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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
for Quarterly Period Ended JUNE 30, 2002
Commission file number 33-30312
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
NORTH CAROLINA 56-1681116
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
WACHOVIA SECURITIES, THREE WACHOVIA CENTER - 6TH FLOOR
401 S. TRYON STREET, CHARLOTTE, NC 28288-1164
(Address of principal executive offices)
(Zip Code)
704-383-3179
(Registrant's telephone number, including area code)
IJL FINANCIAL CENTER, P.O. BOX 1012
CHARLOTTE, NC 28201-1012
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No __
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
7,650 limited partnership units outstanding at August 8, 2002.
Page 1 of 8 Sequentially Numbered Pages
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
AS OF JUNE 30, 2002, AND DECEMBER 31, 2001
June 30,2002 December 31,
(Unaudited) 2001
------------------- -------------------
ASSETS:
Land Held for Sale $1,911,500 $1,911,500
Cash and Cash Equivalents 112,572 129,674
Other 0 0
------------------- -------------------
$2,024,072 $2,041,174
=================== ===================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT):
Accrued Liabilities $10 0
Note Payable 0 0
------------------- -------------------
0
10 0
------------------- -------------------
Class A Limited Partners' Interest 2,024,204 2,041,315
Subordinated Limited Partners' Interest 71 71
General Partners' Interest (214) (212)
------------------- -------------------
2,024,062 2,041,174
------------------- -------------------
$2,024,072 $2,041,174
=================== ===================
See Notes to Condensed Financial Statements
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
--------------- -------------- --------------- -----------------
INCOME:
Sale of Real Estate $ 0 $4,338,360 $ 0 $4,338,360
Interest Income 284 7,021 650 7,056
--------------- -------------- --------------- -----------------
284 4,345,381 650 4,345,416
EXPENSES:
Property Taxes 0 0 10 38
Insurance Expense 250 263 250 263
Professional and Legal Fees 2,475 4,045 9,680 12,649
Cost of Real Estate Sale 0 4,623,774 0 4,623,774
General and Administrative Costs 4,157 4,541 7,823 7,411
Interest Expense 0 9,081 0 15,060
--------------- -------------- --------------- -----------------
6,882 4,641,704 17,763 4,659,194
--------------- -------------- --------------- -----------------
NET LOSS ($6,598) ($296,323) ($17,112) ($313,778)
=============== ============== =============== =================
NET LOSS ALLOCATION:
General Partners (1) (30) (2) (31)
Class A Limited Partners (6,597) (296,294) (17,111) (313,747)
--------------- -------------- --------------- -----------------
($6,598) ($296,323) ($17,112) ($313,778)
=============== ============== =============== =================
CLASS A LIMITED PARTNERSHIP
UNITS OUTSTANDING 7,650 7,650 7,650 7,650
--------------- -------------- --------------- -----------------
NET LOSS PER CLASS A UNIT ($0.86) ($38.73) ($2.24) ($41.01)
=============== ============== =============== =================
See Notes to Condensed Financial Statements
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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited)
Subordinated
General Limited Limited
Partners Partners Partner Total
------------- -------------- ------------- -------------
Partners' Equity (Deficit)
at December 31, 2000 ($160) $6,029,973 $84 $6,029,897
Net Loss for the Six Months
Ended June 30, 2001 (31) (313,747) 0 (313,778)
Less Cash Distributions (347) (3,467,628) 0 (3,467,975)
------------- -------------- ------------- -------------
Partners' Equity (Deficit)
at June 30, 2001 ($191) $2,248,598 $84 $2,248,144
============= ============== ============= =============
Partners' Equity (Deficit)
at December 31, 2001 ($212) $2,041,315 $71 $2,041,174
Net Loss for the Six Months
Ended June 30, 2002 (2) (17,111) 0 (17,112)
------------- -------------- ------------- -------------
Partners' Equity (Deficit)
at June 30, 2002 ($214) $2,024,204 $71 $2,024,062
============= ============== ============= =============
See Notes to Condensed Financial Statements
4
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
Six Months Six Months
Ended Ended
June 30, 2002 June 30, 2001
(Unaudited) (Unaudited)
------------------ ----------------
CASH FLOW FROM OPERATING
ACTIVITIES:
Net Loss ($17,112) ($313,778)
Adjustments to reconcile net loss to net
cash used for operations:
Decrease(Increase) in Accounts Receivable 0 17,427
(Decrease)Increase in Accrued Liabilities 10 (76,708)
------------------ ----------------
Net Cash Used for Operating Activities (17,102) (373,059)
------------------ ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of Real Estate 0 4,329,479
Decrease in Interest Receivable 0 24,934
------------------ ----------------
Net Cash Provided by Investing Activities 0 4,354,413
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Limited Partners 0 (3,467,974)
(Decrease)Increase in Note Payable 0 (387,405)
------------------ ----------------
Net Cash Provided by Financing Activities 0 (3,855,379)
Increase (Decrease) in Cash and Cash Equivalents (17,102) 125,975
------------------ ----------------
Cash and Cash Equivalents at Beginning
of Period 129,674 1,649
------------------ ----------------
Cash and Cash Equivalents at End of Period $112,572 $127,624
================== ================
See Notes to Condensed Financial Statements
5
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2002
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 30, 2002, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2002.
2. ORGANIZATION:
Interstate Land Investors II Limited Partnership ("Registrant" or "Partnership")
is a North Carolina limited partnership. The Partnership filed registration
statements in 1989 and 1990 and offered the sale of the limited partnership
interests to persons who were admitted as limited partners. The initial offering
became effective September 29, 1989, and was terminated November 3, 1989. The
post effective amendment was filed in August 1990, approved in November 1990,
and closed November 30, 1990. Capital contributions of $100 were received from
the general partners and $7,650,000 from the limited partners. The limited
partnership units were sold in $1,000 units. On August 8, 2002, there were 775
unit holders of record. The Partnership's business now consists of holding for
investment, disposing and otherwise dealing in approximately 48 of the original
145 acres of undeveloped land ("the Property") located in York County, South
Carolina. As of May 10, 2001, the Partnership sold 97 acres of the property to
Greenfield Development Company and the Partnership now holds approximately 48 of
the remaining acres of the Property for sale.
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2002, the Registrant had cash on hand of $112,572. The Registrant
will retain this cash to pay ongoing partnership expenses. Until the Registrant
disposes of the Property, its only sources of additional capital are additional
loans and proceeds from the sale of resources (i.e., timber) on the property, if
any.
On May 11, 2001, the Partnership sold 96.9 acres of the property to Greenfield
Development Company LLC. The gross sale price of the property was $4,338,360. A
portion of the sale proceeds in the amount of $313,543 was used to pay debts to
the General Partner. Closing costs and pro-rations incurred at settlement
totaled $447,609 leaving net cash proceeds to the partnership of $3,577,208. On
June 14, 2001, a .33 acre right-of-way was purchased by South Carolina Dept. of
Transportation for $15,000.
On June 29, 2001, a distribution of $3,467,975 (representing $453 per unit) was
distributed to the limited partners.
6
2. RESULTS OF OPERATIONS
The Registrant's net loss was $17,112 for the six months ended June 30, 2002 as
compared to $313,778 for the six months ended June 30, 2001. The large
difference between the two periods is due to the loss realized from the sale of
the property during the June 30, 2001 period.
Professional and legal fees decreased from $12,649 as of June 30, 2001, to
$9,680 for the six months ended June 30, 2002. These fees are less due to the
greater expense incurred during 2001 related to the sale of the property.
Interest expense decreased from $15,060 for the six months ended June 30, 2001,
to $0 for the six months ended June 30, 2001. This decrease reflects the fact
that the entire principal balance was repaid in 2001. All other expenses were in
line with those incurred during the second quarter 2001.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 5. OTHER INFORMATION.
In June 2000, the Partnership entered into a contract with Greenfield
Development Company, LLC, to sell 97 acres of the 145 acres unimproved land for
$45,000 per acre, subject to adjustments for wetlands acreage. The actual
proceeds from the sale totaled $4,338,360. The purchaser deposited $50,000
earnest money with a title agency. Under the terms of the contract, the
purchaser had until November 6, 2000, to complete their due diligence, however,
Greenfield requested two 90-day extensions of the closing date to provide them
time to obtain a wetlands permit from the U.S. Army Corps of Engineers which
permit was necessary to allow the proposed development. An additional $25,000
earnest money was deposited with the title agency for the first extension and
$50,000 was deposited for the second extension. The first extension expired on
March 6, 2001, and the sale was consummated on May 11, 2001. On June 29, 2001, a
cash distribution in the amount of $3,467,975 or $453 per unit was distributed
to the limited partners. Crosland Commercial continues to list and market for
sale the remaining approximate 48 acres of the property consisting of Tract 1A
and Tract 1D.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
EX 99.1 Certification by Officer filed June 30, 2002.
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed during the
six months ended June 30, 2002.
INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERSTATE LAND INVESTORS II
LIMITED PARTNERSHIP
(REGISTRANT)
BY: /S/J. CHRISTOPHER BOONE
-----------------------
J. CHRISTOPHER BOONE
ISC REALTY CORPORATION,
GENERAL PARTNER AND PRINCIPAL EXECUTIVE
OFFICER, PRINCIPAL FINANCIAL OFFICER OF THE
REGISTRANT
DATE: AUGUST 8, 2002
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