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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission file number 0-14461
INTEGRATED RESOURCES AMERICAN LEASING INVESTORS VII-A,
A California Limited Partnership
(Exact name of registrant as specified in its charter)
CALIFORNIA 13-3244529
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
411 West Putnam Avenue, Greenwich, CT 06830
(Address of principal executive offices)
(203) 862-7000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check 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 [ ]
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INTEGRATED RESOURCES,
AMERICAN LEASING INVESTORS VII-A,
A CALIFORNIA LIMITED PARTNERSHIP
FORM 10-Q - MARCH 31, 1996
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS - March 31, 1996 and December 31, 1995
STATEMENTS OF OPERATIONS - For the three months ended
March 31, 1996 and 1995
STATEMENT OF PARTNERS' EQUITY - For the three months ended
March 31, 1996
STATEMENTS OF CASH FLOWS - For the three months ended
March 31, 1996 and 1995
NOTES TO FINANCIAL STATEMENTS
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORT ON FORM 8-K
SIGNATURES
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
INTEGRATED RESOURCES
AMERICAN LEASING INVESTORS VII-A,
A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS
March 31, December 31,
1996 1995
----------- -----------
ASSETS
Leased equipment - net of accumulated
depreciation of $5,196,040 and $5,392,575
and allowance for equipment impairment
of $1,652,757 and $1,699,977 ............ $ 1,856,027 $ 2,078,535
Cash and cash equivalents ................... 295,987 177,089
Accounts receivable ......................... 100,015 333,283
Other receivables ........................... 1,176 7,284
----------- -----------
$ 2,253,205 $ 2,596,191
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Distributions payable ....................... $ 171,030 $ 100,606
Accounts payable and accrued expenses ....... 26,066 47,987
Due to affiliates ........................... 3,536 4,208
Note payable ................................ -- 231,176
----------- -----------
Total liabilities .................... 200,632 383,977
----------- -----------
Commitments and contingencies
Partners' equity
Limited partners' equity (19,920 units issued
and outstanding) ......................... 2,130,653 2,288,698
General partners deficit .................... (78,080) (76,484)
----------- -----------
Total partners' equity ................... 2,052,573 2,212,214
----------- -----------
$ 2,253,205 $ 2,596,191
=========== ===========
See notes to financial statements.
INTEGRATED RESOURCES
AMERICAN LEASING INVESTORS VII-A,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the three months ended
March 31,
--------------------------
1996 1995
-------- --------
Revenues
Rental ............................................... $169,268 $233,441
Interest ............................................. 3,380 2,713
-------- --------
172,648 236,154
-------- --------
Costs and expenses
Depreciation ......................................... 140,577 144,497
General and administrative ........................... 16,650 21,751
Fees to affiliates ................................... 9,651 11,078
Interest ............................................. -- 8,684
-------- --------
166,878 186,010
-------- --------
5,770 50,144
Gain on disposition of equipment ....................... 5,619 --
-------- --------
Net income ............................................. $ 11,389 $ 50,144
======== ========
Net income attributable to
Limited partners ..................................... $ 11,275 $ 49,643
General partners ..................................... 114 501
-------- --------
$ 11,389 $ 50,144
======== ========
Net income per unit of limited partnership interest
(19,920 units outstanding) ........................... $ 0.57 $ 2.49
======== ========
See notes to financial statements
INTEGRATED RESOURCES
AMERICAN LEASING INVESTORS VII-A,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' EQUITY
Limited General Total
Partners' Partners' Partners'
Equity Deficit Equity
----------- ----------- -----------
Balance, January 1, 1996 ..................... $ 2,288,698 $ (76,484) $ 2,212,214
Net income for the three months
ended March 31, 1996 ..................... 11,275 114 11,389
Distributions to partners for the three months
ended March 31, 1996 ($8.50 per limited
partnership unit) ........................ (169,320) (1,710) (171,030)
----------- ----------- -----------
Balance, March 31, 1996 ...................... $ 2,130,653 $ (78,080) $ 2,052,573
=========== =========== ===========
See notes to financial statements
INTEGRATED RESOURCES
AMERICAN LEASING INVESTORS VII-A,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the three months ended
March 31,
--------------------------
1996 1995
--------- ---------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net income ..................................... $ 11,389 $ 50,144
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation ............................ 140,577 144,497
Gain on disposition of equipment ........ (5,619) --
Changes in assets and liabilities
Accounts receivable ......................... 233,268 124,326
Other receivables ........................... 6,108 200
Accounts payable and accrued expenses ....... (21,921) (9,758)
Due to affiliates ........................... (672) --
--------- ---------
Net cash provided by operating activities 363,130 309,409
--------- ---------
Cash flows from investing activities
Proceeds from disposition of equipment ......... 87,550 15,475
Other non-operating payments ................... -- (800)
--------- ---------
Net cash provided by investing activities 87,550 14,675
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Cash flows from financing activities
Distributions to partners ...................... (100,606) (80,485)
Principal payments on notes payable ............ (231,176) (212,248)
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Net cash used in financing activities ... (331,782) (292,733)
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Net increase in cash and cash equivalents ........... 118,898 31,351
Cash and cash equivalents, beginning of period ...... 177,089 198,252
--------- ---------
Cash and cash equivalents, end of period ............ $ 295,987 $ 229,603
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Supplemental disclosure of cash flow information
Interest paid .................................. $ 7,712 $ 20,011
========= =========
See notes to financial statements
INTEGRATED RESOURCES
AMERICAN LEASING INVESTORS VII-A,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1 INTERIM FINANCIAL INFORMATION
The summarized financial information contained herein is unaudited;
however, in the opinion of management, all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of such
financial information have been included. The accompanying financial
statements, footnotes and discussion should be read in conjunction with
the financial statements, related footnotes and discussions contained
in the Integrated Resources American Leasing Investors VII-A, a
California Limited Partnership (the "Partnership") annual report on
Form 10-K for the year ended December 31, 1995. The results of
operations for the three months ended March 31, 1996 are not
necessarily indicative of the results to be expected for the full year.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Leased equipment
The cost of leased equipment represents the initial cost of the
equipment to the Partnership plus miscellaneous acquisition and closing
costs, and is carried at the lower of depreciated cost or net
realizable value.
Depreciation is computed using the straight-line method, over the
estimated useful lives of such assets (20 years for the seismic vessel
and 13 years for transportation equipment).
When equipment is sold or otherwise disposed of, the cost and
accumulated depreciation (and any related allowance for equipment
impairment) are removed from the accounts and any gain or loss on such
sale or disposal is reflected in operations. Normal maintenance and
repairs are charged to operations as incurred. The Partnership provides
allowances for equipment impairment based upon a quarterly review of
all equipment in its portfolio, when management believes that, based
upon market analysis, appraisal reports and leases currently in place
with respect to specific equipment, the investment in such equipment
may not be recoverable.
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The corporate general partner of the Partnership, ALI Capital Corp.
(the "Corporate General Partner"), the managing general partner of the
Partnership, ALI Equipment Management Corp. ("Equipment Management"),
and Integrated Resources Equipment Group, Inc. ("IREG") are wholly
owned subsidiaries of Presidio Capital Corp. ("Presidio"). Z Square G
Partners II was the associate general partner of the Partnership
through February 27, 1995. On February 28, 1995, Presidio Boram Corp.,
a subsidiary of Presidio, became the associate general partner. Other
limited partnerships and similar investment programs have been formed
by Equipment Management or its affiliates to acquire equipment and,
accordingly, conflicts of interest may arise between the Partnership
and such other limited partnerships. Affiliates of Equipment Management
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
have also engaged in businesses related to the management of equipment
and the sale of various types of equipment and may transact business
with the Partnership.
Subject to the rights of the Limited Partners under the Limited
Partnership Agreement, Presidio will control the Partnership through
its direct or indirect ownership of all the shares of Equipment
Management, the Corporate General Partner and, as of February 28, 1995,
the associate general partner. Presidio is managed by Presidio
Management Company, LLC ("Presidio Management"), a company controlled
by a director of Presidio. Presidio Management is responsible for the
day-to-day management of Presidio and, among other things, has
authority to designate directors of Equipment Management, the Corporate
General Partner and the associate general partner. In March 1996,
Presidio Management assigned its agreement for the day-to-day
management of Presidio to Wexford Management LLC ("Wexford").
Presidio is a liquidating company. Although Presidio has no immediate
plans to do so, it will ultimately seek to dispose of the interests it
acquired from Integrated Resources, Inc. through liquidation; however,
there can be no assurance of the timing of such transaction or the
effect it may have on the Partnership.
In March 1995, Presidio elected new directors for Equipment Management.
Wexford Management Corp., formerly Concurrency Management Corp.,
provides management and administrative services to Presidio, its direct
and indirect subsidiaries, as well as to the Partnership. Effective
January 1, 1996, Wexford Management Corp. assigned its agreement to
provide management and administrative services to Presidio and its
subsidiaries to Wexford. During the three months ended March 31, 1996,
reimbursable expenses to Wexford by the Partnership amounted to $5,855.
The Partnership has a management agreement with IREG, pursuant to which
IREG would receive 5% of annual gross rental revenues on operating
leases; 2% of annual gross rental revenues on full payout leases which
contain net lease provisions; and 1% of annual gross rental revenues if
services are performed by third parties under the active supervision of
IREG, as defined in the Limited Partnership Agreement. During the three
months ended March 31, 1996 and 1995, the Partnership incurred expenses
of $6,440 and $7,724, respectively, for such management services.
During the operating and sale stage of the Partnership, IREG is
entitled to a partnership management fee equal to 4% of distributions
of distributable cash from operations, as defined in the Limited
Partnership Agreement, subject to increase after the limited partners
have received certain specified minimum returns on their investment.
During the three months ended March 31, 1996 and 1995, the Partnership
incurred partnership management fees of $3,211 and $3,354,
respectively. Such amounts are included in fees to affiliates in the
statements of operations.
The general partners are entitled to 1% of distributable cash from
operations and cash from sales and an allocation of 1% of taxable net
income or loss of the Partnership.
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
During the operating and sale stage of the Partnership, IREG may be
entitled to receive certain other fees which are subordinated to the
receipt by the limited partners of their original invested capital and
certain specified minimum returns on their investment.
Upon the ultimate liquidation of the Partnership, the general partners
may be required to remit to the Partnership certain payments
representing capital account deficit restoration based upon a formula
provided within the Limited Partnership Agreement. Such restoration
amount may be less than the recorded general partners' deficit, which
could result in distributions to the limited partners of less than
their recorded equity.
In April 1995, Equipment Management and certain affiliates entered into
an agreement with Fieldstone Private Capital Group, L.P. ("Fieldstone")
pursuant to which Fieldstone performs certain management and
administrative services relating to the Partnership as well as certain
other partnerships in which Equipment Management serves as general
partner. Substantially all costs associated with the retention of
Fieldstone will be paid by Equipment Management.
4 DISTRIBUTIONS TO PARTNERS
Distributions payable to Limited Partners and General Partners of
$169,320 ($8.50 per unit) and $1,710, respectively, at March 31, 1996
and were paid in May 1996.
5 DUE TO AFFILIATES
The amounts due to affiliates of $3,536 and $4,208 at March 31, 1996
and December 31, 1995 represent Partnership management fees.
6 EQUIPMENT SALES - 1996
On February 8, 1996, the Partnership entered into an agreement (the
"Agreement") with an unaffiliated third party (the "Purchaser") which
provides for the sale of 324 dry van piggyback trailers (the
"Trailers") upon their return from the lessee. Pursuant to the terms of
the Agreement, redelivery of the Trailers commenced on or about January
2, 1996 and will continue through the earlier of the date at which all
Trailers have been delivered and December 31, 1996. The purchase price
for each Trailer, which is redelivered on or before March 31, 1996 is
$2,575 (the "Purchase Price"). The Purchase Price for any Trailer
redelivered subsequent to March 31, 1996 will be adjusted based on such
redelivery date. The adjusted Purchase Price is calculated by reducing
the Purchase Price by $15 for every week (seven day period) that
elapses from April 1, 1996 through December 31, 1996. As of March 31,
1996, 34 Trailers have been transferred to and accepted by Purchaser.
The 34 Trailers were sold for sales proceeds aggregating $87,550. At
the time of the sale, the net carrying value of the 34 Trailers was
$81,931. The 34 Trailers had originally been acquired in January 1986
for an aggregate purchase cost of $466,264, inclusive of associated
acquisition costs.
6 EQUIPMENT SALES - 1996 (continued)
In addition, the basic term of the lease expired effective December 31,
1995, but each Trailer remains subject to the terms of its lease until
the date it is redelivered by lessee in compliance with the return
conditions defined in the lease agreement. At present, the return dates
of the Trailers which remain on lease have not been finalized.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership declared a cash distribution of $8.50 per unit of
limited partnership interest totaling $171,030 for the quarter ended
March 31, 1996. The source of the distribution was primarily cash from
operations and cash from sales generated during the current quarter. At
March 31, 1996, the Partnership had operating reserves of $196,500
which was comprised of undistributed cash from operations of $96,910 as
well as the general working capital reserve of $99,590.
The Partnership anticipates that its cash for operations expected to be
available for distributions and to pay operating expenses during the
first six months of 1996 will continue to be provided from cash
generated by the lease of a certain Seismic Vessel (the "Seismic
Vessel") to Western Atlas International. Such lease expires June 30,
1996.
The Partnership is investigating possible sale or lease opportunities
with respect to the Seismic Vessel at the expiration of its lease.
There can be no assurance that the Partnership will be successful in
its efforts.
On February 8, 1996, the Partnership entered into an agreement (the
"Agreement") with an unaffiliated third party (the "Purchaser") which
provides for the sale of 324 dry van piggyback trailers (the
"Trailers") upon their return from the lessee. Pursuant to the terms of
the Agreement, redelivery of the Trailers will commence on or about
January 2, 1996 and continue through the earlier of the date at which
all Trailers have been delivered and December 31, 1996. The purchase
price for each Trailer, which is redelivered on or before March 31,
1996 is $2,575 (the "Purchase Price"). The Purchase Price for any
Trailer redelivered subsequent to March 31, 1996 will be adjusted based
on such redelivery date. The adjusted Purchase Price is calculated by
reducing the Purchase Price by $15 for every week (seven day period)
that elapses from April 1, 1996 through December 31, 1996. As of March
31, 1996, 34 Trailers have been transferred to and accepted by
Purchaser.
In addition, the basic term of the lease expired effective December 31,
1995, but each Trailer remains subject to the terms of its lease until
the date it is redelivered by lessee in compliance with the return
conditions defined in the lease agreement. At present, the return dates
of the Trailers which remain on lease have not been finalized.
The Partnership's leasing arrangements include fixed rentals which
provide sufficient funds for the Partnership to meet its cash
requirements for the six months ended June 30, 1996 when the lease of
Seismic Vessel is scheduled to terminate. In the future, liquidity and
distribution levels may fluctuate based upon (I) the results of the
Partnership's efforts to sell or re-lease the Seismic Vessel when the
lease relating to such equipment expires (ii) closing the sale of the
Trailers as mentioned above, and (iii) requirements for operating
reserves, if any.
Liquidity and Capital Resources (continued)
At present, the level of fees payable to IREG for services rendered to
the Partnership and other affiliated equipment leasing partnerships is
declining. The effect of this situation cannot be determined at this
point. The management agreements between the Partnership and IREG may
be terminated by either party to such agreements.
In April 1995, the Managing General Partner and certain affiliates
entered into an agreement with Fieldstone pursuant to which Fieldstone
performs certain management and administrative services relating to the
Partnership as well as certain other partnerships in which the Managing
General Partner serves as general partner. Substantially, all costs
associated with the retention of Fieldstone will be paid by the
Managing General Partner.
On February 28, 1995, Presidio Boram Corp., a subsidiary of Presidio,
became the Associate General Partner upon the withdrawal of Z Square G
Partners II, the former Associate General Partner.
Inflation and changing prices have not had any material effect on the
Partnership's revenues since its inception, nor does the Partnership
anticipate any material effect on its business from these factors.
The Partnership had no outstanding material commitments for capital
expenditures as of March 31, 1996.
Results of Operations
Net income decreased for the three months ended March 31, 1996 as
compared with the prior year's period, primarily due to a decrease in
revenues partially offset by an overall decrease in expenses.
The Partnership's rental revenues decreased for the three months ended
March 31, 1996, due to a reduction of Trailers on lease. During the
quarter ended March 31, 1996, 34 Trailers were returned by the lessee
and sold as discussed previously.
Expenses decreased for the three months ended March 31, 1996 in
comparison to the prior year's period. There was no interest expense
for the quarter ended March 31, 1996, due to the repayment of the
principal amount of outstanding indebtedness by the application of
rental payments on the leveraged transaction. The debt on such
transaction was retired on January 2, 1996. Depreciation expense
decreased as a result of the Trailer sales. Fees to affiliates
decreased due to the reduction in equipment management fees as a result
of the decrease in rentals in which such fees are based.
A gain was recognized during the quarter ended March 31, 1996 due to
the Trailer sales. No gain was recognized in the comparable period.
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: None
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.
Integrated Resources
American Leasing Investors VII-A,
a California Limited Partnership
By: ALI Equipment Management Corp.
Managing General Partner
/S/ Douglas J. Lambert
-----------------------------------
Douglas J. Lambert
President (Principal Executive and
Financial Officer)
Date: May 15, 1996