-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WNO9zmve+k/jM5e/bIG3qMZdPDGU7WxJo85ep/z6mnztrmrEllnGg6nj1se3lR7v H66tOkf7hXgB/Dp14Lzxsw== 0000821218-97-000009.txt : 19971113 0000821218-97-000009.hdr.sgml : 19971113 ACCESSION NUMBER: 0000821218-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEASTEC INCOME FUND V CENTRAL INDEX KEY: 0000821218 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER RENTAL & LEASING [7377] IRS NUMBER: 680136036 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18555 FILM NUMBER: 97715255 BUSINESS ADDRESS: STREET 1: 7175 W JEFFERSON AVE STE 3000 CITY: LAKEWOOD STATE: CO ZIP: 80235 BUSINESS PHONE: 3039801000 10-Q 1 3Q97LIFV.001 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [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 ------------------------------------------------- OR [ ] 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 0-18555 --------------------------------------------------------- Leastec Income Fund V, A California Limited Partnership ------------------------------------------------------- (Exact name of registrant as specified in its charter) California 68-0136036 - ----------------------- ------------------------------------ (State of organization) (I.R.S. Employer Identification No.) 7175 West Jefferson Avenue, Suite 4000 Lakewood, Colorado 80235 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (303) 980-1000 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 . ----- ----- Exhibit Index Appears on Page 11 Page 1 of 12 Pages LEASTEC INCOME FUND V A California Limited Partnership Quarterly Report on Form 10-Q for the Quarter Ended September 30, 1997 Table of Contents ----------------- PART I. FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements (Unaudited) Balance Sheets-September 30, 1997 and December 31, 1996 3 Statements of Income-Three and Nine months ended September 30, 1997 and 1996 4 Statements of Cash Flows-Nine months ended September 30, 1997 and 1996 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-10 PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 11 Signature 12 2 LEASTEC INCOME FUND V A California Limited Partnership BALANCE SHEETS (Unaudited) ASSETS September 30, December 31, 1997 1996 ------------ ------------ Cash and cash equivalents $ 429,278 $ 465,217 Accounts receivable, net 22,046 122,357 Equipment held for sale or re-lease 128,696 128,696 Net investment in direct finance leases 575,598 1,105,111 Leased equipment, net 599,901 1,011,332 ----------- ----------- Total assets $ 1,755,519 $ 2,832,713 =========== =========== LIABILITIES AND PARTNERS' CAPITAL LIABILITIES: Accounts payable and accrued liabilities $ 235,502 $ 283,321 Payable to affiliates 16,090 31,361 Rents received in advance 4,000 34,242 Distributions payable to partners 157,929 225,019 Discounted lease rentals 365,777 721,550 ----------- ----------- Total liabilities 779,298 1,295,493 ----------- ----------- PARTNERS' CAPITAL: General partner - - Limited partners: Class A - 360,500 Class B 976,221 1,176,720 ----------- ----------- Total partners' capital 976,221 1,537,220 ----------- ----------- Total liabilities and partners' capital $ 1,755,519 $ 2,832,713 =========== =========== The accompanying notes are an integral part of these financial statements. 3 LEASTEC INCOME FUND V A California Limited Partnership STATEMENTS OF INCOME (Unaudited)
Three months ended Nine months ended September 30, September 30, --------------------------- --------------------------- 1997 1996 1997 1996 ----------- ---------- ----------- ----------- REVENUE: Operating lease rentals $ 268,294 $ 535,335 $ 895,703 $ 1,820,376 Direct financing lease income 20,369 39,125 71,900 135,821 Equipment sales margin - 410,394 121,950 501,248 Interest income 5,666 7,058 12,759 14,845 ---------- ---------- ---------- ----------- Total revenue 294,329 991,912 1,102,312 2,472,290 ---------- ---------- ---------- ----------- EXPENSES: Depreciation and amortization 156,765 236,637 399,249 985,777 Provision for losses - - - - Management fees paid to general partner 23,962 35,622 72,607 122,242 Interest on discounted lease rentals 10,577 26,252 39,620 102,551 Direct services from general partner 15,164 13,795 47,908 49,297 General and administrative 37,550 53,417 146,032 269,702 ---------- ---------- ---------- ----------- Total expenses 244,018 365,723 705,416 1,529,569 ---------- ---------- ---------- ----------- NET INCOME $ 50,311 $ 626,189 $ 396,896 $ 942,721 ========== ========== ========== =========== NET INCOME ALLOCATED: To the general partner $ 13,158 $ 45,789 $ 47,895 $ 96,841 To the Class A limited partners 35,726 558,100 335,593 813,380 To the Class B limited partner 1,427 22,300 13,408 32,500 ---------- ---------- ---------- ----------- $ 50,311 $ 626,189 $ 396,896 $ 942,721 ========== ========== ========== =========== Net income per weighted average Class A limited partner unit outstanding $ .18 $ 2.82 $ 1.69 $ 4.10 ========== ========== ========== =========== Weighted average Class A limited partner units outstanding 198,025 198,025 198,025 198,214 ========== ========== ========== ===========
The accompanying notes are an integral part of these financial statements. 4 LEASTEC INCOME FUND V A California Limited Partnership STATEMENTS OF CASH FLOWS (Unaudited) Nine months ended September 30, ------------------------- 1997 1996 ----------- ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,344,819 $ 3,202,527 ----------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on discounted lease rentals (355,773) (1,107,851) Redemptions of Class A limited partner units - (11,685) Distributions to partners (1,024,985) (1,675,940) ----------- ------------ Net cash used in financing activities (1,380,758) (2,795,476) ----------- ------------ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (35,939) 407,051 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 465,217 446,663 ----------- ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 429,278 $ 853,714 =========== ============ Supplemental disclosure of cash flow information: Interest paid on discounted lease rentals $ 39,620 $ 102,551 The accompanying notes are an integral part of these financial statements. 5 LEASTEC INCOME FUND V A California Limited Partnership NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation --------------------- The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for annual financial statements. In the opinion of the general partner, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The balance sheet at December 31, 1996 has been derived from the audited financial statements included in the Partnership's 1996 Form 10-K. For further information, refer to the financial statements of Leastec Income Fund V, a California Limited Partnership (the "Partnership"), and the related notes, included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1996 (the "1996 Form 10-K"), previously filed with the Securities and Exchange Commission. 6 LEASTEC INCOME FUND V A California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Presented below are schedules (prepared solely to facilitate the discussion of results of operations that follows) showing condensed statements of income categories and analyses of changes in those condensed categories derived from the Statements of Income:
Condensed Statements Condensed Statements of Income for The effect on of Income for The effect on the three months net income the nine months net income ended September 30, of changes ended September 30, of changes ------------------------- between ------------------------- between 1997 1996 periods 1997 1996 periods ---------- ----------- ------------- ---------- ---------- ------------- Leasing margin $ 121,321 $ 311,571 $ (190,250) $ 528,734 $ 867,869 $ (339,135) Equipment sales margin - 410,394 (410,394) 121,950 501,248 (379,298) Interest income 5,666 7,058 (1,392) 12,759 14,845 (2,086) Management fees paid to general partner (23,962) (35,622) 11,660 (72,607) (122,242) 49,635 Direct services from general partner (15,164) (13,795) (1,369) (47,908) (49,297) 1,389 General and administrative (37,550) (53,417) 15,867 (146,032) (269,702) 123,670 Provision for losses - - - - - - --------- --------- ----------- ---------- ---------- ---------- Net income $ 50,311 $ 626,189 $ (575,878) $ 396,896 $ 942,721 $ (545,825) ========= ========= =========== ========== ========== ==========
The Partnership is in its liquidation period, as defined in the Partnership Agreement and, as expected, the Partnership is not purchasing additional equipment, initial leases are expiring and the equipment is being remarketed (i.e., re-leased, renewed or sold). As a result, both the size of the Partnership's leasing portfolio and the amount of leasing revenue are declining (referred to in this discussion as "portfolio run-off"). LEASING MARGIN Leasing margin consists of the following:
Three months ended Nine months ended September 30, September 30, ------------------------- --------------------------- 1997 1996 1997 1996 ----------- ----------- ------------ ----------- Operating lease rentals $ 268,294 $ 535,335 $ 895,703 $ 1,820,376 Direct financing lease income 20,369 39,125 71,900 135,821 Depreciation and amortization (156,765) (236,637) (399,249) (985,777) Interest expense on related discounted lease rentals (10,577) (26,252) (39,620) (102,551) ---------- ----------- ----------- ----------- Leasing margin $ 121,321 $ 311,571 $ 528,734 $ 867,869 ========== ========== =========== =========== Leasing margin ratio 42% 54% 55% 44% == == == ==
7 LEASTEC INCOME FUND V A California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, (continued) Results of Operations, continued - --------------------- LEASING MARGIN, (continued) All components of leasing margin have declined and are expected to decline further, due to portfolio run-off. Leasing margin ratio fluctuates based upon remarketing activities. Remarketing revenue will vary as initial lease terms expire. The ultimate rate of return on leases depends, in part, on the general level of interest rates at the time the leases are originated. Because leasing is an alternative to financing equipment purchases with debt, lease rates tend to rise and fall with interest rates (although lease rate movements generally lag interest rate movements in the capital markets). Interest rates declined from 1990 until the early part of 1994. The lease rates on equipment purchased by the Partnership during that period reflect that low interest rate environment. This will result in corresponding reductions in the ultimate overall yields to partners. Annual average 5-year U.S. Treasury yields for the past seven years were as follows: Annual average 5-year U.S. Treasury Yield Year Yield ---- ----- 1990 8.37 1991 7.37 1992 6.19 1993 5.14 1994 6.69 1995 6.53 1996 6.18 EQUIPMENT SALES MARGIN Equipment sales margin consists of the following: Three months ended Nine months ended September 30, September 30, ------------------------- ---------------------- 1997 1996 1997 1996 ---------- ----------- --------- ----------- Equipment sales revenue $ - $ 775,840 $ 157,950 $ 1,227,338 Cost of equipment sales - (365,446) (36,000) (726,090) ---------- ---------- --------- ----------- Equipment sales margin $ - $ 410,394 $ 121,950 $ 501,248 ========== ========== ========= =========== 8 LEASTEC INCOME FUND V A California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, (continued) Results of Operations, continued - --------------------- EQUIPMENT SALES MARGIN, continued The Partnership is in its liquidation period. During the liquidation period, as initial leases terminate, equipment is being remarketed (i.e., re-leased or sold to either the original lessee or a third party) and, accordingly the timing and amount of equipment sales cannot be projected accurately. PROVISION FOR LOSSES The remarketing of equipment for an amount greater than its book value is reported as equipment sales margin (if the equipment is sold) or leasing margin (if the equipment is re-leased). The realization of less than the carrying value of equipment (which is typically not known until remarketing subsequent to the initial lease termination has occurred) is recorded as provision for losses. Residual values are established equal to the estimated value to be received from the equipment following termination of the lease. In estimating such values, the Partnership considers all relevant facts regarding the equipment and the lessee, including, for example, the likelihood that the lessee will re-lease the equipment. The nature of the Partnership's leasing activities is that it has credit exposure and residual value exposure and, accordingly, in the ordinary course of business, it will incur losses from those exposures. The Partnership performs ongoing quarterly assessments of its assets to identify any other-than-temporary losses in value. No provision for losses were recorded because no other-than-temporary losses in the value of equipment were identified in the quarterly assessments of the Partnership's assets. EXPENSES Management fees paid to the general partner decreased primarily as a result of portfolio run-off. General and administrative expenses for the nine months ended September 30, 1996 included $107,928 reimbursed to the general partner for insurance costs related to prior years. Liquidity and Capital Resources - ------------------------------- The Partnership funds its activities principally with cash from rents, interest income and sale of off-lease equipment. Available cash and cash reserves of the Partnership are invested in interest bearing cash accounts and short-term U.S. Government securities pending distributions to the partners. During the nine months ended September 30, 1997, the Partnership declared distributions to the partners of $957,895 ($157,929 of which was paid in October 1997), all of which constituted a return of capital. Distributions may be characterized for tax, accounting and economic purposes as a return of capital, a return on capital or both. 9 LEASTEC INCOME FUND V A California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, (continued) Liquidity and Capital Resources, continued - ------------------------------- The total return on capital over a leasing partnership's life can only be determined at the termination of the Partnership after all residual cash flows (which include proceeds from the re-leasing and sale of equipment after initial lease terms expire) have been realized. However, as the general partner has represented for the last several years, all distributions to the partners are expected to be a return of capital. The general partner currently anticipates that the Partnership will generate cash flow from rentals and equipment sales during the remainder of 1997 which, when added to cash and cash equivalents on hand, should provide sufficient cash to enable the Partnership to meet its current operating requirements and to fund distributions to the Class A limited partners. Because the Partnership is in liquidation, as defined in the Partnership Agreement, cash distributions to the Class A limited partners will be based upon cash availability and will vary for the remainder of 1997 (all of which is expected to be a return of capital). The Partnership is required to dissolve and distribute all of its assets no later than December 31, 1998. However, the general partner anticipates that all equipment will be sold prior to that date and that the Partnership will be liquidated earlier. The Class B distributions of cash from operations are subordinated to the Class A limited partners receiving distributions of cash from operations, as scheduled in the Partnership Agreement (i.e., 15%). Therefore, because of the decrease in the distributions to the Class A limited partners effective as of June 1994, CAII, the sole Class B limited partner, ceased receiving distributions of cash from operations as of March 1994 and, as a result of this subordination, the general partner currently anticipates that CAII will not receive any future Class B distributions related to the $1.2 million of Class B limited partner's capital shown on the accompanying Balance Sheets. 10 LEASTEC INCOME FUND V A California Limited Partnership PART II. OTHER INFORMATION Item 1. Legal Proceedings The Partnership is involved in routine legal proceedings incidental to the conduct of its business. The general partner believes none of these legal proceedings will have a material adverse effect on the financial condition or operations of the Partnership. Item 6. Exhibits and Reports on Form 8-K (a) None (b) The Partnership did not file any reports on Form 8-K during the quarter ended September 30, 1997. 11 LEASTEC INCOME FUND V A California Limited Partnership Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LEASTEC INCOME FUND V A California Limited Partnership By: CAI Partners Management Company Dated: November 13, 1997 By: /s/Anthony M. DiPaolo --------------------- Anthony M. DiPaolo Senior Vice President 12 EX-27 2 3Q97LIFV.001
5 The schedule contains summary financial information extracted from the consolidated balance sheets and consolidated statements of income and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1997 SEP-30-1997 429,278 0 22,046 0 128,696 0 599,901 0 1,755,519 0 0 0 0 0 976,221 1,755,519 121,950 1,102,312 0 705,416 120,515 0 39,620 705,416 0 705,416 0 0 0 705,416 1.69 1.69
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