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 March 31, 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
--- ---
1,900,208 Units of Limited Partnership Interest were outstanding as of March 31,
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)
March 31, December 31,
1999 1998
---- ----
ASSETS
Cash and cash equivalents $ 4,170 $ 4,834
Accounts receivable (net of allowance for losses
on accounts receivable of $166 and $176 at
March 31, 1999 and December 31, 1998,
respectively) 138 178
Notes receivable (net of allowance for losses on
notes receivable of $510 and $595 at March 31,
1999 and December 31, 1998, respectively) 10,323 9,646
Equipment on operating leases and held for lease
(net of accumulated depreciation of $4,767 and
$5,419 at March 31, 1999 and December 31, 1998,
respectively) 151 51
Net investment in financing leases (net of allowance
for early terminations of $372 and $345 at March
31, 1999 and December 31, 1998, respectively) 6,990 7,654
Investment in joint ventures 97 122
Capitalized acquisition fees (net of accumulated
amortization of $2,667 and $2,612 at March 31,
1999 and December 31, 1998, respectively) 543 538
Other assets 484 194
-------- --------
Total Assets $ 22,896 $ 23,217
======== ========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 904 $ 883
-------- --------
Total Liabilities 904 883
-------- --------
Partners' Capital (Deficit)
General Partner (3) (7)
Limited Partners, 5,000,000 units authorized,
2,045,838 units issued, 1,900,208 and 1,902,708
units outstanding at March 31, 1999 and December
31, 1998, respectively 21,578 22,218
Accumulated other comprehensive income 417 123
-------- --------
Total Partners' Capital (Deficit) 21,992 22,334
-------- --------
Total Liabilities and Partners' Capital (Deficit) $ 22,896 $ 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
March 31,
1999 1998
---- ----
INCOME
Rental income $ 213 $ 507
Earned income, financing leases 263 408
Interest income, notes receivable 323 267
Equity in earnings from joint ventures, net 17 58
Other income 82 92
------ ------
Total Income 898 1,332
------ ------
EXPENSES
Depreciation 67 145
Amortization of acquisition fees 55 62
Lease related operating expenses 15 12
Management fees to General Partner 76 92
Reimbursed administrative costs to General Partner 68 73
Provision for losses on receivables 80 69
Legal expense 49 49
General and administrative expenses 23 38
------ ------
Total Expenses 433 540
------ ------
NET INCOME 465 792
Other comprehensive income:
Unrealized gains on securities:
Unrealized holding gains arising during period 307 88
Less: reclassification adjustment for gains
included in net income (13) --
------ ------
Other comprehensive income 294 88
------ ------
COMPREHENSIVE INCOME $ 759 $ 880
====== ======
NET INCOME PER LIMITED PARTNERSHIP UNIT $ .23 $ .39
====== ======
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ .53 $ .50
====== ======
ALLOCATION OF NET INCOME:
General Partner $ 33 $ 38
Limited Partners 432 754
------ ------
$ 465 $ 792
====== ======
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)
Three Months Ended
March 31,
1999 1998
---- ----
Operating Activities:
- --------------------
Net income $ 465 $ 792
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 67 145
Amortization of acquisition fees 55 62
Gain on sale of equipment (3) (81)
Gain on sale of securities (13) --
Equity in earnings from joint ventures, net (17) (58)
Provision for early termination, financing leases 27 37
Provision for losses on notes receivable 53 32
Decrease in accounts receivable 40 62
Increase in accounts payable and accrued expenses 36 8
Decrease in other assets 4 3
------- -------
Net cash provided by operating activities 714 1,002
------- -------
Investing Activities:
- --------------------
Principal payments, financing leases 931 1,435
Principal payments, notes receivable 772 407
Proceeds from sale of equipment 10 115
Proceeds from sale of securities 13 --
Distributions from joint ventures 42 179
Investment in financing leases (468) --
Investment in notes receivable (1,502) --
Payment of acquisition fees (75) (82)
------- -------
Net cash provided by (used in) by investing activities (277) 2,054
------- -------
Financing Activities:
- --------------------
Redemptions of capital (27) (43)
Distributions to partners (1,074) (993)
------- -------
Net cash used in financing activities (1,101) (1,036)
------- -------
Increase (decrease) in cash and cash equivalents (664) 2,020
Cash and cash equivalents, beginning of period 4,834 5,087
------- -------
Cash and cash equivalents, end of period $ 4,170 $ 7,107
======= =======
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 March 31, 1999, the Partnership has
investments in notes receivable, before allowance for losses, of $10,833,000 of
which $1,011,000 considered to be impaired. The Partnership has an allowance for
losses of $510,000 as of March 31, 1999. The average recorded investment in
impaired loans during the three months ended March 31, 1999 and 1998 was
approximately $1,011,000 and $361,000, respectively.
5
<PAGE>
The activity in the allowance for losses on notes receivable during the
three months ended March 31, is as follows:
1999 1998
---- ----
(Amounts In Thousands)
Beginning balance $ 595 $ 368
Provision for losses 52 32
Write downs (137) -
----- -----
Ending balance $ 510 $ 400
===== =====
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 1,902,375 and 1,925,226 for the three
months ended March 31, 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:
March 31, December 31,
1999 1998
---- ----
(Amounts in Thousands)
Assets $101 $184
Liabilities 65 117
Partners' Capital 36 67
Three Months Ended
March 31,
1999 1998
---- ----
(Amounts in Thousands)
Revenue $101 $181
Expenses 9 19
Net Income 92 162
6
<PAGE>
Financing Joint Ventures
- ------------------------
The aggregate combined financial information of the financing joint
ventures is presented as follows:
March 31, December 31,
1999 1998
---- ----
(Amounts in Thousands)
Assets $466 $550
Liabilities 144 151
Partners' Capital 322 399
Three Months Ended
March 31,
1999 1998
---- ----
(Amounts in Thousands)
Revenue $ 1 $ 25
Expenses 51 4
Net Income (Loss) (50) 21
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 "Marin Action"). Plaintiffs then dismissed the remaining
claims in Sacramento Superior Court and refiled them in a separate lawsuit
making similar allegations (the"Sacramento Action").
Plaintiffs have amended the Marin Action twice. Defendants have not yet
answered the complaint and may file a demurrer to dismiss the claims. Discovery
has not commenced. The Companies intend to vigorously defend the Complaint.
In February 1999, plaintiffs requested a transfer of the Sacramento
Action to Marin County. The Court granted that request, and the case was
transferred in March 1999. Defendants have not yet responded to the Complaint.
Discovery has not commenced. The Companies intend to vigorously defend the
Complaint.
During the three months ended March 31, 1998, the Partnership recorded
legal expenses of approximately $13,000 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 $465,000 during the three months ended March 31, 1999, as
compared to net income of $792,000 during the three months ended March 31, 1998.
Total revenues decreased by $434,000 for the three months ended March
31, 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 $294,000 for the three months ended March 31,
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 March
31, 1999, the Partnership owned equipment with an aggregate original cost of
approximately $21.8 million, as compared to $32.3 million at March 31, 1998.
Earned income from financing leases decreased by $145,000 during the
three months ended March 31, 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 March 31, 1999, as compared to
$9.4 million at March 31, 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 months ended March 31, 1999, compared to the same period in 1998,
is an increase in interest income from notes receivable of $56,000. This
increase is attributable to new investments made in notes receivable during 1998
and 1999. During the three months ended March 31, 1999, the Partnership made new
investments in notes receivable of $1.5 million, compared to no new investments
in notes receivable during the three months ended March 31, 1998.
Total expenses for the three months ended March 31, 1999 decreased by
$107,000, as compared to the same period 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.
The Partnership did experience an increase in provision for losses on
receivables for the three months ended March 31, 1999, compared to the same
period in 1998. The increase in provision for losses is attributable to an
increase in provision for losses on notes receivable resulting from the
Partnership's increased investment in notes receivable.
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
8
<PAGE>
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
three months ended March 31, 1999 and 1998 was $2,417,000 and $2,844,000,
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 three months ended March 31, 1999, the
Partnership acquired new equipment leases of $468,000 and new investments in
notes receivable of $1.5 million, as compared to no new investments in
equipment leases and notes receivable during the same period in 1998.
As of March 31, 1999, the Partnership owned equipment being held for
lease with an original cost of $4,392,000 and a net book value of $151,000,
compared to $4,596,000 and $208,000, respectively, at March 31, 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 $137,000 during the
three months ended March 31, 1999, compared to the same period in 1998. The
decrease in distributions from joint ventures for the three months ended March
31, 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 three months ended March 31,
1999 was $1,074,000, as compared to $993,000 during the three months ended
March 31, 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
$1,045,000 and $963,000 in distributions during the three months ended March
31, 1999 and 1998, respectively. The cumulative distributions to the Limited
Partners are $25,105,000 and $21,188,000 as of March 31, 1999 and 1998,
respectively. The General Partner received $29,000 and $30,000 in cash
distributions for the three months ended March 31, 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.
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
9
<PAGE>
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 software and hardware is
planned to be completed by September 15, 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.
March 31, 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 "Marin Action"). Plaintiffs then dismissed the remaining
claims in Sacramento Superior Court and refiled them in a separate lawsuit
making similar allegations (the"Sacramento Action").
Plaintiffs have amended the Marin Action twice. Defendants have not yet
answered the complaint and may file a demurrer to dismiss the claims. Discovery
has not commenced. The Companies intend to vigorously defend the Complaint.
In February 1999, plaintiffs requested a transfer of the Sacramento
Action to Marin County. The Court granted that request, and the case was
transferred in March 1999. Defendants have not yet responded to the Complaint.
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
---- ----- ---------
May 13, 1999 Senior Vice President /S/ GARY W. MARTINEZ
- ------------ and a Director of --------------------
Phoenix Leasing Associates II, Inc. (Gary W. Martinez)
May 13, 1999 Chief Financial Officer, /S/ HOWARD SOLOVEI
- ------------ Treasurer and a Director of --------------------
Phoenix Leasing Associates II, Inc. (Howard Solovei)
May 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,170
<SECURITIES> 417
<RECEIVABLES> 11,137
<ALLOWANCES> 676
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 4,918
<DEPRECIATION> 4,767
<TOTAL-ASSETS> 22,896
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 21,992
<TOTAL-LIABILITY-AND-EQUITY> 22,896
<SALES> 0
<TOTAL-REVENUES> 899
<CGS> 0
<TOTAL-COSTS> 433
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 80
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 465
<INCOME-TAX> 0
<INCOME-CONTINUING> 465
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 465
<EPS-PRIMARY> .23
<EPS-DILUTED> 0
</TABLE>
