Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the quarterly period ended June 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 0-21552
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
JUNE 30, 1999
(Unaudited)
ASSETS
Cash and cash equivalents $6,865,020
Accounts receivable 305,939
Investments in leases 12,530,869
----------------
$19,701,828
================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $ 3,529,819
Accounts payable:
General partners 45,975
Other 199,454
Accrued interest payable 15,528
Unearned operating lease income 157,866
----------------
Total liabilities 3,948,642
Partners' capital:
General partners 179,809
Limited partners 15,573,377
----------------
Total partners' capital 15,753,186
----------------
$19,701,828
================
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
INCOME STATEMENTS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Six Months Three Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
Revenues:
<S> <C> <C> <C> <C>
Lease revenues:
Operating leases $1,505,948 $1,906,135 $611,212 $1,001,732
Direct financing leases 356,176 565,799 148,925 270,191
Leveraged leases 80,864 93,742 13,245 46,870
Gain on sale of assets 5,137,639 48,343 3,157,632 17,211
Interest income 47,838 59,687 45,744 26,248
Other income 12,012 4,093 7,161 1,051
---------------- ---------------- ---------------- ----------------
7,140,477 2,677,799 3,983,919 1,363,303
Expenses:
Depreciation 854,275 1,086,519 406,248 529,067
Equipment and incentive management fees 353,153 265,280 170,756 155,199
Interest 173,756 251,740 74,295 123,328
Other 141,984 59,228 81,282 41,134
Amortization 111,445 117,593 21,877 61,261
Administrative cost reimbursements 100,007 119,085 69,398 40,287
Professional fees 20,959 8,369 15,000 5,231
Provision for losses - 13,145 - -
---------------- ---------------- ---------------- ----------------
1,755,579 1,920,959 838,856 955,507
---------------- ---------------- ---------------- ----------------
Net income $5,384,898 $756,840 $3,145,063 $407,796
================ ================ ================ ================
Net income:
General partners $53,849 $7,568 $31,451 $4,078
Limited partners 5,331,049 749,272 3,113,612 403,718
---------------- ---------------- ---------------- ----------------
$5,384,898 $756,840 $3,145,063 $407,796
================ ================ ================ ================
Net income per limited partnership unit $0.71 $0.10 $0.42 $0.05
Weighted average number of units
outstanding 7,487,350 7,487,350 7,487,350 7,487,350
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SIX MONTH PERIOD ENDED
JUNE 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partners 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 (5,242,412) - (5,242,412)
Net income 5,331,049 53,849 5,384,898
---------------- ---------------- ---------------- ----------------
Balance June 30, 1999 7,487,350 $15,573,377 $179,809 $15,753,186
================ ================ ================ ================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Six Months Three Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
Operating activities:
<S> <C> <C> <C> <C>
Net income $ 5,384,898 $ 756,840 $ 3,145,063 $ 407,796
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation 854,275 1,086,519 406,248 529,067
Amortization 111,445 117,593 21,877 61,261
Leveraged lease income (80,864) (93,742) (13,245) (93,742)
Gain on sale of assets (5,137,639) (48,343) (3,157,632) (17,211)
Provision for losses - 13,145 - -
Changes in operating assets and liabilities:
Accounts receivable 102,809 124,157 203,070 44,869
Accounts payable, general partner (412,269) (165,490) (58,868) (211,813)
Accounts payable, other (17,727) 549,983 (60,978) 575,791
Accrued interest payable (4,678) (634) (2,224) 2,659
Unearned operating lease income (105,059) (54,865) 32,698 (4,385)
---------------- ---------------- ---------------- ----------------
Net cash from operations 695,191 2,285,163 516,009 1,294,292
---------------- ---------------- ---------------- ----------------
Investing activities:
Proceeds from sales of assets 11,397,850 496,550 7,777,411 365,874
Reduction in investment in direct financing
leases 747,394 1,279,275 352,400 612,437
Reduction in investment in leveraged leases - - (1,240) 46,872
---------------- ---------------- ---------------- ----------------
Net cash provided by investing activities 12,145,244 1,775,825 8,128,571 1,025,183
---------------- ---------------- ---------------- ----------------
Financing activities:
Payments of non-recourse debt (1,104,894) (1,135,103) (510,230) (574,080)
Distributions to limited partners (5,242,412) (5,241,913) (2,621,410) (2,623,308)
---------------- ---------------- ---------------- ----------------
Net cash used by financing activities (6,347,306) (6,377,016) (3,131,640) (3,197,388)
---------------- ---------------- ---------------- ----------------
Net decrease in cash and cash
equivalents 6,493,129 (2,316,028) 5,512,940 (877,913)
Cash at beginning of period 371,891 3,990,096 1,352,080 2,551,981
---------------- ---------------- ---------------- ----------------
Cash at end of period $ 6,865,020 $ 1,674,068 $ 6,865,020 $ 1,674,068
================ ================ ================ ================
Supplemental disclosures of cash flow information:
Cash paid during period for interest $ 178,434 $ 252,374 $ 76,519 $ 120,669
================ ================ ================ ================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(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.
The Partnership's business consists of leasing various types of equipment. As of
June 30, 1999, the original terms of the leases were from six months to eight
years.
3. Investment in leases:
The Partnership's investment in leases consists of the following:
<TABLE>
<CAPTION>
Depreciation
Expense or Reclass-
December 31, Amortization ifications & June 30,
1998 of Leases Dispositions 1999
---- --------- -------------- ----
<S> <C> <C> <C> <C>
Net investment in operating leases $ 9,415,647 $ (854,275) $ (656,093) $7,905,279
Net investment in direct financing leases 5,252,294 (747,394) (303,192) 4,201,708
Net investment in leveraged leases 4,791,326 80,864 (4,872,190) -
Residual value interests 582,057 - - 582,057
Equipment held for lease 964,358 - (571,376) 392,982
Initial direct costs, net of accumulated
amortization of $911,060 in 1998 and
$649,058 in 1999 333,647 (111,445) (121,277) 100,925
Reserve for losses (915,999) - 263,917 (652,082)
------------------ ---------------- ---------------- ----------------
$20,423,330 $(1,632,250) $(6,260,211) $12,530,869
================== ================ ================ ================
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
3. Investments in leases (continued):
The following schedule provides an analysis of the Partnership's investment in
property on operating leases by major classifications as of December 31, 1998,
acquisitions and dispositions during the quarters ended March 31, 1999 and June
30, 1999 and as of June 30, 1999.
<TABLE>
<CAPTION>
Acquisitions &
December 31, Dispositions June 30,
1998 1st Quarter 2nd Quarter 1999
---- ----------- ----------- ----
<S> <C> <C> <C> <C>
Construction $ 4,985,297 $ 4,985,297
Printing 4,393,249 4,393,249
Transportation 3,005,244 $ (795,725) $ (761,633) 1,447,886
Other 2,130,174 - - 2,130,174
Manufacturing 1,587,670 - - 1,587,670
Corporate aircraft 1,328,569 - - 1,328,569
Ground support 1,127,988 - - 1,127,988
Materials handling 786,160 - - 786,160
Data processing 419,412 - - 419,412
Office equipment 216,080 (152,104) (125,128) (61,152)
---------------- ---------------- ---------------- ----------------
19,979,843 (947,829) (886,761) 18,145,253
Less accumulated depreciation (10,564,196) 160,989 163,233 (10,239,974)
---------------- ---------------- ---------------- ----------------
$ 9,415,647 ($786,840) ($723,528) $7,905,279
================ ================ ================ ================
</TABLE>
All of the property on operating leases was acquired during 1992, 1993, 1994,
1995, 1996 and 1997.
At June 30, 1999, the aggregate amounts of future minimum lease payments are as
follows:
Year ending Direct
December 31, Financing Operating Total
1999 $939,787 $1,321,865 $2,261,652
2000 1,437,289 1,659,731 3,097,020
2001 921,709 999,089 1,920,798
2002 483,677 848,936 1,332,613
2003 396,720 617,484 1,014,204
Thereafter 176,700 - 176,700
---------------- ---------------- ----------------
$4,355,882 $5,447,105 $9,802,987
================ ================ ================
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
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
6.47% to 9.35%.
Future minimum principal payments of long-term non-recourse debt as of June 30,
1999 are as follows:
Year ending
December 31, Principal Interest Total
1999 $940,402 $123,885 $1,064,287
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
---------------- ---------------- ----------------
$3,529,819 $354,334 $3,884,153
================ ================ ================
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, commissions
and reimbursements, pursuant to the Limited Partnership Agreement as follows:
1999 1998
---- ----
Reimbursement of administrative costs $ 100,007 $ 119,085
Incentive and equipment management fees 353,153 265,280
---------------- ----------------
$453,160 $384,365
================ ================
The amounts above are gross amounts incurred by the General Partners and/or
Affiliates, including commissions to broker-dealers for the sales of Partnership
Units.
<PAGE>
ATEL CASH DISTRIBUTION FUND IV, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 Partners.
As more fully described in the Agreement of Limited Partnership, 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 31, 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.
The Partnership had no borrowings under the agreement during 1999.
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of June 30,
1999.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
Funds which have been received, but which have not yet been invested in leased
equipment, are invested in interest-bearing accounts or high-quality/short-term
commercial paper.
The Partnership's primary source of liquidity during 1999 were lease revenues,
proceeds from the sales of lease assets and borrowings under the line of credit.
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.
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 31, 2000.
As of June 30, 1999, the Partnership had borrowed approximately $38,342,000,
with a remaining unpaid balance of $3,529,819. 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 expects that aggregate borrowings in the future will be
approximately 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. As of June 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.
<PAGE>
Cash Flows, 1999 vs. 1998:
Six months:
During the first six months of 1999, proceeds from sales of lease assets was the
primary sources of cash flows.
Cash flows from operations decreased by $1,589,972 from ($2,285,163) in 1998 to
$695,191 in 1999. The decrease is a result of decreased operating and direct
financing lease revenues and by increases in the amounts of cash used to reduce
certain accounts payable compared to 1998.
Sources of cash from investing activities consisted of proceeds from the sales
of lease assets and from direct financing lease rents accounted for as
reductions of the net investment in such leases. Proceeds from sales of assets
increased from $496,550 in 1998 to $11,397,850 in 1999.
In 1999 and 1998, there were no sources of cash from financing activities. The
amounts of cash used to repay non-recourse debt and the amounts distributed to
the Limited Partners did not change significantly.
Three months:
Proceeds from sales of lease assets was the primary source of cash flows in the
second quarter of 1999.
Operating lease rents have decreased by $6390,520 from the prior year due to
asset sales during the preceding twelve months. These rents are the primary
source of cash from operations.
In 1999, proceeds from lease assets sales were the most significant source of
cash from investing activities. They increased from $365,874 in 1998 to
$7,777,411 in 1999 due to increased amounts of asset sales as noted above for
the six month period.
During the second quarter of 1999 and 1998, there were no financing sources of
cash. Payments of non-recourse debt decreased slightly for the same reasons as
noted above for the six month period.
Results of Operations
In 1999, operations resulted in net income of $5,384,898 for the six month
period and $3,145,063 for the three month period. Operations in the 1998
resulted in net income of $756,840 for the six month period and $407,796 for the
three month period.
Revenues increased from $2,677,799 in 1998 to $7,140,477 in 1999, an increase of
$4,462,678. Operating lease revenues declined by $406,187 due to lease
terminations and sales of the related assets. Gains recognized on sales of
assets increased by $5,089,296 compared to 1998. Most of the assets sold were
assets which had been on leveraged leases.
The Partnership's operating expenses decreased by $165,380 for the six month
period and by $116,651 for the three month period. Most of the decrease resulted
from decreased depreciation expense. Depreciation has decreased as operating
leases have matured and as the underlying assets have been sold over the last
year.
<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 Sheet, June 30, 1999
Income statements for the six and three month periods
ended June 30, 1999 and 1998.
Statement of changes in partners' equity for the six
months ended June 30, 1999.
Statements of cash flows for the six and three month
periods ended June 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:
August 13, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 6,865,020
<SECURITIES> 0
<RECEIVABLES> 305,939
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,701,828
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 15,753,186
<TOTAL-LIABILITY-AND-EQUITY> 19,701,828
<SALES> 0
<TOTAL-REVENUES> 7,140,477
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,581,823
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 173,756
<INCOME-PRETAX> 5,384,898
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,384,898
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,384,898
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
