10-Q 1 v449631_atel11-10q.htm 10-Q

 

 

 

Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
x   Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.

For the quarterly period ended September 30, 2016

 
o   Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.

For the transition period from          to         

Commission File number 000-51858

ATEL Capital Equipment Fund XI, LLC

(Exact name of registrant as specified in its charter)

 
California
(State or other jurisdiction of
Incorporation or organization)
  20-1357935
(I. R. S. Employer
Identification No.)

The Transamerica Pyramid, 600 Montgomery Street, 9th Floor, San Francisco, California 94111
(Address of principal executive offices)

Registrant’s telephone number, including area code (415) 989-8800

Securities registered pursuant to section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act: Limited Liability Company Units

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer, large accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o     Accelerated filer o     Non-accelerated filer o     Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes o No x

The number of Limited Liability Company Units outstanding as of October 31, 2016 was 5,209,307.

DOCUMENTS INCORPORATED BY REFERENCE

None.

 


 
 

TABLE OF CONTENTS

ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
Index

 

Part I.

Financial Information

    3  

Item 1.

Financial Statements (Unaudited)

    3  
Balance Sheets, September 30, 2016 and December 31, 2015     3  
Statements of Income for the three and nine months ended September 30, 2016
and 2015
    4  
Statements of Changes in Members’ Capital for the year ended December 31, 2015 and for the nine months ended September 30, 2016     5  
Statements of Cash Flows for the three and nine months ended September 30, 2016
and 2015
    6  
Notes to the Financial Statements     7  

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of   Operations

    19  

Item 4.

Controls and Procedures

    22  

Part II.

Other Information

    23  

Item 1.

Legal Proceedings

    23  

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

    23  

Item 3.

Defaults Upon Senior Securities

    23  

Item 4.

Mine Safety Disclosures

    23  

Item 5.

Other Information

    23  

Item 6.

Exhibits

    23  

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TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
BALANCE SHEETS
 
SEPTEMBER 30, 2016 AND DECEMBER 31, 2015
(In Thousands)

   
  September 30,
2016
  December 31,
2015
     (Unaudited)
ASSETS
                 
Cash and cash equivalents   $ 1,562     $ 3,132  
Accounts receivable, net     161       156  
Investment in securities     22       38  
Warrants, fair value     10       27  
Investments in equipment and leases, net     2,254       2,712  
Prepaid expenses and other assets     35       31  
Total assets   $ 4,044     $ 6,096  
LIABILITIES AND MEMBERS’ CAPITAL
                 
Accounts payable and accrued liabilities:
                 
Managing Member   $ 26     $ 106  
Accrued distributions to Other Members           1,303  
Other     65       80  
Unearned operating lease income     163       14  
Total liabilities     254       1,503  
Commitments and contingencies
                 
Members’ capital:
                 
Managing Member            
Other Members     3,790       4,593  
Total Members’ capital     3,790       4,593  
Total liabilities and Members’ capital   $     4,044     $     6,096  

See accompanying notes.

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
STATEMENTS OF INCOME
 
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2016 AND 2015
(In Thousands Except for Units and Per Unit Data)
(Unaudited)

       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
     2016   2015   2016   2015
Revenues:
                                   
Leasing and lending activities:
                                   
Operating leases   $ 289     $ 440     $ 907     $ 1,468  
Direct financing leases           2       2       9  
Interest on notes receivable           5             17  
Gain on sales of lease assets and early termination of notes     77       148       366       591  
Unrealized loss on fair value adjustment for warrants                 (17 )       
Other           38       4       166  
Total revenues     366       633       1,262       2,251  
Expenses:
                                   
Depreciation of operating lease assets     95       213       297       732  
Asset management fees to Managing Member     14       42       63       93  
Cost reimbursements to Managing Member and/or affiliates     36       42       102       142  
Provision for (reversal of) credit losses           3       (1 )      7  
Impairment losses on investment in securities                 16        
Amortization of initial direct costs     2       2       6       7  
Interest expense           1             13  
Professional fees     19       13       113       100  
Outside services     6       7       31       26  
Taxes on income and franchise fees           10             92  
Other     13       13       29       34  
Total expenses     185       346       656       1,246  
Other (loss) income, net     (2 )            (1 )      2  
Net income   $ 179     $ 287     $ 605     $ 1,007  
Net income:
                                   
Managing Member   $     $     $ 105     $ 190  
Other Members     179       287       500       817  
     $ 179     $ 287     $ 605     $ 1,007  
Net income per Limited Liability Company Unit (Other Members)   $ 0.03     $ 0.06     $ 0.10     $ 0.16  
Weighted average number of Units outstanding     5,209,307       5,209,307       5,209,307       5,209,307  

See accompanying notes.

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL
 
FOR THE YEAR ENDED DECEMBER 31, 2015
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
(In Thousands Except for Units and Per Unit Data)

       
  Other Members   Managing
Member
  Total
     Units   Amount
Balance December 31, 2014     5,209,307     $ 7,261     $     $ 7,261  
Distributions to Other Members ($0.70 per Unit)           (3,647 )            (3,647 ) 
Distributions to Managing Member                 (295 )      (295 ) 
Net income           979       295       1,274  
Balance December 31, 2015     5,209,307       4,593             4,593  
Distributions to Other Members ($0.25 per Unit)           (1,303 )            (1,303 ) 
Distributions to Managing Member                 (105 )      (105 ) 
Net income           500       105       605  
Balance September 30, 2016 (Unaudited)     5,209,307     $    3,790     $      —     $     3,790  

See accompanying notes.

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
STATEMENTS OF CASH FLOWS
 
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2016 AND 2015
(In Thousands)
(Unaudited)

       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
     2016   2015   2016   2015
Operating activities:
                                   
Net income   $ 179     $ 287     $ 605     $ 1,007  
Adjustments to reconcile net income to cash provided by operating activities:
                                   
Gain on sales of lease assets and early termination of notes     (77 )      (148 )      (366 )      (591 ) 
Depreciation of operating lease assets     95       213       297       732  
Amortization of initial direct costs     2       2       6       7  
Provision for (reversal of) credit losses           3       (1 )      7  
Provision for losses on investment in securities                 16        
Unrealized loss on fair value adjustment for warrants                 17        
Changes in operating assets and liabilities:
                                   
Accounts receivable     (40 )      (52 )      (4 )      (68 ) 
Prepaid expenses and other assets     (9 )      (8 )      (4 )      (2 ) 
Accounts payable, Managing Member     37       7       25       9  
Accounts payable, other     6             (15 )      (186 ) 
Unearned operating lease income     143       144       149       80  
Net cash provided by operating activities     336       448       725       995  
Investing activities:
                                   
Purchase of securities                       (3 ) 
Proceeds from sales of lease assets and early termination of notes     137       177       514       735  
Principal payments received on direct financing leases     2       6       8       33  
Principal payments received on notes receivable           36             107  
Net cash provided by investing activities     139       219       522       872  
Financing activities:
                                   
Repayments under non-recourse debt           (184 )            (592 ) 
Distributions to Other Members     (1,303 )      (2,344 )      (2,606 )      (3,125 ) 
Distributions to Managing Member     (106 )      (190 )      (211 )      (254 ) 
Net cash used in financing activities     (1,409 )      (2,718 )      (2,817 )      (3,971 ) 
Net decrease in cash and cash equivalents     (934 )      (2,051 )      (1,570 )      (2,104 ) 
Cash and cash equivalents at beginning of period     2,496       4,741       3,132       4,794  
Cash and cash equivalents at end of period   $ 1,562     $ 2,690     $ 1,562     $ 2,690  
Supplemental disclosures of cash flow information:
                                   
Cash paid during the period for interest   $     $ 2     $     $ 16  
Cash paid during the period for taxes   $     —     $     —     $     21     $     85  

See accompanying notes.

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TABLE OF CONTENTS

ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

1. Organization and Limited Liability Company matters:

ATEL Capital Equipment Fund XI, LLC (the “Company” or the “Fund”) was formed under the laws of the State of California on June 25, 2004. The Company was formed for the purpose of acquiring equipment to engage in equipment leasing, lending and sales activities. Also, from time to time, the Company may purchase securities of its borrowers or receive warrants to purchase securities in connection with its lending arrangements. The Managing Member or Manager of the Company is ATEL Financial Services, LLC (“AFS”), a California limited liability company. The Company may continue until December 31, 2025. 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 July 13, 2005, the Company had received subscriptions for 958,274 Units ($9.6 million), thus exceeding the $7.5 million minimum requirement for Pennsylvania, and AFS requested that the remaining funds in escrow (from Pennsylvania investors) be released to the Company. The Company terminated sales of Units effective April 30, 2006. Life-to-date net contributions through September 30, 2016 totaled $52.2 million, consisting of approximately $52.8 million in gross contributions from Other Members purchasing Units under the public offering less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable) of $636 thousand. As of September 30, 2016, 5,209,307 Units were issued and outstanding.

The Company is governed by its Limited Liability Company Operating Agreement (“Operating Agreement”), as amended. On January 1, 2013, the Company commenced liquidation phase activities pursuant to the guidelines of the Operating Agreement. Pursuant to the terms of the Operating Agreement, AFS and its affiliates receives compensation for services rendered and reimbursements for costs incurred on behalf of the Company (See Note 5). The Company is required to maintain reasonable cash reserves for working capital, the repurchase of Units and contingencies. The repurchase of Units is solely at the discretion of AFS.

The Company’s unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission.

2. Summary of significant accounting policies:

Basis of presentation:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year.

Certain prior period amounts may have been reclassified to conform to the current period presentation. These reclassifications had no significant effect on the reported financial position or results of operations.

Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data.

In preparing the accompanying unaudited financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after September 30, 2016 up until the issuance of the financial statements. No events were noted which would require additional disclosure in the footnotes to the financial statements, or adjustments thereto.

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

2. Summary of significant accounting policies: - (continued)

Use of estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Such estimates primarily relate to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and for determination of the allowance for doubtful accounts and reserve for credit losses on notes receivable.

Segment reporting:

The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States.

The primary geographic regions in which the Company seeks leasing opportunities are North America and Europe. The table below summarizes geographic information relating to the sources, by nation, of the Company’s total revenues for the nine months ended September 30, 2016 and 2015 and long-lived assets as of September 30, 2016 and December 31, 2015 (dollars in thousands):

       
  For The Nine Months Ended September 30,
     2016   % of Total   2015   % of Total
Revenue
                                   
United States   $     1,248            99 %    $    2,230            99 % 
United Kingdom     14       1 %      21       1 % 
Total International     14       1 %      21       1 % 
Total   $ 1,262       100 %    $ 2,251       100 % 

       
  As of September 30,   As of December 31,
     2016   % of Total   2015   % of Total
Long-lived assets
                                   
United States   $     2,252            100 %    $    2,709          100 % 
United Kingdom     2       0 %      3       0 % 
Total International     2       0 %      3       0 % 
Total   $    2,254           100 %    $    2,712           100 % 

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TABLE OF CONTENTS

ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

2. Summary of significant accounting policies: - (continued)

Investment in securities:

From time to time, the Company may purchase securities of its borrowers or receive warrants to purchase securities in connection with its lending arrangements.

Purchased securities

Purchased securities are generally not registered for public sale and are carried at cost. Such securities are adjusted to fair value if the fair value is less than the carrying value and such impairment is deemed by the Managing Member to be other than temporary. Factors considered by the Managing Member in determining fair value include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital. Based upon the Company’s review of its portfolio, a fair value adjustment of $16 thousand was recorded during the nine months ended September 30, 2016 to reduce the cost basis of an impaired investment security to zero. No such fair value adjustment was deemed necessary for the three months ended September 30, 2016 and the three and nine months ended September 30, 2015. There were no sales or dispositions of securities during the three and nine months ended September 30, 2016 and 2015.

Warrants

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are reflected at an estimated fair value on the balance sheet as determined by the Managing Member. During the nine months ended September 30, 2016, the Company recorded unrealized losses of $17 thousand, to adjust its warrants to fair value. By comparison, during the prior year three and nine month periods, and the three months ended September 30, 2016, there were no unrealized gains or losses recorded on its warrants. As of September 30, 2016 and December 31, 2015, the estimated fair value of the Company’s portfolio of warrants amounted to $10 thousand and $27 thousand, respectively. There were no exercises of warrants, net or otherwise, during the three and nine months ended September 30, 2016 and 2015.

Foreign currency transactions:

Foreign currency transaction gains and losses are reported in the results of operations as “other income” or “other loss” in the period in which they occur. Currently, the Company does not use derivative instruments to hedge its economic exposure with respect to assets, liabilities and firm commitments as the foreign currency transactions risks to date have not been significant.

Per Unit data:

The Company issues only one class of Units, none of which are considered dilutive. Net income and distributions per Unit are based upon the weighted average number of Other Members’ Units outstanding during the period.

Fair Value:

Fair value measurements and disclosures are based on a fair value hierarchy as determined by significant inputs used to measure fair value. The three levels of inputs within the fair value hierarchy are defined as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, generally on a national exchange.

Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market.

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

2. Summary of significant accounting policies: - (continued)

Level 3 — Valuation is modeled using significant inputs that are unobservable in the market. These unobservable inputs reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability.

The Company’s valuation policy is determined by members of the Asset Management, Credit and Accounting departments. Whenever possible, the policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, information from third party remarketing agents, third party appraisals of collateral and/or other valuation techniques. These techniques are significantly affected by certain of the Company’s assumptions, including discount rates and estimates of future cash flows. Potential taxes and other transaction costs are not considered in estimating fair values. As the Company is responsible for determining fair value, an analysis is performed on prices obtained from third parties. Such analysis is performed by asset management and credit department personnel who are familiar with the Company’s investments in equipment, notes receivable and equity securities of venture companies. The analysis may include a periodic review of price fluctuations and validation of numbers obtained from a specific third party by reference to multiple representative sources.

Recent accounting pronouncements:

In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-15 — Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 addresses specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this Update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. Management is currently evaluating the standard and its impact on operations and financial reporting.

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016-13”). The main objective of this Update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments affect entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018. Management is currently evaluating the standard and its operational and related disclosure requirements.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) (“ASU 2016-02”). The new standard will require lessees to recognize lease assets and lease liabilities arising from operating leases with lease terms greater than 12 months in the statement of financial position. Lessor accounting per ASU 2016-02 is mostly unchanged from the previous lease accounting GAAP. Certain changes were made to the lessor accounting guidance in order to align the lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. Similar to the previous guidance, lessors will classify leases as operating, direct financing, or sales-type. Lessors in operating leases will continue to recognize the underlying asset and recognize income on a straight-line basis. Lessors determine whether a

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

2. Summary of significant accounting policies: - (continued)

lease is a sale of the underlying asset based on whether the lessee effectively obtains control of the underlying assets. ASU-2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Management is currently evaluating the standard and its operational and related disclosure requirements.

In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The new standard provides guidance related to accounting for equity investments and financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Management is currently evaluating the standard and its operational and related disclosure requirements.

In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU-2014-15”). The new standard provides guidance relative to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. Management does not expect the adoption of ASU 2014-15 to have a material impact on the Company’s financial statements or related disclosures.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year and in August 2015, issued Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting period. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company evaluated the impact of the new standard on its financial statements and has determined that such impact is virtually non-existent as the new revenue guideline does not affect revenues from leases and loans, which comprise the majority of the Company’s revenues.

3. Notes receivable, net:

The Company has had various notes receivable from borrowers who have financed the purchase of equipment through the Company. The notes were secured by the equipment financed. As of September 30, 2016 and December 31, 2015, the notes have been fully settled.

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

4. Investment in equipment and leases, net:

The Company’s investment in leases consists of the following (in thousands):

       
  Balance
December 31,
2015
  Reclassifications,
Additions/
Dispositions
  Depreciation/
Amortization
Expense or
Amortization
of Leases
  Balance
September 30,
2016
Net investment in operating leases   $ 2,688     $ (157 )    $ (296 )    $ 2,235  
Net investment in direct financing leases     9             (8 )      1  
Assets held for sale or lease, net           10       (1 )      9  
Initial direct costs, net of accumulated amortization of $34 at September 30, 2016 and $27 at December 31, 2015     15             (6 )      9  
Total   $     2,712     $     (147 )    $     (311 )    $     2,254  

Impairment of investments in leases and assets held for sale or lease:

Recorded values of the Company’s leased asset portfolio are reviewed each quarter to confirm the reasonableness of established residual values and to determine whether there is indication that an asset impairment might have taken place. The Company uses a variety of sources and considers many factors in evaluating whether the respective book values of its assets are appropriate. In addition, the Company may direct a residual value review at any time if it becomes aware of issues regarding the ability of a lessee to continue to make payments on its lease contract. An impairment loss is measured and recognized only if the estimated undiscounted future cash flows of the asset are less than their net book value. The estimated undiscounted future cash flows are the sum of the residual value of the asset at the end of the asset’s lease contract and undiscounted future rents from the existing lease contract, if any. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows, third party appraisals or comparable sales of similar assets as applicable based on asset type) of the asset and its carrying value on the measurement date. Upward adjustments for impairments recognized in prior periods are not made in any circumstances. As a result of these reviews, management determined that no impairment losses existed during the three and nine months ended September 30, 2016 and 2015.

The Company utilizes a straight line depreciation method for equipment in all of the categories currently in its portfolio of operating lease transactions. Depreciation expense on the Company’s equipment totaled $95 thousand and $213 thousand for the respective three months ended September 30, 2016 and 2015, and $297 thousand and $732 thousand for the respective nine months ended September 30, 2016 and 2015.

Initial direct costs amortization expense related to the Company’s operating and direct financing leases amounted to $2 thousand each for the respective three months ended September 30, 2016 and 2015, and $6 thousand and $7 thousand for the respective nine months ended September 30, 2016 and 2015.

All of the leased property was acquired during the years 2005 through 2011.

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

4. Investment in equipment and leases, net: - (continued)

Operating leases:

Property on operating leases consists of the following (in thousands):

       
  Balance
December 31,
2015
  Additions   Reclassifications
or Dispositions
  Balance
September 30,
2016
Transportation, rail   $ 10,503     $     $ (1,620 )    $ 8,883  
Aviation     1,658                   1,658  
Transportation, other     1,475             (126 )      1,349  
Marine vessels     1,415                   1,415  
Manufacturing     467                   467  
Materials handling     338             (182 )      156  
Construction     148             (148 )       
       16,004             (2,076 )      13,928  
Less accumulated depreciation     (13,316 )      (296 )      1,919       (11,693 ) 
Total   $     2,688     $      (296 )    $      (157 )    $     2,235  

The average estimated residual value for assets on operating leases was 8% of the assets’ original cost at both September 30, 2016 and December 31, 2015. There were no operating lease contracts placed in non-accrual status at September 30, 2016 and December 31, 2015.

Direct financing leases:

As of September 30, 2016 and December 31, 2015, investment in direct financing leases consists of construction equipment. The components of the Company’s investment in direct financing leases as of September 30, 2016 and December 31, 2015 are as follows (in thousands):

   
  September 30,
2016
  December 31,
2015
Total minimum lease payments receivable   $     $ 11  
Estimated residual values of leased equipment (unguaranteed)     1       1  
Investment in direct financing leases     1       12  
Less unearned income           (3 ) 
Net investment in direct financing leases   $       1     $       9  

There were no investments in direct financing lease assets in non-accrual status at September 30, 2016 and December 31, 2015.

At September 30, 2016, the aggregate amounts of future minimum lease payments to be received are as follows (in thousands):

     
  Operating
Leases
  Direct
Financing Leases
  Total
Three months ending December 31, 2016
  $ 298     $     $ 298  
Year ending December 31, 2017
    895             895  
2018
    429             429  
2019
    322             322  
2020
    265             265  
2021     79             79  
     $       2,288     $       —     $       2,288  

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

4. Investment in equipment and leases, net: - (continued)

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of September 30, 2016, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years):

 
Equipment category   Useful Life
Transportation, rail     35 – 40  
Marine vessels     20 – 30  
Aviation     15 – 20  
Manufacturing     10 – 15  
Construction     7 – 10  
Materials handling     7 – 10  
Transportation, other     7 – 10  

5. Related party transactions:

The terms of the Operating Agreement provide that AFS and/or affiliates are entitled to receive certain fees for equipment management and resale, and for management of the Company.

The Operating Agreement allows for the reimbursement of costs incurred by AFS in providing administrative services to the Company. Administrative services provided include Company accounting, finance/treasury, investor relations, legal counsel and lease and equipment documentation. AFS is not reimbursed for services whereby it is entitled to receive a separate fee as compensation for such services, such as management of equipment.

Each of ATEL Leasing Corporation (“ALC”) and AFS is a wholly-owned subsidiary of ATEL Capital Group and performs services for the Company. Acquisition services, equipment management, lease administration and asset disposition services are performed by ALC; and investor relations, communications services and general administrative services are performed by AFS.

Cost reimbursements to the Managing Member are based on its costs incurred in performing administrative services for the Company. These costs are allocated to each managed entity based on certain criteria such as managed assets, number of investors or contributed capital based upon the type of cost incurred.

The Operating Agreement places an annual limit and a cumulative limit for cost reimbursements to AFS and/or affiliates. Any reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent of the cumulative limit. As of September 30, 2016, the Company has not exceeded the annual and/or cumulative limitations discussed above.

AFS and/or affiliates earned fees and billed for reimbursements of costs and expenses pursuant to the Operating Agreement as follows during the three and nine months ended September 30, 2016 and 2015 (in thousands):

       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
     2016   2015   2016   2015
Costs reimbursed to Managing Member and/or affiliates   $ 36     $ 42     $ 102     $ 142  
Asset management fees to Managing Member     14       42       63       93  
     $    50     $    84     $    165     $    235  

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

6. Commitments:

At September 30, 2016, the Company had no commitments to either purchase lease assets or fund loans.

7. Members’ capital:

A total of 5,209,307 Units were issued and outstanding as of September 30, 2016 and December 31, 2015. The Fund was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial members (50 Units). The Company terminated sales of Units effective April 30, 2006.

Distributions to the Other Members were as follows (in thousands, except as to Units and per Unit data):

       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
     2016   2015   2016   2015
Distributions   $     $     $ 1,303     $ 2,344  
Weighted average number of Units outstanding     5,209,307       5,209,307       5,209,307       5,209,307  
Weighted average distributions per Unit   $     $     $ 0.25     $ 0.45  

The monthly distributions were discontinued in 2013 as the Company entered its liquidation phase. The rates and frequency of periodic distributions paid by the Fund during its liquidation phase are solely at the discretion of the Manager.

8. Fair value measurements:

At September 30, 2016 and December 31, 2015, only the Company’s warrants were measured on a recurring basis. In addition, certain investment securities deemed impaired were measured at fair value on a non-recurring basis as of September 30, 2016 and December 31, 2015.

Such fair value adjustments utilized the following methodology:

Warrants (recurring)

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried on the balance sheet at an estimated fair value at the end of the period. The valuation of the warrants was determined using a Black-Scholes formulation of value based upon the stock price(s), the exercise price(s), the volatility of comparable venture companies, and a risk free interest rate for the term(s) of the warrant exercise(s). As of September 30, 2016 and December 31, 2015, the calculated fair value of the Company’s warrant portfolio approximated $10 thousand and $27 thousand, respectively. Such valuations are classified within Level 3 of the valuation hierarchy.

The fair value of warrants that were accounted for on a recurring basis as of the three and nine months ended September 30, 2016 and 2015 and classified as level 3 are as follows (in thousands):

       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
     2016   2015   2016   2015
Fair value adjustment for warrants at beginning of period   $ 10     $     $ 27     $  
Unrealized loss on fair value adjustment for warrants                 (17 )       
Fair value of warrants at end of period   $       10     $       —     $       10     $       —  

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

8. Fair value measurements: - (continued)

Impaired investment securities (non-recurring)

The Company’s investment securities are not registered for public sale and are carried at cost. The investment securities are adjusted for impairment, if any, based upon factors which include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital.

During the first nine months ended September 30, 2016, the Company recorded a $16 thousand fair value adjustment to reduce the cost basis of an impaired investment security to zero. The 100% reduction in value was based on a market approach technique and uses inputs that reflect qualitative and quantitative information provided by the management of the investee. Such information indicated a significantly reduced value as evidenced by the purchase price of the investee as contemplated in its acquisition terms.

During 2015, the Company recorded a fair value adjustment of $6 thousand to reduce the cost basis of an impaired investment security. Such adjustment was recorded subsequent to the third quarter of 2015. The reduction in value was based on a market approach technique and uses inputs that reflect qualitative and quantitative information provided by the management of the investee, which indicated reduced growth opportunity and eventual reduction in cash flows and revenues.

Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of the aforementioned impaired investment securities were classified within Level 3 of the valuation hierarchy.

As previously mentioned, the fair value of the investment security impaired at September 30, 2016 was zero.

The following table presents the fair value measurements of impaired investment securities measured at fair value on a non-recurring basis and the level within the hierarchy in which the fair value measurements fall at December 31, 2015 (in thousands):

       
  December 31,
2015
  Level 1
Estimated
Fair Value
  Level 2
Estimated
Fair Value
  Level 3
Estimated
Fair Value
Assets measured at fair value on a non-recurring basis:
                                   
Impaired investment securities   $       4     $       —     $       —     $       4  

The following table summarizes the valuation techniques and significant unobservable inputs used for the Company’s recurring and non-recurring fair value calculation categorized as Level 3 in the fair value hierarchy at September 30, 2016 and December 31, 2015:

       
September 30, 2016
Name   Valuation Frequency   Valuation Technique   Unobservable Inputs   Range of Input Values
Warrants   Recurring   Black-Scholes formulation   Stock price   $0.35 – $1.25
               Exercise price   $0.91 – $1.25
               Time to maturity (in years)   1.66 – 2.00
               Risk-free interest rate   0.71% – 0.77%
               Annualized volatility   100.00%
Investment Securities   Non-recurring   Market Approach   Qualitative and quantitative   information (Investee Management)   Not Applicable

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

8. Fair value measurements: - (continued)

       
December 31, 2015
Name   Valuation Frequency   Valuation Technique   Unobservable Inputs   Range of Input Values
Warrants   Recurring   Black-Scholes formulation   Stock price   $0.35 – $1.25
               Exercise price   $0.91 – $1.25
               Time to maturity (in years)   2.41 – 2.75
               Risk-free interest rate   1.16% – 1.25%
               Annualized volatility   100.00%
Investment Securities   Non-recurring   Market Approach   Qualitative and quantitative   information (Investee Management)   Not Applicable

The following disclosure of the estimated fair value of financial instruments is made in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification. Fair value estimates, methods and assumptions, set forth below for the Company’s financial instruments, are made solely to comply with the requirements of the Financial Instruments Topic and should be read in conjunction with the Company’s financial statements and related notes.

The Company has determined the estimated fair value amounts by using market information and valuation methodologies that it considers appropriate and consistent with the fair value accounting guidance. Considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize or has realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and cash equivalents

The recorded amounts of the Company’s cash and cash equivalents approximate fair value because of the liquidity and short-term maturity of these instruments.

Non-recourse debt

The fair value of the Company’s non-recourse debt is estimated using discounted cash flow analyses, based upon the current market borrowing rates for similar types of borrowing arrangements.

Commitments and Contingencies

Management has determined that no recognition for the fair value of the Company’s loan commitments is necessary because their terms are made on a market rate basis and require borrowers to be in compliance with the Company’s credit requirements at the time of funding.

The fair value of contingent liabilities (or guarantees) is not considered material because management believes there has been no event that has occurred wherein a guarantee liability has been incurred or will likely be incurred.

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ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

8. Fair value measurements: - (continued)

The following tables present estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at September 30, 2016 and December 31, 2015 (in thousands):

         
  Fair Value Measurements at September 30, 2016
     Carrying Value   Level 1   Level 2   Level 3   Total
Financial assets:
                                            
Cash and cash equivalents   $      1,562     $    1,562     $      —     $      —     $     1,562  
Investment in securities     22                   22       22  
Fair value of warrants     10                   10       10  

         
  Fair Value Measurements at December 31, 2015
     Carrying Value   Level 1   Level 2   Level 3   Total
Financial assets:
                                            
Cash and cash equivalents   $      3,132     $     3,132     $       —     $      —     $     3,132  
Investment in securities     38                   38       38  
Fair value of warrants     27                   27       27  

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Statements contained in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Form 10-Q, which are not historical facts, may be forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. In particular, economic recession and changes in general economic conditions, including, fluctuations in demand for equipment, lease rates, and interest rates, may result in delays in investment and reinvestment, delays in leasing, re-leasing, and disposition of equipment, and reduced returns on invested capital. The Company’s performance is subject to risks relating to lessee and borrower defaults and the creditworthiness of its lessees and borrowers. The Company’s performance is also subject to risks relating to the value of its equipment at the end of its leases, which may be affected by the condition of the equipment, technological obsolescence and the market for new and used equipment at the end of lease terms. Investors are cautioned not to attribute undue certainty to these forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, other than as required by law.

Overview

ATEL Capital Equipment Fund XI, LLC (the “Company” or the “Fund”) is a California limited liability company that was formed in June 2004 for the purpose of engaging in the sale of limited liability company investment units and acquiring equipment to generate revenues from equipment leasing, lending and sales activities, primarily in the United States.

The Company may continue until December 31, 2025. However, pursuant to the guidelines of the Limited Liability Company Operating Agreement (“Operating Agreement”), the Company commenced liquidation phase activities subsequent to the end of the Reinvestment Period which ended on December 31, 2012. Periodic distributions are paid at the discretion of the Managing Member.

Results of Operations

The three months ended September 30, 2016 versus the three months ended September 30, 2015

The Company had net income of $179 thousand and $287 thousand for the three months ended September 30, 2016 and 2015, respectively. The results for the third quarter of 2016 reflect decreases in both total revenues and total operating expenses when compared to the prior year period.

Revenues

Total revenues for the third quarter of 2016 decreased by $267 thousand, or 42%, as compared to the prior year period. This was largely attributable to decreases in operating lease revenues and decreases in gains recognized on the sale of lease assets and early termination of notes.

The decrease in operating lease revenue of $151 thousand was primarily a result of continued run-off and sales of lease assets.

The gain recognized on the sales of lease assets during the current year period totaled $77 thousand as compared to $148 thousand during the prior year period. The $71 thousand unfavorable variance was due to a change in the mix of assets sold.

Expenses

Total operating expenses for the three months ended September 30, 2016 decreased by $161 thousand or 47%, as compared to the prior year period. Such decrease was primarily due to reductions in depreciation expense, asset management fees and taxes on income and franchise fees.

The decrease in depreciation expense totaled $118 thousand and was largely due to continued run-off and sales of lease assets. Asset management fees paid to Managing Member declined by $28 thousand as result of the continued decline in managed assets and related lease revenue. Taxes on income and franchise fees declined by $10 thousand largely due to a lower estimated tax liability based upon actual amounts paid in the prior year.

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The nine months ended September 30, 2016 versus the nine months ended September 30, 2015

The Company had net income of $605 thousand and $1 million for the nine months ended September 30, 2016 and 2015, respectively. The results for the third quarter of 2016 reflect decreases in both total revenues and total operating expenses when compared to the prior year period.

Revenues

Total revenues for the first nine months of 2016 decreased by $989 thousand or 44%, as compared to the prior year period. Such decrease was largely attributable to decreases in operating lease revenues, other revenue and in gains recognized on the sale of lease assets and early termination of notes.

Operating lease revenues declined by $561 thousand primarily as a result of continued portfolio run-off and sales of lease assets. Gains recognized on the sales of lease assets and early termination of notes decreased by $225 thousand due to a change in the mix of assets sold. Other revenue decreased by $162 thousand as the first quarter 2015 included a $92 thousand of deferred maintenance fees billed for excess wear and tear on certain returned equipment. There were no such fees billed during the current year period.

Expenses

Total operating expenses for the first nine months of 2016 decreased by $590 thousand or 47%, as compared to the prior year period. Such decrease was primarily due to reductions in depreciation expense, taxes on income and franchise fees and cost reimbursements to Managing Member.

The decrease in depreciation expense totaled $435 thousand and was largely due to continued portfolio run-off and sales of lease assets. Taxes on income and franchise fees declined by $92 thousand largely due to a lower estimated tax liability based upon actual amounts paid in the prior year. Costs reimbursed to AFS and/or affiliates decreased by $40 thousand due to lower costs allocated by the Manager based on the Company’s continued liquidation.

Capital Resources and Liquidity

At September 30, 2016 and December 31, 2015, the Company’s cash and cash equivalents totaled $1.6 million and $3.1 million, respectively. The liquidity of the Company varies, increasing to the extent cash flows from leases and proceeds of asset sales exceed expenses and decreasing as distributions are made to the Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

The primary source of liquidity for the Company is its cash flow from leasing activities. As the lease terms expire, the Company will re-lease or sell the equipment. The future liquidity beyond the contractual minimum rentals will depend on AFS’s success in remarketing or selling the equipment as it comes off rental.

The Company currently believes it has available adequate reserves to meet its immediate cash requirements and those of the next twelve months, 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. AFS envisions no such requirements for operating purposes.

Cash Flows

The following table sets forth summary cash flow data (in thousands):

       
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
     2016   2015   2016   2015
Net cash provided by (used in):
                                   
Operating activities   $ 336     $ 448     $ 725     $ 995  
Investing activities     139       219       522       872  
Financing activities     (1,409 )      (2,718 )      (2,817 )      (3,971 ) 
Net decrease in cash and cash equivalents   $    (934 )    $   (2,051 )    $   (1,570 )    $   (2,104 ) 

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The three months ended September 30, 2016 versus the three months ended September 30, 2015

During the three months ended September 30, 2016 and 2015, the Company’s primary source of liquidity was cash flow from its portfolio of operating lease contracts. In addition, the Company realized $137 thousand and $177 thousand from the sale or disposition of equipment and early termination of certain notes during the respective three months ended September 30, 2016 and 2015.

During the same respective periods, cash was primarily used to pay distributions to both Other Members and the Managing Member, and to pay down debt. Distributions paid to Other Members and Managing Member totaled $1.4 million and $2.5 million for the three month periods ended September 30, 2016 and 2015, respectively. In addition, during the three months ended September 30, 2015, cash was used to pay down debt totaling $184 thousand.

The nine months ended September 30, 2016 versus the nine months ended September 30, 2015

During the nine months ended September 30, 2016 and 2015, the Company’s primary source of liquidity was cash flow from its portfolio of operating lease contracts. In addition, the Company realized $514 thousand and $735 thousand from the sale or disposition of equipment and early termination of certain notes during the respective nine months ended September 30, 2016 and 2015.

During the same respective periods, cash was primarily used to pay distributions to both Other Members and the Managing Member, and to pay down debt. Distributions paid to Other Members and Managing Member totaled $2.8 million and $3.4 million for the nine month periods ended September 30, 2016 and 2015, respectively. In addition, during the nine months ended September 30, 2015, cash was used to pay down debt totaling $592 thousand.

Distributions

Beginning with the month of June 2005, the Company commenced periodic distributions based on cash flows from operations. The monthly distributions were discontinued in 2013 as the Company entered its liquidation phase. The rates and frequency of periodic distributions paid by the Fund during its liquidation phase are solely at the discretion of the Manager.

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At September 30, 2016, the Company had no commitments to purchase lease assets or fund loans.

Off-Balance Sheet Transactions

None.

Recent Accounting Pronouncements

For information on recent accounting pronouncements, see Note 2 Summary of Significant Accounting Policies.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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. On an on-going basis, the Company evaluates its estimates, which are based upon historical experiences, market trends and financial forecasts, and upon various other assumptions that management believes to be reasonable under the circumstances and at that certain point in time. Actual results may differ, significantly at times, from these estimates under different assumptions or conditions.

The Company’s critical accounting policies are described in its Annual Report on Form 10-K for the year ended December 31, 2015. There have been no material changes to the Company’s critical accounting policies since December 31, 2015.

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Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

The Company’s Managing Member’s President and Chief Executive Officer, and Executive Vice President and Chief Financial Officer and Chief Operating Officer (“Management”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on the evaluation of the Company’s disclosure controls and procedures, Management concluded that as of the end of the period covered by this report, the design and operation of these disclosure controls and procedures were effective.

The Company does not control the financial reporting process, and is solely dependent on the Management of the Managing Member, who is responsible for providing the Company with financial statements in accordance with generally accepted accounting principles in the United States. The Managing Member’s disclosure controls and procedures, as they are applicable to the Company, means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control

There were no changes in the Managing Member’s internal control over financial reporting, as it is applicable to the Company, during the quarter ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, the Managing Member’s internal control over financial reporting, as it is applicable to the Company.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

In the ordinary course of conducting business, there may be certain claims, suits, and complaints filed against the Company. In the opinion of management, the outcome of such matters, if any, will not have a material impact on the Company’s financial position or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Documents filed as a part of this report:

1. Financial Statement Schedules

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are not applicable, and therefore have been omitted.

2. Other Exhibits
31.1 Rule 13a-14(a)/15d-14(a) Certification of Dean L. Cash
31.2 Rule 13a-14(a)/15d-14(a) Certification of Paritosh K. Choksi
32.1 Certification Pursuant to 18 U.S.C. section 1350 of Dean L. Cash
32.2 Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K. Choksi
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 10, 2016

ATEL CAPITAL EQUIPMENT FUND XI, LLC
(Registrant)

 

By:

ATEL Financial Services, LLC
Managing Member of Registrant

    

 
 

By:

/s/ Dean L. Cash

Dean L. Cash
President and Chief Executive Officer of
ATEL Financial Services, LLC (Managing Member)

    

By:

/s/ Paritosh K. Choksi

Paritosh K. Choksi
Executive Vice President and Chief Financial Officer
and Chief Operating Officer of
ATEL Financial Services, LLC (Managing Member)

    

By:

/s/ Samuel Schussler

Samuel Schussler
Senior Vice President and Chief Accounting Officer of
ATEL Financial Services, LLC (Managing Member)

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