EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dean L. Cash, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ATEL Capital Equipment Fund X, LLC;

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

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

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2012

/s/ Dean L. Cash Dean L. Cash President and Chief Executive Officer of ATEL Financial Services, LLC (Managing Member)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paritosh K. Choksi, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ATEL Capital Equipment Fund X, LLC;

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

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

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2012

/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)

EX-32.1

Exhibit 32.1

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

In connection with the Quarterly Report of ATEL Capital Equipment Fund X, LLC (the “Company”) on Form 10-Q for the period ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dean L. Cash, President and Chief Executive Officer of ATEL Financial Services, LLC, Managing Member of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: May 10, 2012

/s/ Dean L. Cash Dean L. Cash President and Chief Executive Officer of ATEL Financial Services, LLC (Managing Member)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

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

In connection with the Quarterly Report of ATEL Capital Equipment Fund X, LLC (the “Company”) on Form 10-Q for the period ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paritosh K. Choksi, Executive Vice President and Chief Financial Officer and Chief Operating Officer of ATEL Financial Services, LLC, Managing Member of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: May 10, 2012

/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)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Summary of significant accounting policies

3 Months Ended

Mar. 31, 2012

Summary of significant accounting policies

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. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results to be expected for the full year.

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no significant effect on the reported financial position or results of operations.

Footnote 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, 2012, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements, and adjustments thereto.

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 primarily relate 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 allowances for doubtful accounts and notes receivable.

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 primary geographic regions in which the Company seeks leasing opportunities are North America and Europe. The table below summarizes geographic information relating to the sources, by nation, of the Company’s total revenues for the three months ended March 31, 2012 and 2011 and long-lived tangible assets as of March 31, 2012 and December 31, 2011 (dollars in thousands):

	Three Months Ended March 31,
	2012		% of Total			2011		% of Total
Revenue:
United States	$	5,236		90	%	$	5,558		93	%
United Kingdom		334		6	%		307		5	%
Canada		240		4	%		109		2	%
Total International		574		10	%		416		7	%
Total	$	5,810		100	%	$	5,974		100	%

	As of March 31,					As of December 31,
	2012		% of Total			2011		% of Total
Long-lived tangible assets:
United States	$	52,314		92	%	$	55,822		93	%
United Kingdom		1,010		2	%		1,033		2	%
Canada		3,243		6	%		3,395		5	%
Total International		4,253		8	%		4,428		7	%
Total	$	56,567		100	%	$	60,250		100	%

Investment in securities:

From time to time, the Company may purchase securities of its borrowers or receive warrants to purchase securities in connection with its lending arrangements.

Purchased securities

Purchased securities are generally not registered for public sale and are carried at cost. Such securities are adjusted to fair value if the fair value is less than the carrying value and such impairment is deemed by the Managing Member to be other than temporary. Factors considered by the Managing Member in determining fair value include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital. At March 31, 2012 and 2011, the Company recorded fair value adjustments totaling $27 thousand and $96 thousand, respectively, which reduced the cost basis of certain investments deemed impaired. There was no incremental impairment to investment securities at December 31, 2011.

Warrants

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried at an estimated fair value on the balance sheet at the end of the period, as determined by the Managing Member. At March 31, 2012 and December 31, 2011, the Managing Member estimated the fair value of the warrants to be nominal in amount. During the first quarter of 2012, the Company recorded an unrealized gain of $14 thousand relative to the conversion of warrants associated with shares of a venture company. Gains and/or losses recognized on the net exercise of certain warrants during each of the three months ended March 31, 2012 and 2011 were nominal in amount.

Other income (expense), net:

The Company’s other income (expense), net for the three months ended March 31, 2012 and 2011 consists of the following (in thousands):

	Three Months Ended March 31,
	2012			2011
Foreign currency loss	$	(17	)	$	(187	)
Change in fair value of interest rate swap contracts		51			113
	$	34		$	(74	)

Per Unit data:

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

Recent accounting pronouncements:

In May 2011, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) (collectively the “Boards”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU 2011-04 created a uniform framework for applying fair value measurement principles for companies around the world and clarified existing guidance in US GAAP. ASU 2011-04 is effective for the first interim or annual reporting period beginning after December 15, 2011 and shall be applied prospectively. The Company adopted the provisions of ASU 2011-04 effective January 1, 2012. The fair value measurement provisions of ASU 2011-04 had no material impact on the Company’s financial position or results of operations.

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Organization and Limited Liability Company matters

3 Months Ended

Mar. 31, 2012

Organization and Limited Liability Company matters

1. Organization and Limited Liability Company matters:

ATEL Capital Equipment Fund X, LLC (the “Company”) was formed under the laws of the State of California on August 12, 2002 for the purpose of engaging in the sale of limited liability company investment units and acquiring equipment to engage in equipment leasing, lending and sales activities, primarily in the United States. The Managing Member or Manager of the Company is ATEL Financial Services, LLC (“AFS”), a California limited liability company. The Company may continue until December 31, 2022.

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. On April 9, 2003, 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. As of March 11, 2005, the offering was terminated. As of that date, subscriptions for 14,059,136 Units ($140.6 million) had been received, of which 87,650 Units ($720 thousand) were subsequently rescinded or repurchased (net of distributions paid and allocated syndication costs, as applicable) by the Company through March 31, 2012. As of March 31, 2012, 13,971,486 Units remain issued and outstanding.

The Company’s principal objectives are 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 ends on December 31, 2011 and (iii) provides additional distributions following the Reinvestment Period and until all equipment has been sold. The Company is governed by the Limited Liability Company Operating Agreement (“Operating Agreement”), as amended. On January 1, 2012, the Company commenced liquidation phase activities pursuant to the guidelines of the Operating Agreement.

Pursuant to the terms of the Operating Agreement, AFS receives compensation for services rendered and reimbursements for costs incurred on behalf of the Company (See Note 6). 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.

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, 2011, filed with the Securities and Exchange Commission.

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BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
ASSETS
Cash and cash equivalents	$ 2,816	$ 1,082
Accounts receivable, net of allowance for doubtful accounts of $106 at March 31, 2012 and $112 at December 31, 2011	731	890
Notes receivable, net of unearned interest income of $183 and allowance for credit losses of $12 as of March 31, 2012 and unearned interest income of $210 and allowance for credit losses of $3 as of December 31, 2011	1,159	1,268
Due from Managing Member		8
Prepaid expenses and other assets	29	40
Investment in securities	57	70
Investments in equipment and leases, net of accumulated depreciation of $70,528 at March 31, 2012 and $70,135 at December 31, 2011	56,567	60,250
Total assets	61,359	63,608
Accounts payable and accrued liabilities:
Managing Member	97
Accrued distributions to Other Members		1,313
Other	538	530
Accrued interest payable	110	132
Interest rate swap contracts	198	249
Deposits due lessees	52	52
Non-recourse debt	20,549	21,851
Receivables funding program obligation	6,316	7,666
Unearned operating lease income	597	681
Total liabilities	28,457	32,474
Commitments and contingencies
Members' capital:
Managing Member
Other Members	32,902	31,134
Total Members' capital	32,902	31,134
Total liabilities and Members' capital	$ 61,359	$ 63,608

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STATEMENTS OF CHANGES IN MEMBERS' CAPITAL (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2011
Distributions to Other Members, per Unit	$ 0.8

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STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Operating activities:
Net income	$ 1,768	$ 585
Adjustment to reconcile net income to cash provided by operating activities:
Gain on sales of lease assets and early termination of notes	(387)	(233)
Depreciation of operating lease assets	2,543	3,525
Amortization of initial direct costs	35	66
Impairment losses on equipment		100
Provision (reversal of provision) for credit losses	3	(6)
Provision for losses on investment in securities	27	96
Change in fair value of interest rate swap contracts	(51)	(113)
Unrealized gain on securities	(14)
Gain on sales or dispositions of securities		(4)
Changes in operating assets and liabilities:
Accounts receivable	165	1,007
Prepaid expenses and other assets	11	14
Accounts payable, Managing Member	211	165
Accounts payable, other	8	133
Accrued interest payable	(22)	(12)
Deposits due lessees		(38)
Unearned operating lease income	(84)	(406)
Net cash provided by operating activities	4,213	4,879
Investing activities:
Purchases of equipment on operating leases		(636)
Proceeds from sales of lease assets and early termination of notes	994	688
Payments of initial direct costs		(1)
Principal payments received on direct financing leases	499	369
Proceeds from sales or dispositions of securities		52
Principal payments received on notes receivable	99	113
Net cash provided by investing activities	1,592	585
Financing activities:
Borrowings under acquisition facility	500
Repayments under acquisition facility	(500)
Repayments under non-recourse debt	(1,302)	(1,163)
Repayments under receivables funding program	(1,350)	(2,034)
Net cash used in financing activities	(4,071)	(6,224)
Net increase (decrease) in cash and cash equivalents	1,734	(760)
Cash and cash equivalents at beginning of period	1,082	8,793
Cash and cash equivalents at end of period	2,816	8,033
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	492	632
Schedule of non-cash transactions:
Securities acquired through conversion of warrants	14
Other Members
Financing activities:
Distributions to Members	(1,313)	(2,800)
Schedule of non-cash transactions:
Distributions declared and payable at year-end		1,313
Managing Member
Financing activities:
Distributions to Members	(106)	(227)
Schedule of non-cash transactions:
Distributions declared and payable at year-end		$ 106

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BALANCE SHEETS (Parenthetical) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Accounts receivable, allowance for doubtful accounts	$ 106	$ 112
Notes receivable, unearned interest income	183	210
Notes receivable, allowance for credit losses	12	3
Investments in equipment and leases, accumulated depreciation	$ 70,528	$ 70,135

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Commitments

3 Months Ended

Mar. 31, 2012

Commitments

10. Commitments:

At March 31, 2012, there were no commitments to purchase lease assets of fund investments in notes receivable.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2012	Apr. 30, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Entity Registrant Name	ATEL CAPITAL EQUIPMENT FUND X LLC
Entity Central Index Key	0001186258
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Units Outstanding		13,971,486

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Guarantees

3 Months Ended

Mar. 31, 2012

Guarantees

11. Guarantees:

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

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.

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STATEMENTS OF INCOME (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Leasing and lending activities:
Operating leases	$ 4,445	$ 4,559
Direct financing leases	880	1,109
Interest on notes receivable	26	35
Gain on sales of lease assets and early termination of notes	387	233
Unrealized gain on securities	14
Gain on sales or dispositions of securities		4
Other interest		2
Other	58	32
Total revenues	5,810	5,974
Expenses:
Depreciation of operating lease assets	2,543	3,525
Asset management fees to Managing Member	164	202
Acquisition expense		104
Cost reimbursements to Managing Member	579	370
Amortization of initial direct costs	35	66
Interest expense	470	620
Impairment losses on equipment		100
Provision (reversal of) provision for credit losses	3	(6)
Provision for losses on investment in securities	27	96
Professional fees	77	101
Franchise fees and taxes	21	21
Outside services	18	11
Other	139	105
Total operating expenses	4,076	5,315
Other income (expense), net	34	(74)
Net income	1,768	585
Net income:
Managing Member		227
Other Members	1,768	358
Net income	$ 1,768	$ 585
Net income per Limited Liability Company Unit (Other Members)	0.13	0.03
Weighted average number of Units outstanding	13,971,486	13,971,486

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Investment in equipment and leases, net

3 Months Ended

Mar. 31, 2012

Investment in equipment and leases, net

5. Investment in equipment and leases, net:

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

	Balance December 31, 2011		Reclassifications & Additions/ Dispositions			Depreciation/ Amortization Expense or Amortization of Leases			Balance March 31, 2012
Net investment in operating leases	$	43,913	$	(401	)	$	(2,543	)	$	40,969
Net investment in direct financing leases		14,995		(97	)		(499	)		14,399
Assets held for sale or lease, net		1,121		(109	)		—			1,012
Initial direct costs, net of accumulated amortization of $474 at March 31, 2012 and $526 at December 31, 2011		221		—			(34	)		187
Total	$	60,250	$	(607	)	$	(3,076	)	$	56,567

Additions to net investment in operating leases are stated at cost. IDC amortization expense related to operating leases and direct financing leases totaled $34 thousand and $66 thousand for the respective three months ended March 31, 2012 and 2011 (See Note 3).

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

Management periodically reviews the carrying values of its assets on leases and assets held for lease or sale for impairment. Impairment losses are recorded as an adjustment to the net investment in operating leases. As a result of these reviews, management determined that no incremental impairment losses existed during the three months ended March 31, 2012. During the three months ended March 31, 2011, the Company deemed certain operating off-lease equipment to be impaired. Accordingly, the Company recorded fair value adjustments totaling $100 thousand which reduced the cost basis of the equipment.

The Company utilizes a straight line depreciation method for equipment in all of the categories currently in its portfolio of operating lease transactions. Depreciation expense on the Company’s equipment was approximately $2.5 million and $3.5 million for the respective three months ended March 31, 2012 and 2011.

All of the leased property was acquired in the years beginning with 2003 through 2011.

As of March 31, 2012 and December 31, 2011, there were no lease contracts placed in non-accrual status. As of the same dates, the Company has certain other leases that have related accounts receivables aged 90 days or more that have not been placed on non-accrual status. In accordance with Company policy, such receivables are fully reserved. Management continues to closely monitor these leases, and all other lease contracts, for any actual change in collectability status and indication of necessary valuation adjustments.

Operating leases:

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

	Balance December 31, 2011			Additions			Reclassifications or Dispositions			Balance March 31, 2012
Transportation, other	$	28,829		$	—		$	—		$	28,829
Transportation, rail		28,286			—			(21	)		28,265
Materials handling		24,032			—			(1,986	)		22,046
Manufacturing		8,302			—			—			8,302
Construction		4,808			—			(65	)		4,743
Aircraft		4,732			—			—			4,732
Logging & lumber		4,125			—			—			4,125
Petro/natural gas		2,446			—			—			2,446
Agriculture		1,509			—			—			1,509
Data processing		937			—			—			937
Research		368			—			—			368
		108,374			—			(2,072	)		106,302
Less accumulated depreciation		(64,461	)		(2,543	)		1,671			(65,333	)
Total	$	43,913		$	(2,543	)	$	(401	)	$	40,969

The average estimated residual value for assets on operating leases was 22% of the assets’ original cost at both March 31, 2012 and December 31, 2011. There were no operating leases placed in non-accrual status as of March 31, 2012 and December 31, 2011.

Direct financing leases:

As of March 31, 2012 and December 31, 2011, investment in direct financing leases generally consists of manufacturing, mining, materials handling, construction and cleaning and maintenance equipment. The components of the Company’s investment in direct financing leases as of March 31, 2012 and December 31, 2011 are as follows (in thousands):

	March 31, 2012			December 31, 2011
Total minimum lease payments receivable	$	21,404		$	22,900
Estimated residual values of leased equipment (unguaranteed)		3,754			3,805
Investment in direct financing leases		25,158			26,705
Less unearned income		(10,759	)		(11,710	)
Net investment in direct financing leases	$	14,399		$	14,995

There were no direct financing leases placed in non-accrual status as of March 31, 2012 and December 31, 2011.

At March 31, 2012, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):

	Operating Leases		Direct Financing Leases		Total
Nine months ending December 31, 2012	$	7,491	$	3,944	$	11,435
Year ending December 31, 2013		6,899		4,762		11,661
2014		3,940		4,538		8,478
2015		1,771		4,465		6,236
2016		515		3,695		4,210
Thereafter		608		—		608
	$	21,224	$	21,404	$	42,628

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Allowance for credit losses

3 Months Ended

Mar. 31, 2012

Allowance for credit losses

4. Allowance for credit losses:

The Company’s provision for credit losses are as follows (in thousands):

	Accounts Receivable Allowance for Doubtful Accounts									Valuation Adjustments on Financing Receivables				Allowance for Credit Losses
	Notes Receivable			Finance Leases			Operating Leases			Notes Receivable		Finance Leases
Balance December 31, 2010	$	25		$	—		$	37		$	—	$	—	$	62
(Reversal of provision) Provision		(25	)		10			65			3		—		53
Balance December 31, 2011		—			10			102			3		—		115
(Reversal of provision) Provision		—			(4	)		(2	)		9		—		3
Balance March 31, 2012	$	—		$	6		$	100		$	12	$	—	$	118

Accounts receivable

Accounts receivable represent the amounts billed under operating and direct financing lease contracts, and notes receivable which are currently due to the Company.

Allowances for doubtful accounts are typically established based upon their aging and historical charge off and collection experience and the creditworthiness of specifically identified lessees and borrowers, and invoiced amounts. Accounts receivable deemed uncollectible are generally charged off against the allowance on a specific identification basis. Recoveries of amounts that were previously written-off are recorded as other income in the period received.

Accounts receivable are generally placed in a non-accrual status (i.e., no revenue is recognized) when payments are more than 90 days past due. Additionally, management periodically reviews the creditworthiness of companies with lease or note payments outstanding less than 90 days. Based upon management’s judgment, such leases or notes may be placed in non-accrual status. Leases or notes placed on non-accrual status are only returned to an accrual status when the account has been brought current and management believes recovery of the remaining unpaid receivable is probable. Until such time, revenues on operating leases are recognized on a cash basis. All payments received on amounts billed under direct financing leases contracts and notes receivable are applied only against outstanding principal balances.

Financing receivables

In addition to the allowance established for delinquent accounts receivable, the total allowance related solely to financing receivables also includes anticipated impairment charges on notes receivable and direct financing leases.

Notes are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and/or interest when due according to the contractual terms of the note agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest when due. If it is determined that a loan is impaired with regard to scheduled payments, the Company will perform an analysis of the note to determine if an impairment valuation reserve is necessary. This analysis considers the estimated cash flows from the note, or the collateral value of the property underlying the note when note repayment is collateral dependent. Any required valuation reserve is charged to earnings when determined; and notes are charged off to the allowance as they are deemed uncollectible.

The asset underlying a direct financing lease contract is considered impaired if the estimated undiscounted future cash flows of the asset are less than its 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.

As of March 31, 2012 and December 31, 2011, the Company’s allowance for credit losses (related solely to financing receivables) and its recorded investment in financing receivables were as follows (in thousands):

March 31, 2012	Notes Receivable		Finance Leases		Total
Allowance for credit losses:
Ending balance	$	12	$	—	$	12
Ending balance: individually evaluated for impairment	$	12	$	—	$	12
Ending balance: collectively evaluated for impairment	$	—	$	—	$	—
Ending balance: loans acquired with deteriorated credit quality	$	—	$	—	$	—
Financing receivables:
Ending balance	$	1,1711	$	14,4342	$	15,605
Ending balance: individually evaluated for impairment	$	1,171	$	14,434	$	15,605
Ending balance: collectively evaluated for impairment	$	—	$	—	$	—
Ending balance: loans acquired with deteriorated credit quality	$	—	$	—	$	—

¹ Includes $1 of unamortized initial direct costs.

² Includes $35 of unamortized initial direct costs.

December 31, 2011	Notes Receivable		Finance Leases		Total
Allowance for credit losses:
Ending balance	$	3	$	—	$	3
Ending balance: individually evaluated for impairment	$	3	$	—	$	3
Ending balance: collectively evaluated for impairment	$	—	$	—	$	—
Ending balance: loans acquired with deteriorated credit quality	$	—	$	—	$	—
Financing receivables:
Ending balance	$	1,2713	$	15,0384	$	16,309
Ending balance: individually evaluated for impairment	$	1,271	$	15,038	$	16,309
Ending balance: collectively evaluated for impairment	$	—	$	—	$	—
Ending balance: loans acquired with deteriorated credit quality	$	—	$	—	$	—

³ Includes $2 of unamortized initial direct costs.

⁴ Includes $43 of unamortized initial direct costs.

The Company evaluates the credit quality of its financing receivables on a scale equivalent to the following quality indicators related to corporate risk profiles:

Pass – Any account whose lessee/debtor, co-lessee/debtor or any guarantor has a credit rating on publicly traded or privately placed debt issues as rated by Moody’s or S&P for either Senior Unsecured debt, Long Term Issuer rating or Issuer rating that are in the tiers of ratings generally recognized by the investment community as constituting an Investment Grade credit rating; or, has been determined by the Manager to be an Investment Grade Equivalent or High Quality Corporate Credit per its Credit Policy or has a Not Rated internal rating by the Manager and the account is not considered by the Chief Credit Officer of the Manager to fall into one of the three risk profiles below.

Special Mention – Any traditional corporate type account with potential weaknesses (e.g. large net losses or major industry downturns) or, any growth capital account that has less than three months of cash as of the end of the calendar quarter to fund their continuing operations. These accounts deserve management’s close attention. If left uncorrected, those potential weaknesses may result in deterioration of the Fund’s receivable at some future date.

Substandard – Any account that is inadequately protected by the current worth and paying capacity of the borrower or of the collateral pledged, if any. Accounts that are so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Fund will sustain some loss as the likelihood of fully collecting all receivables may be questionable if the deficiencies are not corrected. Such accounts are on the Manager’s Credit Watch List.

Doubtful – Any account where the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Accordingly, an account that is so classified is on the Manager’s Credit Watch List, and has been declared in default and the Manager has repossessed, or is attempting to repossess, the equipment it financed. This category includes impaired notes and leases as applicable.

At March 31, 2012 and December 31, 2011, the Company’s financing receivables by credit quality indicator and by class of financing receivables are as follows (excludes initial direct costs) (in thousands):

	Notes Receivable				Finance Leases
	March 31, 2012		December 31, 2011		March 31, 2012		December 31, 2011
Pass	$	149	$	169	$	14,338	$	14,922
Special mention		999		1,100		61		73
Substandard		—		—		—		—
Doubtful		22		—		—		—
Total	$	1,170	$	1,269	$	14,399	$	14,995

As of March 31, 2012 and December 31, 2011, the Company’s impaired loans were as follows (in thousands):

	Impaired Loans
At March 31, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded
Notes receivable	$	—	$	—	$	—	$	—	$	—
With an allowance recorded
Notes receivable		21		21		12		23		—
Total	$	21	$	21	$	12	$	23	$	—

	Impaired Loans
At December 31, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded
Notes receivable	$	—	$	—	$	—	$	—	$	—
With an allowance recorded
Notes receivable		24		24		3		24		—
Total	$	24	$	24	$	3	$	24	$	—

At March 31, 2012 and December 31, 2011, the investment in financing receivables is aged as follows (in thousands):

March 31, 2012	30 – 59 Days Past Due		60 – 89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Financing Receivables		Recorded Investment>90 Days and Accruing
Notes receivable	$	—	$	—	$	—	$	—	$	1,170	$	1,170	$	—
Finance leases		1		36		62		99		14,300		14,399		62
Total	$	1	$	36	$	62	$	99	$	15,470	$	15,569	$	62

December 31, 2011	30 – 59 Days Past Due		60 – 89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Financing Receivables		Recorded Investment>90 Days and Accruing
Notes receivable	$	—	$	—	$	—	$	—	$	1,269	$	1,269	$	—
Finance leases		36		—		1		37		14,958		14,995		1
Total	$	36	$	—	$	1	$	37	$	16,227	$	16,264	$	1

As discussed in Note 3, one of the Company’s notes receivable continues to be in non-accrual status at March 31, 2012 and was considered impaired relative to its payment terms. While, as of the same date, the note was current with respect to its restructured terms, management has determined that an additional $9 thousand adjustment was necessary to reflect fair value. The Company had previously recorded a $3 thousand fair value adjustment to reduce the cost basis of the aforementioned impaired note at September 30, 2011. No incremental adjustment was necessary at December 31, 2011.

At March 31, 2012 and December 31, 2011, certain net investments in financing receivables with related accounts receivable past due more than 90 days are still on an accrual basis based on management’s assessment of the collectability of such receivables. However, these accounts receivable are fully reserved and included in the allowance for doubtful accounts presented above.

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Members' capital

3 Months Ended

Mar. 31, 2012

Members' capital

12. Members’ capital:

Units issued and outstanding were 13,971,486 at both March 31, 2012 and December 31, 2011. 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 ceased offering Units on March 11, 2005.

The Company has the right, exercisable in the Manager’s discretion, but not the obligation, to repurchase Units of a Unitholder 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 Limited Liability Company Operating Agreement. The repurchase would be at the discretion of the Manager on terms it determines to be appropriate under given circumstances, in the event that the Manager 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 Unitholder 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. In accordance with the terms of the Operating Agreement, an additional allocation of income was made to AFS during the three months ended March 31, 2011 to bring AFS’s ending capital account balance to zero.

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

	Three Months Ended March 31,
	2012		2011
Distributions declared	$	—	$	2,800
Weighted average number of Units outstanding		13,971,486		13,971,486
Weighted average distributions per Unit	$	—	$	0.20

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Borrowing facilities

3 Months Ended

Mar. 31, 2012

Borrowing facilities

8. Borrowing facilities:

The Company participates with AFS and certain of its affiliates in a revolving credit facility (the “Credit Facility”) comprised of a working capital facility to AFS, an acquisition facility (the “Acquisition Facility”) and a warehouse facility (the “Warehouse Facility”) to AFS, the Company and affiliates, and a venture facility available to an affiliate with a syndicate of financial institutions which Credit Facility includes certain financial covenants. The Credit Facility is for an amount up to $75 million and expires in June 2012. Negotiations are currently in process of extending the facility at $60 million through June 2013. The lending syndicate providing the Credit Facility has a blanket lien on all of the Company’s assets as collateral for any and all borrowings under the Acquisition Facility, and on a pro-rata basis under the Warehouse Facility.

As of March 31, 2012 and December 31, 2011, borrowings under the facility were as follows (in thousands):

	March 31, 2012		December 31, 2011
Total amount available under the financing arrangement	$	75,000	$	75,000
Amount borrowed by the Company under the acquisition facility		—		—
Amounts borrowed by affiliated partnerships and limited liability companies under the working capital, acquisition and warehouse facilities		—		(7,476	)
Total remaining available under the working capital, acquisition and warehouse	$	75,000	$	67,524

The Company and its affiliates pay an annual commitment fee to have access to this line of credit. As of March 31, 2012, the aggregate amount of the Credit Facility is potentially available to the Company, subject to certain sub-facility and borrowing-base limitations. However, as amounts are drawn on the Credit Facility by each of the Company and the affiliates who are borrowers under the Credit Facility, the amount remaining available to all borrowers to draw under the Credit Facility is reduced. As the Warehousing Facility is a short term bridge facility, any amounts borrowed under the Warehousing Facility, and then repaid by the affiliated borrowers (including the Company) upon allocation of an acquisition to a specific purchaser, become available under the Warehouse Facility for further short term borrowing.

As of March 31, 2012, the Company’s Tangible Net Worth requirement under the Credit Facility was $15.0 million, the permitted maximum leverage ratio was not to exceed 1.25 to 1, and the required minimum interest coverage ratio was not to be less than 2 to 1. The Company was in compliance with these financial covenants under the Credit Facility with a minimum Tangible Net Worth, leverage ratio and interest coverage ratio, as calculated per the Credit Facility agreement of $33.1 million, 0.82 to 1, and 11.48 to 1, respectively, as of March 31, 2012. As such, as of March 31, 2012, the Company was in compliance with all material financial covenants, and with all other material conditions of the Credit Facility. The Company does not anticipate any covenant violations nor does it anticipate that any of these covenants will restrict its operations or its ability to procure additional financing.

Fee and interest terms

The interest rate on the Credit Facility is based on either the LIBOR/Eurocurrency rate of 1-, 2-, 3- or 6-month maturity plus a lender designated spread, or the bank’s Prime rate, which re-prices daily. Principal amounts of loans made under the Credit Facility that are prepaid may be re-borrowed on the terms and subject to the conditions set forth under the Credit Facility. At both March 31, 2012 and December 31, 2011, the Company had no outstanding borrowings under the acquisition facility.

Warehouse facility

To hold the assets under the Warehousing Facility prior to allocation to specific investor programs, a Warehousing Trust has been entered into by the Company, AFS, ALC, and certain of the affiliated partnerships and limited liability companies. The Warehousing Trust is used by the Warehouse Facility borrowers to acquire and hold, on a short-term basis, certain lease transactions that meet the investment objectives of each of such entities. Each of the leasing programs sponsored by AFS and ALC currently in its acquisition stage is a pro rata participant in the Warehousing Trust, as described below. When a program no longer has a need for short term financing provided by the Warehousing Facility, it is removed from participation, and as new leasing investment entities are formed by AFS and ALC and commence their acquisition stages, these new entities are added.

As of March 31, 2012, the investment program participants were the Company, ATEL Capital Equipment Fund XI, LLC, ATEL 12, LLC and ATEL 14, LLC. Pursuant to the Warehousing Trust, the benefit of the lease transaction assets, and the corresponding liabilities under the Warehouse Facility, inure to each of such entities based upon each entity’s pro-rata share in the Warehousing Trust estate. The “pro-rata share” is calculated as a ratio of the net worth of each entity over the aggregate net worth of all entities benefiting from the Warehousing Trust estate, excepting that the trustees, AFS and ALC, are both jointly and severally liable for the pro rata portion of the obligations of each of the affiliated partnerships and limited liability companies participating under the Warehouse Facility. Transactions are financed through this Warehouse Facility only until the transactions are allocated to a specific program for purchase or are otherwise disposed by AFS and ALC. When a determination is made to allocate the transaction to a specific program for purchase by the program, the purchaser repays the debt associated with the asset, either with cash or by means of proceeds of a draw under the Acquisition Facility, and the asset is removed from the Warehouse Facility collateral, and ownership of the asset and any debt obligation associated with the asset are assumed solely by the purchasing entity.

As of March 31, 2012, there were no borrowings under the Warehouse Facility. As of December 31, 2011, borrowings of $5.6 million were outstanding under such facility. The Company’s maximum contingent obligation on the outstanding warehouse balances at December 31, 2011 was approximately $1.5 million.

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Related party transactions

3 Months Ended

Mar. 31, 2012

Related party transactions

6. Related party transactions:

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

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

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

Cost reimbursements to the Managing Member are based on its costs incurred in performing administrative services for the Company. These costs are allocated to each managed entity based on certain criteria such as managed assets, number of investors or contributed capital based upon the type of cost incurred. The Operating Agreement places an annual limit and a cumulative limit for cost reimbursements to AFS and/or affiliates. 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 recovered in future years to the extent of the cumulative limit. As of March 31, 2012, the Company has not exceeded the annual and/or cumulative limitations discussed above.

During the three months ended March 31, 2012 and 2011, AFS and/or affiliates earned fees and commissions, and billed for reimbursements, pursuant to the Operating Agreement as follows (in thousands):

	Three Months Ended March 31,
	2012		2011
Costs reimbursed to Managing Member and/or affiliates	$	579	$	370
Asset management fees to Managing Member and/or affiliates		164		202
Acquisition and initial direct costs paid to Managing Member		—		105
	$	743	$	677

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Non-recourse debt

3 Months Ended

Mar. 31, 2012

Non-recourse debt

7. Non-recourse debt:

At March 31, 2012, non-recourse debt consists of notes payable to financial institutions. The notes are due in monthly installments. Interest on the notes is at fixed rates ranging from 4.41% to 6.66%. The notes are secured by assignments of lease payments and pledges of assets. At March 31, 2012, gross operating lease rentals and future payments on direct financing leases totaled approximately $23.6 million over the remaining lease terms; and the carrying value of the pledged assets is $17.3 million. The notes mature at various dates from 2012 through 2017.

The non-recourse debt does not contain any material financial covenants. The debt is secured by liens granted by the Company to the non-recourse lenders on (and only on) the discounted lease transactions. The lenders have 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 the respective specific security and the Company does not guarantee (nor is the Company otherwise contractually responsible for) the payment of the non-recourse debt as a general obligation or liability of the Company. Although the Company does not have any direct or general liability in connection with the non-recourse debt apart from the security granted, the Company is directly and generally liable and responsible for certain representations, warranties, and covenants made to the lenders, such as warranties as to genuineness of the transaction parties’ signatures, as to the genuineness of the respective lease chattel paper or the transaction as a whole, or as to the Company’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 such industry as being consistent with non-recourse discount financing obligations. Accordingly, as there are no financial covenants or ratios imposed on the Company in connection with the non-recourse debt, the Company has determined that there are no material covenants with respect to the non-recourse debt that warrant footnote disclosure.

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

	Principal		Interest		Total
Nine months ending December 31, 2012	$	3,718	$	919	$	4,637
Year ending December 31, 2013		4,689		954		5,643
2014		4,013		679		4,692
2015		4,208		410		4,618
2016		3,743		133		3,876
2017		178		1		179
	$	20,549	$	3,096	$	23,645

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Receivables funding program

3 Months Ended

Mar. 31, 2012

Receivables funding program

9. Receivables funding program:

As of March 31, 2012, the Company had amounts outstanding under an $80 million receivables funding program (the “RF Program”) with a receivables financing company that issued commercial paper rated A1 from Standard and Poor’s and P1 from Moody’s Investors Service. Under the RF Program, the lender holds liens against the Company’s assets. The lender is in a first position against certain specified assets and in either a subordinated or shared position against the remaining assets. The RF Program does not contain any credit risk related default contingencies and is scheduled to mature in July 2014 at which time advances under the RF Program are to be repaid in full.

The RF Program provides for borrowing at a variable interest rate and requires the Company to enter into interest rate swap agreements with certain hedge counterparties (also rated A1/P1) to mitigate the interest rate risk associated with each variable interest rate note. The RF Program allowed the Company to have a more cost effective means of obtaining debt financing than available for individual non-recourse debt transactions.

The Company had approximately $6.3 million and $7.7 million outstanding under the RF Program at March 31, 2012 and December 31, 2011, respectively. During the three months ended March 31, 2012 and 2011, the Company paid program fees, as defined in the receivables funding agreement, totaling $7 thousand and $14 thousand, respectively. The RF Program fees are included in interest expense in the Company’s statements of operations.

As of March 31, 2012, the Company has entered into interest rate swap agreements to receive or pay interest on a notional principal of $6.3 million based on the difference between nominal rates ranging from 3.21% to 5.39% and variable rates that ranged from 0.24% to 0.28%. As of December 31, 2011, the Company has entered into interest rate swap agreements to receive or pay interest on a notional principal of $7.7 million based on the difference between nominal rates ranging from 3.21% to 5.39% and variable rates that ranged from 0.19% to 0.26%. No actual borrowing or lending is involved. The termination of the swaps coincides with the maturity of the debt. Through the swap agreements, the interest rates have been effectively fixed. The differential to be paid or received is accrued as interest rates change and is recognized currently as an adjustment to interest expense related to the debt. The interest rate swaps are not designated as hedging instruments and are carried at fair value on the balance sheet with unrealized gain/loss included in the statements of income in other income/(expense).

In conjunction with the RF Program, the lender under the RF Program has entered into an inter-creditor agreement with the lenders under the Credit Facility with the respect to priority and the sharing of collateral pools of the Company, including the Acquisition Facility and Warehouse Facility described in Note 8 above. Among the provisions of the inter-creditor agreement are cross-default provisions and acceleration provisions requiring payment before stated maturity in a default situation.

At March 31, 2012 and December 31, 2011, borrowings and interest rate swap agreements under the RF Program are as follows (in thousands):

Date Borrowed	Original Amount Borrowed		Balance March 31, 2012		Notional Balance March 31, 2012		Swap Value March 31, 2012			Payment Rate On Interest Swap Agreement
January 16, 2007	$	12,365	$	760	$	760	$	(17	)		5.15	%
July 2, 2007		7,222		239		239		(13	)		5.39	%
September 19, 2007		6,874		786		786		(36	)		4.83	%
January 15, 2008		10,018		733		733		(19	)		3.58	%
March 27, 2008		5,410		1,771		1,771		(57	)		3.21	%
May 16, 2008		10,194		1,731		1,731		(49	)		3.69	%
May 28, 2008		5,470		296		296		(7	)		3.49	%
	$	57,553	$	6,316	$	6,316	$	(198	)

Date Borrowed	Original Amount Borrowed		Balance December 31, 2011		Notional Balance December 31, 2011		Swap Value December 31, 2011			Payment Rate On Interest Swap Agreement
January 16, 2007	$	12,365	$	994	$	994	$	(27	)		5.15	%
July 2, 2007		7,222		272		272		(15	)		5.39	%
September 19, 2007		6,874		1,025		1,025		(45	)		4.83	%
January 15, 2008		10,018		885		885		(25	)		3.58	%
March 27, 2008		5,410		2,024		2,024		(66	)		3.21	%
May 16, 2008		10,194		2,098		2,098		(62	)		3.69	%
May 28, 2008		5,470		368		368		(9	)		3.49	%
	$	57,553	$	7,666	$	7,666	$	(249	)

At March 31, 2012, the minimum principal repayment schedule under the Program is as follows (in thousands):

Nine Months Ending December 31, 2012	$	3,008
Year ending December 31, 2013		2,528
2014		780
	$	6,316

At March 31, 2012, there are specific leases that are identified as collateral under the Program with expected future lease receivables of approximately $6.5 million at their discounted present value.

During the three months ended March 31, 2012 and 2011, the weighted average interest rates were 5.54% and 4.78%, respectively. The RF Program discussed above includes certain financial and non-financial covenants applicable to the Company as borrower. The Company was in compliance with all covenants as of March 31, 2012 and December 31, 2011.

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STATEMENTS OF CHANGES IN MEMBERS' CAPITAL (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
Beginning Balance	$ 31,134	$ 38,916	$ 38,916
Distributions to Other Members ($0.80 per Unit)			(11,184)
Distributions to Managing Member			(906)
Net income	1,768	585	4,308
Ending Balance	32,902		31,134
Other Members Capital
Beginning Balance (In Units)	13,971,486	13,971,486	13,971,486
Beginning Balance	31,134	38,916	38,916
Distributions to Other Members ($0.80 per Unit)			(11,184)
Net income	1,768		3,402
Ending Balance (In Units)	13,971,486		13,971,486
Ending Balance	32,902		31,134
Managing Member Capital
Distributions to Managing Member			(906)
Net income			$ 906

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Notes receivable, net

3 Months Ended

Mar. 31, 2012

Notes receivable, net

3. Notes receivable, net:

The Company has various notes receivable from borrowers who have financed the purchase of equipment through the Company. The terms of the notes receivable are 17 to 120 months and bear interest at rates ranging from 8.42% to 11.78%. The notes are secured by the equipment financed. The notes mature from 2012 through 2016.

The Company had a note in non-accrual status at March 31, 2012 and December 31, 2011. The note was originally placed in non-accrual status in 2010, at which time, its term was modified to defer the repayment of principal until April 2012 while maintaining interest-only payments at the original rate of 11.78%. As of March 31, 2012, the aforementioned note reflects a principal balance outstanding of $21 thousand. As of the same date, such note was current with respect to its restructured terms. However, the Company deemed it necessary to record a $9 thousand fair value adjustment at March 31, 2012 to reflect the fair value of the non-accrual note. Such fair value adjustment was in addition to a $3 thousand adjustment previously recorded at September 30, 2011.

As of March 31, 2012, the minimum future payments receivable are as follows (in thousands):

Nine months ending December 31, 2012	$	394
Year ending December 31, 2013		384
2014		221
2015		166
2016		188
		1,353
Less: portion representing unearned interest income		(183	)
		1,170
Unamortized initial direct costs		1
Less: allowance for credit losses		(12	)
Notes receivable, net	$	1,159

Initial direct costs (“IDC”) amortization expense related to notes receivable and the Company’s operating and direct financing leases for the three months ended March 31, 2012 and 2011 are as follows (in thousands):

	Three Months Ended March 31,
	2012		2011
IDC amortization – notes receivable	$	1	$	—
IDC amortization – lease assets		34		66
Total	$	35	$	66

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Fair value measurements

3 Months Ended

Mar. 31, 2012

Fair value measurements

13. 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, generally on a national exchange.

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, 2012 and December 31, 2011, only the fair value of the Company’s interest rate swap contracts was measured on a recurring basis. During the first quarter of 2012, the Company recorded non-recurring adjustments to reflect the fair value of impaired notes receivable and investment securities at March 31, 2012. During the first three quarters of 2011, the Company recorded non-recurring adjustments to impaired off-lease assets, notes receivable and investment securities. Amounts at December 31, 2011 reflect the fair value of the then existing impaired assets.

The Company’s valuation policy is determined by members of the Asset Management, Credit and Accounting departments. Whenever possible, the policy is to obtain quoted market prices in active markets to estimate fair values for recognition and disclosure purposes. Where quoted market prices in active markets are not available, fair values are estimated using discounted cash flow analyses, broker quotes, information from third party remarketing agents, third party appraisals of collateral and/or other valuation techniques. These techniques are significantly affected by certain of the Company’s assumptions, including discount rates and estimates of future cash flows. Potential taxes and other transaction costs are not considered in estimating fair values. As the Company is responsible for determining fair value, an analysis is performed on prices obtained from third parties. Such analysis is performed by asset management and credit department personnel who are familiar with the Company’s investments in equipment, notes receivable and equity securities of venture companies. The analysis may include a periodic review of price fluctuations and validation of numbers obtained from a specific third party by reference to multiple representative sources.

Such fair value adjustments utilized the following methodology:

Interest rate swaps

The fair value of interest rate swaps is estimated using a valuation method (discounted cash flow) with inputs that are defined or that can be corroborated by observable market data. The discounted cash flow approach utilizes each swap’s notional amount, payment and termination dates, swap coupon, and the prevailing market rate and pricing data to determine the present value of the future swap payments. Accordingly, such swap contracts are classified within Level 2 of the valuation hierarchy.

Impaired notes receivable

The fair value of the Company’s notes receivable is estimated using either third party appraisals of collateral or discounted cash flow analyses based upon current market rates for similar types of lending arrangements, with adjustments for impaired loans as deemed necessary. At March 31, 2012, the Company deemed it necessary to record a $9 thousand fair value adjustment to reflect the fair value of an impaired note. Such fair value adjustment was in addition to a $3 thousand adjustment previously recorded at September 30, 2011.

Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of the impaired notes receivable was classified within Level 3 of the valuation hierarchy at September 30, 2011. Such valuation utilized a market approach technique and used inputs from third party appraisers that utilize current market transactions as adjusted for certain factors specific to the underlying collateral.

Impaired investment securities

The Company’s investment securities are not registered for public sale and are carried at cost. The investment securities are adjusted for impairment, if any, based upon factors which include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital. At March 31, 2012, the Company recorded non-recurring fair value adjustments totaling $27 thousand relative to two impaired investment securities. The adjustments reflected an approximate 66% reduction in valuation for one investment as determined by investee cash burn and potential necessity for additional venture investors, and a 78% decrease in valuation of the second investment based on subsequent price of unit sale.

There was no incremental fair value adjustments recorded at December 31, 2011. During the first three quarters of 2011, the Company had previously recorded fair value adjustments totaling $96 thousand which reduced the cost basis of two investments deemed impaired at March 31, 2011. The non-recurring fair value adjustments reflected an approximate 87% reduction in valuation of one impaired investment as determined by investee cash burn and potential for additional venture investors, and an approximate 66% reduction in valuation of the second impaired investment as determined by cash payments received in a private transaction whereby the Fund liquidated its warrant position. Such transaction was pursuant to the investee’s acquisition by a third party.

Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of the aforementioned impaired investment securities were classified within Level 3 of the valuation hierarchy at March 31, 2012 and December 31, 2011 due to the significant inputs that are unobservable in the market.

Impaired lease and/or off-lease equipment

The Company had no fair value adjustments relative to impaired equipment as of March 31, 2012. At December 31, 2011, the Company deemed certain off-lease equipment (assets) to be impaired. Accordingly, the Company recorded fair value adjustments totaling $36 thousand which reduced the cost basis of the equipment. Such fair value adjustment is non-recurring. Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of impaired lease assets are classified within Level 3 of the valuation hierarchy as the data sources utilized for the valuation of such assets reflect significant inputs that are unobservable in the market. Such valuation utilizes a market approach technique and uses inputs that reflect the sales price of similar assets sold by affiliates and/or information from third party remarketing agents not readily available in the market.

During the first three quarters of 2011, the Company had previously recorded $224 thousand of non-recurring fair value adjustments to reduce the cost basis of certain impaired lease and off-lease equipment. The fair values of the impaired equipment were classified within Level 3 of the valuation hierarchy.

The following table presents the fair value measurement of assets and liabilities measured at fair value on a recurring and non-recurring basis and the level within the hierarchy in which the fair value measurements fall at March 31, 2012 and December 31, 2011 (in thousands):

	March 31, 2012		Level 1 Estimated Fair Value		Level 2 Estimated Fair Value		Level 3 Estimated Fair Value
Assets measured at fair value on a non-recurring basis:
Impaired notes receivable, net	$	9	$	—	$	—	$	9
Impaired investment securities		12		—		—		12
Liabilities measured at fair value on a recurring basis:
Interest rate swaps		198		—		198		—

	December 31, 2011		Level 1 Estimated Fair Value		Level 2 Estimated Fair Value		Level 3 Estimated Fair Value
Assets measured at fair value on a non-recurring basis:
Impaired off-lease assets	$	115	$	—	$	—	$	115
Impaired notes receivable, net		22		—		—		22
Impaired investment securities		8		—		—		8
Liabilities measured at fair value on a recurring basis:
Interest rate swaps		249		—		249		—

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.

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. Considerable judgment is required to interpret market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

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.

Notes receivable

The fair value of the Company’s notes receivable is estimated using either third party appraisals of collateral or discounted cash flow analyses based upon current market rates for similar types of lending arrangements, with adjustments for impaired loans as deemed necessary.

Investment in securities

The Company’s investment securities are not registered for public sale and are carried at cost which management believes approximates fair value, as appropriately adjusted for impairment.

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.

Borrowings

Borrowings include the outstanding amounts on the Company’s acquisition facility and the RF Program. The carrying amount of these variable rate obligations approximate fair value based on current borrowing rates for similar types of borrowings.

Commitments and Contingencies

Management has determined that no recognition for the fair value of the Company’s loan commitments is necessary because their terms are made on a market rate basis and require borrowers to be in compliance with the Company’s credit requirements at the time of funding.

The fair value of contingent liabilities (or guarantees) is not considered material because management believes there has been no event that has occurred wherein a guarantee liability has been incurred or will likely be incurred.

The following table presents a summary of the carrying value and fair value by level of financial instruments on the Company’s balance sheet at March 31, 2012 and December 31, 2011 (in thousands):

	Fair Value Measurements at March 31, 2012
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	2,816	$	2,816	$	—	$	—	$	2,816
Notes receivable, net		1,159		—		—		1,159		1,159
Investment in securities		57		—		—		57		57
Financial liabilities:
Non-recourse debt		20,549		—		—		21,493		21,493
Borrowings		6,316		—		—		6,316		6,316
Interest rate swap contracts		198		—		198		—		198

	December 31, 2011
	Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	1,082	$	1,082
Notes receivable, net		1,268		1,268
Investment in securities		70		70
Financial liabilities:
Non-recourse debt		21,851		22,962
Borrowings		7,666		7,666
Interest rate swap contracts		249		249