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, 2002
[ ] 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.)
120 Montgomery Street,
Suite 1350, San Francisco, CA 94104
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code: (415) 445-3201
-----------------------
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 ______
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
CONDENSED BALANCE SHEETS
(in thousands of dollars, except unit amounts)
(unaudited)
March 31, December 31,
2002 2001
-----------------------------
ASSETS
Equipment held for operating lease, at cost $ 17,525 $ 21,119
Less accumulated depreciation (14,886) (18,146)
-----------------------------
Net equipment 2,639 2,973
Cash and cash equivalents 2,391 1,958
Accounts receivable, less allowance for doubtful
accounts of $68 in 2002 and $89 in 2001 1,614 584
Prepaid expenses and other assets 61 18
-----------------------------
Total assets $ 6,705 $ 5,533
=============================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 238 $ 260
Due to affiliates 36 42
-----------------------------
Total liabilities 274 302
-----------------------------
Partners' capital:
Limited partners (7,381,165 depositary units as of
March 31, 2002 and December 31, 2001) 6,431 5,231
General Partner -- --
-----------------------------
Total partners' capital 6,431 5,231
-----------------------------
Total liabilities and partners' capital $ 6,705 $ 5,533
=============================
See accompanying notes to unaudited condensed financial statements.
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
CONDENSED STATEMENTS OF OPERATIONS
(in thousands of dollars, except weighted-average unit amounts)
(unaudited)
For the Three Months
Ended March 31,
2002 2001
----------------------------
REVENUES
Lease revenue $ 641 $ 730
Interest and other income 7 30
Net gain on disposition of equipment 1,227 161
----------------------------
Total revenues 1,875 921
----------------------------
EXPENSES
Depreciation 241 300
Repairs and maintenance 242 464
Equipment operating expenses 49 91
Management fees to affiliate 33 30
General and administrative expenses to affiliates 23 104
Other general and administrative expenses 108 230
(Recovery of) provision for bad debts (21 ) 40
----------------------------
Total expenses 675 1,259
----------------------------
Net income (loss) $ 1,200 $ (338)
============================
PARTNERS' SHARE OF NET INCOME (LOSS)
Limited partners $ 1,200 $ (395)
General Partner -- 57
----------------------------
Total $ 1,200 $ (338)
============================
Net income (loss) per weighted-average depositary unit $ 0.16 $ (0.05)
============================
Cash distribution $ -- $ 1,130
============================
Cash distribution per weighted-average depositary unit $ -- $ 0.15
============================
See accompanying notes to unaudited condensed financial statements.
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
CONDENSED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the period from December 31, 2000 to March 31, 2002
(in thousands of dollars)
(unaudited)
Limited General
Partners Partner Total
---------------------------------------------------
Partners' capital as of December 31, 2000 $ 6,552 $ -- $ 6,552
Net (loss) income (26) 68 42
Cash distribution (1,295) (68) (1,363)
---------------------------------------------------
Partners' capital as of December 31, 2001 5,231 -- 5,231
Net income 1,200 -- 1,200
---------------------------------------------------
Partners' capital as of March 31, 2002 $ 6,431 $ -- $ 6,431
===================================================
See accompanying notes to unaudited condensed financial statements.
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(unaudited)
For the Three Months
Ended March 31,
2002 2001
----------------------------------
OPERATING ACTIVITIES
Net income (loss) $ 1,200 $ (338)
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation 241 300
Net gain on disposition of equipment (1,227) (161)
Changes in operating assets and liabilities:
Accounts receivable, net 81 122
Prepaid expenses and other assets (43) (22)
Accounts payable and accrued expenses (22) (179)
Due to affiliates (6) 8
Lessee deposits and reserve for repairs -- (102)
----------------------------------
Net cash provided by (used in) operating activities 224 (372)
----------------------------------
INVESTING ACTIVITIES
Proceeds from disposition of equipment 209 162
----------------------------------
Net cash provided by investing activities 209 162
----------------------------------
FINANCING ACTIVITIES
Cash distribution paid to limited partners -- (1,073)
Cash distribution paid to General Partner -- (57)
----------------------------------
Net cash used in financing activities -- (1,130)
----------------------------------
Net increase (decrease) in cash and cash equivalents 433 (1,340)
Cash and cash equivalents at beginning of period 1,958 2,538
----------------------------------
Cash and cash equivalents at end of period $ 2,391 $ 1,198
==================================
See accompanying notes to unaudited condensed financial statements.
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. OPINION OF MANAGEMENT
In the opinion of the management of PLM Financial Services, Inc. (FSI or
the General Partner), the accompanying unaudited condensed financial
statements contain all adjustments necessary, consisting primarily of
normal recurring accruals, to present fairly the unaudited condensed
financial position of PLM Equipment Growth Fund II (the Partnership) as of
March 31, 2002 and December 31, 2001, the unaudited condensed statements of
operations for the three months ended March 31, 2002 and 2001, the
unaudited condensed statements of changes in partners' capital for the
period from December 31, 2000 to March 31, 2002, and the unaudited
condensed statements of cash flows for the three months ended March 31,
2002 and 2001. Certain information and note disclosures normally included
in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted from the accompanying condensed 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, 2001, 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. CASH DISTRIBUTION
Cash distributions are recorded when paid and may include amounts in excess
of net income that are considered a return of capital. For the three months
ended March 31, 2002 and 2001, cash distributions totaled $0 and $1.1
million, respectively. Cash distributions to the limited partners of $1.1
million for the three months ended March 31, 2001, were deemed to be a
return of capital. In the first quarter of 2002, the Partnership did not
make any cash distributions.
4. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES
The balance due to affiliates as of March 31, 2002 and December 31, 2001 of
$36,000 and $42,000, respectively, is a payable due to FSI and its
affiliate for management fees.
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
5. EQUIPMENT
Owned equipment held for operating leases is stated at cost. The components
of owned equipment were as follows (in thousands of dollars):
March 31, December 31,
2002 2001
--------------------------------------
Trailers $ 9,388 $ 9,404
Railcars 7,181 10,705
Marine containers 956 1,010
-------------------------------------
17,525 21,119
Less accumulated depreciation (14,886) (18,146)
-------------------------------------
Net equipment $ 2,639 $ 2,973
=====================================
As of March 31, 2002, all equipment was on lease, except for 2 marine
containers and 38 railcars with an aggregate net book value of $0.2
million. As of December 31, 2001, all equipment was on lease, except for
223 railcars and 7 marine containers with an aggregate net book value of
$0.2 million.
For the three months ended March 31, 2002, the Partnership disposed of
marine containers, railcars and trailers with an aggregate net book value
of $0.1 million for proceeds of $1.3 million of which $1.1 was due to the
Partnership at March 31, 2002 and is included in accounts receivable on the
accompanying unaudited condensed balance sheet at March 31, 2002.
During the three months ended March 31, 2001, the Partnership disposed of
marine containers and railcars with an aggregate net book value of $18,000
for proceeds of $0.2 million.
6. 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):
Marine
For the three months ended Container Trailer Railcar All
March 31, 2002 Leasing Leasing Leasing Other (1) Total
-------------- ------- ------- ------- ----- -----
REVENUES
Lease revenue $ -- $ 430 $ 211 $ -- $ 641
Interest income and other -- -- -- 7 7
Gain on disposition of equipment 8 7 1,212 -- 1,227
----------------------------------------------------
Total revenues 8 437 1,423 7 1,875
----------------------------------------------------
COSTS AND EXPENSES
Operations support -- 250 25 16 291
Depreciation 1 131 109 -- 241
Management fees to affiliates -- 20 13 -- 33
General and administrative -- 67 25 39 131
expenses
Provision for (recovery of) bad -- 25 (46) -- (21)
debts
----------------------------------------------------
Total costs and expenses 1 493 126 55 675
----------------------------------------------------
Net income (loss) $ 7 $ (56) $ 1,297 $ (48) $ 1,200
====================================================
Total assets as of March 31, 2002 $ 28 $ 2,796 $ 1,429 $ 2,452 $ 6,705
====================================================
(1) Includes certain assets not identifiable to a particular segment, such as
cash and prepaid expenses. Also includes interest income and costs not
identifiable to a particular segment, such as certain operations support
and general and administrative expenses.
PLM EQUIPMENT GROWTH FUND II
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
6. OPERATING SEGMENTS (continued)
Marine
For the three months ended Aircraft Container Trailer Railcar All
March 31, 2001 Leasing Leasing Leasing Leasing Other (1) Total
-------------- ------- ------- ------- ------- ----- -----
REVENUES
Lease revenue $ -- $ (21) $ 400 $ 351 $ -- $ 730
Interest income and other -- -- -- -- 30 30
Gain (loss) on disposition of (10) 168 -- 3 -- 161
equipment
--------------------------------------------------------------
Total revenues (10) 147 400 354 30 921
--------------------------------------------------------------
COSTS AND EXPENSES
Operations support -- -- 165 329 61 555
Depreciation -- 16 133 151 -- 300
Management fees to affiliates -- (1) 19 12 -- 30
General and administrative 1 1 51 20 261 334
expenses
Provision for bad debts -- -- 8 32 -- 40
--------------------------------------------------------------
Total costs and expenses 1 16 376 544 322 1,259
--------------------------------------------------------------
Net income (loss) $ (11) $ 131 $ 24 $ (190) $ (292) $ (338)
==============================================================
(1) Includes interest income and costs not identifiable to a particular
segment, such as certain operations support and general and administrative
expenses.
7. NET INCOME (LOSS) PER WEIGHTED-AVERAGE DEPOSITORY UNIT
Net income (loss) per weighted-average depository unit was computed by
dividing net income (loss) attributable to the limited partners by the
weighted-average number of depository units deemed outstanding during the
period. The weighted-average number of depository units deemed outstanding
during the three months ended March 31, 2002 and 2001 was 7,381,165.
8. LIQUIDATION AND SPECIAL DISTRIBUTIONS
On January 1, 1999, the General Partner began the liquidation phase of the
Partnership and commenced an orderly liquidation of the Partnership assets.
The General Partner is actively marketing the remaining equipment portfolio
with the intent of maximizing sale proceeds. During the liquidation phase
of the Partnership the equipment will continue to be leased under operating
leases until sold. 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. Upon final liquidation, the Partnership will
be dissolved.
The Partnership is not permitted to reinvest proceeds from the disposition
of equipment. These proceeds, in excess of operational cash requirements,
are periodically paid out to limited partners in the form of special
distributions. No special distributions were paid in the first quarter of
2002 and 2001. The sales and liquidations occur because of 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.
9. 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
counterclaims against the Partnership in excess of the Partnership's claims
against the airline. The General Partner
9. CONTINGENCIES (continued)
believes that the airline's counterclaims are completely without merit, and
the General Partner will defend against such counterclaims.
During 2001, the General Partner has decided to minimize its collection
efforts from the India lessee in order to save the Partnership from
incurring additional expenses associated with trying to collect from a
lessee that has a limited ability to pay.
The Partnership is involved as plaintiff or defendant in various legal
actions incidental to its business. Management does not believe that any of
these actions will be material to the financial condition or results of
operations of the Partnership.
(this space intentionally left blank)
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, 2002 and 2001
(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 2002 compared to the same quarter of 2001. 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 6 to the unaudited condensed 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,
2002 2001
---------------------------
Railcars $ 186 $ 22
Trailers 180 235
Marine containers -- (21)
Railcars: Railcar lease revenues and direct expenses were $0.2 million and
$25,000, respectively, for the first quarter of 2002, compared to $0.4 million
and $0.3 million, respectively, during the same quarter of 2001. Lease revenue
decreased $0.1 million due to the disposition of railcars in 2001 and 2002.
Direct expenses decreased $0.3 million in the first quarter of 2002 compared to
the same period of 2001 due to fewer repairs being required for the railcar
portfolio in 2002.
Trailers: Trailer lease revenues and direct expenses were $0.4 million and $0.3
million, respectively, for the first quarter of 2002, compared to $0.4 million
and $0.2 million, respectively, during the same quarter of 2001. Trailer direct
expenses increased $0.1 million in the first quarter of 2002 compared to 2001
due to increased repair and maintenance costs in 2002.
Marine containers: Marine container lease revenues were $0 and $(21,000) in the
first quarter of 2002 and 2001, respectively. The negative $21,000 of lease
revenues in the first quarter of 2001 resulted from actual lease revenue in
previous quarters being lower than previously accrued. The Partnership has been
disposing of marine containers in 2001 and 2002.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $0.4 million for the first quarter of 2002 decreased
from $0.7 million for the same period in 2001. Significant variances are
explained as follows:
(i) A $0.2 million decrease in general and administrative expenses during
the three months ended March 31, 2002 resulted from the reduction in the size of
the Partnership's equipment portfolio over the last twelve months.
(ii)A $0.1 million decrease in depreciation expense from 2001 levels
reflects the effect of asset dispositions in 2002 and 2001.
(C) Net Gain on Disposition of Owned Equipment
Net gain on disposition of equipment in the first quarter of 2002 totaled $1.2
million, and resulted from the disposition of marine containers, railcars and
trailers with an aggregate net book value of $0.1 million for aggregate proceeds
of $1.3 million of which $1.1 was due to the Partnership at March 31, 2002 and
is included in accounts receivable on the accompanying unaudited condensed
balance sheet at March 31, 2002. Net gain on disposition of equipment in the
first quarter of 2001 totaled $0.2 million, and resulted from the disposition of
marine containers and railcars, with an aggregate net book value of $18,000, for
aggregate proceeds of $0.2 million. (D) Net Income (Loss)
As a result of the foregoing, the Partnership's net income was $1.2 million for
the first quarter of 2002, compared to net loss of $0.3 million during the first
quarter of 2001. 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 2002 is not
necessarily indicative of future periods.
(II) CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the General Partner
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. On a regular basis, the General Partner reviews
these estimates including those related to asset lives and depreciation methods,
impairment of long-lived assets, allowance for doubtful accounts, reserves
related to legally mandated equipment repairs and contingencies and litigation.
These estimates are based on the General Partner's historical experience and on
various other assumptions believed to be reasonable under the circumstances.
Actual results may differ from these estimates under different assumptions or
conditions. The General Partner believes, however, that the estimates, including
those for the above-listed items, are reasonable and that actual results will
not vary significantly from the estimated amounts.
The General Partner believes the following critical accounting policies affect
the more significant judgments and estimates used in the preparation of the
Partnership's financial statements:
Asset lives and depreciation methods: The Partnership's primary business
involves the purchase and subsequent lease of long-lived transportation and
related equipment. The General Partner has chosen asset lives that it believes
correspond to the economic life of the related asset. The General Partner has
chosen a deprecation method that it believes matches the benefit to the
Partnership from the asset with the associated costs. These judgments have been
made based on the General Partner's expertise in each equipment segment that the
Partnership operates. If the asset life and depreciation method chosen does not
reduce the book value of the asset to at least the potential future cash flows
from the asset to the Partnership, the Partnership would be required to record a
loss on revaluation. Likewise, if the net book value of the asset was reduced by
an amount greater than the economic value has deteriorated, the Partnership may
record a gain on sale upon final disposition of the asset.
Impairment of long-lived assets: On a regular basis, the General Partner reviews
the carrying value of its equipment and investments in USPEs to determine if the
carrying value of the assets may not be recoverable in consideration of current
economic conditions. This requires the General Partner to make estimates related
to future cash flows from each asset as well as the determination if the
deterioration is temporary or permanent. If these estimates or the related
assumptions change in the future, the Partnership may be required to record
additional impairment charges.
Allowance for doubtful accounts: The Partnership maintains allowances for
doubtful accounts for estimated losses resulting from the inability of the
lessees to make the lease payments. These estimates are primarily based on the
amount of time that has lapsed since the related payments were due as well as
specific knowledge related to the ability of the lessees to make the required
payments. If the financial condition of the Partnership's lessees were to
deteriorate, additional allowances could be required that would reduce income.
Conversely, if the financial condition of the lessees were to improve or if
legal remedies to collect past due amounts were successful, the allowance for
doubtful accounts may need to be reduced and income would be increased.
Contingencies and litigation: The Partnership is subject to legal proceedings
involving ordinary and routine claims related to its business. The ultimate
legal and financial liability with respect to such matters cannot be estimated
with certainty and requires the use of estimates in recording liabilities for
potential litigation settlements. Estimates for losses from litigation are made
after consultation with outside counsel. If estimates of potential losses
increase or the related facts and circumstances change in the future, the
Partnership may be required to record additional litigation expense.
(III) FINANCIAL CONDITION - CAPITAL RESOURCES AND LIQUIDITY
For the three months ended March 31, 2002, the Partnership generated $0.2
million in operating cash.
During the quarter ended March 31, 2002, the Partnership disposed of marine
containers, railcars and trailers and received proceeds of $0.2 million.
Accounts receivable increased $1.0 million during the three months ended March
31, 2002 primarily due to $1.1 million in receivables related to asset
dispositions being outstanding on March 31, 2002. A similar receivable was not
outstanding on December 31, 2001.
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.
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 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.
(IV) OUTLOOK FOR THE FUTURE
Since the Partnership is in its active liquidation phase, the General Partner is
seeking to selectively re-lease or sell assets as the existing leases expire.
Sale decisions may 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 2002 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 2002 and
beyond include:
1. Railcar loadings in North America have weakened over the past year.
Utilization and lease rates have been decreasing over this period. Railcar
contribution may decrease in 2002 as existing leases expire and renewal leases
are negotiated.
2. Industry-wide utilization of intermodal trailers decreased 8% in the first
quarter of 2002 compared to the first quarter of 2001. This has led to lower
contribution from the Partnership's trailers.
3. The Partnership's fleet of marine containers is in excess of twelve years of
age and is no longer suitable for use in international commerce either due to
its specific physical condition, or lessee's preferences for newer equipment.
Demand for the Partnership's marine containers will continue to be weak due to
their age.
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 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 decide 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 unitholders.
(V) FORWARD-LOOKING INFORMATION
Except for historical information contained herein, 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 2002, 18% of the Partnership's total lease
revenues came from non-United States domiciled lessees. Most of the leases
require payment in United States (U.S.) currency. If these lessees' currency
devalues against the U.S. dollar, the lessees could encounter difficulty in
making the U.S. dollar denominated lease payments.
(this space intentionally left blank)
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
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 7, 2002 By: /s/ Stephen M. Bess
-------------------------------------
President and
Current Chief Accounting Officer