-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, IZ5Y8Ob8KjWBGiiTefiXV03LDvtogmCKB7rtuHMhzG4IXy7JXXwNv7FLpckWSRO+ lGUQBFT4aa/DQrv/VbCtXw== 0000720307-95-000002.txt : 19950823 0000720307-95-000002.hdr.sgml : 19950823 ACCESSION NUMBER: 0000720307-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950815 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WELLESLEY LEASE INCOME LTD PARTNERSHIP II C CENTRAL INDEX KEY: 0000720307 STANDARD INDUSTRIAL CLASSIFICATION: 7377 IRS NUMBER: 042819910 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12032 FILM NUMBER: 95564216 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CENTER 21ST FLR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174828000 10-Q 1 10-Q FOR WELLESLEY II-C 6/30/95 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________ FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the United States Securities Exchange Act of 1934 _______________________ For The Quarter Ended June 30, 1995 Commission File No. 2-89177 WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-C (Exact name of registrant as specified in its charter) Massachusetts 04-2819910 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Financial Center, 21st Floor, Boston, MA 02111 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 482-8000 Not Applicable (Former name, former address and former fiscal year, if changed since last report) 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 --- --- There are no Exhibits. Page 1 of 12 (Page 2) WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-C (A Massachusetts Limited Partnership)
INDEX Page No. Part I. FINANCIAL INFORMATION Financial Statements Balance Sheets as of June 30, 1995 and December 31, 1994 3 Statements of Operations For the Quarters Ended June 30, 1995 and 1994 and the Six Months Ended June 30, 1995 and 1994 4 Statements of Cash Flows For the Six Months Ended June 30, 1995 and 1994 5 Notes to Financial Statements 6 - 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 9 Computer Equipment Portfolio 10 Part II. OTHER INFORMATION Items 1 - 6 11 Signature 12
(Page 3) PART I. FINANCIAL INFORMATION WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-C (A Massachusetts Limited Partnership) Balance Sheets
Assets (Unaudited) (Audited) 6/30/95 12/31/94 Investment property, at cost (note 3): Computer equipment $ 588,810 $ 617,239 Less accumulated depreciation 507,546 499,170 --------------------------- Investment property, net 81,264 118,069 Cash and cash equivalents 64,118 150,468 Marketable securities (note 2) 11,118 - Rents receivable, net (note 2) 3,906 1,071 Accounts receivable - affiliates, net (note 2) 3,768 2,799 -------------------------- Total assets $ 164,174 $ 272,407 ========================== Liabilities and Partners' Equity Liabilities: Accounts payable and accrued expenses - affiliates (note 4) $ 18,510 $ 26,745 Accrued expenses 3,189 8,408 Accounts payable 21,607 22,280 Distribution payable 1,648 - Unearned rental revenue - 4,553 -------------------------- Total liabilities 44,954 61,986 -------------------------- Partners' equity: General Partner: Capital contribution 1,000 1,000 Cumulative net income 746,629 735,147 Cumulative cash distributions (750,394) (743,802) --------------------------- (2,765) (7,655) --------------------------- Limited Partners (25,050 units): Capital contribution, net of offering costs 11,158,769 11,158,769 Cumulative net income 3,220,926 3,191,769 --------------------------- Cumulative cash distributions (14,257,710) (14,132,462) --------------------------- 121,985 218,076 --------------------------- Total partners' equity 119,220 210,421 =========================== Total liabilities and partners' equity $ 164,174 $ 272,407 ===========================
See accompanying notes to financial statements. (Page 4) WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-C (A Massachusetts Limited Partnership) Statements of Operations (Unaudited)
Quarters Ended Six Months Ended June 30, June 30, -------------------- --------------------- 1995 1994 1995 1994 -------------------- --------------------- Revenue: Rental income (loss) $ 37,486 $ (27,247) $ 84,299 $ 63,158 Interest income 948 2,294 3,676 2,683 Net gain on sale of equipment 1,066 91,928 1,651 100,155 Recovery of net unsecured pre-petition claim (note 2) 11,118 - 11,118 - -------------------- --------------------- Total revenue 50,618 66,975 100,744 165,996 -------------------- --------------------- Costs and expenses: Depreciation 15,805 38,940 31,610 101,255 Interest (1,077) - 43 - Related party expenses (note 4): Management fees 1,817 (7,351) 4,525 (985) General and administrative 15,676 16,134 28,753 31,684 (Reversal of) provision for doubtful accounts 40 5,413 (4,826) 5,413 --------------------- --------------------- Total costs and expenses 32,261 53,136 60,105 137,367 --------------------- --------------------- Net income $ 18,357 $ 13,839 $ 40,639 $ 28,629 ===================== ===================== Net income (loss) per Limited Partnership Unit $ 0.66 $ (1.37) $ 1.16 $ (3.84) ===================== =====================
See accompanying notes to financial statements. (Page 5) WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-C (A Massachusetts Limited Partnership) Statements of Cash Flows For the Six Months Ended June 30, 1995 and 1994 (Unaudited)
1995 1994 Cash flows from operating activities: Net income $ 40,639 $ 28,629 --------------------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 31,610 101,255 (Reversal of) provision for doubtful accounts (4,826) 5,413 Net gain on sale of equipment (1,651) (100,155) Net increase in current assets (10,096) (32,850) Net (decrease) increase in current liabilities (18,680) 29,394 -------------------------- Total adjustments (3,643) 3,057 -------------------------- Net cash provided by operating activities 36,996 31,686 -------------------------- Cash flows from investing activities: Proceeds from sales of investment property 6,846 283,064 -------------------------- Net cash provided by investing activities 6,846 283,064 -------------------------- Cash flows from financing activities: Cash distributions to partners (130,192) (197,763) -------------------------- Net cash used in financing activities (130,192) (197,763) -------------------------- Net (decrease) increase in cash and cash equivalents (86,350) 116,987 Cash and cash equivalents at beginning of period 150,468 105,018 -------------------------- Cash and cash equivalents at end of period $ 64,118 $ 222,005 ========================== Supplemental cash flow information: Interest paid during period $ 1,120 $ - ==========================
See accompanying notes to financial statements. (Page 6) WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-C (A Massachusetts Limited Partnership) Notes to Financial Statements (Unaudited) (1) Organization and Partnership Matters The foregoing financial statements of Wellesley Lease Income Limited Partnership II-C (the "Partnership") have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q and reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. Pursuant to such rules and regulations, certain note disclosures which are normally required under generally accepted accounting principles have been omitted. It is recommended that these financial statements be read in conjunction with the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994. During the second quarter of 1995, the General Partner announced its intentions of winding down the operations of the Partnership. It is anticipated that substantially all of the assets will be liquidated and the proceeds will be used to settle all outstanding liabilities and make a final distribution. (2) Significant Accounting Policies Allowance for Doubtful Accounts The financial statements include allowances for estimated losses on receivable balances. The allowances for doubtful accounts are based on past write off experience and an evaluation of potential uncollectible accounts within the current receivable balances. Receivable balances which are determined to be uncollectible are charged against the allowance and subsequent recoveries, if any, are credited to the allowance. At June 30, 1995 and December 31, 1994, the allowance for doubtful accounts included in rents receivable was $205 and $56, respectively. The allowance for doubtful accounts included in accounts receivable - affiliates was $16,275 and $21,250 at June 30, 1995 and December 31, 1994, respectively, of which $16,275 was related to the net unsecured pre-petition bankruptcy claim, respectively. Marketable Securities The marketable securities consist of the common stock in Continental Information Systems Corporation received by the Partnership in the distribution made December 27, 1995 by the Trustee of the Liquidating Estate of CIS Corporation, et al with respect to the outstanding net unsecured pre-petition claim. During the second quarter of 1995, the stock began trading, thereby providing an objective valuation measure for establishing the cost basis which approximates fair market value at the balance sheet date. Reclassifications Certain prior year financial statement items have been reclassified to conform with the current year's financial statement presentation. (Page 7) (3) Investment Property At June 30, 1995, the Partnership owned computer equipment with a depreciated cost basis of $70,754, subject to existing leases and equipment with a depreciated cost basis of $10,510 in inventory, awaiting re-lease or sale. All purchases of computer equipment are subject to a 3% acquisition fee paid to the General Partner. (4) Related Party Transactions Fees, commissions and other expenses paid or accrued by the Partnership to the General Partner or affiliates of the General Partner for the quarters ended June 30, 1995 and 1994 are as follows:
1995 1994 Management fees $ 4,525 $ (985) Reimbursable expenses paid 28,693 28,103 --------------------- $ 33,218 $ 27,118 =====================
Under the terms of the Partnership Agreement, the General Partner is entitled to an equipment acquisition fee of 3% of the purchase price paid by the Partnership for the equipment. The General Partner is also entitled to a management fee equal to 7% of the monthly rental billings collected. Also, the Partnership reimburses the General Partner and its affiliates for certain expenses incurred by them in connection with the operation of the Partnership. (5) Subsequent Events On July 20, 1995, the Partnership received the second distribution from the Trustee of the Liquidating Estate of CIS Corporation, et al, with respect to the net unsecured pre-petition claim. The distribution consisted of cash proceeds of $12,765 and 823 shares of common stock in Continental Information Systems Corporation with a carrying value of $2,058. The cash and stock will be reflected in the financial statements for the third quarter of 1995. Following the Trustee's second distribution, the Partnership's net unsecured pre-petition claim has been settled as of July 20, 1995 and there are no other outstanding receivable balances. (Page 8) WELLESLEY INCOME LIMITED PARTNERSHIP II-C (A Massachusetts Limited Partnership) Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) Results of Operations The following discussion relates to the Partnership's operations for the quarter and six months ended June 30, 1995 in comparison to the same periods in the prior year. The Partnership realized net income of $18,357 and $13,839 for the three month periods ended June 30, 1995 and 1994, respectively. Rental income increased from 1994 due to Boeing Computer Services, Inc. ("Boeing") exercise, in 1994, of their option to apply previously accrued and paid rental proceeds toward the purchase price of equipment leased to them. Boeing's option exercise caused a reclass of rental income previously accrued and collected in the amount of $56,442 to sales proceeds. Interest income decreased as a result of lower average short-term investment balances. The significant decrease in net gain on sale of equipment was the result of fewer equipment sales in the current quarter. The recovery of net unsecured pre-petition claim was the result of the establishment of the carrying value of the stock received in the December 27, 1994 distribution from the Trustee of the Liquidating Estate of CIS Corporation, et al. The receivables associated with the stock settlement had been fully reserved in a prior year; accordingly, the Partnership was able to show a recovery on those receivables as of June 30, 1995 at which time a stock value could be determined due to the stock's trading activities. Total costs and expenses decreased 40% between the three month periods primarily as a result of lower depreciation expense. Depreciation expense decreased due to a large portion of the equipment portfolio becoming fully depreciated and a reduction in the equipment portfolio. For the quarter ended June 30, 1995, the increase in management fees expense reflects an increase in rental income as compared to the same period in the prior year. The Partnership decreased its provision for doubtful accounts by $5,373 from the quarter ended June 30, 1994 due to fewer delinquent accounts receivable in the current quarter. The Partnership realized net income of $40,639 and $28,629 for the six months ended June 30, 1995 and 1994, respectively. Rental income increased $21,141 or 34% between the six month periods. The increase in rental income is attributed to the above mentioned Boeing exercised option. As mentioned above, the recovery of net unsecured pre-petition claim was the result of the establishment of the carrying value of the stock received in the December 27, 1994 distribution from the Trustee of the Liquidating Estate of CIS Corporation, et al. The receivables associated with the stock settlement had been fully reserved in a prior year; accordingly, the Partnership was able to show a recovery on those receivables as of June 30, 1995 at which time a stock value could be determined due to the stock's trading activities. Total costs and expenses decreased $77,262 or 57% between the six month periods. The decrease in total costs and expenses is primarily attributable to the decrease in depreciation expense. The 69% decrease in depreciation expense is the result of an increased portion of the equipment portfolio becoming fully depreciated and the reduction in the equipment portfolio. For the six months ended June 30, 1995, management fees expense increased in relationship to rental income along with the Boeing option exercise to reclass rental proceeds to sales proceeds in 1994. The reversal of provision for doubtful accounts was generated due to successful collection efforts of delinquent rents receivable. The Partnership recorded net income per Limited Partnership Unit of $0.66 and $1.16 for the quarter and six months ended June 30, 1995, respectively. (Page 9) Liquidity and Capital Resources For the six months ended June 30, 1995, rental revenue generated from operating leases was the primary source of funds for the Partnership. As equipment leases terminate, the General Partner determines if the equipment will be extended to the same lessee, remarketed to another lessee, or if it is less marketable, sold. This decision is made upon analyzing which options would generate the most favorable results. Rental income will continue to decrease due to two factors. The first factor is the rate obtained when the original leases expire and are remarketed at a lower rate. Typically the remarketed rates are lower due to the decrease in useful life of the equipment. Secondly, the increasing change of technology in the computer industry usually decreases the demand for older equipment, thus increasing the possibility of obsolescence. Both of these factors together will cause remarketed rates to be lower than original rates and will cause certain leases to terminate upon expiration. During the second quarter of 1995, the General Partner announced its intentions of winding down the operations of the Partnership. It is anticipated that substantially all of the assets will be liquidated and the proceeds will be used to settle all outstanding liabilities and make a final distribution. The Partnership's investing activities for the six months ended June 30, 1995 resulted in equipment sales with a depreciated cost basis of $5,195, generating $6,846 in proceeds. The Partnership has no material capital expenditure commitments and will not purchase equipment in the future as the Partnership has reached the end of its reinvestment period and has announced its intentions of winding down the Partnership. Cash distributions are currently at an annual level of 1% per Limited Partnership Unit or $1.25 per Limited Partnership Unit on a quarterly basis. For the quarter ended June 30, 1995, the Partnership declared a cash distribution of $32,961, of which $1,648 was allocated to the General Partner and $31,313 was allocated to the Limited Partners. The distribution will be made on August 28, 1995. The Partnership expects distributions to be more volatile as its operations are winding down. The effects of inflation have not been significant to the Partnership and are not expected to have any material impact in future periods. (Page 10) WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-C (A Massachusetts Limited Partnership) Computer Equipment Portfolio (Unaudited) June 30, 1995 Lessee Caterpillar Tractor Company Coast Pump & Supply Company, Incorporated First Options of Chicago, Incorporated New York Life Insurance Company Owens Corning Fiberglass, Incorporated
Equipment Description Acquisition Price Computer Peripherals $342,746 Other 246,064 -------- $588,810 ========
(Page 11) PART II. OTHER INFORMATION WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-C (A Massachusetts Limited Partnership) Item 1. Legal Proceedings Response: None Item 2. Changes in the Rights of the Partnership's Security Holders Response: None Item 3. Defaults by the Partnership on its Senior Securities Response: None Item 4. Results of Votes of Security Holders Response: None Item 5. Other Information Response: None Item 6. Exhibits and Reports on Form 8-K Response: A. None B. None (Page 12) SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WELLESLEY LEASE INCOME LIMITED PARTNERSHIP II-C (Registrant) By: Wellesley Leasing Partnership, its General Partner By: TLP Leasing Programs, Inc., one of its Corporate General Partners Date: August 11, 1995 By: Arthur P. Beecher, President EX-27 2 WELLESLEY II-C FDS 6/30/95
5 0000720307 WELLESLEY II-C EX.27 6/30/95 6-MOS DEC-31-1995 JUN-30-1995 64,118 11,118 24,154 16,480 0 82,910 588,810 507,546 164,174 44,954 0 11,159,769 0 0 (11,040,549) 164,174 84,299 100,744 0 4,525 60,363 (4,826) 43 40,639 0 40,639 0 0 0 40,639 1.16 0
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