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
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Quarter Ended September 30, 1997 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 12
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COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
INDEX Page No.
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Part I. FINANCIAL INFORMATION
Financial Statements
Balance Sheets as of September 30, 1997 and December 31, 1996 3
Statements of Operations
Quarters Ended September 30, 1997 and 1996 and
Nine Months Ended September 30, 1997 and 1996 4
Statements of Cash Flows
Nine Months Ended September 30, 1997 and 1996 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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<CAPTION>
PART I. FINANCIAL INFORMATION
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Balance Sheets
Assets (Unaudited) (Audited)
9/30/97 12/31/96
--------------- ---------------
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Investment property, at cost (note 3):
Computer equipment $ 1,092,324 $ 1,338,357
Less accumulated depreciation 907,734 1,023,626
--------------- ---------------
Investment property, net 184,590 314,731
Cash and cash equivalents 15,608 23,330
Rents receivable, net (note 2) 3,836 28,066
Sales receivable, net (note 2) 51 139
Accounts receivable - affiliates 913 3,156
Other assets 26,010 -
--------------- ---------------
Total assets $ 231,008 $ 369,422
=============== ===============
Liabilities and Partners' Deficit
Liabilities:
Current portion of long-term debt (note 5) $ 128,986 $ 177,540
Accounts payable and accrued expenses - affiliates (note 4) 32,792 39,014
Accounts payable and accrued expenses 27,050 16,750
Distributions payable (note 6) 1,330 27,931
Long-term debt, less current portion (note 5) 64,160 111,876
--------------- ---------------
Total liabilities 254,318 373,111
--------------- ---------------
Partners' deficit:
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 62,817 61,138
Cumulative cash distributions (410,232) (407,572)
Reallocation of capital accounts 346,415 345,434
--------------- ---------------
- -
--------------- ---------------
Limited Partners (20,217 units):
Capital contribution, net of
offering costs 8,844,937 8,844,937
Cumulative net income 1,193,536 1,161,634
Cumulative cash distributions (9,715,368) (9,664,826)
Reallocation of capital accounts (346,415) (345,434)
--------------- ---------------
(23,310) (3,689)
--------------- ---------------
Total partners' deficit (23,310) (3,689)
--------------- ---------------
Total liabilities and partners' deficit $ 231,008 $ 369,422
=============== ===============
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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,
----------------------------- --------------------------------
1997 1996 1997 1996
----------------------------- --------------------------------
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Revenue:
Rental income on operating leases $ 80,981 $ 117,484 $ 208,445 $ 366,539
Interest income 112 110 526 1,485
Other income 1,258 - 1,258 -
Net gain on sale of equipment 468 308 7,104 2,398
------------- ------------- ------------- -------------
Total revenue 82,819 117,902 217,333 370,422
------------- ------------- ------------- -------------
Costs and expenses:
Depreciation 35,113 64,203 115,310 227,516
Interest 4,671 7,135 15,606 25,885
Related party expenses (note 4):
Management fees 5,084 6,461 15,683 21,009
General and administrative 24,285 17,077 62,597 53,992
(Reversal of) provision for
doubtful accounts (1,736) 4,522 (25,444) 3,191
------------- ------------- ------------- -------------
Total costs and expenses 67,417 99,398 183,752 331,593
------------- ------------- ------------- -------------
Net income $ 15,402 $ 18,504 $ 33,581 $ 38,829
============= ============= ============= =============
Net income per Limited
Partnership Unit $ 0.73 $ 0.87 $ 1.58 $ 1.82
============= ============= ============= =============
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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 Cash Flows
Nine Months Ended September 30, 1997 and 1996
(Unaudited)
1997 1996
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Cash flows from operating activities:
Net income $ 33,581 $ 38,829
--------------- ----------------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 115,310 227,516
(Reversal of) provision for doubtful accounts (25,444) 3,191
Net gain on sale of equipment (7,104) (2,398)
Net decrease (increase) in current assets 25,995 (5,655)
Net increase (decrease) in current liabilities 4,078 (32,333)
--------------- ----------------
Total adjustments 112,835 190,321
--------------- ----------------
Net cash provided by operating activities 146,416 229,150
--------------- ----------------
Cash flows from investing activities:
Proceeds from sales of investment property 21,935 2,888
--------------- ----------------
Net cash provided by investing activities 21,935 2,888
--------------- ----------------
Cash flows from financing activities:
Proceeds from borrowing on long-term debt 35,119 -
Principal payment on long-term debt (131,389) (163,447)
Cash distributions to partners (79,803) (159,611)
--------------- ----------------
Net cash used in financing activities (176,073) (323,058)
--------------- ----------------
Net decrease in cash and cash equivalents (7,722) (91,020)
Cash and cash equivalents at beginning of period 23,330 110,280
--------------- ----------------
Cash and cash equivalents at end of period $ 15,608 $ 19,260
=============== ================
Supplemental cash flow information:
Interest paid during period $ 15,606 $ 25,885
=============== ================
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See accompanying notes to financial statements.
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COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements
Nine Months Ended September 30, 1997 and September 30, 1996
(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, 1996.
(2) Significant Accounting Policies
Allowance for Doubtful Accounts
The financial statements include an allowance for estimated losses on receivable
balances. The allowances for doubtful accounts are 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, 1997 and December 31, 1996,
the allowance for doubtful accounts included in rents receivable was $2,297 and
$27,741, respectively. The allowance for doubtful accounts included in sales
receivable was $250 at September 30, 1997 and December 31, 1996, respectively.
(3) Investment Property
At September 30, 1997, the Partnership owned computer equipment with a
depreciated cost basis of $184,590, subject to existing leases. All purchases of
computer equipment are subject to a 2.5% acquisition fee paid to the General
Partner.
(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 are as follows:
1997 1996
---- ----
Management fees $ 15,683 $ 21,009
Reimbursable expenses paid 53,151 50,954
------------ --------------
$ 68,834 $ 71,963
============ ==============
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COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements
Nine Months Ended September 30, 1997 and September 30, 1996
(Unaudited)
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. In addition, 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, 1997 consists of two installment notes from
Liberty Bank for $8,537 and $184,609, each with an interest rate of 8.250% and
8.500%, respectively, collateralized by the equipment on lease.
The annual maturities of long-term debt for the next three years are as follows:
1997 $ 37,699
1998 123,027
1999 32,420
------------
$ 193,146
============
(6) Distributions to Partners
For the nine months ended September 30, 1997, the declaration of Distributable
Cash was as follows:
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Limited Partners
General
Date Paid Distribution Partner
Quarter Ended or Payable Per $500 Unit Total Total
- ------------- ---------- ------------- ----- -----
<S> <C> <C> <C> <C>
March 31, 1997 May 15, 1997 $ 1.25 $ 25,271 $ 1,330
June 30, 1997 August 15, 1997 $ 1.25 $ 25,271 $ 1,330
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COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
Results of Operations
The following discussion relates to Partnership's operations for the quarter and
nine months ended September 30, 1997 in comparison to the same periods in 1996.
The Partnership realized net income of $15,402 and $18,504 for the quarters
ended September 30, 1997 and 1996, respectively. Rental income on operating
leases decreased $36,503 or 31% 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
remained relatively flat between the three month periods. Other income is the
result of a reduction of an overstated liability recorded in a prior period. The
slight increase in net gain on sale of equipment in the current quarter can be
attributed to a larger number of equipment sales carrying low net book values.
Total costs and expenses decreased $31,981 or 32% between the three month
periods. The decrease in costs and expenses is mainly due to the $29,090 decline
in depreciation expense during the current quarter in comparison to the same
period in 1996. The decrease in depreciation expense is due to a large portion
of the equipment portfolio becoming fully depreciated and an overall reduction
in the equipment portfolio. Interest expense decreased $2,464 as the Partnership
continued to paydown the principle on long-term debt during the current quarter.
The long-term debt balance at September 30, 1997 was $193,146 versus a balance
of $334,052 at September 30, 1996. Management fees decreased in correlation with
the decline in rental income. General and administrative expenses increased
$7,208. A major factor contributing to this increase is that the reimbursable
salaries and expenses of the partnership accounting and reporting personnel of
the General Partner are being allocated over a diminishing number of
partnerships under management. The $1,736 reversal of the provision for doubtful
accounts in the current quarter is due to the successful collection efforts on
delinquent rents receivable.
The Partnership realized net income of $33,581 and $38,829 for the nine months
ended September 30, 1997 and 1996, respectively. The $158,094 or 43% decrease in
rental income is attributed to lower rental rates generated on equipment lease
extensions and remarketings resulting after initial lease term expires, and due
to an overall reduction in the equipment portfolio. Interest income decreased
$959 as a result of lower average cash balances held during the nine month
period. As mentioned in the quarter analysis above, other income is the result
of a reduction of an overstated liability recorded in a prior period. The
increase in net gain on sale of equipment is due to a larger number of equipment
sales carrying low net book values.
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COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
Total costs and expenses decreased $147,841 or 45% between the nine month
periods. The decrease in costs and expenses is mainly due to the $112,206 or 49%
decline in depreciation expense. As discussed in the quarter analysis above, the
decrease in depreciation expense is due to a large portion of the equipment
portfolio becoming fully depreciated and due to an overall reduction in the
equipment portfolio. Another element impacting the decline in costs and expenses
is the $25,444 reversal of provision for doubtful accounts. The reversal is a
result of successful collection efforts on delinquent rents receivable in 1997.
Interest expense decreased $10,279 as the Partnership continued to paydown the
principle on its long-term debt during the nine month period ended September 30,
1997. Management fees decreased $5,326 between the nine month periods due to the
decline in rental income. General and administrative expenses increased $8,605
or 16% mainly due to an increase in the allocable salaries of the partnership
accounting and reporting personnel of the General partner during the current
year.
The Partnership recorded net income per Limited Partnership Unit of $0.73 and
$0.87 for the quarters ended September 30, 1997 and 1996, respectively, and
$1.58 and $1.82 for the nine month periods ended September 30, 1997 and 1996,
respectively.
Liquidity and Capital Resources
For the nine months ended September 30, 1997, 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 sold. This
decision is made upon analyzing which option generates the most favorable
result.
Rental income on operating leases has continued to decrease due to two factors.
First, lower rental rates are obtained on the remarketing of existing equipment
upon 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 the
original rates.
For the nine months ended September 30, 1997, the Partnership's investing
activities generated $21,935 in sales proceeds on the sale of equipment with a
depreciated cost basis of $27,727. Included in equipment sales is a $12,896 loss
which has been charged against the reserve, initially set up in a prior period
to account for estimated losses on the ultimate disposition of equipment.
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COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
The Partnership's financing activities resulted in the paydown on long-term debt
in the amount of $131,389 and proceeds from borrowing on long-term debt of
$35,119 for the nine months ended September 30, 1997. The Partnership will
payoff its remaining long-term debt of $193,146 by 1999. The effects of
inflation have not been significant to the Partnership and are not expected to
have a material impact in future periods.
During the third quarter of 1997, the General Partner announced its intentions
of winding down the operations of the Partnership. It is anticipated that all of
the assets will be liquidated by December 31, 1997. The proceeds generated from
the sale of the assets will be used to settle all outstanding liabilities and to
make a final distribution during February, 1998.
Cash distributions are currently halted in an effort to minimize costs and
accumulate cash in anticipation of a final distribution to the Partners once the
Partnership has been liquidated.
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PART II. OTHER INFORMATION
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware 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
<PAGE>
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 7, 1997
By: Arthur P. Beecher,
President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000769333
<NAME> COLUMBIA LEASE INCOME FUND II-B FDS 9/30/97
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 15,608
<SECURITIES> 0
<RECEIVABLES> 7,347
<ALLOWANCES> 2,547
<INVENTORY> 0
<CURRENT-ASSETS> 46,418
<PP&E> 1,092,324
<DEPRECIATION> 907,734
<TOTAL-ASSETS> 231,008
<CURRENT-LIABILITIES> 61,172
<BONDS> 193,146
8,845,937
0
<COMMON> 0
<OTHER-SE> (8,869,247)
<TOTAL-LIABILITY-AND-EQUITY> 231,008
<SALES> 208,445
<TOTAL-REVENUES> 217,333
<CGS> 0
<TOTAL-COSTS> 15,683
<OTHER-EXPENSES> 177,907
<LOSS-PROVISION> (25,444)
<INTEREST-EXPENSE> 15,606
<INCOME-PRETAX> 33,581
<INCOME-TAX> 0
<INCOME-CONTINUING> 33,581
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,581
<EPS-PRIMARY> 1.58
<EPS-DILUTED> 0
</TABLE>
