<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 Commission file number 0-18042
----------------- -------
COMMUNITY INVESTMENT PARTNERS, L.P.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MISSOURI 43-1531582
- -------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
201 Progress Parkway
Maryland Heights, Missouri 63043
- -------------------------------------------------------------------------------
(Address and principal executive office) (Zip Code)
Registrant's telephone number, including area code (314) 515-2000
---------------------
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
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
--- ---
As of March 15, 1998, 71,715 units of limited partnership interest (Units),
representing net assets of $1,425,694 were held by non-affiliates. There is
no established public market for such Units.
<PAGE> 2
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Prospectus of the Registrant dated March 12, 1990, filed with
the Securities and Exchange Commission and portions of the Proxy Statement of
the Registrant dated March 12, 1991, and filed with the Securities and
Exchange Commission are incorporated by reference in Part I, Part II and Part
III hereof.
2
<PAGE> 3
COMMUNITY INVESTMENT PARTNERS, L.P.
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
PART I
Item 1. Business 4
Item 2. Properties 5
Item 3. Legal Proceedings 5
Item 4. Submission of Matters to a Vote of Security Holders 5
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters 6
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 8. Financial Statements and Supplementary Data 10
Item 9. Change in and Disagreements with Accountants
on Accounting and Financial Disclosure 25
PART III
Item 10. Directors and Executive Officers of the Registrant 26
Item 11. Executive Compensation 27
Item 12. Security Ownership of Certain Beneficial Owners and
Management 27
Item 13. Certain Relationships and Related Transactions 28
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 29
SIGNATURES 30
INDEX TO EXHIBITS 31
</TABLE>
3
<PAGE> 4
PART I
Item 1. BUSINESS
Community Investment Partners, L.P. (the "Partnership") was formed
to seek long-term capital appreciation by making investments in companies and
other special investment situations. The Partnership will not engage in any
other business or activity. The Partnership will dissolve on December 31,
2005, subject to the right of the Individual General Partners to extend the
term for up to two additional two-year periods.
The Partnership has elected to be a business development company
under the Investment Company Act of 1940, as amended. As a business
development company, the Partnership is required to invest at least 70% of
its assets in qualifying investments as specified in the Investment Company
Act.
The Partnership was formed on October 10, 1989, under the Revised
UniformLimited Partnership Act of Missouri. CIP Management, L.P., LLLP, the
Managing General Partner, is a Missouri limited liability limited partnership
formed on October 10, 1989 as a limited partnership and registered as a
limited liability limited partnership on July 23, 1997. The general partner
of CIP Management, L.P., LLLP is CIP Management, Inc., an indirect subsidiary
of Edward D. Jones & Co., L.P.
The Partnership participated in a public offering of its limited
partnership interests in 1990. The Partnership sold 91,820 Units of limited
partnership interest for an aggregate price of $2,295,500. After offering
expenses of approximately $122,000, the Partnership received approximately
$2,173,500 in proceeds available for investment.
The Partnership is no longer making initial portfolio investments,
but may continue to make follow-on investments. For information regarding
the Partnership's current portfolio investments and purchases and sales
during the year, see Item 8 of this Form 10-K.
The information set forth under the captions "Investment Objectives
& Policies" and "Regulation" in the Prospectus of the Partnership dated March
12, 1990, filed with the Securities and Exchange Commission pursuant to Rule
497(b) under the Securities Act of 1933, is incorporated herein by reference.
Risks of Unit Ownership
The purchase and ownership of Units involve a number of significant
risks and other important factors. The portfolio company investments of the
Partnership involve a high degree of business and financial risk that can
result in substantial losses. Among these are the risks associated with
investments in companies with little operating history, companies operating
at a loss or with substantial variations in operating results from period to
period, companies with the need for substantial additional capital to support
expansion or achieve or maintain a competitive position, companies which may
be highly leveraged, companies which may not be diversified and companies in
which the Partnership may be the sole or primary lender. The Partnership
invests in only a few companies. Therefore, a loss or other problem with a
single investment would have a material adverse effect on the Partnership.
Risks may arise due to the period of time (typically four to seven
years or longer) which will elapse before portfolio company investments have
reached a state of maturity such that disposition can be considered.
4
<PAGE> 5
Portfolio companies may require additional funds and there can be no
assurance that the Partnership will have sufficient funds from reserves or
borrowing to make such follow-on investments which may have a substantial
negative impact on a portfolio company in need of additional funds.
All decisions with respect to the management of the Partnership,
including identifying and making portfolio investments, are made exclusively
by the General Partners. Limited Partners must rely on the abilities of the
General Partners. The key personnel of the Managing General Partner have
considerable prior experience in investment banking and in structuring
investments.
Ownership of the Units also entails risk because Limited Partners
may not be able to liquidate their investment in the event of an emergency or
for any other reason due to the substantial restrictions on transfers
contained in the Partnership Agreement and the lack of a market for the
resale of Units.
The information set forth under the captions "Risk and Other
Important Factors" (including the subsections "Risks of Investment," "Size of
Partnership," "Ability to Invest Funds," "Time Required to Maturity of
Investments; Illiquidity of Investments," "Need for Follow-on Investments,"
"Use of Leverage," "Unspecified Investment," "Reliance on Management," "New
Business," "No Market for Units" and "Federal Income Tax Considerations") on
pages 9 through 14 of the Prospectus of Partnership dated March 12, 1990,
filed with the Securities and Exchange Commission pursuant to Rule 497(b)
under the Securities Act of 1933 on March 12, 1990, is incorporated herein by
this reference. (This information has been restated herein pursuant to
section 64(b) of the Investment Company Act of 1940).
Partners should refer to the Partnership Agreement for more detailed
information.
Employees
The Partnership has no employees. The Managing General Partner,
subject to the supervision of the Individual General Partners, manages the
Partnership's portfolio company investments and, pursuant to a Management
Agreement with the Partnership, performs or arranges for affiliates to
perform, the management and administrative services for the Partnership and
is responsible for managing the Partnership's money-market investments. The
Managing General Partner receives no fee under the Management Agreement but
is reimbursed by the Partnership for certain expenses.
Item 2. PROPERTIES
The Partnership does not own or lease any physical properties.
Item 3. LEGAL PROCEEDINGS
The Partnership is not a party to any material pending legal
proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
period covered by this report.
5
<PAGE> 6
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There is no established public trading market for the Limited
Partnership interests. As of March 15, 1998, the total number of
holders of units is 104. The number of limited partnership units
outstanding is 87,820. The number of general partnership units
outstanding is 20,000 as of March 15, 1998.
Cash distributions of $5 per unit were made to its Partners
during the year ended December 31, 1997.
The information set forth under the captions "Partnership
Distributions and Allocations" and "Transferability of Units" in
the Prospectus of the Partnership dated March 12, 1990, filed with
the Securities and Exchange Commission pursuant to Rule 497(b)
under the Securities Act of 1933 is incorporated herein by
reference.
6
<PAGE> 7
Item 6. SELECTED FINANCIAL DATA
<TABLE>
BALANCE SHEET:
<CAPTION>
As of
December 31,
-------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Assets $2,143,937 $2,413,382 $3,577,659 $3,221,998 $3,235,105
Portfolio
Investments at
Fair Value $1,951,068 $2,341,691 3,217,156 3,075,566 3,051,309
INCOME STATEMENT:
<CAPTION>
For the Year Ended
December 31,
-------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Income (Loss)
before Unrealized
(Losses) Gains: $ 524,401 $1,645,082 $575,891 $(110,514) $ 374,346
Unrealized
(Losses) Gains (254,746) (652,959) 318,870 97,407 (765,827)
Net Income (Loss) 269,655 992,123 894,761 (13,107) (391,481)
Per Unit of
Partnership Interest:
Net Asset Value 19.88 22.38 33.18 29.88 30.00
Net Income (Loss)
before Unrealized
(Losses) Gains 4.86 15.26 5.34 (1.02) 3.47
Unrealized
(Losses) Gains (2.36) (6.06) 2.96 .90 (7.10)
Net Income (Loss) 2.50 9.20 8.30 (.12) (3.63)
</TABLE>
7
<PAGE> 8
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
(FISCAL YEAR 1997 VERSUS 1996)
Net income for the year ended December 31, 1997 was $269,655,
compared to net income of $992,123 for the year ended December 31, 1996.
This decrease in net income is primarily attributable to lower realized gains
on the sale of investments in 1997. See detail of investment sales in Note
6 to the financial statements. In 1997, there was a net unrealized loss on
investments of $254,746. This was due to a large unrealized loss recorded
for Isolyser Company, Inc. when the share price declined significantly from
the prior year, which was partially offset by a large unrealized gain
recorded for Intermedia Communications of Florida when the company's share
price more than doubled from the prior year. These unrealized gains and
losses also were offset by reversals of prior period unrealized gains on
stock sold during 1997.
In addition, income derived from dividends and interest increased
approximately $44,900 due to dividends declared for the first time that were
recorded on Innovation Medical Technologies, Inc. 6% Class A and 6% Class B
Preferred Stock. Expenses increased approximately $4,700, or 34% from the
prior year due to higher trustee fees.
The Partnership made a distribution of $5 per unit during 1997.
As of December 31, 1997, unrealized gains on investments totaled
$668,124. The future income or loss of the Partnership is contingent upon
the performance of the portfolio investments.
(FISCAL YEAR 1996 VERSUS 1995)
Net income for the year ended December 31, 1996, was $992,123,
compared to net income of $894,761 in 1995, an increase of 11%. The increase
in net income is attributable to an increase in realized gains of $1,052,817
offset by increased unrealized losses of $971,829 and reduced expenses due to
lower professional fees in the current year.
Realized gains increased approximately $1.1 million compared to 1995
due to significant gains recognized during 1996. The partnership sold shares
in Citation Computer Systems, Intermedia Communications of Florida, and
Isolyser Company, Inc. resulting in realized gains of $530,535, $879,563 and
$237,400, respectively.
Also, during 1996, unrealized gains recognized in previous years
were converted to realized gains when the partnership sold the three
investments described above. The future income or loss of the Partnership is
contingent upon the performance of the portfolio investments.
8
<PAGE> 9
SUBSEQUENT EVENTS
The Partnership received $61,433 from Innovation Medical
Technologies, Inc. in January, 1998. Of this amount, $40,763 and $15,008
were principal payments for the 5% Term Notes which were due December 31,
1997, and the remaining $5,662 was interest on these Notes. In addition, the
Partnership received $54,207 from Innovation Medical Technologies, Inc. for
dividends declared during 1997 on Class A and Class B Convertible Preferred
Stock. This dividend income was recorded as revenue during 1997.
During March 1998, the Partnership sold 7,000 shares of Intermedia
Communications of Florida which resulted in a gain of $527,207. After the
sale of the shares, these funds were used toward a distribution of $7 per
unit.
LIQUIDITY AND CAPITAL RESOURCES
Total capital for the Partnership as of December 31, 1997, was
$2,143,937. This consisted of $1,754,109 in Limited Partner capital and
$389,828 in General Partner capital.
Net income of $269,655 for 1997 was allocated in the amount of
$219,634 to the Limited Partners and in the amount of $50,021 to the General
Partners.
At December 31, 1997, the Partnership had $146,085 in cash and cash
equivalents.
9
<PAGE> 10
Item 8. INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA
Page
----
Report of Independent Accountants 11
Balance Sheet as of December 31, 1997 and 1996 12
Schedule of Portfolio Investments as of
December 31, 1997 and 1996. 13
Income Statement for the Years Ended
December 31, 1997, 1996, and 1995. 17
Statement of Changes in Partnership Capital for the
Years Ended December 31, 1997, 1996 and 1995. 18
Statement of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995. 19
Notes to Financial Statements. 20
Financial Statement Schedules:
All financial statement schedules are omitted because they are not applicable
or the required information is shown in the financial statements or notes
thereto.
10
<PAGE> 11
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Community Investment Partners, L.P.
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Community
Investment Partners, L.P. (the "Partnership") at December 31, 1997 and 1996,
and the results of its operations, its cash flows and the changes in its
Partnership Capital for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Partnership's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements
in accordance with generally accepted auditing standards which require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of portfolio investments owned at December 31, 1997,
provide a reasonable basis for the opinion expressed above.
As explained in Note 3, the financial statements include securities valued at
$870,730 (41 percent of net assets), whose values have been estimated by the
Managing General Partner in the absence of readily ascertainable market
values. Those estimated values may differ significantly from the values
that would have been used had a ready market for the investments existed, and
the differences could be material.
PRICE WATERHOUSE LLP
St. Louis, Missouri
March 9, 1998
11
<PAGE> 12
COMMUNITY INVESTMENT PARTNERS, L.P.
<TABLE>
BALANCE SHEET
<CAPTION>
ASSETS
------
December 31,
1997 1996
---------- ----------
<S> <C> <C>
Investments at Fair Value (Note 3)
(cost $1,282,944 and $1,418,821 respectively) $1,951,068 $2,341,691
Cash and Cash Equivalents 146,085 80,365
Accrued Dividend and Interest Receivable 59,784 3,426
---------- ----------
TOTAL ASSETS $2,156,937 $2,425,482
========== ==========
<CAPTION>
LIABILITIES AND PARTNERSHIP CAPITAL
-----------------------------------
December 31,
1997 1996
---------- ----------
<S> <C> <C>
Liabilities:
Accrued Expenses $ 13,000 $ 12,100
---------- ----------
TOTAL LIABILITIES 13,000 12,100
---------- ----------
Partnership Capital:
Capital - Limited Partners 1,754,109 1,973,575
Capital - General Partners 389,828 439,807
---------- ----------
TOTAL PARTNERSHIP CAPITAL 2,143,937 2,413,382
---------- ----------
TOTAL LIABILITIES AND
PARTNERSHIP CAPITAL $2,156,937 $2,425,482
========== ==========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
12
<PAGE> 13
<TABLE>
COMMUNITY INVESTMENT PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
AS OF DECEMBER 31, 1997
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Company Nature of Business Fair Value
Initial Investment Date Investment Cost (Note 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Saztec International, Provides services for database
Inc. (Sazz) construction and information
conversion
June 7, 1990 27,100 shares Common
Stock $ 78,324 $ 8,469
Intermedia Organized to install and provide
Communications of private, dedicated telecommunication
Florida (ICIX) lines using fiber optic cable
May 31, 1991 13,535 shares Common Stock 38,109 822,251
Innovation Medical Manufactures highly specialized
Technologies, Inc. medical instruments for use in
ophthalmic surgery
July 26, 1991 5,769 shares of 6% Class A
Cumulative Convertible
Preferred Stock 149,994 149,994
March 11, 1992 5,625 shares of 6% Class B
Convertible Preferred
Stock 90,000 90,000
September 30, 1992 5% Term Notes, due
December 31, 1997 40,763 40,763
Warrants to purchase
14,440 shares of Common Stock
at $2.50 per share, expiring 12/31/00 - -
May 26, 1994 5% Term Notes, due
December 31, 1997 15,008 15,008
Warrants to purchase
2,800 shares of
Common Stock at $5.00 per share,
expiring 12/31/02 - -
Citation Computers Provides clinical
(CITA) laboratory information
October 31, 1991 13,680 shares of Common
Stock 33,578 88,920
The accompanying notes are an integral
part of these financial statements.
13
<PAGE> 14
<CAPTION>
COMMUNITY INVESTMENT PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (cont'd.)
AS OF DECEMBER 31, 1997
- --------------------------------------------------------------------------------------------------------------
Company Nature of Business Fair Value
Initial Investment Date Investment Cost (Note 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Vision Partners, L.P. Owns stock in Family
Vision Center, Inc., which
operates leased optical
departments in host stores
October 19, 1992 Limited Partnership
Interests $ 450,000 $ 450,000
December 1, 1993 Limited Partnership
Interests 124,965 124,965
Isolyser Company, Makes healthcare disposables
Inc. from hot-water soluble
polymer
August 30, 1996 68,563 shares of Common
Stock 262,203 160,698
---------- ----------
$1,282,944 $1,951,068
========== ==========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
14
<PAGE> 15
<TABLE>
COMMUNITY INVESTMENT PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
AS OF DECEMBER 31, 1996
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Company Nature of Business Fair Value
Initial Investment Date Investment Cost (Note 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Saztec International, Inc. Provides services for database
(Sazz) construction and information
conversion
June 7, 1990 108,400 shares Common
Stock $ 78,324 $ 14,092
Intermedia Organized to install and provide
Communications of Florida private, dedicated telecommunication
(ICIX) lines using fiber optic cable
May 31, 1991 25,000 shares Common Stock 70,000 643,750
Innovation Medical Manufactures highly specialized
Technologies, Inc. medical instruments for use in
ophthalmic surgery
July 26, 1991 5,769 shares of 6% Class A
Cumulative Convertible
Preferred Stock 149,994 149,994
March 11, 1992 5,625 shares of Class B
Convertible Preferred
Stock 90,000 90,000
September 30, 1992 5% Term Notes, due
December 31, 1997 40,763 40,763
Warrants to purchase
14,440 shares of Common Stock
at $2.50 per share, expiring 12/31/00 - -
May 26, 1994 5% Term Notes, due
December 31, 1997 15,008 15,008
Warrants to purchase 2,800 shares of
Common Stock at $5.00 per share,
expiring 12/31/02 - -
Citation Computers Provides clinical
(CITA) laboratory information
October 31, 1991 16,480 shares of Common
Stock 40,410 107,120
The accompanying notes are an integral
part of these financial statements.
15
<PAGE> 16
<CAPTION>
COMMUNITY INVESTMENT PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (cont'd.)
AS OF DECEMBER 31, 1996
- --------------------------------------------------------------------------------------------------------------
Company Nature of Business Fair Value
Initial Investment Date Investment Cost (Note 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PDT, Inc. Develops, manufactures
(PDTI) and markets the drug
devices used in Photodynamic
Therapy
May 28, 1992 2,323.50 shares of Common
Stock $ 9,294 $ 65,058
Vision Partners, L.P. Owns stock in Family
Vision Center, Inc., which
operates leased optical
departments in host stores
October 19, 1992 Limited Partnership
Interests 450,000 450,000
December 1, 1993 Limited Partnership
Interests 124,965 124,965
Isolyser Company, Inc. Makes healthcare disposables
from hot-water soluble
polymer
August 30, 1996 91,563 shares of Common
Stock 350,063 640,941
---------- ----------
$1,418,821 $2,341,691
---------- ----------
The accompanying notes are an integral
part of these financial statements.
</TABLE>
16
<PAGE> 17
<TABLE>
COMMUNITY INVESTMENT PARTNERS, L.P.
INCOME STATEMENT
<CAPTION>
For the Year Ended
December 31,
1997 1996 1995
--------- ---------- --------
INCOME
------
<S> <C> <C> <C>
Dividend and Interest Income $ 56,358 $ 11,486 $ 8,282
Net Realized Gains on
Sale of Investments (Note 6) 486,662 1,647,498 594,681
--------- ---------- --------
TOTAL INCOME 543,020 1,658,984 602,963
--------- ---------- --------
EXPENSES
--------
Amortization of Deferred
Organizational Costs - - 4,058
Professional Fees 17,633 12,274 20,979
Other 986 1,628 2,035
--------- ---------- --------
TOTAL EXPENSES 18,619 13,902 27,072
--------- ---------- --------
Net Income before
Unrealized (Losses) Gains 524,401 1,645,082 575,891
Net Unrealized (Losses) Gains
on Investments (254,746) (652,959) 318,870
--------- ---------- --------
NET INCOME $ 269,655 $ 992,123 $894,761
========= ========== ========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
17
<PAGE> 18
<TABLE>
COMMUNITY INVESTMENT PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERSHIP CAPITAL
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1997, 1996 and 1995
-----------------------------------------------
LIMITED GENERAL
PARTNERS PARTNERS TOTAL
----------- --------- -----------
<S> <C> <C> <C>
Balance, December 31, 1994 $ 2,632,198 $ 589,800 $ 3,221,998
Distribution (439,100) (100,000) (539,100)
Net income 728,788 165,973 894,761
----------- --------- -----------
Balance, December 31, 1995 $ 2,921,886 $ 655,773 $ 3,577,659
Distribution (1,756,400) (400,000) (2,156,400)
Net income 808,089 184,034 992,123
----------- --------- -----------
Balance, December 31, 1996 $ 1,973,575 $ 439,807 $ 2,413,382
Distribution (439,100) (100,000) (539,100)
Net income 219,634 50,021 269,655
----------- --------- -----------
Balance, December 31, 1997 $ 1,754,109 $ 389,828 $ 2,143,937
=========== ========= ===========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
18
<PAGE> 19
<TABLE>
COMMUNITY INVESTMENT PARTNERS, L.P.
STATEMENT OF CASH FLOWS
<CAPTION>
For the Year Ended December 31,
1997 1996 1995
--------- ----------- ---------
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net Income $ 269,655 $ 992,123 $ 894,761
Adjustments to reconcile Net Income
to Net Cash provided by Operating Activities:
Amortization of Deferred Organization
Costs - - 4,058
Purchase of Portfolio Investments (1,197) (262,184) -
Sale of Portfolio Investments 623,736 2,132,188 771,961
Unrealized Losses (Gains) on
Portfolio Investments 254,746 652,959 (318,870)
Net Realized Gains on
Sale of Portfolio Investments (486,662) (1,647,498) (594,681)
(Increase) Decrease in Other Assets (56,358) 4,596 (3,862)
Increase in Accrued Expenses 900 - 7,000
(Decrease) Increase in Accounts Payable - (30,918) 30,918
--------- ----------- ---------
Total Cash Provided by
Operating Activities 604,820 1,841,266 791,285
--------- ----------- ---------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Capital Distributions (539,100) (2,156,400) (539,100)
--------- ----------- ---------
Total Cash Used by Financing Activities (539,100) (2,156,400) (539,100)
--------- ----------- ---------
Net Increase (Decrease) in Cash and
Cash Equivalents 65,720 (315,134) 252,185
CASH AND CASH EQUIVALENTS:
Beginning of year 80,365 395,499 143,314
--------- ----------- ---------
End of year $ 146,085 $ 80,365 $ 395,499
========= =========== =========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
19
<PAGE> 20
COMMUNITY INVESTMENT PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
1. GENERAL
Partnership Organization
-------------------------
Community Investment Partners, L.P. ("the Partnership") was formed on
October 10, 1989, under the Revised Uniform Limited Partnership Act of
Missouri. CIP Management, L.P., LLLP, the Managing General Partner,
is a Missouri limited liability limited partnership formed on October
10, 1989 as a limited partnership and registered as a limited
liability limited partnership on July 23, 1997. The general partner
of CIP Management, L.P.,LLLP is CIP Management, Inc., an indirect
subsidiary of Edward D. Jones & Co., L.P.
Business
--------
The Partnership elected to be a business development company under the
Investment Company Act of 1940, as amended. As a business development
company, the Partnership is required to invest at least 70% of its
assets in qualifying investments as specified in the Investment
Company Act. The Managing General Partner is responsible for making
the Partnership's investment decisions.
The Partnership has sought and will continue to seek long-term capital
appreciation by making investments in companies and other special
investment situations. The Partnership is not permitted to engage in
any other business or activity. The Partnership will dissolve on
December 31, 2005, subject to the right of the Individual General
Partners to extend the term for up to two additional two-year periods.
As of December 31, 1992, the Partnership is no longer making initial
portfolio investments, but may continue to make follow-on investments.
Risk of Ownership
-----------------
The purchase and ownership of Partnership Units involve a number of
significant risks and other important factors. The portfolio company
investments of the Partnership involve a high degree of business and
financial risk that can result in substantial losses. Among these are
the risks associated with investments in companies with little
operating history, companies operating at a loss or with substantial
variations in operating results from period to period, companies with
the need for substantial additional capital to support expansion or
achieve or maintain a competitive position, companies which may be
highly leveraged, companies which may not be diversified and companies
in which the Partnership may be the sole or primary lender. The
Partnership intends to invest in only a few companies; therefore, a
loss or other problem with a single investment would have a material
adverse effect on the Partnership.
Reclassification
----------------
Certain prior year amounts have been reclassified to conform to current
year classification.
2. ALLOCATION OF PARTNERSHIP PROFITS AND LOSSES
The Partnership Agreement generally provides for the allocation of
profits and losses pro rata based on the Partners' capital
contributions. Refer to the Partnership Agreement for more detailed
information.
20
<PAGE> 21
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
-------------------------
All short-term investments with original maturities of three months or
less are considered to be cash equivalents.
Investment Transactions
-----------------------
All portfolio investments are carried at cost until significant
developments affecting an investment provide a basis for revaluation.
Thereafter, portfolio investments are carried at fair value as
obtained from outside sources or at a value determined quarterly by
the Managing General Partner under the supervision of the Independent
General Partners. Due to the inherent uncertainty of valuation, those
estimated values for portfolio investments carried at cost may differ
significantly from the values that would have been used had a ready
market for the investment existed, and the differences could be
material to the financial statements. Investments in securities
traded on a national securities exchange are valued at the latest
reported sales price on the last business day of the period. If no
sale has taken place, the securities are valued at the last bid price.
If no bid price has been reported, or if no exchange quotation is
available, the securities are valued at the quotation obtained from an
outside broker. Investment transactions are recorded on a trade date
basis. Income is recorded on an accrual basis.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Organizational Costs
--------------------
Organizational costs were amortized over a sixty-month period and were
fully amortized in 1995.
Income Taxes
------------
Income taxes have not been provided for as the Partnership is a limited
partnership and each partner is liable for its own tax payments.
Allocation of Partnership profits and losses for tax purposes is based
upon taxable income which may differ from net income for financial
reporting primarily due to differences between book and tax accounting
for portfolio investments.
Distributions
-------------
When excess cash, if any, becomes available, it is the Partnership's
intent to make distributions. All distributions are subject to the
sole discretion of the Managing General Partner and the Independent
General Partners.
21
<PAGE> 22
4. PER UNIT INFORMATION
There is no market for the Limited Partnership interests. Per Unit
Information is as follows:
<TABLE>
<CAPTION>
For the Year Ended December 31,
1997 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Number of unit holders 104 105 105
Limited partnership units 87,820 87,820 87,820
General partnership units 20,000 20,000 20,000
-------- -------- --------
Total units outstanding 107,820 107,820 107,820
======== ======== ========
Net asset value per unit $ 19.88 $ 22.38 $ 33.18
======== ======== ========
Net income per unit $ 2.50 $ 9.20 $ 8.30
======== ======== ========
</TABLE>
5. RELATED PARTY TRANSACTIONS
The Partnership is furnished with certain non-reimbursed management and
accounting services by affiliates, whose value is not reflected in the
accompanying financial statements.
The Partnership may place its General Partners on Boards of Directors
of portfolio companies.
The Managing General Partner and the Independent General Partners of
the Partnership are also the managing general partner and independent
general partners, respectively, of Community Investment Partners II,
L.P., a business development company. Additionally, the Managing
General Partner is the managing general partner of Community
Investment Partners III L.P., LLLP, another business development
company.
22
<PAGE> 23
6. INVESTMENT TRANSACTIONS
Following is a summary of portfolio investment transactions during the
years ended December 31, 1997, 1996 and 1995, respectively.
For the year ended December 31, 1997:
-------------------------------------
<TABLE>
<CAPTION>
Realized
Company Cost Proceeds Gain (Loss)
------- -------- -------- ----------
<S> <C> <C> <C>
Purchases:
----------
Intermedia Communications
of Florida $ 1,197
--------
Total Purchases $ 1,197
========
Sales:
------
Intermedia Communications
of Florida $ 33,088 $422,268 $389,180
Isolyser Company, Inc. 87,860 76,622 (11,238)
PDT, Inc. 9,294 101,047 91,753
Citation Computers 6,832 23,799 16,967
-------- -------- --------
Total Sales $137,074 $623,736 $486,662
======== ======== ========
</TABLE>
During 1997, there was a one-for-four reverse stock split on Saztec
International, Inc. common stock. The Partnership's 108,400 shares of common
stock were converted to 27,100 shares of common stock.
23
<PAGE> 24
For the year ended December 31, 1996:
-------------------------------------
<TABLE>
<CAPTION>
Realized
Company Cost Proceeds Gain (Loss)
------- -------- -------- ----------
<S> <C> <C> <C>
Purchases:
----------
Micro Partners, L.P. $256,413
Innovation Medical
Technologies, Inc. 5,771
--------
Total Purchases $262,184
========
Sales:
------
Intermedia
Communications $126,000 $1,005,563 $ 879,563
Citation Computers 148,840 679,375 530,535
Isolyser Company, Inc. 206,350 443,750 237,400
Innovation Medical
Technologies, Inc. 3,500 3,500 0
-------- ---------- ----------
Total Sales $484,690 $2,132,188 $1,647,498
======== ========== ==========
</TABLE>
As of December 31, 1995, the Partnership held a $300,000 limited
partnership investment in Micro Partners, L.P. During 1996, an
additional investment of $256,413 was made in Micro Partners, L.P.
Subsequent to this investment, the Micro Partners, L.P. partnership
was dissolved and the Partnership received 88,220 shares of common
stock in Microtek. Then, Microtek merged with Isolyser Company and
the Partnership received 145,563 shares of Isolyser Company stock.
24
<PAGE> 25
For the year ended December 31, 1995:
-------------------------------------
<TABLE>
<CAPTION>
Realized
Investment Cost Proceeds Gain (Loss)
---------- -------- -------- ----------
<S> <C> <C> <C>
Sales:
PDT, Inc. $ 2,934 $ 7,276 $ 4,342
PDT, Inc. 27,882 218,409 190,527
PDT, Inc. 18,588 153,875 135,287
Saztec International, Inc. 21,676 6,875 (14,801)
Intermedia Communications
of Florida 45,200 253,026 207,826
Citation Computers 61,000 132,500 71,500
-------- -------- --------
Total Sales $177,280 $771,961 $594,681
======== ======== ========
</TABLE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None
25
<PAGE> 26
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There are two Independent General Partners and one Managing General
Partner of the Partnership. These Independent General Partners and the
Managing General Partner are responsible for the management and
administration of the Partnership. The General Partners are "interested
persons" of the Partnership as defined by the Investment Company Act of 1940,
but the Partnership has obtained an exemptive order from the Securities and
Exchange Commission permitting them to be considered disinterested persons.
The Independent General Partners provide overall guidance and supervision
with respect to the operations of the Partnership and perform the various
duties imposed on the directors of a business development company by the
Investment Company Act. In addition to general fiduciary duties, the
Independent General Partners supervise the management and underwriting
arrangement of the Partnership, the custody arrangement with respect to
portfolio securities, the selection of accountants, fidelity bonding and
transactions with affiliates.
Specific Information regarding the Independent General Partners:
Tommy L. Gleason, Jr., 52, has been an Independent General Partner
of the Partnership since February 1990. He is also an independent general
partner of Community Investment Partners II, L.P., a business development
company. Mr. Gleason is the Chairman and Chief Executive Officer of Galaxy
Systems Management, Inc., the general Partner of Galaxy Telecom, L.P., which
is involved in management of cable television systems located in sixteen
states and serving approximately 175,000 subscribers. Mr. Gleason owns 4,000
Units.
E. Stanley Kroenke, 50, has served as an Independent General Partner
of the Partnership since February 1990. He is also an independent general
partner of Community Investment Partners II, L.P., a business development
company. Mr. Kroenke leads a company that is a national investor, developer,
and owner of commercial real estate. The company is a developer and owner of
numerous shopping centers as well as apartment projects around the country.
Mr. Kroenke is co-owner and vice chairman of the St. Louis Rams National
Football League franchise. He also serves as a member of the board of
directors of Wal-Mart Stores, Inc., Bentonville, Arkansas; Central
Bancompany, Jefferson City, Missouri; Boone County National Bank, Columbia,
Missouri; and the Strategic Development Board of the University of Missouri
School of Business, Columbia, Missouri. He serves as a trustee of the
College of the Ozarks in Point Lookout, Missouri, as well as chairman of
their real estate committee. Mr. Kroenke owns 4,000 Units.
CIP Management, L.P., LLLP, (the "Managing General Partner") is the
Managing General Partner of Community Investment Partners, L.P. The Managing
General Partner is also managing general partner of Community Investment
Partners II, L.P. and Community Investment Partners III L.P., LLLP, which are
also business development companies. The General Partners of the Managing
General Partner are CIP Management, Inc., a Missouri corporation and a
wholly-owned subsidiary of Edward D. Jones & Co., L.P., and Daniel A.
Burkhardt.
26
<PAGE> 27
The Directors and Officers of CIP Management, Inc. are as follows:
Daniel A. Burkhardt, 50, President, Treasurer and Director of CIP
Management, Inc. since October 1989 and general partner of CIP Management,
L.P.,LLLP since February 1990. He is a general partner of The Jones
Financial Companies, L.P., LLP, the parent company of Edward D. Jones & Co.,
L.P. where he has specialized in investment banking and structuring
investments since 1980. He is also a director of Essex County Gas Company,
St. Joseph Light & Power Co., SEMCO Energy, Inc. and Mid-America Realty
Investment, Inc. Mr. Burkhardt is the beneficial owner of 2,105 Units.
Ray A. Robbins, Jr., 53, Vice President and Director of CIP
Management, Inc. since October 1989. He is a general partner of The Jones
Financial Companies, L.P., LLP, the parent company of Edward D. Jones & Co.,
L.P., where he has specialized in securities analysis since 1984, and where
he was responsible for municipal bond transactions from 1975 to 1983. Mr.
Robbins is a beneficial owner of 2,000 Units.
Marilyn A. Gaffney, 39, Secretary of CIP Management, Inc. since
October 1989. She is a Limited Partner of The Jones Financial Companies,
L.P., LLP, the parent company of Edward D. Jones & Co., L.P., where she has
been a senior investment adviser in investment banking since 1980. Ms.
Gaffney is the beneficial owner of 200 Units.
Item 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Partnership
Distributions and Allocations" in the Prospectus of the Partnership dated
March 12, 1990, filed with the Securities and Exchange Commission pursuant to
Rule 497(b) under the Securities Act of 1933, is incorporated herein by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information concerning the security ownership of the General
Partner, Independent General Partners and the Officers and Directors of CIP
Management, Inc., described in Items 1 and 10, is herein incorporated by
reference.
As of March 15, 1998, the following parties are known by the
Partnership to be the beneficial owners of more than 5% of the Units.
<TABLE>
<CAPTION>
Amount of
Beneficial % of Limited
Name Ownership of Units Partnership Capital
---- ------------------ -------------------
<S> <C> <C>
Iowa Ilinois Investment Co. 10,000 11.39%
EDJ Ventures Ltd. 19,800 22.55%
Richard P. Kiphart 4,590 5.23%
</TABLE>
The Partnership is not aware of any arrangement which may, at a
subsequent date, result in a change of control of the Partnership.
27
<PAGE> 28
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain relationships and related transactions, described in Item
10, are herein incorporated by reference.
28
<PAGE> 29
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a. The following documents are filed as part of this report:
1. Financial Statements:
--------------------
See Index to Financial Statements and Supplementary Data
contained in Item 8 of this Form 10-K.
2. Financial Statement Schedules:
-----------------------------
All financial statement schedules are omitted because
they are not applicable or the required information is
included in the balance sheet or notes thereto.
3. Exhibits:
--------
(3) Amended and Restated Certificate and Agreement of
Limited Partnership dated as of March 29, 1990.
(4) Form of Unit Certificate.<F*>
(10) Management Agreement dated March 28, 1990, between the
Partnership and CIP Management, L.P. ,LLLP<F**>
(28) Prospectus of the Partnership dated March 12, 1990,
filed with the Securities and Exchange Commission in
connection with Registration Statement No. 33-31649 on Form
N-2 under the Securities Act of 1933. <F***>
[FN]
<F*> Incorporated by reference to Exhibit A of the Prospectus
of the Partnership dated March 12, 1990 filed with the
Securities and Exchange Commission pursuant to Rule 497(b)
under the Securities Act of 1933.
<F**> Incorporated by reference to the Partnership's Proxy
Statement filed with the Securities Exchange Commission
on March 11, 1991.
<F***>Incorporated by reference to the Partnership's
Registration Statement No. 33-31649 on Form N-2 under
the Securities Act of 1933.
b. No reports on Form 8-K were filed during the quarter ended December
31, 1997.
c. Exhibits filed as part of this report are included in Item (14)
(a)(3) above.
d. All financial statement schedules are omitted because they are not
applicable or the required information is included in the balance
sheet or notes thereto.
29
<PAGE> 30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on this 23rd day
of March, 1998.
Community Investment Partners, L.P.
By: CIP Management, L.P., LLLP, its
Managing General Partner
By: CIP Management, Inc., its
Managing General Partner
/s/ Daniel A. Burkhardt, President
--------------------------------------
By: Daniel A. Burkhardt, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated.
/s/ Daniel A. Burkhardt
- ------------------------------ General Partner of CIP Management
Daniel A. Burkhardt L.P., LLLP, President, Treasurer and
Director of CIP Management, Inc.
/s/ Ray L. Robbins
- ------------------------------ Vice President and Director of CIP
Ray L. Robbins Management, Inc.
/s/ Tommy L. Gleason, Jr.
- ------------------------------ Individual General Partner,
Tommy L. Gleason, Jr. Community Investment Partners, L.P.
/s/ E. Stanley Kroenke
- ------------------------------ Individual General Partner,
E. Stanley Kroenke Community Investment Partners, L.P.
30
<PAGE> 31
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
Exhibit
Number Description of Exhibit Page
------- ---------------------- ----
<S> <C> <C>
(3) Amended and Restated Certificate and
Agreement of Limited Partnership dated
as of March 29, 1990 <F*>
(4) Form of Unit Certificate <F*>
(10) Management Agreement dated March 28, 1990,
between the Partnership and CIP Management,
L.P.,LLLP <F*>
(28) Prospectus of the Partnership dated March 12,
1990, filed with the Securities and Exchange
Commission in connection with Registration
Statement No. 33-31649 on Form N-2 under the
Securities Act of 1933 <F*>
<FN>
- ----------------
<F*>Incorporated by reference
</TABLE>
31
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for Community Investment Partners, L.P. for the
year ended December 31, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,282,944
<INVESTMENTS-AT-VALUE> 1,951,068
<RECEIVABLES> 59,784
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,156,937
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 13,000
<TOTAL-LIABILITIES> 13,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 107,820
<SHARES-COMMON-PRIOR> 107,820
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,143,937
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 56,358
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 486,662
<APPREC-INCREASE-CURRENT> (254,746)
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (539,100)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,619
<AVERAGE-NET-ASSETS> 2,278,660
<PER-SHARE-NAV-BEGIN> 22.38
<PER-SHARE-NII> 2.50
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (5.00)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.88
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
