Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the quarterly period ended March 31, 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 000-23842
ATEL Cash Distribution Fund V, L.P.
(Exact name of registrant as specified in its charter)
California 94-3165807
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
235 Pine Street, 6th Floor, San Francisco, California 94104
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 989-8800
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X|
No |_|
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(Unaudited)
ASSETS
1999 1998
---- ----
Cash and cash equivalents $8,748,821 $ 8,872,945
Accounts receivable 1,646,731 2,050,366
Notes receivable, net of allowance
for doubtful account of $100,605
in 1998 and 1999 995,175 995,175
Investments in leases 70,580,205 74,753,369
----------------- -----------------
Total assets $81,970,932 $ 86,671,855
================= =================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $27,316,218 $ 29,331,123
Line of credit - 1,000,000
Accounts payable:
Equipment purchases 89,952 178,200
General Partner 307,946 217,385
Other 719,571 348,769
Accrued interest expense 95,411 104,179
Unearned operating lease income 819,261 871,146
----------------- -----------------
Total liabilities 29,348,359 32,050,802
Partners' capital:
General Partner 135,342 117,833
Limited Partners 52,487,231 54,503,220
----------------- -----------------
Total partners' capital 52,622,573 54,621,053
----------------- -----------------
Total liabilities and partners' capital $81,970,932 $ 86,671,855
================= =================
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
INCOME STATEMENTS
THREE MONTH PERIODS ENDED
MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Revenues: 1999 1998
---- ----
Leasing activities:
<S> <C> <C>
Operating leases $3,822,254 $ 4,776,238
Direct financing leases 465,314 644,450
Leveraged leases 24,939 27,442
Gain on sales of assets 533,075 77,089
Interest income 69,531 5,899
Other 2,458 9,819
----------------- -----------------
4,917,571 5,540,937
Expenses:
Depreciation and amortization 2,235,987 3,101,427
Interest expense 566,679 770,699
Equipment and incentive management fees to General Partner 311,681 404,327
Administrative cost reimbursements to General Partner 43,402 119,511
Provision for losses - 55,409
Professional fees 11,043 12,633
Other (2,132) 136,493
----------------- -----------------
3,166,660 4,600,499
----------------- -----------------
Net income $1,750,911 $ 940,438
================= =================
Net income:
General Partner $ 17,509 $ 9,404
Limited Partners 1,733,402 931,034
----------------- -----------------
$1,750,911 $ 940,438
================= =================
Net income per Limited Partnership Unit $ 0.14 $ 0.07
Weighted average number of Units outstanding 12,497,000 12,497,000
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
THREE MONTH PERIOD
ENDED MARCH 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partner 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 (3,749,391) (3,749,391)
Net income 1,733,402 17,509 1,750,911
----------------- ----------------- ----------------- -----------------
Balance March 31, 1999 12,497,000 $ 52,487,231 $ 135,342 $ 52,622,573
================= ================= ================= =================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED
MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
Operating activities: 1999 1998
---- ----
<S> <C> <C>
Net income $1,750,911 $ 940,438
Adjustment to reconcile net income to cash provided by operating activities:
Depreciation and amortization 2,235,987 3,101,427
Gain on sales of lease assets (533,075) (77,089)
Provision for losses - 55,409
Leveraged lease income (24,939) (27,442)
Changes in operating assets and liabilities:
Accounts receivable 403,635 117,276
Accounts payable, General Partner 90,561 (208)
Accounts payable, other 370,802 38,701
Accrued interest expense (8,768) (14,855)
Unearned operating lease income (51,885) (45,471)
----------------- -----------------
Net cash provided by operations 4,233,229 4,088,186
----------------- -----------------
Investing activities:
Reduction of net investment in direct financing leases 547,161 771,536
Purchases of assets on operating leases (88,248) -
Proceeds from sales of lease assets 1,667,311 544,360
Payments received on notes receivable - 17,834
Reduction of net investment in leveraged leases 280,719 153,145
----------------- -----------------
Net cash used in investing activities 2,406,943 1,486,875
----------------- -----------------
Financing activities:
Repayments of borrowings under line of credit (1,000,000) -
Repayments of non-recourse debt (2,014,905) (2,400,478)
Distributions to Limited Partners (3,749,391) (3,604,724)
----------------- -----------------
Net cash used in financing activities (6,764,296) (6,005,202)
----------------- -----------------
Net decrease in cash and cash equivalents (124,124) (430,141)
Cash and cash equivalents at beginning of period 8,872,945 733,263
----------------- -----------------
Cash and cash equivalents at end of period $8,748,821 $ 303,122
================= =================
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 575,447 $ 785,554
================= =================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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. Contributions in
the aggregate of $600 were received as of October 6, 1992, $100 of which
represented the General Partner's continuing interest, and $500 of which
represented the Initial Limited Partners' capital investment.
Upon the sale of the minimum amount of Units of Limited Partnership interest
(Units) of $1,200,000 and the receipt of the proceeds thereof on March 19, 1993,
the Partnership commenced operations. The Partnership or the General Partner on
behalf of the Partnership, will incur costs in connection with the organization,
registration and issuance of the Units. The amount of such costs to be born by
the Partnership is limited by certain provisions in the Partnership Agreement.
As of November 15, 1994, the Partnership had received subscriptions for
12,500,000 Limited Partnership Units ($125,000,000) in addition to the Initial
Limited Partners' 50 Units.
The Partnership does not make a provision for income taxes since all income and
losses will be allocated to the Partners for inclusion in their individual tax
returns.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(Unaudited)
3. Investment in leases:
The Partnership's investment in leases consists of the following:
<TABLE>
<CAPTION>
Depreciation
Balance Expense or Reclassi- Balance
December 31, Amortization fications or March 31,
1998 of Leases Dispositions 1999
---- --------- - ------------- ----
<S> <C> <C> <C> <C>
Net investment in operating leases $ 54,308,897 $(2,076,423) $ (1,562,631) $ 50,669,843
Net investment in direct financing leases 17,631,304 (547,161) (59,460) 17,024,683
Net investment in leveraged leases 2,628,378 (255,780) - 2,372,598
Residual value interests 835,759 - - 835,759
Assets held for sale or lease 217,819 - 487,855 705,674
Reserve for losses (2,254,809) - - (2,254,809)
Initial direct costs, net of accumulated
amortization of $2,268,110 in 1998 and
$2,090,558 in 1999 1,386,021 (159,564) - 1,226,457
----------------- ----------------- ----------------- -----------------
$ 74,753,369 $(3,038,928) $ (1,134,236) $ 70,580,205
================= ================= ================= =================
</TABLE>
Property on operating leases consists of the following:
<TABLE>
<CAPTION>
Balance 1st Quarter Balance
December 31, Reclassifications March 31,
1998 Additions & Dispositions 1999
---- --------- -------------- ----
<S> <C> <C> <C> <C>
Construction $ 24,075,113 $ 24,075,113
Transportation 26,801,502 $ (4,661,144) 22,140,358
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
Food processing 1,826,162 - 1,826,162
Office automation 1,919,479 (254,815) 1,664,664
Other 278,396 - 278,396
----------------- ----------------- ----------------- -----------------
94,810,531 (7,218,843) 87,591,688
Less accumulated depreciation (40,501,634) $(2,076,423) 5,656,212 (36,921,845)
----------------- ----------------- ----------------- -----------------
$ 54,308,897 $(2,076,423) $ (1,562,631) $ 50,669,843
================= ================= ================= =================
</TABLE>
All of the property on leases was acquired in 1993, 1994, 1995, 1996 and 1997.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(Unaudited)
3. Investment in leases (continued):
At March 31, 1999, the aggregate amounts of future minimum lease payments are as
follows:
Direct
Year ending Operating Financing
December 31, Leases Leases Total
1999 $ 9,050,014 $ 3,017,496 $12,067,510
2000 6,282,979 3,874,739 10,157,718
2001 4,415,532 3,114,032 7,529,564
2002 2,576,802 2,766,273 5,343,075
2003 759,539 909,334 1,668,873
Thereafter 4,175,056 5,630,777 9,805,833
----------------- ----------------- -----------------
$ 27,259,922 $ 19,312,651 $46,572,573
================= ================= =================
4. Non-recourse debt:
Notes payable to financial institutions are due in varying monthly, quarterly
and semi-annual installments of principal and interest. The notes are secured by
assignments of lease payments and pledges of the assets which were purchased
with the proceeds of the particular notes. Interest rates on the notes vary from
6.7% to 10.53%.
Future minimum principal payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
1999 $ 5,206,644 $ 1,753,468 $6,960,112
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
----------------- ----------------- -----------------
$ 27,316,218 $ 9,003,716 $36,319,934
================= ================= =================
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(Unaudited)
5. Related party transactions:
The terms of the Limited Partnership Agreement provide that the General Partner
and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The Limited Partnership Agreement allows for the reimbursement of costs incurred
by the General Partner in providing administrative services to the Partnership.
Administrative services provided include Partnership accounting, investor
relations, legal counsel and lease and equipment documentation. The General
Partner is not reimbursed for services where it is entitled to receive a
separate fee as compensation for such services, such as acquisition and
management of equipment. Reimbursable costs incurred by the General Partner are
allocated to the Partnership based upon actual time incurred by employees
working on Partnership business and an allocation of rent and other costs based
on utilization studies.
Substantially all employees of the General Partner record time incurred in
performing administrative services on behalf of all of the Partnerships serviced
by the General Partner. The General Partner believes that the costs reimbursed
are the lower of (i) actual costs incurred on behalf of the Partnership or (ii)
the amount the Partnership would be required to pay independent parties for
comparable administrative services in the same geographic location and are
reimbursable in accordance with the Limited Partnership Agreement.
The General Partner and/or Affiliates earned fees, commissions and
reimbursements, pursuant to the Limited Partnership Agreement as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <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). $ 311,681 $ 404,327
Administrative costs reimbursed to General Partner 43,402 119,511
----------------- -----------------
$ 355,083 $ 523,838
================= =================
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(Unaudited)
6. Partner's capital:
As of March 31, 1999, 12,497,000 Units of Limited Partnership (Units) interest
were issued and outstanding (including the 50 Units issued to the initial
Limited Partners). The Partnership is authorized to issue up to 12,500,000 Units
in addition to those issued to the initial Limited Partners.
The Partnership's Net Profits, Net Losses and Tax Credits are to be allocated
99% to the Limited Partners and 1% to the General Partner.
As more fully described in the Partnership Agreement, available Cash from
Operations and Cash from Sales or Refinancing shall be distributed as follows:
First, 5% of Distributions of Cash from Operations to the General Partner
as Incentive Management Fees.
Second, the balance to the Limited Partners until the Limited Partners have
received aggregate Distributions, as defined, in an amount equal to
their Original Invested Capital, as defined, plus a 10% per annum
cumulative (compounded daily) return on their Adjusted Invested
Capital, as defined.
Third, the General Partner will receive as Incentive Management Fees, the
following:
(A) 10% of remaining Cash from Operations, as defined, (B) 15% of
remaining Cash from Sales or Refinancing, as defined.
Fourth, the balance to the Limited Partners.
7. Line of credit:
The Partnership participates with the General Partner and certain of its
Affiliates in a $90,000,000 revolving credit agreement with a group of financial
institutions which expires on 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.
The Partnership had no borrowings under the agreement at March 31, 1999.
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of March 31,
1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
In 1999 and 1998, the Partnership's primary source of cash was operating lease
rents. The liquidity of the Partnership will vary in the future, increasing to
the extent cash flows from leases and proceeds from asset sales exceed expenses,
and decreasing as lease assets are acquired, as distributions are made to the
limited partners and to the extent expenses exceed cash flows from leases and
proceeds from sales of assets.
As another source of liquidity, the Partnership has contractual obligations with
a diversified group of lessees for fixed lease terms at fixed rental amounts. As
the initial lease terms expire the Partnership will re-lease or sell the
equipment. The future liquidity beyond the contractual minimum rentals will
depend on the General Partner's success in re-leasing or selling the equipment
as it comes off lease.
The Partnership participates with the General Partner and certain of its
affiliates in a $90,000,000 revolving line of credit with a financial
institution. The line of credit expires on January 31, 2000.
The Partnership anticipates reinvesting a portion of lease payments from assets
owned in new leasing transactions. Such reinvestment will occur only after the
payment of all obligations, including debt service (both principal and
interest), the payment of management and acquisition fees to the General Partner
and providing for cash distributions to the Limited Partners.
The Partnership currently has available adequate reserves to meet contingencies,
but in the event those reserves were found to be inadequate, the Partnership
would likely be in a position to borrow against its current portfolio to meet
such requirements. The General Partner envisions no such requirements for
operating purposes.
As of March 31, 1999, the Partnership had borrowed $58,317,911 on a non-recourse
basis with remaining unpaid balances of $27,316,218. Borrowings are to be
generally non-recourse to the Partnership, that is, the only recourse of the
lender upon a default by the lessee on the underlying lease will be to the
equipment or corresponding lease acquired with the loan proceeds. The General
Partner expects that aggregate borrowings in the future will not exceed 40% of
aggregate equipment cost. In any event, the Agreement of Limited Partnership
limits such borrowings to 40% of the total cost of equipment, in aggregate.
No commitments of capital have been or are expected to be made other than for
the acquisition of additional equipment. As of March 31, 1998, the Partnership
had 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
<PAGE>
In both 1999 and 1998, the Partnership's primary operating source of cash was
revenues from operating leases. Operating lease revenues decreased by $953,984,
primarily as a result of sales of operating lease assets over the last year.
In 1999, the Partnership's primary source of cash flows from investing
activities was proceeds from sales of lease assets. In 1998, the Partnership's
primary sources of cash from investing activities were rents on direct financing
and leveraged leases (accounted for as reductions in the net investment in such
leases) and proceeds from the sales of lease assets.
In 1999 and 1998, the single largest financing use of cash was distributions to
limited partners. The amount of such distributions increased from 1998 to 1999
due to an increase in the per Unit distribution rate, starting in February 1998.
There were no sources of cash from financing activities in either year. As a
result of scheduled debt payments, certain notes have been paid off. This has
led to an overall reduction in the amounts of cash used to repay debt compared
to 1998.
Results of operations
Operations resulted in net income of $91,750,911 in 1999 compared to $940,438 in
1998.
Operating lease revenues (and the related depreciation expense) have decreased
as a result of sales of assets over the last year. Direct financing lease
revenues have decreased due to the same cause.
As scheduled debt payments have been made, debt balances have been reduced. This
caused interest expense to decrease by $204,020 compared to 1998.
Sales of lease assets increased in the first quarter of 1999 compared to the
same period in 1998. Gains recognized on these sales increased from $77,089 in
1998 to $533,075 in 1999. This is the primary reason for the increase in net
income 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, March 31, 1999 and December 31, 1998.
Statements of income for the three month periods ended
March 31, 1999 and 1998.
Statement of changes in partners' capital for the three
month period ended March 31, 1999.
Statements of cash flows for the three month periods
ended March 31, 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:
May 14, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 8748821
<SECURITIES> 0
<RECEIVABLES> 1646731
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 81970932
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 52622573
<TOTAL-LIABILITY-AND-EQUITY> 81970932
<SALES> 0
<TOTAL-REVENUES> 4917571
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2599981
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 566679
<INCOME-PRETAX> 1750911
<INCOME-TAX> 0
<INCOME-CONTINUING> 1750911
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1750911
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
