-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EL0fXPgaELcuiPBEISdru1D5/gAH+EFnE7UhZUrELhG5IIz+3HWYwG0MPfN6nW26 Bm3JPNdTg+qZ0lY/tYcQmw== 0000823065-96-000002.txt : 19960816 0000823065-96-000002.hdr.sgml : 19960816 ACCESSION NUMBER: 0000823065-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATEL CASH DISTRIBUTION FUND II CENTRAL INDEX KEY: 0000823065 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943051991 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17631 FILM NUMBER: 96613233 BUSINESS ADDRESS: STREET 1: 235 PINE ST, 6TH FLOOR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4159898800 10-Q 1 REPORT FOR THE SIX MONTHS ENDED 6/30/96 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 |X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended June 30, 1996 |_| 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 0-17631 ATEL Cash Distribution Fund II, a California Limited Partnership (Exact name of registrant as specified in its charter) California 94-3051991 (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 1 Part I FINANCIAL INFORMATION Item 1. Financial Statements. 2 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS JUNE 30, 1996 AND DECEMBER 31, 1995 (Unaudited) ASSETS 1996 1995 ---- ---- Cash and cash equivalents $723,337 $874,714 Accounts receivables, net of allowance for doubtful accounts of $15,552 in 1995 and 1996 44,884 69,558 Investment in equipment and leases 6,113,064 7,459,980 ---------------- ---------------- $6,881,285 $8,404,252 ================ ================ LIABILITIES AND PARTNERS' CAPITAL Non-recourse debt $2,316,581 $2,965,946 Accrued interest 41,300 53,047 Accounts payable: General partners 33,820 61,192 Other 100,199 79,398 Customer deposit 77,409 77,409 Unearned operating lease income 23,595 36,385 ---------------- ---------------- Total liabilities 2,592,904 3,273,377 Partners' capital: General partners 76,425 73,539 Limited partners 4,211,956 5,057,336 ---------------- ---------------- Total partners' capital 4,288,381 5,130,875 ---------------- ---------------- $6,881,285 $8,404,252 ================ ================ See notes to financial statements 3 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) INCOME STATEMENTS SIX AND THREE MONTH PERIODS ENDED JUNE 30, 1996 AND 1995 (Unaudited)
Six Months Three Months Ended June 30, Ended June 30, Revenues: 1996 1995 1996 1995 ---- ---- ---- ---- Lease income: Operating $806,088 $1,308,662 $374,416 $606,945 Direct financing 178,607 236,205 85,603 111,610 Leveraged leases 9,645 7,664 4,822 3,832 Gain on sales of assets 63,650 375,457 61,723 330,263 Other income 97,828 73,148 18,362 53,577 Gain on sale of marketable securities - 124,879 - - Interest income 6,145 18,180 3,148 8,888 ---------------- ----------------- ---------------- ---------------- 1,161,963 2,144,195 548,074 1,115,115 ---------------- ----------------- ---------------- ---------------- Expenses: Depreciation and amortization 527,880 848,599 204,415 362,525 Interest expense 134,967 197,660 63,782 95,020 Equipment and partnership management fees 74,040 122,601 33,820 63,256 Administrative cost reimbursements 60,902 73,128 37,361 41,820 Professional fees 13,211 39,231 11,009 8,819 Taxes 32,050 25,778 32,050 25,778 Other 18,969 23,859 11,868 13,826 Provision for losses 11,344 10,965 5,470 675 ---------------- ----------------- ---------------- ---------------- 873,363 1,341,821 399,775 611,719 ---------------- ----------------- ---------------- ---------------- Net Income $288,600 $802,374 $148,299 $503,396 ================ ================= ================ ================ Net income: General partners $2,886 $8,024 $1,483 $5,034 Limited partners 285,714 794,350 146,816 498,362 ---------------- ----------------- ---------------- ---------------- $288,600 $802,374 $148,299 $503,396 ================ ================= ================ ================ Net income per limited partnership unit $4.08 $11.35 $2.10 $7.12 Weighted average number of units outstanding 69,979 69,979 69,979 69,979
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL SIX MONTHS ENDED JUNE 30, 1996
Limited Partners General Units Amount Partners Total ----- ------ -------- ----- Balance December 31, 1995 69,979 $5,057,336 $73,539 $5,130,875 Net income 285,714 2,886 288,600 Distributions (1,131,094) - (1,131,094) --------- ----------------- ---------------- ---------------- Balance June 30, 1996 69,979 $4,211,956 $76,425 $4,288,381 ========= ================= ================ ================
See notes to financial statements 4 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS SIX AND THREE MONTH PERIODS ENDED JUNE 30, 1996 AND 1995 (Unaudited)
Six Months Three Months Ended June 30, Ended June 30, 1996 1995 1996 1995 ---- ---- ---- ---- Operating activities: Net income $288,600 $802,374 $148,299 $503,396 Adjustment to reconcile net income to net cash provided by operations: Depreciation and amortization 527,880 848,599 204,415 362,525 Revenues from leveraged leases (9,645) (7,664) (4,822) (3,832) Gain on sales of assets (63,650) (375,457) (61,723) (330,263) Gain on sale of marketable securities - (124,879) - - Provision for losses 11,344 10,965 5,470 675 Changes in operating assets and liabilities: Decrease (increase) in accounts Accounts receivable 24,674 571,047 45,366 (15,683) Accounts payable, general partner (27,372) 12,752 (6,400) 63,257 Accounts payable, other 20,801 23,413 (5,350) (33,819) Accrued interest (11,747) (11,487) (5,570) (5,363) Unearned operating lease income (12,790) 4,765 7,034 8,174 ---------------- ----------------- ---------------- ---------------- Net cash from operations 748,095 1,754,428 326,719 549,067 ---------------- ----------------- ---------------- ---------------- Investing activities: Proceeds from sales of assets 431,159 1,862,815 329,390 593,997 Reductions of net investment in direct financing leases 449,828 445,104 229,633 226,902 Proceeds from sale of marketable securities - 124,879 - - ---------------- ----------------- ---------------- ---------------- Net cash provided by investing activities 880,987 2,432,798 559,023 820,899 ---------------- ----------------- ---------------- ----------------
5 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS SIX AND THREE MONTH PERIODS ENDED JUNE 30, 1996 AND 1995 (Unaudited) (Continued)
Six Months Three Months Ended June 30, Ended June 30, 1996 1995 1996 1995 Financing activities: Repayment of non-recourse debt (649,365) (669,682) (328,688) (302,233) Distributions to limited partners (1,131,094) (2,909,566) (472,805) (1,363,859) ---------------- ----------------- ---------------- ---------------- Net cash used in financing activities (1,780,459) (3,579,248) (801,493) (1,666,092) ---------------- ----------------- ---------------- ---------------- Net (decrease) increase in cash and cash equivalents (151,377) 607,978 84,249 (296,126) Cash and cash equivalents at beginning of period 874,714 924,041 639,088 1,828,145 ---------------- ----------------- ---------------- ---------------- Cash and cash equivalents at end of period $723,337 $1,532,019 $723,337 $1,532,019 ================ ================= ================ ================ Supplemental disclosures of cash flow information: Cash paid for interest during the period $134,967 $197,660 $63,782 $95,020 ================ ================= ================ ================ Operating lease assets reclassified to direct financing lease assets $28,996 $28,996 ================= ================
See notes to financial statements 6 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 (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 II, a California Limited Partnership (the Partnership), was formed under the laws of the State of California on September 30, 1987, for the purpose of acquiring equipment to engage in equipment leasing and sales activities. Contributions in the amount of $600 were received as of September 30, 1987, $100 of which represented the General Partners' continuing interest, and $500 of which represented the Initial Limited Partner's capital investment. 3. Investment in leases: The Partnership's investment in leases consists of the following:
Depreciation Expense or Reclass- December 31, Amortization ifications & June 30, 1995 Additions of Leases Dispositions 1996 ---- --------- --------- -------------- ---- Net investment in operating leases $4,278,094 ($526,949) ($309,206) $3,441,939 Net investment in direct financing leases 2,940,554 (449,828) - 2,490,726 Net investment in leveraged leases 74,635 9,645 - 84,280 Equipment held for sale 199,474 - (58,303) 141,171 Reserve for losses (37,588) ($11,344) - - (48,932) Initial direct costs 4,811 - (931) - 3,880 ------------------ ---------------- ----------------- ---------------- ---------------- $7,459,980 ($11,344) ($968,063) ($367,509) $6,113,064 ================== ================ ================= ================ ================
7 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 (Unaudited) 3. Investment in leases (continued): Operating leases: The following schedule provides an analysis of the Partnership's investment in equipment on operating leases by major classifications as of December 31, 1995, additions and dispositions during the three month periods ended March 31, 1996 and June 30, 1996 and as of June 30, 1996:
Reclassifications & December 31, Dispositions June 30, Equipment type 1995 1st Quarter 2nd Quarter 1996 -------------- ---- ----------- ----------- ---- Aircraft $3,164,533 $3,164,533 Mining 2,104,643 2,104,643 Materials handling 1,918,334 ($187,555) ($579,632) 1,151,147 Manufacturing 835,681 - - 835,681 Communications 481,738 - - 481,738 Data processing 527,739 - (195,522) 332,217 Food processing 344,799 - (13,728) 331,071 Transportation 697,722 (511,041) (33,029) 153,652 Motor vehicles 95,277 - - 95,277 Furniture, fixtures and equipment 22,967 - - 22,967 ---------------- ----------------- ---------------- ---------------- 10,193,433 (698,596) (821,911) 8,672,926 Less accumulated depreciation (5,915,339) 303,412 380,940 (5,230,987) ---------------- ----------------- ---------------- ---------------- $4,278,094 ($395,184) ($440,971) $3,441,939 ================ ================= ================ ================
Equipment on operating leases was acquired in 1988, 1989, 1990, 1991 and 1994. At June 30, 1996, the aggregate amounts of future minimum lease payments are as follows: Year ending Direct December 31, Financing Operating Total ------------ --------- --------- ----- 1996 $607,626 $635,574 $1,243,200 1997 1,126,523 546,571 1,673,094 1998 220,075 272,090 492,165 1999 4,248 269,732 273,980 2000 - 202,299 202,299 ---------------- ----------------- ---------------- $1,958,472 $1,926,266 $3,884,738 ================ ================= ================ 8 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 (Unaudited) 4. Non-recourse debt: Notes payable to financial institutions are due in varying monthly, quarterly and semi-annual installments of principal and interest. The notes are secured by assignments of lease payments and pledges of the assets which were purchased with the proceeds of the particular notes. Interest rates on the notes vary from 7.69% to 12.86%. Future minimum principal and interest payments of debt as of June 30, 1996 are as follows: Year ending December 31, Principal Interest Total ------------ --------- -------- ----- 1996 $622,716 $146,231 $768,947 1997 1,037,153 137,795 1,174,948 1998 230,049 61,609 291,658 1999 233,530 36,202 269,732 2000 193,133 9,166 202,299 ---------------- ----------------- ---------------- $2,316,581 $391,003 $2,707,584 ================ ================= ================ 5. Commitments, management and report of fees: The terms of the Limited Partnership Agreement provide that the General Partners and/or Affiliates are entitled to receive certain fees. The General Partners and/or Affiliates earned partnership and equipment management fees of $74,040 in 1996 and $122,601 in 1995, as permitted in the Agreement of Limited Partnership . 9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital Resources and Liquidity Partnership cash which has been received, but which has not yet been invested in leased equipment or distributed to partners, is invested in interest-bearing accounts or high-quality/short-term commercial paper. The partnership's primary source of liquidity is cash received from lease rentals. The liquidity of the partnership will vary in the future, increasing to the extent cash flows from leases exceed expenses and decreasing as lease assets are acquired, as distributions are made to the limited partners and to the extent expenses exceed cash flows from leases. The partnership currently has available adequate reserves to meet contingencies, but in the event those reserves were found to be inadequate, the partnership would likely be in a position to borrow against its current portfolio to meet such requirements. The general partners envision no such requirements for operating purposes, nor have they explored with lenders the possibility of obtaining loans. There can be no assurance as to the terms of any such financing or that the partnership will be able to obtain such loans. All of the Partnership's non-recourse debt is paid by lease payments assigned to the lenders. The assigned lease payments match the required payments on the debt and such payments fully amortize the debt. As of June 30, 1996, the partnership had borrowed approximately $21,700,000. The remaining unpaid balance on those borrowings was $2,316,581. The borrowings are non-recourse to the partnership, that is, the only recourse of the lender will be to the equipment or corresponding lease acquired with the loan proceeds. The general partners expect that aggregate borrowings in the future will decrease as a percentage of equipment cost. In any event, the Agreement of Limited Partnership limits such borrowings to 40% of the total cost of equipment, in aggregate. No commitments of capital have been or are expected to be made other than for the acquisition of additional equipment. There were no such commitments at June 30, 1995. The Partnership made distributions of cash from 1996 first and second quarter operations in April and July 1996, respectively. The amounts of these distributions were each $6.50 per Unit. These distributions represent an annualized distribution rate of 5.2%. 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 or decrease significantly, the lease rates that the partnership can obtain on future leases will be expected to increase or decrease in parallel 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. 10 Cash flows, six months, 1996 vs. 1995 In the first six months of 1996, the Partnership's primary source of cash flows from operations was lease rents, particularly operating lease rents. Cash flows from operations decreased by $1,006,333. The Partnership's operating lease revenues declined by $502,574 compared to 1995 and direct financing lease revenues declined by $57,598. These decreases are a result of scheduled lease terminations and subsequent sales of the underlying lease assets since the second quarter of 1995. Cash flows from investing activities declined from $2,432,798 in 1995 to $880,987 in 1996. Most of the $1,551,811 decrease was due to reduced sales of lease assets in 1996 compared to 1995. The original cost of assets sold in 1996 was approximately $1,520,000 compared to $5,718,000 in 1995. The proceeds from the sales of such assets decreased from $1,862,815 in 1995 to $431,159 in 1996. In 1995, the Partnership sold certain equity securities it had obtained in the bankruptcy settlement of Financial News Network (FNN), a former lessee of the Partnership. The proceeds from the sale were $124,879. This represented the remainder of stock owned by the Partnership and there were no comparable sales in 1996. There were no financing sources of cash in the 1996 or 1995 periods. Debt principal payments have decreased as a result of scheduled debt payments. Distributions decreased due to the lower per Unit rate of distributions in January and April 1996 compared to 1995. Cash flows, three months, 1996 vs. 1995 Lease revenues decreased by $257,546. Lease rentals and the $329,390 received from asset sales were the largest sources of cash in the second quarter of 1996. The decrease in lease rents for the three month period was due to asset sales as noted above for the six month period. Sources of cash flows from investing activities decreased compared to 1995. As noted above for the six month period, proceeds from the sales of assets decreased compared to 1995. There were no financing sources of cash in the 1996 or 1995 periods. Cash flows used in financing activities changed in the three month period due to the same causes as noted above for the six month period. Results of Operations The results of operations in future periods may vary significantly from those of the first six months of 1996 as the partnership's lease portfolio of capital equipment matures. Revenues from leases are expected to decline over the long term as leased assets come off lease and are sold or re-leased at lower lease rates. The effect on net income is not determinable as it will depend to a large degree on the amounts received from the sales of assets or from re-leases to either the same or new lessees once the initial lease terms expire. 1996 vs. 1995 Operating lease revenues declined by $502,574 (six months) and $232,529 (three months) due to lease terminations and asset dispositions during the preceding twelve months. Direct financing lease revenues decreased by $57,598 (six months) and $26,007 (three months) compared to 1995. Depreciation expense decreased due to the asset dispositions discussed under the caption "Capital Resources and Liquidity". Management fees are related to lease revenues and to distributions. Both of these factors declined in 1996 compared to 1995, resulting in lower management fees. Interest expense decreased for both the six and three month periods due to lower average debt balances than in 1995. 11 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, 1996 and December 31, 1995 Income statements for the six and three month periods ended June 30, 1996 and 1995. Statement of changes in partners' equity for the six month period ended June 30, 1996. Statements of cash flows for the six and three month periods ended June 30, 1996 and 1995. 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. 12 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, 1996 ATEL Cash Distribution Fund II, a California limited partnership (Registrant) By: /s/ A. J. BATT ------------------------------ A. J. Batt, General Partner of registrant By: /s/ DEAN L. CASH ------------------------------ Dean Cash, General Partner of registrant By: /s/ F. RANDALL BIGONY ------------------------------ F. Randall Bigony Principal financial officer of registrant By: /s/ DONALD E. CARPENTER ------------------------------ Donald E. Carpenter, Principal accounting officer of registrant 13 EX-27 2 FDS --
5 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 723337 0 60436 15552 0 0 0 0 6881285 0 0 0 0 0 4288381 6881285 0 1161963 0 0 727052 11344 134967 288600 0 288600 0 0 0 288600 0 0
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