Page 1 of 9
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 10-QSB
__X__ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to______________.
Commission file number 0-25278
-------
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 _____
1,587,578 Units of Limited Partnership Interest were outstanding as of March 31,
1997.
Transitional small business disclosure format:
Yes _____ No __X__
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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,
1997 1996
---------- ----------
ASSETS
Cash and cash equivalents $ 6,244 $ 5,134
Accounts receivable (net of allowance for
losses on accounts receivable of $131
and $134 at March 31, 1997 and December
31, 1996, respectively) 321 323
Notes receivable (net of allowance for losses
on notes receivable of $241 at March 31,
1997 and December 31, 1996) 4,027 4,643
Net investment in financing leases (net of
allowance for early terminations of $404
at March 31, 1997 and December 31, 1996) 20,349 22,732
Capitalized acquisition fees (net of accumulated
amortization of $1,073 and $902 at March 31,
1997 and December 31, 1996, respectively) 991 1,111
Other assets 810 854
---------- ----------
Total Assets $ 32,742 $ 34,797
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 1,272 $ 1,125
Notes payable 8,327 9,765
---------- ----------
Total Liabilities 9,599 10,890
---------- ----------
Partners' Capital
General Partner 18 17
Limited Partners, 2,500,000 units authorized,
1,603,335 units issued and 1,587,578 and
1,588,681 units outstanding at March 31,
1997 and December 31, 1996, respectively 22,890 23,662
Unrealized gain on marketable securities
available-for-sale 235 228
---------- ----------
Total Partners' Capital 23,143 23,907
---------- ----------
Total Liabilities and Partners' Capital $ 32,742 $ 34,797
========== ==========
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,
1997 1996
------- -------
INCOME
Earned income, financing leases $ 817 $ 1,058
Interest income, notes receivable 283 221
Gain on sale of securities -- 632
Other income 94 61
------- -------
Total Income 1,194 1,972
------- -------
EXPENSES
Depreciation and amortization 347 193
Amortization of acquisition fees 171 139
Lease related operating expenses 51 30
Management fees to General Partner 101 104
Reimbursed administrative costs to General Partner 104 55
Interest expense 196 307
Provision for losses on receivables -- 93
General and administrative expenses 72 48
------- -------
Total Expenses 1,042 969
------- -------
NET INCOME $ 152 $ 1,003
======= =======
NET INCOME PER LIMITED PARTNERSHIP UNIT $ .07 $ .79
======= =======
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ .55 $ .53
======= =======
ALLOCATION OF NET INCOME:
General Partner $ 37 $ 36
Limited Partners 115 967
------- -------
$ 152 $ 1,003
======= =======
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,
1997 1996
------- -------
Operating Activities:
Net income $ 152 $ 1,003
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 347 193
Amortization of acquisition fees 171 139
Equity in earnings from joint ventures, net (8) (11)
Loss (gain) on sale of equipment 67 (58)
Gain on sale of securities -- (632)
Provision for early termination,
financing leases -- 93
Decrease in accounts receivable 2 74
Increase in accounts payable and
accrued expenses 114 52
Decrease in other assets 25 12
------- -------
Net cash provided by operating activities 870 865
------- -------
Investing Activities:
Principal payments, financing leases 2,609 1,902
Principal payments, notes receivable 1,212 851
Distributions from joint ventures 19 29
Proceeds from sale of equipment 67 590
Proceeds from sale of securities -- 648
Investment in financing leases (691) (3,388)
Investment in notes receivable (596) (443)
Investment in securities -- (16)
Payment of acquisition fees (18) (250)
------- -------
Net cash provided (used) by investing activities 2,602 (77)
------- -------
Financing Activities:
Partners' contributions -- 1,677
Proceeds from notes payable -- 1,000
Payments of principal, notes payable (1,438) (1,417)
Syndication costs -- (224)
Redemptions of capital (14) (96)
Distributions to partners (910) (682)
------- -------
Net cash provided (used) by financing activities (2,362) 258
------- -------
Increase in cash and cash equivalents 1,110 1,046
Cash and cash equivalents, beginning of period 5,134 2,757
------- -------
Cash and cash equivalents, end of period $ 6,244 $ 3,803
======= =======
Supplemental Cash Flow Information:
Cash paid for interest expense $ 184 $ 295
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 1996 amounts have been reclassified to
conform to the 1997 presentation.
Note 3. Income Taxes.
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the financial statements of the Partnership.
Note 4. Notes Receivable.
At March 31, 1997, the recorded investment in notes that are
considered to be impaired was $68,000 for which there was no allowance. The
average recorded investment in impaired loans during the three months ended
March 31, 1997 was approximately $68,000.
The activity in the allowance for losses on notes receivable during the
three months ended March 31, is as follows:
1997 1996
------- ------
(Amounts in Thousands)
Beginning balance $ 241 $ 144
Provision for losses - -
Write downs - -
------- ------
Ending balance $ 241 $ 144
======= ======
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 1,587,990 and 1,230,568 for the three
months ended March 31, 1997 and 1996, 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.
<PAGE>
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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. 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 March 31, 1997.
The Partnership reported net income of $152,000 during the three months
ended March 31, 1997, as compared to net income of $1,003,000 during the same
period in 1996. The decrease in net income is primarily due to a decrease in
earned income from financing leases and a decrease in gain on sale of
securities.
Total revenues decreased during the three months ended March 31, 1997,
as compared to the same period in 1996 due to the absence of a gain on the sale
of securities and a decrease in earned income from financing leases. The gain on
the sale of 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. There was no comparable sales of stock warrants during the period
ended March 31, 1997. The Partnership has been granted stock warrants as part of
its lease or financing agreements with certain emerging growth companies. As of
March 31, 1997, the Partnership had remaining investments in stock warrants with
unrealized gains of $235,000. These stock warrants contain certain restrictions,
but are generally exercisable within one year.
Earned income from financing leases decreased by $241,000 during the
three months ended March 31, 1997, as compared to the same period in 1996. The
decrease in earned income from financing leases is a result of a decline in the
Partnership's investment in financing leases. The Partnership's net investment
in financing leases was $20,349,000 at March 31, 1997, as compared to
$22,732,000 at March 31, 1996. The investment in financing leases, as well as
earned income from financing leases, will decrease over the lease term as the
Partnership amortizes income over the life of the lease using the interest
method. This decrease will be offset in part by a continuous investment of the
excess cash flows of the Partnership in new leasing and financing transactions
over the life of the Partnership.
Total expenses are comprised primarily of interest expense on
outstanding borrowings, depreciation and amortization. Interest expense
decreased by $111,000 during the three months ended March 31, 1997 as compared
1996. The increase in depreciation expense of $154,000 during 1997, as compared
to 1996, 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
$32,000 during the three months ended March 31, 1997, 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 1997 as compared to 1996. The
Partnership did not book any additional allowance for losses on receivables
during the three months ended March 31, 1997 due to the fact that a sufficient
allowance exists.
Liquidity and Capital Resources
During the public offering stage, which concluded on October 6, 1996,
<PAGE>
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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.
The Partnership reported net cash from leasing and financing activities
of $4,691,000 during the three months ended March 31, 1997, as compared to
$3,618,000 during the same period in 1996. This increase is reflective of the
increase in the Partnership's portfolio of leases and notes receivable.
As of March 31, 1997, the Partnership had acquired leased equipment
with an aggregate original cost of $43 million and invested $9 million in notes
receivable (including its pro rata interest in joint ventures), as compared to
investments of $37.2 million in leased equipment and $7 million in notes
receivable at March 31, 1996.
The Partnership owned equipment held for lease with an original cost of
$2,101,000 and a net book value of $679,000 at March 31, 1997, as compared to
$1,888,000 and $891,000 respectively at March 31, 1996. The General Partner is
actively engaged, on behalf of the Partnership, in remarketing and selling the
Partnership's off-lease equipment portfolio.
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. This line of credit 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 March 31, 1997, the Partnership had repaid
approximately $13.3 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 March 31, 1997, the Partnership had
borrowed $3 million under this loan agreement, approximately $1.3 million of
which has been repaid.
Payments of the Partnership's borrowings discussed above are payable
monthly. The Partnership made payments of principal of $1,438,000 on its
outstanding debt during the three months ended March 31, 1997, as compared to
$1,417,000 during the three months ended March 31, 1996.
The cash distributed to partners during the three months ended March
31, 1997 was $910,000, as compared to $682,000 during the same period in 1996.
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 $873,000
and $656,000 in cash distributions during the three months ended March 31, 1997
and 1996, respectively. The total cumulative cash distributions to limited
partners as of March 31, 1997 was $7,523,000, as compared to $3,187,000 at March
31, 1996. The General Partner received $37,000 and $26,000 during the three
months ended March 31, 1997 and 1996, respectively.
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.
<PAGE>
Page 8 of 9
PHOENIX LEASING AMERICAN BUSINESS FUND, L.P.
March 31, 1997
Part II. Other Information.
Item 1. Legal Proceedings. Inapplicable
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults Upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of Securities Holders. Inapplicable
Item 5. Other Information. Inapplicable
Item 6. Exhibits and Reports on 8-K:
a) Exhibits: None
(27) Financial Data Schedule
b) Reports on 8-K: None
<PAGE>
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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, L.P
-------------------------------------------
(Registrant)
BY: PHOENIX LEASING ASSOCIATES III, L.P.
a California limited partnership
Corporate General Partner
BY: PHOENIX LEASING ASSOCIATES III, INC.,
a Nevada corporation
Corporate General Partner
Date Title Signature
---- ----- ---------
May 13, 1997 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- ---------------- Senior Vice President, ----------------------
Treasurer and a Director of (Paritosh K. Choksi)
Phoenix Leasing Associates III, Inc.
May 13, 1997 Senior Vice President, /S/ BRYANT J. TONG
- ---------------- Financial Operations of ----------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Associates III, Inc.
May 13, 1997 Senior Vice President /S/ GARY W. MARTINEZ
- ---------------- and a Director of ----------------------
Phoenix Leasing Associates III, Inc. (Gary W. Martinez)
May 13, 1997 Partnership Controller of /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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,244
<SECURITIES> 0
<RECEIVABLES> 4,720
<ALLOWANCES> 372
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 32,742
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23,143
<TOTAL-LIABILITY-AND-EQUITY> 32,742
<SALES> 0
<TOTAL-REVENUES> 1,194
<CGS> 0
<TOTAL-COSTS> 1,042
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 196
<INCOME-PRETAX> 152
<INCOME-TAX> 0
<INCOME-CONTINUING> 152
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
</TABLE>
