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, 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 Part I. FINANCIAL INFORMATION Item 1: Financial Statements. 2 ATEL CASH DISTRIBUTION FUND V, L.P. BALANCE SHEETS SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 (Unaudited) ASSETS 2000 1999 ---- ---- Cash $1,721,222 $ 3,330,065 Accounts receivable 2,281,744 2,772,627 Other receivables, net of allowance for doubtful accounts of $100,605 in 2000 and 1999 1,150,214 1,309,783 Investments in leases 49,118,943 60,548,669 ---------------- ----------------- $ 54,272,123 $ 67,961,144 ================ ================= LIABILITIES AND PARTNERS' CAPITAL Non-recourse debt $ 17,632,348 $ 22,138,639 Accounts payable Other 890,105 359,831 General Partner 71,221 117,089 Equipment purchases 1,352 1,352 Accrued interest 73,964 107,182 Unearned lease income 272,528 416,654 ---------------- ----------------- Total liabilities 18,941,518 23,140,747 Partners' capital: General Partner 188,310 169,819 Limited Partners 35,142,295 44,650,578 ---------------- ----------------- Total partners' capital 35,330,605 44,820,397 ---------------- ----------------- Total liabilities and partners' capital $ 54,272,123 $ 67,961,144 ================ ================= See accompanying notes. 3 ATEL CASH DISTRIBUTION FUND V, L.P. INCOME STATEMENTS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 Nine Months Ended Three Months Ended September 30, September 30, ------------- ------------- 2000 1999 2000 1999 ---- ---- ---- ---- Revenues: Leasing activities: Operating leases $ 7,318,455 $10,489,356 $1,848,987 $ 3,237,430 Direct financing leases 921,928 1,330,480 205,989 416,433 Leveraged leases 63,785 74,818 18,852 24,939 Gain (loss) on sales of assets 893,417 233,547 (10,822) (258,557) Interest income 111,549 215,767 48,574 68,590 Other 27,343 (1,410) 13,176 5,959 ---------------- ---------------- ---------------- ----------------- 9,336,477 12,342,558 2,124,756 3,494,794 Expenses: Depreciation and amortization 4,981,627 6,234,664 1,509,573 2,043,712 Interest 1,068,208 1,579,828 351,305 488,760 Management fees 609,084 794,182 117,297 208,975 Administrative cost reimbursements 315,319 263,709 119,725 118,969 Other 261,793 282,632 76,996 61,366 Railcar maintenance 251,389 59,099 112,819 71,270 ---------------- ---------------- ---------------- ----------------- 7,487,420 9,214,114 2,287,715 2,993,052 ---------------- ---------------- ---------------- ----------------- Net income (loss) $ 1,849,057 $3,128,444 $ (162,959) $ 501,742 ================ ================ ================ ================= Net income (loss): General Partner $ 18,491 $ 31,284 $ (1,630) $ 5,017 Limited Partners 1,830,566 3,097,160 (161,329) 496,725 ---------------- ---------------- ---------------- ----------------- $ 1,849,057 $3,128,444 $ (162,959) $ 501,742 ================ ================ ================ ================= Net income (loss) per Limited Partnership unit $ 0.15 $ 0.25 $ (0.01) $ 0.04 Weighted average number of units outstanding 12,497,000 12,497,000 12,497,000 12,497,000 See accompanying notes. 4 ATEL CASH DISTRIBUTION FUND V, L.P. STATEMENT OF CHANGES IN PARTNERS' CAPITAL NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 (Unaudited) Limited Partners General Units Amount Partner Total Balance December 31, 1999 12,497,000 $44,650,578 $ 169,819 $ 44,820,397 Distributions to limited partners (11,338,849) - (11,338,849) Net income 1,830,566 18,491 1,849,057 ---------------- ---------------- ---------------- ----------------- Balance September 30, 2000 12,497,000 $35,142,295 $ 188,310 $ 35,330,605 ================ ================ ================ ================= - See accompanying notes. ATEL CASH DISTRIBUTION FUND V, L.P. STATEMENT OF CASH FLOWS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 (Unaudited) Nine Months Ended Three Months Ended September 30, September 30, ------------- ------------- 2000 1999 2000 1999 ---- ---- ---- ---- Operating activities: Net income $ 1,849,057 $3,128,444 $ (162,959) $ 501,742 Adjustments to reconcile net income (loss) to net cash provided by operations Depreciation and amortization 4,981,627 6,234,664 1,509,573 2,043,712 Leveraged lease income (63,785) (74,818) (18,852) (24,939) (Gain) loss on sale of assets (893,417) (233,547) 10,822 258,557 Changes in operating assets and liabilities: Accounts receivable 490,883 391,383 (156,626) 82,140 Accounts payable, General Partner (45,868) (111,419) (199,005) 42,628 Accounts payable, other 530,274 68,810 44,852 10,429 Unearned lease income (144,126) (211,125) 1,048 (15,007) Accrued interest (33,218) (23,808) (16,535) (7,475) ---------------- ---------------- ---------------- ----------------- Net cash provided by operating activities 6,671,427 9,168,584 1,012,318 2,891,787 ---------------- ---------------- ---------------- ----------------- Investing activities: Proceeds from sales of assets 5,519,246 3,050,692 879,544 797,701 Reductions in investment in direct financing leases 1,886,055 1,331,428 672,932 165,636 Payments received on notes receivable 159,569 - - - Reductions in investment in leveraged leases - 476,332 - 153,145 Purchase of equipment on operating leases - (178,200) - - ---------------- ---------------- ---------------- ----------------- Net cash provided by investing activities 7,564,870 4,680,252 1,552,476 1,116,482 ---------------- ---------------- ---------------- ----------------- 5 ATEL CASH DISTRIBUTION FUND V, L.P. STATEMENT OF CASH FLOWS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 (Unaudited) Nine Months Ended Three Months Ended September 30, September 30, ------------- ------------- 2000 1999 2000 1999 ---- ---- ---- ---- Financing activities: Distributions to limited partners (11,338,849) (11,248,840) (3,842,083) (3,749,100) Repayments of non-recourse debt (4,506,291) (5,406,891) (1,080,842) (1,686,443) Repayment of line of credit - (1,000,000) - - ---------------- ---------------- ---------------- ----------------- Net cash used in financing activities (15,845,140) (17,655,731) (4,922,925) (5,435,543) ---------------- ---------------- ---------------- ----------------- Net decrease in cash and cash equivalents (1,608,843) (3,806,895) (2,358,131) (1,427,274) Cash and cash equivalents at beginning of period 3,330,065 8,872,945 4,079,353 6,493,324 ---------------- ---------------- ---------------- ----------------- Cash and cash equivalents at end of period $ 1,721,222 $5,066,050 $1,721,222 $ 5,066,050 ================ ================ ================ ================= Supplemental disclosure of cash flow information: Cash paid for interest during period $ 1,101,426 $1,603,636 $ 367,840 $ 496,235 ================ ================ ================ ================= Supplemental schedule of non-cash transactions: Direct financing lease assets reclassified to notes receivable $ - $ 288,184 $ - $ 288,184 ================ ================ ================ ================= See accompanying notes. 6 ATEL CASH DISTRIBUTION FUND V, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000 (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 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: Depreciation Expense or Reclass- December 31, Amortization ifications & September 30, 1999 of Leases Dispositions 2000 ---- --------- -------------- ---- Net investment in operating leases $43,955,033 $ (4,755,249) $ (5,214,929) $33,984,855 Net investment in direct financing leases 14,969,534 (1,886,055) (1,725,333) 11,358,146 Net investment in leveraged leases 2,123,085 63,785 (611,424) 1,575,446 Residual value interests 835,759 - - 835,759 Equipment held for sale or lease 5,008 - 2,925,857 2,930,865 Initial direct costs, net of accumulated amortization of $1,805,948 in 1999 and $1,675,238 in 2000. 915,059 (226,378) - 688,681 Reserve for losses (2,254,809) - - (2,254,809) ---------------- ---------------- ---------------- ----------------- $60,548,669 $ (6,803,897) $ (4,625,829) $ 49,118,943 ================ ================ ================ ================= 7 ATEL CASH DISTRIBUTION FUND V, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000 (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, 1999, dispositions and reclassifications during the quarters ended March 31, June 30 and September 30, 2000 and as of September 30, 2000. December 31, Dispositions & Reclassifications September 30, -------------------------------- 1999 1st Quarter 2nd Quarter 3rd Quarter 2000 ---- ----------- ----------- ----------- ---- Transportation $ 42,798,186 $(3,657,042) $3,261,725 $ (5,634,911) $ 36,767,958 Construction 15,399,236 $(2,033,221) $ (750,548) (134,984) 12,480,483 Mining 6,981,798 (1,880,826) (1,748,000) 1,748,000 5,100,972 Materials handling 7,636,308 (564,941) (1,503,469) (468,072) 5,099,826 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) (886,018) (4,489,967) 67,634,150 Less accumulated depreciation (37,191,132) 2,305,589 (746,891) 1,983,139 (33,649,295) ----------------- ---------------- ---------------- ---------------- ----------------- $ 43,955,033 $(5,830,441) $ (1,632,909) $ (2,506,828) $ 33,984,855 ================= ================ ================ ================ ================= All of the property on operating leases was acquired during 1993, 1994, 1995, 1996 and 1997. At September 30, 2000, the aggregate amounts of future minimum lease payments are as follows: Direct Operating Financing Total Three months ending December 31, 2000 $ 2,047,859 $ 736,535 $2,784,394 Year ending December 31, 2001 5,472,650 2,473,232 7,945,882 2002 3,640,770 2,125,473 5,766,243 2003 1,764,423 428,733 2,193,156 2004 779,777 622,851 1,402,628 Thereafter 5,460,813 5,007,927 10,468,740 ---------------- ---------------- ---------------- $19,166,292 $11,394,751 $ 30,561,043 ================ ================ ================ 8 ATEL CASH DISTRIBUTION FUND V, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000 (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, 2000. Total minimum lease payments receivable $11,394,751 Estimated residual values of leased equipment (unguaranteed) 3,442,265 ---------------- Investment in direct financing leases 14,837,016 Less unearned income (3,478,870) ---------------- Net investment in direct financing leases $11,358,146 ================ 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, 2000 are as follows: Principal Interest Total --------- -------- ----- Three months ending December 31, 2000 $ 1,276,976 $ 333,132 $1,610,108 Year ending December 31, 2001 4,551,860 1,060,433 5,612,293 2002 2,899,228 699,578 3,598,806 2003 709,048 553,832 1,262,880 2004 453,006 513,642 966,648 Thereafter 7,742,230 2,917,355 10,659,585 ---------------- ---------------- ---------------- $17,632,348 $6,077,972 $ 23,710,320 ================ ================ ================ 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: 2000 1999 ---- ---- Equipment and incentive management fees $ 609,084 $ 794,182 Reimbursement of administrative costs 315,319 263,709 ---------------- ---------------- $ 924,403 $1,057,891 ================ ================ 9 ATEL CASH DISTRIBUTION FUND V, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000 (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 $77,500,000 revolving credit agreement with a group of financial institutions which expires on July 28, 2001. 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, 2000, 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, 2000. 10 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, 2000, the Partnership had borrowed $58,317,911. The remaining unpaid balance as of that date was $17,632,348. 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 $77,500,000 revolving line of credit with a group of financial institutions. The line of credit expires on July 28, 2001. No commitments of capital have been or are expected to be made other than for the acquisition of additional equipment. As of September 30, 2000, 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 2000 and in 1999, the Partnership's most significant source of cash was lease rents. Cash flows - 2000 vs. 1999: In both 2000 and 1999, the Partnership's primary source of operating cash flows was operating lease rents. Operating lease rents have decreased by $3,170,901 (30%) as a result of asset sales over the last year. In 2000 and 1999 the largest source of cash from investing activities was the proceeds from sales of lease assets. In both years, lease rents from direct financing lease transactions also provided a significant amount of cash flows. There were no sources if cash from financing activities in 2000 or in 1999. Repayments of non-recourse debt have decreased as a result of scheduled debt payments. Distributions to the Limited Partners did not change significantly. Results of operations - 2000 vs. 1999: In 2000, operations resulted in net income of $1,849,057 for the nine month period and a net loss of $162,959 for the three month period. In 1999, operations resulted in net income of $3,128,444 for the nine month period and $501,742 for the three month period. Operating leases are the Partnership's primary source of revenues. Such revenues decreased by $3,170,901 (30%) compared to 1999. 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 1999 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 1999. Debt balances have been reduced by scheduled debt payments and this has resulted in the decrease of $511,620 in interest expense compared to 1999. 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings. No material legal proceedings are currently pending against the Partnership or against any of its assets. Schwegmann's Giant Supermarkets In October 1997, Schwegmann's Giant Supermarkets, one of the Partnership's lessees, defaulted on two of five locations of retail grocery store fixtures and equipment, the lease payments, and certain other obligations under the lease, with a receivable balance currently totaling approximately $1.7 million. The remaining portion of the lease payments with respect to three of five stores was assumed by SGSM Acquisition Company ("SGSM"). Payments with respect to these leases remained current until February 1999; however, on March 26, 1999, SGSM filed for protection under Chapter 11 of the U.S. Bankruptcy Code. On February 22, 2000 and then on September 20, 2000, two of the obligors under the original lease, Schwegmann Westside Expressway Inc. and Schwegmann Giant Supermarkets Partnership filed for protection under Chapter 11 of the U. S. Bankruptcy Code, respectively. The Partnership is currently pursuing damages in the amount of $2.8 million, representing amounts due under the lease. The lessee has claimed that it has sufficient assets to satisfy the claims of all secured creditors of the lessee; however, the lessee's assets are primarily relatively illiquid real property investments. As of this date, the General Partner believes that it is doubtful as to the likelihood of recovering all of the amounts claimed, however, it has a reasonable basis for assuming substantial recovery of its current balance. Pegasus Gold Corporation On January 16, 1998, Pegasus Gold Corporation filed for protection under Chapter 11. The initial meeting of creditors established by the Bankruptcy Court was held on March 9, 1998. The lessee's lease with the Partnership had previously been leveraged on a non-recourse basis with The CIT Group/Equipment Financing, Inc. ("CIT"), and all lease receivables (currently estimated at $2,336,266 as of September 30, 2000) were assigned to the lender. Consequently, the Partnership's exposure is no greater than the fair market residual value of the equipment under lease, currently estimated at $1,101,803. The reorganized lessee/debtor has assumed the Partnership's lease in the Bankruptcy Court and, made all past due payments current. The Partnership has entered into an Escrow Agreement with CIT, wherein CIT has agreed not to foreclose on the Partnership's interest so long as the lessee continues to perform under the lease. At this time, the lessee is current in its lease obligations. The ultimate recovery under this lease is dependent on the price of gold remaining at a level sufficient to make the lessee's operations profitable, and, consequently, any assessment of the impact of an adverse outcome of this matter remains uncertain. Quaker Coal Company On December 31, 1997, Quaker Coal Company requested a moratorium on lease payments from January through March 1998. No lease payments were made through June of 1998. As a result, the General Partner declared the lease in default. Subsequently, the lessee made the outstanding payments, however, the General Partner refused to waive the default and insisted on additional damages in the range of $993,000 to $1,370,000. The General Partner sued the lessee for damages and was awaiting judgment from the court when on June 16, 2000, the lessee filed for protection under the U. S. Bankruptcy Act. The Partnership has filed a stipulation for relief from stay to allow the court to issue its ruling, and has filed a request to participate on the Official Committee of Unsecured Creditors. The Partnership has succeeded upon securing the return of its equipment which it is currently liquidating. The amounts of these damages have not been included in the financial statements included in Item 1 of this report, however the liklihood of recovery of amounts above the liquidation of the equipment is speculative. 12 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, 2000 and December 31, 1999. Income statements for the nine and three month periods ended September 30, 2000 and 1999. Statement of changes in partners' capital for the nine months ended September 30, 2000. Statements of cash flows for the nine and three month periods ended September 30, 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 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 9, 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 14