Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the quarterly period ended 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 0-28368
ATEL Cash Distribution Fund VI, L.P.
(Exact name of registrant as specified in its charter)
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
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 VI, L.P.
BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
(Unaudited)
ASSETS
1999 1998
---- ----
Cash and cash equivalents $ 447,985 $ 744,132
Accounts receivable 6,857,675 9,786,041
Investments in leases 116,891,773 129,566,007
------------------ -----------------
Total assets $124,197,433 $140,096,180
================== =================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $52,404,057 $65,164,309
Line of credit 6,350,000 5,100,000
Accounts payable:
General Partner 1,027,570 171,050
Other 692,358 604,768
Equipment purchases 130,852 255,252
Accrued interest payable 808,723 2,275,444
Unearned operating lease income 273,333 202,920
------------------ -----------------
Total liabilities 61,686,893 73,773,743
Partners' capital:
General Partner (492,985) (409,182)
Limited Partners 63,003,525 66,731,619
------------------ -----------------
Total partners' capital 62,510,540 66,322,437
------------------ -----------------
Total liabilities and partners' capital $124,197,433 $140,096,180
================== =================
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
STATEMENTS OF OPERATIONS
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:
Leasing activities:
<S> <C> <C> <C> <C>
Operating lease revenues $ 18,054,921 $ 18,243,619 $ 8,546,289 $ 9,220,961
Direct financing leases 56,606 68,501 28,386 32,486
Gain on sales of assets 157,439 795,189 86,474 117,792
Interest income 3,447 16,980 1,709 5,861
Other 12,519 9,721 6,461 4,130
----------------- ------------------ ------------------ -----------------
18,284,932 19,134,010 8,669,319 9,381,230
Expenses:
Depreciation and amortization 11,856,615 13,512,038 5,798,360 6,710,334
Interest 2,517,878 3,452,060 1,291,530 1,722,230
Equipment and incentive management fees 576,016 631,370 190,821 260,732
Other 350,286 366,666 135,259 168,297
Administrative cost reimbursements 150,308 185,529 106,629 63,756
Professional fees 38,661 21,752 27,629 11,562
Provision for losses - 97,528 - -
----------------- ------------------ ------------------ -----------------
15,489,764 18,266,943 7,550,228 8,936,911
----------------- ------------------ ------------------ -----------------
Net income $ 2,795,168 $ 867,067 $ 1,119,091 $ 444,319
================= ================== ================== =================
Net income:
General partner $ 27,952 $ 8,671 $ 11,191 $ 4,443
Limited partners 2,767,216 858,396 1,107,900 439,876
----------------- ------------------ ------------------ -----------------
$ 2,795,168 $ 867,067 $ 1,119,091 $ 444,319
================= ================== ================== =================
Weighted average number of units
outstanding 12,500,050 12,500,050 12,500,050 12,500,050
Net loss per limited partnership unit $0.22 $0.07 $0.09 $0.04
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SIX MONTH PERIOD ENDED
JUNE 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partner Total
<S> <C> <C> <C> <C>
Balance December 31, 1998 12,500,050 $ 66,731,619 $ (409,182) $66,322,437
Distributions to partners (6,495,310) (111,755) (6,607,065)
Net income 2,767,216 27,952 2,795,168
----------------- ------------------ ------------------ -----------------
Balance June 30, 1999 12,500,050 $ 63,003,525 $ (492,985) $62,510,540
================= ================== ================== =================
</TABLE>
See accompanying notes.
STATEMENT 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 $ 2,795,168 $ 867,067 $ 1,119,091 $ 444,319
Adjustments to reconcile net income to net
cash provided by operations
Depreciation and amortization 11,856,615 13,512,038 5,798,360 6,710,334
Gain on sales of assets (157,439) (795,189) (86,474) (117,792)
Provision for losses - 97,528 - -
Changes in operating assets and liabilities:
Accounts receivable 2,928,366 3,790,999 2,548,924 (2,482,797)
Accounts payable, general partner 856,520 (253,626) 859,450 (162,184)
Accounts payable, other 87,590 1,151,352 (1,155,697) 152,063
Accrued interest expense (1,466,721) (2,837,356) (1,516,338) 877,775
Unearned lease income 70,413 242,507 (803,863) (715,000)
----------------- ------------------ ------------------ -----------------
Net cash provided by operating activities 16,970,512 15,775,320 6,763,453 4,706,718
----------------- ------------------ ------------------ -----------------
Investing activities:
Proceeds from sales of assets 871,191 2,308,466 414,402 424,912
Reduction in net investment in direct
financing leases 103,867 258,270 55,639 108,733
Purchase of equipment on operating leases (124,400) - 5,452 -
----------------- ------------------ ------------------ -----------------
Net cash provided by investing activities 850,658 2,566,736 475,493 533,645
----------------- ------------------ ------------------ -----------------
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
STATEMENTS OF CASH FLOWS
(Continued)
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
---- ---- ---- ----
Financing activities:
<S> <C> <C> <C> <C>
Repayment of long-term non-recourse debt (12,760,252) (10,280,075) (4,972,863) (2,430,478)
Distributions to partners (6,607,065) (6,281,757) (3,282,381) (3,125,059)
Borrowings on line of credit 1,250,000 1,250,000
Repayment of line of credit - (5,850,000) - -
Proceeds of long-term non-recourse debt - 4,199,995 - -
----------------- ------------------ ------------------ -----------------
Net cash provided by financing activities (18,117,317) (18,211,837) (7,005,244) (5,555,537)
----------------- ------------------ ------------------ -----------------
Net (decrease) increase in cash and
cash equivalents (296,147) 130,219 233,702 (315,174)
Cash at beginning of period 744,132 739,701 214,283 1,185,094
----------------- ------------------ ------------------ -----------------
Cash at end of period $ 447,985 $ 869,920 $ 447,985 $ 869,920
================= ================== ================== =================
Supplemental disclosure of cash flow
information:
Cash paid during the period for interest $ 1,880,563 $ 2,424,973 $ 703,832 $ 844,455
================= ================== ================== =================
Supplemental disclosure of non-cash transactions:
Offset of accounts receivable and debt service
per lease and debt agreement:
Accrued interest payable $(2,104,036) $(3,864,443) $ 0 $ 0
Non-recourse debt (2,695,964) (935,557) - -
----------------- ------------------ ------------------ -----------------
Accounts receivable $(4,800,000) $(4,800,000) $ 0 $ 0
================= ================== ================== =================
</TABLE>
See accompanying notes.
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(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 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.
The Partnership does not make a provision for income taxes since all income and
losses will be allocated to the Partners for inclusion in their individual tax
returns.
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 $126,447,049 $(11,475,914) $ (962,070) $114,009,065
Net investment in direct financing leases 1,222,716 (103,867) (6,742) 1,112,107
Assets held for sale or lease 99,038 - 255,060 354,098
Residual interests 379,551 - - 379,551
Reserve for losses (785,086) - - (785,086)
Initial direct costs, net of accumulated
amortization 2,202,739 (380,701) - 1,822,038
----------------- ------------------ ------------------ -----------------
$129,566,007 $(11,960,482) $ (713,752) $116,891,773
================= ================== ================== =================
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
3. Investment in leases (continued):
Property on operating leases consists of the following:
<TABLE>
<CAPTION>
Acquisitions & Balance
December 31, Dispositions June 30,
1998 1st Quarter 2nd Quarter 1999
---- ----------- ----------- ----
<S> <C> <C> <C> <C>
Transportation $ 99,965,294 $ (46,242) $ (181,510) $99,737,542
Construction 32,178,737 - - 32,178,737
Manufacturing 30,086,474 - (302,940) 29,783,534
Materials handling 18,442,909 (516,356) (1,009,500) 16,917,053
Office automation 10,485,156 (1,206,953) (282,900) 8,995,303
Miscellaneous 3,453,751 - - 3,453,751
Communications 658,185 - - 658,185
Medical 343,409 - - 343,409
Food processing 317,520 - - 317,520
----------------- ------------------ ------------------ -----------------
195,931,435 (1,769,551) (1,776,850) 192,385,034
Less accumulated depreciation (69,484,386) (4,429,697) (4,461,886) (78,375,969)
----------------- ------------------ ------------------ -----------------
$126,447,049 $(6,199,248) $(6,238,736) $114,009,065
================= ================== ================== =================
</TABLE>
All of the property on leases was acquired in 1995, 1996 and 1997.
At June 30, 1999, the aggregate amounts of future minimum lease payments are as
follows:
Direct
Year ending Operating Financing
December 31, Leases Leases Total
1999 $ 13,998,355 $ 185,919 $ 14,184,274
2000 20,285,928 260,274 20,546,202
2001 10,777,239 158,238 10,935,477
2002 4,847,069 112,480 4,959,549
2003 3,050,287 98,760 3,149,047
Thereafter 12,975,397 395,040 13,370,437
------------------ ------------------ -----------------
$ 65,934,275 $ 1,210,711 $ 67,144,986
================= ================== ==================
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
4. Non-recourse debt:
Notes payable to financial institutions are due in varying monthly 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
6.5% to 12.229%.
Future minimum principal payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
1999 $ 5,875,578 $ 1,349,708 $ 7,225,286
2000 15,889,562 3,714,499 19,604,061
2001 8,834,242 2,531,010 11,365,252
2002 5,755,960 1,831,550 7,587,510
2003 5,488,995 1,241,942 6,730,937
Thereafter 10,559,720 4,302,772 14,862,492
------------------ ------------------ -----------------
$ 52,404,057 $ 14,971,481 $ 67,375,538
================= ================== ==================
5. Related party transactions:
The terms of the Limited Partnership Agreement provide that the General Partner
and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The General Partner and/or Affiliates earned fees, commissions and
reimbursements, pursuant to the Limited Partnership Agreement as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Incentive management fees (computed as 3.25% of distributions of cash from
operations, as defined in the Limited Partnership Agreement) and equipment
management fees (computed as 3.5% of gross revenues from operating leases, as
defined in the Limited Partnership Agreement plus 2% of gross revenues from full
payout leases, as defined in the Limited Partnership Agreement). $ 576,016 $ 631,370
Reimbursement of administrative costs 150,308 185,529
------------------ -----------------
$ 726,324 $ 816,899
================== =================
</TABLE>
<PAGE>
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
6. Partner's capital:
As of June 30, 1997, 12,500,050 Units ($125,000,500) were issued and
outstanding. The Fund's registration statement with the Securities and Exchange
Commission became effective November 23, 1994 and its offering was concluded on
November 23, 1996. The Fund is authorized to issue up to 12,500,050 Units,
including the 50 Units 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% (95.75% after June 30, 1995) of Distributions of Cash from
Operations to the Limited Partners, 1% of Distributions of Cash from
Operations to the General Partner and 4% (3.25% after June 30, 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 8% 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% (3.25% after June 30, 1995) of remaining Cash
from Sales or Refinancing.
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 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.
At June 30, 1999, the Partnership had $6,350,000 of borrowings under the line of
credit.
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of June 30,
1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
During the first half of 1999, the Partnership's primary activity was engaging
in equipment leasing activities.
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.
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 $95,000,000 revolving line of credit with a financial
institution. The line of credit expires on January 31, 2000.
The Partnership anticipates reinvesting a portion of lease payments from assets
owned in new leasing transactions. Such reinvestment will occur only after the
payment of all obligations, including debt service (both principal and
interest), the payment of management and acquisition fees to the General Partner
and providing for cash distributions to the Limited Partners.
The Partnership currently has available adequate reserves to meet contingencies,
but in the event those reserves were found to be inadequate, the Partnership
would likely be in a position to borrow against its current portfolio to meet
such requirements. The General Partner envisions no such requirements for
operating purposes.
As of June 30, 1999, the Partnership had borrowed $100,521,405 with a remaining
unpaid balance of $52,404,057. The General Partner expects that aggregate
borrowings in the future will not exceed 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.
No commitments of capital have been or are expected to be made other than for
the acquisition of additional equipment. There were no such commitments as of
June 30, 1999.
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:
In 1999 and 1998, the Partnership's primary source of cash was rents from
operating leases. Cash provided by operations increased by $1,326,044 (from
$15,775,320 in 1998 to $17,101,364 in 1999).
The only sources of cash from investing activities were direct financing lease
rents and proceeds from sales of lease assets. Neither of these was as
significant as operating sources of cash.
In 1999, the only source of cash from financing activities was borrowings on the
line of credit. Payments of non-recourse debt have increased as a result of
borrowings in the first quarter of 1998. The Partnership's only significant
source of cash from financing activities in 1998 was proceeds of non-recourse
debt. The proceeds of this debt were used to make payments on the Partnership's
line of credit.
Three months:
Operating lease rents were the primary source of cash from operating activities
in 1999 and 1998.
As noted above for the six month period, proceeds from asset sales and direct
financing lease rents were the only sources of cash from investing activities in
1999 and 1998 and were not as significant as cash flows from operations.
There were no sources of cash from financing activities in 1999 or in 1998. Debt
payments have increased for the same reasons note above for the six month
period.
Results of operations
In 1999, operations resulted in net income of $2,795,168 (six months) and
$1,119,091 (three months). In 1998, operations resulted in net income of
$867,067 (six months) and $444,319 (three months). The Partnership's primary
source of revenues is from operating leases. This is expected to remain true in
future periods. Depreciation expense is the single largest expense of the
Partnership and is expected to remain so in future periods. Operating lease
rents decreased compared to 1998 due to sales of lease assets over the last
year. As Interest expense is related to the borrowings under the line of credit
and non-recourse debt and has decreased because of decreased debt balances
compared to 1998.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Inapplicable.
Item 2. Changes In Securities.
Inapplicable.
Item 3. Defaults Upon Senior Securities.
Inapplicable.
Item 4. Submission Of Matters To A Vote Of Security Holders.
Inapplicable.
Item 5. Other Information.
Inapplicable.
Item 6. Exhibits And Reports On Form 8-K.
(a)Documents filed as a part of this report
1. Financial Statements
Included in Part I of this report:
Balance Sheets, June 30, 1999 and December 31, 1998.
Statements of operations for the six and three month
periods ended June 30, 1999 and 1998.
Statement of changes in partners' capital for the six
month period 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 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
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> 447,985
<SECURITIES> 0
<RECEIVABLES> 6,857,675
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 124,197,433
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 62,510,540
<TOTAL-LIABILITY-AND-EQUITY> 124,197,433
<SALES> 0
<TOTAL-REVENUES> 18,284,932
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,971,886
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,517,878
<INCOME-PRETAX> 2,795,168
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,795,168
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,795,168
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
