As filed with the Securities and Exchange Commission on October 26, 1999
Registration No. 333-62477
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 3
To
Form S-1
Registration Statement
Under
The Securities Act of 1933
ATEL CAPITAL EQUIPMENT FUND
VIII, LLC (Exact name of registrant as
specified in governing instruments)
California 7394 94-3307404
(State or other juris- (Primary standard (IRS Employer
diction of organization) industrial classification Identification number)
code number)
235 Pine Street, 6th Floor
San Francisco, California 94104
(415) 989-8800
(Address, including zip code, and telephone number,including area code, of
principal executive offices)
DEAN L. CASH
235 Pine Street, 6th Floor
San Francisco, California 94104
(415) 989-8800
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
With a copy to:
PAUL J. DERENTHAL, ESQ.
Derenthal & Dannhauser
One Post Street, Suite 575
San Francisco, California 94104
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. X
atel8-1/04.s1
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ATEL CAPITAL EQUIPMENT FUND VIII, LLC
Limited Liability Company Units
$10 per Unit - Minimum Offering 120,000 Units
Minimum Investment -- 250 Units ($2,500)
(200 Units or $2,000 for an Individual Retirement Account or Qualified Plan)
ATEL Capital Equipment Fund VIII, LLC (the "Fund") is a California limited
liability company of which ATEL Financial Corporation ("ATEL") is the Manager.
The Fund's business will be to acquire a diversified portfolio of primarily
low-technology capital equipment leased to third parties. See "Investment
Objectives and Policies." The Fund expects (Continued on following page)
- -----------------------
AN INVESTMENT IN THE FUND INVOLVES SIGNIFICANT RISKS.
(See "Risk Factors"). Among the most prominent risks are the following:
- - Limited voting rights for investors mean total reliance on the Manager for
Fund management, and the Manager may be subject to certain conflicts of
interest;
- - Substantial fees are payable to the Manager and its affiliates;
- - All equipment investments are not specified, and investors cannot fully
assess the risks involved in the Fund's equipment portfolio;
- - The Fund's ability to realize lease revenues and make cash distributions is
subject to the risk of lessee defaults;
- - The use of secured debt may result in the loss of equipment used as
collateral if the Fund is unable to pay its debt obligations;
- - The Units will not be listed on any securities exchange and there are
significant limitations on transferability. Accordingly, investors may be
unable to dispose of Units except at discounts from the offering price, which
discounts may be substantial, and final liquidation is expected to occur
approximately ten to eleven years after the date the final investors are
admitted to the Fund;
- - The Fund's ability to diversify its portfolio of leased equipment by types
of equipment, manufacturers, lessees and geographic regions is dependent on
the amount of capital actually raised and the amount of available debt
financing (the Fund intends to incur debt equal to approximately 50% of its
equipment cost, but there can be no assurance as to the amount of available
debt financing);
- - A substantial portion of distributions will be, and a substantial
portion of distributions by prior ATEL programs have been, a return of
invested capital, as opposed to investment income, and the amount of
investment income investors may realize depends in part on the value of
equipment after the initial leases terminate; and
(Continued on the following page)
-----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- --------------------------------------------------------------------------------
Price to Selling Proceeds to
Public Commissions Fund
Per Unit $ 10 $ 0.95 $ 9.05
Total Minimum $ 1,200,000 $ 114,000 $ 1,086,000
Total Maximum $150,000,000 $14,250,000 $135,750,000
------------ ----------- ------------
- --------------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS December 7, 1998
Any supplements which update this Prospectus are contained inside the back
cover.
ATEL Capital Equipment Fund VIII, LLC is not a mutual fund or any other
type of investment company within the meaning of the Investment Company Act of
1940 and is not subject to regulation thereunder.
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(Cover page continued)
to commit approximately 86% of the total proceeds of this offering to the
purchase of equipment. At least an additional 0.5% of the total proceeds will be
retained by the Fund as working capital reserves. The balance will be used to
pay selling commissions equal to 9.5% of the total proceeds and other expenses
in the estimated amount of from 2.5% to 3.5% of the offering proceeds (which may
be advanced by the Manager and reimbursed by the Fund). See "Estimated Use of
Proceeds."
The Fund's objective is to invest in a diversified portfolio of leased
equipment which will generate regular cash distributions to investors. There can
be no assurance that such objective can be attained.
It is anticipated that a substantial portion of such distributions will
be tax-deferred during the initial years of Fund operations as a result of
depreciation available from equipment purchased by the Fund. To the extent the
Fund's net income is reduced thereby and distributions exceed net income, any
distributions will be considered a return of capital and income tax will be
deferred until subsequent years.
The offering is a best efforts minimum-maximum offering. A best efforts
offering is one in which no underwriter guarantees that any specific amount of
offering proceeds will be raised. All offering proceeds will be deposited in an
escrow account and will not be released to the Fund, until subscriptions for a
minimum of 120,000 Units ($1,200,000) have been received and accepted. Unless
the Fund receives and accepts subscriptions for a minimum of 120,000 Units by a
date one year from the date of this Prospectus, all subscription proceeds will
be promptly released from the escrow account and returned to subscribers,
together with all interest earned thereon. If the minimum offering amount is
achieved within the stated period, the offering may continue for a period of up
to two years from the date hereof, but will terminate when the maximum of
15,000,000 Units ($150,000,000) is sold or the offering is earlier terminated in
the discretion of the Fund and the Dealer Manager.
(Cover page risk factors continued)
- The return of investors' capital is not guaranteed and there can be no
assurance as to the timing or amount of any distributions.
Under the terms of its Operating Agreement, the Fund will provide each
Holder with quarterly and annual financial statements, Fund information
necessary to prepare the Holder's federal income tax return and an annual report
of the Fund's business. The annual financial statements will be examined by, and
include the opinion of, an independent certified public accountant.
THE USE OF PROJECTIONS IN THIS OFFERING IS PROHIBITED. ANY REPRESENTATIONS TO
THE CONTRARY AND ANY PREDICTIONS, WRITTEN OR ORAL, AS TO THE AMOUNT OR CERTAINTY
OF ANY PRESENT OR FUTURE CASH BENEFIT OR TAX CONSEQUENCE WHICH MAY FLOW FROM AN
INVESTMENT IN THE FUND IS A VIOLATION OF THE LAW. HOWEVER, SUCH PROHIBITIONS
SHOULD NOT BE CONSTRUED TO PREVENT THE FUND FROM FILING SUPPLEMENTALLY ANY PRO
FORMA FINANCIAL STATEMENTS REQUIRED BY THE FEDERAL SECURITIES LAWS AND
REGULATIONS THEREUNDER.
THE FOLLOWING LEGEND IS REQUIRED BY THE ARIZONA CORPORATION COMMISSION
PURSUANT TO ITS RULE 14-4-118B: THESE ARE SPECULATIVE SECURITIES.
2
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THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA DOES NOT RECOMMEND
OR ENDORSE THE PURCHASE OF THESE UNITS.
NOTICE TO PROSPECTIVE PURCHASERS IN THE STATE OF NEW HAMPSHIRE: NEITHER THE FACT
THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED NOR
THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED
CONSTITUTES A FINDING BY THE DIRECTOR OF THE NEW HAMPSHIRE OFFICE OF SECURITIES
REGULATION THAT ANY DOCUMENT FILED UNDER THE NEW HAMPSHIRE UNIFORM SECURITIES
ACT IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT
THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION
MEANS THAT THE DIRECTOR HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION.
IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
SECTION 421-B:20 OF THE NEW HAMPSHIRE UNIFORM SECURITIES ACT.
PENNSYLVANIA INVESTORS: BECAUSE THE MINIMUM OFFERING AMOUNT IS UNDER
$15,000,000, YOU ARE CAUTIONED TO EVALUATE CAREFULLY THE FUND'S ABILITY TO
ACCOMPLISH FULLY ITS STATED OBJECTIVES AND INQUIRE AS TO THE CURRENT DOLLAR
VOLUME OF FUND SUBSCRIPTIONS.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
3
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TABLE OF CONTENTS
Page
SUMMARY OF THE OFFERING.................................................. 8
Risk Factors......................................................... 8
Who Should Invest.................................................... 9
Estimated Use of Proceeds............................................ 9
Management Compensation.............................................. 9
Investment Objectives and Policies................................... 9
Conflicts of Interest................................................ 11
Fiduciary Duty of the Manager........................................ 11
Management........................................................... 11
Prior Performance Summary............................................ 11
Income, Losses and Distributions..................................... 11
Reinvestment......................................................... 11
Income Tax Consequences.............................................. 11
Summary of the Operating Agreement................................... 12
Plan of Distribution................................................. 13
Glossary............................................................. 13
RISK FACTORS............................................................. 13
Limited Investor Voting Rights and
Total Reliance on Management......................................... 13
Manager's Compensation and
Conflicts of Interest.............................................. 14
Unspecified Equipment and Lessees...................................... 14
Defaults by Lessees.................................................... 14
Risks of Leverage...................................................... 14
Balloon Payments....................................................... 15
Limited Transferability of Units....................................... 15
Diversification Dependent Upon Size of Fund............................ 15
Return on Investment Dependent Upon
Residual Value of Equipment.......................................... 15
Portion of Distributions Characterized
as Return of Capital............................................... 16
Activities Outside of the United States................................ 16
General Risks in the Equipment Leasing Business........................ 16
Fluctuations in Demand for Equipment................................... 17
Competition............................................................ 17
Risks of Operating Leases.............................................. 17
Casualty Losses........................................................ 17
Consequences of Government Regulation.................................. 17
Registration of Aircraft May Not Be Possible........................... 18
Newly-Formed Entity.................................................... 18
Difficulty in Investing Proceeds....................................... 18
4
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Liability of Holders.................................................... 18
Risks of Joint Ventures................................................. 18
Limited Liability Companies Newly Established........................... 18
Partnership Status...................................................... 18
Certain Other Tax Considerations........................................ 19
Tax Opinion............................................................. 19
ERISA Considerations.................................................... 20
WHO SHOULD INVEST......................................................... 20
ESTIMATED USE OF PROCEEDS................................................. 22
MANAGEMENT COMPENSATION................................................... 23
Summary Table......................................................... 23
Narrative Description of Compensation................................. 25
Limitations on Fees................................................... 26
Defined Terms Used in Description of Compensation..................... 28
INVESTMENT OBJECTIVES AND POLICIES........................................ 31
Principal Investment Objectives....................................... 31
General Policies...................................................... 31
Identified Equipment Acquisitions..................................... 33
Types of Equipment.................................................... 34
Prior Program Diversification......................................... 37
Borrowing Policies.................................................... 38
Description of Lessees................................................ 39
Foreign Leases........................................................ 40
Description of Leases................................................. 41
Competition........................................................... 42
Joint Venture Investments............................................. 43
General Restrictions.................................................. 43
Changes in Investment Objectives and Policies......................... 44
CONFLICTS OF INTEREST..................................................... 44
ORGANIZATIONAL DIAGRAM.................................................... 47
FIDUCIARY DUTY OF THE MANAGER............................................. 47
MANAGEMENT................................................................ 48
The Manager........................................................... 48
The Dealer Manager.................................................... 52
PRIOR PERFORMANCE SUMMARY................................................. 53
5
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INCOME, LOSSES AND DISTRIBUTIONS......................................... 56
Allocations of Net Income and Net Loss............................... 56
Timing of Distributions.............................................. 56
Allocations of Distributions......................................... 56
Reinvestment......................................................... 57
Return of Unused Capital............................................. 58
Cash From Reserve Account............................................ 58
Sources of Distributions - Accounting Matters........................ 58
CAPITALIZATION........................................................... 59
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION................................................. 59
FEDERAL INCOME TAX CONSEQUENCES.......................................... 61
Summary.............................................................. 61
Opinion of Counsel................................................... 61
Classification as a "Partnership".................................... 61
Allocations of Profits and Losses.................................... 61
Income Recognition................................................... 61
Taxation of Holders of Units......................................... 61
Limitation on Deduction of Losses.................................... 61
Tax Status of Leases................................................. 62
Depreciation......................................................... 69
Deductibility of Management Fees..................................... 70
Tax Liability in Later Years......................................... 71
Sales or Exchanges of Fund Equipment................................. 71
Disposition of Units................................................. 72
Original Issue Discount.............................................. 72
Fund Elections....................................................... 72
Treatment of Gifts of Units.......................................... 73
Investment by Qualified Plans and IRAS............................... 73
Individual Tax Rates................................................. 74
Alternative Minimum Tax.............................................. 75
Fund Tax Returns and Tax Information................................. 75
Interest and Penalties............................................... 76
Audit of Tax Returns................................................. 77
Registration Provisions.............................................. 77
Miscellaneous Partnership Tax Aspects................................ 78
Foreign Tax Considerations........................................... 78
Taxation of Foreign Persons.......................................... 78
Future Federal Income Tax Changes.................................... 79
State and Local Taxes................................................ 79
Need for Independent Advice.......................................... 80
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ERISA CONSIDERATIONS..................................................... 80
Prohibited Transactions Under ERISA and the Code..................... 80
Plan Assets.......................................................... 81
Other ERISA Considerations........................................... 81
SUMMARY OF THE OPERATING AGREEMENT....................................... 82
The Duties of the Manager............................................ 82
Liability of Holders................................................. 82
Term and Dissolution................................................. 82
Voting Rights of Members............................................. 83
Dissenters' Rights and Limitations on
Mergers and Roll-ups............................................... 84
Meetings............................................................. 84
Books of Account and Records......................................... 84
Status of Units...................................................... 85
Transferability of Units............................................. 85
Repurchase of Units.................................................. 87
Indemnification of the Manager....................................... 87
PLAN OF DISTRIBUTION..................................................... 88
Distribution......................................................... 88
Selling Compensation and Certain Expenses............................ 89
Escrow Arrangements.................................................. 89
Investments by Certain Persons....................................... 90
State Requirements................................................... 91
REPORTS TO HOLDERS....................................................... 91
SUPPLEMENTAL SALES MATERIAL.............................................. 92
LEGAL OPINIONS........................................................... 92
EXPERTS.................................................................. 93
ADDITIONAL INFORMATION................................................... 93
GLOSSARY................................................................. 93
FINANCIAL STATEMENTS..................................................... F-1
Exhibit A - Prior Performance Information................................ A-1
Exhibit B - Operating Agreement.......................................... B-1
Exhibit C - Subscription Instructions and Documents...................... C-1
7
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offer contained herein, and if given or made, such information or
representation must not be relied upon. This Prospectus does not constitute an
offer or solicitation by anyone in any state or other jurisdiction in which such
offer or solicitation is not authorized or in which the person making such offer
is not qualified to do so or to any person to whom it is unlawful to make such
offer or solicitation. Neither the delivery of this Prospectus or any Supplement
nor any sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the facts set forth herein since
the date hereof; however, if any material change not contemplated hereby occurs
while this Prospectus is required to be delivered, this Prospectus will be
amended or supplemented accordingly.
Until____________, 1999, (90 days after the date of this Prospectus)
all dealers effecting transactions in the registered securities, whether or not
participating in this distribution may be required to deliver a Prospectus. This
is in addition to the obligation of dealers to deliver a Prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.
SUMMARY OF THE OFFERING
The following is a summary of the pertinent facts and highlights from
the material contained in this Prospectus. More detailed information with
respect to this offering may be found in the remainder of this Prospectus.
Risk Factors: An investment in Units involves significant risks.
The "Risk Factors" section of this Prospectus contains a detailed
discussion of the most important risks. Please refer to those sections of the
Prospectus for discussions of material risk factors, including, but not limited
to, the following risks:
- Limited voting rights for investors mean total reliance on the Manager
for Fund management, and the Manager may
be subject to certain conflicts of interest;
- Substantial fees are payable to the Manager and its affiliates;
- All equipment investments are not specified, and investors cannot fully
assess the risks involved in the Fund's equipment
portfolio;
- The Fund's ability to realize lease revenues and make cash
distributions is subject to the risk of lessee defaults;
- The use of secured debt may result in the loss of equipment used as
collateral if the Fund is unable to pay its debt
obligations;
- The Units will not be listed on any securities exchange and there are
significant limitations on transferability. Accordingly, investors may
be unable to dispose of Units except at discounts from the offering
price, which discounts may be substantial, and final liquidation is
expected to occur approximately ten to eleven years after the date the
final investors are admitted to the Fund;
- The Fund's ability to diversify its portfolio of leased equipment by
types of equipment, manufacturers, lessees and geographic regions is
dependent on the amount of capital actually raised and the amount of
available debt financing (the Fund intends to incur debt equal to
approximately 50% of its equipment cost, but there can be no assurance
as to the amount of available debt financing);
8
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- A substantial portion of distributions will be, and a substantial
portion of distributions by prior ATEL programs have been, a return of
invested capital, as opposed to investment income, and the amount of
investment income investors may realize depends in part on the value of
equipment after the initial leases terminate; and
- The return of investors' capital is not guaranteed and there can be no
assurance as to the timing or amount of any
distributions.
Who Should Invest: The section of the Prospectus entitled "Who Should
Invest" contains an explanation of investor suitability requirements, and
describes the minimum net worth and income requirements that various states
impose on investors. In particular, that discussion addresses the rules
applicable to certain investors such as IRAs.
Estimated Use of Proceeds: Of each dollar raised by the Fund,
approximately 86% is expected to be invested in the cash portion of the purchase
price of equipment. An additional 0.5% will be retained as reserves for general
working capital purposes. The balance will be used to pay selling commissions
equal to 9.5%, and other offering and organization expenses in the estimated
amount of from 2.5% to 3.5% (which may be advanced by the Manager and reimbursed
by the Fund). See "Estimated Use of Proceeds" for a precise breakdown of the
Fund's estimate as to the use of the capital it raises.
Management Compensation: The Manager and its affiliates will receive
substantial fees and compensation in connection with this offering and the
operation of the Fund's business, including the following:
- Selling commissions on the sale of Units are payable to the Dealer
Manager, a substantial portion of which will be reallowed to participating
broker dealers. The Dealer Manager may retain up to 1.5% of the total proceeds
from the sale of Units.
- An annual Asset Management Fee will be paid to the Manager in an
amount equal to 4.5% of the revenues from leasing and disposition of the
equipment held for lease by the Fund, subject to certain limitations.
- The Manager will have a carried interest equal to 7.5% of all
allocations of income, loss and cash distributions.
See "Management Compensation." The Manager has discretion with respect
to all decisions related to Fund transactions, and may therefore be able to
affect the amount and timing of compensation payable by the Fund. See "Conflicts
of Interest - Receipt of Commissions, Fees and other Compensation by the Manager
and its Affiliates."
Investment Objectives and Policies: The Fund's objectives are to
invest in a diversified portfolio of equipment for lease to third parties which
will:
(i) Preserve, protect and return the Fund's invested capital;
(ii) Generate regular distributions to investors from net lease
revenues and from sales or refinancing of equipment, with any balance remaining
after certain minimum distributions (see "Income, Losses and Distributions -
Allocations of Distributions") to be reinvested in equipment during the period
ending six years after the year in which this offering of Units terminates (the
"Reinvestment Period"); and
(iii) Provide additional distributions after the end of the
Reinvestment Period and until all Equipment has been sold.
There can be no assurance that any such objectives can be attained.
9
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The Fund's equipment portfolio may include various types of equipment,
as described more fully under "Investment Objectives and Policies - Types of
Equipment."
It is the Fund's investment objective to acquire primarily
low-technology, low-obsolescence equipment such as materials handling equipment,
manufacturing equipment, mining equipment, and transportation equipment. A
portion of the portfolio may include technology-dependent equipment, such as
certain types of communications equipment, medical equipment, manufacturing
equipment and office equipment, although the Fund will seek to invest in such
equipment in a manner consistent with its primary objective of acquiring
equipment which is generally subject to relatively low rates of technological
obsolescence. The Operating Agreement does not limit the Fund's ability to
invest in high-technology equipment. Equipment that depends on high-technology
design or applications for its value may lose value more rapidly than equipment
which is less technology dependent, as advances in technology may render such
high-technology equipment functionally obsolete at an earlier date. See Table IV
of Exhibit A, "Prior Performance Information," for information concerning the
composition of the equipment portfolios held by the prior public programs
sponsored by the Manager and its affiliates which have investment objectives and
policies identical to those of the Fund.
The effect of owning assets which may be subject to economic
depreciation is, generally, that the investors' return on their capital, and in
some cases the return of their capital, is dependent on the rate of such
economic depreciation. In other words, the residual values realized upon the
sale, re-lease or other disposition of the equipment will play a significant
role in determining the success of the investment. Like most goods, new
equipment generally has a higher market value than comparable used equipment,
and capital equipment tends to lose value as it is used over a period of time.
An equipment lessor such as the Fund seeks to negotiate lease terms based in
part on its estimate of the value of the leased equipment upon termination of
the lease. The lessor will negotiate a lease rate designed to generate
sufficient rental revenues over the term of the lease so that, when the total
lease payments are added to the estimated value of the equipment upon lease
termination, the lessor will have achieved a return of the capital used to
purchase the equipment plus an overall profit on the investment. There can be no
assurance, however, that the lessor's assumptions regarding the residual value
of the equipment will be accurate or that its objective will be achieved.
A majority of the Fund's equipment will be leased on terms which return
at least 90% of the original purchase price through lease payments ("High Payout
Leases"), and a substantial portion of the purchase prices of other leased
assets may be expected to be returned through rents. The residual value risk and
the dependence on residual values to achieve a return on investment is discussed
under "Risk Factors - Investment Risks - Return on Investment Dependent Upon
Residual Value of Equipment."
Upon termination of the Fund's leases, the Manager will seek to
re-lease or sell the equipment, provided that subsequent leases will be for
terms consistent with the Fund's intended term.
Other than as set forth under "Investment Objectives and Policies -
Identified Equipment Acquisitions" and in any supplement to this Prospectus, the
Fund does not currently have options, contractual obligations or letters of
intent to acquire any equipment. See "Risk Factors" and "Investment Objectives
and Policies."
There is no limit on the borrowings on individual items of equipment.
However, the Fund's objective is to incur total portfolio debt equal to the
maximum permitted under the Operating Agreement, which is an amount equal to 50%
of the cost of its equipment as of the date of its final investment of the
offering proceeds or, thereafter, as of the date any subsequent indebtedness is
incurred. See "Risk Factors - Risks of Leverage" and "Investment Objectives and
Policies - Borrowing Policies."
10
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Conflicts of Interest: The Manager will have conflicts of interest in the
management of the Fund, including having interests which may be inconsistent
with those of the investors under some circumstances and being permitted to
engage in other activities which may conflict with those of the Fund. The
section of this Prospectus entitled "Conflicts of Interest" discusses the most
important of these conflicts of interest and how the Manager intends to resolve
them.
Fiduciary Duty of the Manager: The Manager is responsible for
supervising all aspects of the administration of the Fund and management of its
business. The Manager, as Manager of the Fund, will act as a fiduciary to the
Fund, and, consequently, is required to exercise good faith and integrity in all
dealings with respect to Fund affairs. See "Fiduciary Duty of Manager." However,
the Fund will indemnify the Manager against certain liabilities and the Manager
will have certain conflicts of interest, as described under "Conflicts of
Interest."
Management: The Manager of the Fund is ATEL Financial Corporation
("ATEL" or the "Manager"), a California corporation. Affiliates of the Manager
will provide various services to the Fund. See "Management." The offices of the
Manager and its Affiliates are located at 235 Pine Street, 6th Floor, San
Francisco, California 94104, and its telephone numbers are (415) 989-8800 and
(800) 543-ATEL (2835). The Manager's balance sheet is included in this
Prospectus under the caption "Financial Statements."
Prior Performance Summary: The Manager and its affiliates have
sponsored seven prior public equipment leasing programs. The seven prior public
programs have had investment objectives substantially identical to those of the
Fund. The section of the Prospectus entitled "Prior Performance Summary"
contains a summary of certain of these prior investment programs in which the
Manager and its affiliates have been involved. The Prior Performance Tables
attached as Exhibit A to the Prospectus include statistical and financial data
regarding these prior investment programs. Upon request, the Manager will
provide a copy of the most recent annual report on Form 10-K for any of the
prior public programs.
Income, Losses and Distributions: Fund income and loss for tax purposes
and cash distributions shall be allocated 92.5% to investors in accordance with
their respective pro rata share of the outstanding Units and 7.5% to the
Manager. The Fund intends to distribute all cash revenues remaining after Fund
expenses, including the annual Asset Management Fee, capital reserves and, to
the extent permitted under the limitations described below, amounts set aside
for reinvestment in additional equipment. See "Income, Losses and Distributions"
for a more complete and precise description of these provisions.
Upon liquidation of the Fund, the proceeds of liquidation will be
distributed in accordance with each partner's positive capital account balance.
See "Income, Losses and Distributions."
Reinvestment: Subject to certain limitations, including the prior
distribution of cash in specified minimum amounts, the Manager may reinvest Fund
revenues in additional equipment through the end of a six-year period commencing
after the year this offering closes. See "Income, Losses and Distributions -
Reinvestment."
Income Tax Consequences: The following is a brief summary of, and is
qualified by, the more extensive discussion of the material federal income tax
consequences set forth in "Income Tax Consequences." Investors should consult
with their tax and financial advisors to determine whether an investment in
Units is suitable for their portfolio.
- - Partnership Classification. Counsel is of the opinion that the Fund
will be classified as a partnership for federal income tax purposes.
11
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- - Allocation of Net Income and Net Loss. In tax counsel's opinion, it is
more likely than not that the tax allocation provisions in the
Operating Agreement will not be significantly modified by the Internal
Revenue Service.
- - Income Recognition. Under certain circumstances, an investor's tax
liabilities attributable to his investment in the Fund may, for a
particular year, exceed cash realized by such investor in that year. In
computing the amount of gain recognized upon the sale or other
disposition by a Holder of his Units, such Holder will generally be
deemed to have received, in addition to all amounts actually paid to
him, an amount equal to his allocable share of the outstanding balance
of the Fund liabilities. As a result, the amount of tax payable by an
investor on the gain realized from a sale or disposition of his Units
may exceed the cash received therefrom.
- - Limitations on Deduction of Losses. There are certain limitations on
the ability of an investor to utilize his allocable share of Fund tax
losses.
- - Tax Status of Leases. In order for investors to be entitled to
depreciation deductions, the equipment leases must be classified "true
leases" for federal income tax purposes. The Manager has represented
that it will use its best efforts to assure that each item of equipment
will comply or will substantially comply with the Internal Revenue
Service's equipment leasing guidelines.
- - Fund Elections. The Fund is not expected to file an election under
Internal Revenue Code Section 754. The absence of such election may
have an adverse effect on the marketability and sale price of the
Units.
- - UBTI. The Fund will generate unrelated business taxable income to
Holders who are Qualified Plans or IRAs.
- - AMT. The Fund's depreciation deductions may be subject to adjustment
under the alternative minimum tax.
Summary of the Operating Agreement: The Operating Agreement that will
govern the relationship between the investors and the Manager is a complex legal
document, and the section of the Prospectus entitled "Summary of the Operating
Agreement" summarizes some of its important provisions. Other important
provisions are summarized elsewhere in the Prospectus under the captions
"Management Compensation," "Income, Losses and Distributions" and "Reports to
Holders." The following is a brief summary of certain provisions of the
Operating Agreement which are discussed in greater detail under "Summary of the
Operating Agreement."
- - Voting Rights of Members. Each member of the Fund ("Member") will be
entitled to cast one vote for each Unit which such Member owns as of
the date designated as the record date for any Member vote. The Members
are entitled to vote on only certain fundamental organizational matters
affecting the Fund, and are not authorized to participate in the
conduct of Fund operations or the establishment or implementation of
Fund investment policies.
- - Meetings. The Manager or Members holding 10% or more of the total
outstanding Units may call a meeting of the Members or a vote of the
Members without a meeting, on matters on which they are entitled to
vote.
- - Dissenters' Rights and Limitations on Mergers and Roll-ups. Section
16.7 of the Operating Agreement provides Members with certain rights in
the event of any proposal involving an acquisition, conversion, merger
or consolidation transaction in which the investors would be issued new
securities in the resulting entity.
- - Transferability of Units. The Manager may condition the effectiveness
of any proposed transfer of Units or an interest in Units on such
representations, warranties, opinions of counsel acceptable to the
Manager (such counsel to be selected and paid by the transferor or
transferee) and other assurances
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as it considers appropriate as to certain specific matters set forth in
the Operating Agreement, including, among other things, legal
opinions confirming that the proposed transfer is in compliance with
applicable securities laws and will not result in adverse tax
consequences to the Fund. Any assignment, sale, exchange or other
transfer in contravention of any of the provisions of the Operating
Agreement shall be void and ineffectual, and shall not bind or be
recognized by the Fund.
- - Liability of Investors. Under the Operating Agreement and the
California Act, an investor complying with the Operating Agreement will
not be liable for Fund obligations in excess of his unreturned capital
contribution and share of undistributed profits; provided that, if the
Fund has made an improper distribution, the investor may be required to
return the amount received as a result.
- - Status Of Units. Under the Operating Agreement, each Unit will be fully
paid and nonassessable and all Units have equal voting and other
rights, except as with respect to certain limitations on the voting of
Units held by the Manager or its Affiliates.
- - Term and Dissolution. The Fund intends to liquidate its assets and
distribute the proceeds thereof beginning after the Reinvestment Period
expires (at the end of the sixth full year following the year during
which the final investors are admitted to the Fund) with final
liquidation expected to occur approximately ten to eleven years after
the date the final investors are admitted to the Fund. In any event,
the Fund may continue for a maximum period ending December 31, 2019.
- - The Duties of the Manager. ATEL Financial Corporation, the Manager, is
Manager of the Fund and, under the terms of the Operating Agreement,
has the exclusive management and control of all aspects of the business
of the Fund.
- - Books of Account and Records. The Manager is responsible under the
Operating Agreement for keeping certain books of account and records of
the Fund reflecting all of the contributions to the capital of the Fund
and all of the expenses and transactions of the Fund. Such books of
account and records will be kept at the principal place of business of
the Fund in the State of California, and each Member and his authorized
representatives shall have, at all times during reasonable business
hours, free access to and the right to inspect and copy at their
expense such books of account and all records of the Fund, and each
Member shall have the right to compel the Fund to deliver copies of
certain of these records on demand.
- - Indemnification of the Manager. The Operating Agreement provides that
the Manager and its affiliates who perform services for the Fund will
be indemnified against certain liabilities.
Plan of Distribution: The Units will be offered through ATEL Securities
Corporation (the "Dealer Manager"), an Affiliate of the Manager. The Dealer
Manager will in turn offer Units through other broker-dealers who are members of
the National Association of Securities Dealers, Inc. ("NASD"). See "Plan of
Distribution."
Until subscriptions for a total of 120,000 Units are received and
accepted, all subscription checks must be made payable to, and all offering
proceeds will be deposited in an escrow account . The offering will terminate
not later than two years from the date of this Prospectus, subject to any
re-qualification or renewal of qualification of the offering which may be
required in certain jurisdictions after the end of the first year of the
offering. Upon receipt and acceptance of subscriptions to a minimum of 120,000
Units, the subscription proceeds will be released to the Fund. See "Plan of
Distribution."
Glossary: See "Glossary" for definitions of certain capitalized terms which
are not otherwise defined herein.
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RISK FACTORS
The purchase of Units involves various risks. Therefore, prospective
purchasers should consider the following factors, among others discussed in this
Prospectus, before making a decision to purchase Units.
Limited Investor Voting Rights and Total Reliance on Management. All
decisions with respect to the management of the Fund will be made exclusively by
the Manager. The success of the Fund will, to a large extent, depend on the
quality of the management of the Fund, particularly as it relates to Equipment
acquisition, leasing and disposition. Holders are not permitted to take part in
the management of the Fund and Members have only limited voting rights. An
affirmative vote by holders of more than 50% of the outstanding Units is
required to remove the Manager. See "Summary of the Operating Agreement - Voting
Rights of Holders." Accordingly, no person should purchase any of the Units
offered hereby unless he is willing to entrust all aspects of the management of
the Fund to the Manager and has evaluated the Manager's capabilities to perform
such functions. See "Management" and Exhibit A - "Prior Performance
Information."
Manager's Compensation and Conflicts of Interest. Substantial fees are
payable to the Manager and its Affiliates before distributions are paid to
investors and even if the Fund does not generate profits. The Manager will also
be subject to conflicts of interest in connection with its management of the
Fund. In particular, the anticipated use of leverage equal to 50% of the
aggregate cost of Equipment would result in higher Asset Management Fees than if
less debt were incurred. See the discussion under "Investment Objectives and
Policies - Borrowing Policies."
Unspecified Equipment and Lessees. It is not possible to assess all of
the potential risks of an investment in Units because all of the Equipment to be
purchased and the lessees to whom such Equipment will be leased have not been
identified. A prospective investor will not have complete information as to the
manufacturers from which the Fund will purchase Equipment, the number of leases
to be entered into, the specific types and models of Equipment to be acquired,
or the identity, financial condition and creditworthiness of the lessees who
will lease such Equipment. The Holders must rely solely upon the judgment and
ability of the Manager with respect to the selection and methods of investment
and reinvestment in Equipment, evaluation of Equipment manufacturers, types of
leases and potential lessees. See "Investment Objectives and Policies."
Defaults by Lessees. The default by a lessee under a lease may cause a
lease to terminate and Equipment to be returned to the Fund at a time when the
Manager or its agents may be unable promptly to arrange for the re-leasing or
sale of such Equipment, thus resulting in the loss of anticipated revenues and
the inability to recover the entire amount of the Fund's original investment.
Furthermore, the Fund may experience difficulties and delays in recovering the
Equipment from the defaulting lessee, if a lessee files for protection under the
bankruptcy laws or otherwise. The Equipment may be returned in poor condition
and the Fund may be unable to enforce the return provisions and other lessee
obligations in its lease against an insolvent lessee. In addition a lessee's
deteriorating financial condition may make pursuing a recovery of the lease
obligation from the lessee not worthwhile. In any event, the costs associated
with recovering Equipment upon a lessee's default, enforcing the lessee's
obligations under the lease, and transporting, storing, repairing and
remarketing the Equipment may be substantial and may adversely affect Fund
operations. See the discussion under "Prior Performance Summary" and in Exhibit
A - "Prior Performance Tables" below.
Risks of Leverage. To finance a portion of the purchase price of its
Equipment portfolio, the Fund expects to incur aggregate indebtedness in an
amount equal to the maximum permitted under the Operating Agreement. Total Fund
debt may not exceed an amount equal to 50% of the aggregate cost of Equipment as
of the final commitment of the Net Proceeds and, thereafter, on the date any
subsequent indebtedness is incurred. Equipment purchased on a leveraged basis
generally can be expected to be profitable only if it generates sufficient cash
revenues from rents and residual proceeds in excess of those required to pay
interest on the related debt, recover the purchase price and cover other
operating expenses. The Fund intends to use both nonrecourse debt (debt in which
only the asset financed by the lender is collateral securing the obligation) and
recourse debt (in which all of the Fund's assets or a selected pool of the
assets are collateral securing the obligation). The Fund expects to incur
recourse debt obligations in the form of asset securitization transactions and
short term bridge financing to provide temporary
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financing for transactions approved for acquisition by the Fund, including a
common recourse debt facility with affiliated programs. Upon a default by a
borrower under a secured debt transaction, the lender generally has the right to
accelerate the entire debt obligation and to foreclose on the collateral. The
lender can thereby force a sale of the collateral to satisfy the full balance
due under the debt obligation of the borrower. The use of leverage may therefore
cause the risk of loss to the Holders to be greater than if no debt were
incurred, because fixed payment obligations must be met on certain specified
dates regardless of the amount of revenues derived by the Fund from leveraged
Equipment. At the same time, the use of debt increases the potential size of the
Fund's Equipment portfolio, the amount of gross lease revenues and potential
residual proceeds, and would also thereby increase the potential Asset
Management Fees payable to the Manager, as such fees are determined as a
percentage of the Operating Revenues.
Furthermore, the amount of Distributions to the Holders and the amount
of potential tax benefits may depend upon the availability and the terms of
financing for the purchase of Equipment. The Fund has not entered into any
agreements to obtain such financing, and it is not currently possible to
ascertain the availability of such financing. No assurance can be given that
financing will be available or, if available, that it will be provided upon
terms which the Manager deems reasonable.
See the discussion under "Investment Objectives and Policies - Borrowing
Policies."
Balloon Payments. The Fund may borrow on terms which do not provide for
amortization of the entire principal amount or a substantial portion thereof
prior to maturity. Such "balloon payment" debt involves greater risks than
secured debt where the principal amount is amortized over the term of the loan
because the ability of the Fund to repay at maturity the outstanding principal
amount may be dependent upon its ability to obtain adequate refinancing, and in
turn upon economic conditions in general and the value of the underlying
Equipment in particular. There is no assurance that the Equipment will have
sufficient value to permit the Fund to pay or refinance any such balloon payment
at maturity. Further, a significant decline in the value of the underlying
Equipment could result in a loss of the Equipment through foreclosure.
Limited Transferability of Units. There are significant limitations on
the transferability of Units, and, as a result of potential adverse tax effects,
the Manager will take steps to assure that no public trading market develops for
the Units offered hereby. Holders may not, therefore, be able to liquidate their
investments in the event of an emergency. In addition, Units may not be readily
accepted as collateral for a loan. Consequently, the purchase of Units should be
considered only as a long-term investment.
Diversification Dependent Upon Size of Fund. The Fund will be funded
with contributions of not less than $1,200,000 nor more than $150,000,000. The
potential for portfolio diversification and therefore the potential
profitability of the Fund may be affected by the amount of funds actually
raised. In the event that the Fund receives only the minimum Gross Proceeds, it
will have less ability to obtain diversification of its Equipment portfolio and
lessees, and the degree to which it may be adversely affected by the results of
any single lease transaction will be increased. See "Estimated Use of Proceeds"
and "Plan of Distribution." It should be noted that there is no minimum number
of lease transactions nor is there any restriction on the percentage of offering
proceeds at the minimum offering amount which may be used to purchase equipment
of a single type or equipment leased to a single lessee. See "Investment
Objectives and Policies."
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Return on Investment Dependent Upon Residual Value of Equipment. A
substantial portion of Fund distributions from lease revenues is expected to be
a return of capital. The Fund's ability to generate income from its investment
in Equipment will depend in part upon the continuing value of such Equipment
when its leases terminate, which in turn will depend upon, among other things:
(i) the condition of the Equipment; (ii) the cost of comparable new Equipment;
and (iii) the functional and technological obsolescence of the Equipment. In
general, leased equipment can be expected to depreciate in constant dollars
(that is, in dollars discounted for the effects of inflation during the lease
term). In structuring the terms of Fund leases, the Manager will make certain
assumptions regarding the anticipated residual values of Equipment in an effort
to calculate lease rates which, when combined with estimated sale proceeds, may
be expected to return the Fund's invested capital and provide a profit. There
can be no assurance that the Fund's residual value assumptions will prove to be
accurate or that the Equipment will not decline in value more rapidly than
anticipated. For information concerning performance of prior programs, see
Exhibit A- "Prior Performance Tables" below.
Portion of Distributions Characterized as Return of Capital. The
portion of each Distribution which exceeds the Fund's net income for the fiscal
period in which the Distribution is made would constitute a return of capital.
In other words, to the extent an investor receives cash in excess of his
allocable share of income for a period, he will be deemed to be receiving a
return of his invested capital rather than investment income. Distributions by
the Fund may be characterized for tax, accounting and economic purposes as a
return of capital, a return on capital (i.e., investment income) or a portion of
each, and for each such purpose may be characterized differently. The portion of
total Distributions which will constitute a return of capital and the portion
which will constitute investment income upon termination of the Fund will depend
on a number of factors in the Fund's operations, including the values which may
be realized on the sales of the Fund's Equipment at the end of its leases, and
cannot be determined until its Equipment portfolio is liquidated and the total
amount of all Distributions is compared to the total capital invested. The
amount and sources of cash distributions to investors in each of the prior
public programs sponsored by the Manager and its Affiliates are set forth in
Table III of Exhibit A to this Prospectus. Set forth under the line item "Cash
distributions to investors on a GAAP basis," are the amount of annual
distributions by each prior program per $1,000 invested and the portions of
which constitute return of capital and investment income. It should be noted,
however, that, as discussed above with respect to the Fund, the return of
capital and investment income ultimately to be realized by the prior programs
will not be finally determinable until each program is completed and liquidated.
Activities Outside of the United States. The Fund may lease Equipment
to foreign subsidiaries of United States corporations and to foreign lessees and
otherwise lease Equipment which is to be used outside the United States. There
is no limit on the amount of Equipment which may be so leased, but the Manager
will seek to limit the aggregate amount of the Fund's equity invested in all
Equipment which is leased to such foreign lessees and which is otherwise to be
used primarily outside the United States to not more than 20% of the Gross
Proceeds. In such cases, the Fund's interest in the Equipment may be subject to
the regulatory, taxing and judicial authorities of a foreign jurisdiction. The
Fund will attempt to require foreign lessees to consent to the jurisdiction of
U.S. courts in the event disputes should arise regarding the lease. Even if the
Fund is successful in this effort, it may be difficult or impossible to enforce
judgments obtained against foreign lessees in the event of a lease default, or
to obtain possession of leased Equipment or otherwise to enforce the Fund's
rights under the related lease. Moreover, the use and operation of Fund
Equipment in foreign jurisdictions may subject the Equipment to unanticipated
taxes, assessments or confiscation without fair compensation. The Fund will
attempt to include in such leases provisions which will cause all payments due
under the leases to be made in U.S. currency and require lessees to reimburse
the Fund for any foreign taxes billed to the Fund and to maintain insurance
covering the risk of confiscation. In the event that lease payments or other
terms of the leases involve payments in other than U.S. currency, the Fund will
be subject to the risk of currency exchange rate fluctuations, which could
reduce the Fund's overall return on an investment. Many countries also have laws
regulating the transfer and exchange of currencies, and such laws may affect a
foreign lessee's ability to comply with lease terms. Finally, certain
depreciation methods may not be available for Equipment leased by a foreign
lessee or "used predominantly outside the United States." See the discussion
below under "Income Tax Consequences - Depreciation - Limitations on the Use of
MACRS - (1) Property Used Predominantly Outside the United States, and (2)
Tax-Exempt Leasing."
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General Risks in the Equipment Leasing Business. The success of the Fund
will be affected by the quality of the Equipment, the viability of the Equipment
manufacturer, the timing of the purchases of Equipment by the Manager and its
ability to forecast technological advances concerning such Equipment. Equipment
leasing is subject to the risk of credit losses, technological and economic
obsolescence and defaults by lessees. Increases in operating expenses borne by
the Fund (including expenses relating to energy, labor, taxes and insurance)
could have an adverse impact upon the Fund's ability to keep the Equipment
leased on a profitable basis.
Fluctuations in Demand for Equipment. The ability of the Fund to keep
the Equipment leased and/or operating and the terms of acquisitions, leases and
dispositions of Equipment depend on various factors (many of which are not
within the control of the Manager or the Fund), such as general economic
conditions, including the effects of inflation or recession, and fluctuations in
supply and demand for various types of Equipment resulting from, among other
things, technological and economic obsolescence.
Competition. The equipment leasing industry is highly competitive.
Equipment manufacturers, corporations, partnerships and others offer users an
alternative to the purchase of most types of equipment with payment terms which
vary widely depending on the lease term and type of equipment. In seeking
suitable lease transactions, the Fund will compete with other entities,
including financial institutions, manufacturers and public and private leasing
companies, some of which may have greater financial resources or experience than
the Fund and the Manager. Such competition may have an adverse effect on the
terms of lease transactions available to the Fund.
Risks of Operating Leases. Although Equipment representing a majority
of the aggregate purchase price of the Fund's Equipment portfolio as of the
final investment of the Net Proceeds must be leased under High Payout Leases,
the Equipment portfolio will predominantly consist of investments in Operating
Leases, under which the Fund will receive aggregate rental payments in an amount
that is less than its purchase price for the Equipment. The Fund must, upon
termination of an Operating Lease, either obtain a renewal from the original
lessee, find a new lessee or sell the Equipment in order to cover its investment
in such Equipment. If the Fund is unable to renew leases, to enter into new
leases or to sell Equipment on desirable terms after the expiration of the
initial terms of Operating Leases, it may experience (i) loss of anticipated
revenues and (ii) the inability to recover the Fund's investment in the
Equipment. For information concerning performance of prior programs, see Exhibit
A- "Prior Performance Tables" below.
Casualty Losses. Equipment may be damaged or lost as a result of fire,
weather, accident, theft or other events of casualty. There is no assurance that
all potential casualties will be insured, insurable or that, if insured, the
insurance proceeds will be sufficient to cover a casualty.
Consequences of Government Regulation. The use, maintenance and
ownership of certain types of Equipment are regulated by federal, state and/or
local authorities which may impose restrictions and financial burdens on the
Fund's ownership and operation of such Equipment. Changes in government
regulations, industry standards or deregulation may also affect the ownership,
operation and resale of such Equipment.
In addition, certain types of Equipment (such as railcars, marine
vessels and aircraft) are subject to extensive safety and operating regulations
by governmental agencies and/or industry organizations. Such agencies or
organizations may require modifications or capital improvements to items of
Equipment. Such modifications or improvements may require the removal from
service of items of Equipment for a period of time and substantial capital
17
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expenditures by the owner. The terms of leases may provide for rent abatements
if required improvements cannot be made in a timely manner or if the Equipment
must remain out of service for an extended period or is otherwise removed from
service. The Fund may as a result experience reductions or interruptions in
operating revenues from such leases. If the Fund lacked sufficient funds to make
a required improvement or modification, it might be required to sell the
affected item of Equipment or to sell other items of Equipment owned by it in
order to obtain the necessary funds; in either event, the Fund might sustain a
loss on its investment in the items sold and might lose future revenues, and the
Holders might experience adverse tax consequences.
Registration of Aircraft and Marine Vessels May Not Be Possible. The
Fund may invest a portion of the Net Proceeds in aircraft or marine vessels.
Aircraft or marine vessels operated in the United States must be registered with
the Federal Aviation Administration ("FAA") or the U.S. Coast Guard ("USCG"),
which limit such registration to aircraft or marine vessels owned by U.S.
Citizens and Resident Aliens. The FAA's and USCG's Rules are not clear on the
status of certain forms of entity which own aircraft or marine vessels, and
there may be a risk that a Fund aircraft or marine vessel may not be registered
or may have its registration revoked. The Fund's acquisition of any aircraft or
marine vessels will be conditioned on appropriate registration with the
government agency having jurisdiction. If such registration were revoked for any
reason, the aircraft or marine vessel could not be operated in the United States
airspace or territorial waters, and the Fund would be subject to resulting
risks, including a possible forced sale of the aircraft or marine vessel, the
potential for uninsured casualties, the loss of the benefits of the central
recording system under federal law (and exposure to liens not of record) and a
breach by the Fund of leases or financing agreements. See "Investment Objectives
and Policies -- Types of Equipment - Aircraft" and "- Maritime Equipment."
Newly-Formed Entity. The Fund was formed in July, 1998, and has no
operating history. No assurance can be given that the Fund's operations will be
successful or that it will meet its stated investment objectives.
Difficulty in Investing Proceeds. There can be no assurance as to the
length of time it will take the Fund to invest the Net Proceeds. A delay in the
investment could affect the Fund's ability to meet its investment objectives.
Any overall decline in corporate expansion or demand for capital goods would
adversely affect the Fund's ability to invest the Net Proceeds.
Liability of Holders. A Member's personal liability for obligations of
the Fund generally will be limited, under the California Act , to the amount of
his Capital Contribution and his right to undistributed profits and assets of
the Fund. Under the California Act, a Member will not be liable for Fund
obligations in excess of his unreturned Capital Contribution and share of
undistributed profits. Notwithstanding the foregoing, a Member may be liable to
the Fund in an amount equal to any distribution made by the Fund to such Member
to the extent that, immediately after the distribution is made, all liabilities
of the Fund exceed the value of the Fund's assets.
Risks of Joint Ventures. Some of the Fund's investments may be owned by
joint ventures between the Fund and unaffiliated third parties or, under certain
circumstances, Affiliates of the Fund or the Manager, or as co-tenants with such
parties. The investment by the Fund in joint ownership of Equipment, instead of
investing in the Equipment directly or as the sole owner, may involve risks not
otherwise present, including, for example, risks associated with the possibility
that the Fund's co-venturer in an investment might become bankrupt, that such
co-venturer may at any time have economic or business interests or goals which
are inconsistent with the business interests or goals of the Fund, that the
parties may reach an impasse on joint venture decisions or that such co-venturer
may be in a position to take action contrary to the instructions or the requests
of the Fund or contrary to the Fund's policies or objectives. Among other
things, actions by such a co-venturer might have the result of subjecting
Equipment owned by the joint venture to liabilities in excess of those
contemplated by the terms of the joint venture agreement or might have other
adverse consequences for the Fund. (See "Investment Objectives and Policies -
Joint Venture Investments.")
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Limited Liability Companies Newly Established. The Fund has been
organized under the California Act, which is based upon a Uniform Limited
Liability Company Act. Although most states have adopted some form of limited
liability company legislation, state statutes vary and limited liability
companies have only a short history in operation. As a result, there are limited
legal precedents available for courts addressing questions concerning limited
liability company questions. Therefore, uncertainty exists concerning potential
the judicial interpretations of the California Act and other relevant limited
liability company provisions.
Partnership Status. The Fund will not apply for a ruling from the
Internal Revenue Service (the "Service") that it will be classified as a
partnership and not as an association taxable as a corporation for federal
income tax purposes. Furthermore, there is the possibility that Units may be
considered to be "publicly traded," thereby resulting in the Fund being taxed as
a corporation. The Manager will cause the Fund to contest any contention by the
Service that the Fund constitutes an association taxable as a corporation, but
Holders should be aware that this may result in additional representation
expenses (i.e., legal and accounting fees). In the event that the Fund is
treated for tax purposes as an association, the effective yield on an investment
in the Units would be substantially reduced because certain tax benefits
associated with the offering would be unavailable. See "Federal Income Tax
Consequences."
Certain Other Tax Considerations. In determining whether to invest in
the Units offered hereby, a prospective Holder should consider other possible
tax consequences thereof which may include, among others:
(a) the Service could disallow or reduce the Fund's
depreciation deductions or other deductions, or reallocate among the
Holders the items of Fund income, gain, deduction and loss in a manner
that is different from the provisions contained in the Operating
Agreement, in each case potentially resulting in less tax loss to
Holders, or additional taxable income to Holders without a
corresponding increase in cash Distributions;
(b) the investment by an exempt organization or a trustee or
custodian of a Qualified Plan or an IRA will result in unrelated
business taxable income to the exempt organization, Qualified Plan or
IRA;
(c) changes in the tax law or in the Regulations promulgated
under the Code may materially and adversely affect the Fund and the
Holders, including limiting the ability of entities such as the Fund to
generate passive income, and could adversely affect the value of
equipment in general, including the value of the Equipment acquired by
the Fund;
(d) the tax opinion of counsel is limited in scope and
qualified by certain assumptions;
(e) Holders may be subject to taxation of an amount in excess
of proceeds actually received on a sale of the Units and/or the
Equipment and on undistributed income;
(f) the taxable losses incurred by the Fund will be subject to
the passive loss limitation which will limit the deductibility of such
losses;
(g) possible audit of a Holder's tax return resulting from the
audit of the Fund's or another Holder's return; and
(h) Holders may be required to file tax returns and pay state,
local and/or foreign taxes as a result of an investment in the Fund.
See "Federal Income Tax Consequences" for further discussion with
respect to the above and other possible tax consequences of the ownership and
sale of Units.
EACH PROSPECTIVE PURCHASER OF UNITS IS URGED TO CONSULT HIS TAX ADVISOR
WITH SPECIFIC REFERENCE TO HIS OWN TAX SITUATION AND POTENTIAL CHANGES IN
APPLICABLE LAW.
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Tax Opinion. The Fund has obtained an opinion from its tax counsel,
Jackson Tufts Cole & Black, LLP ("Tax Counsel"), concerning the Fund's
classification as a partnership for federal income tax purposes. See "Federal
Income Tax Consequences -- Classification as a Partnership." The opinion also
states that the summaries of federal income tax consequences set forth herein
under the headings "Risk Factors" and "Federal Income Tax Consequences" have
been reviewed by Tax Counsel and, to the extent such summaries involve matters
of law, Tax Counsel is of the opinion that such statements of law are accurate
under the Code, the regulations promulgated thereunder and existing
interpretations thereof.
The opinion of Tax Counsel is based upon the facts described in this
Prospectus and upon the facts as they have been represented by the Manager. Any
alteration of the facts may adversely affect the opinion rendered. Furthermore,
the opinion of Tax Counsel is based upon existing law and applicable current and
proposed Treasury Regulations, current published administrative positions of the
Service contained in Revenue Rulings and Revenue Procedures, and judicial
decisions, all of which are subject to change either prospectively or
retroactively.
Each prospective investor should note that the opinions described
herein represent only Tax Counsel's best legal judgment and have no binding
effect or official status of any kind before the Service or the courts. In the
absence of a ruling from the Service, there can be no assurance that the Service
will not challenge such conclusions (or the tax positions taken by the Fund).
ERISA Considerations. In considering an investment of a portion of the
assets of a Qualified Plan or IRA in the Fund, a fiduciary should assess (i)
whether the investment satisfies the diversification requirements of Section
404(a)(1)(C) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (in the case of IRAs and Keogh Plans, fiduciaries should first
determine whether the investment is subject to ERISA requirements), (ii) whether
the investment is prudent, as it is unlikely that there will be a market created
in which the Qualified Plan or IRA can sell or otherwise dispose of the Units,
and (iii) whether the investment is made solely in the interest of the
participants in the Qualified Plan or IRA. Under certain circumstances, ERISA
and the Code, as interpreted by the Department of Labor, will apply a
"look-through" rule under which the assets of an entity in which a Qualified
Plan or IRA has made an equity investment may generally constitute "plan
assets." For this reason, the Fund is limiting sales to Qualified Plans and IRAs
to less than 25% in value of the total sale of Units at any time. In the event
that Qualified Plans or IRAs acquire more than 25% in value of the Units either
because the investors have misrepresented the status of their investment or
because of transfers made to Qualified Plans or IRAs the assets of the Fund
might be treated as "plan assets." ERISA also requires that the assets of a plan
be valued at their fair market value as of the close of the plan year. It may
not be possible to value the Units accurately from year to year, because there
will not be a secondary market for them and any change in the value of the
Equipment may not be reflected in the value of the Units.
WHO SHOULD INVEST
The Units represent a long-term investment, the primary benefit of
which is expected to be Distributions. A purchase of Units involves investment
risks and is suitable only for persons who meet the financial suitability
standards described herein and who have no need for liquidity from this
investment. See "Risk Factors." In order to subscribe for Units, each investor
must execute a Subscription Agreement, a specimen of which is included herein as
Exhibit C. The Subscription Agreement provided to the investor for execution
must be accompanied by a copy of this Prospectus, and each subscriber has the
right to cancel his or her subscription during a period of five business days
after the subscriber has submitted the executed Subscription Agreement to the
broker-dealer through which the Units are sold. The Fund and/or the selling
broker-dealer will send each investor a written confirmation of the acceptance
of the investor's subscription for Units upon admission to the Fund.
20
<PAGE>
As a result of the relative lack of liquidity and the long-term nature of
the investment, the Fund has established suitability standards which require
that an investor (including subsequent transferees) (i) have an annual gross
income of at least $45,000 and a net worth (exclusive of home, home furnishings
and automobiles) of at least $45,000; or (ii) have a net worth (determined with
the same exclusions) of at least $150,000. Certain state securities
commissioners have established investor suitability standards different from
those set forth above for the marketing, sale or subsequent transfers of Units
within their respective jurisdictions, which standards are set forth below under
"Plan of Distribution - State Requirements" or will be set forth in a supplement
hereto. By executing the Subscription Agreement, an investor represents that he
meets the suitability standards applicable to him as set forth herein and in the
Subscription Agreement, and agrees that such standards may be applied to any
proposed transferee of his Units. Notwithstanding the foregoing, each
participating broker-dealer who sells Units has the affirmative duty, confirmed
in the Selected Dealer Agreement entered into with the Dealer Manager, to
determine prior to the sale of Units that an investment in Units is a suitable
investment for its subscribing customer, must execute a representation in the
Subscription Agreement regarding such suitability, and must maintain information
concerning such suitability for at least six years following the date of
investment. The selling broker and the sponsor must make every reasonable effort
to determine that the purchase of Units is a suitable and appropriate investment
for each purchaser.
The minimum number of Units which an investor may purchase is 250,
representing a total minimum investment of $2,500, except that an Individual
Retirement Account ("IRA") or a qualified pension plan, profit-sharing plan,
stock bonus plan or Keogh Plan ("Qualified Plans") may purchase a minimum of 200
Units ($2,000). Additional investments may subsequently be made in a minimum
amount of 50 Units ($500) per subscription, and minimum additional increments of
one Unit ($10). Investors seeking to acquire additional Units after their
initial subscription need not complete a second subscription agreement. In
addition to restrictions on transfer imposed by the Fund, an investor seeking to
transfer his Units subsequent to his initial investment may be subject to the
securities or "Blue Sky" laws of the state in which the transfer is to take
place.
Because the Fund will be engaged in the business of equipment leasing,
the distributive share of Fund income realized by a Qualified Plan or IRA will
be taxable to such plan as "unrelated business taxable income" under the
Internal Revenue Code (the "Code"). Furthermore, in considering an investment in
the Fund, plan fiduciaries should consider, among other things, the
diversification requirements of Section 401(a)(1)(C) of the Code, additional
legal requirements under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and the prudent investment standards generally imposed on plan
fiduciaries. Additionally, in certain circumstances the assets of an entity in
which a Qualified Plan or IRA has made an equity investment may constitute "plan
assets." To the extent necessary to avoid this result, the Fund will limit the
sale and transfer of Units to Qualified Plans and IRAs so that less than 25% of
the total outstanding Units are held by Qualified Plans and IRAs at all times.
In order to satisfy such requirement, each investor must make a representation
at the time of his subscription as to the record and beneficial ownership of the
Units subscribed. See "Income Tax Consequences -- Investment by Qualified Plans
and IRAs."
Investors should also note that the Fund is required by the Operating
Agreement to distribute, to the extent available, Cash from Operations and Cash
from Sales or Refinancing in any year to the extent necessary to allow a Holder
in a 31% federal income tax bracket (but not a higher bracket) to pay the
federal income taxes due with respect to his interest in Fund Net Income for
such year. Accordingly, it is possible that a Holder subject to a higher
effective tax rate might not receive sufficient Distributions to pay such tax
liabilities. However, the Manager is also required to make Distributions in
certain minimum amounts during the Reinvestment Period prior to any reinvestment
in Equipment and must distribute all available revenues after the Reinvestment
Period. The Manager anticipates that such Distributions will be in amounts which
will exceed the expected tax liabilities resulting from allocations of Fund Net
Income regardless of the investors' respective tax brackets. See "Risk Factors -
Income and Distributions" and "Income, Losses and Distributions." In addition,
distributions to nonresident or foreign investors may be subject to withholding
taxes which would reduce the amount of cash actually received by such investors.
See "Income Tax Consequences - Taxation of Foreign Persons" and "State Taxes."
21
<PAGE>
Under federal law, certain types of Equipment, including aircraft and
marine vessels, may not be operated unless they are owned by United States
Citizens or Resident Aliens. To assure that the Fund will not exceed relevant
federal limits on foreign ownership, the Manager will not permit in excess of
20% of the outstanding Units to be held by persons other than U.S. Citizens and
Resident Aliens, and may deny or condition any proposed subscription or transfer
in order to comply with such limitation. Furthermore, any Holder who ceases to
be a United States Citizen or Resident Alien may be required to tender his Units
to the Fund for repurchase at a price determined pursuant to the formula
described under "Summary of Operating Agreement - Repurchase of Units." A HOLDER
WHO FAILS TO CONFORM TO THE REPRESENTATIONS REGARDING UNIT OWNERSHIP AND
CITIZENSHIP REQUIREMENTS OR MISREPRESENTS HIS UNIT OWNERSHIP OR CITIZENSHIP MAY
FORFEIT AND NO LONGER BE ENTITLED TO CASH DISTRIBUTIONS, TAX ALLOCATIONS,
RECEIPT OF REPORTS AND VOTING PRIVILEGES, ALTHOUGH HE MAY REALIZE PROCEEDS UPON
THE TRANSFER OF HIS UNITS TO AN ELIGIBLE INVESTOR, WHO WOULD BE ENTITLED TO THE
FULL ECONOMIC BENEFITS AND OTHER PRIVILEGES ATTRIBUTABLE TO SUCH UNITS.
ESTIMATED USE OF PROCEEDS
Many of the figures set forth below are estimates, and consequently
should not be relied upon as a prediction of the actual use of the proceeds of
this offering. The Fund expects to commit approximately 87% of the Gross
Proceeds of this offering to the cash portion of the purchase price of Equipment
plus capital reserves.
<TABLE>
Minimum Offering Maximum Offering
Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C>
Gross Offering Proceeds(1)...... $1,200,000 100.00% $150,000,000 100.00%
Less Offering and
Organization
Expenses:
Selling Commissions(2)...... 114,000 9.50% 14,250,000 9.50%
Other Offering and Organ-
ization Expenses(3)...... 30,000 2.50% 5,250,000 3.50%
------------ ------ ------------- ------
Net Offering Proceeds 1,056,000 88.00% 130,500,000 87.00%
Capital Reserves(4)... 6,000 0.50% 750,000 0.50%
Amount Available for
Cash Payments for
Equipment(5) .. 1,050,000 87.50% 129,750,000 86.50%
--------- ------ ----------- ------
- -------------
<FN>
(1) The offering amounts shown do not include the Units purchased by
the initial Holders.
(2) The Fund will pay ATEL Securities Corporation (the "Dealer
Manager"), an Affiliate of the Manager, selling commissions equal to 9.5% of the
Gross Proceeds, and the Dealer Manager will in turn reallow to participating
broker-dealers selling commissions equal to 8% of the Gross Proceeds from Units
sold by them, retaining the balance of 1.5%. See "Plan of Distribution." Out of
22
<PAGE>
the amounts retained by the Dealer Manager, it may pay one or more
broker-dealers for "wholesaling" services in connection with the offering.
Wholesaling services include coordinating the sales effort of participating
broker-dealers and training their personnel with respect to the offering. Total
selling commissions, disbursements and reimbursements to participating
broker-dealers may not exceed an amount equal to 10% of the Gross Proceeds,
except that an additional 1/2 of 1% of the Gross Proceeds may be paid for
accountable, bona fide due diligence expenses. If the Manager, the Dealer
Manager or the broker-dealers engaged by the Dealer Manager to sell the Units,
or any of their Affiliates or employees, purchase any Units in this offering,
the Dealer Manager, in its discretion, may reimburse to any such purchasers
selling commissions paid with respect to such Units. Sales to any such
purchasers on such terms would be for investment purposes only, and the Fund and
the Manager would not recognize any attempted transfer of such Units unless
certain conditions are satisfied. See "Plan of Distribution."
(3) Consists of expenses incurred in connection with the organization and
formation of the Fund, legal, accounting and escrow fees, printing costs, filing
and qualification fees and disbursements and reimbursements to participating
broker-dealers in connection with the sale and distribution of Units; provided,
however, that total selling commissions, disbursements and reimbursements to
participating broker-dealers may not exceed the limitations thereon set forth in
footnote (2) above. See "Management Compensation." The Manager has agreed to pay
all Organization and Offering Expenses which exceed an amount equal to 15% of
the Gross Proceeds of the offering up to $25,000,000 plus 14% of all Gross
Proceeds in excess of $25,000,000. Notwithstanding the foregoing, in the event
that the Fund's Gross Proceeds upon the termination of the offering are in an
amount less than $2,000,000, the Manager has agreed to pay all Offering and
Organization Expenses which exceed an amount equal to 12% of the Gross Proceeds.
Payment of such expenses by the Manager will be made without recourse to or
reimbursement by the Fund.
(4) The Fund will initially establish capital reserves in an amount
equal to 1/2 of 1% of Gross Proceeds for general working capital purposes. This
amount may fluctuate from time to time as the Manager determines the level of
reserves necessary for the proper operation of the Fund.
(5) Includes the amount available for the cash portion of the purchase
price to be paid for Equipment plus Acquisition Expenses of the Fund. The Fund
anticipates paying Acquisition Expenses in an amount equal to approximately
0.25% of the Gross Proceeds.
</FN>
</TABLE>
MANAGEMENT COMPENSATION
Summary Table
The following table includes estimates of the maximum amounts of all
compensation and other payments that the Manager and its Affiliates will
receive, directly or indirectly, in connection with the operations of the Fund,
all of which are described more completely below under "Narrative Description of
Compensation." It should be noted that the terms of compensation and amounts of
Distributions payable to the Manager and its Affiliates were not determined by
arm's-length negotiation. See "Conflicts of Interest - Non-Arm's-Length
Agreements" below. The Operating Agreement does not permit the Manager or its
Affiliates to receive fees or expenses in excess of the maximum amount stated
for each type of compensation described below by reclassifying such items under
a different category.
23
<PAGE>
Estimated Amount
Entity Receiving Assuming Maximum
Compensation Type of Compensation Units Sold
The Dealer Manager Selling Commissions (Up to 1.5% Total selling
of Gross Proceeds to be retained commissions to be
by the Dealer Manager) retained by the
Dealer Manager are
not expected to
exceed $2,250,000.
Manager and Affiliates Reimbursement of Organization $5,250,000(1)
and Offering Expenses (when
added to selling commissions,
not to exceed a total equal
to 15% of Gross proceeds up
to $25 million and 14% of any
additional Gross Proceeds)
OPERATIONAL STAGE
Manager and Affiliates Asset Management Fee (a fee Not determinable
equal to 4.5% of Operating at this time (2)
Revenues, subject to
limitations based on Fund
operations) (3)
Manager and Affiliates Reimbursement of Operating Not determinable
Expenses, subject to certain at this time (2)
limitations (4)
CARRIED INTEREST IN FUND
Manager and Affiliates Interest equal to 7.5% of all Not determinable
allocations of Fund Net Income, at this time (2)
Net Loss and Distributions
(1) The estimated maximum amount excludes selling commissions, which will
be paid directly by the Fund, and will therefore not be reimbursed to
the Manager. Selling commissions are included as "Front End Fees" in
the calculation of the minimum Investment in Equipment described in
footnote (4) below. Total Organization and Offering Expenses payable or
reimbursable by the Fund, including selling commissions payable
directly by the Fund, may not exceed an amount equal to 15% of the
Gross Proceeds up to $25,000,000 plus 14% of all Gross Proceeds in
excess of $25,000,000. It is anticipated that substantially all of the
Organization and Offering Expenses, other than selling commissions,
will be paid by the Manager and reimbursed by the Fund, subject to such
limitations.
24
<PAGE>
(2) The Manager is unable to predict the amounts which may be realized. Any
such prediction would depend on the amount of Equipment acquired and
retained, the amount of debt incurred and other factors that would
necessarily involve assumptions of future events which cannot be made
at this time.
(3) The Asset Management Fee will be subject to the Asset Management Fee
Limit, based on an alternative fee schedule, as described in the
discussion below under "Limitations on Fees". In addition, pursuant to
Section 15.7 of the Operating Agreement, the Manager must commit not
less than 85.875% of the Gross Proceeds to "Investment in Equipment"
(which term includes the purchase price of Equipment, expenses such as
interest and taxes and amounts set aside for reserves, but excludes
Front End Fees). In the event the total amount of Investment in
Equipment would otherwise be insufficient, the Asset Management Fee
Limit will be adjusted, and the Asset Management Fee or the Manager's
Carried Interest would be decreased accordingly, as described in the
discussion below under "Limitations on Fees".
(4) Beginning with the first full year after the termination of this
offering, the total amount of Reimbursable Administrative Expenses
payable by the Fund for the remainder of its term may not exceed a
cumulative limit. This cumulative limit on such Reimbursable
Administrative Expenses will equal, as of any date, a maximum of (i)
0.5% of the Gross Proceeds per annum if the total Gross Proceeds are at
least 90% of the maximum Gross Proceeds; (ii) 0.75% of the Gross
Proceeds per annum if the total Gross Proceeds are at least 75%, but
less than 90%, of the maximum Gross Proceeds; and (iii) 1% of the Gross
Proceeds per annum if the total Gross Proceeds are less than 75% of the
maximum Gross Proceeds. In addition, beginning with the first full year
after the termination of this offering, the maximum amount of
Reimbursable Administrative Expenses payable by the Fund for any single
year shall be limited to an amount equal to 1% of the Gross Proceeds.
Narrative Description of Compensation
Selling Commissions. The Dealer Manager will receive selling
commissions on all sales of Units in an amount equal to 9.5% of Gross Proceeds.
The Dealer Manager will reallow to participating broker-dealers 8% of the Gross
Proceeds from Units sold by them, and may use a portion of the retained selling
commissions to compensate certain participating broker-dealers for wholesaling
services or reimburse certain selling expenses. It is not anticipated that the
Dealer Manager or other Affiliates of the Manager will directly effect any sales
of the Units, although the Dealer Manager will provide certain wholesaling
services. See "Plan of Distribution."
Reimbursement of Organization and Offering Expenses. The Manager and
its Affiliates will be reimbursed for certain expenses in connection with the
organization of the Fund and the offering of Units. Total Organization and
Offering Expenses payable or reimbursable by the Fund, including selling
commissions payable directly by the Fund, may not exceed an amount equal to 15%
of the Gross Proceeds up to $25,000,000 plus 14% of all Gross Proceeds in excess
of $25,000,000.
Asset Management Fee. The Fund will pay the Manager an Asset Management
Fee in an amount equal to 4.5% of Operating Revenues, which will include Gross
Lease Revenues and Cash From Sales or Refinancing. The Asset Management Fee will
be paid on a monthly basis. The amount of the Asset Management Fee payable in
any year will be reduced for that year to the extent it would otherwise exceed
the Asset Management Fee Limit, as described below. The Asset Management Fee
will be paid for services rendered by the Manager and its Affiliates in
determining portfolio and investment strategies (i.e., establishing and
maintaining the composition of the Equipment portfolio as a whole and the Fund's
overall debt structure) and generally managing or supervising the management of
the Equipment. The Manager will supervise performance of among others
activities, collection of lease revenues, monitoring compliance by lessees with
25
<PAGE>
the lease terms, assuring that Equipment is being used in accordance with
all operative contractual arrangements, paying operating expenses and arranging
for necessary maintenance and repair of Equipment in the event a lessee fails to
do so, monitoring property, sales and use tax compliance and preparation of
operating financial data. The Manager intends to delegate all or a portion of
its duties and the Asset Management Fee to one or more of its Affiliates who are
in the business of providing such services. See "Management".
Reimbursement of Operating Expenses. The Manager and its Affiliates may
be reimbursed for expenses advanced or incurred on the Fund's behalf, to the
extent permitted under the Operating Agreement. The Manager and its Affiliates
will be reimbursed (i) the actual cost to the Manager or its Affiliates of
services, goods and materials used for and by the Fund and obtained from
unaffiliated parties; (ii) administrative services necessary to the prudent
operation of the Fund, provided that reimbursement for administrative services
will be at the lower of (a) the actual cost of such services, or (b) the amount
which the Fund would be required to pay to independent parties for comparable
services. Beginning with the first full year after the termination of this
offering, the total amount of Reimbursable Administrative Expenses payable by
the Fund for the remainder of its term may not exceed a cumulative limit. If at
least 75% of the maximum Gross Proceeds are raised by the end of this offering,
the cumulative limit will be an amount equal to 0.5% of the gross proceeds per
annum as of any date. If less than 75% of the maximum Gross Proceeds is raised,
then the cumulative limit will be an amount equal to 1% of the Gross Proceeds
per annum. In addition, beginning with the first full year after the termination
of this offering, the maximum amount of Reimbursable Administrative Expenses
payable by the Fund for any single year shall be limited to an amount equal to
1% of the Gross Proceeds. The Manager estimates that the total amount of
Reimbursable Administrative Expenses during the Fund's first full year of
operations after completion of the offering, assuming receipt of the maximum
Gross Proceeds, may be approximately $400,000 to $500,000. See the footnotes to
Table III of Exhibit A "Prior Performance Information" for information
concerning the reimbursement of operating expenses by prior programs sponsored
by the Manager and its Affiliates.
Carried Interest in Fund Net Income, Net Loss and Distributions. The
Fund Manager will have a Carried Interest in the Fund as a Member equal to 7.5%
of all allocations of Net Income, Net Loss and Distributions. The Carried
Interest in the Fund will compensate the Manager for organizing the Fund and
arranging for supervision of Fund administration (i.e., investor communications
and services, regulatory reporting, accounting and transfers of Units).
Limitations on Fees.
Asset Management Fee Limit. The Asset Management Fee will be subject to
the Asset Management Fee Limit. The Asset Management Fee Limit will be
calculated each year during the Fund's term by calculating the total fees that
would be paid to the Manager if the Manager were to be compensated on the basis
of an alternative fee schedule, to include an Equipment Management Fee,
Incentive Management Fee, and Equipment Resale/Re-Leasing Fee, plus the
Manager's Carried Interest, as described below. To the extent that the amount
paid to the Manager as the Asset Management Fee plus its Carried Interest for
any year would exceed the aggregate amount of fees calculated under this
alternative fee schedule for the year, the Asset Management Fee and/or Carried
Interest for that year will be reduced to equal the maximum aggregate fees under
the alternative fee schedule. To the extent any such fees are reduced, the
amount of such reduction will be accrued and deferred, and such accrued and
deferred compensation would be paid to the Manager in a subsequent period, but
only if and to the extent that such deferred compensation would be payable
within the Asset Management Fee Limit for the subsequent period. Any deferred
fees which cannot be paid under the applicable limitations in any subsequent
period through the date of liquidation would be forfeited by the Manager upon
liquidation.
26
<PAGE>
Alternative Fee Schedule. For purposes of the Asset Management Fee Limit,
the Fund will calculate an alternative schedule of fees, including a
hypothetical Equipment Management Fee, Incentive Management Fee, Equipment
Resale/Re- Leasing Fee, and Carried Interest as follows:
An Equipment Management Fee will be calculated to equal the
lesser of (i) 3.5% of annual Gross Revenues from Operating Leases and
2% of annual Gross Revenues from Full Payout Leases which contain Net
Lease Provisions), or (ii) the fees customarily charged by others
rendering similar services as an ongoing public activity in the same
geographic location and for similar types of equipment. If services
with respect to certain Operating Leases are performed by nonaffiliated
persons under the active supervision of the Manager or its Affiliate,
then the amount so calculated shall be 1% of Gross Revenues from such
Operating Leases.
An Incentive Management Fee will be calculated to equal 4% of
Distributions of Cash from Operations until Holders have received a
return of their Original Invested Capital plus a Priority Distribution,
and, thereafter, to equal a total of 7.5% of Distributions from all
sources, including Sale or Refinancing Proceeds. In subordinating the
increase in the Incentive Management Fee to a cumulative return of a
Holder's Original Invested Capital plus a Priority Distribution, a
Holder would be deemed to have received Distributions of Original
Invested Capital only to the extent that Distributions to the Holder
exceed the amount of the Priority Distribution.
An Equipment Resale/Re-Leasing Fee will be calculated in an
amount equal to the lesser of (i) 3% of the sale price of the
Equipment, or (ii) one-half the normal competitive equipment sale
commission charged by unaffiliated parties for resale services. Such
fee would apply only after the Holders have received a return of their
Original Invested Capital plus a Priority Distribution. In connection
with the releasing of Equipment to lessees other than previous lessees
or their Affiliates, the fee would be in an amount equal to the lesser
of (i) the competitive rate for comparable services for similar
equipment, or (ii) 2% of the gross rental payments derived from the
re-lease of such Equipment, payable out of each rental payment received
by the Fund from such re-lease.
A Carried Interest equal to 7.5% of all Distributions of Cash
from Operations and Cash from Sales or Refinancing.
Front End Fee Limitations. The compensation payable as described above
will be subject to further adjustment based on the limitations on Front End Fees
imposed under the North American Securities Administrators Association, Inc.
("NASAA") Statement of Policy concerning Equipment Programs, as amended through
October 24, 1991 (referred to herein as the "NASAA Guidelines"). The Manager
will first determine the effect, if any, of the Front End Fee limitations
described below and make any required adjustments to the Asset Management Fee
Limit. Then the Manager will apply the adjusted Asset Management Fee Limit to
the Asset Management Fee and the Manager's Carried Interest.
Under the NASAA Guidelines, the Fund is required to commit a minimum
percentage of the Gross Proceeds to Investment in Equipment, calculated as the
greater of: (i) 80% of the Gross Proceeds reduced by 0.0625% for each 1% of
indebtedness encumbering the Fund's Equipment; or (ii) 75% of such Gross
Proceeds. The Fund intends to incur total indebtedness equal to 50% of the
aggregate cost of its Equipment. The Operating Agreement requires the Fund to
commit at least 85.875% of the Gross Proceeds to Investment in Equipment. Based
on the formula in the NASAA Guidelines, the Fund's minimum Investment in
Equipment would equal 76.875% of Gross Proceeds (80% - [50% x .0625%] =
76.875%), and the Fund's minimum Investment in Equipment would therefore exceed
the NASAA Guideline minimum by 9%.
27
<PAGE>
The NASAA Guidelines permit the Manager and its Affiliates to receive
compensation in the form of a carried interest in Fund Net Income, Net Loss and
Distributions equal to 1% for the first 2.5% of excess Investment in Equipment
over the NASAA Guidelines minimum, 1% for the next 2% of such excess, and 1% for
each additional 1% of excess Investment in Equipment. With a minimum Investment
in Equipment of 85.875%, the Manager and its Affiliates may receive an
additional carried interest equal to 6.5% of Net Profit, Net Loss and
Distributions under the foregoing formula (2.5% + 2% + 4.5% = 9%; 1% + 1% + 4.5%
= 6.5%]. At the lowest permitted level of Investment in Equipment, the NASAA
Guidelines would permit the Manager and its Affiliates to receive a promotional
interest equal to 5% of Distributions of Cash from Operations and 1% of
Distributions of Sale or Refinancing Proceeds until Members have received total
Distributions equal to their Original Invested Capital plus an 8% per annum
cumulative return on their Adjusted Invested Capital, and, thereafter, the
promotional interest may increase to 15% of all Distributions.
With the additional carried interest calculated as described above, the
maximum aggregate fees payable to the Manager and Affiliates under the NASAA
Guidelines as carried interest and promotional interest would equal 11.5% of
Distributions of Cash from Operations (6.5% + 5% = 11.5%), and 7.5% of
Distributions of Sale or Refinancing Proceeds (6.5% + 1% = 7.5%), before the
subordination level was reached, and 21.5% of all Distributions thereafter. The
maximum amounts to be paid under the terms of the Operating Agreement are
subject to the application of the Asset Fee Limit provided in Section 8.3 of the
Agreement, which limits the annual amount payable to the Manager and its
Affiliates as the Asset Management Fee and the Carried Interest to an aggregate
not to exceed the total amount of fees that would be payable to the Manager and
its Affiliates under the alternative fee schedule set forth in Section 8.3. This
overall limitation on annual fees will include, in addition to an Equipment
Management Fee and Equipment Resale/Releasing Fee, amounts equal to 11.5% of
Distributions of Cash from Operations (4% as an Incentive Management Fee plus
7.5% as the Carried Interest in Fund Distributions) and 7.5% of Distributions of
Sale or Refinancing Proceeds (as the Fund Manager's 7.5% Carried Interest)
before the Priority Return, and 15% of all Distributions thereafter (7.5% as an
Incentive Management Fee plus 7.5% as the Carried Interest).
Upon completion of the offering of Units, final commitment of Net
Proceeds to acquisition of Equipment and establishment of final levels of
permanent portfolio debt encumbering such Equipment, the Manager shall calculate
the maximum carried interest and promotional interest payable to the Manager and
its Affiliates under the NASAA Guidelines and compare such total permitted fees
to the total of the Incentive Management Fees and Manager's Carried Interest. If
and to the extent that the fees calculated under the alternative fee schedule
provided in Section 8.3 as the Incentive Management Fee and the Manager's
Carried Interest should exceed the maximum promotional interest plus carried
interest permitted under the NASAA Guidelines, as described above, the fees
payable to the Manager and its Affiliates shall be reduced. In such event, the
Manager will reduce the amounts calculated for purposes of the Asset Management
Fee Limit as the Incentive Management Fee and/or the Carried Interest by an
amount sufficient to cause the total of such compensation to comply with the
limitations in the NASAA Guidelines on the aggregate of promotional interests
and carried interests. The adjusted Asset Management Fee Limit will then be
applied to the Asset Management Fee and Carried Interest as described above. A
comparison of the Front End Fees actually paid by the Fund and the NASAA
Guideline maximums shall be repeated, and any required adjustments shall be
made, at least annually thereafter.
Defined Terms Used in Description of Compensation
Definitions of certain capitalized terms used in the foregoing narrative
description of compensation payable to the Manager, and used in the alternative
fee schedule for purpose of calculating the Asset Management Fee Limitation, are
as follows:
28
<PAGE>
"Adjusted Invested Capital" means, as of any date, the Original Invested
Capital attributable to the Units held by any Person on or before such date, as
decreased (but not below zero) by the amount by which (i) all Distributions with
respect to such Units on or before the date of determination pursuant to any
provision of the Operating Agreement exceed (ii) the Priority Distribution
attributable to such Units for such period.
"Asset Management Fee Limit" means the total fees calculated pursuant to the
alternative fee schedule as set forth under "Limitations on Fees" above, equal
to the aggregate of a hypothetical Equipment Management Fee, Incentive
Management Fee, and Equipment Resale/Re-Leasing Fee, plus the Carried Interest,
determined in the manner described therein.
"Carried Interest" or "Interest in Distributions" shall mean the allocable share
of Fund Distributions of Cash from Operations and Cash from Sales or Refinancing
payable to the Manager, as a Member, pursuant to Sections 10.4 and 10.5 of the
Agreement.
"Cash from Operations" means the excess of Gross Lease Revenues (which excludes
revenues from Equipment sales or refinancing) over cash disbursements (including
an Equipment Management Fee and amounts reinvested by the Fund in Equipment)
without reduction for depreciation and amortization of intangibles such as
organization and underwriting costs but after a reasonable allowance for cash
for repairs, replacements, contingencies and anticipated obligations, as
determined by the Manager.
"Cash from Sales or Refinancing" means the net cash realized by the Fund from
the sale, refinancing or other disposition of any Equipment after payment of all
expenses related to the transaction (including an Equipment Resale Fee).
"Distributions" means any cash distributed to Holders and the Manager arising
from their respective interests in the Fund. "Full Payout Lease" means a lease
under which the non-cancellable rental payments due during the initial term of
the lease are at least sufficient to cover the purchase price of the Equipment
leased.
"Gross Lease Revenues" means all revenues attributable to the Equipment other
than from security deposits paid by lessees, but excluding revenues from the
sale, refinancing or other disposition of Equipment.
"Net Income" or "Net Loss" means the taxable income or taxable loss of the Fund
as determined for federal income tax purposes, computed by taking into account
each item of Fund income, gain, loss, deduction or credit not already included
in the computation of taxable income and taxable loss, but does not mean
Distributions.
"Operating Lease" means a lease under which the aggregate rental payments due
during the initial term of the lease are less than the purchase price of the
Equipment leased.
"Operating Revenues" means the total for any period of all Gross Lease Revenues
plus all Cash from Sales or Refinancing.
"Original Invested Capital" means the original gross purchase price of the Units
contributed by each Member to the capital of the Fund for his interest in the
Fund, which amount shall be attributed to Units in the hands of a subsequent
Holder.
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"Priority Distribution" for any calendar year or other period means, with
respect to the Units held by any Person, the average Adjusted Invested Capital
with respect to such Units during each calendar year multiplied by 10% per annum
(calculated on a cumulative basis, compounded daily, from the last day of the
calendar quarter in which the initial purchaser of such Units was admitted as a
Holder pursuant to the Operating Agreement and pro rated for any fraction of a
calendar year for which such calculation is made).
"Reimbursable Administrative Expenses" shall mean the ordinary recurring
administration expenses incurred by the Manager and reimbursed by the Fund. Such
expenses shall not include interest, depreciation, equipment maintenance or
repair, third party services or other non-administrative expenses.
See Article II of the Operating Agreement for more complete definitions
of the foregoing terms.
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INVESTMENT OBJECTIVES AND POLICIES
Principal Investment Objectives
The Fund's principal objectives are to invest in a diversified
portfolio of primarily low-technology, low- obsolescence Equipment which will
(i) preserve, protect and return the Fund's invested capital;
(ii) generate regular Distributions to Holders of Cash from
Operations and Cash From Sales or Refinancing, any balance remaining after
certain minimum Distributions to be used to purchase additional Equipment during
the Reinvestment Period; and
(iii) provide additional Distributions after the end of the
Reinvestment Period and until all Equipment has been sold.
Distributions will be made only to the extent cash is available after
payment of Fund obligations (including payment of Fund administrative expenses,
debt service and the Asset Management Fee) and allowance for necessary reserves.
Distributions are expected to commence as of the quarter in which the minimum
offering amount is achieved and in which investors are admitted to the Fund.
However, there can be no assurance as to the timing of Distributions, or that
any specific level of Distributions or any other objectives will be attained.
General Policies
The Fund intends to acquire various types of Equipment for lease. See
the discussion below under "Types of Equipment." Generally, the Fund expects to
acquire newly-manufactured Equipment. However, the Fund may also invest in
desirable used Equipment and Equipment subject to pre-existing leases under
appropriate circumstances and where consistent with the Fund's overall
investment objectives.
The Fund's investment objective is to acquire primarily low-technology,
low-obsolescence equipment such as materials handling equipment, manufacturing
equipment, mining equipment, and transportation equipment. A portion of the
portfolio may include some more technology-dependent equipment such as certain
types of communications equipment, medical equipment, manufacturing equipment
and office equipment, although the Fund will seek to invest in such equipment in
a manner consistent with its primary objective of acquiring equipment which is
generally subject to relatively low rates of technological obsolescence. The
Operating Agreement does not limit the Fund's ability to invest in
high-technology Equipment. See Table IV of Exhibit A, "Prior Performance
Information," for information concerning the composition of the equipment
portfolios held by the four prior public programs sponsored by the Manager and
its Affiliates which have investment objectives and policies similar to those of
the Fund.
Like most goods, new equipment generally has a higher market value than
comparable used equipment, and capital equipment tends to lose value as it is
used over a period of time. An equipment lessor such as the Fund seeks to
negotiate lease terms based in part on its estimate of the value of the leased
equipment upon termination of the lease. The lessor will negotiate a lease rate
designed to generate sufficient rental revenues over the term of the lease so
that, when the total lease payments are added to the estimated value of the
equipment upon lease termination, the lessor will have achieved a return of the
capital used to purchase the equipment plus an overall profit on the investment.
There can be no assurance, however,
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that the lessor's assumptions regarding the residual value of the equipment will
be accurate or that its objective will be achieved.
The Manager will seek to maintain an appropriate balance in the types of
Equipment acquired and the types of leases entered into by the Fund. At least a
majority of the Fund's Equipment, based on the aggregate purchase price, will be
subject to High Payout Leases (with noncancellable lease payments returning at
least 90% of the Equipment Price through the term of the lease) upon final
investment of the Net Proceeds and completion of permanent financing for the
portfolio. In addition, the Manager will seek to invest not more than 20% of the
aggregate purchase price of Equipment in Equipment acquired from a single
manufacturer. However, the latter limitation is a general guideline only, and
the Manager may in its discretion cause the Fund to acquire Equipment from a
single manufacturer in excess of the stated percentage if it deems such a course
of action to be in the Fund's best interest. A number of factors will determine
the actual composition of the Fund's Equipment portfolio; for example, the
amount of Gross Proceeds actually received prior to the termination of the
offering will be a significant factor in determining the Fund's ability to
diversify its portfolio. Furthermore, the Manager cannot anticipate what types
of Equipment will be available and at what prices at the time the Fund is ready
to invest its funds. In structuring leases, the Fund's lease rate and return on
investment objectives will vary based on the type of equipment, the terms of the
lease, the credit quality of the lessee and prevailing lease and financial
market conditions. The Manager will commit to a particular lease transaction
only if it believes that, in the context of the Fund's overall equipment
portfolio, the transaction will contribute to the satisfaction of the Fund's
investment objectives. The Fund does not have any quantifiable "minimum rate of
return". As noted above, the Fund's objectives are to acquire a diversified
portfolio of equipment that will generate sufficient net cash flow to permit
regular distributions to investors and additional funds to reinvest in
equipment. Reinvestment of revenues is permitted only after certain minimum
rates of distributions are made (see "Income, Losses and Distributions -
Reinvestment"). Accordingly, the Manager will seek to structure a portfolio that
(i) is diversified as to equpiment type, industry, lessee and geographic
location; (ii) capable of generating sufficient net cash flow to meet the
minimum distribution requirements to permit reinvestment; and (iii) capable of
generating sufficient cash flow to provide funds for additional investment in
equipment. The quantified rates of return necessary to meet these objectives
through the end of the Reinvestment Period will depend on a number of variables
which cannot be predicted with certainty this far in advance.
As set forth above under "Principal Investment Objectives," it will be
the Fund's objective to reinvest in additional Equipment any Cash from
Operations and Cash from Sales or Refinancing remaining after payment of certain
minimum Distributions during the Reinvestment Period. The Fund will not acquire
Equipment after the Reinvestment Period, except to the extent necessary to
satisfy obligations entered into prior to the end of the Reinvestment Period or
to maintain or improve Equipment already owned at such time.
Other than as set forth below under "Identified Equipment Acquisitions"
and in any supplement to this Prospectus, the Fund has not invested in or
committed to purchase any Equipment, and, as a result, there can be no assurance
as to when the Net Proceeds from the offering will be fully invested.
Furthermore, prospective investors may not have an opportunity prior to
investing to evaluate all of the Equipment to be acquired. This Prospectus will
be supplemented to describe the Fund's acquisition, in any single transaction or
related series of transactions, of items of Equipment involving a cash payment
of more than 10% of the maximum Net Proceeds prior to the termination of this
offering.
Prior to final funding of any acquisition of a single item of Equipment
which has a contract purchase price in excess of $1,000,000, the Manager will
cause the Fund to obtain a future value appraisal of the item of Equipment from
a qualified independent third party appraiser. The Manager may also, in its
discretion, obtain Equipment appraisals for certain smaller acquisitions if it
deems an appraisal to be appropriate because of the type of Equipment, the
overall size of a transaction or otherwise. It should be noted, however, that
any such appraisals would represent only the appraiser's opinion of the value of
the Equipment, and would not necessarily represent the actual amount which might
be realized by the Fund upon disposition of the Equipment.
The Manager or an Affiliate may purchase Equipment in its own name, the
name of an Affiliate or the name of a nominee, a trust or otherwise and hold
title thereto on a temporary or interim basis (generally not in excess of six
months) for the purpose of facilitating the acquisition of such Equipment or the
completion of manufacture of the Equipment or for any other purpose related to
the business of the Fund, provided, however that: (i) the transaction is in the
best interest of the Fund; (ii) such Equipment is purchased by the Fund for a
purchase price no greater than the cost of such Equipment to the Manager or
Affiliate (including any out-of-pocket carrying costs), except for compensation
permitted by the Operating Agreement; (iii) there is no difference in interest
terms of the loans secured by the Equipment at the time acquired by the Manager
or Affiliate and the time acquired by the Fund; (iv) there is no benefit arising
out of such transaction to the
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Manager or its Affiliate apart from the compensation otherwise permitted by the
Operating Agreement; and (v) all income generated by, and all expenses
associated with, Equipment so acquired shall be treated as belonging to the
Fund.
Any of the Net Proceeds received by the Fund during the first twelve
months following the date hereof which have not been invested or committed to
investment in Equipment during the period ending eighteen months following the
date hereof, and any of the Net Proceeds received thereafter which have not been
invested or committed to investment in Equipment during the period ending six
months after the Final Closing Date (except, in either case, for amounts used to
pay Fund operating expenses or deemed to be required as capital reserves, as
determined in the sole discretion of the Manager and in accordance with the
Operating Agreement) will be distributed pro rata by the Fund to the Holders. In
addition, in order to refund to the Holders the amount of Front End Fees
attributable to such returned capital, the Manager has agreed to contribute to
the Fund, and the Fund shall distribute to the Holders pro rata, the amount by
which (x) the amount of unused capital so distributed, divided by (y) the
percentage of Gross Proceeds remaining after payment of all Front End Fees,
exceeds the unused capital so distributed. The Fund's funds will be available
for general use during the foregoing period and may be expended in operating the
Equipment which has been acquired. Net Proceeds will not be segregated or held
separate from other funds of the Fund pending investment, and no interest will
be payable to the Holders if uninvested Net Proceeds are returned to them. For
the purpose of the foregoing provision, Net Proceeds will be deemed to have been
committed to investment and will not be returned to the Holders to the extent
written agreements in principle or letters of understanding were executed at any
time prior to the end of such period, regardless of whether any such investment
is eventually consummated, and also to the extent any funds have been reserved
to make contingent payments in connection with any Equipment, regardless of
whether any such payments are ever made.
Identified Equipment
As of the date hereof ATEL Capital Group, the parent of the Manager, has
been awarded lease transactions representing equipment purchase costs of
approximately $4.2 million which are suitable for acquisition by the Fund as
well as certain Affiliates of the Fund. Some or all of these transactions may be
allocated to the Fund, subject to the discretion of the Manager and depending on
future circumstances and the factors discussed below in the second paragraph
under "Conflicts of Interest - Competition for Investments." ATEL Capital Group
has the right to allocate and assign participations in these transactions among
its affiliates in its discretion, and the Manager has the authority to determine
what level of participation, if any, is appropriate for each of the programs
under its management, including the Fund. The Fund's ability to acquire the
Equipment described below will be dependent upon the amount of capital raised
and the timing of the Fund's capital raising efforts. In addition, the Manager
will cause the Fund to acquire these transactions only to the extent consistent
with its investment objectives at the time of each such acquisition. There can
be no assurance as to what, if any, portion of these transactions awarded to
ATEL Capital Group may be allocated and assigned to the Fund. However, these
transactions include binding lease commitments to ATEL Capital Group from the
following lessees in the approximate amounts noted: General Electric Company
($1.7 million in new and used manufacturing equipment, including both High
Payout Leases and Operating Leases with the overall transaction qualifying as a
High Payout Lease); Hallsmith-Sysco Food Service ($1 million in new trucks and
trailers under Full Payout Leases); Signature Flight Support Corporation ($1.2
million in new trucks and trailers under High Payout Leases); and Tenneco
Automotive ($200,000 in new material handling equipment under Full Payout
Leases). None of the foregoing equipment is subject to indebtedness. Although
the Fund may incur debt upon acquisition or finance the equipment after
acquisition, it has no current financing arrangements or commitments with
respect to such equipment. As is the case with all Fund acquisitions, no
Acquisition Fees will be payable to the Manager or any of its Affiliates in
connection with these proposed transactions.
Types of Equipment
The Fund intends to acquire and lease a diversified portfolio of
Equipment. The Fund intends to invest primarily in what it deems to be
relatively low-technology, low-obsolescence types of equipment. These types of
equipment would include a variety of items which are not dependent on
high-technology design or applications for their usefulness to lessees, and are
therefore less subject to rapid obsolescence than types which are so dependent.
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Equipment acquisition will be subject to the Manager or its agents
obtaining such information and reports, and undertaking such inspections and
surveys as the Manager may deem necessary and appropriate to determine the
probable economic life, reliability and productivity of the Equipment, its
competitive position with respect to other equipment and its suitability and
desirability as compared with other equipment. Purchases of new Equipment for
lease will typically be made directly from a manufacturer or its authorized
dealers, either pursuant to a purchase agreement relating to significant
quantities of such equipment, through lease brokers, or on an ad hoc basis to
meet the needs of a particular lessee. There can be no assurance that favorable
purchase agreements can be negotiated with equipment manufacturers or their
authorized dealers or lease brokers at the time the Fund commences operations.
In addition, the Fund may enter into sale/leaseback transactions pursuant to
which the Fund will purchase Equipment from companies which will simultaneously
lease the Equipment from the Fund.
The following is a more detailed description of the various types of
Equipment which the Fund may purchase and lease. The types of Equipment are
listed in alphabetical order, and the discussion is not intended to imply any
order of emphasis in the Fund's acquisition policies. The final mix of Equipment
types in the Fund's portfolio will depend on the factors discussed above under
"General Policies."
Aircraft. The Fund may invest in cargo and freight aircraft, corporate
aircraft and aircraft used for medical evacuation and rescue purposes. The Fund
may invest in commercial passenger aircraft, provided that not more than 10% of
the maximum Gross Proceeds will be committed to the purchase of commercial
passenger aircraft and provided further that any debt used to acquire or
maintain such Equipment will either be secured by the obligations of an
"investment grade" lessee, or will be non-recourse to the other assets of the
Fund. The Manager anticipates that the Fund's cash investments in all types of
aircraft will not exceed an amount equal to 20% of the maximum Gross Proceeds.
Cargo and freight aircraft are used by commercial freight carriers and national
and international mail and package delivery services exclusively for the hauling
of cargo. Corporate aircraft, including both helicopters and fixed-wing
aircraft, are used by many businesses to move employees from city to city or to
locations without scheduled air service and for the express delivery of
personnel, components and products at various manufacturing and service
facilities. Commercial passenger aircraft consist of aircraft used in the day to
day operation of scheduled passenger air carriers. All domestic corporate and
commercial aircraft are registered with the Federal Aviation Administration
("FAA").
Under the Federal Aviation Act of 1958, as amended (the "Act"), it is
unlawful to operate an unregistered aircraft in the United States. In order to
be eligible for registration, the rules and regulations of the FAA provide, in
effect, that aircraft is eligible for registration only if it is owned by a
United States Citizen or a Resident Alien. A literal reading of the Act could
lead to the conclusion that aircraft in which the Fund has an interest are not
eligible for registration because the term United States Citizen is defined in
the Act to include a partnership in which each member is an "individual" who is
a citizen of the United States or one of its possessions, and the Fund has a
corporate Manager. The FAA has indicated informally that it will permit
registration of an aircraft under the Federal Aviation Act of 1958 and the
regulations thereunder in the name of a trustee of a trust in which a
partnership is the sole beneficiary if the partnership's partners are United
States Citizens (whether or not they are all individuals) or Resident Aliens.
However, such representations are not binding on the FAA; therefore, the
possibility exists that the FAA would challenge such a registration. In
addition, a registration may be challenged and rendered invalid if a Member is
not, contrary to his representation to the Fund, a United States Citizen or a
Resident Alien or if a Member ceases to be a United States Citizen or a Resident
Alien. Any challenge, if successful, could result in an inability to operate the
aircraft, substantial penalties, the premature sale of the aircraft, the loss of
the benefits of the central recording system under federal law thereby leaving
the aircraft exposed to liens or other interests not of record with the FAA, and
a breach by the Fund of lease agreements entered into in connection with the
aircraft. Accordingly, the Manager will limit the ownership of Units or
interests therein by any persons who are not United States Citizens or Resident
Aliens to not more than 20% of the outstanding Units.
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It is anticipated that any aircraft lease will provide, as a condition
precedent to the transaction, that application for registration shall have been
duly made and that the prospective lessee shall have temporary or permanent
authority to operate the aircraft. If such authority were not obtainable because
of failure of registration, the lessee might be entitled to void the transaction
and the lease would not take effect.
Communications Equipment. Communications equipment is used for voice
and data transmission. Its applications include, but are not limited to,
telephone communication, radio and television broadcasting, cable television,
and satellite communications. The Fund may acquire and lease communications
equipment including telephone equipment and systems, data communication
terminals, cables, transmission wires, transmitters, control and amplification
equipment, repeaters, monitoring equipment, teleprinters, connector and
switching equipment, satellite and microwave transmission facilities and support
equipment.
Construction Equipment. Construction equipment includes bulldozers,
haulers, cranes, graders, backhoes, front-end loaders, scrapers and asphalt and
cement spreaders used in a wide variety of applications including building
construction and road, bridge and other civil engineering construction projects.
Energy Equipment. Energy equipment includes cogeneration facilities,
transmission lines, generation facilities, compression and pumping equipment and
other processing and treatment equipment, as well as energy management systems.
General Purpose Plant/Office Equipment. Plant/office equipment includes
racking, shelving, storage bins, portable steel storage sheds, furniture,
fixtures, tables, counters, desks, chairs, cabinets and numerous other items
generally used in manufacturing plants, storage and distribution facilities and
offices.
Graphic Processing Equipment. Graphic processing equipment includes
print setters, printing presses, automatic drafting machines and all equipment
which is used for the visual display of designs, drawings and printed matter.
Printing presses come in a variety of sizes depending on the applications for
which they are used. Some printing presses are of a single color, whereas others
can apply up to eight colors. Phototype setters are used for the setting of type
for publications such as newspapers and magazines. Computerized type-setters
have become common in recent years, as they simplify type- setting, correction
of mistakes and lay-out of printed pages. Automatic drafting machines are
computer controlled visual displays of drawings which enable designers to make
changes in engineering drawings without the time required to make a completely
new drawing by hand.
Machine Tools and Manufacturing Equipment. Machine tools and
manufacturing equipment include a wide variety of metalworking machinery, such
as lathes, drilling presses, turning mills, grinders, metal bending equipment,
metal slitting equipment and other metal forming equipment used in the
production of a variety of machinery and equipment. Some form of machine tool is
used in virtually every production process of a metal product or component.
While some machine tools and metalworking equipment are built for a particular
end product, the majority of machine tools can be used in a variety of
applications. Manufacturing equipment can also include some high technology
equipment.
Maritime Equipment. Maritime equipment is widely used in shipping
industry as the most cost-effective way of transporting large quantities of
commodities. Such equipment includes dry bulk ships, tankers, supply vessels,
tug boats, hopper barges, tank barges and intermodal containers. Marine vessels
include (i) tankers, which are designed to carry liquid commodities, and (ii)
dry bulk carriers, which are designed to carry homogenous commodities. In
addition, certain vessels have been designed as combination carriers that have
the capacity to carry both liquid and dry cargoes.
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Marine vessels may be registered in countries other than the United
States and may operate in international and foreign seas and waterways. Certain
types of marine vessels must be registered prior to operation in the waterways
of the United States. Marine vessel registration can be challenged and rendered
invalid under circumstances similar to those discussed with regard to aircraft
above. Any successful challenge with respect to a marine vessel may result in
substantial penalties, including the forced sale of the vessel, the potential
for uninsured casualties, and a breach by the Partnership of the lease or
financing agreements related to the vessel.
In addition, certain U. S. federal statutes and regulations provide for
the forfeiture to the U. S. Government of transportation equipment, including
marine vessels, found to be used in the transportation of illegal drugs and
other contraband. Upon the acquisition of vessels, the Manager will seek to
cause the vessel owner to enter into the Sea Carrier Initiative Agreement with
the U.S. Customs Service whereby the vessel owner shall agree to take
affirmative steps to deter illegal access to and use of such vessels by those
engaged in trafficking of items deemed to be illegal contraband, including
illegal drugs. The law provides for an exception with respect to the owners of
vessels where the illegal activity has occurred without the owner's knowledge,
consent or willful blindness. However, there can be no assurance that if a
marine vessel owned by the Fund and leased to a third party was found to be
engaged in such illegal activities, that it would not be seized or detained by
the U. S. Government. In that event, insurance coverages of the Fund could
mitigate its loss of income or pecuniary damages.
Materials Handling Equipment. Materials handling equipment includes
many varieties of fork lift trucks. They are either battery-powered or
gas-powered, and are used in warehouses and factories for the movement of
products and materials from one work station to another or from a warehouse to a
truck for shipment, or for the storing of products and materials. The equipment
comes in a variety of styles, depending on the design of the items to be moved
and the design of the shipping or warehouse facility. However, this type of
equipment is generally of standard design and can be used by a variety of
industries.
Medical Equipment. Medical equipment includes a wide variety of testing and
diagnostic equipment including:
Radiology Equipment. This category includes x-ray equipment, CAT and MRI
scanners (i.e., body and head scanners) and other equipment to be used in the
radiology departments of hospitals and clinics.
Laboratory Equipment. This category includes blood analysis equipment and
other automated medical laboratory equipment.
Other Medical Equipment. This general category includes equipment using
ultrasound technology, patient monitoring systems and a variety of other
equipment used in hospitals, clinics and medical laboratories.
Photocopying Equipment. The Fund may acquire and lease photocopying and
other document duplicating or reproduction equipment.
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Railroad Rolling Stock. Railroad rolling stock includes gondolas, tank
cars, boxcars, hopper cars, flatcars, locomotives and various other equipment
used by railroads in the maintenance of their tracks. Flatcars and boxcars have
a variety of designs, some of which are general purpose and some of which are
special purpose. Special purpose flatcars and boxcars are used for the shipment
of specific products whereas a general purpose car can be used for the shipment
of a wide variety of products. Many electric utilities lease hopper cars for the
shipment of coal from the mine to the generating plant. Tank cars are used to
transport liquids. Locomotives are the engines, generally diesel powered, that
drive trains of railcars from one location to another. Locomotives come in a
variety of designs which vary in the amount of horsepower produced.
Research and Experimentation Equipment. Research and experimentation
equipment include various types of analyzers, spectrometers, oscilloscopes,
measuring instruments, gas and liquid chromatographs, physical testing
centrifuges, graphic plotters and printers, laser equipment, digital-aided
design systems, scanning electron microscopes, dissolution sampling systems, and
other general laboratory instruments and equipment used in businesses for the
development of ongoing research programs.
Tractors, Trailers and Trucks. Tractors, trailers and trucks are used
for the shipment of various products and goods from one location to another.
Tractor-trailer rigs are often used for longer shipments and delivery of larger
pieces; whereas heavy-duty trucks are generally used for the more local delivery
of large products. A "tractor" refers to the power unit of a tractor-trailer
combination. The tractor cab is generally manufactured by one company and the
engine and drive train by another. The engine may use gasoline or diesel fuel.
Trailers are the container portion of a tractor-trailer rig and come in a
variety of sizes and designs depending on the product to be shipped. Trailers
may be designed for intermodal use so they can either be pulled by tractors or
transported on railroad flatcars. Trailers may be up to 45 feet long in most
states and most commonly have a set of twin axles (eight wheels) to carry the
load. A trailer may be enclosed on a flatbed for the shipment of large or
oversized products, and may be refrigerated for the shipment of perishable
products. The Fund intends to invest in trailers that can be used for the
shipment of a wide variety of goods and are not limited to specific
applications. Heavy-duty trucks are large trucks in which the engine and load
carrying components are mounted on a single frame. The trucks can be used for
the local delivery of large products or for the hauling of construction
materials.
Miscellaneous Equipment. The Fund may also acquire various other types
of equipment, including, but not limited to, oil drilling equipment, mining and
ore-processing equipment, electronic test equipment, office automation
equipment, furniture and fixtures, automobiles, dairy production equipment,
video projection and production equipment, store fixtures, display cases,
freezers and equipment used in production facilities.
Incidental Property Acquisitions. Incidental to an acquisition of
Equipment, the Fund may acquire certain interests in real property, mineral
rights or other tangible or intangible property or financial instruments. The
Fund may acquire ownership of an item of Equipment by acquiring the beneficial
interests of a trust or the equity interest in a special purpose corporation
which holds an asset sought by the Fund. Nothing in the Operating Agreement
prohibits the Fund from acquiring any such incidental property rights or
indirect ownership interest, provided that the primary purpose and objective is
the acquisition and leasing of equipment as described herein, the acquisition of
the incidental rights does not alter the essential character of the transaction
as an acquisition and lease which otherwise satisfies the investment objectives
and policies of the Fund, and the acquisition does not otherwise violate or
circumvent any provision of the Operating Agreement.
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Prior Program Diversification
The prior public equipment leasing programs sponsored by the Manager and
its Affiliates have had equipment portfolio objectives substantially identical
to those of the Fund. See "Prior Performance Summary" below and the Prior
Performance Tables included as Exhibit A to this Prospectus for more information
concerning these prior programs. The first chart set forth below (Figure 1)
represents the actual equipment portfolio diversification by equipment type for
all prior ATEL public programs as of December 31, 1997; the second chart set
forth below (Figure 2) represents the actual equipment portfolio diversification
by lessee industry for all prior ATEL public programs as of December 31, 1997;
and the third chart set forth below (Figure 3) represents the actual portfolio
diversification by the lessees' geographic location for all prior ATEL public
programs as of December 31, 1997. Diversification of the Fund's portfolio will
depend on a number of variables, including the amount of Gross Proceeds raised
and market conditions, which cannot be predicted in advance. Although there can
be no assurance that the Fund will achieve diversification similar to that of
the prior programs, achieving such diversification will be one of the primary
investment objectives and policies of the Fund.
[GRAPHIC OMITTED - FIGURES 1, 2 and 3]
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Borrowing Policies
The Fund expects to incur debt to finance the purchase of a portion of
its Equipment portfolio. The amount of borrowing in connection with any
Equipment acquisition transaction will be determined by, among other things, the
credit of the lessee, the terms of the lease, the nature of the Equipment and
the condition of the money market. There is no limit on the amount of debt which
may be incurred in connection with any single acquisition of Equipment. However,
the Fund may not incur aggregate indebtedness in excess of 50% of the total cost
of Equipment as of the date of the final commitment of Net Proceeds and,
thereafter, as of the date any subsequent indebtedness is incurred. The Fund
intends to borrow amounts equal to such maximum debt level in order to fund a
portion of its Equipment acquisitions. While the Manager has obtained
commitments for certain short term lines of credit, there can be no assurance
that such short term credit or permanent financing will be available to the Fund
in the amounts desired or on terms considered reasonable by the Manager at the
time the Fund seeks to finance a specific Equipment acquisition.
Financing for the Fund is expected to be a combination of nonrecourse
and recourse debt. The Manager intends to use nonrecourse debt primarily to
finance assets leased to those lessees which, in the opinion of the Manager,
have a relatively higher potential risk of lease default than other lessees of
the Fund's Equipment. This use of nonrecourse debt will mitigate the risk of
loss due to default by such lessees.
Nonrecourse borrowing, in the context of the type of business to be
conducted by the Fund, means that the lender providing the funds would only be
able to look to the Equipment purchased with such funds and the proceeds derived
from the leasing or reselling of such Equipment as security; neither the Fund
nor any Member (including the Manager) will be liable for repayment of any such
loan, nor will any such loan be secured by other Equipment owned by the Fund.
Investors should note, however, that the presence of nonrecourse financing may
limit an investor's ability to claim losses from the Fund. See "Income Tax
Consequences - Limitation on Deduction of Losses - At Risk Rules." Furthermore,
a creditor may under some circumstances have recourse to the Fund's assets upon
establishing fraud or misrepresentation by the Fund.
The Fund expects to incur recourse debt in connection with short-term
bridge financing and asset securitization, as described below. Recourse debt, in
the context of the type of business to be conducted by the Fund, means that the
lender can look beyond the specific asset financed by the loan to all of the
assets of the borrower, or a specified pool of assets, as collateral for
repayment of its debt obligation.
The Fund expects to incur recourse debt in the context of temporary or
short-term bridge financing used to acquire equipment and which is intended to
be repaid through a combination of permanent financing, offering proceeds and/or
operating revenues. In addition, the Fund may participate with other affiliated
programs and the Manager in a common recourse debt facility to provide temporary
or short-term bridge financing of transactions approved for acquisition by the
Fund and such Affiliates. In such instances, lease transactions may be held in
the name of an Affiliate of ATEL for convenience, notwithstanding that the
transaction has been approved for one or more participants. The ultimate
acquisition of the financed transaction will depend on many factors, including
without limitation, the Fund's available cash, portfolio makeup, and investment
objectives at the time of closing. See the discussion under "Risk Factors" and
"Conflicts of Interest" above.
The Fund may also incur long-term recourse debt in the form of asset
securitization transactions in order to obtain lower interest rates or other
more desirable terms than may be available for individual nonrecourse debt
transactions. In an "asset securitization", the lender would receive a security
interest in a specified pool of "securitized" Fund assets or a general lien
against all of the otherwise unencumbered assets of the Fund. It is the
intention of the Manager to use such
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asset securitization primarily to finance assets leased to those credits which,
in the opinion of the Manager, have a relatively lower potential risk of lease
default than those lessees with Equipment financed with nonrecourse debt. The
Manager expects that an asset securitization financing would involve borrowing
at a variable interest rate based on an established reference rate. The Manager
would seek to mitigate the Fund's exposure to increases in the interest rate by
engaging in hedging transactions that would effectively fix the interest rate
obligation of the Fund. The Manager's policy will be to incur variable rate
financing only under conditions which limit the potential adverse effect on the
Fund's anticipated return on the related lease transactions.
In the case of any recourse bridge financing or asset securitization,
however, the lender would not be entitled to look to the individual assets of
any Holder, or, in many cases, of the Manager, for repayment of such loans.
Thus, the liability of the Holders would be limited to their unreturned capital
contributions. See "Summary of the Operating Agreement Liability of Holders" for
a discussion of potential liability of Holders for return of certain
Distributions. If, under tax principles, it is determined that the Manager or
one of its Affiliates bears the economic risk of loss for such recourse debt,
then the recourse debt will be allocated to the Manager or its Affiliate for tax
basis purposes and all deductions attributable to the recourse debt will be
allocated to the Manager or its Affiliate. See "Income Tax Consequences -
Limitation on Deduction of Losses - Tax Basis."
Other than in connection with short-term bridge financing or an asset
securitization financing, the Manager will seek to avoid borrowing under terms
which provide for a rate of interest which may vary with the prime or reference
rate of interest of a lender. The Manager will attempt to limit any other
variable interest rate borrowing to those instances in which the lessee agrees
to bear the cost of any increase in the interest rate. If such debt is incurred
without a corresponding variable lease payment obligation, the Fund's interest
obligations could increase while lease revenues remain fixed. Accordingly, a
rise in the prime or reference rate may increase borrowing costs and reduce the
amount of income and cash available for Distributions. Historically, the prime
rates charged by major banks have fluctuated; as a result, the precise amount of
interest which the Fund may be charged under such circumstances cannot be
predicted.
Fund indebtedness may provide for amortization of the principal balance
over the term of the loan through regular payments of principal and interest or
may provide that all or a substantial portion of the principal due will be
payable in a single "balloon payment" upon maturity. Such balloon payment
indebtedness involves greater risks than fully amortizing debt. See "Risk
Factors - Balloon Payments."
In the event that the Fund does not have sufficient funds to purchase
an item of Equipment at the time it is acquired (including prior to the Fund's
Final Closing Date), the Fund may borrow such funds from third parties on a
short-term basis, and repay the loans out of the Net Proceeds derived from the
subsequent sale of Units. Any such short-term loans may be unsecured or secured
by the assets acquired and/or other assets of the Fund.
Although the Operating Agreement does not prohibit the Manager or its
Affiliates from lending to the Fund, the Fund does not have any intention or
arrangements to borrow from such Persons. In the event that any such borrowing
is incurred, the terms may not permit the Manager or any Affiliate to receive a
rate of interest or other terms which are more favorable than those generally
available from commercial lenders under the circumstances. In no event may the
Manager or its Affiliates provide financing to the Fund with a term in excess of
twelve months.
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Description of Lessees
The Fund will only purchase Equipment for which a lease exists or for
which a lease will be entered into at the time of purchase.
The Fund's objective is to lease a minimum of 75% of the Equipment (by
cost) acquired with the Net Proceeds to lessees which (i) have an average credit
rating by Moody's Investor Service, Inc. of "Baa" or better, or the credit
equivalent as determined by the Manager, with the average rating weighted to
account for the original Equipment cost for each item leased; or (ii) are
established hospitals with histories of profitability or municipalities. The
Manager may determine that the credit equivalent of a Moody's Baa rating applies
to those lessees which are not rated by Moody's, but which (i) have comparable
credit ratings as determined by other nationally recognized credit rating
services; (ii) although not rated by nationally recognized credit rating
services, are believed by the Manager to have comparable creditworthiness; or
(iii) in the Manager's opinion, as a result of guarantees provided, collateral
given, deposits made or other security interests granted, have provided such
safeguards of the Fund's interest in the Equipment that the risk is equivalent
to that involved in a lease to a company with a credit rating of Baa. The
balance of the original Equipment portfolio may include Equipment leased to
lessees which, although deemed creditworthy by the Manager, would not satisfy
the general credit rating criteria for the portfolio. If the risk of lessee
default is not deemed significant, and the potential return is deemed by the
Manager to justify the risk involved, the Fund may enter into leases with such
lessees for up to 25% of the Equipment acquired with the Net Proceeds.
In arranging lease transactions on behalf of corporate investors and
securing institutional financing for such transactions, the Manager and its
Affiliates have been required to analyze and evaluate the creditworthiness of
potential lessees. See "Exhibit A - Prior Performance Information." However,
neither the Manager nor any of its Affiliates is in the business of regularly
providing credit rating analyses as an independent activity. In order to analyze
whether a prospective lessee's credit risk is comparable or equivalent to a
Moody's Baa rating, the Manager will attempt to apply the standards applicable
to securities qualifying for the Baa rating. Such securities are generally
deemed to be of "investment grade," neither highly protected nor poorly secured,
with earnings and asset protection which appear adequate at present but which
may be questionable over any great length of time. Notwithstanding the Manager's
best efforts to assure the lessees' creditworthiness, there can be no assurance
that lease defaults will not occur.
It is not anticipated that the Fund's lessees will be located primarily
in any given geographic area. The Manager will use its best efforts to diversify
lessees by geography and industry. The Manager will seek to limit the amount
invested in Equipment leased to any single lessee to not more than 20% of the
aggregate purchase price of Equipment owned at any time during the Reinvestment
Period, although there can be no assurance that it will be successful in doing
so. The Operating Agreement provides, however, that in no event may the Fund's
equity investment in Equipment leased to a single lessee exceed an amount equal
to 20% of the maximum Gross Proceeds from the sale of Units offered hereunder
(or $30,000,000).
Foreign Leases
There is no limit on the amount of Equipment which may be leased to
foreign subsidiaries of United States corporations, to foreign lessees or which
may otherwise be permitted to be used predominantly outside the United States.
The Manager does not have any specific objective with regard to the amount of
Equipment to be subject to foreign leases, but intends to pursue desirable
foreign leasing opportunities for the Fund to the extent consistent with the
Fund's overall investment objectives.
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Of the total Purchase Price of Equipment leased to foreign lessees, the
Manager will require that a minimum of 75% must represent Equipment leased to
lessees which have a credit risk equivalent to a credit rating by Moody's
Investor Service, Inc. of "Baa" (investment grade) or better, as determined by a
credit rating agency which is generally recognized in the financial services
industry or, if no such credit rating is available, as determined by the
Manager. Any leases to foreign lessees which do not meet the foregoing credit
standard will either be guaranteed by a U.S. parent company of the lessee, or
will involve lessees which have assets located in the United States with a value
equal to or greater than the original purchase cost of the Fund Equipment
subject to the lease.
The Manager will seek to limit the aggregate amount of the Fund's
equity invested in all Equipment leased to foreign lessees or which is otherwise
to be used primarily outside the United States to not more than 20% of the Gross
Proceeds. For this purpose, a lessee under a lease guaranteed by a United States
corporation will not be deemed a foreign lessee.
Description of Leases
The Equipment will be leased to third parties primarily pursuant to
Operating Leases, including High Payout Leases. Operating Leases are leases
which will return to the lessor less than the purchase price of the subject
equipment from non-cancellable rentals payable during the initial term of the
lease. These include leases where rental payments are based upon equipment
usage. High Payout Leases are Operating Leases under which the non-cancellable
lease payments and other payment obligations of the lessee are equal to at least
90% of the original purchase price of the Equipment paid by the Fund. A majority
of the aggregate purchase price of the Fund's Equipment will represent Equipment
leased under High Payout Leases upon final investment of the Net Proceeds and
completion of permanent financing of the portfolio.
Generally, in a lease involving new Equipment, the lessee will express
an interest in lease financing for equipment and the Manager will attempt to
create a lease package for the prospective lessee. In formulating the lease
package, the Manager will consider the following factors, among others: the type
of Equipment and its anticipated residual value; the business of the lessee and
its credit rating; the cost of alternative financing services, and competitive
pricing and other market factors. The initial lease terms will vary as to the
type of Equipment, but will generally be for 36 months to 84 months. The Fund
may lease some Equipment to federal, state or local governments, or agencies
thereof. Many of such leases will be subject to renewal each year, because many
governmental lessees must obtain appropriations for funds for their leases on an
annual basis. In addition, the Fund may, under appropriate circumstances, engage
in other short-term or "per diem" leases when the Manager deems it in the best
interests of the Fund and consistent with its overall objectives.
Upon termination of the initial term of an Operating Lease, it is
necessary either to renew or extend the lease, lease the Equipment to a third
party, or sell the Equipment in order to obtain recovery of the purchase price.
If Equipment is sold at the end of the initial term of an Operating Lease, the
sale will likely result in a recapture of depreciation. Lease rentals during
comparable terms are ordinarily higher under Operating Leases than under Full
Payout Leases, and, accordingly, the Manager believes that well-structured
Operating Leases may help the Fund satisfy its investment objectives.
The Fund's objective will generally be to lease the Equipment for an
initial lease term during which the lessee may not cancel the lease or otherwise
avoid the lease obligation. However, where the Manager deems it to be in the
Fund's best interests, because of favorable lease terms, anticipated high demand
for particular items of Equipment or otherwise, it may permit an appropriate
cancellation clause.
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The Manager believes that the Fund will be able to lease or dispose of its
purchased Equipment profitably in the aggregate after the initial lease terms
although no assurances can be given in this regard. The Fund's ability to renew
or extend the terms of its leases or to re-lease or sell the Equipment on
expiration of the initial lease terms is dependent on many factors, including
possible economic or technological obsolescence of the Equipment, competitive
practices and conditions and generally prevailing economic conditions.
It is anticipated that the leases which the Fund will enter into will
generally be "net leases," which provide that the lessee must bear the risk of
loss of the Equipment, provide adequate insurance, pay applicable taxes,
maintain the Equipment and indemnify the Fund from and against any liability
which may arise as the result of any act or omission by the lessee or its
agents. In the case of Operating Leases, the Fund may be responsible for certain
of these obligations, such as certain insurance and maintenance expenses, but
generally only during a period when the Equipment is not under lease.
The Fund's lease agreements, other than certain operating and per diem
leases, will generally require the respective lessees (i) to maintain casualty
insurance in an amount equal to the greater of the full value of the Equipment
or a specified amount set forth in the lease, and (ii) to maintain liability
insurance naming the Fund as an additional insured with a minimum limit of
$1,000,000 in coverage.
The Fund may enter into remarketing agreements with manufacturers of
Equipment on terms which are customary in the industry. A remarketing agreement
is an agreement whereby the manufacturer agrees with the lessor to assist the
lessor in finding a new lessee at the termination of the original lease. The
Manager will determine, in its sole discretion, whether to enter into such
agreements and with which manufacturers to do so. Most remarketing agreements
call for the manufacturer to find a second user only on a "best efforts" basis.
Thus, a remarketing agreement does not assure the lessor that the equipment can
or will be re-leased at the end of the initial lease term. In the case of an
Operating Lease, the manufacturer will not be required to repurchase Equipment,
but may, through the use of its sales force and contacts with its customers,
re-lease or sell such Equipment for the benefit of the Fund. The monthly rental
payments under a new lease or the sale price of such Equipment would be subject
to the final approval of the Manager. Under a remarketing agreement, the
manufacturer participates with the Fund in revenues on an incentive basis. The
manufacturer would typically receive a percentage of the revenue derived by the
Fund from Equipment subject to a remarketing agreement, which percentage would
increase substantially after the Fund derived a specified return on its
investment in such Equipment.
Competition
Leasing has become one of the major methods by which American
businesses finance their capital equipment needs. See Figure 4 below for a
graphic-presentation of the dollar amount of equipment investment and equipment
lease financing in the United States for each year since 1982 (according to the
Equipment Leasing Association, a leasing industry trade association). Please
note that this chart reflects the growth of equipment lease financing from all
sources, including manufacturers, financial institutions and private and public
lease financing companies, and not just public equipment leasing programs such
as the Fund. Such public direct participation programs represent only a
relatively small portion of the total lease financing industry.
[GRAPHIC OMITTED - Figure 4]
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In obtaining lessees the Fund will compete with manufacturers of
equipment which provide leasing programs and with established leasing companies
and equipment brokers. Manufacturers of equipment may offer certain incentives
including maintenance services and trade-in or replacement privileges which the
Fund cannot offer. The Fund may also be competing with manufacturers and others
who offer leases that provide for longer terms and lower rates than leases which
the Fund will offer. There are numerous other potential entities, including
entities organized and managed similarly to the Fund, seeking to purchase
equipment subject to leases, some of which have greater financial resources than
the Fund.
Joint Venture Investments
The Fund may purchase certain of its Equipment by acquiring a
controlling interest in a partnership, equipment trust or other form of joint
venture with a non-Affiliate which owns such Equipment or beneficial interest
therein. For purposes of determining the permissibility of a joint venture with
a non-Affiliate, the controlling interest requirement may be satisfied by
ownership of more than 50% of the venture's capital or profits or from
provisions in the governing agreement giving the Fund certain basic rights. For
example, control may take the form of the right to make or veto certain
management decisions or provide for certain predetermined benefits for the Fund
in the event that the other party or parties to the venture should make certain
decisions respecting the sale, refinancing or alteration of assets owned by the
venture. The Fund may not acquire Equipment jointly with others unless (i) the
joint venture agreement does not authorize or require the Fund to do anything
with respect to the Equipment which the Fund, or the Manager, could not do
directly because of the policies set forth in the Operating Agreement and (ii)
the transaction does not result in payment of duplicate fees.
The Fund may also acquire Equipment by joint venture or as co-owner
with an Affiliate. In such event, the following conditions must be met: (i) the
Affiliate will be required to have substantially identical investment objectives
to those of the Fund; (ii) there are no duplicate fees; (iii) the Affiliate must
make its investment on substantially the same terms and conditions as the Fund;
(iv) the Affiliate must have a compensation structure substantially identical to
that of the Fund; (v) the venture must be entered into in order to obtain
diversification or to relieve the Manager or Affiliates from commitments entered
into under Section 15.2.15 of the Operating Agreement or similar provisions
governing the Affiliate; and (vi) the Fund has a right of first refusal should a
co-venturer decide to sell the property owned by the venture. Because both the
Fund and such Affiliate will be required to approve decisions pertaining to the
Equipment, it is possible that an impasse will develop. If one party, but not
the other, wishes to sell the Equipment, the party not desiring to sell will
have a right of first refusal to purchase the other party's interest in the
Equipment. The Fund may not, however, be able to exercise its right of first
refusal unless it has the financial resources to do so, and there can be no
assurances that it will.
The investment by the Fund in joint ventures which own Equipment or as
a co-owner of Equipment, instead of investing directly in the Equipment itself
or as the sole owner, may under certain circumstances involve risks not
otherwise present, including, for example, risks associated with the possibility
that a Fund's co-venturer might become bankrupt, that the parties may reach an
impasse on joint venture decisions, or that each co-venturer may at any time
have economic or business interests or goals which are inconsistent with the
business interests or goals of the Fund. See "Risk Factors - Risks of Joint
Ventures."
General Restrictions
The Fund will not: (i) issue any Units after the Final Closing Date or
issue Units in exchange for property, (ii) make loans to the Manager or its
Affiliates, (iii) invest in or underwrite the securities of other issuers, (iv)
operate in such a manner as to be classified as an "investment company" for
purposes of the Investment Company Act of 1940, (v) except as set forth herein,
purchase or lease any Equipment from nor sell or lease property to the Manager
or its Affiliates, or (vi) except as expressly provided herein, grant the
Manager or any of its Affiliates any rebates or give-ups or participate in any
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reciprocal business arrangements with such parties which would circumvent the
restrictions in the Operating Agreement, including the restrictions applicable
to transactions with Affiliates. See Article 15 of the Operating Agreement for a
description of additional investment limitations.
The Manager and its Affiliates, including their officers and directors,
may engage in other businesses or ventures that own, finance, lease, operate,
manage, broker or develop equipment, as well as businesses unrelated to
equipment leasing. See "Conflicts of Interest," "Management Compensation" and
"Management."
Changes in Investment Objectives and Policies
Holders have no voting rights with respect to the establishment or
implementation of the investment objectives and policies of the Fund, all of
which are the responsibility of the Manager. However, the Manager cannot make
any material changes in the investment objectives and policies described above
without first obtaining the written consent or approval of Members owning more
than 50% of the total outstanding Units entitled to vote.
CONFLICTS OF INTEREST
The Fund is subject to various conflicts of interest arising out of its
relationship with the Manager and Affiliates of the Manager. These conflicts
include, but are not limited to, the following:
Other Activities of the Manager. The Manager serves in the capacity of
Manager in other public programs engaged in the equipment leasing business, and
it and its Affiliates otherwise engage in the business of purchasing and selling
equipment and arranging leases for its own account and for the accounts of
others. See Exhibit A - "Prior Performance Information." The Manager will have
conflicts of interest in allocating management time, services and functions
among the prior programs, the Fund, any future investment programs and
activities for their own accounts. The Manager believes that it has or can
employ sufficient staff, equipment and other resources to discharge fully their
responsibilities to each such activity.
In addition, as Manager of prior and future programs, the Manager will
be contingently liable for obligations of such partnerships, except nonrecourse
indebtedness relating to the acquisition of equipment. Such obligations are
expected to consist primarily of normal operating and other current expenses,
and it is not believed this responsibility will materially affect the ability of
the Manager to satisfy its responsibilities to the Fund.
Competition for Investments. The Manager will have conflicts of
interest to the extent that its prior or future investment programs may compete
with the Fund for opportunities in the acquisition and leasing of equipment.
Prior public programs currently in operation include: ATEL Cash Distribution
Fund II ("ACDF II"), a California limited partnership; ATEL Cash Distribution
Fund III, L.P. ("ACDF III"), ATEL Cash Distribution Fund IV, L.P. ("ACDF IV"),
ATEL Cash Distribution Fund V, L.P. ("ACDF V"); ATEL Cash Distribution Fund VI,
L.P. ("ACDF VI"); and ATEL Capital Equipment Fund VII, L.P. ("ACEF VII")
(together collectively referred to as the "Prior Programs") have investment
objectives substantially identical to those of the Fund and may have funds
available for investment at the same time the Fund is seeking to acquire
Equipment. ACDF II completed a fully-subscribed public offering of $35,000,000
of its equity interests in January 1990. All of such gross offering proceeds
have been committed to equipment acquisitions, estimated organization and
offering expenses and capital reserves. ACDF III completed a public offering of
its equity interests on January 3, 1992, pursuant to which it raised total
offering proceeds in the amount of approximately $73,900,000. All of such gross
offering proceeds have been committed to equipment acquisitions, estimated
organization and offering expenses and capital reserves. ACDF IV completed a
fully-subscribed public offering of $75,000,000 of its equity interests on
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February 4, 1993. All of such gross offering proceeds had been committed to
equipment acquisitions, offering and organization expenses and capital reserves.
ACDF V completed a public offering of its equity interests in November 1994
pursuant to which it raised total offering proceeds in the amount of $125
million. All of such gross offering proceeds have been committed to equipment
acquisitions, offering and organization expenses and capital reserves. ACDF VI
completed a fully-subscribed public offering of $125 million of its equity
interests on November 22, 1996. All of such gross offering proceeds had been
committed to equipment acquisitions, offering and organization expenses and
capital reserves as of such date. ACEF VII commenced a public offering of $150
million of its equity interests on November 26, 1996, and had raised a total of
$118,425,120 in gross offering proceeds as of August 24, 1998. All of such gross
offering proceeds had been committed to equipment acquisitions, offering and
organization expenses and capital reserves as of such date.
One or more of the operating Prior Programs may have capital available
to invest in additional equipment at a time when the Fund is also active in
seeking to invest or reinvest in Equipment. Certain of the equipment owned and
to be acquired by the Prior Programs and the Fund may be similar and may be
purchased from the same manufacturers. Furthermore, the Manager and its
Affiliates may in the future form additional investment programs having similar
objectives, and accordingly, the Fund may be in competition with any such future
programs formed by the Manager.
Any time two or more investment programs (including the Fund)
affiliated with the Manager have funds available to acquire and lease the same
types of equipment, conflicts of interest may arise as to which of the programs
should proceed to acquire available items of equipment. In such situations, the
Manager will analyze the equipment already purchased by, and investment
objectives of, each program involved, and will determine which program will
purchase the equipment based upon such factors, among others, as (i) the amount
of cash available in each program for such acquisition and the length of time
such funds have been available, (ii) the current and long-term liabilities of
each program, (iii) the effect of such acquisition on the diversification of
each program's equipment portfolio, (iv) the estimated income tax consequences
to the investors in each program from such acquisition, and (v) the cash
distribution objectives of each program. If after analyzing the foregoing and
any other appropriate factors, the Manager determines that such acquisition
would be equally suitable for more than one program, then the Manager shall
purchase such equipment for the programs on the basis of rotation with the order
of priority determined by the length of time each program has had funds
available for investment, with the available equipment allocated first to the
program which has had funds available for investment the longest.
Receipt of Commissions, Fees and Other Compensation by the Manager and
its Affiliates. Fund operations will result in certain compensation to the
Manager and its Affiliates. See "Management Compensation." The Manager has
absolute discretion with respect to all decisions related to such operations.
Because the amount of such fees may depend, in part, on the debt structure of
Equipment acquisitions and the timing of such transactions, the Manager and its
Affiliates may be subject to conflicts of interest to the extent the
acquisition, retention, re-lease or sale of Equipment and the terms and
conditions thereof may be less advantageous to the Fund and more advantageous to
the Manager under certain circumstances. It should be noted that the Manager
intends to cause the Fund to incur aggregate acquisition debt in an amount
approximately equal to 50% of the total cost of Fund Equipment.
In all cases where the Manager or its Affiliate may have a conflict of
interest in determining the terms or timing of a transaction by the Fund, it
will exercise its discretion strictly in accordance with its fiduciary duty to
the Fund and the Holders. See "Fiduciary Duty of the Manager."
Non-Arm's-Length Agreements. Any agreements and arrangements relating
to compensation between the Fund and the Manager or any of its Affiliates will
not be the result of arm's-length negotiations and the performance thereof by
the Manager and its Affiliates will not be supervised or enforced at
arm's-length.
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Distribution of Units. No independent managing underwriter has been
engaged for the distribution of the Units. Furthermore, ATEL Securities
Corporation (the "Dealer Manager"), an Affiliate of the Manager which may sell
Units and will perform certain wholesaling services for the Fund, may not be
expected to have performed due diligence in the same manner as an independent
broker-dealer. The Dealer Manager has acted in the same capacity in prior
offerings sponsored by the Manager and its Affiliates and is expected to do so
in any future offerings that the Manager and its Affiliates may conduct.
Lack of Separate Representation. The Fund, the Manager and prospective
Holders have not been represented by separate counsel in connection with the
formation of the Fund, drafting of the Operating Agreement or the offering of
Units. The attorneys, accountants and other professionals who perform services
for the Fund all perform similar services for the Manager and its Affiliates and
it is contemplated that such dual representation will continue in the future.
However, should a dispute arise between the Fund and the Manager, the Manager
will cause the Fund to retain separate counsel in connection with such matters.
Joint Ventures with Affiliates of the Manager. The Fund may enter into
joint ownership or joint venture agreements for the acquisition and leasing of
Equipment with other persons, including programs managed by the Manager or its
Affiliates. See "Investment Objectives and Policies - Joint Venture
Investments." Should any such joint ventures be consummated, the Manager may
face certain conflicts of interest inasmuch as it may control and owe fiduciary
duties to both the Fund and, through such Affiliates, the affiliated
co-venturer. For example, because of the differing financial positions of the
co-venturers, it may be in the best interest of one entity to sell the
jointly-held Equipment at a time when it is in the best interest of the other to
hold such Equipment. Nevertheless, such joint ventures are restricted to
circumstances where the co-venturer's investment objectives are comparable to
the Fund's, the Fund's investment is on substantially the same terms as the
co-venturer and the compensation to be received by the Manager and its
Affiliates from each co-venturer is substantially identical.
Maintenance of Reserves. The Manager will have the discretion to
determine the amount of reserves to be maintained by the Fund. The Manager is
required by the Operating Agreement to establish an initial working capital
reserve equal to one-half of 1% of the Gross Proceeds. This amount may fluctuate
from time to time as the Manager determines the appropriate amount of reserves
for the Fund to maintain. The Manager may be subject to conflicts of interest to
the extent that its interests may be served by the Fund maintaining higher
reserves in order to avoid the Manager's personal liability for Fund obligations
when such reserves might otherwise be distributed to Holders. Any personal
liability incurred by the Manager for Fund obligations, however, would generally
be reimbursable to the Manager by the Fund. As a result, the Manager does not
believe any such potential conflict will have a material impact on the Fund or
the Holders.
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ORGANIZATIONAL DIAGRAM
The following diagram (Figure 5) shows the relationships among the
Fund, the Manager and certain of Affiliates of the Manager which may perform
services for the Fund (solid lines denote ownership and dotted lines denote
other relationships).
Figure 5
ATEL Capital Group ("ACG")
ATEL Equipment ATEL Financial ATEL Investor ATEL Leasing
Corporation ("AEC") Corporation ("Fund Services ("AIS") Corporation
Manager" or "AFC") ("ALC")
ATEL Securities Corporation
(the "Dealer Manager")
ATEL Capital Equipment Fund VIII, LLC
(the "Fund")
ATEL Capital Group's capital stock is owned 75% by A.J. Batt and 25% by
Dean L. Cash. ATEL Capital Group owns 100% of the outstanding capital stock of
each of the Manager, ALC, AIS and AEC. The Manager owns 100% of the outstanding
capital stock of the Dealer Manager. See "Management" for further information
concerning the above entities and their respective officers and directors.
FIDUCIARY DUTY OF THE MANAGER
The Manager is accountable to the Fund as a fiduciary and,
consequently, is required to exercise good faith and integrity in all dealings
with respect to Fund affairs.
Under California law and subject to certain conditions, a Member may
institute legal action on behalf of the Fund (a derivative action) to recover
damages from a third party or to recover damages resulting from a breach by a
Manager of its fiduciary duty. In addition, a Member may institute a legal
action on behalf of himself and all other similarly situated Members (a class
action) to recover damages for a breach by a Manager of its fiduciary duty,
subject to procedural rules generally applicable to class actions. This area of
the law is complex and rapidly changing, and investors who have questions
regarding the duties of a Manager and the remedies available to Members should
consult with their counsel.
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The Operating Agreement does not exculpate the Manager from liability
or provide it with any defenses for breaches of its fiduciary duty. However, the
fiduciary duty owed by a Manager is similar in many respects to the fiduciary
duty owed by directors of a corporation to its shareholders, and is subject to
the same rule, commonly referred to as the "business judgment rule," that
directors are not liable for mistakes in the good faith exercise of honest
business judgment or for losses incurred in the good faith performance of their
duties when performed with such care as an ordinarily prudent person would use.
As a result of the business judgement rule, a Manager may not be held liable for
mistakes made or losses incurred in the good faith exercise of reasonable
business judgment. Accordingly, provision has been made in the Operating
Agreement that the Manager shall have no liability to the Fund for losses
arising out of any act or omission by the Manager, provided that the Manager
determined in good faith that its conduct was in the best interest of the Fund
and, provided further, that its conduct did not constitute fraud, negligence or
misconduct. As a result, purchasers of Units may have a more limited right of
action in certain circumstances than they would in the absence of such a
provision in the Operating Agreement specifically defining the Manager's
standard of care.
The Operating Agreement also provides that, to the extent permitted by
law, the Fund shall indemnify the Manager and its Affiliates providing services
to the Fund against liability and related expenses (including attorneys' fees)
incurred in dealings with third parties, provided that the conduct of the
Manager is consistent with the standards described in the preceding paragraph. A
successful claim for such indemnification would deplete Fund assets by the
amount paid. The Manager shall not be indemnified against any liabilities
arising under the Securities Act of 1933. The Fund shall not pay for any
insurance covering liability of the Manager or any other persons for actions or
omissions for which indemnification is not permitted by the Operating Agreement.
Subject to the fiduciary relationship, the Manager has broad
discretionary powers to manage the affairs of the Fund under the terms of the
Operating Agreement and under the California Act. Generally, actions taken by
the Manager are not subject to vote or review by the Holders, except to the
limited extent provided in the Operating Agreement and under California law.
(See "Summary of the Operating Agreement.")
MANAGEMENT
The Manager
The Manager is ATEL Financial Corporation (the "Manager" or "AFC"), a
California corporation formed in 1977 under the name All Type Equipment Leasing,
Inc. The Manager's offices are located at 235 Pine Street, 6th Floor, San
Francisco, California 94104, and its telephone numbers are 415/989-8800 and
800/543-ATEL. Its officers have extensive experience with transactions involving
the acquisition, leasing, financing and disposition of equipment, as more fully
described below and in Exhibit A hereto. The Manager and its Affiliates are
sometimes collectively referred to below as "ATEL" for convenience.
Since its organization in 1977, ATEL has been active in several areas
within the equipment leasing industry, including: (i) originating and financing
leveraged and single investor lease transactions for corporate investors, (ii)
acting as a broker/packager by arranging equity and debt participants for
equipment lease transactions originated by other leasing companies, and (iii)
consulting on the pricing and structuring of equipment lease transactions for
banks, leasing companies and corporations. The Manager has organized seven prior
public limited partnerships to acquire and lease equipment. During the past 16
years, ATEL has participated in structuring and/or arranging lease transactions
involving aggregate equipment costs in excess of $1 billion.
All of the outstanding capital stock of ATEL Financial Corporation is held
by ATEL Capital Group ("ACG"). The
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outstanding capital stock of ATEL Capital Group is owned 75% by A.J. Batt and
25% by Dean L. Cash. Each of ATEL Leasing Corporation ("ALC"), ATEL Equipment
Corporation ("AEC") and ATEL Investor Services ("AIS") is a wholly-owned
subsidiary of ATEL Capital Group which will perform services for the Fund under
the direction of the Manager. Acquisition services will be performed for the
Fund by ALC, equipment management and asset disposition services will be
performed by AEC, and AIS will perform partnership management, administration
and investor services. Finally, the Dealer Manager, ATEL Securities Corporation
("ASC"), is a wholly-owned subsidiary of ATEL Financial Corporation. See the
chart included under the caption "Organizational Diagram" above for more
information in this regard.
The officers and directors of ATEL Capital Group, ATEL Financial
Corporation and their Affiliates are as follows:
Name Positions
A.J. Batt .................Chairman of the Board of Directors of ACG, AFC, ALC,
AEC, AIS and ASC; President
and Chief Executive Officer of ACG, AFC, and AEC
Dean L. Cash ............. Director, Executive Vice President and Chief
Operating Officer of ACG, AFC and AEC;
Director, President and Chief Executive Officer of
ALC, AIS and ASC
F. Randall Bigony..........Chief Financial Officer of ACG, AFC, ALC, AIS and AEC
Donald E. Carpenter........Controller of ACG, AFC, ALC, AEC and AIS; Chief
Financial Officer of ASC
Vasco H. Morais............General Counsel for ACG, AFC, ALC, AIS and AEC
William J. Bullock.........Director of Asset Management of AEC
Carl W. Magnuson...........Vice President - Syndication of ALC
Barbara F. Medwadowski.. Vice President - Syndication of ALC
Russell H. Wilder..........Vice President - Credit of ALC
John P. Scarcella..........Senior Vice President of ASC
A. J. Batt, age 62, founded ATEL in 1977 and has been its president and
chairman of the board of directors since its inception, and a director of the
Dealer Manager since its organization in October, 1985. From 1973 to 1977, he
was employed by GATX Leasing Corporation as manager-data processing and equity
placement for the lease underwriting department, which was involved in equipment
financing for major corporations. From 1967 to 1973 Mr. Batt was a senior
technical representative for General Electric Corporation, involved in sales and
support services for computer time-sharing applications for corporations and
financial institutions. Prior to that time, he was employed by North American
Aviation as an engineer involved in the Apollo project. Mr. Batt received a
B.Sc. degree with honors in mathematics and physics from the University of
British Columbia in 1961. Mr. Batt is qualified as a registered principal with
the NASD.
Dean L. Cash, age 48, joined ATEL as director of marketing in 1980 and
has been a vice president since 1981, executive vice president since 1983 and a
director since 1984. He has been a director of the Dealer Manager since its
organization and its president since 1986. Prior to joining ATEL, Mr. Cash was a
senior marketing representative for
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Martin Marietta Corporation, data systems division, from 1979 to 1980. From
1977 to 1979, he was employed by General Electric Corporation, where he was an
applications specialist in the medical systems division and a marketing
representative in the information services division. Mr. Cash was a systems
engineer with Electronic Data Systems from 1975 to 1977, and was involved in
maintaining and developing software for commercial applications. Mr. Cash
received a B.S. degree in psychology and mathematics in 1972 and an M.B.A.
degree with a concentration in finance in 1975 from Florida State University.
Mr. Cash is an arbitrator with the American Arbitration Association and is
qualified as a registered principal with the NASD.
F. Randall Bigony, age 40, joined ATEL in 1992 and became chief
financial officer in 1994. From 1987 until joining AFC, Mr. Bigony was president
of F. Randall Bigony & Co., a consulting firm that provided financial and
strategic planning services to emerging growth companies. From 1983 to 1987, he
was a manager with the accounting firm of Ernst & Whinney, serving clients in
its management consulting practice. Mr. Bigony received a B.A. degree in
business from the University of Massachusetts and an M.B.A. degree in finance
from the University of California, Berkeley. He is a founding board member and
acting treasurer of the I Have a Dream Foundation - Bay Area Chapter.
Donald E. Carpenter, age 49, joined ATEL in 1986 as controller. Prior
to joining the corporate Manager, Mr. Carpenter was employed as an audit
supervisor with Laventhol & Horwath, certified public accountants in San
Francisco, California, from 1983 to 1986. From 1979 to 1983, Mr. Carpenter was
employed by Deloitte Haskins & Sells, certified public accountants in San Jose,
California. From 1971 to 1975, Mr. Carpenter was a supply officer in the U.S.
Navy. Mr. Carpenter received a B.S. degree in mathematics (magna cum laude) from
California State University, Fresno in 1971 and completed a second major in
accounting in 1978. Mr. Carpenter has been a California certified public
accountant since 1981. He is qualified as a registered principal with the NASD.
Vasco H. Morais, age 40, joined ATEL in 1989 as general counsel. Mr.
Morais manages ATEL's legal department, which provides legal and contractual
support in the negotiating, drafting, documenting, reviewing and funding of
lease transactions. In addition, Mr. Morais advises on general corporate law
matters, and assisting on securities law issues. From 1986 to 1989, Mr. Morais
was employed by the BankAmeriLease Companies, Bank of America's equipment
leasing subsidiaries, providing in-house legal support on the documentation of
tax-oriented and non-tax oriented direct and leveraged lease transactions,
vendor leasing programs and general corporate matters. Prior to the
BankAmeriLease Companies, Mr. Morais was with the Consolidated Capital Companies
in the Corporate and Securities Legal Department involved in drafting and
reviewing contracts, advising on corporate law matters and securities law
issues. Mr. Morais received a B.A. degree in 1982 from the University of
California in Berkeley; a J.D. degree in 1986 from Golden Gate University Law
School; and an M.B.A. (Finance) degree from Golden Gate University in 1997. Mr.
Morais has been an active member of the State Bar of California since 1986.
William J. Bullock, age 34, is a vice president of asset management. He
joined ATEL in 1991. Mr. Bullock is responsible for the disposition maturing
assets, remarketing of off-lease equipment, supervision of lessee maintenance
practices, equipment inspection and residual valuation analysis on new lease
transactions. Prior to joining ATEL, Mr. Bullock was a senior member of the
asset management department at Boeing Capital (formerly known as McDonnell
Douglas Finance Corporation). While there, Mr. Bullock was involved in
negotiating sales, residual valuation and equipment appraisal and inspection for
MDFC's $ 4 billion portfolio of leases. Prior to joining MDFC in 1989, Mr.
Bullock was the senior negotiator at ELLCO Leasing (since acquired by GE Capital
Equipment Corporation). At ELLCO, he was responsible for end-of-lease
negotiations and equipment dispositions of a $500 million diversified portfolio
of equipment. Mr. Bullock has been a member of the Equipment Lessors Association
("ELA") since 1987 and a member of ELA's equipment management committee since
1994. Mr. Bullock received a B.S. degree in Finance in 1987 from San Diego State
University.
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Carl W. Magnuson, age 55, joined ATEL in 1994 and is Vice President -
Syndication for ALC. Mr. Magnuson is responsible for acquiring third party lease
transactions and debt placement. Prior to joining ATEL he was a Regional Group
Manager and Portfolio Sales Manager for Bell Atlantic Systems Leasing for 10
years. From 1983 to 1984 he was Vice President and Chief Financial Officer of
the Handi-Kup Company, a plastics manufacturer, and from 1981 to 1982 he was
Controller for the Cyclotron Corporation, engaged in nuclear medicine research
and development. From 1978 to 1981 he was Executive Vice President of Shannon
Financial Corporation, a middle market leasing corporation. From 1975 to 1978 he
was a Deputy Program Manager for the Watkins Johnson Company. From 1968 to 1973
Mr. Magnuson was an engineering duty officer in the U. S. Navy. Mr. Magnuson
received a B.S. in Engineering Science and an M.S. in Applied Mathematics from
the Rensselaer Polytechnic Institute, an MS in Industrial Engineering/Operations
Research from Stanford University, and an M.B.A. from the University of
California at Berkeley.
Barbara F. Medwadowski, age 59, joined ATEL in 1997 and is vice president -
syndication for ALC. Ms. Medwadoski is responsible for acquiring thrid party
lease transactions. Prior to joining ATEL, she was a syndications manager for
Mellon US Leasing (successor to USL Capital and U.S. leasing Corporation) for
nine years. From 1985 to 1987, she was a vice president with Great Western
Leasing wehre she acquired lease and loan transactions from intermediaries. From
1982 through 1984, she was a portfolio manager with U.S. Leasing Corporation.
Ms. Medwadowski received an M.B.A. degree from the University of California at
Berkeley in 1982. From 1964 through 1979, she was a senior researcher in lipids
and lipoproteins at the University of California at Berkeley. In 1964, she
earned an M.S. degree in nutrition and in 1961 a B.S. degree in child
development, each from the University of California at Berkeley
Russell H. Wilder, age 44, joined ATEL in 1992 as Vice President of
ATEL Business Credit. Immediately prior to joining ATEL, Mr. Wilder was a
personal property broker specializing in equipment leasing and financing and an
outside contractor in the areas of credit and collections. From 1985 to 1990 he
was Vice President and Manager of Leasing for Fireside Thrift Co., a Teledyne
subsidiary, and was responsible for all aspects of setting up and managing the
department, which operated as a small ticket lease funding source. From 1983 to
1985 he was with Wells Fargo Leasing Corporation as Assistant Vice President in
the credit department where he oversaw all credit analysis on transactions in
excess of $2 million. From 1978 to 1983 he was a District Credit Manager with
Westinghouse Credit Corporation's Industrial Group and was responsible for all
non-marketing operations of various district offices. Mr. Wilder holds a B.S.
with Honors in Agricultural Economics and Business Management from the
University of California at Davis. He has been awarded the Certified Lease
Professional designation by the Western Association of Equipment Lessors.
John P. Scarcella, age 37, joined the Dealer Manager as vice president
of broker dealer relations in 1992. He is involved in the marketing of
securities offered by the Dealer Manager. Prior to joining ATEL Securities
Corporation, from 1987 to 1991, he was employed by Landsing Pacific Fund, a real
estate investment trust in San Mateo, California and acted as director of
investor relations. From 1984 to 1987, Mr. Scarcella acted as broker dealer
representative for Landsing Capital Corporation, where he was involved in the
marketing of partnerships and REITs. Mr. Scarcella received a B.S.C. degree with
an emphasis in investment finance in 1983 and an M.B.A. degree with a
concentration in marketing in 1991 from Santa Clara University.
52
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Selection and Management of Investments
An Affiliate of the Manager, ATEL Leasing Corporation, will have primary
responsibility for selecting and negotiating potential acquisitions and leases
of Equipment, subject to the Manager's supervision and approval. The Manager's
Investment Committee will approve any acquisition before it is consummated. The
Investment Committee currently consists of A.J. Batt, Dean L. Cash, Donald E.
Carpenter and F. Randall Bigony.
ATEL Equipment Corporation will manage the Fund's portfolio of
Equipment, subject to the Manager's supervision. Management services to be
provided by AEC include collection of lease payments from the lessees of
Equipment, re-leasing services upon termination of leases, inspection of
Equipment, acting as a liaison between lessees and vendors, general supervision
of lessees and vendors to ensure that the Equipment is being properly used and
operated by lessees, arranging for maintenance and related services with respect
to the Equipment and the supervision, monitoring and review of others performing
services for the Fund. Third parties may participate in managing or may
separately manage Equipment for which they will receive a fee from the Fund.
Management Compensation
The Fund is not required to pay the officers or directors of the
Manager or its Affiliates any remuneration. However, the Fund will pay the
Manager and its Affiliates the Asset Management Fee for their services to the
Fund and the Manager will have a Carried Interest in the Fund as a Member equal
to 7.5% of Fund allocations of Distributions, Net Income and Net Loss.
Furthermore, the Fund will reimburse the Manager and its Affiliates for certain
costs incurred on behalf of the Fund, including the cost of certain personnel
(excluding controlling persons of the Manager) who will be engaged by the
Manager to perform administrative, accounting, secretarial, transfer and other
services required by the Fund. Such individuals may also perform similar
services for the Manager, its Affiliates and other investment programs to be
formed in the future. See "Management Compensation."
Changes in Management
The Operating Agreement provides that the Manager may be removed as
Manager at any time upon the vote of Holders owning more than 50% of the total
outstanding Units entitled to vote, and Holders have the right to elect a
successor Manager in place of the removed Manager by a similar vote. The Manager
may only withdraw voluntarily from the Fund with the approval of Holders owning
in excess of 50% of the Units entitled to vote on Fund matters. The Holders have
no voice in the election of directors or appointment of officers of the Manager
or its parent, ATEL Capital Group, and the capital stock of such entities can be
transferred without the consent of the Fund or the Holders.
The by-laws of the Manager provide for a maximum of three directors.
The by-laws can be amended to increase the number of directors either by a vote
of stockholders or of directors. In the event of a vacancy or increase in the
number of members of the board of directors, the remaining directors may elect
the members to serve until the next annual meeting of directors. Directors are
otherwise elected annually by vote of the stockholders, and the directors
appoint corporate officers to serve at the will of the board.
The Dealer Manager
ATEL Securities Corporation (the "Dealer Manager") was organized in
October 1985 principally for the purpose of participating in and facilitating
the distribution of securities of partnerships to be sponsored by the Manager
and its Affiliates. The Dealer Manager became a member of the NASD in February
1986. The Dealer Manager is a wholly-owned subsidiary of ATEL.
The Dealer Manager will provide certain wholesaling services to the
Fund in connection with the distribution of the Units offered hereby. (See "Plan
of Distribution.") The executive officers and directors of the Dealer Manager
are discussed above under "The Manager."
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PRIOR PERFORMANCE SUMMARY
THE INFORMATION PRESENTED IN THIS SECTION AND IN THE TABLES INCLUDED AS
EXHIBIT A TO THIS PROSPECTUS REPRESENTS THE HISTORICAL RESULTS OF PRIOR
EQUIPMENT LEASING PROGRAMS SPONSORED BY THE MANAGER AND ITS AFFILIATES.
INVESTORS IN THE FUND SHOULD NOT ASSUME THAT THEY WILL EXPERIENCE INVESTMENT
RESULTS COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN SUCH PRIOR PROGRAMS.
Since July 28, 1977, the Manager and its Affiliates have financed,
structured or arranged equity and debt participations for equipment leasing
transactions involving total equipment costs in excess of $1 billion. The
Manager sponsored and syndicated seven prior public equipment leasing programs.
See Exhibit A - Prior Performance Tables for more detailed information
concerning the prior public programs (collectively referred to herein as the
"Prior Programs").
The first Prior Program, ATEL Cash Distribution Fund ("ACDF"),
commenced a public offering of up to $10,000,000 of its equity interests on
March 11, 1986. ACDF terminated its offering on December 18, 1987 after raising
a total of $10,000,000 in offering proceeds from a total of approximately 1,000
investors, all of which proceeds were committed to equipment acquisitions,
organization and offering expenses and capital reserves. ACDF public acquired a
variety of types of equipment with a total purchase cost of approximately
$11,133,679. See Table V - "Acquisition of Equipment by Prior Programs" in
Exhibit A for further information concerning the types of equipment acquired by
ACDF. All of such equipment had been sold and the partnership was terminated as
of December 31, 1997. See Table IV - "Results of Completed Program and Table VI
- - "Sales or Disposals of Equipment" in Exhibit A. Through June 30, 1998, ACDF
had made cash distributions to its investors in the aggregate amount of
$1,121.03 per $1,000 invested. Of this amount a total of $244.89 represents
investment income and $876.14 represents return of capital.
The second Prior Program, ATEL Cash Distribution Fund II ("ACDF II"),
commenced a public offering of up to $25,000,000 (with an option to increase the
offering to $35,000,000) of its equity interests on January 4, 1988. ACDF II
terminated its offering on January 3, 1990 after raising a total of $35,000,000
in offering proceeds from a total of approximately 3,100 investors, all of which
proceeds have been committed to equipment acquisitions, organization and
offering expenses and capital reserves. ACDF II had acquired a variety of types
of equipment with a total purchase cost of approximately $52,270,536 as of
December 31, 1997. See Table V - "Acquisition of Equipment by Prior Programs" in
Exhibit A for further information concerning the types of equipment acquired by
ACDF II. Of such equipment, items representing an original purchase cost of
approximately $51,885,991 had been sold as of June 30, 1998. See Table VI "Sales
or Disposals of Equipment" in Exhibit A. Through June 30, 1998, ACDF II had made
cash distributions to its investors in the aggregate amount of $1,105.70 per
$1,000 invested. Of this amount a total of $289.71 represents investment income
and $815.99 represents return of capital.
The third Prior Program, ATEL Cash Distribution Fund III ("ACDF III"),
commenced a public offering of up to $50,000,000 (with an option to increase the
offering to $75,000,000) of its equity interests on January 4, 1990. ACDF III
terminated its offering on January 3, 1992 after raising a total of $73,855,840
in offering proceeds from a total of approximately 4,822 investors, all of which
proceeds have been committed to equipment acquisitions, estimated organization
and offering expenses and capital reserves. ACDF III had acquired a variety of
types of equipment with a total purchase cost of approximately $99,629,941 as of
June 30, 1998. See Table V - "Acquisition of Equipment by Prior Programs" in
Exhibit A for further information concerning the types of equipment acquired by
ACDF III. Of such equipment, items representing an original purchase cost of
approximately $66,594,290 had been sold as of June 30, 1998. See Table VI -
"Sales or Disposals of Equipment" in Exhibit A. Through June 30, 1998, ACDF III
had made cash
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<PAGE>
distributions to its investors in the aggregate amount of $1,003.64 per
$1,000 invested. Of this amount a total of $261.90 represents investment income
and $741.74 represents return of capital.
The fourth Prior Program, ATEL Cash Distribution Fund IV ("ACDF IV"),
commenced a public offering of up to $75,000,000 of its equity interests on
February 4, 1992. ACDF IV terminated its offering on February 3, 1993 after
raising a total of $75,000,000 in offering proceeds from a total of
approximately 4,873 investors, all of which proceeds have been committed to
equipment acquisitions, estimated organization and offering expenses and capital
reserves. ACDF IV had acquired a variety of types of equipment with a total
purchase cost of approximately $108,734,880 as of June 30, 1998. See Table V -
"Acquisition of Equipment by Prior Programs" in Exhibit A for further
information concerning the types of equipment acquired by ACDF IV. Of such
equipment, items representing an original purchase cost of approximately
$52,871,585 had been sold as of June 30, 1998. See Table VI - "Sales or
Disposals of Equipment" in Exhibit A. Through June 30, 1998, ACDF IV had made
cash distributions to its investors in the aggregate amount of $797.87 per
$1,000 invested. Of this amount a total of $148.05 represents investment income
and $649.82 represents return of capital. See Table III - "Operating Results of
Prior Programs" in Exhibit A for further information concerning such
distributions.
The fifth Prior Program, ATEL Cash Distribution Fund V ("ACDF V"),
commenced a public offering of up to $125,000,000 of its equity interests in
February 1993. ACDF V terminated its offering in November 1994, after raising a
total of $125,000,000 in offering proceeds from a total of approximately 7,217
investors, all of which proceeds have been committed to equipment acquisitions,
estimated organization and offering expenses and capital reserves. ACDF V had
acquired a variety of types of equipment with a total purchase cost of
approximately $186,897,181 as of June 30, 1998. See Table V - "Acquisition of
Equipment by Prior Programs" in Exhibit A for further information concerning the
types of equipment acquired by ACDF V. Of such equipment, items representing an
original purchase cost of approximately $31,330,129 had been sold as of June 30,
1998. See Table VI - "Sales or Disposals of Equipment" in Exhibit A. Through
June 30, 1998, ACDF V had made cash distributions to its investors in the
aggregate amount of $520.97 per $1,000 invested. Of this amount a total of
$73.79 represents investment income and $447.18 represents return of capital.
See Table III - "Operating Results of Prior Programs" in Exhibit A for further
information concerning such distributions.
The sixth Prior Program, ATEL Cash Distribution Fund VI ("ACDF VI"),
commenced a public offering of up to $125,000,000 of its equity interests in
November 1994. ACDF VI terminated its offering in November 1996, after raising a
total of $125,000,000 in offering proceeds from a total of approximately 6,401
investors, all of which proceeds have been committed to equipment acquisitions,
estimated organization and offering expenses and capital reserves. ACDF VI had
acquired a variety of types of equipment with a total purchase cost of
$208,277,121 as of June 30, 1998. See Table V "Acquisition of Equipment by Prior
Programs" in Exhibit A for further information concerning the types of equipment
acquired by ACDF VI. Of such equipment, items representing an original purchase
cost of approximately $2,677,677 had been sold as of June 30, 1998. See Table VI
- - "Sales or Disposals of Equipment" in Exhibit A. Through June 30, 1998, ACDF VI
had made cash distributions to its investors in the aggregate amount of $321.36
per $1,000 invested. Of this amount a total of $6.87 represents investment
income and $314.49 represents return of capital. See Table III - "Operating
Results of Prior Programs" in Exhibit A for further information concerning such
distributions.
The seventh Prior Program, ATEL Capital Equipment Fund VII ("ACEF
VII"), commenced a public offering of up to $150,000,000 of its equity interests
in November 1996. ACEF VII has not terminated its offering as of the date
hereof, and anticipates closing its offering on or about November 26, 1998. As
of June 30, 1998, $105,570,580 of offering proceeds had been received from a
total of approximately 4,300 investors, all of which proceeds have been
committed to equipment acquisitions, estimated organization and offering
expenses and capital reserves. ACEF VII had acquired a variety of types of
equipment with a total purchase cost of $177,566,094 as of June 30, 1998. See
Table V - "Acquisition
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<PAGE>
of Equipment by Prior Programs" in Exhibit A for further information concerning
the types of equipment acquired by ACEF VII. Of such equipment, items
representing an original purchase cost of approximately $2,055,915 had been sold
as of June 30, 1998. See Table VI - "Sales or Disposals of Equipment" in Exhibit
A. Through June 30, 1998, ACEF VII had made cash distributions to its investors
in the aggregate amount of $126.79 per $1,000 invested. Of this amount a total
of $29.74 represents investment income and $97.05 represents return of capital.
See Table III - "Operating Results of Prior Programs" in Exhibit A for further
information concerning such distributions.
Although certain of the Prior Programs have experienced lessee defaults
in the ordinary course of business, none of the Prior Programs has experienced
an unanticipated rate of default or other major adverse business developments
which the Manager believes will impair its ability to meet its investment
objectives. As of June 30, 1998, the Prior Programs have acquired equipment with
a total purchase cost of approximately $787 million during a period of over
twelve years since the date the first Prior Program commenced operations.
Aggregate losses from material lessee defaults on these transactions have been
approximately $1.2 million, or approximately 0.16% of the assets acquired,
substantially less than the amount assumed by the Manager and its Affiliates in
structuring these portfolios as the losses to be anticipated in the ordinary
course of leasing business.
The Prior Programs have investment objectives which are similar to
those of the Fund. The factors considered by the Manager in determining that the
investment objectives of the prior programs were similar to those of the Fund
include the types of equipment to be acquired, the structure of the leases to
such equipment, the credit criteria for lessees, the intended investment cycles,
the reinvestment policies and the investment goals of each program. Therefore
all of the information set forth in the tables included in Exhibit A - "Prior
Performance Information" may be deemed to relate to programs with investment
objectives similar to those of the Fund.
In Tables I through III information is presented with respect to all
Prior Programs sponsored by the Manager and its Affiliates which completed their
offerings of interests within the five-year period ending December 31, 1997,
except that ACDF VII has not completed its public offering as of the date
hereof. Accordingly, the tabular information concerning ACDF VII does not
reflect results of an operating period after completion of its funding. Table V
includes information regarding all acquisitions of equipment by Prior Programs.
Table VI includes information regarding all dispositions of equipment by Prior
Programs during the five year period ending December 31, 1997. Table IV includes
information concerning the one Prior Program that had completed its operations
as of December 31, 1997.
The following is a list of the tables set forth in Exhibit A:
Table I - Experience in Raising and Investing Funds
Table II - Compensation to the Manager and Affiliates
Table III - Operating Results of Prior Programs
Table IV - Results of Completed Program
Table V - Acquisition of Equipment by Prior Programs
Table VI - Sales or Disposals of Equipment
The Manager will provide to any investor, upon written request and without
charge, copies of the most recent Annual Reports on Form 10-K filed with the
Securities and Exchange Commission by each of the Prior Programs, and will
provide to any investor, for a reasonable fee, copies of the exhibits to such
reports. Investors may request such information by writing to ATEL Investor
Services, Inc. at 235 Pine Street, 6th Floor, San Francisco, CA 94104 or by
calling the Manager at (415) 989-8800.
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INCOME, LOSSES AND DISTRIBUTIONS
The taxable income and taxable loss of the Fund (the "Net Income and
Net Loss") and all Fund cash distributions shall be allocated 92.5% to investors
and 7.5% to the Manager as the Carried Interest.
Allocations of Net Income and Net Loss
The Fund will close its books as of the end of each quarter and
allocate Net Income, Net Loss and cash distributions on a daily basis, i.e.,
Fund items will be allocated to the investors in the ratio in which the number
of Units held by each of them bears to the total number of Units held by all as
of the last day of the fiscal quarter with respect to which such Net Income, Net
Loss and Distributions are attributable; provided, however, that, with respect
to Net Income, Net Loss and cash distributions attributable to the offering
period of the Units (including the full quarter in which the offering
terminates), such Net Income, Net Loss and cash distributions shall be
apportioned in the ratio in which (i) the number of Units held by each investor
multiplied by the number of days during the period the investor owned the Units
bears to (ii) the amount obtained by totaling the number of Units outstanding on
each day during such period. No Net Income, Net Loss and cash distributions with
respect to any quarter shall be allocated to Units repurchased by the Fund
during such quarter, and such Units shall not be deemed to have been outstanding
during such quarter for purposes of the foregoing allocations. Transfers of
Member interests will not be effective for any purpose until the first day of
the following quarter.
Timing of Distributions
Fund cash distributions are generally made and allocated to Holders on
a quarterly basis. However, the Manager will determine amounts available for
distributions on a monthly rather than quarterly basis. All investors will be
entitled to elect to receive distributions monthly rather than quarterly by
designating such election in a written request delivered to the Manager. An
initial election to receive monthly rather than quarterly distributions may be
made at the time of subscription by designating such election on the
Subscription Agreement. Thereafter, each investor may during each fiscal quarter
designate an election to change the timing of distributions payable to the
investor for the ensuing fiscal quarter by delivering to the Manager a written
request. Investors who have previously elected monthly distributions may at such
time elect to return to quarterly distributions and those receiving quarterly
distributions may elect monthly distributions for the following quarter.
Allocations of Distributions
Distributions allocated to the investors as described below will be
allocated among them on the same basis as Net Income and Net Loss is to be
allocated, as described under "Allocations of Net Income and Net Loss" above.
Amounts to be distributed will be determined after payment of Fund operating
expenses, establishment or restoration of Capital reserves deemed appropriate by
the Manager, and, to the extent permitted as described below, reinvestment in
additional Equipment.
It is anticipated that income taxes on a portion of distributions will
be deferred by depreciation available from Equipment purchased by the Fund. To
the extent Net Income is reduced by depreciation deductions, distributions will
be considered return of capital for tax purposes and income tax will be deferred
until subsequent years. Furthermore, until investors receive aggregate
distributions equal to their original capital, a portion of each distribution
will be deemed a return of capital rather than a return on capital.
Notwithstanding the foregoing, however, the Manager intends to make
distributions only out of cash from operations and cash from sales or
refinancing and not out of capital reserves or offering proceeds held pending
investment.
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The Fund is intended to be self-liquidating in nature. After the
expiration of the Reinvestment Period, the Fund will distribute any available
cash, subject to the establishment of reserves deemed reasonably required by the
Manager for the proper operation of the business of the Fund, which may include
reserves for the upgrading of Equipment in order to preserve its rental or sales
value or for purchasing Equipment for which the Fund has committed funds prior
to the end of the Reinvestment Period.
Upon liquidation of the Fund, the proceeds of liquidation will be
distributed, after creditors of the Fund (including investors who may be
creditors) have been paid or provision has been made for their payment, in
accordance with each Member's positive Capital Account balance. As a result, if
cash distributions are made during the period between the date investors are
first admitted to the Fund and the end of the offering of Units, it is likely
that different amounts would be distributable upon liquidation to the different
investors, depending on their then Capital Account balances. This difference
will be substantially reduced or eliminated by the special allocation of gain
from the sale or other disposition of Equipment to the investors which will
equalize their respective Capital Account balances. In particular, if
distributions made during the offering period to investors who were admitted at
the initial admission date reflect a return of capital (or to the extent that
such investors receive allocations of net losses relating to the offering
period), such investors will receive less on liquidation of the Fund than those
who were admitted at the final admission date. Furthermore, to the extent that
those investors who were admitted at the first admission date receive
allocations of net profits relating to the offering period in excess of the
distributions of cash for that same period, such investors will receive more
distributions on liquidation than those investors who are admitted at end of the
offering. As noted above, any such differences will be substantially reduced or
eliminated to the extent the Manager equalizes Capital Accounts through the use
of special allocations of gain from the sale or other disposition of Equipment.
Reinvestment
Subject to the limitations set forth herein, the Manager has the right
to reinvest on behalf of the Fund cash from operations and cash from sales or
refinancing during the Reinvestment Period (which ends six years after the last
day of the year in which the offering of Units terminates). Notwithstanding the
foregoing, however, the Manager shall, at a minimum, distribute, to the extent
available, such amounts of cash from sales or refinancing and cash from
operations as may be sufficient to allow an investor in a 31% federal income tax
bracket (but not a higher bracket) to meet the federal and state income taxes
due with respect to income derived by him from the operations of the Fund. See
"Risk Factors - Income in Excess of Distributions" for a discussion of the risk
that a Holder in a higher tax bracket may, under some circumstances, be required
to pay certain tax liabilities out of his personal funds rather than out of
amounts distributed by the Fund.
Furthermore, through the end of the Reinvestment Period the Fund may
reinvest cash from operations and cash from sales or refinancing, but only after
the Manager has caused the Fund to distribute to the investors:
(i) Through the first full fiscal quarter ending at least six
months after termination of the offering of Units, an amount
equal to the lesser of (a) a rate of return on their original
capital contribution equal to 3.5% over the average yield on
five-year United States Treasury Bonds for the fiscal quarter
immediately preceding the date of distribution, as published
in a national financial newspaper from time to time (with a
minimum of 8% per annum and a maximum of 10% per annum), or
(b) 90% of the total amount of cash available for
distributions; and
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(ii) for each quarter during the balance of the Reinvestment
Period, an amount equal to a rate of return on their original
capital contribution equal to 3.5% over the average yield on
five-year United States Treasury Bonds for the period from the
commencement of the offering of Units through a date six
months folowing the termination date of the offering (with a
minimum of 8% per annum and a maximum of 10% per annum) as
published in a national financial newspaper.
Distributions will be made only to the extent cash is available to
distribute after payment of Fund obligations and allowance for necessary
reserves. There can be no prediction as to any future rate of return on original
capital investment nor assurance that any specific amount of cash distributions
can be attained. Distributions may in any year be in amounts less than the
amounts stated above.
Return of Unused Capital
Any portion of the net offering proceeds received by the Fund during
the first twelve months following the date hereof which has not been invested or
committed to Investment in Equipment during the period ending eighteen months
from the date hereof, and any of the net offering proceeds received thereafter
which have not been invested or committed to Investment in Equipment during the
period ending six months after the end of the offering (except, in either case,
for amounts used to pay Fund operating expenses or deemed by the Manager to be
required as capital reserves) will be distributed to investors pro rata as a
return of capital. In addition, in order to refund to the investors the amount
of Front End Fees attributable to such returned capital, the Manager has agreed
to contribute to the Fund, and the Fund shall distribute to investors pro rata,
the amount by which (x) the amount of unused capital so distributed, divided by
(y) the percentage of offering proceeds remaining after payment of all Front End
Fees, exceeds the unused capital so distributed.
Cash from Reserve Account
The Operating Agreement requires that the Fund initially establish a
cash reserve for general working capital purposes in an amount equal to not less
than 1/2 of 1% of the offering proceeds (equal to $6,000 if the minimum Units
are sold and $750,000 if the maximum Units are sold). Any cash reserves used as
provided herein need not be restored, and, if restored, shall be restored from
the operating revenues of the Fund. When Equipment is sold or otherwise disposed
of, all cash reserves specifically allocated to such Equipment may be
distributed to the Holders as a return of original capital investment or be
applied as a reserve for other Equipment. Distributions of cash reserves will be
allocated and distributed in the same manner as cash proceeds from sales or
refinancing of equipment. Cash reserves which the Manager deem no longer
reasonably required to be maintained as reserves may be distributed or invested
by the Fund, subject to the limitations described herein. No distributions or
investments will be made from Fund reserve accounts during the three-year period
following the date investors are first admitted to the Fund; thereafter, no
distributions or investments will be made unless the Manager determines that the
reserves of the Fund, in any fiscal quarter, are in excess of the amount deemed
sufficient in connection with the Fund's operations.
Sources of Distributions - Accounting Matters
During the initial years, the Fund may experience a Net Loss in
accordance with generally accepted accounting principles, and it is anticipated
that a substantial portion of any such Net Loss would be caused by depreciation
which is a non-cash expense. As a result, distributions, if any, made in the
initial years of the Fund may be considered to be a return of capital and not
investment income.
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Without regard to the accounting method adopted, to the extent
Equipment is not producing revenues in excess of operating expenses, debt
service and other contractual obligations related to such Equipment,
distributions may be considered a return of capital.
CAPITALIZATION
The capitalization of the Fund, as of the date of this Prospectus and
as adjusted to reflect the issuance and sale of the Units offered hereby
assuming the minimum 120,000 Units and the maximum 15,000,000 Units are sold is
as follows:
As of Minimum Maximum
the Date 120,000 15,000,000
hereof(2) Units Units
Manager's
Capital Contribution(1) $ 100 $ 100 $ 100
Units of Limited
Fund Interest
($10 per Unit) 500 1,200,500 150,000,500
------- --------- -----------
Total Capitalization $ 600 $1,200,600 $150,000,600
Less Estimated Organization
and Offering Expenses - 144,000 20,250,000
------ -------- ----------
Net Capitalization $ 600 $1,056,600 $129,750,600
------- --------- -----------
- ---------------
(1) See "Management Compensation" and "Income, Losses and
Distributions" for a description of the fees and compensation payable to the
Manager and its Affiliates.
(2) The Fund was originally capitalized with $600, representing a
cash contribution to the Fund of $100 by the Manager and $500 from the initial
Holders.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
Until receipt and acceptance of subscriptions for 120,000 Units, the
Fund will not commence active operations.
Following achievement of such funding level, subscription proceeds
will be released to the Fund from escrow and applied to the payment or
reimbursement of Organization and Offering Expenses, leaving estimated net
proceeds available for investment and operations of $1,056,000. Thereafter, the
Fund will experience a relative increase in liquidity as additional
subscriptions for Units are received, and a relative decrease in liquidity as
Net Proceeds are expended in connection with the
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acquisition and leasing of Equipment.
The Fund will acquire Equipment with cash offering proceeds and
indebtedness. The Fund may borrow on a secured or unsecured basis amounts up to
50% (and intends to borrow the maximum amount permitted) of the aggregate
purchase price of Equipment as of the date of the final investment of Net
Proceeds and, thereafter, on the date any subsequent indebtedness is incurred.
The Fund currently has no arrangements with, or commitments from, any lender
with respect to such financing. The Manager anticipates that any acquisition
financing or other borrowing will be obtained from institutional lenders. Except
as discussed below in connection with asset securitization financing, the Fund
does not currently anticipate that it will engage in any material hedging
transactions. See "Investment Objectives and Policies - Borrowing Policies."
Until required for the acquisition or operation of Equipment, the
Net Proceeds will be held in short-term, liquid investments. The Fund is
required by the Operating Agreement to establish an initial working capital
reserve in the amount of 1/2 of 1% of the Gross Proceeds. See also "Summary of
the Operating Agreement - Reserves."
For financial reporting purposes, Fund Equipment on operating leases
will generally be depreciated using the straight-line method, over periods equal
to the terms of the related leases to the Equipment, down to an amount equal to
the estimated residual value of the Equipment at the end of the related leases.
The treatment for financial reporting purposes differs from cost recovery for
tax purposes (generally, the Modified Accelerated Cost Recovery System or
"MACRS"), in which the Service prescribes certain useful lives for each type of
equipment and the Code provides specific accelerated rates of depreciation over
those useful lives. See "Income Tax Consequences - Depreciation".
The potential effects of inflation on the Fund are difficult to
predict. If the general economy experiences significant rates of inflation,
however, it could affect the Fund in a number of ways. The cost of equipment
acquisitions could increase with inflation, but such cost increases could be
offset by the Fund's ability to increase lease rates in an inflationary market.
Revenues from existing leases would not generally increase with inflation, as
the Fund does not generally expect to provide for rent escalation clauses tied
to inflation in its leases. Nevertheless, the anticipated residual values to be
realized upon the sale or re-lease of equipment upon lease terminations (and
thus the overall cash flow from the Fund's leases) may be expected to increase
with inflation as the cost of similar new and used equipment increases.
Fluctuations in prevailing interest rates could also affect the
Fund. The cost of capital reflected in interest rates is a significant factor in
determining market lease rates and the pricing of lease financing generally.
Higher interest rates could affect the cost of Fund borrowing, reducing its
yield on leveraged investments or reducing the desirability of leverage. The
Fund would also expect that increases or decreases in prevailing interest rates
would generally result in corresponding increases or decreases in available
lease rates on new leases. Except as discussed below, interest rate fluctuations
would generally have little or no effect on existing leases, as rates on such
leases would generally be fixed without any adjustment related to interest
rates.
The Fund may incur short term bridge financing bearing a variable
interest rate, but such borrowing would generally involve little exposure to
increased interest rates because of its limited duration. However, the Manager
expects that any asset securitization financing obtained by the Fund will
involve borrowing at a variable interest rate based on an established reference
rate. The Manager would seek to mitigate the Fund's exposure to increases in the
interest rate by engaging in hedging transactions that would effectively fix the
interest rate obligation of the Fund. The Manager's policy will be to incur
variable rate financing only under conditions and terms which limit the
potential adverse effect on the Fund's anticipated return on the related lease
transactions. Other than in connection with short-term bridge financing or asset
securitization financing, the Manager will seek to avoid borrowing under terms
which provide for a rate of interest which may vary. The Manager will attempt to
limit any other variable interest rate borrowing to those instances in which the
lessee agrees to bear the cost of any
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increase in the interest rate. If such debt is incurred without a corresponding
variable lease payment obligation, the Fund's interest obligations could
increase while lease revenues remain fixed. Accordingly, a rise in interest
rates may increase borrowing costs and reduce the amount of income and cash
available for Distributions. Historically, the interest rates charged by major
banks have fluctuated; as a result, the precise amount of interest which the
Fund may be charged under such circumstances cannot be predicted.
Year 2000 Compliance
The year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. As a result,
the programs are not designed to make the transition to the year 2000. This
computer software problem is commonly referred to as the "year 2000" (or "Y2K")
issue. Computer programs with date-sensitive applications may, if not modified,
fail or miscalculate dates, causing system failures, the inability to process
transactions or other disruptions of operations.
The Manager uses, and expects on behalf of the Fund to use, primarily third
party software and is communicating with key software vendors to ensure that the
systems used by the Manager and the Fund are not impaired by the year 2000
issue. Currently, all of ATEL's critical software systems are believed by the
Manager to be Y2K compliant except one. Compliance of this final system is
expected to be obtained in the first quarter of 1999. Based on discussions with
the Manager's third party software vendor, the Manager believes that any cost to
be incurred by the Fund to bring this system into compliance will not be
material. The Manager's third party software vendor for the system in question
has indicated that it expects the cost of compliance to be included in the
annual upgrade and maintenance cost for the software system, and that the total
incremental amount of such cost is expected to be minimal. Any such cost would
be allocated by the Manager over the seven public funds (including the Fund)
under its management which use or will use the software. This allocation would
be based on the relative size of each such program, and, given the timing of the
expense and the formative stage of the Fund at the time the expense is to be
incurred, its proportionate allocation of the expected minimal cost will in
itself be minimal. In no event will offering proceeds be required to be
committed to any such expenditure. If any cost is incurred by the Fund, it would
be an operating expense funded out of operating revenues.
The ultimate impact of the year 2000 issue on the Fund will depend
to a great extent on the manner in which the issue is addressed by those
businesses whose operational capability is important to the Fund. Failure of
these businesses to be Y2K compliant may impact credit quality or cause a delay
in payments made to the Fund. The Manager has contacted those businesses with
which it currently has material relationships in order to request verification
of Y2K compliance. The Manager believes that each of those entities will have a
material self interest in resolving any year 2000 issue affecting its own
operations.
Equipment to be purchased by the Fund may include technology subject
to the year 2000 issue. Potential year 2000 issues will be among the many
factors considered by the Manager and its affiliates in analyzing and pricing
lease transactions for acquisition by the Fund. The lessees of the equipment
will select such equipment and may be expected to consider year 2000 issues
themselves in determining the suitability of the equipment for the lessee's use.
Most equipment is expected to be subject to fixed term, non-cancellable, triple
net leases. In addition, new equipment may be covered by manufacturer's
warranties. As a result of such triple net provisions and warranties, repairs or
modifications necessary to correct year 2000 issues will most likely be the
responsibility of the manufacturers or the lessees, and the Fund's rights to
lease payments as a triple net lessor will not be affected by any functional
issues affecting the equipment. It is expected that the lease terms for such
equipment will extend well beyond the year 2000.
As a result of the year 2000 issue, the Fund may experience
increased costs resulting from delayed payments from lessees, the costs
associated with the collection of those payments, or costs associated with
manual processing efforts in the event of a Y2K related system failure. In any
event, the Manager does not expect these increased costs to be significant or
that such costs will have any material adverse effect on the operations of the
Fund. Nevertheless, the impact of year 2000 issues cannot be predicted with
certainty and the Fund may be affected both by the impact these issues have on
parties with which it has direct contractual and other relationships as well as
by their impact on financial institutions and the national and international
economy as a whole. Accordingly, there can be no assurance that year 2000 issues
might not have some adverse impact on the operating results experienced by the
Fund.
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FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of all material federal income tax
considerations which may be relevant to a prospective Holder. However, it is
impractical to set forth in this Prospectus all aspects of federal, state, local
and foreign tax law which may affect a Holder's participation in the Fund.
Furthermore, the discussion of various aspects of federal, state, local and
foreign taxation contained herein is based on the Internal Revenue Code of 1986,
as amended (the "Code"), existing laws, judicial decisions and administrative
regulations, rulings and practice, all of which are subject to change. Each
prospective Holder should consult his own tax counsel to satisfy himself as to
the tax consequences of his investment.
Jackson Tufts Cole & Black, LLP ("Tax Counsel") as tax counsel to
the Fund, will not prepare or review the Fund's income tax information returns,
which will be prepared by the management and independent accountants for the
Fund. The Fund will make a number of decisions on such tax matters as the
expensing or capitalizing of particular items, the proper period over which
capital costs may be depreciated or amortized, the allocation of acquisition
costs between Equipment and management fees and many other similar items. Such
matters will be handled by the Fund, often with the advice of independent
accountants retained by the Fund, and usually will not be reviewed by Tax
Counsel.
Summary
The following is a summary of, and is qualified by, the more
extensive discussion of the federal income tax consequences set forth in this
section.
Opinion of Counsel. Tax Counsel has delivered its opinion to the Fund
concerning the likely outcome on the merits of a challenge to the Fund's
position on certain material tax issues. There are certain issues upon which Tax
Counsel cannot express an opinion. (See "Opinion of Counsel.")
Classification as a "Partnership". Tax Counsel has rendered its opinion
that the Fund will be classified as a partnership for federal income tax
purpose. (See "Classification as a Partnership.")
Allocations of Profits and Losses. In Tax Counsel's opinion it is more
likely than not that the tax allocation provisions in the Operating Agreement
will not be significantly modified by the Internal Revenue Service (the
"Service") and that each Holder's distributive share of income, gain, loss and
deduction will be determined and allocated substantially in accordance with the
Operating Agreement. (See "Allocations of Profits and Losses.")
Income Recognition. The Fund's tax returns will be prepared using the
accrual method of accounting. Under such method, the Fund will include in income
items such as rentals and interest as and when earned by the Fund, whether or
not received. (See "Income Recognition.") It is possible that a Holder's tax
liabilities may exceed cash distributions to him in corresponding years. (See
"Income Recognition" and "Tax Liabilities in Later Years.")
Taxation of Holders of Units. A Holder's share of Fund income generally
will not be identical to the Holder's share of Distributions. Any Distributions
in excess of a Holder's adjusted tax basis in his Units will cause such Holder
to recognize such excess as taxable income. (See "Taxation of Holders of
Units.")
Limitations on Deduction of Losses. There are certain limitations that will
restrict the ability of a Holder to utilize his distributive share of losses
from the Fund to offset income from other sources. (See "Limitations on
Deduction of Losses.")
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Tax Status of Leases. In order for the Fund and Holders to be entitled to
depreciation deductions, a lease of Equipment must be treated as a lease rather
than a sale or financing for federal income tax purposes. The Manager has
represented that any initial lease of an item of Equipment acquired with the Net
Proceeds will comply or will substantially comply with the equipment leasing
guidelines of the Service if the cost of such item exceeds 10% of the Gross
Proceeds of this offering. Furthermore, the Manager has agreed to use its best
efforts to cause any other lease entered into by the Fund to satisfy such
guidelines. If the Fund's leases are treated as sales or financings rather than
leases for federal income tax purposes, the Fund and the Holders would not be
entitled to depreciation deductions with respect to such leases. On the other
hand, a portion of the lease rental payments (otherwise fully taxable) would be
deemed to constitute a return of capital, which would not be taxable to the
Holders. (See "Tax Status of Leases.")
Deductibility of Management Fees. The Fund intends to deduct the Asset
Management Fee for services performed by the Manager or its Affiliates. The
Service may challenge the deductibility of all or a portion of the Asset
Management Fee. (See "Deductibility of Management Fees.")
Sale or Exchange of Fund Equipment. The Fund's gain or loss on sale or
disposition of an item of Equipment will equal the difference between sale
proceeds (including the amount of any indebtedness to which the Equipment is
subject) and the Fund's adjusted tax basis in the Equipment. In certain
circumstances, the amount of tax payable by a Holder on his share of gain on
sale of Equipment may exceed his share of cash proceeds therefrom. (See "Sales
or Exchanges of Fund Equipment.")
Disposition of Units. On sale or disposition of Units, a Holder will
recognize gain equal to the excess, if any, of cash received (plus the Holder's
share of any Fund liabilities) over the Holder's tax basis in the Units. Such
gain will be taxed at ordinary income tax rates to the extent of depreciation
recapture. In certain circumstances, the amount of tax payable by a Holder on
the gain realized from a sale or disposition of his Units may exceed the cash
received therefrom. (See "Disposition of Units.")
Fund Elections. The Fund is not expected to file an election under Section
754 of the Code. The absence of such election may have an adverse effect on the
marketability and sale price of Units. (See "Fund Elections.")
Investment by Qualified Plans and IRAs. The Fund will generate unrelated
business taxable income to Holders who are Qualified Plans or IRAs, with the
result that the Fund income will be subject to tax to the extent that the
Qualified Plan's or IRA's unrelated business taxable income from all sources
exceeds $1,000. (See "Investment by Qualified Plans and IRAs.")
Alternative Minimum Tax. The tax preference items and adjustments under the
alternative minimum tax that may be present in the Fund include the excess of
depreciation deductions claimed over deductions that would be allowable if the
Equipment were subject to depreciation using the 150% declining balance method,
switching to the straight-line method in later years. (See "Alternative Minimum
Tax.")
Opinion of Counsel
The Fund has obtained an opinion from Jackson Tufts Cole & Black,
LLP ("Tax Counsel") concerning the likely outcome on the merits of a challenge
to the Fund's position on certain federal income tax issues. The opinion states
that the summary of federal income tax consequences to the Holders set forth in
this Prospectus under the headings "Risk Factors Partnership Status," "Risk
Factors - Certain Other Tax Considerations," " Risk Factors - Tax Opinion" and
"Federal Income Tax Consequences" has been reviewed by Tax Counsel and, to the
extent such summaries involve matters of law,
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Tax Counsel is of the opinion that such statements of law are accurate under the
Code, the Treasury Regulations and existing interpretations thereof.
The opinion of Tax Counsel is based upon the facts described in this
Prospectus, upon facts as they have been represented by the Manager to Tax
Counsel, and upon the assumption that the Fund will operate its business as
described in the Prospectus. Any alteration of the facts may adversely affect
the opinion rendered. Furthermore, the opinion is based on the Code, current and
proposed Treasury Regulations, current published administrative positions of the
Service contained in Revenue Rulings and Revenue Procedures, and judicial
decisions, which are subject to change either prospectively or retroactively.
In the preparation and rendition of its opinion, Tax Counsel has
considered and addressed in the offering materials all of the material tax
issues which Tax Counsel believes involve the reasonable possibility of a
challenge by the Service.
Each prospective Holder should note that the opinion described
herein represents only Tax Counsel's best legal judgment and has no binding
effect or official status of any kind. Thus, in the absence of a ruling from the
Service, there can be no assurance that the Service will not challenge the
conclusion or propriety of any of Tax Counsel's opinions or that legislative or
administrative changes or court decisions may not be forthcoming which would
significantly modify the statements expressed herein. Any such changes may or
may not be retroactive with respect to transactions prior to the date of such
changes.
Treasury Regulations and certain ethical standards require specific
opinions to be rendered in connection with an opinion of counsel regarding the
federal tax consequences of a "tax shelter" investment. For this purpose, a "tax
shelter" is an investment that has, as a significant or intended feature, the
generation of tax losses or tax credits to shelter taxable income or tax
liability from other sources. The Fund is not a "tax shelter" within the meaning
of the Treasury Regulations and said ethical standards. Therefore, although Tax
Counsel is rendering its opinion on certain material federal income tax issues
relating to an investment in the Fund, such opinion will not follow the
standards applicable to opinions with respect to "tax shelters."
It should also be noted that there are certain issues upon which Tax
Counsel cannot express an opinion because: (i) the issue is subject to facts
that are not presently known and cannot readily be determined, (ii) the issue is
subject to future events, or (iii) the issue involves a question of law on which
there is insufficient judicial or other authority upon which a conclusive
opinion can be based. Except for certain expenses that Tax Counsel has indicated
must be capitalized, no opinion is expressed as to whether certain fees will be
deductible as ordinary and necessary expenses reasonable in amount in relation
to services rendered, and no opinion is expressed as to the proper allocation of
various fees and expenses, the proper periods for their deduction or
amortization, or whether certain fees are properly allocable to the cost
recovery basis of the Equipment. If the Fund's position were successfully
challenged by the Service, the asserted deductions could be reduced or
eliminated. This would result in a proportionate increase in the taxable income,
or decrease in tax loss, of the Holders for the tax year such deductions were
reduced or eliminated, resulting in the Holders being required to pay additional
tax for such year. In addition, no opinion is expressed on the issue of whether
the Fund will be determined to be a "dealer" with respect to the Equipment.
Classification as a "Partnership"
Provided that the Fund does not elect to be treated as a corporation
for federal income tax purposes, under the default provisions of the Treasury
Regulations issued under Code Section 7701 (the so-called "check-the-box"
rules), the
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Fund will be classified as a partnership and will not be treated as an
association taxable as a corporation for federal income tax purposes. The
Manager has represented to Tax Counsel that the Fund will not make such an
election.
The treatment of the Fund as a partnership for federal income tax
purposes is based upon the present provisions of the Code, the Treasury
Regulations, and existing judicial and administrative interpretations thereof,
all of which are subject to change. If the applicable Treasury Regulations were
to be amended, it is possible that the Fund would not qualify as a partnership
under the amended regulations.
Notwithstanding the two preceding two paragraphs, if Units are
considered "publicly traded," the Fund will be treated as a corporation under
the publicly traded partnership provisions of Code Section 7704. (Being
classified as a publicly traded partnership also may have other adverse tax
consequences. See "Limitation on Deduction of Losses Passive Loss Limitation"
below.) The Fund will be treated as publicly traded if Units are traded on an
established securities market or are readily tradable on a secondary market or
the substantial equivalent thereof. An established securities market includes a
securities exchange as well as a regular over-the-counter market. Treasury
Regulations under Code Section 7704 state that a secondary market is generally
indicated by the existence of a person standing ready to make a market in the
interests of the entity, or where the holder of an interest has a readily
available, regular and ongoing opportunity to sell or exchange his interest
through a public means of obtaining or providing information on offers to buy,
sell or exchange interests. Complicity or participation of a fund is relevant in
determining whether there is public trading of its units. A fund will be
considered as participating in public trading where trading in its units is in
fact taking place and the fund's governing documents impose no meaningful
limitation on holders' ability to readily transfer their units. A fund's right
to refuse to recognize transfers is not a meaningful limitation unless such
right is exercised (except in the case of transfers by reason of death, divorce
or gift and occasional accommodation transfers).
Whether the Units will become readily tradable on a secondary market
or the substantial equivalent thereof cannot be predicted with certainty. The
Units will not be deemed "readily tradable on a secondary market (or the
substantial equivalent thereof)" if any of the safe harbors provided for in the
Treasury Regulations under Code Section 7704 is satisfied. One of these is the
"2% safe harbor." It provides that a secondary market or its equivalent will not
exist if the sum of the interests in capital or profits attributable to those
interests that are sold or otherwise transferred during a fund's taxable year
does not exceed 2% of the total interests in capital or profits.
Although neither the Fund nor the Manager will have any control over
an independent third person establishing a secondary market in Units, the
Operating Agreement requires that the Holders obtain the consent of the Manager
prior to any transfers of Units. The Manager intends to exercise its discretion
in granting and withholding its consent to transfers in such a manner as to fall
within the parameters of the 2% safe harbor articulated in the Treasury
Regulations. Accordingly, based on representations of the Manager of its
intention to comply with the 2% safe-harbor provision of the Treasury
Regulations, Tax Counsel is of the opinion that, more likely than not, the Fund
will not be considered a "publicly traded" partnership.
If the Fund were treated for federal income tax purposes as an
association taxable as a corporation in any taxable year, (i) it would be
required to pay federal income taxes upon its taxable income, rather than there
being no tax on income at the Fund level; (ii) state and local income taxes
could be imposed on the Fund; (iii) losses of the Fund would not be reportable
by the Holders on their personal income tax returns; and (iv) any Distributions
would be taxable to a Holder as ordinary income to the extent of current or
accumulated earnings and profits or treated as gain from the sale of the
Holder's Units to the extent any Distribution exceeded such earnings and profits
and the tax basis of such Holder for the Units. In addition, Distributions from
the Fund would be classified as portfolio income and, thus would not be
available to offset passive activity losses of any Holder. (See "Limitation on
Deduction of Losses - Passive Loss Limitation" below.) If after
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a period of operations the Fund were deemed to have become an association
taxable as a corporation for federal income tax purposes, such change in status
would result in taxable income to a Holder measured by the excess, if any, of
his share of the liabilities of the Fund over the adjusted basis of his Units.
The effect of the foregoing would be to substantially reduce the effective yield
on an investment in Units.
THE FOLLOWING DISCUSSION IS BASED UPON THE ASSUMPTION THAT THE FUND
WILL BE CLASSIFIED AS A PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES.
Allocations of Profits and Losses
Under Section 704(b) of the Code, a holder's distributive share of
fund income, gain, deduction or loss will be determined in accordance with the
operating agreement, unless the allocations contained therein do not have
"substantial economic effect," in which case the distributive shares will be
determined in accordance with the holders' interests in the fund.
An allocation has "economic effect" under the Treasury Regulations
if: (i) each holder's share of fund items, including certain nondeductible
expenditures (such as syndication expenses), is reflected by an increase or
decrease in the capital account established for the holder; (ii) liquidation
proceeds are distributed in accordance with capital account balances; and (iii)
any holder with a capital account deficit following the distribution of
liquidation proceeds is required to restore such deficit to the fund. In
addition, an allocation can have economic effect even if a holder is not
required to restore a deficit balance in his capital account, but only (i) to
the extent the allocation does not reduce his capital account balance below zero
(after reducing the capital account for certain adjustments, allocations or
distributions in excess of income which are reasonably expected in the future)
and (ii) if the operating agreement contains a "qualified income offset." A
operating agreement contains a "qualified income offset" if it provides that a
holder who unexpectedly receives such an adjustment, allocation or distribution
that reduces his capital account below zero will be allocated income or gain in
an amount and manner sufficient to eliminate his deficit capital account balance
as quickly as possible.
With respect to allocations of loss and deductions attributable to
nonrecourse debt, such allocations will be respected under the Treasury
Regulations if the holders who were allocated the deductions bear the burden of
the future income related to the previous deductions. In particular, the
following additional elements must be satisfied: (i) the operating agreement
must provide for allocations of nonrecourse deductions in a manner consistent
with allocations, which have substantial economic effect, of some other
significant fund item attributable to the property securing the nonrecourse
liability; and (ii) the operating agreement must contain a "minimum gain
chargeback." An operating agreement contains a "minimum gain chargeback" if it
provides that, if there is a net decrease in fund "minimum gain" during a fund
taxable year, all holders will be allocated items of fund income and gain for
such year (and, if necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to the portion of such holder's share of the net
decrease in fund minimum gain. The amount of fund minimum gain is determined by
computing the amount of gain (of whatever character), if any, that would be
realized by the fund if it disposed of the fund property subject to the
nonrecourse liability in full satisfaction thereof.
The Operating Agreement prohibits losses from being allocated to the
Holders that would cause deficit Capital Accounts in excess of their share of
Fund Minimum Gain. Nonrecourse deductions (if any) will be allocated in the same
manner as operating profits and losses. The Operating Agreement contains a
minimum gain chargeback provision and a qualified income offset provision that
are intended to comply with the provisions of the Treasury Regulations under
Section 704(b) of the Code. The Operating Agreement provides that Capital
Accounts of the Holders will be maintained in accordance with the provisions of
the Treasury Regulations and proceeds on liquidation will be distributed in
accordance
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with the positive Capital Account balances of the Holders. Therefore, Tax
Counsel is of the opinion that it is more likely than not that the allocations
included in the Operating Agreement would not be significantly modified if
challenged by the Service.
Under Section 704(b), the economic effect of the Fund allocations
also must be "substantial." Tax Counsel notes that the meaning and scope of the
substantiality requirements are unclear at this time. Based on the existing
language of the Treasury Regulations, Tax Counsel does not believe the Fund
allocations present any material substantiality issues. Consequently, as stated
above, Tax Counsel is of the opinion that it is more likely than not that the
allocations to the Holders would not be significantly modified by the Service.
However, Tax Counsel cautions that no assurance can be given that the Service
will not interpret the Regulations in a manner that could cause those
allocations to be treated as lacking substantiality. If the Service were
successful in challenging the Fund's method of allocating profits and losses,
then this may decrease the Holders' shares of taxable loss or increase the
Holders' shares of taxable income.
Income Recognition
The Fund's tax returns will be prepared using the accrual method of
accounting. Under the accrual method, the Fund will include in income items such
as interest and rentals as and when earned by the Fund, whether or not received.
Thus, the Fund may be required to recognize income sooner than would be the case
under the cash receipts and disbursements method of accounting.
In certain circumstances, where a lease provides for varying rental
payments increasing in the later years of the lease (step rentals), Section 467
of the Code requires the lessor to take the rental payments into income as if
the rent accrued at a constant level rate. This provision applies to certain
sale-leaseback transactions and certain long-term leases. The Manager expects
that certain of the Fund's Equipment leases may provide for rental payments that
increase or decrease in the later years of such leases, and Section 467 may
operate to require the Fund to accrue the rental payments on such leases at a
constant level rate. This could result in Holders receiving increased
allocations of taxable income (or reduced allocations of loss) in earlier years,
without any increase in Distributions until subsequent years. An additional
consequence could be a conversion of a portion of the Fund's rental income
(passive income) from any such lease to interest income (portfolio income).
Taxation of Holders of Units
As long as the Fund is treated as a partnership for federal income
tax purposes, it will not be subject to any federal income taxes, although it
will file federal partnership information tax returns for each calendar year.
Within 75 days after the end of each calendar year, Holders will be provided
with federal income tax information relevant to the Fund and their own federal
income tax returns. Each Holder will be required to report on his own federal
income tax return his share of Fund items of income, gain, loss, deduction, or
credit and, accordingly, may be subject to tax on his distributive share of Fund
income whether or not any Distribution is made to him.
If the amount of a Distribution to a Holder for any year exceeds the
Holder's share of the Fund's taxable income for the year, the excess will
constitute a return of capital. A return of capital is applied first to reduce
the tax basis (as described below) of the Holder's Units, and any amounts in
excess of such tax basis will generally be taxable as a gain from the sale of a
capital asset. However, a distribution of money or property which is received by
a Holder in exchange for an interest in "inventory items" which have
substantially appreciated in value or "unrealized receivables" (as defined in
Code Section 751) will generally result in the receipt of ordinary income to the
extent that such distributions are in excess of the Holder's pro rata share of
the Fund's tax basis in such property. The term "unrealized receivables" under
Section 751
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includes depreciable property subject to depreciation recapture, but only to the
extent of the amount which would be treated as ordinary income upon a sale of
the property. (See "Disposition of Units" below.)
Limitation on Deduction of Losses
There will be certain limitations on the ability of a Holder to
utilize his distributive share of losses of the Fund to offset income from other
sources: (1) losses will be limited to the extent of a Holder's tax basis in his
Units; (2) losses will be limited to the amounts for which a Holder is deemed
"at risk"; (3) losses derived from investments in "passive activities" will be
limited to a Holder's income from such activities; and (4) losses attributable
to "activities not engaged in for profit" will also be limited. These
limitations are described below.
Tax Basis. Generally, each Holder's tax basis for his Units will be
equal to the price paid therefor plus his share of those liabilities of the Fund
with respect to which none of the Holders nor the Fund has any personal
liability. (See "Investment Objectives and Policies - Borrowing Policies.") Each
Holder will increase (or decrease) the tax basis of his Units by the amount of
his allocable share of the Fund's taxable income (or loss) for any year and
reduce the tax basis of his Units by the amount of any Distributions (including
any reduction in his share of Fund nonrecourse debts) made by the Fund to him
during such year. If the tax basis of a Holder's Units should be reduced to
zero, the amount of any Distributions (including any reduction in Fund
nonrecourse debts) in excess of his share of the income reported by the Fund for
any year will be treated as gain from the sale or exchange of the Holder's
Units.
On his own federal income tax return each Holder may, subject to the
limitations discussed below, deduct his share of the Fund's taxable loss, if
any, to the extent of the tax basis for his Units; Fund losses which exceed his
tax basis may be carried over indefinitely and, subject to the limitations
discussed below, deducted in any year to the extent his tax basis is increased
above zero.
At Risk Rules. Under Code Section 465, the amount of losses which
may be claimed by an individual investor or a closely-held corporation (a
corporation of which more than 50% in value of its shares is owned directly or
indirectly by not more than five individuals) in equipment leasing activities is
limited to the amount which the investor has "at risk" with respect to such
activities. For purposes of the at risk rules, the amount at risk is generally
equal to the sum of money and the adjusted basis of property contributed to the
activity plus borrowed amounts for which the taxpayer is personally liable.
The total amount of money paid by each Holder for his Units will be
considered at risk, but any Fund borrowings are not expected to be considered at
risk. Accordingly, subject to the passive loss rules discussed below, a Holder
will only be able to deduct his share of Fund losses in an amount equal to the
purchase price of his Units (as adjusted for Fund income, losses and
Distributions). A Holder's at risk amount will be decreased by his share of Fund
losses and Distributions, and will be increased by his share of Fund income. Any
losses in excess of a Holder's at risk amount will be treated as a deduction in
succeeding taxable years, again subject to the at risk limitations. Recapture of
previously allowed losses will be required if a Holder's amount at risk at the
end of the year is reduced below zero (e.g., by Distributions from the Fund).
Under the Code, the Fund will be permitted to aggregate its
equipment leasing activities only with respect to Equipment placed in service
during the same taxable year. Therefore, the "at risk" rules will be applied to
the net taxable income or loss resulting from leasing Equipment which is placed
in service during the same taxable year. This could result in a Holder's
deduction for losses with respect to certain Equipment being limited by the "at
risk" rules, even though he must recognize income with respect to other
Equipment.
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Passive Loss Limitation. Code Section 469 imposes a limitation (the
"passive loss limitation") on the amount of losses that a taxpayer may claim
from an activity in which the taxpayer does not materially participate. Under
the passive loss limitation, net losses from a passive activity, such as the
leasing activity of the Fund, may not be used to offset active income (e.g.,
compensation) or portfolio income (e.g., interest and dividends). Passive losses
may, however, be used to offset passive income from any other passive activity
carried on by the taxpayer.
The equipment leasing activities of the Fund will constitute a
passive activity. As a result, the losses incurred by the Fund will constitute
passive losses and may thus be offset by a Holder's passive income from other
activities but not active or portfolio income from other activities. Any excess
passive losses for a particular year will be "suspended" and carried forward
indefinitely. Suspended passive losses may be used to offset passive income in
future years and may be claimed in full (even to offset active income) if a
Holder disposes of all of his Units in a fully taxable transaction and the
transferee is not a related person to the Holder.
The passive loss limitation is applied after the "at risk"
limitation. Thus, if a loss is disallowed under the "at risk" rules for a
particular year, it will not again be disallowed by the passive loss limitation
for such year. Rather, for the year in which the Holder becomes "at risk" in the
activity, the suspended "at risk" loss will become subject to the passive loss
limitation, and, as a result, even if a loss is permitted under the "at risk"
rules, it may still be disallowed under the passive loss rules.
Section 469(k) of the Code provides that income and loss from
"publicly traded" partnerships which are not taxable as corporations for Federal
income tax purposes will be treated as separate from income and loss from any
other publicly traded partnerships and also as separate from any income or loss
from passive activities. This provision should not apply to the Fund since the
Fund should not be considered to be publicly traded; if it were to be so
considered, it would be taxable as a corporation. (See "Classification as a
'Partnership'" above.)
Hobby Losses. Under Section 183 of the Code, certain losses from
activities not engaged in for profit are not allowed as deductions from other
income. Although one of the objectives of the Fund is to provide Holders with
Distributions (see "Investment Objectives and Policies"), there can be no
assurance that the Fund will be deemed to be engaged in an activity for profit
because the applicable test is based on the facts and circumstances from time to
time. It is conceivable that the Service may assert that the Fund is not engaged
in an activity for profit, notwithstanding any "profit objective" which the Fund
purports to have. Prospective Holders should consult their own tax advisers
regarding the impact of Code Section 183 on their particular situations.
Tax Status of Leases
The decision as to whether a specific lease is to be categorized as
a lease rather than as a sale for federal income tax purposes involves a factual
determination, and, accordingly, no assurance can be given that, upon audit by
the Service, the leases of Equipment would be treated as such for federal income
tax purposes. If they are treated as sales or financings rather than leases, the
Fund and the Holders would not be entitled to depreciation deductions with
respect to such leases. On the other hand, a portion of the lease rental
payments (otherwise fully taxable), would be deemed to constitute amortization
of such financing or sales proceeds which would not be taxable to the Fund.
The Fund does not intend to apply to the Service for a ruling that
any leases of Equipment which conform to the Service guidelines will be treated
as leases for federal income tax purposes. However, Service guidelines are set
forth in
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Revenue Procedures 75-21, 1975-1 C.B. 715, 75-28, 1975-1 C.B. 752, 76-30,
1976-2 C.B. 647 and 79-48, 1979-2 C.B. 529, which provide that, unless other
facts and circumstances indicate a contrary intent, for advance ruling purposes
only, the Service will consider the lessor in a leveraged lease transaction to
be the owner of property if:
(a) the lessor has a minimum unconditional investment in the
property at all times during the lease of at least 20% of the cost of the
property and can demonstrate that the estimated residual value of the property
is at least 20% of the cost of the property;
(b) the lessee does not have an option to purchase the property
(other than at fair market value) and the lessor does not have the right to
require anyone to purchase the property;
(c) no part of the cost of the property subject to the lease is
furnished by the lessee other than for full consideration;
(d) the lessee does not lend the lessor any of the funds necessary
to purchase the property; and
(e) the lessor expects to receive a profit from the transaction
apart from tax benefits.
The Manager has represented that any initial lease of an item of
Equipment acquired with the Net Proceeds will meet the foregoing guidelines if
the amount of Net Proceeds used to acquire such item exceeds an amount equal to
10% of the maximum Gross Proceeds of this offering. Although, as stated above,
determination of lease status is made on a case-by-case basis, Tax Counsel is of
the opinion that any lease satisfying the foregoing guidelines should more
likely than not qualify as a lease for federal income tax purposes.
Depreciation
MACRS . Under the "Modified Accelerated Cost Recovery System"
("MACRS"), the cost of depreciable personal property placed in service after
1986 ( so-called "recovery property") may be depreciated using certain specified
depreciation methods (referred to as "recovery methods") over specified
depreciable lives (referred to as "recovery periods") generally ranging from
three to 20 years. Under MACRS the methods of recovery and the recovery periods
apply equally to new and used property.
The cost of MACRS property is recovered over the applicable recovery
period using the 200% declining balance method, except for 15- or 20-year
recovery property for which the 150% declining balance method is utilized.
The Code contains "anti-churning" provisions to prevent taxpayers
from utilizing MACRS on property placed in service prior to January 1, 1987.
These provisions generally attempt to reach situations where personal property
used during 1986 is transferred without a real change in the owner or user of
such property and MACRS depreciation would be more favorable than depreciation
under prior law. The Fund may acquire used Equipment which will be leased back
to the owner or continued under lease to the original lessee. If the Fund is not
able to use MACRS with respect to such Equipment, the depreciation deductions
thereon will be determined under the rules in effect prior to 1987 ("ACRS"). In
such cases, depreciation deductions allowed with respect to such Equipment could
be less in the early years and greater in later years than the depreciation
deductions allowable under MACRS, and the Holders' share of Fund losses in the
early years could be reduced.
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It should be noted that the amount by which the depreciation deductions on
Equipment using the 200% declining balance method exceeds the amount that would
have been allowed had depreciation deductions been calculated using the 150%
declining balance method will effectively be an item of tax preference. (See
"Alternative Minimum Tax.")
Recapture. All depreciation deductions with respect to the Equipment will
be subject to recapture at ordinary income rates upon the disposition of the
Equipment. ( See "Sales or Exchanges of Fund Equipment.")
Basis. The tax basis of the Equipment for depreciation purposes will
include reasonable costs payable in connection with the acquisition of the
Equipment.
Limitations on the Use of MACRS. Under certain circumstances, in addition
to those set forth above, a taxpayer is required to recover the cost of property
over a period longer than its MACRS recovery period. The relevant restrictions
include the use of the property predominantly outside the United States and the
use of equipment by a foreign or "tax-exempt" entity. These limitations are
described below.
(1) Property Used Predominantly Outside the United States. The MACRS
provisions of the Code contain special rules for recovering the cost of personal
property used predominantly outside the United States. Under Code Section
168(g), the cost of such property is to be recovered using the straight-line
method over a period equal to the property's "asset depreciation range midpoint
life as set forth in Treasury Regulations under Code Section 167 (the "ADR
Midpoint Life"), utilizing a half-year convention and no salvage value. If the
Treasury Regulations do not provide an ADR Midpoint Life, a 12-year period is
used.
Section 168(g)(4) of the Code provides an exception to the
predominant use limitation described above. Under this subsection of the Code,
certain types of property which are used predominantly outside the United States
will qualify for the normal MACRS cost recovery rules; the exceptions include,
among others, aircraft registered by the administrator of the Federal Aviation
Agency which are operated to and from the United States with some degree of
frequency.
(2) Tax-Exempt Leasing. Section 168 of the Code provides that the
use of personal property by a tax-exempt entity (including (i) certain foreign
persons or entities, (ii) certain governmental units, and (iii) certain other
tax-exempt organizations) will result in a reduction of the tax benefits which
would otherwise be available. The portion of such "tax-exempt use property"
leased to a tax-exempt entity must be depreciated using the straight-line method
over the greater of (i) the ADR Midpoint Life (12 years if there is no ADR
Midpoint Life assigned to such property), or (ii) 125% of the lease term.
If any property which is not otherwise tax-exempt use property is
owned by a fund which has both a tax-exempt entity and a person who is not a
tax-exempt entity as a holder, such tax-exempt entity's proportionate share of
such property is treated as tax-exempt use property unless (i) all allocations
to the tax-exempt entity of fund items are qualified; or (ii) the income derived
from such share of the property is subject to the unrelated business tax.
Income derived by tax-exempt entities other than foreign entities
from the Fund should be subject to the unrelated business tax (see "Investment
by Qualified Plans and IRAs," below); thus, admission of such Qualified Plans
and IRAs as Holders should not, in and of itself, cause any of the Equipment to
be treated as tax-exempt use property. If the Service successfully asserted that
the income of the Fund is not subject to the unrelated business tax, then the
Fund would be required to maintain separate depreciation systems for its
Equipment subject to MACRS, and, as a result, depreciation deductions available
to Holders in the early years of operations of the Fund would be reduced.
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Deductibility of Management Fees
The Fund intends to deduct the Asset Management Fee for services
performed by the Manager or its Affiliates. It is possible that the Service may
challenge the deductibility of all or a portion of the Asset Management Fee on
the basis that (i) the amount thereof is excessive, (ii) that all or a portion
of the Asset Management Fee should properly be considered payment for other
services performed by, or other value provided by, the recipient thereof, or
(iii) that payments for such services rendered are not deductible. If such a
challenge by the Service were successful, the asserted deductions could be
reduced or eliminated. This would result in a proportionate increase in the
taxable income, or decrease in tax loss, of the Holders resulting in the Holders
being required to pay additional tax.
Tax Liabilities in Later Years
Although none of the prior programs sponsored by the Manager and its
Affiliates have experienced such a situation, it is possible that, after some
years of Fund operations, a Holder's tax liabilities may exceed cash
distributions to him in corresponding years. Such situations would typically
arise at the "cross-over point," i.e., the point in time when the Fund's
nondeductible loan amortization payments on its Equipment exceed its
depreciation deductions. This is principally due to (i) the short periods over
which Equipment can be depreciated under MACRS and (ii) the annual increases in
the amount of nondeductible principal amortization payments and the
corresponding decreases in the amount of deductible interest payments which will
typically occur on level payment obligations secured by the Equipment. To the
extent a Holder's tax liabilities exceed cash distributions, such excess will be
a nondeductible out-of-pocket expense to a Holder. Based on historical
experience with similar programs, the Manager does not believe such a
"crossover" is likely to occur.
Sales or Exchanges of Fund Equipment
Gain realized by the Fund on a sale of any Equipment will, to the
extent of all depreciation deductions claimed thereon, be subject to recapture
and taxed as ordinary income. Unless the Fund is a "dealer" in the property
sold, any gain realized by the Fund in excess of such depreciation recapture
will, generally, be treated as long-term capital gain (if the property has been
held for more than one year) under Code Section 1231. Any loss realized upon a
sale will generally be treated as an ordinary loss (if the property has been
held for more than one year) under Code Section 1231.
A "dealer" is one who holds property "primarily for sale to
customers in the ordinary course of business". Under existing law, whether
property is so held is a question of fact, depending upon all of the facts and
circumstances of the particular transactions. The Fund intends to purchase
Equipment for investment only, to engage in the business of owning and operating
such Equipment, and to make such occasional sales thereof as in the opinion of
the Manager is consistent with the Fund's investment objectives. Accordingly,
the Fund does not anticipate that it will be treated as a dealer with respect to
any of its Equipment, although there is no assurance that the Service will not
take the contrary position.
If the Fund were to sell an item of Equipment on an installment
basis, all depreciation recapture income would be recognized at the time of sale
whether or not payments were to be made in succeeding taxable years.
Furthermore, if the Fund were to sell an item of Equipment on an installment
basis, the "original issue discount" rules might apply to the sale.
(See "Original Issue Discount".)
Unless the Equipment is found to be "dealer property" as discussed
above, and assuming the Equipment has been held for more than one year, any gain
or loss generally will be treated as "Section 1231" gain or loss, except to the
extent of recapture of certain cost recovery or depreciation deductions, which
will be taxed as ordinary income. A Holder's allocable share of Fund Section
1231 gains or losses, if any, for the particular year will be netted with the
Holder's other Section
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1231 gains and losses; a "net" Section 1231 loss will be treated as an ordinary
loss. A net Section 1231 gain will be treated as a long-term capital gain,
except to the extent of the taxpayer's "non-recaptured" net Section 1231 loss
(generally, the excess of net Section 1231 losses over net Section 1231 gains
for the five preceding taxable years), to which extent the net Section 1231 gain
will be treated as ordinary income.
Because the Fund's gain on a sale of Equipment will be measured by
the difference between the sales proceeds (including the amount of any
indebtedness to which the property is subject) received upon the sale and the
Fund's adjusted tax basis of the Equipment, the amount of tax payable by a
Holder in respect of his share of such Fund gain may in some cases exceed his
share of the cash proceeds therefrom. In the event of a foreclosure of a debt on
Equipment owned by the Fund, the Fund may realize gain equal to the excess of
such indebtedness over its adjusted tax basis of the Equipment, and the Holders
may realize taxable income although they may not receive any cash distributions
as a result of the foreclosure.
Disposition of Units
The amount of gain which a Holder will realize upon the sale or
other disposition of his Units will equal the excess, if any, of (i) the amount
realized by the Holder for the Units over (ii) the Holder's tax basis in the
Units. The amount of any loss which a Holder will realize on the sale or other
disposition of the Holder's Units will equal the excess, if any, of (i) the
Holder's tax basis over (ii) the amount realized for the Units. For this
purpose, the amount realized on the sale of the Units will include the Holder's
share of any Fund liabilities. As a result, a sale or disposition of Units by a
Holder may result in a tax liability in excess of cash proceeds received on the
sale or other disposition of such Units.
Gain or loss realized by a Holder on the sale of Units generally
will have the character of capital gain or loss, and, in the case of an
individual Holder, any such gain will be subject to tax at a maximum rate of 20%
if the Units have been held for more than 18 months and 28% if the Units have
been held for more than 12 months but not more than 18 months (as opposed to the
maximum rate of 39.6% imposed on ordinary income and short-term capital gain).
However, any gain realized on the sale or other disposition of a Unit by a
Holder which is attributable to (i) unrealized receivables, e.g., the Holder's
share of previous Fund depreciation deductions (computed as if the Equipment of
the Fund had been sold at its fair market value on the date the Units are sold)
or (ii)inventory items, will be taxed at ordinary income rates. A Holder must
recognize such depreciation recapture upon the sale or other disposition of a
Unit in the year of sale or disposition, regardless of the amount of sale
proceeds received in the year of sale or disposition.
Liquidation of the Fund
The Operating Agreement provides generally that on liquidation of
the Fund its assets will be sold and the sale proceeds will be distributed
pursuant to the terms of the Operating Agreement. The Holder will realize gain
or loss on the sale of its assets and each Holder will report his share of such
gain or loss, together with his share of other items of Fund income, gain, loss
and deduction for the year of liquidation. In addition, a Holder will recognize
gain or loss under Code Section 731 measured by the difference between the cash
he receives in liquidation (including cash constructively received as a result
of relief of liabilities) and the adjusted tax basis of his Units. Gain or loss
recognized generally will be taxable as short-term or long-term capital gain or
loss, depending on whether the Holder has held his Units for more than one year.
However, gain attributable to the recapture of cost recovery deductions will be
taxable as ordinary income. See "Sales or Exchanges of Fund Equipment." It is
anticipated that all or substantially all of any gains will be attributable to
such deductions and taxed as ordinary income.
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In the case of a Holder with a taxable year other than the taxable
year of the Fund, the termination of the taxable year of the Fund upon its
liquidation may result in the Holder reporting in his tax return for the year of
liquidation his share of more than twelve (12) months' taxable income or loss of
the Fund.
Original Issue Discount
The original issue discount ("OID") rules apply to seller-provided
financing furnished to a purchaser of property. If the interest rate paid by the
buyer in connection with such financing is not at least equal to an established
federal rate, interest will be imputed at that rate (the "applicable federal
rate"). In addition, the payee of deferred interest on an OID obligation is
required to recognize such interest income ratably as it accrues. The applicable
federal rate is equal to the interest rate of U.S. government securities of
comparable maturity.
If the Fund were to sell an item of Equipment and provide financing
to the buyer bearing interest at a rate less than the applicable federal rate,
the Fund's gain on sale would be reduced by the application of that rate. Such a
reduction in gain on the sale would be offset, in whole or in part, by interest
income exceeding the nominal interest received by the Fund, and the interest
income generally would be taxable at a higher rate.
Fund Elections
The Code permits entities such as the Fund to elect to adjust the
tax basis of fund property upon the transfer of units by sale or exchange or on
the death of a holder, and on the distribution of property by the fund to a
holder (Section 754 election). The general effect of such an election is that
transferees of the units will be treated, for the purpose of depreciation and
gain, as though they had acquired a direct interest in the fund assets, and the
fund will be treated for such purposes, upon certain distributions to holders,
as though it had newly acquired an interest in the fund assets and therefore
acquired a new cost basis for such assets. Any such election, once made, may not
be revoked without the consent of the Service.
As a result of the complexities and added expense of the tax
accounting required to implement such an election, the Manager does not intend
to cause the Fund to make a Section 754 election. Accordingly, upon the sale of
Equipment subsequent to the transfer of a Unit, taxable gain or loss to the
transferee of the Unit will be measured by the difference between his share of
the gross proceeds of such sale and his share of the Fund's tax basis in the
Equipment (which, in the absence of a Section 754 election, will be unchanged by
the transfer of the Unit to him), rather than by the difference between his
share of the amount realized and the portion of his purchase price for his Units
that was allocable to the Equipment. As a consequence, such transferee will be
subject to tax upon a portion of the proceeds which, as to such transferee,
constitutes a return of capital, if the purchase price of his Units exceeds his
share of the adjusted basis for all Equipment. As a result, any benefits which
might have been available to transferee Holders of Units by reason of a Section
754 election will not be available. Moreover, a Holder may have greater
difficulty in selling his Units since the purchaser will obtain no current tax
benefits from his investment to the extent that the purchaser's cost of such
Units exceeds his allocable share of the Fund's basis in its assets.
It is also important to note that the Fund may make various
elections for federal tax reporting purposes which could result in various items
of income, gain, loss, deduction and credit being treated differently for tax
purposes than for accounting purposes.
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Treatment of Gifts of Units
Generally, no gain or loss is recognized for federal income tax
purposes as a result of a gift of property. However, if a gift of a Unit were
made at a time when the Holder's allocable share of the Fund's nonrecourse
indebtedness exceeded the adjusted tax basis of his Unit, such Holder would
realize gain for federal income tax purposes upon the transfer of such Unit to
the extent of such excess. A charitable contribution of Units by a Holder also
would result in income or gain to the extent that the Holder's share of
nonrecourse liabilities exceeds the adjusted tax basis in his Units. Gifts of
Units may also result in gift tax liability pursuant to the rules generally
applicable to all gifts of property.
Investment by Qualified Plans and IRAs
Qualified pension, profit-sharing, stock bonus plans, Keogh Plans
(collectively, "Qualified Plans") and Individual Retirement Accounts ("IRAs")
are generally exempt from taxation except to the extent that "unrelated business
taxable income" (determined in accordance with Sections 511-514 of the Code)
exceeds $1,000 during any fiscal year. Because the Fund will be engaged in the
business of equipment leasing, each Qualified Plan's or IRA's distributive share
of the Fund's taxable income will constitute "unrelated business taxable income"
("UBTI"). Therefore, a Qualified Plan or IRA that purchases Units in the Fund
will be required to report its pro rata share of the Fund's taxable income as
unrelated business taxable income if and to the extent that the Qualified Plan's
or IRA's unrelated business taxable income from all sources exceeds $1,000 in
any taxable year.
A portion of the income from property subject to acquisition
indebtedness also will be included in the unrelated business income of a
tax-exempt entity. For this purpose, indebtedness will constitute acquisition
indebtedness if it was incurred directly or indirectly in connection with the
acquisition or improvement of property.
Except to the extent of gain or loss from the sale, exchange, or
other disposition of Equipment subject to acquisition indebtedness, and except
to the extent Equipment constitutes inventory or property held primarily for
sale to customers in the ordinary course of a trade or business, gains from the
sale or exchange of Equipment generally will be excluded from unrelated business
taxable income. However, any gain on the disposition of Equipment which is
characterized as ordinary income as a result of the recapture of depreciation
deductions in all events will constitute unrelated business taxable income of
Qualified Plans and IRAs. (See "Sales or Exchanges of Fund Equipment" above.)
If an IRA has UBTI in excess of the $1,000 exemption for any taxable
year, the IRA is subject to income tax on this excess at the same tax rates
applicable to trusts and estates. Even if an IRA is not subject to federal
income tax for any taxable year, if the gross income taken into account in
computing UBTI exceeds $1,000, the IRA customer is still obligated to file a tax
return for such year. Generally, this tax return must be filed with the Service
by April 15th of the following year.
Penalties may be imposed by the Service for failing to file this tax
return when required, and, if tax is due, additional penalties and interest may
be imposed if the tax is not paid in a timely manner. In addition, any tax due
should be paid directly from the IRA. Payment of the tax by the IRA customer may
have other adverse tax consequences.
AN IRA CUSTOMER WHO MAKES AN INVESTMENT IN HIS IRA WHICH MAY RESULT
IN THE REALIZATION OF UBTI IS URGED TO OBTAIN THE ADVICE OF A QUALIFIED TAX
ADVISOR ON THE EFFECT OF REALIZATION OF UBTI BY HIS IRA AND ANY OBLIGATION TO
FILE INCOME TAX RETURNS AND TO PAY TAX ON SUCH UBTI. FOR A DISCUSSION OF THE
ERISA CONSIDERATIONS OF AN INVESTMENT IN THE FUND BY A QUALIFIED PLAN OR IRA,
SEE "ERISA CONSIDERATIONS."
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Individual Tax Rates
General. The highest individual tax rate currently is 39.6%. The
benefits of personal exemptions are phased out for taxpayers with an adjusted
gross income over certain thresholds. Further, otherwise allowable itemized
deductions (other than medical expenses, casualty and theft losses and
investment interest) are reduced by an amount equal to 3% of a taxpayer's
adjusted gross income over certain thresholds. In no event, however, are such
deductions reduced by more than 80%.
Capital Gains and Losses. Net capital gain (i.e., the excess of net
long-term capital gains over short-term capital losses) is taxed at a 28%
maximum rate. As a general matter, upon the sale or other disposition of their
Units at a gain, individual Holders who have held their Units for more than 12
but not more than 18 months will be subject to federal income tax at the maximum
tax rate of 28% (15% for individuals whose taxable income does not exceed a
certain threshold). Where an individual has held his Units for more than 18
months, the maximum tax rate on net capital gain will be 20% (10% for
individuals who would otherwise pay 15%). Effective for taxable years beginning
after December 31, 2000, the 20% rate will be reduced to 18% for Units that are
acquired after December 31, 2000 and held more than five years (and the 10% rate
will be reduced to 8% regardless of when the Units were acquired).
In the case of noncorporate Holders, capital losses, whether
long-term or short-term, will only be available to offset $3,000 of ordinary
income in a given taxable year. Any remaining capital loss may be carried
forward indefinitely.
Two Percent Floor on Miscellaneous Itemized Deductions. Noncorporate
Holders may deduct expenses paid or incurred for (a) the production or
collection of income, (b) the management, conservation, or maintenance of
property held for the production of income, or (c) in connection with the
determination, collection or refund of a tax, only to the extent such expenses
exceed 2% of adjusted gross income. This rule is to apply with respect to
indirect deductions through pass-through entities (such as the Fund) of amounts
that would not be allowable as a deduction if paid or incurred directly by an
individual. Although it is not anticipated that the Fund will incur any material
expenses of this nature, the 2% limit described above may cause certain expenses
allocable to Holders to be nondeductible.
Alternative Minimum Tax
The alternative minimum tax ("AMT") rate for individuals is 26% of
so much of the taxable excess as does not exceed $175,000, plus 28% of so much
of the taxable excess as exceeds $175,000. For this purpose, "taxable excess"
means the amount by which alternative minimum taxable income ("AMTI") exceeds
the exemption amounts: $45,000 for married taxpayers filing jointly, $33,750 for
single individuals and $22,500 for married individuals filing separately or
trusts. (The foregoing exempt amounts are reduced for taxpayers with income in
excess of certain specified levels.) The alternative minimum tax is imposed to
the extent that such tax exceeds the taxpayer's "regular tax" liability for the
year.
AMTI is computed differently than taxable income for regular tax
purposes with respect to various "tax preference" items, including, among other
items, depreciation deductions. Deductions for depreciation of personal property
are computed using slower depreciation methods (i.e., a 150% declining balance
method rather than a 200% declining balance method). Because depreciation for
AMT purposes is not as front-loaded as for regular federal income tax purposes,
the basis of depreciated property for AMT purposes will be higher than its basis
for regular federal income tax purposes. Thus, upon disposition of the property,
the taxpayer may recognize less gain for AMT purposes than for regular federal
income tax purposes.
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The tax preference items and adjustments that may be present in the
Fund include, with respect to an item of Equipment, the excess of depreciation
deductions claimed over deductions that would be allowable if the item of
Equipment were permitted depreciation deductions using the 150% declining
balance method, switching to the straight line method in later years. No
additional items of tax preference are expected to be generated by the Fund, but
certain items of tax preference may apply in the case of certain Holders due to
their particular facts and circumstances unrelated to the Fund. The effect of
the AMT on each Holder will depend upon each Holder's particular circumstances.
Each prospective Holder should therefore consult his own tax advisor as to the
effect of the purchase of Units on his AMT liability.
Fund Tax Returns and Tax Information
The Manager will file the Fund's tax returns using the accrual
method of accounting and will adopt the calendar year as the Fund's taxable
year. The Fund will provide tax information to the Holders within 75 days after
the close of each Fund taxable year. If a Holder is required to file its tax
return on or before March 15, it may be necessary for the Holder to obtain an
extension to file if the tax information referred to above is not distributed
until the end of the 75-day period.
Holders will be required to file their returns consistent with the
information provided on the Fund's informational return or notify the Service of
any inconsistency. A failure to notify the Service of an inconsistent position
will allow the Service automatically to assess and collect the tax, if any,
attributable to the inconsistent treatment.
Under Section 6050K of the Code, a selling Holder will be required
to inform the Fund of the sale or exchange of the Holder's Units within 30 days
of the transaction or, if earlier, January 15 of the calendar year following the
calendar year in which the transaction occurs. The Fund will be required to
inform the Service of each such transaction in connection with the filing of its
tax information return for the taxable year in which the transaction occurs.
Failure to provide these notices may result in substantial penalties. The Fund
will also be required to inform both the seller and the buyer of Units of the
proportionate interest of those Units in the unrealized receivables (including
potential depreciation recapture) and inventory items of the Fund. This
notification must be made prior to February 1 of the calendar year following the
calendar year in which the transaction occurs.
Interest and Penalties
With certain exceptions, a penalty will be assessed for each month
or fraction thereof (up to a maximum of five months) that the Fund fails to file
(or files an incomplete) federal information return. In addition, a penalty will
be assessed if the Fund fails to furnish to the Holders a correct Schedule K-1
to the federal income tax return for the Fund on or before the prescribed due
date (including any extension thereof).
All penalties related to the accuracy of tax returns will be
consolidated into one penalty equal to 20% of the portion of an understatement
resulting from one or more of the following: negligence or disregard of
applicable rules and regulations; any substantial valuation overstatement; and
any substantial understatement of federal income tax.
The penalty for underpayment of tax attributable to substantial
valuation overstatement applies only if (i) the value or adjusted basis of any
property as claimed on an income tax return exceeds 200% of the correctly
determined amount of its value or adjusted basis and (ii) the underpayment of
tax attributable to the substantial overvaluation exceeds $5,000 ($10,000 in the
case of a corporation other than an S corporation or personal holding company).
In the event an underpayment of tax is attributable to a gross valuation
misstatement, then the penalty is increased from 20% to 40%. A gross valuation
misstatement occurs only if (i) the value or adjusted basis of any property as
claimed on an income tax return exceeds 400% of the correctly determined amount
of its value or adjusted basis and (ii) the underpayment of tax
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attributable to such gross valuation misstatement exceeds $5,000 ($10,000 in the
case of a corporation, other than an S corporation or personal holding company).
All or any part of the penalty may be waived by the Service upon the taxpayer's
showing that a reasonable basis existed for the valuation claimed on the return
and that the claim was made in good faith. If the Fund were to overstate the
value of Equipment, a Holder might be liable for this penalty.
There is a 20% penalty on the amount of an underpayment of tax
attributable to the "substantial understatement" of a tax liability. A
substantial understatement is defined as an understatement of federal income tax
for the taxable year that exceeds the greater of 10% of the required tax or
$5,000 ($10,000 for corporations other than personal holding companies and S
corporations). The penalty can be avoided either by (i) disclosing the
questionable item on the tax return and showing there was a reasonable basis for
the tax treatement of such item by the taxpayer, or (ii) by showing that there
was "substantial authority" for taking the position on the return. If a
questionable item is related to a tax shelter (defined as any entity, plan or
arrangement whose principal purpose is the avoidance or evasion of tax), the
understatement penalty can only be avoided by showing that the taxpayer
reasonably believed that the treatment of the item was "more likely than not"
the proper treatment. It should be noted that the Manager will not cause the
Fund to claim a deduction unless the Manager believes, based upon the advice of
its accountants or counsel, that substantial authority exists to support the
deduction.
All interest payable with respect to a federal income tax deficiency
will be compounded daily. Interest rates are redetermined quarterly and are
based on the federal short-term interest rate (the average rate of interest on
Treasury obligations maturing in less than three years) for the first month of
the preceding quarter plus 3%.
Audit of Tax Returns
An audit of the Fund's information return may result in adjustments
to items of income, gain, deduction, loss or credit reported on such information
return. At a minimum such adjustments will result in a corresponding adjustment
to the federal income tax returns of individual Holders. Such an audit may also
result in a full audit of a Holder's individual tax return (and thereby result
in adjustments to non-Fund as well as Fund items).
The tax treatment of items of Fund income, loss, deduction or credit
will be determined at the Fund level in a unified Fund proceeding, rather than
in separate proceedings with the Holders. Similarly, only one judicial
proceeding contesting a Service determination may be filed on behalf of the Fund
and all Holders.
Provided that the Fund has more than 100 Holders, in the event of
proposed tax deficiency adjustments pursuant to an administrative proceeding at
the Fund level, in general, each Holder (other than a Holder owning less than a
1% profits interest in the Fund) whose name and address is furnished to the
Service (a "notice-holder") will receive notice of the commencement of the Fund
level audit as well as notice of the final Fund administrative adjustment. All
Holders will have the right to participate in the Fund audit proceeding. In
general, each Holder will be free to negotiate his own settlement of the Fund
items with the Service. If the Service were to enter into a settlement agreement
with any Holder, it would be required to offer the same settlement terms to the
other Holders who request settlement. The Fund must designate a "tax matters
partner" who may enter into a settlement on behalf of, and binding upon, Holders
owning less than a 1% profits interest in the Fund. The tax matters partner will
not be permitted to settle on behalf of Holders with less than a 1% profits
interest if (i) an aggregate of 5% or more of such Holders designate with the
Service a notice Holder to receive notice from the Service on behalf of the
group or (ii) such Holders notify the Service that the tax matters partner may
not settle on their behalf. Except for the above-described settlement power
granted the tax matters partner, any settlement entered into by any
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Holder (including the tax matters partner) will not be binding on any Holder who
does not wish to be bound thereby. However, the tax matters partner may extend
the statute of limitations for assessment of a deficiency with respect to all
Holders. The Fund has designated the Manager as the tax matters partner.
Registration Provisions
Sections 6111 and 6112 of the Code require (i) registration of
certain tax shelters and (ii) the maintenance of lists of investors
participating in certain tax shelter investments, respectively.
Under Section 6111, anyone who organizes a "tax shelter" must
register such shelter with the Service not later than the day on which occurs
the first offering for sale of interests therein. A "tax shelter" is defined as
any investment with respect to which a person could reasonably infer from
representations made or to be made in connection with an offer for sale of any
interest that, as of the close of any of the first five years, the ratio with
respect to any investor of (A) the sum of the aggregate gross deductions and
350% of the credits potentially allowable to (B) the aggregate of the cash
invested and the adjusted basis of other property contributed by the investor
(reduced by any liability to which the property is subject) (the "tax-shelter
ratio) is greater than two to one.
The Manager has determined that, because of the limited amount of
leverage that will be placed on the Equipment, and because a significant amount
of the Equipment will be "net leased" by the Fund, the Fund is not expected to
generate a tax shelter ratio of greater than two to one. Based on this
determination, the Manager will not register the Fund as a tax shelter.
Miscellaneous Fund Tax Aspects
Fees for the syndication of the Fund will be required to be
capitalized; Fund organization fees will be required to be capitalized and may
be amortized over a five-year period. Under Code Section 195, a taxpayer must
amortize "start-up expenditures" over a period of 60 months, beginning with the
date on which the business begins. Start-up expenditures are costs incurred in
investigating the creation or organization of a business, or in creating a
business, which would be deductible if incurred in connection with the expansion
of an existing business.
Foreign Tax Considerations
As noted above, the Fund may acquire Equipment which is operated
outside the United States. As a consequence, Holders may be required to file
returns and pay taxes in foreign jurisdictions with respect to the foreign
source income of the Fund. The income taxed by the foreign jurisdiction would in
such a case be calculated according to the tax laws of the foreign jurisdiction,
which may or may not correspond with applicable United States standards.
Holders who have foreign tax liabilities as a result of the purchase
of Units may be entitled to a foreign tax credit or to a deduction for foreign
taxes paid which can be utilized to reduce their United States tax liabilities
or taxable income, respectively. The calculation of the foreign tax credit is
quite complex and no assurance can be given that a credit will be available in
the amount of any foreign tax paid. In particular, prospective Holders should be
aware that United States law does not generally allow a foreign tax credit
greater than the taxpayer's United States federal income tax liability with
respect to the foreign source income of the taxpayer calculated according to
United States rather than the foreign jurisdiction's tax law. Because the United
States tax rate may be lower than the tax rate imposed by a foreign country, it
is possible that a foreign country might impose a tax in an amount greater than
the allowable foreign credit under United states
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law. In such a case, Holders would be subject to a higher effective rate of
taxation than if no foreign tax had been imposed. Each Holder should consult his
own tax advisor regarding the applicability of foreign taxes to his own
situation.
Prior to the Fund entering into an arrangement which contemplates
the use of Equipment outside the United States, the Manager will consult with
its counsel and with special tax advisor located in the foreign jurisdiction
concerning the possibility of structuring the transaction in a manner which will
enable the Holders to avoid being required to file income tax returns in the
foreign jurisdiction. The Manager has discretion to cause the Fund to enter into
any such arrangement.
Taxation of Foreign Persons
Special rules in the Code govern the U.S. federal income taxation of
nonresident alien individuals, foreign corporations, foreign partnerships and
other foreign investors ("foreign persons"). No attempt is made to provide
herein more than a brief summary of some of the relevant rules. Holders that are
foreign persons should consult their own tax advisors to fully determine the
impact to them of United States federal, state and local income tax laws.
Foreign persons who own Units will be considered to be engaged in a
trade or business in the United States because of the activities of the Fund and
such activities will be deemed to be conducted through a permanent establishment
within the meaning of potentially applicable tax treaties. Therefore, a foreign
person who becomes a Holder of Units will generally be required to file United
States tax returns on an annual basis on which he must report his distributive
share of the Fund's items of income, gain, loss, deduction and credit, and will
be required to pay United States taxes at regular rates on his share of any Fund
net income that is effectively connected with a United States trade or business,
whether ordinary income or capital gains.
Because the Fund will be deemed engaged in a United States business,
it will be required to withhold with respect to a foreign Holder's distributive
share of the Fund's "effectively connected" income at the maximum regular rate
applicable to such foreign Holder (currently 39.6% for individual foreign
Holders and 35% for corporate foreign Holders). Amounts withheld will be
creditable by a foreign Holder against the foreign Holder's United States income
tax liability. Further, if any portion of a foreign Holder's distributive share
of Fund income is not effectively connected with a United States trade or
business, such income may, depending on its character, be subject to a 30%
United States withholding tax (or such lower rates as may be prescribed under an
applicable income tax treaty).
Foreign corporations that are Holders will also be subject to a
branch profits tax equal to 30% (subject to reduction or complete elimination by
an applicable tax treaty) of the foreign corporation's earnings and profits
effectively connected with a United States business that are withdrawn (or
deemed withdrawn) from investment in the United States.
This tax is payable in addition to the regular United States corporate tax.
A foreign Holder may also be subject to tax on his distributive
share of the Fund's income and gain in his country of nationality or residence
or elsewhere, against which the tax paid to the United States may in some
instances be creditable. The method of taxation in such jurisdictions may differ
considerably from the United States tax system described herein and may be
affected by the United States characterization of the Fund and its income.
Prospective foreign Holders should consult their own tax advisors with respect
to their potential tax liability in such jurisdictions, as well as in the United
States, on income derived from an investment in the Fund.
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Future Federal Income Tax Changes
Neither the Manager nor Tax Counsel can predict what additional
legislation, if any, may be proposed by members of Congress by the current
administration, or by any subsequent administration, nor can either predict
which proposals, if any, might ultimately be enacted. Moreover, neither the
Manager nor Tax Counsel can predict what changes may be made to existing
Regulations, or what revisions may occur in the Service's ruling policies. Any
such changes may have a retroactive effect. Consequently, no assurance can be
given that the federal income tax consequences of an investment in Units will
continue to be as described in this Prospectus.
State and Local Taxes
In addition to the federal income tax considerations described
above, prospective Holders should consider applicable state and local taxes
which may be imposed by various jurisdictions. A Holder's distributive share of
the income, gain or loss of the Fund will be required to be included in
determining his reportable income for state or local tax purposes in the
jurisdiction in which he is a resident. Moreover, California and a number of
other states in which the Fund may do business impose taxes on nonresident
Holders, determined with reference to their pro rata share of Fund income
derived from such states; any tax losses associated with an investment in the
Fund from operations in one state may not be available to offset income from
other sources taxable in a different state.
California and a number of other states have adopted a withholding
tax procedure in order to facilitate the collection of taxes from nonresident
and foreign Holders on Fund income derived from such states. Any amounts
withheld would be deemed distributed to the nonresident or foreign Holder and
would therefore reduce the amount of cash actually received by the nonresident
or foreign Holder as a result of such distribution. Nonresidents may be allowed
a credit for the amount so withheld against any income tax imposed by their
state of residency. The Fund cannot, at present, estimate the percentage of its
future income that will be from states which have adopted such withholding tax
procedures, and it cannot therefore estimate the required withholding tax, if
any. In addition, while the Fund may apply to the applicable taxing authority of
such states for a waiver (or a partial waiver), if any, of such withholding
requirements, no assurance can be given that such waiver will ultimately be
granted.
To the extent that a nonresident Holder pays tax to a state by
virtue of Fund operations within that state, he may be entitled to a deduction
or credit against tax owed to his state of residence with respect to the same
income. Furthermore, estate or inheritance taxes might be payable in such
jurisdiction upon the death of a Holder.
PROSPECTIVE HOLDERS SHOULD BE AWARE THAT, IN COMPUTING THEIR TAXABLE
INCOME FOR THE PURPOSE OF DETERMINING THEIR STATE INCOME TAX LIABILITIES, THEY
MAY BE SUBJECT TO RULES WHICH ARE LESS FAVORABLE THAN THOSE UNDER FEDERAL INCOME
TAX LAWS.
Need for Independent Advice
The foregoing summary is not intended as a substitute for careful
tax planning, particularly as the income tax consequences associated with an
investment in the Fund are complex and certain of them will not be the same for
all taxpayers. ACCORDINGLY, EACH PROSPECTIVE PURCHASER OF UNITS IS STRONGLY
URGED TO CONSULT HIS OWN TAX ADVISORS WITH SPECIFIC REFERENCE TO HIS OWN TAX
SITUATION.
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ERISA CONSIDERATIONS
Prohibited Transactions Under ERISA and the Code
Section 4975 of the Code (which applies to all Qualified Plans and
IRAs) and Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") (which does not apply to IRAs or to certain Qualified Plans
that are not subject to ERISA's fiduciary rules) prohibit Qualified Plans and
IRAs from engaging in certain transactions involving "plan assets" with parties
that are "disqualified persons" under the Code. "Disqualified persons" include
fiduciaries of the Qualified Plan or IRA, officers, directors, shareholders and
other owners of the company sponsoring the Qualified Plan and natural persons
and legal entities sharing certain family or ownership relationships with other
"disqualified persons."
"Prohibited transactions" include any direct or indirect transfer or
use of a Qualified Plan's or IRA's assets to or for the benefit of a
disqualified person, any act by a fiduciary that involves the use of a Qualified
Plan's or IRA's assets in the fiduciary's individual interest or for the
fiduciary's own account, and any receipt by a fiduciary of consideration for his
or her own personal account from any party dealing with a Qualified Plan or IRA.
Under ERISA, a disqualified person that engages in a prohibited transaction will
be required to disgorge any profits made in connection with the transaction and
will be required to compensate any Qualified Plan that was a party to the
prohibited transaction for any losses sustained by the Qualified Plan. Section
4975 of the Code imposes excise taxes on a disqualified person that engages in a
prohibited transaction with a Qualified Plan or IRA. Section 408(e)(2) of the
Code provides that an IRA will cease to be an IRA and will be treated as having
immediately distributed all of its assets, if it engages in a prohibited
transaction.
Plan Assets
If the Fund's assets were determined under ERISA or the Code to be
"plan assets" of Qualified Plans and/or IRAs holding Units, fiduciaries of such
Qualified Plans and IRAs might under certain circumstances be subject to
liability for actions taken by the Manager or its Affiliates, and certain of the
transactions described in this Prospectus in which the Fund might engage,
including certain transactions with Affiliates of the Fund, might constitute
prohibited transactions under the Code and ERISA with respect to such Qualified
Plans and IRAs, even if their acquisition of Units did not originally constitute
a prohibited transaction. Moreover, Qualified Plans (other than IRAs) might be
deemed to have delegated their fiduciary responsibility to the Manager in
violation of ERISA.
Although under certain circumstances ERISA and the Code, as
interpreted by the Department of Labor in currently effective regulations, apply
a "look-through" rule under which the assets of an entity in which a Qualified
Plan or IRA has made an equity investment may generally constitute "plan
assets," the applicable regulations except from the application of the
"look-through" principle investments in entities in which equity participation
in the entity by benefit plan investors is not significant.
In order to qualify for the exception described above, "benefit plan
investors" must at all times hold less than 25% of the value of any class of
equity interest in the entity. For this purpose, the value of any equity
interests held by a person (other than a "benefit plan investor") who has
discretionary authority or control with respect to the assets of an entity or
any person who provides investment advice for a fee (direct or indirect) with
respect to such assets, or any affiliate of such a person, is disregarded. A
"benefit plan investor" is any of the following: (a) any employee benefit plan
(as defined in Section 3(3) of ERISA, which definition includes Qualified
Plans), whether or not it is subject to the provisions of Title I of ERISA, (b)
any plan described in Section 4975(e)(1) of the Code (which description includes
Qualified Plans and IRAs), and (c) any entity (such as a common or collective
trust fund of a bank) whose underlying assets include plan assets by reason of a
plan's investment in the entity. As described above under "Who Should Invest"
and below under "Summary of the Operating Agreement - Transferability of Units,"
the sale of Units during this offering and the subsequent transfer of
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Units will be limited to the extent that the Manager deems it necessary to
qualify for this exception. Therefore, the Fund's assets should not be "plan
assets" of any Qualified Plan or IRA investor; and no prohibited transaction
should occur based on treatment of the Fund's underlying assets as "plan assets"
of Qualified Plan or IRA investors.
Other ERISA Considerations
In addition to the above considerations in connection with the "plan
asset" question, a fiduciary's decision to cause a Qualified Plan or IRA to
acquire Units should involve, among other factors, considerations that include
whether (a) the investment is in accordance with the documents and instruments
governing the Qualified Plan or IRA, (b) the purchase is prudent in light of the
potential difficulties that may exist in liquidating Units, (c) the investment
will provide sufficient cash distributions in light of the Qualified Plan's
likely required benefit payments, (d) after an acquisition of Units, the
Qualified Plan's investments taken as a whole are sufficiently diversified so as
to minimize the risk of large losses, (e) the investment is made solely in the
interests of plan participants, and (f) the fair market value of Units will be
sufficiently ascertainable, with sufficient frequency, to enable the Qualified
Plan to value its assets on an annual basis in accordance with the Qualified
Plan's rules and policies. Prospective Qualified Plan investors should note
that, with respect to the diversification of assets requirement, the legislative
history of ERISA and a Department of Labor advisory opinion indicate that in
determining whether the assets of a Qualified Plan that has invested in an
entity such as the Fund are sufficiently diversified, it may be relevant to look
through the Qualified Plan's interest in the entity to the underlying portfolio
of assets owned by the entity, regardless of whether the entity's underlying
assets are treated as "plan assets" for the purpose of ERISA's and the Code's
prohibited transaction and other fiduciary duty rules.
SUMMARY OF THE OPERATING AGREEMENT
The Operating Agreement (attached hereto as Exhibit B) is the
governing instrument establishing the Fund's right under the laws of the State
of California to operate as a limited liability company, and contains the rules
under which the Fund will be operated. The Operating Agreement will be executed
on behalf of each subscriber upon his admission to the Fund by the Manager
acting pursuant to the power of attorney contained in the Subscription
Agreement.
The following is a brief summary of certain provisions of the
Operating Agreement. It does not purport to be complete and it is recommended
that each prospective investor review the Operating Agreement carefully in its
entirety. Aspects of the Operating Agreement relating to allocations of Net
Income, Net Loss and Distributions to Holders and reports to the Members are
summarized elsewhere in this Prospectus. See "Income, Losses and Distributions"
and "Reports to Holders."
The Duties of the Manager
ATEL Financial Corporation is Manager of the Fund and has the
exclusive management and control of all aspects of the business of the Fund.
Affiliates of the Manager will perform certain Equipment acquisition, leasing,
management and disposition services, as well as certain administrative services,
for the Fund. In the course of its management, the Manager may, in its absolute
discretion, acquire, hold title to, sell, re-lease or otherwise dispose of
Equipment and interests therein when and upon such terms as it determines to be
in the best interest of the Fund and employ such persons, including Affiliates
of the Manager, as it deems necessary for the efficient operation of the Fund.
However, prior to the sale or other disposition of Substantially All of the
Assets of the Fund in any single 12-month period, except upon liquidation of the
Fund, Holders owning more than 50% of the total outstanding Units must consent
to such sale or other disposition.
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Liability of Holders
A Holder's capital is subject to the risks of the Fund's business.
He is not permitted to take any part in the management or control of the
business and he may not be required to contribute additional capital at any
time. Under the California Act, a Holder will not be liable for Fund obligations
in excess of his unreturned capital contribution and share of undistributed
profits. Notwithstanding the foregoing, a Holder will be liable to the Fund in
an amount equal to any Distribution made by the Fund to such Holder to the
extent that, immediately after the Distribution is made, all liabilities of the
Fund, other than liabilities to Members on account of their interest in the Fund
and liabilities as to which recourse of creditors is limited to specified
property of the Fund, exceed the fair value of the Fund assets, provided that
the fair value of any property that is subject to a liability as to which
recourse of creditors is so limited is included in the Fund assets only to the
extent that the fair value of the property exceeds such liability.
Term and Dissolution
The Fund will continue for a maximum period ending December 31,
2019, but may be dissolved at an earlier date if certain contingencies occur.
The Fund intends to liquidate its assets and distribute the proceeds thereof
beginning after the Reinvestment Period expires (at the end of the sixth full
year following the year during which the Final Closing Date occurs) with final
liquidation expected to occur approximately ten to eleven years after the Final
Closing Date. A Holder may not withdraw from the Fund prior to dissolution, but
may assign his Units to others or may, under certain circumstances, request that
the Fund repurchase his Units. See "Repurchase of Units" below under this
caption. The contingencies whereupon the Fund may be dissolved are as follows:
(a) The Fund becomes insolvent or bankrupt;
(b) The removal, adjudication of bankruptcy, insolvency, disability
or incompetence or dissolution or death of a Manager unless (i) there is a
remaining Manager, and the remaining Manager, within 45 days of the date of such
event, elects to continue the business of the Fund or (ii) if, upon removal of
the last remaining Manager, the Members holding in excess of 50% of the
outstanding Units elect a successor Manager prior to the effective date of
removal and such successor Manager elects to continue the business of the Fund;
(c) An election to dissolve upon the vote of Members owning more
than 50% of the total outstanding Units; or
(d) The disposition of all interests in Equipment and other assets
of the Fund and the receipt by the Fund of the proceeds of such disposition.
Voting Rights of Members
In any vote of the Members, each Member will be entitled to cast one
vote for each Unit which such Member owns as of the date designated as the
record date for such vote. Notwithstanding the foregoing, Units held by the
Manager or any Affiliate of the Manager will not be entitled to vote, and will
not be deemed to be "outstanding" for purposes of any vote, upon matters which
involve a conflict between the interests of the Manager and the Fund, including,
but not limited to, any vote on the proposed removal or withdrawal of the
Manager as Manager or any proposed amendment to the Operating Agreement which
would expand or extend the rights, authorities or powers of the Manager. The
Members have the right, by vote of Members owning more than 50% of the total
outstanding Units, to vote upon:
(a) Removal or voluntary withdrawal of the Manager;
(b) Election of a successor Manager;
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(c) Termination and dissolution of the Fund;
(d) Amendment of the Operating Agreement, provided such amendment is
not for the purpose of reflecting the addition or substitution of Members, the
reduction of Capital Accounts or for any other purposes prohibited under the
Operating Agreement as described below;
(e) The sale or other disposition of Substantially All of the Assets
in a single sale, or in multiple sales in the same twelve-month period, except
in the liquidation and winding up of the business of the Fund upon its
termination and dissolution; and
(f) The extension of the term of the Fund.
Without the consent of the Members to be adversely affected by the
amendment, the Operating Agreement may not be amended so as to (i) convert a
Holder into a Manager; (ii) modify the limited liability of a Holder; (iii)
alter the interest of the Members in Net Income, Net Loss and Distributions; or
(iv) affect the status of the Fund as a partnership for federal income tax
purposes.
Dissenters' Rights and Limitations on Mergers and Roll-ups
Section 16.7 of the Operating Agreement provides that Members
holding not less than 90% of the outstanding Units must approve any proposal
that involves an acquisition, conversion, merger or consolidation transaction in
which the Holders are issued new securities in the resulting entity. The rights
of any dissenting Holders will be as provided under Section 16.7 and Sections
17600 through 17613 of the California Act. Such provisions generally give a
dissenting Member the right, subject to certain procedural requirements, to
require that the company repurchase the dissenting Member's interest at a price
equal to its fair market value.
Meetings
The Manager may at any time call a meeting of the Members or a vote
of the Members without a meeting, on matters on which they are entitled to vote,
and shall call such meeting or for a vote without a meeting following receipt of
a written request therefore of Members holding 10% or more of the total
outstanding Units. Upon such written request of Members holding 10% or more of
the total outstanding Units, such Members may propose a vote by all Members on
any matter on which Members are entitled to vote under the Operating Agreement.
Books of Account and Records
The Manager is responsible for keeping books of account and records
of the Fund reflecting all of the contributions to the capital of the Fund and
all of the expenses and transactions of the Fund. Such books of account and
records will include the following:
(i) A current list of the full name and last known business
or residence address of each Member set forth in alphabetical order
together with the Original Invested Capital, the Units held and the
share in Net Income and Net Loss of each Member;
(ii) A copy of the articles of organization and all
amendments;
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(iii) Copies of the Fund's federal, state and local income
tax or information returns and reports, if any, for the six most recent taxable
years;
(iv) Copies of the original of the Operating Agreement and
all amendments;
(v) Financial statements of the Fund for the six most recent
fiscal years; and
(vi) The Fund's books and records for at least the current
and past three fiscal years.
Such books of account and records will be kept at the principal
place of business of the Fund in the State of California, and each Member and
his authorized representatives shall have, at all times during reasonable
business hours, free access to and the right to inspect and copy at their
expense such books of account and all records of the Fund. Upon the request of a
Member, the Manager shall promptly deliver to such Member at the expense of the
Fund a copy of the information described in (i), (ii) and (iv) above. In the
event a Member is required to compel the Manager to produce the foregoing
records as a result of the Manager's breach of its obligation to deliver such
information, the Manager shall reimburse the Member for all reasonable costs
actually incurred in compelling production.
Status Of Units
Each Unit will be fully paid and nonassessable and all Units have
equal voting and other rights, except as noted above with respect to the voting
of Units held by the Manager or its Affiliates.
Transferability of Units
The Manager may condition the effectiveness of any proposed transfer
of Units or an interest in Units on such representations, warranties, opinions
of counsel, and other assurances as it considers appropriate as to:
(i) such assignment or transfer not resulting, in the opinion of
counsel for the Fund, in the Fund being considered to have
terminated within the meaning of Section 708 of the Code;
(ii) the transferee not being a minor or an incompetent;
(iii) the transfer or assignment not violating federal or state
securities laws;
(iv) the transferor or the transferee not holding Units representing
Original Invested Capital of less than $2,500 ($2,000 in the case of IRAs and
Keogh Plans);
(v) such assignee or transferee being a Citizen of the United
States;
(vi) such assignment or transfer not constituting a transfer "on a
secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code or otherwise adversely affecting the tax status of the
Fund;
(vii) such assignment or transfer not causing Fund assets to be
deemed Plan Assets under ERISA; and
(viii) the transferor filing with the Fund a duly executed and
acknowledged counterpart of the instrument effecting such assignment or
transfer, which instrument evidences the written acceptance by the assignee or
transferee of all of the terms
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and provisions of the Operating Agreement, contains a representation that such
assignment or transfer was made in accordance with all applicable laws and
regulations (including any investor suitability requirements) and in all other
respects is satisfactory in form and substance to the Manager.
In connection with state securities laws restrictions on transfer,
Section 260.141.11 of the Rules of the California Commissioner of Corporations
states:
(a) The issuer of any security upon which a restriction on
transfer has been imposed pursuant to Sections 260.102.6, 260.141.10
or 260.534 of the Rules of the California Corporations Commissioner
shall cause a copy of this section to be delivered to each issuee or
transferee of such security at the time the certificate evidencing
the security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to
consummate a sale or transfer of such security, or any interest
therein, without the prior written consent of the Commissioner
(until this condition is removed pursuant to Section 260.141.12 of
the Rules of the California Corporations Commissioner), except: (1)
to the issuer; (2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102 of
the Corporations Code of the State of California or Section
260.105.14 of the Rules of the California Corporations Commissioner;
(4) to the transferor's ancestors, descendants, or spouse, or any
custodian or trustee for the account of the transferor or the
transferor's ancestors, descendants, or spouse; or to a transferee
by a trustee or custodian for the account of the transferee or the
transferee's ancestors, descendants, or spouse; (5) to holders of
securities of the same class of the same issuer; (6) by way of gift
or donation inter vivos or on death; (7) by or through a
broker-dealer licensed under the Corporations Code of the State of
California (either acting as such or as a finder) to a resident of a
foreign state, territory, or country who is neither domiciled in the
State of California to the knowledge of the broker-dealer, nor
actually present in the State of California if the sale of such
securities is not in violation of any securities law of the foreign
state, territory, or country concerned; (8) to a broker-dealer
licensed under the Corporations Code of the State of California in a
principal transaction, or as an underwriter or member of an
underwriting syndicate or selling group; (9) if the interest sold or
transferred is a pledge or other lien given by the purchaser to the
seller upon a sale of the security for which the California
Corporations Commissioner's written consent is obtained or is not
required under Section 260.141.11 of the Rules of the California
Corporations Commissioner; (10) by way of a sale qualified under
Section 25111, 25112, 25113, or 25121 of the Corporations Code of
the State of California, of the securities to be transferred,
provided that no order under Section 25140 or subdivision (a) of
Section 25143 of the Corporations Code of the State of California is
in effect with respect to such qualification; (11) by a corporation
to a wholly-owned subsidiary of such corporation, or by a
wholly-owned subsidiary of a corporation to such corporation; (12)
by way of an exchange qualified under Section 25111, 25112, or 25113
of the Corporations Code of the State of California, provided that
no order under Section 25140 or subdivision (a) of Section 25143 of
the Corporations Code of the State of California is in effect with
respect to such qualification; (13) between residents of foreign
states, territories, or countries who are neither domiciled nor
actually present in the State of California; (14) to the California
State Controller pursuant to the Unclaimed Property Law or to the
administrator of the unclaimed property law of another state; or
(15) by the California State Controller pursuant to the Unclaimed
Property Law or by the administrator of the unclaimed property law
of another state if, in either such case, such person (i) discloses
to potential purchasers at the sale that transfer of the securities
is restricted under Section 260.141.11 of the Rules of the
California Corporations Commissioner, (ii) delivers to each
purchaser a copy of Section 260.141.11 of the Rules of the
California Corporations Commissioner, and (iii) advises the
California Corporations Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does not
involve a change in the beneficial ownership of the securities;
provided that any such transfer is on the condition that any
certificate evidencing the security issued to such transferee shall
contain the legend required
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by Section 260.141.11 of the Rules of the California Corporations
Commissioner; or (17) by way of an offer and sale of outstanding
securities in an issuer transaction that is subject to the
qualification requirement of Section 25110 of the Corporations Code
but exempt from that qualification requirement by subdivision (f) of
Section 25102.
(c) The certificates representing such securities subject to
such a restriction on transfer, whether upon initial issuance or
upon any transfer thereof, shall bear on their face a legend,
prominently stamped or printed thereon in capital letters of not
less than 10-point size, reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY,
OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE
COMMISSIONER'S RULES."
Any assignment, sale, exchange or other transfer in contravention of
any of the provisions of the Operating Agreement shall be void and ineffectual,
and shall not bind or be recognized by the Fund.
An Assignee of Record will be entitled to receive allocations and
Distributions from the Fund attributable to the Units acquired by reason of such
assignment from and after the effective date of the assignment of such Units to
him; provided, however, the Fund and the Manager will be entitled to treat the
assignor of such Units as the absolute owner thereof in all respects, and will
incur no liability for allocations of Net Income, Net Loss or Distributions, or
transmittal of reports and notices requested to be given to Holders which are
made in good faith to such assignor until such time as the written instrument of
assignment has been received by the Fund and recorded on its books and the
effective date of an assignment of Units has passed. The effective date of an
assignment of Units and the date on which the Assignee shall be deemed an
Assignee of Record shall be the first day of the first full fiscal quarter
following the later of (i) the date set forth on the written instrument of
assignment, or (ii) the date on which the Fund has actual notice of the
assignment.
All costs and expenses incurred by the Fund in connection with the
transfer of a Unit shall be paid by the transferring Holder.
An Assignee may only be substituted as a Member in the place of the
assignor with the prior consent of the Manager, which consent may be withheld in
the Manager's sole discretion. Any substituted Member must also agree to be
bound by the provisions of the Operating Agreement. The Manager shall cause the
Operating Agreement to be amended to reflect the substitution of Members at
least once in each fiscal quarter.
The Manager will, with respect to any Units owned by it, enjoy all
of the rights, other than the right to request that the Fund repurchase any such
Units, and be subject to all of the obligations and duties of a Member, except
as noted above under "Voting Rights of Members."
Repurchase of Units
In the event a Holder ceases to be a United States Citizen or
Resident Alien for any reason, he must immediately notify the Fund and may be
required to tender his Units to the Fund for repurchase in order to protect the
Fund's interest in certain leases. The Fund will have the absolute right, but no
obligation, to repurchase the Units for a price equal to the Unit Holder's
capital account, computed in accordance with federal tax accounting principles,
allocable to the repurchased Units as of the last day of the quarter during
which the precipitating event occurs.
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Upon any repurchase of Units by the Fund, the Units will be canceled
and will no longer be deemed to represent an interest in the Fund, and the
interests of all other Unit holders will be adjusted accordingly. The Manager
may, in its discretion and on such terms as it deems appropriate, repurchase
Units in the event that it deems such repurchase in the best interests of the
Fund, but the Fund is in no event required to make any such repurchase. No such
repurchase may be effected if it would impair the capital of the Fund or cause
the Fund or any remaining Unit holder to suffer a material adverse tax
consequence.
Indemnification of the Manager
The Operating Agreement provides that the Manager and its affiliates
who perform services for the Fund will be indemnified against any liability or
loss arising out of any act or omission by any such Person when acting in
connection with the business of the Fund, provided that such Person determines
in good faith that its conduct was in the best interest of the Fund and,
provided further, that its conduct did not constitute fraud, negligence, breach
of fiduciary duty or misconduct. The Operating Agreement also provides that, to
the extent permitted by law, the Fund will indemnify the Manager against
liability and related expenses (including attorneys' fees) incurred in dealing
with third parties, provided that the conduct of the Manager is consistent with
the standards described in the preceding sentence. A successful claim for such
indemnification would deplete the Fund's capital assets by the amount paid.
The Manager will not be indemnified against liabilities arising
under the Securities Act of 1933. Furthermore, the Manager has agreed to
indemnify the Fund against any loss or liability it may incur as a result of any
violation of state or federal securities laws by the Manager or its Affiliates.
The Fund will not pay for any insurance covering liability of the Manager or any
other persons for actions or omissions for which indemnification is not
permitted by the Operating Agreement, provided, however, that this will not
preclude the naming of the Manager or any Affiliates as additional insured
parties on policies obtained for the benefit of the Fund to the extent that
there is no additional cost to the Fund.
The Manager will have fiduciary responsibility for the safekeeping
and use of all funds and assets of the Fund. See "Fiduciary Duty of the
Manager."
PLAN OF DISTRIBUTION
Distribution
The Units will be offered and sold on a "best efforts
minimum/maximum" basis through ATEL Securities Corporation (the "Dealer
Manager"), a broker-dealer which is an Affiliate of the Manager (see "Conflicts
of Interest" and "Management"), and through other participating broker-dealers
who are members of the National Association of Securities Dealers, Inc.
("NASD"). The Dealer Manager will manage the selling group and provide certain
wholesaling services. Although the Dealer Manager may participate in the
offering on the same basis as other broker-dealers, it has not in the past
effected, nor does it anticipate in this offering directly effecting, any
significant sales of the Units. The Dealer Manager is a wholly-owned subsidiary
of ATEL formed solely to manage offerings sponsored by ATEL and its Affiliates.
The minimum offering amount is $1,200,000 (120,000 Units) and the
maximum is $150,000,000 (15,000,000 Units).
The minimum subscription is 250 Units ($2,500); provided that an IRA
or Keogh Plan may subscribe for a minimum of 200 Units ($2,000). Additional
investments may subsequently be made in a minimum amount of 50 Units ($500), and
additional one-Unit ($10) increments.
The broker-dealers are not obligated to obtain any subscriptions,
and there is no assurance that any Units will be sold.
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Subscriptions will be effective only on acceptance by the Manager
and the right is reserved to reject any subscription in whole or in part. The
Subscription Agreement provided to the investor for execution must be
accompanied by a copy of this Prospectus, and each subscriber has the right to
cancel his or her subscription during a period of five business days after the
subscriber has submitted the executed Subscription Agreement to the
broker-dealer through which the Units are sold. The Fund and/or the selling
broker-dealer will send each investor a written confirmation of the acceptance
of the investor's subscription for Units upon admission to the Fund.
The offering will terminate on a date not later than two years from
the date of this Prospectus. The offering of Units after the end of one year
from the date hereof will be subject to renewal or requalification in all those
jurisdictions requiring such renewal or requalification. However, the offering
may be terminated at any time by the Manager. If subscriptions for a minimum of
120,000 Units have not been received and accepted prior to a date one year from
the date hereof, all funds received will be promptly returned together with any
interest earned thereon.
Selling Compensation and Certain Expenses
The Dealer Manager will receive selling commissions in an amount
equal to 9.5% of the Gross Proceeds, and will reallow to participating
broker-dealers selling commissions equal to 8% of the Gross Proceeds
attributable to Units sold by them. Out of the 1.5% of the selling commissions
retained by the Dealer Manager, it will pay wholesaling compensation in the form
of salaries and commissions to its personnel and certain participating
broker-dealers, reimburse certain wholesaling expenses incurred by participating
broker-dealers and reimburse amounts which may be advanced by ATEL for certain
overhead expenses of the Dealer Manager and its personnel.
The Dealer Manager (out of its compensation equal to 1.5% of the
Gross Proceeds) or the Fund (up to a maximum amount equal to 0.5% of the Gross
Proceeds) may pay or reimburse participating dealers a portion of their actual
expenses in connection with this offering (including expenses incurred in
coordinating their sales efforts, training their personnel and expenses
incurred, by such broker-dealers as the Dealer Manager shall designate, in
performing "wholesaling" functions). The Fund may also pay or reimburse
participating dealers for their due diligence expenses. Subject to NASD approval
and compliance with Rule 2810(b)(4)(E) of the NASD's Conduct Rules, the Fund,
the Manager or the Dealer Manager may establish noncash sales incentive programs
for sales representatives of participating dealers, provided that the aggregate
value of any noncash incentive awards to any individual by the Manager or any of
its Affiliates during any year does not exceed the sum of $100. The total of all
selling compensation, including sales commissions, wholesaling salaries and
commissions, retail and wholesaling expense reimbursements, broker dealer and
investment seminar expenses, non-cash incentive payments and any other forms of
compensation paid to the Dealer Manager or other participating broker-dealers
(including any unreimbursed overhead costs of the Dealer Manager advanced by
ATEL), will not exceed 10% of the Gross Proceeds, except that up to an
additional 0.5% of the Gross Proceeds may, in the sole discretion of the
Manager, be paid in connection with accountable, bona fide due diligence
activities.
The Manager has agreed to indemnify the participating
broker-dealers, including the Dealer Manager, against certain liabilities
arising under the Securities Act of 1933, as amended.
At various times during the offering period the Manager may elect to
pay a portion of the set-up fees for IRAs which purchase Units. The Manager will
pay a maximum of $25 toward such fees for each IRA which purchases the minimum
number of Units or more.
The Fund will not pay referral or similar fees to any accountants,
attorneys or other persons in connection with the distribution of Units.
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Escrow Arrangements
Until the minimum number of subscriptions are received and the
initial subscribers are admitted to the Fund, subscription checks will be made
payable to, and subscription funds will be held in an escrow account at, U.S.
Bank, National Association, San Francisco, California (the "Bank"). Until such
time all participating broker-dealers will forward subscription checks to the
Dealer Manager promptly but in no event later than noon of the next business day
following receipt thereof, and the Dealer Manager will forward such
subscriptions to the bank escrow agent promptly, but in no event later than noon
of the second business day following receipt thereof by the Dealer Manager.
Subscription proceeds held in the escrow account will be invested in
United States government securities, including Treasury bills, securities issued
or guaranteed by United States government agencies, certificates of deposit and
time or demand deposits in banks and savings and loan associations which are
insured by United States government agencies or deposits in members of the
Federal Home Loan Bank System, as directed by the Manager. Subscribers may not
withdraw funds from the escrow account. Upon the earlier of termination of the
offering or satisfaction of the escrow condition, any interest which accrues on
funds held in escrow will be distributed to subscribers and allocated among them
on the basis of the respective amounts of the subscriptions and the number of
days that such amounts were on deposit in the escrow account.
Notwithstanding the foregoing, subscriptions received from
Pennsylvania subscribers will be placed in a separate escrow account and will
not be counted toward satisfaction of the minimum escrow condition. Instead,
such Pennsylvania subscriptions will be released to the Fund only at such time
as total subscription proceeds received by the Fund from all subscribers,
including the escrowed Pennsylvania subscriptions, equal not less than $7.5
million in Gross Proceeds.
The Original Invested Capital of the initial subscribers will be
transferred from escrow to the Fund at any time after subscriptions for the
minimum of 120,000 Units have been accepted by the Manager and received and
collected by the bank escrow agent, and such subscribers will be admitted to the
Fund within 15 days thereafter. Subsequent subscribers will have their
subscriptions accepted or rejected within 30 days after receipt. Investors whose
subscriptions are accepted will be admitted to the Fund promptly after such
acceptance, but not later than 30 days thereafter. Rejected subscription funds
will be promptly returned.
The Bank's sole role in this offering is that of escrow holder and
as such it has not reviewed any of the offering materials and makes no
representations whatsoever as to the nature of this offering or its compliance
or lack thereof with any applicable state or federal laws, rules or regulations.
The Bank neither endorses, recommends nor guarantees the purchase, value or
repayment or any other aspect of an investment in the Units. The Bank does not
represent the interests of the Members or potential investors. Its duties are
limited as expressly set forth in the Escrow Agreement and interested parties
may request a copy of the Escrow Agreement from the Manager. Pursuant to the
terms of the Escrow Agreement, the Fund has directed the Bank to distribute to
the subscribers any interest earned on funds held in escrow as described above
under this caption.
Investments By Certain Persons
The Manager and its Affiliates may, but do not currently intend to,
acquire such number of Units as they determine. Except as noted below, any Units
purchased by the Manager or its Affiliates will be purchased on the same terms
as the other Units offered hereby. Such Units will be acquired solely for
investment and not with a view to or for distribution. Any Units acquired by
such Persons will not be applied to the requirement that a minimum of 120,000
Units be purchased by all subscribers.
The Manager, the Dealer Manager or the broker-dealers engaged by the
Dealer Manager to sell the Units, or any of their Affiliates or employees, may
purchase Units in this offering net of the 8% retail selling commissions at a
per Unit price
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of $9.20. In addition, clients of an investment advisor which is registered
under the Investment Advisors Act of 1940 and is an Affiliate of a participating
broker-dealer may also purchase Units with reduced selling commissions, subject
to the express approval of such participating broker-dealer Affiliate, if the
client (i) has been advised by such advisor over a continuous course of time on
investments other than the purchase of Units, and (ii) is not being charged by
the advisor or its Affiliates, through the payment of commissions or otherwise,
for the advice rendered by such advisor specifically in connection with the
purchase of Units. In no event will the net contribution to the Fund by such
persons be less than $9.20 per Unit. The Dealer Manager may require that any
investor claiming the right to purchase on the foregoing terms demonstrate the
basis for such right through reasonable documentation and certification. Sales
to any such purchasers on such terms would be for investment purposes only, and
the Fund and the Manager would not recognize any attempted transfer of such
Units unless the Manager is satisfied that the original purchase was not made
with a view to distribution of the securities and that any proposed transfer was
in compliance with all applicable laws and regulations, including the NASD's
Rules of Fair Practice.
State Requirements
In addition to the investor suitability and minimum investment
standards established by the Fund and described under "Who Should Invest" above,
the securities administrators of certain states have imposed more restrictive
standards on investments in Units effected within their jurisdictions. Any such
additional requirements imposed after the date of this Prospectus will be
reflected in a supplement hereto, and investors are urged to review any such
supplement to ascertain whether more restrictive standards are applicable to
their investment.
The following states have imposed additional conditions on
investments in such jurisdictions:
Iowa. The minimum investment for all IRAs in Iowa is $2,500 (250
Units).
Maine. The minimum amount which may be invested by a Maine investor
on any subscription, whether an initial investment or any subsequent investment,
is $2,500 (250 Units), or $2,000 (200 Units) for IRAs and Qualified Plans.
Michigan. An investor in Michigan may not invest in Units any
amount in excess of 10% of the investor's net worth (exclusive of home, home
furnishings and automobiles)
Missouri. Each Missouri investor must (i) have an annual gross
income of at least $60,000 and a net worth (exclusive of home, home furnishings
and automobiles) of at least $60,000 in excess of his Original Invested Capital;
or (ii) have a net worth (determined with the same exclusions) of at least
$225,000 in excess of his Original Invested Capital.
Nebraska. The minimum investment for all investors in Nebraska,
except IRAs and Keogh Plans, is $5,000 (500 Units).
New Hampshire. Each New Hampshire investor must (i) have an annual
gross income of at least $50,000 and a net worth (exclusive of home, home
furnishings and automobiles) of at least $125,000 in excess of his Original
Invested Capital; or (ii) a net worth (exclusive of home, home furnishings and
automobiles) of at least $250,000 in excess of his Original Invested Capital.
North Carolina. Each North Carolina investor must (i) have an annual
gross income of at least $60,000 and a net worth (exclusive of home, home
furnishings and automobiles) of at least $60,000 in excess of his Original
Invested Capital; or (ii) have a net worth (determined with the same exclusions)
of at least $225,000 in excess of his Original Invested Capital.
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<PAGE>
Ohio. An Ohio investor may not invest in Units an amount in
excess of 10% of the investor's net worth.
Pennsylvania. In addition to the investor suitability standards set
forth under "Who Should Invest," an investor in Pennsylvania may not invest in
Units an amount in excess of 10% of the investor's net worth (with such net
worth calculated exclusive of home, home furnishings and automobiles).
Furthermore, Pennsylvania subscriptions will be subject to a separate escrow and
will be released to the Fund only when the Fund has received aggregate
subscriptions from all investors equal to not less than $7.5 million. See
"Escrow Arrangements" above.
REPORTS TO HOLDERS
The Fund fiscal year will be the calendar year; provided, however,
that the Manager may, subject to the approval of applicable taxing authorities,
adopt another fiscal year if they deem it to be in the Fund's best interest.
The Fund will furnish to each Holder certain reports, statements
and tax information, as set forth in Article 14 of the Operating Agreement. The
Manager shall have prepared and distributed at least annually, at the Fund's
expense, (i) a statement of cash flow, (ii) Fund information necessary in the
preparation of each Holder's federal income tax returns; (iii) a report of the
business of the Fund; (iv) a statement as to the compensation received by the
Manager and its Affiliates from the Fund during the year; (v) a report
identifying the sources of all Fund Distributions for the year; and (vi) a
special report containing an opinion of a certified public accounting firm and a
breakdown of the costs reimbursed by the Fund to the Manager or its Affiliates.
Following the close of each taxable year of the Fund, the Fund will distribute
to the Holders copies of the annual report and annual financial statements
(balance sheet, statement of income or loss, statement of members' equity and
statement of cash flow, accompanied by a report containing an opinion of
independent certified public accountants) within 120 days thereafter, and such
statements will be prepared on an accrual basis in accordance with generally
accepted accounting principals; and all Fund information necessary in the
preparation of their federal income tax returns within 75 days after the end of
each fiscal year. The Manager does not intend to cause the Fund to prepare and
distribute any reconciliation between the financial information contained in the
foregoing reports and the information furnished to Holders for income tax
purposes.
During the offering period and until the Fund is fully invested, the
Fund will also furnish to each Holder, at least quarterly, information
concerning the investments of the Fund.
The Fund will also furnish to each Holder a quarterly report
covering each of the first three quarters of Fund operations in each calendar
year, including unaudited financial statements (each of which shall include a
balance sheet, statement of income or loss for said quarterly period and
statement of Cash from Operations and Cash from Sales or Refinancing for said
quarterly period) and a statement of other pertinent information regarding the
Fund and its activities during the quarterly period covered by the report.
Copies of such statements and other pertinent information shall be distributed
to each Holder within 60 days after the close of the quarterly period covered by
the report of the Fund.
SUPPLEMENTAL SALES MATERIAL
In addition to and apart from this Prospectus, the Fund may use
certain sales material in connection with the offering of Units. In certain
jurisdictions such sales material may not be available. This material will
include information relating to this offering, the Manager and its Affiliates
and brochures and articles and publications concerning equipment leasing.
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<PAGE>
The Fund will use only sales material which has been approved by
such appropriate regulatory bodies as may be required. The offering is made only
by means of this Prospectus. Although the information contained in such sales
material does not conflict with any of the information contained in this
Prospectus, such material does not purport to be complete, and should not be
considered as part of this Prospectus or the registration statement of which
this Prospectus is a part, or as incorporated by reference in this Prospectus or
said registration statement or as forming the basis of the offering of Units
which are offered hereby.
LEGAL OPINIONS
The legality of the Units has been passed upon by Derenthal &
Dannhauser, San Francisco, California, and the statements under the captions
"Income Tax Consequences" and "ERISA Considerations" as they relate to federal
income tax and ERISA matters have been reviewed and passed upon by Jackson,
Tufts, Cole & Black, San Francisco, California.
EXPERTS
The consolidated balance sheet of ATEL Financial Corporation and
subsidiary at July 31, 1998 and the financial statements of ATEL Capital
Equipment Fund VIII, LLC at October 7, 1998, and for the period from July 31,
1998 (inception) through October 7,1998, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Fund has filed with the Securities and Exchange Commission,
Washington, D.C., a registration statement under the Securities Act of 1933, as
amended, with respect to the Units offered pursuant to this Prospectus. For
further information, reference is made to the registration statement and the
exhibits thereto which are available for inspection at no fee in the principal
office of the Commission at 450 Fifth Street, Northwest, Washington, D.C. 20549.
The Fund is subject to the informational requirements of the Securities Exchange
Act of 1934 and in accordance therewith files reports and other information with
the Securities and Exchange Commission. Such reports, the registration statement
and other information are available for inspection and copying at the above
address, and are also available to be viewed and retrieved without charge on the
Commission's electronic data gathering and retrieval (EDGAR) system, at its
internet web site at www.sec.gov. In addition, photostatic copies of the
material containing this information may be obtained from the Commission upon
paying of the fees prescribed by the rules and regulations of the Commission.
This Prospectus contains a fair summary of the material provisions of the
exhibits filed with the Commission. This Prospectus does not knowingly contain
any untrue statement of a material fact or omit to state any material fact
required to be stated herein or necessary to make the statements herein not
misleading.
GLOSSARY
The following terms used in this Prospectus shall (unless otherwise
expressly provided herein or unless the context otherwise requires) have the
following respective meanings:
"Acquisition Expenses" shall mean expenses including, but not
limited to, legal fees and expenses, travel and communication expenses, costs of
appraisals, accounting fees and expenses, and miscellaneous expenses relating to
selection and acquisition of Equipment, whether or not acquired.
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<PAGE>
"Acquisition Fees" shall mean the total of all fees and commissions
paid by any party in connection with the initial purchase or manufacture of
Equipment. Included in the computation of such fees or commissions shall be any
commission, selection fee, financing fee, nonrecurring management fee, or any
fee of a similar nature, however designated.
"Adjusted Invested Capital" shall mean, as of any date, the
Original Invested Capital attributable to the Units held by any Person on or
before such date, as decreased (but not below zero) by the amount by which (i)
all Distributions with respect to such Units on or before the date of
determination pursuant to any provision of the Operating Agreement exceed (ii)
the Priority Distribution attributable to such Units for such period.
"Affiliate" of a Person shall mean (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person;
(ii) any Person owning or controlling 10% or more of the outstanding voting
securities or beneficial interests of such Person, (iii) any officer, director,
trustee or partner of such Person and (iv) if such Person is an officer,
director, trustee, partner or holder of 10% or more of the voting securities or
beneficial interests of such Person, any other company for which such Person
acts in such capacity. However, such term shall not include a Person who is a
partner in a partnership or joint venture with the Fund if such Person is not
otherwise an Affiliate.
"Asset Management Fee" shall mean the fee payable to the Manager and
its Affiliates under the provisions of Section 8.2 of the Operating Agreement.
See "Management Compensation."
"Asset Management Fee Limit" means the total fees calculated
pursuant to the alternative fee schedule set forth under Section 8.3 of the
Operating Agreement, equal to the aggregate of an Equipment Management Fee,
Incentive Management Fee, and Equipment Resale/Re-Leasing Fee, plus the Carried
Interest, determined in the manner described therein.
"Assignee" shall mean a Person who has acquired a beneficial
interest in one or more Units from a third party but who is neither a
substituted Holder nor an Assignee of Record.
"Assignee of Record" shall mean an Assignee who has acquired a
beneficial interest in one or more Units whose ownership has been recorded on
the books of the Fund and which ownership is the subject of a written instrument
of assignment, the effective date of which assignment has passed.
"ATEL" shall mean ATEL Financial Corporation, a California
corporation.
"California Act" shall mean the Beverly-Killea Limited Liability
Company Act, Title 2.5, Chapters 1-15, of the California Corporations Code, as
it may be amended from time to time.
"Capital Account" shall mean, with respect to any Member, such
Member's Capital Account determined in accordance with Section 6.7 of the
Operating Agreement.
"Carried Interest" shall mean the allocable share of Fund
Distributions of Cash from Operations and Cash from Sales or Refinancing payable
to the Manager, as a Member, pursuant to Sections 10.4 and 10.5 of the
Agreement.
"Cash from Operations" shall mean the excess of Gross Revenues
(which excludes revenues from Equipment sales or refinancing) over cash
disbursements (including the Equipment Management Fee and amounts reinvested by
the Fund in Equipment) without reduction for depreciation and amortization of
intangibles such as organization and underwriting costs but after a reasonable
allowance for cash for repairs, replacements, contingencies and anticipated
obligations, as determined by the Manager.
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<PAGE>
"Cash from Reserve Account" shall mean that portion of the Net
Proceeds not utilized in the acquisition of Equipment, including cash maintained
according to the provisions of Section 9.4 of the Operating Agreement.
"Cash from Sales or Refinancing" shall mean the net cash realized by
the Fund from the sale, refinancing or other disposition of any Equipment after
payment of all expenses related to the transaction.
"Closing Date" shall mean such date designated by the Manager for
the termination of the offering of Units, but not later than ___________, 2000
(two years from the initial date of the Fund's Prospectus). Extension of the
offering beyond one year from the date of the Prospectus shall be subject to the
qualification of the offering for any such extension in those jurisdictions
which may limit the offering period to one year. "Initial Closing Date" shall
mean the date on which subscribers for Units, other than the initial Holder, are
first admitted to the Fund as Holders. "Final Closing Date" shall mean the last
date on which subscribers for Units are admitted to the Fund as Holders.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent federal revenue laws.
"Distributions" shall mean any cash distributed to Holders and the
Manager arising from their respective interests in the Fund.
"ERISA" shall mean the Employment Retirement Income Security Act of
1974, as amended.
"Equipment" shall mean the equipment acquired and owned by the Fund
to be leased by the Fund to others as well as any Fund interest in equipment,
including without limitation its rights, whether direct or indirect, in all
trusts, joint ventures, leases, chattel paper, options and other contract rights
with respect to equipment.
"Equipment Management Fee" shall mean an element of the alternative
fee schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3.2 of the Operating Agreement. See "Management
Compensation."
"Equipment Re-leasing Fee" shall mean an element of the alternative
fee schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3.2 of the Operating Agreement. See "Management
Compensation."
"Equipment Resale Fee" shall mean an element of the alternative fee
schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3.2 of the Operating Agreement. See "Management
Compensation."
"Front-End Fees" shall mean fees and expenses paid by any party for
any services rendered during the Fund's organization and acquisition phase
including Organization and Offering Expenses, Leasing Fees, Acquisition Fees,
Acquisition Expenses, and any other similar fees, however designated.
Notwithstanding the foregoing, Front-End Fees shall not include any Acquisition
Fees or Acquisition Expenses paid by a manufacturer of Equipment to any of its
employees unless such Persons are Affiliates of the Manager.
"Full Payout Lease" shall mean a lease under which the
non-cancellable rental payments due during the initial term of the lease are at
least sufficient to cover the purchase price of the Equipment leased.
"Fund" shall mean ATEL Capital Equipment Fund VIII, LLC, the
California limited liability company created under the Operating Agreement.
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"Fund Manager" or "Manager" shall mean ATEL Financial Corporation
("ATEL"), a California corporation, or any other Person or Persons which succeed
it in such capacity. The Manager is referred to throughout the Prospectus as
"ATEL" or the "Manager."
"Fund Minimum Gain" shall have the meaning set forth in Regulations
Section 1.704-2(d)(1).
"Gross Proceeds" shall mean the aggregate total of the Original
Invested Capital of the initial and all of the additional Holders.
"Gross Lease Revenues" shall mean all revenues attributable to the
Equipment other than from security deposits paid by lessees thereof. The term
"Gross Revenues" shall not include revenues from the sale, refinancing or other
disposition of Equipment.
"High Payout Lease" shall mean a lease under which the
noncancellable rental payments and other payment obligations of the lessee due
through the initial term of the lease are equal to at least 90% of the original
purchase price paid by the Fund for the Equipment.
"Holders" shall mean owners of Units who are either Members or
Assignees of Record, and reference to a "Holder" shall be to any one of them.
The Manager shall not be considered to be a Holder except to the extent it also
owns Units.
"Incentive Management Fee" shall mean an element of the alternative
fee schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3.2 of the Operating Agreement. See "Management
Compensation."
"IRA" shall mean an individual retirement account qualifying under
Section 408 of the Code.
"Investment in Equipment" shall mean the amount of Gross Proceeds
actually paid or allocated to the purchase of Equipment acquired by the Fund,
any amount of Gross Proceeds reserved pursuant to Section 9.4 of the Operating
Agreement up to a maximum of 3% of Gross Proceeds and other cash payments such
as interest and taxes, but excluding Front-End Fees.
"Members" shall mean the initial Members and any other Persons who
are admitted to the Fund as additional or substituted Members. Reference to a
"Member" shall refer to any one of them.
"Net Income" or "Net Loss" shall mean the taxable income or taxable
loss of the Fund as determined for federal income tax purposes, computed by
taking into account each item of Fund income, gain, loss, deduction or credit
not already included in the computation of taxable income and taxable loss, but
does not mean Distributions.
"Net Lease Provisions" shall mean contractual arrangements under
which the lessee assumes responsibility for, and bears the cost of, insurance,
taxes, maintenance, repair and operation of the leased asset and where
non-cancellable rental payments under the lease are absolutely net to the
lessor, notwithstanding that some minor costs or responsibilities remain with
the Fund as lessor or that the Fund retains the option to require and pay for a
higher standard of care or greater level of maintenance or insurance than would
be imposed on the lessee under the terms of the lease.
"Net Proceeds" shall mean the total Gross Proceeds less Organization
and Offering Expenses.
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"Operating Lease" shall mean a lease under which the aggregate
rental payments due during the initial term of the lease are less than the
purchase price of the Equipment leased.
"Operating Revenues" means the total for any period of all Gross
Lease Revenues plus all Cash from Sales or Refinancing.
"Organization and Offering Expenses" shall mean those expenses
incurred in connection with preparing the Fund for registration and subsequently
offering and distributing Units to the public, including selling commissions and
all advertising expenses except advertising expenses related to the leasing of
Equipment.
"Original Invested Capital" shall mean the original gross purchase
price of the Units contributed by each Member to the capital of the Fund for his
interest in the Fund, which amount shall be attributed to Units in the hands of
a subsequent Holder.
"Operating Agreement" or "Agreement" shall mean the Limited
Liability Company Operating Agreement of ATEL Capital Equipment Fund VIII, LLC,
as it may be amended from time to time.
"Person" shall mean any natural person, partnership, corporation,
association or other legal entity.
"Priority Distribution" shall mean a hypothetical amount determined
solely for purposes of the alternative fee schedule calculation to determine the
Asset Management Fee Limit under the provisions of Section 8.3 of the Operating
Agreement. Such amount will equal, for any calendar year or other period with
respect to the Units held by any Person, the average Adjusted Invested Capital
with respect to such Units during such period multiplied by 10% per annum
(calculated on a cumulative basis, compounded daily, from the last day of the
calendar quarter in which the capital contribution of the initial purchaser of
such Units was received by the Fund and pro rated for any fraction of a calendar
year for which such calculation is made).
"Prospectus" shall mean the final prospectus filed in connection
with the registration of the Units with the Securities and Exchange Commission
on Form S-1, as amended, together with any supplement thereto which may be
subsequently filed with such Commission.
"Purchase Price of Equipment" shall mean the price paid upon the
purchase or sale of a particular item of equipment including all liens and
mortgages on the equipment, but excluding points and prepaid interest.
"Qualified Plan" shall mean employee trusts (or employer individual
retirement accounts), Keogh Plans and corporate retirement plans qualifying
under Section 401(a) of the Code.
"Regulations" or "Treasury Regulations" shall mean the income tax
regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"Reinvestment Period" shall mean the period commencing with the
Initial Closing Date and ending on a date 72 months after the last day of the
fiscal year during which the Final Closing Date occurs.
"Reimbursable Administrative Expenses" shall mean the ordinary
recurring administration expenses incurred by the Manager and reimbursed by the
Fund. Such expenses shall not include interest, depreciation, equipment
maintenance or repair, third party services or other non-administrative
expenses.
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<PAGE>
"Resident Alien" shall mean a resident alien as defined within the
Federal Aviation Act of 1958, as amended from time to time, or any successor
statute, or any regulations adopted pursuant to such Act or any successor
statute.
"Roll-Up" shall mean a transaction involving the acquisition,
merger, conversion or consolidation, either directly or indirectly, of the Fund
and the issuance of securities of a Roll-Up Entity. Such term does not include:
(a) any transaction if the securities of the Fund have
been for at least twelve months traded through the
National Association of Securities Dealers, Inc. Automated
Quotation National Market System; or
(b) a transaction involving the conversion to corporate,
trust or association form of only the Fund, if, as a consequence of
the transaction, there will be no significant adverse change in any
of the following
(i) the Members voting rights;
(ii) the term of existence of the Fund;
(iii) the terms of compensation of the Manager and its
Affiliates;or (iv) the Fund's investment objectives.
"Service" shall mean the United States Internal Revenue Service or
its successor.
"Substantially All of the Assets" shall mean, unless the context
otherwise dictates, Equipment representing 66 2/3% or more of the net book value
of all Equipment as of the end of the most recently completed fiscal quarter.
"Unit" shall mean the interest in the Fund representing Original
Invested Capital in the amount of $10 and shall entitle the Holder thereof to
the rights herein provided.
"United States Citizen" shall mean a "citizen of the United States"
as defined within the Federal Aviation Act of 1958, as amended from time to
time, or any successor statute, or any regulations adopted pursuant to such Act
or any successor statute.
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FINANCIAL STATEMENTS
Set forth below are the following financial statements:
ATEL Capital Equipment Fund VIII, LLC
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . .F - 2
Balance Sheet, October 7, 1998 . . . . . . . . . . . . . . . . . . . . . .F - 3
Statement of Changes in Members' Capital for the Period from
July 31, 1998 (inception) through October 7, 1998 . . . . . . . . . . .F - 3
Statement of Cash Flows for the Period from July 31, 1998 (inception)
through October 7, 1998 . . . . . . . . . . . . . . . . . . . . . . . F - 3
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . F - 4
ATEL Financial Corporation and Subsidiary
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . .F - 6
Consolidated Balance Sheet, July 31, 1998 . . . . . . . . . . . . . . . . F - 7
Notes to Consolidated Balance Sheet, July 31, 1998 . . . . . . . . . . . .F - 8
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Members
ATEL Capital Equipment Fund VIII, LLC
We have audited the accompanying balance sheet of ATEL Capital Equipment Fund
VIII, LLC as of October 7, 1998, and the related statements of changes in
members' capital and cash flows for the period from July 31, 1998 (inception)
through October 7, 1998. These financial statements are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ATEL Capital Equipment Fund
VIII, LLC at October 7, 1998, and its changes in members' capital and cash flows
for the period from July 31, 1998 (inception) through October 7, 1998, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
San Francisco, California
October 7, 1998
F-2
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
(A Development Stage Enterprise)
BALANCE SHEET
OCTOBER 7, 1998
ASSETS
Cash $600
======
LIABILITIES AND MEMBERS' CAPITAL
Members' capital:
Managing Member $100
Initial Members 500
------
Total members' capital $600
======
STATEMENT OF CHANGES IN MEMBERS' CAPITAL
FOR THE PERIOD FROM JULY 31, 1998 (INCEPTION)
THROUGH OCTOBER 7, 1998
Initial Members Managing
Units Amount Member Total
Capital contributions 50 $500 $100 $600
======= ========= ========= ========
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JULY 31, 1998 (INCEPTION)
THROUGH OCTOBER 7, 1998
Financing activities:
Capital contributions received $600
-------
Net increase in cash 600
=======
Cash at end of period $600
=======
See accompanying notes.
F-3
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 7, 1998
1. Organization and Limited Liability Company matters:
ATEL Capital Equipment Fund VIII, LLC (a development stage enterprise)(the
Fund), was formed under the laws of the State of California on July 31, 1998,
for the purpose of acquiring equipment to engage in equipment leasing and sales
activities. The fund shall continue until December 31, 2019. Contributions in
the amount of $600 were received as of October 7, 1998, $100 of which
represented the Managing Member's (ATEL Financial Corporation's) (ATEL's)
continuing interest, and $500 of which represented the Initial Members' capital
investment.
As of October 7, 1998, the Fund had not commenced operations other than those
relating to organizational matters. The Fund, or the Managing Member on behalf
of the Fund, will incur costs in connection with the organization, registration
and issuance of the Limited Liability Company Units (Units). The amount of such
costs to be born by the Fund is limited by certain provisions of the Operating
Agreement.
2. Income taxes:
The Fund does not provide for income taxes since all income and losses are the
liability of the individual members and are allocated to the members for
inclusion in their individual tax returns.
3. Members' capital:
As of October 7, 1998, 50 Units were issued and outstanding. The Fund is
authorized to issue up to 15,000,000 additional Units.
The Fund Net Income, Net Losses, and Distributions are to be allocated 92.5% to
the Members and 7.5% to the Managing Member.
4. Commitments and management:
The terms of the Operating Agreement provide that the Managing Member and/or
affiliates are entitled to receive certain fees, in addition the allocations
described above, which are more fully described in Section 8 of the Operating
Agreement. The additional fees to management include fees for equipment
management and resale.
F-4
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 7, 1998
5. Impact of the Year 2000 (Unaudited)
The year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any computer programs
that have time sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculation causing disruptions of operations, including, among other things,
a temporary inability to process transactions or engage in similar normal
business activities.
The Fund uses primarily third party software and is communicating with key
vendors to ensure that its systems are year 2000 compliant. Based on these
discussions, the Fund does not expect that the costs related to the year 2000
issue will be significant. Ultimately, the potential impact of the year 2000
issue will depend on the way in which the year 2000 issue is addressed by
businesses and other entities whose financial condition or operational
capability is important to the Fund.
F-5
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
ATEL Financial Corporation
We have audited the accompanying consolidated balance sheet of ATEL Financial
Corporation and subsidiary as of July 31, 1998. This balance sheet is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free from material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated balance sheet referred to above presents
fairly, in all material respects, the consolidated financial position of ATEL
Financial Corporation at July 31, 1998 in conformity with generally accepted
accounting principles.
Ernst & Young LLP
San Francisco, California
September 10, 1998
F-6
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JULY 31, 1998
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Cash and cash equivalents $855,114
Accounts receivable 92,931
Amounts due from affiliated partnerships 1,660,221
Investments in leases 3,572,324
Cash surrender value of life insurance 300,000
Deferred tax asset 1,629,810
Property and equipment, net of accumulated depreciation of $1,172,147 575,992
Leasehold improvements, net of accumulated amortization of $283,737 466,527
Other assets 195,405
----------------
$9,348,324
================
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Non-recourse debt $975,278
Line of credit 500,000
Amounts due to affiliated companies 2,522,491
Accounts payable and accrued liabilities 615,784
Customer deposits 22,000
Deferred liabilities and credits:
Unearned acquisition fees 245,569
Deferred capital contributions 408,568
Deferred tax liability 2,513,105
----------------
Total liabilities 7,802,795
Shareholder's equity:
Common stock, 100,000 shares authorized, 666.5 shares issued and outstanding 2,000
Additional paid-in capital 93,855
Retained earnings 1,449,674
----------------
Total shareholder's equity 1,545,529
----------------
$9,348,324
================
</TABLE>
See accompanying notes.
F-7
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1998
1. Summary of significant accounting policies:
Organization and principles of consolidation:
The consolidated balance sheet includes the accounts of ATEL Financial
Corporation (ATEL) and its wholly owned subsidiary, ATEL Securities Corporation
(ASC). ATEL is a wholly owned subsidiary of ATEL Capital Group (ACG).
ATEL is a California corporation formed in July 1977 to engage in the brokering
and leasing of equipment for its own account and the account of affiliated
partnerships. ASC was formed in November 1985 and was registered as a securities
broker/dealer in February 1986. All significant intercompany balances have been
eliminated in consolidation.
ATEL organizes and sponsors limited partnerships (the "affiliated partnerships"
or the "programs") engaged in equipment leasing and sales activities. It also
acts as the corporate general partner in these affiliated partnerships. Through
these programs, ACG derives various fees and also receives reimbursements for
expenses incurred on behalf of these entities, of which certain fees and expense
reimbursements are allocated to ATEL and the balance is allocated to various
other affiliates. The basis for determination of the types and amounts of these
fees and reimbursements are provided in agreements with the various programs.
In addition, under the terms of the partnership agreements for certain of the
affiliated partnerships for which ATEL is a general partner, ATEL is entitled to
participate in net cash from operations and sales or refinancing of equipment
owned by the affiliated partnerships. A portion of ATEL's participation is
subordinated to the limited partners' full recovery of their initial invested
capital contributions plus a specified return on their investments. No earnings
or equity interests from such subordinated interests have been recognized
through July 31, 1998. The shareholders of ATEL Capital Group are also general
partners in certain of these affiliated partnerships.
Operating leases:
Assets on operating leases are stated at cost less accumulated depreciation.
Revenues from operating leases are recognized evenly over the terms of the
related leases. Depreciation is provided by the straight-line method over the
term of the lease to an amount equal to the equipment's estimated residual value
at lease termination.
Initial direct costs:
Initial direct costs are capitalized and amortized over the terms of the related
leases.
Investment in leveraged leases:
Leases which are financed principally with non-recourse debt at lease inception
and which meet certain other criteria are accounted for as leveraged leases.
Leveraged lease contracts receivable are stated net of the related non-recourse
debt service (which includes unpaid principal and aggregate interest on such
debt) plus estimated residual values. Unearned income represents the excess of
anticipated cash flows (after taking into account the related debt service and
residual values) over the investment in the lease and is amortized using a
constant rate of return applied to the net investment when such investment is
positive.
F-8
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1998
1. Summary of significant accounting policies (continued):
Residual interests:
Residual interests represent the present value of ATEL's proportionate interest
(calculated at the time of the transaction) in the estimated residual value of
equipment originally owned by ATEL and subsequently sold to a third party where
ATEL retains an unconditional right to participate in such residual value upon
the expiration of the related lease. This retained residual value is presented
as an asset until the ultimate liquidation of the underlying equipment and
realization of the participation.
Acquisition fees:
Acquisition fees received from the first six affiliated partnerships on
equipment purchased prior to 1995, generally 3.5% to 4.75% of the affiliated
partnerships' equipment cost, were deferred and are recognized as income as
services are provided in connection with the partnerships' acquisition of
equipment and leases. It is estimated that these services will be rendered over
a period of seven years. Beginning in 1995 and through December 31, 1996,
acquisition services subject to a fee were performed by an affiliate.
Property and equipment:
Property and equipment is stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of the respective assets,
which range from three to seven years.
Leasehold improvements:
Leasehold improvements are stated at cost. Amortization is calculated using the
straight-line method over the lives of the related leases or estimated lives,
whichever is shorter.
Cash surrender value of life insurance
ATEL purchased two single premium key-man life insurance policies to cover its
two officer-shareholders. ATEL is a beneficiary under the contracts for $300,000
of cash surrender values and death benefits. The spouses are the beneficiaries
for amounts above $300,000.
Income taxes:
For federal and state income tax reporting, ATEL's taxable income is included in
the returns filed by its parent. For financial reporting, ATEL's income tax
provision is calculated on a separate return basis. Deferred taxes are
calculated using the liability method of accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. The ultimate realization of ATEL's deferred
tax asset is dependent upon the realization of such amount by ACG.
F-9
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1998
1. Summary of significant accounting policies (continued):
Credit risk:
Financial instruments which potentially subject ATEL to concentrations of credit
risk include cash and cash equivalents and accounts receivable. ATEL places its
cash deposits and temporary cash investments with creditworthy, high quality
financial institutions. The concentration of such deposits and temporary cash
investments is not deemed to create a significant risk to ATEL. Accounts
receivable represent amounts due from lessees in various industries related to
equipment on operating leases.
Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles 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.
Investments in affiliated partnerships
ATEL accounts for its interest as a corporate general partner in the affiliated
partnerships at cost, or under the equity method of accounting, based on the
terms of the individual affiliated partnership agreements.
Affiliated partnerships accounted for at cost do not provide for provisions
in the partnership agreements for general partner distributions and hence, the
General Partner does not in effect have any way to recover the amounts of its
capital account as recorded by the Partnership. Upon the dissolution of these
partnerships, a special allocation of income or loss is made from the general
partner to the limited partners in an amount sufficient to bring the capital
accounts to zero, based on the terms of the partnership agreements.
Affiliated partnerships accounted for under the equity method of accounting,
subject to limitations in the respective partnership agreements, provide for
general partner distributions. Upon dissolution of these partnerships, if the
general partner has a deficiency in its capital account, the general partner is
required to contribute in cash to the capital of the affiliated partnership an
amount equal to the lesser of the deficiency in the general partner's account or
1.01% of the original invested capital of the affiliated partnership, based on
the provisions of the partnership agreement. If the general partner has a
positive capital balance upon the dissolution of the partnership, a special
allocation of income is made from the general partner to the limited partners in
an amount sufficient to bring the capital accounts to zero, based on the terms
of the partnership agreements. Through July 31, 1998, ATEL has deferred $408,568
in distributions received from affiliated partnerships accounted for on the
equity method of accounting. Such amounts are included in the balance sheet
under the caption "Deferred capital contributions".
Amounts due from affiliates
Amounts due from affiliates represents amounts advanced to or received from
affiliates for operations or for income taxes to be paid by ATEL on behalf of
ACG and its subsidiaries.
F-10
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1998
2. Investments in leases:
Investments in leases consist of the following:
Equipment on operating leases, net of accumulated depreciation $2,582,814
Residual interests 682,227
Investment in leveraged leases 307,283
------------
$3,572,324
============
Operating leases:
Equipment on operating leases consists of the following:
Electrical cogeneration plant (estimated useful life, 20 years) $2,565,815
Concrete hauling trucks (estimated useful life, 7 years) 1,793,410
------------
4,359,225
Less accumulated depreciation (1,776,411)
------------
Equipment on operating leases, net of accumulated depreciation $2,582,814
============
At July 31, 1998, the aggregate amounts of future minimum lease payments
receivable from operating leases are as follows:
Year ending July 31,
1999 $286,590
2000 290,999
2001 290,999
2002 290,999
2003 290,999
Thereafter 24,250
----------------
$1,474,836
================
Leveraged leases:
ATEL participates in leveraged lease transactions in which the cost of assets
leased to others is financed primarily by loans from financial institutions but
ownership of property is retained by ATEL. The lessees' rental obligations are
assigned to the financial institutions and the related property is pledged as
collateral for the loans and are without deficiency liability (non-recourse)
against ATEL. Equipment under leveraged leases includes coal mining and
processing equipment and over-the-road tractors and trailers. The net investment
in leveraged leases is as follows:
Aggregate rentals receivable $2,364,270
Aggregate principal and interest payable on non-recourse loans (2,364,270)
Estimated residual value of leased assets 381,000
Less unearned income (73,717)
-----------
Investment in leveraged leases 307,283
Deferred tax liability, included in the accompanying balance sheet (272,908)
-----------
Net investment in leveraged leases $34,375
===========
F-11
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1998
2. Investments in leases (continued):
General lease terms and concentration of credit risk:
Operating and leveraged leases generally provide that the lessee will be
responsible for maintenance, insurance and similar costs (referred to as net
leases).
ATEL leases equipment to lessees in diversified industries. As of July 31, 1998,
equipment representing 19% and 12% of total assets was leased to lessees in the
machine tool and heavy construction industries, respectively. Leases are subject
to the Company's credit committee review. The leases provide for the
repossession of the equipment in the event of default.
3. Non-recourse debt:
Non-recourse debt consists of a note payable to financial institution. Interest
is at 9.6094% per year. Concrete hauling trucks and related leases are pledged
as collateral and payments are due in various installments through 2002.
The net book value of assets financed with non-recourse debt was $2,582,814 at
July 31, 1998.
Future minimum payments on non-recourse debt are as follows:
Principal Interest Total
Year ending July 31, Payments Payments Payments
1999 $201,397 $85,193 $286,590
2000 226,437 64,562 290,999
2001 249,180 41,819 290,999
2002 274,207 16,792 290,999
2003 24,057 193 24,250
---------------- ---------------- ----------------
$975,278 $208,559 $1,183,837
================ ================ ================
4. Income taxes:
Deferred income taxes as of July 31, 1998 reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. At
July 31, 1998, deferred tax assets total $1,629,810 and deferred tax liabilities
total $2,513,105.
Deferred income taxes arise primarily from differences in the reporting of lease
income, depreciation, acquisition fees and valuation accounts for tax purposes
as compared to their treatment for financial reporting purposes.
F-12
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1998
5. Line of credit:
ATEL participates with ACG, certain other subsidiaries of ACG and with certain
affiliated partnerships, in a $90,000,000 revolving credit agreement with a
group of financial institutions which expires November 28, 1998. The agreement
includes an acquisition facility, a lease warehouse facility and a small ticket
facility which are used to provide bridge financing for assets on leases. Draws
on the acquisition facility by any individual borrower are secured only by that
borrower's assets, including equipment and related leases. Borrowings on the
warehouse facility are recourse jointly to certain of the affiliated
Partnerships and ATEL. Borrowings on the small ticket facility are recourse to
the borrower and are guaranteed by ACG and certain of its shareholders. Also
included in this line of credit facility is $1,000,000 available for operations
and working capital. At July 31, 1998, ATEL had $500,000 of borrowings related
to working capital. At July 31, 1998, $5,000,000 was borrowed under the small
ticket lease facility by a subsidiary of ACG relating to lease transactions. At
July 31, 1998, $21,017,948 was borrowed under the separate lease warehousing
facility by another subsidiary of ACG relating to lease transactions. Interest
is at the bank's prime rate (8.5% at July 31, 1998) or at LIBOR plus 1.25%
(6.91% at July 31, 1998).
These facilities, when used, are collateralized by (i) leases and equipment
owned by the specific borrower and financed by the lines and (ii) all other
assets owned by the specific borrower except equipment, lease receipts and
residual values specifically pledged to other equipment funding sources. ATEL's
borrowings under the facility are guaranteed by ACG and/or its shareholders.
Under the line, the affiliated partnerships have borrowed $11,865,000 as of July
31, 1998. These funds are collateralized by the assets owned by the affiliated
partnerships, except equipment, lease receipts and residual values specifically
pledged to other equipment funding sources.
The credit agreement includes certain financial covenants applicable to each
borrower. ATEL was in compliance with such covenants as of July 31, 1998.
6. Commitments and contingencies:
Office lease:
ATEL occupies office space under operating leases expiring through December
2002. Future minimum payments for fiscal year periods under the leases are
$526,279 in 1999, $536,162 in 2000, $550,001 in 2001, $559,886 in 2002 and
$233,286 in 2003. Office rent expense was $562,539 in 1998 and $508,747 in 1997.
F-13
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1998
7. Reimbursements of operating costs:
The Limited Partnership Agreements of the affiliated partnerships allow for the
reimbursement of costs incurred by ACG and its subsidiaries in providing
administrative services to the Partnerships, of which a portion of such amounts
is allocated to ATEL. Administrative services provided include partnership
accounting, investor relations, legal counsel and lease and equipment
documentation. ACG and its subsidiaries are not reimbursed for services where
they are entitled to receive a separate fee as compensation for such services,
such as acquiring and overseeing the management of equipment. Reimbursable
operating costs incurred by ACG and its subsidiaries are allocated to the
Partnerships based upon actual time incurred by employees working on partnership
business and an allocation of rent and other costs based on utilization studies.
Accrual and payment of reimbursable costs and management fees due from ATEL Cash
Distribution Fund were voluntarily suspended in May 1994. As of July 31, 1998,
$1,660,221 remained outstanding from affiliated partnerships for reimbursable
operating and syndication costs and management fees.
8. Impact of the Year 2000 (Unaudited)
The year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any computer programs
that have time sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculation causing disruptions of operations, including, among other things,
a temporary inability to process transactions or engage in similar normal
business activities.
ATEL uses primarily third party software and is communicating with key vendors
to ensure that its systems are year 2000 compliant. Based on these discussions,
ATEL does not expect that the costs related to the year 2000 issue will be
significant. Ultimately, the potential impact of the year 2000 issue will depend
on the way in which the year 2000 issue is addressed by businesses and other
entities whose financial condition or operational capability is important to
ATEL.
F-14
<PAGE>
- --------------------------------------------------------------------------------
PRIOR PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
ATEL Financial Corporation ("ATEL"), the Manager of the Fund, and its affiliates
have extensive experience in the equipment leasing industry, including: (i)
originating and financing leveraged and single investor lease transactions for
corporate investors, (ii) acting as a broker/packager by arranging equity and
debt participants for equipment leasing transactions originated by other
companies, (iii) consulting on the pricing and structuring of equipment lease
transactions for banks, leasing companies and corporations, (iv) organizing and
offering individual ownership and limited partnership investment leasing
programs and (v) supervising and arranging for the supervision of equipment
management and marketing on leasing transactions involving total equipment costs
in excess of $1 billion. In addition to the Fund, ATEL has sponsored seven prior
public and one private equipment leasing limited partnership(s). See "Prior
Performance Summary" for a summary of information regarding such prior programs.
The first prior partnership, ATEL Lease Income Fund 1985-A ("ALIF"), completed a
private placement of $218,500 of its limited partnership interests in April 1986
from a total of 12 investors. ALIF had acquired a variety of equipment with a
total purchase cost of approximately $296,627 as of December 31, 1997. All such
equipment had been sold as of December 31, 1997 and the partnership has ceased
operations. See Table VI - "Sales or Disposals of Equipment" in this Exhibit A.
The second prior partnership, ATEL Cash Distribution Fund ("ACDF"), commenced a
public offering of up to $10,000,000 of its limited partnership interests on
March 1, 1986. ACDF terminated its offering on December 18, 1987 after raising a
total of $10,000,000 in offering proceeds from a total of approximately 1,000
investors, all of which proceeds have been committed to equipment acquisitions,
estimated organization and offering expenses and capital reserves. ACDF acquired
a variety of types of equipment with a total purchase cost of approximately
$11,133,679 as of December 31, 1997. See Table V - "Acquisition of Equipment by
Prior Programs" in Exhibit A for further information concerning the types of
equipment acquired by ACDF. All such equipment had been sold as of December 31,
1997. See Table VI - "Sales or Disposals of Equipment" in Exhibit A. Through
December 31, 1997, ACDF had made cash distributions to its investors in the
aggregate amount of $1,121.03 per $1,000 invested. Of this amount a total of
$244.89 represents investment income and $876.14 represents return of capital.
See Table III - "Operating Results of Prior Programs" in this Exhibit A for
further information concerning such distributions. See Table IV - "Results of
Completed Program" in this Exhibit A, for further information.
The third prior partnership, ATEL Cash Distribution Fund II ("ACDF II"),
commenced a public offering of up to $25,000,000 (with an option to increase the
offering to $35,000,000) of its limited partnership interests on January 4,
1988. ACDF II terminated its offering on January 3, 1990 after raising a total
of $35,000,000 in offering proceeds from a total of approximately 3,100
investors, all of which proceeds have been committed to equipment acquisitions,
estimated organization and offering expenses and capital reserves. ACDF II had
acquired a variety of types of equipment with a total purchase cost of
approximately $52,270,536 as of June 30, 1998. See Table V "Acquisition of
Equipment by Prior Programs" in Exhibit A for further information concerning the
types of equipment acquired by ACDF II. Of such equipment, items representing an
original purchase cost of approximately $51,885,991 had been sold as of June 30,
1998. See Table VI - "Sales or Disposals of Equipment" in Exhibit A. Through
June 30, 1998, ACDF II had made cash distributions to its investors in the
aggregate amount of $1,105.70 per $1,000 invested. Of this amount a total of
$289.71 represents investment income and $815.99 represents return of capital.
See Table III - "Operating Results of Prior Programs" in this Exhibit A for
further information concerning such distributions.
A-1
<PAGE>
The fourth prior partnership, ATEL Cash Distribution Fund III ("ACDF III"),
commenced a public offering of up to $50,000,000 (with an option to increase the
offering to $75,000,000) of its limited partnership interests on January 4,
1990. ACDF III terminated its offering on January 3, 1992 after raising a total
of $73,855,840 in offering proceeds from a total of approximately 4,822
investors, all of which proceeds have been committed to equipment acquisitions,
estimated organization and offering expenses and capital reserves. ACDF III had
acquired a variety of types of equipment with a total purchase cost of
approximately $99,629,941 as of June 30, 1998. See Table V "Acquisition of
Equipment by Prior Programs" in Exhibit A for further information concerning the
types of equipment acquired by ACDF III. Of such equipment, items representing
an original purchase cost of approximately $66,594,290 had been sold as of June
30, 1998. See Table VI - "Sales or Disposals of Equipment" in Exhibit A. Through
June 30, 1998, ACDF III had made cash distributions to its investors in the
aggregate amount of $1,003.64 per $1,000 invested. Of this amount a total of
$261.90 represents investment income and $741.74 represents return of capital.
See Table III - "Operating Results of Prior Programs" in this Exhibit A for
further information concerning such distributions.
The fifth prior partnership, ATEL Cash Distribution Fund IV ("ACDF IV"),
commenced a public offering of up to $75,000,000 of its limited partnership
interests on February 4, 1992. ACDF IV terminated its offering on February 3,
1993 after raising a total of $75,000,000 in offering proceeds from a total of
approximately 4,873 investors, all of which proceeds have been committed to
equipment acquisitions, estimated organization and offering expenses and capital
reserves. ACDF IV had acquired a variety of types of equipment with a total
purchase cost of approximately $108,734,880 as of June 30, 1998. See Table V
"Acquisition of Equipment by Prior Programs" in Exhibit A for further
information concerning the types of equipment acquired by ACDF IV. Of such
equipment, items representing an original purchase cost of approximately
$52,871,585 had been sold as of June 30, 1998. See Table VI - "Sales or
Disposals of Equipment" in Exhibit A. Through June 30, 1998, ACDF IV had made
cash distributions to its investors in the aggregate amount of $797.87 per
$1,000 invested. Of this amount a total of $148.05 represents investment income
and $649.82 represents return of capital. See Table III - "Operating Results of
Prior Programs" in this Exhibit A for further information concerning such
distributions.
The sixth prior partnership, ATEL Cash Distribution Fund V ("ACDF V"), commenced
a public offering of up to $125,000,000 of its limited partnership interests on
February 22, 1993. ACDF V terminated its offering on November 15, 1994. As of
that date, $125,000,000 of offering proceeds had been received from
approximately 7,217 investors. All of the proceeds have been committed to
equipment acquisitions, estimated organization and offering expenses and capital
reserves. ACDF V had acquired a variety of types of equipment with a total
purchase cost of $186,897,181 as of June 30, 1998. Of such equipment, items
representing an original purchase cost of approximately $31,330,129 had been
sold as of June 30, 1998. Through June 30, 1998, ACDF V had made cash
distributions to its investors in the aggregate amount of $520.97 per $1,000
invested. Of this amount a total of $73.79 represents investment income and
$447.18 represents return of capital. See Table III - "Operating Results of
Prior Programs" in this Exhibit A for further information concerning such
distributions. See Table V - "Acquisition of Equipment by Prior Programs" in
Exhibit A for further information concerning the types of equipment acquired by
ACDF V. See Table VI - "Sales or Disposals of Equipment" in Exhibit A.
A-2
<PAGE>
The seventh prior partnership, ATEL Cash Distribution Fund VI ("ACDF VI"),
commenced a public offering of up to $125,000,000 of its limited partnership
interests on November 23, 1994. ACDF VI terminated its offering on November 22,
1996. As of that date, $125,000,000 of offering proceeds had been received from
approximately 6,401 investors. All of the proceeds have been committed to
equipment acquisitions, estimated organization and offering expenses and capital
reserves. ACDF VI had acquired a variety of types of equipment with a total
purchase cost of $208,277,121 as of June 30, 1998. Of such equipment, items
representing an original purchase cost of approximately $2,677,677 had been sold
as of June 30, 1998. Through June 30, 1998, ACDF VI had made cash distributions
to its investors in the aggregate amount of $321.36 per $1,000 invested. Of this
amount a total of $6.87 represents investment income and $314.49 represents
return of capital.See Table III - "Operating Results of Prior Programs" in this
Exhibit A for further information concerning such distributions. See Table V -
"Acquisition of Equipment by Prior Programs" in Exhibit A for further
information concerning the types of equipment acquired by ACDF VI. See Table VI
- - "Sales or Disposals of Equipment" in Exhibit A.
The eighth prior partnership, ATEL Capiatal Equipment Fund VII ("ACEF VII"),
commenced a public offering of up to $150,000,000 of its limited partnership
interests on November 29, 1996. ACEF VII will terminate its offering on or
before November 29, 1998. As of June 30, 1998, $105,570,580 of offering proceeds
had been received from approximately 4,300 investors. All of the proceeds have
been committed to equipment acquisitions, estimated organization and offering
expenses and capital reserves. ACEF VII had acquired a variety of types of
equipment with a total purchase cost of $177,566,094 as of June 30, 1998. Of
such equipment, items representing an original purchase cost of approximately
$2,055,915 had been sold as of June 30, 1998. Through June 30, 1998, ACEF VII
had made cash distributions to its investors in the aggregate amount of $126.79
per $1,000 invested. Of this amount a total of $29.74 represents investment
income and $97.05 represents return of capital. See Table III - "Operating
Results of Prior Programs" in this Exhibit A for further information concerning
such distributions. See Table V - "Acquisition of Equipment by Prior Programs"
in Exhibit A for further information concerning the types of equipment acquired
by ACEF VII. See Table VI - "Sales or Disposals of Equipment" in Exhibit A.
Although certain of the Prior Programs have experienced lessee defaults in the
ordinary course of business, none of the Prior Programs has experienced an
unanticipated rate of default or major adverse business developments which the
Fund Manager believes will impair its ability to meet its investment objectives.
All of the Prior Programs have investment objectives that are similar to those
of the Fund. It should be noted, however, that the prior privately placed
program, ALIF, invested in equipment without the use of any acquisition debt,
while Prior Programs ("Prior Public Programs") were designed to use moderate
amounts of acquisition debt, as is the Fund. In addition, as in the case of the
Fund's portfolio objectives, the Prior Public Programs' equipment portfolios
placed greater emphasis on relatively low technology equipment than did ALIF.
The factors considered by the Manager in determining that the investment
objectives of the prior programs were similar to those of the Fund include the
types of equipment to be acquired, the structure of the leases to such
equipment, the credit criteria for lessees, the intended investment cycles, the
reinvestment policies and the investment goals of each program. Therefore all of
the information set forth in Tables included in this Exhibit A - "Prior
Performance Information" may be deemed to relate to programs with investment
objectives similar to those of the Fund.
A-3
<PAGE>
In Tables I through III information is presented with respect to all Prior
Programs sponsored by the Manager and its Affiliates which closed their
offerings within the five year period ending June 30, 1998, except that ACDF
closed its offering December 18, 1987, ACDF II closed its offering January 3,
1990, ACDF III closed its offering January 3, 1992 and ACDF IV closed its
offering on February 3, 1993. Table VI includes information regarding all
dispositions of equipment by prior programs during the five year period ending
June 30, 1998. The following is a list of the tables set forth on this Exhibit
A:
TABLE I Experience in Raising and Investing Funds
TABLE II Compensation to the General Partners
TABLE III Operating results of Prior Programs
TABLE IV Results of Completed Programs
TABLE V Acquisition of Equipment by Prior Programs
TABLE VI Sales or Disposals of Equipment
ATEL will provide to any investor, upon written request and without charge,
copies of the most recent Annual Reports on Form 10-K filed with the Securities
and Exchange Commission by each Prior Public Program and will provide to any
investor, for a reasonable fee, copies of the exhibits to such reports.
INVESTORS IN THE PARTNERSHIP WILL HAVE NO INTEREST IN THE INVESTMENTS DESCRIBED
IN THE FOLLOWING TABLES. PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE INCLUSION
OF THIS INFORMATION AS INDICATIVE OF THE POSSIBLE OPERATIONS OF THE PARTNERSHIP.
In addition to Tables I through V, two summary charts are set forth below.
Figure 6 is a summary of cash distributions through December 31, 1997 by each
Prior Public Program, expressed as a percentage of an initial investor's
original capital contribution and divided into the portions of such
distributions which have been characterized in the Prior Program's financial
statements as a return of capital, on the one hand, and net income, on the
other.
(GRAPHIC OMITTED - FIGURE 6)
Figure 7 below illustrates the disposition of equipment after expiration of the
initial lease term for equipment coming off lease through April 1, 1998 for all
Prior Public Programs that had completed their public offerings as of December
31, 1995. The dispositions are characterized as (i) short term renewals by the
lessees (for terms of less than 12 months), (ii) long term renewals by the
lessees (for terms of at least 12 months), (iii) equipment purchased by the
lessee and (iv) equipment returned by the lessee to the Prior Public Program for
sale or lease to another party.
(GRAPHIC OMITTED - FIGURE 7)
A-4
<PAGE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(on a percentage basis)
June 30, 1998
(Unaudited)
The following Table sets forth certain information concerning the experience of
the General Partners in raising and investing funds. A percentage analysis of
the application of the proceeds raised is presented.
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Cash ATEL Cash
Distribution Distribution Distribution Distribution
Fund Fund II Fund III Fund IV
---- -------- -------- -------
<S> <C> <C> <C> <C>
EQUITY PROCEEDS
Dollar amount of equity
offered $10,000,000 $35,000,000 $75,000,000 $75,000,000
Dollar amount of equity
raised $10,000,000 $35,000,000 $73,855,840 $75,000,000
Less: Offering expenses:
Selling commissions 9.50% 9.50% 9.50% 9.50%
Organization and program
expenses (1) 4.00% 5.00% 4.25% 4.53%
Reserves 3.00% 1.50% 1.50% 1.50%
------------ ------------ -------------- ------------
Percent available for investment 83.50% 84.00% 84.75% 84.47%
Acquisition costs:
Purchase price (2) 79.00% 79.25% 80.00% 79.71%
Acquisition fees 4.50% 4.75% 4.75% 4.76%
------------ ------------ -------------- ------------
83.50% 84.00% 84.75% 84.47%
============ ============ ============== ============
Percent leverage (9) 20.26% 40.93%(8) 43.04%(10) 43.50%
============ ============ ============== ============
Date offering commenced: Mar. 1, 1986 Jan. 4, 1988 Jan. 4, 1990 Feb. 4, 1992
Length of offering 21 Months 24 Months 24 Months 12 Months
Months to invest 90% of
amount available for investment
(measured from beginning of offering) 30 Months (3) 27 Months (4) 30 Months (5) 20 Months (6)
</TABLE>
A-5
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Capital
Distribution Distribution Equipment
Fund V Fund VI Fund VII
------ ------- --------
EQUITY PROCEEDS
Dollar amount of equity
<S> <C> <C> <C>
offered $125,000,000 $125,000,000 $150,000,000
Dollar amount of equity
raised $125,000,000 $125,000,000 105,570,080
Less: Offering expenses:
Selling commissions 9.50% 9.50% 9.50%
Organization and program
expenses (1) 4.60% 4.70% 4.58%
Reserves 1.50% 1.50% 0.50%
------------- ------------- -------------
Percent available for investment 84.40% 84.30% 85.42%
Acquisition costs:
Purchase price (2) 79.64% 79.80% 85.42%
Acquisition fees 4.76% 4.50% -
------------- ------------- -------------
84.40% 84.30% 85.42%
============= ============= =============
Percent leverage (9) 35.06% 46.12% 26.17%
============= ============= =============
Date offering commenced: Feb. 22, 1993 Nov. 23, 1994 Nov. 29, 1996
Length of offering 21 Months 24 Months N/A (12)
Months to invest 90% of
amount available for investment
(measured from beginning of offering) 22 Months (7) 24 Months (11) N/A (12)
</TABLE>
A-6
<PAGE>
FOOTNOTES:
(1) Includes organization, legal, accounting, printing, binding, delivery
and other costs incurred by the General Partner.
(2) Represents amounts paid to unrelated third parties for purchase of
equipment under leases.
(3) As of December 1988, 100% of the amount available for investment had
been
invested.
(4) As of June 1990, 100% of the amount available for investment had been
invested.
(5) As of September 30, 1992, 100% of the amount available for
investment had been invested.
(6) As of December 31, 1993, the proceeds of the offering had been fully
invested.
(7) As of November 15, 1994, the Partnership's offering of Limited
Partnership Units was completed. As of December 31, 1994, the proceeds of the
offering had been fully committed.
(8) From January 4, 1988 through August 31, 1994, the maximum amount of
leverage at the end of any quarter was 37%. This was computed as the outstanding
balance of all debt divided by the original cost of all equipment owned by the
partnership as of the end of each period.
(9) The percentage leverage is calculated by dividing the initial principal
amount of debt incurred by the program through the date of this table by the
aggregate original cost of all equipment purchased by the program through such
date. It should be noted, however, that each program has acquired assets, has
made or will make principal amortizing debt service payments and/or has disposed
or will dispose of assets over a period of time extending from its first
investment in equipment. As a result, for each program the total cost of the
assets in its portfolio and the total principal amount of debt outstanding have
fluctuated from time to time. The percentage figure, therefore, does not reflect
the current leverage ratio or the debt ratio at any one point in time, but
constitutes an aggregate ratio for the life of the program through the date of
the table.
(10) From January 4, 1990 through December 31, 1997, the maximum amount of
leverage at the end of any quarter was less than 40%. This was computed as the
outstanding balance of all debt divided by the original cost of all equipment
owned by the partnership as of the end of each period.
(11) As of November 22, 1996, the Partnership's offering of Limited
Partnership Units was completed. As of that date, the proceeds of the offering
had been fully committed.
(12) As of June 30, 1998, the Partnership's offering of Limited Partnership
Units had not been completed. As of that date, the proceeds of the offering had
been fully committed.
A-7
<PAGE>
TABLE II
COMPENSATION TO THE GENERAL PARTNERS
June 30, 1998
(Unaudited)
The following Table sets forth certain information concerning the
compensation derived by the General Partner. Amounts paid are from two sources:
proceeds of the offering and gross revenues.
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Cash ATEL Cash
Distribution Distribution Distribution Distribution
Fund Fund II Fund III Fund IV
<S> <C> <C> <C> <C>
Date offering commenced Mar. 1, 1986 Jan. 4, 1988 Jan. 4, 1990 Feb. 4, 1992
Date offering closed Dec. 18, 1987 Jan. 3, 1990 Jan. 3, 1992 Feb. 3, 1993
Dollar amount raised $10,000,000 $35,000,000 $73,855,840 $75,000,000
Amounts paid to General
Partners from proceeds of
offering:
Acquisition fees $450,000 $1,662,500 $3,558,700 $3,575,123
Selling commissions $19,078 $230,985 $561,914 $716,296
Organization and program costs $550,000 $1,751,422 $3,135,942 $3,394,652
Dollar amount of cumulative cash generated
from operations before deducting payments
to the General Partner $9,166,349 $38,472,108 $67,886,744 $47,294,524
Cumulative amount paid to the
General Partner from operations:
Management fees $765,081 $2,929,971 $5,689,232 $4,685,687
Other operating expenses $475,740 $1,599,166 $2,565,217 $2,326,641
Aggregate payments to General
Partner: (1)
1993 $221,000 $741,295 $1,383,380 $4,178,039
1994 54,739 551,300 1,339,355 2,007,562
1995 - 380,380 1,201,436 1,480,305
1996 - 290,349 967,667 1,097,106
1997 - 212,148 909,024 1,113,697
1998 - 93,950 285,987 384,365
------------ ------------ -------------- ------------
$275,739 $2,269,422 $6,086,879 $10,261,074
============ ============ ============== ============
</TABLE>
A-8
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Capital
Distribution Distribution Equipment
Fund V Fund VI Fund VII
<S> <C> <C> <C>
Date offering commenced Feb. 22, 1993 Nov. 23, 1994 Nov. 29, 1996
Date offering closed Nov. 15, 1994 Nov. 22, 1996 N/A (2)
Dollar amount raised $125,000,000 $125,000,000 $105,570,080
Amounts paid to General
Partners from proceeds of
offering:
Acquisition fees $5,956,319 $5,625,000 None
Selling commissions $1,702,822 $1,711,446 $1,345,029
Organization and program costs $5,751,177 $5,875,000 $4,831,747
Dollar amount of cumulative cash generated
from operations before deducting payments
to the General Partner $66,608,559 $57,969,330 $14,241,414
Cumulative amount paid to the
General Partner from operations:
Management fees $6,829,986 $3,548,523 $1,004,567
Other operating expenses $2,706,509 $1,909,042 $1,090,828
Aggregate payments to General
Partner: (1)
1993 $8,084,815
1994 15,675,132
1995 4,067,056 $12,837,117
1996 2,328,139 13,208,900
1997 2,053,274 1,969,649 $10,657,867
1998 871,080 816,899 6,338,549
------------- ------------- -------------
$33,079,496 $28,832,565 $16,996,416
============= ============= =============
</TABLE>
FOOTNOTES:
(1) As of June 30, 1998. Includes payments of management fees,
reimbursements of syndication costs to general partner (and affiliates),
acquisition fees and reimbursements of administrative costs.
(2) As of June 30, 1998, the offering had not been terminated. The offering
will terminate on or before November 29, 1998.
A-9
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
June 30, 1998
(Unaudited)
The following Table summarizes the operating results of Prior Programs
(ACDF, ACDF II, ACDF III, ACDF IV, ACDF V, ACDF VI and ACEF VII). The Programs'
records are maintained in accordance with generally accepted accounting
principles for financial statement purposes.
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
1986 1987 1988 1989
Months of operations 2 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $6,257 $375,072 $1,493,794 $1,761,021
- gain (loss) on sales of assets - - - 11,951
--------------- ----------------- -------------- --------------
6,257 375,072 1,493,794 1,772,972
Less Operating Expenses: (1)
Depreciation expense - 51,965 914,188 1,215,223
Amortization expense - 7,849 7,949 7,949
Interest expense 1,558 29,918 37,727 52,553
Administrative costs and reimbursements - 16,288 20,978 43,990
Legal/Professional fees - 15,105 16,586 39,712
Provision for doubtful accounts - - - -
Supplies - 10,507 6,414 -
Other 125 10,886 18,329 12,648
Management fee - 19,882 108,196 147,120
--------------- ----------------- -------------- --------------
Net income - GAAP basis (2) $4,574 $212,672 $363,427 $253,777
=============== ================= ============== ==============
Taxable income (loss) from operations $3,972 ($208,962) ($414,155) ($294,778)
=============== ================= ============== ==============
Cash generated by (used in) operations (3) $221,291 $160,581 $1,402,104 $1,521,502
Cash generated from sales - - - -
Cash generated from refinancing - - - -
Cash generated from other (3) - 104,143 183,679 221,151
--------------- ----------------- -------------- --------------
221,291 264,724 1,585,783 1,742,653
--------------- ----------------- -------------- --------------
Less cash distributions to investors:
From operating cash flow - 160,581 1,215,018 1,508,226
From sales - - - -
From refinancing - - - -
From other - 93,374 - -
--------------- ----------------- -------------- --------------
Total distributions - 253,955 1,215,018 1,508,226
--------------- ----------------- -------------- --------------
Cash generated (deficiency) after cash distributions $221,291 $10,769 $370,765 $234,427
=============== ================= ============== ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $2.76 ($46.78) ($41.00) ($29.20)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income None $47.60 $35.98 $25.14
- Return of capital None 9.82 85.52 125.75
--------------- ----------------- -------------- --------------
None 57.42 121.50 150.89
Cash available for distribution, reinvested for
investors' accounts None 65.08 28.50 9.11
--------------- ----------------- -------------- --------------
Total None $122.50 $150.00 $160.00
=============== ================= ============== ==============
Sources (on a cash basis)
Sales
Refinancing
Operations $77.46 $150.00 $160.00
Other 45.04 - -
--------------- ----------------- -------------- --------------
Total None $122.50 $150.00 $160.00
=============== ================= ============== ==============
Amount invested in program equipment (cost,
excluding acquisition fees) $467,071 $4,293,800 $8,139,130 $8,989,917
Amount invested in program equipment (book value) $488,090 $4,341,128 $7,244,935 $6,724,650
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 4.20% 38.57% 73.10% 80.75%
</TABLE>
(Footnotes follow on page A-26)
A-10
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
1990 1991 1992 1993
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $2,201,630 $1,816,898 $1,410,396 $895,012
- gain (loss) on sales of assets 8,766 4,998 15,909 9,929
--------------- ----------------- -------------- --------------
2,210,396 1,821,896 1,426,305 904,941
Less Operating Expenses: (1)
Depreciation expense 1,612,647 1,277,406 906,100 348,650
Amortization expense 7,949 7,849 - -
Interest expense 176,922 144,752 72,057 25,403
Administrative costs and reimbursements 37,163 55,293 126,664 140,984
Legal/Professional fees 35,231 41,141 41,459 44,256
Provision for doubtful accounts 96,682 42,870 5,731 -
Supplies - - - -
Other 11,786 25,922 35,839 21,664
Management fee 164,932 130,347 94,229 80,016
--------------- ----------------- -------------- --------------
Net income (loss) - GAAP basis (2) $67,084 $96,316 $144,226 $243,968
=============== ================= ============== ==============
Taxable income (loss) from operations $150,104 $180,117 $1,105,467 $692,509
=============== ================= ============== ==============
Cash generated by (used in) operations (3) $1,585,967 $1,424,425 $1,673,016 $574,077
Cash generated from sales 30,000 159,396 562,504 1,343,908
Cash generated from refinancing - - - -
Cash generated from other (3) 237,576 185,406 126,552 183,275
--------------- ----------------- -------------- --------------
1,853,543 1,769,227 2,362,072 2,101,260
--------------- ----------------- -------------- --------------
Less cash distributions to investors:
From operating cash flow 1,516,124 1,265,955 1,470,260 574,077
From sales - - - 524,806
From refinancing - - - -
From other - - - 183,275
--------------- ----------------- -------------- --------------
Total distributions 1,516,124 1,265,955 1,470,260 1,282,158
--------------- ----------------- -------------- --------------
Cash generated (deficiency) after cash distributions $337,419 $503,272 $891,812 $819,102
=============== ================= ============== ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $14.88 $17.83 $109.44 $68.55
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $6.66 $9.54 $14.30 $24.18
- Return of capital 145.17 117.24 132.94 104.22
--------------- ----------------- -------------- --------------
151.83 126.78 147.24 128.40
--------------- ----------------- -------------- --------------
Cash available for distribution, reinvested for
investors' accounts 18.17 14.46 31.00 (21.92)
--------------- ----------------- -------------- --------------
Total $170.00 $141.24 $178.24 $106.48
=============== ================= ============== ==============
Amount invested in program equipment (cost,
excluding acquisition fees) $10,064,292 $8,607,852 $7,402,311 $3,620,293
Amount invested in program equipment (book value) $5,961,158 $3,639,966 $2,147,253 $724,675
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 90.40% 77.31% 66.49% 32.52%
(Footnotes follow on page A-26)
</TABLE>
A-11
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
1994 1995 1996 1997
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $264,117 $374,172 $169,765 $142,272
- gain (loss) on sales of assets 220,266 15,106 39,095 60,838
--------------- ----------------- -------------- --------------
484,383 389,278 208,860 203,110
Less Operating Expenses: (1)
Depreciation expense 98,835 29,324 62,028 36,917
Amortization expense - - - -
Interest expense 5,154 12,496 15,883 11,505
Administrative costs and reimbursements 34,380 - - -
Legal/Professional fees 20,391 15,443 10,606 14,959
Provision for losses - 3,768 2,088 -
Provision for doubtful accounts - - - -
Supplies - - - -
Other 20,697 17,552 16,712 14,962
Management fee 20,359 - - -
--------------- ----------------- -------------- --------------
Net income (loss) - GAAP basis (2) $284,567 $310,695 $101,543 $124,767
=============== ================= ============== ==============
Taxable income (loss) from operations $745,274 $339,275 $193,822 ($311,342)
=============== ================= ============== ==============
Cash generated by (used in) operations (3) $195,123 $200,234 $93,675 $114,354
Cash generated from sales 622,350 112,188 212,802 263,096
Cash generated from refinancing - - - -
Cash generated from other (3) 119,745 79,692 79,520 1,000
--------------- ----------------- -------------- --------------
937,218 392,114 385,997 378,450
--------------- ----------------- -------------- --------------
Less cash distributions to investors:
From operating cash flow 195,123 200,234 93,675 114,354
From sales 622,350 112,188 142,200 298,243
From refinancing - - - -
From other 412,143 174,165 - 1,000
--------------- ----------------- -------------- --------------
Total distributions 1,229,616 486,587 235,875 413,597
--------------- ----------------- -------------- --------------
Cash generated (deficiency) after cash distributions ($292,398) ($94,473) $150,122 ($35,147)
=============== ================= ============== ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $73.92 $33.65 $19.22 ($30.88)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $28.22 $30.82 $10.07 $12.38
- Return of capital 94.96 17.91 13.55 29.06
--------------- ----------------- -------------- --------------
123.18 48.73 23.62 41.44
--------------- ----------------- -------------- --------------
Cash available for distribution, reinvested for
investors' accounts (23.66) (18.63) (3.62) (9.44)
--------------- ----------------- -------------- --------------
Total $99.52 $30.10 $20.00 $32.00
=============== ================= ============== ==============
Sources (on a cash basis)
Sales $50.37 $6.94 $12.06 $23.07
Refinancing
Operations 15.79 12.39 7.94 8.85
Other 33.36 10.77 0.08
--------------- ----------------- -------------- --------------
Total $99.52 $30.10 $20.00 $32.00
=============== ================= ============== ==============
Amount invested in program equipment (cost,
excluding acquisition fees) $2,300,024 $2,825,287 $2,296,755 -
Amount invested in program equipment (book value) $484,971 $552,050 $234,707 -
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 20.66% 25.38% 20.63% -
</TABLE>
(Footnotes follow on page A-26)
A-12
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
Period Ended December 31,
1988 1989 1990
Months of operations 9 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $1,001,065 $4,190,191 $8,619,546
- gain (loss) on sales of assets - - -
----------------- -------------- --------------
1,001,065 4,190,191 8,619,546
Less Operating Expenses: (1)
Depreciation expense 531,855 2,579,866 5,253,869
Provision for decline in value of commercial aircraft - - 1,083,834
Provision for doubtful accounts - - -
Interest expense 31,445 362,122 1,485,960
Administrative costs and reimbursements 19,284 107,082 95,474
Legal/Professional fees - 32,022 42,748
Other 7,799 41,448 58,465
Management fee 43,721 252,159 472,064
----------------- -------------- --------------
Net income - GAAP basis (5) $366,961 $815,492 $127,132
================= ============== ==============
Taxable income (loss) from operations ($588,007) ($3,544,620) ($3,583,850)
================= ============== ==============
Cash generated by (used in) operations (3) $1,044,176 $3,639,963 $6,823,453
Cash generated from sales
Cash generated from refinancing
Cash generated from other (3) 100,715 147,741 400,308
----------------- -------------- --------------
1,144,891 3,787,704 7,223,761
Less cash distributions to investors:
From operating cash flow 253,760 1,986,455 4,069,920
From sales - - -
From refinancing - - -
From other - - -
----------------- -------------- --------------
Total distributions 253,760 1,986,455 4,069,920
----------------- -------------- --------------
Cash generated (deficiency) after cash distributions $891,131 $1,801,249 $3,153,841
================= ============== ==============
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations ($96.15) ($158.82) ($101.37)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $41.91 $36.54 $3.60
- Return of capital - 53.37 112.69
----------------- -------------- --------------
41.91 89.91 116.29
Cash available for distribution, reinvested for investors' accounts 37.47 30.09 13.71
----------------- -------------- --------------
Total $79.38 $120.00 $130.00
================= ============== ==============
Sources (on a cash basis)
Operations $79.38 $120.00 $130.00
Sales - - -
Refinancing - - -
Other - - -
----------------- -------------- --------------
Total $79.38 $120.00 $130.00
================= ============== ==============
Amount invested in program equipment (cost, excluding acquisition fees) $14,664,014 $30,309,212 $48,538,987
Amount invested in program equipment (book value) $14,661,074 $28,412,251 $40,154,353
Amount remaining invested in program equipment (Cost of equipment owned
at end of period as a percentage of cost of all equipment purchased by the
program) (4) 28.05% 57.99% 92.86%
</TABLE>
(Footnotes follow on page A-26)
A-13
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
Period Ended December 31,
1991 1992 1993
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $8,774,789 $8,148,565 $6,665,582
- gain (loss) on sales of assets (31,613) 111,809 184,599
----------------- -------------- --------------
8,743,176 8,260,374 6,850,181
Less Operating Expenses: (1)
Depreciation expense 5,546,000 5,285,315 4,285,373
Provision for decline in value of commercial - - -
aircraft - - -
Provision for doubtful accounts 30,400 4,064 -
Interest expense 1,353,033 1,171,105 860,663
Administrative costs and reimbursements 94,910 256,184 313,421
Legal/Professional fees 52,281 39,612 47,110
Other 38,337 70,316 49,725
Management fee 510,416 408,421 427,874
----------------- -------------- --------------
Net income - GAAP basis (5) $1,117,799 $1,025,357 $866,015
================= ============== ==============
Taxable income (loss) from operations ($2,013,494) $1,686,207 $2,346,733
================= ============== ==============
Cash generated by (used in) operations (3) $6,705,095 $6,601,157 $4,720,797
Cash generated from sales 223,447 767,749 2,643,336
Cash generated from refinancing - - -
Cash generated from other (3) 488,962 698,496 1,437,114
----------------- -------------- --------------
7,417,504 8,067,402 8,801,247
Less cash distributions to investors:
From operating cash flow 4,561,842 4,927,246 4,720,797
From sales - - -
From refinancing - - -
From other - - 794,270
----------------- -------------- --------------
Total distributions 4,561,842 4,927,246 5,515,067
----------------- -------------- --------------
Cash generated (deficiency) after cash distributions $2,855,662 $3,140,156 $3,286,180
================= ============== ==============
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations ($56.95) $47.69 $66.38
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $31.62 $29.01 $24.50
- Return of capital 98.72 111.77 133.07
----------------- -------------- --------------
130.34 140.78 157.57
Cash available for distribution, reinvested for
investors' accounts 9.66 9.22 2.43
----------------- -------------- --------------
Total $140.00 $150.00 $160.00
================= ============== ==============
Sources (on a cash basis)
Operations $140.00 $150.00 $136.96
Sales - - -
Refinancing - - -
Other - - 23.04
----------------- -------------- --------------
Total $140.00 $150.00 $160.00
================= ============== ==============
Amount invested in program equipment (cost, excluding acquisition fees) $47,181,808 $41,405,356 $36,692,677
Amount invested in program equipment (book value) $29,983,437 $23,667,996 $16,204,828
Amount remaining invested in program equipment (Cost of equipment owned
at end of period as a percentage of cost of all equipment purchased by the
program) (4) 90.26% 79.21% 70.20%
</TABLE>
(Footnotes follow on page A-26)
A-14
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
December 31,
1994 1995 1996
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $5,627,738 $3,191,834 $1,994,161
- gain (loss) on sales of assets (3,239) 453,960 168,927
----------------- -------------- --------------
5,624,499 3,645,794 2,163,088
Less Operating Expenses: (1)
Depreciation expense 2,963,445 1,451,193 885,426
Provision for doubtfull accounts - - -
Provision for losses 11,616 25,972 22,221
Interest expense 509,267 365,099 237,226
Administrative costs and reimbursements 238,185 157,444 132,994
Legal/Professional fees 37,647 44,864 21,173
Other 66,324 71,101 72,138
Management fee 313,115 222,936 157,355
----------------- -------------- --------------
Net income - GAAP basis (5) $1,484,900 $1,307,185 $634,555
================= ============== ==============
Taxable income (loss) from operations $4,340,559 $3,101,835 $2,079,449
================= ============== ==============
Cash generated by (used in) operations (3) $3,921,897 $2,788,119 $1,288,526
Cash generated from sales 2,959,549 2,304,367 1,298,116
Cash generated from refinancing - - -
Cash generated from other (3) 1,311,673 875,730 877,510
----------------- -------------- --------------
8,193,119 5,968,216 3,464,152
Less cash distributions to investors:
From operating cash flow 3,921,897 2,788,119 1,288,526
From sales 859,241 1,064,197 -
From refinancing - - -
From other 1,311,673 875,730 788,922
----------------- -------------- --------------
Total distributions 6,092,811 4,728,046 2,077,448
----------------- -------------- --------------
Cash generated (deficiency) after cash distributions $2,100,308 $1,240,170 $1,386,704
================= ============== ==============
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $122.79 $87.76 $58.84
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $42.01 $36.99 $17.95
- Return of capital 132.10 98.14 41.42
----------------- -------------- --------------
174.11 135.13 59.37
Cash available for distribution, reinvested for
investors' accounts (4.11) (30.13) (7.37)
----------------- -------------- --------------
Total $170.00 $105.00 $52.00
================= ============== ==============
Sources (on a cash basis)
Operations $109.43 $61.92 $32.25
Sales 23.97 23.63 -
Refinancing - - -
Other 36.60 19.45 19.75
----------------- -------------- --------------
Total $170.00 $105.00 $52.00
================= ============== ==============
Amount invested in program equipment (cost,
excluding acquisition fees) $26,755,760 $21,031,914 $16,329,599
Amount invested in program equipment (book value) $11,523,077 $7,459,980 $4,564,924
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4)
program) (4) 51.19% 40.24% 31.24%
</TABLE>
(Footnotes follow on page A-26)
A-15
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
December 31, June 30,
1997 1998
Months of operations 12 6
<S> <C> <C>
Gross revenue - lease and other $1,189,141 $452,079
- gain (loss) on sales of assets 124,594 256,886
----------------- --------------
1,313,735 708,965
Less Operating Expenses: (1)
Depreciation expense 364,425 140,293
Provision for doubtfull accounts 17,072 -
Provision for losses 13,097 4,995
Interest expense 115,320 32,450
Administrative costs and reimbursements 127,992 56,196
Legal/Professional fees 24,303 9,045
Other 54,154 37,146
Management fee 84,156 37,754
----------------- --------------
Net income - GAAP basis (5) $513,216 $391,086
================= ==============
Taxable income (loss) from operations $1,357,072 $750,000
================= ==============
Cash generated by (used in) operations (3) $635,243 $303,682
Cash generated from sales 778,928 435,440
Cash generated from refinancing - -
Cash generated from other (3) 816,922 76,485
----------------- --------------
2,231,093 815,607
Less cash distributions to investors:
From operating cash flow 635,243 303,682
From sales - 435,440
From refinancing - -
From other 655,877 79,193
----------------- --------------
Total distributions 1,291,120 818,315
----------------- --------------
Cash generated (deficiency) after cash distributions $939,973 ($2,708)
================= ==============
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $38.40 $21.22
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $14.52 $11.06
- Return of capital 22.38 12.33
----------------- --------------
36.90 23.39
Cash available for distribution, reinvested for
investors' accounts (6.90) 6.61
================= ==============
Total $30.00 $30.00
================= ==============
Sources (on a cash basis)
Operations $14.76 $11.13
Sales - 15.96
Refinancing - -
Other 15.24 2.90
----------------- --------------
Total $30.00 $30.00
================= ==============
Amount invested in program equipment (cost,
excluding acquisition fees) $11,293,265 $10,304,748
Amount invested in program equipment (book value) $2,740,429 $2,370,652
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 21.61% 19.71%
</TABLE>
(Footnotes follow on page A-26)
A-16
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended December 31,
1990 1991 1992
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $2,130,161 $7,760,246 $12,713,280
- gain (loss) on sales of assets - (17,714) 1,202,188
----------------- -------------- --------------
2,130,161 7,742,532 13,915,468
Less Operating Expenses: (1)
Depreciation expense 1,278,427 4,919,605 7,739,054
Provision for decline in value of commercial
aircraft 623,294 - -
Interest expense 482,047 1,002,520 1,186,760
Administrative costs and reimbursements 70,775 239,667 542,510
Legal/Professional fees 7,600 52,746 31,691
Other 22,898 49,198 52,629
Management fee 83,245 391,494 839,909
----------------- -------------- --------------
Net income - GAAP basis (6) ($438,125) $1,087,302 $3,522,915
================= ============== ==============
Taxable income (loss) from operations ($2,539,135) ($6,476,596) ($3,010,933)
================= ============== ==============
Cash generated by (used in) operations (3) $1,572,921 $6,288,997 $9,564,446
Cash generated from sales - - 4,006,080
Cash generated from refinancing - - -
Cash generated from other (3) 125,093 14,587 181,746
----------------- -------------- --------------
1,698,014 6,303,584 13,752,272
Less cash distributions to investors:
From operating cash flow 396,751 4,185,400 9,261,560
From sales - - -
From refinancing - - -
From other - - -
----------------- -------------- --------------
Total distributions 396,751 4,185,400 9,261,560
----------------- -------------- --------------
Cash generated (deficiency) after cash distributions $1,301,263 $2,118,184 $4,490,712
================= ============== ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations ($282.13) ($200.01) ($40.37)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $33.58 $47.23
- Return of capital $44.53 96.98 78.19
----------------- -------------- --------------
$44.53 $130.56 $125.42
================= ============== ==============
Sources (on a cash basis)
Sales
Refinancing
Operations $44.53 $130.56 $125.42
Other - - -
----------------- -------------- --------------
Total $44.53 $130.56 $125.42
================= ============== ==============
Amount invested in program equipment (cost,
excluding acquisition fees) $28,534,220 $52,188,848 $83,423,686
Amount invested in program equipment (book value) $27,475,925 $44,531,829 $64,526,606
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4)
program) (4) 28.64% 52.38% 83.73%
</TABLE>
(Footnotes follow on page A-26)
A-17
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended
December 31,
1993 1994 1995
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $13,970,227 $14,212,777 $13,378,680
- gain (loss) on sales of assets (140,513) 155,497 954,115
----------------- -------------- --------------
13,829,714 14,368,274 14,332,795
Less Operating Expenses: (1)
Depreciation expense 8,984,502 9,734,408 9,037,450
Provision for losses 36,626 826,550
Interest expense 1,456,147 1,395,276 1,064,823
Administrative costs and reimbursements 468,005 340,269 300,952
Legal/Professional fees 58,809 60,552 59,237
Other 75,289 113,411 110,637
Management fee 915,375 999,086 900,484
----------------- -------------- --------------
11,958,127 12,679,628 12,300,133
----------------- -------------- --------------
Income before extraordinary items 1,871,587 1,688,646 2,032,662
Extrordinary gain on early extinguisment of debt - - -
----------------- -------------- --------------
Net income - GAAP basis (6) $1,871,587 $1,688,646 $2,032,662
================= ============== ==============
Taxable income (loss) from operations ($5,122,581) $635,990 $6,281,437
================= ============== ==============
Cash generated by (used in) operations (3) $11,402,915 $11,400,861 $10,333,228
Cash generated from sales 269,479 682,595 3,276,705
Cash generated from refinancing - - -
Cash generated from other (3) 719,701 1,317,531 1,518,191
----------------- -------------- --------------
12,392,095 13,400,987 15,128,124
Less cash distributions to investors:
From operating cash flow 9,594,918 10,201,485 10,333,228
From sales - - -
From refinancing - - -
From other - - 4,961
----------------- -------------- --------------
Total distributions 9,594,918 10,201,485 10,338,189
----------------- -------------- --------------
Cash generated (deficiency) after cash distributions $2,797,177 $3,199,502 $4,789,935
================= ============== ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations ($68.68) $8.53 $84.28
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $25.09 $22.66 $27.27
- Return of capital 104.86 115.59 112.73
----------------- -------------- --------------
$129.95 $138.25 $140.00
================= ============== ==============
Sources (on a cash basis)
Sales
Refinancing
Operations $129.95 $138.25 $139.93
Other - - 0.07
----------------- -------------- --------------
Total $129.95 $138.25 $140.00
================= ============== ==============
Amount invested in program equipment (cost, excluding
acquisition fees) $91,612,304 $87,442,745 $79,602,818
Amount invested in program equipment (book value) $63,434,911 $52,479,724 $39,107,792
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 91.95% 87.77% 79.90%
</TABLE>
(Footnotes follow on page A-26)
A-18
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended
December 31, June 30,
1996 1997 1998
Months of operations 12 12 6
<S> <C> <C> <C>
Gross revenue - lease and other $10,565,963 $7,610,362 $2,645,652
- gain (loss) on sales of assets 1,143,807 2,823,095 (74,584)
----------------- -------------- --------------
11,709,770 10,433,457 2,571,068
Less Operating Expenses: (1)
Depreciation expense 7,051,625 4,560,013 1,385,502
Provision for losses 118,023 104,335 17,173
Interest expense 630,450 319,415 77,378
Administrative costs and reimbursements 245,242 248,250 109,547
Legal/Professional fees 38,522 31,985 7,767
Other 149,613 174,046 78,650
Management fee 722,425 660,774 176,440
----------------- -------------- --------------
8,955,900 6,098,818 1,852,457
----------------- -------------- --------------
Income before extraordinary items 2,753,870 4,334,639 718,611
Extrordinary gain on early extinguisment of debt 97,608 - -
----------------- -------------- --------------
Net income - GAAP basis (6) $2,851,478 $4,334,639 $718,611
================= ============== ==============
Taxable income (loss) from operations $8,404,788 $10,406,517 $6,000,000
================= ============== ==============
Cash generated by (used in) operations (3) $8,435,426 $6,535,498 $2,352,452
Cash generated from sales 5,335,135 10,182,310 2,799,814
Cash generated from refinancing - - -
Cash generated from other (3) 1,628,837 1,047,681 448,401
----------------- -------------- --------------
15,399,398 17,765,489 5,600,667
Less cash distributions to investors:
From operating cash flow 8,435,426 $6,535,498 $2,352,452
From sales - 35,201 2,123,578
From refinancing - -
From other 777,879 1,047,681 448,401
----------------- -------------- --------------
Total distributions 9,213,305 7,618,380 4,924,431
----------------- -------------- --------------
Cash generated (deficiency) after cash distributions $6,186,093 $10,147,109 $676,236
================= ============== ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $112.76 $139.66 $80.53
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $38.26 $58.17 $9.64
- Return of capital 86.63 45.11 57.12
----------------- -------------- --------------
$124.89 $103.28 $66.76
================= ============== ==============
Sources (on a cash basis)
Sales $0.48 $28.79
Refinancing - -
Operations $114.35 88.60 31.89
Other 10.54 14.20 6.08
----------------- -------------- --------------
Total $124.89 $103.28 $66.76
================= ============== ==============
Amount invested in program equipment (cost, excluding
acquisition fees) $64,700,440 $43,579,341 $35,414,346
Amount invested in program equipment (book value) $26,203,009 $13,159,990 $8,443,803
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 64.94% 43.74% 35.55%
</TABLE>
(Footnotes follow on page A-26)
A-19
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund IV
Period Ended December 31,
1992 1993 1994
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $2,123,081 $10,510,289 $13,246,145
- gain (loss) on sales of assets - (38,429) (102,932)
--------------- ----------------- --------------
2,123,081 10,471,860 13,143,213
Less Operating Expenses: (1)
Depreciation and amortization expense 1,147,209 7,054,380 8,743,149
Provision for losses - - 34,505
Interest expense 91,577 81,437 1,332,542
Administrative costs and reimbursements 382,114 537,918 358,441
Legal/Professional fees 46,935 52,838 86,594
Other 25,988 57,575 114,376
Management fee 103,510 752,950 1,060,190
--------------- ----------------- --------------
Net income - GAAP basis $325,748 $1,934,762 $1,413,416
=============== ================= ==============
Taxable income (loss) from operations ($2,034,428) ($9,624,570) ($8,073,869)
=============== ================= ==============
Cash generated by (used in) operations (3) $3,560,891 $9,021,440 $10,366,325
Cash generated from sales - 98,752 5,648,425
Cash generated from refinancing - - -
Cash generated from other (3) - 220,258 1,522,609
--------------- ----------------- --------------
3,560,891 9,340,450 17,537,359
Less cash distributions to investors:
From operating cash flow 1,936,639 8,686,491 9,653,038
From sales - - -
From refinancing - - -
From other - - -
--------------- ----------------- --------------
Total distributions 1,936,639 8,686,491 9,653,038
--------------- ----------------- --------------
Cash generated (deficiency) after cash distributions $1,624,252 $653,959 $7,884,321
=============== ================= ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations ($76.67) ($127.78) ($106.64)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $12.28 $15.86 $18.67
- Return of capital 61.44 100.63 110.12
--------------- ----------------- --------------
$73.72 $116.49 $128.79
=============== ================= ==============
Sources (on a cash basis)
Sales
Refinancing
Operations $73.72 $116.49 $128.79
Other - - -
--------------- ----------------- --------------
Total $73.72 $116.49 $128.79
=============== ================= ==============
Amount invested in program equipment (cost, excluding
acquisition fees) $49,603,894 $82,896,683 $88,187,291
Amount invested in program equipment (book value) $49,801,834 $69,901,953 $65,252,553
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 45.62% 76.24% 81.10%
</TABLE>
(Footnotes follow on page A-26)
A-20
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund IV
Period Ended
December 31, June 30,
1995 1996 1997 1998
Months of operations 12 12 12 6
<S> <C> <C> <C> <C>
Gross revenue - lease and other $12,973,718 $11,664,408 $8,076,530 $2,629,456
- gain (loss) on sales of assets 615,042 1,574,946 3,203,666 48,343
--------------- ----------------- -------------- --------------
13,588,760 13,239,354 11,280,196 2,677,799
Less Operating Expenses: (1)
Depreciation and amortization expense 8,740,231 7,849,010 4,846,725 1,204,112
Provision for losses 679,634 135,965 321,876 13,145
Interest expense 1,960,823 1,858,316 971,628 251,740
Administrative costs and reimbursements 349,663 275,778 303,642 119,085
Legal/Professional fees 76,365 46,419 35,746 8,369
Other 110,466 98,471 156,841 59,228
Management fee 872,374 821,328 810,055 265,280
--------------- ----------------- -------------- --------------
12,789,556 11,085,287 7,446,513 1,920,959
--------------- ----------------- -------------- --------------
Income before extraordinary items 799,204 2,154,067 3,833,683 756,840
Extrordinary gain on early extinguisment of debt - 112,546 - -
--------------- ----------------- -------------- --------------
Net income - GAAP basis (6) $799,204 $2,266,613 $3,833,683 $756,840
=============== ================= ============== ==============
Taxable income (loss) from operations ($2,073,084) $1,101,252 $13,539,726 $7,000,000
=============== ================= ============== ==============
Cash generated by (used in) operations (3) $8,830,893 $7,511,884 $5,717,928 $2,285,163
Cash generated from sales 2,722,954 4,376,555 20,594,019 496,550
Cash generated from refinancing - - - -
Cash generated from other (3) 2,384,094 2,991,035 2,593,695 1,279,275
--------------- ----------------- -------------- --------------
13,937,941 14,879,474 28,905,642 4,060,988
Less cash distributions to investors:
From operating cash flow 8,830,893 7,511,884 $5,717,928 $2,285,163
From sales - - 2,169,677 496,550
From refinancing - - - -
From other 906,007 2,881,345 2,593,695 2,460,200
--------------- ----------------- -------------- --------------
Total distributions 9,736,900 10,393,229 10,481,300 5,241,913
--------------- ----------------- -------------- --------------
Cash generated (deficiency) after cash distributions $4,201,041 $4,486,245 $18,424,342 ($1,180,925)
=============== ================= ============== ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations ($27.43) $14.56 $179.03 $92.56
Recapture
Capital gain (loss) $0.04
Cash distributions to investors on a GAAP basis:
- Investment income $10.57 $29.97 $50.69 $10.01
- Return of capital 119.50 108.83 89.31 59.99
--------------- ----------------- -------------- --------------
$130.07 $138.80 $140.00 $70.00
=============== ================= ============== ==============
Sources (on a cash basis)
Sales $28.98 $6.63
Refinancing - -
Operations $117.97 $100.32 76.38 30.52
Other 12.10 38.48 34.64 32.85
--------------- ----------------- -------------- --------------
Total $130.07 $138.80 $140.00 $70.00
=============== ================= ============== ==============
Amount invested in program equipment (cost, excluding
acquisition fees) $98,547,911 $92,543,075 $60,025,398 $57,601,674
Amount invested in program equipment (book value) $63,967,204 $52,264,526 $27,375,489 $24,524,492
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 90.63% 85.11% 55.20% 52.97%
</TABLE>
(Footnotes follow on page A-26)
A-21
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund V
Period Ended
December 31,
1993 1994 1995
Months of operations 10 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $2,173,205 $10,806,892 $19,951,380
- gain (loss) on sales of assets - 2,564 933,289
--------------- ----------------- --------------
2,173,205 10,809,456 20,884,669
Less Operating Expenses: (1)
Depreciation and amortization expense 1,600,628 8,135,951 14,600,474
Provision for losses - 34,158 987,013
Interest expense 31,511 61,036 1,222,050
Administrative costs and reimbursements 373,089 706,324 535,812
Legal/Professional fees 13,746 65,028 110,744
Other 36,269 113,981 176,847
Management fee 178,583 1,013,448 1,623,818
--------------- ----------------- --------------
Net income - GAAP basis ($60,621) $679,530 $1,627,911
=============== ================= ==============
Taxable income (loss) from operations ($5,061,304) ($13,005,033) ($11,831,759)
=============== ================= ==============
Cash generated by (used in) operations (3) $1,795,722 $10,053,220 $15,800,948
Cash generated from sales - 22,572 6,930,477
Cash generated from refinancing - - -
Cash generated from other (3) - 1,513,782 2,498,923
--------------- ----------------- --------------
1,795,722 11,589,574 25,230,348
Less cash distributions to investors:
From operating cash flow 922,278 8,223,081 13,101,508
From sales - - -
From refinancing - - -
From other - - -
--------------- ----------------- --------------
Total distributions 922,278 8,223,081 13,101,508
--------------- ----------------- --------------
Cash generated (deficiency) after cash distributions $873,444 $3,366,493 $12,128,840
=============== ================= ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations ($219.75) ($152.59) ($93.72)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $8.05 $12.89
- Return of capital $40.45 89.41 91.93
--------------- ----------------- --------------
$40.45 $97.46 $104.82
=============== ================= ==============
Sources (on a cash basis)
Sales
Refinancing
Operations $40.45 $97.46 $104.82
Other - - -
--------------- ----------------- --------------
Total $40.45 $97.46 $104.82
=============== ================= ==============
Amount invested in program equipment (cost, excluding
acquisition fees) $34,699,207 $113,427,843 $161,866,626
Amount invested in program equipment (book value) $34,246,741 $100,762,242 $131,686,535
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 18.57% 60.69% 86.61%
</TABLE>
(Footnotes follow on page A-26)
A-22
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund V
Period Ended
December 31, June 30,
1996 1997 1998
Months of operations 12 12 6
<S> <C> <C> <C>
Gross revenue - lease and other $23,662,790 $23,092,315 10,630,964
- gain (loss) on sales of assets 1,325,132 345,340 127,835
--------------- ----------------- --------------
24,987,922 23,437,655 10,758,799
Less Operating Expenses: (1)
Depreciation and amortization expense 15,351,574 13,503,318 6,045,676
Provision for losses 255,294 1,801,707 (7) 55,409
Interest expense 3,962,860 3,599,776 1,461,401
Administrative costs and reimbursements 455,316 405,886 230,082
Legal/Professional fees 117,566 94,603 28,136
Other 428,631 571,546 281,587
Management fee 1,725,751 1,647,388 640,998
--------------- ----------------- --------------
22,296,992 21,624,224 8,743,289
--------------- ----------------- --------------
Income before extraordinary items 2,690,930 1,813,431 2,015,510
Extrordinary gain on early extinguisment of debt 160,955 - -
--------------- ----------------- --------------
Net income - GAAP basis (6) $2,851,885 $1,813,431 $2,015,510
=============== ================= ==============
Taxable income (loss) from operations ($7,493,824) ($913,120) $1,000,000
=============== ================= ==============
Cash generated by (used in) operations (3) $14,733,366 $16,546,120 $7,679,183
Cash generated from sales 5,900,451 3,136,926 2,603,881
Cash generated from refinancing - - -
Cash generated from other (3) 4,855,093 4,476,163 1,065,530
--------------- ----------------- --------------
25,488,910 24,159,209 11,348,594
Less cash distributions to investors:
From operating cash flow 13,672,825 13,744,875 7,354,230
From sales - - -
From refinancing - - -
From other - - -
--------------- ----------------- --------------
Total distributions 13,672,825 13,744,875 7,354,230
--------------- ----------------- --------------
Cash generated (deficiency) after cash distributions $11,816,085 $10,414,334 $3,994,364
=============== ================= ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations ($59.36) ($7.23) $7.92
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $22.59 $14.51 $15.75
- Return of capital 86.81 95.48 43.10
--------------- ----------------- --------------
$109.40 $109.99 $58.85
=============== ================= ==============
Sources (on a cash basis)
Sales
Refinancing
Operations $109.40 $109.99 $58.85
Other - -
--------------- ----------------- --------------
Total $109.40 $109.99 $58.85
=============== ================= ==============
Amount invested in program equipment (cost, excluding
acquisition fees) $168,575,337 $163,806,646 $156,565,527
Amount invested in program equipment (book value) $125,729,656 $104,863,156 $93,614,614
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 90.20% 87.65% 83.77%
</TABLE>
(Footnotes follow on page A-26)
A-23
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund VI
Period Ended
December 31, June 30,
1995 1996 1997 1998
Months of operations 12 12 12 6
<S> <C> <C> <C> <C>
Gross revenue - lease and other $6,440,218 $25,837,343 $36,458,734 $18,338,821
- gain (loss) on sales of assets 3,819 (107,873) 26,431 795,189
--------------- ----------------- -------------- --------------
6,444,037 25,729,470 36,485,165 19,134,010
Less Operating Expenses: (1)
Depreciation and amortization expense 4,976,075 19,298,500 27,596,548 13,512,038
Provision for losses 64,892 257,814 364,852 97,528
Interest expense 931,651 5,773,463 7,993,746 3,452,060
Administrative costs and reimbursements 539,009 748,745 435,759 185,529
Legal/Professional fees 50,962 186,724 91,625 21,752
Other 121,541 612,698 807,883 366,666
Management fee 362,581 1,061,856 1,492,716 631,370
--------------- ----------------- -------------- --------------
Net income (loss) - GAAP basis ($602,674) ($2,210,330) ($2,297,964) $867,067
=============== ================= ============== ==============
Taxable income (loss) from operations ($11,625,618) ($27,319,391) ($22,433,132) ($5,000,000)
=============== ================= ============== ==============
Cash generated by (used in) operations (3) $4,354,020 $13,940,220 $23,899,770 $15,775,320
Cash generated from sales 54,156 636,397 406,362 2,308,466
Cash generated from refinancing - - - -
Cash generated from other (3) 195,884 501,623 685,665 258,270
--------------- ----------------- -------------- --------------
4,604,060 15,078,240 24,991,797 18,342,056
Less cash distributions to investors:
From operating cash flow 2,484,971 8,719,731 12,475,238 6,281,757
From sales - - - -
From refinancing - - - -
From other - - - -
--------------- ----------------- -------------- --------------
Total distributions 2,484,971 8,719,731 12,475,238 6,281,757
--------------- ----------------- -------------- --------------
Cash generated (deficiency) after cash distributions $2,119,089 $6,358,509 $12,516,559 $12,060,299
=============== ================= ============== ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations ($364.88) ($346.74) ($177.67) ($39.60)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $6.87
- Return of capital $78.78 $92.53 $99.80 43.38
--------------- ----------------- -------------- --------------
$78.78 $92.53 $99.80 $50.25
=============== ================= ============== ==============
Sources (on a cash basis)
Sales
Refinancing
Operations $78.78 $92.53 $99.80 $50.25
Other - - - -
--------------- ----------------- -------------- --------------
Total $78.78 $92.53 $99.80 $50.25
=============== ================= ============== ==============
Amount invested in program equipment (cost, excluding
acquisition fees) $98,036,611 $204,553,244 $206,090,008 $205,669,798
Amount invested in program equipment (book value) $92,802,029 $185,510,097 158,856,251 143,475,138
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 47.07% 98.21% 98.95% 98.75%
</TABLE>
(Footnotes follow on page A-26)
A-24
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Capital Equipment Fund VII
Period Ended
December 31, June 30,
1997 1998
Months of operations 12 6
<S> <C> <C>
Gross revenue - lease and other $7,370,229 $14,013,153
- gain (loss) on sales of assets 3,752 843,793
----------------- --------------
7,373,981 14,856,946
Less Operating Expenses: (1)
Depreciation and amortization expense 5,847,827 8,694,006
Provision for losses 74,277 56,954
Interest expense 714,701 1,962,200
Administrative costs and reimbursements 645,437 445,391
Legal/Professional fees 90,305 37,210
Other 380,821 282,602
Management fee 358,846 645,721
----------------- --------------
Net income (loss) - GAAP basis ($738,233) $2,732,862
================= ==============
Taxable income (loss) from operations ($7,867,498) ($10,000,000)
================= ==============
Cash generated by (used in) operations (3) $6,061,438 $8,179,976
Cash generated from sales 130,413 2,330,193
Cash generated from refinancing - -
Cash generated from other (3) 232,472 871,265
----------------- --------------
6,424,323 11,381,434
Less cash distributions to investors:
From operating cash flow 2,684,635 4,026,256
From sales - -
From refinancing - -
From other - -
----------------- --------------
Total distributions 2,684,635 4,026,256
----------------- --------------
Cash generated (deficiency) after cash distributions $3,739,688 $7,355,178
================= ==============
Tax and distribution data per $1,000
limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations ($230.41) ($292.86)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $29.74
- Return of capital $79.42 $17.63
----------------- --------------
$79.42 $47.37
================= ==============
Sources (on a cash basis)
Sales
Refinancing
Operations $79.42 $47.37
Other - -
----------------- --------------
Total $79.42 $47.37
================= ==============
Amount invested in program equipment (cost, excluding
acquisition fees) $149,409,976 $175,510,177
Amount invested in program equipment (book value) $101,284,861 $125,986,576
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 99.91% 98.84%
</TABLE>
(Footnotes follow on page A-26)
A-25
<PAGE>
FOOTNOTES:
(1) Operating expenses include reimbursements to the corporate general
partner as follows:
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Cash ATEL Cash ATEL Cash ATEL Cash ATEL Capital
Distribution Distribution Distribution Distribution Distribution Distribution Equipment
Year ended December 31, Fund Fund II Fund III Fund IV Fund V Fund VI Fund VII
<S> <C> <C> <C> <C> <C> <C> <C>
1986 $100
1987 15,100
1988 21,500 $3,000
1989 32,201 86,234
1990 37,163 95,474 $70,775
1991 48,195 71,289 239,667
1992 126,664 256,184 542,510 $382,114
1993 140,984 313,421 468,005 537,918 $373,089
1994 34,380 238,185 340,269 358,441 706,324
1995 - 157,444 300,952 349,663 535,812 $539,009
1996 - 132,994 245,242 275,778 455,316 748,745
1997 - 127,992 248,250 303,642 405,886 435,759 $645,437
1998 - 56,196 109,547 119,085 230,082 185,529 445,391
--------------- ------------- ------------- ------------- ------------- ------------- -------------
$456,287 $1,538,413 $2,565,217 $2,326,641 $2,706,509 $1,909,042 $1,090,828
=============== ============= ============= ============= ============= ============= =============
</TABLE>
(2) A portion of the equipment owned by the Partnership is accounted for
under the direct financing method. Income under direct financing leases is
reported on the financing method where the income portion of each rental payment
is calculated so as to generate a constant rate of return on the outstanding net
investment. The effect is to recognize decreasing amounts of income in later
periods as the net investment declines. Net income was also negatively impacted
in 1990 by necessity for a provision for doubtful accounts. Prior to 1990, there
had been no such need. The decrease in net income from 1988 to 1989 and from
1989 to 1990 is due to increasing debt levels and interest expense. The decrease
from 1992 to 1993 is due to decreased lease revenues. Revenues have declined as
equipment leases have expired and as the related assets have been sold.
(3) Cash generated by (used in) operations does not include the principal
portion of lease rentals received under direct financing leases. In the
partnerships' statements of cash flows (under generally accepted accounting
principles), these amounts are included in the investing activities section.
(4) The percentage is calculated as a fraction, the numerator of which is
the amount invested in program equipment (at cost) as of the end of the
indicated period and the denominator of which is the cumulative total of the
cost of all equipment acquired by the program through the end of the latest
period shown.
(5) Net income decreased from 1989 to 1990 due to the provision for decline
value of commercial aircraft ($1,083,834) included in net income in 1990.
Excluding the effect of that provision, net income per $1,000 invested would
have been $34.60. The results in 1990 are also effected by higher depreciation
rates used for more recent equipment purchases, resulting in increased
depreciation expense compared to lease revenues. The remaining amount of the
changes from 1988 to 1989 and from 1989 to 1990 are primarily due to the timing
of the acquisition of assets, the placement of debt against certain assets and
other operating factors.
(6) Net income increased from 1990 to 1991 due to the provision for decline
value of commercial aircraft ($623,294) included in net income in 1990. The
remaining amount of the changes from 1990 to 1991 and from 1991 to 1992 are
primarily due to the timing of the acquisition of assets, the placement of debt
against certain assets and other operating factors.
(7) In January 1998, Pegasus Gold, one of the Partnership's lessees, filed
for reorganization under Chapter 11 of the United States Bankruptcy Code. The
Partnership determined that certain of the assets under this direct financing
lease were impaired at December 31,1997. The Partnership's provision for losses
and impairments for 1997 includes a reserve for the estimated credit exposure
(approximately $1,200,000) related to the remaining lease assets.
A-26
<PAGE>
TABLE IV
RESULTS OF COMPLETED PROGRAMS
December 31, 1997
(Unaudited)
Program name: ATEL Cash Distribution Fund
Dollar amount of equity raised: $10,000,000
Assets purchased (see Table 5 for detail listings): $11,133,679
Date of Closing of Offering: December 18, 1987
Date of first sale of property: May 1, 1989
Date of final sale of property: December 31, 1997
Tax and distribution data per $1,000 limited partner
investment through December 31, 1997:
Federal Income Tax Results:
Ordinary income (loss):
Operations $192.40
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $244.89
- Return of capital 876.14
------------
1,121.03
Cash available for distribution, reinvested for
investors' accounts 89.05
------------
Total $1,210.08
============
Sources (on a cash basis)
Sales $136.03
Refinancing
Operations 969.59
Other 104.46
------------
Total $1,210.08
============
A-27
<PAGE>
TABLE V
ACQUISITION OF EQUIPMENT
BY PRIOR PROGRAMS
The following is a summary of Equipment acquisitions and Lessees by the
seven prior publicly-registered programs sponsored by ATEL Financial Corporation
and its affiliates. Information concerning the prior programs' Equipment
acquisition is current through June 30, 1998.
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3) Leverage (4) Term (5) (6)
ATEL Cash Distribution Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Acushnet Company Office Information Systems Jan-87 $134,246 $6,041 60 FP
Alachua General Hospital, Inc. 7 Medical Jan-89 628,632 28,288 36 OL
American Motors Corporation Lift Trucks Oct-87 to 622,632 28,018 48 OL
Jan-88
Anaheim Memorial Hospital Medical Jan-88 779,613 35,083 48.07% 60 FP
Campbell Soup Company Lift Trucks Mar-87 317,500 14,288 84 FP
Colour Graphics Corporation 8 Printing Jan-87 222,520 10,013 80.75% 84 FP
Enron Corp. Office Information Systems Aug-88 244,488 11,002 36 FP
Financial News Network, Inc. 9 Studio and Broadcasting Apr-90 909,735 26,183 36 FP
GAF Corporation 10 Manufacturing Oct-88 512,208 23,049 60 FP
GAF Corporation Lift Trucks Oct-87 439,866 19,794 60 OL
Galardi Group, Inc. Restaurant Furnitue and
Fixtures Jul-94 247,000 - 48 FP
Hartford Insurance Group Communication Mar-88 89,236 4,016 60 FP
Imperial Plastics, Inc. 11 Manufacturing Sep-87 to 526,270 23,682 69.63% 84 FP
Apr-88
Martin Marietta Corporation Communication May-88 425,670 19,155 48 OL
Nord Kaolin Company 12, 13 Mining, Processing Jul-87 to 358,710 16,734 60-62 FP
Jan-88
Nord Sil-Flo Company 12, 13 Material Handling Aug-89 to 28,113 673 86.27% 60 FP
Jan-88
Polaroid Corporation Office Information Systems Jan-87 36,190 1,629 59 FP
Putnam County Hospital Medical May-88 110,000 4,950 60 FP
Rohr Industries, Inc. Motor Vehicle Apr-88 to 327,240 14,726 36-84 FP, OL
Oct-88
Teledyne Industries, Inc. 14 Lift Trucks Jan-88 to 1,653,596 74,412 36-84 FP, OL
Oct-89
The Dow Chemical Company Motor Vehicle May-88 217,908 9,805 74.86% 50 FP
Treasure Chest Advertising 15 Printing Apr-87 498,746 22,444 97.79% 60 FP
Company
TRW, Inc. Communication Apr-89 320,657 14,430 36 OL
United Technologies Office Information Systems Jan-87 74,115 3,335 48 FP
Corporation, Pratt &
Whitney Aircraft
Group
Vista Chemical Company Railroad Rolling Stock Mar-88 850,000 38,250 53.45% 60 FP
Vista Chemical Company Railroad Rolling Stock, Apr-93 350,000 - 60 OL
Improvements
WSMP, Inc. Food Processing Equipment Jul-95 208,788 - 98.47% 60 FP
---------------- ---------------
ATEL Cash Distribution Fund total: $11,133,679 $450,000
================ ===============
</TABLE>
A-28
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3) Leverage (4) Term (5) (6)
ATEL Cash Distribution Fund II
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A.O. Smith Corporation Office Information Jul-89 to $873,480 $5,878 11.59% 36-59 FP
Feb-91
Systems, Lift Trucks
Addwest Gold, Inc. 16 Mining Oct-88 1,100,717 52,284 60 FP
Alachua General Hospital, Inc. 7 Medical Jan-89 1,257,263 59,720 36 OL
American Express Company Manufacturing May-89 276,775 13,147 48 FP
American President Trucking 17 Tractors Sep-88 2,890,840 137,315 84 FP
Co., Ltd.
Bristol-Myers Squibb Company Office Furniture Jul-92 324,310 - 24 OL
Buffalo & Pittsburgh Railroad Locomotive Nov-93 108,127 - 37 FP
Campbell Soup Company Lift Trucks Aug-88 350,772 16,662 84 FP
Chesebrough-Pond's Inc. Lift Trucks Jun-90 201,452 - 48-50 FP
Chrysler Corporation Material Handling Dec-93 103,620 - 12 OL
Colour Graphics Corporation Computer System Oct-88 33,805 1,606 60 FP
Cooper Tire & Rubber Company Lift Trucks Jan-89 576,326 27,375 84 FP
Delnor Community Hospital Medical Jul-88 449,956 21,373 36 OL
DJ Aerospace (Bermuda), Ltd. Executive Aircraft Jul-94 810,000 - 36 OL
Emanuel Hospital & Health Helicopter Oct-88 2,247,765 106,769 79.58% 144 FP
Center
Financial News Network, Inc. 9, 18 Studio and Broadcasting Apr-90 640,544 29,815 36 FP
Fingerhut Corporation Binding, Printing Jan-89 to 1,441,690 68,481 60 FP
Mar-89
FMC Gold Company Material Handling Apr-90 761,129 36,154 36 OL
GAF Corporation Manufacturing Oct-88 to 682,310 32,410 60 FP
Apr-88
Galardi Group, Inc. Restaurant Furniture and Jul-94 507,000 - 48 FP
Fixtures
General Motors Corporation Video Projectors Jan-94 58,644 - 36 OL
Home Life Insurance Company Office Furniture/Lift Dec-88 425,658 20,219 60 FP
Trucks/Binding
Hudson Foods, Inc. Food Processing Dec-89 2,713,115 128,872 65.91% 57-59 FP
Inland Steel Company Scientific Measuring Sep-89 417,000 19,808 54 FP
International Paper Company 19 Delivery Trucks Jul-88 1,281,761 60,884 36-60 FP, OL
KeyCorp Office Furniture, Jul-89 1,618,337 76,870 40.09% 53-55 FP
Automated Teller Machines
Koppers Industries, Inc. Material Handling Jun-90 639,120 - 60 FP
Liggett Group, Inc. 20 Manufacturing Dec-88 648,577 30,807 56 FP
Midway Airlines, Inc. 21 Commercial Aircraft Jun-90 4,592,040 - 68.85% 102 FP
National Semiconductor Manufacturing Apr-89 728,000 34,580 56 FP
Corporation
National Steel Corporation Material Handling May-89 606,153 28,792 87.63% 81 FP
National Union Electric 22 Communication Apr-89 459,893 21,845 60 FP
Corporation
Nissan Motor Corporation In USA Office Information Systems Jul-88 219,187 10,411 48 FP
NMCS, Inc. , d/b/a National 23 Office Furniture Apr-88 599,001 28,452 60 FP
Medical Group Services,
Inc.
Nord Kaolin Company 12 Drilling Apr-89 292,799 13,908 60 FP
Owens Corning Fiberglas Material Handling Jul-89 to 1,689,012 42,404 39.57% 36-84 FP, OL
Oct-90
Corporation
Quaker Coal Company 24 Tractor Apr-94 558,301 - 24 OL
Regents of the University of Communication Dec-88 80,386 3,818 60 FP
California
Rocky Mountain Helicopters, Inc 25 Medical Aircraft Nov-89 2,150,000 102,125 81.86% 84 FP
Rohr Industries, Inc. Motor Vehicles Jan-89 to 749,291 33,835 36-84 FP
Jan-90
Sebastiani Vineyards, Inc. Production Line, Wine Jan-90 to 2,818,067 29,362 79.98% 60-84 FP
Jan-91
Barrels
Shell Mining Company 26 Mining Jul-90 3,736,965 104,055 21.46% 60-84 FP
Sherwood Rehabilitation 27 Medical Furniture/Fixtures Oct-90 1,814,036 - 97.36% 87 FP
Hospital, Inc. & Eqt.
South Dade Nursing Home Ltd. 27 Physical Therapy & Jul-90 36,676 - 60 FP
Exercise Eqt.
St. Luke's-Roosevelt Hospital Medical Furniture/Fixtures
& Eqt.
Center
The Budd Company Material Handling May-90 to 1,099,014 - 75.09% 55-80 FP
Jun-90
The Dow Chemical Company Material Handling Jun-88 1,532,061 72,773 74.86% 50 OL
Treasure Chest Advertising Printing Press Apr-93 850,000 - 95.59% 60 FP
Company
Treasure Chest Advertising Printing Equipment Feb-94 233,000 - 60 FP
Company
USX Corporation Haul Trucks Dec-89 2,910,766 138,261 83.41% 60 FP
---------------- ---------------
ATEL Cash Distribution Fund II total: $52,270,536 $1,661,498
================ ===============
</TABLE>
A-29
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund III
A.O. Smith Corporation Material Handling Feb-91 $451,902 $21,465 60 FP
Alachua General Hospital, Inc. Medical Oct-92 2,074,989 - 36 OL
Alachua General Hospital, Inc. Medical Apr-95 80,500 - 0.00% 18 FP
Alumina Partners of Jamaica 28 Earth Moving Jun-93 2,057,133 - 60 FP
American President Trucking Tractors and Trailers Mar-90 to 4,859,181 230,811 68.08% 77-84 FP
Aug-90
Co., Ltd.
AMOCO Corporation Trailers May-94 523,805 - 85.88% 66 FP
ARR, Inc. 29, Corporate Aircraft Oct-92 5,275,000 - 84 OL
30
Barney's, Inc. 31 Retail Store Furniture and Oct-93 2,041,222 - 60.04% 60 FP
Fixtures
Buffalo & Pittsburgh Railroad Locomotives Nov-93 792,657 - 37 FP
Company
Carrier Corporation Lift Trucks Jul-90 108,062 5,133 55 FP
Carrier Corporation Lift Trucks Jul-90 to 533,950 25,363 53 FP
Aug-90
Dean Foods Company Trailers Nov-90 to 1,213,190 57,627 75-84 FP
Apr-91
Fingerhut Corporation Offset Printing Press Apr-91 1,303,078 61,896 85 FP
Fingerhut Corporation Printing Oct-91 to 2,074,915 14,464 48.47% 84-85 FP
Oct-92
FMC Gold Company Haul Truck Jul-90 534,828 25,404 48 OL
Fred Meyer, Inc. Point-of-Sale Oct-90 6,343,897 301,335 63.93% 58 FP
General American Life Office Furniture Jan-93 1,611,278 76,536 84 FP
Insurance
H.E. Butt Grocery Company Tractors and Trailers Jan-93 2,112,747 - 60-84 OL/FP
Ingersoll International, Inc. Communication System Dec-90 277,017 13,158 60 FP
Kelly-Springfield Tire Company Material Handling Apr- to 127,834 6,072 60 FP
Jul-92
Koppers Industries, Inc. Material Handling Oct-90 402,722 19,129 60 FP
Kraft General Foods, Inc. Lift Trucks May-91 to 1,621,541 77,023 48-72 FP
Nov-91
Midway Airlines, Inc. 21 Commercial Aircraft Jul-90 2,296,020 109,061 68.85% 102 FP
Mobil Oil Corporation Material Handling Jul-92 70,256 1,173 36 OL
Mobil Oil Corporation Electric Golf Carts Nov-93 280,119 - 36 OL
Nord Kaolin Company 32 Materials Processing Sep-90 391,116 18,578 60 FP
Ohio Coal Company 33 Mining Apr-92 10,630,130 504,931 84.48% 51-84 OL/FP
Pepsico, Inc., d/b/a/ PFS Material Handling Jul-90 to 539,330 25,618 45.63% 58-72 FP
Sep-90
Pilgrim's Pride Corporation Food Processing Nov-90 3,619,095 171,907 59 FP
Pittston Coal Group 34 Mining Jul-92 5,810,941 276,020 75.71% 60 FP
Portland General Electric 35 Power Generation Jun-90 2,710,359 128,742 70.25% 101 OL
Company
PSI Energy, Inc. Earth Moving Aug-90 842,013 39,996 72 FP
Quaker Coal Company Mining Jan-94 5,808,385 - 60 OL
Reliance Insurance Company Office Furniture Jul-92 1,222,297 50,135 51.90% 60 FP
Rohr Industries Motor Vehicle Oct-95 37,244 - 36 OL
Shell Mining Company Haul Trucks Jan-92 3,167,443 150,454 65.64% 60-84 FP
Stone Container Corporation Material Handling Nov-90 2,975,000 141,313 34.40% 26-57 OL
Teledyne Industries, Inc. Lift Trucks Feb-91 116,476 5,533 39 OL
Terex Corporation Manufacturing Apr-91 291,455 13,845 84 FP
The Dow Chemical Company Material Handling Nov-90 to 4,504,918 195,358 68.68% 53-60 OL/FP
Dec-92
The Helen Mining Company 36 Mining Shields Jul-91 5,270,314 250,340 60 FP
The Pillsbury Company Harvesting Jan-93 2,327,946 110,577 59.93% 60 OL
Treasure Chest Advertising Flying High Speed Paster Apr-93 239,171 - 87 FP
Company
Treasure Chest Advertising Printing Stackers Oct-95 139,600 - 84 FP
Company
Truck-Lite Company, Inc. 36 Project Line Oct-91 to 6,875,715 308,441 81.76% 69-84 FP
Jan-93
USS/Kobe Steel Company 37 Lift Trucks Sep-19 to 408,410 19,399 36-60 OL/FP
Nov-91
Utilicorp United, Inc. 38 Power Generation Sep-91 1,086,934 51,629 75.65% 105 FP
Wal-Mart, Inc. Trailers / Forklifts May-94 490,255 - 95.09% 20-38 OL/FP
West Penn Power Company Storage Tanks Sep-91 1,057,551 50,234 97.86% 87 FP
------------- ---------------
ATEL Cash Distribution Fund III total: $99,629,941 $3,558,700
============= ===============
</TABLE>
A-30
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund IV
ARR, Inc. 29, Corporate Aircraft Oct-92 to $9,635,969 $337,259 84 OL
30 Dec-92
ATS, Automatic Tooling Systems Machine Tools Mar-95 434,904 123,410 86.98% 60 FP
ATS, Automatic Tooling Systems Machine Tools Mar-95 175,974 6,545 86.98% 60 FP
Barney's, Inc. 31 Retail Store Furniture and Oct-93 2,353,608 82,376 60.05% 60 FP
Fixtures
Buffalo & Pittsburgh Railroad Locomotives Nov-93 849,216 29,723 37 FP
Burlington Air Exress Materials Handling Apr-95 622,663 21,793 78.25% 84 FP
Burlington Air Exress Materials Handling Jul-95 505,325 - 80.23% 84 FP
Burlington Northern Railroad 39 Locomotives Jan-93 7,950,000 278,250 24 OL
Company
Chrysler Corporation Tractors & Trailers Dec-93 3,253,000 113,855 84.13% 71-72 FP
Clinchfield Coal Company Drill, Endloader, Diesel Jan-94 985,203 34,482 65.79% 73.5-
Generator 91.5 FP
DJ Aerospace (Bermuda), Ltd. Executive Aircraft Jul-94 1,890,000 66,150 36 OL
Federal Paper Board Co., Inc. Office Equipment Jul-95 77,950 - 36 FP
Foodmaker, Inc. Restaurant Furniture and Oct-94 to 2,651,356 92,797 60 FP
Fixtures Jan-95
Galardi Group, Inc. Restaurant Furniture and Jul-94 546,000 19,110 48 FP
Fixtures
GE Industrial & Power Systems Office Automation Mar-95 138,130 4,835 36 FP
GE Industrial & Power Systems Machine Center Jun-95 457,670 - 84 FP
H.E. Butt Grocery Company Trailers Oct-92 to 5,709,369 199,828 72.48% 60-84 OL/FP
Jan-93
H.E. Butt Grocery Company Trailers Jun-93 1,404,302 49,151 75.71% 84 FP
Holston Mining, Inc. 40 Endloader, Dozer Jan-94 584,617 20,462 91.5 FP
Kraft General Foods, Inc. Tractors Dec-93 964,315 33,751 71.69% 31 FP
Liquid Carbonic Industrial/ 41 Air Separation Plant Dec-93 9,500,897 332,531 54.21% 99 FP
Medical Corporation
Midwest Power Systems, Inc. Coal Hopper Cars Jan-93 2,240,000 78,400 28.36% 36 OL
Mobil Oil Corporation Tractors/Construction/Earth Oct-92 to
Moving Apr-94 2,760,175 95,786 27-60 OL
Nabisco, Inc. Office Automation Aug-95 337,594 - 36 FP
National Steel Corporation Construction Equipment Jan-95 2,208,510 77,298 76.55% 60-84 FP
National Steel Corporation Construction Equipment Apr-95 3,675,997 83,148 88.15% 85-91 FP
Omnicom Group Inc. Office Automation Oct-95 901,849 - 36 FP
Omnicom Group Inc. Computers & Related Aug-96 32,599 - 36 FP
Equipment
Paramount Coal Corporation 40 Drill, Dozer Jan-94 595,800 20,853 65.79% 61.5- FP
91.5
Pepsico, Inc. Materials Handling Jan-94 146,926 5,142 48-60 OL/FP
Pepsico, Inc. Materials Handling Jul-93 to 458,017 16,031 48-60 OL/FP
Sep-93
Pittston Coal Group 34 Mining Jul-92 846,883 29,641 78.76% 60 FP
Pittston Coal Group 34 Mining Mar-95 819,349 28,677 65.79% 60 FP
Quaker Coal Company 24 Rail Car Mover Nov-95 263,984 - 48 FP
Rochelle Coal Company 42 Mining Jan-93 6,303,701 220,630 70.34% 84 FP
Sebastiani Vineyards, Inc. Wine Barrels Apr-94 189,855 6,645 60 FP
Sebastiani Vineyards, Inc. Wine Barrels Apr-95 180,253 6,309 60 FP
Sebastiani Vineyards, Inc. Wine Barrels Apr-94 to 454,721 15,915 36 FP
Jul-94
Signature Flight Support Air Support Equipment Jan-95 1,142,400 39,200 84 FP
Corporation
Tarmac America, Inc. 43 Crawler Dozer, Wheel Loader Aug-94 385,443 13,491 75.64% 60-84 FP
Tarmac America, Inc. 43 Construction Equipment Jan-95 210,438 7,365 80.90% 84 FP
Tarmac America, Inc. 43 Construction Equipment Jul-95 to 1,309,300 - 79.82% 97 FP
Aug-95
TASC, Inc. Office Automation Jan-95 131,008 4,585 36 FP
TASC, Inc. Office Automation Oct-95 to 601,701 - 36 FP
Apr-96
The Dow Chemical Company Material Handling, Research Dec-92 2,221,228 77,743 74.80% 60-84 FP
The Dow Chemical Company Research Feb-93 102,149 3,575 87.94% 60 FP
The Dow Chemical Company Boom Lift May-93 66,900 2,342 75.81% 60 FP
The Helen Mining Company 36 Mining Jan- to 3,816,507 133,578 32.62% 60 FP
May-92
The Kendall Company Office Automation Nov-94 166,835 5,839 36 FP
The Kendall Company Office Automation Jan-95 86,108 3,014 36 FP
The Kendall Company Office Automation Apr-95 434,705 15,071 36 FP
The Kendall Company Office Automation Oct-95 to 568,370 - 24-36 FP
Jan-96
The Stop & Shop Supermarket Bakery Labeling Machines Feb-96 368,500 - 60 FP
Company
Trans Ocean Container 44 Intermodal Containers Oct-93 3,001,930 105,068 120 FP
Corporation
Treasure Chest Advertising Bin Stackers and Trimmers Dec-93 to
Company Apr 94 753,419 26,370 84-86 FP
Treasure Chest Advertising Printing Press Dec-93 3,478,749 121,756 88.28% 84 FP
Company
Treasure Chest Advertising Printing Press & Associated Aug-93 2,075,000 72,625 89.99% 66 FP
Company Equipment
Treasure Chest Advertising Printing Press & Associated Feb-95 511,907 17,917 84 FP
Company Equipment
Union Pacific Corporation Intermodal Jan-93 1,453,096 50,858 46.85% 60 OL
Union Tank Car Company Rail Sep-92 to 6,460,600 225,666 23.25% 25-51 OL
Oct-92
USS/Kobe Steel Company 37 Materials Handling Jul-94 35,920 1,257 60 FP
USS/Kobe Steel Company 37 Dump Truck Aug-92 256,000 8,960 84 FP
USX Corporation Materials Handling Jun-93 3,061,376 107,148 83.67% 54-69 FP
Xerox Corporation Materials Handling Feb-95 26,092 913 44 OL
Xerox Corporation AKT PVD System Upgrade Jan-97 77,518 - 54 FP
Xerox Corporation AKT PVD System Jul-96 2,825,000 - 85.74% 60 FP
---------------- ---------------
ATEL Cash Distribution Fund IV total: $108,734,880 $3,575,123
================ ===============
</TABLE>
A-31
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund V
Armco, Inc. Phone Mail System Jan-96 $459,835 $16,094 84 FP
Armco, Inc. Telephone System Upgrade Jan-97 31,932 - 72 FP
The Atchison, Topeka & Santa Fe Containers Jan-95 1,926,930 67,443 62.75% 84 OL
Railroad Company
The Atchison, Topeka & Santa Fe Rail Car Containers and Jul-94 7,812,200 273,427 55.89% 84 OL
Railroad Company Chassis
The Atchison, Topeka & Santa Fe 45 Tank Containers Nov-93 744,875 26,071 84 FP
Railroad Company
Barney's, Inc. 31 Retail Store Furniture and Oct-93 3,365,947 117,808 60.04% 60 FP
Fixtures
BJ's Wholesale Club 46 Materials Handling Oct-94 613,998 21,490 62 FP
BNMC Leasing, Inc. Over-the-road Tractors May-94 141,540 4,954 35.62% 8 OL
Burlington Air Express Materials Handling Jan-95 to 1,720,008 60,200 75.87% 84 FP
Apr-95
Burlington Northern Railroad Locomotives Jan-95 12,350,000 432,250 28 OL
Burlington Northern Railroad 47 Covered Hopper Rail Cars Apr-96 9,344,563 60,848 21 FP
Burris Foods, Inc. Over-the-road Trailers May-94 245,296 8,585 21.16% 5 OL
Canadian Pacific Limited 47 Covered Hopper Rail Cars Apr-96 1,798,388 - 13 FP
Cargill, Inc. 47 Covered Hopper Rail Cars Apr-96 282,100 - 36 FP
CF Industries, Inc. 47 Covered Hopper Rail Cars Apr-96 528,938 - 12 FP
Chrysler Corporaion Materials Handling Dec-94 to 1,300,286 45,510 76.79% 60 OL
Mar-95
Chrysler Corporation Over-the-road Tractors Dec-93 1,379,490 48,282 54.62% 60 OL
Chrysler Corporation Materials Handling Apr-96 9,296 - 60 OL
Chrysler Corporation Forklifts Jul-96 25,162 - 60 OL
Chrysler Corporation Materials Handling Apr-95 to 166,069 5,812 30.07% 60 OL
Jun-95
Chrysler Corporation Materials Handling Nov-93 to 1,303,039 45,606 58.69% 60 OL
Jan-94
CITGO Petroleum Corp. Over-the-road Tractors May-94 837,904 29,327 74.10% 36 OL
Clark Oil & Refining Corporation Retail Store Fixtures Jan-94 1,268,656 44,403 36 OL
Denver and Rio Grande Western Auto Racks May-94 7,180,000 251,300 44 FP/OL
Railroad
Emerson Electric Company Over-the-road Trailers May-94 237,149 8,300 27.39% 80 FP
Federal Paper Board Company, Inc. Materials Handling Jan-95 1,315,911 46,057 36 OL
Federal Paper Board Company, Inc. Materials Handling Apr-95 930,814 32,578 36 OL
Federal Paper Board Company, Inc. Forklifts, Wheeloader Oct-94 167,791 5,873 36 OL
Foodmaker, Inc. Fixtures and Fittings and Jan-94 to 6,042,382 211,489 15.63% 60 FP
Trailers Oct-94
General Electric Company Injection Molding Feb-96 1,470,000 51,450 76.28% 120 FP
General Motors Corporation Materials Handling Jan-94 to 3,023,173 105,811 62.16% 60 OL
(Service Parts Operation May-94
Division)
General Motors Corporation Materials Handling Jul-94 893,382 31,268 73.33% 60 OL
(Truck and Bus Division)
IBM Corporation Office Furniture Aug-93 1,825,710 63,900 48 OL
Illinois Central Railroad 47 Covered Hopper Rail Cars Apr-96 1,234,188 - 12-40 FP
Company
Ingersoll International, Inc. Machine Tools Jun-94 1,196,355 41,872 72 FP
Kaiser Cement Corporation Tractor and Dump Truck Oct-93 984,671 34,463 60 OL
Kraft, Inc. Over-the-road Trailers May-94 1,000,353 35,012 91.49% 56 FP
McDonnell Douglas Helicopter Office Automation Aug-95 110,320 3,861 36 FP
Systems
Minteq International, Inc. 48 Turbo Laser May-96 347,430 - 36 FP
Minteq International, Inc. 48 Turbo Laser Feb-94 461,800 16,163 60 FP
Mobil Administrative Services 49 Helicopter Jun-93 844,525 29,558 24 OL
Company, Inc.
Mobil Oil Corporation Environmental Ejector Jul-93 423,000 14,805 36 OL
Systems
Mobil Oil Corporation Wheel Loader Oct-93 70,200 2,457 36 OL
Mobil Oil Corporation Materials Handling Jan-95 853,093 29,858 60 OL
Mobil Oil Corporation Liquid Petroleum Tank Cars Oct-95 to 12,863,591 450,226 75.74% 240 FP
Jan-96
Montana Rail Link, Inc. 47 Covered Hopper Rail Cars Apr-96 846,300 - 12 FP
Nabisco, Inc. Office Automation Mar-95 426,420 14,925 36 OL
Nabisco, Inc. Office Automation Oct-95 190,442 6,665 36 FP
National Steel Corporation Wheel Loader Oct-94 253,527 8,873 55.74% 60 FP
National Steel Corporation Materials Handling Oct-94 64,650 2,263 46.63% 49 OL
National Steel Corporation Materials Handling Jan-95 1,649,465 57,731 59.70% 61 OL
National Steel Corporation Materials Handling Jan-95 66,134 2,315 51.26% 36 OL
National Steel Corporation Materials Handling Apr-95 873,161 30,561 63.31% 61 OL
National Steel Corporation Materials Handling Apr-95 609,500 21,333 56.28% 49 OL
National Steel Corporation Bulldozer / Crane Oct-95 2,137,183 74,801 78.44% 90 FP
Occidental Chemical Corporation Barges Aug-94 2,798,303 97,941 56.31% 16 OL
Omnicom Group, Inc. 50 Office Automation & Office Jan-96 1,458,896 51,061 36-60 FP
Furniture
Owens Corning Fiberglas Corp. Materials Handling Aug-93 157,462 5,511 36 OL
Pegasus Gold Corporation 51 Surface Mining Jan-96 7,280,747 254,826 79.77% 84 FP
Praxair, Inc. Over-the-road Tractors May-94 668,114 23,384 52.77% 27 OL
Primark Corporation Office Automation Jul-95 to 143,449 5,021 36 FP
Apr-96
PV Trucking Over-the-road Tractors May-94 75,332 2,637 18 FP
Quaker Coal Company 24 Haul Truck & Crawler Oct-94 2,626,953 91,943 24-30 OL
Tractor
Quaker Coal Company 24 Mining Equipment Jan-95 3,000,000 105,000 24 OL
Quaker Coal Company 24 Haul Trucks & Tractor Oct-95 2,877,672 100,719 48-60 FP
Quantum Restaurant Group, Inc. 52 Restaurant Furniture / Jun-96 436,331 - 60 FP
Fixtures / Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture / Jul-96 499,131 - 60 FP
Fixtures / Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture / Sep-96 450,273 - 60 FP
Fixtures / Equipment
Quantum Restaurant Group, Inc. 52 POS System Sep-96 33,023 - 60 FP
Quantum Restaurant Group, Inc. 52 POS System Oct-96 36,185 - 60 FP
Quantum Restaurant Group, Inc. 52 Restaurant Furniture / Oct-97 432,328 15,131 60 FP
Fixtures / Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture / Oct-97 425,437 14,890 60 FP
Fixtures / Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture / Oct-97 205,981 7,209 60 FP
Fixtures / Equipment
Roper Corporation Forklifts Jan-96 243,659 8,528 84 FP
Roper Corporation Industrial Batteries Sep-96 30,882 - 76 FP
Schwegmann Giant Super 53 Fixtures & Equipment Jul-95 5,058,331 176,161 60 FP
Markets, Inc.
Sebastiani Vineyards, Inc. Bottling Equipment Apr-94 113,673 3,979 48 OL
Sebastiani Vineyards, Inc. Wine Barrels Apr-95 95,848 3,355 36 FP
Smitty's Super Valu, Inc. 54 Retail Store Furniture & Jan-96 4,709,326 164,826 64.27% 60 FP
Fixtures
Soo Line Railroad Company 47 Covered Hopper Rail Cars Apr-96 1,586,813 - 12 FP
Star Enterprise Over-the-road Tractors May-94 923,533 32,324 59.16% 32 OL
Tarmac America, Inc. 43 Concrete Trucks with Mixers Sep-94 to 5,937,371 207,808 76.81% 48 FP
Oct-94
Tarmac America, Inc. 43 Construction Equipment Sep-95 to 1,491,348 52,197 70.16% 84 FP
Jan-96
Tarmac America, Inc. 43 Concrete Trucks with Mixers Sep-95 to 1,982,071 69,372 75.27% 97 FP
Oct-95
TASC, Inc. Office Automation Jan-95 237,685 8,319 18 OL
TASC, Inc. Office Automation Apr-96 522,280 16,716 18-36 FP
Texaco Trading and Over-the-road Tractors & May-94 4,485,676 156,999 60.91% 32-68 FP/OL
Transportation, Inc. Trailers
The Dow Chemical Company Copiers Jul-94 272,809 9,548 36 OL
The Dow Chemical Company Office Equipment Apr-95 122,800 4,298 36 FP
The Dow Chemical Company Office Automation Oct-94 to 377,702 13,220 36 OL/FP
Jan-95
The Kendall Company Office Automation Oct-96 3,735 131 36 FP
The Pillsbury Company Harvesting Equipment Oct-94 1,643,101 57,509 84.91% 60 FP/OL
The Pittston Company 34 Construction & Mining Jan-94 to 14,037,683 491,319 38.93% 49-61 OL/FP
Equipment Dec-94
Tom's Foods, Inc. Over-the-road Tractors May-94 259,102 9,069 35.23% 9 OL
Trans Ocean Container 44 Intermodal Containers Oct-93 5,000,683 175,024 120 OL
Corporation
Treasure Chest Advertising Printing Press & Associated Oct-93 2,069,950 72,448 77.94% 60-84 FP
Company, Inc. Equipment
Treasure Chest Advertising Printing Press & Associated Aug-96 287,320 9,051 84 FP
Company, Inc. Equipment
Treasure Chest Advertising Printing Press & Associated Jul-95 to 2,325,000 81,375 46.50% 66 FP
Company, Inc. Equipment Nov-95
Tyson Foods, Inc. Tractors / Trailers Jul-93 to 5,785,000 202,475 26.95% 36-84 OL
Aug-93
Union Carbide Corporation Rail Tank Cars Aug-95 4,835,759 140,000 39.30% 68-92 FP
USS / Kobe Steel Company 37 Wheel loader, Crane & Lift Jan-94 603,352 21,117 60-84 FP/OL
Truck
------------- ---------------
ATEL Cash Distribution Fund V total: $186,897,181 $5,956,319
============= ===============
</TABLE>
A-32
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund VI
A T & T Communications, Inc. 55 Printers Aug-95 to $1,578,500 $46,200 36 OL
Nov-95
A T & T Communications, Inc. 55 Printers Jul-96 to 1,171,302 17,192 34 OL
Dec-96
A T & T Communications, Inc. 55 Printers Nov-97 912,252 28-32 OL
A T & T Communications, Inc. 55 Printers Jun-96 to 540,181 15,752 28-34 OL
Jul-96
American President Trucking 17 Tractors and trailers Nov-95 759,092 22,773 30.18% 8 OL
Company, Ltd.
Applid Magnetics Corporation Manufacturing Sep-96 to 7,435,380 223,061 71.50% 60 OL/FP
Oct-96
Applied Magnetics Corporation Sputter Jul-96 3,274,642 98,239 78.86% 60 FP
Armco, Inc. Link-Belt Scrapmaster Oct-95 388,993 11,670 36 OL
Armco, Inc. Data processing Nov-95 67,829 2,035 37 FP
Armco, Inc. Office Automation Jul-96 109,416 3,282 30 FP
Armco, Inc. Office Automation Jan-97 60,655 72 FP
AT&L Railroad Company 47 Covered Hopper Rail Cars Apr-96 35,263 1,050 12 FP
Atchison, Topeka & Santa Fe Containers Oct-94 to 9,196,811 298,896 60.53% 84 OL
Railroad Company Jan-95
ATS Automation Tooling Machine Tools Apr-96 to 379,551 77,093 60 FP
Systems, Inc. Oct-96
ATS Automation Tooling Machine Center Oct-96 to 330,901 3,513 60 FP
Systems, Inc. Jan-97
BJ's Wholesale Club 46 Materials Handling Jul-95 931,635 30,278 63 OL
Burlington Northern Railroad 47 Covered Hopper Rail Cars Apr-96 13,223,438 396,703 21 FP
Canadian Pacific Limited 47 Covered Hopper Rail Cars Apr-96 2,433,113 72,450 13 FP
Cargill, Inc. 47 Covered Hopper Rail Cars Apr-96 352,625 10,500 36 FP
Certified Grocers of California Materials Handling Oct-96 637,702 19,131 60 OL
CF Industries, Inc. 47 Covered Hopper Rail Cars Apr-96 705,250 21,000 12 FP
Chrysler Corporation Materials Handling Feb-96 to 1,749,200 52,476 69.99% 53-60 OL
Jul-96
Chrysler Corporation Materials Handling Mar-95 to 5,925,384 184,233 66.83% 60 OL
Dec-95
Chrysler Corporation Materials Handling May-96 to 2,419,598 69,832 69.93% 52-60 OL/FP
Oct-96
Consolidated Rail Corporation Locomotives Sep-95 22,353,332 668,372 57.02% 60 OL
Consolidated Rail Corporation Intermodal Container Jan-96 2,502,750 75,083 60 OL
Chassis
Coors Transportation Company 56 Refrigerated Trailers Nov-95 797,704 23,931 47.35% 21 OL
Fairmont Homes, Inc. Materials Handling Apr-96 644,565 19,337 60 OL
Federal Paper Board Company Materials Handling Apr-96 to 1,740,861 52,226 70.43% 36-60 OL
Jun-96
Federal Paper Board Company Materials Handling Jul-95 to 5,401,765 166,124 57.05% 36-84 OL/FP
Jan-96
General Electric Company - Office Filing System Jan-97 101,685 60 FP
Aircraft Engines
General Motors Corporation Manufacturing Equipment Jul-95 652,232 19,567 36 OL
Gerber Products Company Materials Handling Oct-96 197,035 5,911 60 FP
Hastings Leasing Limited 57 Trucks & Miscellaneous Aug-96 20,242,332 607,270 90.58% 80 FP
Illinois Central Railroad 47 Covered Hopper Rail Cars Apr-96 1,692,600 50,400 12-40 FP
Company
IMC Fertilizer, Inc. Rail Tank Cars Sep-95 1,266,374 37,991 27 OL
Mobil Oil Corporation Tractor Jul-96 78,327 2,350 36 OL
Mobil Oil Corporation Materials Handling Oct-96 185,726 5,256 36 OL
Mobil Oil Corporation Hydraulic Crane Oct-96 160,773 4,823 84 OL
Mobil Oil Corporation Liquid Petroleum Tank Cars Jan-96 to 16,110,807 483,324 75.44% 240 FP
Feb-96
Montana Rail Link, Inc. 47 Covered Hopper Rail Cars Apr-96 1,198,925 35,700 12 FP
Nabisco, Inc. Office Automation Apr-95 709,572 23,061 36 OL
National Steel Corporation Hydraulic Shovels Jul-96 6,245,062 187,352 69.96% 60 OL
National Steel Corporation Steel Yard Equipemt Jan-97 948,705 14,543 48-60 OL/FP
National Steel Corporation Steel Yard Equipemt Oct-96 338,674 10,160 75.58% 60 FP
National Steel Corporation Wheel Loaders & Forklifts Jan-96 to 4,710,131 141,304 59.68% 36-90 OL/FP
Apr-96
National Steel Corporation Materials Handling, Jul-95 to 1,525,887 49,517 66.05% 60-90 OL/FP
Tractors & Trailers Oct-95
National Steel Corporation Cranes & Loaders Jul-96 to 1,099,210 32,976 72.33% 36-84 FP/OL
Oct-96
NEC Electronics, Inc. 58 Manufacturing Jan-96 18,320,603 66.67% 51 OL/FP
NVR, Inc. Roof Truss Assembly Jul-96 78,484 2,355 84 FP
Omnicom Group, Inc. 50 Office Automation Apr-95 to 2,232,559 68,290 36-60 OL/FP
Oct-95
Omnicom Group, Inc. 50 Television Production Jul-96 to 1,080,056 4,819 48 FP
Equipment Oct-96
Overnite Transportation Tractors Apr-96 2,140,643 62,961 36 OL
Company
Peerless Eagle Coal Company 59 Haul Trucks & Construction Jul-95 5,184,875 168,508 59.29% 48 OL
Perdue Transportation 60 Freightliner Tractors Nov-95 536,740 16,102 62.74% 24 OL
Incorporated
Quaker Coal Company 24 Wheel Loaders, Drill & Jan-96 3,298,935 98,968 48 FP
Grader
Quantum Restaurant Group, Inc. 52 Restaurant Furniture & Oct-96 253,676 7,610 60 FP
Fixtures
Quantum Restaurant Group, Inc. 52 POS System Nov-96 33,815 60 FP
Sebastiani Vineyards, Inc. Bottle Labeler Feb-96 317,520 9,526 60 OL
Signature Flight Support Fuel Trucks Jan-97 1,085,000 85.01% 96-132 FP
Corporation
Soo Line Railroad Company 47 Covered Hopper Rail Cars Apr-96 2,256,800 67,200 12 FP
Tarmac America, Inc. 43 Dragline Jul-96 1,441,764 43,253 84 FP
Tarmac America, Inc. 43 Concrete Mixer Trucks Jul-96 to 4,787,890 143,637 96 FP
Sep-96
Tarmac America, Inc. 43 Construction Equipment Oct-94 to 3,114,870 101,233 71.69% 97 FP
Nov-94
TASC, Inc. Office Automation Jan-96 to 1,018,030 30,542 36 FP
Jul-96
TASC, Inc. Office Automation May-95 to 1,567,339 50,413 18-36 OL/FP
Oct-95
TASC, Inc. OfficeAutomation Oct-96 to 2,654,244 11,629 36 FP
Jul-97
Trans Ocean Container 44 Intermodal Containers Jan-96 9,995,127 299,854 120 FP
Corporation
Tyson Foods, Inc. Office Automation Jun-95 563,411 18,311 24 OL
Xerox Corporation Binding & Finishing
Equipment Feb-95 to 646,466 19,981 48 OL
Jun-95
Xerox Corporation Materials Handling May-95 to 144,527 4,456 44 OL
Aug-95
--------------- ---------------
ATEL Cash Distribution Fund VI total: $208,277,121 $5,623,585
=============== ===============
</TABLE>
A-33
<PAGE>
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Capital Equipment Fund VII
A.P.Moller (Maersk) 61 Intermodal Containers Jan-98 $2,280,100 52 OL
Alliant Techsystems, Inc. Semiconductor Equipment Jan-98 138,505 8-16 OL
Anchor Glass Container Glass Packaging Equipment Jan-98 371,282 33.52% 3-6 OL
Corporation
Anchor Glass Container Office Automation Jan-98 404,995 18 FP
Corporation
Applied Magnetics Corporation Manufacturing Equipment Jul-97 4,152,810 85.33% 60 FP
Applied Magnetics Corporation Wafer Fabrication Equipment Dec 97 - 7,975,841 60-63 FP
Jan 98
Archer Daniels Midland Company 62 Rail Tank Cars Jan-98 42,875 6 OP
Atmel Corporation Semiconductor Manufacturing Jan-98 4,114,596 96 FP
Equipment
Avon Products, Inc. Office Automation Jan-98 29,415 17 FP
Blue Star Line Ltd. 61 Intermodal Containers Jan-98 3,573,462 60 OL
Burlington Northern Railroad 63 GE Locomotives Dec-96 5,010,960 13 OL
Company
Cargill, Incorporated 64 Covered Hopper Railcars Jan-97 6,534,000 72 FP
Certified Grocers of Forklifts Jul-98 810,792 60 OL
California, Ltd.
Chrysler Corporation Material Handling Equipment Oct 96 - 982,293 60 OL/HP
Dec 96
Columbus & Greenville Railway 64 Boxcars Jan-97 667,000 16 FP
Company
Consolidated Diesel Company Copiers Jan-98 15,697 10-13 FP
Consolidated Diesel Company Machine Tools Jan-98 15,161 14 OL
Consolidated Rail Corporation Intermodal Containers & Sep 97 - 3,314,000 84 HP
Chassis Nov 97
Costain Coal, Inc. Euclid Hual Trucks Jan-98 805,181 58.22% 12 OL
Danskin, Inc. Textile Manufacturing Jan-98 255,718 6-15 OL
Equipment
Dole Fresh Fruit Company 61 Intermodal Containers Jan-98 3,876,170 44 OL
Empire Blue Cross and Blue Office Furniture and Jan-98 696,766 27 FP
Shield Fixtures
Exel Logistics, Inc. Tractors and Semi-Trailers Jan-98 133,947 3 OL
Far Eastern Shipping Company 61 Intermodal Containers Jan-98 2,257,299 75 HP
Farmland Hydro, L.P. 62 Rail Tank Cars Jan-98 370,808 16 OL
General Electric Company / Blow Molding Machine Jan-97 906,370 24 OL
General Electric Plastics
General Electric Company / Trackmobile Railcar Mover Mar-97 166,602 60 OL
General Electric Plastics
General Electric Company / Spectrometers Mar-97 306,545 60 FP
General Electric Plastics
General Motors Corporation - Forklifts Jan-98 352,520 17 OL
GM Powertrain Group
Grand Trunk Western Railroad 65 Remanufactured High Cube Jan-98 3,342,139 56.64% 24 OL
Incorporated Boxcars
Great Salt Lake Minerals 62 Rail Tank Cars Jan-98 481,261 7 OL
Corporation
Hallsmith-Sysco Food Services, Volvo Tractors Apr-98 823,455 84 FP
a division of Sysco
Corporation
Hallsmith-Sysco Food Services, Trailmobile Refrigerated May-98 1,209,055 96 FP
a division of Sysco Trailers
Corporation
Hambros Vendor Leasing Limited 66 Vehicles & Sanitation Sep-97 5,381,076 78.56% 30-66 FP
Trucks
Hartz Foods, Inc. Refrigeration Units Jan-98 18,422 9 FP
Hastings Leasing Limited 67 Medical Equipment Oct-97 8,014,488 91.66% 25-81 FP
Hastings Leasing Limited 67 Trucks & Miscellaneous Oct-97 28,811,289 88.85% 29-113 FP
Henry General Hospital Hematology Analyzers & Jan-98 185,700 41 FP
Upgrades
Hughes Network Systems, Inc. Remote Communication Device Jan-98 97,237 54.61% 6-9 OL
Hyplains Beef, L.C. Racking and Conveyor Jan-98 1,364,007 10 OL
Equipment
IBM Corporation Stereolithography Apparatus Jan-98 30,026 7 OL
Illinois Central Railroad 64 Boxcars Jan-97 1,610,000 36 FP
Company
International Paper Company Trackmobile Railcar Mover Jan-97 248,952 60 OL
International Paper Company CAT Wheel Loaders Jan 97 - 417,700 48 HP
Feb 97
International Paper Company Knuckle Boom Loader Feb-97 213,095 72 FP
International Paper Company Hydraulic Excavator, Lift Jun 97 - 539,438 60 OL
Trucks, Loader Jul 97
International Paper Company Knuckle Boom/ Wheel Loaders Sep 97 - 926,964 2.84% 48-60 OL/HP
Oct 97
International Paper Company 68 Rail Log Cars Oct-97 5,624,724 51 OL
International Rectifier Wafer Fabrication Equipment Jan-98 589,829 8.45% 1-9 OL
Corporation
ITO Corporation Forklifts Jan-98 240,488 15-31 FP
Kawasaki Kisen Kaisha, 61 Intermodal Containers Jan-98 2,614,728 52 OL
Ltd. (K-Line)
Koppers Industries, Inc. 62 Rail Tank Car Jan-98 5,400 6 OL
Kraft Foods, Inc. Steelcase Office Furniture Nov 97 - 1,154,439 84 FP
& Fixtures Jan 98
Kraft Foods, Inc. Telephone System Nov 97 - 549,980 60 FP
Jan 98
Louisiana Workers' Office Automation Jan-98 2,199 1 OL
Compensation Corporation
Maxtor Corporation 69 Electronic Test Equipment Sep-97 533,698 36 HP
Maxtor Corporation 69 Computer Equipment Jan-98 241,310 6 OL
McDonnell Douglas Helicopter Lift Trucks Apr-98 96,510 60 OL
Company
Minteq International, Inc. Geotronics Laser Measuring Jan 97 - 689,350 36 HP
Machine Mar 97
Minteq International, Inc. Geotronics Laser Measuring Sep 97 - 1,019,585 36 HP
Machines Jan 98
Mobil Business Resources 70 Helicopters Nov-96 1,650,000 36 OL
Corporation
Mobil Business Resources 70 Helicopter Oct-97 1,160,000 36 OL
Corporation
Mobil Oil Corporation Wheel Loader Jan-98 92,773 36 OL
National Steel Corporation CAT Dozer Tractors Apr-97 734,730 75.36% 60 HP
National Steel Corporation CAT Dozer, Loaders Jul-97 3,666,101 60 OL
National Steel Corporation Motor Grader & Front End Oct-97 1,747,828 60 HP
Loader
National Steel Corporation Crane & Wheel Loader Jan-98 861,344 48 OL
National Steel Corporation Omega Forklift & Loaders Apr-98 1,286,210 60 HP
Nippon Yusen Kaisha Ltd. 61 Intermodal Containers Jan-98 8,715,760 96 FP
(N.Y.K.Line)
North American Chemical Company Mini Mag - Flow Meters Jan-98 18,809 5 FP
NVR, Inc. Tee-Lok Roller Gantry Aug 97 - 591,046 84 FP
Systems Oct 97
NVR, Inc. Home Manufacturing Nov-97 137,921 84 FP
Equipment
Omnicom Group, Inc. 71 Office Furniture Jul-97 20,292 60 FP
Omnicom Group, Inc. 71 Office Furniture Jan-98 1,007,401 60 FP
PCS Phosphate Company, Inc. 62 Rail Tank Cars Jan-98 175,000 25 OL
Pentagon Systems, Inc. SMT-1200C Surface Mount Jan-98 106,842 35 FP
Placement System
Pioneer Chlor Alkali Company 62 Rail Tank Cars Jan-98 1,614,144 15-60 OL/HP
PlasmaQuest , Inc. Office Automation Jan-98 6,406 8 FP
PVS Technologies, Inc. 62 Rail Tank Cars Jan-98 672,388 6-24 OL
Ralphs Grocery Company Forklifts Jan-98 275,385 8.49% 2-17 FP
Riceland Foods, Inc. 62 Rail Tank Cars Jan-98 130,032 4 OL
Rose Acres Farms, Inc. Food Processing Equipment Jan-98 185,461 62.96% 16 OL
Sarif, Inc. Wafer Fabrication Jan-98 224,702 23 FP
Equipment
Seaboard Commodity Trading 62 Rail Tank Cars Jan-98 525,618 6-22 OL
Company
Sebastiani Vineyards, Inc. Wine Barrels Jan-98 872,061 36-60 HP/FP
Sebastiani Vineyards, Inc. Wine Barrels Jul-98 201,470 36 HP
Sematec, Inc. Manufacturing Equipment Oct-97 1,303,600 36 HP
Sematec, Inc. Manufacturing Equipment Jul-98 2,400,000 36 OL
Sierra Pacific Power Company 68 Coal Hopper Rail Cars Dec-97 2,600,000 67 OL
& Idaho Power Company
Signature Flight Support Fuel Trucks Apr-97 760,000 89.01% 132 FP
Corporation
Signature Flight Support Fuel Trucks Jan-98 620,000 72.64% 96-132 FP
Corporation
Signature Flight Support Fuel Truck & Deicer Apr-98 518,997 78.24% 96 FP
Corporation
Signature Flight Support Isuzu Trucks Jul-98 722,275 78.53% 60 HP
Corporation
Sisseton Milbank Railroad, 64 Covered Hopper Railcars Jan-97 330,000 36 FP
Inc.
Smitty's Super Valu, Inc. Furniture and Fixtures Jan-98 451,861 3 OL
Sony Pictures Entertainment, Sony Monitors Mar-98 1,278,900 36 OL
Inc.
Southern Illinois Railcar Co. 64 Covered Hopper Railcars Jan-97 462,000 48 FP
Southern Pacific Locomotives Jan-98 795,316 9 OL
Transportation Company
Southwest Health Centre, Inc. Siemens Mammographic Jan-98 13,000 1 OL
System
Stater Brothers Markets Furniture and Fixtures Jan-98 13,643 2 FP
Tarmac America, Inc. / 72 CAT / Michigan Loaders Apr-97 350,000 18 OL
Tarmac Mid Atlantic, Inc
Tarmac Minerals. Inc. 72 Steel Deck Barges Jan-98 7,335,250 60 OL
TASC, Inc. Office Automation Oct 97 - 1,169,828 36 HP/FP
Jan 98
TASC, Inc. Office Automation Apr-98 1,146,296 36 HP
TASC, Inc. Office Automation Jul-98 848,065 36 FP
Thompson Pipe & Steel Company Phone System, Furniture Jan-98 31,918 1 OL
and Fixtures
Thomson Saginaw Ball Screw Machine Tools Jan-98 488,918 16 OL
Company
Triad International Aircraft Access and Ground Jan-98 954,125 36.77% 3 OL
Maintenance Corporation Support Equipment
Ultrabeam Lithography, Inc. 73 Technical Instrument Dec-97 269,888 48 HP
Confocal Metrology System
Ultrabeam Lithography, Inc. 73 Manufacturing Equipment May-98 167,220 48 HP
Ultrabeam Lithography, Inc. 73 Manufacturing Equipment Aug-98 220,887 48 HP
United States Surgical Assorted Manufacturing Jul-98 3,747,760 120 FP
Corporation Equipment
Wagner College Desktop PCs Jan-98 91,951 7-9 OL
Wayne Farms, a division of Food Processing Equipment Jan-98 64,686 12 OL
Continental Grain Company
Wisconsin Packing Company, Inc. Forklifts Jan-98 91,850 25 HP
First Union Rail Corporation 62, Rail Tank Cars N/A 478,836 N/A N/A
74
Xerox Corporation FPD Inspection System Jan-98 3,521,046 60 HP
-------------- ---------------
ATEL Capital Equipment Fund VII total: $177,566,094 $0
============== ===============
TOTAL OF ALL FUNDS: $844,509,432 $20,825,225
============== ===============
</TABLE>
A-34
<PAGE>
TABLE V ACQUISITION OF EQUIPMENT FOOTNOTES
(1) In many cases, a Lease transaction is funded over a period of time
according to the Lessee's requirements. Therefore "Commencement Date (s)"
expressed as a range represents multiple commencement dates occurring or
anticipated under the same Lease line.
(2) "Acquisition Cost" includes either amounts committed to Lessees for
funding by the program, or the actual Equipment acquisition cost, less any
Acquisition Fees. All figures are rounded.
(3) "Acquisition Fees" include fees accrued by the program as of the
Preparation Date. For partially funded Lease lines, additional fees may be
expended by the program for future acquisitions made pursuant to the terms of
the Lease.
(4) "Percent Leverage" represents the percent ratio of the original
principal amount of the debt acquired or assumed by the program, to the
Acquisition Cost of the Equipment. The Equipment may be "leveraged" (where a
portion of the Equipment Acquisition Cost is financed using non-recourse debt
financing) at the time of, or subsequent to, the acquisition of the Equipment by
the program. Therefore, actual leverage ratios may be more or less than
indicated due to the timing of the acquisition of the Equipment in relation to
the amortization of the principal amounts of the debt.
(5) "Lease Term" is expressed in terms of months, although the actual Lease
Term may be expressed as monthly, quarterly, semiannual or annual.
(6) A designation of "FP" indicates that the aggregate rents to be received
during the Lease Term exceed or are equal to the Acquisition Cost of the
Equipment. A designation of "OL" indicates that the aggregate rentals to be
received during the Lease Term are less than the Acquisition Cost.
(7) The interest in this transaction is held 1/3 by ATEL Cash Distribution
Fund and 2/3 by ATEL Cash Distribution Fund II.
(8) Guaranteed by both Fingerhut Corporation and by Primerica Corporation,
as successor in interest to American Can Company.
(9) In March 1992, Financial News Network ("FNN"), a lessee of ATEL Lease
Income Fund, ATEL Cash Distribution Fund and ATEL Cash Distribution Fund II,
filed for protection under Chapter 11 of the U.S. Bankruptcy Act. Subsequent
competitive bidding between CNBC (a division of General Electric Company) and a
partnership consisting of Dow Jones, Inc. and Group W (Westinghouse) developed
for the purchase of FNN assets. This bidding resulted in the sale of certain FNN
assets, principally its subscribers, to CNBC for $145 million in cash and the
assumption of $9.3 million in liabilities. The proceeds from the sale were
distributed beginning in June 1992 resulting in the recovery of substantially
all of the programs' remaining investment in the Equipment.
(10) A 34.41% interest in this transaction was acquired by ATEL Cash
Distribution Fund. The remaining 65.59% was acquired by ATEL Cash Distribution
Fund II.
(11) Guaranteed by Fingerhut Corporation.
(12) Credit support provided by an Investment Agreement of Nord Kaolin
Corporation and of Nord Resources Corporation.
A-35
<PAGE>
(13) These transactions are all leveraged under one non-recourse note with
Sogelease Corporation.
(14) Leased to Teledyne Wah Chang Albany, a division of Teledyne
Industries, Inc.
(15) ATEL Cash Distribution Fund holds a one-half interest in this
transaction, the remaining half interest was acquired by ATEL Financial
Corporation on identical terms.
(16) Guaranteed by Addington Resources.
(17) Guaranteed by American President Companies.
(18) A 97.75% interest in Equipment Schedule No. 2 was acquired by ATEL
Cash Distribution Fund II. The remaining 2.25% interest in that Schedule was
acquired by ATEL Lease Income Fund.
(19) Lease originally with Hammermill Paper Company as lessee and
subsequently assumed by International Paper Company.
(20) Lease assigned to and assumed by Liggett & Meyers Tobacco Company,
with recourse retained against the original Lessee.
(21) On January 1, 1991 Midway Airlines, Inc., the lessee of the DC9-32 in
which ATEL Cash Distribution Fund II and ATEL Cash Distribution Fund III owned
interests, suspended payments on its debt and aircraft leases. On March 26,
1991, the Lessee filed for protection under Chapter 11 of the U.S. Bankruptcy
Act. On September 4, 1991, the non-recourse lender, John Hancock Leasing
Corporation, exercised its right to foreclose on the aircraft. As this
investment represents a relatively small portion of the programs' total equity
and anticipated cash flow, the General Partners do not believe that the adverse
developments with respect to this investment will have a material effect on
their respective operations, cash flows or rates of cash distributions. The
beneficial interest in the Equipment was held two-thirds by ATEL Cash
Distribution Fund II and one-third by ATEL Cash Distribution Fund III.
(22) Equipment operated by the Eureka Company, a division of Lessee, an
indirect subsidiary of AB Electrolux, Sweden.
(23) Guaranteed by Reynolds and Reynolds.
(24) On December 31, 1997, this lessee requested a moratorium on lease
payments from January through March 1998. ATEL Cash Distribution Fund V is
currently negotiating a settlement with the lessee.
(25) On October 13, 1993 the lessee, Rocky Mountain Helicopters, Inc.,
filed for protection under Chapter 11 of the U. S. Bankruptcy Act. The aircraft
which was the subject of the lease was delivered to ATEL Cash Distribution Fund
II, prior to the petition for bankruptcy and was sold by the lessor. The
proceeds of the sale satisfied in full the non-recourse debt obligation owed to
USX Credit Corporation and the excess was applied to mitigate the lessor's claim
against the lessee. The lessor subsequently filed and was allowed an unsecured
claim in the amount of $776,542. Through June 30, 1997, the lessor has received
$310,617 on this claim, representing 40% of the allowed claim. The sum of the
proceeds from the rents, sale of the aircraft and the claim filed in bankruptcy
has resulted in a recovery exceeding the lessor's original investment in the
aircraft.
A-36
<PAGE>
(26) Assigned to and assumed by various subsidiaries of Lessee. Recourse
retained against Lessee. Lessee subsequently changed its name to SMC Mining
Corporation.
(27) Guaranteed by Continental Medical Systems, Inc.
(28) An indirect subsidiary and joint venture of Kaiser Aluminum & Chemical
Corporation and Norsk Hydro.
(29) Guaranteed by United States Surgical Corporation.
(30) Acquisition Cost represents one-half of the total Equipment
Acquisition Cost. Title to this Equipment is held in an equipment trust where
one-half of the beneficial interest in the Equipment is owned by ATEL Cash
Distribution Fund III and one-half by ATEL Cash Distribution Fund IV.
(31) On January 10, 1996, Barney's, Inc., a lessee of ATEL Cash
Distribution Fund III, ATEL Cash Distribution Fund IV and ATEL Cash Distribution
Fund V filed for protection under Chapter 11 of the U. S. Bankruptcy Act. In
July of 1996, the lessors sold their unsecured claim in the bankruptcy for an
amount equal to approximately 73% of the unsecured claim, which, after
satisfaction of the non-recourse loan due to the CIT Group/Equipment Financing,
Inc. (and taking into account all prior rents received, security deposits
retained and loan proceeds previously received), resulted in proceeds to the
lessors in excess of their original investments in the equipment.
(32) Guaranteed by Nord Resources Corporation. Subsequently the lease was
assigned without recourse to DBK Minerals, Inc. with a guarantee of Dry Branch
Kaolin Company.
(33) Lessee indicated is the parent of Central Ohio Coal Company and
Southern Ohio Coal Company. The Lease transaction represents three distinct
leases with subsidiary companies. Credit support is provided by the parent, Ohio
Power Company by an Inducement Letter.
(34) The Lessee name is indicated for convenience only. The actual Lessees
are Paramount Coal Corporation, Clinchfield Coal Company, Heartland Resources,
Inc., Motivation Coal Company, Elkay Mining Company, Holston Mining, Inc. and
Meadow River Coal Company, all subsidiaries of The Pittston Company. The Lease
is guaranteed by The Pittston Company.
(35) Title to the Equipment and Lease transaction is held by an equipment
trust. A divisible 1/2 beneficial interest in the equipment trust is owned by
the program. The remaining divisible 1/2 beneficial interest in the equipment
trust is owned by a non-affiliate.
(36) Guaranteed by Quaker State Corporation. This lease was subsequently
assigned to Costain Coal Company on a recourse basis. In 1996, the assignee
defaulted on a lease payment, which default was subsequently cured. The lessor
is currently negotiating a settlement with the assignee, lessee and guarantor.
(37) Lessee is a partnership formed by United States Steel Corporation and
Kobe Steel Corporation.
(38) Title to the Equipment and Lease transaction is held by an equipment
trust. Partnership owns a 17.3199% beneficial interest in the equipment trust.
(39) Subject to a remarketing agreement with General Motors -
Electro-Motive division.
(40) Guaranteed by The Pittston Company.
A-37
<PAGE>
(41) Guaranteed by CBI Industries, Inc. Subsequently guaranteed by Praxair,
Inc.
(42) Guaranteed by Peabody Holding Company, Inc.
(43) Tarmac America, Inc.; Tarmac Mid-Atlantic, Inc.; and Tarmac Florida,
Inc. are co-lessees. Guaranteed by Tarmac PLC, a British Limited Liability
Company.
(44) The equipment is subject to operating leases and managed by the lessee
under a pooled management arrangement. Rentals are variable. Average monthly
lease payments are estimated based on the minimum lease payments to be received
on similar Equipment owned by a prior program.
(45) Lessee has limited option to terminate at 36 months and 60 months,
subject to a remarketing agreement with Bond International (US), Inc.
(46) A division of Waban, Inc.
(47) Equipment is subject to a full payout management agreement with MRXX
Corporation.
(48) Guaranteed by Mineral Technologies, Inc.
(49) Guaranteed by Mobil Corporation.
(50) Guaranteed by Omnicom Group, Inc. Actual lessees are various
subsidiaries of Omnicom Group Inc.: DDB Needham Worldwide Communications Group
Inc.; Griffin Bacal Inc.; DDB Needham Chicago Inc.; DDB Needham Dallas, Inc.;
PGC Advertising, Inc.; The Focus Agency, LP.; Elgin DDB Inc.; Group Management
Services; and TLP, Inc.
(51) This lessee filed for protection under Chapter 11 of the United States
Bankruptcy Code on January 16, 1998. As this lease has been leveraged using
non-recourse secured debt, the General Partner does not feel that the effect of
the bankruptcy will have a material adverse impact on the performance of ATEL
Cash Distribution Fund V.
(52) The lessee name represents the guarantor of the lease obligations
(which has since changed its name to the Morton's Restaurant Group, Inc.).
Actual lessees are various subsidiaries of the guarantor.
(53) This lessee defaulted on a portion of its lease payments in October
1997. ATEL Cash Distribution Fund V is currently negotiating a possible
settlement with the lessee.
(54) Guaranteed by Smith's Food & Drug Centers.
(55) Subject to a remarketing/residual sharing agreement with AT&T Credit
Corporation.
(56) Guaranteed by Adolf Coors Company.
(57) The end-users of the Equipment are various governmental entities in
the United Kingdom.
(58) Guaranteed by NEC Corporation.
A-38
<PAGE>
(59) Guaranteed by A.T. Massey Coal Company, Inc.
(60) Guaranteed by Perdue Farms, Inc.
(61) Subject to a management agreement with Transamerica Leasing, Inc.
(62) Subject to a management agreement with First Union Rail Corporation.
(63) Title to the Equipment and Lease is held by an equipment trust. A
divided beneficial interest in the trust representing 24 of 34 of the
diesel-electric locomotives is owned by the program. A divided beneficial
interest in the trust representing the remaining 10 diesel-electric locomotives
has been assigned to a non-affiliate, however, such interest continues to be
managed by an affiliate of the program.
(64) The equipment is subject to a full payout management agreement with
MRXX Corporation.
(65) Title to the equipment is held in a trust. A divided beneficial
interest in the trust representing 130 of 291 boxcars is owned by the program. A
divided interest in the trust representing the remaining 161 boxcars continues
to be owned by the seller of the program's interest, which seller is a
non-affiliate.
(66) The underlying leases in this transaction are to various
municipalities in the United Kingdom. The underlying leases are being managed by
Hambros Vendor Finance Limited and include a residual sharing agreement.
(67) The underlying leases in this transaction are to various
municipalities in the United Kingdom. The underlying leases are being managed by
Hastings Leasing Limited and include a residual sharing agreement.
(68) Title to the equipment is held in a trust. The program has a 100%
undivided beneficial interest in the trust.
(69) Guaranteed by Hyundai Electronics Industries Co., Ltd.
(70) Guaranteed by Mobil Corporation.
(71) Guaranteed by Omnicom Group, Inc. Actual lessees are various
subsidiaries of Omnicom Group Inc.: The DDB Needham Worldwide Communications
Group Inc.; Griffin Bacal Inc.; DDB Needham Chicago, Inc.; DDB Needham Dallas,
Inc.; PGC Advertising, Inc.; The Focus Agency, LP.; Elgin DDB Inc.; Group
Management Services and TLP, Inc.
(72) Tarmac America, Inc.; Tarmac Mid-Atlantic, Inc.; and Tarmac Florida,
Inc. are co-lessees. Guaranteed by Tarmac PLC, a British Limited Liability
Company.
(73) Co-lessee under the lease with Ultratech Stepper, Inc., UltraBeam
Lithography, Inc. and Verdant Technologies, Inc. as additional co-lessees.
(74) The lessee name represents the manager of the rail tank cars. These
rail tank cars are not currently subject to a fixed term lease.
A-39
<PAGE>
TABLE VI
SALES OR DISPOSALS OF EQUIPMENT
ATEL Lease Income Fund, ATEL Cash Distribution Fund, ATEL Cash Distribution
Fund II, ATEL Cash Distribution Fund III, ATEL Cash Disitribution Fund IV, ATEL
Cash Distribution Fund V, ATEL Cash Distribution Fund VI and ATEL Capital
Equipment Fund VII have disposed of equipment in their portfolios as of June 30,
1998. Set forth below is a summary of equipment sales and dispositions as of
such date. Sales were for consideration unless otherwise noted. Interim rent
(rent paid prior to formal commencement of a lease), hold-over rent (rent
received after termination of the initial lease term, but before formal
extension or disposition) and extension rent (rent paid after formal extension
of a lease) are included in the "Excess of Rents Over Expenses" column.
"Equipment Acquisition Price" includes acquisition fees. Dispositions are shown
on a per asset basis.
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
ATEL LEASE INCOME FUND 1985-A
<S> <C> <C> <C> <C> <C> <C> <C>
Colour Graphics Computer system Feb-87 $34,500 Oct-93 $2,525 $44,483
Colour Graphics Office Information Systems Jul-88 45,000 Jan-94 11,200 55,777
Educational Loan Services, Inc. Office Information Systems May-86 33,050 Oct-90 900 31,350
Federal Home Loan Bank of New York Office Information Systems May-86 39,127 Apr-90 870 36,800
Financial News Network, Inc. Studio and Broadcasting Feb-90 14,777 Jun-92 11,493 2,027 5
Gorham, Inc. Office Information Systems May-86 38,799 Mar-90 2,300 45,180
Long Lake Staionary, Inc. Binding Equipment May-87 4,023 Jul-92 1 6,242
Philip Morris, U.S.A. Office Information Systems May-86 13,297 Jan-89 3,600 12,400
Philip Morris, U.S.A. Office Information Systems May-86 21,584 Aug-92 - 22,050
Polaroid Corporation Office Information Systems May-86 48,028 Jan-90 4,500 45,000
Rohr Industries, Inc. Motor Vehicle Jan-89 12,451 Apr-95 6,400 17,843
Rohr Industries, Inc. Motor Vehicle Apr-89 8,376 Jul-92 4,723 8,558
------------- -------------- -------------
$313,012 $48,512 $327,710
============= ============== =============
</TABLE>
A-40
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
ATEL CASH DISTRIBUTION FUND
<S> <C> <C> <C> <C> <C> <C> <C>
Acushnet Company Office Information Systems Jan-87 $140,287 Dec-91 $4,545 $156,000
Alachua General Hospital MRI Scanner Jan-89 641,593 Jan-95 1 699,453
Alachua General Hospital Tractor Jan-89 15,327 Sep-92 9,000 15,900 6
American Motors Corporation Lift Trucks Oct-87 217,066 Jun-97 57,000 229,029
American Motors Corporation Lift Trucks Oct-87 109,751 Mar-93 31,800 141,636
American Motors Corporation Lift Trucks Oct-87 55,579 Apr-93 15,956 71,727
American Motors Corporation Lift Truck Oct-87 34,494 May-89 30,818 10,117
American Motors Corporation Lift Trucks Oct-87 25,754 Sep-92 6,200 31,306
American Motors Corporation Lift Trucks Oct-87 15,201 Feb-94 4,500 22,886
American Motors Corporation Lift Trucks Oct-87 12,877 Jan-93 3,200 15,863
American Motors Corporation Hoist Mill Truck Dec-87 104,834 Mar-93 18,000 131,164
American Motors Corporation Lift Truck Dec-87 29,709 Jun-97 - 21,189
American Motors Corporation Lift Trucks Jan-88 45,385 Dec-92 7,000 63,268
Anaheim Memorial Hospital CAT Scanner Jan-88 814,696 Apr-93 88,000 839,938
Campbell Soup Company Reach / Walkie Trucks Mar-87 79,248 Sep-93 2,700 89,216
Campbell Soup Company Lift Truck Battery Chargers Mar-87 37,127 Aug-93 12,435 38,812
Campbell Soup Company Lift Truck Mar-87 34,790 Jun-90 30,000 19,575
Campbell Soup Company Lift Truck Mar-87 25,668 Jul-94 5,022 31,663
Campbell Soup Company Lift Truck Mar-87 19,763 Oct-95 2,000 27,283
Campbell Soup Company Lift Truck Mar-87 19,491 May-95 - 25,976
Campbell Soup Company Batteries / Chargers Mar-87 12,417 Dec-93 4,250 13,977
Campbell Soup Company Lift Trucks Mar-87 10,584 Dec-97 11,000 36,430
Campbell Soup Company Lift Truck Apr-87 24,550 Apr-91 17,764 17,765
Campbell Soup Company Lift Truck Apr-87 4,997 Apr-91 3,616 3,616
Campbell Soup Company Lift Truck Apr-87 63,153 Dec-97 20,873 71,540
Color Graphics Corporation 645-MSS Output Scanning Dec-86 232,533 Mar-94 20,000 303,307
Station
Enron Corp. Office Information Systems Jun-88 88,364 Jun-91 17,857 90,326
Enron Corp. Office Information Systems Jun-88 87,399 Feb-92 10,650 85,140
Enron Corp. Office Information Systems Jun-88 79,726 Mar-92 8,000 76,968
Financial News Network, Inc. Studio and Broadcasting Mar-90 935,918 Jun-92 747,617 123,050 7
GAF Corporation Lift Trucks Oct-87 459,660 Nov-92 94,575 457,460
GAF Corporation Joy Filler Mar-88 535,257 Dec-97 44,525 822,498
Galardi Group Restaurant FF&E Jun-94 247,000 Oct-96 147,148 173,042
Hartford Insurance Group Communication Jul-88 93,252 Jul-93 3,618 106,785
Imperial Plastics, Inc. Injection Molding Jun-87 137,247 Apr-94 67,000 147,445
Imperial Plastics, Inc. Injection Molding Dec-87 150,879 Apr-94 64,000 170,530
Imperial Plastics, Inc. Injection Molding Jan-88 194,944 Apr-94 77,000 229,797
Imperial Plastics, Inc. Air Compressor Temperature Mar-88 66,883 Apr-94 17,000 71,949
Control Unit
Martin Marietta Corporation Communication Apr-88 296,550 Aug-93 500 277,184
Martin Marietta Corporation Communication Apr-88 148,275 Jun-92 16,000 138,592
Nord Kaolin Company Hydraulic Excavator May-87 163,490 Mar-93 45,000 184,567
Nord Kaolin Company Komatsu Crawler Tractor Aug-87 50,693 Jul-96 12,000 36,492
Nord Kaolin Company Lift Trucks Sep-87 15,633 Oct-95 3,500 27,386
Nord Kaolin Company Magnetic Separator Oct-87 160,669 Dec-96 25,000 150,087
Nord Kaolin Company Industrial Truck Oct-89 13,745 Oct-97 3,000 20,856
Polaroid Corporation Office Information Systems Mar-87 37,819 Apr-92 2,475 41,005
Putnam County Hospital Spectrum Analyzer May-88 114,950 May-94 2,000 158,780
Rohr Industries, Inc. Motor Vehicle Jul-87 14,790 Feb-93 4,175 17,080
Rohr Industries, Inc. Motor Vehicle Jan-88 9,346 Aug-96 3,232 11,495
Rohr Industries, Inc. Motor Vehicle Feb-88 12,060 Aug-96 1,502 14,896
Rohr Industries, Inc. Motor Vehicle Mar-88 16,421 Feb-93 4,575 19,073
Rohr Industries, Inc. Motor Vehicle Apr-88 16,183 Aug-93 3,977 18,986
Rohr Industries, Inc. Motor Vehicle Apr-88 16,052 Feb-96 5,000 21,252
Rohr Industries, Inc. Motor Vehicle Apr-88 14,630 Apr-91 5,725 13,106
Rohr Industries, Inc. Motor Vehicle Apr-88 14,028 Dec-95 4,630 20,629
Rohr Industries, Inc. Motor Vehicle Apr-88 13,330 Oct-92 2,530 15,081
Rohr Industries, Inc. Motor Vehicle Apr-88 12,932 Apr-91 4,380 11,585
Rohr Industries, Inc. Motor Vehicle Apr-88 12,060 Apr-91 3,498 10,804
Rohr Industries, Inc. Motor Vehicle Apr-88 12,060 Apr-91 3,198 10,804
Rohr Industries, Inc. Motor Vehicle Apr-88 9,356 Aug-96 3,332 12,647
Rohr Industries, Inc. Motor Vehicle May-88 13,981 Sep-95 3,900 20,280
Rohr Industries, Inc. Motor Vehicle Jul-88 29,656 Nov-92 7,135 31,553
Rohr Industries, Inc. Motor Vehicle Jul-88 25,755 Mar-96 9,000 33,051
Rohr Industries, Inc. Motor Vehicle Jul-88 11,566 Jul-91 4,075 10,517
Rohr Industries, Inc. Motor Vehicle Jul-88 11,566 Jul-91 4,850 10,517
Rohr Industries, Inc. Motor Vehicle Jul-88 11,566 Jul-91 3,890 10,517
Rohr Industries, Inc. Motor Vehicle Aug-88 17,829 Nov-96 6,590 23,532
Rohr Industries, Inc. Motor Vehicle Aug-88 16,538 May-93 2,622 18,710
Rohr Industries, Inc. Motor Vehicle Aug-88 14,662 Oct-93 3,435 16,587
Rohr Industries, Inc. Motor Vehicle Oct-89 15,460 Dec-97 2,750 33,297
Teledyne Industries, Inc. Lift Truck Oct-87 160,930 Feb-93 48,000 162,751
Teledyne Industries, Inc. Lift Truck Oct-87 147,345 Nov-92 20,000 149,763
Teledyne Industries, Inc. Lift Truck Oct-87 87,258 Jan-93 19,000 89,166
Teledyne Industries, Inc. Lift Truck Jan-88 147,345 Nov-91 41,000 137,956
Teledyne Industries, Inc. Lift Truck Jan-88 52,250 Apr-91 15,000 47,775
Teledyne Industries, Inc. Lift Truck Jan-88 39,188 Apr-91 10,000 35,832
Teledyne Industries, Inc. Lift Truck Feb-88 173,330 Feb-93 58,000 150,644
Teledyne Industries, Inc. Lift Truck Mar-88 50,160 May-93 11,000 51,896
Teledyne Industries, Inc. Lift Truck Apr-88 55,907 Feb-93 20,000 58,088
Teledyne Industries, Inc. Lift Truck Jul-88 147,345 Oct-92 20,000 134,726
Teledyne Industries, Inc. Lift Truck Aug-88 42,845 Jan-94 9,000 46,240
Teledyne Industries, Inc. Lift Truck Nov-88 38,278 Mar-94 11,000 41,481
Teledyne Industries, Inc. Lift Truck Nov-88 35,530 Jan-94 10,390 36,406
Teledyne Industries, Inc. Lift Trucks Aug-89 32,771 Nov-94 7,896 33,173
Teledyne Industries, Inc. Lift Truck Sep-89 68,970 Oct-92 10,000 67,300
Teledyne Industries, Inc. Lift Truck Nov-89 218,133 Jan-93 44,000 204,009
Teledyne Industries, Inc. Lift Truck Nov-89 58,374 Mar-94 12,500 63,256
Teledyne Industries, Inc. Lift Truck Jan-90 57,487 Mar-94 13,000 55,978
Teledyne Industries, Inc. Lift Trucks Jan-90 57,350 Jan-95 15,000 58,052
Teledyne Industries, Inc. Lift Trucks Jan-90 57,350 Jan-95 15,000 58,052
The Dow Chemical Company Truck Jul-87 111,288 Jun-93 17,500 102,367
The Dow Chemical Company Trucks Jul-87 91,216 Jul-93 26,000 80,985
The Dow Chemical Company Mack Truck Jul-87 25,210 Aug-92 7,500 24,846
Treasure Chest Advertising Company, Printing Press Mar-87 521,190 Dec-92 311,844 523,950
Inc.
TRW, Inc. Communication Apr-89 257,130 Jul-93 8,400 235,080
TRW, Inc. Communication Apr-89 77,957 May-92 19,800 70,704
United Technologies Corporation Office Information Systems Dec-86 77,450 Mar-91 20,000 80,985
Vista Chemical Company Tank cars Mar-88 1,238,250 Dec-93 885,000 1,090,493
WSMP, Inc. Vacuum Pkg. Machine Apr-95 208,788 Dec-97 150,314 129,870
------------- -------------- -------------
$11,583,679 $3,768,290 $11,146,398
============= ============== =============
</TABLE>
A-41
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
ATEL CASH DISTRIBUTION FUND II
<S> <C> <C> <C> <C> <C> <C> <C>
A.O. Smith Corporation Office Automation Dec-90 $723,258 Sep-94 $75,017 $763,652
Equipment
A.O. Smith Corporation Lift Truck Jul-89 80,717 Jun-94 34,000 81,198
A.O. Smith Corporation Lift Truck Jul-89 26,910 Jun-95 6,250 51,147
A.O. Smith Corporation Lift Truck Jul-89 17,616 Jul-95 1,500 23,346
A.O. Smith Corporation Personnel Carrier Jul-89 4,381 Jul-94 500 4,407
A.O. Smith Corporation Machinery Jul-91 26,475 Jan-93 18,360 15,660
Addwest Gold, Inc. Portable Jaw Crusher Plant Sep-88 1,153,001 Nov-94 301,000 1,104,720
Alachua General Hospital MRI Scanner Jan-89 1,286,256 Jan-95 1 1,683,244
Alachua General Hospital Tractor Jan-89 30,727 Sep-92 18,000 31,801 6
American Express Company Manufacturing May-89 289,922 May-93 10,000 293,040
American President Trucking Co., Ltd. Tractors Sep-88 60,326 Jan-94 15,500 55,808
American President Trucking Co., Ltd. Tractors Sep-88 60,326 Apr-94 16,400 61,125
American President Trucking Co., Ltd. Tractors Sep-88 60,326 Apr-94 16,200 61,571
American President Trucking Co., Ltd. Tractors Sep-88 60,326 Apr-94 16,400 55,808
American President Trucking Co., Ltd. Tractors Sep-88 60,325 Sep-96 7,905 69,903
American President Trucking Co., Ltd. Tractors Oct-88 61,513 Dec-93 16,000 52,752
American President Trucking Co., Ltd. Tractors Oct-88 61,513 Jan-94 16,000 60,854
American President Trucking Co., Ltd. Tractors Oct-88 61,513 Jan-94 16,000 58,674
American President Trucking Co., Ltd. Tractors Oct-88 61,513 Apr-94 17,000 59,724
American President Trucking Co., Ltd. Tractors Oct-88 60,326 Dec-93 15,000 51,734
American President Trucking Co., Ltd. Tractors Oct-88 60,326 Jan-94 15,500 56,701
American President Trucking Co., Ltd. Tractors Oct-88 60,326 Apr-94 16,400 58,570
American President Trucking Co., Ltd. Tractors Oct-88 60,326 Apr-94 16,400 58,145
American President Trucking Co., Ltd. Tractors Oct-88 60,326 Apr-94 19,000 58,595
American President Trucking Co., Ltd. Tractors Nov-88 61,513 Jun-93 45,041 47,171
American President Trucking Co., Ltd. Tractors Nov-88 61,513 Dec-93 15,926 59,573
American President Trucking Co., Ltd. Tractors Nov-88 61,513 Jan-94 16,000 59,369
American President Trucking Co., Ltd. Tractors Nov-88 61,513 Jan-94 16,000 56,907
American President Trucking Co., Ltd. Tractors Nov-88 61,513 Jun-96 8,500 71,279
American President Trucking Co., Ltd. Tractors Nov-88 60,326 May-93 44,172 44,957
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Jan-94 17,461 58,772
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Jan-94 15,500 55,808
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Apr-94 19,000 55,809
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Apr-94 16,400 58,570
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Jan-96 10,350 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Jan-96 10,282 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Jan-96 10,350 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Jan-96 10,350 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Apr-96 10,565 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 May-96 10,390 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Jun-96 9,500 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Jul-96 9,995 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Sep-96 7,905 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Sep-96 7,905 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Sep-96 7,700 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Oct-96 7,905 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Oct-96 7,700 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Oct-96 7,905 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Oct-96 7,905 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Oct-96 7,700 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,326 Nov-96 7,600 69,903
American President Trucking Co., Ltd. Tractors Nov-88 60,325 Dec-95 11,522 69,903
American President Trucking Co., Ltd. Tractors Dec-88 60,326 Jun-96 9,500 69,903
American President Trucking Co., Ltd. Tractors Dec-88 60,326 Aug-96 7,200 69,903
American President Trucking Co., Ltd. Tractors Dec-88 60,326 Sep-96 7,700 69,903
American President Trucking Co., Ltd. Tractors Dec-88 60,326 Sep-96 7,700 69,903
American President Trucking Co., Ltd. Tractors Dec-88 60,326 Sep-96 7,905 69,903
American President Trucking Co., Ltd. Tractors Dec-88 60,326 Nov-96 7,600 69,903
American President Trucking Co., Ltd. Tractors Dec-88 60,326 Nov-96 7,600 69,903
American President Trucking Co., Ltd. Tractors Mar-89 61,513 Feb-96 10,488 71,279
Bistol-Meyers Squib Office furniture Jun-92 324,310 Oct-95 89,834 340,960
Buffalo & Pittsburgh Railroad Locomotives Nov-93 108,127 Nov-96 103,500 109,471
Campbell Soup Company Lift Trucks Jul-88 237,980 Oct-95 33,000 304,036
Campbell Soup Company Life plus charger Jul-88 28,056 Aug-95 6,000 34,608
Campbell Soup Company Lift Truck Jul-88 26,604 Oct-95 2,500 33,597
Chesebrough-Pond's Inc. Lift Trucks May-90 109,901 Aug-94 42,000 124,236
Chesebrough-Pond's Inc. Motorized Lowlift Walk/ May-90 38,303 Aug-94 4,800 43,452
Ride Trucks
Chesebrough-Pond's Inc. Lift Truck May-90 35,029 Aug-94 12,950 39,270
Chesebrough-Pond's Inc. Lift Truck May-90 18,220 Aug-94 6,750 20,502
Chrysler Corporation C-Line Industrial Battery Dec-93 7,202 Oct-97 2,221 85,182
Chrysler Corporation Battery Charger Dec-93 4,798 Oct-97 1,479 56,748
Colour Graphics Corporation Computer system Jul-88 35,411 Oct-93 2,475 41,767
Continental Medical Systems, Inc. Physical therapy Jun-90 36,676 Jun-95 11,750 45,485
Cooper Tire & Rubber Company Lift Trucks Nov-88 33,296 Jan-96 10,600 37,698
Cooper Tire & Rubber Company Forklifts Apr-89 to 87,906 Jul-96 15,760 107,895
Jun-89
Cooper Tire & Rubber Company Forklifts Jan-89 to 482,499 Oct-96 89,200 598,468
Mar-89
Delnor Community Hospital Medical Apr-88 89,081 Dec-91 35,000 87,406
Delnor Community Hospital Medical Jul-88 263,473 Apr-91 45,000 247,586 8
Delnor Community Hospital Medical Jul-88 118,775 Apr-91 17,850 106,513
DJ Aerospace Limited Executive Aircraft Apr-94 810,000 Jan-97 436,309 681,820
Financial News Network, Inc. Studio and Broadcasting Feb-90 670,359 Jun-92 534,432 148,788
Fingerhut Corporation Pacesetter Saddlebinder Dec-89 233,268 Dec-94 110,000 258,130
FMC Gold Company Material Handling Apr-90 417,082 Jul-93 155,000 361,891
FMC Gold Company Material Handling Apr-90 380,201 May-93 105,000 322,256
GAF Corporation Manufacturing Mar-88 433,267 Jun-95 1 657,024
Galardi Group Restaurant FF&E Jun-94 507,000 Oct-96 302,042 355,190
General Motors Corp. Video Projector Dec-93 6,516 Jan-98 - 10,006
General Motors Corporation Video Projectors Dec-93 52,128 Jun-97 11,613 59,207
Hudson Foods, Inc. Chicken Processing Jul-89 326,880 Aug-94 120,215 373,808
Hudson Foods, Inc. Waste Water Pre-treatment Aug-89 331,070 Aug-94 121,600 377,895
Plant
Hudson Foods, Inc. Chicken Processing Dec-89 1,102,591 Sep-94 333,006 1,182,678
Equipment
Hudson Foods, Inc. Chicken Processing Dec-89 890,708 Sep-94 272,280 959,784
Equipment
Hudson Foods, Inc. Chicken Processing Dec-89 190,739 Sep-94 56,897 205,202
Equipment
Inland Steel Company Laser Measuring System Sep-89 436,808 Apr-94 105,000 487,179
International Paper Company Truck Jun-88 25,080 Nov-92 14,653 28,446
International Paper Company Trucks Jul-88 32,039 Nov-91 7,412 31,840
International Paper Company Truck Sep-88 42,161 Dec-95 11,120 73,774
International Paper Company Van Sep-88 39,626 Nov-94 11,325 37,872
International Paper Company Trucks Sep-88 37,910 May-92 17,372 33,220
International Paper Company Truck Sep-88 35,302 Sep-94 8,500 36,360
International Paper Company Trucks Sep-88 28,114 Dec-93 7,750 30,848
International Paper Company Truck Sep-88 20,850 Dec-95 11,924 39,114
International Paper Company Trucks Nov-88 165,175 Aug-91 118,185 90,831
International Paper Company Truck with power lift Nov-88 32,691 Dec-94 10,000 36,079
gate
International Paper Company Truck with power lift Nov-88 32,691 Feb-95 9,500 36,079
gate
International Paper Company Motor Vehicle Dec-88 13,873 Apr-97 5,500 22,610
International Paper Company Motor Vehicle Jan-89 33,029 Jul-96 4,000 58,146
International Paper Company Motor Vehicle Feb-89 41,080 Jun-97 4,250 65,533
International Paper Company Trucks Mar-89 48,783 May-95 26,000 40,150
International Paper Company Truck Mar-89 24,458 Apr-95 11,000 25,968
International Paper Company Cargo Van Mar-89 13,910 Jan-95 2,740 16,189
International Paper Company Trucks Apr-89 76,873 May-95 20,000 86,592
International Paper Company Truck Jun-89 29,079 May-95 9,000 31,744
International Paper Company Trucks Jun-89 27,457 Apr-94 4,500 32,538
International Paper Company Truck Aug-89 27,249 Apr-96 7,000 37,622
International Paper Company Cut-away Van Aug-89 19,484 Dec-94 5,750 19,095
International Paper Company Trucks Oct-89 116,589 May-92 83,477 63,595
International Paper Company Cab & chassis Oct-89 25,374 Dec-95 9,477 38,797
International Paper Company Trucks Nov-89 33,587 Mar-94 9,000 34,975
International Paper Company Trucks Dec-89 123,513 Apr-95 50,750 139,088
International Paper Company Trucks Mar-90 76,300 May-92 54,047 34,906
KeyCorp Office Furniture and Aug-89 913,120 Apr-94 245,000 1,014,508
Equipment
Keycorp ATM's Aug-89 251,385 Dec-96 23,500 287,781
KeyCorp ATM Machines Aug-89 195,522 Apr-96 18,650 211,431
KeyCorp ATM Machines Aug-89 139,658 Jan-94 41,250 146,802
Keycorp ATM's Aug-89 139,658 Jun-97 10,000 213,512 9
KeyCorp ATM Machines Aug-89 55,864 Aug-94 14,500 66,333
Koppers Industries, Inc. Hydraulic loader & end Jun-90 639,120 Jun-95 317,500 793,198
loader
Midway Airlines, Inc. Commercial Aircraft Jun-90 4,592,040 Sep-91 3,444,589 463,076
National Semiconductor Corporation Wafer Processing System Apr-89 762,580 Jan-94 82,000 869,955
National Steel Corporation Wheel Loader Dec-89 380,203 Jul-96 134,512 476,098
National Steel Corporation Forklifts Dec-89 85,296 Jun-97 25,000 109,159
National Union Electric Corporation Phone System Aug-89 481,738 Mar-94 130,000 507,722
Nissan Motor Corporation In USA Office Information Jul-88 229,598 Jul-93 3,700 221,328
Systems
NMCS, Inc. , d/b/a National Medical Office Furniture Jun-88 627,453 Mar-94 1 747,640
Group Services, Inc.
Nord Kaolin Company Water Tank Trucks Feb-89 229,795 Nov-96 31,800 191,762
Nord Kaolin Company Ford Truck & Truck Crane Apr-89 76,913 Mar-97 28,000 109,219
Owens Corning Fiberglas Corp. Automobile Nov-88 15,822 Apr-95 3,650 20,000
Owens Corning Fiberglas Corp. Material Handling Jul-89 175,098 Jul-92 41,020 154,944
Owens Corning Fiberglas Corp. Material Handling Oct-89 151,207 Mar-93 47,000 139,317
Owens Corning Fiberglas Corp. Material Handling Oct-89 56,733 Sep-94 13,000 62,760
Owens Corning Fiberglas Corp. Material Handling Oct-89 31,192 Sep-94 9,000 34,524
Owens Corning Fiberglas Corp. Material Handling Dec-89 21,331 May-96 4,100 27,834
Owens Corning Fiberglas Corp. Material Handling Feb-90 100,985 Oct-95 35,000 119,560
Owens Corning Fiberglas Corp. Lift Truck Mar-90 18,288 Mar-95 6,500 19,851
Owens Corning Fiberglas Corp. Material Handling Apr-90 122,130 Apr-94 36,600 126,827
Owens Corning Fiberglas Corp. Material Handling Apr-90 118,092 Apr-95 44,500 128,182
Owens Corning Fiberglas Corp. Material Handling Apr-90 101,775 Jun-93 29,100 92,836
Owens Corning Fiberglas Corp. Material Handling May-90 57,956 Jun-93 13,500 62,821
Owens Corning Fiberglas Corp. Material Handling May-90 21,866 May-98 4,200 30,239
Owens Corning Fiberglas Corp. Material Handling May-90 18,972 Apr-94 4,800 20,165
Owens Corning Fiberglas Corp. Material Handling Jun-90 152,935 Oct-95 56,000 179,186
Owens Corning Fiberglas Corp. Material Handling Jun-90 16,179 Aug-96 5,000 19,670
Owens Corning Fiberglas Corp. Forklift Truck Jul-90 22,422 Jul-97 1 36,338
Owens Corning Fiberglas Corp. Material Handling Aug-90 123,102 Aug-93 41,000 113,082
Owens Corning Fiberglas Corp. Lift Truck Aug-90 59,786 Dec-94 20,000 59,404
Owens Corning Fiberglas Corp. Forklift Aug-90 25,601 Oct-96 5,050 31,106
Owens Corning Fiberglas Corp. Material Handling Aug-90 20,858 Aug-95 10,750 22,911
Owens Corning Fiberglas Corp. Material Handling Aug-90 20,858 Sep-95 10,750 22,911
Owens Corning Fiberglas Corp. Forklift Truck Aug-90 19,000 Jul-97 4,000 24,084
Owens Corning Fiberglas Corp. Mobile Rail Car Mover Oct-90 114,900 Sep-97 70,000 142,436
Owens Corning Fiberglas Corp. Material Handling Oct-90 22,750 Nov-95 7,000 29,948 10
Owens Corning Fiberglas Corp. Material Handling Oct-90 21,920 Oct-95 10,750 24,521
Owens Corning Fiberglas Corp. Material Handling Oct-90 17,235 Jan-98 2,833 22,627
Owens Corning Fiberglas Corp. Sweeper Nov-90 27,592 Dec-93 6,600 26,638
Owens Corning Fiberglas Corp. Material Handling Nov-90 11,302 Mar-95 1 15,881
Pre Press Group Digital Color Scanner Nov-88 1,276,903 Nov-97 9,000 1,529,568
Quaker Coal Company Crawler Dozer Feb-94 558,301 Apr-96 255,000 356,875
Ran-Bar Corporation Boom lift Aug-93 7,950 Sep-95 1 19,152
Regents of the University of Communication Jan-89 84,204 Dec-93 25,500 87,434
California
Rocky Mountain Helicopters, Inc. Aircraft Oct-89 2,252,125 Dec-93 1,472,413 1,383,000
Rohr Industries, Inc. Motor Vehicles Oct-88 47,524 Aug-93 19,095 61,845
Rohr Industries, Inc. Motor Vehicles Oct-88 24,450 May-93 5,534 24,406
Rohr Industries, Inc. Motor Vehicles Oct-88 11,370 Dec-93 3,977 13,300
Rohr Industries, Inc. Motor Vehicles Oct-88 8,742 Aug-96 3,482 12,950
Rohr Industries, Inc. Motor Vehicles Dec-88 99,553 Jan-93 22,012 99,184
Rohr Industries, Inc. Motor Vehicles Dec-88 15,642 Jan-95 3,077 21,521
Rohr Industries, Inc. Motor Vehicles Dec-88 15,569 Dec-93 4,777 17,664
Rohr Industries, Inc. Motor Vehicles Jan-89 14,990 Feb-92 3,509 12,925
Rohr Industries, Inc. Motor Vehicles Jan-89 14,990 May-92 5,538 13,776
Rohr Industries, Inc. Motor Vehicles Jan-89 9,532 Apr-94 3,300 12,375
Rohr Industries, Inc. Motor Vehicles Feb-89 9,359 Aug-94 3,177 12,851
Rohr Industries, Inc. Motor Vehicles Feb-89 8,952 Aug-96 - 14,280
Rohr Industries, Inc. Motor Vehicles Apr-89 72,014 Jul-92 20,088 68,396
Rohr Industries, Inc. Motor Vehicles Apr-89 36,263 Apr-89 7,667 35,328
Rohr Industries, Inc. Motor Vehicles Apr-89 35,762 Apr-92 9,019 34,793
Rohr Industries, Inc. Motor Vehicles Apr-89 24,343 Jul-92 5,146 23,683
Rohr Industries, Inc. Motor Vehicles Apr-89 21,759 Jul-94 8,500 25,267
Rohr Industries, Inc. Motor Vehicles Apr-89 12,393 Jan-92 2,313 12,086
Rohr Industries, Inc. Motor Vehicles Apr-89 11,921 May-92 3,058 11,597
Rohr Industries, Inc. Motor Vehicles Apr-89 11,920 Jul-92 2,973 11,597
Rohr Industries, Inc. Motor Vehicles May-89 16,760 Jul-94 3,677 18,710
Rohr Industries, Inc. Motor Vehicles May-89 11,920 May-93 2,772 12,955
Rohr Industries, Inc. Motor Vehicles Jul-89 18,477 Feb-93 11,810 14,614
Rohr Industries, Inc. Motor Vehicles Jul-89 17,801 Jul-92 3,823 15,948
Rohr Industries, Inc. Motor Vehicles Aug-89 14,570 Dec-93 3,695 15,270
Rohr Industries, Inc. Motor Vehicle Sep-89 8,702 Aug-96 3,979 12,557
Rohr Industries, Inc. Motor Vehicles Nov-89 16,378 May-92 13,340 9,100
Rohr Industries, Inc. Motor Vehicle Nov-89 15,863 Aug-96 4,422 20,605
Rohr Industries, Inc. Pickup Truck Nov-89 9,652 Jan-95 4,100 10,720
Rohr Industries, Inc. Motor Vehicles Mar-90 15,065 Feb-93 6,756 12,658
Sebastiani Vineyards, Inc. Wine Barrels Oct-88 143,804 Jun-96 6,535 188,158
Sebastiani Vineyards, Inc. Wine Barrels May-89 67,314 Jun-96 2,700 81,120
Sebastiani Vineyards, Inc. Wine Barrels May-89 33,919 Jun-94 4,340 41,682
Shell Mining Company Crawler Tractor Oct-89 1,013,257 Dec-94 390,000 1,048,122
Shell Mining Company Miner Machine Feb-90 640,995 Mar-95 130,000 648,032
Shell Mining Company Miner Machine Feb-90 640,427 Mar-95 130,000 647,458
St. Luke's-Roosevelt Hospital Center Medical Furniture, Feb-90 1,126,223 Apr-93 404,654 1,116,417
Fixtures & Equipment
The Budd Company Electric Forklifts May-90 426,589 Sep-97 68,742 491,609
The Budd Company Forklifts May-90 90,919 Jul-97 27,600 104,777
The Budd Company Industrial Batteries May-90 85,100 Oct-97 - 98,071
The Budd Company Industrial Batteries May-90 70,128 Sep-97 17,190 80,817
The Budd Company Electric Tow Tractors May-90 42,589 Jul-97 5,400 49,080
The Budd Company Electric Tuggers May-90 22,342 Jul-97 4,000 25,747
The Budd Company Chargers May-90 19,394 Sep-97 5,441 22,350
The Budd Company Walkie Reach Truck May-90 15,903 Sep-97 3,887 18,327
The Budd Company Electric Cart May-90 2,793 Sep-97 682 3,218
The Budd Company Lift Trucks May-90 154,260 Mar-96 29,000 158,330
The Budd Company Lift Trucks Jun-90 168,998 Mar-98 28,400 242,141
The Dow Chemical Company Material Handling Jul-87 990,448 Aug-92 382,160 877,628
The Dow Chemical Company Rail car Mover Jul-87 145,822 Jan-93 43,650 125,152
The Dow Chemical Company Lift Truck Jul-87 26,198 Aug-92 4,300 25,820
The Dow Chemical Company Material Handling May-88 294,792 Jul-93 74,300 290,517
The Dow Chemical Company Material Handling May-88 55,516 Sep-95 - 73,736
The Dow Chemical Company Material Handling May-88 33,943 Jun-94 10,900 32,539
The Dow Chemical Company Material Handling May-88 33,119 Jan-95 10,000 39,517
The Dow Chemical Company Material Handling May-88 17,045 Jan-94 5,800 16,340
Treasure Chest Advertising Printing Press Mar-93 850,000 Mar-98 400,000 1,017,960
USX Steel Corporation Haul Truck Dec-89 1,017,631 Dec-94 324,300 1,003,483
USX Steel Corporation Haul Truck Dec-89 1,017,631 Dec-94 324,300 1,003,483
USX Steel Corporation Haul Truck Dec-89 1,013,766 Dec-94 324,300 999,671
------------- -------------- -------------
$43,344,386 $15,068,669 $40,257,416
============= ============== =============
</TABLE>
A-42
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
ATEL CASH DISTRIBUTION FUND III
<S> <C> <C> <C> <C> <C> <C> <C>
A.O. Smith Corporation Side loaders Nov-90 $230,591 Feb-97 $62,000 $266,272
A.O. Smith Corporation Forklifts Nov-90 33,752 Feb-97 8,100 40,198
A.O. Smith Corporation Towmotors Nov-90 120,865 Jan-96 44,000 124,614
A.O. Smith Corporation Lift trucks Nov-90 25,315 Jan-96 8,250 26,100
A.O. Smith Corporation Lift trucks Nov-90 22,516 Jan-96 9,000 23,215
A.O. Smith Corporation Carton Clamps Nov-90 22,469 Jan-96 9,000 26,166
A.O. Smith Corporation Lift trucks Nov-90 17,860 Mar-96 3,950 18,414
American President Trucking Co., Ltd. 1989 Utility 48'X102 Mar-90 641,594 Mar-98 210,000 743,110
Curtainsider Trailer
American President Trucking Co., Ltd. 1990 Utility 48'X102 May-90 163,481 Jun-98 52,500 189,348
Curtainsider Trailer
American President Trucking Co., Ltd. Tractors May-90 129,021 Jul-97 24,085 183,461
American President Trucking Co., Ltd. Tractor Jun-90 64,510 Jul-97 12,043 71,710
American President Trucking Co., Ltd. Utility Curtainsiders Jul-90 163,482 Aug-97 60,000 189,348
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Nov-96 10,000 76,859
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Nov-96 18,788 76,859
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Nov-96 10,000 76,859
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Nov-96 10,000 76,859
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Nov-96 10,000 76,859
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Dec-96 15,473 74,845
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Dec-96 11,894 76,859
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Dec-96 9,900 76,859
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Feb-97 15,993 74,845
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Feb-97 15,073 74,845
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Feb-97 15,073 74,845
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Feb-97 15,073 74,845
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Feb-97 15,455 74,845
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Feb-97 15,073 74,845
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Feb-97 15,073 74,845
American President Trucking Co., Ltd. Tractors Feb-90 64,862 Feb-97 15,073 74,845
American President Trucking Co., Ltd. Tractors Feb-90 64,510 May-96 19,738 62,791
American President Trucking Co., Ltd. Tractors Feb-90 64,510 Jun-96 18,738 62,791
American President Trucking Co., Ltd. Tractors Feb-90 64,510 Nov-96 15,443 74,622
American President Trucking Co., Ltd. Tractors Feb-90 64,510 Dec-96 15,443 74,622
American President Trucking Co., Ltd. Tractors Feb-90 64,510 Dec-96 15,443 74,622
American President Trucking Co., Ltd. Tractors Feb-90 64,510 Dec-96 15,443 74,622
American President Trucking Co., Ltd. Tractors Feb-90 64,510 Dec-96 9,900 76,442
American President Trucking Co., Ltd. Tractors Feb-90 64,863 Jun-96 18,788 63,134
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Nov-96 15,472 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Nov-96 15,472 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Nov-96 14,572 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Nov-96 15,472 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Dec-96 15,534 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Dec-96 15,372 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Dec-96 15,372 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Dec-96 15,372 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Apr-97 14,396 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Apr-97 14,072 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Apr-97 14,072 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Apr-97 14,072 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Apr-97 15,598 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 May-97 13,972 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Jun-97 13,772 73,663
American President Trucking Co., Ltd. Tractors Mar-90 63,685 Jun-97 13,772 73,663
American President Trucking Co., Ltd. Tractors Apr-90 64,510 Nov-96 15,543 72,620
American President Trucking Co., Ltd. Tractors Apr-90 64,510 Dec-96 15,443 72,620
American President Trucking Co., Ltd. Tractors Apr-90 64,510 Dec-96 15,443 72,620
American President Trucking Co., Ltd. Tractors Apr-90 322,551 Jun-96 97,892 300,307
American President Trucking Co., Ltd. Tractors May-90 64,510 Nov-96 15,543 71,710
American President Trucking Co., Ltd. Tractors May-90 64,510 Nov-96 15,543 71,710
American President Trucking Co., Ltd. Tractors May-90 64,510 Dec-96 15,543 71,710
American President Trucking Co., Ltd. Tractors May-90 64,510 Feb-97 15,543 71,710
American President Trucking Co., Ltd. Tractors May-90 64,510 Feb-97 15,543 68,070
American President Trucking Co., Ltd. Tractors May-90 387,062 Jun-96 150,839 343,988
American President Trucking Co., Ltd. Tractors May-90 129,021 Jun-96 37,934 120,123
Barney's, Inc. Retail Store FF&E Sep-93 2,009,077 Jul-96 1,033,020 967,060 11
Buffalo & Pittsburgh Railroad Locomotives Nov-93 792,657 Nov-96 713,100 802,504
Carrier Corporation Lift trucks Jun-90 359,305 Apr-95 89,800 369,875
Carrier Corporation Lift trucks Jun-90 113,195 Apr-95 27,950 114,228
Carrier Corporation Lift trucks Aug-90 200,008 Apr-95 43,100 203,148
Central Ohio Coal Company CAT Scrapers Mar-92 2,713,694 Jul-96 1,048,730 2,580,680
Central Ohio Coal Company 160 Ton Coal Hauler Mar-92 2,280,162 Dec-97 972,955 2,936,837
Central Ohio Coal Company Billdozer Mar-92 396,549 Oct-96 53,000 392,373
Dean Foods Company Trailer Oct-90 34,996 Nov-96 20,461 35,617
Dean Foods Company 91 Utility 48'X102 Reefer Oct-90 1,099,749 Feb-98 390,000 1,303,590
Trailer
FMC Gold Company Haul Truck Jun-90 560,232 Jan-94 295,000 427,663
Fred Meyer, Inc. Data Processing Oct-90 3,244,649 Aug-95 1,060,276 3,608,683
Fred Meyer, Inc. Data Processing Nov-90 3,340,551 Dec-92 2,715,033 2,338,583
Koppers Industries, Inc. Material Handling Jul-90 54,156 Sep-95 23,000 64,020
Koppers Industries, Inc. Material Handling Aug-90 45,485 Jan-94 33,383 31,471
Koppers Industries, Inc. Material Handling Dec-90 200,911 Dec-95 102,500 237,614
Koppers Industries, Inc. Hydraulic Excavator Mar-91 114,492 Apr-96 57,500 129,848
Kraft General Foods Lift Truck Apr-91 160,846 May-98 29,925 187,568
Kraft General Foods Lift Truck Apr-91 44,277 Apr-98 11,000 51,633
Kraft General Foods Lift Truck Apr-91 23,101 May-98 3,875 26,939
Kraft General Foods Lift Truck Apr-91 22,523 May-98 2,050 26,265
Kraft General Foods Lift Truck Apr-91 22,093 May-98 2,675 25,763
Kraft General Foods Lift Truck Apr-91 17,614 May-98 4,875 23,309
Kraft General Foods, Inc. Material Handling Jul-91 46,694 Aug-94 24,248 22,701
Midway Airlines, Inc. Commercial Aircraft Jun-90 2,405,081 Sep-91 1,656,694 226,541 12
Mobil Oil Corporation Material Handling Apr-92 35,662 Jun-95 13,040 29,673
Mobil Oil Corporation Material Handling Jul-92 36,249 Jun-95 10,611 30,163
Mobil Oil Corporation Golf Carts Jun-93 142,464 Jul-97 74,800 98,983
Mobil Oil Corporation Golf Carts Jun-93 137,654 Jul-96 80,800 95,642
Nord Kaolin Company Lab Equipment Aug-90 409,694 Oct-97 91,000 110,806
Pepsico, Inc. Material Handling Jul-90 208,042 Sep-96 16,000 254,225
Pepsico, Inc. Material Handling Sep-90 228,666 Oct-96 21,000 266,447
Pepsico, Inc. Material Handling Sep-90 32,885 Sep-96 1,200 41,214
Pepsico, Inc., d/b/a/ PFS Material Handling Jul-90 73,050 Jun-95 8,470 52,933
Pilgrim's Pride Corporation Chicken Processing Dec-90 3,791,002 Oct-95 1,400,000 4,000,050
PSI Energy, Inc. Wheel Tractor Scraper Jul-90 842,013 Sep-96 295,000 923,917
Reliance Insurance Company Office Furniture Jun-92 1,133,854 Jun-97 287,622 1,213,841
Reliance Insurance Company Office Furniture Sep-92 137,047 Sep-97 37,346 159,007
Reliance Insurance Company Offset Press Sep-92 29,780 Sep-97 8,338 35,093
Shell Mining Company Crawler Dozer Oct-91 776,000 Dec-96 350,000 801,763
Southern Ohio Coal Company Mining Mar-92 3,795,152 Jun-92 4,469,135 207,307
Southern Ohio Coal Company Shuttle Cars Mar-92 767,590 Apr-97 120,000 851,419
Southern Ohio Coal Company Power Center Mar-92 102,826 Apr-97 15,000 114,056
Stone Container Corp Forklift Nov-90 35,759 Mar-98 6,500 54,404
Stone Container Corp C50 Forklift Nov-90 19,696 Apr-98 4,000 15,700
Stone Container Corporation Material Handling Nov-90 299,787 Aug-93 115,700 301,446
Stone Container Corporation Material Handling Nov-90 227,384 May-93 54,500 163,622
Stone Container Corporation Material Handling Nov-90 216,936 Jun-95 72,500 199,500
Stone Container Corporation Material Handling Nov-90 183,825 Jul-95 105,500 188,712
Stone Container Corporation Tractor Nov-90 137,327 Mar-95 75,842 124,820
Stone Container Corporation Material Handling Nov-90 136,838 Jun-96 60,670 164,020
Stone Container Corporation Material Handling Nov-90 116,700 Jul-95 23,750 133,201
Stone Container Corporation Material Handling Nov-90 110,836 Jul-95 21,750 125,403
Stone Container Corporation Material Handling Nov-90 96,611 Jun-95 29,500 107,181
Stone Container Corporation Forklifts Nov-90 83,200 Aug-97 21,555 110,823
Stone Container Corporation Material Handling Nov-90 68,950 Mar-96 21,500 85,665
Stone Container Corporation Material Handling Nov-90 63,433 Sep-95 14,000 69,970
Stone Container Corporation Tractor Nov-90 53,694 Jan-95 30,500 50,456
Stone Container Corporation Material Handling Nov-90 51,420 Jun-95 14,500 54,541
Stone Container Corporation Material Handling Nov-90 50,097 Oct-94 17,735 52,700
Stone Container Corporation Material Handling Nov-90 49,232 Jul-95 14,500 54,618
Stone Container Corporation Material Handling Nov-90 46,928 May-96 8,400 57,267
Stone Container Corporation Forklifts Nov-90 46,681 Jul-96 13,375 67,363
Stone Container Corporation Material Handling Nov-90 46,492 Mar-96 13,500 41,148
Stone Container Corporation Material Handling Nov-90 45,669 Apr-94 17,500 45,093
Stone Container Corporation Material Handling Nov-90 43,850 Apr-93 9,000 36,268
Stone Container Corporation Material Handling Nov-90 33,498 Mar-95 14,500 35,136
Stone Container Corporation Forklifts Nov-90 32,261 Nov-96 9,100 47,409
Stone Container Corporation Forklifts Nov-90 26,256 Apr-97 9,000 55,930
Stone Container Corporation Material Handling Nov-90 25,898 Jul-95 12,000 26,586
Stone Container Corporation Material Handling Nov-90 23,674 Oct-93 5,800 24,262
Stone Container Corporation Material Handling Nov-90 22,561 Jan-96 2,000 29,525
Stone Container Corporation Material Handling Nov-90 22,308 Jul-95 5,500 23,453
Stone Container Corporation Material Handling Nov-90 18,611 Jul-94 3,500 16,737
Stone Container Corporation Material Handling Nov-90 17,250 Jul-95 5,500 15,176
Stone Container Corporation Tractor Nov-90 17,227 Jan-95 6,000 18,431
Stone Container Corporation Material Handling Nov-90 17,124 Jul-95 4,300 19,535
Stone Container Corporation Material Handling Nov-90 15,984 Mar-93 5,500 14,058
Stone Container Corporation Material Handling Nov-90 15,810 Jul-95 8,500 16,230
Stone Container Corporation Material Handling Nov-90 15,625 Feb-95 4,000 14,480
Stone Container Corporation Sweeper Nov-90 14,203 Oct-95 2,100 10,440
Stone Container Corporation Material Handling Nov-90 12,949 Jul-95 6,000 13,293
Stone Container Corporation Material Handling Apr-91 128,314 Dec-93 117,236 59,610
Teledyne Industries, Inc. Material Handling Nov-90 56,635 Jan-94 13,714 52,309
Teledyne Industries, Inc. Material Handling Nov-90 41,301 Apr-96 15,000 42,464
Teledyne Industries, Inc. Material Handling Nov-90 24,073 Apr-94 11,100 22,234
Terex Corporation KW-KC Induction Unit Apr-91 68,088 Aug-97 29,428 75,403
Terex Corporation Shape Cutting Machine Jul-91 237,213 Aug-97 89,660 262,698
The Dow Chemical Company Research Equipment Apr-91 222,801 Mar-97 6,000 231,500
The Dow Chemical Company Research Equipment Apr-91 56,295 Oct-96 25,000 61,271
The Dow Chemical Company Research Equipment Apr-91 930,833 Feb-96 214,500 1,013,116
The Dow Chemical Company Research Equipment Oct-91 649,269 Nov-96 to 125,030 748,348
Dec-96
The Dow Chemical Company Research Equipment Oct-91 61,615 Dec-96 2,200 68,479
The Dow Chemical Company Material Handling Oct-91 50,478 Aug-93 12,000 47,859
The Dow Chemical Company Research Equipment Jan-92 937,459 Jan-97 217,000 1,031,519
The Dow Chemical Company Research Equipment Jan-92 468,214 Jan-97 94,875 512,287
The Dow Chemical Company Dilor Micro Raman Apr-92 183,312 Apr-98 24,275 221,865
Spectrometer
The Dow Chemical Company Krypton Ion Laser Apr-92 31,373 Apr-98 7,000 37,971
The Dow Chemical Company Computer Apr-92 2,905 Apr-98 - 3,516
The Dow Chemical Company Computer Apr-92 2,905 Apr-98 - 3,516
The Dow Chemical Company Dozer Jul-92 158,778 Jun-97 79,389 160,540
The Helen Mining Company Mining Jun-91 222,801 Aug-93 14,321 227,537 13
The Helen Mining Company Mining Shields Sep-93 149,536 Jan-97 - 149,536
The Kelly Springfield Tire Co. Trackmobile Mar-92 86,943 Mar-97 65,000 86,246
The Kelly Springfield Tire Co. Mail Sorter Mar-92 28,452 Mar-97 5,432 30,512
The Kelly Springfield Tire Co. Forklifts May-92 18,512 Jun-97 5,000 20,139
The Pillsburry Company Stripper Combines May-92 1,023,718 Dec-97 428,375 857,137
The Pillsburry Company Self Propelled Pods (3) Jun-92 1,012,828 Dec-97 423,819 848,020
The Pillsburry Company Corn Harvesters (3) Jun-92 385,217 Dec-97 148,172 341,077
The Pillsburry Company Dump Cart Jun-92 10,475 Dec-97 4,029 9,275
The Pillsburry Company Poclain Motors Jun-92 6,285 Dec-97 2,418 5,565
The Pittston Company MECD Conveyor System Apr-92 1,766,809 Sep-97 116,000 1,753,821
The Pittston Company Simmons Rand Un-A-Hauler Apr-92 729,550 Oct-97 75,000 724,187
The Pittston Company Fletcher Bolter Apr-92 190,154 Jul-97 36,000 188,756
The Pittston Company Versatrack Apr-92 183,104 Jun-97 31,500 188,826
The Pittston Company Versatrack Apr-92 159,207 Oct-96 83,321 147,150
The Pittston Company Simmons Rand Scoup Apr-92 136,531 Jun-97 18,000 141,702
The Pittston Company Stamler Feeder Apr-92 131,697 Sep-97 15,000 130,729
The Pittston Company Personnel Carrier Apr-92 61,549 Jun-97 12,000 63,880
The Pittston Company Compressor Car Apr-92 34,253 Jun-97 7,000 35,550
The Pittston Company Continuous Miner Jun-92 949,110 Feb-97 437,995 945,758
The Pittston Company LWPC & Controls Jun-92 252,060 Sep-97 5,000 251,170
The Pittston Company Un-a-hauler Jun-92 247,104 Jun-97 35,000 246,915
The Pittston Company Locomotive Jun-92 125,394 Jun-97 28,000 125,298
Truck-Lite Company Project Line Equipement Sep-91 414,720 Jun-97 224,054 397,993
Truck-Lite Company Ct-20 Project Line Sep-91 1,993,259 Apr-98 686,574 2,152,003
Equipment
Truck-Lite Company 700 Ton Press Sep-91 320,311 Apr-98 110,331 345,821
Truck-Lite Company 500 Ton Press Sep-91 245,164 Apr-98 84,446 264,690
Truck-Lite Company 275 Ton Press Sep-91 193,862 Apr-98 66,775 209,301
Truck-Lite Company 150 Ton Press Sep-91 152,248 Apr-98 52,442 164,374
Truck-Lite Company Electro Static Plotter Sep-91 31,070 Apr-98 10,702 33,544
Truck-Lite Company Forklift Truck Sep-91 15,384 Apr-98 5,299 16,610
Truck-Lite Company Forklift Truck Sep-91 15,384 Apr-98 5,299 16,610
Truck-Lite Company Project Line Equipement Dec-91 699,062 Jun-97 380,946 656,930
Truck-Lite Company Ct-20 Project Line Dec-91 1,076,902 Apr-98 365,102 1,156,569
Equipment
Truck-Lite Company 500 Ton Press Dec-91 224,929 Apr-98 76,258 241,569
Truck-Lite Company 275 Ton Press Dec-91 173,702 Apr-98 58,890 186,552
Truck-Lite Company 150 Ton Press Dec-91 131,393 Apr-98 44,546 141,113
Truck-Lite Company Scissor Lift Mold Truck Dec-91 25,011 Apr-98 8,480 26,861
Truck-Lite Company Ct-20 Project Line Mar-92 1,089,540 Apr-98 380,022 1,168,223
Equipment
Truck-Lite Company Ct-20 Project Line Aug-92 274,069 Apr-98 98,219 300,135
Equipment
Truck-Lite Company Ct-20 Project Line Dec-92 108,149 Apr-98 38,093 119,258
Equipment
US Surgical Corp./ARR, Inc. Falcon 50 Aircraft Oct-92 5,275,000 Oct-97 5,200,000 4,421,201
USS/KOBE Steel Corporation Forklift Trucks Aug-91 197,211 Aug-97 45,700 241,284
USS/KOBE Steel Corporation Material Handling Nov-91 82,769 Oct-97 12,000 92,719
USS/KOBE Steel Corporation Hyster Lift Truck Nov-91 34,079 Nov-97 6,200 61,723
Wal-Mart Stores, Inc. Dryvan Trailer Jun-94 300,624 Aug-97 248,000 337,232
Wal-Mart Stores, Inc. Forklifts, Trucks & Jun-94 189,632 Jan-96 165,000 188,817
Trailers
------------- ------------ -------------
$66,594,290 $31,533,234 $60,415,093
============= ============ =============
</TABLE>
A-43
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
ATEL CASH DISTRIBUTION FUND IV
<S> <C> <C> <C> <C> <C> <C> <C>
Ameriserve Food Distribution Battery Connector/ Jan-94 $88,419 Jan-98 $5,850 $83,694
Charger/Pallet Truck
Barney's, Inc. Retail Store FF&E Sep-93 2,316,543 Jul-96 1,191,112 1,115,058 11
Buffalo & Pittsburgh Railroad Locomotives Nov-93 849,216 Nov-96 729,200 859,766
Burlington Northern Railroad Locomotives Dec-92 7,950,000 Dec-94 5,595,000 4,161,000
Canadian Pacific Limited Rail Car Oct-92 5,704 Apr-96 21,772 520
Canadian Pacific Limited Boxcar Oct-92 5,474 May-97 20,466 3,942
DJ (Aeorspace) Limited Executive Aircraft Apr-94 1,890,000 Jan-97 1,018,053 1,590,913
Galardi Group Restaurant FF&E Jun-94 546,000 Oct-96 325,276 382,513
H. E. Butt Grocery Company Refrigerated Trailers Oct-92 2,128,029 Mar-97 1,174,703 1,410,730
H. E. Butt Grocery Company Refrigerated Trailers Nov-92 1,897,830 Mar-97 1,079,789 1,246,977
H. E. Butt Grocery Company Refrigerated Trailers Nov-92 1,645,554 Mar-97 610,258 1,299,522
H. E. Butt Grocery Company Trailers Nov-92 37,957 Jan-96 35,624 18,607
H. E. Butt Grocery Company Refrigerated Trailers May-93 1,404,302 Mar-97 831,127 790,395
Kraft General Foods, Inc. Tractors Dec-93 545,048 Jul-96 139,956 581,119
Kraft General Foods, Inc. Tractors Dec-93 419,267 Jan-95 363,510 337,986
Midwest Power Systems, Inc. Coal Hopper Car Dec-92 2,222,500 Apr-96 1,730,291 1,993,170
Midwest Power Systems, Inc. Coal Hopper Car Dec-92 17,500 Sep-93 20,543 3,915
Mobil Oil Corporation John Deere Loader Rops Apr-92 74,977 Dec-97 30,000 94,050
Mobil Oil Corporation Manlift Jul-92 67,304 Jul-97 31,000 89,177
Mobil Oil Corporation Bobcat Loader Jul-92 15,289 Jul-97 9,000 20,258
Mobil Oil Corporation John Deer Excavator Jul-92 139,970 Jun-98 30,000 102,073
Mobil Oil Corporation 1993 Freightliner Tractor Aug-92 195,915 Feb-98 59,250 174,678
Mobil Oil Corporation 1993 Freightliner Tractor Aug-92 65,305 Feb-98 19,750 58,226
Mobil Oil Corporation Tractors Nov-92 436,136 Sep-96 137,900 536,101
Mobil Oil Corporation Snorkel Uno-33E Electric Nov-92 28,185 Jun-98 7,000 41,689
Boom
Mobil Oil Corporation Snorkel/Economy 2032 Nov-92 13,533 Jun-98 2,700 20,017
Scissorlifts
Mobil Oil Corporation Material Handling Dec-92 69,000 Dec-97 50,000 65,419
Equipment
Mobil Oil Corporation 1993 Kenworth Tractor Dec-92 63,307 Apr-98 15,750 33,901
Mobil Oil Corporation 1993 Freightliner Tractor Dec-92 62,080 Apr-98 15,750 55,351
Mobil Oil Corporation 1993 Freightliner Tractor Dec-92 62,080 Apr-98 15,750 35,882
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Apr-98 15,750 56,224
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Jun-98 29,458 32,161
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Apr-98 15,750 56,224
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Apr-98 18,500 56,224
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 62,055 Apr-98 17,000 55,328
Mobil Oil Corporation Tractor Accessories Oct-93 3,541 Sep-96 - 979
Mobil Oil Corporation Accessories For Kenworth Oct-93 5,682 Apr-98 - 5,774
Tractor
Mobil Oil Corporation Accessories For Tractor Oct-93 1,982 Feb-98 - 1,703
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Apr-98 - 1,402
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Apr-98 - 1,402
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Jun-98 - 1,402
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Apr-98 - 1,402
Mobil Oil Corporation Motor Vehicle Accessories Oct-93 285 Feb-98 - 245
Mobil Oil Corportion Tractors Nov-92 182,949 Jun-96 48,000 136,246
Mobil Oil Corportion Boom Trucks Nov-92 69,903 Jan-94 46,026 19,329
Mobil Oil Corportion Tractors Nov-92 62,312 Jan-96 25,500 43,963
Mobil Oil Corportion Tractors Nov-92 62,312 Mar-96 25,500 43,963
Mobil Oil Corportion Tractors Dec-92 23,500 Feb-96 8,950 21,126
Nabisco, Inc. Computers and Related Jul-95 211,104 Jul-97 to 63,855 100,306
Equipment Nov-97
Nabisco, Inc. Computers and Related Jul-95 72,622 Jul-97 to 26,909 34,506
Equipment Dec-97
Nabisco, Inc. Computers & Related Jul-95 43,423 Dec-96 to 34,799 21,684
Equipment Jun-97
Nabisco, Inc. Computers & Related Jul-95 10,447 Dec-96 to 8,590 5,071
Equipment Jun-97
National Steel Corporation Wheel Loader Oct-94 2,180,730 May-97 1,259,019 1,080,629
National Steel Corporation Forklift Oct-94 27,780 May-97 21,495 11,992
National Steel Corporation Scrap Loader Jan-95 242,595 May-97 193,044 92,425
National Steel Corporation Dump Haul Trucks Mar-95 3,433,402 May-97 2,783,959 1,145,594
Pepsico, Inc. Pallet Trucks and Related Jun-93 103,258 Jul-97 10,000 97,740
Equipment
Pepsico, Inc. Battery Connector Jan-94 3,352 Sep-97 2,506 2,787
Pepsico, Inc. Pallet Trucks and Related Jul-93 to 31,376 Oct-97 1,950 29,700
Aug-93
Equipment
Rochelle Coal Company Haul Truck Nov-92 1,429,807 Jun-97 772,200 1,022,764
Rochelle Coal Company Loader Dec-92 1,988,931 Jun-97 1,074,250 1,403,767
Rochelle Coal Company Haul Truck Dec-92 1,429,807 Jun-97 772,200 1,008,524
Rochelle Coal Company Haul Truck Jan-93 1,455,158 Jun-97 800,500 1,002,462
TASC, Inc. Computers and Related Oct-95 7,394 Apr-98 2,079 7,426
Equipment
TASC, Inc. Computers and Related Oct-95 3,932 Apr-98 1,061 3,949
Equipment
TASC, Inc. Computers and Related Dec-95 4,757 Apr-98 1,301 4,778
Equipment
TASC, Inc. Computers and Related Jan-96 4,351 Apr-98 1,145 4,370
Equipment
TASC, Inc. Computers and Related Jan-96 4,139 Apr-98 1,228 4,157
Equipment
TASC, Inc. Computers and Related Jan-96 3,477 Apr-98 970 3,492
Equipment
The Dow Chemical Company Varian Spectra A4400 Feb-93 102,149 Mar-98 29,500 113,385
Plus System
The Helen Mining Company Mining Mar-92 333,458 Mar-92 72,385 347,258
The Helen Mining Company Battery Locomotive Apr-92 185,249 May-97 39,131 198,041
The Helen Mining Company Mining May-92 641,854 Aug-93 44,235 679,436
The Kendall Company Computers Aug-94 21,819 Nov-97 8,184 24,926
The Kendall Company Computers Aug-94 21,581 Dec-97 3,099 24,654
The Kendall Company Computer Equipment Aug-94 55,013 May-98 9,632 64,411
The Kendall Company Computers Oct-94 45,471 Nov-97 14,322 51,946
The Kendall Company Computers Oct-94 17,206 Dec-97 2,360 19,656
The Kendall Company Computer Oct-94 4,735 Dec-96 2,233 3,822
The Kendall Company Computers Dec-94 20,067 Nov-97 5,924 32,675
The Kendall Company Computers Dec-94 8,586 Dec-97 2,112 13,980
The Kendall Company Computer Equipment Dec-94 57,455 May-98 7,243 95,337
The Kendall Company Centillion Speedswitch(s) Mar-95 43,770 Oct-97 18,906 51,335
The Kendall Company Computers Mar-95 9,553 Dec-96 5,817 6,304
The Kendall Company Computer Equipment Mar-95 346,935 May-98 25,290 472,246
The Kendall Company Computers Jun-95 11,771 Oct-97 to 5,993 9,856
Dec-97
The Kendall Company Computers and Related Oct-95 118,854 Jun-98 8,786 109,712
Equipment
The Kendall Company Computers Jan-95 to 34,449 Nov-97 14,009 40,403
Mar-95
The Pittston Company 1992 Joy 14Cm10 Jun-92 846,883 Apr-98 127,500 916,497
Continuous Miner
The Pittston Company Drill Nov-93 387,000 Apr-97 184,092 254,059
The Pittston Company Wheel Loader Nov-93 382,831 Apr-97 243,561 169,890 13
The Pittston Company Wheel Loader Nov-93 381,922 Apr-97 223,879 198,841
The Pittston Company Drill Nov-93 358,831 Apr-97 203,034 203,113
The Pittston Company Diesel Generator Nov-93 244,450 Apr-97 156,164 114,774
The Pittston Company Crawler Tractor Nov-93 208,800 Apr-97 136,878 98,035
The Pittston Company Crawler Tractor Nov-93 201,786 Apr-97 132,280 94,742
The Pittston Company Continuous Miner Mar-95 819,349 Apr-97 546,207 346,748
The Stop & Shop Supermarket Co. Bakery Labeling Machine Dec-95 2,750 Mar-97 2,568 759
Trans Ocean Container Corporation Intermodal Containers Sep-93 65,073 Oct-96 to 53,512 24,637
Apr-97
Trans Ocean Container Corporation Intermodal Containers Sep-93 23,074 Dec-97 14,130 23,576
Trans Ocean Container Corporation Intermodal Containers Sep-93 13,870 Dec-95 10,608 5,537
Trans Ocean Container Corporation Intermodal Containers Sep-93 13,223 Apr-95 12,095 3,016
Trans Ocean Container Corporation Intermodal Containers Sep-93 10,196 Oct-95 6,112 3,595
Trans Ocean Container Corporation Intermodal Containers Sep-93 6,744 Jul-94 7,398 825
Trans Ocean Container Corporation Intermodal Containers Sep-93 6,706 Jul-95 6,394 2,069
Trans Ocean Container Corporation Intermodal Container - T20 Sep-93 3,372 Mar-98 1,572 2,615
Trans Ocean Container Corporation Intermodal Container - T20 Sep-93 3,372 Mar-98 1,341 2,615
Trans Ocean Container Corporation Intermodal Container - T20 Sep-93 3,372 Mar-98 3,248 2,615
Trans Ocean Container Corporation Intermodal Container - T20 Sep-93 3,372 Mar-98 3,900 2,615
Trans Ocean Container Corporation Intermodal Container - T20 Sep-93 3,372 Mar-98 600 2,615
Union Tank Car Company Rail Car Oct-92 1,222,542 Jul-95 1,383,118 601,100
Union Tank Car Company Rail Car Oct-92 389,367 Sep-95 441,332 203,680
Union Tank Car Company Rail Car Oct-92 389,367 Oct-95 442,564 209,760
Union Tank Car Company Rail Car Oct-92 26,000 Apr-96 21,695 18,920
Union Tank Car Company Box Car Oct-92 25,000 Feb-95 23,158 21,678
Union Tank Car Company Box Car Oct-92 13,000 Aug-97 9,829 12,805
Union Tank Car Company Boxcar Oct-92 13,000 Nov-96 8,979 11,220
Union Tank Car Company Boxcar Oct-92 13,000 Apr-97 9,829 12,100
Union Tank Car Company Rail Car Oct-92 12,000 Apr-95 11,088 12,752
Union Tank Car Company Rail Car Oct-92 12,000 Jan-96 10,371 8,202
Union Tank Car Company Rail Car Dec-92 13,000 Jan-93 14,569 880
US Surgical Corp./ARR, Inc. Falcon 50 Air Craft Aug-92 5,275,000 Oct-97 5,200,000 4,417,201
USX Steel Company Material Handling Jun-93 711,679 Oct-97 175,000 776,136
Equipment
------------- ------------ -------------
$52,871,585 $33,547,640 $35,969,474
============= ============ =============
</TABLE>
A-44
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
ATEL CASH DISTRIBUTION FUND V
<S> <C> <C> <C> <C> <C> <C> <C>
Barney's, Inc Retail Store FF&E Sep-93 $3,312,940 Jul-96 $1,703,435 $1,594,669 11
Burlington Northern & Santa Fe Container - Domestic May-94 9,787 Jan-98 8,434 4,274
Burlington Northern & Santa Fe 1995 Pines 48' Container Oct-94 9,635 Jan-98 8,591 3,672
Burlington Northern Railroad Company Covered Hopper Cars Mar-96 35,000 Dec-96 22,425 619
Burlington Northern Railroad Company Covered Hopper Cars Mar-96 35,000 Jan-97 36,367 -
Burris Foods Trailers Apr-94 108,442 Dec-95 121,000 53,210
Canadian Pacific Railr Jumbo Covered Hopper Mar-96 35,263 Jun-98 29,607 7,600
Railcar
Clark Oil & Refining Corporation Refrigeration Units Aug-93 1,268,656 Dec-96 560,000 1,164,635
Conagra, Inc. Jumbo Covered Hopper Mar-96 35,263 Jun-98 29,341 11,875
Railcar
IBM Corporation Office Furniture Aug-93 1,131,815 Nov-97 431,901 1,087,248
IBM Corporation Office furniture Sep-93 693,896 Jun-95 516,291 666,576
International Paper Company Wheel Loader Aug-94 112,054 Apr-98 45,000 110,842
International Paper Company Utility Hand Truck Sep-94 4,300 Nov-97 1,415 3,314
International Paper Company Floor Sweeper/Scrubber Sep-94 9,069 Apr-98 1,000 8,972
International Paper Company Kotmatsu Articulated Wheel Oct-94 201,039 Apr-98 40,000 200,267
International Paper Company Kotmatsu Articulated Wheel Oct-94 201,039 Apr-98 40,000 200,267
International Paper Company Taylor Forklift Oct-94 80,169 Apr-98 32,000 79,861
International Paper Company Taylor Forklift Oct-94 80,169 Apr-98 32,000 79,861
International Paper Company Caterpillar 980F Wheel Oct-94 248,304 Apr-98 70,000 247,350
Loader
International Paper Company Caterpillar 936F Wheel Oct-94 112,054 Apr-98 45,000 111,623
Loader
International Paper Company Komatsu Forklift Nov-94 28,445 Jun-98 8,400 28,335
International Paper Company Komatsu Forklift Nov-94 28,445 Jun-98 8,400 28,335
International Paper Company Bolzoni Paper Roll Clamp Nov-94 10,376 Jun-98 500 10,336
International Paper Company Hyster Clamp Truck Dec-94 49,672 May-98 13,000 49,481
International Paper Company Hyster Clamp Truck Dec-94 49,672 May-98 13,000 49,481
International Paper Company Hyster Clamp Truck Dec-94 49,672 May-98 13,000 49,481
International Paper Company Bolzoni Paper Roll Clamp Dec-94 10,376 Jun-98 500 10,336
International Paper Company Hyster S120Xl2 Lift Truck Feb-95 52,884 Apr-98 20,000 45,384
International Paper Company Hyster Forklift W/Paper Mar-95 65,584 Apr-98 30,000 56,284
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 Apr-98 20,000 45,384
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 Apr-98 20,000 45,384
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 May-98 20,000 45,384
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 May-98 20,000 45,384
Roll
Louis Dreyfus Corporation Jumbo Covered Hopper Mar-96 105,788 Apr-98 107,505 4,096
Railcar
Mobil Administrative Services Company Helicopter Jun-93 844,525 Mar-95 920,000 308,000
Mobil Oil Corporation Environmental Ejector May-93 423,000 Apr-97 88,000 458,067
Systems
Mobil Oil Corporation Wheel Loader Oct-93 70,200 Oct-96 39,000 50,579
Nabisco, Inc. Hewlett Packard Notebook Feb-95 357,104 Apr-98 62,807 348,386
Computers
Nabisco, Inc. Hewlett Packard Printers Feb-95 39,572 Apr-98 29,370 38,610
Nabisco, Inc. Hewlett Packard Printers Feb-95 29,744 Apr-98 29,370 29,016
Nabisco, Inc. Computers Aug-95 to 123,509 Aug-97 to 100,813 51,414
Oct-95 Nov-97
Nabisco, Inc. Computers & Related Aug-95 to 66,932 Dec-96 to 54,102 29,697
Equipment Oct-95 Jun-97
Owens Corning Fiberglas Corp. Forklifts Jul-93 157,462 May-97 31,800 157,273
Praxair, Inc. Tractors Jun-94 576,685 Sep-96 to 214,000 340,982
Apr-97
Praxair, Inc. Tractors Jun-94 91,429 Aug-97 to 23,028 54,060
Sep-97
PV Trucking Tractors Jun-94 75,333 Jan-96 50,000 36,000
Quaker Coal Company Mining equipment Jun-94 1,118,880 Jun-95 930,251 347,926
Quaker Coal Company Crawler Dozer Jun-94 913,073 Oct-96 425,000 732,192
Quaker Coal Company Mining equipment Jun-94 595,000 Jun-95 505,775 173,253
Quaker Coal Company Mining equipment Dec-94 3,000,000 Jun-95 2,696,718 794,600
Schwegmann Giant Super Markets Fixtures & Equipment Jun-95 1,784,722 May-98 221,893 1,043,329
Schwegmann Giant Supermarkets, Inc. Retail Store FF&E Jun-95 574,703 Oct-96 527,405 167,353
Schwegmann Giant Supermarkets, Inc. Retail Store FF&E Jun-95 309,024 Dec-96 272,109 101,701
Sebastiani Vineyards American Oak Barrels Aug-94 95,848 Jun-98 20,148 87,769
Soo Line Railroad Comp Jumbo Covered Hopper Mar-96 35,263 Jun-98 30,551 14,688
Railcar
Star Enterprise Tractors Jun-94 887,041 Jan-97 to 331,750 649,727
Apr-97
Star Enterprise Tractors Jun-94 36,492 Aug-97 12,850 26,827
TASC, Inc. Computers & Related Mar-96 3,634 Feb-98 586 5,451
Equipment
TASC, Inc. Computers & Related Mar-96 3,634 Feb-98 859 5,451
Equipment
TASC, Inc. Computers & Related Mar-96 3,634 Feb-98 859 5,451
Equipment
TASC, Inc. Computers & Related Mar-96 3,634 Feb-98 859 5,451
Equipment
TASC, Inc. Computers & Related Mar-96 3,634 Feb-98 859 5,451
Equipment
TASC, Inc. Computers & Related Mar-96 3,634 Feb-98 859 5,451
Equipment
TASC, Inc. Computers & Related Mar-96 3,634 Feb-98 859 5,451
Equipment
TASC, Inc. Computers & Related Mar-96 3,634 Feb-98 859 5,451
Equipment
TASC, Inc. Computers & Related Mar-96 3,310 Feb-98 782 4,965
Equipment
TASC, Inc. Computers & Related Mar-96 3,310 Feb-98 782 4,965
Equipment
TASC, Inc. Computers & Related Dec-94 237,685 Jul-96 70,000 226,989
Equipment
Texaco Trading & Transportation Tractors Jun-94 983,717 Jul-97 to 361,500 757,569
Nov-97
Texaco Trading & Transportation Tractors Jun-94 983,294 Feb-97 to 370,000 742,508
Jun-97
Texaco Trading & Transportation Tractors Jun-94 338,992 Aug-97 to 120,000 274,077
Nov-97
Texaco Trading & Transportation Tractors & Trailers Jun-94 156,645 Apr-97 55,000 120,533
Texaco Trading & Transportation Tractors Jun-94 138,783 Feb-97 to 59,250 94,571
Mar-97
Texaco Trading & Transportation Tank Trailers Jun-94 73,805 Aug-97 to 25,000 59,672
Nov-97
The Atchison Topeka & Santa Fe Intermodal Containers Apr-94 9,787 Jan-96 9,612 1,832
Railroad Company
The Atchison Topeka & Santa Fe Intermodal Containers May-94 9,787 Jan-96 9,612 1,832
Railroad Company
The Atchison Topeka & Santa Fe Intermodal Containers Jun-94 9,787 Jan-95 10,107 611
Railroad Company
The Atchison Topeka & Santa Fe Intermodal Containers Jun-94 9,787 Jan-96 9,612 1,832
Railroad Company
The Atchison Topeka & Santa Fe Intermodal Containers Oct-94 9,635 Jan-95 10,123 306
Railroad Company
The Burlington Northern & Santa Intermodal Containers May-94 9,787 Jul-96 9,337 2,548
Fe Railway Co.
The Burlington Northern & Santa Intermodal Containers Jun-94 9,787 Jul-96 9,337 2,843
Fe Railway Co.
The Burlington Northern & Santa Intermodal Containers Jun-94 9,787 Jan-97 8,991 2,843
Fe Railway Co.
The Burlington Northern & Santa Intermodal Containers Nov-94 9,634 Jul-96 9,462 1,993
Fe Railway Co.
The Dow Chemical Company Copiers Jul-94 42,694 Jul-95 31,150 13,588
The Dow Chemical Company Copiers Jul-94 195,975 Jan-96 139,400 224,830
The Dow Chemical Company Copiers Oct-94 230,577 Jan-96 204,000 76,459
The Dow Chemical Company Copiers Jan-95 37,493 Dec-95 20,750 12,437
The Dow Chemical Company Copiers Jan-95 110,900 Jan-96 98,750 38,074
The Dow Chemical Company Copiers Apr-95 13,455 Dec-95 14,080 2,199
The Dow Chemical Company Staplers Apr-95 109,800 Jan-96 119,000 18,576
The Kendall Company Computer Mar-96 3,735 Jan-97 4,112 686
The Pittston Company 1993 Cat D10N Crawler Nov-93 857,082 Apr-98 200,000 697,459
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 857,082 Apr-98 200,000 697,459
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 531,670 Feb-98 175,000 432,652
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 531,670 Feb-98 175,000 432,652
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 531,670 Feb-98 175,000 432,652
Tracter
Tom's Food, Inc. Tractors Jun-94 197,195 Aug-96 to 77,000 181,009
Feb-97
Tom's Foods, Inc. Tractors Jun-94 61,908 Feb-96 36,800 49,982
Trans Ocean Container Corporation Intermodal Containers Sep-93 62,100 Oct-96 to 51,749 21,640
Apr-97
Trans Ocean Container Corporation Intermodal Containers Sep-93 53,507 Dec-95 46,560 21,970
Trans Ocean Container Corporation Intermodal Containers Sep-93 25,925 Apr-96 19,257 10,817
Trans Ocean Container Corporation Intermodal Containers Sep-93 22,868 Jul-97 to 21,673 13,976
Dec-97
Trans Ocean Container Corporation Intermodal Containers Sep-93 18,054 Jul-94 18,898 2,371
Trans Ocean Container Corporation Intermodal Containers Sep-93 10,116 Apr-95 5,246 2,345
Trans Ocean Container Corporation Intermodal Containers Sep-93 5,814 Jul-95 5,263 1,866
Trans Ocean Container Corporation Intermodal Containers Sep-93 4,647 Oct-95 4,405 850
Trans Ocean Container Corporation Intermodal Containers Sep-93 3,372 Oct-94 3,675 1,674
Trans Ocean Container Corporation Intermodal Containers Sep-93 2,245 Jun-96 2,468 1,041
Trans Ocean Container Corporation Intermodal Container - T40 Sep-93 5,693 Mar-98 2,715 3,431
Trans Ocean Container Corporation Intermodal Container - T20 Sep-93 3,372 Mar-98 963 2,032
Trans Ocean Container Corporation Intermodal Container - T20 Sep-93 3,372 Mar-98 923 2,032
Trans Ocean Container Corporation Intermodal Container - T20 Sep-93 3,372 Mar-98 1,751 2,032
Trans Ocean Container Corporation Intermodal Container - C20 Sep-93 2,245 Mar-98 2,080 1,353
Trans Ocean Container Corporation Intermodal Container - C20 Sep-93 2,245 Mar-98 1,284 1,353
Tyson Foods, Inc. Tractors Jun-93 1,585,000 Jul-96 637,500 1,027,080
Tyson Foods, Inc. Tractors Aug-93 1,575,000 Jul-96 637,500 1,022,490
------------- ------------ -------------
$31,330,129 $15,973,910 $19,988,433
============= ============ =============
</TABLE>
A-45
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
ATEL CASH DISTRIBUTION FUND VI
<S> <C> <C> <C> <C> <C> <C> <C>
American President Tractors Nov-95 $759,092 Jul-96 to $327,062 $225,942
Trucking Co., Ltd. Apr-97
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 7,366 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,380 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 6,734 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,024 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Feb-98 9,530 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Feb-98 8,380 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,024 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 9,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,380 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Mobil Oil Corporation Petroleum Wax Car Feb-96 59,953 Jan-97 64,717 3,597
Perdue Transportation Incorporated Tractors Nov-95 47,038 Feb-96 45,838 3,900
The Atchison Topeka & Santa Fe Intermodal Containers Jan-94 20,068 Jan-95 21,084 567
Railroad Company
The Atchison Topeka & Santa Fe Intermodal Containers Sep-94 10,034 Jan-95 10,446 335
Railroad Company
The Atchison Topeka & Santa Fe Intermodal Containers Sep-94 20,068 Jan-96 19,973 2,543
Railroad Company
The Atchison Topeka & Santa Fe Intermodal Containers Nov-94 10,034 Feb-95 10,446 1,159
Railroad Company
The Atchison Topeka & Santa Fe Intermodal Containers Nov-94 10,034 Jan-96 10,113 968
Railroad Company
The Atchison Topeka & Santa Fe Intermodal Containers Nov-94 9,633 Apr-96 9,588 1,240
Railroad Company
The Atchison Topeka & Santa Fe Intermodal Containers Nov-94 6,453 Apr-96 6,567 788
Railroad Company
The Burlington Northern & Santa Ext. Post Container Nov-94 9,633 Oct-97 8,767 3,379
Fe Railway Co.
The Burlington Northern & Santa Intermodal Container Sep-94 10,034 Jul-96 9,717 2,225
Fe Railway Company
The Burlington Northern & Santa Intermodal Container Nov-94 10,034 Jul-96 9,855 1,614
Fe Railway Company
The Burlington Northern Railroad Utility Refrigerated Nov-95 312,145 Sep-97 to 144,951 161,813
Company Trailers Dec-97
The Burlington Northern Railroad Covered Hopper Cars Mar-96 70,526 Sep-97 to 67,033 10,100
Company Dec-97
The Burlington Northern Railroad Covered Hopper Cars Mar-96 70,000 Dec-96 to 59,553 619
Company Jan-97
Tracy Locke, Inc. Printers Mar-95 12,470 Sep-95 12,179 1,662
Trans Ocean Container Corporation Intermodal Containers Dec-95 17,748 Oct-96 to
Jan-97 20,730 1,107
Trans Ocean Container Corporation Intermodal Containers Dec-95 11,063 Jul-97 to 12,070 1,986
Dec-97
Trans Ocean Container Corporation Intermodal Containers Dec-95 9,529 Jun-96 11,167 700
Tyson Foods, Inc. Computers Jun-95 563,411 Jun-97 to 66,323 522,877
Nov-97
Tyson Foods, Inc. Computers & Related Jun-95 195,152 Jun-97 23,080 181,113
Equipment
------------- ----------- -------------
$2,677,677 $1,179,561 $1,354,984
============= =========== =============
</TABLE>
A-46
<PAGE>
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
ATEL CAPITAL EQUIPMENT FUND VII
<S> <C> <C> <C> <C> <C> <C> <C>
Anchor Glass Container Corporation Glass Packaging Equipment Apr-98 $45,598 Jun-98 $60,611 $10,086
Cargill, Inc. Railcars Jan-97 99,000 May-97 to 96,747 9,415
Oct-97
Consolidated Rail Corporation Domestic Container Aug-97 10,255 Jan-98 10,752 9,646
Costain Coal, Inc. Vme/Euclid 339Sd Rear Dump Apr-98 805,181 Jun-98 886,985 161,683
Truck
Exel Logistics, Inc. 1993 International 8200 Apr-98 88,610 May-98 89,307 16,341
Tractor
Exel Logistics, Inc. 1993 Monon Semi-Trailer Apr-98 45,337 May-98 45,693 8,360
International Rectifier Corp. Furnace/Heat Base Apr-98 153,515 Jun-98 154,782 71,669
International Rectifier Corp. Bdf-41 Furnace W/Attachments Apr-98 124,193 Jun-98 125,218 57,233
International Rectifier Corp. Wafer Cleaning System Apr-98 86,791 Jun-98 95,000 26,672
International Rectifier Corp. Optical Assoc.Handler Apr-98 13,336 May-98 12,000 4,480
Assy W/Kit
International Rectifier Corp. VSLI Critical Dim. Measure Apr-98 12,056 May-98 16,805 1,139
System
International Rectifier Corp. Itc5511D Energy Testing Apr-98 9,027 Jun-98 6,000 3,518
System
Riceland Foods, Inc 23,700 Gal Uni-Temp Tank Car Jan-98 17,594 Apr-98 17,594 1,981
Smitty'S Super Valu, Inc. Furniture,Fixtures & Apr-98 451,861 Jun-98 601,960 139,202
Equipment
Southwest Health Center, Inc. Siemens Mammographic X-Ray Apr-98 13,000 May-98 18,500 1,331
Stater Brothers Markets Grocery Store Equipment Apr-98 13,643 Jun-98 - 16,315
Tarmac America, Inc. Tractors Mar-97 35,000 Aug-97 33,666 6,119
Thompson Pipe & Steel Company Office Furniture & Fixtures Apr-98 31,918 May-98 25,000 6,012
------------- ------------ -------------
$2,055,915 $2,296,620 $551,202
============= ============ =============
TOTALS OF ALL FUNDS: $210,770,673 $103,416,436 $170,010,710
============= ============ =============
</TABLE>
A-47
<PAGE>
TABLE VI SALES OR DISPOSALS OF EQUIPMENT FOOTNOTES
(1) "Acquisition Date" is the date the Equipment was acquired by the prior
program.
(2) "Equipment Acquisition Price" is the actual cost of the item of
Equipment, including Acquisition Fees, and any other expenditures incurred by
the prior program in the acquisition of the Equipment.
(3) "Sale Price" is the actual cash received for the purchase, early
termination or casualty of the Equipment upon Lease termination, net of any
direct out-of-pocket closing costs incurred by the prior program as a result of
such termination.
(4) "Excess of Rents Over Expenses" is a total amount of Lease rents, less
any applicable direct out-of-pocket costs incurred by the prior program during
the term of the Lease for the particular Lease transaction.
(5) "Sale Price" represents cash and non-cash amounts distributed by Lessee
as a result of U.S. Bankruptcy Court-approved Chapter 11 Reorganization Plan.
Distributions were as follows: Cash $9,512; Senior Secured Notes $1,000;
Convertible Subordinated Notes $700; Common Stock $296 (market value as of
7/16/92).
(6) The original lease included a mobile MRI unit and a tractor. The
tractor leased under the original lease was sold to the lessee. The MRI unit has
been leased to a third party on a 24 month term with a bargain purchase option
to be exercised at the end of the lease term. The Equipment under this lease is
owned 1/3 by ATEL Cash Distribution Fund and 2/3 By ATEL Cash Distribution Fund
II.
(7) "Sale Price" represents cash and non-cash amounts distributed by Lessee
as a result of U.S. Bankruptcy Court-approved pre-packaged Chapter 11 Plan.
Distributions were as follows: Cash $602,435; Senior Secured Notes $72,800;
Convertible Subordinated Notes $50,900; Common Stock $21,482 (market value as of
7/16/92).
(8) "Sales Price" represents cash and non-cash amounts distributed by
Lessee as a result of U.S. Bankruptcy Court-approved pre-packaged Chapter 11
Plan. Distributions were as follows: Cash $431,499; Senior Secured Notes
$51,600; Convertible Subordinated Notes $36,100; Common Stock $15,233 (market
value as of 7/16/92).
(9) "Equipment Acquisition Price" represents a 2/3 beneficial interest in
the transaction. The Equipment was foreclosed in September 1990 by the
non-recourse lender, John Hancock Leasing. Actual cash/equity amount paid by the
prior program for the Equipment was $1,430,345, the balance of the Acquisition
Price was financed with non-recourse debt. "Sale Price" represents the amount of
the non-recourse debt written off at the time of foreclosure.
(10) The "Sales Price" represents the sum of cash received from the sale of
the aircraft pre-bankruptcy petition, plus all amounts received by the lessor
under its unsecured claim filed in the lessee's Chapter 11 reorganization,
through the date of this table. Through September 30, 1996, such claim payments
have amounted to 40% of the allowed claim amount of $776,542, or $310,617.
A-48
<PAGE>
(11) On January 10, 1996, Barney's, Inc., a lessee of ATEL Cash
Distribution Fund III, ATEL Cash Distribution Fund IV and ATEL Cash Distribution
Fund V filed for protection under Chapter 11 of the U. S. Bankruptcy Act. In
July of 1996, the lessors sold their unsecured claim in the bankruptcy for an
amount equal to approximately 73% of the unsecured claim, which, after
satisfaction of the non-recourse loan due to the CIT Group/Equipment Financing,
Inc. (and taking into account all prior rents received, security deposits
retained and loan proceeds previously received), resulted in proceeds to the
lessors in excess of their original investments in the equipment.
(12) "Equipment Acquisition Price" represents a 1/3 beneficial interest in
the transaction. The Equipment was foreclosed in September 1990 by the
non-recourse lender, John Hancock Leasing. Actual cash/equity amount paid by the
prior program for the Equipment was $715,172, the balance of the Acquisition
Price was financed with non-recourse debt. "Sale Price" represents the amount of
the non-recourse debt written off at the time of foreclosure.
(13) The remaining equipment originally leased to The Helen Mining Company
is now leased to Costain Coal. Quaker State Corporation continued to guarantee
payments through the original lease term. The new lease also includes a two year
extension of the lease term.
A-49
<PAGE>
EXHIBIT B
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
July 31, 1998
Atel8-1/operag6.wpd
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
TABLE OF CONTENTS
Page
1. NAME AND PRINCIPAL PLACE OF BUSINESS.................................B-1
2. DEFINITIONS..........................................................B-1
3. BUSINESS AND PURPOSE.................................................B-7
4. TERM.................................................................B-8
5. MANAGER..............................................................B-8
6. INITIAL AND ADDITIONAL MEMBERS.......................................B-8
Section 6.1 Initial Members.......................................B-8
Section 6.2 Additional Members....................................B-8
Section 6.3 Conditions to Admission...............................B-8
Section 6.4 Admission as a Member.................................B-8
Section 6.5 Limitation on Additional Insurance....................B-8
Section 6.6 Escrow................................................B-9
Section 6.7 Capital Account.......................................B-9
7. LIABILITY AND STATUS OF MEMBERS......................................B-9
8. COMPENSATION TO THE MANAGER AND/OR AFFILIATES........................B-9
Section 8.1 General Limitation....................................B-9
Section 8.2 Asset Management Fee..................................B-9
Section 8.3 Asset Management Fee Limit ...........................B-9
Section 8.4 Other Services.......................................B-11
Section 8.5 Payment of Fees on Removal...........................B-11
Section 8.6 Employment of Broker-Dealers..........................B-11
9. FUND EXPENSES AND RESERVES..........................................B-11
Section 9.1 Reimbursement of Manager.............................B-11
Section 9.2 Limitation on Reimbursement..........................B-12
Section 9.3 Fund Expenses........................................B-12
Section 9.4 Reserves.............................................B-13
10. ALLOCATION OF INCOME, LOSS AND DISTRIBUTIONS........................B-13
Section 10.1 Allocation of Net Income and Net
Loss Prior to Initial Closing Date................B-13
Atel8-1/operag6.wpd
ii
<PAGE>
Section 10.2 Allocation of Net Income and Net
Loss After Initial Closing Date...................B-13
Section 10.3 Special Allocations.................................B-13
Section 10.4 Distribution of Cash From Operations................B-15
Section 10.5 Distribution of Cash From Sales or Refinancing.....B-15
Section 10.6 Distributions of Cash From Reserve Account.........B-15
Section 10.7 Determination of Amounts to be Distributed.........B-15
Section 10.8 Consent to Allocations.............................B-16
Section 10.9 Limitation on Distributions........................B-16
Section 10.10 Allocation to Manager..............................B-16
Section 10.11 Return of Unused Capital...........................B-16
Section 10.12 Distributions in Kind..............................B-16
Section 10.13 Withholding Taxes..................................B-17
11. ASSIGNMENT OF FUND INTERESTS........................................B-17
Section 11.1 Limitations on Transfer.............................B-17
Section 11.2 Distributions and Effective Date of Transfer........B-18
Section 11.3 Governmental Restrictions...........................B-18
Section 11.4 Non-Complying Transfers.............................B-18
Section 11.5 Misrepresentations and Forfeit......................B-18
12. SUBSTITUTED MEMBERS.................................................B-19
Section 12.1 Limitations on Substitution.........................B-19
Section 12.2 Consent to Admission................................B-19
Section 12.3 Amendment of Agreement..............................B-19
13. REPURCHASE OF FUND INTERESTS........................................B-19
14. BOOKS, RECORDS, ACCOUNTINGS AND REPORTS.............................B-20
Section 14.1 Books of Account and Records........................B-20
Section 14.2 Audited Annual Financial Statements.................B-21
Section 14.3 Other Annual Reporting..............................B-21
Section 14.4 Quarterly Reports...................................B-22
Section 14.5 Unaudited Quarterly Financial Statements............B-22
Section 14.6 Other Quarterly Reports.............................B-22
Section 14.7 Tax Returns.........................................B-22
Section 14.8 Governmental Reports................................B-23
Section 14.9 Maintenance of Suitability Records..................B-23
15. RIGHTS, AUTHORITY, POWERS AND RESPONSIBILITIES
OF THE MANAGER................................................B-23
Section 15.1 Services of the Manager.............................B-23
Section 15.2 Authority of the Manager............................B-23
Section 15.3 General Powers and Fiduciary Duty...................B-26
Section 15.4 Limitations on General Partner's Authority..........B-26
Section 15.5 Limitation on Manager's Liability...................B-29
Section 15.6 Tax Matters Partner.................................B-29
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Section 15.7 Minimum Investment in Equipment /Maximum Front-End
Fees................................................B-29
Section 15.8 Reliance on Manager's Authority.....................B-30
16. RIGHTS, POWERS AND VOTING RIGHTS OF THE MEMBERS.....................B-31
Section 16.1 Limitation on Member Authority......................B-31
Section 16.2 Voting Rights.......................................B-31
Section 16.3 Voting Procedures...................................B-31
Section 16.4 Limitations on Member Rights........................B-32
Section 16.5 Limitations on Power to Amend Agreement.............B-33
Section 16.6 Member List.........................................B-33
Section 16.7 Dissenters' Rights and Limitations on Mergers and
Roll-ups............................................B-33
17. TERMINATION OF A MANAGER AND TRANSFER OF A
MANAGER'S INTEREST................................................B-34
Section 17.1 Removal or Withdrawal...............................B-34
Section 17.2 Other Terminating Events............................B-34
Section 17.3 Election of Successor Manager; Continuation of
Fund Business.......................................B-35
Section 17.4 Admission of Successor or Additional Manager........B-35
Section 17.5 Effect of a Terminating Event.......................B-35
Section 17.6 Election of Additional Manager......................B-36
Section 17.7 Assignment of General Partner's Interest............B-36
Section 17.8 Members' Participation in Manager's Bankruptcy......B-36
18. CERTAIN TRANSACTIONS................................................B-36
19. TERMINATION AND DISSOLUTION OF THE FUND.............................B-37
Section 19.1 Termination and Dissolution.........................B-37
Section 19.2 Accounting and Liquidation..........................B-37
20. SPECIAL POWER OF ATTORNEY...........................................B-38
Section 20.1 Execution of Power of Attorney......................B-38
Section 20.2 Special Power of Attorney...........................B-38
21. INDEMNIFICATION.....................................................B-39
Section 21.1 Indemnification of the Manager......................B-39
Section 21.2 Limitations on Indemnification......................B-39
Section 21.3 Insurance...........................................B-39
22. MISCELLANEOUS.......................................................B-40
Section 22.1 Counterparts........................................B-40
Section 22.2 Successors and Assigns..............................B-40
Section 22.3 Severability........................................B-40
Section 22.4 Notices.............................................B-40
Section 22.5 Captions............................................B-40
Section 22.6 Number and Pronouns.................................B-40
Section 22.7 Manager Address.....................................B-40
Section 22.8 Member Address......................................B-40
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Section 22.9 Construction........................................B-40
Section 22.10 Qualification to Do Business........................B-41
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LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF ATEL CAPITAL EQUIPMENT FUND VIII, LLC
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (the "Agreement"), entered
into as of the 31st day of July, 1998, by and between ATEL Financial Corporation
("ATEL"), a California Corporation, as the Managing Member (the "Manager"), and
Eliza Cash and Linda Batt as the initial Members, whereby the parties together
agree to form a limited liability company pursuant to the California Limited
Liability Company Act, as set forth below:
1. NAME AND PRINCIPAL PLACE OF BUSINESS
The name of the Fund shall be ATEL Capital Equipment Fund VIII, LLC or
such other name as the Manager shall hereafter designate in writing to the
Members. The Fund's principal place of business shall be 235 Pine Street, 6th
Floor, San Francisco, California 94104, or such other place or places in the
State of California as the Manager may hereafter determine.
2. DEFINITIONS
The following terms used in this Agreement shall (unless otherwise
expressly provided herein or unless the context otherwise requires) have the
following respective meanings:
"Acquisition Expenses" shall mean expenses including, but not limited
to, legal fees and expenses, travel and communication expenses, costs of
appraisals, accounting fees and expenses, and miscellaneous expenses relating to
selection and acquisition of Equipment, whether or not acquired.
"Acquisition Fees" shall mean the total of all fees and commissions
paid by any party in connection with the initial purchase or manufacture of
Equipment. Included in the computation of such fees or commissions shall be any
commission, selection fee, financing fee, nonrecurring management fee, or any
fee of a similar nature, however designated.
"Adjusted Capital Account Deficit" shall mean, with respect to any
Member, the deficit balance if any, in such Member's Capital Account as of the
end of the Fund taxable year, after giving effect to the following adjustments:
(a) Crediting to such Capital Account any amounts which such Member is obligated
to restore or is deemed to be obligated to restore pursuant to Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (b) Debiting from such Capital
Account the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4),(5)
and (6). This definition is intended to comply with the provisions of Section
1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently
therewith.
"Adjusted Invested Capital" shall mean, as of any date, the Original
Invested Capital attributable to the Units held by any Person on or before such
date, as decreased (but not below zero) by the amount which (i) all
Distributions from Cash from Operations and Cash from Sales and Refinancing with
respect to such Units on or before the date of determination pursuant to any
provision of this Agreement exceed (ii) the Priority Distribution attributable
to such Units for such period.
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"Affiliate" of a Person shall mean (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person;
(ii) any Person owning or controlling 10% or more of the outstanding voting
securities or beneficial interests of such Person, (iii) any officer, director,
trustee or partner of such Person and (iv) if such Person is an officer,
director, trustee, partner or holder of 10% or more of the voting securities or
beneficial interests of such Person, any other company for which such Person
acts in such capacity. However, such term shall not include a Person who is a
partner in a partnership or joint venture with the Fund if such Person is not
otherwise an Affiliate.
"Asset Management Fee" shall mean the fee payable to the Manager and
its Affiliates under the provisions of Section 8.2 of this Agreement.
"Asset Management Fee Limit" means the total fees calculated pursuant
to the alternative fee schedule set forth under Section 8.3 of this Agreement,
equal to the aggregate of an Equipment Management Fee, Incentive Management Fee,
and Equipment Resale/Re-Leasing Fee, plus the Manager's Carried Interest,
determined in the manner described herein.
"Assignee" shall mean a Person who has acquired a beneficial interest
in one or more Units from a third party but who is neither a substituted Holder
nor an Assignee of Record.
"Assignee of Record" shall mean an Assignee who has acquired a
beneficial interest in one or more Units whose ownership has been recorded on
the books of the Fund and which ownership is the subject of a written instrument
of assignment, the effective date of which assignment has passed.
"ATEL" shall mean ATEL Financial Corporation, a California corporation.
"California Act" or "California Limited Liability Company Act" shall
mean the Beverly-Killea Limited Liability Company Act, Title 2.5, Chapters 1-15,
of the California Corporations Code, as it may be amended from time to time.
"Capital Account" shall mean, with respect to any Member, such Member's
Capital Account determined in accordance with Section 6.7.
"Carried Interest" shall mean the allocable share of Fund Distributions
of Cash from Operations and Cash from Sales or Refinancing payable to the
Manager, as Manager, pursuant to Sections 10.4 and 10.5 of this Agreement.
"Cash from Operations" shall mean the excess of Gross Revenues over
cash disbursements (including the Asset Management Fee and amounts reinvested by
the Fund in Equipment in compliance with Section 15.4.18) without reduction for
depreciation and amortization of intangibles such as organization and
underwriting costs but after a reasonable allowance for cash for repairs,
replacements, contingencies and anticipated obligations, as determined by the
General Partner. Cash from Operations shall not include Cash from Sales or
Refinancing or Cash from Reserve Account.
"Cash from Reserve Account" shall mean that portion of the Net Proceeds
not utilized in the acquisition of Equipment, including cash maintained
according to the provisions of Section 9.4.
"Cash from Sales or Refinancing" shall mean the net cash realized by
the Fund from the sale,
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<PAGE>
refinancing or other disposition of any Equipment (including insurance proceeds
or lessee indemnity payments arising from the loss or destruction of any
Equipment through casualty) after payment of all expenses related to the
transaction; provided, however that Cash from Sales or Refinancing shall not
include Cash from Reserve Account or Cash from Operations.
"Closing Date" shall mean such date designated by the Manager for the
termination of the offering of Units, but not later than ______________, 2000.
Extension of the offering beyond one year from the date of the Prospectus shall
be subject to the qualification of the offering for any such extension in those
jurisdictions which may limit the offering period to one year. "Initial Closing
Date" shall mean the date on which subscribers for Units, other than the initial
Holders, are first admitted to the Fund as Holders. "Final Closing Date" shall
mean the last date on which subscribers for Units are admitted to the Fund as
Holders.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent federal revenue laws.
"Distributions" shall mean any cash, tax credits or other property
allocated to or distributed to Holders and the Manager arising from their
respective interests in the Fund, but shall not include any compensation payable
to the Manager under the provisions of Article 8 or Article 9, except as
otherwise provided herein.
"ERISA" shall mean the Employment Retirement Income Security Act of
1974, as amended.
"Equipment" shall mean the equipment acquired and owned by the Fund to
be leased by the Fund to others as well as any Fund interest in equipment,
including without limitation its rights, whether direct or indirect, in all
trusts, joint ventures, leases, chattel paper, options and other contract rights
with respect to equipment.
"Equipment Management Fee" shall mean an element of the alternative fee
schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3 of this Agreement as provided therein.
"Equipment Re-lease Fee" shall mean an element of the alternative fee
schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3 of this Agreement as provided therein.
"Equipment Resale Fee" shall mean an element of the alternative fee
schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3 of this Agreement as provided therein.
"Front-End Fees" shall mean fees and expenses paid by any party for any
services rendered during the Fund's organization and acquisition phase including
Organization and Offering Expenses, Leasing Fees, Acquisition Fees, Acquisition
Expenses, and any other similar fees, however designated. Notwithstanding the
foregoing, Front-End Fees shall not include any Acquisition Fees or Acquisition
Expenses paid by a manufacturer of Equipment to any of its employees unless such
Persons are Affiliates of the Manager.
"Full Payout Lease" shall mean a lease under which the non-cancellable
rental payments due during the initial term of the lease are at least sufficient
to cover the purchase price of the Equipment leased.
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<PAGE>
"Fund" shall mean the limited liability company created under this
Agreement.
"Fund Minimum Gain" shall have the meaning ascribed to the term
"partnership minimum gain" in Regulations Section 1.704-2(d)(1).
"Gross Income" shall mean the gross income of the Fund within the
meaning of section 61(a) of the Code.
"Gross Proceeds" shall mean the aggregate total of the Original
Invested Capital of the initial and all of the additional Holders.
"Gross Lease Revenues" shall mean all revenues attributable to the
Equipment other than from security deposits paid by lessees thereof. The term
"Gross Lease Revenues" shall not include revenues from the sale, refinancing or
other disposition of Equipment.
"High Payout Lease" shall mean a lease under which the noncancellable
rental payments and other payment obligations of the lessee due through the
initial term of the lease are equal to at least 90% of the original purchase
price paid by the Fund for the Equipment.
"Holders" shall mean owners of Units who are either Members or
Assignees of Record, and reference to a "Holder" shall be to any one of them.
The Manager shall not be considered to be a Holder except to the extent it also
owns Units.
"Incentive Management Fee" shall mean an element of the alternative fee
schedule calculation to determine the Asset Management Fee Limit under the
provisions of Section 8.3 of the Operating Agreement as provided therein.
"Independent Expert" shall mean a person with no current material or
prior business or personal relationship with the Manager or any of its
Affiliates who is engaged to a substantial extent in the business of rendering
opinions regarding the value of assets of the type held by the Fund, and who is
qualified to perform such work.
"IRA" shall mean an individual retirement account qualifying under
Section 408 of the Code.
"Investment in Equipment" shall mean the amount of Gross Proceeds
actually paid or allocated to the purchase of Equipment acquired by the Fund,
any amount of Gross Proceeds reserved pursuant to Section 9.4 hereof up to a
maximum of 3% of Gross Proceeds and other cash payments such as interest and
taxes, but excluding Front-End Fees.
"Leasing Fees" shall mean the total of all fees and commissions paid by
any party in connection with the initial lease of equipment acquired by the
Fund.
"Manager" or "Managing Member" shall mean ATEL Financial Corporation
("ATEL"), a California corporation, or any other Person or Persons which succeed
it in such capacity.
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<PAGE>
"Members" shall mean the Manager, the initial Members and any other
Persons who are admitted to the Fund as additional or substituted Members.
Reference to a "Member" shall refer to any one of them.
"Member Nonrecourse Debt" has the meaning ascribed to the term "partner
nonrecourse debt" in Regulations Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" shall have the meaning ascribed
to the term "partner nonrecourse debt minimum gain" in Regulations Sections
1.704-2(i)(2).
"Net Income" or "Net Loss" shall mean the taxable income or taxable
loss of the Fund (including the Fund's share of income or loss of any
partnership, venture or other entity which owns a particular item of Equipment),
as determined for federal income tax purposes, computed by taking into account
each item of Fund income, gain, loss, deduction or credit not already included
in the computation of taxable income and taxable loss.
"Net Lease Provisions" shall mean contractual arrangements under which
the lessee assumes responsibility for, and bears the cost of, insurance, taxes,
maintenance, repair and operation of the leased asset and where non-cancellable
rental payments under the lease are absolutely net to the lessor,
notwithstanding that some minor costs or responsibilities remain with the Fund
as lessor or that the Fund retains the option to require and pay for a higher
standard of care or greater level of maintenance or insurance than would be
imposed on the lessee under the terms of the lease.
"Net Proceeds" shall mean the total Gross Proceeds less Organization
and Offering Expenses.
"Nonrecourse Deductions" shall mean items of Fund loss, deductions or
Code Section 705(a)(2)(B) expenditures which are attributable to Nonrecourse
Liabilities.
"Nonrecourse Liability" means a Fund liability with respect to which no
Member or Related Person bears the economic risk of loss.
"Operating Agreement" or "Agreement" shall mean this Limited Liability
Company Operating Agreement of ATEL Capital Equipment Fund VIII, LLC, as it may
be amended from time to time.
"Operating Lease" shall mean a lease under which the aggregate rental
payments due during the initial term of the lease are less than the purchase
price of the Equipment leased.
"Operating Revenues" means the total for any period of all Gross Lease
Revenues plus all Cash from Sales or Refinancing.
"Organization and Offering Expenses" shall mean those expenses incurred
in connection with preparing the Fund for registration and subsequently offering
and distributing Units to the public, including selling commissions and all
advertising expenses except advertising expenses related to the leasing of
Equipment.
"Original Invested Capital" shall mean the original gross purchase
price of the Units contributed by each Member to the capital of the Fund for his
interest in the Fund, which amount shall be attributed to Units in the hands of
a subsequent Holder.
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<PAGE>
"Person" shall mean any natural person, partnership, corporation,
association or other legal entity.
"Priority Distribution" shall mean a hypothetical amount determined
solely for purposes of the alternative fee schedule calculation to determine the
Asset Management Fee Limit under the provisions of Section 8.3 of this
Agreement. Such amount will equal, for any calendar year or other period with
respect to the Units held by any Person, the average Adjusted Invested Capital
with respect to such Units during such period multiplied by 10% per annum
(calculated on a cumulative basis, compounded daily, from the last day of the
calendar quarter in which the capital contribution of the initial purchaser of
such Units was received by the Fund and pro rated for any fraction of a calendar
year for which such calculation is made).
"Prospectus" shall mean the final prospectus filed in connection with
the registration of the Units with the Securities and Exchange Commission on
Form S-1, as amended, together with any supplement thereto which may be
subsequently filed with such Commission.
"Purchase Price of Equipment" shall mean the price paid upon the
purchase or sale of a particular item of equipment, including the amount of
Acquisition Fees and all liens and mortgages on the equipment, but excluding
points and prepaid interest.
"Qualified Plan" shall mean employee trusts (or employer individual
retirement accounts), Keogh Plans and corporate retirement plans qualifying
under Section 401(a) of the Code.
"Regulations" shall mean the income tax regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Reimbursable Administrative Expenses" shall mean the ordinary
recurring administration expenses incurred by the Manager and reimbursed by the
Fund. Such expenses shall not include interest, depreciation, equipment
maintenance or repair, third party services or other non-administrative
expenses.
"Reinvestment Period" shall mean the period commencing with the Initial
Closing Date and ending on a date 72 months after the last day of the fiscal
year during which the Final Closing Date occurs.
"Related Person" means a Person having a relationship with a Member
that is described in Regulations Section 1.752-4(b).
"Resident Alien" shall mean a resident alien as defined within the
Federal Aviation Act of 1958, as amended from time to time, or any successor
statute, or any regulations adopted pursuant to such Act or any successor
statute.
"Roll-Up" shall mean a transaction involving the acquisition, merger,
conversion or consolidation, either directly or indirectly, of the Fund and the
issuance of securities of a Roll-Up Entity. Such term does not include:
(a) any transaction if the securities of the Fund have been for at
least twelve months traded through the National Association of Securities
Dealers, Inc. Automated Quotation National Market System; or
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B-6
<PAGE>
(b) a transaction involving the conversion to corporate, trust or
association form of only the Fund, if, as a consequence of the transaction,
there will be no significant adverse change in any of the following:
(i) the Members voting rights;
(ii) the term of existence of the Fund;
(iii) the terms of compensation of the Manager
and its Affiliates; or
(iv) the Fund's investment objectives.
"Roll-Up Entity" means the partnership, trust, corporation or other
entity that would be created or would survive after the successful completion of
a proposed Roll-Up transaction.
"Service" shall mean the United States Internal Revenue Service or its
successor.
"Sponsor" shall mean any Person directly or indirectly instrumental in
organizing, wholly or in part, a Program or any Person who will manage or
participate in the management of a Program, and any Affiliate of any such
Person. Sponsor does not include the Program itself or a Person whose only
relation with the Program is that of an independent equipment manager and whose
only compensation is as such. Sponsor does not include wholly independent third
parties such as attorneys, accountants and underwriters whose only compensation
is for professional services rendered in connection with the offering of Program
interests.
"Substantially All of the Assets" shall mean, unless the context
otherwise dictates, Equipment representing 66 2/3% or more of the net book value
of all Equipment as of the end of the most recently completed fiscal quarter.
"Unit" shall mean the interest in the Fund representing Original
Invested Capital in the amount of $10 and shall entitle the Holder thereof to
the rights herein provided.
"United States Citizen" shall mean a "citizen of the United States" as
defined within the Federal Aviation Act of 1958, as amended from time to time,
or any successor statute, or any regulations adopted pursuant to such Act or any
successor statue.
3. BUSINESS AND PURPOSE
The primary purpose of the Fund is to purchase, own, lease and sell
various types of Equipment pursuant to such arrangements as the Manager in its
discretion may enter into on behalf of the Fund. The Fund may enter into
ventures, partnerships and other business arrangements with respect to Equipment
to the extent deemed prudent by the Manager in order to achieve successful
operations for the Fund, subject to the provisions of Section 15.4.8. The Fund
may also engage in such other lawful activities as may be deemed by the Manager
to be incident to its primary purpose or prudent and in the Fund's best
interest. The Fund's investment objectives shall be those set forth in the
Prospectus, and the Manager may not make any material change to such investment
objectives without first obtaining the written consent or approval of Members
owning more than 50% of the total outstanding Units entitled to vote.
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<PAGE>
4. TERM
The Fund commenced as of the 31st day of July 1998 and shall continue
until the 31st day of December, 2019, unless previously terminated in accordance
with the provisions of this Agreement.
5. MANAGER
The Manager has contributed $100 in cash to the Fund and at all times
during the existence of the Fund the Manager shall have a present and continuing
interest in Net Income, Net Losses and Distributions according to the provisions
of Article 10.
6. INITIAL AND ADDITIONAL MEMBERS
6.1 Initial Members. Linda Batt and Eliza Cash, as the initial Members,
have each contributed the sum of $250 to the capital of the Fund and each has
received 25 Units in return therefor.
6.2 Additional Members. The Fund intends to sell and issue to Holders
not less than 120,000 nor more than 15,000,000 additional Units and to admit as
additional Members the Persons who contribute cash to the capital of the Fund
for such Units.
6.3 Conditions to Admission. Subject to the provisions of Section 6.6,
each Person who acquires any such additional Units shall become a Member in the
Fund at such time as he has: (i) purchased 250 or more Units (200 Units in case
of an IRA or Keogh Plan), (ii) contributed the sum of $10 in cash for each Unit
purchased (or such lesser net amount as may be provided in accordance with the
terms described in the Prospectus under "Plan of Distribution"), (iii) executed
and filed with the Fund a written instrument which sets forth an intention to
become a Member and requests admission to the Fund in that capacity, together
with such other instruments as the Manager may deem necessary or desirable to
effect such admission, including the written acceptance and adoption by such
Person of the provisions of this Agreement, and the execution, acknowledgment
and delivery to the Manager of a special power of attorney, the form, style and
content of which are more fully described herein, and (iv) the Manager accepts
such Person as a Member in the Fund.
6.4 Admission as a Member. Each Person who subscribes for Units under
Section 6.2 shall be admitted to the Fund promptly after the Manager's
acceptance of such subscription, but, except as provided in Section 6.6, in no
event later than 30 days after the receipt by the Fund of such subscription.
6.5 Limitation on Additional Issuance. The Fund shall not issue any
additional Units after the Final Closing Date.
6.6 Escrow. All Original Invested Capital of Holders shall be received
by the Fund in trust, and shall be deposited in an escrow account with a banking
institution designated by the Manager as escrow holder for the Original Invested
Capital, until such time as subscriptions for a total of 120,000 Units, in
addition to the Unit purchased by the initial Holder, representing Original
Invested Capital of $1,200,000 have been deposited therein. Not less than 15
days after receipt of a minimum of $1,200,000 of such additional Original
Invested Capital, the Fund will admit subscribers into the Fund as additional
Holders. At the time a subscriber is admitted as a Holder, the escrow holder
shall transfer the subscriber's Original Invested Capital to the Fund. If the
$1,200,000 minimum is not obtained on or before a date one year from the date of
the Prospectus, all Original Invested Capital will be promptly refunded to the
investors. In any event, any interest earned on Original Invested Capital while
in escrow shall be paid to investors.
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<PAGE>
6.7 Capital Account. An individual Capital Account shall be maintained
for each Member. The Capital Account of a Member shall consist of the Original
Invested Capital of such Member, increased by (i) any additional contributions
to capital and (ii) such Member's share of Fund Net Income, and decreased by (i)
Distributions to such Member and (ii) such Member's share of Fund Net Loss. In
the event a Member transfers all or a portion of his Units, the Assignee shall
succeed to the Capital Account of the transferor (as adjusted for all events
preceding the date the transferee is deemed admitted to the Fund under Section
10.3.1) according to the number of Units, and the allocable portion of the
transferor's Capital Account, so transferred. No Holder shall have the
obligation to restore any deficit in his Capital Account upon termination or
dissolution of the Fund. The foregoing provisions of this Section 6.7 are
intended to comply with Regulation Section 1.704-1(b), and shall be interpreted
and applied in a manner consistent with such Regulations.
7. LIABILITY AND STATUS OF MEMBERS
Holders shall not be bound by, or be personally liable for, the
expenses, liabilities or obligations of the Fund, except to the extent, but only
to the extent, a Holder would be required to return any Distribution from the
Fund pursuant to Section 17254(e) of the California Act.
8. COMPENSATION TO THE MANAGER AND/OR AFFILIATES
8.1 General Limitation. The Manager and its Affiliates shall receive
compensation only as specified by this Agreement. In addition to the
compensation provided herein, the Manager will hold the Carried Interest and be
entitled to receive Distributions as provided in Article 10, and receive
reimbursement of costs and expenses advanced as provided in Article 9. The
Manager may delegate to its Affiliates all or a portion of its management duties
hereunder, as described in the Prospectus, and may assign all or a portion of
its compensation hereunder to one or more such Affiliates or other parties in
its discretion.
8.2 Asset Management Fee. The Fund will pay the Manager an Asset
Management Fee in an amount equal to 4.5% of Operating Revenues as compensation
for the Manager's services in establishing and supervising management of the
Fund's portfolio of Equipment and its operations. The Asset Management fee will
be paid on a monthly basis. The amount of the Asset Management Fee payable in
any year will be reduced for that year to the extent it would otherwise exceed
the Asset Management Fee Limit.
8.3 Asset Management Fee Limit. The Asset Management Fee Limit will be
calculated each year during the Fund's term by calculating the total fees that
would be paid to the Manager for the year in question if the Manager were to be
compensated on the basis of an alternative fee schedule, to include an Equipment
Management Fee, Incentive Management Fee, and Equipment Resale/Re-Leasing Fee,
together with the Carried Interest, as provided herein. To the extent that the
total amount paid to the Manager for the year as the Asset Management Fee and
the Carried Interest would exceed the aggregate amount of fees that would have
been payable as calculated under this alternative fee schedule for that year,
the Asset Management Fee for that year will be reduced to equal the maximum
aggregate fees under the alternative fee schedule. The limitations set forth in
this Section 8.3 will be subject to adjustment pursuant to the limitations
imposed under Section 15.7 relating to the Minimum Investment in Equipment.
Under Section 15.7, a separate calculation will be performed upon completion of
the offering of Units, final commitment of Net Proceeds to acquisition of
Equipment and establishment of final levels of permanent portfolio debt
Atel8-1/operag6.wpd
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<PAGE>
encumbering such Equipment, and then annually thereafter. To the extent required
under the provisions of Section 15.7, the alternative fee schedule set forth
below will first be adjusted as provided therein. Thereafter, the Asset Fee
Limitation, using the alternative fee schedule as so adjusted, will be imposed
under this Section 8.3 and applied to the total Asset Management Fee and Carried
Interest for the year. The alternative fee schedule to be used for calculating
the Asset Management Fee Limit shall include:
8.3.1 An Equipment Management Fee calculated for each fiscal
quarter and in an amount equal to (i) 3.5% of the Gross Lease Revenues from
Operating Leases, except that if the services are performed by nonaffiliated
Persons under the active supervision of the Manager or its Affiliate, then the
amount payable to the Manager or such Affiliate shall be 1% of the Gross
Revenues from such Operating Leases, and (ii) 2% of Gross Revenues from Full
Payout Leases which contain Net Lease Provisions;
8.3.2 An Equipment Resale/Re-Leasing Fee calculated in an
amount equal to the following: for resale services, the lesser of (i) 3% of the
sales price of the Equipment, or (ii) one-half the normal competitive equipment
sale commission charged by unaffiliated parties for such services, but in either
case payable only after the Holders have received a return of their Original
Invested Capital plus a Priority Distribution; plus, for re-leasing services, an
amount equal to the lesser of (i) the competitive rate for comparable services
for similar equipment, or (ii) 2% of gross rental payments derived from the
re-lease of such Equipment after the time the re-lease is consummated as a
result of the recipient's efforts, payable as each rental payment is received by
the Fund over the term of the re-lease. No such re-lease fee will be calculated
in connection with the re-lease of Equipment to a previous lessee or its
Affiliates; and such fee will be calculated only to the extent the Manager or
its Affiliates have rendered substantial re-leasing services in connection with
such re-lease;
8.3.3 An Incentive Management Fee will be calculated in an
amount equal to (i) 4% of all Distributions of Cash from Operations until such
time as the Holders have received aggregate Distributions in an amount equal to
their Original Invested Capital plus a Priority Distribution, and (ii)
thereafter, in an amount equal to 7.5% of all Distributions of Cash from
Operations and Cash from Sales or Refinancing. For the purposes of calculating
the Incentive Management Fee for any period during which the Fund has available
both Cash from Operations and Cash from Sales or Refinancing, Distributions to
Holders shall first be treated as consisting of Cash from Operations unless
specifically designated otherwise by the Manager; and
8.3.4 The alternative fee schedule will include the Carried
Interest in Distributions provided in Article 10.
8.4 Other Services. Except as set forth in this Article 8 and Article 9
hereof, no other services may be performed by the Manager or its Affiliates for
the Fund except in extraordinary circumstances (which shall be defined as an
emergency situation requiring immediate action by the Manager or its Affiliate
and the service is not immediately available from an unaffiliated party). Any
such other services must meet the following criteria: (i) the compensation,
price or fee therefor must be comparable and competitive with the compensation,
price or fee of any other Person who is rendering comparable services or selling
or leasing comparable goods which could reasonably be made available to the Fund
and shall be on competitive terms, (ii) the fees and other terms of the contract
shall be fully disclosed to Holders, (iii) the Manager or its Affiliates must be
previously engaged in the business of rendering such services or selling or
leasing such goods, independently of the Fund and as an ordinary and ongoing
business and at least 75% of such Person's gross revenues from such activity
must be derived from other than Affiliates of
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the Manager, and (iv) all services for which the Manager or its Affiliates are
to receive compensation shall be embodied in a written contract which precisely
describes the services to be rendered and all compensation to be paid, which
contract may only be modified by a vote of the majority of the Holders. Said
contract shall contain a clause allowing termination without penalty on 60 days
notice.
8.5 Payment of Fees on Removal. Should the Manager be removed from the
Fund according to provisions of Article 17, any portion of any fee payable to
the Manager according to the provisions of this Article 8 which is then accrued
and due, but not yet paid, shall be paid by the Fund to the Manager in cash
within 30 days of the date of expulsion as stated in the written notice of
expulsion.
8.6 Employment of Broker-Dealers. The Fund may employ underwriters and
selected broker-dealers, including Affiliates of the Manager as set forth in the
Prospectus, for the sale of Units.
9. FUND EXPENSES AND RESERVES
9.1 Reimbursement of Manager. Except as set forth in this Article 9,
all of the Fund's expenses shall be billed directly to and paid by the Fund. The
Manager and its Affiliates may be reimbursed for the following Fund expenses:
(i) Organization and Offering Expenses not in excess of 15% of Gross Proceeds up
to $25,000,000 plus 14% of all Gross Proceeds in excess of $25,000,000 (or an
amount equal to 12% of the Gross Proceeds if, upon termination of the offering
of Units, the total Gross Proceeds are in an amount less than $2,000,000); (ii)
the actual cost of goods and materials used for and by the Fund and obtained
from entities unaffiliated with the Manager; and (iii) administrative services
necessary to the prudent operation of the Fund, provided that such reimbursement
for administrative services will be at the lower of (A) the actual cost of such
services, or (B) the amount which the Fund would be required to pay independent
parties for comparable administrative services in the same geographic location;
provided further that, beginning with the first full year after the termination
of the offering of Units, the total amount of Reimbursable Administrative
Expenses payable by the Fund for the remainder of its term may not exceed a
cumulative limit. This cumulative limit on such Reimbursable Administrative
Expenses will equal, as of any date, a maximum of (i) 0.5% of the Gross Proceeds
per annum if the total Gross Proceeds are at least 90% of the maximum Gross
Proceeds; (ii) 0.75% of the Gross Proceeds per annum if the total Gross Proceeds
are at least 75%, but less than 90%, of the maximum Gross Proceeds; and (iii) 1%
of the Gross Proceeds per annum if the total Gross Proceeds are less than 75% of
the maximum Gross Proceeds. In addition, beginning with the first full year
after the termination of the offering of Units, the maximum amount of
Reimbursable Administrative Expenses payable by the Fund for any single year
shall be limited to an amount equal to 1% of the Gross Proceeds.
9.2 Limitation on Reimbursement. The Manager and its Affiliates will
not be reimbursed by the Fund for the following expenses:
9.2.1 Services for which the Manager or its Affiliates are
entitled to compensation in the form of a separate fee pursuant to Article 8
hereof;
9.2.2 Rent or depreciation, utilities or capital equipment and
other administrative items of the Sponsor;
9.2.3 Salaries, fringe benefits, travel expenses or
administrative items incurred by or allocated to any Controlling Person of the
Manager or its Affiliates. For purposes of this subparagraph,
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"Controlling Person" shall mean any person, regardless of title, who performs
executive or senior management functions for the Manager or its Affiliates
similar to those of executive management or senior management, and directors, or
those holding 5% or more equity interest in the Manager or its Affiliates; or
persons having the power to direct or cause the direction of the Manager or
Affiliates through ownership of voting securities, by contract or otherwise. It
is not intended that every person who carries a title such as vice president,
senior vice president, secretary, controller or treasurer be considered a
Controlling Person;
9.2.4 Organization and Offering Expenses of the Fund to the
extent such Organization and Offering Expenses exceed 15% of the Gross Proceeds
up to $25,000,000 plus 14% of all Gross Proceeds in excess of $25,000,000 (or an
amount equal to 12% of the Gross Proceeds if, upon termination of the offering
of Units, the total Gross Proceeds are in an amount less than $2,000,000), and
the Manager guarantees payment of any such excess expenses, which guarantee is
without recourse to, or reimbursement by, the Fund; and
9.2.5 All other expenses which are unrelated to the business
of the Fund.
9.3 Fund Expenses. Subject to Sections 9.1 and 9.2, the Fund shall pay
all expenses of the Fund which may include, but are not limited to: (i) all
costs of personnel employed by the Fund and involved in the business of the Fund
(which may include personnel who are employed by a Manager or one or more
Affiliates), (ii) all taxes and assessments on Equipment and other taxes
applicable to the Fund, (iii) legal, appraisal, audit, accounting, brokerage and
other fees, (iv) printing, engraving and other expenses and taxes incurred in
connection with the issuance, distribution, transfer, registration and recording
of documents evidencing ownership of an interest in the Fund or in connection
with the business of the Fund, (v) fees and expenses paid to independent
contractors, brokers and servicers, leasing agents, consultants, equipment lease
brokers, insurance brokers and other agents, (vi) expenses in connection with
the acquisition, disposition, replacement, alteration, repair, leasing and
operation of Equipment (including the costs and expenses of insurance premiums,
equipment lease brokerage and leasing commissions and of maintenance of such
Equipment), (vii) the cost of insurance as required in connection with the
business of the Fund, (viii) expenses of organizing, revising, amending,
converting, modifying or terminating the Fund, (ix) the cost of preparation and
dissemination of the informational material and documentation relating to
potential sale or other disposition of Equipment, (x) costs incurred in
connection with any litigation in which the Fund is involved, as well as the
examination, investigation or other proceedings conducted by any regulatory
agency, including legal and accounting fees incurred in connection therewith,
(xi) costs of any computer equipment or services used for or by the Fund, (xii)
costs of any accounting, or statistical bookkeeping equipment necessary for the
maintenance of the books and records of the Fund, and (xiii) the costs of
supervision and expenses of professionals employed by the Fund in connection
with any of the foregoing, including attorneys, accountants and appraisers;
provided, however, that the cost of any services relating to items (vi) or (vii)
above must either be attributable to services performed by Persons other than
the Manager or its Affiliates, be compensated by a specific fee described in
Article 8 (and thus would not be reimbursable by the Fund, as provided in
Section 9.2.1) or comply with the requirements for compensation for "other
services" as provided in Section 8.3.5.
9.4 Reserves. The Fund shall initially establish a cash reserve for
general working capital purposes in an amount equal to at least one-half of 1%
of the Gross Proceeds. Upon the disposition of each item of Equipment, any cash
reserve which was specifically allocated to that Equipment need not be
maintained thereafter, but may be applied as reserves for other Equipment. Any
cash reserve used as aforesaid need not be restored and if restored, may be
restored out of Gross Lease Revenues.
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10. ALLOCATION OF INCOME, LOSS AND DISTRIBUTIONS
10.1 Allocation of Net Income and Net Loss Prior to Initial Closing
Date. From the commencement of the Fund until the Initial Closing Date Net
Income and Net Loss shall be allocated 99% to the Manager and 1% to the initial
Holders.
10.2 Allocation of Net Income and Net Loss After Initial Closing Date.
10.2.1 Commencing with the Initial Closing Date, Net Income
and Net Loss shall be allocated 92.5% to the Holders and 7.5% to the Manager.
10.2.2 Notwithstanding Section 10.2.1 of this Agreement, items
of Net Loss arising out of the Fund's payment of expenditures classified as
syndication expenses pursuant to Regulations section 1.709-2(b) with respect to
each Unit shall be specially allocated to the Holder who acquires such Unit.
10.3 Special Allocations
10.3.1 Except as provided in section 10.3.2, Net Income, Net
Loss and Distributions allocable to the Holders shall be determined on a
quarterly basis and shall be allocated among the Holders in the ratio in which
the number of Units held by each of them bears to the total number of Units held
by all Holders as of the last day of the fiscal quarter with respect to which
such Net Income, Net Loss and Distributions are attributable; provided, however,
that, with respect to Net Income, Net Loss and Distributions attributable to the
offering period of the Units (including the full quarter in which the offering
terminates), such Net Income, Net Loss and Distributions shall be apportioned
among the Holders in the ratio in which (i) the number of Units held by each
Holder multiplied by the number of days during such period that such Holder was
the owner of such Units bears to (ii) the amount obtained by totaling the number
of Units outstanding on each day during such period. No Net Income, Net Loss or
Distributions with respect to any quarter shall be allocated to Units
repurchased by the Fund during such quarter, and such Units shall not be deemed
to have been outstanding during such quarter for purposes of the foregoing
allocations.
10.3.2 Notwithstanding anything in this Agreement to the
contrary, the following items of Fund income and loss shall be specially
allocated to the Members in the manner described below:
(i) Gain characterized as recapture income under Sections 1245
or 1250 of the Code shall be allocated to those Members who
claimed the deductions giving rise to such recapture income.
(ii) Except as provided in Section 10.3.2(iii) and 10.3.2(iv),
in the event any Member unexpectedly receives any adjustments,
allocations or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations or any
other event creates an Adjusted Capital Account Deficit for
such Member, items of Fund gross income and gain (consisting
of a pro rata portion of each item of the Fund's income,
including gross income, and gain for such year) shall be
allocated to such Member in an amount and manner sufficient to
eliminate, to the extent required by Regulations, the Adjusted
Capital Account Deficit created by such adjustments,
allocations or distributions as quickly as possible.
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<PAGE>
This Section 10.3.2(ii) is intended to comply with the
qualified income offset requirement in Section
1.704-1(b)(2)(ii)(d) of the Regulations and shall be
interpreted consistently therewith.
(iii) If there is a net decrease in Member Nonrecourse Debt
Minimum Gain, each Member with a share of the Member
Nonrecourse Debt Minimum Gain (as determined in accordance
with Regulations Section 1.704-2(i)(5)) shall be specially
allocated items of Fund income and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to the portion of such Member's
share of the net decrease in Member Nonrecourse Debt Minimum
Gain during such year. The items to be so allocated shall be
determined in accordance with Regulations Section
1.704-2(i)(4). This Section 10.3.2(iii) is intended to comply
with the minimum gain chargeback requirement in Section
1.704-2(i)(4) of the Regulations and shall be interpreted
consistently therewith.
(iv) If there is a net decrease in Fund Minimum Gain during
any Fund taxable year, each Member shall be specially
allocated items of Fund income and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to the portion of such Member's
share of the net decrease in Fund Minimum Gain during such
year (within the meaning of Section 1.704-2(g)(2) of the
Regulations). The items to be so allocated shall be determined
in accordance with Section 1.704-2(f) of the Regulations. This
Section 10.3.2(iv) is intended to comply with the minimum gain
chargeback requirement contained in Section 1.704-2(f) of the
Regulations and shall be interpreted consistently therewith.
(v) After giving effect to the allocations set forth in
Sections 10.3.2(ii), (iii) and (iv), in the event any Member
receives any actual or deemed distribution (i.e., under
section 752 of the Code) during a taxable year which exceeds
the adjusted tax basis of such Member's Units at the end of
such taxable year (determined immediately before giving effect
to such distribution), such Member shall be allocated an
amount of gross income or gain equal to such excess.
(vi) In the event any fee to which the Manager or an Affiliate
thereof is entitled is treated as a Fund distribution by the
Service, a special allocation of Fund gross income shall be
made annually to the Manager or an Affiliate thereof in an
amount equal to any such recharacterized fee for that taxable
year.
(vii) The Manager will specifically allocate items of gain
from the sale or other disposition of items of Equipment for
any year in which the sale or disposition of any item of
Equipment occurs (and, if necessary, subsequent years) to any
Holder in such amounts and in such manner so as to equalize
the Capital Account balances of the Holders; provided,
however, that such allocations are reasonably consistent with,
and reasonably supportable under, the Code.
(viii) Net Loss shall not be allocated to any Holder if such
allocation would cause or increase an Adjusted Capital Account
Deficit for such Holder at the end of any Fund
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<PAGE>
taxable year, and any such Net Loss shall instead be allocated
to the Manager. This limitation shall be applied on a Holder
by Holder basis so as to allocate the maximum permissible Net
Loss to each Holder under Section 1.704-1(b)(2)(ii)(d) of the
Regulations.
(ix) To the extent an adjustment is made to the adjusted tax
basis of any Fund asset pursuant to Code Section 734(b) or
Code Section 743(b), the Members, Capital Accounts shall be
adjusted as provided in Regulations Section
1.704-1(b)(2)(iv)(m).
(x) Except as otherwise provided herein, Nonrecourse
Deductions shall be allocated 92.5% to the Holders and 7.5% to
the Manager.
(xi) Any deduction attributable to Member Nonrecourse Debt
shall be allocated to the Members that bear the economic risk
of loss for the Member Nonrecourse Debt.
10.4 Distribution of Cash From Operations. Cash from Operations shall
be distributed 92.5% to the Holders and 7.5% to the Manager.
10.5 Distribution of Cash From Sales or Refinancing. Cash from Sales or
Refinancing shall be distributed 92.5% to the Holders and 7.5% to the Manager.
Notwithstanding anything to the contrary herein, however, no cash
Distribution shall be made to a Holder to the extent that, after giving effect
to all allocations under sections 10.1, 10.2 and 10.3 which would accompany such
Distribution (including allocations of gross income and gain under section
10.3.2(iv)), such Distribution would exceed the tax basis of the Holder to whom
such Distribution is otherwise payable.
10.6 Distributions of Cash from Reserve Account. Distributions of Cash
from Reserve Account, if any, shall be distributed in the same manner as Cash
from Sales or Refinancing.
10.7 Determination of Amounts to be Distributed. The Manager shall have
sole discretion in determining the amount of any Distributions. Subject to
provisions of Section 15.4.18 of this Agreement, the Manager may use any funds
of the Fund not distributed to Holders to purchase additional Equipment during
the Reinvestment Period or otherwise as permitted by this Agreement; provided,
however, that the Manager will not reinvest in Equipment, but will distribute,
subject to payment of any obligations of the Fund, such available Cash from
Operations and Cash from Sales or Refinancing as may be necessary to cause total
Distributions to Holders to equal the following amounts for the specified
periods:
10.7.1 Through the first full fiscal quarter ending at least
six months after termination of the offering of Units, an amount equal to the
lesser of (a) a rate of return on their original capital contribution equal to
3.5% over the average yield on five-year United States Treasury Bonds for the
fiscal quarter immediately preceding the date of distribution, as published in a
national financial newspaper from time to time (with a minimum of 8% per annum
and a maximum of 10% per annum), or (b) 90% of the total amount of cash
available for distributions; and
10.7.2 For each quarter during the balance of the Reinvestment
Period, an amount equal to a rate of return on their original capital
contribution equal to 3.5% over the average yield on five-year United States
Treasury Bonds for the period from the commencement of the offering of Units
through a
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<PAGE>
date six months following the termination date of the offering (with a minimum
of 8% per annum and a maximum of 10% per annum), as published in a national
financial newspaper.
10.7.3 Such amounts with respect to each year which are
sufficient to allow a Holder in a 31% federal income tax bracket (but not a
higher bracket) to pay the federal income taxes and state income taxes due with
respect to Net Income derived by him from the Fund for such year.
10.8 Consent to Allocations. The methods hereinabove set forth by which
Distributions and allocations of Net Income and Net Loss are made and
apportioned are hereby expressly consented to by each Member as an express
condition to becoming a Member.
10.9 Limitation on Distributions. All Distributions are subject to the
payment of Fund expenses and to maintenance and repair of Equipment.
10.10 Allocation to Manager. To the extent that the Fund shall be
entitled to any deduction for federal income tax purposes as a result of any
interest in Net Income or Net Loss granted to a Manager, such deduction shall be
allocated for federal income tax purposes to such Manager.
10.11 Return of Unused Capital. In the event that any portion of the
Net Proceeds received by the Fund during the first twelve months after the date
of the Prospectus is not invested or committed for investment within eighteen
months of the date of the Prospectus, or in the event any portion of the Net
Proceeds received by the Fund thereafter is not invested or committed for
investment within six months from the Final Closing Date (except for any amounts
used to pay Fund operating expenses, including amounts set aside for reserves as
set forth in Section 9.4), such portion of the Net Proceeds shall be distributed
to the Holders pro rata by the Fund as a return of capital. In addition, the
Manager shall contribute to the Fund, and the Fund shall distribute pro rata to
the Holders, the amount by which (x) the amount of unused capital distributed
pursuant to the foregoing sentence, divided by (y) the percentage of the Gross
Proceeds which remain after payment of all Front End Fees, exceeds the unused
capital so distributed. For the purposes of this Section 10.11, funds will be
deemed to have been committed to investment and will not be returned to the
Holders to the extent written agreements in principle or letters of
understanding were executed at any time prior to the end of said period,
regardless of whether any such investment is actually consummated, and to the
extent any funds have been reserved to make contingent payments in connection
with any Equipment, regardless of whether any such payment is actually made.
10.12 Distributions in Kind. Distributions in kind shall not be
permitted except upon dissolution and liquidation, and then only to a
liquidating trust which has been established for the purpose of the liquidation
of the assets of the Fund, and the distribution of cash in accordance with the
terms of the Agreement.
10.13 Withholding Taxes.
10.13.1 In the event the Fund pays to any federal, state or
local government authority any amount of tax, penalty, interest, fee or other
expenditure which is attributable to the particular status of one or more
Holders including, without limitation, the status of a Holder as a nonresident
of California or any
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other state imposing such a charge, the Manager shall treat such tax,
penalty, interest or fee, and in its discretion may treat other related Fund
expenditures, as a distribution of Cash from Operations or Cash from Sales or
Refinancing as appropriate, to such Holders. Such a distribution shall reduce
the amount of Cash from Operations or Cash from Sales or Refinancing otherwise
payable by the Fund to such Holders. Such Holders shall be distributed any
refund of any such tax, penalty, interest or other amounts received by the Fund;
provided, however, that the distribution due such Holders shall be reduced by
any Fund expenses (and such expenses shall be specially allocated to such
Holders) incurred in connection with the payment or obtaining of the refund of
such taxes, penalties, interest or other amounts and the Fund shall have no duty
or obligation to seek to obtain or collect any such refund or expend any amount
to reduce the amount of any withholding, penalty, interest or other amount
otherwise payable to any government authority. The Manager may require from a
Holder the appropriate documentation with respect to any distribution hereunder.
10.13.2 As security for any withholding tax or other amount
referred to in section 10.14.1 or other liability or obligation to which the
Fund may be subject as a result of any act or status of any Holder, the Fund
shall have (and each Holder hereby grants to the Fund) a security interest in
all Cash from Operations or Cash from Sales or Refinancing distributable to such
Holder to the extent of the amount of such withholding tax or other liability or
obligation. The Fund shall have a right of set-off against any such
distributions of Cash from Operations or Cash from Sales or Refinancing in the
amount of such withholding tax or other liability or obligation.
11. ASSIGNMENT OF FUND INTERESTS
11.1 Limitations on Transfer. A Holder may not transfer all or part of
his legal and equitable interest in his Units except in compliance with the
provisions of this Agreement. The Manager may condition any proposed transfer on
receipt by the Fund of such representations and warranties of the transferor and
the assignee, opinions of counsel for the Fund and other assurances as it may
deem necessary and appropriate to ensure that:
11.1.1 such assignments or transfers do not result, in the
opinion of counsel for the Fund, in the Fund being considered to have terminated
within the meaning of Section 708 of the Code;
11.1.2 the assignee is not a minor or an incompetent;
11.1.3 the transfer or assignment does not violate federal or
state securities laws;
11.1.4 the transferor or the assignee does not hold Units
representing Original Invested Capital of less than $2,500 ($2,000 in the case
of IRAs and Keogh Plans);
11.1.5 such assignee is a Citizen of the United States;
11.1.6 such assignment or transfer does not cause the assets
of the Fund to be deemed "plan assets" for ERISA purposes;
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<PAGE>
11.1.7 such assignment or transfer does not constitute a
transfer "on a secondary market (or the substantial equivalent thereof)" within
the meaning of Section 7704 of the Code or otherwise adversely affecting the tax
status of the Fund; and
11.1.8 the transferor files with the Fund a duly executed and
acknowledged counterpart of the instrument effecting such assignment or
transfer, which instrument evidences the written acceptance by the assignee or
transferee of all of the terms and provisions of this Agreement, contains a
representation that such assignment or transfer was made in accordance with all
applicable laws and regulations (including any investor suitability
requirements) and in all other respects being satisfactory in form and substance
to the Manager.
11.2 Distributions and Effective Date of Transfer. An Assignee of
Record shall be entitled to receive Distributions from the Fund attributable to
the Units acquired by reason of such assignment from and after the effective
date of the assignment of such Units; provided, however, that notwithstanding
anything herein to the contrary, the Fund and the Manager shall be entitled to
treat the assignor of such Units as the absolute owner thereof in all respects,
and shall incur no liability for allocations of Net Income, Net Loss or
Distributions, or transmittal of reports and notices required to be given to
Holders hereunder, which are made in good faith to such assignor until such time
as the written instrument of assignment has been received by the Fund and
recorded on its books and the effective date of the assignment has passed. The
effective date of such assignment on which the Assignee shall be deemed an
Assignee of Record shall be the last day of the first full calendar month
following the later of (i) the date set forth on the written instrument of
assignment or (ii) the date on which the Fund has actual notice of the
assignment of Units and has received complete documentation of the assignment.
Notwithstanding anything to the contrary contained herein, no Distributions
shall be made in any calendar quarter with respect to Units repurchased by the
Fund during such calendar quarter.
11.3 Governmental Restrictions. No assignment, sale, transfer, exchange
or other disposition of Units may be made except in compliance with the then
applicable rules of any other applicable governmental authority. All Units
originally issued pursuant to qualification under the California Corporate
Securities Law of 1968 shall be subject to, and all documents of assignment and
transfer evidencing such securities shall bear, the following legend condition:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
No transfer of any such Unit shall be made unless the transferor shall have
obtained, if necessary, the written consent of the California Commissioner of
Corporations to such transfer.
11.4 Non-Complying Transfers. Any assignment, sale, exchange or other
transfer in contravention of any of the provisions of this Article 11 shall be
void and shall not bind or be recognized by the Fund.
11.5 Misrepresentation and Forfeit. Subject to the discretion of the
Manager, in the event a Holder who originally obtained Units in the Fund's
offering misrepresented that he was a Citizen of the United States, or that it
was not an IRA or Qualified Plan or purchasing on behalf of an IRA or Qualified
Plan, such person fails to remain a Citizen of the United States, or a
subsequent transferee of Units is not
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<PAGE>
or fails to remain a Citizen of the United States, such Person may, in the
Manager's discretion if it deems that the Fund will fail certain citizenship
requirements with respect to its Equipment, be required to forfeit such Units to
the Fund and no longer be entitled to cash Distributions or allocations of the
Fund, receipt of Fund reports and voting privileges, although he may realize
proceeds upon the transfer of his Units to a Citizen of the United States, which
subsequent transferee would be entitled to the full economic benefits and other
privileges attributable to such Units.
12. SUBSTITUTED MEMBERS
12.1 Limitations on Substitution. No Assignee shall have the right to
become a substituted Member of the Fund in place of his assignor unless all of
the following conditions are first satisfied:
12.1.1 A duly executed and acknowledged written instrument of
assignment covering no less than 250 Units (200 in the case of an IRA or Keogh
Plan) shall have been filed with the Fund, which instrument shall specify the
number of Units being assigned and set forth the intention of the assignor that
the Assignee succeed to the assignor's interest as a substituted Member.
12.1.2 The assignor and Assignee shall have executed and
acknowledged such other instruments as the Manager may deem necessary or
desirable to effect such substitution, including the written acceptance and
adoption by the Assignee of the provisions of this Agreement, as the same may be
amended and his execution, acknowledgment and delivery to the Manager of a
special power of attorney, the form and content of which are described herein;
12.1.3 The written consent of the Manager to such substitution
shall have been obtained, the granting of which may be withheld by the Manager
in its sole discretion, and any exercise of such discretion intended to preserve
the tax consequences of Unit ownership shall presumptively be deemed reasonable;
12.1.4 A transfer fee not to exceed $100 shall have been paid
to the Fund to cover all reasonable expenses connected with such substitution;
and
12.1.5 The provisions of Section 11.1 and 11.3 of this
Agreement are complied with.
12.2 Consent to Admission. By executing or adopting this Agreement,
each Holder hereby consents to the admission of additional or substituted
Holders by the Manager and to any Assignee becoming a substituted Holder, in
accordance with the provisions herein.
12.3 Amendment of Agreement. The Manager shall cause this Agreement to
be amended to reflect the admission and/or substitution of Members at least once
in each fiscal quarter.
13. REPURCHASE OF FUND INTERESTS
13.1 In the event a Holder ceases to be a United States Citizen or
Resident Alien for any reason whatsoever, he may be required, in the Manager's
discretion, to tender his Units to the Fund for repurchase as of the date of
such event. The Fund will have the absolute right to purchase such Units at a
price equal to 100% of the Holder's Capital Account as of such date, in all
cases determined as of the last day of the quarter prior to the fiscal quarter
during which such Units are repurchased. IT SHOULD BE NOTED THAT THE FUND WILL
NOT BE OBLIGATED TO PURCHASE UNITS FROM HOLDERS
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WHO CEASE TO BE UNITED STATES CITIZENS OR RESIDENT ALIENS.
13.2 The Manager may otherwise use available Reserves to repurchase
Units, in its discretion and on terms it determines to be appropriate under
given circumstances, in the event the Fund Manager deems such repurchase to be
in the best interest of the Fund; provided, the Fund shall never be required to
repurchase any Units. Upon the repurchase of any Units by the Fund, the tendered
Units shall be canceled and shall no longer be deemed to represent an interest
in the Fund; and, provided further, that any such repurchase shall not impair
the capital of the Fund, or cause the Fund or any of its remaining Members to
incur an adverse tax consequence as a result of such repurchase.
13.3 The Manager shall cause this Agreement to be amended to reflect
the change in the interests of the Holders (including the person whose Units
were repurchased) in the Net Income, Net Loss and Distributions of the Fund at
least once in each fiscal quarter.
13.4 Neither the Manager nor its Affiliates may request the Fund to
repurchase any Units owned by them.
14. BOOKS, RECORDS, ACCOUNTINGS AND REPORTS
14.1 Books of Account and Records. The Manager shall, for income tax
purposes, keep on an accrual basis adequate books of account and records of the
Fund wherein shall be recorded and reflected all of the contributions to the
capital of the Fund and all of the expenses and transactions of the Fund.
14.1.1 Such books of account and records shall include the
following:
(i) A current list of the full name and last known
business or residence address and business telephone
number of each Member set forth in alphabetical order
together with the Original Invested Capital, the
Units held and the share in Net Income and Net Loss
of each Member, which list shall be updated at least
quarterly to reflect changes in the information
contained therein;
(ii) A copy of the Articles of Organization and all
amendments, together with executed copies of any
powers of attorney pursuant to which any certificate
has been executed;
(iii) Copies of the Fund's federal, state and local
income tax or information returns and reports, if
any, for the six most recent taxable years;
(iv) Copies of the original of this Agreement and all
amendments;
(v)Financial statements of the Fund for the six most
recent fiscal years; and
(vi) The Fund's books and records for at least the
current and past three fiscal years.
14.1.2 Such books of account and records shall be kept at the
principal place of business of the Fund in the State of California, and each
Member and his authorized representatives shall have, at all times during normal
business hours and at any other reasonable time, free access to and the right to
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inspect and copy at their expense such books of account and all records of the
Fund.
14.1.3 Upon the request of a Member, the Manager shall mail to
such Member within ten days of the request a copy of the information described
in Section 14.1.1(i), (ii) and (iv). The information described in Section
14.1.1(i) shall be printed in alphabetical order, on white paper, and in a
readily readable type size (in no event smaller than ten-point type). The Fund
may require payment of a reasonable charge for copy work.
14.1.4 If the Manager neglects or refuses to exhibit, produce
or mail a copy of the information in Section 14.1.1(i) above as requested and
required under this Agreement, the Manager shall be liable to the Member
requesting the information for the costs, including attorneys' fees, incurred by
the Member for compelling production of the information and for actual damages
suffered by the Member by reason of such refusal or neglect. It shall be a
defense that the actual purpose and reason for the requests for inspection or
for a copy of the information is to secure the list of Members or other
information for the purpose of selling such list or copies thereof, or of using
the same for a commercial purpose other than in the interest of the requesting
person as a Member relative to the affairs of the Fund. The Manager may require
that a Member requesting the information in Section 14.1.1(i) above represent
that the list is not requested for a commercial purpose unrelated to the
Member's interest in the Fund. The remedies provided hereunder to Members
requesting copies of the information in Section 14.1.1(i) above are in addition
to, and shall not in any way limit, other remedies available to Limited Members
under federal law or the laws of any state.
14.1.5 Subject to any change pursuant to Section 15.2.8, all
books and records of the Fund shall be kept on the basis of an annual accounting
period ending December 31, except for the final accounting period which shall
end on the dissolution or termination of the Fund. All references herein to a
"year of the Fund" are to such an annual accounting period, and all references
to a Fund "quarter" shall refer to a calendar quarter unless and until such
periods are changed by an amendment hereto. Accelerated methods of depreciation
with respect to Fund assets and other elections available to the Fund may be
used by the Fund for purposes of reporting federal or state income taxes.
14.2 Audited Annual Financial Statements. The Manager shall have
prepared and distributed to the Holders at least annually, at Fund expense,
financial statements (each of which shall include a balance sheet, statement of
income or loss, statement of Members' equity, and statement of cash flow)
prepared in accordance with generally accepted accounting principles and
accompanied by a report thereon containing an opinion of an independent
certified public accounting firm. Such opinion shall also state that reported
"Cash from Operations" is consistent with the definition of Cash from Operations
herein. Copies of such statements and report shall be distributed to each Holder
within 120 days after the close of each taxable year of the Fund.
14.3 Other Annual Reporting. The Manager shall have prepared and
distributed to the Holders at least annually, at Fund expense: (i) a statement
of cash flow, (ii) Fund information necessary in the preparation of the Holders'
and Assignees' federal income tax returns; (iii) a report of the business of the
Fund, which shall include for each piece of Equipment which individually
represents at least 10% of the Fund's total investment in Equipment, a status
report to indicate: (a) the condition of the Equipment, (b) how the Equipment is
being used as of the end of the year (leased, operated, held for lease, repair,
or sale), (c) the remaining term of the Equipment leases, (d) the projected use
of Equipment for the next year (renewal of lease, re-lease, retirement, or
sale), and (e) such other information relevant to the value or use of the
Equipment as the Manager deems appropriate, including the method used as basis
for
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<PAGE>
valuation; (iv) a statement as to the compensation received by the Manager and
its Affiliates from the Fund during the year, which statement shall set forth
the services rendered or to be rendered by the Manager and its Affiliates and
the amount of fees received; (v) a report identifying Distributions from: (a)
Cash from Operations for that year, (b) Gross Revenues of prior years held in
reserves, (c) Cash from Sales or Refinancing, and (d) Cash from Reserve Account
and other sources; and (vi) a special report prepared in accordance with the
American Institute of Certified Public Accountants United States Auditing
Standards relating to special reports, containing an opinion of an independent
certified public accounting firm, to report the breakdown of the costs
reimbursed by the Fund to the Manager or its Affiliates. Such special report
shall at a minimum provide: (a) a review of the time records of individual
employees, the costs of whose services were reimbursed, and (b) a review of the
specific nature of the work performed by each such employee. The additional
costs of such special report shall be itemized by the auditors among all
programs sponsored by the Manager and its Affiliates on a program-by-program
basis and may be reimbursed to the Manager or its Affiliates to the extent that
such reimbursement, when added to the cost for administrative services rendered,
does not exceed the competitive rate for comparable services performed by
independent parties in the same geographic location. Copies of the reports
hereunder shall be distributed to each Holder within 120 days after the close of
each taxable year of the Fund; provided, however, that all Fund information
necessary in the preparation of the Holders' and Assignees' federal income tax
returns shall be distributed to each Holder and Assignee not later than 75 days
after the close of each taxable year of the Fund.
14.4 Quarterly Reports. The Manager shall have prepared quarterly, at
Fund expense, commencing with the first full quarter after the Closing Date: (i)
a statement as to the compensation received by the Manager during such quarter
from the Fund which statement shall set forth the services rendered or to be
rendered by the Manager during such quarter from the Fund and the amount of fees
received, and (ii) other relevant information. Copies of such statements shall
be distributed to each Holder within 60 days after the end of each quarterly
period.
14.5 Unaudited Quarterly Financial Statements. The Manager shall have
prepared, at Fund expense, a quarterly report covering each of the first three
quarters of Fund operations in each calendar year, unaudited financial
statements (each of which shall include a balance sheet, statement of income or
loss for said quarterly period and statement of Cash from Operations and Cash
from Sales or Refinancing for said quarterly period) and a statement of other
pertinent information regarding the Fund and its activities during the quarterly
period covered by the report. Copies of such statements and other pertinent
information shall be distributed to each Holder within 60 days after the close
of the quarterly period covered by the report of the Fund.
14.6 Other Quarterly Reports. The Manager shall have prepared, at Fund
expense, after the end of each quarter in which Equipment is acquired and until
the Net Proceeds are fully invested or returned to investors, a notice which
shall describe therein: (i) a statement of the actual purchase price of the
Equipment, including the terms of the purchase, (ii) a statement of the total
amount of cash expended by the Fund to acquire such items of Equipment
(including and itemizing all commissions, fees, expenses and the name of each
payee), and (iii) a statement of the amount of proceeds in the Fund which remain
unexpended or uncommitted. Copies of such notice shall be distributed to each
Holder within 60 days after the end of such quarter. If deemed appropriate by
the Manager such notice may be prepared and distributed to each Holder more
frequently than quarterly.
14.7 Tax Returns. The Manager, at Fund expense, shall cause income tax
returns for the Fund to be prepared and timely filed with appropriate
authorities.
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<PAGE>
14.8 Governmental Reports. The Manager, at Fund expense, shall cause to
be prepared and timely filed with appropriate federal and state regulatory and
administrative bodies, all reports required to be filed with such entities under
then current applicable laws, rules and regulations. Such reports shall be
prepared on the accounting or reporting basis required by such regulatory
bodies. Any Holder shall be provided with a copy of any such report upon request
without expense to him.
14.9 Maintenance of Suitability Records. The Manager, at Fund expense,
shall maintain for a period of at least six years, a record of the information
obtained to indicate that a Holder meets the suitability standards set forth in
the Prospectus.
15. RIGHTS, AUTHORITY, POWERS AND RESPONSIBILITIES OF THE MANAGER.
15.1 Services of the Manager. The Manager shall be responsible for
providing the following services to the Fund:
15.1.1 Supervising the organization of the Fund and the
offering and sale of Units;
15.1.2 Supervising Fund management, which includes (i)
establishing policies for the operation of the Fund; (ii) causing the Fund's
agents or employees to arrange for the provision of services necessary to the
operation of the Fund (including Equipment management and investor, accounting
and legal services, and services relating to Distributions by the Fund); (iii)
approving actions to be taken by the Fund; (iv) providing advice, consultation,
analysis and supervision with respect to the functions of the Fund as an owner
of the Equipment (including, without limitation, decisions regarding adjustments
to rental schedules, the sale or disposition of Equipment and compliance with
federal, state and local regulatory requirements and procedures); (v) executing
documents on behalf of the Fund; (vi) having a fiduciary responsibility for the
safekeeping and use of all funds of the Fund, whether or not in the Manager's
immediate possession or control; and (vii) making all decisions as to accounting
matters; and
15.1.3 Approval of the terms of the sale or other disposition
of Equipment, including establishing the terms for and arranging any such
transaction.
15.2 Authority of the Manager. The conduct of the Fund's business shall
be controlled solely by the Manager in accordance with this Agreement. The
Manager shall have fiduciary responsibility for the safekeeping and use of all
funds and assets of the Fund, whether or not in its immediate possession or
control, and shall have all authority, rights and powers conferred by law and
those required or appropriate to the management of the Fund business which, by
way of illustration but not by way of limitation, shall, subject only to the
provisions of Section 15.4, include the right, authority and power:
15.2.1 To acquire, lease, sell, hold and dispose of Equipment,
interests therein or appurtenances thereto, as well as personal or mixed
property connected therewith, including the purchase, lease, improvement,
maintenance, exchange, trade or sale of such Equipment, at such price, rental or
amount, for cash, securities (in compliance with appropriate securities
regulations) or other property, and upon such terms, as the Manager deems in its
sole discretion, to be in the best interest of the Fund; provided that, as of
the date of the final investment of Net Proceeds and completion of the permanent
financing of the Equipment portfolio, at least 50% of the Fund's Equipment, by
aggregate purchase cost, shall be subject to initial leases which are High
Payout Leases.
15.2.2 To place record title to, or the right to use Fund
assets in, the name or names of a
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<PAGE>
nominee or nominees, trustee or trustees for any purpose convenient or
beneficial to the Fund;
15.2.3 To acquire and enter into any contract of insurance
which the Manager deems necessary or appropriate for the protection of the Fund
and the Manager, for the conservation of Fund assets, or for any purpose
convenient or beneficial to the Fund;
15.2.4 To employ Persons in the operation and management of
the business of the Fund including, but not limited to, supervisory managing
agents, insurance brokers and equipment lease brokers and Persons to perform, on
behalf of the Fund, the activities enumerated in Section 15.2.1, on such terms
and for such compensation as the Manager shall determine, subject, however, to
the limitations with respect thereto as set forth in Article 8; provided that no
Person is employed to provide duplicative services; and provided further that
agreements with the Manager or their Affiliates for the services set forth in
Article 8 shall contain the terms and limitations as to fees and expenses as set
forth in said Article 8 and any of such agreements shall be terminable
immediately upon dissolution of the Fund under Section 19.1;
15.2.5 To prepare or cause to be prepared reports, statements
and other relevant information for distribution to Holders, as provided in
Article 14 and as they otherwise deem appropriate;
15.2.6 To open accounts and deposit and maintain funds in the
name of the Fund in banks or savings and loan associations; provided, however,
that the Fund funds shall not be commingled with the funds of any other Person;
15.2.7 To cause the Fund to make or revoke any of the
elections referred to in the Code;
15.2.8 To select as the Fund's accounting year a calendar year
or such fiscal year as approved by the Service;
15.2.9 To determine the appropriate accounting method or
methods to be used by the Fund;
15.2.10 To offer and sell Units in the Fund directly or
through any licensed Affiliate of the Manager or nonaffiliate and to employ
personnel, agents and dealers for such purpose;
15.2.11 To amend this Agreement to reflect the addition or
substitution of Holders, the reduction of capital accounts upon the return of
capital to Members or the change in the interests of the Holders in the Net
Income, Net Loss and Distributions of the Fund after the repurchase of Units;
15.2.12 To require in all Fund obligations that the Manager
shall not have any personal liability thereon but that the Person contracting
with the Fund is to look solely to the Fund and its assets for satisfaction of
such obligations; and in the event that the Manager has personal liability with
respect to any such obligation, the Manager may require its satisfaction prior
to obligations with respect to which the Manager has no personal liability;
provided, however, that the inclusion of the aforesaid provisions shall not
materially affect the cost of the service or material being supplied and all
Fund obligations are satisfied in accordance with prudent business practices as
to the time and manner of payment;
15.2.13 To execute and file certificates of amendment and
cancellation of the articles of
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<PAGE>
organization, and certificates of dissolution of the Fund;
15.2.14 Subject to the provisions of Article 10, to determine
the amount of Cash from Operations and Cash from Sales or Refinancing used to
purchase additional Equipment and to make Distributions;
15.2.15 To purchase Equipment in its own name, the name of an
Affiliate or in the name of a nominee, a trust or a corporation or otherwise and
hold title thereto on a temporary or interim basis (generally not in excess of
six months) for the purpose of facilitating the acquisition of such Equipment or
completion of manufacture of the Equipment, or any other purpose related to the
business of the Fund; provided, however that: (i) the transaction is in the best
interest of the Fund; (ii) such Equipment is purchased by the Fund for a
purchase price no greater than the cost of such Equipment to the Manager or
Affiliate (including any out-of-pocket carrying costs), except for compensation
permitted by this Agreement; (iii) there is no difference in interest terms of
the loans secured by the Equipment at the time acquired by the Manager or
Affiliate and the time acquired by the Fund; (iv) there is no benefit arising
out of such transaction to the Manager or its Affiliate apart from the
compensation otherwise permitted by this Agreement; and (v) all income generated
by, and all expenses associated with, Equipment so acquired shall be treated as
belonging to the Fund.
15.2.16 Subject to Sections 15.4.21 and 15.4.22, to borrow
money and, if security is required therefor, to mortgage or subject any
Equipment to any other security device, to obtain replacements of any mortgage
or other security device, and to prepay, in whole or in part, refinance,
increase, modify, consolidate or extend any mortgage or other security device,
all of the foregoing at such terms and in such amounts as the Manager, in its
sole discretion, deems to be in the best interests of the Fund;
15.2.17 To invest (i) the Gross Proceeds or Net Proceeds
temporarily prior to investment in Equipment, (ii) other funds of the Fund prior
to the investment in Equipment or the distribution to Holders and (iii) the
Fund's capital reserves, in short-term, highly liquid investments where there is
appropriate safety of principal;
15.2.18 In addition to any amendments otherwise authorized
herein, this Agreement may be amended from time to time by the Manager, without
the consent of any of the Holders
(i) to add to the representations, duties or obligations of
the Manager or its Affiliates or surrender any right or power
granted to the Manager or its Affiliates herein, for the
benefit of the Holders;
(ii) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other
provision herein, or to make any other provisions with respect
to matters or questions arising under this Agreement which
will not be inconsistent with the provisions of this Agreement
provided that no amendment hereunder will change the voting
rights of Holders;
(iii) to delete or add any provision of this Agreement
required to be so deleted or added by the staff of the
Securities and Exchange Commission or by a state "Blue Sky"
administrator or similar such official, which addition or
deletion is deemed by such staff or official to be for the
benefit or protection of the Holders; or
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<PAGE>
(iv) to amend the provisions of Article 10 of this Agreement
relating to the allocations of Net Income, Net Loss and
Distributions among Members or any other provisions hereof if
the Fund is advised at any time by the Fund's accountants or
legal counsel that the allocations or such other provisions
set forth in this Agreement are unlikely to be respected,
either because of promulgation of Regulations under Sections
704 or 706 of the Code or other developments in the law, but
only to the minimum extent necessary in accordance with such
advice of accountants and/or counsel to cause such provisions
of this Agreement to be respected. Such amendment or
amendments made by the Manager in reliance upon the advice of
the accountants or counsel described above shall be deemed to
be made pursuant to the fiduciary obligation of the Manager to
the Fund and the Holders, and no such amendment or amendments
shall give rise to any claim or cause of action by any Holder.
15.2.19 To execute, acknowledge and deliver any and all
instruments to effectuate the foregoing, and to take all such action in
connection therewith as the Manager shall deem necessary or appropriate.
15.3 General Powers and Fiduciary Duty. The Manager shall, except as
otherwise provided in this Agreement, have all the rights and powers and shall
be subject to all the restrictions and liabilities provided for the manager of a
limited liability company under the California Act. Notwithstanding any other
provision of this Agreement, in no event may the Manager modify or compromise,
by contract or otherwise, its fiduciary duty to the Fund or the Holders, whether
such duty is imposed under the common law or by statute.
15.4 Limitations on Manager's Authority. Neither the Manager nor any
Affiliate shall have the authority to:
15.4.1 Enter into contracts with the Fund which would bind the
Fund after the expulsion, adjudication of bankruptcy or insolvency of a Manager,
or continue the business of the Fund with Fund assets after the occurrence of
such an event;
15.4.2 Grant to the Manager or any Affiliate an exclusive
listing for the sale of Fund assets, including Equipment;
15.4.3 Sell Substantially All of the Assets in a single sale,
or in multiple sales in the same twelve-month period, except in the orderly
liquidation and winding up of the business of the Fund upon its termination and
dissolution;
15.4.4 Pledge or encumber Substantially All of the Assets in a
single transaction or in multiple transactions in the same twelve-month period
other than in connection with the acquisition or improvement of assets or the
refinancing of existing obligations;
15.4.5 Alter the primary purpose of the Fund as set forth in
Article 3;
15.4.6 Receive from the Fund a rebate or give-up or
participate in any reciprocal business arrangements which would circumvent the
provisions of this Agreement, nor shall any such person permit any reciprocal
business arrangement which would circumvent the restrictions herein against
dealing with the Manager and its Affiliates;
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<PAGE>
15.4.7 Sell or lease any Equipment to any entity in which a
Manager or any Affiliate has an interest, other than a joint venture or similar
program which complies with the conditions set forth in Section 15.4.8 hereof;
15.4.8 Cause the Fund to invest in any program, partnership or
other venture unless: (i) the other Member or joint owner is not a Manager (but
it may be an Affiliate of a Manager, provided the Affiliate is formed and
operated for the primary purpose of investment in and operation of or gain from
an interest in equipment, and has substantially identical investment objectives
to those of the Fund); (ii) such joint venture owns and operates particular
Equipment and the Fund or the Fund and Affiliate, as the case may be, acquire
the controlling interest in such partnership, or joint venture; (iii) the
agreement of joint venture does not authorize the Fund to do anything as a
Member or joint venturer with respect to the Equipment which the Fund, or a
Manager, could not do directly because of the provisions of this Agreement; (iv)
the Fund's investment is on substantially the same terms and conditions as the
investment of any Affiliate; (v) no compensation (other than as provided for by
this Agreement) is received in connection therewith by the Manager or any of its
Affiliates, there are no duplicate equipment management or any other duplicate
fees and such investment shall not result in the impairment, abrogation or
circumvention of any of the terms or provisions of this Agreement; (vi) the
joint venture is in the best interest of both co-venturers; and (vii) in joint
venture arrangements with an Affiliate of a Manager, if all of the following
additional conditions are met: the compensation of the Manager is substantially
identical to that received by the sponsor of such Affiliate, the Fund has a
right of first refusal to buy, if such Affiliate wishes to sell, equipment held
in the joint venture, and the joint venture is established either for the
purpose of effecting appropriate diversification of the Fund's investment
portfolio or for the purpose of relieving the Manager or its Affiliates or
nominees from a commitment entered into pursuant to Section 15.2.15 of this
Agreement; for the purposes of this Section, a controlling interest shall
include: (1) ownership of more than 50% of the venture's capital or profits; or
(2) provisions in the venture agreement giving the Fund effective control;
15.4.9 Except as provided in the Sections 15.2.15, 15.4.7 and
15.4.8, purchase or lease Equipment from the Fund or sell or lease Equipment to
the Fund;
15.4.10 Cause the Fund to loan any funds or property to any
Manager or Affiliate of a Manager;
15.4.11 Cause the Fund to borrow from any of the Manager or
its Affiliates on terms which provide for interest, financing charges or fees in
excess of the amounts charged by unrelated lending institutions on comparable
loans for the same purpose, or in excess of the ledger's cost of funds, or, in
any event, to cause the Fund to obtain "permanent financing" (defined as
financing with a term in excess of 12 months) from any such Person;
15.4.12 Cause the Fund to exchange Units for property other
than cash;
15.4.13 Do any action in contravention of this Agreement or
which would make it impossible to carry on the ordinary business of the Fund;
15.4.14 Confess a judgment against the Fund in connection with
any threatened or pending legal action;
15.4.15 Possess any Equipment or assign the rights of the
Fund in specific Equipment
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<PAGE>
for other than a Fund purpose;
15.4.16 Admit a Person as a Manager except with the consent of
the Holders as provided in Article 17 hereof;
15.4.17 Perform any act (other than an act required by this
Agreement or any act taken in good faith reliance upon counsel's opinion) which
would, at the time such act occurred, subject any Holder to liability as a
Manager in any jurisdiction;
15.4.18 Reinvest any funds of the Fund after the end of the
Reinvestment Period other than to invest in Equipment pursuant to commitments
entered into prior to the expiration of the Reinvestment Period or in Equipment
to be used in connection with Equipment under an existing lease, or reinvest any
funds of the Fund during the Reinvestment Period unless such reinvestment is
effected for all Holders on the same terms and is otherwise in compliance with
Section 10.7 hereof;
15.4.19 Invest any of the Gross Proceeds in Equipment which
is non-income producing;
15.4.20 Employ, or permit any Person to employ, the funds or
assets of the Fund in any manner except for the exclusive benefit of the Fund;
this provision shall not prohibit the Manager from causing Fund funds to be
deposited in a separate Fund account with a bank or other financial institution
which aggregates all funds held on behalf of the Manager and its Affiliates in
calculating qualifying balances for purposes of discounts on service charges or
other account benefits, provided that the Fund benefits on a pro rata basis from
any such discounts or other favorable terms, and, provided further, that no
creditor of any party other than the Fund shall have any recourse to funds held
in the Fund's separate account;
15.4.21 Incur any indebtedness wherein the lender will have or
acquire, at any time as a result of making the loan, any direct or indirect
interest in the profit, capital or property of the Fund other than as a secured
creditor; or incur any indebtedness specifically for the purpose of funding
operating distributions, provided however that the Fund may enter into
refinancing transactions with respect to its Equipment and distribute net
proceeds from any such refinancing to the extent consistent with its investment
objectives;
15.4.22 Incur aggregate Fund borrowings which, as of the date
of the final investment of the Net Proceeds and, thereafter, on the date any
subsequent indebtedness is incurred, are in excess of 50% of the purchase price
of all Equipment on a combined basis. "Purchase price" for purposes of this
Section 15.4.22 shall mean the sum of the cash downpayment and any indebtedness
incurred in connection with the acquisition of an item of Equipment by the Fund,
or to which the Equipment is taken subject, plus any Acquisition Fees paid, but
does not include loan points, prepaid interest, or other prepaid expenses;
15.4.23 Commingle Fund funds with those of any other Person;
15.4.24 Except as otherwise provided herein, cause the Fund to
enter into any transaction with any other partnership in which a Manager or any
of its Affiliates have an interest, including, but not limited to, any
transaction involving the sale, lease or purchase of any Equipment to or from
the Fund, the rendering of services to or from the Fund, or the lending of any
monies or other property to or from the Fund;
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<PAGE>
15.4.25 Directly or indirectly pay or award any finder's fees,
commissions or other compensation to any Person engaged by a potential investor
for investment advice as an inducement to such advisor to advise the purchaser
regarding the purchase of Units; provided, however, that the Manager shall not
be prohibited from paying the normal sales commissions payable to a registered
broker-dealer or other properly-licensed Person for selling Units;
15.4.26 Operate the Fund in such a manner as to have the Fund
classified as an "investment company" for purposes of the Investment Company Act
of 1940;
15.4.27 Except as provided herein, invest any of the Gross
Proceeds in units of limited partnership interest, junior mortgages, deeds of
trust or other similar instruments or obligations;
15.4.28 Cause the Fund to enter into any agreements with a
Manager or any Affiliate of a Manager which are not subject to termination
without penalty by either party upon not more than 60 days' written notice,
except for agreements which comply with the provisions of Section 15.2.15 or
those which comply with the provisions of Section 15.4.8 and relate to the
purchase of Equipment by the Fund and an Affiliate as joint venturers;
15.4.29 Cause the Fund to acquire any single item of Equipment
that has a contract purchase price in excess of $1,000,000 unless prior to final
funding of the acquisition it obtains a future value appraisal of the Equipment
from a qualified independent third party appraiser;
15.4.30 Cause the Fund to invest cash in an aggregate amount
in excess of $30,000,000 in Equipment leased to a single lessee.
15.5 Limitation on Manager's Liability. The Manager shall have no
personal liability for the repayment of the Original Invested Capital of any
Holder or to repay the Fund any portion or all of any negative balance in its
Capital Account, except as otherwise provided in Section 5.2.
15.6 Tax Matters Member. ATEL is hereby designated as the "Tax Matters
Member" in accordance with Section 6231(a)(7) of the Code and, in connection
therewith and in addition to all other powers given therein, shall have all
other powers needed to perform fully hereunder including, without limitation,
the power to retain all attorneys and accountants of its choice and the right to
settle any audits without the consent of Members. The designation made in this
paragraph is hereby consented to by each Member as an express condition to
becoming a Member. The Fund hereby indemnifies ATEL from and against any damages
or losses (including attorney's fees) arising out of or incurred in connection
with any action taken or omitted to be taken by it in carrying out its
responsibilities as tax matters Member, subject to the same conditions under
which indemnification is provided the Manager in Article 21 hereof.
15.7 Minimum Investment in Equipment / Maximum Front-End Fees. The
Manager must commit not less than 85.875% of the Gross Proceeds to Investment in
Equipment, with the balance thereof available to pay Organization and Offering
Expenses and Front End Fees, however designated. Under the North American
Securities Administrators Association, Inc. ("NASAA") Statement of Policy
concerning Equipment Programs, as amended through October 24, 1991 (referred to
herein as the "NASAA Guidelines"), the Fund is required to commit a minimum
percentage of the Gross Proceeds to Investment in Equipment, calculated as the
greater of: (i) 80% of the Gross Proceeds reduced by 0.0625% for each 1% of
indebtedness encumbering the Fund's Equipment; or (ii) 75% of such Gross
Proceeds. Based on the formula in the NASAA Guidelines, with 50% portfolio
leverage the Fund's
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minimum Investment in Equipment would equal 76.875% of Gross Proceeds (80% -
[50% x .0625%] = 76.875%), and the Fund's minimum Investment in Equipment would
therefore exceed the NASAA Guideline minimum by 9%. The NASAA Guidelines permit
the Manager and its Affiliates to receive compensation in the form of a carried
interest in Fund Net Income, Net Loss and Distributions equal to 1% for the
first 2.5% of excess Investment in Equipment over the NASAA Guidelines minimum,
1% for the next 2% of such excess, and 1% for each additional 1% of excess
Investment in Equipment. With a minimum Investment in Equipment of 85.875% and
50% leverage, the Manager and its Affiliates may receive an additional carried
interest equal to 6.5% of Net Profit, Net Loss and Distributions under the
foregoing formula (2.5% + 2% + 4.5% = 9%; 1% + 1% + 4.5% = 6.5%]. At the lowest
permitted level of minimum Investment in Equipment, the NASAA Guidelines would
permit the Manager and its Affiliates to receive a promotional interest equal to
5% of Distributions of Cash from Operations and 1% of Distributions of Sale or
Refinancing Proceeds until Members have received total Distributions equal to
their Original Invested Capital plus an 8% per annum cumulative return on their
Adjusted Invested Capital, and, thereafter, the promotional interest could
increase to 15% of all Distributions. With the additional carried interest
calculated as described above, the maximum aggregate fees payable to the Manager
and Affiliates under the NASAA Guidelines as carried interest and promotional
interest would equal 11.5% of Distributions of Cash from Operations (6.5% + 5% =
11.5%), and 7.5% of Distributions of Sale or Refinancing Proceeds (6.5% + 1% =
7.5%), before the subordination level was reached, and 21.5% of all
Distributions thereafter. The maximum amounts to be paid under the terms of this
Agreement are subject to the application of the Asset Management Fee Limit
provided in Section 8.3, which limits the annual amount payable to the Manager
and its Affiliates as the Asset Management Fee and the Carried Interest to an
aggregate not to exceed the total amount of fees that would be payable to the
Manager and its Affiliates under the alternative fee schedule set forth in
Section 8.3. This overall limitation on annual fees will include, in addition to
the Equipment Management Fee and Equipment Resale/Releasing Fee, amounts equal
to 11.5% of Distributions of Cash from Operations (4% as an Incentive Management
Fee plus 7.5% as the Fund Manager's Carried Interest) and 7.5% of Distributions
of Sale or Refinancing Proceeds (as the Fund Manager's 7.5% Carried Interest)
before the Priority Return, and 15% of all Distributions thereafter (7.5% as an
Incentive Management Fee plus 7.5% as the Carried Interest). Upon completion of
the offering of Units, final commitment of Net Proceeds to acquisition of
Equipment and establishment of final levels of permanent portfolio debt
encumbering such Equipment, the Manager shall calculate the maximum carried
interest and promotional interest payable to the Manager and its Affiliates
under the NASAA Guidelines and compare such total permitted fees to the total of
the Incentive Management Fees and Carried Interest. If and to the extent that
the fees calculated under the alternative fee schedule provided in Section 8.3
as the Incentive Management Fee and the Carried Interest should exceed the
maximum promotional interest plus carried interest permitted under the NASAA
Guidelines, as described above, the fees payable to the Manager and its
Affiliates shall be reduced as described herein. In such event, Section 8.3 of
this Agreement shall be amended immediately to reduce the amounts calculated as
the Incentive Management Fee and/or the Carried Interest by an amount sufficient
to cause the total of such compensation to comply with the limitations in the
NASAA Guidelines on the aggregate of promotional interests and carried
interests. A comparison of the Front End Fees actually paid by the Fund and the
NASAA Guideline maximums shall be repeated, and any required adjustments shall
be made, at least annually thereafter.
15.8 Reliance on Manager's Authority. The Manager shall conduct the
business of the Fund, devoting such time thereto as it, in its sole discretion,
shall determine to be necessary to manage the Fund business and affairs in an
efficient manner. Any Person dealing with the Fund or the Manager may rely upon
a certificate signed by the Manager as authority with respect to: (i) the
identity of the Manager or any Holder hereof; (ii) the existence or
non-existence of any fact or facts which constitute a condition
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precedent to acts by the Manager or are in any other manner germane to the
affairs of the Fund; (iii) the Persons who are authorized to execute and deliver
any instrument or document on behalf of the Fund; or (iv) any act or failure to
act by the Fund as to any other matter whatsoever involving the Fund or any
Members.
16. RIGHTS, POWERS AND VOTING RIGHTS OF THE MEMBERS
16.1 Limitation on Member Authority. Members shall take no part in the
control, conduct or operation of the Fund and shall have no right or authority
to act for or bind the Fund except as expressly provided herein.
16.2 Voting Rights. Members shall have the right, by the vote of
Members who own more than 50% of the total outstanding Units entitled to vote (a
"majority-in-interest"), to approve the following matters affecting the basic
structure of the Fund:
16.2.1 Removal or withdrawal of a Manager;
16.2.2 Subject to the further requirements of Article 17,
continuation of the Fund and election of a successor Manager upon the
termination of a Manager;
16.2.3 Termination and dissolution of the Fund;
16.2.4 Amendment of this Agreement, provided such amendment is
not for any of the purposes set forth in Sections 16.4 or 16.5, and provided,
further, that the Members shall have the right to approve or disapprove by
separate vote each proposed amendment to this Agreement;
16.2.5 The pledge or granting of a security interest in, or
sale of, Substantially All of the Assets in a single transaction, or in multiple
transactions in the same twelve-month period, except in the liquidation and
winding up of the business of the Fund upon its termination and dissolution; and
16.2.6 The extension of the term of the Fund.
16.3 Voting Procedures. In any vote of the Members, each Member shall
be entitled to cast one vote for each Unit which he owns as of the designated
record date. Notwithstanding any other provision of this Agreement, any Units
held by a Manager or an Affiliate of a Manager will not be entitled to vote, and
will not be considered to be "outstanding" Units for purposes of any vote, upon
matters which involve a conflict between the interests of such Manager and the
Fund, including, but not limited to, any vote on the proposed removal or
withdrawal of such Manager or on any proposed amendment to this Agreement which
would expand or extend the rights, authorities or powers of such Manager.
16.3.1 Meetings of the Members to vote upon any matters as to
which the Members are authorized to take action under this Agreement, as the
same may be amended from time to time, may be called at any time by the Manager
or by one or more Members holding more than 10% of the outstanding Units by
delivering written notice, either in person or by registered mail, of such
meeting to the Manager. Promptly, but in any event within 10 days following
receipt of such request, the Manager shall cause a written notice, either in
person or by certified mail, to be given to the Members entitled to vote at such
meeting, which notice shall state that a meeting will be held at a time and
place fixed by the Manager, which is to be convenient to the Members as a group,
and which is not less than 15 days nor more than
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60 days after the mailing of the notice of the meeting; provided, however, that
such maximum period for the giving of notice and the holding of meetings may be
extended for an additional 60 days if such extension is necessary to obtain the
qualification with the California Commissioner of Corporations of the matters to
be acted upon at such meeting, the clearance by the Securities and Exchange
Commission or other appropriate governing agency of the solicitation materials
to be forwarded to Members in connection with such meeting or any other
administrative authorizations which may be required. Included with the notice of
a meeting shall be a detailed statement of the action proposed, including a
verbatim statement of the wording of any resolution proposed for adoption by the
Members and of any proposed amendment to this Agreement. All expenses of the
meeting and notification shall be borne by the Fund.
16.3.2 In order to establish the Members of record entitled to
act upon matters by vote or written consent, the Manager or Members holding more
than 10% of the Units may fix in advance a record date (the "Record Date") which
is not more than 60 nor less than 10 days prior to the date of the meeting or
the date upon which written consents are to be delivered. If no Record Date is
fixed in the notice of meeting or action by written consent, the Record Date
shall be deemed to be at the close of business on the business day next
preceding the date on which notice is given. A new Record Date shall be fixed if
a meeting is adjourned for more than 45 days from the date set for the original
meeting.
16.3.3 Upon adjournment of a meeting to another time or place,
notice of the new time or place shall be announced at the meeting at which
adjournment is taken. If the adjournment is for more than 45 days or if, after
the adjournment, a new Record Date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each Member of record entitled to
vote at the meeting.
16.3.4 Personal presence of the Members at a meeting shall not
be required, provided that sufficient Units are represented at the meeting, by
Members appearing in person and/or by duly executed proxies, to take any action
proposed for a vote at such meeting. Attendance by a Member at any meeting and
voting in person shall revoke any proxies of such Member submitted with respect
to action proposed to be taken at such meeting. Submission of a later proxy with
respect to any action shall revoke an earlier one as to such action. Only the
votes, whether in person or by proxy, of Members holding Units as of the Record
Date established for such meeting shall be counted.
16.3.5 Any matter as to which the Members are authorized to
take action under this Agreement or under law may be taken by the Members
without a meeting and shall be as valid and effective as action taken by the
Members at a meeting duly assembled, if written consents to such action by the
Members are (i) signed by the Members entitled to vote upon such action at a
meeting who held, as of the Record Date for such actions, the number of Units
required to authorize such action and (ii) delivered to the Manager as of the
date set for such action. Any action taken without a meeting shall be effective
15 days after the required minimum number of Members have signed the consent and
shall be effective immediately if the Manager and Limited Members holding at
least 90% of the outstanding Units as of the Record Date have signed the
consent.
16.3.6 In the event that there shall be no Manager, the
Members may take action without a meeting by the written consent of Members
having the requisite voting power of the Members entitled to vote.
16.4 Limitations on Member Rights. No Holder shall have the right or power
to: (i) withdraw or reduce his contribution to the capital of the Fund except as
a result of the repurchase of the Units as
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<PAGE>
provided in Article 13, the dissolution of the Fund or as otherwise provided by
law, (ii) bring an action for partition against the Fund, (iii) cause the
termination and dissolution of the Fund by court decree or otherwise, except as
set forth in this Agreement, or (iv) demand or receive property other than cash
in return for his contribution. No Holder shall have priority over any other
Holder either as to the return of contributions of capital or as to Net Income,
Net Loss or Distributions. Other than upon the termination and dissolution of
the Fund as provided by this Agreement there has been no time agreed upon when
the contribution of each Holder may be returned.
16.5 Limitations on Power to Amend Agreement. Except as provided in
Section 15.2.18, and notwithstanding anything to the contrary contained in this
Agreement, this Agreement may not, without the consent of each of the Members
who would be adversely affected thereby, be amended to:
16.5.1 Convert a Holder into a Manager;
16.5.2 Modify the limited liability of a Holder;
16.5.3 Alter the interest of any Member in Net Income, Net
Loss or Distributions; or
16.5.4 Affect the status of the Fund as a partnership for
federal income tax purposes.
16.6 Member List. Upon the written request of a Member and for any
non-commercial purpose reasonably related to the exercise of rights under this
Agreement, the Manager will furnish to such Member or his representative, at his
expense, a list containing the name and address of the Units held of record by
each Member, as provided in Section 14.1.3.
16.7 Dissenters' Rights and Limitations on Mergers and Roll-ups.
16.7.1 Any proposal that the Fund enter into a Roll-Up will
require approval by Members of not less than 90% of the outstanding Units.
Members who dissent with respect to a Roll-Up proposal will have the rights of a
dissenting Member as provided under Sections 15679.1 through 15679.14 of the
California Act. The Fund shall not reimburse the sponsor of a proposed Roll-Up
for the costs of its proxy contest or any other costs of the transaction in the
event the Roll-Up is not approved by the Members as provided herein.
16.7.2 In connection with a proposed Roll-Up, an appraisal of
all Fund assets shall be obtained from a competent, independent expert (defined
as a Person with no current material or prior business or personal relationship
with the Manager or its Affiliates who is engaged to a substantial extent in the
business of rendering opinions regarding the value of assets of the type held by
the Fund, and who is qualified to perform such work). If the appraisal will be
included in a Prospectus used to offer the securities of a Roll-Up Entity, the
appraisal shall be filed with the SEC and the states as an Exhibit to the
Registration Statement for the offering. Accordingly, an issuer using the
appraisal shall be subject to liability for violation of Section 11 of the
Securities Act of 1933 and comparable provisions under state laws for any
material misrepresentations or material omissions in the appraisal. Fund assets
shall be appraised on a consistent basis. The appraisal shall be based on an
evaluation of all relevant information, and shall indicate the value of the
Fund's assets as of a date immediately prior to the announcement of the proposed
Roll-Up transaction. The appraisal shall assume an orderly liquidation of Fund
assets over a 12-month period. The terms of the engagement of the Independent
Expert shall clearly state that the engagement is for the benefit of the Fund
and its Holders. A summary of the independent appraisal, indicating all material
assumptions underlying the appraisal, shall be included in a report to the
Holders
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<PAGE>
in connection with a proposed Roll-Up transaction.
16.7.3 In connection with a proposed Roll-Up, the Person
sponsoring the Roll-Up transaction shall offer to Holders who vote "no" on the
proposal the choice of:
(a) accepting the securities offered in the proposed Roll-Up
transaction; or
(b) one of the following:
(i) remaining as Holders in the Fund, and
preserving their interests therein on the same terms and conditions as existed
previously; or
(ii) receiving cash in an amount equal to the
Holders' pro-rata share of the appraised value of the net assets of the Fund.
16.7.4 The Fund shall not participate in any proposed Roll-Up
transaction which would result in Holders having democracy rights which are less
than those provided for under this Agreement. If the resulting entity is a
corporation, the voting rights of Holders shall correspond to the voting rights
provided for in this Agreement to the greatest extent possible.
16.7.5 The Fund shall not participate in any proposed Roll-Up
transaction which includes provisions which would operate to materially impede
or frustrate the accumulation of shares by any purchaser of the securities of
the Roll-Up Entity (except to the minimum extent necessary to preserve the tax
status of the entity). The Fund shall not participate in any proposed Roll-Up
transaction which would limit the ability of a Holder to exercise the voting
rights of the securities of the Roll-Up Entity on the basis of the number of
Units held by that Holder.
16.7.6 The Fund shall not participate in any proposed Roll-Up
Transaction in which Holders' rights of access to the records of the Roll-Up
Entity will be less than those provided for under this Agreement.
17. TERMINATION OF A MANAGER AND TRANSFER OF THE MANAGER'S INTEREST
17.1 Removal or Withdrawal. The following conditions shall govern the
voluntary withdrawal or removal of the Manager:
17.1.1 The Manager may not voluntarily withdraw from the Fund
without the approval of Members holding more than 50% of the total outstanding
Units entitled to vote.
17.1.2 The Manager may be removed upon a vote of Holders
owning more than 50% of the total outstanding Units entitled to vote. Written
notice of removal of the Manager shall be served either by certified or by
registered mail, return receipt requested, or by personal service. Such notice
shall set forth the date upon which the removal is to become effective.
17.2 Other Terminating Events. In the event of the adjudication of
bankruptcy, filing of a certificate of dissolution, death or adjudication of
insanity or incompetency of the Manager (each of such events, as well as
removal, resignation and withdrawal of a Manager, being herein referred to as a
"Terminating Event"), the Fund shall be dissolved and shall be liquidated under
the provisions of Article
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19, subject to the provisions of Section 17.3.
17.3 Election of Successor Manager; Continuation of Fund Business. The
following provisions shall govern the election of a successor Manager and
continuation of the business of the Fund upon the occurrence of a Terminating
Event with respect to a Manager (the "Retiring Manager"):
17.3.1 If at the time of a Terminating Event the Fund has one
or more Managers other than the Retiring Manager, any remaining Manager or a
majority-in-interest of the Limited Members may elect, within 90 days
thereafter, to continue the Fund business, in which case the Fund shall not
dissolve. So long as there is at least one remaining Manager which so elects, or
if a majority-in-interest of the Members so elect and a remaining Manager does
not so elect, any remaining Manager which is not willing to elect to continue
the Fund business will be deemed to have been removed from the Fund by vote of
the Members.
17.3.2 If at the time of a Terminating Event the Retiring
Manager is the sole remaining Manager, the Fund shall be dissolved unless a
majority-in-interest of the Members elect to continue the Fund business. In the
event of such election, the Fund business may be continued if the Members making
such election, within 90 days after the occurrence of the Terminating Event,
elect a successor Manager and continue the Fund's business on the same terms and
conditions as are contained herein, but with a name which does not include or in
any way refer to the name of any Retiring Manager.
17.4 Admission of Successor or Additional Manager. The following
conditions shall be satisfied before any Person shall become a successor Manager
or an additional Manager:
17.4.1 Such Person shall have been elected in accordance with
Section 17.3 or 17.6;
17.4.2 Such Person shall have accepted and agreed to be bound
by all the terms and provisions of this Agreement;
17.4.3 If such Person is a corporation, it shall have provided
the Fund with evidence satisfactory to counsel for the Fund of its authority to
become a Manager and to be bound by this Agreement; and
17.4.4 Any amendments and filings required or appropriate
under the California Act shall have been made.
17.5 Effect of a Terminating Event. Upon the occurrence of a
Terminating Event, the following provisions shall be applicable:
17.5.1 The Retiring Manager shall immediately cease to be a
Manager and shall not have any right to participate in the management of the
affairs of the Fund or to receive any fees under this Agreement not already paid
or earned; provided, however, that the Retiring Manager shall receive all
amounts then accrued and payable by the Fund and shall be, and shall remain,
liable as a Manager for all obligations and liabilities incurred by the Fund
prior to the effective date of the Terminating Event, but shall be free from any
obligation or liability incurred on account of the activities of the Fund from
and after such time.
17.5.2 If the business of the Fund is continued, as
aforesaid, the Retiring Manager shall
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be entitled to receive from the Fund the then present fair market value of its
interest in the Fund, determined by agreement of the Retiring Manager and the
remaining or new Managers, or, if they cannot agree, by arbitration in
accordance with the then current rules of the American Arbitration Association.
The expense of such arbitration shall be borne equally by the Fund and the
Retiring Manager, and such arbitration shall be conducted in San Francisco,
California unless otherwise agreed by both parties. The Fund shall forthwith pay
to the Retiring Manager an amount equal to the then present fair market value of
the interest so determined. If the Retiring Manager has voluntarily withdrawn
from the Fund, payment shall be in the form of a non-interest bearing unsecured
promissory note with principal payable, if at all, out of Distributions the
Retiring Manager would otherwise have received under this Agreement had such
Manager not been terminated. If the Retiring Manager has been terminated
involuntarily, the payment shall be in the form of an interest bearing
promissory note payable in equal annual installments over a term of not less
than five years. Such payment when made shall constitute complete and full
discharge of all amounts to which the Retiring Manager is entitled in respect to
such interest.
17.5.3 All executory contracts between the Fund and the
Retiring Manager or any Affiliate thereof (unless such Affiliate is also an
Affiliate of the remaining or new Manager or Members) may be terminated by the
Fund effective upon written notice to the party so terminated. The Retiring
Manager or any Affiliate thereof (unless such Affiliate is also an Affiliate of
the remaining or new Manager or Members) may also terminate and cancel any such
executory contract effective upon 60 days' prior written notice of such
termination and cancellation given to the remaining or new Manager or Members,
if any, or to the Fund.
17.6 Election of Additional Manager. Members owning in excess of 50% of
the outstanding Units may at any time and from time to time elect an additional
Manager, and, upon satisfaction of the conditions set forth in Section 17.4, the
Person so elected shall be admitted as an additional Manager. Admission of an
additional Manager shall not cause dissolution of the Fund.
17.7 Assignment of Manager's Interest. The Manager may not transfer its
Membership in the Fund without the consent of Members owning in excess of 50% of
the total outstanding Units, unless such an assignment is to an entity which
succeeds to all of the assets of the assigning Manager and of which at least 80%
of the voting and beneficial interest is controlled by Persons controlling 80%
or more of the voting and beneficial interest of the assigning Manager. Any
entity to which the entire interest of a Manager in the Fund is assigned in
compliance with this Section 17.7 shall be substituted as a Manager by the
filing of appropriate amendments to this Agreement. Notwithstanding the
foregoing, the Manager may delegate to any of its subsidiaries or other
Affiliates responsibility for specific services to be performed for the Fund and
may assign all or a portion of the compensation due the Manager to such
subsidiaries or other Affiliates.
17.8 Members' Participation in Manager's Bankruptcy. In the event the
Manager is subject to a voluntary or involuntary petition for reorganization or
liquidation under the federal Bankruptcy Act, the Manager will cause separate
counsel to be retained on behalf of the Fund, at Fund expense, to represent the
Members' interests in the bankruptcy action. In such event, the Fund will also
bear any reasonable and necessary expenses of a duly appointed committee of
Members incurred while acting on behalf of all of the Members as a group in
connection with such bankruptcy action.
18. CERTAIN TRANSACTIONS
18.1 The Manager and its Affiliates, the Holders, any shareholder,
officer, director, Member or
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employee thereof, or any Person owning a legal or beneficial interest therein,
may engage in or possess an interest in any other business or venture of every
nature and description, independently or with others, including, but not limited
to, the ownership, financing, leasing, operation, management and brokerage of
equipment. Except as described in the Prospectus, and subject to their fiduciary
duties to the Fund, neither the Manager nor its Affiliates shall be obligated to
present to the Fund any particular investment opportunity, regardless of whether
such opportunity is of such character that the Fund could take advantage thereof
if it were presented to the Fund, and the Manager and its Affiliates shall have
the right to take for their own accounts (individually or otherwise) or to
recommend to others any such investment opportunity.
19. TERMINATION AND DISSOLUTION OF THE FUND
19.1 Termination and Dissolution. The Fund shall be terminated and
dissolved upon the earliest to occur of the following:
19.1.1 The withdrawal, removal, adjudication of bankruptcy,
insolvency, insanity or incompetency, death or dissolution of a Manager unless a
remaining Manager or a majority-in-interest of the Members, within 90 days of
the date of such event, elects to continue the business of the Fund, and, if
necessary, elects a replacement Manager, in the manner provided in Article 17;
provided that expenses incurred on behalf of the Manager and/or Members in the
continuation or reformation, or attempted continuation or reformation, of the
Fund hereunder shall be deemed expenses of the Fund;
19.1.2 The Members owning more than 50% of the total
outstanding Units vote in favor of dissolution and termination of the Fund;
19.1.3 The term of the Fund expires; or
19.1.4 The Fund disposes of all interests in Equipment and its
other assets and receives final payment in cash of the proceeds of such
dispositions.
19.2 Accounting and Liquidation. Upon the dissolution and termination
of the Fund for any reason, the Manager shall take full account of the Fund
assets and liabilities, shall liquidate the assets as promptly as is consistent
with obtaining the fair value thereof, and shall apply and distribute the
proceeds therefrom in the following order:
19.2.1 To the payment of creditors of the Fund but excluding
secured creditors whose obligations will be assumed or otherwise transferred on
the liquidation of Fund assets;
19.2.2 To the repayment of any outstanding loans made by the
Manager to the Fund; and
19.2.3 To the Manager and Holders in accordance with their
respective Capital Account balances, after giving effect to all allocations
described in Article 10 of this Agreement; provided, however, that prior to any
allocation under Section 10 of this Agreement, Gross Income shall be specially
allocated to the Manager to the extent, if any, necessary to cause its Capital
Account balance to be zero as of the close of such final taxable year (after
crediting the Manager's Capital Account with the Manager's share of Fund Minimum
Gain). For purposes of making the foregoing allocation, Net Income and Net Loss
for the final taxable year of the Fund shall first tentatively be computed by
including all
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Gross Income as an element thereof; then, to the extent, if any, that the
Capital Account balance of the Manager is negative as of the close of such final
taxable year (after giving effect to all Fund distributions), Gross Income shall
be separately stated and allocated away from the Holders and to the Manager
pursuant to this Section 19.2.3.
19.2.4 Distributions in liquidation shall be made by the end
of the taxable year in which the liquidation occurs or, if later, within 90 days
of the liquidating event and shall otherwise comply with Regulations Section
1.704-1(b).
20. SPECIAL POWER OF ATTORNEY
20.1 Execution of Power of Attorney. By executing this Agreement, each
Holder is hereby granting to the Manager a special power of attorney irrevocably
making, constituting and appointing ATEL, its duly appointed officers, and any
one of them, as the attorney-in-fact for such Holder, with power and authority
to act alone in his name and on his behalf to execute, acknowledge and swear to
the execution, acknowledgement and filing of the following documents:
20.1.1 This Agreement, the Articles of Organization, any
separate certificates, as well as any amendments to the foregoing which, under
the laws of the State of California or the laws of any other state, are required
to be filed or which the Manager deems advisable to file;
20.1.2 Any other instrument or document which may be required
to be filed by the Fund under the laws of any state or by any governmental
agency, or which the Manager deems advisable to file; and
20.1.3 Any instrument or document which may be required to
effect the continuation of the Fund, the admission of an additional or
substituted Holder, or the dissolution and termination of the Fund (provided
such continuation, admission or dissolution and termination are in accordance
with the terms of this Agreement), or to reflect any reductions in amount of
contributions of Members.
20.2 Special Power of Attorney. The special power of attorney being
granted hereby:
20.2.1 Is a special power of attorney coupled with an
interest, is irrevocable, shall survive the death or legal incapacity of the
granting Holder, and is limited to those matters herein set forth;
20.2.2 May be exercised by the Manager acting alone for each
Holder by a facsimile signature of such Manager or by one of its officers, or by
listing all of the Holders executing any instrument with a single signature of a
Manager, or of one of the Manager's officers, acting as attorney-in-fact; and
20.2.3 Shall survive an assignment by a Holder of all or any
portion of his Units except that, where the Assignee of the Units owned by a
Holder has been approved by the Manager for admission to the Fund as a
substituted Holder, the special power of attorney shall survive such assignment
for the sole purpose of enabling the Manager to execute, acknowledge and file
any instrument or document necessary to effect such substitution.
Atel8-1/operag6.wpd
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<PAGE>
21. INDEMNIFICATION
21.1 Indemnification of the Manager. The Fund, its receiver or its
trustee, shall indemnify, save harmless and pay all judgments and claims against
the Manager and any of its Affiliates who perform services for the Fund from any
liability, loss or damage incurred by them or the Fund by reason of any act
performed or omitted to be performed by them when acting in connection with the
business of the Fund, including costs and attorneys' fees and any amounts
expended in the settlement of any claims or liability, loss or damage; provided,
however, that, if such liability, loss or claim arises out of any action or
inaction of the Manager or Affiliates who perform services for the Fund, the
Manager or Affiliates who perform services for the Fund must have determined, in
good faith, that such course of conduct was in the best interest of the Fund and
did not constitute fraud, negligence, breach of fiduciary duty or misconduct by
the Manager or Affiliates who perform services for the Fund; and provided
further, that any such indemnification shall be recoverable only from the assets
of the Fund and not from the assets of the Holders. All judgments against the
Fund and the Manager, wherein a Manager is entitled to indemnification, must
first be satisfied from Fund assets before such Manager may be held responsible.
Persons entitled to indemnification hereunder shall be entitled to receive
advances for attorney's fees and other legal costs and expenses arising out of
claims made against them, provided that (i) no such advances may be made for
such fees, costs or expenses resulting from claims made by Holders; and (ii)
advances for such fees and expenses relating to claims made by parties other
than Holders may only be made if the action relates to the performance of duties
or services by the indemnified party on behalf of the Fund, the indemnified
party obtains an opinion of independent counsel that such party will be entitled
to indemnification pursuant to this Agreement under the specific circumstances
of the claim in question, and the indemnified party undertakes in writing prior
to receipt of such advances that such party will repay in full any such advanced
funds together with interest thereon in the event that, upon the ultimate
disposition of the claim, the party would not be entitled to indemnification
hereunder. Nothing contained herein shall constitute a waiver by a Holder of any
right which he may have against any party under federal or state securities
laws.
21.2 Limitations on Indemnification. Notwithstanding anything to the
contrary contained in the foregoing Section 21.1, neither the Manager nor any of
its Affiliates performing services for the Fund nor any party acting as a
broker-dealer shall be indemnified from any liability, loss or damage incurred
by them in connection with (i) any claim or settlement involving violations of
state or federal securities laws by the Manager or by any Affiliate performing
services for the Fund; or (ii) any liability imposed by law, such as liability
for fraud, bad faith or negligence; provided, however, that indemnification will
be allowed for settlements and related expenses of lawsuits alleging securities
law violations, and for expenses incurred in successfully defending such
lawsuits, provided that a court either (x) approves the settlement and finds
that indemnification of any payment in settlement and related costs should be
made; or (y) approves indemnification of litigation costs if a successful
defense is made, or a dismissal with prejudice is obtained, as to the indemnitee
on the merits of each count involving alleged securities law violations; and (z)
the parties seeking indemnification apprise the court of the positions of the
securities law administrators of any state in which the Units were offered or
sold, including the Massachusetts Securities Division, and the Securities and
Exchange Commission with respect to indemnification for securities laws
violations before seeking court approval for indemnification. Furthermore, the
Manager shall indemnify the Fund against any loss or liability which it may
incur as a result of the violation by the Manager or any of its Affiliates
performing services for the Fund of any state or federal securities laws.
21.3 Insurance. The Fund shall not pay for any insurance covering
liability of the Manager or any of its Affiliates for actions or omissions for
which indemnification is not permitted hereunder;
Atel8-1/operag6.wpd
B-39
<PAGE>
provided, however, that nothing contained herein shall preclude the Fund from
purchasing and paying for such types of insurance, including extended coverage
liability and casualty and worker's compensation, as would be customary for any
Person owning comparable Equipment and engaged in a similar business or from
naming the Manager and any of its Affiliates as additional insured parties
thereunder, provided that such addition does not add to the premiums payable by
the Fund.
22. MISCELLANEOUS
22.1 Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
parties hereto, notwithstanding that all of the parties are not signatory to the
original or the same counterpart.
22.2 Successors and Assigns. The terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of the successors and
assigns of the respective Members.
22.3 Severability. In the event any sentence or paragraph of this
Agreement is declared by a court of competent jurisdiction to be void, such
sentence or paragraph shall be deemed severed from the remainder of this
Agreement and the balance of this Agreement shall remain in effect.
22.4 Notices. All notices under this Agreement shall be in writing and
shall be given to the Person entitled thereto, by personal service or by mail,
posted to the address maintained by the Fund for such Person or at such other
address as he may specify in writing.
22.5 Captions. Article and section titles or captions contained in this
Agreement are inserted only as a matter of convenience and for reference. Such
titles and captions in no way define, limit, extend or describe the scope of
this Agreement nor the intent of any provision hereof.
22.6 Number and Pronouns. Whenever required by the context hereof, the
singular shall include the plural, and vice-versa; the masculine gender shall
include the feminine and neuter genders, and vice-versa.
22.7 Manager Address. The address of the Manager is:
ATEL Financial Corporation
235 Pine Street, 6th Floor
San Francisco, California 94104
22.8 Member Addresses. The names, addresses and capital contributions
of the Members are set forth on Exhibit I attached hereto, which exhibit shall
be maintained at the principal place of business of the Fund.
22.9 Construction. Notwithstanding the place where this Agreement may
be executed by any of the parties hereto, the parties expressly agree that all
the terms and provisions hereof shall be construed under the laws of the State
of California and that the Fund shall be governed by the California Act, as
amended, governing limited liability companies formed under California law.
Atel8-1/operag6.wpd
B-40
<PAGE>
22.10 Qualification to Do Business. In the event the business of the
Fund is carried on or conducted in states in addition to the State of
California, then the parties agree that this Fund shall exist under the laws of
each state in which business is actually conducted by the Fund, and they
severally agree to execute such other and further documents as may be required
or requested in order that the Manager may qualify the Fund to conduct business
in such states. The power of attorney granted to the Manager by each Holder in
Article 20 shall constitute authority for the Manager to perform the ministerial
duty of qualifying the Fund under the laws of any state in which it is necessary
to file documents or instruments of qualification. A Fund office or principal
place of business in a state may be designated from time to time by the Manager.
INITIAL MEMBERS:
ATEL FINANCIAL CORPORATION, Manager
By:________________________________
_____________________________
Linda Batt
_____________________________
Eliza Cash
atel8-1/operating3.ag
Atel8-1/operag6.wpd
B-41
<PAGE>
EXHIBIT I
Schedule of Members
Capital
Name Address Contribution
Linda Batt $250/25 Units
c/o ATEL Financial Corporation
235 Pine Street
6th Floor
San Francisco, CA 94104
Eliza Cash $250/25 Units
c/o ATEL Financial Corporation
235 Pine Street
6th Floor
San Francisco, CA 94104
ATEL Financial Corporation $100
235 Pine Street
6th Floor
San Francisco, CA 94104
Atel8-1/operag6.wpd
B-42
<PAGE>
EXHIBIT C
HOW TO INVEST
TO THE INVESTOR:
Prior to the satisfaction of the escrow condition (sale of 120,000 Units), make
your check payable to "U.S. Bank - ACEF VIII Escrow". Thereafter, make your
check payable to"ATEL Capital Equipment Fund VIII". Investments must be made in
increments of $10, minimum of $2,500 (or $2,000 for an IRA, Keogh or qualified
plan) in most states. See the discussion under Plan of Distribution-State
Requirements in the prospectus for exceptions.
IMPORTANT INSTRUCTIONS:
- ----------------------
Fully complete sections 1, 2, and 3 of the Subscription Agreement.
All subscribers must:
1) sign each appropriate section where indicated, 2) initial each appropriate
section (sections 3A - 3D) where indicated on the bottom of the subscription
agreement.
If you would like your distributions sent to an address other than your own
(mutual fund, bank, etc.). please fill in the optional check address section
(section 6).
ADD-ON INVESTMENTS
The subscription agreement accompanying additional investments in Fund VIII must
have an authorized signature of a Broker/Dealer, but does not require the
signature of the investor. Add-on investments must bear the exact name in which
the previous investment was registered, or a new signed subscription form will
be required.
FOREIGN INVESTOR OPTION
As described in the Prospectus, the Manager has elected to permit limited
investment in Units by nonresident alien investors. In section 1 of the
Subscription Agreement there are three boxes, one of which must be checked to
indicate whether an investor is a resident alien, nonresident alien or U.S.
citizen residing outside the United States. If none of the three boxes is
checked, the executed Subscription Agreement will constitute the investor's
representation that he or she is a U.S. citizen residing in the United States.
C-1
<PAGE>
TO THE SELLING REPRESENTATIVE:
Please complete the Broker/Dealer Information section (Box 7) using your office
address rather than the home office address. This section must be completed for
all investments, including add-on investments by previous subscribers. Please
make sure that the exact same name is used for the registered owner if the
investment is an additional subscription.
Please have the subscription document signed by your branch manager or other
authorized signatory.
Mail original white, pink and yellow copies
Retain blue copy for Broker/Dealer
Retain green copy for the investor unless otherwise specified by your home
office, (all IRA investments must be submitted directly to the custodian and
they will then forward the subscription on to ATEL) to:
ATEL SECURITIES CORPORATION
SUBSCRIPTION PROCESSING DESK
235 PINE STREET, Suite 600
SAN FRANCISCO, CA 94104
(415) 989-8800
(800) 543-ATEL
E-mail: [email protected]
- --------------------------------------------------------------------------
The investor whose signature appears in Section 2 on the reverse side hereof
(the "Investor") hereby subscribes for the number of Units of ATEL Capital
Equipment Fund VIII, LLC (the "Fund") set forth in Section I of this
subscription Agreement in the manner described in the prospectus to which this
agreement is an exhibit (the "Prospectus"). Prior to the satisfaction of the
escrow condition (sale of 120,000 Units), there is transmitted herewith as the
subscription price a check payable to "U.S. Bank - ACEF VIII Escrow" in the
amount required to purchase such Units ($10 per Unit). Such funds will be
promptly transmitted (as defined in Rule 15c2-4 under the Securities Exchange
Act of 1934 and NASD Notice to members 84-64). No subscription funds will be
released to the Fund unless and until subscriptions for a minimum of 120,000
units have been received and collected by the escrow agent prior to a date 12
months after the date of the Prospectus. After the escrow condition of 120,000
Units sold has been satisfied, checks should be made payable to "ATEL Capital
C-2
<PAGE>
Equipment Fund VIII". Minimum initial investment is 250 Units (200 Units for
Individual Retirement Accounts or Qualified Plans).
The Investor agrees that if this subscription is accepted it will be held,
together with the accompanying payment, on the terms described in the Prospectus
and that, if accepted as a holder of the Units ("Holder"), the Investor shall be
bound by the terms and conditions of the Operating Agreement set forth as
Exhibit B to the Prospectus, including the special power of attorney set forth
therein. The subscription may be cancelled by the subscriber at any time during
a period of five days after the subscriber has submitted this executed
subscription agreement to the Fund.
The assignability and transferability of the Units will be governed by the
Agreement and all applicable laws, and the Investor must have adequate means of
providing for his current needs and personal contingencies and must have no need
for liquidity in this investment.
The Investor may not be able to consummate a sale or transfer of the Units, or
any interest therein, or receive any consideration therefor, without the prior
written consent of the Commissioner of Corporations of the State of California,
except as permitted in the Commissioner's Rules, and the Units, or any document
of assignment or transfer evidencing the Units, will bear a legend reflecting
the substance of the foregoing understanding if such Units have been issued
pursuant to qualification under the California Corporate Securities Law of 1968.
The undersigned acknowledges that U.S. Bank Trust National Association is acting
only as an escrow agent in connection with the offering of the Units, and has
not endorsed, recommended or guaranteed the purchase, value or repayment of such
Units.
INSTRUCTIONS FOR COMPLETING THE SUBSCRIPTION AGREEMENT Note- Please type or
print legibly when completing the Subscription Agreement.
Section 1: Units Purchased.
- - Fill in the total dollar amount and the number of Units to be acquired.
Please note there are no fractional Units. All purchases must be in
increments of $10.
- - Indicate whether this is an original investment in the Fund or an
additional investment to an existing Fund account with the exact same
registration by checking the appropriate box. Please note the minimum
requirements. Only the dollar amount, subscriber name and broker/dealer
information sections of the subscription forms need be completed for
additional subscriptions by the same investor.
C-3
<PAGE>
Section 2: Registered Owner.
- - Fill in the name(s) and addresses for the investment as they should
appear in the registration.
- - Check the applicable citizen status boxes.
- - Enter the appropriate taxpayer identification number for this
investment, depending on the type of ownership. For IRAs and Keoghs
please include both the custodian's taxpayer identification and
investor's social security number.
- - Check whether monthly or quarterly distributions are desired.
- - Please read the Subscription Agreement, then sign and date the form.
- - Single Ownership - one signature required
- - Joint Tenants - all parties must sign
- - Community Property - one signature required
- - Tenants in Common - all parties must sign
- - Tenants in Entirety - one signature required
- - In all other cases, the custodian, trustee, general partner or
authorized corporate officer must sign. Where the documents
establishing such representative capacity require more than one
signature for execution of instruments on behalf of the represented
entity, then all signatures required by such documents are required
here.
Section 3: Subscriber Confirmation of Suitability
- - Each item must be initialed.
Section 4: Legal Form of Ownership.
- - Mark only one box. Fill in any information requested and note whose
signature(s) is (are) required in Section 2.
Section 5: Investor Mailing Addresses.
- - Fill in name and address if different from Section 1, as with IRAs and
Keoghs.
Section 6: Optional Check Addresses.
- - Complete this section only if you want your distribution checks mailed
to an address other than that shown in Section 2.
Section 7: Broker/Dealer Information.
- - Fill in the name of the licensed Broker/Dealer firm, the name of the
Account Executive, and the telephone number and mailing address of the
Account Executive. The name, address and phone number of the Account
Executive are required so he/she can receive copies of all investor
communications.
- - An authorized Branch Manager or Registered Principal of the Broker
C-4
<PAGE>
/Dealer firm must sign the form. Orders cannot be accepted without
Broker/Dealer authorization.
Mailing Address.
- - Mail the completed form with a check payable as indicated in Section 1
to:
ATEL Securities Corporation
Attention: Subscription Processing Desk
235 Pine Street, Suite 600
San Francisco, CA 94104
If you have any additional questions about completing this Subscription
Agreement, please call ATEL Securities Corporation Subscription Processing
Desk at (800) 543-ATEL.
- ---------------------------------------------------------------------------
ATEL CAPITAL EQUIPMENT FUND VIII, LLC - SUBSCRIPTION AGREEMENT
Please type or print the following information: 1.UNITS PURCHASED Make checks
payable to "ATEL Capital Equipment Fund VIII" $_________ is for the purchase, as
a Holder, of _______ Units
and should be registered as indicated in the Registered Owner section
below.
2. REGISTERED OWNER.
Name(s) and addresses will be recorded exactly as printed below.
(Include custodial address if applicable.)
___Mr. ___Ms. ___Mr. and Mrs. ___Mrs.
Investor(s) Name and/or
Custodian/Nominee_________________________________________________________
Investor Name(s)__________________________________________________________
Address___________________________________________________________________
City ______________________________________State_____ZipCode______________
Investor Phone Number (____)______________E-mail__________________________
Investor Account # (if any)_______________________________________________
X______________________________________________Date_______________________
Subscriber's Signature
X______________________________________________Date_______________________
Subscriber/Custodian/Nominee or Authorized Signature
C-5
<PAGE>
___INITIAL INVESTMENT $10 per unit ($2,500/250 Unit Minimum, $2,000/200 Unit
Minimum for IRA or Qualified Plan, unless a higher minimum is required in the
investor's state - see the Prospectus)
___ ADDITIONAL INVESTMENT ($500/50 Units, unless a higher minimum is required
in the investor's state - see the Prospectus)
___ Check if you are a resident alien.
___ Check if you are a nonresident alien (please include W-8 form).
___ Check if you are a U.S. citizen residing outside the U.S.
TAXPAYER IDENTIFICATION NUMBER
Note: If the account is in more than one name, the number should be that of
the first person listed.
- -- -- -- -- -- -- -- -- --
Include BOTH numbers for IRAs and Keoghs.
SOCIAL SECURITY NUMBER
- -- -- -- -- -- -- -- -- --
HAVE YOU INVESTED IN ANY PRIOR ATEL FUND?
___YES ___NO
DISTRIBUTION OPTION (check one)
___ Quarterly ___Monthly
PRIVACY ELECTION (check if desired)
____ By checking this box the undersigned directs the Manager to treat all
information concerning the undersigned as confidential, and not to disseminate
any such information to any party, without the undersigned consent, except as
may be required under an applicable statute or regulation or by the order
of a court or governmental agency.
No representations should be relied upon other than those contained in the
Prospectus, as amended and/or supplemented. The subscriber represents, warrants
and agrees as set forth on the reverse side of this signature page; further, the
undersigned declares under penalty of perjury that to the best of his knowledge
the information supplied above is true and correct and may be relied upon by the
Manager and the Fund in connection with his investment as a Holder in the Fund.
The subscriber hereby subscribe(s) for the purchase of fully-paid and
nonassessable Units of the Fund as indicated.
C-6
<PAGE>
3. SUBSCRIBER AGREES AS FOLLOWS (EACH ITEM MUST BE INITIALED): In order to
induce the Manager to accept this subscription, the Investor hereby represents
to you as follows (initial in the space provided): A. The Investor has (a) a net
worth of at least $150,000 in excess of his investment in Units, or (b) has a
net worth of at least $45,000 in excess of his investment in Units and had
during the last tax year or estimates that he will have during the current tax
year a minimum of $45,000 annual gross income. In all cases net worth is
exclusive of home, home furnishings and automobiles. The Investor further
represents that he/she satisfies any other minimum income and/or net worth
standards imposed by the jurisdiction in which he/she resides, if any different
standards are set forth in the Prospectus or any supplement thereto.
INITIAL HERE________
B. If the undersigned is acting in a representative capacity for a corporation,
partnership, trust or other entity, or as agent for any person or entity, he
hereby represents and warrants that he has full authority to enter into this
agreement in such capacity. INITIAL HERE________
C. If the undersigned is purchasing the Units subscribed for hereby in a
fiduciary capacity, the representations and warranties herein shall be deemed to
have been made on behalf of the person or persons for whom the undersigned is so
purchasing. INITIAL HERE________
D. Under the penalties of perjury, the undersigned certifies that (l) the number
provided herein is his correct Taxpayer Identification Number; and (2) he is not
subject to backup withholding either because he has not been notified that he is
subject to backup withholding as a result of a failure to report all interest or
dividends, or the Internal Revenue Service has notified him that he is no longer
subject to backup withholding. (If the undersigned is currently subject to
backup withholding, he has stricken the language under clause (2) above before
signing). INITIAL HERE________
4. LEGAL FORM OF OWNERSHIP (Check Only One) ___ Single Ownership ___ Joint
Tenants With Rights of Survivorship ___ Husband and Wife as Community Property
___ Tenants in Common ___ Tenants in Entirety ___ Sep IRA ___ IRA __regular
__rollover ___ Trust - Trust Date (Month/Day/Year) ___/___/___ ___ Custodian ___
Custodian for___________________________________ ___ UGMA / UTMA - State
of:_______ ___ Pension Plan ___ Profit Sharing Plan
C-7
<PAGE>
___ Corporation
___ Partnership
___ Non-Profit Organization
___ Other__________________
C-8
<PAGE>
5. INVESTOR MAILING ADDRESS
(if different from above, as with IRAs and Keoghs)
Name________________________________________________________________________
Name________________________________________________________________________
Address_____________________________________________________________________
City__________________________________________State_____Zip Code____________
Investor Phone Number (_____)_______________________________________________
6. OPTIONAL CHECK ADDRESS If you would like your distribution checks mailed to
an address other than registered owner's address, please complete.
___ Designated for all Units or,
___ Designated for Partial Units ________
Receiving Entity____________________________________________________________
Address_____________________________________________________________________
City__________________________________________State_____Zip Code____________
Fund Name______________________________Account Number_______________________
7. BROKER/DEALER INFORMATION The Broker/Dealer must sign below to complete
order. Broker/Dealer hereby warrants that it is a duly licensed Broker/Dealer
and may lawfully offer Units in the state designated as the Investor's residence
and, further, that it has reasonable grounds to believe, based on information
obtained from the Subscriber concerning his investment objectives, other
investments, financial situation and needs and any other information known by
the Broker/Dealer, that investment in the Fund is suitable for the Subscriber in
light of his/her financial position, net worth and other suitability
characteristics, and that the Broker/Dealer has informed the Subscriber as to
the limited liquidity and marketability of the Units. The undersigned
Broker/Dealer warrants that a current Prospectus was delivered to the
Subscriber.
Licensed Firm Name__________________________________________________________
Account Executive Name_________________________________B/D Rep #____________ A/E
Mailing Address____________________________________________Suite#_______
City__________________________________________State_____Zip Code____________
Telephone(____)____________________ NumberFax(____)_________________________
E-mail______________________________________________________________________
X_____________________________________________________Date__________________
Authorized signature (Branch Manager or Registered Principal).
Order cannot be accepted without signature.
This transaction, for Blue Sky purposes, took place in the State of ______.
C-9
<PAGE>
ACCEPTANCE BY MANAGER
FOR MANAGER'S USE ONLY
Received and Subscription Accepted
ATEL Financial Corporation, Manager
By__________________________________________________________________________
Amount___________________________ Date______________ B/D Rep #______________
RETURN TOP 3 COPIES: WHITE - ATEL COPY, YELLOW - BROKER/DEALER COPY,
PINK - INVESTOR COPY
RETAIN: BLUE - BROKER/DEALER COPY, GREEN - INVESTOR COPY
ATEL SECURITIES CORPORATION
235 PINE STREET - 6th FLOOR - SAN FRANCISCO, CA 94104
(800) 543-2835 - E-Mail: [email protected]
C-10
<PAGE>
ATEL Capital Equipment Fund VIII, LLC
Supplement dated August 31, 1999 to the Prospectus dated December 7, 1998
of ATEL Capital Equipment Fund VIII, LLC (the "Fund")
TABLE OF CONTENTS
Status of the offering . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Equipment acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Management's Discussion and Analysis . . . . . . . . . . . . . . . . . . . 5
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Prior Performance Information . . . . . . . . . . . . . . . . . . . . . . A-1
The Fund's Prospectus is hereby supplemented as set forth on the following
pages. This supplement is a part of and must be accompanied by the Fund's
Prospectus dated December 7, 1998. Terms not otherwise defined herein have the
meaning as defined in the Prospectus.
Status of the Offering
As of January 13, 1999, the Fund had received and accepted subscriptions for
120,000 Units ($1,200,000). As a result, the escrow condition was satisfied and
the subscription proceeds were released to the Fund.
As of August 31, 1999, the Fund had received and accepted subscriptions for
5,335,298 Units for total subscription proceeds in the amount of $53,352,980. As
of such date, the Fund had committed all of such proceeds to equipment costs,
offering and organization expenses and capital reserves.
1
<PAGE>
Equipment Acquisitions
Set forth below is a summary of the Equipment acquisitions and leases entered
into or identified by the Fund as of the date of this supplement.
<TABLE>
<CAPTION>
EQUIPMENT ACQUISITIONS
Equipment Commence Acquisition Indebt- Lease Lease
Lessee Type Date(s) (1) Price (2) edness (3) Term (4) Type (5) Notes
------ ---- ----------- --------- ---------- -------- -------- -----
Leases Funded:
<S> <C> <C> <C> <C> <C> <C> <C>
BJ's Wholesale Club, Inc. Forklifts Apr-99 $ 594,748 $ - 60 HP
CVS Corporation Telecommunications Oct-99 102,961 - 60 HP
CVS Corporation Materials Handling Jan-00 87,525 - 60 HP
Consolidated Diesel Company Telephone System Feb-99 406,030 - 55 HP
General Electric Company Machining centers Mar-99 352,000 - 84 HP (6)
General Electric Company Extruder systems May-99 281,595 - 60 OL (7)
General Electric Company Machining centers May-99 670,672 - 84 HP (6)
General Electric Company Machining centers Aug-99 to Sep-99 483,317 - 84 HP (6)
General Electric Company Radiographic Inspection Jun-99 43,875 - 84 HP (6)
Facility
General Electric Company Vaccum Blazing Machine Oct-99 76,000 - 84 FP (6)
NVR, Inc. Home Manufacturing Aug-99 193,414 - 84 FP
Overnite Transporattion Conventional Tractors Oct-99 552,488 - 48 OL
Company
Omnicom Group, Inc. Office Automation Oct-98 1,749,913 - 36 HP (8)
Omnicom Group, Inc. Office Furniture Oct-98 321,976 - 60 FP (8)
Overnite Transportation Conventional Tractors Apr-99 2,080,400 - 48 OL
Company
Sebastiani Vineyards, Inc. Bottle Filler Jul-99 310,970 - 84 FP
Seamex International, Ltd. Tug Supply Vessel Dec-98 3,952,500 - 44 OL (9)(10)
Stewart & Stevenson Gas Compressors Jul-99 6,272,782 - 78 HP
Services, Inc.
Southwest Airlines Company Boeing 737 Aircraft Mar-99 3,238,500 - 50 OL (9)
Staples, Inc. Point of sale Jan-99 2,410,939 - 60 FP
Staples, Inc. Point of sale Apr-99 681,910 - 60 FP
Staples, Inc. Point of sale May-99 204,571 - 60 FP
Staples, Inc. Forklifts May-99 101,480 - 48 OL
Sysco Food Services Albany Refrigerated Trailers Sep-99 519,620 - 96 FP
TASC, Inc. Office Automation Jul-99 494,787 - 36 FP
TASC, Inc. Office Automation Oct-99 26,094 - 36 FP
Transamerica Leasing, Inc. Intermodal Containers Dec-98 10,837,500 - 12 FP (11)
Universal City Development Point of sale Apr-99 668,474 - 60 FP
Partners
Universal City Florida Hotel Hotel Laundry Sep-99 3,869,513 - 84 FP
Venture
Universal City Florida Partners Office Automation Oct-99 221,761 - 36 HP
Universal Studios Florida Office Automation Jul-99 487,909 - 36 FP
Williams Distributed Power Micro Turbine Systems Feb-99 to Dec-99 280,500 - 60 HP (12)
Services, Inc.
----------------- -----------
Total funded as of August 31, 1999: 42,576,724 -
----------------- -----------
Leases Committed:
Emery Worldwide Airlines Aviation Oct-99 5,700,000 - 32 OL
CVS Pharmacy/SOMA Telecommunications Oct-99 397,039 - 60 FP
FINNAIR OYJ Aviation Oct-99 15,600,000 4,100,000 41 OL
General Electric Company Manufacturing May-99 to Oct-99 1,498,219 - 84 HP (6)
General Electric Company Manufacturing May-99 to Oct-99 2,747,940 - 84 HP (6)
General Electric Company Manufacturing May-99 to Oct-99 124,172 - 84 HP (6)
General Electric Company Manufacturing May-99 to Oct-99 30,000 - 60 OL (7)
Sebastiani Vineyards, Inc. Food Processing Oct-99 41,914 - 84 HP
TASC, Inc. Office Automation May-99 to Oct-99 163,110 - 36 FP
Universal Studios Florida Point of sale May-99 to Oct-99 144,021 - 36 HP
Universal City Florida Office Automation May-99 to Dec-99 425,210 - 36 HP
Partners
Williams Distributed Power Micro Turbine Systems Dec-99 3,544,500 - 60 HP (12)
Services, Inc.
----------------- -----------
Total committed as of August 31, 1999: 30,416,125 4,100,000
---------------- ------------
Total Acquisition Price: $ 72,992,849 $ 4,100,000
================ ============
</TABLE>
2
<PAGE>
NOTES
(1) In many cases, a Lease transaction is funded over a period of time
according to the Lessee's requirements. Therefore, "Commence Date(s)" expressed
as a range represents multiple Lease commencement dates occurring or anticipated
under the same Lease line.
(2) "Acquisition Price" includes either amounts committed to Lessees for
funding by the Program, or actual Equipment acquisition costs as of April 30,
1999. All figures are rounded to the nearest dollar. For any transactions which
are not fully funded, the "Acquisition Price" may change as a result of ongoing
fundings. To the extent that the transaction is not fully funded, the
information in the table represents the Managing Member's best estimates as to
the size, timing and terms of the transaction upon full funding, based on the
outstanding lease commitment, its discussions with the lessee, the current and
anticipated availability of Fund capital and other factors. There can be no
assurance, however, that the portion of the transaction which has not been
funded will be completed as described.
(3) "Indebtedness" is the original principal amount of the debt acquired or
assumed by the Fund in order to acquire the Equipment and leverage the
Acquisition Price of the Equipment. Although transactions may originally be
purchased for all cash, the Managing Member may subsequently leverage equipment
in order to achieve an overall debt-equity balance for the portfolio.
(4) "Lease Term" is expressed in terms of months, although actual Lease
Terms may be monthly, quarterly, semiannual or annual.
(5) A designation of "FP" indicates that the aggregate rents to be received
during the Lease Term equal or exceed the Acquisition Price of the Equipment. A
designation of "HP" indicates that the aggregate rents to be received during the
Lease Term equal or exceed 90% of the Acquisition Price of the Equipment. A
designation of "OL" indicates that the aggregate rents to be received during the
Lease Term are less than 90% of the Acquisition Price of the Equipment.
(6) Lessee is General Electric Company, by its division GE Aircraft
Engines.
(7) Lessee is General Electric Company, by its division GE Plastics.
(8) Guaranteed by Omnicom Group, Inc. Actual lessees are various
subsidiaries of Omnicom Group Inc.: The DDB Needham Worldwide Communications
Group Inc.; Griffin Bacal Inc.; DDB Needham Chicago, Inc.; DDB Needham Dallas,
Inc.; PGC Advertising, Inc.; The Focus Agency, LP.; Elgin DDB Inc.; Group
Management Services and TLP, Inc.
(9) Asset is held by a special purpose entity. Acquisition cost represents
51% of the total cost. The remaining 49% is owned by another program and
continues to be managed by ATEL.
(10) Guaranteed 40% by Seacor Smit, Inc. and 60% by Trasportacion Maritina
Mexicana.
(11) Assets are on short-term sub-leases with various sub-lessees.
(12) Guaranteed by Williams Companies, Inc.
3
<PAGE>
Distributions
The following table is a summary of cash distributions by the Fund to Holders to
the date of this Supplement. Distributions may be characterized for tax,
accounting and economic purposes as a return of capital, a return on capital or
a portion of each. Generally, the portion of each cash distribution by a company
which exceeds its net income for the fiscal period would constitute a return of
capital. On this basis, all of the distributions to date of the Fund would
constitute a return of capital. The source of all cash distributions has been
Cash from Operations. Cash from Operations is defined in the Limited Liability
Company Operating Agreement (Operating Agreement) as follows: "Cash from
Operations" shall mean the excess of Gross Revenues over cash disbursements
(including the Asset Management Fee and amounts reinvested by the Fund in
Equipment in compliance with Section 15.4.18) without reduction for depreciation
and amortization of intangibles such as organization and underwriting costs but
after reasonable allowance for cash repairs, replacements, contingencies and
anticipated obligations, as determined by the Manager. Cash from Operations
shall not include Cash from Sales or Refinancing or Cash from Reserve Account."
<TABLE> <CAPTION>
Weighted
Total Average
Distribution Month Return of Total Distribution Units
Period (1) Paid Capital Distribution per Unit Outstanding
---------- ---- ------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
January 1999 February 1999 $ 9,560 $ 9,560 $ 0.0667 143,400
February 1999 March 1999 38,107 38,107 0.0667 571,605
March 1999 April 1999 80,800 80,800 0.0667 1,212,000
April 1999 May 1999 121,478 121,478 0.0667 1,822,170
May 1999 June 1999 160,251 160,251 0.0667 2,403,765
June 1999 July 1999 199,877 199,877 0.0667 2,998,155
July 1999 August 1999 240,041 240,041 0.0667 3,600,615
August 1999 September 1999 282,900 282,900 0.0667 4,243,500
------------------ ----------------- -------------
249,945 249,945 $ 0.5333
=============
January - March 1999 April 1999 19,226 19,226 0.2000 96,130
April - June 1999 July 1999 89,531 89,531 0.2000 447,655
------------------ ----------------- =============
$ 269,171 $ 269,171 $ 0.4000
================== ================= =============
</TABLE>
(1) Investors may elect to receive their distributions either monthly or
quarterly. See "Timing of Distributions" on Page 56 of the Prospectus. The
monthly distributions in the table include only those distributions made to
investors on a monthly basis. The quarterly distributions in the table include
only those distributions made to investors on a quarterly basis.
4
<PAGE>
Management's Discussion and Analysis
Capital Resources and Liquidity
During the eight months of 1999, the Company's primary activities were raising
funds through its offering of Limited Liability Company Units (Units) and
engaging in equipment leasing activities. Through August 31, 1999, the Company
had received subscriptions for 5,335,298 Units ($53,352,980) all of which were
issued and outstanding.
During the funding period, the Company's primary source of liquidity is
subscription proceeds from the public offering of Units. The liquidity of the
Company will vary in the future, increasing to the extent cash flows from leases
exceed expenses, and decreasing as lease assets are acquired, as distributions
are made to the members and to the extent expenses exceed cash flows from
leases.
As another source of liquidity, the Company has contractual obligations with a
diversified group of lessees for fixed lease terms at fixed rental amounts. As
the initial lease terms expire the Company will re-lease or sell the equipment.
The future liquidity beyond the contractual minimum rentals will depend on the
Managing Member's success in re-leasing or selling the equipment as it comes off
lease.
The Company participates with the Managing Member and certain of its affiliates
in a $95,000,000 revolving line of credit with a financial institution. The line
of credit expires on January 28, 2000.
The Company anticipates reinvesting a portion of lease payments from assets
owned in new leasing transactions. Such reinvestment will occur only after the
payment of all obligations, including debt service (both principal and
interest), the payment of management and acquisition fees to the Managing Member
and providing for cash distributions to the Limited Partners.
The Company currently has available adequate reserves to meet contingencies, but
in the event those reserves were found to be inadequate, the Company would
likely be in a position to borrow against its current portfolio to meet such
requirements. The Managing Member envisions no such requirements for operating
purposes.
No commitments of capital have been or are expected to be made other than for
the acquisition of additional equipment. Such commitments totaled approximately
$30,416,000 as of August 31, 1999.
If inflation in the general economy becomes significant, it may affect the
Company inasmuch as the residual (resale) values and rates on re-leases of the
Company's leased assets may increase as the costs of similar assets increase.
However, the Company's revenues from existing leases would not increase, as such
rates are generally fixed for the terms of the leases without adjustment for
inflation.
If interest rates increase significantly, the lease rates that the Company can
obtain on future leases will be expected to increase as the cost of capital is a
significant factor in the pricing of lease financing. Leases already in place,
for the most part, would not be affected by changes in interest rates.
Cash Flows
During the first two quarters of 1999, the Company's primary source of liquidity
was the proceeds of its offering of Units.
Sources of cash flows from operating activities consisted primarily of direct
financing lease revenues.
Rents from direct financing leases were the only source of cash from investing
activities. Uses of cash for investing activities consisted of cash used to
purchase operating and direct financing lease assets and payment of initial
direct costs related to lease asset purchases.
The only source of cash from financing activities was the proceeds of the
Company's public offering of Units of Limited Liability Company interest.
Financing uses of cash included payments of syndication costs associated with
the offering and distributions to the members.
5
<PAGE>
Results of operations
On January 13, 1999, the Company commenced operations. Operations resulted in a
net loss of $238,571 for the first half of the year and $15,431 for the second
quarter. The Company's primary source of revenues is from operating leases. In
future periods, operating leases are also expected to be the most significant
source of revenues. Depreciation is related to operating lease assets and thus,
to operating lease revenues. It is expected to increase in future periods as
acquisitions continue.
Asset management fees are based on the gross lease rents of the Company plus
proceeds from the sales of lease assets. They are limited to certain percentages
of lease rents, distributions to members and certain other items. As assets are
acquired, lease rents are collected and distributions are made to the members,
these fees are expected to increase.
Interest expense for the first half of 1999 related to the borrowings under the
line of credit incurred by an affiliate of the Managing Member. It included all
amounts related to those borrowings, going back as far as November 1998 when the
Managing Member started to fund the related transactions on behalf of the
Company. All of the revenues and related carrying costs for these transactions
were attributed to the Company in the first half of 1999.
Results of operations in future periods are expected to vary considerably from
those of the first half of 1999 as the Company continues to acquire significant
amounts of lease assets.
Experts
The financial statements of ATEL Capital Equipment Fund VIII, LLC at December
31, 1998, and for the period from July 31, 1998 (inception) through December 31,
1998 and the consolidated balance sheet of ATEL Financial Corporation at July
31, 1999, appearing in this supplement to the Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
6
<PAGE>
FINANCIAL STATEMENTS
Set forth below are the following financial statements:
ATEL Capital Equipment Fund VIII, LLC
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . F.-.2.
Balance Sheet, December 31, 1998 . . . . . . . . . . . . . . . . . . . F - 3
Statement of Changes in Members' Capital for the Period from
July 31, 1998 (inception) through December 31, 1998 . . . . . . . . F - 3
Statement of Cash Flows for the Period from July 31, 1998 (inception)
through December 31, 1998 . . . . . . . . . . . . . . . . . . . . . F - 3
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . .F - 4
Balance Sheets, June 30, 1999 (Unaudited) and December 31, 1998 . . . .F.-.6.
Statement of Operations for the three and six month periods ended
June 30, 1999 (Unaudited) . . . . . . . . . . . . . . . . . . . . . F - 7
Statement of Changes in Members' Capital for the six month period
ended June 30, 1999 (Unaudited) . . . . . . . . . . . . . . . . . . F - 7
Statement of Cash Flows for the three and six month periods ended
June 30, 1999 (Unaudited) . . . . . . . . . . . . . . . . . . . . . F - 8
Notes to Financial Statements (Unaudited) . . . . . . . . . . . . . . .F - 9
ATEL Financial Corporation and Subsidiary
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . F - 13
Consolidated Balance Sheet, July 31, 1999 . . . . . . . . . . . . . . .F - 14
Notes to Consolidated Balance Sheet, July 31, 1999 . . . . . . . . . . F - 15
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Members
ATEL Capital Equipment Fund VIII, LLC
We have audited the accompanying balance sheet of ATEL Capital Equipment Fund
VIII, LLC as of December 31, 1998, and the related statements of changes in
members' capital and cash flows for the period from July 31, 1998 (inception)
through December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ATEL Capital Equipment Fund
VIII, LLC at December 31, 1998, and its changes in members' capital and cash
flows for the period from July 31, 1998 (inception) through December 31, 1998,
in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
San Francisco, California
January 25, 1999
F-2
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
(A Development Stage Enterprise)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Cash $ 600
========
LIABILITIES AND MEMBERS' CAPITAL
Members' capital:
Managing Member $ 100
Initial Members 500
--------
Total members' capital $ 600
========
STATEMENT OF CHANGES IN MEMBERS' CAPITAL
FOR THE PERIOD FROM JULY 31, 1998 (INCEPTION)
THROUGH DECEMBER 31, 1998
Initial Members Managing
Units Amount Member Total
Capital contributions 50 $ 500 $ 100 $ 600
============ ================ ============== ===========
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JULY 31, 1998 (INCEPTION)
THROUGH DECEMBER 31, 1998
Financing activities:
Capital contributions received $ 600
-------
Net increase in cash 600
-------
Cash at end of period $ 600
=======
See accompanying notes.
F-3
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. Organization and Limited Liability Company matters:
ATEL Capital Equipment Fund VIII, LLC (a development stage enterprise)(the
Company), was formed under the laws of the State of California on July 31, 1998,
for the purpose of acquiring equipment to engage in equipment leasing and sales
activities. The Company shall continue until December 31, 2019. The Managing
Member of the Company is ATEL Financial Corporation (ATEL), a California
corporation. Contributions in the amount of $600 had been received as of
December 31, 1998, $100 of which represented the Managing Member's (ATEL
Financial Corporation's) (ATEL's) continuing interest, and $500 of which
represented the Initial Members' capital investment. Each Member's personal
liability for obligations of the Company generally will be limited to the amount
of their respective contributions and rights to undistributed profits and assets
of the Company.
As of December 31, 1998, the Company had not commenced operations other than
those relating to organizational matters. The Company, or ATEL on behalf of the
Company, will incur costs in connection with the organization, registration and
issuance of the Limited Liability Company Units (Units). The amount of such
costs to be borne by the Company is limited by certain provisions of the Limited
Liability Company Operating Agreement (Operating Agreement).
2. Income taxes:
The Company does not provide for income taxes since all income and losses are
the liability of the individual members and are allocated to the members for
inclusion in their individual tax returns.
3. Members' capital:
As of December 31, 1998, 50 Units were issued and outstanding. The Company is
authorized to issue up to 15,000,000 additional Units.
The Company Net Income, Net Losses, and Distributions are to be allocated 92.5%
to the Members and 7.5% to ATEL.
4. Commitments and management:
The terms of the Operating Agreement provide that ATEL and/or affiliates are
entitled to receive certain fees, in addition the allocations described above,
which are more fully described in Section 8 of the Operating Agreement. The
additional fees to management include fees for equipment management and resale.
ATEL or an Affiliate may purchase equipment in its own name, the name of an
Affiliate or the name of a nominee, a trust or otherwise and hold title thereto
on a temporary or interim basis (generally not in excess of six months) for the
purpose of facilitating the acquisition of such equipment or the completion of
manufacture of the equipment or for any other purpose related to the business of
the Company, provided, however that: (i) the transaction is in the best interest
of the Company; (ii) such equipment is purchased by the Company for a purchase
price no greater than the cost of such equipment to the Managing Member or
Affiliate (including any out-of-pocket carrying costs), except for compensation
permitted by the Operating Agreement; (iii) there is no difference in interest
terms of the loans secured by the equipment at the time acquired by ATEL or
Affiliate and the time acquired by the Company; (iv) there is no benefit arising
out of such transaction to ATEL or its Affiliate apart from the compensation
otherwise permitted by the Operating Agreement; and (v) all income generated by,
and all expenses associated with, equipment so acquired shall be treated as
belonging to the Company.
F-4
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
5. Line of credit:
The Company participates with ATEL and certain of its Affiliates in a
$90,000,000 revolving credit agreement with a group of financial institutions
which expires on January 31, 2000. The agreement includes an acquisition
facility and a warehouse facility which are used to provide bridge financing for
assets on leases. Draws on the acquisition facility by any individual borrower
are secured only by that borrower's assets, including equipment and related
leases. Borrowings on the warehouse facility are recourse jointly to certain of
the Affiliates, the Company and the Managing Member.
The credit agreement includes certain financial covenants applicable to each
borrower. The Company was in compliance with its covenants as of December 31,
1998. At December 31, 1998, $13,070,344 was available under this agreement.
6. Subsequent events:
As of February 28, 1999, the Company had received and accepted subscriptions for
966,081 Units ($9,660,810), in addition to the Units issued to the Initial
Members. As of that date, the Company had purchased assets with total cost of
$4,039,115.
F-5
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
BALANCE SHEETS
JUNE 30, 1999 (Unaudited) AND DECEMBER 31, 1998
ASSETS
1999 1998
---- ----
Cash and cash equivalents $ 4,777,792 $ 600
Accounts receivable 991,095 -
Investments in leases 28,628,809 -
---------------- -----------------
Total assets $ 34,397,696 $ 600
================ =================
LIABILITIES AND MEMBERS' CAPITAL
Accounts payable $ 242,835
Unearned operating lease income 49,766
----------------
Total liabilities 292,601
Members' capital:
Managing member (17,793) $ 100
Other members 34,122,888 500
---------------- -----------------
Total members' capital 34,105,095 600
---------------- -----------------
Total liabilities and members' capital $ 34,397,696 $ 600
================ =================
See accompanying notes.
F-6
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
STATEMENTS OF OPERATIONS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1999
(Unaudited)
Six Months Three Months
Revenues:
Leasing activities:
Operating leases $ 1,481,475 $ 1,462,724
Direct financing leases 125,488 59,493
Interest 19,089 18,944
Other 207 (44)
--------------- -----------------
1,626,259 1,541,117
Expenses:
Depreciation 1,043,220 908,378
Interest expense 422,582 317,034
Administrative cost reimbursements to
Managing Member 276,123 236,010
Asset management fees to Managing Member 78,988 62,124
Professional fees 27,611 22,317
Other 16,306 10,685
--------------- -----------------
1,864,830 1,556,548
--------------- -----------------
Net loss $ (238,571) $ (15,431)
=============== =================
Net loss:
Managing member $ (17,893) $ (1,157)
Other members (220,678) (14,274)
--------------- -----------------
$ (238,571) $ (15,431)
=============== =================
Net loss per Limited Liability Company Unit $ (0.11) $ (0.00)
Weighted average number of Units outstanding 1,934,557 2,855,581
STATEMENT OF CHANGES IN MEMBERS' CAPITAL
SIX MONTH PERIOD ENDED
JUNE 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Other Members Managing
Units Amount Member Total
<S> <C> <C> <C> <C>
Balance December 31, 1998 50 $ 500 $ 100 $ 600
Capital contributions 4,058,545 40,585,450 - 40,585,450
Less selling commissions to affiliates (3,855,618) - (3,855,618)
Other syndication costs to affiliates (1,957,345) - (1,957,345)
Distributions to members (429,421) - (429,421)
Net loss (220,678) (17,893) (238,571)
---------------- ------------------ ---------------- -----------------
Balance June 30, 1999 4,058,595 $ 34,122,888 $ (17,793) $ 34,105,095
================ ================== ================ =================
</TABLE>
See accompanying notes.
F-7
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Six Months Three Months
Operating activities:
<S> <C> <C>
Net loss $ (238,571) $ (15,431)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation 1,043,220 908,378
Changes in operating assets and liabilities:
Accounts receivable (991,095) (631,121)
Accounts payable, Managing Member - (16,864)
Accounts payable, other 242,835 209,906
Unearned lease income 49,766 14,648
---------------- -----------------
Net cash used in operations 106,155 469,516
---------------- -----------------
Investing activities:
Purchases of equipment on operating leases (24,638,437) (15,864,946)
Purchases of equipment on direct financing leases (5,341,088) (1,156,384)
Reduction of net investment in direct financing leases 340,869 262,323
Payment of initial direct costs (33,373) (33,373)
---------------- -----------------
Net cash used in investing activities (29,672,029) (16,792,380)
---------------- -----------------
Financing activities:
Capital contributions received 40,585,450 23,234,030
Payment of syndication costs to managing member (5,812,963) (3,273,955)
Distributions to members (429,421) (381,755)
---------------- -----------------
Net cash provided by financing activities 34,343,066 19,578,320
---------------- -----------------
Net increase in cash and cash equivalents 4,777,192 3,255,456
Cash and cash equivalents at beginning of period 600 1,522,336
---------------- -----------------
Cash and cash equivalents at end of period $ 4,777,792 $ 4,777,792
================ =================
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 422,582 $ 317,034
================ =================
</TABLE>
See accompanying notes.
F-8
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
1. Summary of significant accounting policies:
Interim financial statements:
The unaudited interim financial statements reflect all adjustments which are, in
the opinion of the managing member, necessary to a fair statement of financial
position and results of operations for the interim periods presented. All such
adjustments are of a normal recurring nature. These unaudited interim financial
statements should be read in conjunction with the most recent report on Form
10K.
2. Organization and Company matters:
ATEL Capital Equipment Fund VIII, LLC. (the Company), was formed under the laws
of the State of California on July 31 , 1998, for the purpose of acquiring
equipment to engage in equipment leasing and sales activities. Contributions in
the amount of $600 were received as of October 7, 1998, $100 of which
represented the Managing Member's (ATEL Financial Corporation's) continuing
interest, and $500 of which represented the Initial Members' capital investment.
Upon the sale of the minimum amount of Units of Limited Liability Company
interest (Units) of $1,200,000 and the receipt of the proceeds thereof on
January 13, 1999, the Company commenced operations.
The Company does not make a provision for income taxes since all income and
losses will be allocated to the Partners for inclusion in their individual tax
returns.
3. Investment in leases:
The Company's investment in leases consists of the following:
<TABLE>
<CAPTION>
Depreciation
Expense or Balance
Amortization June 30,
Additions of Leases 1999
<S> <C> <C> <C>
Net investment in operating leases $ 24,638,437 $ (1,038,644) $ 23,599,793
Net investment in direct financing leases 5,341,088 (340,869) 5,000,219
Initial direct costs, net of accumulated amortization 33,373 (4,576) 28,797
---------------- ------------------ ----------------
$ 29,979,525 $ (1,379,513) $ 28,628,809
================ ================== ================
</TABLE>
F-9
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
3. Investment in leases (continued):
Operating leases:
Property on operating leases consists of the following:
Balance
Acquisitions June 30,
1st Quarter 2nd Quarter 1999
Transportation $ 7,404,130 $ 9,160,425 $ 16,564,555
Marine vessel - 3,952,500 3,952,500
Materials handling 594,748 987,960 1,582,708
Manufacturing 494,113 952,267 1,446,380
Other 280,500 811,794 1,092,294
---------------- ---------------- ----------------
8,773,491 15,864,946 24,638,437
Less accumulated depreciation (134,842) (903,802) (1,038,644)
---------------- ---------------- ----------------
$ 8,638,649 $ 14,961,144 $ 23,599,793
================ ================ ================
Direct financing leases:
As of June 30, 1999, investment in direct financing leases consists office
automation equipment. The following lists the components of the Company's
investment in direct financing leases as of June 30, 1999:
Total minimum lease payments receivable $ 5,027,357
Estimated residual values of leased equipment (unguaranteed) 565,388
----------------
Investment in direct financing leases 5,592,745
Less unearned income (592,526)
----------------
Net investment in direct financing leases $ 5,000,219
================
All of the property on leases was acquired in 1999. There were no dispositions
of such property.
F-10
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
3. Investment in leases (continued):
At June 30, 1999, the aggregate amounts of future minimum lease payments are as
follows:
Direct
Year ending Operating Financing
December 31, Leases Leases Total
1999 $ 1,919,921 $ 723,707 $ 2,643,628
2000 3,844,756 1,447,413 5,292,169
2001 3,844,756 1,306,797 5,151,553
2002 3,555,531 804,873 4,360,404
2003 2,303,980 708,252 3,012,232
Thereafter 8,300,164 36,315 8,336,479
---------------- ------------------ ----------------
$ 23,769,108 $ 5,027,357 $ 28,796,465
================ ================== ================
4. Related party transactions:
The terms of the Limited Company Operating Agreement provide that the Managing
Member and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Company.
The Limited Liability Company Operating Agreement allows for the reimbursement
of costs incurred by the Managing Member in providing administrative services to
the Company. Administrative services provided include Company accounting,
investor relations, legal counsel and lease and equipment documentation. The
Managing Member is not reimbursed for services where it is entitled to receive a
separate fee as compensation for such services, such as acquisition and
management of equipment. Reimbursable costs incurred by the Managing Member are
allocated to the Company based upon actual time incurred by employees working on
Company business and an allocation of rent and other costs based on utilization
studies.
Substantially all employees of the Managing Member record time incurred in
performing administrative services on behalf of all of the Companies serviced by
the Managing Member. The Managing Member believes that the costs reimbursed are
the lower of (i) actual costs incurred on behalf of the Company or (ii) the
amount the Company would be required to pay independent parties for comparable
administrative services in the same geographic location and are reimbursable in
accordance with the Limited Liability Company Operating Agreement.
The Managing Member and/or Affiliates earned fees, commissions and
reimbursements, pursuant to the Limited Liability Company Agreement as follows:
Selling commissions (equal to 9.5% of the selling price of the Limited Liability
Company units, deducted from Other Members' capital) $ 3,855,618
Reimbursement of other syndication costs to Managing Member 1,957,345
Administrative costs reimbursed to Managing Member 276,123
Asset management fees to Managing Member 78,988
--------------
$ 6,168,074
==============
F-11
<PAGE>
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
5. Member's capital:
As of June 30, 1999, 4,058,595 Units ($40,585,950) were issued and outstanding.
The Company's registration statement with the Securities and Exchange Commission
became effective December 7, 1998. The Company is authorized to issue up to
15,000,050 Units, including the 50 Units issued to the initial members.
The Company's Net Income, Net Losses, and Distributions are to be allocated
92.5% to the Members and 7.5% to the Managing Member.
6. Line of credit:
The Company participates with the Managing Member and certain of its Affiliates
in a $95,000,000 revolving credit agreement with a group of financial
institutions which expires on January 31, 2000. The agreement includes an
acquisition facility and a warehouse facility which are used to provide bridge
financing for assets on leases. Draws on the acquisition facility by any
individual borrower are secured only by that borrower's assets, including
equipment and related leases. Borrowings on the warehouse facility are recourse
jointly to certain of the Affiliates, the Company and the Managing Member.
At June 30, 1999, the Company had no borrowings under the line of credit.
The credit agreement includes certain financial covenants applicable to each
borrower. The Company was in compliance with its covenants as of June 30, 1999.
7. Commitments:
As of June 30, 1999, the Partnership had outstanding commitments to purchase
lease equipment totaling approximately $16,158,000.
F-12
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholder
ATEL Financial Corporation
We have audited the accompanying consolidated balance sheet of ATEL Financial
Corporation and subsidiary as of July 31, 1999. This balance sheet is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated balance sheet referred to above presents
fairly, in all material respects, the consolidated financial position of ATEL
Financial Corporation at July 31, 1999, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
San Francisco, California
September 24, 1999
F-13
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JULY 31, 1999
ASSETS
Cash and cash equivalents $ 1,781,491
Accounts receivable 191,000
Amounts due from affiliated programs 3,583,868
Investments in leases 2,816,983
Cash surrender value of life insurance 300,000
Deferred tax asset 1,963,585
Property and equipment, net of accumulated depreciation
of $1,373,593 481,824
Leasehold improvements, net of accumulated amortization
of $381,107 369,933
Other assets 330,311
------------
$11,818,995
============
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Non-recourse debt $ 1,654,795
Amounts due to affiliated companies 1,217,822
Accounts payable and accrued liabilities 2,555,986
Customer deposits 22,000
Deferred liabilities and credits:
Deferred capital contributions 1,637,800
Deferred tax liability 3,542,228
------------
Total liabilities 10,630,631
Shareholder's equity:
Common stock, 100,000 shares authorized,
666 1/2shares issued and outstanding 2,000
Additional paid-in capital 93,855
Retained earnings 1,092,509
------------
Total shareholder's equity 1,188,364
------------
$11,818,995
============
See accompanying notes.
F-14
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1999
1. Organization and summary of significant accounting policies:
Organization and principles of consolidation:
The consolidated balance sheet includes the accounts of ATEL Financial
Corporation (ATEL) and its wholly owned subsidiary, ATEL Securities Corporation
(ASC). ATEL is a wholly owned subsidiary of ATEL Capital Group (ACG).
ATEL is a California corporation formed in July 1977 to engage in the brokering
and leasing of equipment for its own account and the account of affiliates. ASC
was formed in November 1985 and was registered as a securities broker/dealer in
February 1986. All significant intercompany balances have been eliminated in
consolidation.
ATEL organizes and sponsors limited partnerships and limited liability companies
(the "affiliated programs" or the "programs") engaged in equipment leasing and
sales activities. It also acts as the corporate general partner or managing
member in these affiliated programs. Through these programs, ACG derives various
fees and also receives reimbursements for expenses incurred on behalf of these
entities, of which certain fees and expense reimbursements are allocated to ATEL
and the balance is allocated to various other affiliates. The basis for
determination of the types and amounts of these fees and reimbursements are
provided in agreements with the various programs.
In addition, under the terms of the partnership agreements and operating
agreements for certain of the affiliated programs for which ATEL is a general
partner or managing member, ATEL is entitled to participate in net cash from
operations and sales or refinancing of equipment owned by the affiliated
programs. A portion of ATEL's participation is subordinated to the limited
partners' and other members' full recovery of their initial invested capital
contributions plus a specified return on their investments. No earnings or
equity interests from such subordinated interests have been recognized through
July 31, 1999. The shareholders of ACG are also general partners in certain of
these affiliated programs.
Operating leases:
Assets on operating leases are stated at cost less accumulated depreciation.
Revenues from operating leases are recognized evenly over the terms of the
related leases. Depreciation is provided by the straight-line method over the
term of the lease to an amount equal to the equipment's estimated residual value
at lease termination.
F-15
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1999
1. Organization and summary of significant accounting policies (continued):
Residual interests:
Residual interests represent the present value of ATEL's proportionate interest
(calculated at the time of the transaction) in the estimated residual value of
equipment originally owned by ATEL and subsequently sold to a third party where
ATEL retains an unconditional right to participate in such residual value upon
the expiration of the related lease. This retained residual value is presented
as an asset and is included in the consolidated balance sheet under the caption
"Investments in leases" until the ultimate liquidation of the underlying
equipment and realization of the participation.
Property and equipment:
Property and equipment is stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of the respective assets,
which range from three to seven years.
Leasehold improvements:
Leasehold improvements are stated at cost. Amortization is calculated using the
straight-line method over the lives of the related leases or estimated lives,
whichever is shorter.
Cash surrender value of life insurance:
ATEL purchased two single premium key-man life insurance policies to cover the
two officer-shareholders of ACG. ATEL is a beneficiary under the contracts for
$300,000 of cash surrender values. The spouses of the two officer-shareholders
of ACG are the beneficiaries for amounts above $300,000.
Income taxes:
For federal and state income tax reporting, ATEL's taxable income is included in
the returns filed by ACG. For financial reporting, ATEL's income tax provision
is calculated on a separate return basis. Deferred taxes are calculated using
the liability method of accounting for income taxes. Under this method, deferred
tax assets and liabilities are determined based on differences between the
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. The ultimate realization of ATEL's deferred tax asset
is dependent upon the realization of such amount by ACG.
F-16
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1999
1. Organization and summary of significant accounting policies (continued):
Credit risk:
Financial instruments which potentially subject ATEL to concentrations of credit
risk include cash and cash equivalents and accounts receivable. ATEL places its
cash deposits and temporary cash investments with creditworthy, high quality
financial institutions. The concentration of such deposits and temporary cash
investments is not deemed to create a significant risk to ATEL. Accounts
receivable represent amounts due from lessees in various industries related to
equipment on operating leases.
Use of estimates:
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles 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 consolidated
financial statements. Actual results could differ from those estimates.
Investments in affiliated programs:
ATEL accounts for its interest as a corporate general partner (or as the
managing member) in the affiliated programs at cost, or under the equity method
of accounting, based on the terms of the individual affiliated partnership or
operating agreements.
Affiliated programs accounted for at cost do not provide for provisions in the
partnership agreements for general partner distributions and hence, ATEL does
not in effect have any way to recover the amounts of its capital accounts as
recorded by the affiliated programs. Certain affiliated programs accounted for
at cost do not require ATEL to make capital contributions and hence, ATEL
records all distributions received from these programs as income based on the
cost method of accounting. Upon the dissolution of these programs, a special
allocation of income or loss is made from the general partner to the limited
partners (or between the managing member and the other members) in an amount
sufficient to bring the capital accounts to zero, based on the terms of the
partnership and operating agreements.
Affiliated programs accounted for under the equity method of accounting, subject
to limitations in the respective partnership agreements, provide for general
partner distributions. Upon dissolution of these programs, if the general
partner has a deficiency in its capital account, the general partner is required
to contribute cash to the capital of the affiliated program in an amount equal
to the lesser of the deficiency in the general partner's account or 1.01% of the
original invested capital of the affiliated program, based on the provisions of
the partnership agreement. If the general partner has a positive capital balance
upon the dissolution of the program, a special allocation of income is made from
the general partner to the limited partners in an amount sufficient to bring the
capital accounts to zero, based on the terms of the partnership agreements.
Through July 31, 1999, ATEL has deferred $1,637,800 in distributions received
from affiliated programs accounted for on the equity method of accounting. Such
amounts are included in the consolidated balance sheet under the caption
"Deferred capital contributions."
F-17
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1999
1. Organization and summary of significant accounting policies (continued):
Amounts due from affiliated companies:
Amounts due from affiliated companies represent amounts advanced to or received
from affiliated companies for operations or for income taxes to be paid by ATEL
on behalf of ACG and its subsidiaries.
2. Investments in leases:
Investments in leases consist of the following:
Equipment on operating leases, net of accumulated depreciation $ 2,505,988
Residual interests 310,995
---------------
$ 2,816,983
===============
Operating leases:
Equipment on operating leases consists of the following:
Electrical cogeneration plant (estimated useful life, 20 years) $ 2,565,815
Concrete hauling trucks (estimated useful life, 7 years) 1,793,410
Kaolin processing equipment (estimated useful life, 20 years) 304,444
---------------
4,663,669
Less accumulated depreciation (2,157,681)
---------------
Equipment on operating leases, net of accumulated depreciation $ 2,505,988
===============
At July 31, 1999, the aggregate amounts of future minimum lease payments
receivable from operating leases are as follows:
Year ending July 31,
2000 $ 662,528
2001 512,390
2002 478,999
2003 212,250
2004 188,000
Thereafter 141,000
---------------
$ 2,195,167
===============
F-18
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1999
2. Investments in leases (continued):
General lease terms and concentration of credit risk:
Operating leases generally provide that the lessee will be responsible for
maintenance, insurance and similar costs (referred to as net leases).
Leases are subject to ATEL's credit committee review. The leases provide for the
repossession of the equipment in the event of default.
3. Non-recourse debt:
Non-recourse debt consists of the following:
Notes payable to financial institutions, interest at
9.6094% per year, concrete trucks and related leases
pledged as collateral, due in various installments through 2002 $ 773,881
Note payable to financial institution, interest at 8.332%
per year, cogeneration plant and related lease pledged
as collateral, due in quarterly installments of $47,000
through July 2005 880,914
---------------
$ 1,654,795
===============
The net book value of assets financed with non-recourse debt was $2,276,741 at
July 31, 1999.
Future minimum payments on non-recourse debt are as follows:
Principal Interest Total
Year ending July 31, Payments Payments Payments
2000 $ 344,760 $ 134,238 $ 478,998
2001 377,664 101,338 479,002
2002 413,719 64,981 478,700
2003 175,546 36,705 212,251
2004 164,493 23,502 187,995
Thereafter 178,613 9,385 187,998
--------------- --------------- ---------------
$ 1,654,795 $ 370,149 $ 2,024,944
=============== =============== ===============
4. Income taxes:
Deferred income taxes as of July 31, 1999, reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. At
July 31, 1999, deferred tax assets total $1,963,585 and deferred tax liabilities
total $3,542,228.
Deferred income taxes arise primarily from differences in the reporting of lease
income, depreciation, acquisition fees and valuation accounts for tax purposes
as compared to their treatment for financial reporting purposes.
F-19
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1999
5. Line of credit:
ATEL participates with ACG, certain other subsidiaries of ACG and with certain
affiliated programs, in a $95,000,000 revolving credit agreement with a group of
financial institutions which expires January 28, 2000. The agreement includes an
acquisition facility, a lease warehouse facility and a small ticket facility
which are used to provide bridge financing for assets on leases. Draws on the
acquisition facility by any individual borrower are secured only by that
borrower's assets, including equipment and related leases. Borrowings on the
warehouse facility are recourse jointly to certain of the affiliated programs
and ATEL. Borrowings on the small ticket facility are recourse to the borrower
and are guaranteed by ACG and certain of its shareholders. Also included in this
line of credit facility is $1,000,000 available for operations and working
capital. At July 31, 1999, ATEL had no borrowings related to working capital. At
July 31, 1999, there were no borrowings under the small ticket lease facility.
At July 31, 1999, $16,631,025 was borrowed under the separate lease warehousing
facility by another subsidiary of ACG relating to lease transactions. Interest
is at the bank's prime rate (8% at July 31, 1999) or at LIBOR plus 1.25% (6.15%
at July 31, 1999).
These facilities, when used, are collateralized by (i) leases and equipment
owned by the specific borrower and financed by the lines and (ii) all other
assets owned by the specific borrower except equipment, lease receipts and
residual values specifically pledged to other equipment funding sources. ATEL's
borrowings under the facility are guaranteed by ACG and/or its shareholders.
Under the line, the affiliated programs have borrowed $6,350,000 as of July 31,
1999. These funds are collateralized by the assets owned by the affiliated
programs, except equipment, lease receipts and residual values specifically
pledged to other equipment funding sources.
The credit agreement includes certain financial covenants applicable to each
borrower. ATEL was in compliance with such covenants as of July 31, 1999.
6. Commitments and contingencies:
Office lease:
ACG occupies office space under operating leases expiring through December 2002.
Future minimum payments for fiscal year periods under the leases are $536,162 in
2000, $550,001 in 2001, $559,886 in 2002 and $233,286 in 2003.
F-20
<PAGE>
ATEL FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED BALANCE SHEET
JULY 31, 1999
7. Reimbursements of operating costs:
The Limited Partnership Agreements and Operating Agreements of the affiliated
programs allow for the reimbursement of costs incurred by ACG and its
subsidiaries in providing administrative services to the Programs, of which a
portion of such amounts is allocated to ATEL. Administrative services provided
include program accounting, investor relations, legal counsel and lease and
equipment documentation. ACG and its subsidiaries are not reimbursed for
services where they are entitled to receive a separate fee as compensation for
such services, such as acquiring and overseeing the management of equipment.
Reimbursable operating costs incurred by ACG and its subsidiaries are allocated
to the Programs based upon actual time incurred by employees working on program
business and an allocation of rent and other costs based on utilization studies.
As of July 31, 1999, $3,583,868 remained outstanding from affiliated programs
for reimbursable operating and syndication costs and management fees.
8. Impact of the Year 2000 (Unaudited)
The year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any computer programs
that have time sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculation causing disruptions of operations, including, among other things,
a temporary inability to process transactions or engage in similar normal
business activities.
ATEL uses primarily third party software and has communicated with key vendors
to ensure that its systems are year 2000 compliant. Based on these discussions,
ATEL does not expect that the costs related to the year 2000 issue will be
significant. Ultimately, the potential impact of the year 2000 issue will depend
on the way in which the year 2000 issue is addressed by businesses and other
entities whose financial condition or operational capability is important to
ATEL.
F-21
<PAGE>
- --------------------------------------------------------------------------------
PRIOR PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
ATEL Financial Corporation ("ATEL"), the Manager of the Fund, and its affiliates
have extensive experience in the equipment leasing industry, including: (i)
originating and financing leveraged and single investor lease transactions for
corporate investors, (ii) acting as a broker/packager by arranging equity and
debt participants for equipment leasing transactions originated by other
companies, (iii) consulting on the pricing and structuring of equipment lease
transactions for banks, leasing companies and corporations, (iv) organizing and
offering individual ownership and limited partnership investment leasing
programs and (v) supervising and arranging for the supervision of equipment
management and marketing on leasing transactions involving total equipment costs
in excess of $1 billion. In addition to the Fund, ATEL has sponsored seven prior
public and one private equipment leasing limited partnership(s) and one prior
public equipment leasing limited liability company. See "Prior Performance
Summary" for a summary of information regarding such prior programs.
The first prior partnership, ATEL Lease Income Fund 1985-A ("ALIF"), completed a
private placement of $218,500 of its limited partnership interests in April 1986
from a total of 12 investors. ALIF had acquired a variety of equipment with a
total purchase cost of approximately $296,627 as of December 31, 1997. All such
equipment had been sold as of December 31, 1997 and the partnership has ceased
operations. See Table VI - "Sales or Disposals of Equipment" in this Exhibit A.
The second prior partnership, ATEL Cash Distribution Fund ("ACDF"), commenced a
public offering of up to $10,000,000 of its limited partnership interests on
March 1, 1986. ACDF terminated its offering on December 18, 1987 after raising a
total of $10,000,000 in offering proceeds from a total of approximately 1,000
investors, all of which proceeds have been committed to equipment acquisitions,
estimated organization and offering expenses and capital reserves. ACDF acquired
a variety of types of equipment with a total purchase cost of approximately
$11,133,679 as of December 31, 1997. See Table V - "Acquisition of Equipment by
Prior Programs" in Exhibit A for further information concerning the types of
equipment acquired by ACDF. All such equipment had been sold as of December 31,
1997. See Table VI - "Sales or Disposals of Equipment" in Exhibit A. Through
December 31, 1997, ACDF had made cash distributions to its investors in the
aggregate amount of $1,121.03 per $1,000 invested. Of this amount a total of
$244.89 represents investment income and $876.14 represents return of capital.
See Table III - "Operating Results of Prior Programs" in this Exhibit A for
further information concerning such distributions. See Table IV - "Results of
Completed Program" in this Exhibit A, for further information.
The third prior partnership, ATEL Cash Distribution Fund II ("ACDF II"),
commenced a public offering of up to $25,000,000 (with an option to increase the
offering to $35,000,000) of its limited partnership interests on January 4,
1988. ACDF II terminated its offering on January 3, 1990 after raising a total
of $35,000,000 in offering proceeds from a total of approximately 3,100
investors, all of which proceeds have been committed to equipment acquisitions,
estimated organization and offering expenses and capital reserves. ACDF II had
acquired a variety of types of equipment with a total purchase cost of
approximately $52,270,536 as of December 31, 1998. See Table V "Acquisition of
Equipment by Prior Programs" in Exhibit A for further information concerning the
types of equipment acquired by ACDF II. All such equipment had been sold as of
December 31, 1998. See Table VI - "Sales or Disposals of Equipment" in Exhibit
A. Through December 31, 1998, ACDF II had made cash distributions to its
investors in the aggregate amount of $1,222.63 per $1,000 invested. Of this
amount a total of $335.43 represents investment income and $887.20 represents
return of capital. See Table III - "Operating Results of Prior Programs" in this
Exhibit A for further information concerning such distributions. See Table IV
"Results of Completed Program" in this Exhibit A, for further information.
A-1
<PAGE>
The fourth prior partnership, ATEL Cash Distribution Fund III ("ACDF III"),
commenced a public offering of up to $50,000,000 (with an option to increase the
offering to $75,000,000) of its limited partnership interests on January 4,
1990. ACDF III terminated its offering on January 3, 1992 after raising a total
of $73,855,840 in offering proceeds from a total of approximately 4,822
investors, all of which proceeds have been committed to equipment acquisitions,
estimated organization and offering expenses and capital reserves. ACDF III had
acquired a variety of types of equipment with a total purchase cost of
approximately $99,629,941 as of December 31, 1998. See Table V "Acquisition of
Equipment by Prior Programs" in Exhibit A for further information concerning the
types of equipment acquired by ACDF III. Of such equipment, items representing
an original purchase cost of approximately $70,019,630 had been sold as of
December 31, 1998. See Table VI - "Sales or Disposals of Equipment" in Exhibit
A. Through December 31, 1998, ACDF III had made cash distributions to its
investors in the aggregate amount of $1,078.65 per $1,000 invested. Of this
amount a total of $350.15 represents investment income and $728.50 represents
return of capital. See Table III - "Operating Results of Prior Programs" in this
Exhibit A for further information concerning such distributions.
The fifth prior partnership, ATEL Cash Distribution Fund IV ("ACDF IV"),
commenced a public offering of up to $75,000,000 of its limited partnership
interests on February 4, 1992. ACDF IV terminated its offering on February 3,
1993 after raising a total of $75,000,000 in offering proceeds from a total of
approximately 4,873 investors, all of which proceeds have been committed to
equipment acquisitions, estimated organization and offering expenses and capital
reserves. ACDF IV had acquired a variety of types of equipment with a total
purchase cost of approximately $108,734,880 as of December 31, 1998. See Table V
- - "Acquisition of Equipment by Prior Programs" in Exhibit A for further
information concerning the types of equipment acquired by ACDF IV. Of such
equipment, items representing an original purchase cost of approximately
$55,712,374 had been sold as of December 31, 1998. See Table VI - "Sales or
Disposals of Equipment" in Exhibit A. Through December 31, 1998, ACDF IV had
made cash distributions to its investors in the aggregate amount of $867.87 per
$1,000 invested. Of this amount a total of $164.65 represents investment income
and $703.22 represents return of capital. See Table III - "Operating Results of
Prior Programs" in this Exhibit A for further information concerning such
distributions.
The sixth prior partnership, ATEL Cash Distribution Fund V ("ACDF V"), commenced
a public offering of up to $125,000,000 of its limited partnership interests on
February 22, 1993. ACDF V terminated its offering on November 15, 1994. As of
that date, $125,000,000 of offering proceeds had been received from
approximately 7,217 investors. All of the proceeds have been committed to
equipment acquisitions, estimated organization and offering expenses and capital
reserves. ACDF V had acquired a variety of types of equipment with a total
purchase cost of $186,897,181 as of December 31, 1998. Of such equipment, items
representing an original purchase cost of approximately $48,698,345 had been
sold as of December 31, 1998. Through December 31, 1998, ACDF V had made cash
distributions to its investors in the aggregate amount of $580.98 per $1,000
invested. Of this amount a total of $96.55 represents investment income and
$484.43 represents return of capital. See Table III - "Operating Results of
Prior Programs" in this Exhibit A for further information concerning such
distributions. See Table V - "Acquisition of Equipment by Prior Programs" in
Exhibit A for further information concerning the types of equipment acquired by
ACDF V. See Table VI - "Sales or Disposals of Equipment" in Exhibit A.
The seventh prior partnership, ATEL Cash Distribution Fund VI ("ACDF VI"),
commenced a public offering of up to $125,000,000 of its limited partnership
interests on November 23, 1994. ACDF VI terminated its offering on November 22,
1996. As of that date, $125,000,000 of offering proceeds had been received from
approximately 6,401 investors. All of the proceeds have been committed to
equipment acquisitions, estimated organization and offering expenses and capital
reserves. ACDF VI had acquired a variety of types of equipment with a total
purchase cost of $208,277,121 as of December 31, 1998. Of such equipment, items
representing an original purchase cost of approximately $8,567,070 had been sold
as of December 31, 1998. Through December 31, 1998, ACDF VI had made cash
distributions to its investors in the aggregate amount of $371.11 per $1,000
invested. Of this amount a total of $5.63 represents investment income and
$365.48 represents return of capital. See Table III - "Operating Results of
Prior Programs" in this Exhibit A for further information concerning such
distributions. See Table V - "Acquisition of Equipment by Prior Programs" in
Exhibit A for further information concerning the types of equipment acquired by
ACDF VI. See Table VI - "Sales or Disposals of Equipment" in Exhibit A.
A-2
<PAGE>
The eighth prior partnership, ATEL Capital Equipment Fund VII ("ACEF VII"),
commenced a public offering of up to $150,000,000 of its limited partnership
interests on November 29, 1996. ACEF VII terminated its offering on November 29,
1998. As of that date, $150,000,000 of offering proceeds had been received from
approximately 5,348 investors. All of the proceeds have been committed to
equipment acquisitions, estimated organization and offering expenses and capital
reserves. ACEF VII had acquired a variety of types of equipment with a total
purchase cost of $273,312,297 as of December 31, 1998. Of such equipment, items
representing an original purchase cost of approximately $4,415,703 had been sold
as of December 31, 1998. Through December 31, 1998, ACEF VII had made cash
distributions to its investors in the aggregate amount of $170.74 per $1,000
invested. Of this amount a total of $45.51 represents investment income and
$125.23 represents return of capital. See Table III - "Operating Results of
Prior Programs" in this Exhibit A for further information concerning such
distributions. See Table V - "Acquisition of Equipment by Prior Programs" in
Exhibit A for further information concerning the types of equipment acquired by
ACEF VII. See Table VI - "Sales or Disposals of Equipment" in Exhibit A.
Although certain of the Prior Programs have experienced lessee defaults in the
ordinary course of business, none of the Prior Programs has experienced an
unanticipated rate of default or major adverse business developments which the
Fund Manager believes will impair its ability to meet its investment objectives.
All of the Prior Programs have investment objectives that are similar to those
of the Fund. It should be noted, however, that the prior privately placed
program, ALIF, invested in equipment without the use of any acquisition debt,
while Prior Programs ("Prior Public Programs") were designed to use moderate
amounts of acquisition debt, as is the Fund. In addition, as in the case of the
Fund's portfolio objectives, the Prior Public Programs' equipment portfolios
placed greater emphasis on relatively low technology equipment than did ALIF.
The factors considered by the Manager in determining that the investment
objectives of the prior programs were similar to those of the Fund include the
types of equipment to be acquired, the structure of the leases to such
equipment, the credit criteria for lessees, the intended investment cycles, the
reinvestment policies and the investment goals of each program. Therefore all of
the information set forth in Tables included in this Exhibit A - "Prior
Performance Information" may be deemed to relate to programs with investment
objectives similar to those of the Fund.
In Tables I through III information is presented with respect to all Prior
Programs sponsored by the Manager and its Affiliates which closed their
offerings within the five year period ending December 31, 1998, except that ACDF
closed its offering December 18, 1987, ACDF II closed its offering January 3,
1990, ACDF III closed its offering January 3, 1992 and ACDF IV closed its
offering on February 3, 1993. Table VI includes information regarding all
dispositions of equipment by prior programs during the five year period ending
June 30, 1998. The following is a list of the tables set forth on this Exhibit
A:
TABLE I Experience in Raising and Investing Funds TABLE II Compensation to the
General Partners TABLE III Operating results of Prior Programs TABLE IV Results
of Completed Programs TABLE V Acquisition of Equipment by Prior Programs TABLE
VI Sales or Disposals of Equipment
ATEL will provide to any investor, upon written request and without charge,
copies of the most recent Annual Reports on Form 10-K filed with the Securities
and Exchange Commission by each Prior Public Program and will provide to any
investor, for a reasonable fee, copies of the exhibits to such reports.
INVESTORS IN THE PARTNERSHIP WILL HAVE NO INTEREST IN THE INVESTMENTS DESCRIBED
IN THE FOLLOWING TABLES. PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE INCLUSION
OF THIS INFORMATION AS INDICATIVE OF THE POSSIBLE OPERATIONS OF THE PARTNERSHIP.
In addition to Tables I through V, two summary charts are set forth below.
Figure 6 is a summary of cash distributions through December 31, 1997 by each
Prior Public Program, expressed as a percentage of an initial investor's
original capital contribution and divided into the portions of such
distributions which have been characterized in the Prior Program's financial
statements as a return of capital, on the one hand, and net income, on the
other.
(GRAPHIC OMITTED)
Figure 7 below illustrates the disposition of equipment after expiration of the
initial lease term for equipment coming off lease through April 1, 1998 for all
Prior Public Programs that had completed their public offerings as of December
31, 1995. The dispositions are characterized as (i) short term renewals by the
lessees (for terms of less than 12 months), (ii) long term renewals by the
lessees (for terms of at least 12 months), (iii) equipment purchased by the
lessee and (iv) equipment returned by the lessee to the Prior Public Program for
sale or lease to another party.
(GRAPHIC OMITTED)
A-3
<PAGE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(on a percentage basis)
December 31, 1998
(Unaudited)
The following Table sets forth certain information concerning the experience of
the General Partners in raising and investing funds. A percentage analysis of
the application of the proceeds raised is presented.
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Cash ATEL Cash
Distribution Distribution Distribution Distribution
Fund Fund II Fund III Fund IV
<S> <C> <C> <C> <C>
EQUITY PROCEEDS
Dollar amount of equity
offered $ 10,000,000 $ 35,000,000 $75,000,000 $ 75,000,000
Dollar amount of equity
raised $ 10,000,000 $ 35,000,000 $73,855,840 $ 75,000,000
-------------- -------------- ------------- --------------
Less: Offering expenses:
Selling commissions 9.50% 9.50% 9.50% 9.50%
Organization and program
expenses (1) 4.00% 5.00% 4.25% 4.53%
Reserves 3.00% 1.50% 1.50% 1.50%
-------------- -------------- ------------- --------------
Percent available for investment 83.50% 84.00% 84.75% 84.47%
Acquisition costs:
Purchase price (2) 79.00% 79.25% 80.00% 79.71%
Acquisition fees 4.50% 4.75% 4.75% 4.76%
-------------- -------------- ------------- --------------
83.50% 84.00% 84.75% 84.47%
-------------- -------------- ------------- --------------
Percent leverage (9) 20.26% 40.93% (8) 43.04% (10) 43.50%
============== ============== ============= ==============
Date offering commenced: Mar. 1, 1986 Jan. 4, 1988 Jan. 4, 1990 Feb. 4, 1992
Length of offering 21 Months 24 Months 24 Months 12 Months
Months to invest 90% of
amount available for investment
(measured from beginning of offering) 30 Months (3) 27 Months (4) 30 Months (5) 20 Months (6)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Capital
Distribution Distribution Equipment
Fund V Fund VI Fund VII
EQUITY PROCEEDS
<S> <C> <C> <C>
Dollar amount of equity
offered $ 125,000,000 $125,000,000 $150,000,000
Dollar amount of equity
raised $ 125,000,000 $125,000,000 $150,000,000
-------------- -------------- --------------
Less: Offering expenses:
Selling commissions 9.50% 9.50% 9.50%
Organization and program
expenses (1) 4.60% 4.70% 4.67%
Reserves 1.50% 1.50% 0.50%
-------------- -------------- --------------
Percent available for investment 84.40% 84.30% 85.33%
Acquisition costs:
Purchase price (2) 79.64% 79.80% 85.33%
Acquisition fees 4.76% 4.50% -
-------------- -------------- --------------
84.40% 84.30% 85.33%
-------------- -------------- --------------
Percent leverage (9) 35.06% 46.12% 36.60%
============== ============== ==============
Date offering commenced: Feb. 22, 1993 Nov. 23, 1994 Nov. 29, 1996
Length of offering 21 Months 24 Months 24 Months
Months to invest 90% of
amount available for investment
(measured from beginning of offering) 22 Months (7) 24 Months (11) 24 Months (12)
</TABLE>
<PAGE>
FOOTNOTES: (1) Includes organization, legal, accounting, printing, binding,
delivery and other costs incurred by the General Partner.
(2) Represents amounts paid to unrelated third parties for purchase of
equipment under leases.
(3) As of December 1988, 100% of the amount available for investment had
been
invested.
(4) As of June 1990, 100% of the amount available for investment had been
invested.
(5) As of September 30, 1992, 100% of the amount available for investment
had been invested.
(6) As of December 31, 1993, the proceeds of the offering had been fully
invested.
(7) As of November 15, 1994, the Partnership's offering of Limited
Partnership Units was completed. As of December 31, 1994, the proceeds of the
offering had been fully committed.
(8) From January 4, 1988 through August 31, 1994, the maximum amount of
leverage at the end of any quarter was 37%. This was computed as the outstanding
balance of all debt divided by the original cost of all equipment owned by the
partnership as of the end of each period.
(9) The percentage leverage is calculated by dividing the initial principal
amount of debt incurred by the program through the date of this table by the
aggregate original cost of all equipment purchased by the program through such
date. It should be noted, however, that each program has acquired assets, has
made or will make principal amortizing debt service payments and/or has disposed
or will dispose of assets over a period of time extending from its first
investment in equipment. As a result, for each program the total cost of the
assets in its portfolio and the total principal amount of debt outstanding have
fluctuated from time to time. The percentage figure, therefore, does not reflect
the current leverage ratio or the debt ratio at any one point in time, but
constitutes an aggregate ratio for the life of the program through the date of
the table.
(10) From January 4, 1990 through December 31, 1997, the maximum amount of
leverage at the end of any quarter was less than 40%. This was computed as the
outstanding balance of all debt divided by the original cost of all
equipment owned by the partnership as of the end of each period.
(11) As of November 22, 1996, the Partnership's offering of Limited
Partnership Units was completed. As of that date, the proceeds of the offering
had been fully committed.
(12) As of November 29, 1998, the Partnership's offering of Limited
Partnership Units was completed. As of that date, the proceeds of the offering
had been fully committed.
A-4
<PAGE>
TABLE II
COMPENSATION TO THE GENERAL PARTNERS
December 31, 1998
(Unaudited)
The following Table sets forth certain information concerning the compensation
derived by the General Partner. Amounts paid are from two sources: proceeds of
the offering and gross revenues.
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Cash ATEL Cash
Distribution Distribution Distribution Distribution
Fund Fund II Fund III Fund IV
<S> <C> <C> <C> <C>
Date offering commenced Mar. 1, 1986 Jan. 4, 1988 Jan. 4, 1990 Feb. 4, 1992
Date offering closed Dec. 18, 1987 Jan. 3, 1990 Jan. 3, 1992 Feb. 3, 1993
Dollar amount raised $ 10,000,000 $ 35,000,000 $73,855,840 $ 75,000,000
Amounts paid to General
Partners from proceeds of
offering:
Acquisition fees $ 450,000 $ 1,662,500 $ 3,558,700 $ 3,575,123
Selling commissions $ 19,078 $ 230,985 $ 561,914 $ 716,296
Organization and program costs $ 550,000 $ 1,751,422 $ 3,135,942 $ 3,394,652
Dollar amount of cumulative cash
generated from operations before
deducting payments to the General
Partner $ 9,166,349 $ 38,627,639 $69,947,213 $ 49,684,404
Cumulative amount paid to the
General Partner from operations:
Management fees $ 765,081 $ 2,980,123 $ 6,234,401 $ 5,271,740
Other operating expenses $ 475,740 $ 1,666,567 $ 2,779,096 $ 2,575,845
Aggregate payments to General
Partner: (1)
1994 $ 54,739 $ 551,300 $ 1,339,355 $ 2,007,562
1995 - 380,380 1,201,436 1,480,305
1996 - 290,349 967,667 1,097,106
1997 - 212,148 909,024 1,113,697
1998 - 211,503 876,403 766,462
1999 - - 168,632 453,160
-------------- -------------- ------------- --------------
$ 54,739 $ 1,645,680 $ 5,462,517 $ 6,918,292
============== ============== ============= ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Capital
Distribution Distribution Equipment
Fund V Fund VI Fund VII
<S> <C> <C> <C>
Date offering commenced Feb. 22, 1993 Nov. 23, 1994 Nov. 29, 1996
Date offering closed Nov. 15, 1994 Nov. 22, 1996 Nov. 29, 1998 (2)
Dollar amount raised $ 125,000,000 $125,000,000 $150,000,000
Amounts paid to General
Partners from proceeds of
offering:
Acquisition fees $ 5,956,319 $ 5,625,000 None
Selling commissions $ 1,702,822 $ 1,711,446 $ 1,922,703
Organization and program costs $ 5,751,177 $ 5,875,000 $ 7,000,000
Dollar amount of cumulative cash
generated from operations before
deducting payments to the General
Partner $ 80,922,052 $83,243,960 $43,869,329
Cumulative amount paid to the
General Partner from operations:
Management fees $ 8,092,568 $ 4,887,307 $ 2,802,524
Other operating expenses $ 3,043,460 $ 2,301,693 $ 1,952,261
Aggregate payments to General
Partner: (1)
1994 $ 15,675,132
1995 4,067,056 $12,837,117
1996 2,328,139 13,208,900
1997 2,053,274 1,969,649 $10,657,867
1998 1,740,666 1,822,010 14,212,252
1999 729,947 726,324 $ 1,134,666
-------------- -------------- --------------
$ 26,594,214 $30,564,000 $26,004,785
============== ============== ==============
</TABLE>
FOOTNOTES:
(1) As of December 31, 1998. Includes payments of management fees,
reimbursements of syndication costs to general partner (and affiliates),
acquisition fees and reimbursements of administrative costs.
A-5
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
December 31, 1998
(Unaudited)
The following Table summarizes the operating results of Prior Programs (ACDF,
ACDF II, ACDF III, ACDF IV, ACDF V, ACDF VI and ACEF VII). The Programs' records
are maintained in accordance with generally accepted accounting principles for
financial statement purposes.
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
-------------------------
1986 1987 1988 1989
---- ---- ---- ----
Months of operations 2 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 6,257 $ 375,072 $ 1,493,794 $ 1,761,021
- gain (loss) on sales of assets - - - 11,951
--------------- ----------------- --------------- ----------------
6,257 375,072 1,493,794 1,772,972
Less Operating Expenses: (1)
Depreciation expense - 51,965 914,188 1,215,223
Amortization expense - 7,849 7,949 7,949
Interest expense 1,558 29,918 37,727 52,553
Administrative costs and reimbursements - 16,288 20,978 43,990
Legal/Professional fees - 15,105 16,586 39,712
Provision for doubtful accounts - - - -
Supplies - 10,507 6,414 -
Other 125 10,886 18,329 12,648
Management fee - 19,882 108,196 147,120
--------------- ----------------- --------------- ----------------
1,683 162,400 1,130,367 1,519,195
--------------- ----------------- --------------- ----------------
Net income - GAAP basis (2) $ 4,574 $ 212,672 $ 363,427 $ 253,777
=============== ================= =============== ================
Taxable income (loss) from operations $ 3,972 $ (208,962) $ (414,155) $ (294,778)
=============== ================= =============== ================
Cash generated by (used in) operations (3) $221,291 $160,581 $1,402,104 $1,521,502
Cash generated from sales - - - -
Cash generated from refinancing - - - -
Cash generated from other (3) - 104,143 183,679 221,151
--------------- ----------------- --------------- ----------------
221,291 264,724 1,585,783 1,742,653
--------------- ----------------- --------------- ----------------
Less cash distributions to investors:
From operating cash flow - 160,581 1,215,018 1,508,226
From sales - - - -
From refinancing - - - -
From other - 93,374 - -
--------------- ----------------- --------------- ----------------
Total distributions - 253,955 1,215,018 1,508,226
--------------- ----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 221,291 $ 10,769 $ 370,765 $ 234,427
=============== ================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 2.76 $ (46.78) $ (41.00) $ (29.20)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income None $ 47.60 $ 35.98 $ 25.14
- Return of capital None 9.82 85.52 125.75
--------------- ----------------- --------------- ----------------
None 57.42 121.50 150.89
----------------
Cash available for distribution, reinvested for
investors' accounts None 65.08 28.50 9.11
--------------- ----------------- --------------- ----------------
Total None $ 122.50 $ 150.00 $ 160.00
=============== ================= =============== ================
Sources (on a cash basis)
Sales
Refinancing
Operations $ 77.46 $ 150.00 $ 160.00
Other 45.04 - -
--------------- ----------------- --------------- ----------------
Total None $ 122.50 $ 150.00 $ 160.00
=============== ================= =============== ================
Amount invested in program equipment (cost,
excluding acquisition fees) $ 467,071 $ 4,293,800 $ 8,139,130 $ 8,989,917
Amount invested in program equipment (book value) $ 488,090 $ 4,341,128 $ 7,244,935 $ 6,724,650
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 4.20% 38.57% 73.10% 80.75%
</TABLE>
(Footnotes follow on page A-22)
A-6
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
1990 1991 1992 1993
---- ---- ---- ----
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 2,201,630 $ 1,816,898 $ 1,410,396 $ 895,012
- gain (loss) on sales of assets 8,766 4,998 15,909 9,929
--------------- ----------------- --------------- ----------------
2,210,396 1,821,896 1,426,305 904,941
Less Operating Expenses: (1)
Depreciation expense 1,612,647 1,277,406 906,100 348,650
Amortization expense 7,949 7,849 - -
Interest expense 176,922 144,752 72,057 25,403
Administrative costs and reimbursements 37,163 55,293 126,664 140,984
Legal/Professional fees 35,231 41,141 41,459 44,256
Provision for doubtful accounts 96,682 42,870 5,731 -
Supplies - - - -
Other 11,786 25,922 35,839 21,664
Management fee 164,932 130,347 94,229 80,016
--------------- ----------------- --------------- ----------------
2,143,312 1,725,580 1,282,079 660,973
--------------- ----------------- --------------- ----------------
Net income (loss) - GAAP basis (2) $ 67,084 $ 96,316 $ 144,226 $ 243,968
=============== ================= =============== ================
Taxable income (loss) from operations $ 150,104 $ 180,117 $ 1,105,467 $ 692,509
=============== ================= =============== ================
Cash generated by (used in) operations (3) $ 1,585,967 $ 1,424,425 $ 1,673,016 $ 574,077
Cash generated from sales 30,000 159,396 562,504 1,343,908
Cash generated from refinancing - - - -
Cash generated from other (3) 237,576 185,406 126,552 183,275
--------------- ----------------- --------------- ----------------
1,853,543 1,769,227 2,362,072 2,101,260
--------------- ----------------- --------------- ----------------
Less cash distributions to investors:
From operating cash flow 1,516,124 1,265,955 1,470,260 574,077
From sales - - - 524,806
From refinancing - - - -
From other - - - 183,275
--------------- ----------------- --------------- ----------------
Total distributions 1,516,124 1,265,955 1,470,260 1,282,158
--------------- ----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 337,419 $ 503,272 $ 891,812 $ 819,102
=============== ================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 14.88 $ 17.83 $ 109.44 $ 68.55
Recapture $ - $ -
Capital gain (loss) $ - $ -
Cash distributions to investors on a GAAP basis:
- Investment income $ 6.66 $ 9.54 $ 14.30 $ 24.18
- Return of capital 145.17 117.24 132.94 104.22
--------------- ----------------- --------------- ----------------
151.83 126.78 147.24 128.40
--------------- ----------------- --------------- ----------------
Cash available for distribution, reinvested for
investors' accounts 18.17 14.46 31.00 (21.92)
--------------- ----------------- --------------- ----------------
Total $ 170.00 $ 141.24 $ 178.24 $ 106.48
=============== ================= =============== ================
Sources (on a cash basis)
Sales $ 43.58
Refinancing
Operations $ 170.00 $ 141.24 $ 178.24 47.68
Other - - - 15.22
--------------- ----------------- --------------- ----------------
Total $ 170.00 $ 141.24 $ 178.24 $ 106.48
=============== ================= =============== ================
Amount invested in program equipment (cost,
excluding acquisition fees) $10,064,292 $ 8,607,852 $ 7,402,311 $ 3,620,293
Amount invested in program equipment (book value) $ 5,961,158 $ 3,639,966 $ 2,147,253 $ 724,675
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 90.40% 77.31% 66.49% 32.52%
(Footnotes follow on page A-22)
</TABLE>
A-7
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund
Period Ended December 31,
-------------------------
1994 1995 1996 1997
---- ---- ---- ----
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 264,117 $ 374,172 $ 169,765 $ 142,272
- gain (loss) on sales of assets 220,266 15,106 39,095 60,838
--------------- ----------------- --------------- ----------------
484,383 389,278 208,860 203,110
Less Operating Expenses: (1)
Depreciation expense 98,835 29,324 62,028 36,917
Amortization expense - - - -
Interest expense 5,154 12,496 15,883 11,505
Administrative costs and reimbursements 34,380 - - -
Legal/Professional fees 20,391 15,443 10,606 14,959
Provision for losses - 3,768 2,088 -
Provision for doubtful accounts - - - -
Supplies - - - -
Other 20,697 17,552 16,712 14,962
Management fee 20,359 - - -
--------------- ----------------- --------------- ----------------
199,816 78,583 107,317 78,343
--------------- ----------------- --------------- ----------------
Net income (loss) - GAAP basis (2) $ 284,567 $ 310,695 $ 101,543 $ 124,767
=============== ================= =============== ================
Taxable income (loss) from operations $ 745,274 $ 339,275 $ 193,822 $ (311,342)
=============== ================= =============== ================
Cash generated by (used in) operations (3) $ 195,123 $ 200,234 $ 93,675 $ 114,354
Cash generated from sales 622,350 112,188 212,802 263,096
Cash generated from refinancing - - - -
Cash generated from other (3) 119,745 79,692 79,520 1,000
--------------- ----------------- --------------- ----------------
937,218 392,114 385,997 378,450
--------------- ----------------- --------------- ----------------
Less cash distributions to investors:
From operating cash flow 195,123 200,234 93,675 114,354
From sales 622,350 112,188 142,200 298,243
From refinancing - - - -
From other 412,143 174,165 - 1,000
--------------- ----------------- --------------- ----------------
Total distributions 1,229,616 486,587 235,875 413,597
--------------- ----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ (292,398) $ (94,473) $ 150,122 $ (35,147)
=============== ================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 73.92 $ 33.65 $ 19.22 $ (30.88)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 28.22 $ 30.82 $ 10.07 $ 12.38
- Return of capital 94.96 17.91 13.55 29.06
--------------- ----------------- --------------- ----------------
123.18 48.73 23.62 41.44
--------------- ----------------- --------------- ----------------
Cash available for distribution, reinvested for
investors' accounts (23.66) (18.63) (3.62) (9.44)
--------------- ----------------- --------------- ----------------
Total $ 99.52 $ 30.10 $ 20.00 $ 32.00
=============== ================= =============== ================
Sources (on a cash basis)
Sales $ 50.37 $ 6.94 $ 12.06 $ 23.07
Refinancing
Operations 15.79 12.39 7.94 8.85
Other 33.36 10.77 0.08
--------------- ----------------- --------------- ----------------
Total $ 99.52 $ 30.10 $ 20.00 $ 32.00
=============== ================= =============== ================
Amount invested in program equipment (cost,
excluding acquisition fees) $ 2,300,024 $ 2,825,287 $ 2,296,755 $ -
Amount invested in program equipment (book value) $ 484,971 $ 552,050 $ 234,707 $ -
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 20.66% 25.38% 20.63% -
</TABLE>
(Footnotes follow on page A-22)
A-8
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
Period Ended December 31,
-------------------------
1988 1989 1990 1991
---- ---- ---- ----
Months of operations 9 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 1,001,065 $ 4,190,191 $ 8,619,546 $ 8,774,789
- gain (loss) on sales of assets - - - (31,613)
--------------- ----------------- --------------- ----------------
1,001,065 4,190,191 8,619,546 8,743,176
Less Operating Expenses: (1)
Depreciation expense 531,855 2,579,866 5,253,869 5,546,000
Provision for decline in value of commercial -
aircraft - - 1,083,834 -
Provision for doubtful accounts - - - 30,400
Interest expense 31,445 362,122 1,485,960 1,353,033
Administrative costs and reimbursements 19,284 107,082 95,474 94,910
Legal/Professional fees - 32,022 42,748 52,281
Other 7,799 41,448 58,465 38,337
Management fee 43,721 252,159 472,064 510,416
--------------- ----------------- --------------- ----------------
634,104 3,374,699 8,492,414 7,625,377
--------------- ----------------- --------------- ----------------
Net income - GAAP basis (5) $ 366,961 $ 815,492 $ 127,132 $ 1,117,799
=============== ================= =============== ================
Taxable income (loss) from operations $ (588,007) $ (3,544,620) $ (3,583,850) $ (2,013,494)
=============== ================= =============== ================
Cash generated by (used in) operations (3) $ 1,044,176 $ 3,639,963 $ 6,823,453 $ 6,705,095
Cash generated from sales $ - $ - $ - 223,447
Cash generated from refinancing -
Cash generated from other (3) 100,715 147,741 400,308 488,962
--------------- ----------------- --------------- ----------------
1,144,891 3,787,704 7,223,761 7,417,504
Less cash distributions to investors:
From operating cash flow 253,760 1,986,455 4,069,920 4,561,842
From sales - - - -
From refinancing - - - -
From other - - - -
--------------- ----------------- --------------- ----------------
Total distributions 253,760 1,986,455 4,069,920 4,561,842
--------------- ----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 891,131 $ 1,801,249 $ 3,153,841 $ 2,855,662
=============== ================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (96.15) $ (158.82) $ (101.37) $ (56.95)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 41.91 $ 36.54 $ 3.60 $ 31.62
- Return of capital - 53.37 112.69 98.72
--------------- ----------------- --------------- ----------------
41.91 89.91 116.29 130.34
Cash available for distribution, reinvested for
investors' accounts 37.47 30.09 13.71 9.66
--------------- ----------------- --------------- ----------------
Total $ 79.38 $ 120.00 $ 130.00 $ 140.00
=============== ================= =============== ================
Sources (on a cash basis)
Operations $ 79.38 $ 120.00 $ 130.00 $140.00
Sales - - - -
Refinancing - - - -
Other - - - -
--------------- ----------------- --------------- ----------------
Total $ 79.38 $ 120.00 $ 130.00 $ 140.00
=============== ================= =============== ================
Amount invested in program equipment (cost,
excluding acquisition fees) $14,664,014 $ 30,309,212 $ 48,538,987 $ 47,181,808
Amount invested in program equipment (book value) $14,661,074 $ 28,412,251 $ 40,154,353 $ 29,983,437
Amount remaining invested in program equipment
(Cost of equipment owned at end of period as a
percentage of cost of all equipment purchased by the
program) (4) 28.05% 57.99% 92.86% 90.26%
</TABLE>
(Footnotes follow on page A-22)
A-9
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
Period Ended December 31,
-------------------------
1992 1993 1994 1995
---- ---- ---- ----
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 8,148,565 $ 6,665,582 $ 5,627,738 $ 3,191,834
- gain (loss) on sales of assets 111,809 184,599 (3,239) 453,960
--------------- ----------------- --------------- ----------------
8,260,374 6,850,181 5,624,499 3,645,794
Less Operating Expenses: (1)
Depreciation expense 5,285,315 4,285,373 2,963,445 1,451,193
Provision for decline in value of commercial
aircraft - -
Provision for doubtful accounts 4,064 - 11,616 25,972
Interest expense 1,171,105 860,663 509,267 365,099
Administrative costs and reimbursements 256,184 313,421 238,185 157,444
Legal/Professional fees 39,612 47,110 37,647 44,864
Other 70,316 49,725 66,324 71,101
Management fee 408,421 427,874 313,115 222,936
--------------- ----------------- --------------- ----------------
7,235,017 5,984,166 4,139,599 2,338,609
--------------- ----------------- --------------- ----------------
Net income - GAAP basis (5) $ 1,025,357 $ 866,015 $ 1,484,900 $ 1,307,185
=============== ================= =============== ================
Taxable income (loss) from operations $ 1,686,207 $ 2,346,733 $ 4,340,559 $ 3,101,835
=============== ================= =============== ================
Cash generated by (used in) operations (3) $ 6,601,157 $ 4,720,797 $ 3,921,897 $ 2,788,119
Cash generated from sales 767,749 2,643,336 2,959,549 2,304,367
Cash generated from refinancing - - - -
Cash generated from other (3) 698,496 1,437,114 1,311,673 875,730
--------------- ----------------- --------------- ----------------
8,067,402 8,801,247 8,193,119 5,968,216
Less cash distributions to investors:
From operating cash flow 4,927,246 4,720,797 3,921,897 2,788,119
From sales - - 859,241 1,064,197
From refinancing - - - -
From other - 794,270 1,311,673 875,730
--------------- ----------------- --------------- ----------------
Total distributions 4,927,246 5,515,067 6,092,811 4,728,046
--------------- ----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 3,140,156 $ 3,286,180 $ 2,100,308 $ 1,240,170
=============== ================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 47.69 $ 66.38 $ 122.79 $ 87.76
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 29.01 $ 24.50 $ 42.01 $ 36.99
- Return of capital 111.77 133.07 132.10 98.14
--------------- ----------------- --------------- ----------------
140.78 157.57 174.11 135.13
Cash available for distribution, reinvested for
investors' accounts 9.22 2.43 (4.11) (30.13)
--------------- ----------------- --------------- ----------------
Total $ 150.00 $ 160.00 $ 170.00 $ 105.00
=============== ================= =============== ================
Sources (on a cash basis)
Operations $ 150.00 $ 136.96 $ 109.43 $ 61.92
Sales - - 23.97 23.63
Refinancing - - - -
Other - 23.04 36.60 19.45
--------------- ----------------- --------------- ----------------
Total $ 150.00 $ 160.00 $ 170.00 $ 105.00
=============== ================= =============== ================
Amount invested in program equipment (cost,
excluding acquisition fees) $41,405,356 $ 36,692,677 $ 26,755,760 $ 21,031,914
Amount invested in program equipment (book value) $23,667,996 $ 16,204,828 $ 11,523,077 $ 7,459,980
Amount remaining invested in program equipment
(Cost of equipment owned at end of period as a
percentage of cost of all equipment purchased by the
program) (4) 79.21% 70.20% 51.19% 40.24%
</TABLE>
(Footnotes follow on page A-22)
A-10
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund II
December 31,
1996 1997 1998
---- ---- ----
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $ 1,994,161 $ 1,189,141 $ 879,740
- gain (loss) on sales of assets 168,927 124,594 1,647,529
----------------- --------------- ----------------
2,163,088 1,313,735 2,527,269
Less Operating Expenses: (1)
Depreciation expense 885,426 364,425 191,489
Provision for doubtfull accounts - 17,072 -
Provision for losses 22,221 13,097 4,994
Interest expense 237,226 115,320 41,969
Administrative costs and reimbursements 132,994 127,992 123,597
Legal/Professional fees 21,173 24,303 20,930
Other 72,138 54,154 49,779
Management fee 157,355 84,156 87,906
----------------- --------------- ----------------
1,528,533 800,519 520,664
----------------- --------------- ----------------
Net income - GAAP basis (5) $ 634,555 $ 513,216 $ 2,006,605
================= =============== ================
Taxable income (loss) from operations $ 2,079,449 $ 1,357,072 $ 5,173,576
================= =============== ================
Cash generated by (used in) operations (3) $ 1,288,526 $ 635,243 $ 459,213
Cash generated from sales 1,298,116 778,928 4,085,168
Cash generated from refinancing - - -
Cash generated from other (3) 877,510 816,922 136,857
----------------- --------------- ----------------
3,464,152 2,231,093 4,681,238
Less cash distributions to investors:
From operating cash flow 1,288,526 635,243 459,213
From sales - - 4,085,168
From refinancing - - -
From other 788,922 655,877 365,512
----------------- --------------- ----------------
Total distributions 2,077,448 1,291,120 4,909,893
----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 1,386,704 $ 939,973 $ (228,655)
================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 58.84 $ 38.40 $ 146.38
Recapture $ - $ -
Capital gain (loss) $ - $ -
Cash distributions to investors on a GAAP basis:
- Investment income $ 17.95 $ 14.52 $ 56.78
- Return of capital 41.42 22.38 83.54
----------------- --------------- ----------------
59.37 36.90 140.32
Cash available for distribution, reinvested for
investors' accounts (7.37) (6.90) (5.32)
----------------- --------------- ----------------
Total $ 52.00 $ 30.00 $ 135.00
================= =============== ================
Sources (on a cash basis)
Operations $ 32.25 $ 14.76 $ 12.63
Sales - - 112.32
Refinancing - - -
Other 19.75 15.24 10.05
----------------- --------------- ----------------
Total $ 52.00 $ 30.00 $ 135.00
================= =============== ================
Amount invested in program equipment (cost,
excluding acquisition fees) $ 16,329,599 $ 11,293,265 $ -
Amount invested in program equipment (book value) $ 4,564,924 $ 2,740,429 $ 2,370,652
Amount remaining invested in program equipment (Cost of equipment owned at end
of period as a percentage of cost of all equipment
purchased by the program) (4) 31.24% 21.61%
</TABLE>
(Footnotes follow on page A-22)
A-11
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended December 31,
1990 1991 1992
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $ 2,130,161 $ 7,760,246 $ 12,713,280
- gain (loss) on sales of assets - (17,714) 1,202,188
----------------- --------------- ----------------
2,130,161 7,742,532 13,915,468
Less Operating Expenses: (1)
Depreciation expense 1,278,427 4,919,605 7,739,054
Provision for decline in value of commercial
aircraft 623,294 - -
Interest expense 482,047 1,002,520 1,186,760
Administrative costs and reimbursements 70,775 239,667 542,510
Legal/Professional fees 7,600 52,746 31,691
Other 22,898 49,198 52,629
Management fee 83,245 391,494 839,909
----------------- --------------- ----------------
1,289,859 1,735,625 2,653,499
----------------- --------------- ----------------
Net income - GAAP basis (6) $ (438,125) $ 1,087,302 $ 3,522,915
================= =============== ================
Taxable income (loss) from operations $ (2,539,135) $ (6,476,596) $ (3,010,933)
================= =============== ================
Cash generated by (used in) operations (3) $ 1,572,921 $ 6,288,997 $ 9,564,446
Cash generated from sales - - 4,006,080
Cash generated from refinancing - - -
Cash generated from other (3) 125,093 14,587 181,746
----------------- --------------- ----------------
1,698,014 6,303,584 13,752,272
Less cash distributions to investors:
From operating cash flow 396,751 4,185,400 9,261,560
From sales - - -
From refinancing - - -
From other - - -
----------------- --------------- ----------------
Total distributions 396,751 4,185,400 9,261,560
----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 1,301,263 $ 2,118,184 $ 4,490,712
================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (282.13) $ (200.01) $ (40.37)
Recapture
Capital gain (loss) Cash distributions to investors on a GAAP basis:
- Investment income $ 33.58 $ 47.23
- Return of capital $ 44.53 96.98 78.19
----------------- --------------- ----------------
$ 44.53 $ 130.56 $ 125.42
================= =============== ================
Sources (on a cash basis)
Sales
Refinancing
Operations $ 44.53 $ 130.56 $ 125.42
Other - - -
----------------- --------------- ----------------
Total $ 44.53 $ 130.56 $ 125.42
================= =============== ================
Amount invested in program equipment (cost,
excluding acquisition fees) $ 28,534,220 $ 52,188,848 $ 83,423,686
Amount invested in program equipment (book value) $ 27,475,925 $ 44,531,829 $ 64,526,606
Amount remaining invested in program equipment (Cost of equipment owned at end
of period as a percentage of cost of all equipment
purchased by the program) (4) 28.64% 52.38% 83.73%
</TABLE>
(Footnotes follow on page A-22)
A-12
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended
December 31,
1993 1994 1995 1996
---- ---- ---- ----
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $13,970,227 $ 14,212,777 $ 13,378,680 $ 10,565,963
- gain (loss) on sales of assets (140,513) 155,497 954,115 1,143,807
--------------- ----------------- --------------- ----------------
13,829,714 14,368,274 14,332,795 11,709,770
Less Operating Expenses: (1)
Depreciation expense 8,984,502 9,734,408 9,037,450 7,051,625
Provision for losses 36,626 826,550 118,023
Interest expense 1,456,147 1,395,276 1,064,823 630,450
Administrative costs and reimbursements 468,005 340,269 300,952 245,242
Legal/Professional fees 58,809 60,552 59,237 38,522
Other 75,289 113,411 110,637 149,613
Management fee 915,375 999,086 900,484 722,425
--------------- ----------------- --------------- ----------------
11,958,127 12,679,628 12,300,133 8,955,900
--------------- ----------------- --------------- ----------------
Income before extraordinary items 1,871,587 1,688,646 2,032,662 2,753,870
Extrordinary gain on early extinguisment of debt - - - 97,608
--------------- ----------------- --------------- ----------------
Net income - GAAP basis (6) $ 1,871,587 $ 1,688,646 $ 2,032,662 $ 2,851,478
=============== ================= =============== ================
Taxable income (loss) from operations $ (5,122,581) $ 635,990 $ 6,281,437 $ 8,404,788
=============== ================= =============== ================
Cash generated by (used in) operations (3) $11,402,915 $ 11,400,861 $ 10,333,228 $ 8,435,426
Cash generated from sales 269,479 682,595 3,276,705 5,335,135
Cash generated from refinancing - - - -
Cash generated from other (3) 719,701 1,317,531 1,518,191 1,628,837
--------------- ----------------- --------------- ----------------
12,392,095 13,400,987 15,128,124 15,399,398
Less cash distributions to investors:
From operating cash flow 9,594,918 10,201,485 10,333,228 8,435,426
From sales - - - -
From refinancing - - - -
From other - - 4,961 777,879
--------------- ----------------- --------------- ----------------
Total distributions 9,594,918 10,201,485 10,338,189 9,213,305
--------------- ----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 2,797,177 $ 3,199,502 $ 4,789,935 $ 6,186,093
=============== ================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (68.68) $ 8.53 $ 84.28 $ 112.76
Recapture
Capital gain (loss) Cash distributions to investors on a GAAP basis:
- Investment income $ 25.09 $ 22.66 $ 27.27 $38.26
- Return of capital 104.86 115.59 112.73 86.63
--------------- ----------------- --------------- ----------------
$ 129.95 $ 138.25 $ 140.00 $ 124.89
=============== ================= =============== ================
Sources (on a cash basis)
Sales
Refinancing
Operations $ 129.95 $ 138.25 $ 139.93 $ 114.35
Other - - 0.07 10.54
--------------- ----------------- --------------- ----------------
Total $ 129.95 $ 138.25 $ 140.00 $ 124.89
=============== ================= =============== ================
Amount invested in program equipment (cost, excluding
acquisition fees) $91,612,304 $ 87,442,745 $ 79,602,818 $ 64,700,440
Amount invested in program equipment (book value) $63,434,911 $ 52,479,724 $ 39,107,792 $ 26,203,009
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 91.95% 87.77% 79.90% 64.94%
</TABLE>
(Footnotes follow on page A-22)
A-13
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund III
Period Ended
December 31, June 30,
1997 1998 1999
---- ---- ----
Months of operations 12 12 6
<S> <C> <C> <C>
Gross revenue - lease and other $ 7,610,362 $ 4,847,317 $ 1,089,386
- gain (loss) on sales of assets 2,823,095 6,160,019 (43,349)
----------------- --------------- ----------------
10,433,457 11,007,336 1,046,037
Less Operating Expenses: (1)
Depreciation expense 4,560,013 2,557,024 431,755
Provision for losses 104,335 17,173 -
Interest expense 319,415 126,982 15,182
Administrative costs and reimbursements 248,250 235,984 87,442
Legal/Professional fees 31,985 25,882 15,366
Other 174,046 110,675 100,512
Management fee 660,774 640,419 81,190
----------------- --------------- ----------------
6,098,818 3,714,139 731,447
----------------- --------------- ----------------
Income before extraordinary items 4,334,639 7,293,197 314,590
Extrordinary gain on early extinguisment of debt - - -
----------------- --------------- ----------------
Net income - GAAP basis (6) $ 4,334,639 $ 7,293,197 $ 314,590
================= =============== ================
Taxable income (loss) from operations $ 10,406,517 $ 10,556,855 $ 5,000,000
================= =============== ================
Cash generated by (used in) operations (3) $ 6,535,498 $ 3,953,216 $ 459,705
Cash generated from sales 10,182,310 9,580,103 736,868
Cash generated from refinancing - -
Cash generated from other (3) 1,047,681 962,739 236,977
----------------- --------------- ----------------
17,765,489 14,496,058 1,433,550
Less cash distributions to investors:
From operating cash flow $6,535,498 $3,953,216 $ 459,705
From sales 35,201 5,541,168 736,868
From refinancing -
From other 1,047,681 962,739 4,340,216
----------------- --------------- ----------------
Total distributions 7,618,380 10,457,123 5,536,789
----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 10,147,109 $ 4,038,935 $ (4,103,239)
================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 139.66 $ 141.69 $ 67.11
Recapture
Capital gain (loss) Cash distributions to investors on a GAAP basis:
- Investment income $ 58.17 $ 97.89 $ 4.22
- Return of capital 45.11 43.88 70.84
----------------- --------------- ----------------
$ 103.28 $ 141.77 $ 75.06
================= =============== ================
Sources (on a cash basis)
Sales $ 0.48 $ 75.12 $ 9.99
Refinancing - - -
Operations 88.60 53.59 6.23
Other 14.20 13.06 58.84
----------------- --------------- ----------------
Total $ 103.28 $ 141.77 $ 75.06
================= =============== ================
Amount invested in program equipment (cost, excluding
acquisition fees) $ 43,579,341 $ 29,610,312 $ 20,264,595
Amount invested in program equipment (book value) $ 13,159,990 $ 6,221,543 $ 4,783,156
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 43.74% 29.72% 20.34%
</TABLE>
(Footnotes follow on page A-22)
A-14
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund IV
Period Ended December 31,
1992 1993 1994 1995
---- ---- ---- ----
Months of operations 12 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 2,123,081 $ 10,510,289 $ 13,246,145 $ 12,973,718
- gain (loss) on sales of assets - (38,429) (102,932) 615,042
--------------- ----------------- --------------- ----------------
2,123,081 10,471,860 13,143,213 13,588,760
Less Operating Expenses: (1)
Depreciation and amortization expense 1,147,209 7,054,380 8,743,149 8,740,231
Provision for losses - - 34,505 679,634
Interest expense 91,577 81,437 1,332,542 1,960,823
Administrative costs and reimbursements 382,114 537,918 358,441 349,663
Legal/Professional fees 46,935 52,838 86,594 76,365
Other 25,988 57,575 114,376 110,466
Management fee 103,510 752,950 1,060,190 872,374
--------------- ----------------- --------------- ----------------
1,797,333 8,537,098 11,729,797 12,789,556
--------------- ----------------- --------------- ----------------
Net income - GAAP basis $ 325,748 $ 1,934,762 $ 1,413,416 $ 799,204
=============== ================= =============== ================
Taxable income (loss) from operations $ (2,034,428) $ (9,624,570) $ (8,073,869) $ (2,073,084)
=============== ================= =============== ================
Cash generated by (used in) operations (3) $ 3,560,891 $ 9,021,440 $ 10,366,325 $ 8,830,893
Cash generated from sales - 98,752 5,648,425 2,722,954
Cash generated from refinancing - - - -
Cash generated from other (3) - 220,258 1,522,609 2,384,094
--------------- ----------------- --------------- ----------------
3,560,891 9,340,450 17,537,359 13,937,941
Less cash distributions to investors:
From operating cash flow 1,936,639 8,686,491 9,653,038 8,830,893
From sales - - - -
From refinancing - - - -
From other - - - 906,007
--------------- ----------------- --------------- ----------------
Total distributions 1,936,639 8,686,491 9,653,038 9,736,900
--------------- ----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 1,624,252 $ 653,959 $ 7,884,321 $ 4,201,041
=============== ================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (76.67) $ (127.78) $ (106.64) $ (27.43)
Recapture
Capital gain (loss) $ 0.04
Cash distributions to investors on a GAAP basis:
- Investment income $ 12.28 $ 15.86 $ 18.67 $ 10.57
- Return of capital 61.44 100.63 110.12 119.50
--------------- ----------------- --------------- ----------------
$73.72 $116.49 $128.79 $ 130.07
=============== ================= =============== ================
Sources (on a cash basis)
Sales
Refinancing
Operations $ 73.72 $ 116.49 $ 128.79 $ 117.97
Other - - - 12.10
--------------- ----------------- --------------- ----------------
Total $ 73.72 $ 116.49 $ 128.79 $ 130.07
=============== ================= =============== ================
Amount invested in program equipment (cost, excluding
acquisition fees) $49,603,894 $ 82,896,683 $ 88,187,291 $ 98,547,911
Amount invested in program equipment (book value) $49,801,834 $ 69,901,953 $ 65,252,553 $ 63,967,204
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 45.62% 76.24% 81.10% 90.63%
</TABLE>
(Footnotes follow on page A-22)
A-15
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund IV
Period Ended
December 31, June 30,
------------ --------
1996 1997 1998 1999
---- ---- ---- ----
Months of operations 12 12 12 6
<S> <C> <C> <C> <C>
Gross revenue - lease and other $11,664,408 $ 8,076,530 $ 5,301,074 $ 2,002,838
- gain (loss) on sales of assets 1,574,946 3,203,666 719,396 5,137,639
--------------- ----------------- --------------- ----------------
13,239,354 11,280,196 6,020,470 7,140,477
Less Operating Expenses: (1)
Depreciation and amortization expense 7,849,010 4,846,725 2,379,210 965,720
Provision for losses 135,965 321,876 288,145 -
Interest expense 1,858,316 971,628 448,071 173,756
Administrative costs and reimbursements 275,778 303,642 268,282 100,007
Legal/Professional fees 46,419 35,746 31,781 20,959
Other 98,471 156,841 94,243 141,984
Management fee 821,328 810,055 498,180 353,153
--------------- ----------------- --------------- ----------------
11,085,287 7,446,513 4,007,912 1,755,579
--------------- ----------------- --------------- ----------------
Income before extraordinary items 2,154,067 3,833,683 2,012,558 5,384,898
Extrordinary gain on early extinguisment of debt 112,546 - - -
--------------- ----------------- --------------- ----------------
Net income - GAAP basis (6) $ 2,266,613 $ 3,833,683 $ 2,012,558 $ 5,384,898
=============== ================= =============== ================
Taxable income (loss) from operations $ 1,101,252 $ 13,539,726 $ 5,093,690 $ 8,000,000
=============== ================= =============== ================
Cash generated by (used in) operations (3) $ 7,511,884 $ 5,717,928 $ 3,979,852 $ 695,191
Cash generated from sales 4,376,555 20,594,019 2,981,305 11,397,850
Cash generated from refinancing - - - -
Cash generated from other (3) 2,991,035 2,593,695 2,210,380 747,394
--------------- ----------------- --------------- ----------------
14,879,474 28,905,642 9,171,537 12,840,435
Less cash distributions to investors:
From operating cash flow 7,511,884 $5,717,928 $3,979,852 $ 695,191
From sales - 2,169,677 2,981,305 3,799,827
From refinancing - - -
From other 2,881,345 2,593,695 3,523,299 747,394
--------------- ----------------- --------------- ----------------
Total distributions 10,393,229 10,481,300 10,484,456 5,242,412
--------------- ----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 4,486,245 $ 18,424,342 $ (1,312,919) $ 7,598,023
=============== ================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 14.56 $ 179.03 $ 67.35 $ 105.78
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 29.97 $ 50.69 $ 26.61 $ 71.20
- Return of capital 108.83 89.31 113.39 (1.20)
--------------- ----------------- --------------- ----------------
$ 138.80 $ 140.00 $ 140.00 $ 70.00
=============== ================= =============== ================
Sources (on a cash basis)
Sales $ 28.98 $ 39.81 $ 50.74
Refinancing - - -
Operations $ 100.32 76.38 53.14 9.28
Other 38.48 34.64 47.05 9.98
--------------- ----------------- --------------- ----------------
Total $ 138.80 $ 140.00 $ 140.00 $ 70.00
=============== ================= =============== ================
Amount invested in program equipment (cost, excluding
acquisition fees) $92,543,075 $ 60,025,398 $ 53,022,506 $ 34,161,057
Amount invested in program equipment (book value) $52,264,526 $ 27,375,489 $ 20,423,330 $ 12,530,869
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 85.11% 55.20% 48.76% 31.42%
</TABLE>
(Footnotes follow on page A-22)
A-16
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund V
Period Ended
December 31,
1993 1994 1995 1996
---- ---- ---- ----
Months of operations 10 12 12 12
<S> <C> <C> <C> <C>
Gross revenue - lease and other $ 2,173,205 $ 10,806,892 $ 19,951,380 $ 23,662,790
- gain (loss) on sales of assets - 2,564 933,289 1,325,132
--------------- ----------------- --------------- ----------------
2,173,205 10,809,456 20,884,669 24,987,922
Less Operating Expenses: (1)
Depreciation and amortization expense 1,600,628 8,135,951 14,600,474 15,351,574
Provision for losses - 34,158 987,013 255,294
Interest expense 31,511 61,036 1,222,050 3,962,860
Administrative costs and reimbursements 373,089 706,324 535,812 455,316
Legal/Professional fees 13,746 65,028 110,744 117,566
Other 36,269 113,981 176,847 428,631
Management fee 178,583 1,013,448 1,623,818 1,725,751
--------------- ----------------- --------------- ----------------
2,233,826 10,129,926 19,256,758 22,296,992
--------------- ----------------- --------------- ----------------
Income before extraordinary items (60,621) 679,530 1,627,911 2,690,930
Extrordinary gain on early extinguisment of debt - - - 160,955
--------------- ----------------- --------------- ----------------
Net income - GAAP basis (6) $ (60,621) $ 679,530 $ 1,627,911 $ 2,851,885
=============== ================= =============== ================
Taxable income (loss) from operations $ (5,061,304) $ (13,005,033) $ (11,831,759) $ (7,493,824)
=============== ================= =============== ================
Cash generated by (used in) operations (3) $ 1,795,722 $ 10,053,220 $ 15,800,948 $ 14,733,366
Cash generated from sales - 22,572 6,930,477 5,900,451
Cash generated from refinancing - - - -
Cash generated from other (3) - 1,513,782 2,498,923 4,855,093
--------------- ----------------- --------------- ----------------
1,795,722 11,589,574 25,230,348 25,488,910
Less cash distributions to investors:
From operating cash flow 922,278 8,223,081 13,101,508 13,672,825
From sales - - - -
From refinancing - - - -
From other - - -
--------------- ----------------- --------------- ----------------
Total distributions 922,278 8,223,081 13,101,508 13,672,825
--------------- ----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 873,444 $ 3,366,493 $ 12,128,840 $ 11,816,085
=============== ================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (219.75) $ (152.59) $ (93.72) $ (59.36)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 8.05 $ 12.89 $ 22.59
- Return of capital $ 40.45 89.41 91.93 86.81
--------------- ----------------- --------------- ----------------
$ 40.45 $ 97.46 $ 104.82 $ 109.40
=============== ================= =============== ================
Sources (on a cash basis)
Sales
Refinancing
Operations $ 40.45 $ 97.46 $ 104.82 $ 109.40
Other - - -
--------------- ----------------- --------------- ----------------
Total $ 40.45 $ 97.46 $ 104.82 $ 109.40
=============== ================= =============== ================
Amount invested in program equipment (cost, excluding
acquisition fees) $34,699,207 $113,427,843 $ 161,866,626 $ 168,575,337
Amount invested in program equipment (book value) $34,246,741 $100,762,242 $ 131,686,535 $ 125,729,656
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 18.57% 60.69% 86.61% 90.20%
</TABLE>
(Footnotes follow on page A-22)
A-17
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund V
Period Ended
December 31, June 30,
1997 1998 1999
Months of operations 12 12 6
<S> <C> <C> <C>
Gross revenue - lease and other $23,092,315 $ 20,960,261 $ 8,355,660
- gain (loss) on sales of assets 345,340 1,050,907 492,104
--------------- ----------------- ---------------
23,437,655 22,011,168 8,847,764
Less Operating Expenses: (1)
Depreciation and amortization expense 13,503,318 11,830,276 4,190,952
Provision for losses 1,801,707 (7) 55,409 -
Interest expense 3,599,776 2,738,745 1,091,068
Administrative costs and reimbursements 405,886 422,293 144,740
Legal/Professional fees 94,603 60,684 31,856
Other 571,546 724,155 177,239
Management fee 1,647,388 1,318,373 585,207
--------------- ----------------- ---------------
21,624,224 17,149,935 6,221,062
--------------- ----------------- ---------------
Income before extraordinary items 1,813,431 4,861,233 2,626,702
Extrordinary gain on early extinguisment of debt - - -
--------------- ----------------- ---------------
Net income - GAAP basis (6) $ 1,813,431 $ 4,861,233 $ 2,626,702
=============== ================= ===============
Taxable income (loss) from operations $ (913,120) $ 15,903,507 $ 5,000,000
=============== ================= ===============
Cash generated by (used in) operations (3) $16,546,120 $ 15,715,879 $ 6,276,797
Cash generated from sales 3,136,926 13,675,178 2,742,607
Cash generated from refinancing - -
Cash generated from other (3) 4,476,163 3,410,321 1,488,979
--------------- ----------------- ---------------
24,159,209 32,801,378 10,508,383
Less cash distributions to investors:
From operating cash flow 13,744,875 14,854,419 6,276,797
From sales - - -
From refinancing - - -
From other - - 1,222,943
--------------- ----------------- ---------------
Total distributions 13,744,875 14,854,419 7,499,740
--------------- ----------------- ---------------
Cash generated (deficiency) after cash distributions $10,414,334 $ 17,946,959 $ 3,008,643
=============== ================= ===============
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (7.23) $ 125.99 $ 39.61
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 14.51 $ 38.51 $ 20.81
- Return of capital 95.48 80.35 39.20
--------------- ----------------- ---------------
$ 109.99 $ 118.86 $ 60.01
=============== ================= ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 109.99 $ 118.86 $ 50.22
Other - - -
--------------- ----------------- ---------------
Total $ 109.99 $ 118.86 $ 60.01
=============== ================= ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $163,806,646 $138,296,812 $ 129,838,591
Amount invested in program equipment (book value) $104,863,156 $ 74,753,369 $ 66,872,814
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 87.65% 73.96% 69.47%
</TABLE>
(Footnotes follow on page A-22)
A-18
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund VI
Period Ended
December 31,
------------
1995 1996 1997
---- ---- ----
Months of operations 12 12 12
<S> <C> <C> <C>
Gross revenue - lease and other $ 6,440,218 $ 25,837,343 $ 36,458,734
- gain (loss) on sales of assets 3,819 (107,873) 26,431
--------------- ----------------- ---------------
6,444,037 25,729,470 36,485,165
Less Operating Expenses: (1)
Depreciation and amortization expense 4,976,075 19,298,500 27,596,548
Provision for losses 64,892 257,814 364,852
Interest expense 931,651 5,773,463 7,993,746
Administrative costs and reimbursements 539,009 748,745 435,759
Legal/Professional fees 50,962 186,724 91,625
Other 121,541 612,698 807,883
Management fee 362,581 1,061,856 1,492,716
--------------- ----------------- ---------------
7,046,711 27,939,800 38,783,129
--------------- ----------------- ---------------
Net income (loss) - GAAP basis $ (602,674) $ (2,210,330) $ (2,297,964)
=============== ================= ===============
Taxable income (loss) from operations $ (11,625,618) $ (27,319,391) $ (22,433,132)
=============== ================= ===============
Cash generated by (used in) operations (3) $ 4,354,020 $ 13,940,220 $ 23,899,770
Cash generated from sales 54,156 636,397 406,362
Cash generated from refinancing - - -
Cash generated from other (3) 195,884 501,623 685,665
--------------- ----------------- ---------------
4,604,060 15,078,240 24,991,797
Less cash distributions to investors:
From operating cash flow 2,484,971 8,719,731 12,475,238
From sales - - -
From refinancing - - -
From other - - -
--------------- ----------------- ---------------
Total distributions 2,484,971 8,719,731 12,475,238
--------------- ----------------- ---------------
Cash generated (deficiency) after cash distributions $ 2,119,089 $ 6,358,509 $ 12,516,559
=============== ================= ===============
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (364.88) $ (346.74) $ (177.67)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income
- Return of capital $ 78.78 $ 92.53 $ 99.80
--------------- ----------------- ---------------
$ 78.78 $ 92.53 $ 99.80
=============== ================= ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 78.78 $ 92.53 $ 99.80
Other - - -
--------------- ----------------- ---------------
Total $ 78.78 $ 92.53 $ 99.80
=============== ================= ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $98,036,611 $204,553,244 $ 206,090,008
Amount invested in program equipment (book value) $92,802,029 $185,510,097 $ 158,856,251
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 47.07% 98.21% 98.95%
</TABLE>
(Footnotes follow on page A-22)
A-19
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Cash Distribution Fund VI
Period Ended
December 31, June 30,
1998 1999
Months of operations 12 6
<S> <C> <C>
Gross revenue - lease and other $ 35,362,991 $ 18,127,493
- gain (loss) on sales of assets 786,070 157,439
----------------- ---------------
36,149,061 18,284,932
Less Operating Expenses: (1)
Depreciation and amortization expense 26,193,147 11,856,615
Provision for losses 97,528 -
Interest expense 6,557,551 2,517,878
Administrative costs and reimbursements 427,872 150,308
Legal/Professional fees 74,390 38,661
Other 693,512 350,286
Management fee 1,394,138 576,016
----------------- ---------------
35,438,138 15,489,764
----------------- ---------------
Net income (loss) - GAAP basis $ 710,923 $ 2,795,168
================= ===============
Taxable income (loss) from operations $ (3,932,316) $ 5,000,000
================= ===============
Cash generated by (used in) operations (3) $ 24,079,438 $ 16,970,512
Cash generated from sales 3,357,017 871,191
Cash generated from refinancing - -
Cash generated from other (3) 428,622 103,867
----------------- ---------------
27,865,077 17,945,570
Less cash distributions to investors:
From operating cash flow 12,500,645 6,607,065
From sales - -
From refinancing - -
From other - -
----------------- ---------------
Total distributions 12,500,645 6,607,065
----------------- ---------------
Cash generated (deficiency) after cash distributions $ 15,364,432 $ 11,338,505
================= ===============
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (31.14) $ 39.60
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 5.63 $ 22.14
- Return of capital 94.37 30.72
----------------- ---------------
$ 100.00 $ 52.86
================= ===============
Sources (on a cash basis)
Sales
Refinancing
Operations $ 100.00 $ 52.86
Other - -
----------------- ---------------
Total $ 100.00 $ 52.86
================= ===============
Amount invested in program equipment (cost, excluding
acquisition fees) $199,708,088 $ 198,599,213
Amount invested in program equipment (book value) $129,566,007 $ 116,891,773
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 95.89% 95.35%
</TABLE>
(Footnotes follow on page A-22)
A-20
<PAGE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS (CONTINUED)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ATEL Capital Equipment Fund VII
Period Ended
December 31, June 30,
1997 1998 1999
---- ---- ----
Months of operations 12 12 6
<S> <C> <C> <C>
Gross revenue - lease and other $ 7,370,229 $ 35,399,754 $ 19,144,603
- gain (loss) on sales of assets 3,752 1,795,336 747,194
----------------- --------------- ----------------
7,373,981 37,195,090 19,891,797
Less Operating Expenses: (1)
Depreciation and amortization expense 5,847,827 22,861,169 12,164,056
Provision for losses 74,277 56,955 -
Interest expense 714,701 5,473,480 3,102,801
Administrative costs and reimbursements 645,437 1,056,746 250,078
Legal/Professional fees 90,305 151,183 119,416
Other 380,821 756,971 695,398
Management fee 358,846 1,559,090 884,588
----------------- --------------- ----------------
8,112,214 31,915,594 17,216,337
----------------- --------------- ----------------
Net income (loss) - GAAP basis $ (738,233) $ 5,279,496 $ 2,675,460
================= =============== ================
Taxable income (loss) from operations $ (7,867,498) $ (26,502,705) $ (7,500,000)
================= =============== ================
Cash generated by (used in) operations (3) $ 6,061,438 $ 21,650,163 $ 16,157,728
Cash generated from sales 130,413 4,742,122 1,273,870
Cash generated from refinancing - - -
Cash generated from other (3) 232,472 2,345,113 1,742,303
----------------- --------------- ----------------
6,424,323 28,737,398 19,173,901
Less cash distributions to investors:
From operating cash flow 2,684,635 9,798,122 8,104,753
From sales - - -
From refinancing - - -
From other - - -
----------------- --------------- ----------------
Total distributions 2,684,635 9,798,122 8,104,753
----------------- --------------- ----------------
Cash generated (deficiency) after cash distributions $ 3,739,688 $ 18,939,276 $ 11,069,148
================= =============== ================
Tax and distribution data per $1,000 limited partner investment:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ (230.41) $ (228.48) $ (46.26)
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 45.51 $ 16.50
- Return of capital $ 79.42 45.81 37.55
----------------- --------------- ----------------
$ 79.42 $ 91.32 $ 54.05
================= =============== ================
Sources (on a cash basis)
Sales
Refinancing
Operations $ 79.42 $ 91.32 $ 54.05
Other -
----------------- --------------- ----------------
Total $ 79.42 $ 91.32 $ 54.05
================= =============== ================
Amount invested in program equipment (cost, excluding
acquisition fees) $149,409,976 $ 268,896,594 $ 273,052,325
Amount invested in program equipment (book value) $101,284,861 $ 204,329,984 $ 195,439,513
Amount remaining invested in program equipment (Cost
of equipment owned at end of period as a percentage of
cost of all equipment purchased by the program) (4) 53.41% 98.38% 97.61%
</TABLE>
(Footnotes follow on page A-22)
A-21
<PAGE>
FOOTNOTES:
(1) Operating expenses include reimbursements to the corporate general
partner as follows:
<TABLE>
<CAPTION>
ATEL Cash ATEL Cash ATEL Cash ATEL Cash ATEL Cash ATEL Cash ATEL Capital
Distribution Distribution Distribution Distribution Distribution Distribution Equipment
Year ended December 31, Fund Fund II Fund III Fund IV Fund V Fund VI Fund VII
<S> <C> <C> <C> <C> <C> <C> <C>
1986 $ 100
1987 15,100
1988 21,500 $ 3,000
1989 32,201 86,234
1990 37,163 95,474 $ 70,775
1991 48,195 71,289 239,667
1992 126,664 256,184 542,510 $ 382,114
1993 140,984 313,421 468,005 537,918 $ 373,089
1994 34,380 238,185 340,269 358,441 706,324
1995 - 157,444 300,952 349,663 535,812 $ 539,009
1996 - 132,994 245,242 275,778 455,316 748,745
1997 - 127,992 248,250 303,642 405,886 435,759 $ 645,437
1998 - 123,597 235,984 268,282 422,293 427,872 1,056,746
1999 - 127,993 248,251 303,643 405,887 435,760 645,438
------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 456,287 $ 1,733,807 $ 2,939,905 $ 2,779,481 $ 3,304,607 $ 2,587,145 $ 2,347,621
============ ============ ============ ============ ============ ============ ============
</TABLE>
(2) A portion of the equipment owned by the Partnership is accounted for
under the direct financing method. Income under direct financing leases is
reported on the financing method where the income portion of each rental payment
is calculated so as to generate a constant rate of return on the outstanding net
investment. The effect is to recognize decreasing amounts of income in later
periods as the net investment declines. Net income was also negatively impacted
in 1990 by necessity for a provision for doubtful accounts. Prior to 1990, there
had been no such need. The decrease in net income from 1988 to 1989 and from
1989 to 1990 is due to increasing debt levels and interest expense. The decrease
from 1992 to 1993 is due to decreased lease revenues. Revenues have declined as
equipment leases have expired and as the related assets have been sold.
(3) Cash generated by (used in) operations does not include the principal
portion of lease rentals received under direct financing leases. In the
partnerships' statements of cash flows (under generally accepted accounting
principles), these amounts are included in the investing activities section.
(4) The percentage is calculated as a fraction, the numerator of which is
the amount invested in program equipment (at cost) as of the end of the
indicated period and the denominator of which is the cumulative total of the
cost of all equipment acquired by the program through the end of the latest
period shown.
(5) Net income decreased from 1989 to 1990 due to the provision for decline
value of commercial aircraft ($1,083,834) included in net income in 1990.
Excluding the effect of that provision, net income per $1,000 invested would
have been $34.60. The results in 1990 are also effected by higher depreciation
rates used for more recent equipment purchases, resulting in increased
depreciation expense compared to lease revenues. The remaining amount of the
changes from 1988 to 1989 and from 1989 to 1990 are primarily due to the timing
of the acquisition of assets, the placement of debt against certain assets and
other operating factors.
(6) Net income increased from 1990 to 1991 due to the provision for decline
value of commercial aircraft ($623,294) included in net income in 1990. The
remaining amount of the changes from 1990 to 1991 and from 1991 to 1992 are
primarily due to the timing of the acquisition of assets, the placement of debt
against certain assets and other operating factors.
(7) In January 1998, Pegasus Gold, one of the Partnership's lessees, filed
for reorganization under Chapter 11 of the United States Bankruptcy Code. The
Partnership determined that certain of the assets under this direct financing
lease were impaired at December 31,1997. The Partnership's provision for losses
and impairments for 1997 includes a reserve for the estimated credit exposure
(approximately $1,200,000) related to the remaining lease assets.
A-22
<PAGE>
TABLE IV
RESULTS OF COMPLETED PROGRAMS
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Program name: ATEL Cash Distribution ATEL Cash Distribution
Fund Fund II
<S> <C> <C>
Dollar amount of equity raised: $ 10,000,000 $ 35,000,000
Assets purchased (see Table 5 for detail listings): $ 11,133,679 $ 52,270,536
Date of Closing of Offering: December 18, 1987 January 3, 1990
Date of first sale of property: May 1, 1989 July 1, 1994
Date of final sale of property: December 31, 1997 December 31, 1998
Taxand distribution data per $1,000 limited partner investment through December
31, 1998:
Federal Income Tax Results:
Ordinary income (loss):
Operations $ 192.40 $ 154.95
Recapture
Capital gain (loss)
Cash distributions to investors on a GAAP basis:
- Investment income $ 244.89 $ 335.43
- Return of capital 876.14 887.20
------------------- ------------------
1,121.03 1,222.63
Cash available for distribution, reinvested for
investors' accounts 89.05 48.75
------------------- ------------------
Total $ 1,210.08 $ 1,271.38
=================== ==================
Sources (on a cash basis)
Sales $ 136.03 $ 159.92
Refinancing
Operations 969.59 987.33
Other 104.46 124.13
------------------- ------------------
Total $ 1,210.08 $ 1,271.38
=================== ==================
</TABLE>
A-23
<PAGE>
TABLE V
ACQUISITION OF EQUIPMENT
BY PRIOR PROGRAMS
The following is a summary of Equipment acquisitions and Lessees by the seven
prior publicly-registered programs sponsored by ATEL Financial Corporation and
its affiliates. Information concerning the prior programs' Equipment acquisition
is current through June 30, 1999.
<TABLE>
<CAPTION>
Lease
Commence Acquisition Acquisition Percent Lease Type
Lessee Notes Equipment Type Date(s) (1) Cost (2) Fees (3) Leverage (4) Term (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATEL Cash Distribution Fund
Acushnet Company Office Information Jan-87 $ 134,246 $ 6,041 60 FP
Systems
Alachua General Hospital, Inc. 7 Medical Jan-89 628,632 28,288 36 OL
American Motors Corporation Lift Trucks Oct-87 622,632 28,018 48 OL
to Jan-88
Anaheim Memorial Hospital Medical Jan-88 779,613 35,083 48.07% 60 FP
Campbell Soup Company Lift Trucks Mar-87 317,500 14,288 84 FP
Colour Graphics Corporation 8 Printing Jan-87 222,520 10,013 80.75% 84 FP
Enron Corp. Office Information Aug-88 244,488 11,002 36 FP
Systems
Financial News Network, Inc. 9 Studio and Broadcasting Apr-90 909,735 26,183 36 FP
GAF Corporation 10 Manufacturing Oct-88 512,208 23,049 60 FP
GAF Corporation Lift Trucks Oct-87 439,866 19,794 60 OL
Galardi Group, Inc. Restaurant Furnitue and Jul-94 247,000 - 48 FP
Fixtures
Hartford Insurance Group Communication Mar-88 89,236 4,016 60 FP
Imperial Plastics, Inc. 11 Manufacturing Sep-87 526,270 23,682 69.63% 84 FP
to Apr-88
Martin Marietta Corporation Communication May-88 425,670 19,155 48 OL
Nord Kaolin Company 12, 13 Mining, Processing Jul-87 358,710 16,734 60-62 FP
to Jan-88
Nord Sil-Flo Company 12, 13 Material Handling Aug-89 28,113 673 86.27% 60 FP
to Jan-88
Polaroid Corporation Office Information Jan-87 36,190 1,629 59 FP
Systems
Putnam County Hospital Medical May-88 110,000 4,950 60 FP
Rohr Industries, Inc. Motor Vehicle Apr-88 327,240 14,726 36-84 FP, OL
to Oct-88
Teledyne Industries, Inc. 14 Lift Trucks Jan-88 1,653,596 74,412 36-84 FP, OL
to Oct-89
The Dow Chemical Company Motor Vehicle May-88 217,908 9,805 74.86% 50 FP
Treasure Chest Advertising
Company 15 Printing Apr-87 498,746 22,444 97.79% 60 FP
TRW, Inc. Communication Apr-89 320,657 14,430 36 OL
United Technologies Office Information Jan-87 74,115 3,335 48 FP
Corporation, Pratt & Systems
Whitney Aircraft Group
Vista Chemical Company Railroad Rolling Stock Mar-88 850,000 38,250 53.45% 60 FP
Vista Chemical Company Railroad Rolling Stock, Apr-93 350,000 - 60 OL
Improvements
WSMP, Inc. Food Processing Jul-95 208,788 - 98.47% 60 FP
Equipment
---------------- ----------------
ATEL Cash Distribution Fund total: $11,133,679 $ 450,000
================ ================
ATEL Cash Distribution Fund II
A.O. Smith Corporation Office Information Jul-89 $ 873,480 $ 5,878 11.59% 36-59 FP
to Feb-91
Systems, Lift
Trucks
Addwest Gold, Inc. 16 Mining Oct-88 1,100,717 52,284 60 FP
Alachua General Hospital, Inc. 7 Medical Jan-89 1,257,263 59,720 36 OL
American Express Company Manufacturing May-89 276,775 13,147 48 FP
American President Trucking 17 Tractors Sep-88 2,890,840 137,315 84 FP
Co., Ltd.
Bristol-Myers Squibb Company Office Furniture Jul-92 324,310 - 24 OL
Buffalo & Pittsburgh Railroad Locomotive Nov-93 108,127 - 37 FP
Campbell Soup Company Lift Trucks Aug-88 350,772 16,662 84 FP
Chesebrough-Pond's Inc. Lift Trucks Jun-90 201,452 - 48-50 FP
Chrysler Corporation Material Handling Dec-93 103,620 - 12 OL
Colour Graphics Corporation Computer System Oct-88 33,805 1,606 60 FP
Cooper Tire & Rubber Company Lift Trucks Jan-89 576,326 27,375 84 FP
Delnor Community Hospital Medical Jul-88 449,956 21,373 36 OL
DJ Aerospace (Bermuda), Ltd. Executive Aircraft Jul-94 810,000 - 36 OL
Emanuel Hospital & Health Helicopter Oct-88 2,247,765 106,769 79.58% 144 FP
Center
Financial News Network, Inc. 9, 18 Studio and Apr-90 640,544 29,815 36 FP
Broadcasting
Fingerhut Corporation Binding, Printing Jan-89 1,441,690 68,481 60 FP
to Mar-89
A-24
<PAGE>
FMC Gold Company Material Handling Apr-90 761,129 36,154 36 OL
GAF Corporation Manufacturing Oct-88 682,310 32,410 60 FP
to Apr-88
Galardi Group, Inc. Restaurant Furniture Jul-94 507,000 - 48 FP
and Fixtures
General Motors Corporation Video Projectors Jan-94 58,644 - 36 OL
Home Life Insurance Company Office Furniture/Lift Dec-88 425,658 20,219 60 FP
Trucks/Binding
Hudson Foods, Inc. Food Processing Dec-89 2,713,115 128,872 65.91% 57-59 FP
Inland Steel Company Scientific Measuring Sep-89 417,000 19,808 54 FP
International Paper Company 19 Delivery Trucks Jul-88 1,281,761 60,884 36-60 FP, OL
KeyCorp Office Furniture, Jul-89 1,618,337 76,870 40.09% 53-55 FP
Automated Teller
Machines
Koppers Industries, Inc. Material Handling Jun-90 639,120 - 60 FP
Liggett Group, Inc. 20 Manufacturing Dec-88 648,577 30,807 56 FP
Midway Airlines, Inc. 21 Commercial Aircraft Jun-90 4,592,040 - 68.85% 102 FP
National Semiconductor Manufacturing Apr-89 728,000 34,580 56 FP
Corporation
National Steel Corporation Material Handling May-89 606,153 28,792 87.63% 81 FP
National Union Electric 22 Communication Apr-89 459,893 21,845 60 FP
Corporation
Nissan Motor Corporation Office Information Jul-88 219,187 10,411 48 FP
In USA Systems
NMCS, Inc. , d/b/a National 23 Office Furniture Apr-88 599,001 28,452 60 FP
Medical Group Services, Inc.
Nord Kaolin Company 12 Drilling Apr-89 292,799 13,908 60 FP
Owens Corning Fiberglas Material Handling Jul-89 1,689,012 42,404 39.57% 36-84 FP, OL
Corporation to Oct-90
Quaker Coal Company 24 Tractor Apr-94 558,301 - 24 OL
Regents of the University of Communication Dec-88 80,386 3,818 60 FP
California
Rocky Mountain 25 Medical Aircraft Nov-89 2,150,000 102,125 81.86% 84 FP
Helicopters, Inc.
Rohr Industries, Inc. Motor Vehicles Jan-89 749,291 33,835 36-84 FP
to Jan-90
Sebastiani Vineyards, Inc. Production Line, Jan-90 2,818,067 29,362 79.98% 60-84 FP
Wine Barrels to Jan-91
Shell Mining Company 26 Mining Jul-90 3,736,965 104,055 21.46% 60-84 FP
Sherwood Rehabilitation 27 Medical Furniture/ Oct-90 1,814,036 - 97.36% 87 FP
Hospital, Inc. Fixtures & Eqt.
South Dade Nursing Home Ltd. 27 Physical Therapy & Jul-90 36,676 - 60 FP
Exercise Eqt.
St. Luke's-Roosevelt Hospital Medical Furniture/ Feb-90 1,075,795 50,428 84.68% 34-39 OL
Center Fixtures & Eqt.
The Budd Company Material Handling May-90 1,099,014 - 75.09% 55-80 FP
to Jun-90
The Dow Chemical Company Material Handling Jun-88 1,532,061 72,773 74.86% 50 OL
Treasure Chest Advertising Printing Press Apr-93 850,000 - 95.59% 60 FP
Company
Treasure Chest Advertising Printing Equipment Feb-94 233,000 - 60 FP
Company
USX Corporation Haul Trucks Dec-89 2,910,766 138,261 83.41% 60 FP
---------------- ----------------
ATEL Cash Distribution Fund II total: $52,270,536 $ 1,661,498
================ ================
ATEL Cash Distribution Fund III
A.O. Smith Corporation Material Handling Feb-91 $ 451,902 $ 21,465 60 FP
Alachua General Hospital, Inc. Medical Oct-92 2,074,989 - 36 OL
Alachua General Hospital, Inc. Medical Apr-95 80,500 - 0.00% 18 FP
Alumina Partners of Jamaica 28 Earth Moving Jun-93 2,057,133 - 60 FP
American President Trucking Tractors and Trailers Mar-90 4,859,181 230,811 68.08% 77-84 FP
Co., Ltd. to Aug-90
AMOCO Corporation Trailers May-94 523,805 - 85.88% 66 FP
ARR, Inc. 29, 30 Corporate Aircraft Oct-92 5,275,000 - 84 OL
Barney's, Inc. 31 Retail Store Furniture Oct-93 2,041,222 - 60.04% 60 FP
and Fixtures
Buffalo & Pittsburgh Locomotives Nov-93 792,657 - 37 FP
Railroad Company
Carrier Corporation Lift Trucks Jul-90 108,062 5,133 55 FP
Carrier Corporation Lift Trucks Jul-90 533,950 25,363 53 FP
to Aug-90
Dean Foods Company Trailers Nov-90 1,213,190 57,627 75-84 FP
to Apr-91
Fingerhut Corporation Offset Printing Press Apr-91 1,303,078 61,896 85 FP
Fingerhut Corporation Printing Oct-91 2,074,915 14,464 48.47% 84-85 FP
to Oct-92
FMC Gold Company Haul Truck Jul-90 534,828 25,404 48 OL
Fred Meyer, Inc. Point-of-Sale Oct-90 6,343,897 301,335 63.93% 58 FP
General American Life Office Furniture Jan-93 1,611,278 76,536 84 FP
Insurance
H.E. Butt Grocery Company Tractors and Trailers Jan-93 2,112,747 - 60-84 OL/FP
Ingersoll International, Inc. Communication System Dec-90 277,017 13,158 60 FP
Kelly-Springfield Material Handling Apr-92 127,834 6,072 60 FP
Tire Company to Jul-92
Koppers Industries, Inc. Material Handling Oct-90 402,722 19,129 60 FP
A-25
<PAGE>
Kraft General Foods, Inc. Lift Trucks May-91 1,621,541 77,023 48-72 FP
to Nov-91
Midway Airlines, Inc. 21 Commercial Aircraft Jul-90 2,296,020 109,061 68.85% 102 FP
Mobil Oil Corporation Material Handling Jul-92 70,256 1,173 36 OL
Mobil Oil Corporation Electric Golf Carts Nov-93 280,119 - 36 OL
Nord Kaolin Company 32 Materials Processing Sep-90 391,116 18,578 60 FP
Ohio Coal Company 33 Mining Apr-92 10,630,130 504,931 84.48% 51-84 OL/FP
Pepsico, Inc., d/b/a/ PFS Material Handling Jul-90 539,330 25,618 45.63% 58-72 FP
to Sep-90
Pilgrim's Pride Corporation Food Processing Nov-90 3,619,095 171,907 59 FP
Pittston Coal Group 34 Mining Jul-92 5,810,941 276,020 75.71% 60 FP
Portland General Electric 35 Power Generation Jun-90 2,710,359 128,742 70.25% 101 OL
Company
PSI Energy, Inc. Earth Moving Aug-90 842,013 39,996 72 FP
Quaker Coal Company Mining Jan-94 5,808,385 - 60 OL
Reliance Insurance Company Office Furniture Jul-92 1,222,297 50,135 51.90% 60 FP
Rohr Industries Motor Vehicle Oct-95 37,244 - 36 OL
Shell Mining Company Haul Trucks Jan-92 3,167,443 150,454 65.64% 60-84 FP
Stone Container Corporation Material Handling Nov-90 2,975,000 141,313 34.40% 26-57 OL
Teledyne Industries, Inc. Lift Trucks Feb-91 116,476 5,533 39 OL
Terex Corporation Manufacturing Apr-91 291,455 13,845 84 FP
The Dow Chemical Company Material Handling Nov-90 4,504,918 195,358 68.68% 53-60 OL/FP
to Dec-92
The Helen Mining Company 36 Mining Shields Jul-91 5,270,314 250,340 60 FP
The Pillsbury Company Harvesting Jan-93 2,327,946 110,577 59.93% 60 OL
Treasure Chest Advertising Flying High Speed Apr-93 239,171 - 87 FP
Company Paster
Treasure Chest Advertising Printing Stackers Oct-95 139,600 - 84 FP
Company
Truck-Lite Company, Inc. 36 Project Line Oct-91 6,875,715 308,441 81.76% 69-84 FP
to Jan-93
USS/Kobe Steel Company 37 Lift Trucks Sep-91 408,410 19,399 36-60 OL/FP
to Nov-91
Utilicorp United, Inc. 38 Power Generation Sep-91 1,086,934 51,629 75.65% 105 FP
Wal-Mart, Inc. Trailers / Forklifts May-94 490,255 - 95.09% 20-38 OL/FP
West Penn Power Company Storage Tanks Sep-91 1,057,551 50,234 97.86% 87 FP
---------------- ----------------
ATEL Cash Distribution Fund III total: $99,629,941 $ 3,558,700
================ ================
ATEL Cash Distribution Fund IV
ARR, Inc. 29, 30 Corporate Aircraft Oct-92 $9,635,969 $ 337,259 84 OL
to Dec-92
ATS, Automatic Tooling Systems Machine Tools Mar-95 434,904 123,410 86.98% 60 FP
ATS, Automatic Tooling Systems Machine Tools Mar-95 175,974 6,545 86.98% 60 FP
Barney's, Inc. 31 Retail Store Oct-93 2,353,608 82,376 60.05% 60 FP
Furniture and
Fixtures
Buffalo & Pittsburgh Railroad Locomotives Nov-93 849,216 29,723 37 FP
Burlington Air Exress Materials Handling Apr-95 622,663 21,793 78.25% 84 FP
Burlington Air Exress Materials Handling Jul-95 505,325 - 80.23% 84 FP
Burlington Northern Railroad 39 Locomotives Jan-93 7,950,000 278,250 24 OL
Company
Chrysler Corporation Tractors & Trailers Dec-93 3,253,000 113,855 84.13% 71-72 FP
Clinchfield Coal Company Drill, Endloader, Jan-94 985,203 34,482 65.79% 73.5-91.5 FP
Diesel Generator
DJ Aerospace (Bermuda), Ltd. Executive Aircraft Jul-94 1,890,000 66,150 36 OL
Federal Paper Board Co., Inc. Office Equipment Jul-95 77,950 - 36 FP
Foodmaker, Inc. Restaurant Furniture Oct-94 2,651,356 92,797 60 FP
and Fixtures to Jan-95
Galardi Group, Inc. Restaurant Furniture Jul-94 546,000 19,110 48 FP
and Fixtures
GE Industrial & Power Systems Office Automation Mar-95 138,130 4,835 36 FP
GE Industrial & Power Systems Machine Center Jun-95 457,670 - 84 FP
H.E. Butt Grocery Company Trailers Oct-92 5,709,369 199,828 72.48% 60-84 OL/FP
to Jan-93
H.E. Butt Grocery Company Trailers Jun-93 1,404,302 49,151 75.71% 84 FP
Holston Mining, Inc. 40 Endloader, Dozer Jan-94 584,617 20,462 91.5 FP
Kraft General Foods, Inc. Tractors Dec-93 964,315 33,751 71.69% 31 FP
Liquid Carbonic Industrial/ 41 Air Separation Plant Dec-93 9,500,897 332,531 54.21% 99 FP
Medical Corporation
Midwest Power Systems, Inc. Coal Hopper Cars Jan-93 2,240,000 78,400 28.36% 36 OL
Mobil Oil Corporation Tractors/Construction Oct-92 2,760,175 95,786 27-60 OL
/Earth Moving to Apr-94
Nabisco, Inc. Office Automation Aug-95 337,594 - 36 FP
National Steel Corporation Construction Equipment Jan-95 2,208,510 77,298 76.55% 60-84 FP
National Steel Corporation Construction Equipment Apr-95 3,675,997 83,148 88.15% 85-91 FP
Omnicom Group Inc. Office Automation Oct-95 901,849 - 36 FP
Omnicom Group Inc. Computers & Related Aug-96 32,599 - 36 FP
Equipment
A-26
<PAGE>
Paramount Coal Corporation 40 Drill, Dozer Jan-94 595,800 20,853 65.79% 61.5-91.5 FP
Pepsico, Inc. Materials Handling Jan-94 146,926 5,142 48-60 OL/FP
Pepsico, Inc. Materials Handling Jul-93 458,017 16,031 48-60 OL/FP
to Sep-93
Pittston Coal Group 34 Mining Jul-92 846,883 29,641 78.76% 60 FP
Pittston Coal Group 34 Mining Mar-95 819,349 28,677 65.79% 60 FP
Quaker Coal Company 24 Rail Car Mover Nov-95 263,984 - 48 FP
Rochelle Coal Company 42 Mining Jan-93 6,303,701 220,630 70.34% 84 FP
Sebastiani Vineyards, Inc. Wine Barrels Apr-94 189,855 6,645 60 FP
Sebastiani Vineyards, Inc. Wine Barrels Apr-95 180,253 6,309 60 FP
Sebastiani Vineyards, Inc. Wine Barrels Apr-94 454,721 15,915 36 FP
to Jul-94
Signature Flight Support Air Support Equipment Jan-95 1,142,400 39,200 84 FP
Corporation
Tarmac America, Inc. 43 Crawler Dozer, Wheel Aug-94 385,443 13,491 75.64% 60-84 FP
Loader
Tarmac America, Inc. 43 Construction Equipment Jan-95 210,438 7,365 80.90% 84 FP
Tarmac America, Inc. 43 Construction Equipment Jul-95 1,309,300 - 79.82% 97 FP
to Aug-95
TASC, Inc. Office Automation Jan-95 131,008 4,585 36 FP
TASC, Inc. Office Automation Oct-95 601,701 - 36 FP
to Apr-96
The Dow Chemical Company Material Handling, Dec-92 2,221,228 77,743 74.80% 60-84 FP
Research
The Dow Chemical Company Research Feb-93 102,149 3,575 87.94% 60 FP
The Dow Chemical Company Boom Lift May-93 66,900 2,342 75.81% 60 FP
The Helen Mining Company 36 Mining Jan-92 3,816,507 133,578 32.62% 60 FP
to May-92
The Kendall Company Office Automation Nov-94 166,835 5,839 36 FP
The Kendall Company Office Automation Jan-95 86,108 3,014 36 FP
The Kendall Company Office Automation Apr-95 434,705 15,071 36 FP
The Kendall Company Office Automation Oct-95 568,370 - 24-36 FP
to Jan-96
The Stop & Shop Supermarket Bakery Labeling Feb-96 368,500 - 60 FP
Company Machines
Trans Ocean Container 44 Intermodal Containers Oct-93 3,001,930 105,068 120 FP
Corporation
Treasure Chest Advertising Bin Stackers and Dec-93 753,419 26,370 84-86 FP
Company Trimmers to Apr 94
Treasure Chest Advertising Printing Press Dec-93 3,478,749 121,756 88.28% 84 FP
Company
Treasure Chest Advertising Printing Press & Aug-93 2,075,000 72,625 89.99% 66 FP
Company Associated Equipment
Treasure Chest Advertising Printing Press & Feb-95 511,907 17,917 84 FP
Company Associated Equipment
Union Pacific Corporation Intermodal Jan-93 1,453,096 50,858 46.85% 60 OL
Union Tank Car Company Rail Sep-92 6,460,600 225,666 23.25% 25-51 OL
to Oct-92
USS/Kobe Steel Company 37 Materials Handling Jul-94 35,920 1,257 60 FP
USS/Kobe Steel Company 37 Dump Truck Aug-92 256,000 8,960 84 FP
USX Corporation Materials Handling Jun-93 3,061,376 107,148 83.67% 54-69 FP
Xerox Corporation Materials Handling Feb-95 26,092 913 44 OL
Xerox Corporation AKT PVD System Upgrade Jan-97 77,518 - 54 FP
Xerox Corporation AKT PVD System Jul-96 2,825,000 - 85.74% 60 FP
---------------- ----------------
ATEL Cash Distribution Fund IV total: $108,734,880 $ 3,575,123
================ ================
ATEL Cash Distribution Fund V
Armco, Inc. Phone Mail System Jan-96 $ 459,835 $ 16,094 84 FP
Armco, Inc. Telephone System Jan-97 31,932 - 72 FP
Upgrade
The Atchison, Topeka & Santa Containers Jan-95 1,926,930 67,443 62.75% 84 OL
Fe Railroad Company
The Atchison, Topeka & Santa Rail Car Containers Jul-94 7,812,200 273,427 55.89% 84 OL
Fe Railroad Company and Chassis
The Atchison, Topeka & Santa 45 Tank Containers Nov-93 744,875 26,071 84 FP
Fe Railroad Company
Barney's, Inc. 31 Retail Store Furniture Oct-93 3,365,947 117,808 60.04% 60 FP
and Fixtures
BJ's Wholesale Club 46 Materials Handling Oct-94 613,998 21,490 62 FP
BNMC Leasing, Inc. Over-the-road Tractors May-94 141,540 4,954 35.62% 8 OL
Burlington Air Express Materials Handling Jan-95 1,720,008 60,200 75.87% 84 FP
to Apr-95
Burlington Northern Railroad Locomotives Jan-95 12,350,000 432,250 28 OL
Burlington Northern Railroad 47 Covered Hopper Apr-96 9,344,563 60,848 21 FP
Rail Cars
Burris Foods, Inc. Over-the-road Trailers May-94 245,296 8,585 21.16% 5 OL
Canadian Pacific Limited 47 Covered Hopper Apr-96 1,798,388 - 13 FP
Rail Cars
Cargill, Inc. 47 Covered Hopper Apr-96 282,100 - 36 FP
Rail Cars
CF Industries, Inc. 47 Covered Hopper Apr-96 528,938 - 12 FP
Rail Cars
A-27
<PAGE>
Chrysler Corporaion Materials Handling Dec-94 1,300,286 45,510 76.79% 60 OL
to Mar-95
Chrysler Corporation Over-the-road Dec-93 1,379,490 48,282 54.62% 60 OL
Tractors
Chrysler Corporation Materials Handling Apr-96 9,296 - 60 OL
Chrysler Corporation Forklifts Jul-96 25,162 - 60 OL
Chrysler Corporation Materials Handling Apr-95 166,069 5,812 30.07% 60 OL
to Jun-95
Chrysler Corporation Materials Handling Nov-93 1,303,039 45,606 58.69% 60 OL
to Jan-94
CITGO Petroleum Corp. Over-the-road May-94 837,904 29,327 74.10% 36 OL
Tractors
Clark Oil & Refining Retail Store Fixtures Jan-94 1,268,656 44,403 36 OL
Corporation
Denver and Rio Grande Western Auto Racks May-94 7,180,000 251,300 44 FP/OL
Railroad
Emerson Electric Company Over-the-road May-94 237,149 8,300 27.39% 80 FP
Trailers
Federal Paper Board Materials Handling Jan-95 1,315,911 46,057 36 OL
Company, Inc.
Federal Paper Board Materials Handling Apr-95 930,814 32,578 36 OL
Company, Inc.
Federal Paper Board Forklifts, Wheeloader Oct-94 167,791 5,873 36 OL
Company, Inc.
Foodmaker, Inc. Fixtures and Fittings Jan-94 6,042,382 211,489 15.63% 60 FP
and Trailers to Oct-94
General Electric Company Injection Molding Feb-96 1,470,000 51,450 76.28% 120 FP
General Motors Corporation Materials Handling Jan-94 3,023,173 105,811 62.16% 60 OL
(Service Parts Operation to May-94
Division)
General Motors Corporation Materials Handling Jul-94 893,382 31,268 73.33% 60 OL
(Truck and Bus Division)
IBM Corporation Office Furniture Aug-93 1,825,710 63,900 48 OL
Illinois Central Railroad 47 Covered Hopper Apr-96 1,234,188 - 12-40 FP
Company Rail Cars
Ingersoll International, Inc. Machine Tools Jun-94 1,196,355 41,872 72 FP
Kaiser Cement Corporation Tractor and Dump Truck Oct-93 984,671 34,463 60 OL
Kraft, Inc. Over-the-road Trailers May-94 1,000,353 35,012 91.49% 56 FP
McDonnell Douglas Helicopter Office Automation Aug-95 110,320 3,861 36 FP
Systems
Minteq International, Inc. 48 Turbo Laser May-96 347,430 - 36 FP
Minteq International, Inc. 48 Turbo Laser Feb-94 461,800 16,163 60 FP
Mobil Administrative Services 49 Helicopter Jun-93 844,525 29,558 24 OL
Company, Inc.
Mobil Oil Corporation Environmental Ejector Jul-93 423,000 14,805 36 OL
Systems
Mobil Oil Corporation Wheel Loader Oct-93 70,200 2,457 36 OL
Mobil Oil Corporation Materials Handling Jan-95 853,093 29,858 60 OL
Mobil Oil Corporation Liquid Petroleum Tank Oct-95 12,863,591 450,226 75.74% 240 FP
Cars to Jan-96
Montana Rail Link, Inc. 47 Covered Hopper Rail Apr-96 846,300 - 12 FP
Cars
Nabisco, Inc. Office Automation Mar-95 426,420 14,925 36 OL
Nabisco, Inc. Office Automation Oct-95 190,442 6,665 36 FP
National Steel Corporation Wheel Loader Oct-94 253,527 8,873 55.74% 60 FP
National Steel Corporation Materials Handling Oct-94 64,650 2,263 46.63% 49 OL
National Steel Corporation Materials Handling Jan-95 1,649,465 57,731 59.70% 61 OL
National Steel Corporation Materials Handling Jan-95 66,134 2,315 51.26% 36 OL
National Steel Corporation Materials Handling Apr-95 873,161 30,561 63.31% 61 OL
National Steel Corporation Materials Handling Apr-95 609,500 21,333 56.28% 49 OL
National Steel Corporation Bulldozer / Crane Oct-95 2,137,183 74,801 78.44% 90 FP
Occidental Chemical Barges Aug-94 2,798,303 97,941 56.31% 16 OL
Corporation
Omnicom Group, Inc. 50 Office Automation & Jan-96 1,458,896 51,061 36-60 FP
Office Furniture
Owens Corning Fiberglas Corp. Materials Handling Aug-93 157,462 5,511 36 OL
Pegasus Gold Corporation 51 Surface Mining Jan-96 7,280,747 254,826 79.77% 84 FP
Praxair, Inc. Over-the-road May-94 668,114 23,384 52.77% 27 OL
Tractors
Primark Corporation Office Automation Jul-95 143,449 5,021 36 FP
to Apr-96
PV Trucking Over-the-road May-94 75,332 2,637 18 FP
Tractors
Quaker Coal Company 24 Haul Truck & Crawler Oct-94 2,626,953 91,943 24-30 OL
Tractor
Quaker Coal Company 24 Mining Equipment Jan-95 3,000,000 105,000 24 OL
Quaker Coal Company 24 Haul Trucks & Tractor Oct-95 2,877,672 100,719 48-60 FP
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Jun-96 436,331 - 60 FP
Fixtures &
Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Jul-96 499,131 - 60 FP
Fixtures &
Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Sep-96 450,273 - 60 FP
Fixtures &
Equipment
A-28
<PAGE>
Quantum Restaurant Group, Inc. 52 POS System Sep-96 33,023 - 60 FP
Quantum Restaurant Group, Inc. 52 POS System Oct-96 36,185 - 60 FP
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Oct-97 432,328 15,131 60 FP
Fixtures &
Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Oct-97 425,437 14,890 60 FP
Fixtures &
Equipment
Quantum Restaurant Group, Inc. 52 Restaurant Furniture, Oct-97 205,981 7,209 60 FP
Fixtures &
Equipment
Roper Corporation Forklifts Jan-96 243,659 8,528 84 FP
Roper Corporation Industrial Batteries Sep-96 30,882 - 76 FP
Schwegmann Giant Super 53 Fixtures & Equipment Jul-95 5,058,331 176,161 60 FP
Markets, Inc.
Sebastiani Vineyards, Inc. Bottling Equipment Apr-94 113,673 3,979 48 OL
Sebastiani Vineyards, Inc. Wine Barrels Apr-95 95,848 3,355 36 FP
Smitty's Super Valu, Inc. 54 Retail Store Jan-96 4,709,326 164,826 64.27% 60 FP
Furniture &
Fixtures
Soo Line Railroad Company 47 Covered Hopper Apr-96 1,586,813 - 12 FP
Rail Cars
Star Enterprise Over-the-road Tractors May-94 923,533 32,324 59.16% 32 OL
Tarmac America, Inc. 43 Concrete Trucks with Sep-94 5,937,371 207,808 76.81% 48 FP
Mixers to Oct-94
Tarmac America, Inc. 43 Construction Equipment Sep-95 1,491,348 52,197 70.16% 84 FP
to Jan-96
Tarmac America, Inc. 43 Concrete Trucks with Sep-95 1,982,071 69,372 75.27% 97 FP
Mixers to Oct-95
TASC, Inc. Office Automation Jan-95 237,685 8,319 18 OL
TASC, Inc. Office Automation Apr-96 522,280 16,716 18-36 FP
Texaco Trading and Over-the-road Tractors May-94 4,485,676 156,999 60.91% 32-68 FP/OL
Transportation, Inc. & Trailers
The Dow Chemical Company Copiers Jul-94 272,809 9,548 36 OL
The Dow Chemical Company Office Equipment Apr-95 122,800 4,298 36 FP
The Dow Chemical Company Office Automation Oct-94 377,702 13,220 36 OL/FP
to Jan-95
The Kendall Company Office Automation Oct-96 3,735 131 36 FP
The Pillsbury Company Harvesting Equipment Oct-94 1,643,101 57,509 84.91% 60 FP/OL
The Pittston Company 34 Construction & Mining Jan-94 14,037,683 491,319 38.93% 49-61 OL/FP
Equipment to Dec-94
Tom's Foods, Inc. Over-the-road Tractors May-94 259,102 9,069 35.23% 9 OL
Trans Ocean Container 44 Intermodal Containers Oct-93 5,000,683 175,024 120 OL
Corporation
Treasure Chest Advertising Printing Press & Oct-93 2,069,950 72,448 77.94% 60-84 FP
Company, Inc. Associated
Equipment
Treasure Chest Advertising Printing Press and Aug-96 287,320 9,051 84 FP
Company, Inc. Associated
Equipment
Treasure Chest Advertising Printing Press & Jul-95 2,325,000 81,375 46.50% 66 FP
Company, Inc. Associated to Nov-95
Equipment
Tyson Foods, Inc. Tractors / Trailers Jul-93 5,785,000 202,475 26.95% 36-84 OL
to Aug-93
Union Carbide Corporation Rail Tank Cars Aug-95 4,835,759 140,000 39.30% 68-92 FP
USS / Kobe Steel Company 37 Wheel loader, Crane Jan-94 603,352 21,117 60-84 FP/OL
& Lift Truck
---------------- ----------------
ATEL Cash Distribution Fund V total: $186,897,181 $ 5,956,319
================ ================
ATEL Cash Distribution Fund VI
A T & T Communications, Inc. 55 Printers Aug-95 $ 1,578,500 $ 46,200 36 OL
to Nov-95
A T & T Communications, Inc. 55 Printers Jul-96 1,171,302 17,192 34 OL
to Dec-96
A T & T Communications, Inc. 55 Printers Nov-97 912,252 28-32 OL
A T & T Communications, Inc. 55 Printers Jun-96 540,181 15,752 28-34 OL
to Jul-96
American President Trucking 17 Tractors and trailers Nov-95 759,092 22,773 30.18% 8 OL
Company, Ltd.
Applid Magnetics Corporation Manufacturing Sep-96 7,435,380 223,061 71.50% 60 OL/FP
to Oct-96
Applied Magnetics Corporation Sputter Jul-96 3,274,642 98,239 78.86% 60 FP
Armco, Inc. Link-Belt Scrapmaster Oct-95 388,993 11,670 36 OL
Armco, Inc. Data processing Nov-95 67,829 2,035 37 FP
Armco, Inc. Office Automation Jul-96 109,416 3,282 30 FP
Armco, Inc. Office Automation Jan-97 60,655 72 FP
AT&L Railroad Company 47 Covered Hopper Apr-96 35,263 1,050 12 FP
Rail Cars
Atchison, Topeka & Santa Fe Containers Oct-94 9,196,811 298,896 60.53% 84 OL
Railroad Company to Jan-95
ATS Automation Tooling Machine Tools Apr-96 379,551 77,093 60 FP
Systems, Inc. to Oct-96
ATS Automation Tooling Machine Center Oct-96 330,901 3,513 60 FP
Systems, Inc. to Jan-97
A-29
<PAGE>
BJ's Wholesale Club 46 Materials Handling Jul-95 931,635 30,278 63 OL
Burlington Northern Railroad 47 Covered Hopper Apr-96 13,223,438 396,703 21 FP
Rail Cars
Canadian Pacific Limited 47 Covered Hopper Apr-96 2,433,113 72,450 13 FP
Rail Cars
Cargill, Inc. 47 Covered Hopper Apr-96 352,625 10,500 36 FP
Rail Cars
Certified Grocers of Materials Handling Oct-96 637,702 19,131 60 OL
California
CF Industries, Inc. 47 Covered Hopper Apr-96 705,250 21,000 12 FP
Rail Cars
Chrysler Corporation Materials Handling Feb-96 1,749,200 52,476 69.99% 53-60 OL
to Jul-96
Chrysler Corporation Materials Handling Mar-95 5,925,384 184,233 66.83% 60 OL
to Dec-95
Chrysler Corporation Materials Handling May-96 2,419,598 69,832 69.93% 52-60 OL/FP
to Oct-96
Consolidated Rail Corporation Locomotives Sep-95 22,353,332 668,372 57.02% 60 OL
Consolidated Rail Corporation Intermodal Container Jan-96 2,502,750 75,083 60 OL
Chassis
Coors Transportation Company 56 Refrigerated Trailers Nov-95 797,704 23,931 47.35% 21 OL
Fairmont Homes, Inc. Materials Handling Apr-96 644,565 19,337 60 OL
Federal Paper Board Company Materials Handling Apr-96 1,740,861 52,226 70.43% 36-60 OL
to Jun-96
Federal Paper Board Company Materials Handling Jul-95 5,401,765 166,124 57.05% 36-84 OL/FP
to Jan-96
General Electric Company - Office Filing System Jan-97 101,685 60 FP
Aircraft Engines
General Motors Corporation Manufacturing Jul-95 652,232 19,567 36 OL
Equipment
Gerber Products Company Materials Handling Oct-96 197,035 5,911 60 FP
Hastings Leasing Limited 57 Trucks & Aug-96 20,242,332 607,270 90.58% 80 FP
Miscellaneous
Illinois Central Railroad 47 Covered Hopper Apr-96 1,692,600 50,400 12-40 FP
Company Rail Cars
IMC Fertilizer, Inc. Rail Tank Cars Sep-95 1,266,374 37,991 27 OL
Mobil Oil Corporation Tractor Jul-96 78,327 2,350 36 OL
Mobil Oil Corporation Materials Handling Oct-96 185,726 5,256 36 OL
Mobil Oil Corporation Hydraulic Crane Oct-96 160,773 4,823 84 OL
Mobil Oil Corporation Liquid Petroleum Jan-96 16,110,807 483,324 75.44% 240 FP
Tank Cars to Feb-96
Montana Rail Link, Inc. 47 Covered Hopper Apr-96 1,198,925 35,700 12 FP
Rail Cars
Nabisco, Inc. Office Automation Apr-95 709,572 23,061 36 OL
National Steel Corporation Hydraulic Shovels Jul-96 6,245,062 187,352 69.96% 60 OL
National Steel Corporation Steel Yard Equipemt Jan-97 948,705 14,543 48-60 OL/FP
National Steel Corporation Steel Yard Equipemt Oct-96 338,674 10,160 75.58% 60 FP
National Steel Corporation Wheel Loaders & Jan-96 4,710,131 141,304 59.68% 36-90 OL/FP
Forklifts to Apr-96
National Steel Corporation Materials Handling, Jul-95 1,525,887 49,517 66.05% 60-90 OL/FP
Tractors & Trailers to Oct-95
National Steel Corporation Cranes & Loaders Jul-96 1,099,210 32,976 72.33% 36-84 FP/OL
to Oct-96
NEC Electronics, Inc. 58 Manufacturing Jan-96 18,320,603 66.67% 51 OL/FP
NVR, Inc. Roof Truss Assembly Jul-96 78,484 2,355 84 FP
Omnicom Group, Inc. 50 Office Automation Apr-95 2,232,559 68,290 36-60 OL/FP
to Oct-95
Omnicom Group, Inc. 50 Television Production Jul-96 1,080,056 4,819 48 FP
Equipment to Oct-96
Overnite Transportation Tractors Apr-96 2,140,643 62,961 36 OL
Company
Peerless Eagle Coal Company 59 Haul Trucks &
Construction Jul-95 5,184,875 168,508 59.29% 48 OL
Perdue Transportation 60 Freightliner Tractors Nov-95 536,740 16,102 62.74% 24 OL
Incorporated
Quaker Coal Company 24 Wheel Loaders, Drill Jan-96 3,298,935 98,968 48 FP
& Grader
Quantum Restaurant Group, Inc. 52 Restaurant Furniture Oct-96 253,676 7,610 60 FP
& Fixtures
Quantum Restaurant Group, Inc. 52 POS System Nov-96 33,815 60 FP
Sebastiani Vineyards, Inc. Bottle Labeler Feb-96 317,520 9,526 60 OL
Signature Flight Support Fuel Trucks Jan-97 1,085,000 85.01% 96-132 FP
Corporation
Soo Line Railroad Company 47 Covered Hopper Apr-96 2,256,800 67,200 12 FP
Rail Cars
Tarmac America, Inc. 43 Dragline Jul-96 1,441,764 43,253 84 FP
Tarmac America, Inc. 43 Concrete Mixer Trucks Jul-96 4,787,890 143,637 96 FP
to Sep-96
Tarmac America, Inc. 43 Construction Oct-94 3,114,870 101,233 71.69% 97 FP
Equipment to Nov-94
TASC, Inc. Office Automation Jan-96 1,018,030 30,542 36 FP
to Jul-96
TASC, Inc. Office Automation May-95 1,567,339 50,413 18-36 OL/FP
to Oct-95
TASC, Inc. OfficeAutomation Oct-96 2,654,244 11,629 36 FP
to Jul-97
Trans Ocean Container 44 Intermodal Containers Jan-96 9,995,127 299,854 120 FP
Corporation
Tyson Foods, Inc. Office Automation Jun-95 563,411 18,311 24 OL
Xerox Corporation Binding & Finishing Feb-95 646,466 19,981 48 OL
Equipment to Jun-95
Xerox Corporation Materials Handling May-95 144,527 4,456 44 OL
to Aug-95
---------------- ----------------
ATEL Cash Distribution Fund VI total: $208,277,121 $ 5,623,585
================ ================
A-30
<PAGE>
ATEL Capital Equipment Fund VII
A.P.Moller (Maersk) 61 Intermodal Containers Jan-98 $ 2,280,100 52 OL
Alliant Techsystems, Inc. Semiconductor Jan-98 138,505 8-16 OL
Equipment
Anchor Glass Container Office Automation Jan-98 404,995 18 FP
Corporation
Anchor Glass Container Glass Packaging Jan-98 371,282 33.52% 3-6 OL
Corporation Equipment
Anna Offshore Inc. Offshore supply Apr-98 15,000,000 36 OL
vessels
Applied Magnetics Corporation Manufacturing Jul-97 4,152,810 85.33% 60 FP
Equipment
Applied Magnetics Corporation Wafer Fabrication Dec-97 7,975,841 60-63 FP
Equipment to Jan-98
Archer Daniels Midland Company 62 Rail Tank Cars Jan-98 42,875 6 OP
Arkansas Electric Cooperatives Surface Mining Jan-99 7,933,630 66 OL
Atmel Corporation Semiconductor Jan-98 4,114,596 96 FP
Manufacturing
Equipment
Avon Products, Inc. Office Automation Jan-98 29,415 17 FP
Blue Star Line Ltd. 61 Intermodal Containers Jan-98 3,573,462 60 OL
Burlington Northern & Santa GE B39-8 Diesel Jul-98 16,200,000 36 OL
Fe Railroad Electric
Locomotives
Burlington Northern & Santa Containers Oct-98 9,280,000 84 OL
Fe Railroad
Burlington Northern Railroad 63 GE Locomotives Dec-96 5,010,960 13 OL
Company
Cargill, Incorporated Covered Hopper Sep-98 2,708,564 88 FP
Railcar
Cargill, Incorporated Covered Hopper Sep-98 1,173,946 28 FP
Railcar
Cargill, Incorporated 64 Covered Hopper Jan-97 6,534,000 72 FP
Railcars
Certified Grocers of Forklifts Jan-99 41,025 60 OL
California, Ltd.
Certified Grocers of Forklifts Jul-98 810,792 60 OL
California, Ltd.
Chrysler Corporation Material Handling Oct-96 982,293 60 OL/HP
Equipment to Dec-96
Columbus & Greenville 64 Boxcars Jan-97 667,000 16 FP
Railway Company
Consolidated Diesel Company Copiers Jan-98 15,697 10-13 FP
Consolidated Diesel Company Machine Tools Jan-98 15,161 14 OL
Consolidated Rail Corporation Intermodal Containers Sep-97 3,314,000 84 HP
& Chassis to Nov-97
Costain Coal, Inc. Euclid Hual Trucks Jan-98 805,181 58.22% 12 OL
Crowley Foods, Inc. Bag In Box Filler Sep-98 330,496 60 OL
& Line
Crowley Foods, Inc. Materials Handling Sep-98 82,313 36 OL
Equipment to Oct-98
CVS Pharmacy, Inc. Phone Systems Jan-99 2,426,385 60 FP
CVS Pharmacy, Inc. Materials Handling Jun-99 1,152,971 60 FP
Equipment
Danskin, Inc. Textile Manufacturing Jan-98 255,718 6-15 OL
Equipment
Dole Fresh Fruit Company 61 Intermodal Containers Jan-98 3,876,170 44 OL
Empire Blue Cross and Office Furniture and Jan-98 696,766 27 FP
Blue Shield Fixtures
Exel Logistics, Inc. Tractors and Jan-98 133,947 3 OL
Trailers
Far Eastern Shipping Company 61 Intermodal Containers Jan-98 2,257,299 75 HP
Farmland Hydro, L.P. 62 Rail Tank Cars Jan-98 370,808 16 OL
First Union Rail Corporation 62, 74 Rail Tank Cars N/A 478,836 N/A N/A
General American Various Tank / Jan-99 8,368,524 84 OL
Transportation Company Hopper Cars
General Electric Company / Sun Enterprise SVR Aug-98 308,343 36 OL
General Electric Stations
Aircraft Engines
General Electric Company / Spectrometer Nov-98 77,150 60 FP
General Electric
Aircraft Engines
General Electric Company / Surface Grinders Aug-98 135,510 60 OL
General Electric to Sep-98
Aircraft Engines
General Electric Company / Machining Centers Jan-99 2,721,058 84 OL
General Electric to May-99
Aircraft Engines
General Electric Company / Machining centers Sep-98 1,546,649 84 FP
General Electric to Jul-99
Aircraft Engines
General Electric Company / Blow Molding Machine Jan-97 906,370 24 OL
General Electric Plastics
General Electric Company / Spectrometers Mar-97 306,545 60 FP
General Electric Plastics
A-31
<PAGE>
General Electric Company / Trackmobile Railcar Mar-97 166,602 60 OL
General Electric Plastics Mover
General Motors Corporation - Forklifts Jan-98 352,520 17 OL
GM Powertrain Group
Grand Trunk Western Railroad 65 Remanufactured High Jan-98 3,342,139 56.64% 24 OL
Incorporated Cube Boxcars
Great Salt Lake Minerals 62 Rail Tank Cars Jan-98 481,261 7 OL
Corporation
Group Management Services Office Furniture Jul-98 10,209 60 FP
Hallsmith-Sysco Food Services, 1999 Volvo WG42T Aug-98 274,485 84 FP
a division of Sysco Tractor
Corporation
Hallsmith-Sysco Food Services, 1999 Trailmobile Nov-98 1,054,033 96 FP
a division of Sysco Refrigerated
Corporation Trailers
Hallsmith-Sysco Food Services, Volvo Tractors Apr-98 823,455 84 FP
a division of Sysco
Corporation
Hallsmith-Sysco Food Services, Trailmobile May-98 1,209,055 96 FP
a division of Sysco Refrigerated
Corporation Trailers
Hambros Vendor Leasing Limited 66 Vehicles & Sep-97 5,381,076 78.56% 30-66 FP
Sanitation Trucks
Hartz Foods, Inc. Refrigeration Units Jan-98 18,422 9 FP
Hastings Leasing Limited 67 Trucks & Oct-97 28,811,289 88.85% 29-113 FP
Miscellaneous
Hastings Leasing Limited 67 Medical Equipment Oct-97 8,014,488 91.66% 25-81 FP
Henry General Hospital Hematology Analyzers Jan-98 185,700 41 FP
& Upgrades
Hughes Network Systems, Inc. Remote Communication Jan-98 97,237 54.61% 6-9 OL
Device
Hyplains Beef, L.C. Racking and Conveyor Jan-98 1,364,007 10 OL
Equipment
IBM Corporation Stereolithography Jan-98 30,026 7 OL
Apparatus
Illinois Central Railroad 64 Boxcars Jan-97 1,610,000 36 FP
Company
International Paper Company Trackmobile Railcar Jan-97 248,952 60 OL
Mover
International Paper Company Knuckle Boom Loader Feb-97 213,095 72 FP
International Paper Company 68 Rail Log Cars Oct-97 5,624,724 51 OL
International Paper Company CAT Wheel Loaders Jan-97 417,700 48 HP
to Feb-97
International Paper Company Hydraulic Excavator, Jun-97 539,438 60 OL
Lift Trucks, Loader to Jul-97
International Paper Company Knuckle Boom/ Sep-97 926,964 2.84% 48-60 OL/HP
Wheel Loaders to Oct-97
International Rectifier Wafer Fabrication Jan-98 589,829 8.45% 1-9 OL
Corporation Equipment
ITO Corporation Forklifts Jan-98 240,488 15-31 FP
Kawasaki Kisen Kaisha, 61 Intermodal Containers Jan-98 2,614,728 52 OL
Ltd. (K-Line)
Koppers Industries, Inc. 62 Rail Tank Car Jan-98 5,400 6 OL
Kraft Foods, Inc. Office Furniture/ Jul-98 1,227,554 71-84 FP
Fixtures to Dec-98
Kraft Foods, Inc. Phone System Jul-98 566,862 53-60 FP
to Sep-98
Kraft Foods, Inc. Steelcase Office Nov-97 1,154,439 84 FP
Furniture & to Jan-98
Fixtures
Kraft Foods, Inc. Telephone System Nov-97 549,980 60 FP
to Jan-98
Louisiana Workers' Office Automation Jan-98 2,199 1 OL
Compensation Corporation
Maxtor Corporation 69 Electronic Test Sep-97 533,698 36 HP
Equipment
Maxtor Corporation 69 Computer Equipment Jan-98 241,310 6 OL
McDonnell Douglas Helicopter Lift Trucks Apr-98 96,510 60 OL
Company
Midland Enterprises, Inc. Jumbo Hopper Barges Dec-98 4,941,229 25-49 OL
Minteq International, Inc. Geotronics Laser Jan-97 689,350 36 HP
Measuring Machine to Mar-97
Minteq International, Inc. Geotronics Laser Sep-97 1,019,585 36 HP
Measuring Machines to Jan-98
Mobil Business Resources 70 Helicopters Nov-96 1,650,000 36 OL
Corporation
Mobil Business Resources 70 Helicopter Oct-97 1,160,000 36 OL
Corporation
Mobil Oil Corporation Wheel Loader Jan-98 92,773 36 OL
National Steel Corporation Haul Trucks/Loader/ Oct-98 7,735,693 60 OL
Dozer to Jan-99
National Steel Corporation CAT Dozer Tractors Apr-97 734,730 75.36% 60 HP
A-32
<PAGE>
National Steel Corporation CAT Dozer, Loaders Jul-97 3,666,101 60 OL
National Steel Corporation Motor Grader & Front Oct-97 1,747,828 60 HP
End Loader
National Steel Corporation Crane & Wheel Loader Jan-98 861,344 48 OL
National Steel Corporation Omega Forklift & Apr-98 1,286,210 60 HP
Loaders
Nippon Yusen Kaisha, Ltd. 61 Intermodal Containers Jan-98 8,715,760 96 FP
(N.Y.K.Line)
North American Chemical Mini Mag - Jan-98 18,809 5 FP
Company Flow Meters
NVR, Inc. Home Manufacturing Nov-97 137,921 84 FP
Equipment
NVR, Inc. Home Manufacturing Oct-98 370,348 84 FP
Equipment
NVR, Inc. Tee-Lok Roller Gantry Aug-97 591,046 84 FP
Systems to Oct-97
Omnicom Group, Inc. 71 Office Furniture Jul-97 20,292 60 FP
Omnicom Group, Inc. 71 Office Furniture Jan-98 1,007,401 60 FP
Omnicom Group, Inc. Office Furniture Jul-98 108,468 60 FP
Omnicom Group, Inc. Office Furniture Jul-98 4,600 60 FP
PCS Phosphate Company, Inc. 62 Rail Tank Cars Jan-98 175,000 25 OL
Pentagon Systems, Inc. SMT-1200C Surface Jan-98 106,842 35 FP
Mount Placement
System
Pioneer Chlor Alkali Company 62 Rail Tank Cars Jan-98 1,614,144 15-60 OL/HP
PlasmaQuest , Inc. Office Automation Jan-98 6,406 8 FP
PVS Technologies, Inc. 62 Rail Tank Cars Jan-98 672,388 6-24 OL
Railcar, Ltd. Gondola and Hopper Nov-98 4,550,304 120 OL
Railcars
Ralphs Grocery Company Forklifts Jan-98 275,385 8.49% 2-17 FP
Riceland Foods, Inc. 62 Rail Tank Cars Jan-98 130,032 4 OL
Rose Acres Farms, Inc. Food Processing Jan-98 185,461 62.96% 16 OL
Equipment
Sarif, Inc. Wafer Fabrication Jan-98 224,702 23 FP
Equipment
Seaboard Commodity 62 Rail Tank Cars Jan-98 525,618 6-22 OL
Trading Company
Sebastiani Vineyards, Inc. Wine Barrels Jan-98 872,061 36-60 HP/FP
Sebastiani Vineyards, Inc. Wine Barrels Jul-98 201,470 36 HP
Sematec, Inc. Manufacturing Oct-97 1,303,600 36 HP
Equipment
Sematec, Inc. Manufacturing Jul-98 2,400,000 36 OL
Equipment
Sematech, Inc. Novellus Inova Feb-99 3,500,000 36 FP
Pvd System
Sierra Pacific Power 68 Coal Hopper Rail Cars Dec-97 2,600,000 67 OL
Company & Idaho Power
Company
Signature Flight Support Rampmaster Fuel Truck Oct-98 320,700 96 FP
Corporation
Signature Flight Support Fuel Trucks Apr-97 760,000 89.01% 132 FP
Corporation
Signature Flight Support Fuel Trucks Jan-98 620,000 72.64% 96-132 FP
Corporation
Signature Flight Support Fuel Truck & Deicer Apr-98 518,997 78.24% 96 FP
Corporation
Signature Flight Support Isuzu Trucks Jul-98 722,275 78.53% 60 HP
Corporation
Sisseton Milbank 64 Covered Hopper Jan-97 330,000 36 FP
Railroad, Inc. Railcars
Smitty's Super Valu, Inc. Furniture and Fixtures Jan-98 451,861 3 OL
Sony Pictures Sony Monitors Mar-98 1,278,900 36 OL
Entertainment, Inc.
Sony Pictures Cybex / Tectrix Jan-99 83,642 48 OL
Entertainment, Inc. Fitness Equipment
Sony Pictures Laserjet Printers Dec-98 78,820 36 OL
Entertainment, Inc. & Equipment
Southern Illinois Railcar Co. 64 Covered Hopper Jan-97 462,000 48 FP
Railcars
Southern Pacific Locomotives Jan-98 795,316 9 OL
Transportation Company
Southwest Health Centre, Inc. Siemens Mammographic Jan-98 13,000 1 OL
System
Stater Brothers Markets Furniture and Fixtures Jan-98 13,643 2 FP
Tarmac America, Inc. / 72 CAT / Michigan Loaders Apr-97 350,000 18 OL
Tarmac Mid Atlantic, Inc.
Tarmac Minerals. Inc. 72 Steel Deck Barges Jan-98 7,335,250 60 OL
A-33
<PAGE>
TASC, Inc. Office Automation Apr-98 1,146,296 36 HP
TASC, Inc. Office Automation Jul-98 848,065 36 FP
TASC, Inc. Office Automation Jul-98 2,362,948 36 FP
to Apr-99
TASC, Inc. Office Automation Oct-97 1,169,828 36 HP/FP
to Jan-98
The Pittston Company Fletcher Rr11-15 Dec-98 462,120 60 FP
Roof Bolters
The Pittston Company Diesel Mantrip Dec-98 140,500 60 FP
The Pittston Company Cat D11R Crawler Oct-98 2,246,938 48 OL
Tractors to Dec-98
Thompson Pipe & Steel Company Phone System, Jan-98 31,918 1 OL
Furniture and
Fixtures
Thomson Saginaw Ball Screw Machine Tools Jan-98 488,918 16 OL
Company
Triad International Aircraft Access and Jan-98 954,125 36.77% 3 OL
Maintenance Corporation Ground Support
Equipment
Ultrabeam Lithography, Inc. 73 Manufacturing Aug-98 971,517 48 FP
to Feb-99
Ultrabeam Lithography, Inc. 73 Manufacturing May-98 167,220 48 HP
Ultrabeam Lithography, Inc. 73 Manufacturing Aug-98 220,887 48 HP
Ultrabeam Lithography, Inc. 73 Technical Instrument Dec-97 269,888 48 HP
Confocal Metrology
System
United States Surgical Assorted Manufacturing Jul-98 3,747,760 120 FP
Corporation Equipment
Universal City Florida Office Automation Oct-98 1,665,120 36 OL
Partners to Apr-99
Wagner College Desktop PCs Jan-98 91,951 7-9 OL
Wayne Farms, a division of Food Processing Jan-98 64,686 12 OL
Continental Grain Company Equipment
Wisconsin Packing Company, Inc. Forklifts Jan-98 91,850 25 HP
Xerox Corporation FPD Inspection System Jan-98 3,521,046 60 HP
Xerox Corporation Lift truck Aug-98 21,921 44 OL
---------------- ----------------
ATEL Capital Equipment Fund VII total: $279,750,668 $ 0
================ ================
TOTAL OF ALL FUNDS: $946,694,006 $ 20,825,225
================ ================
</TABLE>
A-34
<PAGE>
TABLE V ACQUISITION OF EQUIPMENT FOOTNOTES
(1) In many cases, a Lease transaction is funded over a period of time
according to the Lessee's requirements. Therefore "Commencement Date (s)"
expressed as a range represents multiple commencement dates occurring or
anticipated under the same Lease line.
(2) "Acquisition Cost" includes either amounts committed to Lessees for
funding by the program, or the actual Equipment acquisition cost, less any
Acquisition Fees. All figures are rounded.
(3) "Acquisition Fees" include fees accrued by the program as of the
Preparation Date. For partially funded Lease lines, additional fees may be
expended by the program for future acquisitions made pursuant to the terms of
the Lease.
(4) "Percent Leverage" represents the percent ratio of the original
principal amount of the debt acquired or assumed by the program, to the
Acquisition Cost of the Equipment. The Equipment may be "leveraged" (where a
portion of the Equipment Acquisition Cost is financed using non-recourse debt
financing) at the time of, or subsequent to, the acquisition of the Equipment by
the program. Therefore, actual leverage ratios may be more or less than
indicated due to the timing of the acquisition of the Equipment in relation to
the amortization of the principal amounts of the debt.
(5) "Lease Term" is expressed in terms of months, although the actual Lease
Term may be expressed as monthly, quarterly, semiannual or annual.
(6) A designation of "FP" indicates that the aggregate rents to be received
during the Lease Term exceed or are equal to the Acquisition Cost of the
Equipment. A designation of "OL" indicates that the aggregate rentals to be
received during the Lease Term are less than the Acquisition Cost.
(7) The interest in this transaction is held 1/3 by ATEL Cash Distribution
Fund and 2/3 by ATEL Cash Distribution Fund II.
(8) Guaranteed by both Fingerhut Corporation and by Primerica Corporation,
as successor in interest to American Can Company.
(9) In March 1992, Financial News Network ("FNN"), a lessee of ATEL Lease
Income Fund, ATEL Cash Distribution Fund and ATEL Cash Distribution Fund II,
filed for protection under Chapter 11 of the U.S. Bankruptcy Act. Subsequent
competitive bidding between CNBC (a division of General Electric Company) and a
partnership consisting of Dow Jones, Inc. and Group W (Westinghouse) developed
for the purchase of FNN assets. This bidding resulted in the sale of certain FNN
assets, principally its subscribers, to CNBC for $145 million in cash and the
assumption of $9.3 million in liabilities. The proceeds from the sale were
distributed beginning in June 1992 resulting in the recovery of substantially
all of the programs' remaining investment in the Equipment.
(10) A 34.41% interest in this transaction was acquired by ATEL Cash
Distribution Fund. The remaining 65.59% was acquired by ATEL Cash Distribution
Fund II.
(11) Guaranteed by Fingerhut Corporation.
(12) Credit support provided by an Investment Agreement of Nord Kaolin
Corporation and of Nord Resources Corporation.
(13) These transactions are all leveraged under one non-recourse note with
Sogelease Corporation.
(14) Leased to Teledyne Wah Chang Albany, a division of Teledyne
Industries, Inc.
A-35
<PAGE>
(15) ATEL Cash Distribution Fund holds a one-half interest in this
transaction, the remaining half interest was acquired by ATEL Financial
Corporation on identical terms.
(16) Guaranteed by Addington Resources.
(17) Guaranteed by American President Companies.
(18) A 97.75% interest in Equipment Schedule No. 2 was acquired by ATEL
Cash Distribution Fund II. The remaining 2.25% interest in that Schedule was
acquired by ATEL Lease Income Fund.
(19) Lease originally with Hammermill Paper Company as lessee and
subsequently assumed by International Paper Company.
(20) Lease assigned to and assumed by Liggett & Meyers Tobacco Company,
with recourse retained against the original Lessee.
(21) On January 1, 1991 Midway Airlines, Inc., the lessee of the DC9-32 in
which ATEL Cash Distribution Fund II and ATEL Cash Distribution Fund III owned
interests, suspended payments on its debt and aircraft leases. On March 26,
1991, the Lessee filed for protection under Chapter 11 of the U.S. Bankruptcy
Act. On September 4, 1991, the non-recourse lender, John Hancock Leasing
Corporation, exercised its right to foreclose on the aircraft. As this
investment represents a relatively small portion of the programs' total equity
and anticipated cash flow, the General Partners do not believe that the adverse
developments with respect to this investment will have a material effect on
their respective operations, cash flows or rates of cash distributions. The
beneficial interest in the Equipment was held two-thirds by ATEL Cash
Distribution Fund II and one-third by ATEL Cash Distribution Fund III.
(22) Equipment operated by the Eureka Company, a division of Lessee, an
indirect subsidiary of AB Electrolux, Sweden.
(23) Guaranteed by Reynolds and Reynolds.
(24) On December 31, 1997, this lessee requested a moratorium on lease
payments from January through March 1998. ATEL Cash Distribution Fund V is
currently negotiating a settlement with the lessee.
(25) On October 13, 1993 the lessee, Rocky Mountain Helicopters, Inc.,
filed for protection under Chapter 11 of the U. S. Bankruptcy Act. The aircraft
which was the subject of the lease was delivered to ATEL Cash Distribution Fund
II, prior to the petition for bankruptcy and was sold by the lessor. The
proceeds of the sale satisfied in full the non-recourse debt obligation owed to
USX Credit Corporation and the excess was applied to mitigate the lessor's claim
against the lessee. The lessor subsequently filed and was allowed an unsecured
claim in the amount of $776,542. Through June 30, 1997, the lessor has received
$310,617 on this claim, representing 40% of the allowed claim. The sum of the
proceeds from the rents, sale of the aircraft and the claim filed in bankruptcy
has resulted in a recovery exceeding the lessor's original investment in the
aircraft.
(26) Assigned to and assumed by various subsidiaries of Lessee. Recourse
retained against Lessee. Lessee subsequently changed its name to SMC Mining
Corporation.
(27) Guaranteed by Continental Medical Systems, Inc.
(28) An indirect subsidiary and joint venture of Kaiser Aluminum & Chemical
Corporation and Norsk Hydro.
(29) Guaranteed by United States Surgical Corporation.
A-36
<PAGE>
(30) Acquisition Cost represents one-half of the total Equipment
Acquisition Cost. Title to this Equipment is held in an equipment trust where
one-half of the beneficial interest in the Equipment is owned by ATEL Cash
Distribution Fund III and one-half by ATEL Cash Distribution Fund IV.
(31) On January 10, 1996, Barney's, Inc., a lessee of ATEL Cash
Distribution Fund III, ATEL Cash Distribution Fund IV and ATEL Cash Distribution
Fund V filed for protection under Chapter 11 of the U. S. Bankruptcy Act. In
July of 1996, the lessors sold their unsecured claim in the bankruptcy for an
amount equal to approximately 73% of the unsecured claim, which, after
satisfaction of the non-recourse loan due to the CIT Group/Equipment Financing,
Inc. (and taking into account all prior rents received, security deposits
retained and loan proceeds previously received), resulted in proceeds to the
lessors in excess of their original investments in the equipment.
(32) Guaranteed by Nord Resources Corporation. Subsequently the lease was
assigned without recourse to DBK Minerals, Inc. with a guarantee of Dry Branch
Kaolin Company.
(33) Lessee indicated is the parent of Central Ohio Coal Company and
Southern Ohio Coal Company. The Lease transaction represents three distinct
leases with subsidiary companies. Credit support is provided by the parent, Ohio
Power Company by an Inducement Letter.
(34) The Lessee name is indicated for convenience only. The actual Lessees
are Paramount Coal Corporation, Clinchfield Coal Company, Heartland Resources,
Inc., Motivation Coal Company, Elkay Mining Company, Holston Mining, Inc. and
Meadow River Coal Company, all subsidiaries of The Pittston Company. The Lease
is guaranteed by The Pittston Company.
(35) Title to the Equipment and Lease transaction is held by an equipment
trust. A divisible 1/2 beneficial interest in the equipment trust is owned by
the program. The remaining divisible 1/2 beneficial interest in the equipment
trust is owned by a non-affiliate.
(36) Guaranteed by Quaker State Corporation. This lease was subsequently
assigned to Costain Coal Company on a recourse basis. In 1996, the assignee
defaulted on a lease payment, which default was subsequently cured. The lessor
is currently negotiating a settlement with the assignee, lessee and guarantor.
(37) Lessee is a partnership formed by United States Steel Corporation and
Kobe Steel Corporation.
(38) Title to the Equipment and Lease transaction is held by an equipment
trust. Partnership owns a 17.3199% beneficial interest in the equipment trust.
(39) Subject to a remarketing agreement with General Motors -
Electro-Motive division.
(40) Guaranteed by The Pittston Company.
(41) Guaranteed by CBI Industries, Inc. Subsequently guaranteed by Praxair,
Inc.
(42) Guaranteed by Peabody Holding Company, Inc.
(43) Tarmac America, Inc.; Tarmac Mid-Atlantic, Inc.; and Tarmac Florida,
Inc. are co-lessees. Guaranteed by Tarmac PLC, a British Limited Liability
Company.
(44)The equipment is subject to operating leases and managed by the lessee
under a pooled management arrangement. Rentals are variable. Average monthly
lease payments are estimated based on the minimum lease payments to be received
on similar Equipment owned by a prior program.
(45) Lessee has limited option to terminate at 36 months and 60 months,
subject to a remarketing agreement with Bond International (US), Inc.
A-37
<PAGE>
(46) A division of Waban, Inc.
(47) Equipment is subject to a full payout management agreement with MRXX
Corporation.
(48) Guaranteed by Mineral Technologies, Inc.
(49) Guaranteed by Mobil Corporation.
(50) Guaranteed by Omnicom Group, Inc. Actual lessees are various
subsidiaries of Omnicom Group Inc.: DDB Needham Worldwide Communications Group
Inc.; Griffin Bacal Inc.; DDB Needham Chicago Inc.; DDB Needham Dallas, Inc.;
PGC Advertising, Inc.; The Focus Agency, LP.; Elgin DDB Inc.; Group Management
Services; and TLP, Inc.
(51) This lessee filed for protection under Chapter 11 of the United States
Bankruptcy Code on January 16, 1998. As this lease has been leveraged using
non-recourse secured debt, the General Partner does not feel that the effect of
the bankruptcy will have a material adverse impact on the performance of ATEL
Cash Distribution Fund V.
(52) The lessee name represents the guarantor of the lease obligations
(which has since changed its name to the Morton's Restaurant Group, Inc.).
Actual lessees are various subsidiaries of the guarantor.
(53) This lessee defaulted on a portion of its lease payments in October
1997. ATEL Cash Distribution Fund V is currently negotiating a possible
settlement with the lessee.
(54) Guaranteed by Smith's Food & Drug Centers.
(55) Subject to a remarketing/residual sharing agreement with AT&T Credit
Corporation.
(56) Guaranteed by Adolf Coors Company.
(57) The end-users of the Equipment are various governmental entities in
the United Kingdom.
(58) Guaranteed by NEC Corporation.
(59) Guaranteed by A.T. Massey Coal Company, Inc.
(60) Guaranteed by Perdue Farms, Inc.
(61) Subject to a management agreement with Transamerica Leasing, Inc.
(62) Subject to a management agreement with First Union Rail Corporation.
(63) Title to the Equipment and Lease is held by an equipment trust. A
divided beneficial interest in the trust representing 24 of 34 of the
diesel-electric locomotives is owned by the program. A divided beneficial
interest in the trust representing the remaining 10 diesel-electric locomotives
has been assigned to a non-affiliate, however, such interest continues to be
managed by an affiliate of the program.
(64) The equipment is subject to a full payout management agreement with
MRXX Corporation.
(65) Title to the equipment is held in a trust. A divided beneficial
interest in the trust representing 130 of 291 boxcars is owned by the program. A
divided interest in the trust representing the remaining 161 boxcars continues
to be owned by the seller of the program's interest, which seller is a
non-affiliate.
A-38
<PAGE>
(66) The underlying leases in this transaction are to various
municipalities in the United Kingdom. The underlying leases are being managed by
Hambros Vendor Finance Limited and include a residual sharing agreement.
(67) The underlying leases in this transaction are to various
municipalities in the United Kingdom. The underlying leases are being managed by
Hastings Leasing Limited and include a residual sharing agreement.
(68) Title to the equipment is held in a trust. The program has a 100%
undivided beneficial interest in the trust.
(69) Guaranteed by Hyundai Electronics Industries Co., Ltd.
(70) Guaranteed by Mobil Corporation.
(71) Guaranteed by Omnicom Group, Inc. Actual lessees are various
subsidiaries of Omnicom Group Inc.: The DDB Needham Worldwide Communications
Group Inc.; Griffin Bacal Inc.; DDB Needham Chicago, Inc.; DDB Needham Dallas,
Inc.; PGC Advertising, Inc.; The Focus Agency, LP.; Elgin DDB Inc.; Group
Management Services and TLP, Inc.
(72) Tarmac America, Inc.; Tarmac Mid-Atlantic, Inc.; and Tarmac Florida,
Inc. are co-lessees. Guaranteed by Tarmac PLC, a British Limited Liability
Company.
(73) Co-lessee under the lease with Ultratech Stepper, Inc., UltraBeam
Lithography, Inc. and Verdant Technologies, Inc. as additional co-lessees.
(74) The lessee name represents the manager of the rail tank cars. These
rail tank cars are not currently subject to a fixed term lease.
A-39
<PAGE>
TABLE VI
SALES OR DISPOSALS OF EQUIPMENT
ATEL Lease Income Fund, ATEL Cash Distribution Fund, ATEL Cash Distribution Fund
II, ATEL Cash Distribution Fund III, ATEL Cash Disitribution Fund IV, ATEL Cash
Distribution Fund V, ATEL Cash Distribution Fund VI and ATEL Capital Equipment
Fund VII have disposed of equipment in their portfolios as of June 30, 1999. Set
forth below is a summary of equipment sales and dispositions as of such date.
Sales were for consideration unless otherwise noted. Interim rent (rent paid
prior to formal commencement of a lease), hold-over rent (rent received after
termination of the initial lease term, but before formal extension or
disposition) and extension rent (rent paid after formal extension of a lease)
are included in the "Excess of Rents Over Expenses" column. "Equipment
Acquisition Price" includes acquisition fees. Dispositions are shown on a per
asset basis.
<TABLE>
<CAPTION>
Excess of
Equipment Rents Over
Acquisition Acquisition Sale Expenses
Lessee Type of Equipment Date (1) Price (2) Sale Date Price (3) (4) Notes
- ------ ----------------- -------- --------- --------- --------- --- -----
ATEL LEASE INCOME FUND 1985-A
<S> <C> <C> <C> <C> <C> <C> <C>
Colour Graphics Computer system Feb-87 $ 34,500 Oct-93 $ 2,525 $ 44,483
Colour Graphics Office Information Systems Jul-88 45,000 Jan-94 11,200 55,777
Educational Loan Services, Office Information Systems May-86 33,050 Oct-90 900 31,350
Inc.
Federal Home Loan Bank of Office Information Systems May-86 39,127 Apr-90 870 36,800
New York
Financial News Network, Inc. Studio and Broadcasting Feb-90 14,777 Jun-92 11,493 2,027 5
Gorham, Inc. Office Information Systems May-86 38,799 Mar-90 2,300 45,180
Long Lake Staionary, Inc. Binding Equipment May-87 4,023 Jul-92 1 6,242
Philip Morris, U.S.A. Office Information Systems May-86 13,297 Jan-89 3,600 12,400
Philip Morris, U.S.A. Office Information Systems May-86 21,584 Aug-92 - 22,050
Polaroid Corporation Office Information Systems May-86 48,028 Jan-90 4,500 45,000
Rohr Industries, Inc. Motor Vehicle Jan-89 12,451 Apr-95 6,400 17,843
Rohr Industries, Inc. Motor Vehicle Apr-89 8,376 Jul-92 4,723 8,558
-------------- -------------- --------------
$ 313,012 $ 48,512 $ 327,710
============== ============== ==============
ATEL CASH DISTRIBUTION FUND
Acushnet Company Office Information Systems Jan-87 $ 140,287 Dec-91 $ 4,545 $ 156,000
Alachua General Hospital MRI Scanner Jan-89 641,593 Jan-95 1 699,453
Alachua General Hospital Tractor Jan-89 15,327 Sep-92 9,000 15,900 6
American Motors Corporation Lift Trucks Oct-87 217,066 Jun-97 57,000 229,029
American Motors Corporation Lift Trucks Oct-87 109,751 Mar-93 31,800 141,636
American Motors Corporation Lift Trucks Oct-87 55,579 Apr-93 15,956 71,727
American Motors Corporation Lift Truck Oct-87 34,494 May-89 30,818 10,117
American Motors Corporation Lift Trucks Oct-87 25,754 Sep-92 6,200 31,306
American Motors Corporation Lift Trucks Oct-87 15,201 Feb-94 4,500 22,886
American Motors Corporation Lift Trucks Oct-87 12,877 Jan-93 3,200 15,863
American Motors Corporation Hoist Mill Truck Dec-87 104,834 Mar-93 18,000 131,164
American Motors Corporation Lift Truck Dec-87 29,709 Jun-97 - 21,189
American Motors Corporation Lift Trucks Jan-88 45,385 Dec-92 7,000 63,268
Anaheim Memorial Hospital CAT Scanner Jan-88 814,696 Apr-93 88,000 839,938
Campbell Soup Company Reach / Walkie Trucks Mar-87 79,248 Sep-93 2,700 89,216
Campbell Soup Company Lift Truck Battery Chargers Mar-87 37,127 Aug-93 12,435 38,812
Campbell Soup Company Lift Truck Mar-87 34,790 Jun-90 30,000 19,575
Campbell Soup Company Lift Truck Mar-87 25,668 Jul-94 5,022 31,663
Campbell Soup Company Lift Truck Mar-87 19,763 Oct-95 2,000 27,283
Campbell Soup Company Lift Truck Mar-87 19,491 May-95 - 25,976
Campbell Soup Company Batteries / Chargers Mar-87 12,417 Dec-93 4,250 13,977
Campbell Soup Company Lift Trucks Mar-87 10,584 Dec-97 11,000 36,430
Campbell Soup Company Lift Truck Apr-87 24,550 Apr-91 17,764 17,765
Campbell Soup Company Lift Truck Apr-87 4,997 Apr-91 3,616 3,616
A-40
<PAGE>
Campbell Soup Company Lift Truck Apr-87 63,153 Dec-97 20,873 71,540
Color Graphics Corporation 645-MSS Output Scanning Dec-86 232,533 Mar-94 20,000 303,307
Station
Enron Corp. Office Information Systems Jun-88 88,364 Jun-91 17,857 90,326
Enron Corp. Office Information Systems Jun-88 87,399 Feb-92 10,650 85,140
Enron Corp. Office Information Systems Jun-88 79,726 Mar-92 8,000 76,968
Financial News Network, Inc. Studio and Broadcasting Mar-90 935,918 Jun-92 747,617 123,050 7
GAF Corporation Lift Trucks Oct-87 459,660 Nov-92 94,575 457,460
GAF Corporation Joy Filler Mar-88 535,257 Dec-97 44,525 822,498
Galardi Group Restaurant FF&E Jun-94 247,000 Oct-96 147,148 173,042
Hartford Insurance Group Communication Jul-88 93,252 Jul-93 3,618 106,785
Imperial Plastics, Inc. Injection Molding Jun-87 137,247 Apr-94 67,000 147,445
Imperial Plastics, Inc. Injection Molding Dec-87 150,879 Apr-94 64,000 170,530
Imperial Plastics, Inc. Injection Molding Jan-88 194,944 Apr-94 77,000 229,797
Imperial Plastics, Inc. Air Compressor Temperature Mar-88 66,883 Apr-94 17,000 71,949
Control Unit
Martin Marietta Corporation Communication Apr-88 296,550 Aug-93 500 277,184
Martin Marietta Corporation Communication Apr-88 148,275 Jun-92 16,000 138,592
Nord Kaolin Company Hydraulic Excavator May-87 163,490 Mar-93 45,000 184,567
Nord Kaolin Company Komatsu Crawler Tractor Aug-87 50,693 Jul-96 12,000 36,492
Nord Kaolin Company Lift Trucks Sep-87 15,633 Oct-95 3,500 27,386
Nord Kaolin Company Magnetic Separator Oct-87 160,669 Dec-96 25,000 150,087
Nord Kaolin Company Industrial Truck Oct-89 13,745 Oct-97 3,000 20,856
Polaroid Corporation Office Information Systems Mar-87 37,819 Apr-92 2,475 41,005
Putnam County Hospital Spectrum Analyzer May-88 114,950 May-94 2,000 158,780
Rohr Industries, Inc. Motor Vehicle Jul-87 14,790 Feb-93 4,175 17,080
Rohr Industries, Inc. Motor Vehicle Jan-88 9,346 Aug-96 3,232 11,495
Rohr Industries, Inc. Motor Vehicle Feb-88 12,060 Aug-96 1,502 14,896
Rohr Industries, Inc. Motor Vehicle Mar-88 16,421 Feb-93 4,575 19,073
Rohr Industries, Inc. Motor Vehicle Apr-88 16,183 Aug-93 3,977 18,986
Rohr Industries, Inc. Motor Vehicle Apr-88 16,052 Feb-96 5,000 21,252
Rohr Industries, Inc. Motor Vehicle Apr-88 14,630 Apr-91 5,725 13,106
Rohr Industries, Inc. Motor Vehicle Apr-88 14,028 Dec-95 4,630 20,629
Rohr Industries, Inc. Motor Vehicle Apr-88 13,330 Oct-92 2,530 15,081
Rohr Industries, Inc. Motor Vehicle Apr-88 12,932 Apr-91 4,380 11,585
Rohr Industries, Inc. Motor Vehicle Apr-88 12,060 Apr-91 3,498 10,804
Rohr Industries, Inc. Motor Vehicle Apr-88 12,060 Apr-91 3,198 10,804
Rohr Industries, Inc. Motor Vehicle Apr-88 9,356 Aug-96 3,332 12,647
Rohr Industries, Inc. Motor Vehicle May-88 13,981 Sep-95 3,900 20,280
Rohr Industries, Inc. Motor Vehicle Jul-88 29,656 Nov-92 7,135 31,553
Rohr Industries, Inc. Motor Vehicle Jul-88 25,755 Mar-96 9,000 33,051
Rohr Industries, Inc. Motor Vehicle Jul-88 11,566 Jul-91 4,075 10,517
Rohr Industries, Inc. Motor Vehicle Jul-88 11,566 Jul-91 4,850 10,517
Rohr Industries, Inc. Motor Vehicle Jul-88 11,566 Jul-91 3,890 10,517
Rohr Industries, Inc. Motor Vehicle Aug-88 17,829 Nov-96 6,590 23,532
Rohr Industries, Inc. Motor Vehicle Aug-88 16,538 May-93 2,622 18,710
Rohr Industries, Inc. Motor Vehicle Aug-88 14,662 Oct-93 3,435 16,587
Rohr Industries, Inc. Motor Vehicle Oct-89 15,460 Dec-97 2,750 33,297
Teledyne Industries, Inc. Lift Truck Oct-87 160,930 Feb-93 48,000 162,751
Teledyne Industries, Inc. Lift Truck Oct-87 147,345 Nov-92 20,000 149,763
Teledyne Industries, Inc. Lift Truck Oct-87 87,258 Jan-93 19,000 89,166
Teledyne Industries, Inc. Lift Truck Jan-88 147,345 Nov-91 41,000 137,956
Teledyne Industries, Inc. Lift Truck Jan-88 52,250 Apr-91 15,000 47,775
Teledyne Industries, Inc. Lift Truck Jan-88 39,188 Apr-91 10,000 35,832
A-41
<PAGE>
Teledyne Industries, Inc. Lift Truck Feb-88 173,330 Feb-93 58,000 150,644
Teledyne Industries, Inc. Lift Truck Mar-88 50,160 May-93 11,000 51,896
Teledyne Industries, Inc. Lift Truck Apr-88 55,907 Feb-93 20,000 58,088
Teledyne Industries, Inc. Lift Truck Jul-88 147,345 Oct-92 20,000 134,726
Teledyne Industries, Inc. Lift Truck Aug-88 42,845 Jan-94 9,000 46,240
Teledyne Industries, Inc. Lift Truck Nov-88 38,278 Mar-94 11,000 41,481
Teledyne Industries, Inc. Lift Truck Nov-88 35,530 Jan-94 10,390 36,406
Teledyne Industries, Inc. Lift Trucks Aug-89 32,771 Nov-94 7,896 33,173
Teledyne Industries, Inc. Lift Truck Sep-89 68,970 Oct-92 10,000 67,300
Teledyne Industries, Inc. Lift Truck Nov-89 218,133 Jan-93 44,000 204,009
Teledyne Industries, Inc. Lift Truck Nov-89 58,374 Mar-94 12,500 63,256
Teledyne Industries, Inc. Lift Truck Jan-90 57,487 Mar-94 13,000 55,978
Teledyne Industries, Inc. Lift Trucks Jan-90 57,350 Jan-95 15,000 58,052
Teledyne Industries, Inc. Lift Trucks Jan-90 57,350 Jan-95 15,000 58,052
The Dow Chemical Company Truck Jul-87 111,288 Jun-93 17,500 102,367
The Dow Chemical Company Trucks Jul-87 91,216 Jul-93 26,000 80,985
The Dow Chemical Company Mack Truck Jul-87 25,210 Aug-92 7,500 24,846
Treasure Chest Advertising Printing Press Mar-87 521,190 Dec-92 311,844 523,950
Company, Inc.
TRW, Inc. Communication Apr-89 257,130 Jul-93 8,400 235,080
TRW, Inc. Communication Apr-89 77,957 May-92 19,800 70,704
United Technologies Office Information Systems Dec-86 77,450 Mar-91 20,000 80,985
Corporation
Vista Chemical Company Tank cars Mar-88 1,238,250 Dec-93 885,000 1,090,493
WSMP, Inc. Vacuum Pkg. Machine Apr-95 208,788 Dec-97 150,314 129,870
-------------- -------------- --------------
$ 11,583,679 $ 3,768,290 $ 11,146,398
============== ============== ==============
ATEL CASH DISTRIBUTION FUND II
A.O. Smith Corporation Office Automation Equipment Dec-90 $ 723,258 Sep-94 $ 75,017 $ 763,652
A.O. Smith Corporation Lift Truck Jul-89 80,717 Jun-94 34,000 81,198
A.O. Smith Corporation Lift Truck Jul-89 26,910 Jun-95 6,250 51,147
A.O. Smith Corporation Lift Truck Jul-89 17,616 Jul-95 1,500 23,346
A.O. Smith Corporation Personnel Carrier Jul-89 4,381 Jul-94 500 4,407
A.O. Smith Corporation Machinery Jul-91 26,475 Jan-93 18,360 15,660
Addwest Gold, Inc. Portable Jaw Crusher Plant Sep-88 1,153,001 Nov-94 301,000 1,104,720
Alachua General Hospital MRI Scanner Jan-89 1,286,256 Jan-95 1 1,683,244
Alachua General Hospital Tractor Jan-89 30,727 Sep-92 18,000 31,801 6
American Express Company Manufacturing May-89 289,922 May-93 10,000 293,040
American President Trucking Tractors Sep-88 60,326 Jan-94 15,500 55,808
Co., Ltd.
American President Trucking Tractors Sep-88 60,326 Apr-94 16,400 61,125
Co., Ltd.
American President Trucking Tractors Sep-88 60,326 Apr-94 16,200 61,571
Co., Ltd.
American President Trucking Tractors Sep-88 60,326 Apr-94 16,400 55,808
Co., Ltd.
American President Trucking Tractors Sep-88 60,325 Sep-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Oct-88 61,513 Dec-93 16,000 52,752
Co., Ltd.
American President Trucking Tractors Oct-88 61,513 Jan-94 16,000 60,854
Co., Ltd.
American President Trucking Tractors Oct-88 61,513 Jan-94 16,000 58,674
Co., Ltd.
American President Trucking Tractors Oct-88 61,513 Apr-94 17,000 59,724
Co., Ltd.
American President Trucking Tractors Oct-88 60,326 Dec-93 15,000 51,734
Co., Ltd.
A-42
<PAGE>
American President Trucking Tractors Oct-88 60,326 Jan-94 15,500 56,701
Co., Ltd.
American President Trucking Tractors Oct-88 60,326 Apr-94 16,400 58,570
Co., Ltd.
American President Trucking Tractors Oct-88 60,326 Apr-94 16,400 58,145
Co., Ltd.
American President Trucking Tractors Oct-88 60,326 Apr-94 19,000 58,595
Co., Ltd.
American President Trucking Tractors Nov-88 61,513 Jun-93 45,041 47,171
Co., Ltd.
American President Trucking Tractors Nov-88 61,513 Dec-93 15,926 59,573
Co., Ltd.
American President Trucking Tractors Nov-88 61,513 Jan-94 16,000 59,369
Co., Ltd.
American President Trucking Tractors Nov-88 61,513 Jan-94 16,000 56,907
Co., Ltd.
American President Trucking Tractors Nov-88 61,513 Jun-96 8,500 71,279
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 May-93 44,172 44,957
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jan-94 17,461 58,772
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jan-94 15,500 55,808
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Apr-94 19,000 55,809
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Apr-94 16,400 58,570
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jan-96 10,350 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jan-96 10,282 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jan-96 10,350 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jan-96 10,350 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Apr-96 10,565 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 May-96 10,390 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jun-96 9,500 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Jul-96 9,995 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Sep-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Sep-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Sep-96 7,700 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Oct-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Oct-96 7,700 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Oct-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Oct-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Oct-96 7,700 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,326 Nov-96 7,600 69,903
Co., Ltd.
American President Trucking Tractors Nov-88 60,325 Dec-95 11,522 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Jun-96 9,500 69,903
Co., Ltd.
A-43
<PAGE>
American President Trucking Tractors Dec-88 60,326 Aug-96 7,200 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Sep-96 7,700 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Sep-96 7,700 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Sep-96 7,905 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Nov-96 7,600 69,903
Co., Ltd.
American President Trucking Tractors Dec-88 60,326 Nov-96 7,600 69,903
Co., Ltd.
American President Trucking Tractors Mar-89 61,513 Feb-96 10,488 71,279
Co., Ltd.
Bistol-Meyers Squib Office furniture Jun-92 324,310 Oct-95 89,834 340,960
Buffalo & Pittsburgh Railroad Locomotives Nov-93 108,127 Nov-96 103,500 109,471
Campbell Soup Company Lift Trucks Jul-88 237,980 Oct-95 33,000 304,036
Campbell Soup Company Life plus charger Jul-88 28,056 Aug-95 6,000 34,608
Campbell Soup Company Lift Truck Jul-88 26,604 Oct-95 2,500 33,597
Campbell Soup Company Forklift Truck Jul-88 to 74,794 Dec-98 1,680 77,130
Sep-88
Chesebrough-Pond's Inc. Lift Trucks May-90 109,901 Aug-94 42,000 124,236
Chesebrough-Pond's Inc. Motorized Lowlift Walk/ May-90 38,303 Aug-94 4,800 43,452
Ride Trucks
Chesebrough-Pond's Inc. Lift Truck May-90 35,029 Aug-94 12,950 39,270
Chesebrough-Pond's Inc. Lift Truck May-90 18,220 Aug-94 6,750 20,502
Chrysler Corporation C-Line Industrial Battery Dec-93 7,202 Oct-97 2,221 85,182
Chrysler Corporation Battery Charger Dec-93 4,798 Oct-97 1,479 56,748
Colour Graphics Corporation Computer system Jul-88 35,411 Oct-93 2,475 41,767
Continental Medical Systems, Physical therapy Jun-90 36,676 Jun-95 11,750 45,485
Inc.
Cooper Tire & Rubber Company Lift Trucks Nov-88 33,296 Jan-96 10,600 37,698
Cooper Tire & Rubber Company Forklifts Apr-89 to 87,906 Jul-96 15,760 107,895
Jun-89
Cooper Tire & Rubber Company Forklifts Jan-89 to 482,499 Oct-96 89,200 598,468
Mar-89
Delnor Community Hospital Medical Apr-88 89,081 Dec-91 35,000 87,406
Delnor Community Hospital Medical Jul-88 263,473 Apr-91 45,000 247,586 8
Delnor Community Hospital Medical Jul-88 118,775 Apr-91 17,850 106,513
DJ Aerospace Limited Executive Aircraft Apr-94 810,000 Jan-97 436,309 681,820
Emmanuel Hospital & Health 1987 BK117-A4 Helicopter Jul-88 2,354,534 Oct-98 1,591,194 3,236,782
Center
Financial News Network, Inc. Studio and Broadcasting Feb-90 670,359 Jun-92 534,432 148,788
Fingerhut Corporation Pacesetter Saddlebinder Dec-89 233,268 Dec-94 110,000 258,130
FMC Gold Company Material Handling Apr-90 417,082 Jul-93 155,000 361,891
FMC Gold Company Material Handling Apr-90 380,201 May-93 105,000 322,256
GAF Corporation Manufacturing Mar-88 433,267 Jun-95 1 657,024
Galardi Group Restaurant FF&E Jun-94 507,000 Oct-96 302,042 355,190
General Motors Corporation Video Projector Dec-93 6,516 Jan-98 - 10,006
General Motors Corporation Video Projectors Dec-93 52,128 Jun-97 11,613 59,207
Hammermill Paper Company Truck Dec-88 to 100,728 Jul-98 to 13,700 102,577
Mar-90 Dec-98
Home Life Insurance Furniture Jan-89 445,877 Sep-98 102,867 753,912
Hudson Foods, Inc. Chicken Processing Jul-89 326,880 Aug-94 120,215 373,808
Hudson Foods, Inc. Waste Water Pre-treatment Aug-89 331,070 Aug-94 121,600 377,895
Plant
Hudson Foods, Inc. Chicken Processing Dec-89 1,102,591 Sep-94 333,006 1,182,678
Equipment
Hudson Foods, Inc. Chicken Processing Dec-89 890,708 Sep-94 272,280 959,784
Equipment
A-44
<PAGE>
Hudson Foods, Inc. Chicken Processing Dec-89 190,739 Sep-94 56,897 205,202
Equipment
Inland Steel Company Laser Measuring System Sep-89 436,808 Apr-94 105,000 487,179
International Paper Company Truck Jun-88 25,080 Nov-92 14,653 28,446
International Paper Company Trucks Jul-88 32,039 Nov-91 7,412 31,840
International Paper Company Truck Sep-88 42,161 Dec-95 11,120 73,774
International Paper Company Van Sep-88 39,626 Nov-94 11,325 37,872
International Paper Company Trucks Sep-88 37,910 May-92 17,372 33,220
International Paper Company Truck Sep-88 35,302 Sep-94 8,500 36,360
International Paper Company Trucks Sep-88 28,114 Dec-93 7,750 30,848
International Paper Company Truck Sep-88 20,850 Dec-95 11,924 39,114
International Paper Company Trucks Nov-88 165,175 Aug-91 118,185 90,831
International Paper Company Truck with power lift gate Nov-88 32,691 Dec-94 10,000 36,079
International Paper Company Truck with power lift gate Nov-88 32,691 Feb-95 9,500 36,079
International Paper Company Motor Vehicle Dec-88 13,873 Apr-97 5,500 22,610
International Paper Company Motor Vehicle Jan-89 33,029 Jul-96 4,000 58,146
International Paper Company Motor Vehicle Feb-89 41,080 Jun-97 4,250 65,533
International Paper Company Trucks Mar-89 48,783 May-95 26,000 40,150
International Paper Company Truck Mar-89 24,458 Apr-95 11,000 25,968
International Paper Company Cargo Van Mar-89 13,910 Jan-95 2,740 16,189
International Paper Company Trucks Apr-89 76,873 May-95 20,000 86,592
International Paper Company Truck Jun-89 29,079 May-95 9,000 31,744
International Paper Company Trucks Jun-89 27,457 Apr-94 4,500 32,538
International Paper Company Truck Aug-89 27,249 Apr-96 7,000 37,622
International Paper Company Cut-away Van Aug-89 19,484 Dec-94 5,750 19,095
International Paper Company Trucks Oct-89 116,589 May-92 83,477 63,595
International Paper Company Cab & chassis Oct-89 25,374 Dec-95 9,477 38,797
International Paper Company Trucks Nov-89 33,587 Mar-94 9,000 34,975
International Paper Company Trucks Dec-89 123,513 Apr-95 50,750 139,088
International Paper Company Trucks Mar-90 76,300 May-92 54,047 34,906
KeyCorp Office Furniture and Aug-89 913,120 Apr-94 245,000 1,014,508
Equipment
Keycorp ATM's Aug-89 251,385 Dec-96 23,500 287,781
KeyCorp ATM Machines Aug-89 195,522 Apr-96 18,650 211,431
KeyCorp ATM Machines Aug-89 139,658 Jan-94 41,250 146,802
Keycorp ATM's Aug-89 139,658 Jun-97 10,000 213,512 9
KeyCorp ATM Machines Aug-89 55,864 Aug-94 14,500 66,333
Koppers Industries, Inc. Hydraulic loader & end Jun-90 639,120 Jun-95 317,500 793,198
loader
Liggett Group Laser Perforation Unit Dec-88 679,384 Aug-98 75,000 362,630
Midway Airlines, Inc. Commercial Aircraft Jun-90 4,592,040 Sep-91 3,444,589 463,076
National Semiconductor Wafer Processing System Apr-89 762,580 Jan-94 82,000 869,955
Corporation
National Steel Corporation Crane (20 Ton) Oct-89 169,447 Oct-98 38,000 35,432
National Steel Corporation Wheel Loader Dec-89 380,203 Jul-96 134,512 476,098
National Steel Corporation Forklifts Dec-89 85,296 Jun-97 25,000 109,159
National Union Electric Phone System Aug-89 481,738 Mar-94 130,000 507,722
Corporation
Nissan Motor Corporation Office Information Systems Jul-88 229,598 Jul-93 3,700 221,328
In USA
NMCS, Inc. , d/b/a National Office Furniture Jun-88 627,453 Mar-94 1 747,640
Medical Group Services,
Inc.
Nord Kaolin Company Water Tank Trucks Feb-89 229,795 Nov-96 31,800 191,762
Nord Kaolin Company Ford Truck & Truck Crane Apr-89 76,913 Mar-97 28,000 109,219
Owens Corning Fiberglas Corp. Automobile Nov-88 15,822 Apr-95 3,650 20,000
Owens Corning Fiberglas Corp. Material Handling Jul-89 175,098 Jul-92 41,020 154,944
Owens Corning Fiberglas Corp. Material Handling Oct-89 151,207 Mar-93 47,000 139,317
Owens Corning Fiberglas Corp. Material Handling Oct-89 56,733 Sep-94 13,000 62,760
A-45
<PAGE>
Owens Corning Fiberglas Corp. Material Handling Oct-89 31,192 Sep-94 9,000 34,524
Owens Corning Fiberglas Corp. Material Handling Dec-89 21,331 May-96 4,100 27,834
Owens Corning Fiberglas Corp. Material Handling Feb-90 100,985 Oct-95 35,000 119,560
Owens Corning Fiberglas Corp. Lift Truck Mar-90 18,288 Mar-95 6,500 19,851
Owens Corning Fiberglas Corp. Material Handling Apr-90 122,130 Apr-94 36,600 126,827
Owens Corning Fiberglas Corp. Material Handling Apr-90 118,092 Apr-95 44,500 128,182
Owens Corning Fiberglas Corp. Material Handling Apr-90 101,775 Jun-93 29,100 92,836
Owens Corning Fiberglas Corp. Material Handling May-90 57,956 Jun-93 13,500 62,821
Owens Corning Fiberglas Corp. Material Handling May-90 21,866 May-98 4,200 30,239
Owens Corning Fiberglas Corp. Material Handling May-90 18,972 Apr-94 4,800 20,165
Owens Corning Fiberglas Corp. Material Handling Jun-90 152,935 Oct-95 56,000 179,186
Owens Corning Fiberglas Corp. Material Handling Jun-90 16,179 Aug-96 5,000 19,670
Owens Corning Fiberglas Corp. Forklift Truck Jul-90 22,422 Jul-97 1 36,338
Owens Corning Fiberglas Corp. Material Handling Aug-90 123,102 Aug-93 41,000 113,082
Owens Corning Fiberglas Corp. Lift Truck Aug-90 59,786 Dec-94 20,000 59,404
Owens Corning Fiberglas Corp. Forklift Aug-90 25,601 Oct-96 5,050 31,106
Owens Corning Fiberglas Corp. Material Handling Aug-90 20,858 Aug-95 10,750 22,911
Owens Corning Fiberglas Corp. Material Handling Aug-90 20,858 Sep-95 10,750 22,911
Owens Corning Fiberglas Corp. Forklift Truck Aug-90 19,000 Jul-97 4,000 24,084
Owens Corning Fiberglas Corp. Mobile Rail Car Mover Oct-90 114,900 Sep-97 70,000 142,436
Owens Corning Fiberglas Corp. Material Handling Oct-90 22,750 Nov-95 7,000 29,948 10
Owens Corning Fiberglas Corp. Material Handling Oct-90 21,920 Oct-95 10,750 24,521
Owens Corning Fiberglas Corp. Material Handling Oct-90 17,235 Jan-98 2,833 22,627
Owens Corning Fiberglas Corp. Sweeper Nov-90 27,592 Dec-93 6,600 26,638
Owens Corning Fiberglas Corp. Material Handling Nov-90 11,302 Mar-95 1 15,881
Pre Press Group Digital Color Scanner Nov-88 1,276,903 Nov-97 9,000 1,529,568
Quaker Coal Company Crawler Dozer Feb-94 558,301 Apr-96 255,000 356,875
Ran-Bar Corporation Boom lift Aug-93 7,950 Sep-95 1 19,152
Regents of the University of Communication Jan-89 84,204 Dec-93 25,500 87,434
California
Rocky Mountain Helicopters, Aircraft Oct-89 2,252,125 Dec-93 1,472,413 1,383,000
Inc.
Rohr Industries, Inc. Motor Vehicles Oct-88 47,524 Aug-93 19,095 61,845
Rohr Industries, Inc. Motor Vehicles Oct-88 24,450 May-93 5,534 24,406
Rohr Industries, Inc. Motor Vehicles Oct-88 11,370 Dec-93 3,977 13,300
Rohr Industries, Inc. Motor Vehicles Oct-88 8,742 Aug-96 3,482 12,950
Rohr Industries, Inc. Motor Vehicles Dec-88 99,553 Jan-93 22,012 99,184
Rohr Industries, Inc. Motor Vehicles Dec-88 15,642 Jan-95 3,077 21,521
Rohr Industries, Inc. Motor Vehicles Dec-88 15,569 Dec-93 4,777 17,664
Rohr Industries, Inc. Motor Vehicles Jan-89 14,990 Feb-92 3,509 12,925
Rohr Industries, Inc. Motor Vehicles Jan-89 14,990 May-92 5,538 13,776
Rohr Industries, Inc. Motor Vehicles Jan-89 9,532 Apr-94 3,300 12,375
Rohr Industries, Inc. Motor Vehicles Feb-89 9,359 Aug-94 3,177 12,851
Rohr Industries, Inc. Motor Vehicles Feb-89 8,952 Aug-96 - 14,280
Rohr Industries, Inc. Motor Vehicles Apr-89 72,014 Jul-92 20,088 68,396
Rohr Industries, Inc. Motor Vehicles Apr-89 36,263 Apr-89 7,667 35,328
Rohr Industries, Inc. Motor Vehicles Apr-89 35,762 Apr-92 9,019 34,793
Rohr Industries, Inc. Motor Vehicles Apr-89 24,343 Jul-92 5,146 23,683
Rohr Industries, Inc. Motor Vehicles Apr-89 21,759 Jul-94 8,500 25,267
Rohr Industries, Inc. Motor Vehicles Apr-89 12,393 Jan-92 2,313 12,086
Rohr Industries, Inc. Motor Vehicles Apr-89 11,921 May-92 3,058 11,597
Rohr Industries, Inc. Motor Vehicles Apr-89 11,920 Jul-92 2,973 11,597
Rohr Industries, Inc. Motor Vehicles May-89 16,760 Jul-94 3,677 18,710
Rohr Industries, Inc. Motor Vehicles May-89 11,920 May-93 2,772 12,955
Rohr Industries, Inc. Motor Vehicles Jul-89 18,477 Feb-93 11,810 14,614
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Rohr Industries, Inc. Motor Vehicles Jul-89 17,801 Jul-92 3,823 15,948
Rohr Industries, Inc. Motor Vehicles Aug-89 14,570 Dec-93 3,695 15,270
Rohr Industries, Inc. Motor Vehicle Sep-89 8,702 Aug-96 3,979 12,557
Rohr Industries, Inc. Motor Vehicles Nov-89 16,378 May-92 13,340 9,100
Rohr Industries, Inc. Motor Vehicle Nov-89 15,863 Aug-96 4,422 20,605
Rohr Industries, Inc. Pickup Truck Nov-89 9,652 Jan-95 4,100 10,720
Rohr Industries, Inc. Motor Vehicles Mar-90 15,065 Feb-93 6,756 12,658
Rohr Industries, Inc. Vehicles Oct-88 to 101,804 Aug-98 to 20,176 109,725
Jul-90 Sep-98
Sebastiani Vineyards, Inc. Wine Barrels Oct-88 143,804 Jun-96 6,535 188,158
Sebastiani Vineyards, Inc. Wine Barrels May-89 67,314 Jun-96 2,700 81,120
Sebastiani Vineyards, Inc. Wine Barrels May-89 33,919 Jun-94 4,340 41,682
Sebastiani Vineyards, Inc. Bottling Line And Related Apr-90 to 2,602,391 Nov-98 1,011,587 3,360,000
Equipment Mar-91
Shell Mining Company Crawler Tractor Oct-89 1,013,257 Dec-94 390,000 1,048,122
Shell Mining Company Miner Machine Feb-90 640,995 Mar-95 130,000 648,032
Shell Mining Company Miner Machine Feb-90 640,427 Mar-95 130,000 647,458
Shell Mining Company Haultruck and Water Truck Apr-90 to 1,546,341 Sep-98 491,564 2,062,732
May-90
Sherwood Rehab. Hospital/CMS Various Office & Medical Jul-90 to 1,814,036 Aug-98 350,000 2,705,406
Equipment Nov-90
St. Luke's-Roosevelt Medical Furniture, Fixtures Feb-90 1,126,223 Apr-93 404,654 1,116,417
Hospital Center & Equipment
The Budd Company Electric Forklifts May-90 426,589 Sep-97 68,742 491,609
The Budd Company Forklifts May-90 90,919 Jul-97 27,600 104,777
The Budd Company Industrial Batteries May-90 85,100 Oct-97 - 98,071
The Budd Company Industrial Batteries May-90 70,128 Sep-97 17,190 80,817
The Budd Company Electric Tow Tractors May-90 42,589 Jul-97 5,400 49,080
The Budd Company Electric Tuggers May-90 22,342 Jul-97 4,000 25,747
The Budd Company Chargers May-90 19,394 Sep-97 5,441 22,350
The Budd Company Walkie Reach Truck May-90 15,903 Sep-97 3,887 18,327
The Budd Company Electric Cart May-90 2,793 Sep-97 682 3,218
The Budd Company Lift Trucks May-90 154,260 Mar-96 29,000 158,330
The Budd Company Lift Trucks Jun-90 168,998 Mar-98 28,400 242,141
The Dow Chemical Company Material Handling Jul-87 990,448 Aug-92 382,160 877,628
The Dow Chemical Company Rail car Mover Jul-87 145,822 Jan-93 43,650 125,152
The Dow Chemical Company Lift Truck Jul-87 26,198 Aug-92 4,300 25,820
The Dow Chemical Company Material Handling May-88 294,792 Jul-93 74,300 290,517
The Dow Chemical Company Material Handling May-88 55,516 Sep-95 - 73,736
The Dow Chemical Company Material Handling May-88 33,943 Jun-94 10,900 32,539
The Dow Chemical Company Material Handling May-88 33,119 Jan-95 10,000 39,517
The Dow Chemical Company Material Handling May-88 17,045 Jan-94 5,800 16,340
Treasure Chest Advertising Co. Printing Press Mar-93 850,000 Mar-98 400,000 1,017,960
Treasure Chest Advertising Co. Plate Maker Nov-93 233,000 Sep-98 79,617 254,855
USX Steel Corporation Haul Truck Dec-89 1,017,631 Dec-94 324,300 1,003,483
USX Steel Corporation Haul Truck Dec-89 1,017,631 Dec-94 324,300 1,003,483
USX Steel Corporation Haul Truck Dec-89 1,013,766 Dec-94 324,300 999,671
-------------- -------------- --------------
$ 53,466,721 $ 18,844,053 $ 53,318,597
============== ============== ==============
ATEL CASH DISTRIBUTION FUND III
A.O. Smith Corporation Side loaders Nov-90 $ 230,591 Feb-97 $ 62,000 $ 266,272
A.O. Smith Corporation Towmotors Nov-90 120,865 Jan-96 44,000 124,614
A.O. Smith Corporation Forklifts Nov-90 33,752 Feb-97 8,100 40,198
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<PAGE>
A.O. Smith Corporation Lift trucks Nov-90 25,315 Jan-96 8,250 26,100
A.O. Smith Corporation Lift trucks Nov-90 22,516 Jan-96 9,000 23,215
A.O. Smith Corporation Carton Clamps Nov-90 22,469 Jan-96 9,000 26,166
A.O. Smith Corporation Lift trucks Nov-90 17,860 Mar-96 3,950 18,414
Alumina Partners Of Jamaica Payhauler Haul Truck Dec-92 804,472 Sep-98 250,000 971,599
American President Trucking Tractors Feb-90 64,862 Nov-96 10,000 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Nov-96 18,788 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Nov-96 10,000 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Nov-96 10,000 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Nov-96 10,000 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Dec-96 15,473 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Dec-96 11,894 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Dec-96 9,900 76,859
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,993 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,455 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,862 Feb-97 15,073 74,845
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 May-96 19,738 62,791
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Jun-96 18,738 62,791
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Nov-96 15,443 74,622
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Dec-96 15,443 74,622
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Dec-96 15,443 74,622
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Dec-96 15,443 74,622
Co., Ltd.
American President Trucking Tractors Feb-90 64,510 Dec-96 9,900 76,442
Co., Ltd.
American President Trucking Tractors Feb-90 64,863 Jun-96 18,788 63,134
Co., Ltd.
American President Trucking Trailers Mar-90 641,594 Mar-98 210,000 743,110
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Nov-96 15,472 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Nov-96 15,472 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Nov-96 14,572 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Nov-96 15,472 73,663
Co., Ltd.
A-48
<PAGE>
American President Trucking Tractors Mar-90 63,685 Dec-96 15,534 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Dec-96 15,372 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Dec-96 15,372 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Dec-96 15,372 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Apr-97 14,396 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Apr-97 14,072 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Apr-97 14,072 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Apr-97 14,072 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Apr-97 15,598 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 May-97 13,972 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Jun-97 13,772 73,663
Co., Ltd.
American President Trucking Tractors Mar-90 63,685 Jun-97 13,772 73,663
Co., Ltd.
American President Trucking Tractors Apr-90 64,510 Nov-96 15,543 72,620
Co., Ltd.
American President Trucking Tractors Apr-90 64,510 Dec-96 15,443 72,620
Co., Ltd.
American President Trucking Tractors Apr-90 64,510 Dec-96 15,443 72,620
Co., Ltd.
American President Trucking Tractors Apr-90 322,551 Jun-96 97,892 300,307
Co., Ltd.
American President Trucking Tractors May-90 129,021 Jul-97 24,085 183,461
Co., Ltd.
American President Trucking Tractors May-90 64,510 Nov-96 15,543 71,710
Co., Ltd.
American President Trucking Tractors May-90 64,510 Nov-96 15,543 71,710
Co., Ltd.
American President Trucking Tractors May-90 64,510 Dec-96 15,543 71,710
Co., Ltd.
American President Trucking Tractors May-90 64,510 Feb-97 15,543 71,710
Co., Ltd.
American President Trucking Tractors May-90 64,510 Feb-97 15,543 68,070
Co., Ltd.
American President Trucking Tractors May-90 387,062 Jun-96 150,839 343,988
Co., Ltd.
American President Trucking Tractors May-90 129,021 Jun-96 37,934 120,123
Co., Ltd.
American President Trucking Trailer May-90 163,481 Jun-98 52,500 189,348
Co., Ltd.
American President Trucking Tractor Jun-90 64,510 Jul-97 12,043 71,710
Co., Ltd.
American President Trucking Utility Curtainsiders Jul-90 163,482 Aug-97 60,000 189,348
Co., Ltd.
Barney's, Inc. Retail Store FF&E Sep-93 2,009,077 Jul-96 1,033,020 967,060
Buffalo & Pittsburgh Railroad Locomotives Nov-93 792,657 Nov-96 713,100 802,504
Carrier Corporation Lift trucks Jun-90 359,305 Apr-95 89,800 369,875
Carrier Corporation Lift trucks Jun-90 113,195 Apr-95 27,950 114,228
Carrier Corporation Lift trucks Aug-90 200,008 Apr-95 43,100 203,148
Central Ohio Coal Company CAT Scrapers Mar-92 2,713,694 Jul-96 1,048,730 2,580,680
Central Ohio Coal Company 160 Ton Coal Hauler Mar-92 2,280,162 Dec-97 972,955 2,936,837
Central Ohio Coal Company Billdozer Mar-92 396,549 Oct-96 53,000 392,373
Costain Coal, Inc. Hemscheidt Mining Shield Jun-91 5,299,496 Apr-99 126,667 4,636,355
Dean Foods Company Trailer Oct-90 34,996 Nov-96 20,461 35,617
Dean Foods Company 91 Utility 48'X102 Reefer Oct-90 1,099,749 Feb-98 390,000 1,303,590
Trailer
Fingerhut Corporation Saddlebinder/Stacker Oct-91 318,979 Nov-98 130,000 377,903
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<PAGE>
FMC Gold Company Haul Truck Jun-90 560,232 Jan-94 295,000 427,663
Fred Meyer, Inc. Data Processing Oct-90 3,244,649 Aug-95 1,060,276 3,608,683
Fred Meyer, Inc. Data Processing Nov-90 3,340,551 Dec-92 2,715,033 2,338,583 11
H.E. Butt Grocery Company 1993 GMC Tractors Dec-92 1,443,798 Mar-99 214,200 1,544,402
Ingersoll International, Inc. Microwave Communication Nov-90 290,175 Nov-98 25,000 313,002
System
Koppers Industries, Inc. Material Handling Jul-90 54,156 Sep-95 23,000 64,020
Koppers Industries, Inc. Material Handling Aug-90 45,485 Jan-94 33,383 31,471
Koppers Industries, Inc. Material Handling Dec-90 200,911 Dec-95 102,500 237,614
Koppers Industries, Inc. Hydraulic Excavator Mar-91 114,492 Apr-96 57,500 129,848
Kraft General Foods Lift Truck Apr-91 160,846 May-98 29,925 187,568
Kraft General Foods Lift Truck Apr-91 44,277 Apr-98 11,000 51,633
Kraft General Foods Lift Truck Apr-91 23,101 May-98 3,875 26,939
Kraft General Foods Lift Truck Apr-91 22,523 May-98 2,050 26,265
Kraft General Foods Lift Truck Apr-91 22,093 May-98 2,675 25,763
Kraft General Foods Lift Truck Apr-91 17,614 May-98 4,875 23,309
Kraft General Foods, Inc. Material Handling Jul-91 46,694 Aug-94 24,248 22,701
Kraft General Foods, Inc. Lift Trucks and Pallet Mar-91 to 1,296,898 Jul-98 to 173,569 970,702
Trucks Jul-91 Jan-99
Midway Airlines, Inc. Commercial Aircraft Jun-90 2,405,081 Sep-91 1,656,694 226,541
Mobil Oil Corporation Material Handling Apr-92 35,662 Jun-95 13,040 29,673
Mobil Oil Corporation Material Handling Jul-92 36,249 Jun-95 10,611 30,163
Mobil Oil Corporation Golf Carts Jun-93 142,464 Jul-97 74,800 98,983
Mobil Oil Corporation Golf Carts Jun-93 137,654 Jul-96 80,800 95,642
Nord Kaolin Company Lab Equipment Aug-90 409,694 Oct-97 91,000 110,806
Pepsico, Inc. Material Handling Jul-90 208,042 Sep-96 16,000 254,225
Pepsico, Inc. Material Handling Sep-90 228,666 Oct-96 21,000 266,447
Pepsico, Inc. Material Handling Sep-90 32,885 Sep-96 1,200 41,214
Pepsico, Inc., d/b/a/ PFS Material Handling Jul-90 73,050 Jun-95 8,470 52,933
Philips Semiconductors Inc. X-Ray Photo Electron Nov-90 674,771 Feb-99 1 140,149
Spectrometer
Pilgrim's Pride Corporation Chicken Processing Dec-90 3,791,002 Oct-95 1,400,000 4,000,050
Portland General Electric 50 Mw Turbines Jun-90 2,839,101 Dec-98 4,250,000 2,656,687
PSI Energy, Inc. Wheel Tractor Scraper Jul-90 842,013 Sep-96 295,000 923,917
Quaker Coal Company 1993 Cat 789B 170 Ton Haul Oct-93 1,291,110 May-99 250,000 1,199,570
Truck
Reliance Insurance Company Office Furniture Jun-92 1,133,854 Jun-97 287,622 1,213,841 12
Reliance Insurance Company Office Furniture Sep-92 137,047 Sep-97 37,346 159,007
Reliance Insurance Company Offset Press Sep-92 29,780 Sep-97 8,338 35,093
Shell Mining Company Crawler Dozer Oct-91 776,000 Dec-96 350,000 801,763
Southern Ohio Coal Company Mining Mar-92 3,795,152 Jun-92 4,469,135 207,307
Southern Ohio Coal Company Shuttle Cars Mar-92 767,590 Apr-97 120,000 851,419
Southern Ohio Coal Company Power Center Mar-92 102,826 Apr-97 15,000 114,056
Stone Container Corp Forklift Nov-90 35,759 Mar-98 6,500 54,404
Stone Container Corp C50 Forklift Nov-90 19,696 Apr-98 4,000 15,700
Stone Container Corporation Material Handling Nov-90 299,787 Aug-93 115,700 301,446
Stone Container Corporation Material Handling Nov-90 227,384 May-93 54,500 163,622
Stone Container Corporation Material Handling Nov-90 216,936 Jun-95 72,500 199,500
Stone Container Corporation Material Handling Nov-90 183,825 Jul-95 105,500 188,712
Stone Container Corporation Tractor Nov-90 137,327 Mar-95 75,842 124,820
Stone Container Corporation Material Handling Nov-90 136,838 Jun-96 60,670 164,020
Stone Container Corporation Material Handling Nov-90 116,700 Jul-95 23,750 133,201
Stone Container Corporation Caterpillar Wheel Loader Nov-90 110,990 Aug-98 45,000 73,008
Stone Container Corporation Material Handling Nov-90 110,836 Jul-95 21,750 125,403
Stone Container Corporation Material Handling Nov-90 96,611 Jun-95 29,500 107,181
Stone Container Corporation Forklifts Nov-90 83,200 Aug-97 21,555 110,823
Stone Container Corporation Material Handling Nov-90 68,950 Mar-96 21,500 85,665
Stone Container Corporation Material Handling Nov-90 63,433 Sep-95 14,000 69,970
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<PAGE>
Stone Container Corporation Tractor Nov-90 53,694 Jan-95 30,500 50,456
Stone Container Corporation Material Handling Nov-90 51,420 Jun-95 14,500 54,541
Stone Container Corporation Material Handling Nov-90 50,097 Oct-94 17,735 52,700
Stone Container Corporation Material Handling Nov-90 49,232 Jul-95 14,500 54,618
Stone Container Corporation Material Handling Nov-90 46,928 May-96 8,400 57,267
Stone Container Corporation Forklifts Nov-90 46,681 Jul-96 13,375 67,363
Stone Container Corporation Material Handling Nov-90 46,492 Mar-96 13,500 41,148
Stone Container Corporation Material Handling Nov-90 45,669 Apr-94 17,500 45,093
Stone Container Corporation Material Handling Nov-90 43,850 Apr-93 9,000 36,268
Stone Container Corporation Material Handling Nov-90 33,498 Mar-95 14,500 35,136
Stone Container Corporation Forklifts Nov-90 32,261 Nov-96 9,100 47,409
Stone Container Corporation Forklifts Nov-90 26,256 Apr-97 9,000 55,930
Stone Container Corporation Material Handling Nov-90 25,898 Jul-95 12,000 26,586
Stone Container Corporation Material Handling Nov-90 23,674 Oct-93 5,800 24,262
Stone Container Corporation Material Handling Nov-90 22,561 Jan-96 2,000 29,525
Stone Container Corporation Material Handling Nov-90 22,308 Jul-95 5,500 23,453
Stone Container Corporation Material Handling Nov-90 18,611 Jul-94 3,500 16,737
Stone Container Corporation Material Handling Nov-90 17,250 Jul-95 5,500 15,176
Stone Container Corporation Tractor Nov-90 17,227 Jan-95 6,000 18,431
Stone Container Corporation Material Handling Nov-90 17,124 Jul-95 4,300 19,535
Stone Container Corporation Material Handling Nov-90 15,984 Mar-93 5,500 14,058
Stone Container Corporation Material Handling Nov-90 15,810 Jul-95 8,500 16,230
Stone Container Corporation Material Handling Nov-90 15,625 Feb-95 4,000 14,480
Stone Container Corporation Sweeper Nov-90 14,203 Oct-95 2,100 10,440
Stone Container Corporation Material Handling Nov-90 12,949 Jul-95 6,000 13,293
Stone Container Corporation Material Handling Apr-91 128,314 Dec-93 117,236 59,610
Teledyne Industries, Inc. Material Handling Nov-90 56,635 Jan-94 13,714 52,309
Teledyne Industries, Inc. Material Handling Nov-90 41,301 Apr-96 15,000 42,464
Teledyne Industries, Inc. Material Handling Nov-90 24,073 Apr-94 11,100 22,234
Terex Corporation KW-KC Induction Unit Apr-91 68,088 Aug-97 29,428 75,403
Terex Corporation Shape Cutting Machine Jul-91 237,213 Aug-97 89,660 262,698
The Dow Chemical Company Research Equipment Apr-91 222,801 Mar-97 6,000 231,500
The Dow Chemical Company Research Equipment Apr-91 56,295 Oct-96 25,000 61,271
The Dow Chemical Company Research Equipment Apr-91 930,833 Feb-96 214,500 1,013,116
The Dow Chemical Company Research Equipment Oct-91 649,269 Nov-96 to 125,030 748,348
Dec-96
The Dow Chemical Company Research Equipment Oct-91 61,615 Dec-96 2,200 68,479
The Dow Chemical Company Material Handling Oct-91 50,478 Aug-93 12,000 47,859
The Dow Chemical Company Research Equipment Jan-92 937,459 Jan-97 217,000 1,031,519
The Dow Chemical Company Research Equipment Jan-92 468,214 Jan-97 94,875 512,287
The Dow Chemical Company Dilor Micro Raman Apr-92 183,312 Apr-98 24,275 221,865
Spectrometer
The Dow Chemical Company Krypton Ion Laser Apr-92 31,373 Apr-98 7,000 37,971
The Dow Chemical Company Computer Apr-92 2,905 Apr-98 - 3,516
The Dow Chemical Company Computer Apr-92 2,905 Apr-98 - 3,516
The Dow Chemical Company Dozer Jul-92 158,778 Jun-97 79,389 160,540
The Dow Chemical Company Trackmobile And JLG Jul-92 to 233,355 Aug-98 to 80,500 251,995
Manlift Work Platform Dec-92 May-99
The Helen Mining Company Mining Jun-91 222,801 Aug-93 14,321 227,537
The Helen Mining Company Mining Shields Sep-93 149,536 Jan-97 - 149,536
The Kelly Springfield Tire Co. Trackmobile Mar-92 86,943 Mar-97 65,000 86,246
The Kelly Springfield Tire Co. Mail Sorter Mar-92 28,452 Mar-97 5,432 30,512
The Kelly Springfield Tire Co. Forklifts May-92 18,512 Jun-97 5,000 20,139
The Pillsburry Company Stripper Combines May-92 1,023,718 Dec-97 428,375 857,137
The Pillsburry Company Self Propelled Pods (3) Jun-92 1,012,828 Dec-97 423,819 848,020
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<PAGE>
The Pillsburry Company Corn Harvesters (3) Jun-92 385,217 Dec-97 148,172 341,077
The Pillsburry Company Dump Cart Jun-92 10,475 Dec-97 4,029 9,275
The Pillsburry Company Poclain Motors Jun-92 6,285 Dec-97 2,418 5,565
The Pittston Company MECD Conveyor System Apr-92 1,766,809 Sep-97 116,000 1,753,821
The Pittston Company Simmons Rand Un-A-Hauler Apr-92 729,550 Oct-97 75,000 724,187
The Pittston Company Fletcher Bolter Apr-92 190,154 Jul-97 36,000 188,756 13
The Pittston Company Versatrack Apr-92 183,104 Jun-97 31,500 188,826
The Pittston Company Versatrack Apr-92 159,207 Oct-96 83,321 147,150
The Pittston Company Simmons Rand Scoup Apr-92 136,531 Jun-97 18,000 141,702
The Pittston Company Stamler Feeder Apr-92 131,697 Sep-97 15,000 130,729
The Pittston Company Personnel Carrier Apr-92 61,549 Jun-97 12,000 63,880
The Pittston Company Compressor Car Apr-92 34,253 Jun-97 7,000 35,550
The Pittston Company Continuous Miner Jun-92 949,110 Feb-97 437,995 945,758
The Pittston Company LWPC & Controls Jun-92 252,060 Sep-97 5,000 251,170
The Pittston Company Un-a-hauler Jun-92 247,104 Jun-97 35,000 246,915
The Pittston Company Locomotive Jun-92 125,394 Jun-97 28,000 125,298
Truck-Lite Company Project Line Equipement Sep-91 414,720 Jun-97 224,054 397,993
Truck-Lite Company Ct-20 Project Line Sep-91 1,993,259 Apr-98 686,574 2,152,003
Equipment
Truck-Lite Company 700 Ton Press Sep-91 320,311 Apr-98 110,331 345,821
Truck-Lite Company 500 Ton Press Sep-91 245,164 Apr-98 84,446 264,690
Truck-Lite Company 275 Ton Press Sep-91 193,862 Apr-98 66,775 209,301
Truck-Lite Company 150 Ton Press Sep-91 152,248 Apr-98 52,442 164,374
Truck-Lite Company Electro Static Plotter Sep-91 31,070 Apr-98 10,702 33,544
Truck-Lite Company Forklift Truck Sep-91 15,384 Apr-98 5,299 16,610
Truck-Lite Company Forklift Truck Sep-91 15,384 Apr-98 5,299 16,610
Truck-Lite Company Project Line Equipement Dec-91 699,062 Jun-97 380,946 656,930
Truck-Lite Company CT-20 Project Line Dec-91 1,076,902 Apr-98 365,102 1,156,569
Equipment
Truck-Lite Company 500 Ton Press Dec-91 224,929 Apr-98 76,258 241,569
Truck-Lite Company 275 Ton Press Dec-91 173,702 Apr-98 58,890 186,552
Truck-Lite Company 150 Ton Press Dec-91 131,393 Apr-98 44,546 141,113
Truck-Lite Company Scissor Lift Mold Truck Dec-91 25,011 Apr-98 8,480 26,861
Truck-Lite Company Ct-20 Project Line Mar-92 1,089,540 Apr-98 380,022 1,168,223
Equipment
Truck-Lite Company Ct-20 Project Line Aug-92 274,069 Apr-98 98,219 300,135
Equipment
Truck-Lite Company Ct-20 Project Line Dec-92 108,149 Apr-98 38,093 119,258
Equipment
US Surgical Corp./ARR, Inc. Falcon 50 Aircraft Oct-92 5,275,000 Oct-97 5,200,000 4,421,201
USS/KOBE Steel Corporation Forklift Trucks Aug-91 197,211 Aug-97 45,700 241,284
USS/KOBE Steel Corporation Material Handling Nov-91 82,769 Oct-97 12,000 92,719
USS/KOBE Steel Corporation Hyster Lift Truck Nov-91 34,079 Nov-97 6,200 61,723
Wal-Mart Stores, Inc. Dryvan Trailer Jun-94 300,624 Aug-97 248,000 337,232
Wal-Mart Stores, Inc. Forklifts, Trucks & Jun-94 189,632 Jan-96 165,000 188,817
Trailers
West Penn Power Company Oil Storage Facility Sep-91 1,107,785 Dec-98 1,925,000 1,477,705
-------------- -------------- --------------
$ 82,305,221 $ 39,003,171 $ 75,028,171
============== ============== ==============
ATEL CASH DISTRIBUTION FUND IV
Barney's, Inc. Retail Store FF&E Sep-93 $ 2,316,543 Jul-96 $ 1,191,112 $ 1,115,058 11
Buffalo & Pittsburgh Railroad Locomotives Nov-93 849,216 Nov-96 729,200 859,766
Burlington Northern Railroad Locomotives Dec-92 7,950,000 Dec-94 5,595,000 4,161,000
Canadian Pacific Limited Box Cars Sep-92 2,418,000 Nov-98 to 2,942,249 3,583,440
May-99
Canadian Pacific Limited Rail Car Oct-92 5,704 Apr-96 21,772 520
Canadian Pacific Limited Boxcar Oct-92 5,474 May-97 20,466 3,942
Costain Coal, Inc. Shield Supports and High Dec-91 2,649,142 Apr-99 63,333 2,424,042
Pressure Pumps
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<PAGE>
DJ (Aeorspace) Limited Executive Aircraft Apr-94 1,890,000 Jan-97 1,018,053 1,590,913
Foodmaker, Inc. Furniture,Fixtures And May-94 to 2,202,926 Oct-98 1,048,585 2,606,000
Equipment Sep-94
Galardi Group Restaurant FF&E Jun-94 546,000 Oct-96 325,276 382,513
H. E. Butt Grocery Company Refrigerated Trailers Oct-92 2,128,029 Mar-97 1,174,703 1,410,730
H. E. Butt Grocery Company Refrigerated Trailers Nov-92 1,897,830 Mar-97 1,079,789 1,246,977
H. E. Butt Grocery Company Refrigerated Trailers Nov-92 1,645,554 Mar-97 610,258 1,299,522
H. E. Butt Grocery Company Trailers Nov-92 37,957 Jan-96 35,624 18,607
H. E. Butt Grocery Company Refrigerated Trailers May-93 1,404,302 Mar-97 831,127 790,395
International Paper Company Copiers Mar-95 77,950 Oct-98 9,400 78,574
Kendall Company Office Automation Apr-95 to 431,350 Dec-98 to 17,555 478,152
Mar-99
Dec-95
Kraft General Foods, Inc. Tractors Dec-93 545,048 Jul-96 139,956 581,119
Kraft General Foods, Inc. Tractors Dec-93 419,267 Jan-95 363,510 337,986
Liquid Carbonic Ind./ Air Separation Plant Dec-93 9,500,897 Apr-99 7,500,000 9,485,252
Medical Corporation
Midwest Power Systems, Inc. Coal Hopper Car Dec-92 2,222,500 Apr-96 1,730,291 1,993,170
Midwest Power Systems, Inc. Coal Hopper Car Dec-92 17,500 Sep-93 20,543 3,915
Mobil Oil Corporation John Deere Loader Rops Apr-92 74,977 Dec-97 30,000 94,050
Mobil Oil Corporation Manlift Jul-92 67,304 Jul-97 31,000 89,177
Mobil Oil Corporation Bobcat Loader Jul-92 15,289 Jul-97 9,000 20,258
Mobil Oil Corporation John Deer Excavator Jul-92 139,970 Jun-98 30,000 102,073
Mobil Oil Corporation 1993 Freightliner Tractor Aug-92 195,915 Feb-98 59,250 174,678
Mobil Oil Corporation 1993 Freightliner Tractor Aug-92 65,305 Feb-98 19,750 58,226
Mobil Oil Corporation Tractors Nov-92 436,136 Sep-96 137,900 536,101
Mobil Oil Corporation Snorkel Uno-33E Electric Nov-92 28,185 Jun-98 7,000 41,689
Boom
Mobil Oil Corporation Snorkel/Economy 2032 Nov-92 13,533 Jun-98 2,700 20,017
Scissorlifts
Mobil Oil Corporation Material Handling Equipment Dec-92 69,000 Dec-97 50,000 65,419
Mobil Oil Corporation 1993 Kenworth Tractor Dec-92 63,307 Apr-98 15,750 33,901
Mobil Oil Corporation 1993 Freightliner Tractor Dec-92 62,080 Apr-98 15,750 55,351
Mobil Oil Corporation 1993 Freightliner Tractor Dec-92 62,080 Apr-98 15,750 35,882
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Apr-98 15,750 56,224
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Jun-98 29,458 32,161
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Apr-98 15,750 56,224
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 63,060 Apr-98 18,500 56,224
Mobil Oil Corporation 1993 Freightliner Tractor Feb-93 62,055 Apr-98 17,000 55,328
Mobil Oil Corporation Accessories For Tractor Oct-93 3,541 Sep-96 - 979
Mobil Oil Corporation Accessories For Tractor Oct-93 5,682 Apr-98 - 5,774
Mobil Oil Corporation Accessories For Tractor Oct-93 1,982 Feb-98 - 1,703
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Apr-98 - 1,402
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Apr-98 - 1,402
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Jun-98 - 1,402
Mobil Oil Corporation Accessories For Tractor Oct-93 1,320 Apr-98 - 1,402
Mobil Oil Corporation Motor Vehicle Accessories Oct-93 285 Feb-98 - 245
Mobil Oil Corporation 1993 Freightliner Tractors Aug-92 to 258,544 Jul-98 to 51,000 251,800
Oct-93 May-99
Mobil Oil Corportion Tractors Nov-92 182,949 Jun-96 48,000 136,246
Mobil Oil Corportion Boom Trucks Nov-92 69,903 Jan-94 46,026 19,329
Mobil Oil Corportion Tractors Nov-92 62,312 Jan-96 25,500 43,963
Mobil Oil Corportion Tractors Nov-92 62,312 Mar-96 25,500 43,963
Mobil Oil Corportion Tractors Dec-92 23,500 Feb-96 8,950 21,126
Nabisco, Inc. Computers and Related Jul-95 211,104 Jul-97 to 63,855 100,306
Equipment Nov-97
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<PAGE>
Nabisco, Inc. Computers and Related Jul-95 72,622 Jul-97 to 26,909 34,506
Equipment Dec-97
Nabisco, Inc. Computers & Related Jul-95 43,423 Dec-96 to 34,799 21,684
Equipment Jun-97
Nabisco, Inc. Computers & Related Jul-95 10,447 Dec-96 to 8,590 5,071
Equipment Jun-97
National Steel Corporation Wheel Loader Oct-94 2,180,730 May-97 1,259,019 1,080,629
National Steel Corporation Forklift Oct-94 27,780 May-97 21,495 11,992
National Steel Corporation Scrap Loader Jan-95 242,595 May-97 193,044 92,425
National Steel Corporation Dump Haul Trucks Mar-95 3,433,402 May-97 2,783,959 1,145,594
Omnicom Group, Inc. Office Automation Sep-95 819,878 Oct-98 to 90,529 934,508
Mar-99
Pepsico, Inc. Pallet Trucks and Jun-93 103,258 Jul-97 10,000 97,740
Related Equipment
Pepsico, Inc. Battery Connector Jan-94 3,352 Sep-97 2,506 2,787
Pepsico, Inc. Battery Connector / Jan-94 88,419 Jan-98 5,850 83,694
Charger / Pallet Truck
Pepsico, Inc. Pallet Trucks and Related Jul-93 to 31,376 Oct-97 1,950 29,700
Equipment Aug-93
Pepsico, Inc. Material Handling Jun-93 to 378,537 Jul-98 to 64,756 398,099
Dec-93 Feb-99
Rochelle Coal Company Haul Truck Nov-92 1,429,807 Jun-97 772,200 1,022,764
Rochelle Coal Company Loader Dec-92 1,988,931 Jun-97 1,074,250 1,403,767
Rochelle Coal Company Haul Truck Dec-92 1,429,807 Jun-97 772,200 1,008,524
Rochelle Coal Company Haul Truck Jan-93 1,455,158 Jun-97 800,500 1,002,462
Sebastiani Vineyards, Inc. Wine Barrels Jun-94 405,121 Jul-98 to 68,025 501,690
Oct-98
Signature Flight Support Corp. Simon Ultimate Deicer Dec-94 1,142,400 Dec-98 800,000 1,318,567
TASC, Inc. Office Automation Oct-95 7,394 Apr-98 2,079 7,426
TASC, Inc. Office Automation Oct-95 3,932 Apr-98 1,061 3,949
TASC, Inc. Office Automation Dec-95 4,757 Apr-98 1,301 4,778
TASC, Inc. Office Automation Jan-96 4,351 Apr-98 1,145 4,370
TASC, Inc. Office Automation Jan-96 4,139 Apr-98 1,228 4,157
TASC, Inc. Office Automation Jan-96 3,477 Apr-98 970 3,492
Tasc, Inc. Office Automation Jan-95 to 374,473 Nov-98 to 29,632 298,511
Dec-95 Jun-99
The Dow Chemical Company Varian Spectra A4400 Plus Feb-93 102,149 Mar-98 29,500 113,385
System
The Dow Chemical Company JLG Wheel Star Boom Lift May-93 66,900 Jul-98 16,000 72,091
The Helen Mining Company Mining Mar-92 333,458 Mar-92 72,385 347,258
The Helen Mining Company Battery Locomotive Apr-92 185,249 May-97 39,131 198,041
The Helen Mining Company Mining May-92 641,854 Aug-93 44,235 679,436
The Kendall Company Computers Aug-94 21,819 Nov-97 8,184 24,926
The Kendall Company Computers Aug-94 21,581 Dec-97 3,099 24,654
The Kendall Company Computer Equipment Aug-94 55,013 May-98 9,632 64,411
The Kendall Company Computers Oct-94 45,471 Nov-97 14,322 51,946
The Kendall Company Computers Oct-94 17,206 Dec-97 2,360 19,656
The Kendall Company Computer Oct-94 4,735 Dec-96 2,233 3,822
The Kendall Company Computers Dec-94 20,067 Nov-97 5,924 32,675
The Kendall Company Computers Dec-94 8,586 Dec-97 2,112 13,980
The Kendall Company Computer Equipment Dec-94 57,455 May-98 7,243 95,337
The Kendall Company Centillion Speedswitch(s) Mar-95 43,770 Oct-97 18,906 51,335
The Kendall Company Computers Mar-95 9,553 Dec-96 5,817 6,304
The Kendall Company Computer Equipment Mar-95 346,935 May-98 25,290 472,246
A-54
<PAGE>
The Kendall Company Computers Jun-95 11,771 Oct-97 to 5,993 9,856
Dec-97
The Kendall Company Dell Latitude Xpi 75Mhz Oct-95 118,854 Jun-98 8,786 109,712
Notebook Computer
The Kendall Company Computers Jan-95 to 34,449 Nov-97 14,009 40,403
Mar-95
The Pittston Company 1992 Joy 14Cm10 Continuous Jun-92 846,883 Apr-98 127,500 916,497
Miner
The Pittston Company Drill Nov-93 387,000 Apr-97 184,092 254,059
The Pittston Company Wheel Loader Nov-93 382,831 Apr-97 243,561 169,890 13
The Pittston Company Wheel Loader Nov-93 381,922 Apr-97 223,879 198,841
The Pittston Company Drill Nov-93 358,831 Apr-97 203,034 203,113
The Pittston Company Diesel Generator Nov-93 244,450 Apr-97 156,164 114,774
The Pittston Company Crawler Tractor Nov-93 208,800 Apr-97 136,878 98,035
The Pittston Company Crawler Tractor Nov-93 201,786 Apr-97 132,280 94,742
The Pittston Company Continuous Miner Mar-95 819,349 Apr-97 546,207 346,748
The Stop & Shop Bakery Labeling Machine Dec-95 2,750 Mar-97 2,568 759
Supermarket Co.
Trans Ocean Container Intermodal Containers Sep-93 65,073 Oct-96 to 53,512 24,637
Corporation Apr-97
Trans Ocean Container Intermodal Containers Sep-93 55,621 Jul-98 to 38,205 304,474
Corporation Jun-99
Trans Ocean Container Intermodal Containers Sep-93 23,074 Dec-97 14,130 23,576
Corporation
Trans Ocean Container Intermodal Containers Sep-93 13,870 Dec-95 10,608 5,537
Corporation
Trans Ocean Container Intermodal Containers Sep-93 13,223 Apr-95 12,095 3,016
Corporation
Trans Ocean Container Intermodal Containers Sep-93 10,196 Oct-95 6,112 3,595
Corporation
Trans Ocean Container Intermodal Containers Sep-93 6,744 Jul-94 7,398 825
Corporation
Trans Ocean Container Intermodal Containers Sep-93 6,706 Jul-95 6,394 2,069
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 1,572 2,615
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 1,341 2,615
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 3,248 2,615
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 3,900 2,615
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 600 2,615
Corporation
Union Pacific Railroad Intermodal Flat Racks Nov-92 1,150,967 Dec-98 to 153,470 1,292,093
Company Apr-99
Union Tank Car Company Box Car Sep-92 12,000 Aug-98 30,379 1,230
Union Tank Car Company Rail Car Oct-92 1,222,542 Jul-95 1,383,118 601,100
Union Tank Car Company Rail Car Oct-92 389,367 Sep-95 441,332 203,680
Union Tank Car Company Rail Car Oct-92 389,367 Oct-95 442,564 209,760
Union Tank Car Company Rail Car Oct-92 26,000 Apr-96 21,695 18,920
Union Tank Car Company Box Car Oct-92 25,000 Feb-95 23,158 21,678
Union Tank Car Company Box Car Oct-92 13,000 Aug-97 9,829 12,805
Union Tank Car Company Boxcar Oct-92 13,000 Nov-96 8,979 11,220
Union Tank Car Company Boxcar Oct-92 13,000 Apr-97 9,829 12,100
Union Tank Car Company Rail Car Oct-92 12,000 Apr-95 11,088 12,752
Union Tank Car Company Rail Car Oct-92 12,000 Jan-96 10,371 8,202
Union Tank Car Company Rail Car Dec-92 13,000 Jan-93 14,569 880
US Surgical Corp./ARR, Inc. Falcon 50 Air Craft Aug-92 5,275,000 Oct-97 5,200,000 4,417,201
USX Steel Company Material Handling Equipment Jun-93 711,679 Oct-97 175,000 776,136
USX Steel Corporation Material Handling Jun-93 2,292,822 831,250 2,465,502
-------------- -------------- --------------
$ 77,109,114 $ 47,302,009 $ 62,463,501
============== ============== ==============
A-55
<PAGE>
ATEL CASH DISTRIBUTION FUND V
Barney's, Inc Retail Store FF&E Sep-93 $ 3,312,940 Jul-96 $ 1,703,435 $ 1,594,669 11
Burlington Northern & Santa Container - Domestic May-94 9,787 Jan-98 8,434 4,274
Fe Railroad Company
Burlington Northern & Santa 1995 Pines 48' Container Oct-94 9,635 Jan-98 8,591 3,672
Fe Railroad Company
Burlington Northern & Santa Intermodal Tank Container Nov-93 744,875 Apr-99 416,057 910,219
Fe Railroad Company
Burlington Northern & Santa EMD GP38-2 Locomotives Dec-94 12,350,000 Dec-98 8,682,050 9,477,200
Fe Railroad Company
Burlington Northern & Santa Container - Domestic May-94 to 58,264 Jul-98 to 47,104 154,733
Fe Railroad Company Nov-94 Jan-99
Burlington Northern Railroad Covered Hopper Cars Mar-96 35,000 Dec-96 22,425 619
Company
Burlington Northern Railroad Covered Hopper Cars Mar-96 35,000 Jan-97 36,367 -
Company
Burris Foods Trailers Apr-94 108,442 Dec-95 121,000 53,210
Canadian Pacific Railr Jumbo Covered Hopper Mar-96 35,263 Jun-98 29,607 7,600
Railcar
Clark Oil & Refining Refrigeration Units Aug-93 1,268,656 Dec-96 560,000 1,164,635
Corporation
Conagra, Inc. Jumbo Covered Hopper Mar-96 35,263 Jun-98 29,341 11,875
Railcar
Daimler Chrysler Corporation Materials Handling Oct-93 to 1,549,529 Dec-98 to 414,000 1,474,181
Mar-94 Mar-99
Foodmaker, Inc. Restaurant Furniture, Jul-93 to 5,233,726 Oct-98 2,250,161 6,028,123
Fixtures and Equipment Jun-94
IBM Corporation Office Furniture Aug-93 1,131,815 Nov-97 431,901 1,087,248
IBM Corporation Office furniture Sep-93 693,896 Jun-95 516,291 666,576
International Paper Company Wheel Loader Aug-94 112,054 Apr-98 45,000 110,842
International Paper Company Utility Hand Truck Sep-94 4,300 Nov-97 1,415 3,314
International Paper Company Floor Sweeper/Scrubber Sep-94 9,069 Apr-98 1,000 8,972
International Paper Company Kotmatsu Articulated Wheel Oct-94 201,039 Apr-98 40,000 200,267
International Paper Company Kotmatsu Articulated Wheel Oct-94 201,039 Apr-98 40,000 200,267
International Paper Company Taylor Forklift Oct-94 80,169 Apr-98 32,000 79,861
International Paper Company Taylor Forklift Oct-94 80,169 Apr-98 32,000 79,861
International Paper Company Caterpillar 980F Wheel Oct-94 248,304 Apr-98 70,000 247,350
Loader
International Paper Company Caterpillar 936F Wheel Oct-94 112,054 Apr-98 45,000 111,623
Loader
International Paper Company Komatsu Forklift Nov-94 28,445 Jun-98 8,400 28,335
International Paper Company Komatsu Forklift Nov-94 28,445 Jun-98 8,400 28,335
International Paper Company Bolzoni Paper Roll Clamp Nov-94 10,376 Jun-98 500 10,336
International Paper Company Hyster Clamp Truck Dec-94 49,672 May-98 13,000 49,481
International Paper Company Hyster Clamp Truck Dec-94 49,672 May-98 13,000 49,481
International Paper Company Hyster Clamp Truck Dec-94 49,672 May-98 13,000 49,481
International Paper Company Bolzoni Paper Roll Clamp Dec-94 10,376 Jun-98 500 10,336
International Paper Company Hyster S120Xl2 Lift Truck Feb-95 52,884 Apr-98 20,000 45,384
International Paper Company Hyster Forklift W/Paper Mar-95 65,584 Apr-98 30,000 56,284
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 Apr-98 20,000 45,384
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 Apr-98 20,000 45,384
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 May-98 20,000 45,384
Roll
International Paper Company Hyster Forklift W/Paper Mar-95 52,884 May-98 20,000 45,384
Roll
International Paper Company Forklifts Jul-94 to 431,522 Jul-98 to 161,650 1,181,090
Jan-95 Jun-99
Kaiser Cement Corporation Tractor & Dompak Truck Aug-93 984,671 Dec-98 450,000 820,821
Kraft General Foods, Inc. 89 Kidron 28' Single Apr-94 165,644 May-99 14,000 157,498
Reefer Carr
A-56
<PAGE>
Louis Dreyfus Corporation Jumbo Covered Hopper Mar-96 105,788 Apr-98 107,505 4,096
Railcar
Louis Dreyfus Corporation Jumbo Covered Hopper Sep-96 70,525 Sep-98 to 58,033 17,760
Railcars Apr-99
McDonnell Douglas Helicopters Office Automation Jul-95 110,320 Apr-99 3,500 111,408
Mobil Administrative Services Helicopter Jun-93 844,525 Mar-95 920,000 308,000
Company
Mobil Oil Corporation Environmental Ejector May-93 423,000 Apr-97 88,000 458,067
Systems
Mobil Oil Corporation Wheel Loader Oct-93 70,200 Oct-96 39,000 50,579
Mobil Oil Corporation 33,000-Gal Liq.Petroleum Sep-95 76,090 Jul-98 79,035 10,219
Tank Car
Nabisco, Inc. Hewlett Packard Notebook Feb-95 357,104 Apr-98 62,807 348,386
Computers
Nabisco, Inc. Hewlett Packard Printers Feb-95 39,572 Apr-98 29,370 38,610
Nabisco, Inc. Hewlett Packard Printers Feb-95 29,744 Apr-98 29,370 29,016
Nabisco, Inc. Computers Aug-95 to 123,509 Aug-97 to 100,813 51,414
Oct-95 Nov-97
Nabisco, Inc. Computers & Related Aug-95 to 66,932 Dec-96 to 54,102 29,697
Equipment Oct-95 Jun-97
National Steel Corporation Skid Steer Loader Aug-94 to 130,784 Nov-98 to 29,592 179,838
Nov-94 Feb-99
Omnicom Group, Inc. Office Automation Dec-95 294,982 Jan-99 to 34,237 303,632
Jun-99
Owens Corning Fiberglas Corp. Forklifts Jul-93 157,462 May-97 31,800 157,273
Praxair, Inc. Tractors Jun-94 576,685 Sep-96 to 214,000 340,982
Apr-97
Praxair, Inc. Tractors Jun-94 91,429 Aug-97 to 23,028 54,060
Sep-97
Primark Corporation Synoptics 10Bt Ethernet May-95 to 143,449 Jul-98 to 22,087 145,186
Hub-Ntwk Mar-96 Mar-99
PV Trucking Tractors Jun-94 75,333 Jan-96 50,000 36,000
Quaker Coal Company Mining equipment Jun-94 1,118,880 Jun-95 930,251 347,926
Quaker Coal Company Crawler Dozer Jun-94 913,073 Oct-96 425,000 732,192
Quaker Coal Company Mining equipment Jun-94 595,000 Jun-95 505,775 173,253
Quaker Coal Company Mining equipment Dec-94 3,000,000 Jun-95 2,696,718 794,600
Schwegmann Giant Super Markets Fixtures & Equipment Jun-95 1,784,722 May-98 221,893 1,043,329
Schwegmann Giant Super Markets Retail Store FF&E Jun-95 574,703 Oct-96 527,405 167,353
Schwegmann Giant Super Markets Retail Store FF&E Jun-95 309,024 Dec-96 272,109 101,701
Sebastiani Vineyards American Oak Barrels Aug-94 95,848 Jun-98 20,148 87,769
Soo Line Railroad Comp Jumbo Covered Hopper Mar-96 35,263 Jun-98 30,551 14,688
Railcar
Southern Pacific Railroad Auto Rack - Bi-Level May-94 17,770 Apr-99 5,196 31,673
Star Enterprise Tractors Jun-94 887,041 Jan-97 to 331,750 649,727
Apr-97
Star Enterprise Tractors Jun-94 36,492 Aug-97 12,850 26,827
TASC, Inc. Computers & Related Dec-94 237,685 Jul-96 70,000 226,989
Equipment
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 586 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
A-57
<PAGE>
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,634 Feb-98 859 5,451
16Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,310 Feb-98 782 4,965
32Mb/1G Computer
TASC, Inc. Gateway 2000 P5-120 Mar-96 3,310 Feb-98 782 4,965
32Mb/1G Computer
Tasc, Inc. Office Automation Jan-96 to 273,814 May-99 to 13,712 282,087
Mar-96 Jun-99
Texaco Trading & Tractors and Trailer Apr-94 99,456 Dec-98 to 34,500 25,880
Transportation Mar-99
Texaco Trading & Tractors Jun-94 983,717 Jul-97 to 361,500 757,569
Transportation Nov-97
Texaco Trading & Tractors Jun-94 983,294 Feb-97 to 370,000 742,508
Transportation Jun-97
Texaco Trading & Tractors Jun-94 338,992 Aug-97 to 120,000 274,077
Transportation Nov-97
Texaco Trading & Tractors & Trailers Jun-94 156,645 Apr-97 55,000 120,533
Transportation
Texaco Trading & Tractors Jun-94 138,783 Feb-97 to 59,250 94,571
Transportation Mar-97
Texaco Trading & Tank Trailers Jun-94 73,805 Aug-97 to 25,000 59,672
Transportation Nov-97
The Atchison Topeka & Santa Intermodal Containers Apr-94 9,787 Jan-96 9,612 1,832
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers May-94 9,787 Jan-96 9,612 1,832
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Jun-94 9,787 Jan-95 10,107 611
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Jun-94 9,787 Jan-96 9,612 1,832
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Oct-94 9,635 Jan-95 10,123 306
Fe Railroad Company
The Burlington Northern & Intermodal Containers May-94 9,787 Jul-96 9,337 2,548
Santa Fe Railway Co.
The Burlington Northern & Intermodal Containers Jun-94 9,787 Jul-96 9,337 2,843
Santa Fe Railway Co.
The Burlington Northern & Intermodal Containers Jun-94 9,787 Jan-97 8,991 2,843
Santa Fe Railway Co.
The Burlington Northern & Intermodal Containers Nov-94 9,634 Jul-96 9,462 1,993
Santa Fe Railway Co.
The Dow Chemical Company Copiers Jul-94 42,694 Jul-95 31,150 13,588
The Dow Chemical Company Copiers Jul-94 195,975 Jan-96 139,400 224,830
The Dow Chemical Company Copiers Oct-94 230,577 Jan-96 204,000 76,459
The Dow Chemical Company Copiers Jan-95 37,493 Dec-95 20,750 12,437
The Dow Chemical Company Copiers Jan-95 110,900 Jan-96 98,750 38,074
The Dow Chemical Company Copiers Apr-95 13,455 Dec-95 14,080 2,199
The Dow Chemical Company Staplers Apr-95 109,800 Jan-96 119,000 18,576
The Kendall Company Computer Mar-96 3,735 Jan-97 4,112 686
The Pittston Company Haul Trucks and Drills Nov-93 3,489,255 Feb-99 to 1,198,801 2,973,731
May-99
The Pittston Company 1993 Cat D10N Crawler Nov-93 857,082 Apr-98 200,000 697,459
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 857,082 Apr-98 200,000 697,459
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 531,670 Feb-98 175,000 432,652
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 531,670 Feb-98 175,000 432,652
Tracter
The Pittston Company 1993 Cat D10N Crawler Nov-93 531,670 Feb-98 175,000 432,652
Tracter
A-58
<PAGE>
The Pittston Company Endloader and Drills Dec-94 1,227,996 Dec-98 to 141,000 1,145,956
May-99
Tom's Food, Inc. Tractors Jun-94 197,195 Aug-96 to 77,000 181,009
Feb-97
Tom's Foods, Inc. Tractors Jun-94 61,908 Feb-96 36,800 49,982
Trans Ocean Container Intermodal Containers Sep-93 154,077 Jul-98 to 87,925 857,188
Corporation Jun-99
Trans Ocean Container Intermodal Containers Sep-93 62,100 Oct-96 to 51,749 21,640
Corporation Apr-97
Trans Ocean Container Intermodal Containers Sep-93 53,507 Dec-95 46,560 21,970
Corporation
Trans Ocean Container Intermodal Containers Sep-93 25,925 Apr-96 19,257 10,817
Corporation
Trans Ocean Container Intermodal Containers Sep-93 22,868 Jul-97 to 21,673 13,976
Corporation Dec-97
Trans Ocean Container Intermodal Containers Sep-93 18,054 Jul-94 18,898 2,371
Corporation
Trans Ocean Container Intermodal Containers Sep-93 10,116 Apr-95 5,246 2,345
Corporation
Trans Ocean Container Intermodal Containers Sep-93 5,814 Jul-95 5,263 1,866
Corporation
Trans Ocean Container Intermodal Containers Sep-93 4,647 Oct-95 4,405 850
Corporation
Trans Ocean Container Intermodal Containers Sep-93 3,372 Oct-94 3,675 1,674
Corporation
Trans Ocean Container Intermodal Containers Sep-93 2,245 Jun-96 2,468 1,041
Corporation
Trans Ocean Container Intermodal Container - T40 Sep-93 5,693 Mar-98 2,715 3,431
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 963 2,032
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 923 2,032
Corporation
Trans Ocean Container Intermodal Container - T20 Sep-93 3,372 Mar-98 1,751 2,032
Corporation
Trans Ocean Container Intermodal Container - C20 Sep-93 2,245 Mar-98 2,080 1,353
Corporation
Trans Ocean Container Intermodal Container - C20 Sep-93 2,245 Mar-98 1,284 1,353
Corporation
Tyson Foods, Inc. Tractors Jun-93 1,585,000 Jul-96 637,500 1,027,080
Tyson Foods, Inc. Tractors Aug-93 1,575,000 Jul-96 637,500 1,022,490
-------------- -------------- --------------
$ 58,936,879 $ 30,116,549 $ 46,276,857
============== ============== ==============
ATEL CASH DISTRIBUTION FUND VI
American President Trucking Tractors Nov-95 $ 759,092 Jul-96 to $ 327,062 $ 225,942
Co., Ltd. Apr-97
Armco, Inc. Linkbelt Sl6000 Scrapmaster Sep-95 to 566,238 Nov-98 to 166,938 691,107
Jun-96 Jan-99
At&T Communications, Inc. Printers/Folders Aug-95 to 1,607,661 Dec-98 to 155,000 1,953,642
Jan-96 Mar-99
Burlington Northern & Santa 48'Aluminum External Post Sep-94 20,068 Jul-98 to 16,287 53,407
Fe Railroad Co. Containers Apr-99
Coors Transportation Company Utility Refrigerated Nov-95 52,024 Jul-98 to 19,683 26,969
Trailers Aug-98
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 7,366 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,380 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 6,734 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,507 8,990
A-59
<PAGE>
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,024 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Feb-98 9,530 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Feb-98 8,380 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,024 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Apr-98 9,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 May-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,380 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Mar-98 8,507 8,990
Coors Transportation Company Utility Refrigerated Trailer Nov-95 17,341 Jan-98 8,080 8,990
Genaral Motors Corporation Roboform CNC EDM Machines Jul-95 652,232 Nov-98 240,000 397,992
Hastings Leasing Limited Office Equipment Aug-96 103,752 Sep-98 41,247 231,841
International Paper Company Materials Handling Apr-95 to 1,307,495 Oct-98 to 614,655 991,589
Dec-96 Jun-99
Louis Dreyfus Corporation Jumbo Covered Hopper Mar-96 176,313 Sep-98 to 114,125 62,160
Railcars Apr-99
Mobil Oil Corporation Petroleum Wax Car Feb-96 59,953 Jan-97 64,717 3,597
Mobil Oil Corporation Liquid Petroleum Tank Cars Nov-95 to 135,997 May-99 to 144,809 360,686
Feb-96 Jul-99
Omnicom Group, Inc. Office Automation Mar-95 to 1,339,140 Jul-98 to 170,696 1,402,467
Jun-95 Mar-99
Perdue Transportation Incorpor Freightliner Tandem Tractor Nov-95 280,829 Nov-98 51,452 331,500
Perdue Transportation Tractors Nov-95 47,038 Feb-96 45,838 3,900
Incorporated
Tasc, Inc. Office Automation Mar-95 to 973,844 Jul=98 to 94,413 1,044,037
Sep-96 Jun-99
The Atchison Topeka & Santa Intermodal Containers Jan-94 20,068 Jan-95 21,084 567
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Sep-94 10,034 Jan-95 10,446 335
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Sep-94 20,068 Jan-96 19,973 2,543
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Nov-94 10,034 Feb-95 10,446 1,159
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Nov-94 10,034 Jan-96 10,113 968
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Nov-94 9,633 Apr-96 9,588 1,240
Fe Railroad Company
The Atchison Topeka & Santa Intermodal Containers Nov-94 6,453 Apr-96 6,567 788
Fe Railroad Company
The Burlington Northern & Ext. Post Container Nov-94 9,633 Oct-97 8,767 3,379
Santa Fe Railway Company
The Burlington Northern & Intermodal Container Sep-94 10,034 Jul-96 9,717 2,225
Santa Fe Railway Company
The Burlington Northern & Intermodal Container Nov-94 10,034 Jul-96 9,855 1,614
Santa Fe Railway Company
The Burlington Northern Utility Refrigerated Nov-95 312,145 Sep-97 to 144,951 161,813
Railroad Company Trailers Dec-97
The Burlington Northern Covered Hopper Cars Mar-96 70,526 Sep-97 to 67,033 10,100
Railroad Company Dec-97
The Burlington Northern Covered Hopper Cars Mar-96 70,000 Dec-96 to 59,553 619
Railroad Company Jan-97
Tracy Locke, Inc. Printers Mar-95 12,470 Sep-95 12,179 1,662
A-60
<PAGE>
Trans Ocean Container Intermodal Containers Dec-95 53,198 Jul-98 to 52,101 22,908
Corporation Jun-99
Trans Ocean Container Intermodal Containers Dec-95 17,748 Oct-96 to 20,730 1,107
Corporation Jan-97
Trans Ocean Container Intermodal Containers Dec-95 11,063 Jul-97 to 12,070 1,986
Corporation Dec-97
Trans Ocean Container Intermodal Containers Dec-95 9,529 Jun-96 11,167 700
Corporation
Tyson Foods, Inc. Computers Jun-95 563,411 Jun-97 to 66,323 522,877
Nov-97
Tyson Foods, Inc. Computers & Related Jun-95 195,152 Jun-97 23,080 181,113
Equipment
-------------- -------------- --------------
$ 9,946,468 $ 3,060,967 $ 8,925,289
============== ============== ==============
ATEL CAPITAL EQUIPMENT FUND VII
Anchor Glass Container Glass Packaging Equipment Dec-97 $ 325,684 Nov-98 $ 357,890 $ 116,336
Corporation
Anchor Glass Container Glass Packaging Equipment Apr-98 45,598 Jun-98 60,611 10,086
Corporation
Burlington Northern & Santa Fe 48'Aluminium Domestic Aug-98 to 27,840 Jan-99 30,081 1,224
Container Sep-98
Cargill, Inc. Railcars Jan-97 99,000 May-97 to 96,747 9,415
Oct-97
Consolidated Diesel Company Minolta Copiers Dec-97 15,697 Nov-98 to 2,249 16,690
Mar-99
Consolidated Rail Corporation Domestic Container Aug-97 10,255 Jan-98 10,752 9,646
Costain Coal, Inc. Vme/Euclid 339Sd Rear Apr-98 805,181 Jun-98 886,985 161,683
Dump Truck
Danskin, Inc. Textile Manufacturing Dec-97 255,717 Aug-98 to 248,350 110,500
Equipment Dec-98
Exel Logistics, Inc. 1993 International 8200 Apr-98 88,610 May-98 89,307 16,341
Tractor
Exel Logistics, Inc. 1993 Monon Semi-Trailer Apr-98 45,337 May-98 45,693 8,360
Hartz Foods, Inc. Thermo Kings Refrigeration Dec-97 18,422 Oct-98 1 22,671
Unit
Hyplains Beef, L.C. Food Processing Equipment Dec-97 1,235,019 Jan-99 1,145,190 684,040
IBM Corporation Stereolithography Dec-97 30,026 Dec-98 50,000 36,010
International Rectifier Corp. Two Zone Thermal Shock Dec-97 190,911 Aug-98 to 148,000 76,091
Chamber Oct-98
International Rectifier Corp. Furnace/Heat Base Apr-98 153,515 Jun-98 154,782 71,669
International Rectifier Corp. Bdf-41 Furnace W/Attachments Apr-98 124,193 Jun-98 125,218 57,233
International Rectifier Corp. Wafer Cleaning System Apr-98 86,791 Jun-98 95,000 26,672
International Rectifier Corp. Optical Assoc.Handler Apr-98 13,336 May-98 12,000 4,480
Assy W/Kit
International Rectifier Corp. VSLI Critical Dim. Measure Apr-98 12,056 May-98 16,805 1,139
System
International Rectifier Corp. Itc5511D Energy Testing Apr-98 9,027 Jun-98 6,000 3,518
System
ITO Corporation Taylor Stacker W/Fork Dec-97 104,878 Apr-99 - 119,136
Shifter
Louisiana Workers Printer Dec-97 2,200 Jun-99 - 11,393
Compensation Corp.
Nippon Yusen Kaisha 20'Aluminum Refrigerated Dec-97 17,432 Feb-99 20,995 3,059
(N.Y.K.Line) Container
North American Chemical Co. Mini Magnetic Flow Meters Dec-97 18,809 Dec-98 - 22,771
Plasmaquest, Inc. Tatung Sparcstations Dec-97 6,406 Aug-98 5,445 7,104
Riceland Foods, Inc 23,700 Gal Uni-Temp Tank Car Jan-98 17,594 Apr-98 17,594 1,981
Sarif, Inc. ECR Enhanced CVD System Dec-97 224,702 Apr-99 89,826 225,348
Smitty'S Super Valu, Inc. Furniture,Fixtures & Apr-98 451,861 Jun-98 601,960 139,202
Equipment
Southern Pacific EMD SD45-T2 Locomotive Dec-97 397,658 Mar-99 520,000 391,486
Transportation Company
Southwest Health Center, Inc. Siemens Mammographic X-Ray Apr-98 13,000 May-98 18,500 1,331
Stater Brothers Markets Grocery Store Equipment Apr-98 13,643 Jun-98 - 16,315
Tarmac America, Inc. Tractors Mar-97 35,000 Aug-97 33,666 6,119
Tasc, Inc. Office Equipment Oct-97 to 27,247 Dec-98 to 21,441 26,974
Jul-98 Jun-99
The Burlington Northern & General Electric C30-7 Dec-96 208,790 Jun-99 125,000 143,520
Santa Fe Railroad Company Locomotive
Thompson Pipe & Steel Company Office Furniture & Fixtures Apr-98 31,918 May-98 25,000 6,012
Thomson Saginaw Ball Screw Co. Machine Tools Dec-97 488,917 Aug-98 382,771 242,618
A-61
<PAGE>
Triad Intl Maintenance Corpora Aircraft Access and Ground Dec-97 954,124 Jul-98 to 1,306,184 367,159
Support Equipment Aug-98
Wagner College Various Desktop Computers Dec-97 91,951 Aug-98 to 34,289 77,503
Oct-98
-------------- -------------- --------------
$ 6,698,343 $ 6,784,332 $ 3,252,836
============== ============== ==============
TOTALS OF ALL FUNDS: $300,359,436 $148,927,884 $ 260,739,360
============== ============== ==============
</TABLE>
A-62
<PAGE>
TABLE VI SALES OR DISPOSALS OF EQUIPMENT FOOTNOTES
(1) "Acquisition Date" is the date the Equipment was acquired by the prior
program.
(2) "Equipment Acquisition Price" is the actual cost of the item of
Equipment, including Acquisition Fees, and any other expenditures incurred by
the prior program in the acquisition of the Equipment.
(3) "Sale Price" is the actual cash received for the purchase, early
termination or casualty of the Equipment upon Lease termination, net of any
direct out-of-pocket closing costs incurred by the prior program as a result of
such termination.
(4) "Excess of Rents Over Expenses" is a total amount of Lease rents, less
any applicable direct out-of-pocket costs incurred by the prior program during
the term of the Lease for the particular Lease transaction.
(5) "Sale Price" represents cash and non-cash amounts distributed by Lessee
as a result of U.S. Bankruptcy Court-approved Chapter 11 Reorganization Plan.
Distributions were as follows: Cash $9,512; Senior Secured Notes $1,000;
Convertible Subordinated Notes $700; Common Stock $296 (market value as of
7/16/92).
(6) The original lease included a mobile MRI unit and a tractor. The
tractor leased under the original lease was sold to the lessee. The MRI unit has
been leased to a third party on a 24 month term with a bargain purchase option
to be exercised at the end of the lease term. The Equipment under this lease is
owned 1/3 by ATEL Cash Distribution Fund and 2/3 By ATEL Cash Distribution Fund
II.
(7) "Sale Price" represents cash and non-cash amounts distributed by Lessee
as a result of U.S. Bankruptcy Court-approved pre-packaged Chapter 11 Plan.
Distributions were as follows: Cash $602,435; Senior Secured Notes $72,800;
Convertible Subordinated Notes $50,900; Common Stock $21,482 (market value as of
7/16/92).
(8) "Sales Price" represents cash and non-cash amounts distributed by
Lessee as a result of U.S. Bankruptcy Court-approved pre-packaged Chapter 11
Plan. Distributions were as follows: Cash $431,499; Senior Secured Notes
$51,600; Convertible Subordinated Notes $36,100; Common Stock $15,233 (market
value as of 7/16/92).
(9) "Equipment Acquisition Price" represents a 2/3 beneficial interest in
the transaction. The Equipment was foreclosed in September 1990 by the
non-recourse lender, John Hancock Leasing. Actual cash/equity amount paid by the
prior program for the Equipment was $1,430,345, the balance of the Acquisition
Price was financed with non-recourse debt. "Sale Price" represents the amount of
the non-recourse debt written off at the time of foreclosure.
(10) The "Sales Price" represents the sum of cash received from the sale of
the aircraft pre-bankruptcy petition, plus all amounts received by the lessor
under its unsecured claim filed in the lessee's Chapter 11 reorganization,
through the date of this table. Through September 30, 1996, such claim payments
have amounted to 40% of the allowed claim amount of $776,542, or $310,617.
(11) On January 10, 1996, Barney's, Inc., a lessee of ATEL Cash
Distribution Fund III, ATEL Cash Distribution Fund IV and ATEL Cash Distribution
Fund V filed for protection under Chapter 11 of the U. S. Bankruptcy Act. In
July of 1996, the lessors sold their unsecured claim in the bankruptcy for an
amount equal to approximately 73% of the unsecured claim, which, after
satisfaction of the non-recourse loan due to the CIT Group/Equipment Financing,
Inc. (and taking into account all prior rents received, security deposits
retained and loan proceeds previously received), resulted in proceeds to the
lessors in excess of their original investments in the equipment.
A-63
<PAGE>
(12) "Equipment Acquisition Price" represents a 1/3 beneficial interest in
the transaction. The Equipment was foreclosed in September 1990 by the
non-recourse lender, John Hancock Leasing. Actual cash/equity amount paid by the
prior program for the Equipment was $715,172, the balance of the Acquisition
Price was financed with non-recourse debt. "Sale Price" represents the amount of
the non-recourse debt written off at the time of foreclosure.
(13) The remaining equipment originally leased to The Helen Mining Company
is now leased to Costain Coal. Quaker State Corporation continued to guarantee
payments through the original lease term. The new lease also includes a two year
extension of the lease term.
A-64
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
Number Exhibits
1.1 Form of Dealer Manager Agreement (Previously filed)
1.2 Form of Selected Dealer Agreement (Previously filed)
3.1 Limited Liability Company Operating Agreement
(incorporated by reference to Exhibit B to
Prospectus) (Previously filed)
5.1 Opinion regarding legality(Previously filed)
8.1 Opinion regarding tax matters (Previously filed)
10.1 Form of Escrow Agreement (Previously filed)
23.2 Consent of Derenthal & Dannhauser (included in
Exhibit 5.1 to this Registration Statement)
(Previously filed)
23.3 Consent of Jackson, Tufts, Cole & Black (included in
Exhibit 8.1 to this Registration Statement)
(Previously filed)
23.8 Consent of Ernst & Young
24.1 Powers of Attorney are set forth in this Part II of
the Registration Statement on Form S-1 (Previously
filed)
24.2 Powers of Attorney are set forth in Part II of
Post-Effective Amendment No. 2 to the Registration
Statement on Form S-1
(b) Financial Statements Included in the Supplement dated August
31, 1999.
ATEL Capital Equipment Fund VIII, LLC
Report of Independent Auditors
Balance Sheet, December 31, 1998
Statement of changes in Member's
capital for the period from July 31, 1998
(inception) through December 31, 1998
Statement of Cash Flows for the period
from July 31, 1998 (inception)
through December 31, 1998
Notes to Financial Statements
Balance Sheets, June 30, 1999 (Unaudited)
and December 31, 1998
Statement of Operations for the three and six
month periods ended June 30, 1999 (Unaudited)
Statement of Changes in Members' Capital for
the three month period ended June 30, 1999
(Unaudited)
Statement of Cash Flows for the three and six
month periods ended June 30, 1999 (Unaudited)
Notes to Financial Statements (Unaudited)
ATEL Financial Corporation and Subsidiaries
Report of Independent Auditors
Consolidated Balance Sheet, July 31, 1999
Notes to Consolidated Balance Sheet, July
31, 1999
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California, on the 25th day of October, 1999.
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
By: ATEL Financial Corporation,
a California corporation,
Manager
By: A.J. BATT*
-----------------
A. J. Batt
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Capacity Date
A. J. BATT* Principal executive October 25, 1999
- ----------------- officer of
A. J. Batt Registrant; chief
executive officer
and director of
ATEL Financial
Corporation
II-3
<PAGE>
/s/ DEAN L. CASH Director and October 25, 1999
- ---------------------- Executive Vice
Dean L. Cash President of ATEL
Financial Corporation
PARITOSH K. CHOKSI* Principal financial October 25, 1999
- ---------------------- officer and principal
Paritosh K. Choksi accounting officer of
Registrant; chief
financial officer and
chief accounting officer
of ATEL Financial
Corporation
*By /s/DEAN L. CASH
----------------------
Dean L. Cash, as
attorney-in-fact
II-4
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequentially
Number Exhibit Numbered Page
23.8 Consent of Ernst & Young
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our reports dated September 24, 1999 and January 25, 1999, with
respect to the consolidated balance sheet of ATEL Financial Corporation and
Subsidiary at July 31, 1999, and the financial statements of ATEL Capital
Equipment Fund VIII, LLC at December 31, 1998, and for the period from July 31,
1998 (inception) through December 31, 1998, respectively, included in the
Supplement dated August 31, 1999 to the Registration Statement (Form S-1 No.
333-62477) and related Prospectus of ATEL Capital Equipment Fund VIII, LLC for
the registration of 15,000,000 limited liability company units.
Ernst & Young, LLP
San Francisco, California
October 22, 1999
