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 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______________.
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
--- ---
1,918,258 Units of Limited Partnership Interest were outstanding as of June 30,
1998.
Transitional small business disclosure format:
Yes No X
--- ---
Page 1 of 11
<PAGE>
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)
June 30, December 31,
1998 1997
---- ----
ASSETS
Cash and cash equivalents $ 3,381 $ 5,087
Accounts receivable (net of allowance for losses
on accounts receivable of $196 and $220 at
June 30, 1998 and December 31, 1997, respectively) 39 264
Notes receivable (net of allowance for losses on
notes receivable of $447 and $368 at June 30, 1998
and December 31, 1997, respectively) 8,826 6,514
Equipment on operating leases and held for
lease (net of accumulated depreciation of
$5,611 and $7,035 at June 30, 1998 and
December 31, 1997, respectively) 218 293
Net investment in financing leases (net of allowance
for early terminations of $401 and $341 at
June 30, 1998 and December 31, 1997, respectively) 10,389 10,974
Investment in joint ventures 212 353
Capitalized acquisition fees (net of accumulated
amortization of $2,452 and $2,326 at June 30, 1998
and December 31, 1997, respectively) 601 550
Other assets 124 42
----------- -----------
Total Assets $ 23,790 $ 24,077
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 1,027 $ 884
----------- -----------
Total Liabilities 1,027 884
----------- -----------
Partners' Capital
General Partner (22) (38)
Limited Partners, 5,000,000 units authorized,
2,045,838 units issued, 1,922,126 and 1,925,475
units outstanding at June 30, 1998 and
December 31, 1997, respectively 22,700 23,227
Unrealized gains on available-for-sale securities 85 4
----------- -----------
Total Partners' Capital 22,763 23,193
----------- -----------
Total Liabilities and Partners' Capital $ 23,790 $ 24,077
=========== ===========
The accompanying notes are an integral part of these statements.
2
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
INCOME
Rental income $ 359 $ 405 $ 784 $ 878
Earned income, financing leases 369 557 777 1,147
Equity in earnings from joint ventures, net 118 52 176 146
Interest income, notes receivable 239 143 506 334
Gain on sale of equipment 69 103 151 83
Other income 111 116 203 172
------ ------ ------ ------
Total Income 1,265 1,376 2,597 2,760
------ ------ ------ ------
EXPENSES
Depreciation 62 130 207 273
Amortization of acquisition fees 64 71 126 164
Lease related operating expenses 21 18 33 47
Management fees to General Partner 92 101 183 220
Reimbursed administrative costs
to General Partner 83 92 156 182
Provision for losses on receivables 87 141 156 141
Legal expense 59 41 109 76
General and administrative expenses 38 33 76 63
------ ------ ------ ------
Total Expenses 506 627 1,046 1,166
------ ------ ------ ------
NET INCOME $ 759 $ 749 $1,551 $1,594
====== ====== ====== ======
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ .38 $ .37 $ .77 $ .78
====== ====== ====== ======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ .50 $ .50 $ 1.00 $ 1.00
====== ====== ====== ======
ALLOCATION OF NET INCOME:
General Partner $ 37 $ 38 $ 75 $ 76
Limited Partners 722 711 1,476 1,518
------ ------ ------ ------
$ 759 $ 749 $1,551 $1,594
====== ====== ====== ======
The accompanying notes are an integral part of these statements.
3
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Six Months Ended
June 30,
1998 1997
---- ----
Operating Activities:
Net income $ 1,551 $ 1,594
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 207 273
Amortization of acquisition fees 126 164
Gain on sale of equipment (151) (83)
Gain on sale of securities (1) (20)
Equity in earnings from joint ventures, net (176) (146)
Provision for early termination, financing leases 77 97
Provision for losses on notes receivable 79 44
Decrease (increase) in accounts receivable 225 (123)
Increase (decrease) in accounts payable and
accrued expenses 48 (255)
Increase (decrease) in other assets (1) 57
------- -------
Net cash provided by operating activities 1,984 1,602
------- -------
Investing Activities:
Principal payments, financing leases 2,901 3,768
Principal payments, notes receivable 941 1,010
Proceeds from sale of equipment 204 155
Proceeds from sale of securities 1 20
Distributions from joint ventures 317 796
Investment in financing leases (2,578) (1,264)
Investment in notes receivable (3,332) (1,988)
Payment of acquisition fees (82) (76)
------- -------
Net cash provided (used) by investing activities (1,628) 2,421
------- -------
Financing Activities:
Redemptions of capital (80) (133)
Distributions to partners (1,982) (2,005)
------- -------
Net cash used by financing activities (2,062) (2,138)
------- -------
Increase (decrease) in cash and cash equivalents (1,706) 1,885
Cash and cash equivalents, beginning of period 5,087 3,140
------- -------
Cash and cash equivalents, end of period $ 3,381 $ 5,025
======= =======
The accompanying notes are an integral part of these statements.
4
<PAGE>
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.
The Partnership Agreement stipulates the methods by which income will be
allocated to the General Partner and the limited partners. Such allocations will
be made using income or loss calculated under Generally Accepted Accounting
Principles for book purposes, which varies from income or loss calculated for
tax purposes.
The calculation of items of income and loss for book and tax purposes may
result in book basis capital accounts that vary from the tax basis capital
accounts. The requirement to restore any deficit capital balances by the General
Partner will be determined based on the tax basis capital accounts. At
liquidation of the Partnership, the General Partner's remaining book basis
capital account will be reduced to zero through the allocation of income or
loss.
Note 2. Reclassification.
Reclassification - Certain 1997 amounts have been reclassified to conform
to the 1998 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 June 30, 1998 the Partnership has investments
in notes receivable, before allowance for losses, of $9,273,000 of which
$359,000 is considered to be impaired. The Partnership has an allowance for
losses of $447,000 as of June 30, 1998. The average recorded investment in
impaired loans during the six months ended June 30, 1998 and 1997 was
approximately $360,000 and $36,000, respectively.
5
<PAGE>
The activity in the allowance for losses on notes receivable during the six
months ended June 30, is as follows:
1998 1997
---- ----
(Amounts In Thousands)
Beginning balance $ 368 $ 124
Provision for losses 79 44
Write downs - -
----- -----
Ending balance $ 447 $ 168
===== =====
Note 5. 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 1,922,126 and 1,943,523 for the six
months ended June 30, 1998 and 1997 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 6. Investment in Joint Ventures.
Equipment Joint Venture
The aggregate combined financial information of the equipment joint
ventures is presented as follows:
June 30, December 31,
1998 1997
---- ----
(Amounts in Thousands)
Assets $ 314 $ 730
Liabilities 78 156
Partners' Capital 236 574
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ 374 $ 237 $ 555 $ 582
Expenses 27 97 46 181
Net Income 347 140 509 401
6
<PAGE>
Financing Joint Ventures
The aggregate combined financial information of the financing joint
ventures is presented as follows:
June 30, December 31,
1998 1997
---- ----
(Amounts in Thousands)
Assets $ 680 $ 803
Liabilities 141 136
Partners' Capital 539 667
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ 22 $ 33 $ 48 $ 68
Expenses 4 3 8 17
Net Income 18 30 40 51
Note 7. Legal Proceedings.
On October 28, 1997 a Class Action Complaint was filed against Phoenix
Leasing Incorporated, Phoenix Leasing Associates, II and III L.P., Phoenix
Securities Inc. and Phoenix American Incorporated (the "Companies") in
California Superior Court for the County of Sacramento by eleven individuals on
behalf of investors in Phoenix Leasing Cash Distribution Funds I through V (the
"Partnerships"). The Companies were served with the Complaint on December 9,
1997. The Complaint seeks declaratory and other relief including accounting,
receivership, imposition of constructive trust and judicial dissolution and
winding up of the Partnerships, and damages based on fraud, breach of fidicuary
duty and breach of contract by the Companies as general partners of the
Partnerships. Plaintiffs are expected to serve an amended complaint on August
14, 1998. Discovery has not commenced. The Companies intend to vigorously defend
the Complaint
During the six months ended June 30, 1998, the Partnership recorded legal
expenses of approximately $24,000 in connection with the above litigation as
indemnification to the General Partner.
7
<PAGE>
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. (the "Partnership") reported
net income of $759,000 and $1,551,000 during the three and six months ended June
30, 1998, respectively, as compared to net income of $749,000 and $1,594,000
during the three and six months ended June 30, 1997. Net income for the three
and six months ended June 30, 1998 remained relatively the same as compared to
the prior year.
Total revenues decreased by $111,000 and $163,000 for the three and six
months ended June 30, 1998, as compared to the same periods in 1997, primarily
as a result of a decline in earned income from financing leases. Earned income
from financing leases decreased by $188,000 and $370,000 during the three and
six months ended June 30, 1998, as compared to the same periods in 1997, due to
a decrease in the Partnership's investment in financing leases. The investment
in financing leases was $10.4 million at June 30, 1998, as compared to $12.6
million at June 30, 1997. 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. This decrease may be offset in part by a continuous investment of the
excess cash flows of the Partnership in new leasing and financing transactions
over the life of the Partnership. During the six months ended June 30, 1998, the
Partnership made new investments in financing leases of $2.6 million, compared
to $1.3 million during the six months ended June 30, 1997
Partially offsetting this decrease in earned income for the three and six
months ended June 30, 1998, compared to the same periods in 1997, is an increase
in interest income from notes receivable of $96,000 and $172,000, respectively.
This increase is attributable to new investments made in notes receivable during
1997 and 1998. During the six months ended June 30, 1998, the Partnership made
new investments in notes receivable of $3.3 million, compared to $2 million
during the six months ended June 30, 1997.
The increase in earnings from joint ventures of $66,000 and $30,000 for the
three and six months ended June 30, 1998, compared to the same periods in the
previous year, also partially offset the decrease in earned income from
financing leases. The increase in earnings from joint ventures for the three and
six months ended June 30, 1998, compared to the same periods in 1997, is due to
one equipment joint venture, in which the Partnership has an investment,
recognizing a gain on sale of equipment as a result of the lessee exercising the
option to purchase the equipment being leased.
Total expenses for the three and six months ended June 30, 1998 decreased
by $121,000 and $120,000, as compared to the same periods in the previous year.
The decrease in the various items making up total expenses is primarily
attributable to a reduction in the amount of equipment owned by the Partnership.
At June 30, 1998, the Partnership owned equipment having an aggregate original
cost of approximately $32.1 million, as compared to $38.1 million at June 30,
1997.
The Partnership did experience an increase in provision for losses on
receivables for the six months ended June 30, 1998, compared to the same period
in 1997, as well as an increase in legal expense for both the three and six
months ended June 30, 1998, compared to the same periods in the previous year.
The increase in provision for losses is attributable to an increase in provision
for losses on notes receivable.
The increase in legal fees of $18,000 and $33,000 for both the three and
six months ended June 30, 1998, respectively, as compared to the same periods in
1997, is a result of legal costs associated to a Class Action Complaint as
further discussed on Note 7.
8
<PAGE>
Liquidity and Capital Resources
The Partnership's primary source of liquidity is derived from its
contractual obligations with lessees for fixed lease terms at fixed rental
amounts, and from payments of principal and interest on outstanding notes
receivable. As the initial lease terms expire, the Partnership will re-lease the
equipment or sell the equipment. The future liquidity of the Partnership will
depend on the General Partner's success in collecting the contractual amounts
owed, as well as re-leasing and selling the Partnership's equipment as it comes
off lease.
The cash generated from leasing and financing activities during the three
and six months ended June 30, 1998 and 1997 was $5,826,000 and $6,380,000,
respectively. The reduction in cash generated is attributable to a decline in
payments from financing leases and notes receivable. Payments from financing
leases decreased during 1998, compared to 1997, as a result of the Partnership's
declining investment in financing leases. Payments from notes receivable for the
six months ended June 30, 1997 included several payoffs. There were no
significant payoffs received in 1998.
The Partnership may reinvest the cash generated by operating and financing
activities in new leasing and financing transactions over the life of the
Partnership. During the six months ended June 30, 1998, the Partnership acquired
new equipment leases of $2.6 million and new investments in notes receivable of
$3.3 million, as compared to investments of $1.3 in equipment leases and $2
million in notes receivable during the same period in 1997.
As of June 30, 1998, the Partnership owned equipment being held for lease
with an original cost of $4,256,000 and a net book value of $208,000, compared
to $4,118,000 and $146,000, respectively, at June 30, 1997. 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 decreased by $479,000 during the six
months ended June 30, 1998, compared to the same period in 1997. The decrease in
distributions from joint ventures for the six months ended June 30, 1998,
compared to the prior year, is attributable to a decline in the amount of cash
available for distribution from one equipment joint venture as a result of a
decrease in rental income and proceeds from sale of equipment.
The cash distributed to partners for the six months ended June 30, 1998 was
$1,982,000, as compared to $2,005,000 during the six months ended June 30, 1997.
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 $1,923,000 and
$1,945,000 in distributions during the six months ended June 30, 1998 and 1997,
respectively. The cumulative distributions to the Limited Partners are
$22,148,000 and $18,294,000 as of June 30, 1998 and 1997, respectively. The
General Partner received $59,000 and $60,000 in cash distributions for the six
months ended June 30, 1998 and 1997, respectively. The Partnership anticipates
making distributions to partners during 1998 at the same rate as 1997.
As stated in the Partnership's prospectus, redemptions were at the
discretion of the General Partner. It has become necessary to discontinue
redemptions to assure that the Partnership does not have to change its
distribution schedules due to unexpected redemptions and also to assure that it
is able to reinvest lease proceeds to maximize returns for those investors who
continue in the Partnership. No further redemptions in the Partnership will be
permitted after July 31, 1998.
The cash to be generated from leasing and financing operations is
anticipated to be sufficient to meet the Partnership's continuing operational
expenses.
9
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
June 30, 1998
Part II. Other Information
-----------------
Item 1. Legal Proceedings.
-----------------
On October 28, 1997 a Class Action Complaint was filed against
Phoenix Leasing Incorporated, Phoenix Leasing Associates, II and III L.P.,
Phoenix Securities Inc. and Phoenix American Incorporated (the "Companies") in
California Superior Court for the County of Sacramento by eleven individuals on
behalf of investors in Phoenix Leasing Cash Distribution Funds I through V (the
"Partnerships"). The Companies were served with the Complaint on December 9,
1997. The Complaint seeks declaratory and other relief including accounting,
receivership, imposition of constructive trust and judicial dissolution and
winding up of the Partnerships, and damages based on fraud, breach of fidicuary
duty and breach of contract by the Companies as general partners of the
Partnerships. Plaintiffs are expected to serve an amended complaint on August
14, 1998. Discovery has not commenced. The Companies intend to vigorously defend
the Complaint.
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
10
<PAGE>
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
---- ----- ---------
August 12, 1998 Senior Vice President /S/ GARY W. MARTINEZ
- -------------------- and a Director of --------------------
Phoenix Leasing Associates II,Inc. (Gary W. Martinez)
August 12, 1998 Chief Financial Officer, /S/ HOWARD SOLOVEI
- -------------------- Treasurer and a Director of --------------------
Phoenix Leasing Associates II,Inc. (Howard Solovei)
August 12, 1998 Senior Vice President, /S/ BRYANT J. TONG
- -------------------- Financial Operations of --------------------
(Principal Accounting Officer) (Bryant J.Tong)
Phoenix Leasing Associates II, Inc.
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,381
<SECURITIES> 0
<RECEIVABLES> 9,508
<ALLOWANCES> 643
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,829
<DEPRECIATION> 5,611
<TOTAL-ASSETS> 23,790
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 22,763
<TOTAL-LIABILITY-AND-EQUITY> 23,790
<SALES> 0
<TOTAL-REVENUES> 2,597
<CGS> 0
<TOTAL-COSTS> 1,046
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 156
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,551
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,551
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,551
<EPS-PRIMARY> .77
<EPS-DILUTED> 0
</TABLE>
