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x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
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o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
(Exact name of registrant as specified in its charter)
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California | 94-3307404 | |
(State or other jurisdiction of Incorporation or organization) |
(I. R. S. Employer Identification No.) |
(Address of principal executive offices)
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 Liability Company 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.
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Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company x |
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 Liability Company Units outstanding as of July 31, 2013 was 13,560,188.
None.
2
JUNE 30, 2013 AND DECEMBER 31, 2012
(In Thousands)
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June 30, 2013 |
December 31, 2012 | |||||||
(Unaudited) | ||||||||
ASSETS |
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Cash and cash equivalents | $ | 3,316 | $ | 516 | ||||
Accounts receivable, net of allowance for doubtful accounts of $0 as of June 30, 2013 and $10 as of December 31, 2012 | 743 | 836 | ||||||
Prepaid expenses and other assets | 14 | 19 | ||||||
Investments in equipment and leases, net of accumulated depreciation of $34,109 as of June 30, 2013 and $35,621 as of December 31, 2012 | 6,334 | 6,959 | ||||||
Total assets | $ | 10,407 | $ | 8,330 | ||||
LIABILITIES AND MEMBERS CAPITAL |
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Accounts payable and accrued liabilities: |
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Managing Member | $ | 316 | $ | 780 | ||||
Other | 86 | 172 | ||||||
Unearned operating lease income | 46 | 86 | ||||||
Total liabilities | 448 | 1,038 | ||||||
Commitments and contingencies |
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Members capital: |
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Managing Member | | | ||||||
Other Members | 9,959 | 7,292 | ||||||
Total Members capital | 9,959 | 7,292 | ||||||
Total liabilities and Members capital | $ | 10,407 | $ | 8,330 |
See accompanying notes.
3
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2013 AND 2012
(In Thousands Except for Units and Per Unit Data)
(Unaudited)
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues: |
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Leasing activities: |
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Operating leases | $ | 1,014 | $ | 1,342 | $ | 2,142 | $ | 2,817 | ||||||||
Direct financing leases | | 12 | | 30 | ||||||||||||
Gain on sales of assets | 1,519 | 20 | 1,559 | 23 | ||||||||||||
Other revenue | 1 | 1 | 108 | 1 | ||||||||||||
Total revenues | 2,534 | 1,375 | 3,809 | 2,871 | ||||||||||||
Expenses: |
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Depreciation of operating lease assets | 162 | 259 | 376 | 571 | ||||||||||||
Asset management fees to Managing Member | 29 | 40 | 61 | 89 | ||||||||||||
Vessel maintenance | (28 | ) | 226 | 107 | 423 | |||||||||||
Railcar maintenance | 105 | 111 | 187 | 238 | ||||||||||||
Cost reimbursements to Managing Member | 72 | 73 | 152 | 289 | ||||||||||||
Other management fees | 23 | 36 | 50 | 75 | ||||||||||||
Railcar storage fees | 17 | 20 | 37 | 35 | ||||||||||||
Professional fees | 30 | 35 | 81 | 81 | ||||||||||||
Reversal of provision for doubtful accounts | | (18 | ) | (10 | ) | (22 | ) | |||||||||
Taxes on income and franchise fees | 13 | 29 | 26 | 41 | ||||||||||||
Postage | 2 | 5 | 6 | 9 | ||||||||||||
Printing and photocopying | | 7 | 8 | 14 | ||||||||||||
Freight and shipping | 4 | 1 | 12 | 9 | ||||||||||||
Other | 16 | 45 | 49 | 91 | ||||||||||||
Total operating expenses | 445 | 869 | 1,142 | 1,943 | ||||||||||||
Net income | $ | 2,089 | $ | 506 | $ | 2,667 | $ | 928 | ||||||||
Net income: |
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Managing Member | $ | | $ | | $ | | $ | | ||||||||
Other Members | 2,089 | 506 | 2,667 | 928 | ||||||||||||
$ | 2,089 | $ | 506 | $ | 2,667 | $ | 928 | |||||||||
Net income per Limited Liability Company Unit (Other Members) | $ | 0.15 | $ | 0.04 | $ | 0.20 | $ | 0.07 | ||||||||
Weighted average number of Units outstanding | 13,560,188 | 13,560,188 | 13,560,188 | 13,560,188 |
See accompanying notes.
4
FOR THE YEAR ENDED DECEMBER 31, 2012
AND FOR THE SIX MONTHS ENDED
JUNE 30, 2013
(In Thousands Except for Units and Per Unit Data)
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Other Members | Managing Member | Total | ||||||||||||||
Units | Amount | |||||||||||||||
Balance December 31, 2011 | 13,560,188 | $ | 8,850 | $ | | $ | 8,850 | |||||||||
Distributions to Other Members ($0.24 per Unit) |
| (3,186 | ) | | (3,186 | ) | ||||||||||
Distributions to Managing Member | | | (258 | ) | (258 | ) | ||||||||||
Net income | | 1,628 | 258 | 1,886 | ||||||||||||
Balance December 31, 2012 | 13,560,188 | 7,292 | | 7,292 | ||||||||||||
Net income | | 2,667 | | 2,667 | ||||||||||||
Balance June 30, 2013 (Unaudited) | 13,560,188 | $ | 9,959 | $ | | $ | 9,959 |
See accompanying notes.
5
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2013 AND 2012
(In Thousands)
(Unaudited)
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2013 | 2012 | 2013 | 2012 | |||||||||||||
Operating activities: |
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Net income | $ | 2,089 | $ | 506 | $ | 2,667 | $ | 928 | ||||||||
Adjustment to reconcile net income to cash provided by operating activities: |
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Gain on sales of assets | (1,519 | ) | (20 | ) | (1,559 | ) | (23 | ) | ||||||||
Depreciation of operating lease assets | 162 | 259 | 376 | 571 | ||||||||||||
Reversal of provision for doubtful accounts | | (18 | ) | (10 | ) | (22 | ) | |||||||||
Changes in operating assets and liabilities: |
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Accounts receivable | 19 | 54 | 103 | 29 | ||||||||||||
Prepaid expenses and other assets | 2 | (6 | ) | 5 | (11 | ) | ||||||||||
Accounts payable, Managing Member | (11 | ) | (29 | ) | (464 | ) | (298 | ) | ||||||||
Accounts payable, other | (119 | ) | 18 | (86 | ) | | ||||||||||
Unearned operating lease income | (20 | ) | 25 | (40 | ) | (9 | ) | |||||||||
Net cash provided by operating activities | 603 | 789 | 992 | 1,165 | ||||||||||||
Investing activities: |
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Proceeds from sales of lease assets | 1,680 | 49 | 1,760 | 61 | ||||||||||||
Principal payments received on direct financing leases | 24 | 41 | 48 | 86 | ||||||||||||
Net cash provided by investing activities | 1,704 | 90 | 1,808 | 147 | ||||||||||||
Financing activities: |
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Net cash provided by financing activities | | | | | ||||||||||||
Net increase in cash and cash equivalents | 2,307 | 879 | 2,800 | 1,312 | ||||||||||||
Cash and cash equivalents at beginning of period | 1,009 | 1,358 | 516 | 925 | ||||||||||||
Cash and cash equivalents at end of period | $ | 3,316 | $ | 2,237 | $ | 3,316 | $ | 2,237 | ||||||||
Supplemental disclosures of cash flow information: |
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Cash paid during the period for taxes | $ | 15 | $ | 31 | $ | 17 | $ | 33 |
See accompanying notes.
6
ATEL Capital Equipment Fund VIII, LLC (the Company or the Fund) was formed under the laws of the State of California on July 31, 1998. The Company was formed for the purpose of acquiring equipment to engage in equipment leasing and sales activities. The Managing Member or Manager of the Company is ATEL Financial Services, LLC (AFS), a California limited liability company. The Company may continue until December 31, 2019. Each Members personal liability for obligations of the Company generally will be limited to the amount of their respective contributions and rights to undistributed profits and assets of the Company.
The Company conducted a public offering of 15,000,000 Limited Liability Company Units (Units), at a price of $10 per Unit. On January 13, 1999, subscriptions for the minimum number of Units (120,000, representing $1.2 million) had been received (excluding subscriptions from Pennsylvania investors) and AFS requested that the subscriptions be released to the Company. On that date the Company commenced operations in its primary business. Gross contributions in the amount of $135.7 million (13,570,188 units) were received as of November 30, 2000, inclusive of $500 of initial Members capital investment and $100 of AFS capital investment. The offering was terminated on November 30, 2000. As of June 30, 2013, 13,560,188 Units remain issued and outstanding.
The Companys principal objectives have been to invest in a diversified portfolio of equipment that (i) preserves, protects and returns the Companys invested capital; (ii) generates regular distributions to the Members 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, 2006, and (iii) provides additional distributions following the Reinvestment Period and until all equipment has been sold. The Company is governed by its Limited Liability Company Operating Agreement (Operating Agreement), as amended.
Pursuant to the Operating Agreement, AFS and/or its affiliates receive compensation for services rendered and reimbursements for costs incurred on behalf of the Company (See Note 5). The Company 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 June 30, 2013, the Company continues in the liquidation phase of its life cycle as defined in the Operating Agreement.
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, 2012, 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 Managing Member, 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 and six months ended June 30, 2013 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 of operations.
Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data.
7
In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after June 30, 2013, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements, or 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 relate primarily 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 Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States.
Certain of the Companys lessee customers have international operations. In these instances, the Company 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 Company to track, on an asset-by-asset, day-by-day basis, where these assets are deployed.
The primary geographic region in which the Company sought leasing opportunities was North America. The table below summarizes geographic information relating to the sources, by nation, of the Companys total revenues for the six months ended June 30, 2013 and 2012 and long-lived tangible assets as of June 30, 2013 and December 31, 2012 (dollars in thousands):
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For The Six Months Ended June 30, | ||||||||||||||||
2013 | % of Total | 2012 | % of Total | |||||||||||||
Revenue |
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United States | $ | 3,746 | 98 | % | $ | 2,777 | 97 | % | ||||||||
Canada | 63 | 2 | % | 94 | 3 | % | ||||||||||
Total International | 63 | 2 | % | 94 | 3 | % | ||||||||||
Total | $ | 3,809 | 100 | % | $ | 2,871 | 100 | % |
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As of June 30, | As of December 31, | |||||||||||||||
2013 | % of Total | 2012 | % of Total | |||||||||||||
Long-lived assets |
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United States | $ | 6,310 | 100 | % | $ | 6,935 | 100 | % | ||||||||
Canada | 24 | 0 | % | 24 | 0 | % | ||||||||||
Total International | 24 | 0 | % | 24 | 0 | % | ||||||||||
Total | $ | 6,334 | 100 | % | $ | 6,959 | 100 | % |
8
Net income and distributions per Unit are based upon the weighted average number of Other Members Units outstanding during the period.
Recent accounting standards updates as issued by the Financial Accounting Standards Board (FASB) were evaluated and determined to be not applicable to the Company.
There was no allowance for credit losses or delinquent amounts due to the Company as of June 30, 2013. At December 31, 2012, accounts receivable allowances for doubtful accounts pursuant to operating leases totaled $10 thousand. Such allowance was reversed during the first half of 2013 relative to collections of delinquent amounts.
The Companys investment in leases consists of the following (in thousands):
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Balance December 31, 2012 | Reclassifications & Additions/ Dispositions |
Depreciation/Amortization Expense or Amortization of Leases |
Balance June 30, 2013 |
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Net investment in operating leases | $ | 6,230 | $ | (825 | ) | $ | (338 | ) | $ | 5,067 | ||||||
Net investment in direct financing leases |
100 | (42 | ) | (48 | ) | 10 | ||||||||||
Assets held for sale or lease, net | 629 | 666 | (38 | ) | 1,257 | |||||||||||
Total | $ | 6,959 | $ | (201 | ) | $ | (424 | ) | $ | 6,334 |
Management periodically reviews the carrying values of its assets on leases and assets held for lease or sale. Impairment losses are recorded as an adjustment to the net investment in operating leases. There were no impairment losses recorded during the three and six months ended June 30, 2013 and 2012.
The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment on operating leases currently in its portfolio. Depreciation expense on the Companys equipment totaled $162 thousand and $259 thousand for the respective three months ended June 30, 2013 and 2012, and $376 thousand and $571 thousand for the respective six months ended June 30, 2013 and 2012.
All of the remaining property on lease was acquired during the years 1999 through 2001.
9
Property on operating leases consists of the following (in thousands):
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Balance December 31, 2012 | Additions | Reclassifications or Dispositions | Balance June 30, 2013 |
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Containers | $ | 19,380 | $ | | $ | (595 | ) | $ | 18,785 | |||||||
Transportation, rail | 13,125 | | (1,041 | ) | 12,084 | |||||||||||
Marine vessel | 4,793 | | (4,793 | ) | | |||||||||||
Other | 640 | | | 640 | ||||||||||||
37,938 | | (6,429 | ) | 31,509 | ||||||||||||
Less accumulated depreciation | (31,708 | ) | (338 | ) | 5,604 | (26,442 | ) | |||||||||
Total | $ | 6,230 | $ | (338 | ) | $ | (825 | ) | $ | 5,067 |
The average estimated residual value for assets on operating leases was 10% of the assets original cost at both June 30, 2013 and December 31, 2012.
The Company may earn revenues from its containers, marine vessel and certain other assets based on utilization of such assets or through fixed term leases. Contingent rentals (i.e., short-term, operating charter hire payments) 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 $497 thousand and $623 thousand for the respective three months ended June 30, 2013 and 2012, and $1.0 million and $1.2 million for the respective six months ended June 30, 2013 and 2012.
As of June 30, 2013 and December 31, 2012, the Company had no operating leases in non-accrual status.
As of June 30, 2013, the investment in direct financing leases primarily consists of manufacturing equipment. At December 31, 2012, such investment primarily consisted of railcars and manufacturing equipment.
The components of the Companys investment in direct financing leases as of June 30, 2013 and December 31, 2012 are as follows (in thousands):
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June 30, 2013 |
December 31, 2012 |
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Total minimum lease payments receivable | $ | | $ | 48 | ||||
Estimated residual values of leased equipment (unguaranteed) | 10 | 52 | ||||||
Investment in direct financing leases | 10 | 100 | ||||||
Less unearned income | | | ||||||
Net investment in direct financing leases | $ | 10 | $ | 100 |
The Companys remaining direct financing lease matures on July 1, 2013. At June 30, 2013, the Company retained a $10 thousand residual position in the equipment underlying such direct financing lease.
10
At June 30, 2013, the aggregate amount of future lease payments is as follows (in thousands):
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Operating Leases | ||||
Six months ending December 31, 2013 |
$ | 768 | ||
Year ending December 31, 2014 |
1,166 | |||
2015 |
568 | |||
2016 |
280 | |||
2017 |
263 | |||
2018 | 75 | |||
$ | 3,120 |
The terms of the Operating Agreement provide that AFS and/or affiliates are entitled to receive certain fees for equipment management and resale and for management of the Company.
The Operating Agreement allows for the reimbursement of costs incurred by AFS for providing administrative services to the Company. Administrative services provided include Company 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 management of equipment.
Each of ATEL Leasing Corporation (ALC) and AFS is a wholly-owned subsidiary of ATEL Capital Group and performs services for the Company on behalf of the Managing Member. 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 Managing Member are based on its costs incurred in performing administrative services for the Company. These costs are allocated among all managed entities based on certain criteria such as managed assets, number of investors or contributed capital based upon the type of cost incurred.
During the three and six months ended June 30, 2013 and 2012, AFS and/or affiliates earned fees and commissions, and billed for reimbursements, pursuant to the Operating Agreement as follows (in thousands):
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Three Months Ended June 30, | Six Months Ended June 30, |
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2013 | 2012 | 2013 | 2012 | |||||||||||||
Asset management fees to Managing Member | $ | 29 | $ | 40 | $ | 61 | $ | 89 | ||||||||
Cost reimbursements to Managing Member | 72 | 73 | 152 | 289 | ||||||||||||
$ | 101 | $ | 113 | $ | 213 | $ | 378 |
The Funds Operating Agreement places an annual and cumulative limit for cost reimbursements to AFS and/or its affiliates. Any reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent such amounts may be payable if within the annual and cumulative limits in such future years. The Fund is a finite life and self-liquidating entity, and AFS and its affiliates have no recourse against the Fund for the amount of any unpaid excess reimbursable administrative expenses. The Fund will continue to require administrative services from AFS and its affiliates through the end of its term, and will therefore continue to incur reimbursable administrative expenses in each year. The Fund has determined that payment of any amounts in excess of the annual and cumulative limits is not probable, and the date any portion of such amount may be paid, if ever, is uncertain. When the Fund completes its liquidation stage and terminates, any unpaid amount will expire unpaid, with no claim by AFS or its affiliates
11
against any liquidation proceeds or any party for the unpaid balance. For the year ending December 31, 2013, it is not anticipated that any further billings to the Fund will equal or exceed the annual or cumulative reimbursable expense limitation. Such is reflective of the continued diminishing Fund asset base over which reimbursements are calculated.
The Company enters into contracts that contain a variety of indemnifications. The Companys maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
The Managing Member knows of no facts or circumstances that would make the Companys contractual commitments outside standard mutual covenants applicable to commercial transactions between businesses. Accordingly, the Company 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 Companys similar commitments is remote. Should any such indemnification obligation become payable, the Company would separately record and/or disclose such liability in accordance with GAAP.
ATEL filed a claim on behalf of the Company and certain affiliated entities in Federal court in New Orleans for the under-reporting of revenue by a fleet manager of three marine vessels, seeking to recover an approximate amount of 10% of gross proceeds, which in the aggregate for all affiliated entities represents $2.8 million for the years 2005 2007 (of which the Companys portion is an approximate $350 thousand). The annual allocable portion of the claim is not considered material to the Company in any given year. The trial was concluded during the first week of August 2012. In October 2012, the matter was remitted to the Federal Judge to render a decision on both the law and the facts. The decision of the Court was rendered at the end of June 2013 and the court found in favor of the defendants. The Company filed an appeal of the courts decision and is hopeful for a recovery of all or portion of its asserted claims, but the outcome of the litigation remains uncertain as of such date. As a result of the ruling, the defendants have filed a claim for legal fees and costs, of which the Companys portion would amount to approximately $88 thousand, however, this claim remains in dispute pending the outcome of the appeal, and a final award in favor of either party remains uncertain at this time.
As of June 30, 2013 and December 31, 2012, 13,560,188 Units were issued and outstanding. The Company was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial Members (50 Units).
The Company has the right, exercisable at the Managing Members 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 Company 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 Limited Liability Company Operating Agreement. The repurchase would be at the discretion of the Managing Member on terms it determines to be appropriate under given circumstances, in the event that the Managing Member deems such repurchase to be in the best interest of the Company; provided, the Company 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
12
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 Operating Agreement, the Companys Net Income, Net Losses, and Distributions are to be allocated 92.5% to the Other Members and 7.5% to AFS.
There were no distributions declared or paid during the three and six months ended June 30, 2013 and 2012.
13
Statements contained in this Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations, 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, 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 Companys performance is subject to risks relating to lessee defaults and the creditworthiness of its lessees. The Funds 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 Capital Equipment Fund VIII, LLC (the Company or the Fund) is a California limited liability company that was formed in July 1998 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 Company conducted a public offering of 15,000,000 Limited Liability Company Units (Units), at a price of $10 per Unit. The offering was terminated in November 2000. Total proceeds of the offering were $135.7 million. During early 2001, the Company 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 Company reinvested cash flow in excess of certain amounts required to be distributed to the Other Members and/or utilized its credit facilities to acquire additional equipment.
The Company may continue until December 31, 2019. However, pursuant to the guidelines of the Operating Agreement, the Company began to liquidate its assets and distribute the proceeds thereof after the end of the Reinvestment Period which ended in December 2006.
As of June 30, 2013, the Company continues in its liquidation phase. Accordingly, assets related to leases that mature will be returned to inventory and most likely sold, which will result in decreasing revenue as earning assets decrease. Periodic distributions are paid at the discretion of the Managing Member.
The Company had net income of $2.1 million and $506 thousand for the three months ended June 30, 2013 and 2012, respectively. The results for the second quarter of 2013 primarily reflect an increase in total revenues coupled with a decrease in total operating expenses when compared to the prior year period.
Total revenues for the second quarter of 2013 increased by $1.2 million, or 84%, as compared to the prior year period. The net increase in total revenues was largely due to an increase in gains recognized on sales of assets offset, in part, by a decline in operating lease revenues.
The increase in gains recognized on sales of assets totaled $1.5 million and was largely a result of increased volume and change in the mix of assets sold. During the current year quarter, the Fund sold a group of railcars which were in high demand resulting in a significant gain on the transaction.
14
Partially offsetting the aforementioned increase in gains on sales of assets was a $328 thousand decrease in operating lease revenues. The decrease in operating lease revenues was primarily attributable to the December 2012 termination of a lease relative to the Funds marine vessel, the decrease in usage-based rental income during the current year period, and the impact of continued run-off and dispositions of lease assets since June 30, 2012.
Total operating expenses for the second quarter of 2013 decreased by $424 thousand, or 49%, as compared to the prior year period. The net decrease in total operating expenses was primarily due to reductions in vessel maintenance costs, depreciation expense and other expense.
Vessel maintenance and other operating costs declined by $254 thousand primarily due to vessel inactivity since the end of the lease term in December 2012; and, depreciation expense was reduced by $97 thousand largely due to continued run-off and sales of lease assets.
In addition, other expense decreased by $29 thousand primarily due to a refund received from the third party manager relative to prepaid marine vessel expenses. Such expenses were refunded as a result of the vessel lease termination.
The Company had net income of $2.7 million and $928 thousand for the six months ended June 30, 2013 and 2012, respectively. The results for the first half of 2013 primarily reflect an increase in total revenues and a decrease in total operating expenses when compared to the prior year period.
Total revenues for the first half of 2013 increased by $938 thousand, or 33%, as compared to the prior year period. The net increase in total revenues was largely due to increases in gains recognized on sales of assets and other revenue partially offset by a decline in operating lease revenues.
The increase in gains recognized on sales of assets totaled $1.5 million and was largely a result of increased volume and change in the mix of assets sold. During the current year period, the Fund sold a group of railcars which were in high demand resulting in a significant gain on the transaction. In addition, other revenue increased by $107 thousand primarily due to fees collected relative to the termination of the marine vessel lease.
Partially offsetting the aforementioned increases in revenues was a $675 thousand decrease in operating lease revenues. The decrease in operating lease revenues was primarily attributable to the December 2012 termination of a lease relative to the Funds marine vessel, the decrease in usage-based rental income during the current year period, and the impact of continued run-off and dispositions of lease assets since June 30, 2012.
Total operating expenses for the first half of 2013 decreased by $801 thousand, or 41%, as compared to the prior year period. The net decrease in total operating expenses was primarily due to reductions in vessel maintenance costs, depreciation expense, costs reimbursed to the Managing Member, railcar maintenance costs and other expense.
Vessel maintenance and other operating costs declined by $316 thousand primarily due to vessel inactivity since the end of the lease term in December 2012; and, depreciation expense was reduced by $195 thousand largely due to continued run-off and sales of lease assets.
Moreover, costs reimbursed to the Managing Member decreased by $137 thousand as the Fund no longer has the accumulation of reimbursable administrative expenses in excess of the limitations as defined in the Operating Agreement. As such, the costs reimbursed to AFS during the current year period only represent current period charges. It is not anticipated that any further billings to the Fund will equal or exceed the annual or cumulative reimbursable expense limitation.
15
The decrease in railcar maintenance costs totaled $51 thousand and was primarily due to the continued decline in the number of railcars owned by the Company, consistent with a fund in liquidation. Finally, other expense declined by $42 thousand primarily due to a refund received from the third party manager relative to prepaid marine vessel expenses. Such expenses were refunded as a result of the vessel lease termination.
At June 30, 2013 and December 31, 2012, the Companys cash and cash equivalents totaled $3.3 million and $516 thousand, respectively. The liquidity of the Company varies, increasing to the extent that cash flows from leases and proceeds of asset sales exceed expenses and decreasing as distributions are made to the Other Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.
The primary source of liquidity for the Company is its cash flow from leasing activities. As initial lease terms expire, the Company re-leases or sells the equipment. The future liquidity beyond the contractual minimum rentals will depend on the Companys success in remarketing or selling the equipment as it comes off rental.
If inflation in the general economy becomes significant, it may affect the Company in as much as the residual (resale) values and rates on re-leases of the Companys leased assets may increase as the costs of similar assets increase. However, the Companys 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 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.
The Company currently believes it has adequate reserves available 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 Company would likely be in a position to borrow against its current portfolio to meet such requirements. AFS envisions no such requirements for operating purposes.
Cash Flows
The following table sets forth summary cash flow data (in thousands):
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net cash provided by: |
||||||||||||||||
Operating activities | $ | 603 | $ | 789 | $ | 992 | $ | 1,165 | ||||||||
Investing activities | 1,704 | 90 | 1,808 | 147 | ||||||||||||
Financing activities | | | | | ||||||||||||
Net increase in cash and cash equivalents | $ | 2,307 | $ | 879 | $ | 2,800 | $ | 1,312 |
During the three months ended June 30, 2013 and 2012, the Companys primary source of liquidity was cash flow from its portfolio of operating and direct financing lease contracts. In addition, the Company realized proceeds from sales or dispositions of equipment totaling $1.7 million and $49 thousand during the three months ended June 30, 2013 and 2012, respectively.
During the same comparative periods, cash was primarily used to pay invoices related to management 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 Members.
During the six months ended June 30, 2013 and 2012, the Companys primary source of liquidity was cash flow from its portfolio of operating and direct financing lease contracts. In addition, the Company realized proceeds from sales or dispositions of equipment totaling $1.8 million and $61 thousand during the six months ended June 30, 2013 and 2012, respectively.
16
During the same comparative periods, cash was primarily used to pay invoices related to management fees and expenses, and other payables.
The Company commenced periodic distributions, based on cash flows from operations, beginning with the month of January 1999. During its liquidation phase, the rates and frequency of periodic distributions paid by the Fund are solely at the discretion of the Managing Member. There were no distributions declared or paid during the three and six months ended June 30, 2013 and 2012.
At June 30, 2013, the Company had no commitments to purchase lease assets. Pursuant to the Operating Agreement, the Company will no longer purchase any new lease assets.
Gain Contingency
ATEL filed a claim on behalf of the Company and certain affiliated entities in Federal court in New Orleans for the under-reporting of revenue by a fleet manager of three marine vessels, seeking to recover an approximate amount of 10% of gross proceeds, which in the aggregate for all affiliated entities represents $2.8 million for the years 2005-2007 (of which the Companys portion is an approximate $350 thousand). The annual allocable portion of the claim is not considered material to the Company in any given year. The trial was concluded during the first week of August 2012. In October 2012, the matter was remitted to the Federal Judge to render a decision on both the law and the facts. The decision of the Court was rendered at the end of June 2013 and the court found in favor of the defendants. The Company filed an appeal of the courts decision and is hopeful for a recovery of all or portion of its asserted claims, but the outcome of the litigation remains uncertain as of such date. As a result of the ruling, the defendants have filed a claim for legal fees and costs, of which the Companys portion would amount to approximately $88 thousand, however, this claim remains in dispute pending the outcome of the appeal, and a final award in favor of either party remains uncertain at this time.
None.
Recent accounting standards updates as issued by the Financial Accounting Standards Board (FASB) were evaluated and determined to be not applicable to the Company.
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 Company 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 Companys critical accounting policies are described in its Annual Report on Form 10-K for the year ended December 31, 2012. There have been no material changes to the Companys critical accounting policies since December 31, 2012.
17
The Companys Managing Members President and Chief Executive Officer, and Executive Vice President and Chief Financial Officer and Chief Operating Officer (Management), evaluated the effectiveness of the Companys 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 Companys 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 Company does not control the financial reporting process, and is solely dependent on the Management of the Managing Member, which is responsible for providing the Company with financial statements in accordance with generally accepted accounting principles in the United States. The Managing Members disclosure controls and procedures, as applicable to the Company, 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 Managing Members internal control over financial reporting, as it is applicable to the Company, during the quarter ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect, the Managing Members internal control over financial reporting, as is applicable to the Company.
18
In the ordinary course of conducting business, there may be certain claims, suits, and complaints filed against the Company. In the opinion of management, the outcome of such matters, if any, will not have a material impact on the Companys financial position or results of operations. No material legal proceedings are currently pending against the Company or against any of its assets.
None.
None.
Not Applicable.
None.
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.
2. | Other Exhibits |
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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 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
19
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 13, 2013
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By: ATEL Financial Services, LLC |
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By: /s/ Dean L. Cash | ||
By: /s/ Paritosh K. Choksi | ||
By: /s/ Samuel Schussler |
20
Exhibit 31.1
I, Dean L. Cash, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of ATEL Capital Equipment Fund VIII, LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 13, 2013
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/s/ Dean L. Cash![]() Dean L. Cash President and Chief Executive Officer of ATEL Financial Services, LLC (Managing Member) |
Exhibit 31.2
I, Paritosh K. Choksi, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of ATEL Capital Equipment Fund VIII, LLC; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 13, 2013
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/s/ Paritosh K. Choksi![]() Paritosh K. Choksi Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Financial Services, LLC (Managing Member) |
Exhibit 32.1
In connection with the Quarterly Report of ATEL Capital Equipment Fund VIII, LLC (the Company) on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Dean L. Cash, President and Chief Executive Officer of ATEL Financial Services, LLC, Managing Member of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, 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 Company. |
Date: August 13, 2013
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/s/ Dean L. Cash![]() Dean L. Cash President and Chief Executive Officer of ATEL Financial Services, LLC (Managing Member) |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
In connection with the Quarterly Report of ATEL Capital Equipment Fund VIII, LLC (the Company) on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Paritosh K. Choksi, Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Financial Services, LLC, Managing Member of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, 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 Company. |
Date: August 13, 2013
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/s/ Paritosh K. Choksi![]() Paritosh K. Choksi Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Financial Services, LLC (Managing Member) |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Summary of Significant Accounting Policies (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Geographic Information Relating to Sources, by Nation, of Partnership's Total Revenue and Long-Lived Assets | The table below summarizes geographic information relating to the sources, by nation, of the Company’s total revenues for the six months ended June 30, 2013 and 2012 and long-lived tangible assets as of June 30, 2013 and December 31, 2012 (dollars in thousands):
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Allowance for Credit Losses
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6 Months Ended |
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Jun. 30, 2013
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Allowance for Credit Losses [Abstract] | |
Allowance for Credit Losses | 3. Allowance for credit losses:
There was no allowance for credit losses or delinquent amounts due to the Company as of June 30, 2013. At December 31, 2012, accounts receivable allowances for doubtful accounts pursuant to operating leases totaled $10 thousand. Such allowance was reversed during the first half of 2013 relative to collections of delinquent amounts.
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Investments in Equipment and Leases, Net (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Investments in Equipment and Leases, Net [Abstract] | |||||
Depreciation of operating lease assets | $ 162 | $ 259 | $ 376 | $ 571 | |
Average estimated residual value for assets on operating leases | 10.00% | 10.00% | 10.00% | ||
Contingent rental revenue | $ 497 | $ 623 | $ 1,000 | $ 1,200 |
Investments in Equipment and Leases, Net (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Investments in Equipment and Leases, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Leases | The Company’s investment in leases consists of the following (in thousands):
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Property on Operating Leases | Property on operating leases consists of the following (in thousands):
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Components of Partnership's Investment in Direct Financing Leases | The components of the Company’s investment in direct financing leases as of June 30, 2013 and December 31, 2012 are as follows (in thousands):
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Future Minimum Lease Payments Receivable | At June 30, 2013, the aggregate amount of future lease payments is as follows (in thousands):
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Investments in Equipment and Leases, Net (Components of Partnership's Investment in Direct Financing Leases) (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Investments in Equipment and Leases, Net [Abstract] | ||
Total minimum lease payments receivable | $ 48 | |
Estimated residual values of leased, equipment (unguaranteed) | 10 | 52 |
Investment in direct financing leases | 10 | 100 |
Less unearned income | ||
Net investment in direct financing leases | $ 10 | $ 100 |
Investments in Equipment and Leases, Net (Property on Operating Leases) (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | 6 Months Ended | ||||||
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Jun. 30, 2013
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Jun. 30, 2013
Transportation, Containers [Member]
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Jun. 30, 2013
Transportation, Rail [Member]
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Jun. 30, 2013
Marine Vessels [Member]
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Jun. 30, 2013
Transportation, Other [Member]
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Dec. 31, 2012
Transportation, Other [Member]
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Jun. 30, 2013
Total Property Subject to or Available For Operating Lease [Member]
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Jun. 30, 2013
Less Accumulated Depreciation [Member]
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Property Subject to or Available for Operating Lease [Line Items] | ||||||||
Balance December 31, 2012 | $ 6,230 | $ 19,380 | $ 13,125 | $ 4,793 | $ 640 | $ 640 | $ 37,938 | $ (31,708) |
Additions | (338) | (338) | ||||||
Reclassifications or Dispositions | (825) | (595) | (1,041) | (4,793) | (6,429) | 5,604 | ||
Balance June 30, 2013 | $ 5,067 | $ 18,785 | $ 12,084 | $ 640 | $ 640 | $ 31,509 | $ (26,442) |
Members Capital (Narrative) (Details)
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6 Months Ended | |
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Jun. 30, 2013
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Dec. 31, 2012
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Other Members Capital Account [Line Items] | ||
Other Members capital account, units issued | 13,560,188 | 13,560,188 |
Other Members capital account, units outstanding | 13,560,188 | 13,560,188 |
Other Members capital account, units authorized | 15,000,000 | 15,000,000 |
Potential repurchase price of Units as a percentage of holder's capital account | 100.00% | |
Initial [Member]
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Other Members Capital Account [Line Items] | ||
Other Members capital account, units issued | 50 | 50 |
Other Members [Member]
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Other Members Capital Account [Line Items] | ||
Allocation of net income, net losses and distribution allocation percentage | 92.50% | |
Managing Member [Member]
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Other Members Capital Account [Line Items] | ||
Allocation of net income, net losses and distribution allocation percentage | 7.50% |
Statements of Changes in Members' Capital (Parenthetical) (USD $)
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12 Months Ended |
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Dec. 31, 2012
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Statements of Changes in Members' Capital [Abstract] | |
Distributions to Other Members , per unit | $ 0.24 |
Organization and Limited Liability Company Matters
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6 Months Ended |
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Jun. 30, 2013
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Organization and Limited Liability Company Matters [Abstract] | |
Organization and Limited Liability Company Matters | 1. Organization and Limited Liability Company matters:
ATEL Capital Equipment Fund VIII, LLC (the “Company” or the “Fund”) was formed under the laws of the State of California on July 31, 1998. The Company was formed for the purpose of acquiring equipment to engage in equipment leasing and sales activities. The Managing Member or Manager of the Company is ATEL Financial Services, LLC (“AFS”), a California limited liability company. The Company may continue until December 31, 2019. Each Member’s personal liability for obligations of the Company generally will be limited to the amount of their respective contributions and rights to undistributed profits and assets of the Company.
The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. On January 13, 1999, subscriptions for the minimum number of Units (120,000, representing $1.2 million) had been received (excluding subscriptions from Pennsylvania investors) and AFS requested that the subscriptions be released to the Company. On that date the Company commenced operations in its primary business. Gross contributions in the amount of $135.7 million (13,570,188 units) were received as of November 30, 2000, inclusive of $500 of initial Member’s capital investment and $100 of AFS’ capital investment. The offering was terminated on November 30, 2000. As of June 30, 2013, 13,560,188 Units remain issued and outstanding.
The Company’s principal objectives have been to invest in a diversified portfolio of equipment that (i) preserves, protects and returns the Company’s invested capital; (ii) generates regular distributions to the Members 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, 2006, and (iii) provides additional distributions following the Reinvestment Period and until all equipment has been sold. The Company is governed by its Limited Liability Company Operating Agreement (“Operating Agreement”), as amended.
Pursuant to the Operating Agreement, AFS and/or its affiliates receive compensation for services rendered and reimbursements for costs incurred on behalf of the Company (See Note 5). The Company 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 June 30, 2013, the Company continues in the liquidation phase of its life cycle as defined in the Operating Agreement.
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, 2012, filed with the Securities and Exchange Commission.
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Investments in Equipment and Leases, Net
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Jun. 30, 2013
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Investments in Equipment and Leases, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Equipment and Leases, Net | 4. Investment in equipment and leases, net:
The Company’s investment in leases consists of the following (in thousands):
Impairment of investments in leases and assets held for sale or lease:
Management periodically reviews the carrying values of its assets on leases and assets held for lease or sale. Impairment losses are recorded as an adjustment to the net investment in operating leases. There were no impairment losses recorded during the three and six months ended June 30, 2013 and 2012.
The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment on operating leases currently in its portfolio. Depreciation expense on the Company’s equipment totaled $162 thousand and $259 thousand for the respective three months ended June 30, 2013 and 2012, and $376 thousand and $571 thousand for the respective six months ended June 30, 2013 and 2012.
All of the remaining property on lease was acquired during the years 1999 through 2001.
Operating leases:
Property on operating leases consists of the following (in thousands):
The average estimated residual value for assets on operating leases was 10% of the assets’ original cost at both June 30, 2013 and December 31, 2012.
4. Investment in equipment and leases, net: The Company may earn revenues from its containers, marine vessel and certain other assets based on utilization of such assets or through fixed term leases. Contingent rentals (i.e., short-term, operating charter hire payments) 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 $497 thousand and $623 thousand for the respective three months ended June 30, 2013 and 2012, and $1.0 million and $1.2 million for the respective six months ended June 30, 2013 and 2012.
As of June 30, 2013 and December 31, 2012, the Company had no operating leases in non-accrual status.
Direct financing leases:
As of June 30, 2013, the investment in direct financing leases primarily consists of manufacturing equipment. At December 31, 2012, such investment primarily consisted of railcars and manufacturing equipment.
The components of the Company’s investment in direct financing leases as of June 30, 2013 and December 31, 2012 are as follows (in thousands):
The Company’s remaining direct financing lease matures on July 1, 2013. At June 30, 2013, the Company retained a $10 thousand residual position in the equipment underlying such direct financing lease.
At June 30, 2013, the aggregate amount of future lease payments is as follows (in thousands):
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Summary of Significant Accounting Policies
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Jun. 30, 2013
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | 2. Summary of significant accounting policies: Basis of presentation:
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 Managing Member, 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 and six months ended June 30, 2013 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 of operations.
Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data.
In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the
2. Summary of significant accounting policies (continued): Managing Member, events that have occurred after June 30, 2013, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements, or adjustments thereto.
Use of estimates:
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 relate primarily 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.
Segment reporting:
The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States.
Certain of the Company’s lessee customers have international operations. In these instances, the Company 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 Company to track, on an asset-by-asset, day-by-day basis, where these assets are deployed.
The primary geographic region in which the Company sought leasing opportunities was North America. The table below summarizes geographic information relating to the sources, by nation, of the Company’s total revenues for the six months ended June 30, 2013 and 2012 and long-lived tangible assets as of June 30, 2013 and December 31, 2012 (dollars in thousands):
Per Unit data:
Net income and distributions per Unit are based upon the weighted average number of Other Members’ Units outstanding during the period.
Recent accounting pronouncements:
Recent accounting standards updates as issued by the Financial Accounting Standards Board (FASB) were evaluated and determined to be not applicable to the Company.
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Investments in Equipment and Leases, Net (Future Minimum Lease Payments Receivable) (Details) (Operating Leases [Member], USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Operating Leases [Member]
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Leases Disclosure [Line Items] | |
Six months ending December 31, 2013 | $ 768 |
Year ending December 31, 2014 | 1,166 |
2015 | 568 |
2016 | 280 |
2017 | 263 |
2018 | 75 |
Operating Leases, Future Minimum Payments Receivable | $ 3,120 |