Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 1999
|_| Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the transition period from _______ to _______
Commission File Number 0-23842
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
JUNE 30, 1999 AND DECEMBER 31, 1998
(Unaudited)
ASSETS
1999 1998
---- ----
Cash and cash equivalents $6,493,324 $8,872,945
Accounts receivable 1,741,123 2,050,366
Other receivables, net of allowance for
doubtful accounts of $100,605 in 1999
and 1998 1,484,791 995,175
Investments in leases 66,872,814 74,753,369
----------------- ------------------
$76,592,052 $86,671,855
================= ==================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $25,610,675 $29,331,123
Line of credit - 1,000,000
Accounts payable
Other 407,150 348,769
General partner 63,338 217,385
Equipment purchases - 178,200
Accrued interest expense 87,846 104,179
Unearned lease income 675,028 871,146
----------------- ------------------
Total liabilities 26,844,037 32,050,802
Partners' capital:
General partner 144,100 117,833
Limited partners 49,603,915 54,503,220
----------------- ------------------
Total partners' capital 49,748,015 54,621,053
----------------- ------------------
Total liabilities and partners' capital $76,592,052 $86,671,855
================= ==================
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
INCOME STATEMENTS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues:
<S> <C> <C> <C> <C>
Leasing activities:
Operating lease revenues $7,251,926 $ 9,449,991 $ 3,429,672 $ 4,673,753
Direct financing leases 914,047 1,104,112 448,733 459,662
Leveraged leases 49,879 54,884 24,940 27,442
Gain (loss) on sales of assets 492,104 127,835 (40,971) 50,746
Interest income 147,177 9,438 77,646 3,539
Other (7,369) 12,539 (9,827) 2,720
---------------- ---------------- ----------------- ------------------
8,847,764 10,758,799 3,930,193 5,217,862
Expenses:
Depreciation and amortization 4,190,952 6,045,676 1,954,965 2,944,249
Interest 1,091,068 1,461,401 524,389 690,702
Equipment and incentive management fees 585,207 640,998 273,526 236,671
Other 177,239 281,587 179,371 145,094
Administrative cost reimbursements 144,740 230,082 101,338 110,571
Professional fees 31,856 28,136 20,813 15,503
Provision for losses - 55,409 - -
---------------- ---------------- ----------------- ------------------
6,221,062 8,743,289 3,054,402 4,142,790
---------------- ---------------- ----------------- ------------------
Net income $2,626,702 $ 2,015,510 $ 875,791 $ 1,075,072
================ ================ ================= ==================
Net income:
General partner $ 26,267 $ 20,155 $ 8,758 $ 10,751
Limited partners 2,600,435 1,995,355 867,033 1,064,321
---------------- ---------------- ----------------- ------------------
$2,626,702 $ 2,015,510 $ 875,791 $ 1,075,072
================ ================ ================= ==================
Weighted average number of units
outstanding 12,497,000 12,497,000 12,497,000 12,497,000
Net income per limited partnership unit $0.21 $0.16 $0.07 $0.09
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SIX MONTH PERIOD ENDED
JUNE 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partners Total
<S> <C> <C> <C> <C>
Balance December 31, 1998 12,497,000 $54,503,220 $ 117,833 $ 54,621,053
Distributions to limited partners (7,499,740) - (7,499,740)
Net income 2,600,435 26,267 2,626,702
---------------- ---------------- ----------------- ------------------
Balance June 30, 1999 12,497,000 $49,603,915 $ 144,100 $ 49,748,015
================ ================ ================= ==================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Six Months Three Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
Operating activities:
<S> <C> <C> <C> <C>
Net income $2,626,702 $ 2,015,510 $ 875,791 $ 1,075,072
Adjustments to reconcile net income
to net cash provided by operations
Leveraged lease income (49,879) (54,884) (24,940) (27,442)
Depreciation and amortization 4,190,952 6,045,676 1,954,965 2,944,249
(Gain) loss on sales of assets (492,104) (127,835) 40,971 (50,746)
Provision for losses - 55,409 - -
Changes in operating assets and liabilities:
Accounts receivable 309,243 148,471 (94,392) 31,195
Accounts payable, general partner (154,047) (313,955) (244,608) (313,747)
Accounts payable, other 58,381 25,286 (312,421) (13,415)
Accrued interest expense (16,333) (30,668) (7,565) (15,813)
Unearned lease income (196,118) (138,711) (144,233) (93,240)
---------------- ---------------- ----------------- ------------------
Net cash provided by operating activities 6,276,797 7,624,299 2,043,568 3,536,113
---------------- ---------------- ----------------- ------------------
Investing activities:
Proceeds from sales of assets 2,742,607 2,603,881 1,075,296 2,059,521
Reduction in net investment in direct
financing leases 1,165,792 1,065,530 618,631 293,994
Payments received on notes receivable (489,616) 200,048 (489,616) 182,214
Reduction in net investment in leveraged
leases 323,187 195,613 42,468 42,468
Purchase of equipment on operating leases (178,200) 12,148 (89,952) 12,148
---------------- ---------------- ----------------- ------------------
Net cash provided by investing
activities 3,563,770 4,077,220 1,156,827 2,590,345
---------------- ---------------- ----------------- ------------------
</TABLE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
(Continued)
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Six Months Three Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Financing activities:
Distributions to limited partners (7,499,740) (7,354,230) (3,750,349) (3,749,506)
Repayment of non-recourse debt (3,720,448) (4,878,782) (1,705,543) (2,478,304)
Repayment of line of credit (1,000,000) - - -
Borrowings on line of credit - 500,000 - 500,000
---------------- ---------------- ----------------- ------------------
Net cash used in financing activities (12,220,188) (11,733,012) (5,455,892) (5,727,810)
---------------- ---------------- ----------------- ------------------
Net (decrease) increase in cash and
cash equivalents (2,379,621) (31,493) (2,255,497) 398,648
Cash at beginning of period 8,872,945 733,263 8,748,821 303,122
---------------- ---------------- ----------------- ------------------
Cash at end of period $6,493,324 $ 701,770 $ 6,493,324 $ 701,770
================ ================ ================= ==================
Supplemental disclosure of cash flow
information:
Cash paid during the period for interest $1,107,401 $ 2,029,221 $ 524,389 $ 690,702
================ ================ ================= ==================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(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.
The Fund 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.
3. Investment in leases:
The Partnership's investment in leases consists of the following:
<TABLE>
<CAPTION>
Depreciation
Expense or Reclass-
December 31, Amortization ifications & June 30,
1998 of Leases Dispositions 1999
---- --------- - ------------- ----
<S> <C> <C> <C> <C>
Net investment in operating leases $54,308,897 $(3,952,865) $(2,072,693) $48,283,339
Net investment in direct financing leases 17,631,304 (1,165,792) (472,061) 15,993,451
Net investment in leveraged leases 2,628,378 (273,308) - 2,355,070
Residual interests 835,759 - - 835,759
Reserve for losses (2,254,809) - - (2,254,809)
Assets held for sale or lease 217,819 - 294,251 512,070
Initial direct costs, net of accumulated
amortization of $2,268,110 in 1998 and
$1,976,326 in 1999 1,386,021 (238,087) - 1,147,934
------------------ ---------------- ----------------- ------------------
$74,753,369 $(5,630,052) $(2,250,503) $ 66,872,814
================== ================ ================= ==================
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
3. Investments in leases (continued):
The following schedule provides an analysis of the Partnership's investment in
property on operating leases by major classifications as of December 31, 1998,
acquisitions and dispositions during the quarters ended March 31, 1999 and June
30, 1999 and as of June 30, 1999.
<TABLE>
<CAPTION>
Acquisitions, Reclassifications
December 31, & Dispositions June 30,
1998 1st Quarter 2nd Quarter 1999
---- ----------- ----------- ----
<S> <C> <C> <C> <C>
Construction $24,075,113 $ 24,075,113
Transportation 26,801,502 $(4,661,144) $ (913,505) 21,226,853
Materials handling 15,467,931 (109,970) - 15,357,961
Mining 12,841,705 (2,192,914) - 10,648,791
Furniture and fixtures 5,977,981 - - 5,977,981
Manufacturing 3,297,262 - - 3,297,262
Printing 2,325,000 - - 2,325,000
Office automation 1,919,479 (254,815) (635,340) 1,029,324
Food processing 1,826,162 - - 1,826,162
Other 278,396 - - 278,396
---------------- ---------------- ----------------- ------------------
94,810,531 (7,218,843) (1,548,845) 86,042,843
Less accumulated depreciation (40,501,634) 3,579,789 (837,659) (37,759,504)
---------------- ---------------- ----------------- ------------------
$54,308,897 $(3,639,054) $(2,386,504) $ 48,283,339
================ ================ ================= ==================
</TABLE>
All of the property on operating leases was acquired during 1993, 1994, 1995,
1996 and 1997.
At June 30, 1999, the aggregate amounts of future minimum lease payments are as
follows:
Year ending Direct
ecember 31, Financing Operating Total
1999 $1,831,554 $ 6,334,303 $ 8,165,857
2000 3,734,568 6,282,979 10,017,547
2001 3,114,032 4,415,532 7,529,564
2002 2,766,273 2,576,802 5,343,075
2003 909,334 759,539 1,668,873
Thereafter 5,630,777 4,175,056 9,805,833
---------------- ---------------- -----------------
$17,986,538 $24,544,211 $ 42,530,749
================ ================ =================
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
4. Non-recourse debt:
Notes payable to financial institutions are due in varying monthly 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
6.33% to 10.53%.
Future minimum principal payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
1999 $3,501,101 $ 1,222,237 $ 4,723,338
2000 5,674,659 1,501,917 7,176,576
2001 4,580,202 1,063,299 5,643,501
2002 2,916,489 700,203 3,616,692
2003 709,048 553,832 1,262,880
Thereafter 8,229,176 3,430,997 11,660,173
---------------- ---------------- -----------------
$25,610,675 $ 8,472,485 $ 34,083,160
================ ================ =================
5. Related party transactions:
The terms of the Agreement of Limited Partnership 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 General Partner and/or Affiliates earned the following fees and commissions,
pursuant to the Agreement of Limited Partnership as follows:
1999 1998
---- ----
Equipment and incentive management fees $ 585,207 $ 640,998
Reimbursement of administrative costs 144,740 230,082
----------------- ------------------
$729,947 $871,080
================= ==================
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
6. Partner's capital:
The Fund is authorized to issue up to 12,500,000 Units of Limited Partnership
interest in addition to the Initial Limited Partners.
The Fund'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 Agreement of Limited Partnership, 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 $95,000,000 revolving credit agreement with a group of financial
institutions which expires on January 31, 2000. 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 June 30, 1999, the Partnership had no 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 June 30,
1999.
<PAGE>
Item 2. 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 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 June 30, 1999, the Partnership had borrowed $58,317,911. The remaining
unpaid balance at that date was $25,610,675. Borrowings are to be non-recourse
to the Partnership, that is, the only recourse of the lender is to the equipment
or corresponding lease acquired or secured with the loan proceeds. The General
Partner expects that aggregate borrowings in the future will be approximately
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. As of June 30, 1998, there were no such
commitments.
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.
Cash flows
For both the three and six month periods in 1999 and 1998, the Partnership's
primary source of cash flows from operations was rents from operating leases.
In 1999 and 1998, the most significant source of cash from investing activities
in both the six and three month periods was proceeds from sales of lease assets.
Rents from direct financing leases were also significant in both the three and
six month periods.
In 1999, there were no sources of cash from financing activities. Distributions
to the Limited Partners was the primary financing use of cash and it did not
change significantly from the prior year. Cash used to repay non-recourse debt
has decreased as a result of scheduled debt reductions. In 1998, the only source
of cash from financing activities was $500,000 borrowed on the line of credit in
the second quarter.
<PAGE>
Results of operations
The primary source of revenues is operating leases and is expected to remain so
in future periods. As leases reach their scheduled terminations, the Partnership
expects to either sell the assets or to re-lease them. Revenues from succeeding
leases are usually lower than the amounts received on earlier leases. As a
result, lease rents are expected to decline in future periods until all of the
assets are sold. Operating lease revenues declined by $2,198,065 (from
$9,449,991 in 1998 to $7,251,926) for the six month periods and $1,244,081 (from
$4,673,753 in 1998 to $3,429,672 in 1999) for the three month periods.
Depreciation is the Partnership's largest expense and is related directly to
operating lease assets and revenues. Depreciation also decreased for both the
three and six month periods as a result of these lease terminations.
In 1998, sales of assets resulted in gains ($127,835 for the six month period
and $50,746 for the three month period) compared to a gain of $492,104 for the
six month period and a loss of $40,971 for the three month period.
Interest expense has declined for both the six and three month periods as a
result of decreased total debt balances compared to 1998 as a result of
scheduled debt payments.
Management fees are related to lease revenues (equipment management fees) and
the amounts of cash generated from operations which is distributed to the
limited partners (incentive management fees). Lease revenues declined compared
to 1998 as noted above. More of the distributions to the limited partners came
from the proceeds of asset sales (on which no management fees are being paid)
rather than from cash generated from operations. These gave rise to the
decreases in management fees compared to 1998.
<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, June 30, 1999 and December 31, 1998.
Statements of operations for the six and three month
periods ended June 30, 1999 and 1998.
Statement of changes in partners' capital for the six
months ended June 30, 1999.
Statements of cash flows for the six and three month
periods ended June 30, 1999 and 1998.
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:
August 13, 1999
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 General Partner
By: /s/ DEAN L. CASH
---------------------------------
Dean L. Cash
Executive Vice President
of General Partner
By: /s/ PARITOSH K. CHOKSI
-------------------------------------
Paritosh K. Choksi
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 6,493,324
<SECURITIES> 0
<RECEIVABLES> 1,741,123
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 76,592,052
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 49,748,015
<TOTAL-LIABILITY-AND-EQUITY> 76,592,052
<SALES> 0
<TOTAL-REVENUES> 8,847,764
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,129,994
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,091,068
<INCOME-PRETAX> 2,626,702
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,626,702
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,626,702
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
