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 March 31, 1997
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 - MARCH 31, 1997
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS - March 31, 1997 and December 31, 1996 .................
STATEMENTS OF OPERATIONS - For the three months ended
March 31, 1997 and 1996 ..........................................
STATEMENT OF PARTNERS' EQUITY - For the three months ended
March 31, 1997....................................................
STATEMENTS OF CASH FLOWS - For the three months ended
March 31, 1997 and 1996 ..........................................
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
March 31, December 31,
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Leased equipment - net of accumulated depreciation
of $750,554 and $5,531,953 ................................. $ 60,021 $3,161,494
Equipment held for lease or sale, net of
accumulated depreciation of $4,841,065 ..................... 3,041,807 --
Cash and cash equivalents ..................................... 191,019 201,251
Other receivables and prepaid expenses ........................ 63,148 50,633
---------- ----------
$3,355,995 $3,413,378
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses ......................... $ 45,718 $ 44,108
Deferred income ............................................... -- 49,800
Due to affiliates ............................................. 1,693 4,025
---------- ----------
Total liabilities ...................................... 47,411 97,933
---------- ----------
Commitments and contingencies
Partners' equity
Limited partners' equity (as restated) (20,442 units
issued and outstanding) ................................... 3,274,509 3,281,301
General partners' equity (as restated) ........................ 34,075 34,144
---------- ----------
Total partners' equity ..................................... 3,308,584 3,315,445
---------- ----------
$3,355,995 $3,413,378
========== ==========
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN LEASING INVESTORS VIII-B L.P.
STATEMENTS OF OPERATIONS
For the three months ended
March 31,
-----------------------
1997 1996
--------- ----------
<S> <C> <C>
Revenues
Rental ............................................ $ 86,307 $ 229,079
Other - principally interest ...................... 2,491 3,500
--------- ---------
88,798 232,579
--------- ---------
Costs and expenses
Depreciation ...................................... 59,666 142,523
General and administrative ........................ 26,630 22,676
Operating ......................................... 11,695 286
Interest .......................................... -- 15,949
Fees to affiliates ................................ (2,332) 4,582
--------- ---------
95,659 186,016
--------- ---------
Net (loss) income ................................... $ (6,861) $ 46,563
========= =========
Net (loss)income attributable to
Limited partners .................................. $ (6,792) $ 46,097
General partners .................................. (69) 466
--------- ---------
$ (6,861) $ 46,563
========= =========
Net income per unit of limited partnership interest
(20,442 units outstanding) ........................ $ (.33) $ 2.26
========= =========
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN LEASING INVESTORS VIII-B, L.P.
STATEMENT OF PARTNERS' EQUITY
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
----------- ----------- -----------
<S> <C> <C> <C>
Balance, January 1, 1997 ............. $ 3,383,511 $ (68,066) $ 3,315,445
Reallocation of partners' equity ..... (102,210) 102,210
----------- ----------- -----------
Balance, January 1, 1997 (as restated) 3,281,301 34,144 3,315,445
Net loss for the three months
ended March 31, 1997
(6,792) (69) (6,861)
----------- ----------- -----------
Balance, March 31, 1997 .............. $ 3,274,509 $ 34,075 $ 3,308,584
=========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN LEASING INVESTORS VIII-B, L.P.
STATEMENTS OF CASH FLOWS
For the three months ended
March 31,
--------------------------
1997 1996
--------- ---------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net (loss) income ........................................ $ (6,861) $ 46,563
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities
Depreciation ...................................... 59,666 142,523
Changes in assets and liabilities
Other receivables and prepaid expenses ................ (12,515) (12,098)
Accounts payable and accrued expenses ................. 1,610 (13,060)
Deferred income ....................................... (49,800) --
Due to affiliates ..................................... (2,332) (1,721)
Accrued interest payable .............................. -- (431)
--------- ---------
Net cash (used in) provided by operating activities (10,232) 161,776
--------- ---------
Cash flows from financing activities
Distributions to partners ................................ -- (41,297)
Principal payments of notes payable ...................... -- (191,243)
--------- ---------
Net cash used in financing activities ............. -- (232,540)
--------- ---------
Net decrease in cash and cash equivalents ..................... (10,232) (70,764)
Cash and cash equivalents, beginning of period ................ 201,251 302,679
--------- ---------
Cash and cash equivalents, end of period ...................... $ 191,019 $ 231,915
========= =========
Supplemental disclosure of cash flow information
Interest paid ............................................ $ -- $ 16,380
========= =========
See notes to financial statements.
</TABLE>
<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, 1996. The
results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full year.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Leased equipment and equipment held for lease or sale
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"). Presidio
Boram Corp., a subsidiary of Presidio, is 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>
AMERICAN LEASING INVESTORS VIII-B, L.P.
NOTES TO FINANCIAL STATEMENTS
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 three months ended March 31, 1997 and 1996,
reimbursable expenses due to Wexford from the Partnership amounted to
$3,150 and $6,000.
Presidio is a liquidating company. Although Presidio has no immediate
plans to do so, it will ultimately seek to dispose of the interests
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 $730 and $4,582 for the three
months ended March 31, 1997 and 1996, 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 three months ended March 31, 1997
and 1996.
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.
<PAGE>
AMERICAN LEASING INVESTORS VIII-B, L.P.
NOTES TO FINANCIAL STATEMENTS
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
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 are paid by Equipment Management.
4 PARTNERS' EQUITY
The General Partners hold a 1% equity interest in the Partnership. At
the inception of the Partnership, the General Partners' equity account
was credited with only the actual capital contributed in cash, $1,000.
The Partnership's management determined that this accounting does not
appropriately reflect the limited partners' and the General Partners'
relative participations in the Partnership's net assets, since it does
not reflect the General Partners' 1% equity interest in the
Partnership. Thus, the Partnership has restated its financial
statements to reallocate $102,210 (1% of the gross proceeds raised at
the Partnership's formation) of the partners' equity to the General
Partners' equity account. This reallocation was made as of the
inception of the Partnership and all periods presented in the financial
statements have been restated to reflect the reallocation. The
reallocation has no impact on the Partnership's financial position,
results of operations, cash flows, distributions to partners, or the
partners' tax basis capital accounts.
5 SUBSEQUENT EVENT
On January 21, 1997, the lease of the British Aerospace HS 125-800A
aircraft (the "DuPont Aircraft") owned by the Partnership, expired in
accordance with its original terms. The associated debt was repaid upon
the receipt of the final rental installment. The lessee continued to
utilize the DuPont Aircraft, with the Partnership's consent, until
January 31, 1997 at which time the DuPont Aircraft was made available
for its return inspection. On April 16, 1997, the Partnership sold the
DuPont Aircraft to an unaffiliated third party for a purchase price of
$5,400,000, exclusive of selling expenses of approximately $118,000. At
the time of sale, the DuPont Aircraft had a net carrying value of
approximately $3,041,800.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The General Partners hold a 1% equity interest in the Partnership. At
the inception of the Partnership, the General Partners' equity account
was credited with only the actual capital contributed in cash, $1,000.
The Partnership's management determined that this accounting does not
appropriately reflect the limited partners' and the General Partners'
relative participations in the Partnership's net assets, since it does
not reflect the General Partners' 1% equity interest in the
Partnership. Thus, the Partnership has restated its financial
statements to reallocate $102,210 (1% of the gross proceeds raised at
the Partnership's formation) of the partners' equity to the General
Partners' equity account. This reallocation was made as of the
inception of the Partnership and all periods presented in the financial
statements have been restated to reflect the reallocation. The
reallocation has no impact on the Partnership's financial position,
results of operations, cash flows, distributions to partners, or the
partners' tax basis capital accounts.
As of March 31, 1997, the Partnership had operating reserves of
approximately $206,756 which was comprised of undistributed cash from
operations and sales of approximately $104,756 as well as the general
working capital reserve of approximately $102,000. On April 16, 1997,
the Partnership sold one of its two remaining assets, a British
Aerospace HS 125-800A aircraft (the "Dupont Aircraft"), and generated
net proceeds of approximately $5,282,000 in connection with the sale.
As a result, the Partnership anticipates that during the second quarter
of 1997 it will distribute the net proceeds of the sale, less any
amounts required as reserves, which would amount to approximately $252
per Unit. The Partnership's sole remaining asset, packaging line
equipment (the "Packaging Line Equipment") formerly leased to Xerox
Corporation ("Xerox"), is not currently generating any revenue and is
the subject of litigation described in Part II, Item 1. The Partnership
does not anticipate that it will make any additional distributions
other than the one referred to above until it disposes of the Packaging
Line Equipment and resolves the issues associated with the litigation.
The Partnership had no outstanding material commitments for capital
expenditures as of March 31, 1997.
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.
Set forth below is a description of various transactions which have
impacted the liquidity of the Partnership during 1997 and 1996:
(i) In early July 1994, upon the receipt of the final rental
installment during the initial lease term associated with the
Packaging Line Equipment, the associated nonrecourse debt was
repaid. Xerox, the lessee of the Packaging Line Equipment,
exercised its right to renew the lease through December 1995, in
accordance with its "Fair Market Rental Value" renewal option at
a fair market rental rate equal to approximately 42% of the
<PAGE>
Liquidity and Capital Resources (continued)
original rent. Since January 1, 1996, the Partnership and Xerox
have attempted to reach agreement for either a lease extension or
a sale of the Packaging Line Equipment. Notwithstanding the
absence of an agreement on a lease extension, and without the
consent of the Partnership, Xerox continued to utilize the
Packaging Line Equipment while refusing to pay any rent. The
Partnership and Xerox were unable to reach an agreement and, on
April 17, 1997, the Partnership commenced an action against Xerox
which is described in Part II, Item 1. The Packaging Line
Equipment had a net carrying value of approximately $60,021 and
$78,259 at March 31, 1997 and December 31, 1996, respectively.
(ii) On January 21, 1997, the lease of the DuPont Aircraft owned by
the Partnership expired in accordance with its original terms.
The associated debt was repaid upon the receipt of the final
rental installment. The lessee continued to utilize the DuPont
Aircraft, with the Partnership's consent, until January 31, 1997
at which time the DuPont Aircraft was made available for its
return inspection. On April 16, 1997, the Partnership sold the
DuPont Aircraft to an unaffiliated third party for a purchase
price of $5,400,000, exclusive of selling expenses of
approximately $118,000. At the time of sale, the DuPont Aircraft
had a net carrying value of approximately $3,041,800.
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 are paid by Equipment
Management.
Results of Operations
Net income decreased for the three months ended March 31, 1997 as
compared to the net income for the three months ended March 31, 1996,
primarily due to expiration of the DuPont Aircraft lease on January 21,
1997.
Expenses decreased for the three months ended March 31, 1997 in
comparison to the three months ended March 31, 1996 due to reduction in
interest expense, due primarily to the total repayment of debt
associated with the DuPont Aircraft and decrease of depreciation
expense.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
On June 30, 1994, the Partnership's lease of certain packaging
line equipment (the "Packaging Line Equipment") with Xerox
Corporation ("Xerox") was scheduled to expire in accordance with
the original lease terms (the "Xerox Lease"). Upon receipt of the
final rental installment due under the Xerox Lease the associated
nonrecourse debt was repaid.
In late 1993, Xerox had notified the Partnership of its intent to
exercise its right to extend the Xerox Lease and Xerox and the
Partnership commenced negotiations to determine the fair market
rental value of the Packaging Line Equipment. Pursuant to the
terms of the Xerox Lease, Xerox had the right to elect to extend
the Xerox Lease for two consecutive periods of one year each. In
October 1995, the Partnerships and Xerox agreed upon a lease rate
for an eighteen month lease renewal which expired in December 31,
1995.
Since January 1, 1996, the Partnership and Xerox have attempted
to reach agreement for either a lease extension or a sale of the
Packaging Line Equipment. Notwithstanding the absence of an
agreement on a lease extension, and without the consent of the
Partnership, Xerox continued to utilize the Packaging Line
Equipment while refusing to pay any rent. The Partnership and
Xerox were unable to reach an agreement and, on April 17, 1997,
the Partnership commenced an action against Xerox in the Supreme
Court of the State of New York, County of New York, seeking
compensation and punitive damages relating to Xerox's retention
of the Packaging Line Equipment.
Xerox has not yet filed an answer to the complaint.
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: May 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF TEH MARCH 31,1997 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 191,019
<SECURITIES> 0
<RECEIVABLES> 63,148
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 254,167
<PP&E> 8,693,448
<DEPRECIATION> 5,591,620
<TOTAL-ASSETS> 3,355,995
<CURRENT-LIABILITIES> 47,411
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,308,584
<TOTAL-LIABILITY-AND-EQUITY> 3,355,995
<SALES> 0
<TOTAL-REVENUES> 88,798
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 95,659
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,861)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,861)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
