SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____________ to ____________
Commission File No. 0-21242
TRIUMPHE LEASING VIII L.P.
(Name of Small Business Issuer in Its Charter)
Illinois 36-3799482
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
630 Dundee Road, Suite 345, Northbrook, Illinois 60062
(Address of principal executive offices, including zip code)
847-509-1500
(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the
Exchange Act:
None
Securities registered pursuant to Section 12(g) of the
Exchange Act:
LIMITED PARTNERSHIP UNITS
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 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.
[X] Yes [ ] No
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B is not contained in this
form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB. [X]
The issuer's revenues for the fiscal year ended December 31,
1996 were $1,264,165.
The aggregate market value of the voting securities of the
registrant beneficially owned by non-affiliates of the registrant
(the exclusion of the market value of the shares owned by any
person shall not be deemed an admission by the registrant that
such person is an affiliate of the registrant) at December 31,
1996 was $621,126.
DOCUMENTS INCORPORATED BY REFERENCE
None
* There has not been, nor is there expected to be, a public
market for the limited partnership units; the market value of
$621,126 is based on the book value per unit of limited
partnership interest.
Page 1 of 33
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
The registrant, Triumphe Leasing VIII L.P. (the
"Partnership"), is a limited partnership organized in 1991 under
the Revised Uniform Limited Partnership Act of the State of
Illinois. The Partnership sold $2,514,768 in Limited Partnership
Units (the "Units") to the public from March 27, 1992 through
December 31, 1993, pursuant to a Registration Statement on Form
S-18 filed with the Securities and Exchange Commission
(Registration No. 33-44929). The business of the Partnership is
to acquire, own, lease, maintain, manage and sell various items
of new and used computer, computer peripheral, telecommunications
and office equipment ("equipment").
EQUIPMENT ACQUISITION. The General Partners select
Equipment which they believe will maintain residual value. Among
the factors adversely affecting the residual values of Equipment,
and which make predictions of residual value uncertain, are
advances in technology that render equipment obsolete, reductions
in sales prices or rental rates by manufacturers of comparable
new equipment, and surpluses in the marketplace for comparable
equipment. The General Partners utilize data prepared by
recognized appraisal or valuation firms as a guide to estimating
the residual values of Equipment.
TERMS OF LEASES. The General Partners generally lease
Equipment to lessees for initial terms ranging from six months to
six years, under agreements which impose on the lessees all costs
of maintenance, taxes and insurance for the equipment. The
leases may grant the lessees options to extend their leases or to
purchase the leased Equipment at the end of the initial lease
terms.
LESSEES. The Partnership leases Equipment to lessees it
believes to be creditworthy. The General Partners will depend
heavily on the lease credit evaluations of the Partnership's
lenders which, in turn, look primarily to rentals under the
leases to repay their loans.
LEVERAGE. The General Partners typically finance the
purchase of Equipment by the use of nonrecourse loans in an
amount in excess of 50% of the purchase price thereof. A
nonrecourse loan is one in which the lender agrees that its
recourse in the event of default is limited to the equipment
securing the loan, the rents payable under the related lease and
the proceeds derived from their sale, and that neither the
Partnership nor any Partner will be liable for payment. It is
anticipated that generally the loans will be in the maximum
amount which can be repaid with interest out of the lease rentals
receivable during the initial lease terms. The debt incurred
generally bears a fixed interest rate over the term of the loan,
rather than a variable rate which changes with the prime rate or
other criteria.
REFINANCING AND SALE OF EQUIPMENT. In some cases the
Partnership may dispose of its Equipment at the end of the
initial term of the related lease. This may be accomplished by
(a) selling the Equipment to the lessee, (b) selling the
Equipment in the open market, (c) negotiating an extension of the
lease term, and (d) securing a new lessee and selling the
Equipment subject to the extended or new lease to another
investor. In other cases at the end of the initial term of a
lease the Partnership may decide to retain the Equipment and
enter into a new or extended lease. The Partnership will then
either (a) refinance the Equipment, which will permit the
Partnership to distribute to the Partners any cash received in
the refinancing or (b) retain the debt-free leased Equipment so
as to secure for the Partnership the rental income under the
lease. The Partnership may also sell the lease prior to the end
of the initial lease term. It is not anticipated that the terms
of any extended or replacement leases will extend beyond December
31, 1999.
Page 2 of 33
<PAGE>
INDEPENDENT BROKERS. Most of the Partnership's Equipment
purchases and related lease opportunities will be brought to its
attention by independent leasing brokers, which will either
charge the Partnership a commission for their services or
alternatively purchase the Equipment and secure the lessee and
then resell the package to the Partnership at a profit.
Independent brokers may also be compensated by the Partnership
for assisting in the re-leasing and disposition of its Equipment.
The independent brokers may also participate in the proceeds of
the leases on a percentage or fixed basis after the Partnership
has earned a specified return on its investment in a lease.
NO COMMITMENTS. The foregoing description of the business
of the Partnership is only a statement of the present intention
of the General Partners, and should not be viewed as a commitment
as to the Partnership's actual business activities. The General
Partners are granted unlimited discretion in the Partnership
Agreement to make all decisions regarding the business of the
Partnership. These decisions will include the type of equipment
to be acquired, the terms of leases, the amount and nature of
borrowings, and the time and terms of Equipment disposition. The
General Partners intend to exercise sound business judgment in
response to market conditions when making these decisions, which
may result in substantial deviations from the business now
conducted.
As of December 31, 1996, the Partnership had purchased
$19,119,908 worth of Equipment. The Equipment owned by the
Partnership as of that date consists of computer hardware and
peripherals.
LEASES. The following is a summary of each of the leases
and related Equipment acquired by the Partnership through
December 31, 1996 and owned during 1996:
1. THRIFT DRUG, INC.
(a) Under the terms of a master lease agreement entered
into by Thrift Drug, Inc. ("Thrift") dated January 2, 1992, and
an equipment supplement dated January 2, 1992, Thrift has leased
a computer controller and disk drives manufactured by Hitachi
Data Systems Corporation.
The Partnership has acquired from the original lessor the
equipment and all of the rights under the supplement. The cost
to the Partnership of the equipment and supplement was $734,431.
The Partnership paid $24,258 of this amount in cash, and the
balance by assuming existing nonrecourse financing of the
equipment.
Pursuant to a master lease agreement entered into by the
Partnership and Thrift Drug, Inc., dated as of May 31, 1995, and
an equipment supplement dated May 31, 1995, the Partnership and
Thrift Drug terminated the original master lease agreement and
equipment schedules, and renewed the original equipment. The
initial term of the schedule was 26 months which commenced on
June 1, 1995. The monthly rent is $9,858.
(b) Under the terms of (a) a master lease agreement entered
into by Thrift's predecessor, and assumed by Thrift, dated
December 3, 1990, and an equipment supplement dated March 8,
1991, and (b) a master lease agreement entered into by Thrift
Drug, Inc. dated as of January 2, 1992, and an equipment
supplement dated January 2, 1992, Thrift has leased an IBM
mainframe computer and certain peripheral devices.
Page 3 of 33
<PAGE>
The Partnership has acquired from the original lessor the
equipment and all of the rights under the two foregoing described
supplements. The cost to the Partnership of the equipment and
the two supplements was $9,489,339. The Partnership paid
$105,000 of this amount in cash, and the balance by assuming
existing nonrecourse financing of the equipment.
(c) Under the terms of a master lease agreement entered
into by Thrift dated January 2, 1992, and an equipment supplement
dated October 27, 1992, Thrift has leased 17 laser printers
manufactured by IBM.
The Partnership has acquired from the original lessor the
equipment and all of the rights under the supplement. The cost
to the Partnership of the equipment and supplement was $91,891,
which was paid by the Partnership in cash. The term of the
supplement was 24 months which commenced on November 1, 1992.
This supplement was renewed in November 1994, and the term was
extended 24 months at a monthly rent of $2,100. After the
expiration of the renewal, the related equipment was sold in
December 1996.
(d) Under the terms of a master lease agreement entered
into by Thrift dated January 2, 1992, and an equipment supplement
dated August 4, 1992, Thrift has leased 44 laser printers
manufactured by IBM. The term of the supplement is 36 months,
which commenced on November 1, 1992. The Partnership has
acquired from the original lessor the equipment and all of the
rights under the supplement. The cost to the Partnership of the
Equipment and supplement was $235,980. The Partnership paid
$42,825 of this amount in cash, and the balance by assuming
existing nonrecourse financing of the equipment.
(e) Under the terms of a master lease agreement entered
into by Thrift dated January 2, 1992, and an equipment supplement
dated November 23, 1992, Thrift has leased 4 laser printers
manufactured by IBM. The Partnership has acquired from the
original lessor the equipment and all of the rights under the
supplement. The cost to the Partnership of the equipment and
supplement was $21,822, which was paid by the Partnership in
cash. The term of the supplement is 36 months which commenced on
December 1, 1992. The monthly rent is $600.
The term of the schedules in (d) and (e) expired in October
1995 and November 1995, respectively. Under the terms of a
master lease dated May 31, 1995, and an equipment supplement
dated November 1, 1995, the schedules in (d) and (e) were renewed
with 46 new IBM printers. The term of the schedules was 36
months commencing November 1, 1995. The monthly rent is $4,387.
The original equipment in schedules (d) and (e) above was sold
in 1996.
Thrift, a wholly owned subsidiary of J.C. Penney Company,
Inc., operates a chain of retail drug stores.
2. MOUNT SINAI HOSPITAL, New York
Under the terms of a master lease agreement entered into by
Mount Sinai Hospital ("Mount Sinai") dated May 1, 1992, and an
equipment supplement dated May 28, 1992, Mount Sinai has leased
two laser printers manufactured by IBM.
The Partnership has acquired from the original lessor the
equipment and all of the rights under the supplement. The term
of the supplement is 48 months, which commenced on September 1,
1992. The monthly rent is $4,400. The cost to the Partnership
of the equipment and supplement was $185,539.
Page 4 of 33
<PAGE>
The Partnership paid $5,000 of this amount in cash, and the
balance by assuming existing nonrecourse financing of the
equipment.
The original lease expired in August 1996. The equipment is
currently renewed on a month-to-month basis.
3. ICI AMERICAS INC.
Under the terms of a master lease agreement entered into by
ICI Americas Inc. ("ICI") dated December 5, 1990, and an
equipment schedule dated July 10, 1992, ICI has leased computer
equipment manufactured by IBM, Unidata, Digi-board, and TPS
Systems.
The Partnership has acquired from the original lessor the
equipment and all of the rights under the schedule. The cost to
the Partnership of the equipment and schedule was $301,469. The
Partnership paid $41,664 of this amount in cash, and the balance
by assuming existing non-recourse financing of the equipment.
The term of the supplement was 36 months, which commenced on
September 1, 1992. The monthly rent was $7,823.
In November 1994, the equipment was upgraded and ICI and the
Partnership negotiated an early renewal of the schedule. The
term of the schedule was extended to October 1997 at a monthly
rent of $4,889.
In March 1996, the equipment was again upgraded and ICI and
the Partnership negotiated an early renewal of the schedule. The
term of the schedule was extended to February 1999 at a monthly
rent of $4,150.
In June 1996, additional equipment was upgraded and added on
to the original equipment, and was executed as an additional
supplement to the original equipment above. The term of the
additional supplement was 32 months, with a commencement date of
July 1, 1996. The cost to the Partnership of the upgraded and
additional equipment was $88,117, the balance of which was paid
for by assuming nonrecourse financing for the equipment. The
monthly rent for the additional supplement is $3,076.
ICI Americas, Inc., a subsidiary of Imperial Chemical
Industries PLC, is engaged in the manufacture and sale of
pharmaceuticals, plastics, specialty chemicals, advanced
materials, and agricultural products.
4. ADVANTIS
Under the terms of a master lease agreement dated January 4,
1990 entered into by Advantis, having accepted assignment of the
master lease agreement and related equipment supplements from the
original lessee, dated January 4, 1990 and four equipment
supplements dated August 1, 1992 and September 1, 1992, Advantis
has leased computer equipment manufactured by IBM.
The Partnership has acquired from the original lessor the
equipment and all of the rights under the supplements. The term
of each supplement is 36 months. The commencement date for one
supplement was August 1, 1992; the commencement date for the
other supplements was September 1, 1992. The aggregate monthly
rent for the supplements is $3,296. The cost to the Partnership
of the equipment and supplements was $123,616. The Partnership
paid $16,143 of this amount in cash, and the balance by assuming
existing nonrecourse financing of the equipment.
Page 5 of 33
<PAGE>
The original term of the lease expired in July and August
1995. One schedule was renewed for 6 months commencing on
September 1, 1995. The renewal rent is $829. After expiration
of the renewal term, this schedule was leased on a month-to-month
basis for 2 months, and subsequently the equipment was returned
and sold in May 1996. The remaining schedules are leased on a
month-to-month basis with a monthly rent of $2,237.
Advantis is a joint venture between a wholly owned
subsidiary of IBM and a wholly owned subsidiary of Sears, Roebuck
& Co., which provides information network, data processing and
telecommunications services.
5. ALLIED SIGNAL INC.
Under the terms of a master lease agreement entered into by
Allied-Signal Inc. ("Allied") dated May 18, 1988, and an
equipment schedule dated October 7, 1992, Allied has leased 71
printers manufactured by IBM.
The Partnership has acquired from the original lessor the
equipment and all of the rights under the schedule. The cost to
the Partnership of the equipment and schedule was $229,753 which
was paid by the Partnership in cash. The term of the schedule is
48 months, which commenced on October 12, 1992. The monthly rent
is $4,852.
The original lease expired in October 1996. The equipment
is currently renewed on a month-to-month basis.
Allied's primary businesses are in the aerospace, automotive
products, and engineered materials industries.
6. BELLSOUTH TELECOMMUNICATIONS, INC.
(a) Under the terms of a master lease agreement entered
into by BellSouth Services Incorporated, the predecessor of
BellSouth Telecommunications, Inc. ("BellSouth"), dated as of
September 1, 1988 and two equipment schedules dated as of August
30, 1993, BellSouth has leased computer equipment manufactured by
Amdahl. The initial term of the schedules is 24 months, which
commenced on October 1, 1993. The monthly rent is $32,354. The
cost of the equipment and schedules to the Partnership was
$813,161. The Partnership paid $148,750 of this amount in cash
and the balance by assuming nonrecourse financing of the
equipment.
(b) Under the terms of a master lease agreement entered
into by BellSouth Services Incorporated, the predecessor of
BellSouth, dated as of September 1, 1988 and an equipment
schedule dated as of December 13, 1993, BellSouth has leased
computer equipment manufactured by Amdahl. The initial term of
the schedule was 24 months, which commenced on October 1, 1993.
The monthly rent was $8,327. The cost of the equipment and the
schedule to the Partnership was $156,124, which the Partnership
paid in cash.
The term of the schedules in (b) and (c) expired in
September 1995. The Partnership sold certain units of the
equipment in August 1996, and is currently in the process of
remarketing the remaining items of equipment.
BellSouth is in the telephone communications business.
Page 6 of 33
<PAGE>
7. CHARMING SHOPPES OF DELAWARE, INC.
(a) Under the terms of a master lease agreement entered
into by Charming Shoppes of Delaware, Inc. ("Charming Shoppes")
dated August 25, 1992 ("Charming Shoppes Master Lease") and an
equipment schedule dated February 22, 1993, Charming Shoppes has
leased computer equipment manufactured by Amdahl.
The Partnership has acquired from the original lessor the
equipment and all of the rights under the schedule. The term of
the schedule is 36 months, which commenced January 1, 1993. The
monthly rent is $5,599. The cost to the Partnership of the
equipment and schedule was $189,228. The Partnership paid
$20,622 of this amount in cash, and the balance by assuming
nonrecourse financing of the equipment.
The original lease term expired in December 1995, and the
related equipment was returned. Part of the equipment was sold
in August 1996, and the Partnership is in the process of
remarketing the remaining items of equipment.
(b) Under the terms of an equipment schedule, dated August
12, 1993 and amended November 18, 1993, to the Charming Shoppes
Master Lease, Charming Shoppes has leased computer equipment
manufactured by Amdahl. The Partnership has acquired from the
original lessor the equipment and all of the rights under the
schedule. The initial term of the schedule is 36 months which
commenced June 1, 1993. The cost of the equipment and schedule
to the Partnership was $186,031. The monthly rent is $5,599. The
Partnership paid $18,500 of this amount in cash and the balance
by assuming nonrecourse financing of the equipment.
The original lease term expired in May 1996, and the related
equipment was returned. Part of the equipment was sold in
August 1996, and the Partnership is in the process of remarketing
the remaining items of equipment.
(c) Under the terms of an equipment schedule dated October
26, 1993 to the Charming Shoppes Master Lease, Charming Shoppes
has leased computer equipment manufactured by Amdahl. The
Partnership has acquired from the original lessor the equipment
and all of the rights under the schedule. The term of the
schedule is 36 months, which commenced September 1, 1993. The
monthly rent is $5,638. The cost to the Partnership of the
equipment and schedule was $178,629. The Partnership paid
$14,550 of this amount in cash, and the balance by assuming
nonrecourse financing of the equipment.
The original lease term expired in August 1996, and the
related equipment was returned. The Partnership is in the
process of remarketing the equipment.
(d) Under the terms of the Charming Shoppes Master Lease,
dated October 13, 1993, Charming Shoppes has leased computer
equipment manufactured by Netframe Systems, Inc. The Partnership
has acquired from the original lessor the equipment and all of
the rights under the schedule. The cost to the Partnership of
the equipment and the schedule was $183,319. The Partnership
paid $18,500 in cash and the balance by executing a nonrecourse
promissory note. The term of the schedule is 36 months which
commenced December 1, 1993. The monthly rent is $6,935.
Page 7 of 33
<PAGE>
The original lease term expired in November 1996, and the
related equipment was returned. The Partnership is in the
process of remarketing the equipment.
Charming Shoppes is a wholesale distributor of women's
apparel.
8. PEROT SYSTEMS CORPORATION
Under the terms of a master lease agreement entered into by
Perot Systems Corporation ("Perot Systems") dated December 3,
1990, and an equipment schedule dated March 29, 1993, Perot
Systems has leased computer equipment manufactured by Amdahl.
The term of the schedule is 36 months, which commenced March
1, 1993. The monthly rent is $23,693. The cost to the
Partnership of the equipment and schedule was $795,961. The
Partnership paid $82,478 of this amount in cash, and the balance
by assuming nonrecourse financing of the equipment.
Perot Systems assigned its rights and obligations in the
lease to Nationsbanc Services, Inc. ("Nationsbanc"), as of April
1, 1995. The original lease expired in February 1996. After
expiration of the renewal term, this schedule was leased on a
month-to-month basis for 3 months, and subsequently the equipment
was returned. The Partnership sold part of the equipment in
August 1996, and is currently in the process of remarketing the
remaining items of equipment.
9. SONY MUSIC ENTERTAINMENT, INC.
Under the terms of a master lease agreement entered into by
Sony Music Entertainment, Inc. ("Sony"), and equipment schedules
dated June 23, 1993, Sony has leased computer equipment and
software manufactured by IBM.
The Partnership has acquired from the original lessor the
equipment and all of the rights under the schedules. The term of
the schedules is 36 months, which commenced July 1, 1993. The
aggregate monthly rent under the schedules is $41,895. The cost
to the Partnership of the equipment and schedules was $1,512,331.
The Partnership paid $174,500 of this amount in cash, and the
balance by assuming existing nonrecourse financing of the
equipment.
In May 1996, Sony paid off the remaining balance of the
nonrecourse promissory note, and purchased the equipment.
Sony, a subsidiary of Sony Corporation, is in the business
of producing and selling recorded music.
10. MOBIL ADMINISTRATIVE SERVICES COMPANY, INC.
Under the terms of a master lease agreement dated as of
March 9, 1990 and an equipment schedule dated as of June 25,
1993, Mobil Administrative Services Company, Inc. ("Mobil"),
Mobil has leased computer equipment manufactured by IBM. The
initial term of the schedule is 30 months which commenced July 1,
1993. The cost of the equipment and schedule to the Partnership
was $490,081. The Partnership paid $103,000 of this amount in
cash and the balance by assuming nonrecourse financing of the
equipment. The monthly rent is $16,076.
Page 8 of 33
<PAGE>
The original lease expired in January 1996. After
expiration of the renewal term, this schedule was leased on a
month-to-month basis for 5 months, and subsequently the equipment
was returned. The Partnership has sold certain units of the
equipment in 1996, and is currently in the process of remarketing
the remaining items of equipment.
11. CHRYSLER CORPORATION
Under the terms of a master agreement dated March 21, 1989,
and 2 equipment schedules dated November 15, 1993, Chrysler
Corporation ("Chrysler") has leased computer equipment
manufactured by IBM. The initial terms of the schedules are 36
months. One schedule commenced as of April 1, 1994 and the other
commenced August 12, 1994. The aggregate monthly rent is
$15,994. The cost of the equipment and schedules to the
Partnership was $546,634. The Partnership paid $80,524 of this
amount in cash and the balance by assuming nonrecourse financing
of the equipment.
Chrysler Corporation is one of the world's largest
manufacturers of automobiles, vans, and trucks.
12. TOTAL SYSTEM SERVICES, INC.
Under the terms of a master lease agreement dated July 29,
1992 and an equipment schedule dated as of April 4, 1994, Total
System Services, Inc. ("Total System") has leased computer
equipment manufactured by Kodak. The initial term is 36 months
which commenced February 1, 1994. The cost of the equipment and
schedule to the Partnership was $645,555. The Partnership paid
$88,242 of this amount in cash and the balance by assuming
nonrecourse financing of the equipment. The monthly rent is
$18,013.
In April 1996, Total System paid off the remaining balance
of the nonrecourse promissory note, and purchased the
equipment.
Total System is in the credit card processing business.
13. FINGERHUT CORPORATION
Under the terms of a master lease agreement dated July 11,
1990 and an equipment schedule dated as of February 1, 1994,
Fingerhut Corporation ("Fingerhut") has leased computer equipment
manufactured by Hitachi Data Systems Corporation. The initial
term of the schedule is 36 months which commenced February 1,
1994. The monthly rent is $27,945. The cost of the equipment
and the schedule to the Partnership was $1,115,173. The
Partnership paid $236,140 of this amount in cash and the balance
by assuming nonrecourse financing of the equipment.
Fingerhut is a direct mail merchandiser of home furnishings,
apparel, recreation items, small appliances and automotive
accessories.
Page 9 of 33
<PAGE>
14. HALLIBURTON COMPANY
(a) Under the terms of a master lease agreement dated as of
October 16, 1991 and an equipment schedule dated January 24,
1994, Halliburton Company ("Halliburton") has leased 60 printers
manufactured by IBM. The initial term of the schedule is 24
months which commenced February 1, 1994. The monthly rent is
$7,020. The cost of the equipment and the schedule to the
Partnership was $257,175, which the Partnership paid in cash.
(b) Under the terms of a master lease agreement dated as of
October 16, 1991 and an equipment schedule dated March 25, 1994,
Halliburton has leased 9 printers manufactured by IBM. The
initial term of the schedule is 24 months which commenced April
1, 1994. The monthly rent is $693. The cost of the equipment
and the schedule to the Partnership was $24,536, which the
Partnership paid in cash.
The term of the schedule in (a) expired in January 1996. At
the expiration of the original term, Halliburton purchased the 60
IBM printers in February 1996. The term of the schedule in (b)
expired in March 1996. At the expiration of the original term,
Halliburton returned the printers. The printers were sold in
April 1996.
Halliburton specializes in providing oil field services:
engineering and construction of refineries, petrochemical and
generating plants, and pulp and paper mills.
15. KAWASAKI MOTORS, U.S.A.
Under the terms of a master lease agreement dated November
30, 1987, and an equipment schedule dated August 26, 1993,
Kawasaki Motors, U.S.A. ("Kawasaki") has leased computer
equipment manufactured by IBM. The Partnership has acquired from
the original lessor the equipment and all of the rights under the
schedule. Cost to the Partnership of the equipment and the
schedule was $24,858. The Partnership paid $2,600 of this amount
in cash and the balance by assuming existing nonrecourse
financing of the equipment. The term of the schedule is 36
months, which commenced October 1, 1993. The monthly rent is
$1,081.
The original lease expired in September 1996. The lease was
renewed in December 1996 for 24 months, at a monthly rent of
$800.
Kawasaki is engaged primarily in the import and distribution
of motorcycles, jet skis, engines and all-terrain vehicles
supplied by Kawasaki Heavy Industries, Ltd. of Japan ("KHI"),
Kawasaki's parent, and by Kawasaki Motors Manufacturing Corp.,
U.S.A., a wholly owned manufacturing and assembling subsidiary of
KHI.
Page 10 of 33
<PAGE>
<TABLE>
The following tabulation sets forth the lessee, the equity
investment of the Partnership, the debt incurred at the date of
acquisition, the lease term at the acquisition of the Equipment
and lease term remaining at December 31, 1996:
<CAPTION>
Lease Term Lease Term
At Equipment Remaining
Acquisition at 12/31/96
Lessee Equity Debt (in months) (in months)
- ------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Thrift Drug $ 24,258 $ 710,173 46 (5)
Thrift Drug 105,000 9,384,339 61 7
Thrift Drug 91,891 -- 23 (6)
Thrift Drug 42,825 193,155 36 (7)
Thrift Drug 21,822 -- 35 (7)
Aetna Life 116,000 -- 36 (1)
Mount Sinai 5,000 180,539 48 (4)
ICI Americas 41,664 259,805 36 (8)
Advantis 16,143 107,475 35-36 (9)
Allied-Signal 229,753 -- 45 (4)
United Telephone 1,915 43,950 36 (1)
BellSouth 34,951 390,814 45 (1)
BellSouth 148,750 664,441 22 (3)
BellSouth 156,154 -- 18 (3)
Charming Shoppes 20,622 168,606 33 (3)
Charming Shoppes 18,500 167,531 33 (3)
Charming Shoppes 14,550 164,079 32 (2)
Charming Shoppes 18,500 164,819 26 (2)
Perot(Nationsbanc) 82,478 713,483 33 (3)
Sony 174,500 1,337,831 35 (10)
Mobil 103,000 387,081 30 (3)
Chrysler Corp. 43,121 220,100 30 3
Chrysler Corp. 37,403 246,010 34 6
Total System 88,242 557,313 36 (11)
Fingerhut Corp. 236,138 879,035 36 1
Halliburton Co. 257,175 -- 24 (1)
Halliburton Co. 24,536 -- 24 (1)
Kawasaki 2,600 22,258 23 (12)
--------- ---------
TOTAL: $2,157,131 $16,962,807
========= ==========
<FN>
</TABLE>
(1) Lease expired and equipment sold.
(2) Lease expired, the Partnership is in the process of
remarketing the equipment.
(3) Lease expired, part of the equipment has been sold, the
Partnership is in the process of remarketing the rest of
the equipment.
(4) Renewed on a month-to-month basis at the original rent.
(5) Original lease and schedules terminated pursuant to a
master lease agreement between the Partnership and Thrift
Drug dated May 31, 1995. Renewal of original equipment in
June 1995 for 26 months.
(6) Renewed at a monthly rental of $2,100 for a 24-month term
ending in October 1996. After the expiration of the
renewal, the related equipment was sold in December 1996.
Page 11 of 33
<PAGE>
(7) Renewed with new equipment at a monthly rental of $4,387
for a 36-month term ending in October 1998. The original
equipment was sold in 1996.
(8) Equipment on lease upgraded; initial term extended to
October 1997. Equipment on lease upgraded again in March
1996 and June 1996, with additional add-on schedule. Lease
term extended to February 1999.
(9) Lease expired in July and August 1995; part of the
equipment was renewed for 6 months at monthly rent of $829,
and was returned and sold in May 1996. The remaining
equipment is leased on a month-to-month basis at a monthly
rent of $2,237.
(10) Lessee paid off the remaining balance of the nonrecourse
promissory note, and purchased the equipment in May 1996.
(11) Lessee paid off the remaining balance of the nonrecourse
promissory note, and purchased the equipment in April 1996.
(12) Lease renewed in December 1996 for 24 months, at a monthly
rent of $800.
COMPETITION. The equipment leasing industry is highly
competitive and the Partnership competes with other leasing
companies, with equipment manufacturers and distributors, and
with other entities similar to the Partnership, most of which
have greater financial resources than the Partnership and more
experience in the equipment leasing business than the General
Partners. Other leasing companies and especially equipment
manufacturers and distributors may be in a position to offer
equipment for lease upon financial terms more favorable than
those which the Partnership can offer and may also be in a
position to offer trade-in or exchange privileges on a wide range
of equipment, a pass-on of any investment tax credit,
comprehensive maintenance contracts, and other services and
benefits to lessees which the Partnership does not offer.
MAJOR CUSTOMERS Approximately 75% of the Partnership's
lease income in the year ended December 31, 1996 was from five
customers. For those direct financing leases in which the
Partnership has a net investment at December 31, 1996, 91% were
with one customer. See note 4 in "Notes to Financial Statements"
in this report.
EMPLOYEES. The Partnership does not have any employees.
ITEM 2. DESCRIPTION OF PROPERTY
See "Item 1--Description of Business" in this report.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Page 12 of 33
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There has not been, nor is there expected to be, a public
market for the Units. As of December 31, 1996 there were
approximately 226 holders of Units.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
The Partnership commenced the offering of Limited
Partnership Units and began operations on March 27, 1992. As of
December 31, 1993, the date on which the offering of Units
terminated, the Partnership had sold $2,514,768 in Units. At
December 31, 1996, the Partnership had acquired $19,119,937 worth
of equipment, excluding capitalized equipment acquisition costs,
with an equity investment of $2,157,101 and nonrecourse
borrowings of $16,962,807.
OPERATIONS
Total revenues decreased to $1,284,165 for the fiscal year
ended December 31, 1996 ("fiscal 1996") from $2,794,512 for the
fiscal year ended December 31, 1995 ("fiscal 1995"). Total
revenues consist of lease rental income and interest earned on
the proceeds of Units sold and loss on sale of equipment under
lease. This decrease in total revenues resulted from a decrease
in rental income due to the sale of leased equipment and the
increased loss on sale of equipment under lease.
Operating expenses decreased to $1,877,402 for fiscal 1996
from $2,624,429 for fiscal 1995. Operating expenses consist of
interest on nonrecourse financing of equipment purchased,
depreciation of equipment under operating leases, write down of
the carrying value of equipment in operating leases, amortization
of organization expenses, administrative expenses, and payments
to a related party for administrative cost reimbursements. The
decrease in operating expenses from fiscal 1995 to fiscal 1996
resulted primarily from a decrease in interest expense due to the
payment of long-term debt, and a decrease in depreciation expense
due to lease expiration partially offset by a write down of the
carrying value of equipment on operating leases of $447,000.
LIQUIDITY AND CAPITAL RESOURCES
Cash of the Partnership at December 31, 1996 include
undistributed cash available from operations during the period
March 27, 1992 to December 31, 1996.
The Partnership has a cash management program which provides
for the temporary investment of offering proceeds in various
short-term money market instruments pending their investment in
Equipment.
The Partnership generally finances the purchase of Equipment
by the use of nonrecourse loans in an amount in excess of 50% of
the purchase price thereof. The indebtedness incurred by the
Partnership related to the acquisition of Equipment is generally
fully amortized by the monthly rent payments due to the
Partnership under related leases.
Page 13 of 33
<PAGE>
The Partnership maintains a working capital and contingency
reserve in an amount equal to 1% of the gross proceeds of the
offering of Units. Such amount, together with any amount
reserved from operations, will be available to meet working
capital requirements and to provide for contingencies.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Partnership as of December
31, 1996, and for the fiscal years ended December 31, 1996 and
December 31, 1995 and the notes thereto are set forth elsewhere
herein.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
The Partnership has no directors or executive officers. The
General Partners of the Partnership are Gerald A. Horwitz and TL
General VIII Corp., an Illinois corporation ("TL General"), the
sole Director of which is Mr. Horwitz. Mr. Horwitz serves as
Director of TL General until his successor is elected.
The executive officers of TL General are Mr. Horwitz and
Jerry Schwartz, who were elected to serve until their successors
are elected and qualified.
GERALD A HORWITZ. Mr. Horwitz, age 61, is the President
and sole Director of TL General. He is also the Chairman of the
Board, sole Director, President, Treasurer and sole voting
shareholder of Raffaello, Inc., the sole shareholder of TL
General, as well as the sole Director and Treasurer of Triumphe
Leasing Group, Inc. and Horwitz & Associates, Inc. (formerly
known as Horwitz, Schakner & Associates, Inc. and G.A. Horwitz &
Co. Inc.), a securities broker-dealer and investment adviser, and
President and sole Director of TL General Corp., the corporate
General Partner of Triumphe Leasing Limited Partnership. Prior
to organizing Horwitz & Associates, Inc. in 1970, Mr. Horwitz
served as an officer of Thomson, McKinnon and Auchincloss and
prior to that he served as an officer of Blair and Company, both
of which were New York Stock Exchange member firms. Mr. Horwitz
attended Roosevelt University in Chicago, where he earned a
Bachelor of Science Degree. He also attended the University of
Wisconsin as an undergraduate, and the University of Chicago as a
post-graduate student and served part-time as an instructor at
Northwestern University.
Mr. Horwitz has served as a general partner of Res-Com,
Ltd., Unilease Associates, Quest, Valley Associates, Leasing
Income Associates, Equipment Leasing Partners and Triumphe
Leasing Limited Partnership; and as an officer and director of
the sole general partners of Triumphe Leasing VIII L.P., Concorde
Leasing Limited Partnership and Invalease, Ltd. Each of these
entities are Illinois limited partnerships engaged in the
equipment leasing business. Mr. Horwitz is also the sole trustee
of Tax Advantaged Income Trust, a grantor trust formed in 1985
under Illinois law to purchase and lease equipment.
Page 14 of 33
<PAGE>
JERRY SCHWARTZ. Mr. Schwartz, age 51, has served in various
executive capacities for affiliates of Raffaello, Inc. since
April 1987. He is Vice President, Secretary and Treasurer of TL
General and TL General Corp. From 1982 to 1987, he served as a
principal of J.L. Schwartz & Co., Inc., a public accounting firm.
Prior thereto, Mr. Schwartz served as an accounting and
operational manager for a certified public accounting firm.
There is no family relationship among the foregoing
officers.
ITEM 10. EXECUTIVE COMPENSATION
As stated in Item 9, the Partnership has no executive
officers or directors. The compensation to the General Partners
is set forth in Item 12 of this report.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
As of December 31, 1996, no person owned of record or was
known by the Partnership to own beneficially more than 5% of the
Partnership's Units then outstanding.
The Partnership has no executive officers. As of December
31, 1996, neither Gerald A. Horwitz, TL General VIII Corp. nor
Jerry Schwartz owned any Units.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FEES TO GENERAL PARTNERS AND AFFILIATES. The General
Partners and their affiliates will receive substantial fees,
compensation and reimbursement of expenses from the Partnership.
For its services as placement agent of the Partnership,
Horwitz & Associates, Inc. ("H&A"), an affiliate of Messrs.
Horwitz and Schwartz, receives a sales commission of 8% of the
gross proceeds from the offering of Units. Such fees may be
reallowed to other brokers by H&A.
For its services in actively managing the Partnership,
including, but not limited to, bookkeeping, preparation of SEC
reports and filings, preparation of reports to investors, leasing
and re-leasing Equipment, arranging for necessary maintenance and
repairs of Equipment, collecting revenues, paying operating
expenses, determining that the Equipment is used in accordance
with all operative contractual arrangements and providing
clerical and bookkeeping services necessary to the operation of
the Partnership, the Partnership will pay the General Partners
and/or their affiliates an Equipment Management Fee in an amount
equal to (i) 2% of gross rental payments (exclusive of taxes and
other reimbursements) payable to the Partnership with respect to
Full Payout Leases; or (ii) 3% of gross rental payments
(exclusive of taxes and other reimbursements) payable to the
Partnership with respect to Operating Leases.
For its services in locating and acquiring equipment, and
arranging for financing and locating lessees, the Partnership
will pay to the General Partners and their affiliates an
Equipment Acquisition Fee in an amount equal to 5% of the
Partnership's equity investment in such equipment; provided,
however, that the Equipment Acquisition Fee shall not be paid if,
and to the extent that, such payment shall cause the amount of
gross proceeds of the offering invested in Equipment (including
costs of investments other than Equipment) to be less than 85% of
the gross proceeds of the offering.
Page 15 of 33
<PAGE>
For its services in connection with the sale of any
Equipment, the Partnership may pay to the General Partners and
their affiliates a Subordinated Resale Fee in an amount equal to
one-half of a Competitive Equipment Sale Commission, not to
exceed 3% of the contract sales price of such Equipment, provided
that any Subordinated Resale Fee earned shall not be paid to the
General Partners and their affiliates prior to "Payout." Payout
is defined as the time when the aggregate amount of all
distributions to the Investor Limited Partners of Distributable
Cash equals the sum of: (i) the aggregate amount of the Investor
Limited Partners' Capital Contributions, and (ii) a cumulative,
non-compounded 10% annual return on the aggregate amount of each
Investor Limited Partner's unreturned Capital Contributions
(calculated from the date such Investor Limited Partner was
admitted to the Partnership). For purposes of this definition,
Capital Contributions shall be deemed to have been returned only
to the extent that distributions of Distributable Cash to the
Investor Limited Partners exceed the amount required to satisfy
such 10% annual return. If the General Partners participate with
an independent broker on resale, such subordination shall apply
only to the General Partners' Resale Fee. In no event shall
total commissions paid to all persons exceed that which is
reasonable, customary and competitive in light of the size, type
and location of the equipment.
During the fiscal year ended December 31, 1996, the
Partnership paid no sales commissions to H&A, an affiliate of the
General Partners. Management fees to the General Partners for
1996 amounted to $123,317. The General Partners paid no
acquisition fees during fiscal 1996.
ALLOCATIONS AND DISTRIBUTIONS OF THE PARTNERSHIP. In
accordance with the Partnership Agreement, the General Partners
received distributions of $8,377 and were allocated net loss of
$5,932 for fiscal 1996.
REIMBURSEMENTS. The General Partners and their Affiliates
shall be reimbursed for any expenses they incur in organizing the
Partnership and offering the Units, up to a maximum of $1,400
multiplied by the number of Units actually sold.
In addition, reimbursements in amounts not presently
determinable will also be made from time to time to the General
Partners and their Affiliates for reasonable out-of-pocket
expenses incurred in connection with the management,
dministration and operation of the Partnership and the
acquisition of Equipment (e.g., photocopying, postage, and filing
fees). The General Partners presently estimate that such
reimbursements will not exceed $25,000 per year.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits, as listed in the Exhibit Index set forth
on page 18, are submitted as a separate section of this report.
(b) No current reports on Form 8-K were filed during the
quarter ended December 31, 1996.
Page 16 of 33
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the Registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
TRIUMPHE LEASING VIII L.P.
By: TL GENERAL VIII CORP.
Its: General Partner
Date: March 4, 1997 By: /s/ Gerald A. Horwitz
-----------------------------
Gerald A. Horwitz, President
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
in the capacities and on the dates indicated.
SIGNATURES TITLES DATE
/s/ Gerald A. Horwitz Sole Director and March 4, 1997
- --------------------- President of the
Gerald A. Horwitz Corporate General
Partner and as a
General Partner
(Principal Executive
Officer)
/s/ Jerry Schwartz Vice-President, March 4, 1997
- --------------------- Secretary and
Jerry Schwartz Treasurer of the
corporate General
Partner (Principal
Financial and
Accounting Officer)
Page 17 of 33
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No. 1*
1. Copy of the Partnership's Certificate of Limited
Partnership filed with the Illinois Secretary of
State on December 10, 1991 (Incorporated by
reference to Exhibit 4.4 to Registration Statement
No. 33-44929).
2.1 Copy of the Partnership's original Agreement of
Limited Partnership, dated December 10, 1991
(Incorporated by reference to Exhibit 4.3 to
Registration Statement No. 33-44929).
2.2 Form of Amended and Restated Agreement of Limited
Partnership (Incorporated by reference to Exhibit
A to the Partnership's prospectus dated March 27,
1992 as part of Registration Statement No.
33-44929).
27. Financial data schedule
[FN]
* Included only in manually signed original
Page 18 of 33
<PAGE>
TRIUMPHE LEASING VIII L.P.
Financial Statements
Years Ended December 31, 1996 and 1995
Page 19 of 33
<PAGE>
TRIUMPHE LEASING VIII L.P.
Contents
Report of Independent Certified Public Accountants 3
Financial Statements
Balance Sheet 5-6
Statements of Operations 7
Statements of Partners' Equity 8
Statements of Cash Flows 9
Summary of Accounting Policies 10-12
Notes to Financial Statements 13-15
Page 20 of 33
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Triumphe Leasing VIII L.P.
Northbrook, Illinois
We have audited the accompanying balance sheet of Triumphe
Leasing VIII L.P. as of December 31, 1996 and the related
statements of operations, partners' equity and cash flows for the
years ended December 31, 1996 and 1995. These financial
statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these
financial statements 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 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 financial statements referred to above
present fairly, in all material respects, the financial position
of Triumphe Leasing VIII L.P. at December 31, 1996, and the
results of its operations and its cash flows for the years ended
December 31, 1996 and 1995, in conformity with generally accepted
accounting principles.
/s/ BDO Seidman, LLP
Chicago, Illinois
January 17 , 1997
Page 21 of 33
<PAGE>
TRIUMPHE LEASING VIII L.P.
FINANCIAL STATEMENTS
Page 22 of 33
<PAGE>
<TABLE>
TRIUMPHE LEASING VIII L.P.
BALANCE SHEET
<CAPTION>
December 31, 1996
-----------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 78,906
Accounts receivable 44,017
Net investment in direct financing
leases (Notes 1 and 4) 1,670,064
---------
TOTAL CURRENT ASSETS 1,792,987
Computer Equipment on Operating Leases,
less accumulated depreciation
of $ 2,208,951 (Note 1) 543,276
OTHER ASSETS
Net investment in direct financing leases,
less current portion
(Notes 1 and 4) 95,918
Deferred organization costs,
less accumulated amortization of $24,270 730
-----
Total Other Assets 96,648
------
$ 2,432,911
=========
Page 23 of 33
<PAGE>
</TABLE>
<TABLE>
TRIUMPHE LEASING VIII L.P.
BALANCE SHEET
<CAPTION>
December 31, 1996
-----------------
<S> <C>
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Accounts payable (Note 2) $ 439,569
Current maturities of long-term debt
(Note 1) 1,646,827
Other liabilities 27,150
---------
TOTAL CURRENT LIABILITIES 2,113,546
Long-Term Debt, less current maturities (Note 1) 138,414
---------
TOTAL LIABILITIES 2,251,960
PARTNERS' EQUITY
General partners 2,355
Limited partners 178,596
---------
Total Partners' Equity 180,961
--------
$2,432,911
=========
<FN>
See accompanying summary of accounting policies and notes to
financial statements.
</TABLE>
Page 24 of 33
<PAGE>
<TABLE>
TRIUMPHE LEASING VIII L.P.
STATEMENTS OF OPERATIONS
<CAPTION>
Year Ended Year Ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
REVENUES
Lease income (Note 4) $1,635,732 $2,815,858
Loss on sale of equipment
under lease (352,832) (21,346)
Interest 1,265 -
---------- ----------
Total revenues 1,284,165 2,794,512
OPERATING EXPENSES
Interest 253,804 552,861
Depreciation and amortization
(Note 1) 1,437,783 1,858,308
Administrative (Note 2) 185,815 213,260
Total operating expenses 1,877,402 2,624,429
---------- ----------
NET (LOSS) INCOME $ (593,237) $ 170,083
========== ==========
NET (LOSS) INCOME ALLOCATED TO
General partners $ (5,932) $ 1,700
Limited partners (587,305) 168,383
---------- ----------
$ (593,237) $ 170,083
WEIGHTED AVERAGE UNITS OUTSTANDING
DURING THE YEAR:
General partners 1.2894 1.2894
Limited partners 127.6553 127.6553
(LOSS) INCOME PER WEIGHTED AVERAGE UNIT:
General partners $ (4,601) $ 1,319
Limited partners $ (4,601) $ 1,319
<FN>
See accompanying summary of accounting policies and notes to
financial statements.
</TABLE>
Page 25 of 33
<PAGE>
<TABLE>
TRIUMPHE LEASING VIII L.P.
STATEMENTS OF PARTNERS' EQUITY
<CAPTION>
GENERAL LIMITED
TOTAL PARTNERS PARTNERS
-------- --------- ---------
<S> <C> <C> <C>
PARTNERS' EQUITY,
at January 1, 1995 $1,751,128 $ 18,035 $1,733,093
DISTRIBUTIONS
($2,400 per unit) (309,321) (3,071) (306,250)
NET INCOME 170,083 1,700 168,383
---------- ------- ----------
PARTNERS' EQUITY,
at December 31, 1995 1,611,890 16,664 1,595,226
DISTRITUTIONS
($6,500 per unit) (837,702) (8,377) (829,325)
NET LOSS (593,237) (5,932) (587,305)
---------- ------- ----------
PARTNERS' EQUITY,
at December 31, 1996 $ 180,951 2,355 178,596
======== ====== ========
<FN>
See accompanying summary of accounting policies and notes to
financial statements.
</TABLE>
Page 26 of 33
<PAGE>
<TABLE>
TRIUMPHE LEASING VIII L.P.
STATEMENTS OF CASH FLOWS
<CAPTION>
Year ended December 31, 1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $ (593,237) $ 170,083
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities
Depreciation and amortization 1,437,783 1,858,308
Loss on sale of equipment
under lease 352,832 21,346
Amortization of unearned
income (258,826) (467,446)
Changes in assets and liabilities
Increase in accounts receivable (44,017) -
Increase in accounts payable 87,449 90,059
(Decrease) increase in other
liabilities (34,182) 42,466
--------- ----------
Net cash provided by
operating activities 947,802 1,714,816
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of computer equipment
on operating leases (108,393) (201,980)
Principal payments received
under direct financing leases 2,717,687 3,210,673
Proceeds from sale of equipment
under lease 793,660 71,953
--------- ----------
Net cash provided by investing
activities 3,402,954 3,080,646
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on nonrecourse
debt (3,714,875) (4,674,948)
Proceeds from nonrecourse debt 221,312 201,130
Distributions to partners (837,702) (309,321)
----------- -----------
Net cash used in financing activities (4,331,265) (4,783,139)
NET INCREASE IN CASH 19,491 12,323
CASH, at beginning of year 59,415 47,092
----------- -----------
CASH, at end of year $ 78,906 $ 59,415
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year
for interest $ 253,804 $552,861
<FN>
See accompanying summary of accounting policies and notes to
financial statements.
</TABLE>
Page 27 of 33
<PAGE>
TRIUMPHE LEASING VIII L.P.
SUMMARY OF ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
Triumphe Leasing VIII L.P. (the Partnership"), located in
Northbrook, Illinois, was formed on December 10, 1991 under the
Revised Limited Partnership Act of the State of Illinois. The
Partnership acquires, owns, leases, maintains, manages and sells
equipment. At December 31, 1996 and 1995, 127.66 Limited
Partnership Units were outstanding.
The Partnership maintains its records on the accrual method of
accounting for financial reporting and income tax purposes. The
statements do not give effect to any assets or liabilities,
including income taxes, that the partners may have outside of
their interest in the Partnership.
The Partnership purchases and leases to third parties various
items of equipment. The equipment purchased by the Partnership
to date and related lease opportunities are brought to the
attention of the Partnership by independent leasing brokers, who
either charge the Partnership a fee for their services or
purchase the equipment and secure the lessee and then resell the
package to the Partnership. At the conclusions of a lease, the
leased equipment is either (i) re-leased to the same lessee, (ii)
leased to a new lessee or (iii) sold. Generally, the Partnership
compensates the independent brokers for re-leasing or disposing
of the equipment purchased to date by allowing them to
participate in the proceeds of the renewal leases or sales.
LEASE ACCOUNTING
The Partnership records leases in conformity with generally
accepted accounting principles and prevalent accounting practice
within the leasing industry. All existing leases are in the form
of direct financing leases or operating leases.
Direct Financing leases are defined as those leases which
transfer substantially all of the benefits and risks of ownership
of the equipment to the lessee. The Partnership records its net
investment at the inception of the lease as the aggregate of the
gross investment and any initial direct costs less unearned
income, where the gross investment is the aggregate of the
minimum lease payments and the estimated unguaranteed residual
value and unearned income is the difference between the gross
investment and the cost of the leased equipment. Unearned income
net of initial direct costs is recognized over the lease term so
as to produce a constant periodic rate of return on the net
investment in the lease.
Page 28 of 33
<PAGE>
Operating leases are defined as those which do not transfer
substantially all of the benefits and risks of ownership of the
equipment to the lessee. The leased property is included in
computer equipment on operating leases and depreciated following
the Partnership's depreciation policy. Rent is reported as
income over the lease term as it becomes receivable according to
the provisions of the lease.
The Partnership evaluates the recoverability of its
portfolio of assets and leases quarterly, or more frequently
whenever events and circumstances warrant revised estimates, and
considers whether the carrying value of leases should be
completely or partially written off. In 1995, the Partnership
adopted Statement of Financial Accounting Standards No. 121,
"Accounting for Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." During 1996, the
Partnership recorded charges of $447,000 (included in
depreciation and amortization) to write down certain impaired
assets to their fair value. These assets included data
processing and telecommunications equipment not on lease at
December 31, 1996. Fair value was based upon estimates of
discounted future cash flows.
The Partnership's leasing operations consist of the leasing
of various types of data processing equipment and
telecommunications equipment. A substantial portion of the
Partnership's leases are classified as direct financing leases
which expire over the next three years. Other data processing
equipment is leased under operating leases that expire over the
next two years.
COMPUTER EQUIPMENT ON OPERATING LEASES; DEPRECIATION
Computer equipment on operating leases is stated at cost.
Depreciation is computed using the double declining balance and
straight-line methods over the estimated useful lives of the
assets.
DEFERRED ORGANIZATION COSTS AND AMORTIZATION
Deferred organization costs are recorded at cost. Amortization is
computed using the straight-line method over 60 months.
INCOME TAXES
The Partnership is not a tax-paying entity for federal income tax
purposes and, accordingly, no income tax expense has been
provided for in the financial statements. Income or loss from
the Partnership is required to be reported by the partners on
their respective income tax returns.
The Partnership is responsible for State of Illinois replacement
tax on income it generates.
Page 29 of 33
<PAGE>
All of the Partnership's leases are treated as operating leases
for income tax purposes (Note 3).
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the statements and reported amounts of
revenue and expenses during the reporting period. Actual results
could differ from those estimates.
The Partnership has estimated the residual values of equipment
under direct financing and operating leases. These estimates
have been developed based upon published market values of similar
equipment and the general partners' prior experience. Management
does not currently expect to incur any loss on the disposition or
lease renewal of equipment currently under lease. Given the
volatility of market for the resale of equipment, it is
reasonably possible that the Partnership's estimates for residual
value may change in the near term.
Page 30 of 33
<PAGE>
TRIUMPHE LEASING VIII L.P.
NOTES TO FINANCIAL STATEMENTS
1. LEASES AND COMPUTER EQUIPMENT FINANCING
Estimated future minimum lease payments under both direct
financing and operating leases, including estimated residual
values of leased property (unguaranteed) of $202,972, net of
unearned income under direct financing leases, and the related
debt maturities under financing leases and operating leases at
December 31, 1996 are as follows:
<TABLE>
Estimated future minimum lease payments receivable
<CAPTION>
Direct
financing Operating Debt
leases leases Total Maturities
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1997 $ 1,734,915 $ 246,450 $ 1,981,365 $ 1,646,827
1998 86,709 52,675 139,384 124,126
1999 21,424 - 21,424 14,288
----------- ---------- ---------- ----------
1,843,048 299,125 2,142,173 1,785,241
----------
Less Unearned
Income 77,066 - 77,066
----------- ---------- ----------
$ 1,765,982 $ 299,125 $ 2,065,107
========== ========= ==========
</TABLE>
The various debt obligations are payable monthly to financial
institutions and include interest at rates ranging from 5.75% to
9.5%. The Partnership estimates that the fair value of its
fixed-rate borrowings approximates the carrying value at
December 31, 1996 given the Partnership's current borrowing
capabilities. The debt obligations are collateralized by the
related equipment and future rental payments under the respective
leases. The indebtedness is without recourse against the
Partnership.
2. RELATED PARTY TRANSACTIONS
The Partnership pays companies related to the general partners
through common ownership an equipment acquisition fee, in the
amount of 5% of the Partnership's equity investment in such
equipment, for locating and acquiring equipment, arranging lease
financing and locating lessees. Equipment acquisition fees are
not paid unless at least 85% of the gross limited partner
contributions have been invested in equipment. There were no
fees in 1996 or 1995.
Page 31 of 33
<PAGE>
For their services in actively managing the Partnership, the
Partnership is charged by the general partners an equipment
management fee in an amount equal to 3% of gross rental payments
(exclusive of taxes and other reimbursements) payable to the
Partnership. These expenses amounted to $123,317 and $166,557 in
1996 and 1995, respectively.
At December 31, 1996, $419,979 of equipment management fees are
unpaid and included in accounts payable.
3. RECONCILIATION OF REPORTED NET (LOSS) INCOME TO TAX NET
(LOSS) INCOME
<TABLE>
<CAPTION>
Year ended December 31, 1996 1995
- ----------------------- ---------- -----------
<S> <C> <C>
Reported net (loss) income $ (593,237) $ 170,083
Add tax leasing revenues in
excess of reported
leasing revenues 2,458,861 2,743,228
Less tax loss in excess of
loss on sale of equipment
under lease (43,627) (126,732)
Less tax depreciation in excess
of reported depreciation (847,741) (1,995,057)
---------- -----------
Tax Net Income $ 974,256 $ 791,522
---------- -----------
</TABLE>
The Partnership's tax basis in its net assets differs from the
amount at which its net assets are reported for financial
purposes, principally due to the accounting for direct financing
leases. At December 31, 1996, the Partnership's basis for
financial reporting purposes of its net assets was greater than
its basis for tax reporting purposes by $255,769. As a result,
aggregate future income for income tax reporting purposes will
be greater than for financial reporting purposes.
Page 32 of 33
<PAGE>
4. MAJOR CUSTOMERS
Approximately 75% and 67% of the Partnership's lease income in
the years ended December 31, 1996 and 1995, respectively, was
from five customers. The percentages are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Customer A 21% 12%
Customer B 18 15
Customer C 14 -
Customer D 12 -
Customer E 10 18
Customer F - 12
Customer G - 10
---- ----
Total 75 % 67 %
==== ====
<FN>
For those direct financing leases in which the Partnership
has a net investment at December 31, 1996 and 1995, 91% was with
one customer, which is a chain of retail drug stores.
</TABLE>
Page 33 of 33
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<TAB.E>
<S> <C>
<PERIOD-TYPE) 12-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<CASH> 78,906
<SECURITIES> 0
<RECEIVABLES> 44,017
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,792,987
<PP&E> 2,752,227
<DEPRECIATION> 2,208,951
<TOTAL-ASSETS> 2,432,911
<CURRENT-LIABILITIES> 2,113,546
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,432,911
<SALES> 0
<TOTAL-REVENUES> 1,284,165
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 253,804
<INCOME-PRETAX> (593,237)
<INCOME-TAX> 0
<INCOME-CONTINUING> (593,237)
<DISCONTINUED> 0
<EXTRADORINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
