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, 2000
|_| 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
1
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
2
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash and cash equivalents $ 3,298,255 $3,330,065
Accounts receivable 2,031,866 2,772,627
Notes receivable, net of allowance for doubtful
account of $100,605 in 2000 and 1999 1,309,783 1,309,783
Investments in leases 56,777,067 60,548,669
--------------------- -----------------
Total assets $ 63,416,971 $67,961,144
===================== =================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $20,436,801 $22,138,639
Accounts payable:
Equipment purchases 1,352 1,352
General Partner 140,853 117,089
Other 371,863 359,831
Accrued interest expense 97,180 107,182
Unearned operating lease income 272,985 416,654
--------------------- -----------------
Total liabilities 21,321,034 23,140,747
Partners' capital:
General Partner 180,054 169,819
Limited Partners 41,915,883 44,650,578
--------------------- -----------------
Total partners' capital 42,095,937 44,820,397
--------------------- -----------------
Total liabilities and partners' capital $ 63,416,971 $67,961,144
===================== =================
</TABLE>
See accompanying notes.
3
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
INCOME STATEMENTS
THREE MONTH PERIODS ENDED
MARCH 31, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
Revenues: 2000 1999
---- ----
Leasing activities:
<S> <C> <C>
Operating leases $ 2,811,074 $3,822,254
Direct financing leases 390,128 465,314
Leveraged leases 2,410 24,939
Gain on sales of assets 150,078 533,075
Interest income 39,164 69,531
Other 5,285 2,458
--------------------- -----------------
3,398,139 4,917,571
Expenses:
Depreciation and amortization 1,679,517 2,235,987
Interest expense 338,024 566,679
Equipment and incentive management fees to General Partner 115,923 311,681
Railcar maintenance 94,576 -
Administrative cost reimbursements to General Partner 72,350 43,402
Other 53,240 (2,132)
Professional fees 20,978 11,043
--------------------- -----------------
2,374,608 3,166,660
--------------------- -----------------
Net income $ 1,023,531 $1,750,911
===================== =================
Net income:
General Partner $ 10,235 $ 17,509
Limited Partners 1,013,296 1,733,402
--------------------- -----------------
$ 1,023,531 $1,750,911
===================== =================
Net income per Limited Partnership Unit $ 0.08 $ 0.14
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, 2000
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partner Total
<S> <C> <C> <C> <C>
Balance December 31, 1999 12,497,000 $44,650,578 $ 169,819 $44,820,397
Distributions to limited partners (3,747,991) (3,747,991)
Net income 1,013,296 10,235 1,023,531
----------------- ---------------- --------------------- -----------------
Balance March 31, 2000 12,497,000 $41,915,883 $ 180,054 $42,095,937
================= ================ ===================== =================
</TABLE>
See accompanying notes.
4
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED
MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
Operating activities: 2000 1999
---- ----
<S> <C> <C>
Net income $ 1,023,531 $1,750,911
Adjustment to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 1,679,517 2,235,987
Gain on sales of lease assets (150,078) (533,075)
Leveraged lease income (2,410) (24,939)
Changes in operating assets and liabilities:
Accounts receivable 740,761 403,635
Accounts payable, General Partner 23,764 90,561
Accounts payable, other 12,032 370,802
Accrued interest expense (10,002) (8,768)
Unearned operating lease income (143,669) (51,885)
--------------------- -----------------
Net cash provided by operations 3,173,446 4,233,229
--------------------- -----------------
Investing activities:
Proceeds from sales of lease assets 2,085,860 1,667,311
Reduction of net investment in direct financing leases 153,893 547,161
Reduction of net investment in leveraged leases 4,820 280,719
Purchases of assets on operating leases - (88,248)
--------------------- -----------------
Net cash provided by investing activities 2,244,573 2,406,943
--------------------- -----------------
Financing activities:
Distributions to Limited Partners (3,747,991) (3,749,391)
Repayments of non-recourse debt (1,701,838) (2,014,905)
Repayments of borrowings under line of credit - (1,000,000)
--------------------- -----------------
Net cash used in financing activities (5,449,829) (6,764,296)
--------------------- -----------------
Net decrease in cash and cash equivalents (31,810) (124,124)
Cash and cash equivalents at beginning of period 3,330,065 8,872,945
--------------------- -----------------
Cash and cash equivalents at end of period $ 3,298,255 $8,748,821
===================== =================
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 348,026 $ 575,447
===================== =================
</TABLE>
See accompanying notes.
5
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(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 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
Balance Expense and Balance
December 31, Amortization Reclassifications March 31,
1999 of Leases & Dispositions 2000
---- --------- -------------- ----
<S> <C> <C> <C> <C>
Net investment in operating leases $ 43,955,033 $ (1,609,507) $ (4,220,934) $38,124,592
Net investment in direct financing leases 14,969,534 (153,893) (472,061) 14,343,580
Net investment in leveraged leases 2,123,085 (2,410) (334,581) 1,786,094
Residual value interests 835,759 - - 835,759
Assets held for sale or lease 5,008 - 3,091,794 3,096,802
Reserve for losses (2,254,809) - - (2,254,809)
Initial direct costs, net of accumulated
amortization of $1,805,948 in 1999 and
$1,781,482 in 2000 915,059 (70,010) - 845,049
----------------- ---------------- --------------------- -----------------
$ 60,548,669 $ (1,835,820) $ (1,935,782) $56,777,067
================= ================ ===================== =================
</TABLE>
6
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
3. Investment in leases (continued):
Property on operating leases consists of the following:
<TABLE>
<CAPTION>
Balance Balance
December 31, Reclassifications March 31,
1999 Depreciation & Dispositions 2000
---- ------------ -------------- ----
<S> <C> <C> <C> <C>
Transportation $ 42,798,186 $ (3,657,042) $39,141,144
Construction 15,399,236 (2,033,221) 13,366,015
Materials handling 7,636,308 (564,941) 7,071,367
Mining 6,981,798 (1,880,826) 5,100,972
Furniture and fixtures 4,709,326 - 4,709,326
Manufacturing 3,475,585 - 3,475,585
Office automation 145,726 - 145,726
----------------- ---------------- --------------------- -----------------
81,146,165 (8,136,030) 73,010,135
Less accumulated depreciation (37,191,132) $ (1,609,507) 3,915,096 (34,885,543)
----------------- ---------------- --------------------- -----------------
$ 43,955,033 $ (1,609,507) $ (4,220,934) $38,124,592
================= ================ ===================== =================
</TABLE>
All of the property on leases was acquired in 1993, 1994, 1995, 1996 and 1997.
At March 31, 2000, the aggregate amounts of future minimum lease payments are as
follows:
Direct
Year ending Operating Financing
December 31, Leases Leases Total
------------ ------ ------ -----
2000 $6,408,903 $2,712,365 $ 9,121,268
2001 5,428,744 3,114,032 8,542,776
2002 3,574,219 2,766,273 6,340,492
2003 1,713,606 2,707,734 4,421,340
2004 568,585 622,852 1,191,437
Thereafter 5,460,811 3,209,525 8,670,336
----------------- ---------------- ---------------------
$ 23,154,868 $15,132,781 $ 38,287,649
================= ================ =====================
7
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
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
------------ --------- -------- -----
2000 $4,007,495 $1,147,630 $ 5,155,125
2001 4,575,203 1,057,560 5,632,763
2002 2,915,879 699,261 3,615,140
2003 709,048 553,832 1,262,880
2004 453,006 513,642 966,648
Thereafter 7,776,170 2,917,357 10,693,527
----------------- ---------------- ---------------------
$ 20,436,801 $6,889,282 $ 27,326,083
================= ================ =====================
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.
8
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
5. Related party transactions (continued):
The General Partner and/or Affiliates earned fees, commissions and
reimbursements, pursuant to the Limited Partnership Agreement as follows:
<TABLE>
<CAPTION>
2000 1999
---- ----
<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). $ 115,923 $311,681
Administrative costs reimbursed to General Partner 72,350 43,402
------------------ -----------------
$ 188,273 $ 355,083
================== =================
</TABLE>
6. Partner's capital:
As of March 31, 2000, 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.
9
<PAGE>
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
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 July 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.
From July 1, 2000 through July 28, 2000, the maximum available under the line of
credit shall be the then current balance or $85,000,000, which ever is less.
The Partnership had no borrowings under the agreement at March 31, 2000.
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of March 31,
2000.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
In 2000 and 1999, 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 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 $95,000,000 revolving line of credit with a financial
institution. The line of credit expires on July 28, 2000. From July 1, 2000
through July 28, 2000, the maximum available under the line of credit shall be
the then current balance or $85,000,000, which ever is less.
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, 2000, the Partnership had borrowed $58,317,911 on a non-recourse
basis with remaining unpaid balances of $20,436,801. 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, 2000, 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.
11
<PAGE>
Cash Flows
In both 2000 and 1999, the Partnership's primary operating source of cash was
revenues from operating leases. Operating lease revenues decreased by
$1,011,180, primarily as a result of sales of operating lease assets over the
last year.
In 2000 and 1999, the Partnership's primary source of cash flows from investing
activities was proceeds from sales of lease assets. Rents on direct financing
and leveraged leases (accounted for as reductions in the net investment in such
leases) also provided cash in both 2000 and 1999.
In 2000 and 1999, the single largest financing use of cash was distributions to
limited partners. The amount of such distributions did not change significantly.
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 1999.
Results of operations
Operations resulted in net income of $1,023,531 in 2000 compared to $1,750,911
in 1999.
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 $228,655 compared to 1999.
Sales of lease assets decreased in the first quarter of 2000 compared to the
same period in 1999. Gains recognized on these sales decreased from $533,075 in
1999 to $150,078 in 2000.
12
<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, 2000 and December 31, 1999.
Statements of income for the three month periods ended
March 31, 2000 and 1999.
Statement of changes in partners' capital for the three
month period ended March 31, 2000.
Statements of cash flows for the three month periods
ended March 31, 2000 and 1999.
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
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date:
May 12, 2000
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-31-2000
<PERIOD-END> DEC-31-2000
<CASH> 3,298,255
<SECURITIES> 0
<RECEIVABLES> 2,031,866
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 63,416,971
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 42,095,937
<TOTAL-LIABILITY-AND-EQUITY> 63,416,971
<SALES> 0
<TOTAL-REVENUES> 3,398,139
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,036,584
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 338,024
<INCOME-PRETAX> 1,023,531
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,023,531
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,023,531
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
