Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | ATEL CAPITAL EQUIPMENT FUND VIII LLC | |
Entity Central Index Key | 1,069,152 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Units Outstanding | 13,560,188 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 1,621 | $ 11 |
Accounts receivable, net | 475 | 476 |
Prepaid expenses and other assets | 39 | 31 |
Investments in equipment and leases, net | 3,575 | 3,924 |
Total assets | 5,710 | 4,442 |
Accounts payable and accrued liabilities: | ||
Managing Member | 30 | 125 |
Other | 50 | 135 |
Unearned operating lease income | 73 | 68 |
Total liabilities | 153 | 328 |
Commitments and contingencies | ||
Members' capital: | ||
Managing Member | ||
Other Members | 5,557 | 4,114 |
Total Members' capital | 5,557 | 4,114 |
Total liabilities and Members' capital | $ 5,710 | $ 4,442 |
Statements of Income
Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Leasing activities: | ||||
Operating leases | $ 900 | $ 976 | $ 2,619 | $ 2,681 |
Direct financing leases | 4 | 3 | 13 | |
Gain on sales of lease assets | 112 | 399 | 184 | 872 |
Other revenue | 1 | 1 | ||
Total revenues | 1,012 | 1,380 | 2,806 | 3,567 |
Expenses: | ||||
Depreciation of operating lease assets | 71 | 76 | 222 | 244 |
Amortization of initial direct costs | 1 | 1 | ||
Asset management fees to Managing Member | 36 | 29 | 100 | 100 |
Vessel maintenance | 21 | |||
Railcar maintenance | 118 | 77 | 403 | 209 |
Cost reimbursements to Managing Member | 65 | 75 | 198 | 247 |
Other management fees | 34 | 16 | 83 | 69 |
Railcar storage fees | 6 | 15 | 25 | 48 |
Professional fees | 36 | 34 | 160 | 151 |
Insurance | 10 | 12 | 31 | 31 |
Provision for credit losses | 7 | 7 | ||
Taxes on income and franchise fees | 5 | 15 | ||
Postage | 3 | 3 | 8 | |
Printing and photocopying | 4 | 6 | 8 | 14 |
Freight and shipping | 3 | 12 | 18 | 25 |
Other | 24 | 25 | 68 | 80 |
Total expenses | 420 | 380 | 1,363 | 1,226 |
Net income | 592 | 1,000 | 1,443 | 2,341 |
Net income: | ||||
Managing Member | ||||
Other Members | 592 | 1,000 | 1,443 | 2,341 |
Net income | $ 592 | $ 1,000 | $ 1,443 | $ 2,341 |
Net income per Limited Liability Company Unit (Other Members) | $ 0.04 | $ 0.07 | $ 0.11 | $ 0.17 |
Weighted average number of Units outstanding | 13,560,188 | 13,560,188 | 13,560,188 | 13,560,188 |
Statements of Changes in Member
Statements of Changes in Members' Capital - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Beginning Balance (in Units) | 13,560,188 | |||
Beginning Balance | $ 4,114 | $ 5,704 | $ 5,704 | |
Distributions to Other Members | (4,068) | |||
Distributions to Managing Member | (330) | |||
Net income | $ 592 | $ 1,443 | $ 2,341 | $ 2,808 |
Ending Balance (in Units) | 13,560,188 | 13,560,188 | 13,560,188 | 13,560,188 |
Ending Balance | $ 5,557 | $ 5,557 | $ 4,114 | |
Other Members [Member] | ||||
Beginning Balance (in Units) | 13,560,188 | 13,560,188 | 13,560,188 | |
Beginning Balance | $ 4,114 | $ 5,704 | $ 5,704 | |
Distributions to Other Members | (4,068) | |||
Net income | $ 1,443 | $ 2,478 | ||
Ending Balance (in Units) | 13,560,188 | 13,560,188 | 13,560,188 | |
Ending Balance | $ 5,557 | $ 5,557 | $ 4,114 | |
Managing Member [Member] | ||||
Distributions to Managing Member | (330) | |||
Net income | $ 330 |
Statements of Changes in Membe5
Statements of Changes in Members' Capital (Parenthetical) | 12 Months Ended |
Dec. 31, 2015$ / shares | |
Statements of Changes in Members' Capital [Abstract] | |
Weighted average distributions to Other Members per Unit | $ 0.30 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Operating activities: | ||||
Net income | $ 592 | $ 1,000 | $ 1,443 | $ 2,341 |
Adjustment to reconcile net income to cash provided by operating activities: | ||||
Gain on sales of assets | (112) | (399) | (184) | (872) |
Depreciation of operating lease assets | 71 | 76 | 222 | 244 |
Amortization of initial direct costs | 1 | 1 | ||
Provision for credit losses | 7 | 7 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 5 | (65) | (6) | 93 |
Prepaid expenses and other assets | (22) | (23) | (8) | (17) |
Accounts payable, Managing Member | 43 | (54) | (95) | (123) |
Accounts payable, other | 9 | (33) | (85) | (65) |
Unearned operating lease income | 5 | 5 | 23 | |
Net cash provided by operating activities | 594 | 507 | 1,300 | 1,624 |
Investing activities: | ||||
Proceeds from sales of assets | 176 | 465 | 322 | 1,241 |
Principal payments received on direct financing leases | 4 | 3 | 4 | |
Payments of initial direct costs | (15) | (15) | ||
Net cash provided by investing activities | 161 | 469 | 310 | 1,245 |
Financing activities: | ||||
Net cash provided by financing activities | ||||
Net increase in cash and cash equivalents | 755 | 976 | 1,610 | 2,869 |
Cash and cash equivalents at beginning of period | 866 | 2,821 | 11 | 928 |
Cash and cash equivalents at end of period | $ 1,621 | $ 3,797 | 1,621 | 3,797 |
Supplemental disclosures of cash flow information: | ||||
Cash paid during the period for taxes | $ 13 | $ 7 |
Organization and Limited Liabil
Organization and Limited Liability Company Matters | 9 Months Ended |
Sep. 30, 2016 | |
Organization and Limited Liability Company Matters [Abstract] | |
Organization and Limited Liability Company Matters | 1. Organization and Limited Liability Company matters: ATEL Capital Equipment Fund VIII, LLC (the “Company” or the “Fund”) was formed under the laws of the State of California on July 31, 1998. The Company was formed for the purpose of acquiring equipment to engage in equipment leasing and sales activities. The Managing Member or Manager of the Company is ATEL Financial Services, LLC (“AFS”), a California limited liability company. The Company may continue until December 31, 2019 . 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. Gross contributions in the amount of $ 135.7 million ( 13,570,188 units) were received as of November 30, 2000, inclusive of $ 500 of initial Member’s capital investment and $ 100 of AFS’ capital investment. The offering was terminated on November 30, 2000. As of September 30 , 2016, 13,560,188 Units remain issued and outstanding . The Company is governed by its Limited Liability Company Operating Agreement (“Operating Agreement”), as amended. Pursuant to the Operating Agreement, AFS and/or its affiliates receive compensation and reimbursements for services rendered on behalf of the Company (See Note 4). The Company is required to maintain reasonable cash reserves for working capital, the repurchase of Units and contingencies. The repurchase of Units is solely at the discretion of AFS. As of September 30, 2016, the Company continues in the liquidation phase of its life cycle as defined in the Operating Agreement. These unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of significant accounting policies: Basis of presentation: The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three and nine months ended September 30 , 2016 are not necessarily indicative of the results to be expected for the full year. Certain prior period amounts may have been reclassified to conform to the current period presentation. These reclassifications had no significant effect on the reported financial position or results of operations. Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data. In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after September 30 , 2016 up until the issuance of the financial statements. No events were noted which would require additional disclosure in the footnotes to the financial statements, or adjustments thereto. Use of estimates: The preparation of financial statements in conformity with GAAP 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 relate primarily to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and determination of the allowance for doubtful accounts. Segment reporting: The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States. Certain of the Company’s lessee customers have international operations. In these instances, the Company is aware that certain equipment, primarily rail and transportation, may periodically exit the country. However, these lessee customers are US-based, and it is not cost effective for the Company to track, on an asset-by-asset, day-by-day basis, where these assets are deployed. The primary geographic regions in which the Company sought leasing opportunities were North America and Europe. For the nine months ended September 30 , 2016 and 2015, and as of September 30 , 2016 and December 31, 2015, 100% of the Company’s operating revenues and long-lived assets relate to customers domiciled in North America. Per Unit data: The Company issues only one class of Units, none of which are considered dilutive. Net income and distributions per Unit are based upon the weighted average number of Other Members’ Units outstanding during the period. Recent accounting pronouncements: In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-15 —Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 addresses specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this Update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. Management is currently evaluating the standard and its impact on operations and financial reporting. In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”). The main objective of this Update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments affect entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018. Management is currently evaluating the standard and its operational and related disclosure requirements. In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) (“ASU 2016-02”). The new standard will require lessees to recognize lease assets and lease liabilities arising from operating leases with lease terms greater than 12 months in the statement of financial position. Lessor accounting per ASU 2016-02 is mostly unchanged from the previous lease accounting GAAP. Certain changes were made to the lessor accounting guidance in order to align the lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. Similar to the previous guidance, lessors will classify leases as operating, direct financing, or sales-type. Lessors in operating leases will continue to recognize the underlying asset and recognize income on a straight-line basis. Lessors determine whether a lease is a sale of the underlying asset based on whether the lessee effectively obtains control of the underlying assets. ASU-2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Management is currently evaluating the standard and its operational and related disclosure requirements. In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The new standard provides guidance related to accounting for equity investments and financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Management is currently evaluating the standard and its operational and related disclosure requirements. In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU-2014-15”). The new standard provides guidance relative to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. Management does not expect the adoption of ASU 2014-15 to have a material impact on the Company’s financial statements or related disclosures. In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year and in August 2015, issued Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting period. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company evaluated the impact of the new standard on its financial statements and has determined that such impact is virtually non-existent as the new revenue guideline does not affect revenues from leases, which comprise the majority of the Company’s revenues. |
Investments in Equipment and Le
Investments in Equipment and Leases, Net | 9 Months Ended |
Sep. 30, 2016 | |
Investments in Equipment and Leases, Net [Abstract] | |
Investments in Equipment and Leases, Net | 3. Investment in equipment and leases, net: The Company’s investment in leases consists of the following (in thousands): Balance December 31, 2015 Reclassifications & Additions / Dispositions Depreciation/ Amortization Expense or Amortization of Leases Balance September 30, 2016 Net investment in operating leases $ 3,192 $ (106) $ (222) $ 2,864 Net investment in direct financing leases 12 (10) (2) - Assets held for sale or lease, net 720 (23) - 697 Initial direct cost - notes receivable - 15 (1) 14 Total $ 3,924 $ (124) $ (225) $ 3,575 Impairment of investments in leases and assets held for sale or lease: Recorded values of the Company’s leased asset portfolio are reviewed each quarter to confirm the reasonableness of established residual values and to determine whether there is indication that an asset impairment might have taken place. The Company uses a variety of sources and considers many factors in evaluating whether the respective book values of its assets are appropriate. In addition, the Company may direct a residual value review at any time if it becomes aware of issues regarding the ability of a lessee to continue to make payments on its lease contract. An impairment loss is measured and recognized only if the estimated undiscounted future cash flows of the asset are less than their net book value. The estimated undiscounted future cash flows are the sum of the residual value of the asset at the end of the asset’s lease contract and undiscounted future rents from the existing lease contract, if any. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows, third party appraisals or comparable sales of similar assets as applicable based on asset type) of the asset and its carrying value on the measurement date. Upward adjustments for impairments recognized in prior periods are not made in any circumstances. As a result of these reviews, management determined that no impairment losses existed during the three and nine months ended September 30, 2016 and 2015 . The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment on operating leases currently in its portfolio. Depreciation expense on the Company’s equipment totaled $71 thousand and $ 76 thousand for the respective three months ended September 30, 2016 and 2015, and $222 thousand and $244 thousand for the respective nine months ended September 30, 2016 and 2015. All of the remaining property on lease, including capitalized improvements, were acquired during the years 1999 through 2015. Operating leases: Property on operating leases consists of the following (in thousands): Balance December 31, 2015 Additions Reclassifications or Dispositions Balance September 30, 2016 Transportation, rail $ 14,714 $ - $ 397 $ 15,111 Containers 8,968 - (1,466) 7,502 Aviation - - 10 10 23,682 - (1,059) 22,623 Less accumulated depreciation (20,490) (222) 953 (19,759) Total $ 3,192 $ (222) $ (106) $ 2,864 The average estimated residual value for assets on operating leases was 12% and 11% of the assets’ original cost at September 30, 2016 and December 31, 2015, respectively. There were no operating leases in non-accrual status at September 30, 2016 and December 31, 2015. The Company may earn revenues from its containers, rail transportation, marine vessel and certain other assets based on utilization of such assets or through fixed term leases. Contingent rentals (i.e., short-term, operating charter hire payments) and the associated expenses are recorded when earned and/or incurred. The revenues associated with these rentals are included as a component of operating lease revenues, and totaled $ 265 thousand and $ 337 thousand for the respective three months ended September 30 , 2016 and 2015, and $845 thousand and $995 thousand for the respective nine months ended September 30, 2016 and 2015. Direct financing leases: During December 2014, aviation equipment formerly leased under an operating lease contract was re-leased as a direct financing lease. Such equipment comprised the Fund’s total investment in direct financing leases as of December 31, 2015. There were no investments in direct financing leases as of September 30, 2016. The following lists the components of the Company’s investment in direct financing leases as of December 31, 2015 (in thousands): December 31, 2015 Total minimum lease payments receivable $ 6 Estimated residual values of leased equipment (unguaranteed) 10 Investment in direct financing leases 16 Less unearned income (4) Net investment in direct financing leases $ 12 The Company’s remaining direct financing lease matured on April 1, 2016. There was no investment in direct financing lease assets in non-accrual status at September 30 , 2016 and December 31, 2015. At September 30 , 2016, the aggregate amounts of future lease payments receivable are as follows (in thousands) : Operating Leases Three months ending December 31, 2016 581 Year ending December 31, 2017 1,795 2018 1,371 2019 1,106 2020 377 2021 48 $ 5,278 As indicated in Note 1, the Company is scheduled to terminate no later than December 31, 2019. In the event that any assets remain at such date, the Fund will venture to dispose of such assets in an orderly manner within a reasonable timeframe. The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of September 30 , 2016, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years): Equipment category Useful Life Transportation, rail 35 - 40 Aviation equipment 15 - 20 Containers 15 - 20 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 4. Related party transactions: The terms of the Operating Agreement provide that AFS and/or affiliates are entitled to receive certain fees for equipment management and resale and for management of the Company. The Operating Agreement allows for the reimbursement of costs incurred by AFS for providing administrative services to the Company. Administrative services provided include Company accounting, finance/treasury, investor relations, legal counsel and lease and equipment documentation. AFS is not reimbursed for services whereby it is entitled to receive a separate fee as compensation for such services, such as management of equipment. Each of ATEL Leasing Corporation (“ALC”) and AFS is a wholly-owned subsidiary of ATEL Capital Group and performs services for the Company. Acquisition services, equipment management, lease administration and asset disposition services are performed by ALC; investor relations, communications services and general administrative services are performed by AFS. Cost reimbursements to the Managing Member are based on its costs incurred in performing administrative services for the Company. These costs are allocated to each managed entity based on certain criteria such as total assets, number of investors or contributed capital based upon the type of cost incurred. During the three and nine months ended September 30 , 2016 and 2015, AFS and/or affiliates earned fees and billed for reimbursements of costs and expenses pursuant to the Operating Agreement as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Asset management fees to Managing Member $ 36 $ 29 $ 100 $ 100 Cost reimbursements to Managing Member 65 75 198 247 $ 101 $ 104 $ 298 $ 347 The Fund’s Operating Agreement places an annual and cumulative limit for cost reimbursements to AFS and/or its affiliates. Any reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent such amounts may be payable if within the annual and cumulative limits in such future years. The Fund is a finite life and self-liquidating entity, and AFS and its affiliates have no recourse against the Fund for the amount of any unpaid excess reimbursable administrative expenses. The Fund will continue to require administrative services from AFS and its affiliates through the end of its term, and will therefore continue to incur reimbursable administrative expenses in each year. The Fund has determined that payment of any amounts in excess of the annual and cumulative limits is not probable, and the date any portion of such amount may be paid, if ever, is uncertain. When the Fund completes its liquidation stage and terminates, any unpaid amount will expire unpaid, with no claim by AFS or its affiliates against any liquidation proceeds or any party for the unpaid balance. For the year ending December 31, 2016, it is not anticipated that any further billings to the Fund will equal or exceed the annual or cumulative reimbursable expense limitation. Such is reflective of the continued diminishing Fund asset base over which reimbursements are calculated. |
Members' Capital
Members' Capital | 9 Months Ended |
Sep. 30, 2016 | |
Members' Capital [Abstract] | |
Members' Capital | 5. Members’ capital: As of September 30 , 2016 and December 31, 2015, 13,560,188 Units were issued and outstanding . The Company was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial Members ( 50 Units). There were no d istributions declared or paid during the three and nine months ended September 30, 2016 and 2015. |
Summary of Significant Accoun12
Summary of Significant Accounting Policies (Policy) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation: The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three and nine months ended September 30 , 2016 are not necessarily indicative of the results to be expected for the full year. Certain prior period amounts may have been reclassified to conform to the current period presentation. These reclassifications had no significant effect on the reported financial position or results of operations. Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data. In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after September 30 , 2016 up until the issuance of the financial statements. No events were noted which would require additional disclosure in the footnotes to the financial statements, or adjustments thereto. |
Use of Estimates | Use of estimates: The preparation of financial statements in conformity with GAAP 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 relate primarily to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and determination of the allowance for doubtful accounts. |
Segment Reporting | Segment reporting: The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States. Certain of the Company’s lessee customers have international operations. In these instances, the Company is aware that certain equipment, primarily rail and transportation, may periodically exit the country. However, these lessee customers are US-based, and it is not cost effective for the Company to track, on an asset-by-asset, day-by-day basis, where these assets are deployed. The primary geographic regions in which the Company sought leasing opportunities were North America and Europe. For the nine months ended September 30 , 2016 and 2015, and as of September 30 , 2016 and December 31, 2015, 100% of the Company’s operating revenues and long-lived assets relate to customers domiciled in North America. |
Per Unit Data | Per Unit data: The Company issues only one class of Units, none of which are considered dilutive. Net income and distributions per Unit are based upon the weighted average number of Other Members’ Units outstanding during the period. |
Recent Accounting Pronouncements | Recent accounting pronouncements: In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-15 —Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 addresses specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this Update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. Management is currently evaluating the standard and its impact on operations and financial reporting. In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”). The main objective of this Update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments affect entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018. Management is currently evaluating the standard and its operational and related disclosure requirements. In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) (“ASU 2016-02”). The new standard will require lessees to recognize lease assets and lease liabilities arising from operating leases with lease terms greater than 12 months in the statement of financial position. Lessor accounting per ASU 2016-02 is mostly unchanged from the previous lease accounting GAAP. Certain changes were made to the lessor accounting guidance in order to align the lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. Similar to the previous guidance, lessors will classify leases as operating, direct financing, or sales-type. Lessors in operating leases will continue to recognize the underlying asset and recognize income on a straight-line basis. Lessors determine whether a lease is a sale of the underlying asset based on whether the lessee effectively obtains control of the underlying assets. ASU-2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Management is currently evaluating the standard and its operational and related disclosure requirements. In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The new standard provides guidance related to accounting for equity investments and financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Management is currently evaluating the standard and its operational and related disclosure requirements. In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU-2014-15”). The new standard provides guidance relative to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. Management does not expect the adoption of ASU 2014-15 to have a material impact on the Company’s financial statements or related disclosures. In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year and in August 2015, issued Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting period. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company evaluated the impact of the new standard on its financial statements and has determined that such impact is virtually non-existent as the new revenue guideline does not affect revenues from leases, which comprise the majority of the Company’s revenues. |
Investments in Equipment and 13
Investments in Equipment and Leases, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments in Equipment and Leases, Net [Abstract] | |
Investment in Leases | The Company’s investment in leases consists of the following (in thousands): Balance December 31, 2015 Reclassifications & Additions / Dispositions Depreciation/ Amortization Expense or Amortization of Leases Balance September 30, 2016 Net investment in operating leases $ 3,192 $ (106) $ (222) $ 2,864 Net investment in direct financing leases 12 (10) (2) - Assets held for sale or lease, net 720 (23) - 697 Initial direct cost - notes receivable - 15 (1) 14 Total $ 3,924 $ (124) $ (225) $ 3,575 |
Property on Operating Leases | Property on operating leases consists of the following (in thousands): Balance December 31, 2015 Additions Reclassifications or Dispositions Balance September 30, 2016 Transportation, rail $ 14,714 $ - $ 397 $ 15,111 Containers 8,968 - (1,466) 7,502 Aviation - - 10 10 23,682 - (1,059) 22,623 Less accumulated depreciation (20,490) (222) 953 (19,759) Total $ 3,192 $ (222) $ (106) $ 2,864 |
Components of Company's Investment in Direct Financing Leases | The following lists the components of the Company’s investment in direct financing leases as of December 31, 2015 (in thousands): December 31, 2015 Total minimum lease payments receivable $ 6 Estimated residual values of leased equipment (unguaranteed) 10 Investment in direct financing leases 16 Less unearned income (4) Net investment in direct financing leases $ 12 |
Future Minimum Lease Payments Receivable | At September 30 , 2016, the aggregate amounts of future lease payments receivable are as follows (in thousands) : Operating Leases Three months ending December 31, 2016 581 Year ending December 31, 2017 1,795 2018 1,371 2019 1,106 2020 377 2021 48 $ 5,278 |
Schedule of Useful Lives of Assets | The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of September 30 , 2016, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years): Equipment category Useful Life Transportation, rail 35 - 40 Aviation equipment 15 - 20 Containers 15 - 20 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
AFS and/or Affiliates Earned Commissions and Billed for Reimbursements Pursuant to Operating Agreement | During the three and nine months ended September 30 , 2016 and 2015, AFS and/or affiliates earned fees and billed for reimbursements of costs and expenses pursuant to the Operating Agreement as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Asset management fees to Managing Member $ 36 $ 29 $ 100 $ 100 Cost reimbursements to Managing Member 65 75 198 247 $ 101 $ 104 $ 298 $ 347 |
Organization and Limited Liab15
Organization and Limited Liability Company Matters (Narrative) (Details) - USD ($) | Nov. 30, 2000 | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
Organization and Limited Liability Company Matters [Abstract] | ||||
Business cessation date | Dec. 31, 2019 | |||
Contributions received | $ 135,700,000 | |||
Contributions Units received | 13,570,188 | |||
Contributions of capital, initial member | $ 500 | |||
Members capital account, Units issued | 13,560,188 | 13,560,188 | ||
Members capital account, Units outstanding | 13,560,188 | 13,560,188 | 13,560,188 | |
Capital investment, AFS | $ 100 |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Narrative) (Details) - segment | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Number of operating segments | 1 | ||||
Number of reportable segments | 1 | ||||
Long-Lived Assets [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Percentage of concentration risk from customers domiciled in North America | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Investments in Equipment and 17
Investments in Equipment and Leases, Net (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Investments in Equipment and Leases, Net [Abstract] | |||||
Impairment losses recorded | $ 0 | $ 0 | $ 0 | $ 0 | |
Depreciation of operating lease assets | $ 71 | 76 | $ 222 | 244 | |
Average estimated residual value for assets on operating leases | 12.00% | 12.00% | 11.00% | ||
Contingent rental revenue | $ 265 | $ 337 | $ 845 | $ 995 |
Investments in Equipment and 18
Investments in Equipment and Leases, Net (Investment in Leases) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Leases Disclosure [Line Items] | |
Balance December 31, 2015 | $ 3,924 |
Reclassifications, Additions/ Dispositions | (124) |
Depreciation/ Amortization Expense or Amortization of Leases | (225) |
Balance September 30, 2016 | 3,575 |
Operating Leases [Member] | |
Leases Disclosure [Line Items] | |
Balance December 31, 2015 | 3,192 |
Reclassifications, Additions/ Dispositions | (106) |
Depreciation/ Amortization Expense or Amortization of Leases | (222) |
Balance September 30, 2016 | 2,864 |
Direct Financing Leases [Member] | |
Leases Disclosure [Line Items] | |
Balance December 31, 2015 | 12 |
Reclassifications, Additions/ Dispositions | (10) |
Depreciation/ Amortization Expense or Amortization of Leases | (2) |
Assets Held for Sale or Lease [Member] | |
Leases Disclosure [Line Items] | |
Balance December 31, 2015 | 720 |
Reclassifications, Additions/ Dispositions | (23) |
Balance September 30, 2016 | 697 |
Initial Direct Cost [Member] | |
Leases Disclosure [Line Items] | |
Reclassifications, Additions/ Dispositions | 15 |
Depreciation/ Amortization Expense or Amortization of Leases | (1) |
Balance September 30, 2016 | $ 14 |
Investments in Equipment and 19
Investments in Equipment and Leases, Net (Property on Operating Leases) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | $ 22,623 | $ 23,682 |
Less accumulated depreciation | (19,759) | (20,490) |
Property on operating leases, net | 2,864 | 3,192 |
Additions, less accumulated depreciation | (222) | |
Additions, net | (222) | |
Reclassifications or dispositions, gross | (1,059) | |
Reclassifications or dispositions, less accumulated depreciation | 953 | |
Reclassifications or dispositions, net | (106) | |
Transportation, Rail [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | 15,111 | 14,714 |
Reclassifications or dispositions, gross | 397 | |
Containers [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | 7,502 | $ 8,968 |
Reclassifications or dispositions, gross | (1,466) | |
Aviation [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | 10 | |
Reclassifications or dispositions, gross | $ 10 |
Investments in Equipment and 20
Investments in Equipment and Leases, Net (Components of Company's Investment in Direct Financing Leases) (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Investments in Equipment and Leases, Net [Abstract] | |
Total minimum lease payments receivable | $ 6 |
Estimated residual values of leased equipment (unguaranteed) | 10 |
Investment in direct financing leases | 16 |
Less unearned income | (4) |
Net investment in direct financing leases | $ 12 |
Investments in Equipment and 21
Investments in Equipment and Leases, Net (Future Minimum Lease Payments Receivable) (Details) - Operating Leases [Member] $ in Thousands | Sep. 30, 2016USD ($) |
Leases Disclosure [Line Items] | |
Three months ending December 31, 2016 | $ 581 |
Year ending December 31, 2017 | 1,795 |
2,018 | 1,371 |
2,019 | 1,106 |
2,020 | 377 |
2,021 | 48 |
Future minimum payments receivable, total | $ 5,278 |
Investment in Equipment and Lea
Investment in Equipment and Leases, Net (Schedule of Useful Lives of Assets) (Details) | 9 Months Ended |
Sep. 30, 2016 | |
Minimum [Member] | Transportation, Rail [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful lives of lease assets | 35 years |
Minimum [Member] | Containers [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful lives of lease assets | 15 years |
Minimum [Member] | Aviation [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful lives of lease assets | 15 years |
Maximum [Member] | Transportation, Rail [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful lives of lease assets | 40 years |
Maximum [Member] | Containers [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful lives of lease assets | 20 years |
Maximum [Member] | Aviation [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful lives of lease assets | 20 years |
Related Party Transactions (Aff
Related Party Transactions (Affiliates Earned Commissions and Billed for Reimbursements Pursuant to Operating Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Related Party Transactions [Abstract] | ||||
Asset management fees to Managing Member | $ 36 | $ 29 | $ 100 | $ 100 |
Cost reimbursements to Managing Member | 65 | 75 | 198 | 247 |
Related party transaction, total | $ 101 | $ 104 | $ 298 | $ 347 |
Members' Capital (Narrative) (D
Members' Capital (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Other Members Capital Account [Line Items] | |||
Members capital account, Units issued | 13,560,188 | 13,560,188 | |
Members capital account, Units outstanding | 13,560,188 | 13,560,188 | 13,560,188 |
Other Members capital account, Units authorized | 15,000,000 | 15,000,000 | |
Distributions declared | $ 4,068 | ||
Managing Member [Member] | |||
Other Members Capital Account [Line Items] | |||
Members capital account, Units issued | 50 | 50 |