<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30,1999
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ___________________________
Commission file number 0-21382
---------------------------------------------------------
Capital Preferred Yield Fund-II, L.P.
-------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1184628
----------------------- ------------------------------------
(State of organization) (I.R.S. Employer Identification No.)
7175 West Jefferson Avenue, Suite 4000
Lakewood, Colorado 80235
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 980-1000
--------------
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___.
---
Exhibit Index appears on Page 14
Page 1 of 15 Pages
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
Quarterly Report on Form 10-Q
for the Quarter Ended
September 30, 1999
Table of Contents
-----------------
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements (Unaudited)
Balance Sheets - September 30, 1999 and December 31, 1998 3
Statements of Income - Three and Nine Months Ended
September 30, 1999 and 1998 4
Statements of Cash Flows - Nine Months Ended
September 30, 1999 and 1998 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature 15
</TABLE>
2
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 776,290 $ 784,867
Accounts receivable, net 229,972 771,076
Receivable from affiliates 25,550 -
Equipment held for sale or re-lease 776,244 285,299
Net investment in direct finance leases 2,142,619 2,865,887
Leased equipment, net 5,787,612 9,637,771
------------- ------------
Total assets $ 9,738,287 $ 14,344,900
============= ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued liabilities $ 894,623 $ 1,334,422
Payables to affiliates 13,909 2,142
Rents received in advance 43,340 105,332
Distributions payable to partners 112,100 508,106
Discounted lease rentals 2,762,711 4,612,151
------------- ------------
Total liabilities 3,826,683 6,562,153
------------- ------------
Partners' capital:
General partner - -
Limited partners:
Class A 5,737,676 7,601,001
Class B 173,928 181,746
------------- ------------
Total partners' capital 5,911,604 7,782,747
------------- ------------
Total liabilities and partners' capital $ 9,738,287 $ 14,344,900
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- -----------------
1999 1998 1999 1998
--------- ----------- ----------- -----------------
<S> <C> <C> <C> <C>
Revenue:
Operating lease rentals $908,153 $1,723,946 $3,187,708 $5,221,617
Direct finance lease income 55,576 86,926 185,655 282,120
Equipment sales margin 8,841 444,344 388,360 679,714
Interest income 7,144 13,939 21,043 62,996
-------- ---------- ---------- ----------
Total revenue 979,714 2,269,155 3,782,766 6,246,447
-------- ---------- ---------- ----------
Expenses:
Depreciation 659,248 1,249,768 2,427,807 4,001,604
Management fees paid to general partner 21,238 37,988 86,738 115,646
Direct services from general partner 7,887 59,438 73,788 121,986
General and administrative 34,492 44,943 142,980 159,244
Interest on discounted lease rentals 56,935 109,600 203,131 372,514
Interest on financed operating lease rentals - 29,167 - 98,976
Provision for losses 25,000 25,000 100,000 150,000
-------- ---------- ---------- ----------
Total expenses 804,800 1,555,904 3,034,444 5,019,970
-------- ---------- ---------- ----------
Net income $174,914 $ 713,251 $ 748,322 $1,226,477
======== ========== ========== ==========
Net income allocated:
To the general partner $ 5,004 $ 15,244 $ 25,993 $ 52,801
To the Class A limited partners 168,192 690,956 715,022 1,161,795
To the Class B limited partner 1,718 7,051 7,307 11,881
-------- ---------- ---------- ----------
$174,914 $ 713,251 $ 748,322 $1,226,477
======== ========== ========== ==========
Net income per weighted average
Class A limited partner unit outstanding $1.26 $5.17 $5.36 $8.70
======== ========== ========== ==========
Weighted average Class A
limited partner units outstanding 133,418 133,528 133,428 133,600
======== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
September 30, September 30,
1999 1998
-------------- --------------
<S> <C> <C>
Net cash provided by operating activities $ 4,861,198 $ 9,164,516
----------- -----------
Cash flows from investing activities:
Upgrade of equipment on operating lease from affiliate (4,864) -
----------- -----------
Net cash used in investing activities (4,864) -
----------- -----------
Cash flows from financing activities:
Principal payments on discounted lease rentals (1,849,440) (2,499,291)
Principal payments on financed operating lease rentals - (2,257,035)
Distributions to partners (3,007,321) (5,179,015)
Redemptions of Class A limited partner units (8,150) (15,997)
----------- -----------
Net cash used in financing activities (4,864,911) (9,951,338)
----------- -----------
Net decrease in cash and cash equivalents (8,577) (786,822)
Cash and cash equivalents at beginning of period 784,867 1,897,763
----------- -----------
Cash and cash equivalents at end of period 776,290 1,110,941
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid on discounted lease rentals $ 203,131 $ 372,514
Interest paid on financed operating lease rentals - 98,976
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
---------------------
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles for annual
financial statements. In the opinion of the General Partner, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. The balance sheet at December 31, 1998 was
derived from the audited financial statements included in the Partnership's
Annual Report on Form 10-K. For further information refer to the financial
statements of Capital Preferred Yield Fund-II, L.P. (the "Partnership") and
the related notes, included in the Partnership's Annual Report on Form 10-K
for the year ended December 31, 1998, (the "1998 Form 10-K") previously filed
with the Securities and Exchange Commission.
Recently Issued Financial Accounting Standards
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities ("Statement
133"). Statement 133 establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. Statement 133
is effective for fiscal years beginning after June 15, 1999, with earlier
application permitted. The Partnership adopted Statement 133 in the first
quarter of 1999.
In June 1999, the Financial Accounting Standards Board issued SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement 133, an Amendment of FASB Statement 133.
Statement 137 effectively extends the required application of Statement 133
to fiscal years beginning after June 15, 2000, with earlier application
permitted. The Partnership adopted Statement 133 in the first quarter of
1999. The General Partner does not expect the adoption of Statement 133 or
Statement 137 to have an impact on its financial reporting.
2. Transactions With the General Partner and Affiliates
----------------------------------------------------
Management Fees Paid to General Partner
In accordance with the Partnership Agreement, the General Partner earns a
management fee in connection with its management of the equipment, calculated
as a percentage of the monthly gross rentals received, and paid monthly in
arrears. At September 30, 1999, management fees of $6,909 are included in
payables to affiliates.
6
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited), continued
2. Transactions With the General Partner and Affiliates, continued
----------------------------------------------------
Direct Services from General Partner
The General Partner and an affiliate provide accounting, investor relations,
billing, collecting, asset management, and other administrative services to
the Partnership. The Partnership reimburses the General Partner for these
services performed on its behalf as permitted under the terms of the
Partnership Agreement. At September 30, 1999, direct services from the
General Partner in the amount of $7,000 are included in payables to
affiliates.
General and Administrative Expenses
The General Partner and an affiliate are reimbursed for the actual cost of
administrative expenses incurred on behalf of Partnership. At September 30,
1999, there are no administrative expenses included in payables to
affiliates.
Receivable From Affiliates
The General Partner collects rents from lessees and applies these rental
payments to the lessee's account with the Partnership. The General Partner
then transfers the collected rental payments to the Partnership, eliminating
the receivable from affiliate balance. As of September 30, 1999, $25,550 of
rents had been applied by the General Partner that were transferred to the
Partnership subsequent to the end of the quarter and prior to the filing of
the September 30, 1999 Quarterly Report.
7
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
- ---------------------
Presented below are schedules (prepared solely to facilitate the discussion of
results of operations that follows) showing items of income and expense and
changes in those items derived from the Statements of Income:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
---------------------- -------------------------------------
1999 1998 Change 1999 1998 Change
---------- ---------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Leasing margin $247,546 $422,337 $(174,791) $ 742,425 $1,030,643 $(288,218)
Equipment sales margin 8,841 444,344 (435,503) 388,360 679,714 (291,354)
Interest income 7,144 13,939 (6,795) 21,043 62,996 (41,953)
Management fees paid to general partner (21,238) (37,988) 16,750 (86,738) (115,646) 28,908
Direct services from general partner (7,887) (59,438) 51,551 (73,788) (121,986) 48,198
General and administrative expenses (34,492) (44,943) 10,451 (142,980) (159,244) 16,264
Provision for losses (25,000) (25,000) - (100,000) (150,000) 50,000
-------- -------- --------- --------- ---------- ---------
Net income $174,914 $713,251 $(538,337) $ 748,322 $1,226,477 $(478,155)
======== ======== ========= ========= ========== =========
</TABLE>
The Partnership is in its liquidation stage, as defined in the Partnership
Agreement. The Partnership is not purchasing additional equipment, initial
leases are expiring, and the amount of equipment being remarketed (i.e., re-
leased, renewed, or sold) is increasing. As a result, both the size of the
Partnership's lease portfolio and the amount of leasing revenue are declining.
<TABLE>
<CAPTION>
Leasing Margin
Leasing margin consists of the following:
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------
1999 1998 1999 1998
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating lease rentals $ 908,153 $ 1,723,946 $ 3,187,708 $ 5,221,617
Direct finance lease income 55,576 86,926 185,655 282,120
Depreciation (659,248) (1,249,768) (2,427,807) (4,001,604)
Interest expense on discounted lease rentals (56,935) (109,600) (203,131) (372,514)
Interest expense on financed operating
lease rentals - (29,167) - (98,976)
--------- ----------- ----------- -----------
Leasing margin $ 247,546 $ 422,337 $ 742,425 $ 1,030,643
========= =========== =========== ===========
Leasing margin ratio 26% 23% 22% 19%
========= =========== =========== ===========
</TABLE>
8
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
Results of Operations, continued
- ---------------------
Leasing Margin, continued
All components of leasing margin decreased for the three and nine months ended
September 30, 1999 compared to the three and nine months ended September 30,
1998 due to portfolio runoff.
Leasing margin ratio varies due to changes in the portfolio, including, among
other things, the mix of operating leases versus direct finance leases, the
average maturity of leases comprising the portfolio, the average residual value
of leases in the portfolio, and the amount of discounted lease rentals financing
the portfolio. Leasing margin and the related leasing margin ratio for an
operating lease financed with non-recourse debt increases during the term of the
lease since rents and depreciation are typically fixed while interest expense
declines as the related non-recourse debt principal is repaid.
The ultimate rate of return on leases depends, in part, on interest rates at the
time the leases are originated, future equipment values, and on-going lessee
creditworthiness. Because leasing is an alternative to financing equipment
purchases with debt, lease rates tend to rise and fall with interest rates
(although lease rate movements generally lag interest rate changes in the
capital markets).
Equipment Sales Margin
Equipment sales margin consists of the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1999 1998 1999 1998
---------- ------------ -----------------------------
<S> <C> <C> <C> <C>
Equipment sales revenue $ 128,805 $ 2,031,273 $1,284,262 $ 3,356,042
Cost of equipment sales (119,964) (1,586,929) (895,902) (2,676,328)
--------- ----------- ---------- -----------
Equipment sales margin $ 8,841 $ 444,344 $ 388,360 $ 679,714
========= =========== ========== ===========
</TABLE>
Equipment sales margin fluctuates based on the amount and composition of
equipment available for sale. Currently, the Partnership is in its liquidation
phase as defined in the Partnership Agreement. Initial leases are expiring and
equipment is being remarketed (i.e., re-leased or sold to the original lessee or
to third parties). Equipment sold during the nine months ended September 30,
1999 included locomotives with a margin of $154,500, machine tools with a margin
of $131,195 and manufacturing equipment with a margin of $74,470. Equipment
sold during the nine months ended September 30, 1998 included tractors with a
margin of $59,159, glass packaging equipment with a margin of $93,594, and
manufacturing equipment with a margin of $60,830.
9
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
Results of Operations, continued
- ---------------------
Interest Income
Interest income varies based on the amount of cash available for investment
pending distribution to partners, and the interest rate on such invested cash.
As the Partnership is in its liquidation period, excess cash is being
distributed to the partners. Therefore, interest income decreased for the three
and nine months ended September 30, 1999 as compared to the three and nine
months ended September 30, 1998.
Expenses
Management fees paid to the General Partner decreased for the three and nine
months ended September 30, 1999, as compared to the corresponding period in
1998, primarily due to portfolio run-off. Management fees are calculated as a
percentage of rents collected.
General and administrative expenses from the General Partner for the three and
nine months ended September 30, 1999 were comparable to the corresponding period
in 1998. The primary components of general and administrative expenses for the
three and nine months ended September 30, 1999 and September 30, 1998 were data
processing, advertising, audit and tax fees, bank charges, legal and state
income taxes.
Direct services from the General Partner for the three and nine months ended
September 30, 1999 decreased primarily because of a change in the methodology
used to determine the amount to be reimbursed to the affiliate for asset
management services. The affiliate now charges the Partnership a fixed fee for
asset management services. This fee is equal to an estimated cost to refurbish
a piece of equipment returned to the affiliates' warehouse. The fee is charged
to the Partnership when the equipment is returned, and is recorded as an expense
for the period.
Provision for Losses
The remarketing of equipment for an amount greater than its book value is
reported with equipment sales margin (if the equipment is sold) or leasing
margin (if the equipment is re-leased). The realization of less than the
carrying value of equipment (which occurs when the equipment is remarketed
subsequent to initial lease termination) is recorded as provision for losses.
10
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
Provision for Losses, continued
Residual values are established equal to the estimated value to be received from
the equipment following termination of the lease. In estimating such values,
the Partnership considers all relevant facts regarding the equipment and the
lessee, including, for example, the likelihood that the lessee will re-lease the
equipment. The nature of the Partnership's leasing activities is such that it
has credit and residual value exposure and will incur losses from those
exposures in the ordinary course of business. The Partnership performs
quarterly assessments of the estimated residual values of its assets to identify
other-than-temporary losses in value.
The provision for losses recorded during the three and nine months ended
September 30, 1999 related primarily to lessees returning equipment to the
Partnership at lease maturity, and identification of other-than-temporary losses
in value for assets currently on lease.
Liquidity and Capital Resources
- -------------------------------
The Partnership is in its liquidation stage, as defined in the Partnership
Agreement. The Partnership is not purchasing additional equipment, initial
leases are expiring, and the amount of equipment being remarketed (i.e., re-
leased, renewed, or sold) is increasing. As a result, both the size of the
Partnership's lease portfolio and the amount of leasing revenue are declining.
The Partnership funds its operating activities principally with cash from rents,
interest income, and sales of off-lease equipment. Available cash and cash
reserves of the Partnership are invested in short-term government securities
pending distributions to the partners.
During the nine months ended September 30, 1999, the Partnership declared
distributions to the partners of $2,599,215, ($112,100 of which was paid in
October 1999). A substantial portion of such distributions constituted a return
of capital. Distributions may be characterized for tax, accounting and economic
purposes as a return of capital, a return on capital, or both. The portion of
each partners' cash distribution which exceeds its net income for the fiscal
period may be deemed a return of capital for accounting purposes. However, the
total percentage of the partnership's return on capital over its life can only
be determined after all residual cash flows (which include proceeds from the re-
leasing and sale of equipment after initial lease terms expire) have been
realized at the termination of the partnership.
The General Partner believes that the Partnership will generate sufficient cash
flow from operations during the remainder of 1999 to (1) meet current operating
requirements and (2) fund cash distributions to the Class A limited partners in
accordance with the Partnership Agreement. Distributions during the liquidation
phase will vary based upon cash availability. All distributions are expected to
be a return of capital for economic purposes.
11
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
Liquidity and Capital Resources, continued
- -------------------------------
The Class B limited partner distributions of cash from operations are
subordinated to the Class A limited partners cumulative preferred distribution
of 12% per annum per the Partnership Agreement. The Partnership is in the
liquidation stage, and distributions are based on excess cash available from
operations. Although on a monthly basis the distributions to the Class A limited
partners has varied from an annualized rate of 6 percent to 24 percent, the
cumulative distributions during the nine months ended September 30, 1999 have
been paid at the preferred annualized rate of 12%. Consequently, the Class B
limited partner received distributions for five of the nine months ended
September 30, 1999.
Year 2000 Issues
An affiliate provides accounting and other administrative services, including
data processing services to the Partnership. The affiliate has conducted a
comprehensive review of its internal information technology ("IT") systems to
identify systems that could be affected by the Year 2000 issue. The Year 2000
issue results from computer programs being written using two digits rather than
four to define the applicable year. Certain computer programs which have time-
sensitive software could recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in major system failures or
miscalculations. The affiliate is in the process of upgrading or replacing all
components of its IT systems which were identified as being affected by the Year
2000 issue. At the present time, the affiliate has completed upgrades and
testing of the upgrades for all components of its IT systems except its primary
application software which controls the partnership's financial records, asset
management detail, and billing records. The affiliate has fully identified all
aspects of the application software which have Year 2000 issues and has
commenced the process of upgrading the software. The affiliate expects that the
new upgrades will be fully operational by December 31, 1999, and therefore will
be fully Year 2000 compliant. The affiliate does not expect any other changes
required for the Year 2000 to have a material effect on its financial position
or results of operations. As such, the affiliate has not developed any specific
contingency plans in the event it fails to complete the upgrades by December 31,
1999. However, should the affiliate be unsuccessful in completing the necessary
upgrades by December 31, 1999, the affiliate does not expect there will be a
material adverse effect on the Partnership's financial position or results of
operations. There could be a negative impact on the Partnership's ability to
realize expected cash flows from leased equipment on a timely basis due to
billing or collection problems which could arise related to Year 2000 issues.
While it is expected that the Partnership's ability to ultimately realize all
expected cash flows will not be impacted, delays in collecting cash flows would
have a negative impact on the timing of distributions to partners. The cost of
addressing Year 2000 issues, which are borne by the affiliate, are not expected
to be material to the Partnership. The affiliate does not expect any Year 2000
issues relating to its customers and vendors to have a material effect on its
financial position or results of operations, or on its ability to provide
services to the Partnership.
12
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
New Accounting Pronouncements
- -----------------------------
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities ("Statement 133").
Statement 133 establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Statement 133 is
effective for fiscal years beginning after June 15, 1999, with earlier
application permitted. The Partnership adopted Statement 133 in the first
quarter of 1999.
In June 1999, the Financial Accounting Standards Board issued SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement 133, an Amendment of FASB Statement 133.
Statement 137 effectively extends the required application of Statement 133 to
fiscal years beginning after June 15, 2000, with earlier application permitted.
The Partnership adopted Statement 133 in the first quarter of 1999. The General
Partner does not expect the adoption of Statement 133 or Statement 137 to have
an impact on its financial reporting.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
- -----------------------------------------------------------------------------
1995
- ----
The statements contained in this report which are not historical facts may be
deemed to contain forward-looking statements with respect to events, the
occurrence of which involve risks and uncertainties, and are subject to factors
that could cause actual future results to differ both adversely and materially
from currently anticipated results, including, without limitation, the level of
lease originations, realization of residual values, the availability and cost of
financing sources and the ultimate outcome of any contract disputes. Certain
specific risks associated with particular aspects of the Partnership's business
are discussed under Results of Operations in this report and under Results of
Operations in the 1998 Form 10-K when and where applicable.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The partnership is in the liquidation stage (as defined in the Partnership
Agreement). Consequently, the partnership is no longer originating new leases.
The partnership's existing leases are non-cancelable, have fixed rates and are
financed with fixed rate debt. Therefore, the partnership has no exposure to
fluctuations in interest rates or other market risk exposure.
13
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is involved in routine legal proceedings incidental to
the conduct of its business. The general partner believes none of these
legal proceedings will have a material adverse effect on the financial
condition or operations of the Partnership.
Item 6. Exhibits and Reports on Form 8-K
(a) None.
(b) The Partnership did not file any reports on Form 8-K during the
quarter ended September 30, 1999.
14
<PAGE>
CAPITAL PREFERRED YIELD FUND-II, L.P.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAPITAL PREFERRED YIELD FUND-II, L.P.
By: CAI Equipment Leasing III Corp.
Dated: November 15, 1999 By: /s/ Dana T. Martin
-----------------------------------------
Dana T. Martin
Assistant Vice President
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 776,290
<SECURITIES> 0
<RECEIVABLES> 255,522
<ALLOWANCES> 0
<INVENTORY> 776,244
<CURRENT-ASSETS> 0
<PP&E> 7,930,231
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,738,287
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,911,604
<TOTAL-LIABILITY-AND-EQUITY> 9,738,287
<SALES> 388,360
<TOTAL-REVENUES> 3,782,766
<CGS> 0
<TOTAL-COSTS> 3,034,444
<OTHER-EXPENSES> 160,526
<LOSS-PROVISION> 100,000
<INTEREST-EXPENSE> 203,131
<INCOME-PRETAX> 748,322
<INCOME-TAX> 0
<INCOME-CONTINUING> 748,322
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 748,322
<EPS-BASIC> 5.36
<EPS-DILUTED> 5.36
</TABLE>
