0000812072-95-000004.txt : 19950808 0000812072-95-000004.hdr.sgml : 19950808 ACCESSION NUMBER: 0000812072-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950807 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLM EQUIPMENT GROWTH FUND II CENTRAL INDEX KEY: 0000812072 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943041013 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10553 FILM NUMBER: 95559373 BUSINESS ADDRESS: STREET 1: STEUART ST TOWER STE 900 STREET 2: C/O ONE MARKET PLAZA CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 4159741399 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal quarter ended June 30, 1995. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 33-32258 ----------------------- PLM EQUIPMENT GROWTH FUND II (Exact name of registrant as specified in its charter) California 94-3041013 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Market, Steuart Street Tower Suite 900, San Francisco, CA 94105-1301 (Address of principal (Zip code) executive offices) Registrant's telephone number, including area code (415) 974-1399 ----------------------- 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 the number of units outstanding of each of the issuer's classes of partnership units, as of the latest practicable date: Class Outstanding at August 7, 1995 Limited Partnership Depositary Units 7,439,005 General Partnership Units 1 PLM EQUIPMENT GROWTH FUND II (A Limited Partnership) BALANCE SHEETS (in thousands of dollars) ASSETS
June 30, December 31, 1995 1994 Equipment held for operating leases $ 116,154 $ 128,784 Less accumulated depreciation (71,688) (74,672) 44,466 54,112 Equipment held for sale 1,918 -- Net equipment 46,384 54,112 Cash and cash equivalents 7,179 12,348 Restricted cash 296 296 Accounts receivable, less allowance for doubtful accounts of $665 in 1995 and $427 in 1994 2,255 2,258 Deferred charges, net of accumulated amortization of $1,454 in 1995 and $1,798 in 1994 323 385 Prepaid expenses and other assets 20 86 Total assets $ 56,457 $ 69,485 LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable and accrued expenses $ 1,047 $ 867 Due to affiliates 364 236 Note payable 28,000 35,000 Prepaid deposits and reserve for repairs 2,512 3,229 Total liabilities 31,923 39,332 Partners' capital (deficit): Limited Partners (7,439,005 and 7,472,705 Depositary Units, including 1,150 Depositary Units held in the Treasury at June 30, 1995 and December 31, 1994) 25,293 30,850 General Partner (759) (697) Total partners' capital 24,534 30,153 Total liabilities and partners' capital $ 56,457 $ 69,485
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND II (A Limited Partnership) STATEMENTS OF OPERATIONS (In thousands of dollars except per unit amounts)
For the three months For the six months ended June 30, ended June 30, 1995 1994 1995 1994 Revenues: Lease revenue $ 4,407 $ 6,112 $ 8,938 $ 12,281 Interest and other income 104 242 249 355 Net gain on disposition of equipment 804 59 854 640 Total revenues 5,315 6,413 10,041 13,276 Expenses: Depreciation and amortization 1,985 2,764 4,330 5,521 Management fees to affiliate 196 312 434 611 Interest expense 555 824 1,267 1,374 Insurance expense to affiliate -- 168 87 105 Other insurance expense 78 291 95 346 Repairs and maintenance 848 1,259 1,401 2,580 Marine equipment operating expenses 179 1,063 145 1,854 General and administrative expenses to affiliates 231 158 462 338 Other general and administrative expenses 327 368 638 546 Bad debt expense 233 22 251 51 Total expenses 4,632 7,229 9,110 13,326 Net income (loss) $ 683 $ (816) $ 931 $ (50) Partners' share of net income (loss): Limited Partners $ 614 $ (1,021) $ 679 $ (412) General Partner 69 205 252 362 Total $ 683 $ (816) $ 931 $ (50) Net income (loss) per Depositary Unit (7,439,005 and 7,472,705 Units, including 1,150 Units held in Treasury respectively, at June 30, 1995 and 1994) $ 0.08 $ (0.14) $ 0.09 $ (0.05) Cash distributions $ 3,138 $ 3,155 $ 6,284 $ 6,310 Cash distributions per Depositary Unit $ 0.40 $ 0.40 $ 0.80 $ 0.80
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND II (A Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For the period from December 31, 1993 to June 30, 1995 (in thousands of dollars)
Limited General Partners Partner Total Partners' capital (deficit) at December 31, 1993 $ 43,894 $ (1,032) $ 42,862 Net income (loss) (899) 966 67 Cash distributions (11,989) (631) (12,620) Repurchase of Depositary Units (156) -- (156) Partners' capital (deficit) at December 31, 1994 30,850 (697) 30,153 Net income 679 252 931 Cash distributions (5,970) (314) (6,284) Repurchase of Depositary Units (266) -- (266) Partners' capital (deficit) at June 30, 1995 $ 25,293 $ (759) $ 24,534
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND II (A Limited Partnership) STATEMENTS OF CASH FLOWS (in thousands of dollars) For the six months ended June 30, 1995 1994 Operating activities: Net income (loss) $ 931 $ (50) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Net gain on disposition of equipment (854) (640) Write-off of unamortized loan origination costs .. -- 305 Depreciation and amortization 4,330 5,521 Changes in operating assets and liabilities: Accounts receivable, net 2 468 Due to affiliate 128 (169) Prepaid expenses and other assets 66 46 Accounts payable and accrued expenses 165 (703) Accrued drydock expenses 271 -- Prepaid deposits and reserve for repairs (717) 1,724 Cash provided by operating activities 4,322 6,502 Investing activities: Proceeds from disposition of equipment 4,070 1,883 Payments for purchase of equipment -- (501) Payments for capital improvements (11) (710) Decrease in restricted cash -- 7,582 Cash provided by investing activities 4,059 8,254 Financing activities: Proceeds from note payable -- 35,000 Principal payments on notes payable (7,000) (35,000) Cash distributions paid to partners (6,284) (6,310) Payments of debt issuance costs -- (236) Repurchase of Depositary Units (266) -- Cash used in financing activities (13,550) (6,546) Cash and cash equivalents: Net (decrease) increase in cash and cash equivalents (5,169) 8,210 Cash and cash equivalents at beginning of period 12,348 5,996 Cash and cash equivalents at end of period $ 7,179 $ 14,206 Supplemental information: Interest paid $ 1,261 $ 1,069 See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND II (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 1995 1. Opinion of Management In the opinion of the management of PLM Financial Services, Inc., the General Partner, the accompanying unaudited financial statements contain all adjustments necessary, consisting primarily of normal recurring accruals, to present fairly the financial position of PLM Equipment Growth Fund II (the "Partnership") as of June 30, 1995, the statements of operations for the three and six months ended June 30, 1995 and 1994, the statements of changes in partners' capital and the statements of cash flows for the six months ended June 30, 1995 and 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from the accompanying financial statements. For further information, reference should be made to the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994, on file at the Securities and Exchange Commission. 2. Cash Distribution Cash distributions are recorded when paid and totaled $6,284,000 and $3,138,000 for the six and three months ended June 30, 1995, respectively. Cash distributions to unitholders in excess of net income are considered to represent a return of capital. Cash distributions to unitholders of $5,291,000 and $5,994,000 for the six months ended June 30, 1995, and 1994, respectively, were deemed to be a return of capital. Cash distributions of $2,976,000 ($0.40 per Depositary Unit) were declared on July 14, 1995, and are to be paid on August 15, 1995, to the unitholders of record as of June 30, 1995. 3. Repurchase of Depositary Units On December 28, 1992, the Partnership engaged in a program to repurchase up to 200,000 Depositary Units. In the six months ended June 30, 1995, the Partnership had purchased and canceled 33,700 Depositary Units at a cost of $0.3 million. As of June 30, 1995, the Partnership had cumulatively repurchased 60,600 Depositary Units at a cost of $0.6 million. 4. Equipment Equipment held for operating leases is stated at cost. Equipment held for sale is stated at the lower of the equipment's depreciated cost or net realizable value and is subject to a pending contract for sale. PLM EQUIPMENT GROWTH FUND II (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 1995 4. Equipment (continued) The components of equipment are as follows (in thousands): June 30, December 31, 1995 1994 Equipment held for operating leases: Rail equipment $ 19,747 $ 19,749 Marine containers 14,841 17,939 Marine vessels -- 4,702 Aircraft 45,947 50,644 Trailers and tractors 22,961 23,092 Mobile offshore drilling unit 12,658 12,658 116,154 128,784 Less accumulated depreciation (71,688) (74,672) 44,466 54,112 Equipment held for sale 1,918 -- Net equipment $ 46,384 $ 54,112 Revenues are earned by placing the equipment under operating leases which are generally billed monthly or quarterly. The Partnership's marine vessel and certain of its marine containers are leased to operators of utilization-type leasing pools which include equipment owned by unaffiliated parties. In such instances revenues received by the Partnership consist of a specified percentage of revenues generated by leasing the equipment to sublessees, after deducting certain direct operating expenses of the pooled equipment. Rents for railcars are based on mileage traveled or a fixed rate; rents for all other equipment are based on fixed rates. As of June 30, 1995, all equipment in the Partnership's portfolio was either on lease or operating in PLM-affiliated short-term trailer rental facilities, except for 218 marine containers and four railcars. With the exception of 266 marine containers and one tractor, all equipment in the Partnership portfolio was either on lease or operating in PLM-affiliate short-term trailer rental facilities at December 31, 1994. The aggregate carrying value of equipment off lease was $868,000 and $1,136,000 at June 30, 1995 and December 31, 1994, respectively. During the six months ended June 30, 1995, the Partnership sold or disposed of its 50% interest in a DC-9 aircraft, 140 marine containers, eight trailers, one tractor, one railcar, and its 50% interest in a marine vessel, with an aggregate net book value of $3.5 million, and unused drydock reserves of $0.3 million, for proceeds of $4.1 million. For the six months ended June 30, 1994, the Partnership sold or disposed of 189 marine containers, and 262 trailers with an aggregate net book value of $1.3 million, for proceeds of $1.9 million. 5. Notes Payable On March 31, 1995, the Partnership prepaid $7,000,000 of the outstanding note payable of $35 million. This payment was applied to the principal payments due March 31, 1996 and 1997. 6. Subsequent Event In July 1995, the Partnership sold 1,959 marine containers with a net book value of $1.9 million for proceeds of $2.4 million. This group of marine containers was classified as equipment held for sale at June 30, 1995. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources (A) Results of Operations -For the six months ending June 30, 1995 and 1994 Summary The Partnership's operating income before depreciation, amortization, and gain/loss on sales declined by approximately 9% in the first six months of 1995 from the same period in 1994. This decline is attributable primarily to: - sales or liquidations of equipment subsequent to the second quarter of 1994, as the Partnership sold its 12.5% interest in a rig in December 1994, sold two marine vessels in September of 1994, sold its 50% interest in another marine vessel in May of 1995, sold its 50% interest in a DC-9 aircraft in April of 1995, sold 9 trailers and a tractor, and realized the liquidation or disposal of approximately 469 marine containers in the 12 month period ended June 30, 1995; - a 60% reduction in lease rate for one of the Partnership's aircraft as its lease was renegotiated in the third quarter of 1994, a reduction in contribution from aircraft in the first quarter of 1995 as one aircraft came off-lease in January while another was off-lease undergoing maintenance, and a reduction of 31% in daily lease rate for the rig in which the Partnership owns a 55% interest effective January 30, 1995; The Partnership purchased 636 trailers in the third and fourth quarters of 1994, and 1,959 containers between the first and third quarters of 1994. The lessee of the containers encountered financial difficulties in the fourth quarter of 1994, resulting in the establishment of reserves against accrued revenues in the first six months of 1995. Contributions realized from the trailers purchased in 1994 partially offset declining performance resulting from the events described above. (B) Financial Condition - Capital Resources, Liquidity, and Distributions The General Partner purchased the Partnership's initial equipment portfolio with capital raised from its initial equity offering and permanent debt financing. No further capital contributions from original partners are permitted under the terms of the Partnership's Limited Partnership Agreement. While the Partnership's total outstanding indebtedness, currently $28.0 million, can only be increased up to a maximum of $35 million subject to specific covenants in the existing debt agreement. The Partnership relies on operating cash flow to meet its operating obligations, make cash distributions to partners, and increase the Partnership's equipment portfolio with any remaining surplus cash available. During the six months ended June 30, 1995, the Partnership used $7.0 million in proceeds from sales of equipment and other cash on hand to prepay the first annual principal installment of the loan due March 31, 1996, and to partially repay the second annual installment due March 31, 1997. For the six months ended June 30, 1995, the Partnership generated sufficient operating revenues to meet its operating obligations, but used undistributed available cash from prior periods of approximately $1.9 million to maintain the current level of distributions (total 1995 of $6.3 million) to the partners. (C) Depositary Unit Repurchase Plan On December 28, 1992, the Partnership engaged in a program to repurchase up to 200,000 Depositary Units. In the six months ended June 30, 1995, the Partnership had purchased and canceled 33,700 Depositary Units at a cost of $0.3 million. As of June 30, 1995, the Partnership had cumulatively repurchased 60,600 Depositary Units at a cost of $0.6 million. Comparison of the Partnership's Operating Results for the Three Months Ended June 30, 1995 and 1994 (A) Revenues Total revenues of $5.3 million for the quarter ended June 30, 1995, declined from $6.4 million for the same period in 1994. This decrease resulted primarily from lower lease revenue offset by a larger gain in the second quarter of 1995 when compared to the same period in 1994. (1) Lease revenues decreased to $4.4 million in the quarter ended June 30, 1995, from $6.1 million in the same period in 1994. The following table lists lease revenues earned by equipment type: For the three months ended June 30, 1995 1994 Trailers and tractors $ 1,286 $ 770 Rail equipment 1,252 1,308 Aircraft 940 1,366 Marine containers 457 406 Mobile offshore drilling units 338 625 Marine vessels 134 1,637 ---------- ---------- $ 4,407 $ 6,112 Significant revenue component changes from quarter to quarter resulted primarily from: (a) declines of $1.5 million in marine vessel revenues due to the sale of two marine vessels during the third quarter of 1994, and a 50% interest in another marine vessel in the second quarter of 1995, which were on voyage charters or utilization-based pooling arrangements during the first half of 1994; (b) declines of $0.4 million in aircraft revenue due to the sale of the Partnership's 50% interest in a DC-9 aircraft during the second quarter of 1995, and a lower re-lease rate on another aircraft; (c) a decrease of $0.3 million in mobile offshore drilling unit ("rig") revenue due to the sale of one rig in the fourth quarter of 1994, and a lower re-lease rate on another rig; (d) an increase of $0.5 million in trailer and tractor revenue due to the purchase of 649 trailers in the third and fourth quarters of 1994. (2) Interest and other income decreased to $0.1 million due primarily to lower cash balances available for investment, offset slightly by an increase in the interest rate earned on cash equivalents. (3) Net gain on disposition of equipment during the second quarter of 1995 totaled $0.8 million from the sale or disposal of the Partnership's 50% interest in a DC-9 aircraft, eight trailers, one tractor, 79 marine containers, one railcar, and the Partnership's 50% interest in a marine vessel with an aggregate net book value of $3.4 million, and unused drydock reserves of $0.3 million, for proceeds of $4.0 million. During the same period in 1994, the net gain on disposition of equipment was $59,000 from the sale or disposal of one trailer, and 94 marine containers with an aggregate net book value of $139,000, for proceeds of $198,000. (B) Expenses Total expenses for the quarter ended June 30, 1995, decreased to $4.6 million from $7.2 million for the same period in 1994. The decrease in 1995 expenses was primarily attributable to decreases in marine equipment operating expense, depreciation expense, repairs and maintenance, insurance expense and interest expense. (1) Direct operating expenses (defined as repairs and maintenance, insurance expenses, and marine operating expenses) decreased to $1.1 million in the second quarter of 1995, from $2.8 million in the same period in 1994. This decrease resulted from: (a) decreases of $0.9 million in marine equipment operating expense due to the sale of two marine vessels in the third quarter of 1994 and the Partnership's 50% interest in another marine vessel in the second quarter of 1995; (b) decreases of $0.4 million in repairs and maintenance costs from 1994 levels resulted from the sale of two marine vessels in the third quarter of 1994 and a 50% interest in another marine vessel in the second quarter of 1995. These declines were offset slightly by increases in aircraft expenses resulting from the refurbishment of an aircraft prior to being re-leased; (c) decreases of $0.4 million in insurance expenses resulted from the sale of two marine vessels in the third quarter of 1994 and the partnership's 50% interest in another marine vessel in the second quarter of 1995. (2) Indirect operating expenses (defined as depreciation expense, management fees, interest expense, general and administrative expenses, and bad debt expense) decreased to $3.5 million in the second quarter of 1995 from $4.4 million in the same period in 1994. This decrease resulted from: (a) decreases of $0.8 million in depreciation and amortization expense from 1994 levels, reflecting the Partnership's double-declining depreciation method and the effect of asset sales in 1994 and 1995, offset, in part, by the purchase of equipment during the later part of 1994; (b) decreases of $0.2 million in interest expense due to a write-off in 1994 of unamortized loan origination costs resulting from the refinancing of the Partnership's debt in 1994; (c) decreases of $0.1 million in management fees to affiliates, reflecting the lower levels of lease revenues in 1995 as compared to 1994; (d) increases of $0.2 million in bad debt expense due to the General Partner's evaluation of the collectibility of receivables due from an aircraft lessee and a container lessee that encountered financial difficulties. (C) Net Income (Loss) The Partnership's net income of $0.7 million for the second quarter of 1995 increased from a net loss of $0.8 million in the same period of 1994. The Partnership's ability to acquire, operate, or liquidate assets, secure leases, and re-lease those assets whose leases expire during the duration of the Partnership is subject to many factors and the Partnership's performance in the second quarter 1995 is not necessarily indicative of future periods. In the second quarter 1995, the Partnership distributed $3.0 million to the Limited Partners, or $0.40 per Depositary Unit. Comparison of the Partnership's Operating Results for the Six Months Ended June 30, 1995 and 1994 (A) Revenues Total revenues of $10.0 million for the six months ended June 30, 1995, declined from $13.3 million for the same period in 1994. This decrease resulted primarily from lower lease revenue. (1) Lease revenues decreased to $8.9 million in the six months ended June 30, 1995 from $12.3 million in the same quarter of 1994. The following table lists lease revenues earned by equipment type: For the six months ended June 30, 1995 1994 Trailers and tractors $ 2,689 $ 1,691 Rail equipment 2,395 2,417 Aircraft 1,815 2,600 Marine containers 914 874 Mobile offshore drilling units 720 1,209 Marine vessels 405 3,490 -------- --------- $ 8,938 $ 12,281 Significant revenue component changes from quarter to quarter resulted primarily from: (a) declines of $3.1 million in marine vessel revenues due to the sale of two marine vessels in the third quarter of 1994, and the Partnership's 50% interest in another marine vessel in the second quarter of 1995, which were on voyage charters or utilization-based pooling arrangements during the first six months of 1994; (b) declines of $0.8 million in aircraft revenue due to the sale of the Partnership's 50% interest in a DC-9 aircraft during the second quarter of 1995, and a lower re-lease rate on another aircraft; (c) a decrease of $0.5 million in mobile offshore drilling unit ("rig") revenue due to the sale of one rig in the fourth quarter of 1994 and a lower re-lease rate on another rig; (d) an increase of $1.0 million in trailer and tractor revenue due to the purchase of 649 trailers in the third and fourth quarters of 1994, offsetting revenues earned by trailers sold at the end of March 1994. (2) Interest and other income decreased to $0.1 million due primarily to lower cash balances available for investment, offset slightly by an increase in the interest rate earned on cash equivalents. (3) Net gain on disposition of equipment during the six months ended June 30, 1994, totaled $0.8 million from the sale or disposal of the Partnership's 50% interest in a DC-9 aircraft, eight trailers, one tractor, 140 marine containers, one railcar, and the Partnership's 50% interest in a marine vessel with an aggregate net book value of $3.5 million, and unused drydock reserves of $0.3 million, for proceeds of $4.1 million. Net gain or disposition of equipment for the same period in 1994 totaled $0.6 million from the sale or disposal of 262 trailers and 189 marine containers with an aggregate net book value of $1.2 million, for proceeds of $1.9 million (See Footnote 5 to the Financial Statements). (B) Expenses Total expenses for the six months ended June 30, 1995, decreased to $9.1 million from $13.3 million for the same period in 1994. The decrease in 1995 expenses was primarily attributable to decreases in depreciation expense, marine vessel operating expenses, and repairs and maintenance. (1) Direct operating expenses (defined as repairs and maintenance, insurance expenses, and marine operating expenses) decreased to $1.7 million for the six months ended June 30, 1995, from $4.9 million in the same period of 1994. This decrease resulted from: (a) decreases of $1.7 million in marine equipment operating expense resulted from the sale of two marine vessels in the third quarter of 1994, and the Partnership's 50% interest in another marine vessel in the second quarter of 1995; (b) decreases of $1.2 million in repairs and maintenance costs from 1994 levels resulted from the sale of two marine vessels in the third quarter of 1994, and a 50% interest in another marine vessel in the second quarter of 1995. These declines were offset slightly by increases in aircraft expenses resulting from the refurbishment of an aircraft prior to being re-leased; (c) decreases of $0.3 million in all insurance expenses resulted from the sale of two marine vessels in the third quarter of 1994. This decrease was offset by an increase of a $0.2 million refund in 1994, from an insurance pool in which the Partnership's marine vessels participate, due to lower than expected insurance claims in the pool. A similar refund was not received in 1995. (2) Indirect operating expenses (defined as depreciation expense, management fees, interest expense, general and administrative expenses, and bad debt expense) decreased to $7.4 million for the six months ended June 30, 1995, from $8.4 million in the same period of 1994. This decrease resulted primarily from: (a) decreases of $1.2 million in depreciation expense from 1994 levels, reflecting the Partnership's double-declining balance depreciation method and the effect of asset sales in 1994 and 1995, partially offset by the purchase of equipment during the later part of 1994; (b) decreases of $0.2 million in management fees to affiliates, reflecting the lower levels of lease revenues in 1995 as compared to 1994; (c) decreases of $0.1 million in interest expense from a $0.3 million write-off in 1994 of unamortized loan origination costs due to the refinancing of the Partnership's debt in 1994, offset by a $0.2 million increase due to a higher base rate of interest charged on the Partnership's floating rate debt; (d) increases of $0.2 million in general and administrative expenses from 1994 levels resulting from the increased administrative costs associated with the short-term rental facilities due to an additional 636 trailers now operating in the facilities in the first six months of 1995 when compared to the same period in 1994; (e) increases of $0.2 million in bad debt expense due to the General Partner's evaluation of the collectibility of receivables due from a container lessee that encountered financial difficulties. (C) Net Income (loss) The Partnership's net income of $0.9 million for the six months ended June 30, 1995, increased from a net loss of $50,000 for the same period in 1994. The Partnership's ability to acquire, operate, or liquidate assets, secure leases, and re-lease those assets whose leases expire during the duration of the Partnership is subject to many factors and the Partnership's performance for the six months ended June 30, 1995 is not necessarily indicative of future periods. In the six months ended June 30, 1994 , the Partnership distributed $6.0 million to the Limited Partners, or $0.80 per Depositary Unit. Trends Generally, Partnership performance continues to be sensitive to trends in those industry segments in which the Partnership equipment is either subject to frequent re-leasing activity, or is impacted by changing demand for particular Partnership equipment. In the former case, the Partnership's trailers have been subject to softening demand, particularly for refrigerated over-the-road units; and its rigs and vessels have been subject to relatively low rates in essentially static markets. In the latter case, the Partnership's 10-12 year old containers (the majority of its container portfolio) are being retired at an increased rate as container manufacturers step up deliveries of new containers; while demand for the Partnership's older Stage II aircraft and engines has declined in the U.S. market, leading the General Partner to re-market such equipment abroad. Currently, demand for Partnership equipment remains strong in the rail and over-the-road dry van areas. The General Partner monitors these equipment markets. In those markets in which the cyclical nature of demand has short-to intermediate-term impact, the General Partner expects that partnership performance will be subject to such market fluctuations and will vary accordingly. In those markets in which demand for Partnership equipment has dropped for unacceptable lengths of time, the General Partner takes appropriate action to reduce the Partnership's exposure to such events. The Partnership intends to use excess cash flow, if any, after payment of expenses, loan principal and cash distributions to acquire additional equipment through the end of its planned reinvestment period, which ends December 31, 1995. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K None. -13- 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 there unto duly authorized. PLM EQUIPMENT GROWTH FUND II By: PLM Financial Services, Inc. General Partner Date: August 7, 1995 By: /s/ David J. Davis ------------------ David J. Davis Vice President and Corporate Controller EX-27 2
5 1,000 6-MOS DEC-31-1995 JUN-30-1995 7,179 0 2,255 665 0 0 116,154 71,688 56,457 0 0 0 0 0 24,534 56,457 0 10,041 0 7,843 0 0 1,267 931 0 931 0 0 0 931 0 0