ADDITIONAL INFORMATION
The Fund has filed with the Securities and Exchange Commission, Washington,
D.C., a registration statement under the Securities Act of 1933, as amended,
with respect to the Units offered pursuant to this Prospectus. For further
information, reference is made to the registration statement and the exhibits
thereto which are available for inspection at no fee in the principal office of
the Commission at 450 Fifth Street, Northwest, Washington, D.C. 20549. The Fund
is subject to the informational requirements of the Securities Exchange Act of
1934 and in accordance therewith files reports and other information with the
Securities and Exchange Commission. Such reports, the registration statement and
other information are available for inspection and copying at the above address,
and are also available to be viewed and retrieved without charge on the
Commission's electronic data gathering and retrieval (EDGAR) system, at its
internet web site at www.sec.gov. In addition, photostatic copies of the
material containing this information may be obtained from the Commission upon
paying of the fees prescribed by the rules and regulations of the Commission.
This Prospectus contains a fair summary of the material provisions of the
exhibits filed with the Commission. This Prospectus does not knowingly contain
any untrue statement of a material fact or omit to state any material fact
required to be stated herein or necessary to make the statements herein not
misleading.
GLOSSARY
The following terms used in this Prospectus shall (unless otherwise
expressly provided herein or unless the context otherwise requires) have the
following respective meanings:
"Acquisition Expenses" shall mean expenses including, but not limited to,
legal fees and expenses, travel and communication expenses, costs of appraisals,
accounting fees and expenses, and miscellaneous expenses relating to selection
and acquisition of Equipment, whether or not acquired.
"Acquisition Fees" shall mean the total of all fees and commissions paid by
any party in connection with the initial purchase or manufacture of Equipment.
Included in the computation of such fees or commissions shall be any commission,
selection fee, financing fee, nonrecurring management fee, or any fee of a
similar nature, however designated.
"Adjusted Invested Capital" shall mean, as of any date, the Original
Invested Capital attributable to the Units held by any Person on or before such
date, as decreased (but not below zero) by the amount by which (i) all
Distributions with respect to such Units on or before the date of determination
pursuant to any provision of the Operating Agreement exceed (ii) the Priority
Distribution attributable to such Units for such period.
"Affiliate" of a Person shall mean
-- any Person directly or indirectly controlling, controlled by or under
common control with such Person;
-- any Person owning or controlling 10% or more of the outstanding voting
securities or beneficial interests of such Person;
79
-- any officer, director, trustee or partner of such Person; and
-- if such Person is an officer, director, trustee, partner or holder of
10% or more of the voting securities or beneficial interests of such
Person, any other company for which such Person acts in such capacity.
However, such term shall not include a Person who is a partner in a
partnership or joint venture with the Fund if such Person is not
otherwise an Affiliate.
"Asset Management Fee" shall mean the fee payable to the Manager and its
Affiliates under the provisions of Section 8.2 of the Operating Agreement.
"Asset Management Fee Limit" means the limit on fees calculated pursuant to
Section 8.3 of the Operating Agreement.
"Assignee" shall mean a Person who has acquired a beneficial interest in
one or more Units from a third party but who is neither a substituted Holder nor
an Assignee of Record.
"Assignee of Record" shall mean an Assignee who has acquired a beneficial
interest in one or more Units whose ownership has been recorded on the books of
the Fund and which ownership is the subject of a written instrument of
assignment, the effective date of which assignment has passed.
"ATEL" shall mean ATEL Financial Services, LLC, a California limited
liability company.
"California Act" shall mean the Beverly-Killea Limited Liability Company
Act, Title 2.5, Chapters 1-15, of the California Corporations Code, as it may be
amended from time to time.
"Capital Account" shall mean, with respect to any Member, such Member's
Capital Account determined in accordance with Section 6.7 of the Operating
Agreement.
"Carried Interest" shall mean the allocable share of Fund Distributions of
Cash from Operations and Cash from Sales or Refinancing payable to the Manager,
as a Member, pursuant to Sections 10.4 and 10.5 of the Agreement, for which cash
consideration has neither been paid nor is to be paid.
"Cash from Operations" shall mean the excess of Gross Revenues (which
excludes revenues from equipment sales or refinancing) over cash disbursements
(including the Equipment Management Fee and amounts reinvested by the Fund in
Equipment) without reduction for depreciation and amortization of intangibles
such as organization and underwriting costs but after a reasonable allowance for
cash for repairs, replacements, contingencies and anticipated obligations, as
determined by the Manager.
"Cash from Reserve Account" shall mean that portion of the Net Proceeds not
utilized in the acquisition of equipment, including cash maintained according to
the provisions of Section 9.4 of the Operating Agreement.
"Cash from Sales or Refinancing" shall mean the net cash realized by the
Fund from the sale, refinancing or other disposition of any equipment after
payment of all expenses related to the transaction.
"Closing Date" shall mean such date designated by the Manager for the
termination of the offering of Units, but not later than _____, 200_ (a date two
years from the date of this Prospectus). Extension of the offering beyond one
year from the date of the Prospectus shall be subject to the qualification of
the offering for any such extension in those jurisdictions which may limit the
offering period to one year. "Initial Closing Date" shall mean the date on which
subscribers for Units, other than the initial Holder, are first admitted to the
Fund as Holders. "Final Closing Date" shall mean the last date on which
subscribers for Units are admitted to the Fund as Holders.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent federal revenue laws.
"Distributions" shall mean any cash distributed to Holders and the Manager
arising from their respective interests in the Fund.
80
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Equipment Management" shall mean personnel and services necessary to the
leasing activities of the program, including but not limited to leasing and
releasing of program equipment, arranging for necessary maintenance and repair
of the equipment, collecting revenues, paying operating expenses, determining
that the equipment is used in accordance with all operative contractual
arrangements and providing clerical and bookkeeping services necessary to the
operation of the program equipment.
"Front-End Fees" shall mean fees and expenses paid by any party for any
services rendered during the Fund's organization and acquisition phase including
Organization and Offering Expenses, Leasing Fees, Acquisition Fees, Acquisition
Expenses, and any other similar fees, however designated. Notwithstanding the
foregoing, Front-End Fees shall not include any Acquisition Fees or Acquisition
Expenses paid by a manufacturer of Equipment to any of its employees unless such
Persons are Affiliates of the Manager.
"Full Payout Lease" shall mean a lease under which the non-cancellable
rental payments due during the initial term of the lease are at least sufficient
to cover the purchase price of the Equipment leased.
"Fund" shall mean ATEL CAPITAL EQUIPMENT FUND XI, LLC, the California
limited liability company created under the Operating Agreement.
"Fund Manager" or "Manager" shall mean ATEL Financial Services, LLC
("ATEL"), a California limited liability company, or any other Person or Persons
which succeed it in such capacity. The Manager is referred to throughout the
Prospectus as "ATEL" or the "Manager."
"Fund Minimum Gain" shall have the meaning set forth in Regulations Section
1.704-2(d)(1).
"Gross Proceeds" shall mean the aggregate total of the Original Invested
Capital of the initial and all of the additional Holders.
"Gross Lease Revenues" shall mean all revenues attributable to the
equipment other than from security deposits paid by lessees thereof. The term
"Gross Revenues" shall not include revenues from the sale, refinancing or other
disposition of equipment.
"High Payout Lease" shall mean a lease under which the noncancellable
rental payments and other payment obligations of the lessee due through the
initial term of the lease are equal to at least 90% of the original purchase
price paid by the Fund for the equipment.
"Holders" shall mean owners of Units who are either Members or Assignees of
Record, and reference to a "Holder" shall be to any one of them. The Manager
shall not be considered to be a Holder except to the extent it also owns Units.
"IRA" shall mean an individual retirement account qualifying under Section
408 of the Code.
"Investment in Equipment" shall mean the amount of Gross Proceeds actually
paid or allocated to the purchase of Equipment acquired by the Fund, any amount
of Gross Proceeds reserved pursuant to Section 9.4 of the Operating Agreement up
to a maximum of 3% of Gross Proceeds and other cash payments such as interest
and taxes, but excluding Front-End Fees.
"Members" shall mean the initial Members and any other Persons who are
admitted to the Fund as additional or substituted Members. Reference to a
"Member" shall refer to any one of them.
"Net Income" or "Net Loss" shall mean the taxable income or taxable loss of
the Fund as determined for federal income tax purposes, computed by taking into
account each item of Fund income, gain, loss, deduction or credit not already
included in the computation of taxable income and taxable loss, but does not
mean Distributions.
81
"Net Lease Provisions" shall mean contractual arrangements under which the
lessee assumes responsibility for, and bears the cost of, insurance, taxes,
maintenance, repair and operation of the leased asset and where non-cancellable
rental payments under the lease are absolutely net to the lessor,
notwithstanding that some minor costs or responsibilities remain with the Fund
as lessor or that the Fund retains the option to require and pay for a higher
standard of care or greater level of maintenance or insurance than would be
imposed on the lessee under the terms of the lease.
"Net Proceeds" shall mean the total Gross Proceeds less Organization and
Offering Expenses.
"Operating Lease" shall mean a lease under which the aggregate rental
payments due during the initial term of the lease are less than the purchase
price of the equipment leased.
"Operating Revenues" means the total for any period of all Gross Lease
Revenues plus all Cash from Sales or Refinancing.
"Organization and Offering Expenses" shall mean those expenses incurred in
connection with preparing the Fund for registration and subsequently offering
and distributing Units to the public, including selling commissions and all
advertising expenses except advertising expenses related to the leasing of
equipment.
"Original Invested Capital" shall mean the original gross purchase price of
the Units contributed by each Member to the capital of the Fund for his interest
in the Fund, which amount shall be attributed to Units in the hands of a
subsequent Holder.
"Operating Agreement" or "Agreement" shall mean the Limited Liability
Company Operating Agreement of ATEL CAPITAL EQUIPMENT FUND XI, LLC, as it may be
amended from time to time.
"Person" shall mean any natural person, partnership, corporation,
association or other legal entity.
"Prospectus" shall mean the final prospectus filed in connection with the
registration of the Units with the Securities and Exchange Commission on Form
S-1, as amended, together with any supplement thereto which may be subsequently
filed with such Commission.
"Purchase Price of Equipment" shall mean the price paid upon the purchase
or sale of a particular item of equipment including all liens and mortgages on
the equipment, but excluding points and prepaid interest.
"Qualified Plan" shall mean employee trusts (or employer individual
retirement accounts), Keogh Plans and corporate retirement plans qualifying
under Section 401(a) of the Code.
"Regulations" or "Treasury Regulations" shall mean the income tax
regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"Reinvestment Period" shall mean the period commencing with the Initial
Closing Date and ending six calendar years after the Final Closing Date occurs.
"Reimbursable Administrative Expenses" shall mean the ordinary and annually
recurring administration expenses incurred by the Manager and reimbursed by the
Fund. Such expenses shall not include interest, depreciation, equipment
maintenance or repair, third party services or other non-administrative
expenses.
"Resident Alien" shall mean a resident alien as defined within the Federal
Aviation Act of 1958, as amended from time to time, or any successor statute, or
any regulations adopted pursuant to such Act or any successor statute.
"Roll-Up" shall mean a transaction involving the acquisition, merger,
conversion or consolidation, either directly or indirectly, of the Fund and the
issuance of securities of a Roll-Up Entity. Such term does not include:
82
(a) any transaction if the securities of the Fund have been for at
least twelve months traded through the National Association of Securities
Dealers, Inc. Automated Quotation National Market System; or
(b) a transaction involving the conversion to corporate, trust or
association form of only the Fund, if, as a consequence of the transaction,
there will be no significant adverse change in any of the following
(i) the Members' voting rights;
(ii) the term of existence of the Fund;
(iii) the terms of compensation of the Manager and its Affiliates; or
(iv) the Fund's investment objectives.
"Service" shall mean the United States Internal Revenue Service or its
successor.
"Substantially All of the Assets" shall mean, unless the context otherwise
dictates, equipment representing 66 2/3% or more of the net book value of all
equipment as of the end of the most recently completed fiscal quarter.
"Unit" shall mean the interest in the Fund representing Original Invested
Capital in the amount of $10 and shall entitle the Holder thereof to the rights
herein provided.
"United States Citizen" shall mean a "citizen of the United States" as
defined within the Federal Aviation Act of 1958, as amended from time to time,
or any successor statute, or any regulations adopted pursuant to such Act or any
successor statute.
83
FINANCIAL STATEMENTS
Set forth below are the following financial statements:
ATEL Capital Equipment Fund XI, LLC
Report of Ernst & Young LLP, Independent Auditors . . . . . . . . . . . . .F - 2
Balance Sheet, October 15, 2004 . . . . . . . . . . . . . . . . . . . . . .F - 3
Statement of Changes in Members' Capital for the period from
June 25, 2004 (inception) to October 15, 2004 . . . . . . . . . . . . . F - 3
Statement of Cash Flows for the period from June 25,
2004 (inception) to October 15, 2004 . . . . . . . . . . . . . . . . . F - 3
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . F - 4
ATEL Financial Services, LLC
Report of Ernst & Young LLP, Independent Auditors . . . . . . . . . . . . .F - 5
Consolidated Balance Sheet, July 31, 2004 . . . . . . . . . . . . . . . . .F.-.6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . F - 7
F - 1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Members
ATEL Capital Equipment Fund XI, LLC
We have audited the accompanying balance sheet of ATEL Capital Equipment Fund
XI, LLC (a development stage enterprise) (the Fund) as of October 15, 2004, and
the related statements of changes in members' capital and cash flows for the
period from June 25, 2004 (inception) through October 15, 2004. These financial
statements are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards of the Public
Companies Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ATEL Capital Equipment Fund XI,
LLC (a development stage enterprise) at October 15, 2004, and its cash flows for
the period from June 25, 2004 (inception) through October 15, 2004, in
conformity with U. S. generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
October 22, 2004
San Francisco, California
F - 2
ATEL CAPITAL EQUIPMENT FUND XI, LLC
(A Development Stage Enterprise)
BALANCE SHEET
OCTOBER 15, 2004
ASSETS
Cash $600
MEMBERS' CAPITAL
Members' capital:
Managing Member $100
Initial Member 500
Total members' capital $600
STATEMENT OF CHANGES IN MEMBERS' CAPITAL
FOR THE PERIOD FROM JUNE 25, 2004 (INCEPTION)
THROUGH OCTOBER 15, 2004
Initial Member Managing
Units Amount Member Total
Members' Capital as of June 25, 2004
(inception) - $ - $ - $ -
Capital contributions 50 500 100 600
----------------- ----------------- ------------------ -----------------
Members' capital as of October 25, 2004 50 $500 $100 $600
================= ================= ================== =================
|
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JUNE 25, 2004 (INCEPTION)
THROUGH OCTOBER 15, 2004
Financing activities:
Capital contributions received $600
-------
Net increase in cash 600
Cash at inception -
-------
Cash at end of period $600
=======
|
See accompanying notes.
F - 3
ATEL CAPITAL EQUIPMENT FUND XI, LLC
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 15, 2004
1. Organization and Limited Liability Company matters:
ATEL Capital Equipment Fund XI, LLC (a development stage enterprise) (the
"Fund") was formed under the laws of the state of California on June 25, 2004
for the purpose of acquiring equipment to engage in equipment leasing and sales
activities. The Fund shall continue until December 31, 2025. Contributions in
the amount of $600 were received as of October 15, 2004, $100 of which
represented the Managing Member's (ATEL Financial Services, LLC's) continuing
interest, and $500 of which represented the Initial Member's capital investment.
As a limited liability company, the liability of any individual member for the
obligations of the Fund is limited to the extent of capital contributions to the
Fund by the individual member.
As of October 15, 2004, the Fund had not commenced operations other than those
relating to organizational matters. The Fund, or the Managing Member on behalf
of the Fund, will incur costs in connection with the organization, registration
and issuance of the Limited Liability Company Units (Units). The amount of such
costs to be borne by the Fund is limited by certain provisions of the ATEL
Capital Equipment Fund XI, LLC limited liability company operating agreement
dated October 24, 2004 (the "Operating Agreement").
Cash:
Cash is maintained in a standard non-interest bearing checking account.
Use of estimates:
The preparation of the 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 consolidated balance sheet. Actual results could differ from those
estimates. The significant estimates were made in relation to the useful lives
of property and equipment and leasehold improvements and goodwill impairment.
2. Income taxes:
The Fund does not provide for income taxes since all income and losses are the
liability of the individual members and are allocated to the members for
inclusion in their individual tax returns.
3. Members' capital:
As of October 31, 2004, 50 Units ($500) were issued and outstanding. The Fund is
authorized to issue up to 15,000,000 additional Units.
The Fund Net Income, Net Losses, and Distributions are to be allocated 92.5% to
the Members and 7.5% to the Managing Member.
4. Commitments and management:
The terms of the Operating Agreement provide that the Managing Member and/or
affiliates are entitled to receive certain fees, in addition to the allocations
described above, which are more fully described in Section 8 of the Operating
Agreement. The additional fees to management include fees for equipment
management and resale.
F - 4
REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Members
ATEL Financial Services LLC
We have audited the accompanying consolidated balance sheet of ATEL Financial
Services LLC (the "Company") and subsidiary as of July 31, 2004. This balance
sheet is the responsibility of the Company's management. Our responsibility is
to express an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated balance sheet referred to above presents
fairly, in all material respects, the consolidated financial position of ATEL
Financial Services LLC at July 31, 2004, in conformity with accounting
principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
October 15, 2004
San Francisco, California
F - 5
ATEL FINANCIAL SERVICES LLC AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JULY 31, 2004
ASSETS
Cash and cash equivalents $ 1,856,352
Amounts due from affiliated programs 6,156,692
Property and equipment, net of accumulated depreciation of $425,558 908,998
Leasehold improvements, net of accumulated amortization of $172,794 1,179,005
Goodwill, net of accumulated amortization of $879,520 23,286,883
Other assets 150,284
--------------
Total Assets $ 33,538,214
==============
LIABILITIES AND MEMBERS' EQUITY
Liabilities:
Term loan $ 2,809,091
Subordinated convertible promissory note, due to related party 1,000,000
Other long-term debt 850,000
Amounts due to affiliated companies 18,196,405
Accounts payable and accrued liabilities 1,463,442
Derivative - interest rate swap 150,177
--------------
Total liabilities 24,469,115
Members' equity:
Accumulated other comprehensive income (60,670)
Members' equity 9,129,769
--------------
Total Members' equity 9,069,099
--------------
Total liabilities and Members' equity $ 33,538,214
==============
|
See accompanying notes.
F - 6
ATEL FINANCIAL SERVICES LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 2004
1. Organization and summary of significant accounting policies:
Organization and principles of consolidation:
The consolidated balance sheet includes the accounts of ATEL Financial Services
LLC ("ATEL") and its wholly owned subsidiary, ATEL Securities Corporation
("ASC"). ATEL is an indirect wholly owned subsidiary of ATEL Capital Group
("ACG") and the financial position of ATEL would be significantly different if
ATEL was autonomous.
ATEL is a California limited liability company that was formed in March 2001 to
carry on the business activities that had been previously performed through that
date by ATEL Financial Corporation ("AFC"), an affiliated wholly owned
subsidiary of ACG. Accordingly, all the assets and liabilities of AFC were
contributed by the parent, ACG, into ATEL at book value in exchange for an
indirect wholly owned interest in ATEL's members' equity. The assets and
liabilities contributed by ACG into ATEL included deferred tax assets and
liabilities of AFC. Pursuant to Statement of Financial Accounting Standards
(SFAS) No. 109, Accounting for Income Taxes these deferred tax assets and
liabilities of ATEL were then transferred to ACG to reflect ATEL's non-taxable
status as a limited liability company.
In April 2001, ATEL acquired a 71% interest in ACG (734.938 shares of common
stock) from the then controlling shareholder of ACG. In exchange for the common
stock of ACG, ATEL paid $18,020,000 in cash with the balance of the
consideration consisting primarily of lease receivables transferred to the
seller. ATEL financed a portion of the purchase price utilizing a term loan and
a convertible note (discussed in Note 4). This transaction has been accounted
for as a change in control leveraged buyout transaction utilizing the purchase
method of accounting. All of the purchase price was allocated to goodwill. ATEL
recorded goodwill of $24,166,403 related to this transaction and amortized
$879,520 of this amount through July 31, 2001, at which time amortization ceased
as a result of the adoption of SFAS No 142 "Goodwill and Other Intangible
Assets".
On April 16, 2004, ATEL entered into a stock redemption agreement with the
former controlling shareholder of ACG to acquire the remaining five percent
interest in the Company. A cash consideration of $610,000 was paid for the
transaction. After the transaction ATEL immediately retired such shares. This
transaction was accounted for under the treasury stock method.
ATEL organizes and sponsors limited partnerships and limited liability companies
(the "affiliated programs" or the "programs") engaged in equipment leasing and
sales activities. It also acts as the corporate general partner or managing
member in these affiliated programs. Through these programs, ACG derives various
fees and also receives reimbursements for expenses incurred on behalf of these
entities, of which certain fees and expense reimbursements are allocated to
ATEL, with the balance allocated to various other affiliates. The basis for
determination of the types and amounts of these fees and reimbursements are
provided in agreements with the various programs.
F - 7
ATEL FINANCIAL SERVICES LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 2004
1. Organization and summary of significant accounting policies (continued):
A portion of the fees mentioned above are subordinated to the limited partners'
and other members' full recovery of their initial invested capital contributions
plus a specified return on their investments. No earnings or equity interests
from such subordinated interests have been recognized through July 31, 2004.
ATEL will continue in full force and effect until such time as the member elects
to dissolve ATEL or ATEL is otherwise dissolved. As a limited liability company,
the liability of any individual member for the obligations of ATEL is limited to
the extent of capital contributions to the company by the individual member.
Cash and cash equivalents:
Cash and cash equivalents include cash in banks and cash equivalent investments
with original maturities of ninety days or less.
Property and equipment:
Property and equipment is stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of the respective assets,
which range from three to seven years.
Leasehold improvements:
Leasehold improvements are stated at cost. Amortization is calculated using the
straight-line method over the lives of the related leases or estimated lives,
whichever is shorter.
Fair value of financial instruments:
ATEL considers amounts presented for financial instruments on the consolidated
balance sheet to approximate fair value.
Credit risk:
Financial instruments that potentially subject ATEL to concentrations of credit
risk include cash and cash equivalents. ATEL 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 ATEL.
Use of estimates:
The preparation of the consolidated balance sheet 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 consolidated balance sheet. Actual results could differ from those
estimates. The significant estimates were made in relation to the useful lives
of property and equipment and leasehold improvements and goodwill impairment.
F - 8
ATEL FINANCIAL SERVICES LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 2004
1. Organization and summary of significant accounting policies (continued):
Investments in affiliated programs:
ATEL accounts for its interest as a corporate general partner (or as the
managing member) in the affiliated programs at cost, or under the equity method
of accounting, based on the terms of the individual affiliated partnership or
operating agreements.
Investments in affiliated programs accounted for at cost do not provide for
general partner distributions in the partnership agreements. Certain investments
in affiliated programs accounted for at cost do not require ATEL to make
additional capital contributions, and, hence, ATEL records all distributions
received from these programs as income based on the cost method of accounting.
The partnership/operating agreements for investments in affiliated programs
accounted for under the equity method of accounting provide for general partner
(or managing member) distributions, subject to limitations in the respective
partnership agreements (or operating agreement). Upon dissolution of these
programs, if the general partner (or managing member) has a deficiency in its
capital account at the program level, a special allocation of income may be made
to the general partner from the limited partners in an amount sufficient to
bring the capital accounts to zero, based on the provisions of the partnership
agreement (or operating agreement).
If the general partner (or managing member) has a positive capital account
balance at the program level upon the dissolution of the program, a special
allocation of income is made from the general partner (or managing member) to
the limited partners in an amount sufficient to bring the capital accounts to
zero, based on the terms of the partnership agreements (or operating
agreements).
Income taxes:
ATEL does not provide for income taxes since all income and losses are allocated
to the members for inclusion in their respective tax returns.
Amounts due to affiliated companies:
Amounts due to affiliated companies represent net amounts advanced to or
received from affiliated companies for operations on behalf of ACG and its
subsidiaries.
F - 9
ATEL FINANCIAL SERVICES LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 2004
1. Organization and summary of significant accounting policies (continued):
Derivative financial instruments:
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities as amended ("SFAS 133")
established new accounting and reporting standards for derivative instruments.
SFAS No. 133, as amended, requires ATEL to recognize all derivatives as either
assets or liabilities on the balance sheet and measure those instruments at fair
value. It further provides criteria for derivative instruments to be designated
as fair value, cash flow, or foreign currency hedges, and establishes accounting
standards for reporting changes in the fair value of the derivative instruments.
In accordance with SFAS No. 133, ATEL records derivative hedging instruments at
fair value on the balance sheet and recognizes the offsetting gains or losses as
adjustments to be reported in net income or other comprehensive income, as
appropriate.
ATEL utilizes a cash flow hedge comprised of an interest rate swap. The interest
rate swap is linked to and adjusts effectively the interest rate sensitivity of
specific long-term debt. The effective portion of the change in fair value of
the hedging derivative is recorded as the only item in Accumulated Other
Comprehensive Income (AOCI) and the ineffective portion (if any) directly in
earnings. Amounts in AOCI are reclassified into earnings in a manner consistent
with the earnings pattern of the underlying hedged item (generally reflected in
interest expense). If a hedged item is dedesignated prior to maturity, previous
adjustments to AOCI are recognized in earnings to match the earnings recognition
pattern of the hedged item (e.g., level yield amortization if hedging interest
bearing instruments). Interest income or expense on the hedging derivative used
to manage interest rate exposure is recorded on an accrual basis, as an
adjustment to the yield of the hedged item over the periods covered by the
contract.
Credit exposure from derivative financial instruments arises from the risk of a
counterparty default on the derivative contract. The amount of the loss created
by the default is the replacement cost or current positive fair value of the
defaulted contract.
2. Goodwill:
Goodwill of $24,166,403 was recorded in connection with the leveraged buyout of
the principal shareholder of ACG in April 2001 (see Note 1). At July 31, 2004,
accumulated amortization of goodwill was $879,520. In accordance with SFAS No.
142, Goodwill and Other Intangible Assets, no amortization of goodwill was
recorded during the period ended July 31, 2004. On an annual basis, management
reviews goodwill and other amortizable assets and evaluates events or changes in
circumstances that may indicate impairment in the carrying amount of such
assets. In such instances, impairment, if any, is measured on a discounted
future cash flow basis. As a result of management's review, no impairment of
goodwill existed during the period ended July 31, 2004.
F - 10
ATEL FINANCIAL SERVICES LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 2004
3. Property, equipment and leasehold improvements, net:
The following is a summary by category of the
depreciable assets at July 31, 2004:
Category
Leasehold improvements $ 1,351,799
Accumulated amortization (172,794)
Leasehold improvements, net $ 1,179,005
Other equipment 417,660
Furniture and fixture 790,368
Computer equipment 126,528
Accumulated depreciation (425,558)
Furniture, fixture and equipment, net $ 908,998
4. Long-term debt:
Term loan
ATEL assumed two separate notes in association with the leveraged buyout (see
Note 1). The first is a $12,000,000 term loan with a financial institution
maturing in October 2006, the balance of which was $2,809,091 as of July 31,
2004. The effective fixed interest rate on this note is 7.88%. Principal and
interest are to be paid quarterly over twenty-two consecutive quarters. A
financial covenant exists whereby an amount equal to 40% of excess cash flow, as
defined, is payable within 10 days after the due date of the year-end financial
statements and is applied as a reduction of principal. Excess cash flow is
defined as the consolidated net profit of ACG and its consolidated subsidiaries
less certain distributions. ATEL was in compliance with this financial covenant
as of July 31, 2004.
ATEL has entered into an interest rate swap with a financial institution to
manage the interest rate exposure associated with the variable rate term loan by
effectively converting the variable rate to a fixed rate. During the term of the
interest rate swap ATEL receives or pays interest on a notional principal
(generally equal to the outstanding principal of the term note) based on the
difference between the nominal payment rate of 5.380% and the variable receive
rate indexed to a three month libor of 2.25% in July 2004. No actual borrowing
or lending is involved. The termination of the swap coincides with the maturity
of the debt, which is October 2, 2006. As a result of the excess cash flow
principal payment made as of July 31, 2004, the notional amount of the swap of
$5,454,545 exceeded the principal amount of the hedged debt of $2,809,091 by
$2,645,454 as of July 31, 2004. During the year, AOCI decreased by approximately
$266,000 of which approximately $250,000 was related to the decrease in the fair
value of the interest rate swap and approximately $16,000 was related to the
reclassification of AOCI to earnings due to hedge ineffectiveness.
Future minimum payments on long-term debt are as follows at July 31, 2004:
Principal Interest Total
Year ending July 31, Payments Payments Payments
2005 $ 2,181,818 $ 138,437 $ 2,320,255
2006 627,273 13,969 641,242
$ 2,809,091 $ 152,406 $ 2,961,497
F - 11
ATEL FINANCIAL SERVICES LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 2004
4. Long-term debt (continued):
Subordinated convertible promissory note
The second note assumed in association with the leveraged buyout is a
subordinated convertible promissory note (subordinate to the $12,000,000 term
loan) for $4,000,000 from a related party. Interest is accrued at a rate of 8%
per annum paid quarterly, with an additional interest of the greater of 2% of
the principal amount payable at year-end or 15% of excess cashflows as defined.
In July 2004, a principal paydown of $3,000,000 was made. All outstanding
principal and interest is due on December 31, 2006. Upon maturity of the term
loan, the holder will have the option for a period of thirty days, to convert
the outstanding principal amount of this note into 53.1538 shares of either
Series A preferred stock of ACG or, if ATEL elects prior to the maturity date of
the term loan to be treated as common stock of ACG. In addition, thirty-one days
after the repayment date of the term loan, ATEL has the option for a period of
thirty days, to convert the principal amount of this note into the conversion
shares.
Future minimum payments on the convertible subordinated promissory note are as
follows at July 31, 2004:
Principal Interest Total
Year ending July 31, Payments Payments Payments
2005 $ - $ 137,500 $ 137,500
2006 - 100,000 100,000
2007 1,000,000 41,667 1,041,667
$ 1,000,000 $ 279,167 $ 1,279,167
5. Line of credit:
ATEL participates with ACG, certain other subsidiaries of ACG, and with certain
affiliated programs in a $67,190,909 revolving credit agreement with a group of
financial institutions which expires June 28, 2005. The agreement includes an
acquisition facility, a lease warehouse facility and a venture lease 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 affiliated programs,
ACG and ATEL. As of July 31, 2004, no draws were outstanding on the warehouse
facility. Borrowings available on the warehouse facility at July 31, 2004 total
$48,890,909. Also included in this line of credit facility is $1,000,000
available for operations and working capital. There were no draws under this
facility during the year ended July 31, 2004.
These facilities, when used, are collateralized by (i) leases and equipment
owned by the specific borrower and financed by the lines and (ii) all other
assets owned by the specific borrower except equipment, lease receipts and
residual values specifically pledged to other equipment funding sources. ATEL's
borrowings under the facility are guaranteed by ACG and/or its shareholders.
The credit agreement includes certain financial covenants applicable to each
borrower. ATEL and ACG were in compliance with such covenants as of July 31,
2004.
F - 12
ATEL FINANCIAL SERVICES LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 2004
6. Other long-term debt:
ATEL entered into a loan and security agreement with a lender on July 30, 2003.
Under the loan and security agreement ATEL may borrow up to $1,000,000 for
|
equipment purchases, which was borrowed in September 2004. The loan will be paid
in 60 equal monthly installments of principal and interest payments that
commenced on November 29, 2003 and will cease upon termination of the loan on
October 31, 2008. The interest rate is 5.01% and is fixed.
Future minimum payments on other long term debt are as follows:
Principal Interest Total
Year ending July 31, Payments Payments Payments
2005 $ 216,667 $ 40,707 $ 257,374
2006 200,000 27,138 227,138
2007 200,000 17,118 217,118
2008 200,000 7,098 207,098
2009 33,333 209 33,542
$ 850,000 $ 92,270 $ 942,270
7. Equity investments in affiliated programs :
Certain investments in affiliated programs are accounted for under the equity
method of accounting. Summarized information about these affiliates as of
December 31, 2003 and for the year then ended are included in the following
table:
ATEL Cash ATEL Capital ATEL Capital ATEL Capital ATEL Capital
Distribution Equipment Equipment Equipment Equipment
Fund VI, L.P. Fund VII, L.P. Fund VIII, LLC Fund IX, LLC Fund X, LLC
------------------ -------------- --------------- --------------- --------------
Total Assets $ 25,410,604 $ 74,812,214 $ 110,222,744 $ 87,530,487 $ 37,815,563
Total Liabilities $ 1,627,341 $ 33,406,191 $ 62,325,626 $ 624,472 $ 704,900
Net Income (Loss) $ 1,585,834 $ (4,311,400) $ (7,521,261) $ 591,015 $ (183,013)
ATEL has a 1% carried interest in ATEL Cash Distribution Fund VI, L.P. and a
7.5% carried interest in ATEL Capital Equipment Fund VII, L.P., ATEL Capital
Equipment Fund VIII, LLC., ATEL Capital Equipment Fund IX, LLC, and ATEL Capital
Equipment Fund X, LLC.
8. Commitments and contingencies:
Office lease:
ACG occupies office space under an operating lease expiring January 2013. Future
minimum lease payments to be allocated to ATEL are, $644,259 in years 2005
through 2012, and $322,130 in 2013.
F - 13
ATEL FINANCIAL SERVICES LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 2004
9. Reimbursements of operating costs:
The Limited Partnership Agreements and Operating Agreements of the affiliated
programs allow for the reimbursement of costs incurred by ACG and its
subsidiaries in providing administrative services to the programs, of which a
portion of such amounts is allocated to ATEL. Administrative services provided
include program accounting, investor relations, legal counsel and lease and
equipment documentation. ACG and its subsidiaries are not reimbursed for
services whereby they are entitled to receive a separate fee as compensation for
such services, such as acquiring and overseeing the management of equipment.
Reimbursable operating costs incurred by ACG and its subsidiaries are allocated
to the programs based upon actual time incurred by employees working on program
business and an allocation of rent and other costs based on utilization studies.
As of July 31, 2004, $6,156,692 remained outstanding from affiliated programs
for reimbursable operating and syndication costs and management fees.
10. Financial information of affiliated programs (unaudited):
ATEL serves as the general partner or managing member of a series of ten
publicly held limited partnerships and limited liability companies, as well as
two privately held limited liability companies (the "Funds") which report their
results on a calendar year basis. As of December 31, 2001, the first three of
those Funds had ceased operations. As of July 31, 2004, ATEL is the general
partner or managing member of the nine remaining Funds. During the year ended
December 31, 2003, ATEL received management and other fees from the nine Funds
for services provided. These Funds own and lease equipment to third parties. The
Funds' equipment is not available to creditors or the members of ATEL. The
following financial data is presented for purposes of additional analysis to
provide information about the portfolio under management. Presented below is the
unaudited combined, capsulated balance sheet for the nine Funds existing as of
December 31, 2003:
Financial position:
Cash $ 59,440,697
Accounts receivable, net and other assets 12,081,292
Investments in equipment and leases 286,020,540
Total assets $ 357,542,529
Long-term and non-recourse debt $ 88,187,429
Accounts payable and other liabilities 11,627,331
Partners' capital 257,727,769
Total liabilities and partners' capital $ 357,542,529
Presented below is unaudited combined aggregate amounts of future minimum lease
payments from the programs' lease portfolios for each year ending December 31:
2004 $ 52,893,140
2005 36,568,328
2006 23,102,951
2007 11,767,731
2008 5,752,416
Thereafter 3,800,403
$ 133,884,969
F - 14
EXHIBIT A
PRIOR PERFORMANCE INFORMATION
ATEL Financial Services LLC ("ATEL"), the Manager of the Fund, and its
affiliates have extensive experience in the equipment leasing industry,
including: (i) originating and financing leveraged and single investor lease
transactions for corporate investors, (ii) acting as a broker/packager by
arranging equity and debt participants for equipment leasing transactions
originated by other companies, (iii) consulting on the pricing and structuring
of equipment lease transactions for banks, leasing companies and corporations,
(iv) organizing and offering individual ownership and limited partnership
investment leasing programs and (v) supervising and arranging for the
supervision of equipment management and marketing on leasing transactions
involving total equipment costs in excess of $1 billion.
In addition to the Fund, ATEL has sponsored ten prior public and three private
equipment leasing programs. See "Prior Performance Summary" for a summary of
information regarding the prior public programs.
The first prior public program, ATEL Cash Distribution Fund ("ACDF"), commenced
a public offering of up to $10,000,000 of its limited partnership interests on
March 1, 1986. ACDF terminated its offering on December 18, 1987 after raising a
total of $10,000,000 in offering proceeds from a total of approximately 1,000
investors, all of which proceeds were committed to equipment acquisitions,
organization and offering expenses and capital reserves. ACDF acquired a variety
of types of equipment with a total purchase cost of $11,133,679. All such
equipment had been sold as of December 31, 1997.
Through December 31, 1997, ACDF had made cash distributions to its investors in
the aggregate amount of $1,121.03 per $1,000 invested. Of this amount a total of
$244.89 represents investment income and $876.14 represents return of capital.
The second prior public program, ATEL Cash Distribution Fund II ("ACDF II"),
commenced a public offering of up to $25,000,000 (with an option to increase the
offering to $35,000,000) of its limited partnership interests on January 4,
1988. ACDF II terminated its offering on January 3, 1990 after raising a total
of $35,000,000 in offering proceeds from a total of approximately 3,100
investors, all of which proceeds were committed to equipment acquisitions,
organization and offering expenses and capital reserves. ACDF II acquired a
variety of types of equipment with a total purchase cost of $52,270,536. All
such equipment had been sold as of December 31, 1998.
Through December 31, 1998, ACDF II had made cash distributions to its investors
in the aggregate amount of $1,222.63 per $1,000 invested. Of this amount a total
of $335.43 represents investment income and $887.20 represents return of
capital.
The third prior public program, ATEL Cash Distribution Fund III ("ACDF III"),
commenced a public offering of up to $50,000,000 (with an option to increase the
offering to $75,000,000) of its limited partnership interests on January 4,
1990. ACDF III terminated its offering on January 3, 1992 after raising a total
of $73,855,840 in offering proceeds from a total of approximately 4,822
investors, all of which proceeds were committed to equipment acquisitions,
organization and offering expenses and capital reserves. ACDF III acquired a
variety of types of equipment with a total purchase cost of $99,629,942. All
such equipment had been sold as of December 31, 2000.
Through December 31, 2000, ACDF III had made cash distributions to its investors
in the aggregate amount of $1,329.76 per $1,000 invested. Of this amount a total
of $379.10 represents investment income and $950.66 represents return of
capital.
The fourth prior public program, ATEL Cash Distribution Fund IV ("ACDF IV"),
commenced a public offering of up to $75,000,000 of its limited partnership
interests on February 4, 1992. ACDF IV terminated its offering on February 3,
1993 after raising a total of $75,000,000 in offering proceeds from a total of
approximately 4,873 investors, all of which proceeds were committed to equipment
acquisitions, organization and offering expenses and capital reserves. ACDF IV
acquired a variety of types of equipment with a total purchase cost of
$108,734,880. Of such equipment, items representing an original purchase cost of
$102,836,597 had been sold as of December 31, 2003.
Through June 30, 2004, ACDF IV had made cash distributions to its investors in
the aggregate amount of $1,216.49 per $1,000 invested. Of this amount a total of
$319.26 represents investment income and $897.23 represents return of capital.
The fifth prior public program, ATEL Cash Distribution Fund V ("ACDF V"),
commenced a public offering of up to $125,000,000 of its limited partnership
interests on February 22, 1993. ACDF V terminated its offering on November 15,
1994. As of that date, $125,000,000 of offering proceeds had been received from
approximately 7,217 investors. All of the proceeds were committed to equipment
acquisitions, organization and offering expenses and capital reserves. ACDF V
acquired a variety of types of equipment with a total purchase cost of
$186,995,157 as of December 31, 2003. Of such equipment, items representing an
original purchase cost of $141,513,114 had been sold as of December 31, 2003.
Through June 30, 2004, ACDF V had made cash distributions to its investors in
the aggregate amount of $977.38 per $1,000 invested. Of this amount a total of
$188.55 represents investment income and $788.83 represents return of capital.
Past performance is not necessarily indicative of future performance.
A - 1
The sixth prior public program, ATEL Cash Distribution Fund VI ("ACDF VI"),
commenced a public offering of up to $125,000,000 of its limited partnership
interests on November 23, 1994. ACDF VI terminated its offering on November 22,
1996. As of that date, $125,000,000 of offering proceeds had been received from
approximately 6,401 investors. All of the proceeds were committed to equipment
acquisitions, organization and offering expenses and capital reserves. ACDF VI
acquired a variety of types of equipment with a total purchase cost of
$208,275,158. Of such equipment, items representing an original purchase cost of
$134,286,942 had been sold as of December 31, 2003.
Through June 30, 2004, ACDF VI had made cash distributions to its investors in
the aggregate amount of $807.10 per $1,000 invested. Of this amount a total of
$109.03 represents investment income and $698.07 represents return of capital.
The seventh prior public program, ATEL Capital Equipment Fund VII ("ACEF VII"),
commenced a public offering of up to $150,000,000 of its limited partnership
interests on November 29, 1996. ACEF VII terminated its offering on November 29,
1998. As of that date, $150,000,000 of offering proceeds had been received from
approximately 5,386 investors. All of the proceeds were committed to equipment
acquisitions, organization and offering expenses and capital reserves. ACEF VII
had acquired a variety of types of equipment with a total purchase cost of
$302,698,648. Of such equipment, items representing an original purchase cost of
$89,994,695 had been sold as of December 31, 2003.
Through June 30, 2004, ACEF VII had made cash distributions to its investors in
the aggregate amount of $701.37 per $1,000 invested. Of this amount a total of
$99.39 represents investment income and $601.98 represents return of capital.
See Table III - "Operating Results of Prior Programs" in this Exhibit A for
further information concerning such distributions. See Table V - "Acquisition of
Equipment by Prior Programs" in Exhibit A for further information concerning the
types of equipment acquired by ACEF VII. See Table VI - "Sales or Disposals of
Equipment" in Exhibit A for further information concerning the equipment
disposed of by ACEF VII.
The eighth prior public program, ATEL Capital Equipment Fund VIII ("ACEF VIII"),
commenced a public offering of up to $150,000,000 of its limited partnership
interests on December 7, 1998. ACEF VIII terminated its offering on November 30,
2000. As of that date, $135,701,380 of offering proceeds had been received from
approximately 3,625 investors. All of the proceeds were committed to equipment
acquisitions, organization and offering expenses and capital reserves. ACEF VIII
had acquired a variety of types of equipment with a total purchase cost of
$249,040,775 as of December 31, 2003. Of such equipment, items representing an
original purchase cost of approximately $38,008,147 had been sold as of December
31, 2003.
Through June 30, 2004, ACEF VIII had made cash distributions to its investors in
the aggregate amount of $472.10 per $1,000 invested. Of this amount a total of
$14.07 represents investment income and $458.03 represents return of capital.
See Table III - "Operating Results of Prior Programs" in this Exhibit A for
further information concerning such distributions. See Table V - "Acquisition of
Equipment by Prior Programs" in Exhibit A for further information concerning the
types of equipment acquired by ACEF VII. See Table VI - "Sales or Disposals of
Equipment" in Exhibit A for further information concerning the equipment
disposed of by ACEF VIII.
The ninth prior public program, ATEL Capital Equipment Fund IX ("ACEF IX"),
commenced a public offering of up to $150,000,000 of its limited partnership
interests on January 16, 2001. ACEF IX terminated its offering as of January 15,
2003. As of that date, $120,652,160 of offering proceeds had been received from
approximately 3,238 investors. All of the proceeds were committed to equipment
acquisitions, organization and offering expenses and capital reserves. ACEF IX
had acquired a variety of types of equipment with a total purchase cost of
$69,800,513 as of December 31, 2003. Of such equipment, items representing an
original purchase cost of approximately $7,351,475 had been sold as of December
31, 2003.
Through June 30 2004, ACEF IX had made cash distributions to its investors in
the aggregate amount of $271.96 per $1,000 invested. Of this amount a total of
$24.01 represents investment income and $247.95 represents return of capital.
See Table III - "Operating Results of Prior Programs" in this Exhibit A for
further information concerning such distributions. See Table V - "Acquisition of
Equipment by Prior Programs" in Exhibit A for further information concerning the
types of equipment acquired by ACEF IX. See Table VI - "Sales or Disposals of
Equipment" in Exhibit A for further information concerning the equipment
disposed of by ACEF IX.
Past performance is not necessarily indicative of future performance.
A - 2
The tenth prior public program, ATEL Capital Equipment Fund X ("ACEF X"),
commenced a public offering of up to $150,000,000 of its limited partnership
interests on March 12, 2003. As of June 30, 2004, the offering was still in
progress. As of that date, $78,483,620 of offering proceeds had been received.
All of the proceeds were committed to equipment acquisitions, organization and
offering expenses, working capital and capital reserves. ACEF X had acquired a
variety of types of equipment and invested in notes receivable with a total
purchase cost of $26,506,782 as of August 31, 2004. Sales of such equipment were
not significant as of August 31, 2004.
Through June 30 2004, ACEF X had made cash distributions to its investors in the
aggregate amount of $77.14 per $1,000 invested. All of this amount represents
return of capital. See Table III - "Operating Results of Prior Programs" in this
Exhibit A for further information concerning such distributions. See Table V -
"Acquisition of Equipment by Prior Programs" in Exhibit A for further
information concerning the types of equipment acquired by ACEF IX. See Table VI
- "Sales or Disposals of Equipment" in Exhibit A for further information
concerning the equipment disposed of by ACEF IX.
As discussed elsewhere in this Prospectus, fluctuations in demand for equipment
may affect the ability of a leasing program to invest its capital in a timely
manner. ACEF IX is in the process of leveraging its gross offering proceeds for
the purchase of its initial equipment portfolio. ACEF X is in the process of
committing the balance of its gross offering proceeds to its initial equipment
portfolio. Equipment lessors have experienced a more difficult market in which
to make suitable investments during the past three years of reduced growth and
recession in the U.S. economy as a result of the softening demand for capital
equipment during this period. Delays in investment may have a negative impact on
ACEF IX and ACEF X. The Manager believes that it has identified industry
segments, lease markets and potential transaction structures that will permit
ACEF IX and ACEF X to fully pursue their investment objectives.
Each of the Prior Programs has had, as an investment objective, the reinvestment
of cash flow after payment of debt service and certain minimum distributions.
Reinvestment is intended to increase the size, diversification and return on
their equipment portfolios. Adverse economic conditions during the past three
years have affected the timing and terms of remarketing and re-leasing efforts
by these Prior Programs. An extended remarketing cycle and lower lease rates
have limited the ability of ACDF V, ACDF VI, ACEF VII and ACEF VIII to generate
sufficient cash flow to permit significant reinvestment. In the future, adverse
conditions in the general economy and equipment demand may also result in delays
in leasing, re-leasing and disposition of equipment, and in reduced returns on
invested capital. In any event, there can be no assurance as to what future
developments may occur in the economy in general or in the demand for equipment
and lease financing in particular.
As of June 30, 2004, the Prior Programs have acquired equipment with a total
purchase cost of approximately $1.33 billion during a period of over 18 years
since the date the first Prior Program commenced operations. Aggregate losses
from material lessee defaults on these transactions have been approximately $7
million, or approximately 0.53% of the assets acquired, substantially less than
the amount assumed by the Manager and its Affiliates in structuring these
portfolios as the losses to be anticipated in the ordinary course of leasing
business. There is no identifiable trend in the frequency or amount of lessee
defaults experienced by prior programs.
Past performance is not necessarily indicative of future performance.
A-3
Although certain of the Prior Programs have experienced lessee defaults in the
ordinary course of business, none of the Prior Programs has experienced an
unanticipated rate of default or major adverse business developments which the
Fund Manager believes will impair its ability to meet its investment objectives.
All of the prior public programs (the "Prior Public Programs") have investment
objectives that are similar to those of the Fund. The prior private programs,
ATEL Lease Income Fund 1985-A (ALIF), ATEL Venture Fund, LLC ("AVF") and ATEL
Growth Capital Fund, LLC ("AGCF") have substantially different investment
objectives than those of the Fund, so tabular information concerning these prior
private programs has been omitted from this presentation. ALIF invested in
equipment without the use of any debt financing; AVF and ACGF invested in
portfolios with different transaction structures, including significant emphasis
on finance leases, different credit criteria, targeting development stage
lessees, and different investment goals, including more accelerated recovery of
initial capital. The Fund and the Prior Public Programs invest in equipment with
moderate amounts of leverage, acquire operating leases with equipment leased
primarily to investment grade and equivalent credits, and have more emphasis on
low technology, longer-lived equipment. Accordingly, only the Prior Public
Programs are deemed to have investment objectives similar to those of the Fund.
The factors considered by the Manager in determining that the investment
objectives of the Prior Public Programs were similar to those of the Fund
include the types of equipment to be acquired, the structure of the leases to
such equipment, the credit criteria for lessees, the intended investment cycles,
the reinvestment policies and the investment goals of each program. Therefore
all of the information set forth in Tables included in this Exhibit A - "Prior
Performance Information" may be deemed to relate to programs with investment
objectives similar to those of the Fund.
In Tables I through III, information is presented with respect to all Prior
Programs sponsored by the Manager and its Affiliates that completed their
offerings of interests within the five-year period ended December 31, 2003. It
should be noted that the tabular information concerning ACDF IX does not reflect
results of an operating period after completion of its funding. Table IV
includes information concerning the three Prior Programs that had completed
their respective operations as of June 30, 2004. Table V includes information
regarding all acquisitions of equipment by Prior Programs through December 21,
2003, except that ACEF X includes acquisitions through August 31, 2004. Table VI
includes information regarding all dispositions of equipment by Prior Programs
through December 31, 2003.
The following is a list of the tables set forth in Exhibit A:
TABLE I Experience in Raising and Investing Funds
TABLE II Compensation to the General Partner/Managing Member
TABLE III Operating Results of Prior Programs
TABLE IV Results of Completed Programs
TABLE V Acquisition of Equipment by Prior Programs
TABLE VI Sales or Disposals of Equipment by Prior Programs
ATEL will provide to any investor, upon written request and without charge,
copies of the most recent Annual Reports on Form 10-K filed with the Securities
and Exchange Commission by each Prior Public Program and will provide to any
investor, for a reasonable fee, copies of the exhibits to such reports.
INVESTORS IN THE PARTNERSHIP WILL HAVE NO INTEREST IN THE INVESTMENTS DESCRIBED
IN THE FOLLOWING TABLES. PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE INCLUSION
OF THIS INFORMATION AS INDICATIVE OF THE POSSIBLE OPERATIONS OF THE PARTNERSHIP.
Past performance is not necessarily indicative of future performance.
A - 4
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(on a percentage basis)
June 30, 2004
(Unaudited)
The following Table sets forth certain information concerning the experience of
the General Partner/Managing Member in raising and investing funds. A percentage
analysis of the application of the proceeds raised is presented.
ATEL Capital ATEL Capital ATEL Capital
Equipment Equipment Equipment
Fund VIII Fund IX Fund X
EQUITY PROCEEDS
Dollar amount of equity offered $ 150,000,000 $150,000,000 $150,000,000
Dollar amount of equity raised $ 135,701,380 $120,652,160 $ 78,493,620 (6)
----------------- ----------------- -----------------
Less: Offering expenses:
Selling commissions 9.50% 9.50% 9.00%
Organization and program expenses (1) 4.68% 3.93% 4.93%
Reserves 0.50% 0.50% 0.50%
----------------- ----------------- -----------------
Percent available for investment 85.32% 86.07% 85.57%
Acquisition costs:
Purchase price (2) 85.32% 86.07% 85.57%
Acquisition fees - - -
----------------- ----------------- -----------------
85.32% 86.07% 85.57%
----------------- ----------------- -----------------
Percent leverage (3) 53.84% 0.00% 0.00%
================= ================= =================
Date offering commenced: Dec. 7, 1998 Jan. 16, 2001 Mar. 12, 2003
Length of offering 24 Months 24 Months N/A (6)
Months to invest 90% of amount available for
investment (measured from beginning of offering) 24 Months (4) 30 Months (5) N/A (6)
FOOTNOTES: (1) Includes organization, legal, accounting, printing, binding,
delivery and other costs incurred by the General Partner/Managing Member.
(2) Represents amounts paid to unrelated third parties for purchase of equipment
under leases.
(3) The percentage leverage is calculated by dividing the initial principal
amount of debt incurred by the program through the date of this table by the
aggregate original cost of all equipment purchased by the program through such
date. It should be noted, however, that each program has acquired assets, has
made or will make principal amortizing debt service payments and/or has disposed
or will dispose of assets over a period of time extending from its first
investment in equipment. As a result, for each program the total cost of the
assets in its portfolio and the total principal amount of debt outstanding have
fluctuated from time to time. The percentage figure, therefore, does not reflect
the current leverage ratio or the debt ratio at any one point in time, but
constitutes an aggregate ratio for the life of the program through the date of
the table.
(4) As of November 30, 2000, the Fund's offering of Limited Liability Company
Units was completed. As of that date, the proceeds of the offering had been
fully committed.
(5) As of January 15, 2003, the Fund's offering of Limited Liability Company
Units was completed. As of September 30, 2003, the proceeds of the offering had
been fully committed.
(6) As of June 30, 2004, the offering had not been completed.
Past performance is not necessarily indicative of future performance.
A - 5
TABLE II
COMPENSATION TO THE SPONSOR
June 30, 2004
(Unaudited)
The following Table sets forth certain information concerning the compensation
derived by the General Partner/Managing Member. Amounts paid are from two
sources: proceeds of the offering and gross revenues.
ATEL Capital ATEL Capital ATEL Capital
Equipment Equipment Equipment
Fund VIII Fund IX Fund X
Date offering commenced Dec. 7, 1998 Jan. 16, 2001 Mar. 12, 2003
Date offering closed Nov. 30, 2000 Jan. 15, 2003 N/A
Dollar amount raised $ 135,701,380 $120,652,160 $ 78,493,620
Amounts paid to General Partner/Managing
Member from proceeds of offering:
Acquisition fees None None None
Selling commissions $ 1,837,737 $ 1,809,782 $ 1,177,254
Organization and program costs $ 6,356,562 $ 4,745,221 $ 3,866,423
Dollar amount of cumulative cash generated
from operations before deducting payments
to the General Partner/Managing Member $ 105,256,548 $ 20,725,925 $ 3,100,041
Cumulative amount paid to the General
Partner/Managing
Member from operations:
Management fees $ 7,337,148 $ 1,292,570 $ 121,964
Other operating expenses $ 5,472,736 $ 1,659,729 $ 162,597
Aggregate payments to General
Partner/Managing Member:(1)
1999 $ 13,056,922
2000 11,872,250
2001 2,921,431 $ 7,131,876
2002 2,351,555 10,270,778
2003 2,337,830 4,115,416 $ 7,715,713
2004 1,298,811 1,190,071 5,245,676
----------------- ----------------- -----------------
$ 33,838,799 $ 22,708,141 $ 12,961,389
================= ================= =================
FOOTNOTES:
(1) As of June 30, 2004. Includes payments of management fees, reimbursements of
syndication costs to General Partner/Managing Member (and affiliates),
acquisition fees, initial direct costs on leases and reimbursements of
administrative costs.
Past performance is not necessarily indicative of future performance.
A - 6
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
June 30, 2004
(Unaudited)
The following Table summarizes the operating results of Prior Programs (ACEF
VIII, ACEF IX and ACEF X). The Prior Programs' records are maintained in
accordance with generally accepted accounting principles for financial statement
purposes.
ATEL Capital Equipment Fund VIII
Period Ended
December 31,
1999 2000 2001
Months of operations 12 12 12
Gross revenue - lease and other $ 8,657,636 $ 31,046,332 $ 41,992,805
- gain (loss) on sales of assets 3,017 1,453 1,801,292
--------------- -------------- ---------------
8,660,653 31,047,785 43,794,097
Less Operating Expenses: (1)
Depreciation and amortization expense 5,392,504 22,588,276 31,243,646
Provision for losses and doubtful accounts - - 82,615
Interest expense 1,340,804 7,365,041 9,058,622
Administrative costs and reimbursements 767,386 1,408,523 924,375
Legal/Professional fees 155,743 127,345 215,450
Other 121,438 398,365 287,382
Management fee 443,943 1,465,566 1,849,335
--------------- -------------- ---------------
8,221,818 33,353,116 43,661,425
--------------- -------------- ---------------
Net income (loss) - GAAP basis $ 438,835 $ (2,305,331) $ 132,672
=============== ============== ===============
Taxable income (loss) from operations $ (13,620,427) $ (29,018,361) $ (15,498,538)
=============== ============== ===============
Cash generated by (used in) operations (2) $ 5,743,245 $ 18,412,107 $ 30,662,797
Cash generated from sales 38,178 7,761 7,348,063
Cash generated from refinancing -
Cash generated from other (2) 951,549 2,154,474 2,806,236
--------------- -------------- ---------------
6,732,972 20,574,342 40,817,096
Less cash distributions to investors:
From operating cash flow 2,460,684 9,795,386 12,403,683
From sales - - -
From refinancing - - -
From other - - -
--------------- -------------- ---------------
Total distributions 2,460,684 9,795,386 12,403,683
--------------- -------------- ---------------
Cash generated (deficiency) after cash distributions $ 4,272,288 $ 10,778,956 $ 28,413,413
=============== ============== ===============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $(312.53) $(252.40) $(105.64)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 5.95 $ - $ -
- Return of capital 55.18 92.11 91.40
--------------- -------------- ---------------
$ 61.13 $ 92.11 $ 91.40
=============== ============== ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 61.13 $ 92.11 $ 91.40
Other - - -
--------------- -------------- ---------------
Total $ 61.13 $ 92.11 $ 91.40
=============== ============== ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $142,755,301 $ 218,029,699 $ 237,646,671
Amount invested in program equipment (book value) $139,420,208 $ 190,893,298 $ 178,999,739
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (3) 58.09% 88.73% 96.71%
Past performance is not necessarily indicative of future performance.
A - 7
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
June 30, 2004
(Unaudited)
ATEL Capital Equipment Fund VIII
Period Ended
December 31, June 30,
2002 2003 2004
Months of operations 12 12 6
Gross revenue - lease and other $ 32,658,224 $ 27,953,972 $ 11,796,612
- gain (loss) on sales of assets 271,751 595,299 2,177,912
--------------- -------------- ---------------
32,929,975 28,549,271 13,974,524
Less Operating Expenses: (1)
Depreciation and amortization expense 23,162,548 20,694,362 9,155,566
Provision for losses and doubtful accounts 3,087,500 5,499,271 (135,000)
Interest expense 6,148,759 5,270,675 1,651,396
Administrative costs and reimbursements 832,539 820,571 719,342
Legal/Professional fees 179,562 506,698 168,469
Other 843,035 1,761,696 733,551
Management fee 1,481,576 1,517,259 579,469
--------------- -------------- ---------------
35,735,519 36,070,532 12,872,793
--------------- -------------- ---------------
Net income (loss) - GAAP basis $ (2,805,544) $ (7,521,261) $ 1,101,731
=============== ============== ===============
Taxable income (loss) from operations $ (12,212,767) $ (9,525,065) $ (1,500,000) (4)
=============== ============== ===============
Cash generated by (used in) operations (2) $ 23,805,426 $ 18,993,036 $ 7,639,937
Cash generated from sales 2,403,934 13,964,820 10,319,679
Cash generated from refinancing - 2,563,149
Cash generated from other (2) 2,134,026 1,793,351 327,461
--------------- -------------- ---------------
28,343,386 37,314,356 18,287,077
Less cash distributions to investors:
From operating cash flow 12,347,756 12,345,603 6,173,634
From sales - - -
From refinancing - - -
From other - - -
--------------- -------------- ---------------
Total distributions 12,347,756 12,345,603 6,173,634
--------------- -------------- ---------------
Cash generated (deficiency) after cash distributions $ 15,995,630 $ 24,968,753 $ 12,113,443
=============== ============== ===============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $(83.25) $(64.93) $(10.22)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ - $ - $ 8.12
- Return of capital 90.99 90.98 37.37
--------------- -------------- ---------------
$ 90.99 $ 90.98 $ 45.49
=============== ============== ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 90.99 $ 90.98 $ 45.49
Other - - -
--------------- -------------- ---------------
Total $ 90.99 $ 90.98 $ 45.49
=============== ============== ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $232,355,732 $ 210,621,824 $ 192,025,692
Amount invested in program equipment (book value) $149,100,763 $ 107,564,258 $ 89,939,464
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (3) 94.55% 85.71% 78.14%
Past performance is not necessarily indicative of future performance.
A - 8
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
June 30, 2004
(Unaudited)
ATEL Capital Equipment Fund IX
Period Ended
December 31, June 30,
2001 2002 2003 2004
Months of operations 12 12 12 6
Gross revenue - lease and other $ 3,393,685 $ 6,966,142 $ 10,872,695 $ 5,542,061
- gain (loss) on sales of assets - 107,353 658,865 10,069
-------------- --------------- -------------- ---------------
3,393,685 7,073,495 11,531,560 5,552,130
Less Operating Expenses: (1)
Depreciation and amortization expense 2,078,895 5,178,087 8,289,708 4,472,389
Provision for losses and doubtful accounts - - 496,347 287,158
Interest expense 199,230 336,696 349,319 250,343
Administrative costs and reimbursements 374,507 343,120 627,320 314,782
Legal/Professional fees 39,384 99,730 106,167 169,946
Other 34,152 248,390 385,671 222,952
Management fee 83,341 264,322 686,013 258,894
-------------- --------------- -------------- ---------------
2,809,509 6,470,345 10,940,545 5,976,464
-------------- --------------- -------------- ---------------
Net income (loss) - GAAP basis $ 584,176 $ 603,150 $ 591,015 $ (424,334)
============== =============== ============== ===============
Taxable income (loss) from operations $ 107,619 $ (3,947,950) $ (4,526,988) $ (4,000,000) (4)
============== =============== ============== ===============
Cash generated by (used in) operations (2) $ 1,744,270 $ 5,521,904 $ 8,661,683 $ 4,798,068
Cash generated from sales - 749,408 5,370,886 40,597
Cash generated from refinancing - - - -
Cash generated from other (2) 673,907 1,178,949 1,436,942 1,144,008
-------------- --------------- -------------- ---------------
2,418,177 7,450,261 15,469,511 5,982,673
Less cash distributions to investors:
From operating cash flow 1,213,341 5,521,904 8,661,683 4,798,068
From sales - - - -
From refinancing - - - -
From other - 493,723 1,971,403 629,250
-------------- --------------- -------------- ---------------
Total distributions 1,213,341 6,015,627 10,633,086 5,427,318
-------------- --------------- -------------- ---------------
Cash generated (deficiency) after cash
distributions $ 1,204,836 $ 1,434,634 $ 4,836,425 $ 555,355
============== =============== ============== ===============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 4.59 $ (50.16) $ (34.79) $ (30.67)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 22.42 $ 1.58 $ 0.00 $ 0.00
- Return of capital 33.57 81.05 88.35 44.99
-------------- --------------- -------------- ---------------
$ 55.99 $ 82.63 $ 88.35 $ 44.99
============== =============== ============== ===============
Sources (on a cash basis)
Sales
Refinancing - -
Operations $ 55.99 $ 75.85 71.97 39.77
Other - 6.78 16.38 5.22
-------------- --------------- -------------- ---------------
Total $ 55.99 $ 82.63 $ 88.35 $ 44.99
============== =============== ============== ===============
Amount invested in program equipment (cost,
excluding acquisition fees) $22,844,529 $ 49,667,555 $ 64,762,921 $ 73,843,017
Amount invested in program equipment (book value) $21,091,372 $ 46,798,202 $ 52,057,199 $ 52,942,274
Amount remaining invested in program equipment
(Cost of equipment owned at end of period as
a percentage of cost of all equipment
purchased by the program) (3) 29.06% 63.18% 93.20% 93.93%
Past performance is not necessarily indicative of future performance.
A - 9
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
June 30, 2004
(Unaudited)
ATEL Capital Equipment Fund X
Period Ended
December 31, June 30,
2003 2004
Months of operations 12 6
Gross revenue - lease and other $ 896,923 $ 1,816,870
- gain (loss) on sales of assets 10,991 -
-------------- ---------------
907,914 1,816,870
Less Operating Expenses: (1)
Depreciation and amortization expense 863,703 1,541,525
Provision for losses and doubtful accounts - -
Interest expense 8,045 615
Administrative costs and reimbursements 48,235 114,362
Legal/Professional fees 33,563 74,741
Other 88,831 93,345
Management fee 48,550 73,414
-------------- ---------------
1,090,927 1,898,002
-------------- ---------------
Net income (loss) - GAAP basis $ (183,013) $ (81,132)
============== ===============
Taxable income (loss) from operations $ (831,185) $ (2,000,000) (4)
============== ===============
Cash generated by (used in) operations (2) $ 1,214,796 $ 1,882,245
Cash generated from sales 257,206 -
Cash generated from refinancing - -
Cash generated from other (2) 98,028 173,875
-------------- ---------------
1,570,030 2,056,120
Less cash distributions to investors:
From operating cash flow 937,496 1,882,245
From sales - -
From refinancing - -
From other - 256,820
-------------- ---------------
Total distributions 937,496 2,139,065
-------------- ---------------
Cash generated (deficiency) after cash distributions $ 632,534 $ (82,945)
============== ===============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (34.48) $ (30.36)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ - $ -
- Return of capital 42.04 35.10
-------------- ---------------
$ 42.04 $ 35.10
============== ===============
Sources (on a cash basis)
Sales $0.00 $0.00
Refinancing - -
Operations 42.04 30.89
Other 0.00 4.21
-------------- ---------------
Total $ 42.04 $ 35.10
============== ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $ 14,602,123 $ 25,451,603
Amount invested in program equipment (book value) $ 14,726,680 $ 21,152,674
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (3) 98.38% 99.06%
Past performance is not necessarily indicative of future performance.
A - 10
FOOTNOTES:
(1) Operating expenses include reimbursements to the General Partner/Managing
Member as follows:
ATEL Capital ATEL Capital ATEL Capital
Equipment Equipment Equipment
Fund VIII Fund IX Fund X
Year ended December 31, 1999 $ 767,386
2000 1,408,523
2001 924,375 $ 374,507
2002 832,539 343,120
2003 820,571 627,320 $ 48,235
2004 719,342 314,782 114,362
-------------------- -------------------- ---------------
$ 5,472,736 $ 1,659,729 $ 162,597
==================== ==================== ===============
(2) Cash generated by (used in) operations does not include the principal
portion of lease rentals received under direct financing leases or principal
payments received on notes receivable. In the Funds' statements of cash flows
(under generally accepted accounting principles), these amounts are included in
the investing activities section.
(3) The percentage is calculated as a fraction, the numerator of which is the
amount invested in program equipment (at cost) as of the end of the indicated
period and the denominator of which is the cumulative total of the cost of all
equipment acquired by the program through the end of the latest period shown.
(4) Estimated as of June 30, 2004.
Past performance is not necessarily indicative of future performance.
A - 11
TABLE IV
RESULTS OF COMPLETED PROGRAMS
June 30, 2004
(Unaudited)
Program name:
ATEL Cash ATEL Cash ATEL Cash
Distribution Fund Distribution Fund II Distribution Fund III
Dollar amount of equity raised $ 10,000,000 $ 35,000,000 $ 73,855,840
Assets purchased $ 11,133,679 $ 52,270,536 $ 99,629,942
Date of Closing of Offering December 18, 1987 January 3, 1990 January 3, 1992
Date of first sale of property May 1, 1989 July 1, 1994 December 1, 1992
Date of final sale of property December 31, 1997 December 31, 1998 December 31, 2000
Tax and distribution data per
$1,000 limited partner investment
through December 31, 2000:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 192.40 $ 154.95 $ (12.08)
Recapture
Capital gain (loss)
Cash distributions to investors
on a GAAP basis:
- Investment income $ 244.89 $ 335.43 $ 379.10
- Return of capital 876.14 887.20 950.66
----------------------- ------------------------- ------------------------
1,121.03 1,222.63 1,329.76
Cash available for distribution, reinvested
for investors' accounts 89.05 48.75 -
----------------------- ------------------------- ------------------------
Total $ 1,210.08 $ 1,271.38 $ 1,329.76
======================= ========================= ========================
Sources (on a cash basis):
Sales $ 136.03 $ 159.92 $ 169.34
Refinancing
Operations 969.59 987.33 975.75
Other 104.46 124.13 184.67
----------------------- ------------------------- ------------------------
Total $ 1,210.08 $ 1,271.38 $ 1,329.76
======================= ========================= ========================
Past performance is not necessarily indicative of future performance.
A - 12
TABLE V
ACQUISITION OF EQUIPMENT
BY PRIOR PROGRAMS
The following is a summary of Equipment acquisitions and Lessees by the three
most recent prior publicly-registered programs sponsored by ATEL Financial
Services, LLC and its affiliates. Information concerning the prior programs'
Equipment acquisition is current through December 31, 2003.
Lease
Commence Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Leverage (3) Term (4) (5)
------ ----- -------------- ----------- -------- ------------ -------- ---
ATEL Capital Equipment Fund VIII
American Oncologic MRI Scanner Jul-00 $ 1,871,181 60 OL
Hospital, Inc.
ANC Rental Corporation 23 Mini Buses Jan-01 1,860,020 36 FP
ANC Rental Corporation 23 City Buses Jan-01 1,506,459 60 FP
ANC Rental Corporation 23 City Buses Jan-01 1,168,509 60 FP
ANC Rental Corporation 23 Mini Buses Jan-01 576,820 36 OL
BJ's Wholesale Club, Inc. 6 Forklifts Apr-99 594,748 60 HP
Burlington Northern and Locomotives Dec-99 11,750,000 19 OL
Santa Fe Railroad Company
Burlington Northern and Tri-Level Auto Racks Sep-99 1,741,739 40 OL
Santa Fe Railroad Company
Celestica Corporation Chip Placers, Jan-01 2,955,623 33 OL
Stencil Printers
Consolidated Diesel Company Siemens Telephone Feb-99 406,030 55 HP
System
Consolidated Rail Corporation Railroad Gondolas Jan-00 12,922,864 23.79% 36 OL
and Ballast Cars
CSX Transportation, Inc. Rail Boxcars Sep-99 6,782,075 15 OL
CVS Corporation Material Handling Apr-00 1,977,438 60 HP / FP
Equipment
CVS Corporation Material Handling Apr-01 1,356,483 60 HP / FP
Equipment
CVS Corporation Material Handling Jan-01 1,274,563 60 HP / FP
Equipment
CVS Corporation Telecommunications Jan-00 to Apr-00 1,065,848 60 HP
Equipment
CVS Corporation Telecommunications Jul-00 to Oct-00 780,243 60 HP
Equipment
CVS Corporation Handheld Radio Units Apr-01 636,065 36 HP
CVS Corporation Handheld Inventory Oct-00 323,473 60 HP
Control Units
CVS Corporation Phone Equipment Apr-01 130,968 60 HP
CVS Corporation Telecommunications Oct-99 102,961 60 HP
Equipment
E.I.duPont de Nemours Okuma Lathe Jul-00 324,805 72 FP
& Company
Emery Worldwide Airlines, Inc. MD Cargo Aircraft Nov-99 5,725,300 1 OL
Emery Worldwide Airlines, Inc. Used McDonnell Jul-00 14,123,602 54 OL
Douglas DC8-71F
Cargo Aircraft
Finnair OYJ 7 McDonnell Douglas Dec-99 15,448,037 26.54% 50 OL
Passenger Aircraft
General Electric Company 8 Lathes, Machining Oct-00 4,843,887 84 FP
Centers
General Electric Company 8 Turning Lathes Jul-00 2,747,940 84 FP
General Electric Company 8 Milling Machine Dec-99 to Feb-00 1,140,264 84 FP
General Electric Company 8 Grinding Machine Dec-99 to Mar-00 1,060,293 84 FP
General Electric Company 8 Turbolisk Dec-00 999,775 84 FP
General Electric Company 8 Vertical Machining Apr-00 788,675 84 FP
Centers
Past performance is not necessarily indicative of future performance.
A - 13
Lease
Commence Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Leverage (3) Term (4) (5)
------ ----- -------------- ----------- -------- ------------ -------- ---
General Electric Company 8 Machining Center Feb-01 733,600 84 FP
General Electric Company 8 Vertical Machining Mar-01 709,545 84 OL
Center
General Electric Company 8 Grinding Machines Aug-00 660,444 84 FP
General Electric Company 8 Monarch Machining Sep-00 644,886 84 FP
Center
General Electric Company 8 Machine Tools Jun-01 643,106 84 FP
General Electric Company 8 VTX Machining Oct-99 to Dec-99 626,699 84 HP/FP
Centers
General Electric Company 8 Rebuilt Producto Dec-00 593,500 84 FP
Drilling Machine
General Electric Company 8 Rebuilt Omni-Mill Jun-01 563,939 84 FP
General Electric Company 8 Deckel Maho DMU May-99 546,500 84 OL
Machine
General Electric Company 8 Grinding Machine Jan-00 510,756 84 FP
General Electric Company 8 Fadal Machining Jun-00 483,900 84 FP
Centers
General Electric Company 8 Rebuilt CNC Lathe Aug-00 476,458 84 OL
General Electric Company 8 CNC Grinding Machine Oct-00 363,400 84 FP
General Electric Company 8 LeBlond Lathe Jan-00 352,350 84 HP
General Electric Company 8 Machine Center Mar-99 352,000 84 OL
General Electric Company 8 Grit Blast System Jul-00 351,536 84 FP
General Electric Company 8 Grinding Machine Jun-00 330,222 84 FP
General Electric Company 8 Rebuilt Bullard VTL Feb-01 299,706 84 FP
General Electric Company 8 Radio Graphic Sep-99 219,377 84 FP
Inspection
Facility
General Electric Company 8 Rebuilt Vacuum Mar-00 to Apr-00 213,820 84 FP
Blazing Machine
General Electric Company 8 Used Forging Machine Jan-00 177,410 84 FP
General Electric Company 8 Forklifts Aug-00 128,976 36 - 60 OL/FP
General Electric Company 8 VTX Machining Centers May-99 124,172 84 OL
General Electric Company 8 Data Visualization May-00 101,374 84 FP
System
General Electric Company 8 Laser Engraving May-00 80,159 84 FP
System
General Electric Company 8 Air Flow Tester Nov-99 61,960 60 FP
General Electric Company 8 Power Trak Jan-00 39,975 60 OL
General Electric Co |