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 June 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 June 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 March 29, 1995
Parts III and IV - Form S-1 Registration Statement
and all amendments and supplements thereto
File No. 33-10604
<PAGE>
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
INDEX
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets -
As of June 30, 1995, and December 31, 1994 3
Statements of Operations -
For the Six Months Ended June 30, 1995, and 1994 4
For the Three Months Ended June 30, 1995, and 1994 5
Statements of Cash Flows -
For the Six Months Ended June 30, 1995, and 1994 6
Notes to Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 11
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS
June 30, December 31,
1995 1994
ASSETS (Unaudited) (Audited)
Rental Equipment, at Cost $ 10,076,053 $ 15,890,630
Less: Accumulated Depreciation (8,574,621) (12,448,352)
1,501,432 3,442,278
Net Investment in Sales-Type Lease 175,126 197,328
Deferred Debt Cost (Net of Accumulated
Amortization of $34,777 and $34,112,
Respectively) 0 665
Prepaid Expenses 350 482
Rent Receivable 63,670 55,575
Cash and Cash Equivalents 1,855,566 4,868,272
Total Assets $ 3,596,144 $ 8,564,600
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts Payable $ 722 $ 88,013
Payable to General Partner 9,448 38,889
Unearned Revenue 0 106,128
Total Liabilities 10,170 233,030
Partners' Equity:
Limited Partners (60,000 units outstanding
at June 30, 1995, and December 31, 1994) 3,489,230 8,305,660
General Partner 96,744 25,910
Total Partners' Equity 3,585,974 8,331,570
Total Liabilities and Partners' Equity $ 3,596,144 $ 8,564,600
The accompanying notes are an integral part
of these financial statements.
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30,
1995 1994
Revenues:
Rental Income $ 1,003,843 $ 1,138,866
Interest Income 139,338 73,114
Gain on Sale of Equipment 6,381,434 0
Total Revenues 7,524,615 1,211,980
Expenses:
Interest Expense 0 25,470
Management Fees - General Partner 85,339 70,415
General and Administrative - Affiliates 14,010 13,914
- Other 67,947 27,643
Depreciation and Amortization 273,915 462,968
Loss on Sale of Equipment 0 22,148
Total Operating Expenses 441,211 622,558
Net Income $ 7,083,404 $ 589,422
Allocation of Net Income -
Limited Partners $ 7,012,570 $ 583,528
General Partner 70,834 5,894
$ 7,083,404 $ 589,422
Net Income Per $500 Limited Partnership Unit $ 116.88 $ 9.73
Number of Limited Partnership Units 60,000 60,000
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED JUNE 30,
1995 1994
Revenues:
Rental Income $ 178,831 $ 582,284
Interest Income 84,967 38,368
Total Revenues 263,798 620,652
Expenses:
Interest Expense 0 10,926
Management Fees - General Partner 47,002 34,777
General and Administrative - Affiliates 6,513 5,400
- Other 15,578 22,064
Depreciation and Amortization 96,280 231,402
Loss on Sale of Equipment 2,172 3,563
Total Operating Expenses 167,545 308,132
Net Income $ 96,253 $ 312,520
Allocation of Net Income -
Limited Partners $ 95,290 $ 309,395
General Partner 963 3,125
$ 96,253 $ 312,520
Net Income Per $500 Limited Partnership Unit $ 1.59 $ 5.16
Number of Limited Partnership Units 60,000 60,000
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30,
1995 1994
Cash Flows from Operating Activities:
Net Income $ 7,083,404 $ 589,422
Adjustments to Reconcile Net Income to
Net Cash Provided by (Used in) Operating
Activities:
(Gain) Loss on Sale of Equipment (6,381,434) 22,148
Depreciation and Amortization 273,915 462,968
Accreted Interest Income on Investments in
Securities 0 (7,233)
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Rental Equipment
Held for Sale 0 74,605
(Increase) Decrease in Prepaid Expenses 133 (88)
(Increase) Decrease in Rent Receivable (8,095) (15,387)
(Increase) Decrease in Interest Receivable 0 1,442
Increase (Decrease) in Accounts Payable (87,291) (923)
Increase (Decrease) in Payable to
General Partner (29,441) (16,422)
Increase (Decrease) in Unearned Revenue (106,128) 0
Net Cash Provided by Operating
Activities 745,063 1,110,532
Cash Flows from Investing Activities:
Proceeds from Sale of Equipment 8,049,029 55,000
Decrease in Net Investment in Sales-Type Lease 22,202 16,202
Purchase of Investment in Securities 0 (741,936)
Net Cash Provided by (Used in)
Investing Activities 8,071,231 (670,734)
Cash Flows from Financing Activities:
Payment of Notes Payable 0 (227,632)
Distributions to Limited Partners (11,829,000) (1,128,000)
Net Cash Provided by (Used in)
Financing Activities (11,829,000) (1,355,632)
Increase (Decrease) in Cash (3,012,706) (915,834)
Cash and Cash Equivalents at Beginning of Period 4,868,272 2,384,031
Cash and Cash Equivalents at End of Period $ 1,855,566 $ 1,468,197
Supplemental Cash Flow Information:
Interest Paid $ 0 $ 25,470
The accompanying notes are an integral part
of these financial statements.
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 30, 1995
NOTE 1 - BASIS OF PREPARATION
The unaudited financial statements for CIS Capital Equipment Fund, Ltd. 2
(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 $1,855,566 at
June 30, 1995, represents cash of $12,142, money market mutual funds of
$547,685, and cost plus accreted interest income on commercial paper of
$1,295,739. At June 30, 1995, the estimated market value of the commercial
paper was $1,295,739, 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 six months ended June 30, 1995:
Equipment Management Fees $29,089
Incentive Management Fees 56,250
General and Administrative Costs 14,010
NOTE 4 - OTHER EVENTS
As all of the Partnership's leases expire during 1996 and 1997, the
Partnership is winding down its operations.
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
June 30, 1995
NOTE 5 - SUBSEQUENT EVENTS
On July 31, 1995, the Partnership paid a distribution to Limited Partners
of $337,800 for the quarter ended June 30, 1995.
<PAGE>
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Rental income decreased from $582,284 for the three months ended June 30,
1994, to $178,831 for the three months ended June 30, 1995. This decrease
occurred because equipment sold subsequent to June 30, 1994, provided no rental
income in the three months ended June 30, 1995, as it had in the three months
ended June 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 three months ended
June 30, 1995, as compared to the three months ended June 30, 1994, because
the Partnership had more cash available for investment and received a higher
rate of return on investments.
Interest expense decreased $10,926 from the three months ended June 30,
1994, compared to the three months ended June 30, 1995. This decrease resulted
from all debt being retired prior to the 1995 quarter. Equipment management
fees increased due to a larger distribution of cash from cash flow in the first
month of this quarter because of an early termination payment last quarter.
Depreciation expense decreased for the three months ended June 30, 1995, versus
1994 because the Partnership had a lower depreciable basis of equipment in 1995.
During the three months ended June 30, 1995, additional expenses of $2,172
on 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 $96,253 for the three months ended June 30, 1995, compared to a net
income of $312,520 for the three months ended June 30, 1994.
Rental income decreased from $1,138,866 for the six months ended June 30,
1994, to $1,003,843 for the six months ended June 30, 1995. A decrease of
$498,822 occurred because equipment sold subsequent to June 30, 1994, provided
no rental income in the six months ended June 30, 1995, as it had in the six
months ended June 30, 1994, and equipment released during the intervening period
provided less rental income in the current period than in last year's
comparative period. This decrease was offset by $363,799 from early termination
proceeds received during the six month ended June 30, 1995, resulting in a net
decrease of $135,023 from last year's comparative period. Interest income
increased for the six months ended June 30, 1995, as compared to the six months
ended June 30, 1994, because the Partnership had more cash available for
investment and received a higher rate of return on investments.
Interest expense decreased $25,470 from the six months ended June 30, 1994,
to the six months ended June 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 six months ended June 30,
1995, because of an early termination payment. Depreciation expense decreased
for the six months ended June 30, 1995 versus 1994 because the Partnership had
a lower depreciable basis of equipment in 1995.
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
During the six months ended June 30, 1995, equipment with an original cost
of $5,814,577 was sold for $8,049,029 and provided $6,381,434 of gain.
The net effect of the above revenue and expense items resulted in a net
income of $7,083,404 for the six months ended June 30, 1995, compared to a net
income of $589,422 for the six months ended June 30, 1994.
Liquidity and Capital Resources
The primary sources of funds for the six months ended June 30, 1995, were
leasing revenues and sales proceeds, which were used to pay operating expenses
and make cash distributions. As of June 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 six month periods ended June 30, 1995 and
1994, were $11,829,000 and $1,128,000, 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.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - none.
b) Reports on Form 8-K -
Sale of Four Supply Vessels Date filed: May 5, 1995
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: August 10, 1995 By: J. Davenport Mosby, III
J. Davenport Mosby, III
Vice President
Date: August 10, 1995 By: Barbara J. Lotz
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 JUNE 30, 1995.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-END> JUN-30-1995 JUN-30-1995
<CASH> 1,855,566 1,855,566
<SECURITIES> 0 0
<RECEIVABLES> 63,670 63,670
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0<F1> 0<F1>
<PP&E> 10,076,053 10,076,053
<DEPRECIATION> 8,574,621 8,574,621
<TOTAL-ASSETS> 3,596,144 3,596,144
<CURRENT-LIABILITIES> 0<F1> 0<F1>
<BONDS> 0 0
<COMMON> 0 0
0 0
0 0
<OTHER-SE> 3,585,974 3,585,974
<TOTAL-LIABILITY-AND-EQUITY> 3,596,144 3,596,144
<SALES> 0 0
<TOTAL-REVENUES> 263,798 7,524,615
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 167,545 441,211
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 96,253 7,083,404
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 96,253 7,083,404
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 96,253 7,083,404
<EPS-PRIMARY> 1.59<F2> 116.88<F2>
<EPS-DILUTED> 1.59<F2> 116.88<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET INCOME PER $500 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
