<PAGE> Page 1 of 36
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
__X__ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
Commission File Number 0-15287
PHOENIX LEASING CASH DISTRIBUTION FUND II
(Exact name of Registrant as specified in its charter)
California 68-0032426
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
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
As of December 31, 1993, 379,583 Units of Limited Partnership interest were
outstanding. No market exists for the Units of Partnership interest and
therefore there exists no aggregate market value at December 31, 1993.
DOCUMENTS INCORPORATED BY REFERENCE: NONE <PAGE>
<PAGE> Page 2 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
1993 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Page
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . . 6
PART II
Item 5. Market for the Registrant's Securities and
Related Security Holder Matters . . . . . . . . . . . 6
Item 6. Selected Financial Data . . . . . . . . . . . . . . . 7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 8
Item 8. Financial Statements and Supplementary Data . . . . . 12
Item 9. Disagreements on Accounting and Financial
Disclosure Matters . . . . . . . . . . . . . . . . . 28
PART III
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . . . . 29
Item 11. Executive Compensation . . . . . . . . . . . . . . . 30
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . 31
Item 13. Certain Relationships and Related Transactions . . . 31
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . 32
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 33 <PAGE>
<PAGE> Page 3 of 36
PART I
Item 1. Business.
General Development of Business.
Phoenix Leasing Cash Distribution Fund II, a California limited partnership
(the "Partnership"), was organized on June 28, 1984. The Partnership was
registered with the Securities and Exchange Commission with an effective date of
November 20, 1986 and shall continue to operate until its termination date
unless dissolved sooner due to the sale of substantially all of the assets of
the Partnership or a vote of the Limited Partners. The Partnership will
terminate on December 31, 1997. The General Partner is Phoenix Leasing
Incorporated, a California corporation. The General Partner or its affiliates
also is or has been a general partner in several other limited partnerships
formed to invest in capital equipment and other assets.
The initial registration was for 300,000 units of limited partnership
interest at a price of $250 per unit with an option of increasing the public
offering up to a maximum of 400,000 units. The Partnership sold 386,308 units
for a total capitalization of $96,577,000. Of the proceeds received through the
offering, the Partnership has incurred $11,540,000 in organizational and
offering expenses. The Partnership concluded its public offering on February 4,
1988.
From the initial formation of the Partnership through December 31, 1993,
the total investments in equipment leases and financing transactions (loans),
including the Partnership's pro rata interest in investments made by joint
ventures, approximate $174,034,000. The average initial firm term of
contractual payments from equipment subject to lease was 32.20 months, and the
average initial net monthly payment rate as a percentage of the original
purchase price was 2.24%. The average initial firm term of contractual payments
from loans was 82.01 months.
Narrative Description of Business.
The Partnership's principal objective is to produce cash flow to the
investors on a continuing basis over the life of the Partnership. To achieve
this objective, the Partnership has invested in various types of capital
equipment and other assets to provide leasing or financing of the same to third
parties, including Fortune 1000 companies and their subsidiaries, middle-market
companies, emerging growth companies, cable television operators and others, on
either a long-term or short-term basis. The types of equipment that the
Partnership has invested in includes computer peripherals, terminal systems,
small computer systems, communications equipment, IBM mainframes, IBM-software
compatible mainframes, office systems, CAE/CAD/CAM equipment, telecommunications
equipment, cable television equipment, medical equipment, production and
manufacturing equipment and software products.
The Partnership has made secured loans to cable television systems,
emerging growth companies, security monitoring companies and other businesses.
These loans are asset-based and the Partnership receives a security interest in
the assets financed. <PAGE>
<PAGE> Page 4 of 36
Item 1. Business (continued):
Narrative Description of Business (continued).
The Partnership's financing activities have been concentrated in the cable
television industry. The Partnership has made secured loans (notes receivable)
to operators of cable television systems for the acquisition, refinancing,
construction, upgrade and extension of such systems located throughout the
United States. The loans to cable television system operators are secured by a
senior or subordinated interest in the assets of the cable television system,
its franchise agreements, subscriber lists, material contracts and other related
assets. In some cases the Partnership has also received personal guarantees
from the owners of the systems. At December 31, 1993, the Partnership's
investments in notes receivable primarily consist of notes receivable from four
cable television system operators. The Partnership's net investment in notes
receivable (including notes receivable reclassified to in-substance foreclosed
cable systems) of $2,740,000 approximate 40% of the total assets of the
Partnership at December 31, 1993.
Several of the cable television system operators the Partnership provided
financing to have experienced financial difficulties. These difficulties are
believed to have been caused by several factors such as: a significant
reduction in the availability of debt from banks and other financial
institutions to finance acquisitions and operations, uncertainties related to
future government regulation in the cable television industry and the economic
recession in the United States. These factors have resulted in a significant
decline in the demand for the acquisition of cable systems and have further
caused an overall decrease in the value of many cable television systems.
The Partnership has acquired equipment pursuant to either "Operating"
leases or "Full Payout" leases. The Partnership has also provided and intends
to provide financing secured by assets in the form of notes receivable.
Operating leases are generally short-term leases under which the lessor will
receive aggregate rental payments in an amount that is less than the purchase
price of the equipment. Full Payout leases are generally for a longer term
under which the non-cancellable rental payments due during the initial term of
the lease are at least sufficient to recover the purchase price of the
equipment.
The General Partner has concentrated the Partnership's activities in the
equipment leasing and financing industry, an area in which the General Partner
has developed an expertise. The computer equipment leasing industry is
extremely competitive. The Partnership competes with many well established
companies having substantially greater financial resources. Competitive factors
include pricing, technological innovation and methods of financing (including
use of various short-term and long-term financing plans, as well as the outright
purchase of equipment).
Although IBM is still a dominant factor in the computer equipment
marketplace, even IBM has been adversely affected by wide-spread competition in
this industry. Given the high degree of competition and rapid pace of
technological development in the computer equipment industry, revolutionary
changes with respect to pricing, marketing practices, technological
innovation and the availability of new and attractive financing plans could
occur at almost any time. Significant action in any of these areas might
materially and adversely affect the remarketability of equipment owned by the
Partnership. Any such adverse effect on remarketability could also be reflected
in the overall return realized by the Partnership. The General Partner believes
that IBM and its competitors will continue to make significant <PAGE>
<PAGE> Page 5 of 36
Item 1. Business (continued):
Narrative Description of Business (continued):
advances in the computer equipment industry, some of which may result in
revolutionary changes with respect to small, medium and large computer systems.
The Partnership will maintain working capital reserves in an amount which
will fluctuate from time to time depending upon the needs of the Partnership,
but which will be at least one percent of the gross offering proceeds.
Other.
A brief description of the type of assets in which the Partnership has
invested as of December 31, 1993, together with information concerning the uses
of assets is set forth in Item 2.
Item 2. Properties.
The Partnership is engaged in the equipment leasing and financing industry
and as such, does not own or operate any principal plants, mines or real
property. The primary assets held by the Partnership are its investments in
leases and loans.
As of December 31, 1993, the Partnership owns equipment and has outstanding
loans to borrowers with an aggregate original cost of $44,250,000. The
equipment and loans have been made to customers located throughout the United
States. The following table summarizes the type of equipment owned or financed
by the Partnership, including its pro rata interest in joint ventures, at
December 31, 1993.
Percentage of
Asset Types Purchase Price(1) Total Assets
(Amounts in Thousands)
Reproduction Equipment $14,636 33%
Computer Peripherals 12,701 29
Mainframes 9,126 21
Financing Related to Cable Television
Systems 4,157 9
Capital Equipment Leased to Emerging
Growth Companies 1,880 4
Telecommunications 1,350 3
Small Computer Systems 344 1
Financing of Security Monitoring System
Companies 56 -
TOTAL $44,250 100%
(1) These amounts include the Partnership's pro rata interest in equipment
joint ventures of $945,000, cost of equipment on financing leases of
$1,898,000 and original cost of outstanding loans of $4,213,000 at
December 31, 1993. <PAGE>
<PAGE> Page 6 of 36
Item 3. Legal Proceedings.
On July 1, 1991, Phoenix Leasing Incorporated, as General Partner to the
Partnership and sixteen other affiliated partnerships, filed suit in the
Superior Court for the County of Marin, Case No. 150016, against Xerox
Corporation, a corporation in which the General Partner had entered into a
contractual agreement for the acquisition and administration of leased
equipment. Phoenix Leasing Incorporated alleges on behalf of the Partnership
that Xerox Corporation breached certain agreements when it failed to remit and
account for certain funds due as adjustments to purchase prices, failed to
properly refurbish and remarket certain equipment, and failed to properly
administer the Partnership's portfolio of equipment. The suit seeks recovery of
damages and attorney costs of a yet to be determined amount. Discovery in the
case is currently in process.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of Limited Partners, through the
solicitation of proxies or otherwise, during the year covered by this report.
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters.
(a) The Registrant's limited partnership interests are not publicly
traded. There is no market for the Registrant's limited partnership
interests and it is unlikely that any will develop.
(b) Approximate number of equity security investments:
Number of Unit Holders
Title of Class as of December 31, 1993
Limited Partners 9,316
General Partner 1 <PAGE>
<PAGE> Page 7 of 36
PART II
Item 6. Selected Financial Data.
Amounts in Thousands Except for Per Unit Amounts
1993 1992 1991 1990 1989
Total Income $5,613 $10,706 $14,290 $27,016 $42,644
Net Income (Loss) 1,570 (1,540) (5,429) (2,969) 4,149
Total Assets 6,922 10,168 24,728 45,925 83,935
Long-term Debt Obligations - - - - 405
Distributions to Partners 3,794 14,269 14,623 14,119 13,896
Net Income (Loss) per Limited
Partnership Unit 4 (4) (14) (8) 9
Distributions per Limited
Partnership Unit 10 38 37 35 34
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this report. <PAGE>
<PAGE> Page 8 of 36
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
===============================================================================
For the years ended December 31,
Description 1993 1992 1991
(Amounts in Thousands)
- ------------------------------------------------------------------------------
Net income (loss) $1,570 $(1,540) $(5,429)
Rental income 3,779 7,072 12,077
Gain from equipment insurance settlement - 1,235 -
Depreciation expense 1,888 8,471 13,630
Lease related operating expenses 1,081 2,116 3,853
===============================================================================
Phoenix Leasing Cash Distribution Fund II (the Partnership) reported net
income of $1,570,000 during the year ended December 31, 1993, as compared to net
losses of $1,540,000 and $5,429,000 during 1992 and 1991, respectively. The
improvement in earnings during 1993 is attributable to a substantial decrease of
$6,583,000 in depreciation expense. As of December 31, 1992, a majority of the
Partnership's reproduction equipment had become fully depreciated, causing a
major portion of the decrease in depreciation expense during 1993.
The decreased net loss during 1992 was primarily attributable to an
equipment insurance settlement received by the Partnership of $1,235,000 and a
decrease in lease-related operating expenses of $1,737,000. The equipment
insurance settlement received during 1992 was for the full replacement value of
certain capital equipment owned by the Partnership and is not a recurring event.
The decrease in rental income of $3,293,000 and $5,005,000 during 1993 and
1992, respectively, is attributable to a decrease in the size of the equipment
portfolio due to equipment sales. At December 31, 1993, the Partnership owned
equipment with an aggregate original cost of $40 million as compared to $58
million and $79 million at December 31, 1992 and 1991, respectively. As the
Partnership continues to sell equipment upon expiration of the lease terms, it
is anticipated that the equipment portfolio and rental income will continue to
decrease.
Total expenses decreased by $8,203,000 and $7,473,000 during 1993 and 1992,
respectively, as compared to the same period in the preceding year due primarily
to the decrease in depreciation of $6,583,000 and $5,159,000 during 1993 and
1992, respectively. The decrease in depreciation expense is attributable to the
decrease in the size of the equipment portfolio due to the sale of equipment and
a large portion of the equipment having been fully depreciated. The
Partnership sold equipment with an aggregate original cost of $18,149,000,
$20,744,000 and $26,074,000 during the years ended December 31, 1993, 1992 and
1991, respectively.
During 1993 and 1992, the Partnership also experienced a decrease in lease
related operating expenses of $1,035,000 and $1,737,000, respectively, due to a
decrease in maintenance, remarketing and refurbishing expenses incurred on a
portion of the Partnership's reproduction equipment purchased pursuant to a
vendor lease and remarketing agreement. In accordance with the agreement, these
expenses are deducted from the rents and sales proceeds received from such
leases. <PAGE>
<PAGE> Page 9 of 36
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Results of Operations (continued)
The Partnership has been impacted by the recession through an increase in
the number of lessee and borrower defaults. This has caused an increase in
delinquent lease and loan payments from customers, and the Partnership has seen
an increase in lessees and borrowers filing for protection under the bankruptcy
laws. This has caused the Partnership a loss of revenues from such delinquent
or defaulted leases and has also forced the Partnership to renegotiate its
leases on far less favorable terms. These defaults and delinquencies have also
resulted in an increase in legal and collection related expenses. The recession
has also caused manufacturers of newer computer equipment to engage in highly
aggressive sales practices by discounting new products by as much as 50-60%.
The effects of this practice have been lower re-leasing and resale revenues on
the equipment owned by the Partnership, thereby earning lower returns than
originally anticipated as reflected by the decrease in rental income.
Inflation affects the Partnership in relation to the current cost of
equipment placed on lease and the residual values realized when the equipment
comes off-lease and is sold. During the last several years inflation has been
low, thereby having very little impact upon the Partnership.
Liquidity and Capital Resources
===============================================================================
For the years ended December 31,
Description 1993 1992 1991
(Amounts in Thousands)
- ------------------------------------------------------------------------------
MAJOR CASH SOURCES:
Net cash from equipment leasing and
financing operations (1) $ 3,003 $ 5,270 $10,707
Proceeds from sale of equipment 1,857 3,520 6,328
Proceeds from equipment insurance settlement - 1,273 -
Proceeds from payoff of notes receivable - - 543
MAJOR CASH USES:
Cost of equipment acquired 192 221 2,704
Investment in notes receivable - - 166
Principal payments, notes payable 291 - 156
Cash distributions to partners 3,794 14,269 14,623
(1) Includes a per copy charge from the Partnership's reproduction equipment of
$640,000, $978,000 and $1,370,000 during 1993, 1992 and 1991, respectively.
===============================================================================
The Partnership's primary source of liquidity comes from equipment leasing
and financing activities. The Partnership has contractual obligations with a
diversified group of lessees for fixed lease terms at fixed rental amounts and
will also receive payments on its outstanding notes receivable. The
Partnership's future liquidity is dependent upon its receiving payment of such
contractual obligations. As the initial lease terms expire, the Partnership
will continue to renew, remarket or sell the equipment. The future liquidity in
excess of the remaining contractual obligations will depend upon the General
Partner's success in re-leasing and selling the Partnership's equipment as it
comes off lease. <PAGE>
<PAGE> Page 10 of 36
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Liquidity and Capital Resources (continued)
During the fourth quarter of 1992, the Partnership borrowed an additional
$465,000 from a bank. The Partnership repaid $291,000 of its outstanding debt
during 1993.
Proceeds from sale of equipment decreased due to a decrease in the amount
of equipment sold of $1,663,000 and $2,808,000 during 1993 and 1992,
respectively, as well as a decrease in the market value of such equipment.
During 1993, the Partnership purchased $192,000 in equipment subject to
operating and financing type leases, compared to the $221,000 and $2,704,000 in
equipment acquired during 1992 and 1991, respectively. As a result, the
aggregate original cost of equipment owned by the Partnership at December 31,
1993 approximates $40 million, as compared to the $58 million and $79 million at
December 31, 1992 and 1991, respectively.
The $40 million of equipment owned at December 31, 1993 is classified as
follows: 36% reproduction equipment, 32% computer peripheral equipment, 23%
computer mainframes, 5% capital equipment leased to emerging growth companies,
3% telecommunications equipment and 1% small computer systems.
The $58 million of equipment owned at December 31, 1992 was classified as
follows: 58% computer peripheral equipment, 31% reproduction equipment, 6%
capital equipment leased to emerging growth companies, 2% telecommunications
equipment, 1% small computer systems, 1% computer mainframes and 1%
miscellaneous, as compared to $79 million of equipment owned at December 31,
1991 which was classified as follows: 58% computer peripheral equipment, 28%
reproduction equipment, 9% capital equipment leased to emerging growth
companies, 2% small computer systems, 2% telecommunications equipment and 1%
computer mainframes. The Partnership is currently in its liquidation stage and
accordingly has no obligations or commitments to purchase additional equipment.
In addition to acquiring equipment for lease to third parties, the
Partnership has provided financing to cable television system operators,
emerging growth companies, security monitoring system companies, and other
businesses. The Partnership maintains a security interest in the equipment
financed. Such security interest will give the Partnership the right, upon
default, to obtain possession of the assets. The Partnership provided financing
of $0, $0, and $166,000 during 1993, 1992 and 1991, respectively. As a result,
the aggregate original amount of outstanding financing provided by the
Partnership approximates $4.2 million at December 31, 1993, as compared to $4.2
million and $4.6 million at December 31, 1992 and 1991, respectively. The $4.2
million of financing as of December 31, 1993 is classified as follows: 99%
financing to cable television systems and 1% financing to security monitoring
companies.
The Partnership has equipment held for lease with a purchase price of
$13,484,000, $16,645,000 and $22,535,000 with a net book value of $40,000,
$549,000 and $4,098,000 at December 31, 1993, 1992 and 1991, respectively. The
General Partner is actively engaged, on behalf of the Partnership, in
remarketing and selling the Partnership's off-lease equipment portfolio.
The cash distributed to partners for the years ended December 31, 1993,
1992 and 1991 are $3,794,000, $14,269,000 and $14,623,000, respectively. In
accordance with the Limited Partnership Agreement, the limited partners are
entitled to 95% of the cash available for distribution and the General Partner
<PAGE> Page 11 of 36
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Liquidity and Capital Resources (continued)
is entitled to 5%. As a result, the limited partners received distributions of
$3,794,000, $14,269,000 and $14,071,000 for the years ended December 31, 1993,
1992 and 1991, respectively. The cumulative distributions to Limited Partners
are $75,219,000, $71,425,000 and $57,156,000 at December 31, 1993, 1992 and
1991, respectively.
The General Partner received $0, $0 and $741,000 in cash distributions for
the year ended December 31, 1993, 1992 and 1991, respectively. In accordance
with the partnership agreement, upon termination of the Partnership, the General
Partner is required to restore any deficit balance in its capital account.
During 1992, the General Partner elected to make an early contribution for such
deficit capital balance. In addition, the General Partner is no longer
receiving payment for its share of the cash available for distribution.
The Partnership's asset portfolio continues to decline as a result of the
ongoing liquidation of assets, and therefore it is expected that the cash
generated from operations will also decline. As the cash generated by
Partnership operations continues to decline, the rate of cash distributions made
to limited partners will also decline. During 1993, the Partnership reduced the
cash distributions to partners due to such decline in the cash available for
distribution. It is anticipated that the Partnership will make distributions to
partners during 1994 at approximately the same rate as those made during 1993.
The Partnership has been adversely impacted by several factors that have
caused them to achieve returns and recovery of investment in lower than
anticipated amounts. The factors impacting the Partnership have been, the
economic recession in the United States, the rate of obsolescence of computer
equipment, the market demand and remarketability for equipment owned by the
Partnership, aggressive manufacturer sales practices and a general
unavailability of debt to companies. All of these factors have resulted in the
decline in revenues and the reduced distributions to partners.
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 and debt service. <PAGE>
<PAGE> Page 12 of 36
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PHOENIX LEASING CASH DISTRIBUTION FUND II
YEAR ENDED DECEMBER 31, 1993 <PAGE>
<PAGE> Page 13 of 36
REPORT OF INDEPENDENT AUDITORS
The Partners
Phoenix Leasing Cash Distribution Fund II
We have audited the financial statements of Phoenix Leasing Cash Distribution
Fund II (a California limited partnership) listed in the accompanying index to
financial statements (Item 14(a)). These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements listed in the accompanying index to
financial statements (Item 14(a)) present fairly, in all material respects the
financial position of Phoenix Leasing Cash Distribution Fund II at December 31,
1993 and 1992, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1993, in conformity with
generally accepted accounting principles.
San Francisco, California ERNST & YOUNG
January 20, 1994 <PAGE>
<PAGE> Page 14 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
December 31,
1993 1992
ASSETS
Cash and cash equivalents $2,032 $ 1,459
Accounts receivable (net of allowance for losses on
accounts receivable of $453 and $468 at December
31, 1993 and 1992, respectively) 262 623
Notes receivable (net of allowance for losses on
notes receivable of $368 and $253 at December 31,
1993 and 1992, respectively) 1,960 2,972
Equipment on operating leases and held for lease
(net of accumulated depreciation of $34,365 and
$47,638 at December 31, 1993 and 1992, respectively) 641 2,890
Net investment in financing leases (net of
allowance for early terminations of $0 and
$4 at December 31, 1993 and 1992, respectively) 998 1,367
Capitalized acquisition fees (net of accumulated
amortization of $6,681 and $6,559 at
December 31, 1993 and 1992, respectively) 191 305
In-substance foreclosed cable systems 780 -
Other assets 58 552
Total Assets $6,922 $10,168
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $1,093 $ 1,824
Notes payable 174 465
Total Liabilities 1,267 2,289
Partners' Capital:
General Partner 63 47
Limited Partners, 400,000 units authorized,
386,308 units issued and 379,583 units
outstanding at December 31, 1993 and 1992 5,592 7,832
Total Partners' Capital 5,655 7,879
Total Liabilities and Partners' Capital $6,922 $10,168
[FN]
The accompanying notes are an integral part of these statements. <PAGE>
<PAGE> Page 15 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
For the Years Ended December 31,
1993 1992 1991
INCOME
Rental income $3,779 $ 7,072 $12,077
Gain on sale of equipment 1,450 1,804 1,641
Interest income, notes receivable 294 451 163
Equipment insurance settlement - 1,235 -
Other income 90 144 409
Total Income 5,613 10,706 14,290
EXPENSES
Depreciation 1,888 8,471 13,630
Amortization of acquisition fees 122 445 858
Lease related operating expenses 1,081 2,116 3,853
Management fees to General Partner 230 459 646
Interest expense 18 - 1
Provision for losses on receivables 111 111 71
Reimbursed administrative costs to
General partner 133 174 289
Other expenses 460 470 371
Total Expenses 4,043 12,246 19,719
NET INCOME (LOSS) $1,570 $(1,540) $(5,429)
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ 4 $ (4) $ (14)
NET INCOME (LOSS)
General Partner $ 16 $ (15) $ (54)
Limited Partners 1,554 (1,525) (5,375)
$1,570 $(1,540) $(5,429)
[FN]
The accompanying notes are an integral part of these statements. <PAGE>
<PAGE> Page 16 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
STATEMENTS OF PARTNERS' CAPITAL
(Amounts in Thousands Except for Unit Amounts)
General
Partner's Limited Partners' Total
Amount Units Amount Amount
Balance, December 31, 1990 $ (736) 382,384 $ 43,272 $ 42,536
Distributions to partners ($37 per
limited partnership unit) (741) - (14,071) (14,812)
Redemptions of capital - (2,010) (174) (174)
Net loss (54) - (5,375) (5,429)
Balance, December 31, 1991 (1,531) 380,374 23,652 22,121
Partners' contributions 1,404 - - 1,404
Distributions to partners ($38 per
limited partnership unit) - - (14,269) (14,269)
Redemptions of capital - (791) (26) (26)
Reversal of 1991 General Partner
distributions accrued but not
paid 189 - - 189
Net loss (15) - (1,525) (1,540)
Balance, December 31, 1992 47 379,583 7,832 7,879
Distributions to partners ($10 per
limited partnership unit) - - (3,794) (3,794)
Net income 16 - 1,554 1,570
Balance, December 31, 1993 $ 63 379,583 $ 5,592 $ 5,655
[FN]
The accompanying notes are an integral part of these statements. <PAGE>
<PAGE> Page 17 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
For the Years Ended December 31,
1993 1992 1991
Operating Activities:
Net income (loss) $ 1,570 $ (1,540) $ (5,429)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 1,888 8,471 13,630
Amortization of acquisition fees 122 445 858
Gain on sale of equipment (1,450) (1,804) (1,641)
Gain on equipment insurance
settlement - (1,235) -
Provision for early termination,
financing leases (4) 1 7
Provision for losses on notes
receivable 115 110 64
Gain on sale of marketable
securities - (2) (196)
Decrease in accounts receivable 361 296 1,543
Decrease in accounts payable and
accrued expenses (729) (590) (821)
Decrease in other assets 494 314 166
Interest income added to principal
on notes receivable - (97) (133)
Net cash provided by operating
activities 2,367 4,369 8,048
Investing Activities:
Principal payments, financing leases 519 875 2,115
Principal payments, notes receivable 117 26 544
Proceeds from sale of equipment 1,857 3,520 6,328
Proceeds from equipment insurance
settlement - 1,273 -
Proceeds from payoff of notes
receivable - - 543
Proceeds from sale of marketable
securities - 44 196
Purchase of equipment (7) - (1,681)
Investment in financing leases (185) (221) (1,023)
Investment in notes receivable - - (166)
Investment in marketable securities - (42) -
Payment of acquisition fees (10) (12) (109)
Net cash provided by investing
activities 2,291 5,463 6,747
Financing Activities:
Partners' contributions - 1,404 -
Payments of principal, notes payable (291) - (156)
Proceeds from notes payable - 465 -
Redemptions of capital - (26) (174)
Distributions to partners (3,794) (14,269) (14,623)
Net cash used by financing
activities (4,085) (12,426) (14,953)
[FN]
The accompanying notes are an integral part of these statements. <PAGE>
<PAGE> Page 18 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
STATEMENTS OF CASH FLOWS (continued)
(Amounts in Thousands)
For the Years Ended December 31,
1993 1992 1991
Increase (decrease) in cash and cash
equivalents $ 573 $ (2,594) $ (158)
Cash and cash equivalents, beginning
of period 1,459 4,053 4,211
Cash and cash equivalents, end of
period $ 2,032 $ 1,459 $ 4,053
Supplemental Cash Flow Information:
Cash paid for interest expense $ 18 $ - $ 1
[FN]
The accompanying notes are an integral part of these statements. <PAGE>
<PAGE> Page 19 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993
Note 1. Organization and Partnership Matters.
Phoenix Leasing Cash Distribution Fund II, a California limited partnership
(the "Partnership"), was formed on June 28, 1984, to invest in capital equipment
of various types and to lease such equipment to third parties on either a long-
term or short-term basis, and to provide financing to emerging growth companies
and cable television system operators. The Partnership's minimum investment
requirements were met November 24, 1986. The Partnership's termination date is
December 31, 1997.
For financial reporting purposes, Partnership income shall be allocated as
follows: (a) first, to the General Partner until the cumulative income so
allocated is equal to the cumulative distributions to the General Partner, (b)
second, before redemption fees, 1% to the General Partner and 99% to the Limited
Partners until the cumulative income so allocated is equal to any cumulative
Partnership loss and syndication expenses for the current and all prior
accounting periods, and (c) the balance, if any, to the Unit Holders. All
Partnership losses shall be allocated, before redemption fees, 1% to the General
Partner and 99% to the Unit Holders.
The General Partner is entitled to receive 5% of all cash distributions
until the Limited Partners have recovered their initial capital contributions
plus a cumulative return of 12% per annum. Thereafter, the General Partner will
receive 15% of all cash distributions. In the event the General Partner has a
deficit balance in its capital account at the time of partnership liquidation,
it will be required to contribute the amount of such deficit to the Partnership.
During the year ended December 31, 1992, the General Partner elected to make an
early contribution of $1,404,000, and the $189,000 in accrued distributions to
the General Partner at December 31, 1991 was reversed. In addition, the General
Partner did not draw its share of the 1993 and 1992 cash available for
distribution.
As compensation for management services, the General Partner receives a fee
payable quarterly, in an amount equal to 3.5%, subject to certain limitations,
of the Partnership's gross revenues for the quarter from which such payment is
being made, which revenues shall include, but are not limited to, rental
receipts, maintenance fees, proceeds from the sale of equipment and interest
income.
The General Partner will be compensated for services performed in
connection with the analysis of assets available to the Partnership, the
selection of such assets and the acquisition thereof, including obtaining
lessees for the equipment, negotiating and concluding master lease agreements
with certain lessees. As compensation for such acquisition services, the
General Partner will receive a fee equal to 4%, subject to certain limitations,
of (a) the purchase price of equipment acquired by the Partnership, or
equipment leased to customers <PAGE>
<PAGE> Page 20 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1993
Note 1. Organization and Partnership Matters (continued).
by manufacturers, the financing for which is provided by the Partnership, or (b)
financing provided to businesses such as cable operators, emerging growth
companies, or security monitoring system companies, payable upon such
acquisition or financing, as the case may be. As of December 31, 1993,
$6,872,000 had been paid or accrued to the General Partner for its acquisition
fee. Acquisition fees are amortized over the life of the assets principally on
a straight-line basis.
Phoenix Securities, Inc., an affiliate of the General Partner, has
contracted with or employs certain persons who have performed wholesaling
activities in connection with the offering of the units through broker-dealers.
As of December 31, 1993, $1,336,000 has been paid or accrued to Phoenix
Securities, Inc.
Note 2. Summary of Significant Accounting Policies.
Leasing Operations. The Partnership's leasing operations consist of both
financing and operating leases. The financing method of accounting for leases
records as unearned income at the inception of the lease, the excess of net
rentals receivable and estimated residual value at the end of the lease term,
over the cost of equipment leased. Unearned income is credited to income
monthly over the term of the lease on a declining basis to provide an
approximate level rate of return on the unrecovered cost of the investment.
Initial direct costs of consummating new leases are capitalized and included in
the cost of equipment.
Under the operating method of accounting for leases, the leased
equipment is recorded as an asset at cost and depreciated primarily on an
accelerated depreciation method over the estimated useful life of six years,
except for equipment leased under vendor agreements, which is depreciated on a
straight-line basis over the estimated useful life, ranging up to six years.
The Partnership's policy is to review periodically the expected economic
life of its rental equipment in order to determine the probability of recovering
its undepreciated cost. Such reviews address, among other things, recent and
anticipated technological developments affecting computer equipment and
competitive factors within the computer marketplace. Although remarketing
rental rates are expected to decline in the future with respect to some of the
Partnership's rental equipment, such rentals are expected to exceed projected
expenses and depreciation. Where reviews of the equipment portfolio indicate
that rentals plus anticipated sales proceeds will not exceed expenses in any
future period, the Partnership revises its depreciation policy and accelerates
depreciation as appropriate. As a result of such periodic <PAGE>
<PAGE> Page 21 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1993
Note 2. Summary of Significant Accounting Policies (continued).
reviews, the Partnership recognized additional depreciation expense of $0,
$12,000 and $1,812,000 ($0, $.03 and $4.75 per limited partnership unit) for
the years ended December 31, 1993, 1992 and 1991, respectively.
Rental income for the year is determined on the basis of rental payments
due for the period under the terms of the lease. Maintenance, repairs and minor
renewals of the leased equipment are charged to expense.
Non Cash Investing Activities. During the year ended December 31, 1993,
the Partnership reclassified two foreclosed notes receivable from Notes
Receivable to Investment in Foreclosed Cable Systems on the balance sheet. The
amount of such reclassification was $780,000.
Reclassification. Certain 1992 and 1991 amounts have been reclassified to
conform to the 1993 presentation.
Cash and Cash Equivalents. This includes deposits at banks, investments in
money market funds and other highly liquid short-term investments with original
maturities of less than 90 days.
Credit and Collateral. The Partnership's activities have been concentrated
in the equipment leasing and financing industry. A credit evaluation is
performed by the General Partner for all leases and loans made, with the
collateral requirements determined on a case-by-case basis. The Partnership's
loans are generally secured by the equipment or assets financed and, in some
cases, other collateral of the borrower. In the event of default, the
Partnership has the right to foreclose upon the collateral used to secure such
loans.
Note 3. Accounts Receivable.
Accounts receivable consist of the following at December 31:
1993 1992
(Amounts in Thousands)
Lease payments $ 636 $ 920
Other 79 168
Interest - 3
715 1,091
Less: allowance for doubtful
accounts receivable (453) (468)
Total $ 262 $ 623 <PAGE>
<PAGE> Page 22 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1993
Note 4. Notes Receivable.
Notes receivable consist of the following at December 31:
1993 1992
(Amounts in Thousands)
Notes receivable from cable television system
operators with stated interest ranging from
17% to 19% per annum, receivable in installments
ranging from 60 to 108 months, collateralized
by a security interest in the cable system
assets. These notes have a graduated
repayment schedule followed by a
balloon payment. $2,282 $3,176
Notes receivable from security monitoring
companies with stated interest at 16% per
annum, with payments to be taken out of the
monthly payments received from assigned
contracts, collateralized by all assets of
the borrower. At the end of 48 months, the
remaining balance, if any, is due and payable. 46 49
2,328 3,225
Less: allowance for losses on notes
receivable (368) (253)
Total $1,960 $2,972
The Partnership's notes receivable to cable television system operators
provide a payment rate in an amount that is usually less than the contractual
interest rate. The difference between the payment rate and the contractual
interest rate is added to the principal and therefore deferred until the
maturity date of the note. Upon maturity of the note, the original principal
and deferred interest is due and payable in full. Although the contractual
interest rates may be higher, effective January 1, 1993, the amount of interest
being recognized on the Partnership's outstanding notes receivable to cable
television system operators is being limited to the amount of the payments
received, thereby deferring the recognition of a portion of the deferred
interest until the loan is paid off. During 1992 and 1991, the Partnership had
been limiting the amount of interest income to 16% on these notes receivable. <PAGE>
<PAGE> Page 23 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1993
Note 5. Equipment on Operating Leases and Investment in Financing
Leases.
Equipment on lease consists primarily of computer peripheral equipment,
computer mainframes and reproduction equipment.
The Partnership's operating leases are for initial lease terms of
approximately 12 to 48 months. During the remaining terms of existing operating
leases, the Partnership will not recover all of the undepreciated cost and
related expenses of its rental equipment, and therefore must remarket a portion
of its equipment in future years.
The Partnership has agreements with some of the manufacturers of its
equipment, whereby such manufacturers will undertake to remarket off-lease
equipment on a best-efforts basis. This agreement permits the Partnership to
assume the remarketing function directly if certain conditions contained in the
agreements are not met. For their remarketing services, the manufacturers are
paid a percentage of net monthly rentals.
The Partnership has entered into direct lease arrangements with lessees
consisting of Fortune 1000 companies and other businesses in different
industries located throughout the United States. Generally, it is the
responsibility of the lessee to provide maintenance on leased equipment. The
General Partner administers the equipment portfolio of leases acquired through
the direct leasing program. Administration includes the collection of rents
from the lessees and remarketing of the equipment.
The net investment in financing leases consists of the following at
December 31:
1993 1992
(Amounts in Thousands)
Minimum lease payments to be received $ 959 $1,380
Estimated residual value of leased
equipment (unguaranteed) 140 175
Less: unearned income (101) (184)
allowance for early termination - (4)
Net investment in financing leases $ 998 $1,367
Minimum rentals to be received on noncancellable operating and financing
leases for the years ended December 31 are as follows: <PAGE>
<PAGE> Page 24 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1993
Note 5. Equipment on Operating Leases and Investment in Financing
Leases (continued).
Operating Financing
(Amounts in Thousands)
1994 . . . . . . . . . . . . . . . . . . $ 862 $451
1995 . . . . . . . . . . . . . . . . . . 171 349
1996 . . . . . . . . . . . . . . . . . 136 159
1997 . . . . . . . . . . . . . . . . . . 32 -
1998 and future . . . . . . . . . . . . 16 -
Total $1,217 $959
The Partnership receives contingent monthly rental payments on its
reproduction equipment that is not included in the minimum rentals to be
received. The contingent monthly rentals consist of a monthly rental payment
that is based upon actual machine usage. The monthly usage charge included in
income for the years ended December 31, 1993, 1992 and 1991 was $640,000,
$978,000 and $1,370,000, respectively.
The net book value of equipment held for lease at December 31, 1993 and
1992 amounted to $40,000 and $549,000, respectively.
The General Partner, on behalf of the Partnership and sixteen other
affiliated partnerships, filed suit against one manufacturer of its equipment.
The partnerships allege that this manufacturer breached certain agreements with
respect to the equipment portfolios. The suit seeks damages and attorney's fees
in unspecified amounts. The Partnership will recognize any such amounts in
income when received.
Note 6. In-Substance Foreclosed Cable Systems.
The Partnership has reclassified two nonperforming outstanding notes
receivable from cable television system operators to In-Substance Foreclosed
Cable Systems where in-substance foreclosure has occurred. Upon
reclassification, these notes are recorded at the lower of their carrying value
or estimated fair market value of the cable system. The Partnership, along with
other affiliated partnerships managed by the General Partner, has a total
carrying value in these cable systems of $1,399,000. The net carrying value of
the Partnership's investment is $780,000 which represents a 56% pro rata
interest in the total investment.
In order to maximize the recovery of the Partnership's investment, the
General Partner anticipates that upon foreclosure, it will hold and manage the
operations of the foreclosed cable systems, on behalf of the partnerships, until
such time that the General Partner can sell the cable television systems. <PAGE>
<PAGE> Page 25 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1993
Note 7. Accounts Payable and Accrued Expenses.
Accounts payable and accrued expenses consist of the following at December
31:
1993 1992
(Amounts in Thousands)
Equipment lease operations $ 732 $1,173
Sales tax 257 268
General Partner and affiliates 38 228
Security deposits 8 82
Other 57 73
Accrued interest 1 -
Total $1,093 $1,824
Note 8. Notes Payable.
Notes payable consist of the following at December 31:
1993 1992
(Amounts in Thousands)
Note payable to a bank, collateralized by
leased equipment, non-recourse to the other
assets of the Partnership, with interest of
4.75% per annum, payable in 22 monthly
installments through August 1, 1994 $174 $465
Principal payments of $174,000 are due in 1994.
Note 9. 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.
In 1993, the Partnership adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109). One of the
requirements of SFAS 109 is for a public enterprise that is not subject to
income taxes, because its income is taxed directly to its owners, to disclose
the net difference between the tax basis and the reported amounts of the
enterprise's assets and liabilities. <PAGE>
<PAGE> Page 26 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1993
Note 9. Income Taxes (continued).
The net differences between the tax basis and the reported amounts of the
Partnership's assets and liabilities at December 31, 1993 are as follows:
Reported Amounts Tax Basis Net Difference
Assets $6,922,000 $7,966,000 $(1,044,000)
Liabilities 1,267,000 1,267,000 0
Note 10. Related Entities.
The General Partner and its affiliates serves in the capacity of general
partner in other partnerships, all of which are engaged in the equipment leasing
and financing business.
Note 11. Reimbursed Costs to the General Partner.
The General Partner incurs certain administrative costs, such as data
processing, investor and lessee communications, lease administration,
accounting, equipment storage and equipment remarketing, for which it is
reimbursed by the Partnership. These expenses incurred by the General Partner
are to be reimbursed at the lower of the actual costs or an amount equal to 90%
of the fair market value for such services. The reimbursed costs to the General
Partner for the years ended December 31 are as follows:
1993 1992 1991
(Amounts in Thousands)
General administration $139 $179 $289
Equipment remarketing and
administrative 81 168 565
Data processing 14 20 43
Totals $234 $367 $897
In addition, the General Partner receives a management fee and an
acquisition fee (see Note 1). <PAGE>
<PAGE> Page 27 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1993
Note 12. 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 379,583, 380,133 and 381,453 for
the years ended December 31, 1993, 1992 and 1991, respectively. For the
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.
Note 13. Subsequent Events.
In January 1994, cash distributions of $957,000 were made to the Limited
Partners. <PAGE>
<PAGE> Page 28 of 36
Item 9. Disagreements on Accounting and Financial Disclosure
Matters.
None. <PAGE>
<PAGE> Page 29 of 36
PART III
Item 10. Directors and Executive Officers of the Registrant.
The registrant is a limited partnership and, therefore, has no executive
officers or directors. The general partner of the registrant is Phoenix Leasing
Incorporated, a California corporation. The directors and executive officers of
Phoenix Leasing Incorporated (PLI) are as follows:
GUS CONSTANTIN, age 56, is President, Chief Executive Officer and a
Director of PLI. Mr. Constantin received a B.S. degree in Engineering from the
University of Michigan and a Master's Degree in Management Science from Columbia
University. From 1969 to 1972, he served as Director, Computer and Technical
Equipment of DCL Incorporated (formerly Diebold Computer Leasing Incorporated),
a corporation formerly listed on the American Stock Exchange, and as Vice
President and General Manager of DCL Capital Corporation, a wholly-owned
subsidiary of DCL Incorporated. Mr. Constantin was actively engaged in
marketing manufacturer leasing programs to computer and medical equipment
manufacturers and in directing DCL Incorporated's IBM System/370 marketing
activities. Prior to 1969, Mr. Constantin was employed by IBM as a data
processing systems engineer for four years. Mr. Constantin is an individual
general partner in four active partnerships and is an NASD registered principal.
Mr. Constantin is the founder of PLI and the beneficial owner of all of the
common stock of Phoenix American Incorporated.
PARITOSH K. CHOKSI, age 40, is Senior Vice President, Chief Financial
Officer, Treasurer and a Director of PLI. He has been associated with PLI since
1977. Mr. Choksi oversees the finance, accounting, information services and
systems development departments of the General Partner and its Affiliates and
oversees the structuring, planning and monitoring of the partnerships sponsored
by the General Partner and its Affiliates. Mr. Choksi graduated from the Indian
Institute of Technology, Bombay, India with a degree in Engineering. He holds
an M.B.A. degree from the University of California, Berkeley.
GARY W. MARTINEZ, age 43, is Senior Vice President and a Director of PLI.
He has been associated with PLI since 1976. He manages the Asset Management
Department, which is responsible for lease and loan portfolio management. This
includes credit analysis, contract terms, documentation and funding; remittance
application, change processing and maintenance of customer accounts; customer
service, invoicing, collection, settlements and litigation; negotiating lease
renewals, extensions, sales and buyouts; and management information reporting.
From 1973 to 1976, Mr. Martinez was a Loan Officer with Crocker National Bank,
San Francisco. Prior to 1973, he was an Area Manager with Pennsylvania Life
Insurance Company. Mr. Martinez is a graduate of California State University,
Chico.
BRYANT J. TONG, age 39, is Senior Vice President, Financial Operations of
PLI. He has been with PLI since 1982. Mr. Tong is responsible for investor
services and overall company financial operations. He is also responsible
for the technical and administrative operations of the cash management,
corporate accounting, partnership accounting, accounting systems, internal
controls and tax departments, in addition to Securities and Exchange Commission
and other regulatory agency reporting. Prior to his association with PLI,
Mr. Tong was Controller-Partnership Accounting with the Robert A. McNeil
Corporation for two years and was an auditor with Ernst & Whinney (succeeded by
Ernst & Young) from 1977 through 1980. Mr. Tong holds a B.S. in Accounting from
the University of California, Berkeley, and is a Certified Public Accountant. <PAGE>
<PAGE> Page 30 of 36
Item 10. Directors and Executive Officers of the Registrant
(continued).
Neither the General Partner nor any Executive Officer of the General
Partner has any family relationship with the others.
Phoenix Leasing Incorporated or its affiliates and the executive officers
of the General Partner serve in a similar capacity to the following affiliated
limited partnerships:
Phoenix Leasing American Business Fund, L.P.
Phoenix Leasing Cash Distribution Fund V, L.P.
Phoenix Income Fund, L.P.
Phoenix High Tech/High Yield Fund
Phoenix Leasing Cash Distribution Fund IV
Phoenix Leasing Cash Distribution Fund III
Phoenix Leasing Cash Distribution Fund
Phoenix Leasing Capital Assurance Fund
Phoenix Leasing Income Fund VII
Phoenix Leasing Income Fund VI
Phoenix Leasing Growth Fund 1982
Phoenix Leasing Income Fund 1982-4
Phoenix Leasing Income Fund 1982-3
Phoenix Leasing Income Fund 1982-2
Phoenix Leasing Income Fund 1982-1
Phoenix Leasing Income Fund 1981
Phoenix Leasing Income Fund 1980
Phoenix Leasing Income Fund 1977 and
Phoenix Leasing Income Fund 1975
Item 11. Executive Compensation.
Set forth is the information relating to all direct remuneration paid or
accrued by the Registrant during the last year to the General Partner.
(A) (B) (C) (D)
Aggregate of
Name of Capacities Cash and cash- contingent
Individual or in which equivalent forms forms of
persons in group served of remuneration remuneration
(C1) (C2)
Securities or
Salaries, fees, property insurance
directors' fees, benefits or reim-
commissions and bursement, personal
bonuses benefits
(Amounts in Thousands)
Phoenix Leasing
Incorporated General Partner $238(1) $0 $0
(1) consists of management and acquisition fees. <PAGE>
<PAGE> Page 31 of 36
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
(a) No person owns of record, or is known by the Registrant to own
beneficially, more than five percent of any class of voting securities
of the Registrant.
(b) The General Partner of the Registrant owns the equity securities of
the Registrant set forth in the following table:
(1) (2) (3)
Title of Class Amount Beneficially Owned Percent of Class
General Partner Represents a 5% interest in the 100%
Interest Registrant's profits and distributions,
until the Limited Partners have
recovered their capital contributions
plus a cumulative return of 12% per
annum, compounded quarterly, on the
unrecovered portion thereof. Thereafter,
the General Partner will receive 15%
interest in the Registrant's profits
and distributions.
Item 13. Certain Relationships and Related Transactions.
None. <PAGE>
<PAGE> Page 32 of 36
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.
Page No.
(a) 1. Financial Statements for the year ended
December 31, 1993:
Balance Sheets as of December 31, 1993
and 1992 14
Statements of Operations for the
Years Ended December 31, 1993, 1992
and 1991 15
Statements of Partners' Capital for the
Years Ended December 31, 1993, 1992
and 1991 16
Statements of Cash Flows for the Years
ended December 31, 1993, 1992 and 1991 17
Notes to Financial Statements 19 - 27
2. Financial Statement Schedules:
Schedule V - Property, Plant, and Equipment 34
Schedule VI - Accumulated Depreciation and
Amortizable Costs of Equipment 35
Schedule VIII - Valuation and Qualifying
Accounts and Reserves 36
All other schedules are omitted because they are not
applicable, or not required, or because the required
information is included in the financial statements or
notes thereto. <PAGE>
<PAGE> Page 33 of 36
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 CASH DISTRIBUTION FUND II
(Registrant)
BY: PHOENIX LEASING INCORPORATED,
A CALIFORNIA CORPORATION
GENERAL PARTNER
Date: March 29, 1994 BY: /S/ GUS CONSTANTIN, President
Gus Constantin, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/S/ GUS CONSTANTIN President, Chief Executive March 29, 1994
(Gus Constantin) Officer and a Director of
Phoenix Leasing Incorporated,
General Partner
/S/ PARITOSH K. CHOKSI Chief Financial Officer March 29, 1994
(Paritosh K. Choksi) Senior Vice President
Treasurer and a Director of
Phoenix Leasing Incorporated
General Partner
/S/ BRYANT J. TONG Senior Vice President, March 29, 1994
(Bryant J. Tong) Financial Operations
(Principal Accounting Officer)
Phoenix Leasing Incorporated
General Partner
/S/ GARY W. MARTINEZ Senior Vice President and March 29, 1994
(Gary W. Martinez) a Director of
Phoenix Leasing Incorporated
General Partner
/S/ MICHAEL K. ULYATT Partnership Controller March 29, 1994
(Michael K. Ulyatt) Phoenix Leasing Incorporated
General Partner <PAGE>
<TABLE>
<PAGE> Page 34 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
SCHEDULE V
(Amounts in Thousands)
SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Classification Balance at Additions at Retirements Other Changes - Balance at
Beginning of Cost Add (Deduct) - End of
Period Describe - Period
<S> <C> <C> <C> <C> <C>
Year ended
December 31, 1991
Equipment on
operating leases $ 85,713 $1,681 $21,302 $ 894(1) $66,986
Year ended
December 31, 1992
Equipment on
operating leases $ 66,986 $ 0 $16,893 $ 435(1) $50,528
Year ended
December 31, 1993
Equipment on
operating leases $ 50,528 $ 7 $15,568 $ 39(1) $35,006
<FN>
(1) Net recovered and unrecovered costs of equipment reclassified from financing to operating leases. <PAGE>
</TABLE>
<TABLE>
Page 35 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
SCHEDULE VI
(Amounts in Thousands)
SCHEDULE VI - ACCUMULATED DEPRECIATION
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Description Balance at Additions Retirements Other Changes - Balance at
Beginning of Charged to Add (Deduct) - End of Period
Period Costs and Describe -
Expenses
<S> <C> <C> <C> <C> <C>
Year ended
December 31, 1991
Equipment on
operating leases:
Accumulated depreciation $57,287 $13,630 $16,615 $ 7 (1) $54,309
Year ended
December 31, 1992
Equipment on
operating leases:
Accumulated depreciation $54,309 $ 8,471 $15,140 $ (2) (1) $47,638
Year ended
December 31, 1993
Equipment on
operating leases:
Accumulated depreciation $47,638 $ 1,888 $15,161 $ 0 $34,365
<FN>
(1) This amount represents the application (reversal) of the allowance for loss for early
termination of reclassified financing leases. <PAGE>
</TABLE>
<TABLE>
<PAGE> Page 36 of 36
PHOENIX LEASING CASH DISTRIBUTION FUND II
SCHEDULE VIII
(Amounts in Thousands)
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Classification Balance at Charged to Charged to Deductions Balance at
Beginning of Expense Revenue End of
Period Period
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1991
Allowance for losses on accounts
receivable $783 $ 0 $0 $255 $528
Allowance for loss from early
termination of financing
leases 1 7 0 7 1
Allowance for losses on notes
receivable 79 64 0 0 143
Totals $863 $ 71 $0 $262 $672
Year ended December 31, 1992
Allowance for losses on accounts
receivable $528 $ 0 $0 $ 60 $468
Allowance for loss from early
termination of financing
leases 1 1 0 (2) 4
Allowance for losses on notes
receivable 143 110 0 0 253
Totals $672 $111 $0 $ 58 $725
Year ended December 31, 1993
Allowance for losses on accounts
receivable $468 $ 0 $0 $ 15 $453
Allowance for loss from early
termination of financing
leases 4 0 4 0 0
Allowance for losses on notes
receivable 253 115 0 0 368
Totals $725 $115 $4 $ 15 $821 <PAGE>
</TABLE>
