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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, 1995 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, 1995, 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, 1995.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
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PHOENIX LEASING INCOME FUND 1977
1995 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>
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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,
1995, 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 intends to invest will be (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.
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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, 1995, 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, 1995, the Partnership owns equipment and has
outstanding loans to borrowers with an aggregate original cost of $848,000. 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, 1995.
Percentage of
Asset Types Purchase Price(1) Total Assets
----------- ----------------- -------------
(Amounts in Thousands)
Financing Related to Cable TV Systems $ 645 76%
Reproduction Equipment 106 13
Small Computer Systems 78 9
Financing of Solar Systems 19 2
----- ---
TOTAL $ 848 100%
===== ===
(1) These amounts include the Partnership's pro rata interest in equipment
joint ventures of $95,000, financing joint ventures of $19,000 and original
cost of outstanding loans of $645,000 at December 31, 1995.
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:
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Number of Unit Holders
Title of Class as of December 31, 1995
---------------------------------- -----------------------
Limited Partners 1,946
<TABLE>
Item 6. Selected Financial Data.
<CAPTION>
Amounts in Thousands Except for Per Unit Amounts
------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Income $ 259 $ 239 $ 188 $ 230 $ 175
Net Income (Loss) 159 161 31 29 (148)
Total Assets 1,370 1,763 1,769 1,975 2,074
Distributions to Partners 532 165 248 124 826
Net Income (Loss) per Limited Partnership Unit 8.42 8.46 1.41 1.42 (8.70)
Distributions per Limited Partnership Unit 29.22 9.98 15.00 7.50 50.00
</TABLE>
The above selected financial data should be read in conjunction with
the financial statements and related notes appearing elsewhere in this report.
<PAGE>
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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 net income of
$159,000 during the year ended December 31, 1995, as compared to net income of
$161,000 and $31,000 during the 1994 and 1993, respectively.
Total revenues increased by $20,000 during 1995, as compared to the same
period in 1994, and increased by $51,000 during 1994, as compared to the same
period in 1993. The increase in total revenues during 1995, as compared to the
same period in 1994, is attributable to the increase in interest income from
notes receivable. The increase in interest income from notes receivable is
attributable to the payoff of two outstanding notes receivable from cable
television system operators. During 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.
Total revenues increased during 1994, as compared to 1993, due primarily to
a settlement received by the Partnership. The settlement received by the
Partnership during 1994 consisted of cash, receivables and assigned rents from a
pool of leased equipment. Additionally, in connection with such settlement, the
Partnership acquired a portion of a pool of leased equipment. These non-cash
items were subsequently transferred to a joint venture that the Partnership has
an ownership interest.
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.
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 released at lower rental rates. At
December 31, 1995, the Partnership owned equipment with an aggregate original
cost, excluding the Partnership's pro rata interest in joint ventures, of
$78,000 as compared to $160,000 at December 31, 1994. 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.
Total expenses increased by $22,000 during 1995, but decreased by $79,000
during 1994, when compared to the same period in the previous year. The increase
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. The decrease in total expenses during 1994, as compared to 1993, is
due to a decrease in the provision for losses on receivables. The decrease in
losses on receivables during 1994 was due to the Partnership recognizing as
income, an estimated allowance for losses on accounts receivable and allowance
for early terminations of finance leases that was determined to no longer be
necessary.
Joint Ventures
The Partnership has made investments in various equipment and financing
joint ventures along with other affiliated partnerships managed by the General
Partner for the purpose of spreading the risk of investing in certain equipment
leasing and financing transactions. These joint ventures are not currently
making any significant additional investments in new equipment leasing or
financing transactions. As a result, the earnings and cash flow from such
investments are anticipated to continue to decline as the portfolios are
re-leased at lower rental rates and eventually liquidated.
Earnings from joint ventures decreased during 1995, but increased by during
1994, as compared to the same periods in the previous year. Earnings decreased
during 1995 due to the closure of several joint ventures during 1995. The
increase in earnings for 1994, is the result of an overall increase in earnings
from several joint ventures. 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>
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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 provided by leasing and financing
activities of $633,000 during 1995, as compared to $184,000 and $147,000 during
1994 and 1993, respectively. The improvement during 1995 is attributable to the
payoff of two notes receivable from cable television system operators that had
been in default.
As of December 31, 1995, the Partnership owned equipment held for lease
with a purchase price of $31,000 and a net book value of $0, compared to $31,000
and $0, respectively, at December 31, 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 $483,000, $165,000 and $248,000 in cash
distributions during the years ended December 31, 1995, 1994 and 1993,
respectively. As a result, the cumulative cash distributions to the Limited
Partners are $28,440,000, $27,957,000 and $27,792,000 as of December 31, 1995,
1994 and 1993, respectively. The General Partner did not receive cash
distributions during the 1994 and 1993, but did receive cash distributions of
$49,000 during 1995. In addition, the General Partner received payment of
liquidation fees of $14,000, $22,000 and $33,000 during 1995, 1994 and 1993,
respectively. Due to the decrease in the cash generated by leasing operations,
the Partnership is no longer making quarterly cash distributions to Partners.
Distributions are now being made on an annual basis with the annual distribution
date being January 15. Due to the increase in the cash balance of the
Partnership, resulting from the receipt of payoffs from two notes receivable
from cable television system operators that had been in default, the Partnership
made a special cash distribution to partners on October 15, 1995. The
Partnership will reach the end of its term on December 31, 1997, at which time
it will liquidate its remaining assets and liabilities and make a final
distribution to partners of the excess cash, if any.
Cash generated from leasing and financing operations has been and is
anticipated to continue to be sufficient to meet the Partnership's on-going
operational expenses.
<PAGE>
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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PHOENIX LEASING INCOME FUND 1977
YEAR ENDED DECEMBER 31, 1995
<PAGE>
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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, 1995 and December 31,
1994, and the related statements of operations, partners' capital, and cash
flows for each of the three years in the period ended December 31, 1995. 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, 1995 and December 31, 1994, and the results of its
operations, partners' capital and the cash flows for each of the three years in
the period ended December 31, 1995, 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, CROAK & GORMAN
January 19, 1996
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PHOENIX LEASING INCOME FUND 1977
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
December 31,
1995 1994
---- ----
ASSETS
Cash and cash equivalents $ 595 $ 415
Accounts receivable (net of allowance
for losses on accounts receivable of
$1 and $4 at December 31, 1995 and 1994,
respectively) - 10
Notes receivable (net of allowance for losses
on notes receivable of $92 at December 31,
1995 and 1994) 707 1,214
Equipment on operating leases and held for lease
(net of accumulated depreciation of $31 and
$35 at December 31, 1995 and 1994, respectively) - -
Net investment in financing leases (net of
allowance for early terminations of $0 and
$3 at December 31, 1995 and 1994, respectively) - -
Investment in joint ventures 64 116
Other assets 4 8
------ ------
Total Assets $1,370 $1,763
====== ======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 43 $ 63
------ ------
Total Liabilities 43 63
------ ------
Partners' Capital:
General Partners - 29
Limited Partners, 20,000 units authorized
and issued, 16,521 units outstanding at
December 31, 1995 and 1994 1,327 1,671
------ ------
Total Partners' Capital 1,327 1,700
------ ------
Total Liabilities and Partners' Capital $1,370 $1,763
====== ======
The accompanying notes are an intregal
part of these statements
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PHOENIX LEASING INCOME FUND 1977
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
For the Years Ended December 31,
1995 1994 1993
---- ---- ----
INCOME
Rental income $ 41 $ 27 $ 81
Equity in earnings from joint
ventures, net 28 66 30
Interest income, notes receivable 156 60 66
Settlement - 70 -
Other income 34 16 11
----- ----- -----
Total Income 259 239 188
----- ----- -----
EXPENSES
Depreciation - 15 27
Lease related operating expenses - 2 3
Management fees to General Partner 37 11 13
Liquidation fees to General Partner 14 22 33
Provision for losses on receivables 5 (15) 38
General and administrative expenses 44 43 43
----- ----- -----
Total Expenses 100 78 157
----- ----- -----
NET INCOME $ 159 $ 161 $ 31
===== ===== =====
NET INCOME PER LIMITED
PARTNERSHIP UNIT $8.42 $8.46 $1.41
===== ===== =====
ALLOCATION OF NET INCOME:
General Partners $ 20 $ 21 $ 7
Limited Partners 139 140 24
----- ----- -----
$ 159 $ 161 $ 31
===== ===== =====
The accompanying notes are an intregal
part of these statements.
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PHOENIX LEASING INCOME FUND 1977
STATEMENTS OF PARTNERS' CAPITAL
(Amounts in Thousands Except for Unit Amounts)
General
Partners' Limited Partners' Total
Amount Units Amount Amount
--------- ----------------- ------
Balance, December 31, 1992 $ 1 16,521 $ 1,920 $ 1,921
Distributions to partners ($15.00 per
limited partnership unit) - - (248) (248)
Net income 7 - 24 31
------- ------- ------- -------
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
======= ======= ======= =======
The accompanying notes are an intregal
part of these statements.
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PHOENIX LEASING INCOME FUND 1977
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
For the Years Ended December 31,
1995 1994 1993
---- ---- ----
Operating Activities:
Net income $ 159 $ 161 $ 31
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation - 15 27
Loss (gain) on sale of equipment (1) 5 (1)
Equity in earnings from joint
ventures, net (28) (66) (30)
Provision for early termination,
financing leases (3) (5) 2
Provision for losses on notes
receivable - - 20
Provision for losses on accounts
receivable 8 (10) 16
Settlement - (42) -
Decrease (increase) in accounts
receivable 2 9 (18)
Increase (decrease) in accounts
payable and accrued expenses (20) (2) 11
Decrease (increase) in other assets 6 - (1)
----- ----- -----
Net cash provided by operating activities 123 65 57
----- ----- -----
Investing Activities:
Principal payments, financing leases 3 38 53
Principal payments, notes receivable 507 81 37
Proceeds from sale of equipment 1 2 14
Distributions from joint ventures 78 56 63
Purchase of equipment - (43) -
Investment in joint ventures - - (4)
----- ----- -----
Net cash provided by investing activities 589 134 163
----- ----- -----
Financing Activities:
Distributions to partners (532) (165) (248)
----- ----- -----
Net cash used by financing activities (532) (165) (248)
----- ----- -----
Increase (decrease) in cash and
cash equivalents 180 34 (28)
Cash and cash equivalents, beginning
of period 415 381 409
----- ----- -----
Cash and cash equivalents, end of period $ 595 $ 415 $ 381
===== ===== =====
The accompanying notes are an intregal
part of these statements.
<PAGE>
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PHOENIX LEASING INCOME FUND 1977
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
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 $1,892,000.
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 consist 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.
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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.
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.
Investments. 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.
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. The Partnership does not expect
the adoption of this statement to have a material impact on its financial
position and results of operations. The Partnership plans to adopt Statement No.
121 on January 1, 1996.
On January 1, 1995, the Partnership adopted Financial Accounting
Standards Board Statement No. 114, "Accounting by Creditors for Impairment of a
Loan," and Statement No. 118, "Accounting by Creditors for Impairment of a Loan
- - Income Recognition and Disclosures." Statement No. 114 requires that certain
impaired loans be measured based on the present value of expected cash flows
discounted at the loan's effective interest rate; or, alternatively, at the
loan's observable market price or the fair value of the collateral if the loan
is collateral dependent. Prior to 1995, the allowance for losses on notes
receivable was based on the undiscounted cash flows or the fair value of the
collateral dependent loans.
Reclassification. Certain 1994 and 1993 amounts have been reclassified
to conform to the 1995 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.
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 for the year
ended December 31, 1995.
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>
Page 16 of 28
Note 3. Accounts Receivable.
Accounts receivable consist of the following at December 31:
1995 1994
---- ----
(Amounts in Thousands)
Lease payments $ 1 $ 3
Other - 11
---- ----
1 14
Less: allowance for losses on
accounts receivable (1) (4)
---- ----
Total $ - $ 10
==== ====
Note 4. Notes Receivable.
Notes receivable consist of the following at December 31:
1995 1994
---- ----
(Amounts in Thousands)
Notes receivable from cable television
system operators with interest ranging
from 16% to 17% per annum, receivable
in installments ranging from 61 to 96
months, collateralized by a security
interest in the cable system assets.
These loans have a graduated repayment
schedule followed by a balloon payment. $ 799 $ 1,306
Less: allowance for losses on notes
receivable (92) (92)
------ -------
Total $ 707 $ 1,214
====== =======
The Partnership's notes receivable from cable television system
operators provide 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 rates 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.
The average recorded investment in impaired loans during the year ended
December 31, 1995 was approximately $158,000. 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.
The activity in the allowance for losses on notes receivable during the
years ended December 31, is as follows:
1995 1994
---- ----
(Amounts in Thousands)
Beginning balance $ 92 $ 92
Provision for losses - -
Write downs - -
----- -----
Ending balance $ 92 $ 92
===== =====
<PAGE>
Page 17 of 28
Note 5. Equipment on Operating Leases and Investment in Financing Leases.
Equipment on lease consists primarily of small computer systems,
subject to operating and financing 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.
The net investment in financing leases consists of the following at
December 31:
1995 1994
---- ----
(Amounts in Thousands)
Minimum lease payments to be received $ 0 $ 3
Less: unearned income - -
allowance for early terminations - (3)
---- -----
Net investment in financing leases $ 0 $ 0
==== =====
Minimum rentals to be received on noncancelable operating and financing
leases for the year ended December 31 are as follows:
Operating Financing
--------- ---------
(Amounts in Thousands)
1996............................. $ 2 $ 0
1997............................. - -
1998............................. - -
1999............................. - -
2000............................. - -
Thereafter....................... - -
---- ----
Total $ 2 $ 0
==== ====
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, 1995, Phoenix Leasing
Income Fund 1977, is participating in the following equipment joint ventures:
<PAGE>
Page 18 of 28
Weighted
Joint Venture Percentage Interest
------------- -------------------
Equity Joint Venture I(4) 34.23%
Equity Joint Venture II(6) 38.02
Equity Joint Venture III(5) 6.52
Equity Joint Venture IV 23.53
PLI Limited Partnership Fund A(8) 3.94
Leveraged Joint Venture 1985(7 17.20
Leveraged Joint Venture 1986(8) 5.25
Arroyo Joint Venture I(2) 10.63
Arroyo Joint Venture III(1) 7.12
Arroyo Joint Venture V (3) 10.49
Arroyo Joint Venture VI(7) 19.98
Arroyo Joint Venture VII(7) 12.90
Arroyo Joint Venture IX(7) 17.76
Arroyo Joint Venture X (3) 41.00
Arroyo Joint Venture XIV(5) 20.00
Arroyo Joint Venture XV(8) 1.46
Arroyo Joint Venture XVII(7) 7.42
Leverged Joint Venture 1987-1(7) 7.03
Leveraged Joint Venture 1987-2 5.37
Leveraged Joint Venture 1987-3 3.76
TOFI I Joint Venture(4) 19.42
TOFI II Joint Venture(4) 20.11
Phoenix Micro Joint Venture 28.47
Phoenix Joint Venture 1994-1 1.86
(1) Closed during 1986
(2) Closed during 1988
(3) Closed during 1989
(4) Closed during 1991
(5) Closed during 1992
(6) Closed during 1993
(7) Closed during 1994
(8) Closed during 1995
<TABLE>
An analysis of the Partnership's investment in equipment joint ventures
is as follows:
<CAPTION>
Net Investment Equity in Net Investment
at Beginning Earnings Equity in at End
Date of Period Contributions (Losses) Distributions of Period
- ---- -------------- -------------- --------- ------------- --------------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Year Ended
December 31, 1993 $ 46 $ 4 $ 30 $ 61 $ 19
======= === ====== ====== =====
Year Ended
December 31, 1994 $ 19 $85 $ 66 $ 54 $ 116
======= === ====== ====== =====
Year Ended
December 31, 1995 $ 116 $- $ 27 $ 79 $ 64
======= === ====== ====== =====
</TABLE>
The aggregate combined financial information of the equipment joint
ventures as of December 31, and for the years then ended is presented as
follows:
<PAGE>
Page 19 of 28
COMBINED BALANCE SHEETS
ASSETS
December 31,
1995 1994
---- ----
(Amounts in Thousands)
Cash and cash equivalents $ 512 $ 441
Accounts receivable 1,459 1,884
Operating lease equipment 1,021 2,271
Other assets 691 919
------ ------
Total Assets $3,683 $5,515
====== ======
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 454 $ 507
Partners' capital 3,229 5,008
------ ------
Total Liabilities and Partners' Capital $3,683 $5,515
====== ======
COMBINED STATEMENTS OF OPERATIONS
INCOME
For the Years Ended December 31,
1995 1994 1993
---- ---- ----
(Amounts in Thousands)
Rental income $2,526 $1,208 $1,358
Gain on sale of equipment 547 188 389
Other income 718 288 40
------ ------ ------
Total Income 3,791 1,684 1,787
------ ------ ------
EXPENSES
Depreciation 957 81 210
Lease related operating expenses 1,311 588 821
Management fee to the General Partner 194 63 64
Interest expense 1 1 -
Other expenses 200 21 102
------ ------ ------
Total Expenses 2,663 754 1,197
------ ------ ------
Net Income $1,128 $ 930 $ 590
====== ====== ======
As of December 31, 1995 and 1994, the Partnership's pro rata interest
in the equipment joint ventures' net book value of off-lease equipment was
$2,000 and $1,000, 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.
<PAGE>
Page 20 of 28
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%
<TABLE>
An analysis of the Partnership's investment account in financing joint
ventures is as follows:
<CAPTION>
Net Investment Net Investment
at Beginning Equity in Equity in at End
Date of Period Contributions Losses Distributions of Period
- ---- -------------- ------------- --------- ------------- --------------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Year Ended
December 31, 1993 $ 4 $ - $ - $ 2 $ 2
===== ==== ==== ===== =====
Year Ended
December 31, 1994 $ 2 $ - $ - $ 2 $ -
===== ==== ==== ===== =====
Year Ended
December 31, 1995 $ - $ - $ 1 $ 1 $ -
===== ==== ==== ===== =====
</TABLE>
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,
1995 1994
---- ----
(Amounts in Thousands)
Cash and cash equivalents $12 $13
Notes receivable, net - 25
--- ---
Total Assets $12 $38
=== ===
<PAGE>
Page 21 of 28
LIABILITIES AND PARTNERS' CAPITAL
Partners' capital $12 $38
--- ---
Total Liabilities and Partners' Capital $12 $38
=== ===
COMBINED STATEMENTS OF OPERATIONS
INCOME
For the Years Ended December 31,
1995 1994 1993
---- ---- ----
(Amounts in Thousands)
Interest income $ 2 $ - $ -
Other income 67 1 1
---- ---- ----
Total Income 69 1 1
---- --- - ----
EXPENSES
Management fee to the General Partner 4 4 5
Other expenses 2 3 10
---- ---- ----
Total Expenses 6 7 15
---- ---- ----
Net Income (loss) $ 63 $ (6) $(14)
==== ==== ====
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:
1995 1994
---- ----
(Amounts in Thousands)
Equipment lease operations $ 1 $ 15
General Partners and Affiliates 1 1
Other 41 47
---- -----
Total $ 43 $ 63
==== =====
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.
<PAGE>
Page 22 of 28
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, 1995,
1994 and 1993, the liquidation fees accrued to the General Partners were
$14,000, $22,000 and $33,000, 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.
The net difference between the tax basis and the reported amounts of
the Partnership's assets and liabilities is as follows at December 31:
Reported Amounts Tax Basis Net Difference
---------------- --------- --------------
(Amounts in Thousands)
1995
Assets $ 1,370 $ 1,475 $ (105)
Liabilities 43 42 1
1994
Assets $ 1,763 $ 1,861 $ (98)
Liabilities 63 63 0
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.
<PAGE>
Page 23 of 28
Note 12. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net income and distributions per limited partnership unit was based on
the limited partners' share of net income and distributions and the weighted
average number of units outstanding of 16,521 for the years ended December 31,
1995, 1994 and 1993.
Note 13. Fair Value of Financial Instruments.
During the year ended December 31, 1995, the Partnership adopted
Statement of Financial Accounting Standard No. 107, "Disclosures about Fair
Value of Financial Instruments," which requires disclosure of the fair value of
financial instruments for which it is practicable to estimate fair value. 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.
Marketable Securities
The fair values of investments in marketable securities are estimated based on
quoted market prices.
The estimated fair values of the Partnership's financial instruments at
December 31, 1995 are as follows:
Carrying
Amount Fair Value
-------- ----------
(Amounts in Thousands)
Assets
Cash and cash equivalents $ 595 $ 595
Marketable securities 2 2
Notes receivable 707 1,069
Note 14. Subsequent Events.
In January 1996, cash distributions of $164,000 were made to the
Limited Partners.
<PAGE>
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 58, 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 42, is Senior Vice President, Chief Financial
Officer and Treasurer 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 45, is Senior Vice President 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 41, 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 40, is Vice President, General Counsel, Assistant
Secretary and a Director 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.
HOWARD SOLOVEI, age 34, is Vice President, Finance, Assistant Treasurer
and a Director of PLI. He has been associated with PLI since 1984. Mr.
Solovei's principal activities are in the areas of arranging and managing the
company's banking relationships for its various corporations, partnerships and
securitized asse t pools. Mr. Solovei is also involved in corporate financial
<PAGE>
Page 25 of 28
planning and various data processing-related projects. Mr. Solovei graduated
with a B.S. in Business from the University of California at Berkeley in 1984.
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.
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 Capital Assurance Fund
Phoenix Leasing Income Fund VII
Phoenix Leasing Income Fund VI
Phoenix Leasing Growth Fund 1982 and
Phoenix Leasing Income Fund 1981
<TABLE>
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.
<CAPTION>
(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)
<S> <C> <C> <C> <C>
Phoenix Leasing General Partner $46(1) $0 $0
Incorporated
Gus Constantin General Partner 5(2) 0 0
- - -
All General Partners General Partners $51 $0 $0
== = =
</TABLE>
(1) consists of management and liquidation fees.
(2) consists of liquidation fees.
<TABLE>
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.
<PAGE>
Page 26 of 28
(b) The General Partner of the Registrant owns the equity securities
of the Registrant set forth in the following table:
<CAPTION>
(1) (2) (3)
Title of Class Amount Beneficially Owned Percent of Class
-------------- ------------------------- ----------------
<S> <C> <C> <C>
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
</TABLE>
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 year ended December 31, 1995.
(c) Exhibits.
27. Financial Data Schedule.
<PAGE>
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 28, 1996 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 28, 1996
- ---------------------- Director of Phoenix Leasing Incorporated --------------
(Gus Constantin) General Partner
/S/ PARITOSH K. CHOKSI Chief Financial Officer, March 28, 1996
- ---------------------- Senior Vice President --------------
(Paritosh K. Choksi) and Treasurer of
Phoenix Leasing Incorporated
General Partner
/S/ BRYANT J. TONG Senior Vice President, Financial March 28, 1996
- ---------------------- Operations of --------------
(Bryant J. Tong) (Principal Accounting Officer)
Phoenix Leasing Incorporated
General Partner
/S/ GARY W. MARTINEZ Senior Vice President of March 28, 1996
- ---------------------- Phoenix Leasing Incorporated --------------
General Parnter
/S/ HOWARD SOLOVEI Vice President, Finance March 28, 1996
- ---------------------- Assistant Treasurer and a --------------
(Howard Solovei) Director of Phoenix Leasing Incorporated
General Partner
/S/ MICHAEL K. ULYATT Partnership Controller March 28, 1996
- ---------------------- Phoenix Leasing Incorporated --------------
(Michael K. Ulyatt) General Partner
<PAGE>
<TABLE>
Page 28 of 28
PHOENIX LEASING INCOME FUND 1977
SCHEDULE II
(Amounts in Thousands)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>
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
- ------------------------------------- ------------------- ------------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993
Allowance for losses on accounts
receivable $ 14 $ 16 $ 0 $ 7 $ 23
Allowance for early termination
of financing leases 6 2 0 0 8
Allowance for losses on notes
receivable 72 20 0 0 92
------ ----- ---- ---- ------
Totals $ 92 $ 38 $ 0 $ 7 $ 123
====== ===== ==== ==== ======
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
====== ===== ==== ==== ======
</TABLE>
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0
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