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
September 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 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
SEPTEMBER 30, 2001
(Unaudited)
ASSETS
Cash and cash equivalents $ 900,623
Accounts receivable, net of allowance for doubtful
accounts of $67,211 190,315
Investment in leases 2,880,578
------------
$3,971,516
============
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $ 347,432
Accounts payable 41,149
Accrued interest 2,507
Unearned operating lease income 43,947
------------
Total liabilities 435,035
Partners' capital:
General Partner 228,780
Limited Partners 3,307,701
------------
Total partners' capital 3,536,481
------------
$3,971,516
============
See accompanying notes.
3
ATEL CASH DISTRIBUTION FUND IV, L.P.
INCOME STATEMENTS
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 2001 AND 2000
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
Revenues: 2001 2000 2001 2000
---- ---- ---- ----
Lease revenues:
Operating $ 491,177 $ 1,634,319 $ 176,164 $ 408,028
Direct financing 507,781 524,587 219,166 165,707
Gain (loss) on sales of assets 19,149 1,217,674 21,065 (5,480)
Interest income 19,718 182,983 6,119 72,863
Other 1,193 38,487 11 709
----------------- ----------------- ----------------- -----------------
1,039,018 3,598,050 422,525 641,827
Expenses:
Cost reimbursements to General Partner 445,163 178,446 193,879 70,959
Depreciation and amortization 360,895 837,320 111,517 276,637
Other 82,065 80,631 20,797 24,463
Interest 31,749 132,397 7,898 32,501
Professional fees 26,197 39,491 122 3,674
Management fees - 236,186 - 85,954
Railcar maintenance - 111,237 - -
----------------- ----------------- ----------------- -----------------
946,069 1,615,708 334,213 494,188
----------------- ----------------- ----------------- -----------------
Net income $ 92,949 $ 1,982,342 $ 88,312 $ 147,639
================= ================= ================= =================
Net income:
General Partner $ 929 $ 19,823 $ 883 $ 1,476
Limited Partners 92,020 1,962,519 87,429 146,163
----------------- ----------------- ----------------- -----------------
$ 92,949 $ 1,982,342 $ 88,312 $ 147,639
================= ================= ================= =================
Net income per Limited Partnership unit $0.01 $0.26 $0.01 $0.02
Weighted average number of units outstanding 7,487,350 7,487,350 7,487,350 7,487,350
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
NINE MONTH PERIOD ENDED
SEPTEMBER 30, 2001
(Unaudited)
Limited Partners General
Units Amount Partner 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 92,020 929 92,949
----------------- ----------------- ----------------- -----------------
Balance September 30, 2001 7,487,350 $ 3,307,701 $ 228,780 $3,536,481
================= ================= ================= =================
See accompanying notes.
4
ATEL CASH DISTRIBUTION FUND IV, L.P.
STATEMENTS OF CASH FLOWS
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 2001 AND 2000
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
2001 2000 2001 2000
---- ---- ---- ----
Operating activities:
Net income $ 92,949 $ 1,982,342 $ 88,312 $ 147,639
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 360,895 837,320 111,517 276,637
(Gain) loss on sales of assets (19,149) (1,217,674) (21,065) 5,480
Changes in operating assets and liabilities:
Accounts receivable 2,033,678 1,266,447 48,055 53,982
Bank overdrafts (230,243) -
Accounts payable, General Partner (32,722) (36,787) - (10,338)
Accounts payable, other (51,970) (233,672) (79,396) 6,268
Accrued interest (2,949) (4,769) (397) (1,620)
Unearned operating lease income (10,298) (60,570) (37,915) (12,778)
----------------- ----------------- ----------------- -----------------
Net cash from operations 2,140,191 2,532,637 109,111 465,270
----------------- ----------------- ----------------- -----------------
Investing activities:
Proceeds from sales of lease assets 166,285 1,916,239 (14,505) 8,176
Reduction of net investment in direct financing
leases 331,859 682,124 90,637 230,255
----------------- ----------------- ----------------- -----------------
Net cash provided by investing activities 498,144 2,598,363 76,132 238,431
----------------- ----------------- ----------------- -----------------
Financing activities:
Distributions to limited partners (1,331,182) (7,920,672) - (2,679,030)
Repayment of non-recourse debt (461,975) (1,175,776) (54,826) (399,613)
----------------- ----------------- ----------------- -----------------
Net cash used in financing activities (1,793,157) (9,096,448) (54,826) (3,078,643)
----------------- ----------------- ----------------- -----------------
Net increase (decrease) in cash and cash
equivalents 845,178 (3,965,448) 130,417 (2,374,942)
Cash and cash equivalents at beginning of
period 55,445 5,864,559 770,206 4,274,053
----------------- ----------------- ----------------- -----------------
Cash and cash equivalents at end of period $ 900,623 $ 1,899,111 $ 900,623 $1,899,111
================= ================= ================= =================
Supplemental disclosures of cash flow
information:
Cash paid for interest $ 34,698 $ 137,166 $ 8,295 $ 34,121
================= ================= ================= =================
See accompanying notes.
5
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000
(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 Reclass-
December 31, Amortization ifications & September 30,
2000 of Leases Dispositions 2001
---- --------- - ------------- ----
Net investment in operating leases $2,589,544 $ (351,612) $ (129,549) $2,108,383
Net investment in direct financing leases 1,674,127 (331,859) (6,479) 1,335,789
Equipment held for sale or lease 11,108 - (11,108) -
Initial direct costs, net of accumulated
amortization of $108,739 in 2001 and $99,456
in 2000 30,560 (9,283) - 21,277
Reserve for losses (584,871) - - (584,871)
----------------- ----------------- ----------------- -----------------
$3,720,468 $ (692,754) $ (147,136) $2,880,578
================= ================= ================= =================
At September 30, 2001, equipment on operating leases consists of the following:
Balance Balance
December 31, Acquisitions, Dispositions & Reclassifications September 30,
----------------------------------------------
2000 1st Quarter 2nd Quarter 3rd Quarter 2001
---- ----------- ----------- ----------- ----
Transportation $ 3,196,692 $ (124,809) $ (112,294) $ (102,604) $2,856,985
Construction equipment 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) (102,604) 5,388,862
Accumulated depreciation (3,139,025) (57,186) (41,324) (42,944) (3,280,479)
------------------- ----------------- ----------------- ----------------- -----------------
$ 2,589,544 $ (181,995) $ (153,618) $ (145,548) $2,108,383
=================== ================= ================= ================= =================
All of the equipment on operating leases was acquired during 1992, 1993, 1994,
1995 and 1996.
6
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 2000
(Unaudited)
2. Investment in lease assets (continued):
At September 30, 2001, the aggregate amounts of future minimum lease payments
are as follows:
Direct
Operating Financing Total
Three months ending December 31, 2001 $ 210,741 $ 226,500 $ 437,241
Year ending December 31, 2002 707,195 906,000 1,613,195
2003 535,663 906,000 1,441,663
2004 - 595,199 595,199
----------------- ----------------- -----------------
$1,453,599 $ 2,633,699 $4,087,298
================= ================= =================
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
6.69% to 8.95%.
Future minimum principal payments of non-recourse debt as of September 30, 2001
are as follows:
Principal Interest Total
Three months ending December 31, 2001 $ 53,036 $ 7,138 $ 60,174
Year ending December 31, 2002 187,916 18,137 206,053
2003 106,480 2,861 109,341
----------------- ----------------- -----------------
$ 347,432 $ 28,136 $ 375,568
================= ================= =================
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 and
commissions, pursuant to the Agreement of Limited Partnership as follows:
2001 2000
---- ----
Cost reimbursements to General Partner $ 445,163 $ 178,446
Incentive and equipment management fees - 236,186
----------------- -----------------
$ 445,163 $ 414,632
================= =================
7
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND 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 Partner.
As more fully described in the Partnership Agreement, 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.
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Capital Resources and Liquidity
Our primary sources of liquidity during the first nine months of 2001 were
operating and direct finance lease rents. Liquidity will vary in the future,
increasing to the extent cash flows from leases exceed expenses, and decreasing
as distributions are made to the Limited Partners and to the extent expenses
exceed cash flows from leases.
We currently have available adequate reserves to meet contingencies, but in the
event those reserves were found to be inadequate, we would likely be in a
position to borrow against our current portfolio to meet such requirements. We
envision no such requirements for operating purposes.
As of September 30, 2001, we had borrowed approximately $38,342,000, with a
remaining unpaid balance of approximately $347,000. Borrowings are to be
non-recourse to us, that is, the only recourse of the lender will be to the
equipment or corresponding lease acquired or secured with the loan proceeds. We
do not expect that there will be additional borrowings in the future.
As of September 30, 2001, we have made no commitments of capital.
If inflation in the general economy becomes significant, it may affect us in
that the residual (resale) values and rates on re-leases of our leased assets
may increase as the costs of similar assets increase. However, our 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 we 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.
2001 vs. 2000:
Nine months:
During the first nine months of 2001 and 2000, our primary source of operating
cash flows was operating and direct financing lease revenues. Our total lease
revenues decreased by $1,159,948 in 2001 compared to 2000.
In 2001, direct financing lease payments were our most important source of
financing cash flows. In 2000, the most significant source cash flows from
investing activities was the proceeds from the sales of assets. Our proceeds
from asset sales are not comparable to prior periods nor are they expected to be
comparable to future periods. Direct financing lease rents decreased by $350,265
compared to 2000.
We had no sources of cash from financing activities in 2001 or in 2000. The cash
we used to repay non-recourse debt has decreased due to scheduled debt
reductions. Our distributions to Limited Partners have decreased significantly
as a result of the suspension of distributions in January 2001.
Three months:
Our primary source of cash from operations for the third quarter was lease
rents. These lease rents have decreased from the prior year as a result of asset
sales during the preceding twelve months.
Our primary source of cash flows from financing activities in 2001 was rents
from direct financing leases.
9
We had no sources of cash from financing activities in 2001 or in 2000.
Repayments of debt decreased for the same reasons as noted above for the nine
month period. We made no distributions to the limited partners in the third
quarter of 2001 as a result of the suspension of distributions noted above for
the nine month period.
Results of Operations
In 2001, our operations resulted in net income of $92,949 for the nine month
period and $88,312 for the three month period. Our operations in 2000 resulted
in net income of $1,982,342 for the nine month period and $147,639 for the three
month period.
2001 vs. 2000:
Our operating lease revenues have decreased due to sales and reclassifications
of leased assets during the last twelve months.
Depreciation expense is directly related to the amounts of operating lease
assets and has decreased from 2000 to 2001 as a result of sales of operating
lease assets over the last year.
Effective January 1, 2001, the General Partner has ceased taking any management
fees. In prior years, our management fees were related to the amounts of lease
revenues and distributions to Limited Partners. As a result of reductions in the
outstanding non-recourse debt, interest expense has decreased compared to 2000.
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 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 was objected to by several
large creditors, including the General Partner. These creditors were seeking a
formal role on the creditors committee or formation of their own committee.
Upon the termination of the Debtor's exclusivity period, competing plans were
filed by other creditors to the plan, and voting on the competing plans occurred
on October 8, 2001. The results of the vote have not yet been made public.
10
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 Sheets, September 30, 2001 and December
31, 2000.
Income statements for the nine and three month
periods ended September 30, 2001 and 2000.
Statement of changes in partners' equity for the
nine month period ended September 30, 2001.
Statements of cash flows for the nine and three
month periods ended September 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
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:
November 12, 2001
ATEL CASH DISTRIBUTION FUND IV, L.P.
(Registrant)
By: ATEL Financial Corporation
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
Managing Member and
Principal financial officer of
registrant
By: /s/ DONALD E. CARPENTER
--------------------------------------
Donald E. Carpenter
Principal accounting officer of
registrant