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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 June 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 0-17989
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PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
Registrant
California 68-0166383
- --------------------- ----------------------------------
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 HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
June 30, December 31,
1996 1995
---- ----
ASSETS
Cash and cash equivalents $ 678 $ 655
Accounts receivable 8 18
Notes receivable (net of allowance for
losses on notes receivable $706 at
June 30, 1996 and December 31, 1995) 481 581
Equipment on operating leases and held
for lease (net of accumulated
depreciation of $56 at June 30, 1996
and December 31, 1995) -- --
Net investment in financing leases 184 311
Investment in joint ventures 223 266
Capitalized acquisition fees (net of
accumulated amortization of $269 and $260
at June 30, 1996 and December 31, 1995,
respectively) 27 36
Securities available-for-sale 90 149
Other assets 3 1
------- -------
Total Assets $ 1,694 $ 2,017
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 39 $ 44
------- -------
Total Liabilities 39 44
------- -------
Partners' Capital
General Partner (5) (14)
Limited Partners, 25,000 units authorized,
7,526 units issued and outstanding at June
30, 1996 and December 31, 1995 1,570 1,838
Unrealized gains on available-for-sale securities 90 149
------- -------
Total Partners' Capital 1,655 1,973
------- -------
Total Liabilities and Partners' Capital $ 1,694 $ 2,017
======= =======
The accompanying notes are an integral
part of these statements.
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<TABLE>
PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME
Rental income $ 9 $ 3 $ 8 $ 3
Earned income, financing leases 11 20 24 42
Equity in earnings (losses) from
joint ventures (1) 2 24 3
Gain on sale of equipment -- 1 12 4
Other income 8 6 17 12
------ ------ ------ ------
Total Income 27 32 85 64
------ ------ ------ ------
EXPENSES
Depreciation and amortization 7 5 9 11
Management fees to General Partner 7 5 10 8
Reimbursed administrative costs
to General Partner 3 4 7 9
Provision for losses on receivables -- (37) -- (37)
Legal expense 18 29 25 37
General and administrative expenses 5 10 10 17
------ ------ ------ ------
Total Expenses 40 16 61 45
------ ------ ------ ------
NET INCOME (LOSS) $ (13) $ 16 $ 24 $ 19
====== ====== ====== ======
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $(1.91) $ 1.87 $ 1.73 $ 1.87
====== ====== ====== ======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $18.53 $18.33 $37.27 $70.01
====== ====== ====== ======
ALLOCATION OF NET INCOME (LOSS):
General Partner $ 1 $ 2 $ 11 $ 5
Limited Partners (14) 14 13 14
------ ------ ------ ------
$ (13) $ 16 $ 24 $ 19
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral
part of these statements.
<PAGE>
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PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Six Months Ended
June 30,
1996 1995
---- ----
Operating Activities:
Net income $ 24 $ 19
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 9 11
Gain on sale of equipment (12) (4)
Equity in earnings from joint ventures, net (24) (3)
Provision for losses on notes receivable -- (37)
Decrease in accounts receivable 10 6
Decrease in accounts payable and accrued expenses (5) (22)
Decrease (increase) in other assets (2) 2
----- -----
Net cash provided (used) by operating activities -- (28)
----- -----
Investing Activities:
Principal payments, financing leases 127 114
Principal payments, notes receivable 100 75
Proceeds from sale of equipment 12 6
Distributions from joint ventures 67 10
----- -----
Net cash provided by investing activities 306 205
----- -----
Financing Activities:
Distributions to partners (283) (532)
----- -----
Net cash used by financing activities (283) (532)
----- -----
Increase (decrease) in cash and cash equivalents 23 (355)
Cash and cash equivalents, beginning of period 655 755
----- -----
Cash and cash equivalents, end of period $ 678 $ 400
===== =====
The accompanying notes are an integral
part of these statements.
<PAGE>
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PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
The accompanying unaudited condensed financial statements have been
prepared by the Partnership in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Although management believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Partnership's Financial Statement, as filed with the
SEC in the latest annual report on Form 10-K.
Note 2. Reclassification.
Reclassification - Certain 1995 amounts have been reclassified to
conform to the 1996 presentation.
Note 3. Income Taxes.
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.
Note 4. Notes Receivable.
Impaired Notes Receivable. At June 30, 1996, the recorded investment in
notes that are considered to be impaired under Statement No. 114 was $1,187,000
for which the related allowance for losses is $706,000. The average recorded
investment in impaired loans during the six months ended June 30, 1996 was
approximately $1,237,000.
The activity in the allowance for losses on notes receivable during
the six months ended June 30, is as follows:
1996 1995
---- ----
Beginning balance $706 $ 202
Provision for losses -- (37)
Write downs -- (18)
---- -----
Ending balance $706 $ 147
==== =====
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Note 5. Net Income (Loss) and Distribution 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 7,526 for the six months ended June 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 6. Investment in Joint Ventures.
Foreclosed Cable System Joint Ventures
The aggregate combined statements of operations of the foreclosed
cable systems joint ventures is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Subscriber revenue $ 111 $244 $ 271 $485
Gain (adjustment to gain) on sale
of cable system (35) -- 1,205 --
Other income 4 3 16 8
----- ---- ------ ----
Total income 80 247 1,492 493
----- ---- ------ ----
EXPENSES
Depreciation and amortization 31 55 74 109
Program services 41 65 92 129
Management fees to an affiliate of the
General Partner 6 11 131 22
General and administrative expenses 40 70 128 155
Provision for losses on accounts
receivable 1 2 3 5
----- ---- ------ ----
Total expenses 119 203 428 420
----- ---- ------ ----
Net income (loss) $ (39) $ 44 $1,064 $ 73
===== ==== ====== ====
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PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
The Partnership reported a net loss of $13,000 for the three months ended
June 30, 1996, as compared to net income of $16,000 for the same period in 1995.
During the six months ended June 30, 1996, the Partnership reported net income
of $24,000, as compared to net income of $19,000 during the six months ended
June 30, 1995. The decrease in Partnership earnings during the three months
ended June 30, 1996, as compared to the same period in 1995, is attributable to
an increase in total expenses. The increase in Partnership earnings during the
six months ended June 30, 1996, as compared to the same period in 1995, is
attributable to an increase in revenues.
The decrease in total revenues during the three months ended June 30, 1996,
as compared to the same period in 1995, was primarily the result of a decrease
in earned income from financing leases. This decrease is reflective of a
decrease in the net investment in finance leases. The Partnership reported a net
investment in finance leases of $184,000 at June 30, 1996, as compared to
$423,000 at June 30, 1995.
The increase in total revenues during the six months ended June 30, 1996,
as compared to the same period in 1995, was primarily the result of an increase
in earnings from joint ventures. The increase in earnings from joint ventures is
attributable to the sale of a cable television system owned by one of the joint
ventures during the first quarter of 1996.
The Partnership did not report interest income from notes receivable during
the three and six months ended June 30, 1996 and 1995. This is a result of the
Partnership's investment in notes receivable being classified as impaired and
the recognition of interest income on such notes being suspended. The
Partnership has an investment in an impaired note receivable with a net carrying
value (before consideration of the allowance for losses of $706,000) of
approximately $1,187,000 at June 30, 1996.
Total expenses increased by $24,000 and $16,000 during the three and six
months ended June 30, 1996, as compared to the same periods in 1995. The
increase in expenses during the three and six months ended June 30, 1996, as
compared to the same period in 1995, is due to an adjustment to the provision
for losses on receivables made during 1995. During the six months ended June 30,
1995, the Partnership received a settlement payment on a defaulted note
receivable from a cable television system operator in an amount that exceeded
the net carrying value of this note. As a result, the Partnership recovered a
portion of the allowance for loan losses, recognizing this recovery as a
reduction to the allowance for loan losses. Partially offsetting the increase in
total expenses was a decrease in legal expenses of $11,000 and $12,000 during
the three and six months ended June 30, 1996, as compared to the same periods in
1995.
Liquidity and Capital Resources
The Partnership's primary source of liquidity comes from its contractual
obligations with lessees and borrowers to receive rental payments and payments
of principal and interest. The future liquidity of the Partnership will depend
upon the General Partner's success in collecting scheduled contractual payments
from its lessees and borrowers. Additionally, the Partnership has investments in
foreclosed cable systems joint ventures that it receives cash distributions of
the excess cash flows.
<PAGE>
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The cash generated by leasing and financing activities was $227,000 during
the six months ended June 30, 1996, as compared to $161,000 during the same
period in 1995. The net cash generated by leasing and financing activities was
lower during 1995 due to the payment of accounts payable and accrued expenses.
During the six months ended June 30, 1996, the Partnership received cash
distributions of $67,000 from foreclosed cable systems joint ventures, as
compared to cash distributions of $10,000 from foreclosed cable systems joint
ventures during the same period in 1995. This increase in distributions is
attributable to the distribution of the sale proceeds from the sale of a cable
television system owned by one of these joint ventures during the first quarter
of 1996.
As of June 30, 1996, the Partnership owned equipment being held for lease
with an original cost of $89,000 and a net book value of $0, as compared to
$212,000 and $1,000 at June 30, 1995. The General Partner is actively engaged,
on behalf of the Partnership, in remarketing and selling the Partnership's
equipment as it becomes available.
The cash distributed to partners was $283,000 and $532,000 for the six
months ended June 30, 1996 and 1995, respectively. In accordance with the
Partnership Agreement, the Limited Partners are entitled to 99% of the cash
available for distribution and the General Partner is entitled to 1%. As a
result, the Limited Partners received $280,000 and $527,000 in distributions
during the period ended June 30, 1996 and 1995, respectively. The cumulative
cash distributions to limited partners are $5,837,000 and $5,276,000 at June 30,
1996 and 1995, respectively. The General Partner received $3,000 and $5,000 for
its share of the cash distributions during the period ended June 30, 1996 and
1995, respectively.
The Partnership made its quarterly distribution to partners on April 15,
1996 at the same rate as the January 15, 1996 distribution, but at a rate lower
than the distributions made during the same period in 1995. The distribution
made on April 15, 1996 was the last scheduled quarterly distribution made by the
Partnership. The Partnership has switched to an annual distribution method with
the first annual distribution to be made on January 15, 1997. The Partnership's
ability to distribute cash to partners is dependent upon the Partnership
receiving its contractual payments from notes receivable and financing leases.
If the cash generated by Partnership operations decrease below expectations, the
distributions to partners will be adjusted accordingly.
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.
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PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
June 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: None
<PAGE>
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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 HIGH TECH/HIGH YIELD FUND,
----------------------------------
A CALIFORNIA LIMITED PARTNERSHIP
--------------------------------
(Registrant)
Date Title Signature
---- ----- ---------
August 13, 1996 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- -------------------- Senior Vice President ------------------------
and Treasurer of (Paritosh K. Choksi)
Phoenix Leasing Incorporated
General Partner
August 13, 1996 Senior Vice President, /S/ BRYANT J. TONG
- -------------------- Financial Operations -------------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Incorporated
General Partner
August 13, 1996 Partnership Controller /S/ MICHAEL K. ULYATT
- ------------------- Phoenix Leasing Incorporated --------------------------
General Partner (Michael K. Ulyatt)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 678
<SECURITIES> 90
<RECEIVABLES> 1,195
<ALLOWANCES> 706
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 240
<DEPRECIATION> 56
<TOTAL-ASSETS> 1,694
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,655
<TOTAL-LIABILITY-AND-EQUITY> 1,694
<SALES> 0
<TOTAL-REVENUES> 85
<CGS> 0
<TOTAL-COSTS> 61
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 24
<INCOME-TAX> 0
<INCOME-CONTINUING> 24
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 0
</TABLE>
