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 March 31, 1996
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: 02-72177
SEI II L.P.
----------------------------------------------------
Exact Name of Registrant as Specified in its Charter
New York 13-3064636
- - ------------------------------ ----------------
State or Other Jurisdiction of I.R.S. Employer Identification No.
Incorporation or Organization
3 World Financial Center, 29th Floor,
New York, NY Attn.: 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 At March 31, At December 31,
1996 1995
Assets
Equipment, at cost $ 8,306,724 $ 8,306,724
Less accumulated depreciation (4,762,514) (4,679,447)
--------- ---------
Net Equipment 3,544,210 3,627,277
Cash and cash equivalents 4,857,421 4,238,441
Due from Equipment Manager 368,497 673,652
---------- ----------
Total Assets $ 8,770,128 $ 8,539,370
========== ==========
Liabilities and Partners' Deficit
Liabilities:
Accounts payable and accrued expenses $ 28,503 $ 30,628
Accrued interest expense due to affiliate 8,823,936 8,657,814
Deferred interest payable to affiliate 512,854 512,854
Due to General Partner 677,478 671,201
Note payable to affiliate 7,839,000 7,839,000
---------- ----------
Total Liabilities 17,881,771 17,711,497
Partners' Deficit:
General Partner (253,306) (253,911)
Limited Partners (3,614 units outstanding) (8,858,337) (8,918,216)
---------- ----------
Total Partners' Deficit (9,111,643) (9,172,127)
---------- ----------
Total Liabilities and Partners' Deficit $ 8,770,128 $ 8,539,370
========== ==========
Statement of Partners' Deficit
For the three months ended March 31, 1996
General Limited
Partner Partners Total
Balance at December 31, 1995 $(253,911) $(8,918,216) $(9,172,127)
Net income 605 59,879 60,484
Balance at March 31, 1996 $(253,306) $(8,858,337) $(9,111,643)
Statements of Operations
For the three months ended March 31,
Revenues 1996 1995
- - ------------------ ------- -------
Operating revenues $627,740 $624,213
------- -------
Total operating revenues 627,740 624,213
Operating Expenses
- - ------------------
Operating costs 325,690 338,165
Depreciation expense 83,067 83,067
Professional and other expenses 13,184 11,403
Equipment management fee -
Operators 30,489 30,236
General Partner 6,277 6,242
Insurance 4,211 4,211
------- -------
Total operating expenses 462,918 473,324
Income from operations 164,822 150,889
Other Income (Expense)
- - ---------------------
Interest and miscellaneous income 61,784 47,399
Interest expense (166,122) (164,297)
------- -------
Total Other Expense (104,338) (116,898)
------- -------
Net Income $ 60,484 $ 33,991
======= =======
Net Income Allocated:
To the General Partner $ 605 $ 340
To the Limited Partners 59,879 33,651
------- -------
$ 60,484 $ 33,991
======= =======
Per limited partnership unit
(3,614 outstanding) $16.57 $9.31
===== ====
Statements of Cash Flows
For the three months ended March 31, 1996 1995
Cash Flows From Operating Activities
Net income $ 60,484 $ 33,991
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense 83,067 83,067
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Due from Equipment Manager 305,155 236,798
Accounts payable and accrued expenses (2,125) (4,713)
Accrued interest expense due to affiliate 166,122 164,297
Due to general partner 6,277 6,242
--------- ---------
Net cash provided by operating activities 618,980 519,682
--------- ---------
Net increase in cash and cash equivalents 618,980 519,682
Cash and cash equivalents, beginning of period 4,238,441 2,931,466
--------- ---------
Cash and cash equivalents, end of period $4,857,421 $3,451,148
========= =========
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction
with the Partnership's annual 1995 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 March 31, 1996 and the
results of operations and cash flows for the three months ended
March 31, 1996 and 1995 and the statement of changes in partners'
deficit for the three months ended March 31, 1996. 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
1995, and no material contingencies exist which would require
disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
Legal Proceedings
In March 1996, a purported class action suit, on behalf of all
Limited Partners was brought against the Partnership, Lehman
Brothers Inc., Smith Barney Holdings Inc., and a number of other
limited partnerships in the New York State Supreme Court. The
complaint alleges claims of common law fraud and deceit,
negligent misrepresentation, breach of fiduciary duty and breach
of the implied covenant of good faith and fair dealing. The
defendants intend to defend the action vigorously.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- - -------------------------------
The Partnership's cash and cash equivalents balance totaled
$4,857,421 at March 31, 1996, which represents an increase of
$618,980 from the balance of $4,238,441 at December 31, 1995.
The increase is due to net cash flow from operating activities.
At March 31, 1996, the amount due from the Partnership's
equipment manager was $368,497, as compared to $673,652 at
December 31, 1995. The 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 8.5% at March 31, 1996, unchanged from December 31,
1995. No interest was paid relating to the Note for the three-
month period ended March 31, 1996 and, as a result, the
Partnership's accrued interest expense due to affiliate increased
to $8,823,936 at March 31, 1996, compared to $8,657,814 at
December 31, 1995. The maturity date of the Note has been
extended to January 3, 1997, with all other terms and conditions
of the Note remaining unchanged.
Results of Operations
- - ---------------------
For the three months ended March 31, 1996, the Partnership
generated net income of $60,484, as compared to net income of
$33,991 for the corresponding period in 1995. The increase in
net income is primarily attributable to an increase in interest
and miscellaneous income and a decline in operating
costs for the three-month period ended March 31, 1996 relative
to the comparable period in 1995.
Operating revenues were $627,740 and $624,213 for the three
months ended March 31, 1996 and 1995, respectively. The increase
in operating revenues is primarily attributable to a slight
increase in barge utilization during the first quarter of 1996.
Operating costs were largely unchanged during the three months
ended March 31, 1996 and 1995 at $325,690, and $338,165,
respectively.
Interest and miscellaneous income totaled $61,784 for the three
months ended March 31, 1996, as compared to $47,399 for the
corresponding period in 1995. The increase is primarily
attributable to an increase in interest income as a result of the
Partnership maintaining a higher cash balance.
Part II Other Information
Item 1 Legal Proceedings
In March 1996, a purported class action suit, on
behalf of all Limited Partners was brought against the
Partnership, Lehman Brothers Inc., Smith Barney
Holdings Inc., and a number of other limited
partnerships in the New York State Supreme Court. The
complaint alleges claims of common law fraud and
deceit, negligent misrepresentation, breach of
fiduciary duty and breach of the implied covenant of
good faith and fair dealing. The defendants intend to
defend the action vigorously.
Items 2-5 Not applicable.
Item 6 Exhibits and reports on Form 8-k.
(a) Exhibits - None
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were
filed during the quarter ended March 31, 1996
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: May 14, 1996 BY: /s/ Rocco F. Andriola
President and Director
Date: May 14, 1996 BY: /s/ Regina Hertl
Vice President, Director and
Chief Financial Officer