10QSB 1 0001.txt REPORT FOR THE THIRD QUARTER OF 2000 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, 2000 |_| 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 1 Part I FINANCIAL INFORMATION Item 1. Financial Statements. 2 ATEL CASH DISTRIBUTION FUND IV, L.P. BALANCE SHEET SEPTEMBER 30, 2000 (Unaudited) ASSETS Cash and cash equivalents $1,899,111 Accounts receivable 332,965 Investment in leases 5,831,413 ----------------- $8,063,489 ================= LIABILITIES AND PARTNERS' CAPITAL Non-recourse debt $1,413,641 Accounts payable: General Partner 29,789 Other 29,088 Accrued interest 6,969 Unearned operating lease income 89,213 ----------------- Total liabilities 1,568,700 Partners' capital: General Partner 218,849 Limited Partners 6,275,940 ----------------- Total partners' capital 6,494,789 ----------------- $8,063,489 ================= See accompanying notes. 3 ATEL CASH DISTRIBUTION FUND IV, L.P. INCOME STATEMENTS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 (Unaudited)
Nine Months Ended Three Months Ended September 30, September 30, ------------- ------------- Revenues: 2000 1999 2000 1999 ---- ---- ---- ---- Lease revenues: Operating $1,634,319 $ 2,156,039 $ 408,028 $ 650,091 Direct financing 524,587 515,961 165,707 159,785 Leveraged - 80,864 - - Gain (loss) on sales of assets 1,217,674 5,423,105 (5,480) 285,466 Interest income 182,983 138,558 72,863 90,720 Other 38,487 13,303 709 1,291 ----------------- ------------------ ---------------- ----------------- 3,598,050 8,327,830 641,827 1,187,353 Expenses: Depreciation and amortization 837,320 1,328,425 276,637 362,705 Management fees 236,186 525,619 85,954 172,466 Administrative cost reimbursements 178,446 168,992 70,959 68,985 Interest 132,397 238,336 32,501 64,580 Railcar maintenance 111,237 - - - Other 80,631 118,289 24,463 (23,695) Professional fees 39,491 28,834 3,674 7,875 ----------------- ------------------ ---------------- ----------------- 1,615,708 2,408,495 494,188 652,916 ----------------- ------------------ ---------------- ----------------- Net income $1,982,342 $ 5,919,335 $ 147,639 $ 534,437 ================= ================== ================ ================= Net income: General Partner $ 19,823 $ 59,193 $ 1,476 $ 5,344 Limited Partners 1,962,519 5,860,142 146,163 529,093 ----------------- ------------------ ---------------- ----------------- $1,982,342 $ 5,919,335 $ 147,639 $ 534,437 ================= ================== ================ ================= Net income per Limited Partnership unit $0.26 $0.78 $0.02 $0.07 Weighted average number of units outstanding 7,487,350 7,487,350 7,487,350 7,487,350
STATEMENT OF CHANGES IN PARTNERS' CAPITAL NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 (Unaudited)
Limited Partners General Units Amount Partner Total Balance December 31, 1999 7,487,350 $ 12,234,093 $ 199,026 $ 12,433,119 Distributions to limited partners (7,920,672) - (7,920,672) Net income 1,962,519 19,823 1,982,342 ----------------- ------------------ ---------------- ----------------- Balance September 30, 2000 7,487,350 $ 6,275,940 $ 218,849 $6,494,789 ================= ================== ================ =================
See accompanying notes. 4 ATEL CASH DISTRIBUTION FUND IV, L.P. STATEMENTS OF CASH FLOWS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 (Unaudited)
Nine Months Ended Three Months Ended September 30, September 30, ------------- ------------- 2000 1999 2000 1999 ---- ---- ---- ---- Operating activities: Net income $1,982,342 $ 1,180,317 $ 147,639 $ 534,437 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 837,320 1,328,425 276,637 362,705 Leveraged lease income - (80,864) - - (Gain) loss on sales of assets (1,217,674) (5,423,105) 5,480 (285,466) Changes in operating assets and liabilities: Accounts receivable 1,266,447 223,550 53,982 120,741 Accounts payable, General Partner (36,787) (401,741) (10,338) 10,528 Accounts payable, other (233,672) (51,838) 6,268 (34,111) Accrued interest (4,769) (6,743) (1,620) (2,065) Unearned operating lease income (60,570) 36,694 (12,778) 141,753 ----------------- ------------------ ---------------- ----------------- Net cash from operations 2,532,637 1,543,713 465,270 848,522 ----------------- ------------------ ---------------- ----------------- Investing activities: Proceeds from sales of lease assets 1,916,239 14,320,842 8,176 2,922,992 Reduction of net investment in direct financing leases 682,124 1,100,207 230,255 352,813 ----------------- ------------------ ---------------- ----------------- Net cash provided by investing activities 2,598,363 15,421,049 238,431 3,275,805 ----------------- ------------------ ---------------- ----------------- Financing activities: Distributions to limited partners (7,920,672) (7,863,357) (2,679,030) (2,620,945) Repayment of non-recourse debt (1,175,776) (1,613,626) (399,613) (508,732) ----------------- ------------------ ---------------- ----------------- Net cash used in financing activities (9,096,448) (9,476,983) (3,078,643) (3,129,677) ----------------- ------------------ ---------------- ----------------- Net increase (decrease) in cash and cash equivalents (3,965,448) 7,487,779 (2,374,942) 994,650 Cash and cash equivalents at beginning of period 5,864,559 371,891 4,274,053 6,865,020 ----------------- ------------------ ---------------- ----------------- Cash and cash equivalents at end of period $1,899,111 $ 7,859,670 $1,899,111 $7,859,670 ================= ================== ================ ================= Supplemental disclosures of cash flow information: Cash paid for interest $ 137,166 $ 245,079 $ 34,121 $ 66,645 ================= ================== ================ =================
See accompanying notes. 5 ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (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, 1999 of Leases Dispositions 2000 ---- --------- -------------- ---- Net investment in operating leases $4,402,707 $ (806,010) $ 413,456 $4,010,153 Net investment in direct financing leases 3,412,936 (682,124) (298,277) 2,432,535 Equipment held for sale or lease 242,793 - (231,687) 11,106 Residual value interests 582,057 - (582,057) - Initial direct costs, net of accumulated amortization of $303,846 in 2000 and $514,804 in 1999 61,011 (31,310) - 29,701 Reserve for losses (652,082) - - (652,082) ----------------- ------------------ ---------------- ----------------- $8,049,422 $(1,519,444) $ (698,565) $5,831,413 ================= ================== ================ =================
At September 30, 2000, equipment on operating leases consists of the following:
Balance Balance December 31, Acquisitions, Dispositions & Reclassifications September 30, ---------------------------------------------- 1999 1st Quarter 2nd Quarter 3rd Quarter 2000 ---- ----------- ----------- ----------- ---- Printing $ 3,478,749 $3,478,749 Transportation 2,763,271 $ 513,879 $ (18,130) 3,259,020 Construction equipment 2,058,733 (263,984) $ (38,554) - 1,756,195 Ground support equipment 1,127,988 - - - 1,127,988 Manufacturing 457,670 - - - 457,670 Materials handling 291,920 - - - 291,920 Other 272,267 (188,627) - - 83,640 ------------------- ----------------- ------------------ ---------------- ----------------- 10,450,598 61,268 (38,554) (18,130) 10,455,182 Accumulated depreciation (6,047,891) 88,352 (228,943) (256,547) (6,445,029) ------------------- ----------------- ------------------ ---------------- ----------------- $ 4,402,707 $ 149,620 $ (267,497) $ (274,677) $4,010,153 =================== ================= ================== ================ =================
All of the equipment on operating leases was acquired during 1992, 1993, 1994, 1995 and 1996. 6 ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (Unaudited) 2. Investment in lease assets (continued): At September 30, 2000, the aggregate amounts of future minimum lease payments are as follows:
Direct Operating Financing Total Three months ending December 31, 2000 $ 377,444 $ 395,217 $ 772,661 Year ending December 31, 2001 1,162,969 1,086,349 2,249,318 2002 843,921 648,317 1,492,238 2003 609,022 561,360 1,170,382 2004 - 424,000 424,000 ----------------- ------------------ ---------------- $2,993,356 $ 3,115,243 $6,108,599 ================= ================== ================
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 6.69% to 8.95%. Future minimum principal payments of non-recourse debt as of September 30, 2000 are as follows:
Principal Interest Total Three months ending December 31, 2000 $ 359,429 $ 26,229 $ 385,658 Year ending December 31, 2001 697,282 56,062 753,344 2002 250,450 19,870 270,320 2003 106,480 2,861 109,341 ----------------- ------------------ ---------------- $1,413,641 $ 105,022 $1,518,663 ================= ================== ================
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: 2000 1999 ---- ---- Incentive and equipment management fees $ 236,186 $ 525,619 Administrative cost reimbursements 178,446 168,992 ---------------- ----------------- $ 414,632 $ 694,611 ================ ================= 7 ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (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. 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital Resources and Liquidity The Partnership's primary sources of liquidity during the first nine months of 2000 were operating lease rents and proceeds from the sales of lease assets. 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, 2000, the Partnership had borrowed approximately $38,342,000, with a remaining unpaid balance of approximately $1,414,000. 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 does not expect that there will be additional borrowings in the future. No commitments of capital have been or are expected to be made other than for the acquisition of additional equipment. As of September 30, 2000, 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. 2000 vs. 1999: Nine months: During the first nine months of 2000 and 1999, the primary source of operating cash flows was operating lease revenues. Total lease revenues decreased by $521,720 in 2000 compared to 1999. In 2000 and 1999, 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. Direct financing lease rents decreased by $418,086 compared to 1999. There were no sources of cash from financing activities in 2000 or in 1999. Cash used to repay non-recourse debt has decreased due to scheduled debt reductions. Distributions to Limited Partners have not changed significantly. 9 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 primary source of cash flows from financing activities in 2000 was rents from direct financing leases. There were no sources of cash from financing activities in 2000 or in 1999. Repayments of debt decreased for the same reasons as noted above for the nine month period. Distributions to the limited partners were almost unchanged. Results of Operations Operations in 2000 resulted in net income of $1,982,342 for the nine month period and $147,639 for the three month period. In 1999, operations resulted in net income of $5,919,335 for the nine month period and $534,437 for the three month period. 2000 vs. 1999: Operating lease revenues have decreased due to sales and reclassifications of leased assets during the last twelve months. Revenues from leveraged leases decreased as a result of the sale of the remaining assets on such leveraged leases in the second quarter of 1999. Gains on sales of lease assets decreased significantly and resulted largely due to the 1999 sale of leveraged lease assets that had been on lease to Liquid Carbonics. There were no comparable sales in 2000. Depreciation expense is directly related to the amounts of operating lease assets and has decreased from 1999 to 2000 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, equipment management fees have also decreased. Incentive management fees (which are related to the distributions of operating cash flows to the limited partners) have also decreased as less of the distributions were of cash from operations than in 1999. As a result of reductions in the outstanding non-recourse debt, interest expense has decreased compared to 1999. 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, 2000 and December 31, 1999. Income statements for the nine and three month periods ended September 30, 2000 and 1999. Statement of changes in partners' equity for the nine month period ended September 30, 2000. Statements of cash flows for the nine and three month periods ended September 30, 2000 and 1999. 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 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 9, 2000 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/ PARITOSH K. CHOKSI -------------------------------------- Paritosh K. Choksi Principal financial officer of registrant By: /s/ DONALD E. CARPENTER -------------------------------------- Donald E. Carpenter Principal accounting officer of registrant 12