10-Q 1 cappref210q_03-01.txt FORM 10-Q MARCH 31 2001 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 -------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to Commission file number 0-21382 ------- Capital Preferred Yield Fund-II, L.P. ------------------------------------- (Exact name of registrant as specified in its charter) Delaware 84-1184628 ----------------------- ------------------------------------ (State of organization) (I.R.S. Employer Identification No.) 2750 South Wadsworth Blvd., C-200 Denver, Colorado 80227 ----------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (720) 963-9600 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No ___ . Exhibit Index appears on Page 14 Page 1 of 15 Pages CAPITAL PREFERRED YIELD FUND-II, L.P. Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2001 Table of Contents ----------------- PART I. FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements (Unaudited) Balance Sheets - March 31, 2001 and December 31, 2000 3 Statements of Income - Three Months Ended March 31, 2001 and 2000 4 Statements of Cash Flows - Three Months Ended March 31, 2001 and 2000 5 Notes to Financial Statements 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-12 Item 3. Quantitative and Qualitative Disclosures About Market Risk 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 6. Exhibits and Reports on Form 8-K 13 Exhibit Index 14 Signature 15 2 CAPITAL PREFERRED YIELD FUND-II, L.P. BALANCE SHEETS ASSETS

~~PART~~March I.31, ~~FINANCIAL~~December ~~INFORMATION~~31, ~~PAGE~~2001 2000 ---------- ~~Item~~---------- ~~1. Financial Statements~~ (Unaudited) ~~Balance~~Cash ~~Sheets~~and -cash ~~September~~equivalents 30$ 275,824 ~~2000~~$ ~~and~~758,682 ~~December~~Accounts 31receivable 190,147 ~~1999~~119,034 3Equipment ~~Statements~~held offor ~~Income~~sale or re-lease ~~Three~~24,996 ~~and~~74,996 ~~Nine~~Net ~~Months~~investment ~~Ended~~in ~~September~~direct ~~30,~~finance ~~2000~~leases ~~and~~1,071,167 ~~1999~~1,246,976 4Leased ~~Statements~~equipment, ofnet ~~Cash~~1,494,274 ~~Flows~~1,996,693 ---------- ~~Nine~~---------- ~~Months~~Total ~~Ended~~assets ~~September~~$3,056,408 30$4,196,381 ~~2000~~========== ========== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable and ~~1999~~accrued 5liabilities ~~Notes~~$ 697,529 $1,091,170 Payables to ~~Financial~~affiliates ~~Statements~~100,302 682,588 Rents received in advance 77,467 57,169 Distributions payable to partners -7- ~~Item~~178,815 2.Discounted ~~Management's~~lease ~~Discussion~~rentals ~~and~~443,726 ~~Analysis~~763,794 of---------- ~~Financial~~---------- ~~Condition~~Total ~~and~~liabilities ~~Results~~1,319,024 of2,173,536 ~~Operations~~---------- 8-12--------- ~~PART~~Partners' ~~II.~~capital: ~~OTHER~~General ~~INFORMATION~~partner ~~Item~~-- -- Limited partners: Class A 1.,557,334 ~~Legal~~1,841,515 ~~Proceedings~~Class 13B ~~Item~~180,050 6.181,330 ~~Exhibits~~---------- ~~and~~---------- ~~Reports~~Total onpartners' ~~Form~~capital 81,737,384 2,022,845 -K--------- 13---------- ~~Signature~~Total 14liabilities ~~Exhibit~~and ~~Index~~partners' 15capital $3,056,408 $4,196,381 ========== ==========

The accompanying notes are an integral part of these financial statements. 3 CAPITAL PREFERRED YIELD FUND-II, L.P. STATEMENTS OF INCOME (Unaudited)

~~September~~Three ~~30,~~Months ~~December~~Ended March 31, ~~2000 1999~~ ------------- ---------- 2001 2000 ---- ~~(Unaudited)~~---- ~~ASSETS~~Revenue: ~~Cash~~Operating ~~and~~lease ~~cash~~rentals ~~equivalents~~ $ ~~799~~331,~~568~~631 $ 1523,~~345,288~~767 ~~Accounts~~Direct ~~receivable,~~finance ~~net~~lease ~~152,946~~income ~~332~~24,~~475~~707 ~~Receivable from affiliates -- 243~~33,~~586~~295 Equipment ~~held~~sales ~~for~~margin ~~sale or re-lease 385~~89,~~024~~485 ~~566~~134,~~714~~106 ~~Net~~Interest ~~investment~~income ~~in direct finance leases 1~~5,~~493,173~~305 116,~~946,226~~095 ~~Leased~~--------- ~~equipment,~~--------- ~~net~~Total 2revenue 451,~~279,274~~128 4707,~~158,824~~263 ---------~~---~~ ---------~~---~~ ~~Total~~Expenses: ~~assets~~Depreciation ~~$ 5~~243,~~109,985~~897 ~~$ 8~~373,~~593,113~~655 ~~============~~Management ~~============~~fees ~~LIABILITIES~~to ~~AND~~general ~~PARTNERS'~~partner ~~CAPITAL~~12,642 ~~Liabilities:~~25,547 ~~Accounts~~Direct ~~payable~~services ~~and~~from ~~accrued~~general ~~liabilities~~partner ~~$ 770~~18,~~015~~749 ~~$ 1~~28,~~171,040~~458 ~~Payables~~General toand ~~affiliates~~administrative 35218,~~909~~711 1243,~~655~~775 ~~Rents~~Interest ~~received~~on indiscounted ~~advance~~lease 57rentals 7,~~169~~791 138,~~303~~178 ~~Distributions~~Provision ~~payable~~for tolosses ~~partners 167~~75,000 250,000 ~~Discounted lease rentals 1,109,460 2,321,818~~ ---------~~---~~ ---------~~---~~ Total ~~liabilities~~expenses 2576,~~139,553~~790 3559,~~508,816~~613 ---------~~---~~ ---------~~---~~ ~~Partners'~~Net ~~capital~~income (loss) $(125,662) $ 147,650 ========= ========= Net income (loss) allocated: ~~General~~To the general partner --$ --1,598 ~~Limited~~$ ~~partners:~~12,755 To the Class A 2limited partners (125,~~784,155~~979) 4133,~~901,714~~524 To the Class B ~~186~~limited partner (1,~~277~~281) ~~182~~1,~~583~~371 ---------~~---~~ ---------~~---~~ ~~Total~~$(125,662) ~~partners'~~$ ~~capital 2~~147,~~970,432~~650 ~~5,084,297~~========= ~~------------~~========= ~~------------~~Net ~~Total~~income ~~liabilities~~(loss) ~~and~~per ~~partners'~~weighted ~~capital~~average Class A limited partner unit outstanding $ ~~5,109,985~~(0.94) $ ~~8,593,113~~1.00 ========= ========= Weighted average Class A limited partner units outstanding 133,518 133,518 ========= =========

The accompanying notes are an integral part of these financial statements. 4 CAPITAL PREFERRED YIELD FUND-II, L.P. STATEMENTS OF CASH FLOWS (Unaudited)

Three Months Ended ~~Nine~~March ~~Months Ended September 30~~31, ~~September 30,~~ ------------------------ --~~----------------------~~ ~~2000~~2001 ~~1999~~ 2000 ~~1999~~ ----~~------~~ ----~~------~~ ~~----------~~Net ~~----------~~cash ~~REVENUE:~~provided ~~Operating~~by ~~lease~~operating ~~rentals~~activities $ ~~548~~175,~~211~~825 $ ~~908,153 $~~1,~~445~~379,~~923~~089 ~~$3,187,708 Direct finance lease income 33,920 55,576 104,204 185,655 Equipment sales margin 34,570 8,841 293,428 388,360 Interest income 10,690 7,144 40,678 21,043~~ ---------- -~~---------~~ ---------- -~~---------~~ ~~Total~~Cash ~~revenue~~flows ~~627,391~~from ~~979,714~~financing ~~1,884,233 3,782,766 ---------- ---------- ---------- ---------- EXPENSES~~activities: ~~Depreciation~~Principal ~~320,096~~payments 659,248 945,969 2,427,807 Management fees paid to general partner 16,369 21,238 46,193 86,738 Direct services from general partner 5,675 7,887 47,153 73,788 General and administrative 37,712 34,492 138,532 142,980 Interest on discounted lease rentals 23(320,~~784~~068) 56(492,~~935~~297) ~~92,251~~Distributions ~~203,131~~to ~~Provision~~partners ~~for losses 150~~(338,~~000~~615) 25(1,~~000 225~~224,~~000~~500) ~~100,000~~ ---------- -~~---------~~ ---------- -~~---------~~ ~~Total~~Net ~~expenses~~cash ~~553,636~~used ~~804~~in financing activities (658,~~800~~683) (1,~~495~~716,~~098~~797) ~~3,034,444~~ ---------- -~~---------~~ ---------- -~~---------~~ ~~NET~~Net ~~INCOME~~decrease $in ~~73,755~~cash $and ~~174,914~~cash $equivalents ~~389~~(482,~~135~~858) ~~$ 748~~(337,~~322~~708) ~~==========~~Cash ~~==========~~and ~~==========~~cash ~~==========~~equivalents ~~NET~~at ~~INCOME~~beginning ~~ALLOCATED:~~of Toperiod ~~the general partner $ 4~~758,~~175~~682 ~~$ 5,004 $ 25,030 $ 25,993 To the Class A limited partners 68,875 168,192 360,412 715,022 To the Class B limited partner 705~~ 1,~~718 3~~345,~~693~~288 ~~7,307~~ ---------- -~~---------~~ ---------- -~~---------~~ $Cash ~~73,755~~and $cash ~~174,914~~equivalents $at ~~389,135~~end $of ~~748,322~~period ~~========== ========== ========== ========== Net income per weighted average Class A limited partner unit outstanding~~ $ ~~.52~~275,824 $ 1~~.26~~,007,580 ~~$ 2.70 $ 5.36~~ ========== =~~=========~~ ========== =~~=========~~ ~~Weighted~~Supplemental ~~average~~disclosure ~~Class~~of Acash ~~limited~~flow ~~partner~~information: ~~units~~Interest ~~outstanding~~paid ~~133,418~~on ~~133,418~~discounted ~~133,418~~lease ~~133,428~~rentals ~~==========~~$ ~~==========~~7,791 ~~==========~~$ ~~==========~~38,178

The accompanying notes are an integral part of these financial statements. 5 CAPITAL PREFERRED YIELD FUND-II, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation --------------------- The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for annual financial statements. In the opinion of the General Partner, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The balance sheet at December 31, 2000 was derived from the audited financial statements included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2000, (the "2000 Form 10-K") previously filed with the Securities and Exchange Commission. Recently Issued Financial Accounting Standards In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities ("Statement 133"). Statement 133 establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. In June 1999, the Financial Accounting Standard Board issued SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities -Deferral of the Effective Date of FASB Statement 133, an Amendment of FASB Statement 133. Statement 137 effectively extends the required application of Statement 133 to all fiscal quarters of all fiscal years beginning after June 15, 2000, with earlier application permitted. The Partnership adopted Statement 133 in the first quarter of 1999, and such adoption had no material impact on the Partnership. Management Fees to General Partner In accordance with the Partnership Agreement, the General Partner earns a management fee in connection with its management of the equipment, calculated as a percentage of the monthly gross rentals received, and paid monthly in arrears. At March 31, 2001, management fees of $17,735 are included in payables to affiliates. Direct Services from General Partner The General Partner and an affiliate provide accounting, investor relations, billing, collecting, asset management, and other administrative services to the Partnership. The Partnership reimburses the General Partner for these services performed on its behalf as permitted under the terms of the Partnership Agreement. At March 31, 2001, direct services from the General Partner in the amount of $20,595 are included in payables to affiliates. 6 CAPITAL PREFERRED YIELD FUND-II, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited), continued 2. Transactions With the General Partner and Affiliates ---------------------------------------------------- General and Administrative Expenses The General Partner and an affiliate are reimbursed for the actual cost of administrative expenses incurred on behalf of Partnership per the terms of the Partnership Agreement. At March 31, 2001, administrative expenses in the amount of $61,972 are included in payables to affiliates. 7 CAPITAL PREFERRED YIELD FUND-II, L.P. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations --------------------- Presented below are schedules (prepared solely to facilitate the discussion of results of operations that follows) showing items of income and expense and changes in those items derived from the Statements of Income:

~~Nine~~Three Months Ended March 31, ------------------------------------ ~~September~~2001 ~~30, September 30,~~ 2000 ~~1999~~Change ---- ----~~------~~ ------~~--------~~ ~~NET~~Leasing ~~CASH~~margin ~~PROVIDED BY OPERATING ACTIVITIES~~ $ 3104,~~004,638~~650 $ 4145,~~861,198~~229 ~~--------------~~$ ~~-------------- CASH FLOWS FROM INVESTING ACTIVITIES: Upgrade of equipment on operating lease from affiliate --~~ (440,~~864~~579) ~~--------------~~Equipment ~~--------------~~sales ~~Net~~margin ~~cash~~89,485 ~~used~~134,106 ~~in investing activities --~~ (444,~~864~~621) ~~--------------~~Interest ~~--------------~~income ~~CASH~~5,305 ~~FLOWS FROM FINANCING ACTIVITIES: Principal payments on discounted lease rentals (1~~16,~~212,358)~~095 (110,~~849,440~~790) ~~Distributions~~Management fees to ~~partners~~general partner (212,~~338,000~~642) (325,~~007,321~~547) ~~Redemptions~~12,905 ofDirect ~~Class~~services Afrom ~~limited~~general partner ~~units~~(18,749) -- (828,~~150~~458) ~~--------------~~9,709 ~~--------------~~General ~~Net~~and ~~cash~~administrative ~~used~~expenses ~~in financing activities~~ (3218,~~550,358~~711) (443,~~864,911~~775) ~~-------------- -------------- NET INCREASE/~~(~~DECREASE~~174,936) INProvision ~~CASH~~for ~~AND~~losses ~~CASH EQUIVALENTS~~ (~~545~~75,~~720~~000) (850,~~577~~000) ~~CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1~~(25,~~345,288~~000) ~~784,867~~ --------- ----- ---- ---------- ~~CASH~~Net ~~AND~~income ~~CASH~~$(125,662) ~~EQUIVALENTS~~$ ~~AT END OF PERIOD 799~~147,~~568~~650 ~~776~~$(273,~~290~~312) ========= ===== ==== =========~~= Supplemental disclosure of cash flow information: Interest paid on discounted lease rentals $ 92,251 $ 203,131~~

The Partnership is in its liquidation stage, as defined in the Partnership Agreement. The Partnership is not purchasing additional equipment, initial leases are expiring, and the amount of equipment being remarketed (i.e., re-leased, renewed, or sold) is increasing. As a result, both the size of the Partnership's lease portfolio and the amount of leasing revenue are declining. Leasing Margin Leasing margin consists of the following: Three Months Ended March 31, ------------------------ 2001 2000 ---- ---- Operating lease rentals $ 331,631 $ 523,767 Direct finance lease income 24,707 33,295 Depreciation (243,897) (373,655) Interest expense on discounted lease rentals (7,791) (38,178) --------- --------- Leasing margin $ 104,650 $ 145,229 ========= ========= Leasing margin ratio 29% 26% == == 8 CAPITAL PREFERRED YIELD FUND-II, L.P. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Results of Operations, continued --------------------- Leasing Margin, continued All components of leasing margin decreased for the three months ended March 31, 2001 compared to the three months ended March 31, 2000 due to portfolio runoff. Leasing margin ratio varies due to changes in the portfolio, including, among other things, the mix of operating leases versus direct finance leases, the average maturity of leases comprising the portfolio, the average residual value of leases in the portfolio, and the amount of discounted lease rentals financing the portfolio. Leasing margin and the related leasing margin ratio for an operating lease financed with non-recourse debt increases during the term of the lease since rents and depreciation are typically fixed while interest expense declines as the related non-recourse debt principal is repaid. The ultimate rate of return on leases depends, in part, on interest rates at the time the leases are originated, future equipment values, and on-going lessee creditworthiness. Because leasing is an alternative to financing equipment purchases with debt, lease rates tend to rise and fall with interest rates (although lease rate movements generally lag interest rate changes in the capital markets). Equipment Sales Margin Equipment sales margin consists of the following: Three Months Ended March 31, ----------------------------- 2001 2000 ---- ---- Equipment sales revenue $ 328,509 $ 314,111 Cost of equipment sales (239,024) (180,005) ----------- ----------- Equipment sales margin $ 89,485 $ 134,106 =========== =========== Equipment sales margin fluctuates based on the composition of equipment available for sale. Currently, the Partnership is in its liquidation phase (as defined in the Partnership Agreement). Initial leases are expiring and equipment is being remarketed (i.e., re-leased or sold to the original lessee or to third parties). Equipment sales margin varies with the number and dollar amount of equipment leases that mature in a particular period and the current market for specific equipment. Interest Income Interest income varies based on the amount of cash available for investment, pending distribution to partners, and the interest rate on such invested cash. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Results of Operations, continued --------------------- Expenses Management fees paid to and direct services from the General Partner decreased for the three months ended March 31, 2001 as compared to the corresponding period in 2000 primarily due to portfolio run-off. Management fees are calculated as a percentage of rents collected. General and administrative expenses increased for the three months ended March 31, 2001 compared to the three months ended 2000 due to an increase in insurance expense, data processing charges and audit fees. Also contributing to the increase in general and administrative expenses is a one-time charge for software and computer equipment related to a change in the ownership of the General Partner. Provision for Losses The remarketing of equipment for an amount greater than its book value is reported with equipment sales margin (if the equipment is sold) or leasing margin (if the equipment is re-leased). The realization of less than the carrying value of equipment (which occurs when the equipment is remarketed subsequent to initial lease termination) is recorded as provision for losses. Residual values are established equal to the estimated value to be received from the equipment following termination of the lease. In estimating such values, the Partnership considers all relevant facts regarding the equipment and the lessee, including, for example, the likelihood that the lessee will re-lease the equipment. The nature of the Partnership's leasing activities is such that it has credit and residual value exposure and will incur losses from those exposures in the ordinary course of business. The Partnership performs quarterly assessments of the estimated residual values of its assets to identify other-than-temporary losses in value. The provision for losses recorded during the three months ended March 31, 2001 related primarily to lessees returning equipment to the Partnership. Liquidity and Capital Resources ------------------------------- The Partnership is in its liquidation stage, as defined in the Partnership Agreement. The Partnership is not purchasing additional equipment, initial leases are expiring, and the amount of equipment being remarketed (i.e., re-leased, renewed, or sold) is increasing. As a result, both the size of the Partnership's lease portfolio and the amount of leasing revenue are declining. The Partnership funds its operating activities principally with cash from rents, interest income, and sales of off-lease equipment. Available cash and cash reserves of the Partnership are invested in short-term government securities pending distributions to the partners. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Liquidity and Capital Resources, continued ------------------------------- During the three months ended March 31, 2001, the Partnership declared distributions to the partners of $159,800. A substantial portion of such distributions constituted a return of capital. Distributions may be characterized for tax, accounting and economic purposes as a return of capital, a return on capital, or both. The portion of each partners' cash distribution which exceeds its net income for the fiscal period may be deemed a return of capital for accounting purposes. However, the total percentage of the Partnership's return on capital over its life can only be determined after all residual cash flows (which include proceeds from the re-leasing and sale of equipment after initial lease terms expire) have been realized at the termination of the partnership. The General Partner believes that the Partnership will generate sufficient cash flow from operations during the remainder of 2001 to (1) meet current operating requirements and (2) fund cash distributions to the Class A limited partners in accordance with the Partnership Agreement. Distributions during the liquidation phase will vary based upon cash availability. All distributions are expected to be a return of capital for economic purposes. The Class B limited partner distributions of cash from operations are subordinated to the Class A limited partners receiving distributions of cash from operations, as scheduled in the Partnership Agreement (i.e., 12%). Therefore, because of the decrease in distributions to the Class A limited partners during the three months ended March 31, 2001, Mishawaka Leasing Company, Inc., the sole Class B limited partner, did not receive any distributions of cash from operations. New Accounting Pronouncements ----------------------------- In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities ("Statement 133"). Statement 133 establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. In June 1999, the Financial Accounting Standard Board issued SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities -Deferral of the Effective Date of FASB Statement 133, an Amendment of FASB Statement 133. Statement 137 effectively extends the required application of Statement 133 to all fiscal quarters of all fiscal years beginning after June 15, 2000, with earlier application permitted. The Partnership adopted Statement 133 in the first quarter of 1999, and such adoption had no material impact on the Partnership. 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Liquidity and Capital Resources, continued ------------------------------- "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995 ------------ The statements contained in this report which are not historical facts may be deemed to contain forward-looking statements with respect to events, the occurrence of which involve risks and uncertainties, and are subject to factors that could cause actual future results to differ both adversely and materially from currently anticipated results, including, without limitation, the level of lease originations, realization of residual values, the availability and cost of financing sources and the ultimate outcome of any contract disputes. Certain specific risks associated with particular aspects of the Partnership's business are discussed under Results of Operations in this report and under Results of Operations in the 1998 Form 10-K when and where applicable. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Partnership is in the liquidation stage (as defined in the Partnership Agreement). Consequently, the Partnership is no longer originating new leases. The Partnership's existing leases are non-cancelable, have fixed rates and are financed with fixed rate debt. Therefore, the Partnership has no exposure to fluctuations in interest rates or other market risk exposure. 12 CAPITAL PREFERRED YIELD FUND-II, L.P. PART II. OTHER INFORMATION Item 1. Legal Proceedings The Partnership is involved in routine legal proceedings incidental to the conduct of its business. The General Partner believes none of these legal proceedings will have a material adverse effect on the financial condition or operations of the Partnership. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (b) The Partnership did not file any reports on Form 8-K during the quarter ended March 31, 2001. 13 Item No. Exhibit Index 27 Financial Data Schedule 14 CAPITAL PREFERRED YIELD FUND-II, L.P. Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAPITAL PREFERRED YIELD FUND-II, L.P. By: CAI Equipment Leasing III Corp. Dated: July 12, 2001 By: /s/Susan M. Landi ----------------- Susan M. Landi Senior Accounting Officer 15 CAPITAL PREFERRED YIELD FUND-II, L.P. Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAPITAL PREFERRED YIELD FUND-II, L.P. By: CAI Equipment Leasing III Corp. Dated: July 12, 2001 By: Susan M. Landi Senior Accounting Officer 15

Three Months Nine Months Ended September 30, Ended September 30, ----------------------- ----------------------- 2000 1999 Change 2000 1999 Change --------- --------- --------- --------- --------- --------- Leasing margin $ 238,251 $ 247,546 $ (9,295) $ 511,907 $ 742,425 $(230,518) Equipment sales margin 34,570 8,841 25,729 293,428 388,360 (94,932) Interest income 10,690 7,144 3,546 40,678 21,043 19,635 Management fees paid to general partner (16,369) (21,238) 4,869 (46,193) (86,738) 40,545 Direct services from general partner (5,675) (7,887) 2,212 (47,153) (73,788) 26,635 General and administrative expenses (37,712) (34,492) (3,220) (138,532) (142,980) 4,448 Provision for losses (150,000) (25,000) (125,000) (225,000) (100,000) (125,000) --------- --------- --------- --------- --------- --------- Net income $ 73,755 $ 174,914 $(101,159) $ 389,135 $ 748,322 $(359,187) ========= ========= ========= ========= ========= =========

Three Months Ended Nine Months Ended September 30, September 30, ----------------------------- ----------------------------- 2000 1999 2000 1999 ------------ ------------ ------------ ------------ Operating lease rentals $ 548,211 $ 908,153 $ 1,445,923 $ 3,187,708 Direct finance lease income 33,920 55,576 104,204 185,655 Depreciation (320,096) (659,248) (945,969) (2,427,807) Interest expense on discounted lease rentals (23,784) (56,935) (92,251) (203,131) ------------ ------------ ------------ ------------ Leasing margin $ 238,251 $ 247,546 $ 511,907 $ 742,425 ============ ============ ============ ============ Leasing margin ratio 41% 26% 33% 22% ============ ============ ============ ============

Three Months Ended Nine Months Ended September 30, September 30, --------------------------- ---------------------------- 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Equipment sales revenue $ 413,995 $ 128,805 $ 1,112,165 $ 1,284,262 Cost of equipment sales (379,425) (119,964) (818,737) (895,902) ----------- ----------- ----------- ----------- Equipment sales margin $ 34,570 $ 8,841 $ 293,428 $ 388,360 =========== =========== =========== ===========

EXHIBIT NUMBER DESCRIPTION ------ ----------- 27 Financial Data Schedule

Filing Compare · CAPITAL PREFERRED YIELD FUND II L P