10-Q 1 g85876qe10vq.txt INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP 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 for Quarterly Period Ended SEPTEMBER 30, 2003 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 33-30312 INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP (Exact Name of Registrant as Specified in its Charter) NORTH CAROLINA 56-1681116 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) WACHOVIA SECURITIES, NC0170 301 S. COLLEGE ST. - 17TH FLOOR CHARLOTTE, NC 28288-0170 (Address of principal executive offices) (Zip Code) (704) 715-1384 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. 7,650 limited partnership units outstanding at November 19, 2003 Page 1 of 9 Sequentially Numbered Pages INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP CONDENSED BALANCE SHEETS AS OF SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

See attached notes to condensed financial statements 2 INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)

See attached notes to condensed financial statements 3 INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP CONDENSED STATEMENT OF PARTNERS' EQUITY (DEFICIT) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (Unaudited)

See attached notes to condensed financial statements 4 INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

See attached notes to condensed financial statements 5 INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2003 1. BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2003, are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. 2. ORGANIZATION Interstate Land Investors II Limited Partnership ("Registrant" or "Partnership") is a North Carolina limited partnership. The Partnership filed registration statements in 1989 and 1990 and offered the sale of the limited partnership interests to persons who were admitted as limited partners. The initial offering became effective September 29, 1989, and was terminated November 3, 1989. The post effective amendment was filed in August 1990, approved in November 1990, and closed November 30, 1990. Capital contributions of $100 were received from the general partners and $7,650,000 from the limited partners. The limited partnership units were sold in $1,000 units. On November 11, 2003, 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. On 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 September 30, 2003, the Registrant had $97,544 on hand in the form of cash and cash equivalents. 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 facility 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. 6 On June 29, 2001, a distribution of $3,467,975 (representing $453 per unit) was distributed to the limited partners. 2. RESULTS OF OPERATIONS Results of Operations for the Three Months Ended September 30, 2003 Compared to the Three Months Ended September 30, 2002. The Registrant's net loss was $12,334 for the three months ended September 30, 2003 as compared to a net loss of $9,987 for the three months ended September 30, 2002. The difference between the two periods is due to higher professional and legal fees incurred during the 2003 period. Results of Operations for the Nine Months Ended September 30, 2003 Compared to the Nine Months Ended September 30, 2002. The Registrant's net loss was $37,197 for the nine months ended September 30, 2003 as compared to a net loss of $26,934 for the nine months ended September 30, 2002. The difference between the two periods is due to higher professional and legal fees incurred during the 2003 period. Professional and legal fees increased from $9,930 as of September 30, 2002, to $18,450 for the nine months ended September 30, 2003. This increase is due to the higher cost of accounting fees charged for tax preparation and electronic filing changes that became effective in 2003 and outsourced database maintenance fees, including the cost of printing partnership-addressed envelopes to mail K-1s to the limited partners. All other expenses were in line with those incurred during the third quarter 2002. 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Partnership does not hold any financial instruments with market risk exposure. 4. CONTROLS AND PROCEDURES The General Partner's Senior Vice President (the Partnership's principal executive officer and principal financial officer) has concluded, as of the end of the period covered by this report, based on his evaluation as required by Rules 13a-15 or 15d-15 of the Securities Exchange Act of 1934, as amended, that the Partnership's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Partnership in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Partnership in such reports is accumulated and communicated to the Partnership's management, including the General Partner's Senior Vice President, as appropriate to allow timely decisions regarding required disclosure. There were no changes in the Partnership's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the Securities Exchange Act of 1934, as amended, that occurred during the Partnership's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting. 7 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. The remaining approximate 48 acres of the Property is listed for sale with Grubb & Ellis Bissell Patrick. Should a sale of the Property occur from this contractual listing agreement, the past president of ISCR, J. Christopher Boone, may receive a sales commission through a separate agreement between Mr. Boone and Grubb & Ellis Bissell Patrick. As the purchase price of the Property is not known, the Partnership is unable to determine the amount of the sales commission, if any, that Mr. Boone may receive. On September 30, 2003, an Offer to Purchase was received from a potential buyer. The terms of this offer were not acceptable and a counter offer was made and countered back. However, due to a contingency clause relating to the purchase of an adjacent, unrelated property, the General Partner decided it was not in the best interest of the Partnership to incur the substantial cost of a Partnership vote with the possibility of the contingency on the adjacent property expiring and canceling the offer. Negotiations are ongoing as of the date of this filing. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Exhibit 31.1 Certification by Principal Executive and Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 32.1 Certification by Principal Executive and Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K No reports on Form 8-K were required to be filed during the three months ended September 30, 2003. 8 INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP By: ISC REALTY CORPORATION As Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer of the Registrant By: /s/Jeffrey K. Harpel -------------------------------------------- Jeffrey K. Harpel Date: November 19, 2003 9

INTERSTATE LAND INVESTORS II LTD PARTNERSHIP 10-Q