Form 10-KSB
(Final Report)
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 (no fee required)
For the year ended December 31, 1997
OR
|_| 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 (ss.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|
<PAGE>
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.
Narrative Description of Business
The Partnership 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.
The Partnership only entered 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 26% of the purchase price of the
portfolio as of December 31, 1996), (ii) companies which, although not rated by
nationally recognized credit rating services, are believed by the General
Partners to have comparable creditworthiness (33% at December 31, 1996), 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 (40% at December 31,
1996). As of December 31, 1997, the Partnership had sold all of its lease assets
and had ceased operations.
One lessee in the food processing industry accounted for 50% of the
Partnership's lease revenues during 1997 and 1996.
The business of the Partnership is not seasonal.
The Partnership has no full time employees.
Item 2. PROPERTIES
The Partnership does not own or lease any real property, plant or materially
important physical properties.
Item 3. LEGAL PROCEEDINGS
Inapplicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S LIMITED PARTNERSHIP UNITS
AND RELATED MATTERS
Market Information
The Units were 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 developed.
Holders
As of December 31, 1997, a total of 1,036 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. However, since the reinvestment period ended December 31, 1994,
the General Partners are required to distribute, subject to payment of any
obligations of the Partnership, such available cash from operations and cash
from sales or refinancing.
The rates for distributions to Limited Partners were $2.50 per Unit in April,
July and October 1997 and $8.50 in December 1997, a total of $16.00 per Unit.
All distributions were made from cash flows from operations and sales proceeds.
The rates for distributions to Limited Partners in April, July and October 1996
and in January 1997 were $2.50, each, per Unit (a total of $10.00 per Unit). All
distributions were made from cash flows from operations and sales proceeds in
1996.
The following table presents summarized information regarding distributions to
Limited Partners:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Distributions of net income $6.19 $5.04 $15.41 $14.11 $12.09
Return of investment 14.53 6.78 8.97 47.48 59.26
--------------- ------------- ------------- ------------- --------------
Distributions per unit 20.72 11.82 24.38 61.59 71.35
Differences due to timing of distributions
and due to distribution reinvestments (4.72) (1.82) (9.33) (11.83) (18.11)
--------------- ------------- ------------- ------------- --------------
Nominal distribution rates from above $16.00 $10.00 $15.05 $49.76 $53.24
=============== ============= ============= ============= ==============
</TABLE>
In 1993 and 1994, cash flows and distributions to Limited Partners were not
sufficient to allow the Partnership to reinvest in additional equipment. The
reinvestment period ended December 31, 1994 in accordance with the terms of the
Limited Partnership Agreement.
<PAGE>
Effective April 1, 1993, the capital accumulation period was terminated by the
General Partners.
Item 6. SELECTED FINANCIAL DATA
The following table presents selected financial data of the Partnership for the
years ended December 31, 1997, 1996, 1995, 1994, and 1993. This financial data
should be read in conjunction with the financial statements and the related
notes included under Item 8 of this report.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross Revenues $203,110 $208,860 $389,278 $484,383 $904,941
Net Income $124,767 $101,543 $310,695 $284,567 $243,968
Weighted average Limited Partnership Units
(Units) outstanding 19,962 19,962 19,962 19,964 19,971
Net income per Unit, based on weighted
average Units outstanding $6.19 $5.04 $15.41 $14.11 $12.09
Distributions per Unit, based on weighted
average Units outstanding $20.72 $11.82 $24.38 $61.59 $71.35
Total Assets $0 $466,002 $649,232 $692,353 $1,738,846
Non-recourse Debt $0 $154,780 $190,568 - $107,924
Total Partners' Capital $0 $298,853 $433,185 $609,077 $1,556,020
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
During the year, the Partnership's primary sources of liquidity were cash flows
from leasing operations and proceeds from the sales of assets.
As of December 31, 1997, the Partnership had disposed of all of its assets and
had ceased operations.
The Partnership made distributions of cash from operations and sales proceeds to
the Limited Partners in April, July, October and December 1997. These
distributions were based on the results of operations and asset sales in 1997.
1997 vs. 1996
In both 1996 and 1997, the Partnership's primary source of cash from operations
was rents received under operating leases.
The largest source of cash flows from investing activities in 1997 was cash
received from the sales of operating lease assets. Such sales increased as a
result of the cessation of operations and the related sales of the Partnership's
remaining lease assets at the end of the year.
There were no financing sources of cash in either 1996 or in 1997. The largest
use of cash for financing activities in both years was to make distributions to
the Limited Partners.
<PAGE>
Results of Operations
1997 vs. 1996
Operations of the Partnership were concluded on December 31, 1997 with the sale
of the remaining lease assets to an unrelated third party, the sale of remaining
accounts receivable to the General Partner (at full face value) and the transfer
of the remaining cash balances ($15,491) and liabilities ($5,468) to a
liquidating trust. If funds remain in the liquidating trust after paying all of
the expenses related to closing the operations of the fund, the remaining
amounts will be paid to the holders of interests in the trust. The Limited
Partners hold interests in the trust proportionate to their interests in the
Partnership.
Revenues from operating leases decreased compared to 1997 due to assets being
sold during the last two years. Revenues from financing leases declined for the
same reason. As a result of the final sale of lease assets on December 31, 1997,
gains on sales of assets increased compared to 1996.
Depreciation expense decreased as a result of the sales of operating leases
noted above.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Financial Statements and Notes to Financial Statements attached hereto at
pages 7 through 13.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
ATEL Cash Distribution Fund
We have audited the accompanying statements of income, changes in partners'
capital and cash flows of ATEL Cash Distribution Fund (a California limited
partnership) for the years ended December 31, 1997 and 1996. 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 results of operations, changes in partners' capital,
and cash flows of ATEL Cash Distribution Fund (a California limited partnership)
for the years ended December 31, 1997 and 1996, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
San Francisco, California
January 27, 1998
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
---- ----
Revenues:
Leasing activities:
Operating $75,817 $104,371
Direct financing 25,658 38,261
Gain on sale 60,838 39,095
Interest income 4,134 1,093
Other 36,663 26,040
------------- --------------
203,110 208,860
------------- --------------
Expenses:
Depreciation and amortization 36,917 62,028
Other 14,962 16,712
Professional fees 14,959 10,606
Interest 11,505 15,883
Provision for losses - 2,088
------------- --------------
78,343 107,317
------------- --------------
Net income $124,767 $101,543
============= ==============
Net income:
General Partners $1,248 $1,015
Limited Partners 123,519 100,528
------------- --------------
$124,767 $101,543
============= ==============
Net income per Limited Partnership Unit $6.19 $5.04
Weighted average number of Units outstanding 19,962 19,962
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partners Total
<S> <C> <C> <C> <C>
Balance, December 31, 1995 19,962 $413,271 $19,914 $433,185
Distributions ($11.82 per Unit) (235,875) - (235,875)
Net income 100,528 1,015 101,543
------------- ------------- ------------- --------------
Balance, December 31, 1996 19,962 277,924 20,929 298,853
Distributions ($20.72 per Unit) (413,597) (413,597)
Net income 123,519 1,248 124,767
Cash transferred to liquidating trust (15,336) (155) (15,491)
Liabilities transferred to liquidating trust 5,413 55 5,468
Special allocation of income 22,077 (22,077) -
------------- ------------- ------------- --------------
Balance, December 31, 1997 19,962 $0 $0 $0
============= ============= ============= ==============
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
Operating activities:
<S> <C> <C>
Net income $124,767 $101,543
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense 36,917 62,028
Gain on sale of equipment (60,838) (39,095)
Provision for losses - 2,088
Changes in operating assets and liabilities:
Receivables 25,877 (19,779)
Other accounts payable (11,174) 995
Deposits due to lessees - (12,914)
Accrued interest (1,195) (276)
Unearned operating lease income - (915)
------------- -------------
Net cash provided by operating activities 114,354 93,675
------------- -------------
Investing activities:
Proceeds from sale of assets on operating leases 223,629 79,800
Proceeds from sale of assets on direct financing leases 39,467 133,002
Reductions of net investment in direct financing leases 1,000 79,520
------------- -------------
Net cash provided by investing activities 264,096 292,322
------------- -------------
Financing activities:
Distributions to limited partners, net of reinvestments (413,597) (235,875)
Repayments of non-recourse debt (154,780) (35,788)
Transfer to liquidating trust (15,491) -
------------- -------------
Net cash used in financing activities (583,868) (271,663)
------------- -------------
Net (decrease) increase in cash and cash equivalents (205,418) 114,334
Cash and cash equivalents at beginning of year 205,418 91,084
------------- -------------
Cash and cash equivalents at end of year $0 $205,418
============= =============
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $12,700 $16,159
============================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Organization and partnership matters:
ATEL Cash Distribution Fund, a California limited partnership (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 consisted of leasing various types of equipment. As
of December 31, 1997, the Partnership had sold all of its lease assets and
ceased operations.
Pursuant to the Limited Partnership Agreement, the General Partners were
entitled to receive compensation and reimbursement for services rendered on
behalf of the Partnership (Note 4).
2. Summary of significant accounting policies:
Equipment on operating leases:
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.
Statements of cash flows:
For purposes of the Statements of Cash Flows, cash and cash equivalents includes
cash in banks and cash equivalent investments with original maturities of ninety
days or less.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
2. Summary of significant accounting policies (continued):
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 following reconciles the net income reported in these financial statements
to the net income (loss) reported on the Partnership's federal tax return
(unaudited):
1997 1996
---- ----
Net income per financial statements $124,767 $101,543
Adjustment to depreciation expense (18,659) 10,896
Adjustments to revenues 69,245 81,640
Provision for losses and impairments - 2,088
Adjustments to other expenses (486,695) (2,345)
------------- -------------
Net (loss) income per federal tax return ($311,342) $193,822
============= =============
Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
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.
3. Investment in equipment and leases:
The Partnership's investment in equipment and leases consists of the following:
<TABLE>
<CAPTION>
Depreciation
Expense or
Amortization
1996 of Leases Dispositions 1997
---- --------- ------------ ----
<S> <C> <C> <C> <C>
Net investment in operating leases $200,690 ($36,917) ($163,773) $0
Net investment in direct financing leases 40,467 (1,000) (39,467) -
Reserve for losses (6,450) - 6,450 -
------------- ------------- ------------- -------------
$234,707 ($37,917) ($196,790) $0
============= ============= ============= ==============
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
4. 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. In
1997 and 1996, $34,227 and $50,914 were waived, respectively.
5. 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.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
5. Partners' capital (continued):
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.
Operations of the Partnership were concluded on December 31, 1997 with the sale
of the remaining lease assets to an unrelated third party, the sale of remaining
accounts receivable to the General Partner (at full face value) and the transfer
of the remaining cash balances ($15,491) and liabilities ($5,468) to a
liquidating trust. If funds remain in the liquidating trust after paying all of
the expenses related to closing the operations of the fund, the remaining
amounts will be paid to the holders of interests in the trust. The Limited
Partners hold interests in the trust proportionate to their interests in the
Partnership.
Upon termination of operations on December 31, 1997, a special allocation of
income was made to the Limited Partners under the terms of the Partnership
Agreement in an amount sufficient to bring their capital accounts to zero.
6. Concentration of credit risk and major customers:
During 1997 and 1996, lease rentals from one customer represented 68% and 50%,
respectively, of total gross lease payments.
<PAGE>
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 Senior Vice President, Secretary and General Counsel for
ACG, AFC, ALC, AIS and AEC
William J. Bullock Director of Asset Management of AEC
Russell H. Wilder Vice President - Credit of AEC
John P. Scarcella Vice President of ASC
<PAGE>
A. J. Batt, age 61, 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 47, 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 40, 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 49, 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 39, 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.
<PAGE>
William J. Bullock, age 34, 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 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 Equipment 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 and is pursuing his M.B.A.
Russell H. Wilder, age 44, 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.
John P. Scarcella, age 36, 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, 1996 and 1997 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 4 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.
<PAGE>
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. 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. 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 were paid by the Partnership.
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 were paid by the Partnership.
<PAGE>
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 1996 and 1997.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security Ownership of Certain Beneficial Owners
At December 31, 1997 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:
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
<S> <C> <C> <C>
Limited Partnership Units A. J. Batt 16.5 Units ($8,250) 0.08%
235 Pine Street, 6th Floor Individual Retirement
San Francisco, CA 94104 Accounts
</TABLE>
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 4 thereof and Item 11 of this report under the caption
"Executive Compensation," are hereby incorporated herein by reference.
<PAGE>
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
Statements of Income for the years ended
December 31, 1997 and 1996 Statements of
Changes in Partners' Capital for the years
ended December 31,
1997 and 1996
Statements of Cash Flows for the years ended
December 31, 1997 and 1996 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 therefor have been
omitted.
(b) Reports on Form 8-K for the fourth quarter
of 1997 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)
<PAGE>
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: 3/27/1998
ATEL CASH DISTRIBUTION FUND
a California Limited Partnership
(Registrant)
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)
<PAGE>
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; 3/27/1998
- ----------------------------------- president, chairman and chief
A. J. Batt executive officer of ATEL
Financial Corporation
/s/ Dean Cash General Partner of registrant; 3/27/1998
- ----------------------------------- executive vice president and
Dean Cash director of ATEL Financial
Corporation
/s/ F. Randall Bigony Principal financial officer of 3/27/1998
- ----------------------------------- registrant; principal financial
F. Randall Bigony officer of ATEL Financial
Corporation
/s/ Donald E. Carpenter Principal accounting officer of 3/27/1998
- ----------------------------------- registrant; principal accounting
Donald E. Carpenter officer of ATEL Financial
Corporation
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> dec-31-1997
<PERIOD-END> dec-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 203,110
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 66,838
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,505
<INCOME-PRETAX> 124,767
<INCOME-TAX> 0
<INCOME-CONTINUING> 124,767
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 124,767
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
