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, 2001
|_| 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
-----------------------------------------------------------
(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, 2001
(Unaudited)
ASSETS
Cash and cash equivalents $ 770,206
Accounts receivable, net of allowance for
doubtful accounts of $67,211 238,370
Investments in leases 3,047,162
----------------
$ 4,055,738
================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $ 402,258
Accounts payable 120,545
Accrued interest payable 2,904
Unearned operating lease income 81,862
----------------
Total liabilities 607,569
Partners' capital:
General partners 227,897
Limited partners 3,220,272
----------------
Total partners' capital 3,448,169
----------------
$ 4,055,738
================
See accompanying notes.
3
ATEL CASH DISTRIBUTION FUND IV, L.P.
INCOME STATEMENTS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2001 AND 2000
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2001 2000 2001 2000
---- ---- ---- ----
Revenues:
Lease revenues:
Operating leases $ 315,013 $ 1,226,291 $ 166,121 $ 574,504
Direct financing leases 288,615 358,880 143,005 178,265
(Loss) gain on sale of assets (1,916) 1,223,154 (9,279) 1,166,793
Interest income 13,599 110,120 5,368 44,885
Other income 1,182 37,778 144 2,589
---------------- ---------------- ---------------- ----------------
616,493 2,956,223 305,359 1,967,036
Expenses:
Cost reimbursements to General Partner 251,284 107,487 150,813 63,500
Depreciation and amortization 249,378 560,683 114,167 276,828
Other 61,268 56,168 24,974 48,219
Professional fees 26,075 35,817 20,455 21,520
Interest 23,851 99,896 10,005 40,271
Equipment and incentive management fees - 150,232 (30,928) 85,827
Railcar maintenance - 111,237 - -
---------------- ---------------- ---------------- ----------------
611,856 1,121,520 289,486 536,165
---------------- ---------------- ---------------- ----------------
Net income $ 4,637 $ 1,834,703 $ 15,873 $ 1,430,871
================ ================ ================ ================
Net income:
General partners $ 46 $ 18,347 $ 159 $ 14,309
Limited partners 4,591 1,816,356 15,714 1,416,562
---------------- ---------------- ---------------- ----------------
$ 4,637 $ 1,834,703 $ 15,873 $ 1,430,871
================ ================ ================ ================
Net income per limited partnership unit $0.00 $0.24 $0.00 $0.19
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, 2001
(Unaudited)
Limited Partners General
Units Amount Partners Total
Balance December 31, 2000 7,487,350 $ 4,546,863 $ 227,851 $ 4,774,714
Distributions to limited partners (1,331,182) - (1,331,182)
Net income 4,591 46 4,637
---------------- ---------------- ---------------- ----------------
Balance June 30, 2001 7,487,350 $ 3,220,272 $ 227,897 $ 3,448,169
================ ================ ================ ================
See accompanying notes.
4
ATEL CASH DISTRIBUTION FUND IV, L.P.
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2001 AND 2000
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2001 2000 2001 2000
---- ---- ---- ----
Operating activities:
Net income $ 4,637 $ 1,834,703 $ 15,873 $ 1,430,871
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 249,378 560,683 114,167 276,828
Gain on sale of assets 1,916 (1,223,154) 9,279 (1,166,793)
Changes in operating assets and liabilities:
Accounts receivable 1,985,623 1,212,465 88,081 46,088
Bank overdrafts (230,243) - - -
Accounts payable, general partner (32,722) (26,449) (30,928) (56,675)
Accounts payable, other 27,426 (239,940) 82,129 (55,092)
Accrued interest payable (2,552) (3,149) (1,288) (1,590)
Unearned operating lease income 27,617 (47,792) 77,197 3,715
---------------- ---------------- ---------------- ----------------
Net cash from operations 2,031,080 2,067,367 354,510 477,352
---------------- ---------------- ---------------- ----------------
Investing activities:
Proceeds from sales of assets 180,790 2,276,805 45,146 2,127,197
Reduction in investment in direct financing
leases 241,222 83,127 157,059 (146,733)
---------------- ---------------- ---------------- ----------------
Net cash provided by investing activities 422,012 2,359,932 202,205 1,980,464
---------------- ---------------- ---------------- ----------------
Financing activities:
Payments of non-recourse debt (407,149) (776,163) (205,482) (391,875)
Distributions to limited partners (1,331,182) (5,241,642) 2,853 (2,621,012)
---------------- ---------------- ---------------- ----------------
Net cash used in financing activities (1,738,331) (6,017,805) (202,629) (3,012,887)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in cash and
cash equivalents 714,761 (1,590,506) 354,086 (555,071)
Cash at beginning of period 55,445 5,864,559 416,120 4,829,124
---------------- ---------------- ---------------- ----------------
Cash at end of period $ 770,206 $ 4,274,053 $ 770,206 $ 4,274,053
================ ================ ================ ================
Supplemental disclosures of cash flow
information:
Cash paid during period for interest $ 26,403 $ 103,045 $ 11,293 $ 41,861
================ ================ ================ ================
See accompanying notes.
5
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
(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, 2001, 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,
2000 of Leases Dispositions 2001
---- --------- -------------- ----
Net investment in operating leases $ 2,589,544 $ (243,072) $ (92,541) $ 2,253,931
Net investment in direct financing leases 1,674,127 (241,222) (79,795) 1,353,110
Initial direct costs, net of accumulated
amortization of $99,456 in 2000 and
$105,762 in 2001 30,560 (6,306) - 24,254
Equipment held for lease 11,108 - (10,370) 738
Reserve for losses (584,871) - - (584,871)
------------------ ---------------- ---------------- ----------------
$ 3,720,468 $ (490,600) $ (182,706) $ 3,047,162
================== ================ ================ ================
6
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
(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,
2000 1st Quarter 2nd Quarter 2001
---- ----------- ----------- ----
Transportation $ 3,196,692 $ (124,809) $ (112,294) $ 2,959,589
Construction 1,756,195 - - 1,756,195
Manufacturing 457,670 - - 457,670
Materials handling 291,920 - - 291,920
Other 26,092 - - 26,092
---------------- ---------------- ---------------- ----------------
5,728,569 (124,809) (112,294) 5,491,466
Less accumulated depreciation (3,139,025) (57,186) (41,324) (3,237,535)
---------------- ---------------- ---------------- ----------------
$ 2,589,544 $ (181,995) $ (153,618) $ 2,253,931
================ ================ ================ ================
All of the property on operating leases was acquired from 1992 through 1997.
At June 30, 2001, the aggregate amounts of future minimum lease payments are as
follows:
Year ending Direct
December 31, Financing Operating Total
------------ --------- --------- -----
2001 $ 283,626 $ 429,942 $ 713,568
2002 561,360 725,017 1,286,377
2003 561,360 554,385 1,115,745
2004 423,999 - 423,999
---------------- ---------------- ----------------
$ 1,830,345 $ 1,709,344 $ 3,539,689
================ ================ ================
7
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
(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,
2001 are as follows:
Year ending
December 31, Principal Interest Total
------------ --------- -------- -----
2001 $ 107,862 $ 15,433 $ 123,295
2002 187,916 18,137 206,053
2003 106,480 2,861 109,341
---------------- ---------------- ----------------
$ 402,258 $ 36,431 $ 438,689
================ ================ ================
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, 2001 and 2000 as follows :
2001 2000
---- ----
Reimbursement of administrative costs $ 251,284 $ 107,487
Incentive and equipment management fees - 150,232
---------------- ----------------
$ 251,284 $ 257,719
================ ================
Effective January 1, 2001, the General Partners have ceased charging the
Partnership any further fees.
8
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
(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 2001 were lease revenues
and proceeds from the 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 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, 2001, the Partnership had borrowed approximately $38,342,000,
with a remaining unpaid balance of $402,258. 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. As of June 30,
2001, 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, 2001 vs. 2000:
Six months:
During the first six months of 2001, lease rents were the primary source of cash
flows. During the first six months of 2000, proceeds from sales of lease assets
was the primary sources of cash flows.
Cash flows from operations decreased by $36,287 from ($2,067,367 in 2000 to
$2,031,080 in 2001).
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 $2,276,805 in 2000 to $180,790 in 2001.
10
In 2001 and 2000, there were no sources of cash from financing activities. As
scheduled debt payments have been made over the last year, debt balances have
been reduced. As a result, the amounts of cash used to make such debt payments
has also decreased. The Partnership has made no distributions from 2001
operations. This has resulted in a decrease in the amount of cash used for such
distributions.
Three months:
Lease rents were the primary source of cash flows in the second quarter of 2001.
Proceeds from sales of lease assets was the primary source of cash flows in the
second quarter of 2000.
Operating lease rents have decreased by $408,383 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, 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. Such rents were the
primary source of cash from investing activities in 2001.
During the second quarter of 2001 and 2000, there were no financing sources of
cash. Payments of non-recourse debt and distributions to the Limited Partners
decreased for the same reasons as noted above for the six month period.
Results of Operations
Operations in 2000, operations resulted in net income of $4,367 for the six
month period and $15,873 for the three month period. 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.
Operating lease revenues decreased by $911,278 for the six month period and by
$408,383 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 $8,049,422 at December 31, 1999 to
$3,047,162 at June 30, 2001. 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 $509,664 for the six month
period and by $246,679 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
have decreased as the General Partner has determined to charge the Partnership
no further fees. These decreases were partially offset by increased
administrative costs in both the six and three month periods.
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
No material legal proceedings are currently pending against the Partnership or
against any of its assets.
11
On December 31, 1997, Quaker Coal Company requested a moratorium on lease
payments from January through March 1998. No lease payments were made by the
lessee through June of 1998, and as a result, the General Partner declared the
lease in default. Subsequently, the lessee cured the outstanding payments and
eventually satisfied substantially all lease payments due under the Lease;
however, the General Partner refused to waive the default and insisted on
contractual damages. The General Partner filed a suit against the lessee for its
contractual damages in the U.S. District Court of Northern California (the
"Court") (Case No. 98-02971 THE). On June 16, 2000, the lessee filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. The amounts of these
damages have not been included in the financial statements included in Part I,
Item 1 of this report.
The Partnership obtained a stipulation for relief from the automatic bankruptcy
stay to allow the Court to issue its ruling, and filed a request to participate
on the Official Committee of Unsecured Creditors in the bankruptcy proceedings.
The Partnership succeeded upon securing the return of its equipment, which has
been liquidated, netting approximately 17% of the original equipment cost. The
Court issued a ruling on March 4, 2001, denying the Partnership's claim for
damages. The Lessee subsequently filed a claim against the Partnership, for
reimbursement of its legal expenses. The General Partner believes the Court's
decision is erroneous, as a matter law, and has filed an appeal of the decision
in the U.S. District Court of Appeals.
The lessee filed a plan of reorganization, which has been objected to by several
large creditors, including the General Partner. These creditors are also seeking
a formal role on the creditors committee or formation of their own committee.
Currently, the likelihood of recovery of amounts above the payment of the lease
rent and the liquidation of the equipment is speculative and highly uncertain.
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, 2001
Income statements for the six and three month periods
ended June 30, 2001 and 2000. Statement of changes in
partners' equity for the six months ended June 30, 2001.
Statements of cash flows for the six and three month
periods ended June 30, 2001 and 2000.
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 8, 2001
ATEL CASH DISTRIBUTION FUND IV, L.P.
(Registrant)
By: ATEL Financial Services, LLC
General Partner of Registrant
By: /s/ DEAN L. CASH
---------------------------------
Dean L. Cash
President and Chief
Executive Officer of General
Partner
By: /s/ PARITOSH K. CHOKSI
------------------------------------
Paritosh K. Choksi
Executive Vice President of
General Partner, Principal
financial officer of registrant
By: /s/ DONALD E. CARPENTER
-------------------------------------
Donald E. Carpenter,
Principal accounting officer of
registrant