-----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, C70caCZtITInCRqdyvW8hSRq118LS7EeSXmwsgpone174bIyB2LQQxVF37HbYeB/ ZpLbWzQIo5G/ttVnekGKWg== /in/edgar/work/20000807/0000812072-00-000020/0000812072-00-000020.txt : 20000921 0000812072-00-000020.hdr.sgml : 20000921 ACCESSION NUMBER: 0000812072-00-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000807 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLM EQUIPMENT GROWTH FUND II CENTRAL INDEX KEY: 0000812072 STANDARD INDUSTRIAL CLASSIFICATION: [7359 ] IRS NUMBER: 943041013 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10553 FILM NUMBER: 687206 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 0001.txt 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, 2000 [ ] 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 1-10553 ----------------------- 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 unit amounts)
June 30, December 31, 2000 1999 ----------------------------- ASSETS Equipment held for operating lease, at cost $ 29,548 $ 32,487 Less accumulated depreciation (24,196) (25,815) ----------------------------- Net equipment 5,352 6,672 Cash and cash equivalents 1,608 894 Accounts receivable, less allowance for doubtful accounts of $121 in 2000 and $107 in 1999 869 877 Investment in an unconsolidated special-purpose entity -- 368 Prepaid expenses and other assets 17 47 ------------------------------ Total assets $ 7,846 $ 8,858 ============================= LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable and accrued expenses $ 241 $ 352 Due to affiliates 67 67 Lessee deposits and reserve for repairs 716 783 ----------------------------- Total liabilities 1,024 1,202 ----------------------------- Partners' capital: Limited partners (7,381,805 depositary units as of June 30, 2000 and December 31, 1999) 6,822 7,656 General Partner -- -- ----------------------------- Total partners' capital 6,822 7,656 ----------------------------- Total liabilities and partners' capital $ 7,846 $ 8,858 =============================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND II (A LIMITED PARTNERSHIP) STATEMENTS OF INCOME (in thousands of dollars, except weighted-average unit amounts)
For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 -------------------------------------------------------------- Revenues Lease revenue $ 1,361 $ 1,420 $ 2,866 $ 2,877 Interest and other income 26 19 36 43 Net gain on disposition of equipment 523 81 502 233 -------------------------------------------------------------- Total revenues 1,910 1,520 3,404 3,153 -------------------------------------------------------------- Expenses Depreciation 413 488 845 1,002 Repairs and maintenance 449 411 859 805 Equipment operating expenses 44 38 89 68 Management fees to affiliate 66 63 143 142 General and administrative expenses to affiliates 52 57 119 140 Other general and administrative expenses 183 136 427 317 Provision for bad debts 19 13 10 10 -------------------------------------------------------------- Total expenses 1,226 1,206 2,492 2,484 -------------------------------------------------------------- Equity in net income (loss) of an unconsolidated special-purpose entity (60) (180) 1,304 (313 ) -------------------------------------------------------------- Net income $ 624 $ 134 $ 2,216 $ 356 ============================================================== Partners' share of net income: Limited partners $ 528 $ 77 $ 2,063 $ 243 General Partner 96 57 153 113 -------------------------------------------------------------- Total $ 624 $ 134 $ 2,216 $ 356 ============================================================== Limited partners' net income per weighted- average depositary unit $ 0.07 $ 0.01 $ 0.28 $ 0.03 ============================================================== Cash distributions $ 1,136 $ 1,136 $ 2,273 $ 2,273 Special cash distributions 777 -- 777 -- ============================================================== Total cash distributions $ 1,913 $ 1,136 $ 3,050 $ 2,273 ============================================================== Per weighted-average depositary unit: Cash distributions $ 0.15 0.15 $ 0.29 $ 0.29 Special cash distributions 0.10 -- 0.10 -- ============================================================== Total cash distributions $ 0.25 0.15 $ 0.39 $ 0.29 ==============================================================
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, 1998 TO JUNE 30, 2000 (in thousands of dollars)
Limited General Partners Partner Total --------------------------------------------------- Partners' capital as of December 31, 1998 $ 11,267 $ -- $ 11,267 Net income 707 227 934 Cash distribution (4,318) (227). (4,545) --------------------------------------------------- Partners' capital as of December 31, 1999 7,656 -- 7,656 Net income 2,063 153 2,216 Cash distribution (2,159) (114) (2,273) Special cash distribution (738) (39) (777) --------------------------------------------------- Partners' capital as of June 30, 2000 $ 6,822 $ -- 6,822 ===================================================
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, 2000 1999 ----------------------------------- OPERATING ACTIVITIES Net income $ 2,216 $ 356 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 845 1,002 Net gain on disposition of equipment (502) (233) Equity in net (income) loss from an unconsolidated special-purpose entity (1,304) 313 Changes in operating assets and liabilities: Accounts receivable, net 8 208 Prepaid expenses and other assets 30 19 Accounts payable and accrued expenses (111) (2) Due to affiliates -- (26) Lessee deposits and reserve for repairs (67) 95 ----------------------------------- Net cash provided by operating activities 1,115 1,732 ----------------------------------- Investing activities Proceeds from disposition of equipment 977 529 Liquidation distributions from an unconsolidated special-purpose entity 1,824 -- Additional investments in an unconsolidated special-purpose entity (152) (417) ----------------------------------- Net cash provided by investing activities 2,649 112 ----------------------------------- Financing activities Cash distribution paid to limited partners (2,159) (2,160) Cash distribution paid to General Partner (114) (113) Special cash distribution paid to limited partners (738) -- Special cash distribution paid to General Partner (39) -- ----------------------------------- Net cash used in financing activities (3,050) (2,273) ----------------------------------- Net increase (decrease) in cash and cash equivalents 714 (429) Cash and cash equivalents at beginning of period 894 1,986 ----------------------------------- Cash and cash equivalents at end of period $ 1,608 $ 1,557 ===================================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND II (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000 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, 2000 and December 31, 1999, the statements of income for the three and six months ended June 30, 2000 and 1999, the statements of changes in partners' capital for the period from December 31, 1998 to June 30, 2000, and the statements of cash flows for the six months ended June 30, 2000 and 1999. Certain information and note 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, 1999, on file at the Securities and Exchange Commission. 2. SCHEDULE OF PARTNERSHIP PHASES The Partnership, in accordance with its limited partnership agreement, entered its liquidation phase on January 1, 1999, and has commenced an orderly liquidation of the Partnership's assets. The Partnership will terminate on December 31, 2006, unless terminated earlier upon the sale of all equipment or by certain other events. The General Partner may no longer reinvest cash flows and surplus funds in equipment. All future cash flows and surplus funds, if any, are to be used for distributions to partners, except to the extent used to maintain reasonable reserves. During the liquidation phase, the Partnership's assets will continue to be recorded at the lower of the carrying amount or fair value less cost to sell. 3. RECLASSIFICATION Certain amounts in the 1999 financial statements have been reclassified to conform to the 2000 presentation. 4. CASH DISTRIBUTION Cash distributions are recorded when paid and may include amounts in excess of net income that are considered to represent a return of capital. For the six months ended June 30, 2000 and 1999, cash distributions totaled $2.3 million. For the three months ended June 30, 2000 and 1999, cash distributions totaled $1.1 million. In addition, a $0.8 million special distribution was paid to the partners during the three and six months ended June 30, 2000, from the proceeds realized on the sale of equipment in 2000 and 1999. No special distributions were paid in the three and six months ended June 30, 1999. Cash distributions to the limited partners of $0.8 million and $1.9 million for the six months ended June 30, 2000 and 1999, respectively, were deemed to be a return of capital. Cash distributions related to the results from the second quarter of 2000 of $1.1 million, will be paid during August 2000. PLM EQUIPMENT GROWTH FUND II (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000 5. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES Partnership management fees of $0.1 million were payable as of June 30, 2000 and December 31, 1999. The Partnership's proportional share of the data processing and administrative expenses incurred by the unconsolidated special-purpose entity (USPE) was $2,000 and $3,000 for the six months ended June 30, 2000 and 1999, respectively and $1,000 and $3,000 for the three months ended June 30, 2000 and 1999, respectively. 6. EQUIPMENT The components of owned equipment were as follows (in thousands of dollars): June 30, December 31, 2000 1999 ---------------------------------- Railcars $ 14,988 $ 16,249 Trailers 10,404 10,606 Marine containers 4,156 5,632 --------------------------------- 29,548 32,487 Less accumulated depreciation (24,196) (25,815) --------------------------------- Net equipment $ 5,352 $ 6,672 ================================= As of June 30, 2000, all equipment was either on lease or operating in PLM-affiliated short-term trailer rental facilities, except for 148 marine containers and 8 railcars with an aggregate net book value of $0.2 million. As of December 31, 1999, all equipment was either on lease or operating in PLM-affiliated short-term trailer rental facilities, except for 84 railcars and 134 marine containers with an aggregate net book value of $0.4 million. During the six months ended June 30, 2000, the Partnership sold or disposed of marine containers, trailers, and railcars, with an aggregate net book value of $0.5 million, for proceeds of $1.0 million. For the six months ended June 30, 1999, the Partnership sold or disposed of marine containers, trailers, and railcars, with an aggregate net book value of $0.3 million, for proceeds of $0.5 million. On May 24, 2000, FSI, on behalf of the Partnership, entered into an asset purchase agreement to sell the refrigerated and dry trailer assets of the Partnership. Closing of the transaction is contingent on numerous conditions. If the sale is completed, the General Partner estimates that the Partnership's sale proceeds to be approximately $0.3 million and will result in a gain of approximately $0.3 million. Since the sale of the trailers is contingent upon certain conditions being met, the refrigerated and dry trailers are not classified as assets held for sale. 7. INVESTMENT IN UNCONSOLIDATED SPECIAL-PURPOSE ENTITY The net investment in a USPE consisted of a 50% interest in a trust that owned a Boeing 737-200A aircraft (and related assets and liabilities) totaling $0.4 million as of December 31, 1999. During the six months ended June 30, 2000, the General Partner sold the Partnership's investment in this USPE for proceeds of $1.8 million that resulted in a gain on disposition of $1.4 million. PLM EQUIPMENT GROWTH FUND II (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000 8. OPERATING SEGMENTS The Partnership operates or operated in four different segments: railcar leasing, trailer leasing, marine container leasing and aircraft leasing. Each equipment leasing segment engages in short-term to mid-term operating leases to a variety of customers. The following tables present a summary of the operating segments (in thousands of dollars):
Marine Railcar Trailer Container Aircraft All For the quarter ended June 30, 2000 Leasing Leasing Leasing Leasing Other1 Total ----------------------------------- ------- ------- ------- ------- ---- ----- REVENUES Lease revenue $ 887 $ 458 $ 16 $ -- $ -- $ 1,361 Interest income and other -- -- -- -- 26 26 Gain on disposition of equipment 508 2 13 -- -- 523 -------------------------------------------------------------- Total revenues 1,395 460 29 -- 26 1,910 COSTS AND EXPENSES Operations support 333 150 1 -- 9 493 Depreciation 187 171 55 -- -- 413 Management fees 43 22 1 -- -- 66 General and administrative 89 52 1 1 92 235 expenses Provision for (recovery of) bad 26 (7) -- -- -- 19 debts -------------------------------------------------------------- Total costs and expenses 678 388 58 1 101 1,226 -------------------------------------------------------------- Equity in net loss of USPE -- -- -- (60) -- (60) -------------------------------------------------------------- Net income (loss) $ 717 $ 72 $ (29) $ (61) $ (75) $ 624 ============================================================== Total assets as of June 30, 2000 $ 1,668 $ 4,031 $ 522 $ -- $ 1,625 $ 7,846 ============================================================== Marine Railcar Trailer Container Aircraft All For the quarter ended June 30, 1999 Leasing Leasing Leasing Leasing Other1 Total ----------------------------------- ------- ------- ------- ------- ---- ----- Revenues Lease revenue $ 850 $ 534 $ 36 $ -- $ -- $ 1,420 Interest income and other -- -- (1 ) -- 20 19 Gain on disposition of equipment -- 61 20 -- -- 81 -------------------------------------------------------------- Total revenues 850 595 55 -- 20 1,520 Costs and expenses Operations support 280 165 -- -- 4 449 Depreciation 192 211 85 -- -- 488 Management fees 42 20 1 -- -- 63 General and administrative 42 60 3 1 87 193 expenses (Recovery of) provision for bad (4) 18 (1 ) -- -- 13 debts -------------------------------------------------------------- Total costs and expenses 552 474 88 1 91 1,206 -------------------------------------------------------------- Equity in net loss of USPE -- -- -- (180) -- (180) -------------------------------------------------------------- Net income (loss) $ 298 $ 121 $ (33 )$ (181) $ (71) $ 134 ============================================================== Total assets as of June 30, 1999 $ 2,578 $ 4,669 $ 978 $ 598 $ 1,801 $ 10,624 ============================================================== ------------------------------------- 1 Includes interest income and costs not identifiable to a particular segment, such as certain operations support and general and administrative expenses.
PLM EQUIPMENT GROWTH FUND II (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000 8. OPERATING SEGMENTS (CONTINUED)
Marine Railcar Trailer Container Aircraft All For the six months ended June 30, 2000 Leasing Leasing Leasing Leasing Other1 Total - ----------------------------------------- ------- ------- ------- ------- ---- ----- REVENUES Lease revenue $ 1,794 $ 983 $ 89 $ -- $ -- $ 2,866 Interest income and other -- -- -- -- 36 36 Gain (loss) on disposition of 576 21 (95) -- -- 502 equipment -------------------------------------------------------------- Total revenues 2,370 1,004 (6) -- 36 3,404 COSTS AND EXPENSES Operations support 598 329 2 -- 19 948 Depreciation 379 343 123 -- -- 845 Management fees 88 50 5 -- -- 143 General and administrative 126 141 3 1 275 546 expenses Provision for (recovery of) bad 29 (19) -- -- -- 10 debts -------------------------------------------------------------- Total costs and expenses 1,220 844 133 1 294 2,492 -------------------------------------------------------------- Equity in net income of USPE -- -- -- 1,304 -- 1,304 -------------------------------------------------------------- Net income (loss) $ 1,150 $ 160 $ (139 )$ 1,303 $ (258 )$ 2,216 ============================================================== Total assets as of June 30, 2000 $ 1,668 $ 4,031 $ 522 $ -- $ 1,625 $ 7,846 ============================================================== Marine Railcar Trailer Container Aircraft All For the six months ended June 30, 1999 Leasing Leasing Leasing Leasing Other1 Total - ----------------------------------------- ------- ------- ------- ------- ---- ----- REVENUES Lease revenue $ 1,802 $ 998 $ 77 $ -- $ -- $ 2,877 Interest income and other -- -- (1) -- 44 43 Gain (loss) on disposition of 192 103 (62) -- -- 233 equipment -------------------------------------------------------------- Total revenues 1,994 1,101 14 -- 44 3,153 COSTS AND EXPENSES Operations support 575 289 1 -- 8 873 Depreciation 393 436 173 -- -- 1,002 Management fees 89 49 4 -- -- 142 General and administrative 88 133 6 1 229 457 expenses (Recovery of) provision for bad (10) 20 -- -- -- 10 debts -------------------------------------------------------------- Total costs and expenses 1,135 927 184 1 237 2,484 -------------------------------------------------------------- Equity in net loss of USPE -- -- -- (313) -- (313) -------------------------------------------------------------- Net income (loss) $ 859 $ 174 $ (170) $ (314) $ (193) $ 356 ============================================================== Total assets as of June 30, 1999 $ 2,578 $ 4,669 $ 978 $ 598 $ 1,801 $ 10,624 ============================================================== ------------------------------------- 1 Includes interest income and costs not identifiable to a particular segment, such as certain operations support and general and administrative expenses.
PLM EQUIPMENT GROWTH FUND II (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000 9. NET INCOME PER WEIGHTED-AVERAGE DEPOSITARY UNIT Net income per weighted-average Depositary unit was computed by dividing net income attributable to limited partners by the weighted-average number of Depositary units deemed outstanding during the period. The weighted-average number of Depositary units deemed outstanding during the three and six months ended June 30, 2000 and 1999 was 7,381,805. 10. CONTINGENCIES The Partnership, together with affiliates, has initiated litigation in various official forums in India against a defaulting Indian airline lessee to repossess Partnership property and to recover damages for failure to pay rent and failure to maintain such property in accordance with relevant lease contracts. The Partnership has repossessed all of its property previously leased to such airline, and the airline has ceased operations. In response to the Partnership's collection efforts, the airline filed counter-claims against the Partnership in excess of the Partnership's claims against the airline. The General Partner believes that the airline's counterclaims are completely without merit, and the General Partner will vigorously defend against such counterclaims. The General Partner believes an unfavorable outcome from the counterclaims is remote. 11. LIQUIDATION AND SPECIAL DISTRIBUTIONS On January 1, 1999, the General Partner began the liquidation phase of the Partnership with the intent to commence an orderly liquidation of the Partnership assets. The General Partner is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. As sale proceeds are received the General Partner intends to periodically declare special distributions to distribute the sale proceeds to the partners. During the liquidation phase of the Partnership the equipment will continue to be leased under operating leases until sold. Operating cash flows, to the extent they exceed Partnership expenses, will continue to be distributed on a quarterly basis to partners. The amounts reflected for assets and liabilities of the Partnership have not been adjusted to reflect liquidation values. The equipment portfolio continues to be carried at the lower of depreciated cost or fair value less cost to dispose. Although the General Partner estimates that there will be distributions after liquidation of assets and liabilities, the amounts cannot be accurately determined prior to actual liquidation of the equipment. Any excess proceeds over expected Partnership obligations will be distributed to the Partners throughout the liquidation period. Upon final liquidation, the Partnership will be dissolved. In the six months ended June 30, 2000, the General Partner paid special distributions of $0.10 per weighted-average depositary unit. No special distibutions were paid in the six months ended June 30, 1999. The Partnership is not permitted to reinvest proceeds from sales or liquidations of equipment. These proceeds, in excess of operational cash requirements, are periodically paid out to limited partners in the form of special distributions. The sales and liquidations occur because of certain damaged equipment, the determination by the General Partner that it is the appropriate time to maximize the return on an asset through sale of that asset, and, in some leases, the ability of the lessee to exercise purchase options. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (I) RESULTS OF OPERATIONS COMPARISON OF THE PLM EQUIPMENT GROWTH FUND II'S (THE PARTNERSHIP'S) OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999 (A) Owned Equipment Operations Lease revenues less direct expenses (defined as repairs and maintenance and equipment operating expenses) on owned equipment decreased during the second quarter of 2000 when compared to the same quarter of 1999. Gains or losses from the sale of equipment, interest and other income and certain expenses such as depreciation and general and administrative expenses relating to the operating segments (see Note 8 to the financial statements), are not included in the owned equipment operation discussion because they are indirect in nature and not a result of operations but the result of owning a portfolio of equipment. The following table presents lease revenues less direct expenses by equipment type (in thousands of dollars): For the Three Months Ended June 30, 2000 1999 ---------------------------- Railcars $ 554 $ 570 Trailers 308 369 Marine containers 15 36 Railcars: Railcar lease revenues and direct expenses were $0.9 million and $0.3 million, respectively, for the second quarter of 2000 and 1999. The decrease in railcar contribution in the second quarter of 2000 was due to the sale or disposition of railcars in 1999 and 2000. Trailers: Trailer lease revenues and direct expenses were $0.5 million and $0.2 million, respectively, for the second quarter of 2000 and 1999. The decrease in trailer contribution in the second quarter of 2000 was due to the sale or disposition of trailers in 1999 and 2000. Marine containers: Marine container lease revenues were $15,000 and $36,000 during the second quarter of 2000 and 1999, respectively. The decrease in marine container contribution in the second quarter of 2000 was due to the disposition of marine containers in 1999 and 2000. (B) Indirect Expenses Related to Owned Equipment Operations Total indirect expenses of $0.7 million for the second quarter of 2000 decreased from $0.8 million for the same quarter in 1999. The primary reason for the decrease was a $0.1 million decrease in depreciation expense from 1999 levels due to asset sales in 2000 and 1999. (C) Net Gain on Disposition of Owned Equipment Net gain on disposition of equipment for the second quarter of 2000 totaled $0.5 million, and resulted from the disposal or sale of marine containers, trailers, and railcars, with an aggregate net book value of $0.3 million, for aggregate proceeds of $0.8 million. For the same quarter in 1999, net gain on disposition of equipment totaled $0.1 million, and resulted from the disposal or sale of trailers, and marine containers, with an aggregate net book value of $19,000, for aggregate proceeds of $0.1 million. (D) Equity in Net Loss of an Unconsolidated Special-Purpose Entity (USPE) Equity in the net loss of an unconsolidated special-purpose entity represents the Partnership's share of the net loss generated from the operation of a jointly-owned asset accounted for under the equity method (see Note 7 to the financial statements). As of June 30, 2000, the Partnership had no remaining interests in entities which owned aircraft. Expenses were $0.1 million and $0.2 million for the second quarter of 2000 and 1999, respectively. The Partnership's remaining partially-owned aircraft was sold in the first quarter of 2000. (E) Net Income As a result of the foregoing, the Partnership's net income was $0.6 million for the second quarter of 2000, compared to net income of $0.1 million during the second quarter of 1999. 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 2000 is not necessarily indicative of future periods. In the second quarter of 2000, the Partnership distributed $1.1 million to the limited partners, or $0.15 per weighted-average limited partnership unit. In addition, a special distribution of $0.7 million or $0.10 per weighted-average limited partnership unit was made in the second quarter of 2000. COMPARISON OF THE PARTNERSHIP'S OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (A) Owned Equipment Operations Lease revenues less direct expenses (defined as repairs and maintenance and equipment operating expenses) on owned equipment decreased during the six months ended June 30, 2000 when compared to the same period of 1999. The following table presents lease revenues less direct expenses by equipment type (in thousands of dollars): For the Six Months Ended June 30, 2000 1999 ---------------------------- Railcars $ 1,196 $ 1,227 Trailers 654 709 Marine containers 87 76 Railcars: Railcar lease revenues and direct expenses were $1.8 million and $0.6 million, respectively, for the six months ended June 30, 2000 and 1999. The decrease in railcar contribution in the six months ended June 30, 2000 was due to the sale or disposition of railcars in 1999 and 2000. Trailers: Trailer lease revenues and direct expenses were $1.0 million and $0.3 million, respectively, for the six months ended June 30, 2000 and 1999. Lease revenue increased $0.1 million in the six months ended June 30, 2000 compared to the same period in 1999 due to higher utilization. This increase in lease revenue was offset, in part, by a decrease of $0.1 million due to sales and dispositions of trailers during 1999 and 2000. Marine containers: Marine container lease revenues were $0.1 million during the six months ended June 30, 2000 and 1999. Lease revenue increased $0.1 million in the six months ended June 30, 2000 compared to the same period in 1999, due to higher utilization of the container fleet. The increase was offset, in part, by a decrease in lease revenue of $0.1 million due to the reduction in the marine container fleet resulting from the sales and dispositions over the past twelve months. (B) Indirect Expenses Related to Owned Equipment Operations Total indirect expenses of $1.5 million for the six months ended June 30, 2000 decreased from $1.6 million for the same period in 1999. Significant variances are explained as follows: (i) A $0.2 million decrease in depreciation expense from 1999 levels reflects the effect of asset dispositions in 2000 and 1999. (ii) A $0.1 million increase in general and administrative expenses from 1999 levels due to increased professional services required by the Partnership. (C) Net Gain on Disposition of Owned Equipment Net gain on disposition of equipment for the six months ended June 30, 2000 totaled $0.5 million, and resulted from the disposal or sale of marine containers, trailers, and railcars, with an aggregate net book value of $0.5 million, for aggregate proceeds of $1.0 million. For the same period in 1999, net gain on disposition of equipment totaled $0.2 million, and resulted from the sale or disposal of marine containers, trailers, and railcars, with an aggregate net book value of $0.3 million, for aggregate proceeds of $0.5 million. (D) Equity in Net Income (Loss) of an Unconsolidated Special-Purpose Entity (USPE) Equity in the net income (loss) of an unconsolidated special-purpose entity represents the Partnership's share of the net income (loss) generated from the operation of a jointly-owned asset accounted for under the equity method (see Note 7 to the financial statements). As of June 30, 2000, the Partnership had no remaining interests in entities which owned aircraft. During the six months ended June 30, 2000, the gain from the sale of the Partnership's interest in the USPE of $1.4 million, which was sold in the first quarter of 2000, was offset by depreciation expense, direct expenses, and administrative expenses of $0.2 million. During the same period of 1999, depreciation expense, direct expenses, and administrative expenses were $0.3 million. (E) Net Income As a result of the foregoing, the Partnership's net income was $2.2 million for the six months ended June 30, 2000, compared to net income of $0.4 million during the six months ended June 30, 1999. 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 six months ended June 30, 2000 is not necessarily indicative of future periods. In the six months ended June 30, 2000, the Partnership distributed $2.2 million to the limited partners, or $0.29 per weighted-average limited partnership unit. In addition, a special distribution of $0.7 million or $0.10 per weighted-average limited partnership unit was made in the six months of 2000. (II) FINANCIAL CONDITION -- CAPITAL RESOURCES AND LIQUIDITY For the six months ended June 30, 2000, the Partnership generated $1.0 million in operating cash (net cash provided by operating activities less investment in the USPE to fund its operations) to meet its operating obligations, but used undistributed available cash from prior periods and proceeds from equipment sales and liquidating distibutions from USPEs of approximately $2.1 million to make the distributions (total of $3.1 million in the six months ended June 30, 2000, which includes a special distribution of $0.8 million) to the partners. During the six months ended June 30, 2000, the Partnership sold or disposed of marine containers, trailers, and railcars, with an aggregate net book value of $0.5 million, for proceeds of $1.0 million. The Partnership also received liquidating proceeds of $1.8 million from the sale of its interest in an entity owning an aircraft. Lessee deposits and reserve for repairs decreased $0.1 million during the six months ended June 30, 2000 due to fewer lessees prepaying future lease revenue at June 30, 2000 compared to December 31, 1999. Accounts payable decreased $0.1 million during the six months ended June 30, 2000 due to a decrease in trade accounts payable resulting from the reduction of the size of the Partnership's equipment portfolio. The General Partner has not planned any expenditures, nor is it aware of any contingencies that would cause the Partnership to require any additional capital to that mentioned above. The Partnership is in its active liquidation phase. As a result, 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 may be reduced, significant asset sales may result in special distributions to the partners. The amounts reflected for assets and liabilities of the Partnership have not been adjusted to reflect liquidation values. The equipment portfolio that is actively being marketed for sale by the General Partner continues to be carried at the lower of depreciated cost or fair value less cost of disposal. Although the General Partner estimates that there will be distributions to the Partnership after final disposal of assets and settlement of liabilities, the amounts cannot be accurately determined prior to actual disposal of the equipment. (III) OUTLOOK FOR THE FUTURE Since the Partnership is in its active 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. Several factors may affect the Partnership's operating performance in the remainder of 2000 and beyond, including changes in the markets for the Partnership's equipment and changes in the regulatory environment in which that equipment operates. Liquidation of the Partnership's equipment represents a reduction in the size of the equipment portfolio and may result in a reduction of contribution to the Partnership. Another factor affecting the Partnership's contribution in 2000 and beyond is the cost of new marine containers which has been at historic lows for the past several years which has caused downward pressure on per diem lease rates. Recently, the cost of marine containers have started to increase which, if this trend continues, should translate into rising per diem lease rates. Demand, however, for some of the Partnership's refrigerated marine containers have been weak, as they are older containers. These marine containers are currently off lease and the General Partner plans to dispose of these containers. The ability of the Partnership to realize acceptable lease rates on its equipment in the different equipment markets is contingent on many factors, such as specific market conditions and economic activity, technological obsolescence, and government or other regulations. The unpredictability of some of these factors, or of their occurrence, makes it difficult for the General Partner to clearly define trends or influences that may impact the performance of the Partnership's equipment. The General Partner continually monitors both the equipment markets and the performance of the Partnership's equipment in these markets. The General Partner may make an evaluation to reduce the Partnership's exposure to equipment markets in which it determines that it cannot operate equipment and achieve acceptable rates of return. The Partnership intends to use cash flow from operations and proceeds from disposition of equipment to satisfy its operating requirements, maintain working capital reserves, 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Partnership's primary market risk exposure is that of currency devaluation risk. During the six months ended June 30, 2000, 27% of the Partnership's total lease revenues came from non-United States domiciled lessees. Most of the leases require payment in United States (U.S.) currency. If these lessee's currency devalues against the U.S. dollar, the lessees could encounter difficulty in making the U.S. dollar denominated lease payments. PART II -- OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None. (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 4, 2000 By: /s/ Richard K Brock ---------------------- Richard K Brock Chief Financial Officer EX-27 2 0002.txt
5 1,000 6-MOS DEC-31-2000 JUN-30-2000 1,608 0 990 (121) 0 0 29,548 (24,196) 7,846 0 0 0 0 0 6,822 7,846 0 3,404 0 0 2,482 0 0 2,216 0 2,216 0 0 0 2,216 0.28 0.28
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