UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ----- ACT OF 1934
For the quarterly period ended September 30, 1999
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 0-17989
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PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
Registrant
California 68-0166383
- --------------------------------- ----------------------------------
State of Jurisdiction I.R.S. Employer Identification No.
2401 Kerner Boulevard, San Rafael, California 94901-5527
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Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (415) 485-4500
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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
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7,526 Units of Limited Partnership Interest were outstanding as of September 30,
1999.
Transitional small business disclosure format:
Yes No X
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Page 1 of 10
Part I. Financial Information
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Item 1. Financial Statements
PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
September 30, December 31,
1999 1998
---- ----
ASSETS
Cash and cash equivalents $ 215 $ 108
Investment in joint ventures -- 105
Prepaid expense -- 2
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Total Assets $ 215 $ 215
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 8 $ 12
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Total Liabilities 8 12
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Partners' Capital (Deficit)
General Partner (2) (2)
Limited Partners, 25,000 units authorized, 7,526
units issued and outstanding at September 30,
1999 and December 31, 1998 209 205
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Total Partners' Capital (Deficit) 207 203
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Total Liabilities and Partners' Capital (Deficit) $ 215 $ 215
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The accompanying notes are an integral part of these statements.
2
PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
INCOME
Rental income $ -- $ 7 $ -- $ 7
Gain on sale of securities 2 -- 2 111
Equity in earnings (losses) from joint
ventures, net 19 3 11 (10)
Other income 4 4 7 15
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Total Income 25 14 20 123
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EXPENSES
Management fees to General Partner -- -- -- 4
Reimbursed administrative costs to
General Partner -- 3 3 8
Provision for losses on receivables -- 6 -- 6
General and administrative expenses -- 5 13 21
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Total Expenses -- 14 16 39
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NET INCOME 25 -- 4 84
Other comprehensive income:
Unrealized gains on securities:
Unrealized holding gains arising
during period 2 -- 2 111
Less: reclassification adjustment
for gains included in net
income (2) -- (2) (111)
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Other comprehensive income -- -- -- --
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COMPREHENSIVE INCOME $ 25 $ -- $ 4 $ 84
======= ======= ======= =======
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 3.29 $ -- $ .47 $ 9.01
======= ======= ======= =======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ -- $ -- $ -- $ 51.26
======= ======= ======= =======
ALLOCATION OF NET INCOME:
General Partner $ -- $ -- $ -- $ 16
Limited Partners 25 -- 4 68
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$ 25 $ -- $ 4 $ 84
======= ======= ======= =======
The accompanying notes are an integral part of these statements.
3
PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Nine Months Ended
September 30,
1999 1998
---- ----
Operating Activities:
- --------------------
Net income $ 4 $ 84
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Gain on sale of securities (2) (111)
Equity in losses (gains) from joint ventures, net (11) 10
Provision for losses on accounts receivable -- 6
Decrease in accounts receivable -- 31
Increase (decrease) in accounts payable and
accrued expenses (4) 1
Decrease in other assets 2 --
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Net cash provided by (used in) operating activities (11) 21
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Investing Activities:
- --------------------
Proceeds from sale of securities 2 111
Distributions from joint ventures 116 15
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Net cash provided by investing activities 118 126
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Financing Activities:
- --------------------
Distributions to partners -- (389)
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Net cash used in financing activities -- (389)
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Increase (decrease) in cash and cash equivalents 107 (242)
Cash and cash equivalents, beginning of period 108 496
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Cash and cash equivalents, end of period $ 215 $ 254
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The accompanying notes are an integral part of these statements.
4
PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
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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.
The Partnership Agreement stipulates the methods by which income will
be allocated to the General Partner and the limited partners. Such allocations
will be made using income or loss calculated under Generally Accepted Accounting
Principles for book purposes, which varies from income or loss calculated for
tax purposes.
The calculation of items of income and loss for book and tax purposes
may result in book basis capital accounts that vary from the tax basis capital
accounts. The requirement to restore any deficit capital balances by the General
Partner will be determined based on the tax basis capital accounts. At
liquidation of the Partnership, the General Partner's remaining book basis
capital account will be reduced to zero through the allocation of income or
loss.
Note 2. Reclassification.
----------------
Reclassification - Certain 1998 amounts have been reclassified to
conform to the 1999 presentation.
Note 3. Income Taxes.
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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. Net Income (Loss) and Distribution Per Limited Partnership Unit.
---------------------------------------------------------------
Net income and distributions per limited partnership unit were based on
the limited partners' share of net income and distributions, and the weighted
average number of units outstanding of 7,526 for the nine months ended September
30, 1999 and 1998. For purposes of allocating net income (loss) and
distributions to each individual limited partner, the Partnership allocates net
income (loss) and distributions based upon each respective limited partner's net
capital contributions.
5
Note 5. Investment in Joint Ventures.
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Foreclosed Cable Systems Joint Venture
- --------------------------------------
The aggregate financial information of the foreclosed cable systems
joint venture is presented below:
September 30, December 31,
1999 1998
---- ----
(Amounts in Thousands)
Assets $ - $ 626
Liabilities - 97
Partners' Capital - 529
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(Amounts in Thousands)
Revenue $121 $ 96 $245 $219
Expenses 26 77 187 275
Net Income (Loss) 95 19 58 (56)
6
PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations.
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Results of Operations
Phoenix High Tech/High Yield Fund, a California limited partnership ("the
Partnership") reported net income of $25,000 and $4,000 for the three and nine
months September 30, 1999, respectively, compared to net income of $0 and
$84,000 for the three and nine months ended September 30, 1998, respectively.
Total income decreased by $103,000 during the nine months ended September
30, 1999, compared to the same period in the previous year. The decrease is
attributable to a decrease in gain on sale of securities. The gain on sale of
securities for the nine months ended September 30, 1999 was $2,000, compared to
a gain on sale of securities of $111,000 for the nine months ended September 30,
1998, respectively. The decline in total revenues during 1999 is also
attributable to a decline in other income which is a result of a reduction in
interest income from the Partnership's bank account due to a decrease in the
amount of cash being generated by the Partnership.
Total income increased by $11,000 during the three months ended September
30, 1999, compared to the same period in the previous year. The increase is due
to increased earnings from a cable system joint venture that was sold during the
three months ended September 30, 1999.
Total expenses decreased $14,000 and $23,000 for the three and nine months
ended September 30, 1999, compared to the same period in the prior year, due to
an overall reduction in most expense items.
Liquidity and Capital Resources
The cash used in leasing and financing activities was $11,000 during the
nine months ended September 30, 1999, as compared to cash generated of $21,000
during the same period in 1998. The decrease in cash generated is a result of
the liquidation of the Partnership's assets.
The cash distributed to partners was $0 and $389,000 for the nine months
ended September 30, 1999 and 1998, respectively. In accordance with the
Partnership Agreement, the Limited Partners are entitled to 99% of the cash
available for distribution and the General Partner is entitled to 1%. As a
result, the Limited Partners received $0 and $385,000 in distributions during
the nine month period ended September 30, 1999 and 1998, respectively. The
cumulative cash distributions to limited partners are $7,519,000 and $7,380,000
at September 30, 1999 and 1998, respectively. The General Partner received $0
and $4,000 for its share of the cash distributions during the period ended
September 30, 1999 and 1998, respectively. The Partnership plans to make its
next distribution to partners in December 1999.
7
Impact of the Year 2000 Issue
ReSourcePhoenix.com ("ReSourcePhoenix"), an affiliate of the parent to
the General Partner does all local computer processing for the General Partner.
And as such ResourcePhoenix manages the Year 2000 project on behalf of the
General Partner.
ResourcePhoenix has a Year 2000 project plan in place. The Year 2000
project team has identified risks, and has implemented remediation procedures
for its Year 2000 issues. ReSourcePhoenix has budgeted for the necessary
changes, built contingency plans, and has progressed along the scheduled
timeline. Installation of all remediation changes to critical software and
hardware was completed on November 5, 1999.
Costs incurred by the Partnership will be expensed as incurred and are
not currently anticipated to be material to the Partnership's financial position
or results of operations.
8
PHOENIX LEASING HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
September 30, 1999
Part II. Other Information
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Item 1. Legal Proceedings.
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On October 28, 1997, a Class Action Complaint was filed against Phoenix
Leasing Incorporated, Phoenix Leasing Associates, II and III LP., Phoenix
Securities Inc. and Phoenix American Incorporated (the "Companies") in
California Superior Court for the County of Sacramento by eleven individuals on
behalf of investors in Phoenix Leasing Cash Distribution Funds I through V (the
"Partnerships"). The Companies were served with the Complaint on December 9,
1997. The Complaint sought declaratory and other relief including accounting,
receivership, imposition of a constructive trust and judicial dissolution and
winding up of the Partnerships, and damages based on fraud, breach of fiduciary
duty and breach of contract by the Companies as general partners of the
Partnerships.
Plaintiffs severed one cause of action from the Complaint, a claim
related to the marketing and sale of CDF V, and transferred it to Marin County
Superior Court (the "Berger Action"). Plaintiffs then dismissed the remaining
claims in Sacramento Superior Court and refiled them in a separate lawsuit
making similar allegations (the "Ash Action"). That complaint was subsequently
transferred to Marin County as well.
Plaintiffs have amended the Berger Action twice. Defendants recently
answered the complaint. Discovery has recently commenced. The Companies intend
to vigorously defend the Complaint.
Defendants have filed a demurrer to the Ash Complaint, which plaintiffs
amended three times. Discovery has not commenced. The Companies intend to
vigorously defend the Complaint.
Item 2. Changes in Securities. Inapplicable
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Item 3. Defaults Upon Senior Securities. Inapplicable
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Item 4. Submission of Matters to a Vote of Securities Holders. Inapplicable
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Item 5. Other Information. Inapplicable
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Item 6. Exhibits and Reports on 8-K:
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a) Exhibits:
(27) Financial Data Schedule
b) Reports on 8-K: None
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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 HIGH TECH/HIGH YIELD FUND,
---------------------------------
A CALIFORNIA LIMITED PARTNERSHIP
--------------------------------
(Registrant)
Date Title Signature
---- ----- ---------
November 10, 1999 Executive Vice President, /S/ GARY W. MARTINEZ
- ----------------- Chief Operating Officer --------------------
and a Director of (Gary W. Martinez)
Phoenix Leasing Incorporated
General Partner
November 10, 1999 Chief Financial Officer, /S/ HOWARD SOLOVEI
- ----------------- Treasurer and a Director of --------------------
Phoenix Leasing Incorporated (Howard Solovei)
General Partner
November 10, 1999 Senior Vice President, /S/ BRYANT J. TONG
- ----------------- Financial Operations --------------------
(Principal Accounting Officer) (Bryant J. Tong)
and a Director of
Phoenix Leasing Incorporated
General Partner
10