Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the quarterly period ended March 31, 1997
|_| 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 000-23842
ATEL Cash Distribution Fund V, L.P.
(Exact name of registrant as specified in its charter)
California 94-3165807
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
235 Pine Street, 6th Floor, San Francisco, California 94104
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 989-8800
Indicate by a 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 requirements for the past 90 days.
Yes |X|
No |_|
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
(Unaudited)
ASSETS
1997 1996
---- ----
Cash and cash equivalents $1,128,786 $1,917,349
Accounts receivable 1,986,678 2,889,713
Other assets 10,000 10,000
Investments in leases 120,946,089 125,729,656
----------------- -----------------
Total assets $124,071,553 $130,546,718
================= =================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $40,887,413 $41,496,203
Line of credit 7,200,000 9,921,190
Accounts payable:
Equipment purchases 331,704 464,604
General Partner 140,180 295,705
Other 289,664 284,929
Accrued interest expense 205,321 232,808
Unearned operating lease income 1,188,295 1,305,596
----------------- -----------------
Total liabilities 50,242,577 54,001,035
Partners' capital:
General Partner 58,273 51,087
Limited Partners 73,770,703 76,494,596
----------------- -----------------
Total partners' capital 73,828,976 76,545,683
----------------- -----------------
Total liabilities and partners' capital $124,071,553 $130,546,718
================= =================
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
INCOME STATEMENTS
THREE MONTH PERIODS ENDED
MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues:
Leasing activities:
Operating leases $5,099,467 $5,048,533
Direct financing leases 732,441 812,981
Leveraged leases 40,373 42,620
Gain on sales of assets 73,417 138,045
Interest income 11,876 14,546
Other 2,227 13,263
----------------- -----------------
5,959,801 6,069,988
Expenses:
Depreciation and amortization 3,637,731 3,860,496
Interest expense 920,880 844,556
Equipment and incentive management fees to General Partner 399,373 412,874
Administrative cost reimbursements to General Partner 90,436 74,542
Provision for losses 59,598 60,700
Professional fees 12,342 38,403
Other 120,837 31,599
----------------- -----------------
5,241,197 5,323,170
----------------- -----------------
Net income $718,604 $746,818
================= =================
Net income:
General Partner $7,186 $7,468
Limited Partners 711,418 739,350
----------------- -----------------
$718,604 $746,818
================= =================
Net income per Limited Partnership Unit $0.06 $0.06
Weighted average number of Units outstanding 12,497,000 12,500,050
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
THREE MONTH PERIOD
ENDED MARCH 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partner Total
<S> <C> <C> <C> <C>
Balance December 31, 1996 12,497,000 $76,494,596 $51,087 $76,545,683
Distributions to limited partners (3,435,311) - (3,435,311)
Net income 711,418 7,186 718,604
----------------- ---------------- ----------------- -----------------
Balance March 31, 1997 12,497,000 $73,770,703 $58,273 $73,828,976
================= ================ ================= =================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED
MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Operating activities:
Net income $718,604 $746,818
Adjustment to reconcile net income to cash provided by operating activities:
Depreciation and amortization 3,637,731 3,860,496
Gain on sales of lease assets (73,417) (138,045)
Provision for losses 59,598 60,700
Changes in operating assets and liabilities:
Accounts receivable 903,035 321,242
Accounts payable, General Partner (155,525) (683,517)
Accounts payable, other 4,735 (563,584)
Deposits due to lessees - (503,273)
Accrued interest expense (27,487) (231,618)
Unearned operating lease income (117,301) (117,802)
----------------- -----------------
Net cash provided by operations 4,949,973 2,751,417
----------------- -----------------
Investing activities:
Purchases of equipment on operating leases (132,900) (16,179,635)
Reduction of net investment in direct financing leases 668,473 270,474
Proceeds from sales of lease assets 408,582 225,764
Reduction of net investment in leveraged leases 115,622 127,314
Initial direct costs paid to General Partner - (122,554)
Purchases of equipment on direct financing leases (33,022) -
----------------- -----------------
Net cash used in investing activities 1,026,755 (15,678,637)
----------------- -----------------
Financing activities:
Borrowings under line of credit - 18,096,000
Repayments of borrowings under line of credit (2,721,190) (17,184,447)
Proceeds of non-recourse debt 1,121,365 15,968,167
Repayments of non-recourse debt (1,730,155) (2,207,036)
Distributions to Limited Partners (3,435,311) (3,364,351)
----------------- -----------------
Net cash (used in) provided by financing activities (6,765,291) 11,308,333
----------------- -----------------
Net (decrease) increase in cash and cash equivalents (788,563) (1,618,887)
Cash and cash equivalents at beginning of period 1,917,349 2,401,318
----------------- -----------------
Cash and cash equivalents at end of period $1,128,786 $782,431
================= =================
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $948,367 $1,076,174
================= =================
Supplemental schedule of non-cash transactions:
Operating lease assets reclassified to direct financing lease assets $2,025,000
=================
Leveraged lease assets reclassified to operating lease assets $902,362
=================
Operating lease assets reclassified to assets held or sale or lease $55,818 $5,916
================= =================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
1. Summary of significant accounting policies:
Interim financial statements:
The unaudited interim financial statements reflect all adjustments which are, in
the opinion of the general partners, necessary to a fair statement of financial
position and results of operations for the interim periods presented. All such
adjustments are of a normal recurring nature. These unaudited interim financial
statements should be read in conjunction with the most recent report on Form
10K.
2. Organization and partnership matters:
ATEL Cash Distribution Fund V, L.P. (the Partnership), was formed under the laws
of the State of California on September 23, 1992, for the purpose of acquiring
equipment to engage in equipment leasing and sales activities. Contributions in
the aggregate of $600 were received as of October 6, 1992, $100 of which
represented the General Partner's continuing interest, and $500 of which
represented the Initial Limited Partners' capital investment.
Upon the sale of the minimum amount of Units of Limited Partnership interest
(Units) of $1,200,000 and the receipt of the proceeds thereof on March 19, 1993,
the Partnership commenced operations. The Partnership or the General Partner on
behalf of the Partnership, will incur costs in connection with the organization,
registration and issuance of the Units. The amount of such costs to be born by
the Partnership is limited by certain provisions in the Partnership Agreement.
As of November 15, 1994, the Partnership had received subscriptions for
12,500,000 Limited Partnership Units ($125,000,000) in addition to the Initial
Limited Partners' 50 Units. Of those Units, 12,497,000 ($124,970,000) were
issued and outstanding as of March 31, 1997.
The Partnership does not make a provision for income taxes since all income and
losses will be allocated to the Partners for inclusion in their individual tax
returns.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
3. Investment in leases:
The Partnership's investment in leases consists of the following:
<TABLE>
<CAPTION>
Depreciation
Balance Expense or Reclassi- Balance
December 31, Amortization fications or March 31,
1996 Additions of Leases Dispositions 1997
---- --------- --------- - ------------- ----
<S> <C> <C> <C> <C> <C>
Net investment in operating
leases $87,312,105 ($3,288,661) $716,392 $84,739,836
Net investment in direct
financing leases 30,648,362 $33,022 (668,473) - 30,012,911
Net investment in leveraged
leases 4,312,287 - (115,622) (1,107,375) 3,089,290
Residual value interests 835,760 - - - 835,760
Assets held for sale or lease 154,758 - (1,167) 55,818 209,409
Reserve for losses (498,298) - (59,598) - (557,896)
Initial direct costs, net of
accumulated amortization of
$2,189,959 in 1996 and $2,407,210
in 1997 2,964,682 - (347,903) - 2,616,779
-------------------- ----------------- ---------------- ----------------- -----------------
$125,729,656 $33,022 ($4,481,424) ($335,165) $120,946,089
==================== ================= ================ ================= =================
</TABLE>
Property on operating leases consists of the following:
<TABLE>
<CAPTION>
Balance 1st Quarter Balance
December 31, Reclassifications March 31,
1996 Acquisitions & Dispositions 1997
---- ------------ -------------- ----
<S> <C> <C> <C> <C>
Transportation $41,681,813 $695,137 $42,376,950
Construction 24,075,113 - 24,075,113
Mining 15,164,692 - 15,164,692
Materials handling 18,057,102 (157,462) 17,899,640
Furniture and fixtures 7,109,796 - 7,109,796
Printing 2,325,000 - 2,325,000
Food processing 1,826,162 - 1,826,162
Manufacturing 3,475,585 - 3,475,585
Office automation 2,378,155 (3,736) 2,374,419
Other 283,412 - 283,412
----------------- ---------------- ----------------- -----------------
116,376,830 533,939 116,910,769
Less accumulated depreciation (29,064,725) ($3,288,661) 182,453 (32,170,933)
----------------- ---------------- ----------------- -----------------
$87,312,105 ($3,288,661) $716,392 $84,739,836
================= ================ ================= =================
</TABLE>
All of the property on leases was acquired in 1993, 1994, 1995, 1996 and 1997.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
3. Investment in leases (continued):
At March 31, 1997, the aggregate amounts of future minimum lease payments are as
follows:
<TABLE>
<CAPTION>
Direct
Year ending Operating Financing
December 31, Leases Leases Total
<S> <C> <C> <C> <C>
1997 $12,359,647 $6,728,149 $19,087,796
1998 13,155,767 5,486,797 18,642,564
1999 8,863,376 4,956,960 13,820,336
2000 5,786,660 3,752,251 9,538,911
2001 3,940,291 3,008,977 6,949,268
Thereafter 9,061,351 9,283,834 18,345,185
----------------- ---------------- -----------------
$53,167,092 $33,216,968 $86,384,060
================= ================ =================
</TABLE>
4. Non-recourse debt:
Notes payable to financial institutions are due in varying monthly, quarterly
and semi-annual installments of principal and interest. The notes are secured by
assignments of lease payments and pledges of the assets which were purchased
with the proceeds of the particular notes. Interest rates on the notes vary from
6.5% to 10.53%.
Future minimum principal payments of non-recourse debt are as follows:
<TABLE>
<CAPTION>
Year ending
December 31, Principal Interest Total
<S> <C> <C> <C> <C>
1997 $5,669,708 $2,264,088 $7,933,796
1998 8,086,635 2,486,838 10,573,473
1999 6,255,102 1,894,775 8,149,877
2000 4,612,996 1,433,308 6,046,304
2001 4,459,250 1,052,869 5,512,119
Thereafter 11,803,722 4,709,263 16,512,985
----------------- ---------------- -----------------
$40,887,413 $13,841,141 $54,728,554
================= ================ =================
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
5. Related party transactions:
The terms of the Limited Partnership Agreement provide that the General Partner
and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The Limited Partnership Agreement allows for the reimbursement of costs incurred
by the General Partner in providing administrative services to the Partnership.
Administrative services provided include Partnership accounting, investor
relations, legal counsel and lease and equipment documentation. The General
Partner is not reimbursed for services where it is entitled to receive a
separate fee as compensation for such services, such as acquisition and
management of equipment. Reimbursable costs incurred by the General Partner are
allocated to the Partnership based upon actual time incurred by employees
working on Partnership business and an allocation of rent and other costs based
on utilization studies.
Substantially all employees of the General Partner record time incurred in
performing administrative services on behalf of all of the Partnerships serviced
by the General Partner. The General Partner believes that the costs reimbursed
are the lower of (i) actual costs incurred on behalf of the Partnership or (ii)
the amount the Partnership would be required to pay independent parties for
comparable administrative services in the same geographic location and are
reimbursable in accordance with the Limited Partnership Agreement.
The General Partner and/or Affiliates earned fees, commissions and
reimbursements, pursuant to the Limited Partnership Agreement as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Acquisition fees equal to 3.5% of the equipment purchase price, for evaluating
and selecting equipment to be acquired (not to exceed approximately 4.75% of
Gross Proceeds, included in property on operating leases) $122,554
Incentive management fees (computed as 5% of distributions of cash from
operations, as defined in the Limited Partnership Agreement) and equipment
management fees (computed as 5% of gross revenues from operating leases, as
defined in the Limited Partnership Agreement plus 2% of gross revenues from full
payout leases, as defined in the Limited Partnership Agreement). $399,373 412,874
Administrative costs reimbursed to General Partner 90,436 74,542
----------------- -----------------
$489,809 $609,970
================= =================
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
6. Partner's capital:
As of March 31, 1995, 12,500,000 Units of Limited Partnership (Units) interest
were issued and outstanding (in addition to the 50 Units issued to the initial
Limited Partners). The Partnership is authorized to issue up to 12,500,000 Units
in addition to those issued to the initial Limited Partners.
The Partnership's Net Profits, Net Losses and Tax Credits are to be allocated
99% to the Limited Partners and 1% to the General Partner.
As more fully described in the Partnership Agreement, available Cash from
Operations and Cash from Sales or Refinancing shall be distributed as follows:
First, 5% of Distributions of Cash from Operations to the General Partner
as Incentive Management Fees.
Second, the balance to the Limited Partners until the Limited Partners have
received aggregate Distributions, as defined, in an amount equal to
their Original Invested Capital, as defined, plus a 10% per annum
cumulative (compounded daily) return on their Adjusted Invested
Capital, as defined.
Third, the General Partner will receive as Incentive Management Fees, the
following:
(A) 10% of remaining Cash from Operations, as defined, (B) 15% of
remaining Cash from Sales or Refinancing, as defined.
Fourth, the balance to the Limited Partners.
7. Line of credit:
The Partnership participates with the General Partner and certain of its
Affiliates in a $90,000,000 revolving credit agreement with a group of financial
institutions which expires on October 28, 1997. The agreement includes an
acquisition facility and a warehouse facility which are used to provide bridge
financing for assets on leases. Draws on the acquisition facility by any
individual borrower are secured only by that borrower's assets, including
equipment and related leases. Borrowings on the warehouse facility are recourse
jointly to certain of the Affiliates, the Partnership and the General Partner.
At March 31, 1997, the Partnership had $7,200,000 of borrowings under the line
of credit.
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of March 31,
1997.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
In 1997, the Partnership's primary source of cash was operating lease rents. In
1996, the Partnership's primary sources of liquidity were borrowings under the
line of credit, proceeds of non-recourse debt and rents from operating leases.
The liquidity of the Partnership will vary in the future, increasing to the
extent cash flows from leases and proceeds from asset sales exceed expenses, and
decreasing as lease assets are acquired, as distributions are made to the
limited partners and to the extent expenses exceed cash flows from leases and
proceeds from sales of assets.
As another source of liquidity, the Partnership has contractual obligations with
a diversified group of lessees for fixed lease terms at fixed rental amounts. As
the initial lease terms expire the Partnership will re-lease or sell the
equipment. The future liquidity beyond the contractual minimum rentals will
depend on the General Partner's success in re-leasing or selling the equipment
as it comes off lease.
The Partnership participates with the General Partner and certain of its
affiliates in a $90,000,000 revolving line of credit with a financial
institution. The line of credit expires on October 28, 1997.
The Partnership anticipates reinvesting a portion of lease payments from assets
owned in new leasing transactions. Such reinvestment will occur only after the
payment of all obligations, including debt service (both principal and
interest), the payment of management and acquisition fees to the General Partner
and providing for cash distributions to the Limited Partners.
The Partnership currently has available adequate reserves to meet contingencies,
but in the event those reserves were found to be inadequate, the Partnership
would likely be in a position to borrow against its current portfolio to meet
such requirements. The General Partner envisions no such requirements for
operating purposes.
As of March 31, 1997, the Partnership had borrowed $52,621,825 on a non-recourse
basis with remaining unpaid balances of $40,887,413. Borrowings are to be
generally non-recourse to the Partnership, that is, the only recourse of the
lender upon a default by the lessee on the underlying lease will be to the
equipment or corresponding lease acquired with the loan proceeds. As of that
date, the Partnership also had outstanding balances of $7,200,000 on its line of
credit. The General Partner expects that aggregate borrowings in the future will
not exceed 40% of aggregate equipment cost. In any event, the Agreement of
Limited Partnership limits such borrowings to 40% of the total cost of
equipment, in aggregate.
No commitments of capital have been or are expected to be made other than for
the acquisition of additional equipment. Such commitments totaled approximately
$1,965,000 as of May 1, 1997.
If inflation in the general economy becomes significant, it may affect the
Partnership inasmuch as the residual (resale) values and rates on re-leases of
the Partnership's leased assets may increase as the costs of similar assets
increase. However, the Partnership's revenues from existing leases would not
increase, as such rates are generally fixed for the terms of the leases without
adjustment for inflation.
If interest rates increase significantly, the lease rates that the Partnership
can obtain on future leases will be expected to increase as the cost of capital
is a significant factor in the pricing of lease financing. Leases already in
place, for the most part, would not be affected by changes in interest rates.
<PAGE>
1997 vs. 1996:
In both 1997 and 1996, the Partnership's primary operating source of cash was
revenues from operating leases. Operating lease revenues were almost unchanged
from 1996.
In 1997, the Partnership's primary sources of cash from investing activities
were rents on direct financing and leveraged leases (accounted for as reductions
in the net investment in such leases) and proceeds from the sales of lease
assets. Cash was used in investing activities for the purchase of operating
lease assets and direct financing lease assets. Cash flows from direct financing
increased from 1996 due to acquisitions of direct finance lease assets over the
prior twelve months.
In 1996, the Partnership's primary sources of cash from financing activities
were non-recourse debt proceeds and borrowings under the line of credit. In
1997, the single largest financing use of cash was distributions to limited
partners. The amount of such distributions did not change significantly from
1996 to 1997. In 1996, the largest uses of this cash were repayments of
borrowings under the line of credit and for the purchase of operating lease
assets as noted above.
Results of operations
1996 vs. 1995:
Operations resulted in net income of $718,604 in 1997 compared to $746,818 in
1996. The Partnership's primary source of revenues is from operating leases.
This is expected to remain true in future periods. Depreciation expense is the
single largest expense of the Partnership and is expected to remain so in future
periods. Operating lease revenues and depreciation expense have both decreased
as a result of sales of operating lease assets over the previous twelve months.
Equipment management fees are based on the Partnership's rental revenues and are
expected to decrease in relation to expected decreases in the Partnership's
revenues from leases. Incentive management fees are based on the levels of
distributions to limited partners. Management fees have not changed
significantly compared to 1996. Interest expense is expected to decrease
significantly in future periods as scheduled debt payments reduce the balances
of non-recourse debt.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Inapplicable.
Item 2. Changes In Securities.
Inapplicable.
Item 3. Defaults Upon Senior Securities.
Inapplicable.
Item 4. Submission Of Matters To A Vote Of Security Holders.
Inapplicable.
Item 5. Other Information.
Inapplicable.
Item 6. Exhibits And Reports On Form 8-K.
(a) Documents filed as a part of this report
1. Financial Statements
Included in Part I of this report:
Balance Sheets, March 31, 1997 and December 31, 1996.
Statement of changes in partners' capital for the three
months ended March 31, 1997.
Statements of income for the three month periods ended
March 31, 1997 and 1996.
Statements of cash flows for the three month periods
ended March 31, 1997 and 1996.
Notes to the Financial Statements
2. Financial Statement Schedules
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have been
omitted.
(b) Report on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Date:
May 12, 1997
ATEL CASH DISTRIBUTION FUND V, L.P.
(Registrant)
By: ATEL Financial Corporation
General Partner of Registrant
/s/ A. J. BATT
----------------------------------
A. J. Batt
President and Chief Executive Officer
of General Partner
By: /s/ DEAN L. CASH
----------------------------------
Dean L. Cash
Executive Vice President
of General Partner
By: /s/ F. RANDALL BIGONY
----------------------------------
F. Randall Bigony
Principal financial officer
of registrant
By: /s/ DONALD E. CARPENTER
----------------------------------
Donald E. Carpenter
Principal accounting
officer of registrant
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,128,786
<SECURITIES> 0
<RECEIVABLES> 1,986,678
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 124,071,553
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 73,828,976
<TOTAL-LIABILITY-AND-EQUITY> 124,071,553
<SALES> 0
<TOTAL-REVENUES> 5,959,801
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,260,719
<LOSS-PROVISION> 59,598
<INTEREST-EXPENSE> 920,880
<INCOME-PRETAX> 718,604
<INCOME-TAX> 0
<INCOME-CONTINUING> 718,604
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 718,604
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
