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SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-Q (Mark One) þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
  or o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
 Commission file number 000-18547 INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP  North Carolina
(State or other jurisdiction of
incorporation or organization)
    
    56-1669199
(I.R.S. Employer
Identification No.)
 WACHOVIA SECURITIES, NC0170
301 S. COLLEGE ST.  17TH FLOOR
CHARLOTTE, NC 28288-0170
(Address of principal executive offices)
(Zip Code) (704) 532-3320
(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 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 [   ] Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the
Exchange Act). Yes [   ] No [X] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by
Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. Yes [   ] No [   ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuers classes of common stock as of the latest
practicable date.




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1  FINANCIAL STATEMENTSNOTE 1: ORGANIZATION AND BASIS OF PRESENTATIONITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.ITEM 4  CONTROLS AND PROCEDURES.PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS.ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES.ITEM 3. DEFAULTS UPON SENIOR SECURITIES.ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.ITEM 5. OTHER INFORMATION.ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.SIGNATURESEX-31.1EX-31.2EX-32.1    Table of Contents  INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership)Form 10-Q FORWARD LOOKING STATEMENTS Statements in this Quarterly Report on Form 10-Q include forward looking
statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
Securities Act) and Section 21E of
the Securities Act of 1934, as amended (the Exchange Act). Forward looking
statements include
statements concerning our plans, objectives, goals, strategies, future events,
future revenues or
performance, capital expenditures, financing needs, plans or intentions
relating to acquisitions, our
competitive strengths and weaknesses, our business strategy and the trends we
anticipate in the industry
and economies in which we operate and other information that is not historical
information. You can identify
a forward looking statement by our use of the words anticipate, estimate,
expect, intend, plan,
may, will, continue, believe, objective, projection, forecast,
goal, and similar expressions. No
assurance can be given that actual results or events will not differ materially
from those projected,
estimated, assumed or anticipated in any such forward looking statements. 2




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PART I. FINANCIAL INFORMATION 
 ITEM 1  FINANCIAL STATEMENTS INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership) BALANCE SHEETS
(Unaudited) March 31, 2004, and December 31, 2003 March 31,
    
    December 31,2004
    
    2003ASSETSUnimproved land held for investment purposes
    
    $
    1,911,500
    
    
    
    1,911,500Cash and cash equivalents
    
    
    60,389
    
    
    
    60,261Total assets
    
    $
    1,971,889
    
    
    
    1,971,761LIABILITIES AND PARTNERS CAPITALLiabilitiesAccrued expenses
    
    
    278
    
    
    
    3,882Due to general partner
    
    
    48,659
    
    
    
    1,991Total liabilities
    
    
    48,937
    
    
    
    5,873Partners CapitalClass A limited partners interest
    
    
    1,923,107
    
    
    
    1,966,038(authorization, 9,588 units; issued and
outstanding, 7,650 units in 2004 and 2003)Subordinated limited partner interest
    
    
    68
    
    
    
    69General partners capital deficiency
    
    
    (223
    )
    
    
    (219
    )Total partners capital
    
    
    1,922,952
    
    
    
    1,965,888Total liabilities and partners capital
    
    $
    1,971,889
    
    
    
    1,971,761
 See accompanying notes to financial statements. 3




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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership) STATEMENTS OF OPERATIONS
(Unaudited) Three Months Ended March 31, 2004 and 2003 Three Months Ended March 31,2004
    
    2003OPERATING REVENUEInterest
    
    $
    128
    
    
    
    120Total operating revenue
    
    
    128
    
    
    
    120OPERATING EXPENSEProfessional fees
    
    
    42,716
    
    
    
    8,392Property tax
    
    
    28
    
    
    
    10General and administrative
    
    
    320
    
    
    
    5,997Total operating expense
    
    
    43,064
    
    
    
    14,399Net loss
    
    $
    (42,936
    )
    
    
    (14,279
    )NET LOSS ALLOCATED TOClass A limited partners
    
    $
    (42,931
    )
    
    
    (14,136
    )Subordinated limited partner
    
    
    (1
    )
    
    
    General partners
    
    
    (4
    )
    
    
    (143
    )Net loss
    
    $
    (42,936
    )
    
    
    (14,279
    )Weighted average Class A limited
partnership units outstanding
    
    
    7,650
    
    
    
    7,650Net loss per weighted average Class A
limited partnership unit
    
    $
    (5.61
    )
    
    
    (1.85
    )
 See accompanying notes to financial
statements. 4




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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership) STATEMENTS OF PARTNERS CAPITAL
(Unaudited) Three Months Ended March 31, 2004 and 2003 Class A Limited Partners
    
    SubordinatedLimited
    
    GeneralUnits
    
    Capital
    
    Partner
    
    Partners
    
    TotalPartners capital (deficiency),
December 31, 2002
    
    
    7,650
    
    
    $
    2,008,747
    
    
    
    70
    
    
    
    (215
    )
    
    
    2,008,602Net loss
    
    
    
    
    
    
    (14,278
    )
    
    
    
    
    
    
    (1
    )
    
    
    (14,279
    )Partners capital (deficiency),
March 31, 2003
    
    
    7,650
    
    
    
    1,994,469
    
    
    
    70
    
    
    
    (216
    )
    
    
    1,994,323Partners capital (deficiency),
December 31, 2003
    
    
    7,650
    
    
    
    1,966,038
    
    
    
    69
    
    
    
    (219
    )
    
    
    1,965,888Net loss
    
    
    
    
    
    
    (42,931
    )
    
    
    (1
    )
    
    
    (4
    )
    
    
    (42,936
    )Partners capital (deficiency),
March 31, 2004
    
    
    7,650
    
    
    $
    1,923,107
    
    
    
    68
    
    
    
    (223
    )
    
    
    1,922,952
 See accompanying notes to financial statements. 5




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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership) STATEMENTS OF CASH FLOWS
(Unaudited) Three Months Ended March 31, 2004 and 2003 Three Months Ended March 31,2004
    
    2003OPERATING ACTIVITIESNet loss
    
    $
    (42,936
    )
    
    
    (14,279
    )Adjustments to reconcile net loss to net cash
provided (used) by operating activitiesIncrease in due to general partner  related party
    
    
    46,668
    
    
    
    14,388Increase (decrease) in accrued expenses
    
    
    (3,604
    )
    
    
    10Net cash provided by operating activities
    
    
    128
    
    
    
    119Increase in cash and cash equivalents
    
    
    128
    
    
    
    119Cash and cash equivalents, beginning of period
    
    
    60,261
    
    
    
    97,478Cash and cash equivalents, end of period
    
    $
    60,389
    
    
    
    97,597
 See accompanying notes to financial statements. 6




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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership) NOTE TO FINANCIAL STATEMENTS (UNAUDITED) March 31, 2004 and 2003 
 NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION Interstate Land Investors II Limited Partnership (Registrant or
Partnership) is a North Carolina limited
partnership. The Partnerships business consists of holding for investment,
disposing and otherwise dealing
in approximately 48 acres of undeveloped land (the Property) located in York
County, South Carolina. The accompanying unaudited condensed financial statements have been
prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, the financial
statements do not include all the information and footnotes required by
generally accepted accounting
principles for complete financial statements. The unaudited financial
statements of the Registrant, include, in
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a
fair presentation of such financial statements for all periods presented. The
financial position and results of
operations as of and for the three months ended March 31, 2004, are not
necessarily indicative of the results
of operations that may be expected in the future. Please refer to the Registrants 2003 Annual Report on Form 10-K for
additional information related to the
Registrants organization and to the Registrants audited financial statements
for the two years ended
December 31, 2003, including the related notes to financial statements. 7




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ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF
OPERATIONS. LIQUIDITY AND CAPITAL RESOURCES. As of March 31, 2004, the Registrant had $60,389 in cash and cash
equivalents. The registrant will
retain this cash to pay ongoing partnership expenses. Until the Registrant
disposes of the remaining
approximately 48 acres of Property, its only sources of additional capital are
from General Partner advances
or other borrowings. RESULTS OF OPERATIONS. The Registrants net loss was $42,936 for the first quarter of 2004,
compared with a net loss of $14,279
in the same period in 2003. The increased loss in the first quarter of 2004
compared with the same period
last year was primarily due to higher professional fees. Professional fees increased to $42,716 in the first quarter of 2004,
compared with $8,392 in the first
quarter of 2003. The increase reflects higher fees incurred in the current
quarter primarily as a result of
higher audit fees. General and administrative costs decreased to $320 in first
quarter 2004 compared with
$5,997 in the first quarter of 2003. This decrease primarily reflects the
first quarter 2003 cost of printing
partnership-addressed envelopes to mail K-1s to the limited partners used in
2003 and 2004. All other
expenses were comparable with first quarter 2003. 
 ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Partnership does not hold any financial instruments with market risk
exposure. 
 ITEM 4  CONTROLS AND PROCEDURES. As of March 31, 2004, the end of the period covered by this Quarterly
Report on Form 10-Q, the
Registrants general partner (the Partnerships principal executive officer and
principal financial officer),
acting through its Senior Vice President, evaluated the effectiveness of the
Registrants disclosure controls
and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934). Based upon that
evaluation, the Senior Vice President concluded that as of March 31, 2004, the
end of the period covered by
this Quarterly Report on
Form 10-Q, the Registrant maintained effective
disclosure controls and procedures.
In addition, no change in the Registrants internal control over financial
reporting (as defined in Rule 13a-15(f)
under the Securities Exchange Act of 1934) occurred during the fiscal quarter
to which this Quarterly Report
on Form 10-Q relates that has materially affected, or is reasonably likely to
materially affect, the Registrants
internal control over financial reporting. 8




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PART II. OTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS. None. 
 ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES. None. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY 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, J.
Christopher Boone, the past
president of ISCR, the Partnerships general partner, 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 clause
making the offer contingent upon the purchase of an adjacent, unrelated
property within a certain period of
time, 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, resulting
in a cancellation of the offer. Negotiations are ongoing as of the date
hereof. 9




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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Exhibit 31.1 Certification by Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley
Act of 2002. Exhibit 31.2 Certification by Principal 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 During the quarter ended March 31, 2004, the Partnership filed the
following Current Report on Form 8-K
with the Commission: Current Report on Form 8-K dated March 11, 2004 reporting Item 4. 10




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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
(a North Carolina limited partnership) 
 SIGNATURES 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. HarpelJeffrey K. HarpelSenior Vice President Date: May 11, 2004 11