UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the United States Securities Exchange Act of
1934
_______________________
For Quarter Ended June 30, 1995 Commission File No. 2-89177
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(Exact name of registrant as specified in its
charter)
Massachusetts 04-2819913
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Financial Center, 21st Floor, Boston, MA 02111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 482-8000
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
There are no Exhibits.
Page 1 of 12
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WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(A Massachusetts Limited Partnership)
INDEX Page No.
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Part I. FINANCIAL INFORMATION
Financial Statements
Balance Sheets as of June 30, 1995 and
December 31, 1994 3
Statements of Operations For the
Quarters Ended June 30, 1995 and 1994 and the Six
Months Ended June 30, 1995 and 1994 4
Statements of Cash Flows For the Six
Months Ended June 30, 1995 and 1994 5
Notes to Financial Statements 6 - 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 10
Part II. OTHER INFORMATION
Items 1 - 6 11
Signature 12
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<TABLE>
PART I. FINANCIAL INFORMATION
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(A Massachusetts Limited Partnership)
Balance Sheets
Assets
(Unaudited) (Audited)
6/30/95 12/31/94
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Investment property, at cost:
Computer equipment $ - $ 966,011
Less accumulated depreciation - 924,484
Investment property, net - 41,527
Cash and cash equivalents 83,449 871,445
Marketable securities (note 2) 168,295 -
Rents receivables, net - 2,946
Accounts receivable - affiliates,
net (note 2) - -
Total assets $ 251,744 $ 915,918
Liabilities and Partners' Equity
Liabilities:
Accounts payable and accrued
expenses - affiliates $ - $ 43,219
Accrued expenses - 11,901
Accounts payable - 58,420
Unearned rental revenue - 4,769
Total liabilities - 118,309
Partners' equity:
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 1,485,286 1,414,723
Cumulative cash distributions (1,486,286) (1,442,825)
- (27,102)
Limited Partners (55,050 units):
Capital contribution, net of
offering costs 24,523,033 24,523,033
Cumulative net income 3,968,262 3,715,479
Cumulative cash distributions (28,239,551) (27,413,801)
251,744 824,711
Total partners' equity 251,744 797,609
Total liabilities and partners' equity $ 251,744 $ 915,918
</TABLE>
See accompanying notes to financial statements.
<TABLE>
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(A Massachusetts Limited Partnership)
Statements of Operations
(Unaudited)
Quarters Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue:
Rental income $44,838 $69,687 $115,886 $164,182
Interest income 3,824 2,000 14,341 2,231
Other income 62,524 - 62,524 -
Net gain on sale
of equipment 52,536 149,428 54,291 155,883
Recovery of net unsecured
pre-petition claim
(note 2) 168,295 - 168,295 -
Total revenue 332,017 221,115 415,337 322,296
Costs and expenses:
Depreciation - 31,957 12,056 69,727
Interest - 562 43 1,329
Related party expenses
(note 4):
Management fees 1,674 591 4,658 7,243
General and
administrative 57,818 26,952 81,466 52,829
Reversal of provision
for doubtful
accounts (6,232) (13,382) (6,232) (13,382)
Total costs
and expenses 53,260 46,680 91,991 117,746
Net income $278,757 $174,435 $323,346 $204,550
Net income (loss)
per Limited
Partnership Unit $ 4.80 $ 1.69 $ 4.59 $ (4.34)
</TABLE>
See accompanying notes to financial statements.
<TABLE>
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(A Massachusetts Limited Partnership)
Statements of Cash Flows
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Cash flows from operating activities:
Net income $323,346 $204,550
Adjustments to reconcile net income to net
cash (used in) provided by
operating activities:
Depreciation 12,056 69,727
Net gain on sale of equipment (54,291) (155,883)
Reversal of provision for doubtful accounts (6,232) (13,382)
Net (increase) decrease in current assets (159,117) 77,967
Net decrease in current liabilities (118,309) (123,144)
Total adjustments (325,893) (144,715)
Net cash (used in) provided
by operating activities (2,547) 59,835
Cash flows from investing activities:
Purchase of investment property - (1,037)
Proceeds from sales of investment property 83,762 217,796
Net cash provided by investing activities 83,762 216,759
Cash flows from financing activities:
Principal payments on notes
payable - affiliate - (27,409)
Cash distributions to partners (869,211) (144,869)
Net cash used in financing activities (869,211) (172,278)
Net (decrease) increase in cash
and cash equivalents (787,996) 104,316
Cash and cash equivalents
at beginning of period 871,445 43,184
Cash and cash equivalents at end of period $ 83,449 $147,500
Supplemental cash flow information:
Interest paid during the period $ 1,120 $ 1,329
</TABLE>
See accompanying notes to financial statements.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(A Massachusetts Limited Partnership)
Notes to Financial Statements
(Unaudited)
(1) Organization and Partnership
Matters
The foregoing financial statements of Wellesley
Lease Income Limited Partnership II-D (the
"Partnership") have been prepared in accordance
with the rules and regulations of the Securities
and Exchange Commission for Form 10-Q and reflect
all adjustments which are, in the opinion of
management, necessary for a fair presentation of
the results for the interim periods presented.
Pursuant to such rules and regulations, certain
note disclosures which are normally required under
generally accepted accounting principles have been
omitted. It is recommended that these financial
statements be read in conjunction with the
Partnership's Annual Report on Form 10-K for the
year ended December 31, 1994.
In the fourth quarter of 1994, the General Partner
announced its intentions of winding down the
operations of the Partnership beginning in 1995.
As of June 30, 1995, all assets have been sold
with the exception of the marketable securities
and the unsecured pre-petition claim, and the
proceeds have been accumulated to settle all
outstanding liabilities and make a final
distribution. The Partnership will not be
terminated until the unsecured pre-petition claim
against CMI has been settled and the remaining
proceeds have been distributed to the Partners
(see note 4 for further discussion).
(2) Significant Accounting
Policies
Allowance for Doubtful Accounts
The financial statements include an allowance for
estimated losses on receivable balances. The
allowance for doubtful accounts is based on past
write off experience and an evaluation of
potential uncollectible accounts within the
current receivable balances. Receivable balances
which are determined to be uncollectible are
charged against the allowance and subsequent
recoveries, if any, are credited to the allowance.
At June 30, 1995 and December 31, 1994, the
allowance for doubtful accounts included in
accounts receivable - affiliates was $246,368,
respectively, all of which was related to the
unsecured pre-petition claim for both periods.
Marketable Securities
The marketable securities consist of common stock
in Continental Information Systems Corporation
received by the Partnership in the distribution
made December 27, 1994 by the Trustee of the
Liquidating Estate of CIS Corporation, et al with
respect to the outstanding unsecured pre-petition
claim. During the second quarter of 1995, the
stock began trading, thereby providing an
objective valuation measure for establishing the
cost basis which approximates fair market value at
the balance sheet date.
Reclassifications
Certain prior year financial statement items have
been reclassified to conform with the current
year's financial statement presentation.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(A Massachusetts Limited Partnership)
Notes to Financial Statements
(Unaudited)
(3) Related Party Transactions
Fees, commissions and other expenses paid or
accrued by the Partnership to the General Partner
or affiliates of the General Partner for the
quarters ended June 30, 1995 and 1994 are as
follows:
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1995 1994
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Management fees $ 4,658 $ 7,243
Reimbursable expenses paid 49,989 39,263
$ 54,647 $46,506
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Under the terms of the Partnership Agreement, the
General Partner is entitled to an equipment
acquisition fee of 3% of the purchase price paid
by the Partnership for the equipment. The General
Partner is also entitled to a management fee equal
to 7% of the monthly rental billings collected.
Also, the Partnership reimburses the General
Partner and its affiliates for certain expenses
incurred by them in connection with the operation
of the Partnership.
(4) Subsequent Events
On July 20, 1995, the Partnership received the
second distribution from the Trustee of the
Liquidating Estate of CIS Corporation, et al, with
respect to the unsecured pre-petition claim. The
distribution consisted of cash proceeds of
$193,239 and 12,463 shares of common stock in
Continental Information Systems Corporation with a
carrying value of $31,158. The cash and stock
will be reflected in the financial statements for
the third quarter of 1995. Following the
Trustee's second distribution, the Partnership's
unsecured pre-petition claim has been settled as
of July 20, 1995 and there are no other
outstanding receivable balances.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(A Massachusetts Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
Results of Operations
The following discussion relates to the
Partnership's operations for the quarter and six
months ended June 30, 1995 in comparison to the
same periods in 1994.
The Partnership realized net income of $278,757
and $174,435 for the quarters ended June 30, 1995
and 1994, respectively. Rental income decreased
$24,849 between the three month periods. The
decrease is primarily due to the continued
decrease in the overall size of the equipment
portfolio. The sale of the equipment portfolio
and the related leases did not occur until the end
of June, 1995; thus, there was no direct impact
of the sale on current quarter rental revenue.
Interest income increased from 1994 as a result of
higher average short-term investment balances.
Other income has increased from 1994 due to the
result of the reduction of overstated liabilities
recorded in prior periods. The decrease in gain
on the sale of equipment between the two periods
is primarily due to significant sales of equipment
carrying lower net book values in the second
quarter of 1994. The recovery of net unsecured
pre-petition claim was the result of the
establishment of the carrying value of the stock
received in the December 27, 1994 distribution
from the Trustee of the Liquidating Estate of CIS
Corporation, et al. The receivables associated
with the stock settlement had been fully reserved
in a prior year; accordingly, the Partnership was
able to show a recovery on those receivables as of
June 30, 1995 at which time an objective stock
value could be determined due to the stock's
trading activities.
Total costs and expenses increased 14% during the
second quarter of 1995 primarily due to a
significant increase in general and administrative
expenses. General and administrative expenses
increased due to the establishment and
satisfaction of outstanding liabilities related to
the liquidation of the Partnership in 1995. For
example, the Partnership will still need to cover
costs relating to investor reports, Schedule K-1
preparation and mailings, etc. The Partnership
did not recognize any depreciation expense in the
current quarter due to a portion of the equipment
portfolio becoming fully depreciated in the first
quarter of 1995 and the sale of the equipment
portfolio. Management fees expense was lower in
1994 than the quarter ended June 30, 1995, due to
a one time adjustment for a change in method on
which management fees are calculated. The
reversal of provision for doubtful accounts is due
to successful collection efforts on delinquent
rents receivable.
The Partnership realized net income of $323,346
and $204,550 and rental income of $115,886 and
$164,182 for the six months ended June 30, 1995
and 1994, respectively. Rental income decreased
$48,296 between the six month periods. As
discussed above in the quarter analysis, the
decrease in rental income is primarily due to the
continued decrease in the overall size of the
equipment portfolio. Interest income increased as
a result of higher average short-term investment
balances. Other income has increased from 1994 due
to the result of the reduction of overstated
liabilities recorded in prior periods. The large
1994 net gain on sale of equipment is due to
significant sales of equipment carrying low net
book values in the first quarter of 1994. The
recovery of net unsecured pre-petition claim was
the result of the establishment of the carrying
value of the stock received in the December 27,
1994 distribution from the Trustee of the
Liquidating Estate of CIS Corporation, et al, as
mentioned above. The receivables associated with
the stock settlement had been fully reserved in a
prior year; accordingly, the Partnership was able
to show a recovery on those receivables as of June
30, 1995 at which time an objective stock value
could be determined due to the stock's trading
activities.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(A Massachusetts Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
Total costs and expenses decreased $25,755 or 22%
during the first six months of 1995 primarily as a
result of lower depreciation expense exceeding the
increase in general and administrative expenses.
As discussed above in the quarter analysis,
depreciation expense decreased due to a large
portion of the equipment portfolio becoming fully
depreciated and the sale of the equipment
portfolio. Management fees expense decreased in
relation to the decline in rental income. The
reversal of provision for doubtful accounts for
the six months is due to successful collection
efforts on delinquent rents receivable, as
mentioned above.
The Partnership recorded net income per Limited
Partnership Unit of $4.80 and $4.59 for the
quarter and six months ended June 30, 1995,
respectively.
Liquidity and Capital Resources
During the fourth quarter of 1994, the General
Partner announced its intentions of winding down
the operations of the Partnership beginning in
1995. As of June 30, 1995, substantially all of
the assets have been liquidated and the proceeds
have been accumulated to settle all outstanding
liabilities and make a final distribution. As
discussed in note 4 Subsequent Events, the
Partnership received the second and final
distribution from the Trustee of the Liquidating
Estate of CIS Corporation, et al, with respect to
the unsecured pre-petition claim. The
distribution consisted of cash proceeds of
$193,239 and 12,463 shares of common stock in
Continental Information Systems Corporation with a
carrying value of $31,158. The cash and stock
will be reflected in the financial statements for
the third quarter of 1995. Following the
Trustee's second distribution, the Partnership's
unsecured pre-petition claim has been settled as
of July 20, 1995 and there are no other
outstanding receivable balances.
The stock cannot be sold immediately by the
Partnership due to limitations imposed by the
Securities Exchange Act of 1933 (the "Exchange
Act"). Because TLP Leasing Programs, Inc., one
of the Corporate General Partners, is a wholly-
owned subsidiary of Continental Information
Systems Corporation ("CIS"), the Partnership is
considered an "Affiliate" of CIS. Accordingly, in
order for the Partnership to sell the shares, the
Partnership must comply with the restrictions
imposed by Rule 144 of the Exchange Act. In doing
so, the Partnership anticipates selling the stock
and distributing the proceeds to the investors in
the form of a final distribution by the end of
1995.
The Partnership's investing activities for the six
months resulted in the sale of its entire
equipment portfolio with a cost basis of $966,011,
generating $83,762 in proceeds. Also associated
with the equipment sales were $39,114 of loss
charge offs against the reserve, initially set up
in prior periods for estimated losses on the
ultimate disposition of equipment.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(A Massachusetts Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
Cash distributions are currently at an annual
level of 4% per Limited Partnership Unit, or $5.00
per Limited Partnership Unit on a quarterly basis.
For the quarter ended June 30, 1995, the
Partnership declared a cash distribution of
$289,737, of which $14,487 was allocated to the
General Partners and $275,250 was allocated to the
Limited Partners. The distribution will be made
on August 28, 1995. As discussed above, the
Partnership is accumulating its cash in
anticipation of a final distribution.
The effects of inflation have not been significant
to the Partnership and are not expected to have a
material impact in future periods.
PART II. OTHER INFORMATION
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(A Massachusetts Limited Partnership)
Item 1. Legal Proceedings
Response: None
Item 2. Changes in the Rights of the Partnership's
Security Holders
Response: None
Item 3. Defaults by the Partnership on its Senior
Securities
Response: None
Item 4. Results of Votes of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6. Exhibits and Reports on Form 8-K
Response:
A. None
B. None
SIGNATURE
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.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-D
(Registrant)
By: Wellesley Leasing Partnership,
its General Partner
By: TLP Leasing Programs, Inc.,
one of its Corporate General Partners
Date: August 14, 1995
By: Arthur P. Beecher,
President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000739712
<NAME> WELLESLEY II-D EX27 6/30/95
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 83,449
<SECURITIES> 168,295
<RECEIVABLES> 246,368
<ALLOWANCES> 246,368
<INVENTORY> 0
<CURRENT-ASSETS> 251,744
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 251,744
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 24,524,033
0
0
<OTHER-SE> (24,272,289)
<TOTAL-LIABILITY-AND-EQUITY> 251,744
<SALES> 86,266
<TOTAL-REVENUES> 415,337
<CGS> 0
<TOTAL-COSTS> 4,658
<OTHER-EXPENSES> 93,522
<LOSS-PROVISION> (6,232)
<INTEREST-EXPENSE> 43
<INCOME-PRETAX> 323,346
<INCOME-TAX> 0
<INCOME-CONTINUING> 323,346
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 323,346
<EPS-PRIMARY> 4.59
<EPS-DILUTED> 0
</TABLE>
