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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<S> <C>
For The Quarter Ended September 30, 1995 Commission File No. 2-97907
COLUMBIA LEASE INCOME FUND II-D L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3270729
(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
----------------
</TABLE>
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-D L.P.
(A Delaware Limited Partnership)
<CAPTION>
INDEX Page No.
<S> <C> <C>
Part I. FINANCIAL INFORMATION
Financial Statements
Balance Sheets as of September 30, 1995 and December 31, 1994 3
Statements of Operations For the Quarters Ended
September 30, 1995 and 1994 and For the Nine Months Ended
September 30, 1995 and 1994 4
Statements of Cash Flows For the Nine Months Ended
September 30, 1995 and 1994 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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Part I. FINANCIAL INFORMATION
COLUMBIA LEASE INCOME FUND II-D L.P.
(A Delaware Limited Partnership)
Balance Sheets
<CAPTION>
Assets (Unaudited) (Audited)
9/30/95 12/31/94
Investment property, at cost (note 3):
<S> <C> <C>
Computer equipment $ 2,951,951 $ 2,383,363
Less accumulated depreciation 1,165,375 1,272,302
--------- ---------
Investment property, net 1,786,576 1,111,061
Cash and cash equivalents 307,869 906,846
Net investment in sales-type and direct financing leases 1,482 44,752
Rents receivable, net (note 2) 47,381 10,682
Sales receivable 2,664 2,239
Other assets 49,977 132
------ ---
Total assets $ 2,195,949 $ 2,075,712
= ========= = =========
Liabilities and Partners' Equity
Liabilities:
Current portion of long-term debt (note 5) $ 222,518 $ 131,899
Accounts payable and accrued expenses - affiliates (note 4) 66,707 48,009
Accounts payable and accrued expenses 33,498 41,708
Distributions payable (note 6) 85,902 107,376
Long-term debt, less current portion (note 5) 199,337 -
------- -
Total liabilities 607,962 328,992
------- -------
Partners' equity:
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 72,067 67,732
Cumulative cash distributions (126,393) (114,120)
Reallocation of capital accounts 53,326 45,388
------ ------
- -
------ ------
Limited Partners (7,772 Units):
Capital contribution, net of
offering costs 3,400,250 3,400,250
Cumulative net income 1,369,296 1,286,931
Cumulative cash distributions (3,128,233) (2,895,073)
Reallocation of capital accounts (53,326) (45,388)
------- -------
1,587,987 1,746,720
--------- ---------
Total partners' equity 1,587,987 1,746,720
--------- ---------
Total liabilities and partners' equity $ 2,195,949 $ 2,075,712
= ========= = =========
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See accompanying notes to financial statements.
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COLUMBIA LEASE INCOME FUND II-D L.P.
(A Delaware Limited Partnership)
Statements of Operations
(Unaudited)
<CAPTION>
Quarters Ended Nine Months Ended
September 30, September 30,
------------- -------------
1995 1994 1995 1994
---- ---- ---- ----
Revenue:
<S> <C> <C> <C> <C>
Rental income on operating leases $ 270,366 $ 226,283 $ 719,263 $ 487,980
Earned income on sales-type and
direct financing leases 50 2,362 2,007 8,625
Interest income 4,174 14,040 12,386 39,055
Net gain (loss) on sale of equipment 31,781 (55,917) 13,119 (43,481)
------ ------- ------ -------
Total revenue 306,371 186,768 746,775 492,179
------- ------- ------- -------
Costs and expenses:
Depreciation 217,399 103,734 564,987 231,668
Interest 6,475 2,810 9,333 2,810
Related party expenses (note 4):
Management fees 16,606 12,799 43,357 34,499
General and administrative 19,535 14,337 46,698 32,565
(Reversal of) provision for
doubtful accounts - 1,598 (4,300) 18,893
------ ----- ------ ------
Total costs and expenses 260,015 135,278 660,075 320,435
------- ------- ------- -------
Net income $ 46,356 $ 51,490 $ 86,700 $ 171,744
= ====== = ====== = ====== = =======
Net income per Limited
Partnership Unit $ 5.67 $ 6.29 $ 10.60 $ 20.99
= ==== = ==== = ===== = =====
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See accompanying notes to financial statements.
<PAGE>
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COLUMBIA LEASE INCOME FUND II-D L.P.
(A Delaware Limited Partnership)
Statements of Cash Flows
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 86,700 $ 171,744
- ------ - -------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 564,987 231,668
(Reversal of) provision for doubtful accounts (4,300) 18,893
Net (gain) loss on sale of equipment (13,119) 43,481
Net (increase) decrease in current assets (56,190) 46,557
Net increase in current liabilities 10,488 14,697
------ ------
Total adjustments 501,866 355,296
------- -------
Net cash provided by operating activities 588,566 527,040
------- -------
Cash flows from investing activities:
Purchases of investment property (1,235,172) (653,739)
Proceeds from sales of investment property 24,580 63,218
------ ------
Net cash used in investing activities (1,210,592) (590,521)
---------- --------
Cash flows from financing activities:
Proceeds from borrowing on long-term debt 443,625 221,605
Principal payments on long-term debt (153,669) (51,351)
Cash distributions to partners (266,907) (301,676)
-------- --------
Net cash provided by (used in) financing activities 23,049 (131,422)
------ --------
Net decrease in cash and cash equivalents (598,977) (194,903)
Cash and cash equivalents at beginning of period 906,846 1,527,844
------- ---------
Cash and cash equivalents at end of period $ 307,869 $ 1,332,941
= ======= = =========
Supplemental cash flow information:
Interest paid during the period $ 9,333 $ 2,810
= ===== = =====
Non-cash investing activities:
Reclassification of expired direct
financing leases to operating lease $ 16,791 $ 98,865
= ====== = ======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COLUMBIA LEASE INCOME FUND II-D L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
(1) Organization
The foregoing financial statements of Columbia Lease Income Fund II-D 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, 1994.
(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, 1995 and December 31, 1994,
the allowance for doubtful accounts included in rents receivable was $2,905 and
$7,205, respectively.
(3) Investment Property
At September 30, 1995, the Partnership owns computer equipment, with a cost
basis of $2,914,616, subject to existing leases and equipment with a cost basis
of $37,335 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.
(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, 1995 and 1994 are as follows:
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<CAPTION>
1995 1994
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<S> <C> <C>
Equipment acquisition fees $ 30,127 $ 15,945
Management fees 43,357 34,499
Reimbursable expenses paid 43,809 23,158
------ ------
$ 117,293 $ 73,602
= ======= = ======
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COLUMBIA LEASE INCOME FUND II-D L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements
(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 6.0% of the monthly rental billings collected, paid
quarterly. 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, 1995, consists of one installment note with
Randolph Computer Company for $13,475 with an interest rate of 5.75% and three
installment notes with Pullman Capital Corporation totaling $408,380 bearing
interest at 8.00% These four installment notes are collateralized by the
equipment on the respective leases.
Maturities of long-term debt for the next three years are as follows:
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1995 $ 67,378
1996 193,434
1997 161,043
-------
$ 421,855
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(6) Distributions to Partners
For the nine months ended September 30, 1995, declarations of Distributable Cash
were as follows:
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Limited Partners
General
Date Paid Distribution Partner
Quarter Ended or Payable Per $ 500 Unit Total Totals
- ------------- ---------- -------------- ----- ------
<S> <C> <C> <C> <C>
March 31, 1995 May 15, 1995 $ 10.00 $ 77,720 $ 4,091
June 30, 1995 August 15, 1995 $ 10.00 $ 77,720 $ 4,091
September 30, 1995 November 15, 1995 $ 10.00 $ 77,720 $ 4,091
</TABLE>
<PAGE>
COLUMBIA LEASE INCOME FUND II-D 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 the Partnership's operations for the quarter
and nine month periods ended September 30, 1995, compared to the same periods in
1994.
The Partnership realized net income of $46,356 and $51,490 for the three month
periods ended September 30, 1995 and 1994, respectively. Rental income on
operating leases increased $44,083 or 20% between the three month periods. The
significant increase in rental income can be attributed to leases resulting from
equipment acquisitions in 1994 and 1995. Earned income on sales-type and direct
financing leases will continue to decline over the lease term as more of each
minimum lease payments, as calculated using the rate implicit in the leases, are
allocated to the recovery of the fair market value of the equipment at the
inception of the lease. The Partnership currently has one sales-type remaining
with a lease term scheduled to expire in 1996. Interest income decreased as a
result of lower average short-term investment balances. The net gain on sale of
equipment recognized during the current quarter can be attributed to sales of
equipment carrying lower net book values and loss charge offs against the
reserve of $24,116.
Total costs and expenses increased $124,737 between the three month periods. The
increase in costs and expenses is the result of higher depreciation expense. The
increase in depreciation expense of $113,665 is directly related to equipment
purchases of $1,235,172 and $653,739 during 1995 and 1994, respectively. Also
included in depreciation expense for the quarter ended September 30, 1995 is a
provision of $25,000 for estimated losses on the ultimate disposition of
equipment. Management fees and general and administrative expenses increased due
to the overall rise in rental income.
The Partnership realized net income of $86,700 and $171,744 for the nine month
periods ended September 30, 1995 and 1994, respectively. Rental income on
operating leases increased $231,283. As discussed in the quarter analysis above,
the increase in rental income is directly related to equipment acquisitions in
1994 and 1995. Earned income on sales-type and direct financing leases will
continue to decline over the lease term as more of each minimum lease payments,
as calculated using the rate implicit in the lease, are allocated to the
recovery of the fair value of the equipment at the inception of the lease.
Interest income decreased due to the Partnership carrying lower average
short-term investment balances. As stated above, there was a net gain on sale of
equipment in the current year versus a net loss in the prior year, due to
equipment sales carrying lower net book values and loss charge offs of $120,996
in the current year.
Total costs and expenses increased $339,640 between the nine month periods. The
increase in costs and expenses is primarily the result of higher depreciation
expense. As discussed above, the $333,319 increase in depreciation expense is
mainly attributed to equipment purchases during 1994 and 1995. Included in
depreciation expense for the current nine months is a provision of $71,881 for
estimated losses on the ultimate disposition of equipment. Management fees and
general and administrative expenses increased due to the overall increase in
rental income. During the first quarter of 1995, the Partnership was able to
reverse a portion of its provision for doubtful accounts taken in a prior period
due to successful collection efforts on delinquent accounts.
The Partnership recorded net income per Limited Partnership Unit of $5.67 and
$10.60 for the quarter and nine months ended September 30, 1995, respectively.
<PAGE>
COLUMBIA LEASE INCOME FUND II-D L.P.
(A Delaware Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
Liquidity and Capital Resources.
For the nine months ended September 30, 1995, 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 existing operating leases may decline due to two factors. The
first factor is the rate obtained when the original leases expire and are
remarketed at a lower rate. Typically the remarketed rates are lower due to the
decrease in useful life of the equipment. Secondly, the increasing change in
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, 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 $2,536,546 and are to be received
over the next five years.
In the first nine months of 1995, the Partnership's investing activities
resulted in equipment purchases of $1,235,172 and equipment sales with a
depreciated cost basis of $132,457, generating $24,580 in proceeds. Associated
with the equipment sales were $120,996 of loss charge offs against the reserve,
initially set up in prior periods for estimated losses on the ultimate
disposition of equipment. The Partnership has no material capital expenditure
commitments, but expects to continue to purchase equipment as new operating
leases are presented.
The Partnership's financing activities resulted in the paydown of long-term debt
of $153,669 and proceeds from borrowing on long-term debt of $443,625 for the
nine months ended September 30, 1995. The new debt incurred during the second
quarter of 1995 bears interest at 8.00% with installments to be paid monthly.
The Partnership will continue to take down new long-term debt as necessary to
purchase equipment.
Cash distributions are currently at an annual level of 8% per Limited
Partnership Unit, or $10.00 per Limited Partnership Unit on a quarterly basis.
For the quarter ended September 30, 1995, the Partnership declared a cash
distribution of $81,811, of which $4,091 was allocated to the General Partner
and $77,720 was allocated to the Limited Partners. The distribution will be made
on November 15, 1995. 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.
<PAGE>
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<CAPTION>
PART II. OTHER INFORMATION
COLUMBIA LEASE INCOME FUND II-D 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
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<PAGE>
COLUMBIA LEASE INCOME FUND II-D L.P.
(A Delaware Limited Partnership)
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-D L.P.
(Registrant)
By: TLP-Columbia Management Corporation,
its General Partner
By: Arthur P. Beecher,
President
Date: November 14, 1995
--------------------
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000769335
<NAME> COLUMBIA LEASE INCOME FUND II-D
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 307,869
<SECURITIES> 0
<RECEIVABLES> 104,409
<ALLOWANCES> 2,905
<INVENTORY> 0
<CURRENT-ASSETS> 409,373
<PP&E> 2,951,951
<DEPRECIATION> 1,165,375
<TOTAL-ASSETS> 2,195,949
<CURRENT-LIABILITIES> 186,107
<BONDS> 421,855
<COMMON> 3,401,250
0
0
<OTHER-SE> (1,813,263)
<TOTAL-LIABILITY-AND-EQUITY> 2,195,949
<SALES> 721,270
<TOTAL-REVENUES> 746,775
<CGS> 0
<TOTAL-COSTS> 43,357
<OTHER-EXPENSES> 611,685
<LOSS-PROVISION> (4,300)
<INTEREST-EXPENSE> 9,333
<INCOME-PRETAX> 86,700
<INCOME-TAX> 0
<INCOME-CONTINUING> 86,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86,700
<EPS-PRIMARY> 10.60
<EPS-DILUTED> 0
</TABLE>
