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 September 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
September 30, December 31,
Assets 1995 1994
Equipment:
Construction cranes $ 16,548,306 $ 17,436,077
Vehicles and equipment 128,761 135,336
16,677,067 17,571,413
Less accumulated depreciation (9,614,681) (9,075,076)
7,062,386 8,496,337
Cash and cash equivalents 1,110,602 1,215,735
Accounts receivable, net of
allowance for doubtful
accounts of $10,000 in 1995 and 1994 368,584 242,668
Organization and loan closing costs,
net of accumulated amortization of
$225,845 in 1995 and $176,270 in 1994 338,415 387,990
Other assets 96,214 191,048
Total Assets $ 8,976,201 $ 10,533,778
Liabilities and Partners' Deficit
Liabilities:
Accounts payable and accrued expenses $ 688,218 $ 584,631
Deferred management fee 1,843,527 1,715,943
Loans payable 5,100,785 7,047,335
Accrued interest 33,796 50,012
Due to affiliates 53,331 62,331
Deferred income taxes 561,600 459,400
Total Liabilities 8,281,257 9,919,652
Minority interest 1,281,624 1,383,651
Partners' Deficit:
General Partners (586,680) (534,011)
Limited Partners (32,722 Units
Outstanding) -- (233,060)
Special Limited Partner -- (2,454)
Total Partners' Deficit (586,680) (769,525)
Total Liabilities
and Partners' Deficit $ 8,976,201 $ 10,533,778
Consolidated Statement of Partners' Deficit
For the nine months ended September 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 (loss) (52,669) 233,060 2,454 182,845
Balance at September 30, 1995 $ (586,680) $ -- $ -- $ (586,680)
Consolidated Statements of Operations
Three months ended Nine months ended
September 30, September 30,
Income 1995 1994 1995 1994
Rental revenues $ 1,094,520 $ 1,259,317 $ 3,345,526 $ 3,702,965
Interest income 14,872 7,142 44,750 18,971
Other income 6,360 9,427 20,494 31,496
Total Income 1,115,752 1,275,886 3,410,770 3,753,432
Expenses
Rental expenses 470,339 349,104 1,060,690 985,301
General, selling and
administrative 432,128 373,013 1,395,241 1,123,196
Depreciation and amortization 304,790 328,126 931,893 1,004,653
Interest expense 160,750 172,309 428,388 490,824
Management fee 56,869 64,491 172,584 191,819
Total Expenses 1,424,876 1,287,043 3,988,796 3,795,793
Other Income
Gain on sale of cranes -- 516,451 761,044 516,451
Net Income (Loss) before
Minority Interest and
Provision for Income Taxes (309,124) 505,294 183,018 474,090
Minority Interest 50,895 31,003 102,027 82,445
Net Income (Loss) before
Provision for Income Taxes (258,229) 536,297 285,045 556,535
Provision for Income
Taxes, Deferred 11,100 38,100 102,200 128,900
Net Income (Loss) $ (269,329) $ 498,197 $ 182,845 $ 427,635
Net Income (Loss) Allocated:
To the General Partners $ (269,329) $ 568,271 $ (52,669) $ 512,898
To the Limited Partners -- (69,343) 233,060 (84,375)
To the Special Limited
Partner -- (731) 2,454 (888)
$ (269,329) $ 498,197 $ 182,845 $ 427,635
Per limited partnership
unit (32,722 outstanding) $ 0.00 $ (2.12) $ 7.12 $ (2.58)
Consolidated Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 182,845 $ 427,635
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of cranes (761,044) (516,451)
Minority interest (102,027) (82,445)
Depreciation and amortization 931,893 1,004,653
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Accounts receivable, net (125,916) (23,368)
Other assets 94,834 (64,404)
Accounts payable and accrued
expenses 103,587 105,186
Deferred management fee 127,584 146,819
Due to affiliates (9,000) (25,000)
Accrued interest (16,216) --
Deferred income taxes 102,200 128,900
Net cash provided by operating activities 528,740 1,101,525
Cash Flows from Investing Activities:
Proceeds from sale of cranes 1,312,677 931,125
Increase in restricted cash -- (931,125)
Net cash provided by investing activities 1,312,677 --
Cash Flows from Financing Activities:
Proceeds from long-term debt 100,000 275,503
Principal payments on long-term debt (2,046,550) (1,200,074)
Net cash used for financing activities (1,946,550) (924,571)
Net increase (decrease) in cash and
cash equivalents (105,133) 176,954
Cash and cash equivalents at
beginning of period 1,215,735 732,220
Cash and cash equivalents at end of period $ 1,110,602 $ 909,174
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period
for interest $ 444,604 $ 490,824
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 September 30, 1995 and the results of operations for
the three and nine months ended September 30, 1995 and 1994; and cash flows for
the nine months ended September 30, 1995 and 1994 and the statement of changes
in partners' capital (deficit) for the nine months ended September 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 (1) 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
1 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 September 30, 1995, the Partnership and its consolidated venture and
subsidiary's cash and cash equivalents balance totaled $1,110,602, a decrease
of $105,133 from December 31, 1994. The decrease is attributed to principal
payments made on long-term debt exceeding cash flow from operating activities
and proceeds from the sales of cranes during the first nine months of 1995.
Notwithstanding the foregoing, 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 assets are leased.
At September 30, 1995, construction cranes at cost totaled $16,548,306 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 $5,100,785 at September 30, 1995 compared to $7,047,335 at
December 31, 1994. The $1,946,550 decrease is attributable to principal
payments made on the Partnership's debt in part utilizing the proceeds from the
crane sales discussed above.
Results of Operations
For the three and nine months ended September 30, 1995 the Partnership
generated a net loss of $269,329 and net income of $182,845, respectively, as
compared to net income of $498,197 and $427,635 for the three and nine months
ended September 30, 1994. The change from net income to net loss for the
three-month period is primarily due to a $516,451 gain recognized on the sale
of three DSC Venture cranes in July and August of 1994, a decrease in rental
revenue and an increase in rental expense. The decrease in net income for the
nine-month period is mainly due to a decrease in rental revenue and an increase
in general, selling and administrative expenses, partially offset by the gains
recognized on the sales of cranes during the first and second quarters of 1995
discussed above.
Rental revenues for the three and nine months ended September 30, 1995
decreased compared to the same periods in 1994 primarily due to the sale of
five cranes since mid-1994. Dayton-Scott Equipment Company, the fleet's
operational manager, expects rental revenues to remain relatively steady
through 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.
Rental expenses for the three and nine months ended September 30, 1995
increased compared to the same periods in 1994 primarily as a result of a
increases in certain repairs and maintenance expenses net of on-site servicing
of cranes by Dayton-Scott that are typically charged back to crane lessees.
For the three and nine months ended September 30, 1995, general, selling and
administrative expenses were $432,128 and $1,395,241, respectively, compared to
$373,013 and $1,123,196 for the corresponding periods in 1994. The increases
in both periods are primarily due to an accrual for SFN consulting and salary
expenses during the second and third quarters of 1995 and to increases in
non-recurring office expenses.
Interest expense for the three and nine months ended September 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
(27) Financial Data Schedule
(b) Reports on Form 8-K: No reports on Form 8-K were filed
during the quarter ended September 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: November 14, 1995 BY: /s/ Moshe Braver
Name: Moshe Braver
Title: Director and President
Date: November 14, 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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