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, 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
-------
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
----- -----
1,896,292 Units of Limited Partnership Interest were outstanding as of June 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)
June 30, December 31,
1999 1998
---- ----
ASSETS
Cash and cash equivalents $ 4,118 $ 4,834
Accounts receivable (net of allowance for losses on
accounts receivable of $164 and $176 at June 30,
1999 and December 31, 1998, respectively) 152 178
Notes receivable (net of allowance for losses on
notes receivable of $514 and $595 at June 30,
1999 and December 31, 1998, respectively) 10,478 9,646
Equipment on operating leases and held for lease (net of
accumulated depreciation of $4,223 and $5,419 at
June 30, 1999 and December 31, 1998, respectively) 71 51
Net investment in financing leases (net of allowance for
early terminations of $316 and $345 at June 30, 1999
and December 31, 1998, respectively) 6,514 7,654
Investment in joint ventures 64 122
Capitalized acquisition fees (net of accumulated
amortization of $2,718 and $2,612 at June 30, 1999
and December 31, 1998, respectively) 536 538
Other assets 277 194
-------- --------
Total Assets $ 22,210 $ 23,217
======== ========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 916 $ 883
-------- --------
Total Liabilities 916 883
-------- --------
Partners' Capital (Deficit)
General Partner 5 (7)
Limited Partners, 5,000,000 units authorized,
2,045,838 units issued, 1,896,292 and 1,902,708
units outstanding at June 30, 1999 and December
31, 1998, respectively 21,076 22,218
Accumulated other comprehensive income 213 123
-------- --------
Total Partners' Capital (Deficit) 21,294 22,334
-------- --------
Total Liabilities and Partners' Capital (Deficit) $ 22,210 $ 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 Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---- ---- ---- ----
INCOME
Rental income $ 278 $ 428 $ 491 $ 935
Earned income, financing leases 278 369 541 777
Interest income, notes receivable 494 239 817 506
Equity in earnings from joint
ventures, net 36 118 53 176
Gain on sale of securities 222 1 235 1
Other income 49 110 119 202
------- ------- ------- -------
Total Income 1,357 1,265 2,256 2,597
------- ------- ------- -------
EXPENSES
Depreciation 30 62 98 207
Amortization of acquisition fees 52 64 107 126
Lease related operating expenses 9 21 24 33
Management fees to General Partner 85 92 161 183
Reimbursed administrative costs to
General Partner 71 83 139 156
Provision for losses on receivables 330 87 410 156
Legal expense 36 59 85 109
General and administrative expenses 26 38 49 76
------- ------- ------- -------
Total Expenses 639 506 1,073 1,046
------- ------- ------- -------
NET INCOME 718 759 1,183 1,551
Other comprehensive income:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during period 18 (6) 325 82
Less: reclassification adjustment
for gains included in net
income (222) (1) (235) (1)
------- ------- ------- -------
Other comprehensive income (204) (7) 90 81
------- ------- ------- -------
COMPREHENSIVE INCOME $ 514 $ 752 $ 1,273 $ 1,632
======= ======= ======= =======
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ .35 $ .38 $ .58 $ .77
======= ======= ======= =======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ .62 $ .50 $ 1.15 $ 1.00
======= ======= ======= =======
ALLOCATION OF NET INCOME:
General Partner $ 43 $ 37 $ 76 $ 75
Limited Partners 675 722 1,107 1,476
------- ------- ------- -------
$ 718 $ 759 $ 1,183 $ 1,551
======= ======= ======= =======
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,
1999 1998
---- ----
Operating Activities:
- --------------------
Net income $ 1,183 $ 1,551
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 98 207
Amortization of acquisition fees 107 126
Gain on sale of equipment (52) (151)
Gain on sale of securities (235) (1)
Equity in earnings from joint ventures, net (53) (176)
Provision for early termination, financing leases 53 77
Provision for losses on notes receivable 357 79
Decrease in accounts receivable 26 225
Increase in accounts payable and accrued expenses 41 48
Decrease (increase) in other assets 7 (1)
------- -------
Net cash provided by operating activities 1,532 1,984
------- -------
Investing Activities:
- --------------------
Principal payments, financing leases 1,738 2,901
Principal payments, notes receivable 1,531 941
Proceeds from sale of equipment 54 204
Proceeds from sale of securities 235 1
Distributions from joint ventures 111 317
Investment in financing leases (771) (2,578)
Investment in notes receivable (2,720) (3,332)
Payment of acquisition fees (113) (82)
------- -------
Net cash provided by (used in) investing activities 65 (1,628)
------- -------
Financing Activities:
- --------------------
Redemptions of capital (64) (80)
Distributions to partners (2,249) (1,982)
------- -------
Net cash used in financing activities (2,313) (2,062)
------- -------
Decrease in cash and cash equivalents (716) (1,706)
Cash and cash equivalents, beginning of period 4,834 5,087
------- -------
Cash and cash equivalents, end of period $ 4,118 $ 3,381
======= =======
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 June 30, 1999, the Partnership has
investments in notes receivable, before allowance for losses, of $10,992,000 of
which $1,010,000 considered to be impaired. The Partnership has an allowance for
losses of $514,000 as of June 30, 1999. The average recorded investment in
impaired loans during the six months ended June 30, 1999 and 1998 was
approximately $1,010,000 and $360,000, respectively.
5
<PAGE>
The activity in the allowance for losses on notes receivable during the six
months ended June 30, is as follows:
1999 1998
---- ----
(Amounts In Thousands)
Beginning balance $ 595 $ 368
Provision for losses 357 79
Write downs (438) -
----- -----
Ending balance $ 514 $ 447
===== =====
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 1,899,901 and 1,922,126 for the six
months ended June 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:
June 30, December 31,
1999 1998
---- ----
(Amounts in Thousands)
Assets $235 $184
Liabilities 106 117
Partners' Capital 129 67
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---- ---- ---- ----
(Amounts in Thousands)
Revenue $232 $374 $332 $555
Expenses 39 27 48 46
Net Income 193 347 284 509
6
<PAGE>
Financing Joint Ventures
- ------------------------
The aggregate combined financial information of the financing joint
ventures is presented as follows:
June 30, December 31,
1999 1998
---- ----
(Amounts in Thousands)
Assets $ 72 $550
Liabilities 4 151
Partners' Capital 68 399
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ 1 $ 22 $ 2 $ 48
Expenses 111 4 162 8
Net Income (Loss) (110) 18 (160) 40
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 not yet responded to the Ash Complaint, which
plaintiffs amended twice. Discovery has not commenced. The Companies intend to
vigorously defend the Complaint.
During the six months ended June 30, 1999 and June 30, 1998, the
Partnership recorded legal expenses of approximately $19,000 and $24,000,
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 $718,000 and $1,183,000 during the three and six months
ended June 30, 1999, as compared to net income of $759,000 and $1,551,000 during
the three and six months ended June 30, 1998.
Total revenues increased by $92,000 for the three months ended June 30,
1999, as compared to the same period in 1998, primarily due to an increase in
gain on sale of securities and interest income from notes receivable. These
factors contributing to the increase in revenues was however partially offset by
the decline in rental income from operating leases and earned income from
finance leases for the three months ended June 30, 1999, compared to the same
period in 1998. Total revenues decreased by $341,000 for the six months ended
June 30, 1999, as compared to the same period in 1998, primarily as a result of
a decline in rental income from operating leases and earned income from finance
leases.
Rental income decreased $150,000 and $444,000 for the three and six
months ended June 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 June 30, 1999, the Partnership owned equipment with an
aggregate original cost of approximately $21.8 million, as compared to $32.1
million at June 30, 1998.
The Partnership reported a gain on sale of securities of $222,000 and
$235,000 for the three and six months ended June 30, 1999, respectively,
compared to $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
$235,000 and $1,000 from the sale of these securities during the six months
ended June 30, 1999 and June 30, 1998, respectively.
Earned income from financing leases decreased by $91,000 and $236,000
during the three and six months ended June 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 June 30, 1999, as
compared to $10.4 million at June 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 six months ended June 30, 1999, compared to the same period in
1998, is an increase in interest income from notes receivable of $255,000 and
$311,000, respectively. This increase is attributable to new investments made in
notes receivable during 1998 and 1999. During the six months ended June 30,
1999, the Partnership made new investments in notes receivable of $2.7 million,
compared to $3.3 million in new investments in notes receivable during the six
months ended June 30, 1998.
8
<PAGE>
Total expenses for the three and six months ended June 30, 1999,
increased by $133,000 and $27,000, as compared to the same period in the
previous year. This increase was due to the recognition of additional loss
reserves for impaired notes receivable. The increase in the provision for losses
on notes receivable, however, was offset by a decrease in all other expense
items. This decrease in the other expenses is primarily attributable to a
reduction in the amount of equipment owned by the Partnership.
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 six
months ended June 30, 1999 and 1998 was $4,801,000 and $5,826,000, 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 six months ended June 30, 1999, the Partnership
acquired new equipment leases of $771,000 and new investments in notes
receivable of $2.7 million, as compared to $2.6 million in new investments in
equipment leases and $3.3 million in notes receivable during the same period in
1998.
As of June 30, 1999, the Partnership owned equipment being held for
lease with an original cost of $4,197,000 and a net book value of $71,000,
compared to $4,256,000 and $208,000, respectively, at June 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 $206,000 during the six
months ended June 30, 1999, compared to the same period in 1998. The decrease in
distributions from joint ventures for the six months ended June 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 six months ended June 30, 1999
was $2,249,000, as compared to $1,982,000 during the six months ended June 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 $2,184,000 and
$1,923,000 in distributions during the six months ended June 30, 1999 and 1998,
respectively. The cumulative distributions to the Limited Partners are
$26,245,000 and $22,148,000 as of June 30, 1999 and 1998, respectively. The
General Partner received $65,000 and $59,000 in cash distributions for the six
months ended June 30, 1999 and 1998, respectively. The Partnership plans to make
distributions to partners during 1999 at a higher rate than 1998.
9
<PAGE>
The cash to be generated from leasing and financing operations is
anticipated to be sufficient to meet the Partnership's continuing operational
expenses.
Impact of the Year 2000 Issue
ReSource/Phoenix, Inc. ("ReSource/Phoenix"), an affiliate of the parent
to the General Partner does all local computer processing for the General
Partner. And as such Resource/Phoenix manages the Year 2000 project on behalf of
the General Partner.
Resource/Phoenix 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. ReSource/Phoenix 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 is planned to be completed by October 31, 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 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.
June 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 not yet responded to the Ash Complaint, which
plaintiffs amended twice. 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
---- ----- ---------
August 13, 1999 Senior Vice President /S/ GARY W. MARTINEZ
- --------------- and a Director of --------------------
Phoenix Leasing Associates II, Inc. (Gary W. Martinez)
August 13, 1999 Chief Financial Officer, /S/ HOWARD SOLOVEI
- --------------- Treasurer and a Director of --------------------
Phoenix Leasing Associates II, Inc. (Howard Solovei)
August 13, 1999 Senior Vice President, /S/ BRYANT J. TONG
- --------------- Financial Operations of --------------------
(Principal Accounting Officer) (Bryant J.Tong)
Phoenix Leasing Associates II, Inc.
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 4,118
<SECURITIES> 213
<RECEIVABLES> 11,308
<ALLOWANCES> 678
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 4,294
<DEPRECIATION> 4,223
<TOTAL-ASSETS> 22,210
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 21,294
<TOTAL-LIABILITY-AND-EQUITY> 22,210
<SALES> 0
<TOTAL-REVENUES> 2,256
<CGS> 0
<TOTAL-COSTS> 1,073
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 410
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,183
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,183
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,183
<EPS-BASIC> .58
<EPS-DILUTED> 0
</TABLE>
