<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, 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 November 10, 1999
Page 1 of 9 Sequentially Numbered Pages
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
AS OF SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
September 30,
1999 December 31,
(Unaudited) 1998
------------- ------------
ASSETS:
Land Held for Sale $6,534,310 $6,534,310
Cash and Cash Equivalents 1,262 849
Other 37,227 37,227
----------- ----------
$6,572,799 $6,572,386
=========== ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT):
Accrued Liabilities 208,218 183,879
Note Payable 175,000 170,655
----------- ----------
383,218 354,534
----------- ----------
Class A Limited Partners' Interest 6,189,636 6,217,905
Subordinated Limited Partners' Interest 88 88
General Partners' Interest (144) (141)
----------- ----------
6,189,581 6,217,852
----------- ----------
$6,572,799 $6,572,386
=========== ==========
See attached notes to the condensed financial statements.
2
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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,
1999 1998 1999 1998
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
INCOME:
Interest Income $38 $47 $80 $99
---------- ---------- ---------- ----------
38 47 80 99
EXPENSES:
Property Taxes 0 44 94 131
Insurance Expense 0 0 356 351
Professional and Legal Fees 32 1,291 7,937 8,807
General and Administrative Costs 1,527 1,290 6,404 8,881
Interest Expense 5,376 10,667 13,560 14,389
---------- ---------- ---------- ----------
6,934 13,291 28,351 32,559
NET LOSS ($6,896) ($13,244) ($28,271) ($32,459)
NET LOSS ALLOCATION:
General Partners ($1) ($1) ($3) ($3)
Class A Limited Partners (6,896) (13,243) (28,269) (32,456)
---------- ---------- ---------- ----------
(6,896) (13,244) (28,271) (32,459)
========== ========== ========== ==========
CLASS A LIMITED PARTNERSHIP
UNITS OUTSTANDING 7,650 7,650 7,650 7,650
---------- ---------- ---------- ----------
NET LOSS PER CLASS A UNIT ($0.90) ($1.73) ($3.70) ($4.24)
========== ========== ========== ==========
</TABLE>
See attached notes to the condensed financial statements.
3
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 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 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
=============== ================ ============== ================
Partners' Equity (Deficit)
at December 31, 1998 ($141) $6,217,905 $88 $6,217,852
Net Loss for the Nine Months
Ended September 30, 1999 (3) (28,269) 0 (28,271)
--------------- ---------------- -------------- ----------------
Partners' Equity (Deficit)
at September 30, 1999 ($144) $6,189,636 $88 $6,189,581
=============== ================ ============== ================
</TABLE>
See attached notes to the condensed financial statements.
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Nine Months Nine Months
Ended Ended
September 30, September 30,
1999 1998
(Unaudited) (Unaudited)
------------- -------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss ($28,271) ($23,742)
Adjustments to reconcile net loss to net
cash used for operations:
Increase in Property Taxes Payable 94 131
Increase in Accrued Liabilities 5,883 11,356
----------- -----------
Net Cash Used for Operating Activities (22,294) (12,255)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Note Payable 4,345 22,324
----------- -----------
Net Cash Provided by Financing Activities 4,345 22,324
----------- -----------
Increase in Cash and Cash Equivalents 413 1,221
Cash and Cash Equivalents at Beginning
of Period 849 849
----------- -----------
Cash and Cash Equivalents at End of Period $1,262 $2,070
=========== ===========
See attached notes to the condensed financial statements.
5
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 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 nine month period ended September 30, 1999, are not
necessarily indicative of the results that may be expected for the year to end
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 November 10, 1999, 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,
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 September 30, 1999, the Registrant had $1,262 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.
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2. RESULTS OF OPERATIONS
For the nine months ended September 30, 1999, the Partnership reported a net
loss of $23,742 as compared to a net loss of $32,459 for the nine months ended
September 30, 1998.
The Registrant incurred total expenses of $28,351 for the nine month period,
compared to $32,559 for the same period in 1998. Interest expense was down
slightly from the same period in 1998. General and administrative expenses were
$6,404 for the nine months ended September 30, 1999, down from $8,881 for the
same period in 1998, which reflects the cost of separate studies performed in
1998 to evaluate the current market value and environmental conditions in the
area of the property. Professional and legal expenses decreased from $8,807 for
the nine months ended September 30, 1998, to $7,937 for current nine-month
period, which decrease results from the termination of the legal proceedings
against W. G. Allen.
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.
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ITEM 5. OTHER INFORMATION.
On October 12, 1999, the Partnership signed a letter of intent with Crescent
Resources, Inc. to purchase the property for $40,000 per acre for 92 acres and
$20,000 per acre for a maximum of 5 acres of wetlands (purchaser is not required
to pay for any wetlands acreage in excess of 5 acres). Assuming the amount of
wetlands is 5 acres or less, the total purchase price will be $3,780,000.
Another letter of intent was signed on October 12, 1999, with the same purchaser
for the remaining 50 acres of property at prices per acre ranging from $100,000
to $20,000, depending on the parcel location. We calculate that the purchase
price for this 50 acre parcel is $2,880,000, making the aggregate sale price
$6,660,000. Contracts are being drafted at the time of this filing. The
purchaser has no money at stake until after the due diligence period that ends
90 days after the purchaser receives approval of the sale from the limited
partners.
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)
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed during the
nine months ended September 30, 1999.
8
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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 10, 1999
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF INTERSTATE LAND INVESTORS II L.P. FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,262
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,534,310
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,572,799
<CURRENT-LIABILITIES> 208,218
<BONDS> 175,000
0
0
<COMMON> 0
<OTHER-SE> 6,189,581
<TOTAL-LIABILITY-AND-EQUITY> 6,572,799
<SALES> 0
<TOTAL-REVENUES> 80
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,791
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,560
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,271)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
