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 June 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 June 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 June 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 207,499 $ 160,851
Investments in Securities 47,009 47,501
------------ ------------
Total Current Assets 254,508 208,352
Investments in Securities 285,633 326,412
Investments in Project Partnerships, Net 437,658 510,805
------------- -------------
Total Assets $ 977,799 $ 1,045,569
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 43,956 46,190
------------- -------------
Total Current Liabilities 43,956 46,190
------------- -------------
Long-Term Liabilities:
Payable to General Partners 312,798 296,195
------------- -------------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at June 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 June 30, 1998 and
March 31, 1998, issued and outstanding 668,634 749,952
General Partners (47,589) (46,768)
------------- -------------
Total Partners' Equity 621,045 703,184
------------- -------------
Total Liabilities and Partners' Equity $ 977,799 $ 1,045,569
============= =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
SERIES 3 June 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 187,557 $ 135,622
Investments in Securities 41,183 42,252
------------ ------------
Total Current Assets 228,740 177,874
Investments in Securities 254,695 290,336
Investments in Project Partnerships, Net 312,742 378,000
------------- -------------
Total Assets $ 796,177 $ 846,210
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 48,264 50,773
------------- -------------
Total Current Liabilities 48,264 50,773
------------- -------------
Long-Term Liabilities:
Payable to General Partners 250,079 234,783
------------- -------------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at June 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 June 30, 1998 and
March 31, 1998, issued and outstanding 540,671 602,863
General Partners (42,837) (42,209)
------------- -------------
Total Partners' Equity 497,834 560,654
------------- -------------
Total Liabilities and Partners' Equity $ 796,177 $ 846,210
============= =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
SERIES 4 June 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 254,529 $ 196,876
Investments in Securities 52,972 53,529
------------ ------------
Total Current Assets 307,501 250,405
Investments in Securities 321,875 367,826
Investments in Project Partnerships, Net 905,146 981,823
------------- -------------
Total Assets $ 1,534,522 $ 1,600,054
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 53,185 56,202
------------- -------------
Total Current Liabilities 53,185 56,202
------------- -------------
Long-Term Liabilities:
Payable to General Partners 299,473 280,718
------------- -------------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at June 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 June 30, 1998 and
March 31, 1998, issued and outstanding 1,230,699 1,311,156
General Partners (48,835) (48,022)
------------- -------------
Total Partners' Equity 1,181,864 1,263,134
------------- -------------
Total Liabilities and Partners' Equity $ 1,534,522 $ 1,600,054
============= =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
SERIES 5 June 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 350,299 $ 280,813
Investments in Securities 66,024 66,717
------------ ------------
Total Current Assets 416,323 347,530
Investments in Securities 401,175 458,448
Investments in Project Partnerships, Net 1,371,904 1,500,087
------------- -------------
Total Assets $ 2,189,402 $ 2,306,065
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 71,478 74,748
------------- -------------
Total Current Liabilities 71,478 74,748
------------- -------------
Long-Term Liabilities:
Payable to General Partners 297,708 274,507
------------- -------------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at June 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 June 30, 1998 and
March 31, 1998, issued and outstanding 1,877,637 2,012,865
General Partners (57,421) (56,055)
------------- -------------
Total Partners' Equity 1,820,216 1,956,810
------------- -------------
Total Liabilities and Partners' Equity $ 2,189,402 $ 2,306,065
============= =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
SERIES 6 June 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 408,748 $ 406,255
Investments in Securities 49,335 48,608
------------ ------------
Total Current Assets 458,083 454,863
Investments in Securities 379,539 373,009
Investments in Project Partnerships, Net 2,906,493 3,102,793
------------- -------------
Total Assets $ 3,744,115 $ 3,930,665
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 67,247 70,482
------------- -------------
Total Current Liabilities 67,247 70,482
------------- -------------
Long-Term Liabilities:
Payable to General Partners 367,316 341,554
------------- -------------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at June 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 June 30, 1998 and
March 31, 1998, issued and outstanding 3,365,183 3,572,169
General Partners (55,631) (53,540)
------------- -------------
Total Partners' Equity 3,309,552 3,518,629
------------- -------------
Total Liabilities and Partners' Equity $ 3,744,115 $ 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 June 30, March 31,
1998 1998
--------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 1,408,632 $ 1,180,417
Investments in Securities 256,523 258,607
------------ ------------
Total Current Assets 1,665,155 1,439,024
Investments in Securities 1,642,917 1,816,031
Investments in Project Partnerships, Net 5,933,943 6,473,508
------------- -------------
Total Assets $ 9,242,015 $ 9,728,563
============= =============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 284,130 298,395
------------- -------------
Total Current Liabilities 284,130 298,395
------------- -------------
Long-Term Liabilities:
Payable to General Partners 1,527,374 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 June 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 June 30, 1998 and
March 31, 1998, issued and outstanding 7,682,823 8,249,005
General Partners (252,312) (246,594)
------------- -------------
Total Partners' Equity 7,430,511 8,002,411
------------- -------------
Total Liabilities and Partners' Equity $ 9,242,015 $ 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 JUNE 30,
(Unaudited)
SERIES 2 1998 1997
---- ----
Revenues:
Interest Income $ 9,029 $ 9,736
------------ ------------
Expenses:
Asset Management Fee-General Partner 17,193 17,222
General and Administrative:
General Partner 1,851 1,872
Other 1,533 1,227
Amortization 1,345 592
------------ ------------
Total Expenses 21,922 20,913
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (12,893) (11,177)
Equity in Losses of Project Partnerships (69,246) (125,362)
------------ ------------
Net Loss $ (82,139) $ (136,539)
============ ============
Allocation of Net Loss:
Assignees (81,318) (135,174)
General Partners (821) (1,365)
------------ ------------
$ (82,139) $ (136,539)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (13.25) $ (22.03)
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 JUNE 30,
(Unaudited)
SERIES 3 1998 1997
---- ----
Revenues:
Interest Income $ 7,505 $ 7,300
------------ ------------
Expenses:
Asset Management Fee-General Partner 15,911 15,948
General and Administrative:
General Partner 1,935 1,957
Other 1,757 1,381
Amortization 1,115 (404)
------------ ------------
Total Expenses 20,718 18,882
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (13,213) (11,582)
Equity in Losses of Project Partnerships (49,607) (61,939)
------------ ------------
Net Loss $ (62,820) $ (73,521)
============ ============
Allocation of Net Loss:
Assignees (62,192) (72,786)
General Partners (628) (735)
------------ ------------
$ (62,820) $ (73,521)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (11.40) $ (13.34)
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 JUNE 30,
(Unaudited)
SERIES 4 1998 1997
---- ----
Revenues:
Interest Income $ 9,773 $ 9,737
------------ ------------
Expenses:
Asset Management Fee-General Partner 19,533 19,568
General and Administrative:
General Partner 2,440 2,468
Other 1,981 1,577
Amortization 2,264 (489)
------------ ------------
Total Expenses 26,218 23,124
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (16,445) (13,387)
Equity in Losses of Project Partnerships (64,825) (130,656)
------------ ------------
Net Loss $ (81,270) $ (144,043)
============ ============
Allocation of Net Loss:
Assignees (80,457) (142,603)
General Partners (813) (1,440)
------------ ------------
$ (81,270) $ (144,043)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (11.64) $ (20.62)
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 JUNE 30,
(Unaudited)
SERIES 5 1998 1997
---- ----
Revenues:
Interest Income $ 12,625 $ 12,532
------------ ------------
Expenses:
Asset Management Fee-General Partner 24,166 24,211
General and Administrative:
General Partner 3,029 3,063
Other 2,547 1,901
Amortization 3,256 2,751
------------ ------------
Total Expenses 32,998 31,926
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (20,373) (19,394)
Equity in Losses of Project Partnerships (116,221) (157,258)
------------ ------------
Net Loss $ (136,594) $ (176,652)
============ ============
Allocation of Net Loss:
Assignees (135,228) (174,885)
General Partners (1,366) (1,767)
------------ ------------
$ (136,594) $ (176,652)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (15.69) $ (20.30)
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 JUNE 30,
(Unaudited)
SERIES 6 1998 1997
---- ----
Revenues:
Interest Income $ 12,166 $ 12,239
------------ ------------
Expenses:
Asset Management Fee-General Partner 26,780 26,851
General and Administrative:
General Partner 3,198 3,234
Other 3,298 2,258
Amortization 4,855 5,512
------------ ------------
Total Expenses 38,131 37,855
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (25,965) (25,616)
Equity in Losses of Project Partnerships (183,112) (226,916)
------------ ------------
Net Loss $ (209,077) $ (252,532)
============ ============
Allocation of Net Loss:
Assignees (206,986) (250,007)
General Partners (2,091) (2,525)
------------ ------------
$ (209,077) $ (252,532)
============ ============
Net Loss Per Beneficial Assignee
Certificate $ (20.48) $ (24.74)
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 JUNE 30,
(Unaudited)
TOTAL SERIES 2 - 6 1998 1997
---- ----
Revenues:
Interest Income $ 51,098 $ 51,544
------------ ------------
Expenses:
Asset Management Fee-General Partner 103,583 103,800
General and Administrative:
General Partner 12,453 12,594
Other 11,116 8,344
Amortization 12,835 7,962
------------ ------------
Total Expenses 139,987 132,700
------------ ------------
Loss Before Equity in Losses of Project
Partnerships (88,889) (81,156)
Equity in Losses of Project Partnerships (483,011) (702,131)
------------ ------------
Net Loss $ (571,900) $ (783,287)
============ ============
Allocation of Net Loss:
Assignees (566,182) (775,455)
General Partners (5,718) (7,832)
------------ ------------
$ (571,900) $ (783,287)
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 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 (135,174) (1,365) (136,539)
------------- ------------ -------------
Balance at June 30, 1997 $ 949,094 $ (44,756) $ 904,338
============= ============ =============
Balance at March 31, 1998 $ 749,952 $ (46,768) $ 703,184
Net Loss (81,318) (821) (82,139)
------------- ------------ -------------
Balance at June 30, 1998 $ 668,634 $ (47,589) $ 621,045
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
General
SERIES 3 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1997 $ 822,156 $ (39,994) $ 782,162
Net Loss (72,786) (735) (73,521)
------------- ------------ -------------
Balance at June 30, 1997 $ 749,370 $ (40,729) $ 708,641
============= ============ =============
Balance at March 31, 1998 $ 602,863 $ (42,209) $ 560,654
Net Loss (62,192) (628) (62,820)
------------- ------------ -------------
Balance at June 30, 1998 $ 540,671 $ (42,837) $ 497,834
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 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 (142,603) (1,440) (144,043)
------------- ------------ -------------
Balance at June 30, 1997 $ 1,649,114 $ (44,608) $ 1,604,506
============= ============ =============
Balance at March 31, 1998 $ 1,311,156 $ (48,022) $ 1,263,134
Net Loss (80,457) (813) (81,270)
------------- ------------ -------------
Balance at June 30, 1998 $ 1,230,699 $ (48,835) $ 1,181,864
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 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 (174,885) (1,767) (176,652)
------------- ------------ -------------
Balance at June 30, 1997 $ 2,643,347 $ (49,687) $ 2,593,660
============= ============ =============
Balance at March 31, 1998 $ 2,012,865 $ (56,055) $ 1,956,810
Net Loss (135,228) (1,366) (136,594)
------------- ------------ -------------
Balance at June 30, 1998 $ 1,877,637 $ (57,421) $ 1,820,216
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 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 (250,007) (2,525) (252,532)
------------- ------------ -------------
Balance at June 30, 1997 $ 4,183,598 $ (47,364) $ 4,136,234
============= ============ =============
Balance at March 31, 1998 $ 3,572,169 $ (53,540) $ 3,518,629
Net Loss (206,986) (2,091) (209,077)
------------- ------------ -------------
Balance at June 30, 1998 $ 3,365,183 $ (55,631) $ 3,309,552
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 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 (775,455) (7,832) (783,287)
------------- ------------ -------------
Balance at June 30, 1997 $ 10,174,523 $ (227,144) $ 9,947,379
============= ============ =============
Balance at March 31, 1998 $ 8,249,005 $ (246,594) $ 8,002,411
Net Loss (566,182) (5,718) (571,900)
------------- ------------ -------------
Balance at June 30, 1998 $ 7,682,823 $ (252,312) $ 7,430,511
============= ============ =============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
SERIES 2 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $ (82,139) $ (136,539)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 1,345 592
Accreted Interest Income on Investments
in Securities (6,231) (6,669)
Equity in Losses of Project
Partnerships 69,246 125,362
Interest Income from Redemption of
Securities 16,834 13,628
Payment of Asset Management Fee 0 0
Changes in Operating Assets and
Liabilities:
Increase in Payable to Other Series 0 156,308
Increase in Payable to General Partners 14,369 16,757
------------ ------------
Net Cash Used in Operating
Activities 13,424 169,439
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 2,556 2,640
Redemption of Investment in Securities 30,668 32,065
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 33,224 34,705
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents 46,648 204,144
Cash and Cash Equivalents at Beginning of
Year 160,851 138,561
------------ ------------
Cash and Cash Equivalents at End of Year $ 207,499 $ 342,705
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
SERIES 3 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $ (62,820) $ (73,521)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 1,115 (404)
Accreted Interest Income on Investments
in Securities (5,542) (5,931)
Equity in Losses of Project
Partnerships 49,607 61,939
Interest Income from Redemption of
Securities 14,974 12,121
Changes in Operating Assets and
Liabilities:
Increase in Receivable from Other
Series 0 (40,642)
Increase in Payable to General
Partners 12,787 15,433
------------ ------------
Net Cash Used in Operating
Activities 10,121 (31,005)
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 14,536 8,781
Redemption of Investment in Securities 27,278 28,521
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 41,814 37,302
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents 51,935 6,297
Cash and Cash Equivalents at Beginning of
Year 135,622 109,925
------------ ------------
Cash and Cash Equivalents at End of Year $ 187,557 $ 116,222
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
SERIES 4 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $ (81,270) $ (144,043)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 2,264 (489)
Accreted Interest Income on Investments
in Securities (7,021) (7,514)
Equity in Losses of Project
Partnerships 64,825 130,656
Interest Income from Redemption of
Securities 18,970 15,358
Changes in Operating Assets and
Liabilities:
Increase in Receivable from Other
Series 0 (51,491)
Increase in Payable to General
Partners 15,738 19,094
------------ ------------
Net Cash Used in Operating
Activities 13,506 (38,429)
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 9,588 6,835
Redemption of Investment in Securities 34,559 36,133
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 44,147 42,968
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents 57,653 4,539
Cash and Cash Equivalents at Beginning of
Year 196,876 182,773
------------ ------------
Cash and Cash Equivalents at End of Year $ 254,529 $ 187,312
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
SERIES 5 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $ (136,594) $ (176,652)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 3,256 2,751
Accreted Interest Income on Investments
in Securities (8,751) (9,366)
Equity in Losses of Project
Partnerships 116,221 157,258
Interest Income from Redemption of
Securities 23,644 19,140
Changes in Operating Assets and
Liabilities:
Increase in Receivable from Other
Series 0 (64,175)
Increase in Payable to General
Partners 19,931 23,825
------------ ------------
Net Cash Used in Operating
Activities 17,707 (47,219)
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 8,706 8,356
Redemption of Investment in Securities 43,073 45,035
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 51,779 53,391
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents 69,486 6,172
Cash and Cash Equivalents at Beginning of
Year 280,813 259,006
------------ ------------
Cash and Cash Equivalents at End of Year $ 350,299 $ 265,178
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
SERIES 6 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $ (209,077) $ (252,532)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 4,855 5,512
Accreted Interest Income on Investments
in Securities (7,257) (7,411)
Equity in Losses of Project
Partnerships 183,112 226,916
Interest Income from Redemption of
Securities 0 0
Changes in Operating Assets and
Liabilities:
Increase in Payable to General
Partners 22,527 26,326
------------ ------------
Net Cash Used in Operating
Activities (5,840) (1,189)
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 8,333 6,391
Redemption of Investment in Securities 0 0
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 8,333 6,391
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents 2,493 5,202
Cash and Cash Equivalents at Beginning of
Year 406,255 396,736
------------ ------------
Cash and Cash Equivalents at End of Year $ 408,748 $ 401,938
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
TOTAL SERIES 2 - 6 1998 1997
- -------- ---- ----
Cash Flows from Operating Activities:
Net Loss $ (571,900) $ (783,287)
Adjustments to Reconcile Net Loss to Net
Cash Provided by (Used in) Operating
Activities:
Amortization 12,835 7,962
Accreted Interest Income on Investments
in Securities (34,802) (36,891)
Equity in Losses of Project
Partnerships 483,011 702,131
Interest Income from Redemption of
Securities 74,422 60,247
Changes in Operating Assets and
Liabilities:
Increase in Receivable from Other
Series 0 (156,308)
Increase in Payable to Other Series 0 156,308
Increase in Payable to General
Partners 85,352 101,435
------------ ------------
Net Cash Used in Operating
Activities 48,918 51,597
------------ ------------
Cash Flows from Investing Activities:
Distributions Received from Project
Partnerships 43,719 33,003
Redemption of Investment in Securities 135,578 141,754
------------ ------------
Net Cash Provided by (Used in)
Investing Activities 179,297 174,757
------------ ------------
Increase (Decrease) in Cash and Cash
Equivalents 228,215 226,354
Cash and Cash Equivalents at Beginning of
Year 1,180,417 1,087,001
------------ ------------
Cash and Cash Equivalents at End of Year $ 1,408,632 $ 1,313,355
============ ============
See accompanying notes to financial statements.
<PAGE>
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JUNE 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 June
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 and 1996 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 June 30, 1998 Balance Sheet includes Investment in Securities
consisting of U.S. Government Security Strips which represents their cost,
plus accreted interest income of $129,711 for Series 2, $115,375 for Series
3, $146,168 for Series 4, $182,180 for Series 5 and $139,544 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 $ 362,286 $ 332,643 $ 29,643
Series 3 322,141 295,878 26,263
Series 4 408,280 374,847 33,433
Series 5 508,710 467,199 41,511
Series 6 459,521 428,874 41,511
As of June 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 $ 47,009 $ 41,813 $ 52,972
After 1 year through 5 years 172,485 153,420 194,368
After 5 years through 10 years 113,149 100,645 127,507
---------- ---------- ----------
Total Amount Carried on
Balance Sheet $ 332,643 $ 295,878 $ 374,847
========== ========== ==========
Series 5 Series 6 Total
-------- -------- --------
Due with 1 year $ 66,024 $ 49,335 $ 257,153
After 1 year through 5 years 242,255 196,075 958,603
After 5 years through 10 years 158,920 183,464 683,685
---------- ---------- ----------
Total Amount Carried on
Balance Sheet $ 467,199 $ 428,874 $1,899,441
========== ========== ==========
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 three months June 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 $ 17,193 $ 17,222
Series 3 15,911 15,948
Series 4 19,533 19,568
Series 5 24,166 24,211
Series 6 26,780 26,851
--------- ---------
Total $ 103,583 $ 103,800
========= =========
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 $ 1,851 $ 1,872
Series 3 1,935 1,957
Series 4 2,440 2,468
Series 5 3,029 3,063
Series 6 3,198 3,234
--------- --------
Total $ 12,453 $ 12,594
========= ========
<PAGE>
NOTE 5 - INVESTMENTS IN PROJECT PARTNERSHIPS:
As of June 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 JUNE 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) (4,380,029) (4,310,783)
Cumulative distributions received from (66,832) (64,276)
Project Partnerships ------------ -------------
Investment in Project Partnerships before
Adjustment 77,817 149,619
Excess of investment cost over the
underlying assets acquired:
Acquisition fees and expenses 390,838 390,838
Accumulated amortization of acquisition
fees and expenses (30,997) (29,652)
----------- ------------
Investments in Project Partnerships $ 437,658 $ 510,805
============ ============
(1) In accordance with the Partnership's accounting policy to not carry
Investments in Project Partnerships below zero, cumulative suspended losses
of $669,737 for the period ended June 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 JUNE 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) (3,871,388) (3,821,781)
Cumulative distributions received from
Project Partnerships (161,112) (146,576)
----------- -------------
Investment in Project Partnerships before
Adjustment (143,787) (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 (35,217) (34,102)
----------- ------------
Investments in Project Partnerships $ 312,742 $ 378,000
============ ============
(1) In accordance with the Partnership's accounting policy to not carry
Investments in Project Partnerships below zero, cumulative suspended losses
of $1,121,221 for the period ended December 31, 1997 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 JUNE 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) (4,490,092) (4,425,267)
Cumulative distributions received from
Project Partnerships (99,854) (90,266)
----------- -------------
Investment in Project Partnerships before
Adjustment 362,573 436,986
Excess of investment cost over the
underlying assets acquired:
Acquisition fees and expenses 562,967 562,967
Accumulated amortization of acquisition
fees and expenses (20,394) (18,130)
----------- ------------
Investments in Project Partnerships $ 905,146 $ 981,823
============ ============
(1) In accordance with the Partnership's accounting policy to not carry
Investments in Project Partnerships below zero, cumulative suspended losses
of $583,809 for the period ended December 31, 1997 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 JUNE 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) (5,223,578) (5,107,357)
Cumulative distributions received from
Project Partnerships (140,896) (132,190)
----------- -------------
Investment in Project Partnerships before
Adjustment 799,998 924,925
Excess of investment cost over the
underlying assets acquired:
Acquisition fees and expenses 650,837 650,837
Accumulated amortization of acquisition
fees and expenses (78,931) (75,675)
------------ ------------
Investments in Project Partnerships $ 1,371,904 $ 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 $320,482 for the period ended December 31, 1997 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 JUNE 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) (5,077,931) (4,894,819)
Cumulative distributions received from
Project Partnerships (130,039) (121,706)
------------ -------------
Investment in Project Partnerships before
Adjustment 2,254,245 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 (132,931) (128,076)
------------ ------------
Investments in Project Partnerships $ 2,906,493 $ 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 $273,943 for the period ended December 31, 1997 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 JUNE 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 (1) (23,043,018) (22,560,007)
Cumulative distributions received from
Project Partnerships (598,733) (555,014)
----------- -------------
Investment in Project Partnerships before
Adjustment 3,350,846 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 (298,470) (285,635)
----------- ------------
Investments in Project Partnerships $ 5,933,943 $ 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
March 31, of each year:
MARCH 31,,
1998 1997
SERIES 2 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 1,697,340 $ 1,634,549
Investment properties, net 21,437,691 22,326,462
Other assets 15,595 11,036
----------- -----------
Total assets $23,150,626 $23,972,047
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 452,263 467,917
Long-term debt 23,216,826 23,260,181
----------- -----------
Total liabilities 23,669,089 23,728,098
----------- -----------
Partners' equity
Limited Partner (570,269) 168,997
General Partners 51,806 74,952
----------- -----------
Total Partners' equity (518,463) 243,949
----------- -----------
Total liabilities and partners'
equity $23,150,626 $23,972,047
=========== ===========
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 674,916 $ 663,171
Expenses:
Operating expenses 418,495 389,835
Interest expense 207,000 206,339
Depreciation and amortization 233,898 240,247
----------- -----------
Total expenses 859,393 836,421
Net loss (184,477) (173,250)
=========== ===========
Other partners' share of net loss (1,845) (1,733)
Partnerships' share of net loss (182,632) (171,517)
Suspended losses 113,386 46,155
----------- -----------
Equity in Losses of Project Partnerships $ (69,246) $ (125,362)
=========== ===========
<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
March 31, of each year:
MARCH 31,,
1998 1997
SERIES 3 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 2,126,149 $ 2,051,340
Investment properties, net 18,667,551 19,561,292
Other assets 224,455 243,192
----------- -----------
Total assets $21,018,155 $21,855,824
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 430,047 538,944
Long-term debt 21,786,186 21,839,234
----------- -----------
Total liabilities 22,216,233 22,378,178
----------- -----------
Partners' equity
Limited Partner (1,502,919) (851,512)
General Partners 304,841 329,158
----------- -----------
Total Partners' equity (1,198,078) (522,354)
----------- -----------
Total liabilities and partners'
equity $21,018,155 $21,855,824
=========== ===========
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 634,021 $ 613,571
Expenses:
Operating expenses 394,834 394,769
Interest expense 150,037 154,508
Depreciation and amortization 228,291 230,423
----------- -----------
Total expenses 773,162 779,700
Net loss (139,141) (166,129)
=========== ===========
Other partners' share of net loss (1,391) (1,661)
Partnerships' share of net loss (137,750) (164,468)
Suspended losses 88,143 102,529
----------- -----------
Equity in Losses of Project Partnerships $ (49,607) $ (61,939)
=========== ===========
<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
March 31, of each year:
MARCH 31,,
1998 1997
SERIES 4 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 2,095,030 $ 2,016,453
Investment properties, net 25,028,888 26,071,590
Other assets 44,390 24,404
----------- -----------
Total assets $27,168,308 $28,112,447
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 558,948 647,739
Long-term debt 26,565,661 26,615,588
----------- -----------
Total liabilities 27,124,609 27,263,327
----------- -----------
Partners' equity
Limited Partner (179,134) 597,524
General Partners 222,833 251,596
----------- -----------
Total Partners' equity 43,699 849,120
----------- -----------
Total liabilities and partners'
equity $27,168,308 $28,112,447
=========== ===========
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 795,441 $ 782,939
Expenses:
Operating expenses 453,909 478,798
Interest expense 230,165 249,829
Depreciation and amortization 265,155 260,393
----------- -----------
Total expenses 949,229 989,020
Net loss (153,788) (206,081)
=========== ===========
Other partners' share of net loss (1,538) (2,061)
Partnerships' share of net loss (152,250) (204,020)
Suspended losses 87,425 73,364
----------- -----------
Equity in Losses of Project Partnerships $ (64,825) $ (130,656)
=========== ===========
<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
March 31, of each year:
MARCH 31,,
1998 1997
SERIES 5 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 2,732,243 $ 2,629,405
Investment properties, net 31,346,991 32,629,849
Other assets 36,275 5,057
----------- -----------
Total assets $34,115,509 $35,264,311
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 756,950 788,633
Long-term debt 32,829,165 32,899,775
----------- -----------
Total liabilities 33,586,115 33,688,408
----------- -----------
Partners' equity
Limited Partner 599,983 1,599,064
General Partners (70,589) (23,161)
----------- -----------
Total Partners' equity 529,394 1,575,903
----------- -----------
Total liabilities and partners'
equity $34,115,509 $35,264,311
=========== ===========
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 902,914 $ 880,340
Expenses:
Operating expenses 551,516 490,050
Interest expense 208,096 219,451
Depreciation and amortization 333,352 343,782
----------- -----------
Total expenses 1,092,964 1,053,283
Net loss (190,050) (172,943)
=========== ===========
Other partners' share of net loss (1,901) (1,729)
Partnerships' share of net loss (188,149) (171,214)
Suspended losses 71,928 13,956
----------- -----------
Equity in Losses of Project Partnerships $ (116,221) $ (157,258)
=========== ===========
<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
March 31, of each year:
MARCH 31,,
1998 1997
SERIES 6 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 2,988,191 $ 2,784,026
Investment properties, net 35,362,364 36,759,850
Other assets 37,353 15,234
----------- -----------
Total assets $38,387,908 $39,559,110
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 785,945 898,230
Long-term debt 35,743,123 35,847,402
----------- -----------
Total liabilities 36,529,068 36,745,632
----------- -----------
Partners' equity
Limited Partner 2,024,016 2,940,931
General Partners (165,176) (127,453)
----------- -----------
Total Partners' equity 1,858,840 2,813,478
----------- -----------
Total liabilities and partners' $38,387,908 $39,559,110
equity =========== ===========
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 966,931 $ 959,693
Expenses:
Operating expenses 580,494 562,341
Interest expense 259,487 274,912
Depreciation and amortization 368,093 367,107
----------- -----------
Total expenses 1,208,074 1,204,360
Net loss (241,143) (244,667)
=========== ===========
Other partners' share of net loss (2,411) (2,447)
Partnerships' share of net loss (238,732) (242,220)
Suspended losses 55,620 15,304
----------- -----------
Equity in Losses of Project Partnerships $ (183,112) $ (226,916)
=========== ===========
<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
March 31, of each year:
MARCH 31,,
1998 1997
TOTAL SERIES 2- 6 ---- ----
SUMMARIZED BALANCE SHEETS
Assets:
Current assets $ 11,638,953 $ 11,115,773
Investment properties, net 131,843,485 137,349,043
Other assets 358,068 298,923
----------- -----------
Total assets $143,840,506 $148,763,739
=========== ===========
Liabilities and Partners' Equity:
Current liabilities 2,984,153 3,341,463
Long-term debt 140,140,961 140,462,180
----------- -----------
Total liabilities 143,125,114 143,803,643
----------- -----------
Partners' equity
Limited Partner 371,677 4,455,004
General Partners 343,715 505,092
----------- -----------
Total Partners' equity 715,392 4,960,096
----------- -----------
Total liabilities and partners'
equity $143,840,506 $148,763,739
=========== ===========
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income $ 3,974,223 $ 3,899,714
Expenses:
Operating expenses 2,399,248 2,315,793
Interest expense 1,054,785 1,105,039
Depreciation and amortization 1,428,789 1,441,952
----------- -----------
Total expenses 4,882,822 4,862,784
Net loss (908,599) (963,070)
=========== ===========
Other partners' share of net loss (9,086) (9,631)
Partnerships' share of net loss (899,513) (953,439)
Suspended losses 416,502 251,308
----------- -----------
Equity in Losses of Project
Partnerships $ (483,011) $ (702,131)
=========== ===========
<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 three months ended
June 30, 1998 and June 30, 1997. The General and Administrative expenses -
General Partner and General and Administrative expenses - Other for the three
months ended June 30, 1998 are comparable for the same period ended June 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 three months ended June 30, 1998 decreased from $125,362 for the three
months ended June 30, 1997 to $69,246 as a result of not including losses of
$113,386 in 1998 as compared to $46,155 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 June 30, 1998, the Series had $207,499 of short-term investments (Cash
and Cash Equivalents). It also had $332,643 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
$82,139 for the three months ended June 30, 1998. However, after adjusting
for Equity in Losses of Project Partnerships of $69,246 and the changes in
operating assets and liabilities, net cash provided by operating activities
was $13,424, primarily due to the interest income from the maturity of the
Zero Coupon Treasuries. Cash provided by investing activities totaled
$30,668, consisting of $2,556 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 three months ended June 30, 1998 decreased from $61,939 for the three
months ended June 30, 1997 to $49,607 as a result of not including losses of
$88,143 in 1998 as compared to $102,529 in 1997, as these losses would reduce
the investment in certain Project Partnerships below zero.
At June 30, 1998, the Series had $187,557 of short-term investments (Cash and
Cash Equivalents). It also had $295,878 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
$62,820 for the three months ended June 30, 1998. However, after adjusting
for Equity in Losses of Project Partnerships of $49,607 and the changes in
operating assets and liabilities, net cash provided by operating activities
was $10,121, primarily due to the Interest Income from the Redemption of Zero
Coupon Treasuries of $14,974. Cash provided by investing activities totaled
$41,814, consisting of $14,536 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 three months ended June 30, 1998 decreased from $130,656 for the three
months ended June 30, 1997 to $64,825.
At June 30, 1998, the Series had $254,529 of short-term investments (Cash
and Cash Equivalents). It also had $374,847 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
$81,270 for the three months ended June 30, 1998. However, after adjusting
for Equity in Losses of Project Partnerships of $64,825 and the changes in
operating assets and liabilities, net cash provided by operating activities
was $13,506, primarily due to the Interest Income from the maturity of Zero
Coupon Treasuries of $18,970. Cash provided by investing activities totaled
$44,147, consisting of $9,588 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 three months ended June 30, 1998 decreased from $157,258 for the three
months ended June 30, 1997 to $116,221 as a result of not including losses of
$71,928 in 1998 as compared to $13,956 in 1997, as these losses would reduce
the investment in certain Project Partnerships below zero.
At June 30, 1998, the Series had $350,299 of short-term investments (Cash
and Cash Equivalents). It also had $467,199 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
$136,594 for the three months ended June 30, 1998. However, after adjusting
for Equity in Losses of Project Partnerships of $116,221 and the changes in
operating assets and liabilities, net cash provided by operating activities
was $17,707, primarily due to the Interest Income from the maturity of Zero
Coupon Treasuries of $23,644. Cash provided by investing activities totaled
$51,779, consisting of $8,706 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 three months ended June 30, 1998 decreased from $226,916 for the three
months ended June 30, 1997 to $183,112 as a result of not including losses of
$15,304 in 1998 as compared to $55,620 in 1997, as these losses would reduce
the investment in certain Project Partnerships below zero.
At June 30, 1998, the Series had $408,748 of short-term investments (Cash
and Cash Equivalents). It also had $428,874 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
$209,077 for the three months ended June 30, 1998. However, after adjusting
for Equity in Losses of Project Partnerships of $183,112 and the changes in
operating assets and liabilities, net cash used in operating activities was
$5,840, primarily due to the increase in payable to the General Partners.
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: August 21, 1998 By:/s/ Ronald M. Diner
Ronald M. Diner
President
Date: August 21, 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 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 1,408,632
<SECURITIES> 1,899,440
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,665,155
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,242,015
<CURRENT-LIABILITIES> 284,130
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,430,511
<TOTAL-LIABILITY-AND-EQUITY> 9,242,015
<SALES> 0
<TOTAL-REVENUES> 51,098
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 139,987
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (571,900)
<INCOME-TAX> 0
<INCOME-CONTINUING> (571,900)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (571,900)
<EPS-PRIMARY> (15.20)<F1>
<EPS-DILUTED> (15.20)<F1>
<FN>
<F1>EPS IS NET LOSS PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
