UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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-E L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3418894
(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
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</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-E L.P.
(A Delaware Limited Partnership)
INDEX Page No.
Part I. FINANCIAL INFORMATION
Financial Statements
<S> <C> <C>
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 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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<TABLE>
Part I. FINANCIAL INFORMATION
COLUMBIA LEASE INCOME FUND II-E 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 $ 780,046 $ 618,227
Less accumulated depreciation 344,136 210,980
------- -------
Investment property, net 435,910 407,247
Cash 98,092 48,925
Net investment in direct financing leases 1,503 15,940
Rents receivable, net (note 2) 7,774 1,977
Sales receivable, net (note 2) 1,707 2,500
----- -----
Total assets $ 544,986 $ 476,589
= ======= = =======
Liabilities and Partners' Equity
Liabilities:
Current portion of long-term debt (note 5) $ 130,055 $ -
Accounts payable and accrued expenses - affiliates (note 4) 14,680 11,107
Accounts payable and accrued expenses 7,752 23,143
Distributions payable (note 6) 32,758 49,135
Long-term debt, less current portion (note 5) 104,578 -
------- -
Total liabilities 289,823 83,385
------- ------
Partners' equity:
General Partner:
Capital contribution 1,000 1,000
Cumulative net (loss) income (644) 1,578
Cumulative cash distributions (68,586) (63,906)
Reallocation of capital accounts 68,230 61,328
------ ------
- -
Limited Partners (4,742 Units):
Capital contribution, net of
offering costs 2,074,625 2,074,625
Cumulative net (loss) income (12,217) 30,008
Cumulative cash distributions (1,739,015) (1,650,101)
Reallocation of capital accounts (68,230) (61,328)
------- -------
255,163 393,204
------- -------
Total partners' equity 255,163 393,204
------- -------
Total liabilities and partners' equity $ 544,986 $ 476,589
= ======= = =======
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See accompanying notes to financial statements.
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COLUMBIA LEASE INCOME FUND II-E 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 $ 61,568 $ 42,083 $ 164,303 $ 90,809
Earned income on direct
financing leases 279 1,326 1,206 1,711
Interest income 1,783 748 2,367 7,157
Net gain (loss) on sale of equipment 375 342 (1,534) 25,521
--- --- ------ ------
Total revenue 64,005 44,499 166,342 125,198
------ ------ ------- -------
Costs and expenses:
Depreciation 86,887 36,981 170,341 63,974
Interest 3,392 - 3,392 -
Related party expenses (note 4):
Management fees 3,354 3,236 9,192 15,972
General and administrative 9,722 10,225 25,266 21,820
(Reversal of) provision for
doubtful accounts - (1,362) 2,598 9,557
- ------ ----- -----
Total costs and expenses 103,355 49,080 210,789 111,323
------- ------ ------- -------
Net (loss) income $ (39,350) $ (4,581) $ (44,447) $ 13,875
= ======= = ====== = ======= = ======
Net (loss) income per Limited
Partnership Unit $ (7.88) $ (0.92) $ (8.90) $ 2.78
= ===== = ===== = ===== = ====
</TABLE>
See accompanying notes to financial statements.
<PAGE>
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COLUMBIA LEASE INCOME FUND II-E 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 (loss) income $ (44,447) $ 13,875
- ------- - ------
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:
Depreciation 170,341 63,974
Provision for doubtful accounts 2,598 9,557
Net loss (gain) on sale of equipment 1,534 (25,521)
Net decrease in current assets 4,995 21,479
Net (decrease) increase in current liabilities (11,818) 3,352
------- -----
Total adjustments 167,650 72,841
------- ------
Net cash provided by operating activities 123,203 86,716
------- ------
Cash flows from investing activities:
Purchase of investment property (202,164) (452,203)
Proceeds from sales of investment property 3,466 29,225
----- ------
Net cash used in investing activities (198,698) (422,978)
-------- --------
Cash flows from financing activities:
Proceeds from borrowings on long-term debt 255,262 -
Principal payments on long-term debt (20,629) -
Cash distributions to partners (109,971) (169,246)
-------- --------
Net cash provided by (used in) financing activities 124,662 (169,246)
------- --------
Net increase (decrease) in cash 49,167 (505,508)
Cash and cash equivalents at beginning of period 48,925 585,919
------ -------
Cash and cash equivalents at end of period $ 98,092 $ 80,411
= ====== = ======
Supplemental cash flow information:
Interest paid during the period $ 3,392 $ -
= ===== = =
Non-cash investing activities:
Reclassification of residual value of expired
direct financing lease to operating lease $ 1,840 $ -
= ===== = =
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COLUMBIA LEASE INCOME FUND II-E 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-E 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 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 September 30, 1995 and December 31, 1994,
the allowance for doubtful accounts included in rents receivable was $479 and
$381, respectively, and $2,500 and $0 included in sales receivable,
respectively.
(3) Investment Property
At September 30, 1995, the Partnership owned computer equipment, with a cost
basis of $756,961, subject to existing leases and equipment with a cost basis of
$23,085 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 are as follows:
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1995 1994
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<S> <C> <C>
Equipment acquisition fees $ 4,931 $ 11,029
Management fees 9,192 15,972
Reimbursable expenses paid 25,118 13,691
------ ------
$ 39,241 $ 40,692
= ====== = ======
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COLUMBIA LEASE INCOME FUND II-E 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 loan for
$234,633 from Pullman Capital Corporation bearing interest at a rate of 8.00%,
maturing in 1997, collateralized by the equipment on lease.
The annual maturities of long-term debt for the next three years are as follows:
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<CAPTION>
Year Ending December 31
<S> <C>
1995 $ 31,548
1996 132,674
1997 70,411
------
$ 234,633
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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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<CAPTION>
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 $ 6.25 $ 29,638 $ 1,560
June 30, 1995 August 15, 1995 $ 6.25 $ 29,638 $ 1,560
September 30, 1995 November 15, 1995 $ 6.25 $ 29,638 $ 1,560
</TABLE>
<PAGE>
COLUMBIA LEASE INCOME FUND II-E 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 month periods ended September 30, 1995 compared to the same periods in
1994.
The Partnership realized a net loss of $39,350 and $4,581 for the three month
periods ended September 30, 1995 and 1994, respectively. Rental income on
operating leases increased $19,485 between the three month periods. The increase
in rental income can be attributed to rents associated with equipment
acquisitions of $202,164 and $452,203 during the nine months ended September 30,
1995 and 1994, respectively. Interest income increased as a result of higher
average short-term investment balances compared to September 30, 1994.
Total costs and expenses significantly increased $54,275 between the three month
periods. This sharp increase in costs and expenses is primarily the result of
higher depreciation expense. The $49,906 increase in depreciation expense was
directly related to equipment purchases during 1995 and 1994, as mentioned
above. Interest expense was generated in the current quarter due to the interest
paid on the long-term debt acquired in the current quarter. Management fees have
remained constant and are calculated based on rents collected. General and
administrative expenses have decreased slightly due to reduced costs for
equipment refurbishing and storage, resulting from the decrease of equipment in
inventory awaiting re-lease or sale. The Partnership was able to reduce its
provision for bad debts during the prior quarter due to successful collection
efforts on delinquent accounts receivable.
The Partnership realized a net loss of $44,447 and net income of $13,875 for the
nine month periods ended September 30, 1995 and 1994, respectively. Rental
income on operating leases increased $73,494 between the nine month periods. As
discussed above, the increase in rental income is primarily due to equipment
acquisitions during the current and prior years. Earned income on existing
direct financing leases will continue to decline over the lease term as more of
each minimum lease payment, as calculated using the rate implicit in the lease,
is allocated to the recovery of the fair market value of the equipment at the
inception of the lease. The Partnership has one direct financing lease with a
term scheduled to expire in 1995. Interest income decreased overall due to the
Partnership carrying lower average short-term investment balances during the
current year. The loss on sale of equipment during the second quarter can be
attributed to sales of equipment carrying higher net book values.
Total costs and expenses increased $99,466 between the nine month periods. The
significant increase in costs and expenses is again due to higher depreciation
expense. As discussed above, the $106,367 increase in depreciation expense is
attributable to equipment purchases during 1995 and 1994. Interest expense has
increased due to the interest paid on long-term debt acquired in the current
quarter. Management fees have decreased overall due to remarketing fees incurred
during the second quarter of 1994, causing the management fees for the nine
months ended 1994 to be unusually high. However, management fees and general and
administrative expenses are in line with rental income for the current year.
For the nine month periods ended September 30, 1995 and 1994, the Partnership
recorded net (loss) income per Limited Partnership Unit of $(8.90) and $2.78,
respectively.
<PAGE>
COLUMBIA LEASE INCOME FUND II-E 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 $552,309 and are to be received
over the next three years.
For the first nine months of 1995, the Partnership's investing activities
resulted in equipment purchases of $202,164 and equipment sales with a
depreciated cost of $5,000, generating $3,466 in sales proceeds. 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 during the first nine months of 1995
resulted in proceeds from borrowing on long-term debt of $255,262 and principal
payments of $20,629. Such long-term debt 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 a level of 5% per Limited Partnership Unit,
or $6.25 per Limited Partnership Unit. For the quarter ended September 30, 1995,
the Partnership declared a cash distribution of $31,198 of which $1,560 was
allocated to the General Partner and $29,638 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 in the future.
The effects of inflation have not been significant to the Partnership and are
not expected to have a material impact in future periods.
<PAGE>
PART II. OTHER INFORMATION
COLUMBIA LEASE INCOME FUND II-E L.P.
(A Delaware Limited Partnership)
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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>
<PAGE>
COLUMBIA LEASE INCOME FUND II-E 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-E 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> 0000769336
<NAME> COLUMBIA LEASE INCOME FUND II-E
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 98,092
<SECURITIES> 0
<RECEIVABLES> 13,963
<ALLOWANCES> 2,979
<INVENTORY> 0
<CURRENT-ASSETS> 109,076
<PP&E> 780,046
<DEPRECIATION> 344,136
<TOTAL-ASSETS> 544,986
<CURRENT-LIABILITIES> 55,190
<BONDS> 234,633
<COMMON> 2,075,625
0
0
<OTHER-SE> (1,820,462)
<TOTAL-LIABILITY-AND-EQUITY> 544,986
<SALES> 165,509
<TOTAL-REVENUES> 166,342
<CGS> 0
<TOTAL-COSTS> 9,192
<OTHER-EXPENSES> 195,607
<LOSS-PROVISION> 2,598
<INTEREST-EXPENSE> 3,392
<INCOME-PRETAX> (44,447)
<INCOME-TAX> 0
<INCOME-CONTINUING> (44,447)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (44,447)
<EPS-PRIMARY> (8.90)
<EPS-DILUTED> 0
</TABLE>
