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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-K
__X__ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996 Commission File Number 0-25278
PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
California 68-0293258
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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
--------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. ______
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
requirements for the past 90 days.
Yes __X__ No _____
As of December 31, 1996, 1,588,681 Units of Limited Partnership interest were
outstanding. No market exists for the Units of Partnership interest and
therefore there exists no aggregate market value at December 31, 1996.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
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PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
1996 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Page
PART I
Item 1. Business...................................................... 3
Item 2. Properties.................................................... 4
Item 3. Legal Proceedings............................................. 5
Item 4. Submission of Matters to a Vote of Security Holders........... 6
PART II
Item 5. Market for the Registrant's Securities and Related Security
Holder Matters................................................ 6
Item 6. Selected Financial Data....................................... 6
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 7
Item 8. Financial Statements and Supplementary Data................... 10
Item 9. Disagreements on Accounting and Financial Disclosure Matters.. 23
PART III
Item 10. Directors and Executive Officers of the Registrant............ 23
Item 11. Executive Compensation........................................ 24
Item 12. Security Ownership of Certain Beneficial Owners and Management 24
Item 13. Certain Relationships and Related Transactions................ 25
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K...................................................... 25
Signatures............................................................... 26
<PAGE>
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PART I
Item 1. Business.
General Development of Business.
Phoenix Leasing American Business Fund, L.P., a California limited
partnership (the "Partnership"), was organized on December 3, 1992. The
Partnership was registered with the Securities and Exchange Commission with an
effective date of October 19, 1993 and shall continue to operate until its
termination date unless dissolved sooner due to the sale of substantially all of
the assets of the Partnership or a vote of the Limited Partners. The Partnership
will terminate on December 31, 2007. The General Partner is a California limited
partnership, Phoenix Leasing Associates III L.P., the general partner of which
is Phoenix Leasing Associates III, Inc., a Nevada corporation and a wholly-owned
subsidiary of Phoenix Leasing Incorporated, a California corporation. The
General Partner or its affiliates also is or has been a general partner in other
limited partnerships formed to invest in capital equipment and other assets.
The registration was for 2,500,000 units of limited partnership interest
at a price of $20 per unit. The Partnership completed its public offering on
October 6, 1996. The Partnership sold 1,603,335 units for a total capitalization
of $32,066,700. Of the proceeds received through the offering, the Partnership
has incurred $4,808,933 in organizational and offering expenses for a net
capitalization of $27.3 million.
From the initial formation of the Partnership through December 31, 1996,
the total investments in equipment leases and financing transactions (loans)
including the Partnership's pro rata interest in an investment made by a joint
venture, approximate $50,619,000. The average initial firm term of contractual
payments from equipment subject to lease was 48 months, and the average initial
net monthly payment rate as a percentage of the original purchase price was
2.88%. The average initial firm term of contractual payments from loans was 45
months and the weighted average interest was 16.18%.
The Partnership has acquired siginificant amounts of equipment or assets
with the net offering proceeds. In addition, the Partnership has acquired
equipment through the use of debt financing, however, the ratio of the
outstanding debt to net capital contributions less any investment in Leveraged
Joint Ventures at the end of the Partnership's offering period will not exceed
four to five (80%). The cash flow generated by such investments in equipment
leases or financing transactions will be used to provide for debt service, to
provide cash distributions to the Partners and the remainder will be reinvested
in capital equipment or other assets.
The Partnership will maintain working capital reserves in an amount
which will fluctuate from time to time depending upon the needs of the
Partnership, but which will be at least one percent of the gross offering
proceeds during the Partnership's operational phase.
Narrative Description of Business.
The objectives of the Partnership are to: (1) produce cash distributions
on a continuing basis over the life of the Program through leasing equipment and
financing assets primarily to companies engaged in the development of
technologies and other growth industry businesses, franchisees, and other third
party lessees and customers; (2) reinvest, during the operating phase of the
Program (after payment of expenses, including debt service requirements, and
distributions to the Partners), in additional equipment and assets to increase
the overall size of the portfolio; and (3) commence liquidation of the
Partnership's portfolio of investments seven years after the close of the
offering of units of limited partnership interests.
To achieve these objectives the Partnership has invested and will invest
in various types of capital equipment and other assets, and provide leasing and
secured financing of the same to third parties on either a long-term or
short-term basis. The Partnership has invested and will invest in, or have
collateral in, various types of assets including: (1) production, manufacturing,
fabrication and test equipment; (2) lab and medical equipment; (3) furniture and
fixtures; (4) personal computers and workstations, computer peripheral
equipment, computer mainframes, CAE/CAD/CAM equipment, communications equipment,
office systems and computer software products; (5) property management systems,
including computer reservations systems, and phone and telecommunications
<PAGE>
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systems; and (6) various types of other equipment, furnishings, fixtures,
leasehold improvements and assets, including to a limited extent certain
intangible assets.
A substantial portion of the net offering proceeds of the Partnership
has been invested in equipment leases subject to full payout leases. Full payout
leases are leases under which the noncancellable rental payments due during the
initial term of the lease are at least sufficient to recover the purchase price
of the equipment. Operating leases, which generally have terms of shorter
duration than full payout leases, are leases that will return to the lessor an
amount less than the purchase price of the equipment from rental payments over
the initial term of the lease. Upon the expiration of the initial lease term, it
is necessary to extend the lease term with the existing lessee, enter into a new
lease with another lessee or sell the equipment.
Competition. The Partnership will be competing for equipment leasing and
financing business with many well-established companies having substantially
greater financial resources. The types of businesses the Partnership competes
with will be banks, finance companies, leasing companies and other institutional
or governmental lenders. Competitive factors include pricing, technological
innovation, payment terms, collateral requirements and methods of financing. The
General Partner intends to concentrate the Partnership's activities in markets
in which the General Partner and its affiliates have developed an expertise.
Other.
A brief description of the type of assets in which the Partnership has
invested in through December 31, 1996, together with information concerning the
uses of assets is set forth in Item 2.
Item 2. Properties.
The Partnership is engaged in the equipment leasing and financing
industry and as such, does not own or operate any principal plants, mines or
real property. The primary assets held by the Partnership are its investments in
leases and loans.
As of December 31, 1996, the Partnership has acquired equipment and has
provided financing (loans) to borrowers with an aggregate original cost of
$50,619,000. The equipment and loans have been made to customers located
throughout the United States. The total investment in leases and loans at
December 31, 1996 is classified as 57% emerging growth industry businesses, 40%
franchised businesses and 3% other businesses. The following table summarizes
the type of equipment owned or financed by the Partnership, including its pro
rata interest in a joint venture, at December 31, 1996:
<PAGE>
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Percentage of
Asset Types Cost of Assets(1) Total Assets
----------- ----------------- -------------
(Amounts in Thousands)
Equipment:
Computer Hardware $ 15,549 31%
Furniture and Fixtures 7,651 15
Lab Test Equipment 5,144 10
Leasehold Improvements 4,839 10
Commercial Equipment 3,733 7
Miscellaneous Equipment 2,807 6
Manufacturing Equipment 1,267 3
Communications Equipment 661 1
Software 617 1
-------- -----
Total Equipment 42,268 84
Financing:
Financing to Emerging Growth Companies 6,732 13
Financing to Other Businesses 1,619 3
-------- -----
Total Financing 8,351 16
-------- -----
Total Assets $ 50,619 100%
======== =====
(1) These amounts include the Partnership's pro rata interest in a financing
joint venture of $290,000, cost of equipment on financing leases of
$35,634,000 and cost of assets sold of $4,535,000 at December 31, 1996.
Asset Breakdown By
Industrial Classification
-------------------------
Percentage of
Industry Assets
-------- ------
Hospitality 22%
Software 22
Biomedical 16
Restaurants 15
Semiconductor & Other Computer Equipment Manufacturing 7
Communications 9
Retailers 3
Automotive 1
Miscellaneous Business Services 3
Other 2
---
Total 100%
===
Item 3. Legal Proceedings.
The Registrant is not a party to any pending legal proceedings which
would have a material adverse impact on its financial position.
<PAGE>
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PART II
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of Limited Partners, through the
solicitation of proxies or otherwise, during the fourth quarter.
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters.
(a)The Registrant's limited partnership interests are not publicly
traded. There is no market for the Registrant's limited partnership
interests and it is unlikely that any will develop.
(b)Approximate number of equity security investments:
Number of Unit Holders
Title of Class as of December 31, 1996
---------------------------------- -----------------------
Limited Partners 1,630
Item 6. Selected Financial Data.
1996 1995 1994(1) 1993(1)(2)
---- ---- ------- ----------
(Amounts in Thousands Except for Per Unit Amounts)
Total Income $ 6,488 $ 4,100 $ 2,150 $ --
Net Income 1,973 1,143 435 --
Total Assets 34,797 36,053 25,676 253
Long-term Debt Obligations 4,015 8,994 9,365 --
Distributions to Partners 4,285 2,052 570 --
Net Income per Limited
Partnership Unit 1.28 1.10 1.27 --
Distributions per Limited
Partnership Unit 2.94 2.05 1.69 --
(1) The Registrant met minimum investment requirements on January 27, 1994.
Therefore, the earnings for 1994 and 1993 do not reflect a full year of
operations.
(2) The year 1993 is for the period of inception (December 3, 1992) through
December 31, 1993.
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this report.
<PAGE>
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Item 7. 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. The
Partnership concluded its public offering on October 6, 1996 and has sold
1,603,335 units of limited partnership interest, resulting in total capital
contributions of $32,067,000 as of December 31, 1996.
The Partnership reported net income of $1,973,000 during the year ended
December 31, 1996, as compared to net income of $1,143,000 and $435,000 during
1995 and 1994, respectively. The increased net income during 1996, as compared
to 1995, resulted from an increase in earnings from financing leases, interest
income from notes receivable as well as from a gain on sale of securities. The
increased net income during the year ended 1995, as compared to the same period
in 1994, was attributable to an increase in earned income from financing leases
and interest income from notes receivable.
Total revenues are comprised primarily of earned income from financing
leases for 1996, 1995 and 1994. Earned income from financing leases increased by
$852,000 and $1,463,000 during 1996 and 1995, respectively, as compared to the
same period in the previous year. The increase in earned income from financing
leases is directly attributable to the Partnership's new investments made in
equipment leasing transactions during both years. During 1996 and 1995, the
Partnership invested $8.5 million and $11.8 million, respectively, in new
financing leases. The Partnership's net investment in financing leases was
$22,732,000 at December 31, 1996, as compared to $24,984,000 at December 31,
1995. The net investment in financing leases will decrease as the Partnership
amortizes income over the lease term using the interest method of accounting.
This effect will be mitigated to some degree as the Partnership continues to
make additional investments in equipment financing leases.
Total revenues for the year ended December 31, 1996 also includes a gain
on the sale of securities of $1,258,000 which is 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 certain emerging
growth companies. As of December 31, 1996, the Partnership had remaining
investments in stock warrants of public companies with unrealized gains of
approximately $228,000, as compared to $998,000 at December 31, 1995. These
stock warrants contain certain restrictions, but are generally exercisable
within one year.
Total expenses are comprised primarily of interest expense on
outstanding borrowings, depreciation and amortization. Interest expense
decreased by $168,000 during the year ended December 31, 1996 as compared 1995,
but increased by $391,000 during 1995, as compared to 1994. The increase in
depreciation expense of $1,141,000 during 1996, as compared to 1995, was due to
payment defaults of certain financing leases that have been reclassified to
equipment and are being depreciated over their remaining estimated useful life.
The increase in amortization of acquisition fees of $210,000 and $170,000 during
1996 and 1995, respectively, as compared to the same period in the previous
year, is attributable to an increase in the equipment lease and note portfolio.
These fees are amortized over the estimated useful life of the equipment
acquired and notes funded. The Partnership reported small increases in most
other expense categories during 1996 as compared to 1995. The Partnership
increased its allowance for losses on receivables during 1995 by $354,000, as
compared to 1994, as a result of an increase in the growth of the lease
portfolio since 1994. The Partnership reported increases in most other expense
categories, except for general and administrative expenses which experienced a
decrease during 1995, as compared to the same period in 1994.
Inflation affects the Partnership in relation to the current cost of
equipment placed on lease and the residual values realized when the equipment
comes off-lease and is sold. During the last several years inflation has been
low, thereby having very little impact upon the Partnership.
Liquidity and Capital Resources
During the public offering stage, which concluded on October 6, 1996,
the Partnership's primary source of liquidity has 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 liquidity of the Partnership is
dependent upon the payment of the Partnership's contractual obligations from its
lessees and borrowers.
<PAGE>
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The Partnership reported net cash from leasing and financing activities
of $13,462,000 during the year ended December 31, 1996, as compared to
$8,499,000 and $3,117,000 during the same period in 1995 and 1994, respectively.
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
$8,077,000 and incurred organizational and offering costs of $1,200,000 during
the year ended December 31, 1996, as compared to capital contributions received
of $10,709,000 and $13,278,000 and organizational and offering costs of
$1,585,000 and $1,972,000 during the years ended December 31, 1995 and 1994,
respectively.
The Partnership combined these funds with proceeds from borrowings to
invest in equipment leases and notes receivable. During the year ended December
31, 1996, the Partnership invested $8.5 million in equipment leases and $1.7
million in notes receivable, as compared to investments of $11.8 million and $22
million in equipment leases and $3.9 million and $2.7 million in notes
receivable (including its pro rata interest in joint ventures) during the same
period in 1995 and 1994, respectively. As of December 31, 1996, the Partnership
had acquired leased equipment with an aggregate original cost of $42.3 million
and invested $8.3 million in notes receivable (including its pro rata interest
in joint ventures), as compared to acquisitions of $33.8 million and $22 million
of leased equipment and investments of $6.6 million and $2.7 million in notes
receivable (including its pro rata interest in joint ventures) at December 31,
1995 and 1994, respectively.
As of December 31, 1996, the Partnership reported equipment being held
for lease with an original cost of $1,913,000 and a net book value of $674,000,
as compared to equipment being held for lease with an original cost of $891,000
and $0 and a net book value of $345,000 and $0 at December 31, 1995 and 1994,
respectively. The General Partner, on behalf of the Partnership, is actively
engaged in the remarketing and selling of the Partnership's equipment as it
comes available.
The average initial term of all leases entered into, at December 31,
1996, was 48 months and the average net monthly payment as a percentage of the
cost of the equipment placed in service was 2.88%. The average term of all loans
funded by the Partnership was 45 months and the weighted average interest rate
was 16.18%. 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. The investments made by the Partnership at December 31, 1996
were classified as approximately 57% emerging growth industry businesses, 40%
franchised businesses, and 3% other businesses.
The Partnership negotiated a $20 million term line of credit from a bank
in November 1993 for the purchase of equipment and other property subject to
lease and is to be repaid in 49 equal monthly installments of principal and
interest at a variable rate. The $20 million term line of credit was fully
utilized by the Partnership prior to its expiration date of November 30, 1995.
As of December 31, 1996, the Partnership had repaid approximately $12.1 million
of this loan.
The Partnership entered into a second line of credit in the amount of $6
million on November 15, 1994 with another bank. This credit line was for the
purchase of equipment and other personal property assets subject to lease with
interest tied to the lender's prime rate. On June 25, 1996, the bank agreed to
an extension of the commitment termination date under the agreement from June
30, 1996 to December 31, 1996. As of December 31, 1996, the Partnership had
borrowed $3 million under this loan agreement, approximately $1.1 million of
which has been repaid.
Payments of the Partnership's borrowings discussed above are payable
monthly. The Partnership made payments of principal of $5,279,000 on its
outstanding debt during the year ended December 31, 1996, as compared to
$4,646,000 and $2,860,000 during the years ended December 31, 1995 and 1994,
respectively.
The cash distributed to partners during the year ended December 31, 1996
was $4,285,000, as compared to $2,052,000 and $570,000 during the same period in
1995 and 1994, respectively. 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 $4,119,000, $1,977,000 and $554,000 in cash distributions
during the year ended December 31, 1996, 1995 and 1994 respectively. As of
December 31, 1996, the cumulative cash distributions to limited partners was
$6,650,000 as compared to $2,531,000 and $554,000 at December 31, 1995 and 1994,
respectively. The General Partner received $166,000, $75,000 and $16,000 during
the years ended December 31, 1996,1995 and 1994, respectively. The Partnership
plans to make distributions to partners during 1997 at the same rate as the
current distribution.
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On April 15, 1996, the Partnership made a special distribution, in
addition to the regular distribution, to partners of record as of March 31,
1996. The amount of this distribution was approximately 2.5% of the partners'
original contribution. This special distribution was 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.
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Actual results could differ from those anticipated by some of the statements
made above. Limited Partners are cautioned that such forward-looking statements
involve risks and uncertainties including without limitation the following: (i)
the Partnership's plans are subject to change at any time at the discretion of
the General Partner of the Partnership, (ii) future technological developments
in the industry in which the Partnership operates, (iii) competitive pressure on
pricing or services, (iv) substantial customer defaults or cancellations, (v)
changes in business conditions and the general economy, (vi) changes in
government regulations affecting the Partnership's core businesses and (vii) the
ability of the Partnership to sell its remaining assets.
<PAGE>
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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
YEAR ENDED DECEMBER 31, 1996
<PAGE>
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REPORT OF INDEPENDENT AUDITORS
------------------------------
The Partners
Phoenix Leasing American Business Fund, L.P.
We have audited the financial statements of Phoenix Leasing American Business
Fund, L.P. (a California limited partnership) listed in the accompanying index
to financial statements (Item 14(a)). Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and the schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and the
schedule 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 listed in the accompanying index to
financial statements (Item 14(a)) present fairly, in all material respects, the
financial position of Phoenix Leasing American Business Fund, L.P. at December
31, 1996 and 1995, and the results of its operations and its cash flows for the
years ended December 31, 1996, 1995 and 1994, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
San Francisco, California
January 20, 1997
<PAGE>
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PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
December 31,
1996 1995
------- -------
ASSETS
Cash and cash equivalents $ 5,134 $ 2,757
Accounts receivable (net of allowance for
losses on accounts receivable of $134
and $103 at December 31, 1996 and 1995,
respectively) 323 290
Notes receivable (net of allowance for losses
on notes receivable of $241 and $144 at
December 31, 1996 and 1995, respectively) 4,643 4,963
Net investment in financing leases (net of
allowance for early terminations of $404
and $50 at December 31, 1996 and 1995,
respectively) 22,732 24,984
Capitalized acquisition fees (net of accumulated
amortization of $902 and $404 at December 31,
1996 and 1995, respectively) 1,111 1,200
Other assets 854 1,859
------- -------
Total Assets $34,797 $36,053
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 1,125 $ 1,242
Notes payable 9,765 14,494
------- -------
Total Liabilities 10,890 15,736
------- -------
Partners' Capital:
General Partner 17 3
Limited Partners, 2,500,000 units authorized,
1,603,335 and 1,199,457 units issued and
1,588,681 and 1,197,927 units outstanding
at December 31, 1996 and 1995, respectively 23,662 19,316
Unrealized gain on marketable securities
available-for-sale 228 998
------- -------
Total Partners' Capital 23,907 20,317
------- -------
Total Liabilities and Partners' Capital $34,797 $36,053
======= =======
The accompanying notes are an integral part of
these statements.
<PAGE>
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PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
For the Years Ended December 31,
1996 1995 1994
------- ------- -------
INCOME
Earned income, financing leases $ 4,099 $ 3,247 $ 1,784
Interest income, notes receivable 796 568 224
Gain on sale of securities 1,258 -- 8
Other income 335 285 134
------- ------- -------
Total Income 6,488 4,100 2,150
------- ------- -------
EXPENSES
Depreciation and amortization 1,340 199 43
Amortization of acquisition fees 497 287 117
Lease related operating expenses 149 45 23
Management fees to General Partner 345 211 98
Reimbursed administrative costs to
General Partner 403 357 256
Interest expense 1,085 1,253 862
Provision for losses on receivables 487 458 104
General and administrative expenses 209 147 212
------- ------- -------
Total Expenses 4,515 2,957 1,715
------- ------- -------
NET INCOME $ 1,973 $ 1,143 $ 435
======= ======= =======
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 1.28 $ 1.10 $ 1.27
======= ======= =======
ALLOCATION OF NET INCOME:
General Partner $ 184 $ 86 $ 20
Limited Partners 1,789 1,057 415
------- ------- -------
$ 1,973 $ 1,143 $ 435
======= ======= =======
The accompanying notes are an integral part of
these statements.
<PAGE>
Page 14 of 27
PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
STATEMENTS OF PARTNERS' CAPITAL
(Amounts in Thousands Except for Unit Amounts)
General Unrealized
Partner's Limited Partners' Gains Total
Amount Units Amount (Losses) Amount
--------- ------------------- ---------- ------
Balance, December 31, 1993 $- 50 $ 1 $ - $ 1
Partners' contributions - 663,923 13,278 - 13,278
Syndication costs (7) - (1,984) - (1,991)
Distributions to partners ($1.69
per limited partnership unit) (16) - (554) - (570)
Net income 20 - 415 - 435
---- --------- -------- ----- --------
Balance, December 31, 1994 (3) 663,973 11,156 - 11,153
Partners' contributions - 535,484 10,709 - 10,709
Syndication costs (5) - (1,601) - (1,606)
Redemptions of capital - (1,530) (28) - (28)
Change for the year in unrealized
gains on available-for-sale
securities - - - 998 998
Distributions to partners ($2.05
per limited partnership unit) (75) - (1,977) - (2,052)
Net income 86 - 1,057 - 1,143
---- --------- -------- ----- --------
Balance, December 31, 1995 3 1,197,927 19,316 998 20,317
Partners' contributions - 403,878 8,077 - 8,077
Syndication costs (4) - (1,207) - (1,211)
Redemptions of capital - (13,124) (194) - (194)
Change for the year in unrealized
gains on available-for-sale
securities - - - (770) (770)
Distributions to partners ($2.94
per limited partnership unit) (166) - (4,119) - (4,285)
Net income 184 - 1,789 - 1,973
---- --------- -------- ----- --------
Balance, December 31, 1996 $ 17 1,588,681 $ 23,662 $ 228 $ 23,907
==== ========= ======== ===== ========
The accompanying notes are an integral part of
these statements.
<PAGE>
Page 15 of 27
PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
For the Years Ended December 31,
1996 1995 1994
-------- -------- --------
Operating Activities:
Net income $ 1,973 $ 1,143 $ 435
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,340 199 43
Amortization of acquisition fees 497 287 117
Gain on sale of equipment (49) -- (55)
Provision for early termination,
financing leases 354 305 --
Provision for losses on notes receivable 97 78 66
Provision for losses on accounts receivable 36 75 38
Equity in earnings from joint venture, net (39) (44) --
Gain on sale of securities (1,258) -- (8)
Increase in accounts receivable (69) (508) (131)
Increase in accounts payable and
accrued expenses 120 193 744
Decrease (increase) in other assets 130 54 (495)
-------- -------- --------
Net cash provided by operating activities 3,132 1,782 754
-------- -------- --------
Investing Activities:
Principal payments, financing leases 8,387 5,773 2,072
Principal payments, notes receivable 1,943 944 291
Distributions from joint ventures 86 64 --
Proceeds from sale of equipment 766 -- 562
Proceeds from sale of securities 1,274 -- 8
Investment in joint venture -- -- (290)
Investment in financing leases (8,488) (11,778) (22,003)
Investment in notes receivable (1,720) (3,854) (2,488)
Investment in securities (16) -- --
Payment of acquisition fees (656) (444) (911)
-------- -------- --------
Net cash provided (used) by investing
activities 1,576 (9,295) (22,759)
-------- -------- --------
Financing Activities:
Proceeds from notes payable 1,000 5,700 16,300
Payments of principal, notes payable (5,729) (4,646) (2,860)
Partners' contributions 8,077 10,709 13,278
Syndication costs (1,200) (1,585) (1,972)
Distributions to partners (4,285) (2,052) (570)
Redemptions of capital (194) (28) --
-------- -------- --------
Net cash provided (used) by financing
activities (2,331) 8,098 24,176
-------- -------- --------
Increase in cash and cash equivalents 2,377 585 2,171
Cash and cash equivalents, beginning of period 2,757 2,172 1
-------- -------- --------
Cash and cash equivalents, end of period $ 5,134 $ 2,757 $ 2,172
======== ======== ========
Supplemental Cash Flow Information:
Cash paid for interest expense $ 1,037 $ 1,204 $ 814
The accompanying notes are an integral part of
these statements.
<PAGE>
Page 16 of 27
PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1. Organization and Partnership Matters.
Phoenix Leasing American Business Fund, L.P., a California limited
partnership (the "Partnership"), was formed on December 3, 1992, to invest in
capital equipment of various types and to lease such equipment to or provide
financing to, on either a long-term or short-term basis, companies engaged in
the development of technologies and other growth industry businesses,
franchisees, and additional third party lessees and customers. The Partnership
met minimum investment requirements on January 27, 1994. The Partnership's
termination date is December 31, 2007.
For financial reporting purposes, Partnership net income and net losses
will be allocated 99% to the Limited Partners and 1% to the General Partner. In
addition, the General Partner will be allocated gross rental and interest income
in amounts equal to the distributions that it receives from the Partnership.
Syndication costs will be allocated 1% to the General Partner and 99% to the
Limited Partners.
The General Partner is entitled to receive 4% of all distributions until
the Limited Partners have recovered the greater of 177% of their initial capital
contributions or 100% of their initial capital contributions plus a cumulative
return of 11% per annum. Thereafter, the General Partner will receive 15% of all
cash distributions. From inception of the Partnership until December 31, 1999,
the General Partner's interest in Cash Available for Distribution is
subordinated in any calendar quarter until the Limited Partners receive
quarterly distributions equal to 2.75% of their capital contributions (i.e., 11%
per annum), prorated for any partial period.
In the event the General Partner has a deficit balance in its capital
account at the time of Partnership liquidation, it will be required to
contribute the amount of such deficit to the Partnership.
As compensation for management services, the General Partner receives a
fee, payable monthly, subject to certain limitations, in an amount equal to 2%
of the Partnership's gross revenues for the quarter from which such payment is
being made, which revenues shall include, but are not limited to, rental
receipts, maintenance fees, proceeds from the sale of equipment and interest
income.
The General Partner will be compensated for services performed in
connection with the analysis of assets available to the Partnership, the
selection of such assets and the acquisition thereof, including obtaining
lessees for the equipment, negotiating and concluding master lease agreements
with certain lessees. As compensation for such acquisition services, the General
Partner will receive a fee equal to 4%, subject to certain limitations, of (a)
the purchase price of equipment acquired by the Partnership or equipment leased
to customers by manufacturers, the financing for which is provided by the
Partnership, or (b) financing provided to businesses payable upon such
acquisition or financing, as the case may be. Acquisition fees are amortized
over the life of the assets principally on a straight-line basis.
Phoenix Securities, Inc., an affiliate of the General Partner, has
contracted with or employs certain persons who will receive certain compensation
for wholesaling activities performed in connection with the offering of the
units through broker-dealers.
A schedule of compensation paid and distributions made to the General
Partner for the years ended December 31, follows:
1996 1995 1994
------ ------ ------
(Amounts in Thousands)
Management fees $ 345 $ 211 $ 98
Acquisition fees 408 625 980
Wholesaling activities in connection
with the offering of units 162 214 266
Cash distributions 166 75 16
------ ------ ------
$1,081 $1,125 $1,360
====== ====== ======
<PAGE>
Page 17 of 27
In accordance with section 13.2(a) of the amended and restated agreement
of limited partnership, the estimated annual average Unit valuation (unaudited)
is estimated by the General Partner to be equal to the original cost ($20 per
limited partnership unit) at December 31, 1996.
Note 2. Summary of Significant Accounting Policies.
Leasing Operations. The Partnership's leasing operations currently
consist of financing and operating leases. The financing method of accounting
for leases records as unearned income at the inception of the lease, the excess
of net rentals receivable and estimated residual value at the end of the lease
term, over the cost of equipment leased. Unearned income is credited to income
monthly over the term of the lease on a declining basis to provide an
approximate level rate of return on the unrecovered cost of the investment.
Initial direct costs of consummating new leases are capitalized and included in
the cost of equipment. The Partnership reviews its estimates of residual value
at least annually. If a decline in value has occurred which is other than
temporary, a reduction in the investment is recognized currently.
Under the operating method of accounting for leases, the leased
equipment is recorded as an asset at cost and depreciated on a straight-line
basis over the estimated useful life, ranging up to three years. Rental income
for the year is determined on the basis of rental payments due for the period
under the terms of the lease. Maintenance and repairs of the leased equipment
are charged to expense.
The Partnership's policy is to review periodically the expected economic
life of its rental equipment in order to determine the probability of recovering
its undepreciated cost. Such reviews address, among other things, recent and
anticipated technological developments affecting high technology equipment and
competitive factors within the high technology marketplace. Although remarketing
rental rates are expected to decline in the future with respect to some of the
Partnership's rental equipment, such rentals are expected to exceed projected
expenses, including depreciation. Should subsequent reviews of the equipment
portfolio indicate that rentals plus anticipated sales proceeds will not exceed
expenses in any future period, the Partnership will revise its depreciation
policy as appropriate. As a result of such periodic reviews, the Partnership
recognized additional depreciation expense of $271,000, $0 and $0 ($.19, $0 and
$0 per limited partnership unit) for the years ended December 31, 1996, 1995 and
1994, respectively).
Cash and Cash Equivalents. This includes deposits at banks, investments
in money market funds and other highly liquid short-term investments with
original maturities of less than 90 days.
Reclassification. Certain 1995 and 1994 amounts have been reclassified
to conform to the 1996 presentation.
Investment in Available-for-Sale Securities. The Partnership has
investments in stock and stock warrants in public companies that have been
determined to be available for sale. Available-for-sale securities are stated at
their fair market value, with the unrealized gains and losses reported in a
separate component of partners' capital. The stock warrants held by the
Partnership were granted by certain lessees or borrowers as additional
compensation for leasing or financing equipment. At the date of grant, such
warrants were determined to have no fair market value and were recorded at their
historical cost of $0.
Non-Cash Investing Activities. During the year ended December 31, 1996
and 1995, the Partnership recorded an unrealized loss on available-for-sale
securities which has been included in Other Assets of $770,000 and a gain of
$998,000, respectively.
Credit and Collateral. The Partnership's activities have been
concentrated in the equipment leasing and financing industry. A credit
evaluation is performed by the General Partner for all leases and loans made,
with the collateral requirements determined on a case-by-case basis. The
Partnership's loans are generally secured by the equipment or assets financed
and, in some cases, other collateral of the borrower. In the event of default,
the Partnership has the right to foreclose upon the collateral used to secure
such loans.
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
<PAGE>
Page 18 of 27
Note 3. Accounts Receivable.
Accounts receivable consist of the following at December 31:
1996 1995
------ ------
(Amounts in Thousands)
Lease payments $ 292 $ 219
General Partner and Affiliates 105 105
Interest 24 17
Other 36 52
------ ------
457 393
Less: allowance for losses on
accounts receivable (134) (103)
------ ------
Total $ 323 $ 290
====== ======
Note 4. Notes Receivable.
Notes receivable consist of the following at December 31:
1996 1995
------ ------
(Amounts in Thousands)
Notes receivable from emerging growth
companies with stated interest ranging
from 10% to 22% per annum, receivable
in installments ranging from 30 to 49
months, collateralized by the equipment
financed. $3,572 $4,259
Notes receivable from other businesses with
stated interest ranging from 15% to 16% per
annum, receivable in installments ranging
from 48 to 85 months, collateralized by the
equipment financed. 1,312 848
------ ------
4,884 5,107
Less: allowance for losses on notes receivable (241) (144)
------ ------
Total $4,643 $4,963
====== ======
Generally, notes receivable are classified as impaired and the accrual
of interest on such notes are discontinued when the contractual payment of
principal or interest has become 90 days past due or management has serious
doubts about further collectibility of the contractual payments. Any payments
received subsequent to the placement of the note receivable on to impaired
status will generally be applied towards the reduction of the outstanding note
receivable balance, which may include previously accrued interest as well as
principal. Once the principal and accrued interest balance has been reduced to
zero, the remaining payments will be applied to interest income.
At December 31, 1996 and 1995, the recorded investment in notes that are
considered to be impaired were $68,000 and $0, respectively, for which the
related allowance for losses were $0. The average recorded investment in
impaired loans during the year ended December 31, 1996 and 1995 were
approximately $23,000 and $0, respectively. The Partnership recognized interest
income of $8,000 on impaired notes receivable during the year ended December 31,
1996.
The activity in the allowance for losses on notes receivable during the
years ended December 31, is as follows:
1996 1995
------ ------
(Amounts in Thousands)
Beginning balance $ 144 $ 66
Provision for losses 97 78
Write downs -- --
------ ------
Ending balance $ 241 $ 144
====== ======
<PAGE>
Page 19 of 27
Note 5. Net Investment in Financing Leases.
Equipment on lease consists primarily of furniture, fixtures, computer
hardware and other capital equipment.
The Partnership has entered into direct lease arrangements with
franchised businesses, companies engaged in the development of technologies and
other growth industry businesses such as the semiconductor, biotechnology,
medical device, software, communications, data storage, computer, retail,
hospitality and others, located throughout the United States. Generally, it is
the responsibility of the lessee to provide maintenance on leased equipment. The
General Partner administers the equipment portfolio of leases acquired through
the direct leasing program. Administration includes the collection of rents from
the lessees and remarketing of the equipment.
The net investment in financing leases consists of the following at
December 31:
1996 1995
-------- --------
(Amounts in Thousands)
Minimum lease payments to be received $ 27,811 $ 31,395
Less: unearned income (4,675) (6,361)
allowance for early terminations (404) (50)
-------- --------
Net investment in financing leases $ 22,732 $ 24,984
======== ========
Minimum rentals to be received on noncancelable financing leases for the
years ended December 31, are as follows:
Financing
---------
(Amounts in Thousands)
1997............................................... $ 12,285
1998............................................... 8,577
1999............................................... 5,113
2000............................................... 1,594
2001 and future.................................... 242
--------
Total $ 27,811
========
Note 6. Accounts Payable and Accrued Expenses.
Accounts payable and accrued expenses consist of the following at
December 31:
1996 1995
------- -------
(Amounts in Thousands)
Security deposits $ 550 $ 498
Equipment lease operations 408 319
Other 64 87
Syndication costs 52 40
General Partner and Affiliates 51 298
------- -------
Total $ 1,125 $ 1,242
======= =======
<PAGE>
Page 20 of 27
Note 7. Notes Payable.
Notes payable consist of the following at December 31:
1996 1995
------- -------
(Amounts in Thousands)
Notes payable to banks, collateralized by
all assets of the Partnership with variable
rates of interest tied to the banks' base
rate or IBOR rate, with payment terms of
48 months. $ 9,765 $14,494
======= =======
Principal payments due for the years ended December 31, are as follows:
(Amounts in Thousands)
1997............................................. $ 5,750
1998............................................. 2,890
1999............................................. 1,104
2000............................................. 21
--------
Total......................................... $ 9,765
========
On November 15, 1994, the Partnership entered into a loan agreement
pursuant to which it may borrow funds in the aggregate amount of up to
$6,000,000 to finance or refinance the purchase of equipment and other personal
property assets subject to lease. This commitment to loan funds terminated on
December 31, 1996. As of December 31, 1996, $3,000,000 had been borrowed and was
outstanding by the Partnership under this loan agreement.
Interest on the notes payable is tied to various indexes. The weighted
average interest rate for these notes is 7.95% at December 31, 1996. The terms
of the Partnership's outstanding notes payable contain, among other covenants,
requirements for maintaining certain financial ratios and restrictions on cash
distributions to partners in the event of default.
The amounts borrowed under the loan agreements are secured by any and
all assets of the Partnership, whether now owned or hereafter acquired and
regardless of whether such assets were acquired with funds borrowed pursuant to
the loan agreement. The loan agreements impose certain restrictions regarding
the Partnership's ability to borrow additional funds from other lenders,
including a restriction requiring intercreditor agreements with respect to any
such borrowings. In this regard, the respective lenders under the Partnership's
loan agreements have entered into an intercreditor agreement relating to
borrowings by the Partnership under the loan agreements.
Note 8. Income Taxes.
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.
The net differences between the tax basis and the reported amounts of
the Partnership's assets and liabilities are as follows at December 31:
<PAGE>
Page 21 of 27
Reported Amounts Tax Basis Net Difference
---------------- --------- --------------
(Amounts in Thousands)
1996
- ----
Assets $ 34,797 $ 30,073 $ 4,724
Liabilities 10,890 10,455 435
1995
- ----
Assets $ 36,053 $ 31,328 $ 4,725
Liabilities 15,736 15,484 252
The following is a reconciliation between net income for financial
reporting purposes and net income for federal income tax purposes for the years
ended December 31:
1996 1995
------- -------
(Amounts in Thousands)
Net income for financial reporting purposes $ 1,973 $ 1,143
Adjustments for tax purposes:
Tax depreciation in excess of book (7,859) (8,119)
Difference in rental income recognition 8,003 5,551
Excess of book gain on sale of equipment
over tax gain on sale of equipment (34) (389)
Book valuation allowances not recognized
for tax purposes 488 448
Other (28) (2)
------- -------
Net loss for federal income tax purposes $ 2,543 $(1,368)
======= =======
Note 9. Related Entities.
Affiliates of the General Partner serve in the capacity of general
partners in other partnerships, all of which are engaged in the equipment
leasing and financing business.
Note 10. Net Income and Distributions per Limited Partnership Unit.
Net income and distributions per limited partnership unit were based on
the Limited Partner's share of net income and distributions and the weighted
average number of units outstanding of 1,399,791, 962,988 and 663,973 for the
years ended December 31, 1996, 1995 and 1994, respectively. For the 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.
Note 11. Reimbursed Costs to the General Partner and Affiliates.
The General Partner and affiliates incur certain adminstrative costs
such as data processing, investor and lessee communications, lease
administration, accounting, equipment storage and equipment remarketing, for
which it is reimbursed by the Partnership. These expenses incurred by the
General Partner and affiliates are to be reimbursed at the lower of the actual
costs or an amount equal to 90% of the fair market value for such services.
The reimbursed costs to the General Partner are $537,000, $381,000 and
$507,000 at December 31, 1996, 1995 and 1994, respectively.
In addition, the General Partner will receive a management fee and an
acquisition fee (see Note 1).
<PAGE>
Page 22 of 27
Note 12. Fair Value of Financial Instruments.
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument which it is practicable to estimate
that value.
Cash and Cash Equivalents
The carrying amount of cash and cash equivalents approximates fair value because
of the short maturity of these instruments.
Notes Receivable
The fair value of notes receivable is estimated by discounting the expected
future cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings.
Securities, Available-for-Sale
The fair values of investments in available-for-sale securities are estimated
based on quoted market prices.
Notes Payable
The carrying amount of the Partnership's variable rate notes payable
approximates fair value.
The estimated fair values of the Partnership's financial instruments are
as follows at December 31:
Carrying
Amount Fair Value
------- ----------
(Amounts in Thousands)
1996
- ----
Assets
Cash and cash equivalents $ 5,134 $ 5,134
Securities, available-for-sale 229 229
Notes receivable 4,643 4,951
Liabilities
Notes payable 9,765 9,765
1995
- ----
Assets
Cash and cash equivalents $ 2,757 $ 2,757
Securities, available-for-sale 998 998
Notes receivable 4,963 5,188
Liabilities
Notes payable 14,494 14,494
Note 13. Subsequent Events.
In January 1997, cash distributions of $36,000 and $414,000 were made to
the General and Limited Partners, respectively.
<PAGE>
Page 23 of 27
Item 9. Disagreements on Accounting and Financial Disclosure Matters.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The registrant is a limited partnership and, therefore, has no executive
officers or directors. The General Partner of the Registrant is Phoenix Leasing
Associates III L.P., a California limited partnership, the Corporate General
Partner of which is Phoenix Leasing Associates III, Inc., a Nevada corporation
and a wholly-owned subsidiary of Phoenix Leasing Incorporated (PLI), a
California corporation. The directors and executive officers of Phoenix Leasing
Associates III, Inc. (PLA) are as follows:
GUS CONSTANTIN, age 59, is President, and a Director of PLA III. Mr.
Constantin received a B.S. degree in Engineering from the University of Michigan
and a Master's Degree in Management Science from Columbia University. From 1969
to 1972, he served as Director, Computer and Technical Equipment of DCL
Incorporated (formerly Diebold Computer Leasing Incorporated), a corporation
formerly listed on the American Stock Exchange, and as Vice President and
General Manager of DCL Capital Corporation, a wholly-owned subsidiary of DCL
Incorporated. Mr. Constantin was actively engaged in marketing manufacturer
leasing programs to computer and medical equipment manufacturers and in
directing DCL Incorporated's IBM System/370 marketing activities. Prior to 1969,
Mr. Constantin was employed by IBM as a data processing systems engineer for
four years. Mr. Constantin is an individual general partner in four active
partnerships and is an NASD registered principal. Mr. Constantin is the founder
of PLI and the beneficial owner of all of the common stock of Phoenix American
Incorporated.
PARITOSH K. CHOKSI, age 43, is Senior Vice President, Chief Financial
Officer, Treasurer and a Director of PLA III. He has been associated with PLI
since 1977. Mr. Choksi oversees the finance, accounting, information services
and systems development departments of the General Partner and its Affiliates
and oversees the structuring, planning and monitoring of the partnerships
sponsored by the General Partner and its Affiliates. Mr. Choksi graduated from
the Indian Institute of Technology, Bombay, India with a degree in Engineering.
He holds an M.B.A. degree from the University of California, Berkeley.
GARY W. MARTINEZ, age 46, is Senior Vice President and a Director of PLA
III. He has been associated with PLI since 1976. He manages the Asset Management
Department, which is responsible for lease and loan portfolio management. This
includes credit analysis, contract terms, documentation and funding; remittance
application, change processing and maintenance of customer accounts; customer
service, invoicing, collection, settlements and litigation; negotiating lease
renewals, extensions, sales and buyouts; and management information reporting.
From 1973 to 1976, Mr. Martinez was a Loan Officer with Crocker National Bank,
San Francisco. Prior to 1973, he was an Area Manager with Pennsylvania Life
Insurance Company. Mr. Martinez is a graduate of California State University,
Chico.
BRYANT J. TONG, age 42, is Senior Vice President, Financial Operations
of PLA III. He has been with PLI since 1982. Mr. Tong is responsible for
investor services and overall company financial operations. He is also
responsible for the technical and administrative operations of the cash
management, corporate accounting, partnership accounting, accounting systems,
internal controls and tax departments, in addition to Securities and Exchange
Commission and other regulatory agency reporting. Prior to his association with
PLI, Mr. Tong was Controller-Partnership Accounting with the Robert A. McNeil
Corporation for two years and was an auditor with Ernst & Whinney (succeeded by
Ernst & Young) from 1977 through 1980. Mr. Tong holds a B.S. in Accounting from
the University of California, Berkeley, and is a Certified Public Accountant.
Neither the General Partner nor any Executive Officer of the General
Partner has any family relationship with the others.
<PAGE>
Page 24 of 27
Phoenix Leasing Incorporated and subsidiaries and the executive officers
of the General Partner serve in a similar capacity to the following affiliated
limited partnerships:
Phoenix Leasing Cash Distribution Fund V, L.P.
Phoenix Income Fund, L.P.
Phoenix High Tech/High Yield Fund
Phoenix Leasing Cash Distribution Fund IV
Phoenix Leasing Cash Distribution Fund III
Phoenix Leasing Cash Distribution Fund II
Phoenix Leasing Income Fund VII
Phoenix Leasing Income Fund VI
Phoenix Leasing Growth Fund 1982 and
Phoenix Leasing Income Fund 1977
Item 11. Executive Compensation.
<TABLE>
Set forth is the information relating to all direct remuneration paid or
accrued by the Registrant during the last year to the General Partner.
<CAPTION>
(A) (B) (C) (D)
Cash and cash- Aggregate of
Name of Individual Capacities in equivalent forms contingent forms
or persons in group which served of remuneration of remuneration
- ------------------- ------------- ------------------------------------------------- ----------------
(C1) (C2)
Securities or property
Salaries, fees, directors insurance benefits or
fees, commissions, and reimbursement, personal
bonuses benefits
------------------------- -----------------------
(Amounts in Thousands)
<S> <C> <C> <C> <C>
Phoenix Leasing
Associates III L.P. General Partner $753(1) $0 $0
=== = =
</TABLE>
(1) Consists of management and acquisition fees.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a)No person owns of record, or is known by the Registrant to own
beneficially, more than five percent of any class of voting
securities of the Registrant.
(b)The General Partner or its affiliates owns the equity securities of
the Registrant set forth in the following table:
<PAGE>
Page 25 of 27
(1) (2) (3)
Title of Class Amount Beneficially Owned Percent of Class
-------------- ------------------------- ----------------
General Partner Interest Represents a 4% interest in 100%
the Registrant's profits and
distributions, until the Limited
Partners have recovered their
capital contributions plus a
cumulative return of 11% per
annum, compounded quarterly, on
the unrecovered portion thereof.
Thereafter, the General Partner
will receive 15% interest in the
Registrant's profits and
distributions.
Limited Partner Interest 950 units .06
Item 13. Certain Relationships and Related Transactions.
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Page No.
--------
(a) 1. Financial Statements:
Balance Sheets as of December 31, 1996 and 1995 12
Statements of Operations for the year ended December
31, 1996, 1995 and 1994 13
Statements of Partners' Capital for the year ended
December 31, 1996, 1995 and 1994 14
Statements of Cash Flows for the year ended December
31, 1996, 1995 and 1994 15
Notes to Financial Statements 16-22
2. Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts
and Reserves 27
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the financial
statements or notes thereto.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended December 31,
1996.
(c) Exhibits
27. Financial Data Schedule
<PAGE>
Page 26 of 27
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, L.P.,
a California limited partnership
(Registrant)
By: PHOENIX LEASING ASSOCIATES III L.P.,
a California limited partnership,
General Partner
By: PHOENIX LEASING ASSOCIATES III, INC.,
a Nevada corporation,
General Partner
Date: March 25, 1997 By: /S/ GUS CONSTANTIN
-------------- ------------------------
Gus Constantin, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/S/ GUS CONSTANTIN President and a Director March 25, 1997
- ----------------------- of Phoenix Leasing Associates III, Inc. --------------
(Gus Constantin)
/S/ PARITOSH K. CHOKSI Chief Financial Officer, March 25, 1997
- ----------------------- Senior Vice President, --------------
(Paritosh K. Choksi) Treasurer and a Director of
Phoenix Leasing Associates III, Inc.
/S/ BRYANT J. TONG Senior Vice President, March 25, 1997
- ----------------------- Financial Operations of --------------
(Bryant J. Tong) (Principal Accounting Officer)
Phoenix Leasing Associates III, Inc.
/S/ GARY W. MARTINEZ Senior Vice President and a Director of March 25, 1997
- ----------------------- Phoenix Leasing Associates III, Inc. --------------
(Gary W. Martinez)
/S/ MICHAEL K. ULYATT Partnership Controller March 25, 1997
- ----------------------- of Phoenix Leasing Incorporated --------------
(Michael K. Ulyatt) (Parent Company)
<PAGE>
<TABLE>
Page 27 of 27
PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
SCHEDULE II
(Amounts in Thousands)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Classification Balance at Charged to Charged to Deductions Balance at
Beginning of Expense Revenue End of
Period Period
- ------------------------------ --------------- ---------------- ------------- ------------------- --------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1994
Allowance for losses on accounts
receivable $ 0 $ 38 $ 0 $ 0 $ 38
Allowance for losses on notes
receivable 0 66 0 0 66
----- ---- --- ----- -----
Totals $ 0 $104 $ 0 $ 0 $ 104
===== ==== === ===== =====
Year ended December 31, 1995
Allowance for losses on accounts
receivable $ 38 $ 75 $ 0 $ 10 $ 103
Allowance for early termination,
financing leases 0 305 0 255 50
Allowance for losses on notes
receivable 66 78 0 0 144
----- ---- --- ----- -----
Totals $ 104 $458 $ 0 $ 265 $ 297
===== ==== === ===== =====
Year ended December 31, 1996
Allowance for losses on accounts
receivable $ 103 $ 36 $ 0 $ 5 $ 134
Allowance for early termination,
financing leases 50 354 0 0 404
Allowance for losses on notes
receivable 144 97 0 0 241
----- ---- --- ----- -----
Totals $ 297 $487 $ 0 $ 5 $ 779
===== ==== === ===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
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0
0
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</TABLE>
