FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter ended September 30, 1997
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Commission file number 0-16832
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IDM Participating Income Company-II
(A California Limited Partnership)
State of California 33-0177934
- ------------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
2424 S.E. Bristol Street, Suite 200
Newport Beach, California 92660
- ---------------------------------------- --------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone
number, including area code: (714) 225-7520
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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[ ].
Number of limited partnership interests outstanding as of September 30, 1997:
200,000
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are submitted in the next pages:
PAGE
NUMBER
------
Balance Sheets - September 30, 1997 and December 31, 1996 4
Statements of Operations - For the Nine Months Ended September 30,
1997 and 1996 and the Three Months Ended September 30, 1997 and 1996 5
Statements of Cash Flows - For the Nine Months Ended September
30, 1997 and 1996 6
Notes to Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview:
The following discussion should be read in conjunction with the Partnership's
Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q.
The bankruptcy proceeding and the Plan has had, and will continue to have, a
material and substantial impact on the Partnership's liquidity, capital
resources and results of operations, which are discussed below.
Results of Operations:
Comparison of 1997 to 1996.
Interest income decreased in 1997 primarily as a result of the sale of the
Meadow Wood Village, Ltd. note and junior deed of trust effective September 1,
1996. Interest continued to accrue at 12.12% through the sale date. For the nine
months and three months ended June 30, 1996, the Partnership recognized interest
income of $173,000 and $58,000, respectively, related to this loan.
Meadow Wood Village, Ltd. discontinued interest payments in 1996. For the nine
months and three months ended September 30, 1996, interest receivable of
$192,000 and $58,000 related to the Meadow Wood Village, Ltd. note was reserved
in its entirety. This loan was sold in 1996 and no such reserves were incurred
in 1997.
2
<PAGE>
During the third quarter of 1997 the Partnership received additional earnings
reflected in the Statement of Operations in the amount of $100,000. This amount
represents a payment towards a promissory note which had previously been
reserved in its entirety.
General and administrative expenses decreased $15,000 for the nine months ended
September 30, 1997 when compared to the same period in 1996. This decrease was
principally the result of professional fees incurred for a fair value opinion on
the Villa Redondo loan receivable in 1996. No such costs were incurred in 1997.
This decrease was partially offset by an increase in accounting and legal fees
in 1997.
For the three month period ended September 30, 1997, when compared to the same
period in 1996, general and administrative expenses decreased by $15,000. This
is the result of a decrease in accounting and legal fees incurred during the
quarter.
Liquidity and Capital Resources:
During the nine months ended September 30, 1997, the Partnership's cash position
decreased primarily as a result of loans to affiliates. This decrease was
partially offset by the recovery of reserved receivables and the collection of
interest income. The Partnership is in a liquid position at September 30, 1997
with cash balances of $290,000 and current liabilities of $2,000. The
Partnership has no commitments for any future capital expenditures.
Inflation:
The Partnership does not expect inflation to be a material factor in its
operations in 1997.
3
<PAGE>
IDM PARTICIPATING INCOME COMPANY - II
(A California Limited Partnership)
BALANCE SHEETS
September 30, 1997 and December 31, 1996
September 30, December 31,
1997 1996
---------- ----------
ASSETS
Cash .............................................. $ 290,000 $ 576,000
Loans to affiliates:
Interest receivable ............................ 10,000 57,000
Principal, less reserve for possible losses
of $2,024,000 at September 30, 1997 and
$8,924,000 at December 31, 1996 ................ 769,000 415,000
Receivable from affiliate ......................... 265,000 150,000
---------- ----------
Total Assets ...................................... $1,334,000 $1,198,000
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable .................................. $ 2,000 $ 1,000
Partners' capital:
General Partner ................................... 436,000 436,000
Limited Partners:
200,000 units authorized,
200,000 issued and outstanding ................. 896,000 761,000
---------- ----------
Total Partners' capital ........................... 1,332,000 1,197,000
---------- ----------
Total Liabilities and Partners' capital ........... $1,334,000 $1,198,000
========== ==========
See accompanying notes
4
<PAGE>
IDM PARTICIPATING INCOME COMPANY - II
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1997 and 1996
and for the Three Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
---------------------- -----------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Interest income ................... $ 84,000 $ 247,000 $ 28,000 $ 74,000
Recovery of reserved receivables .. 100,000 0 100,000 0
General and administrative expenses (49,000) (64,000) (2,000) (17,000)
Provision for possible losses ..... 0 (192,000) 0 (58,000)
--------- --------- --------- ---------
Net income (loss) ................. $ 135,000 $ (9,000) $ 126,000 $ (1,000)
--------- --------- --------- ---------
Net income (loss) allocable to
limited partners ................ $ 135,000 $ (9,000) $ 126,000 $ (1,000)
========= ========= ========= =========
Number of limited partnership
interests outstanding ........... 200,000 200,000 200,000 200,000
========= ========= ========= =========
Net income (loss) per limited
partnership interest ............ $ 0.68 $ (0.05) $ 0.63 $ (0.01)
========= ========= ========= =========
</TABLE>
See accompanying notes
5
<PAGE>
IDM PARTICIPATING INCOME COMPANY - II
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................. $ 135,000 $ (9,000)
Adjustments to reconcile net income (loss)
to cash provided by (used in) operating activities:
Decrease (increase) in interest receivable .... 47,000 (198,000)
Recovery of reserved receivables .............. (100,000) 0
Provision for possible losses ................. 0 192,000
Increase in accounts payable .................. 1,000 2,000
--------- ---------
Net cash used in operating activities ......... 83,000 (13,000)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to affiliates ............................... (373,000) 0
Collections of loans from affiliates .............. 4,000 474,000
--------- ---------
Net cash (used in) provided by
investing activities ........................ (369,000) 474,000
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners ......................... 0 0
--------- ---------
Net cash used in financing activities ......... 0 0
--------- ---------
NET (DECREASE) INCREASE IN CASH ..................... (286,000) 461,000
Cash beginning of period .......................... 576,000 14,000
--------- ---------
Cash end of period ................................ $ 290,000 $ 475,000
========= =========
</TABLE>
See accompanying notes
6
<PAGE>
IDM PARTICIPATING INCOME COMPANY-II
A California Limited Partnership
Notes to Financial Statements
1. BASIS OF FINANCIAL STATEMENTS
In the opinion of the Partnership's management, these unaudited financial
statements reflect all adjustments which are necessary for a fair presentation
of its financial position at September 30, 1997 and results of operations and
cash flows for the periods presented. All adjustments included in these
statements are of a normal and recurring nature. These financial statements
should be read in conjunction with the financial statements and notes thereto
contained in the Form 10-K of the Partnership for the year ended December 31,
1996.
7
<PAGE>
PART IV - OTHER INFORMATION
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS:
The following Exhibits are filed herewith pursuant to Rule 601 of Regulation
S-K.
(27) Financial Data Schedule
B. REPORTS ON FORM 8-K
None.
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.
IDM PARTICIPATING INCOME COMPANY-II,
a California Limited Partnership
IDM PARTICIPATING INCOME CORPORATION
General Partner of the General Partner
Date: October 27, 1997 STEVEN M. SPEIER
Steven M. Speier
President and Director
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM IDM PARTICIPATING INCOME COMPANY - II SEPTEMBER 30, 1997 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 290,000
<SECURITIES> 0
<RECEIVABLES> 275,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 565,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,334,000
<CURRENT-LIABILITIES> 2,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,332,000
<TOTAL-LIABILITY-AND-EQUITY> 1,334,000
<SALES> 0
<TOTAL-REVENUES> 184,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 49,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 135,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 135,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 135,000
<EPS-PRIMARY> .68
<EPS-DILUTED> .68
</TABLE>
