10QSB 1 fund410q3q2001.txt REPORT FOR THE QUARTER ENDED 9/30/2001 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, 2001 |_| 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, 2001 (Unaudited) ASSETS Cash and cash equivalents $ 900,623 Accounts receivable, net of allowance for doubtful accounts of $67,211 190,315 Investment in leases 2,880,578 ------------ $3,971,516 ============ LIABILITIES AND PARTNERS' CAPITAL Non-recourse debt $ 347,432 Accounts payable 41,149 Accrued interest 2,507 Unearned operating lease income 43,947 ------------ Total liabilities 435,035 Partners' capital: General Partner 228,780 Limited Partners 3,307,701 ------------ Total partners' capital 3,536,481 ------------ $3,971,516 ============ See accompanying notes. 3 ATEL CASH DISTRIBUTION FUND IV, L.P. INCOME STATEMENTS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2001 AND 2000 (Unaudited)
Nine Months Ended Three Months Ended September 30, September 30, ------------- ------------- Revenues: 2001 2000 2001 2000 ---- ---- ---- ---- Lease revenues: Operating $ 491,177 $ 1,634,319 $ 176,164 $ 408,028 Direct financing 507,781 524,587 219,166 165,707 Gain (loss) on sales of assets 19,149 1,217,674 21,065 (5,480) Interest income 19,718 182,983 6,119 72,863 Other 1,193 38,487 11 709 ----------------- ----------------- ----------------- ----------------- 1,039,018 3,598,050 422,525 641,827 Expenses: Cost reimbursements to General Partner 445,163 178,446 193,879 70,959 Depreciation and amortization 360,895 837,320 111,517 276,637 Other 82,065 80,631 20,797 24,463 Interest 31,749 132,397 7,898 32,501 Professional fees 26,197 39,491 122 3,674 Management fees - 236,186 - 85,954 Railcar maintenance - 111,237 - - ----------------- ----------------- ----------------- ----------------- 946,069 1,615,708 334,213 494,188 ----------------- ----------------- ----------------- ----------------- Net income $ 92,949 $ 1,982,342 $ 88,312 $ 147,639 ================= ================= ================= ================= Net income: General Partner $ 929 $ 19,823 $ 883 $ 1,476 Limited Partners 92,020 1,962,519 87,429 146,163 ----------------- ----------------- ----------------- ----------------- $ 92,949 $ 1,982,342 $ 88,312 $ 147,639 ================= ================= ================= ================= Net income per Limited Partnership unit $0.01 $0.26 $0.01 $0.02 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, 2001 (Unaudited)
Limited Partners General Units Amount Partner Total Balance December 31, 2000 7,487,350 $ 4,546,863 $ 227,851 $4,774,714 Distributions to limited partners (1,331,182) - (1,331,182) Net income 92,020 929 92,949 ----------------- ----------------- ----------------- ----------------- Balance September 30, 2001 7,487,350 $ 3,307,701 $ 228,780 $3,536,481 ================= ================= ================= =================
See accompanying notes. 4 ATEL CASH DISTRIBUTION FUND IV, L.P. STATEMENTS OF CASH FLOWS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2001 AND 2000 (Unaudited)
Nine Months Ended Three Months Ended September 30, September 30, ------------- ------------- 2001 2000 2001 2000 ---- ---- ---- ---- Operating activities: Net income $ 92,949 $ 1,982,342 $ 88,312 $ 147,639 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 360,895 837,320 111,517 276,637 (Gain) loss on sales of assets (19,149) (1,217,674) (21,065) 5,480 Changes in operating assets and liabilities: Accounts receivable 2,033,678 1,266,447 48,055 53,982 Bank overdrafts (230,243) - Accounts payable, General Partner (32,722) (36,787) - (10,338) Accounts payable, other (51,970) (233,672) (79,396) 6,268 Accrued interest (2,949) (4,769) (397) (1,620) Unearned operating lease income (10,298) (60,570) (37,915) (12,778) ----------------- ----------------- ----------------- ----------------- Net cash from operations 2,140,191 2,532,637 109,111 465,270 ----------------- ----------------- ----------------- ----------------- Investing activities: Proceeds from sales of lease assets 166,285 1,916,239 (14,505) 8,176 Reduction of net investment in direct financing leases 331,859 682,124 90,637 230,255 ----------------- ----------------- ----------------- ----------------- Net cash provided by investing activities 498,144 2,598,363 76,132 238,431 ----------------- ----------------- ----------------- ----------------- Financing activities: Distributions to limited partners (1,331,182) (7,920,672) - (2,679,030) Repayment of non-recourse debt (461,975) (1,175,776) (54,826) (399,613) ----------------- ----------------- ----------------- ----------------- Net cash used in financing activities (1,793,157) (9,096,448) (54,826) (3,078,643) ----------------- ----------------- ----------------- ----------------- Net increase (decrease) in cash and cash equivalents 845,178 (3,965,448) 130,417 (2,374,942) Cash and cash equivalents at beginning of period 55,445 5,864,559 770,206 4,274,053 ----------------- ----------------- ----------------- ----------------- Cash and cash equivalents at end of period $ 900,623 $ 1,899,111 $ 900,623 $1,899,111 ================= ================= ================= ================= Supplemental disclosures of cash flow information: Cash paid for interest $ 34,698 $ 137,166 $ 8,295 $ 34,121 ================= ================= ================= =================
See accompanying notes. 5 ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2001 AND 2000 (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, 2000 of Leases Dispositions 2001 ---- --------- - ------------- ---- Net investment in operating leases $2,589,544 $ (351,612) $ (129,549) $2,108,383 Net investment in direct financing leases 1,674,127 (331,859) (6,479) 1,335,789 Equipment held for sale or lease 11,108 - (11,108) - Initial direct costs, net of accumulated amortization of $108,739 in 2001 and $99,456 in 2000 30,560 (9,283) - 21,277 Reserve for losses (584,871) - - (584,871) ----------------- ----------------- ----------------- ----------------- $3,720,468 $ (692,754) $ (147,136) $2,880,578 ================= ================= ================= =================
At September 30, 2001, equipment on operating leases consists of the following:
Balance Balance December 31, Acquisitions, Dispositions & Reclassifications September 30, ---------------------------------------------- 2000 1st Quarter 2nd Quarter 3rd Quarter 2001 ---- ----------- ----------- ----------- ---- Transportation $ 3,196,692 $ (124,809) $ (112,294) $ (102,604) $2,856,985 Construction equipment 1,756,195 - - - 1,756,195 Manufacturing 457,670 - - - 457,670 Materials handling 291,920 - - - 291,920 Other 26,092 - - - 26,092 ------------------- ----------------- ----------------- ----------------- ----------------- 5,728,569 (124,809) (112,294) (102,604) 5,388,862 Accumulated depreciation (3,139,025) (57,186) (41,324) (42,944) (3,280,479) ------------------- ----------------- ----------------- ----------------- ----------------- $ 2,589,544 $ (181,995) $ (153,618) $ (145,548) $2,108,383 =================== ================= ================= ================= =================
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, 2001 AND 2000 (Unaudited) 2. Investment in lease assets (continued): At September 30, 2001, the aggregate amounts of future minimum lease payments are as follows:
Direct Operating Financing Total Three months ending December 31, 2001 $ 210,741 $ 226,500 $ 437,241 Year ending December 31, 2002 707,195 906,000 1,613,195 2003 535,663 906,000 1,441,663 2004 - 595,199 595,199 ----------------- ----------------- ----------------- $1,453,599 $ 2,633,699 $4,087,298 ================= ================= =================
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, 2001 are as follows:
Principal Interest Total Three months ending December 31, 2001 $ 53,036 $ 7,138 $ 60,174 Year ending December 31, 2002 187,916 18,137 206,053 2003 106,480 2,861 109,341 ----------------- ----------------- ----------------- $ 347,432 $ 28,136 $ 375,568 ================= ================= =================
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: 2001 2000 ---- ---- Cost reimbursements to General Partner $ 445,163 $ 178,446 Incentive and equipment management fees - 236,186 ----------------- ----------------- $ 445,163 $ 414,632 ================= ================= 7 ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2001 AND 2000 (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 Our primary sources of liquidity during the first nine months of 2001 were operating and direct finance lease rents. Liquidity will vary in the future, increasing to the extent cash flows from leases exceed expenses, and decreasing as distributions are made to the Limited Partners and to the extent expenses exceed cash flows from leases. We currently have available adequate reserves to meet contingencies, but in the event those reserves were found to be inadequate, we would likely be in a position to borrow against our current portfolio to meet such requirements. We envision no such requirements for operating purposes. As of September 30, 2001, we had borrowed approximately $38,342,000, with a remaining unpaid balance of approximately $347,000. Borrowings are to be non-recourse to us, that is, the only recourse of the lender will be to the equipment or corresponding lease acquired or secured with the loan proceeds. We do not expect that there will be additional borrowings in the future. As of September 30, 2001, we have made no commitments of capital. If inflation in the general economy becomes significant, it may affect us in that the residual (resale) values and rates on re-leases of our leased assets may increase as the costs of similar assets increase. However, our 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 we 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. 2001 vs. 2000: Nine months: During the first nine months of 2001 and 2000, our primary source of operating cash flows was operating and direct financing lease revenues. Our total lease revenues decreased by $1,159,948 in 2001 compared to 2000. In 2001, direct financing lease payments were our most important source of financing cash flows. In 2000, the most significant source cash flows from investing activities was the proceeds from the sales of assets. Our 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 $350,265 compared to 2000. We had no sources of cash from financing activities in 2001 or in 2000. The cash we used to repay non-recourse debt has decreased due to scheduled debt reductions. Our distributions to Limited Partners have decreased significantly as a result of the suspension of distributions in January 2001. Three months: Our primary source of cash from operations for the third quarter was lease rents. These lease rents have decreased from the prior year as a result of asset sales during the preceding twelve months. Our primary source of cash flows from financing activities in 2001 was rents from direct financing leases. 9 We had no sources of cash from financing activities in 2001 or in 2000. Repayments of debt decreased for the same reasons as noted above for the nine month period. We made no distributions to the limited partners in the third quarter of 2001 as a result of the suspension of distributions noted above for the nine month period. Results of Operations In 2001, our operations resulted in net income of $92,949 for the nine month period and $88,312 for the three month period. Our operations in 2000 resulted in net income of $1,982,342 for the nine month period and $147,639 for the three month period. 2001 vs. 2000: Our operating lease revenues have decreased due to sales and reclassifications of leased assets during the last twelve months. Depreciation expense is directly related to the amounts of operating lease assets and has decreased from 2000 to 2001 as a result of sales of operating lease assets over the last year. Effective January 1, 2001, the General Partner has ceased taking any management fees. In prior years, our management fees were related to the amounts of lease revenues and distributions to Limited Partners. As a result of reductions in the outstanding non-recourse debt, interest expense has decreased compared to 2000. PART II OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. No material legal proceedings are currently pending against the Partnership or against any of its assets. On December 31, 1997, Quaker Coal Company requested a moratorium on lease payments from January through March 1998. No lease payments were made by the lessee through June of 1998, and as a result, the General Partner declared the lease in default. Subsequently, the lessee cured the outstanding payments and eventually satisfied substantially all lease payments due under the Lease; however, the General Partner refused to waive the default and insisted on contractual damages. The General Partner filed a suit against the lessee for its contractual damages in the U.S. District Court of Northern California (the "Court") (Case No. 98-02971 THE). On June 16, 2000, the lessee filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The amounts of these damages have not been included in the financial statements included in Part I, Item 1 of this report. The Partnership obtained a stipulation for relief from the automatic bankruptcy stay to allow the Court to issue its ruling, and filed a request to participate on the Official Committee of Unsecured Creditors in the bankruptcy proceedings. The Partnership succeeded upon securing the return of its equipment, which has been liquidated, netting approximately 17% of the original equipment cost. The Court issued a ruling on March 4, 2001, denying the Partnership's claim for damages. The Lessee subsequently filed a claim against the Partnership, for reimbursement of its legal expenses. The General Partner believes the Court's decision is erroneous, as a matter law, and has filed an appeal of the decision in the U.S. District Court of Appeals. The lessee filed a plan of reorganization, which was objected to by several large creditors, including the General Partner. These creditors were seeking a formal role on the creditors committee or formation of their own committee. Upon the termination of the Debtor's exclusivity period, competing plans were filed by other creditors to the plan, and voting on the competing plans occurred on October 8, 2001. The results of the vote have not yet been made public. 10 Currently, the likelihood of recovery of amounts above the payment of the lease rent and the liquidation of the equipment is speculative and highly uncertain. 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, 2001 and December 31, 2000. Income statements for the nine and three month periods ended September 30, 2001 and 2000. Statement of changes in partners' equity for the nine month period ended September 30, 2001. Statements of cash flows for the nine and three month periods ended September 30, 2001 and 2000. 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 12, 2001 ATEL CASH DISTRIBUTION FUND IV, L.P. (Registrant) By: ATEL Financial Corporation General Partner of Registrant By: /s/ DEAN L. CASH ----------------------------------- Dean L. Cash President and Chief Executive Officer of General Partner By: /s/ PARITOSH K. CHOKSI ----------------------------------- Paritosh K. Choksi Executive Vice President of Managing Member and Principal financial officer of registrant By: /s/ DONALD E. CARPENTER -------------------------------------- Donald E. Carpenter Principal accounting officer of registrant