Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|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 _______
Commission File Number 000-21552
ATEL Cash Distribution Fund IV, L.P.
(Exact name of registrant as specified in its charter)
California 94-3145429
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
235 Pine Street, 6th Floor, San Francisco, California 94104
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 989-8800
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
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
(Unaudited)
ASSETS
1997 1996
---- ----
Cash and cash equivalents $1,302,622 $696,421
Accounts receivable 514,324 633,329
Investments in leases 45,501,068 52,264,526
--------------- ---------------
Total assets $47,318,014 $53,594,276
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $16,813,490 $20,450,921
Lines of credit 1,000,000 1,500,000
Accounts payable:
Equipment purchases - 42,227
General Partner 67,218 74,487
Other 117,414 138,590
Deposit due to lessee - 97,772
Accrued interest payable 65,349 96,904
Unearned operating lease income 470,064 463,160
--------------- ---------------
Total liabilities 18,533,535 22,864,061
Partners' capital:
General Partner 74,245 67,497
Limited Partners 28,710,234 30,662,718
--------------- ---------------
Total partners' capital 28,784,479 30,730,215
--------------- ---------------
Total liabilities and partners' capital $47,318,014 $53,594,276
=============== ===============
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
INCOME STATEMENTS
THREE MONTH PERIODS ENDED
MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenues:
Leasing activities:
Operating leases $2,295,887 $2,732,327
Direct financing leases 292,127 291,182
Leveraged leases 62,013 47,133
Gain on sale of assets 527,355 32,398
Interest 10,242 7,303
Other 1,142 922
--------------- ---------------
3,188,766 3,111,265
--------------- ---------------
Expenses:
Depreciation and amortization 1,748,461 2,028,154
Interest 433,375 505,484
Equipment and incentive management fees to General Partner 205,025 222,691
Administrative cost reimbursements to General Partner 69,901 45,820
Professional fees 4,871 6,860
Provision for losses 31,888 31,107
Other 20,405 20,461
--------------- ---------------
2,513,926 2,860,577
--------------- ---------------
Net income $674,840 $250,688
=============== ===============
Net income:
General Partner $6,748 $2,507
Limited Partners 668,092 248,181
--------------- ---------------
$674,840 $250,688
=============== ===============
Net income per Limited Partnership unit $0.09 $0.03
Weighted average number of units outstanding 7,487,350 7,488,850
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
THREE MONTH PERIOD
ENDED MARCH 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partner Total
<S> <C> <C> <C> <C>
Balance December 31, 1996 7,487,350 $30,662,718 $67,497 $30,730,215
Distributions to limited partners (2,620,576) - (2,620,576)
Net income 668,092 6,748 674,840
----------------- ---------------- --------------- ---------------
Balance March 31, 1997 7,487,350 $28,710,234 $74,245 $28,784,479
================= ================ =============== ===============
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED
MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Operating activities:
Net income $674,840 $250,688
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization 1,748,461 2,028,154
Leveraged lease revenues - (43,415)
Gain on sale of asset (527,355) (32,398)
Provision for losses 31,888 31,107
Changes in operating assets and liabilities:
Accounts receivable 119,005 (28,893)
Notes receivable - 33,756
Bank overdrafts - 334,627
Accounts payable, General Partner (7,269) (100,663)
Accounts payable, other (21,176) (63,190)
Deposits due to lessees (97,772) (771,024)
Accrued interest payable (31,555) (18,752)
Unearned operating lease income 6,904 (38,978)
--------------- ---------------
Net cash from operations 1,895,971 1,581,019
--------------- ---------------
Investing activities:
Purchase of equipment on operating leases (42,227) (1,611,981)
Reduction in investment in direct financing leases 729,869 1,023,762
Purchase of equipment on direct financing leases (77,518) (898,949)
Proceeds from sales of lease assets 4,763,034 636,395
Reduction in investment in leveraged leases 95,079 -
--------------- ---------------
Net cash provided by (used in) investing activities 5,468,237 (850,773)
--------------- ---------------
Financing activities:
Distributions to limited partners (2,620,576) (2,529,787)
Borrowings on line of credit - 2,000,000
Repayment of line of credit (500,000) -
Repayment of non-recourse debt (3,637,431) (1,507,595)
--------------- ---------------
Net cash used in financing activities (6,758,007) (2,037,382)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents 606,201 (1,307,136)
Cash and cash equivalents at beginning of period 696,421 7,152,081
--------------- ---------------
Cash and cash equivalents at end of period $1,302,622 $5,844,945
=============== ===============
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
STATEMENTS OF CASH FLOWS
(Continued)
THREE MONTH PERIODS ENDED
MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---- ----
Supplemental disclosures of cash flow information:
<S> <C> <C>
Cash paid during period for interest $464,930 $524,236
=============== ===============
Supplemental schedule of non-cash transactions:
Operating lease assets reclassified to assets held for sale or lease $439,677
Less accumulated depreciation (306,125)
---------------
$133,552
===============
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(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 IV, L.P. (the Partnership), was formed under the
laws of the State of California on September 19, 1991, for the purpose of
acquiring equipment to engage in equipment leasing and sales activities.
Contributions in the aggregate of $600 were received as of October 8, 1991, $100
of which represented the General Partner's continuing interest, and $500 of
which represented the Initial Limited Partners' capital investment.
Upon the sale of the minimum amount of Units of Limited Partnership interest
(Units) of $1,200,000 and the receipt of the proceeds thereof on March 6, 1992,
the Partnership commenced operations. The Partnership or the General Partner on
behalf of the Partnership, will incur costs in connection with the organization,
registration and issuance of the Units. The amount of such costs to be born by
the Partnership is limited by certain provisions in the Partnership Agreement.
As of February 3, 1993, the Partnership had received subscriptions for 7,500,000
Limited Partnership Units ($75,000,000) in addition to the Initial Limited
Partners' 50 Units. Of those subscriptions, 7,487,350 Units ($74,873,500) were
issued and outstanding as of March 31, 1997.
The Partnership's business consists of leasing various types of equipment. As of
March 31, 1997, the original terms of the Partnership's leases were from two to
ten years.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
3. Investment in leases:
The Partnership's investment in leases consists of the following:
<TABLE>
<CAPTION>
Depreciation
Expense or Reclassi-
December 31, Amortization fications or March 31,
1996 Additions of Leases Dispositions 1997
---- --------- --------- -------------- ----
<S> <C> <C> <C> <C> <C>
Net investment in operating leases $33,943,386 ($1,556,443) ($4,204,121) $28,182,822
Net investment in direct financing
leases 11,855,610 $77,518 (729,869) (2,737) 11,200,522
Net investment in leveraged leases 4,844,014 - (95,079) - 4,748,935
Residual value interests 610,878 - - (28,821) 582,057
Reserve for losses (305,978) (31,888) - - (337,866)
Assets held for sale or lease 16,464 - - - 16,464
Initial direct costs, net of
accumulated amortization of
$1,365,512 in 1996 and
$1,304,175 in 1997 1,300,152 - (192,018) - 1,108,134
---------------- ----------------- ---------------- --------------- ---------------
$52,264,526 $45,630 ($2,573,409) ($4,235,679) $45,501,068
================ ================= ================ =============== ===============
</TABLE>
The following schedule provides an analysis of the Partnership's investment in
property on operating leases by major classifications as of December 31, 1996,
acquisitions and dispositions during the quarter ended March 31, 1997 and as of
March 31, 1997.
<TABLE>
<CAPTION>
December 31, 1st Quarter March 31,
1996 Acquisitions Dispositions 1997
---- ------------ ------------ ----
<S> <C> <C> <C> <C>
Transportation $21,497,670 ($7,105,011) $14,392,659
Corporate aircraft 9,635,969 (1,890,000) 7,745,969
Mining 4,347,960 - 4,347,960
Printing 4,393,249 - 4,393,249
Construction 4,985,297 - 4,985,297
Other 4,726,040 - 4,726,040
Materials handling 3,915,999 - 3,915,999
Manufacturing 1,587,670 - 1,587,670
Ground support 1,127,988 - 1,127,988
Data processing 851,561 - 851,561
Office equipment 216,080 - 216,080
----------------- ---------------- --------------- ---------------
57,285,483 (8,995,011) 48,290,472
Less accumulated depreciation (23,342,097) ($1,556,443) 4,790,890 (20,107,650)
----------------- ---------------- --------------- ---------------
$33,943,386 ($1,556,443) ($4,204,121) $28,182,822
================= ================ =============== ===============
</TABLE>
All of the property on operating leases was acquired during 1992, 1993, 1994,
1995 and 1996.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
3. Investment in leases (continued):
At March 31, 1997, the aggregate amounts of future minimum lease payments are as
follows:
<TABLE>
<CAPTION>
Year ending Operating Direct Financing
December 31, Leases Leases Total
<S> <C> <C> <C> <C>
1997 $5,738,967 $2,910,511 $8,649,478
1998 6,177,543 3,487,195 9,664,738
1999 5,325,941 2,407,843 7,733,784
2000 2,453,551 1,427,923 3,881,474
2001 1,831,758 867,616 2,699,374
Thereafter 1,930,449 397,917 2,328,366
----------------- ---------------- ---------------
$23,458,209 $11,499,005 $34,957,214
================= ================ ===============
</TABLE>
4. Non-recourse debt:
Notes payable to financial institutions are due in varying monthly, quarterly
and semi-annual installments of principal and interest. The notes are secured by
assignments of lease payments and pledges of the assets which were purchased
with the proceeds of the particular notes. Interest rates on the notes vary from
6.81% to 11.2%.
Future minimum principal payments of non-recourse debt are as follows:
<TABLE>
<CAPTION>
Year ending
December 31, Principal Interest Total
<S> <C> <C> <C> <C>
1997 $2,190,908 $1,035,441 $3,226,349
1998 5,167,306 992,328 6,159,634
1999 5,055,577 585,451 5,641,028
2000 2,324,358 276,272 2,600,630
2001 1,313,315 121,001 1,434,316
Thereafter 762,026 39,505 801,531
----------------- ---------------- ---------------
$16,813,490 $3,049,998 $19,863,488
================= ================ ===============
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
5. Related party transactions:
The terms of the Limited Partnership Agreement provide that the General Partner
and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The General Partner and/or Affiliates earned the following fees, commissions and
reimbursements, pursuant to the Limited Partnership Agreement as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Incentive management fees (computed as 5% of distributions of cash from
operations, as defined in the Limited Partnership Agreement) and equipment
management fees (computed as 5% of gross revenues from operating leases, as
defined in the Limited Partnership Agreement plus 2% of gross revenues from full
payout leases, as defined in the Limited Partnership Agreement). $205,025 $210,600
Administrative costs reimbursed to General Partner 69,901 45,820
--------------- ---------------
$274,926 $256,420
=============== ===============
</TABLE>
6. Line of credit:
The Partnership participates with the General Partner and certain of its
Affiliates in a $90,000,000 revolving credit agreement with a group of financial
institutions which expires on October 28, 1997. The agreement includes an
acquisition facility to be used by the Partnership and Affiliates to provide
bridge financing for assets on leases. Draws on the acquisition facility by any
individual borrower are secured only by that borrower's assets, including
equipment and related leases.
At March 31, 1997, the Partnership had $1,000,000 of borrowings under the line
of credit.
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of March 31,
1997.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
During 1997, the Partnership's primary source of liquidity was proceeds from
sales of lease assets. During 1996, the Partnership's primary source of
liquidity was rents from operating leases. The liquidity of the Partnership will
vary in the future, increasing to the extent cash flows from leases exceed
expenses and proceeds from lease asset sales, and decreasing as lease assets are
acquired, as distributions are made to the limited partners and to the extent
expenses exceed cash flows from leases and proceeds from lease asset sales.
As another source of liquidity, the Partnership has contractual obligations with
a diversified group of lessees for fixed lease terms at fixed rental amounts. As
the initial lease terms expire the Partnership will re-lease or sell the
equipment. The future liquidity beyond the contractual minimum rentals will
depend on the General Partner's success in re-leasing or selling the equipment
as it comes off lease.
The Partnership participates with the General Partner and certain of its
affiliates in a $90,000,000 revolving line of credit with a financial
institution. The line of credit expires on October 28, 1997.
The Partnership anticipates reinvesting a portion of lease payments from assets
owned in new leasing transactions. Such reinvestment will occur only after the
payment of all obligations, including debt service (both principal and
interest), the payment of management and acquisition fees to the General Partner
and providing for cash distributions to the Limited Partners.
The Partnership would likely be in a position to borrow against its current
portfolio to meet such requirements if its current reserves were found to be
inadequate to meet contingencies. The General Partners envision no such
requirements for operating purposes.
Through March 31, 1997, the Partnership had borrowed approximately $38,342,000
with a remaining unpaid balance of approximately $16,813,000. Borrowings are to
be generally non-recourse to the Partnership, that is, the only recourse of the
lender for a default by the lessee on the underlying lease will be to the
equipment or corresponding lease acquired with the loan proceeds. The General
Partners expect that aggregate borrowings in the future will not exceed 40% of
aggregate equipment cost. In any event, the Agreement of Limited Partnership
limits such borrowings to 40% of the total cost of equipment, in aggregate.
No commitments of capital have been or are expected to be made other than for
the acquisition of additional equipment. At March 31, 1997, there were no
commitments to purchase additional lease assets.
If inflation in the general economy becomes significant, it may affect the
Partnership inasmuch as the residual (resale) values and rates on re-leases of
the Partnership's leased assets may increase as the costs of similar assets
increase. However, the Partnership's revenues from existing leases would not
increase, as such rates are generally fixed for the terms of the leases without
adjustment for inflation.
If interest rates increase significantly, the lease rates that the Partnership
can obtain on future leases will be expected to increase as the cost of capital
is a significant factor in the pricing of lease financing. Leases already in
place, for the most part, would not be affected by changes in interest rates.
<PAGE>
The Partnership made distributions of cash from 1997 first quarter operations in
February, March and April 1997. The amount of the distributions totaled $.35 per
Unit. This was paid in either monthly amounts of $.11667 per Unit or in one
quarterly payment of $.35 per Unit in April 1997. These distributions are equal
to an annualized distribution rate of 14%.
Rents from operating leases were the primary sources of cash flows from
operations in the first quarter of both 1997 and 1996. The amounts of such rents
decreased from 1996 to 1997 by $436,440.
Sources of cash from investing activities in 1997 consisted of the proceeds of
the sales of lease assets and cash flows from direct financing leases. Proceeds
from the sales of lease assets are not expected to be consistent from one period
to another. Cash flows from direct financing leases decreased by $293,893. Lease
rents have declined due to lease terminations and sales of assets.
In the first quarter of 1996, the only financing source of cash was borrowings
under the line of credit. The funds were used to partially fund the acquisitions
of lease assets. There were no financing sources of cash in 1997. Repayments of
non-recourse debt have increased due to borrowings over the last year.
Results of Operations
Operations in the first quarter of 1997 resulted in net income of $674,840
compared to $250,688 in 1996.
The decreases in operating lease revenues were matched closely by decreases of
depreciation and amortization expense. Depreciation has decreased as operating
lease assets have been sold.
The other major factor in the increase in net income was the increase in gains
on sales of lease assets. Most of those assets sold were operating lease assets.
The original cost of such assets sold increased from $1,407,323 in 1996 to
$8,995,011 in 1997. Proceeds from asset sales increased from $636,395 in 1996 to
$4,590,09 in 1997.
<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 Sheets, March 31, 1997 and
December 31, 1996.
Income statements for the three month
periods ended March 31, 1997 and
1996.
Statement of changes in partners'
capital for the three months ended
March 31, 1997.
Statements of cash flows for the three
month periods ended March 31, 1997
and 1996.
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
<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:
May 12, 1997
ATEL CASH DISTRIBUTION FUND IV, L.P.
(Registrant)
By: ATEL Financial Corporation
General Partner of Registrant
By: /s/ A. J. Batt
----------------------------------
A. J. Batt
President and Chief Executive Officer
of General Partner
By: /s/ Dean L. Cash
----------------------------------
Dean L. Cash
Executive Vice President
of General Partner
By: /s/ F. Randall Bigony
-----------------------------------
F. Randall Bigony
Principal financial officer
of registrant
By: /s/ Donald E. Carpenter
-----------------------------------
Donald E. Carpenter
Principal accounting
officer of registrant
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,302,622
<SECURITIES> 0
<RECEIVABLES> 514,324
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 47,318,014
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 28,784,479
<TOTAL-LIABILITY-AND-EQUITY> 47,318,014
<SALES> 0
<TOTAL-REVENUES> 3,188,766
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,048,663
<LOSS-PROVISION> 31,888
<INTEREST-EXPENSE> 433,375
<INCOME-PRETAX> 674,840
<INCOME-TAX> 0
<INCOME-CONTINUING> 674,840
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 674,840
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
