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, 1999
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
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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
----- -----
1,883,082 Units of Limited Partnership Interest were outstanding as of September
30, 1999.
Transitional small business disclosure format:
Yes No X
----- -----
Page 1 of 12
<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)
September 30, December 31,
1999 1998
---- ----
ASSETS
Cash and cash equivalents $ 3,517 $ 4,834
Accounts receivable (net of allowance for
losses on accounts receivable of $163 and
$176 at September 30, 1999 and December 31,
1998, respectively) 197 178
Notes receivable (net of allowance for losses
on notes receivable of $174 and $595 at
September 30, 1999 and December 31, 1998,
respectively) 10,315 9,646
Equipment on operating leases and held for
lease (net of accumulated depreciation of
$3,434 and $5,419 at September 30, 1999
and December 31, 1998, respectively) 251 51
Net investment in financing leases (net of
allowance for early terminations of $332
and $345 at September 30, 1999 and December
31, 1998, respectively) 6,646 7,654
Investment in joint ventures -- 122
Capitalized acquisition fees (net of accumulated
amortization of $2,780 and $2,612 at September
30, 1999 and December 31, 1998, respectively) 534 538
Other assets 324 194
-------- --------
Total Assets $ 21,784 $ 23,217
======== ========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 1,064 $ 883
-------- --------
Total Liabilities 1,064 883
-------- --------
Partners' Capital (Deficit)
General Partner 11 (7)
Limited Partners, 5,000,000 units authorized,
2,045,838 units issued, 1,883,082 and
1,902,708 units outstanding at September 30,
1999 and December 31, 1998, respectively 20,448 22,218
Accumulated other comprehensive income 261 123
-------- --------
Total Partners' Capital (Deficit) 20,720 22,334
-------- --------
Total Liabilities and Partners' Capital (Deficit) $ 21,784 $ 23,217
======== ========
The accompanying notes are an integral part of these statements.
2
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
INCOME
Rental income $ 129 $ 353 $ 620 $ 1,288
Earned income, financing leases 276 327 816 1,104
Equity in earnings from joint
ventures, net 23 45 77 221
Interest income, notes receivable 563 443 1,380 949
Gain on sale of securities 14 -- 249 1
Other income 76 77 195 279
------- ------- ------- -------
Total Income 1,081 1,245 3,337 3,842
------- ------- ------- -------
EXPENSES
Depreciation 24 112 122 319
Amortization of acquisition fees 62 84 168 210
Lease related operating expenses 33 18 57 51
Management fees to General Partner 82 113 243 296
Reimbursed administrative costs to
General Partner 66 62 205 218
Provision for losses on receivables 81 83 491 239
Legal expense 46 39 131 148
General and administrative expenses 28 22 78 99
------- ------- ------- -------
Total Expenses 422 533 1,495 1,580
------- ------- ------- -------
NET INCOME 659 712 1,842 2,262
Other comprehensive income:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during period 62 (49) 387 33
Less: reclassification adjustment
for gains included in net
income (14) -- (249) (1)
------- ------- ------- -------
Other comprehensive income 48 (49) 138 32
------- ------- ------- -------
COMPREHENSIVE INCOME $ 707 $ 663 $ 1,980 $ 2,294
======= ======= ======= =======
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ .33 $ .35 $ .91 $ 1.12
======= ======= ======= =======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ .60 $ .50 $ 1.75 $ 1.50
======= ======= ======= =======
ALLOCATION OF NET INCOME:
General Partner $ 41 $ 37 $ 117 $ 111
Limited Partners 618 675 1,725 2,151
------- ------- ------- -------
$ 659 $ 712 $ 1,842 $ 2,262
======= ======= ======= =======
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)
Nine Months Ended
September 30,
1999 1998
---- ----
Operating Activities:
- --------------------
Net income $ 1,842 $ 2,262
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 122 319
Amortization of acquisition fees 168 210
Gain on sale of equipment (108) (80)
Gain on sale of securities (249) (1)
Equity in earnings from joint ventures, net (77) (221)
Provision for early termination, financing leases 79 111
Provision for losses on notes receivable 412 128
Decrease (increase) in accounts receivable (19) 189
Increase in accounts payable and accrued expenses 150 172
Decrease (increase) in other assets 9 (59)
------- -------
Net cash provided by operating activities 2,329 3,030
------- -------
Investing Activities:
- --------------------
Principal payments, financing leases 2,704 4,802
Principal payments, notes receivable 2,241 1,566
Proceeds from sale of equipment 154 230
Proceeds from sale of securities 249 1
Distributions from joint ventures 199 434
Investment in financing leases (2,143) (3,074)
Investment in notes receivable (3,322) (4,744)
Payment of acquisition fees (134) (259)
------- -------
Net cash used in investing activities (52) (1,044)
------- -------
Financing Activities:
- --------------------
Redemptions of capital (173) (241)
Distributions to partners (3,421) (2,970)
------- -------
Net cash used in financing activities (3,594) (3,211)
------- -------
Decrease in cash and cash equivalents (1,317) (1,225)
Cash and cash equivalents, beginning of period 4,834 5,087
------- -------
Cash and cash equivalents, end of period $ 3,517 $ 3,862
======= =======
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 1998 amounts have been reclassified to conform
to the 1999 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, 1999, the Partnership has
investments in notes receivable, before allowance for losses, of $10,489,000.
This amount includes impaired notes receivable, net of specific write downs, of
$713,000. The Partnership has an allowance for losses of $174,000 as of
September 30, 1999. The average recorded investment in impaired loans during the
nine months ended September 30, 1999 and 1998 was approximately $812,000 and
$314,000, respectively.
5
<PAGE>
The activity in the allowance for losses on notes receivable during the
nine months ended September 30, is as follows:
1999 1998
---- ----
(Amounts In Thousands)
Beginning balance $ 595 $ 368
Provision for losses 412 128
Write downs (833) --
----- -----
Ending balance $ 174 $ 496
===== =====
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 1,897,307 and 1,918,566 for the nine
months ended September 30, 1999 and 1998 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:
September 30, December 31,
1999 1998
---- ----
(Amounts in Thousands)
Assets $ 61 $184
Liabilities 62 117
Partners' Capital (1) 67
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ 71 $133 $404 $689
Expenses 4 8 53 55
Net Income 67 125 351 634
6
<PAGE>
Financing Joint Ventures
- ------------------------
The aggregate combined financial information of the financing joint
ventures is presented as follows:
September 30, December 31,
1999 1998
---- ----
(Amounts in Thousands)
Assets $ -- $550
Liabilities -- 151
Partners' Capital -- 399
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ 7 $ 20 $ 2 $ 68
Expenses -- 5 155 13
Net Income (Loss) 7 15 (153) 55
Note 7. Legal Proceedings.
-----------------
On October 28, 1997, a Class Action Complaint was filed against Phoenix
Leasing Incorporated, Phoenix Leasing Associates, II and III LP., 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 sought declaratory and other relief including accounting,
receivership, imposition of a constructive trust and judicial dissolution and
winding up of the Partnerships, and damages based on fraud, breach of fiduciary
duty and breach of contract by the Companies as general partners of the
Partnerships.
Plaintiffs severed one cause of action from the Complaint, a claim
related to the marketing and sale of CDF V, and transferred it to Marin County
Superior Court (the "Berger Action"). Plaintiffs then dismissed the remaining
claims in Sacramento Superior Court and refiled them in a separate lawsuit
making similar allegations (the "Ash Action"). That complaint was subsequently
transferred to Marin County as well.
Plaintiffs have amended the Berger Action twice. Defendants recently
answered the complaint. Discovery has recently commenced. The Companies intend
to vigorously defend the Complaint.
Defendants have filed a demurrer to the Ash Complaint, which plaintiffs
amended three times. Discovery has not commenced. The Companies intend to
vigorously defend the Complaint.
During the nine months ended September 30, 1999 and September 30, 1998,
the Partnership recorded legal expenses of approximately $32,000 and $34,000,
respectively, 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 $659,000 and $1,842,000 during the three and nine months
ended September 30, 1999, as compared to net income of $712,000 and $2,262,000
during the three and nine months ended September 30, 1998.
Total revenues decreased by $164,000 and $505,000 for the three and
nine months ended September 30, 1999, respectively, as compared to the same
period in 1998. This decrease primarily is a result of a decline in rental
income from operating leases and earned income from finance leases. This
decrease was offset by an increase in gain on sale of securities and interest
income from notes receivable.
Rental income decreased $224,000 and $668,000 for the three and nine
months ended September 30, 1999 compared to the same period in the previous
year. The decrease in rental income is attributable to a decrease in the amount
of equipment owned. At September 30, 1999, the Partnership owned equipment with
an aggregate original cost of approximately $18.3 million, as compared to $30
million at September 30, 1998.
The Partnership reported a gain on sale of securities of $14,000 and
$249,000 for the three and nine months ended September 30, 1999, respectively,
compared to $0 and $1,000 for the same periods in the previous year. The
securities sold consisted of common stock received through the exercise of stock
warrants granted to the Partnership as part of financing agreements with
emerging growth companies that are publicly traded. The Partnership received
proceeds of $249,000 and $1,000 from the sale of these securities during the
nine months ended September 30, 1999 and September 30, 1998, respectively.
Earned income from financing leases decreased by $51,000 and $288,000
during the three and nine months ended September 30, 1999, as compared to the
same period in 1998, due to a decrease in the Partnership's investment in
financing leases. The investment in financing leases was $7 million at September
30, 1999, as compared to $8.7 million at September 30, 1998. 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.
Partially offsetting these decreases in rental income and earned income
for the three and nine months ended September 30, 1999, compared to the same
period in 1998, is an increase in interest income from notes receivable of
$120,000 and $431,000, respectively. This increase is attributable to new
investments made in notes receivable during 1998 and 1999.
Total expenses for the three and nine months ended September 30, 1999,
decreased by $111,000 and $85,000, as compared to the same period in the
previous year. This decrease in the various items making up total expenses is
primarily attributable to a reduction in the amount of equipment owned by the
Partnership.
8
<PAGE>
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 will depend upon the General Partner's
success in collecting the contractual amounts owed, as well as 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, 1999 and 1998 was $7,274,000 and $9,398,000,
respectively. The reduction in cash generated is attributable to a decline in
payments from financing leases. Payments from financing leases decreased during
1999, compared to 1998, as a result of the Partnership's declining investment in
financing leases.
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 nine months ended September 30, 1999, the
Partnership acquired new equipment leases of $2.1 million and new investments in
notes receivable of $3.3 million, as compared to $3.1 million in new investments
in equipment leases and $4.7 million in notes receivable during the same period
in 1998.
As of September 30, 1999, the Partnership owned equipment being held
for lease with an original cost of $1,941,000 and a net book value of $251,000,
compared to $4,229,000 and $242,000, respectively, at September 30, 1998. 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 $235,000 during the nine
months ended September 30, 1999, compared to the same period in 1998. The
decrease in distributions from joint ventures for the nine months ended
September 30, 1999, 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 nine months ended September
30, 1999 was $3,421,000, as compared to $2,970,000 during the nine months ended
September 30, 1998. 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
$3,321,000 and $2,881,000 in distributions during the nine months ended
September 30, 1999 and 1998, respectively. The cumulative distributions to the
Limited Partners are $27,380,000 and $23,106,000 as of September 30, 1999 and
1998, respectively. The General Partner received $100,000 and $89,000 in cash
distributions for the nine months ended September 30, 1999 and 1998,
respectively. The Partnership plans to make distributions to partners during
1999 at a higher rate than 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>
Impact of the Year 2000 Issue
ReSourcePhoenix.com. ("ReSourcePhoenix"), an affiliate of the parent to
the General Partner does all local computer processing for the General Partner.
And as such ResourcePhoenix manages the Year 2000 project on behalf of the
General Partner.
ResourcePhoenix has a Year 2000 project plan in place. The Year 2000
project team has identified risks, and has implemented remediation procedures
for its Year 2000 issues. ReSourcePhoenix has budgeted for the necessary
changes, built contingency plans, and has progressed along the scheduled
timeline. Installation of all remediation changes to critical software and
hardware was completed on November 5, 1999.
Costs incurred by the Partnership will be expensed as incurred and are
not currently anticipated to be material to the Partnership's financial position
or results of operations.
The Partnership's customers consist of lessees and borrowers. The
Partnership does not have knowledge of any exposure to any individual customer
that would materially impact the Partnership should the customer experience a
significant Year 2000 problem, however, cumulative exposure to multiple
individual customers could materially impact the Partnership should multiple
customers experience a significant Year 2000 problem.
10
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
September 30, 1999
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 LP., 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 sought declaratory and other relief including accounting,
receivership, imposition of a constructive trust and judicial dissolution and
winding up of the Partnerships, and damages based on fraud, breach of fiduciary
duty and breach of contract by the Companies as general partners of the
Partnerships.
Plaintiffs severed one cause of action from the Complaint, a claim
related to the marketing and sale of CDF V, and transferred it to Marin County
Superior Court (the "Berger Action"). Plaintiffs then dismissed the remaining
claims in Sacramento Superior Court and refiled them in a separate lawsuit
making similar allegations (the "Ash Action"). That complaint was subsequently
transferred to Marin County as well.
Plaintiffs have amended the Berger Action twice. Defendants recently
answered the complaint. Discovery has recently commenced. The Companies intend
to vigorously defend the Complaint.
Defendants have filed a demurrer to the Ash Complaint, which plaintiffs
amended three times. 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
11
<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
---- ----- ---------
November 10, 1999 Senior Vice President /S/ GARY W. MARTINEZ
- ----------------- and a Director of --------------------
Phoenix Leasing Associates II, Inc. (Gary W. Martinez)
November 10, 1999 Chief Financial Officer, /S/ HOWARD SOLOVEI
- ----------------- Treasurer and a Director of --------------------
Phoenix Leasing Associates II, Inc. (Howard Solovei)
November 10, 1999 Senior Vice President, /S/ BRYANT J. TONG
- ----------------- Financial Operations of --------------------
(Principal Accounting Officer) (Bryant J.Tong)
Phoenix Leasing Associates II, Inc.
12
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,517
<SECURITIES> 261
<RECEIVABLES> 10,849
<ALLOWANCES> 337
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,685
<DEPRECIATION> 3,434
<TOTAL-ASSETS> 21,784
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,720
<TOTAL-LIABILITY-AND-EQUITY> 21,784
<SALES> 0
<TOTAL-REVENUES> 3,337
<CGS> 0
<TOTAL-COSTS> 1,495
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 491
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,842
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,842
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,842
<EPS-BASIC> .91
<EPS-DILUTED> 0
</TABLE>
