Form 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                      |X|  Annual report  pursuant to section 13 or 15(d) of the
                           Securities  Exchange Act of 1934 (fee  required)  For
                           the Year Ended December 31, 2001
                                       OR
                      |_|  Transition  report pursuant to section 13 or 15(d) of
                           the Securities Exchange Act of 1934 (no fee required)
                           For the transition period from ____ to ____

                        Commission File number 333-62477

                      ATEL Capital Equipment Fund VIII, LLC

          California                                           94-3307404
          ----------                                           ----------
(State or other jurisdiction of                            (I. R. S. Employer
incorporation or organization)                             Identification No.)

           235 Pine Street, 6th Floor, San Francisco, California 94104
                    (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: None

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 |_|

State the aggregate market value of voting stock held by  non-affiliates  of the
registrant. Inapplicable


                       DOCUMENTS INCORPORATED BY REFERENCE

Prospectus  dated December 7, 1998,  filed  pursuant to Rule 424(b)  (Commission
File No. 33-62477) is hereby incorporated by reference into Part IV hereof.

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of  Regulation  S-K  (ss.229.405)  is not  contained  herein,  and  will  not be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. |X|





                                       1
<PAGE>

                                     PART I

Item 1:  BUSINESS

General Development of Business

ATEL Capital Equipment Fund VIII, LLC (the Company) was formed under the laws of
the state of California in July 1998.  The Company was formed for the purpose of
acquiring  equipment to engage in equipment  leasing and sales  activities.  The
Managing  Member  of the  Company  is ATEL  Financial  Services  LLC  (ATEL),  a
California  limited  liability  corporation.  Prior to  converting  to a limited
liability  company  structure,  the Managing  Member was formerly  known as ATEL
Financial Corporation.

The Company  conducted  a public  offering of  15,000,000  of 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,  $1,200,000)  had been
received and ATEL requested that the  subscriptions,  except those received from
Pennsylvania  investors (7,500 Units,  $75,000),  be released to the Company. On
that date, the Company  commenced  operations in its primary  business  (leasing
activities). As of February 18, 1999, the Company had received subscriptions for
775,777 Units ($7,757,770) and ATEL requested that the remaining funds in escrow
(from  Pennsylvania  investors)  be released to the Company.  As of November 30,
2000, the Company had received subscriptions for 13,570,138 ($135,701,380) Units
in addition to the Initial  Members' Units and the offering was terminated.  All
of the Units were issued and outstanding as of December 31, 2001.

The Company's principal  objectives are to invest in a diversified  portfolio of
equipment  which will (i) preserve,  protect and return the  Company's  invested
capital;  (ii)  generate  regular  distributions  to the  partners  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, ending 72 months after the end of the year in which the
Final  Closing  occurs  (which  will be  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).

Narrative Description of Business

The Company has acquired and intends to acquire  various  types of equipment and
to lease such equipment pursuant to "Operating" leases and "High Payout" leases,
where "Operating"  leases are defined as being leases in which the minimum lease
payments  during  the  initial  lease term do not  recover  the full cost of the
equipment and "High Payout"  leases recover at least 90% of such cost. It is the
intention of ATEL that a majority of the aggregate  purchase  price of equipment
will represent equipment leased under "High Payout" leases upon final investment
of the Net Proceeds of the  Offering and that no more than 20% of the  aggregate
purchase price of equipment will be invested in equipment acquired from a single
manufacturer.

The Company will only purchase equipment for which a lease exists or for which a
lease will be entered into at the time of the purchase.

As of  December  31,  2001,  the Company had  purchased  equipment  with a total
acquisition price of $245,442,880.

The Company's  objective is to lease a minimum of 75% of the equipment  acquired
with the net  proceeds of the  offering to lessees  which (i) have an  aggregate
credit rating by Moody's Investor service,  Inc. of Baa or better, or the credit
equivalent as determined by ATEL, with the aggregate  rating weighted to account
for the  original  equipment  cost for each item leased or (ii) are  established
hospitals with histories of profitability or municipalities.  The balance of the
original  equipment  portfolio may include  equipment  leased to lessees  which,
although  deemed  creditworthy  by the  Managing  Member,  would not satisfy the
general  credit  rating  criteria  for the  portfolio.  In  excess of 75% of the
equipment  acquired  with the net  proceeds of the  offering  (based on original
purchase cost) has been leased to lessees with an aggregate credit rating of Baa
or better or to such hospitals or municipalities.



                                       2
<PAGE>

During 2001, 2000 and 1999,  certain lessees generated  significant  portions of
the Company's total lease revenues as follows:
<TABLE>
<CAPTION>

         Lessee                             Type of Equipment              2001     2000     1999
         ------                             -----------------              ----     ----     ----
<S>                                         <C>                            <C>
Union Pacific Railroad                      Railcars                       16%        *        *
Burlington Northern Santa Fe Railroad       Locomotives and Auto Racks      *        10%       *
Transamerica Leasing Inc.                   Intermodal containers           *         *       31%
Staples, Inc.                               Point of sale / materials       *         *       12%
                                               handling
Stewart & Stevenson Services, Inc.          Gas Compressors                 *         *       12%
Seamex International Ltd.                   Anchor Handler Tug Supply       *         *       10%
                                               Vessel
</TABLE>
*  Less than 10%

These percentages are not expected to be comparable in future periods.

The equipment leasing industry is highly competitive.  Equipment  manufacturers,
corporations, partnerships and others offer users an alternative to the purchase
of most types of equipment with payment terms which vary widely depending on the
lease  term  and type of  equipment.  The  ability  of the  Company  to keep the
equipment leased and/or operating and the terms of the acquisitions,  leases and
dispositions  of equipment  depends on various factors (many of which are not in
the  control  of ATEL or the  Company),  such as  general  economic  conditions,
including the effects of inflation or recession,  and fluctuations in supply and
demand for various  types of  equipment  resulting  from,  among  other  things,
technological and economic obsolescence.

ATEL will seek to limit the amount invested in equipment to any single lessee to
not more than 20% of the aggregate purchase price of equipment owned at any time
during the reinvestment period.

The business of the Company is not seasonal.

The Company has no full time employees.

Equipment Leasing Activities

Through December 31, 2001, the Partnership has disposed of certain leased assets
as set forth below:

                                                                Excess of
         Type of           Original                            Rents Over
        Equipment        Equipment Cost      Sale Price        Expenses *
        ---------        --------------      ----------        ----------
Transportation, rail        $ 6,797,710        $ 7,127,880       $ 1,749,708
Office automation               946,119            191,969           865,619
Manufacturing                    31,130             31,130             5,054
Transportation, other            21,250             22,398             2,490
                        ----------------  -----------------  ----------------
                            $ 7,796,209        $ 7,373,377       $ 2,622,871
                        ================  =================  ================

*  Individual  asset  types  included in "Other"  represent  less than 2% of the
total.

The Company has acquired a diversified portfolio of equipment. The equipment has
been leased to lessees in various industries. The following tables set forth the
types of  equipment  acquired by the Company  through  December 31, 2001 and the
industries  to which the assets have been  leased.  The  Company  has  purchased
certain assets subject to existing  non-recourse  debt. For financial  statement
purposes,  non-recourse  debt has been offset  against the investment in certain
direct finance leases where the right of offset exists.

                                       3
<PAGE>

                                  Purchase Price Excluding  Percentage of Total
       Asset Types                    Acquisition Fees          Acquisitions
       -----------                    ----------------          ------------
Transportation, rail                      $59,769,940                    24.35%
Manufacturing                              44,048,583                    17.95%
Transportation, other                      25,757,971                    10.49%
Aircraft                                   38,535,439                    15.70%
Transportation, intermodal
   containers                              21,228,750                     8.65%
Gas compressors                            13,848,465                     5.64%
Point of sale / office automation           8,383,996                     3.42%
Materials handling                         11,018,547                     4.49%
Storage tanks                               6,712,090                     2.73%
Marine vessels                              3,952,500                     1.61%
Other *                                    12,186,599                     4.97%
                                      ----------------        ------------------
                                         $245,442,880                   100.00%
                                      ================        ==================

*  Individual  asset  types  included in "Other"  represent  less than 2% of the
total.

                                  Purchase Price Excluding  Percentage of Total
   Industry of Lessee                 Acquisition Fees          Acquisitions
   ------------------                 ----------------          ------------
Transportation, rail                      $59,769,940                    24.35%
Transportation, air                        38,535,439                    15.70%
Manufacturing, other                       34,889,583                    14.21%
Transportation, other                      27,245,340                    11.10%
Transportation, containers                 21,228,750                     8.65%
Manufacturing, electronics                 20,901,071                     8.52%
Retail                                     17,762,440                     7.24%
Natural gas                                13,848,465                     5.64%
Other *                                    11,261,852                     4.59%
                                      ----------------        ------------------
                                         $245,442,880                   100.00%
                                      ================        ==================

* Individual lessee industries included in "Other" represent less than 2% of the
total.

For further information  regarding the Company's equipment lease portfolio as of
December  31,  2001,  see Note 3 to the  financial  statements,  Investments  in
equipment  and  leases,   set  forth  in  Item  8,   Financial   Statements  and
Supplementary Data.


Item 2.  PROPERTIES

The Company does not own or lease any real property,  plant or material physical
properties other than the equipment held for lease as set forth in Item 1.


Item 3.  LEGAL PROCEEDINGS

No material  legal  proceedings  are  currently  pending  against the Company or
against  any of its assets.  The  following  is a  discussion  of legal  matters
involving the Company,  but which do not represent claims against the Company or
its assets.

Emery Worldwide Airways, Inc.:



                                       4
<PAGE>

On January 25, 2002,  the Company  filed a complaint  against its lessee,  Emery
Worldwide  Airways,  Inc.,  for failure by the lessee to properly  maintain  the
condition  and  airworthiness  of the  aircraft on lease to the lessee,  and for
certain other  breaches and defaults by the lessee as alleged in the  complaint.
The  Company  has  claimed  stipulated  loss  value  damages  in the  amount  of
$5,648,173  as a result  of the  breaches  and  defaults  under the lease by the
lessee.  As this matter is in its early  stages,  the  outcome of the  Company's
claim is uncertain,  although the Managing  Member believes that currently there
is a reasonable basis for likelihood of success in this matter.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


                                     PART II

Item 5.  MARKET FOR REGISTRANT'S LIMITED LIABILITY COMPANY UNITS
              AND RELATED MATTERS

Market Information

The Units are transferable  subject to restrictions on transfers which have been
imposed under the securities  laws of certain  states.  However,  as a result of
such  restrictions,  the size of the Company and its investment  objectives,  to
ATEL's knowledge,  no established  public secondary trading market has developed
and it is unlikely that a public trading market will develop in the future.

Holders

As of December 31, 2001, a total of 3,625 investors were record holders of Units
in the Company.

Dividends

The Company does not make dividend  distributions.  However,  the Members of the
Company are entitled to certain  distributions  as provided  under the Operating
Agreement.

ATEL shall have sole  discretion  in  determining  the amount of  distributions;
provided,  however, that the Managing Member will not reinvest in equipment, but
will  distribute,  subject to payment of any  obligations  of the Company,  such
available  cash from  operations  and cash from sales or  refinancing  as may be
necessary to cause total  distributions  to the Members for each year during the
reinvestment  period to equal an amount  between  $0.80 and $1.00 per Unit which
was to be  determined  by the Managing  Member.  In 2001,  the  Managing  Member
determined that amount to be $0.91 per Unit.

Investors  may elect to receive  distributions  either on a monthly or quarterly
basis.

The rate for distributions from 2001 operations was $0.076667 per Unit per month
for January through June 2001. The  distributions  were paid in February through
July 2001.  The rate for the  distributions  for July through  December 2001 was
$0.075833.  The  distributions  were paid in August through December 2001 and in
January 2002. For each quarterly  distribution (paid in April and July 2001) the
rate was $0.23 per Unit.  For the quarterly  distributions  paid in October 2001
and January 2002, the rate was $0.2275.  Distributions were from 2001 cash flows
from operations.

The rate for monthly  distributions  from 2000 operations was $0.075 for January
through October 2000. The  distributions  were paid in February through November
2000. The rate for the  distribution  for November 2000 was $0.079167.  The rate
for the distribution for December 2000 was $0.07667. An additional  distribution
was paid in December  2000.  The amount of the  distribution  was calculated for
each Unit so as to bring the average of all monthly distributions  received to a
total of  $0.079167  per Unit per month for the  period  from  February  through
November 2000. For each quarterly  distribution (made in April, July and October
2000) the rate was  $0.225  per Unit.  For the  quarterly  distribution  paid in
January  2001,  the rate was  $0.235.  An  additional  distribution  was paid in
December 2000. The amount of the distribution was calculated for each Unit so as
to bring the  average  of all  quarterly  distributions  received  to a total of
$0.2375 per Unit per quarter for the period from February  through October 2000.
Distributions were from 2000 cash flows from operations.



                                       5
<PAGE>

The rate for monthly  distributions  from 1999  operations was $0.0667 per Unit.
The  distributions  were paid in  February  1999  through  December  1999 and in
January 2000. For each quarterly  distribution  (paid in April, July and October
1999 and in January 2000) the rate was $0.20 per Unit.  Distributions  were from
1999 cash flows from operations. An additional distribution from 1999 cash flows
was paid in January 2000. The amount of the distribution was calculated for each
Unit so as to bring the average of all monthly distributions received to a total
of $.075  per  month  per Unit and to  $0.225  per Unit per  quarter  for  those
receiving  distributions on a quarterly basis. The total distributions represent
a  distribution  rate of 9% per  annum on the  original  invested  capital.  The
amounts  paid to  holders  of Units  were  adjusted  based on the length of time
within  the  previous  calendar  month,  quarter  or year  that the  Units  were
outstanding.

The following table presents summarized  information regarding  distributions to
Other Members:

<TABLE>
<CAPTION>
                                                 2001               2000              1999
                                                 ----               ----              ----
<S>                                               <C>                <C>                 <C>
Distributions of net (loss) income                $ (0.0600)         $ (0.2900)          $ 0.0600
Return of investment                                 0.9700             1.2100             0.5500
                                            ----------------  ----------------- ------------------
Distributions per unit                               0.9100             0.9200             0.6100
Differences due to timing of distributions           0.0050             0.0275             0.2900
                                            ----------------  ----------------- ------------------
Nominal distribution rates from above              $ 0.9150           $ 0.9475           $ 0.9000
                                            ================  ================= ==================
</TABLE>



Item 6.  SELECTED FINANCIAL DATA

The following table presents selected  financial data of the Company at December
31, 2001, 2000, 1999 and 1998. This financial data should be read in conjunction
with the financial  statements  and related notes  included under Item 8 of this
report.

<TABLE>
<CAPTION>
                                                     2001               2000              1999              1998
                                                     ----               ----              ----              ----
<S>                                                 <C>               <C>                 <C>                      <C>
Gross revenues                                      $43,794,097       $ 31,047,485        $ 8,660,653              $ -
Net (loss) income                                     $ 132,672       $ (2,305,631)         $ 438,835              $ -
Weighted average Units                               13,570,188         10,634,792          4,025,294               50
Net income (loss) allocated to
   Other Members                                     $ (872,244)      $ (3,100,640)         $ 239,420              $ -
Net (loss) income per Unit, based on weighted
   average Units outstanding                            $ (0.06)           $ (0.29)            $ 0.06              $ -
Distributions per Unit, based on weighted average
   Units outstanding                                     $ 0.91             $ 0.92             $ 0.61              $ -
Total Assets                                       $184,421,674       $198,832,652      $ 145,663,336            $ 600
Non-recourse and long-term debt                     $91,383,964       $ 93,993,744       $ 71,848,617              $ -
Total Members' Capital                              $83,361,952       $101,338,501       $ 64,130,010            $ 600
</TABLE>




                                       6
<PAGE>

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

Capital Resources and Liquidity

The Company commenced its offering on December 7, 1998. On January 13, 1999, the
Company commenced operations in its primary business (leasing  activities).  The
offering was terminated on November 30, 2000. Total proceeds of the offering was
$135,701,880.  Until the  Company's  initial  portfolio  of  equipment  has been
purchased,  funds which have been received, but which have not yet been invested
in  leased   equipment,   are   invested   in   interest-bearing   accounts   or
high-quality/short-term commercial paper. The Company's public offering provides
for a total maximum capitalization of $150,000,000.

During the  funding  period,  the  Company's  primary  source of  liquidity  was
subscription  proceeds from the public  offering of Units.  The liquidity of the
Company will vary in the future, increasing to the extent cash flows from leases
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 is  expected to have  contractual
obligations  with a diversified  group of lessees for fixed lease terms at fixed
rental amounts.  As the initial lease terms expire, the Company will re-lease or
sell the equipment.  The future liquidity beyond the contractual minimum rentals
will depend on ATEL's success in re-leasing or selling the equipment as it comes
off lease.

The Company  participates with the Managing Member and certain of its affiliates
in a  $62,000,000  revolving  line of credit with a financial  institution  that
includes certain  financial  covenants.  The line of credit expires on April 12,
2002.  The  Managing  Member is currently  negotiating  a new line of credit and
anticipates  that the current  line of credit  will either be replaced  upon its
expiration or that the current line of credit will be extended until the new one
is  finalized.  As of December 31, 2001,  borrowings  under the facility were as
follows:
<TABLE>
<CAPTION>

<S>                                                                                                                  <C>
Amount  borrowed by the Company under the acquisition facility                                                       $     2,500,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
   facility                                                                                                               15,100,000
                                                                                                                    ----------------
                                                                                                                    ----------------
Total borrowings under the acquisition facility                                                                           17,600,000
Amounts borrowed by the Managing Member and its sister corporation under the warehouse facility *                         10,999,501
                                                                                                                    ----------------
                                                                                                                    ----------------
Total outstanding balance                                                                                            $   28,599,501
                                                                                                                    ================
                                                                                                                    ================

Total available under the line of credit                                                                             $   62,000,000
Total outstanding balance                                                                                               (28,599,501)
                                                                                                                    ----------------
                                                                                                                    ----------------
Remaining availability                                                                                               $   33,400,499
                                                                                                                    ================
                                                                                                                    ================
</TABLE>

*  (Unaudited)  The  carrying  value of the  assets  pledged as  collateral  and
financed at December 31, 2001 was $17,955,014.

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



                                       7
<PAGE>

The Company  anticipates  reinvesting  a portion of lease  payments  from assets
owned in new leasing  transactions.  Such reinvestment will occur only after the
payment  of  all  obligations,   including  debt  service  (both  principal  and
interest), the payment of management and acquisition fees to the Managing Member
and providing for cash distributions to the Other Members. At December 31, 2001,
there were no commitments to purchase lease assets.

ATEL or an  affiliate  may purchase  equipment  in its own name,  the name of an
affiliate or the name of a nominee,  a trust or otherwise and hold title thereto
on a temporary or interim basis for the purpose of facilitating  the acquisition
of such  equipment or the  completion of manufacture of the equipment or for any
other purpose  related to the business of the Company,  provided,  however that:
(i) the transaction is in the best interest of the Company;  (ii) such equipment
is  purchased  by the Company for a purchase  price no greater  than the cost of
such  equipment  to ATEL or  affiliate  (including  any  out-of-pocket  carrying
costs),  except for  compensation  permitted by the Operating  Agreement;  (iii)
there is no difference  in interest  terms of the loans secured by the equipment
at the time  acquired by ATEL or affiliate and the time acquired by the Company;
(iv)  there  is no  benefit  arising  out of  such  transaction  to  ATEL or its
affiliate  apart from the  compensation  otherwise  permitted  by the  Operating
Agreement;  and (v) all income  generated by, and all expenses  associated with,
equipment so acquired shall be treated as belonging to the Company.

The Company currently has available adequate reserves to meet its immediate cash
requirements,  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.  ATEL  envisions  no such  requirements  for  operating
purposes.

In 1999,  the Company  established  a $70 million  receivables  funding  program
(which was subsequently  increased to $125 million) with a receivables financing
company  that issues  commercial  paper rated A1 from  Standard and Poors 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  provides for  borrowing at a variable  interest  rate and
requires  the  Managing  Member on behalf of 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. The Managing Member
believes that this program allows the Company to avail itself of lower cost debt
than that available for individual  non-recourse debt transactions.  The program
expires as to new borrowings in April 2002.

See Item 7a and Note 5 to the financial  statements for  additional  information
regarding this program and related interest rate swaps.

It is the intention of the Company to use the receivables funding program as its
primary source of debt  financing.  The Company will continue to use its sources
of  non-recourse  secured debt  financing on a  transaction  basis as a means of
mitigating credit risk.

ATEL expects that aggregate  borrowings in the future will be approximately  50%
of aggregate  equipment cost. In any event, the Operating  Agreement limits such
borrowings to 50% of the total cost of equipment, in aggregate.

See Note 4 to the financial  statements  for  additional  information  regarding
non-recourse debt.

The  Company  commenced  regular   distributions,   based  on  cash  flows  from
operations,  beginning  with the  month of  January  1999.  See Item 5 and 6 for
additional information regarding distributions.

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



                                       8
<PAGE>

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

Cash Flows

     2001 vs. 2000:

In 2001,  operating  lease rents were the primary source of cash flows.  In both
2001 and 2000, it was the Company's primary source of cash from operations.

Sources of cash from investing  activities  consisted of the proceeds from sales
of lease  assets and cash flows from direct  financing  leases.  In 2001,  sales
proceeds  consisted largely of the proceeds from the sale of a fleet of railroad
box cars. There was no similar sale in 2000.

Financing  sources of cash in 2001 consisted of borrowings on the line of credit
and the proceeds of long-term debt. The Company's offering was concluded in 2000
and,  therefore,  there were no  offering  proceeds  and  related  costs in 2001
comparable to those in 2000.

     2000 vs. 1999:

In 2000 and 1999,  the Company's  primary  sources of cash were various types of
debt proceeds and the proceeds of its public offering of Units.

The primary source of cash from  operating  activities in both 2000 and 1999 was
operating lease rents.

Rents from direct financing leases was the only significant  source of cash from
investing  activities in either 2000 or in 1999. In both years,  uses of cash in
investing activities consisted primarily of purchases of assets on operating and
direct  financing  leases.  Cash  was  also  used to pay  initial  direct  costs
associated with those leases.

In 2000 and 1999, the primary  source of cash from financing  activities was the
proceeds of the  Company's  public  offering.  Proceeds  from  non-recourse  and
long-term  debt and  borrowings  under the line of credit also  provided cash in
2000 and 1999. Cash provided by financing  activities was used to purchase lease
assets.

Results of Operations

As of January 13,  1999,  subscriptions  for the minimum  amount of the offering
($1,200,000) had been received and accepted by the Company. As of that date, the
Company  commenced  operations  in its primary  business  (leasing  activities).
Because of the timing of the  commencement  of operations  and the fact that the
initial  portfolio  acquisitions were not been completed until 2001, the results
of operations in 2001, 2000 and 1999 are not expected to be comparable to future
periods.  After the Company's public offering and its initial asset  acquisition
stage terminate, the results of operations are expected to change significantly.

Substantially   all   employees  of  ATEL  track  time  incurred  in  performing
administrative  services on behalf of the Company.  ATEL 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.

     2001 vs. 2000:

In 2001,  operations  resulted in net income of  $132,672  compared to a loss of
$2,305,631 in 2000.  Operating lease rents increased  substantially  compared to
2000 as a result of acquisitions in 2000 and in 2001. This was largely offset by
increased  depreciation  expense  associated with the  acquisitions and interest
expense on the additional debt that was used to finance them.



                                       9
<PAGE>

Income  increased for the most part as a result of an increase in the amounts of
gains  realized  on the sales of assets in 2001  compared  to 2000.  These gains
increased by $1,799,839 compared to 2000.

     2000 vs. 1999:

Operations  in 2000  resulted in a net loss of  $2,305,631.  Operations  in 1999
resulted  in net  income  of  $438,835.  Operations  in future  periods  are not
expected to be comparable to those in 2000 and 1999.

Revenues from operating leases and direct finance leases increased significantly
in 2000 compared to 1999. These increases were the result of asset  acquisitions
over the last two years.  Revenues are expected to increase  again in 2001,  but
not as dramatically as in 2000.

Depreciation expense also increased as a result of the purchases of lease assets
in 2000 and 1999.

Average  debt  balances  increased  in 2000  compared  to 1999.  This led to the
increase in interest  expense  compared to 1999.  The  proceeds of the debt were
used to acquire additional lease assets.

Derivative Financial Instruments

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards ("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, and by SFAS No. 138, issued in June 2000.

SFAS No. 133, as amended,  requires the Company to recognize all  derivatives as
either assets or liabilities in the balance sheet and measure 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.

The Company adopted SFAS No. 133, as amended, on January 1, 2001. Upon adoption,
the Company recorded interest rate swap hedging instruments at fair value in the
balance sheet and  recognized  the  offsetting  gains or losses  reported in net
income  or  other  comprehensive  income,  as  appropriate.  See  Note  5 to the
financial statements for additional information.

Recent Accounting Pronouncement

In August 2001, the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  144,  Accounting  for the  Impairment  or
Disposal of Long-Lived Assets (SFAS 144), which addresses  financial  accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No.  121,  Accounting  for the  Impairment  of  Long-Lived  Assets  and for
Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions
of APB Opinion No. 30,  Reporting the Results of Operations  for a disposal of a
segment of a business.  SFAS 144 is effective for fiscal years  beginning  after
December 15, 2001, with earlier application  encouraged.  The Company expects to
adopt SFAS 144 as of January 1, 2002 and it does not expect that the adoption of
the Statement will have a significant impact on the Company's financial position
and results of operations.


Item 7a.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

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



                                       10
<PAGE>

In general,  the Company manages its exposure to interest rate risk by obtaining
fixed rate debt. The fixed rate debt is structured so as to match the cash flows
required  to service  the debt to the  payment  streams  under  fixed rate lease
receivables.  The  payments  under the leases  are  assigned  to the  lenders in
satisfaction of the debt. Furthermore, the Company has historically been able to
maintain  a stable  spread  between  its cost of funds and lease  yields in both
periods  of  rising  and  falling  interest  rates.  Nevertheless,  the  Company
frequently funds leases with its floating rate line of credit and is, therefore,
exposed to interest  rate risk until fixed rate  financing is  arranged,  or the
floating  rate line of credit is repaid.  As of  December  31,  2001,  there was
$2,500,000  outstanding  on the floating  rate line of credit and the  effective
interest rates of the borrowings ranged from 3.93% to 3.9325%.

Also, as described in the caption "Capital Resources and Liquidity," the Company
entered  into a  receivables  funding  facility in 1999.  Since  interest on the
outstanding balances under the facility varies, the Company is exposed to market
risks associated with changing  interest rates. To hedge its interest rate risk,
the  Company  enters into  interest  rate swaps  which  effectively  convert the
underlying interest characteristic on the facility from floating to fixed. Under
the swap agreements, the Company makes or receives variable interest payments to
or  from  the  counterparty  based  on a  notional  principal  amount.  The  net
differential  paid or received by the Company is  recognized as an adjustment to
interest expense related to the facility  balances.  The amount paid or received
represents  the  difference  between the  payments  required  under the variable
interest  rate  facility  and the  amounts  due under the  facility at the fixed
(hedged) interest rate. As of December 31, 2001, borrowings on the facility were
$85,369,000 and the associated  variable interest rate was 2.0624%.  The average
fixed interest rate achieved with the swap agreements was 6.889% at December 31,
2001.

In general,  these swap  agreements  eliminate the Company's  interest rate risk
associated  with variable  interest  rate  borrowings.  However,  the Company is
exposed to and manages credit risk associated  with the  counterparty by dealing
only with institutions it considers  financially sound. If these agreements were
not in place, based on the Company's facility borrowings at December 31, 2001, a
hypothetical 1.00% increase or decrease in market interest rates, would increase
or decrease  the  Company's  2002  variable  interest  expense by  approximately
$745,000.

See the Notes to the financial statements for additional information.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the  Report  of  Independent  Auditors,  Financial  Statements  and Notes to
Financial Statements attached hereto at pages 12 through 27.



                                       11
<PAGE>





                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS



The Members
ATEL Capital Equipment Fund VIII, LLC

We have audited the accompanying  balance sheets of ATEL Capital  Equipment Fund
VIII, LLC (Company) as of December 31, 2001 and 2000, and the related statements
of operations,  changes in members' capital and cash flows for each of the three
years in the period ended December 31, 2001. These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of ATEL Capital  Equipment Fund
VIII,  LLC at December 31, 2001 and 2000,  and the results of its operations and
its cash flows for each of the three  years in the  period  ended  December  31,
2001, in conformity with accounting  principles generally accepted in the United
States.

                                                           /s/ ERNST & YOUNG LLP

San Francisco, California
February 1, 2002





                                       12
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                                 BALANCE SHEETS

                           DECEMBER 31, 2001 AND 2000


                                     ASSETS

                                                   2001              2000
                                                   ----              ----
Cash and cash equivalents                     $      2,269,137  $     2,484,785
Accounts receivable, net of allowance for
   doubtful accounts of
   $41,365 in 2001 and none in 2000                  3,256,527        5,339,569
Other assets                                            85,000          115,000
Investments in equipment and leases                178,811,010      190,893,298
                                             ------------------ ----------------
Total assets                                     $ 184,421,674    $ 198,832,652
                                             ================== ================


                        LIABILITIES AND MEMBERS' CAPITAL


Long-term debt                                    $ 85,369,000     $ 86,668,000
Non-recourse debt                                    6,014,964        7,325,744
Line of credit                                       2,500,000                -
Accounts payable:
   Managing Member                                           -          695,548
   Other                                               649,538          485,895

Accrued interest payable                                76,980          267,823

Interest rate swap contracts                         4,700,622                -

Unearned operating lease income                      1,748,618        2,051,141
                                             ------------------ ----------------
Total liabilities                                  101,059,722       97,494,151

Members' capital                                    83,361,952      101,338,501
                                             ------------------ ----------------
Total liabilities and members' capital           $ 184,421,674    $ 198,832,652
                                             ================== ================


                             See accompanying notes.


                                       13
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                            STATEMENTS OF OPERATIONS

                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


<TABLE>
<CAPTION>
Revenues:                                                  2001              2000              1999
                                                           ----              ----              ----
   Leasing activities:
<S>                                                      <C>                <C>               <C>
      Operating leases                                   $ 40,911,071       $ 29,965,693      $ 8,212,649
      Direct financing leases                                 920,026            810,501          347,764
      Gain on sales of assets                               1,801,292              1,453            3,017
Interest                                                      131,575            175,029           95,948
Other                                                          30,133             94,809            1,275
                                                     ----------------- ------------------ ----------------
                                                           43,794,097         31,047,485        8,660,653
Expenses:
Depreciation and amortization                              31,243,646         22,588,276        5,392,504
Interest expense                                            9,058,622          7,365,041        1,340,804
Asset management fees to Managing Member                    1,849,335          1,465,566          443,943
Administrative cost reimbursements to Managing Member         924,375          1,408,523          767,386
Professional fees                                             215,450            127,345          155,743
Provision for doubtful accounts                                82,615                  -                -
Other                                                         287,382            398,365          121,438
                                                     ----------------- ------------------ ----------------
                                                           43,661,425         33,353,116        8,221,818
                                                     ----------------- ------------------ ----------------
Net income (loss)                                           $ 132,672       $ (2,305,631)       $ 438,835
                                                     ================= ================== ================

Net income (loss):
   Managing Member                                        $ 1,004,916          $ 795,009        $ 199,415
   Other members                                             (872,244)        (3,100,640)         239,420
                                                     ----------------- ------------------ ----------------
                                                            $ 132,672       $ (2,305,631)       $ 438,835
                                                     ================= ================== ================

Net (loss) income per Limited Liability
   Company Unit (other members)                               $ (0.06)           $ (0.29)          $ 0.06
Weighted average number of Units outstanding               13,570,188         10,634,792        4,025,294
</TABLE>















                             See accompanying notes.


                                       14
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                    STATEMENT OF CHANGES IN MEMBERS' CAPITAL

                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


<TABLE>
<CAPTION>
                                                                                                    Accumulated
                                                                                                       Other
                                                                                                   Comprehensive
                                                     Other Members                 Managing           Income
                                                     -------------
                                                 Units           Amount             Member            (Loss)             Total
                                                 -----           ------             ------            ------             -----
<S>                                             <C>               <C>                <C>                <C>              <C>
Balance December 31, 1998                                50       $      500              $ 100                $ -      $       600
Capital contributions                             7,744,276       77,442,760                  -                  -       77,442,760
Less selling commissions to affiliates                            (7,357,062)                 -                  -       (7,357,062)
Other syndication costs to affiliates                             (3,734,924)                 -                  -       (3,734,924)
Distributions to Managing Member                                           -           (199,515)                 -         (199,515)
Distributions to other members
   ($0.61 per Unit)                                               (2,460,684)                 -                  -       (2,460,684)
Net income                                                           239,420            199,415                             438,835
                                            ---------------- ----------------  ----------------- ------------------ ----------------
Balance December 31, 1999                         7,744,326       64,130,010                  -                  -       64,130,010
Capital contributions                             5,825,862       58,258,620                  -                  -       58,258,620
Less selling commissions to affiliates                            (5,534,569)                 -                  -       (5,534,569)
Other syndication costs to affiliates                             (2,619,534)                 -                  -       (2,619,534)
Distributions to Managing Member                                           -           (795,009)                           (795,009)
Distributions to other members
   ($0.92 per Unit)                                               (9,795,386)                 -                  -       (9,795,386)
Net (loss) income                                                 (3,100,640)           795,009                  -       (2,305,631)
                                            ---------------- ----------------  ----------------- ------------------ ----------------
Balance December 31, 2000                        13,570,188      101,338,501                  -                  -      101,338,501
Distributions to Managing Member                                           -         (1,004,916)                         (1,004,916)
Distributions to other members
   ($0.91 per Unit)                                              (12,403,683)                 -                  -      (12,403,683)
Cumulative effect of change in
   accounting principle at
   January 1, 2001                                                         -                  -           (821,196)        (821,196)
Unrealized decrease in value of
   interest rate swap contracts                                            -                  -         (3,879,426)      (3,879,426)
Net (loss) income                                                   (872,244)         1,004,916                  -          132,672
                                            ---------------- ----------------  ----------------- ------------------ ----------------
Balance December 31, 2001                        13,570,188      $88,062,574                $ -       $ (4,700,622)    $ 83,361,952
                                            ================ ================  ================= ================== ================
</TABLE>


                             See accompanying notes.


                                       15
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                            STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


<TABLE>
<CAPTION>
                                                                     2001              2000              1999
                                                                     ----              ----              ----
Operating activities:
<S>                                                                  <C>                <C>               <C>
Net income (loss)                                                     $ 132,672       $ (2,305,631)       $ 438,835
Adjustments to reconcile net income (loss) to cash provided by
   operating activities:
   Gain on sales of assets                                           (1,801,292)            (1,453)          (3,017)
   Depreciation and amortization                                     31,243,646         22,588,276        5,392,504
   Provision for doubtful accounts                                       82,615                  -                -
   Changes in operating assets and liabilities:
      Accounts receivable                                             2,000,427         (3,214,783)      (2,124,786)
      Other assets                                                       30,000             30,000         (145,000)
      Accounts payable, Managing Member                                (695,548)          (115,739)         811,287
      Accounts payable, other                                           163,643            484,772            1,123
      Accrued interest                                                 (190,843)           153,221          114,602
      Unearned lease income                                            (302,523)           793,444        1,257,697
                                                               ----------------- ------------------ ----------------
Net cash provided by operating activities                            30,662,797         18,412,107        5,743,245
                                                               ----------------- ------------------ ----------------

Investing activities:
Purchases of equipment on operating leases                          (26,556,373)       (66,010,813)    (135,053,806)
Purchases of equipment on direct financing leases                      (810,271)        (9,367,277)      (9,992,009)
Reduction of net investment in direct financing leases                2,806,236          2,154,474          951,549
Payment of initial direct costs to Managing Member                     (147,721)          (844,058)        (753,607)
Proceeds from sales of assets                                         7,348,063              7,761           38,178
                                                               ----------------- ------------------ ----------------
Net cash used in investing activities                               (17,360,066)       (74,059,913)    (144,809,695)
                                                               ----------------- ------------------ ----------------

Financing activities:
Borrowings under line of credit                                      23,556,335         28,555,729       76,641,662
Repayments of line of credit                                        (21,056,335)       (36,055,729)     (69,141,662)
Proceeds of other long-term debt                                     19,000,000         34,900,000       65,000,000
Repayments of other long-term debt                                  (20,299,000)       (12,906,000)        (326,000)
Distributions to other members                                      (12,403,683)        (9,795,386)      (2,460,684)
Distributions to Managing Member                                     (1,004,916)          (795,009)        (199,515)
Repayments of non-recourse debt                                      (1,310,780)        (2,186,487)               -
Proceeds of non-recourse debt                                                 -          2,337,614        7,174,617
Capital contributions received                                                -         58,258,620       77,442,760
Payment of selling commissions and other syndication costs to
   Managing Member                                                            -         (8,154,103)     (11,091,986)
                                                               ----------------- ------------------ ----------------
Net cash (used in) provided by financing activities                 (13,518,379)        54,159,249      143,039,192
                                                               ----------------- ------------------ ----------------

Net (decrease) increase in cash and cash equivalents                   (215,648)        (1,488,557)       3,972,742
Cash and cash equivalents at beginning of year                        2,484,785          3,973,342              600
                                                               ----------------- ------------------ ----------------
Cash and cash equivalents at end of year                            $ 2,269,137        $ 2,484,785      $ 3,973,342
                                                               ================= ================== ================

Supplemental disclosures of cash flow information:
Cash paid during the year for interest                              $ 9,249,465        $ 6,571,597      $ 1,340,804
                                                               ================= ================== ================
</TABLE>
                             See accompanying notes.


                                       16
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


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 for the purpose of acquiring  equipment
to engage in equipment  leasing and sales  activities.  The Company may continue
until  December 31, 2019.  The Managing  Member of the Company is ATEL Financial
Services LLC (ATEL), a California corporation.  Prior to converting to a limited
liability  company  structure,  the Managing  Member was formerly  known as ATEL
Financial  Corporation.  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.

On January 13, 1999,  subscriptions  for the minimum  number of Units  (120,000,
$1,200,000) had been received. On that date, the Company commenced operations in
its primary business (leasing activities).

The Company's  business  consists of leasing  various types of equipment.  As of
December 31, 2001,  the original  terms of the leases  ranged from six months to
nine years.

Pursuant to the Operating Agreement,  the Managing Member receives  compensation
and  reimbursements for services rendered on behalf of the Company (see Note 6).
The  Managing  Member is required to  maintain  in the Company  reasonable  cash
reserves for working capital, the repurchase of Units and contingencies.


2.  Summary of significant accounting policies:

Equipment on operating leases:

Equipment on operating leases is stated at cost.  Depreciation is being provided
by use of the  straight-line  method over the terms of the related leases to the
equipment's estimated residual values at the end of the leases.

Revenues  from  operating  leases are  recognized  evenly  over the lives of the
related leases.

Direct financing leases:

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 income  portion of each  rental  payment  is  calculated  so as to
generate a constant rate of return on the net receivable outstanding.



                                       17
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


2.  Summary of significant accounting policies (continued):

Statements of cash flows:

For purposes of the Statements of Cash Flows, cash and cash equivalents includes
cash in banks and cash equivalent investments with original maturities of ninety
days or less.

Income taxes:

The Company  does not  provide for income  taxes since all income and losses are
the  liability of the  individual  members and are  allocated to the members for
inclusion in their individual tax returns.

The tax basis of the  Company's  net  assets  and  liabilities  varies  from the
amounts presented in these financial statements (unaudited):

                                                 2001              2000
                                                 ----              ----
  Financial statement basis of net assets      $ 83,361,952      $ 101,338,501
  Tax basis of net assets                        50,905,460         79,812,598
                                           ----------------- ------------------
  Difference                                   $ 32,456,492       $ 21,525,903
                                           ================= ==================

The  primary  differences  between  the tax basis of net assets and the  amounts
recorded in the financial statements are the result of differences in accounting
for syndication costs and differences  between the depreciation  methods used in
the financial statements and the Company's tax returns.

The following  reconciles the net income reported in these financial  statements
to the loss reported on the Company's federal tax return (unaudited):

<TABLE>
<CAPTION>
                                                 2001              2000              1999
                                                 ----              ----              ----
<S>                                           <C>                <C>              <C>
Net (loss) income per financial statements        $ 132,672       $ (2,305,631)       $ 438,835
Adjustment to depreciation expense              (19,612,115)       (29,978,571)     (16,401,065)
Adjustments to lease revenues                     3,980,905          3,265,841        2,343,563
                                           ----------------- ------------------ ----------------
Net loss per federal tax return               $ (15,498,538)     $ (29,018,361)   $ (13,618,667)
                                           ================= ================== ================
</TABLE>

Per unit data:

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








                                       18
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


2.  Summary of significant accounting policies (continued):

Credit risk:

Financial instruments which potentially subject the Company to concentrations of
credit risk  include cash and cash  equivalents  and  accounts  receivable.  The
Company   places  its  cash  deposits  and  temporary  cash   investments   with
creditworthy,  high quality  financial  institutions.  The concentration of such
deposits and temporary  cash  investments  is not deemed to create a significant
risk to the Company.  Accounts receivable  represent amounts due from lessees in
various  industries,  related to  equipment on  operating  and direct  financing
leases.  See Note 8 for a description  of lessees by industry as of December 31,
2001, 2000 and 1999.

Basis of presentation:

The accompanying  financial  statements as of December 31, 2001 and 2000 and for
the three years ended  December 31, 2001 have been prepared in  accordance  with
accounting  principles  generally  accepted in the United States.  Certain prior
year amounts have been reclassified to conform to the current year presentation.

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 primarily relate to the determination of residual values at the end of
the lease term.

Reserve for losses and impairments:

The Company  maintains a reserve on its  investments in equipment and leases for
losses and  impairments  which are  inherent in the  portfolio as of the balance
sheet date. The Managing Member's evaluation of the adequacy of the allowance is
a judgmental  estimate that is based on a review of individual leases, past loss
experience and other factors.  While the Managing  Member believes the allowance
is adequate to cover known losses, it is reasonably  possible that the allowance
may change in the near term.  However,  such  change is not  expected  to have a
material  effect on the financial  position or future  operating  results of the
Company.  It is the Company's policy to charge off amounts which, in the opinion
of the Managing  Member,  are not recoverable from lessees or the disposition of
the collateral.

Derivative financial instruments:

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards ("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, and by SFAS No. 138, issued in June 2000.

SFAS No. 133, as amended,  requires the Company to recognize all  derivatives as
either assets or liabilities in the balance sheet and measure 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 and recognized
the  offsetting  gains or losses as  adjustments to be reported in net income or
other comprehensive income, as appropriate.



                                       19
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


2.  Summary of significant accounting policies (continued):

The Company  utilizes cash flow hedges  comprised of interest rate swaps (hedges
of variable rate interest  bearing debt  instruments).  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
dedesignated 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).

Credit exposure from derivative financial  instruments 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.

Recent accounting pronouncement:

In August 2001, the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  144,  Accounting  for the  Impairment  or
Disposal of Long-Lived Assets (SFAS 144), which addresses  financial  accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No.  121,  Accounting  for the  Impairment  of  Long-Lived  Assets  and for
Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions
of APB Opinion No. 30,  Reporting the Results of Operations  for a disposal of a
segment of a business.  SFAS 144 is effective for fiscal years  beginning  after
December 15, 2001, with earlier application  encouraged.  The Company expects to
adopt SFAS 144 as of January 1, 2002 and it does not expect that the adoption of
the Statement will have a significant impact on the Company's financial position
and results of operations.




                                       20
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


3.  Investments in equipment and leases:

The Company's investments in equipment and leases consist of the following:

<TABLE>
<CAPTION>
                                                                                 Depreciation
                                                                                  Expense or         Reclass-
                                             December 31,                        Amortization      ifications or     December 31,
                                                 2000           Additions         of Leases        Dispositions          2001
                                                 ----           ---------         ---------        ------------          ----
<S>                                           <C>                <C>              <C>                <C>              <C>
Net investment in operating leases            $ 173,395,247      $26,556,373      $ (30,867,668)     $ (11,525,795)   $ 157,558,157
Net investment in direct financing leases        16,253,263          810,271         (2,806,236)           (75,624)      14,181,674
Assets held for sale or lease                             -                -                  -          6,055,819        6,055,819
Initial direct costs, net of accumulated
   amortization of $730,615 in 2001 and
   $354,638 in 2000                               1,244,788          147,721           (375,978)            (1,171)       1,015,360
                                            ---------------- ----------------  ----------------- ------------------ ----------------
                                              $ 190,893,298      $27,514,365      $ (34,049,882)      $ (5,546,771)   $ 178,811,010
                                            ================ ================  ================= ================== ================
</TABLE>

Operating leases:

Property on operating leases consists of the following:

<TABLE>
<CAPTION>
                                                                     Reclass-
                               December 31,                       ifications or      December 31,
                                   2000           Additions        Dispositions          2001
                                   ----           ---------        ------------          ----
<S>                            <C>                 <C>                  <C>         <C>
Manufacturing                  $   48,027,279      $ 1,190,814          $ (31,130)  $     49,186,963
Aircraft                           31,614,874        6,920,565                  -         38,535,439
Transportation, rail               39,634,498       16,523,854        (18,532,075)        37,626,277
Transportation, other              23,583,472         (145,316)                 -         23,438,156
Containers                         21,228,750                -                  -         21,228,750
Natural gas compressors            14,045,134            6,467                  -         14,051,601
Materials handling                  5,858,081        1,487,451            317,025          7,662,557
Marine vessel                       4,314,031                -                  -          4,314,031
Other                              12,711,963          572,538           (541,448)        12,743,053
                              ---------------- ----------------  ----------------- ------------------
                                  201,018,082       26,556,373        (18,787,628)       208,786,827
Less accumulated depreciation     (27,622,835)     (30,867,668)         7,261,833        (51,228,670)
                              ---------------- ----------------  ----------------- ------------------
                               $ 173,395,247    $   (4,311,295)   $   (11,525,795)  $   157,558,157
                              ================ ================  ================= ==================
</TABLE>

Direct financing leases:

As of December 31, 2001 and 2000, investment in direct financing leases consists
of 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 December
31, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                   2001              2000
                                                                   ----              ----
<S>                                                           <C>               <C>
Total minimum lease payments receivable                       $    12,119,703   $     15,045,821
Estimated residual values of leased equipment (unguaranteed)        4,785,886          4,810,693
                                                             ----------------- ------------------
Investment in direct financing leases                              16,905,589         19,856,514
Less unearned income                                               (2,723,915)        (3,603,251)
                                                             ----------------- ------------------
Net investment in direct financing leases                     $    14,181,674   $     16,253,263
                                                             ================= ==================
</TABLE>

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


                                       21
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


3.  Investments in equipment and leases (continued):

At December 31, 2001, the aggregate amounts of future minimum lease payments are
as follows:

                                           Direct
       Year ending     Operating         Financing
      December 31,      Leases             Leases             Total
      ------------      ------             ------             -----
              2002   $  31,675,122     $      3,260,750  $     34,935,872
              2003       25,198,860          2,948,178         28,147,038
              2004       15,739,916          1,989,108         17,729,024
              2005       11,389,500          1,901,705         13,291,205
              2006        7,222,444          1,677,533          8,899,977
        Thereafter        9,209,491            342,429          9,551,920
                    ----------------  ----------------- ------------------
                     $100,435,333      $    12,119,703   $   112,555,036
                    ================  ================= ==================

At December 31, 2001, there were no commitments to purchase lease assets.


4.  Non-recourse debt:

At December 31, 2001,  non-recourse  debt consists of notes payable to financial
institutions.  The notes are due in varying quarterly and semi-annual  payments.
Interest on the notes is at fixed rates ranging from 7.98% to 10.00%.  The notes
are secured by assignments of lease payments and pledges of assets.  At December
31, 2001,  the carrying value of the pledged  assets is  $19,140,104.  The notes
mature from 2002 through 2006.

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

     Year ending
     December 31,       Principal        Interest            Total
              2002           312,109          515,608          $ 827,717
              2003           397,915          483,617            881,532
              2004         4,425,556          170,437          4,595,993
              2005           418,256           77,737            495,993
              2006           461,128           34,866            495,994
                     ---------------- ----------------  -----------------
                         $ 6,014,964      $ 1,282,265        $ 7,297,229
                     ================ ================  =================







                                       22
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


5.  Other long-term debt:

In 1999, the Company entered into a $70 million receivables funding program (the
Program) (which was  subsequently  increased to $125 million) with a receivables
financing  company that issues  commercial  paper rated A1 by Standard and Poors
and  P1 by  Moody's  Investor  Services.  Under  the  Program,  the  receivables
financing  company  receives  a  general  lien  against  all  of  the  otherwise
unencumbered  assets of the Company.  The Program  provides  for  borrowing at a
variable  interest rate (2.0624% at December 31, 2001),  based on an index of A1
commercial paper.

The Program  requires the Managing Member on behalf of the Company to enter into
various interest rate swaps with a financial  institution  (also rated A1/P1) to
manage interest rate exposure  associated with variable rate  obligations  under
the Program by effectively  converting the variable rate debt to fixed rates. As
of  December  31,  2001,  the Company  receives  or pays  interest on a notional
principal of $85,369,000,  based on the difference between nominal rates ranging
from 4.35% to 7.72% and the variable rate under the Program. No actual borrowing
or lending is involved.  The termination of the swaps 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.

Borrowings under the Program are as follows:

                          Original          Balance        Payment Rate on
                           Amount        December 31,      Interest Swap
       Date Borrowed      Borrowed           2001            Agreement
       -------------      --------           ----            ---------
        11/11/1999        $ 20,000,000      $10,250,000        6.84%
        12/21/1999          20,000,000       16,646,000        7.41%
        12/24/1999          25,000,000       14,694,000        7.44%
        4/17/2000            6,500,000        4,870,000        7.45%
        4/28/2000            1,900,000        1,107,000        7.72%
         8/3/2000           19,000,000       15,132,000        7.50%
        10/31/2000           7,500,000        5,914,000        7.13%
        1/29/2001            8,000,000        6,756,000        5.91%
         6/1/2001            2,000,000        1,585,000        5.04%
         9/1/2001            9,000,000        8,415,000        4.35%
                       ---------------- ----------------
                         $ 118,900,000      $85,369,000
                       ================ ================

The long-term  debt  borrowings  mature from 2002 through 2009.  Future  minimum
principal payments of long-term debt and annual swap notional  reductions are as
follows:

<TABLE>
<CAPTION>
                  Swap Notional /                                          Rates on
 Year ending           Debt                                              Interest Swap
 December 31,        Principal        Interest            Total           Agreements*
 ------------        ---------        --------            -----           -----------
<S>        <C>       <C>               <C>               <C>            <C>      <C>
           2002      $ 23,297,000      $ 5,139,613       $ 28,436,613   6.885% - 6.921%
           2003        21,173,000        3,605,271         24,778,271   6.916% - 6.989%
           2004        14,771,000        2,363,448         17,134,448   6.986% - 7.079%
           2005        11,079,000        1,487,319         12,566,319   7.076% - 7.286%
           2006         6,830,000          877,080          7,707,080   7.299% - 7.309%
           2007         4,529,000          448,677          4,977,677   7.299% - 7.334%
           2008         3,013,000          183,173          3,196,173   7.333% - 7.410%
           2009           677,000           12,616            689,616       7.410%
                  ---------------- ----------------  -----------------
                     $ 85,369,000      $14,117,197       $ 99,486,197
                  ================ ================  =================
</TABLE>


                                       23
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


5.  Other long-term debt (continued):

* Represents the range of monthly weighted average fixed interest rates paid for
amounts  maturing in the particular year. The  receive-variable  rate portion of
the swap represents commercial paper rates (2.0624% at December 31, 2001).

In 2001,  the net effect of the  interest  rate swaps was to  increase  interest
expense by $2,166,018.


6.  Related party transactions:

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

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

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

The  Managing   Member   and/or   affiliates   earned  fees,   commissions   and
reimbursements, pursuant to the Limited Liability Company Agreement as follows:

<TABLE>
<CAPTION>
                                                                             2001              2000              1999
                                                                             ----              ----              ----
<S>                                                                         <C>                <C>                <C>
Asset management fees to Managing Member                                    $ 1,849,335        $ 1,465,566        $ 443,943
Administrative costs reimbursed to Managing Member                              924,375          1,408,523          767,386
Initial direct costs paid to Managing Member                                    147,721            844,058          753,607
Selling commissions (equal to 9.5% of the selling price of the Limited
   Liability Company units, deducted from Other Members' capital)                     -          5,534,569        7,357,062
Reimbursement of other syndication costs to Managing Member                           -          2,619,534        3,734,924
                                                                       ----------------- ------------------ ----------------
                                                                            $ 2,921,431       $ 11,872,250     $ 13,056,922
                                                                       ================= ================== ================
</TABLE>


7.  Members' capital:

As of December  31,  2001,  13,570,188  Units were issued and  outstanding.  The
Company is authorized  to issue up to 15,000,000  Units in addition to the Units
issued to the initial members (50 Units).

The  Company's Net Income,  Net Losses,  and  Distributions  are to be allocated
92.5% to the Members and 7.5% to ATEL.  In  accordance  with the terms of the of
Operating Agreement,  additional  allocations of income was made to the Managing
Member in 2001,  2000 and 1999.  The amount  allocated  was  determined so as to
bring the Managing Member's ending capital account balance to zero at the end of
each year.



                                       24
<PAGE>

                     ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


8.  Concentration of credit risk and major customers:

The Company leases  equipment to lessees in diversified  industries.  Leases are
subject to the Managing Member's credit committee review. The leases provide for
the return of the equipment upon default.

As of December 31, 2001, 2000 and 1999 there were  concentrations  (greater than
10%) of equipment  leased to lessees in certain  industries  (as a percentage of
total equipment cost) as follows:

                                          2001     2000    1999
                                          ----     ----    ----
   Transportation, rail                    18%     20%      27%
   Transportation, air                     17%     15%      17%
   Manufacturing, other                    15%     15%      15%
   Transportation, other                   12%     13%       *
   Transportation, containers               *      10%      15%
   Manufacturing, electronics               *      10%       *

   * Less than 10%

During 2001, one customer  comprised 16% of the Company's  revenues from leases.
During 2000, one customer  comprised 10% of the Company's  revenues from leases.
During 1999,  four  customers  comprised  31%, 12%, 12% and 10% of the Company's
revenues from leases.


9.  Line of credit:

The Company  participates with the Managing Member and certain of its affiliates
in a  $62,000,000  revolving  line of credit with a financial  institution  that
includes certain  financial  covenants.  The line of credit expires on April 12,
2002.  The  Managing  Member is currently  negotiating  a new line of credit and
anticipates  that the current  line of credit  will either be replaced  upon its
expiration or that the current line of credit will be extended until the new one
is  finalized.  As of December 31, 2001,  borrowings  under the facility were as
follows:

<TABLE>
<CAPTION>
<S>                                                                                               <C>
Amount  borrowed by the Company under the acquisition facility                                    $     2,500,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
   facility                                                                                            15,100,000
                                                                                                 ----------------
Total borrowings under the acquisition facility                                                        17,600,000
Amounts borrowed by the Managing Member and its sister corporation under the warehouse facility *      10,999,501
                                                                                                 ----------------
Total outstanding balance                                                                         $   28,599,501
                                                                                                 ================

Total available under the line of credit                                                          $   62,000,000
Total outstanding balance                                                                            (28,599,501)
                                                                                                 ----------------
Remaining availability                                                                            $   33,400,499
                                                                                                 ================
</TABLE>

*  (Unaudited)  The  carrying  value of the  assets  pledged as  collateral  and
financed at December 31, 2001 was $17,955,014.

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



                                       25
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


9.  Line of credit (continued):

The Company borrowed $23,556,335,  $28,555,729 and $76,641,662 under the line of
credit  during  2001,  2000 and 1999,  respectively.  Repayments  on the line of
credit were $21,056,335, $36,055,729 and $69,141,662 during 2001, 2000 and 1999,
respectively. At December 31, 2001, $2,500,000 remained outstanding. Interest on
the line of credit is based on either  the  thirty  day LIBOR rate or the bank's
prime rate.  The  effective  interest  rate on  borrowings  at December 31, 2001
ranged from 3.92% to 3.93%.

The credit agreement  includes certain  financial  covenants  applicable to each
borrower.  The Company was in  compliance  with its covenants as of December 31,
2001.


10.  Fair value of financial instruments:

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial  instrument for which it is practicable to estimate that
value.

Cash and cash equivalents:

The carrying amount of cash and cash equivalents approximates fair value because
of the short-term maturity of these instruments.

Non-recourse debt:

The fair value of the Company's  non-recourse debt is estimated using discounted
cash flow analyses,  based on the Company's current incremental  borrowing rates
for similar types of borrowing  arrangements.  The  estimated  fair value of the
Company's non-recourse debt at December 31, 2001 is $6,103,611.

Other long-term debt:

The carrying value of the Company's other long-term debt  approximates  its fair
value at December 31, 2001.

Line of credit:

The carrying amounts of the Company's variable rate line of credit  approximates
fair value.

Interest rate swaps:

The fair value of interest  rate swaps is  estimated  by  obtaining  independent
valuations  or  discounting  the fixed cash flows paid under each swap using the
rate at which the  Company  could  enter into new swaps of  similar  maturities.
Swaps are recorded on the balance sheet at fair value at December 31, 2001.



                                       26
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


11.  Other comprehensive income:

In  2001,  2000  and  in  1999,  other  comprehensive  income  consisted  of the
following:

<TABLE>
<CAPTION>
                                                                                     2001              2000              1999
                                                                                     ----              ----              ----
<S>                                                                                   <C>             <C>                 <C>
Net income (loss)                                                                     $ 132,672       $ (2,305,631)       $ 438,835
Other comprehensive income:
Cumulative effect of change in accounting principle at January 1, 2001                 (821,196)
Decrease in value of interest rate swap contracts during the year                    (3,879,426)                 -                -
                                                                               ----------------- ------------------ ----------------
Comprehensive net (loss) income                                                    $ (4,567,950)      $ (2,305,631)       $ 438,835
                                                                               ================= ================== ================
</TABLE>




                                       27
<PAGE>

Item 9. CHANGES IN AND  DISAGREEMENTS  WITH AUDITORS ON ACCOUNTING AND FINANCIAL
        DISCLOSURES

None


                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS

The registrant is a Limited Liability Company and, therefore, has no officers or
directors.

All of the  outstanding  capital  stock  of ATEL  Financial  Services  LLC  (the
Managing Member) is held by ATEL Capital Group ("ACG"), a holding company formed
to control ATEL and affiliated  companies.  The outstanding voting capital stock
of ATEL Capital Group is owned 5% by A. J. Batt and 95% by Dean Cash.

Each of ATEL Leasing Corporation  ("ALC"),  ATEL Equipment  Corporation ("AEC"),
ATEL  Investor  Services  ("AIS") and ATEL  Financial  Services LLC ("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.  ATEL
Securities  Corporation  ("ASC") is a wholly-owned  subsidiary of ATEL Financial
Services LLC.

The officers  and  directors of ATEL  Capital  Group and its  affiliates  are as
follows:

Dean L. Cash               Chairman of the Board of Directors of ACG, AFS, ALC,
                              AEC, AIS and ASC; President and Chief Executive
                              Officer of ACG, AFS and AEC

Paritosh K. Choksi         Director, Executive Vice President, Chief Operating
                              Officer and Chief Financial Officer of ACG, AFS,
                              ALC, AEC and AIS

Donald E. Carpenter        Vice President and Controller of ACG, AFS, ALC, AEC
                              and AIS; Chief Financial Officer of ASC

Vasco H. Morais            Senior Vice President, Secretary and General Counsel
                              for ACG, AFS, ALC, AIS and AEC

Dean L. Cash,  age 51, joined ATEL as director of marketing in 1980 and has been
a vice president since 1981,  executive vice president since 1983 and a director
since 1984.  He has been  President  and CEO since April 2001.  Prior to joining
ATEL,  Mr.  Cash was a  senior  marketing  representative  for  Martin  Marietta
Corporation, data systems division, from 1979 to 1980. From 1977 to 1979, he was
employed  by  General  Electric  Corporation,   where  he  was  an  applications
specialist in the medical systems division and a marketing representative in the
information  services division.  Mr. Cash was a systems engineer with Electronic
Data Systems from 1975 to 1977, and was involved in  maintaining  and developing
software  for  commercial  applications.  Mr.  Cash  received  a B.S.  degree in
psychology and mathematics in 1972 and an M.B.A.  degree with a concentration in
finance in 1975 from Florida State  University.  Mr. Cash is an arbitrator  with
the American Arbitration Association.

Paritosh K.  Choksi,  age 48,  joined  ATEL in 1999 as a  director,  senior vice
president  and its  chief  financial  officer.  He  became  its  executive  vice
president  and COO in April 2001.  Prior to joining  ATEL,  Mr. Choksi was chief
financial officer at Wink  Communications,  Inc. from 1997 to 1999. From 1977 to
1997, Mr. Choksi was with Phoenix American  Incorporated,  a financial  services
and management  company,  where he held various positions during his tenure, and
was senior vice president, chief financial officer and director when he left the
company.  Mr.  Choksi was involved in all  corporate  matters at Phoenix and was
responsible  for Phoenix's  capital  market needs.  He also served on the credit
committee  overseeing  all  corporate  investments,  including its venture lease
portfolio.  Mr. Choksi was a part of the executive  management team which caused
Phoenix's  portfolio to increase  from $50 million in assets to over $2 billion.
Mr. Choksi  received a bachelor of technology  degree in mechanical  engineering
from the Indian Institute of Technology,  Bombay; and an M.B.A.  degree from the
University of California, Berkeley.



                                       28
<PAGE>

Donald E. Carpenter, age 53, joined ATEL in 1986 as controller. Prior to joining
ATEL, Mr. Carpenter was an audit supervisor with Laventhol & Horwath,  certified
public accountants in San Francisco, California, from 1983 to 1986. From 1979 to
1983,  Mr.  Carpenter  was an  audit  senior  with  Deloitte,  Haskins  & Sells,
certified public accountants,  in San Jose,  California.  From 1971 to 1975, Mr.
Carpenter was a Supply Corp officer in the U. S. Navy. Mr. Carpenter  received a
B.S. degree in mathematics  (magna cum laude) from California State  University,
Fresno in 1971 and completed a second major in accounting in 1978. Mr. Carpenter
has been a California certified public accountant since 1981.

Vasco H. Morais, age 43, joined ATEL in 1989 as general counsel to provide legal
support in the  drafting  and  reviewing  of lease  documentation,  advising  on
general corporate law matters, and assisting on securities law issues. From 1986
to 1989,  Mr.  Morais was  employed  by the  BankAmeriLease  Companies,  Bank of
America's  equipment leasing  subsidiaries,  providing in-house legal support on
the  documentation  of  tax-oriented  and non-tax  oriented direct and leveraged
lease transactions, vendor leasing programs and general corporate matters. Prior
to the BankAmeriLease  Companies,  Mr. Morais was with the Consolidated  Capital
Companies in the corporate and securities legal department  involved in drafting
and reviewing  contracts,  advising on corporate law matters and  securities law
issues.  Mr.  Morais  received  a B.A.  degree  in 1982 from the  University  of
California in Berkeley,  a J.D.  degree in 1986 from Golden Gate  University Law
School and an M.B.A.  (Finance) in 1997 from Golden Gate University.  Mr. Morais
has been an active member of the State Bar of California since 1986.


Item 11.  EXECUTIVE COMPENSATION

The registrant is a Limited Liability Company and, therefore, has no officers or
directors.

Set forth hereinafter is a description of the nature of remuneration paid and to
be paid to ATEL and its  Affiliates.  The  amount of such  remuneration  paid in
2001,  2000 and 1999 is set forth in Item 8 of this  report  under  the  caption
"Financial Statements and Supplementary Data - Notes to the Financial Statements
- Related party  transactions,"  at Note 6 thereof,  which information is hereby
incorporated by reference.

Selling Commissions

The Company paid selling commissions in the amount of 9.5% of Gross Proceeds, as
defined, to ATEL Securities Corporation, an affiliate of ATEL.

Through December 31, 2000, $12,891,631 of such commissions had been paid to ATEL
or  its  affiliates.  Of  that  amount,  $11,050,485  was  re-allowed  to  other
broker/dealers. There are no further amounts to be paid.

Asset Management Fee

The Company will pay ATEL an Asset  Management Fee in an amount equal to 4.5% of
Operating Revenues,  which will include Gross Lease Revenues and Cash From Sales
or Refinancing.  The Asset  Management Fee will be paid on a monthly basis.  The
amount of the Asset  Management Fee payable in any year will be reduced for that
year to the extent it would otherwise  exceed the Asset Management Fee Limit, as
described below. The Asset Management Fee will be paid for services  rendered by
ATEL and its  Affiliates  in  determining  portfolio and  investment  strategies
(i.e.,  establishing and maintaining the composition of the Equipment  portfolio
as a whole and the Company's  overall debt structure) and generally  managing or
supervising the management of the Equipment.

ATEL will supervise performance of among others activities,  collection of lease
revenues,  monitoring  compliance by lessees with the lease terms, assuring that
Equipment  is  being  used  in  accordance   with  all   operative   contractual
arrangements,  paying operating expenses and arranging for necessary maintenance
and  repair  of  Equipment  in the  event a lessee  fails  to do so,  monitoring
property,  sales and use tax compliance and  preparation of operating  financial
data.  ATEL  intends  to  delegate  all or a portion of its duties and the Asset
Management  Fee to one or more of its  Affiliates  who  are in the  business  of
providing such services.



                                       29
<PAGE>

Asset Management Fee Limit:

The Asset  Management Fee will be subject to the Asset Management Fee Limit. The
Asset  Management  Fee Limit will be  calculated  each year during the Company's
term by  calculating  the total fees that would be paid to ATEL if the  Managing
Member were to be compensated on the basis of an  alternative  fee schedule,  to
include an Equipment  Management  Fee,  Incentive  Management Fee, and Equipment
Resale/Re-Leasing  Fee, plus ATEL's Carried Interest, as described below. To the
extent that the amount paid to ATEL as the Asset Management Fee plus its Carried
Interest for any year would exceed the aggregate amount of fees calculated under
this  alternative  fee schedule for the year,  the Asset  Management  Fee and/or
Carried  Interest  for that year will be reduced to equal the maximum  aggregate
fees under the alternative fee schedule.

To the extent any such fees are reduced,  the amount of such  reduction  will be
accrued and deferred,  and such accrued and deferred  compensation would be paid
to ATEL in a subsequent period, but only if and to the extent that such deferred
compensation  would be  payable  within the Asset  Management  Fee Limit for the
subsequent  period.  Any deferred fees which cannot be paid under the applicable
limitations  in any subsequent  period through the date of liquidation  would be
forfeited by ATEL upon liquidation.

Alternative Fee Schedule:

For purposes of the Asset  Management  Fee Limit,  the Company will calculate an
alternative schedule of fees, including a hypothetical Equipment Management Fee,
Incentive Management Fee, Equipment Resale/Re- Leasing Fee, and Carried Interest
as follows:

An Equipment  Management  Fee will be calculated to equal the lesser of (i) 3.5%
of annual Gross Revenues from  Operating  Leases and 2% of annual Gross Revenues
from Full Payout  Leases which contain Net Lease  Provisions),  or (ii) the fees
customarily  charged by others  rendering  similar services as an ongoing public
activity in the same geographic location and for similar types of equipment.  If
services with respect to certain Operating Leases are performed by nonaffiliated
persons under the active  supervision of ATEL or its Affiliate,  then the amount
so calculated shall be 1% of Gross Revenues from such Operating Leases.

An Incentive  Management Fee will be calculated to equal 4% of  Distributions of
Cash from  Operations  until  Holders have  received a return of their  Original
Invested Capital plus a Priority Distribution, and, thereafter, to equal a total
of 7.5%  of  Distributions  from  all  sources,  including  Sale or  Refinancing
Proceeds.  In  subordinating  the increase in the Incentive  Management Fee to a
cumulative  return of a  Holder's  Original  Invested  Capital  plus a  Priority
Distribution,  a Holder  would  be  deemed  to have  received  Distributions  of
Original  Invested  Capital only to the extent that  Distributions to the Holder
exceed the amount of the Priority Distribution.

An Equipment  Resale/Re-Leasing Fee will be calculated in an amount equal to the
lesser of (i) 3% of the sale price of the Equipment, or (ii) one-half the normal
competitive equipment sale commission charged by unaffiliated parties for resale
services.  Such fee would apply only after the Holders have received a return of
their Original Invested Capital plus a Priority Distribution. In connection with
the  releasing  of  Equipment to lessees  other than  previous  lessees or their
Affiliates,  the fee  would  be in an  amount  equal  to the  lesser  of (i) the
competitive rate for comparable  services for similar  equipment,  or (ii) 2% of
the gross rental payments  derived from the re-lease of such Equipment,  payable
out of each rental payment received by the Company from such re-lease.

A Carried  Interest equal to 7.5% of all  Distributions  of Cash from Operations
and Cash from Sales or Refinancing.

See Note 6 to the financial statements included in Item 8 for amounts paid.

Managing Member's Interest in Operating Proceeds

Net income,  net loss and  investment  tax credits  are  allocated  92.5% to the
Members and 7.5% to ATEL. See financial statements included in Item 8, Part I of
this report for amounts allocated to the Managing Member in 2001, 2000 and 1999.




                                       30
<PAGE>

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT

Security Ownership of Certain Beneficial Owners

At December 31, 2001, no investor is known to hold  beneficially more than 5% of
the issued and outstanding Units.

Security Ownership of Management

The  shareholders  of ATEL are beneficial  owners of Limited  Liability  Company
Units as follows:

<TABLE>
<CAPTION>
           (1)                                    (2)                                (3)                                  (4)
                                                  Name and Address of                 Amount and Nature of              Percent
      Title of Class                                Beneficial Owner                  Beneficial Ownership             of Class
      --------------                                ----------------                  --------------------             --------

<S>                                           <C>                              <C>                                          <C>
Limited Liability Company Units               A. J. Batt                            Initial Limited Liability               0.0002%
                                               235 Pine Street, 6th Floor       Company Units
                                                San Francisco, CA 94104        25 Units ($250)
                                                                                (owned by wife)

Limited Liability Company Units                Dean Cash                            Initial Limited Liability               0.0002%
                                               235 Pine Street, 6th Floor       Company Units
                                                San Francisco, CA 94104        25 Units ($250)
                                                                                (owned by wife)
</TABLE>

Changes in Control

The Members have the right,  by vote of the Members  owning more than 50% of the
outstanding Limited Liability Company Units, to remove a Managing Member.

ATEL may at any time  call a meeting  of the  Members  or a vote of the  Members
without a meeting, on matters on which they are entitled to vote, and shall call
such  meeting  or for vote  without a  meeting  following  receipt  of a written
request  therefore  of  Limited  Partners  holding  10% or  more  of  the  total
outstanding Limited Liability Company Units.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  responses  to Item 1 of this report  under the caption  "Equipment  Leasing
Activities," Item 8 of this report under the caption  "Financial  Statements and
Supplemental  Data  -  Notes  to  the  Financial   Statements  -  Related  party
transactions"  at Note 6 thereof,  and Item 11 of this report  under the caption
"Executive Compensation," are hereby incorporated by reference.




                                       31
<PAGE>

                                     PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
               ON FORM 8-K

                      (a)Financial Statements and Schedules
                       1.  Financial  Statements  Included  in  Part  II of this
                           report:

                              Report of Independent Auditors

                              Balance Sheets at December 31, 2001 and 2000

                              Statements of Operations for the years ended
                              December  31,  2001, 2000 and  1999

                              Statements of Changes  in  Members' Capital for
                              the years ended December 31, 2001, 2000 and 1999

                              Statements of Cash Flows for the years ended
                              December 31, 2001, 2000 and 1999

                              Notes to Financial Statements

                       2.  Financial Statement Schedules
                           Allschedules 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.

                       (b) Reports on Form 8-K for the fourth quarter of 2001
                           None

                       (c)Exhibits
                           (3)and (4)  Agreement of Limited  Liability  Company,
                              included   as   Exhibit   B  to   Prospectus,   is
                              incorporated  herein by reference to the report on
                              Form 10K for the period  ended  December  31, 1998
                              (File Number 333-62477) (Exhibit 28.1)



                                       32
<PAGE>

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) 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:  3/25/2002

                         ATEL Capital Equipment Fund VIII, LLC
                          (Registrant)


     By: ATEL Financial Services LLC,
       Managing Member of Registrant



                   By:    /s/ Dean Cash
                         ------------------------
                         Dean Cash,
                         President and Chief Executive
                         Officer of ATEL Financial Services
                         LLC (Managing Member)





                   By:   /s/ Paritosh K. Choksi
                         ------------------------
                         Paritosh K. Choksi
                         Executive Vice President of ATEL
                         Financial Services LLC (Managing
                         Member)








                                       33
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has  been  signed  below  by the  persons  in the  capacities  and on the  dates
indicated.


SIGNATURE                         CAPACITIES                             DATE



      /s/ Dean Cash         President, Chairman and Chief             3/25/2002
--------------------------  Executive Officer of ATEL
        Dean Cash           Financial Services LLC



 /s/ Paritosh K. Choksi     Executive Vice President and              3/25/2002
--------------------------  director of ATEL Financial
   Paritosh K. Choksi       Services LLC, Principal financial
                            officer of registrant; principal
                            financial officer and director of
                            ATEL Financial Services LLC


 /s/ Donald E. Carpenter    Principal accounting officer of           3/25/2002
--------------------------  registrant; principal accounting
   Donald E. Carpenter      officer of ATEL Financial Services LLC







Supplemental  Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act:


No proxy  materials  have been or will be sent to  security  holders.  An annual
report will be furnished to security  holders  subsequent  to the filing of this
report on Form 10-K, and copies thereof will be furnished  supplementally to the
Commission when forwarded to the security holders.

                                       34
<PAGE>