UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the quarterly period ended September 30, 1995
OR
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: 2-72177
SEI II L.P.
(formerly Shearson Equipment Investors - II)
--------------------------------------------
(Exact name of registrant as specified in its charter)
New York 13-3064636
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor, New York, NY
Attention: Andre Anderson 10285
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(Address of principal executive offices) (Zip code)
(212) 526-3237
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(Registrant's telephone number, including area code)
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
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Balance Sheets
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September 30, December 31,
Assets 1995 1994
- -------------------- ---------- ----------
Equipment $ 8,306,724 $ 8,306,724
Less accumulated depreciation 4,596,380 4,347,178
Net Equipment 3,710,344 3,959,546
Cash and cash equivalents 3,881,656 2,931,466
Due from Equipment Manager 531,491 522,083
Total Assets $ 8,123,491 $ 7,413,095
Liabilities and Partners' Deficit
- ---------------------------------
Liabilities:
Accounts payable and accrued expenses $ 35,878 $ 36,201
Accrued interest expense due to affiliate 8,463,879 7,965,512
Deferred interest payable to affiliate 512,854 512,854
Due to General Partner 662,362 642,280
Note payable to affiliate 7,839,000 7,839,000
Total Liabilities 17,513,973 16,995,847
Partners' Deficit:
General Partner (256,094) (258,017)
Limited Partners (3,614 units outstanding) (9,134,388) (9,324,735)
Total Partners' Deficit (9,390,482) (9,582,752)
Total Liabilities and Partners' Deficit $ 8,123,491 $ 7,413,095
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Statement of Partners' Deficit
For the nine months ended September 30, 1995
------------------------------
General Limited
Partner Partners Total
-------- ---------- ----------
Balance at December 31, 1994 $(258,017) $(9,324,735) $(9,582,752)
Net Income 1,923 190,347 192,270
Balance at September 30, 1995 $(256,094) $(9,134,388) $(9,390,482)
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Statements of Operations
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Three months ended Nine months ended
September 30, September 30,
Revenues 1995 1994 1995 1994
- ------------------ -------- -------- --------- ---------
Operating revenues $ 822,808 $ 401,923 $2,008,163 $1,032,198
Operating Expenses
- ------------------
Operating costs 407,235 245,821 1,066,189 610,807
Depreciation 83,068 83,068 249,202 249,202
Professional and other expenses 10,719 17,991 34,193 36,665
Equipment management fee -
Operators 35,529 24,933 94,638 70,104
General Partner 8,228 4,019 20,082 10,322
Insurance 4,211 2,694 12,633 11,116
Total Operating Expenses 548,990 378,526 1,476,937 988,216
Income from operations 273,818 23,397 531,226 43,982
Other Income (Expense):
Interest and miscellaneous income 57,025 21,357 159,411 57,253
Interest expense (167,948) (146,471) (498,367) (394,366)
Total Other Expense (110,923) (125,114) (338,956) (337,113)
Net Income (Loss) $ 162,895 $(101,717) $ 192,270 $(293,131)
Net Income (Loss) Allocated:
To the General Partner $ 1,629 $ (1,017) $ 1,923 $ (2,931)
To the Limited Partners 161,266 (100,700) 190,347 (290,200)
$ 162,895 $(101,717) $ 192,270 $(293,131)
Per limited partnership unit
(3,614 outstanding) $44.62 $(27.87) $52.67 $(80.30)
------------------------
Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
------------------------
Cash Flows from Operating Activities: 1995 1994
--------- --------
Net income (loss) $ 192,270 $(293,131)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 249,202 249,202
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Due from Equipment Manager (9,408) 189,304
Accounts payable and accrued expenses (323) (6,963)
Accrued interest expense due to affiliate 498,367 394,366
Due to General Partner 20,082 10,322
Net cash provided by operating activities 950,190 543,100
Net increase in cash and cash equivalents 950,190 543,100
Cash and cash equivalents at beginning of period 2,931,466 2,267,849
Cash and cash equivalents at end of period $3,881,656 $2,810,949
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Notes to the Financial Statements
---------------------------------
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of September 30, 1995, the results of operations for the three and
nine-month periods ended September 30, 1995 and 1994, the statement of changes
in partners' deficit for the nine-month periods ended September 30, 1995 and
the statements of cash flows for the nine-month periods ended September 30,
1995 and 1994. Results of operations for the period are not necessarily
indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1994 which would
require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
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Liquidity and Capital Resources
- -------------------------------
The Partnership's cash and cash equivalents balance totalled $3,881,656 at
September 30, 1995, an increase of $950,190 from December 31, 1994. The
increase is due to net cash flow from operating activities.
At September 30, 1995, the amount due from the Partnership's equipment manager
was $531,491 as compared to $522,083 at December 31, 1994. The $9,408 increase
is due to the timing of the payments of net revenue received from Midwest
Marine Management Company, the equipment manager ("Midwest Marine").
On May 30, 1986, the Partnership successfully restructured its long-term debt.
Buttonwood Leasing Corporation (the "Purchaser"), an affiliate of the General
Partner, purchased from the Partnership's lenders the Promissory Note (the
"Note") originally executed on December 9, 1981. The Purchaser further entered
into an agreement with the Partnership which required that the principal amount
of the Note remain fixed at $7,839,000 with interest accruing on such
principal amount of the Note at the prime rate charged by Bank America
Illinois. The effective prime rate as of December 31, 1994 and September 30,
1995 was 7.75% and 8.5%, respectively. In addition, the maturity date of the
Note was extended to January 3, 1996, with all other terms and conditions
unchanged. Since no interest or principal was paid on the Note for the
nine-month period ended September 30, 1995, the accrued interest expense due to
affiliate increased from $7,965,512 at December 31, 1994, to $8,463,879 at
Septembe r 30, 1995.
The Partnership has extended its existing management agreement with its
equipment manager, Midwest Marine, through December 31, 1996. In general, all
other terms and conditions of the management agreement remained unchanged.
Results of Operations
- ---------------------
For the three and nine-month periods ended September 30, 1995, the Partnership
generated net income of $162,895 and $192,270, respectively, as compared to net
losses of $101,717 and $293,131, respectively, for the corresponding periods in
1994. The change from net loss to net income is primarily attributable to an
increase in operating revenues. Barge utilization and freight rates increased
during the first three quarters of 1995 due to a record fall grain harvest in
1994 and strong export sales of soybeans and corn. Furthermore, barge
utilization was substantially lower during the same period in 1994 as a result
of the residual effects of flooding that occurred in the Midwest in 1993,
damaging corn and soybean crops, the primary cargos hauled by the Partnership's
barges.
Operating costs during the three and nine-month periods ended September 30,
1995 were $407,235 and $1,066,189 respectively, compared to $245,821 and
$610,807, respectively, for the corresponding periods in 1994. The increases
are primarily attributable to increased barge utilization, and to a lesser
extent, lower than usual towing costs in 1994 due to greater competition among
tow operators.
The Partnership's interest and miscellaneous income totalled $57,025 and
$159,411 for the three and nine-month periods ended September 30, 1995, as
compared to $21,357 and $57,253 for the corresponding periods in 1994. The
increases are primarily attributable to an increase in interest income
resulting from maintaining a higher invested cash balance and increases in
interest rates.
Interest expense was $167,948 and $498,367, for the three and nine-month
periods ended September 30, 1995, as compared to $146,471 and $394,366, for the
corresponding periods in 1994. The increase is due to an increase in the prime
rate charged on the principal amount of the Note.
Equipment Management Fees--Operator were $35,529 and $94,638 for the three and
nine-month periods ended September 30, 1995, compared to $24,933 and $70,104
for the corresponding periods in 1994. Equipment Management Fees--General
Partner were $8,228 and $20,082 for the three and nine-month periods ended
September 30, 1995, compared to $4,019 and $10,322 for the corresponding
periods in 1994. The increases in management fees, which are calculated based
upon revenues, resulted from increased revenues in 1995.
---------------------------------
PART II OTHER INFORMATION
---------------------------------
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on
Form 8-K were filed during the
quarter ended September 30, 1995
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SEI II L.P.
BY: SEI II EQUIPMENT INC.
General Partner
Date: November 14, 1995
BY: /s/ Rocco F. Andriola
Name: Rocco F. Andriola
Title: President and Director
Date: November 14, 1995
BY: /s/ Regina Hertl
Name: Regina Hertl
Title: Vice President, Director
and Chief Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 3,881,656
<SECURITIES> 000
<RECEIVABLES> 531,491
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 8,306,724
<DEPRECIATION> 4,596,380
<TOTAL-ASSETS> 8,123,491
<CURRENT-LIABILITIES> 000
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> (9,390,482)
<TOTAL-LIABILITY-AND-EQUITY> 8,123,491
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<TOTAL-REVENUES> 2,167,574
<CGS> 000
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<OTHER-EXPENSES> 410,748
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<INTEREST-EXPENSE> 498,367
<INCOME-PRETAX> 192,270
<INCOME-TAX> 000
<INCOME-CONTINUING> 192,270
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 192,270
<EPS-PRIMARY> 52.67
<EPS-DILUTED> 000
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