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Form 10K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Annual report pursuant to section 13 or 15(d) of
the Securities Exchange Act of 1934 (no fee
required) For the Year Ended December 31, 2000
OR
|_| Transition report pursuant to section 13 or 15(d)
of the Securities Exchange Act of 1934 (no fee
required) For the transition period from ____ to
____
Commission File number 0-24175
ATEL Capital Equipment Fund VII, L.P.
California 94-3248318
- ---------- ----------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
235 Pine Street, 6th Floor, San Francisco, California 94104
(Address of principal executive offices)
Registrant's telephone number, including area code (415) 989-8800
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Limited Partnership
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 |_|
State the aggregate market value of voting stock held by non-affiliates of the
registrant: Inapplicable
DOCUMENTS INCORPORATED BY REFERENCE
None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. |X|
1
PART I
Item 1: BUSINESS
General Development of Business
ATEL Capital Equipment Fund VII, L.P. (the Partnership) was formed under the
laws of the State of California in May 1996. The Partnership was formed for the
purpose of acquiring equipment to engage in equipment leasing and sales
activities. The General Partner of the Partnership is ATEL Financial Corporation
(ATEL).
The Partnership conducted a public offering of 15,000,000 Units of Limited
Partnership Interest (Units) at a price of $10 per Unit. On January 7, 1997, the
Partnership commenced operations in its primary business (leasing activities).
As of November 27, 1998, the Partnership had received subscriptions for
15,000,000 ($150,000,000) Limited Partnership Units and the offering was
terminated. As of December 31, 2000, 14,996,050 Units were issued and
outstanding.
The Partnership's principal objectives are to invest in a diversified portfolio
of equipment which will (i) preserve, protect and return the Partnership's
invested capital; (ii) generate regular distributions to the partners 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, ending December 31, 2004 and (iii) provide
additional distributions following the reinvestment period and until all
equipment has been sold. The Partnership is governed by its Limited Partnership
Agreement.
Narrative Description of Business
The Partnership has acquired and intends to acquire various types of equipment
and to lease such equipment pursuant to "Operating" leases and "High Payout"
leases, where "Operating" leases are defined as being leases in which the
minimum lease payments during the initial lease term do not recover the full
cost of the equipment and "High Payout" leases recover at least 90% of such
cost. It is the intention of the General Partner that a majority of the
aggregate purchase price of equipment will represent equipment leased under
"High Payout" leases upon final investment of the net proceeds of the offering
and that no more than 20% of the aggregate purchase price of equipment will be
invested in equipment acquired from a single manufacturer.
The Partnership will generally only purchase equipment for which a lease exists
or for which a lease will be entered into at the time of the purchase.
As of December 31, 2000, the Partnership had purchased equipment with a total
acquisition price of $289,421,680.
The Partnership's objective is to lease a minimum of 75% of the equipment
acquired with the net proceeds of the offering to lessees which (i) have an
aggregate credit rating by Moody's Investor Service, Inc. of Baa or better, or
the credit equivalent as determined by the General Partner, with the aggregate
rating weighted to account for the original equipment cost for each item leased
or (ii) are established hospitals with histories of profitability or
municipalities. The balance of the original equipment portfolio may include
equipment leased to lessees which, although deemed creditworthy by the General
Partner, would not satisfy the general credit rating criteria for the portfolio.
In excess of 75% of the equipment acquired with the net proceeds of the offering
(based on original purchase cost) had been leased to lessees with an aggregate
credit rating of Baa or better or to such hospitals or municipalities.
2
During 2000, no single lessee generated more than 10% of the Partnership's lease
revenues. During 1999 and 1998 certain lessees generated significant portions of
the Partnership's total lease revenues as follows:
Lessee Type of Equipment 1999 1998
------ ----------------- ---- ----
Burlington Northern Santa Locomotives & intermodal 10% 17%
Fe Railroad Company containers
NYK Lines Intermodal containers * 10%
* Less than 10%.
These percentages are not expected to be comparable in future periods.
The equipment leasing industry is highly competitive. Equipment manufacturers,
corporations, partnerships and others offer users an alternative to the purchase
of most types of equipment with payment terms which vary widely depending on the
lease term and type of equipment. The ability of the Partnership to keep the
equipment leased and/or operating and the terms of the acquisitions, leases and
dispositions of equipment depends on various factors (many of which are not in
the control of the General Partner or the Partnership), such as general economic
conditions, including the effects of inflation or recession, and fluctuations in
supply and demand for various types of equipment resulting from, among other
things, technological and economic obsolescence.
The General Partner will seek to limit the amount invested in equipment to any
single lessee to not more than 20% of the aggregate purchase price of equipment
owned at any time during the reinvestment period.
The business of the Partnership is not seasonal.
The Partnership has no full time employees.
Equipment Leasing Activities
Through December 31, 2000, the Partnership has disposed of certain leased assets
as set forth below:
Excess of
Type of Original Rents Over
Equipment Equipment Cost Sale Price Expenses *
--------- -------------- ---------- ----------
Manufacturing $15,089,798 $ 6,323,632 $ 8,851,236
Transportation 6,923,021 4,363,914 5,093,337
Aircraft 3,764,124 4,330,088 1,814,760
Other 1,808,916 311,239 1,041,063
Office automation 1,677,828 374,321 1,249,542
Food processing 1,612,852 1,243,592 980,308
Furniture and fixtures 1,350,493 765,340 1,068,345
Mining 816,729 888,685 173,808
Materials handling 481,128 17,595 610,889
---------------- ----------------- ----------------
$33,524,889 $ 18,618,406 $ 20,883,288
================ ================= ================
* Includes only those expenses directly related to the production of the related
rents.
3
The Partnership has acquired a diversified portfolio of equipment. The equipment
has been leased to lessees in various industries. The following tables set forth
the types of equipment acquired by the Partnership through December 31, 2000 and
the industries to which the assets have been leased. The Partnership has
purchased certain assets subject to existing non-recourse debt. For financial
statement purposes, non-recourse debt has been offset against the investment in
certain direct finance leases where the right of setoff exists.
Purchase Price Excluding Percentage of Total
Asset Types Acquisition Fees Acquisitions
----------- ---------------- ------------
Transportation, rail cars $ 64,328,409 29.83%
Manufacturing 45,427,770 15.70%
Mining 30,756,101 10.63%
Transportation, other 26,723,940 9.23%
Transportation, intermodal
containers 26,631,519 9.20%
Marine vessels 22,335,250 7.72%
Motor Vehicles 12,437,158 4.30%
Office automation 11,449,934 3.96%
Medical 9,133,951 3.16%
Aircraft 6,310,979 2.18%
Materials handling 6,840,192 2.36%
Railroad locomotives 5,010,960 1.73%
Other * 22,035,517 7.61%
---------------- ----------------
$ 289,421,680 100.00%
================ ================
Purchase Price Excluding Percentage of Total
Industry of Lessee Acquisition Fees Acquisitions
------------------ ---------------- ------------
Transportation, rail $ 73,779,368 34.97%
Municipalities 45,050,058 15.57%
Transportation, other 43,079,361 14.88%
Manufacturing, other 30,086,803 10.40%
Electronics 24,418,734 8.44%
Mining 17,194,252 5.94%
Business services 15,093,493 5.22%
Primary metals 13,251,254 4.58%
Other * 27,468,357 9.49%
---------------- ----------------
$ 289,421,680 100.00%
================ ================
* Individual amounts included in "Other" represent less than 2.5% of the total.
For further information regarding the Partnership's equipment lease portfolio as
of December 31, 2000, see Note 3 to the financial statements, Investments in
equipment and leases, set forth in Item 8, Financial Statements and
Supplementary Data.
Item 2. PROPERTIES
The Partnership does not own or lease any real property, plant or materially
important physical properties other than the equipment held for lease as set
forth in Item 1.
4
Item 3. LEGAL PROCEEDINGS
No material legal proceedings are currently pending against the Partnership or
against any of its assets. The following is a discussion of legal matters
involving the Partnership but which do not represent claims against the
Partnership or its assets.
In January 2000, Applied Magnetics Corporation filed for protection from
creditors under Chapter 11 of the U.S. Bankruptcy Code. The Partnership has
assets with a total net book value of $8,048,095 leased to Applied Magnetics
Corporation. On January 31, 2000, the General Partner was appointed to the
Official Committee of Unsecured Creditors and currently serves as the
Chairperson of the Committee. Procedures were quickly undertaken for the
liquidation of the Partnership's leased equipment, which proceeds resulted in
recoveries of $1,773,798 or 21.7% of original equipment cost. As of November 1,
2000, liquidation of the assets was completed.
The Partnership anticipates additional amounts may be recoverable through the
reorganization of the lessee's business, however, any recoveries above the
amounts received upon liquidation of the Partnership's equipment are highly
uncertain and speculative.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
Item 5. MARKET FOR REGISTRANT'S LIMITED PARTNERSHIP UNITS
AND RELATED MATTERS
Market Information
The Units are transferable subject to restrictions on transfers which have been
imposed under the securities laws of certain states. However, as a result of
such restrictions, the size of the Partnership and its investment objectives, to
the General Partner's knowledge, no established public secondary trading market
has developed and it is unlikely that a public trading market will develop in
the future.
Holders
As of December 31, 2000, a total of 5,665 investors were record holders of Units
in the Partnership.
Dividends
The Partnership does not make dividend distributions. However, the Limited
Partners of the Partnership are entitled to certain distributions as provided
under the Limited Partnership Agreement.
The General Partner has sole discretion in determining the amount of
distributions; provided, however, that the General Partner will not reinvest in
equipment, but will distribute, subject to payment of any obligations of the
Partnership, such available cash from operations and cash from sales or
refinancing as may be necessary to cause total distributions to the Limited
Partners for each year during the reinvestment period to equal $1.00 per Unit.
The reinvestment period ends December 31, 2004.
The rate for monthly distributions from 2000 operations was $0.0833 per Unit.
The distributions were made in February 2000 through December 2000 and in
January 2001. For each quarterly distribution (made in April, July and October
2000 and in January 2001) the rate was $0.25 per Unit. Distributions were from
2000 cash flows from operations.
5
The rate for monthly distributions from 1999 operations was $0.0833 per Unit.
The distributions were made in February 1999 through December 1999 and in
January 2000. For each quarterly distribution (made in April, July and October
1999 and in January 2000) the rate was $0.25 per Unit. Distributions were from
1999 cash flows from operations.
The rate for monthly distributions from 1998 operations was $0.0833 per Unit.
The distributions were made in February 1998 through December 1998 and in
January 1999. For each quarterly distribution (made in April, July and October
1998 and in January 1999) the rate was $0.25 per Unit. Distributions were from
1998 cash flows from operations. The amounts paid to holders of Units were
adjusted based on the length of time within the previous calendar month or
quarter that the Units were outstanding.
The following table presents summarized information regarding distributions to
Limited Partners:
2000 1999 1998 1997
---- ---- ---- ----
Distributions of net income (loss) $ 0.53 $ (0.17) $ 0.46 $ (0.20)
Return of investment 0.48 1.17 0.45 0.99
--------- -------- -------- --------
Distributions per Unit 1.01 1.00 0.91 0.79
Differences due to timing of distributions (0.01) 0.00 0.09 0.21
--------- -------- -------- --------
Nominal distribution rates from above $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ======== ======== ========
Item 6. SELECTED FINANCIAL DATA
The following table presents selected financial data of the Partnership at
December 31, 2000, 1999, 1998, 1997 and 1996. This financial data should be read
in conjunction with the financial statements and related notes included under
Item 8 of this report.
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Gross revenues $41,463,919 $ 39,634,771 $ 37,195,090 $ 7,373,981 $ -
Net income (loss) $ 9,158,705 $ (2,159,370) $ 5,279,496 $ (738,233) $ -
Weighted average Units outstanding 14,996,050 14,996,050 10,729,510 3,380,442 50
Net income (loss) per Unit, based on
weighted average Units outstanding $ 0.53 $ (0.17) $ 0.46 $ (0.20) $ -
Distributions per Unit, based on
weighted average Units outstanding $ 1.01 $ 1.00 $ 0.91 $ 0.79 $ -
Total Assets $157,600,746 $ 191,424,300 $ 212,456,902 $ 104,416,786 $ 600
Non-recourse Debt $15,452,741 $ 21,780,420 $ 16,599,347 $ 8,127,374 $ -
Other long-term debt $44,877,000 $ 53,181,000 $ 61,553,000 $ - $ -
Total Partners' Capital $94,163,608 $ 101,313,784 $ 119,711,246 $ 53,900,414 $ 600
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
The Partnership's public offering provided for a total maximum capitalization of
$150,000,000. As of November 27, 1998, the offering was concluded. As of that
date, subscriptions for 15,000,000 Units had been received and accepted.
The liquidity of the Partnership will vary in the future, 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
Limited Partners and to the extent expenses exceed cash flows from leases and
proceeds from asset sales.
As another source of liquidity, the Partnership is expected to have contractual
obligations with a diversified group of lessees for fixed lease terms at fixed
rental amounts. As the initial lease terms expire, the Partnership will re-lease
or sell the equipment. The future liquidity beyond the contractual minimum
rentals will depend on the General Partner's success in re-leasing or selling
the equipment as it comes off lease.
The Partnership participates with the General Partner and certain of its
affiliates in a $77,500,000 revolving line of credit with a financial
institution that includes certain financial covenants. The line of credit
expires on July 28, 2001. As of December 31, 2000, the Partnership had no
borrowings under this line of credit and the remaining availability was
$39,969,040.
The Partnership anticipates reinvesting a portion of lease payments from assets
owned in new leasing transactions. Such reinvestment will occur only after the
payment of all obligations, including debt service (both principal and
interest), the payment of management and acquisition fees to the General Partner
and providing for cash distributions to the Limited Partners. At December 31,
2000, there were no commitments to purchase lease assets.
As of December 31, 2000, all cash balances consisted of amounts reserved for
distributions in January 2001, generated from operations in 2000.
The Partnership currently has available adequate reserves to meet its immediate
cash requirements, but in the event those reserves were found to be inadequate,
the Partnership would likely be in a position to borrow against its current
portfolio to meet such requirements. The General Partner envisions no such
requirements for operating purposes.
In 1998, the Partnership established a $65 million receivables funding program
with a receivables financing company that issues commercial paper rated A1 from
Standard and Poors and P1 from Moody's Investor Services. In this receivables
funding program, the lenders received a general lien against all of the
otherwise unencumbered assets of the Partnership. The program provided for
borrowing at a variable interest rate and required the General Partner to enter
into hedge agreements with certain hedge counterparties (also rated A1/P1) to
mitigate the interest rate risk associated with a variable rate note. The
General Partner anticipated that this program would allow the Partnership to
avail itself of lower cost debt than that available for individual non-recourse
debt transactions.
It is the intention of the Partnership to use the receivables funding program to
finance assets leased to those lessees which, in the opinion of the General
Partner, have a relatively lower potential risk of lease default than those
lessees with equipment financed with non-recourse debt. The Partnership will
continue to use its traditional sources of non-recourse secured debt financing
on a transaction basis as a means of mitigating credit risk.
The General Partner expects that aggregate borrowings in the future will be
approximately 50% of aggregate equipment cost. In any event, the Limited
Partnership Agreement limits such borrowings to 50% of the total cost of
equipment, in aggregate.
7
The Partnership commenced regular distributions, based on cash flows from
operations, beginning with the month of January 1997. See Items 5 and 6 of this
report for additional information regarding distributions.
If inflation in the general economy becomes significant, it may affect the
Partnership inasmuch as the residual (resale) values and rates on re-leases of
the Partnership's leased assets may increase as the costs of similar assets
increase. However, the Partnership's revenues from existing leases would not
increase, as such rates are generally fixed for the terms of the leases without
adjustment for inflation.
If interest rates increase significantly, the lease rates that the Partnership
can obtain on future leases will be expected to increase as the cost of capital
is a significant factor in the pricing of lease financing. Leases already in
place, for the most part, would not be affected by changes in interest rates.
Cash Flows
2000 vs. 1999:
Cash flows from operations decreased from $29,817,476 in 1999 to $28,382,888 in
2000, and decrease of $1,434,588. Rents from operating leases is the primary
source of operating cash flows. Purchases of operating lease assets in 1999 led
to the slight increase in operating lease revenues compared to 1999.
In 2000, sources of cash from investing activities consisted of proceeds from
the sales of lease assets and from rents from direct financing leases. Proceeds
from the sales of lease assets increased from $2,469,199 in 1999 to $10,439,849
in 2000, an increase of $7,970,650. Rents from direct financing leases decreased
by $851,900 as a result of sales of lease assets in 1999 and 2000.
In 2000, financing sources of cash consisted of proceeds of long-term debt,
proceeds of non-recourse debt and borrowings on the line of credit. The proceeds
of long-term debt were used to repay the line of credit. The additional
non-recourse debt was assumed as a part of the acquisition of leased assets in
2000.
Cash used for distributions to partners did not change significantly.
Non-recourse debt payments increased as a result of the early repayment of the
debt associated with the leases to Applied Magnetics.
Cash used to repay long-term debt decreased as a result scheduled payments, net
of the effect of the additional borrowings in 2000. Overall, average balances
were lower in 2000 than in 1999.
1999 vs. 1998:
Cash flows from operations increased from $21,650,163 in 1998 to $29,817,476 in
1999. The primary source of cash flows from operations is operating lease
revenues. Operating lease revenues increased from $33,655,697 in 1998 to
$36,784,290 in 1999.
Sources of cash flows from investing activities consists of direct financing
lease rents and the proceeds from sales of lease assets. Cash flows from direct
financing leases increased from $2,345,113 in 1998 to $3,406,564 in 1999.
Proceeds from sales of lease assets decreased from $4,742,122 in 1998 to
$2,469,199 in 1999. The most significant use of cash in investing activities was
for the purchase of operating lease assets.
Borrowings on the line of credit ($15,822,824), proceeds of non-recourse debt
($9,520,748) and proceeds of other long-term debt ($9,000,000) were the only
sources of cash from financing activities in 1999. Financing uses of cash
consisted of repayments on the line of credit, non-recourse debt and other
long-term debt and distributions to the Partners. Payments of long-term debt and
non-recourse debt increased compared to 1998 as scheduled debt payments
increased. Distributions to the Limited Partners increased as the average number
of outstanding Units increased from 10,729,510 in 1998 to 14,996,050 in 1999.
8
Results of Operations
As of January 7, 1997, subscriptions for the minimum amount of the offering
($1,200,000) had been received and accepted by the Partnership. As of that date,
the Partnership commenced operations in its primary business (leasing
activities). There were no operations in 1996.
2000 vs. 1999:
Operations resulted in net income of $9,158,705 compared to a loss of $2,159,370
in 1999.
Revenues from leases increased from $38,780,392 in 1999 to $38,849,507 in 2000,
an increase of $69,115. Increases resulting from asset purchases in 1999 and in
2000 were offset by the effects of assets sales. Gains on sales of assets
increased from $784,853 in 1999 to $2,381,787 in 2000, an increase of
$1,596,934. Such gains (and losses) are not expected to be consistent from one
period to another.
Depreciation expense increased slightly (less than 2%) compared to 1999 as a
result of asset acquisitions in 1999.
Interest expense declined as a result schedule debt payments and the early
extinguishment of the Applied Magnetics debt. These repayments and
extinguishments exceeded the amounts of new borrowings in 2000. Total debt,
including the line of credit, decreased from $86,111,420 at December 31, 1999 to
$60,329,741 at December 31, 2000.
In 2000, there were no new major lease defaults similar to the Applied Magnetics
default in 1999. Consequently, there were no new provisions for losses or
doubtful accounts in 2000.
The Partnership recognized an extraordinary gain on the early extinguishment of
debt of $2,056,574. This was related to the non-recourse debt on the Applied
Magnetics leases which was extinguished upon foreclosure by the lender in 2000.
1999 vs. 1998:
Revenues increased from $37,195,090 in 1998 to $39,634,771 in 1999. The increase
was the result of operating lease acquisitions in 1998 and in 1999. As a result
of those additions to operating lease assets, depreciation expense increased
from $22,691,501 in 1998 to $24,532,198 in 1999. Operating leases are expected
to remain as the Partnership's primary source of revenues in future periods and
depreciation is expected to continue as the single largest of the Partnership's
expenses.
Interest expense increased from $5,473,480 in 1998 to $6,082,904 in 1999 as a
result of higher average debt balances in 1999 compared to 1998. Most of the
debt was incurred in 1998 in relation to the acquisition of the Partnership's
portfolio of lease assets.
In 1999, Applied Magnetics, one of the Partnership's lessees, defaulted on its
lease obligations to the Partnership. The General Partner did not expect to
recover any of the uncollected rentals outstanding under the leases. The
Partnership wrote down the related lease assets to their net realizable value as
of December 31, 1999. All accounts receivable for amounts billed and outstanding
under the leases have been fully reserved. In 1999, a provision lease losses of
$6,054,134 was provided in relation to this lessee. In addition, a provision for
doubtful accounts of $724,906 was made against accounts receivable.
Impact of the Year 2000
To date, the Partnership has experienced no significant Year 2000 problems and
the General Partner believes it does not have continued exposure to the Year
2000 problem.
9
Recent Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, which established new accounting and
reporting standards for derivative instruments. SFAS No. 133 has been amended by
SFAS No. 137, issued in June 1999, and by SFAS No. 138, issued in June 2000.
SFAS No. 133, as amended, requires the Partnership to recognize all derivatives
as either assets or liabilities in 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. Upon adoption, the Partnership will be
required to adjust hedging instruments to fair value in the balance sheet and
recognize the offsetting gains or losses as adjustments to be reported in net
income or other comprehensive income, as appropriate.
The Partnership will adopt SFAS No. 133, as amended, on January 1, 2001. The
General Partner believes that the adoption of SFAS No. 133, will not have a
material effect on the Partnership's results of operations or financial
position.
Item 7a. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership, like most other companies, is exposed to certain market risks,
including primarily changes in interest rates. The Partnership believes its
exposure to other market risks including foreign currency exchange rate risk,
commodity risk and equity price risk are insignificant to both its financial
position and results of operations.
In general, the Partnership manages its exposure to interest rate risk by
obtaining fixed rate debt. The fixed rate debt is structured so as to match the
cash flows required to service the debt to the payment streams under fixed rate
lease receivables. The payments under the leases are assigned to the lenders in
satisfaction of the debt. Furthermore, the Partnership has historically been
able to maintain a stable spread between its cost of funds and lease yields in
both periods of rising and falling rates. Nevertheless, the Partnership
frequently funds leases with its floating rate line of credit and is, therefore,
exposed to interest rate risk until fixed rate financing is arranged, or the
floating rate line of credit is repaid. As of December 31, 2000, there was no
outstanding balance on the floating rate line of credit. Also, as described in
the caption "Capital Resources and Liquidity," the Partnership entered into a
receivables funding facility in 1998. Since interest on the outstanding balances
under the facility varies, the Partnership is exposed to market risks associated
with changing interest rates.
To hedge its interest rate risk, the Partnership enters into interest rate swaps
which effectively modify the underlying interest characteristic on the facility
from floating to fixed. Under the swap agreements, the Partnership makes or
receives variable interest payments to or from the counterparty based on a
notional principal amount. The net differential paid or received by the
Partnership is recognized as an adjustment to interest expense related to the
facility balances. The amount paid or received represents the difference between
the payments required under the variable rate facility and the amounts due under
facility at the fixed (hedged) rate. As of December 31, 2000, borrowings on the
facility were $44,877,000 and the associated variable rate was 6.7527%. The
average fixed rate achieved with the swap agreements was 6.31%.
In general, these swap agreements eliminate the Partnership's interest rate risk
associated with variable rate borrowings. However, the Partnership is exposed to
and manages credit risk associated with the counterparty by dealing only with
institutions it considers financially sound. If these agreements were not in
place, based on the Partnership's facility borrowings at December 31, 2000, a
hypothetical 1.00% increase or decrease in market interest rates, would increase
or decrease the Partnership's 2001 variable interest expense by approximately
$378,000.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the Report of Independent Auditors, Financial Statements and Notes to
Financial Statements attached hereto at pages 11 through 27.
10
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Partners
ATEL Capital Equipment Fund VII, L.P.
We have audited the accompanying balance sheets of ATEL Capital Equipment Fund
VII, L.P. as of December 31, 2000 and 1999, and the related statements of
operations, changes in partners' capital and cash flows for each of the three
years in the period ended December 31, 2000. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits 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 financial statements are free
of 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 audits provide 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
VII, L.P. at December 31, 2000 and 1999, and the results of its operations,
changes in its partners' capital and its cash flows for each of the three years
in the period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.
/s/ ERNST & YOUNG LLP
San Francisco, California
February 5, 2001
11
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
ASSETS
2000 1999
---- ----
Cash and cash equivalents $ 1,321,417 $ 1,674,372
Accounts receivable, net of allowance for
doubtful accounts of $724,906 in 1999,
none in 2000 6,222,311 5,626,105
Other assets 90,011 130,007
Investments in equipment and leases 149,967,007 183,993,816
---------------- -----------------
Total assets $ 157,600,746 $191,424,300
================ =================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $ 15,452,741 $ 21,780,420
Other long-term debt 44,877,000 53,181,000
Line of credit - 11,150,000
Accounts payable and accruals:
General Partner 605,684 1,435,651
Other 703,761 425,896
Accrued interest payable 533,858 714,697
Unearned lease income 1,264,094 1,422,852
---------------- -----------------
63,437,138 90,110,516
Partners' capital (deficit):
General Partner (1,514,601) (1,514,601)
Limited Partners 95,678,209 102,828,385
---------------- -----------------
Total partners' capital 94,163,608 101,313,784
---------------- -----------------
Total liabilities and partners' capital $ 157,600,746 $191,424,300
================ =================
See accompanying notes.
12
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
2000 1999 1998
---- ---- ----
Revenues:
Leasing activities:
Operating leases $ 37,500,588 $ 36,784,290 $ 33,655,697
Direct financing leases 1,153,226 1,852,614 1,532,235
Leveraged leases 195,693 143,488 131,515
Gain on sales of assets 2,381,787 784,853 1,795,336
Interest income 157,678 49,225 67,313
Other 74,947 20,301 12,994
----------------- ---------------- -----------------
41,463,919 39,634,771 37,195,090
Expenses:
Depreciation and amortization 25,306,146 24,868,782 22,861,169
Interest 5,307,064 6,082,904 5,473,480
Equipment and incentive management fees to affiliates 1,770,779 1,892,306 1,559,090
Other 973,204 1,467,738 756,971
Administrative cost reimbursements to General Partner 917,952 556,577 1,056,746
Professional fees 86,643 146,794 151,183
Provision for losses and impairments - 6,054,134 56,955
Provision for doubtful accounts - 724,906 -
----------------- ---------------- -----------------
34,361,788 41,794,141 31,915,594
----------------- ---------------- -----------------
Income (loss) before extraordinary item 7,102,131 (2,159,370) 5,279,496
Extraordinary gain on early extinguishment of debt 2,056,574 - -
----------------- ---------------- -----------------
Net income (loss) $ 9,158,705 $ (2,159,370) $ 5,279,496
================= ================ =================
Net income (loss):
General Partner $ 1,220,116 $ 463,626 $ 395,962
Limited Partners 7,938,589 (2,622,996) 4,883,534
----------------- ---------------- -----------------
$ 9,158,705 $ (2,159,370) $ 5,279,496
================= ================ =================
Income (loss) before extraordinary item per Limited Partnership unit $ 0.40 $ (0.17) $ 0.46
Extraordinary gain on early extinguishment of debt
per Limited Partnership unit 0.13 - -
----------------- ---------------- -----------------
Net income (loss) per Limited Partnership unit $ 0.53 $ (0.17) $ 0.46
================= ================ =================
Weighted average number of units outstanding 14,996,050 14,996,050 10,729,510
See accompanying notes.
13
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
Limited Partners General
Units Amount Partner Total
----- ------ ------- -----
Balance December 31, 1997 6,716,896 $ 54,147,875 $ (247,461) $ 53,900,414
Capital contributions received 8,283,154 82,831,540 - 82,831,540
Less selling commissions paid to affiliates (7,868,996) - (7,868,996)
Other syndication costs paid to affiliates (3,727,420) - (3,727,420)
Rescission of investment (4,000) (40,000) - (40,000)
Distributions to Limited Partners ($0.91 per Unit) (9,798,122) - (9,798,122)
Distributions to General Partner - (865,666) (865,666)
Net income 4,883,534 395,962 5,279,496
---------------- ----------------- ---------------- -----------------
Balance December 31, 1998 14,996,050 120,428,411 (717,165) 119,711,246
Distributions to Limited Partners ($1.00 per Unit) (14,977,030) - (14,977,030)
Distributions to General Partner - (1,261,062) (1,261,062)
Net income (loss) (2,622,996) 463,626 (2,159,370)
---------------- ----------------- ---------------- -----------------
Balance December 31, 1999 14,996,050 102,828,385 (1,514,601) 101,313,784
Distributions to Limited Partners ($1.01 per Unit) (15,088,765) - (15,088,765)
Distributions to General Partner - (1,220,116) (1,220,116)
Net income 7,938,589 1,220,116 9,158,705
---------------- ----------------- ---------------- -----------------
Balance December 31, 2000 14,996,050 $ 95,678,209 $ (1,514,601) $ 94,163,608
================ ================= ================ =================
See accompanying notes.
14
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
2000 1999 1998
---- ---- ----
Operating activities:
Net income (loss) $ 9,158,705 $ (2,159,370) $ 5,279,496
Adjustment to reconcile net income (loss) to net
cash provided by operating activities:
Leveraged lease income (195,693) (143,488) (131,515)
Depreciation and amortization 25,306,146 24,868,782 22,861,169
Provision for losses and impairments - 6,054,134 56,955
Provision for doubtful accounts - 724,906 -
Gain on sales of assets (2,381,787) (784,853) (1,795,336)
Extraordinary gain on early extinguishment of debt (2,056,574) - -
Changes in operating assets and liabilities:
Accounts receivable (596,206) 29,875 (5,463,667)
Other assets 39,996 39,996 29,997
Accounts payable, General Partner (829,967) 1,057,696 43,699
Accounts payable, other 277,865 (258,579) 148,854
Accrued interest payable (180,839) (91,056) 608,089
Unearned lease income (158,758) 479,433 12,422
----------------- ---------------- -----------------
Net cash provided by operating activities 28,382,888 29,817,476 21,650,163
----------------- ---------------- -----------------
Investing activities:
Proceeds from sales of assets 10,439,849 2,469,199 4,742,122
Reduction of net investment in direct financing leases 2,554,664 3,406,564 2,345,113
Purchases of equipment on direct financing leases (1,678,000) (860,492) (10,800,420)
Initial direct lease costs (18,370) (880,362) (196,646)
Purchases of equipment on operating leases - (13,793,316) (120,126,565)
----------------- ---------------- -----------------
Net cash provided by (used in) investing activities 11,298,143 (9,658,407) (124,036,396)
----------------- ---------------- -----------------
Financing activities:
Distributions to Limited Partners (15,088,765) (14,977,030) (9,798,122)
Distributions to General Partner (1,220,116) (1,261,062) (865,666)
Borrowings under line of credit 450,000 15,822,824 53,029,261
Repayments of borrowings under line of credit (11,600,000) (16,454,531) (81,638,014)
Proceeds of long-term debt 11,700,000 9,000,000 66,770,000
Repayments of long-term debt (17,947,426) (17,372,000) (5,217,000)
Proceeds of non-recourse debt 584,403 9,520,748 11,165,217
Repayments of non-recourse debt (6,912,082) (4,339,675) (2,693,244)
Capital contributions received - - 82,831,540
Payment of selling commissions and other syndication
costs to General Partner - - (11,596,416)
Rescission of investment - - (40,000)
----------------- ---------------- -----------------
Net cash (used in) provided by financing activities (40,033,986) (20,060,726) 101,947,556
----------------- ---------------- -----------------
Net (decrease) increase in cash and cash equivalents (352,955) 98,343 (438,677)
Cash and cash equivalents at beginning of period 1,674,372 1,576,029 2,014,706
----------------- ---------------- -----------------
Cash and cash equivalents at end of period $ 1,321,417 $ 1,674,372 $ 1,576,029
================= ================ =================
15
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
STATEMENTS OF CASH FLOWS
(CONTINUED)
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
2000 1999 1998
---- ---- ----
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 5,487,903 $ 6,173,960 $ 4,865,391
================= ================ =================
Schedule of non-cash transactions:
Extraordinary gain on early extinguishment of debt $ 2,056,574 $ - $ -
================= ================ =================
See accompanying notes.
16
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
1. Organization and Partnership matters:
ATEL Capital Equipment Fund VII, L.P. (the Partnership) was formed under the
laws of the State of California on May 17, 1996 for the purpose of acquiring
equipment to engage in equipment leasing and sales activities.
Upon the sale of the minimum amount of Units of Limited Partnership interest
(Units) (120,000 Units) ($1,200,000) and the receipt of the proceeds thereof on
January 7, 1997, the Partnership commenced operations.
The General Partner of the Partnership is ATEL Financial Corporation (ATEL).
The Partnership, or the General Partner on behalf of the Partnership, will incur
costs in connection with the organization, registration and issuance of the
Units. The amount of such costs to be borne by the Partnership is limited to 15%
of Gross Proceeds of up to $25,000,000 and 14% of Gross Proceeds in excess of
$25,000,000.
The Partnership's business consists of leasing various types of equipment. As of
December 31, 2000, the original terms of the leases ranged from eighteen months
to eleven years.
Pursuant to the Limited Partnership Agreement, the General Partner receives
compensation and reimbursements for services rendered on behalf of the
Partnership (Note 6). The General Partner is required to maintain in the
Partnership reasonable cash reserves for working capital, the repurchase of
Units and contingencies.
2. Summary of significant accounting policies:
Equipment on operating leases:
Equipment on operating leases is stated at cost. Depreciation is being provided
by use of the straight-line method over the terms of the related leases to the
equipment's estimated residual values at the end of the leases.
Revenues from operating leases are recognized evenly over the lives of the
related leases.
Direct financing leases:
Income from direct financing lease transactions is reported using the financing
method of accounting, in which the Partnership's investment in the leased
property is reported as a receivable from the lessee to be recovered through
future rentals. The income portion of each rental payment is calculated so as to
generate a constant rate of return on the net receivable outstanding.
Investment in leveraged leases:
Leases which are financed principally with non-recourse debt at lease inception
and which meet certain other criteria are accounted for as leveraged leases.
Leveraged lease contracts receivable are stated net of the related non-recourse
debt service (which includes unpaid principal and aggregate interest on such
debt) plus estimated residual values. Unearned income represents the excess of
anticipated cash flows (after taking into account the related debt service and
residual values) over the investment in the lease and is amortized using a
constant rate of return applied to the net investment when such investment is
positive.
17
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
2. Summary of significant accounting policies (continued):
Statements of cash flows:
For purposes of the Statements of Cash Flows, cash and cash equivalents include
cash in banks and cash equivalent investments with original maturities of ninety
days or less.
Income taxes:
The Partnership does not provide for income taxes since all income and losses
are the liability of the individual partners and are allocated to the partners
for inclusion in their individual tax returns.
The tax basis of the Partnership's net assets and liabilities varies from the
amounts presented in these financial statements (unaudited):
2000 1999
---- ----
Financial statement basis of net assets $ 94,163,608 $ 101,313,784
Tax basis of net assets 28,061,745 54,867,781
----------------- ----------------
Difference $ 66,101,863 $ 46,446,003
================= ================
The primary differences between the tax basis of net assets and the amounts
recorded in the financial statements are the result of differences in accounting
for syndication costs and differences between the depreciation methods used in
the financial statements and the Partnership's tax returns.
The following reconciles the net income (loss) reported in these financial
statements to the loss reported on the Partnership's federal tax return
(unaudited):
2000 1999 1998
---- ---- ----
Net income (loss) per financial statements $ 9,158,705 $ (2,159,370) $ 5,279,496
Adjustment to depreciation expense (20,229,067) (38,503,336) (34,679,816)
Adjustments to lease revenues 573,208 3,664,666 2,840,660
Provision for losses - 6,054,134 56,955
----------------- ---------------- -----------------
Net loss per federal tax return $ (10,497,154) $(30,943,906) $(26,502,705)
================= ================ =================
Per unit data:
Net income and distributions per unit are based upon the weighted average number
of units outstanding during the period.
18
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
2. Summary of significant accounting policies (continued):
Credit risk:
Financial instruments which potentially subject the Partnership to
concentrations of credit risk include cash and cash equivalents and accounts
receivable. The Partnership places its cash deposits and temporary cash
investments with creditworthy, high quality financial institutions. The
concentration of such deposits and temporary cash investments is not deemed to
create a significant risk to the Partnership. Accounts receivable represent
amounts due from lessees in various industries, related to equipment on
operating and direct financing leases. See Note 8 for a description of lessees
by industry as of December 31, 2000, 1999 and 1998.
Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles 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.
Reserve for losses and impairments:
The Partnership maintains a reserve on its investments in equipment and leases
for losses and impairments which are inherent in the portfolio as of the balance
sheet date. The General Partner's evaluation of the adequacy of the allowance is
a judgmental estimate that is based on a review of individual leases, past loss
experience and other factors. While the General Partner believes the allowance
is adequate to cover known losses, it is reasonably possible that the allowance
may change in the near term. However, such change is not expected to have a
material effect on the financial position or future operating results of the
Partnership. It is the Partnership's policy to charge off amounts which, in the
opinion of the General Partner, are not recoverable from lessees or the
disposition of the collateral. See Note 11.
Recent Accounting Pronouncement:
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, which established new accounting and
reporting standards for derivative instruments. SFAS No. 133 has been amended by
SFAS No. 137, issued in June 1999, and by SFAS No. 138, issued in June 2000.
SFAS No. 133, as amended, requires the Partnership to recognize all derivatives
as either assets or liabilities in 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. Upon adoption, the Partnership will be
required to adjust hedging instruments to fair value in the balance sheet and
recognize the offsetting gains or losses as adjustments to be reported in net
income or other comprehensive income, as appropriate.
The Partnership will adopt SFAS No. 133, as amended, on January 1, 2001. The
Partnership enters into interest rate swaps (see Note 5). The General Partner
believes that the adoption of SFAS No. 133, will not have a material effect on
the Partnership's results of operations or financial position.
19
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
3. Investments in equipment and leases:
The Partnership's investments in equipment and leases consist of the following:
Depreciation
Expense or Reclass-
December 31, Amortization ifications or December 31,
1999 Additions of Leases Dispositions 2000
---- --------- --------- ------------ ----
Net investment in operating leases $164,971,672 $ (25,118,244) $ (8,136,260) $131,717,168
Net investment in direct financing
leases 22,388,627 $ 1,678,000 (2,554,664) (4,424,497) 17,087,466
Net investment in leveraged leases 1,724,071 - 195,693 (1,919,764) -
Reserve for losses and impairments (6,185,366) - - 5,681,139 (504,227)
Assets held for sale or lease 491,758 - - 741,320 1,233,078
Initial direct costs, net of
accumulated amortization of
$532,599 in 2000 and $344,698 in 1999 603,054 18,370 (187,902) - 433,522
---------------- ---------------- ----------------- ---------------- -----------------
$183,993,816 $ 1,696,370 $ (27,665,117) $ (8,058,062) $149,967,007
================ ================ ================= ================ =================
Operating leases:
Property on operating lease consists of the following:
Reclass-
December 31, ifications or December 31,
1999 Additions Dispositions 2000
---- --------- ------------ ----
Transportation $ 100,584,087 $ 1,080,770 $101,664,857
Marine vessels / barges 27,609,897 (333,418) 27,276,479
Construction 23,002,563 - 23,002,563
Manufacturing 22,508,006 (10,706,688) 11,801,318
Office automation 11,100,543 (1,220,003) 9,880,540
Mining 8,536,249 - 8,536,249
Materials handling 5,907,524 (348,050) 5,559,474
Other 7,855,730 (2,746,899) 5,108,831
Communications 7,740,986 (3,353,167) 4,387,819
---------------- ----------------- ---------------- -----------------
214,845,585 (17,627,455) 197,218,130
Less accumulated depreciation (49,873,913) $ (25,118,244) 9,491,195 (65,500,962)
---------------- ----------------- ---------------- -----------------
$ 164,971,672 $ (25,118,244) $ (8,136,260) $131,717,168
================ ================= ================ =================
20
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
3. Investments in equipment and leases (continued):
Direct financing leases:
As of December 31, 2000, investment in direct financing leases consist of
various transportation, manufacturing and medical equipment. The following lists
the components of the Partnership's investment in direct financing leases as of
December 31, 2000 and 1999:
2000 1999
---- ----
Total minimum lease payments receivable $ 14,005,112 $ 20,333,222
Estimated residual values of leased
equipment (unguaranteed) 8,443,602 8,775,528
----------------- ----------------
Investment in direct financing leases 22,448,714 29,108,750
Less unearned income (5,361,248) (6,720,123)
----------------- ----------------
Net investment in direct financing leases $ 17,087,466 $ 22,388,627
================= ================
All of the property on leases was acquired in the years 1997 through 2000.
At December 31, 2000, the aggregate amounts of future minimum lease payments
under operating and direct financing leases are as follows:
Direct
Year ending Operating Financing
December 31, Leases Leases Total
------------ ------ ------ -----
2001 $27,245,706 $ 3,235,027 $ 30,480,733
2002 20,002,060 2,613,437 22,615,497
2003 12,297,414 2,252,772 14,550,186
2004 7,995,002 2,203,182 10,198,184
2005 5,513,217 2,158,731 7,671,948
Thereafter 2,069,750 1,541,963 3,611,713
---------------- ---------------- -----------------
$75,123,149 $ 14,005,112 $ 89,128,261
================ ================ =================
Leveraged leases:
As of December 31, 1999, investment in leveraged leases consists of railroad box
cars. There were no leveraged leases as of December 31, 2000. The following
lists the components of the Partnership's investment in leveraged leases as of
December 31, 1999:
Aggregate rentals receivable $ 1,291,272
Less aggregate principal and interest payable on non-recourse loans (1,083,503)
Estimated residual value of leased assets 1,672,855
Less unearned income (156,553)
-------------
Net investment in leveraged leases $ 1,724,071
=============
21
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
3. Investments in equipment and leases (continued):
Reserves for losses and impairments:
Activity in the reserve for losses and impairments consists of the following:
Balance December 31, 1997 $ 74,277
Provision 56,955
----------------
Balance December 31, 1998 131,232
Provision 6,054,134
----------------
Balance December 31, 1999 6,185,366
Charge offs (5,681,139)
----------------
Balance December 31, 2000 $ 504,227
================
At December 31, 2000, there were no commitments to purchase lease assets.
4. Non-recourse debt:
At December 31, 2000, non-recourse debt consists of notes payable to financial
institutions. The notes are due in varying monthly, quarterly and semi-annual
payments. Interest on the notes is at rates from 7.1% to 16.9%. The notes are
secured by assignments of lease payments and pledges of assets. At December 31,
2000, the carrying value of the pledged assets is $31,318,509. The notes mature
from 2001 through 2008.
Future minimum payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
2001 $ 5,476,816 $ 1,339,144 $ 6,815,960
2002 5,761,771 813,843 6,575,614
2003 3,261,508 288,853 3,550,361
2004 298,403 67,364 365,767
2005 322,838 42,927 365,765
Thereafter 331,405 25,597 357,002
---------------- ---------------- -----------------
$15,452,741 $ 2,577,728 $ 18,030,469
================ ================ =================
22
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
5. Other long-term debt:
In 1998, the Partnership entered into a $65 million receivables funding program
(the Program) with a receivables financing company that issues commercial paper
rated A1 by Standard and Poors and P1 by Moody's Investor Services. Under the
Program, the receivables financing company receives a general lien against all
of the otherwise unencumbered assets of the Partnership. The Program provides
for borrowing at a variable interest rate (6.7527% at December 31, 2000).
The Program requires the General Partner to enter into various interest rate
swaps with a financial institution (also rated A1/P1) to manage interest rate
exposure associated with variable rate obligations under the Program by
effectively converting the variable rate debt to fixed rates. As of December 31,
2000, the Partnership receives or pays interest on a notional principal of
$44,877,000, based on the difference between nominal rates ranging from 5.55% to
7.58% and the variable rate under the Program. No actual borrowing or lending is
involved. The last of the swaps terminates in 2008. The differential to be paid
or received is accrued as interest rates change and is recognized currently as
an adjustment to interest expense related to the debt.
Borrowings under the Program are as follows:
Variable Interest
Original Balance Rate on Rate at
Amount December 31, Interest Swap December 31,
Date Borrowed Borrowed 2000 Agreement 2000
- ------------- -------- ---- --------- ----
4/1/1998 $21,770,000 $ 9,323,000 6.220% 6.7527%
7/1/1998 25,000,000 9,307,000 6.155% 6.7527%
10/1/1998 20,000,000 11,974,000 5.550% 6.7527%
4/16/1999 9,000,000 4,092,000 5.890% 6.7527%
1/26/2000 11,700,000 10,181,000 7.580% 6.7527%
--------------- ---------------
$87,470,000 $ 44,877,000
=============== ===============
The long-term debt borrowings mature from 2004 through 2008. Future minimum
principal payments of long-term debt are as follows:
Year ending
December 31, Principal Interest Total
--------- -------- -----
2001 $13,724,000 $ 2,410,467 $ 16,134,467
2002 11,131,000 1,640,179 12,771,179
2003 7,200,000 1,075,640 8,275,640
2004 5,422,000 676,854 6,098,854
2005 3,986,000 369,993 4,355,993
Thereafter 3,414,000 328,282 3,742,282
---------------- ---------------- -----------------
$44,877,000 $ 6,501,415 $ 51,378,415
================ ================ =================
23
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
6. Related party transactions:
The terms of the Limited Partnership Agreement provide that the General Partner
and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The Limited Partnership Agreement allows for the reimbursement of costs incurred
by the General Partner in providing administrative services to the Partnership.
Administrative services provided include Partnership accounting, investor
relations, legal counsel and lease and equipment documentation. The General
Partner is not reimbursed for services where it is entitled to receive a
separate fee as compensation for such services, such as acquisition and
disposition of equipment. Reimbursable costs incurred by the General Partner are
allocated to the Partnership based upon actual time incurred by employees
working on Partnership business and an allocation of rent and other costs based
on utilization studies.
Substantially all employees of the General Partner record time incurred in
performing administrative services on behalf of all of the Partnerships serviced
by the General Partner. The General Partner believes that the costs reimbursed
are the lower of (i) actual costs incurred on behalf of the Partnership or (ii)
the amount the Partnership would be required to pay independent parties for
comparable administrative services in the same geographic location and are
reimbursable in accordance with the Limited Partnership Agreement.
The General Partner and/or Affiliates earned fees, commissions and
reimbursements, pursuant to the Limited Partnership Agreement as follows during
2000, 1999 and 1998:
2000 1999 1998
---- ---- ----
Incentive management fees (computed as 4.0% of distributions of cash from
operations, as defined in the Limited Partnership Agreement) and equipment
management fees (computed as 3.5% of gross revenues from operating leases, as
defined in the Limited Partnership Agreement plus 2% of gross revenues from full
payout leases, as defined in the Limited Partnership Agreement). $ 1,770,779 $ 1,892,306 $ 1,559,090
Administrative cost reimbursements to General Partner 917,952 556,577 1,056,746
Selling commissions (equal to 9.5% of the selling price of the Limited
Partnership units, deducted from Limited Partners' capital) - - 7,868,996
Reimbursement of other syndication costs - - 3,727,420
--------------- ---------------- -----------------
$ 2,688,731 $ 2,448,883 $ 14,212,252
=============== ================ =================
The General Partner or an Affiliate may purchase equipment in its own name, the
name of an Affiliate or the name of a nominee, a trust or otherwise and hold
title thereto on a temporary or interim basis (generally not in excess of six
months) for the purpose of facilitating the acquisition of such equipment or the
completion of manufacture of the equipment or for any other purpose related to
the business of the Partnership, provided, however that (i) the transaction is
in the best interest of the Partnership; (ii) such equipment is purchased by the
Partnership for a purchase price no greater than the cost of such equipment to
the General Partner or Affiliate (including any out-of-pocket carrying costs),
except for compensation permitted by the Agreement of Limited Partnership; (iii)
there is no difference in interest terms of the loans secured by the equipment
at the time acquired by the General Partner or Affiliate and the time acquired
by the Partnership; (iv) there is no benefit arising out of such transaction to
the General Partner or its Affiliate apart from the compensation otherwise
permitted by the Agreement of Limited Partnership; and (v) all income generated
by, and all expenses associated with, equipment so acquired shall be treated as
belonging to the Partnership.
24
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
7. Partners' capital:
As of December 31, 2000, 14,996,050 Units ($149,960,050) were issued and
outstanding. The Partnership is authorized to issue up to 15,000,050 Units,
including the 50 Units issued to the Initial Limited Partners.
The Partnership's Net Profits, Net Losses, and Tax Credits are to be allocated
92.5% to the Limited Partners and 7.5% to the General Partner.
Available Cash from Operations, as defined in the Limited Partnership Agreement,
is to be distributed as follows:
First, Distributions of Cash from Operations are to be 88.5% to the Limited
Partners, 7.5% to the General Partner and 4% to the General Partner or its
affiliate designated as the recipient of the Incentive Management Fee, until the
Limited Partners have received Aggregate Distributions in an amount equal to
their Original Invested Capital, as defined, plus a 10% per annum cumulative
(compounded daily) return on their Adjusted Invested Capital, as defined in the
Limited Partnership Agreement.
Second, 85% to the Limited Partners, 7.5% to the General Partner and 7.5% to the
General Partner or its affiliate designated as the recipient of the Incentive
Management Fee.
Available Cash from Sales or Refinancing, as defined in the Limited Partnership
Agreement, are to be distributed as follows:
First, Distributions of Sales or Refinancings are to be 92.5% to the Limited
Partners and 7.5% to the General Partner, until the Limited Partners have
received Aggregate Distributions in an amount equal to their Original Invested
Capital, as defined, plus a 10% per annum cumulative (compounded daily) return
on their Adjusted Invested Capital.
Second, 85% to the Limited Partners, 7.5% to the General Partner and 7.5% to the
General Partner or its affiliate designated as the recipient of the Incentive
Management Fee.
Additional allocations of income were made to the General Partner in 1999 and
2000. The amount allocated was determined so as to bring the General Partner's
ending capital account balance to the amount of capital contributions that the
General Partner will be required to make in a future period.
25
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
8. Concentration of credit risk and major customers:
The Partnership leases equipment to lessees in diversified industries. Leases
are subject to the General Partner's credit committee review. The leases provide
for the return of the equipment upon default.
As of December 31, 2000, 1999 and 1998 there were concentrations (greater than
10%) of equipment leased to lessees in certain industries (as a percentage of
total equipment cost) as follows:
2000 1999 1998
---- ---- ----
Transportation, rail 19% 19% 27%
Municipalities 16% 15% 16%
Transportation, other 12% * 16%
Electronics * 12% *
* Less than 10%
During 2000, no customers comprised in excess of 10% of the Partnership's
revenues from leases. During 1999, one customer comprised 10% of the
Partnership's revenues from leases. During 1998, two customers comprised 17% and
10% of the Partnership's revenues from leases.
9. Line of credit:
The Partnership participates with the General Partner and certain of its
Affiliates in a $77,500,000 revolving credit agreement with a group of financial
institutions which expires on July 28, 2001. The agreement includes an
acquisition facility and a warehouse facility which are used to provide bridge
financing for assets on leases. Draws on the acquisition facility by any
individual borrower are secured only by that borrower's assets, including
equipment and related leases. Borrowings on the warehouse facility are recourse
jointly to certain of the Affiliates, the Partnership and the General Partner.
The Partnership borrowed $450,000, $15,822,824 and $53,029,261 under the line of
credit during 2000, 1999 and 1998, respectively. Repayments on the line of
credit were $11,600,000, $16,454,331 and $1,638,014 during 2000, 1999 and 1998,
respectively. There was no outstanding balance as of December 31, 2000. Interest
on the line of credit is based on either the thirty day LIBOR rate or the bank's
prime rate.
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of December
31, 2000. At December 31, 2000, $39,969,040 was available under this agreement.
26
ATEL CAPITAL EQUIPMENT FUND VII, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
10. Fair value of financial instruments:
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument for which it is practicable to estimate that
value.
Cash and cash equivalents:
The carrying amount of cash and cash equivalents approximates fair value because
of the short-term maturity of these instruments.
Non-recourse debt:
The fair value of the Partnership's non-recourse debt is estimated using
discounted cash flow analyses, based on the Partnership's current incremental
borrowing rates for similar types of borrowing arrangements. The estimated fair
value of the Partnership's non-recourse debt at December 31, 2000 is
$15,783,034.
Other long-term debt:
The fair value of the Partnership's other long-term debt is estimated using
discounted cash flow analyses, based on the Partnership's current variable
borrowing rate for the facility. The estimated fair value of the other long-term
debt at December 31, 2000 is $44,277,187.
Line of credit:
The carrying amounts of the Partnership's variable rate line of credit
approximates fair value.
Interest rate swaps:
The fair value of interest rate swaps is estimated by discounting the fixed cash
flows paid under each swap using the rate at which the Partnership could enter
into new swaps of similar maturities. The carrying amounts of the interest rate
swaps approximate fair value at December 31, 2000.
11. Provision for losses and impairments:
In January 2000, one of the Partnership's lessees filed for reorganization under
Chapter 11 of the United States Bankruptcy Code. The Partnership determined that
the assets under operating leases with a net book value of $8,048,095 at
December 31, 1999 leased to this particular lessee were impaired as of December
31, 1999. The Partnership estimated that the proceeds from the future sales of
those assets which were financed with non-recourse debt would not be sufficient
to satisfy the non-recourse lender. The debt balance was $2,056,474 at December
31, 1999. As result, the Partnership fully reserved for those assets as of
December 31, 1999. The portion of the assets not financed with non-recourse debt
were written down to their expected net realizable value as of December 31,
1999.
Upon foreclosure by the lender and upon sale of the financed assets in 2000, the
Partnership recognized an extraordinary gain on the extinguishment of the debt
$2,056,474.
27
Item 9. CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
The registrant is a Limited Partnership and, therefore, has no officers or
directors.
All of the outstanding capital stock of ATEL Financial Corporation (the General
Partner) is held by ATEL Capital Group ("ACG"), a holding company formed to
control ATEL and affiliated companies. The outstanding voting capital stock of
ATEL Capital Group is owned 75% by A. J. Batt and 25% by Dean Cash.
Each of ATEL Leasing Corporation ("ALC"), ATEL Equipment Corporation ("AEC"),
ATEL Investor Services ("AIS") and ATEL Financial Corporation ("AFC") is a
wholly-owned subsidiary of ATEL Capital Group and performs services for the
Partnership. Acquisition services are performed for the Partnership by ALC,
equipment management, lease administration and asset disposition services are
performed by AEC, investor relations and communications services are performed
by AIS and general administrative services for the Partnership are performed by
AFC. ATEL Securities Corporation ("ASC") is a wholly-owned subsidiary of ATEL
Financial Corporation.
The officers and directors of ATEL Capital Group and its affiliates are as
follows:
A. J. Batt Chairman of the Board of Directors of ACG, AFC,
ALC, AEC, AIS and ASC; President and Chief
Executive Officer of ACG, AFC and AEC
Dean L. Cash Director, Executive Vice President and Chief
Operating Officer of ACG, AFC, and AEC; Director,
President and Chief Executive Officer of ALC, AIS
and ASC
Paritosh K. Choksi Director, Senior Vice President and Chief Financial
Officer of ACG, AFC, ALC, AEC and AIS
Donald E. Carpenter Vice President and Controller of ACG, AFC, ALC, AEC
and AIS; Chief Financial Officer of ASC
Vasco H. Morais Senior Vice President, Secretary and General
Counsel for ACG, AFC, ALC, AIS and AEC
A. J. Batt, age 64, founded ATEL in 1977 and has been its president and chairman
of the board of directors since its inception. From 1973 to 1977, he was
employed by GATX Leasing Corporation as manager-data processing and equity
placement for the lease underwriting department, which was involved in equipment
financing for major corporations. From 1967 to 1973 Mr. Batt was a senior
technical representative for General Electric Corporation, involved in sales and
support services for computer time-sharing applications for corporations and
financial institutions. Prior to that time, he was employed by North American
Aviation as an engineer involved in the Apollo project. Mr. Batt received a
B.Sc. degree with honors in mathematics and physics from the University of
British Columbia in 1961.
Dean L. Cash, age 50, joined ATEL as director of marketing in 1980 and has been
a vice president since 1981, executive vice president since 1983 and a director
since 1984. Prior to joining ATEL, Mr. Cash was a senior marketing
representative for Martin Marietta Corporation, data systems division, from 1979
to 1980. From 1977 to 1979, he was employed by General Electric Corporation,
where he was an applications specialist in the medical systems division and a
marketing representative in the information services division. Mr. Cash was a
systems engineer with Electronic Data Systems from 1975 to 1977, and was
involved in maintaining and developing software for commercial applications. Mr.
Cash received a B.S. degree in psychology and mathematics in 1972 and an M.B.A.
degree with a concentration in finance in 1975 from Florida State University.
Mr. Cash is an arbitrator with the American Arbitration Association.
28
Paritosh K. Choksi, age 47, joined ATEL in 1999 as a director, senior vice
president and its chief financial officer. Prior to joining ATEL, Mr. Choksi was
chief financial officer at Wink Communications, Inc. from 1997 to 1999. From
1977 to 1997, Mr. Choksi was with Phoenix American Incorporated, a financial
services and management company, where he held various positions during his
tenure, and was senior vice president, chief financial officer and director when
he left the company. Mr. Choksi was involved in all corporate matters at Phoenix
and was responsible for Phoenix's capital market needs. He also served on the
credit committee overseeing all corporate investments, including its venture
lease portfolio. Mr. Choksi was a part of the executive management team which
caused Phoenix's portfolio to increase from $50 million in assets to over $2
billion. Mr. Choksi received a bachelor of technology degree in mechanical
engineering from the Indian Institute of Technology, Bombay; and an M.B.A.
degree from the University of California, Berkeley.
Donald E. Carpenter, age 52, joined ATEL in 1986 as controller. Prior to joining
ATEL, Mr. Carpenter was an audit supervisor with Laventhol & Horwath, certified
public accountants in San Francisco, California, from 1983 to 1986. From 1979 to
1983, Mr. Carpenter was an audit senior with Deloitte, Haskins & Sells,
certified public accountants, in San Jose, California. From 1971 to 1975, Mr.
Carpenter was a Supply Corp officer in the U. S. Navy. Mr. Carpenter received a
B.S. degree in mathematics (magna cum laude) from California State University,
Fresno in 1971 and completed a second major in accounting in 1978. Mr. Carpenter
has been a California certified public accountant since 1981.
Vasco H. Morais, age 42, joined ATEL in 1989 as general counsel to provide legal
support in the drafting and reviewing of lease documentation, advising on
general corporate law matters, and assisting on securities law issues. From 1986
to 1989, Mr. Morais was employed by the BankAmeriLease Companies, Bank of
America's equipment leasing subsidiaries, providing in-house legal support on
the documentation of tax-oriented and non-tax oriented direct and leveraged
lease transactions, vendor leasing programs and general corporate matters. Prior
to the BankAmeriLease Companies, Mr. Morais was with the Consolidated Capital
Companies in the corporate and securities legal department involved in drafting
and reviewing contracts, advising on corporate law matters and securities law
issues. Mr. Morais received a B.A. degree in 1982 from the University of
California in Berkeley, a J.D. degree in 1986 from Golden Gate University Law
School and an M.B.A. (Finance) in 1997 from Golden Gate University. Mr. Morais
has been an active member of the State Bar of California since 1986.
Item 11. EXECUTIVE COMPENSATION
The registrant is a Limited Partnership and, therefore, has no officers or
directors.
Set forth hereinafter is a description of the nature of remuneration paid and to
be paid to the General Partner and its Affiliates. The amount of such
remuneration paid in 2000, 1999 and 1998 is set forth in Item 8 of this report
under the caption "Financial Statements and Supplementary Data - Notes to the
Financial Statements - Related party transactions," at Note 6 thereof, which
information is hereby incorporated by reference.
Selling Commissions
The Partnership will pay selling commissions in the amount of 9.5% of Gross
Proceeds, as defined, to ATEL Securities Corporation, an affiliate of the
General Partner. Of this amount, the majority is expected to be reallowed to
other broker/dealers.
Through December 31, 1998, $14,250,000 of such commissions (the maximum
allowable amount) had been paid to the General Partner or its affiliates. Of
that amount, $12,327,297 was reallowed to other broker/dealers.
29
Equipment Management Fees
As compensation for its service rendered generally in managing or supervising
the management of the Partnership's equipment and in supervising other ongoing
service and activities including, among others, arranging for necessary
maintenance and repair of equipment, collecting revenue, paying operating
expenses, determining the equipment is being used in accordance with all
operative contractual arrangements, property and sales tax monitoring and
preparation of financial data, the General Partner or its affiliates are
entitled to receive management fees which are payable for each fiscal quarter
and are to be in an amount equal to (i) 3.5% of the gross lease revenues from
"operating" leases and (ii) 2% of gross lease revenues from "full payout" leases
which contain net lease provisions.
See Note 6 to the financial statements included in Item 8 of this report for
amounts paid.
Incentive Management Fees
As compensation for its service rendered in establishing and maintaining the
composition of the Partnership's equipment portfolio and its acquisition and
debt strategies and supervising fund administration including supervision the
preparation of reports and maintenance of financial and operating data of the
Partnership, Securities and Exchange Commission and Internal Revenue service
filings, returns and reports, the General Partner is entitled to receive the
Incentive management fee which shall be payable for each fiscal quarter.
Available Cash from Operations, as defined in the Limited Partnership Agreement,
is to be distributed as follows:
First, Distributions of Cash from Operations are to be 88.5% to the Limited
Partners, 7.5% to the General Partner and 4% to the General Partner or its
affiliate designated as the recipient of the Incentive Management Fee, until the
Limited Partners have received Aggregate Distributions in an amount equal to
their Original Invested Capital, as defined, plus a 10% per annum cumulative
(compounded daily) return on their Adjusted Invested Capital, as defined in the
Limited Partnership Agreement.
Second, 85% to the Limited Partners, 7.5% to the General Partner and 7.5% to the
General Partner or its affiliate designated as the recipient of the Incentive
Management Fee.
Available Cash from Sales or Refinancing, as defined in the Limited Partnership
Agreement, are to be distributed as follows:
First, Distributions of Sales or Refinancings are to be 92.5% to the Limited
Partners and 7.5% to the General Partner, until the Limited Partners have
received Aggregate Distributions in an amount equal to their Original Invested
Capital, as defined, plus a 10% per annum cumulative (compounded daily) return
on their Adjusted Invested Capital.
Second, 85% to the Limited Partners, 7.5% to the General Partner and 7.5% to the
General Partner or its affiliate designated as the recipient of the Incentive
Management Fee.
See Note 6 to the financial statements included in Item 8 of this report for
amounts paid.
Equipment Resale Fees
As compensation for service rendered in connection with the sale of equipment,
the General Partner is entitled to receive an amount equal to the lesser of (i)
3% of the sales price of the equipment, or (ii) one-half the normal competitive
equipment sales commission charged by unaffiliated parties for such service.
Such fee is payable only after the Limited Partners have received a return of
their adjusted invested capital (as defined in the Limited Partnership
Agreement) plus 10% of their adjusted invested return of their adjusted invested
capital (as defined in the Limited Partnership Agreement) plus 10% of their
adjusted invested capital per annum calculated on a cumulative basis, compounded
daily, commencing the last day of the quarter in which the Limited Partner was
admitted to the Partnership. To date, none have been accrued or paid.
30
Equipment Re-lease Fee
As compensation for providing re-leasing service, the General Partner is
entitled to receive fees equal to 2% of the gross rentals or the comparable
competitive rate for such service relating to comparable equipment, whichever is
less, derived from the re-lease provide that (i) the General Partner or their
affiliates have and will maintain adequate staff to render such service to the
Partnership, (ii) no such re-lease fee is payable in connection with the
re-lease of equipment to a previous lessee or its affiliates, (iii) the General
Partner or its affiliates have rendered substantial re-leasing service in
connection with such re-lease and (iv) the General Partner or its affiliates are
compensated for rendering equipment management service. To date, none have been
accrued or paid.
General Partner's Interest in Operating Proceeds
Net income, net loss and investment tax credits are allocated 92.5% to the
Limited Partners and 7.5% to the General Partner. See financial statements
included in Item 8, Part I of this report for amounts allocated to the General
Partner in 2000, 1999 and 1998.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
At December 31, 2000, no investor is known to hold beneficially more than 5% of
the issued and outstanding Units.
Security Ownership of Management
The shareholders of the General Partner are beneficial owners of Limited
Partnership Units as follows:
(1) (2) (3) (4)
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
-------------- ---------------- -------------------- --------
Limited Partnership Units A. J. Batt Initial Limited Partner Units 0.00017%
235 Pine Street, 6th Floor 25 Units ($250)
San Francisco, CA 94104 (owned by wife)
Limited Partnership Units Dean Cash Initial Limited Partner Units 0.00017%
235 Pine Street, 6th Floor 25 Units ($250)
San Francisco, CA 94104 (owned by wife)
Changes in Control
The Limited Partners have the right, by vote of the Limited Partners owning more
than 50% of the outstanding Limited Partnership units, to remove a General
Partner.
The General Partner may at any time call a meeting of the Limited Partners or a
vote of the Limited Partners without a meeting, on matters on which they are
entitled to vote, and shall call such meeting or for vote without a meeting
following receipt of a written request therefore of Limited Partners holding 10%
or more of the total outstanding Limited Partnership units.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The responses to Item 1 of this report under the caption "Equipment Leasing
Activities," Item 8 of this report under the caption "Financial Statements and
Supplemental Data - Notes to the Financial Statements - Related party
transactions" at Note 6 thereof, and Item 11 of this report under the caption
"Executive Compensation," are hereby incorporated by reference.
31
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a)Financial Statements and Schedules
1. Financial Statements
Included in Part II of this report:
Report of Independent Auditors
Balance Sheets at December 31, 2000 and 1999
Statements of Operations for the years ended
December 31, 2000, 1999 and 1998
Statements of Changes in Partners' Capital for the
years ended December 31, 2000, 1999 and 1998
Statement of Cash Flows for the years ended
December 31, 2000, 1999 and 1998
Notes to Financial Statements
2. Financial Statement Schedules
All schedules for which provision is made in the
applicable accounting regulations of the
Securities and Exchange Commission are not
required under the related instructions or are
inapplicable and, therefore, have been omitted.
(b) Reports on Form 8-K for the fourth quarter of 2000
None
(c)Exhibits
(3)and (4) Agreement of Limited Partnership,
included as Exhibit B to Prospectus (Exhibit
28.1), is incorporated herein by reference to
the report on Form 10K for the period ended
December 31, 1996 (File No. 333-08879).
32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: 3/23/2001
ATEL Capital Equipment Fund VII, L.P.
(Registrant)
By: ATEL Financial Corporation,
General Partner of Registrant
By: /s/ A. J. Batt
---------------------------------------------------
A. J. Batt,
President and Chief Executive Officer of
ATEL Financial Corporation (General
Partner)
By: /s/ Dean Cash
---------------------------------------------------
Dean Cash,
Executive vice President of ATEL
Financial Corporation (General Partner)
33
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the persons in the capacities and on the dates
indicated.
SIGNATURE CAPACITIES DATE
/s/ A. J. Batt President and Chief Executive Officer of 3/23/2001
- -------------------------- ATEL Financial Corporation (General
A. J. Batt Partner)
/s/ Dean Cash Executive Vice President of ATEL 3/23/2001
- -------------------------- Financial Corporation (General Partner)
Dean Cash
/s/ Paritosh K. Choksi Principal financial officer of 3/23/2001
- -------------------------- registrant; principal financial officer
Paritosh K. Choksi and director of ATEL Financial
Corporation
/s/ Donald E. Carpenter Principal accounting officer of 3/23/2001
- -------------------------- registrant; principal accounting officer
Donald E. Carpenter of ATEL Financial Corporation
Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act:
No proxy materials have been or will be sent to security holders. An annual
report will be furnished to security holders subsequent to the filing of this
report on Form 10-K, and copies thereof will be furnished supplementally to the
Commission when forwarded to the security holders.
34