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 September 30, 1998
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 0-12593
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PHOENIX LEASING INCOME FUND VII
- --------------------------------------------------------------------------------
Registrant
California 68-0001202
- ---------------------------------- ----------------------------------
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
----- -----
345,431 Units of Limited Partnership Interest were outstanding as of September
30, 1998.
Transitional small business disclosure format:
Yes No X
----- -----
Page 1 of 14
<PAGE>
Part I. Financial Information
-----------------------------
Item 1. Financial Statements
PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
September 30, December 31,
1998 1997
---- ----
ASSETS
Cash and cash equivalents $1,264 $ 333
Accounts receivable (net of allowance for
losses on accounts receivable of $23 and
$37 at September 30, 1998 and December
31, 1997, respectively) 11 33
Notes receivable (net of allowance for losses
on notes receivable of $0 and $55 at
September 30, 1998 and December 31, 1997,
respectively) -- 601
Equipment on operating leases and held for
lease (net of accumulated depreciation of
$293 and $715 at September 30, 1998 and
December 31, 1997, respectively) -- --
Property, cable systems and equipment (net
of accumulated depreciation of $579 and
$472 at September 30, 1998 and December
31, 1997, respectively) 698 774
Cable subscriber lists and franchise rights
(net of accumulated amortization of $794
and $660 at September 30, 1998 and
December 31, 1997, respectively) 498 632
Investment in joint ventures 245 410
Other assets 184 179
------ ------
Total Assets $2,900 $2,962
====== ======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 306 $ 352
Liquidation fees payable to General
Partner 953 953
------ ------
Total Liabilities 1,259 1,305
------ ------
Partners' Capital
General Partner 348 348
Limited Partners, 480,000 units authorized,
366,432 units issued and 345,431 and
345,496 units outstanding at September
30, 1998 and December 31, 1997, respectively 1,293 1,298
Unrealized gains on available-for-sale securities -- 11
------ ------
Total Partners' Capital 1,641 1,657
------ ------
Total Liabilities and Partners' Capital $2,900 $2,962
====== ======
The accompanying notes are an integral part of these statements.
2
<PAGE>
PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
INCOME
Cable subscriber revenues $ 149 $ 156 $ 448 $ 456
Rental income 52 36 100 117
Equity in losses from joint ventures,
net (106) (125) (91) (17)
Interest income, notes receivable -- -- 151 17
Other income 32 7 65 42
----- ----- ----- -----
Total Income 127 74 673 615
----- ----- ----- -----
EXPENSES
Depreciation and amortization 73 72 241 216
Lease related operating expenses 6 -- 7 1
Cable systems operations 77 72 223 224
Management fees to General Partner 13 15 73 37
Provision for losses on receivables 17 8 19 11
Reimbursed administrative cost to
General Partner 2 -- 5 --
Legal expenses 4 73 30 124
General and administrative expenses 20 22 104 81
----- ----- ----- -----
Total Expenses 212 262 702 694
----- ----- ----- -----
Net loss before income taxes (85) (188) (29) (79)
Income tax benefit (expense) 2 (3) 24 --
----- ----- ----- -----
NET LOSS $ (83) $(191) $ (5) $ (79)
===== ===== ===== =====
NET LOSS PER LIMITED
PARTNERSHIP UNIT $(.20) $(.50) $(.01) $(.23)
===== ===== ===== =====
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $-- $2.47 $-- $6.25
===== ===== ===== =====
ALLOCATION OF NET LOSS:
General Partner $ (12) $ (18) $-- $ (1)
Limited Partners (71) (173) (5) (78)
----- ----- ----- -----
$ (83) $(191) $ (5) $ (79)
===== ===== ===== =====
The accompanying notes are an integral part of these statements.
3
<PAGE>
PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Nine Months Ended
September 30,
1998 1997
---- ----
Operating Activities:
- --------------------
Net loss $ (5) $ (79)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 241 216
Equity in losses from joint ventures, net 91 17
Gain on sale of equipment (1) (13)
Gain on sale of marketable securities (15) --
Provision for losses on accounts receivable 19 11
Decrease (increase) in accounts receivable 3 (9)
Decrease in accounts payable and accrued
expenses (46) (42)
Increase in deferred income tax asset (24) --
Increase in other assets -- (16)
------- -------
Net cash provided by operating activities 263 85
------- -------
Investing Activities:
- --------------------
Principal payments, notes receivable 601 30
Proceeds from sale of equipment 1 13
Proceeds from sale of marketable securities 23 --
Distributions from joint ventures 74 242
Property, cable systems and equipment (31) (33)
------- -------
Net cash provided by investing activities 668 252
------- -------
Financing Activities:
- --------------------
Distributions to partners -- (2,163)
------- -------
Net cash used by financing activities -- (2,163)
------- -------
Increase (decrease) in cash and cash equivalents 931 (1,826)
Cash and cash equivalents, beginning of period 333 2,155
------- -------
Cash and cash equivalents, end of period $ 1,264 $ 329
======= =======
The accompanying notes are an integral part of these statements.
4
<PAGE>
PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
-------
The accompanying unaudited condensed consolidated financial statements
have been prepared by the Partnership in accordance with generally accepted
accounting principles, pursuant to the rules and regulations of the Securities
and Exchange Commission. In the opinion of Management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Although management believes that the
disclosures are adequate to make the information presented not misleading, it is
suggested that these condensed financial statements be read in conjunction with
the financial statements and the notes included in the Partnership's Financial
Statement, as filed with the SEC in the latest annual report on Form 10-K.
The Partnership Agreement stipulates the methods by which income will
be allocated to the General Partner and the limited partners. Such allocations
will be made using income or loss calculated under Generally Accepted Accounting
Principles for book purposes, which varies from income or loss calculated for
tax purposes.
The calculation of items of income and loss for book and tax purposes
may result in book basis capital accounts that vary from the tax basis capital
accounts. The requirement to restore any deficit capital balances by the General
Partner will be determined based on the tax basis capital accounts. At
liquidation of the Partnership, the General Partner's remaining book basis
capital accounts will be reduced to zero through the allocation of income or
loss.
Phoenix Cablevision of Oregon, Inc., a wholly owned subsidiary of the
Partnership, entered into an Asset Purchase Agreement dated July 9, 1998 to sell
all or substantially all of its assets. On November 2, 1998, $1,974,000 was
received for the sale of the assets.
Note 2. Reclassification.
----------------
Reclassification - Certain 1997 amounts have been reclassified to
conform to the 1998 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.
Phoenix Cablevision of Oregon, Inc. (the Subsidiary) is a corporation
subject to state and federal tax regulations. The Subsidiary reports to the
taxing authority on the accrual basis. When income and expenses are recognized
in different periods for financial reporting purposes than for income tax
purposes, deferred taxes are provided for such differences using the liability
method.
5
<PAGE>
Note 4. Notes Receivable.
----------------
Impaired Notes Receivable. At September 30, 1998, the net investment in
notes is $0. The average recorded investment in impaired loans during the nine
months ended September 30, 1998 and 1997 was approximately $18,000 and $624,000,
respectively.
The activity in the allowance for losses on notes receivable during the
nine months ended September 30, is as follows:
1998 1997
---- ----
(Amounts in Thousands)
Beginning balance $ 55 $ 359
Provision for losses -- --
Write downs (55) (83)
----- -----
Ending balance $-- $ 276
===== =====
The Partnership wrote-off the outstanding note receivable balance of
$55,000 during the nine months ended September 30, 1998 from a cable television
system operator which was considered to be impaired. This note receivable had
been fully reserved for in a previous year.
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 partners' share of net income (loss) and distributions, and
the weighted average number of units outstanding of 345,431 and 345,974 for the
nine months ended September 30, 1998 and 1997, respectively. 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.
Note 6. Investment in Joint Ventures.
----------------------------
Equipment Joint Ventures
- ------------------------
The aggregate financial information of the equipment joint ventures is
presented as follows:
September 30, December 31,
1998 1997
---- ----
(Amounts in Thousands)
Assets $243 $988
Liabilities 4 58
Partners' Capital 239 930
6
<PAGE>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ 63 $ 44 $ 117 $ 996
Expenses 640 685 662 1,146
Net Loss (577) (641) (545) (150)
Financing Joint Ventures
- ------------------------
The aggregate financial information of the financing joint ventures is
presented as follows:
September 30, December 31,
1998 1997
---- ----
(Amounts in Thousands)
Assets $41 $39
Liabilities 18 11
Partners' Capital 23 28
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ 5 $21 $66 $40
Expenses -- 1 3 5
Net Income 5 20 63 35
Foreclosed Cable Systems Joint Venture
- --------------------------------------
The aggregate financial information of the foreclosed cable systems
joint ventures is presented as follows:
September 30, December 31,
1998 1997
---- ----
(Amounts in Thousands)
Assets $1,591 $1,809
Liabilities 329 358
Partners' Capital 1,262 1,451
7
<PAGE>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ 228 $ 224 $ 676 $ 660
Expenses 233 234 680 682
Net Loss (5) (10) (4) (22)
Note 7. Subsequent Events.
-----------------
On October 19, 1998, Phoenix Concept Cablevision, Inc., a foreclosed
cable television system joint venture, received proceeds of $1,681,000 for the
sale of its assets. The Partnership owns a 22.32% interest in this joint
venture.
On November 2, 1998, proceeds of $1,974,000 was received for the sale
of the assets of Phoenix Cablevision of Oregon, Inc. These assets had a net
carrying value of approximately $1,200,000 at September 30, 1998.
A summary of the unaudited pro forma consolidated results of operations
of the Partnership for the interim periods ended September 30, 1998 and 1997, as
if the sale of Phoenix Cablevision of Oregon, Inc. had occurred at the beginning
of these periods, is as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
(Amounts in Thousands)
Total income $ 81 $ 40 $ 335 $ 168
Net income (loss) (75) (200) 68 (80)
Net income per limited partnership unit (.22) (.58) .20 (.23)
These pro forma results reflect certain adjustments which, among other
things, include a decrease in revenues from cable subscribers, decreases in
operating expenses and decreases in depreciation and amortization of tangible
and intangible assets. These pro forma consolidated statements should not
necessarily be considered as indicative of the results that would have occurred
had the acquisitions been made at the beginning of the year.
8
<PAGE>
PHOENIX LEASING INCOME FUND VII AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations.
-------------
Results of Operations
Phoenix Leasing Income Fund VII and Subsidiary (the Partnership)
reported a net loss of $83,000 and $5,000 during the three and nine months ended
September 30, 1998, respectively, as compared to a net loss of $191,000 and
$79,000 during the same periods in the preceding year. The improvement in
earnings for the three and nine months ended September 30, 1998, as compared to
the same periods in 1997, is a result of an increase in other income.
Additionally, the increase in interest income from notes receivable also
contributed to the improvement in earnings for the nine months ended September
30, 1998, as compared to the same period in the prior year.
Total revenues increased by $53,000 and $58,000 for the three and nine
months ended September 30, 1998, as compared to the same periods in the previous
year. This increase is the result of an increase in other income of $25,000 and
$23,000 for the three and nine months ended September 30, 1998, respectively,
compared to the same periods in 1997. The increase in other income is
attributable to an increase in interest income and a gain on sale of securities.
The increase in interest income from notes receivable of $134,000 for
the nine months ended September 30, 1998, compared to the same period in the
prior year, is due to the Partnership receiving settlement proceeds from a
defaulted note receivable. The Partnership received proceeds, during the second
quarter of 1998, of $752,000 as a settlement on a note with a carrying value of
$601,000.
An additional factor contributing to the increase in total revenues for
the three months ended September 30, 1998 is the increase in rental income of
$16,000, as compared to the same period in the prior year. This increase in
rental income is due to settlements received on defaulted leases.
Total expenses decreased by $50,000 for the three months ended
September 30, 1998 and increased by $8,000 for the nine months ended September
30, 1998, as compared to the same periods in the prior year. The decrease in
expenses for the three months ended September 30, 1998, as well as for the nine
months ended September 30, 1998, is due to a decline in legal expenses of
$69,000, as compared to the same period in the prior year. Legal expenses were
higher in the prior year due to a defaulted note receivable. The Partnership
received a settlement on this note during the nine months ended September 30,
1998.
The increase in expenses for the nine months ended September 30, 1998
is primarily attributable to increases in most expense items with management
fees to the General Partner and depreciation expense contributing the largest
increase. The increase in management fees of $36,000 for the nine months ended
September 30, 1998, compared to the same period in the prior year, is
attributable to the receipt of settlement proceeds from a defaulted notes
receivable, as previously discussed. Depreciation and amortization increased by
9
<PAGE>
$25,000 for the nine months ended September 30, 1998, compared to the same
period in 1997, due to an increase in cable system depreciation. These increases
were partially offset by a decrease in legal expenses of $94,000 for the nine
months ended September 30, 1998, compared to the same periods in the previous
year.
Because Phoenix Leasing Income Fund VII is in its liquidation stage, it
is not expected that the Partnership will acquire any additional equipment for
its leasing activities. As a result, revenues from leasing activities are
expected to continue to decline. The aggregate original cost of equipment owned
by the Partnership is $326,000 at September 30, 1998, as compared to $1.1
million at September 30, 1997.
Cable System
- ------------
Cable subscriber revenue and cable system operations expenses remained
relatively the same for the nine months ended September 30, 1998, as compared to
the same period in 1997.
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
liquidated.
Losses from joint ventures decreased by $19,000 for the three months
ended September 30, 1998, but increased by $74,000 for the nine months ended
September 30, 1998, as compared to the same periods in the prior year. During
the three months ended September 30, 1997, one equipment joint venture recorded
provisions for additional depreciation and losses for notes receivable, which
contributed to increasing losses for that period. Additionally, during the three
months ended September 30, 1998, this same joint venture experienced an increase
in earnings as a result of a write off of certain liabilities. The increase in
losses for the nine months ended September 30, 1998 is due to one equipment
joint venture recognizing a write down due to a settlement.
Liquidity and Capital Resources
The Partnership's primary source of liquidity comes from its cable
television system operations and its equipment leasing and financing activities.
Additionally, the Partnership is in the process of liquidating the assets of the
Partnership which will provide further liquidity to the Partnership as proceeds
from the sale of these assets are received.
During the nine months ended September 30, 1998, the net cash provided
by leasing, financing and cable television activities was $864,000, compared to
$115,000 for the same period in the prior year. The net increase in cash
generated is due to the receipt of a note receivable settlement during the nine
months ended September 30, 1998.
10
<PAGE>
Distributions from joint ventures is another source of cash generated
by the Partnership. The Partnership received distributions from joint ventures
of $74,000 for the nine months ended September 30, 1998, compared to $242,000
for the same period in 1997. Distributions from joint ventures decreased for the
nine months ended September 30, 1998, compared to the same period in the prior
year, due to the closure of one joint venture as well as another joint venture
experiencing a decline in cash available for distributions as a result of a
reduction in rental income and sales proceeds received.
As of September 30, 1998, the Partnership owned equipment held for
lease with a purchase price of $288,000 and a net book value of $0 compared to
$1,048,000 and $0, respectively at September 30, 1997. 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 $0 and $2,163,000 for
the nine months ended September 30, 1998 and 1997, respectively. As a result,
the cumulative cash distributions to the Limited Partners are $84,744,000 at
September 30, 1998 and 1997. The General Partner did not receive distributions
during the nine months ended September 30, 1998 and 1997. The Partnership
anticipates making a distribution to partners on or before December 30, 1998.
The General Partner currently anticipates that it may not be able to
liquidate the remaining assets by December 31, 1998, as previously reported. The
remaining assets of the Partnership consist primarily of an investment in
Phoenix Pacific Northwest J.V., a foreclosed cable television system joint
venture. The General Partner is continuing its efforts in marketing this cable
television system for sale.
Cash on hand and cash generated from cable television, equipment
leasing and financing operations has been and is anticipated to continue to be
sufficient to meet the Consolidated Partnership's ongoing operational expenses.
On October 19, 1998, Phoenix Concept Cablevision, Inc., a foreclosed
cable television system joint venture, received proceeds of $1,681,000 for the
sale of its assets. The Partnership owns a 22.32% interest in this joint
venture.
On November 2, 1998, proceeds of $1,974,000 was received for the sale
of the assets of Phoenix Cablevision of Oregon, Inc. These assets had a net
carrying value of approximately $1,200,000 at September 30, 1998.
Impact of the Year 2000 Issue
The "Year 2000 problem" arose because many existing computer programs
use only the last two digits to refer to a year. Therefore, these computers and
computer programs do not properly recognize a year that begins with "20" instead
of the familiar "19." If not corrected, many computer applications could fail or
create erroneous results.
The General Partner has performed an assessment of the computer
programs used to conduct the business of the Partnership that are subject to
Year 2000 risk. The General Partner and its affiliates are currently in the
process of testing, upgrading, modifying and replacing existing computer
programs that have been determined not to be Year 2000 compliant. It is
estimated that this project will be completed in mid 1999. However, if this
11
<PAGE>
project is not completed in a timely matter, the Year 2000 issue could have a
material impact on the Partnership's operations. The costs of these changes are
being incurred by the General Partner or its affiliates. Costs incurred by the
Partnership will be expensed as incurred and are not currently anticipated to be
material to the Partnership's financial position or results of operations. The
General Partner currently does not have a contingency plan, but will continue to
evaluate the need for such plan as systems and programs are tested.
The Partnership's customers consist of cable subscribers, lessees and
borrowers. The Partnership does not have exposure to any individual customer
that would materially impact the Partnership should the customer experience a
significant Year 2000 problem.
The assessments of the risks and costs of the Year 2000 issue are based
on management's best estimates. However, there can be no guarantee that these
estimates will be achieved and the actual results could differ materially from
those estimates.
12
<PAGE>
PHOENIX LEASING INCOME FUND VII
September 30, 1998
Part II. Other Information.
-----------------
Item 1. Legal Proceedings.
-----------------
On October 28, 1997, a Class Action Complaint was filed against Phoenix
Leasing Incorporated, Phoenix Leasing Associates, II and III LP., Phoenix
Securities Inc. and Phoenix American Incorporated (the "Companies") in
California Superior Court for the County of Sacramento by eleven individuals on
behalf of investors in Phoenix Leasing Cash Distribution Funds I through V (the
"Partnerships"). The Companies were served with the Complaint on December 9,
1997. The Complaint seeks declaratory and other relief including accounting,
receivership, imposition of a constructive trust and judicial dissolution and
winding up of the Partnerships, and damages based on fraud, breach of fiduciary
duty and breach of contract by the Companies as general partners of the
Partnerships. Discovery has not commenced. The Companies intend to vigorously
defend the Complaint.
Plaintiffs severed one cause of action from the Complaint, a claim
related to the marketing and sale of CDF V, and transferred it to Marin County
Superior Court (the "Marin Action"). Plaintiffs subsequently amended the Marin
Action on August 14, 1998. On October 23, 1998, the Companies filed a demurrer
to the Marin Action, seeking its dismissal. Discovery has not commenced. The
Companies intend to vigorously defend the Complaint.
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
13
<PAGE>
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 VII
-------------------------------
(Registrant)
Date Title Signature
---- ----- ---------
November 11, 1998 Executive Vice President, /S/ GARY W. MARTINEZ
- ----------------- Chief Operating Officer --------------------
and a Director of (Gary W. Martinez)
Phoenix Leasing Incorporated
General Partner
November 11, 1998 Chief Financial Officer, /S/ HOWARD SOLOVEI
- ----------------- Treasurer and a Director of --------------------
Phoenix Leasing Incorporated (Howard Solovei)
General Partner
November 11, 1998 Senior Vice President, /S/ BRYANT J. TONG
- ----------------- Financial Operations --------------------
(Principal Accounting Officer) (Bryant J. Tong)
and a Director of
Phoenix Leasing Incorporated
General Partner
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,264
<SECURITIES> 0
<RECEIVABLES> 34
<ALLOWANCES> 23
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,570
<DEPRECIATION> 872
<TOTAL-ASSETS> 2,900
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,641
<TOTAL-LIABILITY-AND-EQUITY> 2,900
<SALES> 0
<TOTAL-REVENUES> 673
<CGS> 0
<TOTAL-COSTS> 702
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 19
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (29)
<INCOME-TAX> 24
<INCOME-CONTINUING> (5)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0
</TABLE>
