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, 1997
|_| 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
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
ATEL CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(Unaudited)
ASSETS
1997 1996
---- ----
Cash and cash equivalents $2,044,370 $1,917,349
Accounts receivable 1,848,662 2,889,713
Other assets - 10,000
Investments in leases 115,658,775 125,729,656
----------------- -----------------
$119,551,807 $130,546,718
================= =================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $43,028,407 $41,496,203
Line of credit 3,200,000 9,921,190
Accounts payable
Equipment purchases 311,100 464,604
General partner 225,994 295,705
Other 290,945 284,929
Accrued interest expense 226,372 232,808
Unearned lease income 925,898 1,305,596
----------------- -----------------
Total liabilities 48,208,716 54,001,035
Partners' capital:
General partner 67,771 51,087
Limited partners 71,275,320 76,494,596
----------------- -----------------
Total partners' capital 71,343,091 76,545,683
----------------- -----------------
Total liabilities and partners' capital $119,551,807 $130,546,718
================= =================
See accompanying notes.
ATEL CASH DISTRIBUTION FUND V, L.P.
INCOME STATEMENTS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1997 AND 1996
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
Revenues:
Leasing activities:
Operating lease revenues $10,117,592 $10,361,774 $5,018,125 $5,313,241
Direct financing leases 1,445,544 1,557,439 713,103 744,458
Leveraged leases 80,747 87,877 40,374 45,257
Gain (loss) on sales of assets 187,102 137,301 113,685 (744)
Interest income 21,541 21,955 9,665 7,409
Other 3,903 16,030 1,676 2,767
----------------- ---------------- ----------------- -----------------
11,856,429 12,182,376 5,896,628 6,112,388
Expenses:
Depreciation and amortization 6,843,581 7,943,833 3,205,850 4,083,337
Interest 1,885,260 1,924,366 964,380 1,079,810
Equipment and incentive management fees 821,758 862,692 422,385 449,818
Administrative cost reimbursements 171,615 201,113 81,179 126,571
Other 302,003 125,702 181,166 94,103
Provision for losses 118,564 121,824 58,966 61,124
Professional fees 45,244 84,003 32,902 45,600
----------------- ---------------- ----------------- -----------------
10,188,025 11,263,533 4,946,828 5,940,363
----------------- ---------------- ----------------- -----------------
Net income $1,668,404 $918,843 $949,800 $172,025
================= ================ ================= =================
Net income:
General partner $16,684 $9,188 $9,498 $1,720
Limited partners 1,651,720 909,655 940,302 170,305
----------------- ---------------- ----------------- -----------------
$1,668,404 $918,843 $949,800 $172,025
================= ================ ================= =================
Weighted average number of units
outstanding 12,497,000 12,498,425 12,497,000 12,498,300
Net income per limited partnership unit $0.13 $0.07 $0.08 $0.01
See accompanying notes.
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SIX MONTH PERIOD ENDED JUNE 30, 1997
(Unaudited)
Limited Partners General
Units Amount Partners Total
Balance December 31, 1996 12,497,000 $76,494,596 $51,087 $76,545,683
Distributions to limited partners (6,870,996) - (6,870,996)
Net income 1,651,720 16,684 1,668,404
----------------- ---------------- ----------------- -----------------
Balance June 30, 1997 12,497,000 $71,275,320 $67,771 $71,343,091
================= ================ ================= =================
See accompanying notes.
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1997 AND 1996
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
Operating activities:
Net income $1,668,404 $918,843 $949,800 $172,025
Adjustments to reconcile net income
to net cash provided by operations
Depreciation and amortization 6,843,581 7,943,833 3,205,850 4,083,337
Gain on sales of assets (187,102) (137,301) (113,685) 744
Provision for losses 118,564 121,824 58,966 61,124
Changes in operating assets and liabilities:
Accounts receivable 1,041,051 (955,612) 138,016 (1,276,854)
Other assets 10,000 - 10,000 -
Accounts payable, general partner (69,711) (712,576) 85,814 (29,059)
Accounts payable, other 6,016 (186,952) 1,281 376,632
Accrued interest expense (6,436) (104,855) 21,051 398,418
Deposits due to lessees - (503,273) - (271,655)
Unearned lease income (379,698) (135,618) (262,397) (17,816)
----------------- ---------------- ----------------- -----------------
Net cash provided by operating activities 9,044,669 6,248,313 4,094,696 3,496,896
----------------- ---------------- ----------------- -----------------
Investing activities:
Purchase of equipment on operating leases (153,504) (17,083,662) (20,604) (904,027)
Purchase of equipment on direct financing
leases (33,022) (1,340,315) - (1,340,315)
Proceeds from sales of assets 1,095,544 247,488 686,962 21,724
Reduction in net investment in direct
financing leases 2,112,748 2,537,419 1,444,275 2,266,945
Reduction in net investment in leveraged
leases 120,568 141,317 4,946 14,003
Payments of initial direct costs to General
Partner - (138,021) - (15,467)
----------------- ---------------- ----------------- -----------------
Net cash (used in) provided by investing
activities 3,142,334 (15,635,774) 2,115,579 42,863
----------------- ---------------- ----------------- -----------------
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
(Continued)
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1997 AND 1996
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
Financing activities:
Borrowings on line of credit - 18,096,000 - -
Repayment of line of credit (6,721,190) (24,701,207) (4,000,000) (7,516,760)
Proceeds of non-recourse debt 5,092,723 24,314,091 3,971,358 6,345,924
Repayment of non-recourse debt (3,560,519) (3,240,160) (1,830,364) 966,876
Limited partnership units repurchased - (1,219) - (1,219)
Distributions to limited partners (6,870,996) (6,799,979) (3,435,685) (3,435,628)
----------------- ---------------- ----------------- -----------------
Net cash from (used in) financing activities (12,059,982) 7,667,526 (5,294,691) (3,640,807)
----------------- ---------------- ----------------- -----------------
Net (decrease) increase in cash and
cash equivalents 127,021 (1,719,935) 915,584 (101,048)
Cash at beginning of period 1,917,349 2,401,318 1,128,786 782,431
----------------- ---------------- ----------------- -----------------
Cash at end of period $2,044,370 $681,383 $2,044,370 $681,383
================= ================ ================= =================
Supplemental disclosure of cash flow
information:
Cash paid during the period for interest $1,891,696 $2,029,221 $964,380 $953,047
================= ================ ================= =================
Leveraged lease assets reclassified to
operating lease assets $902,362
=================
Operating lease assets reclassified to direct
financing lease assets $2,025,000
================
Operating lease assets reclassified to assets
held or sale or lease $76,858 $285,164 $21,040 $279,248
================= ================ ================= =================
See accompanying notes.
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(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, 12,497,000 were issued and
outstanding as of June 30, 1997.
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.
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(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,
1996 Additions of Leases Dispositions 1997
---- --------- --------- - ------------- ----
Net investment in operating
leases $87,312,105 ($6,360,354) ($6,131) $80,945,620
Net investment in direct
financing leases 30,648,362 $33,022 (2,112,748) - 28,568,636
Net investment in leveraged
leases 4,312,287 - (120,568) (1,107,375) 3,084,344
Residual interests 835,760 - - - 835,760
Reserve for losses (498,298) (118,564) - - (616,862)
Assets held for sale or lease 154,758 - (2,809) 205,064 357,013
Initial direct costs, net of
accumulated amortization
of $2,539,725 in 1997 and
$2,189,959 in 1996 2,964,682 - (480,418) - 2,484,264
------------------ ----------------- ---------------- ----------------- -----------------
$125,729,656 ($85,542) ($9,076,897) ($908,442) $115,658,775
================== ================= ================ ================= =================
The following schedule provides an analysis of the Partnership's investment in
property on operating leases by major classifications as of December 31, 1996,
acquisitions and dispositions during the quarters ended March 31, 1997 and June
30, 1997 and as of June 30, 1997.
Acquisitions, Reclassifications
December 31, & Dispositions June 30,
1996 1st Quarter 2nd Quarter 1997
---- ----------- ----------- ----
Transportation $41,681,813 $695,137 ($796,499) $41,580,451
Construction 24,075,113 - - 24,075,113
Materials handling 18,057,102 (157,462) - 17,899,640
Mining 15,164,692 - - 15,164,692
Furniture and fixtures 7,109,796 - - 7,109,796
Manufacturing 3,475,585 - - 3,475,585
Office automation 2,378,155 (3,736) - 2,374,419
Printing 2,325,000 - - 2,325,000
Food processing 1,826,162 - - 1,826,162
Other 283,412 - (283,412) -
----------------- ---------------- ----------------- -----------------
116,376,830 533,939 (1,079,911) 115,830,858
Less accumulated depreciation (29,064,725) (3,106,208) (2,714,305) (34,885,238)
----------------- ---------------- ----------------- -----------------
$87,312,105 ($2,572,269) ($3,794,216) $80,945,620
================= ================ ================= =================
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
3. Investments in leases (continued):
All of the property on operating leases was acquired during 1993, 1994, 1995,
1996 and 1997.
At June 30, 1997, the aggregate amounts of future minimum lease payments are as
follows:
Year ending Direct
December 31, Financing Operating Total
1997 $4,615,732 $8,095,526 $12,711,258
1998 5,486,797 13,137,199 18,623,996
1999 4,956,960 8,863,376 13,820,336
2000 3,752,251 5,786,660 9,538,911
2001 3,008,977 3,940,291 6,949,268
Thereafter 9,283,834 9,061,351 18,345,185
----------------- ---------------- -----------------
$31,104,551 $48,884,403 $79,988,954
================= ================ =================
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
1997 $4,500,071 $1,636,343 $6,136,414
1998 9,355,769 2,741,237 12,097,006
1999 7,348,292 2,035,620 9,383,912
2000 5,562,189 1,482,702 7,044,891
2001 4,458,364 1,052,839 5,511,203
Thereafter 11,803,722 4,709,263 16,512,985
----------------- ---------------- -----------------
$43,028,407 $13,658,004 $56,686,411
================= ================ =================
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(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:
1997 1996
---- ----
Equipment and incentive management fees $821,758 $862,692
Reimbursement of administrative costs 171,615 201,113
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
----------------- -----------------
$993,373 $1,201,826
================= =================
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.
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(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 the General Partner and certain of its
Affiliates in a $90,000,000 revolving credit agreement with a group of financial
institutions which expires on October 28, 1997. 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 June 30, 1997, the Partnership had $3,200,000 of 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 June 30,
1997.
8. Commitments:
As of June 30, 1997, the Partnership had outstanding commitments to purchase
lease equipment totaling approximately $1,793,000.
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, 1997, the Partnership had borrowed $56,593,183. The remaining
unpaid balance at that date was $43,028,407. 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, 1997, such commitments
totaled approximately $1,793,000.
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.
Cash flows
For both the three and six month periods in 1996 and 1997, the Partnership's
primary source of cash flows from operations was rents from operating leases.
In 1997 and 1996, the largest source of cash from investing activities (for both
the three and six month periods) was rents from direct financing leases which
were accounted for as reductions in the net investment in such leases. In 1997
proceeds from asset sales were also significant for both the three month period
($686,962) and for the six month period ($1,095,544).
In 1997, the Partnership's only source of cash from financing activities was
proceeds from non-recourse debt. The debt proceeds were used to pay down the
line of credit. 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 period in 1996,
proceeds from non-recourse debt was the Partnership's only financing source of
cash flows.
Results of operations
The Partnership's revenues did not change significantly from 1996 to 1997. The
primary source of revenues is operating leases and is expected to remain so in
future periods. As leases reach their scheduled terminations, the Partnership
expects to either sell the assets or to re-lease them. Revenues from succeeding
leases are usually lower than the amounts received on earlier leases. As a
result, lease rents are expected to decline in future periods until all of the
assets are sold.
Depreciation is the Partnership's largest expense and is related directly to
operating lease assets and revenues. It is expected to decline in future periods
along with operating lease revenues. Other expenses did not change significantly
from 1996 to 1997.
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, 1997 and December 31, 1996.
Statements of operations for the six and three month
periods ended June 30, 1997 and 1996.
Statement of changes in partners' capital for the six
months ended June 30, 1997.
Statements of cash flows for the six and three month
periods ended June 30, 1997 and 1996.
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
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 14, 1997
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