-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IsbuXNbmC24+rvM8YeKEIFF8hK/Q0DecgkZA7tBPf445BvV6mzi1lrGlStQqS22l ibQJ1zoX+89CIZ7ysQENPA== 0001019542-97-000003.txt : 19970515 0001019542-97-000003.hdr.sgml : 19970515 ACCESSION NUMBER: 0001019542-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATEL CAPITAL EQUIPMENT FUND VII LP CENTRAL INDEX KEY: 0001019542 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943248318 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-08879 FILM NUMBER: 97603857 BUSINESS ADDRESS: STREET 1: 235 PINE STREET 6TH FLOOR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4159898800 MAIL ADDRESS: STREET 1: 235 PINE STREET STREET 2: SIXTH FLOOR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 10-Q 1 QUARTERLY REPORT ON FORM 10Q 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 March 31, 1997 |_| 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 333-08879 ATEL Capital Equipment Fund VII, L.P. (Exact name of registrant as specified in its charter) California 94-3248318 (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 Part I. FINANCIAL INFORMATION Item 1. Financial Statements. ATEL CAPITAL EQUIPMENT FUND VII, L.P. BALANCE SHEETS MARCH 31, 1997 AND DECEMBER 31, 1996 (Unaudited) ASSETS 1997 1996 ---- ---- Cash and cash equivalents $1,118,406 $600 Accounts receivable 216,218 Investments in leases 20,887,328 ----------------- ------------------ Total assets $22,221,952 $600 ================= ================== LIABILITIES AND PARTNERS' CAPITAL Lines of credit $8,788,690 Accounts payable: General Partner 54,079 Other 53,979 Unearned operating lease income 125,214 ----------------- Total liabilities 9,021,962 Partners' capital: General Partner (645) $100 Limited Partners 13,200,635 500 ----------------- ------------------ Total partners' capital 13,199,990 600 ----------------- ------------------ Total liabilities and partners' capital $22,221,952 $600 ================= ================== See accompanying notes. ATEL CAPITAL EQUIPMENT FUND VII, L.P. STATEMENT OF OPERATIONS THREE MONTH PERIOD ENDED MARCH 31, 1997 (Unaudited) Revenues: Leasing activities: Operating leases $1,515,545 Interest 2,646 Other 117 ------------------ 1,518,308 Expenses: Depreciation 1,018,723 Interest expense 303,983 Administrative cost reimbursements to General Partner 87,163 Equipment and incentive management fees to General Partner 57,329 Other 52,694 Professional fees 8,345 ------------------ 1,528,237 ------------------ Net loss ($9,929) ================== Net loss: General Partner ($745) Limited Partners (9,184) ------------------ ($9,929) ================== Net loss per Limited Partnership Unit ($0.01) Weighted average number of Units outstanding 788,645 STATEMENT OF CHANGES IN PARTNERS' CAPITAL THREE MONTH PERIOD ENDED MARCH 31, 1997 (Unaudited)
Limited Partners General Units Amount Partner Total Balance December 31, 1996 50 $500 $100 $600 Capital contributions 1,556,709 15,567,090 - 15,567,090 Less selling commissions to affiliates (1,478,874) - (1,478,874) Other syndication costs to affiliates (802,670) - (802,670) Distributions to partners (76,227) - (76,227) Net loss (9,184) (745) (9,929) ----------------- ----------------- ----------------- ------------------ Balance March 31, 1997 1,556,759 $13,200,635 ($645) $13,199,990 ================= ================= ================= ==================
See accompanying notes. ATEL CAPITAL EQUIPMENT FUND VII, L.P. STATEMENT OF CASH FLOWS THREE MONTH PERIOD ENDED MARCH 31, 1997
Operating activities: Net loss ($9,929) Adjustments to reconcile net income to cash provided by operating activities: Depreciation 1,018,723 Changes in operating assets and liabilities: Accounts receivable (216,218) Accounts payable, General Partner 54,079 Accounts payable, other 53,979 Unearned lease income 125,214 ------------------ Net cash provided by operations 1,025,848 ------------------ Investing activities: Purchases of equipment on operating leases (21,146,051) Purchases of equipment on direct financing leases (760,000) ------------------ Net cash used in investing activities (21,906,051) ------------------ Financing activities: Borrowings under line of credit 9,273,690 Repayments of borrowings under line of credit (485,000) Capital contributions received 15,567,090 Payment of syndication costs to General Partner (2,281,544) Distributions to partners (76,227) ------------------ Net cash provided by financing activities 21,998,009 ------------------ Net increase in cash and cash equivalents 1,117,806 Cash and cash equivalents at beginning of period 600 ------------------ Cash and cash equivalents at end of period $1,118,406 ================== Supplemental disclosures of cash flow information: Cash paid during the period for interest $303,983 ==================
See accompanying notes. ATEL CAPITAL EQUIPMENT FUND VII, L.P. NOTES TO FINANCIAL STATEMENTS MARCH 31, 1997 (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 Capital Equipment Fund VII, L.P. (the Fund), was formed under the laws of the State of California on July 17 , 1996, for the purpose of acquiring equipment to engage in equipment leasing and sales activities. Contributions in the amount of $600 were received as of July 17, 1996, $100 of which represented the General Partner's (ATEL Financial Corporation'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 January 7, 1997, the Partnership commenced operations. 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 Balance Amortization March 31, Additions of Leases 1997 Net investment in operating leases $21,146,051 ($1,018,723) $20,127,328 Net investment in direct financing leases 760,000 - 760,000 ----------------- ----------------- ----------------- $21,906,051 ($1,018,723) $20,887,328 ================= ================= =================
ATEL CAPITAL EQUIPMENT FUND VII, L.P. NOTES TO FINANCIAL STATEMENTS MARCH 31, 1997 (Unaudited) 3. Investment in leases (continued): Property on operating leases consists of the following: Transportation $18,907,388 Construction 350,000 Materials handling 982,293 Manufacturing 906,370 ----------------- 21,146,051 Less accumulated depreciation (1,018,723) ----------------- $20,127,328 ================= As of March 31, 1997, investment in direct financing leases consists of fuel trucks. The following lists the components of the Partnership's investment in direct financing leases as of March 31, 1997: Total minimum lease payments receivable $1,055,768 Estimated residual values of leased equipment (unguaranteed) 133,380 ------------------ Investment in direct financing leases 1,189,148 Less unearned income (429,148) ------------------ Net investment in direct financing leases $760,000 ================== All of the property on leases was acquired in 1997. There were no dispositions of such property. At March 31, 1997, the aggregate amounts of future minimum lease payments are as follows: Direct Year ending Operating Financing December 31, Leases Leases Total 1997 $3,154,244 $71,984 $3,226,228 1998 3,792,878 95,979 3,888,857 1999 2,463,148 95,979 2,559,127 2000 1,665,631 95,979 1,761,610 2001 1,447,397 95,979 1,543,376 Thereafter 1,135,699 599,868 1,735,567 ----------------- ----------------- ----------------- $13,658,997 $1,055,768 $14,714,765 ================= ================= ================= ATEL CAPITAL EQUIPMENT FUND VII, L.P. NOTES TO FINANCIAL STATEMENTS MARCH 31, 1997 (Unaudited) 4. 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 Limited Partnership Agreement allows for the reimbursement of costs incurred by the General Partner in providing administrative services to the Partnership. Administrative services provided include Partnership accounting, investor relations, legal counsel and lease and equipment documentation. The General Partner is not reimbursed for services where it is entitled to receive a separate fee as compensation for such services, such as acquisition and management of equipment. Reimbursable costs incurred by the General Partner are allocated to the Partnership based upon actual time incurred by employees working on Partnership business and an allocation of rent and other costs based on utilization studies. Substantially all employees of the General Partner record time incurred in performing administrative services on behalf of all of the Partnerships serviced by the General Partner. The General Partner believes that the costs reimbursed are the lower of (i) actual costs incurred on behalf of the Partnership or (ii) the amount the Partnership would be required to pay independent parties for comparable administrative services in the same geographic location and are reimbursable in accordance with the Limited Partnership Agreement.
The General Partner and/or Affiliates earned fees, commissions and reimbursements, pursuant to the Limited Partnership Agreement as follows: Selling commissions (equal to 9.5% of the selling price of the Limited Partnership units, deducted from Limited Partners' capital) $1,478,874 Reimbursement of other syndication costs 802,670 Incentive management fees (computed as 4% of distributions of cash from operations, as defined in the Limited Partnership Agreement) and equipment management fees (computed as 3.5% 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). 57,329 Administrative costs reimbursed to General Partner 87,163 ------------------ $2,426,036 ==================
ATEL CAPITAL EQUIPMENT FUND VII, L.P. NOTES TO FINANCIAL STATEMENTS MARCH 31, 1997 (Unaudited) 5. Partner's capital: As of March 31, 1997, 1,556,759 Units ($15,567,590) were issued and outstanding. The Fund's registration statement with the Securities and Exchange Commission became effective November 29, 1996. The Fund is authorized to issue up to 15,000,050 Units, including the 50 Units issued to the initial limited partners. Available Cash from Operations, as defined in the Limited Partnership Agreement, shall be distributed as follows: First, Distributions of Cash from Operations shall be 88.5% to the Limited Partners, 7.5% to the General Partner and 4% to the General Partner or its affiliate designated as the recipient of the Incentive Management Fee, until the Limited Partners have 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, as defined in the Limited Partnership Agreement. Second, 85% to the Limited Partners, 7.5% to the General Partner and 7.5% to the General Partner or its affiliate designated as the recipient of the Incentive Management Fee. Available Cash from Sales or Refinancing, as defined in the Limited Partnership Agreement, shall be distributed as follows: First, Distributions of Sales or Refinancings shall be 92.5% to the Limited Partners and 7.5% to the General Partner, until the Limited Partners have 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. Second, 85% to the Limited Partners, 7.5% to the General Partner and 7.5% to the General Partner or its affiliate designated as the recipient of the Incentive Management Fee. 6. Line of credit: The Partnership participates with the General Partner and certain of its Affiliates in a $90,000,000 revolving credit agreement with a group of financial institutions which expires on October 28, 1997. The agreement includes an acquisition facility and a warehouse facility which are used to provide bridge financing for assets on leases. 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 Affiliates, the Partnership and the General Partner. At March 31, 1997, the Partnership had $8,788,690 of borrowings under the line of credit. The credit agreement includes certain financial covenants applicable to each borrower. The Partnership was in compliance with its covenants as of March 31, 1997. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Capital Resources and Liquidity During the first quarter of 1997, the Partnership's primary activities were raising funds through its offering of Limited Partnership Units (Units) and engaging in equipment leasing activities. Through March 31, 1997, the Partnership had received subscriptions for 1,556,759 Units ($15,567,590) all of which were issued and outstanding. During the funding period, the Partnership's primary source of liquidity is subscription proceeds from the public offering of Units. 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 $90,000,000 revolving line of credit with a financial institution. The line of credit expires on October 28, 1997. 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. No commitments of capital have been or are expected to be made other than for the acquisition of additional equipment. Such commitments totaled approximately $4,669,000 as of May 1, 1997. 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. During the first quarter of 1997, the Partnership's primary sources of liquidity were the proceeds of its offering of Units and funds borrowed on the line of credit or on a non-recourse basis. Cash from operating activities was almost entirely from operating lease rents. There were no sources of cash from investing activities during the quarter. The primary investing use of cash was the purchase of assets on operating and direct financing leases. Cash from financing sources consisted of cash received for subscriptions for Units and borrowings under the line of credit. The purchase of lease assets was primarily funded with borrowings on this line of credit and the proceeds of the Partnership's public offering of Units. Results of operations Operations resulted in a net loss of $178,604. The Partnership's primary source of revenues is from operating leases. This is expected to remain true in future periods although the amounts are expected to increase as a result of additional equipment acquisitions. Depreciation expense is the single largest expense of the Partnership and is expected to remain so in future periods although at a higher amount. Equipment management fees are based on the Partnership's rental revenues and are expected to increase in relation to expected increases in the Partnership's revenues from leases. Incentive management fees are based on the levels of distributions to limited partners. As the effective distribution rate increases and as the number of units outstanding increases (as a result of the continuing offering of such units), the incentive management fee is expected to increase. Interest expense for the first quarter of 1997 related to the borrowings under the line of credit. It included all amounts related to those borrowings, going back as far as November 1996 when the General Partner started to fund the related transactions on behalf of the Partnership. All of the revenues and related carrying costs for these transactions have been attributed to the Partnership in the first quarter of 1997. PART II. OTHER INFORMATION Item 1. Legal Proceedings. Inapplicable. Item 2. Changes In Securities. Inapplicable. Item 3. Defaults Upon Senior Securities. Inapplicable. Item 4. Submission Of Matters To A Vote Of Security Holders. Inapplicable. Item 5. Other Information. Inapplicable. Item 6. Exhibits And Reports On Form 8-K. (a) Documents filed as a part of this report 1. Financial Statements Included in Part I of this report: Balance Sheets, March 31, 1997 and December 31, 1996. Statement of changes in partners' capital for the three months ended March 31, 1997. Statement of operations for the three month period ended March 31, 1997. Statement of cash flows for the three month period ended March 31, 1997. 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 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 12, 1997 ATEL CAPITAL EQUIPMENT FUND VII, L.P. (Registrant) By: ATEL Financial Corporation General Partner of Registrant By: /s/ A. J. Batt ----------------------------------- A. J. Batt President and Chief Executive Officer of General Partner By: /s/ Dean L. Cash ----------------------------------- Dean L. Cash Executive Vice President of General Partner By: /s/ F. Randall Bigony ----------------------------------- F. Randall Bigony Principal financial officer of registrant By: /s/ Donald E. Carpenter ----------------------------------- Donald E. Carpenter Principal accounting officer of registrant EX-27 2 FDS --
5 3-mos DEC-31-1997 JAN-01-1997 MAR-31-1997 1,118,406 0 216,218 0 0 0 0 0 22,221,952 0 0 0 0 0 13,199,990 22,221,952 0 1,518,308 0 0 1,224,254 0 303,983 (9,929) 0 (9,929) 0 0 0 (9,929) 0 0
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