UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
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: 0-13532
EQUIPMENT ASSET RECOVERY FUND L.P.
(Exact name of registrant as specified in its charter)
Texas 11-2661586
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
Attn: Andre Anderson
3 World Financial Center, 29th floor, New York, NY 10285
(Address of principal executive offices) (Zip code)
(212) 526-3237
(Registrant's telephone number, including area code)
Indicate by 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
Consolidated Balance Sheets
June 30, December 31,
Assets 1995 1994
Equipment:
Construction cranes $ 16,409,110 $ 17,436,077
Vehicles and equipment 128,761 135,336
---------- ----------
16,537,871 17,571,413
Less accumulated depreciation (9,187,219) (9,075,076)
---------- ----------
7,350,652 8,496,337
Cash and cash equivalents 1,100,209 1,215,735
Accounts receivable, net of
allowance for doubtful accounts
of $10,000 in 1995 and 1994 253,019 242,668
Organization and loan closing
costs, net of accumulated
amortization of $209,321 in
1995 and $176,270 in 1994 354,939 387,990
Other assets 145,236 191,048
--------- ----------
Total Assets $ 9,204,055 $ 10,533,778
========= ==========
Liabilities and Partners' Deficit
Liabilities:
Accounts payable and accrued
expenses $ 591,538 $ 584,631
Deferred management fee 1,801,658 1,715,943
Loans payable 5,191,860 7,047,335
Accrued interest - 50,012
Due to affiliates 53,331 62,331
Deferred income taxes 550,500 459,400
------- --------
Total Liabilities 8,188,887 9,919,652
Minority interest 1,332,519 1,383,651
Partners' Capital (Deficit):
General Partners (317,351) (534,011)
Limited Partners - (233,060)
Special Limited Partner - (2,454)
-------- --------
Total Partners' Deficit (317,351) (769,525)
-------- --------
Total Liabilities and Partners'
Deficit $ 9,204,055 $ 10,533,778
========= ==========
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1995
Special
General Limited Limited
Partners Partners Partner Total
Balance at December
31, 1994 $ (534,011) $ (233,060) $ (2,454) $ (769,525)
Net income 216,660 233,060 2,454 452,174
------- ------- ------- -------
Balance at June
30, 1995 $ (317,351) $ - $ - $ (317,351)
======== ======== ======== ========
Consolidated Statements of Operations
Three months ended Six months ended
June 30, June 30,
Income 1995 1994 1995 1994
Rental revenues $ 1,065,897 $ 1,180,318 $ 2,251,006 $ 2,443,648
Interest income 15,341 6,477 29,878 11,829
Gain on sale of cranes 334,345 - 761,044 -
Other income 6,383 11,361 14,134 22,069
--------- --------- --------- ---------
Total Income 1,421,966 1,198,156 3,056,062 2,477,546
--------- --------- --------- ---------
Expenses
Rental expenses 295,879 335,528 590,351 636,197
General, selling
and administrative 530,474 381,292 963,113 750,183
Depreciation and
amortization 310,632 338,263 627,103 676,527
Interest expense 125,852 159,466 267,638 318,515
Management fee 55,237 61,125 115,715 127,328
--------- --------- --------- ---------
Total Expenses 1,318,074 1,275,674 2,563,920 2,508,750
--------- --------- --------- ---------
Net Income (Loss)
before Minority
Interest and
Provision for
Income Taxes
103,892 (77,518) 492,142 (31,204)
Minority Interest 11,928 30,493 51,132 51,442
Net Income (Loss)
before Provision for
Income Taxes 115,820 (47,025) 543,274 20,238
Provision for Income
Taxes, Deferred 64,100 38,900 91,100 90,800
--------- ---------- --------- ---------
Net Income (Loss) $ 51,720 $ (85,925) $ 452,174 $ (70,562)
========= ========== ========= =========
Net Income (Loss) Allocated:
To the General
Partners $ (208,989) $ (55,987) $ 216,660 $ (55,373)
To the Limited
Partners 257,993 (29,627) 233,060 (15,032)
To the Special
Limited Partner 2,716 (311) 2,454 (157)
--------- ---------- --------- ---------
$ 51,720 $ (85,925) $ 452,174 $ (70,562)
========= ========== ========= =========
Per limited
partnership unit
(32,722 outstanding) $ 7.88 $ (0.91) $ 7.12 $ (0.46)
Consolidated Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income (Loss) $ 452,174 $ (70,562)
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities:
Gain on sale of cranes (761,044) -
Minority interest (51,132) (51,442)
Depreciation and amortization 627,103 676,527
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Accounts receivable, net (10,351) 200,042
Other assets 45,812 49,850
Accounts payable and accrued expenses 6,907 (63,593)
Deferred management fee 85,715 97,328
Due to affiliates (9000) -
Accrued interest (50,012) -
Deferred income taxes 91,100 90,800
-------- --------
Net cash provided by operating activities 427,272 928,950
-------- --------
Cash Flows from Investing Activities:
Proceeds from sale of cranes 1,312,677 -
Net cash provided by investing activities 1,312,677 -
Cash Flows from Financing Activities:
Proceeds from long-term debt 100,000 250,781
Principal payments on long-term debt (1,955,475) (913,581)
Net cash used for financing activities (1,855,475) (662,800)
Net increase decrease in cash
and cash equivalents (115,526) 266,150
Cash and cash equivalents at
beginning of period 1,215,735 732,220
--------- --------
Cash and cash equivalents at
end of period $ 1,100,209 $ 998,370
========= ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period
for interest $ 317,650 $ 379,835
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1994 audited consolidated financial
statements within Form 10-K.
The unaudited consolidated financial statements include all adjustments which
are, in the opinion of management, necessary to present a fair statement of
financial position as of June 30, 1995 and the results of operations for the
three and six months ended June 30, 1995 and 1994; and cash flows for the six
months ended June 30, 1995 and 1994 and the statement of changes in partners'
capital (deficit) for the six months ended June 30, 1995. Results of
operations for the period are not necessarily indicative of the results to be
expected for the full year.
Certain amounts in the 1994 financial statements have been reclassified to
conform with the 1995 presentation.
The following significant events have occurred subsequent to fiscal year 1994,
which require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
Sale of Cranes
In January and May 1995, the Partnership sold one DSC Venture crane and one SFN
crane, the proceeds of which were used to reduce the Partnership's debt:
Date Net Net Gain
of Selling Book on
Crane Sale Price Value Sale
Manitowoc 4100 January 4, 1995 $ 653,250 $ 226,551 $ 426,699
Manitowoc 4100w May 15, 1995 659,427 325,082 334,345
$ 1,312,677 $ 551,633 $ 761,044
The proceeds are net of 2.5% sales commission paid to Dayton-Scott
Equipment Company.
Part 1, Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
At June 30, 1995, the Partnership and its consolidated venture and subsidiary's
cash and cash equivalents balance totaled $1,100,209, a decrease of $115,526
from December 31, 1994. The decrease is due to principal payments on long-term
debt exceeding cash flow from operating activities and proceeds from the sales
of cranes during the first six months of 1995. The General Partners believe
that the Partnership has adequate cash reserves at DSC Venture ("DSC"), the
Partnership's 99% subsidiary, and Partnership levels to support operations and
the amortization of debt for the near term. However, there can be no assurance
that existing operating levels can be maintained and that these cash reserves
will be adequate in either the near or long term. The adequacy of the current
cash position will be affected by matters over which the Partnership and its
managers have little control. This includes market conditions which affect the
utilization and rental rates at which the Partnership's as sets are leased.
At June 30, 1995, construction cranes at cost totaled $16,409,110 as compared
to $17,436,077 at December 31, 1994. The decrease is due to the sale of one
DSC crane during the first quarter of 1995 and the sale of one SFN Corporation
("SFN") crane during the second quarter of 1995. The net selling price of the
DSC crane was $653,250, resulting in a gain of $426,699 in the first quarter of
1995. The net selling price of the SFN crane was $659,427, and a resulting
gain of $334,345 was recognized during second quarter of 1995. The proceeds
from these sales were used to reduce the Partnership's debt.
Loans payable were $5,191,860 at June 30, 1995 compared to $7,047,335 at
December 31, 1994. The $1,855,475 decrease is attributable to principal
payments made on the Partnership's debt in part utilizing the proceeds from the
crane sales discussed above.
Accrued interest decreased from $50,012 at December 31, 1994, to $0 at June 30,
1995, due to the timing of the Partnership's debt service payments.
Results of Operations
For the three and six months ended June 30, 1995 the Partnership generated net
income of $51,720 and $452,174, respectively, as compared to net losses of
$85,925 and $70,562 for the three and six months ended June 30, 1994. The
changes from net loss to net income are primarily due to the gains recognized
on the sale of cranes during the first and second quarters of 1995, partially
offset by increases in general, selling and administrative expenses.
Rental revenues for the three and six months ended June 30, 1995 decreased
compared to the same periods in 1994 primarily due to the sale of five cranes
over the past year. Dayton-Scott Equipment Company, the fleet's operational
manager, expects rental revenues to remain relatively steady over the remainder
of 1995 as a result of stable utilization and rental rates. There can be no
assurance, however, that either utilization rates or rental rates will remain
steady.
For the three and six months ended June 30, 1995, general, selling and
administrative expenses were $530,474 and $963,113, respectively, compared to
$381,292 and $750,183 for the corresponding periods in 1994. The increases in
both periods are primarily due to an accrual for SFN consulting and salary
expenses during second quarter of 1995, an increase in staffing at Dayton-Scott
Equipment Company and to non-recurring office expenses.
Interest expense for the three and six months ended June 30, 1995 decreased
from the same periods in 1994 due to interest being calculated on lower
outstanding principal balances on the Partnership's debt resulting from
principal repayments made over the past year.
PART II OTHER INFORMATION
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K: No reports on Form 8-K were filed during
the quarter ended June 30, 1995.
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.
EQUIPMENT ASSET RECOVERY FUND L.P.
BY: EQUIPMENT MANAGEMENT INC.
General Partner
Date: August 11, 1995 BY: /s/ Moshe Braver
Name: Moshe Braver
Title: Director and President
Date: August 11, 1995 BY: /s/ Daniel M. Palmier
Name: Daniel M. Palmier
Title: Vice President and Chief Financial
Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<DISCONTINUED> 000
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