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, 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 June 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
June 30, December 31,
1996 1995
(Unaudited) (Audited)
ASSETS
Leased Equipment, at Cost $ 1,411,538 $ 9,667,362
Less: Accumulated
Depreciation (1,249,409) (8,391,461)
162,129 1,275,901
Equipment Held for Sale 31,664 31,664
Net Investment in Sales-Type Lease 117,454 148,761
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 1,277,368 1,590,103
Total Assets $ 1,608,852 $ 3,097,331
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts Payable $ 177 $ 1,623
Payable to General Partner 3,231 8,825
Unearned Revenue 0 12,000
Total Liabilities 3,408 22,448
Partners' Equity:
Limited Partners (60,000 units
outstanding at June 30, 1996,
and December 31, 1995) 1,487,471 2,976,494
General Partner 117,973 98,389
Total Partners' Equity 1,605,444 3,074,883
Total Liabilities and
Partners' Equity $ 1,608,852 $ 3,097,331
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,
1996 1995
Revenues:
Rental Income $ 477,493 $ 1,003,843
Interest Income 67,277 139,338
Gain on Sale of Equipment 1,643,776 6,381,434
Total Revenues 2,188,546 7,524,615
Operating Expenses:
Management Fees - General
Partner 71,692 85,339
General and Administrative:
Affiliates 20,323 14,010
Other 22,155 67,947
Depreciation and Amortization 116,015 273,915
Total Operating Expenses 230,185 441,211
Net Income $ 1,958,361 $ 7,083,404
Allocation of Net Income:
Limited Partners $ 1,938,777 $ 7,012,570
General Partner 19,584 70,834
$ 1,958,361 $ 7,083,404
Net Income Per $500 Limited
Partnership Unit $ 32.31 $ 116.88
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,
1996 1995
Revenues:
Rental Income $ 35,448 $ 178,831
Interest Income 35,262 84,967
Gain on Sale of Equipment 12,160 0
Total Revenues 82,870 263,798
Operating Expenses:
Management Fees - General
Partner 33,055 47,002
General and Administrative:
Affiliates 9,180 6,513
Other 13,642 15,578
Depreciation and Amortization 27,324 96,280
Loss on Sale of Equipment 0 2,172
Total Operating Expenses 83,201 167,545
Net Income (Loss) $ (331) $ 96,253
Allocation of Net Loss:
Limited Partners $ (328) $ 95,290
General Partner (3) 963
$ (331) $ 96,253
Net Income (Loss) Per $500 Limited
Partnership Unit $ (.01) $ 1.59
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,
1996 1995
Cash Flows from Operating Activities:
Net Income $ 1,958,361 $ 7,083,404
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
(Gain) Loss on Sale of
Equipment (1,643,776) (6,381,434)
Depreciation and
Amortization 116,015 273,915
Changes in Operating Assets
and Liabilities:
(Increase) Decrease in
Rent Receivable 30,665 (8,095)
(Increase) Decrease in
Prepaid Expenses 0 133
Increase (Decrease) in
Accounts Payable (1,446) (87,291)
Increase (Decrease) in
Payable to:
General Partner (5,594) (29,441)
Increase (Decrease) in
Unearned Revenue (12,000) (106,128)
Net Cash Provided by
Operating Activities 442,225 745,063
Cash Flows from Investing Activities:
Proceeds from Sale of Equipment 2,641,533 8,049,029
Decrease in Net Investment in
Sales-Type Lease 31,307 22,202
Net Cash Provided by
Investing Activities 2,672,840 8,071,231
Cash Flows from Financing Activities:
Distributions to Limited
Partners (3,427,800) (11,829,000)
Net Cash (Used in)
Financing Activities (3,427,800) (11,829,000)
Increase (Decrease) in Cash (312,735) (3,012,706)
Cash and Cash Equivalents at
Beginning of Period 1,590,103 4,868,272
Cash and Cash Equivalents at
End of Period $ 1,277,368 $ 1,855,566
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, 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 commercial paper. All of the Partnership's
securities included in Cash and Cash Equivalents are considered
held-to-maturity. The balance of $1,277,368 at June 30, 1996,
represents cash of $133,865, money market mutual funds of $147,103,
and cost plus accreted interest income on commercial paper of
$996,400. At June 30, 1996, the estimated market value of the
commercial paper was $996,400, 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, 1996:
Equipment Management Fees $ 23,812
Incentive Management Fees 47,880
General and Administrative Costs 20,323
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, 1996
NOTE 5 - SUBSEQUENT EVENTS
On July 11, 1996, the Partnership received $90,000 in sale
proceeds for equipment with an original cost of $390,867.
On July 31, 1996, the Partnership paid a distribution to Limited
Partners of $510,000 for the quarter ended June 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
Six Months Ended June 30, 1996, Compared to Six Months Ended
June 30, 1995
Rental income decreased from $1,003,843 for the six months ended
June 30, 1995, to $477,493 for the six months ended June 30, 1996.
The decrease of $526,350 resulted from early termination proceeds
providing $463,533 more revenue during the six months ending June
30, 1995, than the six months ending June 30, 1996, and lower lease
rates and equipment off lease during 1996 provided $62,800 less in
revenue than in 1995. Interest income decreased for the six months
ended June 30, 1996, as compared to the six months ended June 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 six months ended June 30,
1996 versus 1995 because the Partnership had a lower depreciable
basis of equipment in 1996.
During the six months ended June 30, 1996, equipment with an
original cost of $8,255,823 was sold for $2,641,533 and provided
$1,643,776 of gain. 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 $1,958,361 for the six months ended June 30, 1996,
compared to a net income of $7,083,404 for the six months ended June
30, 1995.
Three Months Ended June 30, 1996, Compared to Three Months Ended
June 30, 1995
Rental income decreased from $178,831 for the three months ended
June 30, 1995, to $35,448 for the three months ended June 30, 1996.
This decrease resulted primarily because equipment sold subsequent
to June 30, 1995, provided no rental income in the three months
ended June 30, 1996, as it had in the three months ended June 30,
1995. Interest income decreased for the three months ended June 30,
1996, as compared to the three months ended June 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 three months ended June 30,
1996 versus 1995 because the Partnership had a lower depreciable
basis of equipment in 1996.<PAGE>
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)
Three Months Ended June 30, 1996, Compared to Three Months Ended
June 30, 1995
The net effect of the above revenue and expense items resulted in
a net loss of $331 for the three months ended June 30, 1996,
compared to a net income of $96,253 for the three months ended June
30, 1995.
Liquidity and Capital Resources
The primary sources of funds for the six months ended June 30,
1996, were leasing revenues and sales proceeds, which were used to
pay operating expenses and make cash distributions. As of June 30,
1996, the Partnership owned capital equipment with an original cost
of $1,820,230. The equipment portfolio was comprised of leases
classified as full-payout and sales-type leases.
Actual cash distributions for the six month periods ended June 30,
1996 and 1995, were $3,427,800 and $11,829,000, respectively.
The Partnership anticipates that Cash and Cash Equivalents as of
June 30, 1996, 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 -
Sale of One Aircraft Date filed: May 28, 1996
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 14, 1996 By: /s/J. Davenport Mosby, III
J. Davenport Mosby, III
Vice President
Date: August 14, 1996 By: /s/Christa Kleinrichert
Christa Kleinrichert
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(b) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 1,277,368
<SECURITIES> 0
<RECEIVABLES> 20,237
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,820,530
<DEPRECIATION> 1,626,435
<TOTAL-ASSETS> 1,608,852
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,605,444
<TOTAL-LIABILITY-AND-EQUITY> 1,608,852
<SALES> 0
<TOTAL-REVENUES> 2,188,546
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 230,185
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,958,631
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,958,631
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,958,631
<EPS-PRIMARY> 32.31<F2>
<EPS-DILUTED> 32.31<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET INCOME (LOSS) PER $500 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
