Page 1 of 9
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 0-14444
-------
PHOENIX LEASING CAPITAL ASSURANCE FUND
- --------------------------------------------------------------------------------
Registrant
California 68-0032427
- ----------------------------- ----------------------------------
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 _____
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Page 2 of 9
Part I. Financial Information
------------------------------
Item 1. Financial Statements
PHOENIX LEASING CAPITAL ASSURANCE FUND
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
March 31, December 31,
1996 1995
---- ----
ASSETS
Cash and cash equivalents $ 286 $ 312
Accounts receivable (net of allowance for
losses on accounts receivable of $5 and $18
at March 31, 1996 and December 31, 1995,
respectively) 21 29
Notes receivable 23 23
Equipment on operating leases and held for lease
(net of accumulated depreciation of $770 and $833
at March 31, 1996, and December 31, 1995,
respectively) - -
Investment in zero coupon bonds, available for sale 20,066 19,824
Other assets 50 56
------- -------
Total Assets $20,446 $20,244
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 129 $ 131
------- -------
Total Liabilities 129 131
------- -------
Partners' Capital
General Partner - -
Limited Partners, 320,000 units authorized,
103,121 units issued and 87,478 and 87,714
units outstanding at March 31, 1996 and
December 31, 1995, respectively 19,951 19,577
Unrealized gain on zero coupon bonds
(unallocated to partners) 366 536
------- -------
Total Partners' Capital 20,317 20,113
------- -------
Total Liabilities and Partners' Capital $20,446 $20,244
======= =======
The accompanying notes are an integral part of these statements.
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Page 3 of 9
PHOENIX LEASING CAPITAL ASSURANCE FUND
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Rental income $ 50 $ 86
Accretion of discount, zero coupon bonds 412 380
Loss on sale of zero coupon bonds and other
marketable securities - (20)
Other income 7 6
----- -----
Total Income 469 452
----- -----
EXPENSES
Depreciation and amortization - 4
Lease related operating expenses 5 14
Management fees to General Partner 1 2
Legal expense 22 4
General and administrative expenses 24 16
----- -----
Total Expenses 52 40
----- -----
NET INCOME $ 417 $ 412
===== =====
NET INCOME PER LIMITED PARTNERSHIP UNIT $4.77 $4.55
===== =====
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ - $1.26
===== =====
ALLOCATION OF NET INCOME:
General Partner $ - $ 6
Limited Partners 417 406
----- -----
$ 417 $ 412
===== =====
The accompanying notes are an integral part of these statements.
<PAGE>
Page 4 of 9
PHOENIX LEASING CAPITAL ASSURANCE FUND
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Operating Activities:
Net income $ 417 $ 412
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization - 4
Gain on sale of equipment - (2)
Equity in earnings from joint ventures, net (3) (4)
Loss on sale of zero coupon bonds and
other securities - 20
Accretion of discount, zero coupon bonds (412) (380)
Decrease in accounts receivable 8 -
Decrease in accounts payable and accrued expenses (2) (9)
Decrease in other assets - 3
----- -----
Net cash provided by operating activities 8 44
----- -----
Investing Activities:
Principal payments, notes receivable - 2
Proceeds from sale of equipment - 2
Proceeds from sale of zero coupon bonds and other
marketable securities - 311
Distributions from joint ventures 9 6
----- -----
Net cash provided by investing activities 9 321
----- -----
Financing Activities:
Redemptions of capital (43) (287)
Distributions to partners - (118)
----- -----
Net cash used by financing activities (43) (405)
----- -----
Decrease in cash and cash equivalents (26) (40)
Cash and cash equivalents, beginning of period 312 83
----- -----
Cash and cash equivalents, end of period $ 286 $ 43
===== =====
The accompanying notes are an integral part of these statements.
<PAGE>
Page 5 of 9
PHOENIX LEASING CAPITAL ASSURANCE FUND
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 was $23,000 for
which there is no related allowance. The average recorded investment in impaired
loans during the three months ended March 31, 1996 was approximately $23,000.
Note 5. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net income and distributions per limited partnership unit were based on
the limited partners' share of net income and distributions, and the weighted
average number of units outstanding of 87,523 and 89,313 for the three month
periods ended March 31, 1996 and 1995, respectively.
<PAGE>
Page 6 of 9
PHOENIX LEASING CAPITAL ASSURANCE FUND
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Phoenix Leasing Capital Assurance Fund (the Partnership) reported net
income of $417,000 on total revenues of $469,000 during the three months ended
March 31, 1996, as compared to net income of $412,000 on total revenues of
$452,000 during the same period in 1995.
Total revenues for the three months ended March 31, 1996 increased by
$17,000, when compared to the same period in 1995. The increase in total
revenues for the period is mainly due to an increase of $32,000 from the
accretion of discount from zero coupon bonds. Partially offsetting this
increase, was a decrease in rental income of $36,000 during the three months
ended March 31, 1996, as compared to the same period in 1995. Additionally, the
Partnership did not report any gains or losses from the sale of securities
during the three months ended March 31, 1996, as compared to a loss on the sale
of zero coupon bonds and other marketable securities of $20,000 during the same
period in 1995.
The decrease in rental income is related to the overall decrease in the
amount of equipment owned by the Partnership at March 31, 1996, as compared to
March 31, 1995. At March 31, 1996, the Partnership owned equipment with an
aggregate original cost of $1.4 million, as compared to $2.6 million at March
31, 1995.
The accretion of discount from zero coupon bonds increased for the three
months ended March 31, 1996, compared to the same periods in 1995. The income
related to zero coupon bonds will continue to increase in the future as the
Partnership continues to accrete these bonds so that the carrying value will
equal the face value at the maturity date. The Partnership did not report any
sales of zero coupon bonds during the three months ended March 31, 1996, as
compared to a loss of $20,000 from the sale of zero coupon bonds during the
three months ended March 31, 1995. These bonds were sold in order to provide
sufficient cash for the payment of limited partner redemptions.
Total expenses increased by $12,000 during the three months ended March
31, 1996, as compared to the same period in 1995. This is primarily due to
increases in legal expense and general and administrative expenses. Partially
offsetting these increases were decreases in depreciation and amortization
expense and lease related operating expenses.
Liquidity and Capital Resources
The Partnership's primary source of liquidity is its investments in zero
coupon bonds. It is the intention of the Partnership to hold these bonds until
maturity or to the end of the Partnership's term, whichever occurs first. Upon
termination of the Partnership, the Partnership will use the proceeds received
upon maturity or sale of these bonds to make a final distribution to the
partners. The Partnership has, and will continue to sell a portion of these
bonds as cash is needed to pay limited partner redemptions.
The Partnership reported net cash provided by leasing and financing
activities of $8,000 and $46,000 for the three months ended March 31, 1996 and
1995, respectively. The decrease in 1996 is primarily the result of an increase
in expenses.
<PAGE>
Page 7 of 9
The Partnership paid Limited Partner redemptions of $43,000 during the
three months ended March 31, 1996, as compared to redemptions of $287,000 during
the same period in 1995. As a result, the Partnership also reported proceeds
from the sale of zero coupon bonds of $0 during the three months ended March 31,
1996, as compared to proceeds of $311,000 during the same period in 1995. The
bonds were sold in order to generate sufficient cash to pay redemptions to
limited partners.
As of March 31, 1996, the Partnership owned equipment held for lease with
a purchase price of $754,000 and a net book value of $0 compared to $1,098,000
and $0 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 cash distributions of $0 and $112,000 during
the three months ended March 31, 1996 and 1995, respectively. As a result, the
cumulative cash distributions to the Limited Partners is $9,937,000 at both
March 31, 1996 and 1995. The General Partner received cash distributions of $0
and $6,000 for the three months ended March 31, 1996 and 1995, respectively.
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 for distribution after the redemption or sale
of all the remaining assets, which primarily consists of zero coupon bonds. The
Partnership will reach the end of its term on December 31, 1996.
Cash generated from leasing and financing operations has been and is
anticipated to continue to be sufficient to meet the Partnership's continuing
operational expenses.
<PAGE>
Page 8 of 9
PHOENIX LEASING CAPITAL ASSURANCE FUND
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 9 of 9
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 CAPITAL ASSURANCE FUND
--------------------------------------
(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 Incorporated ----------------------
General Partner (Gary W. Martinez)
May 13, 1996 Partnership Controller /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-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 286
<SECURITIES> 20,066
<RECEIVABLES> 49
<ALLOWANCES> 5
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 770
<DEPRECIATION> 770
<TOTAL-ASSETS> 20,446
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,317
<TOTAL-LIABILITY-AND-EQUITY> 20,446
<SALES> 0
<TOTAL-REVENUES> 469
<CGS> 0
<TOTAL-COSTS> 52
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 417
<INCOME-TAX> 0
<INCOME-CONTINUING> 417
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 417
<EPS-PRIMARY> 4.77
<EPS-DILUTED> 0
</TABLE>
