Form10-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, 1995 												 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 000-16843 												 ATEL Cash Distribution Fund, a California Limited Partnership (Exact name of registrant as specified in its charter) 												 California 94-2985201 (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 												 Former name, former address and former fiscal year, if changed since last report 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 (A CALIFORNIA LIMITED PARTNERSHIP) 												 BALANCE SHEETS 												 SEPTEMBER 30, 1995 AND DECEMBER 31, 1994 												 (Unaudited) 												 ASSETS 1995 1994 ---- ---- Cash and cash equivalents $88,949 $203,776 												 Accounts receivable, net of allowance for doubtful accounts of $22,097 in 1995 and 1994 679 3,606 												 Investment in leases and equipment 591,393 484,971 -------- -------- $681,021 $692,353 ======== ======== 												 LIABILITIES AND PARTNERS' CAPITAL 												 												 												 Non-recourse debt $199,073 												 Accounts payable and accruals 33,100 $68,459 												 Accrued interest 1,534 - Deposits due to lessees 12,914 12,914 Unearned operating lease income 915 1,903 -------- -------- Total liabilities 247,536 83,276 												 Partners' capital: General Partners 19,358 16,807 Limited Partners 414,127 592,270 -------- -------- Total partners' capital 433,485 609,077 -------- -------- $681,021 $692,353 ======== ======== 			 See accompanying notes. 												 			 ATEL CASH DISTRIBUTION FUND 		 (A CALIFORNIA LIMITED PARTNERSHIP) 												 			 STATEMENTS OF OPERATIONS 												 		 NINE AND THREE MONTH PERIODS ENDED 			 SEPTEMBER 30, 1995 AND 1994 				(Unaudited) Nine Months Ended Three Months Ended September 30, September 30, 1995 1994 1995 1994 ---- ---- ---- ---- Revenues: Lease income: Operating $81,503 $142,563 $31,577 $34,900 Direct financing 49,620 47,272 15,470 17,401 Gain on sale of equipment 11,731 40,573 1,894 1,335 Other 103,197 10,388 (111) 4,631 Gain on sale of marketable securities 68,158 - - - Interest income 931 11,865 365 3,788 --------- --------- --------- --------- 315,140 252,661 49,195 62,055 Expenses: Depreciation and amortization 18,824 87,831 10,064 13,013 Professional fees 14,337 20,357 2,124 188 Other 10,590 16,788 4,168 7,418 Interest 8,077 6,012 4,796 203 Taxes 4,920 - - - Provision for losses 3,288 - 491 - Administrative cost reimbursements - 34,380 - - Management fees - 20,359 - - --------- --------- --------- --------- 60,036 185,727 21,643 20,822 --------- --------- --------- --------- Net income $255,104 $66,934 $27,552 $41,233 ========= ========= ========= ========= Net income per Limited Partnership unit $12.65 $3.32 $1.37 $2.04 Weighted average number of units outstanding 19,962 19,965 19,962 19,962 Net income: General Partners $2,551 $669 $276 $412 Limited Partners 252,553 66,265 27,276 40,821 --------- --------- --------- --------- $255,104 $66,934 $27,552 $41,233 ========= ========= ========= ========= 												 		 STATEMENTS OF CHANGES IN PARTNERS' CAPITAL 												 		 NINE MONTHS ENDED SEPTEMBER 30, 1995 												 Limited Partners ---------------- General Units Amount Partners Total ----- ------ -------- ----- Balance December 31, 1994 19,962 $592,270 $16,807 $609,077 Net income 252,553 2,551 255,104 Distributions (430,696) (430,696) ------ --------- ------- --------- Balance September 30, 1995 19,962 $414,127 $19,358 $433,485 ====== ========= ======= ========= 			 See accompanying notes. 		 ATEL CASH DISTRIBUTION FUND 		 (A CALIFORNIA LIMITED PARTNERSHIP) 												 			STATEMENTS OF CASH FLOWS 												 		 NINE AND THREE MONTH PERIODS ENDED 		 SEPTEMBER 30, 1995 AND 1994 	 (Unaudited) 												 Nine Months Ended Three Months Ended September 30, September 30, 1995 1994 1995 1994 ---- ---- ---- ---- Operating activities: Net income $255,104 $66,934 $27,552 $41,233 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization expense 18,824 87,831 10,064 13,013 Gain on sales of assets (11,731) (40,573) (1,894) (1,335) Gain on sale of marketable securities (68,158) - - - Provision for losse 3,288 - 491 - Changes in operating assets and liabilities: Accounts receivable 2,927 16,584 3,618 (3,822) Accounts payable and accruals (35,359) (31,711) (3,096) (2,885) Deposits due to lessees - 12,914 - - Accrued interest 1,534 - 1,534 - Unearned operating lease income (988) 2,561 (125) (12) --------- --------- --------- --------- Net cash provided by operations 165,441 114,540 38,144 46,192 --------- --------- --------- --------- Investing activities: Investment in operating lease assets (208,787) - - - Proceeds from sale of marketable securities 68,158 - - - Proceeds from sales of equipment 33,901 314,116 3,901 (3,108) Reductions in net investment in direct financing leases 58,085 88,102 20,433 37,152 Investment in direct financing leases - (247,000) - - Payment of initial direct costs - (3,705) - - --------- --------- --------- --------- Net cash (used in) provided by investing activities (48,643) 151,513 24,334 34,044 --------- --------- --------- --------- 												 Financing activities: Proceeds of non-recourse debt 205,517 - - - Repayments of non-recourse debt (6,444) (102,214) (6,444) (7,200) Repurchase of limited partnership units - (1,894) - - Distributions to Limited Partners (430,696)(1,006,050) (135,760) (335,349) --------- ---------- --------- --------- Net cash used in financing activities (231,623)(1,110,158) (142,204) (342,549) --------- ---------- --------- --------- Net decrease in cash and cash equivalents (114,825) (844,105) (79,726) (262,313) Cash and cash equivalents at beginning of period 203,776 987,546 168,677 405,754 --------- ---------- --------- --------- Cash and cash equivalents at end of period $88,951 $143,441 $88,951 $143,441 ========= ========= ========= ========= Supplemental disclosure of cash flow information: Cash paid for interest $8,077 $6,012 $4,796 $203 ========= ========= ========= ========= 												 				See accompanying notes. 			 ATEL CASH DISTRIBUTION FUND 			 (A CALIFORNIA LIMITED PARTNERSHIP) 												 			 NOTES TO FINANCIAL STATEMENTS 				 SEPTEMBER 30, 1995 												 				 (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. Investment in leases: 																					 The Partnership's investment in leases consists of the following: 																					 Depreciation Expense or December 31, Amortization September 30, 1994 Additions of Leases Dispositions 1995 ---- --------- --------- ------------ ---- Net investment in operating leases $149,632 $208,787 ($18,143) ($22,168) $318,108 Net investment in direct financing leases 332,682 - (58,085) (1) 274,596 Reserve for losses (594) (3,288) - - (3,882) Initial direct costs 3,251 - (680) - 2,571 --------- --------- ---------- --------- --------- $484,971 $205,499 ($76,908) ($22,169) $591,393 ========= ========= ========== ========= ========= Operating leases: 														 The following schedule provides an analysis of the Partnership's investment in property on operating leases by major classifications as of December 31, 1994, acquisitions and dispositions during the quarters ended March 31, June 30 and September 30, 1995 and as of September 30, 1995. 														 Acquisitions & December 31, ----- Dispositions ----- September 30, 1994 1st Quarter 2nd Quarter 3rd Quarter 1995 ---- ----------- ----------- ----------- ---- Materials handling $392,901 $392,901 Manufacturing equipment 35,653 $208,787 244,440 Motor vehicles 148,672 ($114,972) - ($13,981) 19,719 --------- --------- --------- --------- --------- 577,226 (114,972) 208,787 (13,981) 657,060 Less accumulated depreciation (427,594) 93,268 (6,764) 2,138 (338,952) --------- --------- --------- --------- --------- $149,632 ($21,704) $202,023 ($11,843) $318,108 ========= ========= ========= ========= ========= Equipment on operating leases was acquired in 1987, 1988, 1989, 1990, 1992, 1993 and 1995. 														 At September 30, 1995, the aggregate amounts of future minimum lease payments from direct financing leases and operating leases are as follows: 										 Direct Financing Operating Total ------- ------- ------- Three months ending December 31, 1995 $35,901 $30,120 $66,021 	Year ending December 31, 1996 143,606 81,437 225,043 1997 143,606 52,837 196,443 1998 51,091 51,948 103,039 1999 - 51,948 51,948 2000 - 25,974 25,974 ------- ------- -------- $374,204 $294,264 $668,468 ======== ======== ======== 3. Non-recourse debt: 												 Note payable to financial institution is due in monthly installments of principal and interest. The note is secured by an assignment of lease payments and a pledge of the assets which were purchased with the proceeds of the note. Interest on the note is at an annual rate of 9.25%. The balance remaining at September 30, 1995 is due in monthly payments through 2000. 												 Future minimum principal and interest payments of debt as of September 30, 1995 are as follows: 												 Principal Interest Total ------ ------ ------- Three months ending December 31, 1995 $8,448 $4,539 $12,987 Year ending December 31, 1996 35,808 16,140 51,948 1997 39,265 12,683 51,948 1998 43,055 8,893 51,948 1999 47,210 4,738 51,948 2000 25,287 687 25,974 -------- ------- ------- $199,073 $47,680 $246,753 ======== ======= ======== 4. Related party transactions: 												 The terms of the Limited Partnership Agreement provide that the General Partners and/or their Affiliates are entitled to receive certain fees for equipment acquisition, management and resale and for management of the Partnership. The General Partners earned partnership management fees equal to 5% of cash distributed from operations and equipment management fees equal to 2% of full payout lease rentals and 5% of operating lease rentals pursuant to the Limited Partnership Agreement. Effective April 1, 1994, the General Partners elected to waive all management fees. The amount of management fees earned in 1994 was $20,359. The Limited Partnership Agreement allows for the reimbursement of costs incurred by ATEL in providing administrative services to the Partnership. Administrative services provided include partnership accounting, investor relations, legal counsel and lease and equipment documentation. ATEL is not reimbursed for services where it is entitled to receive a separate fee as compensation for such services, such as acquisition and disposition of equipment. Reimbursable costs incurred by ATEL are allocated to the Partnership based upon actual time incurred by employees working on Partnership business and an allocation of rent and other costs based on utilization studies. Effective May 1, 1994, the General Partners have elected to waive all reimbursements of administrative costs. In 1995, $39,824 was waived. Costs charged and reimbursed in 1994 totaled $34,380. 													 													 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital Resources and Liquidity At September 30, 1995, the Partnership had cash balances of $88,949. 													 During the nine months and the quarter ended September 30, 1995, the Partnership's primary sources of liquidity were cash flows from leasing operations. The liquidity of the Partnership will vary in the future, increasing to the extent cash flows from operations exceed expenses, and decreasing as distributions are made to the Limited Partners and to the extent expenses exceed cash flows from leases. 													 The Partnership currently has available adequate reserves to meet contingencies. 													 As of September 30, 1995, the Partnership had borrowed approximately $2,817,500 with a remaining unpaid balance of approximately $199,000. There were $205,517 of borrowings between December 31, 1994 and September 30, 1995. The borrowings are non-recourse to the Partnership, that is the only recourse of the lender for a lessee default is to the equipment or corresponding lease acquired with the loan proceeds. The Partnership Agreement limits such borrowings to 80% of the total cost of equipment, in aggregate. 												 No commitments of capital have been made or are expected to be made in connection with the acquisition of additional equipment. The General PArtners have determined that the Partnership's investment objectives will be best served by making limited additional investments by means of non-recourse debt. The Partnership may acquire an asset for lease without use of any cash or exposure of any of its other assets by using 100% financing on a non-recourse basis. The Partnership may sell the asset when its lease terminates or sell it subject to the lease and debt. In either case, the potential residual proceeds may provide additional liquidation distributions to the Limited Partners. The Partnership will have the ability to dispose of the asset at any time consistent with the final liquidation of its portfolio and termination of the Partnership. The General Partners have in certain cases determined that waiver of fees or reimbursement of expenses to which they are entitled under the terms of the Agreement of Limited Partnership would be in the best interest of the Partnership and appropriate given the circumstances under which the Partneship was operating. Although the General Partners may be entitled to certain payments, they are fiduciaries and must analyze each payment authorized by the Partnership under all of the facts and circumstances prevailing. Any fees or reimbursements disclosed as waived will not be deferred or recovered in the future. However, unless a fee or reimbursement right is altered by an amendment to the Agreement of Limited Partnership, it is not permanently waived for any future period or transaction. 													 The Partnership made a distribution of cash from operations to the Limited Partners in April 1995. The amount of the distribution was $3.43 per Unit. The distribution represents an annualized distribution rate of 2.74%. 													 The Partnership made a distribution of cash from operations to the Limited Partners in July 1995. The amount of the distribution was $6.07 per Unit. The distribution represents an annualized distribution rate of 4.86%. 													 The Partnership made a distribution of cash from operations to the Limited Partners in October 1995. The amount of the distribution was $2.50 per Unit. The distribution represents an annualized distribution rate of 2.00%. 													 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. 													 Leases already in place, for the most part, would not be affected by changes in interest rates. Cash flows 1994 vs. 1993 Nine months: 													 Cash flows from operations increased for the nine month period compared to the same period in 1994. In 1995, there were two important sources of operating cash flows. As in 1994, cash flows from operating and direct financing leases were the primary sources of operating cash flows, however, these rents decreased by about $58,000. This was offset by the increase in other income of about $92,800. In 1995, the other income represented the Partnership's sharing in certain cash flows generated by the successor company to a former lessee. The rights to participate in these cash flows were a part of the bankruptcy settlement regarding that lessee. No such amounts will be received in the future. These amounts were received in June 1995. 													 Sources of cash from investing activities consisted of proceeds from the sales of marketable securities (in the first quarter), rents received on direct financing leases and the proceeds from sales of lease assets. The securities were received as a part of the bankruptcy settlement discussed above. The Partnership does not own any other marketable securities and no further income of this nature is expected. Cash flows from direct financing leases has decreased from the prior year as the Partnership's investment in such assets has declined due to sales of such assets over the last year. Proceeds from sales of lease assets declined from about $314,000 in 1994 to about $34,000 in 1995. The amounts of such sales are expected to vary considerably from one period to another but are expected to generally decline over the long-term as the Partnership's underlying portfolio of assets diminishes. 													 In 1995, the only financing source of cash was the $205,517 of non-recourse debt proceeds. The debt proceeds were used to finance the acquisition of lease assets in the second quarter. 													 Three months: 													 In both 1994 and 1995, lease rents were the primary source of operating cash flows. Lease rents decreased from about $52,300 in 1994 to about $47,000 in 1995. 													 In both years, the only significant investing source of cash was rents from direct financing leases. The amount decreased from about $37,200 in 1994 to about $20,400 in 1995. The decrease resulted from terminations of direct financing leases and sales of the related assets over the last year. 													 There were no financing sources of cash in either year. The primary financing use of cash continues to be distributions to the limited partners for both the three and nine month periods. 													 Results of Operations 													 As of December 29, 1986, the Partnership commenced operations in its primary business (leasing activities). Operations in the first nine months of 1995 resulted in net income of $255,104 compared to $66,964 in the previous year. 													 1995 vs. 1994: 													 Nine months: 													 Operating lease revenues declined from $142,563 in 1994 to $81,503 in 1995. This decline resulted from asset sales over the last year. The assets are typically sold at the expiration of the underlying lease contract. As the underlying pool of assets decreases, the rents generated also declines. The amounts of equipment on direct financing leases did not change as dramatically in the period and revenues actually increased slightly as a result of assets placed in service in June 1994. Gains realized on sales of assets decreased from the year before. Gains or losses on such sales are expected to fluctuate from one period to another. 													 In 1995, the Partnership sold certain securities at a gain of $68,158. The stock had been received as a part of the settlement of the bankruptcy of Financial News Network (FNN) (a former lessee of the Partnership). The stock was sold in the first quarter of 1995. In the second quarter, the Partnership received a cash payment from the successor to FNN. This was a sharing of certain cash flows generated by that successor and which the Partnership had received a right to participate in as a result of that bankruptcy settlement. The Partnership owns no more stock and if there will not be any further cash flows received from the successor company. 													 Depreciation expense has declined dramatically as operating lease assets have been sold over the last year. 													 Three months: 													 Lease revenues have declined from 1994 to 1995 as a result of asset sales over the last year as noted above. Depreciation has declined for the three month period for the same reasons as noted above for the nine month period. Interest expense increased for the three month period due to the amounts borrowed at the end of the second quarter of 1995. 													 The results of operations in future periods may vary significantly from those of the first nine months of 1995 as the Partnership's lease portfolio of capital equipment matures. Revenues from leases are expected to decline as leased assets come off lease and are sold or re-leased at lower lease rates. The effect on net income is not determinable as it will depend to a large degree on the amounts received from the sales of assets or from re-leases to either the same or new lessees once the initial lease terms expire. 													 													 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, 1995 and December 31, 1994 Statements of operations for the nine and three month periods ended September 30, 1995 and 1994 Statement of changes in partners' capital for the nine months ended September 30, 1995 Statements of cash flows for the nine and three month periods ended September 30, 1995 and 1994 Notes to the financial statements 					 2. Financial Statement Schedules 						 All 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 10, 1995 												 												 ATEL Cash Distribution Fund, a California Limited Partnership (Registrant) 												 												 By: /s/ A. J. BATT A. J. Batt, General Partner of registrant By: /s/ DEAN L. CASH Dean Cash, General Partner of registrant 		 		 		 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