-----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, N7TYJiqUS5Y6BHMrkwQVC9rkbUbVIW5lqRnwH95NJNTvV+s8o0z5eXml9C7QYMev X2kww8P5FMQJMwNQXmT22g== 0001069152-99-000005.txt : 19991117 0001069152-99-000005.hdr.sgml : 19991117 ACCESSION NUMBER: 0001069152-99-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATEL CAPITAL EQUIPMENT FUND VIII LLC CENTRAL INDEX KEY: 0001069152 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943307404 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-62477 FILM NUMBER: 99751506 BUSINESS ADDRESS: STREET 1: 235 PINE ST STREET 2: 6TH FL CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4159898800 MAIL ADDRESS: STREET 1: 235 PINE ST STREET 2: 6TH FL CITY: SAN FRANCISCO STATE: CA ZIP: 94104 10-Q 1 REPORT FOR THE THIRD QUARTER OF 1999 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 September 30, 1999 |_| 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 333-62477 ATEL Capital Equipment Fund VIII, LLC (Exact name of registrant as specified in its charter) California 94-3307404 (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 VIII, LLC BALANCE SHEETS SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 (Unaudited) ASSETS 1999 1998 ---- ---- Cash and cash equivalents $ 2,498,115 $ 600 Accounts receivable 1,966,818 - Other assets 150,000 - Investments in leases 55,896,235 - ----------------- ---------------- Total assets $60,511,168 $ 600 ================= ================ LIABILITIES AND MEMBERS' CAPITAL Line of credit $8,000,000 Accounts payable: General Partner 128,459 Other 1,740,870 Unearned operating lease income 41,768 ----------------- Total liabilities 9,911,097 Members' capital: Managing member (80,335) $ 100 Other members 50,680,406 500 ----------------- ---------------- Total members' capital 50,600,071 600 ----------------- ---------------- Total liabilities and members' capital $60,511,168 $ 600 ================= ================ See accompanying notes. ATEL CAPITAL EQUIPMENT FUND VIII, LLC INCOME STATEMENTS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 1999 (Unaudited)
Nine Months Three Months Revenues: Leasing activities: Operating leases $4,359,539 $2,878,064 Direct financing leases 212,286 86,798 Interest 72,585 53,496 Other 372 165 ----------------- ---------------- 4,644,782 3,018,523 Expenses: Depreciation 2,792,084 1,748,864 Interest expense 764,541 341,959 Administrative cost reimbursements to Managing Member 516,568 240,445 Asset management fees to Managing Member 232,387 153,399 Professional fees 29,213 1,602 Other 40,006 23,700 ----------------- ---------------- 4,374,799 2,509,969 ----------------- ---------------- Net income $ 269,983 $ 508,554 ================= ================ Net income: Managing member $ 20,249 $ 38,142 Other members 249,734 470,412 ----------------- ---------------- $ 269,983 $ 508,554 ================= ================ Net income per Limited Liability Company Unit $ 0.08 $ 0.09 Weighted average number of Units outstanding 3,014,585 4,998,549
STATEMENT OF CHANGES IN MEMBERS' CAPITAL NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999 (Unaudited)
Other Members Managing Units Amount Member Total Balance December 31, 1998 50 $ 500 $ 100 $ 600 Capital contributions 6,017,684 60,176,840 - 60,176,840 Less selling commissions to affiliates (5,716,800) - (5,716,800) Other syndication costs to affiliates (2,788,098) - (2,788,098) Distributions to members (1,241,770) (100,684) (1,342,454) Net income 249,734 20,249 269,983 ----------------- ------------------ ---------------- ---------------- Balance September 30, 1999 6,017,734 $50,680,406 $ (80,335) $ 50,600,071 ================= ================== ================ ================
See accompanying notes. ATEL CAPITAL EQUIPMENT FUND VIII, LLC STATEMENTS OF CASH FLOWS NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 1999 (Unaudited)
Nine Months Three Months Operating activities: Net income $ 269,983 $ 508,554 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 2,792,084 1,748,864 Changes in operating assets and liabilities: Accounts receivable (1,966,818) (975,723) Other assets (150,000) (150,000) Accounts payable, Managing Member 128,459 128,459 Accounts payable, other 1,740,870 1,498,035 Unearned lease income 41,768 (7,998) ----------------- ---------------- Net cash provided by operations 2,856,346 2,750,191 ----------------- ---------------- Investing activities: Purchases of equipment on operating leases (49,378,065) (24,739,628) Purchases of equipment on direct financing leases (9,951,981) (4,610,893) Reduction of net investment in direct financing leases 675,100 334,231 Payment of initial direct costs (33,373) - ----------------- ---------------- Net cash used in investing activities (58,688,319) (29,016,290) ----------------- ---------------- Financing activities: Capital contributions received 60,176,840 19,591,390 Payment of syndication costs to managing member (8,504,898) (2,691,935) Borrowings under line of credit 8,000,000 8,000,000 Distributions to members (1,342,454) (913,033) ----------------- ---------------- Net cash provided by financing activities 58,329,488 23,986,422 ----------------- ---------------- Net increase (decrease) in cash and cash equivalents 2,497,515 (2,279,677) Cash and cash equivalents at beginning of period 600 4,777,792 ----------------- ---------------- Cash and cash equivalents at end of period $2,498,115 $2,498,115 ================= ================ Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 764,541 $ 341,959 ================= ================
See accompanying notes. ATEL CAPITAL EQUIPMENT FUND VIII, LLC NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 (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 managing member, 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 Company matters: ATEL Capital Equipment Fund VIII, LLC. (the Company), was formed under the laws of the State of California on July 31, 1998, for the purpose of acquiring equipment to engage in equipment leasing and sales activities. Contributions in the amount of $600 were received as of October 7, 1998, $100 of which represented the Managing Member's (ATEL Financial Corporation's) continuing interest, and $500 of which represented the Initial Members' capital investment. Upon the sale of the minimum amount of Units of Limited Liability Company interest (Units) of $1,200,000 and the receipt of the proceeds thereof on January 13, 1999, the Company commenced operations. The Company 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 Company's investment in leases consists of the following:
Depreciation Expense or Balance Amortization September 30, Additions of Leases 1999 Net investment in operating leases $49,378,065 $ (2,785,232) $46,592,833 Net investment in direct financing leases 9,951,981 (675,100) 9,276,881 Initial direct costs, net of accumulated amortization 33,373 (6,852) 26,521 ----------------- ------------------ ---------------- $59,330,046 $ (3,460,332) $55,896,235 ================= ================== ================
ATEL CAPITAL EQUIPMENT FUND VIII, LLC NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 (Unaudited) 3. Investment in leases (continued): Operating leases: Property on operating leases consists of the following:
Balance Acquisitions September 30, 1st Quarter 2nd Quarter 3rd Quarter 1999 ----------- ----------- ----------- ---- Transportation $ 7,404,130 $ 9,160,425 $ 14,675,893 $31,240,448 Natural gas compressors - - 6,272,782 6,272,782 Marine vessel - 3,952,500 - 3,952,500 Other 280,500 811,794 2,234,583 3,326,877 Manufacturing 494,113 952,267 1,177,406 2,623,786 Materials handling 594,748 987,960 378,964 1,961,672 ---------------- ----------------- ------------------ ---------------- 8,773,491 15,864,946 24,739,628 49,378,065 Less accumulated depreciation (134,842) (903,802) (1,746,588) (2,785,232) ---------------- ----------------- ------------------ ---------------- $ 8,638,649 $14,961,144 $ 22,993,040 $46,592,833 ================ ================= ================== ================
Direct financing leases: As of September 30, 1999, investment in direct financing leases consists office automation equipment. The following lists the components of the Company's investment in direct financing leases as of September 30, 1999: Total minimum lease payments receivable $ 9,871,322 Estimated residual values of leased equipment (unguaranteed) 1,233,142 ----------------- Investment in direct financing leases 11,104,464 Less unearned income (1,827,583) ----------------- Net investment in direct financing leases $ 9,276,881 ================= All of the property on leases was acquired in 1999. There were no dispositions of such property. ATEL CAPITAL EQUIPMENT FUND VIII, LLC NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 (Unaudited) 3. Investment in leases (continued): At September 30, 1999, the aggregate amounts of future minimum lease payments are as follows:
Direct Year ending Operating Financing December 31, Leases Leases Total ------------ ------ ------ ----- Three months ending December 31, 1999 $ 1,836,999 $ 557,665 $ 2,394,664 Year ending December 31, 2000 7,330,462 2,230,662 9,561,124 2001 7,312,926 2,090,045 9,402,971 2002 6,902,229 1,569,838 8,472,067 2003 5,023,207 1,418,365 6,441,572 Thereafter 17,635,270 2,004,747 19,640,017 ------------------ ---------------- ---------------- $ 46,041,093 $ 9,871,322 $ 55,912,415 ================== ================ ================
4. Related party transactions: The terms of the Limited Company Operating Agreement provide that the Managing Member and/or Affiliates are entitled to receive certain fees for equipment acquisition, management and resale and for management of the Company. The Limited Liability Company Operating Agreement allows for the reimbursement of costs incurred by the Managing Member in providing administrative services to the Company. Administrative services provided include Company accounting, investor relations, legal counsel and lease and equipment documentation. The Managing Member 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 Managing Member are allocated to the Company based upon actual time incurred by employees working on Company business and an allocation of rent and other costs based on utilization studies. Substantially all employees of the Managing Member record time incurred in performing administrative services on behalf of all of the Companies serviced by the Managing Member. The Managing Member believes that the costs reimbursed are the lower of actual costs incurred on behalf of the Company or the amount the Company would be required to pay independent parties for comparable administrative services in the same geographic location and are reimbursable in accordance with the Limited Liability Company Operating Agreement. The Managing Member and/or Affiliates earned fees, commissions and reimbursements, pursuant to the Limited Liability Company Agreement as follows:
Selling commissions (equal to 9.5% of the selling price of the Limited Liability Company units, deducted from Other Members' capital) $5,716,800 Reimbursement of other syndication costs to Managing Member 2,788,098 Administrative costs reimbursed to Managing Member 516,568 Asset management fees to Managing Member 232,387 ----------------- $9,253,853 =================
ATEL CAPITAL EQUIPMENT FUND VIII, LLC NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 (Unaudited) 5. Member's capital: As of September 30, 1999, 6,017,734 Units ($60,177,340) were issued and outstanding. The Company's registration statement with the Securities and Exchange Commission became effective December 7, 1998. The Company is authorized to issue up to 15,000,050 Units, including the 50 Units issued to the initial members. The Company's Net Income, Net Losses, and Distributions are to be allocated 92.5% to the Members and 7.5% to the Managing Member. 6. Line of credit: The Company participates with the Managing Member and certain of its Affiliates in a $95,000,000 revolving credit agreement with a group of financial institutions which expires on January 28, 2000. 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 Company and the Managing Member. At September 30, 1999, the borrowings under the line of credit were $8,000,000. The credit agreement includes certain financial covenants applicable to each borrower. The Company was in compliance with its covenants as of September 30, 1999. 7. Long-term debt: The Company has established a $40 million dollar receivables funding program with a receivables financing company that issues commercial paper rated A1 from Standard and Poors and P1 from Moody's Investor Services. In this receivables funding program, the lenders will receive a general lien against all of the otherwise unencumbered assets of the Company. The program provides for borrowing at a variable interest rate and requires the Managing Member to enter into hedge agreements with certain hedge counterparties (also rated A1/P1) to mitigate the interest rate risk associated with a variable rate note. The Managing Member anticipates that this program will allow the Company to avail itself of lower cost debt than that available for individual non-recourse debt transactions. It is the intention of the Company to use the receivables funding program to finance assets leased to those credits which, in the opinion of the Managing Member, have a relatively lower potential risk of lease default then those lessees with equipment financed with non-recourse debt. The Company will continue to use its traditional sources of non-recourse secured debt financing on a transaction basis as a means of mitigating credit risk. There were no borrowings under the facility as of September 30, 1999. 8. Commitments: As of September 30, 1999, the Company had outstanding commitments to purchase lease equipment totaling approximately $33,852,000. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Capital Resources and Liquidity During the first nine months of 1999, the Company's primary activities were raising funds through its offering of Limited Liability Company Units (Units) and engaging in equipment leasing activities. Through September 30, 1999, the Company had received subscriptions for 6,017,734 Units ($60,177,340) all of which were issued and outstanding. During the funding period, the Company's primary source of liquidity is subscription proceeds from the public offering of Units. The liquidity of the Company 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 members and to the extent expenses exceed cash flows from leases. As another source of liquidity, the Company has contractual obligations with a diversified group of lessees for fixed lease terms at fixed rental amounts. As the initial lease terms expire the Company will re-lease or sell the equipment. The future liquidity beyond the contractual minimum rentals will depend on the Managing Member's success in re-leasing or selling the equipment as it comes off lease. The Company participates with the Managing Member and certain of its affiliates in a $95,000,000 revolving line of credit with a financial institution. The line of credit expires on January 28, 2000. The Company 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 Managing Member and providing for cash distributions to the Limited Partners. The Company currently has available adequate reserves to meet contingencies, but in the event those reserves were found to be inadequate, the Company would likely be in a position to borrow against its current portfolio to meet such requirements. The Managing Member 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 $33,852,000 as of September 30, 1999. If inflation in the general economy becomes significant, it may affect the Company inasmuch as the residual (resale) values and rates on re-leases of the Company's leased assets may increase as the costs of similar assets increase. However, the Company'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 Company 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 During the first nine months of 1999, the Company's primary source of liquidity was the proceeds of its offering of Units. Sources of cash flows from operating activities consisted primarily of operating lease revenues. Rents from direct financing leases were the only source of cash from investing activities. Uses of cash for investing activities consisted of cash used to purchase operating and direct financing lease assets and payment of initial direct costs related to lease asset purchases. The primary source of cash from financing activities was the proceeds of the Company's public offering of Units of Limited Liability Company interest. Borrowings under the line of credit was the only other financing source of cash. Financing uses of cash included payments of syndication costs associated with the offering and distributions to the members. Results of operations On January 13, 1999, the Company commenced operations. Operations resulted in net income of $269,983 for the nine month period and $508,554 for the three month period. The Company's primary source of revenues is from operating leases. In future periods, operating leases are also expected to be the most significant source of revenues. Depreciation is related to operating lease assets and thus, to operating lease revenues. It is expected to increase in future periods as acquisitions continue. Asset management fees are based on the gross lease rents of the Company plus proceeds from the sales of lease assets. They are limited to certain percentages of lease rents, distributions to members and certain other items. As assets are acquired, lease rents are collected and distributions are made to the members, these fees are expected to increase. Interest expense for the first nine months of 1999 related largely to the borrowings under the line of credit incurred by an affiliate of the Managing Member. It included all amounts related to those borrowings, going back as far as November 1998 when the Managing Member started to fund the related transactions on behalf of the Company. All of the revenues and related carrying costs for these transactions were attributed to the Company in the first nine months of 1999. Results of operations in future periods are expected to vary considerably from those of the first nine months of 1999 as the Company continues to acquire significant amounts of lease assets. 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. Information provided pursuant to ss. 228.701 (Item 701(f))(formerly included in Form SR): (1) Effective date of the offering: December 7, 1998; File Number: 333-62477 (2) Offering commenced: December 7, 1998 (3) The offering did not terminate before any securities were sold. (4) The offering has not been terminated prior to the sale of all of the securities. (5) The managing underwriter is ATEL Securities Corporation. (6) The title of the registered class of securities is "Units of Limited Liability Company interest". (7) Aggregate amount and offering price of securities registered and sold as of October 31, 1999.
Aggregate Aggregate price of price of offering offering Amount amount Amount amount Title of Security Registered registered sold sold Limited Company units 15,000,000 $150,000,000 6,631,651 $ 66,316,510 (8) Costs incurred for the issuers account in connection with the issuance and distribution of the securities registered for each category listed below: Direct or indirect payments to directors, officers, general partners of the issuer or their associates; to persons owning ten percent or more of any Direct or class of equity securities of indirect the issuer; and to affiliates of payments to the issuer others Total Underwriting discounts and commissions $ - $6,300,068 $6,300,068 Other expenses - 3,234,243 3,234,243 ----------------- ----------------- ---------------- Total expenses $ - $9,534,311 $9,534,311 ================= ================= ================
(9) Net offering proceeds to the issuer after the total expenses in item 8: $ 56,782,199 (10) The amount of net offering proceeds to the issuer used for each of the purposes listed below:
Direct or indirect payments to directors, officers, general partners of the issuer or their associates; to persons owning ten percent or more of any Direct or class of equity securities of indirect the issuer; and to affiliates of payments to the issuer others Total Purchase and installation of machinery and equipment $ - $56,450,616 $ 56,450,616 Working capital - 331,583 331,583 ----------------- ----------------- ---------------- $ - $56,782,199 $ 56,782,199 ================= ================= ================
(11) The use of the proceeds in Item 10 does not represent a material change in the uses of proceeds described in the prospectus. Item 6. Exhibits And Reports On Form 8-K. (a) Documents filed as a part of this report 1. Financial Statements Included in Part I of this report: Balance Sheets, September 30, 1999 and December 31, 1998. Income statements for the nine and three month periods ended September 30, 1999. Statement of changes in partners' capital for the nine month period ended September 30, 1999. Statements of cash flows for the nine and three month periods ended September 30, 1999. 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: November 12, 1999 ATEL CAPITAL EQUIPMENT FUND VIII, LLC (Registrant) By: ATEL Financial Corporation Managing Member of Registrant By: /s/ A. J. BATT ------------------------------------ A. J. Batt President and Chief Executive Officer of Managing Member By: /s/ DEAN L. CASH ------------------------------------ Dean L. Cash Executive Vice President of Managing Member 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 EX-27 2 FDS --
5 3-MOS Dec-31-1999 Sep-30-1999 2498115 0 1966818 0 0 0 0 0 60511168 0 0 0 0 0 50600071 60511168 0 4644782 0 0 3610258 0 764541 269983 0 269983 0 0 0 269983 0 0
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