Form 10K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 (fee required) For
the Year Ended December 31, 1996
OR
|_| Transition report pursuant to section 13 or 15(d) of
the Securities Exchange Act of 1934 (no fee required)
For the transition period from ____ to ____
Commission File number 000-28368
ATEL Cash Distribution Fund VI, L.P.
California 94-3207229
(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
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Limited Partnership
Units
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 |_|
State the aggregate market value of voting stock held by non-affiliates of the
registrant.
Inapplicable
DOCUMENTS INCORPORATED BY REFERENCE
None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. |X|
<PAGE>
PART I
Item 1: BUSINESS
General Development of Business
ATEL Cash Distribution Fund VI, L.P. (the Partnership), was formed under the
laws of the State of California in June 1994. The Partnership was formed for the
purpose of acquiring equipment to engage in equipment leasing and sales
activities.
The Partnership conducted a public offering of 12,500,000 units of Limited
Partnership interest (Units), at a price of $10 per Unit. As of November 23,
1996, the Partnership had received subscriptions for 12,500,000 ($125,000,000)
Limited Partnership Units in addition to the Initial Limited Partners' Units. On
January 3, 1995, the Partnership commenced operations in its primary business
(leasing activities).
The Partnership's principal objectives are to invest in a diversified portfolio
of equipment which will (i) preserve, protect and return the Partnership's
invested capital; (ii) generate substantial distributions to the partners of
cash from operations and cash from sales or refinancing, with any balance
remaining after certain minimum distributions to be used to purchase additional
equipment during the reinvestment period, ending December 31, 2002 and (iii)
provide significant distributions following the reinvestment period and until
all equipment has been sold. The Partnership is governed by its Limited
Partnership Agreement.
Narrative Description of Business
The Partnership has acquired and intends to acquire various types of equipment
and to lease such equipment pursuant to "Operating" leases and "Full Payout"
leases, where "Operating" leases are defined as being leases in which the
minimum lease payments during the initial lease term do not recover the full
cost of the equipment and "Full Payout" leases recover such cost. It is the
intention of the General Partner that no more than 50% of the aggregate purchase
price of equipment will be subject to "Operating" leases upon final investment
of the Net Proceeds of the Offering and that no more than 20% of the aggregate
purchase price of equipment will be invested in equipment acquired from a single
manufacturer.
The Partnership only purchases equipment for which a lease exists or for which a
lease will be entered into at the time of the purchase. The Partnership has not
completed its initial acquisition stage with the investment of the net proceeds
from the public offering of Units. As noted above, however, it intends to
continue to invest any cash flow in excess of certain amounts required to be
distributed to the Limited Partners in additional items of leased equipment
through December 31, 2002.
As of December 31, 1996, the Partnership had purchased equipment with a total
acquisition price of $205,974,491.
The Partnership's objective is to lease a minimum of 75% of the equipment
acquired with the net proceeds of the offering to lessees which (i) have an
aggregate credit rating by Moody's Investor Service, Inc. of Baa or better, or
the credit equivalent as determined by the General Partner, with the aggregate
rating weighted to account for the original equipment cost for each item leased;
or (ii) are established hospitals with histories of profitability or
municipalities. The balance of the original equipment portfolio may include
equipment leased to lessees which, although deemed creditworthy by the General
Partner, would not satisfy the general credit rating criteria for the portfolio.
<PAGE>
During 1996 and 1995 certain lessees generated significant portions of the
Partnership's total lease revenues as follows:
1996 1995
---- ----
Lessee Type of Equipment
Consolidated Rail Corporation Locomotives & intermodal
containers 14% *
The Atchison, Topeka and Santa Fe
Railroad Company Containers & Chassis * 17%
Peerless Eagle Coal Company Construction Equipment * 11%
* Less than 10%.
These percentages are not expected to be comparable in future periods.
The equipment leasing industry is highly competitive. Equipment manufacturers,
corporations, partnerships and others offer users an alternative to the purchase
of most types of equipment with payment terms which vary widely depending on the
lease term and type of equipment. The ability of the Partnership to keep the
equipment leased and/or operating and the terms of the acquisitions, leases and
dispositions of equipment depends on various factors (many of which are not in
the control of the General Partner or the Partnership), such as general economic
conditions, including the effects of inflation or recession, and fluctuations in
supply and demand for various types of equipment resulting from, among other
things, technological and economic obsolescence.
The General Partner will seek to limit the amount invested in equipment to any
single lessee to not more than 20% of the aggregate purchase price of equipment
owned at any time during the reinvestment period.
The business of the Partnership is not seasonal.
The Partnership has no full time employees.
Equipment Leasing Activities:
Through December 31, 1996, the Partnership has disposed of certain leased assets
as set forth below:
Original
Equipment Cost, Excess of
Type of Excluding Rents Over
Equipment Acquisition Fees Sale Price Expenses *
- --------- ---------------- ---------- ----------
Tractors $789,433 $367,733 $220,693
Office automation 458,000 145,000 370,980
Containers 126,082 130,915 14,517
Railcars 35,262 23,185 2,943
Printers 12,470 12,179 1,662
---------------- ----------------- ---------------
$1,421,247 $679,012 $610,795
================ ================= ===============
* Includes only those expenses directly related to
the production of the related rents.
<PAGE>
The Partnership has acquired a diversified portfolio of equipment. The equipment
has been leased to lessees in various industries. The following tables set forth
the types of equipment acquired by the Partnership through December 31, 1996 and
the industries to which the assets have been leased.
<TABLE>
<CAPTION>
Purchase price excluding Percentage of total
Asset types acquisition fees acquisitions
----------- ---------------- ------------
<S> <C> <C>
Transportation, rail cars $33,380,276 16.21%
Construction 32,643,774 15.85%
Manufacturing 31,118,257 15.11%
Railroad locomotives 22,353,332 10.85%
Transportation, intermodal containers 21,963,189 10.66%
Transportation, other 21,031,070 10.21%
Materials handling 19,379,922 9.41%
Office automation 13,848,293 6.72%
Transportation, over-the-road tractors and trailers 4,420,037 2.15%
Other 3,683,663 1.79%
Aircraft ground support 800,000 0.39%
Communications 658,185 0.32%
Medical 343,409 0.17%
Food processing 317,520 0.15%
Furniture and fixtures 33,564 0.02%
---------------- ----------------
$205,974,491 100.00%
================ ================
</TABLE>
<TABLE>
<CAPTION>
Purchase price excluding Percentage of total
Industry of lessee acquisition fees acquisitions
------------------ ---------------- ------------
<S> <C> <C>
Transportation, rail $56,021,430 27.20%
Transportation, other 25,523,981 12.39%
Business services 23,554,946 11.44%
Electronics 18,422,289 8.94%
Oil & gas 16,535,633 8.03%
Primary metals 15,433,907 7.49%
Industrial machinery and equipment 10,710,021 5.20%
Construction 9,423,008 4.57%
Manufacturing, other 9,288,634 4.51%
Mining 8,483,810 4.12%
Communications 7,163,168 3.48%
Food processing 1,787,538 0.87%
Chemicals 1,266,374 0.61%
Retail, general 931,635 0.45%
Retail food / groceries 637,702 0.31%
Other 536,740 0.26%
Retail food service 253,675 0.13%
---------------- ----------------
$205,974,491 100.00%
================ ================
</TABLE>
For further information regarding the Partnership's equipment lease portfolio as
of December 31, 1996, see Note 3 to the financial statements, Investments in
equipment and leases, set forth in Item 8, Financial Statements and
Supplementary Data.
<PAGE>
Item 2. PROPERTIES
The Partnership does not own or lease any real property, plant or materially
important physical properties other than the equipment held for lease as set
forth in Item 1.
Item 3. LEGAL PROCEEDINGS
Inapplicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
PART II
Item 5. MARKET FOR REGISTRANT'S LIMITED PARTNERSHIP UNITS
AND RELATED MATTERS
Market Information
The Units are transferable subject to restrictions on transfers which have been
imposed under the securities laws of certain states. However, as a result of
such restrictions, the size of the Partnership and its investment objectives, to
the General Partner' knowledge, no established public secondary trading market
has developed and it is unlikely that a public trading market will develop in
the future.
Holders
As of December 31, 1996, a total of 6,301 investors were record holders of Units
in the Partnership.
Dividends
The Partnership does not make dividend distributions. However, the Limited
Partners of the Partnership are entitled to certain distributions as provided
under the Limited Partnership Agreement.
The rate for monthly distributions from 1996 operations was $0.0833 per Unit.
The distributions were made in February 1996 through December 1996 and in
January 1997. For each quarterly distribution (made in April, July and October
1996 and in January 1997) the rate was $0.25 per Unit. Distributions were from
1996 cash flows from operations. The amounts paid to holders of Units were
adjusted based on the length of time within the previous calendar month or
quarter that the Units were outstanding.
The Partnership commenced regular monthly distributions in February 1995 (from
January 1995 operations) and regular quarterly distributions in April 1995 (from
1995 first quarter operations). The rate for each of the monthly distributions
from 1995 operations was $.0833 per Unit. The distributions were made in
February 1995 through December 1995 and in January 1996. For each of the
quarterly distributions (made in April, July and October 1995 and in January
1996) the rate was $.25 per Unit. Distributions were from cash flows from
operations in 1995.
<PAGE>
The General Partner shall have sole discretion in determining the amount of
distributions; provided, however, that the General Partner will not reinvest in
equipment, but will distribute, subject to payment of any obligations of the
Partnership, such available cash from operations and cash from sales or
refinancing as may be necessary to cause total distributions to the Limited
Partners for each year during the reinvestment period to equal the following
amounts per unit: $1.00 in 1997 and 1998; $1.05 in 1999 and 2000; $1.10 in 2001
and 2002.
Holders may make the election without charge to receive distributions on a
monthly basis.
The following table presents summarized information regarding distributions to
Limited Partners:
1996 1995
---- ----
Distributions of net loss ($0.23) ($0.19)
Return of investment 1.16 0.97
-------- --------
Distributions per unit 0.93 0.78
Differences due to timing of distributions 0.07 0.22
-------- --------
Nominal distribution rates from above $1.00 $1.00
======== ========
Item 6. SELECTED FINANCIAL DATA
The following table presents selected financial data of the Partnership at
December 31, 1996, 1995 and 1994. This financial data should be read in
conjunction with the financial statements and related notes included under Item
8 of this report.
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Gross revenues $25,729,470 $6,444,037 -
Net loss ($2,210,330) ($602,674) -
Weighted average Limited Partner Units outstanding 9,424,045 3,154,291 50
Net loss per Unit, based on weighted average Units outstanding ($0.23) ($0.19) -
Distributions per Unit, based on weighted average Units outstanding $0.93 $0.78 -
Total Assets $192,831,691 $96,883,645 $600
Total Non-recourse Debt $80,789,732 $836,181 -
Total Partners' Capital $93,201,156 $50,576,037 $600
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
<PAGE>
The Partnership commenced its offering on November 23, 1994. As of December 31,
1994, all of the proceeds of the offering were held by the escrow agent. Upon
sale of the minimum amount of Units of $1,200,000 and receipt of the proceeds
thereof on January 3, 1995, the Partnership commenced operations. During the
funding period and until the Partnership's initial portfolio of equipment had
been purchased, funds which had been received, but which had not yet been
invested in leased equipment, were invested in interest-bearing accounts or
high-quality/short-term commercial paper. The Partnership's public offering
provided for a total maximum capitalization of $125,000,000 and was completed as
of November 23, 1996. As of that date subscriptions had been received and
accepted for $125,000,000.
During the funding period, the Partnership's primary source of liquidity is
subscription proceeds from the public offering of Units. The liquidity of the
Partnership will vary in the future, increasing to the extent cash flows from
leases and proceeds of asset sales 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 and proceeds from 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 that includes certain financial covenants. The line of credit
expires on October 28, 1997. As of December 31, 1996, the Partnership had
$15,598,257 of borrowings under this line of credit and the remaining
availability was $38,857,117.
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. At December 31,
1996, commitments to purchase lease assets totaled $5,864,204.
As of December 31, 1996, all cash balances consisted of amounts reserved for
distributions in January 1997, generated from operations in 1996.
The Partnership currently has available adequate reserves to meet its immediate
cash requirements, 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 General Partner expects that aggregate borrowings in the future will be
approximately 50% of aggregate equipment cost. In any event, the Agreement of
Limited Partnership limits such borrowings to 50% of the total cost of
equipment, in aggregate. The Partnership may only incur additional debt to the
extent that the then outstanding balance of all such debt, including the
additional debt, does not exceed 50% of the original cost of the lease assets
then owned by the Partnership, including any such assets purchased with the
proceeds of such additional debt.
The Partnership commenced regular distributions, based on cash flows from
operations, beginning with the month of January 1995. See Items 5 and 6 of this
report for additional information regarding the distributions.
<PAGE>
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.
Cash Flows:
1996 vs. 1995
In 1996, the Partnership's primary sources of cash were the proceeds of its
public offering of Limited Partnership Units (Units), proceeds of non-recourse
debt and borrowings under the line of credit. In 1997, the Partnership's primary
source of cash is expected to be rents from operating leases.
Cash flows from operations increased from $4,354,020 in 1995 to $13,940,220 in
1996. The increase was due to increased operating lease rents compared to 1995.
In 1996, sources of cash from investing activities consisted of proceeds from
sales of lease assets and cash flows from direct financing leases. The cash
flows from direct financing leases has increased due to acquisitions of lease
assets in 1995 and in 1996. The Partnership's first year of operations was 1995
and in that year, there were no significant dispositions of assets. In 1996, the
proceeds from sales of assets increased to $636,397 compared to $54,156 in 1995.
Such proceeds are expected to increase in 1997 as more of the Partnership's
leases reach their scheduled termination dates. Uses of cash in investing
activities consisted of lease assets purchases and payment of related
acquisition fees to an affiliate of the General Partner.
In 1996, sources of cash from financing activities consisted of proceeds of the
Partnership's offering of Units and debt proceeds (non-recourse and line of
credit). The Partnership's offering was concluded in November 1996. There will
be no such offering proceeds in 1997. Borrowings under the line of credit and
proceeds of non-recourse debt are expected to decrease in 1997. Borrowings under
the line of credit were used primarily to purchase lease assets. Proceeds from
non-recourse debt were used to repay borrowings under the line of credit and to
purchase lease assets.
Distributions to limited partners increased due to the increased number of Units
outstanding in 1996 compared to 1995 and is expected to increase in 1997 for the
same reason.
1995 vs. 1994
In 1995, the Partnership's primary source of cash from operating activities was
rents from operating leases. The General Partner expects that operating leases
will remain the primary source of cash from operations for most of the
Partnership's life.
In 1995, the Partnership did not have any significant sources of cash from
investing activities.
<PAGE>
During 1995, the Partnership's public offering of its Units was in progress and
is continued until November 1996. The proceeds of the offering was one of the
Partnership's two significant sources of financing cash flows. The other major
source of cash from financing activities was borrowings under the lines of
credit. In 1995, the gross proceeds received from the offering was $62,689,630
and borrowings under the lines of credit were $70,038,370. The most significant
uses of cash for financing activities were for payments of syndication costs
($9,026,548), repayments of lines of credit ($31,669,698) and distributions to
the Limited Partners ($2,467,223).
Results of Operations
As of January 3, 1995, subscriptions for the minimum amount of the offering
($1,200,000) had been received and accepted by the Partnership. As of that date,
the Partnership commenced operations in its primary business (leasing
activities). There were no operations in 1994. Because of the timing of the
commencement of operations and the fact that the initial portfolio acquisitions
had not been completed, the results of operations in 1996 and 1995 are not
expected to be comparable to future periods. After the Partnership's public
offering and its initial asset acquisition stage terminate, the results of
operations are expected to change significantly.
1996 vs. 1995
The Partnership's revenues increased from $6,444,037 in 1995 to $25,729,470 in
1996. The increase was due to increased operating lease revenues. In 1995 and
1996, the original cost of assets under operating leases increased from none at
the beginning of 1995 to $199,982,098 by the end of 1996. These acquisitions led
to the increased lease revenues noted. Operating lease revenues are expected to
increase again in 1997 by about another $4,500,000 due to asset purchases in
1996.
Depreciation expense is directly related to operating lease assets. As the
amount of such assets has increased due to acquisitions, the amount of
depreciation has likewise increased.
The increase in interest expense compared to 1995 is due to increased amounts of
debt outstanding in 1996 compared to 1995. Interest expense is expected to
increase significantly in 1997 as a result of 1996 borrowings.
Equipment and incentive management fees are based on lease rents and
distributions to the limited partners, respectively. Both of these underlying
factors increased in 1996 and this resulted in the increase in management fees.
1995 vs. 1994
In 1995, rents from operating leases were $6,291,439, about 98% of revenues.
Although operating leases are expected to contribute the majority of revenues in
future periods, it is expected that the percentage will decrease significantly.
The Partnership purchased a large portion of its lease assets in the second half
of 1995.
In 1995, depreciation of operating lease assets and interest expense were the
Partnership's largest expenses. The Partnership expects to finance a portion of
its equipment acquisitions with the proceeds of additional debt. As this occurs,
interest expense will also be expected to increase.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Financial Statements and Notes to Financial Statements attached hereto at
pages 10 through 22.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
ATEL Cash Distribution Fund VI, L.P.
We have audited the accompanying balance sheets of ATEL Cash Distribution Fund
VI, L.P. as of December 31, 1996 and 1995, the related statements of operations
for the years ended December 31, 1996 and 1995 and the related statements of
changes in partners' capital and cash flows for the years ended December 31,
1996 and 1995 and for the period from July 21, 1994 (inception) through December
31,1994. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ATEL Cash Distribution Fund VI,
L.P. at December 31, 1996 and 1995 and its results of operations and its cash
flows for the years ended December 31, 1996 and 1995 and for the period from
July 21, 1994 (inception) through December 31, 1994, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
San Francisco, California
February 7, 1997
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
1996 1995
---- ----
Cash and cash equivalents $1,123,336 $2,074,913
Accounts receivable 6,198,258 2,006,703
Investments in equipment and leases 185,510,097 92,802,029
---------------- ---------------
Total assets $192,831,691 $96,883,645
================ ===============
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $80,789,732 $836,181
Lines of credit 15,598,257 38,368,672
Accounts payable and accruals:
General Partner 45,070 1,279,066
Equipment purchases 638,379 5,176,506
Other 415,008 117,483
Accrued interest payable 1,746,206 230,967
Unearned lease income 397,883 298,733
---------------- ---------------
99,630,535 46,307,608
Partners' capital:
General Partner (118,690) (23,675)
Limited Partners 93,319,846 50,599,712
---------------- ---------------
Total partners' capital 93,201,156 50,576,037
---------------- ---------------
Total liabilities and partners' capital $192,831,691 $96,883,645
================ ===============
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenues:
Leasing activities:
Operating leases $25,480,263 $6,291,439
Direct financing leases 215,650 94,398
(Loss) gain on sales of assets (107,873) 3,819
Interest income 66,348 50,388
Other 75,082 3,993
---------------- ---------------
25,729,470 6,444,037
Expenses:
Depreciation and amortization 19,298,500 4,976,075
Interest 5,773,463 931,651
Administrative cost reimbursements to General Partner 748,745 539,009
Equipment and incentive management fees to affiliates 1,061,856 362,581
Provision for losses and impairments 257,814 64,892
Professional fees 186,724 50,962
Other 612,698 121,541
---------------- ---------------
27,939,800 7,046,711
---------------- ---------------
Net loss ($2,210,330) ($602,674)
================ ===============
Net loss:
General Partner ($22,103) ($6,027)
Limited Partners (2,188,227) (596,647)
---------------- ---------------
($2,210,330) ($602,674)
================ ===============
Net loss per Limited Partnership unit ($0.23) ($0.19)
Weighted average number of units outstanding 9,424,045 3,154,291
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1996 AND 1995
AND THE PERIOD FROM JULY 21,1994
THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partners Total
----- ------ -------- -----
<S> <C> <C> <C> <C>
Activity during 1994 and balance at December 31,
1994 50 $500 $100 $600
Capital contributions received 6,268,963 62,689,630 62,689,630
Less selling commissions to affiliates (5,955,515) (5,955,515)
Other syndication costs to affiliates (3,071,033) (3,071,033)
Distributions to limited partners ($0.78 per Unit) (2,467,223) (2,467,223)
Distributions to General Partner - (17,748) (17,748)
Net loss (596,647) (6,027) (602,674)
---------------- ------------- ----------- ---------------
Balance December 31, 1995 6,269,013 50,599,712 (23,675) 50,576,037
Capital contributions received 6,231,037 62,310,370 62,310,370
Less selling commissions to affiliates (5,919,485) (5,919,485)
Other syndication costs to affiliates (2,762,793) (2,762,793)
Distributions to limited partners ($0.93 per Unit) (8,719,731) (8,719,731)
Distributions to General Partner (72,912) (72,912)
Net loss (2,188,227) (22,103) (2,210,330)
---------------- ------------- ----------- ---------------
Balance December 31, 1996 12,500,050 $93,319,846 ($118,690) $93,201,156
================ ============= =========== ===============
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
AND THE PERIOD FROM JULY 21,1994
THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Operating activities:
Net loss ($2,210,330) ($602,674)
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 19,298,500 4,976,075
Provision for losses and impairments 257,814 64,892
Loss (gain) on sales of assets 107,873 (3,819)
Changes in operating assets and liabilities:
Accounts receivable (4,191,555) (2,006,703)
Accounts payable, General Partner (1,233,996) 1,279,066
Accounts payable, other 297,525 117,483
Accrued interest payable 1,515,239 230,967
Unearned lease income 99,150 298,733
------------------ --------------
Net cash provided by operating activities 13,940,220 4,354,020
------------------ --------------
Investing activities:
Purchases of equipment on operating leases (113,775,023) (87,041,903)
Purchases of equipment on direct financing leases (1,177,807) (2,961,829)
Purchases of residual value interests (379,551) -
Initial direct lease costs paid to affiliate (2,716,021) (2,908,979)
Reduction of net investment in direct financing leases 501,623 195,884
Proceeds from sales of assets 636,397 54,156
------------------ --------------
Net cash used in investing activities (116,910,382) (92,662,671)
------------------ --------------
Financing activities:
Capital contributions received 62,310,370 62,689,630 $600
Payment of syndication costs to General Partner (8,682,278) (9,026,548) -
Distributions to Limited Partners (8,719,731) (2,467,223) -
Distributions to General Partner (72,912) (17,748) -
Borrowings under lines of credit 64,426,319 70,038,370 -
Repayments of borrowings under lines of credit (87,196,734) (31,669,698) -
Proceeds of non-recourse debt 84,675,980 943,536 -
Repayments of non-recourse debt (4,722,429) (107,355) -
----------------- --------------- ---------------
Net cash provided by financing activities 102,018,585 90,382,964 600
----------------- --------------- ---------------
Net (decrease) increase in cash and cash equivalents (951,577) 2,074,313 600
Cash and cash equivalents at beginning of period 2,074,913 600 -
----------------- --------------- ---------------
Cash and cash equivalents at end of period $1,123,336 $2,074,913 $600
================= =============== ===============
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $4,258,224 $700,684
================= ===============
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. Organization and Partnership matters:
ATEL Cash Distribution Fund VI, L.P. (the Fund), was formed under the laws of
the State of California on June 29 , 1994, for the purpose of acquiring
equipment to engage in equipment leasing and sales activities. Contributions in
the amount of $600 were received as of July 21, 1994, $100 of which represented
the General Partner's (ATEL Financial Corporation'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 January 3,
1995, 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 to 15%
of Gross Proceeds of up to $25,000,000 and 14% of Gross Proceeds in excess of
$25,000,000.
The Partnership's business consists of leasing various types of equipment. As of
December 31, 1996, the original terms of the leases ranged from one to twenty
years.
Pursuant to the Limited Partnership Agreement, the General Partner receives
compensation and reimbursements for services rendered on behalf of the
Partnership (Note 5). The General Partner is required to maintain in the
Partnership reasonable cash reserves for working capital, the repurchase of
Units and contingencies.
2. Summary of significant accounting policies:
Equipment on operating leases:
Revenues from operating leases are recognized evenly over the life of the
related leases.
Equipment on operating leases is stated at cost. Depreciation is being provided
by use of the straight-line method over the terms of the related leases to the
equipment's' estimated residual values at the end of the leases.
Direct financing leases:
Income from direct financing lease transactions is reported on the financing
method of accounting, in which the Partnership's investment in the leased
property is reported as a receivable from the lessee to be recovered through
future rentals. The income portion of each rental payment is calculated so as to
generate a constant rate of return on the net receivable outstanding.
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
2. Summary of significant accounting policies (continued):
Statements of cash flows:
For purposes of the Statements of Cash Flows, cash and cash equivalents includes
cash in banks and cash equivalent investments with original maturities of ninety
days or less.
Income taxes:
The Partnership does not provide for income taxes since all income and losses
are the liability of the individual partners and are allocated to the partners
for inclusion in their individual tax returns.
The tax basis of the Partnership's net assets and liabilities varies from the
amounts presented in these financial statements.
1996 1995
---- ----
Financial statement basis of net assets and
liabilities $93,201,156 $50,576,037
Tax basis of net assets and liabilities 74,777,978 48,579,641
---------------- ---------------
Difference $18,423,178 $1,996,396
================ ===============
The following reconciles the net loss reported in these financial statements to
the loss reported on the Partnership's federal tax return (unaudited):
1996 1995
---- ----
Net loss per financial statements ($2,210,330) ($602,674)
Adjustment to depreciation expense (26,173,869) (11,337,114)
Adjustments to lease revenues 806,994 249,279
Provision for losses 257,814 64,892
Adjustments to interest expense - (58,536)
Other - 58,535
---------------- ---------------
Net loss per federal tax return ($27,319,391) ($11,625,618)
================ ===============
Per unit data:
Net income and distributions per unit are based upon the weighted average number
of units outstanding during the period.
Credit Risk:
Financial instruments which potentially subject the Partnership to
concentrations of credit risk include cash and cash equivalents. The Partnership
places its cash deposits and temporary cash investments with creditworthy, high
quality financial institutions. The concentration of such deposits and temporary
cash investments is not deemed to create a significant risk to the Partnership.
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
2. Summary of significant accounting policies (continued):
Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. Investments in equipment and leases:
As of December 31, 1996, the Partnership's investments in equipment and leases
consist of the following:
<TABLE>
<CAPTION>
Depreciation
Expense or Reclass-
December 31, Amortization ifications or December 31,
1995 Additions of Leases Dispositions 1996
---- --------- --------- ------------ ----
<S> <C> <C> <C> <C> <C>
Net investment in operating leases $87,360,104 $109,236,896 ($18,137,771) ($759,034) $177,700,195
Net investment in direct financing
leases 2,765,945 1,177,807 (501,623) - 3,442,129
Assets held for sale or lease 45,160 - (27,146) 26,304 44,318
Residual value interests - 379,551 - - 379,551
Reserve for losses (64,892) (257,814) - - (322,706)
Initial direct costs, net of accumulated
amortization of $1,220,992 in 1996
and $213,267 in 1995 2,695,712 2,716,021 (1,133,583) (11,540) 4,266,610
---------------- --------------- ---------------- --------------- ---------------
$92,802,029 $113,252,461 ($19,800,123) ($744,270) $185,510,097
================ =============== ================ =============== ===============
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
3. Investments in equipment and leases (continued):
Operating leases:
Property on operating lease consists of the following as of December 31, 1995,
additions and dispositions during 1996 and as of December 31, 1996:
<TABLE>
<CAPTION>
Reclass-
December 31, ifications or December 31,
1995 Additions Dispositions 1996
---- --------- ------------ ----
<S> <C> <C> <C> <C>
Transportation $58,140,854 $44,288,153 ($912,512) $101,516,495
Construction 14,741,280 17,902,494 - 32,643,774
Manufacturing 1,298,697 29,440,009 - 30,738,706
Materials handling 12,919,801 5,807,703 - 18,727,504
Office automation 5,015,082 6,795,760 (458,000) 11,352,842
Miscellaneous - 3,683,663 - 3,683,663
Communications - 658,185 - 658,185
Medical - 343,409 - 343,409
Food processing - 317,520 - 317,520
---------------- ---------------- --------------- ---------------
92,115,714 109,236,896 (1,370,512) 199,982,098
Less accumulated depreciation (4,755,610) (18,137,771) 611,478 (22,281,903)
---------------- ---------------- --------------- ---------------
$87,360,104 $91,099,125 ($759,034) $177,700,195
================ ================ =============== ===============
</TABLE>
Direct financing leases:
As of December 31, 1996 and 1995, investment in direct financing leases consists
of railroad tank cars and various office automation equipment. The following
lists the components of the Partnership's investment in direct financing leases
as of December 31, 1996:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Total minimum lease payments receivable $2,620,307 $1,850,305
Estimated residual values of leased equipment (unguaranteed) 1,452,053 1,292,219
----------------- ---------------
Investment in direct financing leases 4,072,360 3,142,524
Less unearned income (630,231) (376,579)
----------------- ---------------
Net investment in direct financing leases $3,442,129 $2,765,945
================= ===============
</TABLE>
All of the property on leases was acquired in 1996 and 1995.
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
3. Investments in equipment and leases (continued):
At December 31, 1996, the aggregate amounts of future minimum lease payments
under operating and direct financing leases are as follows:
Direct
Year ending Operating Financing
December 31, Leases Leases Total
------------ ------ ------ -----
1997 $30,042,731 $1,079,893 $31,122,624
1998 31,949,464 463,325 32,412,789
1999 28,905,615 222,919 29,128,534
2000 24,903,636 162,850 25,066,486
2001 15,548,120 98,760 15,646,880
Thereafter 34,015,320 592,560 34,607,880
---------------- --------------- ----------------
$165,364,886 $2,620,307 $167,985,193
================ =============== ================
4. Non-recourse debt:
At December 31, 1996, non-recourse debt consists of notes payable to financial
institutions. The notes are due in varying monthly, quarterly and semi-annual
payments. Interest on the notes is at rates from 6.37% to 15.54%. The notes are
secured by assignments of lease payments and pledges of assets. At December 31,
1996, the carrying value of the pledged assets is approximately $108,311,944.
The notes mature from 1997 through 2016.
Future minimum payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
------------ --------- -------- -----
1997 $12,368,186 $4,331,074 $16,699,260
1998 14,077,770 7,121,052 21,198,822
1999 15,773,481 4,364,586 20,138,067
2000 12,863,367 3,150,113 16,013,480
2001 6,456,555 2,231,597 8,688,152
Thereafter 19,250,373 7,087,205 26,337,578
---------------- ---------------- ---------------
$80,789,732 $28,285,627 $109,075,359
================ ================ ===============
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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 Limited Partnership Agreement allows for the reimbursement of costs incurred
by the General Partner in providing administrative services to the Partnership.
Administrative services provided include Partnership accounting, investor
relations, legal counsel and lease and equipment documentation. The General
Partner is not reimbursed for services where it is entitled to receive a
separate fee as compensation for such services, such as acquisition and
disposition of equipment. Reimbursable costs incurred by the General Partner are
allocated to the Partnership based upon actual time incurred by employees
working on Partnership business and an allocation of rent and other costs based
on utilization studies.
Substantially all employees of the General Partner record time incurred in
performing administrative services on behalf of all of the Partnerships serviced
by the General Partner. The General Partner believes that the costs reimbursed
are the lower of (i) actual costs incurred on behalf of the Partnership or (ii)
the amount the Partnership would be required to pay independent parties for
comparable administrative services in the same geographic location and are
reimbursable in accordance with the Limited Partnership Agreement.
The General Partner and/or Affiliates earned fees, commissions and
reimbursements, pursuant to the Limited Partnership Agreement as follows during
1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Selling commissions (equal to 9.5% of the selling price of the Limited
Partnership units, deducted from Limited Partners' capital) $5,919,485 $5,955,515
Reimbursement of other syndication costs 2,762,793 3,071,033
Acquisition fees equal to 3% (3.25% prior to July 1, 1995) of the equipment
purchase price, for evaluating and selecting equipment to be acquired (not to
exceed approximately 4.5% of Gross Proceeds, included in investment in leases) 2,716,021 2,908,979
Incentive management fees (computed as 3.25% (4% prior to July 1, 1995) of
distributions of cash from operations, as defined in the Limited Partnership
Agreement) and equipment management fees (computed as 3.5% (5% prior to July 1,
1995) 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). 1,061,856 362,581
Administrative costs reimbursed to General Partner 748,745 539,009
---------------- ---------------
$13,208,900 $12,837,117
================ ===============
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
6. Partners' capital:
As of December 31, 1996, 12,500,050 Units were issued and outstanding, including
the 50 Units issued to the Initial Limited Partners. The Fund's registration
statement with the Securities and Exchange Commission became effective November
23, 1994. The Fund is authorized to issue up to 12,500,000 Units, in addition to
those issued to the Initial Limited Partners.
The Partnership Net Profits, Net Losses, and Tax Credits are to be allocated 99%
to the Limited Partners and 1% to the General Partner.
Available Cash from Operations and Cash from Sales and Refinancing, as defined
in the Limited Partnership Agreement, shall be distributed as follows:
First, 95.75% (95% prior to July 1, 1995) of Distributions of Cash from
Operations to the Limited Partners, 1% of Distributions of Cash from Operations
to the General Partner and 3.25% (4% prior to July 1, 1995) to an affiliate of
the General Partner as Incentive Management Compensation, 99% of Distributions
of Cash from Sales or Refinancing to the Limited Partners and 1% of Cash from
Sales or Refinancing to the General Partner.
Second, the balance to the Limited Partners until the Limited Partners have
received Aggregate Distributions 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.
Third, an affiliate of the General Partner will receive as Incentive Management
Compensation, 4% of remaining Cash from Sales or Refinancing.
Fourth, the balance to the Limited Partners.
7. Concentration of credit risk and major customers:
The Partnership leases equipment to lessees in diversified industries. Leases
are subject to the General Partner's credit committee review. The leases provide
for the return of the equipment upon default.
As of December 31, 1996 and 1995 there were concentrations (greater than 10%) of
equipment leased to lessees in certain industries (as a percentage of total
equipment cost) as follows:
1996 1995
---- ----
Rail transportation 27% 36%
Other transportation services 12% 18%
Business services 11% *
Oil and gas * 13%
* Less than 10%.
During 1996, one customer comprised 14% of the Partnership's revenues from
leases. During 1995, two customers comprised 17% and 11% of the Partnership's
revenues from leases.
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
8. Lines 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 and a warehouse facility which are used 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. Borrowings on the warehouse facility are recourse
jointly to certain of the Affiliates, the Partnership and the General Partner.
During 1996, the Partnership had borrowed $64,426,319 under the line of credit.
Repayments on the line of credit were $87,196,734 during 1996 and $15,598,257
remained outstanding as of December 31, 1996. At December 31, 1996, the rates on
such borrowings varied from 6.88% to 8.25%.
In addition, certain of the Affiliates had borrowed an aggregate of $9,821,300
under the warehouse facility as of December 31, 1996.
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of December
31, 1996. At December 31, 1996, $38,857,117 was available under this agreement.
During 1995, the Partnership had borrowed $70,038,370 under a similar line of
credit. Of those amounts, $31,669,698 was repaid during 1995 and $38,368,672
remained outstanding as of December 31, 1995.
9. Fair value of financial instruments:
The Partnership has adopted Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments," which requires
disclosure of the fair value of financial instruments for which it is
practicable to estimate fair value. The following methods and assumptions were
used to estimate the fair value of each class of financial instrument for which
it is practicable to estimate that value.
Cash and cash equivalents:
The carrying amount of cash and cash equivalents approximates fair value because
of the short maturity of these instruments.
Accounts payable, accrued interest and customer deposits:
The carrying amounts of accounts payable, accrued interest and customer deposits
approximate fair value because of the short maturity of these instruments.
Non-recourse debt:
The fair value of the Partnership's non-recourse debt is estimated using
discounted cash flow analyses, based on the Partnership's current incremental
borrowing rates for similar types of borrowing arrangements. The estimated fair
value of the Partnership's non-recourse debt at December 31, 1996 is
$80,889,633.
Line of credit:
The carrying amounts of the Partnership's variable rate lines of credit
approximate fair value.
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
Inapplicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
The registrant is a Limited Partnership and, therefore, has no officers or
directors.
All of the outstanding capital stock of ATEL Financial Corporation (the General
Partner) is held by ATEL Capital Group ("ACG"), a holding company formed to
control the General Partner and affiliated companies pursuant to a corporate
restructuring completed in July 1994. The outstanding capital stock of ATEL
Capital Group is owned 75% by A. J. Batt and 25% by Dean Cash, and was obtained
in the restructuring in exchange for their capital interests in ATEL Financial
Corporation.
Each of ATEL Leasing Corporation ("ALC"), ATEL Equipment Corporation ("AEC"),
ATEL Investor Services ("AIS") and ATEL Financial Corporation ("AFC") is a
wholly-owned subsidiary of ATEL Capital Group and performs services for the
Partnership. Acquisition services are performed for the Partnership by ALC,
equipment management, lease administration and asset disposition services are
performed by AEC, investor relations and communications services are performed
by AIS and general administrative services for the Partnership are performed by
AFC. ATEL Securities Corporation ("ASC"), is a wholly-owned subsidiary of ATEL
Financial Corporation.
The officers and directors of ATEL Capital Group, ATEL Financial Corporation and
their affiliates are as follows:
A. J. Batt . . . . . . . . Chairman of the Board of Directors of ACG, AFC, ALC,
AEC, AIS and ASC; President and Chief Executive
Officer of ACG, AFC and AEC
Dean L. Cash . . . . . . . Director, Executive Vice President and Chief
Operating Officer of ACG, AFC, and AEC; Director,
President and Chief Executive Officer of ALC, AIS
and ASC
F. Randall Bigony . . . . Senior Vice President and Chief Financial Officer of
ACG, AFC, ALC, AIS and AEC
Donald E. Carpenter . . . Vice President and Controller of ACG, AFC, ALC, AEC
and AIS; Chief Financial Officer of ASC
Vasco H. Morais . . . . . General Counsel for ACG, AFC, ALC, AIS and AEC
William J. Bullock . . . . Director of Asset Management of AEC
Jeffrey A. Schwager . . . Vice President - Syndication of ALC
Russell H. Wilder . . . . Vice President - Credit of AEC
John P. Scarcella . . . . Vice President of ASC
<PAGE>
A. J. Batt, age 60, founded ATEL in 1977 and has been its president and chairman
of the board of directors since its inception. From 1973 to 1977, he was
employed by GATX Leasing Corporation as manager-data processing and equity
placement for the lease underwriting department, which was involved in equipment
financing for major corporations. From 1967 to 1973 Mr. Batt was a senior
technical representative for General Electric Corporation, involved in sales and
support services for computer time-sharing applications for corporations and
financial institutions. Prior to that time, he was employed by North American
Aviation as an engineer involved in the Apollo project. Mr. Batt received a
B.Sc. degree with honors in mathematics and physics from the University of
British Columbia in 1961.
Dean L. Cash, age 46, joined ATEL as director of marketing in 1980 and has been
a vice president since 1981, executive vice president since 1983 and a director
since 1984. Prior to joining ATEL, Mr. Cash was a senior marketing
representative for Martin Marietta Corporation, data systems division, from 1979
to 1980. From 1977 to 1979, he was employed by General Electric Corporation,
where he was an applications specialist in the medical systems division and a
marketing representative in the information services division. Mr. Cash was a
systems engineer with Electronic Data Systems from 1975 to 1977, and was
involved in maintaining and developing software for commercial applications. Mr.
Cash received a B.S. degree in psychology and mathematics in 1972 and an M.B.A.
degree with a concentration in finance in 1975 from Florida State University.
Mr. Cash is an arbitrator with the American Arbitration Association.
F. Randall Bigony, age 39, joined ATEL in 1992 to review administrative
operations within ATEL Financial Corporation and to develop and implement
functional plans to support company growth. He currently oversees ATEL's
accounting, MIS and treasury functions. From 1987 until joining ATEL, Mr. Bigony
was president of F. Randall Bigony & Co., a consulting firm that provided
financial and strategic planning services to emerging growth companies. From
1983 to 1987, he was a manager with the accounting firm of Ernst & Whinney,
serving clients in its management consulting practice. Mr. Bigony received a
B.A. degree in business from the University of Massachusetts and an M.B.A.
degree in finance from the University of California, Berkeley. He is a founding
board member and acting treasurer of the I Have a Dream Foundation Bay Area
Chapter.
Donald E. Carpenter, age 48, joined ATEL in 1986 as controller. Prior to joining
ATEL, Mr. Carpenter was an audit supervisor with Laventhol & Horwath, certified
public accountants in San Francisco, California, from 1983 to 1986. From 1979 to
1983, Mr. Carpenter was an audit senior with Deloitte, Haskins & Sells,
certified public accountants, in San Jose, California. From 1971 to 1975, Mr.
Carpenter was a Supply Corp officer in the U. S. Navy. Mr. Carpenter received a
B.S. degree in mathematics (magna cum laude) from California State University,
Fresno in 1971 and completed a second major in accounting in 1978. Mr. Carpenter
has been a California certified public accountant since 1981.
Vasco H. Morais, age 38, joined ATEL in 1989 as general counsel to provide legal
support in the drafting and reviewing of lease documentation, advising on
general corporate law matters, and assisting on securities law issues. From 1986
to 1989, Mr. Morais was employed by the BankAmeriLease Companies, Bank of
America's equipment leasing subsidiaries, providing in-house legal support on
the documentation of tax-oriented and non-tax oriented direct and leveraged
lease transactions, vendor leasing programs and general corporate matters. Prior
to the BankAmeriLease Companies, Mr. Morais was with the Consolidated Capital
Companies in the Corporate and Securities Legal Department involved in drafting
and reviewing contracts, advising on corporate law matters and securities law
issues. Mr. Morais received a B.A. degree in 1982 from the University of
California in Berkeley and a J.D. degree in 1986 from Golden Gate University Law
School. Mr. Morais has been an active member of the State Bar of California
since 1986.
<PAGE>
William J. Bullock, age 33, joined ATEL in 1991, as the director of asset
management. He assumed responsibility for the disposition of off-lease equipment
and residual valuation analysis on new lease transactions. Prior to joining
ATEL, Mr. Bullock was a senior member of the equipment group at McDonnell
Douglas Finance Corporation("MDFC") responsible for managing its $4 billion
portfolio of leases. Mr. Bullock was involved in negotiating sales and renewals
as well as preparing and inspecting equipment. Prior to joining MDFC in 1989,
Mr. Bullock was the Senior Negotiator at Equitable Leasing (a subsidiary of GE
Capital Equipment Corp.) in San Diego. At Equitable, he handled the end-of-lease
negotiations and equipment dispositions of a portfolio comprised of equipment
leased primarily to Fortune 200 companies. Mr. Bullock has been a member of the
Equipment Lessors Association ("ELA") since 1987 and has authored ELA industry
articles. He received a B.S. degree in Finance in 1987 from San Diego State
University and is pursuing his M.B.A.
Jeffrey A. Schwager, age 36, joined ATEL in 1991 as vice president - syndication
and is responsible for acquiring transactions from intermediaries as well as
debt and equity placement. Prior to joining ATEL, Mr. Schwager was a member of
General Electric Capital Corporation's Institutional Financing Group. There, he
was responsible for originating equipment lease and corporate finance
opportunities, as well as soliciting equipment portfolios in conjunction with
marketing a proprietary capital enhancement product. From 1985 through 1990, Mr.
Schwager held several positions with Bank Ireland/First Financial, most recently
Vice President Marketing, where he was responsible for originating and
negotiating tax-oriented leveraged lease financings for Fortune 500 companies.
From 1983 to 1985 Mr. Schwager was an Associate Consultant with The Bigelow
Company, a middle market investment banking and management consulting firm,
developing and implementing strategic plans for a number of clients. Prior to
The Bigelow Company, he worked for Petro-Lewis Corporation as a joint-interest
accountant. Mr. Schwager received his B.S. in Business Administration from
Babson College in 1982, majoring in Finance and Entrepreneurial Studies.
Russell H. Wilder, age 42, joined ATEL in 1992 as Vice President of ATEL
Business Credit, a wholly-owned subsidiary of ACG. Immediately prior to joining
ATEL, Mr. Wilder was a personal property broker specializing in equipment
leasing and financing and an outside contractor in the areas of credit and
collections. From 1985 to 1990 he was Vice President and Manager of Leasing for
Fireside Thrift Co., a Teledyne subsidiary, and was responsible for all aspects
of setting up and managing the department, which operated as a small ticket
lease funding source. From 1983 to 1985 he was with Wells Fargo Leasing
Corporation as Assistant Vice President in the credit department where he
oversaw all credit analysis on transactions in excess of $2 million. From 1978
to 1983 he was District Credit Manager with Westinghouse Credit Corporation's
Industrial Group and was responsible for all non-marketing operations of various
district offices. Mr. Wilder holds a B.S. with Honors in Agricultural Economics
and Business Management from the University of California at Davis. He has been
awarded the Certified Lease Professional designation by the Western Association
of Equipment Lessors.
John P. Scarcella, age 35, joined ATEL Securities as vice president in 1992. He
is involved in the marketing of securities offered by ASC. Prior to joining ASC,
from 1987 to 1991, he was employed by Lansing Pacific Fund, a real estate
investment trust in San Mateo, California and acted as director of investor
relations. From 1984 to 1987, Mr. Scarcella acted as broker dealer
representative for Lansing Capital Corporation, where he was involved in the
marketing of direct participation programs and REITs. Mr. Scarcella received a
B.S.C. degree with emphasis in investment finance in 1983 and an M.B.A. degree
with a concentration in marketing in 1991 from Santa Clara University.
<PAGE>
Item 11. EXECUTIVE COMPENSATION
The registrant is a Limited Partnership and, therefore, has no officers or
directors.
Set forth hereinafter is a description of the nature of remuneration paid and to
be paid to the General Partner and their Affiliates. The amount of such
remuneration paid through December 31, 1996 is set forth in Item 8 of this
report under the caption "Financial Statements and Supplementary Data - Notes to
the Financial Statements - Related party transactions," at Note 5 thereof which
information is hereby incorporated by reference.
Selling Commissions
The Partnership will pay selling commissions in the amount of 9.5% of Gross
Proceeds, as defined, to ATEL Securities Corporation, an affiliate of the
General Partner. Of this amount, the majority is expected to be reallowed to
other broker/dealers.
Through December 31, 1996, $11,875,000 of such commissions had been either
accrued or paid to the General Partner or its affiliates. Of that amount,
$10,163,554 was reallowed to other broker/dealers.
Acquisition Fees
Acquisition fees are to be paid to the General Partner for services rendered in
finding, reviewing and evaluating equipment to be purchased by the Partnership
and rejecting equipment not to be purchased by the Partnership. The total amount
of acquisition fees to be paid to the General Partner or their affiliates is not
to exceed 3% (3.25% prior to July 1,1995) of the aggregate purchase price of
equipment acquired with the net proceeds of the offering and not to exceed 4.5%
of the Gross Proceeds of the Offering.
Through December 31, 1996, $5,625,000 of such fees (the maximum allowable
amount) had been paid to the General Partner or its affiliates.
Equipment Management Fees
As compensation for its services rendered generally in managing or supervising
the management of the Partnership's equipment and in supervising other ongoing
services and activities including, among others, arranging for necessary
maintenance and repair of equipment, collecting revenue, paying operating
expenses, determining the equipment is being used in accordance with all
operative contractual arrangements, property and sales tax monitoring and
preparation of financial data, the General Partner or its affiliates are
entitled to receive management fees which are payable for each fiscal quarter
and are to be in an amount equal to (i) 3.5% (5% prior to July 1, 1995) of the
gross revenues from "operating" leases and (ii) 2% of gross revenues from "full
payout" leases which contain net lease provisions.
See Note to the financial statements included at Item 8 of this report for
amounts paid.
<PAGE>
Incentive Management Fees
As compensation for its services rendered in establishing and maintaining the
composition of the Partnership's equipment portfolio and its acquisition and
debt strategies and supervising fund administration including supervising the
preparation of reports and maintenance of financial and operating data of the
Partnership, Securities and Exchange Commission and Internal Revenue Service
filings, returns and reports, the General Partner shall be entitled to receive
the Incentive management fee which shall be payable for each fiscal quarter and
shall be an amount equal to 1% of cash distributions from operations, sales or
refinancing and 3.25% (4% prior to July 1, 1995) of cash distributions from
operations to an affiliate of the General Partner until such time as the Limited
Partners have received aggregate distributions of cash from operations in an
amount equal to their original invested capital plus a 10% per annum return on
their average adjusted invested capital (as defined in the Limited Partnership
Agreement). Thereafter, the incentive management fee paid to the affiliate of
the General Partner shall be 4% of all distributions of cash from operations,
sales or refinancing.
See Note to the financial statements included at Item 8 of this report for
amounts paid.
Equipment Resale Fees
As compensation for services rendered in connection with the sale of equipment,
the General Partner shall be entitled to receive an amount equal to the lesser
of (i) 3% of the sales price of the equipment, or (ii) one-half the normal
competitive equipment sales commission charged by unaffiliated parties for such
services. Such fee is payable only after the Limited Partners have received a
return of their adjusted invested capital (as defined in the Limited Partnership
Agreement) plus 10% of their adjusted invested capital per annum calculated on a
cumulative basis, compounded daily, commencing the last day of the quarter in
which the limited partner was admitted to the Partnership. To date, none have
been accrued or paid.
Equipment Re-lease Fee
As compensation for providing re-leasing services, the General Partner shall
receive fees equal to 2% of the gross rentals or the comparable competitive rate
for such services relating to comparable equipment, whichever is less, derived
from the re-lease provided that (i) the General Partner or their affiliates have
and will maintain adequate staff to render such services to the Partnership,
(ii) no such re-lease fee is payable in connection with the re-lease of
equipment to a previous lessee or its affiliates, (iii) the General Partner or
its affiliates have rendered substantial re-leasing services in connection with
such re-lease and (iv) the General Partner or its affiliates are compensated for
rendering equipment management services. To date, none have been accrued or
paid.
General Partner's Interest in Operating Proceeds
Net income, net loss and investment tax credits are allocated 99% to the Limited
Partners and 1% to the general partner. See financial statements included in
Item 8, Part I of this report for amounts allocated to the General Partner in
1996 and 1995.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security Ownership of Certain Beneficial Owners
At December 31, 1996 no investor is known to the Partnership to hold
beneficially more than 5% of the issued and outstanding Units.
Security Ownership of Management
<PAGE>
The shareholders of the General Partner are beneficial owners of Limited
Partnership Units as follows:
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
<S> <C> <C> <C>
Limited Partnership Units A. J. Batt Initial Limited Partner Units 0.0004%
235 Pine Street, 6th Floor 25 Units ($250)
San Francisco, CA 94104 (owned by wife)
Limited Partnership Units Dean Cash Initial Limited Partner Units 0.0004%
235 Pine Street, 6th Floor 25 Units ($250)
San Francisco, CA 94104 (owned by wife)
</TABLE>
Changes in Control
The Limited Partners have the right, by vote of the Limited Partners owning more
than 50% of the outstanding limited Partnership units, to remove a General
Partner.
The General Partner may at any time call a meeting of the Limited Partners or a
vote of the Limited Partners without a meeting, on matters on which they are
entitled to vote, and shall call such meeting or for vote without a meeting
following receipt of a written request therefor of Limited Partners holding 10%
or more of the total outstanding Limited Partnership units.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The responses to Item 1 of this report under the caption "Equipment Leasing
Activities," Item 8 of this report under the caption "Financial Statements and
Supplemental Data - Notes to the Financial Statements - Related party
transactions" at Note 5 thereof, and Item 11 of this report under the caption
"Executive Compensation," are hereby incorporated herein by reference.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) Financial Statements and Schedules
1. Financial Statements
Included in Part II of this report:
Report of Independent Auditors
Balance Sheets at December 31, 1996 and 1995
Statements of Operations for the years ended December
31, 1996 and 1995
Statements of Changes in Partners' Capital for the
years ended December 31, 1996 and 1995 and for the
period from July 21, 1994 (inception) through
December 31, 1994
Statements of Cash Flows for the years ended December
31, 1996 and 1995 and for the period from July 21,
1994 (inception) through December 31, 1994
Notes to Financial Statements
2. Financial Statement Schedules
Allschedules 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) Reports on Form 8-K for the fourth quarter of 1996
None
(c) Exhibits
(3)and (4) Agreement of Limited Partnership, included
as Exhibit B to Prospectus (Exhibit 28.1), is
incorporated herein by reference to the report on
Form 10K for the period ended December 31, 1994
(File No. 33-81952).
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: 3/27/1997
ATEL Cash Distribution Fund VI, L.P.
(Registrant)
By: ATEL Financial Corporation,
General Partner of Registrant
By: /s/ A. J. Batt
-------------------------------------------
A. J. Batt,
President and Chief Executive Officer
By: /s/ A. J. Batt
--------------------------------------
A. J. Batt,
General Partner of Registrant,
President and Chief Executive
Officer of ATEL Financial
Corporation (General Partner)
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the persons in the capacities and on the dates
indicated.
SIGNATURE CAPACITIES DATE
/s/ A. J. Batt President, chairman and 3/27/1997
- --------------------- chief executive officer of
A. J. Batt ATEL Financial Corporation
/s/ Dean Cash Executive vice president and 3/27/1997
- --------------------- director of ATEL Financial
Dean Cash Corporation
/s/ F. Randall Bigony Principal financial officer 3/27/1997
- ----------------------- of registrant; principal
F. Randall Bigony financial officer of ATEL
Financial Corporation
/s/ Donald E. Carpenter Principal accounting officer 3/27/1997
- ------------------------ of registrant; principal
Donald E. Carpenter accounting officer of ATEL
Financial Corporation
Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act:
No proxy materials have been or will be sent to security holders. An annual
report will be furnished to security holders subsequent to the filing of this
report on Form 10-K, and copies thereof will be furnished supplementally to the
Commission when forwarded to the security holders.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,123,336
<SECURITIES> 0
<RECEIVABLES> 6,198,258
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 192,831,691
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 93,201,156
<TOTAL-LIABILITY-AND-EQUITY> 192,831,691
<SALES> 0
<TOTAL-REVENUES> 25,729,470
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 21,908,523
<LOSS-PROVISION> 257,814
<INTEREST-EXPENSE> 5,773,463
<INCOME-PRETAX> (2,210,330)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,210,330)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,210,330)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
