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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 September 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
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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 _____
7,526 Units of Limited Partnership Interest were outstanding as of September 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)
September 30, December 31,
1997 1996
------- -------
ASSETS
Cash and cash equivalents $ 536 $ 1,499
Accounts receivable 16 44
Equipment on operating leases and held for
lease (net of accumulated depreciation of
$56 at September 30, 1997 and December 31, 1996) -- --
Net investment in financing leases -- 99
Investment in joint ventures 187 197
Other assets 3 5
------- -------
Total Assets $ 742 $ 1,844
======= =======
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 20 $ 24
------- -------
Total Liabilities 20 24
------- -------
Partners' Capital (Deficit)
General Partner (2) (3)
Limited Partners, 25,000 units authorized,
7,526 units issued and outstanding at
September 30, 1997 and December 31, 1996 724 1,823
------- -------
Total Partners' Capital (Deficit) 722 1,820
------- -------
Total Liabilities and Partners' Capital (Deficit) $ 742 $ 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 Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------- ------- ------- -------
INCOME
Rental income $ -- $ 19 $ -- $ 27
Earned income, financing leases -- 7 5 31
Gain on sale of equipment -- -- -- 12
Equity in earnings (losses) from
joint ventures (3) (1) (10) 23
Interest income, notes receivable 47 -- 49 --
Gain on sale of securities -- 34 51 34
Other income 7 12 23 29
------- ------- ------- -------
Total Income 51 71 118 156
------- ------- ------- -------
EXPENSES
Amortization of acquisition fees -- 21 4 30
Management fees to General Partner 2 27 7 37
Reimbursed administrative costs to
General Partner 2 3 7 10
Recovery of losses on receivables -- (190) -- (190)
Legal expense 5 1 12 26
General and administrative expenses 5 4 16 14
------- ------- ------- -------
Total Expenses 14 (134) 46 (73)
------- ------- ------- -------
NET INCOME $ 37 $ 205 $ 72 $ 229
======= ======= ======= =======
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 4.82 $ 26.94 $ 7.87 $ 28.67
======= ======= ======= =======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ -- $ -- $153.79 $ 37.27
======= ======= ======= =======
ALLOCATION OF NET INCOME:
General Partner $ 1 $ 2 $ 13 $ 13
Limited Partners 36 203 59 216
------- ------- ------- -------
$ 37 $ 205 $ 72 $ 229
======= ======= ======= =======
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)
Nine Months Ended
September 30,
1997 1996
------- -------
Operating Activities:
Net income $ 72 $ 229
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of acquisition fees 4 30
Gain on sale of equipment -- (12)
Equity in earnings from joint ventures, net 10 (23)
Recovery of losses on notes receivable -- (190)
Gain on sale of securities (51) (34)
Decrease in accounts receivable 28 10
Decrease in accounts payable and accrued expenses (4) (6)
Increase in other assets (2) (1)
------- -------
Net cash provided by operating activities 57 3
------- -------
Investing Activities:
Principal payments, financing leases 99 171
Principal payments, notes receivable -- 771
Proceeds from sale of equipment -- 12
Proceeds from sale of securities 51 34
Distributions from joint ventures -- 67
------- -------
Net cash provided by investing activities 150 1,055
------- -------
Financing Activities:
Distributions to partners (1,170) (283)
------- -------
Net cash used by financing activities (1,170) (283)
------- -------
Increase (decrease) in cash and cash equivalents (963) 775
Cash and cash equivalents, beginning of period 1,499 655
------- -------
Cash and cash equivalents, end of period $ 536 $ 1,430
======= =======
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 nine months ended September
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:
September 30, December 31,
1997 1996
------- -------
(Amounts in Thousands)
Assets $ 1,209 $ 1,215
Liabilities 220 172
Partners' Capital 989 1,043
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Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------- ------- ------- -------
(Amounts in Thousands)
Revenue $ 104 $ 113 $ 307 $ 1,577
Expenses 120 118 361 518
Net Income (Loss) (16) (5) (54) 1,059
<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 net income of $37,000 and $72,000 for the three
and nine months ended September 30, 1997, respectively, as compared to net
income of $205,000 and $229,000 for the same periods in 1996. During the three
and nine months ended September 30, 1996, the Partnership experienced a recovery
of losses on receivables of $190,000 related to the payoff of a defaulted note
receivable from a cable television system which contributed to the improved
earnings during 1996.
Total revenues decreased by $20,000 and $38,000 during the three and nine
months ended September 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 nine months ended September 30, 1997, compared to
$19,000 and $27,000 for the same periods in 1996, respectively, is attributable
to equipment for the remaining operating leases being held for lease as of
September 30, 1997.
The decrease in earned income from financing leases during the three and
nine months ended September 30, 1997 of $7,000 and $26,000, 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
September 30, 1997 is $0, as compared to $140,000 at September 30, 1996.
Additionally, the absence of a gain on sale of securities also contributed
to the decrease in total revenues for the three months ended September 30, 1997,
compared to $34,000 for the same period in 1996. The gain experienced in 1996 is
attributable to the exercise and sale of stock warrants held by the Partnership.
The Partnership had been granted stock warrants as part of its lease and
financing agreements with certain emerging growth companies.
Another factor contributing to the decline in total revenues for the nine
months ended September 30, 1997 is the decrease in earnings from joint ventures
of $33,000 for the nine months ended September 30, 1997, compared to the same
period in 1996. This decrease is due to earnings from joint ventures being
higher than usual during the nine months ended September 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 nine months ended September 30, 1997.
The Partnership reported a gain on sale of equipment of $12,000 during the
nine months ended September 30, 1996. The gain on sale of equipment recognized
during the nine months ended September 30, 1996 was a result of equipment which
was fully depreciated being sold for proceeds of $12,000.
Partially offsetting the decreases in total revenues described for the
three and nine months ended September 30, 1997, compared to the same periods in
the prior year, is the recognition of interest income from notes receivable.
During the three and nine months ended September 30, 1997, the Partnership
recognized interest income from notes receivable of $47,000 and $49,000,
respectively, compared to $0 for the same periods in 1996. During the three
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months ended September 30, 1997, the Partnership received additional settlement
proceeds from a defaulted note receivable with a net carrying value of $0. These
settlement proceeds are included in interest income on the Statement of
Operations.
In contrast to the decrease in gain on sale of securities experienced
during the three months ended September 30, 1997, the Partnership reported an
increase in gain on sale of securities of $17,000 during the nine months ended
September 30, 1997, compared to the same period in the prior year. The gain on
sale of securities is due to the exercise and sale of stock warrants held by the
Partnership. During the nine months ended September 30, 1997, the Partnership
received proceeds from the sale of securities of $51,000 compared to $34,000 for
the same period in 1996.
Total expenses increased by $148,000 and $119,000 during the three and nine
months ended September 30, 1997, as compared to the same periods in 1996. The
increase in total expenses for both periods in the current year is attributable
to the absence of a recovery of losses on receivables comparable to the one
experienced in the prior year. During the three and nine months ended September
30, 1996, the Partnership made an adjustment to the allowance for losses on
receivables of $190,000. During the three months ended September 30, 1996, the
Partnership received a payoff on an impaired note receivable from a cable
television system operator. This outstanding note receivable had been classified
as impaired and the Partnership had suspended the accrual of interest income on
this note. The carrying value of this note was $1,188,000, for which the
Partnership had an allowance for loan losses of $706,000, resulting in a net
carrying value of $482,000. The Partnership received total settlement proceeds
of $672,000 on this note, which resulted in a recovery of $190,000 of the
allowance for losses on notes receivable.
Partially offsetting the absence of a recovery of losses on receivables for
the three and nine months ended September 30, 1997, is the decreases in
amortization of acquisition fees and management fees to the General Partner. The
decline in amortization of acquisition fees of $21,000 and $26,000 for the three
and nine months ended September 30, 1997, compared to the same periods in the
prior year, is a result of the capitalized acquisition fees being fully
amortized as of September 30, 1997. The decline in management fees to the
General Partner of $25,000 and $30,000 for the three and nine months ended
September 30, 1997, compared to the same periods in 1996, is a result of a
decline in leasing and financing related revenues.
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 $156,000 during
the nine months ended September 30, 1997, as compared to $945,000 during the
same period in 1996. The net cash generated by leasing and financing activities
during 1996 were higher than usual as a result of a payoff of an impaired note
receivable.
The Partnership did not receive cash distributions from joint ventures
during the nine months ended September 30, 1997, compared to $67,000 during the
nine months ended September 30, 1996. The cash received from distributions from
joint ventures during the nine months ended September 30, 1996 was attributable
to a foreclosed cable systems joint venture distributing proceeds from the sale
of its cable television system.
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The Partnership owned equipment being held for lease with an original cost
of $89,000 and a net book value of $0 at September 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 $1,170,000 and $283,000 for the nine
months ended September 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 $1,158,000 and $280,000 in distributions
during the period ended September 30, 1997 and 1996, respectively. The
cumulative cash distributions to limited partners are $6,995,000 and $5,837,000
at September 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 September 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 nine months ended September 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
operational expenses.
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PHOENIX LEASING HIGH TECH/HIGH YIELD FUND,
A CALIFORNIA LIMITED PARTNERSHIP
September 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>
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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
---- ----- ---------
November 12, 1997 Senior Vice President /S/ GARY W. MARTINEZ
- --------------------- and a Director of ----------------------
Phoenix Leasing Incorporated (Gary W. Martinez)
General Partner
November 12, 1997 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- --------------------- Senior Vice President, ----------------------
Treasurer and a Director of (Paritosh K. Choksi)
Phoenix Leasing Incorporated
General Partner
November 12, 1997 Senior Vice President, /S/ BRYANT J. TONG
- --------------------- Financial Operations of ----------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Incorporated
General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 536
<SECURITIES> 0
<RECEIVABLES> 16
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 56
<DEPRECIATION> 56
<TOTAL-ASSETS> 742
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 722
<TOTAL-LIABILITY-AND-EQUITY> 742
<SALES> 0
<TOTAL-REVENUES> 118
<CGS> 0
<TOTAL-COSTS> 46
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 72
<INCOME-TAX> 0
<INCOME-CONTINUING> 72
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72
<EPS-PRIMARY> 7.87
<EPS-DILUTED> 0
</TABLE>
