Form 10-Q UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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 March 31, 2011  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 000-33103 ATEL Capital Equipment Fund VIII, LLC (Exact name of registrant as specified in its charter)  California

          

          94-3307404(State or other jurisdiction ofIncorporation or organization)

          

          (I. R. S. EmployerIdentification No.)
 600 California Street, 6th Floor, San Francisco, California 94108-2733(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 o 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 April 30, 2011 was 13,560,188. DOCUMENTS INCORPORATED BY REFERENCE None.


TABLE OF CONTENTS

ATEL CAPITAL EQUIPMENT FUND VIII, LLC   Index  Part I.Financial Information





3Item 1.Financial Statements (Unaudited)





3Balance Sheets, March 31, 2011 and December 31, 2010





3Statements of Income for the three months ended March 31, 2011 and 2010





4Statements of Changes in Members Capital for the year ended December 31, 2010 and for the three months ended March 31, 2011





5Statements of Cash Flows for the three months ended March 31, 2011 and 2010





6Notes to the Financial Statements





7Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations





15Item 4.Controls and Procedures





18Part II.Other Information





19Item 1.Legal Proceedings





19Item 2.Unregistered Sales of Equity Securities and Use of Proceeds





19Item 3.Defaults Upon Senior Securities





19Item 4.[Removed and Reserved]





19Item 5.Other Information





19Item 6.Exhibits





19
 
 2


TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) ATEL CAPITAL EQUIPMENT FUND VIII, LLC  BALANCE SHEETS   MARCH 31, 2011 AND DECEMBER 31, 2010 (in thousands)(Unaudited)  March 31,2011

          

          December 31,2010ASSETSCash and cash equivalents

          

          $

          2,244

          

          

          $

          1,818Accounts receivable, net of allowance for doubtful accounts of $8 as of March 31, 2011 and December 31, 2010

          

          

          821

          

          

          

          745Prepaid expenses

          

          

          4

          

          

          

          7Investments in equipment and leases, net of accumulated depreciation of $34,309 as of March 31, 2011 and $34,471 as of December 31, 2010

          

          

          9,440

          

          

          

          9,405Total assets

          

          $

          12,509

          

          

          $

          11,975LIABILITIES AND MEMBERS CAPITALAccounts payable and accrued liabilities:Managing Member

          

          $

          1,091

          

          

          $

          902Affiliates

          

          

          2

          

          

          

          2Other

          

          

          548

          

          

          

          301Unearned operating lease income

          

          

          99

          

          

          

          105Total liabilities

          

          

          1,740

          

          

          

          1,310Commitments and contingenciesMembers capital:Managing Member

          

          

          

          

          

          

          Other Members

          

          

          10,769

          

          

          

          10,665Total Members capital

          

          

          10,769

          

          

          

          10,665Total liabilities and Members capital

          

          $

          12,509

          

          

          $

          11,975
 See accompanying notes.
 
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ATEL CAPITAL EQUIPMENT FUND VIII, LLC  STATEMENTS OF INCOME   FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (in thousands except for units and per unit data)(Unaudited)  Three Months Ended March 31,2011

          

          2010Revenues:Leasing activities:Operating leases

          

          $

          1,366

          

          

          $

          1,542Direct financing leases

          

          

          32

          

          

          

          33Gain on sales of assets

          

          

          190

          

          

          

          Other revenue

          

          

          

          

          

          

          2Total revenues

          

          

          1,588

          

          

          

          1,577Expenses:Depreciation of operating lease assets

          

          

          331

          

          

          

          343Interest expense

          

          

          

          

          

          

          5Asset management fees to Managing Member

          

          

          44

          

          

          

          53Vessel maintenance

          

          

          165

          

          

          

          185Railcar maintenance

          

          

          138

          

          

          

          83Cost reimbursements to Managing Member

          

          

          679

          

          

          

          679Professional fees

          

          

          48

          

          

          

          69Insurance

          

          

          2

          

          

          

          20Reversal of provision for doubtful accounts

          

          

          

          

          

          

          (1

          )Taxes on income and franchise fees

          

          

          

          

          

          

          (25

          )Other

          

          

          77

          

          

          

          111Total operating expenses

          

          

          1,484

          

          

          

          1,522Net income

          

          $

          104

          

          

          $

          55Net income:Managing Member

          

          $

          

          

          

          $

          44Other Members

          

          

          104

          

          

          

          11$

          104

          

          

          $

          55Net income per Limited Liability Company Unit (Other Members)

          

          $

          0.01

          

          

          $

          0.00Weighted average number of Units outstanding

          

          

          13,560,188

          

          

          

          13,560,188
 See accompanying notes.
 
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TABLE OF CONTENTS

ATEL CAPITAL EQUIPMENT FUND VIII, LLC  STATEMENTS OF CHANGES IN MEMBERS CAPITAL   FOR THE YEAR ENDED DECEMBER 31, 2010 AND FOR THE THREE MONTHS ENDED MARCH 31, 2011 (in thousands except for units and per unit data)(Unaudited)  Other Members

          

          ManagingMember

          

          TotalUnits

          

          AmountBalance December 31, 2009

          

          

          13,560,188

          

          

          $

          12,091

          

          

          $

          

          

          

          $

          12,091Distributions to Other Members ($0.24 per Unit)

          

          

          

          

          

          

          (3,254

          )

          

          

          

          

          

          

          (3,254

          )Distributions to Managing Member

          

          

          

          

          

          

          

          

          

          

          (264

          )

          

          

          (264

          )Net income

          

          

          

          

          

          

          1,828

          

          

          

          264

          

          

          

          2,092Balance December 31, 2010

          

          

          13,560,188

          

          

          

          10,665

          

          

          

          

          

          

          

          10,665Net income

          

          

          

          

          

          

          104

          

          

          

          

          

          

          

          104Balance March 31, 2011

          

          

          13,560,188

          

          

          $

          10,769

          

          

          $

          

          

          

          $

          10,769
 See accompanying notes.
 
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TABLE OF CONTENTS

ATEL CAPITAL EQUIPMENT FUND VIII, LLC  STATEMENTS OF CASH FLOWS   FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (in thousands)(Unaudited)  Three Months Ended March 31,2011

          

          2010Operating activities:Net income

          

          $

          104

          

          

          $

          55Adjustment to reconcile net income to cash provided by operating activities:Gain on sales of assets

          

          

          (190

          )

          

          

          Depreciation of operating lease assets

          

          

          331

          

          

          

          343Reversal of provision for doubtful accounts

          

          

          

          

          

          

          (1

          )Changes in operating assets and liabilities:Accounts receivable

          

          

          (76

          )

          

          

          (41

          )Prepaid expenses

          

          

          3

          

          

          

          4Accounts payable, Managing Member

          

          

          189

          

          

          

          254Accounts payable, affiliates

          

          

          

          

          

          

          2Accounts payable, other

          

          

          247

          

          

          

          (181

          )Accrued interest payable

          

          

          

          

          

          

          (1

          )Unearned operating lease income

          

          

          (6

          )

          

          

          (53

          )Net cash provided by operating activities

          

          

          602

          

          

          

          381Investing activities:Proceeds from sales of assets

          

          

          257

          

          

          

          64Principal payments received on direct financing leases

          

          

          27

          

          

          

          23Purchases and additions to equipment on operating leases

          

          

          (460

          )

          

          

          Net cash (used in) provided by investing activities

          

          

          (176

          )

          

          

          87Financing activities:Repayments of non-recourse debt

          

          

          

          

          

          

          (197

          )Distributions to Other Members

          

          

          

          

          

          

          (542

          )Distributions to Managing Member

          

          

          

          

          

          

          (44

          )Net cash used in financing activities

          

          

          

          

          

          

          (783

          )Net increase (decrease) in cash and cash equivalents

          

          

          426

          

          

          

          (315

          )Cash and cash equivalents at beginning of period

          

          

          1,818

          

          

          

          2,306Cash and cash equivalents at end of period

          

          $

          2,244

          

          

          $

          1,991Supplemental disclosures of cash flow information:Cash paid during the period for taxes

          

          $

          2

          

          

          $

          2Cash paid during the period for interest

          

          $

          

          

          

          $

          6
 See accompanying notes.
 
 6


TABLE OF CONTENTS

ATEL CAPITAL EQUIPMENT FUND VIII, LLC   NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. Organization and Limited Liability Company matters: ATEL Capital Equipment Fund VIII, LLC (the Company) was formed under the laws of the State of California on July 31, 1998. The Company was formed for the purpose of acquiring equipment to engage in equipment leasing and sales activities. The Managing Member or Manager of the Company is ATEL Financial Services, LLC (AFS), a California limited liability company. The Company may continue until December 31, 2019. Each Members personal liability for obligations of the Company generally will be limited to the amount of their respective contributions and rights to undistributed profits and assets of the
Company. The Company conducted a public offering of 15,000,000 Limited Liability Company Units (Units), at a price of $10 per Unit. On January 13, 1999, subscriptions for the minimum number of Units (120,000, representing $1.2 million) had been received (excluding subscriptions from Pennsylvania investors) and AFS requested that the subscriptions be released to the Company. On that date the Company commenced operations in its primary business. Gross contributions in the amount of $135.7 million (13,570,188 units) were received as of November 30, 2000, inclusive of $500 of Initial Members capital investment and $100 of AFS capital
investment. The offering was terminated on November 30, 2000. As of March 31, 2011, 13,560,188 Units remain issued and outstanding. The Companys principal objectives have been to invest in a diversified portfolio of equipment that (i) preserves, protects and returns the Companys invested capital; (ii) generates regular distributions to the Members of cash from operations and cash from sales or refinancing, with any balance remaining after certain minimum distributions to be used to purchase additional equipment during the reinvestment period (Reinvestment Period) (defined as six full years following the year the offering was terminated), which ended December 31, 2006, and (iii) provides additional distributions following the Reinvestment Period and until
all equipment has been sold. The Company is governed by its Limited Liability Company Operating Agreement (Operating Agreement), as amended. Pursuant to the Operating Agreement, AFS and/or its affiliates receive 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. As of March 31, 2011, the Company continues in the liquidation phase of its life cycle as defined in the Operating Agreement. These unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-K for the year ended December 31, 2010, 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 months ended March 31, 2011 are not
necessarily indicative of the results to be expected for the full year. Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on the reported financial position or results of operations. Note and tabular amounts are presented in thousands, except as to Units and per Unit data.
 
 7


TABLE OF CONTENTS

ATEL CAPITAL EQUIPMENT FUND VIII, LLC   NOTES TO FINANCIAL STATEMENTS (Unaudited) 2. Summary of significant accounting policies: - (continued) In preparing the accompanying unaudited financial statements, the Managing Member has reviewed events that have occurred after March 31, 2011 up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements, or adjustments thereto. Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Such estimates relate primarily to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and determination of the allowance for doubtful accounts. Segment reporting: The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States. Certain of the Companys lessee customers have international operations. In these instances, the Company is aware that certain equipment, primarily rail and transportation, may periodically exit the country. However, these lessee customers are US-based, and it is impractical for the Company to track, on an asset-by-asset, day-by-day basis, where these assets are deployed. The primary geographic regions in which the Company sought leasing opportunities were North America and Europe. Currently, 100% of the Companys operating revenues are from customers domiciled in North America. Per Unit data: Net income and distributions per Unit are based upon the weighted average number of Other Members Units outstanding during the period. Recent Accounting Pronouncements: In April 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-02, A Creditors Determination of Whether a Restructuring Is a Troubled Debt Restructuring. ASU 2011-02 clarifies guidance on a creditors evaluation of whether it has granted a concession to a borrower and a creditors evaluation of whether a borrower is experiencing financial difficulties. The amendments in this update are effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of
adoption. As a result of applying these amendments, an entity may identify receivables that are newly considered impaired. For purposes of measuring impairment of those receivables, an entity should apply the amendments prospectively for the first interim or annual period beginning on or after June 15, 2011. In addition, an entity should disclose the information required by Accounting Standards Codification paragraphs 310-10-50-33 through 50-34, which was deferred by ASU 2011-01, for interim and annual periods beginning on or after June 15, 2011. The Company anticipates that adoption of this update will not have a material impact on its financial position or results of operations. In January 2011, the FASB issued ASU No. 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. ASU 2011-01 temporarily delays the effective date of the disclosures about troubled debt restructurings in Update 2010-20 for public entities. The delay is intended to allow the Board time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated. Currently, that
guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. The Company anticipates that adoption of these additional disclosures will not have a material effect on its financial position or results of operations.
 
 8


TABLE OF CONTENTS

ATEL CAPITAL EQUIPMENT FUND VIII, LLC   NOTES TO FINANCIAL STATEMENTS (Unaudited) 3. Provision for credit losses: The Companys provision for credit losses are as follows (in thousands):  Accounts Receivable Allowance for Doubtful AccountsBalance December 31, 2009

          

          $

          4Adjustment to provision

          

          

          4Balance December 31, 2010

          

          

          8Adjustment to provision

          

          

          Balance March 31, 2011

          

          $

          8
 At March 31, 2011 and December 31, 2010, the entire allowance for doubtful accounts represents reserves against operating lease receivables. For the three months ended March 31, 2011, the Company did not record an allowance for credit losses related to its financing receivables. The Companys recorded net investment in financing receivables at March 31, 2011 and December 31, 2010 is as follows (in thousands):  March 31, 2011

          

          Finance Leases

          

          TotalAllowance for credit losses:Ending balance

          

          $

          

          

          

          $

          Ending balance: individually evaluated for impairment

          

          $

          

          

          

          $

          Ending balance: collectively evaluated for impairment

          

          $

          

          

          

          $

          Ending balance: loans acquired with deteriorated credit quality

          

          $

          

          

          

          $

          Financing receivables, net:Ending balance

          

          $

          354

          

          

          $

          354Ending balance: individually evaluated for impairment

          

          $

          354

          

          

          $

          354Ending balance: collectively evaluated for impairment

          

          $

          

          

          

          $

          Ending balance: loans acquired with deteriorated credit quality

          

          $

          

          

          

          $

          
  December 31, 2010

          

          Finance Leases

          

          TotalAllowance for credit losses:Ending balance

          

          $

          

          

          

          $

          Ending balance: individually evaluated for impairment

          

          $

          

          

          

          $

          Ending balance: collectively evaluated for impairment

          

          $

          

          

          

          $

          Ending balance: loans acquired with deteriorated credit quality

          

          $

          

          

          

          $

          Financing receivables, net:Ending balance

          

          $

          381

          

          

          $

          381Ending balance: individually evaluated for impairment

          

          $

          381

          

          

          $

          381Ending balance: collectively evaluated for impairment

          

          $

          

          

          

          $

          Ending balance: loans acquired with deteriorated credit quality

          

          $

          

          

          

          $

          
 
 9


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ATEL CAPITAL EQUIPMENT FUND VIII, LLC   NOTES TO FINANCIAL STATEMENTS (Unaudited) 3. Provision for credit losses: - (continued) The Company evaluates the credit quality of its financing receivables on a scale equivalent to the following quality indicators related to corporate risk profiles: Pass  Any account whose lessee/debtor, co-lessee/debtor or any guarantor has a credit rating on publicly traded or privately placed debt issues as rated by Moodys or S&P for either Senior Unsecured debt, Long Term Issuer rating or Issuer rating that are in the tiers of ratings generally recognized by the investment community as constituting an Investment Grade credit rating; or, has been determined by the Manager to be an Investment Grade Equivalent or High Quality Corporate Credit per its Credit Policy or has a Not Rated internal rating by the Manager and the account is not considered by the Chief Credit Officer of the
Manager to fall into one of the three risk profiles below. Special Mention  Any traditional corporate type account with potential weaknesses (e.g. large net losses or major industry downturns) or, any growth capital account that has less than three months of cash as of the end of the calendar quarter to fund their continuing operations. These accounts deserve managements close attention. If left uncorrected, those potential weaknesses may result in deterioration of the Funds receivable at some future date. Substandard  Any account that is inadequately protected by the current worth and paying capacity of the borrower or of the collateral pledged, if any. Accounts that are so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Fund will sustain some loss as the likelihood of fully collecting all receivables may be questionable if the deficiencies are not corrected. Such accounts are on the Managers Credit Watch List. Doubtful  Any account where the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Accordingly, an account that is so classified is on the Managers Credit Watch List, and has been declared in default and the Manager has repossessed, or is attempting to repossess, the equipment it financed. This category includes impaired leases as applicable. At March 31, 2011 and December 31, 2010, the Companys financing receivables by credit quality indicator and by class of financing receivables are as follows (in thousands):  Finance Leases

          

          Finance LeasesMarch 31, 2011

          

          December 31, 2010Pass

          

          $

          354

          

          

          $

          381Special mention

          

          

          

          

          

          

          Substandard

          

          

          

          

          

          

          Doubtful

          

          

          

          

          

          

          Total

          

          $

          354

          

          

          $

          381
 At March 31, 2011 and December 31, 2010, net investment in financing receivables is aged as follows (in thousands):  March 31, 2011

          

          30  59 Days Past Due

          

          60  89 Days Past Due

          

          Greater Than90 Days

          

          Total Past Due

          

          Current

          

          Total Financing Receivables

          

          Recorded Investment>90 Days and AccruingFinance leases

          

          $

          93

          

          

          $

          

          

          

          $

          

          

          

          $

          93

          

          

          $

          261

          

          

          $

          354

          

          

          $

          
  December 31, 2010

          

          30  59 Days Past Due

          

          60  89 Days Past Due

          

          Greater Than90 Days

          

          Total Past Due

          

          Current

          

          Total Financing Receivables

          

          Recorded Investment>90Recorded InvestmentFinance leases

          

          $

          94

          

          

          $

          

          

          

          $

          

          

          

          $

          94

          

          

          $

          287

          

          

          $

          381

          

          

          $

          
 There were no impaired financing receivables at both March 31, 2011 and December 31, 2010. Likewise, there were no financing receivables placed in non-accrual status as of March 31, 2011 and December 31, 2010.
 
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ATEL CAPITAL EQUIPMENT FUND VIII, 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, 2010

          

          Reclassifications & Additions/ Dispositions

          

          Depreciation/ Amortization Expense or Amortization of Leases

          

          Balance March 31,2011Net investment in operating leases

          

          $

          8,820

          

          

          $

          396

          

          

          $

          (331

          )

          

          $

          8,885Net investment in direct financing leases

          

          

          381

          

          

          

          

          

          

          

          (27

          )

          

          

          354Assets held for sale or lease, net

          

          

          204

          

          

          

          (3

          )

          

          

          

          

          

          

          201Total

          

          $

          9,405

          

          

          $

          393

          

          

          $

          (358

          )

          

          $

          9,440
 Impairment of investments in leases and assets held for sale or lease: Management periodically reviews the carrying values of its assets on leases and assets held for lease or sale. Impairment losses are recorded as an adjustment to the net investment in operating leases. No impairment losses were recorded during the three months ended March 31, 2011 and 2010. The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment on operating leases currently in its portfolio. Depreciation expense on the Companys equipment totaled $331 thousand and $343 thousand for the three months ended March 31, 2011 and 2010, respectively. All of the leased property was acquired during the period from 1999 through 2002. Operating leases: Property on operating leases consists of the following (in thousands):  Balance December 31, 2010

          

          Additions

          

          Reclassifications or Dispositions

          

          Balance March 31, 2011Containers

          

          $

          20,038

          

          

          $

          

          

          

          $

          (128

          )

          

          $

          19,910Transportation, rail

          

          

          16,098

          

          

          

          

          

          

          

          (432

          )

          

          

          15,666Marine vessel

          

          

          4,333

          

          

          

          460

          

          

          

          

          

          

          

          4,793Other

          

          

          640

          

          

          

          

          

          

          

          

          

          

          

          64041,109

          

          

          

          460

          

          

          

          (560

          )

          

          

          41,009Less accumulated depreciation

          

          

          (32,289

          )

          

          

          (331

          )

          

          

          496

          

          

          

          (32,124

          )Total

          

          $

          8,820

          

          

          $

          129

          

          

          $

          (64

          )

          

          $

          8,885
 The average estimated residual value for assets on operating leases was 10% of the assets original cost at both March 31, 2011 and December 31, 2010. The Company earns revenues from its containers, marine vessel and certain other assets based on utilization of such assets or through fixed term leases. Contingent rentals (i.e., short-term, operating charter hire payments) and the associated expenses are recorded when earned and/or incurred. The revenues associated with these rentals are included as a component of Operating Lease Revenues, and totaled $591 thousand and $577 thousand for the three months ended March 31, 2011 and 2010, respectively. As of March 31, 2011 and December 31, 2010, the Company had no operating leases in non-accrual status.
 
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ATEL CAPITAL EQUIPMENT FUND VIII, LLC   NOTES TO FINANCIAL STATEMENTS (Unaudited) 4. Investment in equipment and leases, net: - (continued) Direct financing leases: As of March 31, 2011 and December 31, 2010, investment in direct financing leases primarily consists of construction and manufacturing equipment. The following lists the components of the Companys investment in direct financing leases as of March 31, 2011 and December 31, 2010 (in thousands):  March 31, 2011

          

          December 31, 2010Total minimum lease payments receivable

          

          $

          429

          

          

          $

          487Estimated residual values of leased equipment (unguaranteed)

          

          

          54

          

          

          

          54Investment in direct financing leases

          

          

          483

          

          

          

          541Less unearned income

          

          

          (129

          )

          

          

          (160

          )Net investment in direct financing leases

          

          $

          354

          

          

          $

          381
 There were no net investments in direct financing leases in non-accrual status as of March 31, 2011 and December 31, 2010. At March 31, 2011, the aggregate amount of future lease payments is as follows (in thousands):  Operating Leases

          

          Direct Financing Leases

          

          TotalNine months ending December 31, 2011

          

          $

          1,788

          

          

          $

          181

          

          

          $

          1,969Year ending December 31, 2012

          

          

          986

          

          

          

          200

          

          

          

          1,1862013

          

          

          474

          

          

          

          48

          

          

          

          5222014

          

          

          287

          

          

          

          

          

          

          

          2872015

          

          

          179

          

          

          

          

          

          

          

          1792016

          

          

          179

          

          

          

          

          

          

          

          179Thereafter

          

          

          254

          

          

          

          

          

          

          

          254$

          4,147

          

          

          $

          429

          

          

          $

          4,576
 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 for providing administrative services to the Company. Administrative services provided include Company accounting, 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, Inc. and performs services for the Company on behalf of the Managing Member. Acquisition services, equipment management, lease administration and asset disposition services are performed by ALC; investor relations, communications and general administrative services are performed by AFS. Cost reimbursements to the Managing Member 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.
 
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ATEL CAPITAL EQUIPMENT FUND VIII, LLC   NOTES TO FINANCIAL STATEMENTS (Unaudited) 5. Related party transactions: - (continued) During the three months ended March 31, 2011 and 2010, AFS and/or affiliates earned fees and commissions, and billed for reimbursements, pursuant to the Operating Agreement as follows (in thousands):  Three Months EndedMarch 31,2011

          

          2010Asset management fees to Managing Member

          

          $

          44

          

          

          $

          53Cost reimbursements to Managing Member

          

          

          679

          

          

          

          679$

          723

          

          

          $

          732
 The Funds Operating Agreement places an annual and cumulative limit for cost reimbursements to AFS and/or its affiliates. Any reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent such amounts may be payable if within the annual and cumulative limits in such future years. The Fund is a finite life and self liquidating entity, and AFS and its affiliates have no recourse against the Fund for the amount of any unpaid excess reimbursable administrative expenses. The Fund will
continue to require administrative services from AFS and its affiliates through the end of its term, and will therefore continue to incur reimbursable administrative expenses in each year. The Fund has determined that payment of any amounts in excess of the annual and cumulative limits is not probable, and the date any portion of such amount may be paid, if ever, is uncertain. When the Fund completes its liquidation stage and terminates, any unpaid amount will expire unpaid, with no claim by AFS or its affiliates against any liquidation proceeds or any party for the unpaid balance. Accordingly, the Company has recorded neither an obligation nor an expense for such contingent reimbursement of the approximate $983 thousand and $1.3 million excess reimbursable administrative expenses at March 31, 2011 and December 31, 2010, respectively. 6. Guarantees: The Company enters into contracts that contain a variety of indemnifications. The Companys maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. The Managing Member knows of no facts or circumstances that would make the Companys contractual commitments outside standard mutual covenants applicable to commercial transactions between businesses. Accordingly, the Company believes that these indemnification obligations are made in the ordinary course of business as part of standard commercial and industry practice, and that any potential liability under the Companys similar commitments is remote. Should any such indemnification obligation become payable, the Company would separately record and/or disclose such liability in accordance with GAAP. 7. Gain contingencies: ATEL has chosen to litigate a claim on behalf of certain of its Funds for the under-reporting of revenue by a previous fleet manager of its marine vessels. Litigation continues relative to ATELs plaintiff position, seeking to recover an estimated total of $2.8 million, of which the Companys portion approximates $350 thousand, of under-remitted revenues from marine vessel leasing covering years 2005-2007. Such amounts are not considered material to any of the Funds in any given year. While the Funds recovery with respect to this matter may be substantial, there is no assurance that judgment will be rendered in favor of the Funds.
Originally scheduled to begin in March 2011, court proceedings have been re-scheduled to commence in September 2011. However, the outcome, either via negotiation or court mandate, is currently indeterminable.
 
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ATEL CAPITAL EQUIPMENT FUND VIII, LLC   NOTES TO FINANCIAL STATEMENTS (Unaudited) 8. Members capital: As of March 31, 2011 and December 31, 2010, 13,560,188 Units were issued and outstanding. The Company was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial members (50 Units). The Company has the right, exercisable at the Managing Members discretion, but not the obligation, to repurchase Units of a Unitholder who ceases to be a U.S. Citizen, for a price equal to 100% of the holders capital account. The Company is otherwise permitted, but not required, to repurchase Units upon a holders request. The repurchase of Fund Units is made in accordance with Section 13 of the Amended and Restated Limited Liability Company Operating Agreement. The repurchase would be at the discretion of the Managing Member on terms it determines to be appropriate under given circumstances, in the event that the Managing Member
deems such repurchase to be in the best interest of the Company; provided, the Company is never required to repurchase any Units. Upon the repurchase of any Units by the Fund, the tendered Units are cancelled. Units repurchased in prior periods were repurchased at amounts representing the original investment less cumulative distributions made to the Unitholder with respect to the Units. All Units repurchased during a quarter are deemed to be repurchased effective the last day of the preceding quarter, and are not deemed to be outstanding during, or entitled to allocations of net income, net loss or distributions for the quarter in which such repurchase occurs. As defined in the Operating Agreement, the Companys Net Income, Net Losses, and Distributions are to be allocated 92.5% to the Other Members and 7.5% to AFS. Distributions to the Other Members were as follows (in thousands, except as to Units and per Unit data):  Three Months EndedMarch 31,2011

          

          2010Distributions

          

          $

          

          

          

          $

          542Weighted average number of Units outstanding

          

          

          13,560,188

          

          

          

          13,560,188Weighted average distributions per Unit

          

          $

          

          

          

          $

          0.04
 
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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, the economic recession and changes in general economic conditions, including, fluctuations in demand for equipment, lease rates, and interest rates, may result in 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 defaults and the creditworthiness of its lessees. The Fund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 markets 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 VIII, LLC (the Company) is a California limited liability company that was formed in July 1998 for the purpose of engaging in the sale of limited liability investment units and acquiring equipment to generate revenues from equipment leasing and sales activities, primarily in the United States. The Company conducted a public offering of 15,000,000 Limited Liability Company Units (Units), at a price of $10 per Unit. The offering was terminated in November 2000. Total proceeds of the offering were $135.7 million. During early 2001, the Company completed its initial acquisition stage with the investment of the net proceeds from the public offering of Units. Subsequently, throughout the reinvestment period (Reinvestment Period) (defined as six full years following the year the offering was terminated), the Company reinvested cash flow in excess of certain amounts required to be distributed to the Other Members and/or
utilized its credit facilities to acquire additional equipment. The Company may continue until December 31, 2019. However, pursuant to the guidelines of the Operating Agreement, the Company began to liquidate its assets and distribute the proceeds thereof after the end of the Reinvestment Period which ended in December 2006. As of March 31, 2011, the Company continues in its liquidation phase. Accordingly, assets related to leases that mature will be returned to inventory and most likely will be subsequently sold, which will result in decreasing revenue as earning assets decrease. Periodic distributions are paid at the discretion of the Managing Member. Results of Operations The three months ended March 31, 2011 versus the three months ended March 31, 2010 The Company had net income of $104 thousand and $55 thousand for the three months ended March 31, 2011 and 2010, respectively. The results for the first quarter of 2011 primarily reflect a reduction in total operating expenses and a slight increase in total revenues when compared to the prior year period. Revenues Total revenues for the first quarter of 2011 increased by $11 thousand compared to the prior year period. The net increase in revenues was largely due to a $190 thousand increase in gains recognized on sales of lease assets offset, in part, by a $176 thousand reduction in operating lease revenues. The period over period increase in gains recognized on sales of lease assets reflects a higher number and change in the mix of assets sold. The reduction in operating lease revenues was largely attributable to the drydock status of the Funds marine vessel during the first quarter of 2011 and continued run-off and sales of lease assets offset, in part, by a period over period increase in usage-based rental revenues relative to railcars and containers.
 
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Expenses Total operating expenses for the first quarter of 2011 decreased by $38 thousand, or 2%, as compared to the prior year period. The net decrease in total operating expenses was primarily due to reductions in other expense, professional fees, vessel operating and maintenance costs, insurance costs and depreciation expense offset, in part, by increases in railcar maintenance costs and franchise fees and state taxes. The decrease in other expense totaled $34 thousand and was primarily a result of lower railcar storage fees as more railcars were in service during the current year quarter. Professional fees decreased by $21 thousand largely as a result of a period over period decline in legal fees related to an ongoing claim against the Funds former marine vessel management company due to an alleged under-reporting of revenue, and lower tax preparation and audit-related fees. Moreover, vessel operating and maintenance cost declined by $20 thousand as the Funds marine vessel was placed in drydock status during the first quarter of 2011. Insurance costs
decreased by $18 thousand due to lower re-negotiated rates on the Companys marine vessel; and, depreciation expense was reduced by $12 thousand largely as a result of continued run-off and sales of lease assets. Partially offsetting the aforementioned decreases in expenses were increases in railcar maintenance costs and franchise fees and state taxes totaling $55 thousand and $25 thousand, respectively. Railcar maintenance cost was higher as a result of a period over period increase in the number of railcars in service; and franchise fees and state taxes increased largely due to a period over period increase in estimated state franchise and income tax liability. Capital Resources and Liquidity At March 31, 2011 and December 31, 2010, the Companys cash and cash equivalents totaled $2.2 million and $1.8 million, respectively. The liquidity of the Company varies, increasing to the extent that cash flows from leases and proceeds of asset sales exceed expenses and decreasing as lease assets are acquired, as distributions are made to the Other 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 initial lease terms expire, the Company re-leases or sells the equipment. The future liquidity beyond the contractual minimum rentals will depend on the Companys success in remarketing or selling the equipment as it comes off rental. In a normal economy, if inflation in the general economy becomes significant, it may affect the Company in as much 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. In addition, if interest rates increase significantly under such circumstances, 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. 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 March 31,2011

          

          2010Net cash provided by (used in):Operating activities

          

          $

          602

          

          

          $

          381Investing activities

          

          

          (176

          )

          

          

          87Financing activities

          

          

          

          

          

          

          (783

          )Net increase (decrease) in cash and cash equivalents

          

          $

          426

          

          

          $

          (315

          )
 
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Operating Activities Cash provided by operating activities during the first quarter of 2011 increased by $221 thousand as compared to the prior year period. The net increase in cash flow was largely due to increases in accrued expenses and prepaid rents offset, in part, by a decrease in depreciation of lease assets consistent with continued sales and dispositions of such assets. The increase in accrued expenses was primarily relative to marine vessel drydock expenses during the current year quarter. Investing Activities Net cash used in investing activities totaled $176 thousand for the first quarter of 2011 as compared to net cash provided by investing activities totaling $87 thousand during the prior year period, a $263 thousand decrease. Cash flow declined as the current year quarter included $460 thousand of capitalized improvement costs associated with the Funds marine vessel. There were no such capitalized costs incurred during the prior year period. The aforementioned cash outflow was partially offset by a $193 thousand period over period increase in proceeds from sales of lease assets. Such increase reflects a higher number and change in the mix of
assets sold. Financing Activities The Company had no financing activities during the first quarter of 2011. By comparison, an approximate $783 thousand was used in financing activities during the prior year quarter, representing distributions paid to Other Members and the Managing Member totaling $542 thousand and $44 thousand, respectively, as well as a $197 thousand repayment of outstanding non-recourse debt which was fully repaid in June 2010. Distributions The Company commenced periodic distributions, based on cash flows from operations, beginning with the month of January 1999. Commitments and Contingencies and Off-Balance Sheet Transactions Commitments and Contingencies At March 31, 2011, the Company had no commitments to purchase lease assets. Pursuant to the Operating Agreement, the Company will no longer purchase any new lease assets. Gain Contingency ATEL has chosen to litigate a claim on behalf of certain of its Funds for the under-reporting of revenue by a previous fleet manager of its marine vessels. Litigation continues relative to ATELs plaintiff position, seeking to recover an estimated total of $2.8 million, of which the Companys portion approximates $350 thousand, of under-remitted revenues from marine vessel leasing covering years 2005  2007. Such amounts are not considered material to any of the Funds in any given year. While the Funds recovery with respect to this matter may be substantial, there is no assurance that judgment will be rendered in favor
of the Funds. Originally scheduled to begin in March 2011, court proceedings have been re-scheduled to commence in September 2011. However, the outcome, either via negotiation or court mandate, is currently indeterminable. Off-Balance Sheet Transactions None. Recent Accounting Pronouncements Information regarding recent accounting pronouncements is included in Note 2 to the financial statements, Summary of significant accounting policies, as set forth in Part I, Item 1, Financial Statements (Unaudited).
 
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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, 2010. There have been no material changes to the Companys critical accounting policies since December 31, 2010. 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)) 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, which 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 applicable to the Company, were effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. 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 March 31, 2011 that have materially affected, or are reasonably likely to materially affect, the Managing Members internal control over financial reporting, as 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. No material legal proceedings are currently pending against the Company or against any of its assets. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None. Item 3. Defaults Upon Senior Securities. None. Item 4. [Removed and Reserved]. 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
 
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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: May 16, 2011 ATEL CAPITAL EQUIPMENT FUND VIII, LLC (Registrant)  By:ATEL Financial Services, LLC Managing Member of Registrant
  By:/s/ Dean L. CashDean L. Cash President and Chief Executive Officer of ATEL Financial Services, LLC (Managing Member)By:/s/ Paritosh K. ChoksiParitosh K. Choksi Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Financial Services, LLC (Managing Member)By:/s/ Samuel SchusslerSamuel Schussler Vice President and Chief Accounting Officer of ATEL Financial Services, LLC (Managing Member)
 
 20