FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Mark One)
{ X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended September 30, 1995 Commission file number 33-32125
Redwood Equipment Leasing Income Fund L.P.
(Exact Name of Registrant as Specified in its Charter)
Delaware 52-1650971
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
225 East Redwood Street, Baltimore, Maryland 21202
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (410) 727-4083
N/A
(Former Name, Former Address, and Former Fiscal Year,
if Changed Since Last Report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets 1
Statements of Operations 2
Statements of Partners' Capital 3
Statements of Cash Flows 4
Notes to Financial Statements 5-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
Part II. Other Information
Item 1. through Item 6. 9
Signatures 10
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
Assets
<S> <C> <C>
Cash and cash equivalents $2,544,275 $ 2,500,697
Lease payment and other receivables 50,061 68,663
Deposit 10,000 10,000
Investment in direct finance leases, net 2,240,003 2,419,556
Total assets $4,844,339 $ 4,998,916
Liabilities and Partners' Capital
Accounts payable and accrued expenses $ 11,721 $ 16,813
Amounts due to affiliates 19,588 15,910
Advance rentals 17,199 18,521
Total liabilities 48,508 51,244
Partners' Capital
General Partner (76,903) (73,866)
Assignor Limited Partner:
Assignment of limited partnership interests - $25 stated
value per unit, 401,180 units outstanding 4,871,923 5,020,712
Limited partnership interests - $25 stated value per
unit, 40 units outstanding 611 626
Special Limited Partners 200 200
Total partners' capital 4,795,831 4,947,672
Total liabilities and partners' capital $4,844,339 $ 4,998,916
See accompanying notes to financial statements
</TABLE>
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<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Operations
For the three months ended March 31,
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
Revenues
<S> <C> <C>
Direct finance lease revenue $ 51,796 $ 57,699
Interest income 31,581 36,582
Gain from sale of leased equipment - 24,285
83,377 118,566
Expenses
Administrative expenses including
amounts to related party 19,491 15,924
Management fees to advisor 3,053 5,443
Professional fees 4,450 3,500
Amortization of acquisition and
organization costs 3,520 5,174
30,514 30,041
Net earnings $ 52,863 $ 88,525
Net earnings per unit of assignee
limited partnership interest $ 0.13 $ 0.22
See accompanying notes to financial statements
-2-
</TABLE>
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Partners' Capital
For the three months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Assignee Assignor Special
Limited Limited Limited General
Partners Partner Partners Partner Total
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995$5,020,712 $ 626 $ 200 $ (73,866)$4,947,672
Net earnings 51,801 5 - 1,057 52,863
Distributions to partners (200,590) (20) - (4,094) (204,704)
Balance at March 31, 1996 $4,871,923 $ 611 $ 200 $ (76,903)$4,795,831
Balance at December 31, 1994$5,426,614 $ 667 $ 200 $ (65,582)$5,361,899
Net earnings 86,745 9 - 1,771 88,525
Distributions to partners (200,590) (20) - (4,094) (204,704)
Balance at March 31, 1995 $5,312,769 $ 656 $ 200 $ (67,905)$5,245,720
See accompanying notes to financial statements
-3-
</TABLE>
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Cash Flows
For the three months ended March 31,
(unaudited)
<TABLE>
<CAPTION>
1996 1995
Cash flow from operating activities
<S> <C> <C>
Net earnings $ 52,863 $ 88,525
Adjustments to reconcile net earnings to net
cash provided by operating activities
Amortization of acquisition and
organization costs 3,520 5,174
Gain from sale of leased equipment - (24,285)
Changes in assets and liabilities
Decrease (increase) in lease payment and other receivables 18,602 (3,504)
Decrease in accounts payable and accrued expenses (5,092) (7,792)
Increase in amounts due to affiliates 3,678 10,700
Decrease in advance rentals (1,322) (1,322)
Net cash provided by operating activities 72,249 67,496
Cash flows from investing activities-
principal received on direct finance leases 176,033 195,687
Cash flows from financing activities-
distributions to partners (204,704) (204,704)
Net increase in cash and cash equivalents 43,578 58,479
Cash and cash equivalents
Beginning of period 2,500,697 2,645,192
End of period $ 2,544,275 $2,703,671
See accompanying notes to financial statements
-4-
</TABLE>
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Notes to Financial Statements
March 31, 1996
(Unaudited)
Note 1 - The Partnership and Basis of Preparation
The accompanying financial statements of Redwood Equipment Leasing
Income Fund L.P. (the "Partnership") do not include all of the information and
note disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles. The unaudited interim
financial statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the interim periods
presented. All such adjustments are of a normal recurring nature. The unaudited
interim financial information should be read in conjunction with the financial
statements contained in the 1995 Annual Report.
Note 2 - New Accounting Pronouncements
In March 1995, The Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(Statement 121). Statement 121 provides guidance for recognition and measurement
of impairment of long-lived assets, certain identifiable intangibles and
goodwill related both to assets to be held and used and assets to be disposed
of. The Partnership adopted Statement 121 during the first quarter of 1996 and
the adoption did not have any impact on its financial statements.
Note 3 - Cash and Cash Equivalents
The Partnership considers all short-term investments with original
maturities of three months or less as cash equivalents. Cash and cash
equivalents consist of cash, money market accounts and other liquid short term
investments and are stated at cost, which approximates market value, at March
31, 1996 and December 31, 1995.
Note 4 - Related Party Transactions
The Partnership's General Partner earned an asset management fee of
$6,141 each quarter (3% of distributions to investors) and received or was due
reimbursement of $9,245 and $8,717 for certain costs incurred relating to
administrative services for the Partnership for the three months ended March 31,
1996 and 1995, respectively.
As the management agent, Signet is entitled to an equipment and lease
management fee equal to 1.5% of gross lease rental payments as well as a fee for
services provided in acquiring and disposing of leased assets. For the three
months ended March 31, 1996 and 1995, Signet earned $3,053 and $5,443,
respectively in management and disposition fees.
Note 5 - Leases
Investment in direct finance leases with initial terms ranging from 34
to 82 months at March 31, 1996 and December 31, 1995 includes the following:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
<S> <C> <C>
Lease payments receivable $ 1,952,256 $ 2,178,763
Estimated residual value 572,852 572,852
Acquisition fees, net 28,858 32,378
Unearned income (291,407) (341,881)
Reserve for residual value loss (22,556) (22,556)
$ 2,240,003 $ 2,419,556
All leases in the Partnership's portfolio are classified as direct
finance leases.
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</TABLE>
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Notes to Financial Statements
March 31, 1996
(Unaudited)
Note 6 - Net Earnings per Unit of Assigned Limited Partnership Interest
Net earnings per unit of assignee limited partnership interest is
disclosed on the Statements of Operations and is based upon 401,180 units
outstanding.
Note 7 - Subsequent Events
In May, 1996, the Partnership will make a cash distribution totaling
$204,704 of which 98% will be allocated to assignee limited partners. This
distribution will be derived from net cash provided by operating activities and
principal payments received on direct finance leases. Holders of assignee
limited partnership interests will receive cash distributions of $.50 per $25
unit.
-6-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At March 31, 1996, the Partnership had a working capital position that
included cash and cash equivalents of $2,544,275 and accounts payable and
accrued expenses of $11,721. The Partnership invests its cash balances in a
money market account and other high quality short term investments. The
Partnership initially allocated $100,295 (1% of offering proceeds) as working
capital reserves, but has the discretion to increase or decrease reserves as
deemed necessary. The unexpended offering proceeds and working capital reserves
are sufficient to satisfy the Partnership's liquidity requirements.
It is anticipated that a substantial portion of the current cash on
hand will be used to fund lease acquisitions in future periods.
Cash and cash equivalents increased $43,578 during the first quarter of
1996. This increase represented the combined effect of $72,249 provided by
operating activities, $176,033 received in principal payments on direct finance
leases and $204,704 distributed to partners.
The Partnership made a distribution of $204,704 on February 8, 1996
from funds generated from operations, and principal payments on direct finance
leases. This distribution represents an annualized rate of 8% on invested
capital and reflects the Partnership's current distribution target.
Results of Operations
Direct finance lease revenue decreased $5,903 during the first quarter
of 1996 as compared to the first quarter of 1995. This slight decrease resulted
from scheduled lease terminations during 1995 and an expected decline in the
portion of lease payments recognized as revenue (versus return of principal) for
existing leases.
Interest income decreased $5,001 during the first quarter of 1996 as
compared to the first quarter of 1995, due primarily to lower interest rates and
lower cash balances.
The Partnership recognized a $24,285 gain from the sale of leased
equipment during the first quarter of 1995 resulting from the sale of leased
office furniture and computer equipment to EA Engineering. The Partnership also
sold the equipment leased to American Health Services (a Shiatuz imaging system)
during the first quarter of 1995 for $30,000 or $43,752 less than the original
recorded residual value of the equipment. The Partnership reduced its existing
reserves as a result of the sale. The Partnership currently has $22,556 in
reserves which is deemed sufficient for any future potential losses.
Total expenses remained consistent during the first quarter of 1996 as
compared to the first quarter of 1995. Increases in administrative expenses and
professional fees were partially offset by a decreases in amortization expense
and management fees to the advisor..
Equipment Lease Acquisitions
During the first quarter of 1996, the Partnership made no equipment
lease acquisitions. The Partnership will continue to review equipment lease
proposals and anticipates making additional lease acquisitions in future
periods.
-7-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
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) Exhibits: None
b) Reports on Form 8-K: None
-9-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
REDWOOD EQUIPMENT LEASING
INCOME FUND L.P.
DATE: 5/9/96 By: /s/ John M. Prugh
John M. Prugh
President and Director
Redwood Leasing, Inc.
General Partner
DATE: 5/9/96 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Redwood Leasing, Inc.
General Partner
-10-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with legend, if applicable)
</LEGEND>
<CIK> 0000857615
<NAME> Redwood Equipment Leasing Income Fund
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 2,544,275
<SECURITIES> 0
<RECEIVABLES> 50,061
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,594,336
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,844,339
<CURRENT-LIABILITIES> 31,309
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,844,339
<SALES> 0
<TOTAL-REVENUES> 83,377
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 30,514
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 52,863
<INCOME-TAX> 0
<INCOME-CONTINUING> 52,863
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,863
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
