Form 10-K/A
Amendment No. 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
x Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (fee required)
For the year ended December 31, 1994
Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (no fee required)
For the transition period from _____ to _____
Commission File number 0-16843
ATEL Cash Distribution Fund, a California Limited Partnership
California 94-2985201
(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
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Limited Partnership
Units
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
State the aggregate market value of voting stock held by non-affiliates of the
registrant: Inapplicable.
DOCUMENTS INCORPORATED BY REFERENCE
None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. x
PART I
Item 1. BUSINESS
General Development of Business
ATEL Cash Distribution Fund, a California Limited Partnership (the
Partnership), was formed under the laws of the State of California on November
29, 1985. The Partnership was formed for the purpose of acquiring equipment to
engage in equipment leasing and sales activities.
In a public offering of 15,000 units of Limited Partnership interest (Units)
(which was increased to 20,000 Units at the option of the General Partners),
at a price of $500 per Unit, the Partnership sold an aggregate of 20,000
Units for a total capitalization of $10,000,000. Of the proceeds received,
$950,000 was paid to ATEL Securities Corporation, a wholly owned subsidiary of
ATEL Financial Corporation (ATEL), the corporate general partner, as sales
commissions, $550,000 was paid to ATEL as reimbursements of organization and
other syndication costs and $8,250,000 was used to acquire leased equipment,
including acquisition fees paid to ATEL. An additional $250,000 was held for
reserves for repurchases of Units and for working capital. The offering was
closed as of December 18, 1987.
After reserves and amounts to be distributed from 1994 operations ($203,800),
the Partnership had no funds available for investment.
The Partnership's objectives are to invest in a diversified portfolio of
equipment which will (i) preserve, protect and return the Partnership's
invested capital, (ii) generate substantial distributions to the Limited
Partners of cash from operations and cash from sales or refinancing, with any
balance remaining after certain minimum distributions to be reinvested during
the reinvestment period (which ended December 31, 1994), and (iii) provide
significant cash distributions after the end of the reinvestment period, and
until all of the equipment is sold. The Partnership is governed by its
Limited Partnership Agreement.
Narrative Description of Business
The Partnership has acquired various types of equipment and leased such
equipment pursuant to "Operating" leases and "Full Payout" leases, where
"Operating" leases are defined as being leases in which the minimum lease
payments during the initial lease term do not recover the full cost of the
equipment and "Full Payout" leases recover such cost. It was the intention
of the General Partners that no more than 30% of the aggregate purchase price
of equipment will be subject to "Operating" leases at any time during the
reinvestment period and that no more than 20% of the aggregate purchase price
of equipment will be invested in equipment acquired from a single manufacturer.
The Partnership would only enter into leases with (i) companies that have
credit ratings of not less than Baa as determined by Moody's Investor Services,
Inc. or comparable credit ratings as determined by other nationally recognized
credit rating services (which represent approximately 27% of the purchase price
of the portfolio as of December 31, 1994), (ii) companies which, although not
rated by nationally recognized credit rating services, are believed by the
General Partners to have comparable creditworthiness (34% at December 31,
1994), or (iii) under circumstances where, as a result of collateral given,
deposits made or other security provided, the credit risk to the Partnership is
deemed by the General Partners to be equivalent to at least a Baa rating (39%
at December 31, 1994).
As of December 31, 1994, the Partnership had acquired equipment manufactured by
Caterpillar with a total acquisition cost of $2,328,249, representing 21.3% of
the total acquisitions. There is a ready market for the equipment and there
are numerous companies which service these types of equipment. No adverse
consequences are anticipated because of this concentration in equipment
manufactured by one company. As of December 31, 1994, restaurant furniture and
fixtures on lease to the Galardi Group represent 46% of the total lease assets
of the Partnership. These lease assets generated approximately 7% of the
Partnership's gross lease rentals in 1994. The Galardi Group is not affiliated
with the Partnership or its General Partners, although other affiliates of the
Partnership have entered into other transactions with this lessee. Due to the
collateral given, the General Partners do not consider that a default under the
lease would have a significant adverse effect on the Partnership.
The General Partners sought to limit the amount invested in equipment to any
single lessee to not more than 25% of the aggregate purchase price of equipment
owned at any time during the reinvestment period.
The equipment leasing industry is highly competitive. Equipment manufacturers,
corporations, partnerships and others offer users an alternative to the
purchase of most types of equipment with payment terms which vary widely
depending on the lease term and type of equipment. The ability of the
Partnership to keep the equipment leased and/or operating and the terms of the
acquisitions, leases and dispositions of equipment depend on various factors
(many of which are not in the control of the General Partners or the
Partnership), such as general economic conditions, including the effects of
inflation or recession, and fluctuations in supply and demand for various types
of equipment resulting from, among other things, technological and economic
obsolescence.
The business of the Partnership is not seasonal.
The Partnership has no full time employees.
Equipment Dispositions:
Through December 31, 1994, the Partnership has disposed of certain lease assets
as set forth below:
Excess of
Acquisition Sales Rents Over
Asset Type Cost Price Expenses *
- ---------- ------------ ---------- ----------
Material Handling $2,422,964 $635,822 $2,445,220
Transportation 1,418,993 936,000 1,301,611
Other 1,579,698 990,617 922,018
Communications 845,305 48,318 828,345
Medical 899,672 99,000 996,499
Data processing 743,578 83,527 855,547
Motor Vehicles 186,801 55,900 190,647
Mining 156,450 45,000 184,567
----------- ---------- ----------
$8,253,461 $2,894,184 $7,724,454
========== ========== ==========
* Includes only those expenses directly related to the production of the related
rents.
Equipment Leasing Activities:
The Partnership has acquired a diversified portfolio of equipment. The
equipment has been leased to lessees in various industries. The following
tables set forth the types of equipment acquired by the Partnership through
December 31, 1994 and the industries to which the assets have been leased.
Purchase price excluding Percentage of total
Asset types acquisition fees acquisitions
----------- ---------------- ------------
Materials handling $3,061,707 28.03%
Medical 1,518,245 13.90%
Transportation 1,200,000 10.98%
Manufacturing 1,038,478 9.51%
Studio and broadcasting 909,735 8.33%
Communications 835,563 7.65%
Printing 721,266 6.60%
Motor vehicles 545,148 4.99%
Data processing 489,039 4.48%
Mining 358,710 3.28%
Furniture and fixtures 247,000 2.25%
----------- -------
$10,924,891 100.00%
=========== =======
Purchase price excluding Percentage of total
Industry of lessee acquisition fees acquisitions
- ------------------ ---------- ------
Manufacturing, other $3,427,773 31.38%
Forest products 1,653,596 15.14%
Medical 1,518,245 13.90%
Manufacturing, chemicals 1,417,908 12.98%
Communications 909,735 8.33%
Printing 721,266 6.60%
Manufacturing, automobiles 622,632 5.70%
Food processing 317,500 2.91%
Retail food sales 247,000 2.26%
Insurance 89,236 0.80%
----------- -------
$10,924,891 100.00%
=========== =======
For further information regarding the Partnership's equipment lease portfolio
as of December 31, 1994, see Note 3 to the financial statements, Investments in
leases, set forth in Item 8, Financial Statements and Supplementary Data.
Item 2. PROPERTIES
The Partnership does not own or lease any real property, plant or materially
important physical properties other than equipment held for lease as set forth
in Item 1.
Item 3. LEGAL PROCEEDINGS
Inapplicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable
PART II
Item 5. MARKET FOR REGISTRANT'S LIMITED PARTNERSHIP UNITS
AND RELATED MATTERS
Market Information
The Units are transferable subject to restrictions on transfers which have been
imposed under the securities laws of certain states and the Partnership
Agreement. However, as a result of such restrictions, the size of the
Partnership and its investment objectives, to the General Partners' knowledge,
no established public secondary trading market has developed and it is unlikely
that a public trading market will develop in the future.
Holders
As of December 31, 1994, a total of 980 investors were record holders of Units
in the Partnership.
Dividends
The Limited Partners of the Partnership are entitled to certain distributions
as provided under the Limited Partnership Agreement.
The General Partners have sole discretion in determining the amount of
distributions; provided, however, that the General Partners may not reinvest in
equipment, but must distribute, subject to payment of any obligations of the
Partnership, such available cash from operations and cash from sales or
refinancing as may be necessary to cause total distributions to the Limited
Partners for each year during the reinvestment period to equal the following
amounts per Unit: $70.00 in 1987; $75.00 in 1988; $80.00 in 1989; $85.00 in
1990; $90.00 in 1991; $95.00 in 1992 and $100.00 in 1993 and 1994.
The rates for distributions to Limited Partners in April, July and October 1994
and in January 1995 were $15.00, $15.00, $10.00 and $9.76, respectively, per
Unit (a total of $49.76 per Unit). All distributions were made from cash flows
from operations and sales proceeds in 1994.
The rates for distributions to Limited Partners in April, July and October 1993
and in January 1994 were $14.07, $15.80, $8.37 and $15.00, respectively, per
Unit (a total of $53.24 per Unit). All distributions were made from cash flows
from operations and sales proceeds in 1993.
The following table presents summarized information regarding distributions to
Limited Partners:
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
Distributions of net income $14.11 $12.09 $7.15 $4.77 $3.33
Return of investment 47.48 59.26 79.67 69.21 83.93
------ ------ ------ ------ ------
Distributions per unit 61.59 71.35 86.82 73.98 87.26
Differences due to timing of
distributions and due to
distribution reinvestments (11.83) (18.11) 2.30 (9.95) (2.26)
------- ------- ------ ------- -------
Nominal distribution rates from
above $49.76 $53.24 $89.12 $64.03 $85.00
======= ======= ====== ======= =======
In 1991, 1992, 1993 and 1994, cash flows and distributions to Limited Partners
were not sufficient to allow the Partnership to reinvest in additional
equipment.
Effective April 1, 1993, the capital accumulation period was terminated by the
General Partners. The reinvestment period ended December 31, 1994 in
accordance with the terms of the Limited Partnership Agreement.
Item 6. SELECTED FINANCIAL DATA
The following table presents selected financial data of the Partnership for the
years ended December 31, 1994, 1993, 1992, 1991 and 1990. This financial data
should be read in conjunction with the financial statements and the related
notes included under Item 8 of this report.
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Gross Revenues $484,383 $904,941 $1,426,305 $1,821,896 $2,210,396
Net Income $284,567 $243,567 $144,226 $96,316 $67,084
Weighted average Limited
Partnership Units (Units)
outstanding 19,964 19,971 19,971 19,971 19,971
Net income per Unit, based
on weighted average Units
outstanding $14.11 $12.09 $7.15 $4.77 $3.33
Distributions per Unit,
based on weighted average
Units outstanding $61.59 $71.35 $86.82 $73.98 $87.26
Total Assets $692,353 $1,738,846 $3,019,088 $5,084,609 $6,859,939
Total Non-recourse Debt - $107,924 $345,057 $1,078,892 $1,694,692
Total Partners' Capital $609,077 $1,556,020 $2,594,210 $3,920,244 $5,089,883
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
At the end of 1994, the Partnership had cash balances of $203,776. All of this
amount was cash held for the distribution made to the Limited Partners in
January of 1995.
During 1994, the Partnership generated cash flows available for distribution
and/or reinvestment (as defined in the Partnership Agreement) of $447,000. In
1994, cash flows and distributions were not sufficient to allow the Partnership
to reinvest in additional equipment.
During the year, the Partnership's primary sources of liquidity were cash flows
from leasing operations and proceeds from the sales of assets. The liquidity
of the Partnership will vary in the future, increasing to the extent cash flows
from operations and proceeds from asset sales exceed expenses, and decreasing
as distributions are made to the Limited Partners and to the extent expenses
exceed cash flows from leases and proceeds from asset sales.
The Partnership currently has available adequate reserves to meet its immediate
cash requirements.
Through December 31, 1994, the Partnership had borrowed approximately
$2,612,000. All of these borrowings had been repaid as of December 31, 1994.
There were no new borrowings between December 31, 1994 and February 28, 1995.
The borrowings were non-recourse to the Partnership, that is, the only recourse
of the lender is to the equipment or corresponding lease acquired with the loan
proceeds. The Partnership Agreement limits such borrowings to 80% of the total
cost of equipment, in aggregate.
No commitments of capital have been made or are expected to be made in
connection with the reinvestment of available cash from operations and cash
from sales or refinancing for the acquisition of additional equipment as
described in Item 1. The Partnership's reinvestment period ended December
31, 1994. The Partnership may, however, use the proceeds of non-recourse debt
to purchase additional assets. The Partnership intends to acquire assets
without the use of any cash or exposure of any of its other assets by using
100% financing on a non-recourse basis.
The Partnership made distributions of cash from operations and sales proceeds
to the Limited Partners in April, July and October 1994 and in January 1995.
These distributions were based on the results of operations in 1994. In 1994,
distributions were less than the amounts necessary to permit reinvestment as
discussed in Item 5.
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.
1994 vs. 1993.
Cash flows from operations decreased by approximately $207,000. Cash flows
from revenues (primarily lease rents) less cash expenses, decreased by
approximately $172,000. This was due to decreases in operating lease rents of
$508,188. This decrease was partially offset by gains realized on the sale of
common stock ($171,797) received at no cost as part of the 1992 Financial News
Network (FNN) bankruptcy settlement. Certain other cash expenses decreased in
1994 as discussed under the caption "Results of Operations". The decreased
cash flows from leases resulted from sales of lease assets as leases expired.
Cash flows from investing activities decreased by $1,061,453. This decrease is
primarily the result of decreased sales of lease assets. Such sales decreased
from $1,343,908 in 1993 to $450,553 in 1994. The Partnership's reinvestment
period ended December 31, 1994 and the Partnership is not expected to purchase
additional lease assets. In future periods the amounts realized from asset
sales are expected to decline significantly as the underlying portfolio of
assets is sold off.
In 1994, there were no financing sources of cash. Debt payments decreased as
scheduled payments were made and all of the Partnership's debt was repaid.
1993 vs. 1992
Cash flows from operations decreased by approximately $1,100,000. Cash flows
from revenues (primarily lease rents) less cash expenses, decreased by
approximately $607,000. This was due almost entirely to decreased operating
lease revenues. Operating lease revenues were the Partnership's primary source
of cash and declinedas leases matured and/or as the assets were sold. The
decline from 1992 to 1993 was approximately $668,000.
Cash flows from investing activities increased by approximately $634,000 due to
increased sales of assets. The amounts of such sales are expected to decrease
in future periods as the underlying asset pool diminishes. In 1993, there was
no cash provided by financing activities. Debt principal payments decreased as
notes have been paid off. The debt payments were made as scheduled.
Results of Operations
As of December 29, 1986, the Partnership commenced operations in its primary
business (leasing activities). Operations resulted in net income of
$67,084, $96,316, $144,226, $243,968 and 284,567 in 1990, 1991, 1992, 1993 and
1994, respectively. The results of operations in future periods may vary
significantly from those of 1994 as the Partnership's lease portfolio of
capital equipment matures and is liquidated. Revenues from leases are expected
to decline over the long term as leased assets come off lease and are sold or
re-leased at lower lease rents. The effect on net income is not determinable
as it will depend to a large degree on the amounts received from the sales of
assets or from re-leases to either the same or new lessees once the initial
lease terms expire.
In 1995, lease revenues are expected to decrease due to lease terminations and
equipment dispositions in 1994 and 1995 to about $171,000 from $245,476 in
1994. A similar decrease in depreciation expense is also to be expected. The
ultimate effect on net income is not determinable as it will depend to a large
degree on the amounts received from the sales of assets and/or from re-leases
to either the same or new lessees once the initial lease terms expire.
1994 vs. 1993
Lease revenues decreased from $714,000 in 1993 to $245,000 in 1994. This was
primarily the result of scheduled lease terminations. Most of the assets
coming off lease in 1994 were sold and those placed on new leases tend to
produce lower amounts of rent than the leases they replace. Depreciation
expense has decreased from $348,650 in 1993 to $98,835 in 1994. This decrease
resulted from continued sales of operating lease assets in 1993 and 1994.
Effective May 1, 1994, the General Partners elected to waive reimbursement of
administrative costs incurred on behalf of the Partnership. This was the
primary cause of decrease of such costs of $106,604 (75%) compared to 1993. In
addition, effective April 1, 1994, the General Partners elected to waive
equipment and partnership management fees. Such fees decreased by $59,657
(75%) as a result of this and decreased revenues.
All of the Partnership's debt was retired, as scheduled, in 1994. As a
consequence, interest expense decreased by $20,249 (80%).
Contracts for professional services (primarily audit and tax return preparation
services) were renegotiated during 1994 resulting in a decrease of $23,865.
1993 vs. 1992
Lease revenues decreased from $1,385,000 in 1992 to $714,000 in 1993. This
decrease was the result of scheduled lease terminations. As assets came off
lease, most were sold. Those assets which were placed on new leases tended to
produce lower payments than did the original leases. Depreciation expense has
decreased compared to 1992 because of sales of assets in 1992 and in 1993.
Interest expense has declined as outstanding debt balances have decreased. The
debt reductions were due to scheduled debt payments.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Financial Statements and Notes to Financial Statements attached hereto at
pages 9 through 20.
REPORT OF INDEPENDENT AUDITORS
The Partners
ATEL Cash Distribution Fund
We have audited the accompanying balance sheets of ATEL Cash Distribution Fund
(a California Limited Partnership) as of December 31, 1994 and 1993, and the
related statements of income, changes in partners' capital and cash flows for
each of the three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ATEL Cash Distribution Fund
(a California Limited Partnership) at December 31, 1994 and 1993, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1994, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
San Francisco, California
February 3, 1995
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1994 and 1993
ASSETS
1994 1993
---- ----
Cash and cash equivalents $203,776 $987,546
Accounts receivable, net of allowance for doubtful
accounts of $22,097 in 1994 and in 1993 3,606 26,625
Investment in equipment and leases 484,971 724,675
--------- -----------
Total assets $692,353 $1,738,846
========= ===========
LIABILITIES AND PARTNERS' CAPITAL
Long-term non-recourse debt $107,924
Accounts payable:
General Partners 65,389
Trade and other $68,459 9,513
Deposits due to lessees 12,914 -
Unearned lease income 1,903 -
--------- -----------
Total liabilities 83,276 182,826
Partners' capital:
General Partners 16,807 13,961
Limited Partners 592,270 1,542,059
--------- ----------
Total partners' capital 609,077 1,556,020
--------- ----------
Total liabilities and partners' capital $692,353 $1,738,846
========= ==========
See accompanying notes.
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
---- ---- ----
Revenues:
Leasing activities:
Operating $172,471 $680,659 $1,348,404
Direct financing 68,562 33,651 32,563
Leveraged 4,443 - 4,068
Gain on sale 48,469 176,269 25,361
Interest income 9,649 9,929 15,909
Gain on sale of marketable securities 171,797 - -
Other 8,992 4,433 -
--------- --------- -----------
484,383 904,941 1,426,305
--------- --------- -----------
Expenses:
Depreciation and amortization 98,835 348,650 906,100
Administrative cost reimbursements 34,380 140,984 126,664
Professional fees 20,391 44,256 41,459
Equipment and partnership management fees 20,359 80,016 94,229
Interest 5,154 25,403 72,057
Other 20,697 21,664 41,570
--------- --------- -----------
199,816 660,973 1,282,079
--------- --------- -----------
Net income $284,567 $243,968 $144,226
========= ========= ===========
Net income:
General Partners $2,846 $2,440 $1,442
Limited Partners 281,721 241,528 142,784
--------- --------- -----------
$284,567 $243,968 $144,226
========= ========= ===========
Net income per Limited Partnership Unit $14.11 $12.09 $7.15
Weighted average number of Units outstanding 19,964 19,971 19,971
See accompanying notes.
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
General
Units Amount Partners Total
----- ------ -------- -----
Balance, December 31, 1991 19,971 $3,910,165 $10,079 $3,920,244
Distributions ($86.82 per unit) (1,733,815) (1,733,815)
Distributions reinvested 263,555 263,555
Net income 142,784 1,442 144,226
------ ----------- -------- -----------
Balance, December 31, 1992 19,971 2,582,689 11,521 2,594,210
Distributions ($71.35 per unit) (1,424,931) (1,424,931)
Distributions reinvested 142,773 142,773
Net income 241,528 2,440 243,968
------ ------------ -------- -----------
Balance, December 31, 1993 19,971 1,542,059 13,961 1,556,020
Distributions ($61.59 per unit) (1,229,616) (1,229,616)
Repurchase of units (9) (1,894) (1,894)
Net income 281,721 2,846 284,567
------- ----------- -------- -----------
Balance, December 31, 1994 19,962 $592,270 $16,807 $609,077
======= =========== ======== ===========
See accompanying notes.
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
---- ---- ----
Operating activities:
Net income $284,567 $243,968 $144,226
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense 98,835 348,650 906,100
Gain on sale of equipment (48,469) (176,269) (25,361)
Gain on sale of marketable securities (171,797) - -
Other 594 - 1,663
Changes in operating assets and
liabilities:
Receivables 23,019 162,647 652,040
Accounts payable to General Partners (65,389) 49,633 (3,001)
Other accounts payable 58,946 (43,485) 4,408
Deposits due to lessees 12,914 - -
Unearned operating lease income 1,903 (11,067) (7,059)
---------- ---------- ----------
Net cash provided by operating activities 195,123 574,077 1,673,016
---------- ---------- -----------
Investing activities:
Purchases of equipment on direct financing
leases (377,849) - -
Purchases of equipment on operating leases - (276,986) (73,014)
Proceeds from sale of assets on operating
leases 319,553 1,320,905 541,379
Proceeds from sale of assets on direct
financing leases 131,000 23,003 21,125
Reductions of net investment in direct
financing lease 119,745 183,275 126,552
Payment of initial direct costs (3,705) - -
Proceeds from sale of marketable securities 171,797 - -
---------- ---------- -----------
Net cash provided by investing activities 360,541 1,250,197 616,042
---------- ---------- -----------
Financing activities:
Distributions to limited partners, net of
reinvestments (1,229,616)(1,282,158) (1,470,260)
Repayments of long-term non-recourse debt (107,924) (237,133) (733,835)
Repurchase of units (1,894) - -
----------- ---------- -----------
Net cash used in financing activities (1,339,434)(1,519,291) (2,204,095)
----------- ---------- -----------
Net (decrease) increase in cash and
cash equivalents (783,770) 304,983 84,963
Cash and cash equivalents at beginning
of year 987,546 682,563 597,600
----------- ---------- -----------
Cash and cash equivalents at end of year $203,776 $987,546 $682,563
=========== ========== ===========
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(Continued)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
---- ---- ----
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $5,154 $25,403 $72,057
========= ========= =========
Supplemental schedule of non-cash transactions:
Direct financing lease assets reclassified to
operating leases $13,421
=========
Operating lease assets reclassified to direct
financing lease assets $44,761 $641,593
Less accumulated depreciation (8,853) (518,800)
-------- ---------
$35,908 $122,793
======== =========
Leveraged lease assets reclassified to
operating leases $49,862
========
Assets reclassified to equipment held for lease $579,885
Less accumulated depreciation (439,799)
---------
$140,086
=========
See accompanying notes.
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. Organization and partnership matters:
ATEL Cash Distribution Fund (the Partnership) was formed under the laws of the
State of California on November 29, 1985, for the purpose of acquiring
equipment to engage in equipment leasing and sales activities. Initial
contributions of $600 were received, and of this amount, $100 was contributed
by the General Partners for their General Partner interest. One unit of
Limited Partnership interest was issued to the initial Limited Partner for
$500. Partnership operations commenced on November 17, 1986 when subscriptions
for the minimum amount of Units of Limited Partnership Interest (Units) offered
by the prospectus ($1,200,000) and the proceeds thereof had been received by
the Partnership. The General Partners are ATEL Financial Corporation (ATEL), a
California corporation and two individuals, who are principals of ATEL Capital
Group, the parent of ATEL Financial Corporation.
The Partnership's business consists of leasing various types of equipment. As
of December 31, 1994, the original terms of the leases ranged from two to seven
years.
Pursuant to the Limited Partnership Agreement, the General Partners are
entitled to receive compensation and reimbursement for services rendered on
behalf of the Partnership (Note 5). The General Partners are required to
maintain reasonable cash reserves for working capital in the Partnership.
2. Summary of significant accounting policies:
Equipment on operating leases:
Equipment on operating leases is stated at cost. Depreciation is being
provided by use of the straight-line method over the terms of the related
leases to the equipment's estimated residual values at the end of the leases.
Revenues from operating leases are recognized evenly over the life of the
related leases.
Direct financing leases:
Income from direct financing lease transactions is reported on the financing
method of accounting, in which the Partnership's investment in the leased
property is reported as a receivable from the lessee to be recovered through
future rentals and realization of residual values. The income portion of each
rental payment is calculated so as to generate a constant rate of return on the
net receivable outstanding.
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
2. Summary of significant accounting policies (continued):
Investment in leveraged leases:
Leases which are financed principally with non-recourse debt at lease inception
and which meet certain other criteria are accounted for as leveraged leases.
Leveraged lease contracts receivable are stated net of the related non-recourse
debt service (which includes unpaid principal and aggregate interest on such
debt) plus estimated residual values. Unearned income represents the excess of
anticipated cash flows (after taking into account the related debt service and
residual values) over the investment in the lease and is amortized using a
constant rate of return applied to the net investment when such investment is
positive.
Statements of cash flows:
For purposes of the Statement of Cash Flows, cash and cash equivalents includes
cash in banks and cash equivalent investments with original maturities of
ninety days or less.
Income taxes:
The Partnership does not provide for income taxes since all income and losses
are the liability of the individual partners and are allocated to the partners
for inclusion in their individual tax returns.
The tax basis of the Partnership's net assets and liabilities varies from the
amounts presented in these financial statements.
1994 1993
---- ----
Financial statement basis of net assets and libilities $609,077 $1,556,020
Tax basis of net assets and liabilities 2,234,779 2,721,015
----------- -----------
Difference $1,625,702 $1,164,995
=========== ===========
The following reconciles the net loss reported in these financial statements to
the loss reported on the Partnership's federal tax return:
1994 1993
---- ----
Net income per financial statements $284,567 $243,968
Adjustment to depreciation expense (40,389) (49,697)
Adjustments to revenues 500,502 524,744
Adjustments to other expenses 594 (26,506)
--------- -----------
Net income per federal tax return $745,274 $692,509
========= ===========
Per unit data:
Net income and distributions per unit are based upon the weighted average
number of Units outstanding during the period, without giving effect to changes
in capital interests as a result of reinvestment of distributions.
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
3. Investment in leases:
The Partnership's investment in leases consists of the following:
Depreciation
Expense or Reclass-
Amortization ifications or
1993 Additions of Leases Dispositions 1994
---- --------- --------- ------------- ----
Net investment in
operating leases $368,050 ($98,381) ($120,037) $149,632
Net investment in
direct financing
leases 216,539 $377,849 (119,745) (141,961) 332,682
Equipment held for lease 140,086 (140,086) -
Initial direct costs 3,705 (454) 3,251
Reserve for losses (594) (594)
--------- --------- ---------- ---------- ---------
$724,675 $380,960 ($218,580) ($402,084) $484,971
========= ========= ========== ========== =========
Operating leases:
Property on operating lease consists of the following as of December 31, 1993,
additions and dispositions during 1994 and as of December 31, 1994:
Reclass-
December 31, ifications or December 31,
1993 Additions Dispositions 1994
---- --------- ------------ ----
Materials handling $612,268 ($219,367) $392,901
Motor vehicles 148,672 148,672
Manufacturing equipment 297,480 (261,827) 35,653
Medical 114,950 (114,950) -
---------- --------- --------- ----------
1,173,370 (596,144) 577,226
Less accumulated depreciation (805,320) ($98,381) 476,107 (427,594)
---------- --------- ---------- ---------
$368,050 ($98,381) ($120,037) $149,632
========== ========= ========== =========
Direct financing leases:
Equipment under direct financing leases includes restaurant furniture and
fixtures, automated typesetting equipment, electronic data processing
equipment, lift trucks and plastic injection molding equipment. The following
lists the components of the Partnership's investment in direct financing leases
as of December 31, 1994 and 1993:
1994 1993
---- ----
Total minimum lease payments receivable $481,909 $104,023
Estimated residual values of leased equipment
(unguaranteed) 122,211
--------- ---------
Investment in direct financing leases 481,909 226,234
Less unearned income (149,227) (9,695)
--------- ---------
Net investment in direct financing $332,682 $216,539
========= =========
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
3. Investment in leases (continued):
The following table summarizes activity in the Partnership's investment in
operating leases and the related accumulated depreciation for the years ended
December 31, 1992, 1993 and 1994.
Operating
Lease
Assets Operating
Stated at Accumulated Lease
Cost Depreciation Assets, Net
----------- ------------ ------------
Balance December 31, 1991 $7,796,467 ($4,657,513) $3,138,954
Acquisitions and increases 73,014 (906,100) (833,086)
Assets reclassified from
operating leases (641,593) 518,800 (122,793)
Dispositions (1,698,316) 1,180,946 (640,163)
----------- ------------ -----------
Balance December 31, 1992 5,529,572 (3,863,867) 1,665,705
Reclassifications from leveraged
leases 49,862 49,862
Assets reclassified to assets
held for sale (579,885) 439,799 (140,086)
Assets reclassified to direct
financing leases (44,761) 8,853 (35,908)
Acquisitions and increases 276,986 (348,650) (71,664)
Dispositions (4,058,404) 2,958,545 (1,099,859)
----------- ----------- -----------
Balance December 31, 1993 1,173,370 (805,320) 368,050
Assets reclassified to operating
leases 13,241 13,241
Acquisitions and increases (98,381) (98,381)
Dispositions (609,385) 476,107 (133,278)
----------- ----------- -----------
Balance December 31, 1994 $577,226 ($427,594) $149,632
=========== =========== ===========
At December 31, 1994, the aggregate amounts of future minimum lease payments
from direct financing leases and operating leases are as follows:
Year ending Direct
Decemember 31, Financing Operating Total
-------------- --------- --------- -----
1995 $143,606 $27,248 $170,854
1996 143,606 12,714 156,320
1997 143,606 - 143,606
1998 51,091 - 51,091
--------- --------- ---------
$481,909 $39,962 $521,871
========= ========= =========
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
4. Non-recourse debt:
At December 31, 1993, non-recourse debt consisted of notes payable to financial
institutions of $107,924. The notes were repaid in full (as scheduled) in 1994.
The notes were due in varying monthly, quarterly and semi-annual payments.
Interest on the notes was at rates from 10.00% to 10.55%. The notes were
secured by assignments of lease payments and pledges of assets.
5. Related party transactions:
The terms of the Limited Partnership Agreement provide that the General
Partners and/or their Affiliates are entitled to receive certain fees for
equipment acquisition, management and resale and for management of the
Partnership.
The General Partners earned partnership management fees equal to 5% of cash
distributed from operations and equipment management fees equal to 2% of full
payout lease rentals and 5% of operating lease rentals pursuant to the Limited
Partnership Agreement. Effective April 1, 1994, the General Partners elected
to waive all management fees. The amounts of management fees earned in 1994,
1993 and 1992 were $20,359, $80,016 and $94,229.
The Limited Partnership Agreement allows for the reimbursement of costs
incurred by ATEL in providing administrative services to the Partnership.
Administrative services provided include partnership accounting, investor
relations, legal counsel and lease and equipment documentation. ATEL is not
reimbursed for services where it is entitled to receive a separate fee as
compensation for such services, such as acquisition and disposition of
equipment. Reimbursable costs incurred by ATEL are allocated to the
Partnership based upon actual time incurred by employees working on Partnership
business and an allocation of rent and other costs based on utilization
studies. Effective May 1, 1994, the General Partners have elected to waive all
reimbursements of administrative costs. In 1994, $52,800 was waived. Costs
charged and reimbursed in 1994 totaled $34,380.
In 1993 and 1992, the Partnership reimbursed ATEL $140,984 and $126,664,
respectively, for costs incurred in the administration of Partnership business.
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
6. Partners' capital:
The Partnership is authorized to issue up to 20,001 Units of Limited
Partnership Interest. As of December 18, 1987, all of the Units had been
subscribed and issued. Limited Partners had the option to elect to accumulate
their share of distributions for reinvestment during the Partnership's
reinvestment period (through December 31, 1994). Reinvested distributions do
not result in the issuance of additional Units. Each limited partner's capital
interest in the Partnership is based upon his original invested capital plus
any reinvested distributions. This capital accumulation period was terminated
effective April 1, 1993 by the General Partners.
The Partnership's net profits and losses are allocated 99% to the Limited
Partners and 1% to the General Partners.
Available Cash from Operations and Cash from Sales or Refinancing, as defined
in the Limited Partnership Agreement, shall be distributed as follows:
First, 5% of Cash from Operations to the General Partners as the Partnership
Management Fee,
Second, the balance to the Limited Partners until the Limited Partners have
received Aggregate Distributions in an amount equal to their Original
Invested Capital plus an 8% per annum cumulative (compounded daily) return
on their Adjusted Invested Capital.
Third, the General Partners will receive a Subordinated Incentive Fee, as
follows:
A) 10% of remaining Cash from Operations
B) 15% of remaining Cash from Sales or Refinancing
Fourth, the balance to the Limited Partners.
7. Concentration of credit risk and major customers:
The Partnership leases equipment to lessees in diversified industries. As of
December 31, 1994, 28% and 24% of total equipment cost was leased to lessees in
the health services and manufacturing industries, respectively. Leases are
subject to the General Partners' investment committee review. The leases
provide for the return of the equipment upon default.
During 1994, lease rentals from one customer represented 18% of total gross
lease payments. During 1993 and 1992, lease rentals from another customer
represented 16%, and 18%, respectively, of total gross lease payments.
Item 9. CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
Inapplicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
The registrant is a Limited Partnership and, therefore, has no officers or
directors.
All of the outstanding capital stock of ATEL Financial Corporation (the
corporate General Partner) is held by ATEL Capital Group ("ACG"), a holding
company formed to control the General Partner and affiliated companies pursuant
to a corporate restructuring completed in July 1994. The outstanding capital
stock of ATEL Capital Group is owned 75% by A. J. Batt and 25% by Dean Cash
(the individual General Partners), and was obtained in the restructuring in
exchange for their capital interests in ATEL Financial Corporation.
Each of ATEL Leasing Corporation ("ALC"), ATEL Equipment Corporation ("AEC"),
ATEL Investor Services ("AIS") and ATEL Financial Corporation ("AFC") is a
wholly-owned subsidiary of ATEL Capital Group and performs services for the
Partnership. Acquisition services are performed for the Partnership by ALC,
equipment management, lease administration and asset disposition services are
performed by AEC, investor relations and communications services are performed
by AIS and general administrative services for the Partnership are performed by
AFC. ATEL Securities Corporation ("ASC"), is a wholly-owned subsidiary of ATEL
Financial Corporation.
The officers and directors of ATEL Capital Group, ATEL Financial Corporation and
their affiliates are as follows:
A. J. Batt . . . . . . .Chairman of the Board of Directors of ACG, AFC, ALC,
AEC, AIS and ASC; President and Chief Executive Officer
of ACG, AFC and AEC
Dean L. Cash . . . . . .Director, Executive Vice President and Chief Operating
Officer of ACG, AFC, and AEC; Director, President and
Chief Executive Officer of ALC, AIS and ASC
F. Randall Bigony . . . Senior Vice President and Chief Financial Officer of
ACG, AFC, ALC, AIS and AEC
Donald E. Carpenter . . Vice President and Controller of ACG, AFC, ALC, AEC and
AIS; Chief Financial Officer of ASC
Vasco H. Morais . . . . General Counsel for ACG, AFC, ALC, AIS and AEC
William J. Bullock . . .Director of Asset Management of AEC
Jeffrey A. Schwager . . Vice President - Syndication of ALC
D. Max Blackwood . . . .Vice President - Syndication of ALC
Russell H. Wilder . . . Vice President - Credit of AEC
J. Edwin Holliday . . . Senior Vice President - National Sales Manager of ASC
John P. Scarcella . . . Vice President of ASC
A. J. Batt, age 59, founded ATEL in 1977 and has been its president and
chairman of the board of directors since its inception. From 1973 to 1977, he
was employed by GATX Leasing Corporation as manager-data processing and equity
placement for the lease underwriting department, which was involved in
equipment financing for major corporations. From 1967 to 1973 Mr. Batt was a
senior technical representative for General Electric Corporation, involved in
sales and support services for computer time-sharing applications for
corporations and financial institutions. Prior to that time, he was employed
by North American Aviation as an engineer involved in the Apollo project. Mr.
Batt received a B.Sc. degree with honors in mathematics and physics from the
University of British Columbia in 1961.
Dean L. Cash, age 45, joined ATEL as director of marketing in 1980 and has been
a vice president since 1981, executive vice president since 1983 and a director
since 1984. Prior to joining ATEL, Mr. Cash was a senior marketing
representative for Martin Marietta Corporation, data systems division, from
1979 to 1980. From 1977 to 1979, he was employed by General Electric
Corporation, where he was an applications specialist in the medical systems
division and a marketing representative in the information services division.
Mr. Cash was a systems engineer with Electronic Data Systems from 1975 to 1977,
and was involved in maintaining and developing software for commercial
applications. Mr. Cash received a B.S. degree in psychology and mathematics in
1972 and an M.B.A. degree with a concentration in finance in 1975 from Florida
State University. Mr. Cash is an arbitrator with the American Arbitration
Association.
F. Randall Bigony, age 37, joined ATEL in 1992 to review administrative
operations within ATEL Financial Corporation and to develop and implement
functional plans to support company growth. He currently oversees ATEL's
accounting, MIS and treasury functions. From 1987 until joining ATEL, Mr.
Bigony was president of F. Randall Bigony & Co., a consulting firm that
provided financial and strategic planning services to emerging growth
companies. From 1983 to 1987, he was a manager with the accounting firm of
Ernst & Whinney, serving clients in its management consulting practice. Mr.
Bigony received a B.A. degree in business from the University of Massachusetts
and an M.B.A. degree in finance from the University of California, Berkeley.
He is a founding board member and acting treasurer of the I Have a Dream
Foundation - Bay Area Chapter.
Donald E. Carpenter, age 46, joined ATEL in 1986 as controller. Prior to
joining ATEL, Mr. Carpenter was an audit supervisor with Laventhol & Horwath,
certified public accountants in San Francisco, California, from 1983 to 1986.
From 1979 to 1983, Mr. Carpenter was an audit senior with Deloitte, Haskins &
Sells, certified public accountants, in San Jose, California. From 1971 to
1975, Mr. Carpenter was a Supply Corp officer in the U. S. Navy. Mr. Carpenter
received a B.S. degree in mathematics (magna cum laude) from California State
University, Fresno in 1971 and completed a second major in accounting in 1978.
Mr. Carpenter has been a California certified public accountant since 1981.
Vasco H. Morais, age 36, joined ATEL in 1989 as general counsel to provide
legal support in the drafting and reviewing of lease documentation, advising on
general corporate law matters, and assisting on securities law issues. From
1986 to 1989, Mr. Morais was employed by the BankAmeriLease Companies, Bank of
America's equipment leasing subsidiaries, providing in-house legal support on
the documentation of tax-oriented and non-tax oriented direct and leveraged
lease transactions, vendor leasing programs and general corporate matters.
Prior to the BankAmeriLease Companies, Mr. Morais was with the Consolidated
Capital Companies in the Corporate and Securities Legal Department involved in
drafting and reviewing contracts, advising on corporate law matters and
securities law issues. Mr. Morais received a B.A. degree in 1982 from the
University of California in Berkeley and a J.D. degree in 1986 from Golden Gate
University Law School. Mr. Morais has been an active member of the State Bar
of California since 1986.
William J. Bullock, age 31, joined ATEL in 1991, as the director of asset
management. He assumed responsibility for the disposition of off-lease
equipment and residual valuation analysis on new lease transactions. Prior to
joining ATEL, Mr. Bullock was a senior member of the equipment group at
McDonnell Douglas Finance Corporation("MDFC") responsible for managing its $4
billion portfolio of leases. Mr. Bullock was involved in negotiating sales and
and renewals as well as preparing and inspecting equipment. Prior to joining
MDFC in 1989, Mr. Bullock was the Senior Negotiator at Equitable Leasing (a
subsidiary of GE Capital Corp.) in San Diego. At Equitable, he handled the
end-of-lease negotiations and equipment dispositions of a portfolio comprised
of equipment leased primarily to Fortune 200 companies. Mr. Bullock has been
a member of the Equipment Lessors Association ("ELA") since 1987 and has
authored ELA industry articles. He received a B.S. degree in Finance in 1987
from San Diego State University ans is pursuin his M.B.A.
Jeffrey A. Schwager, age 34, joined ATEL in 1991 as vice president -
syndication and is responsible for acquiring transactions from intermediaries
as well as debt and equity placement. Prior to joining ATEL, Mr. Schwager was
a member of General Electric Capital Corporation's Institutional Financing
Group. There, he was responsible for originating equipment lease and corporate
finance opportunities, as well as soliciting equipment portfolios in
conjunction with marketing a proprietary capital enhancement product. From
1985 through 1990, Mr. Schwager held several positions with Bank Ireland/First
Financial, most recently Vice President Marketing, where he was responsible for
originating and negotiating tax-oriented leveraged lease financings for Fortune
500 companies. From 1983 to 1985 Mr. Schwager was an Associate Consultant
with The Bigelow Company, a middle market investment banking and management
consulting firm, developing and implementing strategic plans for a number of
clients. Prior to The Bigelow Company, he worked for Petro-Lewis Corporation as
a joint-interest accountant. Mr. Schwager received his B.S. in Business
Administration from Babson College in 1982, majoring in Finance and
Entrepreneurial Studies.
D. Max Blackwood, age 48, joined ATEL in 1993 as Vice President - Syndication
and is responsible for debt placement and for acquiring lease transactions from
third parties. Prior to joining ATEL, Mr. Blackwood worked for 19 years with
Bank of America Corporation, the last 10 years with BankAmeriLease as Vice
President - Syndication for equipment leasing. From 1967 to 1969, Mr.
Blackwood was a supply officer in the U.S. Navy. Mr. Blackwood received a B.S.
degree in Civil Engineering from Legigh University in 1967 and an M.B.A. from
the University of Pennsylvania's Wharton School in 1972.
Russell H. Wilder, age 40, joined ATEL in 1992 as Vice President of ATEL
Business Credit, a wholly-owned subsidiary of ACG. Immediately prior to
joining ATEL, Mr. Wilder was a personal property broker specializing in
equipment leasing and financing and an outside contractor in the areas of
credit and collections. From 1985 to 1990 he was Vice President and Manager of
Leasing for Fireside Thrift Co., a Teledyne subsidiary, and was responsible for
all aspects of setting up and managing the department, which operated as a
small ticket lease funding source. From 1983 to 1985 he was with Wells Fargo
Leasing Corporation as Assistant Vice President in the credit department where
he oversaw all credit analysis on transactions in excess of $2 million. From
1978 to 1983 he was District Credit Manager with Westinghouse Credit
Corporation's Industrial Group and was responsible for all non-marketing
operations of various district offices. Mr. Wilder holds a B.S. with Honors in
Agricultural Economics and Business Management from the University of
California at Davis. He has been awarded the Certified Lease Professional
designation by the Western Association of Equipment Lessors.
J. Edwin Holliday, age 50, joined ATEL Securities Corporation in 1988 as
Regional Vice President for the Southwestern region and has been its Senior
Vice President and National Sales Manager since April 1994. From August 1993
until April 1994, Mr. Holliday was a Managing Director of HomeMac Corporation,
a mortgage bank that also markets a mortgage-related trust. Prior to joining
ATEL, Mr. Holliday was a Regional Vice President for several firms marketing
securities, including Icon Group from 1986 to 1988, Stonehenge Capital from
1982 to 1986 and Quantum Resources from 1980 to 1982. Mr. Holliday was Sales
Manager for a retail division of Beech Aircraft in Denver, Colorado from 1975
to 1980, and sales engineer for Trane Company in Canton, Ohio from 1968 to
1975. Mr. Holliday received a B.S. degree in Mechanical Engineering from West
Virginia Institute of Technology in 1968, and served a Chairman of the Board of
the Orange County, California Chapter of the International Association for
Financial Planning in 1993 and 1994.
John P. Scarcella, age 33, joined ATEL Securities as vice president in 1992.
He is involved in the marketing of securities offered by ASC. Prior to joining
ASC, from 1987 to 1991, he was employed by Lansing Pacific Fund, a real estate
investment trust in San Mateo, California and acted as director of investor
relations. From 1984 to 1987, Mr. Scarcella acted as broker dealer
representative for Lansing Capital Corporation, where he was involved in the
marketing of direct participation programs and REITs. Mr. Scarcella received a
B.S.C. degree with emphasis in investment finance in 1983 and an M.B.A. degree
with a concentration in marketing in 1991 from Santa Clara University.
Item 11. EXECUTIVE COMPENSATION
The registrant is a Limited Partnership and, therefore, has no officers or
directors.
Set forth hereinafter is a description of the nature of remuneration paid and
to be paid to the General Partners and their Affiliates. The amount of such
remuneration paid to the General Partners and their Affiliates during the years
ended December 31, 1992, 1993 and 1994 is set forth in Item 8 of this report
under the caption "Financial Statements and Supplementary Data - Notes to the
Financial Statements - Related party transactions," at Note 5 thereof which
information is hereby incorporated herein by reference.
Selling Commissions
The Partnership paid selling commissions in the amount of $950,000 to ATEL
Securities Corporation, an affiliate of the General Partners through December
1987. No further commissions are to be paid. Of this amount, $933,761 was
reallowed to other broker/dealers.
Acquisition Fees
Acquisition fees were paid to the General Partners for services rendered in
finding, reviewing and evaluating equipment to be purchased by the Partnership
and rejecting equipment not to be purchased by the Partnership. Total
acquisition fees paid through December 31, 1994 were $450,000, the maximum
allowable amount.
Equipment Management Fees
As compensation for its services rendered generally in managing or supervising
the management of the Partnership's equipment and in supervising other ongoing
services and activities including, among others, broker assistance, cash
management, product development, property and sales tax monitoring and
preparation of financial data, the General Partners or their Affiliates are
entitled to receive management fees which are payable for each fiscal quarter
and are to be in an amount equal to (i) 5% of the gross revenues from
"operating" leases and (ii) 2% of gross revenues from "full payout" leases
which contain net lease provisions. See Note 5 to the financial statements
under item 8 of this report for amounts paid. Effective April 1, 1994, the
General Partners elected to waive Equipment Management fees due from the
Partnership.
Partnership Management Fees
As compensation for its services rendered in connection with the management of
the Partnership, including but not limited to employment and supervision of
supervisory managing agents, insurance brokers, equipment lease brokers,
accountants and other professional advisors, and for supervising the
preparation of reports and maintenance of financial and operating data of the
Partnership, Securities and Exchange Commission and Internal Revenue Service
filings, returns and reports, the General Partners shall be entitled to receive
a Partnership management fee which shall be payable for each fiscal quarter and
shall be an amount equal to 5% of distributions of cash from operations. See
Note 5 to the financial statements under item 8 of this report for amounts paid
in 1992, 1993 and 1994. Effective April 1, 1994, the General Partners elected
to waive Partnership Management fees due from the Partnership.
Equipment Resale Fees
As compensation for services rendered in connection with the sale of equipment,
the General Partners are entitled to receive an amount equal to the lesser of
(i) 3% of the sales price of the equipment, or (ii) one-half the normal
competitive equipment sales commission charged by unaffiliated parties for such
services. Such fee is payable only after the Limited Partners have received a
return of their Adjusted Invested Capital (as defined in the Limited
Partnership Agreement) plus 8% of their Adjusted Invested Capital per annum
calculated on a cumulative basis, compounded daily, commencing the last day of
the quarter in which the limited partner was admitted to the Partnership. No
Equipment Resale fees have been paid to date.
Subordinated Incentive Fee
As compensation for the services rendered in evaluating and selecting equipment
for the Partnership, making decisions as to the nature and terms of the
acquisition, leasing, re-leasing and disposition of such equipment, and
selecting, retaining and supervising consultants, lessees, engineers, lenders,
borrowers and others, the General Partners are entitled to receive a
subordinated incentive fee equal to a percentage of all distributions of cash
from operations and cash from sales or refinancing payable quarterly, but
commencing immediately after the Limited Partners have received the return on
their Adjusted Invested Capital described under "Equipment Resale Fees" above.
The amount of the subordinated incentive fee is 10% of distributions of cash
from operations and 15% of distributions of cash from sales or refinancing. No
Subordinated Management fees have been paid to date.
General Partners' Interest in Operating Proceeds
Net income, net loss and investment tax credits are allocated 99% to the
Limited Partners and 1% to the general partners. See the statements of income
included in the financial statements at item 8 of this report for the amounts
of income allocated to the general and Limited Partners in 1992, 1993 and 1994.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security Ownership of Certain Beneficial Owners
At December 31, 1994 no investor is known to the Partnership to hold
beneficially more than 5% of the issued and outstanding Units.
Security Ownership of Management
The General Partners are beneficial owners of Limited Partnership Units as
follows:
(1) (2) (3) (4)
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
-------------- ---------------- -------------------- --------
Limited Partnership A. J. Batt 16.5 Units ($8,250) 0.08%
Units 235 Pine Street, Individual Retirement
6th Floor Accounts
San Francisco, CA
94104
Changes in Control
The Limited Partners have the right, by vote of the Limited Partners owning
more than 50% of the outstanding Limited Partnership Units, to remove a general
partner.
The General Partners may at any time call a meeting of the Limited Partners or
a vote of the limited partners without a meeting, on matters on which they are
entitled to vote, and shall call such meeting or for vote without a meeting
following receipt of a written request therefor of Limited Partners holding 10%
or more of the total outstanding Limited Partnership Units.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The responses to Item 8 of this report under the caption "Financial Statements
and Supplemental Data - Notes to Financial Statements - Related Party
Transactions" at Note 5 thereof and Item 11 of this report under the caption
"Executive Compensation," are hereby incorporated herein by reference.
The Partnership owns a 19% undivided interest in a lease transaction involving
restaurant furniture, fixtures and equipment on lease to the Galardi Group, Inc.
The Partnership's interest was purchased on the same terms as that of the
affiliated partnerships, ATEL Cash Distribution Fund II and ATEL Cash
Distribution Fund IV which own 39% and 42%, respectively. The term of the
lease is 49 months and expires August 31, 1998. The Partnership's monthly
rentals from the lease are $6,457.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) Financial Statements and Schedules
1. Financial Statements
Included in Part II of this report:
Report of Independent Auditors
Balance Sheets at December 31, 1994 and 1993
Statements of Income for the years ended December 31,
1994, 1993 and 1992
Statements of Changes in Partners' Capital for the years
ended December 31, 1994, 1993 and 1992
Statements of Cash Flows for the years ended December
31, 1994, 1993 and
1992
Notes to Financial Statements
2. Financial Statement Schedules
All 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) Reports on Form 8-K for the fourth quarter of 1994
None
(c) Exhibits
(3) and (4) Agreement of Limited Partnership
incorporated by reference to Exhibits (3) and (4) to
the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1988 filed March 31, 1989
(File No. 0-16843)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: 9/1/1995
By: ATEL Financial Corporation,
General Partner of Registrant
By: /s/ A. J. Batt
A. J. Batt,
President and Chief Executive Officer
By: /s/ A. J. Batt
A. J. Batt,
General Partner of Registrant,
President and Chief Executive
Officer of ATEL Financial
Corporation (General Partner)
By: /s/ Dean Cash
Dean Cash,
General Partner of Registrant,
Executive Vice President of ATEL
Financial Corporation (General
Partner)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
SIGNATURE CAPACITIES DATE
/s/ A. J. Batt General Partner of registrant; president, 9/1/1995
A. J. Batt chairman and chief executive officer of
ATEL Financial Corporation
/s/ Dean Cash General Partner of registrant; executive 9/1/1995
Dean Cash vice president and director of ATEL
Financial Corporation
/s/ F. Randall Bigony Principal financial officer of registrant; 9/1/1995
F. Randall Bigony principal financial officer of ATEL
Financial Corporation
/s/ Donald E. Carpenter Principal accounting officer of registrant; 9/1/1995
Donald E. Carpenter principal accounting officer of ATEL
Financial Corporation
