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 September 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 333-47196
ATEL Capital Equipment Fund IX, LLC
(Exact name of registrant as specified in its charter)
California 94-3375584
- ---------- ----------
(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 |_|
No |X|
DOCUMENTS INCORPORATED BY REFERENCE
None
1
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
2
ATEL CAPITAL EQUIPMENT FUND IX, LLC
BALANCE SHEETS
SEPTEMBER 30, 2002 AND DECEMBER 31, 2001
(Unaudited)
ASSETS
2002 2001
---- ----
Cash and cash equivalents $24,036,121 $13,568,058
Accounts receivable 800,610 1,186,719
Investment securities available for sale 190,158 -
Notes receivable 1,204,135 982,262
Prepaid expenses 295,000 -
Investments in leases 44,399,597 21,091,372
------------------ ------------------
Total assets $70,925,621 $36,828,411
================== ==================
LIABILITIES AND MEMBERS' CAPITAL
Accounts payable:
Managing Member $ 357,358 $ 157,719
Other 42,319 24,471
Unearned operating lease income 37,961 95,618
------------------ ------------------
Total liabilities 437,638 277,808
Members' capital 70,487,983 36,550,603
------------------ ------------------
Total liabilities and members' capital $70,925,621 $36,828,411
================== ==================
See accompanying notes.
3
ATEL CAPITAL EQUIPMENT FUND IX, LLC
STATEMENTS OF OPERATIONS
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 2002 AND 2001
(Unaudited)
Nine Months Three Months
Ended September 30, Ended September 30,
------------------- -------------------
2002 2001 2002 2001
---- ---- ---- ----
Revenues:
Leasing activities:
Operating leases $ 4,270,817 $ 2,424,777 $ 2,083,130 $ 1,231,350
Direct financing leases 84,945 39,494 31,549 17,497
Gain on sales of assets 107,353 - - -
Interest 412,256 138,036 140,755 64,844
Other 609 5,594 290 3,093
------------------ ------------------ ------------------ ------------------
4,875,980 2,607,901 2,255,724 1,316,784
Expenses:
Depreciation and amortization 3,613,275 1,487,960 1,806,628 908,322
Cost reimbursements to Managing Member 216,783 348,285 98,197 118,734
Asset management fees to Managing Member 197,910 72,467 104,217 51,576
Interest expense 167,237 194,393 147,974 12,525
Professional fees 68,364 28,688 35,507 20,534
Other 224,638 15,531 91,075 11,471
------------------ ------------------ ------------------ ------------------
4,488,207 2,147,324 2,283,598 1,123,162
------------------ ------------------ ------------------ ------------------
Net income (loss) $ 387,773 $ 460,577 $ (27,874) $ 193,622
================== ================== ================== ==================
Net income (loss):
Managing member $ 330,673 $ 44,658 $ 133,332 $ 31,451
Other members 57,100 415,919 (161,206) 453,100
------------------ ------------------ ------------------ ------------------
$ 387,773 $ 460,577 $ (27,874) $ 193,622
================== ================== ================== ==================
Net income (loss) per Limited Liability Company
Unit $ 0.01 $ 0.26 $ (0.02) $ 0.19
Weighted average number of Units outstanding 6,435,633 1,586,885 7,831,367 2,423,618
See accompanying notes.
4
ATEL CAPITAL EQUIPMENT FUND IX, LLC
STATEMENT OF CHANGES IN MEMBERS' CAPITAL
NINE MONTH PERIOD ENDED
SEPTEMBER 30, 2002
(Unaudited)
Other Members Managing
-------------
Units Amount Member Total
Balance December 31, 2001 4,363,409 $36,550,603 $ - $36,550,603
Capital contributions 4,350,305 43,503,050 - 43,503,050
Less selling commissions to affiliates (4,132,790) - (4,132,790)
Other syndication costs to affiliates (1,449,123) - (1,449,123)
Distributions to members (4,040,857) (330,673) (4,371,530)
Net income 57,100 330,673 387,773
------------------ ------------------ ------------------ ------------------
Balance September 30, 2002 8,713,714 $70,487,983 $ - $70,487,983
================== ================== ================== ==================
See accompanying notes.
STATEMENT OF CASH FLOWS
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 2002 AND 2001
(Unaudited)
Nine Months Three Months
Ended September 30, Ended September 30,
------------------- -------------------
2002 2001 2002 2001
---- ---- ---- ----
Operating activities:
Net income (loss) $ 387,773 $ 460,577 $ (27,874) $ 193,622
Adjustments to reconcile net income to cash
provided by operating activities:
Gain on sales of assets (107,353) - - -
Depreciation and amortization 3,613,275 1,487,960 1,806,628 908,322
Residual value income - (6,593) - (3,039)
Changes in operating assets and liabilities:
Prepaid expenses (295,000) - (295,000) -
Accounts receivable 386,109 (860,055) 548,065 (114,966)
Accounts payable, Managing Member 199,639 61,308 175,798 (98,038)
Accounts payable, other 17,848 26,340 16,451 13,983
Unearned operating lease income (57,657) 31,142 (33,350) (194,444)
------------------ ------------------ ------------------ ------------------
Net cash provided by operations 4,144,634 1,200,679 2,190,718 705,440
------------------ ------------------ ------------------ ------------------
5
ATEL CAPITAL EQUIPMENT FUND IX, LLC
STATEMENT OF CASH FLOWS
(Continued)
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 2001
(Unaudited)
Nine Months Three Months
Ended September 30, Ended September 30,
------------------- -------------------
2002 2001 2002 2001
---- ---- ---- ----
Investing activities:
Purchases of equipment on operating leases (26,004,995) (14,999,668) (7,991,032) (5,040,436)
Note receivable advances (1,031,605) (1,000,000) - -
Purchases of equipment on direct financing leases (995,270) (888,568) (14,700) (69,444)
Proceeds from sales of assets 753,263 - 3,855 -
Payments of initial direct costs to managing
member (724,535) (175,300) (371,726) (84,004)
Payments received on notes receivable 619,574 141,245 200,195 (32,676)
Reduction of net investment in direct financing
leases 157,390 52,253 62,744 25,523
Investment in residuals - (66,093) 66,995 (6,946)
------------------ ------------------ ------------------ ------------------
Net cash used in investing activities (27,226,178) (16,936,131) (8,043,669) (5,207,983)
------------------ ------------------ ------------------ ------------------
Financing activities:
Capital contributions received 43,503,050 28,952,280 16,939,970 10,608,460
Payment of syndication costs to managing member (5,581,913) (4,231,835) (2,215,225) (1,480,262)
Distributions to members (4,371,530) (596,773) (1,740,321) (419,348)
------------------ ------------------ ------------------ ------------------
Net cash provided by financing activities 33,549,607 24,123,672 12,984,424 8,708,850
------------------ ------------------ ------------------ ------------------
Net increase in cash and cash equivalents 10,468,063 8,388,220 7,131,473 4,206,307
Cash and cash equivalents at beginning of
period 13,568,058 600 16,904,648 4,182,513
------------------ ------------------ ------------------ ------------------
Cash and cash equivalents at end of period $24,036,121 $ 8,388,820 $24,036,121 $ 8,388,820
================== ================== ================== ==================
Supplemental disclosures of cash flow
information:
Cash paid during the period for interest $ 167,237 $ 194,393 $ 147,974 $ 12,525
================== ================== ================== ==================
Supplemental schedule of non-cash
transactions:
Notes receivable exchanged for marketable
securities $ 190,158 $ - $ 190,158 $ -
================== ================== ================== ==================
See accompanying notes.
6
ATEL CAPITAL EQUIPMENT FUND IX, LLC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(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 IX, LLC (the Fund) was formed under the laws of the
state of California on September 27, 2000 for the purpose of acquiring equipment
to engage in equipment leasing and sales activities. The Fund may continue until
December 31, 2019. Contributions in the amount of $600 were received as of
December 31, 2000, $100 of which represented the Managing Member's continuing
interest, and $500 of which represented the Initial Member's 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
February 21, 2001, 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 September 30,
2001 Additions of Leases Dispositions 2002
---- --------- --------- ------------ ----
Net investment in operating leases $19,971,408 $26,004,995 $ (3,518,346) $ (642,052) $41,816,005
Net investment in direct financing
leases 750,894 995,270 (157,390) - 1,588,774
Initial direct costs 293,087 724,535 (94,929) - 922,693
Residual values, other 75,983 - - (3,858) 72,125
----------------- ------------------ ------------------ ------------------ ------------------
$21,091,372 $27,724,800 $ (3,770,665) $ (645,910) $44,399,597
================= ================== ================== ================== ==================
7
ATEL CAPITAL EQUIPMENT FUND IX, LLC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(Unaudited)
3. Investment in leases (continued):
Operating leases:
Property on operating leases consists of the following:
Balance Balance
December 31, Acquisitions, Dispositions & Reclassifications September 30,
----------------------------------------------
2001 1st Quarter 2nd Quarter 3rd Quarter 2002
---- ----------- ----------- ----------- ----
Mining $ 13,421,219 $ - $ - - $ 7,412,084 - $ 20,833,303
Manufacturing 989,709 4,052,809 9,217,711 (2,972,909) 11,287,320
Marine vessels 5,712,000 - - 5,488,000 11,200,000
Materials handling 207,486 2,211,915 1,936,144 (1,936,143) 2,419,402
Natural gas compressors 696,451 - - - 696,451
Office furniture 998,540 325,719 (762,011) - 562,248
Communications - 269,153 - - 269,153
------------------ ------------------ ------------------ ------------------ ------------------
22,025,405 6,859,596 10,391,844 7,991,032 47,267,877
Less accumulated depreciation (2,053,997) (765,391) (871,746) (1,760,738) (5,451,872)
------------------ ------------------ ------------------ ------------------ ------------------
$ 19,971,408 $ 6,094,205 $ 9,520,098 $ 6,230,294 $ 41,816,005
================== ================== ================== ================== ==================
Direct financing leases:
As of September 30, 2002, investment in direct financing leases consists office
furniture. The following lists the components of the Company's investment in
direct financing leases as of September 30, 2002:
Total minimum lease payments receivable $ 1,715,125
Estimated residual values of leased equipment (unguaranteed) 211,527
---------------
Investment in direct financing leases 1,926,652
Less unearned income (337,878)
---------------
Net investment in direct financing leases $ 1,588,774
===============
All of the property on leases was acquired in 2001 and 2002.
At September 30, 2002, the aggregate amounts of future minimum lease payments
are as follows:
Direct
Operating Financing
Leases Leases Total
Three months ending December 31, 2002 $ 1,480,069 $ 93,334 $ 1,573,403
Year ending December 31, 2003 7,626,877 373,338 8,000,215
2004 7,542,067 373,338 7,915,405
2005 7,491,288 373,338 7,864,626
2006 7,035,859 363,473 7,399,332
Thereafter 4,553,217 138,304 4,691,521
------------------ ------------------ ------------------
$35,729,377 $ 1,715,125 $37,444,502
================== ================== ==================
8
ATEL CAPITAL EQUIPMENT FUND IX, LLC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(Unaudited)
4. Notes receivable:
The Company has various notes receivable from parties who have financed the
purchase of equipment through the Company. The terms of the notes receivable are
36 months and bear interest at rates from 11.12% to 14.97%. The notes are
secured by the equipment financed. The minimum payments receivable are as
follows:
Three months ending December 31, 2002 $ 194,219
Year ending December 31, 2003 781,500
2004 208,019
2005 100,000
2006 75,000
------------------
1,358,738
Less: Portion representing interest (154,603)
------------------
$ 1,204,135
==================
5. 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 services to the Company.
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 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.
The Managing Member and/or Affiliates earned fees, commissions and
reimbursements, pursuant to the Limited Liability Company Agreement as follows:
2002 2001
---- ----
Selling commissions (equal to 9.5% of the selling price of the Limited Liability
Company units, deducted from Other Members' capital) $ 4,132,790 $ 2,750,467
Reimbursement of other syndication costs to Managing Member 1,449,123 1,481,368
Costs reimbursed to Managing Member 216,783 348,285
Asset management fees to Managing Member 197,910 72,467
------------------ ------------------
$ 5,996,606 $ 4,652,587
================== ==================
9
ATEL CAPITAL EQUIPMENT FUND IX, LLC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(Unaudited)
6. Member's capital:
As of September 30, 2001, 8,713,714 Units ($87,137,140) were issued and
outstanding. 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.
7. 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 September 30, 2002, borrowings under the facility were as follows:
Amount borrowed by the fund under the acquisition facility $ -
Amounts borrowed by affiliated partnerships and limited
liability companies under the acquisition facility 21,900,000
------------------
Total borrowings under the acquisition facility 21,900,000
Amounts borrowed by the Managing Member and its sister
corporation under the warehouse facility -
------------------
Total outstanding balance $ 21,900,000
==================
Total available under the line of credit $ 43,654,928
Total outstanding balance (21,900,000)
------------------
Remaining availability $ 21,754,928
==================
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 credit agreement includes certain financial covenants applicable to each
borrower. The fund was in compliance with its covenants as of September 30,
2002.
8. Commitments:
As of September 30, 2002, the Company had outstanding commitments to purchase
lease equipment totaling approximately $7,600,000.
10
ATEL CAPITAL EQUIPMENT FUND IX, LLC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(Unaudited)
9. Long-term debt:
In August 2002, the Company entered into a $100 million receivables funding
program (the Program) with a receivables financing company that issues
commercial paper rated A1 by Standard and Poors and P1 by Moody's Investor
Services. Under the Program, the receivables financing company receives a
general lien against all of the otherwise unencumbered assets of the Company.
The Program provides for borrowing at a variable interest rate (2.12292% at
September 30, 2002).
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 September
30, 2002, the Company has not borrowed under the Program. The differential to be
paid or received will be accrued as interest rates change and is recognized
currently as an adjustment to interest expense related to the debt.
11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
During the first three quarters of 2002 and 2001, our primary activities were
raising funds through our offering of Limited Liability Company Units (Units)
and engaging in equipment leasing activities. Through September 30, 2002, we had
received subscriptions for 8,713,714 Units ($87,137,140) all of which were
issued and outstanding.
During the funding period, our primary source of liquidity is subscription
proceeds from the public offering of Units. Our liquidity 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, we have contractual obligations with a
diversified group of lessees for fixed lease terms at fixed rental amounts. As
the initial lease terms expire we will re-lease or sell the equipment. Our
future liquidity beyond the contractual minimum rentals will depend on the our
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 September 30, 2002, borrowings under the facility were as follows:
Amount borrowed by the fund under the acquisition facility $ -
Amounts borrowed by affiliated partnerships and limited
liability companies under the acquisition facility 21,900,000
------------------
Total borrowings under the acquisition facility 21,900,000
Amounts borrowed by the Managing Member and its sister
corporation under the warehouse facility -
------------------
Total outstanding balance $ 21,900,000
==================
Total available under the line of credit $ 43,654,928
Total outstanding balance (21,900,000)
------------------
Remaining availability $ 21,754,928
==================
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.
We anticipate reinvesting a portion of lease payments from assets owned in new
leasing transactions. These reinvestments will occur only after the payment of
all obligations, including debt service (both principal and interest), the
payment of management fees to the Managing Member and providing for cash
distributions to the Other Members.
We currently have available adequate reserves to meet contingencies, but in the
event that those reserves were found to be inadequate, we would likely be in a
position to borrow against our current portfolio to meet such requirements. We
envision no such requirements for operating purposes.
We do not expect to make commitments of capital, nor have we made any
commitments of capital, except for the acquisition of additional equipment. As
of September 30, 2002, we had made commitments totaling approximately
$7,600,000.
If inflation in the general economy becomes significant, it may affect us in
that the residual (resale) values and rates on re-leases of our leased assets
may increase as the costs of similar assets increase. However, our revenues from
existing leases would not increase, as these rates are generally fixed for the
terms of the leases without adjustment for inflation.
If interest rates increase significantly, the lease rates that we 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. Our leases already in
place, for the most part, would not be affected by changes in interest rates.
Cash Flows
During the first three quarters of 2002 and 2001, our primary source of
liquidity was the proceeds of our offering of Units.
In 2002 and 2001, operating lease rents was our primary source of cash from
operations.
12
In both 2002 and 2001, rents from direct financing leases and payments received
on notes receivable were our primary sources of cash from investing activities.
In 2002, we also had proceeds from sales of lease assets as a source of cash
from investing activities. We used of cash in investing activities to purchase
operating and direct financing lease assets, to pay of initial direct costs
associated with the lease asset purchases and to make advances on notes
receivable.
Our primary source of cash from financing activities was the proceeds of our
public offering of Units of Limited Liability Company interest. We used cash in
financing activities to pay syndication costs associated with the offering and
to make distributions to our members.
Results of operations
On February 21, 2001, we commenced operations. In 2002, our operations resulted
in net income of $387,773 for the nine month period and in a net loss of $27,874
for the three month period. In 2001, our operations resulted in net income of
$460,577 for the nine month period and $193,622 for the three month period. Our
primary source of revenues is rents from operating leases. Depreciation is
related to operating lease assets and thus, to operating lease revenues. We
expect these to increase in future periods as we continue to acquire lease
assets.
Asset management fees are based on our gross lease rents 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 we have acquired lease
assets, lease rents are collected and distributions made to the members have
increased. This has led to increases in management fees.
Interest expense in 2002 relates primarily to a credit facility which has been
established (in the third quarter) to provide long-term financing for lease
asset acquisitions. Interest expense for the first three quarters of 2001
related to the borrowings under the line of credit incurred by an affiliate of
the Managing Member. It included all amounts related to those borrowings related
transactions transferred to us. All of the revenues and related carrying costs
for these transactions were attributed to us in the first nine months of 2001.
The results of our operations are expected to vary considerably in future
periods from those of the first nine months of 2002 and 2001 as we continue to
acquire significant amounts of lease assets.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
No material legal proceedings are currently pending against the Partnership or
against any of its assets.
Silicon Access Networks, Inc.:
Silicon Access Networks, Inc. (the Debtor) advised the Manager on July 8, 2002,
that, due to a further decline in expectations of future demand for the Debtor's
products by potential customers in its target markets, the Debtor's Board of
Directors had directed management to close a branch office located in North
Carolina, which occurred in July 2002. As Debtor was current on the Note
payments, the Manager Company declared a technical default in early July on the
basis of the termination of operations. As of September 30, 2002, the Debtor's
account was current except for late charges.
The Manager Company has filed suit, on the basis of the default, and moved for a
Writ of Attachment, which was denied on the first attempt at an ex parte
hearing. The Court has ordered a full hearing on the motion for Writ of
Attachment, which is scheduled for November 2002. The Company will continue to
pursue its claim against the Debtor. The Company's likelihood of success in
recovery recovering the full amount of its claims remains uncertain as of the
date hereof. As of October 30, 2002, the Debtor's account is current except for
accrued late charges.
Photuris, Inc.:
Photuris was on the verge of ceasing operations as it was unable to secure new
equity under favorable terms. The Company commenced negotiations with the
debtor. As of this date, no legal action has been initiated against the debtor;
however, the account has been restructured. In concert with several other
lessors and lenders the Company concluded negotiations and executed a Settlement
Agreement with the debtor. Under the terms of the Settlement Agreement, the
Company received an initial $200,000 in cash in July 2002. The Company is
carrying a promissory note for $300,000 that is payable interest only at prime
plus 1.25% from August 1, 2002, to October 2003, at which time payments will
convert to equal principal plus interest basis, spread over 36 months.
The Company has been granted $200,000 worth of new equity shares in the company
as the final part of the settlement. The Company still retains its perfected
first priority lien on the equipment financed by the Company. As of early
October 2002, the Company became aware that Photuris had not yet closed on
receiving some additional equity and was in danger of running out of operating
capital in early November 2002. The Company has confirmed with the lead investor
in Photuris' latest equity round that the latest investors have agreed to
provide additional equity to allow Photuris to continue to operate.
13
The Company expects that Photuris will receive at least $4 million, perhaps as
much as and $11.5 million, on or about November 1, 2002, which would allow
Photuris to continue operations for at least two to four months. The latest
investors have also agreed to provide another $15 million in funding in stages
to Photuris if certain milestones are met. Receipt of such funds would allow
Photuris to operate an additional six to seven months.
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.
Information provided pursuant to ss. 228.701 (Item 701(f))(formerly
included in Form SR):
(1) Effective date of the offering: January 16, 2001; File Number: 333-47196
(2) Offering commenced: January 16, 2001
(3) The offering did not terminate before any securities were sold.
(4) The offering has not been terminated prior to the sale of all of the
securities.
(5) The managing underwriter is ATEL Securities Corporation.
(6) The title of the registered class of securities is "Units of Limited
Liability Company interest"
(7) Aggregate amount and offering price of securities registered and sold as of
October 31, 2002
Aggregate Aggregate
price of price of
offering offering
Amount amount Amount amount
Title of Security Registered registered sold sold
----------------- ---------- ---------- ---- ----
Limited Company units 15,000,000 $150,000,000 9,332,327 $93,323,270
(8) Costs incurred for the issuers account in connection with the
issuance and distribution of the securities registered for each
category listed below:
Direct or indirect payments to
directors, officers, general
partners of the issuer or their
associates; to persons owning
ten percent or more of any Direct or
class of equity securities of indirect
the issuer; and to affiliates of payments to
the issuer others Total
---------- ------ -----
Underwriting discounts and
commissions $ - $ 8,865,711 $ 8,865,711
Other expenses 3,841,183 3,841,183
------------------ ------------------ ------------------
Total expenses $ - $12,706,894 $12,706,894
================== ================== ==================
(9) Net offering proceeds to the issuer after the total expenses in item 8: $80,616,376
(10) The amount of net offering proceeds to the issuer used for each of the
purposes listed below:
Direct or indirect payments to
directors, officers, general
partners of the issuer or their
associates; to persons owning
ten percent or more of any Direct or
class of equity securities of indirect
the issuer; and to affiliates of payments to
the issuer others Total
---------- ------ -----
Purchase and installation of
machinery and equipment $ - $80,149,760 $80,149,760
Working capital 466,616 466,616
------------------ ------------------ ------------------
$ - $80,616,376 $80,616,376
================== ================== ==================
(11) The use of the proceeds in Item 10 does not represent a material change in
the uses of proceeds described in the prospectus.
14
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, September 30, 2002 and December 31, 2001.
Statements of operations for the nine and three month periods
ended September 30, 2002 and 2001.
Statement of changes in partners' capital for the nine month
period ended September 30, 2002.
Statements of cash flows for the nine and three month periods
ended September 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
15
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:
November 7, 2002
ATEL CAPITAL EQUIPMENT FUND IX, 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
16
CERTIFICATIONS
I, Paritosh K. Choksi, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ATEL Capital Equipment
Fund IX, LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 7, 2002
/s/ PARITOSH K. CHOKSI
- ---------------------------
Paritosh K. Choksi
Principal financial officer of registrant, Executive Vice President of
Managing Member
17
CERTIFICATIONS
I, Dean L. Cash, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ATEL Capital Equipment
Fund IX, LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 7, 2002
/s/ DEAN L. CASH
- ---------------------------
Dean L. Cash
President and Chief Executive Officer of
Managing Member
18
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 10Q of ATEL Capital Equipment
Fund IX, LLC, (the "Company") for the period ended September 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 financial condition and results of operations of the Company.
Date: November 7, 2002
/s/ DEAN L. CASH
- ---------------------------
Dean L. Cash
President and Chief Executive
Officer of Managing Member
November 7, 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 10Q of ATEL Capital Equipment
Fund IX, LLC, (the "Company") for the period ended September 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 financial condition and results of operations of the Company.
Date: November 7, 2002
/s/ PARITOSH K. CHOKSI
- ---------------------------
Paritosh K. Choksi
Executive Vice President of Managing
Member, Principal financial officer of registrant
19