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, 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 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 Part I. FINANCIAL INFORMATION Item 1: Financial Statements. ATEL CASH DISTRIBUTION FUND V, L.P. BALANCE SHEETS SEPTEMBER 30, 1997 AND DECEMBER 31, 1996 (Unaudited) ASSETS 1997 1996 ---- ---- Cash $500,020 $1,917,349 Accounts receivable 2,238,644 2,889,713 Other assets - 10,000 Investments in leases 111,251,756 125,729,656 ----------------- ----------------- $113,990,420 $130,546,718 ================= ================= LIABILITIES AND PARTNERS' CAPITAL Non-recourse debt $40,800,146 $41,496,203 Line of credit 2,000,000 9,921,190 Accounts payable Equipment purchases 311,100 464,604 General Partner 317,036 295,705 Other 254,530 284,929 Accrued interest 220,826 232,808 Unearned lease income 843,502 1,305,596 ----------------- ----------------- Total liabilities 44,747,140 54,001,035 Partners' capital: General Partner 81,141 51,087 Limited Partners 69,162,139 76,494,596 ----------------- ----------------- Total partners' capital 69,243,280 76,545,683 ----------------- ----------------- Total liabilities and partners' capital $113,990,420 $130,546,718 ================= ================= See accompanying notes. ATEL CASH DISTRIBUTION FUND V, L.P. INCOME STATEMENTS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 Nine Months Ended Three Months Ended September 30, September 30, ------------- ------------- 1997 1996 1997 1996 ---- ---- ---- ---- Revenues: Leasing activities: Operating leases $15,284,337 $15,657,716 $5,166,745 $5,295,942 Direct financing leases 2,129,846 2,307,810 684,302 750,371 Leveraged leases 121,120 133,133 40,373 45,256 Gain on sales of assets 261,179 944,993 74,077 807,692 Interest income 27,657 33,621 6,116 11,666 Other 11,138 40,745 7,235 24,715 ---------------- ----------------- ----------------- ----------------- 17,835,277 19,118,018 5,978,848 6,935,642 Expenses: Depreciation and amortization 9,978,846 11,749,993 3,135,265 3,806,160 Management fees 1,157,564 1,278,434 335,806 415,742 Interest 2,747,570 2,912,991 862,310 988,625 Administrative cost reimbursements 304,646 324,503 133,031 123,390 Provision for losses 118,564 192,824 - 71,000 Other 522,721 393,861 175,474 184,156 ---------------- ----------------- ----------------- ----------------- 14,829,911 16,852,606 4,641,886 5,589,073 ---------------- ----------------- ----------------- ----------------- Income before extraordinary item 3,005,366 2,265,412 1,336,962 1,346,569 Extraordinary gain on early extinguishment of debt - 160,955 - 160,955 ---------------- ----------------- ----------------- ----------------- Net income $3,005,366 $2,426,367 $1,336,962 $1,507,524 ================ ================= ================= ================= Net income: General Partner $30,054 $24,264 $13,370 $15,075 Limited Partners 2,975,312 2,402,103 1,323,592 1,492,449 ---------------- ----------------- ----------------- ----------------- $3,005,366 $2,426,367 $1,336,962 $1,507,524 ================ ================= ================= ================= Income before extraordinary item per limited partnership unit $0.24 $0.18 $0.11 $0.11 Extraordinary gain on early extinguishment of debt per limited partnership unit - 0.01 - 0.01 ---------------- ----------------- ----------------- ----------------- Net income per Limited Partnership unit $0.24 $0.19 $0.11 $0.12 ================ ================= ================= ================= Weighted average number of units outstanding 12,497,000 12,497,000 12,497,000 12,497,517 See accompanying notes. ATEL CASH DISTRIBUTION FUND V, L.P. STATEMENT OF CHANGES IN PARTNERS' CAPITAL NINE MONTH PERIOD ENDED SEPTEMBER 30, 1997 (Unaudited) Limited Partners General Units Amount Partner Total Balance December 31, 1996 12,497,000 $76,494,596 $51,087 $76,545,683 Distributions to limited partners (10,307,769) - (10,307,769) Net income 2,975,312 30,054 3,005,366 ---------------- ----------------- ----------------- ----------------- Balance September 30, 1997 12,497,000 $69,162,139 $81,141 $69,243,280 ================ ================= ================= ================= See accompanying notes. ATEL CASH DISTRIBUTION FUND V, L.P. STATEMENT OF CASH FLOWS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 (Unaudited) Nine Months Ended Three Months Ended September 30, September 30, ------------- ------------- 1997 1996 1997 1996 ---- ---- ---- ---- Operating activities: Net income $3,005,366 $2,426,367 $1,336,962 $1,507,524 Adjustments to reconcile net income to net cash provided by operations Depreciation and amortization 9,978,846 11,749,993 3,135,265 3,806,160 Leveraged lease income - - Gain on sale of assets (261,179) (944,993) (74,077) (807,692) Provision for losses 118,564 192,824 - 71,000 Extraordinary gain on early extinguishment of non-recourse debt - (160,955) - (160,955) Changes in operating assets and liabilities: Accounts receivable 651,069 112,243 (389,982) 1,067,855 Other assets 10,000 - - - Accounts payable, General Partner 21,331 (610,690) 91,042 101,886 Accounts payable, other (30,399) 279,605 (36,415) 466,557 Unearned lease income (462,094) (152,998) (82,396) (17,380) Accrued interest (11,982) (132,991) (5,546) (28,136) Deposits due to lessees - (627,508) - (124,235) ---------------- ----------------- ----------------- ----------------- Net cash provided by operating activities 13,019,522 12,130,897 3,974,853 5,882,584 ---------------- ----------------- ----------------- ----------------- Investing activities: Purchase of equipment on operating leases (153,504) (16,685,908) - 397,754 Purchase of equipment on direct financing leases (33,022) (3,608,007) - (2,267,692) Reductions in investment in direct financing leases 2,914,966 2,809,303 802,218 271,884 Reductions in investment in leveraged leases 236,190 265,995 115,622 124,678 Payments of initial direct lease costs to General Partner - (147,072) - (9,051) Proceeds from sales of assets 1,523,535 5,849,124 427,991 5,601,636 ---------------- ----------------- ----------------- ----------------- Net cash (used in) provided by investing activities 4,488,165 (11,516,565) 1,345,831 4,119,209 ---------------- ----------------- ----------------- ----------------- ATEL CASH DISTRIBUTION FUND V, L.P. STATEMENT OF CASH FLOWS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 (Unaudited) Nine Months Ended Three Months Ended September 30, September 30, ------------- ------------- 1997 1996 1997 1996 ---- ---- ---- ---- Financing activities: Proceeds of non-recourse debt 5,092,723 30,773,576 - 6,459,485 Borrowings under line of credit - 19,596,000 - 1,500,000 Repayments of non-recourse debt (5,788,780) (6,470,864) (2,228,261) (3,230,704) Repayment of line of credit (7,921,190) (35,966,233) (1,200,000) (11,265,026) Limited partnership units repurchased - (5,512) - (4,293) Distributions to limited partners (10,307,769) (10,236,671) (3,436,773) (3,436,692) Net cash (used in) provided by financing activities (18,925,016) (2,309,704) (6,865,034) (9,977,230) ---------------- ----------------- ----------------- ----------------- Net (decrease) increase in cash and cash equivalents (1,417,329) (1,695,372) (1,544,350) 24,563 Cash and cash equivalents at beginning of period 1,917,349 2,401,318 2,044,370 681,383 ---------------- ----------------- ----------------- ----------------- Cash and cash equivalents at end of period $500,020 $705,946 $500,020 $705,946 ================ ================= ================= ================= Supplemental disclosure of cash flow information: Cash paid for interest during period $2,759,552 $3,045,982 $867,856 $1,016,761 ================ ================= ================= ================= Supplemental disclosure of non-cash transactions: 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 for sale or lease $76,858 ================ Gain on extinguishment of non-recourse debt $160,955 $160,955 ================= ================= See accompanying notes. ATEL CASH DISTRIBUTION FUND V, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (Unaudited) 1. Interim financial statements: The unaudited interim financial statements reflect all adjustments which are, in the opinion of the general partners, necessary to a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. These unaudited interim financial statements should be read in conjunction with the most recent report on Form 10K. 2. Organization and partnership matters: ATEL Cash Distribution Fund V, L.P. (the Partnership), was formed under the laws of the State of California on September 23, 1992, for the purpose of acquiring equipment to engage in equipment leasing and sales activities. Contributions in the aggregate of $600 were received as of October 6, 1992, $100 of which represented the General Partner's continuing interest, and $500 of which represented the Initial Limited Partners' capital investment. Upon the sale of the minimum amount of Units of Limited Partnership interest (Units) of $1,200,000 and the receipt of the proceeds thereof on March 19, 1993, the Partnership commenced operations. The Fund or the General Partner on behalf of the Fund, will incur costs in connection with the organization, registration and issuance of the Units. The amount of such costs to be born by the Fund is limited by certain provisions in the Agreement of Limited Partnership. The Fund does not make a provision for income taxes since all income and losses will be allocated to the Partners for inclusion in their individual tax returns. 3. Investment in leases: The Partnership's investment in leases consists of the following: Depreciation Expense or Reclass- December 31, Amortization ifications & September 30, 1996 Additions of Leases Dispositions 1997 ---- --------- --------- - ------------- ---- Net investment in operating leases $87,312,105 ($9,287,536) ($76,569) $77,948,000 Net investment in direct financing leases 30,648,362 $33,022 (2,914,966) - 27,766,418 Net investment in leveraged leases 4,312,287 - (236,190) (1,107,375) 2,968,722 Residual value interests 835,760 - - - 835,760 Equipment held for sale or lease 154,758 - (3,209) (78,412) 73,137 Initial direct costs, net of accumulated amortization of $2,747,408 in 1997 and $2,029,792 in 1996. 2,964,682 - (688,101) - 2,276,581 Reserve for losses (498,298) (118,564) - - (616,862) ----------------- ---------------- ----------------- ----------------- ----------------- $125,729,656 ($85,542) ($13,130,002) ($1,262,356) $111,251,756 ================= ================ ================= ================= ================= ATEL CASH DISTRIBUTION FUND V, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (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, 1996, acquisitions and dispositions during the quarters ended March 31, June 30 and September 30, 1997 and as of September 30, 1997. December 31, Acquisitions, Dispositions & Reclassifications September 30, 1996 1st Quarter 2nd Quarter 3rd Quarter 1997 ---- ----------- ----------- ----------- ---- Transportation $41,681,813 $695,137 ($796,499) $41,580,451 Construction 24,075,113 - - ($61,544) 24,013,569 Materials handling 18,057,102 (157,462) - (13,223) 17,886,417 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) (74,767) 115,756,091 Less accumulated depreciation (29,064,725) (3,106,208) (2,714,305) (2,922,853) (37,808,091) ----------------- ---------------- ----------------- ----------------- ----------------- $87,312,105 ($2,572,269) ($3,794,216) ($2,997,620) $77,948,000 ================= ================ ================= ================= ================= All of the property on operating leases was acquired during 1993, 1994, 1995, 1996 and 1997. At September 30, 1997, the aggregate amounts of future minimum lease payments are as follows: Direct Operating Financing Total --------- --------- ----- Three months ending December 31, 1997 $3,799,715 $2,965,678 $6,765,393 Year ending December 31, 1998 9,348,753 5,524,309 14,873,062 1999 8,863,376 4,978,411 13,841,787 2000 5,786,660 3,890,907 9,677,567 2001 3,940,291 3,017,642 6,957,933 Thereafter 9,061,351 9,283,834 18,345,185 ---------------- ----------------- ----------------- $40,800,146 $29,660,781 $70,460,927 ================ ================= ================= ATEL CASH DISTRIBUTION FUND V, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (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, 1997. Total minimum lease payments receivable $29,660,781 Estimated residual values of leased equipment (unguaranteed) 8,939,339 ----------------- Investment in direct financing leases 38,600,120 Less unearned income (10,833,702) ----------------- Net investment in direct financing leases $27,766,418 ================= 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 8% to 13.3%. Future minimum principal payments of non-recourse debt as of September 30, 1997 are as follows: Principal Interest Total --------- -------- ----- Three months ending December 31, 1997 $2,271,810 $798,565 $3,070,375 Year ending December 31, 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 ---------------- ----------------- ----------------- $40,800,146 $12,820,226 $53,620,372 ================ ================= ================= 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: 1997 1996 ---- ---- Equipment and incentive management fees $1,157,564 $1,278,434 Reimbursement of other syndication costs - 89,138 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) - 832,331 ----------------- ----------------- $1,157,564 $2,199,903 ================= ================= ATEL CASH DISTRIBUTION FUND V, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (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 $90,000,000 revolving credit agreement with a group of financial institutions which expires on October 28, 1998. The agreement includes an acquisition facility to be used by the Partnership and Affiliates 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. At September 30, 1997, the Partnership had $2,000,000 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 September 30, 1997. 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, 1997, the Partnership had borrowed $56,593,183. The remaining unpaid balance as of that date was $40,800,146. 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 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. The Partnership participates with the General Partner and certain of its affiliates in a $90,000,000 revolving line of credit with a financial institution. The line of credit expires on October 28, 1998. No commitments of capital have been or are expected to be made other than for the acquisition of additional equipment. As of September 30, 1997, 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 1997, the Partnership's most significant source of cash was lease rents. Cash flows - 1997 vs. 1996: In both 1997 and 1996, the Partnership's primary source of operating cash flows was operating lease rents. Lease rents have decreased by $563,356 (3%) as a result of asset sales over the last year. In 1997, the largest source of cash from investing activities was rents from direct financing leases. In 1996 the largest source of cash from investing activities was the proceeds from sales of lease assets. In 1996, lease rents from direct financing and leveraged lease transactions also provided a significant amount of cash flows. In 1997 and 1996, the only financing sources of cash were borrowings, either as the proceeds of non-recourse debt (1997 and 1996) or as borrowings on the line of credit (1996). Results of operations - 1997 vs. 1996 Operating leases are the Partnership's primary source of revenues. Such revenues decreased by $373,379 (2%) compared to 1996. 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 1996 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 1996. Debt balances have been reduced by scheduled debt payments and this has resulted in the decrease of $165,421 in interest expense compared to 1996. PART II. OTHER INFORMATION Item 1. Legal Proceedings. Inapplicable. Item 2. Changes In Securities. Inapplicable. Item 3. Defaults Upon Senior Securities. Inapplicable. Item 4. Submission Of Matters To A Vote Of Security Holders. Inapplicable. Item 5. Other Information. Inapplicable. Item 6. Exhibits And Reports On Form 8-K. (a) Documents filed as a part of this report 1. Financial Statements Included in Part I of this report: Balance Sheets, September 30, 1997 and December 31, 1996. Income statements for the nine and three month periods ended September 30, 1997 and 1996. Statement of changes in partners' capital for the nine months ended September 30, 1997. Statements of cash flows for the nine and three month periods ended September 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: November 12, 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