Form 10-Q
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 June 30, 2002
|_| 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 0-28368
ATEL Cash Distribution Fund VI, L.P.
(Exact name of registrant as specified in its charter)
California 94-3207229
---------- ----------
(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 VI, L.P.
BALANCE SHEETS
JUNE 30, 2002 AND DECEMBER 31, 2001
(Unaudited)
ASSETS
2002 2001
---- ----
Cash and cash equivalents $ 505,702 $ 701,012
Accounts receivable, net of allowance
for doubtful accounts of $881,254
in 2002 and $861,254 in 2001 3,936,484 7,200,988
Investments in leases 53,361,483 57,939,842
----------------- ------------------
Total assets $ 57,803,669 $65,841,842
================= ==================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $16,708,631 $21,712,993
Line of credit 8,000,000 4,500,000
Accounts payable:
General Partner 397,152 208,687
Other 451,554 585,993
Accrued interest payable 148,565 762,476
Unearned operating lease income 48,794 63,013
----------------- ------------------
Total liabilities 25,754,696 27,833,162
Partners' capital:
General Partner - -
Limited Partners 32,048,973 38,008,680
----------------- ------------------
Total partners' capital 32,048,973 38,008,680
----------------- ------------------
Total liabilities and partners' capital $ 57,803,669 $65,841,842
================= ==================
See accompanying notes.
3
ATEL CASH DISTRIBUTION FUND VI, L.P.
INCOME STATEMENTS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2002 AND 2001
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
Revenues:
Leasing activities:
Operating lease revenues $ 6,809,411 $ 8,903,137 $ 3,553,607 $ 4,542,267
Direct financing leases 89,633 92,663 35,727 40,401
Loss on sales of assets (357,739) (204,900) (74,459) (303,321)
Interest income 2,992 39,121 1,044 13,225
Other 32,177 8,957 31,283 1,160
------------------ ----------------- ----------------- ------------------
6,576,474 8,838,978 3,547,202 4,293,732
Expenses:
Depreciation and amortization 3,577,053 4,790,040 1,794,093 2,374,269
Interest 925,697 1,175,687 410,475 535,308
Equipment and incentive management fees 414,590 454,693 103,425 165,796
Cost reimbursements to General Partner 397,686 404,920 179,157 237,088
Other 267,961 292,685 197,358 211,242
Railcar maintenance 211,083 138,283 113,737 79,002
Professional fees 92,467 77,090 32,576 49,724
Provision for doubtful accounts 20,000 - 20,000 -
------------------ ----------------- ----------------- ------------------
5,906,537 7,333,398 2,850,821 3,652,429
------------------ ----------------- ----------------- ------------------
Net income $ 669,937 $ 1,505,580 $ 696,381 $ 641,303
================== ================= ================= ==================
Net income:
General partner $ 65,841 $ 15,056 $ 32,824 $ 6,413
Limited partners 604,096 1,490,524 663,557 634,890
------------------ ----------------- ----------------- ------------------
$ 669,937 $ 1,505,580 $ 696,381 $ 641,303
================== ================= ================= ==================
Weighted average number of units
outstanding 12,495,063 12,500,050 12,490,076 12,500,050
Net income per limited partnership unit $0.05 $0.31 $0.05 $0.03
See accompanying notes.
4
ATEL CASH DISTRIBUTION FUND VI, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SIX MONTH PERIOD ENDED
JUNE 30, 2002
(Unaudited)
Limited Partners General
Units Amount Partner Total
Balance December 31, 2001 12,500,050 $ 38,008,680 $ - $38,008,680
Repurchase of limited partnership units (9,974) (3,907) (3,907)
Distributions to partners (6,559,896) (65,841) (6,625,737)
Net income 604,096 65,841 669,937
------------------ ----------------- ----------------- ------------------
Balance June 30, 2002 12,490,076 $ 32,048,973 $ - $32,048,973
================== ================= ================= ==================
See accompanying notes.
5
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2002 AND 2001
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
Operating activities:
Net income $ 669,937 $ 1,505,580 $ 696,381 $ 641,303
Adjustments to reconcile net income to net
cash provided by operations
Depreciation and amortization 3,577,053 4,790,040 1,794,093 2,374,269
Loss (gain) on sales of assets 357,739 204,900 74,459 303,321
Provision for doubtful accounts 20,000 - 20,000 -
Changes in operating assets and liabilities:
Accounts receivable (1,555,496) (2,268,894) (1,293,227) (1,045,143)
Accounts payable, general partner 188,465 (164,758) 112,988 (71,112)
Accounts payable, other (134,439) 231,034 (6,328) (6,788)
Accrued interest expense 375,164 583,503 130,617 239,899
Unearned lease income (14,219) (44,362) (64,696) (23,829)
------------------ ----------------- ----------------- ------------------
Net cash provided by operating activities 3,484,204 4,837,043 1,464,287 2,411,920
------------------ ----------------- ----------------- ------------------
Investing activities:
Proceeds from sales of assets 470,036 1,943,083 107,587 1,795,005
Reduction in net investment in direct
financing leases 173,531 153,048 117,690 103,563
Purchase of equipment on operating leases - (5,452) - (5,452)
------------------ ----------------- ----------------- ------------------
Net cash provided by investing activities 643,567 2,090,679 225,277 1,893,116
------------------ ----------------- ----------------- ------------------
6
ATEL CASH DISTRIBUTION FUND VI, L.P.
STATEMENTS OF CASH FLOWS
(Continued)
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2002 AND 2001
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
Financing activities:
Distributions to partners (6,625,737) (6,680,069) (3,311,551) (3,280,319)
Borrowings on line of credit 4,500,000 2,000,000 2,500,000 1,000,000
Repayment of line of credit (1,000,000) (1,000,000) (1,000,000) (1,000,000)
Repayment of long-term non-recourse debt (1,193,437) (2,540,566) (350,215) (1,090,885)
Repurchase of limited partnership units (3,907) - (3,907) -
------------------ ----------------- ----------------- ------------------
Net cash provided by financing activities (4,323,081) (8,220,635) (2,165,673) (4,371,204)
------------------ ----------------- ----------------- ------------------
Net decrease in cash and cash equivalents (195,310) (1,292,913) (476,109) (66,168)
Cash at beginning of period 701,012 1,947,276 981,811 720,531
------------------ ----------------- ----------------- ------------------
Cash at end of period $ 505,702 $ 654,363 $ 505,702 $ 654,363
================== ================= ================= ==================
Supplemental disclosure of cash flow
information:
Cash paid during the period for interest $ 550,533 $ 592,184 $ 279,858 $ 295,409
================== ================= ================= ==================
Supplemental disclosure of non-cash transactions:
Offset of accounts receivable and debt service
per lease and debt agreement:
Accrued interest payable $ (989,075) $(1,404,335) $ 0 $ 0
Non-recourse debt (3,810,925) (3,395,665) - -
------------------ ----------------- ----------------- ------------------
Accounts receivable $(4,800,000) $(4,800,000) $ 0 $ 0
================== ================= ================= ==================
See accompanying notes.
7
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(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
10K.
2. Organization and partnership matters:
ATEL Cash Distribution Fund VI, L.P. (the Fund), was formed under the laws of
the State of California on June 29, 1994, for the purpose of acquiring equipment
to engage in equipment leasing and sales activities.
The Partnership does not make a provision for income taxes since all income and
losses will be allocated to the Partners for inclusion in their individual tax
returns.
3. Investment in leases:
The Partnership's investment in leases consists of the following:
Depreciation
Expense or Reclass-
December 31, Amortization ifications & June 30,
2001 of Leases Dispositions 2002
---- --------- - ------------- ----
Net investment in operating leases $ 55,447,510 $(3,495,420) $(2,979,338) $48,972,752
Net investment in direct financing leases 921,543 (173,531) (500) 747,512
Assets held for sale or lease 1,134,488 - 2,152,065 3,286,553
Residual interests 34,161 - (2) 34,159
Reserve for losses (188,009) - - (188,009)
Initial direct costs, net of accumulated
amortization 590,149 (81,633) - 508,516
------------------ ----------------- ----------------- ------------------
$ 57,939,842 $(3,750,584) $ (827,775) $53,361,483
================== ================= ================= ==================
8
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
3. Investment in leases (continued):
Property on operating leases consists of the following:
Reclassifications & Balance
December 31, Dispositions June 30,
------------
2001 1st Quarter 2nd Quarter 2002
---- ----------- ----------- ----
Transportation $ 82,924,093 $(1,174,264) $(2,942,406) $78,807,423
Construction 19,955,096 - - 19,955,096
Materials handling 10,062,364 (586,841) (501,012) 8,974,511
Office automation 1,503,725 - - 1,503,725
Other 1,042,203 (278,949) (5,500) 757,754
Manufacturing 288,768 (210,284) - 78,484
------------------ ----------------- ----------------- ------------------
115,776,249 (2,250,338) (3,448,918) 110,076,993
Less accumulated depreciation (60,328,739) (184,861) (590,641) (61,104,241)
------------------ ----------------- ----------------- ------------------
$ 55,447,510 $(2,435,199) $(4,039,559) $48,972,752
================== ================= ================= ==================
All of the property on leases was acquired in 1995, 1996 and 1997.
At June 30, 2002, the aggregate amounts of future minimum lease payments are as
follows:
Direct
Operating Financing
Leases Leases Total
Six months ending December 31, 2002 $ 3,518,302 $ 171,523 $ 3,689,825
Year ending December 31, 2003 3,848,594 184,227 4,032,821
2004 3,020,892 110,823 3,131,715
2005 2,701,032 98,760 2,799,792
2006 1,623,020 98,760 1,721,780
Thereafter 10,520,601 98,760 10,619,361
------------------ ----------------- -----------------
$ 25,232,441 $ 762,853 $ 25,995,294
================== ================= =================
9
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
4. Non-recourse debt:
Notes payable to financial institutions are due in varying monthly 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
6.33% to 12.22%.
Future minimum principal payments of non-recourse debt are as follows:
Principal Interest Total
Six months ending December 31, 2002 $ 739,071 $ 400,334 $ 1,139,405
Year ending December 31, 2003 5,486,383 1,237,053 6,723,436
2004 821,505 633,381 1,454,886
2005 476,034 591,844 1,067,878
2006 679,762 548,359 1,228,121
Thereafter 8,505,876 2,493,685 10,999,561
------------------ ----------------- -----------------
$ 16,708,631 $ 5,904,656 $ 22,613,287
================== ================= =================
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 fees, commissions and
reimbursements, pursuant to the Limited Partnership Agreement during the six
month periods ended June 30, 2002 and 2001 as follows:
2002 2001
---- ----
Incentive management fees and equipment management fees $ 414,590 $ 454,693
Reimbursement of administrative costs 397,686 404,920
----------------- ------------------
$ 812,276 $ 859,613
================= ==================
10
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
6. Partner's capital:
As of June 30, 2002, 12,490,076 Units ($124,900,760) were issued and
outstanding. The Fund's registration statement with the Securities and Exchange
Commission became effective November 23, 1994 and its offering was concluded on
November 23, 1996. The Fund is authorized to issue up to 12,500,050 Units,
including the 50 Units issued to the initial limited partners.
The Partnership Net Profits, Net Losses, and Tax Credits are to be allocated 99%
to the Limited Partners and 1% to the General Partner.
Available Cash from Operations and Cash from Sales and Refinancing, as defined
in the Limited Partnership Agreement, shall be distributed as follows:
First, 95% (95.75% after June 30, 1995) of Distributions of Cash from Operations
to the Limited Partners, 1% of Distributions of Cash from Operations to the
General Partner and 4% (3.25% after June 30, 1995) ( to an affiliate of the
General Partner as Incentive Management Compensation, 99% of Distributions of
Cash from Sales or Refinancing to the Limited Partners and 1% of Cash from Sales
or Refinancing to the General Partner.
Second, the balance to the Limited Partners until the Limited Partners have
received Aggregate Distributions in an amount equal to their Original Invested
Capital, as defined, plus a 8% per annum cumulative (compounded daily) return on
their Adjusted Invested Capital.
Third, an affiliate of the General Partner will receive as Incentive Management
Compensation, 4% (3.25% after June 30, 1995) of remaining Cash from Sales or
Refinancing.
Fourth, the balance to the Limited Partners.
11
ATEL CASH DISTRIBUTION FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
7. Line of credit:
The Partnership participates with the General Partner and certain of its
affiliates in a $43,654,928 revolving line of credit with a financial
institution that includes certain financial covenants. The line of credit
expires on June 28, 2004. As of June 30, 2002, borrowings under the facility
were as follows:
Amount borrowed by the Partnership under the acquisition facility $ 8,000,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
facility 15,000,000
---------------
Total borrowings under the acquisition facility 23,000,000
Amounts borrowed by the General Partner and its sister corporation under the warehouse facility -
---------------
Total outstanding balance $ 23,000,000
===============
Total available under the line of credit $ 43,654,928
Total outstanding balance (23,000,000)
---------------
Remaining availability $ 20,654,928
===============
Draws on the acquisition facility by any individual borrower are secured only by
that borrower's assets, including equipment and related leases. Borrowings on
the warehouse facility are recourse jointly to certain of the affiliated
partnerships and limited liability companies, the Partnership and the General
Partner.
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of June 30,
2002.
8. Subsequent event:
In July 2002, the Partnership sold a significant portion of its lease assets
prior to the maturity of the initial lease terms. The assets had been on lease
to Tarmac America, Inc. and Exxon/Mobil. The information below summarizes the
sales transactions.
Tarmac Exxon/Mobil Total
Original cost of equipment $ 6,229,654 $ 15,855,322 $ 22,084,976
Net book value of assets at date of sale $ 2,770,199 $ 11,962,797 $ 14,732,996
Sales price $ 2,959,134 $ 13,662,372 $ 16,621,506
Non-recourse debt repaid at time of sale $ 1,357,281 $ 10,120,304 $ 11,477,585
Net cash received from sale $ 1,601,853 $ 3,542,068 $ 5,143,921
Gain realized on sale $ 188,935 $ 1,699,575 $ 1,888,510
12
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
During the first half of 2002, the Partnership's primary activity was engaging
in equipment leasing activities.
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.
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 participates with the General Partner and certain of its
affiliates in a $43,654,928 revolving line of credit with a financial
institution that includes certain financial covenants. The line of credit
expires on June 28, 2004. As of June 30, 2002, borrowings under the facility
were as follows:
Amount borrowed by the Partnership under the acquisition facility $ 8,000,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
facility 15,000,000
---------------
Total borrowings under the acquisition facility 23,000,000
Amounts borrowed by the General Partner and its sister corporation under the warehouse facility -
---------------
Total outstanding balance $ 23,000,000
===============
Total available under the line of credit $ 43,654,928
Total outstanding balance (23,000,000)
---------------
Remaining availability $ 20,654,928
===============
Draws on the acquisition facility by any individual borrower are secured only by
that borrower's assets, including equipment and related leases. Borrowings on
the warehouse facility are recourse jointly to certain of the affiliated
partnerships and limited liability companies, the Partnership and the General
Partner.
The Partnership anticipates reinvesting a portion of lease payments from assets
owned in new leasing transactions. Such reinvestment will occur only after the
payment of all obligations, including debt service (both principal and
interest), the payment of management and acquisition fees to the General Partner
and providing for cash distributions to the Limited Partners.
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.
13
As of June 30, 2002, the Partnership had borrowed $100,521,405 with a remaining
unpaid balance of $16,708,631. The General Partner expects that aggregate
borrowings in the future will not exceed 50% of aggregate equipment cost. In any
event, the Agreement of Limited Partnership limits such borrowings to 50% of the
total cost of equipment, in aggregate.
No commitments of capital have been or are expected to be made other than for
the acquisition of additional equipment. There were no such commitments as of
June 30, 2002.
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, 2002 vs. 2001:
Six months:
In 2002 and 2001, the Partnership's primary source of cash was rents from
operating leases. Cash provided by operations decreased by $1,352,839 (from
$4,837,043 in 2001 to $3,484,204 in 2002).
The most significant source of cash from investing activities in 2002 and 2001
was proceeds from sales of lease assets. Cash flows from direct financing leases
were not as significant in either period.
In 2002 and 2001, the only source of cash from financing activities was
borrowings on the line of credit. Payments of non-recourse debt have decreased
as a result of scheduled debt payments over the last year.
Three months:
Operating lease rents were the primary source of cash from operating activities
in 2002 and 2001.
As noted above for the six month period, proceeds from asset sales and direct
financing lease rents were the only sources of cash from investing activities in
2002 and 2001.
In 2002 and 2001, the only financing source of cash was the amounts borrowed
under the line of credit. Debt payments have decreased for the same reasons
noted above for the six month periods.
Results of operations
In 2002, operations resulted in net income of $669,931 (six months) and $696,381
(three months). In 2001, operations resulted in net income of $1,505,580 (six
months) and $641,303 (three months). The Partnership's primary source of
revenues is from operating leases. This is expected to remain true in future
periods. Gains and losses on sales of lease assets are not expected to be
consistent from one period to another. Depreciation expense is the single
largest expense of the Partnership and is expected to remain so in future
periods. Operating lease rents and depreciation expense decreased compared to
2001 due to sales of lease assets over the last year. As Interest expense is
related to the borrowings under the line of credit and non-recourse debt and has
decreased because of decreased debt balances compared to 2001.
14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Quaker Coal Company:
On December 31, 1997, Quaker Coal Company, one of the Partnership's lessees,
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"). 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 II,
Item 8.
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 in 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 has been objected to by several
large creditors, including the General Partner.
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
October 8, 2001. The results of the vote were that American Electric Power's
("AEP") Plan of Reorganization ("AEP Plan") was successful. Under the AEP Plan,
the claim of the Partnership has been assigned to a liquidating trustee for
resolution and satisfaction from the debtor's estate.
In January 2002, ATEL attended an appellate settlement conference seeking to
resolve the outstanding disputed claim. A reserve has been set aside by the
liquidating trustee in the amount of $1.2 million in partial satisfaction of the
Partnership's claims and those of its affiliates, although this claim amount
remains in dispute. Currently, the likelihood of recovery of amounts above the
payment of the lease rent and the liquidation of the equipment already received
remains speculative and highly uncertain.
Elkay Mining Company:
On December 17, 1999, Elkay Mining Company, a subsidiary of The Pittston
Company, filed a suit for declaratory relief in response to a notice of event of
default sent by the Partnership. The dispute surrounds the treatment by the
lessee of a defect in the leased equipment, and the lessee's failure to notify
that lessor of the defect in the equipment. All lease payments under that lease
were made in a timely manner, and the equipment was returned and liquidated by
the Partnership for $112,501.04, which is approximately 6% of the original
equipment cost. The Partnership believes that it has suffered damages and loss
as a result of actions of the lessee, in the amount of $773,402, which
represents the difference in the proceeds netted from the sale of the equipment
and the liquidated damages due under the lease. This matter has been litigated
and the parties are awaiting decision from the Court.
The General Partner has filed for arbitration against the guarantor in San
Francisco, as mandated by the lease. The General Partner believes that it has a
reasonable basis for prevailing with respect to this matter, and will
aggressively assert its defense. Applied Magnetics Corporation:
15
In January 2000, Applied Magnetics Corporation filed for protection from
creditors under Chapter 11 of the U. S. Bankruptcy Code. The Partnership had
assets with a total net book value of $5,113,290 leased to Applied Magnetics
Corporation at the bankruptcy filing date. On January 31, 2000, the General
Partner was appointed to the Official Committee of Unsecured Creditors and
served as the Chairperson of the Committee. Procedures were quickly undertaken
for the liquidation of the Partnership's leased equipment, which proceeds
resulted in the satisfaction of a portion of the non-recourse debt secured by
the equipment. As of November 1, 2000, liquidation of the assets was completed.
The debtor filed a Plan of Reorganization (the "Plan"), which was approved by a
vote of the creditors of the debtor in October 2001. The Plan provided that the
debtor change its name to "Integrated Micro-Technology", and enter into a new
line of business, the manufacture and production of "micro-machines". As part of
the Plan the Partnership, along with the other unsecured creditors, receive a
proportionate share of their unsecured claims, in the form of ownership shares
and warrants in the newly formed business. The success of this new business plan
is highly uncertain.
On February 13, 2002, the reorganized Debtor filed a notice of objection to the
Funds claim due to duplication and an improper liquidated damages provision,
which the Funds intend to dispute.
The Partnership anticipates additional amounts may be recoverable through its
equity interests in the reorganized lessee's business, however, any recoveries
above the amounts received upon liquidation of the Partnership's equipment are
highly uncertain and speculative.
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, June
30, 2002 and December 31, 2001.
Statements of operations for the six and three month
periods ended June 30, 2002 and 2001.
Statement of changes in partners' capital for the six
month period ended June 30, 2002.
Statements of cash flows for the six and three month
periods ended June 30, 2002 and 2001.
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
16
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly report on Form 10QSB of ATEL Cash Distribution
Fund VI, LP, (the "Partnership") for the period ended June 30, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
and pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the
Sarbanes-Oxley Act of 2002, I, Dean L. Cash, Chief Executive Officer of ATEL
Financial Services, LLC, general partner of the Partnership, hereby certify
that:
1. The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act
of 1934 ; and
2. The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.
/s/ DEAN L. CASH
- -------------------------------------
Dean L. Cash President and Chief Executive
Officer of General Partner
August 14, 2002
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly report on Form 10QSB of ATEL Cash Distribution
Fund VI, LP, (the "Partnership") for the period ended June 30, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
and pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the
Sarbanes-Oxley Act of 2002, I, Paritosh K. Choksi, Chief Financial Officer of
ATEL Financial Services, LLC, general partner of the Partnership, hereby certify
that:
1. The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act
of 1934 ; and
2. The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.
/s/ PARITOSH K. CHOKSI
- -------------------------------------
Paritosh K. Choksi Executive Vice President of General
Partner, Principal financial officer of registrant
August 14, 2002
17
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:
August 14, 2002
ATEL CASH DISTRIBUTION FUND VI, L.P.
(Registrant)
By: ATEL Financial Services, LLC
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
General Partner, Principal
financial officer of registrant
By: /s/ DONALD E. CARPENTER
--------------------------------------
Donald E. Carpenter
Principal accounting
officer of registrant
18