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 September 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 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
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(Unaudited)
ASSETS
1999 1998
---- ----
Cash $5,066,050 $ 8,872,945
Accounts receivable 1,658,983 2,050,366
Notes receivable 1,283,359 995,175
Investments in leases 63,680,434 74,753,369
---------------- -----------------
$ 71,688,826 $ 86,671,855
================ =================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $ 23,924,232 $ 29,331,123
Line of credit - 1,000,000
Accounts payable
Other 417,579 348,769
General Partner 105,966 217,385
Equipment purchases - 178,200
Accrued interest 80,371 104,179
Unearned lease income 660,021 871,146
---------------- -----------------
Total liabilities 25,188,169 32,050,802
Partners' capital:
General Partner 149,117 117,833
Limited Partners 46,351,540 54,503,220
---------------- -----------------
Total partners' capital 46,500,657 54,621,053
---------------- -----------------
Total liabilities and partners' capital $ 71,688,826 $ 86,671,855
================ =================
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
INCOME STATEMENTS
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues:
Leasing activities:
<S> <C> <C> <C> <C>
Operating leases $10,489,356 $13,997,923 $3,237,430 $ 4,547,932
Direct financing leases 1,330,480 1,625,523 416,433 521,411
Leveraged leases 74,818 82,326 24,939 27,442
Gain (loss) on sales of assets 233,547 210,920 (258,557) 83,085
Interest income 215,767 13,160 68,590 3,722
Other (1,410) 23,452 5,959 10,913
---------------- ---------------- ---------------- -----------------
12,342,558 15,953,304 3,494,794 5,194,505
Expenses:
Depreciation and amortization 6,234,664 8,962,402 2,043,712 2,916,726
Interest 1,579,828 2,148,109 488,760 686,708
Management fees 794,182 989,811 208,975 348,813
Other 341,731 582,323 132,636 272,600
Administrative cost reimbursements 263,709 300,998 118,969 70,916
Provision for losses - 55,409 - -
---------------- ---------------- ---------------- -----------------
9,214,114 13,039,052 2,993,052 4,295,763
---------------- ---------------- ---------------- -----------------
Net income $ 3,128,444 $2,914,252 $ 501,742 $ 898,742
================ ================ ================ =================
Net income:
General Partner $ 31,284 $ 29,143 $ 5,017 $ 8,987
Limited Partners 3,097,160 2,885,109 496,725 889,755
---------------- ---------------- ---------------- -----------------
$ 3,128,444 $2,914,252 $ 501,742 $ 898,742
================ ================ ================ =================
Net income per Limited Partnership unit $ 0.25 $ 0.23 $ 0.04 $ 0.07
Weighted average number of units outstanding 12,497,000 12,497,000 12,497,000 12,497,000
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
NINE MONTH PERIOD ENDED
SEPTEMBER 30, 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 (11,248,840) - (11,248,840)
Net income 3,097,160 31,284 3,128,444
---------------- ---------------- ---------------- -----------------
Balance September 30, 1999 12,497,000 $46,351,540 $ 149,117 $ 46,500,657
================ ================ ================ =================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENT OF CASH FLOWS
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
Operating activities:
<S> <C> <C> <C> <C>
Net income $ 3,128,444 $2,914,252 $ 501,742 $ 898,742
Adjustments to reconcile net income to net cash
provided by operations
Depreciation and amortization 6,234,664 8,962,402 2,043,712 2,916,726
Leveraged lease income (74,818) - (24,939) -
Gain on sale of assets (233,547) (210,920) 258,557 (83,085)
Provision for losses - 55,409 - -
Changes in operating assets and liabilities:
Accounts receivable 391,383 (38,302) 82,140 (186,773)
Accounts payable, General Partner (111,419) (122,037) 42,628 191,918
Accounts payable, other 68,810 1,329,015 10,429 1,303,729
Unearned lease income (211,125) (82,621) (15,007) 56,090
Accrued interest (23,808) (99,652) (7,475) (68,984)
---------------- ---------------- ---------------- -----------------
Net cash provided by operating activities 9,168,584 12,707,546 2,891,787 5,028,363
---------------- ---------------- ---------------- -----------------
Investing activities:
Purchase of equipment on operating leases (178,200) 352 - (11,796)
Reductions in investment in direct financing leases 1,331,428 1,174,710 165,636 109,180
Reductions in investment in leveraged leases 476,332 259,681 153,145 118,952
Payments received on notes receivable - 359,618 - 159,570
Proceeds from sales of assets 3,050,692 3,551,993 797,701 948,112
---------------- ---------------- ---------------- -----------------
Net cash provided by investing activities 4,680,252 5,346,354 1,116,482 1,324,018
---------------- ---------------- ---------------- -----------------
</TABLE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENT OF CASH FLOWS
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Financing activities:
Distributions to limited partners (11,248,840) (11,103,092) (3,749,100) (3,748,862)
Repayments of non-recourse debt (5,406,891) (7,485,362) (1,686,443) (2,606,580)
Repayment of line of credit (1,000,000) - - -
Borrowings under line of credit - 1,000,000 - 500,000
---------------- ---------------- ---------------- -----------------
Net cash used in financing activities (17,655,731) (18,588,454) (5,435,543) (6,355,442)
---------------- ---------------- ---------------- -----------------
Net decrease in cash and cash equivalents (3,806,895) (534,554) (1,427,274) (3,061)
Cash and cash equivalents at beginning
of period 8,872,945 733,263 6,493,324 701,770
---------------- ---------------- ---------------- -----------------
Cash and cash equivalents at end of period $ 5,066,050 $ 500,020 $5,066,050 $ 500,020
================ ================ ================ =================
Supplemental disclosure of cash flow information:
Cash paid for interest during period $ 1,603,636 $2,247,761 $ 496,235 $ 755,692
================ ================ ================ =================
Supplemental schedule of non-cash transactions:
Direct financing lease assets reclassified to notes
receivable $ 288,184 $ 704,898 $ 288,184
================ ================ ================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Unaudited)
1. 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 Fund or the General Partner on behalf
of the Fund, will incur costs in connection with the organization, registration
and issuance of the Units. The amount of such costs to be born by the Fund is
limited by certain provisions in the Agreement of Limited Partnership.
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 & September 30,
1998 of Leases Dispositions 1999
---- --------- -------------- ----
<S> <C> <C> <C> <C>
Net investment in operating leases $54,308,897 $ (5,876,369) $ (2,171,231) $46,261,297
Net investment in direct financing leases 17,631,304 (1,619,612) (501,533) 15,510,159
Net investment in leveraged leases 2,628,378 (401,514) - 2,226,864
Residual value interests 835,759 - - 835,759
Equipment held for sale or lease 217,819 - (144,381) 73,438
Initial direct costs, net of accumulated
amortization of $2,431,130 in 1998 and
$2,036,653 in 1999. 1,386,021 (358,295) - 1,027,726
Reserve for losses (2,254,809) - - (2,254,809)
---------------- ---------------- ---------------- -----------------
$74,753,369 $ (8,255,790) $ (2,817,145) $ 63,680,434
================ ================ ================ =================
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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,
dispositions and reclasifications during the quarters ended March 31, June 30
and September 30, 1999 and as of September 30, 1999.
<TABLE>
<CAPTION>
December 31, Dispositions & Reclassifications September 30,
1998 1st Quarter 2nd Quarter 3rd Quarter 1999
---- ----------- ----------- ----------- ----
<S> <C> <C> <C> <C> <C>
Transportation $ 26,801,502 $ 26,801,502
Construction 24,075,113 $(4,661,144) $ (913,505) 18,500,464
Materials handling 15,467,931 (109,970) - $ (150,446) 15,207,515
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) (635,340) (714,914) 314,410
Other 278,396 - - - 278,396
----------------- ---------------- ---------------- ---------------- -----------------
94,810,531 (7,218,843) (1,548,845) (865,360) 85,177,483
Less accumulated depreciation (40,501,634) 3,579,789 (837,659) (1,156,682) (38,916,186)
----------------- ---------------- ---------------- ---------------- -----------------
$ 54,308,897 $(3,639,054) $ (2,386,504) $ (2,022,042) $ 46,261,297
================= ================ ================ ================ =================
</TABLE>
All of the property on operating leases was acquired during 1993, 1994, 1995,
1996 and 1997.
At September 30, 1999, the aggregate amounts of future minimum lease payments
are as follows:
<TABLE>
<CAPTION>
Direct
Operating Financing Total
<S> <C> <C> <C>
Three months ending December 31, 1999 $3,211,491 $ 944,360 $ 4,155,851
Year ending December 31, 2000 6,282,979 3,722,037 10,005,016
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
---------------- ---------------- -----------------
$21,421,399 $ 17,086,813 $ 38,508,212
================ ================ =================
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Unaudited)
3. Investments in leases (continued):
Direct financing leases:
The following lists the components of the Partnership's investment in direct
financing leases as of September 30, 1999.
Total minimum lease payments receivable $17,086,813
Estimated residual values of leased equipment (unguaranteed) 5,304,034
-------------
Investment in direct financing leases 22,390,847
Less unearned income (6,880,688)
-------------
Net investment in direct financing leases $15,510,159
=============
4. Non-recourse debt:
Notes payable to financial institutions are due in varying monthly, quarterly
and semi-annual installments of principal and interest. The notes are secured by
assignments of lease payments and pledges of the assets which were purchased
with the proceeds of the particular notes. Interest rates on the notes vary from
6.5% to 11.05%.
Future minimum principal payments of non-recourse debt as of September 30, 1999
are as follows:
<TABLE>
<CAPTION>
Principal Interest Total
<S> <C> <C> <C>
Three months ending December 31, 1999 $1,814,658 $ 726,002 $ 2,540,660
Year ending December 31, 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
---------------- ---------------- -----------------
$23,924,232 $7,976,250 $ 31,900,482
================ ================ =================
</TABLE>
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
amounts above are gross amounts incurred by the General Partner and/or
affiliates, including commissions to broker-dealers for the sales of Limited
Partnership Units.
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 $ 794,182 $ 989,811
Reimbursement of administrative costs 263,709 300,998
---------------- ----------------
$1,057,891 $1,290,809
================ ================
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 28, 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 September 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 September
30, 1999.
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
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 September 30, 1999, the Partnership had borrowed $58,317,911. The
remaining unpaid balance as of that date was $23,924,232. 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 or secured 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.
The Partnership participates with the General Partner and certain of its
affiliates in a $95,000,000 revolving line of credit with a financial
institution. The line of credit expires on January 28, 2000.
No commitments of capital have been or are expected to be made other than for
the acquisition of additional equipment. As of September 30, 1999, 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.
In 1999, the Partnership's most significant source of cash was lease rents.
Cash flows - 1999 vs. 1998:
In both 1999 and 1998, the Partnership's primary source of operating cash flows
was operating lease rents. Operating lease rents have decreased by $3,508,567
(25%) as a result of asset sales over the last year.
In 1999 and 1998 the largest source of cash from investing activities was the
proceeds from sales of lease assets. In both years, lease rents from direct
financing and leveraged lease transactions also provided a significant amount of
cash flows.
There were no sources if cash from financing activities in 1999. In 1998, the
only financing source of cash from financing activities was borrowings on the
line of credit. Repayments of non-recoursed debt have decreased as a result of
scheduled debt payments.
Results of operations - 1999 vs. 1998
Operating leases are the Partnership's primary source of revenues. Such revenues
decreased by $3,508,567 (25%) compared to 1998. The decrease resulted from asset
sales over the last year. Depreciation expense is directly related to operating
lease assets and has also decreased compared to 1998 as a result of these asset
sales. Management fees are based on the Partnership's revenues and its
distributions to the Limited Partners. As a result of the decrease in lease
revenues, management fees have declined compared to 1998. Debt balances have
been reduced by scheduled debt payments and this has resulted in the decrease of
$568,281 in interest expense 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, September 30, 1999 and December
31, 1998.
Income statements for the nine and three month
periods ended September 30, 1999 and 1998.
Statement of changes in partners' capital for the
nine months ended September 30, 1999.
Statements of cash flows for the nine and three
month periods ended September 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:
November 12, 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> 9-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Sep-30-1999
<CASH> 5066050
<SECURITIES> 0
<RECEIVABLES> 1658983
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 71688826
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 46500657
<TOTAL-LIABILITY-AND-EQUITY> 71688826
<SALES> 0
<TOTAL-REVENUES> 12342558
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7634286
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1579828
<INCOME-PRETAX> 3128444
<INCOME-TAX> 0
<INCOME-CONTINUING> 3128444
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3128444
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
