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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For The Quarter Ended March 31, 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 11
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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 March 31, 1997 and December 31, 1996 3
Statements of Operations
Quarters Ended March 31, 1997 and 1996 4
Statements of Cash Flows
Quarters Ended March 31, 1997 and 1996 5
Notes to Financial Statements 6 - 7
Management's Discussion and Analysis of Financial Condition and
Results of Operation 8 - 9
Part II. OTHER INFORMATION
Items 1 - 6 10
Signature 11
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PART I. FINANCIAL INFORMATION
COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Balance Sheets
Assets
(Unaudited) (Audited)
3/31/97 12/31/96
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Investment property, at cost (note 3):
Computer equipment $ 1,212,996 $ 1,338,357
Less accumulated depreciation 945,365 1,023,626
--------------- ---------------
Investment property, net 267,631 314,731
Cash and cash equivalents 36,918 23,330
Rents receivable, net (note 2) 2,256 28,066
Sales receivable, net (note 2) - 139
Accounts receivable - affiliates (note 4) 1,466 3,156
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Total assets $ 308,271 $ 369,422
=============== ===============
Liabilities and Partners' Equity
Liabilities:
Current portion of long-term debt (note 5) $ 164,825 $ 177,540
Accounts payable and accrued expenses - affiliates (note 4) 41,545 39,014
Accounts payable and accrued expenses 21,095 16,750
Distributions payable (note 6) 27,931 27,931
Long-term debt, less current portion (note 5) 79,066 111,876
--------------- ---------------
Total liabilities 334,462 373,111
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Partners' equity (deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 61,343 61,138
Cumulative cash distributions (408,902) (407,572)
Reallocation of capital accounts 346,559 345,434
--------------- ---------------
- -
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Limited Partners (20,217 units):
Capital contribution, net of
offering costs 8,844,937 8,844,937
Cumulative net income 1,165,528 1,161,634
Cumulative cash distributions (9,690,097) (9,664,826)
Reallocation of capital accounts (346,559) (345,434)
--------------- ---------------
(26,191) (3,689)
--------------- ---------------
Total partners' deficit (26,191) (3,689)
--------------- ---------------
Total liabilities and partners' equity $ 308,271 $ 369,422
=============== ===============
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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)
Statements of Operations
Quarters Ended March 31, 1997 and 1996
(Unaudited)
1997 1996
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Revenue:
Rental income on operating leases $ 45,109 $ 135,004
Interest income 186 1,138
Net gain on sale of equipment 4,387 340
--------------- ---------------
Total revenue 49,682 136,482
--------------- ---------------
Costs and expenses:
Depreciation 40,378 99,090
Interest 5,374 10,514
Related party expenses (note 4):
Management fees 5,874 6,463
General and administrative 17,665 18,414
Reversal of provision for doubtful accounts (23,708) -
--------------- ---------------
Total costs and expenses 45,583 134,481
--------------- ---------------
Net income $ 4,099 $ 2,001
=============== ===============
Net income per Limited Partnership Unit $ 0.19 $ 0.09
=============== ===============
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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)
Statements of Cash Flows
Quarters Ended March 31, 1997 and 1996
(Unaudited)
1997 1996
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Cash flows from operating activities:
Net income $ 4,099 $ 2,001
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Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 40,378 99,090
Net gain on sale of equipment (4,387) (340)
Reversal of provision for doubtful accounts (23,708) -
Net decrease (increase) in current assets 51,347 (4,362)
Net increase (decrease) in current liabilities 6,876 (15,522)
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Total adjustments 70,506 78,866
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Net cash provided by operating activities 74,605 80,867
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Cash flows from investing activities:
Proceeds from sales of investment property 11,109 340
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Net cash provided by investing activities 11,109 340
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Cash flows from financing activities:
Principal payments on long-term debt (45,525) (58,703)
Cash distributions to partners (26,601) (79,805)
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Net cash used in financing activities (72,126) (138,508)
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Net increase (decrease) in cash and cash equivalents 13,588 (57,301)
Cash and cash equivalents at beginning of period 23,330 110,280
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Cash and cash equivalents at end of period $ 36,918 $ 52,979
============= =============
Supplemental cash flow information:
Interest paid during the period $ 5,374 $ 10,514
============= =============
Non cash investing activities:
Reclassification of residual value of expired
direct financing lease to operating lease $ - $ 20,797
============= =============
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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
Quarters Ended March 31, 1997 and March 31, 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 allowances 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 March 31, 1997 and December 31, 1996, the
allowance for doubtful accounts included in rents receivable was $4,033 and
$27,741, respectively. The allowance for doubtful accounts included in sales
receivable was $250 at March 31, 1997 and December 31, 1996, respectively.
(3) Investment Property
At March 31, 1997, the Partnership owned computer equipment with a depreciated
cost basis of $267,631 subject to existing leases. All purchases of computer
equipment are subject to a 2.5% acquisition fee paid to the General Partner.
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COLUMBIA LEASE INCOME FUND II-B L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements
Quarters Ended March 31, 1997 and March 31, 1996
(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 three months ended
March 31 are as follows:
1997 1996
---- ----
Management fees $ 5,874 $ 6,463
Reimbursable expenses paid 19,685 19,245
------------ --------------
$ 25,559 $ 25,708
============ ==============
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 March 31, 1997 consists of three installment notes from
Liberty Bank for $12,210, $25,093 and $206,588, 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 two years are as follows:
1997 $ 132,015
1998 111,876
------------
$ 243,891
============
(6) Distributions to Partners
For the three months ended March 31, 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
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<S> <C> <C> <C> <C>
March 31, 1997 May 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 Operation
(Unaudited)
Results of Operations
The following discussion relates to Partnership's operations for the three
month period ended March 31, 1997 in comparison to the same period in 1996.
The Partnership realized net income of $4,099 and $2,001 for the three month
periods ended March 31, 1997 and 1996, respectively. Rental income on operating
leases decreased $89,895 or 67% 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
decreased $952 or 84% as a result of lower average cash balances. The increase
in net gain on the sale of equipment in the current quarter is primarily due to
a larger number of equipment sales carrying low net book values.
Total costs and expenses decreased $88,898 or 66% between the three month
periods. The decrease in costs and expenses is mainly due to the $58,712
decrease 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. Another element impacting the decline in
costs and expenses is the $23,708 reversal of provision for doubtful accounts.
The reversal is a result of the successful collection efforts of delinquent
rents receivable in 1997. Interest expense decreased $5,140 as the Partnership
continued to paydown the principal on long-term debt during the current quarter.
The long-term debt balance at March 31, 1997 was $243,891 versus a balance of
$438,796 at March 31, 1996. Management fees and general and administrative
expenses decreased in correlation to the reduction in rental income.
The Partnership recorded net income per Limited Partnership Unit of $0.19
and $0.09 for the quarters ended March 31, 1997 and 1996, respectively.
Liquidity and Capital Resources
For the three months ended March 31, 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.
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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 Operation
(Unaudited)
Rental income on operating leases has continued to decrease due to two factors.
First, lower 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. This decrease however, should not affect the Partnership's ability to
meet its future cash requirements, including its long-term debt obligations. 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 on operating leases amount to $364,309 and
are to be received over the next five years.
For the three months ended March 31, 1997, the Partnership's investing
activities generated $11,109 in sales proceeds on the sale of equipment with a
depreciated cost basis of $6,722.
The Partnership's financing activities resulted in a paydown on long-term debt
of $45,525 for the three months ended March 31, 1997. The Partnership will
payoff its remaining long-term debt of $243,891 in 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 March 31, 1997, 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 May 15, 1997. The Partnership expects to continue paying distributions at or
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.
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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
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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
By: Arthur P. Beecher,
President
Date: May 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000769333
<NAME> COLUMBIA LEASE INCOME FUND II-B FDS 3/31/97
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 36,918
<SECURITIES> 0
<RECEIVABLES> 8,005
<ALLOWANCES> 4,283
<INVENTORY> 0
<CURRENT-ASSETS> 40,640
<PP&E> 1,212,996
<DEPRECIATION> 945,365
<TOTAL-ASSETS> 308,271
<CURRENT-LIABILITIES> 90,571
<BONDS> 243,891
0
0
<COMMON> 8,845,937
<OTHER-SE> (8,872,128)
<TOTAL-LIABILITY-AND-EQUITY> 308,271
<SALES> 45,109
<TOTAL-REVENUES> 49,682
<CGS> 0
<TOTAL-COSTS> 5,874
<OTHER-EXPENSES> 58,043
<LOSS-PROVISION> (23,708)
<INTEREST-EXPENSE> 5,374
<INCOME-PRETAX> 4,099
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,099
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,099
<EPS-PRIMARY> .19
<EPS-DILUTED> 0
</TABLE>
