Form 10-QSB
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
September 30, 1999
|_| 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 SHEET
SEPTEMBER 30, 1999
(Unaudited)
ASSETS
Cash and cash equivalents $7,859,670
Accounts receivable 185,198
Investment in leases 9,177,825
-----------------
$ 17,222,693
=================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $3,021,087
Accounts payable:
General Partner 56,503
Other 165,343
Accrued interest 13,463
Unearned operating lease income 299,619
-----------------
Total liabilities 3,556,015
Partners' capital:
General Partner 185,153
Limited Partners 13,481,525
-----------------
Total partners' capital 13,666,678
-----------------
$ 17,222,693
=================
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
INCOME STATEMENTS
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
Revenues: 1999 1998 1999 1998
---- ---- ---- ----
Lease revenues:
<S> <C> <C> <C> <C>
Operating $2,156,039 $ 2,751,484 $ 650,091 $ 845,349
Direct financing 515,961 821,370 159,785 255,571
Leveraged 80,864 140,614 - 46,872
Gain on sales of assets 5,423,105 153,476 285,466 105,133
Interest income 138,558 71,424 90,720 11,737
Other 13,303 26,486 1,291 22,393
----------------- ----------------- ----------------- -----------------
8,327,830 3,964,854 1,187,353 1,287,055
Expenses:
Depreciation and amortization 1,328,425 1,762,137 362,705 558,025
Management fees 525,619 366,309 172,466 101,029
Interest 238,336 352,431 64,580 100,691
Administrative cost reimbursements 168,992 189,635 68,985 70,550
Other 118,289 75,113 (23,695) 15,885
Professional fees 28,834 25,767 7,875 17,398
Provision for losses - 13,145 - -
----------------- ----------------- ----------------- -----------------
2,408,495 2,784,537 652,916 863,578
----------------- ----------------- ----------------- -----------------
Net income $5,919,335 $ 1,180,317 $ 534,437 $ 423,477
================= ================= ================= =================
Net income:
General Partner $ 59,193 $ 11,803 $ 5,344 $ 4,235
Limited Partners 5,860,142 1,168,514 529,093 419,242
----------------- ----------------- ----------------- -----------------
$5,919,335 $ 1,180,317 $ 534,437 $ 423,477
================= ================= ================= =================
Net income per Limited Partnership unit $0.78 $0.16 $0.07 $0.06
Weighted average number of units outstanding 7,487,350 7,487,350 7,487,350 7,487,350
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partner Total
<S> <C> <C> <C> <C>
Balance December 31, 1998 7,487,350 $ 15,484,740 $ 125,960 $ 15,610,700
Distributions to limited partners (7,863,357) - (7,863,357)
Net income 5,860,142 59,193 5,919,335
----------------- ----------------- ----------------- -----------------
Balance September 30, 1999 7,487,350 $ 13,481,525 $ 185,153 $ 13,666,678
================= ================= ================= =================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
STATEMENTS OF CASH FLOWS
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
Operating activities:
<S> <C> <C> <C> <C>
Net income $5,919,335 $ 1,180,317 $ 534,437 $ 423,477
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 1,328,425 1,762,137 362,705 558,025
Leveraged lease income (80,864) (140,614) - (46,872)
Gain on sales of assets (5,423,105) (153,476) (285,466) (105,133)
Provision for losses - 13,145 - -
Changes in operating assets and liabilities:
Accounts receivable 223,550 155,611 120,741 31,454
Accounts payable, General Partner (401,741) 721 10,528 166,211
Accounts payable, other (51,838) 1,248,094 (34,111) 698,111
Accrued interest (6,743) (8,679) (2,065) (8,045)
Unearned operating lease income 36,694 (244,111) 141,753 (189,246)
----------------- ----------------- ----------------- -----------------
Net cash from operations 1,543,713 3,813,145 848,522 1,527,982
----------------- ----------------- ----------------- -----------------
Investing activities:
Reduction of net investment in direct financing
leases 1,100,207 1,871,948 352,813 592,673
Proceeds from sales of lease assets 14,320,842 652,642 2,922,992 156,092
----------------- ----------------- ----------------- -----------------
Net cash provided by investing activities 15,421,049 2,524,590 3,275,805 748,765
----------------- ----------------- ----------------- -----------------
Financing activities:
Repayment of non-recourse debt (1,613,626) (1,709,200) (508,732) (574,097)
Distributions to limited partners (7,863,357) (7,862,543) (2,620,945) (2,620,630)
----------------- ----------------- ----------------- -----------------
Net cash used in financing activities (9,476,983) (9,571,743) (3,129,677) (3,194,727)
----------------- ----------------- ----------------- -----------------
Net increase (decrease) in cash and cash
equivalents 7,487,779 (3,234,008) 994,650 (917,980)
Cash and cash equivalents at beginning of
period 371,891 3,990,096 6,865,020 1,674,068
================= ================= ================= =================
Cash and cash equivalents at end of period $7,859,670 $ 756,088 $7,859,670 $ 756,088
================= ================= ================= =================
Supplemental disclosures of cash flow
information:
Cash paid for interest $ 245,079 $ 361,110 $ 66,645 $ 108,736
================= ================= ================= =================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(Unaudited)
1. 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. Investment in leases:
The Partnership's investment in leases consists of the following:
<TABLE>
<CAPTION>
Depreciation
Expense or Reclass-
December 31, Amortization ifications & September 30,
1998 of Leases Dispositions 1999
---- --------- - ------------- ----
<S> <C> <C> <C> <C>
Net investment in operating leases $9,415,647 $(1,190,219) $ (2,888,802) $5,336,626
Net investment in direct financing leases 5,252,294 (1,100,207) (318,458) 3,833,629
Net investment in leveraged leases 4,791,326 80,864 (4,872,190) -
Equipment held for sale or lease 964,358 - (960,927) 3,431
Residual value interests 582,057 - - 582,057
Initial direct costs, net of accumulated
amortization of $514,804 in 1999 and $934,748
in 1998 333,647 (138,206) (121,277) 74,164
Reserve for losses (915,999) - 263,917 (652,082)
----------------- ----------------- ----------------- -----------------
$20,423,330 $(2,347,768) $ (8,897,737) $9,177,825
================= ================= ================= =================
</TABLE>
At September 30, 1999, equipment on operating leases consists of the following:
<TABLE>
<CAPTION>
Balance Balance
December 31, Acquisitions, Dispositions & Reclassifications September 30,
1998 1st Quarter 2nd Quarter 3rd Quarter 1999
---- ----------- ----------- ----------- ----
<S> <C> <C> <C> <C> <C>
Printing $ 4,393,249 $1,160,500 $5,553,749
Transportation 3,005,244 $ (795,725) $ (761,633) 2,025,313 3,473,199
Construction equipment 4,985,297 (2,534,118) 2,451,179
Ground support equipment 1,127,988 - - - 1,127,988
Manufacturing 1,587,670 - - (991,870) 595,800
Materials handling 786,160 - - (522,089) 264,071
Data processing 419,412 - - (394,290) 25,122
Other 2,130,174 - (61,152) (2,069,022) -
Corporate aircraft 1,328,569 - - (1,328,569) -
Office equipment 216,080 (152,104) (63,976) -
------------------- ----------------- ----------------- ----------------- -----------------
19,979,843 (947,829) (886,761) (4,654,145) 13,491,108
Accumulated depreciation (10,564,196) 160,989 163,233 2,085,492 (8,154,482)
------------------- ----------------- ----------------- ----------------- -----------------
$ 9,415,647 $ (786,840) $ (723,528) $ (2,568,653) $5,336,626
=================== ================= ================= ================= =================
</TABLE>
All of the equipment on operating leases was acquired during 1992, 1993, 1994,
1995 and 1996.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(Unaudited)
2. Investment in lease assets (continued):
At September 30, 1999, the aggregate amounts of future minimum lease payments
are as follows:
<TABLE>
<CAPTION>
Direct
Operating Financing Total
<S> <C> <C> <C>
Three months ending December 31, 1999 $ 504,408 $ 427,188 $ 931,596
Year ending December 31, 2000 1,655,807 1,437,289 3,093,096
2001 995,166 921,709 1,916,875
2002 845,013 483,677 1,328,690
2003 613,561 396,720 1,010,281
Thereafter - 176,700 176,700
----------------- ----------------- -----------------
$ 4,613,955 $3,843,283 $8,457,238
================= ================= =================
</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
6.69% to 8.95%.
Future minimum principal payments of non-recourse debt as of September 30, 1999
are as follows:
<TABLE>
<CAPTION>
Principal Interest Total
<S> <C> <C> <C>
Three months ending December 31, 1999 $ 431,670 $ 57,240 $ 488,910
Year ending December 31, 2000 1,535,205 151,656 1,686,861
2001 697,282 56,062 753,344
2002 250,450 19,870 270,320
2003 106,480 2,861 109,341
----------------- ----------------- -----------------
$ 3,021,087 $ 287,689 $3,308,776
================= ================= =================
</TABLE>
5. Related party transactions:
The terms of the Agreement of Limited Partnership provide that the General
Partners and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The General Partners and/or Affiliates earned the following fees and
commissions, pursuant to the Agreement of Limited Partnership as follows:
1999 1998
---- ----
Incentive and equipment management fees $ 525,619 $ 366,309
Administrative cost reimbursements 168,992 189,635
----------------- -----------------
$ 694,611 $ 555,944
================= =================
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(Unaudited)
6. Partner's capital:
The Fund is authorized to issue up to 7,500,000 Units of Limited Partnership
interest in addition to the Initial Limited Partners.
The Fund's Net Profits, Net Losses and Tax Credits are to be allocated 99% to
the Limited Partners and 1% to the General Partner.
As more fully described in the Partnership Agreement, available Cash from
Operations and Cash from Sales or Refinancing shall be distributed as follows:
First, 5% of Distributions of Cash from Operations to the General Partner
as Incentive Management Fees.
Second, the balance to the Limited Partners until the Limited Partners have
received aggregate Distributions, as defined, in an amount equal to
their Original Invested Capital, as defined, plus a 10% per annum
cumulative (compounded daily) return on their Adjusted Invested
Capital, as defined.
Third,the General Partner will receive as Incentive Management Fees, the
following: (A) 10% of remaining Cash from Operations, as defined, (B)
15% of remaining Cash from Sales or Refinancing, as defined.
Fourth, the balance to the Limited Partners.
7. Line of credit:
The Partnership participates with the General Partner and certain of its
Affiliates in a $95,000,000 revolving credit agreement with a group of financial
institutions which expires on January 28, 2000. 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 September 30, 1999, the Partnership had no 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 September
30, 1999.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
The Partnership's primary source of liquidity during 1999 was proceeds from the
sales of lease assets. The liquidity of the Partnership will vary in the future,
increasing to the extent cash flows from leases exceed expenses, 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.
The Partnership currently has available adequate reserves to meet contingencies,
but in the event those reserves were found to be inadequate, the Partnership
would likely be in a position to borrow against its current portfolio to meet
such requirements. The General Partner envisions no such requirements for
operating purposes.
As of September 30, 1999, the Partnership had borrowed approximately
$38,342,000, with a remaining unpaid balance of approximately $3,021,000.
Borrowings are to be non-recourse to the Partnership, that is, the only recourse
of the lender will be to the equipment or corresponding lease acquired or
secured with the loan proceeds. The General Partner does not expect that there
will be additional borrowings in the future.
The Partnership participates with the General Partner and certain of its
affiliates in a $95,000,000 revolving line of credit with a financial
institution. The line of credit expires on January 28, 2000.
No commitments of capital have been or are expected to be made other than for
the acquisition of additional equipment. As of September 30, 1999, there were no
such commitments.
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.
1999 vs. 1998:
Nine months:
During the first nine months of 1999, the primary source of operating cash flows
was operating lease revenues. Total lease revenues decreased by $960,604
compared to 1998.
In 1999, the most significant source cash flows from investing activities was
the proceeds from the sales of assets. Proceeds from asset sales are not
comparable to prior periods nor are they expected to be comparable to future
periods. In 1998, the most important source of cash from investing activities
was rents from direct financing leases.
Such rents decreased by $83,441 compare to 1998.
There were no sources of cash from financing activities in 1999 or in 1998. Cash
used to repay non-recourse debt has decreased due to scheduled debt reductions.
Distributions to Limited Partners have not changed significantly.
<PAGE>
Three months:
The primary source of cash from operations for the third quarter was lease
rents. Lease rents have decreased from the prior year due to asset sales during
the preceding twelve months.
The investing sources of cash in 1999 and 1998 were the same as noted above for
the nine month period.
There were no sources of cash from financing activities in 1999 or in 1998.
Repayments of debt decreased for the same reasons as noted above for the nine
month period. Distributions to the limited partners were unchanged.
Results of Operations
In 1999, operations resulted in net income of $5,919,335 for the nine month
period and $534,437 for the three month period. Operations in 1998 resulted in
net income of $1,180,317 for the nine month period and $423,477 for the three
month period.
1999 vs. 1998:
Operating lease revenues and direct financing lease revenues have decreased due
to sales of leased assets during the last twelve months. Revenues from leveraged
leases decreased as a result of the sale of the remaining assets on such
leveraged leases in the second quarter of 1999. Gains on sales of lease assets
increased significantly and resulted largely due to the sale of leveraged lease
assets that had been on lease to Liquid Carbonics.
Depreciation expense is directly related to the amounts of operating lease
assets and has decreased from 1998 to 1999 as a result of sales of operating
lease assets over the last year. Management fees are related to the amounts of
lease revenues and distributions to Limited Partners. As assets have been sold,
lease revenues have decreased and as a result, equipment management fees have
also decreased. This was offset by an increase in incentive management fees
(which are related to the distributions of operating cash flows to the limited
partners). As a result of reductions in t outstanding non-recourse debt,
interest expense has decreased compared to 1998.
<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, September 30, 1999 and December
31, 1998.
Income statements for the nine and three month
periods ended September 30, 1999 and 1998.
Statement of changes in partners' equity for the
nine month period ended September 30, 1999.
Statements of cash flows for the nine and three
month periods ended September 30, 1999 and 1998.
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:
November 12, 1999
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/ PARITOSH K. CHOKSI
--------------------------------------
Paritosh K. Choksi
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> 9-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Sep-30-1999
<CASH> 7859670
<SECURITIES> 0
<RECEIVABLES> 185198
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 17222693
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 13666678
<TOTAL-LIABILITY-AND-EQUITY> 17222693
<SALES> 0
<TOTAL-REVENUES> 8327830
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2170159
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 238336
<INCOME-PRETAX> 5919335
<INCOME-TAX> 0
<INCOME-CONTINUING> 5919335
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5919335
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
