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, 1996
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, 1996
Units of Limited Partnership
Interest: $500 per unit 60,000
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II, 1995 Form 10-K, filed with the
Securities and Exchange Commission on May 8, 1996
Parts III and IV - Form S-1 Registration Statement
and all amendments and supplements thereto
File No. 33-10604<PAGE>
PART I - Financial Information
Item 1. Financial Statements
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS
September 30, December 31,
1996 1995
------------ ------------
ASSETS (Unaudited) (Audited)
Leased Equipment, at Cost $ 1,020,671 $ 9,667,362
Less: Accumulated
Depreciation (964,043) (8,391,461)
------------ ------------
56,628 1,275,901
Equipment Held for Sale 31,664 31,664
Net Investment in Sales-Type Lease 99,664 148,761
Rent Receivable 20,237 50,902
Deferred Debt Cost (Net of
Accumulated Amortization of
$34,777 and $34,777,
Respectively) 0 0
Cash and Cash Equivalents 890,652 1,590,103
------------ ------------
Total Assets $ 1,098,845 $ 3,097,331
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts Payable $ 838 $ 1,623
Payable to General Partner 676 8,825
Unearned Revenue 0 12,000
------------ ------------
Total Liabilities 1,514 22,448
------------ ------------
Partners' Equity:
Limited Partners (60,000 units
outstanding at September 30, 1996,
and December 31, 1995) 979,339 2,976,494
General Partner 117,992 98,389
------------ ------------
Total Partners' Equity 1,097,331 3,074,883
------------ ------------
Total Liabilities and
Partners' Equity $ 1,098,845 $ 3,097,331
============ ============
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 NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
------------ ------------
Revenues:
Rental Income $ 502,218 $ 1,176,238
Interest Income 89,245 178,361
Gain on Sale of Equipment 1,654,625 6,376,380
Other Income 0 26,835
------------ ------------
Total Revenues 2,246,088 7,757,814
------------ ------------
Operating Expenses:
Management Fees - General
Partner 90,433 110,184
General and Administrative:
Affiliates 28,616 22,674
Other 30,725 77,779
Depreciation and Amortization 136,066 370,196
------------ ------------
Total Operating Expenses 285,840 580,833
------------ ------------
Net Income $ 1,960,248 $ 7,176,981
============ ============
Allocation of Net Income:
Limited Partners $ 1,940,646 $ 7,105,211
General Partner 19,602 71,770
------------ ------------
$ 1,960,248 $ 7,176,981
============ ============
Net Income Per $500 Limited
Partnership Unit $ 32.34 $ 118.42
============ ============
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 SEPTEMBER 30,
1996 1995
------------ ------------
Revenues:
Rental Income $ 24,725 $ 172,395
Interest Income 21,968 39,023
Gain on Sale of Equipment 10,849 0
Other Income 0 26,835
------------ ------------
Total Revenues 57,542 238,253
------------ ------------
Operating Expenses:
Management Fees - General
Partner 18,741 24,845
General and Administrative:
Affiliates 8,293 8,664
Others 8,570 9,832
Depreciation and Amortization 20,051 96,281
Loss on Sale of Equipment 0 5,054
------------ ------------
Total Operating Expenses 55,655 144,676
------------ ------------
Net Income $ 1,887 $ 93,577
============ ============
Allocation of Net Income:
Limited Partners $ 1,868 $ 92,641
General Partner 19 936
------------ ------------
$ 1,887 $ 93,577
============ ============
Net Income Per $500 Limited
Partnership Unit $ .03 $ 1.54
============ ============
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
STATEMENT OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
------------ ------------
Cash Flows from Operating Activities:
Net Income $ 1,960,248 $ 7,176,981
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
(Gain) Loss on Sale of
Equipment (1,654,625) (6,376,380)
Depreciation and
Amortization 136,066 370,196
Changes in Operating Assets
and Liabilities:
(Increase) Decrease in
Rent Receivable 30,665 25,603
(Increase) Decrease in
Prepaid Expenses 0 307
Increase (Decrease) in
Accounts Payable (785) (87,388)
Increase (Decrease) in
Payable to:
General Partner (8,149) (38,019)
Increase (Decrease) in
Unearned Revenue (12,000) (33,881)
------------ ------------
Net Cash Provided by
Operating Activities 451,420 1,037,419
------------ ------------
Cash Flows from Investing Activities:
Proceeds from Sale of Equipment 2,737,832 8,043,977
(Increase) Decrease in
Net Investment in
Sales-Type Lease 49,097 (25,428)
------------ ------------
Net Cash Provided by
Investing Activities 2,786,929 8,018,549
------------ ------------
Cash Flows from Financing Activities:
Distributions to Limited
Partners (3,937,800) (12,166,800)
------------ ------------
Net Cash (Used in)
Financing Activities (3,937,800) (12,166,800)
------------ ------------
Increase (Decrease) in Cash (699,451) (3,110,832)
Cash and Cash Equivalents at
Beginning of Period 1,590,103 4,868,272
------------ ------------
Cash and Cash Equivalents at
End of Period $ 890,652 $ 1,757,440
============ ============
The accompanying notes are an integral part
of these financial statements.<PAGE>
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1996
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, 1995. 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 a repurchase
agreement. All of the Partnership's securities included in Cash
and Cash Equivalents are considered held-to-maturity. The
balance of $890,652 at September 30, 1996, represents cash of
$12,328, money market mutual funds of $128,324, and a repurchase
agreement of $750,000. At September 30, 1996, the estimated
market value of the repurchase agreement was $750,000, 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, 1996:
Equipment Management Fees $ 25,663
Incentive Management Fees 64,770
General and Administrative Costs 28,616
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, 1996, the Partnership paid a distribution to
Limited Partners of $684,000 for the quarter ended September 30,
1996.<PAGE>
CIS CAPITAL EQUIPMENT FUND, LTD. 2,
A CALIFORNIA LIMITED PARTNERSHIP
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Nine Months Ended September 30, 1996, Compared to Nine
Months Ended September 30, 1995
Rental income decreased from $1,176,238 for the nine months
ended September 30, 1995, to $502,218 for the nine months ended
September 30, 1996. This decrease occurred because equipment sold
subsequent to September 30, 1995, provided less rental income in
the nine months ended September 30, 1996, than it had in the nine
months ended September 30, 1995, and equipment re-leased during
the intervening period provided less rental income in the current
period than in last year's comparative period. Interest income
decreased for the nine months ended September 30, 1996, as
compared to the nine months ended September 30, 1995, because the
Partnership had less cash available for investment.
Equipment management fees decreased due to lower rental
income. Depreciation expense decreased for the nine months ended
September 30, 1996 versus 1995 because the Partnership had a
lower depreciable basis of equipment in 1996.
During the nine months ended September 30, 1996, equipment
with an original cost of $8,646,690 was sold for $2,737,832 and
provided $1,654,625 of gain. 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 net income of $1,960,248 for the nine months ended
September 30, 1996, compared to net income of $7,176,981 for the
nine months ended September 30, 1995.
Three Months Ended September 30, 1996, Compared to Three
Months Ended September 30, 1995
Rental income decreased from $172,395 for the three months
ended September 30, 1995, to $24,725 for the three months ended
September 30, 1996. This decrease occurred because equipment
sold subsequent to September 30, 1995, provided no rental income
in the three months ended September 30, 1996, as it had in the
three months ended September 30, 1995, and equipment re-leased
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, 1996,
as compared to the three months ended September 30, 1995, because
the Partnership had less cash available for investment.<PAGE>
Equipment management fees decreased due to lower rental
income. Depreciation expense decreased for the three months
ended September 30, 1996, versus 1995, because the Partnership
had a lower depreciable basis of equipment in 1996.
The net effect of the above revenue and expense items
resulted in net income of $1,887 for the three months ended
September 30, 1996, compared to net income of $93,577 for the
three months ended September 30, 1995.
Liquidity and Capital Resources
The primary sources of funds for the nine months ended
September 30, 1996, were leasing revenues and sales proceeds,
which were used to pay operating expenses and make cash
distributions. As of September 30, 1996, the Partnership owned
equipment with an original cost of $1,429,362. The equipment
portfolio was comprised of leases classified as full-payout and
sales-type leases.
Actual cash distributions for the nine month periods ended
September 30, 1996 and 1995, were $3,937,800 and $12,166,800,
respectively.
The Partnership anticipates that Cash and Cash Equivalents
as of December 31, 1995, and funds from operations will be
adequate to cover all 1996 operating contingencies.
As all of the Partnership's leases expire during 1996 and
1997, the Partnership is winding down its operations.
<PAGE>
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - None.
b) Reports on Form 8-K - None.
<PAGE>
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: By:
-----------------------------
J. Davenport Mosby, III
President
Date: By:
-----------------------------
Christa Kleinrichert
Secretary and Treasurer<PAGE>
<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, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 890,652
<SECURITIES> 0
<RECEIVABLES> 20,237
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,429,362
<DEPRECIATION> 1,341,070
<TOTAL-ASSETS> 1,098,845
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,097,331
<TOTAL-LIABILITY-AND-EQUITY> 1,098,845
<SALES> 0
<TOTAL-REVENUES> 2,246,088
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 285,840
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,960,248
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,960,248
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,960,248
<EPS-PRIMARY> 32.34<F2>
<EPS-DILUTED> 32.34<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET INCOME PER $500 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
