Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


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

For the quarterly period ended September 30, 2012


o		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 000-50687

ATEL Capital Equipment Fund X, LLC

(Exact name of registrant as specified in its charter)


California		68-0517690
(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 o

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 x No o

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 o Accelerated filer o Non-accelerated filer o 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 o No x

The number of Limited Liability Company Units outstanding as of October 31, 2012 was 13,971,486.

DOCUMENTS INCORPORATED BY REFERENCE

None.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

BALANCE SHEETS

SEPTEMBER 30, 2012 AND DECEMBER 31, 2011
(in thousands)
(Unaudited)


	September 30, 2012		December 31, 2011
ASSETS
Cash and cash equivalents	$	4,733	$	1,082
Accounts receivable, net of allowance for doubtful accounts of $32 at September 30, 2012 and $112 at December 31, 2011		1,321		890
Notes receivable, net of unearned interest income of $145 and allowance for credit losses of $39 as of September 30, 2012 and unearned interest income of $210 and allowance for credit losses of $3 as of December 31, 2011		916		1,268
Due from Managing Member		9		—
Due from affiliates		—		8
Prepaid expenses and other assets		153		40
Investment in securities		73		70
Investments in equipment and leases, net of accumulated depreciation of $67,497 at September 30, 2012 and $70,135 at December 31, 2011		49,287		60,250
Total assets	$	56,492	$	63,608
LIABILITIES AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities:
Accrued distributions to Other Members	$	—	$	1,313
Other		615		530
Accrued interest payable		105		132
Interest rate swap contracts		111		249
Deposits due lessees		52		52
Non-recourse debt		18,166		21,851
Receivables funding program obligation		4,160		7,666
Unearned operating lease income		703		681
Total liabilities		23,912		32,474
Commitments and contingencies
Members’ capital:
Managing Member		—		—
Other Members		32,580		31,134
Total Members’ capital		32,580		31,134
Total liabilities and Members’ capital	$	56,492	$	63,608

See accompanying notes.

ATEL CAPITAL EQUIPMENT FUND X, LLC

STATEMENTS OF INCOME

FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2012 AND 2011
(in thousands, except per unit data)
(Unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2012			2011		2012			2011
Revenues:
Leasing and lending activities:
Operating leases	$	4,022		$	4,196	$	12,611		$	13,198
Direct financing leases		850			1,033		2,590			3,224
Interest on notes receivable		18			30		64			99
Gain on sales of lease assets and early termination of notes		309			123		741			881
Gain from settlement of lease asset casualty		350			—		350			—
Gain on sales or dispositions of securities		—			1		1			42
Unrealized gain on net exercise of warrants		—			—		31			—
Other		119			49		214			91
Total revenues		5,668			5,432		16,602			17,535
Expenses:
Depreciation of operating lease assets		2,113			3,021		7,189			9,826
Asset management fees to Managing Member and/or affiliates		145			59		619			540
Acquisition expense		—			88		—			293
Cost reimbursements to Managing Member and/or affiliates		319			362		1,242			1,095
Amortization of initial direct costs		28			44		92			161
Interest expense		386			537		1,283			1,733
Impairment losses on equipment		338			124		430			224
(Reversal of provision) provision for credit losses		(23	)		7		(44	)		(10	)
Provision for losses on investment in securities		—			—		29			96
Professional fees		37			27		154			155
Franchise fees and taxes		33			21		89			64
Outside services		13			17		45			43
Other		141			256		422			572
Total operating expenses		3,530			4,563		11,550			14,792
Other income, net		82			97		170			117
Net income	$	2,220		$	966	$	5,222		$	2,860
Net income:
Managing Member	$	—		$	226	$	283		$	680
Other Members		2,220			740		4,939			2,180
	$	2,220		$	966	$	5,222		$	2,860
Net income per Limited Liability Company Unit (Other Members)	$	0.16		$	0.06	$	0.35		$	0.16
Weighted average number of Units outstanding		13,971,486			13,971,486		13,971,486			13,971,486

See accompanying notes.

ATEL CAPITAL EQUIPMENT FUND X, LLC

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2011
AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2012
(in thousands, except per unit data)
(Unaudited)


	Other Members					Managing Member
	Units		Amount			Managing Member			Total
Balance December 31, 2010		13,971,486	$	38,916		$	—		$	38,916
Distributions to Other Members ($0.80 per Unit)		—		(11,184	)		—			(11,184	)
Distributions to Managing Member		—		—			(906	)		(906	)
Net income		—		3,402			906			4,308
Balance December 31, 2011		13,971,486		31,134			—			31,134
Distributions to Other Members ($0.25 per Unit)		—		(3,493	)		—			(3,493	)
Distributions to Managing Member		—		—			(283	)		(283	)
Net income		—		4,939			283			5,222
Balance September 30, 2012		13,971,486	$	32,580		$	—		$	32,580

See accompanying notes.

ATEL CAPITAL EQUIPMENT FUND X, LLC

STATEMENTS OF CASH FLOWS

FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2012 AND 2011
(in thousands)
(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Operating activities:
Net income	$	2,220		$	966		$	5,222		$	2,860
Adjustments to reconcile net income to cash provided by operating activities:
Gain on sales of lease assets and early termination of notes		(309	)		(123	)		(741	)		(881	)
Gain from settlement of lease asset casualty		(350	)		—			(350	)		—
Depreciation of operating lease assets		2,113			3,021			7,189			9,826
Amortization of initial direct costs		28			44			92			161
Impairment losses on equipment		338			124			430			224
(Reversal of provision) provision for credit losses		(23	)		7			(44	)		(10	)
Provision for losses on investment in securities		—			—			29			96
Change in fair value of interest rate swap contracts		(38	)		(73	)		(138	)		(250	)
Gain on sales or dispositions of securities		—			(1	)		(1	)		(42	)
Unrealized gain on net exercise of warrants		—			—			(31	)		—
Changes in operating assets and liabilities:
Accounts receivable		151			—			89			1,027
Prepaid expenses and other assets		(26	)		(15	)		(113	)		20
Due from affiliates		—			(3	)		—			(3	)
Due from Managing Member		(9	)		(213	)		(9	)		(213	)
Accounts payable, Managing Member		(145	)		27			106			70
Accounts payable, other		130			(396	)		85			(44	)
Accrued interest payable		(7	)		(4	)		(27	)		(22	)
Deposits due lessees		—			—			—			(38	)
Unearned operating lease income		(154	)		(46	)		22			(386	)
Net cash provided by operating activities		3,919			3,315			11,810			12,395
Investing activities:
Purchases of equipment on operating leases		—			(4,455	)		—			(7,057	)
Improvements to direct financing lease equipment		—			—			—			(34	)
Proceeds from sales of lease assets and early termination of notes		1,117			710			2,429			3,602
Payments of initial direct costs		—			(30	)		—			(33	)
Principal payments received on direct financing leases		514			463			1,475			1,583
Proceeds from sales or dispositions of securities		—			18			—			111
Principal payments received on notes receivable		111			108			315			337
Net cash provided by (used in) investing activities		1,742			(3,186	)		4,219			(1,491	)
Financing activities:
Borrowings under acquisition facility		—			—			500			—
Repayments under acquisition facility		—			—			(500	)		—
Repayments under non-recourse debt		(1,239	)		(1,176	)		(3,685	)		(3,512	)
Repayments under receivables funding program		(996	)		(1,551	)		(3,506	)		(5,388	)
Settlement of amount due from affiliate (transfer of lease assets)		—			—			8			—
Distributions to Other Members		(3,493	)		(2,795	)		(4,806	)		(8,389	)
Distributions to Managing Member		(283	)		(226	)		(389	)		(680	)
Net cash used in financing activities		(6,011	)		(5,748	)		(12,378	)		(17,969	)
Net (decrease) increase in cash and cash equivalents		(350	)		(5,619	)		3,651			(7,065	)
Cash and cash equivalents at beginning of period		5,083			7,347			1,082			8,793
Cash and cash equivalents at end of period	$	4,733		$	1,728		$	4,733		$	1,728
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	394		$	541		$	1,311		$	1,755
Cash paid during the period for taxes	$	4		$	7		$	98		$	84
Schedule of non-cash transactions:
Distributions declared and payable to Managing Member at period-end	$	—		$	106		$	—		$	106
Distributions declared and payable to Other Members at period-end	$	—		$	1,313		$	—		$	1,313
Improvements to operating lease equipment	$	—		$	76		$	—		$	76
Amount due from settlement of lease asset casualty	$	440		$	—		$	440		$	—

See accompanying notes.

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

1. Organization and Limited Liability Company matters:

ATEL Capital Equipment Fund X, LLC (the “Company” or the “Fund”) 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 September 30, 2012. As of September 30, 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.

On or about December 1, 2012, the offices of the Fund and the Manager will be relocated to The Transamerica Pyramid, 600 Montgomery Street, 9th Floor, San Francisco, California 94111. The telephone number for the Manager will be the same in its new location.

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.

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 and nine months ended September 30, 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.

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

2. Summary of significant accounting policies: - (continued)

In preparing the accompanying unaudited financial statements, the Managing Member has reviewed events that have occurred after September 30, 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 nine months ended September 30, 2012 and 2011 and long-lived tangible assets as of September 30, 2012 and December 31, 2011 (dollars in thousands):


	Nine Months Ended September 30,
	2012		% of Total			2011		% of Total
Revenue
United States	$	15,260		92	%	$	16,481		94	%
United Kingdom		664		4	%		753		4	%
Canada		678		4	%		301		2	%
Total International		1,342		8	%		1,054		6	%
Total	$	16,602		100	%	$	17,535		100	%


	As of September 30,					As of December 31,
	2012		% of Total			2011		% of Total
Long-lived assets
United States	$	45,807		93	%	$	55,822		93	%
United Kingdom		647		1	%		1,033		2	%
Canada		2,833		6	%		3,395		5	%
Total International		3,480		7	%		4,428		7	%
Total	$	49,287		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. During the first six months of 2012, the Company had previously recorded fair value adjustments totaling $29 thousand to reduce the cost basis of certain investments deemed impaired. There were no additional fair value adjustments recorded during the third

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

2. Summary of significant accounting policies: - (continued)

quarter of 2012. By contrast, during the first nine months of 2011, the Company recorded fair value adjustments totaling $96 thousand, all of which were recorded during the first quarter of 2011. Gains and/or losses recognized on sales or dispositions of securities were nominal for the three months ended September 30, 2012 and 2011, as well as for the first nine months of 2012. During the first nine months of 2011, realized gains amounted to $23 thousand.

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 September 30, 2012 and December 31, 2011, the Managing Member estimated the fair value of the warrants to be nominal in amount. During the first six months of 2012, the Company recorded $31 thousand of unrealized gains relative to the conversion of warrants associated with shares of a venture company. There were no unrealized gains recorded during the three months ended September 30, 2012 and 2011. Further, there were no such unrealized gains during the preceding six months of 2011. Gains and/or losses recognized on the net exercise of certain warrants were nominal for the three months ended September 30, 2012 and 2011, and for the first nine months of 2012. By contrast, realized gains amounted to $19 thousand during the first nine months of 2011.

Other income, net:

The Company’s other income, net for the three and nine months ended September 30, 2012 and 2011 consists of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Foreign currency gain (loss)	$	44	$	24	$	32	$	(133	)
Change in fair value of interest rate swap contracts		38		73		138		250
Total	$	82	$	97	$	170	$	117

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.

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 8.44% 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 both September 30, 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%. From April 1, 2012 well into the third quarter, the interest only payment arrangement was continued pending a final resolution of the terms of

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

3. Notes receivable, net: - (continued)

repayment. Just prior to the end of the third quarter, past due amounts were received bringing the note current at September 30, 2012. Accordingly, the note was returned to accrual status effective October 1, 2012. As of September 30, 2012, the aforementioned note reflects a principal balance outstanding of $12 thousand. The Company had previously accumulated $12 thousand of adjustments to reflect the fair value of the non-accrual note. No incremental adjustment was recorded at September 30, 2012.

During the second quarter of 2012, an additional note was deemed to be impaired and placed in non-accrual status. As such, the Company recorded a fair value adjustment of $27 thousand which reduced the cost basis of the impaired note. As of September 30, 2012, such estimated impairment remained unchanged. As of the same date, the note reflects a principal balance outstanding of $100 thousand.

The net investment in notes receivable placed in non-accrual status totaled $73 thousand and $24 thousand as of September 30, 2012 and December 31, 2011, respectively.

As of September 30, 2012, the minimum future payments receivable are as follows (in thousands):


Three months ending December 31, 2012	$	141
Year ending December 31, 2013		384
2014		221
2015		165
2016		188
		1,099
Less: portion representing unearned interest income		(145	)
		954
Unamortized initial direct costs		1
Less: Reserve for impairment		(39	)
Notes receivable, net	$	916

Initial direct costs (“IDC”) amortization expense related to notes receivable and the Company’s operating and direct financing leases for the three and nine months ended September 30, 2012 and 2011 are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
IDC amortization – notes receivable	$	—	$	—	$	1	$	1
IDC amortization – lease assets		28		44		91		160
Total	$	28	$	44	$	92	$	161

4. Allowance for credit losses:

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


	Accounts Receivable Allowance for Doubtful Accounts								Valuation Adjustments on Financing Receivables				Total 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		—			—		(80	)		36		—		(44	)
Balance September 30, 2012	$	—		$	10	$	22		$	39	$	—	$	71

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

4. Allowance for credit losses: - (continued)

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.

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

4. Allowance for credit losses: - (continued)

As of September 30, 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):


September 30, 2012	Notes Receivable		Finance Leases		Total
Allowance for credit losses:
Ending balance	$	39	$	—	$	39
Ending balance: individually evaluated for impairment	$	39	$	—	$	39
Ending balance: collectively evaluated for impairment	$	—	$	—	$	—
Ending balance: loans acquired with deteriorated credit quality	$	—	$	—	$	—
Financing receivables:
Ending balance	$	955¹	$	13,587²	$	14,542
Ending balance: individually evaluated for impairment	$	955	$	13,587	$	14,542
Ending balance: collectively evaluated for impairment	$	—	$	—	$	—
Ending balance: loans acquired with deteriorated credit quality	$	—	$	—	$	—

Includes $1 of unamortized initial direct costs.

Includes $27 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.

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

4. Allowance for credit losses: - (continued)

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 September 30, 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
	September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011
Pass	$	100	$	169	$	13,524	$	14,922
Special mention		854		1,100		36		73
Substandard		—		—		—		—
Doubtful		—		—		—		—
Total	$	954	$	1,269	$	13,560	$	14,995

As of September 30, 2012 and December 31, 2011, the Company’s impaired loans were as follows (in thousands):


	Impaired Loans
At September 30, 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		73		112		39		112		—
Total	$	73	$	112	$	39	$	112	$	—


	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		21		24		3		24		—
Total	$	21	$	24	$	3	$	24	$	—

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

4. Allowance for credit losses: - (continued)

At September 30, 2012 and December 31, 2011, the investment in financing receivables is aged as follows (in thousands):


September 30, 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	$	—	$	—	$	—	$	—	$	954	$	954	$	—
Finance leases		7		—		37		44		13,516		13,560		—
Total	$	7	$	—	$	37	$	44	$	14,470	$	14,514	$	—


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 of September 30, 2012 and December 31, 2011, the Company had a note in non-accrual status which was considered impaired relative to its payment terms. Just prior to the end of the third quarter, past due amounts were received bringing the note current at September 30, 2012. Accordingly, the note was returned to accrual status effective October 1, 2012. Through June 30, 2012, the Company had accumulated $12 thousand of adjustments to reflect the fair value of such non-accrual note. No additional adjustment was recorded on the aforementioned note during the three months ended September 30, 2012.

During the second quarter of 2012, the Company deemed an additional note to be impaired and recorded a fair value adjustment of $27 thousand, which reduced the cost basis of such impaired note. As of September 30, 2012, such estimated impairment remained unchanged.

At September 30, 2012, there were no investments in financing receivables with related accounts receivable past due more than 90 days which were still on an accrual basis. As of 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.

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 and Impairment Losses			Depreciation/ Amortization Expense or Amortization of Leases			Balance September 30, 2012
Net investment in operating leases	$	43,913	$	(1,804	)	$	(7,189	)	$	34,920
Net investment in direct financing leases		14,995		40			(1,475	)		13,560
Assets held for sale or lease, net		1,121		(444	)		—			677
Initial direct costs, net of accumulated amortization of $359 at September 30, 2012 and $526 at December 31, 2011		221		—			(91	)		130
Total	$	60,250	$	(2,208	)	$	(8,755	)	$	49,287

Additions to net investment in operating leases are stated at cost. IDC amortization expense related to operating leases and direct financing leases totaled $28 thousand and $44 thousand for the respective three months ended September 30, 2012 and 2011, and $91 thousand and $160 thousand for the respective nine months ended September 30, 2012 and 2011 (See Note 3).

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

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

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. During the three months ended September 30, 2012, the Company deemed certain lease equipment to be impaired and accordingly, recorded fair value adjustments of $338 thousand which reduced the cost basis of the impaired equipment. Year-to-date, the Company had recorded fair value adjustments totaling $430 thousand relative to impaired equipment. By comparison, the Company recorded $124 thousand and $224 thousand of fair value adjustments to reduce the cost basis of certain impaired off-lease assets during the three and nine months ended September 30, 2011, respectively.

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 $2.1 million and $3.0 million for the respective three months ended September 30, 2012 and 2011, and was approximately $7.2 million and $9.8 million for the respective nine months ended September 30, 2012 and 2011, respectively.

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

As of September 30, 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, Dispositions and Impairment Losses			Balance September 30, 2012
Transportation, rail	$	28,286		$	—		$	1,300		$	29,586
Transportation, other		28,829			—			(1,075	)		27,754
Materials handling		24,032			—			(8,150	)		15,882
Manufacturing		8,302			—			—			8,302
Construction		4,808			—			—			4,808
Aircraft		4,732			—			(341	)		4,391
Logging & lumber		4,125			—			(66	)		4,059
Petro/natural gas		2,446			—			—			2,446
Agriculture		1,509			—			(824	)		685
Data processing		937			—			(166	)		771
Research		368			—			(368	)		—
		108,374			—			(9,690	)		98,684
Less accumulated depreciation		(64,461	)		(7,189	)		7,886			(63,764	)
Total	$	43,913		$	(7,189	)	$	(1,804	)	$	34,920

The average estimated residual value for assets on operating leases was 22% of the assets’ original cost at both September 30, 2012 and December 31, 2011. There were no operating leases placed in non-accrual status as of September 30, 2012 and December 31, 2011.

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

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

Direct financing leases:

As of September 30, 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 September 30, 2012 and December 31, 2011 are as follows (in thousands):


	September 30, 2012			December 31, 2011
Total minimum lease payments receivable	$	18,962		$	22,900
Estimated residual values of leased equipment (unguaranteed)		3,762			3,805
Investment in direct financing leases		22,724			26,705
Less unearned income		(9,164	)		(11,710	)
Net investment in direct financing leases	$	13,560		$	14,995

There were no direct financing leases placed in non-accrual status as of September 30, 2012 and December 31, 2011.

At September 30, 2012, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):


	Operating Leases		Direct Financing Leases		Total
Three months ending December 31, 2012	$	2,420	$	1,316	$	3,736
Year ending December 31, 2013		7,783		4,865		12,648
2014		4,693		4,602		9,295
2015		1,963		4,478		6,441
2016		515		3,699		4,214
2017		489		2		491
Thereafter		119		—		119
	$	17,982	$	18,962	$	36,944

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

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

6. Related party transactions: - (continued)

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 September 30, 2012, the Company has not exceeded the annual and/or cumulative limitations discussed above.

During the three and nine months ended September 30, 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 September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Costs reimbursed to Managing Member and/or affiliates	$	319	$	362	$	1,242	$	1,095
Asset management fees to Managing Member and/or affiliates		145		59		619		540
Acquisition and initial direct costs paid to Managing Member		—		96		—		304
	$	464	$	517	$	1,861	$	1,939

7. Non-recourse debt:

At September 30, 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 4.71% to 6.66%. The notes are secured by assignments of lease payments and pledges of assets. At September 30, 2012, gross operating lease rentals and future payments on direct financing leases totaled approximately $20.2 million over the remaining lease terms; and the carrying value of the pledged assets is $15.9 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
Three months ending December 31, 2012	$	1,335	$	294	$	1,629
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
	$	18,166	$	2,471	$	20,637

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

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 $60 million and expires in September 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 September 30, 2012 and December 31, 2011, borrowings under the facility were as follows (in thousands):


	September 30, 2012			December 31, 2011
Total amount available under the financing arrangement	$	60,000		$	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		(1,025	)		(7,476	)
Total remaining available under the working capital, acquisition and warehouse facilities	$	58,975		$	67,524

The Company and its affiliates pay an annual commitment fee to have access to this line of credit. As of September 30, 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 September 30, 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 $32.7 million, 0.68 to 1, and 11.91 to 1, respectively, as of September 30, 2012. As such, as of September 30, 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 September 30, 2012 and December 31, 2011, the Company had no outstanding borrowings under the acquisition facility. During the first quarter of 2012, the Company borrowed and repaid $500 thousand. There were no borrowings subsequent to the first quarter of 2012. The weighted average rate on borrowings was 3.16% during the first nine months of 2012. There were no borrowings outstanding during the first nine months of 2011.

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

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

8. Borrowing facilities: - (continued)

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 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 September 30, 2012, the investment program participants were the Company, ATEL Capital Equipment Fund XI, LLC, ATEL 12, LLC, ATEL 14, LLC and ATEL 15, 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 September 30, 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.

9. Receivables funding program:

As of September 30, 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 $4.2 million and $7.7 million outstanding under the RF Program at September 30, 2012 and December 31, 2011, respectively. During the three months ended September 30, 2012 and 2011, the Company paid program fees, as defined in the receivables funding agreement, totaling $4 thousand and $11 thousand, respectively. Such program fees paid amounted to $19 thousand and $37 thousand during the respective nine months ended September 30, 2012 and 2011. The RF Program fees are included in interest expense in the Company’s statements of operations.

As of September 30, 2012, the Company has entered into interest rate swap agreements to receive or pay interest on a notional principal of $4.2 million based on the difference between nominal rates ranging from 3.21% to 5.39% and a variable rate of 0.24%. 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 a variable rate of 0.25%. 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

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

9. Receivables funding program: - (continued)

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 September 30, 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 September 30, 2012		Notional Balance September 30, 2012		Swap Value September 30, 2012			Payment Rate On Interest Swap Agreement
January 16, 2007	$	12,365	$	278	$	278	$	(4	)		5.15	%
July 2, 2007		7,222		183		183		(7	)		5.39	%
September 19, 2007		6,874		588		588		(22	)		4.83	%
January 15, 2008		10,018		461		461		(10	)		3.58	%
March 27, 2008		5,410		1,343		1,343		(38	)		3.21	%
May 16, 2008		10,194		1,133		1,133		(26	)		3.69	%
May 28, 2008		5,470		174		174		(4	)		3.49	%
	$	57,553	$	4,160	$	4,160	$	(111	)


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 September 30, 2012, the minimum principal repayment schedule under the Program is as follows (in thousands):


Three months ending December 31, 2012	$	852
Year ending December 31, 2013		2,528
2014		780
	$	4,160

At September 30, 2012, there are specific leases that are identified as collateral under the Program with expected future lease receivables of approximately $4.7 million at their discounted present value. During the three months ended September 30, 2012 and 2011, the weighted average interest rates on the RF Program, including interest on the swap contracts, were 5.37% and 5.04%, respectively. During the nine months ended September 30, 2012 and 2011, the weighted average interest rates were 5.45% and 4.90%, 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 September 30, 2012 and December 31, 2011.

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

10. Commitments:

At September 30, 2012, there were no commitments to purchase lease assets or fund investments in notes receivable.

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.

12. Members’ capital:

Units issued and outstanding were 13,971,486 at both September 30, 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 September 30, 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 September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Distributions declared	$	—	$	2,795	$	3,493	$	8,389
Weighted average number of Units outstanding		13,971,486		13,971,486		13,971,486		13,971,486
Weighted average distributions per Unit	$	—	$	0.20	$	0.25	$	0.60

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

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 September 30, 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 nine months of 2012 and 2011, the Company recorded non-recurring adjustments to reflect the fair value of impaired lease and off-lease assets, notes receivable and investment securities. Amounts at September 30, 2012 and 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 lease and/or off-lease equipment

During the third quarter of 2012, the Company deemed certain lease equipment (assets) to be impaired and recorded fair value adjustments of $338 thousand to reduce the cost basis of the equipment. Such fair value adjustments were in addition to those recorded to off-lease equipment during the first half of 2012 totaling $92 thousand. The adjustments were non-recurring. Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of impaired lease assets were 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 three and nine months ended September 30, 2011, the Company recorded non–recurring fair value adjustments totaling $124 thousand and $224 thousand, respectively, 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. An additional $36 thousand of fair value adjustments were recorded through December 31, 2011.

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

13. Fair value measurements: - (continued)

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. During the first nine months of 2012, the Company recorded $36 thousand of adjustments to reflect the fair value of two impaired notes, all of which were recorded during the first half of the year. The Company originally deemed one of the notes impaired in 2011 and had previously recorded $3 thousand of adjustments through December 2011. Such adjustments were non-recurring and were based upon an independent appraisal of the underlying collateral. Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of the impaired notes receivable is classified within Level 3 of the valuation hierarchy. Such valuation utilizes a market approach technique and uses 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. During the first six months of 2012, the Company recorded fair value adjustments totaling $29 thousand which reduced the cost basis of 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 were no additional adjustments recorded on the aforementioned impaired securities during the third quarter of 2012.

During the first nine months of 2011, such fair value adjustments totaled $96 thousand all of which was recorded during the first quarter of 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. There was no incremental impairment to investment securities through December 31, 2011.

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 for all measurement periods due to the significant inputs that are unobservable in the market.

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 September 30, 2012 and December 31, 2011 (in thousands):


	September 30, 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 lease and off-lease assets	$	204	$	—	$	—	$	204
Impaired notes receivable, net		74		—		—		74
Impaired investment securities		10		—		—		10
Liabilities measured at fair value on a recurring basis:
Interest rate swaps	$	111	$	—	$	111	$	—

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

13. Fair value measurements: - (continued)


	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

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.

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

13. Fair value measurements: - (continued)

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 September 30, 2012 and December 31, 2011 (in thousands):


	Fair Value Measurements at September 30, 2012
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	4,733	$	4,733	$	—	$	—	$	4,733
Notes receivable, net		916		—		—		916		916
Investment in securities		73		—		—		73		73
Financial liabilities:
Non-recourse debt		18,166		—		—		19,090		19,090
Borrowings		4,160		—		—		4,160		4,160
Interest rate swap contracts		111		—		111		—		111


	December 31, 2011
	Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	1,082	$	1,082
Notes receivable		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

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 investment and reinvestment, delays in leasing, releasing, and disposition of equipment, and reduced returns on invested capital. The Company’s performance is subject to risks relating to lessee defaults and the creditworthiness of its lessees. The Company’s performance is also subject to risks relating to the value of its equipment at the end of its leases, which may be affected by the condition of the equipment, technological obsolescence and the market 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 X, LLC (the “Company” or the “Fund”) is a California limited liability company that was formed in August 2002 for the purpose of engaging in the sale of limited liability company investment units and acquiring equipment to generate revenues from equipment leasing and sales activities, primarily in the United States. The Managing Member of the Company is ATEL Financial Services, LLC (“AFS”), a California limited liability company.

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 March 2005. During 2005, the Company completed its initial acquisition stage with the investment of the net proceeds from the public offering of Units. Subsequently, during the reinvestment period (“Reinvestment Period”) (defined as six full years following the year the offering was terminated), the Company has utilized its credit facilities and reinvested cash flow in excess of certain amounts required to be distributed to the Other Members to acquire additional equipment. Throughout the Reinvestment Period, which ended on December 31, 2011, the Company anticipates continued reinvestment of cash flow in excess of minimum distributions and other obligations.

The Company may continue until December 31, 2022. Periodic distributions will be paid at the discretion of the Managing Member.

Results of Operations

The three months ended September 30, 2012 versus the three months ended September 30, 2011

The Company had net income of $2.2 million and $966 thousand for the three months ended September 30, 2012 and 2011, respectively. The results for the third quarter of 2012 reflect the combination of a reduction in total operating expenses and an increase in total revenues when compared to the prior year period.

Revenues

Total revenues for the third quarter of 2012 increased by $236 thousand, or 4%, as compared to the prior year period. The increase in total revenues was primarily a result of a gain from the settlement of a lease asset casualty claim, and increases in gains realized on sales of lease assets and early termination of notes, and in other revenue. Such increases in revenues were partially offset by reductions in revenues from both direct financing and operating leases.

The gain realized on the settlement of a lease asset casualty claim totaled $350 thousand. Such claim was relative to a total loss on a leased helicopter. Gains realized on sales of lease assets and early termination notes increased by $186 thousand largely due to a period over period increase in volume and a change in the mix of assets sold; and, other revenue increased by $70 thousand as a result of additional billings for excess wear and tear on returned equipment.

Partially offsetting the aforementioned increases in revenue were decreases in direct financing and operating lease revenues totaling $183 thousand and $174 thousand, respectively. The decrease in direct financing lease revenues was largely due to run-off of the portfolio coupled with an early termination of a significant lease during the first quarter of 2012; and, the decrease in operating lease revenues was primarily a result of continued run-off and dispositions of lease assets.

Expenses

Total expenses for the third quarter of 2012 decreased by $1.0 million, or 23%, as compared to the prior year period. The net decline in expenses was primarily due to decreases in depreciation expense, interest expense, other expense and acquisition expense offset, in part, by an increase in impairment losses on equipment.

The decrease in depreciation expense totaled $908 thousand and was largely a result of run-off and sales of lease assets. Interest expense was lower by $151 thousand largely due to an approximate $9.8 million decrease in outstanding borrowings since September 30, 2011. In addition, other expense decreased by $115 thousand primarily due to lower railcar maintenance costs, as the prior year period amount included costs associated with preparing certain railcars for re-leasing, and lower property taxes. Acquisition expense was reduced by $88 thousand due to a period over period decrease in lease origination activities consistent with a Fund in liquidation.

Partially offsetting the aforementioned decreases in expenses was a $214 thousand increase in impairment losses on equipment. The increase in impairment losses reflects third quarter 2012 adjustments made to certain leased and off-lease equipment, including certain materials handling equipment and vehicles, deemed impaired by the Company. During the same period, the secondary market for certain materials handling equipment and vehicles deteriorated, and the reduced estimated realizable secondary market values for such items of the Company’s leased and off-lease equipment resulted in the recognition of impairment losses. The Company attributed these market conditions to the low demand for these types of assets. The Company had consulted with various third party marketing agents to help determine any necessary residual value adjustments caused by such market conditions. The Company did not consider such impairment to create any concentration of risk in its portfolio based on geographic region, type of asset, customer or industry group.

Other income, net

The Company recognized other income, net totaling $82 thousand and $97 thousand for the three months ended September 30, 2012 and 2011, respectively. The decrease in other income, net was a result of a $35 thousand unfavorable change in the fair value of the Company’s interest rate swap contracts partially offset by a $20 thousand favorable change in foreign currency translation transactions.

The decrease in the value of the interest rate swaps was mostly driven by the continued lower interest rate environment which unfavorably impacts the Company as the fixed rate payer in the swap contracts.

The favorable change in foreign currency translation transactions was primarily due to the period over period weakness of the U.S. currency against the British pound at the time of the transactions. The Company’s foreign currency transactions are primarily denominated in British pounds.

The nine months ended September 30, 2012 versus the nine months ended September 30, 2011

The Company had net income of $5.2 million and $2.9 million for the nine months ended September 30, 2012 and 2011, respectively. The results for the first nine months of 2012 reflect the combination of a reduction in total operating expenses and a decrease in total revenues when compared to the prior year period.

Revenues

Total revenues for the first nine months of 2012 decreased by $933 thousand, or 5%, as compared to the prior year period. The decrease was primarily a result of lower revenues from both direct financing and operating leases, and gain recognized on sales of lease assets and early termination of notes. Such decreases in revenues were partially offset by a gain from the settlement of lease asset casualty and an increase in other revenue.

The decrease in direct financing lease revenues totaled $634 thousand and was largely due to run-off of the portfolio coupled with an early termination of a significant lease during the first quarter of 2012. Likewise, operating lease revenues decreased by $587 thousand primarily as a result of continued run-off and dispositions of lease assets. Gain on sales of lease assets and early termination of notes decreased by $140 thousand largely due to a period over period change in the mix of assets sold.

Partially offsetting the aforementioned decreases in revenues was a $350 thousand gain realized on settlement of a casualty claim relative to a total loss on a leased helicopter. In addition, other revenue increased by $123 thousand as a result of additional billings for excess wear and tear on returned equipment.

Expenses

Total expenses for the first nine months of 2012 decreased by $3.2 million, or 22%, as compared to the prior year period. The net decline in expenses was primarily due to decreases in depreciation expense, interest expense, acquisition expense, and other expense offset, in part, by increases in impairment losses on equipment and cost reimbursements to AFS.

The decrease in depreciation expense totaled $2.6 million and was largely a result of run-off and sales of lease assets. Interest expense was reduced by $450 thousand largely due to an approximate $9.8 million decline in outstanding borrowings since September 30, 2011. Acquisition expense was lower by $293 thousand due to a period over period decrease in lease origination activities consistent with a Fund in liquidation; and, other expense declined by $150 thousand primarily as a result of lower railcar maintenance costs, property taxes, freight and shipping, and postage costs during the current year period.

Partially offsetting the aforementioned decreases in expenses were increases in impairment losses on equipment and in cost reimbursements to AFS totaling $206 thousand and $147 thousand, respectively. The increase in impairment losses on equipment was largely due to incremental fair value adjustments recorded during the third quarter of 2012 relative to certain leased and off-lease equipment, including certain materials handling equipment and vehicles, deemed impaired by the Company. Cost reimbursements to AFS increased as a result of the billing and payment of expenses previously deferred on the basis of an annual limitation on costs reimbursable to the Managing Member as defined in the Limited Liability Company Operating Agreement, as amended.

Other income, net

The Company recognized other income, net totaling $170 thousand and $117 thousand for the nine months ended September 30, 2012 and 2011, respectively. The increase in other income, net was a result of a $165 thousand favorable change in foreign currency translation transactions offset, in part, by a $112 thousand unfavorable change in the fair value of the Company’s interest rate swap contracts.

Capital Resources and Liquidity

At September 30, 2012 and December 31, 2011, the Company’s cash and cash equivalents totaled $4.7 million and $1.1 million, respectively. The liquidity of the Company varies, increasing to the extent cash flows from leases and proceeds of asset sales exceed expenses and decreasing as lease assets are acquired, as distributions are made to the Other Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

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

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 believes it 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.

Cash Flows

The following table sets forth summary cash flow data (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net cash provided by (used in):
Operating activities	$	3,919		$	3,315		$	11,810		$	12,395
Investing activities		1,742			(3,186	)		4,219			(1,491	)
Financing activities		(6,011	)		(5,748	)		(12,378	)		(17,969	)
Net (decrease) increase in cash and cash equivalents	$	(350	)	$	(5,619	)	$	3,651		$	(7,065	)

The three months ended September 30, 2012 versus the three months ended September 30, 2011

During the three months ended September 30, 2012 and 2011, the Company’s primary sources of liquidity were cash flows from its portfolio of operating and direct financing lease contracts, and its investments in notes receivable. In addition, the Company realized $1.1 million and $710 thousand of proceeds from the sale or disposition of equipment and early termination of certain notes during the respective three month periods ended September 30, 2012 and 2011.

During the same comparative periods, cash was used to pay distributions to both the Other Members and the Managing Member, totaling $3.8 million and $3.0 million. Cash was also used to pay down $2.2 million and $2.7 million of debt for the respective three months ended September 30, 2012 and 2011. During the prior year period, cash was also used to purchase lease assets amounting to $4.5 million.

The nine months ended September 30, 2012 versus the nine months ended September 30, 2011

During the nine months ended September 30, 2012 and 2011, the Company’s primary sources of liquidity were cash flows from its portfolio of operating and direct financing lease contracts, and its investments in notes receivable. Moreover, the Company realized $2.4 million and $3.6 million of proceeds from the sale or disposition of equipment and early termination of certain notes during the respective nine months ended September 30, 2012 and 2011, and utilized borrowings totaling $500 thousand during the current year period.

During the same comparative periods, cash was used to pay down $7.7 million and $8.9 million of debt. Cash was also used to pay distributions to both the Other Members and the Managing Member, totaling $5.2 million and $9.1 million for the nine months ended September 30, 2012 and 2011, respectively. During the prior year period, the Company used $7.1 million to purchase lease assets.

Revolving credit facility

Receivable funding program

In addition to the Credit Facility, as of September 30, 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 Investor Services. 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 is in either a subordinated or shared position against the remaining assets. The ability to draw down on the RF Program terminated on July 31, 2008, and the RF Program matures in July 2014 upon repayment in full of all outstanding amounts due under the Program.

Compliance with covenants

The Credit Facility and the RF Program (collectively, the “Facilities”) include certain financial and non-financial covenants applicable to each borrower, including the Company. Such covenants include covenants typically found in credit facilities of the size and nature of the Facilities, such as accuracy of representations, good standing, absence of liens and material litigation, etc. The Company was in compliance with all covenants under the Facilities as of September 30, 2012. The Company considers certain financial covenants to be material to its ongoing use of the Facilities and these covenants are described below.

Material financial covenants

Under the Credit Facility, the Company is required to maintain a specific tangible net worth, to comply with a leverage ratio and an interest coverage ratio, and to comply with other terms expressed in the Credit Facility, including limitation on the incurrence of additional debt and guaranties, defaults, and delinquencies.

The material financial covenants are summarized as follows:

Under both the RF Program and Credit Facility:

Minimum Tangible Net Worth: $15 million
Leverage Ratio (leverage to Tangible Net Worth): not to exceed 1.25 to 1

Under the Credit Facility Only:

Collateral Value: Collateral value under the Warehouse Facility must exceed outstanding borrowings under that facility.
EBITDA to Interest Ratio: Not less than 2 to 1 for the four fiscal quarters just ended.

“EBITDA” is defined under the Credit Facility as, for the relevant period of time (1) gross revenues (all payments from leases and notes receivable) for such period minus (2) expenses deducted in determining net income for such period plus (3) to the extent deducted in determining net income for such period (a) provision for income taxes and (b) interest expense, and (c) depreciation, amortization and other non-cash charges. Extraordinary items and gains or losses on (and proceeds from) sales or dispositions of assets outside of the ordinary course of business are excluded in the calculation of EBITDA. “Tangible Net Worth” is defined as, as of the date of determination, (i) the net worth of the Company, after deducting therefrom (without duplication of deductions) the net book amount of all assets of the Company, after deducting any reserves and other amounts for assets which would be treated as intangibles under accounting principles generally accepted in the United States of America (“GAAP”), and after certain other adjustments permitted under the agreements.

The financial covenants referred to above are applicable to the Company only to the extent that the Company has borrowings outstanding under the Facilities. As of September 30, 2012, the Company’s Tangible Net Worth requirement under the Credit Facility was $15 million and under the RF Program was $15 million, the permitted maximum leverage ratio under the Facilities was 1.25 to 1, and under the Credit Facility, the required minimum interest coverage ratio (EBITDA/interest expense) was 2 to 1. The Company was in compliance with each of these financial covenants with a minimum Tangible Net Worth, leverage ratio and (EBITDA) interest coverage ratio, as calculated per the Credit Facility agreement of $32.7 million, 0.68 to 1, and 11.91 to 1, respectively, as of September 30, 2012. As such, as of September 30, 2012, the Company was in compliance with all such material financial covenants.

Reconciliation to GAAP of EBITDA

For purposes of compliance with the Credit Facility covenants, the Company uses a financial calculation of EBITDA which is not in accordance with GAAP. The EBITDA is utilized by the Company to calculate one of its debt covenant ratios.

The following is a reconciliation of net income to EBITDA, as defined in the loan agreement, for the twelve months ended September 30, 2012 (in thousands):


Net income – GAAP basis	$	6,670
Interest expense		1,805
Depreciation of operating lease assets		10,156
Amortization of initial direct costs		132
Impairment losses on equipment		466
Provision for credit losses		19
Provision for losses on investment in securities		29
Change in fair value of interest rate swap contracts		(218	)
Principal payments received on direct financing leases		2,020
Principal payments received on notes receivable		410
EBITDA (for Credit Facility financial covenant calculation only)	$	21,489

Events of default, cross-defaults, recourse and security

The terms of both of the Facilities include standard events of default by the Company which, if not cured within applicable grace periods, could give lenders remedies against the Company, including the acceleration of all outstanding borrowings and a demand for repayment in advance of their stated maturity. If a breach of any material term of either of the Facilities should occur, the lenders may, at their option, increase borrowing rates, accelerate the obligations in advance of their stated maturities, terminate the facility, and exercise rights of collection available to them under the express terms of the facility, or by operation of law. The lenders also retain the discretion to waive a violation of any covenant at the Company’s request.

The Company is currently in compliance with its obligations under the Facilities. In the event of a technical default (e.g., the failure to timely file a required report, or a one-time breach of a financial covenant), the Company believes it has ample time to request and be granted a waiver by the lenders, or, alternatively, cure the default under the existing provisions of its debt agreements, including, if necessary, arranging for additional capital from alternate sources to satisfy outstanding obligations.

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.

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 respect to priority and the sharing of collateral pools of the Company, including under the Acquisition Facility and Warehouse Facility. Among the provisions of the inter-creditor agreement are cross-default provisions among the Credit Facility and the RF Program.

The Acquisition Facility is generally recourse solely to the Company, and is not cross-defaulted to any other obligations of affiliated companies under the Credit Facility, except as described in this paragraph, and in connection with the RF Program, as noted above. The Facilities are cross-defaulted to a default in the payment of any debt (other than non-recourse debt) or any other agreement or condition beyond the period of grace (not exceeding 30 days), the effect of which would entitle the lender under such agreement to accelerate the obligations prior to their stated maturity in an individual or aggregate principal amount in excess of 15% of the Company’s consolidated Tangible Net Worth with respect to the Credit Facility, and $2.5 million with respect to the RF Program. Also, a bankruptcy of AFS will trigger a default for the Company under the Credit Facility.

Non-Recourse Long-Term Debt

As of September 30, 2012 and December 31, 2011, the Company had non-recourse long-term debt totaling $18.2 million and $21.9 million, respectively. Such non-recourse notes payable do not contain any material financial covenants. The notes are secured by a lien 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 Operating Agreement limits aggregate borrowings to 50% of the total cost of equipment. For detailed information on the Company’s debt obligations, see Notes 7 through 9 in Item 1. Financial Statements (Unaudited).

Distributions

The Company commenced periodic distributions, based on cash flows from operations, beginning with the month of April 2003. The monthly distributions were discontinued in 2012 as the Company entered its liquidation phase. The rates and frequency of periodic distributions paid by the Fund during its liquidation phase are solely at the discretion of the Manager.

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At September 30, 2012, there were no commitments to purchase lease assets or fund investments in notes receivable.

Off-Balance Sheet Transactions

None.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements is included in Note 2 to the financial statements, Summary of significant accounting policies, as set forth in Part I, Item 1, Financial Statements (Unaudited).

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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. On an on-going basis, the Company evaluates its estimates, which are based upon historical experiences, market trends and financial forecasts, and upon various other assumptions that management believes to be reasonable under the circumstances and at that certain point in time. Actual results may differ, significantly at times, from these estimates under different assumptions or conditions.

The Company’s critical accounting policies are described in its Annual Report on Form 10-K for the year ended December 31, 2011. There have been no material changes to the Company’s critical accounting policies since December 31, 2011.

Item 4. 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 September 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Managing Member’s internal control over financial reporting, as it is applicable to the Company.

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. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Documents filed as a part of this report:

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 inapplicable, and therefore have been omitted.

Other Exhibits


31.1		Certification of Dean L. Cash
31.2		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
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be “furnished” and not “filed.”


Part I. Financial Information			3
Item 1. Financial Statements (Unaudited)			3
Balance Sheets, September 30, 2012 and December 31, 2011			3
Statements of Income for the three and nine months ended September 30, 2012 and 2011			4
Statements of Changes in Members’ Capital for the year ended December 31, 2011 and for the nine months ended September 30, 2012			5
Statements of Cash Flows for the three and nine months ended September 30, 2012 and 2011			6
Notes to the Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 4. Controls and Procedures			32
Part II. Other Information			33
Item 1. Legal Proceedings			33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			33
Item 3. Defaults Upon Senior Securities			33
Item 4. Mine Safety Disclosures			33
Item 5. Other Information			33
Item 6. Exhibits			33

Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

For the quarterly period ended September 30, 2012

For the transition period from to

Commission File number 000-50687

ATEL Capital Equipment Fund X, LLC

DOCUMENTS INCORPORATED BY REFERENCE

ATEL CAPITAL EQUIPMENT FUND X, LLC

Index

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC BALANCE SHEETS SEPTEMBER 30, 2012 AND DECEMBER 31, 2011 (in thousands) (Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

1. Organization and Limited Liability Company matters:

2. Summary of significant accounting policies:

Basis of presentation:

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

2. Summary of significant accounting policies: - (continued)

Use of estimates:

Segment reporting:

Investment in securities:

Purchased securities

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

2. Summary of significant accounting policies: - (continued)

Warrants

Other income, net:

Per Unit data:

Recent accounting pronouncements:

3. Notes receivable, net:

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

3. Notes receivable, net: - (continued)

4. Allowance for credit losses:

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

4. Allowance for credit losses: - (continued)

Accounts receivable

Financing receivables

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

4. Allowance for credit losses: - (continued)

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

4. Allowance for credit losses: - (continued)

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

4. Allowance for credit losses: - (continued)

5. Investment in equipment and leases, net:

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

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

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

Operating leases:

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

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

Direct financing leases:

6. Related party transactions:

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

6. Related party transactions: - (continued)

7. Non-recourse debt:

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

8. Borrowing facilities:

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

8. Borrowing facilities: - (continued)

9. Receivables funding program:

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

9. Receivables funding program: - (continued)

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

10. Commitments:

11. Guarantees:

12. Members’ capital:

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

13. Fair value measurements:

Interest rate swaps

Impaired lease and/or off-lease equipment

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

13. Fair value measurements: - (continued)

Impaired notes receivable

Impaired investment securities

ATEL CAPITAL EQUIPMENT FUND X, LLC NOTES TO FINANCIAL STATEMENTS (Unaudited)

13. Fair value measurements: - (continued)

Cash and cash equivalents

Notes receivable

Investment in securities

Non-recourse debt

Borrowings

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

ATEL CAPITAL EQUIPMENT FUND X, LLC

BALANCE SHEETS

SEPTEMBER 30, 2012 AND DECEMBER 31, 2011
(in thousands)
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC
(Registrant)