Form 10-K
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 (fee required) For
the Year Ended December 31, 2001
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 333-62477
ATEL Capital Equipment Fund VIII, LLC
California 94-3307404
---------- ----------
(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: None
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
Prospectus dated December 7, 1998, filed pursuant to Rule 424(b) (Commission
File No. 33-62477) is hereby incorporated by reference into Part IV hereof.
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 VIII, LLC (the Company) was formed under the laws of
the state of California in July 1998. The Company was formed for the purpose of
acquiring equipment to engage in equipment leasing and sales activities. The
Managing Member of the Company is ATEL Financial Services LLC (ATEL), a
California limited liability corporation. Prior to converting to a limited
liability company structure, the Managing Member was formerly known as ATEL
Financial Corporation.
The Company conducted a public offering of 15,000,000 of Limited Liability
Company Units (Units), at a price of $10 per Unit. On January 13, 1999,
subscriptions for the minimum number of Units (120,000, $1,200,000) had been
received and ATEL requested that the subscriptions, except those received from
Pennsylvania investors (7,500 Units, $75,000), be released to the Company. On
that date, the Company commenced operations in its primary business (leasing
activities). As of February 18, 1999, the Company had received subscriptions for
775,777 Units ($7,757,770) and ATEL requested that the remaining funds in escrow
(from Pennsylvania investors) be released to the Company. As of November 30,
2000, the Company had received subscriptions for 13,570,138 ($135,701,380) Units
in addition to the Initial Members' Units and the offering was terminated. All
of the Units were issued and outstanding as of December 31, 2001.
The Company's principal objectives are to invest in a diversified portfolio of
equipment which will (i) preserve, protect and return the Company'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 72 months after the end of the year in which the
Final Closing occurs (which will be December 31, 2006) and (iii) provide
additional distributions following the reinvestment period and until all
equipment has been sold. The Company is governed by its Limited Liability
Company Operating Agreement (Operating Agreement).
Narrative Description of Business
The Company 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 ATEL 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 Company will 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, 2001, the Company had purchased equipment with a total
acquisition price of $245,442,880.
The Company'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 ATEL, 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 Managing Member, 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) has been leased to lessees with an aggregate credit rating of Baa
or better or to such hospitals or municipalities.
2
During 2001, 2000 and 1999, certain lessees generated significant portions of
the Company's total lease revenues as follows:
Lessee Type of Equipment 2001 2000 1999
------ ----------------- ---- ---- ----
Union Pacific Railroad Railcars 16% * *
Burlington Northern Santa Fe Railroad Locomotives and Auto Racks * 10% *
Transamerica Leasing Inc. Intermodal containers * * 31%
Staples, Inc. Point of sale / materials * * 12%
handling
Stewart & Stevenson Services, Inc. Gas Compressors * * 12%
Seamex International Ltd. Anchor Handler Tug Supply * * 10%
Vessel
* 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 Company 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 ATEL or the Company), 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.
ATEL 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 Company is not seasonal.
The Company has no full time employees.
Equipment Leasing Activities
Through December 31, 2001, 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 *
--------- -------------- ---------- ----------
Transportation, rail $ 6,797,710 $ 7,127,880 $ 1,749,708
Office automation 946,119 191,969 865,619
Manufacturing 31,130 31,130 5,054
Transportation, other 21,250 22,398 2,490
---------------- ----------------- ----------------
$ 7,796,209 $ 7,373,377 $ 2,622,871
================ ================= ================
* Individual asset types included in "Other" represent less than 2% of the
total.
The Company 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 Company through December 31, 2001 and the
industries to which the assets have been leased. The Company 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 offset exists.
3
Purchase Price Excluding Percentage of Total
Asset Types Acquisition Fees Acquisitions
----------- ---------------- ------------
Transportation, rail $59,769,940 24.35%
Manufacturing 44,048,583 17.95%
Transportation, other 25,757,971 10.49%
Aircraft 38,535,439 15.70%
Transportation, intermodal
containers 21,228,750 8.65%
Gas compressors 13,848,465 5.64%
Point of sale / office automation 8,383,996 3.42%
Materials handling 11,018,547 4.49%
Storage tanks 6,712,090 2.73%
Marine vessels 3,952,500 1.61%
Other * 12,186,599 4.97%
---------------- ------------------
$245,442,880 100.00%
================ ==================
* Individual asset types included in "Other" represent less than 2% of the
total.
Purchase Price Excluding Percentage of Total
Industry of Lessee Acquisition Fees Acquisitions
------------------ ---------------- ------------
Transportation, rail $59,769,940 24.35%
Transportation, air 38,535,439 15.70%
Manufacturing, other 34,889,583 14.21%
Transportation, other 27,245,340 11.10%
Transportation, containers 21,228,750 8.65%
Manufacturing, electronics 20,901,071 8.52%
Retail 17,762,440 7.24%
Natural gas 13,848,465 5.64%
Other * 11,261,852 4.59%
---------------- ------------------
$245,442,880 100.00%
================ ==================
* Individual lessee industries included in "Other" represent less than 2% of the
total.
For further information regarding the Company's equipment lease portfolio as of
December 31, 2001, 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 Company does not own or lease any real property, plant or material physical
properties other than the equipment held for lease as set forth in Item 1.
Item 3. LEGAL PROCEEDINGS
No material legal proceedings are currently pending against the Company or
against any of its assets. The following is a discussion of legal matters
involving the Company, but which do not represent claims against the Company or
its assets.
Emery Worldwide Airways, Inc.:
4
On January 25, 2002, the Company filed a complaint against its lessee, Emery
Worldwide Airways, Inc., for failure by the lessee to properly maintain the
condition and airworthiness of the aircraft on lease to the lessee, and for
certain other breaches and defaults by the lessee as alleged in the complaint.
The Company has claimed stipulated loss value damages in the amount of
$5,648,173 as a result of the breaches and defaults under the lease by the
lessee. As this matter is in its early stages, the outcome of the Company's
claim is uncertain, although the Managing Member believes that currently there
is a reasonable basis for likelihood of success in this matter.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR REGISTRANT'S LIMITED LIABILITY COMPANY 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 Company and its investment objectives, to
ATEL'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, 2001, a total of 3,625 investors were record holders of Units
in the Company.
Dividends
The Company does not make dividend distributions. However, the Members of the
Company are entitled to certain distributions as provided under the Operating
Agreement.
ATEL shall have sole discretion in determining the amount of distributions;
provided, however, that the Managing Member will not reinvest in equipment, but
will distribute, subject to payment of any obligations of the Company, such
available cash from operations and cash from sales or refinancing as may be
necessary to cause total distributions to the Members for each year during the
reinvestment period to equal an amount between $0.80 and $1.00 per Unit which
was to be determined by the Managing Member. In 2001, the Managing Member
determined that amount to be $0.91 per Unit.
Investors may elect to receive distributions either on a monthly or quarterly
basis.
The rate for distributions from 2001 operations was $0.076667 per Unit per month
for January through June 2001. The distributions were paid in February through
July 2001. The rate for the distributions for July through December 2001 was
$0.075833. The distributions were paid in August through December 2001 and in
January 2002. For each quarterly distribution (paid in April and July 2001) the
rate was $0.23 per Unit. For the quarterly distributions paid in October 2001
and January 2002, the rate was $0.2275. Distributions were from 2001 cash flows
from operations.
The rate for monthly distributions from 2000 operations was $0.075 for January
through October 2000. The distributions were paid in February through November
2000. The rate for the distribution for November 2000 was $0.079167. The rate
for the distribution for December 2000 was $0.07667. An additional distribution
was paid in December 2000. The amount of the distribution was calculated for
each Unit so as to bring the average of all monthly distributions received to a
total of $0.079167 per Unit per month for the period from February through
November 2000. For each quarterly distribution (made in April, July and October
2000) the rate was $0.225 per Unit. For the quarterly distribution paid in
January 2001, the rate was $0.235. An additional distribution was paid in
December 2000. The amount of the distribution was calculated for each Unit so as
to bring the average of all quarterly distributions received to a total of
$0.2375 per Unit per quarter for the period from February through October 2000.
Distributions were from 2000 cash flows from operations.
5
The rate for monthly distributions from 1999 operations was $0.0667 per Unit.
The distributions were paid in February 1999 through December 1999 and in
January 2000. For each quarterly distribution (paid in April, July and October
1999 and in January 2000) the rate was $0.20 per Unit. Distributions were from
1999 cash flows from operations. An additional distribution from 1999 cash flows
was paid in January 2000. The amount of the distribution was calculated for each
Unit so as to bring the average of all monthly distributions received to a total
of $.075 per month per Unit and to $0.225 per Unit per quarter for those
receiving distributions on a quarterly basis. The total distributions represent
a distribution rate of 9% per annum on the original invested capital. The
amounts paid to holders of Units were adjusted based on the length of time
within the previous calendar month, quarter or year that the Units were
outstanding.
The following table presents summarized information regarding distributions to
Other Members:
2001 2000 1999
---- ---- ----
Distributions of net (loss) income $ (0.0600) $ (0.2900) $ 0.0600
Return of investment 0.9700 1.2100 0.5500
---------------- ----------------- ------------------
Distributions per unit 0.9100 0.9200 0.6100
Differences due to timing of distributions 0.0050 0.0275 0.2900
---------------- ----------------- ------------------
Nominal distribution rates from above $ 0.9150 $ 0.9475 $ 0.9000
================ ================= ==================
Item 6. SELECTED FINANCIAL DATA
The following table presents selected financial data of the Company at December
31, 2001, 2000, 1999 and 1998. This financial data should be read in conjunction
with the financial statements and related notes included under Item 8 of this
report.
2001 2000 1999 1998
---- ---- ---- ----
Gross revenues $43,794,097 $ 31,047,485 $ 8,660,653 $ -
Net (loss) income $ 132,672 $ (2,305,631) $ 438,835 $ -
Weighted average Units 13,570,188 10,634,792 4,025,294 50
Net income (loss) allocated to
Other Members $ (872,244) $ (3,100,640) $ 239,420 $ -
Net (loss) income per Unit, based on weighted
average Units outstanding $ (0.06) $ (0.29) $ 0.06 $ -
Distributions per Unit, based on weighted average
Units outstanding $ 0.91 $ 0.92 $ 0.61 $ -
Total Assets $184,421,674 $198,832,652 $ 145,663,336 $ 600
Non-recourse and long-term debt $91,383,964 $ 93,993,744 $ 71,848,617 $ -
Total Members' Capital $83,361,952 $101,338,501 $ 64,130,010 $ 600
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Capital Resources and Liquidity
The Company commenced its offering on December 7, 1998. On January 13, 1999, the
Company commenced operations in its primary business (leasing activities). The
offering was terminated on November 30, 2000. Total proceeds of the offering was
$135,701,880. Until the Company's initial portfolio of equipment has been
purchased, funds which have been received, but which have not yet been invested
in leased equipment, are invested in interest-bearing accounts or
high-quality/short-term commercial paper. The Company's public offering provides
for a total maximum capitalization of $150,000,000.
During the funding period, the Company's primary source of liquidity was
subscription proceeds from the public offering of Units. The liquidity of the
Company will vary in the future, increasing to the extent cash flows from leases
and proceeds of asset sales exceed expenses, and decreasing as lease assets are
acquired, as distributions are made to the other members and to the extent
expenses exceed cash flows from leases and proceeds from asset sales.
As another source of liquidity, the Company 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 Company will re-lease or
sell the equipment. The future liquidity beyond the contractual minimum rentals
will depend on ATEL's success in re-leasing or selling the equipment as it comes
off lease.
The Company participates with the Managing Member and certain of its affiliates
in a $62,000,000 revolving line of credit with a financial institution that
includes certain financial covenants. The line of credit expires on April 12,
2002. The Managing Member is currently negotiating a new line of credit and
anticipates that the current line of credit will either be replaced upon its
expiration or that the current line of credit will be extended until the new one
is finalized. As of December 31, 2001, borrowings under the facility were as
follows:
Amount borrowed by the Company under the acquisition facility $ 2,500,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
facility 15,100,000
----------------
----------------
Total borrowings under the acquisition facility 17,600,000
Amounts borrowed by the Managing Member and its sister corporation under the warehouse facility * 10,999,501
----------------
----------------
Total outstanding balance $ 28,599,501
================
================
Total available under the line of credit $ 62,000,000
Total outstanding balance (28,599,501)
----------------
----------------
Remaining availability $ 33,400,499
================
================
* (Unaudited) The carrying value of the assets pledged as collateral and
financed at December 31, 2001 was $17,955,014.
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
Companies and limited liability companies, the Company and the Managing Member.
7
The Company anticipates reinvesting a portion of lease payments from assets
owned in new leasing transactions. Such reinvestment will occur only after the
payment of all obligations, including debt service (both principal and
interest), the payment of management and acquisition fees to the Managing Member
and providing for cash distributions to the Other Members. At December 31, 2001,
there were no commitments to purchase lease assets.
ATEL 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 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 Company, provided, however that:
(i) the transaction is in the best interest of the Company; (ii) such equipment
is purchased by the Company for a purchase price no greater than the cost of
such equipment to ATEL or affiliate (including any out-of-pocket carrying
costs), except for compensation permitted by the Operating Agreement; (iii)
there is no difference in interest terms of the loans secured by the equipment
at the time acquired by ATEL or affiliate and the time acquired by the Company;
(iv) there is no benefit arising out of such transaction to ATEL or its
affiliate apart from the compensation otherwise permitted by the Operating
Agreement; and (v) all income generated by, and all expenses associated with,
equipment so acquired shall be treated as belonging to the Company.
The Company currently has available adequate reserves to meet its immediate cash
requirements, but in the event those reserves were found to be inadequate, the
Company would likely be in a position to borrow against its current portfolio to
meet such requirements. ATEL envisions no such requirements for operating
purposes.
In 1999, the Company established a $70 million receivables funding program
(which was subsequently increased to $125 million) 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
Company. The program provides for borrowing at a variable interest rate and
requires the Managing Member on behalf of the Company to enter into interest
rate swap agreements with certain counterparties (also rated A1/P1) to mitigate
the interest rate risk associated with a variable rate note. The Managing Member
believes that this program allows the Company to avail itself of lower cost debt
than that available for individual non-recourse debt transactions. The program
expires as to new borrowings in April 2002.
See Item 7a and Note 5 to the financial statements for additional information
regarding this program and related interest rate swaps.
It is the intention of the Company to use the receivables funding program as its
primary source of debt financing. The Company will continue to use its sources
of non-recourse secured debt financing on a transaction basis as a means of
mitigating credit risk.
ATEL expects that aggregate borrowings in the future will be approximately 50%
of aggregate equipment cost. In any event, the Operating Agreement limits such
borrowings to 50% of the total cost of equipment, in aggregate.
See Note 4 to the financial statements for additional information regarding
non-recourse debt.
The Company commenced regular distributions, based on cash flows from
operations, beginning with the month of January 1999. See Item 5 and 6 for
additional information regarding distributions.
If inflation in the general economy becomes significant, it may affect the
Company inasmuch as the residual (resale) values and rates on re-leases of the
Company's leased assets may increase as the costs of similar assets increase.
However, the Company's revenues from existing leases would not increase, as such
rates are generally fixed for the terms of the leases without adjustment for
inflation.
8
If interest rates increase significantly, the lease rates that the Company can
obtain on future leases will be expected to increase as the cost of capital is a
significant factor in the pricing of lease financing. Leases already in place,
for the most part, would not be affected by changes in interest rates.
Cash Flows
2001 vs. 2000:
In 2001, operating lease rents were the primary source of cash flows. In both
2001 and 2000, it was the Company's primary source of cash from operations.
Sources of cash from investing activities consisted of the proceeds from sales
of lease assets and cash flows from direct financing leases. In 2001, sales
proceeds consisted largely of the proceeds from the sale of a fleet of railroad
box cars. There was no similar sale in 2000.
Financing sources of cash in 2001 consisted of borrowings on the line of credit
and the proceeds of long-term debt. The Company's offering was concluded in 2000
and, therefore, there were no offering proceeds and related costs in 2001
comparable to those in 2000.
2000 vs. 1999:
In 2000 and 1999, the Company's primary sources of cash were various types of
debt proceeds and the proceeds of its public offering of Units.
The primary source of cash from operating activities in both 2000 and 1999 was
operating lease rents.
Rents from direct financing leases was the only significant source of cash from
investing activities in either 2000 or in 1999. In both years, uses of cash in
investing activities consisted primarily of purchases of assets on operating and
direct financing leases. Cash was also used to pay initial direct costs
associated with those leases.
In 2000 and 1999, the primary source of cash from financing activities was the
proceeds of the Company's public offering. Proceeds from non-recourse and
long-term debt and borrowings under the line of credit also provided cash in
2000 and 1999. Cash provided by financing activities was used to purchase lease
assets.
Results of Operations
As of January 13, 1999, subscriptions for the minimum amount of the offering
($1,200,000) had been received and accepted by the Company. As of that date, the
Company commenced operations in its primary business (leasing activities).
Because of the timing of the commencement of operations and the fact that the
initial portfolio acquisitions were not been completed until 2001, the results
of operations in 2001, 2000 and 1999 are not expected to be comparable to future
periods. After the Company's public offering and its initial asset acquisition
stage terminate, the results of operations are expected to change significantly.
Substantially all employees of ATEL track time incurred in performing
administrative services on behalf of the Company. ATEL believes that the costs
reimbursed are the lower of (i) actual costs incurred on behalf of the Company
or (ii) the amount the Company would be required to pay independent parties for
comparable administrative services in the same geographic location.
2001 vs. 2000:
In 2001, operations resulted in net income of $132,672 compared to a loss of
$2,305,631 in 2000. Operating lease rents increased substantially compared to
2000 as a result of acquisitions in 2000 and in 2001. This was largely offset by
increased depreciation expense associated with the acquisitions and interest
expense on the additional debt that was used to finance them.
9
Income increased for the most part as a result of an increase in the amounts of
gains realized on the sales of assets in 2001 compared to 2000. These gains
increased by $1,799,839 compared to 2000.
2000 vs. 1999:
Operations in 2000 resulted in a net loss of $2,305,631. Operations in 1999
resulted in net income of $438,835. Operations in future periods are not
expected to be comparable to those in 2000 and 1999.
Revenues from operating leases and direct finance leases increased significantly
in 2000 compared to 1999. These increases were the result of asset acquisitions
over the last two years. Revenues are expected to increase again in 2001, but
not as dramatically as in 2000.
Depreciation expense also increased as a result of the purchases of lease assets
in 2000 and 1999.
Average debt balances increased in 2000 compared to 1999. This led to the
increase in interest expense compared to 1999. The proceeds of the debt were
used to acquire additional lease assets.
Derivative Financial Instruments
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 Company 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.
The Company adopted SFAS No. 133, as amended, on January 1, 2001. Upon adoption,
the Company recorded interest rate swap hedging instruments at fair value in the
balance sheet and recognized the offsetting gains or losses reported in net
income or other comprehensive income, as appropriate. See Note 5 to the
financial statements for additional information.
Recent Accounting Pronouncement
In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS 144), which addresses financial accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions
of APB Opinion No. 30, Reporting the Results of Operations for a disposal of a
segment of a business. SFAS 144 is effective for fiscal years beginning after
December 15, 2001, with earlier application encouraged. The Company expects to
adopt SFAS 144 as of January 1, 2002 and it does not expect that the adoption of
the Statement will have a significant impact on the Company's financial position
and results of operations.
Item 7a. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company, like most other companies, is exposed to certain market risks,
including primarily changes in interest rates. The Company 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.
10
In general, the Company 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 Company has historically been able to
maintain a stable spread between its cost of funds and lease yields in both
periods of rising and falling interest rates. Nevertheless, the Company
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, 2001, there was
$2,500,000 outstanding on the floating rate line of credit and the effective
interest rates of the borrowings ranged from 3.93% to 3.9325%.
Also, as described in the caption "Capital Resources and Liquidity," the Company
entered into a receivables funding facility in 1999. Since interest on the
outstanding balances under the facility varies, the Company is exposed to market
risks associated with changing interest rates. To hedge its interest rate risk,
the Company enters into interest rate swaps which effectively convert the
underlying interest characteristic on the facility from floating to fixed. Under
the swap agreements, the Company 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 Company 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
interest rate facility and the amounts due under the facility at the fixed
(hedged) interest rate. As of December 31, 2001, borrowings on the facility were
$85,369,000 and the associated variable interest rate was 2.0624%. The average
fixed interest rate achieved with the swap agreements was 6.889% at December 31,
2001.
In general, these swap agreements eliminate the Company's interest rate risk
associated with variable interest rate borrowings. However, the Company 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 Company's facility borrowings at December 31, 2001, a
hypothetical 1.00% increase or decrease in market interest rates, would increase
or decrease the Company's 2002 variable interest expense by approximately
$745,000.
See the Notes to the financial statements for additional information.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the Report of Independent Auditors, Financial Statements and Notes to
Financial Statements attached hereto at pages 12 through 27.
11
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Members
ATEL Capital Equipment Fund VIII, LLC
We have audited the accompanying balance sheets of ATEL Capital Equipment Fund
VIII, LLC (Company) as of December 31, 2001 and 2000, and the related statements
of operations, changes in members' capital and cash flows for each of the three
years in the period ended December 31, 2001. These financial statements are the
responsibility of the Company'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
VIII, LLC at December 31, 2001 and 2000, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
2001, in conformity with accounting principles generally accepted in the United
States.
/s/ ERNST & YOUNG LLP
San Francisco, California
February 1, 2002
12
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
ASSETS
2001 2000
---- ----
Cash and cash equivalents $ 2,269,137 $ 2,484,785
Accounts receivable, net of allowance for
doubtful accounts of
$41,365 in 2001 and none in 2000 3,256,527 5,339,569
Other assets 85,000 115,000
Investments in equipment and leases 178,811,010 190,893,298
------------------ ----------------
Total assets $ 184,421,674 $ 198,832,652
================== ================
LIABILITIES AND MEMBERS' CAPITAL
Long-term debt $ 85,369,000 $ 86,668,000
Non-recourse debt 6,014,964 7,325,744
Line of credit 2,500,000 -
Accounts payable:
Managing Member - 695,548
Other 649,538 485,895
Accrued interest payable 76,980 267,823
Interest rate swap contracts 4,700,622 -
Unearned operating lease income 1,748,618 2,051,141
------------------ ----------------
Total liabilities 101,059,722 97,494,151
Members' capital 83,361,952 101,338,501
------------------ ----------------
Total liabilities and members' capital $ 184,421,674 $ 198,832,652
================== ================
See accompanying notes.
13
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
Revenues: 2001 2000 1999
---- ---- ----
Leasing activities:
Operating leases $ 40,911,071 $ 29,965,693 $ 8,212,649
Direct financing leases 920,026 810,501 347,764
Gain on sales of assets 1,801,292 1,453 3,017
Interest 131,575 175,029 95,948
Other 30,133 94,809 1,275
----------------- ------------------ ----------------
43,794,097 31,047,485 8,660,653
Expenses:
Depreciation and amortization 31,243,646 22,588,276 5,392,504
Interest expense 9,058,622 7,365,041 1,340,804
Asset management fees to Managing Member 1,849,335 1,465,566 443,943
Administrative cost reimbursements to Managing Member 924,375 1,408,523 767,386
Professional fees 215,450 127,345 155,743
Provision for doubtful accounts 82,615 - -
Other 287,382 398,365 121,438
----------------- ------------------ ----------------
43,661,425 33,353,116 8,221,818
----------------- ------------------ ----------------
Net income (loss) $ 132,672 $ (2,305,631) $ 438,835
================= ================== ================
Net income (loss):
Managing Member $ 1,004,916 $ 795,009 $ 199,415
Other members (872,244) (3,100,640) 239,420
----------------- ------------------ ----------------
$ 132,672 $ (2,305,631) $ 438,835
================= ================== ================
Net (loss) income per Limited Liability
Company Unit (other members) $ (0.06) $ (0.29) $ 0.06
Weighted average number of Units outstanding 13,570,188 10,634,792 4,025,294
See accompanying notes.
14
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
STATEMENT OF CHANGES IN MEMBERS' CAPITAL
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
Accumulated
Other
Comprehensive
Other Members Managing Income
-------------
Units Amount Member (Loss) Total
----- ------ ------ ------ -----
Balance December 31, 1998 50 $ 500 $ 100 $ - $ 600
Capital contributions 7,744,276 77,442,760 - - 77,442,760
Less selling commissions to affiliates (7,357,062) - - (7,357,062)
Other syndication costs to affiliates (3,734,924) - - (3,734,924)
Distributions to Managing Member - (199,515) - (199,515)
Distributions to other members
($0.61 per Unit) (2,460,684) - - (2,460,684)
Net income 239,420 199,415 438,835
---------------- ---------------- ----------------- ------------------ ----------------
Balance December 31, 1999 7,744,326 64,130,010 - - 64,130,010
Capital contributions 5,825,862 58,258,620 - - 58,258,620
Less selling commissions to affiliates (5,534,569) - - (5,534,569)
Other syndication costs to affiliates (2,619,534) - - (2,619,534)
Distributions to Managing Member - (795,009) (795,009)
Distributions to other members
($0.92 per Unit) (9,795,386) - - (9,795,386)
Net (loss) income (3,100,640) 795,009 - (2,305,631)
---------------- ---------------- ----------------- ------------------ ----------------
Balance December 31, 2000 13,570,188 101,338,501 - - 101,338,501
Distributions to Managing Member - (1,004,916) (1,004,916)
Distributions to other members
($0.91 per Unit) (12,403,683) - - (12,403,683)
Cumulative effect of change in
accounting principle at
January 1, 2001 - - (821,196) (821,196)
Unrealized decrease in value of
interest rate swap contracts - - (3,879,426) (3,879,426)
Net (loss) income (872,244) 1,004,916 - 132,672
---------------- ---------------- ----------------- ------------------ ----------------
Balance December 31, 2001 13,570,188 $88,062,574 $ - $ (4,700,622) $ 83,361,952
================ ================ ================= ================== ================
See accompanying notes.
15
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
2001 2000 1999
---- ---- ----
Operating activities:
Net income (loss) $ 132,672 $ (2,305,631) $ 438,835
Adjustments to reconcile net income (loss) to cash provided by
operating activities:
Gain on sales of assets (1,801,292) (1,453) (3,017)
Depreciation and amortization 31,243,646 22,588,276 5,392,504
Provision for doubtful accounts 82,615 - -
Changes in operating assets and liabilities:
Accounts receivable 2,000,427 (3,214,783) (2,124,786)
Other assets 30,000 30,000 (145,000)
Accounts payable, Managing Member (695,548) (115,739) 811,287
Accounts payable, other 163,643 484,772 1,123
Accrued interest (190,843) 153,221 114,602
Unearned lease income (302,523) 793,444 1,257,697
----------------- ------------------ ----------------
Net cash provided by operating activities 30,662,797 18,412,107 5,743,245
----------------- ------------------ ----------------
Investing activities:
Purchases of equipment on operating leases (26,556,373) (66,010,813) (135,053,806)
Purchases of equipment on direct financing leases (810,271) (9,367,277) (9,992,009)
Reduction of net investment in direct financing leases 2,806,236 2,154,474 951,549
Payment of initial direct costs to Managing Member (147,721) (844,058) (753,607)
Proceeds from sales of assets 7,348,063 7,761 38,178
----------------- ------------------ ----------------
Net cash used in investing activities (17,360,066) (74,059,913) (144,809,695)
----------------- ------------------ ----------------
Financing activities:
Borrowings under line of credit 23,556,335 28,555,729 76,641,662
Repayments of line of credit (21,056,335) (36,055,729) (69,141,662)
Proceeds of other long-term debt 19,000,000 34,900,000 65,000,000
Repayments of other long-term debt (20,299,000) (12,906,000) (326,000)
Distributions to other members (12,403,683) (9,795,386) (2,460,684)
Distributions to Managing Member (1,004,916) (795,009) (199,515)
Repayments of non-recourse debt (1,310,780) (2,186,487) -
Proceeds of non-recourse debt - 2,337,614 7,174,617
Capital contributions received - 58,258,620 77,442,760
Payment of selling commissions and other syndication costs to
Managing Member - (8,154,103) (11,091,986)
----------------- ------------------ ----------------
Net cash (used in) provided by financing activities (13,518,379) 54,159,249 143,039,192
----------------- ------------------ ----------------
Net (decrease) increase in cash and cash equivalents (215,648) (1,488,557) 3,972,742
Cash and cash equivalents at beginning of year 2,484,785 3,973,342 600
----------------- ------------------ ----------------
Cash and cash equivalents at end of year $ 2,269,137 $ 2,484,785 $ 3,973,342
================= ================== ================
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 9,249,465 $ 6,571,597 $ 1,340,804
================= ================== ================
See accompanying notes.
16
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
1. Organization and Limited Liability Company matters:
ATEL Capital Equipment Fund VIII, LLC (the Company) was formed under the laws of
the state of California on July 31, 1998 for the purpose of acquiring equipment
to engage in equipment leasing and sales activities. The Company may continue
until December 31, 2019. The Managing Member of the Company is ATEL Financial
Services LLC (ATEL), a California corporation. Prior to converting to a limited
liability company structure, the Managing Member was formerly known as ATEL
Financial Corporation. Each Member's personal liability for obligations of the
Company generally will be limited to the amount of their respective
contributions and rights to undistributed profits and assets of the Company.
On January 13, 1999, subscriptions for the minimum number of Units (120,000,
$1,200,000) had been received. On that date, the Company commenced operations in
its primary business (leasing activities).
The Company's business consists of leasing various types of equipment. As of
December 31, 2001, the original terms of the leases ranged from six months to
nine years.
Pursuant to the Operating Agreement, the Managing Member receives compensation
and reimbursements for services rendered on behalf of the Company (see Note 6).
The Managing Member is required to maintain in the Company 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 Company's investment in the leased property
is reported as a receivable from the lessee to be recovered through future
rentals. The income portion of each rental payment is calculated so as to
generate a constant rate of return on the net receivable outstanding.
17
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
2. Summary of significant accounting policies (continued):
Statements of cash flows:
For purposes of the Statements of Cash Flows, cash and cash equivalents includes
cash in banks and cash equivalent investments with original maturities of ninety
days or less.
Income taxes:
The Company does not provide for income taxes since all income and losses are
the liability of the individual members and are allocated to the members for
inclusion in their individual tax returns.
The tax basis of the Company's net assets and liabilities varies from the
amounts presented in these financial statements (unaudited):
2001 2000
---- ----
Financial statement basis of net assets $ 83,361,952 $ 101,338,501
Tax basis of net assets 50,905,460 79,812,598
----------------- ------------------
Difference $ 32,456,492 $ 21,525,903
================= ==================
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 Company's tax returns.
The following reconciles the net income reported in these financial statements
to the loss reported on the Company's federal tax return (unaudited):
2001 2000 1999
---- ---- ----
Net (loss) income per financial statements $ 132,672 $ (2,305,631) $ 438,835
Adjustment to depreciation expense (19,612,115) (29,978,571) (16,401,065)
Adjustments to lease revenues 3,980,905 3,265,841 2,343,563
----------------- ------------------ ----------------
Net loss per federal tax return $ (15,498,538) $ (29,018,361) $ (13,618,667)
================= ================== ================
Per unit data:
Net (loss) income and distributions per unit are based upon the weighted average
number of units outstanding during the period.
18
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
2. Summary of significant accounting policies (continued):
Credit risk:
Financial instruments which potentially subject the Company to concentrations of
credit risk include cash and cash equivalents and accounts receivable. The
Company places its cash deposits and temporary cash investments with
creditworthy, high quality financial institutions. The concentration of such
deposits and temporary cash investments is not deemed to create a significant
risk to the Company. Accounts receivable represent amounts due from lessees in
various industries, related to equipment on operating and direct financing
leases. See Note 8 for a description of lessees by industry as of December 31,
2001, 2000 and 1999.
Basis of presentation:
The accompanying financial statements as of December 31, 2001 and 2000 and for
the three years ended December 31, 2001 have been prepared in accordance with
accounting principles generally accepted in the United States. Certain prior
year amounts have been reclassified to conform to the current year presentation.
Use of estimates:
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Such
estimates primarily relate to the determination of residual values at the end of
the lease term.
Reserve for losses and impairments:
The Company maintains a reserve on its investments in equipment and leases for
losses and impairments which are inherent in the portfolio as of the balance
sheet date. The Managing Member's evaluation of the adequacy of the allowance is
a judgmental estimate that is based on a review of individual leases, past loss
experience and other factors. While the Managing Member believes the allowance
is adequate to cover known losses, it is reasonably possible that the allowance
may change in the near term. However, such change is not expected to have a
material effect on the financial position or future operating results of the
Company. It is the Company's policy to charge off amounts which, in the opinion
of the Managing Member, are not recoverable from lessees or the disposition of
the collateral.
Derivative financial instruments:
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 Company 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 on January 1, 2001, the Company recorded its interest
rate swap hedging instruments at fair value in the balance sheet and recognized
the offsetting gains or losses as adjustments to be reported in net income or
other comprehensive income, as appropriate.
19
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
2. Summary of significant accounting policies (continued):
The Company utilizes cash flow hedges comprised of interest rate swaps (hedges
of variable rate interest bearing debt instruments). Such interest rate swaps
are linked to and adjust effectively the interest rate sensitivity of specific
long-term debt.
The effective portion of the change in fair value of the interest rate swaps is
recorded 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 an interest bearing instruments). Interest
income or expense on most hedging derivatives used to manage interest rate
exposure is recorded on an accrual basis as an adjustment to the yield of the
link exposures over the periods covered by the contracts. This matches the
income recognition treatment of the exposure (i.e., the liabilities, which are
carried at historical cost, with interest recorded on an accrual basis).
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.
Recent accounting pronouncement:
In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS 144), which addresses financial accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions
of APB Opinion No. 30, Reporting the Results of Operations for a disposal of a
segment of a business. SFAS 144 is effective for fiscal years beginning after
December 15, 2001, with earlier application encouraged. The Company expects to
adopt SFAS 144 as of January 1, 2002 and it does not expect that the adoption of
the Statement will have a significant impact on the Company's financial position
and results of operations.
20
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
3. Investments in equipment and leases:
The Company's investments in equipment and leases consist of the following:
Depreciation
Expense or Reclass-
December 31, Amortization ifications or December 31,
2000 Additions of Leases Dispositions 2001
---- --------- --------- ------------ ----
Net investment in operating leases $ 173,395,247 $26,556,373 $ (30,867,668) $ (11,525,795) $ 157,558,157
Net investment in direct financing leases 16,253,263 810,271 (2,806,236) (75,624) 14,181,674
Assets held for sale or lease - - - 6,055,819 6,055,819
Initial direct costs, net of accumulated
amortization of $730,615 in 2001 and
$354,638 in 2000 1,244,788 147,721 (375,978) (1,171) 1,015,360
---------------- ---------------- ----------------- ------------------ ----------------
$ 190,893,298 $27,514,365 $ (34,049,882) $ (5,546,771) $ 178,811,010
================ ================ ================= ================== ================
Operating leases:
Property on operating leases consists of the following:
Reclass-
December 31, ifications or December 31,
2000 Additions Dispositions 2001
---- --------- ------------ ----
Manufacturing $ 48,027,279 $ 1,190,814 $ (31,130) $ 49,186,963
Aircraft 31,614,874 6,920,565 - 38,535,439
Transportation, rail 39,634,498 16,523,854 (18,532,075) 37,626,277
Transportation, other 23,583,472 (145,316) - 23,438,156
Containers 21,228,750 - - 21,228,750
Natural gas compressors 14,045,134 6,467 - 14,051,601
Materials handling 5,858,081 1,487,451 317,025 7,662,557
Marine vessel 4,314,031 - - 4,314,031
Other 12,711,963 572,538 (541,448) 12,743,053
---------------- ---------------- ----------------- ------------------
201,018,082 26,556,373 (18,787,628) 208,786,827
Less accumulated depreciation (27,622,835) (30,867,668) 7,261,833 (51,228,670)
---------------- ---------------- ----------------- ------------------
$ 173,395,247 $ (4,311,295) $ (11,525,795) $ 157,558,157
================ ================ ================= ==================
Direct financing leases:
As of December 31, 2001 and 2000, investment in direct financing leases consists
of anhydrous ammonia storage tanks, office automation equipment, point of sale
equipment, refrigerated trailers and laundry equipment. The following lists the
components of the Company's investment in direct financing leases as of December
31, 2001 and 2000:
2001 2000
---- ----
Total minimum lease payments receivable $ 12,119,703 $ 15,045,821
Estimated residual values of leased equipment (unguaranteed) 4,785,886 4,810,693
----------------- ------------------
Investment in direct financing leases 16,905,589 19,856,514
Less unearned income (2,723,915) (3,603,251)
----------------- ------------------
Net investment in direct financing leases $ 14,181,674 $ 16,253,263
================= ==================
All of the property on leases was acquired in 2001, 2000 and 1999.
21
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
3. Investments in equipment and leases (continued):
At December 31, 2001, the aggregate amounts of future minimum lease payments are
as follows:
Direct
Year ending Operating Financing
December 31, Leases Leases Total
------------ ------ ------ -----
2002 $ 31,675,122 $ 3,260,750 $ 34,935,872
2003 25,198,860 2,948,178 28,147,038
2004 15,739,916 1,989,108 17,729,024
2005 11,389,500 1,901,705 13,291,205
2006 7,222,444 1,677,533 8,899,977
Thereafter 9,209,491 342,429 9,551,920
---------------- ----------------- ------------------
$100,435,333 $ 12,119,703 $ 112,555,036
================ ================= ==================
At December 31, 2001, there were no commitments to purchase lease assets.
4. Non-recourse debt:
At December 31, 2001, non-recourse debt consists of notes payable to financial
institutions. The notes are due in varying quarterly and semi-annual payments.
Interest on the notes is at fixed rates ranging from 7.98% to 10.00%. The notes
are secured by assignments of lease payments and pledges of assets. At December
31, 2001, the carrying value of the pledged assets is $19,140,104. The notes
mature from 2002 through 2006.
Future minimum payments of non-recourse debt are as follows:
Year ending
December 31, Principal Interest Total
2002 312,109 515,608 $ 827,717
2003 397,915 483,617 881,532
2004 4,425,556 170,437 4,595,993
2005 418,256 77,737 495,993
2006 461,128 34,866 495,994
---------------- ---------------- -----------------
$ 6,014,964 $ 1,282,265 $ 7,297,229
================ ================ =================
22
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
5. Other long-term debt:
In 1999, the Company entered into a $70 million receivables funding program (the
Program) (which was subsequently increased to $125 million) 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 Company. The Program provides for borrowing at a
variable interest rate (2.0624% at December 31, 2001), based on an index of A1
commercial paper.
The Program requires the Managing Member on behalf of the Company 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, 2001, the Company receives or pays interest on a notional
principal of $85,369,000, based on the difference between nominal rates ranging
from 4.35% to 7.72% and the variable rate under the Program. No actual borrowing
or lending is involved. The termination of the swaps coincide with the maturity
of the debt. 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:
Original Balance Payment Rate on
Amount December 31, Interest Swap
Date Borrowed Borrowed 2001 Agreement
------------- -------- ---- ---------
11/11/1999 $ 20,000,000 $10,250,000 6.84%
12/21/1999 20,000,000 16,646,000 7.41%
12/24/1999 25,000,000 14,694,000 7.44%
4/17/2000 6,500,000 4,870,000 7.45%
4/28/2000 1,900,000 1,107,000 7.72%
8/3/2000 19,000,000 15,132,000 7.50%
10/31/2000 7,500,000 5,914,000 7.13%
1/29/2001 8,000,000 6,756,000 5.91%
6/1/2001 2,000,000 1,585,000 5.04%
9/1/2001 9,000,000 8,415,000 4.35%
---------------- ----------------
$ 118,900,000 $85,369,000
================ ================
The long-term debt borrowings mature from 2002 through 2009. Future minimum
principal payments of long-term debt and annual swap notional reductions are as
follows:
Swap Notional / Rates on
Year ending Debt Interest Swap
December 31, Principal Interest Total Agreements*
------------ --------- -------- ----- -----------
2002 $ 23,297,000 $ 5,139,613 $ 28,436,613 6.885% - 6.921%
2003 21,173,000 3,605,271 24,778,271 6.916% - 6.989%
2004 14,771,000 2,363,448 17,134,448 6.986% - 7.079%
2005 11,079,000 1,487,319 12,566,319 7.076% - 7.286%
2006 6,830,000 877,080 7,707,080 7.299% - 7.309%
2007 4,529,000 448,677 4,977,677 7.299% - 7.334%
2008 3,013,000 183,173 3,196,173 7.333% - 7.410%
2009 677,000 12,616 689,616 7.410%
---------------- ---------------- -----------------
$ 85,369,000 $14,117,197 $ 99,486,197
================ ================ =================
23
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
5. Other long-term debt (continued):
* Represents the range of monthly weighted average fixed interest rates paid for
amounts maturing in the particular year. The receive-variable rate portion of
the swap represents commercial paper rates (2.0624% at December 31, 2001).
In 2001, the net effect of the interest rate swaps was to increase interest
expense by $2,166,018.
6. Related party transactions:
The terms of the Limited Company Operating Agreement provide that the Managing
Member and/or affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Company.
The Limited Liability Company Operating Agreement allows for the reimbursement
of costs incurred by the Managing Member in providing administrative services to
the Company. Administrative services provided include Company accounting,
investor relations, legal counsel and lease and equipment documentation. The
Managing Member is not reimbursed for services where it is entitled to receive a
separate fee as compensation for such services, such as acquisition and
management of equipment. Reimbursable costs incurred by the Managing Member are
allocated to the Company based upon actual time incurred by employees working on
Company business and an allocation of rent and other costs based on utilization
studies.
Substantially all employees of the Managing Member record time incurred in
performing administrative services on behalf of all of the Companies serviced by
the Managing Member. The Managing Member believes that the costs reimbursed are
the lower of actual costs incurred on behalf of the Company or the amount the
Company would be required to pay independent parties for comparable
administrative services in the same geographic location and are reimbursable in
accordance with the Limited Liability Company Operating Agreement.
The Managing Member and/or affiliates earned fees, commissions and
reimbursements, pursuant to the Limited Liability Company Agreement as follows:
2001 2000 1999
---- ---- ----
Asset management fees to Managing Member $ 1,849,335 $ 1,465,566 $ 443,943
Administrative costs reimbursed to Managing Member 924,375 1,408,523 767,386
Initial direct costs paid to Managing Member 147,721 844,058 753,607
Selling commissions (equal to 9.5% of the selling price of the Limited
Liability Company units, deducted from Other Members' capital) - 5,534,569 7,357,062
Reimbursement of other syndication costs to Managing Member - 2,619,534 3,734,924
----------------- ------------------ ----------------
$ 2,921,431 $ 11,872,250 $ 13,056,922
================= ================== ================
7. Members' capital:
As of December 31, 2001, 13,570,188 Units were issued and outstanding. The
Company is authorized to issue up to 15,000,000 Units in addition to the Units
issued to the initial members (50 Units).
The Company's Net Income, Net Losses, and Distributions are to be allocated
92.5% to the Members and 7.5% to ATEL. In accordance with the terms of the of
Operating Agreement, additional allocations of income was made to the Managing
Member in 2001, 2000 and 1999. The amount allocated was determined so as to
bring the Managing Member's ending capital account balance to zero at the end of
each year.
24
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
8. Concentration of credit risk and major customers:
The Company leases equipment to lessees in diversified industries. Leases are
subject to the Managing Member's credit committee review. The leases provide for
the return of the equipment upon default.
As of December 31, 2001, 2000 and 1999 there were concentrations (greater than
10%) of equipment leased to lessees in certain industries (as a percentage of
total equipment cost) as follows:
2001 2000 1999
---- ---- ----
Transportation, rail 18% 20% 27%
Transportation, air 17% 15% 17%
Manufacturing, other 15% 15% 15%
Transportation, other 12% 13% *
Transportation, containers * 10% 15%
Manufacturing, electronics * 10% *
* Less than 10%
During 2001, one customer comprised 16% of the Company's revenues from leases.
During 2000, one customer comprised 10% of the Company's revenues from leases.
During 1999, four customers comprised 31%, 12%, 12% and 10% of the Company's
revenues from leases.
9. Line of credit:
The Company participates with the Managing Member and certain of its affiliates
in a $62,000,000 revolving line of credit with a financial institution that
includes certain financial covenants. The line of credit expires on April 12,
2002. The Managing Member is currently negotiating a new line of credit and
anticipates that the current line of credit will either be replaced upon its
expiration or that the current line of credit will be extended until the new one
is finalized. As of December 31, 2001, borrowings under the facility were as
follows:
Amount borrowed by the Company under the acquisition facility $ 2,500,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
facility 15,100,000
----------------
Total borrowings under the acquisition facility 17,600,000
Amounts borrowed by the Managing Member and its sister corporation under the warehouse facility * 10,999,501
----------------
Total outstanding balance $ 28,599,501
================
Total available under the line of credit $ 62,000,000
Total outstanding balance (28,599,501)
----------------
Remaining availability $ 33,400,499
================
* (Unaudited) The carrying value of the assets pledged as collateral and
financed at December 31, 2001 was $17,955,014.
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
Companies and limited liability companies, the Company and the Managing Member.
25
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
9. Line of credit (continued):
The Company borrowed $23,556,335, $28,555,729 and $76,641,662 under the line of
credit during 2001, 2000 and 1999, respectively. Repayments on the line of
credit were $21,056,335, $36,055,729 and $69,141,662 during 2001, 2000 and 1999,
respectively. At December 31, 2001, $2,500,000 remained outstanding. Interest on
the line of credit is based on either the thirty day LIBOR rate or the bank's
prime rate. The effective interest rate on borrowings at December 31, 2001
ranged from 3.92% to 3.93%.
The credit agreement includes certain financial covenants applicable to each
borrower. The Company was in compliance with its covenants as of December 31,
2001.
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 Company's non-recourse debt is estimated using discounted
cash flow analyses, based on the Company's current incremental borrowing rates
for similar types of borrowing arrangements. The estimated fair value of the
Company's non-recourse debt at December 31, 2001 is $6,103,611.
Other long-term debt:
The carrying value of the Company's other long-term debt approximates its fair
value at December 31, 2001.
Line of credit:
The carrying amounts of the Company's variable rate line of credit approximates
fair value.
Interest rate swaps:
The fair value of interest rate swaps is estimated by obtaining independent
valuations or discounting the fixed cash flows paid under each swap using the
rate at which the Company could enter into new swaps of similar maturities.
Swaps are recorded on the balance sheet at fair value at December 31, 2001.
26
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
11. Other comprehensive income:
In 2001, 2000 and in 1999, other comprehensive income consisted of the
following:
2001 2000 1999
---- ---- ----
Net income (loss) $ 132,672 $ (2,305,631) $ 438,835
Other comprehensive income:
Cumulative effect of change in accounting principle at January 1, 2001 (821,196)
Decrease in value of interest rate swap contracts during the year (3,879,426) - -
----------------- ------------------ ----------------
Comprehensive net (loss) income $ (4,567,950) $ (2,305,631) $ 438,835
================= ================== ================
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 Liability Company and, therefore, has no officers or
directors.
All of the outstanding capital stock of ATEL Financial Services LLC (the
Managing Member) 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 5% by A. J. Batt and 95% by Dean Cash.
Each of ATEL Leasing Corporation ("ALC"), ATEL Equipment Corporation ("AEC"),
ATEL Investor Services ("AIS") and ATEL Financial Services LLC ("AFS") is a
wholly-owned subsidiary of ATEL Capital Group and performs services for the
Company. Acquisition services are performed for the Company 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 Company are performed by AFS. ATEL
Securities Corporation ("ASC") is a wholly-owned subsidiary of ATEL Financial
Services LLC.
The officers and directors of ATEL Capital Group and its affiliates are as
follows:
Dean L. Cash Chairman of the Board of Directors of ACG, AFS, ALC,
AEC, AIS and ASC; President and Chief Executive
Officer of ACG, AFS and AEC
Paritosh K. Choksi Director, Executive Vice President, Chief Operating
Officer and Chief Financial Officer of ACG, AFS,
ALC, AEC and AIS
Donald E. Carpenter Vice President and Controller of ACG, AFS, ALC, AEC
and AIS; Chief Financial Officer of ASC
Vasco H. Morais Senior Vice President, Secretary and General Counsel
for ACG, AFS, ALC, AIS and AEC
Dean L. Cash, age 51, 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. He has been President and CEO since April 2001. 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.
Paritosh K. Choksi, age 48, joined ATEL in 1999 as a director, senior vice
president and its chief financial officer. He became its executive vice
president and COO in April 2001. 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.
28
Donald E. Carpenter, age 53, 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 43, 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 Liability Company and, therefore, has no officers or
directors.
Set forth hereinafter is a description of the nature of remuneration paid and to
be paid to ATEL and its Affiliates. The amount of such remuneration paid in
2001, 2000 and 1999 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 Company paid selling commissions in the amount of 9.5% of Gross Proceeds, as
defined, to ATEL Securities Corporation, an affiliate of ATEL.
Through December 31, 2000, $12,891,631 of such commissions had been paid to ATEL
or its affiliates. Of that amount, $11,050,485 was re-allowed to other
broker/dealers. There are no further amounts to be paid.
Asset Management Fee
The Company will pay ATEL an Asset Management Fee in an amount equal to 4.5% of
Operating Revenues, which will include Gross Lease Revenues and Cash From Sales
or Refinancing. The Asset Management Fee will be paid on a monthly basis. The
amount of the Asset Management Fee payable in any year will be reduced for that
year to the extent it would otherwise exceed the Asset Management Fee Limit, as
described below. The Asset Management Fee will be paid for services rendered by
ATEL and its Affiliates in determining portfolio and investment strategies
(i.e., establishing and maintaining the composition of the Equipment portfolio
as a whole and the Company's overall debt structure) and generally managing or
supervising the management of the Equipment.
ATEL will supervise performance of among others activities, collection of lease
revenues, monitoring compliance by lessees with the lease terms, assuring that
Equipment is being used in accordance with all operative contractual
arrangements, paying operating expenses and arranging for necessary maintenance
and repair of Equipment in the event a lessee fails to do so, monitoring
property, sales and use tax compliance and preparation of operating financial
data. ATEL intends to delegate all or a portion of its duties and the Asset
Management Fee to one or more of its Affiliates who are in the business of
providing such services.
29
Asset Management Fee Limit:
The Asset Management Fee will be subject to the Asset Management Fee Limit. The
Asset Management Fee Limit will be calculated each year during the Company's
term by calculating the total fees that would be paid to ATEL if the Managing
Member were to be compensated on the basis of an alternative fee schedule, to
include an Equipment Management Fee, Incentive Management Fee, and Equipment
Resale/Re-Leasing Fee, plus ATEL's Carried Interest, as described below. To the
extent that the amount paid to ATEL as the Asset Management Fee plus its Carried
Interest for any year would exceed the aggregate amount of fees calculated under
this alternative fee schedule for the year, the Asset Management Fee and/or
Carried Interest for that year will be reduced to equal the maximum aggregate
fees under the alternative fee schedule.
To the extent any such fees are reduced, the amount of such reduction will be
accrued and deferred, and such accrued and deferred compensation would be paid
to ATEL in a subsequent period, but only if and to the extent that such deferred
compensation would be payable within the Asset Management Fee Limit for the
subsequent period. Any deferred fees which cannot be paid under the applicable
limitations in any subsequent period through the date of liquidation would be
forfeited by ATEL upon liquidation.
Alternative Fee Schedule:
For purposes of the Asset Management Fee Limit, the Company will calculate an
alternative schedule of fees, including a hypothetical Equipment Management Fee,
Incentive Management Fee, Equipment Resale/Re- Leasing Fee, and Carried Interest
as follows:
An Equipment Management Fee will be calculated to equal the lesser of (i) 3.5%
of annual Gross Revenues from Operating Leases and 2% of annual Gross Revenues
from Full Payout Leases which contain Net Lease Provisions), or (ii) the fees
customarily charged by others rendering similar services as an ongoing public
activity in the same geographic location and for similar types of equipment. If
services with respect to certain Operating Leases are performed by nonaffiliated
persons under the active supervision of ATEL or its Affiliate, then the amount
so calculated shall be 1% of Gross Revenues from such Operating Leases.
An Incentive Management Fee will be calculated to equal 4% of Distributions of
Cash from Operations until Holders have received a return of their Original
Invested Capital plus a Priority Distribution, and, thereafter, to equal a total
of 7.5% of Distributions from all sources, including Sale or Refinancing
Proceeds. In subordinating the increase in the Incentive Management Fee to a
cumulative return of a Holder's Original Invested Capital plus a Priority
Distribution, a Holder would be deemed to have received Distributions of
Original Invested Capital only to the extent that Distributions to the Holder
exceed the amount of the Priority Distribution.
An Equipment Resale/Re-Leasing Fee will be calculated in an amount equal to the
lesser of (i) 3% of the sale price of the Equipment, or (ii) one-half the normal
competitive equipment sale commission charged by unaffiliated parties for resale
services. Such fee would apply only after the Holders have received a return of
their Original Invested Capital plus a Priority Distribution. In connection with
the releasing of Equipment to lessees other than previous lessees or their
Affiliates, the fee would be in an amount equal to the lesser of (i) the
competitive rate for comparable services for similar equipment, or (ii) 2% of
the gross rental payments derived from the re-lease of such Equipment, payable
out of each rental payment received by the Company from such re-lease.
A Carried Interest equal to 7.5% of all Distributions of Cash from Operations
and Cash from Sales or Refinancing.
See Note 6 to the financial statements included in Item 8 for amounts paid.
Managing Member's Interest in Operating Proceeds
Net income, net loss and investment tax credits are allocated 92.5% to the
Members and 7.5% to ATEL. See financial statements included in Item 8, Part I of
this report for amounts allocated to the Managing Member in 2001, 2000 and 1999.
30
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security Ownership of Certain Beneficial Owners
At December 31, 2001, no investor is known to hold beneficially more than 5% of
the issued and outstanding Units.
Security Ownership of Management
The shareholders of ATEL are beneficial owners of Limited Liability Company
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 Liability Company Units A. J. Batt Initial Limited Liability 0.0002%
235 Pine Street, 6th Floor Company Units
San Francisco, CA 94104 25 Units ($250)
(owned by wife)
Limited Liability Company Units Dean Cash Initial Limited Liability 0.0002%
235 Pine Street, 6th Floor Company Units
San Francisco, CA 94104 25 Units ($250)
(owned by wife)
Changes in Control
The Members have the right, by vote of the Members owning more than 50% of the
outstanding Limited Liability Company Units, to remove a Managing Member.
ATEL may at any time call a meeting of the Members or a vote of the Members
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 Liability Company 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, 2001 and 2000
Statements of Operations for the years ended
December 31, 2001, 2000 and 1999
Statements of Changes in Members' Capital for
the years ended December 31, 2001, 2000 and 1999
Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999
Notes to Financial Statements
2. Financial Statement Schedules
Allschedules 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 2001
None
(c)Exhibits
(3)and (4) Agreement of Limited Liability Company,
included as Exhibit B to Prospectus, is
incorporated herein by reference to the report on
Form 10K for the period ended December 31, 1998
(File Number 333-62477) (Exhibit 28.1)
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: 3/25/2002
ATEL Capital Equipment Fund VIII, LLC
(Registrant)
By: ATEL Financial Services LLC,
Managing Member of Registrant
By: /s/ Dean Cash
------------------------
Dean Cash,
President and Chief Executive
Officer of ATEL Financial Services
LLC (Managing Member)
By: /s/ Paritosh K. Choksi
------------------------
Paritosh K. Choksi
Executive Vice President of ATEL
Financial Services LLC (Managing
Member)
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/ Dean Cash President, Chairman and Chief 3/25/2002
- -------------------------- Executive Officer of ATEL
Dean Cash Financial Services LLC
/s/ Paritosh K. Choksi Executive Vice President and 3/25/2002
- -------------------------- director of ATEL Financial
Paritosh K. Choksi Services LLC, Principal financial
officer of registrant; principal
financial officer and director of
ATEL Financial Services LLC
/s/ Donald E. Carpenter Principal accounting officer of 3/25/2002
- -------------------------- registrant; principal accounting
Donald E. Carpenter officer of ATEL Financial Services LLC
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