Page 1 of 10
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 10-QSB
__X__ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________.
Commission file number 0-8868
------
PHOENIX LEASING INCOME FUND 1977
- --------------------------------------------------------------------------------
Registrant
California 94-2446904
- ---------------------------- -----------------------------------
State of Jurisdiction I.R.S. Employer Identification No.
2401 Kerner Boulevard, San Rafael, California 94901-5527
- --------------------------------------------------------------------------------
Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (415) 485-4500
--------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
preceding requirements for the past 90 days.
Yes __X__ No _____
16,521 Units of Limited Partnership Interest were outstanding as of March 31,
1997.
Transitional small business disclosure format:
Yes _____ No __X__
<PAGE>
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Part I. Financial Information
Item 1. Financial Statements
PHOENIX LEASING INCOME FUND 1977
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
March 31, December 31,
ASSETS 1997 1996
----- -----
Cash and cash equivalents $ 376 $ 369
Accounts receivable -- 17
Notes receivable (net of allowance for
losses on notes receivable of $274 at
March 31, 1997 and December 31, 1996) 525 525
Equipment on operating leases and held for
lease (net of accumulated depreciation of
$15 at March 31, 1997 and December 31, 1996) -- --
Investment in joint ventures 33 44
Other assets 5 4
----- -----
Total Assets $ 939 $ 959
===== =====
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 36 $ 39
----- -----
Total Liabilities 36 39
----- -----
Partners' Capital
General Partners (28) (26)
Limited Partners, 20,000 units authorized
and issued, 16,521 units outstanding at
March 31, 1997 and December 31, 1996 930 945
Unrealized gains on available-for-sale
securities 1 1
----- -----
Total Partners' Capital 903 920
----- -----
Total Liabilities and Partners' Capital $ 939 $ 959
===== =====
The accompanying notes are an integral part of these statements.
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PHOENIX LEASING INCOME FUND 1977
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended
March 31,
1997 1996
----- -----
INCOME
Rental income $ 1 $ 3
Equity in earnings from joint ventures, net 3 8
Interest income - notes receivable 4 --
Other income 13 6
----- -----
Total Income 21 17
----- -----
EXPENSES
Management fees to General Partner 1 --
Liquidation fees to General Partner -- 21
Legal expense 29 1
General and administrative expenses 8 10
----- -----
Total Expenses 38 32
----- -----
NET LOSS $ (17) $ (15)
===== =====
NET LOSS PER LIMITED PARTNERSHIP UNIT $(.89) $(.97)
===== =====
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $-- $9.95
===== =====
ALLOCATION OF NET INCOME (LOSS):
General Partners $ (2) $ 1
Limited Partners (15) (16)
----- -----
$ (17) $ (15)
===== =====
The accompanying notes are an integral part of these statements.
<PAGE>
Page 4 of 10
PHOENIX LEASING INCOME FUND 1977
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Three Months Ended
March 31,
1997 1996
----- -----
Operating Activities:
Net loss $ (17) $ (15)
Adjustments to reconcile net loss to net
cash used by operating activities:
Gain on sale of equipment -- (1)
Equity in earnings from joint ventures, net (3) (8)
Decrease in accounts receivable 17 1
Decrease in accounts payable and accrued
expenses (3) (10)
Increase in other assets (1) --
----- -----
Net cash used by operating activities (7) (33)
----- -----
Investing Activities:
Proceeds from sale of equipment -- 1
Distributions from joint ventures 14 13
----- -----
Net cash provided by investing activities 14 14
----- -----
Financing Activities:
Distributions to partners -- (165)
----- -----
Net cash used by financing activities -- (165)
----- -----
Increase (decrease) in cash and cash equivalents 7 (184)
Cash and cash equivalents, beginning of period 369 595
----- -----
Cash and cash equivalents, end of period $ 376 $ 411
===== =====
The accompanying notes are an integral part of these statements.
<PAGE>
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PHOENIX LEASING INCOME FUND 1977
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
The accompanying unaudited condensed financial statements have been
prepared by the Partnership in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Although management believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Partnership's Financial Statement, as filed with the
SEC in the latest annual report on Form 10-K.
Note 2. Reclassification.
Reclassification - Certain 1996 amounts have been reclassified to
conform to the 1997 presentation.
Note 3. Income Taxes.
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.
Note 4. Notes Receivable.
Impaired Notes Receivable. At March 31, 1997 and 1996, the recorded
investment in notes that are considered to be impaired was $798,000 for which
the related allowance for losses was $274,000 and $92,000, respectively. The
average recorded investment in impaired loans during the three months ended
March 31, 1997 and 1996 was approximately $798,000.
The activity in the allowance for losses on notes receivable during the
three months ended March 31, is as follows:
1997 1996
------- -------
(Amounts in Thousands)
Beginning balance $ 274 $ 92
Provision for losses - -
Write downs - -
------- -------
Ending balance $ 274 $ 92
======= =======
Note 5. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net loss and distributions per limited partnership unit were based on
the limited partners' share of net loss and distributions, and the weighted
average number of units outstanding of 16,521 for the three month periods ended
March 31, 1997 and 1996.
<PAGE>
Page 6 of 10
Note 6. Investment in Joint Ventures.
Equipment Joint Ventures
The aggregate combined financial information of the equipment joint
ventures is presented below:
March 31, December 31,
1997 1996
------ ------
(Amounts in Thousands)
Assets $2,429 $2,700
Liabilities 333 372
Partners' Capital 2,096 2,328
Three Months Ended
March 31,
1997 1996
------ ------
(Amounts in Thousands)
Revenue $ 486 $ 572
Expenses 209 336
Net Income 277 236
Financing Joint Ventures
The aggregate combined financial information of the financing joint
ventures is presented below:
March 31, December 31,
1997 1996
------ ------
(Amounts in Thousands)
Assets $ 12 $ 17
Liabilities -- --
Partners' Capital 12 17
Three Months Ended
March 31,
1997 1996
------ ------
(Amounts in Thousands)
Revenue $ 6 $ 2
Expenses 1 --
Net Income 5 2
<PAGE>
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PHOENIX LEASING INCOME FUND 1977
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Phoenix Leasing Income Fund 1977 (the Partnership) reported a net loss of
$17,000 for the three months ended March 31, 1997, as compared to a net loss of
$15,000 during the same period in 1996. The slight increase in the net loss is
due to an increase in total expenses of $6,000 offset by an increase in total
income of $4,000.
Total revenues increased $4,000 for the three months ended March 31, 1997,
compared to the same period in 1996. The increase in total revenues for the
three months ended March 31, 1997, compared to the same period in 1996, is
attributable to the increase in other income of $7,000 and an increase in
interest income from notes receivable of $4,000, offset by a decrease in equity
from joint ventures of $5,000 and a decrease in rental income of $2,000.
Other income increased by $7,000 during the three months ended March 31,
1997, when compared to the same period in 1996. This was due to the receipt of
settlement proceeds received on a defaulted lease. The increase in interest
income from notes receivable of $4,000 during the three months ended March 31,
1997, when compared to the same period in 1996. The Partnership received a
disbursement of proceeds during the three months ended March 31, 1997 which were
held in escrow for a note receivable which was paid off in 1995. In 1995, a
portion of the proceeds from the payoff of this note receivable was placed in
escrow to cover unanticipated liabilities which may have arisen after the
payoff.
Rental income decreased by $2,000 during the three months ended March 31,
1997, compared to the same period in 1996. 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. The Partnership will
reach the end of its term on December 31, 1997, at which time it will liquidate
its remaining assets, pay its remaining liabilities and distribute the remaining
cash, if any, to the limited partners. At March 31, 1997, the Partnership owned
equipment with an aggregate original cost, excluding the Partnership's pro rata
interest in joint ventures, of $47,000 at March 31, 1997 and 1996.
Total expenses increased by $6,000 for the three months ended March 31,
1997, compared to the same period in 1996. The increase is primarily the result
of increased legal expenses of $28,000 which is primarily the result of one
remaining outstanding note receivable from a cable television system operator
that is in default, offset by a decrease in liquidation fees of $21,000 to the
General Partner.
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
released at lower rental rates and eventually liquidated. Earnings from joint
ventures was $3,000 and $8,000 during both the three months ended March 31, 1997
and 1996, respectively.
<PAGE>
Page 8 of 10
Liquidity and Capital Resources
The Partnership's primary source of liquidity comes from its contractual
obligations with lessees and borrowers for fixed terms at fixed payment amounts.
The Partnership also has investments in equipment leasing and financing joint
ventures in which it receives a share of the 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 $7,000 for the three months ended March 31, 1997, as compared to $33,000 for
the same period in 1996. This decrease is due to the majority of the
Partnership's assets having been liquidated.
Distributions from joint ventures remained approximately the same for the
three months ended March 31, 1997, as compared to the same period in 1996.
The Partnership owned equipment held for lease with a purchase price of
$31,000 and a net book value of $0 at March 31, 1997 and 1996. 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 $0 and $165,000 in cash distributions during
both the three months ended March 31, 1997 and 1996, respectively. As a result,
the cumulative cash distributions to the Limited Partners are $28,604,000 as of
March 31, 1997 and 1996. The General Partner received cash distributions of $0
and $1,000 during the three months ended March 31, 1997 and 1996, respectively.
In addition, the General Partner received payment of liquidation fees of $0 and
$21,000 during the three months ended March 31, 1997 and 1996, 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. 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.
The General Partner is entitled to 11.688% of all cash distributions.
Distributions in excess of the General Partners' capital account are
characterized as liquidation fees. The total liquidation fee paid to the General
Partner will not exceed 11.688% of the sum of the net contributed capital and
cumulative net profits and losses. The fee represents an expense of the
Partnership and is specially allocated to the Limited Partners.
Cash generated from leasing and financing operations has been and is
anticipated to continue to be sufficient to meet the Partnership's on-going
operational expenses.
<PAGE>
Page 9 of 10
PHOENIX LEASING INCOME FUND 1977
March 31, 1997
Part II. Other Information.
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults Upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of Securities Holders. Inapplicable
Item 5. Other Information. Inapplicable
Item 6. Exhibits and Reports on 8-K:
a) Exhibits: None
(27) Financial Data Schedule
b) Reports on 8-K: None
<PAGE>
Page 10 of 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PHOENIX LEASING INCOME FUND 1977
--------------------------------
(Registrant)
Date Title Signature
---- ----- ---------
May 13, 1997 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- ------------------ Senior Vice President, ----------------------
Treasurer and a Director of (Paritosh K. Choksi)
Phoenix Leasing Incorporated
General Partner
May 13, 1997 Senior Vice President, /S/ BRYANT J. TONG
- ------------------ Financial Operations of ------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Incorporated
General Partner
May 13, 1997 Senior Vice President /S/ GARY W. MARTINEZ
- ------------------- and a Director of --------------------
Phoenix Leasing Incorporated (Gary W. Martinez)
General Partner
May 13, 1997 Partnership Controller of /S/ MICHAEL K. ULYATT
- ------------------- Phoenix Leasing Incorporated ---------------------
General Partner (Michael K. Ulyatt)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 376
<SECURITIES> 0
<RECEIVABLES> 799
<ALLOWANCES> 274
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 15
<DEPRECIATION> 15
<TOTAL-ASSETS> 939
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 903
<TOTAL-LIABILITY-AND-EQUITY> 939
<SALES> 0
<TOTAL-REVENUES> 21
<CGS> 0
<TOTAL-COSTS> 38
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (17)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17)
<EPS-PRIMARY> (.89)
<EPS-DILUTED> 0
</TABLE>
