-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AIkkPcLF3tlEjKJCj9TUVSudj6L3rQOJzQ9qDeqU8pQRg3Mobmb5KZ5/QIIPNQ/X ZpN0bnaKDGoIecGGSfzi5A== 0000882574-98-000001.txt : 19980226 0000882574-98-000001.hdr.sgml : 19980226 ACCESSION NUMBER: 0000882574-98-000001 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980225 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIUMPHE LEASING VIII L P CENTRAL INDEX KEY: 0000882574 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 363799482 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-21242 FILM NUMBER: 98548719 BUSINESS ADDRESS: STREET 1: 630 DUNDEE RD STREET 2: STE 345 CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7085091500 MAIL ADDRESS: STREET 1: 630 DUNDEE RD STREET 2: STE 345 CITY: NORTHBROOK STATE: IL ZIP: 60062 10KSB 1 TRIUMPHE LEASING VIII L.P. 12/31/97 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 (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. 0-21242 TRIUMPHE LEASING VIII L.P. (Name of Small Business Issuer in Its Charter) Illinois 36-3799482 (State or Other Jurisdiction of (I.R.S. Employer) Incorporation or Organization) Identification No. 630 Dundee Road, Suite 345, Northbrook, Illinois 60062 (Address of principal executive offices, including zip code) (847) 509-1500 (Issuer's Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Exchange Act: None Securities registered pursuant to Section 12(g) of the Exchange Act: Limited Partnership Units Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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, 1997 were $250,802. 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, 1997 was $0.* 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 $0 is based on the book value per unit of limited partnership interest. PART I ITEM 1. DESCRIPTION OF BUSINESS The registrant, Triumphe Leasing VIII L.P. (the "Partnership"), is a limited partnership organized in 1991 under the Revised Uniform Limited Partnership Act of the State of Illinois. The Partnership sold $2,514,768 in Limited Partnership Units (the "Units") to the public from March 27, 1992 through December 31, 1993, pursuant to a Registration Statement on Form S-18 filed with the Securities and Exchange Commission (Registration No. 33-44929). The business of the Partnership is to acquire, own, lease, maintain, manage and sell various items of new and used computer, computer peripheral, telecommunications and office equipment (the "Equipment"). Equipment Acquisition. The General Partners select Equipment which they believe will maintain residual value. Among the factors adversely affecting the residual values of Equipment, and which make predictions of residual value uncertain, are advances in technology that render Equipment obsolete, reductions in sales prices or rental rates by manufacturers of comparable new Equipment, and surpluses in the marketplace for comparable Equipment. The General Partners utilize data prepared by recognized appraisal or valuation firms as a guide to estimating the residual values of Equipment. Terms of Leases. The General Partners generally lease Equipment to lessees for initial terms ranging from six months to six years, under agreements which impose on the lessees all costs of maintenance, taxes and insurance for the Equipment. The leases may grant the lessees options to extend their leases or to purchase the leased Equipment at the end of the initial lease terms. Lessees. The Partnership leases Equipment to lessees it believes to be creditworthy. The General Partners will depend heavily on the lease credit evaluations of the Partnership's lenders which, in turn, look primarily to rentals under the leases to repay their loans. Leverage. The General Partners typically finance the purchase of Equipment by the use of nonrecourse loans in an amount in excess of 50% of the purchase price thereof. A nonrecourse loan is one in which the lender agrees that its recourse in the event of default is limited to the Equipment securing the loan, the rents payable under the related lease and the proceeds derived from their sale, and that neither the Partnership nor any Partner will be liable for payment. It is anticipated that generally the loans will be in the maximum amount which can be repaid with interest out of the lease rentals receivable during the initial lease terms. The debt incurred generally bears a fixed interest rate over the term of the loan, rather than a variable rate which changes with the prime rate or other criteria. Refinancing and Sale of Equipment. In some cases the Partnership may dispose of its Equipment at the end of the initial term of the related lease. This may be accomplished by (a) selling the Equipment to the lessee, (b) selling the Equipment in the open market, (c) negotiating an extension of the lease term, and (d) securing a new lessee and selling the Equipment subject to the extended or new lease to another investor. In other cases, at the end of the initial term of a lease, the Partnership may decide to retain the Equipment and enter into a new or extended lease. The Partnership will then either (a) refinance the Equipment, which will permit the Partnership to distribute to the Partners any cash received in the refinancing or (b) retain the debt-free leased Equipment so as to secure for the Partnership the rental income under the lease. The Partnership may also sell the lease prior to the end of the initial lease term. It is not anticipated that the terms of any extended or replacement leases will extend beyond July 11, 2000. Independent Brokers. Most of the Partnership's Equipment purchases and related lease opportunities will be brought to its attention by independent leasing brokers, which will either charge the Partnership a commission for their services or alternatively purchase the Equipment and secure the lessee and then resell the package to the Partnership at a profit. Independent brokers may also be compensated by the Partnership for assisting in the re-leasing and disposition of its Equipment. The independent brokers may also participate in the proceeds of the leases on a percentage or fixed basis after the Partnership has earned a specified return on its investment in a lease. No Commitments. The foregoing description of the business of the Partnership is only a statement of the present intention of the General Partners, and should not be viewed as a commitment as to the Partnership's actual business activities. The General Partners are granted unlimited discretion in the Partnership Agreement to make all decisions regarding the business of the Partnership. These decisions will include the type of equipment to be acquired, the terms of leases, the amount and nature of borrowings, and the time and terms of Equipment disposition. The General Partners intend to exercise sound business judgment in response to market conditions when making these decisions, which may result in substantial deviations from the business now conducted. Through December 31, 1997, the Partnership had purchased equipment for an aggregate purchase price of $19,237,745 including the assumption of debt. The Equipment owned by the Partnership as of that date consists of computer hardware and peripherals. Leases. The following is a summary of each of the leases and related Equipment acquired by the Partnership through December 31, 1997 and owned during 1997: 1. Thrift Drug, Inc. (a) Under the terms of a master lease agreement entered into by Thrift Drug, Inc. ("Thrift") dated January 2, 1992, and an equipment supplement dated January 2, 1992, Thrift has leased a computer controller and disk drives manufactured by Hitachi Data Systems Corporation. The Partnership has acquired from the original lessor the equipment and all of the rights under the supplement. The cost to the Partnership of the equipment and supplement was $734,431. The Partnership paid $24,258 of this amount in cash, and the balance by assuming existing nonrecourse financing of the equipment. Pursuant to a master lease agreement entered into by the Partnership and Thrift Drug, Inc., dated as of May 31, 1995, and an equipment supplement dated May 31, 1995, the Partnership and Thrift Drug terminated the original master lease agreement and equipment schedules, and renewed the original equipment. The initial term of the schedule was 26 months which commenced on June 1, 1995. The monthly rent was $9,858. After the lease expired, the Partnership took possession of the equipment and is in the process of selling the equipment. There is no assurance that the partnership will be able to sell this equipment, and if sold there is no assurance with the respect to the amount to be received by the partnership. (b) Under the terms of (a) a master lease agreement entered into by Thrift's predecessor, and assumed by Thrift, dated December 3, 1990, and an equipment supplement dated March 8, 1991, and (b) a master lease agreement entered into by Thrift Drug, Inc. dated as of January 2, 1992, and an equipment supplement dated January 2, 1992, Thrift has leased an IBM mainframe computer and certain peripheral devices. The Partnership has acquired from the original lessor the equipment and all of the rights under the two foregoing described supplements. The cost to the Partnership of the equipment and the two supplements was $9,489,339. The Partnership paid $105,000 of this amount in cash, and the balance by assuming existing nonrecourse financing of the equipment. After the expiration of the two supplements, the Partnership took possession of the Equipment and is in the process of selling the Equipment. There is no assurance that the partnership will be able to sell this equipment, and if sold there is no assurance with the respect to the amount to be received by the partnership. (c) Under the terms of a master lease agreement entered into by Thrift dated January 2, 1992, and an equipment supplement dated August 4, 1992, Thrift has leased 44 laser printers manufactured by IBM. The term of the supplement is 36 months, which commenced on November 1, 1992. The Partnership has acquired from the original lessor the equipment and all of the rights under the supplement. The cost to the Partnership of the Equipment and supplement was $235,980. The Partnership paid $42,825 of this amount in cash, and the balance by assuming existing non recourse financing of the equipment. (d) Under the terms of a master lease agreement entered into by Thrift dated January 2, 1992, and an equipment supplement dated November, 23 1992, Thrift has leased 4 laser 4 laser printers manufactured by IBM. The Partnership has acquired from the original lessor the equipment and all of the rights under the supplement. The cost to the Partnership of the equipment and supplement was $21,822, which was paid by the Partnership in cash. The term of the supplement was 36 months which commenced on December 1, 1992. The monthly rent was $600. The term of the schedules in (c) and (d) expired in October 1995 and November 1995, respectively, Under the terms of a master lease dated May 31, 1995, respectively. Under the terms of a master lease dated May 31, 1995, and an equipment supplement dated November 1, 1995, the schedules in (c) and (d) were renewed with 46 new IBM printers. The term of the schedule is 36 months commencing November 1, 1995. The monthly rent is $4,387. Thrift operates a chain of retail drug stores. 2. Mount Sinai Hospital, New York Under the terms of a master lease agreement entered into by Mount Sinai Hospital ("Mount Sinai") dated May 1, 1992, and an equipment supplement dated May 28, 1992, Mount Sinai has leased two laser printers manufactured by IBM. The Partnership has acquired from the original lessor the Equipment and all of the rights under the supplement. The term of the supplement was 48 months, which commenced on September 1, 1992. The monthly rent was $4,400. The cost to the Partnership of the Equipment and supplement was $185,539. The Partnership paid $5,000 of this amount in cash, and the balance by assuming existing nonrecourse financing of the Equipment. The original lease expired in August 1996 and the equipment was sold in June 1997. 3. ICI Americas Inc. Under the terms of a master lease agreement entered into by ICI Americas Inc. ("ICI") dated December 5, 1990, and an equipment schedule dated July 10, 1992, ICI has leased computer equipment manufactured by IBM, Unidata, Digi-board, and TPS Systems. The Partnership has acquired from the original lessor the equipment and all of the rights under the schedule. The cost to the Partnership of the equipment and schedule was $301,469. The Partnership paid $41,664 of this amount in cash, and the balance by assuming existing nonrecourse financing of the equipment. The term of the supplement was 36 months, which commenced on September 1, 1992. The monthly rent was $7,823. In November 1994, the equipment was upgraded and ICI and the Partnership negotiated an early renewal of the schedule. The term of the schedule was extended to October 1997 at a monthly rent of $4,889. In March 1996, the equipment was again upgraded and ICI and the Partnership negotiated an early renewal of the schedule. The term of the schedule was extended to February 1999 at a monthly rent of $4,150. In June 1996, additional equipment was upgraded and added on to the original equipment, and was executed as an additional supplement to the original equipment above. The term of the additional supplement was 32 months, with a commencement date of July 1, 1996. The cost to the Partnership of the upgraded and additional equipment was $88,117, the balance of which was paid for by assuming non recourse financing for the equipment. The monthly rent for the additional supplement is $3,076. ICI Americas, Inc., a subsidiary of Imperial Chemical Industries PLC, is engaged in the manufacture and sale of pharmaceuticals, plastics, specialty chemicals, advanced materials, and agricultural products. 4. Advantis Under the terms of a master lease agreement dated January 4, 1990 entered into by Advantis, having accepted assignment of the master lease agreement and related equipment supplements from the original lessee and four equipment supplements dated August 1, 1992 and September 1, 1992, Advantis has leased computer equipment manufactured by IBM. The Partnership has acquired from the original lessor the equipment and all of the rights under the supplements. The term of each supplement was 36 months. The commencement date for one supplement was August 1, 1992; the commencement date for the other supplements was September 1, 1992. The aggregate monthly rent for the supplements was $3,296. The cost to the Partnership of the equipment and supplements was $123,616. The Partnership paid $16,143 of this amount in cash, and the balance by assuming existing nonrecourse financing of the equipment. The original term of the lease expired in July and August 1995. One schedule was renewed for 6 months commencing on September 1, 1995. The renewal rent is $829. After expiration of the renewal term, this schedule was leased on a month-to-month basis for 2 months, and subsequently the equipment was returned and sold in May 1996. The remaining schedules were leased on a month-to-month basis and sold in January 1997. Advantis is a joint venture between a wholly owned subsidiary of IBM and a wholly owned subsidiary of Sears, Roebuck & Co., which provides information network, data processing and telecommunications services. 5. Allied-Signal Inc. Under the terms of a master lease agreement entered into by Allied-Signal Inc. ("Allied") dated May 18, 1988, and an equipment schedule dated October 7, 1992, Allied has leased 71 printers manufactured by IBM. The Partnership has acquired from the original lessor the equipment and all of the rights under the schedule. The cost to the Partnership of the equipment and schedule was $229,753 which was paid by the Partnership in cash. The term of the schedule was 48 months, which commenced on October 12, 1992. The monthly rent was $4,852. The original lease expired in October 1996. The equipment lease was renewed during the year and will expire in August 1999, with monthly rent of $3,847. Allied's primary businesses are in the aerospace, automotive products, and engineered materials industries. 6. BellSouth Telecommunications, Inc. (a) Under the terms of a master lease agreement entered into by BellSouth Services Incorporated, the predecessor of BellSouth Telecommunications, Inc. ( BellSouth ), dated as of September 1, 1988 and two equipment schedules dated as of August 30, 1993, BellSouth has leased computer equipment manufactured by Amdahl. The initial term of the schedules was 24 months, which commenced on October 1, 1993. The monthly rent was $32,354. The cost of the equipment and schedules to the Partnership was $813,161. The Partnership paid $148,750 of this amount in cash and the balance by assuming nonrecourse financing of the equipment. (b) Under the terms of a master lease agreement entered into by BellSouth Services Incorporated, the predecessor of BellSouth, dated as of September 1, 1988 and an equipment schedule dated as of December 13, 1993, BellSouth has leased computer equipment manufactured by Amdahl. The initial term of the schedule was 24 months, which commenced on October 1, 1993. The monthly rent was $8,327. The cost of the equipment and the schedule to the Partnership was $156,124, which the Partnership paid in cash. The term of the schedules in (a) and (b)expired in September 1995. The Partnership scrapped the equipment in June 1997. BellSouth is in the telephone communications business. 7. Charming Shoppes of Delaware, Inc. (a) Under the terms of a master lease agreement entered into by Charming Shoppes of Delaware, Inc. ("Charming Shoppes") dated August 25, 1992 ("Charming Shoppes Master Lease") and an equipment schedule dated February 22, 1993, Charming Shoppes has leased computer equipment manufactured by Amdahl. The Partnership has acquired from the original lessor the equipment and all of the rights under the schedule. The term of the schedule was 36 months, which commenced January 1, 1993. The monthly rent was $5,599. The cost to the Partnership of the equipment and schedule was $189,228. The Partnership paid $20,622 of this amount in cash, and the balance by assuming nonrecourse financing of the equipment. The original lease term expired in December 1995, and the related equipment was returned. Part of the equipment was sold in August 1996, and the Partnership scrapped the remaining equipment during 1997. (b) Under the terms of an equipment schedule, dated August 12, 1993 and amended November 18, 1993, to the Charming Shoppes Master Lease, Charming Shoppes has leased computer equipment manufactured by Amdahl. The Partnership has acquired from the original lessor the equipment and all of the rights under the schedule. The initial term of the schedule was 36 months which commenced June 1, 1993. The cost of the equipment and schedule to the Partnership was $186,031. The monthly rent was $5,599. The Partnership paid $18,500 of this amount in cash and the balance by assuming nonrecourse financing of the equipment. The original lease term expired in May 1996, and the related equipment was returned. Part of the equipment was sold in August 1996, and the Partnership scrapped the remaining equipment in 1997. (c) Under the terms of an equipment schedule dated October 26, 1993 to the Charming Shoppes Master Lease, Charming Shoppes has leased computer equipment manufactured by Amdahl. The Partnership has acquired from the original lessor the equipment and all of the rights under the schedule. The term of the schedule was 36 months, which commenced September 1, 1993. The monthly rent was $5,638. The cost to the Partnership of the equipment and schedule was $178,629. The Partnership paid $14,550 of this amount in cash, and the balance by assuming nonrecourse financing of the equipment. The original lease term expired in August 1996, and the related equipment was returned. The Partnership scrapped the equipment during 1997. (d) Under the terms of the Charming Shoppes Master Lease, dated October 13, 1993, Charming Shoppes has leased computer equipment manufactured by Netframe Systems, Inc. The Partnership has acquired from the original lessor the equipment and all of the rights under the schedule. The cost to the Partnership of the equipment and the schedule was $183,319. The Partnership paid $18,500 in cash and the balance by executing a nonrecourse promissory note. The term of the schedule was 36 months which commenced December 1, 1993. The monthly rent was $6,935. The original lease term expired in November 1996, and the related equipment was returned. The Partnership scrapped the equipment during 1997. Charming Shoppes is a wholesale distributor of women's apparel. 8. Perot Systems Corporation Under the terms of a master lease agreement entered into by Perot Systems Corporation ("Perot Systems") dated December 3, 1990, and an equipment schedule dated March 29, 1993, Perot Systems has leased computer equipment manufactured by Amdahl. The term of the schedule was 36 months, which commenced March 1, 1993. The monthly rent was $23,693. The cost to the Partnership of the equipment and schedule was $795,961. The Partnership paid $82,478 of this amount in cash, and the balance by assuming nonrecourse financing of the equipment. Perot Systems assigned its rights and obligations in the lease to Nationsbanc Services, Inc. ("Nationsbanc"), as of April 1, 1995. The original lease expired in February 1996. After expiration of the renewal term, this schedule was leased on a month-to-month basis for 3 months, and subsequently the equipment was returned. The Partnership sold part of the equipment in August 1996, and scrapped the remainder during 1997. 9. Mobil Administrative Services Company, Inc. Under the terms of a master lease agreement dated as of March 9, 1990 and an equipment schedule dated as of June 25, 1993, Mobil Administrative Services Company, Inc. ("Mobil"), Mobil has leased computer equipment manufactured by IBM. The initial term of the schedule is 30 months which commenced July 1, 1993. The cost of the equipment and schedule to the Partnership was $490,081. The Partnership paid $103,000 of this amount in cash and the balance by assuming nonrecourse financing of the equipment. The monthly rent was $16,076. The original lease expired in January 1996. After expiration of the renewal term, this schedule was leased on a month-to-month basis for 5 months, and subsequently the equipment was returned. The Partnership has sold certain units of the equipment in 1996 and 1997, and is currently in the process of remarketing the remaining items of equipment. There is no assurance that the partnership will be able to sell this equipment, and if sold there is no assurance with the respect to the amount to be received by the partnership. 10. Chrysler Corporation Under the terms of a master agreement dated March 21, 1989, and 2 equipment schedules dated November 15, 1993, Chrysler Corporation ("Chrysler") has leased computer equipment manufactured by IBM. The initial terms of the schedules are 36 months. One schedule commenced as of April 1, 1994 and the other commenced August 12, 1994. The aggregate monthly rent was $15,994. The cost of the equipment and schedules to the Partnership was $546,634. The Partnership paid $80,524 of this amount in cash and the balance by assuming nonrecourse financing of the equipment. Both equipment schedules were renewed during 1997 and will expire in March and July of the year 2000, respectively with aggregate monthly rent of $9,950. Chrysler Corporation is one of the world's largest manufacturers of automobiles, vans, and trucks. 11. Fingerhut Corporation Under the terms of a master lease agreement dated July 11, 1990 and an equipment schedule dated as of February 1, 1994, Fingerhut Corporation ("Fingerhut") has leased computer equipment manufactured by Hitachi Data Systems Corporation. The initial term of the schedule was 36 months which commenced February 1, 1994. The monthly rent was $27,945. The cost of the equipment and the schedule to the Partnership was $1,115,173. The Partnership paid $236,140 of this amount in cash and the balance by assuming nonrecourse financing of the equipment. The equipment was sold during 1997. Fingerhut is a direct mail merchandiser of home furnishings, apparel, recreation items, small appliances and automotive accessories. 12. Kawasaki Motors, U.S.A. Under the terms of a master lease agreement dated November 30, 1987, and an equipment schedule dated August 26, 1993, Kawasaki Motors, U.S.A. ("Kawasaki") has leased computer equipment manufactured by IBM. The Partnership has acquired from the original lessor the equipment and all of the rights under the schedule. Cost to the Partnership of the equipment and the schedule was $24,858. The Partnership paid $2,600 of this amount in cash and the balance by assuming existing nonrecourse financing of the equipment. The term of the schedule was 36 months, which commenced October 1, 1993. The monthly rent was $1,081. The original lease expired in September 1996. The lease was renewed in December 1996 for 24 months, at a monthly rent of $800. Kawasaki is engaged primarily in the import and distribution of motorcycles, jet skis, engines and all-terrain vehicles supplied by Kawasaki Heavy Industries, Ltd. of Japan ("KHI"), Kawasaki's parent, and by Kawasaki Motors Manufacturing Corp., U.S.A., a wholly-owned manufacturing and assembling subsidiary of KHI. 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, 1997:
Lease Lease Term Term at Remaining Equipment at Acquisition 12/31/97 (in (in Lessee Equity Debt months) months) Thrift Drug $ 24,258 $ 710,173 46 (2) Thrift Drug 105,000 9,384,339 61 (2) Thrift Drug 91,891 -- 23 (1) Thrift Drug 42,825 193,155 36 (5) Thrift Drug 21,822 -- 35 (5) Aetna Life 116,000 -- 36 (1) Mount Sinai 5,000 180,539 48 (1) ICI Americas 41,664 259,805 36 (6) Advantis 16,143 107,475 35-36 (1) Allied-Signal 229,753 -- 45 (9) United Telephone 1,915 43,950 36 (1) BellSouth 34,591 390,814 45 (1) BellSouth 148,750 664,411 22 (1) BellSouth 156,154 -- 18 (1) Charming Shoppes 20,622 168,606 33 (1) Charming Shoppes 18,500 167,531 33 (1) Charming Shoppes 14,550 164,079 32 (1) Charming Shoppes 18,500 164,819 26 (1) Perot (Nationsbanc) 82,478 713,483 33 (1) Sony 174,500 1,337,831 35 (1) Mobil 103,000 387,081 30 (3) Chrysler Corp. 43,121 220,100 30 (8) Chrysler Corp. 37,403 246,010 34 (8) Chrysler Corp. 117,807 -- 36 (8) Total System 88,242 557,313 36 (1) Fingerhut Corp. 236,138 879,035 36 (1) Halliburton Company 257,175 -- 24 (1) Halliburton Company 24,536 -- 24 (1) Kawasaki 2,600 22,258 23 (7) ---------- ----------- Total: $2,274,938 $16,962,807
(1) Lease expired and equipment sold or scrapped. (2) Lease expired, the Partnership is in the process of remarketing the equipment. (3) Lease expired, part of the equipment has been sold, the Partnership is in the process of remarketing the rest of the equipment. (4) Renewed on a month-to-month basis at the original rent. (5) Renewed with new equipment at a monthly rental of $4,387 for a 36-month term ending in October 1998. The original equipment was sold in 1996. (6) Equipment on lease upgraded; initial term extended to October 1997. Equipment on lease upgraded again in March 1996 and June 1996, with additional add-on schedule. Lease term extended to February 1999. (7) Lease renewed in December 1996 for 24 months, at a monthly rent of $800. (8) Lease renewed in 1997 for 36 months at a monthly rental of $4,975. (9) Original lease expired in October 1996. The lease was renewed for 34 months at a monthly rate of $3,847. Competition. The equipment leasing industry is highly competitive and the Partnership competes with other leasing companies, with equipment manufacturers and distributors, and with other entities similar to the Partnership, most of which have greater financial resources than the Partnership and more experience in the equipment leasing business than the General Partners. Other leasing companies and especially equipment manufacturers and distributors may be in a position to offer equipment for lease upon financial terms more favorable than those which the Partnership can offer and may also be in a position to offer trade-in or exchange privileges on a wide range of equipment, a pass-on of any investment tax credit, comprehensive maintenance contracts, and other services and benefits to lessees which the Partnership does not offer. Major Customers. Approximately 74% of the Partnership's lease income in the year ended December 31, 1997 was from three customers. For those direct financing leases in which the Partnership has a net investment at December 31, 1997, 100% was with one customer. See note 4 in "Notes to Financial Statements" in this report. Employees. The Partnership does not have any employees. ITEM 2. DESCRIPTION OF PROPERTY See "Item 1--Description of Business" in this report. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There has not been, nor is there expected to be, a public market for the Units. As of December 31, 1996 there were approximately 226 holders of Units. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership commenced the offering of Limited Partnership Units and began operations on March 27, 1992. As of December 31, 1993, the date on which the offering of Units terminated, the Partnership had sold $2,514,768 in Units. At December 31, 1997, the Partnership had acquired $19,237,743 worth of equipment, excluding capitalized equipment acquisition costs, with an equity investment of $2,274,938 and nonrecourse borrowings of $16,962,807. Operations Total revenues decreased to $250,802 for the fiscal year ended December 31, 1997 ("fiscal 1997") from $1,284,165 for the fiscal year ended December 31, 1996 ("fiscal 1996"). Total revenues consist of lease rental income and interest earned on temporary cash investments and loss on sales of equipment under lease. This decrease in total revenues resulted from a decrease in rental income due to the sale of leased equipment. Operating expenses decreased to $672,415 for fiscal 1997 from $1,877,402 for fiscal 1996. Operating expenses consist of interest on nonrecourse financing of equipment purchased, depreciation of equipment under operating leases, write-down of the carrying value of equipment in operating leases, amortization of organization expenses, administrative expenses, and payments to a related party for administrative cost reimbursements. The decrease in operating expenses from fiscal 1996 to fiscal 1997 resulted primarily from a decrease in interest expense due to the payment of long-term debt, and a decrease in depreciation expense due to lease expirations. Liquidity and Capital Resources Cash and cash equivalents of the Partnership at December 31, 1997 include undistributed cash available from operations during the period March 27, 1992 to December 31, 1997. The Partnership has a cash management program which provides for the temporary investment of offering proceeds in various short-term money market instruments pending their investment in Equipment. The Partnership generally finances the purchase of Equipment by the use of nonrecourse loans in an amount in excess of 50% of the purchase price thereof. The indebtedness incurred by the Partnership related to the acquisition of Equipment is generally fully amortized by the monthly rent payments due to the Partnership under related leases. The Partnership maintains a working capital and contingency reserve in an amount equal to 1% of the gross proceeds of the offering of Units. Such amount, together with any amount reserved from operations, will be available to meet working capital requirements and to provide for contingencies. The partnership does not believe that it is subject to any material costs related to the year 2000 issues . ITEM 7. FINANCIAL STATEMENTS The financial statements of the Partnership as of December 31, 1997, and for the fiscal years ended December 31, 1997 and December 31, 1996, and the notes thereto are set forth elsewhere herein. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT The Partnership has no directors or executive officers. The General Partners of the Partnership are Gerald A. Horwitz and TL General VIII Corp., an Illinois corporation ("TL General"), the sole Director of which is Mr. Horwitz. Mr. Horwitz serves as Director of TL General until his successor is elected. The executive officers of TL General are Mr. Horwitz and Jerry Schwartz, who were elected to serve until their successors are elected and qualified. Gerald A. Horwitz. Mr. Horwitz, age 62, is the President and sole Director of TL General. He is also the Chairman of the Board, sole Director, President, Treasurer and sole voting shareholder of Raffaello, Inc., the sole shareholder of TL General, as well as the sole Director and Treasurer of Triumphe Leasing Group, Inc. and Horwitz & Associates, Inc. (formerly known as Horwitz, Schakner & Associates, Inc. and G.A. Horwitz & Co. Inc.), a securities broker-dealer and investment adviser, and President and sole Director of TL General Corp., the corporate General Partner of Triumphe Leasing Limited Partnership. Prior to organizing Horwitz & Associates, Inc. in 1970, Mr. Horwitz served as an officer of Thomson, McKinnon and Auchincloss and prior to that he served as an officer of Blair and Company, both of which were New York Stock Exchange member firms. Mr. Horwitz attended Roosevelt University in Chicago, where he earned a Bachelor of Science Degree. He also attended the University of Wisconsin as an undergraduate, and the University of Chicago as a post-graduate student and served part-time as an instructor at Northwestern University. Mr. Horwitz has served as a general partner of Res-Com, Ltd., Unilease Associates, Quest, Valley Associates, Leasing Income Associates, Equipment Leasing Partners and Triumphe Leasing Limited Partnership; and as an officer and director of the sole general partners of Triumphe Leasing VIII L.P., Concorde Leasing Limited Partnership and Invalease, Ltd. Each of these entities are Illinois limited partnerships engaged in the equipment leasing business. Mr. Horwitz is also the sole trustee of Tax Advantaged Income Trust, a grantor trust formed in 1985 under Illinois law to purchase and lease equipment. Jerry Schwartz. Mr. Schwartz, age 52, has served in various executive capacities for affiliates of Raffaello, Inc. since April 1987. He is Vice President, Secretary and Treasurer of TL General and TL General Corp. From 1982 to 1987, he served as a principal of J.L. Schwartz & Co., Inc., a public accounting firm. Prior thereto, Mr. Schwartz served as an accounting and operational manager for a certified public accounting firm. There is no family relationship among the foregoing officers. ITEM 10. EXECUTIVE COMPENSATION As stated in Item 9, the Partnership has no executive officers or directors. The compensation to the General Partners is set forth in Item 12 of this report. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of December 31, 1997, 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, 1997, neither Gerald A. Horwitz, TL General VIII Corp. nor Jerry Schwartz owned any Units. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Fees to General Partners and Affiliates. The General Partners and their affiliates will receive substantial fees, compensation and reimbursement of expenses from the Partnership. For its services as placement agent of the Partnership, Horwitz & Associates, Inc. ("H&A"), an affiliate of Messrs. Horwitz and Schwartz, receives a sales commission of 8% of the gross proceeds from the offering of Units. Such fees may be reallowed to other brokers by H&A. For its services in actively managing the Partnership, including, but not limited to, 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 Investor Limited Partners' Capital Contributions, and (ii) a cumulative, non-compounded 10% annual return on the aggregate amount of each Investor Limited Partner's unreturned Capital Contributions (calculated from the date such Investor Limited Partner was admitted to the Partnership). For purposes of this definition, Capital Contributions shall be deemed to have been returned only to the extent that distributions of Distributable Cash to the Investor Limited Partners exceed the amount required to satisfy such 10% annual return. If the General Partners participate with an independent broker on resale, such subordination shall apply only to the General Partners' Resale Fee. In no event shall total commissions paid to all persons exceed that which is reasonable, customary and competitive in light of the size, type and location of the equipment. During the fiscal year ended December 31, 1997, the Partnership paid no sales commissions to H&A, an affiliate of the General Partners. Management fees to the General Partners for 1997 and 1996 amounted to $55,867 and $123,317, respectively. At December 31, 1997, $470,845 of equipment management fees are unpaid. The Partnership paid $5,000 in management fees in 1997. The General Partners paid no acquisition fees during fiscal 1997. Allocations and Distributions of the Partnership. In accordance with the Partnership Agreement, the General Partners received distributions of $2,966 and were allocated net loss of $4,216 for fiscal 1997. 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. PART IV ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K (a) The exhibits, as listed in the Exhibit Index set forth on page 17, 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, 1997. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TRIUMPHE LEASING VIII L.P. By: TL GENERAL VIII CORP. Its: General Partner Date: 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 February 25, 1998 - ---------------------- President of the Gerald A. Horwitz corporate General Partner and as a General Partner (Principal Executive Officer) /s/ Jerry Schwartz Vice President, February 25, 1998 - ---------------------- Secretary and Jerry Schwartz Treasurer of the corporate General Partner (Principal Financial and Accounting Officer) 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 December 10, 1991 (Incorporated by reference to Exhibit 4.4 to Registration Statement No. 33-44929). 2.1 Copy of the Partnership's original Agreement of Limited Partnership, dated December 10, 1991 (Incorporated by reference to Exhibit 4.3 to Registration Statement No. 33-44929). 2.2 Form of Amended and Restated Agreement of Limited Partnership (Incorporated by reference to Exhibit A to the Partnership's prospectus dated March 27, 1992 as part of Registration Statement No. 33-44929). 27. Financial data schedule Triumphe Leasing VIII L.P. Financial Statements Years Ended December 31, 1997 and 1996 Triumphe Leasing VIII L.P. Contents Report Of Independent Certified Public Accountants 3 Financial Statements Balance Sheet 5-6 Statements of Operations 7 Statements of Partners Equity (Deficit) 8 Statements of Cash Flows 9 Summary of Accounting Policies 10-12 Notes to Financial Statements 13-15 Report Of Independent Certified Public Accountants To the Partners Triumphe Leasing VIII L.P. Northbrook, Illinois We have audited the accompanying balance sheet of Triumphe Leasing VIII L.P. as of December 31, 1997 and the related statements of operations, partners equity (deficit) and cash flows for each of the two years in the period ended December 31, 1997. These financial statements are the responsibility of the Partnership s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Triumphe Leasing VIII L.P. at December 31, 1997, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. /s/ BDO Seidman, LLP Chicago, Illinois January 16, 1998 Financial Statements Triumphe Leasing VIII L.P. Balance Sheet
December 31, 1997 Assets Current Assets Cash and cash equivalents $ 83,982 Accounts receivable 1,250 Net investment in direct financing leases (Notes 1 and 4) 74,866 -------- Total Current Assets 160,098 -------- Computer Equipment on Operating Leases, less accumulated depreciation of $ 876,589 (Note 1) 166,603 -------- Other Assets Net investment in direct financing leases, less current portion (Notes 1 and 4) 21,052 -------- $ 347,753 ========
Triumphe Leasing VIII L.P. Balance Sheet
December 31, 1997 Liabilities and Partners Deficit Current Liabilities Current maturities of long-term debt (Note 1) $ 227,060 Other liabilities 3,601 --------- Total Current Liabilities 230,661 --------- Long-Term Debt, less current maturities (Note 1) 183,411 Accrued management fees (Note 2) 470,845 --------- Total Long-Term Liabilities 654,256 --------- Total Liabilities 884,917 --------- Partners Deficit General partners (4,827) Limited partners (532,337) --------- Total Partners Deficit (537,164) --------- $ 347,753 ========= See accompanying summary of accounting policies and notes to financial statements.
Triumphe Leasing VIII L.P. Statements of Operations
Year ended December 31, 1997 1996 Revenues Lease income (Note 4) $ 402,401 $1,635,732 Loss on sale of equipment under lease (152,237) (352,832) Interest 638 1,265 --------- --------- Total revenues 250,802 1,284,165 --------- --------- Operating Expenses Interest 60,777 253,804 Depreciation and amortization 405,590 1,437,783 Administrative (Note 2) 206,048 185,815 --------- --------- Total operating expenses 672,415 1,877,402 --------- --------- Net Loss $(421,613) $(593,237) ========= ========= Net Loss Allocated to General partners $ (4,216) $ (5,932) Limited partners (417,397) (587,305) --------- --------- $(421,613) $(593,237) ========= ========= Weighted Average Units Outstanding During the Year General partners 1.2894 1.2894 Limited partners 127.6553 127.6553 Basic and Fully Diluted Earnings Per Unit General partners $ (3,270) $ (4,601) Limited partners $ (3,270) $ (4,601) See accompanying summary of accounting policies and notes to financial statements.
Triumphe Leasing VIII L.P. Statements of Partners Equity (Deficit)
General Limited Total Partners Partners Partners Equity, at December 31, 1995 $ 1,611,890 $ 16,664 $ 1,595,226 Distributions ($6,500 per unit) (837,702) (8,377) (829,325) Net loss (593,237) (5,932) (587.305) Partners Equity, at December 31, 1996 $ 180,951 $ 2,355 $ 178,596 Distributions ($2,300 per unit) (296,502) (2,966) (293,536) Net loss (421,613) (4,216) (417,397) ---------- -------- ---------- Partners Deficit, at December 31, 1997 $ (537,164) $ (4,827) $ (532,337) ========== ======== ========== See accompanying summary of accounting policies and notes to financial statements.
Triumphe Leasing VIII L.P. Statements of Cash Flows
Year ended December 31, 1997 1996 Cash Flows From Operating Activities Net loss $ (421,613) $ (593,237) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization 405,590 1,437,783 Loss on sale of equipment under lease 152,237 352,832 Amortization of unearned income (64,851) (258,826) Changes in assets and liabilities Decrease (increase) in accounts receivable 42,767 (44,017) Increase in accounts payable 31,276 87,449 Decrease in other liabilities (23,549) (34,182) ---------- ---------- Net cash provided by operating activities 121,857 947,802 ---------- ---------- Cash Flows From Investing Activities Purchase of computer equipment on operating leases - (108,393) Principal payments received under direct financing leases 1,538,915 2,717,687 Proceeds from sale of equipment under lease 15,576 793,660 ---------- ---------- Net cash provided by investing activities 1,554,491 3,402,954 ---------- ---------- Cash Flows From Financing Activities Principal payments on nonrecourse debt (1,698,403) (3,714,875) Proceeds from nonrecourse debt 323,633 221,312 Distributions to partners (296,502) (837,702) ---------- ---------- Net cash used in financing activities (1,671,272) (4,331,265) ---------- ---------- Net Increase in Cash and Cash Equivalents 5,076 19,491 Cash and Cash Equivalents, at beginning of year 78,906 59,415 ---------- ---------- Cash and Cash Equivalents, at end of year $ 83,982 $ 78,906 ========== ========== Supplemental Disclosures of Cash Flow Information Cash paid during the year for interest $ 60,777 $ 253,804 See accompanying summary of accounting policies and notes to financial statements.
Triumphe Leasing VIII L.P. Summary of Accounting Policies Organization and Triumphe Leasing VIII L.P. (the Business Partnership ), located in Northbrook, Illinois, was formed on December 10, 1991 under the Revised Limited Partnership Act of the State of Illinois. The Partnership acquires, owns, leases, maintains, manages and sells equipment. At December 31, 1997 and 1996, 127.66 limited partnership units were outstanding. The Partnership maintains its records on the accrual method of accounting for financial reporting and income tax purposes. The statements do not give effect to any assets or liabilities, including income taxes, that the partners may have outside of their interest in the Partnership. The Partnership purchases and leases to third parties various items of equipment. The equipment purchased by the Partnership to date and related lease opportunities are brought to the attention of the Partnership by independent leasing brokers, who either charge the Partnership a fee for their services or purchase the equipment and secure the lessee and then resell the package to the Partnership. At the conclusion of a lease, the leased equipment is either (I) released 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. 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. Triumphe Leasing VIII L.P. Summary of Accounting Policies Operating leases are defined as those which do not transfer substantially all of the benefits and risks of ownership of the equipment to the lessee. The leased property is included in computer equipment on operating leases and depreciated following the Partnership's depreciation policy. Rent is reported as income over the lease term as it becomes receivable according to the provisions of the lease. The Partnership evaluates the recoverability of its portfolio of leases quarterly, or more frequently whenever events and circumstances warrant revised estimates, and considers whether the carrying value of leases should be completely or partially written off. In 1995, the Partnership adopted Statement of Financial Accounting Standards No. 121, Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. During 1997 and 1996, the Partnership recorded charges of $194,000 and $447,000, respectively (included in depreciation and amortization) to write-down certain impaired assets to their fair value. These assets included data processing and telecommunications equipment not on lease at December 31, 1997 and 1996, respectively. Fair value was based on estimates of discounted future cash flows. The Partnership's leasing operations consist of the leasing of various types of data processing equipment and telecommunications equipment. A substantial portion of the Partnership's leases are classified as direct financing leases which expire over the next two years. Other data processing equipment is leased under operating leases that expire over the next three years. Computer Equipment Computer equipment on operating leases on Operating Leases; is stated at cost. Depreciation is Depreciation computed using the double declining balance and straight-line methods over the estimated useful lives of the assets. Cash and Cash For purposes of the statements of cash Equivalents flows, the Partnership considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Income Taxes The Partnership is not a tax-paying entity for federal income tax purposes and, accordingly, no income tax expense has been provided for in the financial statements. Income or loss from the Partnership is required to be reported by the partners on their respective income tax returns. The Partnership is responsible for State of Illinois replacement tax on income it generates. Triumphe Leasing VIII L.P. Summary of Accounting Policies All of the Partnership's leases are treated as operating leases for income tax purposes (Note 3). Earnings per Unit In February, 1997, the Financial Standards Board issued Statement of Financial Accounting Standard ( SFAS ) No. 128, Earnings per Share. The new standard simplifies the method for computing earnings per unit and requires the presentation of two new amounts, basic and fully diluted earnings per unit. Management Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Partnership has estimated the residual values of equipment under direct financing and operating leases. These estimates have been developed based upon published market values of similar equipment and the general partners prior experience. Management 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 computer equipment, it is reasonably possible that the Partnership's estimates for residual value may change in the near term. Recent Accounting In June, 1997, the Financial Pronouncement Accounting Board issued SFAS No. 130, Reporting Comprehensive Income . The new standard discusses how to report and display comprehensive income and its components. The standard is effective for years beginning after December 15, 1997. When the Partnership adopts this statement, it is not expected to have a material impact on the Partnership s financial statements. Triumphe Leasing VIII 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 $6,972, net of unearned income under direct financing leases, and the related debt maturities under financing leases and operating leases at December 31, 1997 are as follows: [CAPTION] Estimated future minimum lease payments receivable ------------------------------------------ Direct financing Operating Debt leases leases Total maturities ------------------------------------------ 1998 $ 86,709 $ 202,851 $ 289,560 $ 227,060 1999 21,424 119,400 140,824 124,993 2000 - 59,700 59,700 58,418 ------------------------------------------ 108,133 381,951 490,024 $ 410,471 ---------- Less unearned income 12,215 - 12,215 ------------------------------- $ 95,918 $ 381,951 $ 477,869
The various debt obligations are payable monthly to financial institutions and include interest at rates ranging from 5.75% to 8.75%. The Partnership estimates that the fair value of its fixed-rate borrowings approximates the carrying value at December 31, 1997 given the Partnership's current borrowing capabilities. The debt obligations are collateralized by the related equipment and future rental payments under the respective leases. The indebtedness is without recourse against the Partnership. 2. Related Party 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 Triumphe Leasing VIII L.P. Notes to Financial Statements been invested in equipment. There were no fees in 1997 and 1996. 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 $ 55,867 and $123,317 in 1997 and 1996, respectively. At December 31, 1997, $ 470,845 of equipment management fees are unpaid and included in accounts payable. Per an agreement with the general partners, the management fees are not payable until March 31, 1999. 3. Reconciliation of Reported Net Loss to Tax Net (Loss) Income
Year ended December 31, 1997 1996 Reported net loss $(421,613) $(593,237) Add tax leasing revenues in excess of reported leasing revenues 1,474,064 2,458,861 Less tax loss in excess of reported loss on sale of equipment under lease (173,214) (43,627) Less tax depreciation in excess of reported depreciation (1,121,110) (847,741) Add management fees in excess of tax management fees 55,866 - ------------------------------------------------ Tax net (loss) income $ (186,007) $ 974,256 ------------------------------------------------
Triumphe Leasing VIII L.P. Notes to Financial Statements The Partnership's tax basis in its net assets differs from the amount at which its net assets are reported for financial purposes, principally due to the accounting for direct financing leases. At December 31, 1997, the Partnership's basis for financial reporting purposes of its net assets was less than its basis for tax reporting purposes by approximately $651,000. As a result, aggregate future income for income tax reporting purposes will be lesser than for financial reporting purposes. 4. Major Customers Approximately 74% and 75% of the Partnership s lease income in the years ended December 31, 1997 and 1996, respectively, was from six customers. The percentages are as follows: 1997 1996 ------------------------------------------ Customer A 35% 12% Customer B 26 18 Customer C 13 - Customer D - 21 Customer E - 14 Customer F - 10 ------------------------------------------- Total 74% 75% ------------------------------------------- For those direct financing leases in which the Partnership has a net investment at December 31, 1997, 100% was with one customer which manufactures pharmaceuticals, plastics, specialty chemicals, advanced materials and agricultural products. EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 10-KSB WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1-YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 83,982 0 0 0 0 160,098 1,043,192 876,589 347,753 230,661 0 0 0 0 0 347,753 0 250,802 0 0 0 0 60,777 (421,613) 0 (421,613) 0 0 0 0 0
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