UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
----------------------
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
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Commission File No. 33-21977
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POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
State of Organization: California
IRS Employer Identification No. 94-3068259
201 Mission Street, 27th Floor, San Francisco, California 94105
Telephone - (415) 284-7400
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X_ No ___
This document consists of 15 pages.
<PAGE>
POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
FORM 10-Q - For the Quarterly Period Ended September 30, 1996
INDEX
Part I. Financial Information Page
Item 1. Financial Statements
a) Balance Sheets - September 30, 1996 and
December 31, 1995............................................3
b) Statements of Operations - Three and Nine Months
Ended September 30, 1996 and 1995............................4
c) Statements of Changes in Partners' Capital
(Deficit) -Year Ended December 31, 1995
and Nine Months Ended September 30, 1996.....................5
d) Statements of Cash Flows - Nine Months
Ended September 30, 1996 and 1995............................6
e) Notes to Financial Statements................................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............11
Part II. Other Information
Item 1. Legal Proceedings........................................13
Item 5. Other Information........................................14
Item 6. Exhibits and Reports on Form 8-K.........................14
Signature .........................................................15
2
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Part I. Financial Information
-----------------------------
Item 1. Financial Statements
POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
BALANCE SHEETS
(Unaudited)
September 30, December 31,
1996 1995
---- ----
ASSETS:
CASH AND CASH EQUIVALENTS $ 20,526,746 $ 20,842,611
RENT AND OTHER RECEIVABLES 2,103,796 3,215,421
NOTES RECEIVABLE, net of allowance for
credit losses of $0 in 1996 and $376,905 in 1995 12,809,491 386,457
AIRCRAFT, net of accumulated depreciation of
$103,394,464 in 1996 and $102,154,767 in 1995 79,420,902 114,376,702
------------- -------------
$ 114,860,935 $ 138,821,191
============= =============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT):
PAYABLE TO AFFILIATES $ 525,702 $ 793,901
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES 44,178 167,547
SECURITY DEPOSITS 225,000 269,000
MAINTENANCE RESERVES 578,653 3,139,136
------------- -------------
Total Liabilities 1,373,533 4,369,584
------------- -------------
PARTNERS' CAPITAL (DEFICIT):
General Partner (1,075,864) (866,147)
Limited Partners, 500,000 units
issued and outstanding 114,563,266 135,317,754
------------- -------------
Total Partners' Capital 113,487,402 134,451,607
------------- -------------
$ 114,860,935 $ 138,821,191
============= =============
The accompanying notes are an integral part of these statements.
3
<PAGE>
<TABLE>
POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rent from operating leases $ 3,134,289 $ 4,110,379 $ 9,978,917 $ 10,922,317
Interest 623,105 267,040 1,169,961 846,417
Gain on sale of aircraft 43,565 76,940 376,905 369,834
Other 3,880 -- 3,880 --
------------ ------------ ------------ ------------
Total Revenues 3,804,839 4,454,359 11,529,663 12,138,568
------------ ------------ ------------ ------------
EXPENSES:
Depreciation and amortization 10,761,803 3,527,196 22,957,024 10,581,586
Management fees to general partner 156,715 205,519 498,946 546,116
Operating 463,613 26,484 469,459 316,857
Administration and other 72,488 74,662 235,106 241,870
------------ ------------ ------------ ------------
Total Expenses 11,454,619 3,833,861 24,160,535 11,686,429
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (7,649,780) $ 620,498 $(12,630,872) $ 452,139
============ ============ ============ ============
NET INCOME ALLOCATED
TO THE GENERAL PARTNER $ 173,477 $ 256,179 $ 623,616 $ 754,446
============ ============ ============ ============
NET INCOME (LOSS)
ALLOCATED TO
LIMITED PARTNERS $ (7,823,257) $ 364,319 $(13,254,488) $ (302,307)
============ ============ ============ ============
NET INCOME (LOSS) PER
LIMITED PARTNERSHIP UNIT $ (15.65) $ 0.73 $ (26.51) $ (0.60)
============ ============ ============ ============
The accompanying notes are an integral part of these statements.
</TABLE>
4
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POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Year Ended December 31, 1995 and
Nine Months Ended September 30, 1996
------------------------------------
General Limited
Partner Partners Total
------- -------- -----
Balance, December 31, 1994 $ (624,991) $ 159,182,168 $ 158,557,177
Net income (loss) 869,955 (13,864,414) (12,994,459)
Cash distributions to partners (1,111,111) (10,000,000) (11,111,111)
------------- ------------- -------------
Balance, December 31, 1995 (866,147) 135,317,754 134,451,607
Net income (loss) 623,616 (13,254,488) (12,630,872)
Cash distributions to partners (833,333) (7,500,000) (8,333,333)
------------- ------------- -------------
Balance, September 30, 1996 $ (1,075,864) $ 114,563,266 $ 113,487,402
============= ============= =============
The accompanying notes are an integral part of these statements.
5
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<TABLE>
POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $(12,630,872) $ 452,139
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 22,957,024 10,581,586
Gain on sale of aircraft (376,905) (369,834)
Changes in operating assets and liabilities:
Decrease (increase) in rent and other
receivables 1,111,625 (925,274)
Increase (decrease) in payable to affiliates (268,199) 18,560
Decrease in accounts payable and
accrued liabilities (123,369) (1,355,935)
Increase (decrease) in security deposits (44,000) 75,000
Decrease in maintenance reserves (2,560,483) (84,709)
------------ ------------
Net cash provided by operating activities 8,064,821 8,391,533
------------ ------------
INVESTING ACTIVITIES:
Increase in notes receivable (146,646) --
Proceeds from sale of aircraft 1,748,776 --
Principal payments on notes receivable 386,457 54,071
Principal payments on finance sale of aircraft 714,060 369,834
Increase in aircraft capitalized costs (2,750,000) --
------------ ------------
Net cash provided by (used in) investing activities (47,353) 423,905
------------ ------------
FINANCING ACTIVITIES:
Cash distributions to partners (8,333,333) (8,333,333)
------------ ------------
Net cash used in financing activities (8,333,333) (8,333,333)
------------ ------------
CHANGES IN CASH AND CASH
EQUIVALENTS (315,865) 482,105
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 20,842,611 18,725,876
------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 20,526,746 $ 19,207,981
============ ============
The accompanying notes are an integral part of these statements.
</TABLE>
6
<PAGE>
POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Principles and Policies
In the opinion of management, the financial statements presented herein include
all adjustments, consisting only of normal recurring items, necessary to
summarize fairly Polaris Aircraft Income Fund V's (the Partnership's) financial
position and results of operations. The financial statements have been prepared
in accordance with the instructions of the Quarterly Report to the Securities
and Exchange Commission (SEC) Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto for the years ended December 31, 1995, 1994, and
1993 included in the Partnership's 1995 Annual Report to the SEC on Form 10-K
(Form 10-K).
Aircraft and Depreciation - The aircraft are recorded at cost, which includes
acquisition costs. Depreciation to an estimated residual value is computed using
the straight-line method over the estimated economic life of the aircraft which
was originally estimated to be 30 years from the date of manufacture.
Depreciation in the year of acquisition was calculated based upon the number of
days that the aircraft were in service.
The Partnership periodically reviews the estimated realizability of the residual
values at the projected end of each aircraft's economic life based on estimated
residual values obtained from independent parties which provide current and
future estimated aircraft values by aircraft type. For any downward adjustment
in estimated residual value or decrease in the projected remaining economic
life, the depreciation expense over the projected remaining economic life of the
aircraft is increased.
If the projected net cash flow for each aircraft (projected rental revenue, net
of management fees, less projected maintenance costs, if any, plus the estimated
residual value) is less than the carrying value of the aircraft, an impairment
loss is recognized. Pursuant to Statement of Financial Accounting Standards
(SFAS) No. 121, as discussed below, measurement of an impairment loss will be
based on the "fair value" of the asset as defined in the statement.
Capitalized Costs - Aircraft modification and maintenance costs which are
determined to increase the value or extend the useful life of the aircraft are
capitalized and amortized using the straight-line method over the estimated
useful life of the improvement. These costs are also subject to periodic
evaluation as discussed above.
Financial Accounting Pronouncements - SFAS No. 107, "Disclosures about Fair
Value of Financial Instruments," requires the Partnership to disclose the fair
value of financial instruments. Cash and cash equivalents is stated at cost,
which approximates fair value. The fair value of the Partnership's notes
receivable is estimated by discounting future estimated cash flows using current
interest rates at which similar loans would be made to borrowers with similar
credit ratings and remaining maturities. The Partnership's notes receivables
discussed in Notes 4 and 6 approximate their estimated fair value.
The Partnership adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," as of January 1,
1996. This statement requires that long-lived assets and certain identifiable
7
<PAGE>
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. The Partnership estimates that this pronouncement will
not have a material impact on the Partnership's financial position or results of
operations unless events or circumstances change that would cause projected net
cash flows to be adjusted.
In June 1996, the Partnership sold the Boeing 747-100 Special Freighter that was
previously on lease to American International Airways Limited (AIA) as discussed
in Note 4. Upon review of the aircraft in the second quarter of 1996, it was
determined that certain maintenance work on three out of four of the aircraft's
engines, aggregating approximately $5,000,000, would be required to remarket
this aircraft for re-lease. The Partnership determined that a sale of the
aircraft would maximize the projected economic return on the aircraft to the
Partnership. During the second quarter of 1996, the Partnership reviewed the
aircraft for impairment based on the projected discounted cash flow generated
from the aircraft sale. Previous estimates of cash flow for this aircraft were
based on the continued lease of the aircraft through its estimated economic
life. As a result, in accordance with SFAS No. 121, the Partnership recognized
an impairment loss of approximately $5,836,000 during the second quarter of
1996.
The leases of three Boeing 737-200 Advanced aircraft to Southwest Airlines Co.
(Southwest) expire in October and December 1996. Southwest returned one of these
aircraft to the Partnership in October 1996. Upon review of the condition of
this aircraft, it was estimated that certain maintenance and modification work
aggregating approximately $2.1 million would be required to remarket this
aircraft for re-lease. The two additional aircraft that are to be returned to
the Partnership in December 1996 will likely require similar maintenance and
modifications to be re-leased. As a result, the Partnership has determined that
a sale of these aircraft on an "as is/where is" basis would maximize the
projected economic return on the three aircraft to the Partnership. The
Partnership reviewed the three aircraft for impairment based on the projected
discounted cash flows from a sale of the aircraft. Previous estimates of cash
flow for these aircraft were based on the continued lease of the aircraft
through their estimated economic life. As a result, in accordance with SFAS No.
121, the Partnership recognized an impairment loss for the three aircraft of
approximately $8.2 million during the third quarter of 1996.
2. Lease to American Trans Air, Inc. (ATA)
As discussed in the Form 10-K, under the ATA lease, the Partnership may be
required to finance up to three aircraft hushkits for use on the aircraft at an
estimated aggregate cost of approximately $7.8 million, which would be partially
recovered with interest through payments from ATA over an extended lease term.
The Partnership loaned $556,000 to ATA in 1993 to finance the purchase by ATA of
one spare engine. The balance of the note at December 31, 1995 was $386,457. The
Partnership has received all scheduled payments due under the note which was
paid in full in March 1996.
3. Sale to Empresa de Transporte Aereo del Peru S.A. (Aeroperu)
In August 1993, the Partnership negotiated a sale to Aeroperu of two of the
Boeing 727-100 aircraft that were transferred to the Partnership under the ATA
lease, as discussed in the Form 10-K. The Partnership agreed to accept payment
of the sale prices of approximately $699,000 and $639,000 in 36 monthly
installments of $23,000 and $21,000, respectively, with interest at a rate of
12% per annum. The Partnership recorded a note receivable and an allowance for
credit losses equal to the discounted sale prices. Gain on sale of the aircraft
and interest revenue was recognized as payments were received. During the nine
months ended September 30, 1996, the Partnership received all principal and
8
<PAGE>
interest payments due from Aeroperu. The Partnership recorded $43,565 and
$376,905 as gain on sale in the statement of operations for the three and nine
months ended September 30, 1996, respectively. The notes receivable and
corresponding allowances for credit losses were reduced by the principal portion
of payments received. The balances of the notes receivable and corresponding
allowances for credit losses was $376,905 as of December 31, 1995. In July 1996,
the Partnership received the final payments due from Aeroperu and the remaining
balance of the security deposits posted by Aeroperu was applied to the last
installment due from Aeroperu.
4. Sale to AIA
The lease of one Boeing 747-100 Special Freighter with AIA was originally
scheduled to expire on March 31, 1996. The lease was extended through May 31,
1996. In June 1996, the Partnership sold the aircraft to AIA for $13.0 million.
In addition, the Partnership retained maintenance reserves aggregating
approximately $1,749,000 that had been held by the Partnership to offset
potential future maintenance expenses for this aircraft. The Partnership agreed
to accept payment of the sale price, with interest at a rate of 10% per annum,
in sixty equal monthly installments beginning July 1996. The note receivable
balance as of September 30, 1996 was $12,662,845.
As discussed in Note 1, in accordance with FAS 121, the Partnership recognized
an impairment loss of approximately $5,836,000 on this aircraft which was
recorded as additional depreciation expense during the second quarter of 1996.
The Partnership recorded no gain or loss on the sale as the net book value of
the aircraft (subsequent to the FAS 121 impairment adjustment) equaled the
aggregate of the aircraft sale price and the aircraft's maintenance reserve
balance.
5. Engine Purchase
In September 1996, the Partnership purchased two refurbished engines to replace
two inoperable engines on the Boeing 747-100 Special Freighter aircraft
currently on lease to Polar Air Cargo, Inc. (Polar Air Cargo). The Partnership,
as required in the lease, was responsible to overhaul or replace these two
inoperable engines. The aggregate cost of the two replacement engines was $2.75
million, which was determined to be less than the estimated cost to repair the
inoperable engines. The Partnership capitalized the cost of the two refurbished
engines to be depreciated over the remaining estimated useful life of the
aircraft. The Partnership sold one of the inoperable engines in October 1996 as
discussed in Note 8. The second inoperable engine was transferred to a
maintenance facility in settlement of disputed claims.
6. Polar Air Cargo Modification Cost Sharing Agreement
As specified in the Partnership's lease of one Boeing 747-100 Special Freighter
aircraft to Polar Air Cargo, the Partnership is required to share in the cost of
certain modification work on the aircraft. The Partnership recognized
approximately $200,000 of these modification costs as operating expense in the
three and nine months ended September 30, 1996. In addition, as specified in the
lease, the Partnership loaned Polar Air Cargo a portion of its share of the
modification costs to be repaid by Polar Air Cargo in 36 monthly installments
through January 1999. The balance of the note receivable at September 30, 1996
was $146,646.
9
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7. Related Parties
Under the Limited Partnership Agreement, the Partnership paid or agreed to pay
the following amounts for the current quarter to the general partner, Polaris
Investment Management Corporation, in connection with services rendered or
payments made on behalf of the Partnership:
Payments for the
Three Months Ended Payable at
September 30, 1996 September 30, 1996
------------------ ------------------
Aircraft Management Fees $ 537,570 $ 99,853
Out-of-Pocket Administrative Expense
Reimbursement 272,303 76,990
Out-of-Pocket Operating and
Remarketing Expense Reimbursement 784,223 348,859
---------- ----------
$1,594,096 $ 525,702
========== ==========
8. Subsequent Event
Sale of Inoperable Engine - The Partnership sold one of the inoperable engines
from the Boeing 747-100 Special Freighter aircraft on lease to Polar Air Cargo,
as discussed in Note 5, in October 1996 for $150,000.
10
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Polaris Aircraft Income Fund V (the Partnership) owns a portfolio of 13 used
commercial jet aircraft. The portfolio includes six Boeing 737-200 Advanced
aircraft leased to Southwest Airlines Co. (Southwest); one Boeing 737-200
Advanced aircraft formerly leased to Southwest; three Boeing 727-200 Advanced
aircraft leased to American Trans Air, Inc. (ATA), two Boeing 727-200 Advanced
aircraft leased to Sun Country Airlines, Inc. (Sun Country), and one Boeing
747-100 Special Freighter aircraft leased to Polar Air Cargo, Inc. (Polar Air
Cargo). The Partnership sold two Boeing 727-100 aircraft that ATA transferred to
the Partnership as part of the ATA lease transaction in April 1993, to Empresa
de Transporte Aereo del Peru S.A. (Aeroperu). Aeroperu completed its payment
obligations to the Partnership in July 1996. The Partnership sold one Boeing
747-100 Special Freighter aircraft to its former lessee American International
Airways Limited (AIA) in June 1996.
Remarketing Update
Boeing 737-200 Advanced aircraft leased to Southwest - The leases of three
Boeing 737-200 Advanced aircraft to Southwest expire in October and December
1996. Southwest returned one of these aircraft to the Partnership upon
expiration of the lease in October 1996. Southwest paid to the Partnership
$155,695 in lieu of meeting certain return conditions specified in the lease.
Upon review of the condition of this aircraft, it was determined that certain
maintenance and modification work aggregating approximately $2.1 million would
be required to remarket this aircraft for re-lease. The two additional aircraft
that are to be returned to the Partnership in December 1996 will likely require
similar maintenance and modifications to be re-leased. As a result, the
Partnership has determined that a sale of these aircraft on an "as is/where is"
basis would maximize the projected economic return on the three aircraft to the
Partnership. The Partnership reviewed the three aircraft for impairment based on
the projected discounted cash flows from a sale of the aircraft. Previous
estimates of cash flow for these aircraft were based on the continued lease of
the aircraft through their estimated economic life. As a result, in accordance
with Statement of Financial Accounting Standards (SFAS) No. 121, the Partnership
recognized an impairment loss for the three aircraft of approximately $8.2
million during the third quarter of 1996.
Boeing 727-200 Advanced aircraft leased to Sun Country - The leases of two
Boeing 727-200 Advanced aircraft to Sun Country were scheduled to expire in
September and October 1996. Sun Country has notified the Partnership that it is
exercising its option under the leases to extend the leases for the two aircraft
for a period of one-year at the existing lease rates. Under the terms of the
leases, Sun Country is entitled to extend the leases for up to three additional
one-year periods at the existing lease rates.
Partnership Operations
The Partnership recorded a net loss of $7,649,780, or $15.65 per limited
partnership unit, for the three months ended September 30, 1996, compared to net
income of $620,498, or $0.73 per unit, for the same period in 1995. The
Partnership recorded a net loss of $12,630,872, or $26.51 per limited
partnership unit, for the nine months ended September 30, 1996, compared to net
income of $452,139, or an allocated net loss of $0.60 per unit, for the same
period in 1995. The significant decline in operating results for the three and
nine months ended September 30, 1996 compared to the same periods in 1995 is due
primarily to a decrease in rental revenues during 1996 combined with
substantially increased depreciation expense recognized during the second and
third quarters of 1996.
11
<PAGE>
In June 1996, the Partnership sold one Boeing 747-100 Special Freighter aircraft
to AIA upon expiration of its lease. The Partnership recognized no additional
rental revenue on this aircraft subsequent to June 1996. As discussed in Note 1
to the financial statements, in accordance with SFAS No. 121, the Partnership
recognized an impairment loss of approximately $5,836,000 on this aircraft which
was recorded as additional depreciation expense during the second quarter of
1996.
As discussed above, the Partnership recognized additional depreciation expense
aggregating approximately $8.2 million during the third quarter of 1996 on three
aircraft leased or formerly leased to Southwest.
Liquidity and Cash Distributions
Liquidity - The Partnership receives maintenance reserve payments from certain
of its lessees that may be reimbursed to the lessee or applied against certain
costs incurred by the Partnership for maintenance work performed on the
Partnership's aircraft, as specified in the leases. Maintenance reserve balances
remaining at the termination of the lease may be used by the Partnership to
offset future maintenance expenses. The net maintenance reserve payments
aggregate $578,653 as of September 30, 1996.
The Partnership's cash reserves are being retained to cover maintenance costs
the Partnership has agreed to incur on certain of its aircraft, to cover the
costs of remarketing the three Boeing 737-200 Advanced aircraft on lease to
Southwest through October and December 1996, and to finance a portion of the
hushkit costs that may be incurred under the leases with ATA. The ATA leases
specify the Partnership may be required to finance certain aircraft hushkits at
an aggregate cost of approximately $7.8 million, which would be partially
recovered with interest through payments from ATA over an extended lease term.
As discussed in Note 5 to the financial statements, in September 1996, the
Partnership purchased two refurbished engines to replace two inoperable engines
on the Boeing 747-100 Special Freighter aircraft currently on lease to Polar Air
Cargo. The Partnership, as required in the lease, was responsible to overhaul or
replace these two inoperable engines. The aggregate cost of the two replacement
engines was $2.75 million, which was determined to be less than the estimated
cost to repair the inoperable engines. As discussed in Note 8 to the financial
statements, the Partnership sold one of the inoperable engines in October 1996
for $150,000.
Cash Distributions - Cash distributions to limited partners during the three
months ended September 30, 1996 and 1995 were $2,500,000, or $5.00 per limited
partnership unit, for each period. Cash distributions to limited partners during
the nine months ended September 30, 1996 and 1995 were $7,500,000, or $15.00 per
limited partnership unit, for each period. The amount of future cash
distributions will depend upon the Partnership's future cash requirements
including the potential maintenance and remarketing costs associated with the
Partnership's aircraft, the receipt of the rental payments from Southwest, ATA,
Sun Country and Polar Air Cargo and the Partnership's success in remarketing the
three Boeing 737-200 Advanced aircraft leased or formerly leased to Southwest.
12
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Part II. Other Information
--------------------------
Item 1. Legal Proceedings
As discussed in Item 3 of Part I of Polaris Aircraft Income Fund V's (the
Partnership) 1995 Annual Report to the Securities and Exchange Commission (SEC)
on Form 10-K (Form 10-K) and in Item 1 of Part II of the Partnership's Quarterly
Report to the SEC on Form 10-Q (Form 10-Q) for the periods ended March 31, 1996
and June 30, 1996, there are a number of pending legal actions or proceedings
involving the Partnership. There have been no material developments with respect
to any such actions or proceedings during the period covered by this report.
Other Proceedings - Item 10 in Part III of the Partnership's 1995 Form 10-K and
Item 1 in Part II of the Partnership's Form 10-Q for the periods ended March 31,
1996 and June 30, 1996 discuss certain actions which have been filed against
Polaris Investment Management Corporation and others in connection with the sale
of interests in the Partnership and the management of the Partnership. With the
exception of Novak, et al v. Polaris Holding Company, et al, (which has been
dismissed, as discussed in Item 10 of the Partnership's 1995 Form 10-K) where
the Partnership was named as a defendant for procedural purposes, the
Partnership is not a party to these actions. Except as discussed below, there
have been no material developments during the period covered by this report with
respect to any of the actions described in Item 10 in Part III of the
Partnership's 1995 Form 10-K and Item 1 in Part II of the Partnership's Form
10-Q for the periods ended March 31, 1996 and June 30, 1996.
Wilson et al. v. Polaris Holding Company et al. - On October 1, 1996, a
complaint was filed in the Superior Court of the State of California for the
County of Sacramento by over 500 individual plaintiffs who purchased limited
partnership units in one or more of Polaris Aircraft Income Funds I through VI.
The complaint names Polaris Holding Company, Polaris Aircraft Leasing
Corporation, Polaris Investment Management Corporation, Polaris Securities
Corporation, Polaris Jet Leasing, Inc., Polaris Technical Services, Inc.,
General Electric Company, General Electric Capital Services, Inc., General
Electric Capital Corporation, GE Capital Aviation Services, Inc. and DOES 1-100
as defendants. The Partnership has not been named as a defendant. The complaint
alleges violations of state common law, including fraud, negligent
misrepresentation, negligence, breach of contract, and breach of fiduciary duty.
The complaint seeks to recover compensatory damages and punitive damages in an
unspecified amount, interest and rescission with respect to the Polaris Aircraft
Income Funds sold to plaintiffs. Defendants time to answer or otherwise respond
to the complaint is November 18, 1996.
B&L Industries, Inc. et al. v. Polaris Holding Company et al. - On August 16,
1996, defendants filed a motion to dismiss plaintiffs' amended complaint. The
motion is returnable on January 16, 1997.
In re Prudential Securities Inc. Limited Partnerships Litigation - The trial,
which was scheduled for November 11, 1996, has not proceeded and no new trial
date has been set.
13
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Item 5. Other Information
James W. Linnan resigned as Director and President of Polaris Investment
Management Corporation effective December 31, 1996. Mr. Linnan's replacement has
not presently been named. Mr. Linnan will continue to serve in those capacities
through the effective date of his resignation.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
27. Financial Data Schedule
b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter for
which this report is filed.
14
<PAGE>
SIGNATURE
Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
(Registrant)
By: Polaris Investment
Management Corporation,
General Partner
November 12, 1996 By: /S/Marc A. Meiches
- ---------------------------------- ------------------
Marc A. Meiches
Chief Financial Officer
(principal financial officer and
principal accounting officer of
Polaris Investment Management
Corporation, General Partner of
the Registrant)
15
<TABLE> <S> <C>
<ARTICLE>5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
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