UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended March 31, 2010

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

For the transition period from              to             

Commission File number 000-33103

ATEL Capital Equipment Fund VIII, LLC

(Exact name of registrant as specified in its charter)

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

600 California Street, 6th Floor, San Francisco, California 94108-2733

(Address of principal executive offices)

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

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

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer, large accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨ Accelerated filer  ¨ Non-accelerated filer  ¨ Smaller reporting company  x

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

The number of Limited Liability Company Units outstanding as of April 30, 2010 was 13,560,188.

DOCUMENTS INCORPORATED BY REFERENCE

None.

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

Index

Part I.	Financial Information	3
Item 1.	Financial Statements (Unaudited)	3
	Balance Sheets, March 31, 2010 and December 31, 2009	3
	Statements of Operations for the three months ended March 31, 2010 and 2009	4
	Statements of Changes in Members’ Capital for the year ended December 31, 2009 and for the three months ended March 31, 2010	5
	Statements of Cash Flows for the three months ended March 31, 2010 and 2009	6
	Notes to the Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 4T.	Controls and Procedures	17
Part II.	Other Information	18
Item 1.	Legal Proceedings	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	[Reserved]	18
Item 5.	Other Information	18
Item 6.	Exhibits	18

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

BALANCE SHEETS

MARCH 31, 2010 AND DECEMBER 31, 2009

(In Thousands)

(Unaudited)

	March 31, 2010		December 31, 2009
ASSETS
Cash and cash equivalents	$	1,991	$	2,306
Accounts receivable, net of allowance for doubtful accounts of $3 as of March 31, 2010 and $4 as of December 31, 2009		781		739
Prepaid expenses		5		9
Investments in equipment and leases, net of accumulated depreciation of $33,812 as of March 31, 2010 and $33,664 as of December 31, 2009		10,523		10,953
Total assets	$	13,300	$	14,007
LIABILITIES AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities:
Managing Member	$	1,110	$	856
Affiliates		2		—
Other		310		491
Accrued interest payable		—		1
Non-recourse debt		201		398
Unearned operating lease income		117		170
Total liabilities		1,740		1,916
Commitments and contingencies
Members’ capital:
Managing Member		—		—
Other Members		11,560		12,091
Total Members’ capital		11,560		12,091
Total liabilities and Members’ capital	$	13,300	$	14,007

See accompanying notes.

3

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED

MARCH 31, 2010 AND 2009

(In Thousands Except for Units and Per Unit Data)

(Unaudited)

	Three months ended March 31,
	2010			2009
Revenues:
Leasing activities:
Operating leases	$	1,542		$	1,598
Direct financing leases		33			—
Loss on sales of assets		—			(37	)
Interest		—			1
Other revenue		2			1
Total revenues		1,577			1,563
Expenses:
Depreciation of operating lease assets		343			554
Interest expense		5			30
Asset management fees to Managing Member		53			53
Vessel maintenance		185			157
Railcar maintenance		83			157
Cost reimbursements to Managing Member		679			679
Professional fees		69			67
Insurance		20			28
Reversal of provision for doubtful accounts		(1	)		—
Taxes on income and franchise fees		(25	)		121
Other		111			91
Total operating expenses		1,522			1,937
Net income (loss) from operations		55			(374	)
Other income, net		—			12
Net income (loss)	$	55		$	(362	)
Net income (loss):
Managing Member	$	44		$	—
Other Members		11			(362	)
	$	55		$	(362	)
Net income (loss) per Limited Liability Company Unit (Other Members)	$	0.00		$	(0.03	)
Weighted average number of Units outstanding		13,560,188			13,560,188

See accompanying notes.

4

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2009

AND FOR THE

THREE MONTHS ENDED

MARCH 31, 2010

(In Thousands Except for Units and Per Unit Data)

(Unaudited)

	Other Members				Managing Member			Total
	Units	Amount
Balance December 31, 2008	13,560,188	$	12,707		$	—		$	12,707
Distributions to Other Members ($0.13 per Unit)	—		(1,762	)		—			(1,762	)
Distributions to Managing Member	—		—			(143	)		(143	)
Net income	—		1,146			143			1,289
Balance December 31, 2009	13,560,188		12,091			—			12,091
Distributions to Other Members ($0.04 per Unit)	—		(542	)		—			(542	)
Distributions to Managing Member	—		—			(44	)		(44	)
Net income	—		11			44			55
Balance March 31, 2010	13,560,188	$	11,560		$	—		$	11,560

See accompanying notes.

5

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED

MARCH 31, 2010 AND 2009

(In Thousands)

(Unaudited)

	Three months ended March 31,
	2010			2009
Operating activities:
Net income (loss)	$	55		$	(362	)
Adjustment to reconcile net income (loss) to cash provided by operating activities:
Loss on sales of assets		—			37
Depreciation of operating lease assets		343			554
Amortization of unearned income on direct financing leases		(33	)		—
Change in fair value of interest rate swap contracts		—			(12	)
Reversal of provision for doubtful accounts		(1	)		—
Changes in operating assets and liabilities:
Accounts receivable		(41	)		346
Prepaid expenses and other assets		4			4
Accounts payable, Managing Member		254			(2	)
Accounts payable, affiliates		2			—
Accounts payable, other		(181	)		282
Accrued interest payable		(1	)		—
Unearned operating lease income		(53	)		55
Net cash provided by operating activities		348			902
Investing activities:
Proceeds from sales of lease assets		64			83
Payments received on direct financing leases		56			24
Purchases and additions to equipment on operating leases		—			(379	)
Net cash provided by (used in) investing activities		120			(272	)
Financing activities:
Repayments of non-recourse debt		(197	)		(184	)
Distributions to Other Members		(542	)		—
Distributions to Managing Member		(44	)		—
Net cash used in financing activities		(783	)		(184	)
Net (decrease) increase in cash and cash equivalents		(315	)		446
Cash and cash equivalents at beginning of period		2,306			1,748
Cash and cash equivalents at end of period	$	1,991		$	2,194
Supplemental disclosures of cash flow information:
Cash paid during the period for taxes	$	2		$	2
Cash paid during the period for interest	$	6		$	30

See accompanying notes.

6

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

1. Organization and Limited Liability Company matters:

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

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. On January 13, 1999, subscriptions for the minimum number of Units (120,000, representing $1.2 million) had been received (excluding subscriptions from Pennsylvania investors) and AFS requested that the subscriptions be released to the Company. On that date the Company commenced operations in its primary business. Gross contributions in the amount of $135.7 million (13,570,188 units) were received as of November 30, 2000, inclusive of $500 of Initial Member’s capital investment and $100 of AFS’ capital investment. The offering was terminated on November 30, 2000. As of March 31, 2010, 13,560,188 Units were issued and outstanding.

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

Pursuant to the Operating Agreement, AFS and/or its affiliates receive compensation and reimbursements for services rendered on behalf of the Company (see Note 4). The Company is required to maintain reasonable cash reserves for working capital, the repurchase of Units and contingencies. The repurchase of Units is solely at the discretion of AFS.

As of March 31, 2010, the Company continues in the liquidation phase of its life cycle as defined in the Operating Agreement.

These unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission.

2. Summary of significant accounting policies:

Basis of presentation:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q as mandated by the Securities and Exchange Commission. The unaudited interim financial statements reflect all adjustments which are, in the opinion of the Managing Member, necessary for a fair statement of financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions in the financial statements and accompanying notes. Therefore, actual results could differ from those estimates. Operating results for the three months ended March 31, 2010 are not necessarily indicative of the results to be expected for the full year.

7

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued):

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on equity or net income.

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

In preparing the accompanying unaudited financial statements, the Managing Member has reviewed events that have occurred after March 31, 2010 up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements.

Use of estimates:

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

Segment reporting:

The Company is not organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, the Company operates in one reportable operating segment in the United States.

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

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

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

Other income, net:

Other income, net consists of fair value adjustments on interest rate swap contracts.

Per Unit data:

Net income and distributions per Unit are based upon the weighted average number of Other Members’ Units outstanding during the period.

8

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued):

Recent Accounting Pronouncements:

In February 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-09 “Subsequent Events—Amendments to Certain Recognition and Disclosure Requirements” (“ASU 2010-09”), which amends FASB ASC Topic 855, Subsequent Events, so that SEC filers no longer are required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. ASU No. 2010-09 was effective immediately and was adopted by the Company for its yearend 2009 reporting period with no impact on its financial position, results of operations or cash flows.

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosure about Fair Value Measurement” (“ASU 2010-06”). ASU 2010-06 requires additional disclosures related to recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair-value measurements, and information on purchases, sales, issuances, and settlements in a rollforward reconciliation of Level 3 fair-value measurements. Except for the Level 3 reconciliation disclosures, which will be effective for fiscal years beginning after December 15, 2010, the guidance became effective for the Company beginning January 1, 2010 and was adopted during the first quarter of 2010 with no impact on the Company’s financial position, results of operations or cash flows.

3. Investment in equipment and leases, net:

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

	Balance December 31, 2009		Reclassifications & Additions / Dispositions			Depreciation/ Amortization Expense or Amortization of Leases			Balance March 31, 2010
Net investment in operating leases	$	9,740	$	40		$	(343	)	$	9,437
Net investment in direct financing leases		475		—			(23	)		452
Assets held for sale or lease, net		738		(104	)		—			634
Total	$	10,953	$	(64	)	$	(366)		$	10,523

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

Management periodically reviews the carrying values of its assets on leases and assets held for lease or sale. Impairment losses are recorded as an adjustment to the net investment in operating leases. There were no impaired lease assets during the three months ended March 31, 2010 and 2009. Depreciation expense on property subject to operating leases and property held for lease or sale totaled $343 thousand and $554 thousand for the three months ended March 31, 2010 and 2009, respectively.

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

9

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

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

Operating leases:

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

	Balance December 31, 2009			Additions			Reclassifications or Dispositions			Balance March 31, 2010
Containers	$	20,612		$	—		$	(234	)	$	20,378
Transportation, rail		12,960			—			1,206			14,166
Marine vessels		4,333			—			—			4,333
Materials handling		73			—			(25	)		48
Other		640			—			—			640
		38,618			—			947			39,565
Less accumulated depreciation		(28,878	)		(343	)		(907	)		(30,128	)
Total	$	9,740		$	(343	)	$	40		$	9,437

The average estimated residual value for assets on operating leases was 11% of the assets’ original cost at both March 31, 2010 and December 31, 2009.

The Company earns revenues from its marine vessel and certain lease assets based on utilization of such assets. Such contingent rentals (i.e., short-term, operating charter hire payments) and the associated expenses are recorded when earned and/or incurred. The revenues associated with these rentals are included as a component of Operating Lease Revenues, and totaled $560 thousand and $625 thousand for the three months ended March 31, 2010 and 2009, respectively.

As of March 31, 2010 and 2009, the Company had no operating leases in non-accrual status.

Direct financing leases:

As of March 31, 2010 and December 31, 2009, investment in direct financing leases primarily consists of manufacturing equipment. The following lists the components of the Company’s investment in direct financing leases as of March 31, 2010 and December 31, 2009 (in thousands):

	March 31, 2010			December 31, 2009
Total minimum lease payments receivable	$	657		$	712
Estimated residual values of leased equipment (unguaranteed)		54			54
Investment in direct financing leases		711			766
Less unearned income		(259	)		(291	)
Net investment in direct financing leases	$	452		$	475

There were no net investments in direct financing leases in nonaccrual status as of March 31, 2010 and December 31, 2009.

10

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

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

At March 31, 2010, the aggregate amount of future lease payments is as follows (in thousands):

	Operating Leases		Direct Financing Leases		Total
Nine months ending December 31, 2010	$	2,245	$	169	$	2,414
Year ending December 31, 2011		1,767		240		2,007
2012		781		200		981
2013		468		48		516
2014		287		—		287
2015		179		—		179
Thereafter		433		—		433
	$	6,160	$	657	$	6,817

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

Equipment category	Useful Life
Transportation, rail	30 - 35
Containers	20 - 30
Marine vessel	20 - 30
Materials handling	7 - 10

4. Related party transactions:

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

The Operating Agreement allows for the reimbursement of costs incurred by AFS for providing administrative services to the Company. Administrative services provided include Company accounting, investor relations, legal counsel and lease and equipment documentation. AFS is not reimbursed for services whereby it is entitled to receive a separate fee as compensation for such services, such as management of equipment.

Each of ATEL Leasing Corporation (“ALC”) and AFS is a wholly-owned subsidiary of ATEL Capital Group, Inc. and performs services for the Company on behalf of the Managing Member. Acquisition services, equipment management, lease administration and asset disposition services are performed by ALC; investor relations, communications and general administrative services are performed by AFS.

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

During the three months ended March 31, 2010 and 2009, AFS and/or affiliates earned fees, commissions and reimbursements, pursuant to the Operating Agreement as follows (in thousands):

	Three Months Ended March 31,
	2010		2009
Asset management fees to Managing Member	$	53	$	53
Cost reimbursements to Managing Member		679		679
	$	732	$	732

11

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

4. Related party transactions (continued):

The Fund’s Operating Agreement places an annual and cumulative limit for cost reimbursements to AFS and/or its affiliates. Any reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent such amounts may be payable if within the annual and cumulative limits in such future years. The Fund is a finite life and self liquidating entity, and AFS and its affiliates have no recourse against the Fund for the amount of any unpaid excess reimbursable administrative expenses. The Fund will continue to require administrative services from AFS and its affiliates through the end of its term, and will therefore continue to incur reimbursable administrative expenses in each year. The Fund has determined that payment of any amounts in excess of the annual and cumulative limits is not probable, and the date any portion of such amount may be paid, if ever, is uncertain. When the Fund completes its liquidation stage and terminates, any unpaid amount will expire unpaid, with no claim by AFS or its affiliates against any liquidation proceeds or any party for the unpaid balance. Accordingly, the Company has recorded neither an obligation nor an expense for such contingent reimbursement of the approximate $1.3 million and $1.6 million excess reimbursable administrative expenses as of March 31, 2010 and December 31, 2009, respectively.

5. Non-recourse debt:

At March 31, 2010, non-recourse debt consists of a note payable to a financial institution. The note is due in monthly installments. Interest on the note is at a fixed rate of 6.90% per annum. The note is secured by assignments of lease payments and pledges of assets. At March 31, 2010, gross lease rentals totaled approximately $230 thousand over the remaining lease terms; and the carrying value of the pledged assets is $811 thousand. The note matures in June 2010.

The non-recourse note payable does not contain any material financial covenant. The note is secured by a lien granted by the registrant to the non-recourse lender on (and only on) the discounted lease transaction. The lender has recourse only to the following collateral: the specific leased equipment; the related lease chattel paper; the lease receivables; and proceeds of the foregoing items. The non-recourse obligation is payable solely out of this specific security and the registrant does not guarantee (nor is the registrant otherwise contractually responsible for) the payment of non-recourse note as a general obligation or liability of the registrant. Although the registrant does not have any direct general liability in connection with the non-recourse note apart from the security granted, the registrant is directly and generally liable and responsible for certain representations, warranties, and covenants made to the lender, such as warranties as to genuineness of the transaction parties’ signatures, as to the genuineness of the lease chattel paper or the transaction as a whole, or as to the registrant’s good title to or perfected interest in the secured collateral, as well as similar representations, warranties and covenants typically provided by non-recourse borrowers and customary in the equipment finance industry, and are viewed by the such industry as being consistent with a non-recourse discount financing obligation. Accordingly, as there are no financial covenants or ratios imposed on the registrant in connection with this non-recourse obligation, the registrant does not believe there are any material covenants that warrant footnote disclosure.

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

	Principal		Interest		Total
Period ending June 30, 2010	$	201	$	2	$	203

6. Guarantees:

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

The Managing Member knows of no facts or circumstances that would make the Company’s contractual commitments outside standard mutual covenants applicable to commercial transactions between businesses. Accordingly, the Company believes that these indemnification obligations are made in the ordinary course of business as part of standard commercial and industry practice, and that any potential liability under the Company’s similar commitments is remote. Should any such indemnification obligation become payable, the Company would separately record and/or disclose such liability in accordance with GAAP.

12

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

7. Members’ capital:

As of March 31, 2010 and December 31, 2009, 13,560,188 Units were issued and outstanding. The Company was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial members (50 Units).

The Company has the right, exercisable at the Managing Member’s discretion, but not the obligation, to repurchase Units of a Unit holder who ceases to be a U.S. Citizen, for a price equal to 100% of the holder’s capital account. The Company is otherwise permitted, but not required, to repurchase Units upon a holder’s request. The repurchase of Fund units is made in accordance with Section 13 of the Amended and Restated Agreement of Limited Company. The repurchase would be at the discretion of the Managing Member on terms it determines to be appropriate under given circumstances, in the event that the Managing Member deems such repurchase to be in the best interest of the Company; provided, the Company is never required to repurchase any Units. Upon the repurchase of any Units by the Fund, the tendered Units are cancelled. Units repurchased in prior periods were repurchased at amounts representing the original investment less cumulative distributions made to the unit-holder with respect to the Units. All Units repurchased during a quarter are deemed to be repurchased effective the last day of the preceding quarter, and are not deemed to be outstanding during, or entitled to allocations of net income, net loss or distributions for the quarter in which such repurchase occurs.

As defined in the Operating Agreement, the Company’s Net Income, Net Losses, and Distributions are to be allocated 92.5% to the Other Members and 7.5% to AFS. Distributions to the Other Members were as follows (in thousands, except as to Units and per Unit data):

	Three Months Ended March 31,
	2010		2009
Distributions	$	542	$	—
Weighted average number of Units outstanding		13,560,188		13,560,188
Weighted average distributions per Unit	$	0.04	$	—

8. Fair value measurements:

Fair value measurements and disclosures are based on a fair value hierarchy as determined by significant inputs used to measure fair value. The three levels of inputs within the fair value hierarchy are defined as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market.

Level 3 – Valuation is modeled using significant inputs that are unobservable in the market. These unobservable inputs reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability.

At March 31, 2010, the Company had no assets or liabilities that require measurement on a recurring or non-recurring basis.

The Company has determined the estimated fair value amounts by using market information and valuation methodologies that it considers appropriate and consistent with the fair value accounting guidance. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize or has realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

13

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

NOTES TO FINANCIAL STATEMENTS

8. Fair value measurements (continued):

The following disclosure of the estimated fair value of financial instruments is made in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification. Fair value estimates, methods and assumptions, set forth below for the Company’s financial instruments, are made solely to comply with the requirements of the Financial Instruments Topic and should be read in conjunction with the Company’s financial statements and related notes.

Cash and cash equivalents

The recorded amounts of the Company’s cash and cash equivalents approximate fair value because of the liquidity and short-term maturity of these instruments.

Non-recourse debt

The fair value of the Company’s non-recourse debt is estimated using discounted cash flow analyses, based upon current market borrowing rates for similar types of borrowing arrangements.

Limitations

The fair value estimates presented herein were based on pertinent information available to the Company as of March 31, 2010 and December 31, 2009. Although the Company is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since those dates and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

The following table presents estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at March 31, 2010 and December 31, 2009 (in thousands):

	March 31, 2010				December 31, 2009
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	1,991	$	1,991	$	2,306	$	2,306
Financial liabilities:
Non-recourse debt		201		202		398		403

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements contained in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Form 10-Q, which are not historical facts, may be forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. In particular, the economic recession and changes in general economic conditions, including, fluctuations in demand for equipment, lease rates, and interest rates, may result in delays in leasing, re-leasing, and disposition of equipment, and reduced returns on invested capital. The Company’s performance is subject to risks relating to lessee defaults and the creditworthiness of its lessees. The Fund’s performance is also subject to risks relating to the value of its equipment at the end of its leases, which may be affected by the condition of the equipment, technological obsolescence and the markets for new and used equipment at the end of lease terms. Investors are cautioned not to attribute undue certainty to these forward-looking statements, which speak only as of the date of this Form 10-Q. 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-Q or to reflect the occurrence of unanticipated events, other than as required by law.

Overview

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

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. The offering was terminated in November 2000. Total proceeds of the offering were $135.7 million. During early 2001, the Company completed its initial acquisition stage with the investment of the net proceeds from the public offering of Units. Subsequently, throughout the reinvestment period (“Reinvestment Period”) (defined as six full years following the year the offering was terminated), the Company reinvested cash flow in excess of certain amounts required to be distributed to the Other Members and/or utilized its credit facilities to acquire additional equipment.

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

As of March 31, 2010, the Company continues in its liquidation phase. Accordingly, assets related to leases that mature will be returned to inventory and most likely will be subsequently sold, which will result in decreasing revenue as earning assets decrease. Periodic distributions are paid at the discretion of the Managing Member.

Results of Operations

The three months ended March 31, 2010 versus the three months ended March 31, 2009

The Company had net income of $55 thousand for the three months ended March 31, 2010 as compared to a net loss of $362 thousand for the prior year period. The results for the first quarter of 2010 reflect a reduction in total operating expenses and a slight increase in total revenues when compared to the prior year period.

Revenues

Total revenues for the first quarter of 2010 increased by $14 thousand, or 1%, when compared to the prior year period. The net increase in revenues was largely due to a $37 thousand favorable change in gains or losses recognized on the sale of equipment, and a $33 thousand increase in direct financing lease revenue. These increases in revenue were partially offset by a $56 thousand reduction in operating lease revenue.

The favorable change in gains or losses recognized on sales of equipment was primarily due to a first quarter 2009 net loss recognized on two sale transactions. Such gains or losses recognized on first quarter 2010 sale transactions were nominal in amount. The increase in direct financing lease revenue was primarily attributable to certain off-lease assets that were renewed as direct financing leases subsequent to the first quarter of 2009.

Partially offsetting the aforementioned increases in revenues was the reduction in operating lease revenue, which declined mainly due to the decrease in revenues from the Company’s marine vessel and other usage-based assets coupled with

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continued run-off and sales of lease assets.

Expenses

Total operating expenses for the first quarter of 2010 decreased by $415 thousand, or 21%, as compared to the prior year period. The net decrease in total operating expenses was primarily due to reductions in depreciation expense, taxes and franchise fees and railcar maintenance expense.

The decrease in depreciation expense totaled $211 thousand and was a result of continued run-off and sales of lease assets. Taxes and franchise fees decreased by $146 thousand mainly due to a period over period decline in state franchise and income tax liability. The first quarter 2009 accrual reflects estimated tax obligations related to an approximate $3.0 million of gains recognized on the sale of railcars during 2008. In addition, maintenance expense decreased by $74 thousand primarily due to a decline in railcars in service.

Other

The Company recorded other income, net totaling $0 and $12 thousand for the three months ended March 31, 2010 and 2009, respectively. The first quarter 2009 amount reflects the change in the fair value of its interest swap contracts, all of which terminated during the first quarter of 2009.

Capital Resources and Liquidity

The liquidity of the Company varies, increasing to the extent that cash flows from leases and proceeds of asset sales exceed expenses and decreasing as lease assets are acquired, as distributions are made to the Other Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

The primary source of liquidity for the Company is its cash flow from leasing activities. As initial lease terms expire, the Company re-leases or sells the equipment. The future liquidity beyond the contractual minimum rentals will depend on the Company’s success in remarketing or selling the equipment as it comes off rental.

The changes in the Company’s cash flow for the three months ended March 31, 2010 when compared to the three months ended March 31, 2009 are as follows:

• Operating Activities

Cash provided by operating activities during the first quarter of 2010 decreased by $554 thousand as compared to the prior year period. The net decrease in cash flow was primarily attributable to an unfavorable year over year three-month change in accounts receivable and accounts payable activities, and a decrease in unearned lease income. These decreases in cash flow were partially offset by an increase in net operating results, as adjusted for non-cash revenue and expense items such as gain on sales of assets and depreciation expense.

The unfavorable change in accounts receivable activities reduced cash flow by $387 thousand and was largely due to lower 2009 year-end billings related to marine vessel rental revenue as compared to year-end 2008. Accordingly, receivables collected during the current quarter were significantly lower when compared to the prior year period. Likewise, the unfavorable change in accounts payable and accrued liabilities activities reduced cash flow by $205 thousand and was largely due to first quarter 2009 period-end accrued costs related to refurbishing the Company’s marine vessel. Finally, the decrease in unearned lease income reduced cash by $108 thousand and was mainly a result of a period over period decrease in unearned rents received and increased amortization of prepaid rents received in previous periods.

The aforementioned decreases in cash flow was partially offset by a $147 thousand increase resulting from a period over period improvement in net operating results, as adjusted for non-cash items. The improvement in net operating results, as adjusted for non-cash items, was largely due to reduced taxes and franchise fees and railcar maintenance expense.

• Investing Activities

Net cash provided by investing activities during the first quarter of 2010 totaled $120 thousand as compared to cash used in investing activities of $272 thousand for the prior year period, an increase of $392 thousand. Cash flow

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increased as the first quarter 2009 amount included $379 thousand of capitalized improvement costs associated with the Company’s marine vessel. There were no such capitalized costs incurred during the first quarter of 2010.

• Financing Activities

Net cash used in financing activities during the first quarter of 2010 increased by $599 thousand as compared to the prior year period. A majority of the increase in cash used (decrease in cash flow) represents distributions paid to both Other Members and the Managing Member totaling $542 thousand and $44 thousand, respectively. No distributions were paid during the first quarter of 2009.

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

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. For detailed information on the Company’s debt obligations, see Note 5, Non-recourse debt, as set forth in Item 1. Financial Statements.

The Company commenced periodic distributions, based on cash flows from operations, beginning with the month of January 1999. At March 31, 2010, the Company had no commitments to purchase lease assets. Pursuant to the Operating Agreement, the Company will no longer purchase any new lease assets.

Item 4T. Controls and procedures.

Evaluation of disclosure controls and procedures

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

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

Changes in internal control

There were no changes in the Managing Member’s internal control over financial reporting, as it is applicable to the Company, during the quarter ended March 31, 2010 that have materially affected, or are reasonably likely to materially affect, the Managing Member’s internal control over financial reporting, as is applicable to the Company.

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PART II. OTHER INFORMATION

Item 1. 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 financial position or results of operations. No material legal proceedings are currently pending against the Company or against any of its assets.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. [Reserved].

Item 5. Other Information.

None.

Item 6. Exhibits.

Documents filed as a part of this report:

1. Financial Statement Schedules

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

2. Other Exhibits

31.1    Rule 13a-14(a)/15d-14(a) Certification of Dean L. Cash

31.2    Rule 13a-14(a)/15d-14(a) Certification of Paritosh K. Choksi

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

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

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 12, 2010

		ATEL CAPITAL EQUIPMENT FUND VIII, LLC
		(Registrant)
By:	ATEL Financial Services, LLC
	Managing Member of Registrant
		By:	/s/ Dean L. Cash
			Dean L. Cash
			President and Chief Executive Officer of ATEL Financial Services, LLC (Managing Member)
		By:	/s/ Paritosh K. Choksi
			Paritosh K. Choksi
			Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Financial Services, LLC (Managing Member)
		By:	/s/ Samuel Schussler
			Samuel Schussler
			Vice President and Chief Accounting Officer of ATEL Financial Services, LLC (Managing Member)

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