Page 1 of 12
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ----- ACT OF 1934
For the quarterly period ended September 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________.
Commission file number 0-20133
-------
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
- --------------------------------------------------------------------------------
Registrant
California 68-0222136
- ----------------------------------- ----------------------------------
State of Jurisdiction I.R.S. Employer Identification No.
2401 Kerner Boulevard, San Rafael, California 94901-5527
- --------------------------------------------------------------------------------
Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (415) 485-4500
--------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
preceding requirements for the past 90 days.
Yes _X_ No ___
1,928,520 Units of Limited Partnership Interest were outstanding as of September
30, 1997.
Transitional small business disclosure format:
Yes ___ No _X_
<PAGE>
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<TABLE>
Part I. Financial Information
-----------------------------
Item 1. Financial Statements
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
<CAPTION>
September 30, December 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 4,651 $ 3,140
Accounts receivable (net of allowance for losses on accounts receivable
of $128 and $153 at September 30, 1997 and December 31, 1996, respectively) 213 187
Notes receivable (net of allowance for losses on notes receivable of $134 and
$124 at September 30, 1997 and December 31, 1996, respectively) 5,761 3,333
Equipment on operating leases and held for lease (net of accumulated
depreciation of $7,630 and $8,389 at September 30, 1997 and
December 31, 1996, respectively) 261 719
Netinvestment in financing leases (net of allowance for early terminations of
$314 and $519 at September 30, 1997 and December 31, 1996, respectively) 11,635 15,139
Investment in joint ventures 454 1,383
Capitalized acquisition fees (net of accumulated amortization of $2,255
and $2,015 at September 30, 1997 and December 31, 1996, respectively) 539 591
Securities, available-for-sale 782 369
Other assets 68 127
-------- --------
Total Assets $ 24,364 $ 24,988
======== ========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 1,032 $ 1,126
-------- --------
Total Liabilities 1,032 1,126
-------- --------
Partners' Capital (Deficit)
General Partner (54) (76)
Limited Partners, 5,000,000 units authorized, 2,045,838 units issued,
1,928,520 and 1,946,243 units outstanding at September 30, 1997 and
December 31, 1996, respectively 22,604 23,569
Unrealized gains on available-for-sale securities 782 369
-------- --------
Total Partners' Capital (Deficit) 23,332 23,862
-------- --------
Total Liabilities and Partners' Capital (Deficit) $ 24,364 $ 24,988
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
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<TABLE>
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME
Rental income $ 453 $ 763 $1,414 $2,722
Earned income, financing leases 486 596 1,633 1,989
Equity in earnings from joint ventures, net 56 139 201 315
Interest income, notes receivable 209 120 543 295
Gain on sale of securities -- -- 20 368
Other income 77 55 230 200
------ ------ ------ ------
Total Income 1,281 1,673 4,041 5,889
------ ------ ------ ------
EXPENSES
Depreciation 146 527 419 2,769
Amortization of acquisition fees 76 90 240 286
Lease related operating expenses 23 35 70 171
Management fees to General Partner 104 119 324 366
Reimbursed administrative costs
to General Partner 76 87 258 275
Interest expense -- 24 -- 132
Provision for losses on receivables 76 69 217 220
Legal expense 99 32 175 75
General and administrative expenses 24 30 87 104
------ ------ ------ ------
Total Expenses 624 1,013 1,790 4,398
------ ------ ------ ------
NET INCOME $ 657 $ 660 $2,251 $1,491
====== ====== ====== ======
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ .32 $ .32 $ 1.10 $ .70
====== ====== ====== ======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ .50 $ .50 $ 1.50 $ 1.50
====== ====== ====== ======
ALLOCATION OF NET INCOME:
General Partner $ 36 $ 36 $ 112 $ 106
Limited Partners 621 624 2,139 1,385
------ ------ ------ ------
$ 657 $ 660 $2,251 $1,491
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
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<TABLE>
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1997 1996
---- ----
<S> <C> <C>
Operating Activities:
Net income $ 2,251 $ 1,491
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 419 2,769
Amortization of acquisition fees 240 286
Gain on sale of equipment (121) (60)
Gain on sale of securities (20) (368)
Equity in earnings from joint ventures, net (201) (315)
Provision for early termination, financing leases 142 220
Provision for losses on notes receivable 74 --
Provision for losses on accounts receivable 1 --
Decrease (increase) in accounts receivable (27) 155
Increase (decrease) in accounts payable and accrued expenses (185) 191
Decrease in other assets 59 65
------- -------
Net cash provided by operating activities 2,632 4,434
------- -------
Investing Activities:
Principal payments, financing leases 5,625 5,486
Principal payments, notes receivable 1,359 538
Proceeds from sale of equipment 304 805
Proceeds from sale of securities 20 381
Distributions from joint ventures 1,130 151
Purchase of equipment -- (20)
Investment in financing leases (2,407) (3,301)
Investment in notes receivable (3,861) (1,992)
Investment in joint ventures -- (45)
Investment in securities -- (13)
Payment of acquisition fees (97) (185)
------- -------
Net cash provided by investing activities 2,073 1,805
------- -------
Financing Activities:
Payments of principal, notes payable -- (3,594)
Redemptions of capital (193) (611)
Distributions to partners (3,001) (3,059)
------- -------
Net cash used by financing activities (3,194) (7,264)
------- -------
Increase (decrease) in cash and cash equivalents 1,511 (1,025)
Cash and cash equivalents, beginning of period 3,140 3,131
------- -------
Cash and cash equivalents, end of period $ 4,651 $ 2,106
======= =======
Supplemental Cash Flow Information:
Cash paid for interest expense $ -- $ 130
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
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PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
The accompanying unaudited condensed financial statements have been
prepared by the Partnership in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Although management believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Partnership's Financial Statement, as filed with the
SEC in the latest annual report on Form 10-K.
Note 2. Reclassification.
Reclassification - Certain 1996 amounts have been reclassified to
conform to the 1997 presentation.
Note 3. Income Taxes.
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the financial statements of the Partnership.
Note 4. Notes Receivable.
Impaired Notes Receivable. At September 30, 1997, there are no notes
that are considered to be impaired. The average recorded investment in impaired
notes during the nine months ended September 30, 1997 and 1996 was approximately
$24,000 and $0, respectively.
The activity in the allowance for losses on notes receivable during the
nine months ended September 30, is as follows:
1997 1996
---- ----
(Amounts in Thousands)
Beginning balance $ 124 $55
Provision for losses 74 --
Write downs (64) --
----- ---
Ending balance $ 134 $55
===== ===
Note 5. Equipment on Operating Leases and Held for Lease.
The Partnership's policy, as disclosed on the Partnership's latest
annual report filed on Form 10-K, is to provide additional depreciation expense
where reviews of equipment indicate that rentals plus anticipated sales proceeds
will not exceed expenses, including depreciation expense, in any future period.
As a result, the Partnership has provided additional depreciation expense on
various leases that are near the end of their initial lease term where the
estimated fair market value is not expected to exceed the net book value of such
leases. The portion of additional depreciation expense included in the caption
"Depreciation" on the statements of operations for the nine months ended
September 30, 1997 and 1996, are $4,000 and $758,000, respectively ($0 and $.38
per limited partnership unit, respectively).
<PAGE>
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Note 6. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net income and distributions per limited partnership unit were based on
the limited partners' share of net income and distributions, and the weighted
average number of units outstanding of 1,939,294 and 1,981,901 for the nine
months ended September 30, 1997 and 1996, respectively. For purposes of
allocating income (loss) to each individual partner, the Partnership allocates
net income (loss) based upon each respective limited partner's net capital
contributions.
Note 7. Investment in Joint Ventures.
Equipment Joint Venture
The aggregate combined financial information of the equipment
joint ventures is presented as follows:
September 30, December 31,
1997 1996
---- ----
(Amounts in Thousands)
Assets $1,203 $4,002
Liabilities 355 382
Partners' Capital 848 3,620
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
(Amounts in Thousands)
Revenue $320 $616 $903 $1,655
Expenses 173 219 355 779
Net Income 147 397 548 876
Financing Joint Ventures
The aggregate combined financial information of the financing
joint ventures is presented as follows:
September 30, December 31,
1997 1996
---- ----
(Amounts in Thousands)
Assets $872 $1,023
Liabilities 145 130
Partners' Capital 727 893
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
(Amounts in Thousands)
Revenue $31 $40 $99 $124
Expenses 4 2 21 4
Net Income 27 38 78 120
<PAGE>
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Note 8. Subsequent Events.
In October 1997, the Partnership received proceeds from the sale of
securities of $935,000. The securities sold consisted of common stock of two
emerging growth companies. The common stock was received through the exercise of
stock warrants granted to the Partnership as part of a financing agreement.
<PAGE>
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PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Phoenix Leasing Cash Distribution Fund V, L.P. reported net income of
$657,000 and $2,251,000 during the three and nine months ended September 30,
1997, respectively, as compared to net income of $660,000 and $1,491,000 during
the same periods in 1996. Net income remained relatively the same during the
three months ended September 30, 1997, compared to the same period in the
previous year but increased for the nine months ended September 30, 1997. The
increase in net income experienced during the nine months ended September 30,
1997 is attributable to a decrease in depreciation expense.
Total revenues decreased by $392,000 and $1,848,000 for the three and
nine months ended September 30, 1997, respectively, as compared to the same
periods in 1996 primarily as a result of a decline in rental income. Rental
income decreased by $310,000 and $1,308,000 during the three and nine months
ended September 30, 1997, respectively, as compared to the same periods in 1996.
The decrease in rental income is attributable to a decrease in the amount of
equipment owned. At September 30, 1997, the Partnership owned equipment having
an aggregate original cost of approximately $37.2 million, as compared to $42.9
million at September 30, 1996.
The decreases in earned income from financing leases also contributed
to the decline in total revenues for the three and nine months ended September
30, 1997, as compared to the same periods in the prior year. Earned income from
financing leases decreased by $110,000 and $356,000 during the three and nine
months ended September 30, 1997, respectively, as compared to the same periods
in 1996, due to a decrease in the Partnership's investment in financing leases.
The investment in financing leases was $11.6 million at September 30, 1997, as
compared to $16.2 million at September 30, 1996. The investment in financing
leases, as well as earned income from financing leases, will decrease over the
lease term as the Partnership amortizes income over the life of the lease using
the interest method.
An additional factor contributing to the decline in total revenues for
the nine months ended September 30, 1997, compared to the same period in the
prior year, is the decline in gain on sale of securities. During the nine months
ended September 30, 1997, the Partnership recognized a gain on the sale of
marketable securities of $20,000, compared to $368,000 for the same period in
1996. The securities sold for both 1996 and 1997 consisted of common stock
received through the exercise of stock warrants granted to the Partnership as
part of a financing agreement with two emerging growth companies. In addition,
the Partnership owns shares of stock and stock warrants in emerging growth
companies that are publicly traded with an unrealized gain of $782,000 at
September 30, 1997 compared to $439,000 at September 30, 1996. These investments
in stock and stock warrants carry certain restrictions, but generally can be
exercised within a one year period.
Partially offsetting the factors contributing to the decrease in total
revenues is the increase in interest income from notes receivable of $89,000 and
$248,000 for the three and nine months ended September 30, 1997, respectively,
compared to the same periods in 1996. This increase is attributable to new
investments made in notes receivable during 1996 and 1997.
Total expenses decreased by $389,000 and $2,608,000 during the three
and nine months ended September 30, 1997, respectively, when compared to the
same periods in 1996. The decline in depreciation of $381,000 and $2,350,000 for
the three and nine months ended September 30, 1997, respectively, as compared to
the same periods in the previous year, is the primary cause for the reduction in
total expenses. The decrease in depreciation expense is attributable to a
<PAGE>
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decrease in the amount of equipment owned, as well as a portion of the equipment
portfolio having become fully depreciated. Another factor contributing to the
decrease in depreciation expense during the three and nine months ended
September 30, 1997, as compared to the same periods in 1996, is the result of
the Partnership providing less additional depreciation on various leases that
had come to the end of their initial lease term or had terminated early, where
the estimated fair market value was not expected to exceed the net book value of
such leases. Included in depreciation expense for the three and nine months
ended September 30, 1997 was additional depreciation expense of $4,000, as
compared to $0 and $758,000 for the same periods in 1996, respectively.
Liquidity and Capital Resources
The Partnership's primary source of liquidity comes from contractual
obligations with lessees and borrowers for fixed terms at fixed payment amounts.
The future liquidity of the Partnership is dependent upon the payment of the
Partnership's contractual obligations from its lessees and borrowers. As the
initial lease terms of the Partnership's short term operating leases expire, the
Partnership will re-lease or sell the equipment as it becomes available. The
future liquidity of the Partnership in excess of the contractual obligations
will depend upon the General Partner's success in re-leasing and selling the
Partnership's equipment when the lease terms expire.
The cash generated from leasing and financing activities during the
nine months ended September 30, 1997 and 1996 was $9,616,000 and $10,458,000,
respectively. The reduction in cash generated is attributable to a decline in
rental income, as discussed previously. During the nine months ended September
30, 1996, the net cash generated from leasing and financing activities, combined
with the cash on hand, were used for the repayment of debt and for the payment
of cash distributions to the partners. During the nine months ended September
30, 1996, the Partnership repaid $3,594,000 of its outstanding debt. The
Partnership's outstanding debt was paid off in full in 1996.
The Partnership will continue to reinvest the cash generated by
operating and financing activities in new leasing and financing transactions
over the life of the Partnership. During the nine months ended September 30,
1997, the Partnership invested $2,407,000 in equipment leases and $3,861,000 in
notes receivable, as compared to investments of $3,301,000 in equipment leases
and $1,992,000 in notes receivable during the same period in 1996.
As of September 30, 1997, the Partnership owned equipment being held
for lease with an original cost of $4,088,000 and a net book value of $135,000,
compared to $5,125,000 and $531,000, respectively, at September 30, 1996. The
General Partner is actively engaged, on behalf of the Partnership, in
remarketing and selling the Partnership's equipment as it becomes available.
Distributions from joint ventures increased by $979,000 during the nine
months ended September 30, 1997, compared to the same period in 1996. In
November of 1996, one equipment joint venture's outstanding debt was repaid in
full. As a result, this equipment joint venture has begun making distributions.
The cash distributed to partners for the nine months ended September
30, 1997 was $3,001,000, as compared to $3,059,000 during the nine months ended
September 30, 1996. In accordance with the Partnership Agreement, the limited
partners are entitled to 97% of the cash available for distribution and the
General Partner is entitled to 3%. As a result, the limited partners received
$2,911,000 and $2,966,000 in distributions during the nine months ended
September 30, 1997 and 1996, respectively. The cumulative distributions to the
Limited Partners are $19,261,000 and $15,375,000 as of September 30, 1997 and
1996, respectively. The General Partner received $90,000 and $93,000 in cash
distributions for the nine months ended September 30, 1997 and 1996,
respectively. The Partnership anticipates making distributions to partners
during 1997 at the same rate as the current distribution.
<PAGE>
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The cash to be generated from leasing and financing operations is
anticipated to be sufficient to meet the Partnership's continuing operational
expenses.
<PAGE>
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PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
September 30, 1997
Part II. Other Information.
-----------------
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults Upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of Securities Holders.Inapplicable
Item 5. Other Information. Inapplicable
Item 6. Exhibits and Reports on 8-K:
a) Exhibits:
(27) Financial Data Schedule
b) Reports on 8-K: None
<PAGE>
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
----------------------------------------------
(Registrant)
BY: PHOENIX LEASING ASSOCIATES II, L.P.
a California limited partnership,
General Partner
BY: PHOENIX LEASING ASSOCIATES II, INC.
a Nevada corporation,
General Partner
Date Title Signature
---- ----- ---------
November 12, 1997 Senior Vice President and /S/ GARY W. MARTINEZ
- ----------------- a Director of ----------------------
Phoenix Leasing Associates II, Inc. (Gary W. Martinez)
November 12, 1997 Senior Vice President, /S/ PARITOSH K. CHOKSI
- ----------------- Chief Financial Officer, ----------------------
Treasurer and a Director of (Paritosh K. Choksi)
Phoenix Leasing Associates II, Inc.
November 12, 1997 Senior Vice President, /S/ BRYANT J. TONG
- ----------------- Financial Operations of ------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Associates II, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,651
<SECURITIES> 782
<RECEIVABLES> 6,236
<ALLOWANCES> 262
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 7,891
<DEPRECIATION> 7,630
<TOTAL-ASSETS> 24,364
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23,332
<TOTAL-LIABILITY-AND-EQUITY> 24,364
<SALES> 0
<TOTAL-REVENUES> 4,041
<CGS> 0
<TOTAL-COSTS> 1,790
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 217
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,251
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,251
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,251
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 0
</TABLE>
