UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ----- ACT OF 1934
For the quarterly period ended June 30, 1997
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
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
------ ------
7,526 Units of Limited Partnership Interest were outstanding as of June 30,1997.
Transitional small business disclosure format:
Yes No X
------ ------
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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,
1997 1996
---- ----
ASSETS
Cash and cash equivalents $ 499 $ 1,499
Accounts receivable 13 44
Equipment on operating leases and
held for lease (net of accumulated
depreciation of $56 at June 30, 1997
and December 31, 1996) - -
Net investment in financing leases 12 99
Investment in joint ventures 190 197
Capitalized acquisition fees (net of
accumulated amortization of $295 and
$292 at June 30, 1997 and December 31,
1996, respectively) 1 4
Other assets 2 1
--------- ---------
Total Assets $ 717 $ 1,844
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 31 $ 24
--------- ---------
Total Liabilities 31 24
--------- ---------
Partners' Capital
General Partner (3) (3)
Limited Partners, 25,000 units
authorized, 7,526 units issued
and outstanding at June 30, 1997
and December 31, 1996 689 1,823
--------- ---------
Total Partners' Capital 686 1,820
--------- ---------
Total Liabilities and Partners' Capital $ 717 $ 1,844
========= =========
The accompanying notes are an integral part of these statements.
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PHOENIX HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
INCOME
Rental income $ -- $ 9 $ -- $ 8
Earned income, financing leases 1 11 5 24
Gain on sale of equipment -- -- -- 12
Gain on sale of securities -- -- 50 --
Equity in earnings (losses) from
joint ventures, net (2) (1) (7) 24
Other income 8 8 19 17
------ ------ ------ ------
Total Income 7 27 67 85
------ ------ ------ ------
EXPENSES
Amortization of acquisition fees 2 7 3 9
Management fees to General Partner 2 7 5 10
Reimbursed administrative costs to
General Partner 2 3 5 7
Legal expense 4 18 7 25
General and administrative expenses 6 5 12 10
------ ------ ------ ------
Total Expenses 16 40 32 61
------ ------ ------ ------
NET INCOME (LOSS) $ (9) $ (13) $ 35 $ 24
====== ====== ====== ======
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $(1.20) $(1.91) $ 3.05 $ 1.73
====== ====== ====== ======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ -- $18.53 $153.79 $37.27
====== ====== ====== ======
ALLOCATION OF NET INCOME (LOSS):
General Partner $ -- $ 1 $ 12 $ 11
Limited Partners (9) (14) 23 13
------ ------ ------ ------
$ (9) $ 13 $ 35 $ 24
====== ====== ====== ======
The accompanying notes are an integral part of these statements
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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,
1997 1996
---- ----
Operating Activities:
Net income $ 35 $ 24
Adjustments to reconcile net income to net
cash provided by operating
activities:
Amortization of acquisition fees 3 9
Gain on sale of equipment -- (12)
Gain on sale of securities (50) --
Equity in losses (earnings) from joint
ventures, net 7 (24)
Decrease in accounts receivable 31 10
Increase (decrease) in accounts payable and
accrued expenses 7 (5)
Increase in other assets (1) (2)
------- -------
Net cash provided by operating activities 32 --
------- -------
Investing Activities:
Principal payments, financing leases 87 127
Principal payments, notes receivable -- 100
Proceeds from sale of equipment -- 12
Proceeds from sale of securities 50 --
Distributions from joint ventures -- 67
------- -------
Net cash provided by investing activities 137 306
------- -------
Financing Activities:
Distributions to partners (1,169) (283)
------- -------
Net cash used by financing activities (1,169) (283)
------- -------
Increase (decrease) in cash and cash equivalents (1,000) 23
Cash and cash equivalents, beginning of period 1,499 655
------- -------
Cash and cash equivalents, end of period $ 499 $ 678
======= =======
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 1996 amounts have been reclassified to
conform to the 1997 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. 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,
1997 and 1996. 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 5. Investment in Joint Ventures.
Foreclosed Cable System Joint Ventures
The aggregate combined financial information of the foreclosed cable
systems joint ventures is presented as follows:
June 30, December 31,
1997 1996
---- ----
(Amounts in Thousands)
Assets $ 1,225 $ 1,215
Liabilities 220 172
Partners' Capital 1,005 1,043
<PAGE>
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Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ 103 $ 80 203 $ 1,465
Expenses 118 119 241 401
Net Income (Loss) (15) (39) (38) 1,064
<PAGE>
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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 $9,000 for the three months ended
June 30, 1997, as compared to a net loss of $13,000 for the same period in 1996.
In contrast, the Partnership reported net income for the six months ended June
30, 1997 of $35,000 compared to net income of $24,000 for the same period in
1996. The improvement in earnings for the three months ended June 30, 1997
compared to 1996 is a result of a decrease in total expenses which exceeded the
decrease in total revenues. The increase in net income during the six months
ended June 30, 1997, as compared to the same period in 1996, is attributable to
a gain on sale of securities of $50,000.
Total revenues decreased by $20,000 and $18,000 during the three and six
months ended June 30, 1997, respectively, as compared to the same periods in
1996. This decrease is primarily the result of an absence of rental income and a
decline in earned income from financing leases. The absence of rental income
during the three and six months ended June 30, 1997, compared to $9,000 and
$8,000 for the same periods in 1996, respectively, is attributable to equipment
for the remaining operating leases being held for lease as of June 30, 1997.
The decrease in earned income from financing leases during the three and
six months ended June 30, 1997 of $10,000 and $19,000, respectively, compared to
the same periods in 1996, is attributable to the declining net investment in
financing leases. The net investment in financing leases at June 30, 1997 is
$12,000, as compared to $184,000 at June 30, 1996.
Additionally, the absence of a gain on sale of equipment and the decline in
earnings from joint ventures also contributed to the decrease in total revenues
for the six months ended June 30, 1997 compared to 1996. The Partnership
reported a gain on sale of equipment of $12,000 during the six months ended June
30, 1996. The gain on sale of equipment recognized during the six months ended
June 30, 1996 was a result of equipment which was fully depreciated being sold
for proceeds of $12,000.
The decline in earnings from joint ventures of $31,000 for the six months
ended June 30, 1997, compared to 1996, is due to earnings from joint ventures
being higher than usual during the six months ended June 30, 1996. The higher
earnings in 1996 was a result of a sale of a cable television system owned by
one of the foreclosed cable systems joint ventures. Such an event did not occur
during the six months ended June 30, 1997.
In contrast, the Partnership experienced a gain on sale of securities of
$50,000 which partially offset the factors contributing to the decrease in total
revenues as previously described during the six months ended June 30, 1997. The
gain on sale of securities is due to the exercise and sale of stock warrants
held by the Partnership.
Total expenses decreased by $24,000 and $29,000 during the three and six
months ended June 30, 1997, as compared to the same periods in 1996. The
<PAGE>
Page 8 of 11
decrease in expenses during the three and six months ended June 30, 1997, as
compared to the same periods in 1996, is a result of all expense line items
declining with the exception of general and administrative expenses. The decline
in legal expense contributed to a majority of the decrease in total expenses.
Legal expense decreased by $14,000 and $18,000 for the three and six months
ended June 30, 1997, respectively, compared to the same periods in the prior
year. The reduction in legal expense during 1997 is due to a decline in legal
costs attributable to the Partnership's impaired note receivable. This note
receivable was paid off during 1996.
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.
The cash generated by leasing and financing activities was $119,000 during
the six months ended June 30, 1997, as compared to $227,000 during the same
period in 1996. During the six months ended June 30, 1997, the Partnership
received a payment on an outstanding receivable; however, the receipt of this
payment was less than the amount received in the prior year as a payoff of an
impaired note receivable which caused net cash generated by leasing and
financing activities to be higher than usual in 1996.
The Partnership did not receive cash distributions from joint ventures
during the six months ended June 30, 1997, compared to $67,000 during the six
months ended June 30, 1996. The cash received from distributions from joint
ventures during the six months ended June 30, 1996 was attributable to a
foreclosed cable systems joint venture distributing proceeds from the sale of
its cable television system.
The Partnership owned equipment being held for lease with an original cost
of $89,000 and a net book value of $0 at June 30, 1997 and 1996. 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 $1,169,000 and $283,000 for the six
months ended June 30, 1997 and 1996, 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 $1,157,000 and $280,000 in distributions
during the period ended June 30, 1997 and 1996, respectively. The cumulative
cash distributions to limited partners are $6,995,000 and $5,837,000 at June 30,
1997 and 1996, respectively. The General Partner received $12,000 and $3,000 for
its share of the cash distributions during the period ended June 30, 1997 and
1996, respectively.
The increase in distributions to partners is a result of the Partnership
switching to an annual distribution method from a quarterly distribution method
with the first annual distribution being made on January 15, 1997. The
distribution on April 15, 1996 was the last scheduled quarterly distribution
made by the Partnership. An additional factor contributing to the increase in
distributions to partners during the six months ended June 30, 1997 is the
receipt of a settlement payment on an impaired note during the quarter ended
September 30, 1996, the Partnership included these proceeds in the January 15,
1997 distribution to partners. The Partnership's ability to distribute cash to
partners is dependent upon the Partnership receiving its contractual payments
from 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
<PAGE>
Page 9 of 11
operational expenses.
<PAGE>
Page 10 of 11
PHOENIX LEASING HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
June 30, 1997
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>
Page 11 of 11
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, 1997 Senior Vice President /S/ GARY W. MARTINEZ
- ----------------- and a Director of ------------------------
Phoenix Leasing Incorporated (Gary W. Martinez)
General Partners
August 13, 1997 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- ----------------- Senior Vice President, ------------------------
Treasurer and a Director of (Paritosh K. Choksi)
Phoenix Leasing Incorporated
General Partner
August 13, 1997 Senior Vice President, /S/ BRYANT J. TONG
- ----------------- Financial Operations of ------------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Incorporated
General Partner
August 13, 1997 Partnership Controller of /S/ MICHAEL K. ULYATT
- ----------------- Phoenix Leasing Incorporated ------------------------
General Partner (Michael K. Ulyatt)
General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 499
<SECURITIES> 0
<RECEIVABLES> 13
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 56
<DEPRECIATION> 56
<TOTAL-ASSETS> 717
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 686
<TOTAL-LIABILITY-AND-EQUITY> 717
<SALES> 0
<TOTAL-REVENUES> 67
<CGS> 0
<TOTAL-COSTS> 32
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 35
<INCOME-TAX> 0
<INCOME-CONTINUING> 35
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35
<EPS-PRIMARY> 3.05
<EPS-DILUTED> 0
</TABLE>
