SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 1997
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File No. 33-72740-FW
TRIUMPHE LEASING IX L.P.
(Name of Small Business Issuer in Its Charter)
Illinois 36-3921954
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
630 Dundee Road, Suite 345, Northbrook, Illinois 60062
(Address of principal executive offices, including zip code)
(847) 509-1500
(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Exchange
Act:
None
Securities registered pursuant to Section 12(g) of the Exchange
Act
Limited Partnership Interests
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and
no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or
any amendment to this Form 10-KSB. [X]
The issuer's revenues for the fiscal year ended December
31, 1998 were $2,144,634.
The aggregate market value of the voting securities of
the registrant beneficially owned by non-affiliates of the
registrant (the exclusion of the market value of the shares owned
by any person shall not be deemed an admission by the registrant
that such person is an affiliate of the registrant) at December
31, 1998 was $915,258.*
DOCUMENTS INCORPORATED BY REFERENCE
None.
* There has not been, nor is there expected to be, a
public market for the limited partnership units; the market value
of $915,258 is based on the book value per unit of limited
partnership interest.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
The registrant, Triumphe Leasing IX L.P. (the
"Partnership"), is a limited partnership organized in November,
1993 under the Revised Uniform Limited Partnership Act of the
State of Illinois. The Partnership sold $2,090,465 in Limited
Partnership Units (the "Units") to the public from January 31,
1994 through April 30, 1997, pursuant to a Registration Statement
on Form SB-2 filed with the Securities and Exchange Commission
(Registration No. 33-72740-FW). The business of the Partnership
is to acquire, own, lease, maintain, manage and sell various
items of new and used computer, computer peripheral,
telecommunications and office equipment (the "Equipment").
Equipment Acquisition. The General Partners selects
Equipment which they believe will maintain residual value.
Among the factors adversely affecting the residual values of
Equipment, and which make predictions of residual value
uncertain, are advances in technology that render equipment
obsolete, reductions in sales prices or rental rates by
manufacturers of comparable new equipment, and surpluses in the
marketplace for comparable equipment. The General Partners
utilizes data prepared by recognized appraisal or
valuation firms as a guide to estimating the residual values of
Equipment.
Terms of Leases. The General Partners generally
lease Equipment to lessees for initial terms ranging from six
months to six years, under agreements which impose on the lessees
all costs of maintenance, taxes and insurance for the equipment.
The leases may grant the lessees options to extend their leases
or to purchase the leased Equipment at the end of the initial
lease terms.
Lessees. The General Partners lease Equipment
to lessees it believes to be creditworthy. The General Partners
will depend heavily on the lease credit evaluations of the
Partnership's lenders which, in turn, look primarily to rentals
under the leases to repay their loans.
Leverage. The General Partners finance the
purchase of Equipment by the use of nonrecourse loans in an
amount in excess of 50% of the purchase price thereof. A
nonrecourse loan is one in which the lender agrees that its
recourse in the event of default is limited to the equipment
securing the loan, the rents payable under the related lease and
the proceeds derived from their sale, and that neither the Part-
nership nor any Partner will be liable for payment. It is
anticipated that generally the loans will be in the maximum
amount which can be repaid with interest out of the lease rentals
receivable during the initial lease terms. The General Partners
incur debt which bears a fixed interest rate over the
term of the loan, rather than a variable rate which changes with
the prime rate or other criteria.
Refinancing and Sale of Equipment. In some cases the
Partnership may dispose of its Equipment at the end of the
initial term of the related lease. This may be accomplished by
(a) selling the Equipment to the lessee, (b) selling the
Equipment in the open market, (c) negotiating an extension of the
lease term, and (d) securing a new lessee and selling the
Equipment subject to the extended or new lease to another
investor. In other cases, at the end of the initial term of a
lease, the Partnership may decide to retain the Equipment
and enter into a new or extended lease. The Partnership will
then either (a) refinance the Equipment, which will permit the
Partnership to distribute to the Partners any cash received in
the refinancing or (b) retain the debt-free leased Equipment so
as to secure for the Partnership the rental income under the
lease. The Partnership may also sell the lease prior to the end
of the initial lease term. It is not anticipated that the terms
of any extended or replacement leases will extend beyond December
31, 2000.
<PAGE>
Independent Brokers. Most of the Partnership s
Equipment purchases and related lease opportunities
were brought to its attention by independent leasing brokers,
which charged the Partnership a commission for their
services or alternatively purchase the Equipment and secure the
lessee and then resell the package to the Partnership at a
profit. Independent brokers may also be compensated by the
Partnership for assisting in the re-leasing and disposition of
its Equipment. The independent brokers may also participate in
the proceeds of the leases on a percentage or fixed basis after
the Partnership has earned a specified return on their investment
in a lease.
No Commitments. The foregoing description of the
proposed business of the Partnership is only a statement of the
present intention of the General Partners, and should not be
viewed as a commitment as to the Partnership's actual business
activities. The General Partners are granted unlimited
discretion in the Partnership Agreement to make all decisions
regarding the business of the Partnership. These decisions will
include the type of equipment to be acquired, the terms of
leases, the amount and nature of borrowings, and the time and
terms of Equipment disposition. The General Partners intend to
exercise sound business judgment in response to market conditions
when making these decisions, which may result in substantial
deviations from the business now envisioned.
As of December 31, 1998, the Partnership had purchased
$10,707,925 worth of Equipment. The Equipment owned by the
Partnership as of that date consists of computer hardware and
peripherals.
Leases. The following is a summary of each of the
leases and related Equipment acquired by the Partnership as of
December 31, 1998 and owned during 1998:
1. Thrift Drug, Inc.
Pursuant to a master lease agreement entered into by
the Partnership and Thrift Drug, Inc., dated as of January 1,
1996, and an equipment supplement dated October 1, 1996, Thrift
has leased 17 IBM laser printers. The term of the lease is 24
months which commenced November 1, 1996. The cost of the
equipment and lease to the Partnership was $78,551, which the
Partnership paid in cash. The monthly rent is $2,664. This lease
has expired and the equipment has been returned. Currently, the
partnership is engaged in negotiations to sell the printers.
Thrift operates a chain of retail drug stores.
2. AT&T Corp.
(c) Under the terms of a lease order dated October 24,
1994 to a master lease agreement as amended June 15, 1990, AT&T
has leased computer equipment manufactured by Hewlett Packard.
The Partnership has acquired from the original lessor the
equipment and all of the rights under the lease order. The term
of the lease order was 36 months, which commenced December 1,
1994. The monthly rent was $43,630. The cost to the Partnership
of the equipment and lease order was $1,619,276. The Partnership
paid $217,773 of this amount in cash and the balance by assuming
existing nonrecourse financing of the equipment.
The lease above was early renewed in February
1996. The term of the lease was extended to January 1999 at a
monthly rent of $40,000. AT&T is in the communication services
business.
<PAGE>
3. Litton Computer Services, a Division of Litton
Industries, Inc.
Under the terms of a master lease agreement entered into
by Litton Computer Services, a Division of Litton Industries,
Inc. ("Litton") dated October 31, 1990, and an equipment schedule
dated March 1, 1994, as amended, Litton has leased computer
equipment manufactured by AT&T Paradyne, Larscom and IBM.
The Partnership has acquired from the original lessor
the equipment and all of the rights under the schedule. The term
of the schedule is 60 months, which commenced on May 1, 1994.
The monthly rent is $26,170. The cost to the Partnership of the
equipment and supplement was $1,325,457. The Partnership paid
$80,922 of this amount in cash, and the balance by assuming
nonrecourse financing of the equipment.
Litton's businesses include systems engineering,
information systems and data processing.
4. Total System Services, Inc.
(a) Under the terms of a master lease agreement dated
July 29, 1992 and an equipment schedule dated as of June 14,
1996, Total System has leased computer equipment manufactured by
Anacomp. The initial term of the schedule is 36 months
commencing on June 1, 1996. The monthly rent is $19,328. The
cost of the equipment and schedule to the Partnership was
$635,348. The Partnership paid $93,684 of this amount in cash
and the balance by assuming nonrecourse financing of the
equipment.
(b) Under the terms of a master lease agreement dated
July 29, 1992 and an equipment schedule dated as of June 18,
1996, Total System has leased equipment manufactured by Pitney
Bowes. The initial term of the schedule is 48 months commencing
on May 1, 1996. The monthly rent is $26,542. The cost of the
equipment and schedule to the Partnership was $1,140,431. The
Partnership paid $170,904 of this amount in cash and the balance
by assuming nonrecourse financing of the equipment.
(c) Under the terms of a master lease agreement entered
into by Total System dated July 29, 1992, and an equipment
schedule dated January 16, 1997, Total System has leased computer
equipment manufactured by Anacomp. The term of the schedule is
36 months, which commenced on February 1, 1997. The monthly rent
is $12,672. The cost to the Partnership of the equipment and the
schedule was $421,023. The Partnership paid $61,000 of this
amount in cash and the balance by assuming nonrecourse financing
of the equipment.
Total System is in the credit card processing business.
<PAGE>
5. Monsanto Company
Under the terms of a master lease agreement dated July
1, 1993, and an equipment schedule dated as of November 22, 1995,
Monsanto Company ("Monsanto") has leased Cisco routing equipment.
The initial term of the schedule is 36 months which commenced
January 1, 1996. The monthly rent is $5,618. The cost of the
equipment and the schedule was $207,388. The Partnership paid
$27,531 of this amount in cash and the balance by assuming a
nonrecourse promissory note.
Monsanto is a major manufacturer and distributor of
chemicals and chemical products.
6. Weirton Steel Corporation
Under the terms of a master lease agreement dated
February 29, 1996, and an equipment schedule dated as of February
29, 1996, Weirton Steel Corporation ( Weirton Steel ) has leased
computer equipment manufactured by IBM. The initial term of the
schedule is 36 months which commenced May 1, 1996. The monthly
rent is $7,700. The cost of the equipment and the schedule to
the Partnership was $280,356. The Partnership paid $41,338 in
cash and the balance by assuming nonrecourse financing of the
equipment.
Weirton Steel is a producer of steel and tin mill
products.
7. Southern Company Services, Inc.
Under the terms of a master lease agreement dated
December 2, 1994, and an equipment schedule dated as of March 12,
1996, Southern Company Services, Inc. ( Southern ) has leased 15
Alphaservers manufactured by Digital Electronics Corporation. The
initial term of the schedule is 36 months which commenced May 1,
1996. The monthly rent is $13,612. The cost of the equipment
and the schedule to the Partnership was $526,733. The
Partnership paid $77,955 in cash and the balance by assuming
nonrecourse financing of the equipment.
Southern Company Services, Inc is in the energy
supply business.
8. Hughes Network Systems, a Hughes Electronics
Company
Under the terms of a master lease agreement dated
February 16, 1996, and an equipment schedule dated as of May 16,
1996, Hughes Network Systems ( Hughes ) has leased Cisco routing
equipment. The initial term of the schedule is 36 months which
commenced June 1, 1996. The monthly rent is $6,554. The cost of
the equipment and the schedule to the Partnership was $234,299.
The Partnership paid $28,058 in cash and the balance by assuming
nonrecourse financing of the equipment.
Hughes Network Systems manufactures and distributes
networking components and satellite dishes.
<PAGE>
9. Chrysler Motors Corporation
(a) Under the terms of a master lease agreement dated
April 5, 1989, and an equipment schedule dated as of May 29,
1996, Chrysler Motors Corporation ( Chrysler ) has leased
ONYX/IRS infinite reality systems manufactured by Silicon
Graphics. The initial term of the schedule is 36 months which
commenced July 19, 1996. The monthly rent is $18,494. The cost
of the equipment and the schedule to the Partnership was
$706,115. The Partnership paid $141,104 in cash and the balance
by assuming nonrecourse financing of the equipment.
(b) Under the terms of a master lease agreement dated
April 5, 1989, and an equipment schedule dated as of September
30, 1996, Chrysler has leased 19 Indigo2 systems manufactured by
Silicon Graphics. The initial term of the schedule is 36 months
which commenced October 28, 1996. The monthly rent is $20,362.
The cost of the equipment and the schedule to the Partnership was
$783,289. The Partnership paid $142,202 in cash and the balance
by assuming nonrecourse financing of the equipment.
Chrysler Corporation is one of the world's largest
manufacturers of automobiles, vans, and trucks.
10. Johnson Controls, Inc.
Under the terms of a master lease agreement entered into
by Johnson Controls, Inc. ( Johnson Controls ) dated August 29,
1995, and an equipment schedule dated as of March 26, 1997,
Johnson Controls has leased various computer equipment
manufactured by SGI.
The Partnership has acquired from the original lessor
the equipment and all of the rights under the schedule. The term
of the schedule is 36 months, which commenced on February 1, 1997.
The monthly rent is $5,309. The cost to the Partnership of the
equipment and schedule was $204,130. The Partnership paid
$30,781 of this amount in cash and the balance by executing a
nonrecourse promissory note.
Johnson Controls is in the automotive and systems
service business.
11. Genus, Inc.
Under the terms of a master lease agreement entered into
by Genus, Inc. ( Genus ) dated April 10, 1996, and an equipment
schedule dated February 11, 1997, Genus has leased computer
equipment manufactured by Concorde.
The Partnership has acquired from the original lessor
the equipment and all of the rights under the schedule. The term
of the schedule is 36 months, which commenced on April 1, 1997.
The monthly rent is $3,923. The cost to the Partnership of the
equipment and schedule was $124,300, which the Partnership paid
in cash.
Genus is in the automotive business.
<PAGE>
<TABLE>
The following tabulation sets forth the lessee, the
equity investment of the Partnership, the debt incurred at the
date of acquisition, the lease term at the acquisition of the
Equipment and lease term remaining at December 31, 1998:
<CAPTION>
Lease Lease
Term Term
Equipment Remaining
at at
Acquisition 12/31/98
(in (in)
Lessee Equity Debt months) months)
<S> <C> <C> <C> <C>
Fingerhut Corp. $ 116,480 $ 539,377 36 (1)
Bell Comm. 81,045 398,098 33 (1)
Thrift Drug 20,000 -- 12 (1)
Thrift Drug 78,551 -- 24 (3)
AT&T Corp. 58,000 268,854 15 (1)
AT&T Corp. 81,200 -- 15 (1)
AT&T Corp. 217,773 1,401,503 36 (2)
Charming Shoppes 20,781 204,099 33 (1)
Litton Industries 80,922 1,244,535 58 6
Total System 66,100 337,575 31 (1)
Total System 93,684 541,664 31 5
Total System 170,904 969,527 42 16
First Interstate 34,374 191,717 35 (1)
First Interstate 3,529 -- 29 (1)
Monsanto 27,531 179,857 35 3
Weirton Steel 41,338 239,018 35 4
Southern Company 77,955 448,778 36 4
Hughes Network 28,058 206,241 35 5
Chrysler 141,104 565,011 34 7
Chrysler 142,202 641,087 35 10
Johnson 30,781 173,349 36 13
Genus 124,300 -- 36 15
Total System 61,000 360,023 36 13
---------- ----------
Total: $1,797,612 $8,910,313
========== ==========
<FN>
</TABLE>
(1) Lease expired and equipment was sold.
(2) Lease was early renewed in February 1996. The term of
the lease was extended to January 1999 at a monthly rent of
$40,000.
(3) Lease expired, the Partnership is in the process of
remarketing the equipment.
<PAGE>
Competition. The equipment leasing industry is highly
competitive and the Partnership competes with other leasing
companies, with equipment manufacturers and distributors, and
with other entities similar to the Partnership, most of which
have greater financial resources than the Partnership and more
experience in the equipment leasing business than the General
Partners. Other leasing companies, especially equipment
manufacturers and distributors, may be in a position to offer
equipment for lease upon financial terms more favorable than
those which the Partnership can offer and may also be in a
position to offer trade-in or exchange privileges on a wide range
of equipment, a pass-on of any investment tax credit,
comprehensive maintenance contracts, and other services and
benefits to lessees which the Partnership does not offer.
Major Customers. Approximately 77% and 73% of the
Partnership's lease income in the period ended December 31, 1998
and 1997 respectively was from three customers. For those direct
financing leases in which the Partnership has a net investment at
December 31, 1998 and 1997, 100% was with two customers. See
Note 4 in "Notes to Financial Statements" in this report.
Employees. The Partnership does not have any employees.
Item 2. DESCRIPTION OF PROPERTY
See "Item 1--Description of Business" in this report.
Item 3. LEGAL PROCEEDINGS
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There has not been, nor is there expected to be, a
public market for the Units. As of December 31, 1998 there were
approximately 201 holders of Units.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
The Partnership commenced the offering of Limited
Partnership Units and began operations on January 31, 1994. As
of April 30, 1997 the Partnership had sold $2,090,465 in Units.
As of December 31, 1998 the Partnership had acquired $10,707,925
of leased equipment, excluding capitalized equipment acquisition
costs, with an equity investment of $1,797,612 and nonrecourse
bank borrowings of $8,910,313.
<PAGE>
Operations
Total revenues increased to $2,144,634 for the fiscal
year ended December 31, 1998 ("fiscal 1998") from $1,979,247 for
the fiscal year ended December 31, 1997 ("fiscal 1997"). Total
revenues consist of lease rental income and interest earned on
the proceeds of Units sold and loss on sales of equipment. This
increase in total revenues resulted from a decrease in the
losses from sale of equipment.
Operating expenses decreased to $1,730,349 for fiscal
1998 from $2,814,657 for fiscal 1997. Operating expenses consist
of interest on nonrecourse financing of equipment purchased,
depreciation of equipment under operating leases, amortization of
organization expenses, administrative expenses, and payments to a
related party for administrative cost reimbursements. The
decrease in operating expenses from fiscal 1997 to fiscal 1998
resulted primarily from a decrease in depreciation incurred due
to the maturation of equipment on lease.
Liquidity and Capital Resources
Liquid assets of the Partnership increase as offering
proceeds are collected and decrease as the Partnership makes
equipment investments. Cash of the Partnership at December 31,
1998 includes undistributed cash available from operations during
the period January 31, 1994 to December 31, 1998.
The Partnership has a cash management program which
provides for the temporary investment of cash in various
short-term money market instruments pending their investment in
Equipment or distribution to partners.
The Partnership generally finances the purchase of
Equipment by the use of nonrecourse loans in an amount in excess
of 50% of the purchase price thereof. The indebtedness incurred
by the Partnership related to the acquisition of Equipment is
generally fully amortized by the monthly rent payments due to the
Partnership under related leases.
The Partnership maintains a working capital and
contingency reserve in an amount equal to 1% of the gross
proceeds of the offering of Units. Such amounts, together with
any amount reserved from operations, will be available to meet
working capital requirements and to provide for contingencies.
The partnership does not believe that it is subject to any
material costs related to the Year 2000 issues .
Year 2000
The Partnership owns equipment which it leases in the
ordinary course of business. Each lessee is obligated to make
all payments under its respective lease irrespective of the
ability of such equipment to function due to the Year 2000
computer problem. All computer processing necessary for the
Partnership s business operations is conducted by the General
Partner of the Partnership. The General Partner has advised the
Partnership that it anticipates no problems due to the Year 2000
problem with performing its obligations on behalf of the
Partnership. Accordingly, the Partnership does not believe that
the Year 2000 computer problem will have a material adverse
effect on the Partnership or its results of operations.
Item 7. FINANCIAL STATEMENTS
The financial statements of the Partnership as of
December 31, 1998 and for the fiscal years ended December 31,
1998 and December 31, 1997 and the notes thereto are set forth
elsewhere herein.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
The Partnership has no directors or executive officers.
The General Partners of the Partnership are Gerald A. Horwitz and
TL General IX Corp., an Illinois corporation ("TL General"), the
sole Director of which is Mr. Horwitz. Mr. Horwitz serves as
Director of TL General until his successor is elected.
The executive officers of TL General are Mr. Horwitz and
Jerry Schwartz, who were elected to serve until their successors
are elected and qualified.
Gerald A. Horwitz. Mr. Horwitz, age 63, is the
President and sole Director of TL General. He is also the
Chairman of the Board, sole Director, President, Treasurer and
sole voting shareholder of Raffaello, Inc., the sole shareholder
of TL General, as well as the sole Director and Treasurer of
Triumphe Leasing Group, Inc. and Horwitz & Associates, Inc.
(formerly known as Horwitz, Schakner & Associates, Inc. and G.A.
Horwitz & Co. Inc.), a securities broker-dealer and investment
adviser, President and sole Director of TL General Corp., the
corporate General Partner of Triumphe Leasing Limited Partnership
and President and sole Director of TL General VIII Corp., the
corporate General Partner of Triumphe Leasing VIII L.P. Prior to
organizing Horwitz & Associates, Inc. in 1970, Mr. Horwitz served
as an officer of Thomson, McKinnon and Auchincloss and prior to
that he served as an officer of Blair and Company, both of which
were New York Stock Exchange member firms. Mr. Horwitz attended
Roosevelt University in Chicago, where he earned a Bachelor of
Science Degree. He also attended the University of Wisconsin
as an undergraduate and the University of Chicago as a
post-graduate student and served part-time as an instructor at
Northwestern University.
Mr. Horwitz has served as a general partner of Res-Com,
Ltd., Unilease Associates, Quest, Valley Associates, Leasing
Income Associates, Equipment Leasing Partners, Triumphe Leasing
Limited Partnership, and Triumphe Leasing VIII L.P.; and as an
officer and director of the sole general partners of Triumphe
Leasing Limited Partnership, Triumphe Leasing VIII L.P., Concorde
Leasing Limited Partnership and Invalease, Ltd. Each of these
entities are Illinois limited partnerships engaged in the
equipment leasing business. Mr. Horwitz is also the sole trustee
of Tax Advantaged Income Trust, a grantor trust formed in 1985
under Illinois law to purchase and lease equipment.
Jerry Schwartz. Mr. Schwartz, age 53, has served in
various executive capacities for affiliates of Raffaello, Inc.
since April 1987. He is Vice President, Secretary and Treasurer
of TL General and
<PAGE>
TL General Corp. From 1982 to 1987, he served as a principal of
J.L. Schwartz & Co., Inc., a public accounting firm. Prior
thereto, Mr. Schwartz served as an accounting and operational
manager for a certified public accounting firm.
There is no family relationship among the foregoing
officers.
Item 10. EXECUTIVE COMPENSATION
As stated in Item 9, the Partnership has no executive
officers or directors. The compensation to the General Partners
is set forth in Item 12 of this report.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of December 31, 1998, no person owned of record or
was known by the Partnership to own beneficially more than 5% of
the Partnership's Units then outstanding.
The Partnership has no executive officers. As of
December 31, 1998, neither Gerald A. Horwitz, TL General IX Corp.
nor Jerry Schwartz owned any Units.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Fees to General Partners and Affiliates. The General
Partners and their affiliates will receive substantial fees,
compensation and reimbursement of expenses from the Partnership.
For its services in actively managing the Partnership,
including, but not limited to, preparation of SEC reports and
filings, preparation of reports to investors, leasing and
re-leasing Equipment, arranging for necessary maintenance and
repairs of Equipment, collecting revenues, paying operating
expenses, determining that the Equipment is used in accordance
with all operative contractual arrangements and providing
clerical and bookkeeping services necessary to the operation of
the Partnership, the Partnership will pay the General Partners
and/or their affiliates an Equipment Management Fee in an amount
equal to (i) 2% of gross rental payments (exclusive of taxes and
other reimbursements) payable to the Partnership with respect to
Full Payout Leases; or (ii) 3% of gross rental payments
(exclusive of taxes and other reimbursements) payable to the
Partnership with respect to Operating Leases.
For its services in locating and acquiring equipment,
and arranging for financing and locating lessees, the Partnership
will pay to the General Partners and their affiliates an
Equipment Acquisition Fee in an amount equal to 5% of the
Partnership's equity investment in such equipment; provided,
however, that the Equipment Acquisition Fee shall not be paid if,
and to the extent that, such payment shall cause the amount of
gross proceeds of the offering invested in Equipment (including
costs of investments other than Equipment) to be less than 85% of
the gross proceeds of the offering.
For its services in connection with the sale of any
Equipment, the Partnership may pay to the General Partners and
their affiliates a Subordinated Resale Fee in an amount equal to
one-half of a Competitive Equipment Sale Commission, not to
exceed 3% of the contract sales price of such Equipment, provided
that any Subordinated Resale Fee earned shall not be paid to the
General Partners and their affiliates prior to "Payout." Payout
is defined as the time when the aggregate amount of all
distributions to the Investor Limited Partners of Distributable
Cash equals the sum of: (i) the aggregate amount of the
<PAGE>
Investor Limited Partners' Capital Contributions, and (ii) a
cumulative, non-compounded 12% annual return on the aggregate
amount of each Investor Limited Partner's unreturned Capital
Contributions (calculated from the date such Investor Limited
Partner was admitted to the Partnership). For purposes of this
definition, Capital Contributions shall be deemed to have been
returned only to the extent that distributions of Distributable
Cash to the Investor Limited Partners exceed the amount required
to satisfy such 12% annual return. If the General Partners
participate with an independent broker on resale, such
subordination shall apply only to the General Partners' Resale
Fee. In no event shall total commissions paid to all persons
exceed that which is reasonable, customary and competitive in
light of the size, type and location of the equipment.
During the fiscal years ended December 31, 1998 and
1997, the Partnership accrued management fees to the General
Partners of $75,221 and $86,343 respectively with $216,484 of
management fees unpaid at December 31, 1998. The Partnership
paid $0 and $20,000 in management fees in 1998 and 1997,
respectively. The Partnership paid $0 and $10,000 in
acquisition fees during fiscal 1998 and 1997, respectively.
Allocations and Distributions of the Partnership. In
accordance with the Partnership Agreement, the General Partners
received distributions of $1,856 and were allocated net loss of
$4,143 for fiscal 1998.
Reimbursements. The General Partners and their
affiliates shall be reimbursed for any expenses they incur in
organizing the Partnership and offering the Units, up to a
maximum of $1,400 multiplied by the number of Units actually
sold.
In addition, reimbursements in amounts not presently
determinable will also be made from time to time to the General
Partners and their affiliates for reasonable out-of-pocket
expenses incurred in connection with the management,
administration and operation of the Partnership and the
acquisition of Equipment (e.g., photocopying, postage, and
filing fees). The General Partners presently estimate that
such reimbursements will not exceed $25,000 per year.
During the fiscal year ended December 31, 1998, the
Partnership paid nominal reimbursements to affiliates of the
General Partners.
PART IV
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits, as listed in the Exhibit Index set
forth on page E-1, are submitted as a separate section of this
report.
(b) No current reports on Form 8-K were filed during
the quarter ended December 31, 1998.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange
Act, the Registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
TRIUMPHE LEASING IX L.P.
By: TL GENERAL IX CORP.
Its: General Partner
Date: February 25, 1998 By: /s/ Gerald A. Horwitz
----------------------------
Gerald A. Horwitz, President
In accordance with the Exchange Act, this report has
been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
Signatures Title(s) Date
/s/ Gerald A. Horwitz Sole Director and March 24, 1999
- ------------------------ President of the
Gerald A. Horwitz corporate General
Partner and as a
General Partner
(Principal
Executive
Officer)
/s/ Jerry Schwartz Vice President, March 24, 1999
- ------------------------ Secretary and
Jerry Schwartz Treasurer of the
corporate General
Partner (Principal
Financial and
Accounting
Officer)
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d) OF THE EXCHANGE ACT BY NON-REPORTING
ISSUERS
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
1. Copy of the Partnership's Certificate of
Limited Partnership filed with the Illinois
Secretary of State on November 30, 1993
(Incorporated by reference to Exhibit 4.4 to
Registration Statement No. 33-44929).
2.1 Copy of the Partnership's original Agreement
of Limited Partnership, dated November 30,
1993 (Incorporated by reference to Exhibit 4.3
to Registration Statement No. 33-44929).
2.2 Form of Amended and Restated Agreement of
Limited Partnership (Incorporated by reference
to Exhibit A to the Partnership's prospectus
dated January 31, 1994 as part of Registration
Statement No. 33-44929).
10 Form of Waiver of Gerald A. Horwitz and TL
General IX Corp. (Incorporated by reference to
Exhibit 10 to Registration Statement No.
33-72740-FW).
27 Financial Data Schedule
Triumphe Leasing IX L.P.
Financial Statements
Years Ended December 31, 1998 and 1997
<PAGE>
Triumphe Leasing IX L.P.
Contents
Report Of Independent Certified Public Accountants 3
Financial Statements
Balance Sheet 5-6
Statements of Operations 7
Statements of Partners Equity 8
Statements of Cash Flows 9
Summary of Accounting Policies 10-13
Notes to Financial Statements 14-16
<PAGE>
Report Of Independent Certified Public Accountants
To the Partners
Triumphe Leasing IX L.P.
Northbrook, Illinois
We have audited the accompanying balance sheet of Triumphe
Leasing IX L.P. as of December 31, 1998 and the related
statements of operations, partner equity and cash flows for each
of the two years in the period ended December 31, 1998. These
financial statements are the responsibility of the Partnership s
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Triumphe Leasing IX L.P. at December 31, 1998, and the results
of its operations and its cash flows for each of the two years in
the period ended December 31, 1998 in conformity with generally
accepted accounting principles.
/s/ BDO Seidman, LLP
Chicago, Illinois
January 21, 1999
<PAGE>
Financial Statements
<PAGE>
<TABLE>
Triumphe Leasing IX L.P.
Balance Sheet
<CAPTION>
December 31, 1998
<S> <C>
Assets
Current Assets
Cash $ 38,281
Accounts receivable 2,664
Net investment in direct financing
leases (Notes 1 and 4) 217,481
---------
Total Current Assets 258,426
---------
Computer Equipment on Operating Leases,
less accumulated depreciation of
$4,725,776 (Note 1) 2,149,666
---------
Other Assets
Net investment in direct financing leases,
less current portion (Notes 1 and 4) 27,461
---------
Total Other Assets 27,461
---------
$ 2,435,553
=========
<FN>
</TABLE>
<PAGE>
<TABLE>
Triumphe Leasing IX L.P.
Balance Sheet
<CAPTION>
December 31, 1998
<S> <C>
Liabilities and Partners Equity
Current Liabilities
Other Liabilities 383
Current maturities of long-term debt (Note 1) $ 1,171,365
---------
Total Current Liabilities 1,171,748
Accrued management fees (Note 2) 216,484
Long-Term Debt, less current maturities
(Note 1) 122,179
---------
Long-Term Liabilites 338,663
---------
Total Liabilities 1,510,411
---------
Partners Equity
General partners 9,958
Limited partners 915,184
---------
Total Partners Equity 925,142
---------
$ 2,435,553
=========
<FN>
See accompanying summary of accounting policies and notes to
financial statements.
</TABLE>
<PAGE>
<TABLE>
Triumphe Leasing IX L.P.
Statements of Operations
<CAPTION>
Year ended December 31, 1998 1997
<S> <C> <C>
Revenues
Lease income $ 2,143,597 $ 2,461,668
Loss on sale of equipment - (486,947)
Interest 1,037 4,526
---------- ---------
Total revenues 2,144,634 1,979,247
---------- ---------
Operating Expenses
Interest 199,415 354,856
Depreciation and amortization 1,435,183 2,268,428
Administrative (Note 2) 95,751 191,369
--------- ---------
Total operating expenses 1,730,349 2,814,653
--------- ---------
Net Income (Loss) $ 414,285 $ (835,406)
========= =========
Net Income (Loss) Allocated to
General partners $ 4,143 $ (8,354)
Limited partners 410,142 (827,052)
--------- ---------
$ 414,285 $ (835,406)
========= =========
Weighted Average Units Outstanding During the Period
General partners 1.0761 1.0533
Limited partners 106.5354 104.2761
Basic Earnings Per Unit
General partners $ 3,850 $ (7,931)
Limited partners $ 3,850 $ (7,931)
<FN>
See accompanying summary of accounting policies and notes to
financial statements.
</TABLE>
<PAGE>
<TABLE>
Triumphe Leasing IX L.P.
Statements of Partners Equity
<CAPTION>
General Limited
Total Partners Partners
<S> <C> <C> <C>
Partners Equity, at
January 1, 1997 $ 1,630,647 $ 16,750 $ 1,613,897
Sale of partnership
units 158,140 1,690 156,450
Distributions ($2,400
per unit) (247,667) (2,403) (245,264)
Net loss (835,406) (8,354) (827,052)
Offering costs (1,203) (12) (1,191)
---------- ------- ----------
Partners Equity, at
December 31, 1997 704,511 7,671 696,840
Distributions ($1,800
per unit) (193,654) (1,856) (191,798)
Net income 414,285 4,143 410,142
---------- ------- ----------
Partners Equity, at
December 31, 1998 $ 925,142 $ 9,958 $ 915,184
========== ======= ==========
<FN>
See accompanying summary of accounting policies and notes to
financial statements.
</TABLE>
<PAGE>
<TABLE>
Triumphe Leasing IX L.P.
Statements of Cash Flows
<CAPTION>
Year ended December 31, 1998 1997
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ 414,285 $ (835,406)
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities
Depreciation and
amortization 1,435,183 2,268,428
Amortization of
unearned income - (79,328)
Loss on sale of equipment
under lease - 486,947
Changes in assets and
liabilities
Decrease in
accounts receivable 2,664 34,039
Increase in accrued
management fees 75,273 61,933
Decrease in accounts
payable - (8,580)
Increase (Decrease) in
other liabilities 383 (7,060)
---------- ----------
Net cash provided by operating
activities 1,927,788 1,920,973
---------- ----------
Cash Flows From Investing Activities
Principal payments received
under direct financing leases 353,283 377,783
Purchase of computer equipment
on operating leases - (635,153)
Proceeds from sale of equipment
under lease - 140,470
Acquisition of direct financing
leases - (48,895)
---------- ----------
Net cash provided by (used in)
investing activities 353,283 (165,795)
---------- ----------
Cash Flows From Financing Activities
Proceeds from nonrecourse debt - 533,372
Principal payments on
nonrecourse debt (2,228,932) (2,293,662)
Partner capital contributions - 158,140
Distributions to partners (193,654) (247,667)
Offering costs paid - (1,203)
---------- ----------
Net cash (used in)
financing activities (2,422,586) (1,851,020)
---------- ----------
Net Decrease in Cash (141,515) (95,842)
Cash, at beginning of year 179,796 275,638
---------- ----------
Cash, at end of year $ 38,281 $ 179,796
========== ==========
Supplemental Disclosure of Cash
Flow Information
Cash paid during the year for
interest $ 199,415 $ 354,856
<FN>
See accompanying summary of accounting policies and notes to
financial statements.
</TABLE>
<PAGE>
Triumphe Leasing IX L.P.
Summary of Accounting Policies
Organization and Triumphe Leasing IX L.P. (the
Business Partnership ), located in Northbrook,
Illinois, was formed on November 30,
1993 under the Revised Uniform
Limited Partnership Act of the State
of Illinois. The Partnership
commenced operations January 31, 1994.
The Partnership operates in one business
segment, equipment leasing, as
determined in accordance with FAS 131
governing segment information disclosure.
The Partnership acquires, owns, leases,
maintains, manages and sells equipment.
At December 31, 1998 and 1997, 106.5354
limited partnership units were
outstanding.
The Partnership maintains its records
on the accrual method of accounting
for financial reporting and income tax
purposes. The statements do not give
effect to any assets or liabilities,
including income taxes, that the
partners may have outside of their
interest in the Partnership.
The Partnership purchases and leases
to third parties various items of
equipment. The equipment purchased by
the Partnership to date and related
lease opportunities are brought to the
attention of the Partnership by
independent leasing brokers, who
either charge the Partnership a fee
for their services or purchase the
equipment and secure the lessee and
then resell the package to the
Partnership. At the conclusion of a
lease, the leased equipment is either
(i) re-leased to the same lessee, (ii)
leased to a new lessee or (iii) sold.
Generally, the Partnership compensates
the independent brokers for re-leasing
or disposing of the equipment
purchased to date by allowing them to
participate in the proceeds of the
renewal leases or sales.
Lease Accounting The Partnership records leases in
conformity with generally accepted
accounting principles and prevalent
accounting practices within the
leasing industry. All existing leases
are in the form of direct financing
leases or operating leases.
Direct financing leases are defined as
those leases which transfer
substantially all of the benefits and
risks of ownership of the equipment to
the lessee. The Partnership records
its net investment at the inception of
the lease as the aggregate of the
gross investment and any initial
direct costs less unearned income,
where the gross investment is the
aggregate of the minimum lease
payments and the estimated
unguaranteed residual value and
unearned income is the difference
between the gross investment and the
cost of the leased equipment.
<PAGE>
Triumphe Leasing IX L.P.
Summary of Accounting Policies
Unearned income net of initial direct
costs is recognized over the lease
term so as to produce a constant
periodic rate of return on the net
investment in the lease.
Operating leases are defined as those
leases which do not transfer
substantially all of the benefits and
risks of ownership of the equipment to
the lessee. The leased property is
included in equipment on operating
leases and depreciated following the
Partnership's depreciation policy.
Rent is reported as income on the
straight-line method over the lease
term as it becomes receivable
according to the provisions of the
lease.
The Partnership evaluates the
recoverability of its portfolio of
leases quarterly, or more frequently
whenever events and circumstances
warrant revised estimates, and
considers whether the carrying value
of leases should be completely or
partially written off. In
accordance with the Statement of
Financial Accounting Standards No.
121, Accounting for Impairment of
Long-Lived Assets and for Long-Lived
Assets to be Disposed of," the
Partnership assesses the
recoverability of its portfolio of
leases based on undiscounted estimated
future operating cash flows. If the
Partnership determines that the
carrying value of a lease has been
impaired, the measurement and
recognition of the impairment will
be based on discounted estimated
future operating cash flows.
The Partnership s leasing operations
consist of the leasing of various
types of data processing equipment
and telecommunications equipment. A
substantial portion of the
Partnership's leases are classified
as operating leases which
expire over the next two years.
Other equipment is leased under
direct financing leases that expire
during the next two years.
<PAGE>
Triumphe Leasing IX L.P.
Summary of Accounting Policies
Equipment on Equipment on operating leases
Operating Leases; is stated at cost. Depreciation is
Depreciation computed using the double declining
balance method over the estimated
useful lives of the assets (five
years).
Income Taxes The Partnership is not a tax-paying
entity for federal income tax purposes
and, accordingly, no income tax
expense has been provided for in the
financial statements. Income or loss
from the Partnership is required to be
reported by the partners on their
respective income tax returns.
The Partnership will be responsible
for State of Illinois replacement tax
on income it generates.
All of the Partnership's leases are
treated as operating leases for income
tax purposes (Note 3).
Earnings per Unit Earnings per unit is computed by
dividing income available to general
and limited partners by the weighted
average number of units outstanding.
<PAGE>
Triumphe Leasing IX L.P.
Summary of Accounting Policies
Management Estimates The preparation of financial
statements in conformity with
generally accepted accounting
principles requires management to make
estimates and assumptions that affect
the reported amounts of assets and
liabilities and disclosure of
contingent assets and liabilities at
the date of the statements and
reported amounts of revenue and
expenses during the reporting period.
Actual results could differ from those
estimates.
The Partnership has estimated the
residual values of equipment under
direct financing leases. These estimates
have been developed based upon published
market values of similar equipment and
the general partners' prior experience.
Management has provided for estimated
future losses on the disposition or
lease renewals of equipment currently
under lease. Given the volatility of
market for the resale of equipment, it
is reasonably possible that the
Partnership's estimates for residual
value may change in the near term.
Recent Accounting In June 1998, the Financial Accounting
Pronouncement Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments
and Hedging Activities. This standard
establishes accounting and reporting
standards for derivative instruments
and for hedging contracts. This
standard is effective for all fiscal
quarters of all fiscal years beginning
after June 15, 1999. When the
Partnership adopts this statement, it
is not expected to have a material
impact on the Partnership's financial
statements or their presentation.
<PAGE>
<TABLE>
Triumphe Leasing IX L.P.
Notes to Financial Statements
1. Leases and Computer Estimated future minimum lease
Equipment Financing payments under both direct financing
and operating leases, including
estimated residual values of leased
property (unguaranteed) of $13,378,
net of unearned income under direct
financing leases, and the related debt
maturities under direct financing
leases and operating leases at
December 31, 1998 are as follows:
<CAPTION>
Estimated future minimum lease payments receivable
-----------------------------------------------------
Direct
financing Operating Debt
leases leases Total maturities
-----------------------------------------------------
<S> <C> <C> <C> <C>
1999 217,481 1,062,794 1,280,275 1,171,365
2000 27,461 124,149 151,610 122,179
-----------------------------------------------------
244,942 1,186,943 1,431,885 $ 1,293,544
-----------
Less
unearned
income - - -
----------------------------------------
$ 244,942 $ 1,186,943 $ 1,431,885
<FN>
</TABLE>
The various debt obligations are
payable to financial institutions and
include interest at rates ranging from
6.25% to 9.45%. The Partnership
estimates that the fair value of its
fixed-rate borrowings approximates the
carrying value at December 31, 1998
given the Partnership s current
borrowing capabilities. The debt
obligations are collateralized by the
related equipment and future rental
payments under the respective leases.
The indebtedness is without recourse
against the Partnership.
<PAGE>
<TABLE>
Triumphe Leasing IX L.P.
Notes to Financial Statements
2. Related Party The Partnership pays companies related
Transactions to the general partners through common
ownership an equipment acquisition
fee, in the amount of 5% of the
Partnership's equity investment in
such equipment, for locating and
acquiring equipment, arranging lease
financing and locating lessees.
Equipment acquisition fees are not
paid unless at least 85% of the gross
limited partner contributions have
been invested in equipment. Equipment
acquisition fees of $10,000 were paid
in 1997.
For their services in actively
managing the Partnership, the
Partnership is charged by the general
partners an equipment management fee
in an amount equal to 3% of gross
rental payments (exclusive of taxes and
other reimbursements) payable to the
Partnership. These expenses amounted
to $75,221 and $86,343 in 1998 and
1997, respectively.
At December 31, 1998, $216,484 of
equipment management fees are unpaid.
Per an agreement with the General
Partners, the management fees are not
payable until March 31, 2000.
3. Reconciliation of
Reported Net
Income to Tax Net
Income (Loss)
<CAPTION>
Year ended December 31, 1998 1997
<S> <C> <C>
Reported net income
(loss) $ 414,285 $(835,406)
Add tax leasing
revenues in
excess of reported
leasing revenues 361,129 373,860
Less tax loss in excess
of reported loss on
sale of equipment
under lease - (2,230)
Less tax depreciation
in excess of reported
depreciation (195,013) (297,318)
Tax net income (loss)----------- ----------
$ 580,401 $(761,094)
----------- ----------
<FN>
</TABLE>
<PAGE>
Triumphe Leasing IX L.P.
Notes to Financial Statements
The Partnership's tax basis in its
assets differs from the amount at
which its net assets are reported for
financial reporting purposes,
principally due to the accounting for
direct financing leases. At December
31, 1998, the Partnership's basis for
financial reporting purposes of its
net assets was greater than its basis
for tax reporting purposes by
approximately $55,000. As a result,
aggregate future income for financial
reporting purposes will be less than
for income tax reporting purposes.
4. Major Customers Approximately 77% and 73% of the
Partnership's lease income in 1998 and
1997, respectively, was from three
customers. The percentages are as
follows:
1998 1997
-------------------------------------
Customer A 33% 31%
Customer B 22 23
Customer C 22 19
-------------------------------------
Total 77% 73%
-------------------------------------
The Partnership has a net investment
in direct financing leases at December
31, 1998 and 1997, with two customers,
one which is a large company in the
information systems industry, and the
other, a wholesale distributor of
women's apparel.
1998 1997
-------------------------------------
Customer A 70% 81%
Customer B 30 19
-------------------------------------
Total 100% 100%
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 1-YEAR
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Dec-31-1998
<CASH> 38,281
<SECURITIES> 0
<RECEIVABLES> 2,664
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 258,426
<PP&E> 6,875,442
<DEPRECIATION> 4,725,776
<TOTAL-ASSETS> 2,435,553
<CURRENT-LIABILITIES> 1,171,748
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,435,553
<SALES> 0
<TOTAL-REVENUES> 2,144,634
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 199,415
<INCOME-PRETAX> 414,285
<INCOME-TAX> 0
<INCOME-CONTINUING> 414,825
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
