Form 10-K/A

                       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, 2003
                                       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

The number of Limited  Liability  Company Units  outstanding  as of December 31,
2003 was 13,570,188.


                       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.

This   amendment  is  being  filed  in  order  to  correct  the  format  of  the
certifications included as Exhibits 31.1 and 31.2.

                                       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  (AFS),  a
California  limited  liability  corporation.  Prior to  converting  to a limited
liability  company   structure,   AFS  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 $10.00 per Unit.  On January  13,  1999,
subscriptions  for the minimum number of Units  (120,000,  $1,200,000)  had been
received and AFS 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 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, 2003.

The Company's principal  objectives are to invest in a diversified  portfolio of
equipment  that will (i)  preserve,  protect and return the  Company's  invested
capital;  (ii)  generate  regular  distributions  to the  members  of cash  from
operations and cash from sales or refinancing,  with any balance remaining after
certain minimum distributions to be used to purchase additional equipment during
the reinvestment period  ("Reinvestment  Period"),  ending 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 AFS 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,  2003,  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 AFS, 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 AFS, would not satisfy the general credit rating
criteria for the portfolio.  In excess of 75% of the equipment acquired with the
net proceeds of the offering  (based on original  purchase cost) has been leased
to lessees with an aggregate credit rating of Baa or better or to such hospitals
or municipalities (as described above).

During 2003, 2002 and 2001,  certain lessees generated  significant  portions of
the Company's total lease revenues as follows:

Lessee                           Type of Equipment     2003     2002    2001
------                           -----------------     ----     ----    ----
Emery Worldwide Airlines         Aircraft               13%      *       *
Overnite Transportation Company  Tractors and trailers  10%     10%      *
Union Pacific Railroad           Railcars                *       *      16%
*  Less than 10%

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

The equipment leasing industry is highly competitive.  Equipment  manufacturers,
corporations, partnerships and others offer users an alternative to the purchase
of most types of equipment with payment terms 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 AFS 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.



                                       2
<PAGE>

AFS 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

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, 2003 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%
Aircraft                                  38,535,439                    15.68%
Transportation, other                     25,757,971                    10.48%
Transportation, intermodal
   containers                             21,228,750                     8.64%
Gas compressors                           13,848,465                     5.64%
Materials handling                        11,018,547                     4.48%
Point of sale / office
   automation                              8,677,566                     3.53%
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.

Through  December 31, 2003, the Company has disposed of certain leased assets as
set forth below:

<TABLE>
<CAPTION>
                                                                                     Excess of
Type of                                        Original                              Rents Over
Equipment                                   Equipment Cost       Sale Price          Expenses *
---------                                   --------------       ----------          ----------
<S>                                            <C>                  <C>                <C>
Aircraft                                       $ 14,123,602         $ 3,980,000        $ 5,829,737
Transportation, rail                             10,602,408           9,180,712          3,883,785
Point of sale / office automation                 7,693,006           1,971,275          8,122,613
Manufacturing                                     4,501,890           2,039,344          3,106,859
Transportation, other                               334,948             249,263            173,413
Other                                               773,543             362,203            570,911
                                           -----------------  ------------------  -----------------
                                               $ 38,029,397        $ 17,782,797       $ 21,687,318
                                           =================  ==================  =================
</TABLE>

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

For further information  regarding the Company's equipment lease portfolio as of
December  31,  2003,  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.




                                       3
<PAGE>

Item 2.  PROPERTIES

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


Item 3.  LEGAL PROCEEDINGS

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

Solectron:

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


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
AFS'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, 2003,  a total of 3,683  investors  were holders of record of
Units in the Company.

ERISA Valuation

In order to permit  ERISA  fiduciaries  who hold Units to satisfy  their  annual
reporting requirements, AFS estimated the value per Unit of the Company's assets
as of September 30, 2003. AFS calculated the estimated liquidation proceeds that
would be realized by the Company,  assuming an orderly disposition of all of the
Company's  assets as of January 1, 2004.  The estimates were based on the amount
of  remaining  lease  payments on existing  Company  leases,  and the  estimated
residual  values of the equipment  held by the Company upon the  termination  of
those  leases.  This  valuation  was based solely on AFS's  perception of market
conditions  and the types and amounts of the Company's  assets.  No  independent
valuation was sought.

After  calculating  the  aggregate  estimated  disposition  proceeds,  AFS  then
calculated  the portion of the aggregate  estimated  value of the Company assets
that would be distributed  to Unit holders on  liquidation  of the Company,  and
divided the total so  distributable  by the number of outstanding  Units.  As of
September 30, 2003, the value of the Company's assets, calculated on this basis,
was approximately  $7.71 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.

AFS has sole  discretion in determining the amount of  distributions;  provided,
however, that AFS will not reinvest in equipment,  but will distribute,  subject
to  payment  of any  obligations  of  the  Company,  such  available  cash  from
operations and cash from sales or refinancing as may be necessary to cause total
distributions  to the Members for each year  during the  Reinvestment  Period to
equal an amount between $0.80 and $1.00 per Unit,  which was to be determined by
AFS. In 2001,  AFS  determined  that amount to be $0.91 per Unit.  The Company's
Reinvestment Period ends December 31, 2006.



                                       4
<PAGE>

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

The rate for distributions  from 2003 operations was $0.0758 per Unit per month.
The  distributions  were paid in February  through  December 2003 and in January
2004. For each quarterly  distribution (paid in April, July and October 2003 and
in January  2004) the rate was  $0.2275 per Unit.  Distributions  were from 2003
cash flows from operations.

The rate for distributions  from 2002 operations was $0.0758 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 $0.0767 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
$0.0758.  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 $0.2300 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 following table presents summarized  information regarding  distributions to
members other than AFS (Other Members:)

<TABLE>
<CAPTION>
                                                2003             2002              2001               2000               1999
                                                ----             ----              ----               ----               ----
<S>                                               <C>              <C>                <C>               <C>                <C>
Net income (loss) per Unit, based on
   weighted average Units outstanding            $ (0.6300)       $ (0.2800)         $ (0.0600)        $ (0.2900)          $ 0.0600
Return of investment                                1.5400           1.1900             0.9700            1.2100             0.5500
                                          ----------------- ---------------- ------------------ -----------------  -----------------
Distributions per unit                              0.9100           0.9100             0.9100            0.9200             0.6100
Differences per Unit due to timing
   of distributions                                      -                -             0.0050            0.0275             0.2900
                                          ----------------- ---------------- ------------------ -----------------  -----------------
Actual distribution rates per Unit                $ 0.9100         $ 0.9100           $ 0.9150          $ 0.9475           $ 0.9000
                                          ================= ================ ================== =================  =================
</TABLE>



Item 6.  SELECTED FINANCIAL DATA

The following table presents selected  financial data of the Company at December
31, 2003, 2002, 2001, 2000 and 1999 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>
                                                 2003             2002              2001               2000               1999
                                                 ----             ----              ----               ----               ----
<S>                                            <C>               <C>               <C>               <C>                 <C>
Gross revenues                                 $ 28,549,271      $32,929,975       $ 43,794,097      $ 31,047,485        $ 8,660,653
Net income (loss)                              $ (7,521,261)    $ (2,805,544)         $ 132,672      $ (2,305,631)         $ 438,835
Weighted average Units                           13,570,188       13,570,188         13,570,188        10,634,792          4,025,294
Net income (loss) allocated to
   Other Members                               $ (8,522,240)    $ (3,806,713)        $ (872,244)     $ (3,100,640)         $ 239,420
Net income (loss) per Unit, based on
   weighted average Units outstanding               $ (0.63)         $ (0.28)           $ (0.06)          $ (0.29)            $ 0.06
Distributions per Unit, based on
   weighted average Units outstanding                $ 0.91           $ 0.91             $ 0.91            $ 0.92             $ 0.61
Total Assets                                  $ 110,222,744     $153,464,672       $184,421,674     $ 198,832,652      $ 145,663,336
Non-recourse and Other Long-term Debt          $ 46,555,335      $68,614,855       $ 91,383,964      $ 93,993,744       $ 71,848,617
Total Members' Capital                         $ 47,897,118      $66,526,763       $ 83,361,952     $ 101,338,501       $ 64,130,010
</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.



                                       5
<PAGE>

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.  The Company's  public  offering  provided for a
total maximum capitalization of $150,000,000.

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 AFS's  success in re-leasing or selling the equipment as it comes
off lease.

The Company participates with AFS and certain of its affiliates in a $58,627,656
floating rate 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, 2003, borrowings under the facility were as follows:

Amount  borrowed by the Company under the acquisition facility  $     9,500,000
Amounts borrowed by affiliated partnerships and limited
   liability companies under the acquisition facility                13,500,000
                                                               -----------------
Total borrowings under the acquisition facility                      23,000,000
Amounts borrowed by AFS and its sister corporation under the
   warehouse facility                                                         -
                                                               -----------------
Total outstanding balance                                       $   23,000,000
                                                               =================

Total available under the line of credit                        $   58,627,656
Total outstanding balance                                          (23,000,000)
                                                               -----------------
Remaining availability                                          $   35,627,656
                                                               =================

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 limited
partnerships and limited liability companies, the Company and AFS.

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 AFS  and  providing  for  cash
distributions  to the  Other  Members.  At  December  31,  2003,  there  were no
commitments to purchase lease assets.

AFS 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 AFS 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 AFS or affiliate and the time acquired by the Company; (iv) there is
no benefit  arising out of such  transaction to AFS 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. AFS 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  AFS 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. AFS believes that this
program  allowed  the  Company  to avail  itself  of lower  cost  debt than that
available for individual non-recourse debt transactions.  The program expired as
to new borrowings in April 2002.



                                       6
<PAGE>

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.

AFS 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

2003 vs. 2002:

In 2003 and 2002,  our primary  source of cash flows was rents we received  from
operating  leases. In both years, this was also our largest source of cash flows
from operating activities.

In  both  2003  and  2002,  we had two  sources  of cash  flows  from  investing
activities,  proceeds  from sales of lease  assets  and cash  flows from  direct
financing leases.  Proceeds from sales of lease assets increased from $2,403,934
in 2003 to $13,964,820 in 2003, an increase of $11,560,886.  Assets sold in 2003
consisted largely of aircraft, rail transportation and manufacturing  equipment.
Assets sold in 2002,  consisted  primarily of office  automation  equipment.  In
2002,  assets with an original cost of  approximately  $5,585,000  were sold. In
2003,  that increased to  approximately  $24,469,000.  It was this increase that
gave rise to the increase in cash flows from asset sales.  Investing  activities
also  included  cash flows from direct  financing  leases in both 2002 and 2003.
Cash received on these leases decreased from $2,134,026 in 2002 to $1,793,351 in
2003, a decrease of $340,675.

In 2003, our sources of cash from financing  activities  consisted of borrowings
on the  line of  credit  ($19,500,000)  and  the  proceeds  of a new  $2,563,149
non-recourse  note  payable.  In  2002,  our  financing  sources  of  cash  were
borrowings  on the  line of  credit  ($12,400,000)  and the  proceeds  of  other
long-term debt ($3,900,000).  We used cash in investing  activities in both 2002
and 2003 to make  payments  on the line of credit,  non-recourse  debt and other
long-term debt and to make distributions to the members.

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.  Cash  flows  from  operations  decreased  from  $30,662,797  in  2001 to
$23,805,426  in 2002,  primarily as a result of  decreases  in  operating  lease
revenues partially off set by a decline in interest expense.

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.  As of December 31, 2001,  the Company had nearly
completed the  acquisition of its portfolio of lease assets.  After 2001,  asset
acquisitions  are not expected to be as significant.  Proceeds from the sales of
lease assets are not expected to be consistent from one period to another as the
amounts of such  proceeds  are  dependent on a number of factors  including  the
timing of lease terminations, types of assets being sold and the markets for the
various equipment types at the times they are sold.

In 2002 and  2001,  sources  of cash  from  financing  activities  consisted  of
long-term  debt  proceeds and  borrowings  under the line of credit.  Amounts of
long-term  debt proceeds  decreased  from  $19,000,000  in 2001 to $3,900,000 in
2002.  After the  borrowings in 2002, the debt facility was closed as it related
to new borrowings.



                                       7
<PAGE>

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 are not expected to be comparable to future periods.

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

As of December 31,  2003,  2002 and 2001 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:

                                         2003           2002            2001
                                         ----           ----            ----
  Transportation, rail                    20%            14%            18%
  Manufacturing, other                    18%            17%            15%
  Transportation, other                   13%            12%            12%
  Transportation, containers              11%            11%             *
  Transportation, air                      *             17%            17%
  Manufacturing, electronics               *             10%             *

  * Less than 10%

2003 vs. 2002:

Our  operations  resulted in net losses of $7,521,261 in 2003 and  $2,805,544 in
2002.The  primary reason for the increased loss is due to additional  impairment
losses of $5,290,639 in 2003,  an increase of $3,179,046  compared to 2002.  Our
primary source of revenues in both years was rents from operating leases.  Rents
from  operating  leases have  continued to decrease from  $31,638,196 in 2002 to
$26,938,424  in 2003, a decrease of $4,699,772.  Our operating  lease rents have
decreased  as a result of asset sales over the last two years,  consistent  with
the Company's maturing lease portfolio.

Our largest expense is depreciation of operating lease assets.  Depreciation has
decreased  from  $22,784,103  in 2002 to  $20,337,442  in 2003,  a  decrease  of
$2,446,661. This decrease is a result of the asset sales we noted above.

Railcar  maintenance costs have increased from $215,009 in 2002 to $1,008,874 in
2003,  an increase of $793,865.  Most of the increase  (approximately  $722,000)
related  to costs  incurred  in order to  prepare  rail cars to be placed on new
leases.

Interest  expense has decreased from $6,148,759 in 2002 to $5,270,675 in 2003, a
decrease of $878,084.  The decrease  resulted from  scheduled  repayments of our
non-recourse  and other  long-term  debt.  The  reduction  in  interest  expense
attributable to reduced  average  outstanding  balances was partially  offset by
additional  interest charges related to prior period asset  acquisitions as more
fully described in Note 6 in the financial statements included in Part I, Item 8
of this report.

In 2002 we provided  $475,000 for an allowance  for doubtful  accounts.  A large
portion  of the  accounts  provided  for in 2002  related to the  bankruptcy  of
National  Steel  Corporation,  a lessee of the  Company.  In 2003,  we recovered
$180,000 of the amounts we had provided for in 2002.

Management  periodically reviews the carrying values of its assets on leases and
assets held for lease or sale. As a result of the review,  management determined
that the fair values of a fleet of diesel  electric  locomotives,  railroad auto
racks,  manufacturing  equipment  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  $5,679,271  for the year ended  December
31, 2003.

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.  The primary  reason for the loss is due to
impairment losses of $2,612,500 in 2002, there was no such provision in 2001.

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.

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 as a result of making
scheduled  payments on the Company's  existing debt. This led to the decrease in
interest expense compared to 2001.



                                       8
<PAGE>

In 2002 we provided  $475,000 for an allowance  for doubtful  accounts.  A large
portion  of the  accounts  provided  for in 2002  related to the  bankruptcy  of
National Steel Corporation, a lessee of the Company. There were no similar large
provisions in 2001.

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

As a result of our  periodic  review  of the  carrying  values of our  assets on
leases and assets held for lease or sale,  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.

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, by SFAS No. 138,  issued in June 2000 and by
SFAS No. 149, issued in June 2003.

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 Pronouncements

In  January   2003,   the  FASB  issued   Interpretation   No.  46  ("FIN  46"),
"Consolidation of Variable Interest Entities,  an interpretation of ARB 51." The
primary  objectives  of  this  interpretation  are to  provide  guidance  on the
identification  of entities for which  control is achieved  through  means other
than through voting rights ("variable  interest  entities") and how to determine
when  and  which  business   enterprise  (the  "primary   beneficiary")   should
consolidate  the  variable  interest  entity.  This new model for  consolidation
applies to an entity in which  either (i) the equity  investors  (if any) do not
have a controlling  financial interest; or (ii) the equity investment at risk is
insufficient to finance that entity's  activities  without receiving  additional
subordinated  financial support from other parties. In addition, FIN 46 requires
that  the  primary  beneficiary,  as  well  as  all  other  enterprises  with  a
significant  variable  interest in a variable  interest entity,  make additional
disclosures.  Certain  disclosure  requirements  of FIN 46  were  effective  for
financial statements issued after January 31, 2003.

In  December  2003,  the  FASB  issued  FIN  No.  46  (revised  December  2003),
"Consolidation  of Variable  Interest  Entities" ("FIN 46-R") to address certain
FIN 46 implementation  issues.  The effective dates and impact of FIN 46 and FIN
46-R are as follows:

(i) Special  purpose  entities  ("SPEs")  created prior to February 1, 2003. The
company must apply either the provisions of FIN 46 or early adopt the provisions
of FIN 46-R at the end of the first  interim or annual  reporting  period ending
after December 15, 2003.

(ii)  Non-SPEs  created  prior to February  1, 2003.  The company is required to
adopt FIN 46-R at the end of the first interim or annual reporting period ending
after March 15, 2004.

(iii) All entities, regardless of whether a SPE, that were created subsequent to
January  31,  2003.  The  provisions  of FIN 46  were  applicable  for  variable
interests in entities obtained after January 31, 2003.

The  company is  required  to adopt FIN 46-R at the end of the first  interim or
annual  reporting  period  ending  after  March 15,  2004.  The  adoption of the
provisions  applicable to SPEs and all other variable  interests  obtained after
January  31,  2003 did not have a  material  impact on the  company's  financial
statements.  The company is currently evaluating the impact of adopting FIN 46-R
applicable  to Non-SPEs  created prior to February 1, 2003 but does not expect a
material impact.

In April 2002,  the FASB  issued FASB  Statement  No.  145,  Rescission  of FASB
Statements No. 4, 44, and 64,  Amendment of FASB Statement No. 13, and Technical
Corrections (Statement No. 145). Among other things,  Statement No. 145 rescinds
Statement No. 4, which required that all gains and losses from extinguishment of
debt be reported as an  extraordinary  item.  The adoption of Statement No. 145,
effective January 1, 2003, did not have any effect on the Company's consolidated
financial position, consolidated results of operations, or liquidity.



                                       9
<PAGE>

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.

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.

Allowances for losses on direct financing leases are typically established based
on historical charge offs and collections  experience and are usually determined
by specifically identified lessees and billed and unbilled receivables.

Direct financing leases are placed in a non-accrual status based on specifically
identified lessees.  Such leases are only returned to an accrual status based on
a case by case  review  by AFS.  Direct  financing  leases  are  charged  off on
specific identification by AFS.

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.

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.


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 revolving line of credit and is,
therefore, exposed to interest rate risk until fixed rate financing is arranged,
or the  floating  rate  revolving  line of credit is repaid.  As of December 31,
2003,  there was  $9,500,000  outstanding on the floating rate revolving line of
credit and the effective  interest rate of the  borrowings  ranged from 3.03% to
4.00%.



                                       10
<PAGE>

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, 2003, borrowings on the facility

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,  2003,  a  hypothetical  1.00%  increase or decrease in market
interest rates would  increase or decrease the Company's 2004 variable  interest
expense by approximately $337,800.

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 12 through 30.

                                       11
<PAGE>







                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS



The Members
ATEL Capital Equipment Fund VIII, LLC

We have audited the accompanying  balance sheets of ATEL Capital  Equipment Fund
VIII, LLC (Company) as of December 31, 2003 and 2002, 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, 2003. 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, 2003 and 2002,  and the results of its operations and
its cash flows for each of the three  years in the  period  ended  December  31,
2003, in conformity with accounting  principles generally accepted in the United
States.

                                                          /s/ ERNST & YOUNG LLP

San Francisco, California
February 20, 2004





                                       12
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                                 BALANCE SHEETS

                           DECEMBER 31, 2003 AND 2002


                                     ASSETS

<TABLE>
<CAPTION>
                                                                    2003               2002
                                                                    ----               ----

<S>                                                            <C>                <C>
Cash and cash equivalents                                      $       508,584    $     2,263,479
Accounts receivable, net of allowance for doubtful accounts of
   $225,115 in 2003 and $516,365 in 2002                             2,124,902          1,874,311
Due from Managing Member                                                     -            171,119
Other assets                                                            25,000             55,000
Investments in equipment and leases                                107,564,258        149,100,763
                                                              -----------------  -----------------
Total assets                                                     $ 110,222,744      $ 153,464,672
                                                              =================  =================


                        LIABILITIES AND MEMBERS' CAPITAL


Long-term debt                                                    $ 39,946,000       $ 62,912,000
Non-recourse debt                                                    6,609,335          5,702,855
Line of credit                                                       9,500,000         10,600,000
Accounts payable and accruals:
   Managing Member                                                     889,555                  -
   Other                                                               820,799            697,720
Accrued interest payable                                               115,844             96,179
Interest rate swap contracts                                         3,207,595          5,381,342
Unearned operating lease income                                      1,236,498          1,547,813
                                                              -----------------  -----------------
Total liabilities                                                   62,325,626         86,937,909


Members' capital:
   Accumulated other comprehensive income                           (3,143,144)        (5,381,342)
   Members' capital                                                 51,040,262         71,908,105
                                                              -----------------  -----------------
Total Members' capital                                              47,897,118         66,526,763
                                                              -----------------  -----------------
Total liabilities and Members' capital                           $ 110,222,744      $ 153,464,672
                                                              =================  =================
</TABLE>




                             See accompanying notes.


                                       13
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                            STATEMENTS OF OPERATIONS

                               FOR THE YEARS ENDED
                        DECEMBER 31, 2003, 2002 AND 2001


<TABLE>
<CAPTION>
Revenues:                                                        2003               2002               2001
                                                                 ----               ----               ----
   Leasing activities:
<S>                                                             <C>               <C>                <C>
      Operating leases                                          $ 26,938,424      $ 31,638,196       $ 40,911,071
      Direct financing leases                                        864,509           807,678            920,026
      Gain on sales of assets                                        595,299           271,751          1,801,292
Interest                                                               5,717            15,547            131,575
Other                                                                145,322           196,803             30,133
                                                           ------------------ ----------------- ------------------
                                                                  28,549,271        32,929,975         43,794,097
Expenses:
Depreciation of operating lease assets                            20,337,442        22,784,103         30,867,668
Provision for losses and impairments                               5,679,271         2,612,500                  -
Interest expense                                                   5,270,675         6,148,759          9,058,622
Asset management fees to Managing Member                           1,517,259         1,481,576          1,849,335
Railcar maintenance                                                1,008,874           215,009                  -
Cost reimbursements to Managing Member                               820,571           832,539            924,375
Amortization of initial direct costs                                 356,920           378,445            375,978
Professional fees                                                    506,698           179,562            215,450
Insurance                                                            186,393                 -                  -
(Recovery of) provision for doubtful accounts                       (180,000)          475,000             82,615
Aircraft inspection and maintenance                                  137,510           211,268                  -
Franchise fees and taxes on income                                   124,239            72,843             70,349
Other                                                                304,680           343,915            217,033
                                                           ------------------ ----------------- ------------------
                                                                  36,070,532        35,735,519         43,661,425
                                                           ------------------ ----------------- ------------------
Net (loss) income                                               $ (7,521,261)     $ (2,805,544)         $ 132,672
                                                           ================== ================= ==================

Net (loss) income:
   Managing Member                                               $ 1,000,979       $ 1,001,169        $ 1,004,916
   Other Members                                                  (8,522,240)       (3,806,713)          (872,244)
                                                           ------------------ ----------------- ------------------
                                                                $ (7,521,261)     $ (2,805,544)         $ 132,672
                                                           ================== ================= ==================

Net loss per Limited Liability Company Unit (Other Members)          $ (0.63)          $ (0.28)           $ (0.06)
Weighted average number of Units outstanding                      13,570,188        13,570,188         13,570,188
</TABLE>











                             See accompanying notes.


                                       14
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                    STATEMENT OF CHANGES IN MEMBERS' CAPITAL

                               FOR THE YEARS ENDED
                        DECEMBER 31, 2003, 2002 AND 2001


<TABLE>
<CAPTION>
                                                                                                 Accumulated
                                                                                                    Other
                                                   Other Members                                Comprehensive
                                                   -------------                Managing            Income
                                              Units            Amount            Member             (Loss)             Total
<S>              <C> <C>                       <C>           <C>                   <C>                <C>           <C>
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 increase in interest rate
   swap liability                                                        -                  -        (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 increase in interest rate
   swap liability                                                        -                  -          (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
Distributions to Managing Member                                         -         (1,000,979)                -         (1,000,979)
Distributions to Other Members
   ($0.91 per Unit)                                            (12,345,603)                 -                 -        (12,345,603)
Unrealized decrease in interest rate
   swap liability                                                        -                  -         2,173,747          2,173,747
Reclassification adjustment for
   portion of swap liability charged to
   net loss                                                              -                  -            64,451             64,451
Net income (loss)                                               (8,522,240)         1,000,979                 -         (7,521,261)
                                         ----------------- ---------------- ------------------ -----------------  -----------------
Balance December 31, 2003                      13,570,188      $51,040,262                $ -      $ (3,143,144)      $ 47,897,118
                                         ================= ================ ================== =================  =================
</TABLE>


                             See accompanying notes.


                                       15
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                            STATEMENTS OF CASH FLOWS

                               FOR THE YEARS ENDED
                        DECEMBER 31, 2003, 2002 AND 2001


<TABLE>
<CAPTION>
                                                                                  2003               2002               2001
                                                                                  ----               ----               ----
Operating activities:
<S>                                                                              <C>               <C>                   <C>
Net (loss) income                                                                $ (7,521,261)     $ (2,805,544)         $ 132,672
Adjustments to reconcile net income (loss) to cash provided by
   operating activities:
   Gain on sales of assets                                                           (595,299)         (271,751)        (1,801,292)
   Depreciation of operating lease assets                                          20,337,442        22,784,103         30,867,668
   Amortization of initial direct costs                                               356,920           378,445            375,978
   Interest rate swap contracts                                                        64,451                 -                  -
   (Recovery of) provision for doubtful accounts                                     (180,000)          475,000             82,615
   Provision for losses and impairments                                             5,679,271         2,612,500                  -
   Changes in operating assets and liabilities:
      Accounts receivable                                                             (70,591)          907,216          2,000,427
      Due from Managing Member                                                        171,119          (171,119)                 -
      Other assets                                                                     30,000            30,000             30,000
      Accounts payable, Managing Member                                               889,555                 -           (695,548)
      Accounts payable, other                                                         123,079            48,182            163,643
      Accrued interest                                                                 19,665            19,199           (190,843)
      Unearned lease income                                                          (311,315)         (200,805)          (302,523)
                                                                            ------------------ -----------------  -----------------
Net cash provided by operating activities                                          18,993,036        23,805,426         30,662,797
                                                                            ------------------ -----------------  -----------------

Investing activities:
Proceeds from sales of lease assets                                                13,964,820         2,403,934          7,348,063
Reduction of net investment in direct financing leases                              1,793,351         2,134,026          2,806,236
Purchases of equipment on direct financing leases                                           -          (293,570)          (810,271)
Payment of initial direct costs to Managing Member                                          -           (37,440)          (147,721)
Purchases of equipment on operating leases                                                  -                 -        (26,556,373)
                                                                            ------------------ -----------------  -----------------
Net cash provided by (used in) investing activities                                15,758,171         4,206,950        (17,360,066)
                                                                            ------------------ -----------------  -----------------

Financing activities:
Repayments of other long-term debt                                                (22,966,000)      (26,357,000)       (20,299,000)
Repayments of line of credit                                                      (20,600,000)       (4,300,000)       (21,056,335)
Borrowings under line of credit                                                    19,500,000        12,400,000         23,556,335
Distributions to Other Members                                                    (12,345,603)      (12,347,756)       (12,403,683)
Proceeds of non-recourse debt                                                       2,563,149                 -                  -
Repayments of non-recourse debt                                                    (1,656,669)         (312,109)        (1,310,780)
Distributions to Managing Member                                                   (1,000,979)       (1,001,169)        (1,004,916)
Proceeds of other long-term debt                                                            -         3,900,000         19,000,000
                                                                            ------------------ -----------------  -----------------
Net cash used in financing activities                                             (36,506,102)      (28,018,034)       (13,518,379)
                                                                            ------------------ -----------------  -----------------

Net decrease in cash and cash equivalents                                          (1,754,895)           (5,658)          (215,648)
Cash and cash equivalents at beginning of year                                      2,263,479         2,269,137          2,484,785
                                                                            ------------------ -----------------  -----------------
Cash and cash equivalents at end of year                                            $ 508,584       $ 2,263,479        $ 2,269,137
                                                                            ================== =================  =================
</TABLE>



                                       16
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                            STATEMENTS OF CASH FLOWS
                                   (CONTINUED)

                               FOR THE YEARS ENDED
                        DECEMBER 31, 2003, 2002 AND 2001


<TABLE>
<CAPTION>
                                                                                  2003               2002               2001
                                                                                  ----               ----               ----

Supplemental disclosures of cash flow information:

<S>                                                                               <C>               <C>                <C>
Cash paid during the year for interest                                            $ 5,251,010       $ 6,129,560        $ 9,249,465
                                                                            ================== =================  =================

Schedule of non-cash transactions:

Change in fair value of interest rate swaps contracts                             $ 2,173,747        $ (680,720)      $ (3,879,426)
                                                                            ================== =================  =================
</TABLE>






                             See accompanying notes.


                                       17
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


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 (AFS), a California limited liability
company.  Prior to converting to a limited liability company structure,  AFS 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,  2003,  the  original  terms of the leases  ranged from one to ten
years.

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

The Company's principal  objectives are to invest in a diversified  portfolio of
equipment  that will (i)  preserve,  protect and return the  Company's  invested
capital;  (ii)  generate  regular  distributions  to the  members  of cash  from
operations and cash from sales or refinancing,  with any balance remaining after
certain minimum distributions to be used to purchase additional equipment during
the Reinvestment  Period,  ending 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).


2. Summary of significant accounting policies:

Cash and cash equivalents:

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

Accounts receivable:

Accounts  receivable  represent  the amounts  billed under lease  contracts  and
currently  due to the Company.  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.

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.



                                       18
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


2. Summary of significant accounting policies (continued):

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.

Allowances for losses on direct financing leases are typically established based
on historical charge offs and collections  experience and are usually determined
by specifically identified lessees and billed and unbilled receivables.

Direct financing leases are placed in a non-accrual status based on specifically
identified lessees.  Such leases are only returned to an accrual status based on
a case by case  review  of AFS.  Direct  financing  leases  are  charged  off on
specific identification by AFS.

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.

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) as of December 31:

                                                 2003               2002
                                                 ----               ----
  Financial statement basis of net assets       $ 47,897,118      $ 66,526,763
  Tax basis of net assets                          2,409,944        26,812,934
                                           ------------------ -----------------
  Difference                                    $ 45,487,174      $ 39,713,829
                                           ================== =================

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 (loss)  income  reported in these  financial
statements to the loss reported on the Company's federal tax return  (unaudited)
for each of the years ended December 31:

<TABLE>
<CAPTION>
                                                     2003               2002               2001
                                                     ----               ----               ----
<S>                                                 <C>               <C>                   <C>
  Net income (loss) per financial statements        $ (7,521,261)     $ (2,805,544)         $ 132,672
  Adjustment to depreciation expense                  (4,676,068)      (14,111,240)       (19,612,115)
  Provisions for doubtful accounts and losses          5,499,271         3,087,500             82,615
  Adjustments to lease revenues                       (1,150,757)        1,616,517          3,898,290
                                               ------------------ -----------------  -----------------
  Net loss per federal tax return                   $ (7,848,815)    $ (12,212,767)     $ (15,498,538)
                                               ================== =================  =================
</TABLE>



                                       19
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


2. Summary of significant accounting policies (continued):

Per unit data:

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

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.

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.

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, 2003, 2002 and 2001.

Derivative financial instruments:

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

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.



                                       20
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


2. Summary of significant accounting policies (continued):

Derivative financial instruments (continued):

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.

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.

Basis of presentation:

The accompanying  financial  statements as of December 31, 2003 and 2002 and for
the three years ended  December 31, 2003 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.

Recent accounting pronouncements:

In  January   2003,   the  FASB  issued   Interpretation   No.  46  ("FIN  46"),
"Consolidation of Variable Interest Entities,  an interpretation of ARB 51." The
primary  objectives  of  this  interpretation  are to  provide  guidance  on the
identification  of entities for which  control is achieved  through  means other
than through voting rights ("variable  interest  entities") and how to determine
when  and  which  business   enterprise  (the  "primary   beneficiary")   should
consolidate  the  variable  interest  entity.  This new model for  consolidation
applies to an entity in which  either (i) the equity  investors  (if any) do not
have a controlling  financial interest; or (ii) the equity investment at risk is
insufficient to finance that entity's  activities  without receiving  additional
subordinated  financial support from other parties. In addition, FIN 46 requires
that  the  primary  beneficiary,  as  well  as  all  other  enterprises  with  a
significant  variable  interest in a variable  interest entity,  make additional
disclosures.  Certain  disclosure  requirements  of FIN 46  were  effective  for
financial statements issued after January 31, 2003.

In  December  2003,  the  FASB  issued  FIN  No.  46  (revised  December  2003),
"Consolidation  of Variable  Interest  Entities" ("FIN 46-R") to address certain
FIN 46 implementation  issues.  The effective dates and impact of FIN 46 and FIN
46-R are as follows:

(i) Special  purpose  entities  ("SPEs")  created prior to February 1, 2003. The
company must apply either the provisions of FIN 46 or early adopt the provisions
of FIN 46-R at the end of the first  interim or annual  reporting  period ending
after December 15, 2003.



                                       21
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


2. Summary of significant accounting policies (continued):

Recent accounting pronouncements (continued):

(ii)  Non-SPEs  created  prior to February  1, 2003.  The company is required to
adopt FIN 46-R at the end of the first interim or annual reporting period ending
after March 15, 2004.

(iii) All entities, regardless of whether a SPE, that were created subsequent to
January  31,  2003.  The  provisions  of FIN 46  were  applicable  for  variable
interests in entities obtained after January 31, 2003.

The  company is  required  to adopt FIN 46-R at the end of the first  interim or
annual  reporting  period  ending  after  March 15,  2004.  The  adoption of the
provisions  applicable to SPEs and all other variable  interests  obtained after
January  31,  2003 did not have a  material  impact on the  company's  financial
statements.  The company is currently evaluating the impact of adopting FIN 46-R
applicable  to Non-SPEs  created prior to February 1, 2003 but does not expect a
material impact.

In April 2002,  the FASB  issued FASB  Statement  No.  145,  Rescission  of FASB
Statements No. 4, 44, and 64,  Amendment of FASB Statement No. 13, and Technical
Corrections (Statement No. 145). Among other things,  Statement No. 145 rescinds
Statement No. 4, which required that all gains and losses from extinguishment of
debt be reported as an  extraordinary  item.  The adoption of Statement No. 145,
effective January 1, 2003, did not have any effect on the Company's consolidated
financial position, consolidated results of operations, or liquidity.


3. Investments in equipment and leases:

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

<TABLE>
<CAPTION>
                                                                              Depreciation /
                                                                               Amortization
                                                                                Expense or
                                                                              Amortization of      Reclassi-
                                          December 31,        Impairment      Direct Financing    fications or     December 31,
                                                2002            Losses            Leases          Dispositions           2003
                                                ----            ------            ------          ------------           ----
<S>                                          <C>               <C>               <C>                <C>                <C>
Net investment in operating leases           $ 119,404,269     $ (4,140,362)     $ (20,337,442)     $ (7,814,125)      $ 87,112,340
Net investment in direct financing leases       11,233,604                -         (1,793,351)        2,057,548         11,497,801
Assets held for sale or lease, net of
   accumulated depreciation of
   $16,874,083  in 2003 and $13,981,447
   in 2002                                      17,788,535       (1,538,909)                 -        (7,612,944)         8,636,682
Initial direct costs, net of accumulated
   amortization of $249,737 in 2003 and
   $1,075,687 in 2002                              674,355                -           (356,920)                -            317,435
                                          ----------------- ---------------- ------------------ -----------------  -----------------
                                             $ 149,100,763     $ (5,679,271)     $ (22,487,713)    $ (13,369,521)     $ 107,564,258
                                          ================= ================ ================== =================  =================
</TABLE>



                                       22
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


3. Investments in equipment and leases (continued):

Management  periodically reviews the carrying values of its assets on leases and
assets  held for  lease  or sale.  As a  result  of  those  reviews,  management
determined that the fair values of a fleet of diesel electric locomotives,  rail
car auto racks,  manufacturing equipment and an aircraft had, as detailed below,
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.  Charges to operations were recorded
for the  declines  in value of those  assets in the  amounts of  $5,679,271  and
$2,612,500 for the years ended December 31, 2003 and 2002, respectively.

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

Impairment losses are recorded as an addition to accumulated depreciation of the
impaired assets.  Depreciation expense and impairment losses on property subject
to operating  leases and assets held for sale or lease  consist of the following
for the years ended December 31:

                              2003              2002               2001
                              ----              ----               ----
   Depreciation expense      $20,337,442       $ 22,784,103      $ 30,867,668
   Impairment losses           5,679,271          2,612,500                 -
                         ---------------- ------------------ -----------------
                             $26,016,713       $ 25,396,603      $ 30,867,668
                         ================ ================== =================

Due to continued  declines in markets for certain  types of assets,  during 2002
and 2003, management determined that the values of certain assets were impaired.
The Company  recorded  impairment  losses as follows for each of the years ended
December 31:

                                          2003              2002
                                          ----              ----
   Aircraft                              $ 4,401,397        $ 2,212,500
   Locomotives                               760,000            400,000
   Rail car auto racks                       268,373                  -
   Manufacturing equipment                   249,501                  -
                                     ---------------- ------------------
                                         $ 5,679,271        $ 2,612,500
                                     ================ ==================

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

Operating leases:

Property on operating leases consists of the following:

<TABLE>
<CAPTION>
                                                                                            Reclassi-
                                     December 31,      Impairment       Depreciation       fications or       December 31,
                                         2002            Losses            Expense         Dispositions           2003
                                         ----            ------            -------         ------------           ----
<S>                                 <C>               <C>              <C>                <C>                <C>
Manufacturing                       $    49,700,635              $ -                $ -      $ (8,621,156)   $    41,079,479
Aircraft                                 32,810,139                -                  -       (17,362,102)        15,448,037
Transportation, rail                     21,054,669                -                  -        13,240,733         34,295,402
Transportation, other                    23,438,156                -                  -          (135,378)        23,302,778
Containers                               21,207,500                -                  -           (42,500)        21,165,000
Natural gas compressors                  14,051,601                -                  -          (374,152)        13,677,449
Materials handling                        7,380,720                -                  -           (67,482)         7,313,238
Other                                    14,118,402                -                  -        (3,126,421)        10,991,981
                                   ----------------- ---------------- ------------------ -----------------  -----------------
                                        183,761,822                -                  -       (16,488,458)       167,273,364
Less accumulated depreciation           (64,357,553)      (4,140,362)       (20,337,442)        8,674,333        (80,161,024)
                                   ----------------- ---------------- ------------------ -----------------  -----------------
                                    $   119,404,269   $   (4,140,362)  $    (20,337,442)   $   (7,814,125)  $     87,112,340
                                   ================= ================ ================== =================  =================
</TABLE>



                                       23
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


3. Investments in equipment and leases (continued):

Direct financing leases:

As of December 31, 2003 and 2002, investment in direct financing leases consists
of rail cars,  anhydrous  ammonia storage tanks,  office  automation  equipment,
point of sale  equipment,  refrigerated  trailers  and  laundry  equipment.  The
following lists the components of the Company's  investment in direct  financing
leases as of December 31, 2003 and 2002:


<TABLE>
<CAPTION>
                                                                  2003               2002
                                                                  ----               ----
<S>                                                          <C>                <C>
Total minimum lease payments receivable                      $     10,461,599    $    8,634,652
Estimated residual values of leased equipment (unguaranteed)        4,496,939         4,510,520
                                                            ------------------ -----------------
Investment in direct financing leases                              14,958,538        13,145,172
Less unearned income                                               (3,460,737)       (1,911,568)
                                                            ------------------ -----------------
Net investment in direct financing leases                    $     11,497,801    $   11,233,604
                                                            ================== =================
</TABLE>

At December 31, 2003, the aggregate amounts of future minimum lease payments are
as follows:

                                        Direct
     Year ending     Operating         Financing
    December 31,      Leases            Leases             Total
    ------------      ------            ------             -----
            2004   $  12,766,608    $      2,620,844   $     15,387,452
            2005        9,844,593          2,577,630        12,422,223
            2006        5,392,208          2,321,635         7,713,843
            2007        3,436,648            894,719         4,331,367
            2008          942,588            663,561         1,606,149
      Thereafter          641,520          1,383,210         2,024,730
                  ---------------- ------------------ -----------------
                   $  33,024,165    $    10,461,599    $     43,485,764
                  ================ ================== =================


4.  Non-recourse debt:

At December 31, 2003,  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 4.96% to 7.98%.  The notes
are secured by assignments of lease payments and pledges of assets.  At December
31, 2003,  the carrying value of the pledged  assets is  $12,771,509.  The notes
mature from 2004 through 2007.

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

  Year ending
 December 31,       Principal         Interest            Total
          2004        $ 4,663,440        $ 142,640        $ 4,806,080
          2005            617,125           88,955            706,080
          2006            648,113           57,967            706,080
          2007            680,657           25,423            706,080
                 ----------------- ---------------- ------------------
                      $ 6,609,335        $ 314,985        $ 6,924,320
                 ================= ================ ==================



                                       24
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


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 (1.5154% at December 31, 2003),  based on an index of A1
commercial paper. The Program expired as to new borrowings in April 2002.

The Program requires AFS on behalf of the Company to enter into various interest
rate swaps with a financial  institution  (also rated A1/P1) to manage  interest
rate exposure  associated  with variable rate  obligations  under the Program by
effectively converting the variable rate debt to fixed rates. As of December 31,
2003,  the  Company  receives  or  pays  interest  on a  notional  principal  of
$40,311,324, based on the difference between nominal rates ranging from 4.35% to
7.72% and the variable rate under the Program. No actual borrowing or lending is
involved.  The  termination of the swaps coincide with the maturity of the debt.
The  differential to be paid or received is accrued as interest rates change and
is  recognized  currently as an adjustment  to interest  expense  related to the
debt.

Borrowings under the Program are as follows:

<TABLE>
<CAPTION>
                                                        Notional             Swap           Payment Rate
                     Original          Balance           Balance            Value           on Interest
                      Amount        December 31,      December 31,       December 31,           Swap
  Date Borrowed      Borrowed           2003              2003               2003            Agreement
  -------------      --------           ----              ----               ----            ---------
<S>                  <C>               <C>                <C>                <C>               <C>
  11/11/1999         $ 20,000,000      $ 3,604,000        $ 3,499,006        $ (193,076)       6.84%
  12/21/1999           20,000,000       12,806,000         12,845,059        (1,493,722)       7.41%
  12/24/1999           25,000,000        3,302,000          3,235,809          (175,200)       7.44%
   4/17/2000            6,500,000        2,801,000          2,770,624          (193,519)       7.45%
   4/28/2000            1,900,000          369,000            366,443           (26,481)       7.72%
   8/3/2000            19,000,000        9,028,000          9,005,393          (754,010)       7.50%
  10/31/2000            7,500,000        3,276,000          3,259,596          (236,016)       7.13%
   1/29/2001            8,000,000                -          2,568,210           (64,451)*      5.91%
   6/1/2001             2,000,000           78,000             50,600              (306)       5.04%
   9/1/2001             9,000,000        2,696,000          2,710,584           (70,814)       4.35%
   1/31/2002            3,900,000        1,986,000                  -                 -          **
                 ----------------- ---------------- ------------------ -----------------
                    $ 122,800,000      $39,946,000       $ 40,311,324      $ (3,207,595)
                 ================= ================ ================== =================
</TABLE>

* This  interest  rate swap  contract is deemed to be  ineffective  and has been
charged to operations.

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



                                       25
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


5. Other long-term debt (continued):

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>
                            Debt             Debt                                                  Rates on
      Year ending        Principal         Principal                                            Interest Swap
      December 31,        Swapped         Not Swapped        Interest            Total           Agreements*
      ------------        -------         -----------        --------            -----           -----------
<S>            <C>        <C>                 <C>              <C>              <C>               <C>
               2004       $ 12,253,000        $ 798,000        $ 2,362,294      $ 15,413,294      6.975%-7.008%
               2005          9,586,000          816,000          1,576,595        11,162,595      7.034%-7.144%
               2006          6,830,000          120,000            964,030         7,794,030      7.180%-7.206%
               2007          4,529,000          172,000            519,280         5,048,280      6.964%-7.055%
               2008          3,013,000           12,000            249,081         3,262,081      6.667%-6.972%
               2009          1,749,000           68,000             45,481         1,794,481      5.766%-6.383%
                      ----------------- ---------------- ------------------ -----------------
                          $ 37,960,000      $ 1,986,000        $ 5,716,761      $ 44,474,761
                      ================= ================ ================== =================
</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 (1.5154% at December 31, 2003).

In 2003 and 2002,  the net effect of the  interest  rate  swaps was to  increase
interest expense by $2,780,673 and $1,818,380, respectively.


6.  Related party transactions:

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

The Limited Liability  Company Operating  Agreement allows for the reimbursement
of costs  incurred by AFS in providing  administrative  services to the Company.
Administrative services provided include Company accounting, investor relations,
legal counsel and lease and equipment  documentation.  AFS is not reimbursed for
services 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 AFS are allocated to the Company based upon  estimated time incurred
by employees  working on Company  business and an  allocation  of rent and other
costs based on utilization studies.

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

Substantially   all   employees  of  AFS  record  time  incurred  in  performing
administrative  services on behalf of all of the Companies  serviced by AFS. AFS
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.



                                       26
<PAGE>

                     ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


6. Related party transactions (continued):

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

<TABLE>
<CAPTION>
                                                  2003               2002               2001
                                                  ----               ----               ----
<S>                                               <C>               <C>                <C>
Asset management fees to Managing Member          $ 1,517,259       $ 1,481,576        $ 1,849,335
Costs reimbursements to Managing Member               820,571           832,539            924,375
Initial direct costs paid to Managing Member                -            37,440            147,721
                                            ------------------ -----------------  -----------------
                                                  $ 2,337,830       $ 2,351,555        $ 2,921,431
                                            ================== =================  =================
</TABLE>

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

The Limited  Partnership  Agreement  places an annual and a cumulative limit for
cost  reimbursements  to AFS.  The  cumulative  limit  increases  annually.  Any
reimbursable  costs  incurred by AFS during the year exceeding the annual and/or
cumulative  limits  cannot be  reimbursed  in the  current  year,  though may be
reimbursable  in  future  years.  As of  December  31,  2003,  AFS had  incurred
approximately  $1,175,000  of costs that are expected to be reimbursed to AFS by
the Partnership in 2004 and 2005.


7.  Members' capital:

As of December  31,  2003,  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 defined 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 AFS. In accordance with the terms of the Operating Agreement, additional
allocations  of income  were made to AFS in 2003,  2002 and  2001.  The  amounts
allocated were determined so as to bring AFS's ending capital account balance to
zero at the end of each year.




                                       27
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


8. Concentration of credit risk and major customers:

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

As of December 31,  2003,  2002 and 2001 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:

                                     2003              2002               2001
                                     ----              ----               ----
 Transportation, rail                 20%               14%               18%
 Manufacturing, other                 18%               17%               15%
 Transportation, other                13%               12%               12%
 Transportation, containers           11%               11%                *
 Transportation, air                   *                17%               17%
 Manufacturing, electronics            *                10%                *

 * Less than 10%

During 2003,  two customers  comprised  13% and 10% of the  Company's  revenues.
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.


9.  Line of credit:

The Company participates with AFS and certain of its affiliates in a $58,627,656
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, 2003,
borrowings under the facility were as follows:

Amount  borrowed by the Company under the acquisition facility  $     9,500,000
Amounts borrowed by affiliated partnerships and limited
   liability companies under the acquisition facility                13,500,000
                                                               -----------------
Total borrowings under the acquisition facility                      23,000,000
Amounts borrowed by AFS and its sister corporation under the
   warehouse facility                                                         -
                                                               -----------------
Total outstanding balance                                       $   23,000,000
                                                               =================

Total available under the line of credit                        $   58,627,656
Total outstanding balance                                          (23,000,000)
                                                               -----------------
Remaining availability                                          $   35,627,656
                                                               =================

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 AFS.

The Company borrowed $19,500,000,  $12,400,000 and $23,556,335 under the line of
credit  during  2003,  2002 and 2001,  respectively.  Repayments  on the line of
credit were $20,600,000,  $4,300,000 and $21,056,335 during 2003, 2002 and 2001,
respectively. At December 31, 2003, $9,500,000 remained outstanding. Interest on
the line of credit is based on either  the  thirty  day LIBOR rate or the bank's
prime rate.  The  effective  interest  rates on  borrowings at December 31, 2003
ranged from 3.03% to 4.00%.



                                       28
<PAGE>

                     ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


9. Line of credit (continued):

The credit agreement  includes certain  financial  covenants  applicable to each
borrower.  The Company was in  compliance  with its covenants as of December 31,
2003.


10. Fair value of financial instruments:

The  recorded  amounts  of the  Company's  cash and cash  equivalents,  accounts
receivable,  accounts payable and accruals at December 31, 2003 approximate fair
value because of the liquidity and short-term maturity of these instruments.

Non-recourse debt:

The fair value of the Company's  non-recourse debt is estimated using discounted
cash flow analyses,  based 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, 2003 is $6,506,804.

Other long-term debt:

The carrying value of the Company's other long-term debt  approximates  its fair
value at December 31, 2003 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, 2003.


11.  Comprehensive loss:

For the years ended  December 31, 2003,  2002 and in 2001,  other  comprehensive
income (loss) consisted of the following:

<TABLE>
<CAPTION>
                                                                                2003               2002               2001
                                                                                ----               ----               ----
<S>                                                                            <C>               <C>                   <C>
Net (loss) income                                                              $ (7,521,261)     $ (2,805,544)         $ 132,672
Other comprehensive income (loss):
      Cumulative effect of change in accounting principle at January 1, 2001              -                 -           (821,196)
      Change in value of interest rate swap contracts during the year             2,173,747          (680,720)        (3,879,426)
                                                                            ---------------- -----------------  -----------------
Comprehensive loss                                                             $ (5,347,514)     $ (3,486,264)      $ (4,567,950)
                                                                            ================ =================  =================
</TABLE>

There were no other sources of comprehensive net loss.



                                       29
<PAGE>

                      ATEL CAPITAL EQUIPMENT FUND VIII, LLC

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2003


12. Selected quarterly data (unaudited):

<TABLE>
<CAPTION>
                                                          March 31,         June 30,        September 30,       December 31,
Quarter ended                                               2002              2002               2002               2002
                                                            ----              ----               ----               ----

<S>                                                        <C>                <C>               <C>                <C>
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 Liability Company unit           $ (0.02)           $ (0.08)          $ (0.06)           $ (0.12)
</TABLE>

<TABLE>
<CAPTION>
                                                          March 31,         June 30,        September 30,       December 31,
Quarter ended                                               2003              2003               2003               2003
                                                            ----              ----               ----               ----

<S>                                                        <C>                <C>               <C>                <C>
Total revenues                                             $ 7,725,324        $ 7,610,699       $ 6,737,293        $ 6,475,955
Net income (loss)                                         $ (3,379,701)         $ 345,679      $ (3,372,590)      $ (1,114,649)
Net income (loss) per Limited Liability Company unit           $ (0.27)            $ 0.01           $ (0.27)           $ (0.10)
</TABLE>


13.  Commitments:

At December 31, 2003,  the  Partnership  had no  commitments  to purchase  lease
assets.


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

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

                                                         Allowance for
                                                           doubtful
                                        Impairments        accounts
    Balance December 31, 2000               $       -         $        -
    Provision                                       -             82,615
    Charge offs                                     -            (41,250)
                                      ---------------- ------------------
    Balance December 31, 2001                       -             41,365
    Provision                               2,612,500            475,000
    Charge offs                            (2,612,500)                 -
                                      ---------------- ------------------
    Balance December 31, 2002                       -            516,365
    Provision (recoveries)                  5,679,271           (180,000)
    Charge offs                            (5,679,271)          (111,250)
                                      ---------------- ------------------
    Balance December 31, 2003                     $ -          $ 225,115
                                      ================ ==================







                                       30
<PAGE>

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

None.


Item 9A.  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

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

Due to the increased scrutiny and reporting  requirements of Sarbanes-Oxley,  it
came to the  attention of the chief  executive  officer and the chief  financial
officer of the Company in connection  with the audit of the Company for the year
ended  December  31,  2003,  that  enhanced  internal  controls  were  needed to
facilitate a more effective closing of the Company's financial  statements,  and
that this would require additional skilled personnel.  To address this issue the
Company has taken steps to upgrade the accounting staff and will take additional
steps in 2004 to add personnel to its  accounting  department to ensure that the
Company's ability to execute internal controls in accounting and  reconciliation
in the closing process will be adequate in all respects. It should be noted that
the  control  issues  affecting  the  closing  process  and  disclosure  did not
materially  affect the  accuracy and  completeness  of the  Company's  financial
reporting and  disclosure  reflected in this report,  and the audited  financial
statements  included herein contain no  qualification or limitation on the scope
of the auditor's opinion.

Changes in internal controls

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


                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS

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

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

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



                                       31
<PAGE>

Dean L. Cash,  age 53, 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 50,  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 55, joined ATEL in 1986 as controller. Prior to joining
ATEL, Mr. Carpenter was an audit supervisor with Laventhol & Horwath,  certified
public accountants in San Francisco, California, from 1983 to 1986. From 1979 to
1983,  Mr.  Carpenter  was an  audit  senior  with  Deloitte,  Haskins  & Sells,
certified public accountants,  in San Jose,  California.  From 1971 to 1975, Mr.
Carpenter was a Supply Corp officer in the U. S. Navy. Mr. Carpenter  received a
B.S. degree in mathematics  (magna cum laude) from California State  University,
Fresno in 1971 and completed a second major in accounting in 1978. Mr. Carpenter
has been a California certified public accountant since 1981.

Vasco H. Morais, age 45, 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.

Audit Committee

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

Code of Ethics

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


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 AFS and its Affiliates. The amount of such remuneration paid in 2003,
2002 and 2000 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.



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<PAGE>

Through December 31, 2000,  $12,891,631 of such commissions had been paid to AFS
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 AFS 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
AFS and its Affiliates in determining portfolio and investment strategies (i.e.,
establishing  and maintaining  the  composition of the Equipment  portfolio as a
whole and the  Company's  overall  debt  structure)  and  generally  managing or
supervising the management of the Equipment.

AFS 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.  AFS  intends  to  delegate  all or a portion  of its duties and the Asset
Management  Fee to one or more of its  Affiliates  who  are in the  business  of
providing such services.

Asset Management Fee Limit:

The Asset  Management Fee 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 AFS if AFS were to be
compensated on the basis of an alternative fee schedule, to include an Equipment
Management Fee, Incentive Management Fee, and Equipment  Resale/Re-Leasing  Fee,
plus AFS's Carried  Interest,  as described below. To the extent that the amount
paid to AFS as the Asset  Management Fee plus its Carried  Interest for any year
would exceed the aggregate  amount of fees calculated under this alternative fee
schedule for the year, the Asset Management Fee and/or Carried Interest for that
year 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 AFS in a subsequent  period, but only if and to the extent that such deferred
compensation  would be  payable  within the Asset  Management  Fee Limit for the
subsequent  period.  Any deferred fees which cannot be paid under the applicable
limitations  in any subsequent  period through the date of liquidation  would be
forfeited by AFS upon liquidation.

Alternative Fee Schedule:

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

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

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

An Equipment  Resale/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 I, Item 8 for amounts


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<PAGE>

paid.

Managing Member's Interest in Operating Proceeds

As defined in the Limited Liability Company Operating  Agreement,  the Company's
Net Income,  Net Losses,  and  Distributions  are to be  allocated  92.5% to the
Members  and  7.5% to AFS.  In  accordance  with the  terms of the of  Operating
Agreement,  additional  allocations of income were made to AFS in 2003, 2002 and
2001.  The amounts  allocated  were  determined  to bring AFS's  ending  capital
account  balance  to  zero at the end of each  year.  See  financial  statements
included in Item 8, Part I of this report for amounts  allocated to AFS in 2003,
2002 and 2001.


Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

At December 31, 2003, no investor is known to hold  beneficially more than 5% of
the issued and outstanding Units.

Security Ownership of Management

The ultimate  shareholders  of AFS 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.

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


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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


Item 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

During the most recent two years, the Company incurred audit, audit related, tax
and other fees with its principal auditors as follows:

                                              2003              2002
                                              ----              ----
       Audit fees                         $       70,025   $         63,351
       Audit related fees                              -                  -
       Tax fees                                   33,700             35,786
       Other                                           -                  -
                                         ---------------- ------------------
                                               $ 103,725           $ 99,137
                                         ================ ==================

ATEL Leasing Corporation is AFS of ATEL Financial Services,  LLC. ATEL Financial
Services  LLC is AFS of the  registrant.  The board of directors of ATEL Leasing
Corporation acts as the audit committee of the registrant. Engagements for audit
services, audit related services and tax services are approved in advance by the
Chief Financial  Officer of ATEL Leasing  Corporation  acting as a member of the
board of directors of that company.




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<PAGE>

                                     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, 2003 and 2002

          Statements of Operations for the years ended  December 31, 2003,  2002
          and 2001

          Statements of Changes in Members' Capital for the years ended December
          31, 2003, 2002 and 2001

          Statements of Cash Flows for the years ended  December 31, 2003,  2002
          and 2001

          Notes to Financial Statements

   2.     Financial Statement Schedules

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

   (b)    Reports on Form 8-K for the fourth quarter of 2003 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)

          (14.1) Code of Ethics

          (31.1) Certification of Paritosh K. Choksi

          (31.2) Certification of Dean L. Cash

          (32.1)  Certification  Pursuant to 18 U.S.C.  section  1350 of Dean L.
          Cash

          (32.2) Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K.
          Choksi



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<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:     3/26/2004

                      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)








                                       36
<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     3/26/2004
-----------------------------------------   Chief Executive Officer
               Dean Cash                    of ATEL Financial
                                            Services LLC



         /s/ Paritosh K. Choksi            Executive Vice President    3/26/2004
-----------------------------------------  and director of ATEL
           Paritosh K. Choksi              Financial Services LLC,
                                           Principal financial officer
                                           of registrant; principal
                                           financial officer and
                                           director of ATEL Financial
                                           Services LLC



        /s/ Donald E. Carpenter            Principal accounting        3/26/2004
-----------------------------------------  officer of registrant;
          Donald E. Carpenter              principal accounting officer
                                           of ATEL Financial Services LLC





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


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



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<PAGE>