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, 1998
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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
-----------------------------------------------
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, 1998:
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, 1998 and December 31, 1997 4
Statements of Operations - For the Nine Months Ended September
30, 1998 and 1997 and the Three Months Ended September 30,
1998 and 1997 5
Statements of Cash Flows - For the Nine Months Ended September
30, 1998 and 1997 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 1998 to 1997.
Interest income increased by $7,000 for the nine months ended September 30,
1998, when compared to the corresponding period in 1997, primarily due to
interest income associated with the funding of new participating loans in the
prior year. The total amount funded by the Partnership in 1997 was $1,054,000.
The increase in interest income was partially offset due to the acceptance of a
$350,000 payoff on the Harbor Plaza Ltd. loan in January 1998. For the nine
months and three months ended September 30, 1998, the Partnership recognized
interest income of $91,000 and $30,000, respectively, related to the new
participating loans.
2
<PAGE>
General and administrative expenses increased by $1,000 for the nine months
ended September 30, 1998 when compared to the same period in 1997. An increase
in data processing costs was partially offset by a decrease in accounting fees
incurred during the period. For the three months ended September 30, 1998,
general and administrative expenses increased by $8,000, primarily due to an
increase in data processing costs and legal fees.
Liquidity and Capital Resources:
During the nine months ended September 30, 1998, the Partnership's cash position
decreased primarily as a result of loans to affiliates. This decrease was
partially offset due to the acceptance of a $350,000 payoff on the Harbor Plaza
Ltd. loan in January 1998. The Partnership is in a liquid position at September
30, 1998 with a cash balance of $5,000 and no current liabilities. 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 1998.
3
<PAGE>
IDM PARTICIPATING INCOME COMPANY - II
(A California Limited Partnership)
BALANCE SHEETS
September 30, 1998 and December 31, 1997
- --------------------------------------------------------------------------------
September 30, December 31,
1998 1997
----------- -----------
ASSETS
Cash ............................................... $ 5,000 $ 94,000
Loans to affiliates:
Interest receivable ............................. 91,000 13,000
Principal, less reserve for possible losses
of $859,000 at September 30, 1998 and
December 31, 1997 ............................... 974,000 1,370,000
Receivables from affiliates ........................ 435,000 1,000
Prepaid expenses ................................... 8,000 0
---------- ----------
Total Assets ....................................... $1,513,000 $1,478,000
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable ................................... $ 0 $ 6,000
Partners' capital:
General Partner .................................... 438,000 438,000
Limited Partners:
200,000 units authorized,
200,000 issued and outstanding .................. 1,075,000 1,034,000
---------- ----------
Total Partners' capital ............................ 1,513,000 1,472,000
---------- ----------
Total Liabilities and Partners' capital ............ $1,513,000 $1,478,000
========== ==========
Limited partners' equity per unit .................. $ 5.38 $ 5.17
========== ==========
See accompanying notes
4
<PAGE>
IDM PARTICIPATING INCOME COMPANY - II
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1998 and 1997
and for the Three Months Ended September 30, 1997 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
---------------------- ----------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Interest income ................... $ 91,000 $ 84,000 $ 30,000 $ 28,000
Recovery of reserved receivables .. 0 100,000 0 100,000
General and administrative expenses (50,000) (49,000) (10,000) (2,000)
--------- --------- --------- ---------
Net income ........................ $ 41,000 $ 135,000 $ 20,000 $ 126,000
--------- --------- --------- ---------
Net income allocable to
limited partners ............... $ 41,000 $ 135,000 $ 20,000 $ 126,000
========= ========= ========= =========
Number of limited partnership
interests outstanding .......... 200,000 200,000 200,000 200,000
========= ========= ========= =========
Net income per limited
partnership interest ........... $ 0.21 $ 0.68 $ 0.10 $ 0.63
========= ========= ========= =========
</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, 1998 and 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended September 30,
------------------------------
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................... $ 41,000 $ 135,000
Adjustments to reconcile net income to cash
(used in) provided by operating activities:
(Increase) decrease in interest receivable ........ (78,000) 47,000
Recovery of reserved receivables .................. 0 (100,000)
Increase in receivables from affiliates ........... (434,000) 0
Increase in prepaid expenses ...................... (8,000) 0
(Decrease) increase in accounts payable ........... (6,000) 1,000
--------- ---------
Net cash (used in) provided by
operating activities .............................. (485,000) 83,000
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to affiliates .................................. 0 (373,000)
Collections of loans from affiliates ................. 396,000 4,000
--------- ---------
Net cash provided by (used in) investing activities 396,000 (369,000)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash used in financing activities ............. 0 0
--------- ---------
NET DECREASE IN CASH ................................... (89,000) (286,000)
Cash beginning of period ............................ 94,000 576,000
--------- ---------
Cash end of period .................................. $ 5,000 $ 290,000
========= =========
</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, 1998 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,
1997.
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: November 1, 1998 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, 1998 FINANCIAL
STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 5,000
<SECURITIES> 0
<RECEIVABLES> 526,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 539,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,513,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,513,000
<TOTAL-LIABILITY-AND-EQUITY> 1,513,000
<SALES> 0
<TOTAL-REVENUES> 91,000
<CGS> 0
<TOTAL-COSTS> 50,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 41,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 41,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,000
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
