-----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, A4Nw3VhMX61NMcLaYyUhmZAmr/YewSYFYvCx0e3LdcYHZQ6jK+kyPwyGRFZHoXtj 9Luo7M/Z3yvm2r7ki+TbTA== 0001125264-01-500016.txt : 20010817 0001125264-01-500016.hdr.sgml : 20010817 ACCESSION NUMBER: 0001125264-01-500016 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATEL CAPITAL EQUIPMENT FUND IX LLC CENTRAL INDEX KEY: 0001125264 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943375584 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-47196 FILM NUMBER: 1716936 BUSINESS ADDRESS: STREET 1: 235 PINE ST STREET 2: 6TH FLR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4159898800 MAIL ADDRESS: STREET 1: 235 PINE STREET STREET 2: 6TH FLOOR CITY: SAN FRANCISCO STATE: CA ZIP: 94104 10-Q/A 1 fund910q2q2001.txt REPORT FOR THE SIX MONTHS ENDED JUNE 30, 2001 Form 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 |X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended June 30, 2001 |_| 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 333-47196 ATEL Capital Equipment Fund IX, LLC (Exact name of registrant as specified in its charter) California 94-3375584 - ---------- ---------- (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 |_| No |X| DOCUMENTS INCORPORATED BY REFERENCE None 1 Part I. FINANCIAL INFORMATION Item 1. Financial Statements. 2 ATEL CAPITAL EQUIPMENT FUND IX, LLC BALANCE SHEETS JUNE 30, 2001 AND DECEMBER 31, 2000 (Unaudited) ASSETS 2001 2000 ---- ---- Cash and cash equivalents $ 4,182,513 $ 600 Accounts receivable 745,089 - Notes receivable 826,079 - Investments in leases 10,325,985 - ------------------ ----------------- Total assets $16,079,666 $ 600 ================== ================= LIABILITIES AND MEMBERS' CAPITAL Accounts payable: Managing Member $ 159,346 Other 12,357 Unearned operating lease income 225,586 ------------------ Total liabilities 397,289 Members' capital: Managing member - $ 100 Other members 15,682,377 500 ------------------ ----------------- Total members' capital 15,682,377 600 ------------------ ----------------- Total liabilities and members' capital $16,079,666 $ 600 ================== ================= See accompanying notes. 3 ATEL CAPITAL EQUIPMENT FUND IX, LLC STATEMENT OF OPERATIONS SIX AND THREE MONTH PERIODS ENDED JUNE 30, 2001 (Unaudited) Revenues: Six Months Three Months ---------- ------------ Leasing activities: Operating leases $ 1,193,427 $ 1,123,612 Direct financing leases 21,997 16,429 Interest 73,192 59,292 Other 2,501 (2,499) ------------------ ----------------- 1,291,117 1,196,834 Expenses: Depreciation and amortization 579,638 538,350 Cost reimbursements to Managing Member 229,551 163,091 Interest expense 181,868 162,541 Asset management fees to Managing Member 20,891 19,093 Other 12,214 9,623 ------------------ ----------------- 1,024,162 892,698 ------------------ ----------------- Net income $ 266,955 $ 304,136 ================== ================= Net income: Managing member $ 13,207 $ 13,307 Other members 253,748 290,929 ------------------ ----------------- $ 266,955 $ 304,136 ================== ================= Net incomes per Limited Liability Company Un $0.26 $0.24 Weighted average number of Units outstanding 994,685 1,226,514 STATEMENT OF CHANGES IN MEMBERS' CAPITAL SIX MONTH PERIOD ENDED JUNE 30, 2001 (Unaudited)
Other Members Managing ------------- Units Amount Member Total Balance December 31, 2000 50 $ 500 $ 100 $ 600 Capital contributions 1,834,382 18,343,820 18,343,820 Less selling commissions to affiliates (1,742,663) (1,742,663) Other syndication costs to affiliates (1,008,910) (1,008,910) Distributions to members (164,118) (13,307) (177,425) Net income 253,748 13,207 266,955 ------------------ ----------------- ------------------ ----------------- Balance June 30, 2001 1,834,432 $15,682,377 $ - $15,682,377 ================== ================= ================== =================
See accompanying notes. 4 ATEL CAPITAL EQUIPMENT FUND IX, LLC STATEMENT OF CASH FLOWS SIX AND THREE MONTH PERIODS ENDED JUNE 30, 2001 (Unaudited)
Operating activities: Six Months Three Months ---------- ------------ Net income $ 266,955 $ 304,136 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 579,638 538,350 Residual value income (3,554) (3,554) Changes in operating assets and liabilities: Accounts receivable (745,089) (658,538) Accounts payable, Managing Member 159,346 148,629 Accounts payable, other 12,357 10,256 Unearned operating lease income 225,586 225,586 ------------------ ----------------- Net cash used in operations 495,239 564,865 ------------------ ----------------- Investing activities: Purchases of equipment on operating leases (9,959,232) (7,674,046) Note receivable advances (1,000,000) - Purchases of equipment on direct financing leases (819,124) - Payments received on notes receivable 173,921 21,879 Investment in residuals (59,147) 40,853 Payments of initial direct costs to managing member (91,296) (50,920) Reduction of net investment in direct financing leases 26,730 20,115 ------------------ ----------------- Net cash used in investing activities (11,728,148) (7,642,119) ------------------ ----------------- Financing activities: Capital contributions received 18,343,820 11,220,320 Payment of syndication costs to managing member (2,751,573) (1,865,348) Distributions to members (177,425) (177,425) ------------------ ----------------- Net cash provided by financing activities 15,414,822 9,177,547 ------------------ ----------------- Net increase in cash and cash equivalents 4,181,913 2,100,293 Cash and cash equivalents at beginning of period 600 2,082,220 ------------------ ----------------- Cash and cash equivalents at end of period $ 4,182,513 $ 4,182,513 ================== ================= Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 181,868 $ 162,541 ================== =================
See accompanying notes. 5 ATEL CAPITAL EQUIPMENT FUND IX, LLC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 (Unaudited) 1. Organization and Company matters: ATEL Capital Equipment Fund IX, LLC (the Fund) was formed under the laws of the state of California on September 27, 2000 for the purpose of acquiring equipment to engage in equipment leasing and sales activities. The Fund may continue until December 31, 2019. Contributions in the amount of $600 were received as of December 31, 2000, $100 of which represented the Managing Member's continuing interest, and $500 of which represented the Initial Member's 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 February 21, 2001, 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. 2. 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. Equipment on operating leases: Equipment on operating leases is stated at cost. Depreciation is being provided by use of the straight-line method over the terms of the related leases to the equipment's estimated residual values at the end of the leases. Revenues from operating leases are recognized evenly over the lives of the related leases. Direct financing leases: Income from direct financing lease transactions is reported using the financing method of accounting, in which the Company's investment in the leased property is reported as a receivable from the lessee to be recovered through future rentals. The income portion of each rental payment is calculated so as to generate a constant rate of return on the net receivable outstanding. 6 ATEL CAPITAL EQUIPMENT FUND IX, LLC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 (Unaudited) 2. Summary of significant accounting policies (continued): Investment in leveraged leases: Leases which are financed principally with non-recourse debt at lease inception and which meet certain other criteria are accounted for as leveraged leases. Leveraged lease contracts receivable are stated net of the related non-recourse debt service (which includes unpaid principal and aggregate interest on such debt) plus estimated residual values. Unearned income represents the excess of anticipated cash flows (after taking into account the related debt service and residual values) over the investment in the lease and is amortized using a constant rate of return applied to the net investment when such investment is positive. Statements of cash flows: For purposes of the Statements of Cash Flows, cash and cash equivalents includes cash in banks and cash equivalent investments with original maturities of ninety days or less. Income taxes: The Company does not provide for income taxes since all income and losses are the liability of the individual partners and are allocated to the partners for inclusion in their individual tax returns. Per unit data: Net (loss) income and distributions per unit are based upon the weighted average number of units outstanding during the period. Credit risk: Financial instruments which potentially subject the Company to concentrations of credit risk include cash and cash equivalents and accounts receivable. The Company places its cash deposits and temporary cash investments with creditworthy, high quality financial institutions. The concentration of such deposits and temporary cash investments is not deemed to create a significant risk to the Company. Accounts receivable represent amounts due from lessees in various industries, related to equipment on operating and direct financing leases. Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Such estimates primarily relate to the determination of residual values at the end of the lease term. 7 ATEL CAPITAL EQUIPMENT FUND IX, LLC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 (Unaudited) 2. Summary of significant accounting policies (continued): Reserve for losses and impairments: The Company maintains a reserve on its investments in equipment and leases for losses and impairments which are inherent in the portfolio as of the balance sheet date. The Managing Member's evaluation of the adequacy of the allowance is a judgmental estimate that is based on a review of individual leases, past loss experience and other factors. While the Managing Member believes the allowance is adequate to cover known losses, it is reasonably possible that the allowance may change in the near term. However, such change is not expected to have a material effect on the financial position or future operating results of the Company. It is the Company's policy to charge off amounts which, in the opinion of the Managing Member, are not recoverable from lessees or the disposition of the collateral. 3. Investment in leases: The Company's investment in leases consists of the following:
Depreciation Expense and Balance Amortization June 30, Additions of Leases 2001 --------- --------- ---- Net investment in operating leases $ 9,959,232 $ (575,732) $ 9,383,500 Net investment in direct financing leases 819,124 (26,730) 792,394 Residual values, other 59,147 3,554 62,701 Initial direct costs 91,296 (3,906) 87,390 ------------------ ----------------- ------------------ $10,928,799 $ (602,814) $10,325,985 ================== ================= ==================
Operating leases: Property on operating leases consists of the following:
Acquisitions, Dispositions & Reclassifications Balance ----------------- June 30, 1st Quarter 2nd Quarter 2001 ----------- ----------- ---- Mining $ 531,021 $ 7,639,357 $ 8,170,378 Manufacturing 821,697 - 821,697 Natural gas compressors 696,451 - 696,451 Office furniture 236,017 - 236,017 Materials handling - 34,689 34,689 ----------------- ------------------ ----------------- 2,285,186 7,674,046 9,959,232 Less accumulated depreciation (40,997) (534,735) (575,732) ----------------- ------------------ ----------------- $ 2,244,189 $ 7,139,311 $ 9,383,500 ================= ================== =================
8 ATEL CAPITAL EQUIPMENT FUND IX, LLC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 (Unaudited) 3. Investment in leases (continued): Direct financing leases: As of June 30, 2001, investment in direct financing leases consists office furniture. The following lists the components of the Company's investment in direct financing leases as of June 30, 2001: Total minimum lease payments receivable $ 918,623 Estimated residual values of leased equipment (unguaranteed) 122,869 ------------------ Investment in direct financing leases 1,041,492 Less unearned income (249,098) ------------------ Net investment in direct financing leases $ 792,394 ================== All of the property on leases was acquired in 2001. At June 30, 2001, the aggregate amounts of future minimum lease payments are as follows: Direct Year ending Operating Financing December 31, Leases Leases Total ------------ ------ ------ ----- 2001 $ 789,364 $ 73,092 $ 862,456 2002 1,578,728 146,184 1,724,912 2003 1,572,684 146,184 1,718,868 2004 1,506,200 146,184 1,652,384 2005 1,506,200 146,184 1,652,384 Thereafter 1,332,323 260,795 1,593,118 ------------------ ----------------- ------------------ $ 8,285,499 $ 918,623 $ 9,204,122 ================== ================= ================== 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 services to the Company. 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 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 (i) actual costs incurred on behalf of the Company or (ii) 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. 9 ATEL CAPITAL EQUIPMENT FUND IX, LLC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 (Unaudited) 4. Related party transactions (continued): 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) $ 1,742,663 Reimbursement of other syndication costs to Managing Member 1,008,910 Costs reimbursed to Managing Member 229,551 Asset management fees to Managing Member 20,891 ------------------ $ 3,002,015 ==================
5. Member's capital: As of June 30, 2001, 1,834,432 Units ($18,344,320) were issued and outstanding. 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. 8. Line of credit: The Company participates with the Managing Member and certain of its Affiliates in a $62,000,000 revolving credit agreement with a group of financial institutions which expires on April 12, 2002. 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 June 30, 2001, the Company had no borrowings under the line of credit. The credit agreement includes certain financial covenants applicable to each borrower. The Company was in compliance with its covenants as of June 30, 2001. 9. Commitments: As of June 30, 2001, the Company had no outstanding commitments to purchase lease equipment. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Capital Resources and Liquidity During the second quarter of 2001, the Company's primary activities were raising funds through its offering of Limited Liability Company Units (Units) and engaging in equipment leasing activities. Through June 30, 2001, the Company had received subscriptions for 1,834,432 Units ($18,344,320) 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 $62,000,000 revolving line of credit with a financial institution. The line of credit expires on April 12, 2002. The Company could not borrow under the line of credit until it had a minimum equity of $15,000,000. 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. As of June 30, 2001, such commitments totaled approximately $6,800,000. 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. 11 Cash Flows During the first half of 2001, the Company's primary source of liquidity was the proceeds of its offering of Units. In 2001, the primary source of cash from operations was rents from operating leases. Rents from direct financing leases and payments received on notes receivable were the primary sources of cash from investing activities. Uses of cash for investing activities consisted of cash used to purchase operating and direct financing lease assets, payments of initial direct costs associated with the lease asset purchases and advances on notes receivable. In 2001, the primary source of cash from financing activities was the proceeds of the Company's public offering of Units of Limited Liability Company interest. Financing uses of cash consisted of payments of syndication costs associated with the offering and distributions to the members. Results of operations On February 21, 2001, the Company commenced operations. Operations resulted in net income of $266,955 for the six month period and $304,136 for the three month period. The Company's primary source of revenues is from operating leases. Depreciation is related to operating lease assets and thus, to operating lease revenues. They are 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 half quarter of 2001 related to the borrowings under the line of credit incurred by an affiliate of the Managing Member. It included all amounts related to those borrowings related transactions transferred to the Company. All of the revenues and related carrying costs for these transactions were attributed to the Company in the first half of 2001. Results of operations in future periods are expected to vary considerably from those of the first half of 2001 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. 12 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: January 16, 2001; File Number: 333-47196 (2) Offering commenced: January 16, 2001 (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 July 31, 2001
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 2,230,119 $22,301,190 (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 $ - $ 2,118,613 $ 2,118,613 Other expenses 1,226,565 1,226,565 ------------------ ------------------ ----------------- Total expenses $ - $ 3,345,179 $ 3,345,179 ================== ================== ================= (9) Net offering proceeds to the issuer after the total expenses in item 8: $18,956,012 (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 $ - $18,844,506 $18,844,506 Working capital 111,506 111,506 ------------------ ------------------ ----------------- $ - $18,956,012 $18,956,012 ================== ================== ================= (11) The use of the proceeds in Item 10 does not represent a material change in the uses of proceeds described in the prospectus.
13 Item 6. Exhibits And Reports On Form 8-K. (a)Documents filed as a part of this report 1. Financial Statements Included in Part I of this report: Balance Sheets, June 30, 2001 and December 31, 2000. Statements of operations for the six and three month periods ended June 30, 2001. Statement of changes in partners' capital for the six month period ended June 30, 2001. Statements of cash flows for the six and three month periods ended June 30, 2001. Notes to the Financial Statements 2. Financial Statement Schedules All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. (b) Report on Form 8-K None 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 8, 2001 ATEL CAPITAL EQUIPMENT FUND IX, LLC (Registrant) By: ATEL Financial Services, LLC Managing Member of Registrant By: /s/ DEAN L. CASH ------------------------------------ Dean L. Cash President and Chief Executive Officer of Managing Member By: /s/ PARITOSH K. CHOKSI ------------------------------------- Paritosh K. Choksi Executive Vice President of Managing Member, Principal financial officer of registrant By: /s/ DONALD E. CARPENTER ------------------------------------- Donald E. Carpenter Principal accounting officer of registrant 15 -----END PRIVACY-ENHANCED MESSAGE-----