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, 2004

         |_|     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 333-62477

                      ATEL Capital Equipment Fund VIII, LLC
             (Exact name of registrant as specified in its charter)

California                                                     94-3307404
----------                                                     ----------
(State or other jurisdiction of                               (I. R. S. Employer
incorporation or organization)                               Identification 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 |_|

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes |_| No |X|

The number of Limited  Liability  Company Units  outstanding as of September 30,
2004 was 13,570,188.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None




                                       1
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC


 Index


Part I. Financial Information

Item 1. Financial Statements (Unaudited)

     Balance Sheets, September 30, 2004 and December 31, 2003.

     Statements  of  Operations  for the  nine and  three  month  periods  ended
     September 30, 2004 and 2003.

     Statements of Changes in Members'  Capital for the year ended  December 31,
     2003 and for the nine month period ended September 30, 2004.

     Statements  of Cash  Flows  for the  nine and  three  month  periods  ended
     September 30, 2004 and 2003.

     Notes to Financial Statements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures

Part II. Other Information

Item 1. Legal Proceedings

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

Item 3. Defaults Upon Senior Securities

Item 4. Submission of Matters to a Vote of Security Holders

Item 5. Other Information

Item 6. Exhibits




                                       2
<PAGE>

                          Part I. FINANCIAL INFORMATION

Item 1.  Financial Statements.


                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                                 BALANCE SHEETS

                    SEPTEMBER 30, 2004 AND DECEMBER 31, 2003
                                   (Unaudited)


                                     ASSETS


<TABLE>
<CAPTION>
                                                                                  September 30,        December 31,
                                                                                       2004                2003
                                                                                       ----                ----
                                                                                   (Unaudited)
<S>                                                                                  <C>                  <C>
Cash and cash equivalents                                                               $ 354,371             $ 508,584
Accounts receivable, net of allowance for doubtful accounts of $115,115 in 2004
   and $225,115 in 2003                                                                 1,725,951             2,124,902
Other assets                                                                                2,500                25,000
Investments in leases                                                                  66,249,626           107,564,258
                                                                                 -----------------  --------------------
Total assets                                                                         $ 68,332,448         $ 110,222,744
                                                                                 =================  ====================


                        LIABILITIES AND MEMBERS' CAPITAL


Long-term debt                                                                       $ 15,222,000          $ 39,946,000
Financing arrangement                                                                   1,000,000             9,500,000
Non-recourse debt                                                                       6,039,946             6,609,335

Accounts payable:
   Managing member                                                                        707,890               889,555
   Other                                                                                  241,972               820,799

Accrued interest payable                                                                   91,228               115,844
Interest rate swap contracts                                                            1,864,852             3,207,595
Unearned operating lease income                                                           862,317             1,236,498
                                                                                 -----------------  --------------------
Total liabilities                                                                      26,030,205            62,325,626

Other accumulated comprehensive loss                                                     (954,330)           (3,143,144)
Members' capital                                                                       43,256,573            51,040,262
                                                                                 -----------------  --------------------
Total Members' capital                                                                 42,302,243            47,897,118
                                                                                 -----------------  --------------------
Total liabilities and Members' capital                                               $ 68,332,448         $ 110,222,744
                                                                                 =================  ====================
</TABLE>

                             See accompanying notes.


                                       3
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                            STATEMENTS OF OPERATIONS

                       NINE AND THREE MONTH PERIODS ENDED
                           SEPTEMBER 30, 2004 AND 2003
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                 Nine Months                            Three Months
                                                             Ended September 30,                    Ended September 30,
                                                             -------------------                    -------------------
                                                           2004               2003               2004                2003
                                                           ----               ----               ----                ----
Revenues:
Leasing activities:
<S>                                                        <C>                <C>               <C>                   <C>
   Operating leases                                        $14,708,872        $20,664,386       $ 3,962,722           $ 6,386,973
   Direct financing leases                                     799,723            607,527           186,063               273,769
   Gain on sales of assets                                   5,775,106            749,759         3,597,194                60,104
Interest                                                         4,577              5,106             2,804                 1,454
Other                                                          457,895             46,538            22,866                14,993
                                                     ------------------ ------------------ -----------------  --------------------
                                                            21,746,173         22,073,316         7,771,649             6,737,293
Expenses:
Depreciation of operating lease assets                      12,303,855         15,303,869         3,285,546             4,902,273
Interest expense                                             3,175,740          4,277,728         1,524,344             1,123,248
Impairment losses                                            1,050,000          5,049,770         1,050,000             3,158,909
Cost reimbursements to Managing Member                         738,928            789,166            19,586                35,433
Asset management fees to Managing Member                       750,662          1,097,980           171,193               322,026
Railcar maintenance                                            621,648            954,559           354,674               148,379
Professional fees                                              179,117            367,255            10,648                81,255
Amortization of initial direct costs                           177,245            281,499            39,988                93,425
Outside services                                               145,267            (10,086)           53,041               (93,665)
Insurance                                                      139,678            143,688            53,903               143,688
(Recoveries of) provision for doubtful accounts               (110,000)          (237,000)           25,000                13,000
Franchise fees and state taxes                                  94,061            124,239                 -                     -
Aircraft maintenance                                                 -            137,510                 -                92,010
Other                                                          252,285            199,748            57,800                89,902
                                                     ------------------ ------------------ -----------------  --------------------
                                                            19,518,486         28,479,925         6,645,723            10,109,883
                                                     ------------------ ------------------ -----------------  --------------------
Net income (loss)                                          $ 2,227,687       $ (6,406,609)      $ 1,125,926          $ (3,372,590)
                                                     ================== ================== =================  ====================

Net income (loss):
   Managing Member                                           $ 750,868          $ 750,691         $ 250,287             $ 250,287
   Other Members                                             1,476,819         (7,157,300)          875,639            (3,622,877)
                                                     ------------------ ------------------ -----------------  --------------------
                                                           $ 2,227,687       $ (6,406,609)      $ 1,125,926          $ (3,372,590)
                                                     ================== ================== =================  ====================
Net income (loss) per Limited Liability
   Company Unit                                                 $ 0.11            $ (0.53)           $ 0.06               $ (0.27)
Weighted average number of Units outstanding                13,570,188         13,570,188        13,570,188            13,570,188
</TABLE>

                             See accompanying notes.



                                       4
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                    STATEMENT OF CHANGES IN MEMBERS' CAPITAL

                      FOR THE YEAR ENDED DECEMBER 31, 2003
                       AND FOR THE NINE MONTH PERIOD ENDED
                               SEPTEMBER 30, 2004
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                              Accumulated
                                                                                                 Other
                                                                                             Comprehensive
                                              Other Members                  Managing            Income
                                              -------------
                                         Units             Amount             Member             (Loss)               Total

<S>                                       <C>               <C>                 <C>              <C>                  <C>
Balance December 31, 2002                 13,570,188        $71,908,105                $ -       $(5,381,342)         $ 66,526,763

Distributions to members                           -        (12,345,603)        (1,000,979)                -           (13,346,582)
Reclassification adjustment for
   portion of swap liability charged
   to net loss                                     -                  -                  -            64,451                64,451
Unrealized change in value of
   interest rate swap contracts                    -                  -                  -         2,173,747             2,173,747
Net income (loss)                                  -         (8,522,240)         1,000,979                 -            (7,521,261)
                                    ----------------- ------------------------------------- -----------------  --------------------
Balance December 31, 2003                 13,570,188         51,040,262                  -        (3,143,144)           47,897,118

Distributions to members                           -         (9,260,508)          (750,868)                -           (10,011,376)
Reclassification adjustment for
   portion of swap liability charged
   to net income                                   -                  -                  -           846,071               846,071
Unrealized change in value of
   interest rate swap contracts                    -                  -                  -         1,342,743             1,342,743
Net income                                         -          1,476,819            750,868                 -             2,227,687
                                    ----------------- ------------------ ------------------ -----------------  --------------------
Balance September 30, 2004                13,570,188        $43,256,573                $ -        $ (954,330)         $ 42,302,243
                                    ================= ================== ================== =================  ====================
</TABLE>














                             See accompanying notes.



                                       5
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                            STATEMENTS OF CASH FLOWS

                       NINE AND THREE MONTH PERIODS ENDED
                           SEPTEMBER 30, 2004 AND 2003
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                  Nine Months                            Three Months
                                                              Ended September 30,                    Ended September 30,
                                                              -------------------                    -------------------
                                                            2004               2003               2004                2003
                                                            ----               ----               ----                ----
Operating activities:
<S>                                                         <C>               <C>                <C>                  <C>
Net income (loss)                                           $ 2,227,687       $ (6,406,609)      $ 1,125,926          $ (3,372,590)
Adjustments to reconcile net income (loss) to
   cash provided by operating activities:
   Depreciation of operating lease assets                    12,303,855         15,303,869         3,285,546             4,902,273
   Amortization of initial direct costs                         177,245            281,499            39,988                93,425
   Gain on sales of assets                                   (5,775,106)          (749,759)       (3,597,194)              (60,104)
   Impairment losses (recoveries)                             1,050,000          5,049,770         1,050,000             3,158,909
   (Recovery of) provision for doubtful accounts               (110,000)          (237,000)           25,000                13,000
   Changes in operating assets and liabilities:
      Accounts receivable                                       508,951            177,839          (206,352)             (376,693)
      Due from Managing Member                                        -            171,119                 -                     -
      Other assets                                               22,500             22,500             7,500                 7,500
      Accounts payable, Managing Member                        (181,665)           121,372          (383,228)               10,299
      Accounts payable, other                                  (578,827)           (61,523)           (3,665)             (403,996)
      Accrued interest expense                                  (24,616)               (27)          (48,211)               13,968
      Unearned lease income                                    (374,181)            67,905           266,115               136,947
      Interest rate swap contracts                              846,071                  -           890,552                     -
                                                      ------------------ ------------------ -----------------  --------------------
Net cash provided by operations                              10,091,914         13,740,955         2,451,977             4,122,938
                                                      ------------------ ------------------ -----------------  --------------------

Investing activities:
Proceeds from sales of assets                                32,931,008         12,870,512        22,611,329               613,677
Reduction of net investment in direct financing
   leases                                                       627,630          1,108,178           300,169               199,794
                                                      ------------------ ------------------ -----------------  --------------------
Net cash provided by investing activities                    33,558,638         13,978,690        22,911,498               813,471
                                                      ------------------ ------------------ -----------------  --------------------
</TABLE>



                                       6
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                            STATEMENTS OF CASH FLOWS
                                   (Continued)
                       NINE AND THREE MONTH PERIODS ENDED
                           SEPTEMBER 30, 2004 AND 2003
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                  Nine Months                            Three Months
                                                              Ended September 30,                    Ended September 30,
                                                              -------------------                    -------------------
                                                            2004               2003               2004                2003
                                                            ----               ----               ----                ----

Financing activities:
<S>                                                         <C>               <C>                <C>                  <C>
Repayments of line of credit                                (17,400,000)       (14,800,000)       (5,400,000)           (4,500,000)
Borrowings on line of credit                                  8,900,000         15,500,000         1,900,000             7,300,000
Repayments of long-term debt                                (24,724,000)       (18,381,000)      (18,194,000)           (3,478,000)
Proceeds of non-recourse debt                                         -          2,563,149                 -             2,563,149
Repayments of non-recourse debt                                (569,389)        (1,602,855)         (296,496)           (1,435,001)
Distributions to other members                               (9,260,508)        (9,258,529)       (3,086,874)           (3,086,875)
Distributions to Managing Member                               (750,868)          (750,691)         (250,287)             (250,287)
                                                      ------------------ ------------------ -----------------  --------------------
Net cash used in financing activities                       (43,804,765)       (26,729,926)      (25,327,657)           (2,887,014)
                                                      ------------------ ------------------ -----------------  --------------------

Net (decrease) increase in cash and cash
   equivalents                                                 (154,213)           989,719            35,818             2,049,395
Cash and cash equivalents at beginning of
   period                                                       508,584          2,263,479           318,553             1,203,803
                                                      ------------------ ------------------ -----------------  --------------------
Cash and cash equivalents at end of period                    $ 354,371        $ 3,253,198         $ 354,371           $ 3,253,198
                                                      ================== ================== =================  ====================

Supplemental disclosures of cash flow
   information:
Cash paid during the period for interest                    $ 2,354,285        $ 4,277,755         $ 726,486           $ 1,109,280
                                                      ================== ================== =================  ====================

Schedule of non-cash transactions:
Change in fair value of interest rate swap
   contracts                                                $ 1,342,743        $ 1,992,116         $ 198,072             $ 807,356
                                                      ================== ================== =================  ====================
</TABLE>

                             See accompanying notes.


                                       7
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2004
                                   (Unaudited)


1. Summary of significant accounting policies:

Interim financial statements:


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 instructions to Form 10-Q and Article 10
of  Regulation  S-X. The  unaudited  interim  financial  statements  reflect all
adjustments  which are, in the opinion of the  Managing  Member,  necessary to a
fair  statement of financial  position and results of operations for the interim
periods  presented.  All such adjustments are of a normal recurring nature.  The
preparation of financial  statements in accordance with GAAP requires management
to make estimates and assumptions  that effect reported amounts in the financial
statements and accompanying notes.  Therefore,  actual results could differ from
those estimates.  Operating results for the nine months ended September 30, 2004
are not  necessarily  indicative of the results for the year ending December 31,
2004.

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, 2003,  filed with the  Securities  and Exchange
Commission.


2.  Organization and Company matters:

ATEL Capital Equipment Fund VIII, LLC. (the Company),  was formed under the laws
of the state of  California  on July 31,  1998,  for the  purpose  of  acquiring
equipment to engage in equipment leasing and sales  activities.  The Company may
continue until December 31, 2019.

Upon the sale of the  minimum  amount  of Units  of  Limited  Liability  Company
interest  (Units)  of  $1,200,000  and the  receipt of the  proceeds  thereof on
January 13, 1999, the Company commenced operations.

The  Company  does not make a  provision  for income  taxes since all income and
losses will be allocated to the Members for  inclusion in their  individual  tax
returns.

ATEL Financial  Services,  LLC (AFS), an affiliated entity, acts as the Managing
Member of the Company.

Certain prior period amounts have been reclassified to conform to current period
presentation.

The Company is in its operating phase and is making  distributions  on a monthly
or quarterly basis.


                                       8
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2004
                                   (Unaudited)


3.  Investment in leases:

The Company's investment in leases consists of the following:

<TABLE>
<CAPTION>
                                                                          Depreciation /
                                                                           Amortization
                                                                            Expense or
                                        Balance                           Amortization of       Reclass-             Balance
                                     December 31,        Impairment      Direct Financing    ifications and       September 30,
                                         2003              Losses             Leases          Dispositions            2004
                                         ----              ------             ------          ------------            ----
<S>                                     <C>                <C>               <C>                <C>                   <C>
Net investment in operating
    leases                              $ 87,112,340                $ -      $ (12,303,855)     $(20,910,530)         $ 53,897,955
Net investment in direct
    financing leases                      11,497,801                  -           (627,630)       (5,084,696)            5,785,475
Assets held for sale or lease,
    net of accumulated deprec-
    iation of $18,268,514 in 2004
    and $16,874,083 in 2003                8,636,682         (1,050,000)                 -        (1,160,676)            6,426,006
Initial direct costs, net of
    accumulated amortization of
    $1,349,917 in 2004 and
    $1,345,313 in 2003                       317,435                  -           (177,245)                -               140,190
                                   ------------------ ------------------ ------------------ -----------------  --------------------
                                        $107,564,258       $ (1,050,000)     $ (13,108,730)     $(27,155,902)         $ 66,249,626
                                   ================== ================== ================== =================  ====================
</TABLE>

Management  periodically reviews the carrying values of its assets on leases and
assets  held for lease or sale.  As a result of a review  during  the nine month
period ended September 30, 2003, management determined that the value of various
assets had declined in value to the extent that the  carrying  values had become
impaired. These declines were the result of decreased long-term demand for these
types of assets and a corresponding  reduction in the amounts of rental payments
that these assets could command. Management recorded a provision for the decline
in value of those assets in the amount of  $5,049,770  for the nine months ended
September 30, 2003.

During the nine months ended September 30, 2004,  management determined that the
value of an aircraft  currently  off lease was impaired and a provision was made
against income in the amount of $1,050,000.

In 2004 it came to the  Company's  attention  that the Company  had  incorrectly
calculated  the amounts of  depreciation  expense  associated  with an operating
lease from January 2001 through  December 31, 2003.  During the six months ended
June 30, 2004, the Company recorded additional  depreciation expense of $538,929
to correct the accounting for the transaction. The Company does not believe that
this amount is  material  to the periods in which it should have been  recorded,
nor is it expected that this amount will be material to the Company's  operating
results for the year ending  December 31, 2004.  However,  if this adjustment is
ultimately deemed to be material to the Company's operating results for the year
ending  December 31,  2004,  the Company  will need to restate  prior  financial
reporting periods, including the current period.



                                       9
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2004
                                   (Unaudited)


3. Investment in leases (continued):

The impact on prior financial reporting periods would be a reduction of members'
equity  of  $538,929  ($0.04  per  Unit)  for  all  previous  periods  currently
presented. The net loss for the nine month period ended September 30, 2003 would
be  increased  by  $134,733  ($0.01 per Unit) and net income for the three month
period ended September 30, 2003 would be decreased by $44,911 ($0.003 per Unit).
Net income for the nine month period ended September 30, 2004 would be increased
by $538,929 ($0.04 per Unit).

In August  2004,  the  Company  sold  operating  leases  with  original  cost of
$42,339,763  and net book value of  $18,916,260  resulting in sales  proceeds of
$22,499,128. Portions of the proceeds were used to pay down Other Long-Term Debt
of $15,956,000 and Financing Arrangement of $5,400,000.

Impairment losses are recorded as an addition to accumulated depreciation of the
impaired assets.  Depreciation expense and impairment losses on property subject
to operating  leases and assets held for lease or sale consist of the  following
for the three and nine month periods ended September 30:

<TABLE>
<CAPTION>
                                                    Nine Months                          Three Months
                                               Ended September 30,                    Ended September 30,
                                               -------------------                    -------------------
                                             2004               2003               2004                2003
                                             ----               ----               ----                ----
<S>                                          <C>                <C>               <C>                   <C>
Depreciation of operating lease assets       $12,303,855        $15,303,869       $ 3,285,546           $ 4,902,273
Impairment losses                             1,050,000          5,049,770         1,050,000             3,158,909
                                       ------------------ ------------------ -----------------  --------------------
                                          $ 13,353,855       $ 20,353,639       $ 4,335,546         $ 8,061,182
                                       ================== ================== =================  ====================
</TABLE>

Net investment in operating leases:

Property on operating leases consists of the following:

<TABLE>
<CAPTION>
                                     Balance                              Reclass-             Balance
                                  December 31,       Depreciation      ifications and       September 30,
                                      2003              Expense         Dispositions            2004
                                      ----              -------         ------------            ----

<S>                                <C>                    <C>             <C>                  <C>
Transportation, rail               $   34,295,402         $        -      $ 10,304,272         $  44,599,674
Containers                             21,165,000                  -                 -            21,165,000
Aircraft                               15,448,037                  -                 -            15,448,037
Natural gas compressors                13,677,449                  -          (136,146)           13,541,303
Transportation, other                  23,302,778                  -       (16,892,830)            6,409,948
Manufacturing                          41,079,479                  -       (36,479,656)            4,599,823
Materials handling                      7,313,238                  -        (5,905,848)            1,407,390
Other                                  10,991,981                  -        (5,678,926)            5,313,055
                                ------------------ ------------------ -----------------  --------------------
                                      167,273,364                  -       (54,789,134)          112,484,230
Less accumulated depreciation         (80,161,024)       (12,303,855)       33,878,604           (58,586,275)
                                ------------------ ------------------ -----------------  --------------------
                                     $ 87,112,340      $ (12,303,855)     $(20,910,530)        $  53,897,955
                                ================== ================== =================  ====================
</TABLE>



                                       10
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2004
                                   (Unaudited)


3. Investment in leases (continued):

Net investment in direct financing leases:

As of September 30, 2004, net  investment in direct  financing  leases  consists
primarily of railcars and office automation  equipment.  The following lists the
components  of the Company's net  investment  in direct  financing  leases as of
September 30, 2004:

Total minimum lease payments receivable                             $ 6,746,289
Estimated residual values of leased equipment (unguaranteed)          1,241,016
                                                               -----------------
Investment in direct financing leases                                 7,987,305
Less unearned income                                                 (2,201,830)
                                                               -----------------
Net investment in direct financing leases                           $ 5,785,475
                                                               =================

All of the property on leases was acquired in 1999, 2000, 2001 and 2002.

At September 30, 2004,  the aggregate  amounts of future  minimum lease payments
are as follows:

<TABLE>
<CAPTION>
                                           Operating          Financing
                                            Leases             Leases             Total
<S>                                          <C>                <C>              <C>
Three months ending December 31, 2004     $    2,419,530          $ 504,137       $ 2,923,667
        Year ending December 31, 2005          6,838,093          1,839,014         8,677,107
                                 2006          2,595,791          1,461,648         4,057,439
                                 2007          1,984,626            894,719         2,879,345
                                 2008          1,165,740            663,561         1,829,301
                                 2009            997,480            614,760         1,612,240
                           Thereafter            651,810            768,450         1,420,260
                                       ------------------ ------------------ -----------------
                                             $16,653,070        $ 6,746,289      $ 23,399,359
                                       ================== ================== =================
</TABLE>

4.  Non-recourse debt:

At September 30, 2004,  non-recourse debt consists of notes payable to financial
institutions.  The notes are due in varying quarterly and semi-annual  payments.
Interest on the notes is fixed at rates  ranging from 4.96% to 6.85%.  The notes
are secured by assignments  of lease  payments and pledges of assets.  The notes
mature from 2005 through 2007.

Future minimum payments of non-recourse debt are as follows:

<TABLE>
<CAPTION>
                                           Principal          Interest            Total
<S>                                          <C>                  <C>             <C>
Three months ending December 31, 2004       $          -           $ 30,470          $ 30,470
        Year ending December 31, 2005          4,715,234            180,430         4,895,664
                                 2006            646,128             57,792           703,920
                                 2007            678,584             25,337           703,921
                                       ------------------ ------------------ -----------------
                                             $ 6,039,946          $ 294,029       $ 6,333,975
                                       ================== ================== =================
</TABLE>




                                       11
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2004
                                   (Unaudited)


5. Other long-term debt:

In 1999, the Company entered into a $70 million receivables funding program (the
Program), (which was subsequently increased to $125 million), with a receivables
financing  company that issues  commercial  paper rated A1 by Standard and Poors
and  P1 by  Moody's  Investor  Services.  Under  the  Program,  the  receivables
financing  company  receives  a  general  lien  against  all  of  the  otherwise
unencumbered  assets of the Company.  The Program  provides  for  borrowing at a
variable  interest rate (2.1885% at September 30, 2004).  The Program expired as
to new borrowings in March 2002.

The  Program  requires  AFS,  on behalf of the  Company,  to enter into  various
interest  rate swaps with a financial  institution  (also rated A1/P1) to manage
interest rate exposure  associated  with  variable  rate  obligations  under the
Program by effectively  converting the variable rate debt to fixed rates.  As of
September  30,  2004,  the  Company  receives  or pays  interest  on a  notional
principal of $29,180,273,  based on the difference between nominal rates ranging
from 4.35% to 7.72% and the variable rate under the Program. No actual borrowing
or lending is involved.  The  termination of the swaps were to coincide with the
maturity of the debt with the last of the swaps  maturing  in 2008.  Through the
swap  agreements,   the  interest  rates  have  been   effectively   fixed.  The
differential  to be paid or received is accrued as interest  rates change and is
recognized currently as an adjustment to interest expense related to the debt.

In 2003, the remaining  amount owing on an original  borrowing of $8,000,000 was
repaid in full, though the associated swap will not mature until January 2005.

During August 2004, an additional repayment of debt ($15,956,000) was made. As a
result of this payment,  as of September 30, 2004 all of the swaps are deemed to
be  partially  ineffective  and the Company  de-designated  the  original  hedge
relationship.  During the year,  Accumulated Other Comprehensive Income ("AOCI")
decreased by  approximately  $2,189,000 of which  approximately  $1,343,000  was
related  to the  decrease  in the  fair  value  of the  interest  rate  swap and
approximately  $846,000 was related to the  reclassification of AOCI to earnings
(included in interest expense) due to hedge  ineffectiveness.  Amounts remaining
in AOCI are to be  reclassified  into earnings in a manner  consistent  with the
earnings pattern of the underlying hedged item (generally  reflected in interest
expense).


Borrowings under the Program are as follows:

<TABLE>
<CAPTION>
                                                         Notional             Swap            Payment Rate
                   Original            Balance            Balance            Value             on Interest
                    Amount          September 30,      September 30,     September 30,            Swap
Date Borrowed      Borrowed             2004               2004               2004              Agreement
-------------      --------             ----               ----               ----              ---------
<S>                 <C>                 <C>                <C>                <C>                 <C>
 11/11/1999         $ 20,000,000        $ 1,148,000        $ 2,243,231         $ (78,851)         6.84%
 12/21/1999           20,000,000          7,624,000         11,262,813        (1,030,917)         7.41%
 12/24/1999           25,000,000            283,000          1,641,493           (81,543)         7.44%
 4/17/2000             6,500,000          1,471,000          1,897,151           (88,926)         7.45%
 4/28/2000             1,900,000             92,000            242,173           (12,282)         7.72%
  8/3/2000            19,000,000            851,000          6,641,488          (417,591)         7.50%
 10/31/2000            7,500,000          1,128,000          2,292,890          (121,658)         7.13%
 1/29/2001             8,000,000                  -          1,048,123            (7,551)         5.91%
  6/1/2001             2,000,000                  -                  -                 -          5.04%
  9/1/2001             9,000,000          1,130,000          1,910,911           (25,533)         4.35%
 1/31/2002             3,900,000          1,495,000                  -                 -            *
               ------------------ ------------------ ------------------ -----------------
                    $122,800,000        $15,222,000        $29,180,273       $(1,864,852)
               ================== ================== ================== =================
</TABLE>

* Under the terms of the Program,  no interest rate swap  agreement was required
for this borrowing.





                                       12
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2004
                                   (Unaudited)


5. Other long-term debt (continued):

Other  long-term debt borrowings  mature from 2004 through 2007.  Future minimum
principal payments of long-term debt are as follows:

<TABLE>
<CAPTION>
                                           Debt               Debt                                                    Rates on
                                         Principal          Principal                                               Interest Swap
                                          Swapped          Not Swapped         Interest            Total             Agreements*
                                          -------          -----------         --------            -----             -----------
<S>                                        <C>                  <C>                <C>             <C>                 <C>
Three months ending December 31, 2004      $ 1,614,000          $ 416,000          $ 253,967       $ 2,283,967         6.805%-6.830%
        Year ending December 31, 2005        5,700,000            973,000            724,594         7,397,594         6.878%-7.172%
                                 2006        3,362,000             60,000            377,573         3,799,573         7.337%-7.348%
                                 2007        3,051,000             46,000             18,932         3,115,932         7.336%
                                     ------------------ ------------------ ------------------ -----------------
                                          $ 13,727,000        $ 1,495,000        $ 1,375,066      $ 16,597,066
                                     ================== ================== ================== =================
</TABLE>

* Represents the range of monthly weighted average fixed interest rates paid for
amounts  maturing in the particular year. The  receive-variable  rate portion of
the swap represents commercial paper rates (2.1885% at September 30, 2004).


6.  Related party transactions:

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

The Limited Liability  Company Operating  Agreement allows for the reimbursement
of costs incurred by AFS in providing services to the Company. Services provided
include  Company  accounting,  investor  relations,  legal counsel and lease and
equipment documentation. AFS is not reimbursed for services where it is entitled
to receive a separate fee as compensation for such services.  Reimbursable costs
incurred by AFS are  allocated  to the Company  based upon an estimate of actual
time incurred by employees working on Company business and an allocation of rent
and other costs based on utilization studies.

Substantially  all employees of AFS record time incurred in performing  services
on behalf of all of the  companies  serviced by AFS. AFS believes that the costs
reimbursed  are the lower of (i) actual costs  incurred on behalf of the Company
or (ii) the amount the Company would be required to pay independent  parties for
comparable  services in the same  geographic  location and are  reimbursable  in
accordance with the Limited Liability Company Operating Agreement.








                                       13
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2004
                                   (Unaudited)


6. Related party transactions (continued):

AFS and/or affiliates earned fees,  commissions and reimbursements,  pursuant to
the Limited  Liability Company Agreement during the nine and three month periods
ended September 30, 2004 and 2003 as follows:


<TABLE>
<CAPTION>
                                                            Nine Months                            Three Months
                                                        Ended September 30,                    Ended September 30,
                                                        -------------------                    -------------------
                                                      2004               2003               2004                2003
                                                      ----               ----               ----                ----
<S>                                                   <C>                <C>                 <C>                   <C>
Administrative costs reimbursed to Managing
   Member                                               $ 738,928          $ 789,166          $ 19,586              $ 35,433
Reimbursements of other costs initially paid by
   AFS on behalf of the Company                           361,506            294,662            81,539               101,146
Asset management fees to Managing Member                  750,662          1,097,980           171,193               322,026
                                                ------------------ ------------------ -----------------  --------------------
                                                      $ 1,851,096        $ 2,181,808         $ 272,318             $ 458,605
                                                ================== ================== =================  ====================
</TABLE>

In 2003, it came to the Company's attention that an affiliated company had under
billed the  Company  in a prior  year for  interest  costs  associated  with the
financing  of an asset  acquired on its behalf.  During the three  months  ended
March 31, 2003, the Company recorded  additional interest expense of $742,000 to
correct the  accounting for the  transaction.  The Company does not believe that
this amount is  material  to the periods in which it should have been  recorded,
nor that it is material to the  Company's  operating  results for the year ended
December 31, 2003. The effect of the  additional  interest  expense  recorded in
2003 was to increase the loss in 2003 by $0.05 per Unit.


7. Member's capital:

As of September  30, 2004,  13,570,188  Units were issued and  outstanding.  The
Company's  registration  statement with the  Securities and Exchange  Commission
became  effective  December 7, 1998.  The offering was concluded on November 30,
2000. The Company is authorized to issue up to 15,000,050  Units,  including the
50 Units issued to the initial members.

The  Company's  Net Income,  Net  Losses,  and  Distributions  as defined in the
Limited Liability  Company Operating  Agreement are to be allocated 92.5% to the
Members and 7.5% to AFS.

Distributions to the Other Members were as follows:

<TABLE>
<CAPTION>
                                                     Nine Months                            Three Months
                                                 Ended September 30,                    Ended September 30,
                                                 -------------------                    -------------------
                                               2004               2003               2004                2003
                                               ----               ----               ----                ----
<S>                                            <C>                <C>               <C>                   <C>
Distributions                                  $ 9,260,508        $ 9,258,529       $ 3,086,874           $ 3,086,875
Weighted average number of Units outstanding    13,570,188         13,570,188        13,570,188            13,570,188
Weighted average distributions per Unit             $ 0.68             $ 0.68            $ 0.23                $ 0.23
</TABLE>




                                       14
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2004
                                   (Unaudited)


8.  Financing arrangement:

The Company  participates  with AFS and certain of its affiliates in a financing
arrangement  (comprised  of a term loan to AFS, an  acquisition  facility  and a
warehouse facility) with a group of financial institutions that includes certain
financial covenants.  The available financing arrangement was amended during the
current  quarter  and  the  overall  financing   arrangement  was  increased  by
$4,300,000  to  $70,000,000  and  expires  in June  2006.  The  availability  of
borrowings available to the Company under this financing  arrangement is reduced
by the amount AFS has  outstanding  as a term loan.  As of  September  30,  2004
borrowings under the facility were as follows:

Total amount available under the financing arrangement           $  70,000,000
Term loan to AFS as of September 30, 2004                           (2,809,091)
                                                                ---------------
Total available under the acquisition and warehouse facilities      67,190,909

Amount  borrowed by the Company under the acquisition facility      (1,000,000)
Amounts borrowed by affiliated partnerships and limited
   liability companies under the acquisition facility              (13,300,000)
                                                                ---------------
Total remaining available under the acquisition and
   warehouse facilities                                          $  52,890,909
                                                                ===============

Subsequent to quarter end the revolving line of credit was increased  $5,000,000
to an overall available credit limit of $75,000,000.

Draws on the acquisition facility by any individual borrower are secured only by
that borrower's assets,  including  equipment and related leases.  Borrowings on
the  warehouse  facility  are  recourse  jointly to  certain  of the  affiliated
partnerships and limited liability companies, the fund and AFS.

The credit agreement  includes certain  financial  covenants  applicable to each
borrower.  The Company was in compliance  with its covenants as of September 30,
2004.  The interest  rate on the balance  outstanding  at September 30, 2004 was
3.74%.


9.  Commitments:

As of September 30, 2004, the Company had no outstanding commitments to purchase
lease equipment.


10.  Other comprehensive income:

In 2004 and 2003, other comprehensive income consisted of the following:

<TABLE>
<CAPTION>
                                                                 Nine Months                            Three Months
                                                             Ended September 30,                    Ended September 30,
                                                             -------------------                    -------------------
                                                           2004               2003               2004                2003
                                                           ----               ----               ----                ----

<S>                                                        <C>               <C>                <C>                  <C>
Net income (loss)                                          $ 2,227,687       $ (6,406,609)      $ 1,125,926          $ (3,372,590)
Other comprehensive income:
Change in fair value of interest rate swap contracts         1,342,743          1,992,116           198,072               807,356
                                                     ------------------ ------------------ -----------------  --------------------
Comprehensive net income (loss)                            $ 3,570,430       $ (4,414,493)      $ 1,323,998          $ (2,565,234)
                                                     ================== ================== =================  ====================
</TABLE>

There were no other sources of comprehensive net income.



                                       15
<PAGE>

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.  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.

Capital Resources and Liquidity

During the first nine months of 2004 and 2003,  the Company's  primary  activity
was engaging in equipment leasing activities.

During 2004 and 2003, the Company's primary sources of liquidity were rents from
operating  leases and proceeds from the sales of lease assets.  The liquidity of
the Company  will vary in the future,  increasing  to the extent cash flows from
leases  exceed  expenses,  and  decreasing  as lease  assets  are  acquired,  as
distributions  are made to the  members and to the extent  expenses  exceed cash
flows from leases.

The Company has contractual  obligations with a diversified group of lessees for
fixed lease terms at fixed rental  amounts.  As the initial  lease terms expire,
the Company will re-lease or sell the equipment. The future liquidity beyond the
contractual  minimum  rentals  will depend on the Managing  Member's  success in
re-leasing or selling the equipment as it comes off lease.

The Company  participates  with AFS and certain of its affiliates in a financing
arrangement  (comprised  of a term loan to AFS, an  acquisition  facility  and a
warehouse facility) with a group of financial institutions that includes certain
financial covenants.  The available financing arrangement was amended during the
current  quarter  and  the  overall  financing   arrangement  was  increased  by
$4,300,000  to  $70,000,000  and  expires  in June  2006.  The  availability  of
borrowings available to the Company under this financing  arrangement is reduced
by the amount AFS has  outstanding  as a term loan.  As of  September  30,  2004
borrowings under the facility were as follows:

Total amount available under the financing arrangement           $  70,000,000
Term loan to AFS as of September 30, 2004                           (2,809,091)
                                                                ---------------
Total available under the acquisition and warehouse facilities      67,190,909

Amount  borrowed by the Company under the acquisition facility      (1,000,000)
Amounts borrowed by affiliated partnerships and limited
   liability companies under the acquisition facility              (13,300,000)
                                                                ---------------
Total remaining available under the acquisition and
   warehouse facilities                                          $  52,890,909
                                                                ===============

Subsequent to quarter end the revolving line of credit was increased  $5,000,000
to an overall available credit limit of $75,000,000.

Draws on the acquisition facility by any individual borrower are secured only by
that borrower's assets,  including  equipment and related leases.  Borrowings on
the  warehouse  facility  are  recourse  jointly to  certain  of the  affiliated
partnerships  and limited  liability  companies,  the  Company and the  Managing
Member.

The Company  anticipates  reinvesting  a portion of lease  payments  from assets
owned in new leasing  transactions.  Such reinvestment will occur only after the
payment  of  all  obligations,   including  debt  service  (both  principal  and
interest), the payment of management and acquisition fees to the Managing Member
and providing for cash distributions to the members.

The Company currently has available adequate reserves to meet contingencies, but
in the event those  reserves  were found to be  inadequate,  the  Company  would
likely be in a position to borrow  against its  current  portfolio  to meet such
requirements.  The Managing Member envisions no such  requirements for operating
purposes.

No  commitments  of capital  have been or are expected to be made other than for
the acquisition of additional  equipment.  There were no such  commitments as of
September 30, 2004.

If  inflation  in the general  economy  becomes  significant,  it may affect the
Company  inasmuch as the residual  (resale) values and rates on re-leases of the
Company's  leased assets may increase as the costs of similar  assets  increase.
However, the Company's revenues from existing leases would not increase, as such
rates are generally  fixed for the terms of the leases  without  adjustment  for
inflation.



                                       16
<PAGE>

If interest rates increase  significantly,  the lease rates that the Company can
obtain on future leases will be expected to increase as the cost of capital is a
significant  factor in the pricing of lease financing.  Leases already in place,
for the most part, would not be affected by changes in interest rates.

Cash Flows

During the first nine months of 2004 and 2003, the Company's  primary sources of
liquidity was operating lease rents and proceeds from the sales of lease assets.

In the  first  nine  months of 2004 and 2003,  the  primary  source of cash from
operations was rents from  operating  leases.  Operating  leases are expected to
remain as the primary source of cash from operations in future periods.

In both 2004 and 2003,  proceeds from sales of assets was the primary  source of
cash from investing activities.  Proceeds from the sales of lease assets are not
expected to be  consistent  from one period to another.  Asset sales are made as
leases expire, as purchasers can be found and as the sales can be negotiated and
completed. There were no investing uses of cash in 2004 or in 2003.

In the  first  nine  months  of 2004 and  2003,  the only  source  of cash  from
financing activities was borrowings under the line of credit.  Financing uses of
cash included  repayments of debt of  $24,724,000  and  $18,381,000  in the nine
month periods  ended  September  30, 2004 and 2003,  respectively.  In the three
month  periods  ended   September  30,  2004  and  2003,  debt  repayments  were
$18,194,000  and  $3,478,000,  respectively.  Distributions  were  made to Other
Members in amounts of $9,260,508  and $9,258,529 in the nine month periods ended
September 30, 2004 and 2003,  respectively  and $3,086,874 and $3,086,875 in the
three  month   periods  ended   September  30,  2004  and  2003,   respectively.
Distributions  were made to AFS in the amounts of $750,868  and  $750,691 in the
nine month periods ended September 30, 2004 and 2003,  respectively and $250,287
in the three month periods ended both September 30, 2004 and 2003. Repayments of
debt for the nine and three month  periods ended  September  30, 2004  decreased
from  the  same  periods  in the  prior  year as a result  of the  reduction  in
scheduled repayments.

In August  2004,  the  Company  sold  operating  leases  with  original  cost of
$42,339,763  and net book value of  $18,916,260  resulting in sales  proceeds of
$22,499,128. Portions of the proceeds were used to pay down Other Long-Term Debt
of $15,956,000 and Financing Arrangement of $5,400,000.

Results of operations

Operations  resulted in a net loss of $6,406,609 for the nine month period ended
September 30, 2003 and $3,372,590 for the three month period ended September 30,
2003.  In 2004,  operations  resulted in net income of  $2,227,687  for the nine
month period ended September 30 and $1,125,926 for the third quarter then ended.
The Company's  primary  source of revenues is from operating  leases.  Operating
lease rents have  decreased in 2004 compared to 2003 as a result of two factors:
(1) a larger  portion of the  Company's  assets were off lease  during the first
nine  months of 2004 than in 2003;  and (2) there have been sales of assets over
the last twelve months.  Depreciation  is related to operating  lease assets and
thus, to operating lease revenues. Consequently,  depreciation expense decreased
in 2004 compared to 2003.  For the nine month  periods,  depreciation  decreased
from $15,303,869 in 2003 to $12,303,855 in 2004 and for the three month periods,
it decreased  from  $4,902,273 in 2003 to $3,285,546 in 2004.  During the second
quarter of 2004, the Company received  $406,348 of late payment fees included in
other income in a  settlement  with a lessee.  There were no similar  amounts in
2003.

During the third quarter of 2004, the Company sold significant  amounts of lease
assets.  These sales  resulted in gains of $5,775,106  for the nine months ended
September 30, 2004 compared to $749,759 in the comparable period in 2003. During
the  nine  month  period  ended  September  30,  2003,  the  Company  recognized
impairment losses of $5,049,770.  In the comparable  period in 2004,  impairment
losses were  $1,050,000.  Neither  gains on sales of lease assets or  impairment
losses are expected to be consistent  from one period to another.  These factors
are the primary  reasons for the  fluctuation  of net income (loss) between 2003
and 2004.

Asset  management  fees are based on the gross lease  rents of the Company  plus
proceeds from the sales of lease assets. They are limited to certain percentages
of lease rents,  distributions  to members and certain other items. The decrease
in asset  management fees from $1,097,980 in the nine months ended September 30,
2003 to $750,662  for the nine month  period in 2004 and from  $322,026  for the
three month  period  ended  September  30, 2003 to $171,193  for the three month
period in 2004 are a direct result of decreases in lease revenues.

Interest  expense has increased from  $1,123,248 in the three month period ended
September 30, 2003 to  $1,524,344 in the three month period ended  September 30,
2004. For the nine month periods ended September 30, interest expense  decreased
from $4,277,728 in 2003 to $3,175,740 in 2004. In 2003, it came to the Company's
attention  that an  affiliated  company had under  billed the Company in a prior
year for interest  costs  associated  with the financing of an asset acquired on
its behalf.  During the three months ended March 31, 2003, the Company  recorded
additional  interest  expense of  $742,000  to correct  the  accounting  for the
transaction.



                                       17
<PAGE>

Due to  unscheduled  payments  of  other  long-term  debt in  August  2004,  the
Company's swap  agreements  were deemed to be  ineffective.  This resulted in an
additional charge to interest expense in the third quarter of $890,552.  This is
the cause of the  increase in interest  expense for the three month period ended
September  30, 2004  compared to the  comparable  period in 2003.  This one time
expense was  partially  offset by the effects of the lower overall debt balances
in 2004  compared  to 2003.  Overall  debt has  decreased  from  $79,214,855  at
December 31, 2002 to  $22,261,946  at September  30, 2004.  This decrease in the
debt balances has resulted in the decreased interest charges in 2004 compared to
the same period in 2003.

In the nine  month  periods  ended  September  30,  2004 and 2003,  the  Company
incurred  $621,648 and $954,559,  respectively for maintenance costs relating to
railcars.  In the three month  periods ended  September  30, 2004 and 2003,  the
Company incurred $354,674 and $148,379, respectively, of such costs. These costs
were  incurred  in order to be able to place the  railcars  on a new lease.  The
costs did not increase the useful life of the assets or increase  their value in
the marketplace.

Recoveries of doubtful accounts decreased from $237,000 to $110,000 for the nine
month periods ended  September  30, 2003 and 2004,  respectively.  For the three
month  periods  ended  September  30,  2003 and 2004,  provisions  for  doubtful
accounts  increased  from  $13,000  to  $25,000,  respectively.  Recoveries  and
provisions  for doubtful  accounts are not  expected to be  consistent  from one
period to another.


Item 3.  Quantitative and Qualitative Disclosures of Market Risk.

The Company,  like most other  companies,  is exposed to certain  market  risks,
including primarily changes in interest rates. The Company believes its exposure
to other market risks,  including foreign currency exchange rate risk, commodity
risk and equity price risk, are insignificant to both its financial position and
results of operations.

In general,  the Company manages its exposure to interest rate risk by obtaining
fixed rate debt. The fixed rate debt is structured so as to match the cash flows
required  to service  the debt to the  payment  streams  under  fixed rate lease
receivables.  The  payments  under the leases  are  assigned  to the  lenders in
satisfaction of the debt. Furthermore, the Company has historically been able to
maintain  a stable  spread  between  its cost of funds and lease  yields in both
periods  of  rising  and  falling  interest  rates.  Nevertheless,  the  Company
frequently funds leases with its floating rate line of credit and is, therefore,
exposed to interest  rate risk until fixed rate  financing is  arranged,  or the
floating  rate line of credit is repaid.  As of September  30,  2004,  there was
$1,000,000 outstanding on the floating rate line of credit.

Also, the Company  entered into a receivables  funding  facility in 1999.  Since
interest on the outstanding  balances under the facility varies,  the Company is
exposed to market risks  associated  with changing  interest rates. To hedge its
interest rate risk, the Company enters into interest rate swaps that effectively
convert the underlying interest  characteristic on the facility from floating to
fixed.  Under  the swap  agreements,  the  Company  makes or  receives  variable
interest  payments  to or from the  counterparty  based on a notional  principal
amount. The net differential paid or received by the Company is recognized as an
adjustment to interest expense related to the facility balances. The amount paid
or received  represents the difference  between the payments  required under the
variable  interest  rate  facility and the amounts due under the facility at the
fixed  (hedged)  interest  rate.  As of September  30, 2004,  borrowings  on the
facility were $15,222,000 and the associated variable interest rate was 2.1885%.


Item 4.  Controls and procedures.

Evaluation of disclosure controls and procedures

Under  the  supervision  and  with the  participation  of our  management  (ATEL
Financial  Services,  LLC as Managing  Member of the  registrant,  including the
chief  executive  officer and chief  financial  officer),  an  evaluation of the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures [as defined in Rules  240.13a-14(c) under the Securities Exchange
Act of 1934]  was  performed  as of the date of this  report.  Based  upon  this
evaluation,  the  chief  executive  officer  and  the  chief  financial  officer
concluded that, as of the evaluation date, except as noted below, our disclosure
controls  and   procedures   were  effective  for  the  purposes  of  recording,
processing,  summarizing,  and  timely  reporting  information  required  to  be
disclosed by us in the reports that we file under the Securities Exchange Act of
1934;  and  that  such  information  is  accumulated  and  communicated  to  our
management in order to allow timely decisions regarding required disclosure.



                                       18
<PAGE>

As  disclosed in the Form 10-K for the year ended  December 31, 2003,  the chief
executive and chief financial  officer of the Managing Member of the Company had
identified  certain  enhanced  controls  needed to  facilitate a more  effective
closing of the Company's financial statements.  During the first quarter of 2004
and since the end of the quarter,  the Managing  Member hired a new  controller,
added  additional  accounting  staff  personnel,  and has  instituted or revised
existing  procedures  in order to ensure that the  Company's  ability to execute
internal  controls in accounting and  reconciliation  in the closing  process is
adequate  in all  respects.  The  Managing  Member  will  continue to review its
accounting  procedures  and  practices  to  determine  their  effectiveness  and
adequacy  and will take such  steps as deemed  necessary  in the  opinion of the
Managing  Member's chief  executive and chief  financial  officers to ensure the
adequacy of the Company's accounting controls and procedures.

The Managing  Member's chief executive  officer and chief financial officer have
determined that no weakness in financial and accounting  controls and procedures
had any  material  effect on the  accuracy  and  completeness  of the  Company's
financial reporting and disclosure included in this report.

Changes in internal controls

There have been no  significant  changes in our  internal  controls  or in other
factors that could  significantly  affect our disclosure controls and procedures
subsequent to the evaluation date nor were there any significant deficiencies or
material  weaknesses in our internal controls,  except as described in the prior
paragraphs.

                           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.  The following is a discussion  of legal matters  involving the Company,
but which do not represent claims against the Company or its assets.

Solectron:

This is a matter  whereby  the  Company  has  declared a lessee in  default  for
failure to pay rent in a timely manner, and for other various defaults.  A claim
was filed on August 29,  2002,  by AFS on behalf of the Company in the amount of
$13,332,328.  The lessee  filed a  counter-claim  against the Company  asserting
unfair business practices.  In 2003, the Company elected to dismiss its suit and
subsequently  obtained a corresponding  dismissal of Solectron's  counter-claim.
The Company is continuing has now settled this matter for $406,348.


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

         Inapplicable.

Item 3. Defaults Upon Senior Securities.

         Inapplicable.

Item 4. Submission Of Matters To A Vote Of Security Holders.

         Inapplicable.

Item 5. Other Information.

         Inapplicable.

Item 6. Exhibits.

(a) 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 inapplicable,  and
          therefore have been omitted.

     2. Other Exhibits

          31.1 Certification of Paritosh K. Choksi

          31.2 Certification of Dean L. Cash

          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

(b) Report on Form 8-K

     None


                                       19
<PAGE>

                                   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 11, 2004

                      ATEL CAPITAL EQUIPMENT FUND VIII, 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 Managing Member




    By: /s/ Paritosh K. Choksi
        -------------------------------------
        Paritosh K. Choksi
        Executive Vice President of
        Managing Member, Principal
        financial officer of registrant



    By: /s/ Donald E.  Carpenter
        --------------------------------------
        Donald E. Carpenter
        Principal accounting officer of
        registrant

                                       20
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