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 June 30, 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 June 30, 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>
June 30, December 3
1997 1996
Assets
<S> <C> <C>
Cash and cash equivalents $ 369,300 $2,772,471
Lease payment and other receivables 102,099 33,098
Deposit - 10,000
Investment in direct finance leases, net 1,217,167 1,631,824
Total assets $ 1,688,566 $4,447,393
Liabilities and Partners' Capital
Accounts payable and accrued expenses $ 14,060 $ 18,656
Amounts due to affiliates 18,288 12,403
Advance rentals 28,386 40,634
Total liabilities 60,734 71,693
Partners' Capital
General Partner (114,831) (85,305)
Assignor Limited Partner:
Assignment of limited partnership interests - $25 stated
value per unit, 401,180 units outstanding 1,742,164 4,460,235
Limited partnership interests - $25 stated value per
unit, 40 units outstanding 299 570
Special Limited Partners 200 200
Total partners' capital 1,627,832 4,375,700
Total liabilities and partners' capital $ 1,688,566 $4,447,393
</TABLE>
See accompanying notes to financial statements
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<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
Six months ended
June 30, June 30,
June 30, June 30,
1997 1996 1997 1996
Revenues
<S> <C> <C> <C> <C>
Direct finance lease revenue $ 32,580 $ 47,915 $ 71,183 $ 99,711
Interest income 3,767 29,843 29,139 61,424
Gain from sale of leased equipment 29,556 29,516 29,556 29,516
65,903 107,274 129,878 190,651
Expenses
Administrative expenses including
amounts to related party 14,279 16,943 37,490 36,434
Management fees to advisor 8,060 3,054 10,965 6,107
Professional fees 4,420 4,000 8,420 8,450
Amortization of acquisition costs 3,071 3,560 6,405 7,080
29,830 27,557 63,280 58,071
Net earnings $ 36,073 $ 79,717 $ 66,598 $132,580
Net earnings per unit of assignee
limited partnership interest $ 0.09 $ 0.19 $ 0.16 $ 0.32
</TABLE>
See accompanying notes to financial statements
- -2-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Partners' Capital
For the six months ended June 30, 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 65,925 7 - 666 66,598
Distributions to partners
Operations (376,916) (38) - (5,875) (382,829)
Return of capital (2,407,080) (240) - (24,317) (2,431,637)
Balance at June 30, 1997 $ 1,742,164 $ 299 $ 200 $ (114,831)$ 1,627,832
Balance at December 31, 1995 $ 5,020,712 $ 626 $ 200 $ (73,866)$ 4,947,672
Net earnings 129,915 13 - 2,652 132,580
Distributions to partners (401,180) (40) - (8,188) (409,408)
Balance at June 30, 1996 $ 4,749,447 $ 599 $ 200 $ (79,402)$ 4,670,844
</TABLE>
See accompanying notes to financial statements
-3-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Statements of Cash Flows
For the six months ended June 30,
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
Cash flow from operating activities
<S> <C> <C>
Net earnings $ 66,598 $ 132,580
Adjustments to reconcile net earnings to net
cash provided by operating activities
Amortization of acquisition costs 6,405 7,080
Gain from sale of leased equipment (29,556) (29,516)
Changes in assets and liabilities
(Increase) decrease in lease payment and other receivables (69,001) 30,599
Decrease in deposit 10,000 -
Decrease in accounts payable and accrued expenses (4,596) (3,551)
Increase in amounts due to affiliates 5,885 2,242
Decrease in advance rentals (12,248) (2,645)
Net cash provided by (used in) operating activities (26,513) 136,789
Cash flows from investing activities
Principal received on direct finance leases 349,308 355,947
Termination of direct finance leases 88,500 29,516
Net cash provided by investing activities 437,808 385,463
Cash flows from financing activities-
distributions to partners (2,814,466) (409,408)
Net increase (decrease) in cash and cash equivalents (2,403,171) 112,844
Cash and cash equivalents
Beginning of period 2,772,471 2,500,697
End of period $ 369,300 $ 2,613,541
</TABLE>
See accompanying notes to financial statements
- -4-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Notes to Financial Statements
June 30, 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 June 30,
1997 and December 31, 1996.
Note 3 - Related Party Transactions
The Partnership's General Partner earned an asset management fee of
$4,340 and $6,141 (3% of distributable cash distributions to investors) and
received or was due reimbursement of $8,885 and $8,025 for certain costs
incurred relating to administrative services for the Partnership for the three
months ended June 30, 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 June 30, 1997 and 1996, Signet earned $8,060 and $3,054,
respectively in management and disposition fees.
Note 4 - Leases
Investment in direct finance leases with initial terms ranging from 34
to 82 months at June 30, 1997 and December 31, 1996 includes the following:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
<S> <C> <C>
Lease payments receivable $ 844,473 $ 1,259,277
Estimated residual value 483,292 542,237
Acquisition fees, net 12,111 18,516
Unearned income (100,153) (165,650)
Reserve for residual value loss (22,556) (22,556)
$ 1,217,167 $ 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.
-5-
<PAGE>
REDWOOD EQUIPMENT LEASING INCOME FUND L.P.
Notes to Financial Statements
June 30, 1997
(Unaudited)
Note 4 - Leases - continued
During the second quarter of 1997, two lease schedules from one lessee
expired. The lessee purchased the equipment for $88,500 from the Partnership
resulting in a gain from the sale of leased equipment of $29,556.
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 Event
In August 1997, the Partnership will make a cash distribution totaling
$233,170 of which 99% will be allocated to assignee limited partners. This
distribution will be derived from principal payments received on direct finance
leases and certain other investing activities. Holders of assignee limited
partnership interests will receive cash distributions of approximately $.58 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 June 30, 1997, the Partnership had a working capital position that
included cash and cash equivalents of $369,300 and accounts payable and accrued
expenses of $14,060. 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 increased $55,045 during the second quarter
of 1997. This increase represented the combined effect of $25,287 used by
operating activities, $169,957 received in principal payments on direct finance
leases, $88,500 received upon termination of certain direct finance leases, and
$178,125 distributed to partners.
The Partnership made a distribution of $178,125 on May 13, 1997 from
funds generated from principal payments on direct finance leases. This
distribution increased the total distributions from the Partnership to
$9,078,407 to Unitholders or 90.51% of gross offering proceeds
Results of Operations
Direct finance lease revenue decreased $15,335 during the second
quarter of 1997 as compared to the second quarter of 1996, and $28,528 during
the first six months of 1997 as compared to the first six months 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 $26,076 during the second quarter of 1997 as
compared to the second quarter of 1996, and $32,285 during the first six months
of 1997 as compared to the first six months of 1996, due primarily to lower cash
balances after the return of capital distribution made in March 1997.
The Partnership recognized a $29,556 gain from the sale of leased equipment
during the second quarter of 1997.
Total expenses increased by $2,273 during the second quarter of 1997 as
compared to the second quarter of 1996, and $5,209 during the first six months
of 1997 as compared to the first six months of 1996. The increases are primarily
attributable to state taxes and disposition fees earned by the Advisor.
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 second 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 $233,170 in August 1997 which was derived
primarily from principal payments and certain other investing activities
received during the quarter ended June 30, 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: 7/29/97 By: /s/ John M. Prugh
John M. Prugh
President and Director
Redwood Leasing, Inc.
General Partner
DATE: 7/29/97 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 369,300
<SECURITIES> 0
<RECEIVABLES> 102,099
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 471,399
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,688,566
<CURRENT-LIABILITIES> 60,734
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,688,566
<SALES> 0
<TOTAL-REVENUES> 129,878
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 63,280
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 66,598
<INCOME-TAX> 0
<INCOME-CONTINUING> 66,598
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,598
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
