-----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, T8LlHEHHOLR0Ub9FWkAItAFDwc2jDlAhrotcrIP757oJ6ur80NIVTnFM6Gdv596d ikXpXkepD/D3L+zg88ZsfQ== 0000823065-98-000004.txt : 19981111 0000823065-98-000004.hdr.sgml : 19981111 ACCESSION NUMBER: 0000823065-98-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981110 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: 10QSB SEC ACT: SEC FILE NUMBER: 000-17631 FILM NUMBER: 98742577 BUSINESS ADDRESS: STREET 1: 235 PINE ST, 6TH FLOOR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4159898800 10QSB 1 QUARTER ENDED 9/30/98 Form 10-QSB 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, 1998 |_| 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 Part I FINANCIAL INFORMATION Item 1. Financial Statements. ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS SEPTEMBER 30, 1998 (Unaudited) ASSETS Cash and cash equivalents $830,667 Accounts receivable 707,846 Investment in equipment and leases 1,557,988 -------------- $3,096,501 ============== LIABILITIES AND PARTNERS' CAPITAL Non-recourse debt $481,073 Accrued interest 4,510 Accounts payable: General Partners 17,128 Other 91,880 Unearned lease income 73,559 -------------- Total liabilities 668,150 Partners' capital: General Partners 93,838 Limited Partners 2,334,513 -------------- Total partners' capital 2,428,351 -------------- $3,096,501 ============== See accompanying notes. ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) INCOME STATEMENTS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997 (Unaudited)
Nine Months Ended Three Months Ended September 30, September 30, Revenues: 1998 1997 1998 1997 ---- ---- ---- ---- Lease income: Operating $422,324 $695,748 $139,103 $178,166 Direct financing 180,531 120,782 56,531 33,779 Leveraged 30,550 14,161 - 2,023 Gain on disposition of assets 680,418 150,984 423,532 867 Interest income 18,322 20,681 5,746 7,716 Other 8,763 64,298 7,031 546 --------------- ---------------- ---------------- ---------------- 1,340,908 1,066,654 631,943 223,097 --------------- ---------------- ---------------- ---------------- Expenses: Depreciation 191,239 291,868 50,946 74,075 Administrative cost reimbursements 86,397 99,420 30,201 34,552 Management fees 68,551 63,963 30,797 14,048 Interest expense 46,479 96,282 14,029 24,964 Other expense 24,288 28,987 5,948 2,916 Taxes 18,806 20,641 - - Professional fees 18,020 21,052 8,975 12,602 Provision for losses 4,995 4,162 - - --------------- ---------------- ---------------- ---------------- 458,775 626,375 140,896 163,157 --------------- ---------------- ---------------- ---------------- Net income $882,133 $440,279 $491,047 $59,940 =============== ================ ================ ================ Net income: General Partners $8,821 $4,403 $4,910 $599 Limited Partners 873,312 435,876 486,137 59,341 --------------- ---------------- ---------------- ---------------- $882,133 $440,279 $491,047 $59,940 =============== ================ ================ ================ Net income per Limited Partnership unit $12.48 $6.23 $6.95 $0.85 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, 1998
Limited Partners General Units Amount Partners Total Balance December 31, 1997 69,979 $2,825,061 $85,017 $2,910,078 Net income 873,312 8,821 882,133 Distributions to limited partners (1,363,860) - (1,363,860) --------------- ---------------- ---------------- ---------------- Balance September 30, 1998 69,979 $2,334,513 $93,838 $2,428,351 =============== ================ ================ ================
See accompanying notes. ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997 (Unaudited)
Nine Months Ended Three Months Ended September 30, September 30, 1998 1997 1998 1997 ---- ---- ---- ---- Operating activities: Net income $882,133 $440,279 $491,047 $59,940 Adjustments to reconcile net income to net cash provided by operations: Depreciation 191,239 291,868 50,946 74,075 Revenues from leveraged leases (30,550) (14,161) - (2,023) Gain on dispositions of assets (680,418) (150,984) (423,532) (867) Provision for losses 4,995 4,162 - - Changes in operating assets and liabilities: Accounts receivable (672,135) (89,363) (673,404) (26,286) Accounts payable, General Partner 6,236 (1,165) 15,154 18,576 Accounts payable, other 17,594 3,714 27,909 (1,583) Accrued interest (2,107) (17,485) (496) (5,663) Customer deposit - (60,000) - - Unearned operating lease income 63,847 8,989 (10,472) 14,807 --------------- ---------------- ---------------- ---------------- Net cash (used in) provided by operations (219,166) 415,854 (522,848) 130,976 --------------- ---------------- ---------------- ---------------- Investing activities: Proceeds from sales of equipment 1,600,029 768,223 1,164,589 204,259 Reductions of net investment in direct financing leases 97,146 639,725 20,661 216,916 --------------- ---------------- ---------------- ---------------- Net cash provided by investing activities 1,697,175 1,407,948 1,185,250 421,175 --------------- ---------------- ---------------- ----------------
ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997 (Unaudited) (Continued)
Nine Months Ended Three Months Ended September 30, September 30, ------------- ------------- 1998 1997 1998 1997 ---- ---- ---- ---- Financing activities: Repayment of non-recourse debt (175,639) (825,532) (52,908) (240,258) Distributions to limited partners (1,363,860) (1,018,348) (545,545) (272,772) --------------- ---------------- ---------------- ---------------- Net cash used in financing activities (1,539,499) (1,843,880) (598,453) (513,030) --------------- ---------------- ---------------- ---------------- Net (decrease) increase in cash and cash equivalents (61,490) (20,078) 63,949 39,121 Cash and cash equivalents at beginning of period 892,157 989,337 766,718 930,138 --------------- ---------------- ---------------- ---------------- Cash and cash equivalents at end of period $830,667 $969,259 $830,667 $969,259 =============== ================ ================ ================ Supplemental disclosures of cash flow information: Cash paid for interest $46,479 $96,282 $14,029 $24,964 =============== ================ ================ ================ Supplemental schedule of non-cash transactions: Operating lease assets reclassified to equipment held for lease $1,131,256 $85,102 Less accumulated depreciation (865,387) (62,762) ---------------- ---------------- $265,869 $22,340 ================ ================ Assets held for lease reclassified as operating lease assets $1,045,766 $1,045,766 Less accumulated depreciation (802,625) (802,625) ---------------- ---------------- $243,141 $243,141 ================ ================
See accompanying notes. ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 (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, 1997 Additions of Leases Dispositions 1998 ---- --------- --------- -------------- ---- Net investment in operating leases $1,749,575 ($191,239) ($413,999) $1,144,337 Net investment in direct financing leases 944,264 (97,146) (369,688) 477,430 Net investment in leveraged leases 118,208 30,550 (148,758) - Assets held for sale 388 - (388) - Reserve for losses (72,006) ($4,995) - 13,222 (63,779) ---------------- --------------- ---------------- ---------------- ---------------- $2,740,429 ($4,995) ($257,835) ($919,611) $1,557,988 ================ =============== ================ ================ ================
The following schedule provides an analysis of the Partnership's investment in equipment on operating leases by major classifications as of December 31, 1997, dispositions during the three month periods ended March 31, June 30 and September 30, 1998 and as of September 30, 1998:
December 31, -------- Reclassifications & Dispositions -------- September 30, Equipment type 1997 1st Quarter 2nd Quarter 3rd Quarter 1998 -------------- ---- ----------- ----------- ----------- ---- Aircraft $2,354,533 $2,354,533 Other 183,599 183,599 Materials handling 432,139 ($54,592) ($350,720) 26,827 Mining 1,546,341 (186,232) ($21,866) (1,338,243) - Communications 445,877 - - (445,877) - ---------------- --------------- ---------------- ---------------- ---------------- 4,962,489 (240,824) (21,866) (2,134,840) 2,564,959 Less accumulated depreciation (3,212,914) 142,180 (52,198) 1,702,310 (1,420,622) ---------------- --------------- ---------------- ---------------- ---------------- $1,749,575 ($98,644) ($74,064) ($432,530) $1,144,337 ================ =============== ================ ================ ================
ATEL CASH DISTRIBUTION FUND II (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 (Unaudited) 2. Investment in leases (continued): At September 30, 1998, the aggregate amounts of future minimum lease payments are as follows:
Direct Financing Operating Total Three months ending December 31, 1998 $58,405 $69,766 $128,171 Year ending December 31, 1999 224,000 269,732 493,732 2000 224,000 202,299 426,299 2001 224,000 - 224,000 2002 224,000 - 224,000 --------------- ---------------- ---------------- $954,405 $541,797 $1,496,202 =============== ================ ================
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, 1998 are as follows:
Principal Interest Total Three months ending December 31, 1998 $54,410 $13,023 $67,433 Year ending December 31, 1999 233,530 36,202 269,732 2000 193,133 9,166 202,299 --------------- ---------------- ---------------- $481,073 $58,391 $539,464 =============== ================ ================
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 for equipment acquisition, management and resale and for management of the Partnership. The General Partners and/or Affiliates earned the following fees, commissions and reimbursements, pursuant to the Limited Partnership Agreement as follows: 1998 1997 ---- ---- Reimbursement of administrative costs $86,397 $99,420 Incentive and equipment management fees 68,551 63,963 ---------------- ---------------- $154,948 $163,383 ================ ================ Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital Resources and Liquidity The Partnership's primary source of liquidity is cash received from sales of lease assets and 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. As of September 30, 1998, the Partnership had borrowed approximately $21,700,000. The remaining unpaid balance on those borrowings was approximately $481,000. 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. The Partnership made distributions of cash from 1998 first quarter operations in April 1998, from second quarter operations in July 1998 and from third quarter operations in October 1998. The amounts of each of the distributions were $7.50 per Unit. These distributions represent an annualized distribution rate of 6.0%. 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. As of September 30, 1998, the Partnership sold a significant portion of its portfolio of leases and lease assets to an unrelated third party. The gain on the sale of these assets is included in the operations of the Partnership for the three and nine month periods ended September 30, 1998. In October 1998, additional sales of lease assets were completed. The General Partner anticipates that all of the Partnership's lease assets will have been sold by December 31, 1998 and that the Partnership will have ceased operations by that date. Cash flows, nine months, 1998 vs. 1997 Proceeds from the sales of lease assets was the primary source of cash in 1998. Lease revenues, the Partnership's second most important source of cash, decreased by $197,286 compared to 1997. Lease revenues have declined as leases have matured and the underlying assets have been sold. Cash flows provided by investing activities increased by $289,227 primarily as a result of increased asset sales. The increase in sales proceeds was partially offset by a decrease in cash flows from direct financing leases. There were no financing sources of cash in 1998 or 1997. Debt principal payments have decreased due to scheduled debt payments. Cash flows, three months, 1998 vs. 1997 For the third quarter, lease rents were the primary source of cash from operations for the Partnership. Lease rents decreased by $18,334 compared to 1997. 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 $764,065 due largely to increased asset sales. This was partially offset by decreased rents from direct financing leases ($196,255). There were no financing sources of cash in 1998 or 1997. Debt principal payments decreased due to the causes noted above for the nine month period. In both the nine and three month periods, distributions increased as the per Unit distribution rate was increased effective with the distribution in April 1998. Results of Operations The results of operations in future periods are expected to vary significantly from those of the first nine months of 1998 as the Partnership's lease portfolio of capital equipment matures. As noted above, the General Partners anticipate that all of the Partnership's assets will have been sold prior to the end of the current year and that operations will have been concluded by that date. 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. 1998 vs. 1997 Operating lease revenues decreased by $273,424 for the nine month period and $39,063 for the three month period due to lease terminations and subsequent asset sales. Direct financing lease revenues increased by $59,749 for the nine month period and increased by $22,752 for the three month period compared to 1997. The increases resulted from lease renewals which are classified as direct finance leases. The assets had previously been leased under operating lease agreements. In 1997, sales of assets resulted in gains of $150,984 (nine months) and $867 (three months). In 1998, sales of assets resulted in gains of $680,418 for the nine month period and $423,532 for the three month period. Such gains are not expected to be comparable from one period to another. Depreciation expense declined by $100,629 (nine months) and $23,129 (three months) as a result of asset sales. 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. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. Inapplicable. Item 2. CHANGES IN SECURITIES. Inapplicable. Item 3. DEFAULTS UPON SENIOR SECURITIES. Inapplicable. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Inapplicable. Item 5. OTHER INFORMATION. Inapplicable. Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Documents filed as a part of this report 1 Financial Statements. Included in Part I of this report: Balance sheet, September 30, 1998. Income statements for the nine and three month periods ended September 30, 1998 and 1997. Statement of changes in partners' capital for the nine months ended September 30, 1998. Statements of cash flows for the nine and three month periods ended September 30, 1998 and 1997. 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 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 10, 1998 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 EX-27 2 FDS --
5 9-mos Dec-31-1998 Sep-30-1998 830,667 0 707,846 0 0 0 0 0 3,096,501 0 0 0 0 0 2,428,351 3,096,501 0 1,340,908 0 0 407,301 4,995 46,479 882,133 0 882,133 0 0 0 882,133 0 0
-----END PRIVACY-ENHANCED MESSAGE-----