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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-QSB



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

For the quarterly period ended September 30, 2007



| ̈ | 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 of Incorporation or organization) |  | (I. R. S. Employer Identification No.)

600 California Street, 6th Floor, San Francisco, California 94108

(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

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

State the issuers revenues for the most recent
fiscal year: $14,581,271

The number of Limited Liability Company Units outstanding as of October 31, 2007: 13,560,188

DOCUMENTS INCORPORATED BY REFERENCE

None



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Table of Contents

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

Index



|         |  |                                                                                                                                |  |   
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------ |  | --
|Part I.  |  | Financial Information                                                                                                          |  |   
|         |  |                                                                                                                               
|Item 1.  |  | Financial Statements (Unaudited)                                                                                               |  | 3 
|         |  |                                                                                                                               
|         |  | Balance Sheet, September 30, 2007                                                                                              |  | 3 
|         |  |                                                                                                                               
|         |  | Statements of Operations for the three and nine months ended September 30, 2007 and 2006                                       |  | 4 
|         |  |                                                                                                                               
|         |  | Statement of Changes in Members Capital for the year ended December 31, 2006 and for the nine months ended September 30, 2007 |  | 5 
|         |  |                                                                                                                               
|         |  | Statements of Cash Flows for the three and nine months ended September 30, 2007 and 2006                                       |  | 6 
|         |  |                                                                                                                               
|         |  | Notes to the Financial Statements                                                                                              |  | 7 
|         |  |                                                                                                                               
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                          |  | 18
|         |  |                                                                                                                               
|Item 3.  |  | Controls and Procedures                                                                                                        |  | 23
|         |  |                                                                                                                               
|Part II. |  | Other Information                                                                                                              |  |   
|         |  |                                                                                                                               
|Item 1.  |  | Legal Proceedings                                                                                                              |  | 24
|         |  |                                                                                                                               
|Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                    |  | 24
|         |  |                                                                                                                               
|Item 3.  |  | Defaults Upon Senior Securities                                                                                                |  | 24
|         |  |                                                                                                                               
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                                            |  | 24
|         |  |                                                                                                                               
|Item 5.  |  | Other Information                                                                                                              |  | 24
|         |  |                                                                                                                               
|Item 6.  |  | Exhibits                                                                                                                       |  | 24



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Part I. FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

ATEL CAPITAL
EQUIPMENT FUND VIII, LLC

BALANCE SHEET

SEPTEMBER 30, 2007

(in thousands)

(Unaudited)



|                                                                                                            |  |   |       
|----------------------------------------------------------------------------------------------------------- |  | - | ------
|ASSETS                                                                                                      |  |   |       
|Cash and cash equivalents                                                                                   |  | $ | 2,078 
|Accounts receivable, net of allowance for doubtful accounts of $140                                         |  |   | 750   
|Prepaid expenses and other assets                                                                           |  |   | 15    
|Investments in equipment and leases, net of accumulated depreciation and impairment loss reserve of $41,787 |  |   | 18,187
|                                                                                                            |  |   |       
|Total assets                                                                                                |  | $ | 21,030
|                                                                                                            |  |   |       
|LIABILITIES AND MEMBERS CAPITAL                                                                            |  |   |       
|Accounts payable and accrued liabilities:                                                                   |  |   |       
|Managing Member                                                                                             |  | $ | 694   
|Other                                                                                                       |  |   | 495   
|Accrued interest payable                                                                                    |  |   | 9     
|Non-recourse debt                                                                                           |  |   | 2,155 
|Interest rate swap contracts                                                                                |  |   | 98    
|Unearned operating lease income                                                                             |  |   | 309   
|                                                                                                            |  |   |       
|Total liabilities                                                                                           |  |   | 3,760 
|                                                                                                            |  |   |       
|Commitments and contingencies                                                                               |  |   |      
|Members capital:                                                                                           |  |   |       
|Managing Member                                                                                             |  |   |      
|Other Members                                                                                               |  |   | 17,270
|                                                                                                            |  |   |       
|Total Members capital                                                                                      |  |   | 17,270
|                                                                                                            |  |   |       
|Total liabilities and Members capital                                                                      |  | $ | 21,030
|                                                                                                            |  |   |       

See accompanying notes.



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ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENTS OF OPERATIONS

THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2007 AND 2006

(in
thousands, except per unit data)

(Unaudited)



|                                                                     |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|-------------------------------------------------------------------- |  | -------------------------------- | ---------- | - | ------------------------------- | - | ---------- | ---- |  | ---- | ---------- |  | - | ---------- | -
|                                                                     |  | Three months ended September 30, |            |   | Nine months ended September 30, |  
|                                                                     |  | 2007                             |            |   | 2006                            |   |            | 2007 |  | 2006 |           
|Revenues:                                                            |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|Leasing activities:                                                  |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|Operating leases                                                     |  | $                                | 1,852      |   |                                 | $ | 2,630      |      |  | $    | 6,091      |  | $ | 7,552      |  
|Direct financing leases                                              |  |                                  | 6          |   |                                 |   | 19         |      |  |      | 23         |  |   | 77         |  
|Gain (loss) on sales of assets                                       |  |                                  | 47         |   |                                 |   | 47         |      |  |      | 162        |  |   | (184       | )
|Interest                                                             |  |                                  | 25         |   |                                 |   | 12         |      |  |      | 58         |  |   | 37         |  
|Other revenue                                                        |  |                                  | 29         |   |                                 |   | 2          |      |  |      | 35         |  |   | 30         |  
|                                                                     |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|Total revenues                                                       |  |                                  | 1,959      |   |                                 |   | 2,710      |      |  |      | 6,369      |  |   | 7,512      |  
|                                                                     |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|Expenses:                                                            |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|Depreciation of operating lease assets                               |  |                                  | 1,015      |   |                                 |   | 1,146      |      |  |      | 3,055      |  |   | 3,928      |  
|Provision for losses and impairments                                 |  |                                  | 220        |   |                                 |   |           |      |  |      | 220        |  |   |           |  
|Interest expense                                                     |  |                                  | 61         |   |                                 |   | 203        |      |  |      | 222        |  |   | 775        |  
|Asset management fees to Managing Member                             |  |                                  |           |   |                                 |   | 135        |      |  |      | 241        |  |   | 384        |  
|Vessel maintenance                                                   |  |                                  | 122        |   |                                 |   | 226        |      |  |      | 443        |  |   | 473        |  
|Railcar maintenance                                                  |  |                                  | 144        |   |                                 |   | 221        |      |  |      | 418        |  |   | 523        |  
|Cost reimbursements to Managing Member                               |  |                                  |           |   |                                 |   |           |      |  |      | 679        |  |   | 679        |  
|Amortization of initial direct costs                                 |  |                                  | 3          |   |                                 |   | 5          |      |  |      | 10         |  |   | 20         |  
|Professional fees                                                    |  |                                  | 82         |   |                                 |   | 329        |      |  |      | 471        |  |   | 501        |  
|Insurance                                                            |  |                                  | 20         |   |                                 |   | 23         |      |  |      | 67         |  |   | 72         |  
|Provision for doubtful accounts                                      |  |                                  | 16         |   |                                 |   | 26         |      |  |      | 10         |  |   | 55         |  
|Taxes on income and franchise fees                                   |  |                                  | 32         |   |                                 |   |           |      |  |      | 289        |  |   | 109        |  
|Other                                                                |  |                                  | 20         |   |                                 |   | 104        |      |  |      | 123        |  |   | 179        |  
|                                                                     |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|                                                                     |  |                                  | 1,735      |   |                                 |   | 2,418      |      |  |      | 6,248      |  |   | 7,698      |  
|                                                                     |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|Net income (loss) from operations                                    |  |                                  | 224        |   |                                 |   | 292        |      |  |      | 121        |  |   | (186       | )
|Other (loss) income, net                                             |  |                                  | (8         | ) |                                 |   | (6         | )    |  |      | 65         |  |   | 255        |  
|                                                                     |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|Net income                                                           |  | $                                | 216        |   |                                 | $ | 286        |      |  | $    | 186        |  | $ | 69         |  
|                                                                     |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|Net income (loss):                                                   |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|Managing Member                                                      |  | $                                | 110        |   |                                 | $ | 197        |      |  | $    | 110        |  | $ | 591        |  
|Other Members                                                        |  |                                  | 106        |   |                                 |   | 89         |      |  |      | 76         |  |   | (522       | )
|                                                                     |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|                                                                     |  | $                                | 216        |   |                                 | $ | 286        |      |  | $    | 186        |  | $ | 69         |  
|                                                                     |  |                                  |            |   |                                 |   |            |      |  |      |            |  |   |            |  
|Net income (loss) per Limited Liability Company Unit (Other Members) |  | $                                | 0.01       |   |                                 | $ | 0.01       |      |  | $    | 0.01       |  | $ | (0.04      | )
|Weighted average number of Units outstanding                         |  |                                  | 13,560,188 |   |                                 |   | 13,566,492 |      |  |      | 13,560,188 |  |   | 13,568,943 |  

See accompanying notes.



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ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENT OF CHANGES IN MEMBERS CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2006

AND FOR THE

NINE MONTHS ENDED

SEPTEMBER 30, 2007

(in thousands, except per unit data)

(Unaudited)



|                                                                   |  |               |   |  |          |         |   |                               |   |      |      |  |   |       |   |  |   |         |  
|------------------------------------------------------------------ |  | ------------- | - |  | -------- | ------- | - | ----------------------------- | - | ---- | ---- |  | - | ----- | - |  | - | ------- | -
|                                                                   |  | Other Members |   |  | Managing |         |   | AccumulatedOtherComprehensive |   |      |      | 
|                                                                   |  | Units         |   |  | Amount   |         |   | Member                        |   |      | Loss |  |   | Total |  
|Balance December 31, 2005                                          |  | 13,570,188    |   |  | $        | 26,622  |   |                               | $ |     |      |  | $ | (140  | ) |  | $ | 26,482  |  
|Distributions to Other Members ($0.91 per Unit)                    |  |              |   |  |          | (12,343 | ) |                               |   |     |      |  |   |      |   |  |   | (12,343 | )
|Distributions to Managing Member                                   |  |              |   |  |          |        |   |                               |   | (788 | )    |  |   |      |   |  |   | (788    | )
|Reclassification for portion of swap liability charged to net loss |  |              |   |  |          |        |   |                               |   |     |      |  |   | 140   |   |  |   | 140     |  
|Rescissions of capital contributions                               |  | (10,000       | ) |  |          | (45     | ) |                               |   |     |      |  |   |      |   |  |   | (45     | )
|Net income                                                         |  |              |   |  |          | 4,316   |   |                               |   | 788  |      |  |   |      |   |  |   | 5,104   |  
|                                                                   |  |               |   |  |          |         |   |                               |   |      |      |  |   |       |   |  |   |         |  
|Balance December 31, 2006                                          |  | 13,560,188    |   |  |          | 18,550  |   |                               |   |     |      |  |   |      |   |  |   | 18,550  |  
|Distributions to Other Members ($0.10 per Unit)                    |  |              |   |  |          | (1,356  | ) |                               |   |     |      |  |   |      |   |  |   | (1,356  | )
|Distributions to Managing Member                                   |  |              |   |  |          |        |   |                               |   | (110 | )    |  |   |      |   |  |   | (110    | )
|Net income                                                         |  |              |   |  |          | 76      |   |                               |   | 110  |      |  |   |      |   |  |   | 186     |  
|                                                                   |  |               |   |  |          |         |   |                               |   |      |      |  |   |       |   |  |   |         |  
|Balance September 30, 2007                                         |  | 13,560,188    |   |  | $        | 17,270  |   |                               | $ |     |      |  | $ |      |   |  | $ | 17,270  |  
|                                                                   |  |               |   |  |          |         |   |                               |   |      |      |  |   |       |   |  |   |         |  

See accompanying notes.



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ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENTS OF CASH FLOWS

THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2007 AND 2006

(in
thousands)

(Unaudited)



|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------------------------------------------------- |  | -------------------------------- | ------ | - | ------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                             |  | Three months ended September 30, |        |   | Nine months ended September 30, |  
|                                                                             |  | 2007                             |        |   | 2006                            |   |        | 2007 |  |   | 2006   |  
|Operating activities:                                                        |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Net income                                                                   |  | $                                | 216    |   |                                 | $ | 286    |      |  | $ | 186    |   |  | $ | 69     |  
|Adjustment to reconcile net income to cash provided by operating activities: |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|(Gain) loss on sales of assets                                               |  |                                  | (47    | ) |                                 |   | (47    | )    |  |   | (162   | ) |  |   | 184    |  
|Depreciation of operating lease assets                                       |  |                                  | 1,015  |   |                                 |   | 1,146  |      |  |   | 3,055  |   |  |   | 3,928  |  
|Amortization of initial direct costs                                         |  |                                  | 3      |   |                                 |   | 5      |      |  |   | 10     |   |  |   | 20     |  
|Interest rate swap contracts                                                 |  |                                  |       |   |                                 |   |       |      |  |   |       |   |  |   | 140    |  
|Change in fair value of interest rate swap contracts                         |  |                                  | 9      |   |                                 |   | 6      |      |  |   | (64    | ) |  |   | (255   | )
|Provision for doubtful accounts                                              |  |                                  | 16     |   |                                 |   | 26     |      |  |   | 10     |   |  |   | 55     |  
|Provision for losses and impairments                                         |  |                                  | 220    |   |                                 |   |       |      |  |   | 220    |   |  |   |       |  
|Changes in operating assets and liabilities:                                 |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Accounts receivable                                                          |  |                                  | 104    |   |                                 |   | 109    |      |  |   | 261    |   |  |   | (81    | )
|Prepaid expenses and other assets                                            |  |                                  | 20     |   |                                 |   | (33    | )    |  |   | 61     |   |  |   | 1      |  
|Accounts payable, Managing Member                                            |  |                                  | (83    | ) |                                 |   | 659    |      |  |   | (296   | ) |  |   | 480    |  
|Accounts payable, accrued distributions to Other Members                     |  |                                  |       |   |                                 |   | (1     | )    |  |   |       |   |  |   | (1     | )
|Accounts payable, other                                                      |  |                                  | 3      |   |                                 |   | 24     |      |  |   | (206   | ) |  |   | (63    | )
|Accrued interest payable                                                     |  |                                  | (9     | ) |                                 |   | (25    | )    |  |   | (20    | ) |  |   | (18    | )
|Unearned operating lease income                                              |  |                                  | 83     |   |                                 |   | 258    |      |  |   | 217    |   |  |   | 170    |  
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Net cash provided by operating activities                                    |  |                                  | 1,550  |   |                                 |   | 2,413  |      |  |   | 3,272  |   |  |   | 4,629  |  
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Investing activities:                                                        |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Proceeds from sales of lease assets                                          |  |                                  | 364    |   |                                 |   | 2,747  |      |  |   | 927    |   |  |   | 3,461  |  
|Reduction of net investment in direct financing leases                       |  |                                  | 64     |   |                                 |   | 192    |      |  |   | 221    |   |  |   | 682    |  
|Purchases of equipment on operating leases                                   |  |                                  | 12     |   |                                 |   | (237   | )    |  |   | (6     | ) |  |   | (798   | )
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Net cash provided by investing activities                                    |  |                                  | 440    |   |                                 |   | 2,702  |      |  |   | 1,142  |   |  |   | 3,345  |  
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Financing activities:                                                        |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Borrowings under acquisition facility                                        |  |                                  |       |   |                                 |   | 500    |      |  |   |       |   |  |   | 8,600  |  
|Repayments under acquisition facility                                        |  |                                  |       |   |                                 |   | (1,500 | )    |  |   |       |   |  |   | (2,600 | )
|Repayments under receivables funding program                                 |  |                                  |       |   |                                 |   |       |      |  |   |       |   |  |   | (4,524 | )
|Repayments of non-recourse debt                                              |  |                                  | (561   | ) |                                 |   | (326   | )    |  |   | (1,341 | ) |  |   | (644   | )
|Rescissions of capital contributions                                         |  |                                  |       |   |                                 |   | (45    | )    |  |   |       |   |  |   | (45    | )
|Distributions to Other Members                                               |  |                                  | (1,356 | ) |                                 |   | (3,085 | )    |  |   | (2,660 | ) |  |   | (9,259 | )
|Distributions to Managing Member                                             |  |                                  | (193   | ) |                                 |   | (197   | )    |  |   | (193   | ) |  |   | (591   | )
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Net cash used in by financing activities                                     |  |                                  | (2,110 | ) |                                 |   | (4,653 | )    |  |   | (4,194 | ) |  |   | (9,063 | )
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Net (decrease) increase in cash and cash equivalents                         |  |                                  | (120   | ) |                                 |   | 462    |      |  |   | 220    |   |  |   | (1,089 | )
|Cash and cash equivalents at beginning of period                             |  |                                  | 2,198  |   |                                 |   | 1,064  |      |  |   | 1,858  |   |  |   | 2,615  |  
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Cash and cash equivalents at end of period                                   |  | $                                | 2,078  |   |                                 | $ | 1,526  |      |  | $ | 2,078  |   |  | $ | 1,526  |  
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Supplemental disclosures of cash flow information:                           |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Cash paid during the period for taxes                                        |  | $                                | 18     |   |                                 | $ | 98     |      |  | $ | 275    |   |  | $ | 110    |  
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Cash paid during the period for interest                                     |  | $                                | 71     |   |                                 | $ | 226    |      |  | $ | 242    |   |  | $ | 792    |  
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Schedule of non-cash transactions:                                           |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Distributions accrued to Managing Member at period end                       |  | $                                |       |   |                                 | $ | 83     |      |  | $ |       |   |  | $ | 83     |  
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Distributions accrued to Other Members at period end                         |  | $                                |       |   |                                 | $ | 1,304  |      |  | $ |       |   |  | $ | 1,304  |  
|                                                                             |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  

See accompanying notes.



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ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

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, lending and sales activities. The Managing Member 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 (leasing and lending activities). Total gross contributions in the amount of $135.7 million (13,570,188 Units) were received as of November 30, 2000, $500 of which represented the Initial
Members capital investment, $100 of which represented AFS capital investment and $135.7 million of which represented continuing interest of Other Members. The offering was terminated on November 30, 2000.

As of September 30, 2007, 13,560,188 Units were issued and outstanding.

The Companys principal objectives are to invest in a diversified portfolio of equipment that will (i) preserve, protect and return the Companys invested capital; (ii) generate 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) provide 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.

The Company, or AFS on behalf of the Company, has incurred costs in
connection with the organization, registration and issuance of the Limited Liability Company Units (Note 4). The amount of such costs to be borne by the Company is limited by certain provisions of the Companys Operating Agreement. The Company
will pay AFS and affiliates of AFS substantial fees which may result in a conflict of interest. The Company will pay substantial fees to AFS and its affiliates before distributions are paid to investors even if the Company does not produce profits.
Therefore, the financial position of the Company could change significantly.

The Company is in its liquidation phase as defined in its Operating
Agreement.

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 instructions to Form 10-QSB and Item 310(b) of Regulation S-B. 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 three
and nine months ended September 30, 2007 are not necessarily indicative of the results for the year ending December 31, 2007.

These unaudited
interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-KSB for the year ended December 31, 2006, filed with the Securities and Exchange Commission.



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##### Table of Contents

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued):



Certain prior period amounts have been reclassified to conform to the
current period presentation. Footnote and tabular amounts are presented in thousands, except as to Units and per Unit data.

Use of estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.

Cash and cash equivalents:

Cash and cash equivalents include cash in banks and cash equivalent investments with original maturities of ninety days or less.

Credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents,
direct finance lease receivables and accounts receivable. The Company places its cash deposits and temporary cash investments with creditworthy, high quality financial institutions and, therefore, believes that such concentration of such deposits
and temporary cash investments is not deemed to create a significant risk to the Company. Accounts receivable represent amounts due from lessees in various industries, related to equipment on operating and direct financing leases.

Accounts receivable:

Accounts receivable represent the amounts
billed under operating and direct financing lease contracts which are currently due to the Company. Allowances for doubtful accounts are typically established based on historical charge off and collection experience and the collectability of
specifically identified lessees and invoiced amounts. Accounts receivable are charged off to the allowance on specific identification basis. Amounts recovered that were previously written-off are recorded as other income in the period received.

Direct financing leases and related revenue recognition:

Income from direct financing lease transactions is reported using the financing method of accounting, in which the Companys investment in the leased property is reported as a receivable from the lessee to be recovered through future
rentals. The interest income portion of each rental payment is calculated so as to generate a constant rate of return on the net receivable outstanding.

Allowances for losses on direct financing leases are typically established based on historical charge off and collection experience and the collectability of specifically identified lessees and billed and unbilled receivables. Direct
financing leases are charged off to the allowance as they are deemed uncollectible.

Direct financing leases are generally placed in a non-accrual status
(i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management periodically reviews the credit worthiness of all direct finance lessees with payments outstanding less than 90 days. Based upon
managements judgment, direct finance lessees with balances less than 90 days delinquent may be placed in a non-accrual status. Leases placed on non-accrual status are only returned to an accrual status when the account has been brought current
and management believes recovery of the remaining unpaid lease payments is probable.



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##### Table of Contents

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued):



Equipment on operating leases and related revenue recognition:

Equipment subject to operating leases is stated at cost. Depreciation is being recognized on a straight-line method over the terms of the related leases to
the equipments estimated residual values at the end of the leases. Maintenance costs associated with the Funds portfolio of leased assets are expensed as incurred.

Operating lease revenue is recognized on a straight-line basis over the term of the underlying leases. The initial lease terms will vary as to the type of equipment subject to the leases, the needs of the lessees and
the terms to be negotiated, but initial leases are generally from 24 to 120 months. The difference between rent received and rental revenue recognized is recorded as unearned operating lease income on the balance sheet.

Initial direct costs:

The Company capitalizes initial direct costs
(IDC) associated with the origination and funding of lease assets as defined in Statement of Financial Accounting Standards (SFAS) No. 91 (SFAS No. 91) Accounting for Nonrefundable Fees and Costs
Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases. IDC includes both internal costs (e.g., labor and overhead) and external broker fees incurred with the origination. The costs are amortized on a lease by lease
basis based on actual lease term using a straight-line method for operating leases and the effective interest rate method for direct finance leases. Upon disposal of the underlying lease assets, both the initial direct costs and the associated
accumulated amortization are relieved. Costs related to leases that are not consummated are not eligible for capitalization as initial direct costs and are expensed as acquisition expense.

Acquisition expense:

In prior years, the Company capitalized initial
direct costs (IDC) associated with the acquisition of lease assets (as defined in Statement of Financial Accounting Standards SFAS No. 91 Accounting for Nonrefundable Fees and Costs Associated with Originating or
Acquiring Loans and Initial Direct Costs of Leases). Capitalized IDC included both internal costs (e.g., labor and overhead) and external broker fees incurred with the acquisition. Remaining IDC is being amortized on a lease by lease basis
based on actual lease term using a straight-line method for operating leases and the effective interest rate method for direct finance leases. Upon disposal of the underlying lease assets, both the initial direct costs and the associated accumulated
amortization are relieved. Costs related to leases that were not consummated were not eligible for capitalization as initial direct costs. Such amounts were expensed as acquisition expense.

Asset valuation:

Recorded values of the Companys asset
portfolio are periodically reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. An impairment loss is measured and recognized only if the estimated undiscounted
future cash flows of the asset are less than their net book value. The estimated undiscounted future cash flows are the sum of the estimated residual value of the asset at the end of the assets expected holding period and estimates of
undiscounted future rents. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the market place are disregarded and it is assumed that there is no
necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using
discounted estimated future cash flows) of the asset and its carrying value on the measurement date.

Segment reporting:

The Company reports segment information in accordance with SFAS No. 131 Disclosures about Segments of an Enterprise and Related Information. SFAS
No. 131 establishes annual and interim standards for operating segments of a company. It also requires entity-wide disclosures about the products and services an entity provides, the material countries



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##### Table of Contents

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued):



in which it holds assets and reports revenue, and its major customers. The Company is not organized by multiple operating segments for the purpose of making
operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States.

The
Companys chief operating decision makers are the Managing Members Chief Operating Officer and its Chief Executive Officer. The Company believes that its equipment leasing business operates as one reportable segment because: a) the
Company measures profit and loss at the equipment portfolio level as a whole; b) the chief operating decision makers do not review information based on any operating segment other than the equipment leasing transaction portfolio; c) the Company does
not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and services other than equipment lease financing;
and e) the Company has not chosen to organize its business around geographic areas.

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.

Derivative financial
instruments:

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which established new accounting and reporting standards for derivative instruments. SFAS No. 133 has been amended by SFAS No. 137, issued in June 1999, by SFAS No. 138, issued in June 2000
and by SFAS No. 149, issued in June 2003.

The Company records all derivatives as either assets or liabilities in the balance sheet and measures those
instruments at fair value. It further provides criteria for derivative instruments to be designated as fair value, cash flow, or foreign currency hedges, and establishes accounting standards for reporting changes in the fair value of the derivative
instruments. Upon adoption on January 1, 2001, the Company recorded its interest rate swap hedging instruments at fair value in the balance sheet, designated the interest rate swaps as cash flow hedges, and recognized the offsetting gains or
losses as adjustments to be reported in net income or other comprehensive income, as appropriate. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in current earnings during the period of change. Such
interest rate swaps are linked to and adjust effectively the interest rate sensitivity of specific long-term debt.

The effective portion of the change in
fair value of the interest rate swaps is recorded in Accumulated Other Comprehensive Income (AOCI) and the ineffective portion (if any) directly in earnings. Amounts in AOCI are reclassified into earnings in a manner consistent with the
earnings pattern of the underlying hedged item (generally reflected in interest expense). If a hedged item is de-designated prior to maturity, previous adjustments to AOCI are recognized in earnings to match the earnings recognition pattern of the
hedged item (e.g., level yield amortization if hedging an interest bearing instruments). Interest income or expense on most hedging derivatives used to manage interest rate exposure is recorded on an accrual basis as an adjustment to the yield of
the link exposures over the periods covered by the contracts. This matches the income recognition treatment of the exposure (i.e., the liabilities, which are carried at historical cost, with interest recorded on an accrual basis). See footnote 7,
Receivables funding program, for further information regarding interest rate swaps.

Credit exposure from derivative financial instruments, which are
assets, arises from the risk of a counterparty default on the derivative contract. The amount of the loss created by the default is the replacement cost or current positive fair value of the defaulted contract.



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##### Table of Contents

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued):



Unearned operating lease income:

The Company records prepayments on operating leases as a liability, unearned operating lease income. The liability is recorded when the prepayments are received and
recognized as operating lease revenue ratably over the period to which the prepayments relate.

Income taxes:

The Company is treated as a partnership for federal income tax purposes. Pursuant to the provisions of Section 701 of the Internal Revenue Code, a partnership is not
subject to federal income taxes. Accordingly, the Company has provided current income taxes for only those states which levy income taxes on partnerships.

Other income (loss), net:

Other income (loss) consists of gains and losses on interest rate swap contracts.

Per unit data:

Net income (loss) and distributions per unit are
based upon the weighted average number of Other Members units outstanding during the period.

Recent Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board (FASB) issued Statement No.159, The Fair Value Option for Financial Assets and Financial
Liabilitiesincluding an amendment of FASB Statement No. 115. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by
providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the
use of fair value measurement, which is consistent with the Boards long-term measurement objectives for accounting for financial instruments. SFAS 159 is effective as of the beginning of an entitys first fiscal year that begins after
November 15, 2007, with early adoption permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, Fair Value
Measurements. The Company does not presently anticipate any significant impact on its financial position, results of operations or cash flows.

In
September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157). This standard clarifies the definition of fair value for
financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. As of September 30, 2007, the Fund does not believe the adoption of SFAS 157 will impact the amounts reported in the financial statements, however, additional disclosures
will be required about the inputs used to develop the measurements of fair value and the effect of certain of the measurements reported in the statement of operations for a fiscal period.



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##### Table of Contents

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued):



In June 2006, the FASB issued Interpretation No. 48, Accounting
for Uncertainty in Income Taxes, an interpretation of FAS 109, Accounting for Income Taxes (FIN 48), to create a single model to address accounting for uncertainty in tax positions. FIN 48 clarifies the accounting for income taxes
by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on deregulation, measurement, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company adopted the provisions of FIN 48 on January 1, 2007. The adoption of FIN 48 did not have a significant effect
on the Companys financial position and results of operations for the three and nine months ended September 30, 2007.

3. Investment in
equipment and leases, net:

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



|                                                                                                                  |  |                         |        |                                           |   |      |                                                          |  |   |                          |   |  |   |       
|----------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | ----------------------------------------- | - | ---- | -------------------------------------------------------- |  | - | ------------------------ | - |  | - | ------
|                                                                                                                  |  | BalanceDecember 31,2006 |        | Reclassifications&Additions /Dispositions |   |      | Depreciation/AmortizationExpense orAmortizationof Leases |  |   | BalanceSeptember 30,2007
|Net investment in operating leases                                                                                |  | $                       | 21,184 |                                           | $ | (547 | )                                                        |  | $ | (3,054                   | ) |  | $ | 17,583
|Net investment in direct financing leases                                                                         |  |                         | 633    |                                           |   |     |                                                          |  |   | (221                     | ) |  |   | 412   
|Assets held for sale or lease, net                                                                                |  |                         | 620    |                                           |   | (432 | )                                                        |  |   | (1                       | ) |  |   | 187   
|Initial direct costs, net of accumulated amortization of $239 at September 30, 2007 and $259 at December 31, 2006 |  |                         | 15     |                                           |   |     |                                                          |  |   | (10                      | ) |  |   | 5     
|                                                                                                                  |  |                         |        |                                           |   |      |                                                          |  |   |                          |   |  |   |       
|Total                                                                                                             |  | $                       | 22,452 |                                           | $ | (979 | )                                                        |  | $ | (3,286                   | ) |  | $ | 18,187
|                                                                                                                  |  |                         |        |                                           |   |      |                                                          |  |   |                          |   |  |   |       

IDC amortization expense related to leases was $3 thousand and $5 thousand for the three months ended
September 30, 2007 and 2006, respectively. IDC amortization expense related to leases was $10 thousand and $20 thousand for the nine months ended September 30, 2007 and 2006, respectively.

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

Impairment losses are recorded as an adjustment to the net investment in operating leases. Depreciation expense on property subject to operating leases and property held for lease or sale was $1.0 million and $1.1 million for the three
months ended September 30, 2007 and 2006, respectively. Depreciation expense on property subject to operating leases and property held for lease or sale was $3.1 million and $3.9 million for the nine months ended September 30, 2007 and
2006, respectively. At September 30, 2007, the Company established a $220 thousand reserve for impairment losses on lease assets. There were no impairment losses for the three and nine months ended September 30, 2006.

All of the leased property was acquired during the period from 1999 through 2002.



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##### Table of Contents

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

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



Operating leases:

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



|                               |  |                         |         |   |           |   |        |                                  |  |   |                          |   |  |   |         |  
|------------------------------ |  | ----------------------- | ------- | - | --------- | - | ------ | -------------------------------- |  | - | ------------------------ | - |  | - | ------- | -
|                               |  | BalanceDecember 31,2006 |         |   | Additions |   |        | Reclassificationsor Dispositions |  |   | BalanceSeptember 30,2007 |  
|Transportation, rail           |  | $                       | 23,854  |   |           | $ |       |                                  |  | $ |                         |   |  | $ | 23,854  |  
|Containers                     |  |                         | 20,995  |   |           |   |       |                                  |  |   | (42                      | ) |  |   | 20,953  |  
|Natural gas compressors        |  |                         | 2,522   |   |           |   |       |                                  |  |   | (188                     | ) |  |   | 2,334   |  
|Manufacturing                  |  |                         | 1,141   |   |           |   |       |                                  |  |   | (600                     | ) |  |   | 541     |  
|Transportation, other          |  |                         | 7,721   |   |           |   | 6      |                                  |  |   |                         |   |  |   | 7,727   |  
|Material handling              |  |                         | 1,041   |   |           |   |       |                                  |  |   |                         |   |  |   | 1,041   |  
|Other                          |  |                         | 3,050   |   |           |   |       |                                  |  |   | (750                     | ) |  |   | 2,300   |  
|                               |  |                         |         |   |           |   |        |                                  |  |   |                          |   |  |   |         |  
|                               |  |                         | 60,324  |   |           |   | 6      |                                  |  |   | (1,580                   | ) |  |   | 58,750  |  
|Less: accumulated depreciation |  |                         | (39,140 | ) |           |   | (3,054 | )                                |  |   | 1,027                    |   |  |   | (41,167 | )
|                               |  |                         |         |   |           |   |        |                                  |  |   |                          |   |  |   |         |  
|Total                          |  | $                       | 21,184  |   |           | $ | (3,048 | )                                |  | $ | (553                     | ) |  | $ | 17,583  |  
|                               |  |                         |         |   |           |   |        |                                  |  |   |                          |   |  |   |         |  

Direct financing leases:

As of September 30, 2007, investment in direct financing leases consists of rail cars, anhydrous ammonia storage tanks, office automation equipment, point of sale equipment, refrigerated trailers and laundry
equipment. The following lists the components of the Companys investment in direct financing leases as of September 30, 2007 (in thousands):



|                                                             |  |   |     |  
|------------------------------------------------------------ |  | - | --- | -
|Total minimum lease payments receivable                      |  | $ | 85  |  
|Estimated residual values of leased equipment (unguaranteed) |  |   | 334 |  
|                                                             |  |   |     |  
|Investment in direct financing leases                        |  |   | 419 |  
|Less unearned income                                         |  |   | (7  | )
|                                                             |  |   |     |  
|Net investment in direct financing leases                    |  | $ | 412 |  
|                                                             |  |   |     |  

At September 30, 2007, the aggregate amount of future lease payments is as follows (in thousands):



|                                      |  |  |  |                 |        |                       |   |       |  |   |       
|------------------------------------- |  |  |  | --------------- | ------ | --------------------- | - | ----- |  | - | ------
|                                      |  |  |  | OperatingLeases |        | DirectFinancingLeases |   | Total
|Three months ending December 31, 2007 |  |  |  | $               | 1,497  |                       | $ | 36    |  | $ | 1,533 
|Year ending December 31, 2008         |  |  |  |                 | 5,136  |                       |   | 49    |  |   | 5,185 
|2009                                  |  |  |  |                 | 2,634  |                       |   |      |  |   | 2,634 
|2010                                  |  |  |  |                 | 1,274  |                       |   |      |  |   | 1,274 
|2011                                  |  |  |  |                 | 761    |                       |   |      |  |   | 761   
|2012                                  |  |  |  |                 | 358    |                       |   |      |  |   | 358   
|Thereafter                            |  |  |  |                 | 193    |                       |   |      |  |   | 193   
|                                      |  |  |  |                 |        |                       |   |       |  |   |       
|                                      |  |  |  | $               | 11,853 |                       | $ | 85    |  | $ | 11,938
|                                      |  |  |  |                 |        |                       |   |       |  |   |       



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ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

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



The Company utilizes a straight line depreciation method for equipment in all
of the categories currently in its portfolio of lease transactions. The useful lives for investment in leases by category are as follows (in years):



|                        |  |            
|----------------------- |  | -----------
|Equipment category      |  | Useful Life
|Transportation, rail    |  | 30 - 35    
|Manufacturing           |  | 10 - 20    
|Construction            |  | 7 - 10     
|Material handling       |  | 7 - 10     
|Natural gas compressors |  | 7 - 10     
|Transportation, other   |  | 7 - 10     

4. 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. Reimbursable costs incurred by AFS are allocated to the Company based upon estimated time incurred by employees working on Company business and an allocation of rent and other costs based on utilization studies.

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

Cost reimbursements to the Managing
Member are based on costs incurred by AFS in performing administrative services for the Company that are allocated to each fund that AFS manages based on certain criteria such as existing or new leases, number of investors or equity depending on the
type of cost incurred. 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 administrative
services in the same geographic location.

During the three and nine months ended September 30, 2007 and 2006, AFS and/or affiliates earned fees,
commissions and reimbursements, pursuant to the Operating Agreement as follows (in thousands):



|                                         |  |                   |   |                  |   |      |  |      |     |  |   |      
|---------------------------------------- |  | ----------------- | - | ---------------- | - | ---- |  | ---- | --- |  | - | -----
|                                         |  | Three MonthsEnded |   | Nine MonthsEnded
|                                         |  | September 30,     |   | September 30,   
|                                         |  | 2007              |   | 2006             |   | 2007 |  | 2006
|Asset management fees to Managing Member |  | $                 |  |                  | $ | 135  |  | $    | 241 |  | $ | 384  
|Cost reimbursements to Managing Member   |  |                   |  |                  |   |     |  |      | 679 |  |   | 679  
|                                         |  |                   |   |                  |   |      |  |      |     |  |   |      
|                                         |  | $                 |  |                  | $ | 135  |  | $    | 920 |  | $ | 1,063
|                                         |  |                   |   |                  |   |      |  |      |     |  |   |      

The Operating Agreement places an annual limit and a cumulative limit for cost reimbursements to AFS and/or
affiliates. The cumulative limit increases annually. Any reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be
reimbursable in future years to the extent of the cumulative limit.



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##### Table of Contents

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

5. Non-recourse debt:



At September 30, 2007, non-recourse debt consists of notes payable to a financial
institution. The notes are due in monthly installments. Interest on the notes is at a fixed rate of 6.90% per annum. The notes are secured by assignments of lease payments and pledges of assets. At September 30, 2007, the carrying value of
the pledged assets is $1.2 million. The notes mature from 2008 through 2010.

Future minimum payments of non-recourse debt are as follows (in thousands):



|                                      |  |  |  |           |       |          |   |       |  |   |      
|------------------------------------- |  |  |  | --------- | ----- | -------- | - | ----- |  | - | -----
|                                      |  |  |  | Principal |       | Interest |   | Total
|Three months ending December 31, 2007 |  |  |  | $         | 222   |          | $ | 37    |  | $ | 259  
|Year ending December 31, 2008         |  |  |  |           | 779   |          |   | 107   |  |   | 886  
|2009                                  |  |  |  |           | 756   |          |   | 56    |  |   | 812  
|2010                                  |  |  |  |           | 398   |          |   | 8     |  |   | 406  
|                                      |  |  |  |           |       |          |   |       |  |   |      
|                                      |  |  |  | $         | 2,155 |          | $ | 208   |  | $ | 2,363
|                                      |  |  |  |           |       |          |   |       |  |   |      

6. Borrowing facilities:

The Company participated with AFS and certain of its affiliates, as defined in the Operating Agreement, in a financing arrangement (the Master Terms Agreement) comprised of: (1) a working capital term
loan facility to AFS, (2) an acquisition facility and (3) a warehouse facility to AFS, the Company and affiliates, and (4) a venture facility available to an affiliate. The Master Terms Agreement is with a group of financial
institutions and includes certain financial and non-financial covenants. The financial arrangement, which was originally for $75 million, expired in June 2007. AFS and its affiliates renewed the financial arrangement through June 2009. The Company
was removed as a party to the Master Terms Agreement on January 31, 2007.

7. Receivables funding program:

In 1999, the Company established a $40 million receivables funding program (which was subsequently increased to a maximum of $125 million in July 2000) with a receivables
financing company that issues commercial paper rated A1 from Standard and Poors and P1 from Moodys Investor Services. In this receivables funding program, the lenders received a general lien against all of the otherwise unencumbered
assets of the Company. The program provided for borrowing at a variable interest rate and required the Company to enter into interest rate swap agreements with certain counterparties (also rated A1/P1) to mitigate the interest rate risk associated
with a variable rate note. AFS believes that this program allowed the Company to avail itself of lower cost debt than that available for individual non-recourse debt transactions. The program expired as to new borrowings in January 2002. The
receivables funding program terminated in January 2007.

As of September 30, 2007, the Company receives or pays interest on interest rate swap
agreements with a notional principal totaling $4.8 million, based on the difference between nominal rates ranging from 4.35% to 7.50% and variable rates ranging from 5.39% to 5.49% at September 30, 2007. No actual borrowing or lending is
involved. The termination of swaps was to coincide with the maturity of the debt. 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.
Through the swap agreements, the interest rates on the borrowings 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. The interest rate swaps are carried at fair value on the balance sheet with unrealized gain/loss included in the statement of operations in other income or loss.

The interest rate swaps were originally designated as cash flow hedges of the interest payment on the long term debt. As a result of repayments, the swaps were deemed to be ineffective and the Company de-designated
the original hedge relationships effective September 30, 2004. Prior to this de-designation, changes in the fair value of the swaps were



15



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##### Table of Contents

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

7. Receivables funding program (continued):



recognized in accumulated other comprehensive loss (AOCL). Subsequent to this de-designation, changes in fair value of the swaps were reflected
in the statement of operations in other income/loss, net. In addition, amounts remaining in AOCL subsequent to the de-designation of the swaps were reclassified into earnings in a manner consistent with the earnings pattern of the
underlying hedged item. As of September 30, 2007, the Company has no remaining balance in AOCL.

Prior to the programs termination in January
2007, the Company was required to make payments of standby fees in order to maintain the availability of the program. These fees were included in interest expense in the Companys statement of operations. The Company made standby fee payments
of $7 thousand during the first nine months of 2006. There were no standby fee payments in 2007.

Borrowings under the program are as follows (in
thousands):



|              |  |                        |         |                          |   |                                  |  |                             |       |  |                                     |     |   |  |      |  
|------------- |  | ---------------------- | ------- | ------------------------ | - | -------------------------------- |  | --------------------------- | ----- |  | ----------------------------------- | --- | - |  | ---- | -
|Date Borrowed |  | OriginalAmountBorrowed |         | BalanceSeptember 30,2007 |   | NotionalBalanceSeptember 30,2007 |  | Swap ValueSeptember 30,2007 |       |  | PaymentRate OnInterestSwapAgreement |    
|11/11/1999    |  | $                      | 20,000  |                          | $ |                                 |  | $                           |      |  | $                                   |    |   |  | 6.84 | %
|12/21/1999    |  |                        | 20,000  |                          |   |                                 |  |                             | 4,126 |  |                                     | (94 | ) |  | 7.41 | %
|12/24/1999    |  |                        | 25,000  |                          |   |                                 |  |                             |      |  |                                     |    |   |  | 7.44 | %
|4/17/2000     |  |                        | 6,500   |                          |   |                                 |  |                             | 10    |  |                                     |    |   |  | 7.45 | %
|4/28/2000     |  |                        | 1,900   |                          |   |                                 |  |                             |      |  |                                     |    |   |  | 7.72 | %
|8/3/2000      |  |                        | 19,000  |                          |   |                                 |  |                             | 431   |  |                                     | (5  | ) |  | 7.50 | %
|10/31/2000    |  |                        | 7,500   |                          |   |                                 |  |                             |      |  |                                     |    |   |  | 7.13 | %
|1/29/2001     |  |                        | 8,000   |                          |   |                                 |  |                             |      |  |                                     |    |   |  | 5.91 | %
|6/1/2001      |  |                        | 2,000   |                          |   |                                 |  |                             |      |  |                                     |    |   |  | 5.04 | %
|9/1/2001      |  |                        | 9,000   |                          |   |                                 |  |                             | 201   |  |                                     | 1   |   |  | 4.35 | %
|1/31/2002     |  |                        | 3,900   |                          |   |                                 |  |                             |      |  |                                     |    |   |  | *    |  
|              |  |                        |         |                          |   |                                  |  |                             |       |  |                                     |     |   |  |      |  
|              |  | $                      | 122,800 |                          | $ |                                 |  | $                           | 4,768 |  | $                                   | (98 | ) |  |      |  
|              |  |                        |         |                          |   |                                  |  |                             |       |  |                                     |     |   |  |      |  

8. Commitments:

As of September 30, 2007, the Company had no commitments to purchase lease assets.

9. 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.

In the normal course of business, the
Company enters into contracts of various types, including lease contracts, contracts for the sale or purchase of lease assets, management contracts, loan agreements, credit lines and other debt facilities. It is prevalent industry practice for most
contracts of any significant value to include provisions that each of the contracting partiesin addition to assuming liability for breaches of the representations, warranties, and covenants that are part of the underlying contractual
obligationsalso assume an obligation to indemnify and hold the other contracting party harmless for such breaches, for harm caused by such partys gross negligence and willful misconduct, including, in certain instances, certain costs and
expenses arising from the contract. The Managing Member has substantial experience in managing similar leasing programs subject to similar contractual commitments in similar transactions, and the losses and claims arising from these commitments have
been insignificant, if any. Generally, to the extent these contracts are performed in the ordinary course of business under the reasonable business judgment of the Managing Member, no



16



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##### Table of Contents

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

9. Guarantees (continued):



liability will arise as a result of these provisions. The Managing Member has no reason to believe that the facts and circumstances relating to the
Companys contractual commitments differ from those it has entered into on behalf of the prior programs it has managed. 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.

10. Members capital:

As of September 30,
2007, 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).

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 per unit data):



|                                             |  |                                  |            |                                 |   |            |  |      |            |  |   |           
|-------------------------------------------- |  | -------------------------------- | ---------- | ------------------------------- | - | ---------- |  | ---- | ---------- |  | - | ----------
|                                             |  | Three Months Ended September 30, |            | Nine Months Ended September 30,
|                                             |  | 2007                             |            | 2006                            |   | 2007       |  | 2006
|Distributions declared                       |  | $                                | 1,356      |                                 | $ | 3,085      |  | $    | 1,356      |  | $ | 9,259     
|Weighted average number of Units outstanding |  |                                  | 13,560,188 |                                 |   | 13,566,492 |  |      | 13,560,188 |  |   | 13,568,943
|                                             |  |                                  |            |                                 |   |            |  |      |            |  |   |           
|Weighted average distributions per Unit      |  | $                                | 0.10       |                                 | $ | 0.23       |  | $    | 0.10       |  | $ | 0.68      
|                                             |  |                                  |            |                                 |   |            |  |      |            |  |   |           



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##### Table of Contents

|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-QSB, 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 form those projected. In particular, economic recession and changes in general economic conditions, including,
fluctuations in demand for equipment, lease rates, and interest rates, may result in delays in investment and reinvestment, delays in leasing, re-leasing, and disposition of equipment, and reduced returns on invested capital. The Companys
performance is subject to risks relating to lessee 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-QSB. 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-QSB or to reflect the occurrence of unanticipated events,
other than as required by law.

Business 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. 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 utilized its credit facilities and reinvested cash
flow in excess of certain amounts required to be distributed to the Other Members 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 September 30, 2007, the Company remained in its liquidation phase and as expected, assets that mature are returned to inventory and most are subsequently
sold, resulting in decreasing revenue as earning assets decrease. Periodic distributions are paid at the discretion of the Managing Member.

Capital
Resources and Liquidity

The Company commenced its offering of Units on December 7, 1998. On January 13, 1999, the Company commenced
operations in its primary business (leasing activities). As of November 30, 2000, the offering was concluded. Total proceeds of the offering were $135.7 million. The Companys public offering provided for a total maximum capitalization of
$150 million.

The liquidity of the Company will vary in the future, increasing to the extent 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.

As another source of liquidity, the Company has and is expected to continue having contractual obligations with a diversified group of lessees for fixed lease terms at
fixed rental amounts. 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 re-leasing or selling the equipment as it
comes off lease.

Throughout the Reinvestment Period, which ended December 31, 2006, the Company reinvested a portion of lease payments from assets
owned in new leasing transactions. Such reinvestment occurred only after the payment of all current obligations, including debt service (both principal and interest), the payment of management fees to AFS and providing for cash distributions to the
Other Members.



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##### Table of Contents

The Company participated with AFS and certain of its affiliates in a financing arrangement (the Master Terms
Agreement). The Master Terms Agreement is comprised of: (1) a working capital term loan facility to AFS, (2) an acquisition facility and a (3) a warehouse facility to AFS, the Company and affiliates, and (4) a venture
facility available to an affiliate. The Master Terms Agreement is with a group of financial institutions and includes certain financial and non-financial covenants. The Master Terms Agreement, which originally totaled $75 million, expired in June
2007 and was renewed by AFS and its affiliates through June 2009. The availability of borrowings to the Company under the Master Terms Agreement was reduced by the amount outstanding on any of the above mentioned facilities. The Company was removed
as a party to the Master Terms Agreement on January 31, 2007.

The Company currently 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.

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.

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. For detailed information on the
Companys debt obligations, see footnotes 5, 6 and 7 to the financial statements.

In 1999, the Company established a $40 million receivables funding
program (which was subsequently increased to a maximum of $125 million) with a receivables financing company that issues commercial paper rated A1 from Standard and Poors and P1 from Moodys Investor Services. In this receivables funding
program, the lenders received liens against the Companys assets. The lender was in a first position against certain specified assets and was in either a subordinated or shared position against the remaining assets. The program provided for
borrowing at a variable interest rate and required AFS, on behalf of the Company, to enter into interest rate swap agreements with certain hedge counterparties (also rated A1/P1) to mitigate the interest rate risk associated with a variable interest
rate note. The receivables funding program allowed the Company to have a more cost effective means of obtaining debt financing than available for individual, non-recourse debt transactions. The receivables funding program expired as to new
borrowings in January 2002 and was fully terminated in January 2007.

As of September 30, 2007, the Company receives or pays interest on interest rate
swap agreements with a notional principal totaling $4.8 million, based on the difference between nominal rates ranging from 4.35% to 7.50% and variable rates ranging from 5.39% to 5.49% at September 30, 2007. At September 30, 2007, the
fair value of the interest rate swaps totaled $98 thousand and was recorded as a liability on the balance sheet with a corresponding unrealized gain/loss included in the statement of operations in other income or loss.

Prior to the termination of the receivables funding program, the Company was required to make standby payments. These fees totaled $7 thousand for the first nine months
of 2006. There were no fees paid in 2007. The standby payments are included in interest expense in the Companys statement of operations.

Finally,
the Company has access to certain sources of non-recourse debt financing, which the Company uses on a transaction basis as a means of mitigating credit risk. The non-recourse debt financing is non-committed and consists of notes payable to a
financial institution. The notes are due in monthly payments. Interest on the notes is at a fixed rate of 6.90% per annum. The notes are secured by assignments of lease payments and pledges of assets.

The Operating Agreement limits such borrowings to 50% of the total cost of equipment, in aggregate.

The Company commenced periodic distributions, based on cash flows from operations, beginning with the month of January 1999.

At September 30, 2007, the Company had no commitments to purchase leased assets. Pursuant to the Operating agreement, the Company will no longer purchase any new leased assets.



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##### Table of Contents

Cash Flows

The three months ended September 30, 2007 versus the three months ended September 30, 2006

Operating Activities

During the three months ended September 30, 2007 and 2006, the Companys primary source of cash from operations was rents from operating
leases. In addition, the Companys cash flows are impacted by changes in certain assets and liabilities. Net cash provided by operating activities totaled $1.6 million and $2.4 million for the three months ended September 30, 2007 and
2006, respectively. The decrease in cash flow was primarily due to increased payments made against accounts payable and accrued liabilities and decreased unearned lease income.

The increased payment made against accounts payable and accrued liabilities reduced cash flow by $762 thousand during the three months ended September 30, 2007 when compared to the same period in 2006, and was
due to payment of deferred costs due to the Managing Member. Similarly, the decline in unearned rents received reduced cash flow by $175 thousand.

Investing Activities

During the three months ended September 30, 2007 and 2006, the main sources of cash flow from investing
activities were proceeds from sales of lease assets and payments received on the Companys investment in direct financing leases. Net cash provided by investing activities totaled $440 thousand and $2.7 million for the three months ended
September 30, 2007 and 2006, respectively. The decrease was primarily due to the following: (1) $2.4 million quarter over quarter decline in proceeds from sales of lease assets, and (2) a $128 thousand decrease in principal payments
received on the Companys investment in direct financing leases, partially offset by a $249 thousand decline in capitalized costs of refurbishing rail cars and vessels under operating leases.

The quarter over quarter decrease in proceeds from sales of lease assets was primarily due to a decline in terminating lease assets that were subsequently sold during
the three months ended September 30, 2007 when compared to the same period in 2006. The decrease in principal payments received on the Companys investment in direct financing leases was attributable to run-off of the Companys direct
finance lease portfolio.

Financing Activities

During
the three months ended September 30, 2007 and 2006, the main uses of cash in financing activities have been the payment of distributions to both Managing Member and Other Members and repayment of debt.

Net cash used in financing activities totaled $2.1 million and $4.7 million the three months ended September 30, 2007 and 2006, respectively. The significantly
lower amount of cash used during the third quarter of 2007 was primarily due to a $1.7 million decrease in distributions paid to Other Members combined with a $765 thousand decrease in net repayments made on the Companys outstanding debt.

The nine months ended September 30, 2007 versus the nine months ended September 30, 2006

Operating Activities

During the nine months ended September 30,
2007 and 2006, the Companys primary source of cash from operations was rents from operating leases. In addition, the Companys cash flows are impacted by changes in certain assets and liabilities. Net cash provided by operating activities
totaled $3.3 million and $4.6 million for the nine months ended September 30, 2007 and 2006, respectively. The decrease in cash flow was primarily due to (1) increased payments made against accounts payable and accrued liabilities, and
(2) the period over period change in operating results, adjusted for non-cash revenue and expense such as gains on sales of assets and depreciation expense, partially offset by increased payments received on accounts receivable.

The increased payments made against accounts payable and accrued liabilities reduced cash flow by $918 thousand during the nine months ended September 30, 2007 when
compared to the same period in 2006, and was due to payment of deferred costs due to the Managing Member. The change in period over period results, adjusted for non-cash items, reduced cash flow by $886 thousand. The decrease in operating results
was primarily due to the decline in operating lease revenue. The aforementioned decreases in cash flow were partially offset by a $342 thousand increase in cash resulting from increased payments received on accounts receivable.



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##### Table of Contents

Investing Activities

During the nine months ended September 30, 2007 and 2006, the main sources of cash flow from investing activities were proceeds from sales of lease assets and payments received on the Companys investment in direct financing
leases. Net cash provided by investing activities totaled $1.1 million and $3.3 million for the nine months ended September 30, 2007 and 2006, respectively. The decrease was primarily due to the following: (1) $2.5 million period over
period decline in proceeds from sales of lease assets, and (2) a $461 thousand decrease in principal payments received on the Companys investment in direct financing leases, partially offset by a $792 thousand decline in capitalized costs
of refurbishing rail cars and vessels under operating leases. The decrease in proceeds from sales of lease assets was primarily due to a decline in terminating lease assets that were subsequently sold during the nine months ended September 30,
2007 when compared to the same period in 2006, while the decrease in principal payments received on the Companys investment in direct financing leases was attributable to run-off of the Companys direct finance lease portfolio.

Financing Activities

During the nine months ended
September 30, 2007 and 2006, the main uses of cash in financing activities have been the payment of distributions to both Managing Member and Other Members and the repayment of debt.

Cash used in financing activities totaled $4.2 million and $9.1 million for the nine months ended September 30, 2007 and 2006, respectively. The significantly lower
amount of cash used during the nine months ended September 30, 2007 was primarily due to a $7.0 million decrease in distributions paid to the Managing Member and Other Members offset, in part, by a $2.2 million decline in net borrowings.

Results of Operations

Cost reimbursements to
the Managing Member are based on costs incurred by AFS in performing administrative services for the Company that are allocated to each managed entity based on certain criteria such as existing or new leases, number of investors or equity depending
on the type of cost incurred.

The three months ended September 30, 2007 versus the three months ended September 30, 2006

The Company had net income of $216 thousand and $286 thousand for the three months ended September 30, 2007 and 2006, respectively. Results for the three months
ended September 30, 2007 reflect decreases in both total revenues and operating expenses when compared to the three months ended September 30, 2006.

Revenues

Total revenues were $2.0 million and $2.7 million for the three months ended September 30, 2007 and 2006, respectively. The
net decline in total revenues was primarily a result of a decrease in operating lease revenue.

Revenues from operating leases for the three months ended
September 30, 2007 declined by $778 thousand when compared to the same period in 2006, due to continued run-off of the Companys lease portfolio.

Expenses

Total expenses were $1.7 million and $2.4 million for the three months ended September 30, 2007 and 2006, respectively. The
quarter over quarter decrease in total expenses was primarily due to (1) $247 thousand decline in professional fees, (2) $181 thousand decrease in vessel and railcar maintenance costs, (3) $135 thousand decrease in management fees to
AFS, (4) $142 thousand decrease in interest expense, and (5) $131 thousand decrease in depreciation expense offset, in part, by a $220 thousand increase in provision for impairment.

The decrease in professional fees was primarily a result of the decline in costs associated with the audit and restatement of the Partnerships prior year financial
statements which was largely completed during the second quarter of 2007. Maintenance costs decreased due to the timing of required maintenance on railcars and a leased vessel placed in service in September 2006, while management fees paid to AFS
decreased due to the continued decline in assets under management.

Interest expense decreased as a result of a $6.5 million decline in outstanding debt
since September 30, 2006; whereas depreciation expense declined due to the continued run-of of the Companys lease portfolio.



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##### Table of Contents

Other

Other loss
recorded during the three months ended September 30, 2007 and 2006 was solely comprised of losses on interest rate swap contracts and totaled $8 thousand and $6 thousand, respectively.

The nine months ended September 30, 2007 versus the nine months ended September 30, 2006

The Company had net income of $186 thousand and $69 thousand for the nine months ended September 30, 2007 and 2006, respectively. Results for the nine months ended September 30, 2007 reflects decreases in
both total revenues and operating expenses when compared to the same period in 2006.

Revenues

Total revenues were $6.4 million and $7.5 million for the nine months ended September 30, 2007 and 2006, respectively. The net decline in total revenues was
primarily a result of a decrease in operating lease revenue offset, in part, by an increase in gains on sales of lease assets.

Operating lease revenue
declined by $1.4 million during the nine months ended September 30, 2007 when compared to the same period in 2006 due to run-off and disposition of the Companys lease assets.

Partially offsetting the decrease in operating lease revenue was a $346 thousand favorable change in gains or losses recognized on the sale of lease assets. Gains or losses on sale of lease assets represent the excess
between the market value and the recorded value of equipment under leases that terminate and are subsequently sold. Accordingly, higher market values associated with assets sold during 2007 when compared to assets sold during the same period in 2006
resulted in net gains totaling $162 thousand for the nine months ended September 30, 2007 versus net losses totaling $184 thousand for the same period in 2006.

Expenses

Total expenses were $6.2 million and $7.7 million for the nine months ended September 30, 2007 and
2006, respectively. The period over period decrease in total expenses was primarily due to decreases in (1) depreciation expense, (2) interest expense, and (3) management fees paid to the Managing Member offset, in part, by increases
in the provision for impairment losses and taxes on income and franchise fees.

Depreciation expense for the nine months ended September 30, 2007
declined by $873 thousand when compared to the same period in 2006. The decrease was primarily due to the run-off of the Companys lease portfolio. Interest expense decreased by $553 thousand as a result of a $6.5 million decline in outstanding
debt balances since September 30, 2006. Also during the first nine months of 2007, management fees paid to the Managing Member decreased by $143 thousand as a result of the decline in assets under management.

The above decreases in expenses were partially offset by increases of $220 thousand in the provision for impairment losses, and $180 thousand in taxes on income and
franchise fees due primarily to higher period over period assessments in Pennsylvania, Illinois and New York.

Other

Other income for the nine months ended September 30, 2007 and 2006 was solely comprised of gains on interest rate swap contracts and totaled $65 thousand and $255
thousand, respectively.



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##### Table of Contents

|Item 3. | Controls and procedures.
|------- | ------------------------

Evaluation of disclosure
controls and procedures

The Companys Managing Members Chief Executive Officer, and Executive Vice President and Chief Financial and
Operating Officer, evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) during and as of the end of the period covered by this report. Based on the evaluation of the
Companys disclosure controls and procedures, the Chief Executive Officer and Executive Vice President and Chief Financial and Operating Officer 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 dependent on the Managing
Member, who is responsible for providing the Company with financial statements in accordance with generally accepted accounting principles. The Managing Members disclosure controls and procedures were determined to be effective and 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

The Managing Member believes that
the following corrective actions taken as a whole have addressed, and mitigated, the material weaknesses noted in its disclosure controls and procedures listed in its previously filed Form 10-QSB as of its fiscal quarter ended June 30, 2007:



| |  |  | With regard to improving the timeliness of financial reporting, the Company is current with its regulatory filings since the timely filing of its Form 10-QSB for
the quarter ended June 30, 2007 and has in place appropriate documentation requirements, procedures and staff to ensure continued timeliness.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have aggressively recruited experienced professionals to augment and upgrade our financial staff to address issues of timeliness in financial reporting even
during periods when we are preparing filings for the Securities and Exchange Commission, and we believe that this corrective step has enabled management to conclude that the internal controls over our financial reporting are effective.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Except for the preceding items, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) or
Rule 15d-15(f) under the Securities Exchange Act of 1934) occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

Inapplicable.



|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 Dean L. Cash                                         
|31.2 |  | 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: November 9, 2007

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                       
|                              |  | Principal Financial Officer of Registrant



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