Page 1 of 12
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-Q
__X__ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________.
Commission file number 0-19063
-------
PHOENIX INCOME FUND, L.P .
- - --------------------------------------------------------------------------------
Registrant
California 68-0204588
- - --------------------------- ----------------------------------
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 _____
<PAGE>
Page 2 of 12
Part I. Financial Information
-----------------------------
Item 1. Financial Statements
PHOENIX INCOME FUND, L.P.
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
March 31, December 31,
1996 1995
---- ----
ASSETS
Cash and cash equivalents $ 2,869 $ 2,364
Accounts receivable (net of allowance for losses
on accounts receivable of $115 and $147 at March
31, 1996 and December 31, 1995, respectively) 153 219
Notes receivable (net of allowance for losses
on notes receivable of $216 and $230 at March
31, 1996 and December 31, 1995, respectively) 1,670 1,850
Equipment on operating leases and held for lease
(net of accumulated depreciation of $14,746 and
$15,279 at March 31, 1996 and December 31, 1995,
respectively) 1,101 1,407
Net investment in financing leases (net of allowance
for early terminations of $372 and $436 at March
31, 1996 and December 31, 1995, respectively) 7,761 8,980
Investment in joint ventures 1,177 1,103
Capitalized acquisition fees (net of accumulated
amortization of $3,160 and $3,084 at March 31, 1996
and December 31, 1995, respectively) 434 505
Other assets 266 284
------- -------
Total Assets $15,431 $16,712
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 833 $ 868
------- -------
Total Liabilities 833 868
------- -------
Partners' Capital
General Partner (10) (14)
Limited Partners, 300,000 units authorized,
175,285 units issued and 170,959 and 171,073
units outstanding at March 31, 1996 and December
31, 1995, respectively 14,495 15,727
Unrealized gains on available-for-sale securities 113 131
------- -------
Total Partners' Capital 14,598 15,844
------- -------
Total Liabilities and Partners' Capital $15,431 $16,712
======= =======
The accompanying notes are an integral part of these statements.
<PAGE>
Page 3 of 12
PHOENIX INCOME FUND, L.P.
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Rental income $ 712 $ 970
Earned income, financing leases 292 404
Equity in earnings from joint ventures, net 85 63
Interest income, notes receivable 69 63
Other income 52 75
------ ------
Total Income 1,210 1,575
------ ------
EXPENSES
Depreciation 431 952
Amortization of acquisition fees 76 133
Lease related operating expenses 53 89
Management fees to General Partner 83 122
Reimbursed administrative costs to General Partner 74 76
Interest expense - 79
Provision for losses on receivables 21 -
General and administrative expenses 33 52
------ ------
Total Expenses 771 1,503
------ ------
NET INCOME $ 439 $ 72
====== ======
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 2.06 $ -
====== ======
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ 9.20 $ 8.83
====== ======
ALLOCATION OF NET INCOME:
General Partner $ 87 $ 72
Limited Partners 352 -
------ ------
$ 439 $ 72
====== ======
The accompanying notes are an integral part of these statements.
<PAGE>
Page 4 of 12
PHOENIX INCOME FUND, L.P.
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Operating Activities:
Net income $ 439 $ 72
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 431 952
Amortization of acquisition fees 76 133
Loss on sale of equipment 14 94
Equity in earnings from joint ventures, net (85) (63)
Gain on sale of securities (21) -
Provision for early termination, financing leases 35 -
Provision for losses on notes receivable (14) -
Decrease (increase) in accounts receivable 66 (112)
Increase in accounts payable and accrued expenses 23 32
Decrease in other assets - 32
------ ------
Net cash provided by operating activities 964 1,140
------ ------
Investing Activities:
Principal payments, financing leases 1,026 1,409
Principal payments, notes receivable 133 147
Proceeds from sale of equipment 137 411
Distributions from joint ventures 72 308
Proceeds from sale of securities 21 -
Investment in financing leases (118) (43)
Purchase of equipment - (32)
Payment of acquisition fees (63) (36)
------ ------
Net cash provided by investing activities 1,208 2,164
------ ------
Financing Activities:
Payments of principal, notes payable - (3,513)
Redemptions of capital (10) (71)
Distributions to partners (1,657) (1,598)
------ ------
Net cash used by financing activities (1,667) (5,182)
------ ------
Increase (decrease) in cash and cash equivalents 505 (1,878)
Cash and cash equivalents, beginning of period 2,364 5,712
------ ------
Cash and cash equivalents, end of period $2,869 $3,834
====== ======
Supplemental Cash Flow Information:
Cash paid for interest expense $ - $ 92
The accompanying notes are an integral part of these statements.
<PAGE>
Page 5 of 12
PHOENIX INCOME FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
The accompanying unaudited condensed financial statements have been
prepared by the Partnership in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Although management believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Partnership's Financial Statement, as filed with the
SEC in the latest annual report on Form 10-K.
Non Cash Investing Activities. During the three months ended March 31,
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 $62,000 to Investment in Joint Ventures on the balance sheet.
Note 2. Reclassification.
Reclassification - Certain 1995 amounts have been reclassified to conform
to the 1996 presentation.
Note 3. Income Taxes.
Federal and state income tax regulations provide that taxes on the income
or loss of the Partnership are reportable by the partners in their individual
income tax returns. Accordingly, no provision for such taxes has been made in
the financial statements of the Partnership.
Note 4. Notes Receivable.
Impaired Notes Receivable. At March 31, 1996, the recorded investment in
notes that are considered to be impaired under Statement No. 114 was $160,000
for which there is no related allowance for losses. The average recorded
investment in impaired loans during the three months ended March 31, 1996 was
approximately $160,000.
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. The Partnership's net carrying value for this
outstanding note receivable was $62,000 at March 31, 1996, for which the
Partnership had an allowance for losses on notes of $14,000. Because the market
value of the cable system exceeded the carrying value, this allowance of $14,000
was reversed and recognized as income at March 31, 1996.
The activity in the allowance for losses on notes receivable during the
three months ended March 31, is as follows:
<PAGE>
Page 6 of 12
1996 1995
---- ----
(Amounts In Thousands)
Beginning balance $230 $230
Provision for losses (14) -
Write downs - -
---- ----
Ending balance $216 $230
==== ====
Note 5. Equipment on Operating Leases and Held for Lease.
The Partnership's policy, as disclosed on the Partnership's latest annual
report filed on Form 10-K, is to provide additional depreciation expense where
reviews of equipment indicate that rentals plus anticipated sales proceeds will
not exceed expenses, including depreciation expense, in any future period. As a
result, the Partnership has provided additional depreciation expense on various
leases that are near the end of their initial lease term where the estimated
fair market value is not expected to exceed the net book value of such leases.
The portion of additional depreciation expense included in the caption
"Depreciation" on the statement of operations for the three months ended March
31, 1996 and 1995, are $81,000 and $19,000 respectively, ($.47 and $.12 per
limited partnership unit, respectively).
Note 6. 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 171,054 and 171,952 for the three months
ended March 31, 1996 and 1995, respectively. For purposes of allocating net
income (loss) to each individual limited partner, the Partnership allocates net
income (loss) based upon each respective limited partner's net capital
contributions.
Note 7. Investment in Joint Ventures:
Equipment Joint Venture
The statements of operations of the equipment joint venture are presented
below:
STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Earned income, financing leases $431 $623
Gain on sale of equipment 50 43
Other income 66 58
---- ----
Total income 547 724
---- ----
<PAGE>
Page 7 of 12
EXPENSES
Depreciation 24 12
Lease related operating expenses - 5
Management fees to General Partner 53 80
Interest expense 111 314
General and administrative expenses 29 83
---- ----
Total expenses 217 494
---- ----
Net income $330 $230
==== ====
Financing Joint Venture
The statements of operations of the financing joint venture are presented
below:
STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Interest income - notes receivable $ 42 $ 49
Other income 1 1
----- ----
Total income 43 50
----- ----
EXPENSES
Management fees to general partner 1 -
General and administrative expenses - 6
----- ----
Total expenses 1 6
----- ----
Net income $ 42 $ 44
===== ====
<PAGE>
Page 8 of 12
Foreclosed Cable Systems Joint Venture
The statements of operations of the foreclosed cable systems joint venture
are presented below:
STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended
March 31,
1996 1995
---- ----
INCOME
Subscriber revenue $ 303 $ -
Other income 2 -
----- ----
Total income 305 -
----- ----
EXPENSES
Depreciation and amortization 139 -
Program services 105 -
Management fees to an affiliate of the General Partner 14 -
General and administrative expenses 63 -
Provision for losses on accounts receivable 3 -
----- ----
Total expenses 324 -
----- ----
Net loss $ (19) $ -
===== ====
<PAGE>
Page 9 of 12
PHOENIX INCOME FUND, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
The Partnership reported net income of $439,000 during the three months
ended March 31, 1996, as compared to net income of $72,000 during the three
months ended March 31, 1995. The Partnership reported an overall decrease in
total revenues and expenses. However, the decrease in expense exceeded the
decrease in revenues, generating an increase in net income for the period.
Total revenues decreased by $365,000 during the three months ended March
31, 1996, as compared to the same period in 1995. The decrease in total revenues
is due primarily to a decrease in rental income from operating leases of
$258,000 for the three months ended March 31, 1996, as compared to the same
period in 1995. The decrease in rental income is attributable to a decrease in
the amount of equipment owned that is classified as operating type leases. At
March 31, 1996, the Partnership owned equipment with an aggregate original cost
of $36.3 million, as compared to the $46.6 million of equipment owned at March
31, 1995.
Earned income from financing leases decreased by $112,000 during the three
months ended March 31, 1996, as compared to the same period in 1995. This is
attributable to the decrease in the net investment in financing leases since
March 31, 1995. The Partnership owned financing leases with a net investment of
$7.8 million at March 31, 1996, as compared to $11.6 million at March 31, 1995.
The net investment in financing leases will continue to decline over the lease
term as payments are received.
Total expenses of the Partnership decreased by $732,000 during the three
months ended March 31, 1996, compared to the same period in 1995. Depreciation
expense experienced the largest decrease during the three months ended March 31,
1996, as compared to the same period in 1995. Depreciation expense decreased due
to the decrease in the amount of equipment owned by the Partnership.
The Partnership did not incur any interest expense during the three months
ended March 31, 1996, as compared to interest expense of $79,000 for the three
months ended March 31, 1995. Interest expense decreased during the three months
ended March 31, 1996, as compared to the same period in 1995, due to the
Partnership having paid off its outstanding debt during 1995. As of March 31,
1996, there are no available lines of credit.
Liquidity and Capital Resources
The Partnership's primary source of liquidity comes from its contractual
obligations with lessees and borrowers for fixed lease terms at fixed payment
amounts. As the initial lease terms of the Partnership's short term operating
leases 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 its contractually owed amounts from lessees and borrowers as well as
re-leasing and selling the Partnership's equipment when the lease terms expire.
The Partnership reported net cash generated by equipment leasing and financing
activities during the three months ended March 31, 1996 of $2,123,000, as
compared to $2,696,000 during the same period in 1995. In addition, the
Partnership received proceeds from the sale of equipment of $137,000 during the
three months ended March 31, 1996, as compared to $411,000 during the three
months ended March 31, 1995. During the three months ended March 31, 1996, the
Partnership did not make any debt payments, as compared to payments of
$3,513,000 during the same period in 1995. The Partnership's outstanding debt
was paid off during the fourth quarter of 1995.
<PAGE>
Page 10 of 12
The Partnership anticipates reinvesting a portion of the revenues from the
assets owned by the Partnership in new leasing or financing transactions over
the life of the Partnership. During the three months ended March 31, 1996 the
Partnership invested $118,000 in equipment leases, as compared to investments of
$75,000 during the same period in 1995.
As of March 31, 1996, the Partnership owned equipment being held for lease
with an original cost of $2,996,000 and a net book value of $371,000, as
compared to equipment with an original cost of $6,444,000 and a net book value
of $370,000 at March 31, 1995. The General Partner is actively engaged, on
behalf of the Partnership, in remarketing and selling the Partnership's off
lease equipment.
The cash distributed to partners was $1,657,000 and $1,598,000 during the
three months ended March 31, 1996 and 1995, respectively. 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 $1,574,000 and $1,518,000 in cash
distributions for the three months ended March 31, 1996 and 1995, respectively.
The cumulative cash distributions to limited partners at March 31, 1996 is
$24,533,000, as compared to $18,395,000 at March 31, 1995. The General Partner
received cash distributions of $83,000 and $80,000 for its share of the cash
distribution for the three months ended March 31, 1996 and 1995, respectively.
The Partnership anticipates making distributions during the remainder of 1996 at
approximately the same rate as the current distribution.
The cash to be generated from leasing and financing operations is
anticipated to be sufficient to meet the Partnership's continuing operational
expenses, debt service and to provide cash distributions to the Partners.
<PAGE>
Page 11 of 12
PHOENIX INCOME FUND, L.P.
March 31, 1996
Part II. Other Information.
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults Upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of Securities Holders. Inapplicable
Item 5. Other Information. Inapplicable
Item 6. Exhibits and Reports on 8-K:
a) Exhibits: None
(27) Financial Data Schedule
b) Reports on 8-K: None
<PAGE>
Page 12 of 12
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 INCOME FUND, L.P.
-------------------------
(Registrant)
BY: PHOENIX LEASING ASSOCIATES LP,
a California limited partnership,
General Partner
BY: PHOENIX LEASING ASSOCIATES, INC.
a Nevada corporation,
General Partner
Date Title Signature
---- ----- ---------
May 13, 1996 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- - -------------------- Senior Vice President -------------------------
and Treasurer of (Paritosh K. Choksi)
Phoenix Leasing Associates, Inc.
General Partner
May 13, 1996 Senior Vice President, /S/ BRYANT J. TONG
- - -------------------- Financial Operations -------------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Associates, Inc.
General Partner
May 13, 1996 Senior Vice President of /S/ GARY W. MARTINEZ
- - -------------------- Phoenix Leasing Associates, Inc. -------------------------
General Partner (Gary W. Martinez)
May 13, 1996 Partnership Controller /S/ MICHAEL K. ULYATT
- - -------------------- Phoenix Leasing Incorporated -------------------------
General Partner (Michael K. Ulyatt)
(Parent Company)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,869
<SECURITIES> 0
<RECEIVABLES> 2,154
<ALLOWANCES> 331
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 23,980
<DEPRECIATION> 15,118
<TOTAL-ASSETS> 15,431
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,598
<TOTAL-LIABILITY-AND-EQUITY> 15,431
<SALES> 0
<TOTAL-REVENUES> 1,210
<CGS> 0
<TOTAL-COSTS> 771
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 21
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 439
<INCOME-TAX> 0
<INCOME-CONTINUING> 439
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 439
<EPS-PRIMARY> 2.06
<EPS-DILUTED> 0
</TABLE>
