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GTWY2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRES)
For the fiscal year ended March 31, 1999
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 No., Including Area Code: (727)573-3800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class: Beneficial Assignee Certificates
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
Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained
herein, and will be contained to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. X
Number of Units
Title of Each Class March 31, 1999
Beneficial Assignee Certificates 2,310
General Partner Interest 2
DOCUMENTS INCORPORATED BY REFERENCE
Parts III and IV - Form S-11 Registration Statement and all amendments and
supplements thereto.
File No. 33-31821
PART I
Item 1. Business
Gateway Tax Credit Fund II Ltd. ("Gateway") is a Florida Limited
Partnership. The general partners are Raymond James Tax Credit Funds,
Inc., the Managing General Partner, and Raymond James Partners, Inc., both
sponsors of Gateway Tax Credit Fund II Ltd. and wholly-owned subsidiaries
of Raymond James Financial, Inc.
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.
Gateway is engaged in only one industry segment, to acquire limited
partnership interests in unaffiliated limited partnerships ("Project
Partnerships"), each of which owns and operates one or more apartment
complexes eligible for Low-Income Housing Tax Credits under Section 42 of
the Internal Revenue Code ("Tax Credits"), received over a ten year period.
Subject to certain limitations, Tax Credits may be used by Gateway's
investors to reduce their income tax liability generated from other income
sources. Gateway will terminate on December 31, 2040, or sooner, in
accordance with the terms of its Limited Partnership Agreement. As of
March 31, 1999, Gateway had received capital contributions of $1,000 from
the General Partners and $37,228,000 from Assignees.
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, 1999. Each series is
treated as a separate partnership, investing in a separate and distinct
pool of Project Partnerships. Net proceeds from each series were 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 property will be
allocated as described in the Limited Partnership Agreement.
As of March 31, 1999, Gateway had invested in 22 Project Partnerships for
Series 2, 23 Project Partnerships for Series 3, 29 Project Partnerships for
Series 4, 36 Project Partnerships for Series 5 and 38 Project Partnerships
for Series 6. Gateway acquired its interests in these properties by
becoming a limited partner in the Project Partnerships that own the
properties. As of March 31, 1999 each series was fully invested in Project
Partnerships and management plans no new investments in the future.
The primary source of funds from the inception of each series has been
the capital contributions from Assignees. Gateway's operating costs are
funded using the reserves, established for this purpose, the interest
earned on these reserves and distributions received from Project
Partnerships.
All but two of the Project Partnerships are government subsidized with
mortgage loans from the Farmers Home Administration (now called United
States Department of Agriculture - Rural Development) ("USDA-RD") under
Section 515 of the Housing Act of 1949. These mortgage loans are made at
low interest rates for multi-family housing in rural and suburban areas,
with the requirement that the interest savings be passed on to low income
tenants in the form of lower rents. A significant portion of the project
partnerships also receive rental assistance from USDA-RD to subsidize
certain qualifying tenants.
The General Partners do not believe the Project Partnerships are subject
to the risks generally associated with conventionally financed
nonsubsidized apartment properties. Risks related to the operations of
Gateway are described in detail on pages 23 through 34 of the Prospectus,
as supplemented, under the Caption "Risk Factors" which is incorporated
herein by reference. The investment objectives of Gateway are to:
1) Provide tax benefits to Assignees in the form of Tax Credits
during the period in which each Project is eligible to claim tax
credits;
2) Preserve and protect the capital contribution of Investors;
3) Participate in any capital appreciation in the value of the
Projects; and
4) Provide passive losses to i) individual investors to offset
passive income from other passive activities, and ii) corporate
investors to offset business income.
The investment objectives and policies of Gateway are described in detail
on pages 34 through 40 of the Prospectus, as supplemented, under the
caption "Investment Objectives and Policies" which is incorporated herein
by reference.
Gateway's goal was to invest in a diversified portfolio of Project
Partnerships located in rural and suburban locations with a high demand for
low income housing. As of March 31, 1999 the investor capital
contributions were successfully invested in Project Partnerships which met
the investment criteria. Management anticipates that competition for
tenants will only be with other low income housing projects and not with
conventionally financed housing. With significant number of rural American
households living below the poverty level in substandard housing,
management believes there will be a continuing demand for affordable low
income housing for the foreseeable future.
Gateway has no direct employees. Services are performed by the Managing
General Partner and its affiliates and by agents retained by it. The
Managing General Partner has full and exclusive discretion in management
and control of Gateway.
Item 2. Properties
Gateway owns a majority interest in properties through its limited
partnership investments in Project Partnerships. The largest single
investment in a Project Partnership in Series 2 is 15.1% of the Series'
total assets, Series 3 is 11.8%, Series 4 is 7.3%, Series 5 is 12.6% and
Series 6 is 13.7%. The following table provides certain summary
information regarding the Project Partnerships in which Gateway had an
interest as of December 31, 1998:
Item 2 - Properties (continued):
SERIES 2
OCCU-
LOCATION OF # OF DATE PROPERTY PANCY
PARTNERSHIP PROPERTY UNIT ACQUIRED COST RATE
- ----------- ----------- ----- -------- -------- -----
Claxton Elderly Claxton, GA 24 9/90 $ 799,538 100%
Deerfield II Douglas, GA 24 9/90 854,562 83%
Hartwell Family Hartwell, GA 24 9/90 859,698 96%
Cherrytree Apts. Albion, PA 33 9/90 1,439,636 91%
Springwood Apts. Westfield, NY 32 9/90 1,511,700 94%
Lakeshore Apts. Tuskegee, AL 34 9/90 1,267,543 91%
Lewiston Lewiston, NY 25 10/90 1,233,935 100%
Charleston Charleston, AR 32 9/90 1,076,098 81%
Sallisaw II Sallisaw, OK 47 9/90 1,517,589 96%
Pocola Pocola, OK 36 10/90 1,245,870 89%
Inverness Club Inverness, FL 72 9/90 3,496,824 93%
Pearson Elderly Pearson, GA 25 9/90 781,460 100%
Richland Elderly Richland, GA 33 9/90 1,057,871 91%
Lake Park Lake Park, GA 48 9/90 1,794,542 94%
Woodland Terrace Waynesboro, GA 30 9/90 1,079,615 97%
Mt. Vernon Elderly Mt. Vernon, GA 21 9/90 700,935 91%
Lakeland Elderly Lakeland, GA 29 9/90 955,815 93%
Prairie Apartments Eagle Butte, SD 21 10/90 1,257,226 100%
Sylacauga Heritage Sylacauga, AL 44 12/90 1,759,614 93%
Manchester Housing Manchester, GA 49 1/91 1,781,302 96%
Durango C.W.W. Durango, CO 24 1/91 1,292,590 100%
Columbus Seniors Columbus, KS 16 5/92 514,126 100%
----- -----------
723 $28,278,089
==== ===========
The aggregate average effective rental per unit is $3,387 per year ($282
per month).
Inverness Club Ltd.'s fixed asset total is 12.4% of the Series 2 total
Project Partnership fixed assets. Inverness Club was placed in service in
October 1991, is located on Florida's West Coast and operates as a
low-income 72 unit apartment facility for the elderly. It also offers an
optional congregate services package to all tenants. The property competes
for tenants with six other apartment properties in the area. The market
study estimated a demand for 100 elderly units.
Inverness Club's occupancy rate was 93% and its average effective annual
rental per unit was $4,584 ($382 per month) on December 31, 1998. The land
cost was $205,500 and the building cost was $3,291,324. The building is
depreciated using the straight line method over 27.5 years. Management
believes the property insurance coverage is adequate. For the year ended
December 31, 1998 the real estate taxes were $64,017.
Item 2 - Properties (continued):
SERIES 3
OCCU-
LOCATION OF # OF DATE PROPERTY PANCY
PARTNERSHIP PROPERTY UNIT ACQUIRED COST RATE
- ----------- ----------- ----- -------- -------- -----
Poteau II Poteau, OK 52 8/90 $1,789,148 96%
Sallisaw Sallisaw, OK 52 8/90 1,744,103 100%
Nowata Properties Oolagah, OK 32 8/90 1,148,484 94%
Waldron Properties Waldron, AR 24 9/90 860,273 96%
Roland II Roland, OK 52 10/90 1,804,010 87%
Stilwell Stilwell, OK 48 10/90 1,597,701 92%
Birchwood Apts. Pierre, SD 24 9/90 1,051,392 92%
Hornellsville Arkport, NY 24 9/90 1,097,600 92%
Sunchase II Watertown, SD 41 9/90 1,344,334 98%
CE McKinley II Rising Sun, MD 16 9/90 796,134 100%
Weston Apartments Weston, AL 10 11/90 339,949 50%
Countrywood Apts. Centreville, AL 40 11/90 1,519,764 100%
Wildwood Apts. Pineville, LA 28 11/90 1,084,325 86%
Hancock Hawesville, KY 12 12/90 440,425 100%
Hopkins Madisonville, KY 24 12/90 927,256 100%
Elkhart Apts. Elkhart, TX 54 1/91 1,546,912 87%
Bryan Senior Bryan, OH 40 1/91 1,186,268 93%
Brubaker Square New Carlisle, OH 38 1/91 1,452,524 89%
Southwood Savannah, TN 44 1/91 1,792,293 100%
Villa Allegra Celina, OH 32 1/91 1,134,780 94%
Belmont Senior Cynthiana, KY 24 1/91 935,143 100%
Heritage Villas Helena, GA 25 3/91 823,974 92%
Logansport Seniors Logansport, LA 32 3/91 1,086,394 94%
---- -----------
768 $27,503,186
==== ===========
The average effective rental per unit is $2,937 per year ($245 per month).
Item 2 - Properties (continued):
SERIES 4
OCCU-
LOCATION OF # OF DATE PROPERTY PANCY
PARTNERSHIP PROPERTY UNIT ACQUIRED COST RATE
- ----------- ----------- ---- -------- -------- ------
Alsace Soda Springs, ID 24 12/90 $800,927 92%
Seneca Apartments Seneca, MO 24 2/91 724,685 100%
Eudora Senior Eudora, KS 36 3/91 1,257,482 94%
Westville Westville, OK 36 3/91 1,101,686 100%
Wellsville Senior Wellsville, KS 24 3/91 810,970 92%
Stilwell II Stilwell, OK 52 3/91 1,657,974 96%
Spring Hill Sr. Spring Hill, KS 24 3/91 1,036,369 100%
Smithfield Smithfield, UT 40 4/91 1,841,135 93%
Tarpon Heights Galliano, LA 48 4/91 1,493,434 98%
Oaks Apartments Oakdale, LA 32 4/91 1,032,509 97%
Wynnwood Common Fairchance, PA 34 4/91 1,679,018 97%
Chestnut Howard, SD 24 5/91 1,052,686 50%
Apts -St. George St. George, SC 24 6/91 940,861 88%
Williston Williston, SC 24 6/91 1,002,600 100%
Brackettville Sr. Brackettville, TX 32 6/91 991,966 94%
Sonora Seniors Sonora, TX 32 6/91 1,013,315 100%
Ozona Seniors Ozona, TX 24 6/91 759,843 96%
Fredericksburg Sr. Fredericksburg, TX 48 6/91 1,402,563 100%
St. Joseph St. Joseph, IL 24 6/91 976,453 100%
Courtyard Huron, SD 21 6/91 846,512 100%
Rural Development Ashland, ME 25 6/91 1,422,482 96%
Jasper Villas Jasper, AR 25 6/91 1,101,517 92%
Edmonton Senior Edmonton, KY 24 6/91 906,714 96%
Jonesville Manor Jonesville, VA 40 6/91 1,722,741 98%
Norton Green Norton, VA 40 6/91 1,695,989 100%
Owingsville Senior Owingsville, KY 22 8/91 848,044 100%
Timpson Seniors Timpson, TX 28 8/91 815,916 100%
Piedmont Barnesville, GA 36 8/91 1,289,047 89%
S.F. Arkansas City Arkansas City, KS 12 8/91 412,031 100%
---- ----------
879 32,637,469
==== ==========
The average effective rental per unit is $3,272 per year ($273 per month).
Item 2 - Properties (continued):
SERIES 5
OCCU-
LOCATION OF # OF DATE PROPERTY PANCY
PARTNERSHIP PROPERTY UNIT ACQUIRED COST RATE
- ----------- ----------- ---- -------- -------- -----
Seymour Seymour, IN 37 8/91 1,518,441 97%
Effingham Effingham, IL 24 8/91 980,617 100%
S.F. Winfield Winfield, KS 12 8/91 400,920 92%
S.F.Medicine Lodge Medicine Lodge,KS 16 8/91 564,559 94%
S.F. Ottawa Ottawa, KS 24 8/91 707,449 96%
S.F. Concordia Concordia, KS 20 8/91 686,962 100%
Highland View Elgin, OR 24 9/91 882,527 88%
Carrollton Club Carrollton, GA 78 9/91 3,217,901 95%
Scarlett Oaks Lexington, SC 40 9/91 1,675,974 100%
Brooks Hill Ellijay, GA 44 9/91 1,750,689 98%
Greensboro Greensboro, GA 24 9/91 866,259 96%
Greensboro II Greensboro, GA 33 9/91 1,088,664 100%
Pine Terrace Wrightsville, GA 25 9/91 885,185 92%
Shellman Shellman, GA 27 9/91 901,648 89%
Blackshear Cordele, GA 46 9/91 1,593,662 100%
Crisp Properties Cordele, GA 31 9/91 1,127,994 94%
Crawford Crawford, GA 25 9/91 907,712 100%
Yorkshire Wagoner, OK 60 9/91 2,543,876 97%
Woodcrest South Boston, VA 40 9/91 1,574,776 100%
Fox Ridge Russellville, AL 24 9/91 889,941 100%
Redmont II Red Bay, AL 24 9/91 840,596 100%
Clayton Clayton, OK 24 9/91 871,530 79%
Alma Alma, AR 24 9/91 957,710 100%
Pemberton Village Hiawatha, KS 24 9/91 766,979 88%
Magic Circle Eureka, KS 24 9/91 796,127 88%
Spring Hill Spring Hill, KS 36 9/91 1,449,378 94%
Menard Retirement Menard, TX 24 9/91 762,072 92%
Wallis Housing Wallis, TX 24 9/91 578,454 83%
Zapata Housing Zapata, TX 40 9/91 1,238,405 88%
Mill Creek Grove, OK 60 11/91 1,741,669 100%
Portland II Portland, IN 20 11/91 732,163 100%
Georgetown Georgetown, OH 24 11/91 921,985 96%
Cloverdale Cloverdale, IN 24 1/92 943,909 100%
So. Timber Ridge Chandler, TX 44 1/92 1,283,029 96%
Pineville Pineville, MO 12 5/92 391,889 100%
Ravenwood Americus, GA 24 1/94 887,896 85%
----- -----------
1,106 39,929,547
==== ===========
The average effective rental per unit is $3,141 per year ($262 per month).
Item 2 - Properties (continued):
SERIES 6
OCCU-
LOCATION OF # OF DATE PROPERTY PANCY
PARTNERSHIP PROPERTY UNIT ACQUIRED COST RATE
- ----------- ----------- ----- -------- -------- ------
Spruce Pierre, SD 24 11/91 1,122,161 92%
Shannon O'Neill, NE 16 11/91 650,675 100%
Carthage Carthage, MO 24 1/92 698,313 92%
Mountain Crest Enterprise, OR 39 3/92 1,238,874 85%
Coal City Coal City, IL 24 3/92 1,216,372 100%
Blacksburg Terrace Blacksburg, SC 32 4/92 1,323,070 100%
Frazer Place Smyrna, DE 30 4/92 1,673,104 100%
Ehrhardt Ehrhardt, SC 16 4/92 685,776 81%
Sinton Sinton, TX 32 4/92 1,039,306 94%
Frankston Frankston, TX 24 4/92 674,981 100%
Flagler Beach Flagler Beach, FL 43 5/92 1,653,116 100%
Oak Ridge Williamsburg, KY 24 5/92 1,037,966 100%
Monett Monett, MO 32 5/92 958,788 100%
Arma Arma, KS 28 5/92 870,842 93%
Southwest City Southwest City, MO 12 5/92 388,165 100%
Meadowcrest Luverne, AL 32 6/92 1,203,738 97%
Parsons Parsons, KS 48 7/92 1,532,968 100%
Newport Village Newport, TN 40 7/92 1,613,724 100%
Goodwater Falls Jenkins, KY 36 7/92 1,393,363 100%
Northfield Station Corbin, KY 24 7/92 1,022,561 92%
Pleasant Hill Somerset, KY 24 7/92 954,810 96%
Winter Park Mitchell, SD 24 7/92 1,252,759 96%
Cornell Watertown, SD 24 7/92 1,081,014 96%
Heritage Drive So. Jacksonville, TX 40 1/92 1,199,590 98%
Brodhead Brodhead, KY 24 7/92 956,534 75%
Mt. Village Mt. Vernon, KY 24 7/92 943,158 92%
Hazlehurst Hazlehurst, MS 32 8/92 1,181,404 100%
Sunrise Yankton, SD 33 8/92 1,366,792 97%
Stony Creek Hooversville, PA 32 8/92 1,649,283 84%
Logan Place Logan, OH 40 9/92 1,522,650 88%
Haines Haines, AK 32 8/92 3,030,343 88%
Maple Wood Barbourville, KY 24 8/92 1,007,744 96%
Summerhill Gassville, AR 28 9/92 841,241 96%
Dorchester St. George, SC 12 9/92 562,272 100%
Lancaster Mountain View, AR 33 9/92 1,382,821 100%
Autumn Village Harrison, AR 16 7/92 615,604 100%
Hardy Hardy, AR 24 7/92 936,545 92%
Dawson Dawson, GA 40 11/93 1,474,973 100%
---- ----------
1,086 43,957,400
===== ==========
The average effective rental per unit is $3,439 per year ($287 per month).
Item 2 - Properties (continued):
A summary of the cost of the properties at December 31, 1998, 1997 and 1996
is as follows:
12/31/98
SERIES 2 SERIES 3 SERIES 4
Land $1,012,180 $ 985,546 $ 1,188,112
Land Improvements 123,358 242,943 143,608
Buildings 26,240,151 25,157,917 29,897,293
Furniture and Fixtures 902,400 1,116,780 1,408,453
Construction in Progress 0 0 0
----------- ----------- ----------
Properties, at Cost
Less: Accum.Depreciation 28,278,089 27,503,186 32,637,466
7,497,204 9,442,106 8,340,684
Properties, Net ----------- ------------ ----------
20,780,885 18,061,080 24,296,782
=========== =========== ===========
SERIES 5 SERIES 6 TOTAL
Land $ 1,456,671 $ 1,779,755 $ 6,422,264
Land Improvements 59,966 475,244 1,045,119
Buildings 36,889,183 39,742,035 157,926,579
Furniture and Fixtures 1,523,727 1,960,336 6,911,696
Construction in Progress 0 0 0
---------- ---------- -----------
Properties, at Cost 39,929,547 43,957,370 172,305,658
Less: Accum.Depreciation 9,481,184 9,550,937 44,312,115
---------- ---------- -----------
Properties, Net 30,448,363 34,406,433 127,993,543
=========== =========== ============
12/31/97
SERIES 2 SERIES 3 SERIES 4
Land $ 1,012,180 $ 985,546 $ 1,188,112
Land Improvements 118,113 242,943 123,230
Buildings 26,235,180 25,126,561 29,953,004
Furniture and Fixtures 887,906 1,079,796 1,345,403
Construction in Progress 0 0 9,011
---------- ---------- ----------
Properties, at Cost 28,253,379 27,434,846 32,618,760
Less: Accum.Depreciation 6,581,790 8,538,755 7,324,765
---------- ---------- ----------
Properties, Net 21,671,589 18,896,091 25,293,995
=========== =========== ===========
SERIES 5 SERIES 6 TOTAL
Land $ 1,461,156 $ 1,779,755 $ 6,426,749
Land Improvements 71,317 478,286 1,033,889
Buildings 36,827,233 39,721,640 157,863,618
Furniture and Fixtures 1,490,535 1,886,188 6,689,828
Construction in Progress 0 0 9,011
---------- ---------- -----------
Properties, at Cost 39,850,241 43,865,869 172,023,095
Less: Accum.Depreciation 8,170,490 8,136,483 38,752,283
---------- ---------- -----------
Properties, Net 31,679,751 35,729,386 133,270,812
=========== =========== ===========
12/31/96
SERIES 2 SERIES 3 SERIES 4
Land $ 1,012,180 $ 985,546 $ 1,188,112
Land Improvements 110,157 370,083 120,607
Buildings 26,256,812 24,975,936 29,950,050
Furniture and Fixtures 819,983 1,084,398 1,305,988
Construction in Progress 0 0 0
----------- ----------- -----------
Properties, at Cost 28,199,132 27,415,963 32,564,757
Less: Accum.Depreciation 5,649,101 7,624,569 6,264,280
----------- ----------- -----------
Properties, Net $22,550,031 $19,791,394 $26,300,477
=========== =========== ===========
SERIES 5 SERIES 6 TOTAL
Land $ 1,461,156 $ 1,779,755 $ 6,426,749
Land Improvements 71,068 449,010 1,120,925
Buildings 36,811,454 39,702,357 157,696,609
Furniture and Fixtures 1,468,845 1,821,854 6,501,068
Construction in Progress 0 0 0
----------- ----------- ------------
Properties, at Cost 39,812,523 43,752,976 171,745,351
Less: Accum.Depreciation 6,839,405 6,668,399 33,045,754
----------- ----------- ------------
Properties, Net $32,973,118 $37,084,577 $138,699,597
=========== =========== ============
Item 3. Legal Proceedings
Gateway is not a party to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
As of March 31, 1999, no matters were submitted to a vote of security
holders, through the solicitation of proxies or otherwise.
PART II
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters
(a) Gateway's Limited Partnership interests (BACs) are not publicly
traded. There is no market for Gateway's Limited Partnership
interests and it is unlikely that any will develop. No transfers of
Limited Partnership Interest or BAC Units are permitted without the
prior written consent of the Managing General Partner. There have
been several transfers from inception to date with most being from
individuals to their trusts or heirs. The Managing General Partner is
not aware of the price at which the units are transferred. The
conditions under which investors may transfer units is found under
ARTICLE XII - "Issuance of BAC'S" on pages A-29 and A-30 of the
Limited Partnership Agreement within the Prospectus, which is
incorporated herein by reference.
There have been no distributions to Assignees from inception
to date.
(b) Approximate Number of Equity Security Holders:
Title of Class Number of Holders
as of March 31, 1999
Beneficial Assignee Certificates 2,310
General Partner Interest 2
Item 6. Selected Financial Data
FOR THE YEARS ENDED MARCH 31,:
SERIES 2 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Total
Revenues $ 41,405 $ 41,272 $ 36,217 $ 36,532 $ 34,922
Net Loss (221,305) (337,693) (582,633) (591,355) (756,064)
Equity in
Losses of
Project
Partnerships (126,899) (288,412) (527,175) (537,111) (699,847)
Total Assets 853,057 1,045,569 1,345,931 1,893,838 2,449,615
Investments
In Project
Partnerships 331,579 510,805 814,883 1,350,923 1,901,609
Per BAC: (A)
Tax Credits 166.30 166.40 166.40 166.30 166.30
Portfolio
Income 12.90 13.10 12.10 11.20 9.70
Passive Loss (144.60) (147.90) (141.90) (126.10) (131.30)
Net Loss (35.71) (54.48) (94.00) (95.41) (121.99)
FOR THE YEARS ENDED MARCH 31,:
SERIES 3 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Total
Revenues $ 44,329 $ 65,111 $ 31,128 $ 31,179 $ 29,718
Net Loss (187,324) (221,508) (341,282) (470,880) (640,203)
Equity in
Losses of
Project
Partnerships (105,820) (198,168) (285,853) (421,996) (579,907)
Total Assets 669,866 846,210 1,043,223 1,362,838 1,805,494
Investments
In Project
Partnerships 218,820 378,000 584,189 901,663 1,348,162
Per BAC: (A)
Tax Credits 164.30 176.60 176.40 176.65 175.12
Portfolio
Income 14.10 20.10 13.90 14.00 12.00
Passive Loss (145.00) (154.10) (146.40) (143.30) (135.00)
Net Loss (33.99) (40.19) (61.93) (85.44) (116.17)
Item 6. Selected Financial Data
FOR THE YEARS ENDED MARCH 31,:
SERIES 4 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Total
Revenues $ 46,672 $ 44,309 $ 41,455 $ 42,246 $ 40,437
Net Loss (348,671) (485,415) (696,010) (705,639) (758,528)
Equity in
Losses of
Project
Partnerships (208,919) (421,886) (635,178) (644,865) (694,726)
Total Assets 1,280,602 1,600,054 2,048,377 2,711,102 3,379,586
Investments
In Project
Partnerships 676,348 981,823 1,423,319 2,073,510 2,737,516
Per BAC: (A)
Tax Credits 168.60 168.60 168.60 168.60 168.30
Portfolio
Income 14.10 13.70 13.20 12.90 10.30
Passive Loss (136.00) (157.20) (149.30) (142.30) (134.60)
Net Loss (49.92) (69.50) (99.65) (101.02) (108.60)
FOR THE YEARS ENDED MARCH 31,:
SERIES 5 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Total
Revenues $ 64,661 $ 54,417 $ 52,985 $ 54,273 $ 57,635
Net Loss (403,555) (813,502) (997,362) (781,436) (817,018)
Equity in
Losses of
Project
Partnerships (300,042) (728,729) (911,965) (700,127) (739,296)
Total Assets 1,932,914 2,306,065 3,078,890 4,041,606 4,790,100
Investments
In Project
Partnerships 1,145,581 1,500,087 2,268,632 3,211,868 3,950,979
Per BAC: (A)
Tax Credits 164.60 164.60 164.70 164.60 162.20
Portfolio
Income 14.40 14.10 13.10 12.50 10.90
Passive Loss (149.20) (141.60) (137.80) (124.30) (108.20)
Net Loss (46.37) (93.47) (114.60) (89.79) (93.88)
Item 6. Selected Financial Data
FOR THE YEARS ENDED MARCH 31,:
SERIES 6 1999 1998 1997 1996 1995
---- --- ---- ---- ----
Total
Revenues $ 50,722 $ 49,707 $ 47,326 $ 48,446 $ 48,235
Net Loss (701,324) (870,137) (915,827) (821,024) (987,087)
Equity in
Losses of
Project
Partnerships (601,405) (761,923) (805,310) (710,986) (875,023)
Total Assets 3,272,734 3,930,665 4,748,789 5,612,685 6,375,252
Investments
In Project
Partnerships 2,464,086 3,102,793 3,912,526 4,769,625 5,525,062
Per BAC: (A)
Tax Credits 165.50 165.50 165.40 165.40 161.70
Portfolio
Income 12.90 12.90 11.30 10.70 7.70
Passive Loss (129.30) (124.30) (122.10) (117.30) (119.80)
Net Loss (68.71) (85.25) (89.72) (80.44) (96.71)
(A) The per BAC tax information is as of December 31, the year end for tax
purposes.
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this report.
This statement is not covered by the auditor's opinion included elsewhere
in this report.
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 years ended March
31, 1999, March 31, 1998 and March 31, 1997. The General and
Administrative expenses - General Partner and General and Administrative
expenses - Other for the year ended March 31, 1999 are comparable to March
31, 1998 and March 31, 1997.
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. As of March 31, 1999, the series
had invested $4,524,678 in 22 Project Partnerships located in 10 states
containing 723 apartment units. Average occupancy of the Project
Partnerships was 94% at December 31, 1998.
Equity in Losses of Project Partnerships decreased from $288,412 for the
year ended March 31, 1998 to $126,899 for the year ended March 31, 1999.
This decrease was due to additional suspended losses of $575,862 as these
losses would reduce the investment in certain Project Partnerships below
zero. Equity in Losses of Project Partnerships of $288,412 for the year
ended March 31, 1998 were comparable to the year ended March 31, 1997. 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. (These Project Partnerships reported
depreciation and amortization of $939,525, $935,616 and $919,877 for the
years ended December 31, 1996, 1997, and 1998 respectively.) 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 March 31, 1999, the Series had $169,513 of short-term investments (Cash
and Cash Equivalents). It also had $351,965 in Zero Coupon Treasuries with
annual maturities providing $49,538 in fiscal year 1999 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
$221,305 for the year ending March 31, 1999. However, after adjusting for
Equity in Losses of Project Partnerships of $126,899 and the changes in
operating assets and liabilities, net cash used in operating activities was
$34,321, of which $37,895 was the Asset Management Fee actually paid. Cash
provided by investing activities totaled $42,983, consisting of $12,315 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. As of March 31, 1999 the series had
invested $3,888,713 in 23 Project Partnerships located in 12 states
containing 768 apartment units. Average occupancy of the Project
Partnerships was 94% as of December 31, 1998.
Equity in Losses of Project Partnerships decreased from $285,853 for the
year ended March 31, 1997 to $198,168 for the year ended March 31, 1998 and
to $105,820 for the year ended March 31, 1999. These decreases were due to
suspended losses of $343,378, $463,688 and 548,603 for the years ended
March 31, 1997, 1998, and 1999 respectively. These losses would reduce the
investment in certain Project Partnerships below zero. (These Project
Partnerships reported depreciation and amortization of $925,984, $923,055
and $913,619 for the years ended December 31, 1996, 1997 and 1998,
respectively.) Overall, management believes these Project Partnerships
are operating as expected and are generating tax credits which meet
projections.
At March 31, 1999, the Series had $137,981 of short-term investments (Cash
and Cash Equivalents). It also had $313,065 in Zero Coupon Treasuries with
annual maturities providing $44,063 in fiscal year 1999 increasing to
$58,940 in fiscal year 2007. Management believes these sources of funds
are sufficient to meet the Series' 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
$187,324 for the year ended March 31, 1999. However, after adjusting for
Equity in Losses of Project Partnerships of $105,820 and the changes in
operating assets and liabilities, net cash used in operating activities was
$48,724, of which $50,027 was the Asset Management Fee actually paid. Cash
provided by investing activities totaled $51,083, consisting of $23,805,
adjusted by $14,515 included in Other Income, in cash distributions
received 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. As of March 31, 1999, the series had
invested $4,952,519 in 29 Project Partnerships located in 16 states
containing 879 apartment units. Average occupancy of the Project
Partnerships was 95% at December 31, 1998.
Equity in Losses of Project Partnerships decreased from $635,178 for the
year ended March 31, 1997 to $421,886 for the year ended March 31, 1998 and
to $208,919 for the year ended March 31, 1999. (These Project Partnerships
reported depreciation and amortization of $1,043,887, $1,060,885 and
$1,016,293 for the years ended December 31, 1996, 1997 and 1998,
respectively.) Overall, management believes these Project Partnerships
are operating as expected and are generating tax credits which meet
projections.
At March 31, 1999, the Series had $207,632 of short-term investments (Cash
and Cash Equivalents). It also had $396,622 in Zero Coupon Treasuries with
annual maturities providing $55,823 in fiscal year 1999 increasing to
$74,700 in fiscal year 2007. Management believes these sources of funds
are sufficient to meet the Series' 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
$348,671 for the year ended March 31, 1999. However, after adjusting for
Equity in Losses of Project Partnerships of $208,919 and the changes in
operating assets and liabilities, net cash used in operating activities was
$42,177, of which $45,817 was the Asset Management Fee actually paid. Cash
provided by investing activities totaled $52,933, consisting of $18,374 in
cash distributions from the Project Partnerships and $34,559 from matured
Zero Coupon Treasuries. There were no unusual events or trends to
describe.
A Project Partnership located in Howard, S.D. experienced significant
cash shortages from operations in 1998 due to low occupancy as a result of
layoffs at a local major employer. The local general partner partially
funded the deficit by lending $22,000 in 1997 and $15,855 in 1998, they
also have deferred management fees in the amount of $32,727 for these same
years. The project received approval for a $40 per unit rent increase as
of January 1999. Management does not expect any materially adverse effect
to Gateway from this Project Partnership.
Series 5 - Gateway closed this series on October 11, 1991 after receiving
$8,616,000 from 535 Assignees. As of March 31, 1999, the series had
invested $6,164,472 in 36 Project Partnerships located in 13 states
containing 1,106 apartment units. Average occupancy of the Project
Partnerships was 95% as of December 31, 1998.
Equity in Losses of Project Partnerships increased from $911,965 for the
year ended March 31, 1997 to $728,729 for the year ended March 31, 1998 and
decreased to $300,042 for the year ended March 31, 1999. (These Project
Partnerships reported depreciation and amortization of $1,380,487,
$1,331,686 and $1,312,998 for the years ended December 31, 1996, 1997 and
1998, respectively.) Overall, management believes these Project
Partnerships are operating as expected and are generating tax credits which
meet projections.
At March 31, 1999, the Series had $292,994 of short-term investments (Cash
and Cash Equivalents). It also had $494,339 in Zero Coupon Treasuries with
annual maturities providing $66,576 in fiscal year 1999 increasing to
$93,075 in fiscal year 2007. Management believes these sources of funds
are sufficient to meet the Series' 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
$403,555 for the year ended March 31, 1999. However, after adjusting for
Equity in Losses of Project Partnerships of $300,042 and the changes in
operating assets and liabilities, net cash used in operating activities was
$59,946, of which $62,738 was the Asset Management Fee actually paid. Cash
provided by investing activities totaled $72,127 consisting of $29,054 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. As of March 31, 1999, the series had
invested $7,462,215 in 38 Project Partnerships located in 19 states
containing 1,086 apartment units. Average occupancy of the Project
Partnerships was 95% as of December 31, 1998.
Equity in Losses of Project Partnerships increased from $805,310 for the
year ended March 31, 1997 to $761,923 for the year ended March 31, 1998 and
decreased to $601,405 for the year ended March 31, 1999. (These Project
Partnerships reported depreciation and amortization of $1,477,003,
$1,474,599 and $1,414,757 for the years ended December 31, 1996, 1997 and
1998, respectively.) Overall, management believes these Project
Partnerships are operating as expected and are generating tax credits which
meet projections.
At March 31, 1999, the Series had $408,672 of short-term investments (Cash
and Cash Equivalents). It also had $399,976 in Zero Coupon Treasuries with
annual maturities providing $55,000 in fiscal year 1999 increasing to
$83,000 in fiscal year 2007. Management believes these sources of funds
are sufficient to meet the Series' 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
$701,324 for the year ended March 31, 1999. However, after adjusting for
Equity in Losses of Project Partnerships of $601,405 and the changes in
operating assets and liabilities, net cash used in operating activities was
$60,465, of which $59,999 was the Asset Management Fee actually paid. Cash
provided by investing activities totaled $62,882 of which $27,865 was
received in cash distributions from the Project Partnerships and $35,017
from matured Zero Coupon Treasuries. There were no unusual events or
trends to describe.
Item 8. Financial Statements and Supplementary Data
INDEPENDENT AUDITOR'S REPORT
To the Partners of Gateway Tax Credit Fund II Ltd.
We have audited the accompanying balance sheets of each of the five
Series (Series 2 through 6) constituting Gateway Tax Credit Fund II Ltd. (a
Florida Limited Partnership) as of March 31, 1999 and 1998 and the related
statements of operations, partners' equity, and cash flows of each of the
five Series for each of the three years in the period ended March 31,
1999. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits. We did not audit the
financial statements of certain underlying Project Partnerships owned by
Gateway Tax Credit Fund II Ltd. for each of the periods presented, the
investments in which are recorded using the equity method of accounting.
The investments in these partnerships total the following as of March 31,
1999 and 1998 and the equity in their losses total for each of the three
years in the period ended March 31, 1999:
Assets Partnership Loss
March 31, Year Ended March 31,
-------- --------------------
1999 1998 1999 1998 1997
---- ---- ---- ---- ----
Series 2 $186,641 $329,899 $107,106 $228,377 $293,789
Series 3 118,646 214,464 65,214 143,165 179,637
Series 4 471,161 706,006 187,477 320,588 335,255
Series 5 690,078 908,120 74,842 485,727 574,281
Series 6 1,122,059 1,528,537 301,060 506,231 518,594
Those statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to the amounts
included for such underlying partnerships, is based solely on the reports
of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
and the reports of other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the reports of other auditors,
the financial statements referred to above present fairly, in all material
respects, the financial position of each of the five Series (Series 2
through 6) constituting Gateway Tax Credit Fund II Ltd. as of March 31,
1999 and 1998, and the results of their operations and their cash flows for
each of the three years in the period ended March 31, 1999, in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedules listed under
Item 14(a)(2) in the index are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, based on our audits and the reports of other auditors, fairly
state in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
/s/ Spence, Marston, Bunch, Morris & Co.
SPENCE, MARSTON, BUNCH, MORRIS & CO.
Certified Public Accountants
Clearwater, Florida
July 6, 1999
PART I - Financial Information
Item 1. Financial Statements
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
MARCH 31, 1999 AND 1998
SERIES 2 1999 1998
---- ----
ASSETS
Current Assets:
Cash and Cash Equivalents $ 169,513 $ 160,851
Investments in Securities 49,538 47,501
---------- ----------
Total Current Assets 219,051 208,352
Investments in Securities 302,427 326,412
Investments in Project Partnerships, Net 331,579 510,805
---------- ----------
Total Assets $853,057 $1,045,569
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 44,229 46,190
---------- ----------
Total Current Liabilities 44,229 46,190
---------- ----------
Long-Term Liabilities:
Payable to General Partners 326,949 296,195
---------- ----------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of
which 37,228 at March 31, 1999 and 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 March 31, 1999 and 1998, issued and
outstanding 530,860 749,952
General Partners (48,981) (46,768)
---------- ----------
Total Partners' Equity 481,879 703,184
---------- ----------
Total Liabilities and Partners' Equity $853,057 $1,045,569
========== ==========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
MARCH 31, 1999 AND 1998
SERIES 3 1999 1998
---- ----
ASSETS
Current Assets:
Cash and Cash Equivalents $ 137,981 $ 135,622
Investments in Securities 44,063 42,252
---------- ----------
Total Current Assets 182,044 177,874
Investments in Securities 269,002 290,336
Investments in Project Partnerships, Net 218,820 378,000
---------- ----------
Total Assets $ 669,866 $846,210
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 48,298 50,773
---------- ----------
Total Current Liabilities 48,298 50,773
---------- ----------
Long-Term Liabilities:
Payable to General Partners 248,238 234,783
---------- ----------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of which
37,228 at March 31, 1999 and 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
March 31, 1999 and 1998, issued and
outstanding 417,412 602,863
General Partners (44,082) (42,209)
----------- -----------
Total Partners' Equity 373,330 560,654
----------- -----------
Total Liabilities and Partners' Equity $ 669,866 $ 846,210
=========== ===========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
MARCH 31, 1999 AND 1998
SERIES 4 1999 1998
---- ----
ASSETS
Current Assets:
Cash and Cash Equivalents $ 207,632 $ 196,876
Investments in Securities 55,823 53,529
----------- -----------
Total Current Assets 263,455 250,405
Investments in Securities 340,799 367,826
Investments in Project Partnerships, Net 676,348 981,823
----------- -----------
Total Assets $ 1,280,602 $1,600,054
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 53,248 56,202
---------- ----------
Total Current Liabilities 53,248 56,202
---------- ----------
Long-Term Liabilities:
Payable to General Partners 312,891 280,718
---------- ----------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of which
37,228 at March 31, 1999 and 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
March 31, 1999 and 1998, issued and
outstanding 965,972 1,311,156
General Partners (51,509) (48,022)
----------- -----------
Total Partners' Equity 914,463 1,263,134
----------- -----------
Total Liabilities and Partners' Equity $ 1,280,602 $1,600,054
=========== ===========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
MARCH 31, 1999 AND 1998
SERIES 5 1999 1998
---- ----
ASSETS
Current Assets:
Cash and Cash Equivalents $ 292,994 $ 280,813
Investments in Securities 69,576 66,717
----------- -----------
Total Current Assets 362,570 347,530
Investments in Securities 424,763 458,448
Investments in Project Partnerships, Net 1,145,581 1,500,087
------------ ------------
Total Assets $ 1,932,914 $2,306,065
============ ============
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 71,427 74,748
----------- -----------
Total Current Liabilities 71,427 74,748
----------- -----------
Long-Term Liabilities:
Payable to General Partners 308,232 274,507
----------- -----------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of which
37,228 at March 31, 1999 and 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
March 31, 1999 and 1998, issued and
outstanding 1,613,346 2,012,865
General Partners (60,091) (56,055)
----------- -----------
Total Partners' Equity 1,553,255 1,956,810
----------- -----------
Total Liabilities and Partners' Equity $ 1,932,914 $2,306,065
=========== ===========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
MARCH 31, 1999 AND 1998
SERIES 6 1999 1998
---- ----
ASSETS
Current Assets:
Cash and Cash Equivalents $ 408,672 $ 406,255
Investments in Securities 52,341 48,608
----------- -----------
Total Current Assets 461,013 454,863
Investments in Securities 347,635 373,009
Investments in Project Partnerships, Net 2,464,086 3,102,793
----------- -----------
Total Assets $ 3,272,734 $3,930,665
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 67,059 70,482
----------- -----------
Total Current Liabilities 67,059 70,482
----------- -----------
Long-Term Liabilities:
Payable to General Partners 388,370 341,554
----------- ----------
Partners' Equity:
Assignor Limited Partner
Units of limited partnership interest
consisting of 40,000 authorized BAC's, of which
37,228 at March 31, 1999 and 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
March 31, 1999 and 1998, issued and
outstanding 2,877,858 3,572,169
General Partners (60,553) (53,540)
---------- -----------
Total Partners' Equity 2,817,305 3,518,629
---------- ------------
Total Liabilities and Partners' Equity $3,272,734 $3,930,665
=========== ===========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
MARCH 31, 1999 AND 1998
TOTAL SERIES 2 - 6 1999 1998
---- ----
ASSETS
Current Assets:
Cash and Cash Equivalents $ 1,216,792 $1,180,417
Investments in Securities 271,341 258,607
----------- -----------
Total Current Assets 1,488,133 1,439,024
Investments in Securities 1,684,626 1,816,031
Investments in Project Partnerships, Net 4,836,414 6,473,508
----------- -----------
Total Assets $ 8,009,173 $9,728,563
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Payable to General Partners 284,261 298,395
----------- -----------
Total Current Liabilities 284,261 298,395
----------- -----------
Long-Term Liabilities:
Payable to General Partners 1,584,680 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 March 31, 1999 and 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 March 31, 1999 and 1998, issued and
outstanding 6,405,448 8,249,005
General Partners (265,216) (246,594)
----------- -----------
Total Partners' Equity 6,140,232 8,002,411
----------- -----------
Total Liabilities and Partners' Equity $ 8,009,173 $9,728,563
============ ============
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31,
SERIES 2 1999 1998 1997
---- ---- ----
Revenues:
Interest Income $ 34,468 $ 37,434 $ 36,217
Other Income 6,937 3,838 0
----------- ----------- ------------
Total Revenues 41,405 41,272 36,217
----------- ----------- ------------
Expenses:
Asset Management Fee-General
Partner 68,648 68,773 68,889
General and Administrative:
General Partner 7,433 8,267 6,792
Other 12,781 10,502 13,625
Amortization 46,949 3,011 2,369
----------- ----------- ------------
Total Expenses 135,811 90,553 91,675
----------- ----------- ------------
Loss Before Equity in Losses
of Project Partnerships (94,406) (49,281) (55,458)
Equity in Losses of Project
Partnerships (126,899) (288,412) (527,175)
----------- ----------- ------------
Net Loss $ (221,305) $ (337,693) $ (582,633)
=========== =========== ============
Allocation of Net Loss:
Assignees (219,092) (334,316) (576,807)
General Partners (2,213) (3,377) (5,826)
----------- ----------- ------------
$ (221,305) $ (337,693) $ (582,633)
=========== =========== ============
Net Loss Per Beneficial
Assignee Certificate $ (35.71) $ (54.48) $ (94.00)
Number of Beneficial Assignee =========== =========== ============
Certificates Outstanding 6,136 6,136 6,136
=========== =========== ============
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31,
SERIES 3 1999 1998 1997
---- ---- ----
Revenues:
Interest Income $ 29,814 $ 30,145 $ 31,128
Other Income 14,515 34,966 0
---------- ---------- ----------
Total Revenues 44,329 65,111 31,128
---------- ---------- ----------
Expenses:
Asset Management Fee-General
Partner 63,479 63,645 63,792
General and Administrative:
General Partner 7,771 8,481 7,102
Other 10,513 10,903 17,278
Amortization 44,070 5,422 (1,615)
---------- ---------- ----------
Total Expenses 125,833 88,451 86,557
---------- ---------- ----------
Loss Before Equity in Losses
of Project Partnerships (81,504) (23,340) (55,429)
Equity in Losses of Project
Partnerships (105,820) (198,168) (285,853)
----------- ----------- -----------
Net Loss $ (187,324) $ (221,508) $ (341,282)
=========== =========== ===========
Allocation of Net Loss:
Assignees (185,451) (219,293) (337,869)
General Partners (1,873) (2,215) (3,413)
----------- ----------- -----------
$ (187,324) $ (221,508) $ (341,282)
=========== =========== ===========
Net Loss Per Beneficial
Assignee Certificate $ (33.99) $ (40.19) $ (61.93)
Number of Beneficial Assignee =========== =========== ===========
Certificates Outstanding 5,456 5,456 5,456
=========== =========== ===========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31,
SERIES 4 1999 1998 1997
---- ---- ----
Revenues:
Interest Income $ 39,022 $ 39,924 $ 41,455
Other Income 7,650 4,385 0
--------- --------- ---------
Total Revenues 46,672 44,309 41,455
--------- --------- ---------
Expenses:
Asset Management Fee - General
Partner 77,989 78,133 78,270
General and Administrative:
General Partner 9,798 10,693 8,953
Other 12,805 13,417 17,019
Amortization 85,832 5,595 (1,955)
---------- ---------- ---------
Total Expenses 186,424 107,838 102,287
---------- ---------- ---------
Loss Before Equity in Losses
of Project Partnerships (139,752) (63,529) (60,832)
Equity in Losses of Project
Partnerships (208,919) (421,886) (635,178)
---------- ---------- ----------
Net Loss $ (348,671) $(485,415) $(696,010)
========== ========== ==========
Allocation of Net Loss:
Assignees (345,184) (480,561) (689,050)
General Partners (3,487) (4,854) (6,960)
---------- ---------- ----------
$ (348,671) $(485,415) $(696,010)
========== ========== ==========
Net Loss Per Beneficial
Assignee Certificate $ (49.92) $ (69.50) $ (99.65)
Number of Beneficial Assignee ========== ========== ==========
Certificates Outstanding 6,915 6,915 6,915
========== ========== ==========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31,
SERIES 5 1999 1998 1997
---- ---- ----
Revenues:
Interest Income $ 50,132 $ 51,284 $ 52,985
Other Income 14,529 3,133 0
---------- ---------- ----------
Total Revenues 64,661 54,417 52,985
---------- ---------- ----------
Expenses:
Asset Management Fee - General
Partner 96,461 96,663 96,844
General and Administrative:
General Partner 12,163 13,274 11,114
Other 19,611 16,492 19,418
Amortization 39,939 12,761 11,006
---------- ---------- ----------
Total Expenses 168,174 139,190 138,382
---------- ---------- ----------
Loss Before Equity in Losses
of Project Partnerships (103,513) (84,773) (85,397)
Equity in Losses of Project
Partnerships (300,042) (728,729) (911,965)
---------- ---------- ----------
Net Loss $ (403,555) $(813,502) $(997,362)
========== ========== ==========
Allocation of Net Loss:
Assignees (399,519) (805,367) (987,388)
General Partners (4,036) (8,135) (9,974)
---------- ---------- ----------
$ (403,555) $(813,502) $(997,362)
========== ========== ==========
Net Loss Per Beneficial
Assignee Certificate $ (46.37) $ (93.47) $ (114.60)
Number of Beneficial Assignee ========== ========== ==========
Certificates Outstanding 8,616 8,616 8,616
========== ========== ==========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31,
SERIES 6 1999 1998 1997
---- ---- ----
Revenues:
Interest Income $ 46,807 $ 48,382 $ 47,326
Other Income 3,915 1,325 0
---------- ---------- ----------
Total Revenues 50,722 49,707 47,326
---------- ---------- ----------
Expenses:
Asset Management Fee - General
Partner 106,815 107,120 107,403
General and Administrative:
General Partner 12,839 14,012 11,732
Other 17,635 17,513 16,660
Amortization 13,352 19,276 22,048
---------- ---------- ----------
Total Expenses 150,641 157,921 157,843
---------- ---------- ----------
Loss Before Equity in Losses
of Project Partnerships (99,919) (108,214) (110,517)
Equity in Losses of Project
Partnerships (601,405) (761,923) (805,310)
---------- ---------- ----------
Net Loss $(701,324) $(870,137) $(915,827)
========== ========== ==========
Allocation of Net Loss:
Assignees (694,311) (861,436) (906,669)
General Partners (7,013) (8,701) (9,158)
---------- ---------- ----------
$(701,324) $(870,137) $(915,827)
========== ========== ==========
Net Loss Per Beneficial
Assignee Certificate $ (68.54) $ (85.25) $ (89.72)
Number of Beneficial Assignee ========== ========== ==========
Certificates Outstanding 10,105 10,105 10,105
========== ========== ==========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31,
TOTAL SERIES 2 - 6 1999 1998 1997
---- ---- ----
Revenues:
Interest Income $ 200,243 $ 207,169 $ 209,111
Other Income 47,546 47,647 0
------------ ------------ ------------
Total Revenues 247,789 254,816 209,111
------------ ------------ ------------
Expenses:
Asset Management Fee-General
Partner 413,392 414,334 415,198
General and Administrative:
General Partner 50,004 54,727 45,693
Other 73,345 68,827 84,000
Amortization 230,142 46,065 31,853
------------ ------------ -----------
Total Expenses 766,883 583,953 576,744
------------ ------------ -----------
Loss Before Equity in Losses
of Project Partnerships (519,094) (329,137) (367,633)
Equity in Losses of Project
Partnerships (1,343,085) (2,399,118) (3,165,481)
------------ ------------ ------------
Net Loss $(1,862,179) $(2,728,255) $(3,533,114)
============ ============ ============
Allocation of Net Loss:
Assignees (1,843,557) (2,700,973) (3,497,783)
General Partners (18,622) (27,282) (35,331)
------------ ------------ ------------
$(1,862,179) $(2,728,255) $(3,533,114)
============ ============ ============
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
General
SERIES 2 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1996 $ 1,661,075 $ (37,565) $ 1,623,510
Net Loss (576,807) (5,826) (582,633)
------------ ---------- ------------
Balance at March 31, 1997 1,084,268 (43,391) 1,040,877
Net Loss (334,316) (3,377) (337,693)
------------ ---------- -----------
Balance at March 31, 1998 749,952 (46,768) 703,184
Net Loss (219,092) (2,213) (221,305)
------------ ----------- -----------
Balance at March 31, 1999 $ 530,860 $ (48,981) $ 481,879
============ =========== ===========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
General
SERIES 3 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1996 $ 1,160,025 $ (36,581) $ 1,123,444
Net Loss (337,869) (3,413) (341,282)
------------ ----------- ------------
Balance at March 31, 1997 822,156 (39,994) 782,162
Net Loss (219,293) (2,215) (221,508)
------------ ----------- -----------
Balance at March 31, 1998 602,863 (42,209) 560,654
Net Loss (185,451) (1,873) (187,324)
------------ ------------ -----------
Balance at March 31, 1999 $ 417,412 $ (44,082) $ 373,330
============ ============ ===========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
General
SERIES 4 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1996 $ 2,480,767 $ (36,208) $ 2,444,559
Net Loss (689,050) (6,960) (696,010)
------------ ---------- ------------
Balance at March 31, 1997 1,791,717 (43,168) 1,748,549
Net Loss (480,561) (4,854) (485,415)
------------ ---------- ------------
Balance at March 31, 1998 1,311,156 (48,022) 1,263,134
Net Loss (345,184) (3,487) (348,671)
------------ ---------- ------------
Balance at March 31, 1999 $ 965,972 $ (51,509) $ 914,463
============ ========== ============
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
General
SERIES 5 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1996 $ 3,805,620 $ (37,946) $ 3,767,674
Net Loss (987,388) (9,974) (997,362)
------------ ---------- ------------
Balance at March 31, 1997 2,818,232 (47,920) 2,770,312
Net Loss (805,367) (8,135) (813,502)
------------ ---------- ------------
Balance at March 31, 1998 2,012,865 (56,055) 1,956,810
Net Loss (399,519) (4,036) (403,555)
------------ ----------- ------------
Balance at March 31, 1999 $ 1,613,346 $ (60,091) $ 1,553,255
============ =========== ============
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
General
SERIES 6 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1996 $ 5,340,274 $ (35,681) $ 5,304,593
Net Loss (906,669) (9,158) (915,827)
------------ ---------- ------------
Balance at March 31, 1997 4,433,605 (44,839) 4,388,766
Net Loss (861,436) (8,701) (870,137)
------------ ---------- ------------
Balance at March 31, 1998
3,572,169 (53,540) 3,518,629
Net Loss (694,311) (7,013) (701,324)
------------ ----------- ------------
Balance at March 31, 1999 $ 2,877,858 $ (60,553) $ 2,817,305
============ =========== ============
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
General
TOTAL SERIES 2 - 6 Assignees Partners Total
--------- -------- -----
Balance at March 31, 1996 $ 14,447,761 $ (183,981) $ 14,263,780
Net Loss (3,497,783) (35,331) (3,533,114)
------------- ----------- -------------
Balance at March 31, 1997 10,949,978 (219,312) 10,730,666
Net Loss (2,700,973) (27,282) (2,728,255)
------------- ----------- -------------
Balance at March 31, 1998 8,249,005 (246,594) 8,002,411
Net Loss (1,843,557) (18,622) (1,862,179)
------------- ----------- -------------
Balance at March 31, 1999 $ 6,405,448 $(265,216) $ 6,140,232
============= =========== =============
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
SERIES 2 1999 1998 1997
- -------- ---- ---- ----
Cash Flows from Operating
Activities:
Net Loss $ (221,305) $ (337,693) $ (582,633)
Adjustments to Reconcile Net
Loss to Net Cash Provided by
(Used in) Operating Activities:
Amortization 46,949 3,011 2,369
Accreted Interest Income on
Investments in Securities (25,554) (27,118) (28,749)
Equity in Losses of Project
Partnerships 126,899 288,412 527,175
Interest Income from
Redemption of Securities 16,834 13,627 10,358
Distributions Included in
Other Income (6,937) (3,838) 0
Changes in Operating Assets
and Liabilities:
Increase in Payable to
General Partners 28,793 37,331 34,728
---------- ---------- ----------
Net Cash Used in Operating
Activities (34,321) (26,268) (36,752)
---------- ---------- ----------
Cash Flows from Investing
Activities:
Distributions Received from
Project Partnerships 12,315 16,493 6,497
Redemption of Investment in
Securities 30,668 32,065 33,297
---------- ---------- ----------
Net Cash Provided by
Investing Activities 42,983 48,558 39,794
---------- ---------- ----------
Increase (Decrease) in Cash and
Cash Equivalents 8,662 22,290 3,042
Cash and Cash Equivalents at
Beginning of Year 160,851 138,561 135,519
---------- ---------- ----------
Cash and Cash Equivalents at
End of Year $ 169,513 $ 160,851 $ 138,561
========== ========== ==========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
SERIES 3 1999 1998 1997
- - ------ ---- ---- ----
Cash Flows from Operating
Activities:
Net Loss $ (187,324) $ (221,508) $ (341,282)
Adjustments to Reconcile Net
Loss to Net Cash Provided by
(Used in) Operating Activities:
Amortization 44,070 5,422 (1,615)
Accreted Interest Income on
Investments in Securities (22,729) (24,121) (25,571)
Equity in Losses of Project
Partnerships 105,820 198,168 285,853
Interest Income from
Redemption of Securities 14,974 12,121 9,212
Distributions Included In
Other Income (14,515) (34,966) 0
Changes in Operating Assets
and Liabilities:
Increase in Payable to
General Partners 10,980 24,495 22,486
---------- ---------- ----------
Net Cash Used in Operating
Activities (48,724) (40,389) (50,917)
---------- ---------- ----------
Cash Flows from Investing
Activities:
Distributions Received from
Project Partnerships 23,805 37,565 33,237
Redemption of Investment in
Securities 27,278 28,521 29,617
---------- ---------- ----------
Net Cash Provided by
Investing Activities 51,083 66,086 62,854
---------- ---------- ----------
Increase (Decrease) in Cash and
Cash Equivalents 2,359 25,697 11,937
Cash and Cash Equivalents at
Beginning of Year 135,622 109,925 97,988
---------- ---------- ----------
Cash and Cash Equivalents at
End of Year $ 137,981 $ 135,622 $ 109,925
========== ========== ==========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
SERIES 4 1999 1998 1997
- -------- ---- ---- ----
Cash Flows from Operating
Activities:
Net Loss $ (348,671) $ (485,415) $ (696,010)
Adjustments to Reconcile Net
Loss to Net Cash Provided by
(Used in) Operating Activities:
Amortization 85,832 5,595 (1,955)
Accreted Interest Income on
Investments in Securities (28,796) (30,559) (32,396)
Equity in Losses of Project
Partnerships 208,919 421,886 635,178
Interest Income from
Redemption of Securities 18,970 15,357 11,676
Distributions Included In
Other Income (7,650) (4,385) 0
Changes in Operating Assets
and Liabilities:
Increase in Payable to
General Partners 29,219 37,092 33,284
---------- ---------- ----------
Net Cash Used in Operating
Activities (42,177) (40,429) (50,223)
---------- ---------- ----------
Cash Flows from Investing
Activities:
Distributions Received from
Project Partnerships 18,374 18,400 16,968
Redemption of Investment in
Securities 34,559 36,132 37,522
---------- ---------- ----------
Net Cash Provided by
Investing Activities 52,933 54,532 54,490
---------- ---------- ----------
Increase (Decrease) in Cash and
Cash Equivalents 10,756 14,103 4,267
Cash and Cash Equivalents at
Beginning of Year 196,876 182,773 178,506
---------- ---------- ----------
Cash and Cash Equivalents at
End of Year $ 207,632 $ 196,876 $ 182,773
========== ========== ==========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
SERIES 5 1999 1998 1997
- -------- ---- ---- ----
Cash Flows from Operating
Activities:
Net Loss $ (403,555) $ (813,502) $ (997,362)
Adjustments to Reconcile Net
Loss to Net Cash Provided by
(Used in) Operating Activities:
Amortization 39,939 12,761 11,006
Accreted Interest Income on
Investments in Securities (35,890) (38,088) (40,378)
Equity in Losses of Project
Partnerships 300,042 728,729 911,965
Interest Income from
Redemption of Securities 23,644 19,140 14,552
Distributions Included In
Other Income (14,529) (3,133) 0
Changes in Operating Assets
and Liabilities:
Increase in Payable to
General Partners 30,403 40,677 34,644
---------- ---------- ----------
Net Cash Used in Operating
Activities (59,946) (53,416) (65,573)
---------- ---------- ----------
Cash Flows from Investing
Activities:
Distributions Received from
Project Partnerships 29,054 30,188 20,264
Redemption of Investment in
Securities 43,073 45,035 46,766
---------- ---------- ----------
Net Cash Provided by
Investing Activities 72,127 75,223 67,030
---------- ---------- ----------
Increase (Decrease) in Cash and
Cash Equivalents 12,181 21,807 1,457
Cash and Cash Equivalents at
Beginning of Year 280,813 259,006 257,549
---------- ---------- ----------
Cash and Cash Equivalents at
End of Year $ 292,994 $ 280,813 $ 259,006
========== ========== ==========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
SERIES 6 1999 1998 1997
- -- ----- ---- ---- ----
Cash Flows from Operating
Activities:
Net Loss $ (701,324) $ (870,137) $ (915,827)
Adjustments to Reconcile Net
Loss to Net Cash Provided by
(Used in) Operating Activities:
Amortization 13,352 19,276 22,048
Accreted Interest Income on
Investments in Securities (29,359) (30,091) (30,456)
Equity in Losses of Project
Partnerships 601,405 761,923 805,310
Interest Income from
Redemption of Securities 15,983 12,262 8,978
Distributions Included In
Other Income (3,915) (1,325) 0
Changes in Operating Assets
and Liabilities:
Increase in Payable to
General Partners 43,393 52,014 51,930
---------- ---------- ----------
Net Cash Used in Operating
Activities (60,465) (56,078) (58,017)
---------- ---------- ----------
Cash Flows from Investing
Activities:
Distributions Received from
Project Partnerships 27,865 29,859 29,740
Redemption of Investment in
Securities 35,017 35,738 36,022
---------- ---------- ----------
Net Cash Provided by
Investing Activities 62,882 65,597 65,762
---------- ---------- ----------
Increase (Decrease) in Cash and
Cash Equivalents 2,417 9,519 7,745
Cash and Cash Equivalents at
Beginning of Year 406,255 396,736 388,991
---------- ---------- ----------
Cash and Cash Equivalents at
End of Year $ 408,672 $ 406,255 $ 396,736
========== ========== ==========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997:
TOTAL SERIES 2 - 6 1999 1998 1997
- ------------------ ---- ---- ----
Cash Flows from Operating
Activities:
Net Loss $(1,862,179) $(2,728,255) $(3,533,114)
Adjustments to Reconcile Net
Loss to Net Cash Provided by
(Used in) Operating Activities:
Amortization 230,142 46,065 31,853
Accreted Interest Income on
Investments in Securities (142,328) (149,977) (157,550)
Equity in Losses of Project
Partnerships 1,343,085 2,399,118 3,165,481
Interest Income from
Redemption of Securities 90,405 72,507 54,776
Distributions Included In
Other Income (47,546) (47,647) 0
Changes in Operating Assets
and Liabilities:
Increase in Payable to
General Partners 142,788 191,609 177,072
----------- ----------- ----------
Net Cash Used in Operating
Activities (245,633) (216,580) (261,482)
----------- ----------- ----------
Cash Flows from Investing
Activities:
Distributions Received from
Project Partnerships 111,413 132,505 106,706
Redemption of Investment in
Securities 170,595 177,491 183,224
----------- ----------- ----------
Net Cash Provided by
Investing Activities 282,008 309,996 289,930
----------- ----------- ----------
Increase (Decrease) in Cash and
Cash Equivalents 36,375 93,416 28,448
Cash and Cash Equivalents at
Beginning of Year 1,180,417 1,087,001 1,058,553
----------- ----------- ----------
Cash and Cash Equivalents at
End of Year $1,216,792 $1,180,417 $1,087,001
=========== =========== ===========
See accompanying notes to financial statements.
GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999, 1998 AND 1997
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 March 31, 1999, 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, 1999. 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 limited partner in Project
Partnerships ("Investments in Project Partnerships"), using the equity
method of accounting, because management believes that Gateway does not
have a majority control of the major operating and financial policies of
the Project Partnerships in which it invests, 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 expense is shown 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. Distributions received from Project
Partnerships whose investment has been reduced to zero are included in
Other Income.
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 1998 and 1997 figures have been reclassified, where
appropriate, to conform with the financial statement presentation used in
1999.
NOTE 3 - INVESTMENT IN SECURITIES:
The March 31, 1999 Balance Sheet includes Investment in Securities
consisting of U.S. Government Security Strips which represents their cost,
plus accreted interest income of $149,034 for Series 2, $132,562 for Series
3, $167,943 for Series 4, $209,319 for Series 5 and $145,663 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 $ 379,988 $ 351,966 $ 28,022
Series 3 337,882 313,065 24,817
Series 4 428,229 396,622 31,607
Series 5 533,568 494,338 39,230
Series 6 430,861 399,976 30,885
As of March 31, 1999, the cost and accreted interest of debt securities by
contractual maturities is as follows:
Series 2 Series 3 Series 4
-------- -------- --------
Due within 1 year $ 49,537 $ 44,062 $ 55,824
After 1 year through 5 years 182,488 162,318 205,639
After 5 years through 10 years 119,941 106,685 135,159
----------- ----------- -----------
Total Amount Carried on
Balance Sheet $ 351,966 $ 313,065 $ 396,622
=========== =========== ===========
Series 5 Series 6 Total
-------- -------- --------
Due within 1 year $ 69,576 $ 52,341 $ 271,3