Page 1 of 28
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ----- ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996 Commission File Number 0-8868
PHOENIX LEASING INCOME FUND 1977
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
California 94-2446904
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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
--------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest
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. ________
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 ___
As of December 31, 1996, 16,521 Units of Limited Partnership interest were
outstanding. No market exists for the Units of Partnership interest and
therefore there exists no aggregate market value at December 31, 1996.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
Page 2 of 28
PHOENIX LEASING INCOME FUND 1977
1996 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Page
PART I
Item 1. Business.................................................. 3
Item 2. Properties................................................ 4
Item 3. Legal Proceedings......................................... 4
Item 4. Submission of Matters to a Vote of Security Holders....... 4
PART II
Item 5. Market for the Registrant's Securities and Related
Security Holder Matters.................................. 4
Item 6. Selected Financial Data................................... 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 6
Item 8. Financial Statements and Supplementary Data............... 8
Item 9. Disagreements on Accounting and Financial Disclosure...... 24
PART III
Item 10. Directors and Executive Officers of the Registrant........ 24
Item 11. Executive Compensation.................................... 25
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................... 25
Item 13. Certain Relationships and Related Transactions............ 26
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K................................................. 26
Signatures......................................................... 27
Page 3 of 28
PART I
Item 1. Business.
Summary of Business Activities.
Phoenix Leasing Income Fund 1977, a California limited partnership (the
"Partnership"), was organized on June 30, 1976. The Partnership was registered
with the Securities and Exchange Commission with an effective date of August 24,
1977 and shall continue to operate until its termination date unless dissolved
sooner due to the sale of substantially all of the assets of the Partnership or
a vote of the Limited Partners. The Partnership will terminate on December 31,
1997. The General Partners originally consisted of Phoenix Leasing Incorporated,
a California corporation and three individual General Partners, Gus Constantin,
Daniel B. Murray and Paul J. Ronan. The General Partners remaining are Phoenix
Leasing Incorporated and Gus Constantin. The General Partners or their
affiliates also are or have been a general partner in several other limited
partnerships formed to invest in capital equipment and other assets.
The initial public offering was for 20,000 units of limited partnership
interest at a price of $1,000 per unit. The Partnership sold 20,000 units for a
total capitalization of $20,000,000. Of the proceeds received through the
offering, the Partnership has incurred $2,163,000 in organizational and offering
expenses.
From the initial formation of the Partnership through December 31,
1996, the total investments in equipment leases and financing transactions
(loans), including the Partnership's pro-rata interest in investments made by
joint ventures, approximate $52,470,000. The average initial firm term of
contractual payments from equipment subject to lease was 23.43 months, and the
average initial net monthly payment rate as a percentage of the original
purchase price was 3.09%. The average initial firm term of contractual payments
from loans was 65 months.
The Partnership's principal objective is to produce current income and
to build and maintain a balanced portfolio of leases and loans, through the
acquisition and financing of various types of assets including computer
peripherals, terminal systems, small computer systems, communications equipment,
IBM-software compatible mainframes, office systems and telecommunications
equipment and to lease such equipment and products to third parties pursuant to
either Operating Leases or Full Payout Leases.
The principal markets for the types of equipment in which the
Partnership has invested are (1) major corporations and other large
organizations seeking to reduce the cost of their peripheral equipment and large
computer systems, (2) major corporations with numerous operating locations
seeking to improve the timeliness and responsiveness of their data processing
systems, and (3) small organizations interested in improving the efficiency of
their overall operations by moving from manually operated to small
computer-based management systems.
In addition to acquiring equipment for lease to third parties, the
Partnership either directly or through the investment in Joint Ventures, has
provided limited financing to certain emerging growth companies, manufacturers
and their lessees with respect to equipment leased directly by such
manufacturers to third parties. The Partnership maintains a security interest in
the equipment financed and in the receivables due under any lease or rental
agreement relating to such equipment. Such security interests will give the
Partnership the right, upon a default by the manufacturer or lessee, to obtain
possession of the equipment.
The Partnership will not incur debt to finance the purchase of
equipment. However, the Registrant can enter into joint venture agreements with
certain other partnerships managed by the General Partner which would finance
the acquisition of equipment through the use of indebtedness which would be
nonrecourse to the Partnership.
Competition. The equipment leasing industry is highly competitive.
Leases are offered on a wide variety of equipment ranging from construction
equipment to entire manufacturing facilities. The equipment leasing industry
offers to users an alternative to the purchase of nearly every type of
equipment. The General Partner intends to concentrate the Partnership's
activities, however, in markets in which the General Partner has expertise. The
computer equipment industry is extremely competitive. Competitive factors
include pricing, technological innovation and methods of financing (including
use of various short-term and long-term financing plans, as well as the outright
purchase of equipment). Generally, the impact of these factors to the
Partnership would be the realization of increased equipment remarketing and
storage costs, as well as lower residuals received from the sale or remarketing
of such equipment.
Page 4 of 28
There is strong competition in non-computer related equipment markets
in which the Partnership will engage as well. There is, however, no single
dominant company or factor in those other markets.
Other.
A brief description of the type of assets in which the Partnership has
invested as of December 31, 1996, together with information concerning the uses
of assets is set forth in Item 2.
Item 2. Properties.
The Partnership is engaged in the equipment leasing and financing
industry and as such, does not own or operate any principal plants, mines or
real property. The primary assets held by the Partnership are its investments in
leases and loans either directly or through its investment in joint ventures.
As of December 31, 1996, the Partnership owns equipment and has
outstanding loans to borrowers with an aggregate original cost of $666,000. The
equipment and loans have been made to customers located throughout the United
States. The following table summarizes the type of equipment owned or financed
by the Partnership, including its pro rata interest in joint ventures, at
December 31, 1996.
Percentage of
Asset Types Purchase Price(1) Total Assets
----------- ----------------- ------------
(Amounts in Thousands)
Financing Related to Cable TV Systems $500 75%
Reproduction Equipment 99 15
Small Computer Systems 47 7
Financing of Solar Systems 20 3
---- ----
TOTAL $666 100%
==== ====
(1) These amounts include the Partnership's pro rata interest in equipment
joint ventures of $89,000, financing joint ventures of $20,000, and
original cost of outstanding loans of $500,000, at December 31, 1996.
Item 3. Legal Proceedings.
The Registrant is not a party to any pending legal proceedings which
would have a material adverse impact on its financial position.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of Limited Partners, through the
solicitation of proxies or otherwise, during the year covered by this report.
PART II
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters.
(a) The Registrant's limited partnership interests are not publicly
traded. There is no market for the Registrant's limited
partnership interests and it is unlikely that any will develop.
(b) Approximate number of equity security investments:
Number of Unit Holders
Title of Class as of December 31, 1996
---------------------------------- -----------------------
Limited Partners 1,943
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Item 6. Selected Financial Data.
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(Amounts in Thousands Except for Per Unit Amounts)
Total Income $ 79 $ 259 $ 239 $ 188 $ 230
Net Income (Loss) (244) 159 161 31 29
Total Assets 959 1,370 1,763 1,769 1,975
Distributions to Partners 164 532 165 248 124
Net Income (Loss) per Limited
Partnership Unit (13.19) 8.42 8.46 1.41 1.42
Distributions per Limited
Partnership Unit 9.95 29.22 9.98 15.00 7.50
The above selected financial data should be read in conjunction with
the financial statements and related notes appearing elsewhere in this report.
Page 6 of 28
Item 7. 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
$244,000 during the year ended December 31, 1996, as compared to net income of
$159,000 and $161,000 for the years ended December 31, 1995 and 1994,
respectively. The decreased earnings during 1996 is attributable to the decrease
in total revenues combined with an increase in total expenses.
Total revenues decreased by $180,000 during 1996, as compared to the same
period in 1995, and increased by $20,000 during 1995, as compared to the same
period in 1994. During the year ended December 31, 1995 the Partnership received
payment for the settlement of two outstanding notes receivable from cable
television system operators that had been in default and the Partnership had
suspended the accrual of interest income. The amount received in excess of the
net carrying value of these notes was recognized as interest income. There were
no such payments during 1996.
Rental income decreased during the year ended December 31, 1996, primarily
as a result of the majority of the remaining equipment lease portfolio being off
lease. Because the Partnership is in its liquidation stage, it is not expected
that the Partnership will acquire additional equipment. As a result, revenues
from equipment leasing activities are expected to decline as the portfolio is
liquidated and the remaining equipment is re-leased at lower rental rates.
Rental income increased slightly during 1995, primarily as a result of the
recognition as rental income of prepaid rent that had previously been recorded
as a liability. During this period it was determined that these payments were no
longer a liability and the amount was subsequently recognized as rental income.
Other income increased during 1995, as compared to the same period in 1994, due
to the increase in the Partnership's cash balances combined with an increase in
interest rates earned on such balances. At December 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 $78,000 at December
31, 1995.
Total expenses increased by $223,000 and $22,000 during 1996 and 1995,
respectively, as compared to the same periods in the previous year. The increase
during 1996 is primarily the result of increased legal expenses and the
additional provision booked for its remaining note receivable from a cable
television system operator that is in default. Based on a recent appraisal of
the cable systems collateralizing this impaired note, the carrying value of the
note receivable exceeded the market value of the cable systems and the
Partnership recognized an additional provision for losses of $182,000 during the
year ended December 31, 1996. The increased expenses during 1995, as compared to
1994, is primarily the result of an increase in management fees to the General
Partner. The increase in management fees is the direct result of the receipt of
a payoff on the outstanding notes receivable during 1995.
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 generally are anticipated to continue to decline as the portfolios
are re-leased at lower rental rates and eventually liquidated.
Earnings from joint ventures increased by $4,000 during 1996, as compared
to 1995, and decreased by $38,000 during 1995, as compared to the same period in
1994. The small increase in earnings during 1996 was due to one joint venture's
increased net income due to decreasing expenses in excess of decreasing
revenues. Earnings decreased during 1995 due to the closure of several joint
ventures during 1995. Overall, the joint ventures experienced a decrease in
total expenses, such as depreciation and lease related expenses. The equipment
owned by several of the joint ventures has been fully depreciated thereby
causing depreciation expense to decline. Lease related expenses decreased in one
joint venture as a result of decreases in remarketing, refurbishing and
maintenance expenses.
Inflation affects the Partnership in relation to the current cost of
equipment placed on lease and the residual values realized when the equipment
comes off-lease and is sold. During the last several years inflation has been
low, thereby having very little impact upon the Partnership.
Page 7 of 28
Liquidity and Capital Resources
The Partnership's primary source of liquidity comes from rental and note
receipts. The Partnership has contractual obligations from lessees and borrowers
for fixed terms at stated amounts. The Partnership also has investments in
equipment leasing and financing joint ventures in which it receives a share of
the profits and receives cash distributions. 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 $117,000 during 1996, as compared to $633,000 and $184,000 provided by
leasing and financing activities during 1995 and 1994, respectively. This
decrease is due to the majority of the Partnership's assets having been
liquidated. The cash flow was higher during 1995 due to the payoff of two notes
receivable from cable television system operators that had been in default. At
December 31, 1996, the Partnership has one remaining note receivable from a
cable television system operator that is in default and is not currently
providing any cash flows to the Partnership.
Distributions from joint ventures declined $26,000 for the year ended
December 31, 1996 as compared to 1995, yet increased $22,000 during the year
ended December 31, 1995 as compared to 1994. Distributions from joint ventures
consisted primarily of cash received from the Partnership's investments in
equipment joint ventures. The decrease in distributions, during 1996, is due to
the closure of some equipment joint ventures during the year ended December 31,
1995. This decrease was offset by the increased distribution from a new
equipment joint venture that was formed upon the receipt of a legal settlement
during October of 1994.
The Partnership owned equipment held for lease with a purchase price of
$31,000 and a net book value of $0 at December 31, 1996, 1995 and 1994. 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 $164,000, $483,000 and $165,000 in cash
distributions during the years ended December 31, 1996, 1995 and 1994,
respectively. As a result, the cumulative cash distributions to the Limited
Partners are $28,604,000, $28,440,000 and $27,957,000 as of December 31, 1996,
1995 and 1994, respectively. The General Partner did not receive cash
distributions during the 1996 and 1994, but did receive cash distributions of
$49,000 during 1995. In addition, the General Partner received payment of
liquidation fees of $22,000, $14,000 and $22,000 during 1996, 1995 and 1994,
respectively. The Partnership made a special cash distribution to partners on
October 15, 1995, due to the increase in its cash balance resulting from the
receipt of payoffs from two notes receivable from cable television system
operators that had been in default. 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. However, since the
Partnership is closing this year the next distribution to partners is expected
to be made at the termination of the Partnership. The amount of the distribution
will be dependent upon the amount of cash available after the Partnership
liquidates its remaining assets and liabilities. The Partnership will reach the
end of its term on December 31, 1997.
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.
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Actual results could differ from those anticipated by some of the statements
made above. Limited Partners are cautioned that such forward-looking statements
involve risks and uncertainties including without limitation the following: (i)
the Partnership's plans are subject to change at any time at the discretion of
the General Partner of the Partnership, (ii) future technological developments
in the industry in which the Partnership operates, (iii) competitive pressure on
pricing or services, (iv) substantial customer defaults or cancellations, (v)
changes in business conditions and the general economy, (vi) changes in
government regulations affecting the Partnership's core businesses and (vii) the
ability of the Partnership to sell its remaining assets.
Page 8 of 28
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PHOENIX LEASING INCOME FUND 1977
YEAR ENDED DECEMBER 31, 1996
Page 9 of 28
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Phoenix Leasing Income Fund 1977:
We have audited the accompanying balance sheets of Phoenix Leasing Income Fund
1977 (a California limited partnership) as of December 31, 1996 and December 31,
1995, and the related statements of operations, partners' capital, and cash
flows for each of the three years in the period ended December 31, 1996. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Phoenix Leasing Income Fund
1977 as of December 31, 1996 and December 31, 1995, and the results of its
operations, partners' capital and the cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in Item
14, Subsection (a)2 are presented for purposes of complying with the Securities
and Exchange Commission's rules and regulations under the Securities Exchange
Act of 1934 and are not otherwise a required part of the basic financial
statements. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to be
set forth therein in relation to the basic financial statements taken as a
whole.
San Francisco, California KROHN AND CROAK
January 17, 1997
Page 10 of 28
PHOENIX LEASING INCOME FUND 1977
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
December 31,
1996 1995
---- ----
ASSETS
Cash and cash equivalents $ 369 $ 595
Accounts receivable (net of allowance for losses on
accounts receivable of $0 and $1 at December 31,
1996 and 1995, respectively) 17 1
Notes receivable (net of allowance for losses on
notes receivable of $274 and $92 at December 31,
1996 and 1995) 525 707
Equipment on operating leases and held for lease (net of
accumulated depreciation of $15 and $31 at
December 31, 1996 and 1995, respectively) -- --
Investment in joint ventures 44 64
Other assets 4 4
------ ------
Total Assets $ 959 $1,371
====== ======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 39 $ 44
------ ------
Total Liabilities 39 44
------ ------
Partners' Capital:
General Partners (26) --
Limited Partners, 20,000 units authorized and
issued, 16,521 units outstanding at December 31,
1996 and 1995 945 1,327
Unrealized gains on available-for-sale securities 1 --
------ ------
Total Partners' Capital 920 1,327
------ ------
Total Liabilities and Partners' Capital $ 959 $1,371
====== ======
The accompanying notes are an integral
part of these statements.
Page 11 of 28
PHOENIX LEASING INCOME FUND 1977
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
For the Years Ended December 31,
1996 1995 1994
----- ----- -----
INCOME
Rental income $ 6 $ 41 $ 27
Equity in earnings from joint ventures, net 32 28 66
Interest income, notes receivable 17 156 60
Settlement -- -- 70
Other income 24 34 16
------ ----- -----
Total Income 79 259 239
------ ----- -----
EXPENSES
Depreciation -- -- 15
Lease related operating expenses -- -- 2
Management fees to General Partner 2 37 11
Liquidation fees to General Partner 22 14 22
Provision for (recovery of) losses on
receivables 182 5 (15)
Legal Expense 86 4 7
General and administrative expenses 31 40 36
------ ----- -----
Total Expenses 323 100 78
------ ----- -----
NET INCOME (LOSS) $ (244) $ 159 $ 161
====== ===== =====
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $(13.19) $ 8.42 $ 8.46
====== ===== =====
ALLOCATION OF NET INCOME (LOSS):
General Partners $ (26) $ 20 $ 21
Limited Partners (218) 139 140
------ ----- -----
$ (244) $ 159 $ 161
====== ===== =====
The accompanying notes are an integral
part of these statements.
Page 12 of 28
PHOENIX LEASING INCOME FUND 1977
STATEMENTS OF PARTNERS' CAPITAL
(Amounts in Thousands Except for Unit Amounts)
General
Partners' Limited Partners' Unrealized Total
Amount Units Amount Gains Amount
------ ----- ------ ----- ------
Balance, December 31, 1993 $ 8 16,521 $ 1,696 $ -- $ 1,704
Distributions to partners ($9.98 per limited
partnership unit) -- -- (165) -- (165)
Net income 21 -- 140 -- 161
------- ------- ------- ------- -------
Balance, December 31, 1994 29 16,521 1,671 -- 1,700
Distributions to partners ($29.22 per limited
partnership unit) (49) -- (483) -- (532)
Net income 20 -- 139 -- 159
------- ------- ------- ------- -------
Balance, December 31, 1995 -- 16,521 1,327 -- 1,327
Distributions to partners ($9.95 per limited
partnership unit) -- -- (164) -- (164)
Unrealized gains on available-for-sale
securities -- -- -- 1 1
Net loss (26) -- (218) -- (244)
------- ------- ------- ------- -------
Balance, December 31, 1996 $ (26) 16,521 $ 945 $ 1 $ 920
======= ======= ======= ======= =======
The accompanying notes are an integral
part of these statements.
Page 13 of 28
PHOENIX LEASING INCOME FUND 1977
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
For the Years Ended December 31,
1996 1995 1994
---- ---- ----
Operating Activities:
Net income (loss) $(244) $ 159 $ 161
Adjustments to reconcile net income(loss) to
net cash provided (used) by operating
activities:
Depreciation -- -- 15
Loss (gain) on sale of equipment (1) (1) 5
Equity in earnings from joint ventures, net (32) (28) (66)
Recovery of early termination, financing
leases -- (3) (5)
Provision for losses on notes receivable 182 -- --
Provision for (recovery of) losses on
accounts receivable -- 8 (10)
Gain on sale of securities (1) -- --
Settlement -- -- (42)
Decrease (increase) in accounts receivable (16) 1 9
Decrease in accounts payable and
accrued expenses (5) (19) (2)
Decrease in other assets -- 6 --
----- ----- -----
Net cash provided (used) by operating activities (117) 123 65
----- ----- -----
Investing Activities:
Principal payments, financing leases -- 3 38
Principal payments, notes receivable -- 507 81
Proceeds from sale of equipment 1 1 2
Proceeds from sale of securities 2 -- --
Distributions from joint ventures 52 78 56
Purchase of equipment -- -- (43)
----- ----- -----
Net cash provided by investing activities 55 589 134
----- ----- -----
Financing Activities:
Distributions to partners (164) (532) (165)
----- ----- -----
Net cash used by financing activities (164) (532) (165)
----- ----- -----
Increase (decrease) in cash and cash equivalents (226) 180 34
Cash and cash equivalents, beginning of period 595 415 381
----- ----- -----
Cash and cash equivalents, end of period $ 369 $ 595 $ 415
===== ===== =====
The accompanying notes are an integral
part of these statements.
Page 14 of 28
PHOENIX LEASING INCOME FUND 1977
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1. Organization and Partnership Matters.
Phoenix Leasing Income Fund 1977, a California limited partnership (the
"Partnership"), was formed on June 30, 1976, to invest in capital equipment of
various types and to lease such equipment to third parties on either a long-term
or short-term basis. Minimum investment requirements were met September 30,
1977, at which time the Partnership commenced operations. The Partnership will
terminate on December 31, 1997.
The Partnership has also made investments in joint ventures with
affiliated partnerships managed by the General Partner for the purpose of
spreading the risks of financing or acquiring certain capital equipment leased
to third parties (see Note 6).
On June 20, 1984, Daniel B. Murray resigned as General Partner of the
Partnership and the Partnership repurchased his equity interest. Mr. Murray's
interest was valued pursuant to the partnership agreement at $410,873. Such
amount was paid in five equal annual installments, the first of which was made
on July 15, 1984. Interest has been imputed at 10.5%. As a result of the
Partnership's repurchase of Mr. Murray's General Partner interest, future
distributions and income or loss applicable to this interest will be reallocated
to the remaining General and Limited Partners on a pro rata basis. Phoenix
Leasing Incorporated and Gus Constantin remain as the General Partners of the
Partnership.
The General Partners are allocated 11.688% (15% prior to repurchase of
Mr. Murray's interest, as discussed above) of all profits, losses, and cash
distributions. Cash distributions in excess of allocated cumulative net profits
represent a liquidation fee which cannot exceed, in the aggregate, 11.688% (15%
of profits prior to the repurchase of Mr. Murray's interest) of net contributed
capital. The cumulative liquidation fee paid or accrued to date is $1,914,000.
The fee represents an expense of the Partnership and is specially allocated to
the Limited Partners.
The Limited Partners are not required to make additional capital
contributions, nor are they otherwise liable for deficit balances in their
adjusted capital accounts, if any, as defined in the Partnership agreement.
As compensation for management services, the General Partner receives a
fee, payable quarterly in an amount equal to 5% of the Partnership's gross
revenues for the quarter from which such payment is being made, which revenues
shall include rental receipts, maintenance fees, proceeds from the sale of
equipment and notes receivable payments.
Note 2. Summary of Significant Accounting Policies.
Leasing Operations. The Partnership's leasing operations originally
consisted of both financing and operating leases. The financing method of
accounting for leases records as unearned income at the inception of the lease,
the excess of net rentals receivable and estimated residual value at the end of
the lease term, over the cost of equipment leased. Unearned income is credited
to income monthly over the term of the lease on a declining basis to provide an
approximate level rate of return on the unrecovered cost of the investment.
Initial direct costs of consummating new leases are capitalized and included in
the cost of the equipment.
Under the operating method of accounting for leases, the leased
equipment is recorded as an asset at cost and depreciated on a straight-line
basis over the estimated useful life, ranging up to seven years.
The Partnership's policy is to review periodically the expected
economic life of its rental equipment in order to determine the probability of
recovering its undepreciated cost. Such reviews address, among other things,
recent and anticipated technological developments affecting computer equipment
and competitive factors within the computer marketplace. Although remarketing
rental rates are expected to decline in the future with respect to some of the
Partnership's rental equipment, such rentals are expected to exceed projected
expenses, including depreciation. Should subsequent reviews of the equipment
portfolio indicate that rentals plus anticipated sales proceeds will not exceed
the net book value of the equipment in any future period, the Partnership will
revise its depreciation policy as appropriate.
Page 15 of 28
Rental income for the year is determined on the basis of rental
payments due for the period under the terms of the lease. Maintenance, repairs
and minor renewals of the leased equipment are charged to expense.
Portfolio Valuation Methodology. The Partnership will use the portfolio
method of accounting for the net realizable value of the Partnership's equipment
and loan portfolio.
Investment in Joint Ventures. Investments in net assets of the
equipment and financing joint ventures reflect the Partnership's equity basis in
the ventures. Under the equity method of accounting, the original investment is
recorded at cost and is adjusted periodically to recognize the Partnership's
share of earnings, losses, cash contributions and cash distributions after the
date of acquisition.
Investment in Available-for-Sale Securities. The Partnership has
investments in stock in public companies that have been determined to be
available for sale. Available-for-sale securities are stated at their fair
market value, with the unrealized gains and losses reported in a separate
component of partners' capital.
Financial Accounting Pronouncements. In March 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standard No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," which requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In performing the review for
recoverability, the entity would estimate the future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of the
expected future cash flows (undiscounted and without interest charges) is less
than the carrying amount of the asset, an impairment loss is recognized.
Measurement of an impairment loss for long-lived assets and identifiable
intangibles that an entity expects to hold and use should be based on the fair
value of the asset. Statement No. 121 is effective for financial statements for
fiscal years beginning after December 15, 1995. At January 1, 1996, the adoption
of Statement No. 121 did not materially impact the Partnership's financial
position or results of operations.
Reclassification. Certain 1995 and 1994 amounts have been reclassified
to conform to the 1996 presentation.
Cash and Cash Equivalents. Cash and cash equivalents includes deposits
at banks, investments in money market funds and other highly liquid short-term
investments with original maturities of less than 90 days.
Credit and Collateral. The Partnership's activities have been
concentrated in the equipment leasing and financing industry. A credit
evaluation is performed by the General Partner for all leases and loans made,
with the collateral requirements determined on a case-by-case basis. The
Partnership's loans are generally secured by the equipment or assets financed
and, in some cases, other collateral of the borrower. In the event of default,
the Partnership has the right to foreclose upon the collateral used to secure
such loans.
Non Cash Investing Activities. During the quarter ended June 30, 1995,
the Partnership received a final distribution of common stock from one of its
investments in equipment joint ventures. The market value of the stock at the
final distribution date was $2,000 and is included in Other Assets.
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in financial
statements and accompanying notes. Actual results could differ from those
estimates.
Page 16 of 28
Note 3. Accounts Receivable.
Accounts receivable consist of the following at December 31:
1996 1995
---- ----
(Amounts in Thousands)
General Partner and affiliates $17 $ 1
Lease payments -- 1
--- ---
17 2
Less: allowance for losses on
accounts receivable -- (1)
--- ---
Total $17 $ 1
=== ===
Note 4. Notes Receivable.
Notes receivable consist of the following at December 31:
1996 1995
---- ----
(Amounts in Thousands)
Notes receivable from cable television
system operators with interest of 16%
per annum, receivable in installments
of 96 months, collateralized by a security
interest in the cable system assets
This loan has a graduated repayment
schedule followed by a balloon payment $ 799 $ 799
Less: allowance for losses on notes receivable (274) (92)
----- -----
Total $ 525 $ 707
===== =====
The Partnership's notes receivable from cable television system
operators provides for a monthly payment rate in an amount that is less than the
contractual interest rate. The difference between the payment rate and the
contractual interest rate is added to the principal and therefore deferred until
the maturity date of the note. Upon maturity of the note, the original principal
and deferred interest is due and payable in full. Although the contractual
interest rate may be higher, the amount of interest being recognized on the
Partnership's outstanding notes receivable to cable television system operators
is being limited to the amount of the payments received, thereby deferring the
recognition of a portion of the deferred interest until the loan is paid off.
Generally, notes receivable are classified as impaired and the accrual
of interest on such notes are discontinued when the contractual payment of
principal or interest has become 90 days past due or management has serious
doubts about further collectibility of the contractual payments. Any payments
received subsequent to the placement of the note receivable on to impaired
status will generally be applied towards the reduction of the outstanding note
receivable balance, which may include previously accrued interest as well as
principal. Once the principal and accrued interest balance has been reduced to
zero, the remaining payments will be applied to interest income.
At December 31, 1996 and 1995, the recorded investment in notes that
are considered to be impaired were $799,000 and $0, respectively, for which the
related allowance for losses were $274,000 and $0, respectively. The average
recorded investment in impaired loans during the year ended December 31, 1996
and 1995 were approximately $799,000 and $158,000, respectively. The Partnership
recognized interest income on impaired notes receivable during the year ended
December 31, 1996 and 1995 totaling $19,000 and $0, respectively.
The activity in the allowance for losses on notes receivable during the
years ended December 31, is as follows:
1996 1995
---- ----
(Amounts in Thousands)
Beginning balance $ 92 $ 92
Provision for losses 182 --
Write downs -- --
---- ----
Ending balance $274 $ 92
==== ====
Page 17 of 28
Note 5. Equipment on Operating Leases.
Equipment on lease consists primarily of small computer systems,
subject to operating leases.
The Partnership's operating leases are for initial lease terms of
approximately 12 to 36 months. During the remaining terms of existing operating
leases the Partnership will not recover all of the undepreciated cost and
related expenses of its rental equipment, and therefore must remarket a portion
of its equipment in future years.
The Partnership has agreements with the manufacturers of certain of its
equipment, whereby such manufacturers undertake to remarket off-lease equipment
on a best efforts basis. These agreements permit the Partnership to assume the
remarketing function directly if certain conditions contained in the agreements
are not met. For their remarketing services, the manufacturers are paid a
percentage of net monthly rentals. Certain manufacturers are entitled to
additional fees after the Partnership has recovered certain amounts.
The Partnership has entered into direct lease arrangements with certain
lessees. Generally, it is the responsibility of the lessee to provide
maintenance on leased equipment. The General Partner administers the equipment
portfolio of leases acquired through the direct leasing program. Administration
includes the collection of rents from the lessees and remarketing of the
equipment.
Minimum rentals to be received on noncancelable operating leases for
the year ended December 31 are as follows:
Operating
---------
(Amounts in Thousands)
1997.......................................... $ 1
----
Total $ 1
====
Note 6. Investment in Joint Ventures.
Equipment Joint Ventures
The Partnership owns a limited or general partnership interest in
equipment joint ventures. These investments are accounted for using the equity
method of accounting. The other partners of the ventures are entities organized
and managed by the General Partner.
The purpose of the equipment joint ventures is the acquisition and
leasing of various types of equipment. As of December 31, 1996, Phoenix Leasing
Income Fund 1977, is participating in the following equipment joint ventures:
Weighted
Joint Venture Percentage Interest
------------- -------------------
PLI Limited Partnership Fund A(2) 3.94%
Leveraged Joint Venture 1985(1) 17.20
Leveraged Joint Venture 1986(2) 5.25
Arroyo Joint Venture VI(1) 19.98
Arroyo Joint Venture VII(1) 12.90
Arroyo Joint Venture IX(1) 17.76
Arroyo Joint Venture XV(2) 1.46
Arroyo Joint Venture XVII(1) 7.42
Leverged Joint Venture 1987-1(1) 7.03
Leveraged Joint Venture 1987-2 5.37
Leveraged Joint Venture 1987-3 3.76
Phoenix Micro Joint Venture(3) 28.47
Phoenix Joint Venture 1994-1 1.86
Page 18 of 28
(1) Closed during 1994
(2) Closed during 1995
(3) Closed during 1996
An analysis of the Partnership's investment in equipment joint ventures
is as follows:
Net Investment Net Investment
at Beginning Equity in Equity in at End
Date of Period Contributions Earnings Distributions of Period
- ---- --------- ------------- -------- ------------- ---------
(Amounts in Thousands)
Year Ended
December 31, 1994 $ 19 $ 85 $66 $54 $116
==== ===== === === ====
Year Ended
December 31, 1995 $116 $- $27 $79 $ 64
==== ===== === === ====
Year Ended
December 31, 1996 $ 64 $- $31 $51 $ 44
==== ===== === === ====
The aggregate combined financial information of the equipment joint
ventures as of December 31, and for the years then ended is presented as
follows:
COMBINED BALANCE SHEETS
ASSETS
December 31,
1996 1995
---- ----
(Amounts in Thousands)
Cash and cash equivalents $ 351 $ 512
Accounts receivable 1,311 1,459
Operating lease equipment 526 1,021
Other assets 512 691
------ ------
Total Assets $2,700 $3,683
====== ======
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 372 $ 454
Partners' capital 2,328 3,229
------ ------
Total Liabilities and Partners' Capital $2,700 $3,683
====== ======
COMBINED STATEMENTS OF OPERATIONS
INCOME
For the Years Ended December 31,
1996 1995 1994
---- ---- ----
(Amounts in Thousands)
Rental income $1,847 $2,526 $1,208
Gain on sale of equipment 328 547 188
Other income 262 718 288
------ ------ ------
Total Income 2,437 3,791 1,684
------ ------ ------
Page 19 of 28
EXPENSES
Depreciation 332 957 81
Lease related operating
expenses 718 1,311 588
Management fee to the
General Partner 104 194 63
Interest expense -- 1 1
Other expenses 5 200 21
------ ------ ------
Total Expenses 1,159 2,663 754
------ ------ ------
Net Income $1,278 $1,128 $ 930
====== ====== ======
As of December 31, 1996 and 1995, the Partnership's pro rata interest
in the equipment joint ventures' net book value of off-lease equipment was
$1,000 and $2,000, respectively.
The General Partner earns a management fee of 5% of the Partnership's
respective interest in gross revenues of each equipment joint venture, excluding
TOFI I. Revenues subject to management fees at the joint venture level are not
subject to management fees at the Partnership level. Revenues generated from
equipment joint ventures are subject to the same management fee percentage as
revenues from equipment purchased and maintained in the Partnership's own
portfolio.
Financing Joint Ventures
The Partnership has invested in financing joint ventures which are
consolidated for reporting purposes into Phoenix Funding Partnership (PFP). The
Partnership's current investment in PFP consists of one financing joint venture.
The purpose of the financing joint ventures is to provide on a limited basis,
financing to manufacturers and their lessees for equipment leased directly by
manufacturers to third parties. All loans to manufacturers are secured by
equipment. The Partnership uses the equity method of accounting to account for
the PFP.
PFP periodically reviews the probability of recovering the outstanding
note balances. Such reviews address, among other things, current cash receipts,
costs of collection efforts, the current economic situation and potential
uncollectible receivables. If the review indicates that future cash receipts,
net of anticipated future expenses, does not exceed the outstanding note
balances, PFP provides a reserve for any anticipated loan loss as appropriate.
Due to a high degree of uncertainty relating to the collection of the
entire amount of contractually owed principal and interest over the lives of the
notes receivable, the PFP loan portfolio applies all cash receipts (principal
and interest) to the outstanding note balances. Under this method, interest
income will not be recognized until the outstanding note balances are recovered.
The following information summarizes the Partnership's respective
interest in the original loan proceeds of the financing joint ventures.
Weighted
Joint Venture Percentage Interest
------------- -------------------
Phoenix Funding Partnership 3.56%
Page 20 of 28
An analysis of the Partnership's investment account in financing joint
ventures is as follows:
Net Investment Net Investment
at Beginning Equity in Equity in at End
Date of Period Contributions Earnings Distributions of Period
- ---- --------- ------------- --------- ------------- ---------
(Amounts in Thousands)
Year Ended
December 31, 1994 $ 2 $-- $-- $2 $--
====== === ===== == ===
Year Ended
December 31, 1995 $ -- $-- $ 1 $1 $--
====== === ===== == ===
Year Ended
December 31, 1996 $ -- $-- $ 1 $1 $--
====== === ===== == ===
The aggregate combined financial information of the financing joint
ventures as of December 31, and for the years then ended is presented as
follows:
COMBINED BALANCE SHEETS
ASSETS
December 31,
1996 1995
---- ----
(Amounts in Thousands)
Cash and cash equivalents $11 $12
Accounts receivable 6 --
--- ---
Total Assets $17 $12
=== ===
LIABILITIES AND PARTNERS' CAPITAL
Partners' capital $17 $12
--- ---
Total Liabilities and Partners' Capital $17 $12
=== ===
COMBINED STATEMENTS OF OPERATIONS
INCOME
For the Years Ended December 31,
1996 1995 1994
---- ---- ----
(Amounts in Thousands)
Interest income $ 8 $ 2 $--
Other income 20 67 1
--- --- ---
Total Income 28 69 1
--- --- ---
EXPENSES
Management fee to the
General Partner 1 4 4
Other expenses 1 2 3
--- --- ---
Total Expenses 2 6 7
--- --- ---
Net Income (loss) $26 $63 $(6)
=== === ===
Page 21 of 28
The General Partner earns a management fee of 5% of the Partnership's
respective interest in gross payments received for each financing joint venture.
Revenues subject to a management fee at the joint venture level are not subject
to management fees at the Partnership level. Revenues generated from the
financing joint venture are subject to the same management fee percentage as
revenues from equipment purchased and maintained in the Partnership's own
portfolio.
Note 7. Accounts Payable and Accrued Expenses.
Accounts payable and accrued expenses consist of the following at
December 31:
1996 1995
---- ----
(Amounts in Thousands)
Equipment lease operations $ 1 $ 1
General Partners and Affiliates 1 2
Other 37 41
--- ---
Total $39 $44
=== ===
Note 8. Settlement.
On July 1, 1991, Phoenix Leasing Incorporated, as General Partner to
the Partnership and sixteen other affiliated partnerships, filed suit in the
Superior Court for the County of Marin, Case No. 150016, against Xerox
Corporation, a corporation with which the General Partner had entered into
contractual agreements for the acquisition and administration of leased
equipment. The lawsuit was settled out of court effective as of October 28, 1994
pursuant to the terms of a Confidential Settlement Agreement and Mutual Release.
The settlement agreement generally provides for compensation payable to the
Partnership and its affiliates in cash and kind, including the assignment by
Xerox of certain goods and services. The agreement further provides for the sale
by Xerox to the Partnership and its affiliates of equipment subject to lease.
The suit that was filed in the Superior Court for the County of Marin, Case No.
150016, has been dismissed with prejudice on the merits.
The Partnership's pro rata share of the Xerox settlement was $70,000,
which consists of cash of $28,000, and assigned monthly rentals and credits for
goods and services valued at $42,000. In addition, the Partnership purchased
additional leased equipment at an aggregate cost of $43,000. The Partnership,
along with sixteen other affiliated partnerships managed by the General Partner,
contributed its share of the assigned monthly rentals, credits for goods and
services and purchased equipment leases to a joint venture, in exchange for an
interest in the joint venture.
Note 9. Liquidation Fees.
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. If the Partnership were to dissolve, the
General Partner would be liable to the Partnership for the negative capital
account to the extent of the liability. For the years ended December 31, 1996,
1995 and 1994, the liquidation fees accrued to the General Partners were
$22,000, $14,000 and $22,000, respectively. The fee represents an expense of the
Partnership and is specially allocated to the Limited Partners.
Note 10. 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.
Page 22 of 28
The net difference between the tax basis and the reported amounts of
the Partnership's assets and liabilities are as follows at December 31:
Reported Amounts Tax Basis Net Difference
---------------- --------- --------------
(Amounts in Thousands)
1996
- ----
Assets $ 959 $ 1,220 $ (261)
Liabilities 39 21 18
1995
- ----
Assets $ 1,370 $ 1,475 $ (105)
Liabilities 43 42 1
Note 11. Related Entities.
The General Partner serves in the capacity of general partner in other
partnerships, all of which are engaged in the equipment leasing and financing
business.
The General Partner incurs certain expenses, such as data processing,
equipment storage and equipment remarketing costs, for which it is reimbursed by
the Partnership. Equipment remarketing costs are incurred as the General Partner
remarkets certain equipment on behalf of the Partnership. These expenses
incurred by the General Partner are reimbursed at the lower of the actual costs
or an amount equal to 90% of the fair market value for such services.
Note 12. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net income (loss) and distributions per limited partnership unit was
based on the limited partners' share of net income (loss) and distributions and
the weighted average number of units outstanding of 16,521 for the years ended
December 31, 1996, 1995 and 1994.
Note 13. Fair Value of Financial Instruments.
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument which it is practicable to estimate
that value.
Cash and Cash Equivalents
The carrying amount of cash and cash equivalents approximates fair value because
of the short maturity of these instruments.
Notes Receivable
The fair value of notes receivable is estimated by discounting the expected
future cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings.
Available-for-Sale Securities
The fair values of investments in available-for-sale securities are estimated
based on quoted market prices.
Page 23 of 28
The estimated fair values of the Partnership's financial instruments
are as follows at December 31:
Carrying
Amount Fair Value
------ ----------
(Amounts in Thousands)
1996
- ----
Assets
Cash and cash equivalents $ 369 $ 369
Securities, available-for-sale 2 2
Notes receivable 525 525
1995
- ----
Assets
Cash and cash equivalents $ 595 $ 595
Securities, available-for-sale 2 2
Notes receivable 707 1,069
Page 24 of 28
Item 9. Disagreements on Accounting and Financial Disclosure Matters.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The registrant is a limited partnership and, therefore, has no
executive officers or directors. The corporate general partner of the registrant
is Phoenix Leasing Incorporated, a California corporation. Gus Constantin serves
as an individual general partner. The directors and executive officers of
Phoenix Leasing Incorporated (PLI) are as follows:
GUS CONSTANTIN, age 59, is President, Chief Executive Officer and a
Director of PLI. Mr. Constantin received a B.S. degree in Engineering from the
University of Michigan and a Master's Degree in Management Science from Columbia
University. From 1969 to 1972, he served as Director, Computer and Technical
Equipment of DCL Incorporated (formerly Diebold Computer Leasing Incorporated),
a corporation formerly listed on the American Stock Exchange, and as Vice
President and General Manager of DCL Capital Corporation, a wholly-owned
subsidiary of DCL Incorporated. Mr. Constantin was actively engaged in marketing
manufacturer leasing programs to computer and medical equipment manufacturers
and in directing DCL Incorporated's IBM System/370 marketing activities. Prior
to 1969, Mr. Constantin was employed by IBM as a data processing systems
engineer for four years. Mr. Constantin is an individual general partner in four
active partnerships and is an NASD registered principal. Mr. Constantin is the
founder of PLI and the beneficial owner of all of the common stock of Phoenix
American Incorporated.
PARITOSH K. CHOKSI, age 43, is Senior Vice President, Chief Financial
Officer, Treasurer and a Director of PLI. He has been associated with PLI since
1977. Mr. Choksi oversees the finance, accounting, information services and
systems development departments of the General Partner and its Affiliates and
oversees the structuring, planning and monitoring of the partnerships sponsored
by the General Partner and its Affiliates. Mr. Choksi graduated from the Indian
Institute of Technology, Bombay, India with a degree in Engineering. He holds an
M.B.A. degree from the University of California, Berkeley.
GARY W. MARTINEZ, age 46, is Senior Vice President and a Director of
PLI. He has been associated with PLI since 1976. He manages the Asset Management
Department, which is responsible for lease and loan portfolio management. This
includes credit analysis, contract terms, documentation and funding; remittance
application, change processing and maintenance of customer accounts; customer
service, invoicing, collection, settlements and litigation; negotiating lease
renewals, extensions, sales and buyouts; and management information reporting.
From 1973 to 1976, Mr. Martinez was a Loan Officer with Crocker National Bank,
San Francisco. Prior to 1973, he was an Area Manager with Pennsylvania Life
Insurance Company. Mr. Martinez is a graduate of California State University,
Chico.
BRYANT J. TONG, age 42, is Senior Vice President, Financial Operations
of PLI. He has been with PLI since 1982. Mr. Tong is responsible for investor
services and overall company financial operations. He is also responsible for
the technical and administrative operations of the cash management, corporate
accounting, partnership accounting, accounting systems, internal controls and
tax departments, in addition to Securities and Exchange Commission and other
regulatory agency reporting. Prior to his association with PLI, Mr. Tong was
Controller-Partnership Accounting with the Robert A. McNeil Corporation for two
years and was an auditor with Ernst & Whinney (succeeded by Ernst & Young) from
1977 through 1980. Mr. Tong holds a B.S. in Accounting from the University of
California, Berkeley, and is a Certified Public Accountant.
CYNTHIA E. PARKS, age 41, is Vice President, General Counsel and
Assistant Secretary of PLI. Prior to joining PLI in 1984, she was with GATX
Leasing Corporation, and had previously been Corporate Counsel for Stone
Financial Companies, and an Assistant Vice President of the Bank of America,
Bank Amerilease Group. She has a bachelor's degree from Santa Clara University,
and earned her J.D. from the University of San Francisco School of Law.
Neither the General Partner nor any Executive Officer of the General
Partner has any family relationship with the others.
Phoenix Leasing Incorporated or its affiliates and the executive
officers of the General Partner serve in a similar capacity to the following
affiliated limited partnerships:
Phoenix Leasing American Business Fund, L.P.
Phoenix Leasing Cash Distribution Fund V, L.P.
Page 25 of 28
Phoenix Income Fund, L.P.
Phoenix Leasing Cash Distribution Fund IV
Phoenix High Tech/High Yield Fund
Phoenix Leasing Cash Distribution Fund III
Phoenix Leasing Cash Distribution Fund II
Phoenix Leasing Income Fund VII
Phoenix Leasing Income Fund VI and
Phoenix Leasing Growth Fund 1982
Item 11. Executive Compensation.
Set forth is the information relating to all direct remuneration paid
or accrued by the Registrant during the last year to the General Partner.
(A) (B) (C) (D)
Cash and cash- Aggregate of
Name of Individual Capacities in equivalent forms contingent forms
or persons in group which served of remuneration of remuneration
- ------------------- ------------ ------------------------------------------- -----------------
(C1) (C2)
Securities or property
Salaries, fees, directors' insurance benefits or
fees, commissions, and reimbursement, personal
bonuses benefits
------------------------ --------------------
(Amounts in Thousands)
Phoenix Leasing General Partner $17(1) $0 $0
Incorporated
Gus Constantin General Partner 7(2) 0 0
--- - -
All General Partners General Partners $24 $0 $0
=== = =
(1) consists of management and liquidation fees.
(2) consists of liquidation fees.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) No person owns of record, or is known by the Registrant to own
beneficially, more than five percent of any class of voting
securities of the Registrant.
(b) The General Partner of the Registrant owns the equity securities
of the Registrant set forth in the following table:
Page 26 of 28
(1) (2) (3)
Title of Class Amount Beneficially Owned Percent of Class
-------------- ------------------------- ----------------
General Partner Interest:
Mr. Gus Constantin, Represents a 3.896% Interest 33.3%
Individual General Partner in the Registrant's Profits,
Losses and Distributions.
General Partner Interest:
Phoenix Leasing Incorporated, Represents a 7.792% Interest 66.7%
Corporate General Partner in the Registrant's Profits,
Losses and Distributions.
Limited Partner Interest:
Phoenix Leasing Incorporated, .50 units -
Corporate General Partner
Item 13. Certain Relationships and Related Transactions.
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Page No.
--------
(a) 1. Financial Statements:
Report of Independent Public Accountants 9
Balance Sheets 10
Statements of Operations 11
Statements of Partners' Capital 12
Statements of Cash Flows 13
Notes to the Financial Statements 14-23
2. Financial Statement Schedules:
Report of Independent Public Accountants on the
Financial Statement Schedules 9
Schedule II - Valuation and Qualifying Accounts
and Reserves 28
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the financial
statements or notes thereto.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended December 31,
1996.
(c) Exhibits.
21. Additional Exhibits
a) Balance Sheets of Phoenix Leasing Incorporated E21 1-12
b) Financial Statements for Significant Subsidiaries:
Phoenix Joint Venture 1994-1 E21 13-23
27. Financial Data Schedule.
Page 27 of 28
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)
BY: PHOENIX LEASING INCORPORATED,
A CALIFORNIA CORPORATION
GENERAL PARTNER
Date: March 25, 1997 By: /S/ GUS CONSTANTIN
-------------- -------------------
Gus Constantin, 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.
Signature Title Date
--------- ----- ----
/S/ GUS CONSTANTIN President, Chief Executive Officer and a March 25, 1997
- ---------------------- Director of Phoenix Leasing Incorporated --------------
(Gus Constantin) General Partner
/S/ PARITOSH K. CHOKSI Chief Financial Officer, March 25, 1997
- ---------------------- Senior Vice President, --------------
(Paritosh K. Choksi) Treasurer and a Director of
Phoenix Leasing Incorporated
General Partner
/S/ BRYANT J. TONG Senior Vice President, March 25, 1997
- ---------------------- Financial Operations of --------------
(Bryant J. Tong) (Principal Accounting Officer)
Phoenix Leasing Incorporated
General Partner
/S/ GARY W. MARTINEZ Senior Vice President and a Director of March 25, 1997
- ---------------------- Phoenix Leasing Incorporated --------------
(Gary W. Martinez) General Partner
/S/ MICHAEL K. ULYATT Partnership Controller of March 25, 1997
- ---------------------- Phoenix Leasing Incorporated --------------
(Michael K. Ulyatt) General Partner
Page 28 of 28
PHOENIX LEASING INCOME FUND 1977
SCHEDULE II
(Amounts in Thousands)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Classification Balance at Charged to Charged to Deductions Balance at
Beginning of Expense Revenue End of
Period Period
- ----------------------------------- --------------- -------------- -------------- ---------------- -------------
Year ended December 31, 1994
Allowance for losses on accounts
receivable $ 23 $ 0 $10 $ 9 $ 4
Allowance for early termination
of financing leases 8 0 5 0 3
Allowance for losses on notes
receivable 92 0 0 0 92
---- ---- --- --- ----
Totals $123 $ 0 $15 $ 9 $ 99
==== ==== === === ====
Year ended December 31, 1995
Allowance for losses on accounts
receivable $ 4 $ 8 $ 0 $11 $ 1
Allowance for early termination
of financing leases 3 0 3 0 0
Allowance for losses on notes
receivable 92 0 0 0 92
---- ---- --- --- ----
Totals $ 99 $ 8 $ 3 $11 $ 93
==== ==== === === ====
Year ended December 31, 1996
Allowance for losses on accounts
receivable $ 1 $ 0 $ 0 $ 1 $ 0
Allowance for losses on notes
receivable 92 182 0 0 274
---- ---- --- --- ----
Totals $ 93 $182 $ 0 $ 1 $274
==== ==== === === ====