For the quarterly period ended March 31, 2012
For the transition period from to
Commission File number 000-28368
ATEL Cash Distribution Fund VI, L.P.
(Exact name of registrant as specified in its charter)
600 California Street, 6th Floor, San Francisco, California 94108-2733
Registrants telephone number, including area code (415) 989-8800
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Limited Partnership Units
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 o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of accelerated filer, large accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes o No x
The number of Limited Partnership Units outstanding as of April 30, 2012 was 12,478,676.
DOCUMENTS INCORPORATED BY REFERENCE
ATEL CASH DISTRIBUTION FUND VI, L.P.
|Cash and cash equivalents||$||515||$||205|
|Investments in equipment and leases, net of accumulated depreciation of $20,994 at March 31, 2012 and $21,017 at December 31, 2011||3,490||3,605|
|LIABILITIES AND PARTNERS CAPITAL
|Accounts payable and accrued liabilities:
|Lessees and other||81||87|
|Unearned operating lease income||4||7|
|Commitments and contingencies
|Total Partners capital||4,152||3,845|
|Total liabilities and Partners capital||$||4,273||$||4,017|
See accompanying notes.
|Three Months Ended
|Gain on sales of assets||38||25|
|Depreciation of operating lease assets||90||188|
|Cost reimbursements to General Partner||60||67|
|Equipment and incentive management fees to General Partner||16||17|
|Taxes on income and franchise fees||1||1|
|Other management fees||22||30|
|Provision for doubtful accounts||||2|
|Printing and photocopying||11||2|
|Total operating expenses||456||455|
|Net income per Limited Liability Partnership Unit||$||0.02||$||0.02|
|Weighted average number of Units outstanding||12,478,676||12,478,676|
See accompanying notes.
|Limited Partners||General Partner||Total|
|Balance December 31, 2010||12,478,676||$||4,829||$||||$||4,829|
|Distributions to Limited Partners ($0.13 per Unit)||||(1,684||)||||(1,684||)|
|Distributions to General Partner||||||(17||)||(17||)|
|Balance December 31, 2011||12,478,676||3,845||||3,845|
|Balance March 31, 2012||12,478,676||$||4,152||$||||$||4,152|
See accompanying notes.
|Three Months Ended
|Adjustment to reconcile net income to cash provided by operating activities:
|Depreciation of operating lease assets||90||188|
|Provision for doubtful accounts||||2|
|Gain on sales of assets||(38||)||(25||)|
|Changes in operating assets and liabilities:
|Prepaid expenses and other assets||||1|
|Accounts payable, General Partner||(42||)||(40||)|
|Accounts payable, other||(6||)||(14||)|
|Unearned operating lease income||(3||)||(7||)|
|Net cash provided by operating activities||247||270|
|Proceeds from sales of assets||63||62|
|Net cash provided by investing activities||63||62|
|Net cash provided by financing activities|||||
|Net increase in cash and cash equivalents||310||332|
|Cash and cash equivalents at beginning of period||205||446|
|Cash and cash equivalents at end of period||$||515||$||778|
See accompanying notes.
ATEL Cash Distribution Fund VI, L.P. (the Partnership) was formed under the laws of the State of California on June 29, 1994 for the purpose of engaging in the sale of limited liability investment units and acquiring equipment to engage in equipment leasing and sales activities, primarily in the United States. The Partnership may continue until December 31, 2015. The General Partner of the Partnership is ATEL Financial Services, LLC (AFS). Prior to converting to a limited liability company structure, AFS was formerly known as ATEL Financial Corporation.
The Partnership conducted a public offering of 12,500,000 Limited Partnership Units (Units), at a price of $10 per Unit. Upon the sale of the minimum amount of Units of $1.2 million and the receipt of the proceeds thereof on January 3, 1995, the Partnership commenced operations in its primary business (acquiring equipment to engage in equipment leasing and sales activities). On November 23, 1996, subscriptions for 12,500,000 ($125 million) Limited Partnership Units had been received, in addition to the Initial Limited Partners Units, and the offering terminated. As of March 31, 2012, 12,478,676 Units were issued and outstanding.
The Partnerships principal objectives have been to invest in a diversified portfolio of equipment that (i) preserves, protects and returns the Partnerships invested capital; (ii) generates regular distributions to the partners of cash from operations and cash from sales or refinancing, with any balance remaining after certain minimum distributions to be used to purchase additional equipment during the reinvestment period (Reinvestment Period) (defined as six full years following the year the offering was terminated), which ended December 31, 2002 and (iii) provides additional distributions following the Reinvestment Period and until all equipment has been sold. The Partnership is governed by its Limited Partnership Agreement (Partnership Agreement).
Pursuant to the Partnership Agreement, AFS receives compensation for services rendered and reimbursements for costs incurred on behalf of the Partnership (Note 4). The Partnership is required to maintain reasonable cash reserves for working capital, the repurchase of Units and contingencies. The repurchase of Units is solely at the discretion of AFS.
As of March 31, 2012, the Partnership is in the liquidation phase of its life cycle, as defined in the Partnership Agreement, and is generally making distributions on an annual basis or at the discretion of the General Partner.
These unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission.
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the General Partner, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results to be expected for the full year.
Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no significant effect on the reported financial position or results from operations.
Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data.
In preparing the accompanying unaudited financial statements, the General Partner has reviewed events that have occurred after March 31, 2012, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements, and adjustments thereto.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Such estimates primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and determination of the allowance for doubtful accounts.
The Partnership is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Partnership operates in one reportable operating segment in the United States.
Certain of the Partnerships lessee customers may have international operations. In these instances, the Partnership is aware that certain equipment, primarily rail and transportation, may periodically exit the country. However, these lessee customers are US-based, and it is impractical for the Partnership to track, on an asset-by-asset, day-by-day basis, where these assets are deployed.
The primary geographic regions in which the Partnership sought leasing opportunities were North America and Europe. Currently, 100% of the Partnerships operating revenues are from customers domiciled in North America.
Net income and distributions per Unit are based upon the weighted average number of Limited Partners Units outstanding during the period.
The Partnerships investments in equipment and leases consists of the following (in thousands):
|Net investment in operating leases||$||3,600||$||(25||)||$||(90||)||$||3,485|
|Assets held for sale or lease, net||5||||||5|
Management periodically reviews the carrying values of its assets on leases and assets held for lease or sale for impairment. As a result of these reviews, management determined that no impairment losses existed for the respective three month periods ended March 31, 2012 and 2011.
The Partnership utilizes a straight-line depreciation method over the term of the equipment lease for equipment in all of the categories currently in its portfolio of lease transactions. Depreciation expense on the Partnerships equipment totaled $90 thousand and $188 thousand for the respective three months ended March 31, 2012 and 2011.
All of the equipment on leases was acquired in the years 1995 through 1997.
Property on operating leases consists of the following (in thousands):
|Balance December 31, 2011||Additions||Reclassifications or Dispositions||Balance March 31,
|Less accumulated depreciation||(21,011||)||(90||)||112||(20,989||)|
The average estimated residual value for assets on operating leases was 12% and 13% of the assets original cost at March 31, 2012 and December 31, 2011, respectively.
The Partnership earns revenues from certain lease assets based on utilization of such assets. Such contingent rentals and the associated expenses are recorded when earned and/or incurred. The revenues associated with these rentals are included as a component of Operating Lease Revenues, and totaled $117 thousand and $100 thousand for the respective three months ended March 31, 2012 and 2011.
At March 31, 2012, the aggregate amounts of future minimum lease payments under operating leases are as follows (in thousands):
|Nine months ending December 31, 2012
|Year ending December 31, 2013
The terms of the Partnership Agreement provide that AFS and/or affiliates are entitled to receive certain fees for equipment acquisition, management and resale and for management of the Partnership.
The Partnership Agreement allows for the reimbursement of costs incurred by AFS in providing administrative services to the Partnership. Administrative services provided include Partnership accounting, investor relations, legal counsel and lease and equipment documentation. AFS is not reimbursed for services whereby it is entitled to receive a separate fee as compensation for such services, such as acquisition and disposition of equipment. The Partnership is contingently liable for certain future costs to be incurred by AFS to manage the administrative services provided to the Partnership.
Each of ATEL Leasing Corporation (ALC) and AFS is a wholly-owned subsidiary of ATEL Capital Group and performs services for the Partnership. Acquisition services, equipment management, lease administration and asset disposition services are performed by ALC; investor relations, communications and general administrative services are performed by AFS.
Cost reimbursements to the General Partner are based on its costs incurred in performing administrative services for the Partnership. These costs are allocated to each managed entity based on certain criteria such as managed assets, number of investors or contributed capital based upon the type of cost incurred.
Incentive management fees are computed as 4% of distributions of cash from operations, as defined in the Partnership Agreement. Equipment management fees are computed as 3.5% of gross revenues from operating leases, as defined in the Partnership Agreement plus 2% of gross revenues from full payout leases, as defined in the Partnership Agreement.
During the three months ended March 31, 2012 and 2011, AFS and/or affiliates earned fees and commissions, and billed for reimbursements, pursuant to the Limited Partnership Agreement, as follows (in thousands):
|Three Months Ended
|Cost reimbursements to General Partner||$||60||$||67|
|Equipment and incentive management fees to General Partner||16||17|
The Partnership enters into contracts that contain a variety of indemnifications. The Partnerships maximum exposure under these arrangements is unknown. However, the Partnership has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
The General Partner knows of no facts or circumstances that would make the Partnerships contractual commitments outside standard mutual covenants applicable to commercial transactions between businesses. Accordingly, the Partnership believes that these indemnification obligations are made in the ordinary course of business as part of standard commercial and industry practice, and that any potential liability under the Partnerships similar commitments is remote. Should any such indemnification obligation become payable, the Partnership would separately record and/or disclose such liability in accordance with GAAP.
As of March 31, 2012 and December 31, 2011, 12,478,676 Units were issued and outstanding. The Partnership was authorized to issue up to 12,500,000 Units, in addition to the 50 Units issued to the Initial Limited Partners, as defined.
The Partnership has the right, exercisable at the General Partners discretion, but not the obligation, to repurchase Units of a Unitholder who ceases to be a U.S. Citizen, for a price equal to 100% of the holders capital account. The Partnership is otherwise permitted, but not required, to repurchase Units upon a holders request. The repurchase of Fund Units is made in accordance with Section 13 of the Amended and Restated Agreement of Limited Partnership. The repurchase would be at the discretion of the General Partner on terms it determines to be appropriate under given circumstances, in the event that the General Partner deems such repurchase to be in the best interest of the Partnership; provided, the Partnership is never required to repurchase any Units. Upon the repurchase of any Units by the Fund, the tendered Units are cancelled. Units repurchased in prior periods were repurchased at amounts representing the original investment less cumulative distributions made to the Unitholder with respect to the Units. All Units repurchased during a quarter are deemed to be repurchased effective the last day of the preceding quarter, and are not deemed to be outstanding during, or entitled to allocations of net income, net loss or distributions for the quarter in which such repurchase occurs.
As defined in the Limited Partnership Agreement, the Partnerships Net Income, Net Losses, and Tax Credits are to be allocated 99% to the Limited Partners and 1% to AFS. The Limited Partnership Agreement allows the Partnership to make an allocation of income to AFS in order to maintain the capital account of AFS at zero. In accordance with the terms of the Limited Partnership Agreement, additional allocations of income were made to AFS for the year ended December 31, 2011. The amounts allocated were determined so as to bring AFSs ending capital account balance to zero at the end of the year.
As defined in the Limited Partnership Agreement, available Cash from Operations and Cash from Sales and Refinancing are to be distributed as follows:
Cash from Operations is distributed 95% to the Limited Partners, 1% to AFS and 4% to an affiliate of AFS as an Incentive Management Fee.
First, 99% to the Limited Partners and 1% to AFS until each Limited Partner has received Aggregate Distributions 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; and
Thereafter, 95% to the Limited Partners, 1% to AFS and 4% to an affiliate of AFS as an Incentive Management Fee.
There were no distributions made to the Limited Partners during the three-month periods ended March 31, 2012 and 2011.
Statements contained in this Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations, (MD&A) and elsewhere in this Form 10-Q, which are not historical facts, may be forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. In particular, the economic recession and changes in general economic conditions, including, fluctuations in demand for equipment, lease rates, and interest rates, may result in delays in leasing, re-leasing, and disposition of equipment, and reduced returns on invested capital. The Partnerships performance is subject to risks relating to lessee defaults and the creditworthiness of its lessees. The Partnerships performance is also subject to risks relating to the value of its equipment at the end of its leases, which may be affected by the condition of the equipment, technological obsolescence and the markets for new and used equipment at the end of lease terms. Investors are cautioned not to attribute undue certainty to these forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, other than as required by law.
ATEL Cash Distribution Fund VI, L.P. (the Partnership) is a California partnership that was formed in June 1994 for the purpose of engaging in the sale of limited liability investment units and acquiring equipment to generate revenues from equipment leasing and sales activities, primarily in the United States. The General Partner of the Partnership is ATEL Financial Services, LLC (AFS), a California limited liability company.
The Partnership conducted a public offering of 12,500,000 Limited Partnership Units (Units), at a price of $10 per Unit. The offering was terminated in November 1996. During early 1997, the Partnership completed its initial acquisition stage with the investment of the net proceeds from the public offering of Units. Subsequently, throughout the reinvestment period (Reinvestment Period) (defined as six full years following the year the offering was terminated), the Partnership reinvested cash flow in excess of certain amounts required to be distributed to the Limited Partners and/or utilized its credit facilities to acquire additional equipment.
The Partnership may continue until December 31, 2015. Pursuant to the guidelines of the Limited Partnership Agreement (Partnership Agreement), the Partnership began to liquidate its assets and distribute the proceeds thereof after the end of the Reinvestment Period which ended in December 2002.
As of March 31, 2012, the Partnership remains in its liquidation phase. Accordingly, assets that mature will be returned to inventory and most likely will be subsequently sold, which will result in decreasing revenue as earning assets decrease. The Partnership continues to generally make distributions on an annual basis or at the discretion of the General Partner.
The Partnership had net income of $307 thousand and $195 thousand for the three months ended March 31, 2012 and 2011, respectively. The results for the first quarter of 2012 reflect an increase in total revenues when compared to the prior year period.
Total revenues for the first quarter of 2012 increased by $113 thousand, or 17%, as compared to the prior year period largely due to a $100 thousand increase in operating lease revenues.
The increase in operating lease revenues was largely due to higher negotiated rates on certain re-marketed leases and an increase in usage-based rental revenues.
Total operating expenses for the first quarter of 2012 were virtually unchanged as compared to the prior year period. Certain individual expense items did, however, have significant variances of which the most notable was a $104 thousand increase in railcar maintenance costs which was offset, in part, by a $98 thousand decrease in depreciation expense.
The increase in railcar maintenance costs was largely due to an increase in the base rate for maintenance by the Partnerships third party railcar manager; and, the decrease in depreciation expense was mainly as a result of continued run-off and disposition of lease assets.
At March 31, 2012 and December 31, 2011, the Partnerships cash and cash equivalents totaled $515 and $205 thousand, respectively. The liquidity of the Partnership varies, increasing to the extent cash flows from leases and proceeds from lease asset sales exceed expenses and decreasing as distributions are made to the partners and to the extent expenses exceed cash flows from leases and proceeds from asset sales.
The primary source of liquidity for the Partnership has been its cash flow from leasing activities. As the initial lease terms have expired, the Partnership ventured to re-lease or sell the equipment. Future liquidity will depend on the Partnerships success in remarketing or selling the equipment as it comes off rental.
If inflation in the general economy becomes significant, it may affect the Partnership in as much as the residual (resale) values of the Partnerships leased assets may increase as the costs of similar assets increase. However, the Partnerships revenues from existing leases would not increase as such rates are generally fixed for the terms of the leases without adjustment for inflation. In addition, if interest rates increase significantly under such circumstances, the lease rates that the Partnership can obtain on future leases will be expected to increase as the cost of capital is a significant factor in the pricing of lease financing. Leases already in place, for the most part, would not be affected by changes in interest rates.
The Partnership currently believes it has available adequate reserves to meet its immediate cash requirements and those of the next twelve months, but in the event those reserves were found to be inadequate, the Partnership would likely be in a position to borrow against its current portfolio to meet such requirements. AFS envisions no such requirements for operating purposes.
The following table sets forth summary cash flow data (in thousands):
|Three Months Ended March 31,|
|Net cash provided by:
|Net increase in cash and cash equivalents||$||310||$||332|
During the three months ended March 31, 2012 and 2011, the Partnerships primary sources of liquidity were cash flows from its portfolio of operating lease contracts and proceeds from sales of lease assets.
During the same comparative periods, cash was primarily used to pay invoices related to General Partner fees and expenses, and other payables. As the Fund is in its liquidation phase, any future financing activity is anticipated to only include distributions to Partners.
The Partnership commenced periodic distributions, based on cash flows from operations, beginning with the month of January 1995. During its liquidation phase, the rates and frequency of periodic distributions paid by the Fund are solely at the discretion of the General Partner.
At March 31, 2012, the Partnership had no commitments to purchase lease assets and pursuant to the Partnership Agreement, the Partnership will no longer purchase any new lease assets.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, the Partnership evaluates its estimates, which are based upon historical experiences, market trends and financial forecasts, and upon various other assumptions that management believes to be reasonable under the circumstances and at that certain point in time. Actual results may differ, significantly at times, from these estimates under different assumptions or conditions.
The Partnerships critical accounting policies are described in its Annual Report on Form 10-K for the year ended December 31, 2011. There have been no material changes to the Partnerships critical accounting policies since December 31, 2011.
The Partnerships General Partners President and Chief Executive Officer, and Executive Vice President and Chief Financial Officer and Chief Operating Officer (Management), evaluated the effectiveness of the Partnerships disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based on the evaluation of the Partnerships disclosure controls and procedures, Management concluded that as of the end of the period covered by this report, the design and operation of these disclosure controls and procedures were effective.
The Partnership does not control the financial reporting process, and is solely dependent on the Management of the General Partner, which is responsible for providing the Partnership with financial statements in accordance with generally accepted accounting principles in the United States. The General Partners disclosure controls and procedures, as it is applicable to the Partnership, were effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
There were no changes in the General Partners internal control over financial reporting, as it is applicable to the Partnership, during the quarter ended March 31, 2012 that have materially affected, or are reasonably likely to materially affect, the General Partners internal control over financial reporting, as it is applicable to the Partnership.
In the ordinary course of conducting business, there may be certain claims, suits, and complaints filed against the Partnership. In the opinion of management, the outcome of such matters, if any, will not have a material impact on the Partnerships financial position or results of operations.
Documents filed as a part of this report:
|1.||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 not applicable, and therefore have been omitted.
31.1 Rule 13a-14(a)/ 15d-14(a) Certification of Dean L. Cash
31.2 Rule 13a-14(a)/ 15d-14(a) Certification of Paritosh K. Choksi
32.1 Certification Pursuant to 18 U.S.C. section 1350 of Dean L. Cash
32.2 Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K. Choksi
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, 2012
ATEL Financial Services, LLC
/s/ Dean L. Cash
/s/ Paritosh K. Choksi
/s/ Samuel Schussler
This web site and associated pages are not associated with, endorsed by, or sponsored by ATEL CASH DISTRIBUTION FUND VI LP and has no official or unofficial affiliation with ATEL CASH DISTRIBUTION FUND VI LP
Based on public records. Inadvertent errors are possible.
Getfilings.com does not guarantee the accuracy or timeliness of any information on this site. Use at your own risk. This website is not associated with the SEC
Some parts © 2013 Advameg, Inc.