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, 1996
{ } 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, 1996 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
Part II. Other Information
Item 1. through Item 6. 8
Signatures 9
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
Assets
<S> <C> <C>
Cash and cash equivalents $2,719,367 $2,500,697
Lease payment and other receivables 33,098 68,663
Deposit 10,000 10,000
Investment in direct finance leases, net 1,813,453 2,419,556
Total assets $4,575,918 $4,998,916
Liabilities and Partners' Capital
Accounts payable and accrued expenses $ 18,956 $ 16,813
Amounts due to affiliates 14,892 15,910
Advance rentals 14,552 18,521
Total liabilities 48,400 51,244
Partners' Capital
General Partner (82,269) (73,866)
Assignor Limited Partner:
Assignment of limited partnership interests - $25 stated
value per unit, 401,180 units outstanding 4,609,002 5,020,712
Limited partnership interests - $25 stated value per
unit, 40 units outstanding 585 626
Special Limited Partners 200 200
Total partners' capital 4,527,518 4,947,672
Total liabilities and partners' capital $4,575,918 $4,998,916
</TABLE>
See accompanying notes to financial statements
-1-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
Revenues
<S> <C> <C> <C> <C>
Direct finance lease revenue $ 43,776 $ 49,786 $ 143,487 $ 158,283
Interest income 35,474 38,670 96,898 115,280
Gain from sale of leased equipment 6,575 - 36,091 147,012
85,825 88,456 276,476 420,575
Expenses
Administrative expenses including
amounts to related party 13,008 14,806 49,442 51,175
Management fees to advisor 4,022 2,996 10,129 14,396
Professional fees 4,000 (88) 12,450 11,612
Amortization of acquisition and
organization costs 3,417 3,258 10,497 11,447
24,447 20,972 82,518 88,630
Net earnings $ 61,378 $ 67,484 $ 193,958 $ 331,945
Net earnings per unit of assignee
limited partnership interest $ 0.15 $ 0.16 $ 0.47 $ 0.81
</TABLE>
See accompanying notes to financial statements
-2-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Partners' Capital
For the nine months ended September 30, 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 190,060 19 - 3,879 193,958
Distributions to partners (601,770) (60) - (12,282) (614,112)
Balance at September 30, 1996$4,609,002 $ 585 $ 200 $ (82,269)$4,527,518
Balance at December 31, 1994 $5,426,614 $ 667 $ 200 $ (65,582)$5,361,899
Net earnings 325,274 32 - 6,639 331,945
Distributions to partners (601,770) (60) - (12,282) (614,112)
Balance at September 30, 1995$5,150,118 $ 639 $ 200 $ (71,225)$5,079,732
</TABLE>
See accompanying notes to financial statements
-3-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Cash Flows
For the nine months ended September 30,
(unaudited)
<TABLE>
<CAPTION>
1996 1995
Cash flow from operating activities
<S> <C> <C>
Net earnings $ 193,958 $ 331,945
Adjustments to reconcile net earnings to net
cash provided by operating activities
Amortization of acquisition and organization costs 10,497 11,447
Gain from sale of leased equipment (36,091) (147,012)
Changes in assets and liabilities
Decrease in lease payment and other receivables 35,565 7,624
Increase (decrease) in accounts payable and accrued expenses 2,143 (6,987)
(Decrease) increase in amounts due to affiliates (1,018) 4,361
Decrease in advance rentals (3,969) (3,969)
Net cash provided by operating activities 201,085 197,409
Cash flows from investing activities
Acquistion of direct finance leases - (543,914)
Principal received on direct finance leases 532,560 512,391
Termination of direct finance leases 99,137 263,334
Net cash provided by investing activities 631,697 231,811
Cash flows from financing activities-
distributions to partners (614,112) (614,112)
Net increase (decrease) in cash and cash equivalents 218,670 (184,892)
Cash and cash equivalents
Beginning of period 2,500,697 2,645,192
End of period $ 2,719,367 $2,460,300
</TABLE>
See accompanying notes to financial statements
- -4-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Notes to Financial Statements
September 30, 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 - 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
September 30, 1996 and December 31, 1995.
Note 3 - 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 $5,118 and $7,494 for certain costs incurred relating to
administrative services for the Partnership for the three months ended September
30, 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 September 30, 1996 and 1995, Signet earned $4,022 and $2,996,
respectively in management and disposition fees.
Note 4 - Leases
Investment in direct finance leases with initial terms ranging from 34
to 82 months at September 30, 1996 and December 31, 1995 includes the following:
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
<S> <C> <C>
Lease payments receivable $ 1,475,908 $ 2,178,763
Estimated residual value 542,237 572,852
Acquisition fees, net 21,881 32,378
Unearned income (204,017) (341,881)
Reserve for residual value loss (22,556) (22,556)
$ 1,813,453 $ 2,419,556
</TABLE>
During the third quarter of 1996, one lease expired and another lessee
purchased a portion of its equipment prior to the end of its lease. The
Partnership received $69,621 and recorded a gain of $6,575 from these
transactions.
-5-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Notes to Financial Statements
September 30, 1996
(Unaudited)
Note 4 - Leases - continued
The partnership has been unable to identify acceptable lease
opportunities through the first nine months of 1996. The Partnership is
approaching the end of the Investment Period and prior to the end of 1996 will
enter the Liquidation Phase.
All leases in the Partnership's portfolio are classified as direct
finance leases.
Note 5 - 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 6 - Subsequent Events
In November, 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 September 30, 1996, the Partnership had a working capital position
that included cash and cash equivalents of $2,719,367 and accounts payable and
accrued expenses of $18,956. 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.
Cash and cash equivalents increased $105,826 during the third quarter
of 1996. This increase represented the combined effect of $64,296 provided by
operating activities, $176,613 received in principal payments on direct finance
leases, $30,000 received from the sale of one of the EA Engineering lease
schedules, and $39,621 received as a partial payoff at its booked residual value
on the Coca-Cola lease, and $204,704 distributed to partners.
The Partnership made a distribution of $204,704 on August 9, 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 $6,010 during the third quarter
of 1996 as compared to the third quarter of 1995, and $14,796 during the first
nine months of 1996 as compared to the first nine months of 1995. This decrease
resulted from scheduled lease terminations and an expected decline in the
portion of lease payments recognized as revenue (versus return of principal) for
existing leases.
Interest income decreased $3,196 during the third quarter of 1996 as
compared to the third quarter of 1995, and $18,382 during the first nine months
of 1996 as compared to the first nine months of 1995, due primarily to lower
cash balances.
The Partnership recognized a $6,575 gain from the sale of leased
equipment during the third quarter of 1996 resulting from the sale of equipment
on one of the EA Engineering lease schedules. The Partnership currently has
$22,556 in reserves which is deemed sufficient for any future potential losses.
Total expenses increased by $3,475 during the third quarter of 1996 as
compared to the third quarter of 1995 due to the timing of expenses. Total
expenses decreased $6,112 during the first nine months of 1996 as compared to
the first nine months of 1995. The decreases over the nine month period are
attributable to reductions in administrative and management fees.
Equipment Lease Acquisitions
During the third quarter of 1996, the Partnership made no equipment
lease acquisitions. The Partnership has not been able to identify new lease
transactions which it deems acceptable from a risk and credit standpoint. As
noted in prior reports, the Partnership is approaching the end of the Investment
Period (period during which the Partnership makes new investments in equipment
leases) and prior to the end of 1996 will enter the Liquidation Phase. If the
Partnership does not fully invest its cash in acceptable equipment lease
transactions prior to the end of the Investment Period, the remaining funds (net
of reserves) will be distributed to investors.
-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
-8-
<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: 11/8/96 By: /s/ John M. Prugh
John M. Prugh
President and Director
Redwood Leasing, Inc.
General Partner
DATE: 11/8/96 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Redwood Leasing, Inc.
General Partner
-9-
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 2,719,367
<SECURITIES> 0
<RECEIVABLES> 33,098
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,752,465
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,575,918
<CURRENT-LIABILITIES> 33,848
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,575,918
<SALES> 0
<TOTAL-REVENUES> 276,476
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 82,518
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 193,958
<INCOME-TAX> 0
<INCOME-CONTINUING> 193,958
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 193,958
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
