UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
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: 2-72177
SEI II L.P.
(formerly Shearson Equipment Investors - II)
(Exact name of registrant as specified in its charter)
New York 13-3064636
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor, New York, NY
Attention: Andre Anderson 10285
(Address of principal executive offices) (Zip code)
(212) 526-3237
(Registrant's telephone number, including area code)
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
Balance Sheets
June 30, December 31,
Assets 1995 1994
Equipment $ 8,306,724 $ 8,306,724
Less accumulated depreciation 4,513,312 4,347,178
Net Equipment 3,793,412 3,959,546
Cash and cash equivalents 3,753,954 2,931,466
Due from Equipment Manager 234,952 522,083
Total Assets $ 7,782,318 $ 7,413,095
Liabilities and Partners' Deficit
Liabilities:
Accounts payable and accrued expenses $ 33,776 $ 36,201
Accrued interest expense due to affiliate 8,295,931 7,965,512
Deferred interest payable to affiliate 512,854 512,854
Due to General Partner 654,134 642,280
Note payable to affiliate 7,839,000 7,839,000
Total Liabilities 17,335,695 16,995,847
Partners' Deficit:
General Partner (257,723) (258,017)
Limited Partners(3,614 units outstanding) (9,295,654) (9,324,735)
Total Partners' Deficit (9,553,377) (9,582,752)
Total Liabilities and Partners'
Deficit $ 7,782,318 $ 7,413,095
Statement of Partners' Deficit
For the six months ended June 30, 1995
General Limited
Partner Partners Total
Balance at December 31, 1994 $(258,017) $(9,324,735) $(9,582,752)
Net Income 294 29,081 29,375
Balance at June 30, 1995 $(257,723) $(9,295,654) $(9,553,377)
Statements of Operations
Three months ended Six months ended
June 30, June 30,
Revenues 1995 1994 1995 1994
Operating revenues $ 561,142 $ 310,648 $1,185,355 $ 630,275
Operating Expenses
Operating costs 320,789 176,050 658,954 364,986
Depreciation 83,067 83,067 166,134 166,134
Professional and other
expenses 12,071 6,080 23,474 18,674
Equipment management fee -
Operators 28,873 22,555 59,109 45,171
General Partner 5,612 3,107 11,854 6,303
Insurance 4,211 4,211 8,422 8,422
Total Operating Expenses 454,623 295,070 927,947 609,690
Income from operations 106,519 15,578 257,408 20,585
Other Income (Expense):
Interest and miscellaneous
income 54,987 19,386 102,386 35,896
Interest expense (166,122) (131,921) (330,419) (247,895)
Total Other Expense (111,135) (112,535) (228,033) (211,999)
Net Income (Loss) $ (4,616) $ (96,957) $ 29,375 $(191,414)
Net Income (Loss) Allocated:
To the General Partner $ (46) $ (969) $ 294 $ (1,914)
To the Limited Partners (4,570) (95,988) 29,081 (189,500)
$ (4,616) $ (96,957) $ 29,375 $(191,414)
Per limited partnership unit
(3,614 outstanding) $ (1.26) $ (26.56) $ 8.05 $ (52.43)
Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income (loss) $ 29,375 $ (191,414)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 166,134 166,134
Increase (decrease) in cash arising
from changesin operating assets and
liabilities:
Due from Equipment Manager 287,131 197,420
Accounts payable and accrued expenses (2,425) (18,074)
Accrued interest expense due to affiliate 330,419 247,895
Due to General Partner 11,854 6,303
Net cash provided by operating activities 822,488 408,264
Net increase in cash and cash equivalents 822,488 408,264
Cash and cash equivalents at beginning of period 2,931,466 2,267,849
Cash and cash equivalents at end of period $3,753,954 $2,676,113
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of June 30, 1995, the results of operations for the three and six
months ended June 30, 1995 and 1994, the statement of changes in partners'
deficit for the six months ended June 30, 1995 and the statements of cash flows
for the six months ended June 30, 1995 and 1994. Results of operations for the
period are not necessarily indicative of the results to be expected for the
full year.
No significant events have occurred subsequent to fiscal year 1994 which would
require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
(a) Liquidity and Capital Resources
The Partnership's cash and cash equivalents balance totalled $3,753,954 at June
30, 1995, which represents an increase of $822,488 from the balance of
$2,931,466 at December 31, 1994. The increase is due to net cash flow from
operating activities.
At June 30, 1995, the amount due from the Partnership's equipment manager was
$234,952 as compared to $522,083 at December 31, 1994. The $287,131 decrease
is due to the timing of the payments of net revenue received from the equipment
manager.
On May 30, 1986, the Partnership successfully restructured its long-term debt.
Buttonwood Leasing Corporation (the "Purchaser"), an affiliate of the General
Partner, purchased from the Partnership's lenders the Promissory Note (the
"Note") originally executed by the Partnership in favor of the lenders and
which was dated December 9, 1981. Subsequent to the Note purchase, the
Purchaser entered into an understanding with the Partnership on the following
terms and conditions. First, the principal amount of the loan would remain
the same. Second, interest would be charged on the outstanding principal
amount of the Note at a rate equal to the prime rate charged by Bank America
Illinois, formerly Continental Illinois National Bank, which was 7.75% at
December 31, 1994, compared to 8.5% at June 30, 1995. No interest was paid
relating to the Note for the six months ended June 30, 1995, and, as a result,
the Partnership's accrued interest expense due to affiliate increased to
$8,295,931 at June 30, 1995, compared to $7,965,512 at December 31, 1994. The
maturity date of the Note was extended to January 3, 1996, with all other
terms and conditions of the Note remaining unchanged.
(b) Results of Operations
For the three and six months ended June 30, 1995, the Partnership generated a
net loss of $4,616 and net income of $29,375, respectively, as compared to net
losses of $96,957 and $191,414, respectively, for the corresponding periods in
1994. The reduction in the net loss from the second quarter of 1994 to the
second quarter of 1995 and the change from a net loss during the first half of
1994 to net income during the corresponding period in 1995 is primarily
attributable to an increase in operating revenues. The increase in operating
revenues is primarily attributable to a substantial increase in barge
utilization during the first half of 1995 due to the significant crop harvest
during the second half of 1994. Additionally, it should be noted that the
Partnership's operations during the first half of 1994 were impaired by the
residual effects of the flooding in the Midwest during 1993.
Operating costs during the three and six months ended June 30, 1995 were
$320,789 and $658,954, respectively, compared to $176,050 and $364,986,
respectively, for the corresponding periods in 1994. The increases are
attributable to an increase in the level of barge utilization and improved
operating conditions as a result of the significant harvest during the second
half of 1994. It should be noted that operating costs were lower than usual in
the first half of 1994 due to lower towing costs due to intense competition
among tow operators for the reduced level of traffic.
The Partnership's interest and miscellaneous income totalled $54,987 and
$102,386 for the three and six months ended June 30, 1995, as compared to
$19,386 and $35,896 for the corresponding periods in 1994. The increases are
primarily attributable to an increase in interest income as a result of the
Partnership maintaining a higher invested cash balance and as a result of an
increase in interest rates.
Interest expense for the three and six months ended June 30, 1995 increased
compared to the corresponding periods in 1994 due to an increase in the prime
rate charged on the outstanding principal amount of the Note.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on
Form 8-K were filed during the
quarter ended June 30, 1995
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.
SEI II L.P.
BY: SEI II EQUIPMENT INC.
General Partner
Date: August 10, 1995
BY: /s/ Rocco F. Andriola
Name: Rocco F. Andriola
Title: President and Director
Date: August 10, 1995
BY: /s/ Regina Hertl
Name: Regina Hertl
Title: Vice President, Director
and Chief Financial Officer