UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-KSB



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

For the year ended December 31, 2007



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

For the transition period from                      to

Commission File
number 000-33103

ATEL Capital Equipment Fund VIII, LLC

(Exact name of registrant as specified in its charter)



|                                                              |  |                                      
|------------------------------------------------------------- |  | -------------------------------------
|California                                                    |  | 94-3307404                           
|(State or other jurisdiction ofincorporation or organization) |  | (I. R. S. EmployerIdentification No.)

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

(Address of principal executive offices)

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

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

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

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act of 1934.  ̈

Check whether the issuer (1) 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  þ    No   ̈

Check if there is no disclosure of delinquent
filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB. þ

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   ̈            Accelerated filer   ̈            Non-accelerated filer  þ

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

State the issuers revenues for the most
recent fiscal year: $9.3 million.

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference
to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.) Not applicable.

The number of Limited Liability Company Units outstanding as of February 29, 2008 was 13,560,188.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business disclosure Format (check one):    Yes   ̈    No  þ









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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 on July 31, 1998. The Company was formed for
the purpose of acquiring equipment to engage in equipment leasing, lending and sales activities. The Managing Member of the Company is ATEL Financial Services, LLC (AFS), a California limited liability company. The Company may continue
until December 31, 2019. Each Members personal liability for obligations of the Company generally will be limited to the amount of their respective contributions and rights to undistributed profits and asset of the Company.

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (Units), at a price of $10 per Unit. On January 13, 1999,
subscriptions for the minimum number of Units (120,000, representing $1.2 million) had been received (excluding subscriptions from Pennsylvania investors) and AFS requested that the subscriptions be released to the Company. On that date the Company
commenced operations in its primary business (acquiring equipment to engage in equipment leasing, lending and sales activities). Gross contributions in the amount of $135.7 million (13,570,188 units) were received as of November 30, 2000,
inclusive of $500 of Initial Members capital investment and $100 of AFS capital investment. The offering was terminated on November 30, 2000.

As of December 31, 2007, 13,560,188 Units were issued and outstanding.

The Companys principal objectives have been to invest in a
diversified portfolio of equipment that (i) preserves, protects and returns the Companys invested capital; (ii) generates regular distributions to the Members of cash from operations and cash from sales or refinancing, with any
balance remaining after certain minimum distributions to be used to purchase additional equipment during the reinvestment period (Reinvestment Period) (defined as six full years following the year the offering was terminated), which
ended December 31, 2006, and (iii) provides additional distributions following the Reinvestment Period and until all equipment has been sold. The Company is governed by its Limited Liability Company Operating Agreement (Operating
Agreement), as amended.

The Company has incurred debt to finance the purchase of a portion of its equipment portfolio. The amount of borrowings in
connection with any equipment acquisition transaction will be determined by, among other things, the credit of the leases, the terms of the lease, the nature of the equipment and the condition of the money market. There is no limit on the amount of
debt that may be incurred in connection with any single acquisition of equipment. However the Company may not incur aggregate outstanding indebtedness in excess of 50% of the total cost of all equipment as of the date of the final commitment of the
offering proceeds and, thereafter, as of the date of any subsequent indebtedness is incurred. The Company has borrowed amounts within such maximum debt level in order to fund a portion of its equipment acquisitions. As of December 31, 2007, all
such equipment acquisition debt had been repaid.

Narrative Description of Business

The Company has acquired various types of equipment and to lease such equipment pursuant to Operating leases and High Payout leases, whereby
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. Guidelines
provided by the offering indicated 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 has purchased equipment under
pre-existing leases or for which a lease would be concurrently entered into at the time of the purchase.

From inception through December 31, 2007,
the Company had purchased equipment with a total acquisition price of $247.3 million.



2



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The Companys objective is to lease a minimum of 75% of the equipment acquired with the net proceeds of the offering
to lessees that (i) have an average credit rating by Moodys Investor Service, Inc. of Baa or better, or the credit equivalent as determined by AFS, with the average 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 AFS, 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 average credit rating of Baa or better or to
such hospitals or municipalities, as described in (ii) above.

During 2007 and 2006, certain lessees generated significant portions of the
Companys operating lease revenues as follows:



|                                                    |  |                   |  |                                   |   |  |      |  
|--------------------------------------------------- |  | ----------------- |  | --------------------------------- | - |  | ---- | -
|                                                    |  |                   |  | Percentage of TotalLease Revenues |  
|Lessee                                              |  | Type of Equipment |  | 2007                              |   |  | 2006 |  
|Exsif Worldwide Inc.                                |  | Containers        |  | 29                                | % |  | 34   | %
|Hornbeck Offshore Operations LLC (Formerly Sea Mar) |  | Marine Vessel     |  | 16                                | % |  | 11   | %
|Bartlett Grain Company, L.P.                        |  | Railcars          |  | 14                                | % |  | 14   | %

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 that vary widely depending on the lease term, type of equipment and creditworthiness of the lessee. The ability of the Company to keep the equipment leased and/or operating and the terms of the reinvestments,
leases and dispositions of equipment depends on various factors (many of which are not in the control of AFS or the Company), such as raw material costs to manufacture equipment as well 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.

AFS sought 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. AFS employees and affiliates provide the services the Company requires to effectively operate. The cost of these services is reimbursed by the Company to AFS and affiliates per the Operating Agreement.

Equipment Leasing Activities - 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, 2007 and the industries to which the assets have been leased (in thousands).



|                                  |  |                                         |         |                                |        |  
|--------------------------------- |  | --------------------------------------- | ------- | ------------------------------ | ------ | -
|Asset Types                       |  | Purchase PriceExcludingAcquisition Fees |         | Percentage ofTotalAcquisitions |       
|Transportation, rail              |  | $                                       | 60,311  |                                | 24.38  | %
|Transportation, other             |  |                                         | 47,259  |                                | 19.11  | %
|Manufacturing                     |  |                                         | 44,049  |                                | 17.81  | %
|Aircraft                          |  |                                         | 38,535  |                                | 15.58  | %
|Gas compressors                   |  |                                         | 13,848  |                                | 5.60   | %
|Material handling                 |  |                                         | 11,018  |                                | 4.45   | %
|Point of sale / office automation |  |                                         | 8,678   |                                | 3.51   | %
|Storage tanks                     |  |                                         | 6,712   |                                | 2.71   | %
|Marine vessels                    |  |                                         | 4,744   |                                | 1.92   | %
|Other                             |  |                                         | 12,187  |                                | 4.93   | %
|                                  |  |                                         |         |                                |        |  
|                                  |  | $                                       | 247,341 |                                | 100.00 | %
|                                  |  |                                         |         |                                |        |  



3



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|                           |  |                                         |         |                                |        |  
|-------------------------- |  | --------------------------------------- | ------- | ------------------------------ | ------ | -
|Industry of Lessee         |  | Purchase PriceExcludingAcquisition Fees |         | Percentage ofTotalAcquisitions |       
|Transportation, rail       |  | $                                       | 60,311  |                                | 24.38  | %
|Transportation, air        |  |                                         | 38,535  |                                | 15.58  | %
|Manufacturing, other       |  |                                         | 34,890  |                                | 14.11  | %
|Transportation, other      |  |                                         | 27,538  |                                | 11.14  | %
|Transportation, containers |  |                                         | 21,229  |                                | 8.58   | %
|Manufacturing, electronics |  |                                         | 20,901  |                                | 8.45   | %
|Retail                     |  |                                         | 18,056  |                                | 7.30   | %
|Natural gas                |  |                                         | 13,848  |                                | 5.60   | %
|Other                      |  |                                         | 12,033  |                                | 4.86   | %
|                           |  |                                         |         |                                |        |  
|                           |  | $                                       | 247,341 |                                | 100.00 | %
|                           |  |                                         |         |                                |        |  

Through December 31, 2007, the Company has disposed of certain leased assets as set forth below (in
thousands):



|                                  |  |                                                 |         |            |   |                              |  |   |        
|--------------------------------- |  | ----------------------------------------------- | ------- | ---------- | - | ---------------------------- |  | - | -------
|Asset Types                       |  | OriginalEquipment CostExcludingAcquisition Fees |         | Sale Price |   | Excess ofRents OverExpense *
|Manufacturing                     |  | $                                               | 46,288  |            | $ | 19,970                       |  | $ | 47,061 
|Aircraft                          |  |                                                 | 38,535  |            |   | 8,667                        |  |   | 16,856 
|Transportation, rail              |  |                                                 | 36,337  |            |   | 27,000                       |  |   | 14,900 
|Transportation, other             |  |                                                 | 24,179  |            |   | 7,958                        |  |   | 22,651 
|Point of sale / office automation |  |                                                 | 12,162  |            |   | 2,393                        |  |   | 1,309  
|Photo processing equipment        |  |                                                 | 10,782  |            |   | 6,555                        |  |   | 9,618  
|Storage tanks                     |  |                                                 | 6,903   |            |   | 6,851                        |  |   | 1,219  
|Material handling                 |  |                                                 | 6,845   |            |   | 2,016                        |  |   | 6,559  
|Gas compressors                   |  |                                                 | 2,522   |            |   | 506                          |  |   | 2,794  
|Other                             |  |                                                 | 10,032  |            |   | 3,493                        |  |   | 11,720 
|                                  |  |                                                 |         |            |   |                              |  |   |        
|                                  |  | $                                               | 194,585 |            | $ | 85,409                       |  | $ | 134,687
|                                  |  |                                                 |         |            |   |                              |  |   |        

Proceeds from sales of lease assets are not expected to be consistent from one period to another. The Company is a
finite life equipment leasing fund, which will acquire leasing transactions during the period ending six years after completion of its public offering. On the termination of leases, assets may be re-leased or sold. Sales of assets are not scheduled
and are created by opportunities within the marketplace. The Company sought to acquire and lease a wide variety of assets and to enter into leases on a variety of terms. Some assets will be expected to have little or no value for re-lease or sale
upon termination of the initial leases, and the anticipated residual values are a key factor in pricing and terms structured for each lease. The Companys goal is to seek maximum return on its leased assets and will determine when and under
what terms to dispose of such assets during the course of its term.

For further information regarding the Companys equipment lease portfolio as of
December 31, 2007, see Note 5 to the financial statements, Investments in equipment and leases, net, as set forth in Part II, Item 7, Financial Statements and Supplementary Data.

The Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 131 Disclosures about Segments of an Enterprise and
Related Information. SFAS No. 131 establishes annual and interim standards for operating segments of a company. It also requires entity-wide disclosures about the products and services an entity provides, the material countries in which
it holds assets and reports revenue, and its major customers. Certain of the Companys lessee customers have international operations. In these instances, the Company is aware that certain equipment, primarily rail and transportation, may
periodically exit the country. However, these lessee customers are US-based, and it is impractical for the Company to track, on an asset-by-asset, day-by-day basis, where these assets are deployed. For further information regarding the
Companys geographic revenues and assets and major customers, see Notes 2 and 3 to the financial statements as set forth in Part II, Item 7, Financial Statements and Supplementary Data.



4



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|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
|------- | -----------------

In the ordinary course of conducting business,
there may be certain claims, suits, and complaints filed against the Company. In the opinion of management, the outcome of such matters, if any, will not have a material impact on the Companys consolidated financial position or results of
operations. No material legal proceedings are currently pending against the Company or against any of its assets.



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

None.



5



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PART II



|Item 5. | MARKET FOR COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
|------- | ---------------------------------------------------------------------------------------------------------------------

Market Information

There are certain material conditions and
restrictions on the transfer of Units imposed by the terms of the Operating Agreement. Consequently, there is no public market for Units and it is not anticipated that a public market for Units will develop. In the absence of a public market for the
Units, there is no currently ascertainable fair market value for the Units.

Holders

As of December 31, 2007, a total of 3,376 investors were Unitholders of record in the Company.

ERISA Valuation

In order to permit ERISA fiduciaries who hold Units to satisfy their annual reporting requirements, AFS estimated the value per Unit of the
Companys assets as of December 31, 2007. AFS calculated the estimated liquidation proceeds that would be realized by the Company, assuming an orderly disposition of all of the Companys assets as of January 1, 2008. The
estimates were based on the amount of remaining lease payments on existing Company leases, and the estimated residual values of the equipment held by the Company upon the termination of those leases. This valuation was based solely on AFSs
perception of market conditions and the types and amounts of the Companys assets. No independent valuation was sought.

After calculating the
aggregate estimated disposition proceeds, AFS then calculated the portion of the aggregate estimated value of the Company assets that would be distributed to Unitholders on liquidation of the Company, and divided the total so distributable by the
number of outstanding Units. As of December 31, 2007 the value of the Companys assets, calculated on this basis, was approximately $2.25 per Unit. The foregoing valuation was performed solely for the ERISA purposes described above. There
is no market for the Units, and, accordingly, this value does not represent an estimate of the amount a Unitholder would receive if he were to seek to sell his Units. Furthermore, there can be no assurance as to the amount the Company may actually
receive if and when it seeks to liquidate its assets or the amount of lease payments and equipment disposition proceeds it will actually receive over the remaining term of the Company.

Distributions

The Unitholders of record are entitled to certain distributions as provided under the Operating
Agreement.

AFS has sole discretion in determining the amount of distributions; provided, however, that AFS 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 AFS. In 2001, AFS determined that amount to be $0.91 per Unit. The Company commenced periodic distributions, based on cash flows from operations, beginning with the
month of January 1999.

The monthly distributions were discontinued in 2007 as the Company entered its liquidation phase. Periodic distributions were
declared in July and December 2007, and were paid in August 2007 and January 2008. The cumulative rate for distributions from 2007 operations was $0.58 per Unit.

The rate for monthly distributions from 2006 operations was $0.0758 per Unit for January through December. The distributions were paid in February through December 2006 and in January 2007. The rate for quarterly distribution paid in April,
July and October 2006 and in January 2007 was $0.2275 per Unit. Distributions were from 2006 cash flows from operations.



6



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



|                                                                                          |  |      |       |   |      |   |     
|----------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----
|                                                                                          |  | 2007 |       |   | 2006
|Net income per Unit, based on weighted average Unit outstanding                           |  | $    | 0.06  |   |      | $ | 0.32
|Return of investment                                                                      |  |      | 0.52  |   |      |   | 0.59
|                                                                                          |  |      |       |   |      |   |     
|Distributions declared per Unit, based on weighted average Other Member Units outstanding |  |      | 0.58  |   |      |   | 0.91
|Differences due to timing of distributions                                                |  |      | (0.48 | ) |      |   |    
|                                                                                          |  |      |       |   |      |   |     
|Actual distributions paid per Unit                                                        |  | $    | 0.10  |   |      | $ | 0.91
|                                                                                          |  |      |       |   |      |   |     



|Item 6. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Statements contained in this Item 6, Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and elsewhere in this Form 10-KSB, which are not
historical facts, may be forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. In particular, economic recession and changes in general economic
conditions, including fluctuations in demand for equipment, lease rates, and interest rates, may result in delays in investment and reinvestment, delays in leasing, re-leasing, and disposition of equipment, and reduced returns on invested capital.
The Companys performance is subject to risks relating to lessee defaults and the creditworthiness of its lessees. The Companys performance is also subject to risks relating to the value of its equipment at the end of its leases, which
may be affected by the condition of the equipment, technological obsolescence and the markets for new and used equipment at the end of lease terms. Investors are cautioned not to attribute undue certainty to these forward-looking statements, which
speak only as of the date of this Form 10-KSB. We undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-KSB or to reflect the occurrence of
unanticipated events, other than as required by law.

Overview

ATEL Capital Equipment Fund VIII, LLC (the Company) is a California limited liability company that was formed in July 1998 for the purpose of engaging in the sale of limited liability investment units and
acquiring equipment to generate revenues from equipment leasing and sales activities, primarily in the United States.

The Company conducted a public
offering of 15,000,000 Limited Liability Company Units (Units), at a price of $10 per Unit. The offering was terminated in November 2000. During early 2001, the Company completed its initial acquisition stage with the investment of the
net proceeds from the public offering of Units. Subsequently, throughout the reinvestment period (Reinvestment Period) (defined as six full years following the year the offering was terminated), the Company reinvested cash flow in excess
of certain amounts required to be distributed to the Other Members and/or utilized its credit facilities to acquire additional equipment.

The Company may
continue until December 31, 2019. However, pursuant to the guidelines of the Operating Agreement, the Company began to liquidate its assets and distribute the proceeds thereof after the end of the Reinvestment Period which ended in December
2006.

As of December 31, 2007, the Company remains in its liquidation phase. Accordingly, assets that mature will be returned to inventory and most
likely will be subsequently sold, which will result in decreasing revenue as earning assets decrease. Periodic distributions are paid at the discretion of the Managing Member.

Capital Resources and Liquidity

The liquidity of the Company varies, 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.

The primary source of liquidity for the Company is its cash flow from a diversified group of lessees for fixed term leases with fixed rental amounts. As initial lease
terms expire, the Company re-leases or sells the equipment. The future liquidity beyond the contractual minimum rentals will depend on the Companys success in re-leasing or selling the equipment as it comes off lease.



7



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

The Company currently has available adequate reserves to meet its immediate cash requirements and those of the next
twelve months, but in the event those reserves were found to be inadequate, the Company would likely be in a position to borrow against its current portfolio to meet such requirements. AFS envisions no such requirements for operating purposes.

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

If interest rates increase significantly, the lease rates that the Company can obtain on future leases will be expected to increase as the cost
of capital is a significant factor in the pricing of lease financing. Leases already in place, for the most part, would not be affected by changes in interest rates. For detailed information on the Companys debt obligations, see Notes 7
through 9 to the financial statements, as set forth in Part II, Item 7, Financial Statements and Supplementary Data.

The Company participated with
AFS and certain of its affiliates in a financing arrangement (the Master Terms Agreement) comprised of: (1) a working capital term loan facility to AFS, (2) an acquisition facility and a (3) a warehouse facility to AFS,
the Company and affiliates, and (4) a venture facility available to an affiliate. The Master Terms Agreement is with a group of financial institutions and includes certain financial and non-financial covenants. The Master Terms Agreement, which
originally totaled $75 million and expired on June 28, 2007, was renewed for an additional two years with an availability of $65 million pending redefinition of the lender base. On July 28, 2007, with a redefinition of the lender base, the
facility was amended to reset availability to $75 million. The availability of borrowings to the Company under the Master Terms Agreement was reduced by the amount outstanding on any of the above mentioned facilities. The Company was removed as a
party to the Master Terms Agreement on January 31, 2007.

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

As
of December 31, 2007, the Company receives or pays interest on interest rate swap agreements with a notional principal totaling $3.9 million, based on the difference between nominal rates ranging from 4.35% to 7.50% and a variable rate of 4.57%
at December 31, 2007. At December 31, 2007, the fair value of the interest rate swaps totaled $91 thousand and was recorded as a liability on the balance sheet with a corresponding unrealized gain/loss included in the statement of
operations in other income or loss.

Finally, the Company has access to certain sources of non-recourse debt financing, which the Company uses on a
transaction basis as a means of mitigating credit risk. The non-recourse debt financing consists of notes payable to a financial institution. The notes are due in monthly installments. Interest on the notes is at a fixed rate of 6.90% per
annum. The notes are secured by an assignment of lease payments and pledges of assets. At December 31, 2007, the carrying value of the pledged assets is $1.1 million. The notes mature through 2010.

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

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

At December 31, 2007, the Company had no commitments to purchase leased assets. Pursuant to the Operating Agreement, the Company will no longer purchase any new
leased assets.



8



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Cash Flows

2007 vs. 2006

Operating Activities

The
Companys primary source of cash from operations has been rents from operating leases. Additionally, its cash flows are impacted by changes in certain operating assets and liabilities.

Net cash provided by operating activities decreased by $175 thousand, or 3%, for the year ended December 31, 2007 as compared to 2006. The net decrease in cash flow
was primarily attributable to increased payments made against accounts payable and accrued liabilities offset, in part, by increases in payments received on accounts receivable and in unearned lease income.

Increased payments made against accounts payable and accrued liabilities reduced cash flow by $486 thousand and was primarily a result of 2006 accruals related to
distributions to the Managing Member and to maintenance costs paid in 2007.

Offsetting the above noted decrease in cash flow were increases of $215
thousand and $127 thousand resulting from increases in payments received on accounts receivable and unearned lease income, respectively. Payment received on accounts receivable increased primarily as a result of 2006 billings paid in 2007, while
unearned lease income increased mainly due to a decrease in unearned rents realized in 2007, as compared to 2006.

Investing Activities

Net cash provided by investing activities decreased by $9.3 million, or 82%, for the year ended December 31, 2007 as compared to 2006. The net decrease in cash
flow was primarily a result of a $9.6 million reduction in net proceeds from sales of lease assets, attributable to 2006 sales proceeds from the sale of railcars to a major railway customer, and an end of term residual position on a direct finance
lease totaling $5.7 million and $1.7 million, respectively.

Financing Activities

Net cash used in financing activities declined by $13.1 million, or 75%, for the year ended December 31, 2007 as compared to 2006. The net decrease in cash used (net increase in cash flow) was primarily due to a
$9.7 million year over year decline in distributions paid to Other Members, and a $2.8 million decline in net cash used to repay debt.

Results of
Operations

On January 13, 1999, the Company commenced operations in its primary business (acquiring equipment to engage in equipment leasing
and lending activities)

As of December 31, 2007, there were concentrations (defined as greater than 10%) of equipment leased to lessees in certain
industries (as a percentage of total equipment cost) as follows:



|                           |  |    |  
|-------------------------- |  | -- | -
|Transportation, rail       |  | 45 | %
|Transportation, containers |  | 40 | %

During 2007 and 2006, certain lessees generated significant portions of the Companys operating lease
revenues as follows:



|                                                    |  |                   |  |                                   |   |  |      |  
|--------------------------------------------------- |  | ----------------- |  | --------------------------------- | - |  | ---- | -
|                                                    |  |                   |  | Percentage of TotalLease Revenues |  
|Lessee                                              |  | Type of Equipment |  | 2007                              |   |  | 2006 |  
|Exsif Worldwide Inc.                                |  | Containers        |  | 29                                | % |  | 34   | %
|Hornbeck Offshore Operations LLC (Formerly Sea Mar) |  | Marine Vessel     |  | 16                                | % |  | 11   | %
|Bartlett Grain Company, L.P.                        |  | Railcars          |  | 14                                | % |  | 14   | %



9



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These percentages are not expected to be comparable in future periods due to changes in the mix of investments and/or
lessees resulting from liquidation phase activity.

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

The Operating Agreement places an annual limit and a cumulative limit for cost reimbursements to AFS and/or affiliates. The cumulative limit increases annually. Any
reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent of the cumulative limit.
As of December 31, 2007, costs reimbursable to AFS in future years totaled approximately $965 thousand.

2007 versus 2006

The Company had net income of $1.5 million and $5.1 million for the years ended December 31, 2007 and 2006, respectively. The results for 2007 reflect a reduction in
total revenues offset, in part, by a decline in operating expenses when compared to 2006.

Revenues

Total revenues for 2007 declined by $5.3 million, or 36%, as compared to 2006. The net reduction in total revenues was primarily a result of decreases in net gain of
sales of assets and operating lease revenue totaling $4.1 million and $1.2 million, respectively.

The year over year decrease in net gain on sales of
lease assets was primarily due to gains of $3.5 million and $1.0 million recognized in 2006 related to the sale of railcars to a major railway customer and an end of term residual position on a direct finance lease. The decline in operating lease
revenue was mainly attributable to run-off of the lease portfolio and sales of lease assets.

Expenses

Total expenses for 2007 decreased by $1.9 million, or 20%, as compared to 2006. The net increase in total expenses was mainly due to decreases in depreciation and
interest expenses, asset management fees and provision for doubtful accounts offset, in part, by an increase in impairment loss provision.

The year over
year decline in depreciation expense totaled $858 thousand and was primarily due to run-off of the Companys lease portfolio and sales of lease assets. Interest expense decreased by $598 thousand as a result of continued paydown of the
Companys outstanding debt balances.

In addition, management fees paid to the Managing Member and the provision for doubtful accounts decreased by
$248 thousand and $155 thousand, respectively. The decrease in management fees paid to AFS is attributable to the continued decline in assets under management during the Funds liquidation phase; while the decline to the provision for doubtful
accounts reflects an adjustment made to reduce the reserve as payments were received on previously reserved delinquent invoices.

The above decreases in
expenses were partially offset by a $290 thousand impairment loss provision established during 2007 for certain impaired railcars.

Other

Other income, net was solely comprised of net gains on interest rate swap contracts and totaled $71 thousand and $304 thousand for the years ended
December 31, 2007 and 2006, respectively,

Derivative Financial Instruments

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



10



---

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. If derivative financial instruments are utilized, the Company will be required to record derivative instruments at fair value in the balance sheet and recognize the offsetting gains or losses as adjustments to net income or other
comprehensive income, as appropriate.

The Company records interest rate swap hedging instruments at fair value in the balance sheet and recognized the
offsetting gains or losses in net income or other comprehensive income, as appropriate. See Note 9 to the financial statements, Receivables funding program, as set forth in Part II, Item 7, Financial Statements and Supplementary Data.

Recent Accounting Pronouncements

In December
2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141R, Business Combinations (SFAS 141R). SFAS 141R replaces SFAS 141 and establishes principles and
requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes
disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination. This standard is effective for fiscal years beginning after December 15, 2008. The Company does not presently anticipate
the adoption of SFAS 141R to significantly impact its financial position, results of operations or cash flows.

In February 2007, the FASB issued Statement
No. 159, The Fair Value Option for Financial Assets and Financial Liabilitiesincluding an amendment of FASB Statement No. 115 (SFAS 159). This Statement permits entities to choose to measure many financial
instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Boards long-term measurement objectives for accounting for financial instruments.
SFAS 159 is effective for the Company as of January 1, 2008. The Company does not presently anticipate the adoption of SFAS 159 to significantly impact its financial position, results of operations or cash flows.

In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (SFAS 157). This standard clarifies the definition of fair
value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. The provisions of SFAS 157 were to be effective for fiscal years beginning after
November 15, 2007. However, in February 2008, the FASB issued FASB Staff Position (FSP) No. 157-2, which defers the effective date of SFAS No. 157 as it pertains to fair value measurements of nonfinancial assets and
nonfinancial liabilities until fiscal years beginning after November 15, 2008. The Company will adopt SFAS 157 except as it applies to its investment in equipment and leases, and other nonfinancial assets and nonfinancial liabilities as
noted in FSP FAS 157-2. The Fund is in the process of determining the financial impact the partial adoption of SFAS 157 will have on its results of operations and financial position.

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

Critical Accounting Policies and Estimates

The
policies discussed below are considered by management of the Company to be critical to an understanding of the Companys financial statements because their application requires significantly complex or subjective judgments, decisions, or
assessments, with financial reporting results relying on estimation about the effect of matters that are inherently uncertain. Specific risks for these critical accounting policies are described in the following paragraphs. The Company also states
these accounting policies in the notes to the financial statements and in relevant sections in this discussion and analysis. For all of these policies, management cautions that future events rarely develop exactly as forecast, and the best estimates
routinely require adjustment.



11



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Use of estimates:

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

Equipment on operating leases and related revenue recognition:

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

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

Direct financing
leases and related revenue recognition:

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

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

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

Initial direct costs:

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

Asset valuation:

Recorded values of the Companys asset
portfolio are periodically reviewed for impairment in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. An impairment loss is measured and recognized
only if the estimated undiscounted future cash flows of the asset are less than



12



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their net book value. The estimated undiscounted future cash flows are the sum of the estimated residual value of the asset at the end of the assets
expected holding period and estimates of undiscounted future rents. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the market place are
disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value
(as determined by a valuation method using discounted estimated future cash flows) of the assets and its carrying value on the measurement date.



|Item 7. | FINANCIAL STATEMENTS
|------- | --------------------

See the Report of Independent Registered
Public Accounting Firm, Financial Statements and Notes to Financial Statements attached hereto at pages 13 through 30.



13



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Members

ATEL Capital Equipment Fund VIII, LLC

We have audited the accompanying balance sheet of ATEL Capital Equipment Fund VIII, LLC (the Company) as of December 31, 2007, and the related
statements of income, changes in members capital, and cash flows for each of the years in the two-year period ended December 31, 2007. These financial statements are the responsibility of the Companys Managing Member. Our
responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to
perform an audit of the Companys internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 as of December 31, 2007, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2007, in conformity
with U.S. generally accepted accounting principles.



/s/ Moss Adams LLP


San Francisco, California

March 25, 2008



14



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ATEL CAPITAL EQUIPMENT FUND VIII, LLC

BALANCE SHEET

DECEMBER 31, 2007

(In Thousands)



|                                                                                                                          |  |   |       
|------------------------------------------------------------------------------------------------------------------------- |  | - | ------
|ASSETS                                                                                                                    |  |   |       
|Cash and cash equivalents                                                                                                 |  | $ | 4,709 
|Accounts receivable, net of allowance for doubtful accounts of $38                                                        |  |   | 941   
|Prepaid expenses and other assets                                                                                         |  |   | 15    
|Investments in equipment and leases, net of accumulated depreciation, amortization and impairment loss reserve of $37,865 |  |   | 16,281
|                                                                                                                          |  |   |       
|Total assets                                                                                                              |  | $ | 21,946
|                                                                                                                          |  |   |       
|LIABILITIES AND MEMBERS CAPITAL                                                                                          |  |   |       
|Accounts payable and accrued liabilities:                                                                                 |  |   |       
|Managing Member                                                                                                           |  | $ | 1,247 
|Accrued distributions to Other Members                                                                                    |  |   | 6,448 
|Other                                                                                                                     |  |   | 525   
|Accrued interest payable                                                                                                  |  |   | 6     
|Non-recourse debt                                                                                                         |  |   | 1,932 
|Interest rate swap contracts                                                                                              |  |   | 91    
|Unearned operating lease income                                                                                           |  |   | 99    
|                                                                                                                          |  |   |       
|Total liabilities                                                                                                         |  |   | 10,348
|                                                                                                                          |  |   |       
|Commitments and contingencies                                                                                             |  |   |       
|Members capital:                                                                                                         |  |   |       
|Managing Member                                                                                                           |  |   |      
|Other Members                                                                                                             |  |   | 11,598
|                                                                                                                          |  |   |       
|Total Members capital                                                                                                    |  |   | 11,598
|                                                                                                                          |  |   |       
|Total liabilities and Members capital                                                                                    |  | $ | 21,946
|                                                                                                                          |  |   |       

See accompanying notes.



15



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ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(In Thousands Except for Units and Per Unit Data)



|                                                              |  |      |            |   |      |   |           
|------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ----------
|                                                              |  | 2007 |            |   | 2006
|Revenues:                                                     |  |      |            |   |      |   |           
|Leasing activities:                                           |  |      |            |   |      |   |           
|Operating leases                                              |  | $    | 8,879      |   |      | $ | 10,045    
|Direct financing leases                                       |  |      | 27         |   |      |   | 88        
|Gain on sales of assets                                       |  |      | 226        |   |      |   | 4,370     
|Interest                                                      |  |      | 91         |   |      |   | 47        
|Other revenue                                                 |  |      | 39         |   |      |   | 32        
|                                                              |  |      |            |   |      |   |           
|Total revenues                                                |  |      | 9,262      |   |      |   | 14,582    
|                                                              |  |      |            |   |      |   |           
|Expenses:                                                     |  |      |            |   |      |   |           
|Depreciation of operating lease assets                        |  |      | 4,098      |   |      |   | 4,956     
|Provision for losses and impairments                          |  |      | 290        |   |      |   |          
|Interest expense                                              |  |      | 281        |   |      |   | 879       
|Asset management fees to Managing Member                      |  |      | 258        |   |      |   | 506       
|Vessel maintenance                                            |  |      | 700        |   |      |   | 686       
|Railcar maintenance                                           |  |      | 527        |   |      |   | 681       
|Cost reimbursements to Managing Member                        |  |      | 679        |   |      |   | 679       
|Amortization of initial direct costs                          |  |      | 12         |   |      |   | 24        
|Professional fees                                             |  |      | 547        |   |      |   | 661       
|Insurance                                                     |  |      | 84         |   |      |   | 96        
|Provision for doubtful accounts                               |  |      | (93        | ) |      |   | 62        
|Taxes on income and franchise fees                            |  |      | 239        |   |      |   | 293       
|Other                                                         |  |      | 227        |   |      |   | 259       
|                                                              |  |      |            |   |      |   |           
|                                                              |  |      | 7,849      |   |      |   | 9,782     
|                                                              |  |      |            |   |      |   |           
|Net income from operations                                    |  |      | 1,413      |   |      |   | 4,800     
|Other income, net                                             |  |      | 71         |   |      |   | 304       
|                                                              |  |      |            |   |      |   |           
|Net income                                                    |  | $    | 1,484      |   |      | $ | 5,104     
|                                                              |  |      |            |   |      |   |           
|Net income:                                                   |  |      |            |   |      |   |           
|Managing Member                                               |  | $    | 633        |   |      | $ | 788       
|Other Members                                                 |  |      | 851        |   |      |   | 4,316     
|                                                              |  |      |            |   |      |   |           
|                                                              |  | $    | 1,484      |   |      | $ | 5,104     
|                                                              |  |      |            |   |      |   |           
|Net income per Limited Liability Company Unit (Other Members) |  | $    | 0.06       |   |      | $ | 0.32      
|Weighted average number of Units outstanding                  |  |      | 13,560,188 |   |      |   | 13,566,736

See accompanying notes.



16



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ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENTS OF CHANGES IN MEMBERS CAPITAL

FOR THE YEARS ENDED DECEMBER
31, 2007 AND 2006

(In Thousands Except for Units and Per Unit Data)



|                                                                   |  |               |   |  |          |         |   |                               |   |      |      |  |   |       |   |  |   |         |  
|------------------------------------------------------------------ |  | ------------- | - |  | -------- | ------- | - | ----------------------------- | - | ---- | ---- |  | - | ----- | - |  | - | ------- | -
|                                                                   |  | Other Members |   |  | Managing |         |   | AccumulatedOtherComprehensive |   |      |      | 
|                                                                   |  | Units         |   |  | Amount   |         |   | Member                        |   |      | Loss |  |   | Total |  
|Balance December 31, 2005                                          |  | 13,570,188    |   |  | $        | 26,622  |   |                               | $ |     |      |  | $ | (140  | ) |  | $ | 26,482  |  
|Distributions to Other Members ($0.91 per Unit)                    |  |              |   |  |          | (12,343 | ) |                               |   |     |      |  |   |      |   |  |   | (12,343 | )
|Distributions to Managing Member                                   |  |              |   |  |          |        |   |                               |   | (788 | )    |  |   |      |   |  |   | (788    | )
|Reclassification for portion of swap liability charged to net loss |  |              |   |  |          |        |   |                               |   |     |      |  |   | 140   |   |  |   | 140     |  
|Rescissions of capital contributions                               |  | (10,000       | ) |  |          | (45     | ) |                               |   |     |      |  |   |      |   |  |   | (45     | )
|Net income                                                         |  |              |   |  |          | 4,316   |   |                               |   | 788  |      |  |   |      |   |  |   | 5,104   |  
|                                                                   |  |               |   |  |          |         |   |                               |   |      |      |  |   |       |   |  |   |         |  
|Balance December 31, 2006                                          |  | 13,560,188    |   |  |          | 18,550  |   |                               |   |     |      |  |   |      |   |  |   | 18,550  |  
|Distributions to Other Members ($0.58 per Unit)                    |  |              |   |  |          | (7,803  | ) |                               |   |     |      |  |   |      |   |  |   | (7,803  | )
|Distributions to Managing Member                                   |  |              |   |  |          |        |   |                               |   | (633 | )    |  |   |      |   |  |   | (633    | )
|Net income                                                         |  |              |   |  |          | 851     |   |                               |   | 633  |      |  |   |      |   |  |   | 1,484   |  
|                                                                   |  |               |   |  |          |         |   |                               |   |      |      |  |   |       |   |  |   |         |  
|Balance December 31, 2007                                          |  | 13,560,188    |   |  | $        | 11,598  |   |                               | $ |     |      |  | $ |      |   |  | $ | 11,598  |  
|                                                                   |  |               |   |  |          |         |   |                               |   |      |      |  |   |       |   |  |   |         |  

See accompanying notes.



17



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ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(In Thousands)



|                                                                             |  |      |        |   |      |   |         |  
|---------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------- | -
|                                                                             |  | 2007 |        |   | 2006 |  
|Operating activities:                                                        |  |      |        |   |      |   |         |  
|Net income                                                                   |  | $    | 1,484  |   |      | $ | 5,104   |  
|Adjustment to reconcile net income to cash provided by operating activities: |  |      |        |   |      |   |         |  
|Gain on sales of assets                                                      |  |      | (226   | ) |      |   | (4,370  | )
|Depreciation of operating lease assets                                       |  |      | 4,098  |   |      |   | 4,956   |  
|Amortization of initial direct costs                                         |  |      | 12     |   |      |   | 24      |  
|Interest rate swap contracts                                                 |  |      |       |   |      |   | 140     |  
|Change in fair value of interest rate swap contracts                         |  |      | (71    | ) |      |   | (304    | )
|Provision for doubtful accounts                                              |  |      | (93    | ) |      |   | 62      |  
|Provision for losses and impairments                                         |  |      | 290    |   |      |   |        |  
|Changes in operating assets and liabilities:                                 |  |      |        |   |      |   |         |  
|Accounts receivable and due from affiliates                                  |  |      | 173    |   |      |   | (42     | )
|Prepaid expenses and other assets                                            |  |      | 61     |   |      |   | (17     | )
|Accounts payable, Managing Member                                            |  |      | (266   | ) |      |   | 54      |  
|Accounts payable, other                                                      |  |      | (176   | ) |      |   | (10     | )
|Accrued interest payable                                                     |  |      | (23    | ) |      |   | (32     | )
|Unearned operating lease income                                              |  |      | 7      |   |      |   | (120    | )
|                                                                             |  |      |        |   |      |   |         |  
|Net cash provided by operating activities                                    |  |      | 5,270  |   |      |   | 5,445   |  
|                                                                             |  |      |        |   |      |   |         |  
|Investing activities:                                                        |  |      |        |   |      |   |         |  
|Proceeds from sales of lease assets                                          |  |      | 1,749  |   |      |   | 11,360  |  
|Reduction of net investment in direct financing leases                       |  |      | 254    |   |      |   | 759     |  
|Purchases of equipment on operating leases                                   |  |      | (6     | ) |      |   | (795    | )
|                                                                             |  |      |        |   |      |   |         |  
|Net cash provided by investing activities                                    |  |      | 1,997  |   |      |   | 11,324  |  
|                                                                             |  |      |        |   |      |   |         |  
|Financing activities:                                                        |  |      |        |   |      |   |         |  
|Borrowings under acquisition facility                                        |  |      |       |   |      |   | 9,600   |  
|Repayments under acquisition facility                                        |  |      |       |   |      |   | (11,600 | )
|Repayments under receivables funding program                                 |  |      |       |   |      |   | (4,524  | )
|Proceeds of non-recourse debt                                                |  |      |       |   |      |   | 2,870   |  
|Repayments of non-recourse debt                                              |  |      | (1,564 | ) |      |   | (696    | )
|Rescissions of capital contributions                                         |  |      |       |   |      |   | (45     | )
|Distributions to Other Members                                               |  |      | (2,659 | ) |      |   | (12,343 | )
|Distributions to Managing Member                                             |  |      | (193   | ) |      |   | (788    | )
|                                                                             |  |      |        |   |      |   |         |  
|Net cash used in financing activities                                        |  |      | (4,416 | ) |      |   | (17,526 | )
|                                                                             |  |      |        |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                         |  |      | 2,851  |   |      |   | (757    | )
|Cash and cash equivalents at beginning of year                               |  |      | 1,858  |   |      |   | 2,615   |  
|                                                                             |  |      |        |   |      |   |         |  
|Cash and cash equivalents at end of year                                     |  | $    | 4,709  |   |      | $ | 1,858   |  
|                                                                             |  |      |        |   |      |   |         |  
|Supplemental disclosures of cash flow information:                           |  |      |        |   |      |   |         |  
|Cash paid during the year for taxes                                          |  | $    | 295    |   |      | $ | 293     |  
|                                                                             |  |      |        |   |      |   |         |  
|Cash paid during the year for interest                                       |  | $    | 305    |   |      | $ | 910     |  
|                                                                             |  |      |        |   |      |   |         |  
|Schedule of non-cash transactions:                                           |  |      |        |   |      |   |         |  
|Distributions declared to Managing Member at year end                        |  | $    | 523    |   |      | $ | 83      |  
|                                                                             |  |      |        |   |      |   |         |  
|Distributions declared to Other Members at year end                          |  | $    | 6,448  |   |      | $ | 1,304   |  
|                                                                             |  |      |        |   |      |   |         |  

See accompanying notes.



18



---

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

1. Organization and Limited Liability Company matters:

ATEL Capital Equipment Fund VIII, LLC (the Company) was formed under the laws of the State of California on July 31, 1998. The Company was
formed for the purpose of acquiring equipment to engage in equipment leasing, lending and sales activities. The Managing Member of the Company is ATEL Financial Services, LLC (AFS), a California limited liability company. The Company may
continue until December 31, 2019. Each Members personal liability for obligations of the Company generally will be limited to the amount of their respective contributions and rights to undistributed profits and assets of the Company.

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (Units), at a price of $10 per Unit. On January 13,
1999, subscriptions for the minimum number of Units (120,000, representing $1.2 million) had been received (excluding subscriptions from Pennsylvania investors) and AFS requested that the subscriptions be released to the Company. On that date the
Company commenced operations in its primary business (acquiring equipment to engage in equipment leasing, lending and sales activities). Gross contributions in the amount of $135.7 million (13,570,188 units) were received as of November 30,
2000, inclusive of $500 of Initial Members capital investment and $100 of AFS capital investment. The offering was terminated on November 30, 2000.

As of December 31, 2007, 13,560,188 Units were issued and outstanding.

The Companys principal objectives have
been to invest in a diversified portfolio of equipment that (i) preserves, protects and returns the Companys invested capital; (ii) generates regular distributions to the Members of cash from operations and cash from sales or
refinancing, with any balance remaining after certain minimum distributions to be used to purchase additional equipment during the reinvestment period (Reinvestment Period) (defined as six full years following the year the offering was
terminated), which ended December 31, 2006 and (iii) provides additional distributions following the Reinvestment Period and until all equipment has been sold. The Company is governed by its Limited Liability Company Operating Agreement
(Operating Agreement), as amended.

The Company, or AFS on behalf of the Company, has incurred costs in connection with the organization,
registration and issuance of the Limited Liability Company Units (Note 6). The amount of such costs to be borne by the Company is limited by certain provisions of the Companys Operating Agreement. The Company will pay AFS and affiliates of AFS
substantial fees which may result in a conflict of interest. The Company will pay substantial fees to AFS and its affiliates before distributions are paid to investors even if the Company does not produce profits. Therefore, the financial position
of the Company could change significantly.

The Company is in the liquidation phase of its life cycle as defined in the Operating Agreement.

2. Summary of significant accounting policies:

Basis of
presentation:

The accompanying balance sheet as of December 31, 2007 and the related statements of operations, changes in members capital,
and cash flows for each of the two years ended December 31, 2007 have been prepared in accordance with accounting principles generally accepted in the United States, (GAAP). Certain prior year amounts have been reclassified to
conform to the current year presentation. These reclassifications had no effect on equity or net income.

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

Use of estimates:

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



19



---

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued):

Cash and cash equivalents:

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

Credit risk:

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

Accounts receivable:

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

Direct financing leases and related revenue recognition:

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

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

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

Equipment on operating leases and related revenue recognition:

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

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



20



---

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS



2. Summary of significant accounting policies (continued):

Initial direct costs:

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

Asset valuation:

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

Segment reporting:

The Company reports segment information in accordance with SFAS No. 131 Disclosures about Segments of an Enterprise and Related Information. SFAS
No. 131 establishes annual and interim standards for operating segments of a company. It also requires entity-wide disclosures about the products and services an entity provides, the material countries in which it holds assets and reports
revenue, and its major customers. The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United
States.

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

Certain of the Companys lessee customers have international operations. In these instances, the Company is aware that certain equipment, primarily rail and
transportation, may periodically exit the country. However, these lessee customers are US-based, and it is impractical for the Company to track, on an asset-by-asset, day-by-day basis, where these assets are deployed.

The primary geographic regions in which the Company sought leasing opportunities were North America and Europe. Currently, 100% of the Companys operating revenues
are from customers domiciled in North America.



21



---

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS



2. Summary of significant accounting policies (continued):

Derivative financial instruments:

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

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

The effective portion of the change in fair value of the interest rate swaps is recorded in Accumulated Other Comprehensive Income (AOCI) and the ineffective
portion (if any) directly in earnings. Amounts in AOCI are reclassified into earnings in a manner consistent with the earnings pattern of the underlying hedged item (generally reflected in interest expense). If a hedged item is de-designated prior
to maturity, previous adjustments to AOCI are recognized in earnings to match the earnings recognition pattern of the hedged item (e.g., level yield amortization if hedging an interest bearing instruments). Interest income or expense on most hedging
derivatives used to manage interest rate exposure is recorded on an accrual basis as an adjustment to the yield of the link exposures over the periods covered by the contracts. This matches the income recognition treatment of the exposure (i.e., the
liabilities, which are carried at historical cost, with interest recorded on an accrual basis). See Note 9, Receivables funding program, for further information regarding interest rate swaps.

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

Unearned operating lease income:

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

Income taxes:

The Company is treated as a partnership for federal income tax purposes. Pursuant to the provisions of Section 701 of the Internal Review Code, a partnership is not
subject to federal income taxes. Accordingly, the Company has provided current income taxes for only those states, which levy income taxes on partnerships. For the years ended December 31, 2007 and 2006, the related provision for state income
taxes was approximately $239 thousand and $293 thousand, respectively.

The tax bases of the Companys net assets and liabilities vary from the
amounts presented in these financial statements at December 31, 2007 (in thousands).



|                                        |  |   |       
|--------------------------------------- |  | - | ------
|Financial statement basis of net assets |  | $ | 11,598
|Tax basis of net assets (unaudited)     |  |   | 10,129
|                                        |  |   |       
|Difference                              |  | $ | 1,469 
|                                        |  |   |       



22



---

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS



2. Summary of significant accounting policies (continued):

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 net income reported on the Companys federal tax returns (unaudited) for the years ended December 31 (in thousands):



|                                              |  |      |        |   |      |   |       
|--------------------------------------------- |  | ---- | ------ | - | ---- | - | ------
|                                              |  | 2007 |        |   | 2006
|Net income per financial statements           |  | $    | 1,484  |   |      | $ | 5,104 
|Tax adjustments (unaudited):                  |  |      |        |   |      |   |       
|Adjustment to depreciation expense            |  |      | 212    |   |      |   | 1,667 
|Provision for losses and doubtful accounts    |  |      | 290    |   |      |   | 793   
|Adjustments to lease revenues                 |  |      | 187    |   |      |   | 4,904 
|Other                                         |  |      | (1,982 | ) |      |   |      
|                                              |  |      |        |   |      |   |       
|Net income per federal tax return (unaudited) |  | $    | 191    |   |      | $ | 12,468
|                                              |  |      |        |   |      |   |       

Other income (loss), net:

Other income (loss) is comprised of fair value adjustments on interest rate swap contracts.

Per unit data:

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

Recent accounting pronouncements:

In December 2007,
the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141R, Business Combinations (SFAS 141R). SFAS 141R replaces SFAS 141 and establishes principles and requirements
for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure
requirements which will enable users to evaluate the nature and financial effects of the business combination. This standard is effective for fiscal years beginning after December 15, 2008. The Company does not presently anticipate the adoption
of SFAS 141R to significantly impact its financial position, results of operations or cash flows.

In February 2007, the FASB issued Statement
No. 159, The Fair Value Option for Financial Assets and Financial Liabilitiesincluding an amendment of FASB Statement No. 115 (SFAS 159). This Statement permits entities to choose to measure many financial
instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Boards long-term measurement objectives for accounting for financial instruments.
SFAS 159 is effective for the Company as of January 1, 2008. The Company does not presently anticipate the adoption of SFAS 159 to significantly impact its financial position, results of operations or cash flows.

In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (SFAS 157). This standard clarifies the definition of fair
value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. The provisions of SFAS 157 were to be effective for fiscal years beginning after
November 15, 2007. However, in February 2008, the FASB issued FASB Staff Position (FSP) No. 157-2, which defers the effective date of SFAS No. 157 as it pertains to fair value measurements of nonfinancial assets and
nonfinancial liabilities until fiscal years beginning after November 15, 2008. The Company will adopt SFAS 157 except as it applies to its investment in equipment and leases, and other nonfinancial assets and nonfinancial liabilities as
noted in FSP FAS 157-2. The Fund is in the process of determining the financial impact the partial adoption of SFAS 157 will have on its results of operations and financial position.



23



---

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS



2. Summary of significant accounting policies (continued):

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

3. Concentration of credit risk and major customers:

The Company leases equipment to lessees and provides debt financing to borrowers in diversified industries. Leases are subject to AFSs credit committee review. The leases provide for the return of the equipment to the Company upon
default.

As of December 31, 2007, there were concentrations (greater than 10% as a percentage of total equipment cost) of equipment leased to lessees
and/or financial borrowers in certain industries as follows:



|                           |  |    |  
|-------------------------- |  | -- | -
|Transportation, rail       |  | 45 | %
|Transportation, containers |  | 40 | %

Three customers comprised 59% of the Companys revenues from leases for both years ended December 31,
2007 and 2006.

4. Reserves, impairment losses and provisions for doubtful accounts:

Activity in the reserve for losses and impairments and allowances for doubtful accounts consists of the following (see Note 5 for further discussion on impairment loss) (in thousands):



|                          |  |                                  |       |   |                               |   |     |  
|------------------------- |  | -------------------------------- | ----- | - | ----------------------------- | - | --- | -
|                          |  | Reserve forLosses andImpairments |       |   | Allowance forDoubtfulAccounts |  
|Balance December 31, 2005 |  | $                                | 1,274 |   |                               | $ | 68  |  
|Provision                 |  |                                  |      |   |                               |   | 63  |  
|Charge offs               |  |                                  | (612  | ) |                               |   |    |  
|                          |  |                                  |       |   |                               |   |     |  
|Balance December 31, 2006 |  |                                  | 662   |   |                               |   | 131 |  
|Provision (recoveries)    |  |                                  | 290   |   |                               |   | (93 | )
|Charge offs               |  |                                  | (882  | ) |                               |   |    |  
|                          |  |                                  |       |   |                               |   |     |  
|Balance December 31, 2007 |  | $                                | 70    |   |                               | $ | 38  |  
|                          |  |                                  |       |   |                               |   |     |  



24



---

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS



5. Investments in equipment and leases, net:

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



|                                                                                                                 |  |                         |        |                                           |   |        |                                                          |  |   |                         |   |  |   |       
|---------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | ----------------------------------------- | - | ------ | -------------------------------------------------------- |  | - | ----------------------- | - |  | - | ------
|                                                                                                                 |  | BalanceDecember 31,2006 |        | Reclassifications&Additions /Dispositions |   |        | Depreciation/AmortizationExpense orAmortizationof Leases |  |   | BalanceDecember 31,2007
|Net investment in operating leases                                                                               |  | $                       | 21,184 |                                           | $ | (1,290 | )                                                        |  | $ | (4,098                  | ) |  | $ | 15,796
|Net investment in direct financing leases                                                                        |  |                         | 633    |                                           |   |       |                                                          |  |   | (254                    | ) |  |   | 379   
|Assets held for sale or lease, net                                                                               |  |                         | 620    |                                           |   | (517   | )                                                        |  |   |                        |   |  |   | 103   
|Initial direct costs, net of accumulated amortization of $108 at December 31, 2007 and $259 at December 31, 2006 |  |                         | 15     |                                           |   |       |                                                          |  |   | (12                     | ) |  |   | 3     
|                                                                                                                 |  |                         |        |                                           |   |        |                                                          |  |   |                         |   |  |   |       
|Total                                                                                                            |  | $                       | 22,452 |                                           | $ | (1,807 | )                                                        |  | $ | (4,364                  | ) |  | $ | 16,281
|                                                                                                                 |  |                         |        |                                           |   |        |                                                          |  |   |                         |   |  |   |       

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

Management periodically reviews the carrying values of its assets on leases and assets held for lease or sale. For the year ended December 31, 2007, the Company
established a $290 thousand impairment loss reserve related to impaired natural gas compressors and railcars. There were no impairment losses for the year ended December 31, 2006.

Impairment losses are recorded as an adjustment to the net investment in operating leases. Depreciation expense and impairment losses on property subject to operating leases and assets held for sale or lease consist
of the following for the years ended December 31 (in thousands):



|                                       |  |      |       |      |   |      
|-------------------------------------- |  | ---- | ----- | ---- | - | -----
|                                       |  | 2007 |       | 2006
|Depreciation of operating lease assets |  | $    | 4,098 |      | $ | 4,956
|Impairment losses                      |  |      | 290   |      |   |     
|                                       |  |      |       |      |   |      
|Total                                  |  | $    | 4,388 |      | $ | 4,956
|                                       |  |      |       |      |   |      

All of the property on lease was acquired during the period 1999 through 2002.

Operating leases:

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



|                              |  |                         |         |   |           |   |        |                                  |  |   |                         |   |  |   |         |  
|----------------------------- |  | ----------------------- | ------- | - | --------- | - | ------ | -------------------------------- |  | - | ----------------------- | - |  | - | ------- | -
|                              |  | BalanceDecember 31,2006 |         |   | Additions |   |        | Reclassificationsor Dispositions |  |   | BalanceDecember 31,2007 |  
|Transportation, rail          |  | $                       | 23,854  |   |           | $ |       |                                  |  | $ | (32                     | ) |  | $ | 23,822  |  
|Containers                    |  |                         | 20,995  |   |           |   |       |                                  |  |   | (43                     | ) |  |   | 20,952  |  
|Transportation, other         |  |                         | 7,721   |   |           |   | 6      |                                  |  |   | (2,707                  | ) |  |   | 5,020   |  
|Material handling             |  |                         | 1,041   |   |           |   |       |                                  |  |   |                        |   |  |   | 1,041   |  
|Natural gas compressors       |  |                         | 2,522   |   |           |   |       |                                  |  |   | (2,522                  | ) |  |   |        |  
|Manufacturing                 |  |                         | 1,141   |   |           |   |       |                                  |  |   | (1,141                  | ) |  |   |        |  
|Other                         |  |                         | 3,050   |   |           |   |       |                                  |  |   | (750                    | ) |  |   | 2,300   |  
|                              |  |                         |         |   |           |   |        |                                  |  |   |                         |   |  |   |         |  
|                              |  |                         | 60,324  |   |           |   | 6      |                                  |  |   | (7,195                  | ) |  |   | 53,135  |  
|Less accumulated depreciation |  |                         | (39,140 | ) |           |   | (4,098 | )                                |  |   | 5,899                   |   |  |   | (37,339 | )
|                              |  |                         |         |   |           |   |        |                                  |  |   |                         |   |  |   |         |  
|Total                         |  | $                       | 21,184  |   |           | $ | (4,092 | )                                |  | $ | (1,296                  | ) |  | $ | 15,796  |  
|                              |  |                         |         |   |           |   |        |                                  |  |   |                         |   |  |   |         |  



25



---

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS



5. Investments in equipment and leases, net (continued):

Direct financing leases:

As of December 31, 2007, investment in
direct financing leases consists of rail cars, anhydrous ammonia storage tanks, office automation equipment, point of sale equipment, refrigerated trailers and laundry equipment. The following lists the components of the Companys investment in
direct financing leases as of December 31, 2007 (in thousands):



|                                                             |  |   |     |  
|------------------------------------------------------------ |  | - | --- | -
|Total minimum lease payments receivable                      |  | $ | 49  |  
|Estimated residual values of leased equipment (unguaranteed) |  |   | 334 |  
|                                                             |  |   |     |  
|Investment in direct financing leases                        |  |   | 383 |  
|Less unearned income                                         |  |   | (4  | )
|                                                             |  |   |     |  
|Net investment in direct financing leases                    |  | $ | 379 |  
|                                                             |  |   |     |  

At December 31, 2007, the aggregate amounts of future minimum lease payments receivable are as follows (in
thousands):



|                              |  |                 |        |                       |   |       |  |   |       
|----------------------------- |  | --------------- | ------ | --------------------- | - | ----- |  | - | ------
|                              |  | OperatingLeases |        | DirectFinancingLeases |   | Total
|Year ending December 31, 2008 |  | $               | 5,139  |                       | $ | 49    |  | $ | 5,188 
|2009                          |  |                 | 2,634  |                       |   |      |  |   | 2,634 
|2010                          |  |                 | 1,274  |                       |   |      |  |   | 1,274 
|2011                          |  |                 | 761    |                       |   |      |  |   | 761   
|2012                          |  |                 | 358    |                       |   |      |  |   | 358   
|Thereafter                    |  |                 | 192    |                       |   |      |  |   | 192   
|                              |  |                 |        |                       |   |       |  |   |       
|                              |  | $               | 10,358 |                       | $ | 49    |  | $ | 10,407
|                              |  |                 |        |                       |   |       |  |   |       

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



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



26



---

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS



6. Related party transactions:

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

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

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

Cost reimbursements to the
Managing Member are based on its costs incurred in performing administrative services for the Company. These costs are allocated to each managed entity based on certain criteria such as total assets, number of investors or contributed capital based
upon the type of cost incurred. The Operating Agreement places an annual limit and a cumulative limit for cost reimbursements to AFS and/or affiliates. The cumulative limit increases annually. Any reimbursable costs incurred by AFS and/or affiliates
during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent of the cumulative limit. As of December 31, 2007, costs reimbursable to
AFS in future years totaled approximately $965 thousand.

AFS and/or affiliates earned fees, commissions and reimbursements, pursuant to the Operating
Agreement as follows during each of the years ended December 31 (in thousands):



|                                         |  |      |     |      |   |      
|---------------------------------------- |  | ---- | --- | ---- | - | -----
|                                         |  | 2007 |     | 2006
|Asset management fees to Managing Member |  | $    | 258 |      | $ | 506  
|Cost reimbursements to Managing Member   |  |      | 679 |      |   | 679  
|                                         |  |      |     |      |   |      
|                                         |  | $    | 937 |      | $ | 1,185
|                                         |  |      |     |      |   |      

7. Non-recourse debt:

At December 31, 2007, non-recourse debt consists of notes payable to a financial institution. The notes are due in monthly installments. Interest on the notes is at a fixed rate of 6.90% per annum. The notes are secured by
assignments of lease payments and pledges of assets. At December 31, 2007, the carrying value of the pledged assets is $1.1 million. The notes mature from 2008 through 2010.

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



|                              |  |           |       |          |   |       |  |   |      
|----------------------------- |  | --------- | ----- | -------- | - | ----- |  | - | -----
|                              |  | Principal |       | Interest |   | Total
|Year ending December 31, 2008 |  | $         | 779   |          | $ | 107   |  | $ | 886  
|2009                          |  |           | 756   |          |   | 56    |  |   | 812  
|2010                          |  |           | 397   |          |   | 8     |  |   | 405  
|                              |  |           |       |          |   |       |  |   |      
|                              |  | $         | 1,932 |          | $ | 171   |  | $ | 2,103
|                              |  |           |       |          |   |       |  |   |      



27



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ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS



8. Borrowing facilities:

The Company participated with AFS and certain of its affiliates in a financing arrangement (the Master Terms Agreement) comprised of: (1) a working capital term loan facility to AFS, (2) an acquisition facility and
(3) a warehouse facility to AFS, the Company and affiliates, and (4) a venture facility available to an affiliate. The Master Terms Agreement is with a group of financial institutions and includes certain financial and non-financial
covenants. The Master Terms Agreement, which originally totaled $75 million and expired on June 28, 2007, was renewed for an additional two years with an availability of $65 million pending redefinition of the lender base. On July 28,
2007, with a redefinition of the lender base, the facility was amended to reset availability to $75 million. The availability of borrowings to the Company under the Master Terms Agreement was reduced by the amount outstanding on any of the above
mentioned facilities. The Company was removed as a party to the Master Terms Agreement on January 31, 2007.

9. Receivables funding program:

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

As of December 31, 2007, the Company receives or pays interest on interest
rate swap agreements with a notional principal totaling $3.9 million, based on the difference between nominal rates ranging from 4.35% to 7.50% and a variable rate of 4.57% at December 31, 2007. No actual borrowing or lending is involved. The
termination of swaps was to coincide with the maturity of the debt. The differential to be paid or received is accrued as interest rates change and is recognized currently as an adjustment to interest expense related to the debt. Through the swap
agreements, the interest rates on the borrowings have been effectively fixed. The differential to be paid or received is accrued as interest rates change and is recognized currently as an adjustment to interest expense related to the debt. The
interest rate swaps are carried at fair value on the balance sheet with unrealized gain/loss included in the statement of operations in other income or loss.

The interest rate swaps were originally designated as cash flow hedges of the interest payment on the long term debt. As a result of repayments, the swaps were deemed to be ineffective and the Company de-designated the original hedge
relationships effective September 30, 2004. Prior to this de-designation, changes in the fair value of the swaps were recognized in accumulated other comprehensive loss (AOCL). Subsequent to this de-designation, changes in fair
value of the swaps were reflected in the statement of operations in other income/loss, net. In addition, amounts remaining in AOCL subsequent to the de-designation of the swaps were reclassified into earnings in a manner consistent with
the earnings pattern of the underlying hedged item. As of December 31, 2007, the Company has no remaining balance in AOCL.



28



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ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS



9. Receivables funding program (continued):

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



|              |  |                        |         |                         |   |                                 |  |                           |       |  |                                      |     |   |  |      |  
|------------- |  | ---------------------- | ------- | ----------------------- | - | ------------------------------- |  | ------------------------- | ----- |  | ------------------------------------ | --- | - |  | ---- | -
|Date Borrowed |  | OriginalAmountBorrowed |         | BalanceDecember 31,2007 |   | NotionalBalanceDecember 31,2007 |  | SwapValueDecember 31,2007 |       |  | Payment RateOn InterestSwapAgreement |    
|11/11/1999    |  | $                      | 20,000  |                         | $ |                                |  | $                         |      |  | $                                    |    |   |  | 6.84 | %
|12/21/1999    |  |                        | 20,000  |                         |   |                                |  |                           | 3,467 |  |                                      | (88 | ) |  | 7.41 | %
|12/24/1999    |  |                        | 25,000  |                         |   |                                |  |                           |      |  |                                      |    |   |  | 7.44 | %
|4/17/2000     |  |                        | 6,500   |                         |   |                                |  |                           | 5     |  |                                      |    |   |  | 7.45 | %
|4/28/2000     |  |                        | 1,900   |                         |   |                                |  |                           |      |  |                                      |    |   |  | 7.72 | %
|8/3/2000      |  |                        | 19,000  |                         |   |                                |  |                           | 291   |  |                                      | (3  | ) |  | 7.50 | %
|10/31/2000    |  |                        | 7,500   |                         |   |                                |  |                           |      |  |                                      |    |   |  | 7.13 | %
|1/29/2001     |  |                        | 8,000   |                         |   |                                |  |                           |      |  |                                      |    |   |  | 5.91 | %
|6/1/2001      |  |                        | 2,000   |                         |   |                                |  |                           |      |  |                                      |    |   |  | 5.04 | %
|9/1/2001      |  |                        | 9,000   |                         |   |                                |  |                           | 143   |  |                                      |    |   |  | 4.35 | %
|1/31/2002     |  |                        | 3,900   |                         |   |                                |  |                           |      |  |                                      |    |   |  | *    |  
|              |  |                        |         |                         |   |                                 |  |                           |       |  |                                      |     |   |  |      |  
|              |  | $                      | 122,800 |                         | $ |                                |  | $                         | 3,906 |  | $                                    | (91 | ) |  |      |  
|              |  |                        |         |                         |   |                                 |  |                           |       |  |                                      |     |   |  |      |  

10. Commitments:

At December 31, 2007, the Company had no commitments to purchase lease assets.

11. Guarantees:

The Company enters into contracts that contain a variety of indemnifications. The Companys maximum exposure under these arrangements is unknown. However, the
Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

In the normal course of business, the
Company enters into contracts of various types, including lease contracts, contracts for the sale or purchase of lease assets, management contracts, loan agreements, credit lines and other debt facilities. It is prevalent industry practice for most
contracts of any significant value to include provisions that each of the contracting parties - in addition to assuming liability for breaches of the representations, warranties, and covenants that are part of the underlying contractual obligations
- also assume an obligation to indemnify and hold the other contracting party harmless for such breaches, for harm caused by such partys gross negligence and willful misconduct, including, in certain instances, certain costs and expenses
arising from the contract. The Managing Member has substantial experience in managing similar leasing programs subject to similar contractual commitments in similar transactions, and the losses and claims arising from these commitments have been
insignificant, if any. Generally, to the extent these contracts are performed in the ordinary course of business under the reasonable business judgment of the Managing Member, no liability will arise as a result of these provisions. The Managing
Member has no reason to believe that the facts and circumstances relating to the Companys contractual commitments differ from those it has entered into on behalf of the prior programs it has managed. The Managing Member knows of no facts or
circumstances that would make the Companys contractual commitments outside standard mutual covenants applicable to commercial transactions between businesses. Accordingly, the Company believes that these indemnification obligations are made in
the ordinary course of business as part of standard commercial and industry practice, and that any potential liability under the Companys similar commitments is remote. Should any such indemnification obligation become payable, the Company
would separately record and/or disclose such liability in accordance with GAAP.



29



---

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS



12. Members capital:

As of December 31, 2007, 13,560,188 Units were issued and outstanding. The Company was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial members (50 Units).

As defined in the Operating Agreement, the Companys Net Income, Net Losses, and Distributions are to be allocated 92.5% to the Other Members and 7.5% to AFS. In
accordance with the terms of the Operating Agreement, additional allocations of income were made to AFS in 2007 and 2006. The amounts allocated were determined so as to bring AFSs ending capital account balance to zero at the end of the year.

The Managing Member voluntarily reduced the carried interest percentage to 6.0% for 2006. The rate was reset to 7.5% beginning January 2007. If the
Managing Member had received payments based on a 7.5% carried interest rate, it would have received $1.0 million in distributions instead of $788 thousand.

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



|                                             |  |      |            |      |   |           
|-------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                             |  | 2007 |            | 2006
|Distributions declared                       |  | $    | 7,803      |      | $ | 12,343    
|Weighted average number of Units outstanding |  |      | 13,560,188 |      |   | 13,566,736
|                                             |  |      |            |      |   |           
|Weighted average distributions per Unit      |  | $    | 0.58       |      | $ | 0.91      
|                                             |  |      |            |      |   |           

13. Fair value of financial instruments:

The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of Statement of Financial Accounting Standards No. 107, Disclosures about Fair Value
of Financial Instruments. Fair value estimates, methods and assumptions, set forth below for the Companys financial instruments, are made solely to comply with the requirements of Statement No. 107 and should be read in conjunction
with the Companys financial statements and related notes.

The Company has determined the estimated fair value amounts by using market information
and valuation methodologies that it considers appropriate. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the
amounts the Company could realize or has realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. For all of these reasons, the
aggregation of the fair values presented herein does not represent, and should not be construed to represent, their underlying value.

Cash and cash
equivalents, and other accounts:

The recorded amounts of the Companys cash and cash equivalents, accounts receivable, accounts payable and
accruals at December 31, 2007 approximate fair value because of the liquidity and short-term maturity of these instruments.

Non-recourse debt:

The fair value of the Companys non-recourse debt is estimated using discounted cash flow analyses, based upon the Companys estimated
current incremental borrowing rates for similar types of borrowing arrangements. The estimated fair value of the Companys non-recourse debt at December 31, 2007 is $2.0 million.

Interest rate swaps:

The fair value of interest rate swaps is the
estimated amount that the Company would receive or pay to terminate the swap agreements at the reporting date, taking into account current interest rates and the current creditworthiness of the swap counterparties.



30



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|Item 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
|------- | -------------------------------------------------------------------------------------

None.



|Item 8A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Evaluation of disclosure controls
and procedures

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

The Company does not control the financial reporting process, and is solely dependent on the
Management of the Managing Member, who is responsible for providing the Company with financial statements in accordance with generally accepted accounting principles in the United States. The Managing Members disclosure controls and procedures
were effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United
States.

Managements Report on Internal Control over Financial Reporting

The Management of the Managing Member is responsible for establishing and maintaining adequate internal control over financial reporting as that term is defined in Exchange Act Rule 13a-15(f) for the Company, and for
performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2007. The internal control process of the Managing Member, as is applicable to the Company, was designed to provide reasonable
assurance to Management regarding the preparation and fair presentation of published financial statements, and includes those policies and procedures that:



| | (1) | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in
the United States, and that the Companys receipts and expenditures are being made only in accordance with authorization of the Management of the Managing Member; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a material effect
on the financial statements.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All internal control processes, no matter how well designed, have inherent limitations. Therefore, even those
processes determined to be effective can provide only reasonable assurance with respect to the reliability of financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal control may vary
over time.

Management of the Managing Member assessed the effectiveness of its internal control over financial reporting, as is applicable to the Company,
as of December 31, 2007. In making this assessment, it used the criteria set forth in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its
assessment, Management of the Managing Member concluded that the Managing Members internal control over financial reporting, as is applicable to the Company, was effective as of December 31, 2007.

The Company is a non-accelerated filer for the 2007 fiscal year. Accordingly, the Companys independent registered public accounting firm is not
currently required to issue an audit report on the Companys internal control over financial reporting.

Changes in internal control

There were no changes in the Managing Members internal control over financial reporting, as is applicable to the Company, during the quarter ended
December 31, 2007 that has materially affected, or is reasonably likely to materially affect, the Managing Members internal control over financial reporting, as is applicable to the Company.



31



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PART III



|Item 9. | DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
|------- | ------------------------------------------------------------------------------------------------------------------

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

ATEL Financial Services, LLC (AFS) is the Companys Managing Member or Manager. AFS is controlled by ATEL Capital Group (ACG or ATEL), a holding company formed to control ATEL and affiliated
companies, through its subsidiaries, ATEL Leasing Corporation (ALC), AFSs managing member, and ATEL Business Credit, Inc. (ABC), the other member of AFS. ALC and ABC are AFSs only members. The outstanding voting
capital stock of ATEL Capital Group is owned 100% by Dean L. Cash.

Each of ATEL Leasing Corporation (ALC), ATEL Equipment Corporation
(AEC), ATEL Investor Services (AIS) and ATEL Financial Services, LLC (AFS) is a subsidiary under the control 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 AFS which performs distribution services in connection with the Companys public offering of its Units.

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



|                   |  |                                                                                                                                   
|------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------
|Dean L. Cash       |  | President and Chief Executive Officer of ATEL
Financial Services, LLC (Managing Member)                                           
|Paritosh K. Choksi |  | Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Financial Services, LLC (Managing Member)
|Vasco H. Morais    |  | Senior Vice President, Secretary and General Counsel of ATEL Financial Services, LLC (Managing Member)                            

Dean L. Cash, age 57, 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 54, joined ATEL in 1999 as a director, senior vice president and its chief financial officer. He became its executive vice president and CFO/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 is a member of the board
of directors of Syntel, Inc. 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.

Vasco H. Morais, age 49, 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.



32



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Audit Committee

ATEL Leasing Corporation is the managing member of ATEL Financial Services, LLC. ATEL Financial Services, LLC is the Managing Member of the registrant. The board of directors of ATEL Leasing Corporation acts as the audit committee of the
registrant. Dean L. Cash and Paritosh K. Choksi are members of the board of directors of ALC and are deemed to be financial experts. They are not independent of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely on a review of Forms 3, 4, and 5,
the Company is not aware of any failures to file reports of beneficial ownership required to be filed during or for the year ended December 31, 2007.

Code of Ethics

ACG on behalf of AFS and ALC has adopted a code of ethics for its Chief Executive Officer and Chief Financial Officer
and Chief Operating Officer. The Code of Ethics is included as Exhibit 14.1 to this report.



|Item 10. | EXECUTIVE COMPENSATION
|-------- | ----------------------

The registrant 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 2007 is set forth in Item 7 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.

Asset Management Fee

The Company pays AFS an Asset Management Fee in an amount equal to 4% of Operating Revenues, which includes Gross Lease Revenues and Cash From Sales or Refinancing. The Asset Management Fee is paid on a monthly basis. The amount of the
Asset Management Fee payable in any year is reduced for that year to the extent it would otherwise exceed the Asset Management Fee Limit, as described below. The Asset Management Fee is paid for services rendered by AFS 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.

AFS supervises 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. AFS 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.

Asset Management Fee Limit:

The Asset Management Fee
is subject to the Asset Management Fee Limit. The Asset Management Fee Limit is calculated each year during the Companys term by calculating the total fees that would be paid to AFS if AFS 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 AFSs Carried Interest, as described below. To the extent that the amount paid to AFS 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 is reduced to equal the maximum aggregate fees under
the alternative fee schedule.



33



---

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 AFS 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 AFS 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 AFS 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 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.

An Equipment Re-Leasing Fee, in connection with
the releasing of Equipment to lessees other than previous lessees or their affiliates, will be calculated 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.

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.

Managing Members Interest in Operating Proceeds

As defined in the Operating Agreement, the Companys Net Income, Net
Losses, and Distributions are to be allocated 92.5% to the Members and 7.5% to AFS. In accordance with the terms of the Operating Agreement, additional allocations of income were made to AFS in 2007 and 2006. The amounts allocated were determined to
bring AFSs ending capital account balance to zero at the end of each year. See financial statements as set forth in Part II, Item 7, Financial Statements and Supplementary Data, of this report for amounts allocated to AFS in 2007 and
2006.



34



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|Item 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------

Security Ownership of Certain Beneficial Owners

At December 31, 2007, no investor is known to hold
beneficially more than 5% of the issued and outstanding Units.

Security Ownership of Management

The parent of AFS is the beneficial owner of Limited Liability Company Units as follows:



|                                |  |                                                                             |  |                                                                         |  |                   
|------------------------------- |  | --------------------------------------------------------------------------- |  | ----------------------------------------------------------------------- |  | ------------------
|(1)Title of Class               |  | (2)Name and Address of Beneficial Owner                                     |  | (3)Amount and Nature ofBeneficial
Ownership                             |  | (4)Percent ofClass
|Limited Liability Company Units |  | ATEL Capital Group 600 California Street, 6th Floor San Francisco, CA 94108 |  | Initial Limited Liability Company Units 25 Units ($250) (owned by wife) |  | 0.0002%           

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 the Managing Member.

AFS 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 Members holding 10% or more of the total outstanding Limited Liability Company Units.



|Item 12. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------

The responses to
Item 1 of this report under the caption Equipment Leasing Activities, Item 7 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 10 of this report under the caption Executive Compensation, are hereby incorporated by reference.



|Item 13. | EXHIBITS
|-------- | --------



|(a) | Exhibits
|--- | --------



|              |  |                                                                               |  |                                                        
|------------- |  | ----------------------------------------------------------------------------- |  | -------------------------------------------------------
|ExhibitNumber |  | Description                                                                   |  | Reference toPrior Filing orExhibit NumberAttachedHereto
|              |  |                                                                              
|3             |  | Articles of Incorporation Bylaws                                              |  | 3a                                                     
|              |  |                                                                              
|4             |  | Instruments defining the rights of security holders, including indentures     |  | 3a                                                     
|              |  |                                                                              
|14            |  | Code of Ethics                                                                |  | 14.1                                                   
|              |  |                                                                              
|31            |  | Certification of Dean L. Cash pursuant to Rules 13a-14(a) and 15d-14(a)       |  | 31.1                                                   
|              |  |                                                                              
|31            |  | Certification of Paritosh K. Choksi pursuant to Rules 13a-14(a) and 15d-14(a) |  | 31.2                                                   
|              |  |                                                                              
|32            |  | Certification of Dean L. Cash pursuant to 18 U.S.C. section 1350              |  | 32.1                                                   
|              |  |                                                                              
|32            |  | Certification of Paritosh K. Choksi pursuant to 18 U.S.C. section 1350        |  | 32.2                                                   



|3a | Amended and Restated Limited Liability Company Operating Agreement, included as exhibit B to the Prospectus filed as exhibit 28.1 to the Registrants Annual Report on
Form 10-K for the year ended December 31, 1998 (File No. 333-62477), is hereby incorporated herein by reference.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



35



---

|Item 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES
|-------- | --------------------------------------

During the last two years,
the Company incurred audit and other fees with its principal auditors as follows (in thousands):



|           |  |      |    |      |   |   
|---------- |  | ---- | -- | ---- | - | --
|           |  | 2007 |    | 2006
|Audit fees |  | $    | 61 |      | $ | 62
|Other      |  |      | 1  |      |   |  
|           |  |      |    |      |   |   
|           |  | $    | 62 |      | $ | 62
|           |  |      |    |      |   |   

Audit Fees consist of the aggregate fees and expenses billed in connection with the audit of the Companys
annual financial statements and the review of the financial statements included in the Companys quarterly reports on Form 10-Q.

Other fees represent
costs incurred in connection with various Agreed-Upon Procedures engagements.

ATEL Leasing Corporation is the managing member of ATEL Financial Services,
LLC. ATEL Financial Services, LLC is the Managing Member of the registrant. The board of directors of ATEL Leasing Corporation acts as the audit committee of the registrant. Engagements for audit services, audit related services and tax services are
approved in advance by the Chief Financial Officer of ATEL Leasing Corporation acting on behalf of the board of directors of ATEL Leasing Corporation in its role as the audit committee of the Company.



36



---

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: March 25, 2008



|    |  |                               |  |                                                    |  |    |  |                                                         
|--- |  | ----------------------------- |  | -------------------------------------------------- |  | -- |  | --------------------------------------------------------
|    |  |                               |  | ATEL Capital Equipment Fund VIII, LLC (Registrant)
|    |  |                               |  |                                                   
|By: |  | ATEL Financial Services, LLC  |  |                                                    |  | By |  | /s/ Dean L. Cash                                        
|    |  | Managing Member of Registrant |  |                                                    |  |    |  | Dean L. Cash,                                           
|    |  |                               |  |                                                    |  |    |  | President and Chief Executive Officer of                
|    |  |                               |  |                                                    |  |    |  | ATEL Financial Services, LLC (Managing Member)          
|    |  |                               |  |                                                   
|    |  |                               |  |                                                    |  | By |  | /s/ Paritosh K. Choksi                                  
|    |  |                               |  |                                                    |  |    |  | Paritosh K. Choksi,                                     
|    |  |                               |  |                                                    |  |    |  | Executive Vice President and Chief Financial Officer and
|    |  |                               |  |                                                    |  |    |  | Chief Operating Officer of ATEL Financial Services, LLC 
|    |  |                               |  |                                                    |  |    |  | (Managing Member)                                       

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 L. Cash Dean L. Cash             |  | President and Chief Executive Officer of ATEL Financial
Services, LLC (Managing Member)                                            |  | March 25, 2008
|                                          |  |                                                                                                                                   
|/s/ Paritosh K. Choksi Paritosh K. Choksi |  | Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Financial Services, LLC (Managing Member) |  | March 25, 2008

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-KSB, and copies thereof will be furnished supplementally to the Commission when forwarded to the security holders.



37