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 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
For Quarter Ended March 31, 1997 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>
March 31, December 3
1997 1996
Assets
<S> <C> <C>
Cash and cash equivalents $ 314,255 $2,772,471
Lease payment and other receivables 36,030 33,098
Deposit 10,000 10,000
Investment in direct finance leases, net 1,449,139 1,631,824
Total assets $1,809,424 $4,447,393
Liabilities and Partners' Capital
Accounts payable and accrued expenses $ 12,520 $ 18,656
Amounts due to affiliates 15,113 12,403
Advance rentals 11,907 40,634
Total liabilities 39,540 71,693
Partners' Capital
General Partner (113,411) (85,305)
Assignor Limited Partner:
Assignment of limited partnership interests - $25 stated
value per unit, 401,180 units outstanding 1,882,782 4,460,235
Limited partnership interests - $25 stated value per
unit, 40 units outstanding 313 570
Special Limited Partners 200 200
Total partners' capital 1,769,884 4,375,700
Total liabilities and partners' capital $1,809,424 $4,447,393
</TABLE>
See accompanying notes to financial statements
- -1-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Operations
For the three months ended March 31,
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
Revenues
<S> <C> <C>
Direct finance lease revenue $ 38,603 $ 51,796
Interest income 25,372 31,581
63,975 83,377
Expenses
Administrative expenses including
amounts to related party 23,211 19,491
Management fees to advisor 2,905 3,053
Professional fees 4,000 4,450
Amortization of acquisition and
organization costs 3,334 3,520
33,450 30,514
Net earnings $ 30,525 $ 52,863
Net earnings per unit of assignee
limited partnership interest $ 0.08 $ 0.13
</TABLE>
See accompanying notes to financial statements
- -2-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Partners' Capital
For the three months ended March 31, 1997 and 1996
(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, 1996 $ 4,460,235 $ 570 $ 200 $ (85,305)$ 4,375,700
Net earnings 30,217 3 305 30,525
Distributions to partners
Operations (200,590) (20) (4,094) (204,704)
Return of capital (2,407,080) (240) (24,317) (2,431,637)
Balance at March 31, 1997 $ 1,882,782 $ 313 $ 200 $ (113,411)$ 1,769,884
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
</TABLE>
See accompanying notes to financial statements
-3-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Cash Flows
For the three months ended March 31,
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
Cash flow from operating activities
<S> <C> <C>
Net earnings $ 30,525 $ 52,863
Adjustments to reconcile net earnings to net
cash provided by operating activities
Amortization of acquisition and organization costs 3,334 3,520
Changes in assets and liabilities
(Increase) decrease in lease payment and other receivables (2,932) 18,602
Decrease in accounts payable and accrued expenses (6,136) (5,092)
Increase in amounts due to affiliates 2,710 3,678
Decrease in advance rentals (28,727) (1,322)
Net cash provided by (used in) operating activities (1,226) 72,249
Cash flows from investing activities-
principal received on direct finance leases 179,351 176,033
Cash flows from financing activities-
distributions to partners (2,636,341) (204,704)
Net increase (decrease) in cash and cash equivalents (2,458,216) 43,578
Cash and cash equivalents
Beginning of period 2,772,471 2,500,697
End of period $ 314,255 $2,544,275
</TABLE>
See accompanying notes to financial statements
- -4-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Notes to Financial Statements
March 31, 1997
(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 1996 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 March
31, 1997 and December 31, 1996.
Note 3 - Related Party Transactions
The Partnership's General Partner earned an asset management fee of
$5,344 and $6,141 (3% of distributions to investors) and received or was due
reimbursement of $9,250 and $9,245 for certain costs incurred relating to
administrative services for the Partnership for the three months ended March 31,
1997 and 1996, 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, 1997 and 1996, Signet earned $2,905 and $3,053,
respectively in management and disposition fees.
Note 4 - Leases
Investment in direct finance leases with initial terms ranging from 34
to 82 months at March 31, 1997 and December 31, 1996 includes the following:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
<S> <C> <C>
Lease payments receivable $ 1,044,130 $ 1,259,277
Estimated residual value 542,237 542,237
Acquisition fees, net 15,182 18,516
Unearned income (129,854) (165,650)
Reserve for residual value loss (22,556) (22,556)
$ 1,449,139 $ 1,631,824
</TABLE>
During the first quarter of 1997, the Partnership learned that one of
its lessees is in default under the terms of its lease. However, pursuant to the
Security Agreement and Assignment of Lease, all rental payments due from this
lessee have been guaranteed by the lease originator. The guarantee obligations
have been honored by the lease originator and accordingly, the Partnership has
timely received all rental payments due under the lease.
All leases in the Partnership's portfolio are classified as direct
finance leases.
-5-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Notes to Financial Statements
March 31, 1997
(Unaudited)
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 Event
In May 1997, the Partnership will make a cash distribution totaling
$178,125 of which 99% will be allocated to assignee limited partners. This
distribution will be derived from principal payments received on direct finance
leases. Holders of assignee limited partnership interests will receive cash
distributions of $.44 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, 1997, the Partnership had a working capital position that
included cash and cash equivalents of $314,255 and accounts payable and accrued
expenses of $12,520. The Partnership invests its cash balances in a money market
account. The Partnership is reserving $136,130 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 decreased $2,458,216 during the first quarter
of 1997. This decrease represented the combined effect of a loss of $1,226 from
operating activities, $179,351 received in principal payments on direct finance
leases, and $2,636,341 distributed to partners.
The Partnership made a distribution of $204,704 on February 10, 1997
from funds generated from operations, and principal payments on direct finance
leases. The Partnership made a return of capital distribution of $2,431,637 on
March 4, 1997 and increased the total distributions from the Partnership to
$8,902,063 to Unitholders or 88.75% of gross offering proceeds.
Results of Operations
Direct finance lease revenue decreased $13,193 during the first quarter
of 1997 as compared to the first quarter of 1996. 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 $6,209 during the first quarter of 1997 as
compared to the first quarter of 1996, due primarily to lower cash balances
after the return of capital distribution.
Total expenses increased by $2,936 during the first quarter of 1997 as
compared to the first quarter of 1996 due to increases in state taxes.
During the first quarter of 1997, the Partnership learned that one of
its lessees is in default under the terms of its lease. However, pursuant to the
Security Agreement and Assignment of Lease, all rental payments due from this
lessee have been guaranteed by the lease originator. The guarantee obligations
have been honored by the lease originator and accordingly, the Partnership has
timely received all rental payments due under the lease.
Equipment Lease Acquisitions
During the first quarter of 1997, the Partnership made no equipment
lease acquisitions. As noted in prior reports, the Partnership has entered the
Liquidation Phase during which the remaining funds (net of reserves) were
distributed to investors. Future quarterly distributions will be dependent on
funds generated from operations, principal payments and proceeds from lease
sales. The Partnership will distribute $178,125 in May 1997 which was derived
primarily from principal payments received during the quarter ended March 31,
1997.
-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: 5/9/97 By: /s/ John M. Prugh
John M. Prugh
President and Director
Redwood Leasing, Inc.
General Partner
DATE: 5/9/97 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 314,255
<SECURITIES> 0
<RECEIVABLES> 36,030
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 360,285
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,809,424
<CURRENT-LIABILITIES> 39,540
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,809,424
<SALES> 0
<TOTAL-REVENUES> 63,975
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 33,450
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 30,525
<INCOME-TAX> 0
<INCOME-CONTINUING> 30,525
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,525
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
