Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
|X| Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 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 0-21552
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
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(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 989-8800
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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
JUNE 30, 2000
(Unaudited)
ASSETS
Cash and cash equivalents $ 4,274,053
Accounts receivable 386,947
Investments in leases 6,351,961
----------------
$11,012,961
================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $ 1,813,254
Accounts payable:
General partners 40,127
Other 22,820
Accrued interest payable 8,589
Unearned operating lease income 101,991
----------------
Total liabilities 1,986,781
Partners' capital:
General partners 217,373
Limited partners 8,808,807
----------------
Total partners' capital 9,026,180
----------------
$11,012,961
================
See accompanying notes.
3
ATEL CASH DISTRIBUTION FUND IV, L.P.
INCOME STATEMENTS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2000 AND 1999
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
Lease revenues:
Operating leases $ 1,226,291 $ 1,505,948 $ 574,504 $ 611,212
Direct financing leases 358,880 356,176 178,265 148,925
Leveraged leases - 80,864 - 13,245
Gain on sale of assets 1,223,154 5,137,639 1,166,793 3,157,632
Interest income 110,120 47,838 44,885 45,744
Other income 37,778 12,012 2,589 7,161
---------------- ---------------- ---------------- ----------------
2,956,223 7,140,477 1,967,036 3,983,919
Expenses:
Depreciation and amortization 560,683 965,720 276,828 428,125
Equipment and incentive management fees 150,232 353,153 85,827 170,756
Interest 99,896 173,756 40,271 74,295
Railcar maintenance 111,237 - - -
Other 56,168 141,984 48,219 81,282
Administrative cost reimbursements 107,487 100,007 63,500 69,398
Professional fees 35,817 20,959 21,520 15,000
---------------- ---------------- ---------------- ----------------
1,121,520 1,755,579 536,165 838,856
---------------- ---------------- ---------------- ----------------
Net income $ 1,834,703 $ 5,384,898 $ 1,430,871 $ 3,145,063
================ ================ ================ ================
Net income:
General partners $ 18,347 $ 53,849 $ 14,309 $ 31,451
Limited partners 1,816,356 5,331,049 1,416,562 3,113,612
---------------- ---------------- ---------------- ----------------
$ 1,834,703 $ 5,384,898 $ 1,430,871 $ 3,145,063
================ ================ ================ ================
Net income per limited partnership unit $0.24 $0.71 $0.19 $0.42
Weighted average number of units
outstanding 7,487,350 7,487,350 7,487,350 7,487,350
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SIX MONTH PERIOD ENDED
JUNE 30, 2000
(Unaudited)
Limited Partners General
Units Amount Partners Total
Balance December 31, 1999 7,487,350 $12,234,093 $ 199,026 $12,433,119
Distributions to limited partners (5,241,642) - (5,241,642)
Net income 1,816,356 18,347 1,834,703
---------------- ---------------- ---------------- ----------------
Balance June 30, 2000 7,487,350 $ 8,808,807 $ 217,373 $ 9,026,180
================ ================ ================ ================
See accompanying notes.
4
ATEL CASH DISTRIBUTION FUND IV, L.P.
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2000 AND 1999
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2000 1999 2000 1999
---- ---- ---- ----
Operating activities:
Net income $ 1,834,703 $ 5,384,898 $ 1,430,871 $ 3,145,063
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 560,683 965,720 276,828 428,125
Leveraged lease income - (80,864) - (13,245)
Gain on sale of assets (1,223,154) (5,137,639) (1,166,793) (3,157,632)
Changes in operating assets and liabilities:
Accounts receivable 1,212,465 102,809 46,088 203,070
Accounts payable, general partner (26,449) (412,269) (56,675) (58,868)
Accounts payable, other (239,940) (17,727) (55,092) (60,978)
Accrued interest payable (3,149) (4,678) (1,590) (2,224)
Unearned operating lease income (47,792) (105,059) 3,715 32,698
---------------- ---------------- ---------------- ----------------
Net cash from operations 2,067,367 695,191 477,352 516,009
---------------- ---------------- ---------------- ----------------
Investing activities:
Proceeds from sales of assets 2,276,805 11,397,850 2,127,197 7,777,411
Reduction in investment in direct financing
leases 83,127 747,394 (146,733) 352,400
Reduction in investment in leveraged leases - - - (1,240)
---------------- ---------------- ---------------- ----------------
Net cash provided by investing activities 2,359,932 12,145,244 1,980,464 8,128,571
---------------- ---------------- ---------------- ----------------
Financing activities:
Payments of non-recourse debt (776,163) (1,104,894) (391,875) (510,230)
Distributions to limited partners (5,241,642) (5,242,412) (2,621,012) (2,621,410)
---------------- ---------------- ---------------- ----------------
Net cash used by financing activities (6,017,805) (6,347,306) (3,012,887) (3,131,640)
---------------- ---------------- ---------------- ----------------
Net (decrease) increase in cash and
cash equivalents (1,590,506) 6,493,129 (555,071) 5,512,940
Cash at beginning of period 5,864,559 371,891 4,829,124 1,352,080
---------------- ---------------- ---------------- ----------------
Cash at end of period $ 4,274,053 $ 6,865,020 $ 4,274,053 $ 6,865,020
================ ================ ================ ================
Supplemental disclosures of cash flow
information:
Cash paid during period for interest $ 103,045 $ 178,434 $ 41,861 $ 76,519
================ ================ ================ ================
See accompanying notes.
5
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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
10K.
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.
The Partnership's business consists of leasing various types of equipment. As of
June 30, 2000, the original terms of the leases were from six months to eight
years.
3. Investment in leases:
The Partnership's investment in leases consists of the following:
Depreciation
Expense or Reclass-
December 31, Amortization ifications & June 30,
1999 of Leases Dispositions 2000
---- --------- -------------- ----
Net investment in operating leases $ 4,402,707 $ (539,704) $ 421,827 $ 4,284,830
Net investment in direct financing leases 3,412,936 (83,127) (661,736) 2,668,073
Initial direct costs, net of accumulated
amortization of $496,325 in 1999 and
$649,058 in 2000 61,011 (20,979) - 40,032
Equipment held for lease 242,793 - (231,685) 11,108
Residual value interests 582,057 - (582,057) -
Reserve for losses (652,082) - - (652,082)
------------------ ---------------- ---------------- ----------------
$ 8,049,422 $ (643,810) $(1,053,651) $ 6,351,961
================== ================ ================ ================
6
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
3. Investments in leases (continued):
The Partnership's investment in property on operating leases consists of the
following:
Reclassifications &
December 31, Dispositions June 30,
1999 1st Quarter 2nd Quarter 2000
---- ----------- ----------- ----
Printing $ 3,478,749 $ 3,478,749
Transportation 2,763,271 $ 513,879 3,277,150
Construction 2,058,733 (263,984) $ (38,554) 1,756,195
Ground support 1,127,988 - - 1,127,988
Manufacturing 457,670 - - 457,670
Materials handling 291,920 - - 291,920
Other 272,267 (188,627) - 83,640
---------------- ---------------- ---------------- ----------------
10,450,598 61,268 (38,554) 10,473,312
Less accumulated depreciation (6,047,891) 88,352 (228,943) (6,188,482)
---------------- ---------------- ---------------- ----------------
$ 4,402,707 $ 149,620 $ (267,497) $ 4,284,830
================ ================ ================ ================
All of the property on operating leases was acquired from 1992 through 1997.
At June 30, 2000, the aggregate amounts of future minimum lease payments are as
follows:
Year ending Direct
December 31, Financing Operating Total
------------ --------- --------- -----
2000 $ 791,179 $ 822,622 $ 1,613,801
2001 1,086,349 1,162,969 2,249,318
2002 648,317 843,921 1,492,238
2003 561,360 609,022 1,170,382
2004 424,000 - 424,000
---------------- ---------------- ----------------
$ 3,511,205 $ 3,438,534 $ 6,949,739
================ ================ ================
7
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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
7.1% to 9.1%.
Future minimum principal payments of long-term non-recourse debt as of June 30,
2000 are as follows:
Year ending
December 31, Principal Interest Total
------------ --------- -------- -----
2000 $ 759,042 $ 60,350 $ 819,392
2001 697,282 56,062 753,344
2002 250,450 19,870 270,320
2003 106,480 2,861 109,341
---------------- ---------------- ----------------
$ 1,813,254 $ 139,143 $ 1,952,397
================ ================ ================
5. Related party transactions:
The terms of the Agreement of Limited Partnership provide that the General
Partners and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The General Partners and/or Affiliates earned the following fees, commissions
and reimbursements, pursuant to the Limited Partnership Agreement during the six
month periods ended June 30, 2000 and 1999 as follows :
2000 1999
---- ----
Reimbursement of administrative costs $ 107,487 $ 100,007
Incentive and equipment management fees 150,232 353,153
---------------- ----------------
$ 257,719 $ 453,160
================ ================
The amounts above are gross amounts incurred by the General Partners and/or
Affiliates, including commissions to broker-dealers for the sales of Partnership
Units.
8
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
6. Partner's capital:
The Fund is authorized to issue up to 7,500,000 Units of Limited Partnership
interest in addition to the Initial Limited Partners.
The Fund's Net Profits, Net Losses and Tax Credits are to be allocated 99% to
the Limited Partners and 1% to the General Partners.
As more fully described in the Agreement of Limited Partnership, available Cash
from Operations and Cash from Sales or Refinancing shall be distributed as
follows:
First, 5% of Distributions of Cash from Operations to the General Partner as
Incentive Management Fees.
Second, the balance to the Limited Partners until the Limited Partners have
received aggregate Distributions, as defined, in an amount equal to their
Original Invested Capital, as defined, plus a 10% per annum cumulative
(compounded daily) return on their Adjusted Invested Capital, as defined.
Third, the General Partner will receive as Incentive Management Fees, the
following:
(A) 10% of remaining Cash from Operations, as defined,
(B) 15% of remaining Cash from Sales or Refinancing, as defined.
Fourth, the balance to the Limited Partners.
9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Capital Resources and Liquidity
Funds which have been received, but which have not yet been invested in leased
equipment, are invested in interest-bearing accounts or high-quality/short-term
commercial paper.
The Partnership's primary source of liquidity during 2000 were lease revenues,
proceeds from the sales of lease assets and borrowings under the line of credit.
The liquidity of the Partnership will vary in the future, increasing to the
extent cash flows from leases exceed expenses, and decreasing as lease assets
are acquired, 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,
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 partner envisions no such requirements for
operating purposes.
As of June 30, 2000, the Partnership had borrowed approximately $38,342,000,
with a remaining unpaid balance of $1,813,254. Borrowings are to be non-recourse
to the Partnership, that is, the only recourse of the lender will be to the
equipment or corresponding lease acquired or secured with the loan proceeds. The
general partner expects that aggregate borrowings in the future will be
approximately 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 or are expected to be made other than for
the acquisition of additional equipment. As of June 30, 2000, there were no such
commitments.
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.
Cash Flows, 2000 vs. 1999:
Six months:
During the first six months of 2000 and 1999, proceeds from sales of lease
assets was the primary sources of cash flows.
Cash flows from operations increased by $1,372,176 from ($695,191 in 1999 to
$2,067,367 in 2000). The increase is a result of reductions of accounts
receivables in 2000 compared to 1999.
10
Sources of cash from investing activities consisted of proceeds from the sales
of lease assets and from direct financing lease rents accounted for as
reductions of the net investment in such leases. Proceeds from sales of assets
decreased from $11,397,850 in 1999 to $2,276,805 in 2000.
In 2000 and 1999, there were no sources of cash from financing activities. The
amounts of cash used to repay non-recourse debt and the amounts distributed to
the Limited Partners did not change significantly.
Three months:
Proceeds from sales of lease assets was the primary source of cash flows in the
second quarter of 2000 and 1999.
Operating lease rents have decreased by $279,657 from the prior year due to
asset sales during the preceding twelve months. These rents are the primary
source of cash from operations.
In 2000 and 1999, proceeds from lease assets sales were the most significant
source of cash from investing activities. Proceeds from asset sales has
decreased as most of the Partnership's lease assets have been sold over the last
eighteen months. Rents from direct financing leases also provided cash flows
from investing activities but has decreased as a result of asset sales.
During the second quarter of 2000 and 1999, there were no financing sources of
cash. Payments of non-recourse debt decreased slightly for the same reasons as
noted above for the six month period.
Results of Operations
Operations in the 2000 resulted in net income of $1,834,703 for the six month
period and $1,430,871 for the three month period. In 1999, operations resulted
in net income of $5,384,898 for the six month period and $3,145,063 for the
three month period.
Operating lease revenues decreased by $279,657 for the six month period and by
$36,708 for the three month period. Revenues have declined as leases have
matured and as the underlying assets have been sold. The Partnership's
investment in lease assets has decreased from $20,423,330 at December 31, 1998
to $6,351,961 at June 30, 2000. Most of the decrease has been as a result of
sales of assets. As leases mature and the related assets are sold, lease
revenues are expected to continue to decline. Gains and losses from the sales of
those assets are not expected to be consistent from one period to another.
The Partnership's operating expenses decreased by $634,059 for the six month
period and by $302,691 for the three month period. Most of the decrease resulted
from decreased depreciation expense. Depreciation has decreased as operating
leases have matured and as the underlying assets have been sold. Management fees
are related to lease revenues and have decreased along with those revenues.
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
No material legal proceedings are currently pending against the Partnership or
against any of its assets.
On December 31, 1997, Quaker Coal Company requested a moratorium on lease
payments from January through March 1998. No lease payments were made through
June of 1998. As a result, the General Partner declared the lease in default.
Subsequently, the lessee made the outstanding payments, however, the General
Partner refused to waive the default and insisted on additional damages in the
range of $1,377,000 to $2,543,000. The General Partner sued the lessee for
damages and is currently awaiting judgment from the court. The General Partner
believes that an adverse ruling would not have a material impact on the
operations of the Partnership. The amounts of these damages have not been
included in the financial statements included in Item 1 of this report.
11
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, June 30, 2000
Income statements for the six and three month periods
ended June 30, 2000 and 1999.
Statement of changes in partners' equity for the six
months ended June 30, 2000.
Statements of cash flows for the six and three month
periods ended June 30, 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
12
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:
August 11, 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