Form 10-Q/A 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, 1998 |_| 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. The financial statements are amended to correctly reflect the termination of a lease contract. The effect of the changes is to reclassify certain lease assets as notes receivable and to reduce certain direct finance lease revenues and losses on sales of lease assets. Investments in leases is decreased by $704,898 and notes receivable is increased by $732,738. Direct finance lease revenues are decreased by $646,065. The reclassifications result in changing the gains/losses on sales of lease assets from a loss of $546,070 to a gain of $127,835, a difference of $673,905. The change to the net income of the Partnership is an increase of $27,840 for the six and three month periods ended June 30, 1998. ATEL CASH DISTRIBUTION FUND V, L.P. BALANCE SHEETS JUNE 30, 1998 AND DECEMBER 31, 1997 (Unaudited) ASSETS 1998 1997 ---- ---- Cash and cash equivalents $701,770 $733,263 Accounts receivable 2,045,790 2,194,261 Notes receivable, net of allowance for doubtful accounts of $100,605 in 1998 and 1997 886,898 382,048 Investments in leases 92,909,716 103,398,004 ----------------- ----------------- $96,544,174 $106,707,576 ================= ================= LIABILITIES AND PARTNERS' CAPITAL Non-recourse debt $35,259,618 $40,138,400 Line of credit 500,000 - Accounts payable Equipment purchases 190,348 178,200 General partner 3,760 317,715 Other 260,354 235,068 Accrued interest expense 188,901 219,569 Unearned lease income 865,674 1,004,385 ----------------- ----------------- Total liabilities 37,268,655 42,093,337 Partners' capital: General partner 89,376 69,221 Limited partners 59,186,143 64,545,018 ----------------- ----------------- Total partners' capital 59,275,519 64,614,239 ----------------- ----------------- Total liabilities and partners' capital $96,544,174 $106,707,576 ================= ================= See accompanying notes. ATEL CASH DISTRIBUTION FUND V, L.P. INCOME STATEMENTS SIX AND THREE MONTH PERIODS ENDED JUNE 30, 1998 AND 1997 (Unaudited) Six Months Three Months Ended June 30, Ended June 30, -------------- -------------- 1998 1997 1998 1997 ---- ---- ---- ---- Revenues: Leasing activities: Operating lease revenues $9,449,991 $10,117,592 $4,673,753 $5,018,125 Direct financing leases 1,104,112 1,445,544 459,662 713,103 Leveraged leases 54,884 80,747 27,442 40,374 Gain on sales of assets 127,835 187,102 50,746 113,685 Interest income 9,438 21,541 3,539 9,665 Other 12,539 3,903 2,720 1,676 ----------------- ---------------- ----------------- ----------------- 10,758,799 11,856,429 5,217,862 5,896,628 Expenses: Depreciation and amortization 6,045,676 6,843,581 2,944,249 3,205,850 Interest 1,461,401 1,885,260 690,702 964,380 Equipment and incentive management fees 640,998 821,758 236,671 422,385 Administrative cost reimbursements 230,082 171,615 110,571 81,179 Other 281,587 302,003 145,094 181,166 Provision for losses 55,409 118,564 - 58,966 Professional fees 28,136 45,244 15,503 32,902 ----------------- ---------------- ----------------- ----------------- 8,743,289 10,188,025 4,142,790 4,946,828 ----------------- ---------------- ----------------- ----------------- Net income $2,015,510 $1,668,404 $1,075,072 $949,800 ================= ================ ================= ================= Net income: General partner $20,155 $16,684 $10,751 $9,498 Limited partners 1,995,355 1,651,720 1,064,321 940,302 ----------------- ---------------- ----------------- ----------------- $2,015,510 $1,668,404 $1,075,072 $949,800 ================= ================ ================= ================= Weighted average number of units outstanding 12,497,000 12,497,000 12,497,000 12,497,000 Net income per limited partnership unit $0.16 $0.13 $0.09 $0.08 See accompanying notes. ATEL CASH DISTRIBUTION FUND V, L.P. STATEMENT OF CHANGES IN PARTNERS' CAPITAL SIX MONTH PERIOD ENDED JUNE 30, 1998 (Unaudited) Limited Partners General Units Amount Partners Total Balance December 31, 1997 12,497,000 $64,545,018 $69,221 $64,614,239 Distributions to limited partners (7,354,230) - (7,354,230) Net income 1,995,355 20,155 2,015,510 ----------------- ---------------- ----------------- ----------------- Balance June 30, 1998 12,497,000 $59,186,143 $89,376 $59,275,519 ================= ================ ================= ================= See accompanying notes. ATEL CASH DISTRIBUTION FUND V, L.P. STATEMENTS OF CASH FLOWS SIX AND THREE MONTH PERIODS ENDED JUNE 30, 1998 AND 1997 (Unaudited) Six Months Three Months Ended June 30, Ended June 30, 1998 1997 1998 1997 Operating activities: Net income $2,015,510 $1,668,404 $1,075,072 $949,800 Adjustments to reconcile net income to net cash provided by operations Depreciation and amortization 6,045,676 6,843,581 2,944,249 3,205,850 Gain on sales of assets (127,835) (187,102) (50,746) (113,685) Provision for losses 55,409 118,564 - 58,966 Changes in operating assets and liabilities: Accounts receivable 148,471 1,041,051 31,195 138,016 Other assets - 10,000 - 10,000 Accounts payable, general partner (313,955) (69,711) (313,747) 85,814 Accounts payable, other 25,286 6,016 (13,415) 1,281 Accrued interest expense (30,668) (6,436) (15,813) 21,051 Deposits due to lessees - - - - Unearned lease income (138,711) (379,698) (93,240) (262,397) ----------------- ---------------- ----------------- ----------------- Net cash provided by operating activities 7,679,183 9,044,669 3,563,555 4,094,696 ----------------- ---------------- ----------------- ----------------- Investing activities: Proceeds from sales of assets 2,603,881 1,095,544 2,059,521 686,962 Reduction in net investment in direct financing leases 1,065,530 2,112,748 293,994 1,444,275 Payments received on notes receivable 200,048 - 182,214 - Reduction in net investment in leveraged leases 140,729 120,568 15,026 4,946 Purchase of equipment on operating leases 12,148 (153,504) 12,148 (20,604) Purchase of equipment on direct financing leases - (33,022) - - ----------------- ---------------- ----------------- ----------------- Net cash provided by investing activities 4,022,336 3,142,334 2,562,903 2,115,579 ----------------- ---------------- ----------------- ----------------- ATEL CASH DISTRIBUTION FUND V, L.P. STATEMENTS OF CASH FLOWS (Continued) SIX AND THREE MONTH PERIODS ENDED JUNE 30, 1998 AND 1997 (Unaudited) Six Months Three Months Ended June 30, Ended June 30, 1998 1997 1998 1997 Financing activities: Distributions to limited partners (7,354,230) (6,870,996) (3,749,506) (3,435,685) Repayment of non-recourse debt (4,878,782) (3,560,519) (2,478,304) (1,830,364) Borrowings on line of credit 500,000 - 500,000 - Repayment of line of credit - (6,721,190) - (4,000,000) Proceeds of non-recourse debt - 5,092,723 - 3,971,358 ----------------- ---------------- ----------------- ----------------- Net cash used in financing activities (11,733,012) (12,059,982) (5,727,810) (5,294,691) ----------------- ---------------- ----------------- ----------------- Net (decrease) increase in cash and cash equivalents (31,493) 127,021 398,648 915,584 Cash at beginning of period 733,263 1,917,349 303,122 1,128,786 ----------------- ---------------- ----------------- ----------------- Cash at end of period $701,770 $2,044,370 $701,770 $2,044,370 ================= ================ ================= ================= Supplemental disclosure of cash flow information: Cash paid during the period for interest $1,492,069 $2,029,221 $690,702 $953,047 ================= ================ ================= ================= Leveraged lease assets reclassified to operating lease assets $902,362 ================ Direct financing lease assets reclassified to notes receivable $704,898 $704,898 ================= ================= Operating lease assets reclassified to assets held or sale or lease $76,858 $21,040 ================ ================= See accompanying notes. ATEL CASH DISTRIBUTION FUND V, L.P. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 (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, 1998. 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, 1998 (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, 1997 Additions of Leases Dispositions 1998 ---- --------- --------- - ------------- ---- Net investment in operating leases $74,586,944 ($5,636,346) $453,635 $69,404,233 Net investment in direct financing leases 25,128,971 (1,065,530) (3,657,643) 20,405,798 Net investment in leveraged leases 2,909,776 (140,729) - 2,769,047 Residual interests 835,759 - - 835,759 Reserve for losses (2,199,400) ($55,409) - - (2,254,809) Assets held for sale or lease 65,533 - (60,758) 23,064 27,839 Initial direct costs, net of accumulated amortization of $2,474,583 in 1997 and $2,271,952 in 1998 2,070,421 - (348,572) - 1,721,849 ------------------ ----------------- ---------------- ----------------- ----------------- $103,398,004 ($55,409) ($7,251,935) ($3,180,944) $92,909,716 ================== ================= ================ ================= ================= The following schedule provides an analysis of the Partnership's investment in property on operating leases by major classifications as of December 31, 1997, acquisitions and dispositions during the quarters ended March 31, 1998 and June 30, 1998 and as of June 30, 1998. Acquisitions, Reclassifications December 31, & Dispositions June 30, 1997 1st Quarter 2nd Quarter 1998 ---- ----------- ----------- ---- Transportation $41,483,244 $2,194,026 ($1,826,129) $41,851,141 Construction 24,075,113 - - 24,075,113 Materials handling 17,409,425 (9,069) - 17,400,356 Mining 15,164,692 (3,309,174) - 11,855,518 Furniture and fixtures 5,977,981 - - 5,977,981 Manufacturing 3,475,585 - (113,673) 3,361,912 Printing 2,325,000 - - 2,325,000 Office automation 2,378,155 - (426,420) 1,951,735 Food processing 1,826,162 - - 1,826,162 Other 278,396 - - 278,396 ----------------- ---------------- ----------------- ----------------- 114,393,753 (1,124,217) (2,366,222) 110,903,314 Less accumulated depreciation (39,806,809) (527,286) (1,164,986) (41,499,081) ----------------- ---------------- ----------------- ----------------- $74,586,944 ($1,651,503) ($3,531,208) $69,404,233 ================= ================ ================= ================= ATEL CASH DISTRIBUTION FUND V, L.P. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 (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, 1998, the aggregate amounts of future minimum lease payments are as follows: Year ending Direct December 31, Financing Operating Total 1998 $2,823,793 $9,123,125 $11,946,918 1999 4,663,812 10,624,276 15,288,088 2000 3,778,243 6,325,404 10,103,647 2001 3,106,913 4,480,595 7,587,508 2002 2,759,152 2,640,019 5,399,171 Thereafter 6,667,952 6,894,053 13,562,005 ----------------- ---------------- ----------------- $23,799,865 $40,087,472 $63,887,337 ================= ================ ================= 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 1998 $5,194,960 $1,402,290 $6,597,250 1999 7,891,017 2,083,413 9,974,430 2000 5,680,723 1,506,847 7,187,570 2001 4,586,627 1,066,950 5,653,577 2002 2,918,650 703,533 3,622,183 Thereafter 8,987,641 4,009,255 12,996,896 ----------------- ---------------- ----------------- $35,259,618 $10,772,288 $46,031,906 ================= ================ ================= ATEL CASH DISTRIBUTION FUND V, L.P. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 (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: 1998 1997 ---- ---- Equipment and incentive management fees $640,998 $821,758 Reimbursement of administrative costs 230,082 171,615 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 ----------------- ----------------- $871,080 $1,131,394 ================= ================= 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, 1998 (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, 1998. 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, 1998, the Partnership had $500,000 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, 1998. 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, 1998, the Partnership had borrowed $58,317,911. The remaining unpaid balance at that date was $35,259,618. 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, 1998, 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. Cash flows For both the three and six month periods in 1998 and 1997, the Partnership's primary source of cash flows from operations was rents from operating leases. In 1998, the most significant source of cash from investing activities was proceeds from sales of lease assets ($2,603,881 for the six month period and $2,059,521 for the three month period). Rents from direct financing leases were also significant in both the three and six month periods. In 1998, the only source of cash from financing activities was $500,000 borrowed on the line of credit in the second quarter. 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. Results of operations 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. Operating lease revenues declined by $667,601 (from $10,117,592 in 1997 to $9,449,991 in 1998) for the six month periods and $344,392 (from $5,018,125 in 1997 to $4,673,753 in 1998) for the three month periods. Depreciation is the Partnership's largest expense and is related directly to operating lease assets and revenues. Depreciation also decreased for both the three and six month periods as a result of these lease terminations. In 1998, sales of assets resulted in gains ($127,835 for the six month period and $50,746 for the three month period) compared to gains in 1997 of $187,102 (six months) and $113,685 (three months). Interest expense has declined for both the six and three month periods as a result of decreased total debt balances compared to 1997. Management fees are related to lease revenues (equipment management fees) and the amounts of cash generated from operations which is distributed to the limited partners (incentive management fees). Lease revenues declined compared to 1997 as noted above. More of the distributions to the limited partners came from the proceeds of asset sales (on which no management fees are being paid) rather than from cash generated from operations. These gave rise to the decreases in management fees compared to 1997. OTHER Year 2000 Issues The year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any computer programs that have time sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculation causing disruptions of operations, including, among other things, a temporary inability to process transactions or engage in similar normal business activities. The Partnership uses primarily third party software and is communicating with key vendors to ensure that the Partnership's systems are year 2000 compliant. Based on these discussions, the Partnership does not expect that the costs related to the year 2000 issue will be significant. Ultimately, the potential impact of the year 2000 issue will depend on the way in which the year 2000 issue is addressed by businesses and other entities whose financial condition or operational capability is important to the Partnership. 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, 1998 and December 31, 1997. Statements of operations for the six and three month periods ended June 30, 1998 and 1997. Statement of changes in partners' capital for the six months ended June 30, 1998. Statements of cash flows for the six and three month periods ended June 30, 1998 and 1997. 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 23, 1998 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