UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 2000
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.
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Registrant
California 68-0222136
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State of Jurisdiction I.R.S. Employer Identification No.
2401 Kerner Boulevard, San Rafael, California 94901-5527
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Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code:(415) 485-4500
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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
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1,866,067 Units of Limited Partnership Interest were outstanding as of September
30, 2000.
Transitional small business disclosure format:
Yes No X
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Page 1 of 13
<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,
2000 1999
---- ----
ASSETS
Cash and cash equivalents $ 6,411 $ 4,521
Accounts receivable (net of allowance for losses on
accounts receivable of $97 and $131 at September
30, 2000 and December 31, 1999, respectively) 192 167
Notes receivable (net of allowance for losses on
notes receivable of $66 and $88 at September 30,
2000 and December 31, 1999, respectively) 6,962 8,943
Equipment on operating leases and held for lease
(net of accumulated depreciation of $2,011 and
$2,459 at September 30, 2000 and December 31,
1999, respectively) 113 61
Net investment in financing leases (net of allowance
for early terminations of $56 and $55 at September
30, 2000 and December 31, 1999, respectively) 5,498 6,161
Investment in joint ventures -- 46
Capitalized acquisition fees (net of accumulated
amortization of $3,082 and $2,866 at September
30, 2000 and December 31, 1999, respectively) 385 464
Marketable securities 850 1,729
Other assets 57 61
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Total Assets $20,468 $22,153
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 1,212 $ 980
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Total Liabilities 1,212 980
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Partners' Capital
General Partner 37 12
Limited Partners, 5,000,000 units authorized,
2,045,838 units issued, 1,866,067 and 1,882,582
units outstanding at September 30, 2000 and
December 31, 1999, respectively 18,369 19,432
Accumulated other comprehensive income 850 1,729
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Total Partners' Capital 19,256 21,173
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Total Liabilities and Partners' Capital $20,468 $22,153
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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,
2000 1999 2000 1999
---- ---- ---- ----
INCOME
Rental income $ 126 $ 129 $ 415 $ 620
Earned income, financing leases 178 276 629 816
Equity in earnings from joint
ventures, net -- 23 4 77
Gain on sale of securities 304 14 1,862 249
Interest income, notes receivable 426 563 1,183 1,380
Other income 117 76 299 195
------- ------- ------- -------
Total Income 1,151 1,081 4,392 3,337
------- ------- ------- -------
EXPENSES
Depreciation 18 24 111 122
Amortization of acquisition fees 80 62 216 168
Lease related operating expenses 15 33 31 57
Management fees to General Partner 103 82 314 243
Reimbursed administrative costs to
General Partner 61 66 242 205
Provision for losses on receivables 267 81 683 491
Legal expense 67 46 137 131
General and administrative expenses 18 28 66 78
------- ------- ------- -------
Total Expenses 629 422 1,800 1,495
------- ------- ------- -------
NET INCOME 522 659 2,592 1,842
Other comprehensive income:
Unrealized gains on securities:
Unrealized holding gains arising
during period 436 62 983 387
Less: reclassification adjustment
for gains included in net
income (304) (14) (1,862) (249)
------- ------- ------- -------
Other comprehensive income 132 48 (879) 138
------- ------- ------- -------
COMPREHENSIVE INCOME $ 654 $ 707 $ 1,713 $ 1,980
======= ======= ======= =======
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ .26 $ .33 $ 1.31 $ .91
======= ======= ======= =======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ .60 $ .60 $ 1.80 $ 1.75
======= ======= ======= =======
ALLOCATION OF NET INCOME:
General Partner $ 41 $ 41 $ 130 $ 117
Limited Partners 481 618 2,462 1,725
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$ 522 $ 659 $ 2,592 $ 1,842
======= ======= ======= =======
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,
2000 1999
---- ----
Operating Activities:
--------------------
Net income $ 2,592 $ 1,842
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 111 122
Amortization of acquisition fees 216 168
Gain on sale of equipment (5) (108)
Gain on sale of securities (1,862) (249)
Equity in earnings from joint ventures, net (4) (77)
Provision for early termination, financing leases 261 79
Provision for losses on notes receivable 411 412
Provision for losses on accounts receivable 11 --
Increase in accounts receivable (36) (19)
Increase in accounts payable and accrued expenses 166 150
Decrease in other assets 4 9
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Net cash provided by operating activities 1,865 2,329
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Investing Activities:
--------------------
Principal payments, financing leases 2,360 2,704
Principal payments, notes receivable 3,688 2,241
Proceeds from sale of equipment 337 154
Proceeds from sale of securities 1,862 249
Distributions from joint ventures 50 199
Investment in financing leases (2,453) (2,143)
Investment in notes receivable (2,118) (3,322)
Payment of acquisition fees (71) (134)
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Net cash provided by (used in) investing activities 3,655 (52)
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Financing Activities:
--------------------
Redemptions of capital (146) (173)
Distributions to partners (3,484) (3,421)
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Net cash used in financing activities (3,630) (3,594)
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Increase (decrease) in cash and cash equivalents 1,890 (1,317)
Cash and cash equivalents, beginning of period 4,521 4,834
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Cash and cash equivalents, end of period $ 6,411 $ 3,517
======= =======
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.
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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 1999 amounts have been reclassified to conform
to the 2000 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, 2000, the Partnership has
investments in notes receivable, before allowance for losses, of $7,028,000 of
which $389,000 is considered to be impaired. The impaired loans of $389,000 are
net of specific write-downs of $948,000. The Partnership has an allowance for
losses of $66,000 as of September 30, 2000. The average recorded investment in
impaired loans during the nine months ended September 30, 2000 and 1999 was
approximately $349,000 and $812,000, respectively.
5
<PAGE>
The activity in the allowance for losses on notes receivable during the
nine months ended September 30, is as follows:
2000 1999
---- ----
(Amounts In Thousands)
Beginning balance $ 88 $ 595
Provision for losses 411 412
Write downs (433) (833)
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Ending balance $ 66 $ 174
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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 1,875,771 and 1,897,307 for the nine
months ended September 30, 2000 and 1999 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,
2000 1999
---- ----
(Amounts in Thousands)
Assets $ - $177
Liabilities - 35
Partners' Capital - 142
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ - $ 71 $ 16 $404
Expenses - 4 3 53
Net Income - 67 13 351
The equipment joint venture was closed during the nine months ended
September 30, 2000.
6
<PAGE>
Financing Joint Ventures
------------------------
The aggregate combined financial information of the financing joint
ventures is presented as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ - $ 7 $ - $ 2
Expenses - - - 155
Net Loss - 7 - (153)
The financing joint venture was closed during the third quarter of
1999.
Note 7. Legal Proceedings.
-----------------
On October 28, 1997, a Class Action Complaint (the "Complaint") was
filed against Phoenix Leasing Inc., Phoenix Leasing Associates, II and III L.P.,
Phoenix Securities Inc. and Phoenix American Inc. (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 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 re-filed them in a separate lawsuit
making similar allegations (the "Ash Action").
The Ash complaint includes six causes of action: breach of fiduciary
duty, constructive fraud, judicial dissolution of Cash Distribution Fund IV,
judicial dissolution of Cash Distribution Fund V, accounting and alter ego.
Defendants recently answered the complaint and discovery has commenced. The
plaintiffs' depositions have been taken, and plaintiffs recently took
depositions of defendants.
The Berger complaint relates to alleged misrepresentations made in
connection with the offering of Cash Distribution V. Defendants have answered
the complaint and discovery has commenced. A class has been certified. The
plaintiffs' depositions have been taken, and plaintiffs recently took
depositions of defendants.
On August 28, 2000, the Ash and Berger actions were consolidated (the
"Consolidated Action") pursuant to stipulation by both parties. Plaintiffs
recently served a first request for production in the Consolidated Action;
defendants will respond to the first request for production on November 22,
2000.
The Companies intend to vigorously defend the Consolidated Action.
7
<PAGE>
During the nine months ended September 30, 2000 and 1999, the
Partnership recorded legal expenses of approximately $0 and $32,000,
respectively, in connection with the above litigation as indemnification to the
General Partner.
The Partnership is not a party to any pending legal proceedings which
would have a material adverse impact on its financial position.
8
<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 $522,000 and $2,592,000 during the three and nine months
ended September 30, 2000, as compared to net income of $659,000 and $1,842,000
during the three and nine months ended September 30, 1999.
Total revenues increased by $70,000 and $1,055,000 for the three and
nine months ended September 30, 2000, as compared to the same period in 1999,
primarily as a result of an increase in gain on sale of securities. However,
this increase was offset by the decline in rental income from operating leases,
earned income from finance leases and interest income from notes receivable for
the three and nine months ended September 30, 2000, compared to the same period
in 1999.
The Partnership reported a gain on sale of securities of $304,000 and
$1,862,000 for the three and nine months ended September 30, 2000, respectively,
compared to $14,000 and $249,000 for the same periods in the previous year. The
securities sold, for both 2000 and 1999, 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 $1,862,000 and $249,000 from the sale of
these securities during the nine months ended September 30, 2000 and September
30, 1999, respectively. In addition, at September 30, 2000, the Partnership owns
shares of stock and stock warrants in emerging growth companies that are
publicly traded with an unrealized gain of approximately $850,000. These stock
warrants contain certain restrictions, but are generally exercisable within one
year.
Rental income decreased $3,000 and $205,000 for the three and nine
months ended September 30, 2000 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, 2000, the Partnership owned equipment with
an aggregate original cost of approximately $13.3 million, as compared to $18.3
million at September 30, 1999. Another factor contributing to the decrease in
rental income is the equipment being held for lease. Until new lessees or buyers
of equipment can be found, the equipment will continue to generate depreciation
expense without any corresponding rental income. The effect of this will be a
reduction of the Partnership earnings during this remarketing period.
Earned income from financing leases decreased by $98,000 and $187,000
during the three and nine months ended September 30, 2000, as compared to the
same period in 1999, due to a decrease in the Partnership's investment in
financing leases. The investment in financing leases was $5 million at September
30, 2000, as compared to $7 million at September 30, 1999. 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 will be offset in part by the
investment of the excess cash flows of the Partnership in new leasing
transactions. During 2000, the Partnership made new investments in financing
leases of $2,453,000, compared to $2,143,000 during 1999.
9
<PAGE>
Interest income from notes receivable decreased by $137,000 and
$197,000 for the three and nine months ended September 30, 2000, respectively,
compared to 1999. The decrease in interest income from notes receivable is
attributable to the decline in net investment in notes receivable. The net
investment in notes receivable was $6,962,000 at September 30, 2000, compared to
$10,315,000 at September 30, 1999. The decrease will be offset in part by the
investment of the excess cash flows of the Partnership in new loan transactions.
During 2000, the Partnership made new investments in notes receivable of
$2,118,000, compared to $3,322,000 during 1999.
Total expenses for the three and nine months ended September 30, 2000
increased by $207,000 and $305,000, respectively, as compared to the same
periods in the previous year. These increases are due to an increase in
management fees to the General Partner, reimbursed administrative costs to the
General Partner, amortization of acquisition fees and provision for losses on
receivables. The increase in the provision for losses on receivables was due to
the recognition of additional loss reserves for impaired leases. These increases
were offset by decreases in most other expenses. These decreases correspond
directly to the 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
nine months ended September 30, 2000 and 1999 was $7,913,000 and $7,274,000,
respectively. The increase in cash generated is attributable to an increase in
payments from notes receivable offset by a decline in payments from financing
leases. Payments from notes receivable increased due to the continued
acquisition of notes receivable during the years 1999 and 2000. Payments from
financing leases decreased during 2000, compared to 1999, 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, 2000, the
Partnership acquired new equipment leases of $2.5 million and new investments in
notes receivable of $2.1 million, as compared to $2.1 million in new investments
in equipment leases and $3.3 million in notes receivable during the same period
in 1999.
As of September 30, 2000, the Partnership owned equipment being held
for lease with an original cost of $1,716,000 and a net book value of $113,000,
compared to $1,941,000 and $251,000, respectively, at September 30, 1999. The
General Partner is actively engaged, on behalf of the Partnership, in
remarketing and selling the Partnership's equipment as it becomes available.
10
<PAGE>
Distributions from joint ventures decreased by $149,000 during the nine
months ended September 30, 2000, compared to the same period in 1999. The
decrease was due to one joint venture closing during the third quarter of 1999
and another joint venture closing during the first quarter of 2000.
The cash distributed to partners for the nine months ended September
30, 2000 was $3,484,000, as compared to $3,421,000 during the nine months ended
September 30, 1999. 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
$3,379,000 and $3,321,000 in distributions during the nine months ended
September 30, 2000 and 1999, respectively. The cumulative distributions to the
Limited Partners are $31,891,000 and $27,380,000 as of September 30, 2000 and
1999, respectively. The General Partner received $105,000 and $100,000 in cash
distributions for the nine months ended September 30, 2000 and 1999,
respectively. The Partnership anticipates making distributions to partners
during 2000 at the same rate as 1999.
The cash to be generated from leasing and financing operations is
anticipated to be sufficient to meet the Partnership's continuing operational
expenses.
11
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
September 30, 2000
Part II. Other Information.
-----------------
Item 1. Legal Proceedings.
-----------------
On October 28, 1997, a Class Action Complaint (the "Complaint") was
filed against Phoenix Leasing Inc., Phoenix Leasing Associates, II and III L.P.,
Phoenix Securities Inc. and Phoenix American Inc. (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 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 re-filed them in a separate lawsuit
making similar allegations (the "Ash Action").
The Ash complaint includes six causes of action: breach of fiduciary
duty, constructive fraud, judicial dissolution of Cash Distribution Fund IV,
judicial dissolution of Cash Distribution Fund V, accounting and alter ego.
Defendants recently answered the complaint and discovery has commenced. The
plaintiffs' depositions have been taken, and plaintiffs recently took
depositions of defendants.
The Berger complaint relates to alleged misrepresentations made in
connection with the offering of Cash Distribution V. Defendants have answered
the complaint and discovery has commenced. A class has been certified. The
plaintiffs' depositions have been taken, and plaintiffs recently took
depositions of defendants.
On August 28, 2000, the Ash and Berger actions were consolidated (the
"Consolidated Action") pursuant to stipulation by both parties. Plaintiffs
recently served a first request for production in the Consolidated Action;
defendants will respond to the first request for production on November 22,
2000.
The Companies intend to vigorously defend the Consolidated Action.
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
12
<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 13, 2000 Senior Vice President /S/ GARY W. MARTINEZ
----------------- and a Director of --------------------
Phoenix Leasing Associates II, Inc. (Gary W. Martinez)
November 13, 2000 Vice President, Finance, /S/ ANDREW N. GREGSON
----------------- Treasurer and a Director of ---------------------
Phoenix Leasing Associates II, Inc. (Andrew N. Gregson)
13