Form 10-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 March 31, 1996
|_| 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
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
MARCH 31, 1996 AND DECEMBER 31, 1995
(Unaudited)
ASSETS
1996 1995
---- ----
Cash and cash equivalents $76,639 $91,084
Accounts receivable, net of allowance for
doubtful accounts of $22,097 in 1996 and 1995 11,486 6,098
Investments in leases and equipment 509,362 552,050
=============== ================
Total assets $597,487 $649,232
=============== ================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $181,929 $190,568
Accounts payable, trade and other 6,798 10,179
Deposits due to lessees 12,914 12,914
Accrued interest 1,404 1,471
Unearned lease income - 915
--------------- ----------------
Total liabilities 203,045 216,047
Partners' capital:
General partners 20,208 19,914
Limited partners 374,234 413,271
--------------- ----------------
Total partners' equity 394,442 433,185
--------------- ----------------
Total liabilities and partners' capital $597,487 $649,232
=============== ================
See accompanying notes.
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE MONTH PERIODS ENDED
MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
---- ----
Revenues:
Lease income:
Operating $29,196 $21,677
Direct financing 13,028 17,584
Gain (loss) on sale of lease assets 5,196 9,839
Gain on sale of marketable securities - 68,158
Interest income 146 320
Other 9 12
--------------- ----------------
47,575 117,590
--------------- ----------------
Expenses:
Depreciation and amortization 11,010 1,770
Interest 4,280 -
Other 1,602 2,515
Professional fees 1,238 8,405
Provision for losses - 1,408
--------------- ----------------
18,130 14,098
--------------- ----------------
Net income (loss) $29,445 $103,492
=============== ================
Net income (loss):
General Partners $294 $1,035
Limited Partners 29,151 102,457
--------------- ----------------
$29,445 $103,492
=============== ================
Net income (loss) per Limited Partnership unit $1.46 $5.13
Weighted average number of units outstanding 19,962 19,962
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
THREE MONTHS ENDED MARCH 31, 1996
Limited Partners General
Units Amount Partners Total
Balance December 31, 1995 19,962 $413,271 $19,914 $433,185
Net income 29,151 294 29,445
Distributions (68,188) (68,188)
----------------- -------------- --------------- ----------------
Balance March 31, 1996 19,962 $374,234 $20,208 $394,442
================= ============== =============== ================
See accompanying notes.
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED
MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
---- ----
Operating activities:
Net income (loss) $29,445 $103,492
Adjustments to reconcile net income (loss)
income to net cash provided by operations:
Depreciation and amortization expense 11,010 1,770
(Gain) loss on sale of assets (5,196) (9,839)
Gain on sale of marketable securities - (68,158)
Provision for losses - 1,408
Changes in operating assets and liabilities:
Accounts receivable (5,388) 3,606
Accrued interest (67) -
Unearned operating lease income (915) (988)
Accounts payable, other (3,381) (10,719)
--------------- ----------------
Net cash provided by operations 25,508 20,572
--------------- ----------------
Investing activities:
Proceeds from sale of marketable securities - 68,158
Proceeds from sale of lease assets 13,999 30,000
Reductions in net investment in direct
financing leases 22,875 18,318
--------------- ----------------
Net cash provided by investing activities 36,874 116,476
--------------- ----------------
Financing activities:
Distributions to limited partners (68,188) (218,201)
Repayments of non-recourse debt (8,639) -
--------------- ----------------
Net cash used in financing activities (76,827) (218,201)
--------------- ----------------
Net decrease in cash and cash equivalents (14,445) (81,153)
Cash and cash equivalents at beginning of period 91,084 203,776
--------------- ----------------
Cash and cash equivalents at end of period $76,639 $122,623
=============== ================
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $4,347
===============
See accompanying notes.
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(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 and equipment:
The Partnership's investment in leases consists of the following:
Depreciation
Expense or
December 31, Amortization March 31,
1995 of Leases Dispositions 1996
---- --------- -------------- ----
Net investment in operating leases $301,079 ($10,783) ($8,803) $281,493
Net investment in direct financing leases 252,989 (22,875) - 230,114
Initial direct costs 2,344 (227) - 2,117
Reserve for losses (4,362) - - (4,362)
================= ============== =============== ================
$552,050 ($33,885) ($8,803) $509,362
================= ============== =============== ================
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, 1995,
additions and dispositions during the quarter ended March 31, 1996 and as of
March 31, 1996.
December 31, 1st Quarter March 31,
1995 Additions Dispositions 1996
---- --------- ------------ ----
Materials handling $271,352 ($25,755) $245,597
Food processing 208,787 - 208,787
Motor vehicles 120,663 (16,052) 104,611
Manufacturing equipment 35,653 -35,653
----------------- -------------- --------------- ----------------
636,455 (41,807) 594,648
Less accumulated depreciation (335,376) ($10,783) 33,004 (313,155)
----------------- -------------- --------------- ----------------
$301,079 ($10,783) ($8,803) $281,493
================= ============== =============== ================
Equipment on operating leases was acquired in 1987, 1988, 1989, 1990, 1992, 1993
and 1995.
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
2. Investment in leases and equipment: (continued)
At March 31, 1996, the aggregate amounts of future minimum lease payments from
direct financing leases and operating leases are as follows:
Direct
Financing Operating Total
1996 $107,704 $59,254 $166,958
1997 143,606 52,837 196,443
1998 51,091 51,948 103,039
1999 - 51,948 51,948
2000 - 25,974 25,974
================= ============== ===============
$302,401 $215,987 $518,388
================= ============== ===============
4. Non-recourse debt:
At March 31, 1996, non-recourse debt consisted of a note payable to a financial
institution of $190,568. The notes is due in monthly payments of $4,329.
Interest on the note is at the rate of 9.264%. The note is secured by an
assignment of lease payments and a pledge of assets.
Future minimum principal payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
1996 $27,149 $11,812 $38,961
1997 39,248 12,700 51,948
1998 43,042 8,906 51,948
1999 47,204 4,744 51,948
2000 25,286 688 25,974
================= ============== ===============
$181,929 $38,850 $220,779
================= ============== ===============
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
5. 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 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, $16,892 was waived.
Item 2. Management's Discussion And Analysis Of Financial Condition And
Results Of Operations
Capital Resources and Liquidity
At March 31, 1996, the Partnership had cash balances of $76,639. Of this amount,
$20,740 was held for reserves. The balance was held for distribution to the
Limited Partners.
During the quarter, the Partnership's primary sources of liquidity were cash
flows from leasing operations and from sales of assets. The liquidity of the
Partnership will vary in the future, increasing to the extent cash flows from
operations and proceeds from asset sales exceed expenses, and decreasing as
distributions are made to the Limited Partners and to the extent expenses exceed
cash flows from leases and proceeds from asset sales.
The Partnership currently has available adequate reserves to meet contingencies.
Since 1986, the Partnership had borrowed approximately $2,818,000. The
outstanding balance at March 31, 1996 was $181,929. There were no new borrowings
between December 31, 1995 and March 31, 1996. The borrowings were generally
non-recourse to the Partnership, that is the only recourse of the lender upon
default by the lessee on the underlying lease was 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.
Cash flows from operations increased from $20,572 in 1995 to $25,508 in 1996.
This increase of approximately $5,000 was primarily due to an increase in lease
revenues of $2,963 compared to the first quarter of 1995. In future periods,
proceeds from the sales of assets are expected to be the Partnership's most
significant source of cash.
Cash provided by investing activities sources decreased from $116,476 in 1995 to
$36,874 in 1996. Proceeds from the sale of lease assets decreased by $16,001
compared to 1995. The sale of DBCC stock provided $68,158 in 1995, where none
was provided in 1996. Proceeds from lease asset sales are not expected to be
comparable from one year to another or from one quarter to another. The timing
of such sales is dependent upon the expirations of existing leases and
negotiated sales of the assets to either the lessees or to third parties. The
cash provided by the reduction of the Partnership's net investment in direct
financing leases increased from $18,318 in 1995 to $22,875 in 1996. These
amounts represent lease rents applied to reduce the net investment in such
leases and have decreased as leases have expired and as the underlying assets
have been sold over the last year.
Cash used in financing activities decreased from $218,201 in 1995 to $76,827 in
1996. All debt had been repaid before the first quarter of 1995 began and
therefore, there were no debt payments in 1995. Additional borrowings in the
second quarter of 1995 gave rise to the repayments in the first quarter of 1996.
Distributions decreased compared to 1995 and are expected to fluctuate in the
future depending on the amounts of cash available for such distributions. There
were no financing sources of cash in the first quarter of either 1996 or 1995.
The Partnership made a distribution of cash from operations to the Limited
Partners in April 1996. This distribution was based on the results of operations
and asset sales in the first quarter of 1996. The amount of the distribution was
$2.50 per Unit (which is equal to an annualized rate of 2.0%).
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.
Results of Operations
As of December 29, 1986, the Partnership commenced operations in its primary
business (leasing activities). Operations in the first quarter of 1996 resulted
in net income of $29,445 compared $103,492 in the previous year. The change from
the prior year was due to several factors. The most significant of these was the
gain realized in 1995 on the sale of common stock of Data Broadcasting
Corporation (DBCC)($68,158) received as a partial settlement of the 1991
bankruptcy of Financial News Network (FNN), a former lessee of the Partnership.
Depreciation expense increased by $9,240. This increase resulted from
depreciation of assets acquired in the second quarter of 1995. This was
partially offset by a decrease in professional fees.
The results of operations in future periods are expected vary significantly from
those of the first quarter of 1996 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, March 31, 1995 and December 31, 1996
Statements of operations for the three month periods ended
March 31, 1996 and 1995
Statement of changes in partners' capital for the three months
ended March 31, 1996
Statements of cash flows for the three month periods ended
March 31, 1996 and 1995
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 Fork 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:
May 10, 1996
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