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 March 31, 1998
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 0-18278
-------
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
Registrant
California 68-0191380
- ------------------------------- ----------------------------------
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
----- -----
6,196,603 Units of Limited Partnership Interest were outstanding as of March 31,
1998.
Transitional small business disclosure format:
Yes No X
----- -----
Page 1 of 11
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
March 31, December 31,
1998 1997
---- ----
ASSETS
Cash and cash equivalents $ 9,130 $ 9,218
Accounts receivable (net of allowance for
losses on accounts receivable of $363
and $389 at March 31, 1998 and December
31, 1997, respectively) 432 509
Notes receivable (net of allowance for losses
on notes receivable of $2,299 and $2,268 at
March 31, 1998 and December 31, 1997) 5,625 6,458
Equipment on operating leases and held for
lease (net of accumulated depreciation of
$10,462 and $11,646 at March 31, 1998 and
December 31, 1997, respectively) 335 128
Net investment in financing leases (net of
allowance for early terminations of $836
and $777 at March 31, 1998 and December
31, 1997, respectively) 7,540 9,631
Investment in joint ventures 514 680
Capitalized acquisition fees (net of
accumulated amortization of $10,358 and
$10,252 at March 31, 1998 and December 31,
1997, respectively) 573 680
Other assets 170 86
------- -------
Total Assets $24,319 $27,390
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 1,221 $ 1,216
------- -------
Total Liabilities 1,221 1,216
------- -------
Partners' Capital
General Partner -- --
Limited Partners, 6,500,000 units authorized,
6,492,727 units issued, 6,196,603 and
6,208,563 units outstanding at March 31,
1998 and December 31, 1997, respectively 22,997 26,169
Unrealized gain on available-for-sale securities 101 5
------- -------
Total Partners' Capital 23,098 26,174
------- -------
Total Liabilities and Partners' Capital $24,319 $27,390
======= =======
The accompanying notes are an integral part of these statements.
2
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
INCOME
Rental income $ 447 $ 906
Earned income, financing leases 364 654
Gain on sale of equipment 127 501
Equity in earnings from joint ventures, net 73 114
Interest income, notes receivable 289 223
Other income 137 163
------- -------
Total Income 1,437 2,561
------- -------
EXPENSES
Depreciation 89 308
Amortization of acquisition fees 106 158
Lease related operating expenses 36 81
Management fees to General Partner 132 204
Reimbursed administrative costs
to General Partner 91 169
Legal expense 68 81
Provision for losses on receivables 62 --
General and administrative expenses 57 53
------- -------
Total Expenses 641 1,054
------- -------
NET INCOME BEFORE INCOME TAXES $ 796 $ 1,507
Income tax benefit (expense) (1) 1
------- -------
NET INCOME $ 795 $ 1,508
======= =======
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ .10 $ .21
======= =======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ .60 $ .60
======= =======
ALLOCATION OF NET INCOME:
General Partner $ 196 $ 197
Limited Partners 599 1,311
------- -------
$ 795 $ 1,508
======= =======
The accompanying notes are an integral part of these statements.
3
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Operating Activities:
Net income $ 795 $ 1,508
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 89 308
Amortization of acquisition fees 106 158
Gain on sale of equipment (127) (501)
Equity in earnings from joint ventures, net (73) (114)
Provision for early termination,
financing leases 31 --
Provision for losses on notes receivable 31 --
Decrease in accounts receivable 77 143
Increase in accounts payable and
accrued expenses 8 154
Decrease(increase)in deferred income
tax asset 1 (1)
Decrease (increase) in other assets 12 (8)
-------- --------
Net cash provided by operating activities 950 1,647
-------- --------
Investing Activities:
Principal payments, financing leases 1,730 2,340
Principal payments, notes receivable 802 825
Proceeds from sale of equipment 161 920
Distributions from joint ventures 239 624
Investment in financing leases -- (1,673)
Investment in notes receivable -- (1,300)
Payment of acquisition fees (3) --
-------- --------
Net cash provided by investing activities 2,929 1,736
-------- --------
Financing Activities:
Redemptions of capital (43) (34)
Distributions to partners (3,924) (3,947)
-------- --------
Net cash used by financing activities (3,967) (3,981)
-------- --------
Decrease in cash and cash equivalents (88) (598)
Cash and cash equivalents, beginning of period 9,218 12,134
-------- --------
Cash and cash equivalents, end of period $ 9,130 $ 11,536
======== ========
The accompanying notes are an integral part of these statements.
4
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
The accompanying unaudited condensed financial statements have been
prepared by the Partnership in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Although management believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Partnership's Financial Statement, as filed with the
SEC in the latest annual report on Form 10-K.
Note 2. Reclassification.
Reclassification - Certain 1997 amounts have been reclassified to
conform to the 1998 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.
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.
Note 4. Notes Receivable.
Impaired Notes Receivable. At March 31, 1998, the recorded investment
in notes that are considered to be impaired was $1,988,000. Included in this
amount is $1,860,000 of impaired notes for which the related allowance for
losses is $1,860,000, and $128,000 of impaired notes for which there is no
allowance. The average recorded investment in impaired loans during the three
months ended March 31, 1998 and 1997 was approximately $1,988,000 and
$2,037,000, respectively.
The activity in the allowance for losses on notes receivable during the
three months ended March 31, is as follows:
1998 1997
---- ----
(Amounts in Thousands)
Beginning balance $ 2,268 $ 2,224
Provision for losses 31 -
Write downs - -
-------- --------
Ending balance $ 2,299 $ 2,224
======== ========
5
<PAGE>
Note 5. Net Income (Loss) and Distributions Per Limited Partnership Unit.
Net income and distributions per limited partnership unit were based on
the limited partners' share of net income and distributions, and the weighted
average number of units outstanding of 6,203,101 and 6,239,231 for the three
months ended March 31, 1998 and 1997, respectively. For purposes of allocating
net income (loss) and distributions to each individual limited partner, the
Partnership allocates net income (loss) and distributions based upon each
respective limited partner's net capital contributions.
Note 6. Investment in Joint Ventures.
Equipment Joint Venture
The aggregate financial information of the equipment joint venture is
presented as follows:
March 31, December 31,
1998 1997
---- ----
(Amounts in Thousands)
Assets $ 361 $ 730
Liabilities 111 156
Partners' Capital 250 574
Three Months Ended
March 31,
1998 1997
---- ----
(Amounts in Thousands)
Revenue $ 181 $ 374
Expenses 20 112
Net Income 161 262
Financing Joint Venture
The aggregate financial information of the financing joint venture is
presented as follows:
March 31, December 31,
1998 1997
---- ----
(Amounts in Thousands)
Assets $ 722 $ 803
Liabilities 118 136
Partners' Capital 604 667
6
<PAGE>
Three Months Ended
March 31,
1998 1997
---- ----
(Amounts in Thousands)
Revenue $ 25 $ 35
Expenses 4 14
Net Income 21 21
Foreclosed Cable Systems Joint Ventures
The aggregate combined financial information of the foreclosed cable
systems joint ventures is presented as follows:
March 31, December 31,
1998 1997
---- ----
(Amounts in Thousands)
Assets $ 902 $ 909
Liabilities 243 240
Partners' Capital 659 669
Three Months Ended
March 31,
1998 1997
---- ----
(Amounts in Thousands)
Revenue $ 100 $ 61
Expenses 110 123
Net Loss (10) (62)
7
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Phoenix Leasing Cash Distribution Fund IV, a California limited
partnership, reported net income of $795,000 during the three months ended March
31, 1998, as compared to net income of $1,508,000 during the three months ended
March 31, 1997. The decline in earnings is the result of a decrease in revenues
that exceeded the decrease in expenses.
The decrease in total revenues of $1,124,000 for the three months ended
March 31, 1998, as compared to the same period in 1997, is primarily the result
of declines in rental income, earned income from financing leases and gain on
sale of equipment. The decrease in rental income of $459,000 for the three
months ended March 31, 1998, compared to the same period in 1997, is reflective
of a decrease in the size of the equipment portfolio. The Partnership owned
equipment with an aggregate original cost of $41 million at March 31, 1998, as
compared to $61 million at March 31, 1997. Another factor contributing to the
decrease in rental income is equipment being off lease. As of March 31, 1998,
the Partnership owned equipment being held for lease with an original purchase
price of $12.7 million and a net book value of $291,000, compared to $9 million
and $509,000, respectively, at March 31, 1997. The General Partner is actively
engaged, on behalf of the Partnership, in remarketing and selling the
Partnership's equipment as it becomes available. Until new lessees or buyers of
equipment can be found, the equipment will continue to generate depreciation
expense without any corresponding rental income. The effect of this will be a
reduction of the Partnership earnings during this remarketing period.
The decrease in earned income from financing leases of $290,000 for the
three months ended March 31, 1998, compared to the same period in the prior
year, is due to a decrease in the net investment in financing leases. The net
investment in financing leases was $7.5 million at March 31, 1998, as compared
to $16.3 million at March 31, 1997. 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. During the three months ended March 31, 1998, the Partnership made
no new investments in financing leases, compared to $1.7 million for the same
period in 1997.
Gain on sale of equipment decreased by $374,000 for the three months
ended March 31, 1998, compared to the same period in 1997, as a result of a
decrease in sales activity of the Partnership's equipment portfolio.
Correspondingly, proceeds from the sale of equipment also decreased. The
Partnership sold equipment with an aggregate original cost of $4.3 million for
the three months ended March 31, 1998, compared to $17.8 million for the same
period in 1997.
Total expenses decreased by $413,000 during the three months ended
March 31, 1998, as compared to the same period in 1997. A majority of the
decrease in total expenses is due to a decline in depreciation expense of
$219,000 for the three months ended March 31, 1998, as compared to the same
period in 1997. This decrease is due to a decline in the amount of depreciable
equipment owned by the Partnership as well as an increasing portion of the
equipment owned by the Partnership becoming fully depreciated.
Liquidity and Capital Resources
The Partnership's primary source of liquidity is derived from its contractual
obligations with lessees for fixed lease terms at fixed rental amounts, and from
8
<PAGE>
payments of principal and interest on outstanding notes receivable. As the
initial lease terms expire, the Partnership will re-lease the equipment 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 and
financing activities of $3,482,000 and $4,812,000 during the three months ended
March 31, 1998 and 1997, respectively. The net decrease in cash generated is due
to a decrease in rental income and payments on financing leases, as previously
discussed above in the Results of Operations.
The Partnership received cash distributions from joint ventures of
$239,000 during the three months ended March 31, 1998, as compared to cash
distributions of $624,000 during the same period in 1997. The decrease in
distributions from joint ventures is attributable to a decline in the amount of
cash available for distribution from one equipment joint venture as a result of
a decrease in rental income and proceeds from sale of equipment.
The total cash distributed to partners for the three months ended March
31, 1998 was $3,924,000, as compared to $3,947,000 for the same period in 1997.
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 $3,727,000 and
$3,750,000 in distributions during the three months ended March 31, 1998 and
1997, respectively. The General Partner received $197,000 for its share of the
cash available for distribution during both the three months ended March 31,
1998 and 1997. The Partnership anticipates making distributions to partners
during the remainder of 1998 at the same rate as distributions made during 1997.
Distributions to partners are anticipated to be made at a lower rate beginning
with the January 15, 1999 distribution.
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.
9
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND IV,
A CALIFORNIA LIMITED PARTNERSHIP
March 31, 1998
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
10
<PAGE>
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)
Date Title Signature
---- ----- ---------
May 13, 1998 Executive Vice President, /S/ GARY W. MARTINEZ
- --------------- Chief Operating Officer --------------------
and a Director of (Gary W. Martinez)
Phoenix Leasing Incorporated
General Partner
May 13, 1998 Chief Financial Officer, /S/ HOWARD SOLOVEI
- -------------- Treasurer and a Director of --------------------
Phoenix Leasing Incorporated (Howard Solovei)
General Partner
May 13, 1998 Senior Vice President, /S/ BRYANT J. TONG
- -------------- Financial Operations --------------------
(Principal Accounting Officer) (Bryant J. Tong)
and a Director of
Phoenix Leasing Incorporated
General Partner
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,130
<SECURITIES> 0
<RECEIVABLES> 8,719
<ALLOWANCES> 2,662
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 10,797
<DEPRECIATION> 10,462
<TOTAL-ASSETS> 24,319
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23,098
<TOTAL-LIABILITY-AND-EQUITY> 24,319
<SALES> 0
<TOTAL-REVENUES> 1,437
<CGS> 0
<TOTAL-COSTS> 641
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 62
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 796
<INCOME-TAX> 1
<INCOME-CONTINUING> 795
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 795
<EPS-PRIMARY> .10
<EPS-DILUTED> 0
</TABLE>
