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 June 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
----- -----
1,874,334 Units of Limited Partnership Interest were outstanding as of June 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)
June 30, December 31,
2000 1999
---- ----
ASSETS
Cash and cash equivalents $ 6,387 $ 4,521
Accounts receivable (net of allowance for losses
on accounts receivable of $100 and $131 at
June 30, 2000 and December 31, 1999,
respectively) 137 167
Notes receivable (net of allowance for losses
on notes receivable of $65 and $88 at June 30,
2000 and December 31, 1999, respectively) 8,244 8,943
Equipment on operating leases and held for lease
(net of accumulated depreciation of $2,194 and
$2,459 at June 30, 2000 and December 31, 1999,
respectively) 15 61
Net investment in financing leases (net of
allowance for early terminations of $44 and $55
at June 30, 2000 and December 31, 1999,
respectively) 5,394 6,161
Investment in joint ventures -- 46
Capitalized acquisition fees (net of accumulated
amortization of $3,002 and $2,866 at June 30,
2000 and December 31, 1999, respectively) 417 464
Marketable securities 718 1,729
Other assets 57 61
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Total Assets $21,369 $22,153
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 1,542 $ 980
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Total Liabilities 1,542 980
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Partners' Capital
General Partner 32 12
Limited Partners, 5,000,000 units authorized,
2,045,838 units issued, 1,874,334 and 1,882,582
units outstanding at June 30, 2000 and December
31, 1999, respectively 19,077 19,432
Accumulated other comprehensive income 718 1,729
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Total Partners' Capital 19,827 21,173
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Total Liabilities and Partners' Capital $21,369 $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 Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
INCOME
Rental income $ 80 $ 278 $ 288 $ 491
Earned income, financing leases 248 278 450 541
Equity in earnings from joint
ventures, net -- 36 4 53
Gain on sale of securities 317 222 1,558 235
Interest income, notes receivable 323 494 758 817
Other income 87 49 183 119
------- ------- ------- -------
Total Income 1,055 1,357 3,241 2,256
------- ------- ------- -------
EXPENSES
Depreciation 28 30 93 98
Amortization of acquisition fees 70 52 136 107
Lease related operating expenses 5 9 17 24
Management fees to General Partner 92 85 211 161
Reimbursed administrative costs to
General Partner 73 71 180 139
Provision for losses on receivables 128 330 416 410
Legal expense 33 36 70 85
General and administrative expenses 26 26 48 49
------- ------- ------- -------
Total Expenses 455 639 1,171 1,073
------- ------- ------- -------
NET INCOME 600 718 2,070 1,183
Other comprehensive income:
Unrealized gains on securities:
Unrealized holding gains arising
during period 333 18 547 325
Less: reclassification adjustment
for gains included in net
income (317) (222) (1,558) (235)
------- ------- ------- -------
Other comprehensive income 16 (204) (1,011) 90
------- ------- ------- -------
COMPREHENSIVE INCOME $ 616 $ 514 $ 1,059 $ 1,273
======= ======= ======= =======
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ .29 $ .35 $ 1.05 $ .58
======= ======= ======= =======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ .60 $ .62 $ 1.20 $ 1.15
======= ======= ======= =======
ALLOCATION OF NET INCOME:
General Partner $ 40 $ 43 $ 89 $ 76
Limited Partners 560 675 1,981 1,107
------- ------- ------- -------
$ 600 $ 718 $ 2,070 $ 1,183
======= ======= ======= =======
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,
2000 1999
---- ----
Operating Activities:
--------------------
Net income $ 2,070 $ 1,183
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 93 98
Amortization of acquisition fees 136 107
Loss (gain) on sale of equipment 23 (52)
Gain on sale of securities (1,558) (235)
Equity in earnings from joint ventures, net (4) (53)
Provision for early termination, financing leases 209 53
Provision for losses on notes receivable 196 357
Provision for losses on accounts receivable 11 --
Decrease in accounts receivable 19 26
Increase in accounts payable and accrued expenses 522 41
Decrease in other assets 4 7
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Net cash provided by operating activities 1,721 1,532
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Investing Activities:
--------------------
Principal payments, financing leases 1,596 1,738
Principal payments, notes receivable 2,319 1,531
Proceeds from sale of equipment 52 54
Proceeds from sale of securities 1,558 235
Distributions from joint ventures 50 111
Investment in financing leases (1,160) (771)
Investment in notes receivable (1,816) (2,720)
Payment of acquisition fees (48) (113)
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Net cash provided by investing activities 2,551 65
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Financing Activities:
--------------------
Redemptions of capital (81) (64)
Distributions to partners (2,325) (2,249)
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Net cash used in financing activities (2,406) (2,313)
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Increase (decrease) in cash and cash equivalents 1,866 (716)
Cash and cash equivalents, beginning of period 4,521 4,834
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Cash and cash equivalents, end of period $ 6,387 $ 4,118
======= =======
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 June 30, 2000, the Partnership has
investments in notes receivable, before allowance for losses, of $8,309,000 of
which $315,000 is considered to be impaired. The impaired loans of $315,000 are
net of specific write-downs of $862,000. The Partnership has an allowance for
losses of $65,000 as of June 30, 2000. The average recorded investment in
impaired loans during the six months ended June 30, 2000 and 1999 was
approximately $329,000 and $861,000, respectively.
5
<PAGE>
The activity in the allowance for losses on notes receivable during the six
months ended June 30, is as follows:
2000 1999
---- ----
(Amounts In Thousands)
Beginning balance $ 88 $ 595
Provision for losses 196 357
Write downs (219) (438)
----- -----
Ending balance $ 65 $ 514
===== =====
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 1,878,223 and 1,899,901 for the six
months ended June 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:
June 30, December 31,
2000 1999
---- ----
(Amounts in Thousands)
Assets $ -- $177
Liabilities -- 35
Partners' Capital -- 142
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ -- $232 $ 16 $332
Expenses -- 39 3 48
Net Income -- 193 13 284
The equipment joint venture was closed during the six months ended June
30, 2000.
6
<PAGE>
Financing Joint Ventures
------------------------
The aggregate combined financial information of the financing joint
ventures is presented as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ -- $ 1 $ -- $ 2
Expenses -- 111 -- 162
Net Loss -- (110) -- (160)
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").
In the Ash action, Plaintiffs have filed a fourth amended complaint
which 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. Plaintiffs have served four requests for production on
July 25, 2000. 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 Fund V. Defendants have
answered the complaint and discovery has commenced. A class has been certified.
Plaintiffs have served three requests for production; defendants responded to
the third request for production on July 25, 2000. The plaintiffs deposition has
been taken and plaintiffs recently took depositions of defendants.
The Companies intend to vigorously defend both actions.
7
<PAGE>
During the six months ended June 30, 2000 and 1999, the Partnership
recorded legal expenses of approximately $0 and $19,000, 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 $600,000 and $2,070,000 during the three and six months
ended June 30, 2000, as compared to net income of $718,000 and $1,183,000 during
the three and six months ended June 30, 1999.
Total revenues increased by $985,000 for the six months ended June 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 and earned income from finance
leases for the six months ended June 30, 2000, compared to the same period in
1999. Total revenues decreased by $302,000 for the three months ended June 30,
2000, as compared to the same period in 1999, primarily as a result of a decline
in rental income from operating leases and earned income from finance leases.
The Partnership reported a gain on sale of securities of $317,000 and
$1,558,000 for the three and six months ended June 30, 2000, respectively,
compared to $222,000 and $235,000 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 $1,558,000 and $235,000 from the sale of
these securities during the six months ended June 30, 2000 and June 30, 1999,
respectively. In addition, at June 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 $718,000. These stock warrants contain
certain restrictions, but are generally exercisable within one year.
Rental income decreased $198,000 and $203,000 for the three and
six months ended June 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 June 30, 2000, the Partnership owned equipment with an
aggregate original cost of approximately $13.6 million, as compared to $21.8
million at June 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 $30,000 and $91,000
during the three and six months ended June 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 June 30, 2000, as
compared to $7 million at June 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 $1,160,000, compared
to $771,000 during 1999.
9
<PAGE>
Total expenses for the six months ended June 30, 2000 increased by
$98,000, as compared to the same period in the previous year. This increase is
due to an increase of $50,000 in management fees to the General Partner and a
$41,000 increase in reimbursed administrative costs to the General Partner.
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. Total expenses for the three months ended June 30, 2000, decreased
by $184,000, as compared to the same period in the previous year. This decrease
was due to the decrease in the recognition of additional loss reserves for
impaired 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
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, 2000 and 1999 was $5,636,000 and $4,801,000, 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 six months ended June 30, 2000, the Partnership
acquired new equipment leases of $1,160,000 and new investments in notes
receivable of $1.8 million, as compared to $771,000 in new investments in
equipment leases and $2.7 million in notes receivable during the same period in
1999.
As of June 30, 2000, the Partnership owned equipment being held for
lease with an original cost of $1,798,000 and a net book value of $15,000,
compared to $4,197,000 and $71,000, respectively, at June 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.
Distributions from joint ventures decreased by $61,000 during the six
months ended June 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 six months ended June 30, 2000
was $2,325,000, as compared to $2,249,000 during the six months ended June 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 $2,255,000 and
$2,184,000 in distributions during the six months ended June 30, 2000 and 1999,
respectively. The cumulative distributions to the Limited Partners are
$30,767,000 and $26,245,000 as of June 30, 2000 and 1999, respectively. The
General Partner received $70,000 and $65,000 in cash distributions for the six
10
<PAGE>
months ended June 30, 2000 and 1999, respectively. The Partnership anticipates
making distributions to partners during 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.
Impact of the Year 2000 Issue
The General Partner has appointed ResourcePhoenix.com. (RPC), an
affiliate of the General Partner, to manage its Year 2000 project.
RPC has a Year 2000 project plan in place and a "Y2K Project Team" has
been appointed. The team has identified risks, and has implemented remediation
procedures for its Year 2000 issues. RPC 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. As of July 31, 2000, RPC has not encountered any
material year 2000 problems with the hardware and software systems used in our
operations. In addition, none of RPC's critical vendors have reported any
material year 2000 problems nor have they experienced any decline in service
levels from such vendors.
RPC will continue to monitor internal and external issues related to
year 2000.
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.
11
<PAGE>
PHOENIX LEASING CASH DISTRIBUTION FUND V, L.P.
June 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").
In the Ash action, Plaintiffs have filed a fourth amended complaint
which 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. Plaintiffs have served four requests for production on
July 25, 2000. 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 Fund V. Defendants have
answered the complaint and discovery has commenced. A class has been certified.
Plaintiffs have served three requests for production; defendants responded to
the third request for production on July 25, 2000. The plaintiffs deposition has
been taken and plaintiffs recently took depositions of defendants.
The Companies intend to vigorously defend both actions.
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
---- ----- ---------
August 11, 2000 Senior Vice President /S/ GARY W. MARTINEZ
--------------- and a Director of --------------------
Phoenix Leasing Associates II, Inc. (Gary W. Martinez)
August 11, 2000 Vice President, Finance, /S/ ANDREW N. GREGSON
--------------- Treasurer and a Director of ---------------------
Phoenix Leasing Associates II, Inc. (Andrew N. Gregson)
13
