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 June 30, 1996
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: 02-72177
SEI II L.P.
Exact Name of Registrant as Specified in its Charter
New York 13-3064636
State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn.: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3237
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 ____
Balance Sheets At June 30, At December 31,
1996 1995
Assets
Equipment, at cost $8,306,724 $8,306,724
Less accumulated depreciation (4,845,581) (4,679,447)
Equipment, net 3,461,143 3,627,277
Cash and cash equivalents 5,086,323 4,238,441
Due from Equipment Manager 440,604 673,652
Total Assets $8,988,070 $8,539,370
Liabilities and Partners' Deficit
Liabilities:
Accounts payable and accrued expenses $ 23,396 $ 30,628
Accrued interest expense due to affiliate 8,985,172 8,657,814
Deferred interest payable to affiliate 512,854 512,854
Due to General Partner 684,159 671,201
Note payable to affiliate 7,839,000 7,839,000
Total Liabilities 18,044,581 17,711,497
Partners' Deficit:
General Partner (252,755) (253,911)
Limited Partners (3,614 units outstanding) (8,803,756) (8,918,216)
Total Partners' Deficit (9,056,511) (9,172,127)
Total Liabilities and Partners' Deficit $8,988,070 $8,539,370
Statement of Partners' Deficit
For the six months ended June 30, 1996 General Limited
Partner Partners Total
Balance at December 31, 1995 $(253,911) $(8,918,216) $(9,172,127)
Net income 1,156 114,460 115,616
Balance at June 30, 1996 $(252,755) $(8,803,756) $(9,056,511)
Statements of Operations
Three months Six months
ended June 30, ended June 30,
1996 1995 1996 1995
Revenues
Operating revenues $668,072 $ 561,142 $1,295,812 $1,185,355
Operating Expenses
Operating costs 374,059 320,789 699,749 658,954
Depreciation 83,067 83,067 166,134 166,134
Professional and other expenses 17,077 12,071 30,261 23,474
Equipment management fee -
Operators 31,483 28,873 61,972 59,109
General Partner 6,681 5,612 12,958 11,854
Insurance 4,211 4,211 8,422 8,422
Total operating expenses 516,578 454,623 979,496 927,947
Income from operations 151,494 106,519 316,316 257,408
Other Income (Expense)
Interest and miscellaneous income 64,875 54,987 126,659 102,386
Interest expense (161,237) (166,122) (327,359) (330,419)
Total Other Expense (96,362) (111,135) (200,700) (228,033)
Net Income $ 55,132 $ (4,616) $ 115,616 $ 29,375
Net Income Allocated:
To the General Partner $ 551 $ (46) $ 1,156 $ 294
To the Limited Partners 54,581 (4,570) 114,460 29,081
$ 55,132 $ (4,616) $ 115,616 $ 29,375
Per limited partnership unit
(3,614 outstanding) $15.10 $(1.26) $31.67 $8.05
Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities
Net income $ 115,616 $ 29,375
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense 166,134 166,134
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Due from Equipment Manager 233,048 287,131
Accounts payable and accrued expenses (7,232) (2,425)
Accrued interest expense due to affiliate 327,358 330,419
Due to general partner 12,958 11,854
Net cash provided by operating activities 847,882 822,488
Net increase in cash and cash equivalents 847,882 822,488
Cash and cash equivalents, beginning of period 4,238,441 2,931,466
Cash and cash equivalents, end of period $5,086,323 $3,753,954
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction
with the Partnership's annual 1995 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 June 30, 1996 and the
results of operations for the three and six months ended June 30,
1996 and 1995 and cash flows for the six months ended June 30,
1996 and 1995 and the statement of changes in partners' deficit
for the six months ended June 30, 1996. Results of operations for
the period are not necessarily indicative of the results to be
expected for the full year.
The following significant event has occurred subsequent to fiscal year
1995 which requires disclosure in this interim report per
Regulation S-X, Rule 10-01, Paragraph (a)(5).
Legal Proceedings
In March 1996, a purported class action suit on behalf of all
Limited Partners was brought against the Partnership, Lehman
Brothers Inc., Smith Barney Holdings Inc., and a number of other
limited partnerships in New York State Supreme Court. The
complaint alleges claims of common law fraud and deceit,
negligent misrepresentation, breach of fiduciary duty and breach
of the implied covenant of good faith and fair dealing. The
defendants intend to defend the action vigorously.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The Partnership's cash and cash equivalents balance totaled
$5,086,323 at June 30, 1996, which represents an increase from
the balance of $4,238,441 at December 31, 1995. The increase is
due to net cash flow from operating activities.
At June 30, 1996, the amount due from the Partnership's equipment
manager was $440,604, compared to $673,652 at December 31, 1995.
The decrease is due to the timing of the payments of net revenue
received from the equipment manager.
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 by the Partnership in favor of the lenders
and which was dated December 9, 1981. Subsequent to the Note
purchase, the Purchaser entered into an understanding with the
Partnership on the following terms and conditions. First, the
principal amount of the loan would remain the same. Second,
interest would be charged on the outstanding principal amount of
the Note at a rate equal to the prime rate charged by Bank
America Illinois, formerly Continental Illinois National Bank,
which was 8.25% at June 30, 1996. No interest was paid relating
to the Note for the six-month period ended June 30, 1996 and, as
a result, the Partnership's accrued interest expense due to
affiliate increased to $8,985,172 at June 30, 1996, compared to
$8,657,814 at December 31, 1995. The maturity date of the Note
has been extended to January 3, 1997, with all other terms and
conditions of the Note remaining unchanged.
Results of Operations
For the three and six months ended June 30, 1996, the Partnership
generated net income of $55,132 and $115,616, compared to a net
loss of $4,616 and net income of $29,375, for the corresponding
periods in 1995. The improvement in 1996 is primarily
attributable to an increase in operating revenues, partially
offset by higher total operating expenses.
Operating revenues were $668,072 and $1,295,812, respectively,
for the three and six months ended June 30, 1996, compared to
$561,142 and $1,185,355 for the corresponding periods in 1995.
The increase in operating revenues is primarily attributable to
an increase in barge utilization during the first half of 1996.
Operating costs for the three and six months ended June 30, 1996
were $374,059 and $699,749, respectively, compared to $320,789
and $658,954, respectively, in 1995. The increases for both
periods are mainly due to higher barge utilization in 1996.
Interest and miscellaneous income totaled $64,875 and $126,659,
respectively, for the three and six months ended June 30, 1996,
as compared to $54,987 and $102,386 for the corresponding periods
in 1995. The increase is primarily attributable to an increase
in interest income as a result of the Partnership maintaining a
higher cash balance in 1996.
Part II Other Information
Item 1 Legal Proceedings
In March 1996, a purported class action suit on
behalf of all Limited Partners was brought against
the Partnership, Lehman Brothers Inc., Smith
Barney Holdings Inc., and a number of other
limited partnerships in the New York State Supreme
Court. The complaint alleges claims of common law
fraud and deceit, negligent misrepresentation,
breach of fiduciary duty and breach of the implied
covenant of good faith and fair dealing. The
defendants intend to defend the action vigorously.
Items 2-5 Not applicable.
Item 6 Exhibits and reports on Form 8-k.
(a) Exhibits - None
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K
were filed during the quarter ended June 30, 1996
SIGNATURES
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: August 12, 1996 BY:/s/ Rocco F. Andriola
President and Director
Date: August 12, 1996 BY:/s/ Regina Hertl
Vice President, Director and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
<CASH> 5,086,323
<SECURITIES> 0
<RECEIVABLES> 440,604
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8,306,724
<DEPRECIATION> 4,845,581
<TOTAL-ASSETS> 8,988,070
<CURRENT-LIABILITIES> 23,396
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 9,056,511
<TOTAL-LIABILITY-AND-EQUITY> 8,988,070
<SALES> 0
<TOTAL-REVENUES> 1,295,812
<CGS> 0
<TOTAL-COSTS> 979,496
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 327,359
<INCOME-PRETAX> 115,616
<INCOME-TAX> 0
<INCOME-CONTINUING> 115,616
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 115,616
<EPS-PRIMARY> 31.67
<EPS-DILUTED> 0
</TABLE>
