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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 1996 Commission File Number 0-18278
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
California 68-0191380
- ------------------------------- ------------------------------------
(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, 1996, 6,242,943 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, 1996.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
1996 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Page
PART I
Item 1. Business...................................................... 3
Item 2. Properties.................................................... 4
Item 3. Legal Proceedings............................................. 5
Item 4. Submission of Matters to a Vote of Security Holders........... 5
PART II
Item 5. Market for the Registrant's Securities and Related
Security Holder Matters....................................... 5
Item 6. Selected Financial Data....................................... 5
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 6
Item 8. Financial Statements and Supplementary Data................... 9
Item 9. Disagreements on Accounting and Financial Disclosure Matters.. 28
PART III
Item 10. Directors and Executive Officers of the Registrant............ 28
Item 11. Executive Compensation........................................ 29
Item 12. Security Ownership of Certain Beneficial Owners and Management 29
Item 13. Certain Relationships and Related Transactions................ 29
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K...................................................... 30
Signatures............................................................... 31
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PART I
Item 1. Business.
General Development of Business.
Phoenix Leasing Cash Distribution Fund IV, a California limited
partnership (the Partnership), was organized on August 22, 1989. The Partnership
was registered with the Securities and Exchange Commission with an effective
date of December 27, 1989 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, 2000. 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 public offering was for 3,750,000 units of limited
partnership interest at a price of $20 per unit. During 1991, the Partnership
increased the public offering up to a maximum of 6,500,000 units. The
Partnership completed its public offering on December 27, 1991. As of December
27, 1991, the Partnership sold 6,492,727 units for a total capitalization of
$129,847,540. Of the proceeds received through the offering, the Partnership has
incurred $16,292,000 in organizational and offering expenses.
Narrative Description of Business.
Equipment Leasing and Financing Operations
From the initial formation of the Partnership through December 31, 1996,
the total investments in equipment leases and financing transactions (loans),
including the Partnership's pro rata interest in investments made by joint
ventures, approximate $266,852,000. The average initial firm term of contractual
payments from equipment subject to lease was 43.09 months, and the average
initial net monthly payment rate as a percentage of the original purchase price
was 2.71%. The average initial firm term of contractual payments from loans was
62.09 months.
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 will invest 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, franchised businesses, pay television
system operators and others, on either a long-term or short-term basis. The
types of equipment that the Partnership will invest in will include, but is not
limited to, 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.
In addition to acquiring equipment for lease to third parties, the
Partnership, either directly or through the investment in joint ventures, has
provided limited financing to certain emerging growth companies, cable
television operators, manufacturers and their lessees with respect to assets
leased directly by such manufacturers to third parties. The Partnership
maintains a security interest in the assets financed and in the receivables due
under any lease or rental agreement relating to such assets. Such security
interests constitute a lien on the equipment and will give the Partnership the
right, upon default, to obtain possession of the assets.
During the Partnership offering, the Partnership acquired significant
amounts of equipment or assets and provided financing with the net offering
proceeds. In addition, the Partnership has acquired equipment through the use of
debt financing. The ratio of the outstanding debt to net capital contributions
less any investment in Leveraged Joint Ventures at the end of the Partnership's
offering period will not exceed one-to-one. The cash flow generated by such
investments in equipment leases or financing transactions has been and will be
used to provide for debt service, to provide cash distributions to the Partners
and the remainder will be reinvested in capital equipment or other assets.
The Partnership has acquired and intends to acquire and lease equipment
pursuant to either "Operating" leases or "Financing" leases. At December 31,
1996, approximately 93% of the equipment owned by the Partnership was classified
as Financing 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
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equipment. Financing leases are generally for a longer term under which the
noncancellable rental payments due during the initial term of the lease are at
least sufficient to recover the purchase price of the equipment.
Competition. The General Partner has concentrated the Partnership's
activities in the equipment leasing and financing industry, an area where the
General Partner has developed an expertise. The 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). Generally, the impact of these factors to the
Partnership would be the realization of increased equipment remarketing and
storage costs, as well as lower residuals received from the sale or remarketing
of such equipment.
Cable Television System Operations.
Phoenix Westcom Cablevision, Inc. (the Subsidiary), a wholly-owned
subsidiary of the Partnership, owned a cable television system in the state of
Arizona that was acquired through foreclosure on a defaulted note receivable to
the Partnership on December 23, 1994. The net carrying value of the
Partnership's share of this defaulted note receivable was approximately
$885,000. Phoenix Cable Management Inc. (PCMI), an affiliate of the General
Partner, provides day to day management services in connection with the
operation of the system. On October 23, 1996, Phoenix Westcom Cablevision, Inc.
sold all the assets used in the operations of its cable television system
receiving proceeds of approximately $735,000, resulting in a loss on sale of the
assets of the cable system of $64,000. As a result of the sale of the cable
television system's assets, the Subsidiary ceased operations.
Other.
A brief description of the type of assets in which the Partnership has
invested as of December 31, 1996, together with information concerning the uses
of assets is set forth in Item 2.
Item 2. Properties.
Equipment Leasing and Financing Operations.
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, 1996, the Partnership owns equipment and has
outstanding loans to borrowers with an aggregate original cost of $95,937,000.
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, 1996.
Percentage of
Asset Types Purchase Price(1) Total Assets
----------- ----------------- -------------
(Amounts in Thousands)
Capital Equipment Leased to Emerging
Growth Companies $ 23,644 25%
Computer Peripherals 19,255 20
Furniture and Fixtures 18,491 19
Small Computer Systems 8,611 9
Financing Related to Emerging
Growth Companies 7,268 8
Computer Mainframes 5,644 6
Miscellaneous 5,107 5
Financing of Other Businesses 4,357 4
Telecommunications 2,769 3
Financing Related to Pay TV Systems
and Other Media 791 1
-------- ---
TOTAL $ 95,937 100%
======== ===
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(1) These amounts include the Partnership's pro rata interest in equipment
joint ventures of $6,785,000, a financing joint venture of $290,000, cost
of equipment on financing leases of $39,970,000 and original cost of
outstanding loans of $12,126,000 at December 31, 1996.
Item 3. Legal Proceedings.
The Registrant is not a party to any pending legal proceedings which
would have a material adverse impact on its financial position.
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.
PART II
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, 1996
---------------------------------- -----------------------
Limited Partners 8,343
Item 6. Selected Financial Data.
1996(1) 1995(1) 1994(1) 1993 1992
-------- -------- -------- -------- --------
(Amounts in Thousands Except for Per Unit Amounts)
Total Income $ 12,926 $ 15,469 $ 20,589 $ 35,234 $ 41,748
Net Income (loss) 5,856 4,228 (1,217) 980 4,440
Total Assets 39,575 50,262 66,299 99,380 138,814
Long-term Debt Obligations -- -- 114 3,656 17,668
Distributions to Partners 15,880 16,062 16,174 16,289 16,189
Net Income (loss) per
Limited Partnership Unit .81 .41 (.19) .03 .56
Distributions per Limited
Partnership Unit 2.40 2.40 2.40 2.41 2.38
(1) These amounts reflect the consolidated activity of the Partnership and its
subsidiary.
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this report.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Phoenix Leasing Cash Distribution Fund IV and Subsidiary (the
Partnership) reported net income of $5,856,000 for the year ended December 31,
1996, as compared to $4,228,000 during 1995 and a net loss of $1,217,000 during
1994. The increase in earnings during 1996 and 1995, as compared to the
respective previous year, is due to a decrease in total expenses, primarily
depreciation, that exceeded the decrease in total revenues.
The decrease in total revenues of $2,543,000 for the year ended December
31, 1996, as compared to 1995, is primarily the result of a decrease in rental
income of $2,021,000, and to a lesser extent, a decrease in earned income from
financing leases of $965,000. The decrease in total revenues of $5,120,000
during the year ended December 31, 1995, as compared to the same period in 1994,
was primarily attributable to a decrease in rental income of $3,783,000, as well
as, decreases in earned income from financing leases of $1,233,000 and interest
income from notes receivable of $838,000.
The decrease in rental income during 1996 and 1995, as compared to the
same period in the previous year, is a reflective of a decrease in the size of
the equipment portfolio. The Partnership owned equipment with an aggregate
original cost of $76.7 million at December 31, 1996 ,as compared to $96 million
at December 31, 1995. Partially offsetting this factor, in 1996, is a settlement
payment which is included in rental income of $638,000 from a lessee that had
defaulted in 1992.
An additional factor contributing to the decline in rental income in
1995, was the increase in the amount of equipment being held for lease. During
1994, many of the initial lease terms of the Partnership's equipment began to
expire. As a result, the Partnership must either renew the leases with the
current lessee, remarket the equipment to new lessees or sell the equipment.
Until new lessees or buyers of equipment can be found, the equipment continued
to generate depreciation expense without any corresponding rental income. The
effect of this was a reduction of the Partnership earnings during this
remarketing period.
The decrease in earned income from financing leases during 1996 and
1995, as compared to the same period in the previous year, is due to a decrease
in the Partnership's net investment in financing lease to $17 million at
December 31, 1996 from $24.7 million at December 31, 1995. The investment in
financing leases, as well as earned income from financing leases, will decrease
over the lease term as the Partnership amortizes income over the lease term
using the interest method of accounting. This effect will be mitigated to some
degree as the Partnership continues to invest in new financing leases over its
life. During both 1996 and 1995, the Partnership invested $6.4 million in new
financing leases.
The Partnership reported a gain on the sale of securities of $977,000 on
proceeds from the sale of securities of $1,005,000 during the year ended
December 31, 1996, as compared to a gain of $235,000 on proceeds of $235,000
during 1995, and a gain of $118,000 on proceeds of $118,000 during 1994. These
securities consisted of common stock and stock warrants granted to the
Partnership as part of a financing agreement with several emerging growth
companies. The Partnership owns shares of common stock and stock warrants in
emerging growth companies that are publicly traded with unrealized gains of
$525,000 at December 31, 1996. These investments in stock and stock warrants
carry certain restrictions, but generally can be exercised within a one year
period.
An additional factor contributing to the decline in total revenues for
the year ended December 31, 1995, compared to 1994, was the reduction in
interest income from notes receivable of $838,000. This decline was due to a
decrease in the net carrying value of outstanding notes as well as an increase
in impaired notes receivable. During 1995, the Partnership received payoffs of
$1,251,000 from three notes receivable and foreclosed upon another note
receivable. As a result, the Partnership applied $133,000 of its allowance for
losses on notes receivable during 1995. This activity was the primary reason for
the decrease in interest income and the decreased net carrying value of notes
receivable to $5.4 million at December 31, 1995 from $8.9 million at December
31, 1994. At December 31, 1995, the Partnership held notes receivable that are
classified as impaired with a net carrying value of $2,747,000. The Partnership
does not accrue interest income on notes receivable that have been determined to
be impaired.
In contrast, interest income from notes receivable had a small increase
of $45,000 for the year ended December 31, 1996, as compared to 1995. This
increase in interest income from notes receivable is primarily the result of a
settlement received from a note receivable which was considered to be impaired
from a cable television system operator and new investments in notes receivable.
The Partnership received $856,000 as a settlement which was applied to the
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$605,000 outstanding note receivable balance and the remainder of $251,000 was
recognized as interest income from notes receivable. During the year ended
December 31, 1996, the Partnership made new investments in notes receivable of
$2,440,000 compared to $1,856,000 during 1995.
Partially offsetting the factors contributing to the increase in
interest income from notes receivable for the year ended December 31, 1996, as
compared to the previous year, is the decline in the net carrying value of the
notes receivable. The net carrying value of the outstanding notes receivable at
December 31, 1996 is $4.6 million compared to $5.4 million at December 31, 1995.
Total expenses decreased by $4,252,000 and $10,524,000 during 1996 and
1995, respectively, as compared to the same period in the previous year. A
majority of the decrease in total expenses is due to the decrease in
depreciation expense of $2,360,000 and $7,488,000 during 1996 and 1995,
respectively, as compared to the same period in the previous year. This decrease
is due to a decline in the amount of depreciable equipment owned by the
Partnership. In addition, the Partnership experienced declines in most other
expense categories during 1996 and 1995, when compared to the same period in the
previous year.
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 investments of the Partnership.
Cable Television System:
Included in other income for 1996 and 1995 is cable subscriber revenues
from a wholly-owned subsidiary (Phoenix Westcom Cablevision, Inc) of the
Partnership. The cable television system was acquired through foreclosure on a
defaulted note receivable to the Partnership on December 23, 1994. As a result,
there were no results of operations from this cable television system during
1994.
On October 10, 1996, Phoenix Westcom Cablevision Inc. sold all of its
tangible and intangible assets used in the operation of its cable television
system for proceeds of $735,000 resulting in a loss on the sale of these assets
of $64,000. This loss on sale is included in other income during 1996. As a
result of the sale of the cable television system's assets, the subsidiary
ceased operations. The revenues from this cable television system have not had a
significant impact upon total revenues during 1996 and 1995.
Liquidity and Capital Resources
The Partnership's primary source of liquidity is derived from its
contractual obligations with a diversified group of lessees for fixed lease
terms at fixed rental amounts, and from payments of principal and interest on
its outstanding notes receivable. As the initial lease terms expire, the
Partnership will re-lease or sell the equipment. The future liquidity of the
Partnership will depend upon the General Partner's success in collecting the
contractual amounts owed, as well as re-leasing and selling the Partnership's
equipment as it comes off lease.
The Partnership reported net cash generated by equipment leasing,
financing and cable television activities of $23,034,000 during 1996, as
compared to $26,689,000 and $38,461,000 during 1995 and 1994, respectively. The
decrease in the net cash generated during 1996 and 1995 is due to a decrease in
rental income and payments on notes receivable and financing leases.
The Partnership received proceeds from the sale of equipment of $925,000
during the year ended December 31, 1996 compared to $3,428,000 and $4,869,000
received in 1995 and 1994, respectively. The decrease in sales proceeds in 1996
and 1995 is attributable to a decrease in the amount of equipment sold as well
as a decrease in the market value of the equipment sold. During 1996, the
Partnership sold equipment with an aggregate original cost of $25.8 million
compared to $38.8 million during 1995 and $48.3 million during 1994.
The Partnership's outstanding debt was paid off in full during 1995. As
a result , the Partnership did not make any payments of principal during 1996,
as compared to payments of principal on its outstanding debt of $3,195,000 in
1995 and $14,311,000 in 1994.
The Partnership received cash distributions from joint ventures of
$727,000 during 1996, as compared to cash distributions of $1,195,000 during
1995 and $9,713,000 during 1994. Distributions from joint ventures were higher
during 1995, as compared to 1996, due to the Partnership receiving a
distribution of excess cash on hand from a joint venture that was formed on
August 1, 1994. During 1994, this newly formed joint venture made a significant
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distribution as a result of it receiving proceeds from the issuance of lease
backed certificates. As a result, this joint venture made a distribution of the
proceeds to the Partnership. This joint venture was not expected to generate any
significant amounts of cash available for distribution until the outstanding
debt of this joint venture was paid in full. In November of 1996, the
outstanding debt had been repaid in full. This joint venture is expected to
begin making distributions to the Partnership in 1997.
The Partnership anticipates reinvesting a portion of the cash generated
from operations in new leasing or financing transactions over the life of the
Partnership. During 1994, 1995 and 1996, the Partnership purchased equipment
leases with an aggregate original cost of $6.4 million, $6.4 million and $14.8
million, respectively. The equipment owned by the Partnership at December 31,
1996 approximates $76.7 million, as compared to $96 million at December 31, 1995
and $128.4 million at December 31, 1994.
As of December 31, 1996, the Partnership owned equipment being held for
lease with an original purchase price of $17,496,000 and a net book value of
$1,015,000 , compared to $8,349,000 and $997,000, respectively, at December 31,
1995 and $21,667,000 and $1,855,000, respectively, at December 31, 1994. The
General Partner is actively engaged, on behalf of the Partnership, in
remarketing and selling the Partnership's equipment as it becomes available.
The total cash distributed to partners during 1996 was $15,880,000, as
compared to $16,062,000 during 1995 and $16,174,000 during 1994. In accordance
with the partnership agreement, the limited partners are entitled to 95% of the
cash available for distribution and the General Partner is entitled to 5%. As a
result, the limited partners received $15,085,000, $15,258,000 and $15,364,000
during 1996, 1995 and 1994, respectively. The cumulative cash distributions to
limited partners was $88,222,000 at December 31, 1996, as compared to
$73,137,000 at December 31, 1995 and $57,879,000 at December 31, 1994. The
General Partner received $795,000, $804,000 and $810,000 for its share of the
cash available for distribution during 1996, 1995 and 1994, respectively. The
Partnership currently anticipates making distributions to partners during 1997
at approximately the same rate as 1996.
The cash to be generated from leasing and financing operations is
anticipated to be sufficient to meet the Partnership's continuing operational
expenses and to provide for distributions to partners.
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Actual results could differ from those anticipated by some of the statements
made above. Limited Partners are cautioned that such forward-looking statements
involve risks and uncertainties including without limitation the following: (i)
the Partnership's plans are subject to change at any time at the discretion of
the General Partner of the Partnership, (ii) future technological developments
in the industry in which the Partnership operates, (iii) competitive pressure on
pricing or services, (iv) substantial customer defaults or cancellations, (v)
changes in business conditions and the general economy, (vi) changes in
government regulations affecting the Partnership's core businesses and (vii) the
ability of the Partnership to sell its remaining assets .
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Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
YEAR ENDED DECEMBER 31, 1996
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REPORT OF INDEPENDENT AUDITORS
------------------------------
The Partners
Phoenix Leasing Cash Distribution Fund IV, a California limited partnership
We have audited the consolidated financial statements of Phoenix Leasing Cash
Distribution Fund IV, a California limited partnership, and Subsidiary, listed
in the accompanying index to financial statements (Item 14(a)). Our audits also
included the financial statement schedule listed in the Index at Item 14(a).
These financial statements and the schedule are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements and the schedule 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 and schedule 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 consolidated financial statements listed in the accompanying
index to financial statements (Item 14(a)) present fairly, in all material
respects, the consolidated financial position of Phoenix Leasing Cash
Distribution Fund IV, a California limited partnership, and Subsidiary, at
December 31, 1996 and 1995, and the consolidated results of their operations and
their cash flows for the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
ERNST & YOUNG LLP
San Francisco, California
January 20, 1997
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PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
December 31,
1996 1995
-------- --------
ASSETS
Cash and cash equivalents $ 12,134 $ 11,571
Accounts receivable (net of allowance for
losses on accounts receivable of $424
and $548 at December 31, 1996 and 1995,
respectively) 484 603
Notes receivable (net of allowance for losses
on notes receivable of $2,224 and $2,241 at
December 31, 1996 and 1995 respectively) 4,654 5,428
Equipment on operating leases and held for
lease (net of accumulated depreciation of
$26,179 and $32,579 at December 31, 1996 and
1995, respectively) 1,376 2,576
Net investment in financing leases (net of
allowance for early terminations of $941 and
$755 at December 31, 1996 and 1995, respectively) 16,973 24,685
Investment in joint ventures 2,278 2,451
Capitalized acquisition fees (net of accumulated
amortization of $9,695 and $8,961 at December
31, 1996 and 1995, respectively) 957 1,336
Other assets 719 1,612
-------- --------
Total Assets $ 39,575 $ 50,262
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 1,511 $ 1,817
-------- --------
Total Liabilities 1,511 1,817
-------- --------
Partners' Capital:
General Partner -- --
Limited Partners, 6,500,000 units authorized,
6,492,727 units issued, 6,242,943 and
6,318,955 units outstanding at December 31,
1996 and 1995, respectively 37,539 48,068
Unrealized gain on available-for-sale securities 525 377
-------- --------
Total Partners' Capital 38,064 48,445
-------- --------
Total Liabilities and Partners' Capital $ 39,575 $ 50,262
======== ========
The accompanying notes are an integral part of
these statements.
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PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
For the Years Ended December 31,
1996 1995 1994
-------- -------- --------
INCOME
Rental income $ 6,209 $ 8,230 $ 12,013
Earned income, financing leases 3,372 4,337 5,570
Interest income, notes receivable 1,202 1,157 1,995
Gain on sale of securities 977 235 118
Equity in earnings from joint ventures, net 412 596 429
Other income 754 914 464
-------- -------- --------
Total Income 12,926 15,469 20,589
-------- -------- --------
EXPENSES
Depreciation 3,290 5,650 13,138
Amortization of acquisition fees 733 1,089 2,192
Lease related operating expenses 296 481 760
Management fees to General Partner 971 1,202 1,658
Interest expense -- 81 489
Reimbursed administrative costs to
General Partner 734 914 858
Provision for losses on receivables 338 904 1,889
Legal expenses 203 326 466
General and administrative expenses 465 635 356
-------- -------- --------
Total Expenses 7,030 11,282 21,806
-------- -------- --------
NET INCOME (LOSS) BEFORE INCOME TAXES 5,896 4,187 (1,217)
Income tax benefit (expense) of subsidiary (40) 41 --
-------- -------- --------
NET INCOME (LOSS) $ 5,856 $ 4,228 $ (1,217)
======== ======== ========
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ .81 $ .41 $ (.19)
======== ======== ========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ 795 $ 1,626 $ (12)
Limited Partners 5,061 2,602 (1,205)
-------- -------- --------
$ 5,856 $ 4,228 $ (1,217)
======== ======== ========
The accompanying notes are an integral part of
these statements.
<PAGE>
<TABLE>
Page 13 of 32
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(Amounts in Thousands Except for Unit Amounts)
<CAPTION>
General
Partner's Limited Partners' Unrealized Total
Amount Units Amount Gains Amount
--------- ------------------- ---------- ------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $ - 6,407,825 $78,119 $ - $ 78,119
Distributions to partners ($2.40
per limited partnership unit) (810) - (15,364) - (16,174)
Redemptions of capital - (38,405) (403) - (403)
Net loss (12) - (1,205) - (1,217)
------ --------- ------- ----- --------
Balance, December 31, 1994 (822) 6,369,420 61,147 - 60,325
Distributions to partners ($2.40
per limited partnership unit) (804) - (15,258) - (16,062)
Redemptions of capital - (50,465) (423) - (423)
Net income 1,626 - 2,602 - 4,228
Change for the year in unrealized
gain on available-for-sale
securities - - - 377 377
------ --------- ------- ----- --------
Balance, December 31, 1995 - 6,318,955 48,068 377 48,445
Distributions to partners ($2.40
per limited partnership unit) (795) - (15,085) - (15,880)
Redemptions of capital - (76,012) (505) - (505)
Net income 795 - 5,061 - 5,856
Change for the year in unrealized
gain on available-for-sale
securities - - - 148 148
------ --------- ------- ----- --------
Balance, December 31, 1996 $ - 6,242,943 $37,539 $ 525 $ 38,064
====== ========= ======= ===== ========
The accompanying notes are an integral part of
these statements.
</TABLE>
<PAGE>
Page 14 of 32
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
For the Years Ended December 31,
1996 1995 1994
-------- -------- --------
Operating Activities:
Net income (loss) $ 5,856 $ 4,228 $ (1,217)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 3,290 5,650 13,138
Amortization of acquisition fees 733 1,089 2,192
Gain on sale of equipment (381) (845) (695)
Gain on sale of securities (977) (235) (118)
Loss on sale of assets of the cable
television system 64 -- --
Equity in earnings from joint ventures, net (412) (596) (429)
Provision for early termination,
financing leases 352 408 718
Provision for (recovery of) losses on
notes receivable (17) 110 908
Provision for losses on accounts receivable 3 386 263
Decrease (increase) in accounts receivable 88 (99) 816
Decrease in accounts payable and accrued
expenses (118) (1,000) (904)
Decrease in other assets 92 163 98
Decrease (increase) in deferred income
tax asset 40 (40) --
-------- -------- --------
Net cash provided by operating activities 8,613 9,219 14,770
-------- -------- --------
Investing Activities:
Principal payments, financing leases 11,263 12,522 14,897
Principal payments, notes receivable 3,158 4,948 8,794
Proceeds from sale of equipment 925 3,428 4,869
Proceeds from sale of securities 1,005 235 118
Proceeds from sale of assets of the cable
television system 735 -- --
Distributions from joint ventures 727 1,195 9,713
Purchase of equipment -- (5) (392)
Investment in financing leases (6,446) (6,424) (14,750)
Cable systems, property and equipment (36) (95) --
Investment in notes receivable (2,440) (1,856) (2,738)
Investment in joint ventures (69) -- (290)
Investment in securities (28) -- --
Payment of acquisition fees (459) (319) (788)
-------- -------- --------
Net cash provided by investing activities 8,335 13,629 19,433
-------- -------- --------
Financing Activities:
Payments of principal, notes payable -- (3,195) (14,311)
Redemptions of capital (505) (423) (403)
Distributions to partners (15,880) (16,062) (16,174)
-------- -------- --------
Net cash used by financing activities (16,385) (19,680) (30,888)
-------- -------- --------
Increase in cash and cash equivalents 563 3,168 3,315
Cash and cash equivalents, beginning of period 11,571 8,403 5,088
-------- -------- --------
Cash and cash equivalents, end of period $ 12,134 $ 11,571 $ 8,403
======== ======== ========
Supplemental Cash Flow Information:
Cash paid for interest expense $ -- $ 81 $ 504
The accompanying notes are an integral part of
these statements.
<PAGE>
Page 15 of 32
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1. Organization and Partnership Matters.
Phoenix Leasing Cash Distribution Fund IV, a California limited
partnership (the Partnership), was formed on July 14, 1989, 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 provide financing to emerging growth
companies and cable television system operators. The Partnership met its minimum
investment requirements on January 12, 1990. The Partnership's termination date
is December 31, 2000.
The Partnership has also made investments in joint ventures with
affiliated partnerships managed by the General Partner for the purpose of
reducing the risks of financing or acquiring certain capital equipment leased to
third parties (see Note 6).
On December 23, 1994, the Partnership foreclosed upon a cable television
system in Arizona that was in default on a loan payable to the Partnership with
a carrying amount of approximately $885,000 which was carried over to the basis
in the cable system. Phoenix Westcom Cablevision, Inc. (the Subsidiary), a
wholly owned subsidiary of the Partnership, was formed under the laws of Nevada
on August 5, 1994 to own and operate the foreclosed cable television system.
Phoenix Westcom Cablevision, Inc. is a wholly-owned subsidiary of the
Partnership (hereinafter, the Partnership and the Subsidiary are collectively
referred to as the Consolidated Partnership). The acquisition of Westcom
Cablevision by the Subsidiary through foreclosure was accounted for using the
"purchase method" of accounting in which the net carrying value of the loan was
allocated to the net assets in accordance with the relative fair market value of
the assets acquired and liabilities assumed.
On October 23, 1996, Phoenix Westcom Cablevision, Inc. sold the assets
used in the operation of the cable television system receiving net proceeds of
approximately $735,000, recognizing a loss on sale of the assets of this cable
television system of $64,000. As a result of the sale of the cable television
system's assets, the Subsidiary ceased operations.
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, one percent 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 one percent to the General Partner and 99% to the Unit Holders.
The General Partner is entitled to receive five percent of all cash
distributions until the Limited Partners have recovered their initial capital
contributions plus a cumulative return of twelve percent per annum. Thereafter,
the General Partner will receive 15% of all cash distributions. From inception
of the Partnership until December 31, 1996, the General Partner's interest in
Cash Available for Distribution is subordinated in any calendar quarter until
the Limited Partners receive quarterly distributions equal to three percent of
their Capital Contributions (i.e., 12% per annum), prorated for any partial
period.
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.
As compensation for management services subject to certain limitations,
the General Partner receives a fee, payable quarterly, in an amount equal to
3.5% 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
<PAGE>
Page 16 of 32
Partner will receive a fee equal to four percent, subject to certain
limitations, of (a) the purchase price of equipment acquired by the Partnership
or equipment leased 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 other businesses, payable upon such acquisition or
financing, as the case may be. Acquisition fees are amortized over the life of
the assets principally on a straight-line basis.
Phoenix Cable Management Inc. (PCMI), an affiliate of the General
Partner, provided day to day management services in connection with the
operation of the Subsidiary. The Subsidiary paid a management fee equal to four
and one-half percent of the System's monthly gross revenue for these services.
Revenues subject to a management fee at the Subsidiary level were not subject to
management fees at the Partnership level.
A schedule of compensation paid and distributions made to the General
Partner and affiliate for the years ended December 31, follows:
1996 1995 1994
------- ------- -------
(Amounts in Thousands)
Management fees $ 971 $ 1,202 $ 1,658
Acquisition fees 355 329 715
Cash distributions 795 804 810
------- ------- -------
$ 2,121 $ 2,335 $ 3,183
======= ======= =======
Note 2. Summary of Significant Accounting Policies.
Principles of Consolidation. The 1996, 1995 and 1994 consolidated
financial statements include the accounts of the Partnership and its
wholly-owned subsidiary, Phoenix Westcom Cablevision, Inc., since the date of
acquisition, December 23, 1994. All significant intercompany accounts and
transactions have been eliminated in consolidation.
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. The Partnership reviews its estimates of residual value at least
annually. If a decline in value has occurred which is other than temporary, a
reduction in the investment is recognized currently.
Under the operating method of accounting for leases, the leased
equipment is recorded as an asset at cost and depreciated. The Partnership's
leased equipment is depreciated primarily using an accelerated depreciation
method over the estimated useful life of 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 including 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 may
provide additional depreciation as appropriate. As a result of such periodic
reviews, the Partnership provided additional depreciation expense of $544,000,
$679,000, and $1,579,000 ($.09, $.11 and $.25 per limited partnership unit) for
the years ended December 31, 1996, 1995 and 1994, 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.
Cable Television System Operations. The consolidated statement of
operations includes the operating activity of the Subsidiary for the years ended
December 31, 1996 and 1995 and for the period from the date of acquisition
(December 23, 1994) to December 31, 1994. The Subsidiary's cable operations
consisted of a cable system located in the counties of Maricopa and Mohave in
the State of Arizona and consisted of headend equipment and 69 miles of plant
passing, approximately 2,060 homes and approximately 737 cable subscribers. The
<PAGE>
Page 17 of 32
Subsidiary's cable television system served the communities of Cave Creek,
Perryville and Peach Springs. The Subsidiary operated under four non-exclusive
franchise agreements with the Town of Cave Creek, Maricopa County, Yavapai
County and the Hualapai Tribe in Mohave County.
As of December 31, 1995, the Consolidated Partnership held $909,000 in
property, cable system and equipment which has been included in Other Assets on
the balance sheet. Property, cable system and equipment were depreciated using
the straight-line method over the estimated service lives ranging from five to
10 years. Replacements, renewals and improvements were capitalized and
maintenance and repairs were charged to expense as incurred.
Cable television services were billed monthly in advance. Revenue was
deferred and recognized as the services were provided.
Investments in Joint Ventures. Minority investments in net assets of the
equipment, financing and foreclosed cable systems joint ventures reflect the
Consolidated Partnership's equity basis in the ventures. Under the equity method
of accounting, the original investment is recorded at cost and is adjusted
periodically to recognize the Consolidated Partnership's share of earnings,
losses, cash contributions and cash distributions after the date of acquisition.
Investment in Available-for-Sale Securities. The Partnership has
investments in stock warrants in public companies. The Partnership has
classified its investments in stock warrants as available-for-sale in accordance
with FASB Statement No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." Available-for-sale securities are stated at their fair
market value, with unrealized gains and losses reported as a separate component
of partners' capital. The stock warrants held by the Partnership were granted by
certain lessees or borrowers as additional compensation for leasing or financing
equipment. At the date of grant, such warrants were determined to have no fair
market value and were recorded at their historical cost of $0.
Notes Receivable. Notes receivable generally are stated at their
outstanding unpaid principal balances, which includes accrued interest. Interest
income is accrued on the unpaid principal balance.
Impaired Notes Receivable. Generally, notes receivable are classified as
impaired and the accrual of interest on such notes is discontinued when the
contractual payment of principal or interest has become 90 days past due or
management has serious doubts about further collectibility of the contractual
payments, even though the loan may currently be performing. When a note
receivable is classified as impaired, income recognition is discontinued. Any
payments received subsequent to the placement of the note receivable on to
impaired status will generally be applied towards the reduction of the
outstanding note receivable balance, which may include previously accrued
interest as well as principal. Once the principal and accrued interest balance
has been reduced to zero, the remaining payments will be applied to interest
income. Generally, notes receivable are restored to accrual status when the
obligation is brought current, has performed in accordance with the contractual
terms for a reasonable period of time and the ultimate collectibility of the
total contractual principal and interest is no longer in doubt.
Allowance for Losses. An allowance for losses is established through
provisions for losses charged against income. Notes receivable deemed to be
uncollectible are charged against the allowance for losses, and subsequent
recoveries, if any, are credited to the allowance.
Reclassification. Certain 1995 and 1994 amounts have been reclassified to
conform to the 1996 presentation.
Cash and Cash Equivalents. Cash and cash equivalents include deposits at
banks, investments in money market funds and other highly liquid short-term
investments with original maturities of less than 90 days. The Partnership
places its cash deposits in temporary cash investments with credit worthy, high
quality financial institutions. The concentration of such cash deposits and
temporary cash investments is not deemed to create a significant risk to the
Partnership.
Non-Cash Investing Activities. During 1996, the Partnership, along with
other affiliated partnerships managed by the General Partner, obtained title to
a cable television company that had been pledged as collateral for a
non-performing note. As a result, the Partnership reclassified $73,000 to
Investment in Joint Ventures on the balance sheet.
During the year ended December 31, 1996 and 1995, the Partnership recorded
an unrealized gain on available-for-sale securities which has been included in
Other Assets of $148,000 and $377,000, respectively.
During 1995, the Partnership foreclosed on a note receivable which was
reclassified from Notes Receivable to Investment in Joint Ventures on the
balance sheet. The amount of such reclassification was $230,000.
<PAGE>
Page 18 of 32
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.
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Note 3. Accounts Receivable.
Accounts receivable consist of the following at December 31:
1996 1995
------- -------
(Amounts in Thousands)
Lease payments $ 763 $ 891
Reimbursement for property taxes 122 181
General Partners and Affiliates 7 39
Other 16 40
------- -------
908 1,151
Less: allowance for losses on
accounts receivable (424) (548)
------- -------
Total $ 484 $ 603
======= =======
Note 4. Notes Receivable.
Notes receivable consist of the following at December 31:
1996 1995
------- -------
(Amounts in Thousands)
Notes receivable from emerging growth
companies, with stated interest ranging
from 10% to 21% per annum, receivable in
installments ranging from 31 to 60 months,
collateralized by a security interest in
the equipment financed. $ 4,941 $ 4,584
Notes receivable from cable television system
operators with stated interest ranging from 11%
to 13% per annum, receivable in installments
ranging from 78 to 96 months, collateralized by
a security interest in the cable system assets
These notes have a graduated repayment schedule
followed with a balloon payment. 524 1,332
Notes receivable from other businesses with
stated interest ranging from 14% to 16% per
annum, receivable in installments ranging from
36 to 85 months, collateralized by the equipment
financed. 1,413 1,753
------- -------
6,878 7,669
Less: allowance for losses on notes receivable (2,224) (2,241)
------- -------
Total $ 4,654 $ 5,428
======= =======
The Partnership's notes receivable to cable television system operators
provide for a monthly payment rate in an amount that is 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
<PAGE>
Page 19 of 32
interest rates may be higher, 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.
At December 31, 1996, the recorded investment in notes that are
considered to be impaired was $2,060,000. Included in this amount is $1,938,000
of impaired notes for which the related allowance for losses is $1,916,000 and
$122,000 of impaired notes for which there is no allowance. The average recorded
investment in impaired loans during the year ended December 31, 1996 was
approximately $2,479,000. The Partnership recognized $287,000 of interest income
on impaired notes receivable during the year ended December 31, 1996.
At December 31, 1995, the recorded investment in notes that are
considered to be impaired was $2,747,000. Included in this amount is $2,086,000
of impaired notes for which the related allowance for losses was $1,818,000 and
$661,000 of impaired notes for which there was no allowance. The average
recorded investment in impaired loans during the year ended December 31, 1995
was approximately $3,490,000. The Partnership recognized $107,000 of interest
income on impaired notes receivable during the year ended December 31, 1995.
On February 14, 1996, the Partnership foreclosed upon a nonperforming
outstanding note receivable to a cable television operator to whom the
Partnership, along with other affiliated partnerships managed by the General
Partner, had extended credit. Upon foreclosure, this note was reclassified to
Investment in Joint Ventures on the balance sheet. The Partnership's net
carrying value for this outstanding note receivable was $73,000, for which the
Partnership had an allowance for losses on notes of $17,000. This allowance of
$17,000 was reversed and recognized as income during the year ended December 31,
1996. This joint venture subsequently sold the cable system on August 30, 1996
at a small gain.
During the year ended December 31, 1996, the Partnership received a
settlement on one of its notes receivable from a cable television system
operator which was considered to be impaired. The Partnership received a
recovery of $856,000 as a settlement which was applied to the $605,000
outstanding note receivable balance and the difference of $251,000 was
recognized as interest income from notes receivable during the year ended
December 31, 1996.
The Partnership received payoffs during the year ended December 31, 1995
from three of its impaired notes receivable from cable television system
operators and foreclosed upon the assets of another note receivable from a cable
television operator.
The activity in the allowance for losses on notes receivable during the
years ended December 31, is as follows:
1996 1995
------- -------
(Amounts in Thousands)
Beginning balance $ 2,241 $ 2,264
Provision for (recovery of) losses (17) 110
Write downs -- (133)
------- -------
Ending balance $ 2,224 $ 2,241
======= =======
Note 5. Equipment on Operating Leases and Investment in Financing Leases.
Equipment on lease consists primarily of computer peripheral, small
computers and other capital equipment.
The Partnership's operating leases are for initial lease terms of
approximately 24 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 entered into direct lease arrangements with
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.
<PAGE>
Page 20 of 32
The net investment in financing leases consists of the following at
December 31:
1996 1995
-------- --------
(Amounts in Thousands)
Minimum lease payments to be received $ 21,308 $ 30,719
Estimated residual value of leased equipment
(ungaranteed) 9 22
Less: unearned income (3,403) (5,301)
allowance for early termination (941) (755)
-------- --------
Net investment in financing leases $ 16,973 $ 24,685
======== ========
Minimum rentals to be received on noncancellable operating and financing
leases for the years ended December 31 are as follows:
Operating Financing
--------- ---------
(Amounts in Thousands)
1997........................................... $ 1,395 $ 10,280
1998........................................... 844 6,679
1999........................................... 596 3,344
2000........................................... 217 879
2001........................................... 7 126
-------- --------
Total $ 3,059 $ 21,308
======== ========
The net book value of equipment held for lease at December 31, 1996 and
1995 amounted to $1,015,000 and $997,000, respectively.
Note 6. Investment in Joint Ventures.
Equipment Joint Venture.
On August 1, 1994, the Partnership entered into an agreement along with
two other affiliated partnerships to contribute certain leased assets and notes
receivable (the "Assets") to Phoenix Acceptance Limited Liability Company, a
Delaware limited liability company (the "Joint Venture") in exchange for a
44.97% equity interest in the Joint Venture. The interest received in the Joint
Venture was accounted for at the historical cost basis of the Assets
transferred. The Partnership has accounted for its net investment in this Joint
Venture using the equity method of accounting. The Joint Venture was organized
to hold title to the assets and subsequently transfer such assets to a trust for
the purpose of the trust issuing two classes of lease backed certificates to
third parties in exchange for cash proceeds. The transaction between the Joint
Venture and the trust has been accounted for as a financing arrangement. The
Joint Venture retains a residual interest in the assets transferred through the
ownership of a third class of subordinated trust certificates. The lease backed
certificates are recourse only to the assets used to collateralize the
obligation.
The net carrying value of such assets contributed by the Partnership to
the Joint Venture was approximately $11.2 million and the total carrying value
of all of the assets contributed by all three partnerships approximated $24.7
million. The net proceeds from the issuance of the lease backed certificates are
being distributed back to the partnerships who contributed to the Joint Venture.
On August 5, 1994, the Joint Venture received proceeds from the issuance of the
7.10% Class A lease backed certificates in the principal amount of $18.5
million. On August 12, 1994, the Joint Venture received proceeds from the
issuance of the 8.25% Class B lease backed certificates in the principal amount
of $5.3 million. The lease backed certificates were paid in full in November
1996.
The Equipment Joint Venture owned by the Partnership, along with its
percentage ownership is as follows:
Weighted
Joint Venture Percentage Interest
------------- -------------------
Phoenix Acceptance Limited Liability Company 44.97%
<PAGE>
Page 21 of 32
<TABLE>
An analysis of the Partnership's investment in the Equipment Joint Venture is as follows:
<CAPTION>
Net Investment Net Investment
at Beginning Equity in at End
Date of Period Contributions Earnings Distributions of Period
- ---- -------------- ------------- --------- ------------- --------------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Year Ended
December 31, 1994 $ - $11,224 $ 408 $ 9,658 $1,974
====== ======= ===== ======= ======
Year Ended
December 31, 1995 $1,974 $ - $ 533 $ 850 $1,657
====== ======= ===== ======= ======
Year Ended
December 31, 1996 $1,657 $ 69 $ 393 $ 483 $1,636
====== ======= ===== ======= ======
</TABLE>
The aggregate financial information of the Equipment Joint Venture as of
December 31 and for the years then ended is presented as follows:
BALANCE SHEET
ASSETS
December 31,
1996 1995
------- -------
(Amounts in Thousands)
Cash and cash equivalents $ 490 $ 1,384
Accounts receivable 59 14
Equipment on operating lease 155 347
Net investment in finance leases 2,930 8,816
Other assets 368 1,018
------- -------
Total Assets $ 4,002 $11,579
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 382 $ 761
Lease backed certificates -- 7,150
Partners' capital 3,620 3,668
------- -------
Total Liabilities and Partners' Capital $ 4,002 $11,579
======= =======
STATEMENT OF OPERATIONS
INCOME
For the Years Ended
December 31,
1996 1995 1994
------- ------- -------
(Amounts in Thousands)
Earned income, financing leases $ 855 $ 1,924 $ 1,515
Rental income 536 196 --
Gain on sale of equipment 453 465 26
Other income 181 361 239
------- ------- -------
Total Income 2,025 2,946 1,780
------- ------- -------
<PAGE>
Page 22 of 32
EXPENSES
Depreciation 261 104 4
Management fee to the General Partner 284 283 192
Interest expense 221 924 633
Other expenses 383 450 43
------- ------- -------
Total Expenses 1,149 1,761 872
------- ------- -------
Net Income $ 876 $ 1,185 $ 908
======= ======= =======
As of December 31, 1996 and 1995 the Partnership's pro rata interest in
the Equipment Joint Venture's net book value of off-lease equipment was $2,000
and $11,000, respectively.
The General Partner earns a management fee of 3.5% of the Partnership's
respective interest in gross revenues of the Equipment Joint Venture. A
management fee of $743,000 based on cash distributed to the venturers was paid
to the General Partner in 1994. Such fees have been capitalized and fully
amortized. Cash proceeds subject to a management fee at the joint venture level
are not subject to management fees at the Partnership level.
Financing Joint Venture.
The Partnership owns an interest in a Financing Joint Venture. This
investment is accounted for using the equity method of accounting. The other
partners of the venture are entities organized and managed by the General
Partner.
The following information summarizes the Partnership's respective
interest in the Financing Joint Venture.
Weighted
Joint Venture Percentage Interest
------------- -------------------
Phoenix Joint Venture 1994-2 25.00%
<TABLE>
An analysis of the Partnership's investment account in the Financing Joint Venture is as follows:
<CAPTION>
Net Investment Net Investment
at Beginning Equity in at End
Date of Period Contributions Earnings Distributions of Period
- ---- -------------- ------------- --------- ------------- --------------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Year Ended
December 31, 1994 $ - $290 $ 1 $- $ 291
===== ==== ==== ==== =====
Year Ended
December 31, 1995 $ 291 $- $ 44 $ 64 $ 271
===== ==== ==== ==== =====
Year Ended
December 31, 1996 $ 271 $- $ 39 $ 86 $ 224
===== ==== ==== ==== =====
</TABLE>
The aggregate financial information of the Financing Joint Venture as of
December 31 and for the years then ended is presented as follows:
<PAGE>
Page 23 of 32
BALANCE SHEET
ASSETS
December 31,
1996 1995
------- -------
(Amounts in Thousands)
Cash and cash equivalents $ 155 $ 271
Notes receivable, net 823 977
Accounts receivable 14 11
Other assets 31 37
------- -------
Total Assets $ 1,023 $ 1,296
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 130 $ 215
Partners' capital 893 1,081
------- -------
Total Liabilities and Partners' Capital $ 1,023 $ 1,296
======= =======
STATEMENT OF OPERATIONS
INCOME
For the Years Ended
December 31,
1996 1995 1994
------- ------- -------
(Amounts in Thousands)
Interest Income $ 158 $ 187 $ 2
Other income 4 2 --
------- ------- -------
Total Income 162 189 $ 2
------- ------- -------
EXPENSES
Management fee to the General Partner 6 7 --
Other expenses -- 6 1
------- ------- -------
Total Expenses 6 13 1
------- ------- -------
Net Income $ 156 $ 176 $ 1
======= ======= =======
The General Partner earns a management fee of 3.5% of the Partnership's
respective interest in gross payments received for the Financing Joint Venture.
Revenues subject to a management fee at the joint venture level are not subject
to management fees at the Partnership level.
Foreclosed Cable Systems Joint Ventures.
The Partnership owns an interest in foreclosed cable systems joint
ventures along with other partnerships managed by the General Partner and its
affiliates. The Partnership foreclosed upon nonperforming outstanding notes
receivable to cable television operators to whom the Partnership, along with
other affiliated partnerships managed by the General Partner, had extended
credit. The partnerships' notes receivables were exchanged for interests (their
capital contribution), on a pro rata basis, in newly formed joint ventures owned
by the partnerships and managed by the General Partner. Title to the cable
television systems is held by the joint ventures. These investments are
accounted for using the equity method of accounting.
<PAGE>
Page 24 of 32
Weighted
Joint Venture Percentage Interest
------------- -------------------
Phoenix Pacific Northwest Cable J.V. 37.22%
Phoenix Country Cable J.V. (1) 46.65
Phoenix Independence Cable, LLC 43.69
Phoenix Grassroots Cable System, LLC (2) .80
(1) Cable system sold in 1995 and joint venture closed in 1996.
(2) Cable system sold in 1996.
<TABLE>
<CAPTION>
Net Investment Equity in Net Investment
at Beginning Earnings at End
Date of Period Contributions (Losses) Distributions of Period
- ---- -------------- ------------- --------- ------------- --------------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Year Ended
December 31, 1994 $ 591 $ - $ 20 $ 55 $ 556
===== ===== ===== ===== ======
Year Ended
December 31, 1995 $ 556 $ 229 $ 19 $ 281 $ 523
===== ===== ===== ===== ======
Year Ended
December 31, 1996 $ 523 $ 73 $ (20) $ 158 $ 418
===== ===== ====== ===== ======
</TABLE>
The aggregate combined financial information of the foreclosed cable
systems joint ventures as of December 31 and for the years then ended is
presented as follows:
COMBINED BALANCE SHEETS
ASSETS
December 31,
1996 1995
------- -------
(Amounts in Thousands)
Cash and cash equivalents $ 166 $ 181
Accounts receivable 32 29
Property, plant and equipment 1,128 1,178
Other 4 3
------- -------
Total Assets $ 1,330 $ 1,391
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 197 $ 98
Partners' capital 1,133 1,293
------- -------
Total Liabilities and Partners' Capital $ 1,330 $ 1,391
======= =======
<PAGE>
Page 25 of 32
COMBINED STATEMENTS OF OPERATIONS
INCOME
For the Years Ended December 31,
1996 1995 1994
------- ------- -------
(Amounts in Thousands)
Subscriber revenue $ 1,961 $ 479 $ 433
Gain on sale of cable systems 173 25 --
Other income 34 6 2
------- ------- -------
Total Income 2,168 510 435
------- ------- -------
EXPENSES
Depreciation and amortization 608 120 110
Program services 635 148 120
Management fee to an affiliate of
the General Partner 409 22 19
General and administrative expenses 541 175 128
Provision for losses on accounts
receivable 20 5 8
------- ------- -------
Total Expenses 2,213 470 385
------- ------- -------
Net Income (Loss) $ (45) $ 40 $ 50
======= ======= =======
Phoenix Cable Management Inc. (PCMI), an affiliate of the General
Partner, provides day to day management services in connection with the
operation of the foreclosed cable systems joint ventures. The foreclosed cable
systems joint ventures will pay a management fee equal to four and one-half
percent of the System's monthly gross revenue for these services. Revenues
subject to a management fee at the joint venture level will not be subject to
management fees at the Partnership level.
Note 7. Accounts Payable and Accrued Expenses.
Accounts payable and accrued expenses consist of the following at
December 31:
1996 1995
------- -------
(Amounts in Thousands)
Equipment lease operations $ 753 $ 854
General Partner and affiliates 115 385
Security deposits 362 342
Other 281 236
------- -------
Total $ 1,511 $ 1,817
======= =======
Note 8. 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.
The net differences between the tax basis and the reported amounts of
the Partnership's assets and liabilities is as follows at December 31:
<PAGE>
Page 26 of 32
Reported Amounts Tax Basis Net Difference
---------------- --------- --------------
(Amounts in Thousands)
1996
- ----
Assets $ 39,564 $ 45,096 $ (5,532)
Liabilities 1,500 891 609
1995
- ----
Assets $ 50,182 $ 55,687 $ (5,505)
Liabilities 1,736 1,112 624
The Subsidiary is a corporation subject to state and federal tax
regulations. The Subsidiary reports to the taxing authority on the accrual
basis. When income and expenses are recognized in different periods for
financial reporting purposes than for income tax purposes, deferred taxes are
provided for such differences using the liability method.
The Subsidiary's income tax benefit (provision) includes the following
components for the years ended December 31:
1996 1995
------- -------
(Amounts in Thousands)
Current tax benefit $ -- $ 58
Deferred tax expense related to
future taxable income, net -- (17)
Provision for valuation allowance
on net deferred tax asset (40) --
------- -------
Income tax benefit (provision), net $ (40) $ 41
======= =======
Note 9. Related Entities.
The General Partner and affiliates serve in the capacity of general
partner in other partnerships, all of which are engaged in the equipment leasing
and financing business.
Note 10. 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 administrative costs to the General Partner were
$734,000, $914,000 and $858,000 for the years ended December 31 1996, 1995 and
1994, respectively. The equipment storage, remarketing and data processing costs
reimbursed to the General Partner during the years ended December 31, 1996, 1995
and 1994 were $237,000, $401,000, and $665,000, respectively.
Note 11. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net income (loss) and distributions per limited partnership unit were
based on the limited partner's share of consolidated net income (loss) and
distributions, and the weighted average number of units outstanding of
6,273,582, 6,346,597 and 6,392,111 for the years ended December 31, 1996, 1995
and 1994, respectively. For the purposes of allocating consolidated income
(loss) and distributions to each individual limited partner, the Partnership
allocates consolidated net income (loss) and distributions based upon each
respective limited partner's net capital contributions.
Note 12. Subsequent Events.
In January 1997, cash distributions of $197,000 and $2,410,000 were made
to the General and Limited Partners, respectively.
<PAGE>
Page 27 of 32
Note 13. Fair Value of Financial Instruments.
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument which it is practicable to estimate
that value.
Cash and Cash Equivalents
The carrying amount of cash and cash equivalents approximates fair value because
of the short maturity of these instruments.
Notes Receivable
The fair value of notes receivable is estimated based on the lesser of the
discounted expected future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit ratings, or the estimated
fair value of the underlying collateral.
Securities, Available-for-Sale
The fair values of investments in available for sale securities are estimated
based on quoted market prices.
The estimated fair values of the Partnership's financial instruments are as
follows at December 31:
Carrying
Amount Fair Value
-------- ----------
1996 (Amounts in Thousands)
- ----
Assets
Cash and cash equivalents $12,134 $12,134
Securities, available-for-sale 525 525
Notes receivable 4,654 5,114
1995
- ----
Assets
Cash and cash equivalents $11,571 $11,571
Securities, available-for-sale 377 377
Notes receivable 5,428 6,769
<PAGE>
Page 28 of 32
Item 9. Disagreements on Accounting and Financial Disclosure Matters.
None.
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 59, 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 43, 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 46, 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 42, 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.
CYNTHIA E. PARKS, age 41, is Vice President, General Counsel and
Assistant Secretary of PLI. Prior to joining PLI in 1984, she was with GATX
Leasing Corporation, and had previously been Corporate Counsel for Stone
Financial Companies, and an Assistant Vice President of the Bank of America,
Bank Amerilease Group. She has a bachelor's degree from Santa Clara University,
and earned her J.D. from the University of San Francisco School of Law.
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 III
Phoenix Leasing Cash Distribution Fund II
<PAGE>
Page 29 of 32
Phoenix Leasing Income Fund VII
Phoenix Leasing Income Fund VI
Phoenix Leasing Growth Fund 1982 and
Phoenix Leasing Income Fund 1977
Item 11. Executive Compensation.
<TABLE>
Set forth is the information relating to all direct remuneration paid or accrued by the Registrant
during the last year to the General Partner and its affiliate.
(A) (B) (C) (D)
<CAPTION>
Cash and cash- Aggregate of
Name of Individual Capacities in equivalent forms contingent forms
or persons in group which served of remuneration of remuneration
- ------------------- ------------- ---------------------------------------------- ----------------
(C1) (C2)
Securities or property
Salaries, fees, directors' insurance benefits or
fees, commissions, and reimbursement, personal
bonuses benefits
-------------------------- -----------------------
(Amounts in Thousands)
<S> <C> <C> <C> <C>
Phoenix Leasing
Incorporated General Partner $ 1,291(1) $ 0 $ 0
Phoenix Cable Manager 35(2) 0 0
Management, Inc. -------- --- ----
$ 1,326 $ 0 $ 0
======== === ====
</TABLE>
(1) consists of management and acquisition fees.
(2) consists of management fees.
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 Interest Represents a 5% interest in 100%
the 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.
Limited Partner Interest 1,100 units .02
Item 13. Certain Relationships and Related Transactions.
None.
<PAGE>
Page 30 of 32
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Page No.
--------
(a) 1. Financial Statements:
Consolidated Balance Sheets as of December 31, 1996
and 1995 11
Consolidated Statements of Operations for the Years
Ended December 31, 1996, 1995 and 1994 12
Consolidated Statements of Partners' Capital for the
Years Ended December 31, 1996, 1995 and 1994 13
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1996, 1995 and 1994 14
Notes to Consolidated Financial Statements 15-27
2. Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts and Reserves 32
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.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended December 31,
1996.
(c) 21.Additional Exhibits.
a) Listing of all subsidiaries of the Registrant:
Phoenix Westcom Cablevision, Inc., a Nevada corporation and
wholly owned subsidiary.
<PAGE>
Page 31 of 32
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 IV,
A CALIFORNIA LIMITED PARTNERSHIP
(Registrant)
BY: PHOENIX LEASING INCORPORATED,
A CALIFORNIA CORPORATION
GENERAL PARTNER
Date: March 25, 1997 By: /S/ GUS CONSTANTIN
-------------- ------------------------
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 Officer and a March 25, 1997
- ---------------------- Director of Phoenix Leasing Incorporated, --------------
(Gus Constantin) General Partner
/S/ PARITOSH K. CHOKSI Chief Financial Officer, March 25, 1997
- ---------------------- Senior Vice President, --------------
(Paritosh K. Choksi) Treasurer and a Director of
Phoenix Leasing Incorporated
General Partner
/S/ BRYANT J. TONG Senior Vice President, March 25, 1997
- ---------------------- Financial Operations of --------------
(Bryant J. Tong) (Principal Accounting Officer)
Phoenix Leasing Incorporated
General Partner
/S/ GARY W. MARTINEZ Senior Vice President and a Director March 25, 1997
- ---------------------- of Phoenix Leasing Incorporated --------------
(Gary W. Martinez) General Partner
/S/ MICHAEL K. ULYATT Partnership Controller March 25, 1997
- ---------------------- of Phoenix Leasing Incorporated --------------
(Michael K. Ulyatt) General Partner
<PAGE>
<TABLE>
Page 32 of 32
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
SCHEDULE II
(Amounts in Thousands)
SCHEDULE II - 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, 1994
Allowance for losses on accounts
receivable $ 296 $ 263 $ 0 $ 72 $ 487
Allowance for early termination
of financing leases 1,509 718 0 408 1,819
Allowance for losses on notes
receivable 1,551 908 0 195 2,264
--------- -------- ------ ------ -------
Totals $ 3,356 $ 1,889 $ 0 $ 675 $ 4,570
========= ======== ====== ====== =======
Year ended December 31, 1995
Allowance for losses on accounts
receivable $ 487 $ 386 $ 0 $ 325 $ 548
Allowance for early termination
of financing leases 1,819 408 0 1,472 755
Allowance for losses on notes
receivable 2,264 110 0 133 2,241
--------- -------- ------ ------ -------
Totals $ 4,570 $ 904 $ 0 $1,930 $ 3,544
========= ======== ====== ====== =======
Year ended December 31, 1996
Allowance for losses on accounts
receivable $ 548 $ 0 $ 3 $ 121 $ 424
Allowance for early termination
of financing leases 755 352 0 166 941
Allowance for losses on notes
receivable 2,241 0 17 0 2,224
--------- -------- ------ ------ -------
Totals $ 3,544 $ 352 $ 20 $ 287 $ 3,589
========= ======== ====== ====== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 12,134
<SECURITIES> 0
<RECEIVABLES> 7,786
<ALLOWANCES> 2,648
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 27,555
<DEPRECIATION> 26,179
<TOTAL-ASSETS> 39,575
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 38,064
<TOTAL-LIABILITY-AND-EQUITY> 39,575
<SALES> 0
<TOTAL-REVENUES> 12,926
<CGS> 0
<TOTAL-COSTS> 7,030
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 338
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,896
<INCOME-TAX> 40
<INCOME-CONTINUING> 5,856
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,856
<EPS-PRIMARY> .81
<EPS-DILUTED> 0
</TABLE>
