-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TrMTN08+m9oPr0o8SZXqkaKZWke6oMJjVNvrvzzisDrVYkKyjXZ7KrzmBR0UtYo9 yZb9XTyX/NADgJX0EgDFcw== 0000809224-97-000004.txt : 19970329 0000809224-97-000004.hdr.sgml : 19970329 ACCESSION NUMBER: 0000809224-97-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970328 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CSA INCOME FUND LIMITED PARTNERSHIP II CENTRAL INDEX KEY: 0000809224 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER RENTAL & LEASING [7377] IRS NUMBER: 042932178 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17091 FILM NUMBER: 97567879 BUSINESS ADDRESS: STREET 1: 22 BATTERYMARCH ST CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6173571700 MAIL ADDRESS: STREET 1: 22 BATTERY MARCH STREET CITY: BOSTON STATE: MA ZIP: 02109 10-K 1 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 Commission file number 0-17091 December 31, 1996 CSA Income Fund Limited Partnership II (Exact name of registrant as specified in its charter) Massachusetts No. 04-2932178 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 22 Batterymarch St., Boston, MA 02109 (Address of principal executive offices) Zip Code Registrant's telephone number, including area code: (617) 357-1700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: 78,785 Units of Limited Partnership Interest Indicate by check whether 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 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] Number of shares outstanding of each registrant's classes of securities: Number of Units Title of Each Class at December 31, 1996 Units of Limited Partnership 78,785 Interest: $250 per unit DOCUMENTS INCORPORATED BY REFERENCE Portions of Part IV are incorporated by reference to Post-Effective Amendment No. 1 to Form S-1, Registration No. 33-11272 The Exhibit index is located on pages 20 and 21. Part I Item 1. Business CSA Income Fund Limited Partnership II (the "Partnership") is a limited partnership organized under the provisions of The Massachusetts Uniform Limited Partnership Act. The Partnership is composed of CSA Income Funds, Inc., the General Partner (an affiliate of CSA Financial Corp.), and 1,817 Limited Partners owning 78,785 Units of Limited Partnership Interest of $250 each, the capital contributions of which aggregated $19,689,570 at December 31, 1996. The Partnership was formed on September 17, 1986 and commenced operations on June 26, 1987. The Partnership terminated its public offering on June 30, 1988. The intended life of the Partnership contained in the original Partnership Prospectus was seven to ten years. The Partnership has been in operation in excess of nine years. The General Partner informed the Limited Partners in the 1996 Third Quarter Financial Report mailed on November 14, 1996 that the Partnership was winding up and that the Partnership would be dissolved in 1997. The General Partner is currently reviewing all remaining leases and equipment for disposition and realization of maximum potential proceeds for the Partnership. The Partnership was organized to engage in the business of acquiring income-producing equipment for investment. The Partnership's principal objectives were: 1. To acquire and lease Equipment, primarily through Operating Leases, to generate income during its entire useful life; 2. To provide quarterly distributions of cash to the Limited Partners from leasing revenues and from the proceeds of sale or other disposition of Partnership Equipment; and 3. To reinvest in additional Equipment a portion of lease revenues and a substantial portion of Cash From Sales and Refinancings during the first years of the Partnership's operations. The Partnership was formed primarily for investment purposes and not as a "tax shelter". The registrant has no direct employees. The General Partner has full and exclusive discretion in management and control of the Partnership. Selection of the Equipment for purchase and lease was based principally on the General Partner's evaluation of the usefulness of the Equipment in commercial or industrial applications and its estimate of the potential demand for the equipment at the end of the initial lease term. The Partnership's equipment may have included: 1. New and reconditioned computer peripheral equipment, computer terminal systems and data processing systems primarily manufactured by International Business Machines, Inc. (IBM) and qualified for IBM maintenance. 2. New telecommunications and telecomputer equipment consisting primarily of private automated branch exchanges (PBXs), advanced high-speed digital telephone switching devices, voice/data transmission devices and telephone/computer networks as well as telephone hand sets and facsimile transmission products. 3. New office equipment consisting primarily of photocopying and graphic processing equipment. 4. New highway transportation equipment and new and reconditioned air transportation equipment consisting primarily of tractors, trailers, trucks, intermodal equipment, railroad rolling stock, passenger vehicles and corporate or commercial aircraft. 5. Miscellaneous other types of equipment which meet the investment objective of the Partnership. The equipment leasing industry is highly competitive. In initiating its leasing transactions, the Partnership competes with leasing companies, manufacturers that lease their products directly, equipment brokers and dealers and financial institutions, including commercial banks and insurance companies. Many competitors are larger than the Partnership and have access to more favorable financing. Competitive factors in the equipment leasing business primarily involve pricing and other financial arrangements. Marketing capability is also a factor. As of December 31, 1996, substantially all of the remaining equipment in the Partnership's portfolio was leased under 20 separate leases to 11 lessees. The lessees providing at least 10% of total revenues during 1996 are as follows: America West Airlines 12% Lucent Technologies, Inc. 22% K-Mart Corporation 16% U.S. West Communications, Inc. 10% The Partnership's leases and equipment is described more fully in Notes 3 and 4 to the Financial Statements included in Item 8. Item 2. Properties The Partnership neither owns nor leases office space or equipment for the purpose of managing its day-to-day affairs. The General Partner, CSA Income Funds, Inc. (CIF), has exclusive control over all aspects of the business of the Partnership, including provision for any necessary office space. As such, CIF will be compensated through Management fees and reimbursement of General and Administrative costs related to managing the Partnership's business. Excluded from the allowable reimbursement to the General Partner, however, will be any of the following: (1) Expenditures for rent or utilities; (2) Capital equipment and the related depreciation; and (3) Certain other administrative items. Item 3. Legal Proceedings The Partnership is not a party to any pending legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of 1996. PART II Item 5. Market for the Registrant's Equity Securities and Related Security Holder Matters a. The Partnership's limited partnership interests are not publicly traded. There is no market for the Partnership's limited partnership interests and it is unlikely that one will develop. b. Approximate Number of Equity Security Holders: Title of Class Number of Limited Partners Units of Limited Partnership Interests as of 12/31/96 78,785 1,817 c. Distributions are paid at a rate determined by the General Partner. Total Distributions paid per Limited Partnership Unit during 1996, 1995, 1994, 1993 and 1992 were as follows: 1996 1995 1994 1993 1992 February $ 4.38 $ 4.38 $ 4.38 $ 6.25 $ 7.50 May 4.38 4.38 4.38 4.38 7.50 August 4.38 4.38 4.38 4.38 6.25 November 4.38 4.38 4.38 4.38 6.25 $17.52 $17.52 $17.52 $19.39 $27.50
Item 6. Selected Financial Data - Unaudited The following table sets forth selected financial information regarding the Partnership's financial position and operating results. The information should be read in conjunction with the Financial Statements and Notes thereto, and General Partner's Discussion and Analysis of Financial Condition and Results of Operations, which are included in Items 7 and 8 of this Report.
Years Ended December 31, (IN THOUSANDS EXCEPT PER UNIT AMOUNTS) 1996 1995 1994 1993 1992 Total Revenues $1,958 $2,225 $3,543 $3,559 $4,117 Net Income 598 905 883 1,372 1,184 Net Income per Limited Partnership Unit 7.29 11.38 11.10 17.24 14.87 Total Assets 2,552 3,001 3,802 4,893 4,188 Notes Payable 1,127 803 752 1,452 346 Limited Recourse Notes Payable 78 71 292 Distributions per Limited Partnership Unit 17.52 17.52 17.52 19.39 27.50
Item 7 General Partner's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Gross rental income for the years ended December 31, 1996, 1995, and 1994 was $1,882,003, $2,014,366 and $3,343,300, respectively. The decrease in gross rental income over time is attributable to the expected occurrence of reduced rental rates for re-leased equipment and to the sale of equipment from the Partnership's portfolio. Net income for the year ended December 31, 1996 was $597,769 as compared to net income of $905,421 and $883,070 in the years ended December 31, 1995 and 1994, respectively. The decrease in net income was primarily due to the decrease in gross rental income in 1996. Lower levels of gains recorded on sale of equipment were also part of the reason net income decreased, $58,916, $149,837, and $151,690, for the years 1996, 1995, and 1994, respectively. Interest income for 1996, 1995, and 1994 was $17,249, $60,417, and $47,714, respectively. The 1996 decrease was due to lower cash balances. Interest expense was $92,067, $67,724, and $127,712, for the years ended December 31, 1996, 1995, and 1994, respectively. Interest expense increased in 1996 primarily due to the additional leases financed during the year. Liquidity and Capital Resources During 1996, the Partnership realized cash flow from operations of $1,751,675 and $257,313 from the sale of equipment. The Partnership has utilized the cash flow from operations and sale of equipment to reduce notes payable, make distributions to its partners and purchase equipment. Notes payable were reduced down by $781,111 in 1996 and distributions to the partners were $1,394,254. During 1996, the Partnership acquired additional equipment in the amount of $1,409,642 using cash flow of $298,069 and notes payable of $1,111,573. The intended life of the Partnership contained in the original Partnership Prospectus was seven to ten years. The Partnership has been in operation since June 26, 1987. The General Partner informed the Limited Partners in the 1996 Third Quarter Financial Report mailed on November 14, 1996 that the Partnership was winding up and the Partnership would be dissolved in 1997. The General Partner is currently reviewing all remaining leases and equipment for disposition and realization of maximum potential proceeds for the Partnership. The Partnership anticipates a final distribution to be paid to the Limited Partners during May 1997. The Partnership distributed $4.38 per Limited Partnership Unit on February 15, 1997. To date, the Partnership has made cash distributions to the Limited Partners ranging from 82% to 91% of their initial investment, depending on when the Limited Partner entered the Partnership. The objective of the Partnership is to return the Limited Partners' investment through current cash distributions and provide a return on the investment by continued distributions as long as the equipment continues to be leased. However, revenues generated from the Partnership from lease renewals and remarketings after the initial lease term have been lower than anticipated as a result of rapid technological obsolescence in high technology equipment. Consequently, the General Partner previously estimated that the continued cash distributions may not fully return the entire initial investment of all Limited Partners and/or a return thereon. Currently, it is expected, subject to the winding up process, that total projected returns will approximate 92% to 101% of the Limited Partner's initial investment. Quarterly Financial Data - Unaudited Summarized unaudited quarterly financial data for the years ended December 31, 1996 and 1995 is as follows:
1996 Quarter Ended: 12/31 9/30 6/30 3/31 Total Revenues * $491,904 $530,488 $541,230 $394,546 Net Income 90,294 163,488 205,315 138,672 Net Income Per Limited Partnership Unit .92 2.05 2.58 1.74 Cash Distributions Paid Per Limited Partnership Unit 4.38 4.38 4.38 4.38 1995 Quarter Ended: 12/31 9/30 6/30 3/31 Total Revenues * $406,509 $615,157 $492,920 $710,034 Net Income 202,220 309,591 180,472 213,138 Net Income Per Limited Partnership Unit 2.54 3.89 2.27 2.68 Cash Distributions Paid Per Limited Partnership Unit 4.38 4.38 4.38 4.38
* Total revenues include the net gains and losses from the sale of equipment. Item 8 Financial Statements CSA Income Fund Limited Partnership II Index to Financial Statements Independent Auditors' Report Statements of Financial Position as of December 31, 1996 and 1995 Statements for the Years Ended December 31, 1996, 1995 and 1994: Operations Cash Flows Changes in Partners' Capital (Deficit) Notes to Financial Statements INDEPENDENT AUDITORS' REPORT To the Partners of CSA Income Fund Limited Partnership II We have audited the accompanying statements of financial position of CSA Income Fund Limited Partnership II as of December 31, 1996 and 1995, and the related statements of operations, cash flows, and changes in partners' capital (deficit)for the three years then ended. 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 in accordance with generally accepted auditing standards. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in note 1 to the financial statements, the Partnership is in a wind up phase. The General Partner anticipates that the Partnership will be dissolved in 1997. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CSA Income Fund Limited Partnership II as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the three years then ended in conformity with generally accepted accounting principles. /s/ SULLIVAN BILLE, P.C. BOSTON, MASSACHUSETTS March 18, 1997
CSA INCOME FUND LIMITED PARTNERSHIP II Statements of Financial Position as of December 31, 1996 and 1995 assets 1996 1995 Cash and cash equivalents $ 556,920 $ 1,021,366 Rentals receivable - 21,109 Accounts receivable - affiliates 69,648 133,277 Sales proceeds receivable - 46,367 Rental equipment, at cost 5,509,177 6,996,398 Less accumulated depreciation (3,613,329) (5,217,222) Net rental equipment 1,895,848 1,779,176 Total assets $2,522,416 $ 3,001,295 Liabilities and Partners' Capital Accrued management and reimbursable fees $ 9,758 $ 17,710 Accounts payable 11,226 14,495 Deferred income 3,202 4,836 Notes payable 1,126,931 803,137 Limited recourse notes payable 78,049 71,382 Total liabilities 1,229,166 911,560 Partners' capital: General Partner (deficit): Capital contribution 1,000 1,000 Cumulative net Gain (Loss) 22,769 (613) Cumulative cash distributions (168,052) (154,111) (144,283) (153,724) Limited Partners (78,785 units): Capital contributions, net of offering costs 17,563,265 17,563,265 Cumulative net Gain (Loss) 513,772 (60,615) Cumulative cash distributions (16,639,504) (15,259,191) 1,437,533 2,243,459 Total partners' capital 1,293,250 2,089,735 Total liabilities and partners' capital $ 2,522,416 $ 3,001,295 See accompanying notes to financial statements
CSA INCOME FUND LIMITED PARTNERSHIP II Statements of Operations for the years ended December 31, 1996, 1995 and 1994 1996 1995 1994 Revenues: Rental income $ 1,882,003 $ 2,014,366 $ 3,343,300 Interest income 17,249 60,417 47,714 Gain on sale of equipment 58,916 149,837 151,690 Total revenues 1,958,168 2,224,620 3,542,704 Costs and expenses: Depreciation 1,101,087 1,064,341 2,259,812 Interest 92,067 67,724 127,712 Storage and refurbishment 3,000 8,400 3,594 Management fee 94,100 100,718 167,165 General and administrative 70,145 78,016 101,351 Total expenses 1,360,399 1,319,199 2,659,634 Net income $ 597,769 $ 905,421 $ 883,070 Net income allocation: General Partner $ 23,382 9,054 $ 8,830 Limited Partners 574,387 896,367 874,240 $ 597,769 $ 905,421 $ 883,070 Net income per Limited Partnership Unit $ 7.29 $ 11.38 $ 11.10 Number of Limited Partnership Units Outstanding 78,785 78,785 78,785
See accompanying notes to financial statements.
CSA INCOME FUND LIMITED PARTNERSHIP II Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 1996 1995 1994 Cash flows from operations: Cash received from rental of equipment $ 2,004,959 $1,871,777 $ 3,587,169 Cash paid for operating and management expenses (178,466) (280,280) (343,175) Interest paid (92,067) (67,724) (127,712) Interest received 17,249 60,417 47,714 Net cash from operations 1,751,675 1,584,190 3,163,996 Cash flows from investments: Purchase of equipment (1,409,642) (1,006,788) (2,486,244) Sale of equipment 257,313 1,217,771 330,275 Net cash from or used for investments (1,152,329) 210,983 (2,155,969) Cash flows from financing: Proceeds from notes payable 1,111,573 601,411 1,422,657 Repayment of notes payable (781,111) (771,207) (1,830,752) Payment of cash distributions (1,394,254) (1,394,256) (1,394,256) Net cash used for financing (1,063,792) (1,564,052) (1,802,351) Net change in cash and cash equivalents (464,446) 231,121 (794,324) Cash and cash equivalents at beginning of year 1,021,366 790,245 1,584,569 Cash and cash equivalents at end of year $ 556,920 $ 1,021,366 $ 790,245 See accompanying notes to financial statements.
CSA INCOME FUND LIMITED PARTNERSHIP II Statement of Changes in Partners' Capital (Deficit) for the years ended December 31, 1996, 1995 and 1994 Limited General Partners Partner Total Balance at December 31, 1993 $ 3,233,478 $ (143,722) $ 3,089,756 Net income 874,240 8,830 883,070 Cash distributions (1,380,313) (13,943) (1,394,256) Balance at December 31, 1994 2,727,405 (148,835) 2,578,570 Net income 896,367 9,054 905,421 Cash distributions (1,380,313) (13,943) (1,394,256) Balance at December 31, 1995 2,243,459 (153,724) 2,089,735 Net income 574,387 23,382 597,769 Cash distributions (1,380,313) (13,941) (1,394,254) Balance at December 31, 1996 $ 1,437,533 $ (144,283) $ 1,293,250
See accompanying notes to financial statements. CSA INCOME FUND LIMITED PARTNERSHIP II Notes to Financial Statements (1) Organization The Partnership was formed under the Massachusetts Uniform Limited Partnership Act on September 17, 1986, with an initial investment of $1,000, to invest primarily in equipment to be leased to third parties. On June 26, 1987, the Partnership commenced operations, admitting 397 Limited Partners who purchased 12,398 partnership units, contributing $3,098,860 in capital. Subsequent to the initial closing, the Partnership admitted an additional 469 Limited Partners whose capital contribution totaled $5,404,800, representing 21,634 partnership units during 1987 and an additional 1,007 Limited Partners whose capital contributions totaled $11,185,910 representing 44,753 partnership units during 1988. The Partnership terminated its offering period on June 30, 1988. CSA Income Funds Inc., an affiliate of CSA Financial Corp., is the General Partner and manages the business and affairs of the Partnership. The intended life of the Partnership contained in the original Partnership Prospectus was seven to ten years. The Partnership has been in operation in excess of nine years. The General Partner informed the Limited Partners in the Third Quarter Financial Report mailed on November 14, 1996 that the Partnership was winding up and the Partnership would be dissolved in 1997. The General Partner is currently reviewing all remaining leases and equipment for disposition and realization of maximum potential proceeds for the Partnership. Distributable cash from operations, sales or refinancings and profits or losses for federal income tax purposes are allocated 99% to the Limited Partners and 1% to the General Partner until Payout has occurred, and thereafter, 85% and 15% respectively. As provided by the Partnership Agreement, pursuant to Section 8.3 (c), accounting profits from the sale of equipment that results in the dissolution of the Partnership, shall be allocated to each partner first in the amount equal to the negative balance in the Capital Account of such partner. In connection with the wind-up of the Partnership, certain gains on the disposition of partnership assets were allocated during the Fourth Quarter of 1996 to the General Partner to reduce its capital account negative balance. In accordance with the Partnership Agreement, the Partnership is liable to the General Partner (or its affiliates) for management fees and reimbursable operating expenses calculated in amounts not to exceed 5% and 2%, respectively, of gross rental revenues. CSA INCOME FUND LIMITED PARTNERSHIP II Notes to Financial Statements (2) Significant Accounting Policies The Partnership records are maintained on the accrual basis of accounting. The Partnership accounts for equipment leases as operating leases; therefore, rental income is reported when earned and the cost of the equipment is depreciated on a straight-line basis over the shorter of the initial term of the lease or five years, to estimated realizable value at the end of such period. On a periodic basis, the Partnership conducts a review of the net book values of its equipment as compared to the estimated net realizable values for such equipment. The Partnership records additional charges to depreciation expense when net book values exceed estimated net realizable values. Based on this analysis, the Partnership recorded no additional charges to depreciation expense in 1994, 1995 or 1996. No provision for income taxes has been made as the liability for such taxes is that of the partners rather than the Partnership. The Partnership's federal tax return is prepared solely to arrive at the Partner's individual taxable income or loss as reported on form K-1. Partnership federal taxable income exceeded book income by approximately $40,000 for 1996. The Partnership's book income exceeded federal taxable income by approximately $271,000 for 1995. In 1994, the Partnership's federal taxable income exceeded book income by approximately $238,000. The differences are primarily due to differences in the depreciation methods for book and income tax purposes. The Partnership considers short-term investments with original maturities of three months or less to be cash equivalents. The preparation of financial statements in conformity with generally accepted accounting principles requires the General Partner 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 revenue and expenses during the reporting year. Actual results could differ from those estimates. (3) Rental Equipment The Partnership purchases equipment subject to existing leases either directly from CSA Financial Corp. or the manufacturer. The purchase price to the Partnership is equal to the lesser of fair market value or cost as adjusted, if necessary, for rents received and carrying costs, plus an acquisition fee of 4% of cost. During 1994, CSA Financial Corp. acquired TIC Leasing Corp. (TIC) from Turner Broadcasting System Inc. TIC's only asset was an interest in partnerships which owned a portfolio of equipment subject to leases consisting primarily of computer equipment. CSA Financial Corp. has assigned the beneficial interest in certain of the underlying equipment and the related leases to the Partnership. Accordingly, the Partnership is accounting for its interest as a purchase from CSA Financial Corp. of equipment and related debt, subject to the leases. CSA INCOME FUND LIMITED PARTNERSHIP II Notes to Financial Statements A summary of changes in rental equipment owned and accumulated depreciation on rental equipment is as follows:
Beginning Sales/ Ending Balance Additions Retirements Balance Cost for the years ended: December 31, 1994 $13,798,426 $ 2,486,244 $ 4,217,283 $ 12,067,387 December 31, 1995 $12,067,387 $ 1,006,788 $ 6,077,777 $ 6,996,398 December 31, 1996 $ 6,996,398 $ 1,409,642 $ 2,896,863 $ 5,509,177 Accumulated depreciation for the years ended: December 31, 1994 $10,965,811 $ 2,259,812 $ 4,038,699 $ 9,186,924 December 31, 1995 $ 9,186,924 $ 1,064,341 $ 5,034,043 $ 5,217,222 December 31, 1996 $ 5,217,222 $ 1,101,087 $ 2,704,980 $ 3,613,329
(4) Leases As of December 31, 1996, substantially all of the Partnership's equipment was leased under 20 separate leases to 11 lessees. Four lessees provided approximately 60% (22%, 16%, 12% and 10%, respectively) of the Partnership's rental income in 1996 as compared with two lessees providing 28% (14% and 14%, respectively) and two lessees providing approximately 30% (17% and 13%, respectively) in 1995 and 1994, respectively. Minimum annual lease rentals scheduled to be received under existing noncancellable operating leases are as follows: Year Amount 1997 $ 993,855 1998 283,670 $ 1,277,525
(5) Notes Payable Notes payable consist of notes due in monthly installments, with interest rates that range from 7.00% to 9.11% per annum. Such notes are collateralized by equipment with a cost of $3,639,318. Annual maturities of notes payable at December 31, 1996 are as follows:
Year Amount 1997 $ 861,823 1998 265,108 $ 1,126,931
(6) Limited Recource Notes Payable Limited recourse notes payable of $78,049, maturing in 1997, consist of notes due with interest (9.2% to 10.3%) at maturity which coincides with the expiration of the initial lease term of the related equipment with a cost of $218,693 and the lenders' recourse is limited to proceeds obtained through disposition of the equipment after its initial lease term. All of the Partnership's limited recourse notes payable were incurred as part of the acquisition of equipment subject to lease interests, obtained in connection with CSA Financial Corp.'s acquisition of TIC Leasing Corp. (See note 3). CSA INCOME FUND LIMITED PARTNERSHIP II Notes to Financial Statements (7) Fair Values of Financial Instruments The following methods and assumptions were used to estimate the fair value of financial instruments: Cash and Cash Equivalents: The carrying amount of cash and cash equivalents approximates its fair value due to their short maturity. Notes Payable: The fair value of the Partnership's notes payable is based on the market price for the same or similar debt issues or on the current rates offered to the Partnership for debt with the same remaining maturity. The carrying amount of notes payable approximates fair value. Limited Recourse Notes Payable The carrying amount of the limited recourse notes payable approximates its fair value due to their short maturities. (8) Related Party Transactions Fees and other expenses paid or accrued by the Partnership to the General Partner or affiliates of the General Partner for the years 1996, 1995 and 1994 are as follows:
1996 1995 1994 Equipment acquisition fees $ 54,217 $ 36,542 $ 94,948 Management fee 94,100 100,718 167,165 Reimbursable operating expenses 37,640 40,287 66,866 Storage and Refurbishment fees 3,000 8,400 3,594
(9) Net Cash Provided from Operations The reconciliation of net income to net cash from operations for the years 1996, 1995 and 1994 are as follows:
1996 1995 1994 Net income $ 597,769 $ 905,421 $ 883,070 Depreciation 1,101,087 1,064,341 2,259,812 Gain on sale of equipment (58,916) (149,837) (151,690) (Increase) decrease in receivable 124,590 (93,630) 344,091 Decrease in payables and deferred income (12,855) (142,105) (171,287) Net cash from operations $1,751,675 $ 1,584,190 $ 3,163,996
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures The information required by this item is incorporated by reference to reports on Form 8-K filed on October 26, 1994 and January 6, 1995 regarding a change in Registrant's certifying accountant. PART III Item 10. Directors and Executive Officers of the Registrant The Partnership has no directors or officers. All management functions are performed by CSA Income Funds, Inc., the corporate General Partner. The current directors and officers of the corporate General Partner are:
Name Age Title(s) Elected J. Frank Keohane 60 Director & President 04/01/88 Richard P. Timmons 42 Controller 03/01/95 Trevor A. Keohane 30 Director 05/28/93 Claudine A. Aquillon 31 Clerk 08/30/95
Term of Office: Until a successor is elected. Item 11. Executive Compensation (a), (b), (c), (d) and (e): The Officers and Directors of the General Partner receive no current or proposed direct remuneration in such capacities, pursuant to any standard arrangements or otherwise, from the Partnership. In addition, the Partnership has not paid and does not propose to pay any options, warrants or rights to the Officers and Directors of the General Partner. There exists no remuneration plan or arrangement with any Officer or Director of the General Partner resulting from resignation, retirement or any other termination. See Note 8 of the Notes to Financial Statements included in Item 8 of this report for a description of the remuneration paid by the Partnership to the General Partner and its affiliates. Item 12. Security Ownership of Certain Beneficial Owners and Management By virtue of its organization as a limited partnership, the Partnership has outstanding no securities possessing traditional voting rights. However, as provided for in Section 13.2 of the Agreement of Limited Partnership (subject to Section 13.3), a majority in interest of the Limited Partners have voting rights with respect to: 1. Amendment of the Limited Partnership Agreement. 2. Termination of the Partnership. 3. Removal of the General Partner. 4. Approval or disapproval of the sale of substantially all the assets of the Partnership, if such sale occurs prior to June 30, 1995. No person or group is known by the General Partner to own beneficially more than 5% of the Partnership's outstanding Limited Partnership Units as of December 31, 1996. Item 13. Certain Relationships and Related Transactions The General Partner is affiliated with the General Partner for CSA Income Fund Limited Partnerships III and CSA Income Fund IV Limited Partnership and may act in that capacity for other income fund limited partnerships in the future. PART IV Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K (a) (1) Financial Statements - See accompanying Index to Financial Statements - Item 8. (2) Financial Statement Schedules - All schedules have been omitted as not required, not applicable or the information required to be shown therein is included in the Financial Statements and related notes. (3) Exhibits Index Except as set forth below, all exhibits to Form 10-K, as set forth in item 601 of Regulation S-K are not applicable.
Page Number or Exhibit Incorporated by Number Description Reference 4.1 Agreement of Limited Partnership * 4.2 Subscription Agreement ** 4.3 Certificate of Limited Partnership and *** Agreement of Limited Partnership dated September 17, 1986 4.4 First Amended and Restated Certificate *** of Limited Partnership and Agreement of Limited Partnership dated January 9, 1987 4.5 Second Amended and Restated Certificate **** of Limited Partnership and Agreement of Limited Partnership dated March 10, 1987 10. Material Contracts *** 10.1 Escrow Agreement **** 11.0 Information regarding a change in the Registrant's Certifying Accountant *****
* Included as Exhibit A to Amendment No. 1 to Form S-1, Registration Statement No. 33-11272 filed with the Securities and Exchange Commission on March 11, 1987. ** Included as Exhibit C to Amendment No. 1 to Form S-1 to Registration Statement No. 33-11272 filed with the Securities and Exchange Commission on March 11, 1987. *** Included with the Exhibit Volume to Form S-1, Registration Statement No. 33-11272 filed with the Securities and Exchange Commission on January 12, 1987. **** Included with the Exhibit Volume to Amendment No. 1 to Form S-1, Registration Statement No. 33-11272 filed with the Securities and Exchange Commission on March 11, 1987. ***** Included in reports on Form 8-K filed on October 26, 1994 and January 6, 1995. (b) Reports on Form 8-K: There were no reports filed during the fourth quarter of 1996. 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. CSA Income Fund Limited Partnership II (Registrant) By its General Partner, CSA Income Funds, Inc. Date: /S/ J. Frank Keohane, 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 and on the dates indicated. By its General Partner, CSA Income Funds, Inc. Date: /S/ J. Frank Keohane President & Director Principal Executive Officer Date: /S/ Richard P. Timmons Controller Principal Accounting and Finance officer EX-27 2
5 This schedule contains summary financial information extracted from CSA Income Fund Limited Partnership II's Statement of Financial Position as of December 31, 1996 and Statement of Operations for the twelve months then ended and is qualified in its entirety by reference to such financial statements. 12-MOS DEC-31-1996 DEC-31-1996 556,920 0 69,648 0 0 0 5,509,177 3,613,329 2,522,416 0 0 0 0 0 1,293,250 2,522,416 0 1,958,168 1,195,187 1,360,399 70,145 0 92,067 597,769 0 597,769 0 0 0 597,769 7.29 7.29 The Registrant maintains an unclassified Statement of Financial Position.
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