SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549-1004
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995
Commission File Number 0-16763
CIS Capital Equipment Fund, Ltd. 2, a California Limited Partnership
(Exact name of Registrant as specified in its charter)
California 59-2737253
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
880 Carillon Parkway, St. Petersburg, Florida 33716
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (813) 573-3800
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
Number of Units at
Title of Each Class September 30, 1995
Units of Limited Partnership
Interest: $500 per unit 60,000
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II, 1994 Form 10-K, filed with the
Securities and Exchange Commission on April 2, 1995
Parts III and IV - Form S-1 Registration Statement
and all amendments and supplements thereto
File No. 33-10604
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS
September 30, December 31,
1995 1994
(Unaudited) (Audited)
ASSETS
Rental Equipment, at Cost $ 10,076,053 $ 15,890,630
Less: Accumulated Depreciation (8,670,902) (12,448,352)
1,405,151 3,442,278
Net Investment in Sales-Type Lease 222,756 197,328
Deferred Debt Cost (Net of Accumulated
Amortization of $34,777 and $34,112,
Respectively) 0 665
Prepaid Expenses 175 482
Rent Receivable 29,972 55,575
Cash and Cash Equivalents 1,757,440 4,868,272
Total Assets $ 3,415,494 $ 8,564,600
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts Payable $ 625 $ 88,013
Payable to General Partner 870 38,889
Unearned Revenue 72,247 106,128
Total Liabilities 73,742 233,030
Partners' Equity:
Limited Partners (60,000 units outstanding
at September 30, 1995, and
December 31, 1994) 2,598,144 8,305,660
General Partner 743,608 25,910
Total Partners' Equity 3,341,752 8,331,570
Total Liabilities and Partners' Equity $ 3,415,494 $ 8,564,600
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1995 1994
Revenues:
Rental Income $ 1,176,238 $ 1,808,477
Interest Income 178,361 114,704
Gain on Sale of Equipment 6,376,380 0
Gain on Sale of Rental Equipment Held
for Sale 0 742,865
Other Income 26,835 0
Total Revenues 7,757,814 2,666,046
Expenses:
Interest Expense 0 97,638
Management Fees - General Partner 110,184 105,644
General and Administrative - Affiliates 22,674 24,798
- Other 77,779 145,001
Depreciation and Amortization 370,196 694,041
Loss on Sale of Equipment 0 22,148
Total Expenses 580,833 1,089,270
Net Income $ 7,176,981 $ 1,576,776
Allocation of Net Income
Limited Partners $ 6,459,283 $ 1,561,008
General Partner 717,698 15,768
$ 7,176,981 $ 1,576,776
Net Income Per $500 Limited
Partnership Unit $ 107.65 $ 26.02
Number of Limited Partnership Units 60,000 60,000
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1995 1994
Revenues:
Rental Income $ 172,395 $ 669,611
Interest Income 39,023 41,590
Gain on Sale of Rental Equipment Held
for Sale 0 742,865
Other Income 26,835 0
Total Revenues 238,253 1,454,066
Expenses:
Interest Expense 0 72,168
Management Fees - General Partner 24,845 35,229
General and Administrative - Affiliates 8,664 10,884
- Others 9,832 117,358
Depreciation and Amortization 96,281 231,073
Loss on Sale of Equipment 5,054 0
Total Operating Expenses 144,676 466,712
Net Income $ 93,577 $ 987,354
Allocation of Net Income
Limited Partners $ 92,641 $ 977,480
General Partner 936 9,874
$ 93,577 $ 987,354
Net Income Per $500 Limited
Partnership Unit $ 1.54 $ 16.29
Number of Limited Partnership Units 60,000 60,000
STATEMENT OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1995 1994
Cash Flows from Operating Activities:
Net Income $ 7,176,981 $ 1,576,776
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by (Used in) Operating
Activities:
(Gain) Loss on Sale of Equipment (6,376,380) 22,148
Depreciation and Amortization 370,196 694,041
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Rental Equipment
Held for Sale 0 2,341,123
(Increase) Decrease in Prepaid Expenses 307 535
(Increase) Decrease in Rent Receivable 25,603 (11,387)
(Increase) Decrease in Interest Receivable 0 1,442
Increase (Decrease) in Accounts Payable (87,388) 17,118
Increase (Decrease) in Interest Payable 0 (46,018)
Increase (Decrease) in Payable to
General Partner (38,019) (40,369)
Increase (Decrease) in Unearned Revenue (33,881) 0
Net Cash Provided by
Operating Activities 1,037,419 4,555,409
Cash Flows from Investing Activities:
Proceeds from Sale of Equipment 8,043,977 55,000
(Increase) Decrease in Net Investment in
Sales-Type Lease (25,428) 25,409
Net Cash Provided by
Investing Activities 8,018,549 80,409
Cash Flows from Financing Activities:
Payment of Notes Payable 0 (2,574,340)
Distributions to Limited Partners (12,166,800) (1,578,000)
Net Cash Provided by (Used in)
Financing Activities (12,166,800) (4,152,340)
Increase (Decrease) in Cash (3,110,832) 483,478
Cash and Cash Equivalents at Beginning of Period 4,868,272 2,384,031
Cash and Cash Equivalents at End of Period $ 1,757,440 $ 2,867,509
Supplemental Cash Flow Information:
Interest Paid $ 0 $ 143,656
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1995
NOTE 1 - BASIS OF PREPARATION
The unaudited financial statements for CIS Capital Equipment Fund,
Ltd. 2, a California Limited Partnership (the "Partnership") presented herein
have been prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by generally
accepted accounting principles. These statements should be read in conjunction
with the financial statements and notes thereto included in the Partnership's
Form 10-K for the year ended December 31, 1994. In the opinion of management,
these financial statements include all adjustments, consisting only of normal
recurring adjustments, necessary to summarize fairly the Partnership's financial
position and results of operations. The results of operations for the period
may not be indicative of the results to be expected for the year.
NOTE 2 - CASH AND CASH EQUIVALENTS
It is the Partnership's policy to include short-term investments with an
original maturity of three months or less in Cash and Cash Equivalents. These
short-term investments are comprised of money market mutual funds and
commercial paper. All of the Partnership's securities included in Cash and
Cash Equivalents are considered held-to-maturity. The balance of $1,757,440
at September 30, 1995, represents cash of $21,163, money market mutual funds of
$422,483, and cost plus accreted interest income on commercial paper of
$1,313,794. At September 30, 1995, the estimated market value of the
commercial paper was $1,313,794, resulting in no unrealized gain or loss.
NOTE 3 - COMPENSATION AND REIMBURSEMENTS TO GENERAL PARTNER AND AFFILIATES
The General Partner and its affiliates are entitled to the following
types of compensation and reimbursements for costs and expenses incurred for
the Partnership for the nine months ended September 30, 1995:
Equipment Management Fees $ 37,044
Incentive Management Fees 73,140
General and Administrative Costs 22,674
NOTE 4 - OTHER EVENTS
As all of the Partnership's leases expire during 1996 and 1997, the
Partnership is winding down its operations.
NOTE 5 - SUBSEQUENT EVENTS
On October 31, 1995, the Partnership paid a distribution to Limited
Partners of $337,800 for the quarter ended September 30, 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Rental income decreased from $669,611 for the three months ended
September 30, 1994, to $172,395 for the three months ended September 30, 1995.
This decrease occurred because equipment sold subsequent to September 30, 1994,
provided no rental income in the three months ended September 30, 1995, as it
had in the three months ended September 30, 1994, and equipment released during
the intervening period provided less rental income in the current period than
in last year's comparative period. Interest income decreased for the three
months ended September 30, 1995, as compared to the three months ended
September 30, 1994, because the Partnership had less cash available for
investment.
Equipment management fees decreased due to lower rental income.
Depreciation expense decreased for the three months ended September 30, 1995,
versus 1994, because the Partnership had a lower depreciable basis of
equipment in 1995.
During the three months ended September 30, 1995, additional expenses
of $5,054 from previous sales were recognized, resulting in a loss on sale of
equipment.
The net effect of the above revenue and expense items resulted in a net
income of $93,578 for the three months ended September 30, 1995, compared to
a net income of $987,354 for the three months ended September 30, 1994.
Rental income decreased from $1,808,477 for the nine months ended
September 30, 1994, to $1,176,238 for the nine months ended September 30, 1995.
This decrease occurred because equipment sold subsequent to September 30,
1994, provided no rental income in the nine months ended September 30, 1995,
as it had in the nine months ended September 30, 1994, and equipment released
during the intervening period provided less rental income in the current
period than in last year's comparative period. Interest income increased for
the nine months ended September 30, 1995, as compared to the nine months ended
September 30, 1994, because the Partnership had a larger average balance of
cash available for investment in 1995.
Interest expense decreased $97,638 from the nine months ended
September 30, 1994, to the nine months ended September 30, 1995. This decrease
resulted from all debt being retired prior to 1995. Equipment management
fees increased due to a larger distribution of cash from cash flow in the nine
months ended September 30, 1995, because of an early termination payment.
Depreciation expense decreased for the nine months ended September 30, 1995
versus 1994 because the Partnership had a lower depreciable basis of
equipment in 1995.
During the nine months ended September 30, 1995, equipment with an
original cost of $5,814,577 was sold for $8,043,977 and provided $6,376,380
of gain.
The net effect of the above revenue and expense items resulted in a net
income of $7,176,981 for the nine months ended September 30, 1995, compared to
a net income of $1,576,778 for the nine months ended September 30, 1994.
Liquidity and Capital Resources
The primary sources of funds for the nine months ended September 30,
1995, were leasing revenues and sales proceeds, which were used to pay
operating expenses and make cash distributions. As of September 30, 1995,
the Partnership owned capital equipment with an original cost of $10,076,053.
The equipment portfolio was comprised of leases classified as operating,
full-payout, and sales-type leases.
Actual cash distributions for the nine month periods ended September 30,
1995 and 1994, were $12,166,800 and $1,578,000, respectively.
The Partnership anticipates that Cash and Cash Equivalents as of December
31, 1994, and funds from operations will be adequate to cover all 1995
operating contingencies.
As all of the Partnership's leases expire during 1996 and 1997, the
Partnership is winding down its operations.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - none.
b) Reports on Form 8-K - None.
SIGNATURES
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.
CIS Capital Equipment Fund, Ltd. 2,
a California Limited Partnership
RJ Leasing, Inc.
A General Partner of
CIS Investors Partnership,
the General Partner
Date: November 8, 1995 By:
J. Davenport Mosby, III
Vice President
Date: November 8, 1995 By:
Barbara J. Lotz
Secretary and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-END> SEP-30-1995 SEP-30-1995
<CASH> 1,757,440 1,757,440
<SECURITIES> 0 0
<RECEIVABLES> 29,972 29,972
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0<F1> 0<F1>
<PP&E> 10,076,053 10,076,053
<DEPRECIATION> 8,670,902 8,670,902
<TOTAL-ASSETS> 3,415,494 3,415,494
<CURRENT-LIABILITIES> 0<F1> 0<F1>
<BONDS> 0 0
<COMMON> 0 0
0 0
0 0
<OTHER-SE> 3,341,752 3,341,752
<TOTAL-LIABILITY-AND-EQUITY> 3,415,494 3,415,494
<SALES> 0 0
<TOTAL-REVENUES> 238,253 7,757,814
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 144,676 580,833
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 93,577 7,176,981
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 93,577 7,176,981
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 93,577 7,176,981
<EPS-PRIMARY> 1.540<F2> 107.650<F2>
<EPS-DILUTED> 1.540<F2> 107.650<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET INCOME PER $500 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
