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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission file number 0-15801
AMERICAN LEASING INVESTORS VIII-B, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3275939
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
411 West Putnam Avenue, Greenwich, CT 06830
(Address of principal executive offices)
(203) 862-7000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check 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 [ ]
<PAGE>
AMERICAN LEASING INVESTORS VIII-B, L.P.
FORM 10-Q - SEPTEMBER 30, 1996
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS - September 30, 1996 and December 31, 1995
STATEMENTS OF OPERATIONS - For the three months ended September 30, 1996
and 1995 and the nine months ended September 30, 1996 and 1995
STATEMENT OF PARTNERS' EQUITY - For the nine months ended
September 30, 1996
STATEMENTS OF CASH FLOWS - For the nine months ended
September 30, 1996 and 1995
NOTES TO FINANCIAL STATEMENTS
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AMERICAN LEASING INVESTORS VIII-B, L.P.
BALANCE SHEETS
September 30, December 31,
1996 1995
----------- -----------
ASSETS
<S> <C> <C>
Leased equipment - net of accumulated depreciation
of $5,389,432 and $4,961,865 .................. $ 3,304,017 $ 3,731,584
Cash and cash equivalents ........................ 209,231 302,679
Accounts receivable .............................. 37,306 --
Other receivables and prepaid expenses ........... 1,118 1,834
----------- -----------
$ 3,551,672 $ 4,036,097
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Notes payable .................................... $ 204,547 $ 791,382
Accounts payable and accrued expenses ............ 50,072 69,035
Deferred income .................................. 49,800 49,800
Due to affiliates ................................ 4,025 5,746
Accrued interest payable ......................... 460 1,781
Distributions payable ............................ -- 41,297
----------- -----------
Total liabilities ......................... 308,904 959,041
----------- -----------
Commitments and contingencies
Partners' equity
Limited partners' equity (20,442 units issued
and outstanding) .............................. 3,311,561 3,147,506
General partners' deficit ........................ (68,793) (70,450)
----------- -----------
Total partners' equity ........................ 3,242,768 3,077,056
----------- -----------
$ 3,551,672 $ 4,036,097
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN LEASING INVESTORS VIII-B, L.P.
STATEMENTS OF OPERATIONS
For the three months ended For the nine months ended
September 30, September 30,
-------------------------- --------------------------
1996 1995 1996 1995
-------- -------- -------- --------
Revenues
<S> <C> <C> <C> <C>
Rental ................................................ $229,080 $243,739 $687,238 $696,026
Other, principally interest ........................... 2,775 6,026 8,966 20,854
-------- -------- -------- --------
231,855 249,765 696,204 716,880
-------- -------- -------- --------
Costs and expenses
Depreciation .......................................... 142,523 142,523 427,567 427,567
General and administrative ............................ 18,237 12,229 53,806 67,936
Interest .............................................. 7,160 24,352 34,712 85,153
Fees to affiliates .................................... 4,582 4,875 13,745 13,921
Operating ............................................. 137 1,802 662 3,108
-------- -------- -------- --------
172,639 185,781 530,492 597,685
-------- -------- -------- --------
59,216 63,984 165,712 119,195
Gain on disposition of equipment, net ...................... -- 736,487 -- 736,487
-------- -------- -------- --------
Net income ................................................. $ 59,216 $800,471 $165,712 $855,682
======== ======== ======== ========
Net income attributable to
Limited partners ...................................... $ 58,624 $792,466 $164,055 $847,125
General partners ...................................... 592 8,005 1,657 8,557
-------- -------- -------- --------
$ 59,216 $800,471 $165,712 $855,682
======== ======== ======== ========
Net income per unit of limited partnership
interest (20,442 units outstanding) ................... $ 2.87 $ 38.77 $ 8.03 $ 41.44
======== ======== ======== ========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN LEASING INVESTORS VIII-B, L.P.
STATEMENT OF PARTNERS' EQUITY
Limited General Total
Partners' Partners' Partners'
Equity Deficit Equity
---------- ---------- ----------
<S> <C> <C> <C>
Balance, January 1, 1996 .................................. $3,147,506 $ (70,450) $3,077,056
Net income for the nine months
ended September 30, 1996 ............................. 164,055 1,657 165,712
---------- ---------- ----------
Balance, September 30, 1996 ............................... $3,311,561 $ (68,793) $3,242,768
========== ========== ==========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN LEASING INVESTORS VIII-B, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended
September 30,
----------------------
1996 1995
--------- ---------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net income ...................................... $ 165,712 $ 855,682
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation ............................. 427,567 427,567
Gain on disposition of equipment, net .... -- (736,487)
Changes in assets and liabilities
Accounts receivable .......................... (37,306) (26,687)
Other receivables and prepaid expenses ....... 716 3,650
Accounts payable and accrued expenses ........ (18,963) (21,836)
Deferred income .............................. -- 49,800
Due to affiliates ............................ (1,721) 920
Accrued interest payable ..................... (1,321) --
--------- ---------
Net cash provided by operating activities 534,684 552,609
--------- ---------
Cash flows from investing activities
Other non-operating receipts .................... -- 33,486
--------- ---------
Cash flows from financing activities
Distributions to partners ....................... (41,297) (103,242)
Principal payments of notes payable ............. (586,835) (593,923)
--------- ---------
Net cash used in financing activities .... (628,132) (697,165)
--------- ---------
Net decrease in cash and cash equivalents ............ (93,448) (111,070)
Cash and cash equivalents, beginning of period ....... 302,679 584,144
--------- ---------
Cash and cash equivalents, end of period ............. $ 209,231 $ 473,074
========= =========
Supplemental disclosure of cash flow information
Interest paid ................................... $ 36,033 $ 98,153
========= =========
</TABLE>
See motes to financial statements.
<PAGE>
AMERICAN LEASING INVESTORS VIII-B, L.P.
NOTES TO FINANCIAL STATEMENTS
1 INTERIM FINANCIAL INFORMATION
The summarized financial information contained herein is unaudited;
however, in the opinion of management, all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of such
financial information have been included. The accompanying financial
statements, footnotes and discussion should be read in conjunction with
the financial statements, related footnotes and discussions contained
in the American Leasing Investors VIII-B, L.P. (the "Partnership")
annual report on Form 10-K for the year ended December 31, 1995. The
results of operations for the nine months ended September 30, 1996 are
not necessarily indicative of the results to be expected for the full
year.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Leased equipment
The cost of leased equipment represents the initial cost of the
equipment to the Partnership plus miscellaneous acquisition and closing
costs, and is carried at the lower of depreciated cost or net
realizable value.
Depreciation is computed using the straight-line method over the
estimated useful lives of such assets (15 years for transportation
equipment and 10 years for packaging line equipment).
When equipment is sold or otherwise disposed of, the cost and
accumulated depreciation (and any related allowance for equipment
impairment) are removed from the accounts and any gain or loss on such
sale or disposal is reflected in operations. Normal maintenance and
repairs are charged to operations as incurred. The Partnership provides
allowances for equipment impairment based upon a quarterly review of
all equipment in its portfolio, when management believes that, based
upon market analysis, appraisal reports and leases currently in place
with respect to specific equipment, the investment in such equipment
may not be recoverable.
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The corporate general partner of the Partnership, ALI Capital Corp.
(the "Corporate General Partner"), the managing general partner of the
Partnership, ALI Equipment Management Corp. ("Equipment Management")
and Integrated Resources Equipment Group, Inc. ("IREG") are wholly
owned subsidiaries of Presidio Capital Corp. ("Presidio"). CDG
Associates was the associate general partner of the Partnership through
February 27, 1995. On February 28, 1995, Presidio Boram Corp., a
subsidiary of Presidio, became the associate general partner. Other
limited partnerships and similar investment programs have been formed
by Equipment Management or its affiliates to acquire equipment and,
accordingly, conflicts of interest may arise between the Partnership
and such other limited partnerships. Affiliates of Equipment Management
have also engaged in businesses related to the management of equipment
and the sale of various types of equipment and may transact business
with the Partnership.
<PAGE>
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
Subject to the rights of the Limited Partners under the Limited
Partnership Agreement, Presidio will control the Partnership through
its direct or indirect ownership of all of the shares of Equipment
Management, the Corporate General Partner and, as of February 28, 1995,
the associate general partner. Presidio is managed by Presidio
Management Company, LLC ("Presidio Management"), a company controlled
by a director of Presidio. Presidio is also party to an administrative
services agreement with Wexford Management LLC ("Wexford") pursuant to
which Wexford is responsible for the day-to-day management of Presidio
and, among other things, has authority to designate directors of
Equipment Management, the Corporate General Partner and the associate
general partner. During the nine months ended September 30, 1996,
reimbursable expenses to Wexford by the Partnership amounted to
$18,391.
Presidio is a liquidating company. Although Presidio has no immediate
plans to do so, it will ultimately seek to dispose of the interests it
acquired from Integrated Resources, Inc. including its interests in
Equipment Management, the Corporate General Partner and IREG, through
liquidation; however, there can be no assurance of the timing of such
transaction or the effect it may have on the Partnership.
The Partnership has a management agreement with IREG, pursuant to which
IREG receives 5% of annual gross rental revenues on operating leases;
2% of annual gross rental revenues on full payout leases which contain
net lease provisions; and 1% of annual gross rental revenues, if
services are performed by third parties under the active supervision of
IREG, as defined in the Limited Partnership Agreement. The Partnership
incurred equipment management fees of $13,745 and $13,921 for the nine
months ended September 30, 1996 and 1995, respectively.
During the operating and sale stage of the Partnership, IREG is
entitled to a partnership management fee equal to 4% of distributable
cash from operations, as defined in the Limited Partnership Agreement,
subject to increase after the limited partners have received certain
specified minimum returns on their investment. No partnership
management fees were incurred for the nine months ended September 30,
1996 and 1995.
<PAGE>
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
The general partners are entitled to 1% of distributable cash from
operations and cash from sales and an allocation of 1% of taxable net
income or loss of the Partnership.
During the operating and sale stage of the Partnership, IREG may be
entitled to receive certain other fees which are subordinated to the
receipt by the limited partners of their original invested capital and
certain specified minimum returns on their investment.
Upon the ultimate liquidation of the Partnership, the general partners
may be required to remit to the Partnership certain payments
representing capital account deficit restoration based upon a formula
provided within the Limited Partnership Agreement. Such restoration
amount may be less than the recorded general partners' deficit, which
could result in distributions to the limited partners of less than
their recorded equity.
In April 1995, Equipment Management and certain affiliates entered into
an agreement with Fieldstone Private Capital Group, L.P. ("Fieldstone")
pursuant to which Fieldstone performs certain management and
administrative services relating to the Partnership as well as certain
other partnerships in which Equipment Management serves as general
partner. Substantially all costs associated with the retention of
Fieldstone will be paid by Equipment Management.
4 EQUIPMENT SALE - 1995
On September 21, 1993, Hawaiian Airlines, Inc. ("Hawaiian"), filed for
reorganization under Chapter 11 of the United States Bankruptcy Code.
Hawaiian had leased two de Havilland DHC Dash 7 Series 102 aircraft
(collectively the "Hawaiian Aircraft"), owned by the Partnership,
pursuant to two separate leases (the "Hawaiian Leases"). The Hawaiian
Aircraft were subject to nonrecourse financing (the "Hawaiian Loans")
provided by an unaffiliated third party lender (the "Hawaiian Lender").
Hawaiian had suffered significant financial difficulties since at least
1990, and, through April 1994 made rental payments that were less than
the scheduled amounts due, based upon a series of proposed
restructuring plans. Such reduced rental payments resulted in the
Hawaiian loans being in default. As a result of a variety of factors,
the Partnership believed that there was a limited market for the
Hawaiian Aircraft. Accordingly, the Partnership had determined that it
would not make any payments to cure the defaults on the Hawaiian Loans.
Hawaiian emerged from bankruptcy on September 12, 1994, and on
September 28, 1994, it returned the Hawaiian Aircraft, which had been
retired from Hawaiian's fleet since April 18, 1994, to a designated
agent of the Hawaiian Lender. In September 1994, the Hawaiian Aircraft
were placed into storage in California at the Hawaiian Lender's
expense.
<PAGE>
4 EQUIPMENT SALE - 1995 (continued)
On August 3, 1995, the Hawaiian Lender foreclosed on the Hawaiian
Aircraft and held an auction to offer the Hawaiian Aircraft for sale.
As a result of the limited market and significant competition with
respect to the Hawaiian Aircraft, the Hawaiian Lender was unsuccessful
in its attempts to liquidate its security interest through a
foreclosure sale. The Partnership no longer retains an interest in the
Hawaiian Aircraft and in August 1995, the Partnership removed the net
carrying value of the Hawaiian Aircraft of approximately $2,292,000 and
the related nonrecourse notes and accrued interest payable of
approximately $2,991,000, from its respective accounts.
Both the Partnership and the Hawaiian Lender filed proofs of claim in
the Hawaiian bankruptcy case. Because the Partnership's claims
duplicated those of the Hawaiian Lender (since the Hawaiian Leases and
all amounts thereunder were assigned to the Hawaiian Lender as
collateral for the Hawaiian Loans), the Partnership withdrew its claims
and the Hawaiian Lender assumed the responsibility of pursuing its own
claims against Hawaiian.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of September 30, 1996, the Partnership had operating reserves of
approximately $197,000 which was comprised of undistributed cash from
operations and sales of approximately $94,800 as well as the general
working capital reserve of $102,200.
The Partnership's remaining revenue generating assets are one British
Aerospace Hawker Siddeley 125-800A aircraft (the "Hawker Aircraft") and
certain packaging line equipment (the "Packaging Line Equipment"). The
rents from the lease of the Hawker Aircraft are dedicated to the
repayment of debt used to acquire such equipment and to pay operating
expenses. Additionally, the rents related to the lease renewal of the
Packaging Line Equipment are nominal. Consequently, the Partnership
anticipates that cash distributions will not be significant until
January 1997 when the remaining debt on the Hawker Aircraft is repaid.
Quarterly cash from operations has reached minimal levels and the costs
associated with making quarterly cash distributions remain fixed;
therefore, the managing general partner of the Partnership has decided
to discontinue quarterly cash distributions (except that it is
anticipated that cash from sales will be distributed with respect to
the quarter in which such sales are made) and instead make periodic
cash distributions based upon the accumulation of cash in the
Partnership. It is the Partnership's intention to maintain reserves
(including the general working capital reserve) sufficient to support
the Partnership's future obligations. The Partnership may, in the
future, use certain of its reserves to upgrade its leased equipment in
order to enhance its value.
The Partnership had no outstanding material commitments for capital
expenditures as of September 30, 1996.
Inflation and changing prices have not had any material effect on the
Partnership's revenues since its inception nor does the Partnership
anticipate any material effect on its business from these factors.
In April 1995, the managing general partner of the Partnership, ALI
Equipment Management Corp. ("Equipment Management"), and certain
affiliates entered into an agreement with Fieldstone Private Capital
Group, L.P. ("Fieldstone") pursuant to which Fieldstone performs
certain management and administrative services relating to the
Partnership as well as certain other partnerships in which Equipment
Management serves as general partner. Substantially all costs
associated with the retention of Fieldstone will be paid by Equipment
Management.
<PAGE>
Results of Operations
Net income decreased for the quarter and nine months ended September
30, 1996 as compared to the net income for the quarter and nine months
ended September 30, 1995, primarily due to the recognition of a gain on
disposition of equipment in the 1995 periods. No gain was recognized in
the 1996 periods.
Revenues decreased for the quarter and nine months ended September 30,
1996 as compared to the respective prior year periods due to the lease
renewal in October 1995 of the Packaging Line Equipment at a lower
lease rate and lower balances available for investment in the 1996
periods.
Expenses decreased for the quarter and nine months ended September 30,
1996 in comparison to the corresponding periods ended September 30,
1995 due to reduction in interest expense, due primarily to the
continued reduction of the principal amount of outstanding indebtedness
by the application of rental payments on leveraged transactions.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on form 8K: None
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
AMERICAN LEASING INVESTORS VIII-B, L.P.
By: ALI Equipment Management Corp.
Managing General Partner
/s/ Douglas J. Lambert
----------------------------------------------
Douglas J. Lambert
President (Principal Executive and Financial
Officer)
Date: November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary information from the financial statements of the
September 30, 1996 Form 10-Q of American Leasing Investors VIII-B and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 209,231
<SECURITIES> 0
<RECEIVABLES> 38,424
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 247,655
<PP&E> 8,693,449
<DEPRECIATION> 5,389,432
<TOTAL-ASSETS> 3,551,672
<CURRENT-LIABILITIES> 104,357
<BONDS> 204,547
0
0
<COMMON> 0
<OTHER-SE> 3,242,768
<TOTAL-LIABILITY-AND-EQUITY> 3,551,672
<SALES> 0
<TOTAL-REVENUES> 696,204
<CGS> 0
<TOTAL-COSTS> 102,925
<OTHER-EXPENSES> 427,567
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,712
<INCOME-PRETAX> 165,712
<INCOME-TAX> 0
<INCOME-CONTINUING> 165,712
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 165,712
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
