Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 28, 2017 | Jun. 30, 2016 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
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 Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Public Float | $ 0 | ||
Entity Units Outstanding | 13,560,188 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 965 | $ 11 |
Accounts receivable, net | 412 | 476 |
Prepaid expenses and other assets | 32 | 31 |
Investments in equipment and leases, net | 3,466 | 3,924 |
Total assets | 4,875 | 4,442 |
Accounts payable and accrued liabilities: | ||
Managing Member | 200 | 125 |
Other | 56 | 135 |
Unearned operating lease income | 69 | 68 |
Total liabilities | 325 | 328 |
Commitments and contingencies | ||
Members' capital: | ||
Managing Member | ||
Other Members | 4,550 | 4,114 |
Total Members' capital | 4,550 | 4,114 |
Total liabilities and Members' capital | $ 4,875 | $ 4,442 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Balance Sheets [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 7 | $ 0 |
Investments in equipment and leases, accumulated depreciation | $ 23,704 | $ 25,276 |
Statements of Income
Statements of Income - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Leasing activities: | ||
Operating leases | $ 3,510 | $ 3,627 |
Direct financing leases | 3 | 16 |
Gain on sales of lease assets | 224 | 889 |
Other revenue | 2 | |
Total revenues | 3,737 | 4,534 |
Expenses: | ||
Depreciation of operating lease assets | 287 | 317 |
Amortization of initial direct costs | 1 | |
Asset management fees to Managing Member | 176 | 222 |
Vessel maintenance | 29 | |
Railcar maintenance | 504 | 332 |
Cost reimbursements to Managing Member and/or affiliates | 269 | 308 |
Other management fees | 108 | 95 |
Railcar storage fees | 32 | 62 |
Professional fees | 207 | 185 |
Insurance | 41 | 38 |
Provision for credit losses | 7 | |
Taxes on income and franchise fees | 20 | |
Postage | 12 | 11 |
Printing and photocopying | 17 | 24 |
Freight and shipping | 22 | 24 |
Other | 103 | 108 |
Total expenses | 1,835 | 1,726 |
Net income | 1,902 | 2,808 |
Net income: | ||
Managing Member | 110 | 330 |
Other Members | 1,792 | 2,478 |
Net income | $ 1,902 | $ 2,808 |
Net income per Limited Liability Company Unit (Other Members) | $ 0.13 | $ 0.18 |
Weighted average number of Units outstanding | 13,560,188 | 13,560,188 |
Statements of Changes in Member
Statements of Changes in Members' Capital - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Beginning Balance (in Units) | 13,560,188 | 13,560,188 |
Beginning Balance | $ 4,114 | $ 5,704 |
Distributions to Other Members | (1,356) | (4,068) |
Distributions to Managing Member | (110) | (330) |
Net income | $ 1,902 | $ 2,808 |
Ending Balance (in Units) | 13,560,188 | 13,560,188 |
Ending Balance | $ 4,550 | $ 4,114 |
Other Members [Member] | ||
Beginning Balance (in Units) | 13,560,188 | 13,560,188 |
Beginning Balance | $ 4,114 | $ 5,704 |
Distributions to Other Members | (1,356) | (4,068) |
Net income | $ 1,792 | $ 2,478 |
Ending Balance (in Units) | 13,560,188 | 13,560,188 |
Ending Balance | $ 4,550 | $ 4,114 |
Managing Member [Member] | ||
Distributions to Managing Member | (110) | (330) |
Net income | $ 110 | $ 330 |
Statements of Changes in Membe6
Statements of Changes in Members' Capital (Parenthetical) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Statements of Changes in Members' Capital [Abstract] | ||
Weighted average distributions per Unit | $ 0.10 | $ 0.30 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Operating activities: | ||
Net income | $ 1,902 | $ 2,808 |
Adjustment to reconcile net income to cash provided by operating activities: | ||
Gain on sales of assets | (224) | (889) |
Depreciation of operating lease assets | 287 | 317 |
Amortization of initial direct costs | 1 | |
Provision for credit losses | 7 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 57 | 82 |
Prepaid expenses and other assets | (1) | (10) |
Accounts payable, Managing Member | 75 | (25) |
Accounts payable, other | (79) | 140 |
Unearned operating lease income | 1 | 20 |
Net cash provided by operating activities | 2,026 | 2,443 |
Investing activities: | ||
Improvements to equipment on operating leases | (253) | |
Proceeds from sales of assets | 405 | 1,285 |
Principal payments received on direct financing leases | 3 | 6 |
Payments of initial direct costs | (14) | |
Net cash provided by investing activities | 394 | 1,038 |
Financing activities: | ||
Net cash used in financing activities | (1,466) | (4,398) |
Net increase (decrease) in cash and cash equivalents | 954 | (917) |
Cash and cash equivalents at beginning of year | 11 | 928 |
Cash and cash equivalents at end of year | 965 | 11 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the period for taxes | 13 | 7 |
Managing Member [Member] | ||
Operating activities: | ||
Net income | 110 | 330 |
Financing activities: | ||
Distributions to Members | (110) | (330) |
Other Members [Member] | ||
Operating activities: | ||
Net income | 1,792 | 2,478 |
Financing activities: | ||
Distributions to Members | $ (1,356) | $ (4,068) |
Organization and Limited Liabil
Organization and Limited Liability Company Matters | 12 Months Ended |
Dec. 31, 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 (“Date of Inception”) for the purpose of equipment financing and acquiring equipment to engage in equipment leasing and sales activities. The Managing Member of the Company is ATEL Financial Services, LLC (the “Managing Member” or “Manager”), a California limited liability company. The Managing Member is a wholly-owned subsidiary of ATEL Capital Group. The Fund may continue until December 31, 2019 . As a limited liability company, the liability of any individual member for the obligations of the Fund is limited to the extent of capital contributions to the Fund by the individual member. Contributions in the amount of $600 were received, which represented a $500 initial member’s capital investment and a $100 Managing Member’s capital investment. The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $ 10 per Unit. On January 13, 1999, subscriptions for the minimum number of Units ( 120,000 , representing $ 1.2 million) had been received ( excluding subscriptions from Pennsylvania investors ) and AFS requested that the subscription s be released to the Company. On that date, the Company commenced operations in its primary business (acquiring equipment to engage in equipment leasing, lending and sales activities ). 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 December 31, 2016, cumulative gross contributions, less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable), totaling $ 135.7 million (inclusive of the $ 600 i nitial Member’s capital investment ) have been received. As of the same date , 13,560,188 Units were issued and outstanding . The Company’s principal objectives have been to invest in a diversified portfolio of equipment that (i) preserves, protects and returns the Company’s invested capital; (ii) generates regular distributions to the Members of cash from operations and cash from sales or refinancing, with any balance remaining after certain minimum distributions to be used to purchase additional equipment during the reinvestment period (“Reinvestment Period”) (defined as six full years following the year the offering was terminated), which ended December 31, 2006, and (iii) provides additional distributions following the Reinvestment Period and until all equipment has been sold. The Company is governed by its Limited Liability Company Operating Agreement (“Operating Agreement”), as amended. Pursuant to the terms of the Operating Agreement, the Managing Member and/or its affiliates receive compensation for services rendered and reimbursements for costs incurred on behalf of the Company (See Note 6, Related party transactions). 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 the Managing Member. As of December 31, 2016, the Company continues in the liquidation phase of its life cycle as defined in the Operating Agreement. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of significant accounting policies: Basis of presentation: The accompanying balance sheets as of December 31, 2016 and 2015, and the related statements of income, changes in members’ capital, and cash flows for the years then ended, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission. Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no significant effect on the reported financial position or results from 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 December 31 , 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, and adjustments thereto. Cash and cash equivalents: Cash and cash equivalents include cash in banks and cash equivalent investments such as U.S. Treasury instruments with original and/or purchased maturities of ninety days or less. Use of Estimates: The preparation of the 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 the estimates. Such estimates primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and for determination of the allowance for doubtful accounts and reserve for credit losses on notes receivable. Accounts receivable: Accounts receivable represent the amounts billed under operating and direct financing lease contracts, and notes receivable which are currently due to the Company. Allowances for doubtful accounts are typically established based on historical charge off and collection experience and the collectability of specifically identified lessees and borrowers, and invoiced amounts. Accounts receivable deemed uncollectible are generally charged off against the allowance on a specific identification basis. Recoveries of amounts that were previously written-off are recorded as other income in the period received. Credit risk: Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents, operating and direct financing lease receivables, notes receivable and accounts receivable. The Company places the majority of its cash deposits in noninterest-bearing accounts with financial institutions that have no less than $10 billion in assets. Such deposits are insured up to $250 thousand. The remainder of the Funds’ cash is temporarily invested in U.S. Treasury denominated instruments. The concentration of such deposits and temporary cash investments is not deemed to create a significant risk to the Company. Accounts and notes receivable represent amounts due from lessees or borrowers in various industries, related to equipment on operating and direct financing leases or notes receivable. Equipment on operating leases and related revenue recognition: Equipment subject to operating leases is stated at cost. Depreciation is being recognized on a straight-line method over the terms of the related leases to the equipment’s estimated residual values. Off-lease equipment is generally not subject to depreciation. The Company depreciates all lease assets, in accordance with guidelines consistent with ASC 840-20-35-3, over the periods of the lease terms contained in each asset’s respective lease contract to the estimated residual value at the end of the lease contract. All lease assets are purchased only concurrent with the execution of a lease commitment by the lessee. Thus, the original depreciation period corresponds with the term of the original lease. Once the term of an original lease contract is completed, the subject property is typically sold to the existing user, re-leased to the existing user, or, when off-lease, is held for sale. Assets which are re-leased continue to be depreciated using the terms of the new lease agreements and the estimated residual values at the end of the new lease terms, adjusted downward as necessary. Assets classified as held-for-sale are carried at the lower of carrying amount, or the fair value less cost to sell (ASC 360-10-35-43). The Company does not use the equipment held in its portfolio, but holds it solely for lease and ultimate sale. In the course of marketing equipment that has come off-lease, management may determine at some point that re-leasing the assets may provide a superior return for investors and would then execute another lease. Upon entering into a new lease contract, management will estimate the residual value once again and resume depreciation. If, and when, the Company, at any time, determines that depreciation in value may have occurred with respect to an asset held-for-sale, the Company would review the value to determine whether a material reduction in value had occurred and recognize any appropriate impairment. All lease assets, including off-lease assets, are subject to the Company’s quarterly impairment analysis, as described below. Maintenance costs associated with the Fund’s portfolio of leased assets are expensed as incurred. Major additions and betterments are capitalized. Operating lease revenue is recognized on a straight-line basis over the term of the underlying leases. The initial lease terms will vary as to the type of equipment subject to the leases, the needs of the lessees and the terms to be negotiated, but initial leases are generally on terms from 24 to 120 months. The difference between rent received and rental revenue recognized is recorded as unearned operating lease income on the balance sheet. Operating leases are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management considers the equipment underlying the lease contracts for impairment and periodically reviews the credit worthiness of all operating lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related operating leases may be placed on non-accrual status. Leases placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is probable. Until such time, revenues are recognized on a cash basis. Direct financing leases and related revenue recognition: Income from direct financing lease transactions is reported using the financing method of accounting, in which the Company’s investment in the leased property is reported as a receivable from the lessee to be recovered through future rentals. The interest income portion of each rental payment is calculated so as to generate a constant rate of return on the net receivable outstanding. Allowances for losses on direct financing leases are typically established based on historical charge-off and collection experience and the collectability of specifically identified lessees and billed and unbilled receivables. Direct financing leases are charged off to the allowance as they are deemed uncollectible. Direct financing leases are generally placed in a non-accrual status (i.e., no revenue is recognized) and deemed impaired when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of all direct finance lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related direct financing leases may be placed on non-accrual status. Leases placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is probable. Until such time, all payments received are applied only against outstanding principal balances. Initial direct costs: The Company capitalizes initial direct costs (“IDC”) associated with the origination and funding of lease assets. IDC includes both internal costs (e.g., the costs of employees’ activities in connection with successful lease and loan originations) and external broker fees incurred with such originations. The costs are amortized on a lease by lease basis based on actual lease term using a straight-line method. Upon disposal of the underlying lease assets, both the initial direct costs and the associated accumulated amortization are relieved. Costs related to leases that are not consummated are not eligible for capitalization as initial direct costs and are expensed as acquisition expense. Asset valuation: 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. 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. Segment reporting: The Company is organized into one operating segment for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States. The Company’s principal decision makers are the Managing Member’s Chief Executive Officer and its Chief Financial Officer and Chief Operating Officer. The Company believes that its equipment leasing business operates as one reportable segment because : a) the Company measures profit and loss at the equipment portfolio level as a whole; b) the principal decision makers do not review information based on any operating segment other than the equipment leasing transaction portfolio; c) the Company does not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and services other than equipment lease financing; and e) the Company has not chosen to organize its business around geographic areas. The primary geographic region in which the Company seeks leasing opportunities is North America. As and for the years ended December 31, 2016 and 2015, all of the Company’s current operating revenues and long-lived assets relate to customers domiciled in the United States. Unearned operating lease income: The Company records prepayments on operating leases as a liability under the caption of unearned operating lease income. The liability is recorded when prepayments are received and recognized as operating lease revenue over the period to which the prepayments relate using a straight-line method. Income Taxes: The Company is treated as a partnership for federal income tax purposes. Pursuant to the provisions of Section 701 of the Internal Revenue Code, a partnership is not subject to federal income taxes. Accordingly, the Company has provided current franchise income taxes for only those states which levy income taxes on partnerships. For the years ended December 31, 2016 and 2015, the Company recorded no provision for state income taxes. The Company does not have any entity level uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions and is generally subject to examination by U.S. federal (or state and local) income tax authorities for three years from the filing of a tax return. The tax bases of the Company’s net assets and liabilities vary from the amounts presented in these financial statements at December 31, 2016 and 2015 as follows (in thousands): 2016 2015 Financial statement basis of net assets $ 4,550 $ 4,114 Tax basis of net assets (unaudited) 8,336 7,492 Difference $ (3,786) $ (3,378) The primary differences between the tax bases of net assets and the amounts recorded in the financial statements are the result of differences in accounting for syndication costs and differences between the depreciation methods used in the financial statements and the Company’s tax returns. The following reconciles the net income reported in these financial statements to the income reported on the Company’s federal tax return (unaudited) for the years ended December 31, 2016 and 2015 (in thousands): 2016 2015 Net income per financial statements $ 1,902 $ 2,808 Tax adjustments (unaudited): Adjustment to depreciation expense 217 227 Provision for losses and doubtful accounts 7 - Adjustments to revenues / other expenses 3 25 Adjustments to gain on sales of assets 181 396 Income per federal tax return (unaudited) $ 2,310 $ 3,456 Per Unit data: Net income and distributions per Unit are based upon the weighted average number of Other Members Units outstanding during the year. 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 will adopt the standard and 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, the 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 and loans, which comprise the majority of the Company’s revenues. |
Concentration of Credit Risk an
Concentration of Credit Risk and Major Customers | 12 Months Ended |
Dec. 31, 2016 | |
Concentration of Credit Risk and Major Customers [Abstract] | |
Concentration of Credit Risk and Major Customers | 3. Concentration of credit risk and major customers: The Company leases equipment to lessees and provides debt financing to borrowers in diversified industries. Leases and notes receivable are subject to the Managing Member’s credit committee review. The leases and notes receivable provide for the return of the equipment to the Company upon default. As of December 31, 2016 and 2015, there were concentrations (greater than or equal to 10% as a percentage of total equipment cost) of equipment leased to lessees and/or financed for borrowers in certain industries as follows: 2016 2015 Transportation, rail 64% 58% Transportation, containers 32% 38% During 2016 and 2015, certain lessees and/or financial borrowers generated significant portions (defined as greater than or equal to 10%) of the Company’s total leasing and lending revenues, excluding gains or losses on disposition of assets, as follows: Percentage of Total Lease Revenues Lessee Type of Equipment 2016 2015 Exsif Worldwide Inc. Transportation, other 22% 26% Interstate Commodities, Inc. Transportation, rail 21% 20% These percentages are not expected to be comparable in future periods due to anticipated changes in the mix of investments and/or lessees as a result of normal business activities. |
Investments in Equipment and Le
Investments in Equipment and Leases, Net | 12 Months Ended |
Dec. 31, 2016 | |
Investments in Equipment and Leases, Net [Abstract] | |
Investments in Equipment and Leases, Net | 4 . Investments 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 December 31, 2016 Net investment in operating leases $ 3,192 $ (148) $ (287) $ 2,757 Net investment in direct financing leases 12 (10) (2) - Assets held for sale or lease, net 720 (23) - 697 Initial direct cost, net of accumulated amortization of $1 at December 31, 2016 - 13 (1) 12 Total $ 3,924 $ (168) $ (290) $ 3,466 Impairment of investments in leases: 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. 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 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 $287 thousand and $ 317 thousand for the years ended December 31, 2016 and 2015, respectively. The Company had $1 thousand IDC amortization expense related to operating or direct financing leases for 2016 and there was no IDC amortization expense related to operating or direct financing leases for 2015. All of the Company’s lease asset purchases and capital improvements were made during the years from 1999 through 2015. Operating leases: Property on operating leases consists of the following (in thousands): Balance December 31, 2015 Additions Reclassifications or Dispositions Balance December 31, 2016 Transportation, rail $ 14,714 $ - $ 397 $ 15,111 Containers 8,968 - (1,998) 6,970 Aviation - - 11 11 23,682 - (1,590) 22,092 Less accumulated depreciation (20,490) (287) 1,442 (19,335) Total $ 3,192 $ (287) $ (148) $ 2,757 The average estimated residual value fo r assets on operating leases were 12% and 11% of the assets’ original cost at December 31, 2016 and 2015 , respectively . There were no operating leases in non-accrual status at both December 31, 2016 and 2015. Direct financing leases: As of December 31, 2016, the company had no investment in direct financing leases. The components of the Company’s investment in direct financing leases as of December 31, 2015 are as follows (in thousands): 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 At December 31, 2016, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands): Operating Leases Year ending December 31, 2017 $ 1,795 2018 1,371 2019 1,106 2020 377 2021 48 $ 4,697 The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of December 31, 2016 and 2015, 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 |
Allowance for Credit Losses
Allowance for Credit Losses | 12 Months Ended |
Dec. 31, 2016 | |
Allowance for Credit Losses [Abstract] | |
Allowance for Credit Losses | 5. Allowance for credit losses: The Company’s allowance for credit losses total $7 thousand and $0 at December 31, 2016 and December 31, 2015, respectively. All of such allowance was related to delinquent operating lease receivables. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 6 . Related party transactions: The terms of the Operating Agreement provide that the Managing Member 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 the Managing Member and/or affiliates for 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 whereby it is entitled to receive a separate fee as compensation for such services, such as management of investments. Each of AFS and ATEL Leasing Corporation (“ALC”) is a wholly-owned subsidiary of ATEL Capital Group, Inc. and performs services for the Company on behalf of the Managing Member. Acquisition services, equipment management, lease administration and asset disposition services are performed by ALC; investor relations, communications and general administrative services are performed by AFS. Cost reimbursements to the Managing Member or its affiliates 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. 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. The Managing Member and/or affiliates earned fees and billed for reimbursements, pursuant to the Operating Agreement, during the years ended December 31, 2016 and 2015 as follows (in thousands): 2016 2015 Asset management fees to Managing Member $ 176 $ 222 Cost reimbursements to Managing Member 269 308 $ 445 $ 530 |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2016 | |
Commitments [Abstract] | |
Commitments | 7. Commitments: At December 31, 2016, there were no commitments to purchase lease assets. |
Guarantees
Guarantees | 12 Months Ended |
Dec. 31, 2016 | |
Guarantees [Abstract] | |
Guarantees | 8 . Guarantees: The Company entered into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. The Managing Member knows of no facts or circumstances that would make the Company’s contractual commitments outside standard mutual covenants applicable to commercial transactions between businesses. Accordingly, the Company believes that these indemnification obligations are made in the ordinary course of business as part of standard commercial and industry practice, and that any potential liability under the Company’s similar commitments is remote. Should any such indemnification obligation become payable, the Company would separately record and/or disclose such liability in accordance with GAAP. |
Members' Capital
Members' Capital | 12 Months Ended |
Dec. 31, 2016 | |
Members' Capital [Abstract] | |
Members' Capital | 9 . Members’ capital: A total of 13,560,188 Units were issued and outstanding at December 31, 2016 and 2015, including the 50 Units issued to the initial Member (Managing Member). The Fund was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial Member. The Company has the right, exercisable at the Managing Member ’s discretion, but not the obligation, to repurchase Units of a Unitholder who ceases to be a U.S. Citizen, for a price equal to 100 % of the holder’s capital account. The Company is otherwise permitted, but not required, to repurchase Units upon a holder’s request. The repurchase of Fund u nits is made in accordance with Section 13 of the Amended and Restated Limited Liability Company Operating Agreement . The repurchase would be at the discretion of the Managing Member on terms it determines to be appropriate under given circumstances, in the event that the Managing Member deems such repurchase to be in the best interest of the Company ; provided, the Company is never required to repurchase any Units. Upon the repurchase of any Units by the Fund, the tendered Units are cancelled. Units repurchased in prior periods were repurchased at amounts representing the original investment less cumulative distributions made to the Unitholder with respect to the Units. All Units repurchased during a quarter are deemed to be repurchased effective the last day of the preceding quarter, and are not deemed to be outstanding during, or entitled to allocations of net income, net loss or distributions for the quarter in which such repurchase occurs. The Fund’s net income or net losses are to be allocated 100% to the Members. From the commencement of the Fund until the initial closing date, net income and net loss were allocated 99% to the Managing Member and 1% to the initial Other Members. Commencing with the initial closing date, net income and net loss are to be allocated 92.5 % to the Other Members and 7.5 % to the Managing Member. Fund distributions are to be allocated 7.5% to the Managing Member and 92.5% to the Other Members. The Company commenced periodic distributions in January 1999. Distributions to the Other Members for the years ended December 31, 2016 and 2015 were as follows (in thousands except Units and per Unit data): 2016 2015 Distributions declared $ 1,356 $ 4,068 Weighted average number of Units outstanding 13,560,188 13,560,188 Weighted average distributions per Unit $ 0.10 $ 0.30 |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policy) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation: The accompanying balance sheets as of December 31, 2016 and 2015, and the related statements of income, changes in members’ capital, and cash flows for the years then ended, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission. Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no significant effect on the reported financial position or results from 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 December 31 , 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, and adjustments thereto. |
Use of Estimates | Use of Estimates: The preparation of the 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 the estimates. Such estimates primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and for determination of the allowance for doubtful accounts and reserve for credit losses on notes receivable. |
Accounts Receivable | Accounts receivable: Accounts receivable represent the amounts billed under operating and direct financing lease contracts, and notes receivable which are currently due to the Company. Allowances for doubtful accounts are typically established based on historical charge off and collection experience and the collectability of specifically identified lessees and borrowers, and invoiced amounts. Accounts receivable deemed uncollectible are generally charged off against the allowance on a specific identification basis. Recoveries of amounts that were previously written-off are recorded as other income in the period received. |
Cash and Cash Equivalents | Cash and cash equivalents: Cash and cash equivalents include cash in banks and cash equivalent investments such as U.S. Treasury instruments with original and/or purchased maturities of ninety days or less. |
Credit Risk | Credit risk: Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents, operating and direct financing lease receivables, notes receivable and accounts receivable. The Company places the majority of its cash deposits in noninterest-bearing accounts with financial institutions that have no less than $10 billion in assets. Such deposits are insured up to $250 thousand. The remainder of the Funds’ cash is temporarily invested in U.S. Treasury denominated instruments. The concentration of such deposits and temporary cash investments is not deemed to create a significant risk to the Company. Accounts and notes receivable represent amounts due from lessees or borrowers in various industries, related to equipment on operating and direct financing leases or notes receivable. |
Equipment on Operating Leases and Related Revenue Recognition | Equipment on operating leases and related revenue recognition: Equipment subject to operating leases is stated at cost. Depreciation is being recognized on a straight-line method over the terms of the related leases to the equipment’s estimated residual values. Off-lease equipment is generally not subject to depreciation. The Company depreciates all lease assets, in accordance with guidelines consistent with ASC 840-20-35-3, over the periods of the lease terms contained in each asset’s respective lease contract to the estimated residual value at the end of the lease contract. All lease assets are purchased only concurrent with the execution of a lease commitment by the lessee. Thus, the original depreciation period corresponds with the term of the original lease. Once the term of an original lease contract is completed, the subject property is typically sold to the existing user, re-leased to the existing user, or, when off-lease, is held for sale. Assets which are re-leased continue to be depreciated using the terms of the new lease agreements and the estimated residual values at the end of the new lease terms, adjusted downward as necessary. Assets classified as held-for-sale are carried at the lower of carrying amount, or the fair value less cost to sell (ASC 360-10-35-43). The Company does not use the equipment held in its portfolio, but holds it solely for lease and ultimate sale. In the course of marketing equipment that has come off-lease, management may determine at some point that re-leasing the assets may provide a superior return for investors and would then execute another lease. Upon entering into a new lease contract, management will estimate the residual value once again and resume depreciation. If, and when, the Company, at any time, determines that depreciation in value may have occurred with respect to an asset held-for-sale, the Company would review the value to determine whether a material reduction in value had occurred and recognize any appropriate impairment. All lease assets, including off-lease assets, are subject to the Company’s quarterly impairment analysis, as described below. Maintenance costs associated with the Fund’s portfolio of leased assets are expensed as incurred. Major additions and betterments are capitalized. Operating lease revenue is recognized on a straight-line basis over the term of the underlying leases. The initial lease terms will vary as to the type of equipment subject to the leases, the needs of the lessees and the terms to be negotiated, but initial leases are generally on terms from 24 to 120 months. The difference between rent received and rental revenue recognized is recorded as unearned operating lease income on the balance sheet. Operating leases are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management considers the equipment underlying the lease contracts for impairment and periodically reviews the credit worthiness of all operating lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related operating leases may be placed on non-accrual status. Leases placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is probable. Until such time, revenues are recognized on a cash basis. |
Direct Financing Leases and Related Revenue Recognition | Direct financing leases and related revenue recognition: Income from direct financing lease transactions is reported using the financing method of accounting, in which the Company’s investment in the leased property is reported as a receivable from the lessee to be recovered through future rentals. The interest income portion of each rental payment is calculated so as to generate a constant rate of return on the net receivable outstanding. Allowances for losses on direct financing leases are typically established based on historical charge-off and collection experience and the collectability of specifically identified lessees and billed and unbilled receivables. Direct financing leases are charged off to the allowance as they are deemed uncollectible. Direct financing leases are generally placed in a non-accrual status (i.e., no revenue is recognized) and deemed impaired when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of all direct finance lessees with payments outstanding less than 90 days. Based upon management’s judgment, the related direct financing leases may be placed on non-accrual status. Leases placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid lease payments is probable. Until such time, all payments received are applied only against outstanding principal balances. |
Initial Direct Costs | Initial direct costs: The Company capitalizes initial direct costs (“IDC”) associated with the origination and funding of lease assets. IDC includes both internal costs (e.g., the costs of employees’ activities in connection with successful lease and loan originations) and external broker fees incurred with such originations. The costs are amortized on a lease by lease basis based on actual lease term using a straight-line method. Upon disposal of the underlying lease assets, both the initial direct costs and the associated accumulated amortization are relieved. Costs related to leases that are not consummated are not eligible for capitalization as initial direct costs and are expensed as acquisition expense. |
Asset Valuation | Asset valuation: 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. 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. |
Segment Reporting | Segment reporting: The Company is organized into one operating segment for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States. The Company’s principal decision makers are the Managing Member’s Chief Executive Officer and its Chief Financial Officer and Chief Operating Officer. The Company believes that its equipment leasing business operates as one reportable segment because : a) the Company measures profit and loss at the equipment portfolio level as a whole; b) the principal decision makers do not review information based on any operating segment other than the equipment leasing transaction portfolio; c) the Company does not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and services other than equipment lease financing; and e) the Company has not chosen to organize its business around geographic areas. The primary geographic region in which the Company seeks leasing opportunities is North America. As and for the years ended December 31, 2016 and 2015, all of the Company’s current operating revenues and long-lived assets relate to customers domiciled in the United States. |
Unearned Operating Lease Income | Unearned operating lease income: The Company records prepayments on operating leases as a liability under the caption of unearned operating lease income. The liability is recorded when prepayments are received and recognized as operating lease revenue over the period to which the prepayments relate using a straight-line method. |
Income Taxes | Income Taxes: The Company is treated as a partnership for federal income tax purposes. Pursuant to the provisions of Section 701 of the Internal Revenue Code, a partnership is not subject to federal income taxes. Accordingly, the Company has provided current franchise income taxes for only those states which levy income taxes on partnerships. For the years ended December 31, 2016 and 2015, the Company recorded no provision for state income taxes. The Company does not have any entity level uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions and is generally subject to examination by U.S. federal (or state and local) income tax authorities for three years from the filing of a tax return. The tax bases of the Company’s net assets and liabilities vary from the amounts presented in these financial statements at December 31, 2016 and 2015 as follows (in thousands): 2016 2015 Financial statement basis of net assets $ 4,550 $ 4,114 Tax basis of net assets (unaudited) 8,336 7,492 Difference $ (3,786) $ (3,378) The primary differences between the tax bases of net assets and the amounts recorded in the financial statements are the result of differences in accounting for syndication costs and differences between the depreciation methods used in the financial statements and the Company’s tax returns. The following reconciles the net income reported in these financial statements to the income reported on the Company’s federal tax return (unaudited) for the years ended December 31, 2016 and 2015 (in thousands): 2016 2015 Net income per financial statements $ 1,902 $ 2,808 Tax adjustments (unaudited): Adjustment to depreciation expense 217 227 Provision for losses and doubtful accounts 7 - Adjustments to revenues / other expenses 3 25 Adjustments to gain on sales of assets 181 396 Income per federal tax return (unaudited) $ 2,310 $ 3,456 |
Per Unit Data | Per Unit data: Net income and distributions per Unit are based upon the weighted average number of Other Members Units outstanding during the year. |
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 will adopt the standard and 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, the 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 and loans, which comprise the majority of the Company’s revenues. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of Differences Between Book Value and Tax Basis of Net Assets | The tax bases of the Company’s net assets and liabilities vary from the amounts presented in these financial statements at December 31, 2016 and 2015 as follows (in thousands): 2016 2015 Financial statement basis of net assets $ 4,550 $ 4,114 Tax basis of net assets (unaudited) 8,336 7,492 Difference $ (3,786) $ (3,378) |
Reconciliation of Net Income (Loss) Reported in Financial Statements and Federal Tax Return | The following reconciles the net income reported in these financial statements to the income reported on the Company’s federal tax return (unaudited) for the years ended December 31, 2016 and 2015 (in thousands): 2016 2015 Net income per financial statements $ 1,902 $ 2,808 Tax adjustments (unaudited): Adjustment to depreciation expense 217 227 Provision for losses and doubtful accounts 7 - Adjustments to revenues / other expenses 3 25 Adjustments to gain on sales of assets 181 396 Income per federal tax return (unaudited) $ 2,310 $ 3,456 |
Concentration of Credit Risk 19
Concentration of Credit Risk and Major Customers (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Concentration of Credit Risk and Major Customers [Abstract] | |
Schedule of Equipment Leased Credit Risk Concentration | As of December 31, 2016 and 2015, there were concentrations (greater than or equal to 10% as a percentage of total equipment cost) of equipment leased to lessees and/or financed for borrowers in certain industries as follows: 2016 2015 Transportation, rail 64% 58% Transportation, containers 32% 38% |
Schedule of Major Customers Credit Risk Concentration | During 2016 and 2015, certain lessees and/or financial borrowers generated significant portions (defined as greater than or equal to 10%) of the Company’s total leasing and lending revenues, excluding gains or losses on disposition of assets, as follows: Percentage of Total Lease Revenues Lessee Type of Equipment 2016 2015 Exsif Worldwide Inc. Transportation, other 22% 26% Interstate Commodities, Inc. Transportation, rail 21% 20% |
Investments in Equipment and 20
Investments in Equipment and Leases, Net (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2016 Net investment in operating leases $ 3,192 $ (148) $ (287) $ 2,757 Net investment in direct financing leases 12 (10) (2) - Assets held for sale or lease, net 720 (23) - 697 Initial direct cost, net of accumulated amortization of $1 at December 31, 2016 - 13 (1) 12 Total $ 3,924 $ (168) $ (290) $ 3,466 |
Property on Operating Leases | Property on operating leases consists of the following (in thousands): Balance December 31, 2015 Additions Reclassifications or Dispositions Balance December 31, 2016 Transportation, rail $ 14,714 $ - $ 397 $ 15,111 Containers 8,968 - (1,998) 6,970 Aviation - - 11 11 23,682 - (1,590) 22,092 Less accumulated depreciation (20,490) (287) 1,442 (19,335) Total $ 3,192 $ (287) $ (148) $ 2,757 |
Components of Company's Investment in Direct Financing Leases | The components of the Company’s investment in direct financing leases as of December 31, 2015 are as follows (in thousands): 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 December 31, 2016, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands): Operating Leases Year ending December 31, 2017 $ 1,795 2018 1,371 2019 1,106 2020 377 2021 48 $ 4,697 |
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 December 31, 2016 and 2015, 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) | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
AFS and/or Affiliates Earned Commissions and Billed for Reimbursements Pursuant to Operating Agreement | The Managing Member and/or affiliates earned fees and billed for reimbursements, pursuant to the Operating Agreement, during the years ended December 31, 2016 and 2015 as follows (in thousands): 2016 2015 Asset management fees to Managing Member $ 176 $ 222 Cost reimbursements to Managing Member 269 308 $ 445 $ 530 |
Members' Capital (Tables)
Members' Capital (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Members Capital [Abstract] | |
Distributions to the Other Members | Distributions to the Other Members for the years ended December 31, 2016 and 2015 were as follows (in thousands except Units and per Unit data): 2016 2015 Distributions declared $ 1,356 $ 4,068 Weighted average number of Units outstanding 13,560,188 13,560,188 Weighted average distributions per Unit $ 0.10 $ 0.30 |
Organization and Limited Liab23
Organization and Limited Liability Company Matters (Narrative) (Details) - USD ($) | Nov. 30, 2000 | Jan. 13, 1999 | Dec. 07, 1998 | Jul. 31, 1998 | Dec. 31, 2016 | Dec. 31, 2006 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Organization and Limited Liability Company Matters [Abstract] | |||||||||
Business cessation date | Dec. 31, 2019 | ||||||||
Contributions received | $ 135,700,000 | $ 600 | $ 135,700,000 | ||||||
Contributions Units received | 13,570,188 | ||||||||
Public offering of Limited Liability Company Units | 15,000,000 | ||||||||
Public offering of Limited Liability Company Units, price per unit | $ 10 | ||||||||
Sale of Limited Liability Company Units, number of units | 120,000 | ||||||||
Proceeds from sale of Limited Liability Company Units | $ 1,200,000 | ||||||||
Contributions of capital, initial member | $ 600 | 500 | |||||||
Members capital account, Units issued | 13,560,188 | 13,560,188 | 13,560,188 | ||||||
Members capital account, Units outstanding | 13,560,188 | 13,560,188 | 13,560,188 | 13,560,188 | |||||
Capital investment, AFS | $ 100 | ||||||||
Reinvestment Period | 6 years |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($)segment | |
Summary Of Significant Accounting Policies [Line Items] | |
Operating leases, period for non accrual status | 90 days |
Operating leases, period of review for impairment | 90 days |
Number of operating segments | segment | 1 |
Number of reportable segments | segment | 1 |
Minimum [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Required assets value of financial institutions for cash deposits | $ | $ 10,000,000 |
Operating leases, initial terms | 24 months |
Direct financing leases, period for non accrual status | 90 days |
Maximum [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
U.S. Treaasury instruments maturity period | 90 days |
Cash deposits, insured amount | $ | $ 250 |
Operating leases, initial terms | 120 months |
Direct financing leases, period of review for impairment | 90 days |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Schedule of Differences Between Book Value and Tax Basis of Net Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of Significant Accounting Policies [Abstract] | |||
Financial statement basis of net assets | $ 4,550 | $ 4,114 | $ 5,704 |
Tax basis of net assets (unaudited) | 8,336 | 7,492 | |
Difference | $ (3,786) | $ (3,378) |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Reconciliation of Net Income (Loss) Reported in Financial Statements and Federal Tax Return) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | ||
Net income per financial statements | $ 1,902 | $ 2,808 |
Adjustment to depreciation expense | 217 | 227 |
Provision for losses and doubtful accounts | 7 | |
Adjustments to revenues / other expenses | 3 | 25 |
Adjustments to gain on sales of assets | 181 | 396 |
Income per federal tax return (unaudited) | $ 2,310 | $ 3,456 |
Concentration of Credit Risk 27
Concentration of Credit Risk and Major Customers (Schedule of Leasing and Lending Revenues) (Details) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Transportation, Containers [Member] | Equipment Cost [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk | 32.00% | 38.00% |
Transportation, Rail [Member] | Equipment Cost [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk | 64.00% | 58.00% |
Transportation, Rail [Member] | Interstate Commodities, Inc. [Member] | Operating Revenues [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk | 21.00% | 20.00% |
Transportation, Other [Member] | Exsif Worldwide Inc. [Member] | Operating Revenues [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk | 22.00% | 26.00% |
Investments in Equipment and 28
Investments in Equipment and Leases, Net (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Investments in Equipment and Leases, Net [Abstract] | ||
Depreciation of operating lease assets | $ 287 | $ 317 |
Amortization of initial direct costs | $ 1 | |
Average estimated residual value for assets on operating leases | 12.00% | 11.00% |
Investments in Equipment and 29
Investments in Equipment and Leases, Net (Investment in Leases) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Leases Disclosure [Line Items] | |
Balance December 31, 2015 | $ 3,924 |
Reclassifications & Additions/ Dispositions | (168) |
Depreciation/ Amortization Expense or Amortization of Leases | (290) |
Balance December 31, 2016 | 3,466 |
Operating Leases [Member] | |
Leases Disclosure [Line Items] | |
Balance December 31, 2015 | 3,192 |
Reclassifications & Additions/ Dispositions | (148) |
Depreciation/ Amortization Expense or Amortization of Leases | (287) |
Balance December 31, 2016 | 2,757 |
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 December 31, 2016 | 697 |
Initial Direct Cost [Member] | |
Leases Disclosure [Line Items] | |
Reclassifications & Additions/ Dispositions | 13 |
Depreciation/ Amortization Expense or Amortization of Leases | (1) |
Balance December 31, 2016 | $ 12 |
Investments in Equipment and 30
Investments in Equipment and Leases, Net (Property on Operating Leases) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | $ 22,092 | $ 23,682 |
Less accumulated depreciation | (19,335) | (20,490) |
Property on operating leases, net | 2,757 | 3,192 |
Additions, less accumulated depreciation | (287) | |
Additions, net | (287) | |
Reclassifications or dispositions, gross | (1,590) | |
Reclassifications or dispositions, less accumulated depreciation | 1,442 | |
Reclassifications or dispositions, net | (148) | |
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 | |
Transportation, Containers [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | 6,970 | $ 8,968 |
Reclassifications or dispositions, gross | (1,998) | |
Aviation [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | 11 | |
Reclassifications or dispositions, gross | $ 11 |
Investments in Equipment and 31
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 32
Investments in Equipment and Leases, Net (Future Minimum Lease Payments Receivable) (Details) - Operating Leases [Member] $ in Thousands | Dec. 31, 2016USD ($) |
Leases Disclosure [Line Items] | |
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 | $ 4,697 |
Investment in Equipment and Lea
Investment in Equipment and Leases, Net (Schedule of Useful Lives of Assets) (Details) | 12 Months Ended |
Dec. 31, 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] | Transportation, 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] | Transportation, 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 |
Allowance for Credit Losses (Na
Allowance for Credit Losses (Narrative) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Allowance for Credit Losses [Abstract] | ||
Allowance for credit losses | $ 7 | $ 0 |
Related Party Transactions (Aff
Related Party Transactions (Affiliates Earned Commissions and Billed for Reimbursements Pursuant to Operating Agreement (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transactions [Abstract] | ||
Asset management fees to Managing Member | $ 176 | $ 222 |
Cost reimbursements to Managing Member | 269 | 308 |
Related party transaction, total | $ 445 | $ 530 |
Commitments (Narrative) (Detail
Commitments (Narrative) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Commitments [Abstract] | |
Commitments to purchase lease assets | $ 0 |
Members' Capital (Narrative) (D
Members' Capital (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | 28 Months Ended | 193 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Nov. 30, 2000 | Dec. 31, 2016 | Dec. 31, 2014 | |
Other Members Capital Account [Line Items] | |||||
Members capital account, Units issued | 13,560,188 | 13,560,188 | 13,560,188 | ||
Members capital account, Units outstanding | 13,560,188 | 13,560,188 | 13,560,188 | 13,560,188 | |
Other Members capital account, Units authorized | 15,000,000 | 15,000,000 | 15,000,000 | ||
Potential repurchase price of Units as a percentage of holder's capital account | 100.00% | ||||
Allocation of net income, net losses and distribution allocation percentage | 100.00% | ||||
Distributions declared | $ 1,356 | $ 4,068 | |||
Initial [Member] | |||||
Other Members Capital Account [Line Items] | |||||
Allocation of net income, net losses and distribution allocation percentage | 1.00% | ||||
Managing Member [Member] | |||||
Other Members Capital Account [Line Items] | |||||
Members capital account, Units issued | 50 | 50 | 50 | ||
Allocation of net income, net losses and distribution allocation percentage | 7.50% | 99.00% | 7.50% | ||
Other Members [Member] | |||||
Other Members Capital Account [Line Items] | |||||
Members capital account, Units outstanding | 13,560,188 | 13,560,188 | 13,560,188 | 13,560,188 | |
Allocation of net income, net losses and distribution allocation percentage | 92.50% | 92.50% | |||
Distributions declared | $ 1,356 | $ 4,068 |
Members' Capital (Distributions
Members' Capital (Distributions to Other Members) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Members' Capital [Abstract] | ||
Distributions declared | $ 1,356 | $ 4,068 |
Weighted average number of Units outstanding | 13,560,188 | 13,560,188 |
Weighted average distributions per Unit | $ 0.10 | $ 0.30 |