Form 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                        |X| Annual report pursuant to section 13 or 15(d) of the
                            Securities Exchange Act of 1934 (fee required) For
                            the Year Ended December 31, 2002
                                                                      OR
                        |_| Transition report pursuant to section 13 or 15(d) of
                            the Securities Exchange Act of 1934 (no fee
                            required) For the transition period from ____ to
                            ____

                        Commission File number 333-62477

                      ATEL Capital Equipment Fund VIII, LLC

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

        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: None

     Indicate by a check mark whether the  registrant  (1) has filed all reports
required to be filed by section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

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

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


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


                       DOCUMENTS INCORPORATED BY REFERENCE

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



                                       1
<PAGE>

                                     PART I

Item 1:  BUSINESS

General Development of Business

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

     The Company  conducted a public offering of 15,000,000 of Limited Liability
Company  Units  (Units),  at a price  of $10 per  Unit.  On  January  13,  1999,
subscriptions  for the minimum number of Units  (120,000,  $1,200,000)  had been
received and ATEL requested that the  subscriptions,  except those received from
Pennsylvania  investors (7,500 Units,  $75,000),  be released to the Company. On
that date, the Company  commenced  operations in its primary  business  (leasing
activities). As of February 18, 1999, the Company had received subscriptions for
775,777 Units ($7,757,770) and ATEL requested that the remaining funds in escrow
(from  Pennsylvania  investors)  be released to the Company.  As of November 30,
2000, the Company had received subscriptions for 13,570,138 ($135,701,380) Units
in addition to the Initial  Members' Units and the offering was terminated.  All
of the Units were issued and outstanding as of December 31, 2002.

     The Company's principal objectives are to invest in a diversified portfolio
of equipment that will (i) preserve,  protect and return the Company's  invested
capital;  (ii)  generate  regular  distributions  to the  partners  of cash from
operations and cash from sales or refinancing,  with any balance remaining after
certain minimum distributions to be used to purchase additional equipment during
the reinvestment period, ending 72 months after the end of the year in which the
Final  Closing  occurs  (which  will be  December  31,  2006) and (iii)  provide
additional  distributions  following  the  reinvestment  period  and  until  all
equipment  has been sold.  The  Company is  governed  by its  Limited  Liability
Company Operating Agreement (Operating Agreement).

Narrative Description of Business

     The Company has acquired and intends to acquire  various types of equipment
and to lease such  equipment  pursuant to  "Operating"  leases and "High Payout"
leases,  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.  It is the  intention  of ATEL that a majority of the  aggregate  purchase
price of equipment  will represent  equipment  leased under "High Payout" leases
upon final  investment of the Net Proceeds of the Offering and that no more than
20% of the aggregate  purchase  price of equipment will be invested in equipment
acquired from a single manufacturer.

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

     As of December 31, 2002,  the Company had purchased  equipment with a total
acquisition price of $245,736,450.

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

     During 2002, 2001 and 2000, certain lessees generated  significant portions
of the Company's total lease revenues as follows:

<TABLE>
<CAPTION>
Lessee                                     Type of Equipment             2002    2001    2000
------                                     -----------------             ----    ----    ----
<S>                                                                      <C>
Overnite Transportation Company            Tractors and trailers         10%       *      *
Union Pacific Railroad                     Railcars                       *       16%     *
Burlington Northern Santa Fe Railroad      Locomotives and Auto Racks     *        *     10%
</TABLE>
*  Less than 10%

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



                                       2
<PAGE>

     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 and type of equipment. The ability of the Company to
keep the equipment  leased and/or  operating and the terms of the  acquisitions,
leases and  dispositions of equipment  depends on various factors (many of which
are not in the  control  of  ATEL or the  Company),  such  as  general  economic
conditions, including the effects of inflation or recession, and fluctuations in
supply and demand for various  types of equipment  resulting  from,  among other
things, technological and economic obsolescence.

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

     The business of the Company is not seasonal.

     The Company has no full time employees.

Equipment Leasing Activities

     Through  December  31,  2002,  the Company has  disposed of certain  leased
assets as set forth bel

                                                                 Excess of
Type of                    Original                              Rents Over
Equipment               Equipment Cost       Sale Price          Expenses *
---------               --------------       ----------          ----------
Transportation, rail        $ 7,128,678        $ 7,464,886         $ 1,887,775
Office automation             5,854,367          1,744,052           5,099,209
Manufacturing                   376,423             99,322             279,808
Transportation, other            21,250             22,398               2,490
                       -----------------  -----------------   -----------------
                       -----------------  -----------------   -----------------
                           $ 13,380,718        $ 9,330,658         $ 7,269,282
                       =================  =================   =================
                       =================  =================   =================

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

     The  Company  has  acquired  a  diversified  portfolio  of  equipment.  The
equipment has been leased to lessees in various industries. The following tables
set forth the types of equipment  acquired by the Company  through  December 31,
2002 and the  industries  to which the assets have been leased.  The Company has
purchased  certain assets subject to existing  non-recourse  debt. For financial
statement purposes,  non-recourse debt has been offset against the investment in
certain direct finance leases where the right of offset exists.

                                   Purchase Price Excluding  Percentage of Total
Asset Types                            Acquisition Fees         Acquisitions
-----------                            ----------------         ------------
Transportation, rail                         $59,769,940                 24.32%
Manufacturing                                 44,048,583                 17.93%
Transportation, other                         25,757,971                 10.48%
Aircraft                                      38,535,439                 15.68%
Transportation, intermodal
   containers                                 21,228,750                  8.64%
Gas compressors                               13,848,465                  5.64%
Point of sale / office automation              8,677,566                  3.53%
Materials handling                            11,018,547                  4.48%
Storage tanks                                  6,712,090                  2.73%
Marine vessels                                 3,952,500                  1.61%
Other *                                       12,186,599                  4.96%
                                         ----------------     ------------------
                                            $245,736,450                100.00%
                                         ================     ==================

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

                                   Purchase Price Excluding  Percentage of Total
Industry of Lessee                     Acquisition Fees          Acquisitions
------------------                     ----------------          ------------
Transportation, rail                         $59,769,940                 24.31%
Transportation, air                           38,535,439                 15.68%
Manufacturing, other                          34,889,583                 14.20%
Transportation, other                         27,245,340                 11.09%
Transportation, containers                    21,228,750                  8.64%
Manufacturing, electronics                    20,901,071                  8.51%
Retail                                        18,056,010                  7.35%
Natural gas                                   13,848,465                  5.64%
Other *                                       11,261,852                  4.58%
                                         ----------------     ------------------
                                            $245,736,450                100.00%
                                         ================     ==================

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



                                       3
<PAGE>

     For further  information  regarding the Company's equipment lease portfolio
as of December 31, 2002, see Note 3 to the financial statements,  Investments in
equipment and leases, as set forth in Part II, Item 8, Financial  Statements and
Supplementary Data.


Item 2.  PROPERTIES

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


Item 3.  LEGAL PROCEEDINGS

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

Emery Worldwide Airways, Inc.:

     On January  25,  2002,  the Company  filed a complaint  against its lessee,
Emery Worldwide  Airways,  Inc., for failure by the lessee to properly  maintain
the condition and airworthiness of the aircraft on lease to the lessee,  and for
certain other  breaches and defaults by the lessee as alleged in the  complaint.
The  Company  has  claimed  stipulated  loss  value  damages  in the  amount  of
$5,648,173  as a result  of the  breaches  and  defaults  under the lease by the
lessee.  A motion for  summary  judgment on the  Company's  claims was filed the
summer of 2002, and an  unfavorable  ruling on the motion was handed down in the
fourth  quarter of 2002. A trial date for this matter had been set for May 2003,
but was delayed until September 2003. In March 2003, ATEL settled with Emery for
an amount equal to $1,300,000, plus the value of the aircraft. ATEL is currently
taking steps to remarket the aircraft.

Burlington Northern Santa Fe Corporation:

     This  complaint  was filed for the  recovery of $300,000 in damages for the
"Agreed  Value"  of  a  destroyed  locomotive,  where  THE  CIT  Group/Equipment
Financing,  Inc.,  acting  as  agent  for the  Company,  agreed  to  "swap"  the
locomotive  unit with Burlington  Northern Santa Fe  Corporation,  without first
obtaining  the  Company's  consent to do so, as  required by the  agreement.  An
additional  claim for holdover  rent was  informally  asserted.  A  satisfactory
agreement for settlement has been reached in this matter and payment of $483,653
in the settlement was received in the first quarter of 2003.

Solectron:

     This is a matter  whereby the Company has  declared a lessee in default for
failure to pay rent in a timely manner, and for other various defaults.  A claim
was filed on August 29,  2002,  by the  Manager on behalf of the  Company in the
amount of  $13,332,328.  The lessee  filed a  counter-claim  against the Company
asserting  unfair  business  practices.  The  Company  believes  that  it  has a
reasonable basis for success of some, if not all, of its claims in this matter.

Ingersoll International:

     At  December  31,  2002,  ATEL  had  commenced  action  against   Ingersoll
International  ("the  Lessee) as we had  declared  them in default for making an
unauthorized assignment of part of the leased equipment.  Subsequent to December
31, 2002,  ATEL, the Lessee and the  unauthorized  party reached an agreement in
principal to have the unauthorized  party assume the lease.  Documents have been
prepared  by ATEL and sent to the other  parties for  signature  and the Company
expects all documents to be signed and this matter resolved by March 31, 2003.


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

None.


                                     PART II

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

Market Information

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

Holders

     As of December 31, 2002, a total of 3,656  investors were record holders of
Units in the Company.



                                       4
<PAGE>

ERISA Valuation

     In order to permit ERISA fiduciaries who hold Units to satisfy their annual
reporting requirements,  the Managing Member estimated the value per Unit of the
Company's  assets as of September 30, 2002. The Managing  Member  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, 2003. 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
the Managing Member'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,   the
Managing Member then calculated the portion of the aggregate  estimated value of
the Company  assets that would be  distributed to Unit holders on liquidation of
the Company, and divided the total so distributable by the number of outstanding
Units. As of September 30, 2002, the value of the Company's  assets,  calculated
on this basis,  was  approximately  $8.24 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 Unit  holder  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.

Dividends

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

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

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

     The rate for  distributions  from 2002 operations was $0.07583 per Unit per
month.  The  distributions  were paid in February  through  December 2002 and in
January 2003. For each quarterly  distribution  (paid in April, July and October
2002 and in January 2003) the rate was $0.2275 per Unit. Distributions were from
2002 cash flows from operations.

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

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

     The following table presents summarized information regarding distributions
to members other than the Managing Member (Other Members:)

<TABLE>
<CAPTION>
                                                2002              2001              2000               1999
                                                ----              ----              ----               ----
<S>                                              <C>               <C>                <C>                <C>
Distributions of net income (loss)               $ (0.2800)        $ (0.0600)         $ (0.2900)         $ 0.0600
Return of investment                                1.1900            0.9700             1.2100            0.5500
                                           ---------------- ----------------- ------------------ -----------------
Distributions per unit                              0.9100            0.9100             0.9200            0.6100
Differences due to timing of distributions               -            0.0050             0.0275            0.2900
                                           ---------------- ----------------- ------------------ -----------------
Nominal distribution rates from above             $ 0.9100          $ 0.9150           $ 0.9475          $ 0.9000
                                           ================ ================= ================== =================
</TABLE>





                                       5
<PAGE>

Item 6.  SELECTED FINANCIAL DATA

     The following  table  presents  selected  financial  data of the Company at
December 31, 2002, 2001, 2000, 1999 and 1998 and for the years then ended.  This
financial data should be read in conjunction  with the financial  statements and
related notes included under Item 8 of this report.

<TABLE>
<CAPTION>
                                                  2002             2001              2000              1999               1998
                                                  ----             ----              ----              ----               ----
<S>                                             <C>               <C>              <C>                 <C>                       <C>
Gross revenues                                  $ 32,929,975      $43,794,097      $ 31,047,485        $ 8,660,653               $ -
Net income (loss)                               $ (2,805,544)       $ 132,672      $ (2,305,631)         $ 438,835               $ -
Weighted average Units                            13,570,188       13,570,188        10,634,792          4,025,294                50
Net income (loss) allocated to
   Other Members                                $ (3,806,713)      $ (872,244)     $ (3,100,640)         $ 239,420               $ -
Net income (loss) per Unit, based on
   weighted average Units outstanding                $ (0.28)         $ (0.06)          $ (0.29)            $ 0.06               $ -
Distributions per Unit, based on
   weighted average Units outstanding                 $ 0.91           $ 0.91            $ 0.92             $ 0.61               $ -
Total Assets                                   $ 153,464,672     $184,421,674      $198,832,652      $ 145,663,336             $ 600
Non-recourse and Other Long-term Debt           $ 68,614,855      $91,383,964      $ 93,993,744       $ 71,848,617               $ -
Total Members' Capital                          $ 66,526,763      $83,361,952      $101,338,501       $ 64,130,010             $ 600
</TABLE>


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

     Statements contained in this Item 7, "Management's  Discussion and Analysis
of Financial  Condition and Results of  Operations,"  and elsewhere in this Form
10-K, which are not historical facts, may be  forward-looking  statements.  Such
statements  are  subject  to risks and  uncertainties  that could  cause  actual
results to differ  materially from those projected.  Investors are cautioned not
to attribute undue certainty to these  forward-looking  statements,  which speak
only as of the date of this Form 10-K.  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-K or to reflect the  occurrence of
unanticipated events, other than as required by law.

Capital Resources and Liquidity

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

     During the funding  period,  the Company's  primary source of liquidity was
subscription  proceeds from the public  offering of Units.  The liquidity of the
Company will vary in the future, increasing to the extent cash flows from leases
and proceeds of asset sales exceed expenses,  and decreasing as lease assets are
acquired,  as  distributions  are made to the Other  Members  and to the  extent
expenses exceed cash flows from leases and proceeds from asset sales.

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

     The  Company  participates  with the  Managing  Member  and  certain of its
affiliates  in  a  $55,645,837   revolving  line  of  credit  (comprised  of  an
acquisition facility and a warehouse facility) with a financial institution that
includes  certain  financial  covenants.  The line of credit expires on June 28,
2004. As of December 31, 2002, borrowings under the facility were as follows:

<TABLE>
<CAPTION>
<S>                                                                                               <C>
Amount  borrowed by the Company under the acquisition facility                                    $    10,600,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
   facility                                                                                            18,400,000
                                                                                                 -----------------
Total borrowings under the acquisition facility                                                        29,000,000
Amounts borrowed by the Managing Member and its sister corporation under the warehouse facility                 -
                                                                                                 -----------------
Total outstanding balance                                                                         $    29,000,000
                                                                                                 =================

Total available under the line of credit                                                          $    55,645,837
Total outstanding balance                                                                             (29,000,000)
                                                                                                 -----------------
Remaining availability                                                                            $    26,645,837
                                                                                                 =================
</TABLE>



                                       6
<PAGE>

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

     The Company anticipates reinvesting a portion of lease payments from assets
owned in new leasing  transactions.  Such reinvestment will occur only after the
payment  of  all  obligations,   including  debt  service  (both  principal  and
interest),  the payment of management  fees to the Managing Member and providing
for cash distributions to the Other Members. At December 31, 2002, there were no
commitments to purchase lease assets.

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

     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.  ATEL
envisions no such requirements for operating purposes.

     In 1999, the Company  established a $70 million receivables funding program
(which was subsequently  increased to $125 million) with a receivables financing
company  that issues  commercial  paper rated A1 from  Standard and Poors and P1
from Moody's Investor Services. In this receivables funding program, the lenders
received a general lien against all of the otherwise  unencumbered assets of the
Company.  The program  provided for  borrowing at a variable  interest  rate and
required  the  Managing  Member on behalf of the Company to enter into  interest
rate swap agreements with certain  counterparties (also rated A1/P1) to mitigate
the interest rate risk associated with a variable rate note. The Managing Member
believes  that this  program  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 April 2002.

     See Item 7a and Note 5 to the financial  statements,  Other long-term debt,
as set forth in Part II, Item 8, Financial  Statements and  Supplementary  Data,
for  additional  information  regarding  this program and related  interest rate
swaps.

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

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

     See Note 4 to the financial statements,  Non-recourse debt, as set forth in
Part II, Item 8,  Financial  Statements and  Supplementary  Data, for additional
information regarding non-recourse debt.

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

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

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

Cash Flows

2002 vs. 2001:

     In 2002 and 2001, the Company's  primary source of cash was operating lease
revenues. This was also the primary source of cash flows from operations in both
years.



                                       7
<PAGE>

     Rents from direct  financing  leases and proceeds from asset sales were the
only sources of cash from  investing  activities  in either 2002 or in 2001.  In
both years, uses of cash in investing activities included purchases of assets on
operating  and direct  financing  leases and  payment  of initial  direct  costs
associated with those leases.

     In 2002 and 2001,  sources of cash from financing  activities  consisted of
long-term debt proceeds and borrowings under the line of credit.

2001 vs. 2000:

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

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

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

Results of Operations

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

     Substantially  all  employees  of ATEL track time  incurred  in  performing
administrative  services on behalf of the Company.  ATEL believes that the costs
reimbursed  are the lower of (i) actual costs  incurred on behalf of the Company
or (ii) the amount the Company would be required to pay independent  parties for
comparable administrative services in the same geographic location.

2002 vs. 2001:

     Operations in 2002 resulted in a net loss of $2,805,544. Operations in 2001
resulted in net income of $132,672.

     Revenues  from  operating   leases  and  direct  finance  leases  decreased
significantly in 2002 compared to 2001. These decreases were the result of asset
sales over the last two years,  lower lease rates on renewals and an increase in
the amount of the Company's assets that are off lease.  Revenues are expected to
decrease again in 2003.

     Depreciation  expense  also  decreased  as a result  of the  sales of lease
assets in 2002 and 2001.

     Average debt balances  decreased in 2002 compared to 2001.  This led to the
decrease in interest expense compared to 2001.

     Management  fees are related to the  Company's  revenues.  As the Company's
revenues decline, as a result of asset sales, the management also decrease.

     Management periodically reviews the carrying values of its assets on leases
and  assets  held for  lease or sale.  As a result  of that  review,  management
determined that the fair values of a fleet of diesel electric locomotives and an
aircraft had declined in value to the extent that the carrying values had become
impaired.  The fair value of the assets was  determined  based on the sum of the
discounted estimated future cash flows of the assets. A charge to operations was
recorded  for the decline in value of those  assets in the amount of  $2,612,500
for the year ended December 31, 2002.

2001 vs. 2000:

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

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

Recent developments

     In March 2003,  the Company began  preliminary  discussions to terminate an
aircraft  operating lease with Emery Worldwide.  The lease had been scheduled to
continue  through  December  31,  2004.  The  carrying  value of the aircraft at
December 31, 2002 was  $10,624,043  and the proposed amount of the settlement is
$8,100,000.  This is expected to result in a loss of  $2,524,043  on the sale of
the aircraft if this  transaction  is  consumated.  The sale is expected to take
place on March 31, 2003 or early in the second quarter of 2003.



                                       8
<PAGE>

Derivative Financial Instruments

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

     SFAS No. 133, as amended, requires the Company to recognize all derivatives
as  either  assets  or  liabilities  in the  balance  sheet  and  measure  those
instruments  at  fair  value.  It  further  provides   criteria  for  derivative
instruments  to be  designated  as fair value,  cash flow,  or foreign  currency
hedges, and establishes  accounting  standards for reporting changes in the fair
value of the derivative instruments.

     The Company  adopted  SFAS No. 133,  as amended,  on January 1, 2001.  Upon
adoption,  the Company recorded  interest rate swap hedging  instruments at fair
value in the balance sheet and recognized the offsetting  gains or losses in net
income  or  other  comprehensive  income,  as  appropriate.  See  Note  5 to the
financial  statements,  Other  long-term  debt, as set forth in Part II, Item 8,
Financial Statements and Supplementary Data, for additional information.

Recent Accounting Pronouncement

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

Internal Controls

     As of December 31, 2002, an evaluation was performed  under the supervision
and with the  participation of the Company's  management,  including the CEO and
CFO of the Managing Member,  of the effectiveness of the design and operation of
the Company's disclosure controls and procedures.  Based on that evaluation, the
Company's  management,  including  the  CEO  and  CFO  of the  Managing  Member,
concluded that the Company's  disclosure  controls and procedures were effective
as of December 31, 2002. There have been no significant changes in the Company's
internal controls or in other factors that could  significantly  affect internal
controls subsequent to December 31, 2002.

Critical Accounting Policies

     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   significant  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.

Use of estimates:

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

Asset Valuation:

     Recorded values of the Company's asset portfolio are periodically  reviewed
for impairment in accordance  with Statement of Financial  Accounting  Standards
(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 the  discounted  estimated  future cash flows) of the assets and its carrying
value on the measurement date.




                                       9
<PAGE>

Item 7a.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

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

     In general,  the  Company  manages  its  exposure to interest  rate risk by
obtaining  fixed rate debt. The fixed rate debt is structured so as to match the
cash flows required to service the debt to the payment  streams under fixed rate
lease receivables.  The payments under the leases are assigned to the lenders in
satisfaction of the debt. Furthermore, the Company has historically been able to
maintain  a stable  spread  between  its cost of funds and lease  yields in both
periods  of  rising  and  falling  interest  rates.  Nevertheless,  the  Company
frequently funds leases with its floating rate line of credit and is, therefore,
exposed to interest  rate risk until fixed rate  financing is  arranged,  or the
floating  rate line of credit is repaid.  As of  December  31,  2002,  there was
$10,600,000  outstanding  on the floating  rate line of credit and the effective
interest rate of the borrowings ranged from 3.29% to 3.30%.

     Also,  as  described  in  Item  7 in the  caption  "Capital  Resources  and
Liquidity,"  the Company  entered into a receivables  funding  facility in 1999.
Since  interest on the  outstanding  balances  under the  facility  varies,  the
Company is exposed to market risks  associated with changing  interest rates. To
hedge its interest rate risk,  the Company  enters into interest rate swaps that
effectively convert the underlying interest  characteristic on the facility from
floating to fixed.  Under the swap  agreements,  the  Company  makes or receives
variable  interest  payments  to or from the  counterparty  based on a  notional
principal  amount.  The net  differential  paid or  received  by the  Company is
recognized  as an  adjustment  to  interest  expense  related  to  the  facility
balances.  The amount paid or received  represents  the  difference  between the
payments  required under the variable interest rate facility and the amounts due
under the facility at the fixed (hedged) interest rate. As of December 31, 2002,
borrowings on the facility were $62,912,000 and the associated variable interest
rate was  2.0081%.  The  average  fixed  interest  rate  achieved  with the swap
agreements was 6.861% at December 31, 2002.

     In general,  these swap  agreements  eliminate the Company's  interest rate
risk associated with variable interest rate borrowings.  However, the Company is
exposed to and manages credit risk associated with the  counterparty to the swap
agreement by dealing only with institutions it considers  financially  sound. If
these agreements were not in place, based on the Company's  facility  borrowings
at  December  31,  2002,  a  hypothetical  1.00%  increase or decrease in market
interest rates would  increase or decrease the Company's 2003 variable  interest
expense by approximately $528,500.

     See the Notes to the  financial  statements as set forth in Part II, Item 8
for additional information.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See the Report of Independent  Auditors,  Financial Statements and Notes to
Financial Statements attached hereto at pages 11 through 28.

                                       10
<PAGE>







                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS



The Members
ATEL Capital Equipment Fund VIII, LLC

     We have audited the accompanying  balance sheets of ATEL Capital  Equipment
Fund VIII,  LLC  (Company)  as of December  31,  2002 and 2001,  and the related
statements of operations, changes in members' capital and cash flows for each of
the  three  years  in the  period  ended  December  31,  2002.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

     In our opinion,  the financial statements referred to above present fairly,
in all material respects,  the financial position of ATEL Capital Equipment Fund
VIII,  LLC at December 31, 2002 and 2001,  and the results of its operations and
its cash flows for each of the three  years in the  period  ended  December  31,
2002, in conformity with accounting  principles generally accepted in the United
States.

                                                           /s/ ERNST & YOUNG LLP

San Francisco, California
February 7, 2003





                                       11
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                                 BALANCE SHEETS

                           DECEMBER 31, 2002 AND 2001


                                     ASSETS

<TABLE>
<CAPTION>
                                                                     2002               2001
                                                                     ----               ----
<S>                                                             <C>                <C>
Cash and cash equivalents                                       $       2,263,479  $     2,269,137
Accounts receivable, net of allowance for doubtful accounts of
   $516,365 in 2002 and $41,365 in 2001                                1,874,311         3,256,527
Due from Managing Member                                                 171,119                 -
Other assets                                                              55,000            85,000
Investments in equipment and leases                                  149,100,763       178,811,010
                                                               ------------------ -----------------
Total assets                                                       $ 153,464,672     $ 184,421,674
                                                               ================== =================


                        LIABILITIES AND MEMBERS' CAPITAL


Long-term debt                                                      $ 62,912,000      $ 85,369,000
Non-recourse debt                                                      5,702,855         6,014,964
Line of credit                                                        10,600,000         2,500,000
Accounts payable                                                         697,720           649,538
Accrued interest payable                                                  96,179            76,980
Interest rate swap contracts                                           5,381,342         4,700,622
Unearned operating lease income                                        1,547,813         1,748,618
                                                               ------------------ -----------------
Total liabilities                                                     86,937,909       101,059,722

Members' capital                                                      66,526,763        83,361,952
                                                               ------------------ -----------------
Total liabilities and members' capital                             $ 153,464,672     $ 184,421,674
                                                               ================== =================
</TABLE>


                             See accompanying notes.


                                       12
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                            STATEMENTS OF OPERATIONS

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


<TABLE>
<CAPTION>
Revenues:                                                         2002              2001               2000
                                                                  ----              ----               ----
   Leasing activities:
<S>                                                             <C>                <C>               <C>
      Operating leases                                          $ 31,638,196       $ 40,911,071      $ 29,965,693
      Direct financing leases                                        807,678            920,026           810,501
      Gain on sales of assets                                        271,751          1,801,292             1,453
Interest                                                              15,547            131,575           175,029
Other                                                                196,803             30,133            94,809
                                                             ---------------- ------------------------------------
                                                                  32,929,975         43,794,097        31,047,485
Expenses:
Depreciation and amortization                                     23,162,548         31,243,646        22,588,276
Interest expense                                                   6,148,759          9,058,622         7,365,041
Asset management fees to Managing Member                           1,481,576          1,849,335         1,465,566
Cost reimbursements to Managing Member                               832,539            924,375         1,408,523
Provision for doubtful accounts                                      475,000             82,615                 -
Provision for losses and impairments                               2,612,500                  -                 -
Railcar maintenance                                                  215,009                  -                 -
Aircraft inspection and maintenance                                  211,268                  -                 -
Professional fees                                                    179,562            215,450           127,345
Other                                                                416,758            287,382           398,365
                                                             ---------------- ------------------------------------
                                                                  35,735,519         43,661,425        33,353,116
                                                             ---------------- ------------------------------------
Net income (loss)                                               $ (2,805,544)         $ 132,672      $ (2,305,631)
                                                             ================ ====================================

Net income (loss):
   Managing Member                                               $ 1,001,169        $ 1,004,916         $ 795,009
   Other Members                                                  (3,806,713)          (872,244)       (3,100,640)
                                                             ---------------- ------------------------------------
                                                                $ (2,805,544)         $ 132,672      $ (2,305,631)
                                                             ================ ====================================

Net (loss) per Limited Liability Company Unit (Other Members)        $ (0.28)           $ (0.06)          $ (0.29)
Weighted average number of Units outstanding                      13,570,188         13,570,188        10,634,792
</TABLE>















                             See accompanying notes.


                                       13
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                    STATEMENT OF CHANGES IN MEMBERS' CAPITAL

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


<TABLE>
<CAPTION>
                                                                                                  Accumulated
                                                                                                     Other
                                                                                                 Comprehensive
                                                    Other Members                Managing           Income
                                                    -------------
                                               Units            Amount            Member            (Loss)             Total
                                               -----            ------            ------            ------             -----
<S>                                              <C>           <C>              <C>                <C>                 <C>
Balance December 31, 1999                        7,744,326     $ 64,130,010     $           -      $           -       $64,130,010
Capital contributions                            5,825,862       58,258,620                 -                  -        58,258,620
Less selling commissions to affiliates                           (5,534,569)                -                  -        (5,534,569)
Other syndication costs to affiliates                            (2,619,534)                -                  -        (2,619,534)
Distributions to Managing Member                                          -          (795,009)                 -          (795,009)
Distributions to Other Members
   ($0.92 per Unit)                                              (9,795,386)                -                  -        (9,795,386)
Net income (loss)                                                (3,100,640)          795,009                           (2,305,631)
                                          ----------------- ---------------- ----------------- ------------------ -----------------
Balance December 31, 2000                       13,570,188      101,338,501                 -                  -       101,338,501
Distributions to Managing Member                                          -        (1,004,916)                 -        (1,004,916)
Distributions to Other Members
   ($0.91 per Unit)                                             (12,403,683)                -                  -       (12,403,683)
Cumulative effect of change in
   accounting principle at
   January 1, 2001                                                        -                 -           (821,196)         (821,196)
Unrealized decrease in value of
   interest rate swap contracts                                           -                 -         (3,879,426)       (3,879,426)
Net income (loss)                                                  (872,244)        1,004,916                  -           132,672
                                          ----------------- ---------------- ----------------- ------------------ -----------------
Balance December 31, 2001                       13,570,188       88,062,574                 -         (4,700,622)       83,361,952
Distributions to Managing Member                                          -        (1,001,169)                 -        (1,001,169)
Distributions to Other Members
   ($0.91 per Unit)                                             (12,347,756)                -                  -       (12,347,756)
Unrealized decrease in value of
   interest rate swap contracts                                           -                 -           (680,720)         (680,720)
Net income (loss)                                                (3,806,713)        1,001,169                  -        (2,805,544)
                                          ----------------- ---------------- ----------------- ------------------ -----------------
Balance December 31, 2002                       13,570,188      $71,908,105     $           -       $ (5,381,342)     $ 66,526,763
                                          ================= ================ ================= ================== =================
</TABLE>


                             See accompanying notes.


                                       14
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                            STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


<TABLE>
<CAPTION>
                                                                                   2002              2001               2000
                                                                                   ----              ----               ----
Operating activities:
<S>                                                                              <C>                   <C>            <C>
Net income (loss)                                                                $ (2,805,544)         $ 132,672      $ (2,305,631)
Adjustments to reconcile net income (loss) to cash provided by
   operating activities:
   Gain on sales of assets                                                           (271,751)        (1,801,292)           (1,453)
   Depreciation and amortization                                                   23,162,548         31,243,646        22,588,276
   Provision for doubtful accounts                                                    475,000             82,615                 -
   Provision for losses and impairments                                             2,612,500                  -                 -
   Changes in operating assets and liabilities:
      Accounts receivable                                                             907,216          2,000,427        (3,214,783)
      Due from Managing Member                                                       (171,119)                 -                 -
      Other assets                                                                     30,000             30,000            30,000
      Accounts payable, Managing Member                                                     -           (695,548)         (115,739)
      Accounts payable, other                                                          48,182            163,643           484,772
      Accrued interest                                                                 19,199           (190,843)          153,221
      Unearned lease income                                                          (200,805)          (302,523)          793,444
                                                                             ----------------- ------------------ -----------------
Net cash provided by operating activities                                          23,805,426         30,662,797        18,412,107
                                                                             ----------------- ------------------ -----------------

Investing activities:
Purchases of equipment on operating leases                                                  -        (26,556,373)      (66,010,813)
Purchases of equipment on direct financing leases                                    (293,570)          (810,271)       (9,367,277)
Reduction of net investment in direct financing leases                              2,134,026          2,806,236         2,154,474
Payment of initial direct costs to Managing Member                                    (37,440)          (147,721)         (844,058)
Proceeds from sales of assets                                                       2,403,934          7,348,063             7,761
                                                                             ----------------- ------------------ -----------------
Net cash provided by (used in) investing activities                                 4,206,950        (17,360,066)      (74,059,913)
                                                                             ----------------- ------------------ -----------------

Financing activities:
Borrowings under line of credit                                                    12,400,000         23,556,335        28,555,729
Repayments of line of credit                                                       (4,300,000)       (21,056,335)      (36,055,729)
Proceeds of other long-term debt                                                    3,900,000         19,000,000        34,900,000
Repayments of other long-term debt                                                (26,357,000)       (20,299,000)      (12,906,000)
Distributions to Other Members                                                    (12,347,756)       (12,403,683)       (9,795,386)
Distributions to Managing Member                                                   (1,001,169)        (1,004,916)         (795,009)
Repayments of non-recourse debt                                                      (312,109)        (1,310,780)       (2,186,487)
Proceeds of non-recourse debt                                                               -                  -         2,337,614
Capital contributions received                                                              -                  -        58,258,620
Payment of selling commissions and other syndication costs to
   Managing Member                                                                          -                  -        (8,154,103)
                                                                             ----------------- ------------------ -----------------
Net cash (used in) provided by financing activities                               (28,018,034)       (13,518,379)       54,159,249
                                                                             ----------------- ------------------ -----------------

Net decrease in cash and cash equivalents                                              (5,658)          (215,648)       (1,488,557)
Cash and cash equivalents at beginning of year                                      2,269,137          2,484,785         3,973,342
                                                                             ----------------- ------------------ -----------------
Cash and cash equivalents at end of year                                          $ 2,263,479        $ 2,269,137       $ 2,484,785
                                                                             ================= ================== =================
</TABLE>


                                       15
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                            STATEMENTS OF CASH FLOWS
                                   (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


<TABLE>
<CAPTION>
                                                                                   2002              2001               2000
                                                                                   ----              ----               ----

Supplemental disclosures of cash flow information:

<S>                                                                               <C>                <C>               <C>
Cash paid during the year for interest                                            $ 6,129,560        $ 9,249,465       $ 6,571,597
                                                                             ================= ================== =================

Schedule of non-cash transactions:

Change in fair value of interest rate swaps contracts                              $ (680,720)      $ (3,879,426)              $ -
                                                                             ================= ================== =================
</TABLE>






                             See accompanying notes.


                                       16
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


1.  Organization and Limited Liability Company matters:

     ATEL Capital  Equipment  Fund VIII,  LLC (the Company) was formed under the
laws of the state of  California  on July 31, 1998 for the purpose of  acquiring
equipment to engage in equipment leasing and sales activities,  primarily in the
United  States.  The Company may continue  until December 31, 2019. The Managing
Member of the  Company is ATEL  Financial  Services  LLC  (ATEL),  a  California
corporation.  Prior to converting to a limited liability company structure,  the
Managing Member was formerly known as ATEL Financial Corporation.  Each Member's
personal  liability for obligations of the Company  generally will be limited to
the amount of their respective contributions and rights to undistributed profits
and assets of the Company.

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

     The Company's  business consists of leasing various types of equipment.  As
of December 31, 2002, the original terms of the leases ranged from six months to
nine years.

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


2.  Summary of significant accounting policies:

Equipment on operating leases:

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

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

Direct financing leases:

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



                                       17
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


2.  Summary of significant accounting policies (continued):

Statements of cash flows:

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

Income taxes:

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

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

                                                 2002              2001
                                                 ----              ----
 Financial statement basis of net assets       $ 66,526,763       $ 83,361,952
 Tax basis of net assets                         26,812,937         50,905,460
                                           ----------------- ------------------
 Difference                                    $ 39,713,826       $ 32,456,492
                                           ================= ==================

     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 bad debts, impairment losses,  syndication costs and differences between the
depreciation  methods used in the  financial  statements  and the  Company's tax
returns.

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

<TABLE>
<CAPTION>
                                                         2002              2001               2000
                                                         ----              ----               ----
<S>                                                    <C>                   <C>            <C>
Net income (loss) per financial statements             $ (2,805,544)         $ 132,672      $ (2,305,631)
Adjustment to depreciation expense                      (14,111,240)       (19,612,115)      (29,978,571)
Provisions for doubtful accounts and losses               3,087,500             82,615                 -
Adjustments to lease revenues                             1,616,517          3,898,290         3,265,841
                                                   ----------------- ------------------ -----------------
Net loss per federal tax return                       $ (12,212,767)     $ (15,498,538)    $ (29,018,361)
                                                   ================= ================== =================
</TABLE>

Per unit data:

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








                                       18
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


2.  Summary of significant accounting policies (continued):

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.  The concentration of such deposits and temporary cash investments
is not deemed to create a significant risk to the Company.  Accounts  receivable
represent amounts due from lessees in various  industries,  related to equipment
on  operating  and direct  financing  leases.  See Note 8 for a  description  of
lessees by industry as of December 31, 2002, 2001 and 2000.

Basis of presentation:

     The accompanying  financial statements as of December 31, 2002 and 2001 and
for the three years ended  December  31, 2002 have been  prepared in  accordance
with  accounting  principles  generally  accepted in the United States.  Certain
prior  year  amounts  have been  reclassified  to conform  to the  current  year
presentation.

Use of estimates:

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

Asset valuation:

     Recorded values of the Company's asset portfolio are periodically  reviewed
for impairment in accordance  with Statement of Financial  Accounting  Standards
(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 the  discounted  estimated  future cash flows) of the assets and its carrying
value on the measurement date.

Derivative financial instruments:

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



                                       19
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


2.  Summary of significant accounting policies (continued):

     SFAS No. 133, as amended, requires the Company to recognize all derivatives
as  either  assets  or  liabilities  in the  balance  sheet  and  measure  those
instruments  at  fair  value.  It  further  provides   criteria  for  derivative
instruments  to be  designated  as fair value,  cash flow,  or foreign  currency
hedges, and establishes  accounting  standards for reporting changes in the fair
value of the  derivative  instruments.  Upon  adoption  on January 1, 2001,  the
Company recorded its interest rate swap hedging instruments at fair value in the
balance sheet and recognized the offsetting gains or losses as adjustments to be
reported in net income or other comprehensive income, as appropriate.

     The Company  utilizes  cash flow hedges  comprised  of interest  rate swaps
(hedges of variable rate interest bearing debt instruments).  Such interest rate
swaps are linked to and adjust  effectively  the interest  rate  sensitivity  of
specific long-term debt.

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

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

Recent accounting pronouncement:

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

Initial direct costs:

     The  Company   capitalizes   initial  direct  costs   associated  with  the
acquisition  of lease assets.  The costs are  amortized  over a five year period
using a straight line method.

Accounts receivable:

     Accounts receivable  represent the amounts billed under lease contracts and
currently due to the Partnership. Allowances for doubtful accounts are typically
established  based on historical  charge offs and collection  experience and are
usually determined by specifically identified lessees and invoiced amounts.



                                       20
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


3.  Investments in equipment and leases:

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

<TABLE>
<CAPTION>
                                                                               Depreciation
                                                                                Expense or         Reclass-
                                             December 31,                      Amortization      ifications or      December 31,
                                                 2001          Additions        of Leases        Dispositions           2002
                                                 ----          ---------        ---------        ------------           ----
<S>                                           <C>                       <C>     <C>                <C>               <C>
Net investment in operating leases            $ 157,558,157             $ -     $ (22,784,103)     $ (15,369,785)    $ 119,404,269
Net investment in direct financing leases        14,181,674         293,570        (2,134,026)        (1,107,614)       11,233,604
Assets held for sale or lease                     6,055,819               -                 -         14,345,216        20,401,035
Reserves for losses and impairments                       -      (2,612,500)                -                  -        (2,612,500)
Initial direct costs, net of accumulated
   amortization of $1,075,687 in 2002 and
   730,615 in 2001                                1,015,360          37,440          (378,445)                 -           674,355
                                            ---------------- --------------- ----------------- ------------------ -----------------
                                              $ 178,811,010    $ (2,281,490)    $ (25,296,574)      $ (2,132,183)    $ 149,100,763
                                            ================ =============== ================= ================== =================
</TABLE>

     Management periodically reviews the carrying values of its assets on leases
and  assets  held for  lease or sale.  As a result  of that  review,  management
determined that the fair values of a fleet of diesel electric locomotives and an
aircraft had declined in value to the extent that the carrying values had become
impaired.  The fair value of the assets was  determined  based on the sum of the
discounted estimated future cash flows of the assets. A charge to operations was
recorded  for the decline in value of those  assets in the amount of  $2,612,500
for the year ended December 31, 2002.

Operating leases:

Property on operating leases consists of the following:

<TABLE>
<CAPTION>
                                                                    Reclass-
                               December 31,                      ifications or      December 31,
                                   2001           Additions       Dispositions          2002
                                   ----           ---------       ------------          ----
<S>                           <C>                          <C>         <C>         <C>
Manufacturing                 $   49,186,963               $ -         $ 513,672   $     49,700,635
Aircraft                           38,535,439                -        (5,725,300)        32,810,139
Transportation, rail               37,626,277                -       (16,571,608)        21,054,669
Transportation, other              23,438,156                -                 -         23,438,156
Containers                         21,228,750                -           (21,250)        21,207,500
Natural gas compressors            14,051,601                -                 -         14,051,601
Materials handling                  7,662,557                -          (281,837)         7,380,720
Marine vessel                       4,314,031                -        (4,314,031)                 -
Other                              12,743,053                -         1,375,349         14,118,402
                             ----------------- ---------------- ----------------- ------------------
                                  208,786,827                -       (25,025,005)       183,761,822
Less accumulated depreciation     (51,228,670)     (22,784,103)        9,655,220        (64,357,553)
                             ----------------- ---------------- ----------------- ------------------
                              $ 157,558,157     $ (22,784,103)   $   (15,369,785)  $   119,404,269
                             ================= ================ ================= ==================
</TABLE>



                                       21
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


3.  Investments in equipment and leases (continued):

Direct financing leases:

     As of December 31, 2002 and 2001,  investment  in direct  financing  leases
consists of anhydrous ammonia storage tanks, office automation equipment,  point
of sale equipment,  refrigerated  trailers and laundry equipment.  The following
lists the components of the Company's  investment in direct  financing leases as
of December 31, 2002 and 2001:

<TABLE>
<CAPTION>
                                                                  2002              2001
                                                                  ----              ----
<S>                                                          <C>               <C>
Total minimum lease payments receivable                      $      8,634,652  $     12,119,703
Estimated residual values of leased equipment (unguaranteed)       4,510,520          4,785,886
                                                            ----------------- ------------------
Investment in direct financing leases                             13,145,172         16,905,589
Less unearned income                                              (1,911,568)        (2,723,915)
                                                            ----------------- ------------------
Net investment in direct financing leases                    $    11,233,604   $     14,181,674
                                                            ================= ==================
</TABLE>

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

     At  December  31,  2002,  the  aggregate  amounts of future  minimum  lease
payments are as follows:

                                          Direct
       Year ending     Operating        Financing
      December 31,      Leases            Leases             Total
      ------------      ------            ------             -----
              2003   $  25,180,670    $      2,524,494  $     27,705,164
              2004       15,717,391         2,063,877         17,781,268
              2005       11,386,580         1,976,473         13,363,053
              2006        7,219,524         1,727,378          8,946,902
              2007        5,200,244           293,628          5,493,872
        Thereafter        4,002,677            48,802          4,051,479
                    ---------------- ----------------- ------------------
                     $  68,707,086    $      8,634,652  $     77,341,738
                    ================ ================= ==================

     At December 31, 2002, there were no commitments to purchase lease assets.

     Reserves for losses and impairments and allowance for doubtful accounts:

     Activity in the  reserve  for losses and  impairments  and  allowances  for
doubtful accounts consists of the following:

                                        Reserve for     Allowance for
                                        losses and         doubtful
                                        impairments        accounts
    Balance December 31, 1999               $       -        $        -
    Provision                                       -                 -
                                      ---------------- -----------------
    Balance December 31, 2000                       -                 -
    Provision                                                    82,615
    Charge offs                                     -           (41,250)
                                      ---------------- -----------------
    Balance December 31, 2001                       -            41,365
    Provision                               2,612,500           475,000
                                      ---------------- -----------------
    Balance December 31, 2002             $ 2,612,500         $ 516,365
                                      ================ =================



                                       22
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


4.  Non-recourse debt:

     At December  31,  2002,  non-recourse  debt  consists  of notes  payable to
financial  institutions.  The notes are due in varying quarterly and semi-annual
payments.  Interest on the notes is at fixed rates ranging from 7.98% to 10.00%.
The notes are secured by assignments of lease payments and pledges of assets. At
December 31, 2002, the carrying value of the pledged assets is $17,682,618.  The
notes mature from 2003 through 2006.

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

        Year ending
       December 31,       Principal         Interest           Total
                2003            397,915          483,617         $ 881,532
                2004          4,425,556          170,437         4,595,993
                2005            418,256           77,737           495,993
                2006            461,128           34,866           495,994
                       ----------------- ---------------- -----------------
                            $ 5,702,855        $ 766,657       $ 6,469,512
                       ================= ================ =================


5.  Other long-term debt:

     In 1999, the Company entered into a $70 million receivables funding program
(the  Program)  (which  was  subsequently  increased  to  $125  million)  with a
receivables  financing company that issues commercial paper rated A1 by Standard
and  Poors  and  P1  by  Moody's  Investor  Services.  Under  the  Program,  the
receivables  financing  company  receives  a  general  lien  against  all of the
otherwise unencumbered assets of the Company. The Program provides for borrowing
at a variable interest rate (2.0081% at December 31, 2002), based on an index of
A1 commercial paper.

     The Program  requires the Managing Member on behalf of the Company to enter
into various interest rate swaps with a financial institution (also rated A1/P1)
to manage interest rate exposure associated with variable rate obligations under
the Program by effectively  converting the variable rate debt to fixed rates. As
of  December  31,  2002,  the Company  receives  or pays  interest on a notional
principal of $62,912,000,  based on the difference between nominal rates ranging
from 3.60% to 7.72% and the variable rate under the Program. No actual borrowing
or lending is involved.  The termination of the swaps coincide with the maturity
of the debt.  The  differential  to be paid or  received  is accrued as interest
rates change and is recognized  currently as an  adjustment to interest  expense
related to the debt.



                                       23
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


5.  Other long-term debt (continued):

Borrowings under the Program are as follows:

                           Original          Balance       Payment Rate on
                            Amount        December 31,     Interest Swap
        Date Borrowed      Borrowed           2002           Agreement
        -------------      --------           ----           ---------
         11/11/99          $ 20,000,000      $ 6,005,000       6.84%
         12/21/99            20,000,000       14,792,000       7.41%
         12/24/99            25,000,000        8,471,000       7.44%
          4/17/00             6,500,000        3,785,000       7.45%
          4/28/00             1,900,000          612,000       7.72%
          8/3/00             19,000,000       12,100,000       7.50%
         10/31/00             7,500,000        4,450,000       7.13%
          1/29/01             8,000,000        4,923,000       5.91%
          6/1/01              2,000,000          776,000       5.04%
          9/1/01              9,000,000        4,048,000       4.35%
          1/31/02             3,900,000        2,950,000       3.60%
                       ----------------- ----------------
                          $ 122,800,000      $62,912,000
                       ================= ================

     The long-term debt borrowings mature from 2003 through 2009. Future minimum
principal payments of long-term debt and annual swap notional  reductions are as
follows:

<TABLE>
<CAPTION>
                  Swap Notional /                                          Rates on
  Year ending           Debt                                             Interest Swap
  December 31,       Principal         Interest           Total           Agreements*
  ------------       ---------         --------           -----           -----------
<S>        <C>        <C>               <C>              <C>             <C>    <C>
           2003       $ 21,073,000      $ 3,636,621      $ 24,709,621    6.861%-6.901%
           2004         15,092,000        2,394,241        17,486,241    6.896%-6.962%
           2005         11,351,000        1,507,894        12,858,894    6.985%-7.137%
           2006          6,950,000          884,435         7,834,435    7.172%-7.203%
           2007          4,701,000          439,685         5,140,685    6.896%-7.028%
           2008          3,025,000          169,486         3,194,486    6.214%-6.887%
           2009            720,000            9,149           729,149    5.042%-5.068%
                  ----------------- ---------------- -----------------
                      $ 62,912,000      $ 9,041,511      $ 71,953,511
                  ================= ================ =================
</TABLE>

* Represents the range of monthly weighted average fixed interest rates paid for
amounts maturing in the particular year. The receive-variable rate portion of
the swap represents commercial paper rates (2.0081% at December 31, 2002).

     In 2002 and 2001, the net effect of the interest rate swaps was to increase
interest expense by $1,818,380 and $2,166,018, respectively.




                                       24
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


6.  Related party transactions:

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

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

     Each  of ATEL  Leasing  Corporation  ("ALC"),  ATEL  Equipment  Corporation
("AEC"),  ATEL Investor  Services  ("AIS") and ATEL Financial  Services LLC 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 ATEL Financial
Services LLC.

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

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

<TABLE>
<CAPTION>
                                                                                   2002              2001               2000
                                                                                   ----              ----               ----
<S>                                                                               <C>                <C>               <C>
Asset management fees to Managing Member                                          $ 1,481,576        $ 1,849,335       $ 1,465,566
Administrative costs reimbursed to Managing Member                                    832,539            924,375         1,408,523
Initial direct costs paid to Managing Member                                           37,440            147,721           844,058
Selling commissions (equal to 9.5% of the selling price of the Limited
   Liability Company units, deducted from Other Members' capital)                           -                  -         5,534,569
Reimbursement of other syndication costs to Managing Member                                 -                  -         2,619,534
                                                                             ----------------- ------------------ -----------------
                                                                                  $ 2,351,555        $ 2,921,431      $ 11,872,250
                                                                             ================= ================== =================
</TABLE>


7.  Members' capital:

As of December 31, 2002, 13,570,188 Units were issued and outstanding. The
Company is authorized to issue up to 15,000,000 Units in addition to the Units
issued to the initial members (50 Units).

     As difined in the Company's 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 ATEL.  In  accordance  with the  terms  of the of  Operating  Agreement,
additional  allocations of income was made to the Managing  Member in 2002, 2001
and 2000.  The amount  allocated was  determined to bring the Managing  Member's
ending capital account balance to zero at the end of each year.



                                       25
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


8.  Concentration of credit risk and major customers:

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

     As of December 31, 2002, 2001 and 2000 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:

                                             2002          2001          2000
                                             ----          ----          ----
      Transportation, rail                    14%          18%            20%
      Transportation, air                     17%          17%            15%
      Manufacturing, other                    17%          15%            15%
      Transportation, other                   12%          12%            13%
      Transportation, containers              11%           *             10%
      Manufacturing, electronics              10%           *             10%

      * Less than 10%

     During 2002,  one customer  comprised  10% of the  Company's  revenues from
leases.  During 2001, one customer  comprised 16% of the Company's revenues from
leases.  During 2000, one customer  comprised 10% of the Company's revenues from
leases.


9.  Line of credit:

     The  Company  participates  with the  Managing  Member  and  certain of its
affiliates  in  a  $55,645,837   revolving  line  of  credit  (comprised  of  an
acquisition facility and a warehouse facility) with a financial institution that
includes  certain  financial  covenants.  The line of credit expires on June 28,
2004. As of December 31, 2002, borrowings under the facility were as follows:

<TABLE>
<CAPTION>
<S>                                                                                                <C>
Amount  borrowed by the Company under the acquisition facility                                     $   10,600,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
   facility                                                                                             18,400,000
                                                                                                  -----------------
Total borrowings under the acquisition facility                                                         29,000,000
Amounts borrowed by the Managing Member and its sister corporation under the warehouse facility                  -
                                                                                                  -----------------
Total outstanding balance                                                                          $   29,000,000
                                                                                                  =================

Total available under the line of credit                                                           $   55,645,837
Total outstanding balance                                                                             (29,000,000)
                                                                                                  -----------------
Remaining availability                                                                             $   26,645,837
                                                                                                  =================
</TABLE>

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



                                       26
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


9.  Line of credit (continued):

     The Company  borrowed  $12,400,000,  $23,556,335 and $28,555,729  under the
line of credit during 2002, 2001 and 2000, respectively.  Repayments on the line
of credit were  $4,300,000,  $21,056,335 and  $36,055,729  during 2002, 2001 and
2000,  respectively.  At December 31, 2002,  $10,600,000  remained  outstanding.
Interest  on the line of credit is based on either  the thirty day LIBOR rate or
the bank's prime rate.  The effective  interest  rates on borrowings at December
31, 2002 ranged 3.29% to 3.30%.

     The credit agreement  includes certain  financial  covenants  applicable to
each borrower.  The Company was in compliance  with its covenants as of December
31, 2002.


10.  Fair value of financial instruments:

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

Cash and cash equivalents:

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

Non-recourse debt:

     The fair  value  of the  Company's  non-recourse  debt is  estimated  using
discounted  cash  flow  analyses,  based on the  Company's  current  incremental
borrowing rates for similar types of borrowing arrangements.  The estimated fair
value of the Company's non-recourse debt at December 31, 2002 is $5,918,609.

Other long-term debt:

     The carrying value of the  Partnership's  other long-term debt approximates
its fair value at December  31, 2002 as  borrowings  are at a variable  interest
rate that adjusts to current market interest rates.

Line of credit:

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

Interest rate swaps:

     The fair value of interest rate swaps is estimated by  management  based on
independent  valuations or discounting the fixed cash flows paid under each swap
using the rate at which  the  Company  could  enter  into new  swaps of  similar
maturities.  Swaps are  recorded on the balance  sheet at fair value at December
31, 2002.



                                       27
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2002


11.  Other comprehensive income (loss):

For the years ended December 31, 2002, 2001 and in 2000, other comprehensive
income (loss) consisted of the following:

<TABLE>
<CAPTION>
                                                                                   2002              2001               2000
                                                                                   ----              ----               ----
<S>                                                                              <C>                   <C>            <C>
Net income (loss)                                                                $ (2,805,544)         $ 132,672      $ (2,305,631)
Other comprehensive income:
Cumulative effect of change in accounting principle at January 1, 2001                      -           (821,196)                -
Increase (decrease) in value of interest rate swap contracts during the year         (680,720)        (3,879,426)                -
                                                                              ---------------- ------------------ -----------------
Comprehensive net income (loss)                                                  $ (3,486,264)      $ (4,567,950)     $ (2,305,631)
                                                                              ================ ================== =================
</TABLE>


12.  Selected quarterly data (unaudited):

<TABLE>
<CAPTION>
                                                               March 31,         June 30,        September 30,      December 31,
Quarter ended                                                    2001              2001              2001               2001
                                                                 ----              ----              ----               ----

<S>                                                             <C>               <C>                <C>               <C>
Total revenues                                                  $15,961,653       $ 9,205,063        $ 9,505,505       $ 9,121,876
Net income (loss)                                               $ 4,225,174      $ (1,010,900)      $ (3,306,950)        $ 225,348
Net income (loss) per limited partnership unit                       $ 0.29           $ (0.09)           $ (0.26)           $ 0.00

                                                               March 31,         June 30,        September 30,      December 31,
Quarter ended                                                    2002              2002              2002               2002
                                                                 ----              ----              ----               ----

Total revenues                                                  $ 9,071,677       $ 8,160,128        $ 7,684,683       $ 8,013,487
Net income (loss)                                                 $ (79,008)       $ (365,999)        $ (523,737)     $ (1,836,800)
Net income (loss) per limited partnership unit                      $ (0.02)          $ (0.08)           $ (0.06)          $ (0.12)
</TABLE>






                                       28
<PAGE>

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

None.


                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS

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

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

     Each  of ATEL  Leasing  Corporation  ("ALC"),  ATEL  Equipment  Corporation
("AEC"),  ATEL Investor Services ("AIS") and ATEL Financial Services LLC ("AFS")
is a wholly-owned subsidiary of ATEL Capital Group and performs services for the
Partnership.  Acquisition  services are  performed for the  Partnership  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 Partnership are performed by
AFS. ATEL Securities Corporation ("ASC") is a wholly-owned subsidiary of AFS.

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

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

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

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

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

     Dean L. Cash,  age 52, 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 49, joined ATEL in 1999 as a director,  senior vice
president  and its  chief  financial  officer.  He  became  its  executive  vice
president  and COO in April 2001.  Prior to joining  ATEL,  Mr. Choksi was chief
financial officer at Wink  Communications,  Inc. from 1997 to 1999. From 1977 to
1997, Mr. Choksi was with Phoenix American  Incorporated,  a financial  services
and management  company,  where he held various positions during his tenure, and
was senior vice president, chief financial officer and director when he left the
company.  Mr.  Choksi was involved in all  corporate  matters at Phoenix and was
responsible  for Phoenix's  capital  market needs.  He also served on the credit
committee  overseeing  all  corporate  investments,  including its venture lease
portfolio.  Mr. Choksi was a part of the executive  management team which caused
Phoenix's  portfolio to increase  from $50 million in assets to over $2 billion.
Mr. Choksi  received a bachelor of technology  degree in mechanical  engineering
from the Indian Institute of Technology,  Bombay; and an M.B.A.  degree from the
University of California, Berkeley.

     Donald E.  Carpenter,  age 54, joined ATEL in 1986 as controller.  Prior to
joining ATEL, Mr.  Carpenter was an audit  supervisor  with Laventhol & Horwath,
certified public  accountants in San Francisco,  California,  from 1983 to 1986.
From 1979 to 1983, Mr.  Carpenter was an audit senior with  Deloitte,  Haskins &
Sells, certified public accountants, in San Jose, California. From 1971 to 1975,
Mr.  Carpenter  was a Supply  Corp  officer  in the U. S.  Navy.  Mr.  Carpenter
received a B.S. degree in mathematics  (magna cum laude) from  California  State
University,  Fresno in 1971 and  completed a second major in accounting in 1978.
Mr. Carpenter has been a California certified public accountant since 1981.



                                       29
<PAGE>

     Vasco H. Morais,  age 44, joined ATEL in 1989 as general counsel to provide
legal support in the drafting and reviewing of lease documentation,  advising on
general corporate law matters, and assisting on securities law issues. From 1986
to 1989,  Mr.  Morais was  employed  by the  BankAmeriLease  Companies,  Bank of
America's  equipment leasing  subsidiaries,  providing in-house legal support on
the  documentation  of  tax-oriented  and non-tax  oriented direct and leveraged
lease transactions, vendor leasing programs and general corporate matters. Prior
to the BankAmeriLease  Companies,  Mr. Morais was with the Consolidated  Capital
Companies in the corporate and securities legal department  involved in drafting
and reviewing  contracts,  advising on corporate law matters and  securities law
issues.  Mr.  Morais  received  a B.A.  degree  in 1982 from the  University  of
California in Berkeley,  a J.D.  degree in 1986 from Golden Gate  University Law
School and an M.B.A.  (Finance) in 1997 from Golden Gate University.  Mr. Morais
has been an active member of the State Bar of California since 1986.


Item 11.  EXECUTIVE COMPENSATION

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

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

Selling Commissions

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

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

Asset Management Fee

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

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

Asset Management Fee Limit:

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

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

Alternative Fee Schedule:

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



                                       30
<PAGE>

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

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

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

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

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

Managing Member's Interest in Operating Proceeds

     Net income,  net loss and investment tax credits are allocated 92.5% to the
Other  Members and 7.5% to ATEL.  See financial  statements  included in Item 8,
Part I of this report for amounts allocated to the Managing Member in 2002, 2001
and 2000.


Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT

Security Ownership of Certain Beneficial Owners

     At December 31, 2002, no investor is known to hold  beneficially  more than
5% of the issued and outstanding Units.

Security Ownership of Management

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

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

<S>                                         <C>                                <C>                                           <C>
Limited Liability Company Units                A. J. Batt                           Initial Limited Liability                0.0002%
                                            600 California Street, 6th Floor    Company Units
                                                 San Francisco, CA 94108       25 Units ($250)
                                                                                (owned by wife)

Limited Liability Company Units                Dean Cash                            Initial Limited Liability                0.0002%
                                            600 California Street, 6th Floor    Company Units
                                                 San Francisco, CA 94108       25 Units ($250)
                                                                                (owned by wife)
</TABLE>

Changes in Control

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

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




                                       31
<PAGE>

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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


Item 14.  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

     Under the supervision and with the  participation  of our management  (ATEL
Financial  Services,  LLC as Managing  Member of the  registrant,  including the
chief  executive  officer and chief  financial  officer),  an  evaluation of the
effectiveness of the design and operation of the Company's  disclosure  controls
and  procedures  [as  defined in Rules  240.13a-14(c)  and  15d-14(c)  under the
Securities  Exchange Act of 1934] was  performed as of a date within ninety days
before the filing date of this annual report.  Based upon this  evaluation,  the
chief executive  officer and chief financial  officer  concluded that, as of the
evaluation  date, our disclosure  controls and procedures were effective for the
purposes of recording, processing,  summarizing and timely reporting information
required to be disclosed by us in the reports that we file under the  Securities
Exchange Act of 1934 and that such  information is accumulated and  communicated
to our  management  in  order  to  allow  timely  decisions  regarding  required
disclosure.

Changes in internal controls

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


                                     PART IV

Item 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
               ON FORM 8-K

   (a)Financial Statements and Schedules
   1.     Financial Statements
          Included in Part II of this report:
          Report of Independent Auditors
          Balance Sheets at December 31, 2002 and 2001
          Statements of Operations for the years ended December 31, 2002, 2001
          and 2000 Statements of Changes in Members' Capital for the years ended
          December 31, 2002, 2001 and 2000 Statements of Cash Flows for the
          years ended December 31, 2002, 2001 and 2000 Notes to Financial
          Statements

   2.     Financial Statement Schedules
          Allschedules for which provision is made in the applicable accounting
             regulations of the Securities and Exchange Commission are not
             required under the related instructions or are inapplicable and,
             therefore, have been omitted.

   (b)    Reports on Form 8-K for the fourth quarter of 2002
          None

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



                                       32
<PAGE>

                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



Date:     3/26/03

                    ATEL Capital Equipment Fund VIII, LLC
                      (Registrant)


By: ATEL Financial Services LLC,
    Managing Member of Registrant



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





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








                                       33
<PAGE>

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


 SIGNATURE                               CAPACITIES                      DATE



      /s/ Dean Cash       President, Chairman and Chief Executive        3/26/03
------------------------   Officer of ATEL Financial Services LLC
        Dean Cash



 /s/ Paritosh K. Choksi   Executive Vice President and director of       3/26/03
------------------------   ATEL Financial Services LLC, Principal
   Paritosh K. Choksi      financial officer of registrant; principal
                           financial officer and director of ATEL
                           Financial Services LLC


 /s/ Donald E. Carpenter  Principal accounting officer of                3/26/03
------------------------   registrant; principal accounting officer
   Donald E. Carpenter     of ATEL Financial Services LLC





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


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



                                       34
<PAGE>

                                 CERTIFICATIONS


I, Paritosh K. Choksi, certify that:

1. I have  reviewed  this annual  report on Form 10-K of ATEL Cash  Distribution
Fund VIII, LLC;

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the  period  in which  this  annual  report  is being
     prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     annual report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions  about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

     a) all  significant  deficiencies  in the design or  operation  of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.



Date:          3/26/03

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


                                       35
<PAGE>

                                 CERTIFICATIONS


I, Dean L. Cash, certify that:

1. I have  reviewed  this annual  report on Form 10-K of ATEL Cash  Distribution
Fund VIII, LLC;

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the  period  in which  this  annual  report  is being
     prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     annual report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions  about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

     a) all  significant  deficiencies  in the design or  operation  of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.



Date:          3/26/03

 /s/ Dean Cash
-------------------------------------------------------------
Dean L. Cash
President and Chief Executive
Officer of Managing Member


                                       36
<PAGE>

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual report on Form 10K of ATEL Cash  Distribution
Fund VIII,  LLC, (the "Company") for the period ended December 31, 2002 as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
and  pursuant  to 18  U.S.C.  ss.1350,  as  adopted  pursuant  to  ss.906 of the
Sarbanes-Oxley  Act of 2002, I, Dean L. Cash,  Chief  Executive  Officer of ATEL
Financial Services, LLC, managing member of the Company, hereby certify that:

1. The Report fully complies with the  requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934 ; and

2. The  information  contained in the Report  fairly  presents,  in all material
respects, the financial condition and results of operations of the Company.

Date:          3/26/03



 /s/ Dean Cash
------------------------------------------
Dean L. Cash
President and Chief Executive
Officer of Managing Member


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual report on Form 10K of ATEL Cash  Distribution
Fund VIII,  LP, (the  "Company") for the period ended December 31, 2002 as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
and  pursuant  to 18  U.S.C.  ss.1350,  as  adopted  pursuant  to  ss.906 of the
Sarbanes-Oxley  Act of 2002, I, Paritosh K. Choksi,  Chief Financial  Officer of
ATEL Financial  Services,  LLC,  managing member of the Company,  hereby certify
that:

1. The Report fully complies with the  requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934 ; and

2. The  information  contained in the Report  fairly  presents,  in all material
respects, the financial condition and results of operations of the Company.

Date:          3/26/03



/s/ Paritosh K. Choksi
------------------------------------------
Paritosh K. Choksi
Executive Vice President of General
Partner, Principal financial officer of registrant



                                       37
<PAGE>