Page 1 of 11
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-Q
_X_ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
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 0-11168
-------
PHOENIX LEASING INCOME FUND 1981
- --------------------------------------------------------------------------------
Registrant
California 94-2735708
- --------------------------------- ----------------------------------
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
requirements for the past 90 days.
Yes__X__ No_____
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Part I. Financial Information
------------------------------
Item 1. Financial Statements
PHOENIX LEASING INCOME FUND 1981
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
March 31, December 31,
1996 1995
---- ----
ASSETS
Cash and cash equivalents $ 540 $ 1,127
Accounts receivable (net of allowance for losses on
accounts receivable of $4 at March 31, 1996 and
December 31, 1995) 1 6
Notes receivable 11 11
Equipment on operating leases and held for lease
(net of accumulated depreciation of $359 and $360
at March 31, 1996 and December 31, 1995, respectively) 7 13
Investment in joint ventures 160 165
Other assets 38 32
------- -------
Total Assets $ 757 $ 1,354
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 60 $ 48
------- -------
Total Liabilities 60 48
------- -------
Partners' Capital
General Partners -- 2
Limited Partners, 25,000 units authorized, 20,883
units issued and 18,762 units outstanding at
March 31, 1996 and December 31, 1995 708 1,318
Unrealized losses on marketable securities
available-for-sale (11) (14)
------- -------
Total Partners' Capital 697 1,306
------- -------
Total Liabilities and Partners' Capital $ 757 $ 1,354
======= =======
The accompanying notes are an integral part of these statements.
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PHOENIX LEASING INCOME FUND 1981
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Rental income $ 20 $ 22
Equity in earnings from joint ventures, net 25 21
Interest income 9 14
------- -------
Total Income 54 57
------- -------
EXPENSES
Depreciation 6 6
Management fees to General Partner 2 3
Liquidation fees to General Partner 67 70
Legal expense 11 -
General and administrative expenses 13 10
------- -------
Total Expenses 99 89
------- -------
NET LOSS $ (45) $ (32)
======= =======
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (2.55) $ (1.96)
======= =======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ 29.99 $ 29.99
======= =======
ALLOCATION OF INCOME(LOSS):
General Partners $ 3 $ 5
Limited Partners (48) (37)
------- -------
$ (45) $ (32)
======= =======
The accompanying notes are an integral part of these statements.
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PHOENIX LEASING INCOME FUND 1981
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Operating Activities:
Net loss $ (45) $ (32)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 6 6
Equity in earnings from joint ventures, net (25) (21)
Decrease in accounts receivable 5 17
Increase (decrease) in accounts payable and
accrued expenses 12 (31)
Decrease (increase) in other assets (3) 3
------- -------
Net cash used by operating activities (50) (58)
------- -------
Investing Activities:
Principal payments, financing leases -- 2
Principal payments, notes receivable -- 10
Distributions from joint ventures 30 49
------- -------
Net cash provided by investing activities 30 61
------- -------
Financing Activities:
Distributions to partners (567) (563)
------- -------
Net cash used by financing activities (567) (563)
------- -------
Decrease in cash and cash equivalents (587) (560)
Cash and cash equivalents, beginning of period 1,127 1,509
------- -------
Cash and cash equivalents, end of period $ 540 $ 949
======= =======
The accompanying notes are an integral part of these statements.
<PAGE>
Page 5 of 11
PHOENIX LEASING INCOME FUND 1981
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 1995 amounts have been reclassified to conform
to the 1996 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, 1996, the recorded investment in
notes that are considered to be impaired under Statement No. 114 is $11,000 for
which there is no allowance. The average recorded investment in impaired loans
during the three months ended March 31, 1996 was approximately $11,000.
Note 5. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net income (loss) and distributions per limited partnership unit were
based on the limited partner's share of net income (loss) and distributions, and
the weighted average number of units outstanding of 18,762 for the three months
ended March 31, 1996 and 1995. For purposes of allocating income (loss) and
distributions to each individual limited partner, the Partnership allocates net
income (loss) and distributions based upon each respective limited partner's
ending capital account balance. The use of this method accurately reflects each
limited partner's participation in the partnership including reinvestment
through the Capital Accumulation Plan. As a result, the calculation of net
income (loss) and distributions per limited partnership unit is not indicative
of per unit income (loss) and distributions due to reinvestments through the
Capital Accumulation Plan.
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Page 6 of 11
Note 6. Investment in Joint Ventures.
Equipment Joint Ventures
The aggregate combined statements of operations of the equipment joint
ventures is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Rental income $ 682 $ 919
Gain on sale of equipment 248 578
Other income 41 60
------ ------
Total income 971 1,557
------ ------
EXPENSES
Depreciation 89 347
Lease related operating expenses 464 734
Management fees to General Partner 32 64
General and administrative expenses 6 7
------ ------
Total expenses 591 1,152
------ ------
Net income $ 380 $ 405
====== ======
Financing Joint Ventures
The aggregate combined statements of operations of the financing joint
ventures is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Interest income - notes receivable $17 $28
Other income 2 4
--- ---
Total income 19 32
--- ---
EXPENSES
Management fees to General Partner -- 2
General and administrative expenses 4 6
--- ---
Total expenses 4 8
--- ---
Net income $15 $24
=== ===
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Page 7 of 11
Foreclosed Cable System Joint Ventures
The aggregate combined statements of operations of the foreclosed cable
systems joint ventures is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Subscriber revenue $ 133 $ 146
Other income 3 2
----- -----
Total income 136 148
----- -----
EXPENSES
Depreciation and amortization 49 55
Program services 44 51
Management fees to an affiliate of the General Partner 6 7
Provision for losses on accounts receivable 1 1
General and administrative expenses 48 48
----- -----
Total expenses 148 162
----- -----
Net loss before income taxes (12) (14)
Income tax expense (1) (1)
----- -----
Net loss $ (13) $ (15)
===== =====
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Page 8 of 11
PHOENIX LEASING INCOME FUND 1981
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
The Partnership reported a net loss of $45,000 for the three months ended
March 31, 1996, as compared to a net loss of $32,000 for the same period in the
preceding year. The increase in the net loss during 1996 is attributable to an
increase in total expenses.
Total revenues for the three months ended March 31, 1996 decreased by
$3,000, as compared to the prior year. The decrease in total revenues is the
result of a decline of $5,000 in interest income earned from the Partnership's
cash and cash equivalents. The decline in interest income is partially offset by
an increase in earnings from joint ventures of $4,000, which will be further
discussed under "Joint Ventures".
In addition to the decrease in interest income, the Partnership also
experienced a decrease in rental income. The reduction in rental income of
$2,000 for the three months ended March 31, 1996, as compared to the same period
in the prior year, is reflective of a decrease in the size of the equipment
portfolio as a result of the ongoing liquidation of equipment. Because the
Partnership is in its liquidation stage, it is not expected to acquire any
additional equipment. As a result, rental revenues are expected to continue to
decline as the portfolio is liquidated and the remaining equipment is re-leased
at lower rental rates. At March 31, 1996, the Partnership owned equipment with
an aggregate original cost of $571,000 compared to $807,000 at March 31, 1995.
Total expenses increased by $10,000 for the three months ended March 31,
1996, as compared to the same period in the preceding year. The increase is
primarily attributable to an increase in legal expense of $11,000 for the three
months ended March 31, 1996, as compared to the same period in 1995. This
increase is primarily due to legal costs incurred on a defaulted note
receivable.
The increase in general and administrative expenses of $3,000 is due to
the write off of sales tax receivables for several leases that were determined
to be uncollectible.
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.
The increase in earnings from joint ventures of $4,000 for the three
months ended March 31, 1996, compared to the same period in the previous year,
is due to a decrease in lease related operating expenses, mainly maintenance,
remarketing, and refurbishing costs in one of the equipment joint ventures in
which the Partnership has an interest. In addition, this equipment joint venture
experienced a decrease in depreciation expense.
<PAGE>
Page 9 of 11
Liquidity and Capital Resources
The Partnership reported net cash used by equipment leasing and financing
activities of $50,000 during the three months ended March 31, 1996, as compared
to net cash used of $46,000 during the same period in 1995. The increase in cash
used for the three months ended March 31, 1996 is attributable to an increase in
expenses combined with a decrease in payments from lessees and borrowers.
Distributions from joint ventures were $30,000 for the three months ended
March 31, 1996, compared to $49,000 for the same period in the preceding year.
The decrease during the three months ended March 31, 1996 is attributable to the
closure of two equipment joint ventures.
As of March 31, 1996, the Partnership owned equipment being held for lease
with a purchase price of $34,000 and a net book value of $0, compared to
$238,000 and $2,000, respectively at March 31, 1995. 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 distributions of $567,000 and $563,000 for
the periods ended March 31, 1996 and 1995, respectively. As a result, the
cumulative distributions to the Limited Partners are $20,661,000 and $19,539,000
as of March 31, 1996 and 1995, respectively. The General Partner did not receive
cash distributions during the three months ended March 31, 1996 and 1995, but
did receive payment of certain management and liquidation fees.
As the Partnership's asset portfolio continues to decline as a result of
the ongoing liquidation of assets, it is expected that the cash generated from
operations will also decline. Due to the decrease in cash generated by leasing
and financing activities, distributions are being made annually. The January
1996 annual distribution was made at approximately the same rate as the January
1995 distribution. The Partnership will reach the end of its term on December
31, 1996 and is therefore currently in the process of liquidating its remaining
assets and liabilities. Upon termination, the Partnership will make a final
distribution to partners of the remaining 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 ongoing
operational expenses.
<PAGE>
Page 10 of 11
PHOENIX LEASING INCOME FUND 1981
March 31, 1996
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:
(27) Financial Data Schedule
b) Reports on 8-K: None
<PAGE>
Page 11 of 11
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 1981
--------------------------------
(Registrant)
Date Title Signature
---- ----- ---------
May 13, 1996 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- --------------------- Senior Vice President ----------------------
and Treasurer of (Paritosh K. Choksi)
Phoenix Leasing Incorporated
General Partner
May 13, 1996 Senior Vice President, /S/ BRYANT J. TONG
- --------------------- Financial Operations ----------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Incorporated
General Partner
May 13, 1996 Senior Vice President of /S/ GARY W. MARTINEZ
- --------------------- Phoenix Leasing Incorportated ----------------------
General Partner (Gary W. Martinez)
May 13, 1996 Partnership Controller /S/ MICHAEL K. ULYATT
- --------------------- Phoenix Leasing Incorportated ----------------------
General Partner (Michael K. Ulyatt)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 540
<SECURITIES> 0
<RECEIVABLES> 16
<ALLOWANCES> 4
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 366
<DEPRECIATION> 359
<TOTAL-ASSETS> 757
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 697
<TOTAL-LIABILITY-AND-EQUITY> 757
<SALES> 0
<TOTAL-REVENUES> 54
<CGS> 0
<TOTAL-COSTS> 99
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (45)
<INCOME-TAX> 0
<INCOME-CONTINUING> (45)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45)
<EPS-PRIMARY> (2.55)
<EPS-DILUTED> 0
</TABLE>
