Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the quarterly period ended March 31, 1997
|_| Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the transition period from _______ to _______
Commission File Number 000-16843
ATEL Cash Distribution Fund, a California Limited
Partnership (Exact name of registrant as
specified in its charter)
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
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X|
No |_|
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEET
MARCH 31, 1997
(Unaudited)
ASSETS
Cash and cash equivalents $238,066
Investments in leases and equipment 212,238
----------------
Total assets $450,304
================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $145,305
Accounts payable, trade and other 48,349
Accrued interest 1,122
----------------
Total liabilities 194,776
Partners' capital:
General partners 21,055
Limited partners 234,473
----------------
Total partners' equity 255,528
----------------
Total liabilities and partners' capital $450,304
================
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE MONTH PERIODS ENDED
MARCH 31, 1997 AND 1996
(Unaudited)
1997 1996
---- ----
Revenues:
Lease income:
Operating $24,174 $29,196
Direct financing 3,572 13,028
Interest income 576 146
Other 646 9
--------------- ----------------
28,968 42,379
--------------- ----------------
Expenses:
Depreciation and amortization 9,509 11,010
Interest 3,439 4,280
Other 2,184 1,602
Professional fees 1,269 1,238
--------------- ----------------
16,401 18,130
--------------- ----------------
Net income $12,567 $24,249
=============== ================
Net income:
General Partners $126 $242
Limited Partners 12,441 24,007
--------------- ----------------
$12,567 $24,249
=============== ================
Net income per Limited Partnership unit $0.62 $1.20
Weighted average number of units outstanding 19,962 19,962
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
THREE MONTHS ENDED MARCH 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partners Total
<S> <C> <C> <C> <C>
Balance December 31, 1996 19,962 $277,924 $20,929 $298,853
Net income 12,441 126 12,567
Distributions (55,892) (55,892)
----------------- -------------- --------------- ----------------
Balance March 31, 1997 19,962 $234,473 $21,055 $255,528
================= ============== =============== ================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED
MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Operating activities:
Net income $12,567 $29,445
Adjustments to reconcile net income income to net cash provided by operations:
Depreciation and amortization expense 9,509 11,010
Gain on sale of assets - (5,196)
Changes in operating assets and liabilities:
Accounts receivable 25,877 (5,388)
Accrued interest (73) (67)
Unearned operating lease income - (915)
Accounts payable, other 37,175 (3,381)
--------------- ----------------
Net cash provided by operations 85,055 25,508
--------------- ----------------
Investing activities:
Reductions in net investment in direct financing leases 12,960 22,875
Proceeds from sale of lease assets - 13,999
--------------- ----------------
Net cash provided by investing activities 12,960 36,874
--------------- ----------------
Financing activities:
Distributions to limited partners (55,892) (68,188)
Repayments of non-recourse debt (9,475) (8,639)
--------------- ----------------
Net cash used in financing activities (65,367) (76,827)
--------------- ----------------
Net increase (decrease) in cash and cash equivalents 32,648 (14,445)
Cash and cash equivalents at beginning of period 205,418 91,084
--------------- ----------------
Cash and cash equivalents at end of period $238,066 $76,639
=============== ================
Supplemental disclosures of cash flow information:
Cash paid during the period for interest: $1,122 $4,347
=============== ================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
1. Interim financial statements:
The unaudited interim financial statements reflect all adjustments which are, in
the opinion of the general partners, necessary to a fair statement of financial
position and results of operations for the interim periods presented. All such
adjustments are of a normal recurring nature. These unaudited interim financial
statements should be read in conjunction with the most recent report on Form
10K.
2. Investment in leases and equipment:
The Partnership's investment in leases consists of the following:
<TABLE>
<CAPTION>
Depreciation
Expense or
December 31, Amortization March 31,
1996 of Leases 1997
---- --------- ----
<S> <C> <C> <C>
Net investment in operating leases $200,690 ($9,509) $191,181
Net investment in direct financing leases 40,467 (12,960) 27,507
Reserve for losses (6,450) - (6,450)
-------------- --------------- ----------------
$234,707 ($22,469) $212,238
============== =============== ================
</TABLE>
Operating leases:
The following schedule provides an analysis of the Partnership's investment in
property on operating leases by major classifications as of December 31, 1996,
additions and dispositions during the quarter ended March 31, 1997 and as of
March 31, 1997.
December 31, Depreciation March 31,
1996 Expense 1997
---- ------- ----
Materials handling $220,787 $220,787
Food processing $208,787 208,787
Motor vehicles 30,263 30,263
Manufacturing equipment 35,653 35,653
-------------- --------------- ----------------
495,490 495,490
Less accumulated depreciation (294,800) ($9,509) (304,309)
-------------- --------------- ----------------
$200,690 ($9,509) $191,181
============== =============== ================
Equipment on operating leases was acquired in 1987, 1988, 1989, 1990, 1992, 1993
and 1995.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
2. Investment in leases and equipment: (continued)
At March 31, 1997, the aggregate amounts of future minimum lease payments from
direct financing leases and operating leases are as follows:
Direct
Financing Operating Total
--------- --------- -----
1997 $49,594 $43,931 $93,525
1998 - 51,948 51,948
1999 - 51,948 51,948
2000 - 25,974 25,974
----------------- -------------- ---------------
$49,594 $173,801 $223,395
================= ============== ===============
4. Non-recourse debt:
At March 31, 1997, non-recourse debt consisted of a note payable to a financial
institution of $145,305. The notes is due in monthly payments of $4,329.
Interest on the note is at the rate of 9.264%. The note is secured by an
assignment of lease payments and a pledge of assets.
Future minimum principal payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
1997 $29,773 $29,773 $59,546
1998 43,042 8,906 51,948
1999 47,204 4,744 51,948
2000 25,286 688 25,974
----------------- -------------- ---------------
$145,305 $44,111 $189,416
================= ============== ===============
<PAGE>
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
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 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.
<PAGE>
Item 2. Management's Discussion And Analysis Of Financial Condition And
Results Of Operations
Capital Resources and Liquidity
At March 31, 1997, the Partnership had cash balances of $238,066. Of this
amount, $182,174 was held for reserves. The balance was held for distribution to
the Limited Partners in April 1997.
During the quarter, the Partnership's primary sources of liquidity were cash
flows from operating leases. 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 contingencies.
Since 1986, the Partnership had borrowed approximately $2,818,000. The
outstanding balance at March 31, 1997 was $145,305. There were no new borrowings
between December 31, 1996 and March 31, 1997. The borrowings were generally
non-recourse to the Partnership, that is the only recourse of the lender upon
default by the lessee on the underlying lease was 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.
Cash flows from operations increased from $25,508 in 1996 to $85,055 in 1997.
The increase resulted from collections of accounts receivable and from increases
in payables and accrued liabilities. These were partially offset by decreases in
lease revenues compared to 1996.
Cash provided by investing activities decreased compared to 1996. In 1997, there
were no first quarter asset sales, compared to $13,999 in 1996. In addition,
cash provided by direct financing leases decreased from $22,875 in 1996 to
$12,960 in 1997. This decrease resulted from scheduled lease terminations and
sales of the related asets over the last year. These cash flows are expected to
decrease as the underlying leases reach their scheduled terminations.
Cash used in financing activities decreased from $76,827 in 1996 to $65,367 in
1997. Repayments of debt increased from $8,639 in 1996 to $9,425 in 1997 due to
scheduled debt payments. Distributions decreased compared to 1996 and are
expected to fluctuate in the future depending on the amounts of cash available
for such distributions. There were no financing sources of cash in the first
quarter of either 1997 or 1996.
The Partnership made a distribution of cash from operations to the Limited
Partners in April 1997. This distribution was based on the results of operations
and asset sales in the first quarter of 1997. The amount of the distribution was
$2.50 per Unit (which is equal to an annualized rate of 2.0%).
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.
<PAGE>
Results of Operations
As of December 29, 1986, the Partnership commenced operations in its primary
business (leasing activities). Operations in the first quarter of 1997 resulted
in net income of $12,567 compared $29,445 in the previous year. The change from
the prior year was due to several factors. The most significant cause of the
decrease was the decline in direct financing lease revenues from $13,028 in 1996
to $3,572 in 1997. the decline was due to scheduled lease terminations and sales
of most of the related assets. Operating lease revenues and depreciation expense
are directly related to each other and the decline in each of them is due to the
same cause as the decrease in direct financing lease revenues.
The results of operations in future periods are expected vary significantly from
those of the first quarter of 1997 as the Partnership's lease portfolio of
capital equipment matures. Revenues from leases are expected to decline as
leased assets come off lease and are sold or re-leased at lower lease rates. 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.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Inapplicable.
Item 2. Changes In Securities.
Inapplicable.
Item 3. Defaults Upon Senior Securities.
Inapplicable.
Item 4. Submission Of Matters To A Vote Of Security Holders
Inapplicable.
Item 5. Other Information.
Inapplicable.
Item 6. Exhibits And Reports On Form 8-K.
(a) Documents filed as a part of this report
1. Financial Statements
Included in Part I of this report:
Balance Sheet, March 31, 1997.
Statements of operations for the three month periods ended
March 31, 1997 and 1996
Statement of changes in partners' capital for the three months
ended March 31, 1997.
Statements of cash flows for the three month periods ended March
31, 1997 and 1996.
Notes to the 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) Report on Fork 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date:
May 12, 1997
ATEL Cash Distribution Fund,
a California Limited Partnership
(Registrant)
By: /s/ A. J. BATT
-----------------------------------------
A. J. Batt,
General Partner of registrant
By: /s/ DEAN L. CASH
-----------------------------------------
Dean Cash,
General Partner of registrant
By: /s/ F. RANDALL BIGONY
-----------------------------------------
F. Randall Bigony
Principal financial officer
of registrant
By: /s/ DONALD E. CARPENTER
-----------------------------------------
Donald E. Carpenter,
Principal accounting
officer of registrant
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 238,066
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 450,304
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 255,528
<TOTAL-LIABILITY-AND-EQUITY> 450,304
<SALES> 0
<TOTAL-REVENUES> 28,968
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,128
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,439
<INCOME-PRETAX> 12,567
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,567
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,567
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
