Page 1 of 11
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
FORM 10-Q
__X__ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
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 0-8868
------
PHOENIX LEASING INCOME FUND 1977
- --------------------------------------------------------------------------------
Registrant
California 94-2446904
- ---------------------------- ----------------------------------
State of Jurisdiction I.R.S. Employer Identification No.
2401 Kerner Boulevard, San Rafael, California 94901-5527
- --------------------------------------------------------------------------------
Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (415) 485-4500
--------------
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
preceding requirements for the past 90 days.
Yes __X__ No _____
Page 2 of 11
Part I. Financial Information
------------------------------
Item 1. Financial Statements
PHOENIX LEASING INCOME FUND 1977
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
March 31, December 31,
1996 1995
---- -----
ASSETS
Cash and cash equivalents $ 411 $ 595
Accounts receivable (net of allowance for
losses on accounts receivable of $1 at
March 31, 1996 and December 31, 1995) - -
Notes receivable (net of allowance for losses
on notes receivable of $92 at March 31, 1996
and December 31, 1995) 707 707
Equipment on operating leases and held for lease
(net of accumulated depreciation of $15 and $31 at
March 31, 1996 and December 31, 1995, respectively) - -
Investment in joint ventures 59 64
Other assets 4 4
------ ------
Total Assets $1,181 $1,370
====== ======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 34 $ 43
------ ------
Total Liabilities 34 43
------ ------
Partners' Capital
General Partners - -
Limited Partners, 20,000 units authorized and
issued, 16,521 units outstanding at March 31,
1996 and December 31, 1995 1,147 1,327
------ ------
Total Partners' Capital 1,147 1,327
------ ------
Total Liabilities and Partners' Capital $1,181 $1,370
====== ======
The accompanying notes are an integral part of these statements.
Page 3 of 11
PHOENIX LEASING INCOME FUND 1977
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Rental income $ 3 $ 5
Equity in earnings from joint ventures, net 8 8
Interest income, notes receivable - 10
Other income 6 3
----- -----
Total Income 17 26
----- -----
EXPENSES
Management fees to General Partner - 2
Liquidation fees to General Partner 21 22
Provision for losses on receivables - (3)
General and administrative expenses 11 9
----- -----
Total Expenses 32 30
----- -----
NET LOSS $ (15) $ (4)
===== =====
NET LOSS PER LIMITED PARTNERSHIP UNIT $(.97) $(.35)
===== =====
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $9.95 $9.95
===== =====
ALLOCATION OF NET INCOME:
General Partners $ 1 $ 2
Limited Partners (16) (6)
------ -----
$ (15) $ (4)
====== =====
The accompanying notes are an integral part of these statements.
Page 4 of 11
PHOENIX LEASING INCOME FUND 1977
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Operating Activities:
Net loss $ (15) $ (4)
Adjustments to reconcile net loss to net
cash used by operating activities:
Gain on sale of equipment (1) (1)
Equity in earnings from joint ventures, net (8) (8)
Provision for early termination, financing leases - (3)
Decrease in accounts receivable - 2
Decrease in accounts payable and accrued expenses (9) (5)
Decrease in other assets - 2
----- -----
Net cash used by operating activities (33) (17)
----- -----
Investing Activities:
Principal payments, financing leases - 3
Principal payments, notes receivable - 10
Proceeds from sale of equipment 1 1
Distributions from joint ventures 13 23
----- -----
Net cash provided by investing activities 14 37
----- -----
Financing Activities:
Distributions to partners (165) (164)
----- -----
Net cash used by financing activities (165) (164)
----- -----
Decrease in cash and cash equivalents (184) (144)
Cash and cash equivalents, beginning of period 595 415
----- -----
Cash and cash equivalents, end of period $ 411 $ 271
===== =====
The accompanying notes are an integral part of these statements.
Page 5 of 11
PHOENIX LEASING INCOME FUND 1977
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
The accompanying unaudited condensed financial statements have been
prepared by the Partnership in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Although management believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Partnership's Financial Statement, as filed with the
SEC in the latest annual report on Form 10-K.
Note 2. Reclassification.
Reclassification - Certain 1995 amounts have been reclassified to conform
to the 1996 presentation.
Note 3. Income Taxes.
Federal and state income tax regulations provide that taxes on the income
or loss of the Partnership are reportable by the partners in their individual
income tax returns. Accordingly, no provision for such taxes has been made in
the accompanying financial statements.
Note 4. Notes Receivable.
Impaired Notes Receivable. At March 31, 1996 the recorded investment in
notes that are considered to be impaired under Statement No. 114 was $798,000
for which the related allowance for losses is $92,000. The average recorded
investment in impaired loans during the three months ended March 31, 1996 was
approximately $798,000.
The activity in the allowance for losses on notes receivable during the
three months ended March 31, is as follows:
1996 1995
---- ----
(Amounts in Thousands)
Beginning balance $ 92 $ 92
Provision for losses - -
Write downs - -
------ ------
Ending balance $ 92 $ 92
====== ======
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Note 5. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net loss and distributions per limited partnership unit were based on the
limited partners' share of net loss and distributions, and the weighted average
number of units outstanding of 16,521 for the three month periods ended March
31, 1996 and 1995.
Note 6. Investment in Joint Ventures.
Equipment Joint Ventures
The aggregate combined statements of operations of the equipment joint
ventures is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Rental income $440 $523
Gain on sale of equipment 93 89
Other income 39 59
---- ----
Total income 572 671
---- ----
EXPENSES
Depreciation 89 115
Lease related operating expenses 218 185
Management fees to General Partner 25 27
General and administrative expenses 4 4
---- ----
Total expenses 336 331
---- ----
Net income $236 $340
==== ====
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Financing Joint Ventures
The aggregate combined statements of operations of the financing joint
venture is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Other income $ 2 $ -
---- ----
Total income 2 -
---- ----
Net income $ 2 $ -
==== ====
Page 8 of 11
PHOENIX LEASING INCOME FUND 1977
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Phoenix Leasing Income Fund 1977 (the Partnership) reported a net loss of
$15,000 for the three months ended March 31, 1996, as compared to a net loss of
$4,000 during the same period in 1995. The change in net loss is primarily
attributable to the absence of interest income from notes receivable during the
three months ended March 31, 1996, as compared to the same period in 1995.
Total revenues decreased by $9,000 for the three months ended March 31, 1996,
compared to the same period in 1995. The decrease in total revenues for the
three months ended March 31, 1996, compared to the same period in 1995, is
attributable to the decrease in interest income from notes receivable. The
Partnership's remaining investments in notes receivable consists of an
investment in one impaired note in which the Partnership is no longer accruing
interest income.
Rental income decreased by $2,000 during the three months ended March 31,
1996, primarily as a result of a decrease in the equipment owned by the
Partnership. Because the Partnership is in its liquidation stage, it is not
expected that the Partnership will acquire addition equipment. As a result,
revenues from equipment leasing activities are expected to decline as the
portfolio is liquidated. The Partnership will reach the end of its term on
December 31, 1997, at which time it will liquidate its remaining assets, pay its
remaining liabilities and distribute the remaining cash, if any, to the limited
partners. At March 31, 1996, the Partnership owned equipment with an aggregate
original cost, excluding the Partnership's pro rata interest in joint ventures,
of $47,000 as compared to $116,000 at March 31, 1995. Partially offsetting the
overall decrease in revenues was a $3,000 increase in other income. This
increase in other income was due to an increase in interest income earned on the
Partnership's cash and cash equivalents.
Total expenses increased by $2,000 for the three months ended March 31, 1996,
compared to the same period in 1995. The increase is primarily the result of an
increase in general and administrative expenses.
Joint Ventures
The Partnership has made investments in various equipment and financing joint
ventures along with other affiliated partnerships managed by the General Partner
for the purpose of spreading the risk of investing in certain equipment leasing
and financing transactions. These joint ventures are not currently making any
significant additional investments in new equipment leasing or financing
transactions. As a result, the earnings and cash flow from such investments are
anticipated to continue to decline as the portfolios are re-leased at lower
rental rates and eventually liquidated. Earnings from joint ventures was $8,000
during both the three months ended March 31, 1996 and 1995.
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Liquidity and Capital Resources
The Partnership's primary source of liquidity comes from its contractual
obligations with lessees and borrowers for fixed terms at fixed payment amounts.
The Partnership also has investments in equipment leasing and financing joint
ventures in which it receives a share of the cash flows. The future liquidity of
the Partnership will depend upon the General Partner's success in collecting
contractual amounts owed.
The Partnership reported net cash used by leasing and financing activities of
$33,000 for the three months ended March 31, 1996, as compared to $4,000 for the
same period in 1995. This decline is attributable to an increase in expenses
combined with a decrease in payments from lessees and borrowers.
Distributions from joint ventures decreased for the three months ended March
31, 1996, as compared to the same period in 1995. Distributions from joint
ventures decreased due to the closure of several joint ventures during 1995 that
are no longer providing any cash flows to the Partnership.
As of March 31, 1996, the Partnership owned equipment held for lease with
a purchase price of $31,000 and a net book value of $0, compared to $47,000 and
$0, respectively, at March 31, 1995. The General Partner is actively engaged, on
behalf of the Partnership, in remarketing and selling the Partnership's
off-lease equipment portfolio.
The Limited Partners received $165,000 and $164,000 in cash distributions
during both the three months ended March 31, 1996 and 1995, respectively. As a
result, the cumulative cash distributions to the Limited Partners are
$28,604,000 and $28,121,000 as of March 31, 1996 and 1995, respectively. The
General Partner received cash distributions of $1,000 and $0 during the three
months ended March 31, 1996 and 1995, respectively. In addition, the General
Partner received payment of liquidation fees of $21,000 and $22,000 during the
three months ended March 31, 1996 and 1995, respectively. Due to the decrease in
the cash generated by leasing operations, the Partnership is no longer making
quarterly cash distributions to Partners. Distributions are now being made on an
annual basis with the annual distribution date being January 15.
The General Partner is entitled to 11.688% of all cash distributions.
Distributions in excess of the General Partners' capital account are
characterized as liquidation fees. The total liquidation fee paid to the General
Partner will not exceed 11.688% of the sum of the net contributed capital and
cumulative net profits and losses. The fee represents an expense of the
Partnership and is specially allocated to the Limited Partners.
Cash generated from leasing and financing operations has been and is
anticipated to continue to be sufficient to meet the Partnership's on-going
operational expenses.
Page 10 of 11
PHOENIX LEASING INCOME FUND 1977
March 31, 1996
Part II. Other Information.
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults Upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of Securities Holders. Inapplicable
Item 5. Other Information. Inapplicable
Item 6. Exhibits and Reports on 8-K:
a) Exhibits: None
(27) Financial Data Schedule
b) Reports on 8-K: None
Page 11 of 11
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.
PHOENIX LEASING INCOME FUND 1977
--------------------------------
(Registrant)
Date Title Signature
---- ----- ---------
May 13, 1996 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- ---------------------- Senior Vice President -----------------------
and Treasurer of (Paritosh K. Choksi)
Phoenix Leasing Incorporated
General Partner
May 13, 1996 Senior Vice President, /S/ BRYANT J. TONG
- ---------------------- Financial Operations -----------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Incorporated
General Partner
May 13, 1996 Senior Vice President of /S/ GARY W. MARTINEZ
- ---------------------- Phoenix Leasing Incorporated -----------------------
General Partner (Gary W. Martinez)
May 13, 1996 Partnership Controller /S/ MICHAEL K. ULYATT
- ---------------------- Phoenix Leasing Incorporated -----------------------
General Partner (Michael K. Ulyatt)