Form 10K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 (no fee required) For
the Year Ended December 31, 1997
OR
|_| Transition report pursuant to section 13 or 15(d) of
the Securities Exchange Act of 1934 (no fee required)
For the transition period from ____ to ____
Commission File number 0-23842
ATEL Cash Distribution Fund V, L.P.
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
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Limited Partnership
Units
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 |_|
State the aggregate market value of voting stock held by non-affiliates of the
registrant.
Inapplicable
DOCUMENTS INCORPORATED BY REFERENCE
None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. |X|
<PAGE>
PART I
Item 1: BUSINESS
General Development of Business
ATEL Cash Distribution Fund V, L.P. (the Partnership), was formed under the laws
of the State of California in September 1992. The Partnership was formed for the
purpose of acquiring equipment to engage in equipment leasing and sales
activities.
The Partnership conducted a public offering of 12,500,000 units of Limited
Partnership interest (Units), at a price of $10 per Unit. As of November 15,
1994, the Partnership had received and accepted subscriptions for 12,500,000
($125,000,000) Limited Partnership Units in addition to the Initial Limited
Partners' Units and the offering was terminated. Of those Units, 12,497,000 were
issued and outstanding as of December 31, 1997. Of the proceeds received,
$11,875,000 was paid to ATEL Securities Corporation, a wholly owned subsidiary
of ATEL Financial Corporation (the General Partner), as sales commissions,
$5,738,415 was paid to the General Partner as reimbursements of organization and
other syndication costs, $1,875,000 was reserved for repurchases of Units and
working capital and $105,511,585 has been used to acquire leased equipment,
including acquisition fees paid or to be paid to the General Partner.
The Partnership's principal objectives are to invest in a diversified portfolio
of equipment which will (i) preserve, protect and return the Partnership's
invested capital; (ii) generate substantial distributions to the partners of
cash from operations and cash from sales or refinancing, with any balance
remaining after certain minimum distributions to be used to purchase additional
equipment during the reinvestment period, ending December 31, 2000; and (iii)
provide significant distributions following the reinvestment period and until
all equipment has been sold. The Partnership is governed by its Limited
Partnership Agreement.
Narrative Description of Business
The Partnership has acquired and intends to acquire various types of equipment
and to lease such equipment pursuant to "Operating" leases and "Full Payout"
leases, where "Operating" leases are defined as being leases in which the
minimum lease payments during the initial lease term do not recover the full
cost of the equipment and "Full Payout" leases recover such cost. It is the
intention of the General Partner that no more than 25% of the aggregate purchase
price of equipment will be subject to "Operating" leases upon final investment
of the Net Proceeds of the Offering and that no more than 20% of the aggregate
purchase price of equipment will be invested in equipment acquired from a single
manufacturer.
The Partnership only purchases equipment for which a lease exists or for which a
lease will be entered into at the time of the purchase. The Partnership has
completed its initial acquisition stage with the investment of the net proceeds
from the public offering of Units. As noted above, however, it intends to
continue to invest any cash flow in excess of certain amounts required to be
distributed to the Limited Partners in additional items of leased equipment
through December 31, 2000.
As of December 31, 1997, the Partnership had purchased equipment with a total
acquisition price of $186,995,157.
<PAGE>
The Partnership's objective is to lease a minimum of 75% of the equipment
acquired with the net proceeds of the offering to lessees which (i) have an
aggregate credit rating by Moody's Investor Service, Inc. of Baa or better, or
the credit equivalent as determined by the General Partners, with the aggregate
rating weighted to account for the original equipment cost for each item leased;
or (ii) are established hospitals with histories of profitability or
municipalities. The balance of the original equipment portfolio may include
equipment leased to lessees which, although deemed creditworthy by the General
Partners, would not satisfy the general credit rating criteria for the
portfolio. At December 31, 1997, in excess of 75% of the equipment acquired had
been leased to lessees with an aggregate credit rating of Baa or better or to
such hospitals or municipalities.
During 1997, 1996 and 1995, certain lessees generated significant portions of
the Partnership's total lease revenues as follows:
Percentage of Total Lease
Revenues
Lessee Type of Equipment 1997 1996 1995
------ ----------------- ---- ---- ----
Burlington Northern Railroad Locomotives 19% 16% 14%
The Pittston Company Mining 14% 11% 12%
These percentages are not expected to be comparable in future periods.
The equipment leasing industry is highly competitive. Equipment manufacturers,
corporations, Partnerships and others offer users an alternative to the purchase
of most types of equipment with payment terms which vary widely depending on the
lease term and type of equipment. The ability of the Partnership to keep the
equipment leased and/or operating and the terms of the acquisitions, leases and
dispositions of equipment depends on various factors (many of which are not in
the control of the General Partner or the Partnership), such as general economic
conditions, including the effects of inflation or recession, and fluctuations in
supply and demand for various types of equipment resulting from, among other
things, technological and economic obsolescence.
The General Partner will seek to limit the amount invested in equipment to any
single lessee to not more than 20% of the aggregate purchase price of equipment
owned at any time during the reinvestment period.
The business of the Partnership is not seasonal.
The Partnership has no full time employees.
Equipment Leasing Activities:
Through December 31, 1997, the Partnership has disposed of certain leased assets
as set forth below:
Original
Equipment Cost, Excess of
Type of Excluding Rents Over
Equipment Acquisition Fees Sale Price Expenses *
--------- ---------------- ---------- ----------
Tractors & trailers $7,626,704 $3,132,178 $5,490,298
Furniture, fixtures and office
equipment 6,554,387 4,078,271 4,003,710
Mining equipment 5,521,195 4,596,744 2,098,550
Refrigeration units 1,229,473 560,000 1,164,635
Helicopter 818,442 920,000 308,000
Office automation 418,523 229,027 308,786
Other 921,811 445,394 714,463
--------------- --------------- ---------------
$23,090,535 $13,961,614 $14,088,442
=============== =============== ===============
* Includes only those expenses directly related to
the production of the related rents.
<PAGE>
The Partnership has acquired a diversified portfolio of equipment. The equipment
has been leased to lessees in various industries. The following tables set forth
the types of equipment acquired by the Partnership through December 31, 1997 and
the industries to which the assets have been leased.
Purchase price excluding Percentage of total
Asset types acquisition fees acquisitions
----------- ---------------- ------------
Transportation, over-the-road
tractors and trailers $34,546,518 18.47%
Furniture and fixtures 24,145,180 12.91%
Transportation, other 18,454,853 9.87%
Mining 15,986,308 8.55%
Transportation, intermodal
containers 15,484,688 8.28%
Construction 15,335,327 8.20%
Materials handling 14,469,358 7.74%
Railroad locomotives 12,350,000 6.60%
Earth moving 11,943,745 6.39%
Transportation, rail cars 7,180,000 3.84%
Printing 4,707,508 2.52%
Other 12,391,672 6.63%
--------------- ----------------
$186,995,157 100.00%
=============== ================
Purchase price excluding Percentage of total
Industry of lessee acquisition fees acquisitions
------------------ ---------------- ------------
Transportation, rail $45,670,556 24.42%
Mining 29,823,055 15.95%
Oil & gas 21,301,523 11.39%
Retail, foods 11,215,586 6.00%
Food processing 9,828,623 5.26%
Construction 9,410,789 5.03%
Chemicals 9,075,487 4.85%
Retail, restaurant 8,528,067 4.56%
Transportation, other 8,311,346 4.44%
Primary metals 7,526,037 4.02%
Manufacturing, other 6,815,862 3.64%
Manufacturing, auto/truck 6,690,185 3.58%
Printing 4,707,508 2.52%
Other 8,090,533 4.34%
--------------- ----------------
$186,995,157 100.00%
=============== ================
For further information regarding the Partnership's equipment lease portfolio as
of December 31, 1997, see Note 3 to the financial statements, Investments in
equipment and leases, set forth in Item 8, Financial Statements and
Supplementary Data.
Item 2. PROPERTIES
The Partnership does not own or lease any real property, plant or materially
important physical properties other than the equipment held for lease as set
forth in Item 1.
<PAGE>
Item 3. LEGAL PROCEEDINGS
No material legal proceedings are currently pending against the Partnership or
against any of its assets.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
PART II
Item 5. MARKET FOR REGISTRANT'S LIMITED PARTNERSHIP UNITS
AND RELATED MATTERS
Market Information
The Units are transferable subject to restrictions on transfers which have been
imposed under the securities laws of certain states. However, as a result of
such restrictions, the size of the Partnership and its investment objectives, to
the General Partner's knowledge, no established public secondary trading market
has developed and it is unlikely that a public trading market will develop in
the future.
Holders
As of December 31, 1997, a total of 7,217 investors were record holders of Units
in the Partnership.
Dividends
The Partnership does not make dividend distributions. However, the Limited
Partners of the Partnership are entitled to certain distributions as provided
under the Limited Partnership Agreement.
The General Partner shall have sole discretion in determining the amount of
distributions; provided, however, that the General Partner will not reinvest in
equipment, but will distribute, subject to payment of any obligations of the
Partnership, such available cash from operations and cash from sales or
refinancing as may be necessary to cause total distributions to the Limited
Partners for each year during the reinvestment period to equal the following
amounts per unit: $1.05 in 1995 and 1996; $1.10 in 1997 and 1998; $1.20 in 1999
and 2000.
The rate for monthly distributions from 1995 operations was $0.0875 per Unit.
The distributions were made in February 1995 through December 1995 and in
January 1996. For each quarterly distribution (made in April, July and October
1995 and in January 1996) the rate was $0.2625 per Unit. Distributions were from
1995 cash flows from operations. The amounts paid to holders of Units were
adjusted based on the length of time within the previous calendar month or
quarter that the Units were outstanding.
The rate for monthly distributions from 1996 operations was $0.09166 per Unit.
The distributions were made in February 1996 through December 1996 and in
January 1997. For each quarterly distribution (made in April, July and October
1996 and in January 1997) the rate was $0.275 per Unit. Distributions were from
1996 cash flows from operations. The amounts paid to holders of Units were
adjusted based on the length of time within the previous calendar month or
quarter that the Units were outstanding.
<PAGE>
The rate for monthly distributions from 1997 operations was $0.09166 per Unit.
The distributions were made in February 1997 through December 1997 and in
January 1998. For each quarterly distribution (made in April, July and October
1997 and in January 1998) the rate was $0.275 per Unit. Distributions were from
1997 cash flows from operations. The amounts paid to holders of Units were
adjusted based on the length of time within the previous calendar month or
quarter that the Units were outstanding.
The following table presents summarized information regarding distributions to
Limited Partners:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Distributions of net income (loss) $0.14 $0.23 $0.13 $0.08 ($0.03)
Return of investment 0.96 0.86 0.92 0.89 0.43
--------------- --------------- ---------------- --------------- ---------------
Distributions per unit 1.10 1.09 1.05 0.97 0.40
Differences due to timing of
distributions - 0.01 - 0.08 0.36
--------------- --------------- ---------------- --------------- ---------------
Nominal distribution rates from
above $1.10 $1.10 $1.05 $1.05 $0.76
=============== =============== ================= ============== ===============
</TABLE>
Owners of 1,000 or more units may make the election without charge to receive
distributions on a monthly basis. Owners of less than 1,000 units may make the
election upon payment of a $20.00 annual fee.
Item 6. SELECTED FINANCIAL DATA
The following table presents selected financial data of the Partnership for the
years ended December 31, 1997, 1996, 1995 and 1994 and for the period from March
19, 1993 (commencement of operations) to December 31, 1993. This financial data
should be read in conjunction with the financial statements and related notes
included under Item 8 of this report.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross Revenues $23,437,655 $24,987,922 $20,884,669 $10,809,456 $2,173,205
Net income (loss) $1,813,431 $2,851,885 $1,627,911 $679,530 ($60,621)
Weighted average Limited Partner
Units (Units) outstanding 12,497,000 12,497,713 12,498,550 8,437,365 2,280,173
Net income (loss) per Unit, based on
weighted average Units outstanding $0.1400 $0.2259 $0.1289 $0.0797 ($0.0263)
Distributions per Unit, based on
weighted average Units outstanding $1.1000 $1.0900 $1.0500 $0.9700 $0.4000
Total Assets $106,707,576 $130,546,718 $136,475,349 $108,090,539 $41,256,114
Non-recourse Debt $40,138,400 $41,496,203 $19,129,298 $6,136,233 None
Total Partners' Capital $64,614,239 $76,545,683 $87,372,135 $98,949,871 $36,832,316
</TABLE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
Funds which have been received, but which have not yet been invested in leased
equipment, are invested in interest-bearing accounts or high-quality/short-term
commercial paper. The Partnership's public offering provided for a total maximum
capitalization of $125,000,000.
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 asset sales.
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 (which has been increased
to $105,000,000 through March 31, 1998) with a financial institution that
includes certain financial covenants. The line of credit expires on October 28,
1998. As of December 31, 1997, the Partnership had no borrowings under this line
of credit and the remaining availability was $17,754,812.
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. At December 31,
1997, there were no commitments to purchase lease assets.
As of December 31, 1997, cash balances consisted of amounts reserved for
distributions in January 1998, generated from operations in 1997.
The Partnership currently has available adequate reserves to meet its immediate
cash requirements, 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 December 31, 1997, the Partnership had borrowed $58,317,911. The remaining
unpaid balance as of that date was $40,138,400.
The Partnership's expected long-term borrowings are to be non-recourse to the
Partnership, that is, the only recourse of the lender will be to the equipment
or corresponding lease acquired with the loan proceeds. The Partnership may only
incur additional debt to the extent that the then outstanding balance of all
such debt, including the additional debt, does not exceed 40% of the original
cost of the lease assets then owned by the Partnership, including any such
assets purchased with the proceeds of such additional debt.
The Partnership commenced regular distributions, based on cash flows from
operations, beginning with the second quarter of 1993. See Items 5 and 6 of this
report for additional information regarding the distributions.
<PAGE>
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.
In future periods, cash flows from operating leases are expected to be the
Partnership's primary source of cash flows from operations.
Cash Flows:
1997 vs. 1996:
As in 1996, operating lease rents were the Partnership's primary source of cash
flows from operating activities in 1997.
Sources of cash from investing activities consisted of rents from direct
financing leases and proceeds from sales of lease assets. Such financing lease
rents increased by about 2% compared to 1996. Proceeds from sales of lease
assets are not expected to be consistent from one year to another and decreased
by about $2,764,000 compared to 1996.
Proceeds on non-recourse debt was the Partnership's most significant source of
cash from financing activities.
1996 vs. 1995:
In 1996, the Partnership's primary source of cash from operations was rents from
operating leases. Revenues from operating and direct financing leases increased
by $3,786,126 and interest expense increased by $2,740,810. The net effect of
these increases was offset by fluctuations in the Partnership's operating assets
and liabilities.
Sources of cash from investing activities consisted primarily of proceeds from
sales of lease assets ($5,900,451) and cash flows from direct financing leases
($4,396,705). Cash flows from those leases increased by $1,792,188 compared to
1995 as a result of acquisitions of assets placed on financing leases in 1995
and in 1996. The primary investing uses of cash were purchases of operating and
direct financing lease assets.
In 1996, the only sources of cash from financing activities were proceeds from
non-recourse debt ($30,770,985) and borrowings under the line of credit
($18,098,333). Most, if not all, of the borrowings under the line of credit are
expected to be repaid with the proceeds of non-recourse debt in 1997. The
primary financing uses of cash were scheduled payments of non-recourse debt,
repayments on the line of credit and distributions to the limited partners.
Results of Operations
1997 vs. 1996:
As of March 19, 1993, subscriptions for the minimum amount of the offering
($1,200,000) had been received and accepted by the Partnership. As of that date,
the Partnership commenced operations in its primary business (leasing
activities). Because of the timing of the commencement of operations and the
fact that the initial portfolio acquisitions were not completed until 1996, the
results of operations in 1996 and 1995 are not comparable.
<PAGE>
As of December 31, 1997, 25% of total equipment at cost (24% at December 31,1996
and 19% at December 31, 1995) was leased to lessees in the rail transportation
industry. As of December 31, 1997, 15% of total equipment at cost (16% at
December 31, 1996 and 20% at December 31, 1995) was leased to lessees in the
mining industry. As of December 31, 1997, 10% of total equipment cost (11% at
December 31, 1996 and 13% at December 31, 1995) was leased to lessees in the oil
and gas industry. Leases are subject to the general partners' credit committee
review. The leases provide for the return of the equipment upon default. The
concentration of the Partnership's assets in these industries is not known to
have had any effect on the Partnership's results of operations nor is there any
known trend regarding these industries that would effect its operations in
future periods.
Operations in 1997 resulted in net income of $1,813,431 compared to $2,851,885
in 1996. The decrease resulted from a number of factors. Overall, revenues
declined by $1,550,267 and expenses by $672,768. The most significant factor in
the decline in revenues was the decrease in gains recognized on sales of assets.
Such gains are not expected to be consistent from one year to another. Gains in
1996 included $689,237 from the disposal of assets formerly leased to Barney's,
Inc. The sale of the assets had also given rise to an extraordinary gain on the
early extinguishment of the debt related to the transaction.
The decreases in operating expenses was mostly due to decreases in depreciation
expense and interest expense offset by an increase in the provision for losses.
Depreciation expense decreased as a result of sales of operating lease assets in
1997. The decrease in interest expense was due to overall decreases in the
Partnership's indebtedness. At December 31, 1996, the Partnership's balance on
the line of credit was just under $10,000,000. During 1997, the line of credit
was paid off. This was done by replacing it with new non-recourse debt (about
$6,800,000) and by using cash generated by operations ($3,300,000). Overall,
debt balances were reduced from $51,417,393 at December 31, 1996 to $40,138,400
at December 31, 1997. This reduction in overall indebtedness gave rise to the
decrease in interest expense compared to 1996. The increase in the provision for
losses related primarily to provisions relating to two of the Partnership's
lessees, Schwegmann's and Pegasus Gold. See Note 11 to the financial statements
included in Item 8 of this report for further information.
1996 vs. 1995:
Operations in 1996 resulted in net income of $2,851,885 compared to $1,627,911
in 1995. Total revenues increased by $4,103,253 while expenses increased by
$3,040,234.
Operating lease revenues and direct financing lease revenues increased by
$2,281,557 and $1,504,569, respectively. Both of these increases were the result
of lease asset acquisitions in 1995 and in 1996.
Gains on sales of assets increased by $391,843. The 1996 gains included $689,237
realized on the sale of assets leased to Barney's, Inc.
Depreciation and amortization expense increased by $751,100 due to the asset
acquisitions in 1995 and 1996 noted above.
Equipment management fees are related to the Partnership's gross lease rents and
incentive management fees are related to the amounts distributed to the Limited
Partners from "Operations", as defined in the Agreement of Limited Partnership.
Both gross rents and such distributions increased in 1996 compared to 1995.
These underlying increases gave rise to the increase in management fees.
<PAGE>
The increase in interest expense is directly related to increased debt balances
in 1996 compared to 1995.
The Partnership's provision for losses and impairments declined $731,719
compared to 1995. In 1995, a specific provision was made relating to the
Barney's lease assets in the amount of $778,169. There were no similar defaults
in 1996 for which specific reserves were considered necessary.
Impact of the Year 2000
The year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any computer programs
that have time sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculation causing disruptions of operations, including, among other things,
a temporary inability to process transactions or engage in similar normal
business activities.
The Partnership believes that it will not be required to modify or replace
significant portions of its software and that the year 2000 issue will not pose
significant operational problems for its computer systems. The Partnership does
not expect that the costs related to the year 2000 issue will be significant.
Ultimately, the potential impact of the year 2000 issue will depend not only on
the corrective measures the Partnership undertakes, but also on the way in which
the year 2000 issue is addressed by businesses and other entities whose
financial condition or operational capability is important to the Partnership.
Therefore, the Partnership is communicating to these parties to ensure they are
aware of the year 2000 issue, to learn how they are addressing it, and to
evaluate any likely impact on the Partnership.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Financial Statements and Notes to Financial Statements attached hereto at
pages 12 through 26.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
ATEL Cash Distribution Fund V, L.P.
We have audited the accompanying balance sheets of ATEL Cash Distribution Fund
V, L.P. as of December 31, 1997 and 1996 and the related statements of income,
changes in partners' capital, and cash flows for each of the three years in the
period ended December 31, 1997. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ATEL Cash Distribution Fund V,
L.P. at December 31, 1997 and 1996 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
San Francisco, California
February 6, 1998
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
1997 1996
---- ----
Cash and cash equivalents $733,263 $1,917,349
Accounts receivable 2,194,261 2,889,713
Other assets - 10,000
Notes receivable, net of allowance for
doubtful accounts of $100,605 in 1997,
none in 1996 382,048 -
Investments in equipment and leases 103,398,004 125,729,656
---------------- ---------------
Total assets $106,707,576 $130,546,718
================ ===============
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $40,138,400 $41,496,203
Line of credit - 9,921,190
Accounts payable:
Equipment purchases 178,200 464,604
General Partner 317,715 295,705
Other 235,068 284,929
Accrued interest payable 219,569 232,808
Unearned lease income 1,004,385 1,305,596
---------------- ---------------
Total liabilities 42,093,337 54,001,035
Partners' capital:
General Partner 69,221 51,087
Limited Partners 64,545,018 76,494,596
---------------- ---------------
Total partners' capital 64,614,239 76,545,683
---------------- ---------------
Total liabilities and partners' capital $106,707,576 $130,546,718
================ ===============
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenues:
Leasing activities:
Operating leases $20,153,372 $20,476,748 $18,195,191
Direct financing leases 2,783,215 2,911,529 1,406,960
Leveraged leases 107,494 178,390 217,129
Gain on sales of assets 345,340 1,325,132 933,289
Interest income 32,575 39,898 124,308
Other 15,659 56,225 7,792
---------------- --------------- ---------------
23,437,655 24,987,922 20,884,669
Expenses:
Depreciation and amortization 13,503,318 15,351,574 14,600,474
Interest expense 3,599,776 3,962,860 1,222,050
Equipment and incentive management fees to General Partner 1,647,388 1,725,751 1,623,818
Provision for losses and impairments 1,701,102 255,294 987,013
Other 571,546 428,631 176,847
Administrative cost reimbursements to General Partner 405,886 455,316 535,812
Provision for doubtful accounts 100,605 - -
Professional fees 94,603 117,566 110,744
---------------- --------------- ---------------
21,624,224 22,296,992 19,256,758
---------------- --------------- ---------------
Income before extraordinary item 1,813,431 2,690,930 1,627,911
Extraordinary gain on early extinguishment of debt - 160,955 -
---------------- --------------- ---------------
Net income $1,813,431 $2,851,885 $1,627,911
================ =============== ===============
Net income:
General Partner $18,134 $28,519 $16,279
Limited Partners 1,795,297 2,823,366 1,611,632
---------------- --------------- ---------------
$1,813,431 $2,851,885 $1,627,911
================ =============== ===============
Income before extraordinary item per limited partnership unit $0.14 $0.21 $0.13
Extraordinary gain on early extinguishment of debt per limited
partnership unit - 0.02 -
---------------- --------------- ---------------
Net income per Limited Partnership unit $0.14 $0.23 $0.13
================ =============== ===============
Weighted average number of units outstanding 12,497,000 12,497,713 12,498,550
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partner Total
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1994 12,500,050 $98,943,582 $6,289 $98,949,871
Other syndication costs to affiliates (89,139) (89,139)
Capital contributions rescinded (1,500) (15,000) (15,000)
Distributions to Limited Partners ($1.05 per Unit) (13,101,508) (13,101,508)
Net income 1,611,632 16,279 1,627,911
--------------- ---------------- --------------- ---------------
Balance December 31, 1995 12,498,550 87,349,567 22,568 87,372,135
Limited Partnership Units repurchased (1,550) (5,512) (5,512)
Distributions to Limited Partners ($1.09 per Unit) (13,672,825) (13,672,825)
Net income 2,823,366 28,519 2,851,885
--------------- ---------------- --------------- ---------------
Balance December 31, 1996 12,497,000 76,494,596 51,087 76,545,683
Distributions to Limited Partners ($1.10 per Unit) (13,744,875) (13,744,875)
Net income 1,795,297 18,134 1,813,431
--------------- ---------------- --------------- ---------------
Balance December 31, 1997 12,497,000 $64,545,018 $69,221 $64,614,239
=============== ================ =============== ===============
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Operating activities:
Net income $1,813,431 $2,851,885 $1,627,911
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 13,503,318 15,351,574 14,600,474
Provision for losses and impairments 1,701,102 255,294 987,013
Provision for doubtful accounts 100,605 - -
Leveraged lease income (107,494) (178,390) (217,129)
Gain on sales of assets (345,340) (1,325,132) (933,289)
Extraordinary gain on early extinguishment of debt - (160,955) -
Changes in operating assets and liabilities:
Accounts receivable 695,452 (512,217) (1,015,951)
Notes receivable (482,653) - -
Other assets 10,000 - -
Accounts payable, General Partner 22,010 (730,728) (362,779)
Accounts payable, other (49,861) (529,924) 723,603
Accrued interest payable (13,239) (148,823) 334,642
Deposits due to lessees - (627,508) (217)
Unearned lease income (301,211) 488,290 56,670
---------------- --------------- ---------------
Net cash provided by operating activities 16,546,120 14,733,366 15,800,948
Investing activities:
Purchases of equipment on operating leases (286,404) (16,665,304) (26,990,580)
Proceeds from sales of assets 3,136,926 5,900,451 6,930,477
Decrease (increase) of net investment in leveraged leases - 458,388 (105,594)
Purchases of equipment on direct financing leases (33,023) (1,639,128) (23,121,223)
Reduction of net investment in direct financing leases 4,476,163 4,396,705 2,604,517
Purchases of equipment on leveraged leases - - (2,099,438)
Initial direct lease costs paid to General Partner - (147,072) (1,818,287)
Purchase of residual value interests - - (835,760)
---------------- --------------- ---------------
Net cash provided by (used in) investing activities 7,293,662 (7,695,960) (45,435,888)
Financing activities:
Borrowings under line of credit 250,000 18,098,333 33,994,956
Repayments of borrowings under line of credit (10,171,190) (34,469,231) (7,702,868)
Proceeds of non-recourse debt 6,817,451 30,770,985 14,593,242
Repayments of non-recourse debt (8,175,254) (8,243,125) (1,600,177)
Distributions to Limited Partners (13,744,875) (13,672,825) (13,101,508)
Payment of syndication costs to General Partner - - (89,139)
Limited Partnership Units repurchased - (5,512) -
Capital contributions rescinded - - (15,000)
---------------- --------------- ---------------
Net cash used in financing activities (25,023,868) (7,521,375) 26,079,506
---------------- --------------- ---------------
Net decrease in cash and cash equivalents (1,184,086) (483,969) (3,555,434)
Cash and cash equivalents at beginning of period 1,917,349 2,401,318 5,956,752
---------------- --------------- ---------------
Cash and cash equivalents at end of period $733,263 $1,917,349 $2,401,318
================ =============== ===============
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(CONTINUED)
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $3,613,015 $4,111,683 $887,408
================ =============== ===============
Schedule of non-cash transactions:
Operating lease assets reclassified to direct financing leases $35,692 $2,798,303
Less accumulated depreciation (29,803) (773,303)
---------------- --------------- ---------------
$5,889 $2,025,000
================ ===============
Operating lease assets reclassified to assets held for sale or lease $70,525 $35,262
Less accumulated depreciation (4,992) (1,070)
---------------- --------------- ---------------
$65,533 $34,192
================ ===============
Direct financing lease assets reclassified to notes receivable $482,653
================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Organization and Partnership matters:
ATEL Cash Distribution Fund V, L.P. (the Partnership), was formed under the laws
of the State of California in September 1992, for the purpose of acquiring
equipment to engage in equipment leasing and sales activities. Contributions in
the amount 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 (no other financial
activity occurred in 1992).
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, incurred
costs in connection with the organization, registration and issuance of the
Units. The amount of such costs to be born by the Partnership was limited to 15%
of Gross Proceeds of up to $25,000,000 and 14% of Gross Proceeds in excess of
$25,000,000.
The Partnership's business consists of leasing various types of equipment. As of
December 31, 1997, the original terms of the leases ranged from one to twenty
years.
Pursuant to the Limited Partnership Agreement, the General Partner receives
compensation and reimbursements for services rendered on behalf of the
Partnership (Note 5). The General Partner is required to maintain in the
Partnership reasonable cash reserves for working capital, the repurchase of
Units and contingencies.
2. Summary of significant accounting policies:
Equipment on operating leases:
Revenues from operating leases are recognized evenly over the life of the
related leases.
Equipment on operating leases is stated at cost. Depreciation is being provided
by use of the straight-line method over the terms of the related leases to the
equipment's estimated residual values at the end of the leases.
Direct financing leases:
Income from direct financing lease transactions is reported on the financing
method of accounting, in which the Partnership's investment in the leased
property is reported as a receivable from the lessee to be recovered through
future rentals. The income portion of each rental payment is calculated so as to
generate a constant rate of return on the net receivable outstanding.
Investment in leveraged leases:
Leases which are financed principally with non-recourse debt at lease inception
and which meet certain other criteria are accounted for as leveraged leases.
Leveraged lease contracts receivable are stated net of the related
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
2. Summary of significant accounting policies (continued):
non-recourse debt service (which includes unpaid principal and aggregate
interest on such debt) plus estimated residual values. Unearned income
represents the excess of anticipated cash flows (after taking into account the
related debt service and residual values) over the investment in the lease and
is amortized using a constant rate of return applied to the net investment when
such investment is positive.
Allowance for credit losses:
The Partnership maintains an allowance for credit losses on its direct financing
lease portfolio and on its notes receivable to provide for potential credit and
collateral losses. The General Partner's evaluation of the adequacy of the
allowance is a judgmental estimate that is based on a review of individual
leases and notes receivable, past loss experience, current and anticipated
economic conditions, the value of the underlying collateral and other factors.
While the General Partner believes the allowance is adequate to cover
anticipated losses, it is reasonably possible that the allowance may change in
the near term. However, such change is not expected to have a material effect on
the financial position or future operating results of the Partnership. It is the
Partnership's policy to charge off amounts which, in the opinion of the General
Partner, are not recoverable from lessees or borrowers or the disposition of the
collateral. The General Partner considers the portion of the allowance
attributable to the lease portfolio to be general in nature and available for
that portfolio in its entirety.
Statements of cash flows:
For purposes of the Statements of Cash Flows, cash and cash equivalents includes
cash in banks and cash equivalent investments with original maturities of ninety
days or less.
Income taxes:
The Partnership does not provide for income taxes since all income and losses
are the liability of the individual partners and are allocated to the partners
for inclusion in their individual tax returns.
The tax basis of the Partnership's net assets and liabilities varies from the
amounts presented in these financial statements (unaudited):
1997 1996
---- ----
Financial statement basis of net assets $64,614,239 $76,545,683
Tax basis of net assets 37,010,481 51,668,477
---------------- ---------------
Difference $27,603,758 $24,877,206
================ ===============
The primary differences between the tax basis of net assets and the amounts
recorded in the financial statements are the accounting for syndication costs
and differences between the depreciation methods used in the financial
statements and the Partnership's tax returns.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
2. Summary of significant accounting policies (continued):
The following reconciles the net income reported in these financial statements
to the loss reported on the Partnership's federal tax return (unaudited):
1997 1996
---- ----
Net income per financial statements $1,813,431 $2,851,885
Adjustment to depreciation expense (12,174,736) (18,949,366)
Adjustments to lease revenues 7,646,478 8,509,318
Extraordinary gain on extinguishment of debt - (160,955)
Provision for doubtful accounts 100,605 -
Provision for losses 1,701,102 255,294
---------------- ---------------
Net loss per federal tax return ($913,120) ($7,493,824)
================ ===============
Credit Risk:
Financial instruments which potentially subject the Partnership to
concentrations of credit risk include cash and cash equivalents, accounts
receivable and notes receivable. The Partnership places its cash deposits and
temporary cash investments with creditworthy, high quality financial
institutions. The concentration of such deposits and temporary cash investments
is not deemed to create a significant risk to the Partnership. Accounts
receivable represent amounts due from lessees in various industries, related to
equipment on operating and direct financing leases. See Note 7 for a description
of lessees by industry as of December 31, 1997. See Note 11 for a description of
the Partnership's note receivable as of December 31, 1997.
Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Per unit data:
Net income and distributions per unit are based upon the weighted average number
of units outstanding during the period.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
3. Investments in equipment and leases:
As of December 31, 1997, the Partnership's investments in equipment and leases
consist of the following:
<TABLE>
<CAPTION>
Depreciation
Expense or Reclass-
Amortization ifications or
1996 Additions of Leases Dispositions 1997
---- --------- --------- ------------ ----
<S> <C> <C> <C> <C> <C>
Net investment in operating leases $87,312,105 ($12,609,057) ($116,104) $74,586,944
Net investment in direct financing
leases 30,648,362 $33,023 (4,476,163) (1,076,251) 25,128,971
Net investment in leveraged leases 4,312,287 - 107,494 (1,510,005) 2,909,776
Assets held for sale or lease 154,758 - - (89,225) 65,533
Residual value interests 835,760 - - (1) 835,759
Reserve for losses (498,298) (1,701,102) - - (2,199,400)
Initial direct costs, net of accumulated
amortization of $2,474,583 in 1997
and $2,189,959 in 1996 2,964,682 - (894,261) - 2,070,421
--------------- --------------- ---------------- --------------- ---------------
$125,729,656 ($1,668,079) ($17,871,987) ($2,791,586) $103,398,004
=============== =============== ================ =============== ===============
</TABLE>
Operating leases:
Property on operating leases consists of the following as of December 31, 1996,
additions and dispositions during 1997 and as of December 31, 1997:
<TABLE>
<CAPTION>
Reclass-
ifications or
1996 Additions Dispositions 1997
---- --------- ------------ ----
<S> <C> <C> <C> <C>
Transportation $41,681,813 ($198,569) $41,483,244
Construction 24,075,113 - 24,075,113
Materials handling 18,057,102 (647,677) 17,409,425
Mining 15,164,692 - 15,164,692
Furniture and fixtures 7,109,796 (1,131,815) 5,977,981
Manufacturing 3,475,585 - 3,475,585
Printing 2,325,000 - 2,325,000
Office automation 2,378,155 - 2,378,155
Food processing 1,826,162 - 1,826,162
Other 283,412 (5,016) 278,396
--------------- ---------------- --------------- ---------------
116,376,830 - (1,983,077) 114,393,753
Less accumulated depreciation (29,064,725) ($12,609,057) 1,866,973 (39,806,809)
--------------- ---------------- --------------- ---------------
$87,312,105 ($12,609,057) ($116,104) $74,586,944
=============== ================ =============== ===============
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
3. Investments in equipment and leases (continued):
Direct financing leases:
As of December 31, 1997, investment in direct financing leases consists of
railroad auto racks, railroad tank cars and retail store fixtures. The following
lists the components of the Partnership's investment in direct financing leases
as of December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Total minimum lease payments receivable $26,688,410 $34,535,417
Estimated residual values of leased equipment (unguaranteed) 8,888,584 8,936,243
---------------- ---------------
Investment in direct financing leases 35,576,994 43,471,660
Less unearned income (10,448,023) (12,823,298)
---------------- ---------------
Net investment in direct financing leases $25,128,971 $30,648,362
================ ===============
</TABLE>
All of the property on leases was acquired in 1997, 1996, 1995, 1994 and 1993.
At December 31, 1997, the aggregate amounts of future minimum lease payments
under operating and direct financing leases are as follows:
Direct
Year ending Operating Financing
December 31, Leases Leases Total
1998 $16,707,042 $5,517,616 $22,224,658
1999 9,245,581 4,978,411 14,223,992
2000 6,105,549 3,890,907 9,996,456
2001 4,259,485 3,017,642 7,277,127
2002 2,488,326 2,669,882 5,158,208
Thereafter 6,555,838 6,613,952 13,169,790
--------------- --------------- ----------------
$45,361,821 $26,688,410 $72,050,231
=============== =============== ================
Leveraged leases:
As of December 31, 1997, investment in leveraged leases consists of an air
separation plant and materials handling equipment. The following lists the
components of the Partnership's investment in leveraged leases as of December
31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Aggregate rentals receivable $3,881,273 $5,149,595
Less aggregate principal and interest payable on non-recourse loans (2,181,052) (3,046,744)
Estimated residual value of leased assets 1,570,511 2,731,886
Less unearned income (360,956) (522,450)
---------------- ---------------
Net investment in leveraged leases $2,909,776 $4,312,287
================ ===============
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
4. Non-recourse debt:
At December 31, 1997, non-recourse debt, other than that related to leveraged
leases which is accounted for as a part of the net investment in leveraged
leases, consists of notes payable to financial institutions. The notes are due
in varying monthly, quarterly and semi-annual payments. Interest on the notes is
at rates from 6.50% to 10.53%. The notes are secured by assignments of lease
payments and pledges of assets. At December 31, 1997, the carrying value of the
pledged assets is approximately $54,086,249. The notes mature from 1998 through
2015.
Future minimum payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
1998 $10,073,742 $2,846,626 $12,920,368
1999 7,891,017 2,083,413 9,974,430
2000 5,680,723 1,506,847 7,187,570
2001 4,586,627 1,066,950 5,653,577
2002 2,918,650 703,533 3,622,183
Thereafter 8,987,641 4,009,255 12,996,896
--------------- ---------------- ---------------
$40,138,400 $12,216,624 $52,355,024
=============== ================ ===============
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
disposition 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.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
5. Related party transactions (continued):
The General Partner and/or Affiliates earned fees, commissions and
reimbursements pursuant to the Limited Partnership Agreement as follows during
1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
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). $1,647,388 $1,725,751 $1,623,818
Administrative costs reimbursed to General Partner 405,886 455,316 535,812
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
investment in leases) - 147,072 1,818,287
Reimbursement of other syndication costs - - 89,139
---------------- --------------- ---------------
$2,053,274 $2,328,139 $4,067,056
================ =============== ===============
</TABLE>
6. Partners' capital:
As of December 31, 1997, 12,497,000 Units were issued and outstanding (in
addition to the Units issued to the Initial Limited Partners). The Partnership
is authorized to issue up to 12,500,000 Units of Limited Partnership interest in
addition to those issued to the initial Limited Partners.
The Partnership Net Profits, Net Losses, and Tax Credits are to be allocated 99%
to the Limited Partners and 1% to the General Partner.
Available Cash from Operations and Cash from Sales and Refinancing, as defined
in the Limited Partnership Agreement, shall be distributed as follows:
First, 5% of Distributions of Cash from Operations to the General Partner as
Incentive Management Compensation.
Second, the balance to the Limited Partners until the Limited Partners have
received Aggregate Distributions 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.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
6. Partners' capital (continued):
Third, the General Partner will receive as Incentive Management Compensation,
the following:
(A) 10% of remaining Cash from Operations,
(B) 15% of remaining Cash from Sales or Refinancing.
Fourth, the balance to the Limited Partners.
7. Concentration of credit risk and major customers:
The Partnership leases equipment to lessees in diversified industries. Leases
are subject to the General Partner's credit committee review. The leases provide
for the return of the equipment upon default.
As of December 31, 1997, 1996 and 1995, there were concentrations (greater than
10%) of equipment leased to lessees in certain industries (as a percentage of
total equipment cost) as follows:
1997 1996 1995
---- ---- ----
Rail transportation 25% 24% 19%
Mining 15% 16% 20%
Petroleum and coal products 10% 11% 13%
Food processing * * 10%
* Less than 10%.
During 1997, two customers comprised 19% and 14% of the Partnership's revenues
from leases. During 1996, two customers comprised 16% and 11% of the
Partnership's revenues from leases. During 1995, two customers comprised 14% and
12% of the Partnership's revenues from leases.
8. Line of credit:
The Partnership participates with the General Partner and certain of its
Affiliates in a $90,000,000 revolving credit agreement (which has been increased
to $105,000,000 through March 31, 1998) with a group of financial institutions
which expires on October 28, 1998. 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.
During 1997, the Partnership had borrowed $250,000 under the line of credit.
Repayments on the line of credit were $10,171,190 during 1997 and there were no
outstanding balances as of December 31, 1997.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
8. Line of credit (continued):
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of December
31, 1997. At December 31, 1997, $17,754,812 was available under this agreement.
9. Extraordinary gain on extinguishment of debt:
In January 1996, Barney's, Inc., one of the Partnership's lessees filed for
reorganization under Chapter 11 of the United States Bankruptcy Code. In
accordance with Financial Accounting Standards Board Statement No. 121 (FAS 121)
the Partnership determined that the assets under an operating lease to this
particular lessee were impaired as of December 31, 1995. The Partnership
estimated that only a portion of the contractual cash flows would be received
under the lease. Under FAS 121, the estimated cash flows were discounted at the
effective rate of the non-recourse debt related to the lease and the assets were
written down to the present value of those cash flows.
On July 19, 1996, the assets subject to the lease were purchased by a third
party. As part of the purchase and transaction restructure, the related
non-recourse debt was extinguished by the lender and the Partnership received a
small amount of cash proceeds. The sale resulted in a gain on the sale of the
assets and a gain on the extinguishment of the related non-recourse debt. The
following summarizes this transaction:
Assets at cost $3,365,947
Accumulated depreciation at June 30, 1996 (1,573,580)
----------------
Book value of lease assets at June 30, 1996 1,792,367
Reserve for impairment (778,169)
----------------
Carrying value at June 30, 1996 1,014,198
Deposits from lessee retained by Partnership (124,235)
----------------
Excess of carrying value over deposits from lessee 889,963
Gross sales proceeds 1,579,200
----------------
Gain on sale of assets $689,237
================
Non-recourse debt $1,733,741
Gross sales proceeds used to extinguish non-recourse debt (1,572,786)
----------------
Extraordinary gain on extinguishment of debt $160,955
================
Gross sales proceeds $1,579,200
Gross sales proceeds used to extinguish non-recourse debt (1,572,786)
----------------
Net cash proceeds to Partnership $6,414
================
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
10. Fair value of financial instruments:
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument for which it is practicable to estimate that
value.
Cash and cash equivalents:
The carrying amount of cash and cash equivalents approximates fair value because
of the short maturity of these instruments.
Non-recourse debt:
The fair value of the Partnership's non-recourse debt is estimated using
discounted cash flow analyses, based on the Partnership's current incremental
borrowing rates for similar types of borrowing arrangements. The estimated fair
value of the Partnership's non-recourse debt at December 31, 1997 is
$38,995,084.
Line of credit:
The carrying amount of the Partnership's variable rate line of credit
approximates fair value.
11. Provision for losses and impairments:
In January 1998, Pegasus Gold, one of the Partnership's lessees, filed for
reorganization under Chapter 11 of the United States Bankruptcy Code. The
Partnership has determined that certain of the assets under this direct
financing lease (with a total net book value of $5,826,418) were impaired at
December 31,1997. The Partnership's provision for losses and impairments for
1997 includes a reserve for the estimated credit exposure related to the
remaining lease assets.
In October 1997, Schwegmann's Giant Supermarkets, one of the Partnership's
lessees, defaulted on a portion of its lease obligations. The Partnership sold
assets relating to a portion of the defaulted lease obligation for sales
proceeds of $36,558, resulting in a loss of $87,007. Subsequent to the sale of
the assets, the Partnership reclassified the remaining lease investment to a
note receivable. The book value of the note receivable was $482,653 at December
31, 1997. The General Partner has provided for a reserve of $100,605 on the note
receivable at December 31, 1997.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
11. Provision for losses and impairments (continued):
The net book value of the Partnership's defaulted lease obligation related to
Schwegmann's Giant Supermarkets which is classified as an investment in direct
finance lease was $970,591 at December 31, 1997. The Partnership's provision for
losses and impairments for 1997 includes a reserve for the estimated credit
exposure related to the remaining lease assets.
Uncertainties surrounding the lessees' workout proceedings, their credit and
collateral and the related bankruptcy court adjudications, among other factors,
all affect the Partnership's ability to estimate its future cash flows from note
and lease payments and equipment residual values. As a result, it is reasonably
possible that a change in estimate will occur in the near term. However, such
change is not expected to have a material effect on the financial position or
future operating results of the Partnership.
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
Inapplicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
The registrant is a Limited Partnership and, therefore, has no officers or
directors.
All of the outstanding capital stock of ATEL Financial Corporation (the General
Partner) is held by ATEL Capital Group ("ACG"), a holding company formed to
control the General Partner and affiliated companies pursuant to a corporate
restructuring completed in July 1994. The outstanding capital stock of ATEL
Capital Group is owned 75% by A. J. Batt and 25% by Dean Cash, and was obtained
in the restructuring in exchange for their capital interests in ATEL Financial
Corporation.
Each of ATEL Leasing Corporation ("ALC"), ATEL Equipment Corporation ("AEC"),
ATEL Investor Services ("AIS") and ATEL Financial Corporation ("AFC") is a
wholly-owned subsidiary of ATEL Capital Group and performs services for the
Partnership. Acquisition services are performed for the Partnership by ALC,
equipment management, lease administration and asset disposition services are
performed by AEC, investor relations and communications services are performed
by AIS and general administrative services for the Partnership are performed by
AFC. ATEL Securities Corporation ("ASC"), is a wholly-owned subsidiary of ATEL
Financial Corporation.
The officers and directors of ATEL Capital Group, ATEL Financial Corporation and
their affiliates are as follows:
A. J. Batt Chairman of the Board of Directors of ACG, AFC, ALC,
AEC, AIS and ASC; President and Chief Executive
Officer of ACG, AFC and AEC
Dean L. Cash Director, Executive Vice President and Chief
Operating Officer of ACG, AFC, and AEC; Director,
President and Chief Executive Officer of ALC, AIS
and ASC
F. Randall Bigony Senior Vice President and Chief Financial Officer of
ACG, AFC, ALC, AIS and AEC
Donald E. Carpenter Vice President and Controller of ACG, AFC, ALC, AEC
and AIS; Chief Financial Officer of ASC
Vasco H. Morais General Counsel for ACG, AFC, ALC, AIS and AEC
William J. Bullock Director of Asset Management of AEC
Russell H. Wilder Vice President - Credit of AEC
John P. Scarcella Vice President of ASC
<PAGE>
A. J. Batt, age 61, founded ATEL in 1977 and has been its president and chairman
of the board of directors since its inception. From 1973 to 1977, he was
employed by GATX Leasing Corporation as manager-data processing and equity
placement for the lease underwriting department, which was involved in equipment
financing for major corporations. From 1967 to 1973 Mr. Batt was a senior
technical representative for General Electric Corporation, involved in sales and
support services for computer time-sharing applications for corporations and
financial institutions. Prior to that time, he was employed by North American
Aviation as an engineer involved in the Apollo project. Mr. Batt received a
B.Sc. degree with honors in mathematics and physics from the University of
British Columbia in 1961.
Dean L. Cash, age 47, joined ATEL as director of marketing in 1980 and has been
a vice president since 1981, executive vice president since 1983 and a director
since 1984. Prior to joining ATEL, Mr. Cash was a senior marketing
representative for Martin Marietta Corporation, data systems division, from 1979
to 1980. From 1977 to 1979, he was employed by General Electric Corporation,
where he was an applications specialist in the medical systems division and a
marketing representative in the information services division. Mr. Cash was a
systems engineer with Electronic Data Systems from 1975 to 1977, and was
involved in maintaining and developing software for commercial applications. Mr.
Cash received a B.S. degree in psychology and mathematics in 1972 and an M.B.A.
degree with a concentration in finance in 1975 from Florida State University.
Mr. Cash is an arbitrator with the American Arbitration Association.
F. Randall Bigony, age 40, joined ATEL in 1992 to review administrative
operations within ATEL Financial Corporation and to develop and implement
functional plans to support company growth. He currently oversees ATEL's
accounting, MIS and treasury functions. From 1987 until joining ATEL, Mr. Bigony
was president of F. Randall Bigony & Co., a consulting firm that provided
financial and strategic planning services to emerging growth companies. From
1983 to 1987, he was a manager with the accounting firm of Ernst & Whinney,
serving clients in its management consulting practice. Mr. Bigony received a
B.A. degree in business from the University of Massachusetts and an M.B.A.
degree in finance from the University of California, Berkeley. He is a founding
board member and acting treasurer of the I Have a Dream Foundation Bay Area
Chapter.
Donald E. Carpenter, age 49, joined ATEL in 1986 as controller. Prior to joining
ATEL, Mr. Carpenter was an audit supervisor with Laventhol & Horwath, certified
public accountants in San Francisco, California, from 1983 to 1986. From 1979 to
1983, Mr. Carpenter was an audit senior with Deloitte, Haskins & Sells,
certified public accountants, in San Jose, California. From 1971 to 1975, Mr.
Carpenter was a Supply Corp officer in the U. S. Navy. Mr. Carpenter received a
B.S. degree in mathematics (magna cum laude) from California State University,
Fresno in 1971 and completed a second major in accounting in 1978. Mr. Carpenter
has been a California certified public accountant since 1981.
Vasco H. Morais, age 39, joined ATEL in 1989 as general counsel to provide legal
support in the drafting and reviewing of lease documentation, advising on
general corporate law matters, and assisting on securities law issues. From 1986
to 1989, Mr. Morais was employed by the BankAmeriLease Companies, Bank of
America's equipment leasing subsidiaries, providing in-house legal support on
the documentation of tax-oriented and non-tax oriented direct and leveraged
lease transactions, vendor leasing programs and general corporate matters. Prior
to the BankAmeriLease Companies, Mr. Morais was with the Consolidated Capital
Companies in the Corporate and Securities Legal Department involved in drafting
and reviewing contracts, advising on corporate law matters and securities law
issues. Mr. Morais received a B.A. degree in 1982 from the University of
California in Berkeley and a J.D. degree in 1986 from Golden Gate University Law
School. Mr. Morais has been an active member of the State Bar of California
since 1986.
<PAGE>
William J. Bullock, age 34, joined ATEL in 1991, as the director of asset
management. He assumed responsibility for the disposition of off-lease equipment
and residual valuation analysis on new lease transactions. Prior to joining
ATEL, Mr. Bullock was a senior member of the equipment group at McDonnell
Douglas Finance Corporation ("MDFC") responsible for managing its $4 billion
portfolio of leases. Mr. Bullock was involved in negotiating sales and renewals
as well as preparing and inspecting equipment. Prior to joining MDFC in 1989,
Mr. Bullock was the Senior Negotiator at Equitable Leasing (a subsidiary of GE
Capital Equipment Corp.) in San Diego. At Equitable, he handled the end-of-lease
negotiations and equipment dispositions of a portfolio comprised of equipment
leased primarily to Fortune 200 companies. Mr. Bullock has been a member of the
Equipment Lessors Association ("ELA") since 1987 and has authored ELA industry
articles. He received a B.S. degree in Finance in 1987 from San Diego State
University and is pursuing his M.B.A.
Russell H. Wilder, age 43, joined ATEL in 1992 as Vice President of ATEL
Business Credit, a wholly-owned subsidiary of ACG. Immediately prior to joining
ATEL, Mr. Wilder was a personal property broker specializing in equipment
leasing and financing and an outside contractor in the areas of credit and
collections. From 1985 to 1990 he was Vice President and Manager of Leasing for
Fireside Thrift Co., a Teledyne subsidiary, and was responsible for all aspects
of setting up and managing the department, which operated as a small ticket
lease funding source. From 1983 to 1985 he was with Wells Fargo Leasing
Corporation as Assistant Vice President in the credit department where he
oversaw all credit analysis on transactions in excess of $2 million. From 1978
to 1983 he was District Credit Manager with Westinghouse Credit Corporation's
Industrial Group and was responsible for all non-marketing operations of various
district offices. Mr. Wilder holds a B.S. with Honors in Agricultural Economics
and Business Management from the University of California at Davis. He has been
awarded the Certified Lease Professional designation by the Western Association
of Equipment Lessors.
John P. Scarcella, age 36, joined ATEL Securities as vice president in 1992. He
is involved in the marketing of securities offered by ASC. Prior to joining ASC,
from 1987 to 1991, he was employed by Lansing Pacific Fund, a real estate
investment trust in San Mateo, California and acted as director of investor
relations. From 1984 to 1987, Mr. Scarcella acted as broker dealer
representative for Lansing Capital Corporation, where he was involved in the
marketing of direct participation programs and REITs. Mr. Scarcella received a
B.S.C. degree with emphasis in investment finance in 1983 and an M.B.A. degree
with a concentration in marketing in 1991 from Santa Clara University.
Item 11. EXECUTIVE COMPENSATION
The registrant is a Limited Partnership and, therefore, has no officers or
directors.
Set forth hereinafter is a description of the nature of remuneration paid and to
be paid to the General Partner and their affiliates. The amount of such
remuneration paid for the years ended December 31, 1997, 1996 and 1995 is set
forth in Item 8 of this report under the caption "Financial Statements and
Supplementary Data - Notes to the Financial Statements - Related party
transactions," at Note 5 thereof which information is hereby incorporated by
reference.
Selling Commissions
The Partnership paid selling commissions in the amount of 9.5% of Gross
Proceeds, as defined, ($11,875,000) to ATEL Securities Corporation, an affiliate
of the General Partner. Of this amount, $10,170,534 was reallowed to other
broker/dealers.
<PAGE>
Acquisition Fees
Acquisition fees are to be paid to the General Partner for services rendered in
finding, reviewing and evaluating equipment to be purchased by the Partnership
and rejecting equipment not to be purchased by the Partnership. The total amount
of acquisition fees to be paid to the General Partner or their Affiliates is not
to exceed 3.5% of the aggregate purchase piece of equipment acquired, not to
exceed approximately 4.75% of the Gross Proceeds of the Offering.
The maximum amount of such fees to be paid is $5,929,583, all of which had been
paid as of December 31, 1997.
Equipment Management Fees
As compensation for its services rendered generally in managing or supervising
the management of the Partnership's equipment and in supervising other ongoing
services and activities including, among others, arranging for necessary
maintenance and repair of equipment, collecting revenue, paying operating
expenses, determining the equipment is being used in accordance with all
operative contractual arrangements, property and sales tax monitoring and
preparation of financial data, the General Partner or its affiliates are
entitled to receive management fees which are payable for each fiscal quarter
and are to be in an amount equal to (i) 5% of the gross revenues from
"operating" leases and (ii) 2% of gross revenues from "full payout" leases which
contain net lease provisions. See Note 5 to the financial statements included at
Item 8 of this report for amounts paid.
Incentive Management Fees
As compensation for its services rendered in establishing and maintaining the
composition of the Partnership's equipment portfolio and its acquisition and
debt strategies and supervising fund administration including supervising the
preparation of reports and maintenance of financial and operating data of the
Partnership, Securities and Exchange Commission and Internal Revenue Service
filings, returns and reports, the General Partner shall be entitled to receive
the Partnership management fee which shall be payable for each fiscal quarter
and shall be an amount equal to 5% of distributions of cash from operations
until such time as the Limited Partners have received aggregate distributions of
cash from operations in an amount equal to their original invested capital plus
a 10% per annum return on their average adjusted invested capital (as defined in
the Limited Partnership Agreement). Thereafter, the incentive management fee
shall be 15% of all distributions of cash from operations, sales or refinancing.
See Note 5 to the financial statements included at Item 8 of this report for
amounts paid.
Equipment Resale Fees
As compensation for services rendered in connection with the sale of equipment,
the General Partner shall be entitled to receive an amount equal to the lesser
of (i) 3% of the sales price of the equipment, or (ii) one-half the normal
competitive equipment sales commission charged by unaffiliated parties for such
services. Such fee is payable only after the Limited Partners have received a
return of their adjusted invested capital (as defined in the Limited Partnership
Agreement) plus 10% of their adjusted invested capital per annum calculated on a
cumulative basis, compounded daily, commencing the last day of the quarter in
which the limited partner was admitted to the Partnership. To date, none have
been accrued or paid.
<PAGE>
Equipment Re-lease Fee
As compensation for providing re-leasing services, the General Partner shall
receive fees equal to 2% of the gross rentals or the comparable competitive rate
for such services relating to comparable equipment, whichever is less, derived
from the re-lease provided that (i) the General Partner or their affiliates have
and will maintain adequate staff to render such services to the Partnership,
(ii) no such re-lease fee is payable in connection with the re-lease of
equipment to a previous lessee or its affiliates, (iii) the General Partner or
its affiliates have rendered substantial re-leasing services in connection with
such re-lease and (iv) the General Partner or its affiliates are compensated for
rendering equipment management services. To date, none have been accrued or
paid.
General Partner's Interest in Operating Proceeds
Net income, net loss and investment tax credits are allocated 99% to the Limited
Partners and 1% to the general partner. See the statements of income included in
Item 8 of this report for the amounts allocated to the general and Limited
Partners in 1997, 1996 and 1995.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security Ownership of Certain Beneficial Owners
At December 31, 1997 no investor is known to the Partnership to hold
beneficially more than 5% of the issued and outstanding Units.
Security Ownership of Management
The shareholders of the General Partner are beneficial owners of Limited
Partnership Units as follows:
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
<S> <C> <C> <C>
Limited Partnership Units A. J. Batt Initial Limited Partner Units 0.0002%
235 Pine Street, 6th Floor 25 Units ($250)
San Francisco, CA 94104 (owned by wife)
Limited Partnership Units Dean Cash Initial Limited Partner Units 0.0002%
235 Pine Street, 6th Floor 25 Units ($250)
San Francisco, CA 94104 (owned by wife)
</TABLE>
Changes in Control
The Limited Partners have the right, by vote of the Limited Partners owning more
than 50% of the outstanding limited Partnership units, to remove a General
Partner.
The General Partner may at any time call a meeting of the Limited Partners or a
vote of the Limited Partners without a meeting, on matters on which they are
entitled to vote, and shall call such meeting or for vote without a meeting
following receipt of a written request therefor of Limited Partners holding 10%
or more of the total outstanding Limited Partnership units.
<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The responses to Item 1 of this report under the caption "Equipment Leasing
Activities," Item 8 of this report under the caption "Financial Statements and
Supplemental Data - Notes to the Financial Statements - Related party
transactions" at Note 5 thereof, and Item 11 of this report under the caption
"Executive Compensation," are hereby incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) Financial Statements and Schedules
1.Financial Statements
Included in Part II of this report:
Report of Independent Auditors
Balance Sheets at December 31, 1997 and 1996
Statements of Income for the years ended December 31,
1997, 1996 and 1995 Statements of Changes in
Partners' Capital for the years ended December 31,
1997, 1996
and 1995
Statements of Cash Flows for the years ended December
31, 1997, 1996 and 1995 Notes to Financial Statements
2.Financial Statement Schedules
All 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) Reports on Form 8-K for the fourth quarter of 1997
None
(c) Exhibits
(3) and (4) Agreement of Limited Partnership,
included as Exhibit B to Prospectus (Exhibit 28.1),
is incorporated herein by reference to the Report on
From 10K for the period ended December 31, 1993 (File
No. 33-53162)
<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.
Date: 3/27/1998
ATEL Cash Distribution Fund V, L.P.
(Registrant)
By: ATEL Financial Corporation,
General Partner of Registrant
By: /s/ A. J. Batt
------------------------------------------------
A. J. Batt,
President and Chief Executive Officer of
ATEL Financial Corporation (General
Partner)
By: /s/ Dean Cash
------------------------------------------------
Dean Cash,
Executive Vice President of ATEL
Financial Corporation (General Partner)
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the persons in the capacities and on the dates
indicated.
SIGNATURE CAPACITIES DATE
/s/ A. J. Batt President, chairman and chief 3/27/1998
- ---------------------------------- executive officer of ATEL
A. J. Batt Financial Corporation
/s/ Dean Cash Executive vice president and 3/27/1998
- ---------------------------------- director of ATEL Financial
Dean Cash Corporation
/s/ F. Randall Bigony Principal financial officer 3/27/1998
- ---------------------------------- of registrant; principal
F. Randall Bigony financial officer of ATEL
Financial Corporation
/s/ Donald E. Carpenter Principal accounting officer 3/27/1998
- ---------------------------------- of registrant; principal
Donald E. Carpenter accounting officer of ATEL
Financial Corporation
Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act:
No proxy materials have been or will be sent to security holders. An annual
report will be furnished to security holders subsequent to the filing of this
report on Form 10-K, and copies thereof will be furnished supplementally to the
Commission when forwarded to the security holders.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> dec-31-1997
<PERIOD-END> dec-31-1997
<CASH> 733,263
<SECURITIES> 0
<RECEIVABLES> 2,194,261
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 106,707,576
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 64,614,239
<TOTAL-LIABILITY-AND-EQUITY> 106,707,576
<SALES> 0
<TOTAL-REVENUES> 23,437,655
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,222,741
<LOSS-PROVISION> 1,801,707
<INTEREST-EXPENSE> 3,599,776
<INCOME-PRETAX> 1,813,431
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,813,431
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,813,431
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
