FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number 0-17091 CSA Income Fund Limited Partnership II (Exact name of registrant as specified in its charter) Massachusetts 04-2932178 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 22 Batterymarch St., Boston, Massachusetts 02109 (Address of principal executive offices) (Zip Code) (617) 357-1700 (Registrant's telephone number, including area code) 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 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: PART I - FINANCIAL INFORMATION CSA INCOME FUND LIMITED PARTNERSHIP II STATEMENTS OF FINANCIAL POSITION AS OF (Unaudited) September 30, December 31, 1997 1996 [CAPTION] Assets Cash and cash equivalents $ 34,602 $ 556,920 Accounts receivable affiliates - 69,648 Rental equipment, at cost 3,809,499 5,509,177 Less accumulated depreciation (2,905,974) (3,613,329) Net rental equipment 903,525 1,895,848 Total assets $ 938,127 $ 2,522,416 Liabilities and partners' capital Liabilities: Accrued management and reimbursable fees $ 4,171 $ 9,758 Accounts payable affiliate 148,480 - Accounts payable 6,679 11,226 Deferred income 2,720 3,202 Notes payable 389,374 1,126,931 Limited recourse notes payable - 78,049 Total liabilities 551,424 1,229,166 Partners' capital: General Partner (deficit): Capital contributions 1,000 1,000 Cumulative net income 54,390 22,769 Cumulative cash distributions (178,508) (168,052) (123,118) (144,283) Limited Partners (78,785 units): Capital contributions, net of offering costs 17,563,265 17,563,265 Cumulative net income 621,295 513,772 Cumulative cash distributions (17,674,739) (16,639,504) 509,821 1,437,533 Total Partners' capital 386,703 1,293,250 Total liabilities and partners' capital $ 938,127 $ 2,522,416 CSA INCOME FUND LIMITED PARTNERSHIP II STATEMENTS OF OPERATIONS (Unaudited) Quarters Ended Nine Months Ended September September September September 30, 1997 30, 1996 30, 1997 30, 1996 [CAPTION] Revenues: Rental income $ 244,953 $ 516,935 $1,002,695 $1,404,543 Interest income 326 1,364 5,184 14,479 Gain (loss) on sale of equipment 359 12,189 (18,232) 47,242 Total revenues 245,638 530,488 989,647 1,466,264 Costs and expenses: Depreciation 173,020 296,845 707,803 761,821 Interest 9,851 24,449 43,440 68,989 Management fees 13,223 25,847 51,110 70,227 General and administrative 13,800 19,859 48,150 57,752 Total expenses 209,894 367,000 850,503 958,789 Net income $ 35,744 $ 163,488 $ 139,144 $ 507,475 Net income allocation: General Partner $ 359 $ 1,635 $ 31,621 $ 5,075 Limited Partners 35,385 161,853 107,523 502,400 $ 35,744 $ 163,488 $ 139,144 $ 507,475 Net income per Limited Partnership Unit $ .45 $ 2.05 $ 1.36 $ 6.38 Number of Limited Partnership Units 78,785 78,785 78,785 78,785 CSA INCOME FUND LIMITED PARTNERSHIP II STATEMENTS OF CASH FLOWS (Unaudited) Quarters Ended Nine Months Ended September September September September 30, 1997 30, 1996 30, 1997 30,1996 Cash flows from operations: Cash received from rental of equipment $ 246,940 $ 508,661 $1,090,807 $1,432,037 Cash paid for operating and management expenses(28,584) 58,523) (109,394) (140,465) Interest paid (9,851) (24,449) (43,440) (68,989) Interest received 327 1,364 5,185 14,479 Net cash from operations 208,832 427,053 943,158 1,237,062 Cash flow from investments: Sale of equipment 543 99,521 177,693 236,251 Purchase of equipment - (262,985) - (1,409,642) Net cash from (used by) investments 543 (163,464) 177,693 (1,173,391) Cash flows from financing: Change in amounts due Affiliates 218,128 - 218,128 - Proceeds from notes payable - 429,071 - 747,127 Repayment of notes payable (167,463) (233,243) (815,606) (516,889) Payment of cash distributions (348,562) (348,566)(1,045,691) (1,045,692) Net cash from (used by) financing (297,897) (152,738)(1,643,169) (815,454) Net change in cash and cash equivalents (88,522) 110,851 (522,318) (751,783) Cash and cash equivalents at beginning of period 123,124 158,732 556,920 1,021,366 Cash and cash equivalents at end of period $ 34,602 $ 269,583 $ 34,602 $ 269,583 CSA INCOME FUND LIMITED PARTNERSHIP II NOTE TO FINANCIAL STATEMENTS The quarterly financial statements of the Partnership presented herein are without audit except for the December 31, 1996 Balance sheet information. Certain information and footnote disclosures normally included in the annual financial statements have been condensed or omitted from the accompanying statements. For such information,reference should be made to the financial statements and notes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 1996. In the General Partner's opinion, the unaudited financial statements reflect all adjustments necessary to present fairly the financial position of CSA Income Fund Limited Partnership II as of September 30,1997 and September 30, 1996 and the results of operations and cash flows for the periods presented therein. CSA INCOME FUND LIMITED PARTNERSHIP II GENERAL PARTNER'S DISCUSSION OF OPERATIONS Rental income was $244,953 and $516,935 and net income was $35,744 and $163,488 for the quarters ended September 30, 1997 and 1996, respectively. For the nine months ended September 30, 1997 and 1996, rental income was $1,002,695 and $1,404,543 and net income was $139,144 and $507,475, respectively. For the nine month period, the decrease in rental income is attributable to the expected occurrence of reduced rental rates for re-leased equipment and to the ongoing sale of equipment from the Partnership's portfolio. The decreased rental revenue and the smaller gains on sale of equipment in 1997 resulted in the decrease in net income from 1996. The Partnership generated $1,120,851 in cash flow from operations and the sale of equipment during the nine months ended September 30, 1997. This cash, cash on hand and a loan of $196,000 from the General Partner were used to make distributions of $1,045,691 to the partners and reduce debt by $815,606. As part of the Partnership Wind-Up, effective November 1, 1997, the Partnership sold all but three leases from the remaining portfolio. Two of these three leases, both with K Mart Corporation, are expected to be sold in December. The third lease of an Airplane Engine with American West Airlines Inc. may require some additional time to obtain the best return for the Limited Partners. The General Partner will be communicating with the Limited Partners on these leases in December. The Partnership paid a quarterly distribution to the Limited Partners in the amount of $4.38 per unit on August 15, 1997, and the Partnership is paying another distribution on November 14, 1997 from Wind-Up proceeds in the same amount as the August distribution. There will be a final distribution(s) from the disposition of the remaining three leases, possibly by the end of December. To date, the Partnership has made cash distributions to the Limited Partners ranging from 87% to 96% of their initial investment, depending on when the Limited Partner entered the Partnership. CSA INCOME FUND LIMITED PARTNERSHIP II PART II Item 1 - Legal Proceedings None Item 2 - Changes in Securities None Item 3 - Defaults Upon Senior Securities None Item 4 - Submission of Matters to a Vote of Security Holders None Item 5 - Other Information None Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits - Exhibit 27. Financial Data Schedule. (b) Reports on Form 8-K - No reports have been filed on Form 8-K during this quarter. SIGNATURES 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. CSA Income Fund Limited Partnership II (Registrant) By its General Partner, CSA Income Funds, Inc. Date: 11/14/97 /s/ J. Frank Keohane Principal Executive Officer Date: 11/14/97 /s/ Richard P. Timmons Controller Principal Accounting and Finance Officer