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, 1999
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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)
7700 Irvine Center Drive
Suite 400
Irvine, California 92618
- -------------------------------------- -----------------------------------
(Address of principal executive
offices) (Zip Code)
Registrant's telephone
number,
including area code: (713) 706-6271
-----------------------------------------------
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,
1999: 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, 1999 and December 31, 1998 4
Statements of Operations - For the Nine Months Ended September 30, 1999
and 1998 and the Three Months Ended September 30, 1999 and 1998 5
Statements of Cash Flows - For the Nine Months Ended September
30, 1999 and 1998 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 1999 to 1998.
Interest income for the nine months and three months ended September 30, 1999
increased by $47,000 and $16,000, respectively, when compared to the
corresponding periods in 1998. These increases were primarily due to interest
income associated with the funding of an additional $585,000 in 1998 to an
affiliate on an existing secured loan.
General and administrative expenses for the nine months ended September 30, 1999
increased by $3,000, or 6%, when compared to the same period in the prior year,
primarily due to an increase in insurance costs. This increase was partially
offset by a decrease in data processing fees. For the three months ended
September 30, 1999, general and administrative expenses decreased by $2,000, or
20%, principally due to lower data processing and professional fees incurred
during the quarter.
2
<PAGE>
Liquidity and Capital Resources:
The Partnership is in a liquid position at September 30, 1999 with a cash
balance of $24,000 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 1999.
Year 2000 Compliance:
The Year 2000 Compliance issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Partnership's computer programs that have time-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities. As a result,
many companies' software and computer systems may need to be upgraded or
replaced in order to comply with Year 2000 requirements.
The total cost to the Partnership of activities associated with Year 2000
Compliance is not anticipated to be material to its financial position or
results of operations in any given year. In January 1999, the Partnership began
utilizing a new software program to maintain books and records. The new software
program is Year 2000 compliant.
The total amount of potential risk that would be reasonably likely to result
from Year 2000 failures cannot presently be estimated. In the event the
Partnership does not properly identify Year 2000 issues in a timely manner,
there can be no assurance that Year 2000 issues will not materially affect the
Partnership's results.
The Partnership's contingency plan should systems fail due to the Year 2000 date
change is to temporarily convert to a manual system. The Partnership believes it
could temporarily operate on a manual system without adversely impacting
operations.
The preceding Year 2000 discussion contains various forward-looking statements
which represent the Partnership's beliefs or expectations regarding future
events. All forward-looking statements involve a number of risks and
uncertainties that could cause the actual results to differ materially from
projected results.
3
<PAGE>
IDM PARTICIPATING INCOME COMPANY - II
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 DECEMBER 31, 1998
-------------------- --------------------
<S> <C> <C>
ASSETS
Cash ............................................... $ 24,000 $ 8,000
Loans to affiliates:
Interest receivable ............................ 131,000 1,000
Principal, less reserve for possible losses
of $859,000 at September 30, 1999 and
December 31, 1998 .............................. 1,490,000 1,542,000
Prepaid expenses ................................... 0 7,000
-------------------- --------------------
Total Assets ....................................... $ 1,645,000 $ 1,558,000
==================== ====================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable ................................... $ 2,000 $ 0
General Partner .................................... 439,000 439,000
Limited Partners:
200,000 units authorized,
200,000 issued and outstanding ................. 1,204,000 1,119,000
-------------------- --------------------
Total Partners' capital ............................ 1,643,000 1,558,000
-------------------- --------------------
Total Liabilities and Partners' capital ............ $ 1,645,000 $ 1,558,000
==================== ====================
Limited partners' equity per unit .................. $ 6.02 $ 5.60
==================== ====================
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE>
IDM PARTICIPATING INCOME COMPANY - II
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
AND FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Interest income ................... $ 138,000 $ 91,000 $ 46,000 $ 30,000
General and administrative expenses (53,000) (50,000) (8,000) (10,000)
--------- --------- --------- ---------
Net income ........................ $ 85,000 $ 41,000 $ 38,000 $ 20,000
--------- --------- --------- ---------
Net income allocable to
limited partners ............... $ 85,000 $ 41,000 $ 38,000 $ 20,000
========= ========= ========= =========
Number of limited partnership
interests outstanding .......... 200,000 200,000 200,000 200,000
========= ========= ========= =========
Net income per limited
partnership interest ........... $ 0.43 $ 0.21 $ 0.19 $ 0.10
========= ========= ========= =========
</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, 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------------
1999 1998
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ....................................... $ 85,000 $ 41,000
Adjustments to reconcile net income to cash
used in operating activities:
Increase in interest receivable ............... (130,000) (78,000)
Increase in receivables from affiliates ....... 0 (434,000)
Decrease (increase) in prepaid expenses ....... 7,000 (8,000)
Increase (decrease) in accounts payable ....... 2,000 (6,000)
----------------- -----------------
Net cash used in operating activities ......... (36,000) (485,000)
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Collections of loans from affiliates ............. 52,000 396,000
----------------- -----------------
Net cash provided by investing activities ..... 52,000 396,000
----------------- -----------------
NET INCREASE (DECREASE) IN CASH .................... 16,000 (89,000)
Cash beginning of period ........................ 8,000 94,000
----------------- -----------------
Cash end of period .............................. $ 24,000 $ 5,000
================= =================
</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, 1999 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,
1998.
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, 1999 /s/ WILLIAM J. CARDEN
----------------- ------------------------------------
William J. Carden
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, 1999 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-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 24,000
<SECURITIES> 0
<RECEIVABLES> 131,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 155,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,645,000
<CURRENT-LIABILITIES> 2,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,643,000
<TOTAL-LIABILITY-AND-EQUITY> 1,645,000
<SALES> 0
<TOTAL-REVENUES> 138,000
<CGS> 0
<TOTAL-COSTS> 53,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 85,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 85,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85,000
<EPS-BASIC> .43
<EPS-DILUTED> .43
</TABLE>
