UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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 High Ridge Road, Stamford, Connecticut 06927
Telephone - (203) 357-3776
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 11 pages.
<PAGE>
POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
FORM 10-Q - For the Quarterly Period Ended June 30, 1998
INDEX
Part I. Financial Information Page
Item 1. Financial Statements
a) Balance Sheets - June 30, 1998 and
December 31, 1997...........................................3
b) Statements of Operations - Three and Six Months
Ended June 30, 1998 and 1997................................4
c) Statements of Changes in Partners' Capital
(Deficit) -Year Ended December 31, 1997
and Six Months Ended June 30, 1998..........................5
d) Statements of Cash Flows - Six Months
Ended June 30, 1998 and 1997................................6
e) Notes to Financial Statements...............................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...........8
Part II. Other Information
Item 1. Legal Proceedings.......................................9
Item 6. Exhibits and Reports on Form 8-K........................9
Signature .......................................................10
2
<PAGE>
Part I. Financial Information
-----------------------------
Item 1. Financial Statements
POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
BALANCE SHEETS
(Unaudited)
June 30, December 31,
1998 1997
---- ----
ASSETS:
CASH AND CASH EQUIVALENTS $ 1,821,319 $ 53,802,187
RECEIVABLES 1,363 2,012
------------ ------------
$ 1,822,682 $ 53,804,199
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT):
PAYABLE TO AFFILIATES $ 181,957 $ 103,569
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES 69,001 53,436
------------ ------------
Total Liabilities 250,958 157,005
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner (6,887,685) (1,674,489)
Limited Partners, 500,000 units
issued and outstanding 8,459,409 55,321,683
------------ ------------
Total Partners' Capital 1,571,724 53,647,194
------------ ------------
$ 1,822,682 $ 53,804,199
============ ============
The accompanying notes are an integral part of these statements.
3
<PAGE>
POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rent from operating leases $ -- $1,501,456 $ -- $3,911,355
Interest 25,212 866,366 372,017 2,448,108
---------- ---------- ---------- ----------
Total Revenues 25,212 2,367,822 372,017 5,359,463
---------- ---------- ---------- ----------
EXPENSES:
Depreciation and amortization -- 1,318,620 -- 2,297,427
Management fees to general partner -- -- -- 120,495
Operating 41,379 19,249 133,884 133,876
Administration and other 81,824 112,379 169,159 185,361
---------- ---------- ---------- ----------
Total Expenses 123,203 1,450,248 303,043 2,737,159
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (97,991) $ 917,574 $ 68,974 $2,622,304
========== ========== ========== ==========
NET INCOME (LOSS) ALLOCATED
TO THE GENERAL PARTNER $ (980) $ 384,139 $ 1,248 $ 651,161
========== ========== ========== ==========
NET INCOME (LOSS) ALLOCATED
TO LIMITED PARTNERS $ (97,011) $ 533,435 $ 67,726 $1,971,143
========== ========== ========== ==========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (0.19) $ 1.06 $ 0.14 $ 3.94
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Year Ended December 31, 1997 and
Six Months Ended June 30, 1998
------------------------------
General Limited
Partner Partners Total
------- -------- -----
Balance, December 31, 1996 $ (1,505,679) $ 72,014,095 $ 70,508,416
Net income 2,022,302 3,027,587 5,049,889
Cash distributions to partners (2,191,112) (19,719,999) (21,911,111)
------------ ------------ ------------
Balance, December 31, 1997 (1,674,489) 55,321,683 53,647,194
Net income 1,248 67,726 68,974
Cash distributions to partners (5,214,444) (46,930,000) (52,144,444)
------------ ------------ ------------
Balance, June 30, 1998 $ (6,887,685) $ 8,459,409 $ 1,571,724
============ ============ ============
The accompanying notes are an integral part of these statements.
5
<PAGE>
POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
-------------------------
1998 1997
---- ----
OPERATING ACTIVITIES:
Net income $ 68,974 $ 2,622,304
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation -- 2,297,427
Changes in operating assets and liabilities,
net of effect of sale of aircraft:
Decrease (increase) in rent and other
receivables 649 (49,756)
Increase in other assets -- (1,472)
Increase (decrease) in payable to
affiliates 78,388 (99,370)
Increase (decrease) in accounts payable
and accrued liabilities 15,565 (26,419)
Decrease in security deposits -- (225,000)
Decrease in maintenance reserves -- (909,642)
------------ ------------
Net cash provided by operating
activities 163,576 3,608,072
------------ ------------
INVESTING ACTIVITIES:
Proceeds from sale of aircraft -- 5,674,334
Payments to Purchaser related to sale of
aircraft -- (2,290,443)
Principal payments on notes receivable -- 587,308
Principal payments on finance sale of
aircraft -- 533,770
------------ ------------
Net cash provided by investing
activities -- 4,504,969
------------ ------------
FINANCING ACTIVITIES:
Cash distributions to partners (52,144,444) (6,944,444)
------------ ------------
Net cash used in financing activities (52,144,444) (6,944,444)
------------ ------------
CHANGES IN CASH AND CASH
EQUIVALENTS (51,980,868) 1,168,597
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 53,802,187 23,252,136
------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,821,319 $ 24,420,733
============ ============
The accompanying notes are an integral part of these statements.
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 (GAAP). These statements should be read in conjunction with the
financial statements and notes thereto for the years ended December 31, 1997,
1996, and 1995 included in the Partnership's 1997 Annual Report to the SEC on
Form 10-K.
2. 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
Three Months Ended Payable at
June 30, 1998 June 30, 1998
------------- -------------
Out-of-Pocket Administrative and Selling
Expense Reimbursement $103,648 $177,124
Out-of-Pocket Operating and
Remarketing Expense Reimbursement 34,460 4,833
-------- --------
$138,108 $181,957
======== ========
3. Partners' Capital
The Partnership Agreement (the Agreement) stipulates different methods by which
revenue, income and loss from operations and gain or loss on the sale of
aircraft are to be allocated to the general partner and the limited partners.
Such allocations are made using income or loss calculated under GAAP for book
purposes, which varies from income or loss calculated for tax purposes.
Cash available for distributions, including the proceeds from the sale of
aircraft, is distributed 10% to the general partner and 90% to the limited
partners.
The different methods of allocating items of income, loss and cash available for
distribution combined with the calculation of items of income and loss for book
and tax purposes result in book basis capital accounts that may vary
significantly from tax basis capital accounts. The ultimate liquidation and
distribution of remaining cash will be based on the tax basis capital accounts
following liquidation, in accordance with the Agreement.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
As discussed below under "Liquidity and Cash Distributions", Polaris Investment
Management Corporation (PIMC or the General Partner), is in the process of
winding up the business of Polaris Aircraft Income Fund V (the Partnership).
During 1997, the Partnership sold its remaining portfolio of 13 used aircraft
out of its original portfolio of 14 aircraft.
Partnership Operations
The Partnership recorded a net loss of $97,991, or $0.19 per limited partnership
unit for the three months ended June 30, 1998, compared to net income of
$917,574, or $1.06 per limited partnership unit, for the three months ended June
30, 1997. The Partnership recorded net income of $68,974, or $0.14 per limited
partnership unit for the six months ended June 30, 1998, compared to net income
of $2,622,304, or $3.94 per limited partnership unit, for the six months ended
June 30, 1997. The significant decline in operating results for the three and
six months ended June 30, 1998, compared to the same periods in 1997, is due
primarily to the sale of the Partnership's remaining aircraft in 1997 as
discussed above.
Interest income decreased during the three and six months ended June 30, 1998
compared to the same periods in 1997, primarily due to the repayment of notes
receivable from AIA and Triton in November and December 1997, respectively.
Liquidity and Cash Distributions
Liquidity - As previously discussed, the Partnership sold its remaining aircraft
during 1997. Polaris Investment Management Corporation, the general partner, has
determined that the Partnership maintain cash reserves as a prudent measure to
ensure that the Partnership has available sufficient funds to satisfy
anticipated contingencies and expenses in connection with winding up its
business. The Partnership's cash reserves will be monitored and may be revised
from time to time as further information becomes available in the future.
Cash Distributions - Cash distributions to limited partners during the three
months ended June 30, 1997 were $3,750,000, or $7.50 per limited partnership
unit. Cash distributions to limited partners during the six months ended June
30, 1998 and 1997 were $46,930,000 and 6,250,000, or $93.86 and $12.50 per
limited partnership unit, respectively. The increase, as compared to 1997, is
due to the distribution of the proceeds received from the prepayment of a note
due from Triton Aviation Services V LLC on December 30, 1997. The Partnership is
now in the process of winding up its business. With the exception of reserves
maintained for anticipated expenses and costs of winding up, the Partnership
distributed all of its available cash during 1997 and the first quarter of 1998.
Consequently, the timing and amount of future cash distributions, if any, are
not yet known and will depend upon whether the Partnership's reserves exceed its
actual expenses and contingencies in winding up and on the time required to
complete the winding up process.
8
<PAGE>
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) 1997 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 period ended March 31, 1998,
there are a number of pending legal actions or proceedings involving the
Partnership. Except as described below, there have been no material developments
with respect to any such actions or proceedings during the period covered by
this report.
Ron Wallace v. Polaris Investment Management Corporation, et al. - On April 23,
1998, the Court consolidated for discovery purposes this action with the action
entitled "Accelerated" High Yield Income Fund II, Ltd., L.P. v. Polaris
Investment Management Corporation, et. al. On July 9, 1998, the Court denied the
defendants' demurrer to dismiss the plaintiffs' second amended complaint. On
July 28, 1998, defendants filed an answer to the second amended complaint.
"Accelerated" High Yield Income Fund II, Ltd., L.P. v. Polaris Investment
Management Corporation, et. al. - On April 23, 1998, the Court consolidated for
discovery purposes this action with the action entitled Ron Wallace v. Polaris
Investment Management Corporation, et al. On July 28, 1998, the Court granted
defendants' motion to continue the trial date & extend the discovery cut-off;
the Court set a new trial date of November 30, 1998.
Other Proceedings - Item 10 in Part III of the Partnership's 1997 Form 10-K and
Item 1 in Part II of the Partnership's Form 10-Q for the period ended March 31,
1998 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. The Partnership is not a
party to these actions. There have been no material developments with respect to
any of the actions described therein during the period covered by this report.
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 (in electronic format only).
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.
9
<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
August 12, 1998 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)
10
<TABLE> <S> <C>
<ARTICLE>5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1821319
<SECURITIES> 0
<RECEIVABLES> 1363
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1822682
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1571724
<TOTAL-LIABILITY-AND-EQUITY> 1822682
<SALES> 0
<TOTAL-REVENUES> 372017
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 303043
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 68974
<INCOME-TAX> 0
<INCOME-CONTINUING> 68974
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68974
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0
</TABLE>
