<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, 2000
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, 2000
Page 1 of 9 Sequentially Numbered Pages
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
AS OF SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
<TABLE>
<CAPTION>
September 30,
2000 December 31,
(Unaudited) 1999
------------------- ------------------
<S> <C> <C>
ASSETS:
Land Held for Sale $6,450,000 $6,450,000
Cash and Cash Equivalents 5,485 3,443
Other 39,493 39,493
------------------- ------------------
$6,494,977 $6,492,936
=================== ==================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT):
Accrued Liabilities 229,285 $214,164
Note Payable 212,754 194,754
------------------- ------------------
442,039 408,918
------------------- ------------------
Class A Limited Partners' Interest 6,053,011 6,084,088
Subordinated Limited Partners' Interest 85 85
General Partners' Interest (158) (155)
------------------- ------------------
6,052,938 6,084,018
------------------- ------------------
$6,494,977 $6,492,936
=================== ==================
</TABLE>
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,
2000 1999 2000 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCOME:
Interest Income $43 $38 $103 $80
----------------- ----------------- ----------------- -----------------
43 38 103 80
EXPENSES:
Property Taxes 0 0 94 94
Insurance Expense 0 0 354 356
Professional and Legal Fees 256 32 8,513 7,937
General and Administrative Costs 3,198 1,527 7,195 6,404
Interest Expense 5,959 5,376 15,027 13,560
----------------- ----------------- ----------------- -----------------
9,413 6,934 31,183 28,351
NET LOSS ($9,370) ($6,896) ($31,080) ($28,271)
================= ================= ================= =================
NET LOSS ALLOCATION:
General Partners ($1) ($1) ($3) ($3)
Class A Limited Partners (9,369) (6,896) (31,077) (28,269)
----------------- -------------------------------------------------------
(9,370) (6,896) (31,080) (28,271)
================= =======================================================
CLASS A LIMITED PARTNERSHIP
UNITS OUTSTANDING 7,650 7,650 7,650 7,650
----------------- ----------------- ----------------- -----------------
NET LOSS PER CLASS A UNIT ($1.22) ($0.90) ($4.06) ($3.70)
================= ================= ================= =================
</TABLE>
See attached notes to the condensed financial statements
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
Subordinated
General Limited Limited
Partners Partners Partner Total
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
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
================ ================= ================ =================
Partners' Equity (Deficit)
at December 31, 1999 ($155) $6,084,088 $85 $6,084,018
Net Loss for the Nine Months
Ended September 30, 2000 (3) (31,077) 0 (31,080)
---------------- ----------------- ---------------- -----------------
Partners' Equity (Deficit)
at September 30, 2000 ($158) $6,053,011 $85 $6,052,938
================ ================= ================ =================
</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, 2000 AND 1999
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
2000 1999
(Unaudited) (Unaudited)
------------------ -------------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss ($31,080) ($28,271)
Adjustments to reconcile net loss to net
cash used for operations:
Increase in Property Taxes Payable 94 94
Increase in Accrued Liabilities 15,027 5,883
------------------ -------------------
Net Cash Used for Operating Activities (15,959) (22,294)
------------------ -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Note Payable 18,000 4,345
------------------ -------------------
Net Cash Provided by Financing Activities 18,000 4,345
------------------ -------------------
Increase in Cash and Cash Equivalents 2,042 413
Cash and Cash Equivalents at Beginning
of Period 3,443 849
------------------ -------------------
Cash and Cash Equivalents at End of Period $5,485 $1,262
================== ===================
</TABLE>
See attached notes to the condensed financial statements
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2000
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, 2000, are not
necessarily indicative of the results that may be expected for the year to end
December 31, 2000.
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, 2000, there were
775 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,
2000, 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, 2000, the Registrant had $5,485 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 $212,754. 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 (i.e.,
timber) on the property.
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2. RESULTS OF OPERATIONS
For the nine months ended September 30, 2000, the Partnership reported a net
loss of $31,080 as compared to a net loss of $28,271 for the nine months ended
September 30, 1999.
The Registrant incurred total expenses of $31,183 for the nine month period,
compared to $28,351 for the same period in 1999. Interest expense accrued on the
higher balance of the note payable was up $1,467 from the same period in 1999.
General and administrative expenses were up $791 for the nine months ended
September 30, 2000 from the same period in 1999, which reflects the cost of
ballot mailings and property appraisal costs. Professional and legal expenses
increased by $576 for the nine months ended September 30, 2000. Legal fees are
higher due to the fees incurred for review of documents pertaining to the
proposed sale of the property.
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
On July 10, 2000, ballots were sent to the limited partners requesting
their vote in favor of the proposed sale of the property to Greenfield
Development Company, LLC. A majority of the limited partners voted their
approval of the proposed sale.
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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. In December 1999, the Partnership entered into a
contract to sell the property for approximately $6,600,000. However, on March
17, 2000, Crescent Resources, the potential purchaser, canceled the contract.
On June 29, 2000, the Partnership entered into a contract with Greenfield
Development Company, LLC, to sell approximately 97 acres of the land for
approximately $4,165,000, which is $45,000 per acre (assuming that the total
wetlands acreage does not exceed 6 acres). The potential purchaser deposited
$50,000 earnest money with a title agency. Under the terms of the contract, the
potential purchaser has 90 days from the date that the limited partners vote
their majority agreement to the sale, to complete their due diligence. Limited
partners have voted their majority as of this filing. Notice of limited partner
majority vote approving the sale was given on August 7, 2000. The contract also
includes the purchase of approximately 97 acres of land owned by Interstate Land
Investors I. A majority of the investors in that Partnership have approved the
sale. The contract closing date is 30 days after completion of the due diligence
period, which would have made the probable closing date on December 6, 2000.
However, Greenfield has requested two 90-day extension periods, with additional
earnest money being deposited for each extension, making the first possible new
closing date March 6, 2001, and, if necessary, the second possible closing date
June 6, 2001.
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, 2000.
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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 17, 2000
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