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 March 31, 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.)
3 World Financial Center, 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
March 31, December 31,
Assets 1995 1994
Equipment:
Construction cranes $16,876,294 $17,436,077
Vehicles and equipment 128,761 135,336
17,005,055 17,571,413
Less accumulated depreciation (9,035,214) (9,075,076)
7,969,841 8,496,337
Cash and cash equivalents 1,069,051 1,215,735
Accounts receivable,
net of allowance for doubtful
accounts of $10,000 in 1995 and 1994 264,722 242,668
Organization and loan closing costs,
net of accumulated
amortization of $192,796 in 1995
and $176,270 in 1994 371,464 387,990
Other assets 174,880 191,048
Total Assets $ 9,849,958 $10,533,778
Liabilities and Partners' Deficit
Liabilities:
Accounts payable and accrued expenses $ 382,551 $ 584,631
Deferred management fee 1,761,421 1,715,943
Loans payable 6,194,210 7,047,335
Accrued interest - 50,012
Due to affiliates 50,000 62,331
Deferred income taxes 486,400 459,400
Total Liabilities 8,874,582 9,919,652
Minority interest 1,344,447 1,383,651
Partners' Deficit:
General Partners (108,362) (534,011)
Limited Partners (257,993) (233,060)
Special Limited Partner (2,716) (2,454)
Total Partners' Deficit (369,071) (769,525)
Total Liabilities and
Partners' Deficit $ 9,849,958 $10,533,778
Consolidated Statement of Partners' Deficit
For the three months ended March 31, 1995
Special
General Limited Limited
Partners Partners Partner Total
Balance at December 31, 1994 $(534,011) $(233,060) $(2,454) $(769,525)
Net income 425,649 (24,933) (262) 400,454
Balance at March 31, 1995 $(108,362) $(257,993) $(2,716) $(369,071)
Consolidated Statements of Operations
For the three months ended March 31, 1995 and 1994
Income 1995 1994
Rental revenues $ 1,185,109 $ 1,263,330
Interest income 14,537 5,352
Gain on sale of cranes 426,699 -
Other income 7,751 10,708
Total Income 1,634,096 1,279,390
Expenses
Rental expenses 294,472 300,669
General, selling and administrative 432,639 368,891
Depreciation and amortization 316,471 338,264
Interest expense 141,786 159,049
Management fee 60,478 66,203
Total Expenses 1,245,846 1,233,076
Income before Minority Interest and Provision
for Income Taxes 388,250 46,314
Minority Interest 39,204 20,949
Income before Provision for Income Taxes 427,454 67,263
Provision for Income Taxes, Deferred 27,000 51,900
Net Income $ 400,454 $ 15,363
Net Income Allocated:
To the General Partner $ 425,649 $ 614
To the Limited Partners (24,933) 14,595
To the Special Limited Partner (262) 154
$ 400,454 $ 15,363
Per limited partnership unit
(32,722 outstanding) $ (0.76) $ .45
Consolidated Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 400,454 $ 15,363
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of cranes (426,699) -
Minority interest (39,204) (20,949)
Depreciation and amortization 316,471 338,264
Increase (decrease) in
cash arising from changes
in operating assets and liabilities:
Accounts receivable, net (22,054) 188,950
Other assets 16,526 20,027
Accounts payable and
accrued expenses (202,080) (95,119)
Deferred management fee 45,478 51,203
Due to affiliates (12,331) (25,000)
Accrued interest (50,012) -
Deferred income taxes 27,000 51,900
Net cash provided by operating activities 53,549 524,639
Cash Flows from Investing Activities:
Proceeds from sale of cranes 652,892 -
Net cash provided by investing activities 652,892 -
Cash Flows from Financing Activities:
Principal payments on long-term debt (853,125) (300,271)
Net cash used for financing activities (853,125) (300,271)
Net increase (decrease) in
cash and cash equivalents (146,684) 224,368
Cash and cash equivalents at beginning of period 1,215,735 732,220
Cash and cash equivalents at end of period $ 1,069,051 $ 956,588
Supplemental Disclosure of
Cash Flow Information:
Cash paid during the period for interest $ 191,798 $ 159,049
Notes to the Consolidated Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of March 31, 1995 and the results of operations, and cash flows for
the three months ended March 31, 1995 and 1994 and the statement of changes in
partners' deficit for the three months ended March 31, 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.
No significant events have occurred subsequent to fiscal year 1994, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part 1, Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources
At March 31, 1995, the Partnership and its consolidated venture and
subsidiary's cash and cash equivalents balance totaled $1,069,051, a decrease
of $146,684 from December 31, 1994. The decrease is due to net principal
payments on long-term debt exceeding cash flow from operating activities and
proceeds from the sale of a crane during the first quarter 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 assets are leased.
At March 31, 1995, construction cranes at cost totaled $16,876,294 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. The net selling price of the crane
was $652,892, and a resulting gain of $426,699 was recognized during the first
quarter of 1995. The proceeds from this sale were used to reduce the
Partnership's debt.
Loans payable were $6,194,210 at March 31, 1995 compared to $7,047,335 at
December 31, 1994. The $853,125 decrease is attributable to principal payments
made on the Partnership's debt in part utilizing the proceeds from the first
quarter 1995 crane sale discussed above.
Accounts payable and accrued expenses at March 31, 1995 were $382,551 compared
to $584,631 at December 31, 1994. The $202,080 decrease is primarily
attributable to the timing of the payment of operating expenses and audit fees.
Results of Operations
The Partnership generated net income of $400,454 for the period ended March 31,
1995, compared to $15,363 for the same period in 1994. The increase is
primarily attributable to the $426,699 gain recognized on the sale of one crane
in the first quarter of 1995 partially offset by an increase in general,
selling and administrative expenses. The Partnership generated net income
before provision for income taxes and minority interest of $388,250 and $46,314
for the periods ended March 31, 1995 and 1994, respectively.
Rental revenue for the period ended March 31, 1995 did not change significantly
from the same period in 1994. Dayton-Scott Equipment Company, the fleet's
operational manager, expects rental revenues to remain 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.
General, selling and administrative expenses were $432,639 for the three months
ended March 31, 1995 compared to $368,891 for the corresponding period in 1994.
Such increase is primarily attributable to timing differences in the payment of
operating expenses, an increase in staffing at Dayton-Scott Equipment Company
and to nonrecurring offices expenses.
Interest expense for the period ended March 31, 1995 decreased from the same
period in 1994 due to interest being calculated on lower outstanding principal
balances on the Partnership's debt.
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 three month period covered by this report.
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: May 12, 1995
BY: /s/Moshe Braver
Name: Moshe Braver
Title: Director and President
Date: May 12, 1995
BY: /s/Daniel M. Palmier
Name: Daniel M. Palmier
Title: Vice President and
Chief Financial Officer
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
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