Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
|X| Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 1996
|_| Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
For the transition period from _____ to _____
Commission File Number 0-23842
ATEL Cash Distribution Fund V, L.P.
(Exact name of registrant as specified in its charter)
California 94-3165807
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
235 Pine Street, 6th Floor, San Francisco, California 94104
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 989-8800
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X|
No |_|
DOCUMENTS INCORPORATED BY REFERENCE
None
1
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
2
ATEL CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
ASSETS
1996 1995
---- ----
Cash and cash equivalents $681,383 $2,401,318
Accounts receivable 3,333,108 2,377,496
Other assets 10,000 10,000
Investments in leases 139,397,206 131,686,535
----------------- -----------------
$143,421,697 $136,475,349
================= =================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $40,203,229 $19,129,298
Line of credit 19,686,881 26,292,088
Accounts payable
Equipment purchases 17,350 14,097
General partner 313,857 1,026,433
Other 627,901 814,853
Accrued interest expense 276,776 381,631
Deposits due to lessees 124,235 627,508
Unearned lease income 681,688 817,306
----------------- -----------------
Total liabilities 61,931,917 49,103,214
Partners' capital:
General partner 31,756 22,568
Limited partners 81,458,024 87,349,567
----------------- -----------------
Total partners' capital 81,489,780 87,372,135
----------------- -----------------
Total liabilities and partners' capital $143,421,697 $136,475,349
================= =================
See accompanying notes.
3
ATEL CASH DISTRIBUTION FUND V, L.P.
INCOME STATEMENTS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1996 AND 1995
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Leasing activities:
Operating lease revenues $10,361,774 $9,252,103 $5,313,241 $4,556,223
Direct financing leases 1,557,439 534,240 744,458 264,402
Leveraged leases 87,877 82,236 45,257 (6,441)
Gain (loss) on sales of assets 137,301 887,061 (744) 553,063
Interest income 21,955 65,501 7,409 43,162
Other 16,030 3,403 2,767 668
----------------- ---------------- ----------------- -----------------
12,182,376 10,824,544 6,112,388 5,411,077
Expenses:
Depreciation and amortization 7,943,833 7,517,609 4,083,337 3,856,173
Interest 1,924,366 287,553 1,079,810 141,520
Equipment and incentive management fees 862,692 815,183 449,818 338,972
Administrative cost reimbursements 201,113 246,389 126,571 140,776
Other 125,702 86,953 94,103 54,474
Provision for losses 121,824 108,245 61,124 54,110
Professional fees 84,003 59,038 45,600 18,581
----------------- ---------------- ----------------- -----------------
11,263,533 9,120,970 5,940,363 4,604,606
----------------- ---------------- ----------------- -----------------
Net income $918,843 $1,703,574 $172,025 $806,471
================= ================ ================= =================
Net income:
General partner $9,188 $17,036 $1,720 $8,065
Limited partners 909,655 1,686,538 170,305 798,406
================= ================ ================= =================
$918,843 $1,703,574 $172,025 $806,471
================= ================ ================= =================
Weighted average number of units
outstanding 12,498,425 12,499,300 12,498,300 12,498,550
Net income per limited partnership unit $0.07 $0.13 $0.01 $0.06
See accompanying notes.
4
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SIX MONTH PERIOD ENDED JUNE 30, 1996
(Unaudited)
Limited Partners General
Units Amount Partners Total
Balance December 31, 1995 12,498,550 $87,349,567 $22,568 $87,372,135
Limited partner units repurchased (250) (1,219) - (1,219)
Distributions to limited partners (6,799,979) - (6,799,979)
Net income 909,655 9,188 918,843
----------------- ---------------- ----------------- -----------------
Balance June 30, 1996 12,498,300 $81,458,024 $31,756 $81,489,780
================= ================ ================= =================
See accompanying notes.
5
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1996 AND 1995
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
Operating activities:
Net income $918,843 $1,703,574 $172,025 $806,471
Adjustments to reconcile net income
to net cash provided by operations
Depreciation and amortization 7,943,833 7,517,609 4,083,337 3,856,173
Gain on sales of assets (137,301) (887,061) 744 (553,063)
Provision for losses 121,824 108,245 61,124 54,110
Changes in operating assets and liabilities:
Accounts receivable (955,612) (360,613) (1,276,854) 123,310
Accounts payable, general partner (712,576) (999,223) (29,059) (240,824)
Accounts payable, other (186,952) 47,023 376,632 25,496
Accrued interest expense (104,855) (5,497) 398,418 (21,323)
Deposits due to lessees (503,273) (217) (271,655) -
Unearned lease income (135,618) (107,380) (17,816) (102,334)
----------------- ---------------- ----------------- -----------------
Net cash provided by operating activities 6,248,313 7,016,460 3,496,896 3,948,016
----------------- ---------------- ----------------- -----------------
Investing activities:
Purchase of equipment on operating leases (17,083,662) (4,555,992) (904,027) (206,172)
Purchase of equipment on direct financing
leases (1,340,315) (7,004,620) (1,340,315) (6,831,035)
Purchase of equipment on leveraged leases - - - -
Proceeds from sales of assets 247,488 5,928,838 21,724 4,722,015
Reduction in net investment in direct
financing leases 2,537,419 1,041,815 2,266,945 913,905
Reduction in net investment in leveraged
leases 141,317 316,406 14,003 294,667
Payments of initial direct costs to General
Partner (138,021) (389,228) (15,467) (229,476)
----------------- ---------------- ----------------- -----------------
Net cash (used in) provided by investing
activities (15,635,774) (4,662,781) 42,863 (1,336,096)
----------------- ---------------- ----------------- -----------------
6
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
(Continued)
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1996 AND 1995
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
Financing activities:
Borrowings on line of credit 18,096,000 - - -
Repayment of line of credit (24,701,207) - (7,516,760) -
Proceeds of non-recourse debt 24,314,091 4,565,767 6,345,924 4,565,767
Repayment of non-recourse debt (3,240,160) (419,356) 966,876 (192,864)
Limited partnership units repurchased (1,219) - (1,219) -
Capital contributions rescinded - (15,000) - (15,000)
Payment of syndication costs to General
Partner - (86,844) - (4,265)
Distributions to limited partners (6,799,979) (6,538,058) (3,435,628) (3,279,983)
----------------- ---------------- ----------------- -----------------
Net cash from (used in) financing activities 7,667,526 (2,493,491) (3,640,807) 1,073,655
----------------- ---------------- ----------------- -----------------
Net (decrease) increase in cash and
cash equivalents (1,719,935) (139,812) (101,048) 3,685,575
Cash at beginning of period 2,401,318 5,956,752 782,431 2,131,365
================= ================ ================= =================
Cash at end of period $681,383 $5,816,940 $681,383 $5,816,940
================= ================ ================= =================
Supplemental disclosure of cash flow
information:
Cash paid during the period for interest $2,029,221 $293,050 $953,047 $162,843
================= ================ ================= =================
Operating lease assets reclassified to direct
financing lease assets $2,025,000
=================
Operating lease assets reclassified to assets
held or sale or lease $285,164 $279,248
================= =================
See accompanying notes.
7
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(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 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.
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. Of those Units, 12,498,300 were issued and
outstanding as of June 30, 1996.
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.
8
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
3. Investment in leases:
The Partnership's investment in leases consists of the following:
Depreciation
Expense or Reclass-
December 31, Amortization ifications & June 30,
1995 Additions of Leases Dispositions 1996
---- --------- --------- --------------- ----
Net investment in operating
leases $90,328,014 $17,086,915 ($7,382,539) ($2,420,351) $97,612,039
Net investment in direct
financing leases 32,688,774 1,340,315 (2,537,419) 2,025,000 33,516,670
Net investment in leveraged
leases 4,854,410 - (141,317) - 4,713,093
Residual interests 835,760 - - - 835,760
Reserve for losses (1,021,171) (121,824) - - (1,142,995)
Assets held for sale or lease - - - 285,164 285,164
Initial direct costs, net of
accumulated amortization
of $1,934,025 in 1996 and
$975,467 in 1995 4,000,748 138,021 (561,294) - 3,577,475
------------------ ----------------- ---------------- ----------------- -----------------
$131,686,535 $18,443,427 ($10,622,569) ($110,187) $139,397,206
================== ================= ================ ================= =================
The following schedule provides an analysis of the Partnership's investment in
property on operating leases by major classifications as of December 31, 1995,
acquisitions and dispositions during the quarters ended March 31, 1996 and June
30, 1996 and as of June 30, 1996.
Acquisitions &
December 31, Dispositions June 30,
1995 1st Quarter 2nd Quarter 1996
---- ----------- ----------- ----
Transportation $34,422,258 $12,746,114 ($310,270) $46,858,102
Construction 24,075,113 - - 24,075,113
Materials handling 17,778,985 243,659 9,296 18,031,940
Mining 15,164,692 - - 15,164,692
Furniture and fixtures 10,475,743 - - 10,475,743
Manufacturing 2,834,155 294,000 347,430 3,475,585
Office automation 2,076,126 531,879 4,101 2,612,106
Printing 2,325,000 - - 2,325,000
Food processing 1,826,162 - - 1,826,162
Other 353,612 - - 353,612
----------------- ---------------- ----------------- -----------------
111,331,846 13,815,652 50,557 125,198,055
Less accumulated depreciation (21,003,832) (2,779,759) (3,802,425) (27,586,016)
================= ================ ================= =================
$90,328,014 $11,035,893 ($3,751,868) $97,612,039
================= ================ ================= =================
9
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
3. Investments in leases (continued):
All of the property on operating leases was acquired during 1993 and 1994.
At June 30, 1996, the aggregate amounts of future minimum lease payments are as
follows:
Year ending Direct
December 31, Financing Operating Total
1996 $3,586,864 $10,408,812 $13,995,676
1997 7,092,308 17,326,385 24,418,693
1998 5,545,029 13,349,412 18,894,441
1999 4,967,626 8,527,182 13,494,808
2000 3,662,427 5,450,467 9,112,894
Thereafter 12,047,546 12,723,291 24,770,837
----------------- ---------------- -----------------
$36,901,800 $67,785,549 $104,687,349
================= ================ =================
4. Non-recourse debt:
Notes payable to financial institutions are due in varying monthly and
semi-annual installments of principal and interest. The notes are secured by
assignments of lease payments and pledges of the assets which were purchased
with the proceeds of the particular notes. Interest rates on the notes vary from
6.5% to 10.74%.
Future minimum principal payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
1996 $3,421,801 $1,462,752 $4,884,553
1997 6,513,678 2,627,441 9,141,119
1998 6,936,675 2,109,410 9,046,085
1999 4,956,535 1,630,657 6,587,192
2000 3,921,434 1,254,564 5,175,998
Thereafter 14,453,106 5,522,979 19,976,085
----------------- ---------------- -----------------
$40,203,229 $14,607,803 $54,811,032
================= ================ =================
10
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
5. Related party transactions:
The terms of the Agreement of Limited Partnership provide that the General
Partner and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The General Partner and/or Affiliates earned the following fees and commissions,
pursuant to the Agreement of Limited Partnership as follows:
1996 1995
---- ----
Reimbursement of administrative costs $201,113 $246,389
Reimbursement of other syndication costs - 86,844
Acquisition fees equal to 3.5% of the
equipment purchase price, for evaluating
and selecting equipment to be acquired
(not to exceed approximately 4.75% of
Gross Proceeds, included in investments in
leases in the balance sheet) 138,021 389,228
Equipment and incentive management fees 862,692 815,183
----------------- -----------------
$1,201,826 $1,537,644
================= =================
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.
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.
11
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
6. Partner's capital (continued):
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 ATEL and certain of its Affiliates in a
$70,000,000 revolving line of credit with a financial institution that includes
certain financial covenants. The line of credit expires on July 18, 1997.
The current line of credit, when used, is collateralized by (i) specific lease
assets assigned or (ii) all lease receivables and other lease related proceeds
owned by the Partnership, all equipment subject to leases and related insurance
policies and maintenance contracts owned by the Partnership and all deposit
accounts with the lender and all cash on deposit.
8. Subsequent event:
On July 19, 1996, the Partnership's interest in the bankruptcy of Barney's, Inc.
(Barney's), a former lessee of the Partnership was settled. The terms of the
settlement provided for the sale of the assets which had been leased to
Barney's, for the repayment of the non-recourse debt used by the Partnership to
finance the assets and for net cash proceeds to the Partnership. The settlement
resulted in a gain on the sale of the assets of $689,235 and an extraordinary
gain on the extinguishment of the debt of $160,955.
12
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
Funds which have been received, but which have not yet been invested in leased
equipment, are invested in interest-bearing accounts or high-quality/short-term
commercial paper.
The Partnership currently has available adequate reserves to meet contingencies,
but in the event those reserves were found to be inadequate, the Partnership
would likely be in a position to borrow against its current portfolio to meet
such requirements. The General Partner envisions no such requirements for
operating purposes.
As of June 30, 1996, the Partnership had borrowed $45,043,566. The remaining
unpaid balance at that date was $40,203,229. Borrowings are to be non-recourse
to the Partnership, that is, the only recourse of the lender is to the equipment
or corresponding lease acquired or secured with the loan proceeds. The General
Partner expects that aggregate borrowings in the future will be approximately
40% of aggregate equipment cost. In any event, the Agreement of Limited
Partnership limits such borrowings to 40% of the total cost of equipment, in
aggregate.
No commitments of capital have been or are expected to be made other than for
the acquisition of additional equipment. As of June 30, 1996, such commitments
totaled approximately $6,261,000.
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.
During the first six months of 1995 and 1996, the Partnership's primary source
of cash was rents from operating leases.
Cash flows
For both the three and six month periods in 1995 and 1996, the Partnership's
primary source of cash flows from operations was rents from operating leases.
In 1996, the largest source of cash fro investing activities was rents fro
direct financing leases which were accounted for as reductions in the net
investment in such leases. Direct financing lease rents were also significant in
1995, but in that year, proceeds from the sales of lease assets was the largest
source of cash flows from investing activities.
For the six month period in 1996, proceeds of non-recourse debt and borrowings
under the line of credit were the Partnership's only sources of cash flows from
financing activities. For the three month periods in both 1995 and 1996 and for
the six month period in 1995, proceeds from non-recourse debt was the
Partnership's only financing source of cash flows.
13
Results of operations
For both the three and six month periods, revenues from operating, direct
financing and leveraged leases has increased compared to 1995. These increases
are the result of equipment acquisitions over the last year, in excess of asset
dispositions.
Gains on the sales of assets has decreased significantly compared to 1995. In
1995, a single large sale accounted for most of the recognized gain and for most
of the sales proceeds received. There were no similar sales in 1996.
Depreciation and amortization have increased as a consequence of equipment
acquisitions over the last year.
Since June 30, 1995, the Partnership's non-recourse debt balance has increased
from $10,282,644 to $40,203,229 and amounts outstanding on the line of credit
have increased to $19,686,881 at June 30, 1996 from nothing a year earlier.
These increased borrowings have led to the increase of interest expense for the
six month period from $287,553 in 1995 to $1,924,366 in 1996. Interest expense
for the three month periods has increased from $141,520 in 1995 to $1,079,810 in
1996.
14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Inapplicable.
Item 2. Changes In Securities.
Inapplicable.
Item 3. Defaults Upon Senior Securities.
Inapplicable.
Item 4. Submission Of Matters To A Vote Of Security Holders.
Inapplicable.
Item 5. Other Information.
Inapplicable.
Item 6. Exhibits And Reports On Form 8-K.
(a) Documents filed as a part of this report
1. Financial Statements
Included in Part I of this report:
Balance Sheets, June 30, 1996 and December 31, 1995.
Statements of operations for the six and three month
periods ended June 30, 1996 and 1995.
Statement of changes in partners' capital for the six
months ended June 30, 1996.
Statements of cash flows for the six and three month
periods ended June 30, 1996 and 1995.
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
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date:
August 13, 1996
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/ F. RANDALL BIGONY
-------------------------------------
F. Randall Bigony
Principal financial officer of registrant
By: /s/ DONALD E. CARPENTER
-------------------------------------
Donald E. Carpenter,
Principal accounting officer of
registrant
16