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
MARCH 31, 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 ______
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
(in thousands of dollars, except unit amounts)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-----------------------------
ASSETS
<S> <C> <C>
Equipment held for operating lease, at cost $ 31,220 $ 32,487
Less accumulated depreciation (25,204) (25,815)
-----------------------------
Net equipment 6,016 6,672
Cash and cash equivalents 2,197 894
Accounts receivable, less allowance for doubtful
accounts of $97 in 2000 and $107 in 1999 1,002 877
Investment in an unconsolidated special-purpose entity 7 368
Prepaid expenses and other assets 32 47
----------------------------
Total assets $ 9,254 $ 8,858
=============================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 316 $ 352
Due to affiliates 67 67
Lessee deposits and reserve for repairs 759 783
-----------------------------
Total liabilities 1,142 1,202
-----------------------------
Partners' capital:
Limited partners (7,381,805 depositary units as of
March 31, 2000 and December 31, 1999) 8,112 7,656
General Partner -- --
-----------------------------
Total partners' capital 8,112 7,656
-----------------------------
Total liabilities and partners' capital $ 9,254 $ 8,858
=============================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
(in thousands of dollars, except weighted-average unit amounts)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
2000 1999
----------------------------
REVENUES
<S> <C> <C>
Lease revenue $ 1,505 $ 1,457
Interest and other income 11 24
Net gain (loss) on disposition of equipment (22) 152
----------------------------
Total revenues 1,494 1,633
EXPENSES
Depreciation 432 514
Repairs and maintenance 410 395
Equipment operating expenses 45 29
Management fees to affiliate 77 79
General and administrative expenses to affiliates 67 83
Other general and administrative expenses 245 181
Recovery of bad debts (10) (3)
----------------------------
Total expenses 1,266 1,278
Equity in net income (loss) of an unconsolidated
special-purpose entity 1,364 (133)
----------------------------
Net income $ 1,592 $ 222
============================
PARTNERS' SHARE OF NET INCOME
Limited partners $ 1,535 $ 166
General Partner 57 56
----------------------------
Total $ 1,592 $ 222
============================
Net income per weighted-average depositary unit $ 0.21 $ 0.02
============================
Cash distribution $ 1,136 $ 1,136
============================
Cash distribution per weighted-average depositary unit $ 0.15 $ 0.15
============================
</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, 1998 TO MARCH 31, 2000
(in thousands of dollars)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
---------------------------------------------------
<S> <C> <C> <C>
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 1,535 57 1,592
Cash distribution (1,079) (57) (1,136)
---------------------------------------------------
Partners' capital as of March 31, 2000 $ 8,112 $ -- $ 8,112
===================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
2000 1999
-----------------------------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 1,592 $ 222
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation 432 514
Net (gain) loss on disposition of equipment 22 (152)
Equity in net (gain) loss from an unconsolidated special-purpose entity (1,364) 133
Changes in operating assets and liabilities:
Accounts receivable, net (125) 252
Prepaid expenses and other assets 15 10
Accounts payable and accrued expenses (36) (48)
Due to affiliates -- (10)
Lessee deposits and reserve for repairs (24) 18
-----------------------------------
Net cash provided by operating activities 512 939
-----------------------------------
Investing activities
Proceeds from disposition of equipment 202 429
Liquidation distributions from an unconsolidated special-purpose entity 1,824 --
Additional investments in an unconsolidated special-purpose entity
to fund operations (99) (2)
-----------------------------------
Net cash provided by investing activities 1,927 427
-----------------------------------
Financing activities
Cash distribution paid to limited partners (1,079) (1,080)
Cash distribution paid to General Partner (57) (56)
----------------------------------
Net cash used in financing activities (1,136) (1,136)
-----------------------------------
Net increase in cash and cash equivalents 1,303 230
Cash and cash equivalents at beginning of period 894 1,986
-----------------------------------
Cash and cash equivalents at end of period $ 2,197 $ 2,216
===================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 2000 and December 31, 1999, the
statements of income for the three months ended March 31, 2000 and 1999,
the statements of cash flows for the three months ended March 31, 2000 and
1999, and the statements of changes in partners' capital for the period
from December 31, 1998 to March 31, 2000. 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, 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
three months ended March 31, 2000 and 1999, cash distributions totaled $1.1
million. Cash distributions to the limited partners of $0 and $0.9 million
for the three months ended March 31, 2000 and 1999, respectively, were
deemed to be a return of capital.
Cash distributions related to the results from the first quarter of 2000 of
$1.1 million, will be paid during May 2000. In addition, the Partnership
will make a special distribution of $0.8 million during the second quarter
of 2000.
5. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES
Partnership management fees of $0.1 million were payable as of March 31,
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 $1,000 and $0 for the three months ended March 31, 2000
and 1999, respectively.
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
6. EQUIPMENT
The components of owned equipment were as follows (in thousands of
dollars):
March 31, December 31,
2000 1999
---------------------------------
Railcars $ 16,120 $ 16,249
Trailers 10,432 10,606
Marine containers 4,668 5,632
--------------------------------
31,220 32,487
Less accumulated depreciation (25,204) (25,815)
--------------------------------
Net equipment $ 6,016 $ 6,672
================================
As of March 31, 2000, all equipment was either on lease or operating in
PLM-affiliated short-term trailer rental facilities, except for 156 marine
containers and 83 railcars with an aggregate net book value of $0.4
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.
For the three months ended March 31, 2000, the Partnership sold or disposed
marine containers, trailers and railcars, with an aggregate net book value
of $0.2 million, for proceeds of $0.2 million.
During the three months ended March 31, 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 $0.4 million.
7. INVESTMENT IN AN 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 $7,000 and $0.4 million as of March 31, 2000 and December 31,
1999, respectively.
During the first quarter of 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 $1.5 million.
(This space intentionally left blank.)
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
8. OPERATING SEGMENTS
The Partnership operates or operated in four different segments: aircraft
leasing, marine container leasing, trailer leasing and railcar 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):
<TABLE>
<CAPTION>
Marine
Aircraft Container Trailer Railcar All
For the quarter ended March 31, 2000 Leasing Leasing Leasing Leasing Other<F1>1 Total
------------------------------------ ------- ------- ------- ------- ---- -----
REVENUES
<S> <C> <C> <C> <C> <C> <C>
Lease revenue $ -- $ 73 $ 524 $ 908 $ -- $ 1,505
Interest income and other -- -- -- -- 11 11
Gain (loss) on disposition of -- (108) 19 67 -- (22)
equipment
--------------------------------------------------------------
Total revenues -- (35) 543 975 11 1,494
COSTS AND EXPENSES
Operations support -- 1 179 265 10 455
Depreciation -- 67 172 193 -- 432
Management fees -- 4 28 45 -- 77
General and administrative -- 1 89 37 185 312
expenses
(Recovery of) provision for bad -- -- (12) 2 -- (10)
debts
--------------------------------------------------------------
Total costs and expenses -- 73 456 542 195 1,266
--------------------------------------------------------------
Equity in net income of a USPE 1,364 -- -- -- -- 1,364
--------------------------------------------------------------
Net income (loss) $ 1,364 $ (108) $ 87 $ 433 $ (184) $ 1,592
==============================================================
Total assets as of March 31, 2000 $ 7 $ 658 $ 4,270 $ 2,089 $ 2,230 $ 9,254
==============================================================
Marine
Aircraft Container Trailer Railcar All
For the quarter ended March 31, 1999 Leasing Leasing Leasing Leasing Other<F1>1 Total
------------------------------------ ------- ------- ------- ------- ---- -----
Revenues
Lease revenue $ -- $ 41 $ 464 $ 952 $ -- $ 1,457
Interest income and other -- -- -- -- 24 24
Gain (loss) on disposition of -- (83) 43 192 -- 152
equipment
--------------------------------------------------------------
Total revenues -- (42) 507 1,144 24 1,633
Costs and expenses
Operations support -- 1 124 295 4 424
Depreciation -- 88 225 201 -- 514
Management fees -- 2 29 48 -- 79
General and administrative 1 3 73 46 141 264
expenses
Provision for (recovery of) bad -- -- 3 (6) -- (3)
debts
--------------------------------------------------------------
Total costs and expenses 1 94 454 584 145 1,278
--------------------------------------------------------------
Equity in net loss of a USPE (133) -- -- -- -- (133)
--------------------------------------------------------------
Net income (loss) $ (134) $ (136) $ 53 $ 560 $ (121) $ 222
==============================================================
Total assets as of March 31, 1999 $ 363 $ 993 $ 4,437 $ 2,768 $ 2,959 $ 11,520
==============================================================
<FN>
<F1>
- --------------------------
1 Includes interest income and costs not identifiable to a particular segment,
such as certain operations support and general and administrative expenses.
</FN>
</TABLE>
<PAGE>
PLM EQUIPMENT GROWTH FUND II
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
9. NET INCOME PER WEIGHTED-AVERAGE PARTNERSHIP UNIT
Net income per weighted-average Partnership unit was computed by dividing
net income attributable to limited partners by the weighted-average number
of Partnership units deemed outstanding during the period. The
weighted-average number of Partnership units deemed outstanding during the
three months ended March 31, 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.
No special distributions were paid in the first quarter of 2000 and 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.
(This space intentionally left blank.)
<PAGE>
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 March 31, 2000 and 1999
(A) Owned Equipment Operations
Lease revenues less direct expenses (defined as repairs and maintenance and
equipment operating expenses) on owned equipment increased during the first
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 unaudited 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 segment (in
thousands of dollars):
For the Three Months
Ended March 31,
2000 1999
----------------------------
Railcars $ 643 $ 657
Trailers 345 340
Marine containers 72 40
Railcars: Railcar lease revenues and direct expenses were $0.9 million and $0.3
million, respectively, for the first quarter of 2000, compared to $1.0 million
and $0.3 million, respectively, during the same quarter of 1999. Railcar
contribution decreased in the first quarter of 2000, compared to the same
quarter of 1999, due to the sale of railcars in 2000 and 1999.
Trailers: Trailer lease revenues and direct expenses were $0.5 million and $0.2
million, respectively, for the first quarter of 2000, compared to $0.5 million
and $0.1 million, respectively, during the same quarter of 1999. Lease revenue
increased $0.1 million in the first quarter of 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 2000 and 1999. Trailer repairs and maintenance increased $0.1 million
primarily due to required repairs during the first quarter of 2000 that were not
needed during the same period of 1999.
Marine containers: Marine container lease revenues were $0.1 million and $40,000
during the first quarter of 2000 and 1999, respectively. The increase in lease
revenues was due to higher utilization revenue in the first quarter of 2000
compared to the same period in 1999.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $0.8 million for the first quarter of 2000 decreased
from $0.9 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 (Loss) on Disposition of Owned Equipment
The net loss on disposition of equipment for the first quarter of 2000 totaled
$0.1 million, which resulted from the disposal of marine containers with a net
book value of $0.2 million, for proceeds of $0.1 million. The net loss on
disposition of this equipment was offset, in part, by a net gain on disposition
of equipment of $0.1 million, resulting from the sale or disposal of trailers
and railcars with an aggregate net book value of $20,000, for aggregate proceeds
of $0.1 million. Net gain on disposition of equipment for the same quarter in
1999 totaled $0.2 million, and resulted from the disposal or sale of trailers,
marine containers, and railcars, with an aggregate net book value of $0.3
million, for aggregate proceeds of $0.4 million.
<PAGE>
(D) Equity in Net Gain (Loss) of an Unconsolidated Special-Purpose Entity (USPE)
Equity in net gain (loss) of an unconsolidated special-purpose entity represents
the net gain (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 March 31, 1999, the Partnership owned a 50% interest in an entity which
owned a commercial aircraft that was off lease during the first quarter of 1999.
During the first quarter of 2000, the gain from the sale of the Partnership's
interest in the USPE of $1.5 million, which was sold in the first quarter of
2000, was offset by depreciation expense, direct expenses, and administrative
expenses of $0.1 million. During the same period of 1999, depreciation expense,
direct expenses, and administrative expenses was $0.1 million.
(E) Net Income
As a result of the foregoing, the Partnership's net income was $1.6 million for
the first quarter of 2000, compared to net income of $0.2 million during the
first 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 first quarter of 2000
is not necessarily indicative of future periods. In the first quarter of 2000,
the Partnership distributed $1.1 million to the limited partners, or $0.15 per
weighted-average depositary unit.
(II) FINANCIAL CONDITION -- CAPITAL RESOURCES AND LIQUIDITY
For the quarter ended March 31, 2000, the Partnership generated $0.4 million in
operating cash (net cash provided by operating activities less investments in a
USPE to fund its operations) to meet its operating obligations, but used
undistributed available cash from prior periods and proceeds from equipment
sales of approximately $0.7 to maintain the level of distributions (total of
$1.1 million in the first quarter of 2000) to the partners.
During the quarter ended March 31, 2000, the Partnership sold or disposed of
marine containers, trailers, and railcars for proceeds of $0.2 million. The
Partnership also received liquidating proceeds of $1.8 million from the sale of
its interest in an entity owning an aircraft.
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 potential 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 partners
after final disposal of assets and settlement of liabilities, the amounts cannot
be accurately determined prior to actual disposal of the equipment.
(III) EFFECTS OF YEAR 2000
To date, the Partnership has not experienced any material Year 2000 (Y2K) issues
with either its internally developed software or purchased software. In
addition, to date the Partnership has not been impacted by any Y2K problems that
may have impacted our customers and suppliers. The General Partner continues to
monitor its systems for any potential Y2K issues.
(IV) 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. Other factors affecting the Partnership's contribution in 2000 and
beyond includes:
1. The General Partner continues to seek a lessee for the Partnership's 75 mill
gondola railcars, which have remained off lease since the second quarter of
1999. Demand for these particular mill gondolas has been weak, as they are
older, low cubic capacity, and low-sided railcars.
2. The cost of new marine containers 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. However,
demand 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.
(V) 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 first quarter of 2000, 28% of the Partnership's total lease
revenues from wholly- and partially-owned equipment 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.
<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>
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: May 8, 2000 By: /s/ Richard K Brock
--------------------------
Richard K Brock
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,197
<SECURITIES> 0
<RECEIVABLES> 1,099
<ALLOWANCES> 97
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 31,220
<DEPRECIATION> (25,204)
<TOTAL-ASSETS> 9,254
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,112
<TOTAL-LIABILITY-AND-EQUITY> 1,142
<SALES> 0
<TOTAL-REVENUES> 1,494
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,276
<LOSS-PROVISION> (10)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,592
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,592
<EPS-BASIC> 0.15
<EPS-DILUTED> 0.15
</TABLE>
