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 The Quarter Ended September 30, 1996 Commission File No. 2-97907
COLUMBIA LEASE INCOME FUND II-B L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3263135
(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 11
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<CAPTION>
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
<S> <C> <C>
INDEX Page No.
Part I. FINANCIAL INFORMATION
Financial Statements
Balance Sheets as of September 30, 1996 and December 31, 1995 3
Statements of Operations For the Quarters Ended
September 30, 1996 and 1995 and the Nine Months Ended
September 30, 1996 and 1995 4
Statements of Cash Flows For the Nine Months Ended
September 30, 1996 and 1995 5
Notes to Financial Statements 6 - 7
Management's Discussion and Analysis of Financial Condition and
Results of Operations 8 - 9
Part II. OTHER INFORMATION
Items 1 - 6 10
Signature 11
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<CAPTION>
PART I. FINANCIAL INFORMATION
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Balance Sheets
Assets (Unaudited) (Audited)
9/30/96 12/31/95
--------------- ---------------
<S> <C> <C>
Investment property, at cost (note 3):
Computer equipment $ 1,386,685 $ 2,077,781
Less accumulated depreciation 1,007,448 1,470,538
--------------- ---------------
Investment property, net 379,237 607,243
Cash and cash equivalents 19,260 110,280
Net investment in sales-type and direct financing leases - 359
Rents receivable, net (note 2) 15,933 12,186
Sales receivable - 975
Accounts receivable - affiliates 1,828 1,777
--------------- ---------------
Total assets $ 416,258 $ 732,820
=============== ===============
Liabilities and Partners' Equity
Liabilities:
Current portion of long-term debt (note 5) $ 181,457 $ 208,083
Accounts payable and accrued expenses - affiliates (note 4) 36,114 37,608
Accounts payable and accrued expenses 21,123 51,962
Distributions payable (note 6) 26,601 79,805
Long-term debt, less current portion (note 5) 152,595 289,416
--------------- ---------------
Total liabilities 417,890 666,874
--------------- ---------------
Partners' equity:
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 59,910 57,969
Cumulative cash distributions (406,243) (400,921)
Reallocation of capital accounts 345,333 341,952
--------------- ---------------
- -
--------------- ---------------
Limited Partners (20,217 units):
Capital contribution, net of
offering costs 8,844,937 8,844,937
Cumulative net income 1,138,319 1,101,431
Cumulative cash distributions (9,639,555) (9,538,470)
Reallocation of capital accounts (345,333) (341,952)
--------------- ---------------
(1,632) 65,946
--------------- ---------------
Total partners' equity (1,632) 65,946
--------------- ---------------
Total liabilities and partners' equity $ 416,258 $ 732,820
=============== ===============
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See accompanying notes to financial statements.
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<CAPTION>
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Statements of Operations
(Unaudited)
Quarters Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
----------------------------- --------------------------------
<S> <C> <C> <C> <C>
Revenue:
Rental income on operating leases $ 117,484 $ 151,749 $ 366,539 $ 385,209
Earned income on sales-type and
direct financing lease - 41 - 446
Interest income 110 306 1,485 2,212
Net gain on sale of equipment 308 580 2,398 16,224
------------- ------------- ------------- -------------
Total revenue 117,902 152,676 370,422 404,091
------------- ------------- ------------- -------------
Costs and expenses:
Depreciation 64,203 85,068 227,516 241,972
Interest 7,135 4,129 25,885 8,170
Related party expenses (note 4):
Management fees 6,461 8,453 21,009 21,781
General and administrative 17,077 16,577 53,992 44,447
Provision for doubtful accounts 4,522 803 3,191 1,180
------------- ------------- ------------- -------------
Total costs and expenses 99,398 115,030 331,593 317,550
------------- ------------- ------------- -------------
Net income $ 18,504 $ 37,646 $ 38,829 $ 86,541
============= ============= ============= =============
Net income per Limited
Partnership Unit $ 0.87 $ 1.77 $ 1.82 $ 4.07
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Statements of Cash Flows
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 38,829 $ 86,541
--------------- ----------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 227,516 241,972
Provision for doubtful accounts 3,191 1,180
Net gain on sale of equipment (2,398) (16,224)
Net (increase) decrease in current assets (5,655) 12,626
Net decrease in current liabilities (32,333) (10,820)
--------------- ----------------
Total adjustments 190,321 228,734
--------------- ----------------
Net cash provided by operating activities 229,150 315,275
--------------- ----------------
Cash flows from investing activities:
Purchase of investment property - (489,517)
Proceeds from sales of investment property 2,888 43,724
--------------- ----------------
Net cash provided by (used in) investing activities 2,888 (445,793)
--------------- ----------------
Cash flows from financing activities:
Proceeds from borrowing on notes payable - affiliates - 364,677
Principal payment on long-term debt (163,447) (49,994)
Principal payment on notes payable - affiliates - (7,770)
Cash distributions to partners (159,611) (380,399)
--------------- ----------------
Net cash used in financing activities (323,058) (73,486)
--------------- ----------------
Net decrease in cash and cash equivalents (91,020) (204,004)
Cash and cash equivalents at beginning of period 110,280 244,809
--------------- ----------------
Cash and cash equivalents at end of period $ 19,260 $ 40,805
=============== ================
Supplemental cash flow information:
Interest paid during period $ 25,885 $ 6,614
=============== ================
Non-cash investing activities:
Reclassification of expired direct financing
lease to operating lease $ - $ 4,318
=============== ================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements
For the Nine Months Ended September 30, 1996 and September 30, 1995
(Unaudited)
(1) Organization
The foregoing financial statements of Columbia Lease Income Fund II-B L.P. (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, 1995.
(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 September 30, 1996 and December 31, 1995,
the allowance for doubtful accounts included in rents receivable was $6,873 and
$3,682, respectively.
(3) Investment Property
At September 30, 1996, the Partnership owned computer equipment with a cost
basis of $1,222,789, subject to existing leases and equipment with a cost basis
of $163,896 in inventory awaiting re-lease or sale. All purchases of computer
equipment are subject to a 2.5% acquisition fee paid to the General Partner.
<PAGE>
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements
For the Nine Months Ended September 30, 1996 and September 30, 1995
(Unaudited)
(4) 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 nine months ended
September 30, 1996 and 1995 are as follows:
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<CAPTION>
1996 1995
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<S> <C> <C>
Equipment acquisition fees $ - $ 11,939
Management fees 21,009 21,781
Reimbursable expenses paid 50,954 46,247
------------ --------------
$ 71,963 $ 79,967
============ ==============
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Under the terms of the Partnership Agreement, the General Partner is entitled to
an equipment acquisition fee of 2.5% of the purchase price paid by the
Partnership for the equipment. The General Partner is also entitled to a
management fee equal to 6% of the monthly rental billings, paid monthly, based
on rents received. The Partnership reimburses the General Partner and its
affiliates for certain expenses incurred by them in connection with the
operation of the Partnership.
(5) Long-Term Debt
Long-term debt at September 30, 1996 consists of three installment notes for
$26,321, $40,982 and $266,749 from Liberty Bank, each with an interest rate of
8.250%, 8.250% and 7.750%, respectively, collateralized by the equipment on
lease.
The annual maturities of long-term debt for the next three years are as follows:
1996 $ 44,636
1997 177,540
1998 111,876
------------
$ 334,052
============
(6) Distributions to Partners
For the nine months ended September 30, 1996, the declaration of Distributable
Cash was as follows:
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<CAPTION>
Limited Partners
General
Date Paid Distribution Partner
Quarter Ended or Payable Per $500 Unit Total Total
- ------------- ---------- ------------- ----- -----
<S> <C> <C> <C> <C>
March 31, 1996 May 15, 1996 $ 2.50 $ 50,542 $ 2,660
June 30, 1996 August 15, 1996 $ 1.25 $ 25,271 $ 1,330
September 30, 1996 November 15, 1996 $ 1.25 $ 25,271 $ 1,330
</TABLE>
<PAGE>
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operation
(Unaudited)
Results of Operations
The following discussion relates to Partnership's operations for the quarter and
nine month periods ended September 30, 1996 in comparison to the same periods in
1995.
The Partnership realized net income of $18,504 and $37,646 for the three month
periods ended September 30, 1996 and 1995, respectively. Rental income on
operating leases decreased $34,265 or 23% between the three month periods. The
decrease is primarily due to lower rental rates generated on equipment lease
extensions and remarketings resulting after the initial lease term expires.
Interest income has decreased $196 as a result of lower average cash balances
held during the current quarter.
Total costs and expenses decreased $15,632 or 14% between the three month
periods. The decrease in costs and expenses is due to a portion of the equipment
portfolio becoming fully depreciated. Interest expense increased $3,006 as the
Partnership continued to paydown its long-term debt during the current quarter.
The long-term debt balance at September 30, 1996 was $334,052 versus a balance
of $356,907 at September 30, 1995. Management fees decreased due to the decline
in rental income. General and administrative expenses increased between the
three month periods due to an increase in the allocable salaries of the
partnership accounting and reporting personnel of the General Partner. The
Partnership increased its provision for doubtful accounts by $4,522 for the
three month period ended September 30, 1996 to reserve for potential
uncollectible accounts.
The Partnership realized net income of $38,829 and $86,541 for the nine month
periods ended September 30, 1996 and 1995, respectively. Rental income decreased
$18,670 or 5% between the nine month periods. The decrease in rental income is
primarily due to lower rental rates on equipment lease extensions and
remarketing resulting after initial lease term expires. No earned income on
direct financing leases has been recognized during the current nine month period
due to the complete allocation of the lease payments to the fair market value of
the equipment over the lease terms in 1995. Interest income decreased $727 due
to the Partnership carrying lower average short-term investment balances during
the first nine months of 1996. The net gain on sale of equipment decreased
during the current year due to fewer sales of equipment.
Total costs and expenses increased $14,043 or 4% between the nine month periods.
The increase in costs and expenses is primarily the result of increased interest
expense and general and administrative expenses. Interest expense increased
$17,715, as the Partnership continued to paydown its long-term debt during the
nine month period ended September 30, 1996. General and administrative expenses
increased due to an increase in allocable salaries of the partnership accounting
and reporting personnel of the General Partner. The decrease in depreciation
expense between the nine month periods is due to a portion of the equipment
portfolio becoming fully depreciated. Management fees decreased slightly between
the nine month periods due to the decline in rental income. As discussed in the
quarter analysis above, the Partnership increased its provision for doubtful
accounts to reserve for potential uncollectible accounts.
<PAGE>
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operation
(Unaudited)
The Partnership recorded net income per Limited Partnership Unit of $0.87 and
$1.77 for the quarters ended September 30, 1996 and 1995, respectively, and
$1.82 and $4.07 for the nine month periods ended September 30, 1996 and 1995,
respectively.
Liquidity and Capital Resources
For the nine months ended September 30, 1996, rental revenue generated from
operating leases was the primary source of funds for the Partnership. As
equipment leases terminate, the General Partner determines if the equipment will
be extended to the same lessee, remarketed to another lessee, or if it is less
marketable, sold. This decision is made upon analyzing which option would
generate the most favorable results.
Rental income on operating leases will continue to decrease due to two factors.
First, lower rental rates are obtained on the remarketing of existing equipment
after the expiration of the original lease. Typically, the remarketed rates are
lower due to the decrease in useful life of the equipment. Second, the
increasing change of technology in the computer industry usually decreases the
demand for older equipment, thus increasing the possibility of obsolescence.
Both of these factors together will cause remarketed rates to be lower than
original rates. This decrease however, should not affect the Partnership's
ability to meet its future cash requirements. To the extent that future cash
flows should be insufficient to meet the Partnership's operating expenses and
liabilities, additional funds could be obtained through the sale of equipment,
or a reduction in the rate of cash distributions. Future rental revenues from
operating leases amount to $548,829 and are to be received over the next five
years.
For the nine months ended September 30, 1996, the Partnership's investing
activities generated $2,888 in sales proceeds on the sale of equipment with a
depreciated cost basis of $490. The Partnership has no material capital
expenditure commitments and will not purchase equipment in the future as the
Partnership has reached the end of its reinvestment period.
The Partnership's financing activities resulted in a paydown on long-term debt
of $163,447 for the nine months ended September 30, 1996. The Partnership will
payoff its remaining long-term debt of $334,052 by 1998.
Cash distributions are currently at an annual level of 1% per Limited
Partnership Unit, or $1.25 per Limited Partnership Unit on a quarterly basis.
For the quarter ended September 30, 1996, the Partnership declared a cash
distribution of $26,601, of which $1,330 was allocated to the General Partner
and $25,271 was allocated to the Limited Partners. The distribution is payable
on November 15, 1996. The Partnership expects to continue paying distributions
near this level. The effects of inflation have not been significant to the
Partnership and are not expected to have a material impact in future periods.
On January 9, 1996, TLP Holding LLC purchased all the common stock of TLP
Leasing Programs, Inc. from CMI Holding Co. Under the new ownership, it is
expected that TLP Leasing Programs, Inc. will continue to operate in the same
manner of business as it has in the past.
<PAGE>
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<CAPTION>
PART II. OTHER INFORMATION
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
<S> <C>
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
</TABLE>
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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.
COLUMBIA LEASE INCOME FUND II-B L.P.
(Registrant)
By: TLP Columbia Management Corporation,
its General Partner
Date: November 14, 1996
By: Arthur P. Beecher,
President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000769333
<NAME> COLUMBIA II-B FDS 9/30/96
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 19,260
<SECURITIES> 0
<RECEIVABLES> 24,634
<ALLOWANCES> 6,873
<INVENTORY> 0
<CURRENT-ASSETS> 37,021
<PP&E> 1,386,685
<DEPRECIATION> 1,007,448
<TOTAL-ASSETS> 416,258
<CURRENT-LIABILITIES> 83,838
<BONDS> 334,052
<COMMON> 8,845,937
0
0
<OTHER-SE> (8,847,569)
<TOTAL-LIABILITY-AND-EQUITY> 416,258
<SALES> 366,539
<TOTAL-REVENUES> 370,422
<CGS> 0
<TOTAL-COSTS> 21,009
<OTHER-EXPENSES> 281,508
<LOSS-PROVISION> 3,191
<INTEREST-EXPENSE> 25,885
<INCOME-PRETAX> 38,829
<INCOME-TAX> 0
<INCOME-CONTINUING> 38,829
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,829
<EPS-PRIMARY> 1.82
<EPS-DILUTED> 0
</TABLE>
