<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, 1999
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 July 27, 1999.
Page 1 of 8 Sequentially Numbered Pages
<PAGE> 2
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
AS OF JUNE 30, 1999, AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
June 30,
1999 December 31,
(Unaudited) 1998
----------- -----------
<S> <C> <C>
ASSETS:
Land Held for Sale $ 6,534,310 $ 6,534,310
Cash and Cash Equivalents 3,352 849
Other 37,227 37,227
----------- -----------
$ 6,574,890 $ 6,572,386
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT):
Accrued Liabilities $ 203,413 $ 183,879
Note Payable 175,000 170,655
----------- -----------
378,413 354,534
----------- -----------
Class A Limited Partners' Interest 6,196,532 6,217,905
Subordinated Limited Partners' Interest 88 88
General Partners' Interest (143) (141)
----------- -----------
6,196,477 6,217,852
----------- -----------
$ 6,574,890 $ 6,572,386
=========== ===========
</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,
1999 1998 1999 1998
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCOME:
Interest Income $ 19 $ 30 $ 42 $ 53
-------- -------- -------- --------
19 30 42 53
EXPENSES:
Property Taxes 47 43 94 87
Insurance Expense 356 351 356 351
Professional and Legal Fees 1,240 7,516 7,905 7,516
General and Administrative Costs 2,953 4,627 4,878 4,874
Interest Expense 4,514 2,718 8,184 6,439
-------- -------- -------- --------
9,110 15,255 21,417 19,268
-------- -------- -------- --------
NET LOSS $ (9,091) $(15,225) $(21,375) $(19,215)
======== ======== ======== ========
NET LOSS ALLOCATION:
General Partners (1) (2) (2) (2)
Class A Limited Partners (9,090) (15,223) (21,373) (19,213)
-------- -------- -------- --------
$ (9,091) $(15,225) $(21,375) $(19,215)
======== ======== ======== ========
CLASS A LIMITED PARTNERSHIP
UNITS OUTSTANDING 7,650 7,650 7,650 7,650
-------- -------- -------- --------
NET LOSS PER CLASS A UNIT $ (1.19) $ (1.99) $ (2.79) $ (2.51)
======== ======== ======== ========
</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, 1999, AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Subordinated
General Limited Limited
Partners Partners Partner Total
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
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
=========== =========== =========== ===========
Partners' Equity (Deficit)
at December 31, 1998 $ (141) $ 6,217,905 $ 88 $ 6,217,852
Net Loss for the Six Months
Ended June 30, 1999 (2) (21,373) 0 (21,375)
----------- ----------- ----------- -----------
Partners' Equity (Deficit)
at June 30, 1999 $ (143) $ 6,196,532 $ 88 $ 6,196,477
=========== =========== =========== ===========
</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, 1999, AND 1998
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1999 June 30, 1998
(Unaudited) (Unaudited)
------------- -------------
<S> <C> <C>
CASH FLOW FROM OPERATING
ACTIVITIES:
Net Loss $(21,375) $(19,215)
Adjustments to reconcile net loss to net
cash used for operations:
Increase in Accrued Liabilities 19,534 3,809
-------- --------
Net Cash Used for Operating Activities (1,841) (15,406)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Note Payable 4,345 12,324
-------- --------
Net Cash Provided by Financing Activities 4,345 12,324
Increase (Decrease) in Cash and Cash Equivalents 2,503 0
Cash and Cash Equivalents at Beginning
of Period 849 0
-------- --------
Cash and Cash Equivalents at End of Period $ 3,352 $ 0
======== ========
</TABLE>
See Notes to Condensed Financial Statements
5
<PAGE> 6
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1999
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, 1999, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999.
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 May 13, 1999, 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 May 13, 1999, 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, 1999, the Registrant had $3,352 on hand in the form of cash and
cash equivalents. The Registrant has executed a note payable to the General
Partner in the amount of $175,000. The general partner plans to continue to fund
the operating cost of the Partnership through additional advances under the
note. The note will extend through the term of the partnership and accrue
interest at prime plus two 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.
2. RESULTS OF OPERATIONS
The Registrant's net loss was $21,375 for the six months ended June 30, 1999 as
compared to $19,215 for the six months ended June 30, 1998. The change is
primarily due to the following:
Professional and legal fees increased from $7,516 as of June 30, 1998, to $7,905
for the six months ended June 30, 1999. Higher accounting fees were paid for the
annual audit and tax returns. General and administrative costs are in line with
1998 expenses. Interest expense increased from $6,439 for the six months ended
June 30, 1998,
6
<PAGE> 7
to $8,184 for the six months ended June 30, 1999. This increase reflects
interest paid on a higher principal balance. All other costs were comparable
with the 1998 figures.
The Year 2000 Issue
The Registrant determined that the potential consequences of year 2000 will not
have a material effect on business, results of operations, or financial
condition. This conclusion was reached after researching computer programs and
third party vendors that are currently used to manage this limited partnership.
The Registrant is not solely reliant upon outside systems or vendors for record
keeping. Information is on file in our offices which states that existing
computer software is Y2K compliant and that the third party vendor is Y2K
compliant. The computer hardware and peripherals located in the Registrant's
offices are also Y2K ready.
If necessary, the Registrant can revert to manual methods for bookkeeping, check
writing, preparation of financial statements and investor correspondence. Hard
copies of essential information are available and will continue to be available
well into the year 2000.
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. There were no matters submitted for vote during the quarter covered by
this report.
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 at
$8,866,000 in aggregate.
Effective April 1, 1999, Interstate/Johnson Lane merged into Wachovia
Corporation and officially changed its name to Wachovia Securities, Inc. The
Registrant will be an affiliate of Wachovia Securities, Inc., but not be part of
Wachovia Corporation's banking subsidiary. Personnel and offices will continue
to operate as usual.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
EX-27 FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY)
7
<PAGE> 8
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed during the
six months ended June 30, 1999.
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: JULY 27, 1999
-----------------------
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
SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,352
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,352
<PP&E> 6,534,310
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,574,890
<CURRENT-LIABILITIES> 203,413
<BONDS> 175,000
0
0
<COMMON> 0
<OTHER-SE> 6,196,477
<TOTAL-LIABILITY-AND-EQUITY> 6,574,890
<SALES> 0
<TOTAL-REVENUES> 42
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,233
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,184
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,375)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
