Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 2002
|_| Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the transition period from _______ to _______
Commission File Number 333-62477
ATEL Capital Equipment Fund VIII, LLC
(Exact name of registrant as specified in its charter)
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
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 |_|
DOCUMENTS INCORPORATED BY REFERENCE
None
1
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
2
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
BALANCE SHEETS
JUNE 30, 2002 AND DECEMBER 31, 2001
(Unaudited)
ASSETS
2002 2001
---- ----
Cash and cash equivalents $ 1,786,425 $ 2,269,137
Accounts receivable, net of allowance for
doubtful accounts of $516,365 in 2002
and $41,365 in 2001 1,894,010 3,256,527
Other assets 70,000 85,000
Investments in leases 164,149,125 178,999,739
----------------- --------------------
Total assets $167,899,560 $ 184,610,403
================= ====================
LIABILITIES AND MEMBERS' CAPITAL
Long-term debt $ 74,563,000 $ 85,369,000
Non-recourse debt 5,862,716 6,014,964
Line of credit 4,000,000 2,500,000
Accounts payable:
Managing member 263,652 -
Other 492,903 838,267
Accrued interest payable 100,168 76,980
Interest rate swap contracts 3,984,595 4,700,622
Unearned operating lease income 1,674,116 1,748,618
----------------- --------------------
Total liabilities 90,941,150 101,248,451
Members' capital 76,958,410 83,361,952
----------------- --------------------
Total liabilities and members' capital $167,899,560 $ 184,610,403
================= ====================
See accompanying notes.
3
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
STATEMENTS OF OPERATIONS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2002 AND 2001
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
Revenues: 2002 2001 2002 2001
---- ---- ---- ----
Leasing activities:
Operating leases $16,369,513 $23,023,666 $ 7,679,155 $ 9,205,063
Direct financing leases 413,236 508,142 197,219 247,516
Gain on sales of assets 256,871 1,788,113 273,326 3,463
Interest 9,035 109,824 3,046 28,653
Other 183,150 25,909 7,382 9,306
------------------ ------------------ ----------------- --------------------
17,231,805 25,455,654 8,160,128 9,494,001
Expenses:
Depreciation and amortization 11,924,692 14,781,124 5,899,599 7,645,706
Interest expense 3,258,213 5,574,861 1,656,843 2,009,316
Asset management fees to Managing Member 770,623 1,009,978 353,209 407,013
Cost reimbursements to Managing Member 757,879 526,265 243,271 284,993
Provision for doubtful accounts 475,000 - 75,000 -
Other 379,850 163,722 244,195 102,367
Professional fees 110,555 185,430 54,010 55,506
------------------ ------------------ ----------------- --------------------
17,676,812 22,241,380 8,526,127 10,504,901
------------------ ------------------ ----------------- --------------------
Net income (loss) $ (445,007) $ 3,214,274 $ (365,999) $ (1,010,900)
================== ================== ================= ====================
Net income (loss):
Managing member $ 500,592 $ 503,448 $ 750,888 $ 146,237
Other members (945,599) 2,710,826 (1,116,887) (1,157,137)
------------------ ------------------ ----------------- --------------------
$ (445,007) $ 3,214,274 $ (365,999) $ (1,010,900)
================== ================== ================= ====================
Net income (loss) per Limited Liability Company Unit $ (0.07) $ (0.21) $ (0.08) $ (0.09)
Weighted average number of Units outstanding 13,570,188 9,143,454 13,570,188 13,570,188
See accompanying notes.
4
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
STATEMENT OF CHANGES IN MEMBERS' CAPITAL
SIX MONTH PERIOD ENDED
JUNE 30, 2002
(Unaudited)
Accumulated
Other
Comprehensive
Other Members Managing Income
-------------
Units Amount Member (Loss) Total
Balance December 31, 2001 13,570,188 $88,062,574 $ - $(4,700,622) $ 83,361,952
Distributions to members (6,173,970) (500,592) (6,674,562)
Unrealized decrease in value of
interest rate swap contracts 716,027 716,027
Net income (945,599) 500,592 (445,007)
------------------ ------------------ ------------------ ----------------- --------------------
Balance June 30, 2002 13,570,188 $80,943,005 $ - $(3,984,595) $ 76,958,410
================== ================== ================== ================= ====================
See accompanying notes.
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2002 AND 2001
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
Operating activities:
Net income (loss) $ (445,007) $ 3,214,274 $ (365,999) $ (1,010,900)
Adjustments to reconcile net income (loss) to cash
provided by operating activities:
Depreciation and amortization 11,924,692 14,781,124 5,899,599 7,645,706
Gain on sales of assets (256,871) (1,788,113) (273,326) (3,463)
Provision for doubtful accounts 475,000 - 75,000 -
Changes in operating assets and liabilities:
Accounts receivable 887,517 971,119 1,245,939 (304,565)
Other assets 15,000 15,000 7,500 7,500
Accounts payable, Managing Member - (185,659) (376,446) (102,817)
Accounts payable, other (81,712) (107,200) 339,271 22,363
Accrued interest expense 23,188 (59,042) (38,244) (6,586)
Unearned lease income (74,502) (405,033) (689,531) (739,215)
------------------ ------------------ ----------------- --------------------
Net cash provided by operations 12,467,305 16,436,470 5,823,763 5,508,023
------------------ ------------------ ----------------- --------------------
5
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
STATEMENTS OF CASH FLOWS
(Continued)
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2002 AND 2001
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
Investing activities:
Purchases of equipment on operating leases - (27,938,716) - (313,309)
Purchases of equipment on direct financing
leases - (810,271) - (636,064)
Reduction of net investment in direct financing
leases 2,037,467 1,396,835 1,628,146 1,191,935
Payment of initial direct costs to managing
member - (145,831) - (37,841)
Proceeds from sales of assets 1,145,326 8,601,318 1,069,276 46,056
------------------ ------------------ ----------------- --------------------
Net cash provided by (used in) investing
activities 3,182,793 (18,896,665) 2,697,422 250,777
------------------ ------------------ ----------------- --------------------
Financing activities:
Borrowings on line of credit 5,800,000 16,756,335 2,000,000 5,532,838
Repayments of line of credit (4,300,000) (7,532,838) (800,000) (7,532,838)
Proceeds of long-term debt 3,900,000 10,000,000 - 2,000,000
Repayments of long-term debt (14,706,000) (9,148,000) (5,902,000) (4,895,000)
Repayments of non-recourse debt (152,248) (1,165,781) (152,248) (138,094)
Distributions to other members (6,173,970) (6,218,917) (3,086,989) (3,121,917)
Distributions to managing member (500,592) (503,448) (250,296) (253,128)
------------------ ------------------ ----------------- --------------------
Net cash (used in) provided by financing
activities (16,132,810) 2,187,351 (8,191,533) (8,408,139)
------------------ ------------------ ----------------- --------------------
Net (decrease) increase in cash and cash
equivalents (482,712) (272,844) 329,652 (2,649,339)
Cash and cash equivalents at beginning of
period 2,269,137 2,484,785 1,456,773 4,861,280
------------------ ------------------ ----------------- --------------------
Cash and cash equivalents at end of period $ 1,786,425 $ 2,211,941 $ 1,786,425 $ 2,211,941
================== ================== ================= ====================
Supplemental disclosures of cash flow
information:
Cash paid during the period for interest $ 3,235,025 $ 5,633,903 $ 1,695,087 $ 2,015,902
================== ================== ================= ====================
See accompanying notes.
6
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(Unaudited)
1. Summary of significant accounting policies:
Interim financial statements:
The unaudited interim financial statements reflect all adjustments which are, in
the opinion of the managing member, necessary to a fair statement of financial
position and results of operations for the interim periods presented. All such
adjustments are of a normal recurring nature. These unaudited interim financial
statements should be read in conjunction with the most recent report on Form
10K.
2. Organization and 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. Contributions in
the amount of $600 were received as of October 7, 1998, $100 of which
represented the Managing Member's (ATEL Financial Corporation's) continuing
interest, and $500 of which represented the Initial Members' capital investment.
Upon the sale of the minimum amount of Units of Limited Liability Company
interest (Units) of $1,200,000 and the receipt of the proceeds thereof on
January 13, 1999, the Company commenced operations.
The Company does not make a provision for income taxes since all income and
losses will be allocated to the Partners for inclusion in their individual tax
returns.
3. Investment in leases:
The Company's investment in leases consists of the following:
Depreciation
Balance Expense or Reclassi- Balance
December 31, Amortization fications or June 30,
2001 Additions of Leases Dispositions 2002
---- --------- --------- - ------------- ----
Net investment in operating
leases $157,746,886 $ - $ (11,735,812) $ (4,405,645) $ 141,605,429
Net investment in direct
financing leases 14,181,674 - (2,037,467) (217,352) 11,926,855
Assets held for sale or lease 6,055,819 - - 3,734,542 9,790,361
Initial direct costs, net of
accumulated amortization 1,015,360 - (188,880) - 826,480
------------------ ------------------ ------------------ ----------------- --------------------
$178,999,739 $ - $ (13,962,159) $ (888,455) $ 164,149,125
================== ================== ================== ================= ====================
7
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(Unaudited)
3. Investment in leases (continued):
Operating leases:
Property on operating leases consists of the following:
Balance Acquisitions, Dispositions & Balance
December 31, Reclassifications June 30,
-----------------
2001 1st Quarter 2nd Quarter 2002
---- ----------- ----------- ----
Manufacturing $ 49,700,638 $ - $ - $ 49,700,638
Transportation, rail 37,626,277 - - 37,626,277
Aircraft 38,535,439 - (5,725,300) 32,810,139
Transportation, other 23,438,156 - - 23,438,156
Containers 21,228,750 - - 21,228,750
Natural gas compressors 14,051,601 - - 14,051,601
Materials handling 7,710,415 - - 7,710,415
Marine vessel 3,952,500 - - 3,952,500
Other 12,731,780 (178,918) - 12,552,862
------------------ ------------------ ----------------- --------------------
208,975,556 (178,918) (5,725,300) 203,071,338
Less accumulated depreciation (51,228,670) (5,852,683) (4,384,556) (61,465,909)
------------------ ------------------ ----------------- --------------------
$157,746,886 $ (6,031,601) $ (10,109,856) $ 141,605,429
================== ================== ================= ====================
Direct financing leases:
As of June 30, 2002, investment in direct financing leases consists primarily
office automation equipment. The following lists the components of the Company's
investment in direct financing leases as of June 30, 2002:
Total minimum lease payments receivable $ 9,668,999
Estimated residual values of leased equipment (unguaranteed) 4,501,147
-----------------
Investment in direct financing leases 14,170,146
Less unearned income (2,243,291)
-----------------
Net investment in direct financing leases $ 11,926,855
=================
All of the property on leases was acquired in 1999, 2000 and 2001.
8
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(Unaudited)
3. Investment in leases (continued):
At June 30, 2002, the aggregate amounts of future minimum lease payments are as
follows:
Direct
Operating Financing
Leases Leases Total
Six months ending December 31, 2002 $15,406,183 $ 1,354,557 $ 16,760,740
Year ending December 31, 2003 25,176,885 2,509,590 27,686,475
2004 15,717,941 2,063,877 17,781,818
2005 11,389,500 1,976,473 13,365,973
2006 7,222,444 1,422,073 8,644,517
Thereafter 9,209,493 342,429 9,551,922
------------------ ------------------ -----------------
$84,122,446 $ 9,668,999 $ 93,791,445
================== ================== =================
4. Non-recourse debt:
At June 30, 2002, 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 rates from 7.98% to 10.0%. The notes are secured by
assignments of lease payments and pledges of assets. The notes mature from 2002
through 2006.
Future minimum payments of non-recourse debt are as follows:
Principal Interest Total
Six months ending December 31, 2002 $ 159,860 $ 254,452 $ 414,312
Year ending December 31, 2003 397,915 486,617 884,532
2004 4,425,556 170,437 4,595,993
2005 418,256 77,737 495,993
2006 461,129 34,866 495,995
------------------ ------------------ -----------------
Thereafter $ 5,862,716 $ 1,024,109 $ 6,886,825
================== ================== =================
9
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(Unaudited)
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 (1.8539% at June 30, 2002). As of June 30, 2002, the
program has been closed as to additional borrowings.
The Program requires the Managing Member 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 June 30,
2002, the Company receives or pays interest on a notional principal of
$74,563,000, based on the difference between nominal rates ranging from 3.60% to
7.72% and the variable rate under the Program. No actual borrowing or lending is
involved. The last of the swaps terminates in 2009. 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 Rate on
Amount June 30, Interest Swap
Date Borrowed Borrowed 2002 Agreement
------------- -------- ---- ---------
11/11/99 $20,000,000 $ 7,972,000 6.840%
12/21/99 20,000,000 15,735,000 7.410%
12/24/99 25,000,000 11,587,000 7.440%
4/17/00 6,500,000 4,337,000 7.450%
4/28/00 1,900,000 864,000 7.720%
8/3/00 19,000,000 13,642,000 7.500%
10/31/00 7,500,000 5,194,000 7.130%
1/29/01 8,000,000 5,852,000 5.910%
6/1/01 2,000,000 1,185,000 5.040%
9/1/01 9,000,000 4,750,000 4.350%
1/31/02 3,900,000 3,445,000 3.600%
------------------ ------------------
$122,800,000 $74,563,000
================== ==================
10
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(Unaudited)
5. Other long-term debt (continued):
Other long-term debt borrowings mature from 2004 through 2009. Future minimum
principal payments of long-term debt are as follows:
Rates on
Interest Swap
Principal Interest Total Agreements*
--------- -------- ----- -----------
Six months ending December 31, 2002 $11,681,000 $ 2,383,653 $ 14,064,653 6.848% - 6.862%
Year ending December 31, 2003 21,043,000 3,636,621 24,679,621 6.865% - 6.901%
2004 15,092,000 2,394,241 17,486,241 6.896% - 6.962%
2005 11,351,000 1,507,894 12,858,894 6.985% - 7.137%
2006 6,950,000 884,435 7,834,435 7.172% - 7.203%
2007 4,701,000 439,685 5,140,685 6.896% - 7.028%
2008 3,025,000 169,486 3,194,486 6.214% - 6.887%
2009 720,000 9,149 729,149 5.042% - 5.068%
------------------ ------------------ -----------------
$74,563,000 $11,425,164 $ 85,988,164
================== ================== =================
* 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 (1.8539% at June 30, 2002).
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 (i) actual costs incurred on behalf of the Company or (ii) the
amount the Company would be required to pay independent parties for comparable
administrative services in the same geographic location and are reimbursable in
accordance with the Limited Liability Company Operating Agreement.
11
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(Unaudited)
6. Related party transactions (continued):
The Managing Member and/or Affiliates earned fees, commissions and
reimbursements, pursuant to the Limited Liability Company Agreement during the
six month periods ended June 30, 2002 and 2001 as follows:
2002 2001
---- ----
Asset management fees to Managing Member $ 770,623 $ 1,009,978
Administrative costs reimbursed to Managing Member 757,879 526,265
Selling commissions (equal to 9.5% of the selling price of the Limited Liability
Company units, deducted from Other Members' capital) - 3,855,618
Reimbursement of other syndication costs to Managing Member - 1,957,345
----------------- --------------------
$ 1,528,502 $ 7,349,206
================= ====================
7. Member's capital:
As of June 30, 2002, 13,570,188 Units ($135,701,880) were issued and
outstanding. The Company's registration statement with the Securities and
Exchange Commission became effective December 7, 1998. The offering was
concluded on November 30, 2000. The Company is authorized to issue up to
15,000,050 Units, including the 50 Units issued to the initial members.
The Company's Net Income, Net Losses, and Distributions are to be allocated
92.5% to the Members and 7.5% to the Managing Member.
8. Line of credit:
The Company participates with the Managing Member and certain of its affiliates
in a $43,654,928 revolving line of credit with a financial institution that
includes certain financial covenants. The line of credit expires on June 28,
2004. As of June 30, 2002, borrowings under the facility were as follows:
Amount borrowed by the fund under the acquisition facility $ 4,000,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
facility 19,000,000
--------------------
Total borrowings under the acquisition facility 23,000,000
Amounts borrowed by the Managing Member and its sister corporation under the warehouse facility -
--------------------
Total outstanding balance $ 23,000,000
====================
Total available under the line of credit $ 43,654,928
Total outstanding balance (23,000,000)
--------------------
Remaining availability $ 20,654,928
====================
12
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(Unaudited)
8. Line of credit (continued):
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
partnerships and limited liability companies, the fund and the Managing Member.
The credit agreement includes certain financial covenants applicable to each
borrower. The fund was in compliance with its covenants as of June 30, 2002.
9. Commitments:
As of June 30, 2002, the Company had no outstanding commitments to purchase
lease equipment.
13
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
During the first half of 2002 and 2001, the Company's primary activity was
engaging in equipment leasing activities.
During 2002 and 2001, the Company's primary source of liquidity was rents from
operating leases. The liquidity of the Company will vary in the future,
increasing to the extent cash flows from leases exceed expenses, and decreasing
as lease assets are acquired, as distributions are made to the members and to
the extent expenses exceed cash flows from leases.
As another source of liquidity, the Company has contractual obligations with a
diversified group of lessees for fixed lease terms at fixed rental amounts. As
the initial lease terms expire the Company will re-lease or sell the equipment.
The future liquidity beyond the contractual minimum rentals will depend on the
Managing Member's success in re-leasing or selling the equipment as it comes off
lease.
The Company participates with the Managing Member and certain of its affiliates
in a $43,654,928 revolving line of credit with a financial institution that
includes certain financial covenants. The line of credit expires on June 28,
2004. As of June 30, 2002, borrowings under the facility were as follows:
Amount borrowed by the fund under the acquisition facility $ 4,000,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
facility 19,000,000
--------------------
Total borrowings under the acquisition facility 23,000,000
Amounts borrowed by the Managing Member and its sister corporation under the warehouse facility -
--------------------
Total outstanding balance $ 23,000,000
====================
Total available under the line of credit $ 43,654,928
Total outstanding balance (23,000,000)
--------------------
Remaining availability $ 20,654,928
====================
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
partnerships and limited liability companies, the fund and the Managing Member.
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 members.
The Company currently has available adequate reserves to meet contingencies, but
in the event those reserves were found to be inadequate, the Company would
likely be in a position to borrow against its current portfolio to meet such
requirements. The Managing Member envisions no such requirements for operating
purposes.
14
No commitments of capital have been or are expected to be made other than for
the acquisition of additional equipment. There were no such commitments as of
June 30, 2002.
If inflation in the general economy becomes significant, it may affect the
Company inasmuch as the residual (resale) values and rates on re-leases of the
Company's leased assets may increase as the costs of similar assets increase.
However, the Company's revenues from existing leases would not increase, as such
rates are generally fixed for the terms of the leases without adjustment for
inflation.
If interest rates increase significantly, the lease rates that the Company can
obtain on future leases will be expected to increase as the cost of capital is a
significant factor in the pricing of lease financing. Leases already in place,
for the most part, would not be affected by changes in interest rates.
Cash Flows
During the first half of 2002 and 2001, the Company's primary source of
liquidity was operating lease rents.
Sources of cash flows from operating activities consisted primarily of operating
lease revenues in both years.
Rents from direct financing leases were the most significant source of cash from
investing activities in 2002. In 2001, the most significant source of cash flows
from investing activities was proceeds from the sales of lease assets. Uses of
cash for investing activities consisted of cash used to purchase operating and
direct financing lease assets and payment of initial direct costs related to
lease asset purchases. No cash was used in investing activities in 2002.
In 2002 and 2001, sources of cash from financing activities consisted of
borrowings on the line of credit and proceeds of long-term debt. Financing uses
of cash included repayments of long-tern debt, repayments of non-recourse debt,
repayments of borrowings under the line of credit and distributions to the
members.
Results of operations
In 2002, operations resulted in a net loss of $445,007 for the six month period
and a net loss of $365,999 for the three month period. In 2001, operations
resulted in net income of $3,214,274 for the first half of the year and a net
loss of $1,010,900 for the second quarter. The Company's primary source of
revenues is from operating leases. In future periods, operating leases are also
expected to be the most significant source of revenues. Depreciation is related
to operating lease assets and thus, to operating lease revenues. It is expected
to decrease in future periods as leases mature and lease assets are sold.
Asset management fees are based on the gross lease rents of the Company plus
proceeds from the sales of lease assets. They are limited to certain percentages
of lease rents, distributions to members and certain other items. As lease
assets are sold and as revenues decline, these fees are expected to decrease.
Interest expense has decreased compared to 2001 due to debt repayments over the
last year.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Emery Worldwide Airways, Inc.:
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. A motion for summary judgment on the Company's claims was heard towards
the end of May, 2002. As this matter is in its early stages, the outcome of the
Company's claim is uncertain, although the Manager believes that currently there
is a substantial likelihood of success in this matter.
15
Burlington Northern Santa Fe Corporation:
This complaint was filed for the recovery of $300,000 in damages for the "Agreed
Value" of a destroyed locomotive. The Company feels that it has a reasonable
basis for success in this matter.
Item 2. Changes In Securities.
Inapplicable.
Item 3. Defaults Upon Senior Securities.
Inapplicable.
Item 4. Submission Of Matters To A Vote Of Security Holders.
Inapplicable.
Item 5. Other Information.
Inapplicable.
Item 6. Exhibits And Reports On Form 8-K.
(a)Documents filed as a part of this report
1. Financial Statements
Included in Part I of this report:
Balance Sheets, June 30, 2002 and December 31, 2001.
Statements of operations for the six and three month
periods ended June 30, 2002 and 2001.
Statement of changes in partners' capital for the six
month period ended June 30, 2002.
Statements of cash flows for the six and three month
periods ended June 30, 2002 and 2001.
Notes to the Financial Statements
2. Financial Statement Schedules
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have
been omitted.
(b) Report on Form 8-K
None
16
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly report on Form 10QSB of ATEL Capital Equipment
Fund VIII, LLC, (the "Company") for the period ended June 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), and
pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the
Sarbanes-Oxley Act of 2002, I, Dean L. Cash, Chief Executive Officer of ATEL
Financial Services, LLC, managing member of the Company, hereby certify that:
1. The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act
of 1934 ; and
2. The information contained in the Report fairly presents,
in all material respects, the finanancial condition and
results of operations of the Company.
/s/ DEAN L. CASH
- ------------------------------------
Dean L. Cash President and Chief Executive
Officer of Managing Member
August 14, 2002
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly report on Form 10QSB of ATEL Capital Equipment
Fund VIII, LLC, (the "Company") for the period ended June 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), and
pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the
Sarbanes-Oxley Act of 2002, I, Paritosh K. Choksi, Chief Financial Officer of
ATEL Financial Services, LLC, managing member of the Company, hereby certify
that:
1. The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act
of 1934 ; and
2. The information contained in the Report fairly presents,
in all material respects, the finanancial condition and
results of operations of the Company.
/s/ PARITOSH K. CHOKSI
- ------------------------------------
Paritosh K. Choksi Executive Vice President of Managing
Member, Principal financial officer of registrant
August 14, 2002
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date:
August 14, 2002
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
(Registrant)
By: ATEL Financial Services, LLC
Managing Member of Registrant
By: /s/ DEAN L. CASH
-------------------------------------
Dean L. Cash
President and Chief Executive
Officer of Managing Member
By: /s/ PARITOSH K. CHOKSI
-------------------------------------
Paritosh K. Choksi
Executive Vice President of
Managing Member, Principal
financial officer of registrant
By: /s/ DONALD E. CARPENTER
--------------------------------------
Donald E. Carpenter
Principal accounting officer of
registrant
18