Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 28, 2019 | Jun. 30, 2018 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | ATEL CAPITAL EQUIPMENT FUND IX LLC | ||
Entity Central Index Key | 0001125264 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Smaller Reporting Company | true | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 0 | ||
Entity Units Outstanding | 12,055,016 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
ASSETS | ||
Cash and cash equivalents | $ 1,283 | $ 441 |
Accounts receivable, net of allowance for doubtful accounts of $71 at December 31, 2018 and $12 at December 31, 2017 | 276 | 112 |
Due from Managing Member | 21 | |
Investment in securities | 5 | 5 |
Investments in equipment and leases, net of accumulated depreciation of $22,339 at December 31, 2018 and $23,187 at December 31, 2017 | 3,198 | 3,703 |
Prepaid expenses and other assets | 77 | 68 |
Total assets | 4,860 | 4,329 |
Accounts payable and accrued liabilities: | ||
Due to Managing Member | 18 | |
Due to affiliates | 39 | |
Other | 143 | 137 |
Deposits due lessees | 1 | 6 |
Unearned operating lease income | 44 | 49 |
Total liabilities | 188 | 249 |
Commitments and contingencies | ||
Members' capital: | ||
Managing Member | ||
Other Members | 4,672 | 4,080 |
Total Members' capital | 4,672 | 4,080 |
Total liabilities and Members' capital | $ 4,860 | $ 4,329 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Balance Sheets [Abstract] | ||
Allowance for doubtful accounts | $ 71 | $ 12 |
Investments in equipment and leases, accumulated depreciation | $ 22,339 | $ 23,187 |
Statements of Income
Statements of Income - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Leasing activities: | ||
Operating leases | $ 2,202 | $ 2,374 |
Direct financing leases | 7 | |
Gain on sales of lease assets | 87 | 124 |
Gain on sales or dispositions of investment in securities | 4 | |
Other revenue | 18 | 6 |
Total revenues | 2,314 | 2,508 |
Expenses: | ||
Depreciation of operating lease assets | 352 | 435 |
Asset management fees to Managing Member and/or affiliates | 62 | 102 |
Cost reimbursements to Managing Member and/or affiliates | 300 | 419 |
Provision for credit losses | 60 | 10 |
Amortization of initial direct costs | 2 | 2 |
Other management fees | 59 | 26 |
Professional fees | 95 | 139 |
Outside services | 126 | 112 |
Insurance | 45 | 48 |
Marine vessel maintenance and other operating costs | 377 | 20 |
Railcar and equipment maintenance | 121 | 132 |
Income taxes and franchise fees | 7 | 47 |
Storage fees | 30 | 47 |
Printing and photocopying | 23 | 36 |
Other | 65 | 68 |
Total operating expenses | 1,724 | 1,643 |
Other income, net | 2 | 8 |
Net income | 592 | 873 |
Net income: | ||
Managing Member | 312 | |
Other Members | 592 | 561 |
Net income | $ 592 | $ 873 |
Net income per Limited Liability Company Unit (Other Members) | $ 0.05 | $ 0.05 |
Weighted average number of Units outstanding | 12,055,016 | 12,055,016 |
Statements of Changes in Member
Statements of Changes in Members' Capital - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Beginning Balance | $ 4,080 | $ 7,361 |
Distributions to Other Members | (3,842) | |
Distributions to Managing Member | (312) | |
Net income | 592 | 873 |
Ending Balance | $ 4,672 | $ 4,080 |
Other Members [Member} | ||
Beginning Balance (in Units) | 12,055,016 | 12,055,016 |
Beginning Balance | $ 4,080 | $ 7,361 |
Distributions to Other Members | (3,842) | |
Net income | $ 592 | $ 561 |
Ending Balance (in Units) | 12,055,016 | 12,055,016 |
Ending Balance | $ 4,672 | $ 4,080 |
Managing Member [Member] | ||
Distributions to Managing Member | (312) | |
Net income | $ 312 |
Statements of Changes in Memb_2
Statements of Changes in Members' Capital (Parenthetical) | 12 Months Ended |
Dec. 31, 2017$ / shares | |
Statements of Changes in Members' Capital [Abstract] | |
Distributions to Other Members, per Unit | $ 0.32 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities: | ||
Net income | $ 592 | $ 873 |
Adjustment to reconcile net income to cash provided by operating activities: | ||
Gain on sales of lease assets | (87) | (124) |
Gain on sales or dispositions of investment in securities | (4) | |
Depreciation of operating lease assets | 352 | 435 |
Amortization of initial direct costs | 2 | 2 |
Provision for credit losses | 60 | 10 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (224) | (17) |
Due from Managing Member and affiliates | (21) | |
Prepaid expenses and other assets | (9) | 1 |
Accounts payable, Managing Member and affiliates | (57) | 33 |
Accounts payable, other | 6 | (160) |
Deposits due lessees | (5) | 2 |
Unearned operating lease income | (5) | (63) |
Net cash provided by operating activities | 604 | 988 |
Investing activities: | ||
Purchases and improvements to operating leases | (162) | |
Proceeds from sales of lease assets | 405 | 190 |
Proceeds from sales or dispositions of investment in securities | 4 | |
Payments of initial direct costs | (5) | (9) |
Principal payments received on direct financing leases | 1 | |
Net cash provided by investing activities | 238 | 186 |
Financing activities: | ||
Net cash used in financing activities | (4,154) | |
Net increase (decrease) in cash and cash equivalents | 842 | (2,980) |
Cash and cash equivalents at beginning of year | 441 | 3,421 |
Cash and cash equivalents at end of year | 1,283 | 441 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the year for taxes | 17 | 42 |
Other Members [Member} | ||
Operating activities: | ||
Net income | $ 592 | 561 |
Financing activities: | ||
Distributions to Members | (3,842) | |
Managing Member [Member] | ||
Operating activities: | ||
Net income | 312 | |
Financing activities: | ||
Distributions to Members | $ (312) |
Organization and Limited Liabil
Organization and Limited Liability Company Matters | 12 Months Ended |
Dec. 31, 2018 | |
Organization and Limited Liability Company Matters [Abstract] | |
Organization and Limited Liability Company Matters | 1. Organization and Limited Liability Company matters: ATEL Capital Equipment Fund IX, LLC (the “Company” or the “Fund”) was formed under the laws of the State of California on September 27, 2000 for the purpose of engaging in the sale of limited liability company investment units and acquiring equipment to engage in equipment leasing, lending and sales activities, primarily in the United States. The Managing Member of the Company is ATEL Financial Services, LLC (“AFS”), a California limited liability company. The Company may continue until December 31, 2020. Contributions in the amount of $600 were received as of December 31, 2000, $100 of which represented AFS’s continuing interest, and $500 of which represented the Initial 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 February 21, 2001, 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 subscriptions 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). As of April 3, 2001, the Company had received subscriptions for 753,050 Units ($7.5 million), thus exceeding the $7.5 million minimum requirement for Pennsylvania, and AFS requested that the remaining funds in escrow (from Pennsylvania investors) be released to the Company. As of January 15, 2003, the offering was terminated. As of that date, the Company had received subscriptions for 12,065,266 Units ($120.7 million). Subsequent to January 15, 2003, Units totaling 10,250 were rescinded or repurchased and funds returned to investors (net of distributions paid and allocated syndication costs, as applicable). As of December 31, 2018, 12,055,016 Units remain 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 on December 31, 2009 and (iii) provides additional distributions following the Reinvestment Period and until all equipment has been sold. The Company is governed by the Limited Liability Company Operating Agreement (“Operating Agreement”) , as amended. On January 1, 2010, the Company commenced liquidation phase activities pursuant to the guidelines of the Operating Agreement. Pursuant to the terms of the Operating Agreement, AFS receives compensation and reimbursements for services rendered on behalf of the Company (See Note 6). 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 and 2017, 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 may have been reclassified to conform to the current year 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 December 31, 2018, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements. 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 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. Accounts receivable: Accounts receivable represent the amounts billed under operating and direct financing lease contracts, and notes receivable which are 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 invoiced amounts. Accounts receivable deemed uncollectible are charged off to the allowance on a specific identification basis. Amounts recovered 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 generally 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 the Financial Accounting Standards Board (“FASB”)Accounting Standards Codification (“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. 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 36 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. The Company may earn revenues from its marine vessel based on charter utilization of the vessel or a fixed term lease. When the vessel is chartered, contingent rentals and the associated expenses are recorded when earned and/or incurred. From time to time, the Company incurs “drydocking” costs on its vessel. Drydocking costs include labor and material costs related to refurbishing, overhauling and/or replacing engine and other major mechanical components of the vessel, hull maintenance and other repairs that bring the vessel into seaworthy compliance with U.S. marine codes in order to have it certified as available for charter. Such drydocking costs are capitalized and added to the equipment cost and depreciated over the period between scheduled drydockings, which generally occur every 24 to 30 months. 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 and investments in notes receivable. 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 (or note by note) basis based on actual contract term using a straight-line method for operating leases and the effective interest rate method for direct financing leases and notes receivable. Upon disposal of the underlying lease or loan assets, both the initial direct costs and the associated accumulated amortization are relieved. Costs related to leases or notes receivable that are not consummated are not eligible for capitalization as initial direct costs and are expensed as acquisition expense. Acquisition expense: Acquisition expense represents costs which include, but are not limited to, legal fees and expenses, travel and communication expenses, cost of appraisals, accounting fees and expenses and miscellaneous expenses related to the selection and acquisition of equipment which are reimbursable to the Managing Member under the terms of the Operating Agreement. As the costs are not eligible for capitalization as initial direct costs, such amounts are expensed as incurred. 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 the 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 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. 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 regions in which the Company seeks leasing and lending opportunities are North America and Europe. The table below summarizes geographic information relating to the sources, by nation, of the Company’s total revenues for the years ended December 31, 2018 and 2017 and long-lived assets as of December 31, 2018 and 2017 (dollars in thousands): For the Year Ended December 31, 2018 % of Total 2017 % of Total Revenue North America $ 2,239 97 % $ 2,430 97 % Canada 75 3 % 65 2 % United Kingdom — % 13 1 % Total International 75 3 % 78 3 % Total $ 2,314 100 % $ 2,508 100 % As of December 31, 2018 % of Total 2017 % of Total Long-lived assets North America $ 3,107 97 % $ 3,610 97 % Canada 91 3 % 91 3 % United Kingdom — % 2 % Total International 91 3 % 93 3 % Total $ 3,198 100 % $ 3,703 100 % Foreign currency transactions: Foreign currency transaction gains and losses are reported in the results of operations as “other income” or “other loss” in the period in which they occur. Currently, the Company does not use derivative instruments to hedge its economic exposure with respect to assets, liabilities and firm commitments as the foreign currency transactions risks to date have not been significant. During 2018 and 2017, the Company’s net foreign currency gains (losses) were nominal. Investment in securities: Purchased securities The Company’s purchased securities do not have readily determinable fair values and are measured at cost minus impairment, and adjusted for changes in observable prices. Factors considered by the Managing Member in determining fair value include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital . There were neither impaired securities at December 31, 2018 and 2017 nor investment securities sold or disposed of during the years ended December 31, 2018 and 2017. Warrants: Warrants owned by the Company are not registered for public sale, but are considered derivatives and are reflected at an estimated fair value on the balance sheets as determined by the Managing Member. The Company held no warrants at December 31, 2018 and 2017. The Company realized $0 and $4 thousand of gains on the net exercise of warrants, at December 31, 2018 and 2017, respectively, from final payment of previously sold warrants. 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 income taxes for only those states which levy income taxes on partnerships. For the years ended December 31, 2018 and 2017, the related provision for state income taxes was approximately $7 thousand and $47 thousand, respectively. 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, 2018 and 2017 were as follows (in thousands): 2018 2017 Financial statement basis of net assets $ 4,672 $ 4,080 Tax basis of net assets (unaudited) 20,365 19,142 Difference $ (15,693) $ (15,062) 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 each of the years ended December 31, 2018 and 2017 (in thousands): 2018 2017 Net income per financial statements $ 592 $ 873 Tax adjustments (unaudited): Adjustment to depreciation expense (190) 391 Provision for losses and doubtful accounts (60) 10 Adjustments to revenues / other expenses (13) (63) Adjustments to gain on sales of assets 317 66 Other — — Income per federal tax return (unaudited) $ 646 $ 1,277 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 November 2018, the FASB issued Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses (“ASU 2018-19”). The new standard clarifies certain aspects of the new current expected credit losses (CECL) impairment model in ASU 2016-13. The amendment clarifies that receivables arising from operating leases are within the scope of ASC 842, rather than ASC 326. The effective date and transition requirements in this Update are the same as the effective dates and transition requirements in Update 2016-13, as amended by this Update, which is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Management is currently evaluating the impact of the standard on the financial statements and related disclosure requirements. In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (“ASU 2018-13”), which amends the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. This ASU modifies disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. Management is currently evaluating the impact of this standard on the financial statements and related disclosure requirements. In August 2016, the 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. This guidance is effective for the Company beginning on January 1, 2018. The adoption of ASU 2016‑15 did not have a material impact on its financial statements and disclosures. 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 expects the Update may potentially result in an increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments. 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 under 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. While early adoption is permitted, the Company does not expect to elect that option. The Company expects to adopt the guidance in the first quarter 2019 using the modified retrospective method. Management is currently evaluating the impact of this standard on the financial statements and its operational and related disclosure requirements, including the impact on the Company’s current lease portfolio from a lessor perspective. As part of the adoption of the standard, the Company has selected and is in the process of implementing new lease accounting software. The Company is in the process of identifying and designing appropriate changes to its business processes, systems and controls to support the new standard. Given the limited changes to lessor accounting, Management does not expect material changes to recognition or measurement. In July 2018, the FASB issued Accounting Standards Update 2018-11, Leases (Topic 842) Targeted Improvements (“ASU 2018-11”). The new standard provides a new transition method and practical expedient to simplify the application of the new leasing standard. Under the new transition method, comparative periods presented in the financial statements in the period of adoption will not need to be restated. Instead, a Company would initially apply the new lease requirements at the effective date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company would continue to report comparative periods presented in the financial statements in the period of adoption under current GAAP and provide the applicable required disclosures for such periods. The new practical expedient allows lessors to avoid separating lease and associated nonlease components within a contract if certain criteria are met. If elected, lessors will be able to aggregate nonlease components that otherwise would be accounted for under the new revenue standard with the associated lease component if the following conditions are met (1) the timing and pattern of transfer of the nonlease component and the associated lease component are the same and (2) the stand-alone lease component would be classified as an operating lease if accounted for separately. For entities that have not adopted Topic 842 before the issuance of this Update, the effective date and transition requirements for the amendments in this Update related to separating components of a contract are the same as the effective date and transition requirements in Update 2016-02. The practical expedient may be elected either in the first reporting period following the issuance of this Update or at the original effective date of Topic 842 for that entity. The practical expedient may be applied either retrospectively or prospectively. Management is currently evaluating the impact of the standard on the financial statements and related disclosure requirements. The Company plans to adopt this guidance on January 1, 2019 and will prospectively apply the new lease requirements and recognize a cumulative effect adjustment upon adoption. As part of the adoption, the Company has elected to apply the package of transitional practical expedients under which the Company will not reassess prior conclusions about lease identification, lease classification, and initial direct costs of existing leases as of the date of adoption. Under Topic 842, initial direct costs include only those incremental costs of a lease that would not have been incurred if the lease had not been executed. Therefore, only certain costs that the Company capitalized as initial direct costs under ASC Topic 840: Leases may be expensed as incurred under Topic 842. The Company expects an immaterial cumulative effect adjustment upon adoption. The Company plans to elect the lessor practical expedient to combine the lease and non-lease components. The Company expects that the lease components are the predominant component in the majority of its leasing arrangements and will account for the combined component as an operating lease under Topic 842. The Company currently does not believe the adoption will significantly affect the timing of the recognition of its combined lease and non-lease components. In December 2018, the FASB issued Accounting Standards Update 2018-20, Narrow-Scope Improvements for Lessors (“ASU 2018-20”). The new standard includes amendments related to sales taxes and other similar taxes collected from lessees, lessor costs paid by a lessee and recognition of variable payments for contracts with lease and non-lease components. The effective date in this Update is the same as that of ASU 2016-02, which is for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company plans to adopt this guidance on January 1, 2019. The Company expects the adoption of ASU 2018-20 will have an immaterial impact on the Company’s financial statements and disclosures. 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. ASU 2016‑01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, and (v) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. ASU 2016‑01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance is effective for the Company beginning on January 1, 2018. The adoption of ASU 2016‑01 did have an impact on its financial statements and disclosures. The Company elected to record equity investments without readily determinable fair values at cost, less impairment, and adjusted for changes in observable prices. Any changes in the basis of these equity investments are reported in current earnings. 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. This guidance was effective for the Company beginning on January 1, 2018. The adoption of ASU 2014-09 did not have a material impact on the Company’s financial statements and disclosures as the new revenue guideline did not substantially change revenue from leases, which comprise the majority of the Company’s revenues and are not within the scope of this standard. |
Concentration of Credit Risk an
Concentration of Credit Risk and Major Customers | 12 Months Ended |
Dec. 31, 2018 | |
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 in diversified industries. Leases are subject to AFS’s credit committee review. The leases provide for the return of the equipment to the Company upon default. As of December 31, 2018 and 2017, there were concentrations (greater than or equal to 10% as a percentage of total equipment cost) of equipment leased to lessees in certain industries were as follows: 2018 2017 Transportation, rail 31 % 38 % Marine transportation/Transportation, other 46 % 38 % During 2018 and 2017, certain lessees generated significant portions (defined as greater than or equal to 10%) of the Company’s total leasing revenues, excluding gains or losses on disposition of assets, were as follows : Percentage of Total Leasing Revenues Lessee Type of Equipment 2018 2017 Yellow Fin Marine Services LLC Marine 20 % 27 % MRXX-Interstate Commodities Transportation, rail 16 % 16 % Union Pacific Railroad Company Transportation, rail 12 % 12 % |
Investment in Equipment and Lea
Investment in Equipment and Leases, Net | 12 Months Ended |
Dec. 31, 2018 | |
Investments In Equipment and Leases Net [Abstract] | |
Investment in Equipment and Leases, Net | 4. Investment in equipment and leases, net: The Company’s investment in leases consisted of the following (in thousands): Depreciation/ Amortization Balance Reclassifications, Expenses or Balance December 31, Additions/ Amortization December 31, 2017 Dispositions of Leases 2018 Net investment in operating leases $ 3,079 $ 182 $ (352) $ 2,909 Net investment in direct financing leases — 3 — 3 Assets held for sale or lease, net 616 (340) — 276 Initial direct costs, net of accumulated amortization of $3 at December 31, 2018 and $2 at December 31, 2017 8 4 (2) 10 Total $ 3,703 $ (151) $ (354) $ 3,198 Impairment of investments in leases and assets held for sale or lease: T he Company did not record any fair value adjustments during 2018 and 2017. As of December 31, 2018 and 2017, there were no lease contracts placed in non-accrual status. As of the same dates, the Company had certain other leases with related accounts receivable aged 90 days or more that had not been placed on non-accrual status. In accordance with Company policy, the related accounts receivable were fully reserved. Management continues to closely monitor these leases for any actual change in collectability status and indication of necessary valuation adjustments. The Company utilizes a straight line depreciation method for equipment in all of the categories currently in its portfolio of operating lease transactions. Depreciation expense on the Company’s equipment was approximately $352 thousand and $435 thousand for the respective years ended December 31, 2018 and 2017. IDC amortization expense totaled $2 thousand both during 2018 and 2017, all of which was related to operating leases and direct financing leases. All of the leased property was acquired during the years 2001 through 2010. Operating leases: Property on operating leases consisted of the following (in thousands): Balance Balance December 31, Reclassifications or December 31, 2017 Additions Dispositions 2018 Transportation, rail $ 11,996 $ — $ (35) $ 11,961 Marine vessels 9,700 162 1,500 11,362 Transportation, other 1,371 — — 1,371 Materials handling 615 — (284) 331 Construction 417 — (417) — Manufacturing 124 — (124) — Other 11 — (11) — 24,234 162 629 25,025 Less accumulated depreciation (21,155) (352) (609) (22,116) Total $ 3,079 $ (190) $ 20 $ 2,909 The average estimated residual value for assets on operating leases was 9% and 11% of the assets’ original cost at December 31, 2018 and 2017, respectively. The Company may earn revenues from its rail transportation and certain other assets based on utilization of such assets or a fixed-term lease. 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 $279 thousand and $82 thousand during the years ended December 31, 2018 and 2017, respectively. Direct financing leases: As of December 31, 2018 and 2017, the Company had $3 thousand and $0 investment in direct financing leases, respectively. Such investment consists of research equipment as of December 31, 2018. The following lists the components of the Company’s investment in direct financing leases as of December 31, 2018 (in thousands): December 31, 2018 Total minimum lease payments receivable $ 3 Estimated residual values of leased equipment (unguaranteed) — Investment in direct financing leases 3 Less unearned income — Net investment in direct financing leases $ 3 At December 31, 2018, the aggregate amounts of future minimum operating lease payments receivable were as follows (in thousands): Operating Leases Year Ending December 31, 2019 1,055 592 166 53 12 $ 1,878 The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of December 31, 2018 and 2017, the respective useful lives of each category of lease assets in the Company’s portfolio were as follows (in years): Equipment category Useful Life Transportation, rail 35 - 50 Marine vessels 20 - 30 Manufacturing 10 - 15 Construction 7 - 10 Materials handling 7 - 10 Transportation, other 7 - 10 |
Allowance for Credit Losses
Allowance for Credit Losses | 12 Months Ended |
Dec. 31, 2018 | |
Allowance for Credit Losses [Abstract] | |
Allowance for Credit Losses | 5. Allowance for credit losses: The Company’s allowance for credit losses totaled $71 thousand and $12 thousand at December 31, 2018 and 2017, respectively. All of such allowance was related to delinquent operating lease receivables. The Company had neither financing receivables in non-accrual status nor impaired financing receivables at both December 31, 2018 and 2017. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 6. 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. The Company will be liable for certain future costs to be incurred by AFS to manage the administrative services provided to the Company. 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 for the Company 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. The Operating Agreement places an annual limit and a cumulative limit for cost reimbursements to AFS and/or 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 recovered in future years to the extent of the cumulative limit 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. As of December 31, 2018 and 2017, the Company has not exceeded the annual and/or cumulative limitations discussed above. AFS and/or affiliates earned fees and reimbursements, pursuant to the Operating Agreement as follows during each of the years ended December 31, 2018 and 2017 (in thousands): 2018 2017 Costs reimbursed to Managing Member and/or affiliates $ 300 $ 419 Asset management fees to Managing Member and/or affiliates 62 102 $ 362 $ 521 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies [Abstract] | |
Commitments | 7. Commitments and contingencies: At December 31, 2018, the Company had no commitments to purchase lease assets or fund investments in notes receivable. |
Guarantees
Guarantees | 12 Months Ended |
Dec. 31, 2018 | |
Guarantees [Abstract] | |
Guarantees | 8. Guarantees: The Company enters 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, 2018 | |
Members' Capital [Abstract] | |
Members' Capital | 9. Members’ capital: As of December 31, 2018 and 2017, 12,055,016 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 member (50 Units). 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 units 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. As defined in the Operating Agreement, the Company’s Net Income, Net Losses, and Distributions are to be allocated 92.5% to the Other Members and 7.5% to AFS. In accordance with the terms of the Operating Agreement, additional allocations of income were made to AFS in 2017. The amounts allocated were determined to bring AFS’s ending capital account balance to zero at the end of each year. Distributions to the Other Members were as follows (in thousands except Units and per Unit data): 2018 2017 Distributions declared $ — $ 3,842 Weighted average number of Units outstanding 12,055,016 12,055,016 Weighted average distributions per Unit $ — $ 0.32 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 10. Fair value measurements: Under applicable accounting standards, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurements and disclosures are based on a fair value hierarchy as determined by significant inputs used to measure fair value. The three levels of inputs within the fair value hierarchy are defined as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, generally on a national exchange. Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market. Level 3 – Valuation is modeled using significant inputs that are unobservable in the market. These unobservable inputs reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. The Company had no assets or liabilities requiring measurement at fair value on a recurring or non-recurring basis at December 31, 2018 and 2017. The Company’s valuation policy is determined by members of the Asset Management, Credit and Accounting departments. Whenever possible, the policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, information from third party remarketing agents, third party appraisals of collateral and/or other valuation techniques. These techniques are significantly affected by certain of the Company’s assumptions, including discount rates and estimates of future cash flows. Potential taxes and other transaction costs are not considered in estimating fair values. As the Company is responsible for determining fair value, an analysis is performed on prices obtained from third parties. Such analysis is performed by asset management and credit department personnel who are familiar with the Company’s investments in equipment, notes receivable and equity securities of venture companies. The analysis may include a periodic review of price fluctuations and validation of numbers obtained from a specific third party by reference to multiple representative sources. The following disclosure of the estimated fair value of financial instruments is made in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification. Fair value estimates, methods and assumptions, set forth below for the Company’s financial instruments, are made solely to comply with the requirements of the Financial Instruments Topic. The Company has determined the estimated fair value amounts by using market information and valuation methodologies that it considers appropriate and consistent with the fair value accounting guidance. Considerable judgment is required to interpret market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash and cash equivalents The recorded amounts of the Company’s cash and cash equivalents approximate fair value because of the liquidity and short-term maturity of these instruments. Commitments and Contingencies Management has determined that the fair value of contingent liabilities (or guarantees) is not considered material because management believes there has been no event that has occurred wherein a guarantee liability has been incurred or will likely be incurred. The following tables present estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at December 31, 2018 and 2017 (in thousands): Fair Value Measurements at December 31, 2018 Carrying Amount Level 1 Level 2 Level 3 Total Financial assets: Cash and cash equivalents $ 1,283 $ 1,283 $ — $ — $ 1,283 Fair Value Measurements at December 31, 2017 Carrying Amount Level 1 Level 2 Level 3 Total Financial assets: Cash and cash equivalents $ 441 $ 441 $ — $ — $ 441 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policy) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation: The accompanying balance sheets as of December 31, 2018 and 2017, 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 may have been reclassified to conform to the current year 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 December 31, 2018, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements. |
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. |
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. |
Accounts Receivable | Accounts receivable: Accounts receivable represent the amounts billed under operating and direct financing lease contracts, and notes receivable which are 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 invoiced amounts. Accounts receivable deemed uncollectible are charged off to the allowance on a specific identification basis. Amounts recovered that were previously written-off are recorded as other income in the period received. |
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 generally 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 the Financial Accounting Standards Board (“FASB”)Accounting Standards Codification (“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. 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 36 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. The Company may earn revenues from its marine vessel based on charter utilization of the vessel or a fixed term lease. When the vessel is chartered, contingent rentals and the associated expenses are recorded when earned and/or incurred. From time to time, the Company incurs “drydocking” costs on its vessel. Drydocking costs include labor and material costs related to refurbishing, overhauling and/or replacing engine and other major mechanical components of the vessel, hull maintenance and other repairs that bring the vessel into seaworthy compliance with U.S. marine codes in order to have it certified as available for charter. Such drydocking costs are capitalized and added to the equipment cost and depreciated over the period between scheduled drydockings, which generally occur every 24 to 30 months. |
Notes Receivable, Unearned Interest Income 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 and investments in notes receivable. 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 (or note by note) basis based on actual contract term using a straight-line method for operating leases and the effective interest rate method for direct financing leases and notes receivable. Upon disposal of the underlying lease or loan assets, both the initial direct costs and the associated accumulated amortization are relieved. Costs related to leases or notes receivable that are not consummated are not eligible for capitalization as initial direct costs and are expensed as acquisition expense. |
Acquisition Expense | Acquisition expense: Acquisition expense represents costs which include, but are not limited to, legal fees and expenses, travel and communication expenses, cost of appraisals, accounting fees and expenses and miscellaneous expenses related to the selection and acquisition of equipment which are reimbursable to the Managing Member under the terms of the Operating Agreement. As the costs are not eligible for capitalization as initial direct costs, such amounts are expensed as incurred. |
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 the 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 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. 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 regions in which the Company seeks leasing and lending opportunities are North America and Europe. The table below summarizes geographic information relating to the sources, by nation, of the Company’s total revenues for the years ended December 31, 2018 and 2017 and long-lived assets as of December 31, 2018 and 2017 (dollars in thousands): For the Year Ended December 31, 2018 % of Total 2017 % of Total Revenue North America $ 2,239 97 % $ 2,430 97 % Canada 75 3 % 65 2 % United Kingdom — % 13 1 % Total International 75 3 % 78 3 % Total $ 2,314 100 % $ 2,508 100 % As of December 31, 2018 % of Total 2017 % of Total Long-lived assets North America $ 3,107 97 % $ 3,610 97 % Canada 91 3 % 91 3 % United Kingdom — % 2 % Total International 91 3 % 93 3 % Total $ 3,198 100 % $ 3,703 100 % |
Foreign Currency Transactions | Foreign currency transactions: Foreign currency transaction gains and losses are reported in the results of operations as “other income” or “other loss” in the period in which they occur. Currently, the Company does not use derivative instruments to hedge its economic exposure with respect to assets, liabilities and firm commitments as the foreign currency transactions risks to date have not been significant. During 2018 and 2017, the Company’s net foreign currency gains (losses) were nominal. |
Investment in Securities | Investment in securities: Purchased securities The Company’s purchased securities do not have readily determinable fair values and are measured at cost minus impairment, and adjusted for changes in observable prices. Factors considered by the Managing Member in determining fair value include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital . There were neither impaired securities at December 31, 2018 and 2017 nor investment securities sold or disposed of during the years ended December 31, 2018 and 2017. Warrants: Warrants owned by the Company are not registered for public sale, but are considered derivatives and are reflected at an estimated fair value on the balance sheets as determined by the Managing Member. The Company held no warrants at December 31, 2018 and 2017. The Company realized $0 and $4 thousand of gains on the net exercise of warrants, at December 31, 2018 and 2017, respectively, from final payment of previously sold warrants. |
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 income taxes for only those states which levy income taxes on partnerships. For the years ended December 31, 2018 and 2017, the related provision for state income taxes was approximately $7 thousand and $47 thousand, respectively. 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, 2018 and 2017 were as follows (in thousands): 2018 2017 Financial statement basis of net assets $ 4,672 $ 4,080 Tax basis of net assets (unaudited) 20,365 19,142 Difference $ (15,693) $ (15,062) 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 each of the years ended December 31, 2018 and 2017 (in thousands): 2018 2017 Net income per financial statements $ 592 $ 873 Tax adjustments (unaudited): Adjustment to depreciation expense (190) 391 Provision for losses and doubtful accounts (60) 10 Adjustments to revenues / other expenses (13) (63) Adjustments to gain on sales of assets 317 66 Other — — Income per federal tax return (unaudited) $ 646 $ 1,277 |
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 November 2018, the FASB issued Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments — Credit Losses (“ASU 2018-19”). The new standard clarifies certain aspects of the new current expected credit losses (CECL) impairment model in ASU 2016-13. The amendment clarifies that receivables arising from operating leases are within the scope of ASC 842, rather than ASC 326. The effective date and transition requirements in this Update are the same as the effective dates and transition requirements in Update 2016-13, as amended by this Update, which is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Management is currently evaluating the impact of the standard on the financial statements and related disclosure requirements. In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (“ASU 2018-13”), which amends the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. This ASU modifies disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. Management is currently evaluating the impact of this standard on the financial statements and related disclosure requirements. In August 2016, the 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. This guidance is effective for the Company beginning on January 1, 2018. The adoption of ASU 2016‑15 did not have a material impact on its financial statements and disclosures. 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 expects the Update may potentially result in an increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments. 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 under 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. While early adoption is permitted, the Company does not expect to elect that option. The Company expects to adopt the guidance in the first quarter 2019 using the modified retrospective method. Management is currently evaluating the impact of this standard on the financial statements and its operational and related disclosure requirements, including the impact on the Company’s current lease portfolio from a lessor perspective. As part of the adoption of the standard, the Company has selected and is in the process of implementing new lease accounting software. The Company is in the process of identifying and designing appropriate changes to its business processes, systems and controls to support the new standard. Given the limited changes to lessor accounting, Management does not expect material changes to recognition or measurement. In July 2018, the FASB issued Accounting Standards Update 2018-11, Leases (Topic 842) Targeted Improvements (“ASU 2018-11”). The new standard provides a new transition method and practical expedient to simplify the application of the new leasing standard. Under the new transition method, comparative periods presented in the financial statements in the period of adoption will not need to be restated. Instead, a Company would initially apply the new lease requirements at the effective date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company would continue to report comparative periods presented in the financial statements in the period of adoption under current GAAP and provide the applicable required disclosures for such periods. The new practical expedient allows lessors to avoid separating lease and associated nonlease components within a contract if certain criteria are met. If elected, lessors will be able to aggregate nonlease components that otherwise would be accounted for under the new revenue standard with the associated lease component if the following conditions are met (1) the timing and pattern of transfer of the nonlease component and the associated lease component are the same and (2) the stand-alone lease component would be classified as an operating lease if accounted for separately. For entities that have not adopted Topic 842 before the issuance of this Update, the effective date and transition requirements for the amendments in this Update related to separating components of a contract are the same as the effective date and transition requirements in Update 2016-02. The practical expedient may be elected either in the first reporting period following the issuance of this Update or at the original effective date of Topic 842 for that entity. The practical expedient may be applied either retrospectively or prospectively. Management is currently evaluating the impact of the standard on the financial statements and related disclosure requirements. The Company plans to adopt this guidance on January 1, 2019 and will prospectively apply the new lease requirements and recognize a cumulative effect adjustment upon adoption. As part of the adoption, the Company has elected to apply the package of transitional practical expedients under which the Company will not reassess prior conclusions about lease identification, lease classification, and initial direct costs of existing leases as of the date of adoption. Under Topic 842, initial direct costs include only those incremental costs of a lease that would not have been incurred if the lease had not been executed. Therefore, only certain costs that the Company capitalized as initial direct costs under ASC Topic 840: Leases may be expensed as incurred under Topic 842. The Company expects an immaterial cumulative effect adjustment upon adoption. The Company plans to elect the lessor practical expedient to combine the lease and non-lease components. The Company expects that the lease components are the predominant component in the majority of its leasing arrangements and will account for the combined component as an operating lease under Topic 842. The Company currently does not believe the adoption will significantly affect the timing of the recognition of its combined lease and non-lease components. In December 2018, the FASB issued Accounting Standards Update 2018-20, Narrow-Scope Improvements for Lessors (“ASU 2018-20”). The new standard includes amendments related to sales taxes and other similar taxes collected from lessees, lessor costs paid by a lessee and recognition of variable payments for contracts with lease and non-lease components. The effective date in this Update is the same as that of ASU 2016-02, which is for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company plans to adopt this guidance on January 1, 2019. The Company expects the adoption of ASU 2018-20 will have an immaterial impact on the Company’s financial statements and disclosures. 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. ASU 2016‑01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, and (v) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. ASU 2016‑01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance is effective for the Company beginning on January 1, 2018. The adoption of ASU 2016‑01 did have an impact on its financial statements and disclosures. The Company elected to record equity investments without readily determinable fair values at cost, less impairment, and adjusted for changes in observable prices. Any changes in the basis of these equity investments are reported in current earnings. 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. This guidance was effective for the Company beginning on January 1, 2018. The adoption of ASU 2014-09 did not have a material impact on the Company’s financial statements and disclosures as the new revenue guideline did not substantially change revenue from leases, which comprise the majority of the Company’s revenues and are not within the scope of this standard. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Geographic Information Relating to Sources, by Nation, of Company's Total Revenue and Long-Lived Assets | The table below summarizes geographic information relating to the sources, by nation, of the Company’s total revenues for the years ended December 31, 2018 and 2017 and long-lived assets as of December 31, 2018 and 2017 (dollars in thousands): For the Year Ended December 31, 2018 % of Total 2017 % of Total Revenue North America $ 2,239 97 % $ 2,430 97 % Canada 75 3 % 65 2 % United Kingdom — % 13 1 % Total International 75 3 % 78 3 % Total $ 2,314 100 % $ 2,508 100 % As of December 31, 2018 % of Total 2017 % of Total Long-lived assets North America $ 3,107 97 % $ 3,610 97 % Canada 91 3 % 91 3 % United Kingdom — % 2 % Total International 91 3 % 93 3 % Total $ 3,198 100 % $ 3,703 100 % |
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, 2018 and 2017 were as follows (in thousands): 2018 2017 Financial statement basis of net assets $ 4,672 $ 4,080 Tax basis of net assets (unaudited) 20,365 19,142 Difference $ (15,693) $ (15,062) |
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 each of the years ended December 31, 2018 and 2017 (in thousands): 2018 2017 Net income per financial statements $ 592 $ 873 Tax adjustments (unaudited): Adjustment to depreciation expense (190) 391 Provision for losses and doubtful accounts (60) 10 Adjustments to revenues / other expenses (13) (63) Adjustments to gain on sales of assets 317 66 Other — — Income per federal tax return (unaudited) $ 646 $ 1,277 |
Concentration of Credit Risk _2
Concentration of Credit Risk and Major Customers (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Concentration of Credit Risk and Major Customers [Abstract] | |
Schedule of Equipment Leased, Credit Risk Concentration | As of December 31, 2018 and 2017, there were concentrations (greater than or equal to 10% as a percentage of total equipment cost) of equipment leased to lessees in certain industries were as follows: 2018 2017 Transportation, rail 31 % 38 % Marine transportation/Transportation, other 46 % 38 % |
Schedule of Major Customers Credit Risk Concentration | During 2018 and 2017, certain lessees generated significant portions (defined as greater than or equal to 10%) of the Company’s total leasing revenues, excluding gains or losses on disposition of assets, were as follows : Percentage of Total Leasing Revenues Lessee Type of Equipment 2018 2017 Yellow Fin Marine Services LLC Marine 20 % 27 % MRXX-Interstate Commodities Transportation, rail 16 % 16 % Union Pacific Railroad Company Transportation, rail 12 % 12 % |
Investment in Equipment and L_2
Investment in Equipment and Leases, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investments In Equipment and Leases Net [Abstract] | |
Investment in Leases | The Company’s investment in leases consisted of the following (in thousands): Depreciation/ Amortization Balance Reclassifications, Expenses or Balance December 31, Additions/ Amortization December 31, 2017 Dispositions of Leases 2018 Net investment in operating leases $ 3,079 $ 182 $ (352) $ 2,909 Net investment in direct financing leases — 3 — 3 Assets held for sale or lease, net 616 (340) — 276 Initial direct costs, net of accumulated amortization of $3 at December 31, 2018 and $2 at December 31, 2017 8 4 (2) 10 Total $ 3,703 $ (151) $ (354) $ 3,198 |
Property on Operating Leases | Property on operating leases consisted of the following (in thousands): Balance Balance December 31, Reclassifications or December 31, 2017 Additions Dispositions 2018 Transportation, rail $ 11,996 $ — $ (35) $ 11,961 Marine vessels 9,700 162 1,500 11,362 Transportation, other 1,371 — — 1,371 Materials handling 615 — (284) 331 Construction 417 — (417) — Manufacturing 124 — (124) — Other 11 — (11) — 24,234 162 629 25,025 Less accumulated depreciation (21,155) (352) (609) (22,116) Total $ 3,079 $ (190) $ 20 $ 2,909 |
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, 2018 (in thousands): December 31, 2018 Total minimum lease payments receivable $ 3 Estimated residual values of leased equipment (unguaranteed) — Investment in direct financing leases 3 Less unearned income — Net investment in direct financing leases $ 3 |
Future Minimum Lease Payments Receivable | December 31, 2018 Total minimum lease payments receivable $ 3 Estimated residual values of leased equipment (unguaranteed) — Investment in direct financing leases 3 Less unearned income — Net investment in direct financing leases $ 3 At December 31, 2018, the aggregate amounts of future minimum operating lease payments receivable were as follows (in thousands): Operating Leases Year Ending December 31, 2019 1,055 592 166 53 12 $ 1,878 |
Schedule of Useful Lives of Lease Assets | The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of December 31, 2018 and 2017, the respective useful lives of each category of lease assets in the Company’s portfolio were as follows (in years): Equipment category Useful Life Transportation, rail 35 - 50 Marine vessels 20 - 30 Manufacturing 10 - 15 Construction 7 - 10 Materials handling 7 - 10 Transportation, other 7 - 10 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Affiliates Earned Commissions and Billed for Reimbursements Pursuant to Operating Agreement | AFS and/or affiliates earned fees and reimbursements, pursuant to the Operating Agreement as follows during each of the years ended December 31, 2018 and 2017 (in thousands): 2018 2017 Costs reimbursed to Managing Member and/or affiliates $ 300 $ 419 Asset management fees to Managing Member and/or affiliates 62 102 $ 362 $ 521 |
Members' Capital (Tables)
Members' Capital (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Members' Capital [Abstract] | |
Distributions to Other Members | Distributions to the Other Members were as follows (in thousands except Units and per Unit data): 2018 2017 Distributions declared $ — $ 3,842 Weighted average number of Units outstanding 12,055,016 12,055,016 Weighted average distributions per Unit $ — $ 0.32 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements [Abstract] | |
Estimated Fair Values of Financial Instruments | The following tables present estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at December 31, 2018 and 2017 (in thousands): Fair Value Measurements at December 31, 2018 Carrying Amount Level 1 Level 2 Level 3 Total Financial assets: Cash and cash equivalents $ 1,283 $ 1,283 $ — $ — $ 1,283 Fair Value Measurements at December 31, 2017 Carrying Amount Level 1 Level 2 Level 3 Total Financial assets: Cash and cash equivalents $ 441 $ 441 $ — $ — $ 441 |
Organization and Limited Liab_2
Organization and Limited Liability Company Matters (Narrative) (Details) - USD ($) | Jan. 16, 2001 | Dec. 31, 2018 | Dec. 31, 2009 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 15, 2003 | Apr. 03, 2001 | Feb. 21, 2001 | Dec. 31, 2000 |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | |||||||||||
Business activities, description | the sale of limited liability company investment units and acquiring equipment to engage in equipment leasing, lending and sales activities | ||||||||||
Business formation date | Sep. 27, 2000 | ||||||||||
Business formation State | California | ||||||||||
Business cessation date | Dec. 31, 2020 | ||||||||||
Public offering of Limited Liability Company Units, price per Unit | $ 10 | ||||||||||
Public offering of Limited Liability Company Units | 15,000,000 | ||||||||||
Amount of aggregate subscriptions for Pennsylvania subscriptions to be released to the Fund | $ 7,500,000 | ||||||||||
Contributions of capital | $ 600 | ||||||||||
Reinvestment period | 6 years | ||||||||||
Sale of Limited Liability Company Units, number of Units | 12,065,266 | 753,050 | |||||||||
Proceeds from sale of Limited Liability Company Units | $ 120,700,000 | ||||||||||
Repurchase of Units, number of Units | 10,250 | ||||||||||
Minimum [Member] | |||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | |||||||||||
Contributions of capital | $ 7,500,000 | ||||||||||
Sale of Limited Liability Company Units, number of Units | 120,000 | ||||||||||
Proceeds from sale of Limited Liability Company Units | $ 1,200,000 | ||||||||||
Atel Financial Services LLC [Member] | |||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | |||||||||||
Capital investment | 100 | ||||||||||
Other Members [Member} | |||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | |||||||||||
Units issued | 12,055,016 | 12,055,016 | 12,055,016 | 12,055,016 | |||||||
Units outstanding | 12,055,016 | 12,055,016 | 12,055,016 | 12,055,016 | 12,055,016 | ||||||
Initial Members [Member] | |||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items] | |||||||||||
Contributions of capital | $ 500 | ||||||||||
Units issued | 50 | 50 | 50 | 50 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | |
Operating lease equipment, depreciation method | straight-line | |
Number of operating segments | segment | 1 | |
Number of reportable segments | segment | 1 | |
Gain on exercise of warrants | $ 4 | |
Provision for franchise fees and state income taxes | $ 7 | $ 47 |
Period subject to income tax examination | 3 years | |
Minimum [Member] | ||
Required assets value of financial institutions for cash deposits | $ 10,000,000 | |
Operating leases, initial terms | 36 months | |
Operating leases, period for non accrual status | 90 days | |
Direct financing leases, period for non accrual status | 90 days | |
Period of scheduled vessel drydocking | 24 months | |
Maximum [Member] | ||
Treasury instruments maturity period | 90 days | |
Cash deposits, insured amount | $ 250 | |
Operating leases, initial terms | 120 months | |
Equipment and lessee period of review for impairment | 90 days | |
Direct financing leases, period of review for impairment | 90 days | |
Period of scheduled vessel drydocking | 30 months |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Summary of Geographic Information Relating to Sources, by Nation, of Company's Total Revenue and Long-Lived Assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 2,314 | $ 2,508 |
Percentage of total revenue | 100.00% | 100.00% |
Long-lived assets | $ 3,198 | $ 3,703 |
Percentage of long lived assets | 100.00% | 100.00% |
North America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 2,239 | $ 2,430 |
Percentage of total revenue | 97.00% | 97.00% |
Long-lived assets | $ 3,107 | $ 3,610 |
Percentage of long lived assets | 97.00% | 97.00% |
Canada [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 75 | $ 65 |
Percentage of total revenue | 3.00% | 2.00% |
Long-lived assets | $ 91 | $ 91 |
Percentage of long lived assets | 3.00% | 3.00% |
United Kingdom [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 13 | |
Percentage of total revenue | 0.00% | 1.00% |
Long-lived assets | $ 0 | $ 2 |
Percentage of long lived assets | 0.00% | 0.00% |
Total International [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 75 | $ 78 |
Percentage of total revenue | 3.00% | 3.00% |
Long-lived assets | $ 91 | $ 93 |
Percentage of long lived assets | 3.00% | 3.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Schedule of Differences Between Book Value and Tax Basis of Net Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Summary of Significant Accounting Policies [Abstract] | |||
Financial statement basis of net assets | $ 4,672 | $ 4,080 | $ 7,361 |
Tax basis of net assets (unaudited) | 20,365 | 19,142 | |
Difference | $ (15,693) | $ (15,062) |
Summary of Significant Accoun_7
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, 2018 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | ||
Net income per financial statements | $ 592 | $ 873 |
Adjustment to depreciation expense | (190) | 391 |
Provision for losses and doubtful accounts | (60) | 10 |
Adjustments to revenues / other expenses | (13) | (63) |
Adjustments to gain on sales of assets | 317 | 66 |
Income per federal tax return (unaudited) | $ 646 | $ 1,277 |
Concentration of Credit Risk _3
Concentration of Credit Risk and Major Customers (Schedule of Leasing and Lending Revenues) (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Equipment Cost [Member] | Transportation, Rail [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk | 31.00% | 38.00% |
Equipment Cost [Member] | Transportation, Other [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk | 46.00% | 38.00% |
Yellow Fin Marine Services LLC [Member] | Operating Revenue [Member] | Marine [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk | 20.00% | 27.00% |
MRXX-Interstate Commodities [Member] | Operating Revenue [Member] | Transportation, Rail [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk | 16.00% | 16.00% |
Union Pacific Railroad Company [Member] | Operating Revenue [Member] | Transportation, Rail [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk | 12.00% | 12.00% |
Investment in Equipment and L_3
Investment in Equipment and Leases, Net (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Average estimated residual value of assets on operating leases | 9.00% | 11.00% |
IDC amortization expense related to operating leases and direct financing leases | $ 2 | $ 2 |
Long-lived assets | 3,198 | 3,703 |
Depreciation of operating lease assets | 352 | 435 |
Revenues from contingent rentals | $ 279 | $ 82 |
Minimum [Member] | ||
Financing leases, period for non accrual status | 90 days | |
Accounts receivable, period for non-accrual status | 90 days | |
Direct Financing Leases [Member] | ||
Long-lived assets | $ 3 |
Investment in Equipment and L_4
Investment in Equipment and Leases, Net (Investment in Leases) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Leases Disclosure [Line Items] | ||
Balance December 31, 2017 | $ 3,703 | |
Reclassifications, Additions/Dispositions | (151) | |
Depreciation/ Amortization Expense or Amortization of Leases | (354) | |
Balance December 31, 2018 | 3,198 | |
Initial direct costs, accumulated amortization | 3 | $ 2 |
Operating Leases [Member] | ||
Leases Disclosure [Line Items] | ||
Balance December 31, 2017 | 3,079 | |
Reclassifications, Additions/Dispositions | 182 | |
Depreciation/ Amortization Expense or Amortization of Leases | (352) | |
Balance December 31, 2018 | 2,909 | |
Direct Financing Leases [Member] | ||
Leases Disclosure [Line Items] | ||
Reclassifications, Additions/Dispositions | 3 | |
Balance December 31, 2018 | 3 | |
Assets Held-for-sale or Lease[Member] | ||
Leases Disclosure [Line Items] | ||
Balance December 31, 2017 | 616 | |
Reclassifications, Additions/Dispositions | (340) | |
Balance December 31, 2018 | 276 | |
Initial Direct Cost [Member] | ||
Leases Disclosure [Line Items] | ||
Balance December 31, 2017 | 8 | |
Reclassifications, Additions/Dispositions | 4 | |
Depreciation/ Amortization Expense or Amortization of Leases | (2) | |
Balance December 31, 2018 | $ 10 |
Investment in Equipment and L_5
Investment in Equipment and Leases, Net (Property on Operating Leases) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | $ 25,025 | $ 24,234 |
Less accumulated depreciation | (22,116) | (21,155) |
Property on operating leases, net | 2,909 | 3,079 |
Additions, gross | 162 | |
Additions, less accumulated depreciation | (352) | |
Additions, net | (190) | |
Reclassifications or dispositions, gross | 629 | |
Reclassifications or dispositions, less accumulated depreciation | (609) | |
Reclassifications or dispositions, net | 20 | |
Transportation, Rail [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | 11,961 | 11,996 |
Reclassifications or dispositions, gross | (35) | |
Marine Vessels [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | 11,362 | 9,700 |
Additions, gross | 162 | |
Reclassifications or dispositions, gross | 1,500 | |
Transportation, Other [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | 1,371 | 1,371 |
Materials Handling [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | 331 | 615 |
Reclassifications or dispositions, gross | (284) | |
Construction [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | 417 | |
Reclassifications or dispositions, gross | (417) | |
Manufacturing [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | 124 | |
Reclassifications or dispositions, gross | (124) | |
Other Properties [Member] | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Property on operating leases, gross | $ 11 | |
Reclassifications or dispositions, gross | $ (11) |
Investment in Equipment and L_6
Investment in Equipment and Leases, Net (Components of Investment in Direct Financing Leases) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Investment In Equipment And Leases Net [Abstract] | |
Total minimum lease payments receivable | $ 3 |
Estimated residual values of leased equipment (unguaranteed) | |
Investment in direct financing leases | 3 |
Less unearned income | |
Net investment in direct financing leases | $ 3 |
Investment in Equipment and L_7
Investment in Equipment and Leases, Net (Future Minimum Lease Payments Receivable) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Operating Leases | |
Year Ending December 31, 2019 | $ 1,055 |
2020 | 592 |
2021 | 166 |
2022 | 53 |
2023 | 12 |
Operating leases, future minimum payments receivable | $ 1,878 |
Investment in Equipment and L_8
Investment in Equipment and Leases, Net (Schedule of Useful Lives of Assets) (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Minimum [Member] | Transportation, Rail [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 35 years |
Minimum [Member] | Marine Vessels [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 20 years |
Minimum [Member] | Manufacturing [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 10 years |
Minimum [Member] | Construction [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 7 years |
Minimum [Member] | Materials Handling [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 7 years |
Minimum [Member] | Transportation, Other [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 7 years |
Maximum [Member] | Transportation, Rail [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 50 years |
Maximum [Member] | Marine Vessels [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 30 years |
Maximum [Member] | Manufacturing [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 15 years |
Maximum [Member] | Construction [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 10 years |
Maximum [Member] | Materials Handling [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 10 years |
Maximum [Member] | Transportation, Other [Member] | |
Property Subject To Or Available For Operating Lease [Line Items] | |
Useful Lives of lease assets | 10 years |
Allowance for Credit Losses (Na
Allowance for Credit Losses (Narrative) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Allowance for Credit Losses [Abstract] | ||
Allowance for Credit Losses | $ 71 | $ 12 |
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, 2018 | Dec. 31, 2017 | |
Related Party Transactions [Abstract] | ||
Costs reimbursed to Managing Member and/or affiliates | $ 300 | $ 419 |
Asset management fees to Managing Member and/or affiliates | 62 | 102 |
Related party transactions, total | $ 362 | $ 521 |
Commitments and Contingencies (
Commitments and Contingencies (Narrative) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments and Contingencies [Abstract] | |
Purchase Obligation | $ 0 |
Members' Capital (Narrative) (D
Members' Capital (Narrative) (Details) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other Members Capital Account [Line Items] | |||
Potential repurchase price of Units as percentage of holder's capital account | 100.00% | ||
Other Members [Member} | |||
Other Members Capital Account [Line Items] | |||
Members capital account, Units issued | 12,055,016 | 12,055,016 | |
Members capital account, Units outstanding | 12,055,016 | 12,055,016 | 12,055,016 |
Members capital account, Units authorized | 15,000,000 | 15,000,000 | |
Allocation of net income, net losses and distributions | 92.50% | ||
Managing Member [Member] | |||
Other Members Capital Account [Line Items] | |||
Allocation of net income, net losses and distributions | 7.50% | ||
Initial Members [Member] | |||
Other Members Capital Account [Line Items] | |||
Members capital account, Units issued | 50 | 50 |
Members' Capital (Distributions
Members' Capital (Distributions to Other Members) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Members' Capital [Abstract] | ||
Distributions declared | $ 3,842 | |
Weighted average number of Units outstanding | 12,055,016 | 12,055,016 |
Weighted average distributions per Unit | $ 0.32 |
Fair Value Measurements (Estima
Fair Value Measurements (Estimated Fair Values of Financial Instruments) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Financial assets: | ||
Cash and cash equivalents | $ 1,283 | $ 441 |
Carrying Amount [Member] | ||
Financial assets: | ||
Cash and cash equivalents | 1,283 | 441 |
Estimated Fair Value [Member] | Level 1 Estimated Fair Value [Member] | ||
Financial assets: | ||
Cash and cash equivalents | $ 1,283 | 441 |
Estimated Fair Value [Member] | Level 2 Estimated Fair Value [Member] | ||
Financial assets: | ||
Cash and cash equivalents |