-----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, QQB/dUVqMKI0R1kWvjEZMX3ZRHIymb0lzkFJpoXZP9QLHp/PyV0rn9J8cb7PUB3f 2misTs+CjAXy/Q8uzs+2GQ== 0000821218-96-000007.txt : 19960918 0000821218-96-000007.hdr.sgml : 19960918 ACCESSION NUMBER: 0000821218-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEASTEC INCOME FUND V CENTRAL INDEX KEY: 0000821218 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96609978 BUSINESS ADDRESS: STREET 1: 7175 W JEFFERSON AVE STE 3000 CITY: LAKEWOOD STATE: CO ZIP: 80235 BUSINESS PHONE: 3039801000 10-Q 1 LIFV2Q96.001 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 June 30, 1996 ------------------------------------------------- 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, 1996 Table of Contents PART I. FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements (Unaudited) Balance Sheets-June 30, 1996 and December 31, 1995 3 Statements of Income-Three and Six months ended June 30, 1996 and 1995 4 Statements of Cash Flows-Six months ended June 30, 1996 and 1995 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) June 30, December 31, 1996 1995 ---------- ------------ ASSETS Cash and cash equivalents $ 337,990 $ 446,663 Accounts receivable, net 53,048 120,375 Equipment held for sale or lease 141,823 59,534 Net investment in direct finance leases 1,495,745 1,803,274 Leased equipment, net 1,720,380 2,989,764 ---------- ---------- Total assets $3,748,986 $5,419,610 ========== ========== LIABILITIES AND PARTNERS' CAPITAL LIABILITIES: Accounts payable and accrued liabilities $ 153,065 $ 235,847 Payable to affiliates 15,440 27,918 Rents received in advance 11,817 40,894 Distributions payable to partners 189,565 186,101 Discounted lease rentals 1,226,319 2,061,334 ---------- ---------- Total liabilities 1,596,206 2,552,094 ---------- ---------- PARTNERS' CAPITAL: General partner - - Limited partners: Class A 1,004,336 1,729,272 Class B 1,148,444 1,138,244 ---------- ---------- Total partners' capital 2,152,780 2,867,516 ---------- ---------- Total liabilities and partners' capital $3,748,986 $5,419,610 ========== ========== 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 Six months ended June 30, June 30, ----------------------- ----------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Revenue: Operating lease rentals $ 641,909 $ 907,246 $1,285,041 $1,892,393 Direct finance lease income 45,630 62,443 96,696 132,431 Equipment sales margin 89,564 90,513 90,854 135,801 Interest income 2,154 2,679 7,787 7,793 ---------- ---------- ---------- ---------- Total revenue 779,257 1,062,881 1,480,378 2,168,418 ---------- ---------- ---------- ---------- Expenses: Depreciation and amortization 362,956 513,650 749,140 1,120,066 Provision for losses - - - - Management fees paid to general partner 43,439 53,646 86,620 114,454 Interest on discounted lease rentals 33,318 74,434 76,299 162,389 Direct services from general partner 18,141 20,352 35,502 42,804 General and administrative 173,700 67,845 216,285 111,050 ---------- ---------- ---------- ---------- Total expenses 631,554 729,927 1,163,846 1,550,763 ---------- ---------- ---------- ---------- Net income $ 147,703 $ 332,954 $ 316,532 $ 617,655 ========== ========== ========== ========== Net income allocated: To the general partner $ 11,581 $ 19,533 $ 51,052 $ 58,213 To the Class A limited partners 130,892 301,379 255,280 537,947 To the Class B limited partner 5,230 12,042 10,200 21,495 ---------- ---------- ---------- ---------- $ 147,703 $ 332,954 $ 316,532 $ 617,655 ========== ========== ========== ========== Net income per weighted average Class A limited partner unit outstanding $ .66 $ 1.52 $ 1.29 $ 2.71 ========== ========== ========== ========== Weighted average Class A limited partner units outstanding 198,151 198,488 198,308 198,600 ========== ========== ========== ==========
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, -------------------------- 1996 1995 ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,754,148 $ 2,197,867 ----------- ----------- CASH FLOW FROM FINANCING ACTIVITIES: Principal payments on discounted lease rentals (835,015) (1,213,636) Redemptions of Class A limited partner units (10,248) (9,909) Distributions to partners (1,017,558) (1,389,177) ----------- ----------- Net cash used in financing activities (1,862,821) (2,612,722) ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (108,673) (414,855) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 446,663 702,210 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 337,990 $ 287,355 =========== =========== Supplemental disclosure of cash flow information: Interest paid on discounted lease rentals $ 76,299 $ 162,389 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, 1995 has been derived from the audited financial statements included in the Partnership's 1995 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, 1995 (the "1995 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 of Condensed Statements of Income for the three months The effect on Income for the six months The effect on ended June 30, net income of ended June 30, net income of ---------------------------- changes between --------------------------- changes between 1996 1995 periods 1996 1995 periods ------------ ------------ --------------- ------------ ------------ --------------- Leasing margin $ 291,265 $ 381,605 $ (90,340) $ 556,298 $ 742,369 $(186,071) Equipment sales margin 89,564 90,513 (949) 90,854 135,801 (44,947) Interest income 2,154 2,679 (525) 7,787 7,793 (6) Management fees paid to general partner (43,439) (53,646) 10,207 (86,620) (114,454) 27,834 Direct services from general partner (18,141) (20,352) 2,211 (35,502) (42,804) 7,302 General and administrative (173,700) (67,845) (105,855) (216,285) (111,050) (105,235) Provision for losses - - - - - - --------- --------- --------- --------- --------- --------- Net income $ 147,703 $ 332,954 $(185,251) $ 316,532 $ 617,655 $(301,123) ========= ========= ========= ========= ========= =========
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, the size of the Partnership's leasing portfolio and the amount of leasing revenue is declining (referred to in this discussion as "portfolio run-off"). LEASING MARGIN Leasing margin consists of the following:
Three months ended Six months ended June 30, June 30, ----------------------------- ----------------------------- 1996 1995 1996 1995 ----------- ----------- ------------ ----------- Operating lease rentals $ 641,909 $ 907,246 $ 1,285,041 $ 1,892,393 Direct financing lease income 45,630 62,443 96,696 132,431 Depreciation and amortization (362,956) (513,650) (749,140) (1,120,066) Interest expense on related discounted lease rentals (33,318) (74,434) (76,299) (162,389) ----------- ----------- ----------- ----------- Leasing margin $ 291,265 $ 381,605 $ 556,298 $ 742,369 =========== =========== =========== =========== Leasing margin ratio 42% 39% 40% 37% == == == ==
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 and are expected to decline further, due to portfolio run-off. Leasing margin ratio increased primarily because of (a) remarketing activities, and (b) a portion of the Partnership's portfolio consists of operating leases financed with non-recourse debt. Leasing margin and leasing margin ratio for an operating lease financed with non-recourse debt increases during the term of the lease since rents and depreciation are typically fixed while interest expense declines as the related non-recourse debt is repaid. 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. This will result in corresponding reductions in the ultimate overall yields to partners. EQUIPMENT SALES MARGIN Equipment sales margin consists of the following:
Three months ended Six months ended June 30, June 30, ----------------------------- ----------------------------- Equipment sales revenue $ 163,208 $ 105,128 $ 451,498 $ 272,932 Cost of equipment sales (73,644) (14,615) (360,644) (137,131) ----------- ----------- ----------- ----------- Equipment sales margin $ 89,564 $ 90,513 $ 90,854 $ 135,801 =========== =========== =========== ===========
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 are difficult to project. 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. 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, continued 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 for the six months ended June 30, 1996 or for the corresponding period in 1995 because no other-than-temporary losses in the value of equipment were identified in the quarterly assessments of the Partnership's assets. EXPENSES General and administrative expenses increased primarily due to $107,928 reimbursed to the general partner for insurance costs related to prior years. Management fees paid to the general partner decreased due to portfolio run-off. 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 three months ended June 30, 1996, the Partnership declared distributions to the partners of $231,607 ($189,595 of which was paid in July 1996), 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. 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. 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 general partner currently anticipates that the Partnership will generate cash flow from rentals and equipment sales during the remainder of 1996 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. The general partner currently anticipates that the remaining 1996 distributions to the Class A limited partners are expected to be in the range of an annualized rate of 1% to 3% of their capital contributions (all of which is expected to be a return of capital). 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. 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 $1.1 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 partners believe 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 June 30, 1996. 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 12, 1996 By: /s/John E. Christensen ---------------------- John E. Christensen Senior Vice President, Chief Administrative Officer and Director 12 EX-27 2 FDS LIFV2Q96.001
5 The schedule contains summary financial information extracted from the balance sheeets and statements of income and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1996 JUN-30-1996 337,990 0 53,048 0 141,823 0 1,720,380 0 3,748,986 0 0 0 0 0 2,152,780 3,748,986 90,854 1,480,378 0 1,163,846 122,122 0 76,299 316,532 0 316,532 0 0 0 316,532 1.29 1.29
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