Page 1 of 11
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, 1997
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________.
Commission file number 0-19063
-------
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 _____
170,276 Units of Limited Partnership Interest were outstanding as of March 31,
1997.
Transitional small business disclosure format:
Yes _____ No __X__
<PAGE>
Page 2 of 11
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,
1997 1996
-------- --------
ASSETS
Cash and cash equivalents $ 3,624 $ 3,323
Accounts receivable (net of allowance for
losses on accounts receivable of $124
and $125 at March 31, 1997 and
December 31, 1996, respectively) 103 125
Notes receivable (net of allowance for
losses on notes receivable of $216 at
March 31, 1997 and December 31, 1996) 927 1,042
Equipment on operating leases and held for
lease (net of accumulated depreciation of
$11,305 and $12,008 at March 31, 1997 and
December 31, 1996, respectively) 216 378
Net investment in financing leases (net of
allowance for early terminations of $68 at
March 31, 1997 and December 31, 1996) 4,019 5,039
Investment in joint ventures 790 1,047
Capitalized acquisition fees (net of accumulated
amortization of $3,398 and $3,346 at March 31,
1997 and December 31, 1996, respectively) 209 261
Other assets 73 123
-------- --------
Total Assets $ 9,961 $ 11,338
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 629 $ 684
-------- --------
Total Liabilities 629 684
-------- --------
Partners' Capital
General Partner -- (1)
Limited Partners, 300,000 units authorized,
175,285 units issued and 170,276 and
170,316 units outstanding at March 31,
1997 and December 31, 1996, respectively 9,303 10,618
Unrealized gains on available-for-sale
securities 29 37
-------- --------
Total Partners' Capital 9,332 10,654
-------- --------
Total Liabilities and Partners' Capital $ 9,961 $ 11,338
======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
Page 3 of 11
PHOENIX INCOME FUND, L.P.
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended
March 31,
1997 1996
------- -------
INCOME
Rental income $ 481 $ 712
Earned income, financing leases 166 292
Equity in earnings from joint ventures, net 66 85
Interest income, notes receivable 84 69
Other income 39 52
------- -------
Total Income 836 1,210
------- -------
EXPENSES
Depreciation 164 431
Amortization of acquisition fees 52 76
Lease related operating expenses 70 53
Management fees to General Partner 65 83
Reimbursed administrative costs to General Partner 67 74
Provision for losses on receivables -- 21
General and administrative expenses 35 33
------- -------
Total Expenses 453 771
------- -------
NET INCOME $ 383 $ 439
======= =======
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 1.75 $ 2.06
======= =======
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ 9.45 $ 9.20
======= =======
ALLOCATION OF NET INCOME:
General Partner $ 85 $ 87
Limited Partners 298 352
------- -------
$ 383 $ 439
======= =======
The accompanying notes are an integral part of these statements.
<PAGE>
Page 4 of 11
PHOENIX INCOME FUND, L.P.
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Three Months Ended
March 31,
1997 1996
------- -------
Operating Activities:
Net income $ 383 $ 439
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 164 431
Amortization of acquisition fees 52 76
Loss (gain) on sale of equipment (33) 14
Equity in earnings from joint ventures, net (66) (85)
Gain on sale of securities -- (21)
Provision for early termination,
financing leases -- 35
Recovery of losses on notes receivable -- (14)
Decrease in accounts receivable 22 66
Increase (decrease) in accounts payable
and accrued expenses (55) 23
Decrease in other assets 42 --
------- -------
Net cash provided by operating activities 509 964
------- -------
Investing Activities:
Principal payments, financing leases 935 1,026
Principal payments, notes receivable 115 133
Proceeds from sale of equipment 116 137
Distributions from joint ventures 323 72
Proceeds from sale of securities -- 21
Investment in financing leases -- (118)
Payment of acquisition fees -- (63)
------- -------
Net cash provided by investing activities 1,489 1,208
------- -------
Financing Activities:
Redemptions of capital (2) (10)
Distributions to partners (1,695) (1,657)
------- -------
Net cash used by financing activities (1,697) (1,667)
------- -------
Increase in cash and cash equivalents 301 505
Cash and cash equivalents, beginning of period 3,323 2,364
------- -------
Cash and cash equivalents, end of period $ 3,624 $ 2,869
======= =======
The accompanying notes are an integral part of these statements.
<PAGE>
Page 5 of 11
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 1996 amounts have been reclassified to
conform to the 1997 presentation.
Note 3. Income Taxes.
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the financial statements of the Partnership.
Note 4. Notes Receivable.
Impaired Notes Receivable. At March 31, 1997 and 1996, the recorded
investment in notes that are considered to be impaired was $0 and $160,000,
respectively, for which there was no related allowance for losses. The average
recorded investment in impaired loans during the three months ended March 31,
1997 and 1996 was approximately $0 and $160,000, respectively.
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. This cable television
system was subsequently sold on August 30, 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 11
1997 1996
------ ------
(Amounts In Thousands)
Beginning balance $ 216 $ 230
Provision for losses - (14)
Write downs - -
------ ------
Ending balance $ 216 $ 216
====== ======
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, 1997 and 1996, are $0 and $81,000 respectively, ($0 and $.47 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 170,298 and 171,054 for the three months
ended March 31, 1997 and 1996, 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 aggregate financial information of the equipment joint venture is
presented below:
March 31, December 31,
1997 1996
------ ------
(Amounts in Thousands)
Assets $2,863 $4,002
Liabilities 323 382
Partners' Capital 2,540 3,620
Three Months Ended
March 31,
1997 1996
------ ------
(Amounts in Thousands)
Revenue $ 374 $ 547
Expenses 112 217
Net Income 262 330
<PAGE>
Page 7 of 11
Financing Joint Ventures
The aggregate financial information of the financing joint venture is
presented below:
March 31, December 31,
1997 1996
------ ------
(Amounts in Thousands)
Assets $ 967 $1,023
Liabilities 127 130
Partners' Capital 840 893
Three Months Ended
March 31,
1997 1996
------ ------
(Amounts in Thousands)
Revenue $ 35 $ 43
Expenses 14 1
Net Income 21 42
Foreclosed Cable Systems Joint Venture
The aggregate financial information of the financing joint venture is
presented below:
March 31, December 31,
1997 1996
------ ------
(Amounts in Thousands)
Assets $ 51 $ 115
Liabilities -- 25
Partners' Capital 51 90
Three Months Ended
March 31,
1997 1996
------ ------
(Amounts in Thousands)
Revenue $ (38) $ 305
Expenses -- 324
Net Income (38) (19)
<PAGE>
Page 8 of 11
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 $383,000 during the three months
ended March 31, 1997, as compared to net income of $439,000 during the three
months ended March 31, 1996. The Partnership reported an overall decrease in
total revenues and expenses. However, the decrease in revenues exceeded the
decrease in expense, generating a decrease in net income for the period.
Total revenues decreased by $374,000 during the three months ended
March 31, 1997, as compared to the same period in 1996. The decrease in total
revenues is due primarily to a decrease in rental income from operating leases
of $231,000 for the three months ended March 31, 1997, as compared to the same
period in 1996. 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, 1997, the Partnership owned equipment with an aggregate original cost
of $27 million, as compared to the $36.3 million of equipment owned at March 31,
1996.
Earned income from financing leases decreased by $126,000 during the
three months ended March 31, 1997, as compared to the same period in 1996. This
is attributable to the decrease in the net investment in financing leases since
March 31, 1996. The Partnership owned financing leases with a net investment of
$4.1 million at March 31, 1997, as compared to $7.8 million at March 31, 1996.
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 $318,000 during the
three months ended March 31, 1997, compared to the same period in 1996.
Depreciation expense experienced the largest decrease during the three months
ended March 31, 1997, as compared to the same period in 1996. Depreciation
expense decreased due to the decrease in the amount of equipment owned by the
Partnership, as well as, an increasing portion of the equipment portfolio having
been fully depreciated.
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, 1997 of $1,559,000,
as compared to $2,123,000 during the same period in 1996. The decline in net
cash generated from leasing and financing activities for the three months ended
March 31, 1997, as compared to the same period in the previous year, is
attributable to decreases in rental income from operating leases and principal
payments from financing leases, as previously discussed in the Results of
Operations.
An additional factor contributing to the decline in net cash generated
is the reduction in the amount of proceeds received from the sale of equipment
for the three months ended March 31, 1997, as compared to the previous year.
<PAGE>
Page 9 of 11
The Partnership received proceeds from the sale of equipment of $116,000 during
the three months ended March 31, 1997, as compared to $137,000 during the three
months ended March 31, 1996.
The Partnership received distributions from joint ventures of $323,000
and $72,000 for the three months ended March 31, 1997 and 1996, respectively.
The increase in distributions from joint ventures is attributable to one joint
venture having paid its outstanding debt in full in November 1996. Previously,
any excess cash flow generated by this joint venture was being used to pay off
the outstanding debt. The excess cash flow generated by this joint venture is
currently being paid to the Partnership and the other venturers.
As of March 31, 1997, the Partnership owned equipment being held for
lease with an original cost of $3,847,000 and a net book value of $131,000, as
compared to equipment with an original cost of $2,996,000 and a net book value
of $370,000 at March 31, 1996. The General Partner is actively engaged, on
behalf of the Partnership, in remarketing and selling the Partnership's off
lease equipment. 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 cash distributed to partners was $1,695,000 and $1,657,000 during
the three months ended March 31, 1997 and 1996, 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 $1,610,000 and $1,574,000 in cash
distributions for the three months ended March 31, 1997 and 1996, respectively.
The cumulative cash distributions to limited partners at March 31, 1997 is
$30,926,000, as compared to $24,533,000 at March 31, 1996. The General Partner
received cash distributions of $85,000 and $83,000 for its share of the cash
distribution for the three months ended March 31, 1997 and 1996, respectively.
The Partnership anticipates making distributions during the remainder of 1997 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 10 of 11
PHOENIX INCOME FUND, L.P.
March 31, 1997
Part II. Other Information.
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults Upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of Securities Holders. Inapplicable
Item 5. Other Information. Inapplicable
Item 6. Exhibits and Reports on 8-K:
a) Exhibits: None
(27) Financial Data Schedule
b) Reports on 8-K: None
<PAGE>
Page 11 of 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PHOENIX 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, 1997 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- ---------------- Senior Vice President, ----------------------
Treasurer and a Director of (Paritosh K. Choksi)
Phoenix Leasing Associates, Inc.
May 13, 1997 Senior Vice President, /S/ BRYANT J. TONG
- ---------------- Financial Operations of ----------------------
Phoenix Leasing Associates, Inc. (Bryant J. Tong)
May 13, 1997 Senior Vice President /S/ GARY W. MARTINEZ
- ---------------- and a Director of ----------------------
Phoenix Leasing Associates, Inc. (Gary W. Martinez)
May 13, 1997 Partnership Controller /S/ MICHAEL K. ULYATT
- ---------------- of Phoenix Leasing Incorporated ----------------------
(Parent Company) (Michael K. Ulyatt)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,624
<SECURITIES> 0
<RECEIVABLES> 1,370
<ALLOWANCES> 340
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,521
<DEPRECIATION> 11,305
<TOTAL-ASSETS> 9,961
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,332
<TOTAL-LIABILITY-AND-EQUITY> 9,961
<SALES> 0
<TOTAL-REVENUES> 836
<CGS> 0
<TOTAL-COSTS> 453
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 383
<INCOME-TAX> 0
<INCOME-CONTINUING> 383
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 383
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 0
</TABLE>
