-----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, Emol2WhWcMf1VKUkzjfQ2hrv1mNdeRLntiEU87JtkJFf4C99CeswS66YRjfCHkES diP6WanGfdbRlNV3lZwAPg== 0000823065-96-000004.txt : 19961118 0000823065-96-000004.hdr.sgml : 19961118 ACCESSION NUMBER: 0000823065-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96662725 BUSINESS ADDRESS: STREET 1: 235 PINE ST, 6TH FLOOR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4159898800 10-Q 1 REPORT FOR NINE MONTHS ENDED 9/30/96 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 September 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 000-17631 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 Former name, former address and former fiscal year, if changed since last report 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 1 OF 12 Part I FINANCIAL INFORMATION Item 1. Financial Statements. Page 2 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS SEPTEMBER 30, 1996 AND DECEMBER 31, 1995 (Unaudited) ASSETS 1996 1995 ---- ---- Cash and cash equivalents $740,014 $874,714 Accounts receivable, net of allowance for doubtful accounts of $15,552 in 1996 and 1995 43,209 69,558 Investment in equipment and leases 5,446,372 7,459,980 ---------------- ---------------- $6,229,595 $8,404,252 ================ ================ LIABILITIES AND PARTNERS' CAPITAL Non-recourse debt $2,009,137 $2,965,946 Accrued interest 35,270 53,047 Accounts payable: General Partners 45,940 61,192 Other 98,567 79,398 Deposits due to lessees 77,409 77,409 Unearned lease income 12,567 36,385 ---------------- ---------------- Total liabilities 2,278,890 3,273,377 Partners' capital: General Partners 77,776 73,539 Limited Partners 3,872,929 5,057,336 ---------------- ---------------- Total partners' capital 3,950,705 5,130,875 ---------------- ---------------- $6,229,595 $8,404,252 ================ ================ See accompanying notes. Page 3 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) INCOME STATEMENTS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995 (Unaudited)
Nine Months Ended Three Months Ended September 30, September 30, Revenues: 1996 1995 1996 1995 ---- ---- ---- ---- Lease income: Operating $1,144,100 $1,856,003 $338,012 $547,341 Direct financing 250,018 339,916 71,411 103,711 Leveraged 12,860 11,496 3,215 3,832 Gain (loss) on disposition of assets 51,757 396,058 (11,893) 20,601 Interest income 10,869 27,858 4,724 9,678 Gain on sale of marketable securities - 124,879 - - Other 177,151 228,600 79,323 155,452 --------------- ---------------- ---------------- ---------------- 1,646,755 2,984,810 484,792 840,615 --------------- ---------------- ---------------- ---------------- Expenses: Depreciation 712,396 1,159,568 184,516 310,969 Interest expense 190,085 286,058 55,118 88,398 Management fees 119,981 171,722 45,941 49,121 Administrative cost reimbursements 101,298 107,480 40,396 34,352 Taxes 32,048 25,841 - 63 Other expense 31,345 35,342 12,376 11,483 Professional fees 19,682 42,853 6,471 3,622 Provision for losses 16,192 19,371 4,846 8,406 --------------- ---------------- ---------------- ---------------- 1,223,027 1,848,235 349,664 506,414 --------------- ---------------- ---------------- ---------------- Net income $423,728 $1,136,575 $135,128 $334,201 =============== ================ ================ ================ Net income: General Partners $4,237 $11,366 $1,351 $3,342 Limited Partners 419,491 1,125,209 133,777 330,859 --------------- ---------------- ---------------- ---------------- $423,728 $1,136,575 $135,128 $334,201 =============== ================ ================ ================ Net income per Limited Partnership unit $5.99 $16.08 $1.91 $4.73 =============== ================ ================ ================ Weighted average number of units outstanding 69,979 69,979 69,979 69,979 =============== ================ ================ ================
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL NINE MONTHS ENDED SEPTEMBER 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 419,491 4,237 423,728 Distributions to limited partners (1,603,898) (1,603,898) --------------- ---------------- ---------------- ---------------- Balance September 30, 1996 69,979 $3,872,929 $77,776 $3,950,705 =============== ================ ================ ================
See accompanying notes. Page 4 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995 (Unaudited)
Nine Months Ended Three Months Ended September 30, September 30, 1996 1995 1996 1995 ---- ---- ---- ---- Operating activities: Net income $423,728 $1,136,575 $135,128 $334,201 Adjustments to reconcile net income to net cash provided by operations: Depreciation 712,396 1,159,568 184,516 310,969 Revenues from leveraged leases (12,860) (11,496) (3,215) (3,832) (Gain) loss on dispositions of assets (51,757) (396,058) 11,893 (20,601) Gain on sale of marketable securities - (124,879) - - Provision for losses 16,192 19,371 4,846 8,406 Changes in operating assets and liabilities: Accounts receivable 26,349 675,980 1,675 104,933 Accounts payable, General Partner (15,252) (1,385) 12,120 (14,137) Accounts payable, other 19,169 13,597 (1,632) (9,816) Accrued interest (17,777) (15,944) (6,030) (4,457) Customer deposit - - - - Unearned operating lease income (23,818) (15,352) (11,028) (20,117) --------------- ---------------- ---------------- ---------------- Net cash provided by operations 1,076,370 2,439,977 328,273 685,549 --------------- ---------------- ---------------- ---------------- Investing activities: Proceeds from sales of equipment 679,310 1,901,361 248,151 38,546 Proceeds from sales of marketable securities - 124,879 - - Reductions of net investment in direct financing leases 670,327 657,928 220,499 212,824 --------------- ---------------- ---------------- ---------------- Net cash provided by investing activities 1,349,637 2,684,168 468,650 251,370 --------------- ---------------- ---------------- ----------------
Page 5 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995 (Unaudited) (Continued)
Nine Months Ended Three Months Ended September 30, September 30, 1996 1995 1996 1995 ---- ---- ---- ---- Financing activities: Repayment of non-recourse debt (956,809) (975,937) (307,442) (306,255) Distributions to limited partners (1,603,898) (3,818,804) (472,804) (909,238) --------------- ---------------- ---------------- ---------------- Net cash used in financing activities (2,560,707) (4,794,741) (780,246) (1,215,493) --------------- ---------------- ---------------- ---------------- Net increase (decrease) in cash and cash equivalents (134,700) 329,404 16,677 (278,574) Cash and cash equivalents at beginning of period 874,714 924,041 723,337 1,532,019 --------------- ---------------- ---------------- ---------------- Cash and cash equivalents at end of period $740,014 $1,253,445 $740,014 $1,253,445 =============== ================ ================ ================ Supplemental disclosures of cash flow information: Cash paid for interest $190,085 $286,058 $55,118 $88,398 =============== ================ ================ ================ Supplemental schedule of non-cash transactions: Operating lease assets reclassified to direct financing lease assets $166,612 $166,612 Less accumulated depreciation (127,649) (127,649) ---------------- ---------------- $38,963 $38,963 ================ ================ Operating lease assets reclassified to equipment held for lease $146,252 $324,310 $146,252 $324,310 Less accumulated depreciation (118,612) (259,448) (118,612) (259,448) --------------- ---------------- ---------------- ---------------- $27,640 $64,862 $27,640 $64,862 =============== ================ ================ ================
See accompanying notes. Page 6 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 (Unaudited) 1. Interim financial statements: The unaudited interim financial statements reflect all adjustments which are, in the opinion of the general partners, necessary to a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. These unaudited interim financial statements should be read in conjunction with the most recent report on Form 10K. 2. Investment in leases: The Partnership's investment in leases consists of the following:
Depreciation Expense or Reclass- December 31, Amortization ifications & September 30, 1995 Additions of Leases Dispositions 1996 ---- --------- --------- -------------- ---- Net investment in operating leases $4,278,094 (640,319) ($559,940) $3,077,835 Net investment in direct financing leases 2,940,554 (670,327) (276,456) 1,993,771 Net investment in leveraged leases 74,635 12,860 - 87,495 Assets held for sale or lease 199,474 (70,680) 208,843 337,637 Initial direct costs 4,811 (1,397) - 3,414 Reserve for losses (37,588) ($16,192) - - (53,780) ---------------- --------------- ---------------- ---------------- ---------------- $7,459,980 ($16,192) ($1,369,863) ($627,553) $5,446,372 ================ =============== ================ ================ ================
The following schedule provides an analysis of the Partnership's investment in equipment on operating leases by major classifications as of December 31, 1995, dispositions during the three month periods ended March 31, June 30 and September 30, 1996 and as of September 30, 1996:
December 31, -------- Dispositions -------- September 30, Equipment type 1995 1st Quarter 2nd Quarter 3rd Quarter 1996 -------------- ---- ----------- ----------- ----------- ---- Aircraft $3,164,533 $3,164,533 Mining 2,104,643 2,104,643 Manufacturing 835,681 835,681 Materials handling 1,918,334 ($187,555) ($579,632) ($509,889) 641,258 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 - - (34,061) 61,216 Furniture, fixtures and equipment 22,967 - - - 22,967 ---------------- --------------- ---------------- ---------------- ---------------- 10,193,433 (698,596) (821,911) (543,950) 8,128,976 Less accumulated depreciation (5,915,339) 303,412 380,940 179,846 (5,051,141) ---------------- --------------- ---------------- ---------------- ---------------- $4,278,094 ($395,184) ($440,971) ($364,104) $3,077,835 ================ =============== ================ ================ ================
Page 7 ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 (Unaudited) 2. Investment in leases (continued): At September 30, 1996, the aggregate amounts of future minimum lease payments are as follows:
Direct Financing Operating Total --------- --------- ----- Three months ending December 31, 1996 $260,003 $304,081 $564,084 Year ending December 31, 1997 967,483 578,044 1,545,527 1998 115,204 272,090 387,294 1999 4,248 269,732 273,980 2000 - 202,299 202,299 --------------- ---------------- ---------------- $1,346,938 $1,626,246 $2,973,184 =============== ================ ================
3. 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 9.43% to 12.86%. Future minimum principal payments of debt as of September 30, 1996 are as follows:
Principal Interest Total --------- -------- ----- Three months ending December 31,1996 $315,272 $53,319 $368,591 Year ending December 31, 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 --------------- ---------------- ---------------- $2,009,137 $298,091 $2,307,228 =============== ================ ================
4. Commitments, management and report of fees: The terms of the Agreement of Limited Partnership 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 $171,722 in 1995 and $119,181 in 1996, as permitted in the Agreement of Limited Partnership . Page 8 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. As of September 30, 1996, the Partnership had borrowed approximately $21,700,000. The remaining unpaid balance on those borrowings was approximately $2,009,000. 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 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. At September 30, 1996, there were no such commitments. The Partnership made distributions of cash from 1996 first quarter operations in April 1996, from second quarter operations in July 1996 and from third quarter operations in October 1996. The amounts of each of the distributions were $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. Cash flows, nine months, 1996 vs. 1995 Lease revenues, the Partnership's primary source of cash, decreased by $800,437 compared to 1995. Lease revenues have declined as leases have matured and the underlying assets have been sold. Cash flows provided by investing activities decreased by $1,334,531 primarily as a result of decreased asset sales. There were no financing sources of cash in 1996. Debt principal payments have decreased due to scheduled debt payments. Page 9 Cash flows, three months, 1996 vs. 1995 For the third quarter, lease rents were the primary source of cash for the Partnership. Lease rents decreased by $242,246 compared to 1995. As noted above, the decrease is the result of assets coming off lease and being subsequently sold. Cash flows provided by investing activities increased by $217,280 due largely to increased asset sales. This was the result of a increased amount of equipment coming off lease in the third quarter of 1996 compared to 1995 and subsequent sales of that equipment. There were no financing sources of cash in 1996 or 1995. Debt principal payments decreased due to the causes noted above for the nine month period. Results of Operations The results of operations in future periods may vary significantly from those of the first nine 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 decreased by $711,903 for the nine month period and $209,329 for the three month period due to lease terminations and subsequent asset sales. Direct financing lease revenues decreased by $89,898 for the nine month period and decreased by $32,300 for the three month period compared to 1995. The decreases resulted from lease terminations and asset sales. In 1995, sales of assets resulted in gains of $396,058 (nine months) and $20,601 (three months). In 1996, sales of assets resulted in gains of $51,757 for the nine month period and losses of $11,893 for the three month period. Such gains and losses are not expected to be comparable from one period to another. Depreciation expense declined by $447,172 (nine months) and $126,453 (three months) as a result of asset sales since October 1, 1995. Interest expense continues to decline in both the three and nine month periods in relation to the declining balances of debt. There have been no new borrowings in the current year. Page 10 PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. Inapplicable. Item 2. CHANGES IN SECURITIES. Inapplicable. Item 3. DEFAULTS UPON SENIOR SECURITIES. Inapplicable. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Inapplicable. Item 5. OTHER INFORMATION. Inapplicable. Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Documents filed as a part of this report 1 Financial Statements. Included in Part I of this report: Balance sheets, September 30, 1996 and December 31, 1995 Income statements for the nine and three month periods ended September 30, 1996 and 1995. Statement of changes in partners' capital for the nine months ended September 30, 1996. Statements of cash flows for the nine and three month periods ended September 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. (b) Report on Form 8-K None Page 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: November 11, 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 L. 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 Page 12 EX-27 2 FDS --
5 9-MOS DEC-31-1996 SEP-30-1996 740014 0 58761 15552 0 0 0 0 6229595 0 0 0 0 0 3950705 6229595 0 1646755 0 0 1016750 16192 190085 423728 0 423728 0 0 0 423728 0 0
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