<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
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, 1996
Commission file number 33-47917
COMMUNITY INVESTMENT PARTNERS II, L.P.
___________________________________________________________________
(Exact name of registrant as specified in its charter)
MISSOURI 43-1609351
___________________________________________________________________
(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(g) of the Act: None.
Securities registered pursuant to Section 12(b) 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, 1997, 90,404 units of limited partnership
interest (Units), totaling $1,592,918 were held by non-affiliates.
There is no established public market for such Units.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Prospectus of the Registrant dated November 4,
1992, filed with the Securities and Exchange Commission are
incorporated by reference in Part I, Part II and Part III hereof.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
TABLE OF CONTENTS
PART I Page
Item 1. Business................................... 4
Item 2. Properties................................. 5
Item 3. Legal Proceedings.......................... 6
Item 4. Submission of Matters to a Vote of
Security Holders.......................... 6
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters............... 7
Item 6. Selected Financial Data.................... 7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations....... 8
Item 8. Index to Financial Statements and
Supplementary Financial................... 11
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure... 23
PART III
Item 10.Directors and Executive Officers
of the Registrant......................... 24
Item 11.Executive Compensation...................... 25
Item 12.Security Ownership of Certain Beneficial Owners and
Management................................. 25
Item 13. Certain Relationships and Related
Transactions............................. 26
PART IV
Item 14.Exhibits, Financial Statement Schedules and
Reports on Form 8-K........................ 27
SIGNATURES........................................... 28
INDEX TO EXHIBITS.................................... 29
<PAGE>
PART I
Item 1. BUSINESS
Community Investment Partners II, 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, 2007, 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 May 8, 1992, under the Revised
Uniform Limited Partnership Act of Missouri. CIP Management, L.P.,
the Managing General Partner, is a Missouri limited partnership
formed on October 10, 1989. The general partner of CIP Management,
L.P., 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 1992. The Partnership sold
111,410 Units of limited partnership interest and 1,120 units of
general partnership interest for an aggregate price of $1,406,625.
After offering expenses, the Partnership received approximately
$1,224,000 in proceeds available for investment. The Partnership
executed a call to each partner requesting the deposit of an amount
equal to the initial capital contribution on August 25, 1994.
The Managing General Partner is required to have invested the
net proceeds of the Partnership's offering (excluding amounts held
in reserve) within two years of the date of the capital call.
The information set forth under the captions ``Investment
Objectives & Policies'' and ``Regulation'' in the Prospectus of the
Partnership dated November 4, 1992, 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 investment 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 be
less 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.
<PAGE>
Other risks include the Partnership's ability to find suitable
investments for its funds because of competition from other
entities having similar investment objectives. Risks may arise due
to the significant period of time that may elapse before the
Partnership has completed the selection of its portfolio company
investments and the significant 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. It is unlikely that any significant
distributions of the proceeds from the disposition of investments
will be made until the later years of the term of the Partnership.
Portfolio companies may require additional funds. There can
be no assurance that the Partnership will have sufficient funds
from reserves or borrowing to make such follow-up 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. In addition, they have prior experience in the
operation of Community Investment Partners, L.P., a business
development company such as the Partnership.
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 Investments,'' ``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 November 4, 1992, filed with the Securities and
Exchange Commission pursuant to Rule 497(b) under the Securities
Act of 1933 on November 4, 1992, 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.
<PAGE>
Employees
The Partnership has no employees. The Managing General
Partner performs management and administrative services for the
operation of the Partnership. The Managing General Partner is paid
an annual management fee of 1.5% of total assets. The Managing
General Partner is reimbursed by the Partnership for out of pocket
expenses in connection with finding, evaluating, structuring,
approving, monitoring and liquidating the Partnership's portfolio
investments.
Item 2. PROPERTIES
The Partnership has no 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 matter was submitted to a vote of security holders
during the period covered by this report.
<PAGE>
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, 1997, the
total number of holders of units is 131. The number of
limited partnership units outstanding is 111,395. The
number of general partnership units outstanding is 1,135 as
of March 15, 1997.
The information set forth under the captions
``Partnership Distributions and Allocations'' and
``Transferability of Units'' in the Prospectus of the
Partnership dated November 4, 1992, filed with the
Securities and Exchange Commission pursuant to Rule 497(b)
under the Securities Act of 1933 is incorporated herein by
reference.
Item 6. SELECTED FINANCIAL DATA
BALANCE SHEET:
As of
December 31,
1996 1995 (1) 1994 1993 1992
Net Assets $1,982,725 $2,014,889 $2,645,511 $1,355,231 $1,403,625
Portfolio
Investments$1,397,330 $545,013 $1,000,013 $ 500,013 $ -
INCOME STATEMENT:
For the Year Ended
December 31,
1996 1995 (1) 1994 1993 1992
Net Loss $(32,164) $(630,622) $(86,345) $(48,394) $ (3,000)
Per Unit of
Partnership Interest:
Net Asset
Value $ 17.62 $ 17.91 $ 23.50 $ 12.04 $ 12.47
Net Loss $ (.29) $ (5.60) $ (.77) $ (.43) $ (.03)
(1) See ``Fiscal Year 1995 versus 1994'' in Item 7, Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
(FISCAL YEAR 1996 VERSUS 1995)
Net loss for the year ended December 31, 1996, was $32,164,
compared to a net loss of $630,622 for 1995. Income was derived
from dividend income on portfolio investments and interest income
from certificates of deposit. The majority of the reduced net loss
incurred during 1996 is due primarily to a 1995 worthless
investment in West End Soda Brew of $600,000. In addition, the
Partnership had lower interest income of $15,212, due to cash being
used to purchase investments throughout 1996. Dividend income
increased $18,979 due to the increased level of investments.
During the year, the Partnership made several investments as
outlined in the Schedule of Portfolio Investments. One such
investment, FCOA Acquisition Corp., participated in an initial
public stock offering on December 13, 1996. The initial public
offering price was $9 per share, and the stock trades on the NASDAQ
under the ticker symbol FCPY. As of December 31, 1996, an
unrealized loss of $15,298 has been recorded for the FCOA
Acquisition Corporation investment. Expenses decreased by $9,989,
from $110,490 in 1995 to $100,501 in 1996. The decrease is
primarily related to lower professional fees. The future income or
loss of the Partnership is contingent upon the performance of
current and future investments.
<PAGE>
(FISCAL YEAR 1995 VERSUS 1994)
Net loss for the year ended December 31, 1995, was $630,622,
compared to a net loss of $86,345 for 1994. Income was derived
from dividend income on portfolio investments and interest income
from certificates of deposit. A loss was recorded to reflect a
worthless investment as West End Soda Brew closed operations in
November, 1995. The company was unable to compete with large
national competitors in the New Age segment of the beverage
industry and faced slowing demand for its products. This loss
accounts for the majority of the decrease in income. Expenses
decreased by $19,411, from $129,901 in 1994 to $110,490 in 1995.
As a result of lower total assets when compared to 1994, management
fees decreased by $9,000. Legal fees were down $10,000.
SUBSEQUENT EVENTS
On January 2, 1997, the Partnership sold its investment in
Houghton Acquisition Corporation (HAC). In exchange for the 2,000
shares of Class A cumulative redeemable Preferred Stock, the
Partnership received $613,379 in cash and a Convertible Promissory
Note in the principal amount of $77,400 due January 2, 1999 with
interest payable at 8%. A Promissory Note in the principal amount
of $25,800 was also received but is contingent upon the future
income of HAC before interest, taxes, depreciation, amortization
and corporate charges. As of December 31, 1996, the Partnership's
investment in HAC was recorded at original cost of $200,013.
Accordingly, the above transaction results in a gain of
approximately $490,000, which will be recorded in fiscal year 1997.
Due to the contingent nature of the Promissory Note in the
principal amount of $25,800, a gain has not been recorded for this
amount as of the transaction date. This Note has been recorded at
an original cost of $0, and additional gain will be recorded if, or
<PAGE>
when, payments become due under terms of the Note.
On January 6, 1997, the Partnership made a distribution of $5
per unit.
On January 24, 1997, the Partnership invested $100,000 in
Medical Device Alliance, Inc. and received 20,000 shares of common
stock. Medical Device Alliance, Inc. specializes in the
development, manufacture and marketing of devices for ultrasound-
assisted lipoplasty.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's total capital of $1,982,725 as of December
31, 1996, consisted of $1,962,730 in Limited Partner capital and
$19,995 in General Partner capital.
The 1996 total net loss of $32,164 was allocated to the
Limited Partners in the amount of $31,842 and to the General
Partners in the amount of $322.
The Partnership is actively reviewing potential portfolio
investments. Until the Partnership invests in portfolio
investments, it intends to invest its cash balances in a money
market account. At December 31, 1996, $527,000 was invested in the
money market account. Such investments provide the Partnership
with the liquidity necessary for investments as opportunities
arise.
<PAGE>
Item 8.INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Report of Independent Accountants............ 12
Balance Sheet as of December 31, 1996 and 1995.. 13
Schedule of Portfolio Investments as of
December 31, 1996 and 1995.................... 14
Income Statement for the Years Ended
December 31, 1996, 1995, and 1994............. 17
Statement of Changes in Partnership Capital for the
Years Ended December 31, 1996, 1995 and 1994..... 18
Statement of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994................. 19
Notes to Financial Statements...................... 20
Financial Statement Schedules:
Financial statement schedules are omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Community Investment Partners II, 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 II, L.P. (the
`` Partnership'') at December 31, 1996 and 1995, and the results of
its operations and its cash flows for each of the three years in
the period ended December 31, 1996, 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. Our procedures included
confirmation of portfolio investments owned as of December 31, 1996
and 1995. We believe that our audits provide a reasonable basis
for the opinion expressed above.
As explained in Note 3, the financial statements include
investments, valued at $1,397,330 (70 percent of net assets), whose
values have been determined by the Managing General Partner in the
absence of readily ascertainable market values. We have reviewed
the procedures used by the Managing General Partner in arriving at
an estimate of value and have inspected underlying documentation,
and, in the circumstances, we believe the procedures are reasonable
and the documentation appropriate. However, because of the
inherent uncertainty of valuation, 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 to the financial statements.
PRICE WATERHOUSE LLP
St. Louis, Missouri
February 21, 1997
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
BALANCE SHEET
ASSETS
December 31,
1996 1995
____________ ____________
Investments at Fair Market Value
(cost $1,412,628 and $545,013,
respectively) $ 1,397,330 $ 545,013
Cash and Cash Equivalents 540,528 1,399,026
Deferred Organizational Costs, net 36,683 73,366
Accrued Interest and Dividends
Receivable 17,835 9,584
Prepaid Expenses 2,449 -
____________ ____________
TOTAL ASSETS $ 1,994,825 $ 2,026,989
============ ============
LIABILITIES AND PARTNERSHIP CAPITAL
December 31,
1996 1995
____________ ____________
Liabilities
Accrued Expenses $ 12,100 $ 12,100
____________ ____________
TOTAL LIABILITIES 12,100 12,100
____________ ____________
Partnership Capital
Capital - Limited Partners 1,962,730 1,994,572
Capital - General Partners 19,995 20,317
____________ ____________
TOTAL PARTNERSHIP CAPITAL 1,982,725 2,014,889
____________ ____________
TOTAL LIABILITIES AND
PARTNERSHIP CAPITAL $ 1,994,825 $ 2,026,989
============ ============
The accompanying notes are an integral
part of these financial statements.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
Company Fair Market
Initial Investment Nature of Business Value
Date Investment Cost Dec. 31, 1996
Houghton Acquisition Organized for the purpose of
Corporation acquiring Hutchinson Foundry
Products, Inc.
March 10, 1993 2,000 shares of Class A
cumulative redeemable
Preferre Stock $200,013 $200,013
Global Surgical Formed to acquire the Urban
Corporation Microscope Division and the
Surgical Mechanical Research
subsidiary of Storz Medical
January 31, 19943,000 shares of Common
Stock 300,000 300,000
June 30, 1995 7% Promissory Note,
due 6/29/00 45,000 45,000
January 26, 19967% Promissory Note,
due 1/25/01 67,500 67,500
Computer Motion, Inc. Develops and supplies
medical robotics
May 3, 1996 Prime +1% Term Note,
due 10/31/98 125,000 125,000
September 9, 1996 25,000 shares of
Series E Preferred
Stock 125,000 125,000
25,000 warrants 250 250
FCOA Acquisition A chain of greeting card/
Corporation party stores which offer
(d/b/a Factory a full line of products at
Card everyday value prices
Outlet)
July 30, 1996 26,063 Common Shares 249,865 234,567
Permalok
Corporation Develops and sells steel
pipe joining system to the
domestic underground
utility construction industry
September 24,
1996 25,000 shares of Convertible
Preferred Stock 200,000 200,000
The accompanying notes are an integral
part of these financial statements.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
Company Fair Market
Initial Investment Nature of Business Value
Date Investment Cost Dec. 31, 1996
Stereotaxis, Inc. Develops and markets a system
by which surgery can be conducted
remotely using computer
controlled magnets
December 30, 1996 138,889 shares of
Preferred Stock 100,000 100,000
_________ __________
$1,412,628 $1,397,330
========= ==========
The accompanying notes are an integral
part of these financial statements.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
Company Fair Market
Initial Investment Nature of Business Value
Date Investment Cost Dec. 31, 1995
Houghton Acquisition Organized for the purpose of
Corporation acquiring Hutchinson Foundry
Products, Inc.
March 10, 1993 2,000 shares of Class A
cumulative redeemable
Preferred Stock $200,013 200,013
Global Surgical Formed to acquire the Urban
Corporation Microscope Division and the
Surgical Mechanical Research
subsidiary of Storz Medical
January 31, 19943,000 shares of Common
Stock 300,000 300,000
June 30, 1995 7% Promissory Note 45,000 45,000
___________ _________
$545,013 $545,013
=========== ==========
The accompanying notes are an integral
part of these financial statements.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
INCOME STATEMENT
For the Year Ended
December 31,
1996 1995 1994
INCOME
Interest Income $ 47,169 $ 62,381 $ 27,556
Dividend Income 36,466 17,487 16,000
Loss from Liquidation of
Investment - (600,000) -
________ _________ _______
TOTAL INCOME (LOSS) 83,635 (520,132) 43,556
________ _________ _______
EXPENSES
Legal Fees $ 7,236 $ 8,415 $ 19,189
Management Fees 30,496 30,918 40,363
Amortization of Deferred
Organization Costs 36,684 36,683 36,683
Professional Fees 12,100 19,100 16,163
Trustee Fees 562 2,025 2,666
Independent General Partners'
Fees 12,000 12,000 13,000
Miscellaneous Expenses 1,423 1,349 1,837
___________ ________ _______
TOTAL EXPENSES 100,501 110,490 129,901
___________ ________ _______
Net Loss before
Unrealized Losses (16,866) (630,622) (86,345)
Net Unrealized Losses
on Investments (15,298) - -
___________ _________ _______
NET LOSS $ (32,164)$(630,622)$ (86,345)
=========== ========== =======
The accompanying notes are an integral
part of these financial statements.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF CHANGES IN PARTNERSHIP CAPITAL
For the Years Ended December 31, 1996, 1995 and 1994
Limited General
Partners Partners Totals
Balance, December 31, 1993 $1,341,745 $ 13,486 $1,355,231
Capital call 1,362,625 14,000 1,376,625
Net loss (85,482) (863) (86,345)
___________ ________ _________
Balance, December 31, 1994 $2,618,888 $26,623 $2,645,511
Net loss (624,316) (6,306) (630,622)
___________ ________ ________
Balance, December 31, 1995 $1,994,572 $20,317 $2,014,889
Net loss (31,842) (322) (32,164)
___________ _________ ________
Balance, December 31, 1996 $1,962,730 $ 19,995 $1,982,725
=========== ========= ========
The accompanying notes are an integral
part of these financial statements.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF CASH FLOWS
For the Year Ended December 31,
1996 1995 1994
CASH FLOWS USED FOR
OPERATING ACTIVITIES:
Net Loss $ (32,164) $ (630,622) $(86,345)
Adjustments to Reconcile
Net Loss to Net Cash
Provided by Operating
Activities:
Amortization of Deferred
Organization Costs 36,683 36,683 36,683
Purchase of Portfolio
Investments (867,615) (145,000) (500,000)
Liquidation of Portfolio
Investment - 600,000 -
Unrealized Losses on
Portfolio Investments 15,298 - -
Increase in Accrued Interest
Receivable (8,251) (2,206) (1,538)
Increase in Accrued Expenses - 7,000 1,100
Increase in Prepaid Expense (2,449) - -
________________________________
Total Cash Used for Operating
Activities (858,498) (134,145) (550,100)
CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES:
Capital contributions - - 1,376,625
________________________________
Total Cash Provided by
Financing Activities - - 1,376,625
________________________________
Net (Decrease) Increase in
Cash and Cash Equivalents (858,498) (134,145) 826,525
CASH AND CASH EQUIVALENTS:
Beginning of year 1,399,026 1,533,171 706,646
________________________________
End of year $ 540,528 $1,399,026 $ 1,533,171
================================
The accompanying notes are an integral
part of these financial statements.
<PAGE>
COMMUNITY INVESTMENT PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
1. GENERAL
Partnership Organization
Community Investment Partners II, L.P. (the ``Partnership'') was
formed on May 8, 1992, under the Revised Uniform Limited
Partnership Act of Missouri. CIP Management, L.P., the
Managing General Partner, is a Missouri limited partnership
formed on October 10, 1989. The general partner of CIP
Management, L.P. 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 Partnership will 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, 2007, subject to the right of the Individual
General Partners to extend the term for up to two additional
two-year periods.
The Managing General Partner was required to have invested the
net proceeds of the Partnership's offering (including amounts
held in reserve) within two years of the date of the capital
call.
Risk of 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 investment
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 be less 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.
<PAGE>
2. ALLOCATION OF PARTNERSHIP PROFITS AND LOSSES
The Partnership Agreement generally provides for the pro rata
allocation of profits, losses and distributions between the
limited and general partners. Partners should refer to the
Partnership Agreement for more detailed information.
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 investments existed, and the differences could be
material to the financial statements. Investment 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 are being amortized over a sixty-month
period.
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.
<PAGE>
4. PER UNIT INFORMATION
There is no market for the Limited Partnership interests. Per
Unit Information is as follows:
For the Year Ended December 31,
1996 1995 1994
Number of unit holders 131 131 132
Limited partnership units 111,395 111,395 111,395
General partnership units 1,135 1,135 1,135
______________________________
Total units outstanding 112,530 112,530 112,530
==============================
Net asset value per unit $ 17.62 $ 17.91 $ 23.50
==============================
Net (loss) per unit $ (.29)$ (5.60) $ (.77)
==============================
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 Managing General Partner performs management and
administrative services for the operation of the Partnership.
The Managing General Partner is paid an annual management fee
of 1.5% of total assets. This fee for 1996 was $30,496.
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, L.P., a business development
company.
<PAGE>
Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None
<PAGE>
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, 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 operation 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., 51, has been an Independent General
Partner of the Partnership since May 1992. He is also an
independent general partner of Community Investment Partners, 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
2,026 Units.
E. Stanley Kroenke, 49, has served as an Independent General
Partner of the Partnership since May 1992. He is also an
independent general partner of Community Investment Partners, 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 5,633 Units.
<PAGE>
CIP Management, L.P. (the ``Managing General Partner'') is
the Managing General Partner of Community Investment Partners II,
L.P. The Managing General Partner is also managing general partner
of Community Investment Partners, L.P., a business development
company. 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.
The Directors and Officers of CIP Management, Inc. are as follows:
Daniel A. Burkhardt, 49, President, Treasurer and Director
of CIP Management, Inc. since October 1989 and general partner of
CIP Management, L.P. 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.,
Southeastern Michigan Gas Enterprises and Mid-America Realty
Investment, Inc. Mr. Burkhardt is the beneficial owner of 4,052
Units.
Ray A. Robbins, Jr., 52, 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 3,242 Units.
Marilyn A. Gaffney, 38, 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 advisor
in investment banking since 1980. Ms. Gaffney is the beneficial
owner of 405 Units.
Item 11. EXECUTIVE COMPENSATION
Each Independent General Partner receives an annual fee of
$6,000 from the Partnership, a fee of $1,000 for each meeting
attended, and all out-of-pocket expenses relating to attendance at
meetings of the Individual General Partners.
The information set forth under the caption ``Partnership
Distributions and Allocations'' in the Prospectus of the
Partnership dated November 4, 1992, 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
Independent General Partners and the Officers and Directors of CIP
Managements, Inc., described in Item 10, is herein incorporated by
reference.
<PAGE>
As of March 15, 1997, the following parties are known by the
Partnership to be the beneficial owners of more than 5% of the
Units.
Amount of
Beneficial % of Limited
Name Ownership of Units Partnership Capital
Richard P. Kiphart 10,131 9.09%
EDJ Ventures Ltd. 5,633 5.06%
E. Stanley Kroenke 5,633 5.06%
The Partnership is not aware of any arrangement which may,
at a subsequent date, result in a change of control of the
Partnership.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain relationships and related transactions, described in
Item 10, are herein incorporated by reference.
<PAGE>
PART IV
Item14. 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 November 4, 1992.
(4)Form of Unit Certificate. *
(10) Management Agreement dated November 4, 1992, between
the Partnership and CIP Management, L.P. **
(28) Prospectus of the Partnership dated November 4,
1992, filed with the Securities and Exchange
Commission in connection with Registration Statement
No. 33-47917 on Form N-2 under the Securities Act of
1933. **
* Incorporated by reference to Exhibit A of the
Prospectus of the Partnership dated November 4, 1992
filed with the Securities and Exchange Commission
pursuant to Rule 497(b) under the Securities Act of
1933.
** Incorporated by reference to the Partnership's
Registration Statement No. 33-47917 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, 1996.
c. Exhibits filed as part of this report are included in Item
(14) (a)(3) above.
d. Financial Statement Schedules required by Regulations S-X
are included as described in Part II Item 8 above.
<PAGE>
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 27th day of March, 1997.
Community Investment Partners II, L.P.
By: CIP Management, L.P., its
Managing General Partner
By: CIP Management, Inc., its
Managing General Partner
___________________________________
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.
______________________________ General Partner of CIP Management
Daniel A. Burkhardt L.P., President, Treasurer and
Director of CIP Management, Inc.
______________________________ Vice President and Director of CIP
Ray L. Robbins Management, Inc.
______________________________ Individual General Partner,
Tommy L. Gleason, Jr. Community Investment Partners II, L.P.
______________________________ Individual General Partner,
E. Stanley Kroenke Community Investment Partners II, L.P.
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit Page
(3) Amended and Restated Certificate and
Agreement of Limited Partnership dated
as of November 4, 1992 *
(4) Form of Unit Certificate *
(10) Management Agreement dated November 4,
1992, between the Partnership and CIP
Management, L.P. *
(28) Prospectus of the Partnership dated
November 4, 1992, filed with the
Securities and Exchange Commission
in connection with Registration
Statement No. 33-47917 on Form N-2
under the Securities Act of 1933 *
______________________
*Incorporated by reference
<PAGE>
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 27th day of March, 1997.
Community Investment Partners, L.P.
By: CIP Management, L.P., 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., 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
II L.P.
/s/ E. Stanley Kroenke
______________________________ Individual General Partner,
E. Stanley Kroenke Community Investment Partners
II, L.P.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for Community Investment Partners II, L.P. for the year
ended December 31, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
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