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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ----- ACT OF 1934
For the quarterly period ended September 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the transition period from ______________ to______________.
Commission file number 0-16615
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PHOENIX LEASING CASH DISTRIBUTION FUND III,
A CALIFORNIA LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
Registrant
California 68-0062480
- --------------------- ----------------------------------
State of Jurisdiction I.R.S. Employer Identification No.
2401 Kerner Boulevard, San Rafael, California 94901-5527
- --------------------------------------------------------------------------------
Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (415) 485-4500
--------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
preceding requirements for the past 90 days.
Yes _X_ No ___
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Part I. Financial Information
-----------------------------
Item 1. Financial Statements
PHOENIX LEASING CASH DISTRIBUTION FUND III,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
September 30, December 31,
1996 1995
---- ----
ASSETS
Cash and cash equivalents $ 14,605 $ 3,619
Accounts receivable (net of allowance
for losses on accounts receivable of $83
and $63 at September 30, 1996 and
December 31, 1995, respectively) 375 254
Notes receivable (net of allowance for losses
on notes receivable of $679 and $3,880 at
September 30, 1996 and December 31, 1995,
respectively) 417 13,153
Equipment on operating leases and held for lease
(net of accumulated depreciation of $13,967
and $17,004 at September 30, 1996 and
December 31, 1995, respectively) 4 79
Net investment in financing leases (net of
allowance for early terminations of $0 and
$81 at September 30, 1996 and December 31,
1995, respectively) -- 227
Cable systems, property and equipment (net of
accumulated depreciation of $174 and $548 at
September 30, 1996 and December 31, 1995,
respectively) 3,217 1,449
Cable subscriber lists (net of accumulated
amortization of $138 and $0 at September 30,
1996 and December 31, 1995, respectively) 1,515 --
Investment in joint ventures 782 742
Capitalized acquisition fees (net of accumulated
amortization of $8,272 and $7,994 at
September 30, 1996 and December 31, 1995,
respectively) 4 283
Other assets 22 575
-------- --------
Total Assets $ 20,941 $ 20,381
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 3,688 $ 3,637
Notes payable -- 329
Minority interest in subsidiary 19 311
-------- --------
Total Liabilities 3,707 4,277
-------- --------
Partners' Capital
General Partner (35) (71)
Limited Partners, 600,000 units authorized,
528,151 units issued and 516,716 units
outstanding at September 30, 1996 and
December 31, 1995 17,269 15,618
Unrealized gains on available-for-sale securities -- 557
-------- --------
Total Partners' Capital 17,234 16,104
-------- --------
Total Liabilities and Partners' Capital $ 20,941 $ 20,381
======== ========
The accompanying notes are an integral part of these statements.
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PHOENIX LEASING CASH DISTRIBUTION FUND III,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Rental income $ 197 $ 469 $ 785 $ 1,657
Gain on sale of cable systems 333 -- 1,535 --
Cable subscriber revenue 977 166 2,709 509
Interest income, notes receivable 11 71 73 773
Equity in earnings from joint
ventures, net 68 75 196 204
Other income 224 153 431 393
------- ------- ------- -------
Total Income 1,810 934 5,729 3,536
------- ------- ------- -------
EXPENSES
Depreciation and amortization 308 228 1,482 971
Lease related operating expenses 10 64 82 214
Program service, cable system 270 48 781 135
Management fees to General Partner
and affiliate 410 68 655 418
Reimbursed administrative costs
to General Partner 42 74 130 255
Provision for (recovery of) losses
on receivables (124) 27 (2,223) (1,819)
Legal expense 22 128 222 511
General and administrative expenses 267 100 754 358
------- ------- ------- -------
Total Expenses 1,205 737 1,883 1,043
------- ------- ------- -------
NET INCOME BEFORE MINORITY INTEREST 605 197 3,846 2,493
Minority interest in earnings of
subsidiary (2) (6) (205) (18)
------- ------- ------- -------
NET INCOME $ 603 $ 191 $ 3,641 $ 2,475
======= ======= ======= =======
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 1.16 $ .36 $ 6.98 $ 4.74
======= ======= ======= =======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ -- $ 3.74 $ 3.78 $ 11.22
======= ======= ======= =======
ALLOCATION OF NET INCOME:
General Partner $ 6 $ 2 $ 37 $ 25
Limited Partners 597 189 3,604 2,450
------- ------- ------- -------
$ 603 $ 191 $ 3,641 $ 2,475
======= ======= ======= =======
The accompanying notes are an integral part of these statements.
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PHOENIX LEASING CASH DISTRIBUTION FUND III,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Nine Months Ended
September 30,
1996 1995
---- ----
Operating Activities:
Net income $ 3,641 $ 2,475
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,482 971
Gain on sale of cable systems (1,535) --
Gain on sale of equipment (51) (235)
Equity in earnings from joint ventures, net (196) (204)
Recovery of losses on notes receivable (2,185) (2,000)
Provision for losses on accounts receivable 43 181
Recovery of early termination, financing leases (81) --
Gain on sale of securities (125) --
Decrease (increase) in accounts receivable (222) 371
Decrease in accounts payable and accrued expenses (184) (473)
Decrease (increase) in other assets (4) 49
Minority interest in earnings of subsidiary 205 18
Other 374 --
-------- --------
Net cash provided by operating activities 1,162 1,153
-------- --------
Investing Activities:
Principal payments, financing leases -- 661
Principal payments, notes receivable 1,585 7,567
Proceeds from sale of cable systems 11,483 --
Proceeds from sale of equipment 62 560
Proceeds from sale of securities 125 --
Distributions from joint ventures 156 310
Investment in notes receivable -- (6,146)
Cable systems, property and equipment (272) (46)
-------- --------
Net cash provided by investing activities 13,139 2,906
-------- --------
Financing Activities:
Proceeds from notes payable -- 2,000
Payments of principal, notes payable (729) --
Distributions to partners (1,954) (5,798)
Distributions to minority partners (632) (24)
-------- --------
Net cash used by financing activities (3,315) (3,822)
-------- --------
Increase in cash and cash equivalents 10,986 237
Cash and cash equivalents, beginning of period 3,619 4,636
-------- --------
Cash and cash equivalents, end of period $ 14,605 $ 4,873
======== ========
Supplemental Cash Flow Information:
Cash paid for interest expense $ 26 $ --
The accompanying notes are an integral part of these statements.
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PHOENIX LEASING CASH DISTRIBUTION FUND III,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
The accompanying unaudited condensed financial statements have been
prepared by the Partnership in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Although management believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Partnership's Financial Statement, as filed with the
SEC in the latest annual report on Form 10-K.
Non-Cash Investing Activities. The Partnership foreclosed upon two cable
television systems during the nine months ended September 30, 1996, as discussed
in Note 2 in the consolidated financial statements.
Note 2. Summary of Significant Accounting Policies.
Principles of consolidation. The 1996 financial statements include the
accounts of Phoenix Leasing Cash Distribution Fund III and its majority owned
subsidiaries, Phoenix Black Rock Cable J.V. (a California partnership) and
Phoenix Grassroots Cable Systems, L.L.C. (a Delaware limited liability company)
and its wholly owned subsidiary, Phoenix Concept Cablevision of Indiana, L.L.C.
(a Delaware limited liability company). Hereinafter these entities are
collectively referred to as "the Partnership". All significant intercompany
accounts and transactions have been eliminated in consolidation.
Sale of Cable Television Systems. On January 17, 1996, Phoenix Black
Rock Cable J.V., a majority owned subsidiary of the Partnership, sold its cable
television systems receiving net proceeds of approximately $2.6 million,
recognizing a gain on sale of this cable system of $1,205,000.
On August 30, 1996, Phoenix Grassroots Cable Systems, L.L.C., a majority
owned subsidiary of the Partnership, sold its cable television systems receiving
net proceeds of approximately $8.9 million, recognizing a gain on sale of this
cable system of $330,000.
Foreclosures of Cable Television Systems. On February 2, 1996, Phoenix
Leasing Cash Distribution Fund III and Phoenix Concept Cablevision of Indiana,
L.L.C. entered into a Commercial Code Section 9505 Agreement (the "Agreement")
with Concept Cablevision of Indiana, Inc., a cable television company that the
Partnership had extended credit. Phoenix Concept Cablevision of Indiana, L.L.C.
is a newly formed limited liability company and wholly owned subsidiary of
Phoenix Leasing Cash Distribution Fund III. The closing date of the Agreement
was February 2, 1996. This Agreement allowed the Partnership to foreclose upon
the cable television system (the collateral for the note) of Concept Cablevision
of Indiana, Inc. The Partnership's net carrying value for this outstanding note
receivable was $4,321,000 at February 2, 1996, for which the Partnership had no
related allowance. In addition, the Partnership is required to make a cash
payment of $200,000, assume certain liabilities including a note payable of
$600,000 and certain other miscellaneous accounts payable as specified in the
agreement.
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The cable television system owned by Phoenix Concept Cablevision of
Indiana, L.L.C. is located in the counties of Benton, Parke, Greene, Montgomery,
Putnam, Boone, Hendricks, Clinton, Hamilton and Madison in the state of Indiana.
The cable television systems consist of headend equipment and 166 miles of plant
passing approximately 9,449 homes with approximately 5,648 subscribers. The
Subsidiary operates under non-exclusive franchise agreements with several of
these counties and with communities located within these counties.
On February 14, 1996, Phoenix Leasing Cash Distribution Fund III and
Phoenix Grassroots Cable Systems, L.L.C. entered into a Settlement Agreement and
Releases (the "Agreement") with Grassroots Cable Systems, Inc., a cable
television company that the Partnership had extended credit. Phoenix Grassroots
Cable Systems, L.L.C. is a newly formed limited liability company and majority
owned (98.5%) subsidiary of Phoenix Leasing Cash Distribution Fund III. The
closing date of the Agreement was February 14, 1996. This Agreement allowed the
Partnership to foreclose upon the cable television system (the collateral for
the note) of Grassroots Cable Systems, Inc. The Partnership's net carrying value
for this outstanding note receivable was $9,014,000 at February 14, 1996, for
which the Partnership had an allowance for losses on notes of $2,035,000. In
addition, the Partnership assumed certain liabilities and miscellaneous payables
as specified in the agreement.
The cable television system owned by Phoenix Grassroots Cable Systems,
L.L.C. is located in the counties of Franklin, Hancock, Kennebec, Knox, Oxford
and Penobscot in the state of Maine and the counties of Carroll, Coos, Grafton,
Merrimack, Strafford and Sullivan in the State of New Hampshire. The cable
television systems consist of headend equipment and 676 miles of plant passing
approximately 12,429 homes with approximately 7,197 subscribers. The Subsidiary
operates under non-exclusive franchise agreements with several of these counties
and with communities located within these counties.
Phoenix Cable Management Inc. (PCMI), an affiliate of the General
Partner, provides day to day management services in connection with the
operation of these systems.
Note 3. Reclassification.
Reclassification - Certain 1995 amounts have been reclassified to
conform to the 1996 presentation.
Note 4. Income Taxes.
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.
Note 5. Notes Receivable.
Impaired Notes Receivable. At September 30, 1996, the recorded
investment in notes that are considered to be impaired under Statement 114 was
$468,000 for which the related allowance for losses is $403,000. The average
recorded investment in impaired loans during the nine months ended September 30,
1996 was approximately $1,820,000.
During the quarter ended September 30, 1996, the Partnership received a
settlement on one of its notes receivable from a cable television system
operator which was considered to be impaired under Statement No. 114. The
Partnership received a partial recovery of $1,008,000 as a settlement which was
applied towards the $1,781,000 outstanding note receivable balance. The
remaining balance of $773,000 was written-off through its related allowance for
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loan losses provided for in a previous year. Upon receipt of the settlement of
this note receivable, the Partnership reduced the remaining allowance for loan
losses for this note by $150,000 during the quarter ended September 30, 1996.
This reduction in the allowance for loan losses was recognized as income during
the period.
The Partnership also wrote-off the outstanding note receivable balance
of $243,000 during the quarter ended September 30, 1996 from a security
monitoring system company which was considered to be impaired. This note
receivable had been fully reserved for in a previous year.
The Partnership also foreclosed on two notes receivable form cable
television system operators as discussed in Note 2.
The activity in the allowance for losses on notes receivable during the
nine months ended September 30, is as follows:
1996 1995
---- ----
(Amounts in Thousands)
Beginning balance $ 3,880 $ 8,357
Provision for losses (2,185) (2,000)
Write downs (1,016) (2,010)
------- -------
Ending balance $ 679 $ 4,347
======= =======
Note 6. Net Income (Loss) and Distributions Per Limited Partnership Unit.
Net income and distributions per limited partnership unit were based on
the limited partners' share of net income and distributions, and the weighted
average number of units outstanding of 516,716 for the nine months ended
September 30, 1996 and 1995. For purposes of allocating net income (loss) and
distributions to each individual limited partner, the Partnership allocates net
income (loss) and distributions based upon each respective limited partner's net
capital contributions.
Note 7. Investment in Joint Ventures.
Equipment Joint Ventures
The aggregate combined statements of operations of the equipment joint
ventures are presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Rental income $ 568 $1,013 $1,838 $2,968
Gain on sale of equipment 159 359 702 1,164
Other income 30 569 104 674
------ ------ ------ ------
Total income 757 1,941 2,644 4,806
------ ------ ------ ------
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EXPENSES
Depreciation 81 628 254 1,086
Lease related operating expenses 267 726 1,110 2,142
Management fees to General Partner 33 94 100 221
General and administrative expenses 2 1 7 8
------ ------ ------ ------
Total expenses 383 1,449 1,471 3,457
------ ------ ------ ------
Net income $ 374 $ 492 $1,173 $1,349
====== ====== ====== ======
Foreclosed Cable Systems Joint Ventures
The aggregate combined statements of operations of the foreclosed cable
systems joint ventures are presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Subscriber revenue $ 249 $ 267 $ 749 $ 794
Gain on sale of cable system -- -- 10 --
Other income 17 3 24 9
----- ----- ----- -----
Total income 266 270 783 803
----- ----- ----- -----
EXPENSES
Depreciation and amortization 82 77 243 237
Program services 83 89 256 247
Management fees to an affiliate
of the General Partner 11 12 42 36
General and administrative expenses 80 79 248 228
Provision for losses on accounts
receivable 3 3 7 8
----- ----- ----- -----
Total expenses 259 260 796 756
----- ----- ----- -----
Net income (loss) before income taxes 7 10 (13) 47
Income tax expense (3) (6) (2) (13)
----- ----- ----- -----
Net income (loss) $ 4 $ 4 $ (15) $ 34
===== ===== ===== =====
Note 8. Pro Forma Information.
On February 2, 1996, the Partnership entered into a Commercial Code
Section 9505 Agreement with Concept Cablevision of Indiana, Inc., a cable
television company that the Partnership had extended credit. As a result of this
agreement, Phoenix Concept Cablevision of Indiana, L.L.C., a limited liability
company and wholly owned subsidiary of the Partnership, was formed.
On February 14, 1996, the Partnership, along with two other affiliated
partnerships managed by the General Partner, entered into a Settlement Agreement
and Releases with Grassroots Cable Systems, Inc., a cable television company
that the Partnership had extended credit. As a result of this agreement, Phoenix
Grassroots Cable Systems, L.L.C., a limited liability company and majority owned
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subsidiary of the Partnership, was formed.
A summary of the unaudited pro forma consolidated results of operations
of the Partnership for the year ended December 31, 1995, as if these cable
television systems had been acquired at the beginning of the year, is as
follows:
(Amounts in Thousands Except
for Per Unit Amounts)
Cable subscriber revenue $5,322
Total income 9,765
Depreciation and amortization 2,699
Program service, cable systems 2,263
General and administrative expenses 1,719
Total expenses 6,178
Net income before minority interest 3,587
Minority interest in earnings of subsidiary 20
Net income 3,567
Net income per limited partnership unit $ 6.83
These pro forma results reflect certain adjustments which, among other
things, include an increase in operating revenues from cable subscribers,
increases in operating expenses of cable systems, depreciation and amortization
of tangible and intangible assets and adjustments of interest expense on
outstanding debt.
The above pro forma consolidated statement should not necessarily be
considered as indicative of the results that would have occurred had the
acquisitions been made at the beginning of the year and their operations
consolidated for the twelve month period.
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PHOENIX LEASING CASH DISTRIBUTION FUND III,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Phoenix Leasing Cash Distribution Fund III, a California limited
partnership and Subsidiaries (the Partnership) reported net income of $603,000
and $3,641,000 for the three and nine months ended September 30, 1996,
respectively, as compared to net income of $191,000 and $2,475,000 for the same
periods in 1995. The increase in net income for the three and nine months ended
September 30, 1996, as compared to the prior year, is due to a gain on the sale
of two cable systems, as well as an increase in subscriber revenue from the
addition of new cable systems in 1996.
The gain on sale of cable systems during the three months ended
September 30, 1996, includes the sale of a cable system owned by Phoenix
Grassroots Cable Systems, L.L.C., a majority owned subsidiary of the
Partnership. This cable television system was transferred to the Partnership on
February 14, 1996. The closing date of this sale was August 30, 1996 and the
Partnership recorded sales proceeds of $8.9 million and a net gain on sale of
$330,000. This sale and another sale of a cable system is included in the gain
on sale of cable systems for the nine months ended September 30, 1996. On
January 17, 1996, Phoenix Black Rock Cable J.V., a wholly owned subsidiary of
the Partnership, sold its cable television system for $2.6 million in cash. As a
result of this sale, the Partnership recognized a gain on sale of $1,205,000.
In February of 1996, the Partnership entered into agreements with two
cable television system operators to transfer all of the assets of the cable
television systems in satisfaction of defaulted notes receivable from these
cable television system operators. The assets of these cable television systems
were transferred to newly formed limited liability companies that are majority
owned by the Partnership. The assets received through foreclosure generally
consists of headend equipment, cable plant, franchise agreements, subscriber
lists, leased property, land, tools, vehicles and miscellaneous other assets.
The Partnership plans to continue the operations of the cable television company
received through foreclosure. One of these cable systems was subsequently sold
during 1996. For further information please see the notes to the financial
statements. The Partnership reduced its allowance for loan losses by $2,035,000
during the nine months ended September 30, 1996 as a result of the transfer of
one of the cable systems. This reduction in the allowance for loan losses was
recognized as income during the period.
Total revenues increased by $876,000 and $2,193,000 for the three and
nine months ended September 30, 1996, when compared to the same periods in 1995.
The increase in total revenues is attributable to a gain on the sale of cable
systems and an increase in cable subscriber revenues. Cable subscriber revenues
increased due to the addition of two new cable systems that were transferred to
the Partnership in satisfaction of two defaulted notes receivable from cable
television system operators.
During the nine months ended September 30, 1996 the partnership reported
a decrease in interest income from notes receivable of $700,000 and a decrease
in rental income of $872,000, compared to the same period in 1995. During the
nine months ended September 30, 1995, the Partnership recognized interest income
from the receipt of a final payoff from one of its notes receivable which was
considered to be impaired. This payoff caused interest income from notes
receivable to be higher than expected during the nine months ended September 30,
1995.
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The reduction in rental income experienced for both the three and nine
months ended September 30, 1996 is primarily the result of a decrease in the
amount of equipment owned by the Partnership. At September 30, 1996, the
Partnership owned equipment, excluding the Partnership's pro rata interest in
joint ventures, with an aggregate original cost of $16.1 million, as compared to
$27.1 million at September 30, 1995.
Total expenses increased by $468,000 and $840,000 for both the three and
nine months ended September 30, 1996, respectively, as compared to the same
periods in 1995. The increase in total expenses during the three and nine months
ended September 30, 1996, compared to 1995, is primarily due to increases in
depreciation expense and cable program service expense, resulting from the
addition of two new cable television systems during the year. In addition, the
Partnership reported increases in management fees due to the sale of two cable
systems during the year.
The Partnership reported net recoveries of allowances for losses on
receivables of approximately $2.2 million and $2 million during the nine months
ended September 30, 1996 and 1995, respectively. The recovery of the allowance
during 1996 was attributable to the foreclosure upon a cable system in which the
estimated fair value at foreclosure indicated that an allowance was not
necessary, resulting in an adjustment to the allowance that had been provided
for this loan in a prior year. During the nine months ended September 30, 1995,
the Partnership received a settlement payment of $2.7 million on a defaulted
note receivable from a cable television system operator. The Partnership had
provided a loan loss reserve in the amount equal to the net carrying value of
this note in a prior year. Upon recovery of a portion of this defaulted note
receivable, the Partnership reduced the allowance for loan losses by $2 million
during the nine months ended September 30, 1995. This reduction in the allowance
(recovery of) for loan losses was recognized as income during nine months ended
September 30, 1995.
The Partnership has also foreclosed upon the collateral of several notes
receivable to certain cable television system operators. As a result, the
Partnership has an ownership interest in the operating cable television systems
organized as joint ventures. The Partnership's equity interest in the earnings
from the foreclosed cable system joint ventures was minimal during the three and
nine months ended September 30, 1996 and 1995.
Liquidity and Capital Resources
The Partnership's primary source of liquidity comes from cable
subscriber revenues and from its contractual obligations with lessees and
borrowers for fixed payment terms. As the initial lease terms of the leases
expire, the Partnership will continue to renew, remarket or sell the equipment.
The future liquidity of the Partnership will depend upon the General Partner's
success in collecting contractual amounts and re-leasing and selling the
Partnership's equipment as it comes off lease. As another source of liquidity,
the Partnership has investments in joint ventures.
The net cash generated by operating activities was $1,162,000 during the
nine months ended September 30, 1996, as compared to $1,153,000 during the same
period in 1995. The net cash generated by operating activities remained steady
during the two periods due primarily to an increase in cable subscriber
revenues.
Proceeds from the sale of cable systems is related to the sale of two
cable systems owned by Phoenix Black Rock Cable J.V. and Phoenix Grassroots
Cable Systems, L.L.C ., both majority owned subsidiaries of the Partnership.
<PAGE>
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During the nine months ended September 30, 1996, the Partnership
reported decreases in principal payments from financing leases and notes
receivable of $661,000 and $5,982,000, respectively, as compared to the prior
year. These decreases are reflective of the decrease in the net investment in
financing leases and the decrease in notes receivable, as reported on the
balance sheet at September 30, 1996. The Partnership received smaller settlement
payments from outstanding notes during 1996, when compared to the same period in
1995.
As of September 30, 1996, the Partnership owned equipment held for lease
with an aggregate original cost of $3,681,000 and a net book value of $0,
compared to $7,770,000 and $48,000, respectively, as of September 30, 1995. The
General Partner is actively engaged, on behalf of the Partnership, in
remarketing and selling the Partnership's off-lease portfolio.
The cash distributed to limited partners during the nine months ended
September 30, 1996 and 1995 were $1,954,000 and $5,798,000, respectively. As a
result, the cumulative cash distributions to the limited partners are
$98,179,000 and $94,272,000 as of September 30, 1996 and 1995, respectively. The
General Partner did not receive cash distributions during the nine months ended
September 30, 1996 and 1995. The General Partner has elected not to receive
payment, at this time, for its share of the cash available for distribution due
to its negative capital account. During 1995, the Partnership was making
quarterly distributions to partners with the last quarterly distribution having
been made on January 15, 1996. The Partnership has switched to an annual
distribution plan with the next distribution planned for January 15, 1997. As a
result of the sale of certain cable television systems and the settlement of an
impaired note during 1996, the Partnership anticipates distributing the excess
cash provided by these events on January 15, 1997.
Cash generated from leasing and financing operations has been and is
anticipated to continue to be sufficient to meet the Partnership's continuing
operational expenses and to provide for distributions to partners.
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PHOENIX LEASING CASH DISTRIBUTION FUND III,
A CALIFORNIA LIMITED PARTNERSHIP
September 30, 1996
Part II. Other Information.
---------------------------
Item 1. Legal Proceedings. Inapplicable
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults Upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of Securities Holders. Inapplicable
Item 5. Other Information. Inapplicable
Item 6. Exhibits and Reports on 8-K:
a) Exhibits:
(27) Financial Data Schedule
b) Reports on 8-K:
One report, dated August 30, 1996, on Form 8-K was filed during
the quarter ending September 30, 1996, pursuant to Item 2 and Item 7 of that
form. No financial statements were filed as part of that report.
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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 III,
-------------------------------------------
A CALIFORNIA LIMITED PARTNERSHIP
--------------------------------
(Registrant)
Date Title Signature
---- ----- ---------
November 12, 1996 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- ----------------- Senior Vice President ----------------------
and Treasurer of (Paritosh K. Choksi)
Phoenix Leasing Incorporated
General Partner
November 12, 1996 Senior Vice President, /S/ BRYANT J. TONG
- ----------------- Financial Operations ----------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Incorporated
General Partner
November 12, 1996 Senior Vice President of /S/ GARY W. MARTINEZ
- ----------------- Phoenix Leasing Incorporated ----------------------
General Partner (Gary W. Martinez)
November 12, 1996 Partnership Controller /S/ MICHAEL K. ULYATT
- ----------------- Phoenix Leasing Incorporated ----------------------
General Partner (Michael K. Ulyatt)
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