UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE
ACT OF 1934
For The Quarterly Period Ended September 30, 1998
Commission File Number 0-19022
Gateway Tax Credit Fund II Ltd.
(Exact name of Registrant as specified in its charter)
Florida 65-0142704
(State or other jurisdiction of ( I.R.S. Employer No.)
incorporation or organization)
880 Carillon Parkway, St. Petersburg, Florida 33716
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (813)573-3800
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 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
Number of Units
Title of Each Class September 30, 1998
Beneficial Assignee Certificates:
$1,000 per certificate 37,228
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II, 1998 Form 10-K, filed with the
Securities and Exchange Commission on July 13, 1998
Parts III and IV - Form S-11 Registration Statement
and all amendments and supplements thereto
File No. 33-31821
<PAGE>
PART I - Financial Information
Item 1. Financial Statements
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
SERIES 2 September 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 169,748 $ 160,851
Investments in Securities 47,867 47,501
------------ ------------
Total Current Assets 217,615 208,352
Investments in Securities 291,125 326,412
Investments in Project Partnerships, Net 408,013 510,805
------------- -------------
Total Assets $ 916,753 $ 1,045,569
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 44,735 46,190
------------- -------------
Total Current Liabilities 44,735 46,190
------------- -------------
Long-Term Liabilities:
Payable to General Partners 294,146 296,195
------------- -------------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at September 30, 1998 and
March 31, 1998 have been issued to the
assignees
Assignees
Units of beneficial interest of the
limited partnership interest of the
assignor limited partner, $1,000 stated
value per BAC, 37,228 at September 30,1998
and March 31, 1998, issued and outstanding 625,893 749,952
General Partners (48,021) (46,768)
------------- -------------
Total Partners' Equity 577,872 703,184
------------- -------------
Total Liabilities and Partners' Equity $ 916,753 $ 1,045,569
============= =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
SERIES 3 September 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 135,900 $ 135,622
Investments in Securities 42,576 42,252
------------ ------------
Total Current Assets 178,476 177,874
Investments in Securities 258,950 290,336
Investments in Project Partnerships, Net 206,967 378,000
------------- -------------
Total Assets $ 644,393 $ 846,210
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 48,970 50,773
------------- -------------
Total Current Liabilities 48,970 50,773
------------- -------------
Long-Term Liabilities:
Payable to General Partners 218,107 234,783
------------- -------------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at September 30, 1998 and
March 31, 1998 have been issued to the
assignees
Assignees
Units of beneficial interest of the
limited partnership interest of the
assignor limited partner, $1,000 stated
value per BAC, 37,228 at September 30, 1998
and March 31, 1998, issued and outstanding 421,358 602,863
General Partners (44,042) (42,209)
------------- -------------
Total Partners' Equity 377,316 560,654
------------- -------------
Total Liabilities and Partners' Equity $ 644,393 $ 846,210
============= =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
SERIES 4 September 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 208,954 $ 196,876
Investments in Securities 53,940 53,529
------------ ------------
Total Current Assets 262,894 250,405
Investments in Securities 328,063 367,826
Investments in Project Partnerships, Net 929,726 981,823
------------- -------------
Total Assets $ 1,520,683 $ 1,600,054
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 54,140 56,202
------------- -------------
Total Current Liabilities 54,140 56,202
------------- -------------
Long-Term Liabilities:
Payable to General Partners 275,892 280,718
------------- -------------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at September 30, 1998 and
March 31, 1998 have been issued to the
assignees
Assignees
Units of beneficial interest of the
limited partnership interest of the
assignor limited partner, $1,000 stated
value per BAC, 37,228 at September 30, 1998
and March 31, 1998, issued and outstanding 1,239,398 1,311,156
General Partners (48,747) (48,022)
------------- -------------
Total Partners' Equity 1,190,651 1,263,134
------------- -------------
Total Liabilities and Partners' Equity $ 1,520,683 $ 1,600,054
============= =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
SERIES 5 September 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 288,746 $ 280,813
Investments in Securities 67,229 66,717
------------ ------------
Total Current Assets 355,975 347,530
Investments in Securities 408,888 458,448
Investments in Project Partnerships, Net 1,231,149 1,500,087
------------- -------------
Total Assets $ 1,996,012 $ 2,306,065
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 73,725 74,748
------------- -------------
Total Current Liabilities 73,725 74,748
------------- -------------
Long-Term Liabilities:
Payable to General Partners 262,491 274,507
------------- -------------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at September 30, 1998 and
March 31, 1998 have been issued to the
assignees
Assignees
Units of beneficial interest of the
limited partnership interest of the
assignor limited partner, $1,000 stated
value per BAC, 37,228 at September 30,1998
and March 31, 1998, issued and outstanding 1,718,821 2,012,865
General Partners (59,025) (56,055)
------------- -------------
Total Partners' Equity 1,659,796 1,956,810
------------- -------------
Total Liabilities and Partners' Equity $ 1,996,012 $ 2,306,065
============= =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
SERIES 6 September 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 344,419 $ 406,255
Investments in Securities 50,081 48,608
------------ ------------
Total Current Assets 394,500 454,863
Investments in Securities 386,257 373,009
Investments in Project Partnerships, Net 2,746,352 3,102,793
------------- -------------
Total Assets $ 3,527,109 $ 3,930,665
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 68,164 70,482
------------- -------------
Total Current Liabilities 68,164 70,482
------------- -------------
Long-Term Liabilities:
Payable to General Partners 337,638 341,554
------------- -------------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at September 30, 1998 and
March 31, 1998 have been issued to the
assignees
Assignees
Units of beneficial interest of the
limited partnership interest of the
assignor limited partner, $1,000 stated
value per BAC, 37,228 at September 30,1998
and March 31, 1998, issued and outstanding 3,178,820 3,572,169
General Partners (57,513) (53,540)
------------- -------------
Total Partners' Equity 3,121,307 3,518,629
------------- -------------
Total Liabilities and Partners' Equity $ 3,527,109 $ 3,930,665
============= =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
TOTAL SERIES 2 - 6 September 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 1,147,767 $ 1,180,417
Investments in Securities 261,693 258,607
------------ ------------
Total Current Assets 1,409,460 1,439,024
Investments in Securities 1,673,283 1,816,031
Investments in Project Partnerships, Net 5,522,207 6,473,508
------------- -------------
Total Assets $ 8,604,950 $ 9,728,563
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 289,734 298,395
------------- -------------
Total Current Liabilities 289,734 298,395
------------- -------------
Long-Term Liabilities:
Payable to General Partners 1,388,274 1,427,757
------------- -------------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at September 30, 1998 and
March 31, 1998 have been issued to the
assignees
Assignees
Units of beneficial interest of the
limited partnership interest of the
assignor limited partner, $1,000 stated
value per BAC, 37,228 at September 30, 1998
and March 31, 1998, issued and outstanding 7,184,290 8,249,005
General Partners (257,348) (246,594)
------------- -------------
Total Partners' Equity 6,926,942 8,002,411
------------- -------------
Total Liabilities and Partners' Equity $ 8,604,950 $ 9,728,563
============= =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)
SERIES 2 1998 1997
---- ----
Revenues:
Interest Income $ 8,841 $ 10,457
------------ ------------
Expenses:
Asset Management Fee-General Partner 17,193 17,222
General and Administrative:
General Partner 2,671 2,344
Other 5,342 5,577
Amortization 1,345 592
------------ ------------
Total Expenses 26,551 25,735
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (17,710) (15,278)
Equity in Losses of Project Partnerships (25,463) (45,452)
------------ ------------
Net Loss $ (43,173) $ (60,730)
============ ============
Allocation of Net Loss:
Assignees (42,741) (60,122)
General Partners (432) (608)
------------ ------------
$ (43,173) $ (60,760)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (6.97) $ (9.80)
Number of Beneficial Assignee ============ ============
Certificates Outstanding 6,136 6,136
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)
SERIES 3 1998 1997
---- ----
Revenues:
Interest Income $ 7,866 $ 7,787
------------ ------------
Expenses:
Asset Management Fee-General Partner 15,911 15,948
General and Administrative:
General Partner 2,792 2,451
Other 5,646 5,011
Amortization 1,115 (404)
------------ ------------
Total Expenses 25,464 23,006
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (17,598) (15,219)
Equity in Losses of Project Partnerships (102,920) (56,357)
------------ ------------
Net Loss $ (120,518) $ (71,576)
============ ============
Allocation of Net Loss:
Assignees (119,313) (70,860)
General Partners (1,205) (716)
------------ ------------
$ (120,518) $ (71,576)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (21.87) $ (12.99)
Number of Beneficial Assignee ============ ============
Certificates Outstanding 5,456 5,456
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)
SERIES 4 1998 1997
---- ----
Revenues:
Interest Income $ 10,208 $ 10,277
------------ ------------
Expenses:
Asset Management Fee-General Partner 19,533 19,568
General and Administrative:
General Partner 3,521 3,089
Other 6,941 6,656
Amortization 1,514 (489)
------------ ------------
Total Expenses 31,509 28,824
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (21,301) (18,547)
Equity in Losses of Project Partnerships 30,088 (27,064)
------------ ------------
Net Loss $ 8,787 $ (45,611)
============ ============
Allocation of Net Loss:
Assignees 8,699 (45,155)
General Partners 88 (456)
------------ ------------
$ 8,787 $ (45,611)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ 1.26 $ (6.53)
Number of Beneficial Assignee ============ ============
Certificates Outstanding 6,915 6,915
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)
SERIES 5 1998 1997
---- ----
Revenues:
Interest Income $ 13,130 $ 13,213
------------ ------------
Expenses:
Asset Management Fee-General Partner 24,166 24,211
General and Administrative:
General Partner 4,371 3,835
Other 9,717 8,695
Amortization 3,256 2,751
------------ ------------
Total Expenses 41,510 39,492
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (28,380) (26,279)
Equity in Losses of Project Partnerships (132,040) (218,011)
------------ ------------
Net Loss $ (160,420) $ (244,290)
============ ============
Allocation of Net Loss:
Assignees (158,816) (241,848)
General Partners (1,604) (2,442)
------------ ------------
$ (160,420) $ (244,290)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (18.44) $ (28.07)
Number of Beneficial Assignee ============ ============
Certificates Outstanding 8,616 8,616
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)
SERIES 6 1998 1997
---- ----
Revenues:
Interest Income $ 12,347 $ 12,484
------------ ------------
Expenses:
Asset Management Fee-General Partner 26,780 26,851
General and Administrative:
General Partner 4,612 4,047
Other 9,059 8,622
Amortization 4,855 5,512
------------ ------------
Total Expenses 45,306 45,032
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (32,959) (32,548)
Equity in Losses of Project Partnerships (155,286) (171,286)
------------ ------------
Net Loss $ (188,245) $ (203,834)
============ ============
Allocation of Net Loss:
Assignees (186,363) (201,795)
General Partners (1,882) (2,039)
------------ ------------
$ (188,245) $ (203,834)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (18.45) $ (19.97)
Number of Beneficial Assignee ============ ============
Certificates Outstanding 10,105 10,105
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)
TOTAL SERIES 2 - 6 1998 1997
---- ----
Revenues:
Interest Income $ 52,392 $ 54,218
------------ ------------
Expenses:
Asset Management Fee-General Partner 103,583 103,800
General and Administrative:
General Partner 17,967 15,766
Other 36,705 34,561
Amortization 12,085 7,962
------------ ------------
Total Expenses 170,340 162,089
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (117,948) (107,871)
Equity in Losses of Project Partnerships (385,621) (518,170)
------------ ------------
Net Loss $ (503,569) $ (626,041)
============ ============
Allocation of Net Loss:
Assignees (498,533) (619,779)
General Partners (5,036) (6,262)
------------ ------------
$ (503,569) $ (626,041)
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)
SERIES 2 1998 1997
---- ----
Revenues:
Interest Income $ 17,870 $ 20,193
------------ ------------
Expenses:
Asset Management Fee-General Partner 34,386 34,444
General and Administrative:
General Partner 4,522 4,216
Other 6,875 6,804
Amortization 2,690 1,184
------------ ------------
Total Expenses 48,473 46,648
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (30,603) (26,455)
Equity in Losses of Project Partnerships (94,709) (170,814)
------------ ------------
Net Loss $ (125,312) $ (197,269)
============ ============
Allocation of Net Loss:
Assignees (124,059) (195,296)
General Partners (1,253) (1,973)
------------ ------------
$ (125,312) $ (197,269)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (20.22) $ (31.83)
Number of Beneficial Assignee ============ ============
Certificates Outstanding 6,136 6,136
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)
SERIES 3 1998 1997
---- ----
Revenues:
Interest Income $ 15,371 $ 15,087
------------ ------------
Expenses:
Asset Management Fee-General Partner 31,822 31,896
General and Administrative:
General Partner 4,727 4,408
Other 7,403 6,392
Amortization 2,230 (808)
------------ ------------
Total Expenses 46,182 41,888
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (30,811) (26,801)
Equity in Losses of Project Partnerships (152,527) (118,296)
------------ ------------
Net Loss $ (183,338) $ (145,097)
============ ============
Allocation of Net Loss:
Assignees (181,505) (143,646)
General Partners (1,833) (1,451)
------------ ------------
$ (183,338) $ (145,097)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (33.27) $ (26.33)
Number of Beneficial Assignee ============ ============
Certificates Outstanding 5,456 5,456
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)
SERIES 4 1998 1997
---- ----
Revenues:
Interest Income $ 19,981 $ 20,014
------------ ------------
Expenses:
Asset Management Fee-General Partner 39,066 39,136
General and Administrative:
General Partner 5,961 5,557
Other 8,922 8,233
Amortization 3,778 (978)
------------ ------------
Total Expenses 57,727 51,948
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (37,746) (31,934)
Equity in Losses of Project Partnerships (34,737) (157,720)
------------ ------------
Net Loss $ (72,483) $ (189,654)
============ ============
Allocation of Net Loss:
Assignees (71,758) (187,757)
General Partners (725) (1,897)
------------ ------------
$ (72,483) $ (189,654)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (10.38) $ (27.15)
Number of Beneficial Assignee ============ ============
Certificates Outstanding 6,915 6,915
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)
SERIES 5 1998 1997
---- ----
Revenues:
Interest Income $ 25,755 $ 25,745
------------ ------------
Expenses:
Asset Management Fee-General Partner 48,332 48,422
General and Administrative:
General Partner 7,400 6,898
Other 12,264 10,596
Amortization 6,512 5,502
------------ ------------
Total Expenses 74,508 71,418
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (48,753) (45,673)
Equity in Losses of Project Partnerships (248,261) (375,269)
------------ ------------
Net Loss $ (297,014) $ (420,942)
============ ============
Allocation of Net Loss:
Assignees (294,044) (416,733)
General Partners (2,970) (4,209)
------------ ------------
$ (297,014) $ (420,942)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (34.13) $ (48.37)
Number of Beneficial Assignee ============ ============
Certificates Outstanding 8,616 8,616
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)
SERIES 6 1998 1997
---- ----
Revenues:
Interest Income $ 24,513 $ 24,723
------------ ------------
Expenses:
Asset Management Fee-General Partner 53,560 53,702
General and Administrative:
General Partner 7,810 7,281
Other 12,357 10,880
Amortization 9,710 11,024
------------ ------------
Total Expenses 83,437 82,887
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (58,924) (58,164)
Equity in Losses of Project Partnerships (338,398) (398,202)
------------ ------------
Net Loss $ (397,322) $ (456,366)
============ ============
Allocation of Net Loss:
Assignees (393,349) (451,802)
General Partners (3,973) (4,564)
------------ ------------
$ (397,322) $ (456,366)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (38.93) $ (44.71)
Number of Beneficial Assignee ============ ============
Certificates Outstanding 10,105 10,105
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
(Unaudited)
TOTAL SERIES 2 - 6 1998 1997
---- ----
Revenues:
Interest Income $ 103,490 $ 105,762
------------ ------------
Expenses:
Asset Management Fee-General Partner 207,166 207,600
General and Administrative:
General Partner 30,420 28,360
Other 47,821 42,905
Amortization 24,920 15,924
------------ ------------
Total Expenses 310,327 294,789
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (206,837) (189,027)
Equity in Losses of Project Partnerships (868,632) (1,220,301)
------------ ------------
Net Loss $(1,075,469) $(1,409,328)
============ ============
Allocation of Net Loss:
Assignees (1,064,715) (1,395,234)
General Partners (10,754) (14,094)
------------ ------------
$(1,075,469) $(1,409,328)
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
General
SERIES 2 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1997 $ 1,084,268 $ (43,391) $ 1,040,877
Net Loss (195,296) (1,973) (197,269)
------------- ------------ -------------
Balance at September 30,1997 $ 888,972 $ (45,364) $ 843,608
============= ============ =============
Balance at March 31, 1998 $ 749,952 $ (46,768) $ 703,184
Net Loss (124,059) (1,253) (125,312)
------------- ------------ -------------
Balance at September 30,1998 $ 625,893 $ (48,021) $ 577,872
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
General
SERIES 3 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1997 $ 822,156 $ (39,994) $ 782,162
Net Loss (143,646) (1,451) (145,097)
------------- ------------ -------------
Balance at September 30,1997 $ 678,510 $ (41,445) $ 637,065
============= ============ =============
Balance at March 31, 1998 $ 602,863 $ (42,209) $ 560,654
Net Loss (181,505) (1,833) (183,338)
------------- ------------ -------------
Balance at September 30,1998 $ 421,358 $ (44,042) $ 377,316
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
General
SERIES 4 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1997 $ 1,791,717 $ (43,168) $ 1,748,549
Net Loss (187,757) (1,897) (189,654)
------------- ------------ -------------
Balance at September 30,1997 $ 1,603,960 $ (45,065) $ 1,558,895
============= ============ =============
Balance at March 31, 1998 $ 1,311,156 $ (48,022) $ 1,263,134
Net Loss (71,758) (725) (72,483)
------------- ------------ -------------
Balance at September 30,1998 $ 1,239,398 $ (48,747) $ 1,190,651
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
General
SERIES 5 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1997 $ 2,818,232 $ (47,920) $ 2,770,312
Net Loss (416,733) (4,209) (420,942)
------------- ------------ -------------
Balance at September 30,1997 $ 2,401,499 $ (52,129) $ 2,349,370
============= ============ =============
Balance at March 31, 1998 $ 2,012,865 $ (56,055) $ 1,956,810
Net Loss (294,044) (2,970) (297,014)
------------- ------------ -------------
Balance at September 30,1998 $ 1,718,821 $ (59,025) $ 1,659,796
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
General
SERIES 6 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1997 $ 4,433,605 $ (44,839) $ 4,388,766
Net Loss (451,802) (4,564) (456,366)
------------- ------------ -------------
Balance at September 30,1997 $ 3,981,803 $ (49,403) $ 3,932,400
============= ============ =============
Balance at March 31, 1998 $ 3,572,169 $ (53,540) $ 3,518,629
Net Loss (393,349) (3,973) (397,322)
------------- ------------ -------------
Balance at September 30,1998 $ 3,178,820 $ (57,513) $ 3,121,307
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
General
TOTAL SERIES 2 - 6 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1997 $ 10,949,978 $ (219,312) $ 10,730,666
Net Loss (1,395,234) (14,094) (1,409,328)
------------- ------------ -------------
Balance at September 30,1997 $ 9,554,744 $ (233,406) $ 9,321,338
============= ============ =============
Balance at March 31, 1998 $ 8,249,005 $ (246,594) $ 8,002,411
Net Loss (1,064,715) (10,754) (1,075,469)
------------- ------------ -------------
Balance at September 30,1998 $ 7,184,290 $ (257,348) $ 6,926,942
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
SERIES 2 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $ (125,312) $ (197,269)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 2,690 1,184
Accreted Interest Income on Investments
in Securities (12,580) (13,605)
Equity in Losses of Project
Partnerships 94,709 170,814
Interest Income from Redemption of
Securities 16,834 13,628
Changes in Operating Assets and
Liabilities:
Increase in Payable to General Partners (3,505) (2,865)
------------ ------------
Net Cash Used in Operating
Activities (27,164) (28,113)
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 5,393 5,196
Redemption of Investment in Securities 30,668 32,065
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 36,061 37,261
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents 8,897 9,148
Cash and Cash Equivalents at Beginning of
Year 160,851 138,561
------------ ------------
Cash and Cash Equivalents at End of Year $ 169,748 $ 147,709
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
SERIES 3 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $ (183,338) $ (145,097)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 2,230 (808)
Accreted Interest Income on Investments
in Securities (11,190) (12,101)
Equity in Losses of Project
Partnerships 152,527 118,296
Interest Income from Redemption of
Securities 14,974 12,121
Changes in Operating Assets and
Liabilities:
Increase in Payable to General
Partners (18,479) (10,543)
------------ ------------
Net Cash Used in Operating
Activities (43,276) (38,132)
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 16,276 19,677
Redemption of Investment in Securities 27,278 28,521
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 43,554 48,198
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents 278 10,066
Cash and Cash Equivalents at Beginning of
Year 135,622 109,925
------------ ------------
Cash and Cash Equivalents at End of Year $ 135,900 $ 119,991
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
SERIES 4 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $ (72,483) $ (189,654)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 3,778 (978)
Accreted Interest Income on Investments
in Securities (14,176) (15,331)
Equity in Losses of Project
Partnerships 34,737 157,720
Interest Income from Redemption of
Securities 18,970 15,358
Changes in Operating Assets and
Liabilities:
Increase in Payable to General
Partners (6,889) (5,276)
------------ ------------
Net Cash Used in Operating
Activities (36,063) (38,161)
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 13,582 8,131
Redemption of Investment in Securities 34,559 36,133
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 48,141 44,264
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents 12,078 6,103
Cash and Cash Equivalents at Beginning of
Year 196,876 182,773
------------ ------------
Cash and Cash Equivalents at End of Year $ 208,954 $ 188,876
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
SERIES 5 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $ (297,014) $ (420,942)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 6,512 5,502
Accreted Interest Income on Investments
in Securities (17,669) (19,108)
Equity in Losses of Project
Partnerships 248,261 375,269
Interest Income from Redemption of
Securities 23,644 19,140
Changes in Operating Assets and
Liabilities:
Increase in Payable to General
Partners (13,039) (11,500)
------------ ------------
Net Cash Used in Operating
Activities (49,305) (51,639)
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 14,165 12,755
Redemption of Investment in Securities 43,073 45,035
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 57,238 57,790
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents 7,933 6,151
Cash and Cash Equivalents at Beginning of
Year 280,813 259,006
------------ ------------
Cash and Cash Equivalents at End of Year $ 288,746 $ 265,157
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
SERIES 6 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $ (397,322) $ (456,366)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 9,710 11,024
Accreted Interest Income on Investments
in Securities (14,720) (15,031)
Equity in Losses of Project
Partnerships 338,398 398,202
Interest Income from Redemption of
Securities 0 0
Changes in Operating Assets and
Liabilities:
Increase in Payable to General
Partners (6,235) (5,849)
------------ ------------
Net Cash Used in Operating
Activities (70,169) (68,020)
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 8,333 8,904
Redemption of Investment in Securities 0 0
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 8,333 8,904
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents (61,836) (59,116)
Cash and Cash Equivalents at Beginning of
Year 406,255 396,736
------------ ------------
Cash and Cash Equivalents at End of Year $ 344,419 $ 337,620
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
TOTAL SERIES 2 - 6 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $(1,075,469) $(1,409,328)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 24,920 15,924
Accreted Interest Income on Investments
in Securities (70,335) (75,176)
Equity in Losses of Project
Partnerships 868,632 1,220,301
Interest Income from Redemption of
Securities 74,422 60,247
Changes in Operating Assets and
Liabilities:
Increase in Payable to General
Partners (48,147) (36,033)
------------ ------------
Net Cash Used in Operating
Activities (225,977) (224,065)
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 57,749 54,663
Redemption of Investment in Securities 135,578 141,754
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 193,327 196,417
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents (32,650) (27,648)
Cash and Cash Equivalents at Beginning of
Year 1,180,417 1,087,001
------------ ------------
Cash and Cash Equivalents at End of Year $ 1,147,767 $ 1,059,353
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
SEPTEMBER 30, 1998
NOTE 1 - ORGANIZATION:
Gateway Tax Credit Fund II Ltd. ("Gateway"), a Florida Limited Partnership,
was formed September 12, 1989, under the laws of Florida. Operations
commenced on September 14, 1990 for Series 2, September 28, 1990 for Series
3, February 1, 1991 for Series 4, July 1, 1991 for Series 5 and January 1,
1992 for Series 6. Gateway has invested, as a limited partner, in other
limited partnerships ("Project Partnerships") each of which owns and operates
one or more apartment complexes expected to qualify for Low-Income Housing
Tax Credits. Gateway will terminate on December 31, 2040, or sooner, in
accordance with the terms of the Limited Partnership Agreement. As of
September 30, 1998, Gateway had received capital contributions of $1,000 from
the General Partners and $37,228,000 from Beneficial Assignee Certificate
investors (the "Assignees"). The fiscal year of Gateway for reporting
purposes ends on March 31.
Pursuant to the Securities Act of 1933, Gateway filed a Form S-11
Registration Statement with the Securities and Exchange Commission, effective
September 12, 1989, which covered the offering (the "Public Offering") of
Gateway's Beneficial Assignee Certificates ("BACs") representing assignments
of units for the beneficial interest of the limited partnership interest of
the Assignor Limited Partner. The Assignor Limited Partner was formed for
the purpose of serving in that capacity for the Fund and will not engage in
any other business.
Raymond James Partners, Inc. and Raymond James Tax Credit Funds, Inc.,
wholly-owned subsidiaries of Raymond James Financial, Inc., are the General
Partner and the Managing General Partner, respectively. The Managing General
Partner manages and controls the business of Gateway.
Gateway offered BACs in five series. BACs in the amounts of $6,136,000,
$5,456,000, $6,915,000, $8,616,000 and $10,105,000 for Series 2, 3, 4, 5 and
6, respectively had been issued as of March 31, 1997. Each Series is treated
as a separate partnership, investing in a separate and distinct pool of
Project Partnerships. Net proceeds from each Series are used to acquire
Project Partnerships which are specifically allocated to such Series. Income
or loss and all tax items from the Project Partnerships acquired by each
Series are specifically allocated among the Assignees of such Series.
Operating profits and losses, cash distributions from operations and tax
credits are allocated 99% to the Assignees and 1% to the General Partners.
Profit or loss and cash distributions from sales of properties will be
allocated as formulated in the Limited Partnership Agreement.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
Gateway utilizes the accrual basis of accounting whereby revenues are
recognized when earned and expenses are recognized when obligations are
incurred.
Gateway accounts for its investments as the sole limited partner in Project
Partnerships ("Investments in Project Partnerships") using the equity method
of accounting and reports the equity in losses of the Project Partnerships on
a 3-month lag in the Statements of Operations. Under the equity method, the
Investments in Project Partnerships initially include:
1)Gateway's capital contribution,
2)Acquisition fees paid to the General Partner for services rendered
in selecting properties for acquisition, and
3)Acquisition expenses including legal fees, travel and other
miscellaneous costs relating to acquiring properties.
Quarterly the Investments in Project Partnerships are increased or decreased
as follows:
1)Increased for equity in income or decreased for equity in losses of
the Project Partnerships,
2)Decreased for cash distributions received from the Project
Partnerships, and
3)Decreased for the amortization of the acquisition fees and expenses.
Amortization is calculated on a straight-line basis over 35 years, as this
is the average estimated useful life of the underlying assets. The
amortization is shown as amortization expense on the Statements of
Operations.
Pursuant to the limited partnership agreements for the Project Partnerships,
cash losses generated by the Project Partnerships are allocated to the
general partners of those partnerships. In subsequent years, cash profits,
if any, are first allocated to the general partners to the extent of the
allocation of prior years' cash losses.
Since Gateway invests as a limited partner, and therefore is not obligated
to fund losses or make additional capital contributions, it does not
recognize losses from individual Project Partnerships to the extent that
these losses would reduce the investment in those Project Partnerships below
zero. The suspended losses will be used to offset future income from the
individual Project Partnerships.
Gateway recognizes a decline in the carrying value of its investment in the
Project Partnerships when there is evidence of a non-temporary decline in the
recoverable amount of the investment. There is a possibility that the
estimates relating to reserves for non-temporary declines in carrying value
of the investments in Project Partnerships may be subject to material near
term adjustments.
Gateway, as a limited partner in the Project Partnerships, is subject to
risks inherent in the ownership of property which are beyond its control,
such as fluctuations in occupancy rates and operating expenses, variations in
rental schedules, proper maintenance and continued eligibility of tax
credits. If the cost of operating a property exceeds the rental income earned
thereon, Gateway may deem it in its best interest to voluntarily provide
funds in order to protect its investment.
Cash and Cash Equivalents
It is Gateway's policy to include short-term investments with an original
maturity of three months or less in Cash and Cash Equivalents. Short-term
investments are comprised of money market mutual funds.
Concentration of Credit Risk
Financial instruments which potentially subject Gateway to concentrations of
credit risk consist of cash investments in a money market mutual fund that is
a wholly-owned subsidiary of Raymond James Financial, Inc.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates that affect
certain reported amounts and disclosures. These estimates are based on
management's knowledge and experience. Accordingly, actual results could
differ from these estimates.
Investment in Securities
Effective April 1, 1995, Gateway adopted Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and Equity
Securities ("FAS 115"). Under FAS 115, Gateway is required to categorize its
debt securities as held-to-maturity, available-for-sale or trading
securities, dependent upon Gateway's intent in holding the securities.
Gateway's intent is to hold all of its debt securities (U. S. Government
Security Strips) until maturity and to use these reserves to fund Gateway's
ongoing operations. Interest income is recognized ratably on the U. S.
Government Strips using the effective yield to maturity.
Offering and Commission Costs
Offering and commission costs were charged against Assignees' Equity upon
the admission of Limited Partners.
Income Taxes
No provision for income taxes has been made in these financial statements,
as income taxes are a liability of the partners rather than of Gateway.
Reclassifications
For comparability, the 1997 figures have been reclassified, where
appropriate, to conform with the financial statement presentation used in
1998.
Basis of Preparation
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the
financial statements and notes thereto included with the Partnership's Form
10-K for the year ended March 31, 1998. In the opinion of management, these
financial statements include adjustments, consisting only of normal recurring
adjustments, necessary to fairly summarize the Partnership's financial
position and results of operations. The results of operations for the
periods may not be indicative of the results to be expected for the year.
NOTE 3 - INVESTMENT IN SECURITIES:
The September 30, 1998 Balance Sheet includes Investment in Securities
consisting of U.S. Government Security Strips which represents their cost,
plus accreted interest income of $136,061 for Series 2, $121,023 for Series
3, $153,324 for Series 4, $191,098 for Series 5 and $147,008 for Series 6.
For convenience, the Investment in Securities are commonly held in a
brokerage account with Raymond James and Associates, Inc. A separate
accounting is maintained for each series' share of the investments.
Gross Unrealized
Estimated Market Cost Plus Gains and
Value Accreted Interest (Losses)
----------------- ----------------- ----------------
Series 2 $ 382,750 $ 338,992 $ 43,758
Series 3 340,338 301,527 38,811
Series 4 431,343 382,003 49,340
Series 5 537,448 476,117 61,331
Series 6 487,560 436,338 51,222
As of September 30, 1998, the cost and accreted interest of debt
securities by contractual maturities is as follows:
Series 2 Series 3 Series 4
-------- -------- --------
Due with 1 year $ 47,867 $ 42,576 $ 53,940
After 1 year through 5 years 175,756 156,331 198,054
After 5 years through 10 years 115,369 102,620 130,009
---------- ---------- ----------
Total Amount Carried on
Balance Sheet $ 338,992 $ 301,527 $ 382,003
========== ========== ==========
Series 5 Series 6 Total
-------- -------- --------
Due with 1 year $ 67,229 $ 50,081 $ 261,693
After 1 year through 5 years 246,850 199,379 976,370
After 5 years through 10 years 162,038 186,878 696,914
---------- ---------- ----------
Total Amount Carried on
Balance Sheet $ 476,117 $ 436,338 $1,934,977
========== ========== ==========
NOTE 4 - RELATED PARTY TRANSACTIONS:
The Payable to General Partners primarily represents the asset management
fees owed to the General Partners at the end of the period. It is unsecured,
due on demand and, in accordance with the limited partnership agreement, non-
interest bearing. Within the next 12 months, the Managing General Partner
does not intend to demand payment on the portion of Asset Management Fees
payable classified as long-term on the Balance Sheet.
The Payable to Project Partnerships represents unpaid capital contributions
to the Project Partnerships and will be paid after certain performance
criteria are met. Such contributions are in turn payable to the general
partner of the Project Partnerships.
For the six months ended September 30, 1998 and 1997 the General Partners
and affiliates are entitled to compensation and reimbursement for costs and
expenses incurred by Gateway as follows:
Asset Management Fee - The Managing General Partner is entitled to be paid
an annual asset management fee equal to 0.25% of the aggregate cost of
Gateway's interest in the projects owned by the Project Partnerships. The
asset management fee will be paid only after all other expenses of Gateway
have been paid. These fees are included in the Statements of Operations.
1998 1997
---- ------
Series 2 $ 34,386 $ 34,444
Series 3 31,822 31,896
Series 4 39,066 39,136
Series 5 48,332 48,422
Series 6 53,560 53,702
--------- ---------
Total $ 207,166 $ 207,600
========= =========
General and Administrative Expenses - The Managing General Partner is reim
bursed for general and administrative expenses of Gateway on an accountable
basis. This expense is included in the Statements of Operations.
Series 2 $ 4,522 $ 4,216
Series 3 4,727 4,408
Series 4 5,961 5,557
Series 5 7,400 6,898
Series 6 7,810 7,281
--------- --------
Total $ 30,420 $ 28,360
========= ========
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS:
As of September 30, 1998, the Partnership had acquired an interest in 148
Project Partnerships for the Series which own and operate government assisted
multi-family housing complexes(Series 2-22, Series 3-23, Series 5-36 and
Series 6-38). The Partnership, as the Investor Limited Partner pursuant to
the Project Partnership Agreements has generally acquired an ownership
interest of 99% in these Project Partnerships.
The following is a summary of Investments in Project Partnerships as of:
SERIES 2 SEPTEMBER 30, MARCH 31,
1998 1998
-------------- ----------
Capital Contributions to Project Partner-
ships and purchase price paid for limited
partner interests in Project Partnerships $ 4,524,678 $ 4,524,678
Cumulative equity in losses of Project
Partnerships (1) (4,405,492) (4,310,783)
Cumulative distributions received from
Project Partnerships (69,669) (64,276)
------------ -------------
Investment in Project Partnerships before
Adjustment 49,517 149,619
Excess of investment cost over the
underlying assets acquired:
Acquisition fees and expenses 390,838 390,838
Accumulated amortization of acquisition
fees and expenses (32,342) (29,652)
----------- ------------
Investments in Project Partnerships $ 408,013 $ 510,805
============ ============
(1) In accordance with the Partnership's accounting policy to not carry
Investments in Project Partnerships below zero, cumulative suspended losses
of $778,305 for the period ended September 30, 1998 and cumulative suspended
losses of $556,351 for the year ended March 31, 1998 are not included.
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):
The following is a summary of Investments in Project Partnerships as of:
SERIES 3 SEPTEMBER 30, MARCH 31,
1998 1998
-------------- ----------
Capital Contributions to Project Partner-
ships and purchase price paid for limited
partner interests in Project Partnerships $ 3,888,713 $ 3,888,713
Cumulative equity in losses of Project
Partnerships (1) (3,974,308) (3,821,781)
Cumulative distributions received from
Project Partnerships (162,852) (146,576)
----------- -------------
Investment in Project Partnerships before
Adjustment (248,447) (79,644)
Excess of investment cost over the
underlying assets acquired:
Acquisition fees and expenses 491,746 491,746
Accumulated amortization of acquisition
fees and expenses (36,332) (34,102)
----------- ------------
Investments in Project Partnerships $ 206,967 $ 378,000
============ ============
(1) In accordance with the Partnership's accounting policy to not carry
Investments in Project Partnerships below zero, cumulative suspended losses
of $1,244,470 for the period ended September 30, 1998 and cumulative
suspended losses of $1,033,078 for the year ended March 31, 1998 are not
included.
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):
The following is a summary of Investments in Project Partnerships as of:
SERIES 4 SEPTEMBER 30, MARCH 31,
1998 1998
-------------- ----------
Capital Contributions to Project Partner-
ships and purchase price paid for limited
partner interests in Project Partnerships $ 4,952,519 $ 4,952,519
Cumulative equity in losses of Project
Partnerships (1) (4,460,004) (4,425,267)
Cumulative distributions received from
Project Partnerships (103,848) (90,266)
----------- -------------
Investment in Project Partnerships before
Adjustment 388,667 436,986
Excess of investment cost over the
underlying assets acquired:
Acquisition fees and expenses 562,967 562,967
Accumulated amortization of acquisition
fees and expenses (21,908) (18,130)
----------- ------------
Investments in Project Partnerships $ 929,726 $ 981,823
============ ============
(1) In accordance with the Partnership's accounting policy to not carry
Investments in Project Partnerships below zero, cumulative suspended losses
of $671,674 for the period ended September 30, 1998 and cumulative suspended
losses of $496,384 for the year ended March 31, 1998 are not included.
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):
The following is a summary of Investments in Project Partnerships as of:
SERIES 5 SEPTEMBER 30, MARCH 31,
1998 1998
-------------- ----------
Capital Contributions to Project Partner-
ships and purchase price paid for limited
partner interests in Project Partnerships $ 6,164,472 $ 6,164,472
Cumulative equity in losses of Project
Partnerships (1) (5,355,618) (5,107,357)
Cumulative distributions received from
Project Partnerships (146,355) (132,190)
----------- -------------
Investment in Project Partnerships before
Adjustment 662,499 924,925
Excess of investment cost over the
underlying assets acquired:
Acquisition fees and expenses 650,837 650,837
Accumulated amortization of acquisition
fees and expenses (82,187) (75,675)
------------ ------------
Investments in Project Partnerships $ 1,231,149 $ 1,500,087
============ ============
(1) In accordance with the Partnership's accounting policy to not carry
Investments in Project Partnerships below zero, cumulative suspended losses
of $438,040 for the period ended September 30, 1998 and cumulative suspended
losses of $248,554 for the year ended March 31, 1998 are not included.
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):
The following is a summary of Investments in Project Partnerships as of:
SERIES 6 SEPTEMBER 30, MARCH 31,
1998 1998
-------------- ----------
Capital Contributions to Project Partner-
ships and purchase price paid for limited
partner interests in Project Partnerships $ 7,462,215 $ 7,462,215
Cumulative equity in losses of Project
Partnerships (1) (5,233,217) (4,894,819)
Cumulative distributions received from
Project Partnerships (130,039) (121,706)
------------ -------------
Investment in Project Partnerships before
Adjustment 2,098,959 2,445,690
Excess of investment cost over the
underlying assets acquired:
Acquisition fees and expenses 785,179 785,179
Accumulated amortization of acquisition
fees and expenses (137,786) (128,076)
------------ ------------
Investments in Project Partnerships $ 2,746,352 $ 3,102,793
============ ============
(1) In accordance with the Partnership's accounting policy to not carry
Investments in Project Partnerships below zero, cumulative suspended losses
of $308,001 for the period ended September 30, 1998 and cumulative suspended
losses of $218,323 for the year ended March 31, 1998 are not included.
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):
The following is a summary of Investments in Project Partnerships as of:
TOTAL SERIES 2 - 6 SEPTEMBER 30, MARCH 31,
1998 1998
-------------- ----------
Capital Contributions to Project Partner-
ships and purchase price paid for limited
partner interests in Project Partnerships $ 26,992,597 $ 26,992,597
Cumulative equity in losses of Project
Partnerships (23,428,639) (22,560,007)
Cumulative distributions received from
Project Partnerships (612,763) (555,014)
----------- -------------
Investment in Project Partnerships before
Adjustment 2,951,195 3,877,576
Excess of investment cost over the
underlying assets acquired:
Acquisition fees and expenses 2,881,567 2,881,567
Accumulated amortization of acquisition
fees and expenses (310,555) (285,635)
----------- ------------
Investments in Project Partnerships $ 5,522,207 $ 6,473,508
============ ============
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):
In accordance with the Partnership's policy of presenting the financial
information of the Project Partnerships on a three month lag, below is the
summarized financial information for the Series' Project Partnerships as of
June 30, of each year:
1998 1997
SERIES 2 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 1,750,157 $ 1,645,940
Investment properties, net 21,204,830 22,168,236
Other assets 35,271 10,058
----------- -----------
Total assets $22,990,258 $23,824,234
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 437,533 428,623
Long-term debt 23,206,573 23,257,739
----------- -----------
Total liabilities 23,644,106 23,686,362
----------- -----------
Partners' equity
Limited Partner (704,300) 63,980
General Partners 50,452 73,892
----------- -----------
Total Partners' equity (653,848) 137,872
----------- -----------
Total liabilities and partners'
equity $22,990,258 $23,824,234
=========== ===========
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 1,356,115 $ 1,342,960
----------- -----------
Expenses:
Operating expenses 796,685 734,845
Interest expense 411,496 417,630
Depreciation and amortization 467,796 469,812
----------- -----------
Total expenses 1,675,977 1,622,287
Net loss (319,862) (279,327)
=========== ===========
Other partners' share of net loss (3,199) (2,793)
=========== ===========
Partnerships' share of net loss (316,663) (276,534)
Suspended loss 221,954 105,720
----------- -----------
Equity in Losses of Project Partnerships $ (94,709) $ (170,814)
=========== ===========
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):
In accordance with the Partnership's policy of presenting the financial
information of the Project Partnerships on a three month lag, below is the
summarized financial information for the Series' Project Partnerships as of
June 30, of each year:
1998 1997
SERIES 3 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 2,142,090 $ 2,094,496
Investment properties, net 18,451,962 19,383,407
Other assets 221,466 236,415
----------- -----------
Total assets $20,815,518 $21,714,318
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 484,048 543,028
Long-term debt 21,758,002 21,830,460
----------- -----------
Total liabilities 22,242,050 22,373,488
----------- -----------
Partners' equity
Limited Partner (1,729,088) (986,004)
General Partners 302,556 326,834
----------- -----------
Total Partners' equity (1,426,532) (659,170)
----------- -----------
Total liabilities and partners'
equity $20,815,518 $21,714,318
=========== ===========
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 1,187,591 $ 1,210,651
Expenses: ----------- -----------
Operating expenses 830,029 742,330
Interest expense 267,363 308,623
Depreciation and amortization 457,794 460,693
----------- -----------
Total expenses 1,555,186 1,511,646
Net loss (367,595) (300,995)
=========== ===========
Other partners' share of net loss (3,676) (3,010)
=========== ===========
Partnerships' share of net loss (363,919) (297,985)
Suspended loss 211,392 179,689
----------- -----------
Equity in Losses of Project Partnershi ps $ (152,527) $ (118,296)
=========== ===========
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):
In accordance with the Partnership's policy of presenting the financial
information of the Project Partnerships on a three month lag, below is the
summarized financial information for the Series' Project Partnerships as of
June 30, of each year:
1998 1997
SERIES 4 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 2,281,638 $ 2,100,912
Investment properties, net 24,774,619 25,828,907
Other assets 46,196 24,858
----------- -----------
Total assets $27,102,453 $27,954,677
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 592,640 562,752
Long-term debt 26,531,497 26,611,866
----------- -----------
Total liabilities 27,124,137 27,174,618
----------- -----------
Partners' equity
Limited Partner (240,423) 529,747
General Partners 218,739 250,312
----------- -----------
Total Partners' equity (21,684) 780,059
----------- -----------
Total liabilities and partners'
equity $27,102,453 $27,954,677
=========== ===========
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 1,656,330 $ 1,592,236
Expenses: ----------- -----------
Operating expenses 981,127 882,888
Interest expense 357,041 462,018
Depreciation and amortization 530,310 521,872
----------- -----------
Total expenses 1,868,478 1,866,778
Net loss (212,148) (274,542)
=========== ===========
Other partners' share of net loss (2,121) (2,745)
=========== ===========
Partnerships' share of net loss (210,027) (271,797)
Suspended loss 175,290 114,077
----------- -----------
Equity in Losses of Project Partnerships $ (34,737) $ (157,720)
=========== ===========
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):
In accordance with the Partnership's policy of presenting the financial
information of the Project Partnerships on a three month lag, below is the
summarized financial information for the Series' Project Partnerships as of
June 30, of each year:
1998 1997
SERIES 5 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 2,759,912 $ 2,731,776
Investment properties, net 31,015,360 32,306,100
Other assets 71,380 4,958
----------- -----------
Total assets $33,846,652 $35,042,834
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 756,060 824,094
Long-term debt 32,813,316 32,897,396
----------- -----------
Total liabilities 33,569,376 33,721,490
----------- -----------
Partners' equity
Limited Partner 350,386 1,347,051
General Partners (73,110) (25,707)
----------- -----------
Total Partners' equity 277,276 1,321,344
----------- -----------
Total liabilities and partners'
equity $33,846,652 $35,042,834
=========== ===========
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 1,765,354 $ 1,778,167
Expenses: ----------- -----------
Operating expenses 1,123,887 1,064,849
Interest expense 417,261 453,197
Depreciation and amortization 666,375 687,623
----------- -----------
Total expenses 2,207,523 2,205,669
Net loss (442,169) (427,502)
=========== ===========
Other partners' share of net loss (4,422) (4,275)
=========== ===========
Partnerships' share of net loss (437,747) (423,227)
Suspended loss 189,486 47,958
----------- -----------
Equity in Losses of Project Partnerships $ (248,261) $ (375,269)
=========== ===========
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):
In accordance with the Partnership's policy of presenting the financial
information of the Project Partnerships on a three month lag, below is the
summarized financial information for the Series' Project Partnerships as of
June 30, of each year:
1998 1997
SERIES 6 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 3,077,417 $ 2,904,433
Investment properties, net 35,013,401 36,416,742
Other assets 24,437 15,352
----------- -----------
Total assets $38,115,255 $39,336,527
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 788,868 880,880
Long-term debt 35,658,804 35,836,877
----------- -----------
Total liabilities 36,447,672 36,717,757
----------- -----------
Partners' equity
Limited Partner 1,834,672 2,748,170
General Partners (167,089) (129,400)
----------- -----------
Total Partners' equity 1,667,583 2,618,770
----------- -----------
Total liabilities and partners' $38,115,255 $39,336,527
equity =========== ===========
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 1,988,399 $ 2,044,084
Expenses: ----------- -----------
Operating expenses 1,141,374 1,094,214
Interest expense 546,487 652,781
Depreciation and amortization 732,938 736,464
----------- -----------
Total expenses 2,420,799 2,483,459
Net loss (432,400) (439,375)
=========== ===========
Other partners' share of net loss (4,324) (4,394)
=========== ===========
Partnerships' share of net loss (428,076) (434,981)
Suspended losses 89,678 36,779
----------- -----------
Equity in Losses of Project Partnerships $ (338,398) $ (398,202)
=========== ===========
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS (continued):
In accordance with the Partnership's policy of presenting the financial
information of the Project Partnerships on a three month lag, below is the
summarized financial information for the Series' Project Partnerships as of
June 30, of each year:
1998 1997
TOTAL SERIES 2- 6 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 12,011,214 $ 11,477,557
Investment properties, net 130,460,172 136,103,392
Other assets 398,750 291,641
----------- -----------
Total assets $142,870,136 $147,872,590
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 3,059,149 3,239,377
Long-term debt 139,968,192 140,434,338
----------- -----------
Total liabilities 143,027,341 143,673,715
----------- -----------
Partners' equity
Limited Partner (488,753) 3,702,944
General Partners 331,548 495,931
----------- -----------
Total Partners' equity (157,205) 4,198,875
----------- -----------
Total liabilities and partners'
equity $142,870,136 $147,872,590
============= =============
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 7,953,789 $ 7,968,098
Expenses: ------------- -------------
Operating expenses 4,873,102 4,519,126
Interest expense 1,999,648 2,294,249
Depreciation and amortization 2,855,213 2,876,464
----------- -----------
Total expenses 9,727,963 9,689,839
Net loss (1,774,174) (1,721,741)
=========== ===========
Other partners' share of net loss (17,742) (17,217)
=========== ===========
Partnerships' share of net loss (1,756,432) (1,704,524)
Suspended losses 887,800 484,223
----------- -----------
Equity in Losses of Project
Partnerships $ (868,632) $(1,220,301)
============ ============
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations, Liquidity and Capital Resources
Operations commenced on September 14, 1990, with the first admission of
Assignees in Series 2. The proceeds from Assignees' capital contributions
available for investment were used to acquire interests in Project
Partnerships.
As disclosed on the statement of operations for each Series, except as
described below, interest income is comparable for the six and three months
ended September 30, 1998 and September 30, 1997. The General and
Administrative expenses - General Partner and General and Administrative
expenses - Other for the six and three months ended September 30, 1998 are
comparable for the same period ended September 30, 1997. There were no
unusual variations in the operating results between these two periods.
The capital resources of each Series are used to pay General and
Administrative operating costs including personnel, supplies, data
processing, travel and legal and accounting associated with the
administration and monitoring of Gateway and the Project Partnerships. The
capital resources are also used to pay the Asset Management Fee due the
Managing General Partner, but only to the extent that Gateway's remaining
resources are sufficient to fund Gateway's ongoing needs. (Payment of any
Asset Management Fee unpaid at the time Gateway sells its interests in the
Project Partnerships is subordinated to the return of the investors' original
capital contributions).
The sources of funds to pay the operating costs of each Series are short
term investments and interest earned thereon, the maturity of U.S. Treasury
Security Strips ("Zero Coupon Treasuries") which were purchased with funds
set aside for this purpose, and cash distributed to the Series from the
operations of the Project Partnerships.
From inception, no Series has paid distributions and management does not
anticipate distributions in the future.
Series 2 - Gateway closed this series on September 14, 1990 after receiving
$6,136,000 from 375 Assignees. Equity in Losses of Project Partnerships for
the six months ended September 30, 1998 decreased from $170,814 for the six
months ended September 30, 1997 to $94,709 as a result of not including
losses of $221,954 in 1998 as compared to $105,720 in 1997, as these losses
would reduce the investment in certain Project Partnerships below zero. In
general, it is common in the real estate industry to experience losses for
financial and tax reporting purposes because of the non-cash expenses of
depreciation and amortization. As a result, management expects that this
Series, as well as those described below, will report its equity in Project
Partnerships as a loss for tax and financial reporting purposes. Overall,
management believes the Project Partnerships are operating as expected and
are generating tax credits which meet projections.
At September 30, 1998, the Series had $169,748 of short-term investments
(Cash and Cash Equivalents). It also had $338,992 in Zero Coupon Treasuries
with annual maturities providing $49,544 in fiscal year 2000 increasing to
$66,285 in fiscal year 2007. Management believes the sources of funds are
sufficient to meet current and ongoing operating costs for the foreseeable
future, and to pay part of the Asset Management Fee.
As disclosed on the statement of cash flows, the Series had a net loss of
$125,312 for the six months ended September 30, 1998. However, after
adjusting for Equity in Losses of Project Partnerships of $94,709 and the
changes in operating assets and liabilities, net cash used in operating
activities was $27,164 as a result of paying Asset Management Fees of
$35,000. Cash provided by investing activities totaled $36,061, consisting of
$5,393 in cash distributions from the Project Partnerships and $30,668 from
matured Zero Coupon Treasuries. There were no unusual events or trends to
describe.
Series 3 - Gateway closed this series on December 13, 1990 after receiving
$5,456,000 from 398 Assignees. Equity in Losses of Project Partnerships for
the six months ended September 30, 1998 increased from $118,296 for the six
months ended September 30, 1997 to $152,527.
At September 30, 1998, the Series had $135,900 of short-term investments
(Cash and Cash Equivalents). It also had $301,526 in Zero Coupon Treasuries
with annual maturities providing $44,054 in fiscal year 2000 increasing to
$58,940 in fiscal year 2007. Management believes the sources of funds are
sufficient to meet current and ongoing operating costs for the foreseeable
future, and to pay part of the Asset Management Fee.
As disclosed on the statement of cash flows, the Series had a net loss of
$183,338 for the six months ended September 30, 1998. However, after
adjusting for Equity in Losses of Project Partnerships of $152,527 and the
changes in operating assets and liabilities, net cash used in operating
activities was $43,276 as a result of paying Asset Management Fees of
$47,000. Cash provided by investing activities totaled $43,554, consisting of
$16,276 in cash distributions from the Project Partnerships and $27,278 from
matured Zero Coupon Treasuries. There were no unusual events or trends to
describe.
Series 4 - Gateway closed this series on May 31, 1991 after receiving
$6,915,000 from 465 Assignees. Equity in Losses of Project Partnerships for
the six months ended September 30, 1998 decreased from $157,720 for the six
months ended September 30, 1997 to $34,737 as a result of not including
losses of $175,290 in 1998 as compared to $114,077 in 1997, as these losses
would reduce the investment in certain Project Partnerships below zero.
At September 30, 1998, the Series had $208,954 of short-term investments
(Cash and Cash Equivalents). It also had $382,003 in Zero Coupon Treasuries
with annual maturities providing $55,834 in fiscal year 2000 increasing to
$74,700 in fiscal year 2007. Management believes the sources of funds are
sufficient to meet current and ongoing operating costs for the foreseeable
future, and to pay part of the Asset Management Fee.
As disclosed on the statement of cash flows, the Series had a net loss of
$72,483 for the six months ended September 30, 1998. However, after
adjusting for Equity in Losses of Project Partnerships of $34,737 and the
changes in operating assets and liabilities, net cash used in operating
activities was $36,063 as a result of paying Asset Management Fees of
$42,000. Cash provided by investing activities totaled $48,141, consisting
of $13,582 in cash distributions from the Project Partnerships and $34,559
from matured Zero Coupon Treasuries. There were no unusual events or trends
to describe.
Series 5 - Gateway closed this series on October 11, 1991 after receiving
$8,616,000 from 535 Assignees. Equity in Losses of Project Partnerships for
the six months ended September 30, 1998 decreased from $375,269 for the six
months ended September 30, 1997 to $248,261 as a result of not including
losses of $189,486 in 1998 as compared to $47,958 in 1997, as these losses
would reduce the investment in certain Project Partnerships below zero.
At September 30, 1998, the Series had $288,746 of short-term investments
(Cash and Cash Equivalents). It also had $476,117 in Zero Coupon Treasuries
with annual maturities providing $69,568 in fiscal year 2000 increasing to
$93,075 in fiscal year 2007. Management believes the sources of funds are
sufficient to meet current and ongoing operating costs for the foreseeable
future, and to pay part of the Asset Management Fee.
As disclosed on the statement of cash flows, the Series had a net loss of
$297,014 for the six months ended September 30, 1998. However, after
adjusting for Equity in Losses of Project Partnerships of $248,261 and the
changes in operating assets and liabilities, net cash used in operating
activities was $49,305 as a result of paying Asset Management Fees of
$58,000. Cash provided by investing activities totaled $57,238, consisting of
$14,165 in cash distributions from the Project Partnerships and $43,073 from
matured Zero Coupon Treasuries. There were no unusual events or trends to
describe.
Series 6 - Gateway closed this series on March 11, 1992 after receiving
$10,105,000 from 625 Assignees. Equity in Losses of Project Partnerships for
the six months ended September 30, 1998 decreased from $398,202 for the six
months ended September 30, 1997 to $338,398 as a result of not including
losses of $89,678 in 1998 as compared to $36,779 in 1997, as these losses
would reduce the investment in certain Project Partnerships below zero.
At September 30, 1998, the Series had $344,419 of short-term investments
(Cash and Cash Equivalents). It also had $436,338 in Zero Coupon Treasuries
with annual maturities providing $51,000 in fiscal year 2000 increasing to
$83,000 in fiscal year 2007. Management believes the sources of funds are
sufficient to meet current and ongoing operating costs for the foreseeable
future, and to pay part of the Asset Management Fee.
As disclosed on the statement of cash flows, the Series had a net loss of
$397,322 for the six months ended September 30, 1998. However, after
adjusting for Equity in Losses of Project Partnerships of $338,398 and the
changes in operating assets and liabilities, net cash used in operating
activities was $70,169 as a result of paying Asset Management Fees of
$55,000. Cash provided by investing activities totaled $8,333, consisting of
cash distributions from the Project Partnerships. There were no unusual
events or trends to describe.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
By: Raymond James Tax Credit Funds,Inc.
Date: November 13, 1998 By:/s/ Ronald M. Diner
Ronald M. Diner
President
Date: November 13, 1998 By:/s/ Sandra L. Furey
Sandra L. Furey
Secretary and Treasurer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF Q934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998,
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 1,147,767
<SECURITIES> 1,934,976
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,409,460
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,604,950
<CURRENT-LIABILITIES> 289,734
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,926,942
<TOTAL-LIABILITY-AND-EQUITY> 8,604,950
<SALES> 0
<TOTAL-REVENUES> 103,490
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 310,327
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,075,469)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,075,469)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,075,469)
<EPS-PRIMARY> (28.60)<F1>
<EPS-DILUTED> (28.60)<F1>
<FN>
<F1>EPS IS NET LOSS PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
