-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, OYa0hER/Ts4E3fe4/Wn9lwTtvdau/g6ojnfBxPoTZ5shDg8lerXzZhLxc5lnQnwE 64zpWA51iQ/vK6j3giNlow== 0000821218-95-000004.txt : 19950814 0000821218-95-000004.hdr.sgml : 19950814 ACCESSION NUMBER: 0000821218-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NASD 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: 1934 Act SEC FILE NUMBER: 000-18555 FILM NUMBER: 95561748 BUSINESS ADDRESS: STREET 1: 7175 W JEFFERSON AVE STE 3000 CITY: LAKEWOOD STATE: CO ZIP: 80235 BUSINESS PHONE: 3039801000 10-Q 1 LIFV2Q95 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 June 30, 1995 ------------------------------------------------- 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 3000 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 June 30, 1995 Table of Contents PART I. FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements (Unaudited) Balance Sheets-June 30, 1995 and December 31, 1994 3 Statements of Operations-Three and Six months ended June 30, 1995 and 1994 4 Statements of Cash Flows-Six months ended June 30, 1995 and 1994 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 2. 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) June 30, December 31, 1995 1994 ---------- ------------ ASSETS Cash and cash equivalents $ 287,355 $ 702,210 Accounts receivable, net 37,008 95,807 Equipment held for sale or lease 61,282 74,337 Net investment in direct finance leases 2,137,107 2,467,517 Equipment on operating leases, net 4,100,411 5,349,797 ---------- ---------- Total assets $6,623,163 $8,689,668 ========== ========== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable and accrued liabilities $ 232,426 $ 271,525 Payable to affiliates 41,585 26,298 Rents received in advance 50,411 98,037 Distributions payable to partners 216,497 441,682 Discounted lease rentals 3,017,757 4,231,393 ---------- ---------- Total liabilities 3,558,676 5,068,935 ---------- ---------- Partners' Capital: General partner - - Limited partners: Class A 1,941,929 2,519,669 Class B 1,122,558 1,101,064 ---------- ---------- Total partners' capital 3,064,487 3,620,733 ---------- ---------- Total liabilities and partners' capital $6,623,163 $8,689,668 ========== ========== The accompanying notes are an integral part of these financial statements. 3 LEASTEC INCOME FUND V A California Limited Partnership STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------------- ------------------------ 1995 1994 1995 1994 ---------- ---------- ---------- ----------- Revenue: Operating lease rentals $ 907,246 $ 1,325,562 $ 1,892,393 $ 3,094,959 Direct finance lease income 62,443 100,521 132,431 192,640 Equipment sales margin 90,513 52,121 135,801 375,715 Interest income 2,679 7,353 7,793 16,740 ----------- ----------- ----------- ----------- Total revenue 1,062,881 1,485,557 2,168,418 3,680,054 ----------- ----------- ----------- ----------- Expenses: Depreciation and amortization 513,650 1,136,347 1,120,066 2,486,490 Provision for losses - 8,615 - 108,615 Management fees paid to general partner 53,646 83,327 114,454 182,947 Interest on discounted lease rentals 74,434 147,439 162,389 285,983 Direct services from general partner 20,352 23,901 42,804 48,820 General and administrative 67,845 53,229 111,050 113,267 ----------- ----------- ----------- ----------- Total expenses 729,927 1,452,858 1,550,763 3,226,122 ----------- ----------- ----------- ----------- Net income $ 332,954 $ 32,699 $ 617,655 $ 453,932 =========== =========== =========== =========== Net income allocated: To the general partner $ 19,533 $ 101,550 $ 58,213 $ 202,048 To the Class A limited partners 301,379 (66,208) 537,947 242,202 To the Class B limited partner 12,042 (2,643) 21,495 9,682 ----------- ----------- ----------- ----------- $ 332,954 $ 32,699 $ 617,655 $ 453,932 =========== =========== =========== =========== Net income (loss) per weighted average Class A limited partner unit outstanding $ 1.52 $ (0.33) $ 2.71 $ 1.22 =========== =========== =========== =========== Weighted average Class A limited partner units outstanding 198,488 199,115 198,600 199,150 =========== =========== =========== ===========
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) Six Months Ended June 30, June 30, 1995 1994 ----------- ----------- Net cash provided by operating activities $ 2,197,867 $ 4,178,723 ----------- ----------- Cash flows from investing activities: Net cash used in investing activities - - ----------- ----------- Cash flows from financing activities: Proceeds from the discounting of lease rentals - 616,512 Principal payments on discounted lease rentals (1,213,636) (1,715,970) Redemptions of Class A limited partner units (9,909) (1,541) Distributions to partners (1,389,177) (4,064,379) ----------- ----------- Net cash used in financing activities (2,612,722) (5,165,378) ----------- ----------- Net decrease in cash and cash equivalents (414,855) (986,655) Cash and cash equivalents at beginning of period 702,210 2,360,404 ----------- ----------- Cash and cash equivalents at end of period $ 287,355 $ 1,373,749 =========== =========== Supplemental disclosure of cash flow information: Interest paid $ 162,389 $ 285,983 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 of normal recurring adjustments) considered necessary for a fair presentation have been included. The balance sheet at December 31, 1994 has been derived from the audited financial statements included in the Partnership's 1994 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, 1994 (the "1994 Form 10-K"), previously filed with the Securities and Exchange Commission. 2. Reclassifications In the Statements of Cash Flows for the six months ended June 30, 1995 and 1994, the principal portion of direct finance lease rentals and proceeds from sales of equipment have been classified as "Cash flows from operating activities". Previously, such amounts were reported as "Cash flows from investing activities". The effect of the reclassifications on previously issued financial statements is as follows: Six months ended June 30, 1994 ----------------------------- As Previously As Reported Reclassified ------------- ------------ Net cash provided by operating activities $ 2,448,741 $ 4,178,723 Net cash provided by investing activities 1,729,982 - Net cash used in financing activities (5,165,378) (5,165,378) ------------ ------------ Net decrease in cash and cash equivalents $ 986,655 $ 986,655 ============ ============ 3. Equipment Purchases The Partnership is in its liquidation period, as defined in the Partnership Agreement and as set forth in the Prospectus, and made no equipment purchases during the six months ended June 30, 1995. It is not anticipated that the Partnership will acquire any material amount of equipment in future periods. 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 operations categories and analyses of changes in those condensed categories derived from the Statements of Operations:
Condensed Condensed Statements of Operations Statements of Operations for the Three Months The effect on for the Six Months The effect on ended June 30, net income of ended June 30 net income of ------------------------ changes between ------------------------ changes between 1995 1994 periods 1995 1994 periods --------- ---------- --------------- --------- ---------- --------------- Leasing margin $ 381,605 $ 142,297 $ 239,308 $ 742,369 $ 515,126 $ 227,243 Equipment sales margin 90,513 52,121 38,392 135,801 375,715 (239,914) Interest income 2,679 7,353 (4,674) 7,793 16,740 (8,947) Management fees paid to general partner, direct services from general partner and general and administrative expenses (141,843) (160,457) 18,614 (268,308) (345,034) 76,726 Provision for losses - (8,615) 8,615 - (108,615) 108,615 --------- --------- --------- --------- --------- ----------- Net income $ 332,954 $ 32,699 $ 300,255 $ 617,655 $ 453,932 $ 163,723 ========= ========= ========= ========= ========= ===========
Leasing Margin The Partnership is currently in the eighth year of its operations and, as set forth in the Prospectus, is in its liquidation period. The Partnership is not purchasing additional equipment, initial leases are expiring and the amount of equipment being remarketed is increasing. Because a leasing portfolio declines in size as it matures, these circumstances have resulted in a decline in the Partnership's leasing portfolio (referred to in this discussion as "portfolio run-off"). Leasing margin consists of the following:
Three months ended Six months ended June 30, June 30, -------------------------- ---------------------------- 1995 1994 1995 1994 ---------- ------------ ------------ ------------ Operating lease rentals $ 907,246 $ 1,325,562 $ 1,892,393 $ 3,094,959 Direct finance lease income 62,443 100,521 132,431 192,640 Depreciation and amortization (513,650) (1,136,347) (1,120,066) (2,486,490) Interest expense on discounted lease rentals (74,434) (147,439) (162,389) (285,983) ---------- ----------- ------------ ------------ Leasing margin $ 381,605 $ 142,297 $ 742,369 $ 515,126 ========== =========== ============ ============ Leasing margin ratio 39% 20% 37% 19% ========== =========== ============ ============
7 LEASTEC INCOME FUND V A California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, (continued) Leasing Margin, (continued) All components of leasing margin have declined for the three and six months ended June 30, 1995 compared to the corresponding periods in 1994, and are expected to decline further, due to portfolio run-off. The leasing margin and leasing margin ratio increased primarily due to (a) remarketing activities, which include the rental proceeds from renewing, extending or re-leasing equipment before and after the end of the initial lease term and (b) a portion of the Partnership's portfolio consists of non-recourse debt financed operating leases. Leasing margin and leasing margin ratio for non-recourse debt financed operating leases increases during the term of the leases since rents and depreciation are typically fixed while interest expense declines as the related non-recourse debt is paid off. 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 market). 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. Equipment Sales Margin Equipment sales margin consists of the following:
Three months ended Six months ended June 30, June 30, -------------------------- --------------------------- 1995 1994 1995 1994 ---------- ---------- ----------- ------------ Equipment sale revenue $ 105,128 $ 767,912 $ 272,932 $ 1,441,434 Cost of equipment sales (14,615) (715,791) (137,131) (1,065,719) ---------- ---------- ----------- ------------ Gain on sale of equipment, net $ 90,513 $ 52,121 $ 135,801 $ 375,715 ========== ========== =========== ============
The Partnership is in its liquidation period and, as initial leases terminate, equipment is remarketed (i.e., released or sold to either the original lessee or a third party). The timing and amount of equipment sales are difficult to predict. However, as the Partnership's liquidation continues, equipment sales are expected to provide an increasingly higher percentage of total revenue. Interest Income Interest income declined due to a decrease in cash available for investment. 8 LEASTEC INCOME FUND V A California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, (continued) Provision for losses The remarketing of equipment for an amount greater than its net book value is reported as equipment sales margin (if the equipment is sold) or as leasing margin (if the equipment is released). The realization of less than the carrying value of equipment (which is typically not known until after the initial lease termination) is recorded as provision for loss. The Partnership performs ongoing quarterly assessments of its assets to identify any other-than-temporary losses in value. The Partnership did not record provision for losses during the three and six months ended June 30, 1995 because no new losses were identified. The provision for losses during the three and six months ended June 30, 1994 primarily related to identified "other-than-temporary" losses in value of off-lease equipment, principally certain telecommunication equipment and semiconductor manufacturing equipment. Expenses Management fees paid to the general partner and direct services from general partner decreased due to portfolio run-off. General and administrative expenses increased for the three months ended June 30, 1995 compared to June 30, 1994 due to legal expenses related to the North Miami Medical lease litigation. Liquidity and Capital Resources The Partnership funded its operating 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 six months ended June 30, 1995, the Partnership declared distributions to the partners of $1,163,992 (of which $216,497 was paid during the third quarter of 1995). All of such distributions 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. 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, the general partner currently anticipates 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 1995 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. Currently, distributions to the Class A limited partners are at an annualized rate of 3% on their capital contributions (all of which will constitute a return of capital). However, while rentals are fairly predictable, the timing and amounts of proceeds from 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 equipment sales are not. If fewer equipment sales occur or the proceeds from equipment sales are less than anticipated, the Partnership may not have sufficient cash available to continue to make cash distributions to the Class A limited partners at an annualized rate of 3% on their capital contributions. Therefore, because the Partnership is in liquidation, cash distributions to the Class A limited partners will be based upon cash availability and allowed to vary, as early as fourth quarter. Cash distributions to the Class B limited partner are subordinated to the Class A limited partners receiving the distributions as scheduled in the Partnership Agreement. Therefore, because of the initial decrease in cash distributions to the Class A limited partners which occurred as of July 1, 1994, CAII, the sole Class B limited partner ceased receiving any distributions as a result of this subordination. 10 LEASTEC INCOME FUND V A California Limited Partnership PART II. OTHER INFORMATION Item 1. Legal Proceedings North Miami Medical Center litigation ("North Miami"), see the Partnership's 1994 Form 10-K for a complete discussion. USX served the writ of replevin on North Miami and, with the general partner's assistance, the Partnership repossessed the Equipment since the parties were unable to work out a settlement. The general partner is remarketing the equipment on behalf of USX. Because the value of the Equipment is less than the amount of the outstanding debt owed to USX, the Partnership may suffer a loss equal to its book value for the equipment, net of any additional rent payments received from North Miami. A provision for loss has been previously recorded for this contingent loss. 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 June 30, 1995. 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: August 11, 1995 By: /s/John F. Olmstead ------------------- John F. Olmstead President and Director By: /s/John E. Christensen ---------------------- John E. Christensen Senior Vice President, Chief Administrative Officer and Director 12 EX-27 2 FDS
5 The schedule contains summary financial information extracted from the balance sheets and statements of operations and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1995 Jun-30-1995 287,355 0 37,008 0 61,282 0 4,100,411 0 6,623,163 0 0 0 0 0 3,064,487 6,623,163 135,801 2,168,418 0 1,550,763 268,308 0 162,389 617,655 0 617,655 0 0 0 617,655 2.71 2.71
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