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, 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
MARCH 31, 2001
(Unaudited)
ASSETS
Cash and cash equivalents $ 416,120
Accounts receivable 326,451
Investments in leases 3,372,813
------------------
Total assets $4,115,384
==================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $ 607,740
Accounts payable:
General Partner 30,928
Other 38,416
Accrued interest payable 4,192
Unearned operating lease income 4,665
------------------
Total liabilities 685,941
Partners' capital:
General Partner 227,739
Limited Partners 3,201,704
------------------
Total partners' capital 3,429,443
------------------
Total liabilities and partners' capital $4,115,384
==================
See accompanying notes.
3
ATEL CASH DISTRIBUTION FUND IV, L.P.
INCOME STATEMENTS
THREE MONTH PERIODS ENDED
MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
---- ----
Revenues:
Leasing activities:
Operating leases $ 148,892 $ 651,787
Direct financing leases 145,610 180,615
Gain on sale of assets 7,363 56,361
Interest 8,231 65,235
Other 1,038 35,189
--------------------- ------------------
311,134 989,187
--------------------- ------------------
Expenses:
Depreciation and amortization 135,211 283,855
Cost reimbursements to General Partner 100,471 43,987
Other 36,294 7,949
Equipment and incentive management fees to General Partner 30,928 64,405
Interest 13,846 59,625
Professional fees 5,620 14,297
Railcar maintenance - 111,237
--------------------- ------------------
322,370 585,355
--------------------- ------------------
Net (loss) income $ (11,236) $ 403,832
===================== ==================
Net (loss) income:
General Partner $ (112) $ 4,038
Limited Partners (11,124) 399,794
--------------------- ------------------
$ (11,236) $ 403,832
===================== ==================
Net (loss) income per Limited Partnership unit $ (0.00) $ 0.05
Weighted average number of units outstanding 7,487,350 7,487,350
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
THREE MONTH PERIOD ENDED
MARCH 31, 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 (1,334,035) - (1,334,035)
Net loss (11,124) (112) (11,236)
---------------- -------------------- --------------------- ------------------
Balance March 31, 2001 7,487,350 $ 3,201,704 $ 227,739 $3,429,443
================ ==================== ===================== ==================
See accompanying notes.
4
ATEL CASH DISTRIBUTION FUND IV, L.P.
STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED
MARCH 31, 2001 AND 2000
(Unaudited)
Operating activities: 2001 2000
---- ----
Net (loss) income $ (11,236) $ 403,832
Adjustments to reconcile net (loss) income to net cash provided by operations:
Depreciation and amortization 135,211 283,855
Gain on sale of asset (7,363) (56,361)
Changes in operating assets and liabilities:
Accounts receivable 1,897,542 1,166,377
Bank overdrafts (230,243) -
Accounts payable, General Partner (1,794) 30,226
Accounts payable, other (54,703) (184,848)
Accrued interest payable (1,264) (1,559)
Unearned operating lease income (49,580) (51,507)
--------------------- ------------------
Net cash from operations 1,676,570 1,590,015
--------------------- ------------------
Investing activities:
Reduction in investment in direct financing leases 84,163 229,860
Proceeds from sales of lease assets 135,644 149,608
--------------------- ------------------
Net cash provided by investing activities 219,807 379,468
--------------------- ------------------
Financing activities:
Distributions to limited partners (1,334,035) (2,620,630)
Repayment of non-recourse debt (201,667) (384,288)
--------------------- ------------------
Net cash used in financing activities (1,535,702) (3,004,918)
--------------------- ------------------
Net increase (decrease) in cash and cash equivalents 360,675 (1,035,435)
Cash and cash equivalents at beginning of period 55,445 5,864,559
--------------------- ------------------
Cash and cash equivalents at end of period $ 416,120 $4,829,124
===================== ==================
Supplemental disclosures of cash flow information:
Cash paid during period for interest $ 15,110 $ 61,184
===================== ==================
See accompanying notes.
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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
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,
2000 of Leases Dispositions 2001
---- --------- - ------------- ----
Net investment in operating leases $ 2,589,544 $ (132,058) $ (49,937) $2,407,549
Net investment in direct financing leases 1,674,127 (84,163) (78,344) 1,511,620
Reserve for losses (584,871) - - (584,871)
Assets held for sale or lease 11,108 - - 11,108
Initial direct costs, net of accumulated
amortization of $99,456 in 2000 and
$102,609 in 2001 30,560 (3,153) - 27,407
------------------ -------------------- --------------------- ------------------
$ 3,720,468 $ (219,374) $ (128,281) $3,372,813
================== ==================== ===================== ==================
5
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2001
(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, 2000,
acquisitions and dispositions during the quarter ended March 31, 2001 and as of
March 31, 2001.
Reclassi-
December 31, fications and March 31,
2000 Depreciation Dispositions 2001
---- ------------ - ------------- ----
Transportation $ 3,196,692 $ (124,809) $3,071,883
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) 5,603,760
Less accumulated depreciation (3,139,025) $ (132,058) 74,872 (3,196,211)
---------------- -------------------- --------------------- ------------------
$ 2,589,544 $ (132,058) $ (49,937) $2,407,549
================ ==================== ===================== ==================
All of the property on operating leases was acquired during 1992, 1993, 1994,
1995 and 1996.
At March 31, 2001, the aggregate amounts of future minimum lease payments are as
follows:
Year ending Operating Direct Financing
December 31, Leases Leases Total
------------ ------ ------ -----
2001 $ 731,202 $ 585,142 $ 1,316,344
2002 7,445,507 561,360 8,006,867
2003 574,875 561,360 1,136,235
2004 - 424,000 424,000
---------------- -------------------- ---------------------
$ 8,751,584 $ 2,131,862 $ 10,883,446
================ ==================== =====================
6
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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
6.5% to 8.85%.
Future minimum principal payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
------------ --------- -------- -----
2001 $ 313,344 $ 26,727 $ 340,071
2002 187,916 18,137 206,053
2003 106,480 2,860 109,340
---------------- -------------------- ---------------------
$ 607,740 $ 47,724 $ 655,464
================ ==================== =====================
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:
2001 2000
---- ----
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). $ 30,928 $64,405
Costs reimbursed to General Partner 100,471 43,987
--------------------- ------------------
$ 131,399 $ 108,392
===================== ==================
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
During 2001, the Partnership's primary source of liquidity was rents from direct
financing and operating leases. During 2000, the Partnership's primary source of
liquidity was rents from operating leases. 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 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 $608,000. 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.
Cash Flows
In 2001, the primary sources of cash from operations were rents from direct
financing and operating leases. Rents from operating leases were the primary
sources of cash flows from operations in the first quarter of 2000. The amounts
of such rents decreased from $832,402 in 2000 to $294,502 in 2001, a decrease of
$537,900.
Sources of cash from investing activities in 2001 and 2000 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 $145,697. Lease rents have declined due to lease terminations and
sales of assets.
8
In the first quarter of 2001 and 2000, there were no financing sources of cash
flows. Repayments of non-recourse debt have decreased as a result of the
scheduled debt payments. In 2001, no distributions were made from first quarter
operations. As a result, distributions decreased compared to 2000.
Results of Operations
Operations in the first quarter of 2001 resulted in a net loss of $11,236
compared to net income of $403,832 in 2000.
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 2001. 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.
Total distributions to the Limited Partners decreased significantly leading a
reduction in the incentive management fee. Incentive management fees decreased
from $37,241 in 2000 to $18,692 in 2001. 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 $25,842 in 2000 to $10,252 in 2001.
In the first quarter of 2000, the Partnership incurred $111,237 of maintenance
costs related to rail cars that it owned at that time. The related rail cars
were sold later in 2000 and there were no similar costs in 2001.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
No material legal proceedings are currently pending against the Partnership or
against any of its assets. The following is a discussion of legal matters
involving the Partnership but which do not represent claims against the
Partnership or 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. 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.
9
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, 2001.
Income statements for the three month periods ended March 31, 2001
and 2000.
Statement of changes in partners' capital for the three months ended
March 31, 2001.
Statements of cash flows for the three month periods ended March 31,
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
10
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 11, 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
Principal financial officer
of registrant
By: /s/ Donald E. Carpenter
-----------------------------------
Donald E. Carpenter
Principal accounting
officer of registrant
11