10QSB 1 f410q1q2001.txt REPORT FOR THE QUARTER ENDED 3/31/02 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 March 31, 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 MARCH 31, 2001 (Unaudited) ASSETS Cash and cash equivalents $ 416,120 Accounts receivable 326,451 Investments in leases 3,372,813 ------------------ Total assets $4,115,384 ================== LIABILITIES AND PARTNERS' CAPITAL Non-recourse debt $ 607,740 Accounts payable: General Partner 30,928 Other 38,416 Accrued interest payable 4,192 Unearned operating lease income 4,665 ------------------ Total liabilities 685,941 Partners' capital: General Partner 227,739 Limited Partners 3,201,704 ------------------ Total partners' capital 3,429,443 ------------------ Total liabilities and partners' capital $4,115,384 ================== See accompanying notes. 3 ATEL CASH DISTRIBUTION FUND IV, L.P. INCOME STATEMENTS THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 (Unaudited)
2001 2000 ---- ---- Revenues: Leasing activities: Operating leases $ 148,892 $ 651,787 Direct financing leases 145,610 180,615 Gain on sale of assets 7,363 56,361 Interest 8,231 65,235 Other 1,038 35,189 --------------------- ------------------ 311,134 989,187 --------------------- ------------------ Expenses: Depreciation and amortization 135,211 283,855 Cost reimbursements to General Partner 100,471 43,987 Other 36,294 7,949 Equipment and incentive management fees to General Partner 30,928 64,405 Interest 13,846 59,625 Professional fees 5,620 14,297 Railcar maintenance - 111,237 --------------------- ------------------ 322,370 585,355 --------------------- ------------------ Net (loss) income $ (11,236) $ 403,832 ===================== ================== Net (loss) income: General Partner $ (112) $ 4,038 Limited Partners (11,124) 399,794 --------------------- ------------------ $ (11,236) $ 403,832 ===================== ================== Net (loss) income per Limited Partnership unit $ (0.00) $ 0.05 Weighted average number of units outstanding 7,487,350 7,487,350
STATEMENT OF CHANGES IN PARTNERS' CAPITAL THREE MONTH PERIOD ENDED MARCH 31, 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 (1,334,035) - (1,334,035) Net loss (11,124) (112) (11,236) ---------------- -------------------- --------------------- ------------------ Balance March 31, 2001 7,487,350 $ 3,201,704 $ 227,739 $3,429,443 ================ ==================== ===================== ==================
See accompanying notes. 4 ATEL CASH DISTRIBUTION FUND IV, L.P. STATEMENTS OF CASH FLOWS THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 (Unaudited)
Operating activities: 2001 2000 ---- ---- Net (loss) income $ (11,236) $ 403,832 Adjustments to reconcile net (loss) income to net cash provided by operations: Depreciation and amortization 135,211 283,855 Gain on sale of asset (7,363) (56,361) Changes in operating assets and liabilities: Accounts receivable 1,897,542 1,166,377 Bank overdrafts (230,243) - Accounts payable, General Partner (1,794) 30,226 Accounts payable, other (54,703) (184,848) Accrued interest payable (1,264) (1,559) Unearned operating lease income (49,580) (51,507) --------------------- ------------------ Net cash from operations 1,676,570 1,590,015 --------------------- ------------------ Investing activities: Reduction in investment in direct financing leases 84,163 229,860 Proceeds from sales of lease assets 135,644 149,608 --------------------- ------------------ Net cash provided by investing activities 219,807 379,468 --------------------- ------------------ Financing activities: Distributions to limited partners (1,334,035) (2,620,630) Repayment of non-recourse debt (201,667) (384,288) --------------------- ------------------ Net cash used in financing activities (1,535,702) (3,004,918) --------------------- ------------------ Net increase (decrease) in cash and cash equivalents 360,675 (1,035,435) Cash and cash equivalents at beginning of period 55,445 5,864,559 --------------------- ------------------ Cash and cash equivalents at end of period $ 416,120 $4,829,124 ===================== ================== Supplemental disclosures of cash flow information: Cash paid during period for interest $ 15,110 $ 61,184 ===================== ==================
See accompanying notes. ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS MARCH 31, 2001 (Unaudited) 1. Summary of significant accounting policies: 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 10KSB. 2. Organization and partnership matters: ATEL Cash Distribution Fund IV, L.P. (the Partnership), was formed under the laws of the State of California on September 19, 1991, for the purpose of acquiring equipment to engage in equipment leasing and sales activities. Contributions in the aggregate of $600 were received as of October 8, 1991, $100 of which represented the General Partner's continuing interest, and $500 of which represented the Initial Limited Partners' capital investment. Upon the sale of the minimum amount of Units of Limited Partnership interest (Units) of $1,200,000 and the receipt of the proceeds thereof on March 6, 1992, the Partnership commenced operations. The Partnership's business consists of leasing various types of equipment. 3. Investment in leases: The Partnership's investment in leases consists of the following:
Depreciation Expense and Reclassi- December 31, Amortization fications and March 31, 2000 of Leases Dispositions 2001 ---- --------- - ------------- ---- Net investment in operating leases $ 2,589,544 $ (132,058) $ (49,937) $2,407,549 Net investment in direct financing leases 1,674,127 (84,163) (78,344) 1,511,620 Reserve for losses (584,871) - - (584,871) Assets held for sale or lease 11,108 - - 11,108 Initial direct costs, net of accumulated amortization of $99,456 in 2000 and $102,609 in 2001 30,560 (3,153) - 27,407 ------------------ -------------------- --------------------- ------------------ $ 3,720,468 $ (219,374) $ (128,281) $3,372,813 ================== ==================== ===================== ==================
5 ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS MARCH 31, 2001 (Unaudited) 3. Investment in leases (continued): The following schedule provides an analysis of the Partnership's investment in property on operating leases by major classifications as of December 31, 2000, acquisitions and dispositions during the quarter ended March 31, 2001 and as of March 31, 2001.
Reclassi- December 31, fications and March 31, 2000 Depreciation Dispositions 2001 ---- ------------ - ------------- ---- Transportation $ 3,196,692 $ (124,809) $3,071,883 Construction 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) 5,603,760 Less accumulated depreciation (3,139,025) $ (132,058) 74,872 (3,196,211) ---------------- -------------------- --------------------- ------------------ $ 2,589,544 $ (132,058) $ (49,937) $2,407,549 ================ ==================== ===================== ==================
All of the property on operating leases was acquired during 1992, 1993, 1994, 1995 and 1996. At March 31, 2001, the aggregate amounts of future minimum lease payments are as follows: Year ending Operating Direct Financing December 31, Leases Leases Total ------------ ------ ------ ----- 2001 $ 731,202 $ 585,142 $ 1,316,344 2002 7,445,507 561,360 8,006,867 2003 574,875 561,360 1,136,235 2004 - 424,000 424,000 ---------------- -------------------- --------------------- $ 8,751,584 $ 2,131,862 $ 10,883,446 ================ ==================== ===================== 6 ATEL CASH DISTRIBUTION FUND IV, L.P. NOTES TO FINANCIAL STATEMENTS MARCH 31, 2001 (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 6.5% to 8.85%. Future minimum principal payments of non-recourse debt are as follows: Year ending December 31, Principal Interest Total ------------ --------- -------- ----- 2001 $ 313,344 $ 26,727 $ 340,071 2002 187,916 18,137 206,053 2003 106,480 2,860 109,340 ---------------- -------------------- --------------------- $ 607,740 $ 47,724 $ 655,464 ================ ==================== ===================== 5. Related party transactions: The terms of the Limited Partnership Agreement provide that the General Partner and/or Affiliates are entitled to receive certain fees for equipment acquisition, management and resale and for management of the Partnership. The General Partner and/or Affiliates earned the following fees, commissions and reimbursements, pursuant to the Limited Partnership Agreement as follows:
2001 2000 ---- ---- Incentive management fees (computed as 5% of distributions of cash from operations, as defined in the Limited Partnership Agreement) and equipment management fees (computed as 5% of gross revenues from operating leases, as defined in the Limited Partnership Agreement plus 2% of gross revenues from full payout leases, as defined in the Limited Partnership Agreement). $ 30,928 $64,405 Costs reimbursed to General Partner 100,471 43,987 --------------------- ------------------ $ 131,399 $ 108,392 ===================== ==================
7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Capital Resources and Liquidity During 2001, the Partnership's primary source of liquidity was rents from direct financing and operating leases. During 2000, the Partnership's primary source of liquidity was rents from operating leases. The liquidity of the Partnership will vary in the future, increasing to the extent cash flows from leases exceed expenses and proceeds from lease asset sales, and decreasing as distributions are made to the limited partners and to the extent expenses exceed cash flows from leases and proceeds from lease asset sales. As another source of liquidity, the Partnership has contractual obligations with a diversified group of lessees for fixed lease terms at fixed rental amounts. As the initial lease terms expire the Partnership will re-lease or sell the equipment. The future liquidity beyond the contractual minimum rentals will depend on the General Partner's success in re-leasing or selling the equipment as it comes off lease. 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. Through March 31, 2000, the Partnership had borrowed approximately $38,342,000 with a remaining unpaid balance of approximately $608,000. Borrowings are to be generally non-recourse to the Partnership, that is, the only recourse of the lender for a default by the lessee on the underlying lease will be to the equipment or corresponding lease acquired with the loan proceeds. The General Partners expect 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. No commitments of capital have been made or are expected to be made. 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. Cash Flows In 2001, the primary sources of cash from operations were rents from direct financing and operating leases. Rents from operating leases were the primary sources of cash flows from operations in the first quarter of 2000. The amounts of such rents decreased from $832,402 in 2000 to $294,502 in 2001, a decrease of $537,900. Sources of cash from investing activities in 2001 and 2000 consisted of the proceeds of the sales of lease assets and cash flows from direct financing leases. Proceeds from the sales of lease assets are not expected to be consistent from one period to another. Cash flows from direct financing leases decreased by $145,697. Lease rents have declined due to lease terminations and sales of assets. 8 In the first quarter of 2001 and 2000, there were no financing sources of cash flows. Repayments of non-recourse debt have decreased as a result of the scheduled debt payments. In 2001, no distributions were made from first quarter operations. As a result, distributions decreased compared to 2000. Results of Operations Operations in the first quarter of 2001 resulted in a net loss of $11,236 compared to net income of $403,832 in 2000. Operating lease revenues and the related depreciation expense have decreased as a result of asset sales over the last year. Sales of these assets were not significant in the first quarter of 2001. Sales of assets are not expected to be consistent from one period to another. Depreciation expense has decreased as a result of operating lease asset sales over the last year. As scheduled debt payments have been made over the last year, debt balances have been significantly reduced. As a result, interest expense has decreased compared to the prior year. Total distributions to the Limited Partners decreased significantly leading a reduction in the incentive management fee. Incentive management fees decreased from $37,241 in 2000 to $18,692 in 2001. Equipment management fees are related to gross lease rents and as those rents have decreased as a result of asset sales, the fees have decreased from $25,842 in 2000 to $10,252 in 2001. In the first quarter of 2000, the Partnership incurred $111,237 of maintenance costs related to rail cars that it owned at that time. The related rail cars were sold later in 2000 and there were no similar costs in 2001. PART II. OTHER INFORMATION Item 1. Legal Proceedings. No material legal proceedings are currently pending against the Partnership or against any of its assets. The following is a discussion of legal matters involving the Partnership but which do not represent claims against the Partnership or 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. 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. 9 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, March 31, 2001. Income statements for the three month periods ended March 31, 2001 and 2000. Statement of changes in partners' capital for the three months ended March 31, 2001. Statements of cash flows for the three month periods ended March 31, 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 10 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: May 11, 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 Principal financial officer of registrant By: /s/ Donald E. Carpenter ----------------------------------- Donald E. Carpenter Principal accounting officer of registrant 11