Form 10-QSB
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, 2000
|_| 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 000-21552
ATEL Cash Distribution Fund IV, L.P.
(Exact name of registrant as specified in its charter)
California 94-3145429
---------- ----------
(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
1
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
2
ATEL CASH DISTRIBUTION FUND IV, L.P.
BALANCE SHEET
MARCH 31, 2000
(Unaudited)
ASSETS
Cash and cash equivalents $ 4,829,124
Accounts receivable 433,035
Investments in leases 7,442,460
------------------
Total assets $12,704,619
==================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $ 2,205,129
Accounts payable:
General Partner 96,802
Other 77,912
Accrued interest payable 10,179
Unearned operating lease income 98,276
------------------
Total liabilities 2,488,298
Partners' capital:
General Partner 203,064
Limited Partners 10,013,257
------------------
Total partners' capital 10,216,321
------------------
Total liabilities and partners' capital $12,704,619
==================
See accompanying notes.
3
ATEL CASH DISTRIBUTION FUND IV, L.P.
INCOME STATEMENTS
THREE MONTH PERIODS ENDED
MARCH 31, 2000 AND 1999
(Unaudited)
2000 1999
---- ----
Revenues:
Leasing activities:
Operating leases $ 651,787 $ 894,736
Direct financing leases 180,615 207,251
Leveraged leases - 67,619
Gain on sale of assets 56,361 1,980,007
Interest 65,235 2,094
Other 35,189 4,851
--------------------- ------------------
989,187 3,156,558
--------------------- ------------------
Expenses:
Depreciation and amortization 283,855 537,595
Railcar maintenance 111,237 -
Equipment and incentive management fees to General Partner 64,405 182,397
Interest 59,625 99,461
Administrative cost reimbursements to General Partner 43,987 30,609
Professional fees 14,297 5,959
Other 7,949 60,702
--------------------- ------------------
585,355 916,723
--------------------- ------------------
Net income $ 403,832 $ 2,239,835
===================== ==================
Net income:
General Partner $ 4,038 $ 22,398
Limited Partners 399,794 2,217,437
--------------------- ------------------
$ 403,832 $ 2,239,835
===================== ==================
Net income per Limited Partnership unit $ 0.05 $ 0.30
Weighted average number of units outstanding 7,487,350 7,487,350
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
THREE MONTH PERIOD ENDED
MARCH 31, 2000
(Unaudited)
Limited Partners General
Units Amount Partner Total
Balance December 31, 1999 7,487,350 $12,234,093 $199,026 $12,433,119
Distributions to limited partners (2,620,630) - (2,620,630)
Net income 399,794 4,038 403,832
---------------- -------------------- --------------------- ------------------
Balance March 31, 2000 7,487,350 $ 10,013,257 $ 203,064 $10,216,321
================ ==================== ===================== ==================
See accompanying notes.
4
ATEL CASH DISTRIBUTION FUND IV, L.P.
STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED
MARCH 31, 2000 AND 1999
(Unaudited)
2000 1999
---- ----
Operating activities:
Net income $ 403,832 $ 2,239,835
Adjustments to reconcile net income to net cash provided by operations:
Leveraged lease income - (67,619)
Depreciation and amortization 283,855 537,595
Gain on sale of asset (56,361) (1,980,007)
Changes in operating assets and liabilities:
Accounts receivable 1,166,377 (100,261)
Accounts payable, General Partner 30,226 (353,401)
Accounts payable, other (184,848) 43,251
Accrued interest payable (1,559) (2,454)
Unearned operating lease income (51,507) (137,757)
--------------------- ------------------
Net cash from operations 1,590,015 179,182
--------------------- ------------------
Investing activities:
Reduction in investment in direct financing leases 229,860 394,994
Proceeds from sales of lease assets 149,608 3,620,439
Reduction in investment in leveraged leases - 1,240
--------------------- ------------------
Net cash provided by investing activities 379,468 4,016,673
--------------------- ------------------
Financing activities:
Distributions to limited partners (2,620,630) (2,621,002)
Repayment of non-recourse debt (384,288) (594,664)
--------------------- ------------------
Net cash used in financing activities (3,004,918) (3,215,666)
--------------------- ------------------
Net (decrease) increase in cash and cash equivalents (1,035,435) 980,189
Cash and cash equivalents at beginning of period 5,864,559 371,891
--------------------- ------------------
Cash and cash equivalents at end of period $ 4,829,124 $ 1,352,080
===================== ==================
Supplemental disclosures of cash flow information:
Cash paid during period for interest $ 61,184 $ 101,915
===================== ==================
See accompanying notes.
5
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
1. Summary of significant accounting policies:
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
10KSB.
2. Organization and partnership matters:
ATEL Cash Distribution Fund IV, L.P. (the Partnership), was formed under the
laws of the State of California on September 19, 1991, for the purpose of
acquiring equipment to engage in equipment leasing and sales activities.
Contributions in the aggregate of $600 were received as of October 8, 1991, $100
of which represented the General Partner's continuing interest, and $500 of
which represented the Initial Limited Partners' capital investment.
Upon the sale of the minimum amount of Units of Limited Partnership interest
(Units) of $1,200,000 and the receipt of the proceeds thereof on March 6, 1992,
the Partnership commenced operations.
The Partnership's business consists of leasing various types of equipment.
3. Investment in leases:
The Partnership's investment in leases consists of the following:
Depreciation
Expense and Reclassi-
December 31, Amortization fications and March 31,
1999 of Leases Dispositions 2000
---- --------- - ------------- ----
Net investment in operating leases $4,402,707 $ (273,208) $ 422,828 $ 4,552,327
Net investment in direct financing leases 3,412,936 (229,860) (286,244) 2,896,832
Residual value interests 582,057 - - 582,057
Reserve for losses (652,082) - - (652,082)
Assets held for sale or lease 242,793 - (229,831) 12,962
Initial direct costs, net of accumulated
amortization of $911,060 in 1999 and
$412,901 in 2000 61,011 (10,647) - 50,364
------------------ -------------------- --------------------- ------------------
$8,049,422 $ (513,715) $ (93,247) $ 7,442,460
================== ==================== ===================== ==================
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
3. Investment in leases (continued):
The following schedule provides an analysis of the Partnership's investment in
property on operating leases by major classifications as of December 31, 1999,
acquisitions and dispositions during the quarter ended March 31, 2000 and as of
March 31, 2000.
Reclassi-
December 31, fications and March 31,
1999 Depreciation Dispositions 2000
---- ------------ - ------------- ----
Transportation $2,763,271 $ 513,879 $ 3,277,150
Printing 3,478,749 - 3,478,749
Construction 2,058,733 (263,984) 1,794,749
Other 272,267 (188,627) 83,640
Manufacturing 457,670 - 457,670
Ground support 1,127,988 - 1,127,988
Materials handling 291,920 - 291,920
---------------- -------------------- --------------------- ------------------
10,450,598 61,268 10,511,866
Less accumulated depreciation (6,047,891) $ (273,208) 361,560 (5,959,539)
---------------- -------------------- --------------------- ------------------
$4,402,707 $ (273,208) $ 422,828 $ 4,552,327
================ ==================== ===================== ==================
All of the property on operating leases was acquired during 1992, 1993, 1994,
1995 and 1996.
At March 31, 2000, the aggregate amounts of future minimum lease payments are as
follows:
Year ending Operating Direct Financing
December 31, Leases Leases Total
------------ ------ ------ -----
2000 $1,330,329 $ 1,191,455 $ 2,521,784
2001 1,166,277 1,086,349 2,252,626
2002 847,229 648,317 1,495,546
2003 612,330 561,360 1,173,690
2004 - 424,000 424,000
---------------- -------------------- ---------------------
$3,956,165 $ 3,911,481 $ 7,867,646
================ ==================== =====================
6
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
4. Non-recourse debt:
Notes payable to financial institutions are due in varying monthly, quarterly
and semi-annual installments of principal and interest. The notes are secured by
assignments of lease payments and pledges of the assets which were purchased
with the proceeds of the particular notes. Interest rates on the notes vary from
6.5% to 8.85%.
Future minimum principal payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
- ------------ --------- -------- -----
2000 $1,150,917 $ 114,229 $ 1,265,146
2001 697,282 56,062 753,344
2002 250,450 19,870 270,320
2003 106,480 2,861 109,341
---------------- -------------------- ---------------------
$2,205,129 $ 193,022 $ 2,398,151
================ ==================== =====================
5. Related party transactions:
The terms of the Limited Partnership Agreement provide that the General Partner
and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The General Partner and/or Affiliates earned the following fees, commissions and
reimbursements, pursuant to the Limited Partnership Agreement as follows:
2000 1999
---- ----
Incentive management fees (computed as 5% of distributions of cash from
operations, as defined in the Limited Partnership Agreement) and equipment
management fees (computed as 5% of gross revenues from operating leases, as
defined in the Limited Partnership Agreement plus 2% of gross revenues from full
payout leases, as defined in the Limited Partnership Agreement). $ 64,405 $182,397
Administrative costs reimbursed to General Partner 43,987 30,609
------------- -------------
$ 108,392 $ 213,006
============= =============
7
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
6. Line of credit:
The Partnership participates with the General Partner and certain of its
Affiliates in a $95,000,000 revolving credit agreement with a group of financial
institutions which expires on July 28, 2000. The agreement includes an
acquisition facility to be used by the Partnership and Affiliates to provide
bridge financing for assets on leases. Draws on the acquisition facility by any
individual borrower are secured only by that borrower's assets, including
equipment and related leases.
From July 1, 2000 through July 28, 2000, the maximum available under the line of
credit shall be the then current balance or $85,000,000, which ever is less.
The Partnership had no borrowings under the agreement during 2000.
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of March 31,
2000.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
During 2000, the Partnership's primary source of liquidity was rents from
operating leases. During 1999, the Partnership's primary source of liquidity was
proceeds from sales of lease assets. The liquidity of the Partnership will vary
in the future, increasing to the extent cash flows from leases exceed expenses
and proceeds from lease asset sales, and decreasing as distributions are made to
the limited partners and to the extent expenses exceed cash flows from leases
and proceeds from lease asset sales.
As another source of liquidity, the Partnership has contractual obligations with
a diversified group of lessees for fixed lease terms at fixed rental amounts. As
the initial lease terms expire the Partnership will re-lease or sell the
equipment. The future liquidity beyond the contractual minimum rentals will
depend on the General Partner's success in re-leasing or selling the equipment
as it comes off lease.
The Partnership participates with the General Partner and certain of its
affiliates in a $95,000,000 revolving line of credit with a financial
institution. The line of credit expires on July 28, 2000. From July 1, 2000
through July 28, 2000, the maximum available under the line of credit shall be
the then current balance or $85,000,000, which ever is less.
The Partnership currently has available adequate reserves to meet contingencies,
but in the event those reserves were found to be inadequate, the Partnership
would likely be in a position to borrow against its current portfolio to meet
such requirements. The General Partners envision no such requirements for
operating purposes.
Through March 31, 2000, the Partnership had borrowed approximately $38,342,000
with a remaining unpaid balance of approximately $2,205,000. Borrowings are to
be generally non-recourse to the Partnership, that is, the only recourse of the
lender for a default by the lessee on the underlying lease will be to the
equipment or corresponding lease acquired with the loan proceeds. The General
Partners expect that aggregate borrowings in the future will not exceed 40% of
aggregate equipment cost. In any event, the Agreement of Limited Partnership
limits such borrowings to 40% of the total cost of equipment, in aggregate.
No commitments of capital have been made or are expected to be made.
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.
The Partnership made distributions of cash from 2000 first quarter operations in
February, March and April 2000. The amount of the distributions totaled $.35 per
Unit. This was paid in either monthly amounts of $.11667 per Unit or in one
quarterly payment of $.35 per Unit in April 2000. These distributions are equal
to an annualized distribution rate of 14%.
9
Cash Flows
Rents from operating leases were the primary sources of cash flows from
operations in the first quarter of both 2000 and 1999. The amounts of such rents
decreased from 1999 to 2000 by $242,949.
Sources of cash from investing activities in 2000 and 1999 consisted of the
proceeds of the sales of lease assets and cash flows from direct financing
leases. Proceeds from the sales of lease assets are not expected to be
consistent from one period to another. Cash flows from direct financing leases
decreased by $165,1344. Lease rents have declined due to lease terminations and
sales of assets.
In the first quarter of 2000 and 1999, there were no financing sources of cash
flows. Repayments of non-recourse debt have decreased as a result of the
scheduled debt payments.
Results of Operations
Operations in the first quarter of 2000 resulted in net income of $403,832
compared to $2,239,835 in 1999.
Operating lease revenues and the related depreciation expense have decreased as
a result of asset sales over the last year. Sales of these assets were not
significant in the first quarter of 2000. In 1999, sales of lease assets were
significantly greater and the amounts of gains recognized on those sales were
also significantly higher. Sales of assets are not expected to be consistent
from one period to another.
Depreciation expense has decreased as a result of operating lease asset sales
over the last year.
As scheduled debt payments have been made over the last year, debt balances have
been significantly reduced. As a result, interest expense has decreased compared
to the prior year.
Although total distributions to the Limited Partners was almost unchanged, a
larger portion was subject to the incentive management fee in 1999 than in 2000.
As a result, incentive management fees decreased from $167,925 in 1999 to
$37,241 in 2000. Equipment management fees are related to gross lease rents and
as those rents have decreased as a result of asset sales, the fees have
decreased from $44,473 in 1999 to $25,842 in 2000.
10
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 Sheet, March 31, 2000.
Income statements for the three month periods ended March 31, 2000
and 1999.
Statement of changes in partners' capital for the three months ended
March 31, 2000.
Statements of cash flows for the three month periods ended March 31,
2000 and 1999.
Notes to the Financial Statements
2. Financial Statement Schedules
All other 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
11
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 12, 2000
ATEL CASH DISTRIBUTION FUND IV, L.P.
(Registrant)
By: ATEL Financial Corporation
General Partner of Registrant
By: /s/ A. J. Batt
-------------------------------------
A. J. Batt
President and Chief Executive Officer
of General Partner
By: /s/ Dean L. Cash
-------------------------------------
Dean L. Cash
Executive Vice President
of General Partner
By: /s/ Paritosh K. Choksi
-----------------------------------
Paritosh K. Choksi
Principal financial officer
of registrant
By: /s/ Donald E. Carpenter
-----------------------------------
Donald E. Carpenter
Principal accounting
officer of registrant