-----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, KnQtBmuAhzVwJyqMaRHz0YeZJq7Xavv0954H5ZIXwXjY3lzM8Wwdg1o/HLSPcbGK j2igBn/V+R/OguO75Kv2gg== 0000879812-98-000004.txt : 19981111 0000879812-98-000004.hdr.sgml : 19981111 ACCESSION NUMBER: 0000879812-98-000004 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 IV L P CENTRAL INDEX KEY: 0000879812 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943145429 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-21552 FILM NUMBER: 98743189 BUSINESS ADDRESS: STREET 1: 235 PINE ST STREET 2: 6TH FL CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4159898800 MAIL ADDRESS: STREET 1: 235 PINE ST STREET 2: 6TH FL CITY: SAN FRANCISCO STATE: CA ZIP: 94104 10QSB 1 REPORT FOR THE 3RD QUARTER 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 000-21552 ATEL Cash Distribution Fund IV, L.P. (Exact name of registrant as specified in its charter) California 94-3145429 (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 Part I FINANCIAL INFORMATION Item 1. Financial Statements. ATEL CASH DISTRIBUTION FUND IV, L.P. BALANCE SHEET SEPTEMBER 30, 1998 (Unaudited) ASSETS Cash and cash equivalents $756,088 Accounts receivable 264,327 Investment in leases 23,369,707 ----------------- $24,390,122 ================= LIABILITIES AND PARTNERS' CAPITAL Non-recourse debt $5,230,799 Accounts payable: General Partner 45,581 Other 1,443,921 Accrued interest 23,237 Unearned operating lease income 246,212 ----------------- Total liabilities 6,989,750 Partners' capital: General Partner 117,637 Limited Partners 17,282,735 ----------------- Total partners' capital 17,400,372 ----------------- $24,390,122 ================= See accompanying notes. ATEL CASH DISTRIBUTION FUND IV, L.P. 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 revenues: Operating $2,751,484 $5,420,170 $845,349 $1,508,791 Direct financing 821,370 1,014,640 255,571 447,483 Leveraged 140,614 186,039 46,872 62,013 Gain (loss) on sales of assets 153,476 1,091,776 105,133 (12,859) Other 26,486 724 22,393 (418) Interest income 71,424 22,310 11,737 5,352 ----------------- ----------------- ----------------- ----------------- 3,964,854 7,735,659 1,287,055 2,010,362 Expenses: Depreciation and amortization 1,762,137 4,216,157 558,025 954,870 Interest 352,431 822,510 100,691 140,931 Management fees 366,309 506,568 101,029 93,261 Administrative cost reimbursements 189,635 229,871 70,550 89,615 Professional fees 25,767 30,174 17,398 14,662 Provision for losses 13,145 57,231 - - Other 75,113 133,634 15,885 46,841 ----------------- ----------------- ----------------- ----------------- 2,784,537 5,996,145 863,578 1,340,180 ----------------- ----------------- ----------------- ----------------- Net income $1,180,317 $1,739,514 $423,477 $670,182 ================= ================= ================= ================= Net income: General Partner $11,803 $17,395 $4,235 $6,702 Limited Partners 1,168,514 1,722,119 419,242 663,480 ----------------- ----------------- ----------------- ----------------- $1,180,317 $1,739,514 $423,477 $670,182 ================= ================= ================= ================= Net income per Limited Partnership unit $0.16 $0.23 $0.06 $0.09 Weighted average number of units outstanding 7,487,350 7,487,350 7,487,350 7,487,350
See accompanying notes. ATEL CASH DISTRIBUTION FUND IV, L.P. STATEMENT OF CHANGES IN PARTNERS' CAPITAL NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998 (Unaudited)
Limited Partners General Units Amount Partner Total Balance December 31, 1997 7,487,350 $23,976,764 $105,834 $24,082,598 Distributions to limited partners (7,862,543) - (7,862,543) Net income 1,168,514 11,803 1,180,317 ----------------- ----------------- ----------------- ----------------- Balance September 30, 1998 7,487,350 $17,282,735 $117,637 $17,400,372 ================= ================= ================= =================
See accompanying notes. ATEL CASH DISTRIBUTION FUND IV, L.P. 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 $1,180,317 $1,739,514 $423,477 $670,182 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 1,762,137 4,216,157 558,025 954,870 Leveraged lease income (140,614) (186,039) (46,872) (62,013) (Gain) loss on sales of assets (153,476) (1,091,776) (105,133) 12,859 Provision for losses 13,145 57,231 - - Changes in operating assets and liabilities: Accounts receivable 155,611 162,815 31,454 3,218,421 Accounts payable, General Partner 721 17,187 166,211 28,583 Accounts payable, other 1,248,094 209,882 698,111 218,277 Accrued interest (8,679) (56,429) (8,045) (13,338) Deposits due to lessees - (97,772) - - Unearned operating lease income (244,111) (264,225) (189,246) (116,665) ----------------- ----------------- ----------------- ----------------- Net cash from operations 3,813,145 4,706,545 1,527,982 4,911,176 ----------------- ----------------- ----------------- ----------------- Investing activities: Purchase of equipment on operating leases - (42,227) - - Purchase of equipment on direct financing leases - (77,518) - - Reduction of net investment in direct financing leases 1,871,948 1,955,389 592,673 528,711 Reduction of net investment in leveraged leases - 177,571 - - Proceeds from sales of lease assets 652,642 14,449,750 156,092 80,898 ----------------- ----------------- ----------------- ----------------- Net cash (used in) provided by investing activities 2,524,590 16,462,965 748,765 609,609 ----------------- ----------------- ----------------- -----------------
ATEL CASH DISTRIBUTION FUND IV, L.P. STATEMENTS OF CASH FLOWS (CONTINUED) 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 ---- ---- ---- ---- Financing activities: Repayment of non-recourse debt (1,709,200) (12,672,865) (574,097) (2,822,170) Borrowings under lines of credit - 500,000 - 500,000 Repayments of lines of credit - (1,500,000) - (500,000) Distributions to limited partners (7,862,543) (7,860,545) (2,620,630) (2,619,388) Repurchase of units - - - ----------------- ----------------- ----------------- ----------------- Net cash used in financing activities (9,571,743) (21,533,410) (3,194,727) (5,441,558) ----------------- ----------------- ----------------- ----------------- Net increase (decrease) in cash and cash equivalents (3,234,008) (363,900) (917,980) 79,227 Cash and cash equivalents at beginning of period 3,990,096 696,421 1,674,068 253,294 ----------------- ----------------- ----------------- ----------------- Cash and cash equivalents at end of period $756,088 $332,521 $756,088 $332,521 ================= ================= ================= ================= Supplemental disclosures of cash flow information: Cash paid for interest $361,110 $878,939 $108,736 $154,269 ================= ================= ================= =================
See accompanying notes. ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 AND 1997 (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 $13,166,852 ($1,602,905) ($985,853) $10,578,094 Net investment in direct financing leases 8,803,127 (1,871,948) (501,188) 6,429,991 Net investment in leveraged leases 4,722,893 140,614 - 4,863,507 Equipment held for sale or lease 131,158 - 996,354 1,127,512 Residual value interests 582,057 - - 582,057 Initial direct costs, net of accumulated amortization of $934,748 in 1998 and $1,022,825 in 1997 597,256 (159,232) (8,479) 429,545 Reserve for losses (627,854) ($13,145) - - (640,999) ------------------- ----------------- ----------------- ----------------- ----------------- $27,375,489 ($13,145) ($3,493,471) ($499,166) $23,369,707 =================== ================= ================= ================= =================
ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 AND 1997 (Unaudited) 2. Investment in lease assets (continued): At September 30, 1998, equipment on operating leases consists of the following:
Balance Balance December 31, Acquisitions, Dispositions & Reclassifications September 30, 1997 1st Quarter 2nd Quarter 3rd Quarter 1998 ---- ----------- ----------- ----------- ---- Construction equipment $4,985,297 ($59,740) $4,925,557 Printing 4,393,249 - 4,393,249 Transportation 5,412,784 ($1,861,391) ($490,466) 3,060,927 Corporate aircraft 2,470,969 - - - 2,470,969 Materials handling 2,389,826 - - (122,268) 2,267,558 Manufacturing 1,587,670 - - - 1,587,670 Ground support equipment 1,127,988 - - - 1,127,988 Data processing 851,561 - (165,767) - 685,794 Other 2,054,576 (1,495,048) - - 559,528 Office equipment 216,080 - - - 216,080 ------------------- ----------------- ----------------- ----------------- ----------------- 25,490,000 (3,356,439) (656,233) (182,008) 21,295,320 Accumulated depreciation (12,323,148) 1,983,425 (19,148) (358,355) (10,717,226) ------------------- ----------------- ----------------- ----------------- ----------------- $13,166,852 ($1,373,014) ($675,381) ($540,363) $10,578,094 =================== ================= ================= ================= =================
All of the equipment on operating leases was acquired during 1992, 1993, 1994, 1995 and 1996. At September 30, 1998, the aggregate amounts of future minimum lease payments are as follows:
Direct Operating Financing Total Three months ending December 31, 1998 $782,916 $1,121,786 $1,904,702 Year ending December 31, 1998 2,577,038 2,163,464 4,740,502 2000 1,745,565 1,639,902 3,385,467 2001 1,192,923 1,128,109 2,321,032 2002 854,403 557,077 1,411,480 Thereafter 622,951 23,660 646,611 ----------------- ----------------- ----------------- $7,775,796 $6,633,998 $14,409,794 ================= ================= =================
ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 AND 1997 (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 7.04% to 13.3%. Future minimum principal payments of non-recourse debt as of September 30, 1998 are as follows:
Principal Interest Total Three months ending December 31, 1998 $596,086 $98,664 $694,750 Year ending December 31, 1998 2,045,296 287,128 2,332,424 2000 1,535,205 151,657 1,686,862 2001 697,282 56,062 753,344 2002 356,930 22,731 379,661 ----------------- ----------------- ----------------- $5,230,799 $616,242 $5,847,041 ================= ================= =================
5. Related party transactions: 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 and commissions, pursuant to the Agreement of Limited Partnership as follows: 1998 1997 ---- ---- Incentive and equipment management fees $366,309 $506,568 Administrative cost reimbursements 189,635 229,871 ----------------- ----------------- $555,944 $736,439 ================= ================= ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 AND 1997 (Unaudited) 6. Partner's capital: The Fund is authorized to issue up to 7,500,000 Units of Limited Partnership interest in addition to the Initial Limited Partners. The Fund's Net Profits, Net Losses and Tax Credits are to be allocated 99% to the Limited Partners and 1% to the General Partner. As more fully described in the Partnership Agreement, available Cash from Operations and Cash from Sales or Refinancing shall be distributed as follows: First, 5% of Distributions of Cash from Operations to the General Partner as Incentive Management Fees. Second, the balance to the Limited Partners until the Limited Partners have received aggregate Distributions, as defined, 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, as defined. Third,the General Partner will receive as Incentive Management Fees, the following: (A) 10% of remaining Cash from Operations, as defined, (B) 15% of remaining Cash from Sales or Refinancing, as defined. 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 $90,000,000 revolving credit agreement with a group of financial institutions which expires on November 28, 1999. The agreement includes an acquisition facility to be used by the Partnership and Affiliates 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. At September 30, 1998, the Partnership had no 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 September 30, 1998. At September 30, 1998, $32,612,740 was available under this agreement. 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 during 1998 was lease revenues. 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 Partner envisions no such requirements for operating purposes. As of September 30, 1998, the Partnership had borrowed approximately $38,342,000, with a remaining unpaid balance of approximately $5,231,000. Borrowings are to be non-recourse to the Partnership, that is, the only recourse of the lender will be to the equipment or corresponding lease acquired or secured with the loan proceeds. The General Partner expects that aggregate borrowings in the future will not exceed 40% of aggregate equipment cost. In any event, the Agreement of Limited Partnership limits such borrowings to 40% of the total cost of equipment, in aggregate. 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. The line of credit expires on November 28, 1998. No commitments of capital have been or are expected to be made other than for the acquisition of additional equipment. As of September 30, 1998, there were no such commitments. 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. 1998 vs. 1997: Nine months: During the first nine months of 1998, the primary source of operating cash flows was operating lease revenues. Total lease revenues decreased by $2,907,381 compared to 1997. In 1998, the most important source of cash from investing activities was rents from direct financing leases. Such rents decreased by $83,441 compare to 1997. In 1997, the most significant source cash flows from investing activities was the proceeds from the sales of assets. Proceeds from asset sales are not comparable to prior periods nor are they expected to be comparable to future periods. In 1997, the only source of cash from financing activities was borrowings under the line of credit. There were no sources of cash from financing activities in 1998. Cash used to repay non-recourse debt has decreased due to scheduled debt reductions. Distributions to Limited Partners have not changed significantly. Three months: The primary source of cash from operations for the third quarter was lease rents. Lease rents have decreased from the prior year due to asset sales during the preceding twelve months. The investing sources of cash in 1998 and 1997 were the same as noted above for the nine month period. In 1997, the only source of cash from financing activities was borrowings under the line of credit. There were no sources of cash from financing activities in 1998. Results of Operations Operations in 1998 resulted in net income of $1,180,317 for the nine month period and $423,477 for the three month period. In 1997, operations resulted in net income of $1,739,514 for the nine month period and $670,182 for the three month period. 1998 vs. 1997: Operating lease revenues and direct financing lease revenues have decreased due to sales of leased assets during the last twelve months. Revenues from leveraged leases have not changed significantly compared to 1997. Depreciation expense is directly related to the amounts of operating lease assets and has decreased from 1997 to 1998 as a result of sales of operating lease assets over the last year. Management fees are related to the amounts of lease revenues and distributions to Limited Partners. As assets have been sold, lease revenues have decreased and as a result, management fees have also decreased. As a result of reductions in the amounts of outstanding non-recourse debt, interest expense has decreased compared to 1997. Other Year 2000 Issues The year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any computer programs that have time sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculation causing disruptions of operations, including, among other things, a temporary inability to process transactions or engage in similar normal business activities. The Partnership uses primarily third party software and is communicating with key vendors to ensure that the Partnership's systems are year 2000 compliant. Based on these discussions, the Partnership does not expect that the costs related to the year 2000 issue will be significant. Ultimately, the potential impact of the year 2000 issue will depend on the way in which the year 2000 issue is addressed by businesses and other entities whose financial condition or operational capability is important to the Partnership. 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, 1998 and December 31, 1997. Income statements for the nine and three month periods ended September 30, 1998 and 1997. Statement of changes in partners' equity for the nine month period 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 IV, 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/ 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 756,088 0 264,327 0 0 0 0 0 24,390,122 0 0 0 0 0 17,400,372 24,390,122 0 3,964,854 0 0 2,418,961 13,145 352,431 1,180,317 0 1,180,317 0 0 0 1,180,317 0 0
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