UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the fiscal quarter ended
June 30, 1995.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 33-32258
-----------------------
PLM EQUIPMENT GROWTH FUND II
(Exact name of registrant as specified in its charter)
California 94-3041013
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Market, Steuart Street Tower
Suite 900, San Francisco, CA 94105-1301
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code (415) 974-1399
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ______
Indicate the number of units outstanding of each of the issuer's classes of
partnership units, as of the latest practicable date:
Class Outstanding at August 7, 1995
Limited Partnership Depositary Units 7,439,005
General Partnership Units 1
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
BALANCE SHEETS
(in thousands of dollars)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Equipment held for operating leases $ 116,154 $ 128,784
Less accumulated depreciation (71,688) (74,672)
44,466 54,112
Equipment held for sale 1,918 --
Net equipment 46,384 54,112
Cash and cash equivalents 7,179 12,348
Restricted cash 296 296
Accounts receivable, less allowance for
doubtful accounts of $665 in 1995 and $427 in 1994 2,255 2,258
Deferred charges, net of accumulated amortization of
$1,454 in 1995 and $1,798 in 1994 323 385
Prepaid expenses and other assets 20 86
Total assets $ 56,457 $ 69,485
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 1,047 $ 867
Due to affiliates 364 236
Note payable 28,000 35,000
Prepaid deposits and reserve for repairs 2,512 3,229
Total liabilities 31,923 39,332
Partners' capital (deficit):
Limited Partners (7,439,005 and 7,472,705 Depositary Units,
including 1,150 Depositary Units held in the
Treasury at June 30, 1995 and December 31, 1994) 25,293 30,850
General Partner (759) (697)
Total partners' capital 24,534 30,153
Total liabilities and partners' capital $ 56,457 $ 69,485
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(In thousands of dollars except per unit amounts)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Lease revenue $ 4,407 $ 6,112 $ 8,938 $ 12,281
Interest and other income 104 242 249 355
Net gain on disposition of equipment 804 59 854 640
Total revenues 5,315 6,413 10,041 13,276
Expenses:
Depreciation and amortization 1,985 2,764 4,330 5,521
Management fees to affiliate 196 312 434 611
Interest expense 555 824 1,267 1,374
Insurance expense to affiliate -- 168 87 105
Other insurance expense 78 291 95 346
Repairs and maintenance 848 1,259 1,401 2,580
Marine equipment operating expenses 179 1,063 145 1,854
General and administrative
expenses to affiliates 231 158 462 338
Other general and administrative expenses 327 368 638 546
Bad debt expense 233 22 251 51
Total expenses 4,632 7,229 9,110 13,326
Net income (loss) $ 683 $ (816) $ 931 $ (50)
Partners' share of net income (loss):
Limited Partners $ 614 $ (1,021) $ 679 $ (412)
General Partner 69 205 252 362
Total $ 683 $ (816) $ 931 $ (50)
Net income (loss) per Depositary Unit
(7,439,005 and 7,472,705 Units,
including 1,150 Units held in Treasury
respectively, at June 30, 1995 and 1994) $ 0.08 $ (0.14) $ 0.09 $ (0.05)
Cash distributions $ 3,138 $ 3,155 $ 6,284 $ 6,310
Cash distributions per Depositary Unit $ 0.40 $ 0.40 $ 0.80 $ 0.80
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For
the period from December 31, 1993 to June 30, 1995
(in thousands of dollars)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
<S> <C> <C> <C>
Partners' capital (deficit) at December 31, 1993 $ 43,894 $ (1,032) $ 42,862
Net income (loss) (899) 966 67
Cash distributions (11,989) (631) (12,620)
Repurchase of Depositary Units (156) -- (156)
Partners' capital (deficit) at December 31, 1994 30,850 (697) 30,153
Net income 679 252 931
Cash distributions (5,970) (314) (6,284)
Repurchase of Depositary Units (266) -- (266)
Partners' capital (deficit) at June 30, 1995 $ 25,293 $ (759) $ 24,534
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(in thousands of dollars)
For the six months ended
June 30,
1995 1994
Operating activities:
Net income (loss) $ 931 $ (50)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Net gain on disposition of equipment (854) (640)
Write-off of unamortized loan origination costs .. -- 305
Depreciation and amortization 4,330 5,521
Changes in operating assets and liabilities:
Accounts receivable, net 2 468
Due to affiliate 128 (169)
Prepaid expenses and other assets 66 46
Accounts payable and accrued expenses 165 (703)
Accrued drydock expenses 271 --
Prepaid deposits and reserve for repairs (717) 1,724
Cash provided by operating activities 4,322 6,502
Investing activities:
Proceeds from disposition of equipment 4,070 1,883
Payments for purchase of equipment -- (501)
Payments for capital improvements (11) (710)
Decrease in restricted cash -- 7,582
Cash provided by investing activities 4,059 8,254
Financing activities:
Proceeds from note payable -- 35,000
Principal payments on notes payable (7,000) (35,000)
Cash distributions paid to partners (6,284) (6,310)
Payments of debt issuance costs -- (236)
Repurchase of Depositary Units (266) --
Cash used in financing activities (13,550) (6,546)
Cash and cash equivalents:
Net (decrease) increase in cash and cash equivalents (5,169) 8,210
Cash and cash equivalents at beginning of period 12,348 5,996
Cash and cash equivalents at end of period $ 7,179 $ 14,206
Supplemental information:
Interest paid $ 1,261 $ 1,069
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
1. Opinion of Management
In the opinion of the management of PLM Financial Services, Inc., the General
Partner, the accompanying unaudited financial statements contain all adjustments
necessary, consisting primarily of normal recurring accruals, to present fairly
the financial position of PLM Equipment Growth Fund II (the "Partnership") as of
June 30, 1995, the statements of operations for the three and six months ended
June 30, 1995 and 1994, the statements of changes in partners' capital and the
statements of cash flows for the six months ended June 30, 1995 and 1994.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the accompanying financial statements. For
further information, reference should be made to the financial statements and
notes thereto included in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1994, on file at the Securities and Exchange Commission.
2. Cash Distribution
Cash distributions are recorded when paid and totaled $6,284,000 and $3,138,000
for the six and three months ended June 30, 1995, respectively. Cash
distributions to unitholders in excess of net income are considered to represent
a return of capital. Cash distributions to unitholders of $5,291,000 and
$5,994,000 for the six months ended June 30, 1995, and 1994, respectively, were
deemed to be a return of capital.
Cash distributions of $2,976,000 ($0.40 per Depositary Unit) were declared on
July 14, 1995, and are to be paid on August 15, 1995, to the unitholders of
record as of June 30, 1995.
3. Repurchase of Depositary Units
On December 28, 1992, the Partnership engaged in a program to repurchase up to
200,000 Depositary Units. In the six months ended June 30, 1995, the Partnership
had purchased and canceled 33,700 Depositary Units at a cost of $0.3 million. As
of June 30, 1995, the Partnership had cumulatively repurchased 60,600 Depositary
Units at a cost of $0.6 million.
4. Equipment
Equipment held for operating leases is stated at cost. Equipment held for sale
is stated at the lower of the equipment's depreciated cost or net realizable
value and is subject to a pending contract for sale.
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
4. Equipment (continued)
The components of equipment are as follows (in thousands):
June 30, December 31,
1995 1994
Equipment held for operating leases:
Rail equipment $ 19,747 $ 19,749
Marine containers 14,841 17,939
Marine vessels -- 4,702
Aircraft 45,947 50,644
Trailers and tractors 22,961 23,092
Mobile offshore drilling unit 12,658 12,658
116,154 128,784
Less accumulated depreciation (71,688) (74,672)
44,466 54,112
Equipment held for sale 1,918 --
Net equipment $ 46,384 $ 54,112
Revenues are earned by placing the equipment under operating leases which are
generally billed monthly or quarterly. The Partnership's marine vessel and
certain of its marine containers are leased to operators of utilization-type
leasing pools which include equipment owned by unaffiliated parties. In such
instances revenues received by the Partnership consist of a specified percentage
of revenues generated by leasing the equipment to sublessees, after deducting
certain direct operating expenses of the pooled equipment. Rents for railcars
are based on mileage traveled or a fixed rate; rents for all other equipment are
based on fixed rates.
As of June 30, 1995, all equipment in the Partnership's portfolio was either on
lease or operating in PLM-affiliated short-term trailer rental facilities,
except for 218 marine containers and four railcars. With the exception of 266
marine containers and one tractor, all equipment in the Partnership portfolio
was either on lease or operating in PLM-affiliate short-term trailer rental
facilities at December 31, 1994. The aggregate carrying value of equipment off
lease was $868,000 and $1,136,000 at June 30, 1995 and December 31, 1994,
respectively.
During the six months ended June 30, 1995, the Partnership sold or disposed of
its 50% interest in a DC-9 aircraft, 140 marine containers, eight trailers, one
tractor, one railcar, and its 50% interest in a marine vessel, with an aggregate
net book value of $3.5 million, and unused drydock reserves of $0.3 million, for
proceeds of $4.1 million. For the six months ended June 30, 1994, the
Partnership sold or disposed of 189 marine containers, and 262 trailers with an
aggregate net book value of $1.3 million, for proceeds of $1.9 million.
5. Notes Payable
On March 31, 1995, the Partnership prepaid $7,000,000 of the outstanding note
payable of $35 million. This payment was applied to the principal payments due
March 31, 1996 and 1997.
6. Subsequent Event
In July 1995, the Partnership sold 1,959 marine containers with a net book value
of $1.9 million for proceeds of $2.4 million. This group of marine containers
was classified as equipment held for sale at June 30, 1995.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
(A) Results of Operations -For the six months ending June 30, 1995 and 1994
Summary
The Partnership's operating income before depreciation, amortization, and
gain/loss on sales declined by approximately 9% in the first six months of 1995
from the same period in 1994. This decline is attributable primarily to:
- sales or liquidations of equipment subsequent to the second quarter of 1994,
as the Partnership sold its 12.5% interest in a rig in December 1994, sold two
marine vessels in September of 1994, sold its 50% interest in another marine
vessel in May of 1995, sold its 50% interest in a DC-9 aircraft in April of
1995, sold 9 trailers and a tractor, and realized the liquidation or disposal of
approximately 469 marine containers in the 12 month period ended June 30, 1995;
- a 60% reduction in lease rate for one of the Partnership's aircraft as its
lease was renegotiated in the third quarter of 1994, a reduction in contribution
from aircraft in the first quarter of 1995 as one aircraft came off-lease in
January while another was off-lease undergoing maintenance, and a reduction of
31% in daily lease rate for the rig in which the Partnership owns a 55% interest
effective January 30, 1995;
The Partnership purchased 636 trailers in the third and fourth quarters of
1994, and 1,959 containers between the first and third quarters of 1994. The
lessee of the containers encountered financial difficulties in the fourth
quarter of 1994, resulting in the establishment of reserves against accrued
revenues in the first six months of 1995. Contributions realized from the
trailers purchased in 1994 partially offset declining performance resulting from
the events described above.
(B) Financial Condition - Capital Resources, Liquidity, and Distributions
The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity offering and permanent debt financing. No
further capital contributions from original partners are permitted under the
terms of the Partnership's Limited Partnership Agreement. While the
Partnership's total outstanding indebtedness, currently $28.0 million, can only
be increased up to a maximum of $35 million subject to specific covenants in the
existing debt agreement. The Partnership relies on operating cash flow to meet
its operating obligations, make cash distributions to partners, and increase the
Partnership's equipment portfolio with any remaining surplus cash available.
During the six months ended June 30, 1995, the Partnership used $7.0
million in proceeds from sales of equipment and other cash on hand to prepay the
first annual principal installment of the loan due March 31, 1996, and to
partially repay the second annual installment due March 31, 1997.
For the six months ended June 30, 1995, the Partnership generated
sufficient operating revenues to meet its operating obligations, but used
undistributed available cash from prior periods of approximately $1.9 million to
maintain the current level of distributions (total 1995 of $6.3 million) to the
partners.
(C) Depositary Unit Repurchase Plan
On December 28, 1992, the Partnership engaged in a program to repurchase up to
200,000 Depositary Units. In the six months ended June 30, 1995, the Partnership
had purchased and canceled 33,700 Depositary Units at a cost of $0.3 million. As
of June 30, 1995, the Partnership had cumulatively repurchased 60,600 Depositary
Units at a cost of $0.6 million.
<PAGE>
Comparison of the Partnership's Operating Results for the Three Months Ended
June 30, 1995 and 1994
(A) Revenues
Total revenues of $5.3 million for the quarter ended June 30, 1995, declined
from $6.4 million for the same period in 1994. This decrease resulted primarily
from lower lease revenue offset by a larger gain in the second quarter of 1995
when compared to the same period in 1994.
(1) Lease revenues decreased to $4.4 million in the quarter ended June 30, 1995,
from $6.1 million in the same period in 1994. The following table lists lease
revenues earned by equipment type:
For the three months
ended June 30,
1995 1994
Trailers and tractors $ 1,286 $ 770
Rail equipment 1,252 1,308
Aircraft 940 1,366
Marine containers 457 406
Mobile offshore drilling units 338 625
Marine vessels 134 1,637
---------- ----------
$ 4,407 $ 6,112
Significant revenue component changes from quarter to quarter resulted primarily
from:
(a) declines of $1.5 million in marine vessel revenues due to the sale of
two marine vessels during the third quarter of 1994, and a 50% interest in
another marine vessel in the second quarter of 1995, which were on voyage
charters or utilization-based pooling arrangements during the first half of
1994;
(b) declines of $0.4 million in aircraft revenue due to the sale of the
Partnership's 50% interest in a DC-9 aircraft during the second quarter of 1995,
and a lower re-lease rate on another aircraft;
(c) a decrease of $0.3 million in mobile offshore drilling unit ("rig")
revenue due to the sale of one rig in the fourth quarter of 1994, and a lower
re-lease rate on another rig;
(d) an increase of $0.5 million in trailer and tractor revenue due to the
purchase of 649 trailers in the third and fourth quarters of 1994.
(2) Interest and other income decreased to $0.1 million due primarily to lower
cash balances available for investment, offset slightly by an increase in the
interest rate earned on cash equivalents.
(3) Net gain on disposition of equipment during the second quarter of 1995
totaled $0.8 million from the sale or disposal of the Partnership's 50% interest
in a DC-9 aircraft, eight trailers, one tractor, 79 marine containers, one
railcar, and the Partnership's 50% interest in a marine vessel with an aggregate
net book value of $3.4 million, and unused drydock reserves of $0.3 million, for
proceeds of $4.0 million. During the same period in 1994, the net gain on
disposition of equipment was $59,000 from the sale or disposal of one trailer,
and 94 marine containers with an aggregate net book value of $139,000, for
proceeds of $198,000.
(B) Expenses
Total expenses for the quarter ended June 30, 1995, decreased to $4.6 million
from $7.2 million for the same period in 1994. The decrease in 1995 expenses was
primarily attributable to decreases in marine equipment operating expense,
depreciation expense, repairs and maintenance, insurance expense and interest
expense.
(1) Direct operating expenses (defined as repairs and maintenance, insurance
expenses, and marine
<PAGE>
operating expenses) decreased to $1.1 million in the second quarter of 1995,
from $2.8 million in the same period in 1994. This decrease resulted from:
(a) decreases of $0.9 million in marine equipment operating expense due to
the sale of two marine vessels in the third quarter of 1994 and the
Partnership's 50% interest in another marine vessel in the second quarter of
1995;
(b) decreases of $0.4 million in repairs and maintenance costs from 1994
levels resulted from the sale of two marine vessels in the third quarter of 1994
and a 50% interest in another marine vessel in the second quarter of 1995. These
declines were offset slightly by increases in aircraft expenses resulting from
the refurbishment of an aircraft prior to being re-leased;
(c) decreases of $0.4 million in insurance expenses resulted from the sale
of two marine vessels in the third quarter of 1994 and the partnership's 50%
interest in another marine vessel in the second quarter of 1995.
(2) Indirect operating expenses (defined as depreciation expense, management
fees, interest expense, general and administrative expenses, and bad debt
expense) decreased to $3.5 million in the second quarter of 1995 from $4.4
million in the same period in 1994. This decrease resulted from:
(a) decreases of $0.8 million in depreciation and amortization expense from
1994 levels, reflecting the Partnership's double-declining depreciation method
and the effect of asset sales in 1994 and 1995, offset, in part, by the purchase
of equipment during the later part of 1994;
(b) decreases of $0.2 million in interest expense due to a write-off in
1994 of unamortized loan origination costs resulting from the refinancing of the
Partnership's debt in 1994;
(c) decreases of $0.1 million in management fees to affiliates, reflecting
the lower levels of lease revenues in 1995 as compared to 1994;
(d) increases of $0.2 million in bad debt expense due to the General
Partner's evaluation of the collectibility of receivables due from an aircraft
lessee and a container lessee that encountered financial difficulties.
(C) Net Income (Loss)
The Partnership's net income of $0.7 million for the second quarter of 1995
increased from a net loss of $0.8 million in the same period of 1994. The
Partnership's ability to acquire, operate, or liquidate assets, secure leases,
and re-lease those assets whose leases expire during the duration of the
Partnership is subject to many factors and the Partnership's performance in the
second quarter 1995 is not necessarily indicative of future periods. In the
second quarter 1995, the Partnership distributed $3.0 million to the Limited
Partners, or $0.40 per Depositary Unit.
Comparison of the Partnership's Operating Results for the Six Months Ended June
30, 1995 and 1994
(A) Revenues
Total revenues of $10.0 million for the six months ended June 30, 1995, declined
from $13.3 million for the same period in 1994. This decrease resulted primarily
from lower lease revenue.
<PAGE>
(1) Lease revenues decreased to $8.9 million in the six months ended June 30,
1995 from $12.3 million in the same quarter of 1994. The following table lists
lease revenues earned by equipment type:
For the six months
ended June 30,
1995 1994
Trailers and tractors $ 2,689 $ 1,691
Rail equipment 2,395 2,417
Aircraft 1,815 2,600
Marine containers 914 874
Mobile offshore drilling units 720 1,209
Marine vessels 405 3,490
-------- ---------
$ 8,938 $ 12,281
Significant revenue component changes from quarter to quarter resulted primarily
from:
(a) declines of $3.1 million in marine vessel revenues due to the sale of
two marine vessels in the third quarter of 1994, and the Partnership's 50%
interest in another marine vessel in the second quarter of 1995, which were on
voyage charters or utilization-based pooling arrangements during the first six
months of 1994;
(b) declines of $0.8 million in aircraft revenue due to the sale of the
Partnership's 50% interest in a DC-9 aircraft during the second quarter of 1995,
and a lower re-lease rate on another aircraft;
(c) a decrease of $0.5 million in mobile offshore drilling unit ("rig")
revenue due to the sale of one rig in the fourth quarter of 1994 and a lower
re-lease rate on another rig;
(d) an increase of $1.0 million in trailer and tractor revenue due to the
purchase of 649 trailers in the third and fourth quarters of 1994, offsetting
revenues earned by trailers sold at the end of March 1994.
(2) Interest and other income decreased to $0.1 million due primarily to lower
cash balances available for investment, offset slightly by an increase in the
interest rate earned on cash equivalents.
(3) Net gain on disposition of equipment during the six months ended June 30,
1994, totaled $0.8 million from the sale or disposal of the Partnership's 50%
interest in a DC-9 aircraft, eight trailers, one tractor, 140 marine containers,
one railcar, and the Partnership's 50% interest in a marine vessel with an
aggregate net book value of $3.5 million, and unused drydock reserves of $0.3
million, for proceeds of $4.1 million. Net gain or disposition of equipment for
the same period in 1994 totaled $0.6 million from the sale or disposal of 262
trailers and 189 marine containers with an aggregate net book value of $1.2
million, for proceeds of $1.9 million (See Footnote 5 to the Financial
Statements).
(B) Expenses
Total expenses for the six months ended June 30, 1995, decreased to $9.1 million
from $13.3 million for the same period in 1994. The decrease in 1995 expenses
was primarily attributable to decreases in depreciation expense, marine vessel
operating expenses, and repairs and maintenance.
(1) Direct operating expenses (defined as repairs and maintenance, insurance
expenses, and marine operating expenses) decreased to $1.7 million for the six
months ended June 30, 1995, from $4.9 million in the same period of 1994. This
decrease resulted from:
(a) decreases of $1.7 million in marine equipment operating expense
resulted from the sale of two marine vessels in the third quarter of 1994, and
the Partnership's 50% interest in another marine vessel in the second quarter of
1995;
(b) decreases of $1.2 million in repairs and maintenance costs from 1994
levels resulted from the sale of two marine vessels in the third quarter of
1994, and a 50% interest in another marine vessel in the second quarter of 1995.
These declines were offset slightly by increases in aircraft expenses resulting
from the refurbishment of an aircraft prior to being re-leased;
(c) decreases of $0.3 million in all insurance expenses resulted from the
sale of two marine vessels in the third quarter of 1994. This decrease was
offset by an increase of a $0.2 million refund in 1994, from an insurance pool
in which the Partnership's marine vessels participate, due to lower than
expected insurance claims in the pool. A similar refund was not received in
1995.
(2) Indirect operating expenses (defined as depreciation expense, management
fees, interest expense, general and administrative expenses, and bad debt
expense) decreased to $7.4 million for the six months ended June 30, 1995, from
$8.4 million in the same period of 1994. This decrease resulted primarily from:
(a) decreases of $1.2 million in depreciation expense from 1994 levels,
reflecting the Partnership's double-declining balance depreciation method and
the effect of asset sales in 1994 and 1995, partially offset by the purchase of
equipment during the later part of 1994;
(b) decreases of $0.2 million in management fees to affiliates, reflecting
the lower levels of lease revenues in 1995 as compared to 1994;
(c) decreases of $0.1 million in interest expense from a $0.3 million
write-off in 1994 of unamortized loan origination costs due to the refinancing
of the Partnership's debt in 1994, offset by a $0.2 million increase due to a
higher base rate of interest charged on the Partnership's floating rate debt;
(d) increases of $0.2 million in general and administrative expenses from
1994 levels resulting from the increased administrative costs associated with
the short-term rental facilities due to an additional 636 trailers now operating
in the facilities in the first six months of 1995 when compared to the same
period in 1994;
(e) increases of $0.2 million in bad debt expense due to the General
Partner's evaluation of the collectibility of receivables due from a container
lessee that encountered financial difficulties.
(C) Net Income (loss)
The Partnership's net income of $0.9 million for the six months ended June 30,
1995, increased from a net loss of $50,000 for the same period in 1994. The
Partnership's ability to acquire, operate, or liquidate assets, secure leases,
and re-lease those assets whose leases expire during the duration of the
Partnership is subject to many factors and the Partnership's performance for the
six months ended June 30, 1995 is not necessarily indicative of future periods.
In the six months ended June 30, 1994 , the Partnership distributed $6.0 million
to the Limited Partners, or $0.80 per Depositary Unit.
Trends
Generally, Partnership performance continues to be sensitive to trends in those
industry segments in which the Partnership equipment is either subject to
frequent re-leasing activity, or is impacted by changing demand for particular
Partnership equipment. In the former case, the Partnership's trailers have been
subject to softening demand, particularly for refrigerated over-the-road units;
and its rigs and vessels have been subject to relatively low rates in
essentially static markets. In the latter case, the Partnership's 10-12 year old
containers (the majority of its container portfolio) are being retired at an
increased rate as container manufacturers step up deliveries of new containers;
while demand for the Partnership's older Stage II aircraft and engines has
declined in the U.S. market, leading the General Partner to re-market such
equipment abroad. Currently, demand for Partnership equipment remains strong in
the rail and over-the-road dry van areas.
The General Partner monitors these equipment markets. In those markets in
which the cyclical nature of demand has short-to intermediate-term impact, the
General Partner expects that partnership performance will be subject to such
market fluctuations and will vary accordingly. In those markets in which demand
for Partnership equipment has dropped for unacceptable lengths of time, the
General Partner takes appropriate action to reduce the Partnership's exposure to
such events.
The Partnership intends to use excess cash flow, if any, after payment of
expenses, loan principal and cash distributions to acquire additional equipment
through the end of its planned reinvestment period, which ends December 31,
1995.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
<PAGE>
-13-
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
PLM EQUIPMENT GROWTH FUND II
By: PLM Financial Services, Inc.
General Partner
Date: August 7, 1995 By: /s/ David J. Davis
------------------
David J. Davis
Vice President and
Corporate Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 7,179
<SECURITIES> 0
<RECEIVABLES> 2,255
<ALLOWANCES> 665
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 116,154
<DEPRECIATION> 71,688
<TOTAL-ASSETS> 56,457
<CURRENT-LIABILITIES> 0
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0
0
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<CGS> 0
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<INCOME-PRETAX> 931
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
