![]() |
![]() |
|
x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
![]() |
![]() |
|
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)
![]() |
![]() |
|
California | 20-1357935 | |
(State or other jurisdiction of Incorporation or organization) |
(I. R. S. Employer Identification No.) |
The Transamerica Pyramid, 600 Montgomery Street, 9th Floor, San Francisco, California 94111
(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.
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 October 31, 2013 was 5,209,307.
None.
2
![]() |
![]() |
![]() |
||||||
September 30, 2013 |
December 31, 2012 |
|||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Cash and cash equivalents | $ | 725 | $ | 1,502 | ||||
Accounts receivable, net of allowance for doubtful accounts of $3 as of September 30, 2013 and $6 as of December 31, 2012 | 239 | 179 | ||||||
Notes receivable, net of unearned interest income of $68 and allowance for credit losses of $10 at September 30, 2013 and net of unearned interest income of $110 and allowance for credit losses of $10 at December 31, 2012 |
580 | 759 | ||||||
Investment in securities | 219 | 219 | ||||||
Investments in equipment and leases, net of accumulated depreciation of $19,073 as of September 30, 2013 and $22,758 as of December 31, 2012 | 8,591 | 11,245 | ||||||
Prepaid expenses and other assets | 33 | 32 | ||||||
Total assets | $ | 10,387 | $ | 13,936 | ||||
LIABILITIES AND MEMBERS CAPITAL |
||||||||
Accounts payable and accrued liabilities: |
||||||||
Managing Member | $ | 41 | $ | 155 | ||||
Accrued distributions to Other Members | | 551 | ||||||
Other | 186 | 404 | ||||||
Non-recourse debt | 2,382 | 3,651 | ||||||
Unearned operating lease income | 204 | 162 | ||||||
Total liabilities | 2,813 | 4,923 | ||||||
Commitments and contingencies |
||||||||
Members capital: |
||||||||
Managing Member | | | ||||||
Other Members | 7,574 | 9,013 | ||||||
Total Members capital | 7,574 | 9,013 | ||||||
Total liabilities and Members capital | $ | 10,387 | $ | 13,936 |
See accompanying notes.
3
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues: |
||||||||||||||||
Leasing and lending activities: |
||||||||||||||||
Operating leases | $ | 913 | $ | 1,353 | $ | 3,162 | $ | 4,424 | ||||||||
Direct financing leases | 18 | 38 | 66 | 83 | ||||||||||||
Interest on notes receivable | 13 | 19 | 42 | 60 | ||||||||||||
Gain on sales of lease assets and early termination of notes | 98 | 75 | 194 | 275 | ||||||||||||
Gain on sales or dispositions of securities | | | 3 | 1 | ||||||||||||
Unrealized gain on securities | | | | 59 | ||||||||||||
Other | 53 | 34 | 139 | 71 | ||||||||||||
Total revenues | 1,095 | 1,519 | 3,606 | 4,973 | ||||||||||||
Expenses: |
||||||||||||||||
Depreciation of operating lease assets | 441 | 701 | 1,647 | 2,297 | ||||||||||||
Asset management fees to Managing Member and/or affiliates | 51 | 79 | 181 | 251 | ||||||||||||
Acquisition expense | | 30 | | 42 | ||||||||||||
Cost reimbursements to Managing Member and/or affiliates | 81 | 96 | 242 | 312 | ||||||||||||
Provision (reversal of provision) for credit losses | 2 | 11 | (3 | ) | (38 | ) | ||||||||||
Impairment losses on equipment | 39 | 221 | 52 | 255 | ||||||||||||
Provision for losses on investment in securities | | | | 32 | ||||||||||||
Amortization of initial direct costs | 5 | 4 | 15 | 17 | ||||||||||||
Interest expense | 35 | 57 | 120 | 188 | ||||||||||||
Professional fees | 8 | 16 | 61 | 81 | ||||||||||||
Outside services | 8 | 8 | 28 | 40 | ||||||||||||
Other | 24 | 31 | 97 | 133 | ||||||||||||
Total operating expenses | 694 | 1,254 | 2,440 | 3,610 | ||||||||||||
Other loss, net | | (22 | ) | (1 | ) | (21 | ) | |||||||||
Net income | $ | 401 | $ | 243 | $ | 1,165 | $ | 1,342 | ||||||||
Net income: |
||||||||||||||||
Managing Member | $ | | $ | 98 | $ | 195 | $ | 293 | ||||||||
Other Members | 401 | 145 | 970 | 1,049 | ||||||||||||
$ | 401 | $ | 243 | $ | 1,165 | $ | 1,342 | |||||||||
Net income per Limited Liability Company Unit (Other Members) | $ | 0.08 | $ | 0.03 | $ | 0.19 | $ | 0.20 | ||||||||
Weighted average number of Units outstanding | 5,209,307 | 5,209,307 | 5,209,307 | 5,209,307 |
See accompanying notes.
4
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
Other Members | Managing Member | Total | ||||||||||||||
Units | Amount | |||||||||||||||
Balance December 31, 2011 | 5,209,307 | $ | 12,585 | $ | | $ | 12,585 | |||||||||
Distributions to Other Members ($0.93 per Unit) | | (4,819 | ) | | (4,819 | ) | ||||||||||
Distributions to Managing Member | | | (391 | ) | (391 | ) | ||||||||||
Net income | | 1,247 | 391 | 1,638 | ||||||||||||
Balance December 31, 2012 | 5,209,307 | 9,013 | | 9,013 | ||||||||||||
Distributions to Other Members ($0.46 per Unit) | | (2,409 | ) | | (2,409 | ) | ||||||||||
Distributions to Managing Member | | | (195 | ) | (195 | ) | ||||||||||
Net income | | 970 | 195 | 1,165 | ||||||||||||
Balance September 30, 2013 (Unaudited) | 5,209,307 | $ | 7,574 | $ | | $ | 7,574 |
See accompanying notes.
5
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Operating activities: |
||||||||||||||||
Net income | $ | 401 | $ | 243 | $ | 1,165 | $ | 1,342 | ||||||||
Adjustments to reconcile net income to cash provided by operating activities: |
||||||||||||||||
Gain on sales of lease assets and early termination of notes | (98 | ) | (75 | ) | (194 | ) | (275 | ) | ||||||||
Depreciation of operating lease assets | 441 | 701 | 1,647 | 2,297 | ||||||||||||
Amortization of initial direct costs | 5 | 4 | 15 | 17 | ||||||||||||
Impairment losses on equipment | 39 | 221 | 52 | 255 | ||||||||||||
Provision (reversal of provision) for credit losses | 2 | 11 | (3 | ) | (38 | ) | ||||||||||
Provision for losses on investment in securities | | | | 32 | ||||||||||||
Gain on sales or dispositions of securities | | | (3 | ) | (1 | ) | ||||||||||
Unrealized gain on securities | | | | (59 | ) | |||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||
Accounts receivable | (56 | ) | (62 | ) | (57 | ) | 251 | |||||||||
Prepaid expenses and other assets | (7 | ) | 31 | (1 | ) | (34 | ) | |||||||||
Accounts payable, Managing Member | 12 | 20 | (69 | ) | (41 | ) | ||||||||||
Accounts payable, other | (2 | ) | (89 | ) | (218 | ) | 28 | |||||||||
Unearned operating lease income | 146 | (93 | ) | 42 | (60 | ) | ||||||||||
Net cash provided by operating activities | 883 | 912 | 2,376 | 3,714 | ||||||||||||
Investing activities: |
||||||||||||||||
Purchase of securities | | | (8 | ) | | |||||||||||
Proceeds from sales of lease assets and early termination of notes | 277 | 423 | 999 | 1,350 | ||||||||||||
Payments of initial direct costs | | (40 | ) | | (40 | ) | ||||||||||
Proceeds from sales or dispositions of securities | | | 11 | 1 | ||||||||||||
Principal payments received on direct financing leases | 37 | 57 | 135 | 143 | ||||||||||||
Principal payments received on notes receivable | 61 | 87 | 179 | 246 | ||||||||||||
Net cash provided by investing activities | 375 | 527 | 1,316 | 1,700 | ||||||||||||
Financing activities: |
||||||||||||||||
Repayments under non-recourse debt | (425 | ) | (445 | ) | (1,269 | ) | (1,442 | ) | ||||||||
Distributions to Other Members | (551 | ) | (1,205 | ) | (2,960 | ) | (3,614 | ) | ||||||||
Distributions to Managing Member | (45 | ) | (98 | ) | (240 | ) | (293 | ) | ||||||||
Net cash used in financing activities | (1,021 | ) | (1,748 | ) | (4,469 | ) | (5,349 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents | 237 | (309 | ) | (777 | ) | 65 | ||||||||||
Cash and cash equivalents at beginning of period | 488 | 1,790 | 1,502 | 1,416 | ||||||||||||
Cash and cash equivalents at end of period | $ | 725 | $ | 1,481 | $ | 725 | $ | 1,481 | ||||||||
Supplemental disclosures of cash flow information: |
||||||||||||||||
Cash paid during the period for interest | $ | 36 | $ | 64 | $ | 125 | $ | 220 | ||||||||
Cash paid during the period for taxes | $ | | $ | 4 | $ | 32 | $ | 49 | ||||||||
Schedule of non-cash transactions: |
||||||||||||||||
Distributions payable to Other Members at period-end |
$ | | $ | 551 | $ | | $ | 551 | ||||||||
Distributions payable to Managing Member at period-end |
$ | | $ | 45 | $ | | $ | 45 | ||||||||
Securities acquired through conversion of warrants | $ | | $ | | $ | | $ | 59 |
See accompanying notes.
6
ATEL Capital Equipment Fund XI, LLC (the Company or the Fund) was formed under the laws of the State of California on June 25, 2004. The Company was formed for the purpose of acquiring equipment to engage in equipment leasing, lending and sales activities. Also, from time to time, the Company may purchase securities of its borrowers or receive warrants to purchase securities in connection with its lending arrangements. 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, 2025. 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 May 31, 2005, subscriptions for the minimum number of Units (120,000, representing $1.2 million) had been received and AFS requested that the subscriptions be released to the Company. On that date, the Company commenced operations in its primary business (acquiring equipment to engage in equipment leasing, lending and sales activities). As of July 13, 2005, the Company had received subscriptions for 958,274 Units ($9.6 million), thus exceeding the $7.5 million minimum requirement for Pennsylvania, and AFS requested that the remaining funds in escrow (from Pennsylvania investors) be released to the Company. The Company terminated sales of Units effective April 30, 2006. Life-to-date net contributions through September 30, 2013 totaled $52.2 million, consisting of approximately $52.8 million in gross contributions from Other Members purchasing Units under the public offering less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable) of $636 thousand. As of September 30, 2013, 5,209,307 Units were issued and outstanding.
The Companys principal objectives are 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, 2012, 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. On January 1, 2013, the Company commenced liquidation phase activities pursuant to the guidelines of the Operating Agreement.
Pursuant to the terms of the Operating Agreement, AFS receives compensation for services rendered and reimbursements for costs incurred on behalf of the Company (See Note 6). 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.
The Companys 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 nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the full year.
7
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 unaudited financial statements, the Managing Member has reviewed events that have occurred after September 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 primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and for determination of the allowance for doubtful accounts and reserve for credit losses on notes receivable.
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.
The primary geographic regions in which the Company seeks leasing opportunities are North America and Europe. The table below summarizes geographic information relating to the sources, by nation, of the Companys total revenues for the nine months ended September 30, 2013 and 2012 and long-lived assets as of September 30, 2013 and December 31, 2012 (dollars in thousands):
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
For The Nine Months Ended September 30, | ||||||||||||||||
2013 | % of Total | 2012 | % of Total | |||||||||||||
Revenue |
||||||||||||||||
United States | $ | 3,518 | 98 | % | $ | 4,762 | 96 | % | ||||||||
United Kingdom | 88 | 2 | % | 211 | 4 | % | ||||||||||
Total International | 88 | 2 | % | 211 | 4 | % | ||||||||||
Total | $ | 3,606 | 100 | % | $ | 4,973 | 100 | % |
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
As of September 30, | As of December 31, | |||||||||||||||
2013 | % of Total | 2012 | % of Total | |||||||||||||
Long-lived assets |
||||||||||||||||
United States | $ | 8,585 | 100 | % | $ | 11,090 | 99 | % | ||||||||
United Kingdom | 6 | 0 | % | 155 | 1 | % | ||||||||||
Total International | 6 | 0 | % | 155 | 1 | % | ||||||||||
Total | $ | 8,591 | 100 | % | $ | 11,245 | 100 | % |
8
From time to time, the Company may purchase securities of its borrowers or receive warrants to purchase securities in connection with its lending arrangements.
Purchased securities are generally not registered for public sale and are carried at cost. Such securities are adjusted to fair value if the fair value is less than the carrying value and such impairment is deemed by the Managing Member to be other than temporary. Factors considered by the Managing Member in determining fair value include, but are not limited to, available financial information, the issuers ability to meet its current obligations and indications of the issuers subsequent ability to raise capital. Based upon the Companys review of its portfolio, no fair value adjustment was deemed necessary for the three and nine months ended September 30, 2013. By comparison, $32 thousand of fair value adjustments relative to impaired investments were recorded during the first nine months of 2012, all of which were recorded during the first quarter.
Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried on the balance sheet at an estimated fair value, as determined by the Managing Member. At September 30, 2013 and December 31, 2012, the Managing Member estimated the fair value of the warrants to be nominal in amount. Likewise, gains and/or losses recognized on the net exercise of certain warrants were nominal for the three and nine months ended September 30, 2013 and 2012. During the first nine months of 2012, the Company recorded $59 thousand of unrealized gains relative to the conversion of warrants associated with shares of certain venture companies. There were no unrealized gains recorded during the three months ended September 30, 2013 and 2012, or the nine months ended September 30, 2013.
Foreign currency transaction gains and losses are reported in the results of operations as other income or other loss in the period in which they occur. Currently, the Company does not use derivative instruments to hedge its economic exposure with respect to assets, liabilities and firm commitments as the foreign currency transactions risks to date have not been significant. The Companys foreign currency translations gains and losses were nominal during the three months ended September 30, 2013. By comparison, the Company recorded net foreign currency losses of $22 thousand during the prior year period. Such net foreign currency losses totaled $1 thousand and $21 thousand for the nine months ended September 30, 2013 and 2012, respectively.
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.
9
The Company has various notes receivable from borrowers who have financed the purchase of equipment through the Company. At September 30, 2013, the original terms of the notes receivable are from 17 to 120 months and bear interest at rates ranging from 8.42% to 11.58%. The notes are secured by the equipment financed, and mature from 2013 through 2016.
The Company had no notes in non-accrual status at both September 30, 2013 and December 31, 2012. As of December 31, 2012, the Company did, however, have a note receivable that was deemed impaired. Such impaired note remained outstanding as of September 30, 2013.
The impaired note at December 31, 2012 was placed in non-accrual status in 2010, at which time its term was modified to defer the repayment of principal until April 2012 while maintaining interest-only payments at the original rate of 11.58%. During 2011, the note was deemed impaired relative to its original payment terms. From April 1, 2012 well into the third quarter of 2012, the interest only payment arrangement was continued pending final resolution of the terms of repayment. Prior to the end of the third quarter of 2012, a large dollar amount was received to significantly reduce the then outstanding principal balance by September 30, 2012. During the periods when interest only was being paid, all such payments were made in accordance with the then applicable note modification agreements. The note was returned to accrual status effective October 1, 2012. As of September 30, 2013, $10 thousand of the aforementioned note remains outstanding. As of the same date, the estimated fair value of the impaired note is $0, reflecting previous valuation adjustments of $10 thousand.
The minimum future payments receivable as of September 30, 2013 are as follows (in thousands):
![]() |
![]() |
|||
Three months ending December 31, 2013 | $ | 83 | ||
Year ending December 31, 2014 | 221 | |||
2015 | 166 | |||
2016 | 188 | |||
658 | ||||
Less: portion representing unearned interest income | (68 | ) | ||
590 | ||||
Less: reserve for impairment | (10 | ) | ||
Notes receivable, net | $ | 580 |
The Companys allowance for credit losses are as follows (in thousands):
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||||||||
Accounts Receivable Allowance for Doubtful Accounts | Valuation Adjustments on Financing Receivables | Total Allowance for Credit Losses | ||||||||||||||||||||||
Notes Receivable | Finance Leases | Operating Leases | Notes Receivable | Finance Leases | ||||||||||||||||||||
Balance December 31, 2011 | $ | | $ | | $ | 58 | $ | 2 | $ | | $ | 60 | ||||||||||||
(Reversal of) provision for credit losses | | | (52 | ) | 8 | | (44 | ) | ||||||||||||||||
Balance December 31, 2012 | | | 6 | 10 | | 16 | ||||||||||||||||||
Reversal of provision for credit losses | | | (3 | ) | | | (3 | ) | ||||||||||||||||
Balance September 30, 2013 | $ | | $ | | $ | 3 | $ | 10 | $ | | $ | 13 |
10
Accounts receivable represent the amounts billed under operating and direct financing lease contracts, and notes receivable which are currently due to the Company.
Allowances for doubtful accounts are typically established based upon their aging and historical charge off and collection experience and the creditworthiness of specifically identified lessees and borrowers, and invoiced amounts. Accounts receivable deemed uncollectible are generally charged off against the allowance on a specific identification basis. Recoveries of amounts that were previously written-off are recorded as other income in the period received. Accounts receivable are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of companies with lease or note payments outstanding less than 90 days. Based upon managements judgment, such leases or notes may be placed in non-accrual status. Leases or notes placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid receivable is probable. Until such time, revenues on operating leases are recognized on a cash basis. All payments received on amounts billed under direct financing leases and notes receivable are applied only against outstanding principal balances.
In addition to the allowance established for delinquent accounts receivable, the total allowance related solely to financing receivables also includes anticipated impairment charges on notes receivable and direct financing leases.
Notes are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and/or interest when due according to the contractual terms of the note agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest when due. If it is determined that a loan is impaired with regard to scheduled payments, the Company will perform an analysis of the note to determine if an impairment valuation reserve is necessary. This analysis considers the estimated cash flows from the note, or the collateral value of the property underlying the note when note repayment is collateral dependent. Any required valuation reserve is charged to earnings when determined; and notes are charged off to the allowance as they are deemed uncollectible.
The asset underlying a direct financing lease contract is considered impaired if the estimated undiscounted future cash flows of the asset are less than its net book value. The estimated undiscounted future cash flows are the sum of the estimated residual value of the asset at the end of the assets expected holding period and estimates of undiscounted future rents. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly.
Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows, third party appraisals or comparable sales of similar assets as applicable based on asset type) of the asset and its carrying value on the measurement date.
11
As of September 30, 2013 and December 31, 2012, the Companys allowance for credit losses (related solely to financing receivables) and its recorded investment in financing receivables were as follows (in thousands):
![]() |
![]() |
![]() |
![]() |
|||||||||
September 30, 2013 | Notes Receivable | Finance Leases | Total | |||||||||
Allowance for credit losses: |
||||||||||||
Ending balance | $ | 10 | $ | | $ | 10 | ||||||
Ending balance: individually evaluated for impairment | $ | 10 | $ | | $ | 10 | ||||||
Ending balance: collectively evaluated for impairment | $ | | $ | | $ | | ||||||
Ending balance: loans acquired with deteriorated credit quality | $ | | $ | | $ | | ||||||
Financing receivables: |
||||||||||||
Ending balance | $ | 590 | $ | 168 | $ | 758 | ||||||
Ending balance: individually evaluated for impairment | $ | 590 | $ | 168 | $ | 758 | ||||||
Ending balance: collectively evaluated for impairment | $ | | $ | | $ | | ||||||
Ending balance: loans acquired with deteriorated credit quality | $ | | $ | | $ | |
![]() |
![]() |
![]() |
![]() |
|||||||||
December 31, 2012 | Notes Receivable | Finance Leases | Total | |||||||||
Allowance for credit losses: |
||||||||||||
Ending balance | $ | 10 | $ | | $ | 10 | ||||||
Ending balance: individually evaluated for impairment | $ | 10 | $ | | $ | 10 | ||||||
Ending balance: collectively evaluated for impairment | $ | | $ | | $ | | ||||||
Ending balance: loans acquired with deteriorated credit quality | $ | | $ | | $ | | ||||||
Financing receivables: |
||||||||||||
Ending balance | $ | 769 | $ | 300 | $ | 1,069 | ||||||
Ending balance: individually evaluated for impairment | $ | 769 | $ | 300 | $ | 1,069 | ||||||
Ending balance: collectively evaluated for impairment | $ | | $ | | $ | | ||||||
Ending balance: loans acquired with deteriorated credit quality | $ | | $ | | $ | |
The Company evaluates the credit quality of its financing receivables on a scale equivalent to the following quality indicators related to corporate risk profiles:
Pass Any account whose lessee/debtor, co-lessee/debtor or any guarantor has a credit rating on publicly traded or privately placed debt issues as rated by Moodys or S&P for either Senior Unsecured debt, Long Term Issuer rating or Issuer rating that are in the tiers of ratings generally recognized by the investment community as constituting an Investment Grade credit rating; or, has been determined by the Manager to be an Investment Grade Equivalent or High Quality Corporate Credit per its Credit Policy or has a Not Rated internal rating by the Manager and the account is not considered by the Chief Credit Officer of the Manager to fall into one of the three risk profiles below.
Special Mention Any traditional corporate type account with potential weaknesses (e.g. large net losses or major industry downturns) or, any growth capital account that has less than three months of cash as of the end of the calendar quarter to fund their continuing operations. These accounts deserve managements close attention. If left uncorrected, those potential weaknesses may result in deterioration of the Funds receivable at some future date.
12
Substandard Any account that is inadequately protected by the current worth and paying capacity of the borrower or of the collateral pledged, if any. Accounts that are so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Fund will sustain some loss as the likelihood of fully collecting all receivables may be questionable if the deficiencies are not corrected. Such accounts are on the Managers Credit Watch List.
Doubtful Any account where the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Accordingly, an account that is so classified is on the Managers Credit Watch List, and has been declared in default and the Manager has repossessed, or is attempting to repossess, the equipment it financed. This category includes impaired notes and leases as applicable.
At September 30, 2013 and December 31, 2012, the Companys financing receivables by credit quality indicator and by class of financing receivables are as follows (excludes initial direct costs) (in thousands):
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
Notes Receivable | Finance Leases | |||||||||||||||
September 30, 2013 | December 31, 2012 | September 30, 2013 | December 31, 2012 |
|||||||||||||
Pass | $ | 580 | $ | | $ | 168 | $ | 274 | ||||||||
Special mention | | 769 | | 26 | ||||||||||||
Substandard | | | | | ||||||||||||
Doubtful | 10 | | | | ||||||||||||
Total | $ | 590 | $ | 769 | $ | 168 | $ | 300 |
As of September 30, 2013 and December 31, 2012, the Companys impaired loans were as follows (in thousands):
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
|||||||||||||||
Impaired Loans | ||||||||||||||||||||
September 30, 2013 | Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
With no related allowance recorded |
||||||||||||||||||||
Notes receivable | $ | | $ | | $ | | $ | | $ | | ||||||||||
With an allowance recorded |
||||||||||||||||||||
Notes receivable | 10 | 10 | 10 | 10 | | |||||||||||||||
Total | $ | 10 | $ | 10 | $ | 10 | $ | 10 | $ | |
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
|||||||||||||||
Impaired Loans | ||||||||||||||||||||
December 31, 2012 | Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
With no related allowance recorded |
||||||||||||||||||||
Notes receivable | $ | | $ | | $ | | $ | | $ | | ||||||||||
With an allowance recorded |
||||||||||||||||||||
Notes receivable | 10 | 10 | 10 | 14 | 4 | |||||||||||||||
Total | $ | 10 | $ | 10 | $ | 10 | $ | 14 | $ | 4 |
13
At September 30, 2013 and December 31, 2012, investment in financing receivables is aged as follows (in thousands):
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
|||||||||||||||||||||
September 30, 2013 | 31 60 Days Past Due | 61 90 Days Past Due | Greater Than 90 Days | Total Past Due |
Current | Total Financing Receivables | Recorded Investment > 90 Days and Accruing |
|||||||||||||||||||||
Notes receivable | $ | | $ | | $ | | $ | | $ | 590 | $ | 590 | $ | | ||||||||||||||
Finance leases | | | | | 168 | 168 | | |||||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | 758 | $ | 758 | $ | |
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
|||||||||||||||||||||
December 31, 2012 | 31 60 Days Past Due | 61 90 Days Past Due | Greater Than 90 Days | Total Past Due |
Current | Total Financing Receivables | Recorded Investment > 90 Days and Accruing |
|||||||||||||||||||||
Notes receivable | $ | | $ | | $ | | $ | | $ | 769 | $ | 769 | $ | | ||||||||||||||
Finance leases | | 33 | | 33 | 267 | 300 | | |||||||||||||||||||||
Total | $ | | $ | 33 | $ | | $ | 33 | $ | 1,036 | $ | 1,069 | $ | |
The Company had no notes in non-accrual status at both September 30, 2013 and December 31, 2012. As of December 31, 2012, the Company did, however, have a note receivable that was deemed impaired. Such impaired note remained outstanding as of September 30, 2013. See Note 3 for further discussion.
The Companys investment in leases consists of the following (in thousands):
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
Balance December 31, 2012 | Reclassifications, Additions/ Dispositions and Impairment Losses | Depreciation/ Amortization Expense or Amortization of Leases | Balance September 30, 2013 | |||||||||||||
Net investment in operating leases | $ | 10,515 | $ | (604 | ) | $ | (1,647 | ) | $ | 8,264 | ||||||
Net investment in direct financing leases | 300 | 3 | (135 | ) | 168 | |||||||||||
Assets held for sale or lease, net | 371 | (256 | ) | | 115 | |||||||||||
Initial direct costs, net of accumulated amortization of $83 at September 30, 2013 and $80 at December 31, 2012 | 59 | | (15 | ) | 44 | |||||||||||
Total | $ | 11,245 | $ | (857 | ) | $ | (1,797 | ) | $ | 8,591 |
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. During the respective three months ended September 30, 2013 and 2012, the Company recorded $39 thousand and $221 thousand of fair value adjustments to reduce the cost basis of certain impaired lease and off-lease equipment. Such fair value adjustments totaled $52 thousand and $255 thousand during the respective nine months ended September 30, 2013 and 2012.
The Company utilizes a straight line depreciation method for equipment in all of the categories currently in its portfolio of operating lease transactions. Depreciation expense on the Companys equipment was approximately $441 thousand and $701 thousand for the respective three months ended September 30, 2013 and 2012, and was approximately $1.6 million and $2.3 million for the respective nine months ended
14
September 30, 2013 and 2012. Initial direct costs amortization expense related to the Companys operating and direct financing leases totaled $5 thousand and $4 thousand for the respective three months ended September 30, 2013 and 2012, and $15 thousand and $17 thousand for the respective nine months ended September 30, 2013 and 2012.
All of the leased property was acquired during the years 2005 through 2011.
Property on operating leases consists of the following (in thousands):
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
Balance December 31, 2012 | Additions | Reclassifications, Dispositions and Impairment Losses | Balance September 30, 2013 | |||||||||||||
Transportation, rail | $ | 11,626 | $ | | $ | (220 | ) | $ | 11,406 | |||||||
Transportation, other | 6,086 | | (1,677 | ) | 4,409 | |||||||||||
Mining | 2,893 | | | 2,893 | ||||||||||||
Materials handling | 6,089 | | (3,269 | ) | 2,820 | |||||||||||
Aviation | 1,658 | | | 1,658 | ||||||||||||
Marine vessels | 1,415 | | | 1,415 | ||||||||||||
Manufacturing | 953 | | (123 | ) | 830 | |||||||||||
Construction | 898 | | (140 | ) | 758 | |||||||||||
Other | 4 | | 7 | 11 | ||||||||||||
31,622 | | (5,422 | ) | 26,200 | ||||||||||||
Less accumulated depreciation | (21,107 | ) | (1,647 | ) | 4,818 | (17,936 | ) | |||||||||
Total | $ | 10,515 | $ | (1,647 | ) | $ | (604 | ) | $ | 8,264 |
The average estimated residual value for assets on operating leases was 21% of the assets original cost at both September 30, 2013 and December 31, 2012.
There were no operating lease contracts placed in non-accrual status at September 30, 2013 and December 31, 2012. However, as of September 30, 2013 and December 31, 2012, the Company had certain other leases that have related accounts receivables aged 90 days or more that have not been placed on non-accrual status. In accordance with Company policy, such receivables are fully reserved. Management continues to closely monitor these leases for any actual change in collectability status and indication of necessary valuation adjustments.
As of September 30, 2013, investment in direct financing leases primarily consists of materials handling, construction, manufacturing, and research equipment. As of December 31, 2012, such investment primarily consisted of materials handling, furniture and fixtures, and research equipment. The components of the Companys investment in direct financing leases as of September 30, 2013 and December 31, 2012 are as follows (in thousands):
![]() |
![]() |
![]() |
||||||
September 30, 2013 |
December 31, 2012 |
|||||||
Total minimum lease payments receivable | $ | 193 | $ | 325 | ||||
Estimated residual values of leased equipment (unguaranteed) | 30 | 60 | ||||||
Investment in direct financing leases | 223 | 385 | ||||||
Less unearned income | (55 | ) | (85 | ) | ||||
Net investment in direct financing leases | $ | 168 | $ | 300 |
15
There were no investments in direct financing lease assets in non-accrual status at September 30, 2013 and December 31, 2012.
At September 30, 2013, the aggregate amounts of future minimum lease payments to be received are as follows (in thousands):
![]() |
![]() |
![]() |
![]() |
|||||||||
Operating Leases | Direct Financing Leases |
Total | ||||||||||
Three months ending December 31, 2013 | $ | 806 | $ | 40 | $ | 846 | ||||||
Year ending December 31, 2014 | 2,308 | 96 | 2,404 | |||||||||
2015 | 1,245 | 46 | 1,291 | |||||||||
2016 | 557 | 11 | 568 | |||||||||
2017 | 485 | | 485 | |||||||||
2018 | 115 | | 115 | |||||||||
Thereafter | 25 | | 25 | |||||||||
$ | 5,541 | $ | 193 | $ | 5,734 |
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 in providing administrative services to the Company. Administrative services provided include Company accounting, finance/treasury, 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. Acquisition services, equipment management, lease administration and asset disposition services are performed by ALC; and investor relations, communications services 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 to each managed entity based on certain criteria such as managed assets, number of investors or contributed capital based upon the type of cost incurred.
The Operating Agreement places an annual limit and a cumulative limit for cost reimbursements to AFS and/or 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 of the cumulative limit. As of September 30, 2013, the Company has not exceeded the annual and/or cumulative limitations discussed above.
16
AFS and/or affiliates earned fees and commissions, and billed for reimbursements, pursuant to the Operating Agreement as follows during each of the three and nine months ended September 30, 2013 and 2012 (in thousands):
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Costs reimbursed to Managing Member and/or affiliates | $ | 81 | $ | 96 | $ | 242 | $ | 312 | ||||||||
Asset management fees to Managing Member and/or affiliates |
51 | 79 | 181 | 251 | ||||||||||||
Acquisition and initial direct costs paid to Managing Member and/or affiliates | | 30 | | 42 | ||||||||||||
$ | 132 | $ | 205 | $ | 423 | $ | 605 |
At September 30, 2013, non-recourse debt consists of notes payable to financial institutions. The notes are due in monthly installments. Interest on the notes is at fixed rates ranging from 4.40% to 5.95%. The notes are secured by assignments of lease payments and pledges of assets. At September 30, 2013, gross lease rentals totaled approximately $2.5 million over the remaining lease terms; and the carrying value of the pledged assets is approximately $5.2 million. The notes mature from 2014 through 2015.
The non-recourse debt does not contain any material financial covenants. The debt is secured by liens granted by the Company to the non-recourse lenders on (and only on) the discounted lease transactions. The lenders have recourse only to the following collateral: the specific leased equipment; the related lease chattel paper; the lease receivables; and proceeds of the foregoing items. The non-recourse obligation is payable solely out of the respective specific security and the Company does not guarantee (nor is the Company otherwise contractually responsible for) the payment of the non-recourse debt as a general obligation or liability of the Company. Although the Company does not have any direct or general liability in connection with the non-recourse debt apart from the security granted, the Company is directly and generally liable and responsible for certain representations, warranties, and covenants made to the lenders, such as warranties as to genuineness of the transaction parties' signatures, as to the genuineness of the respective lease chattel paper or the transaction as a whole, or as to the Company's good title to or perfected interest in the secured collateral, as well as similar representations, warranties and covenants typically provided by non-recourse borrowers and customary in the equipment finance industry, and are viewed by such industry as being consistent with non-recourse discount financing obligations. Accordingly, as there are no financial covenants or ratios imposed on the Company in connection with the non-recourse debt, the Company has determined that there are no material covenants with respect to the non-recourse debt that warrant footnote disclosure.
Future minimum payments of non-recourse debt are as follows (in thousands):
![]() |
![]() |
![]() |
![]() |
|||||||||
Principal | Interest | Total | ||||||||||
Three months ending December 31, 2013 | $ | 430 | $ | 30 | $ | 460 | ||||||
Year ending December 31, 2014 | 1,313 | 73 | 1,386 | |||||||||
2015 | 639 | 17 | 656 | |||||||||
$ | 2,382 | $ | 120 | $ | 2,502 |
17
Effective as of December 31, 2012, the Companys participation in a revolving credit facility (the Credit Facility) with AFS and certain of its affiliates was terminated. The Company had no related balances outstanding at the time.
Prior to December 31, 2012, the Company participated with AFS and certain of its affiliates in the Credit Facility comprised of a working capital facility to AFS, an acquisition facility (the Acquisition Facility) and a warehouse facility (the Warehouse Facility) to AFS, the Company and affiliates, and a venture facility available to an affiliate, with a syndicate of financial institutions as lenders. The Credit Facility was for an amount up to $60 million and included certain financial covenants. The interest rate on the Credit Facility was based on either the LIBOR/Eurocurrency rate of 1-, 2-, 3- or 6-month maturity plus a lender designated spread, or the banks Prime rate, which re-priced daily. Principal amounts of loans made under the Credit Facility that were prepaid may be re-borrowed on the terms and subject to the conditions set forth under the Credit Facility.
At September 30, 2013, the Company had no commitments to either purchase lease assets or fund loans.
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.
A total of 5,209,307 Units were issued and outstanding as of September 30, 2013 and December 31, 2012. The Fund was authorized to issue up to 15,000,000 Units. The Company terminated sales of Units effective April 30, 2006.
The Company has the right, exercisable at the Managers 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 Manager on terms it determines to be appropriate under given circumstances, in the event that the Manager 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 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.
18
Distributions to the Other Members were as follows (in thousands, except as to Units and per Unit data):
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Distributions | $ | | $ | 1,205 | $ | 2,409 | $ | 3,614 | ||||||||
Weighted average number of Units outstanding | 5,209,307 | 5,209,307 | 5,209,307 | 5,209,307 | ||||||||||||
Weighted average distributions per Unit | $ | | $ | 0.23 | $ | 0.46 | $ | 0.69 |
The monthly distributions were discontinued in 2013 as the Company entered its liquidation phase. The rates and frequency of periodic distributions paid by the Fund during its liquidation phase are solely at the discretion of the Manager.
Fair value measurements and disclosures are based on a fair value hierarchy as determined by significant inputs used to measure fair value. The three levels of inputs within the fair value hierarchy are defined as follows:
Level 1 Quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, generally on a national exchange.
Level 2 Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market.
Level 3 Valuation is modeled using significant inputs that are unobservable in the market. These unobservable inputs reflect the Company's own estimates of assumptions that market participants would use in pricing the asset or liability.
The Company had no assets or liabilities requiring measurement at fair value on a recurring basis as of September 30, 2013 and December 31, 2012; however, the Company recorded non-recurring adjustments to reflect the fair values of certain impaired lease and off-lease equipment during the first nine months of 2013, and those of certain impaired lease and off-lease equipment, notes receivable and investment securities during 2012. Balances shown at September 30, 2013 and December 31, 2012 reflect the fair value of the then existing impaired assets.
The Companys valuation policy is determined by members of the Asset Management, Credit and Accounting departments. Whenever possible, the policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, information from third party remarketing agents, third party appraisals of collateral and/or other valuation techniques. These techniques are significantly affected by certain of the Companys assumptions, including discount rates and estimates of future cash flows. Potential taxes and other transaction costs are not considered in estimating fair values. As the Company is responsible for determining fair value, an analysis is performed on prices obtained from third parties. Such analysis is performed by asset management and credit department personnel who are familiar with the Companys investments in equipment, notes receivable and equity securities of venture companies. The analysis may include a periodic review of price fluctuations and validation of numbers obtained from a specific third party by reference to multiple representative sources.
19
Such fair value adjustments utilized the following methodology:
During the third quarter of 2013, the Company recorded fair value adjustments of $39 thousand to reduce the cost basis of certain impaired lease and off-lease equipment. Such amount is in addition to the $13 thousand of fair value adjustments recorded during the first six months of 2013. Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of impaired lease assets are classified within Level 3 of the valuation hierarchy as the data sources utilized for the valuation of such assets reflect significant inputs that are unobservable in the market. Such valuation utilizes a market approach technique and uses inputs that reflect the sales price of similar assets sold by affiliates and/or information from third party remarketing agents not readily available in the market.
During the three and nine months ended September 30, 2012, fair value adjustments relative to impaired lease and off-lease equipment amounted to $221 thousand and $255 thousand, respectively. The fair values of the impaired equipment were classified within Level 3 of the valuation hierarchy. An additional $174 thousand of fair value adjustments were recorded through December 31, 2012.
The fair value of the Companys notes receivable, when impairment adjustments are required, is estimated using either third party appraisals or estimations of the value of collateral (for collateral dependent loans) or discounted cash flow analyses (by discounting estimated future cash flows) using the effective interest rate contained in the terms of the original loan. The Company had no fair value adjustments relative to impaired notes receivable during the three and nine months ended September 30, 2013.
During the first quarter of 2012, the Company recorded an additional $8 thousand adjustment to reflect the fair value of a note deemed impaired in 2011. Such amount also represents the total fair value adjustments for the nine months ended September 30, 2012. The incremental adjustment was based upon an independent appraisal of the underlying collateral. Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of the impaired notes receivable was classified within Level 3 of the valuation hierarchy. Such valuation utilized a market approach technique and used inputs from third party appraisers that utilize current market transactions as adjusted for certain factors specific to the underlying collateral. There was no additional fair value adjustment through December 31, 2012.
The Companys investment securities are not registered for public sale and are carried at cost. The investment securities are adjusted for impairment, if any, based upon factors which include, but are not limited to, available financial information, the issuers ability to meet its current obligations and indications of the issuers subsequent ability to raise capital. The Company had no fair value adjustments to investment securities during first nine months of 2013.
During 2012, the Company recorded $40 thousand of non-recurring fair value adjustments which reduced the cost basis of two investment securities. Of the total adjustment, $32 thousand was recorded during the first quarter of 2012 and was based on an approximate 66% reduction in the valuation of one of the securities. Such reduction considered the investees current liquidity, rate of cash burn and potential for additional capital infusion. The remaining $8 thousand, which was recorded during the fourth quarter of 2012, represents an additional adjustment to an investment which was originally deemed impaired in March 2011. Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair values of the impaired investment securities were classified within Level 3 of the valuation hierarchy due to the significant inputs that are unobservable in the market.
20
The following table presents the fair value measurement of impaired assets measured at fair value on a non-recurring basis and the level within the hierarchy in which the fair value measurements fall at September 30, 2013 and December 31, 2012 (in thousands):
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
September 30, 2013 |
Level 1 Estimated Fair Value |
Level 2 Estimated Fair Value |
Level 3 Estimated Fair Value |
|||||||||||||
Assets measured at fair value on a non-recurring basis: |
||||||||||||||||
Impaired lease and off-lease equipment | $ | 19 | $ | | $ | | $ | 19 |
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
December 31, 2012 | Level 1 Estimated Fair Value |
Level 2 Estimated Fair Value |
Level 3 Estimated Fair Value |
|||||||||||||
Assets measured at fair value on a non-recurring basis: |
||||||||||||||||
Impaired lease and off-lease equipment | $ | 405 | $ | | $ | | $ | 405 | ||||||||
Impaired investment securities | 24 | | | 24 |
The following table summarizes the valuation techniques and significant unobservable inputs used for the Companys non-recurring fair value adjustments categorized as Level 3 in the fair value hierarchy at September 30, 2013:
![]() |
![]() |
![]() |
![]() |
![]() |
||||
Name | Valuation Frequency | Valuation Technique | Unobservable Inputs | Range of Input Values |
||||
Lease Equipment | Non-recurring | Market Approach | Third Party Agents' Pricing Quotes - per equipment Equipment Condition |
$600 (total of $18,600) Poor to Average |
The following disclosure of the estimated fair value of financial instruments is made in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification. Fair value estimates, methods and assumptions, set forth below for the Companys financial instruments, are made solely to comply with the requirements of the Financial Instruments Topic and should be read in conjunction with the Companys financial statements and related notes.
The Company has determined the estimated fair value amounts by using market information and valuation methodologies that it considers appropriate and consistent with the fair value accounting guidance. Considerable judgment is required to interpret market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The recorded amounts of the Companys cash and cash equivalents approximate fair value because of the liquidity and short-term maturity of these instruments.
The fair value of the Companys notes receivable is estimated using either third party appraisals of collateral or discounted cash flow analyses based upon current market rates for similar types of lending arrangements, with credit risk or estimated collateral liquidation adjustments for impaired loans as deemed necessary.
21
The Companys investment securities are not registered for public sale and are carried at cost which management believes approximates fair value, as appropriately adjusted for impairment.
The fair value of the Companys non-recourse debt is estimated using discounted cash flow analyses, based upon the current market borrowing rates for similar types of borrowing arrangements.
Management has determined that no recognition for the fair value of the Companys loan commitments is necessary because their terms are made on a market rate basis and require borrowers to be in compliance with the Companys credit requirements at the time of funding.
The fair value of contingent liabilities (or guarantees) is not considered material because management believes there has been no event that has occurred wherein a guarantee liability has been incurred or will likely be incurred.
The following tables present a summary of the carrying value and fair value by level of financial instruments not recorded at fair value on the Companys balance sheet at September 30, 2013 and December 31, 2012 (in thousands):
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
|||||||||||||||
Fair Value Measurements at September 30, 2013 | ||||||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Financial assets: |
||||||||||||||||||||
Cash and cash equivalents | $ | 725 | $ | 725 | $ | | $ | | $ | 725 | ||||||||||
Notes receivable, net | 580 | | | 580 | 580 | |||||||||||||||
Investment in securities | 219 | | | 219 | 219 | |||||||||||||||
Financial liabilities: |
||||||||||||||||||||
Non-recourse debt | 2,382 | | | 2,463 | 2,463 |
![]() |
![]() |
![]() |
![]() |
![]() |
![]() |
|||||||||||||||
Fair Value Measurements at December 31, 2012 | ||||||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Financial assets: |
||||||||||||||||||||
Cash and cash equivalents | $ | 1,502 | $ | 1,502 | $ | | $ | | $ | 1,502 | ||||||||||
Notes receivable, net | 759 | | | 759 | 759 | |||||||||||||||
Investment in securities | 219 | | | 219 | 219 | |||||||||||||||
Financial liabilities: |
||||||||||||||||||||
Non-recourse debt | 3,651 | | | 3,807 | 3,807 |
22
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 investment and reinvestment, 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 Companys 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 market 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 XI, LLC (the Company or the Fund) is a California limited liability company that was formed in June 2004 for the purpose of engaging in the sale of limited liability company investment units and acquiring equipment to generate revenues from equipment leasing, lending 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 April 2006. During 2006, the Company completed its initial acquisition stage with the investment of the net proceeds from the public offering of Units. Subsequently, during the reinvestment period (Reinvestment Period) (defined as six full years following the year the offering was terminated), the Company has 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, 2025. However, pursuant to the guidelines of the Limited Liability Company Operating Agreement (Operating Agreement), the Company commenced liquidation phase activities subsequent to the end of the Reinvestment Period which ended on December 31, 2012. Periodic distributions are paid at the discretion of the Managing Member.
The Company had net income of $401 thousand and $243 thousand for the three months ended September 30, 2013 and 2012, respectively. Results for the third quarter of 2013 reflect decreases in both total operating expenses and total revenues when compared to the prior year period.
Total revenues for the third quarter of 2013 declined by $424 thousand, or 28%, as compared to the prior year period. The net reduction in total revenues was largely attributable to a $440 thousand decrease in operating lease revenue which declined as a result of continued run-off and sales of lease assets.
Total expenses for the third quarter of 2013 decreased by $560 thousand, or 45%, as compared to the prior year period. The net reduction in total expenses was primarily due to decreases in depreciation expense, impairment losses on equipment, acquisition expense, asset management fees paid to AFS and interest expense.
23
The decrease in depreciation expense totaled $260 thousand and was largely due to continued run-off and sales of lease assets. Impairment losses on equipment declined by $182 thousand primarily due to a reduction in fair value adjustments relative to impaired leased and off-lease equipment. Such reduction in fair value adjustments was primarily a result of improved demand for certain of the Funds materials handling equipment.
Moreover, acquisition expense decreased by $30 thousand largely due to reduced costs related to identifying potential lease and funding transactions. Asset management fees paid to AFS declined by $28 thousand as a result of the decrease in managed assets and related rents; and, interest expense decreased by $22 thousand mainly due to a $1.7 million decline in outstanding borrowings since September 30, 2012.
The Company had net income of $1.2 million and $1.3 million for the nine months ended September 30, 2013 and 2012, respectively. Results for the first nine months of 2013 reflect decreases in both total revenues and total operating expenses when compared to the prior year period.
Total revenues for the first nine months of 2013 declined by $1.4 million, or 27%, as compared to the prior year period. The net reduction in total revenues was largely attributable to decreases in operating lease revenues, gain on sales of lease assets and early termination of notes, and unrealized gain on investment securities partially offset by an increase in other revenue.
The decrease in operating lease revenues totaled $1.3 million and was primarily a result of continued run-off and sales of lease assets. Gain on sales of lease assets and early termination of notes declined by $81 thousand largely due to a reduction in volume and a change in the mix of assets sold. Moreover, during the prior year period, the Company recorded $59 thousand of unrealized gain relative to the conversion of warrants into shares of certain venture companies. There were no such unrealized gains during the current year period.
Partially offsetting the aforementioned decreases in revenues was a $68 thousand increase in other revenue. Such increase was largely due to excess mileage fees collected on certain returned vehicles.
Total expenses for the first nine months of 2013 decreased by $1.2 million, or 32%, as compared to the prior year period. The net reduction in total expenses was primarily due to decreases in the following: depreciation expense, impairment losses on equipment, cost reimbursements to AFS, asset management fees paid to AFS, interest expense, acquisition expense and other expense. Such decreases in expenses were partially offset by a reduction in recovery of accounts receivable amounts previously reserved.
The decrease in depreciation expense totaled $650 thousand and was primarily a result of continued run-off and sales of lease assets. Impairment losses on equipment declined by $203 thousand primarily due to a reduction in fair value adjustments relative to impaired leased and off-lease equipment. As previously discussed, the reduction in fair value adjustments was primarily a result of improved demand for certain of the Funds materials handling equipment. Cost reimbursements to AFS declined by $70 thousand primarily due to lower costs allocated by the Manager based on the Companys declining asset base and operations, consistent with a fund in liquidation; and, asset management fees were lower by $70 thousand as a result of the decline in managed assets and related rents.
Furthermore, interest expense decreased by $68 thousand primarily due to a $1.7 million decline in outstanding borrowings since September 30, 2012. Acquisition expense decreased by $42 thousand largely due to reduced costs related to identifying potential lease and funding transactions; and, other expense decreased by $36 thousand largely due to lower franchise tax fees and bank charges related to the Funds line of credit which terminated effective December 31, 2012.
A $35 thousand decline in recovery of accounts receivable amounts previously reserved partially offset the above mentioned decreases in expenses incurred during the first nine months of 2013.
24
At September 30, 2013 and December 31, 2012, the Companys cash and cash equivalents totaled $725 thousand and $1.5 million, respectively. The liquidity of the Company varies, increasing to the extent cash flows from leases and proceeds of asset sales 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 and proceeds from asset sales.
The primary source of liquidity for the Company is its cash flow from leasing activities. As the lease terms expire, the Company will re-lease or sell the equipment. The future liquidity beyond the contractual minimum rentals will depend on AFSs 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 and notes would not increase as such rates are generally fixed for the terms of the leases and notes without adjustment for inflation. In addition, if interest rates increase significantly under such circumstances, the rates that the Company can obtain on future lease or financing transactions will be expected to increase as the cost of capital is a significant factor in the pricing of leases and investments in notes receivable. Leases and notes 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.
The following table sets forth summary cash flow data (in thousands):
![]() |
![]() |
![]() |
![]() |
![]() |
||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net cash provided by (used in): |
||||||||||||||||
Operating activities | $ | 883 | $ | 912 | $ | 2,376 | $ | 3,714 | ||||||||
Investing activities | 375 | 527 | 1,316 | 1,700 | ||||||||||||
Financing activities | (1,021 | ) | (1,748 | ) | (4,469 | ) | (5,349 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents | $ | 237 | $ | (309 | ) | $ | (777 | ) | $ | 65 |
During the three months ended September 30, 2013 and 2012, the Companys primary sources of liquidity were cash flows from its portfolio of operating and direct financing lease contracts, and its investments in notes receivable. In addition, the Company also realized $277 thousand and $423 thousand of cash flows from the sale or disposition of equipment and early termination of certain notes during the respective three months ended September 30, 2013 and 2012.
During the same respective periods, cash was primarily used to pay distributions to both the Other Members and the Managing Member, totaling $596 thousand and $1.3 million. In addition, cash was also used to pay down $425 thousand and $445 thousand of debt during the respective three months ended September 30, 2013 and 2012; and, to pay invoices related to management fees and expenses, and other payables.
25
During the nine months ended September 30, 2013 and 2012, the Companys primary sources of liquidity were cash flows from its portfolio of operating and direct financing lease contracts, and its investments in notes receivable. In addition, the Company also realized $1.0 million and $1.4 million of cash flows from the sale or disposition of equipment and early termination of certain notes, and the disposition of investment securities during the respective nine months ended September 30, 2013 and 2012.
During the same respective periods, cash was primarily used to pay distributions to both the Other Members and the Managing Member, totaling $3.2 million and $3.9 million. In addition, cash was also used to pay down $1.3 million and $1.4 million of debt during the respective nine months ended September 30, 2013 and 2012; and, to pay invoices related to management fees and expenses, and other payables.
Effective as of December 31, 2012, the Companys participation in a revolving credit facility with AFS and certain of its affiliates was terminated. The Company had no related balances outstanding at the time.
Prior to December 31, 2012, the Company participated with AFS and certain of its affiliates in a revolving credit facility comprised of a working capital facility to AFS, an acquisition facility and a warehouse facility to AFS, the Company and affiliates, and a venture facility available to an affiliate, with a syndicate of financial institutions as lenders.
As of September 30, 2013 and December 31, 2012, the Company had non-recourse long-term debt totaling $2.4 million and $3.7 million. Such non-recourse notes payable do not contain any material financial covenants. The notes are secured by a lien granted by the Company to the non-recourse lenders on (and only on) the discounted lease transactions. The lenders have recourse only to the following collateral: the specific leased equipment; the related lease chattel paper; the lease receivables; and proceeds of the foregoing items.
For detailed information on the Companys debt obligations, see Notes 7 and 8 to the financial statements as set forth in Part I, Item 1, Financial Statements (Unaudited).
The Company commenced periodic distributions, based on cash flows from operations, beginning with the month of June 2005. The monthly distributions were discontinued in 2013 as the Company entered its liquidation phase. The rates and frequency of periodic distributions paid by the Fund during its liquidation phase are solely at the discretion of the Manager.
At September 30, 2013, the Company had no commitments to purchase lease assets or fund loans.
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.
26
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.
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 September 30, 2013 that have materially affected, or are reasonably likely to materially affect, the Managing Members internal control over financial reporting, as it is applicable to the Company.
27
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.
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 |
![]() |
![]() |
|
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 |
28
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 13, 2013
![]() |
![]() |
![]() |
||
By: ATEL Financial Services, LLC | ||||
By: | /s/ Dean L. Cash![]() Dean L. Cash President and Chief Executive Officer of ATEL Financial Services, LLC (Managing Member) |
|||
By: | /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) |
|||
By: | /s/ Samuel Schussler![]() Samuel Schussler Vice President and Chief Accounting Officer of ATEL Financial Services, LLC (Managing Member) |
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 XI, 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: November 13, 2013
/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 XI, 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: November 13, 2013
/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 XI, LLC (the Company) on Form 10-Q for the period ended September 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: November 13, 2013
/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 XI, LLC (the Company) on Form 10-Q for the period ended September 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: November 13, 2013
/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.
Guarantees
|
9 Months Ended |
---|---|
Sep. 30, 2013
|
|
Guarantees [Abstract] | |
Guarantees | 10. Guarantees:
The Company enters into contracts that contain a variety of indemnifications. The Company’s 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 Company’s 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 Company’s 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.
|
*XW.E88;X=X>2II?:2?:5%P)V,7,C\"+M?L5;Z8.XEJ3?TOJ85]PIZ`&F^K,8^J#&:R4^-.PL;S<[UL!U4'X]P?6?PN7+GP'XP%C3 M/HB+:_
KWVJD(BC%:)
M:(1;$=T0[,L,0R:44-'-$274UO*UAI`(\T@DHA%N171#L$M3#"'JANCIU,P8
MEM!AWV=D<.B1")-(\_65O(%L:V
79P=3F+ XQL
MA5JEH4&2D[RL20L2*EG#><(YD:<*PB/&4#;^BA8J)KNZ4K,:5E^H,6]X;N:1
M1QY5@$!ZZ[RQ'=D"G"1QW!AGYS'".;\=H,6JDQY-U^TSQ)YK3,"'%4!4+^WI
MF6.3BGYT;2R5)S!"22&8E!MS6%P?*F-YHT]T/_"O.[W6TM8VNXG;6G67>E*6
MA0==?MC\QB2N^T+OF@#_QRQ?ZVYD'<*!_%?\X"2=V$FG]/)\S[V"$AS6?*;N
MK]^S/RY2,*6'^+2U:/FAK>V]:9+H;GR4[_G73B(7`^Z+=W19P&:BP7$[HV/8
M-L(O-R>'R1$HY9M0J8>[;]H)S&IWD2&%DL8]ZVY9
M*']R^'AK[]%!B(COW7VR?=2@4Q.M%F1MY+%&\WSWT?9A','_.K&$7\=CK!A
MBUMI.]<]VM:"#CES$9VUVDBW'^5VI9X,UUVD-S1P&&J5F)%=
GK2BO+
M'Y#>;O:4`"U=$&,,"*O:_C`4M0T8,69[/44;^3:<%-G7L!ICIE0&8:U`6MV=
MIB]^:\X8NZ0
=&6`&D-FUZ[!JG4]E\`XLPU1__8P,C8V3;A"#
M^$1.&"KKT?7H"V/U2^Q5L,_)FC=(ARN;'8B+6/A@[#_14WW8!
M'TRD^`).8_$OO?9XJ?WL9R(N`\>SW.RAY>[E\@8#02_$&E=/FPH3^65YU>(5
M4D`=996799])YTR2Y:+6'8>EC3VILI6":-1F@NAH3[DI102=(D=276
MSL338R-\I.DI=9!+CWMRTY[&'?]NUP*"8*/)E>87>0_:\`!U%\
MQ=XW:8MA@]E:.[;Z!+CQ^D9?)I,4NZ@D"4E<2]]&;=R0(;3G=@N:8MXC!>_)O%=XIL@I=$D^U&BB."
MH8$[54?,"(8),+^<$:1BL!<&;$-`K((NW&WGJXU_!Y7+3Y"=@RPQZB'1&)&]
M@%CT$!]D]=H@XZ$V4_49].YMC29HK#&*>WJ;QLY![+Q80S8PC`1`088"WK[8
M@$'@(//Y>G*Q@\P'D(FT["W$2!J0#*6]KS8F*,60;=^<.)A(=)"5;>YL[,N&
MOE=:!N/\<5DF:"(K'%^]
W[X^FO0GX8-KC
MU15O=C5MCS2C5<6=@CV+:VD`KQ'#4[PR;\D2[D%P5;6>9^(J+9Y[@P%NLN?\
M2'_D[;%LN%/1`[CT9PDTW!;OPOBE8V=Y\=JQ#NZP\N,)?K.@<,/R9P`^,-:]
M?Q$;#+^";/X'``#__P,`4$L#!!0`!@`(````(0!]JRP7/@4``,P8```9````
M>&PO=V]R:W-H965T