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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 0-25278
-------
PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
- - --------------------------------------------------------------------------------
Registrant
California 68-0293258
- - ---------------------------- ----------------------------------
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 ____
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Part I. Financial Information
-----------------------------
Item 1. Financial Statements
PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
March 31, December 31,
1996 1995
---- ----
ASSETS
Cash and cash equivalents $ 3,803 $ 2,757
Accounts receivable (net of allowance for
losses on accounts receivable of $103 at
March 31, 1996 and December 31, 1995) 143 217
Notes receivable (net of allowance for losses
on notes receivable of $144 at March 31,
1996 and December 31, 1995) 4,555 4,963
Equipment on operating leases and held for
lease (net of accumulated depreciation of
$515 and $373 at March 31, 1996 and December
31, 1995, respectively) 1,033 341
Net investment in financing leases (net of
allowance for early terminations of $143
and $50 at March 31, 1996 and December 31,
1995, respectively) 24,634 24,643
Capitalized acquisition fees (net of
accumulated amortization of $544 and
$404 at March 31, 1996 and December 31,
1995, respectively) 1,215 1,200
Other assets 1,251 1,859
---------- ----------
Total Assets $ 36,634 $ 35,980
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 1,153 $ 1,169
Notes payable 14,077 14,494
---------- ----------
Total Liabilities 15,230 15,663
---------- ----------
Partners' Capital
General Partner 12 3
Limited Partners, 2,500,000 units
authorized, 1,283,311 and 1,199,457
units issued and 1,275,256 and 1,197,927
units outstanding at March 31, 1996 and
December 31, 1995, respectively 20,957 19,316
Unrealized gain on marketable securities
available-for-sale 435 998
---------- ----------
Total Partners' Capital 21,404 20,317
---------- ----------
Total Liabilities and Partners' Capital $ 36,634 $ 35,980
========== ==========
The accompanying notes are an integral part of these statements.
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PHOENIX LEASING AMERICAN BUSINESS 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 $ 259 $ 16
Earned income, financing leases 933 719
Interest income, notes receivable 221 108
Gain on sale of securities 632 -
Other income 61 61
-------- --------
Total Income 2,106 904
-------- --------
EXPENSES
Depreciation and amortization 327 17
Amortization of acquisition fees 139 51
Lease related operating expenses 30 5
Management fees to General Partner 104 42
Reimbursed administrative costs to
General Partner 55 89
Interest expense 307 323
Provision for losses on receivables 93 -
General and administrative expenses 48 35
-------- --------
Total Expenses 1,103 562
-------- --------
NET INCOME $ 1,003 $ 342
======== ========
NET INCOME PER LIMITED PARTNERSHIP UNIT $ .79 $ .44
======== ========
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ .53 $ .50
======== ========
ALLOCATION OF NET INCOME:
General Partner $ 36 $ 17
Limited Partners 967 325
-------- --------
$ 1,003 $ 342
======== ========
The accompanying notes are an integral part of these statements.
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PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Operating Activities:
Net income $ 1,003 $ 342
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 327 17
Amortization of acquisition fees 139 51
Equity in earnings from joint ventures, net (11) (11)
Gain on sale of equipment (58) -
Gain on sale of securities (632) -
Provision for early termination, financing leases 93 -
Decrease (increase) in accounts receivable 74 (38)
Increase in accounts payable and accrued expense 52 50
Decrease (increase) in other assets 12 (37)
Interest income added to principal on notes
receivable - (7)
------- -------
Net cash provided by operating activities 999 367
------- -------
Investing Activities:
Principal payments, financing leases 1,768 1,109
Principal payments, notes receivable 851 154
Distributions from joint ventures 29 1
Proceeds from sale of equipment 590 -
Proceeds from sale of securities 648 -
Investment in financing leases (3,388) (3,790)
Investment in notes receivable (443) (1,397)
Investment in securities (16) -
Payment of acquisition fees (250) (134)
------- -------
Net cash used by investing activities (211) (4,057)
------- -------
Financing Activities:
Partners' contributions 1,677 3,657
Proceeds from notes payable 1,000 2,000
Payments of principal, notes payable (1,417) (1,061)
Syndication costs (224) (483)
Redemptions of capital (96) -
Distributions to partners (682) (387)
------- -------
Net cash provided by financing activities 258 3,726
------- -------
Increase in cash and cash equivalents 1,046 36
Cash and cash equivalents, beginning of period 2,757 2,172
------- -------
Cash and cash equivalents, end of period $ 3,803 $ 2,208
======= =======
Supplemental Cash Flow Information:
Cash paid for interest expense $ 295 $ 310
The accompanying notes are an integral part of these statements.
<PAGE>
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PHOENIX LEASING AMERICAN BUSINESS 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.
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.
The activity in the allowance for losses on notes receivable during the
three months ended March 31, is as follows:
1996 1995
---- ----
(Amounts in Thousands)
Beginning balance $ 144 $ 66
Provision for losses - -
Write downs - -
----- ----
Ending balance $ 144 $ 66
===== ====
Note 5. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net income and distributions per limited partnership unit were based on
the limited partners' share of net income and distributions and the weighted
average number of units outstanding of 1,230,568 and 743,380 for the three
months ended March 31, 1996 and 1995, respectively. For purposes of allocating
income (loss) to each individual limited partner, the Partnership allocates net
income (loss) based upon each respective limited partner's net capital
contributions.
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Note 6. Notes Payable.
During the three months ended March 31, 1996, the Partnership drew down
$1,000,000 on the $6,000,000 credit line entered into on November 15, 1994 (as
previously discussed in Note 7 to the Partnership's December 31, 1995 annual
report on Form 10-K). As a result, the weighted average interest rate of the
Partnership's debt with two banks is 7.9% at March 31, 1996. The Partnership had
an available credit line of approximately $3 million at March 31, 1996.
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PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Phoenix Leasing American Business Fund, L.P. (the Partnership) became
effective with the Securities and Exchange Commission on October 9, 1993 and met
its minimum investment requirements of $1,200,000 on January 27, 1994. As of
March 31, 1996, 1,283,311 units of limited partnership interest of the Program
had been sold, resulting in total capital contributions of $25,666,220. The
public offering is scheduled to end on October 19, 1996.
The Partnership reported net income of $1,003,000 during the three
months ended March 31, 1996, as compared to net income of $342,000 during the
same period in 1995. The increase in total revenues exceeded the increase in
total expenses, resulting in increased earnings for the Partnership
Total revenues increased during the three months ended March 31, 1996,
as compared to the same period in 1995 due to a gain on the sale of marketable
securities, an increase in earned income from financing leases and an increase
in interest income from notes receivable. Total revenues are comprised primarily
of earned income from financing leases and a gain on the sale of marketable
securities during the three months ended March 31, 1996. The gain on the sale of
marketable securities of $632,000 during the three months ended March 31, 1996,
was due to the exercise and sale of stock warrants held by the Partnership. The
Partnership has been granted stock warrants as part of its lease or financing
agreements with emerging growth companies. As of March 31, 1996, the Partnership
had remaining investments in stock warrants with unrealized gains of $435,000.
These stock warrants contain certain restrictions, but are generally exercisable
within one year.
Earned income from financing leases increased by $214,000 during the
three months ended March 31, 1996, as compared to the same period in 1995. The
increase in earned income from financing leases is directly attributable to the
Partnership's new investments made in equipment leasing and financing
transactions during the year. The Partnership's net investment in financing
leases was $24,634,000 at March 31, 1996, as compared to $22,079,000 at March
31, 1995. Revenues will continue to increase as the Partnership continues to
make additional investments in equipment leasing and financing transactions
during the public offering stage.
Total expenses increased by $541,000 during the three months ended
March 31, 1996, as compared to the same period in 1995. The increase in total
expenses during the three months ended March 31, 1996, was the increase in
depreciation expense of $310,000, as compared to the same period in 1995. The
Partnership also recognized a provision for early termination of finance leases
of $93,000 during the three months ended March 31, 1996, as compared to $0
during the same period in 1995. Expenses are expected to increase as the
Partnership's portfolio increases during the public offering period.
Liquidity and Capital Resources
During the public offering period, the Partnership's primary source of
liquidity will come from capital contributions and borrowings. As another source
of liquidity, the Partnership has entered into contractual obligations with
lessees and borrowers for fixed terms at fixed payment amounts. The future
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liquidity of the Partnership is dependent upon the payment of the Partnership's
contractual obligations from its lessees and borrowers.
The Partnership reported net cash from leasing and financing activities
of $3,618,000 during the three months ended March 31, 1996, as compared to
$1,630,000 during the same period in 1995. This increase is reflective of the
increase in the Partnership's portfolio of leases and notes receivable.
The Partnership received capital contributions from investors of
$1,677,000 and paid syndication costs of $224,000 during the three months ended
March 31, 1996, as compared to capital contributions of $3,657,000 and
syndication costs of $483,000 during the three months ended March 31, 1995. The
Partnership combined these funds with proceeds from borrowings to invest in
equipment leases and notes receivable. As of March 31, 1996, the Partnership had
acquired leased equipment with an aggregate original cost of $37.2 million and
invested $7 million in notes receivable (including its pro rata interest in
joint ventures), as compared to investments of $25.8 million in leased equipment
and $3.9 million in notes receivable at March 31, 1995.
The equipment owned by the Partnership is leased under financing leases
to approximately 300 lessees in 44 states at March 31, 1996. The loans funded by
the Partnership consisted of 24 loans in 10 states. The average initial term of
all leases entered into was 49 months and the average net monthly payment as a
percentage of the cost of the equipment placed in service was 2.85%. The average
term of all loans funded by the Partnership was 44 months and the weighted
average interest rate was 16.24%. The Partnership plans to reinvest the cash
generated by operating and financing activities in new leasing and financing
transactions over the life of the Partnership.
On November 15, 1994, the Partnership entered into a loan agreement
pursuant to which it may borrow $6 million to finance or refinance the purchase
of equipment and other assets subject to lease. This commitment to loan funds
will expire on June 30, 1996. As of March 31, 1996, the Partnership had drawn $3
million pursuant to this credit line, of which $1 million was drawn during the
three months ended March 31, 1996. During the three months ended March 31, 1995,
the Partnership had drawn down $2 million on this credit line. At March 31,
1996, the unused portion of this credit line was $3 million.
The Partnership maintains loans payable to two banks for which it makes
monthly payments of principal and interest. The Partnership made payments of
principal of $1,417,000 on its outstanding debt during the three months ended
March 31, 1996, as compared to $1,061,000 during the three months ended March
31, 1995. The increase in payments is reflective of the increase in outstanding
debt as the Partnership draws down on its available credit line.
The cash distributed to partners during the three months ended March
31, 1996 was $682,000, as compared to $387,000 during the same period in 1995.
In accordance with the partnership agreement, the limited partners are entitled
to 96% of the cash available for distribution and the General Partner is
entitled to four percent. As a result, the limited partners received $656,000
and $373,000 in cash distributions during the three months ended March 31, 1996
and 1995, respectively. The total cumulative cash distributions to limited
partners as of March 31, 1996 was $3,187,000, as compared to $927,000 at March
31, 1995. The General Partner received $26,000 and $14,000 during the three
months ended March 31, 1996 and 1995, respectively.
On April 15, 1996, the Partnership will make a special distribution, in addition
to the regular distribution, to partners of record as of March 31, 1996. The
amount of this distribution is approximately 2.5% of the partners original
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contribution. This special distribution is being made as the result of proceeds
received from the sale of marketable securities.
The cash to be generated from leasing and financing operations is
anticipated to be sufficient to meet the Partnership's continuing operational
expenses and debt service.
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Page 10 of 11
PHOENIX LEASING AMERICAN BUSINESS 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>
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PHOENIX LEASING AMERICAN BUSINESS FUND
---------------------------------------
(Registrant)
BY: PHOENIX LEASING ASSOCIATES III, L.P.
a California limited partnership
General Partner
BY: PHOENIX LEASING ASSOCIATES III, INC.,
a Nevada corporation
Corporate General Partner
Date Title Signature
---- ----- ---------
May 13, 1996 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- - ----------------- Senior Vice President, ----------------------
Treasurer and a Director of (Paritosh K. Choksi)
Phoenix Leasing Associates III, Inc.
May 13, 1996 Senior Vice President, /S/ BRYANT J. TONG
- - ----------------- Financial Operations of ----------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Associates III, Inc.
May 13, 1996 Senior Vice President /S/ GARY W. MARTINEZ
- - ----------------- and a Director of ----------------------
Phoenix Leasing Associates III, Inc. (Gary W. Martinez)
May 13, 1996 Partnership Controller /S/ MICHAEL K. ULYATT
- - ----------------- 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-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,803
<SECURITIES> 0
<RECEIVABLES> 4,945
<ALLOWANCES> 247
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,325
<DEPRECIATION> 658
<TOTAL-ASSETS> 36,634
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 21,404
<TOTAL-LIABILITY-AND-EQUITY> 36,634
<SALES> 0
<TOTAL-REVENUES> 2,106
<CGS> 0
<TOTAL-COSTS> 1,003
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 93
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,003
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,003
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,003
<EPS-PRIMARY> .79
<EPS-DILUTED> 0
</TABLE>
