Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
|X| Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 2000
|_| 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 000-19160
ATEL Cash Distribution Fund III, L.P.
(Exact name of registrant as specified in its charter)
California 94-3100855
---------- ----------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
235 Pine Street, 6th Floor, San Francisco, California 94104
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(Address of principal executive offices)
Registrant's telephone number, including area code: (415)989-8800
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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
1
<PAGE>
Part I FINANCIAL INFORMATION
Item 1. Financial Statements.
2
<PAGE>
ATEL CASH DISTRIBUTION FUND III, L.P.
BALANCE SHEET
JUNE 30, 2000
(Unaudited)
ASSETS
Cash and cash equivalents $3,850,422
Accounts receivable 252,874
----------------
$4,103,296
================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $190,027
----------------
Total liabilities 190,027
Partners' capital:
General partners 265,595
Limited partners 3,647,674
----------------
Total partners' capital 3,913,269
----------------
$4,103,296
================
See notes to financial statements
3
<PAGE>
ATEL CASH DISTRIBUTION FUND III, L.P.
INCOME STATEMENTS
THREE AND SIX MONTH PERIODS ENDED
JUNE 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
-------- --------
Revenues: 2000 1999 2000 1999
---- ---- ---- ----
Lease revenues:
<S> <C> <C> <C> <C>
Gain (loss) on sales of assets $2,253,471 ($43,349) ($459,629) ($47,026)
Operating leases 60,000 853,338 30,000 391,892
Direct financing leases 3,438 42,134 - 18,323
Leveraged leases - 10,562 - 5,281
Interest income 36,809 181,067 30,942 90,971
Other 70,115 2,285 70,076 1,634
---------------- ---------------- ---------------- ----------------
2,423,833 1,046,037 (328,611) 461,075
---------------- ---------------- ---------------- ----------------
Expenses:
Administrative cost reimbursements 86,061 87,442 44,575 62,747
Professional fees 44,545 15,366 27,749 11,364
Depreciation 36,625 431,755 18,312 231,636
Other 21,294 63,168 10,257 48,636
Taxes 9,360 37,344 9,360 761
Equipment and partnership management fees 3,000 81,190 2,126 28,464
Interest expense 2,690 15,182 899 6,106
---------------- ---------------- ---------------- ----------------
203,575 731,447 113,278 389,714
---------------- ---------------- ---------------- ----------------
Net Income $2,220,258 $314,590 ($441,889) $71,361
================ ================ ================ ================
Net income:
General partners $22,203 $3,146 ($4,419) $714
Limited partners 2,198,055 311,444 (437,470) 70,647
---------------- ---------------- ---------------- ----------------
$2,220,258 $314,590 ($441,889) $71,361
================ ================ ================ ================
Net income per limited partnership unit $0.30 $0.04 ($0.06) $0.01
Weighted average number of units
outstanding 7,376,284 7,376,284 7,376,284 7,376,284
</TABLE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
SIX MONTH PERIOD ENDED
JUNE 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partners Total
<S> <C> <C> <C> <C>
Balance December 31, 1999 7,376,284 $1,449,619 $243,392 $1,693,011
Net income 2,198,055 22,203 2,220,258
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
Balance June 30, 2000 7,376,284 $ 3,647,674 $ 265,595 $ 3,913,269
================ ================ ================ ================
</TABLE>
See notes to financial statements
4
<PAGE>
ATEL CASH DISTRIBUTION FUND III, L.P.
STATEMENTS OF CASH FLOWS
THREE AND SIX MONTH PERIODS ENDED
JUNE 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
Operating activities:
<S> <C> <C> <C> <C>
Net income $2,220,258 $314,590 ($441,889) $71,361
Adjustment to reconcile net income to net cash
provided by operations:
Depreciation 36,625 431,755 18,312 231,636
Leveraged lease income - (10,562) - (5,281)
Gain on sales of assets (2,253,471) 43,349 459,629 47,026
Changes in operating assets and liabilities:
Accounts receivable (168,785) (25,842) (165,004) 13,844
Accounts payable, general partner - (339,374) - (21,240)
Accounts payable, other 39,634 (22,189) (46,214) (102,803)
Accrued interest - (1,014) - (513)
Unearned operating lease income - 68,992 - 40,565
---------------- ---------------- ---------------- ----------------
Net cash provided by operating activities (125,739) 459,705 (175,166) 274,595
---------------- ---------------- ---------------- ----------------
Investing activities:
Proceeds from sales of lease assets 3,303,599 736,868 239,204 394,667
Reduction in net investment in direct
financing leases - 236,977 - 121,056
---------------- ---------------- ---------------- ----------------
Net cash provided by investing activities 3,303,599 973,845 239,204 515,723
---------------- ---------------- ---------------- ----------------
Financing activities:
Distributions to limited partners - (5,536,789) - (2,770,745)
Repayments of long-term non-recourse debt (57,291) (258,075) - (130,516)
---------------- ---------------- ---------------- ----------------
Net cash used in financing activities (57,291) (5,794,864) - (2,901,261)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in cash and
cash equivalents 3,120,569 (4,361,314) 64,038 (2,110,943)
Cash and cash equivalents at
beginning of period 729,853 11,294,942 3,786,384 9,044,571
---------------- ---------------- ---------------- ----------------
Cash and cash equivalents at end of
period $3,850,422 $6,933,628 $3,850,422 $6,933,628
================ ================ ================ ================
Supplemental disclosures of cash flow information:
Cash paid during period for interest $2,690 $15,182 $899 $6,106
================ ================ ================ ================
</TABLE>
See notes to financial statements
5
<PAGE>
ATEL CASH DISTRIBUTION FUND III, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
1. Summary of significant accounting policies:
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. Organization and partnership matters:
ATEL Cash Distribution Fund III, L.P. (the Partnership), was formed under the
laws of the State of California in September 1989, for the purpose of acquiring
equipment to engage in equipment leasing and sales activities.
The Partnership's business consisted of leasing various types of equipment. As
of June 30, 2000, all of the Partnership's leases and related assets had been
sold.
Pursuant to the Agreement of Limited Partnership, the General Partners receive
compensation and reimbursements for services rendered on behalf of the
Partnership (Note 5.)
3. Investment in leases:
The Partnership's investment in leases consisted of the following:
<TABLE>
<CAPTION>
Depreciation
Expense or
December 31, Amortization June 30,
1999 of Leases Dispositions 2000
---- --------- -------------- ----
<S> <C> <C> <C> <C>
Net investment in operating leases $ 735,458 $ (36,625) $ (698,833) $ -
Net investment in direct financing leases 348,795 - (348,795) -
Equipment held for sale or lease 2,500 - (2,500) -
---------------- ---------------- ---------------- ----------------
$ 1,086,753 $ (36,625) $(1,050,128) $ -
================ ================ ================ ================
</TABLE>
6
<PAGE>
ATEL CASH DISTRIBUTION FUND III, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
3. Investment in leases (continued):
The following schedule provides an analysis of the Partnership's investment in
property on operating leases by major classifications as of December 31, 1999,
acquisitions and dispositions during the quarters ended March 31, 2000 and June
30, 2000 and as of June 30, 2000.
<TABLE>
<CAPTION>
December 31, Dispositions June 30,
1999 1st Quarter 2nd Quarter 2000
---- ----------- ----------- ----
<S> <C> <C> <C> <C>
Mining equipment $3,757,698 $(2,505,036) $(1,252,662) $ -
Less accumulated depreciation (3,022,240) 2,086,723 935,517 -
---------------- ---------------- ---------------- ----------------
$735,458 ($418,313) ($317,145) $ -
================ ================ ================ ================
</TABLE>
Equipment on operating leases was acquired in 1990, 1991, 1992, 1993 and 1995.
At June 30, 2000, aggregate amounts of future minimum lease payments were zero.
4. Non-recourse debt:
At December 31, 1999, non-recourse debt consists of a note payable to a
financial institution of $57,291. The note was due in quarterly payments of
$29,832 through its due date of June 2000. Interest on the note was at a rate of
11%. The note was secured by an assignment of lease payments and a pledge of
assets. The note was repaid in the first quarter of 2000.
7
<PAGE>
ATEL CASH DISTRIBUTION FUND III, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
5. Related party transactions:
The terms of the Agreement of Limited Partnership provide that the General
Partners and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The General Partners and/or Affiliates earned the following fees, commissions
and reimbursements, pursuant to the Limited Partnership Agreement during the six
month periods ended June 30, 2000 and 1999 as follows:
2000 1999
---- ----
Reimbursement of administrative costs $ 86,061 $ 87,442
Incentive and equipment management fees 3,000 81,190
---------------- ----------------
$89,061 $168,632
================ ================
6. Partners' capital:
The Partnership Net Profits, Net Losses, and Tax Credits are to be allocated 99%
to the Limited Partners and 1% to the General Partners.
As more fully described in the Partnership Agreement, available Cash from
Operations and Cash from Sales or Refinancing shall be distributed as follows:
First, 5% of Distributions of Cash from Operations to the General Partners as
Incentive Management Compensation.
Second, the balance to the Limited Partners until the Limited Partners have
received aggregate Distributions, as defined, in an amount equal to their
Original Invested Capital, as defined, plus an 8% per annum cumulative
(compounded daily) return on their Adjusted Invested Capital, as defined.
Third, the General Partners will receive as Incentive Management Compensation,
the following:
(A) 10% of remaining Cash from Operations, as defined,
(B) 15% of remaining Cash from Sales or Refinancing, as defined.
Fourth, the balance to the Limited Partners.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
As of June 30, 2000, the Partnership disposed of the last of its lease assets
and ceased operations in its primary business, equipment leasing and sales
activities. During the third quarter, the General Partners plan that the
Partnership will make a liquidating distribution of approximately $3,500,000,
which represents about 4.7% of the original invested capital of the Partnership.
Funds which have been received, but which have not yet been distributed, are
invested in interest-bearing accounts.
The Partnership's primary source of liquidity during the first six months of
2000 were proceeds from sales of assets.
The Partnership currently has available adequate reserves to meet contingencies.
As of June 30, 1999, the Partnership had borrowed approximately $32,425,000, all
of which has been repaid. The General Partners expect that there will be no
additional borrowings.
No commitments of capital have been or are expected to be made. As of June 30,
1999, there were no such commitments.
In the first six months of 2000, the Partnership made no distributions.
The Partnership made distributions of cash from 1999 first quarter operations in
February, March and April 1999. The Partnership made distributions of cash from
1999 second quarter operations in May, June and July 1999. The amounts of the
monthly distributions were each $0.125 per Unit. The amounts of the quarterly
distributions were each $0.375 per Unit. These distributions represent an
annualized distribution rate of 15.0%.
Cash Flows, 2000 vs. 1999:
Six months:
Cash flows from operations decreased due to decreases in lease rents compared to
1999. The decreases were due to lease asset sales since the second quarter of
1999.
Cash flows from the sales of assets increased by $2,566,731 compared to 1999.
The increase was due to increased sales activities and the final asset sales in
2000. Cash flows from the reduction of the Partnership's net investment in
direct financing leases decreased compared to 1999 as a result of equipment
sales over the last twelve months. All such assets had been sold by December 31,
1999.
There were no financing sources of cash flows in 2000 or 1999. There were no
distributions in the first six months of 2000. Debt payments for the six month
period decreased due to scheduled debt payments and the final repayment of all
remaining debt in the first quarter of 2000.
Three months:
Cash flows from operations decreased in the three month period for the same
reasons noted above for the six month period.
Cash flows from investing activities consisted of proceeds from sales of assets
( in both 2000 and 1999) and from reductions in the Partnership's net investment
in direct financing leases (1999 only). Proceeds from the sales of assets
decreased due to reduced sales activities. Direct financing lease rents
decreased for the same reasons as noted above for the six month period.
There were no financing sources of cash in 2000 or 1999. Debt payments decreased
compared to 1999 since all remaining debt had been repaid in the first quarter
of 2000.
9
<PAGE>
Results of Operations
Operations in the second quarter of 2000 resulted in a net loss of $441,889 of
compared to net income of $71,361 in 1999. Net income for the first six months
of 2000 was $2,220,258 compared to $314,590 in 1999.
2000 vs. 1999:
Lease revenues decreased in both the three and six month periods compared to the
prior year. This is the result of asset sales since June 30, 1999. All lease
assets were sold prior to June 30, 2000. Interest income has decreased from 1999
to 2000 for both the three and six month periods. This a direct consequence of
having maintained lower average cash balances during the 2000 periods than in
the 1999 periods.
Operating lease revenues have shown a net decrease for both the three and six
month periods. The original cost of the underlying assets has decreased from
$11,378,493 at June 30, 1999 to zero at June 30, 2000. The decreased amounts of
equipment owned by the Partnership also gave rise to the decrease in
depreciation expense.
As scheduled debt payments have been made, debt balances have been reduced and
this has caused interest expense to decline from 1999 to 2000.
Equipment management fees are based on the Partnership's lease rents. As those
rents have decreased, the fees have also decreased. Incentive management fees
are based on the amounts of distributions of cash flows generated from
operations. In the first six months of 2000, there were no distributions to the
Limited Partners, and hence, no incentive management fees.
10
<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, June 30, 2000.
Income statement for the six and three month periods
ended June 30, 2000 and 1999. Statement of changes in
partners' equity for the six month period ended June 30,
2000. Statements of cash flows for the six and three
month periods ended June 30, 2000
and 1999.
Notes to the Financial Statements.
2. Financial Statement Schedules
All other 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 Form 8-K
None
11
<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:
August 11, 2000
ATEL CASH DISTRIBUTION FUND III, L.P.
(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/ PARITOSH K. CHOKSI
----------------------------------------------
Paritosh K. Choksi
Principal financial officer of registrant
By: /s/ DONALD E. CARPENTER
----------------------------------------------
Donald E. Carpenter,
Principal accounting officer of
registrant
12
