-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FcsvXyOyarZWJJF30NQqiDPzFC6s78dWiBfQGQx7PB8AZd/KaFSPazdlYv0f3yzm WlXLz8APPupRIZho8evbEA== 0000812072-97-000003.txt : 19970811 0000812072-97-000003.hdr.sgml : 19970811 ACCESSION NUMBER: 0000812072-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970808 SROS: NONE 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: 97654343 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, 1997 [ ] 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 800, 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 ______ PLM EQUIPMENT GROWTH FUND II (A Limited Partnership) BALANCE SHEETS (in thousands of dollars, except per unit amount)
June 30, December 31, 1997 1996 ------------------------------------ Assets: Equipment held for operating lease, at cost $ 64,744 $ 82,856 Less accumulated depreciation (49,099 ) (62,114 ) ------------------------------------ 15,645 20,742 Equipment held for sale 1,047 - ------------------------------------ Net equipment 16,692 20,742 Cash and cash equivalents 3,455 7,962 Restricted cash 295 295 Investment in unconsolidated special-purpose entity 772 1,665 Accounts receivable, net of allowance for doubtful accounts of $1,098 in 1997 and $882 in 1996 2,618 1,765 Deferred charges, net of accumulated amortization of $232 in 1997 and $197 in 1996 118 157 Prepaid expenses and other assets 974 1,009 ------------------------------------ Total assets $ 24,924 $ 33,595 ==================================== Liabilities and partners' capital: Liabilities: Accounts payable and accrued expenses $ 432 $ 412 Due to affiliates 130 110 Lessee deposits and reserve for repairs 2,890 2,827 Notes payable 7,500 13,000 ------------------------------------ Total liabilities 10,952 16,349 ------------------------------------ Partners' capital (deficit): Limited partners (7,381,805 depositary units, including 1,150 depositary units held in the Treasury as of June 30, 1997 and December 31, 1996) 14,077 17,434 General Partner (105 ) (188 ) ------------------------------------ Total partners' capital 13,972 17,246 ------------------------------------ Total liabilities and partners' capital $ 24,924 $ 33,595 ====================================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND II (A Limited Partnership) STATEMENTS OF OPERATIONS (in thousands of dollars, except weighted-average unit amounts)
For the Three Months For the Six Months Ended June 30, Ended June 30, 1997 1996 1997 1996 -------------------------------------------------------------- Revenues: Lease revenue $ 2,468 3,200 $ 5,506 $ 6,381 Interest and other income 63 69 144 142 Net gain on disposition of equipment 859 53 1,027 167 -------------------------------------------------------------- Total revenues 3,390 3,322 6,677 6,690 -------------------------------------------------------------- Expenses: Depreciation and amortization 1,150 1,458 2,373 2,925 Repairs and maintenance 429 573 805 963 Interest expense 193 483 426 971 Insurance expense 43 24 73 65 Management fees to affiliate 128 172 256 321 General and administrative expenses to affiliates 158 224 372 418 Other general and administrative expenses 240 205 492 495 (Recovery of) provision for bad debt (98 ) 194 228 225 -------------------------------------------------------------- Total expenses 2,243 3,333 5,025 6,383 -------------------------------------------------------------- Equity in net loss of unconsolidated special-purpose entities (925 ) (22 ) (1,041 ) (424 ) -------------------------------------------------------------- Net income (loss) $ 222 (33 ) $ 611 $ (117 ) ============================================================== Partners' share of net income (loss): Limited partners $ 79 (166 ) $ 334 $ (435 ) General Partner 143 133 277 318 -------------------------------------------------------------- Total $ 222 (33 ) $ 611 $ (117 ) ============================================================== Net income (loss) per weighted-average depositary unit (7,381,805 and 7,387,671 units, including 1,150 units held in the Treasury, as of June 30, 1997 and 1996, respectively) $ 0.01 (0.02 ) $ 0.05 $ (0.06 ) ============================================================== Cash distributions $ 1,942 1,943 $ 3,885 $ 5,070 ============================================================== Cash distributions per weighted-average depositary unit $ 0.25 0.25 $ 0.50 $ 0.65 ==============================================================
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, 1995 to June 30, 1997 (in thousands of dollars)
Limited General Partners Partner Total --------------------------------------------------- Partners' capital (deficit) as of December 31, 1995 $ 18,658 $ (462 ) $ 18,196 Net income 7,464 722 8,186 Cash distributions (8,509 ) (448 ) (8,957 ) Repurchase of depositary units (179 ) - (179 ) --------------------------------------------------- Partners' capital (deficit) as of December 31, 1996 17,434 (188 ) 17,246 Net income 334 277 611 Cash distributions (3,691 ) (194 ) (3,885 ) --------------------------------------------------- Partners' capital (deficit) as of June 30, 1997 $ 14,077 $ (105 ) $ 13,972 ===================================================
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, 1997 1996 ----------------------------------- Operating activities: Net income (loss) $ 611 $ (117 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Net gain on disposition of equipment (1,027 ) (167 ) Depreciation and amortization 2,373 2,925 Equity in net loss of unconsolidated special-purpose entities 1,041 424 Changes in operating assets and liabilities: Restricted cash - 133 Accounts receivable, net (853 ) 342 Prepaid expenses and other assets 35 35 Accounts payable and accrued expenses 6 (26 ) Due to affiliates 20 (152 ) Lessee deposits and reserve for repairs 63 (277 ) ----------------------------------- Net cash provided by operating activities 2,269 3,120 ----------------------------------- Investing activities: Proceeds from disposition of equipment 2,739 709 (Additional investments in) distributions from unconsolidated special- purpose entities (148 ) 179 Reimbursements of (payments for) capital improvements 18 (6 ) ----------------------------------- Net cash provided by investing activities 2,609 882 ----------------------------------- Financing activities: Principal payments on notes payable (5,500 ) - Cash distributions paid to limited partners (3,691 ) (4,817 ) Cash distributions paid to General Partner (194 ) (253 ) Repurchase of depositary units - (179 ) ----------------------------------- Net cash used in financing activities (9,385 ) (5,249 ) ----------------------------------- Net decrease in cash and cash equivalents (4,507 ) (1,247 ) Cash and cash equivalents at beginning of period 7,962 6,427 ----------------------------------- Cash and cash equivalents at end of period $ 3,455 $ 5,180 =================================== Supplemental information: Interest paid $ 426 $ 971 ===================================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND II (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 1997 1. Opinion of Management In the opinion of the management of PLM Financial Services, Inc. (FSI or 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, 1997 and December 31, 1996, the statements of operations for the three and six months ended June 30, 1997 and 1996, the statements of changes in partners' capital for the period from December 31, 1995 to June 30, 1997, and the statements of cash flows for the six months ended June 30, 1997 and 1996. 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, 1996, on file at the Securities and Exchange Commission. 2. Reclassifications Certain amounts in the 1996 financial statements have been reclassified to conform to the 1997 presentation. 3. Repurchase of Depositary Units Pursuant to the Partnership repurchase plan as of December 28, 1992, the Partnership agreed to repurchase up to 200,000 depositary units. As of June 30, 1997, the Partnership had cumulatively repurchased 117,800 depositary units for $0.8 million. The General Partner may repurchase the remaining units in the future. 4. Cash Distribution Cash distributions are recorded when paid and totaled $3.9 million and $5.1 million for the six months ended June 30, 1997 and 1996, respectively, and $1.9 million and $1.9 million for the three months ended June 30, 1997 and 1996, respectively. Cash distributions to limited partners in excess of net income are considered to represent a return of capital. Cash distributions to limited partners of $3.4 million and $4.8 million for the six months ended June 30, 1997 and 1996, respectively, were deemed to be a return of capital. 5. Investment in Unconsolidated Special-Purpose Entity The net investment in an unconsolidated special purpose entity (USPE) consisted of the following jointly-owned equipment (and related assets and liabilities) (in thousands):
June 30, December 31, 1997 1996 ---------------------------------------- 50% interest in a trust owning a Boeing 737-200A aircraft $ 772 $ 1,665 =======================================
This aircraft was off lease as of June 30, 1997 and December 31, 1996. PLM EQUIPMENT GROWTH FUND II (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 1997 6. Transactions with General Partner and Affiliates Partnership management fees of $0.1 million and $0.1 million were payable as of June 30, 1997 and December 31, 1996, respectively. The Partnership's proportional share of the affiliated expenses incurred by the USPE during 1997 and 1996 is listed in the following table (in thousands):
For the Three Months For the Six Months Ended June 30, Ended June 30, 1997 1996 1997 1996 ------------------------------------------------------------- Data processing and administrative expenses $ 3 $ 45 $ 3 $ 68 Management fees - (3 ) - 22
7. Equipment Components of owned equipment are as follows (in thousands):
June 30, December 31, 1997 1996 -------------------------------------- Aircraft $ 18,826 $ 32,860 Trailers 18,268 21,173 Rail equipment 18,155 18,183 Marine containers 9,495 10,640 ------------------------------------ 64,744 82,856 Less accumulated depreciation (49,099 ) (62,114 ) ------------------------------------ ------------------------------------ 15,645 20,742 Equipment held for sale 1,047 - ------------------------------------ Net equipment $ 16,692 $ 20,742 ====================================
Equipment held for sale is stated at the lower of the equipment's depreciated cost or fair value less costs to sell and is subject to a pending contract of sale. As of June 30, 1997, an aircraft with a net book value of $1.0 million is currently on lease and subject to a pending sale. This aircraft was reclassified to equipment held for sale. As of June 30, 1997, all equipment was either on lease or operating in PLM-affiliated short-term trailer rental facilities, except for 172 marine containers and 3 railcars. With the exception of 71 marine containers and 3 railcars, all equipment was either on lease or operating in PLM-affiliated short-term trailer rental facilities as of December 31, 1996. The aggregate carrying value of off-lease equipment was $0.4 million and $0.2 million as of June 30, 1997 and December 31, 1996, respectively. During the six months ended June 30, 1997, the Partnership sold or disposed of an aircraft, marine containers, trailers, and railcars, with an aggregate net book value of $1.7 million, for proceeds of $2.7 million. For the six months ended June 30, 1996, the Partnership sold or disposed of marine containers, trailers, and railcars, with an aggregate net book value of $0.5 million, for proceeds of $0.7 million. PLM EQUIPMENT GROWTH FUND II (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 1997 8. Notes Payable In the first six months of 1997, the Partnership prepaid $5.5 million of the outstanding notes payable, representing a portion of the principal payment due March 31, 1999. (This space intentionally left blank.) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (I) RESULTS OF OPERATIONS Comparison of the Partnership's Operating Results for the Three Months Ended June 30, 1997 and 1996 (A) Owned Equipment Operations Lease revenues less direct expenses (defined as repair and maintenance, and asset-specific insurance expenses) on owned equipment decreased during the second quarter of 1997, compared to the same quarter of 1996. The following table presents lease revenues less direct expenses by owned equipment type (in thousands):
For the Three Months Ended June 30, 1997 1996 ---------------------------- Rail equipment $ 875 $ 765 Aircraft 577 601 Trailers 483 899 Marine containers 85 346
Rail equipment: Railcar lease revenues and direct expenses were $1.1 million and $0.2 million, respectively, for the second quarter of 1997, compared to $1.2 million and $0.4 million, respectively, during the same quarter of 1996. Lease revenue decreased due to the sale of 42 railcars at the end of 1996. Railcar expenses decreased due to running repairs required on certain of the railcars during 1996, which were not needed during 1997, and the smaller fleet in 1997. Aircraft: Aircraft lease revenues and direct expenses were $0.6 million and $10,000, respectively, for the second quarter of 1997, compared to $0.6 million and $9,000, respectively, during the same quarter of 1996. Aircraft contribution decreased slightly in the second quarter of 1997, compared to the same period in 1996, due to the sale of an aircraft, which was partially offset by an increase in the lease rate for another aircraft. Trailers: Trailer lease revenues and direct expenses were $0.7 million and $0.2 million, respectively, for the second quarter of 1997, compared to $1.0 million and $0.1 million, respectively, during the same quarter of 1996. The decrease was primarily due to the sale of 102 trailers in the first quarter of 1997. In addition, the trailer fleet is experiencing lower utilization in the PLM-affiliated short-term rental yards. Marine containers: Marine container lease revenues were $0.1 million and $0.3 million during the second quarter of 1997 and 1996, respectively. The number of marine containers owned by the Partnership has been declining over the past twelve months due to sales and dispositions. The result of this declining fleet has been a decrease in marine container revenues. (B) Indirect Expenses Related to Owned Equipment Operations Total indirect expenses of $1.8 million for the second quarter of 1997 decreased from $2.7 million for the same period in 1996. The variances are explained as follows: (1) A $0.3 million decrease in depreciation and amortization expense from 1996 levels reflects the effect of asset sales in 1996 and 1997. (2) A $0.3 million decrease in interest expense was due to a decrease in the level of outstanding debt during the second quarter of 1997 when compared to the same period in 1996. In 1997, the Partnership prepaid $5.5 million of the outstanding notes payable, representing a portion of the principal payment due March 31, 1999. In 1996, the Partnership prepaid $14.0 million of the outstanding notes payable, representing the principal payment due March 31, 1998, and a portion of the principal payment due March 31, 1999. (3) A $0.3 million decrease in bad debt expense reflects the General Partner's evaluation of the collectibility of receivables due from certain lessees. (C) Net Gain on Disposition of Owned Equipment Net gain on disposition of equipment for the second quarter of 1997 totaled $0.9 million, and resulted from the disposal or sale of an aircraft, trailers, marine containers, and railcars, with an aggregate net book value of $1.3 million, for aggregate proceeds of $2.2 million. For the same period in 1996, the $0.1 million net gain on disposition of equipment resulted from the sale or disposal of the trailers, marine containers, and railcars, with an aggregate net book value of $0.4 million, for proceeds of $0.5 million. (D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities Equity in net income (loss) of unconsolidated special-purpose entities (USPEs) represents net income (loss) generated from the operation of jointly-owned assets accounted for under the equity method (in thousands).
For the Three Months Ended June 30, 1997 1996 ---------------------------- Aircraft $ (925 ) $ 49 Mobile offshore drilling unit - (71 )
Aircraft: As of June 30, 1997 and 1996, the Partnership owned a 50% investment in an entity that owns a commercial aircraft. Revenues and expenses were $0.0 and $0.9 million, respectively, for the second quarter of 1997, compared to $0.2 million and $0.1 million, respectively, for the same period in 1996. The Partnership's share of revenues decreased due to the off-lease status of this aircraft during the second quarter of 1997, compared to its on-lease status for the second quarter of 1996. The Partnership's share of expenses increased in the second quarter of 1997 due to the repairs required to meet airworthiness requirements. This increase was partially offset by a decrease in the Partnership's share of bad debt expenses. In 1996, the General Partner fully reserved the uncollected outstanding receivables from an aircraft's lessee that encountered financial difficulties. Mobile offshore drilling unit: As of June 30, 1996, the Partnership owned a 55% investment in an entity that owns a mobile offshore drilling unit (rig). The rig was sold in the third quarter of 1996. (E) Net Income (Loss) As a result of the foregoing, the Partnership's net income was $0.2 million for the second quarter of 1997, compared to a net loss of $33,000 during the same period of 1996. The Partnership's ability to operate and liquidate assets, secure leases, and re-lease those assets whose leases expire is subject to many factors, and the Partnership's performance in the second quarter of 1997 is not necessarily indicative of future periods. In the second quarter of 1997, the Partnership distributed $1.8 million to the unitholders, or $0.25 per weighted-average depositary unit. Comparison of the Partnership's Operating Results for the Six Months Ended June 30, 1997 and 1996 (A) Owned Equipment Operations Lease revenues less direct expenses (defined as repair and maintenance, and asset-specific insurance expenses) on owned equipment decreased during the six months ended June 30, 1997, compared to the same period of 1996. The following table presents lease revenues less direct expenses by owned equipment type (in thousands):
For the Six Months Ended June 30, 1997 1996 ---------------------------- Rail equipment $ 1,800 $ 1,707 Trailers 1,277 1,784 Aircraft 1,197 1,191 Marine containers 384 699
Rail equipment: Railcar lease revenues and direct expenses were $2.3 million and $0.5 million, respectively, for the six months ended June 30, 1997, compared to $2.4 million and $0.7 million, respectively, during the same period of 1996. Lease revenues decreased due to the sale of 42 railcars at the end of 1996. Railcar expenses decreased due to running repairs required on certain of the railcars during 1996, which were not needed during 1997, and the smaller fleet as a result of the sale of the 42 cars. Trailers: Trailer lease revenues and direct expenses were $1.6 million and $0.3 million, respectively, for the six months ended June 30, 1997, compared to $2.1 million and $0.3 million, respectively, during the same period of 1996. The decrease in net contribution was due to the sale of 102 trailers in the six months ended June 30, 1997. In addition, the trailer fleet is experiencing lower utilization in the PLM-affiliated short-term rental yards. Aircraft: Aircraft lease revenues and direct expenses were $1.2 million and $19,000, respectively, for the six months ended June 30, 1997, compared to $1.2 million and $0.0 million, respectively, during the same period of 1996. Aircraft contribution increased slightly in the six months ended June 30, 1997, compared to the same period in 1996, due to an increase in the lease rate for an aircraft, which was partially offset by the sale of another aircraft in the second quarter of 1997. Marine containers: Marine container lease revenues were $0.4 million and $0.7 million for the six months ended June 30, 1997 and 1996, respectively. The number of marine containers owned by the Partnership has been declining over the past twelve months due to sales and dispositions. The result of this declining fleet has been a decrease in marine container revenue. (B) Indirect Expenses Related to Owned Equipment Operations Total indirect expenses of $4.1 million for the six months ended June 30, 1997 decreased from $5.4 million for the same period of 1996. The variances are explained as follows: (1) A $0.6 million decrease in depreciation and amortization expense from 1996 levels reflects the effect of asset sales in 1996 and 1997. (2) A $0.5 million decrease in interest expense was due to a decrease in the level of outstanding debt during the six months ended June 30, 1997, compared to the same period in 1996. In 1997, the Partnership prepaid $5.5 million of the outstanding notes payable, representing a portion of the principal payment due March 31, 1999. In 1996, the Partnership prepaid $14.0 million of the outstanding notes payable, representing the principal payment due March 31, 1998, and a portion of the principal payment due March 31, 1999. (3) A $0.1 million decrease in administrative expenses from 1996 levels was due to reduced office expenses and professional services required by the Partnership. (4) A $0.1 million decrease in management fees to affiliates reflects the lower levels of lease revenues in 1997, compared to 1996. (C) Net Gain on Disposition of Owned Equipment Net gain on disposition of equipment for the six months ended June 30, 1997 totaled $1.0 million, and resulted from the sale or disposal of an aircraft, marine containers, trailers, and railcars, with an aggregate net book value of $1.7 million, for aggregate proceeds of $2.7 million. For the six months ended June 30, 1996, the $0.2 million net gain on disposition of equipment resulted from the sale or disposal of marine containers, trailers, and railcars, with an aggregate net book value of $0.5 million, for aggregate proceeds of $0.7 million. (D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities Equity in net income (loss) of unconsolidated special-purpose entities represents net income (loss) generated from the operation of jointly-owned assets accounted for under the equity method (in thousands).
For the Six Months Ended June 30, 1997 1996 ------------------------------ Aircraft $ (1,041 ) $ (312 ) Mobile offshore drilling unit - (112 )
Aircraft: As of June 30, 1997 and 1996, the Partnership owned a 50% investment in an entity that owns a commercial aircraft. Revenues and expenses were $0.0 and $1.0 million, respectively, for the six months ended June 30, 1997, compared to $0.2 million and $0.5 million, respectively, for the same period in 1996. The Partnership's share of revenues decreased due to the off-lease status of this aircraft during the six months ended June 30, 1997; this aircraft had been on lease for the entire six months ended June 30, 1996. The Partnership's share of expenses increased due to the repairs required in 1997 to meet airworthiness requirements. This increase was offset by a decrease in the Partnership's share of bad debt expenses. In 1996, the General Partner fully reserved the uncollected outstanding receivables from an aircraft's lessee that encountered financial difficulties. Mobile offshore drilling unit: As of June 30, 1996, the Partnership owned a 55% investment in an entity that owns a mobile offshore drilling unit (rig). The rig was sold in the third quarter of 1996. (E) Net Income (Loss) As a result of the foregoing, the Partnership's net income was $0.6 million for the six months ended June 30, 1997, compared to a net loss of $0.1 million during the same period of 1996. The Partnership's ability to operate and liquidate assets, secure leases, and re-lease those assets whose leases expire is subject to many factors, and the Partnership's performance in the second quarter 1997 is not necessarily indicative of future periods. In the six months ended June 30, 1997, the Partnership distributed $3.7 million to the unitholders, or $0.50 per weighted-average depositary unit. (II) FINANCIAL CONDITION -- CAPITAL RESOURCES AND LIQUIDITY 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. The Partnership's total outstanding indebtedness, currently $7.5 million, can only be increased up to a maximum of $35.0 million, subject to specific covenants in the existing debt agreement. The Partnership relies on operating cash flow to meet its operating obligations, maintain working capital reserves, and, to the extent funds are available, make cash distributions to partners. In the first six months of 1997, the Partnership used $5.5 million in proceeds from the sale of assets and other cash on hand to prepay the remaining portion of the fourth annual $9.0 million principal installment of the loan due March 31, 1999 and a portion of the final annual $9.0 million principal installment of the loan due March 31, 2000. In 1996, the Partnership prepaid the third annual $9.0 million installment of the loan due March 31, 1998 and a portion of the fourth annual $9.0 million installment due March 31, 1999. For the six months ended June 30, 1997, the Partnership generated sufficient operating cash (net cash provided by operating activities plus distributions from the unconsolidated special-purpose entity) to meet its operating obligations, but used undistributed available cash from prior periods of approximately $1.8 million to maintain the current level of distributions ($3.9 million) to the partners. The cash distributions to be paid in August 1997 was reduced from an annual rate of 5% to an annual rate of 3% to more closely reflect current and expected net cash flows from operations. Continued weak market conditions in certain equipment sectors and equipment sales have reduced overall lease revenues in the Partnership to the extent that reductions in distribution levels are now necessary. In addition, with the Partnership expected to enter the active liquidation phase in the near future, the size of the Partnership's remaining equipment portfolio and, in turn, the amount of net cash flows from operations will continue to become progressively smaller as assets are sold. Although distribution levels will be reduced, significant asset sales may result in potential special distributions to unitholders. (III) OUTLOOK FOR THE FUTURE Since the Partnership is in its holding or passive liquidation phase, the General Partner will be seeking to selectively re-lease or sell assets as the existing leases expire. Sale decisions will cause the operating performance of the Partnership to decline over the remainder of its life. The General Partner anticipates the liquidation of Partnership assets will be completed by the planned termination of the Partnership at the end of the year 2000. The Partnership intends to use cash flow from operations to satisfy its operating requirements, pay loan principal on debt, and pay cash distributions to the investors. (IV) FORWARD-LOOKING INFORMATION Except for historical information contained herein, the discussion in this Form 10-Q contains forward-looking statements that involve risks and uncertainties, such as statements of the Partnership's plans, objectives, expectations, and intentions. The cautionary statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. The Partnership's actual results could differ materially from those discussed here. (This space intentionally left blank.) PART II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Second amendment to the second amended and restated limited partnership agreement. (b) Reports on Form 8-K None. 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 8, 1997 By: /s/ Richard Brock ----------------- Richard Brock Vice President and Corporate Controller EX-27 2
5 1,000 6-MOS DEC-31-1997 JUN-30-1997 3,455 0 2,618 1,098 0 0 64,744 49,099 24,924 0 0 0 0 0 13,972 24,924 0 6,677 0 4,599 0 0 426 611 0 611 0 0 0 611 0 0
EX-10 3 SECOND AMENDMENT TO THE AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF PLM EQUIPMENT GROWTH FUND II This Second Amendment ("Amendment") to the Amended and Restated Limited Partnership Agreement ("Agreement") of PLM Equipment Growth Fund II ("Partnership") is executed as of November 21, 1996, by its general partner, PLM Financial Services, Inc., a Delaware corporation ("General Partner"), pursuant to Article XVIII of the Agreement. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Agreement. RECITALS The Partners entered into a Limited Partnership Agreement as of March 30, 1987, a First Amended and Restated Limited Partnership Agreement as of June 5, 1987 and a Second Amended and Restated Limited Partnership Agreement as of June 16, 1987. The General Partner now amends the Agreement, pursuant to Article XVIII, paragraph two, subsections (i) and (ii), to add for the benefit of the Limited Partners, to the General Partner's representations and obligations, to cure any ambiguity or to correct any inconsistency that may exist among Sections 6.01, 6.02 and 9.02 of the Agreement. In executing this Amendment the General Partner represents, warrants and agrees, and will take all action to ensure, that this Amendment does not, and will not, detrimentally affect the Cash Distributions of the Limited Partners or assignees or the management of the Partnership by the General Partner. Now, therefor, the Agreement is amended as follows: 1. Section 6.02 is amended to read in its entirety as follows: "The General Partner shall not transfer its interest as General Partner in the Partnership (which transfer shall be deemed as "withdrawal" of the General Partner for purposes of Section 9.02) or its interest in the Partnership's capital, earnings or assets (except in connection with the pledge of the General Partner's assets or right in connection with loans or other indebtedness) except (a) upon the approval of a majority in interest of the Limited Partners, or (b) to an Affiliate upon its merger, consolidation with another person or its transfer pursuant to a reorganization of all or substantially all of its assets to another person, and the assumption of the rights and duties of the General Partner by such Person; provided, however, that such successor or transferee shall on the date of such transfer, merger, consolidation or reorganization assume all of the duties and obligations of the General Partner set forth in this Agreement." IN WITNESS WHEREOF, the General Partner has duly executed this Amendment as of November 21, 1996. PLM FINANCIAL SERVICES, INC. a Delaware corporation, General Partner and as attorney-in-fact for and on behalf of the Limited Partners By: /s/ J. Michael Allgood ------------------------ Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----