ALLOCATION:
General Partners ($ 1) ($ 1) ($ 3) ($ 3)
Class A Limited Partners (13,243) (9,111) (32,456) (34,366)
-------- -------- -------- --------
(13,244) (9,112) (32,459) (34,369)
======== ======== ======== ========
CLASS A LIMITED PARTNERSHIP
UNITS OUTSTANDING 7,650 7,650 7,650 7,650
-------- -------- -------- --------
NET LOSS PER CLASS A UNIT ($ 1.73) ($ 1.19) ($ 4.24) ($ 4.49)
======== ======== ======== ========
</TABLE>
See attached notes to the condensed financial statements
3
<PAGE> 4
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
Condensed Statements of Partners' Equity (Deficit)
For the Nine Months Ended September 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 ($124) $ 6,310,092 $92 $ 6,310,050
Net Loss for the Nine Months
Ended September 30, 1997 (3) (34,366) 0 (34,369)
----- ----------- --- -----------
Partners' Equity (Deficit)
at September 30, 1997 ($127) $ 6,275,726 $92 $ 6,275,681
===== =========== === ===========
Partners' Equity (Deficit)
at December 31, 1997 ($136) $ 6,268,013 $89 $ 6,267,966
Net Loss for the Nine Months
Ended September 30, 1998 (3) (32,456) 0 (32,459)
----- ----------- --- -----------
Partners' Equity (Deficit)
at September 30, 1998 ($139) $ 6,235,557 $89 $ 6,235,507
===== =========== === ===========
</TABLE>
See attached notes to the condensed financial statements
4
<PAGE> 5
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
Condensed Statements of Cash Flows
For the Nine Months Ended September 30, 1998 and 1997
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1997
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss ($32,459) ($34,369)
Adjustments to reconcile net loss to net cash used for operations:
Increase in Property Taxes Payable 131 132
Increase in Accrued Liabilities 11,356 3,626
Increase in Other Assets 0 0
-------- --------
Net Cash Used for Operating Activities (20,973) (30,611)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Note Payable 22,324 14,499
-------- --------
Net Cash Provided by Financing Activities 22,324 14,499
-------- --------
Increase in Cash and Cash Equivalents 1,221 1,713
Cash and Cash Equivalents at Beginning
of Period 0 0
-------- --------
Cash and Cash Equivalents at End of Period $ 1,221 $ 1,713
======== ========
</TABLE>
See attached notes to the condensed financial statements
5
<PAGE> 6
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
September 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 nine month period ended September 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 November 1, 1998, 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 September 30, 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 September 30, 1998, the Registrant had $1,221 on hand in the form of cash
and cash equivalents. The Registrant increased its funding available 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
For the nine months ended September 30, 1998, the Partnership reported a net
loss of $32,459 as compared to a net loss of $34,369 for the nine months ended
September 30, 1997.
The Registrant incurred total expenses of $32,559 for the nine month period,
compared to $36,069 for the same period in 1997. Interest expense increased from
$10,893 for the nine months ended September 30, 1997, to $14,389 for the same
period in 1998. Interest expense for the current quarter was $10,667 compared to
$3,804 for the same quarter in 1997. This increase reflects interest for both
the current quarter and interest from the June 30, 1998, quarter not previously
accrued. General and administrative expenses were $8,881 for the nine months
ended September 30, 1998, up from $1,558 for the same period in 1997, which
increase reflects the cost of separate studies performed to evaluate the current
market value and environmental conditions in the area of the property. This
increase is favorably offset by the decrease in Professional and legal expenses
from $23,049 in 1997 to $8,807 for the current period, which decrease results
from the termination of the legal proceedings against William G. Allen.
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.
On October 31, 1998, the Partnership entered into a listing agreement
with The Crosland Group to sell the property. The property is listed for sale
as follows: Tract #2 and #3 (97 acres) at $45,000 per acre, Tract #1A (17
acres) at $125,000 per acre and Tract #1D (33 acres) at $6,000 per unit (12
units per acre).
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
nine months ended September 30, 1998.
7
<PAGE> 8
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
By: ISC REALTY CORPORATION
As Principal Executive Officer,
Principal Financial Officer, and
Principal Accounting Officer of
the Registrant
By: /S/ J. Christopher Boone
----------------------------------
J. Christopher Boone
President
Date: November 11, 1998
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,221
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,534,310
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,570,493
<CURRENT-LIABILITIES> 334,986
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,235,507
<TOTAL-LIABILITY-AND-EQUITY> 6,570,493
<SALES> 0
<TOTAL-REVENUES> 99
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,170
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,389
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32,459)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
