<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter ended Commission File Number
March 31, 1996 33-19038
PERSHING LEASE INCOME LIMITED PARTNERSHIP II
(Exact name of registrant as specified in its charter)
MISSOURI
(State or other jurisdiction of incorporation or organization)
43-1507816
(I.R.S. Employer Identification No.)
6300 LAMAR, P.O. BOX 29217, SHAWNEE MISSION, KANSAS 66201-9217
(913) 236-2000
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
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 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>
<PAGE>
PERSHING LEASE INCOME LIMITED PARTNERSHIP II
(A Missouri Limited Partnership)
Table of Contents
Part I - Financial Information
Financial Statements: Page
Balance Sheets - March 31, 1996 and
December 31, 1995 3
Statements of Income for the Quarters Ended
March 31, 1996 and 1995 4
Statements of Cash Flow for the Quarters Ended
March 31, 1996 and 1995 5
Notes to Financial Statements 6-8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 12
Item 2. Changes in Securities. 12
Item 3. Default Upon Senior Securities. 12
Item 4. Submission of Matters to a Vote of Security
Holders. 12
Item 5. Other Information. 12
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits 12
(b) Reports on Form 8-K 12
<PAGE>
<PAGE>
PERSHING LEASE INCOME LIMITED PARTNERSHIP II
(A Missouri Limited Partnership)
Balance Sheets
March 31, December 31,
1996 1995
Assets (Unaudited)
Investment Property:
Cost $ 6,208,491 $ 7,362,387
Less accumulated depreciation 3,388,787 4,376,718
Less allowance for loss on
investment property 650,000 650,000
Investment property, net 2,169,704 2,335,669
Cash and cash equivalents 529,767 386,282
Rents and other receivables 87,025 138,605
Total assets $ 2,786,496 $ 2,860,556
========== ==========
Liabilities and Partners' Equity
Liabilities:
Due to affiliates $ 3,677 $ 6,527
Accounts payable 69,707 64,972
Unearned rental income 6,113 -
Deferred gain on sale of asset 199,989 218,413
Total liabilities 279,486 289,912
Partners' Equity (Deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 32,741 41,566
Cumulative cash distributions (373,323) (367,962)
(339,582) (325,396)
Limited Partners (24,137 units):
Capital contributions, net of
offering costs 10,707,885 10,707,885
Cumulative net income 806,400 735,163
Cumulative cash distributions (8,667,693) (8,547,008)
2,846,592 2,896,040
Total partners' equity accounts 2,507,010 2,570,644
Total liabilities and partners'
equity $ 2,786,496 $ 2,860,556
========== ==========
See accompanying notes to financial statements.
<PAGE>
<PAGE>
PERSHING LEASE INCOME LIMITED PARTNERSHIP II
(A Missouri Limited Partnership)
Statements of Income
(Unaudited)
For the Quarters Ended March 31, 1996 and 1995
1996 1995
Revenue:
Rental income $ 50,130 $ 204,650
Interest income 4,235 27,614
Gain on sale of
investment property 298,650 697,696
Provision for loss on
investment property - (650,000)
Total revenue 353,015 279,960
Expenses:
Depreciation 131,931 188,171
General and administrative 158,672 48,043
Total expenses 290,603 236,214
Net income $ 62,412 $ 43,746
========= =========
See accompanying notes to financial statements.
<PAGE>
<PAGE>
PERSHING LEASE INCOME LIMITED PARTNERSHIP II
(A Missouri Limited Partnership)
Statements of Cash Flows
(Unaudited)
For the Quarters ended March 31, 1996 and 1995
1996 1995
Cash flows from operating activities:
Net income $ 62,412 $ 43,746
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 131,931 188,171
Gain on sale of investment
property (298,650) (697,696)
Provision for loss on
investment property - 650,000
Changes in assets and liabilities:
Receivables 51,579 (3,728)
Due to affiliates (2,850) (7,186)
Accounts payable 4,735 (50,130)
Unearned rental revenue 6,113 (70,425)
Net cash provided by operating
activities (44,730) 52,752
Cash flows from investing activities:
Disposition of investment property 314,260 1,416,629
Cash flows from financing activities:
Cash distribution to Partners (126,045) (563,475)
Net increase in cash and
cash equivalents 143,485 905,906
Cash and cash equivalents at
beginning of period 386,282 952,851
Cash and cash equivalents at end of
period $ 529,767 $1,858,757
========= =========
See accompanying notes to financial statements.
<PAGE>
<PAGE>
PERSHING LEASE INCOME LIMITED PARTNERSHIP II
(A Missouri Limited Partnership)
Notes to Financial Statements
(Unaudited)
In the opinion of the General Partner, the accompanying unaudited
financial statements contain all adjustments necessary to present
fairly the financial position, results of operations and cash flows.
(1) Summary of Significant Accounting Policies
Organization
Pershing Lease Income Limited Partnership II (the "Partnership")
was organized under the Missouri Revised Uniform Limited Partnership
Act on February 24, 1989. The Partnership was formed to invest
primarily in equipment to be leased to third parties. The initial
capital of $1,500 represented capital contributions of $1,000 by
Waddell & Reed Leasing, Inc. (the General Partner) and $500 from the
initial Limited Partner. The Amended Agreement of Limited Partnership
authorized the issuance of up to 60,000 Limited Partnership units at a
price of $500 per unit and up to 20,000 additional units. The
Partnership had an initial closing and twelve subsequent closings. The
closings occurred on November 1, 1989, December 11, 1989, January 9,
1990, February 9, 1990, March 9, 1990, April 10, 1990, May 9, 1990,
June 11, 1990, July 11, 1990, August 9, 1990, September 12, 1990,
October 10, 1990 and November 1, 1990 with subscribers purchasing
6,887, 1,987, 2,264, 1,293, 904, 1,241, 1,071, 1,461, 1,114, 1,314,
2,050, 672 and 1,879 units, respectively.
Pursuant to the terms of the Amended Agreement of Limited
Partnership, distributable cash from operations and profits for federal
income tax purposes from normal operations, as defined, are to be
allocated 95% to the Limited Partners and 5% to the General Partner
until payout has occurred, and 85% to the Limited Partners and 15% to
the General Partner thereafter. Any distributable cash from sales shall
be distributed 99% to the Limited Partners and 1% to the General
Partner until payout has occurred, and 85% to the Limited Partners and
15% to the General Partner thereafter. "Payout" means the time when the
aggregate amount of all distributions to the Limited Partners of
distributable cash from operations and of distributable cash from sales
or refinancing equals the aggregate amount of the Limited Partners'
original invested capital plus a cumulative 8% annual return on their
aggregate unreturned invested capital (calculated from the beginning of
the first full fiscal quarter following each Limited Partner's
admission to the Partnership). Losses for federal income tax purposes
from the normal operations of the Partnership will be allocated 99% to
the Limited Partners and 1% to the General Partner.
<PAGE>
<PAGE>
Pershing Lease Income Limited Partnership II
(A Missouri Limited Partnership)
Notes to Financial Statements, Continued
(Unaudited)
The General Partner contributed $1,000 for its General Partnership
interest. The General Partner is not required to make any other
capital contributions except under certain limited circumstances upon
termination of the Partnership.
Basis of Presentation
The Partnership financial statements are presented on the accrual
basis of accounting.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and short-term
investments with original maturities of less than ninety days.
Investment Property
Investment property consists primarily of aircraft, mining
equipment, and forklifts. At March 31, 1996 and December 31, 1995, the
Partnership owned investment property, with a depreciable cost basis of
$6,208,491 and $7,362,387, respectively. The depreciable cost basis at
March 31, 1996 and December 31, 1995, includes acquisition fees of
$281,531 and $333,855 respectively, which were paid to the General
Partner. Depreciation on investment property is provided using
straight-line and accelerated methods over lives ranging from 5 to 12
years.
On March 29, 1996 the Partnership received an offer from North
American Airlines Limited, to purchase, subject to certain
conditions, a Fairchild Metro III aircraft, Serial Number AC429,
Registration C-FJLF. On April 3, 1996 the Partnership sold the Metro
III aircraft, with an original cost basis of $1,666,857, to North
American Airlines Limited for $500,000. The net book value of the
aircraft was $763,539 which resulted in a book loss of $263,539.
<PAGE>
<PAGE>
Pershing Lease Income Limited Partnership II
(A Missouri Limited Partnership)
Notes to Financial Statements, Continued
(Unaudited)
Income Taxes
The Partnership is a pass-through entity and, accordingly, taxes on
income, if any, are the responsibility of the individual partners.
Partners' equity at March 31, 1996 as reported herein has been reduced
by sales commissions and other costs of the offering which will not be
deductible by the partners until the Partnership is liquidated or the
partners' units are otherwise disposed of.
(2) Leases
The Partnership leases the investment property to unrelated third
parties under operating leases. Rental income is reported when earned.
Minimum lease payments scheduled to be received in the future under
existing noncancellable operating leases follow:
Year Amount
1996 $ 11,012
1997 0
$ 11,012
=======
(3) Related Party Transactions
Fees, commissions and other expenses paid or payable by the
Partnership to the General Partner or affiliates of the General Partner
for the quarter ended March 31, 1996 are as follows:
Management fees $ 2,538
Reimbursable operating expenses 5,728
$ 8,266
=======
At March 31, 1996, the following costs were due to the General
Partner or affiliates:
Management fees $ 1,717
Reimbursable operating expenses 1,960
$ 3,677
=======
<PAGE>
<PAGE>
Pershing Lease Income Limited Partnership II
(A Missouri Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership believes it has sufficient liquidity to pay
operating expenses and fund cash distributions. The Partnership also
believes that rental income and proceeds from sales will provide
sufficient resources to meet obligations.
Partnership Operations
Rental income for the quarter was $50,130; down $154,520 from
the first quarter of 1995 due to the sale of investment property and
lease expirations. A Fokker F-27 aircraft has been off lease since
October, 1994. To reduce the net book value of the aircraft to its
estimated market value, the Partnership recorded an allowance of
$650,000 in January 1995.
Depreciation expense for the quarter was $131,931, down $56,240
from the first quarter of 1995 due to the sale of $1.3 million in
equipment since first quarter 1995. General and administrative
expense was $158,672 for the quarter; up $110,629 from last year due
to an increase in aircraft maintenance expense.
Cash from Operations and Distributable Cash from Operations
Shown below is the calculation of Cash from Operations and
Distributable Cash from Operations for the quarter ended March 31,
1996 as defined by Section 17 of the Amended Agreement of Limited
Partnership:
Rental income $ 50,130
Cash from sales 364,327
Interest income 4,235
Total cash inflow 418,692
Operating expenses (156,134)
Cash from operations 262,558
Reserve for distributions and operations 69,747
Partnership management fee (2,538)
Distributable cash from operations $ 329,767
=========
<PAGE>
<PAGE>
Pershing Lease Income Limited Partnership II
(A Missouri Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
Cash from Operations and Distributable Cash from Operations (cont.)
Allocation of Distributable Cash from Operations and Sales:
Operations Sales Total
Limited Partners $ 14,732 $ 311,117 $ 325,849
General Partner 775 3,143 3,918
$ 15,507 $ 314,260 $ 329,767
======== ========= =========
On February 28, 1996, the cash distributions for the fourth
quarter of 1995 in the amount of $120,685 were made to the Limited
Partners of record on December 31, 1995.
<PAGE>
<PAGE>
Pershing Lease Income Limited Partnership II
(A Missouri Limited Partnership)
Equipment Summary
(Unaudited)
Lessee
Container Corporation of America
Eveleth Expansion Co.
Jefferson Smurfit Corporation
Acquisition
Equipment Description Cost
Aircraft $ 5,888,575
Heavy Duty Equipment 140,365
Forklifts 179,551
$ 6,208,491
==========
<PAGE>
<PAGE>
Pershing Lease Income Limited Partnership II
(A Missouri Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Default Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) Form 8-K - There have been no reports on Form
8-K.
<PAGE>
<PAGE>
Pershing Lease Income Limited Partnership II
(A Missouri Limited Partnership)
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.
PERSHING LEASE INCOME LIMITED PARTNERSHIP II
(Registrant)
By: /s/ Michael D. Strohm
Michael D. Strohm, as Executive Vice
President, and Assistant Treasurer
of the General Partner
Date: May 21, 1996
By: /s/ Robert L. Hechler
Robert L. Hechler, as Vice President
Treasurer and Director of the General
Partner
(Principal Accounting and Financial
Officer)
Date: May 21, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000847582
<NAME> P210Q396.TXT
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> MAR-31-1996 DEC-31-1995
<CASH> 529767 386282
<SECURITIES> 0 0
<RECEIVABLES> 87025 138605
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 5558491 6712387
<DEPRECIATION> 3388787 4376718
<TOTAL-ASSETS> 2786496 2860556
<CURRENT-LIABILITIES> 279486 289912
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 2507010 2570644
<TOTAL-LIABILITY-AND-EQUITY> 2786496 2860556
<SALES> 0 0
<TOTAL-REVENUES> 353015 279960
<CGS> 0 0
<TOTAL-COSTS> 290603 236214
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 62412 43746
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 62412 43746
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
