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 June 30, 2014

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 000-33103

ATEL Capital Equipment Fund VIII, LLC

(Exact name of registrant as specified in its charter)

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

The Transamerica Pyramid, 600 Montgomery Street, 9th Floor, San Francisco, California 94111
(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 July 31, 2014 was 13,560,188.

DOCUMENTS INCORPORATED BY REFERENCE

None.

ATEL CAPITAL EQUIPMENT FUND VIII, LLC
 
Index

Part I. Financial Information			3
Item 1. Financial Statements (Unaudited)			3
Balance Sheets, June 30, 2014 and December 31, 2013			3
Statements of Income for the three and six months ended June 30, 2014 and 2013			4
Statements of Changes in Members’ Capital for the year ended December 31, 2013 and for the six months ended June 30, 2014			5
Statements of Cash Flows for the three and six months ended June 30, 2014 and 2013			6
Notes to the Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
Item 4. Controls and Procedures			17
Part II. Other Information			18
Item 1. Legal Proceedings			18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			18
Item 3. Defaults Upon Senior Securities			18
Item 4. Mine Safety Disclosures			18
Item 5. Other Information			18
Item 6. Exhibits			18

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

BALANCE SHEETS

JUNE 30, 2014 AND DECEMBER 31, 2013
(In Thousands)

		June 30, 2014				December 31, 2013
		(Unaudited)
ASSETS
Cash and cash equivalents		$	2,945			$	1,641
Accounts receivable, net of allowance for doubtful accounts of $0 as of June 30, 2014 and $3 as of December 31, 2013			521				574
Prepaid expenses and other assets			14				19
Investments in equipment and leases, net of accumulated depreciation of $29,302 as of June 30, 2014 and $31,907 as of December 31, 2013			4,741				5,521
Total assets		$	8,221			$	7,755
LIABILITIES AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities:
Managing Member		$	23			$	369
Other			114				99
Unearned operating lease income			25				74
Total liabilities			162				542
Commitments and contingencies
Members’ capital:
Managing Member			—				—
Other Members			8,059				7,213
Total Members’ capital			8,059				7,213
Total liabilities and Members’ capital		$	8,221			$	7,755

See accompanying notes.

3

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENTS OF INCOME

FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2014 AND 2013
(In Thousands Except for Units and Per Unit Data)
(Unaudited)

		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
Revenues:
Leasing activities:
Operating leases		$	855			$	1,014			$	1,636			$	2,142
Gain on sales of assets			60				1,519				181				1,559
Other revenue			—				1				—				108
Total revenues			915				2,534				1,817				3,809
Expenses:
Depreciation of operating lease assets			124				162				258				376
Asset management fees to Managing Member			23				29				43				61
Vessel maintenance			—				(28	)			—				107
Railcar maintenance			121				105				180				187
Cost reimbursements to Managing Member			64				72				127				152
Other management fees			25				23				46				50
Railcar storage fees			35				17				70				37
Professional fees			36				30				114				81
Insurance			15				(7	)			26				1
Reversal of provision for doubtful accounts			—				—				(3	)			(10	)
Taxes on income and franchise fees			1				13				2				26
Postage			2				2				5				6
Printing and photocopying			7				—				11				8
Freight and shipping			8				4				47				12
Other			25				23				45				48
Total expenses			486				445				971				1,142
Net income		$	429			$	2,089			$	846			$	2,667
Net income:
Managing Member		$	—			$	—			$	—			$	—
Other Members			429				2,089				846				2,667
		$	429			$	2,089			$	846			$	2,667
Net income per Limited Liability Company Unit (Other Members)		$	0.03			$	0.15			$	0.06			$	0.20
Weighted average number of Units outstanding			13,560,188				13,560,188				13,560,188				13,560,188

See accompanying notes.

4

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2013
AND FOR THE SIX MONTHS ENDED
JUNE 30, 2014
(In Thousands Except for Units and Per Unit Data)

		Other Members								Managing Member
		Units				Amount								Total
Balance December 31, 2012			13,560,188			$	7,292			$	—			$	7,292
Distributions to Other Members ($0.25 per Unit)			—				(3,390	)			—				(3,390	)
Distributions to Managing Member			—				—				(275	)			(275	)
Net income			—				3,311				275				3,586
Balance December 31, 2013			13,560,188				7,213				—				7,213
Net income			—				846				—				846
Balance June 30, 2014 (Unaudited)			13,560,188			$	8,059			$	—			$	8,059

See accompanying notes.

5

ATEL CAPITAL EQUIPMENT FUND VIII, LLC

STATEMENTS OF CASH FLOWS

FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2014 AND 2013
(In Thousands)
(Unaudited)

		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
Operating activities:
Net income		$	429			$	2,089			$	846			$	2,667
Adjustment to reconcile net income to cash provided by operating activities:
Gain on sales of assets			(60	)			(1,519	)			(181	)			(1,559	)
Depreciation of operating lease assets			124				162				258				376
Reversal of provision for doubtful accounts			—				—				(3	)			(10	)
Changes in operating assets and liabilities:
Accounts receivable			26				19				56				103
Prepaid expenses and other assets			2				2				5				5
Accounts payable, Managing Member			(23	)			(11	)			(346	)			(464	)
Accounts payable, other			20				(119	)			15				(86	)
Unearned operating lease income			(37	)			(20	)			(49	)			(40	)
Net cash provided by operating activities			481				603				601				992
Investing activities:
Proceeds from sales of lease assets			257				1,680				703				1,760
Principal payments received on direct financing leases			—				24				—				48
Net cash provided by investing activities			257				1,704				703				1,808
Financing activities:
Net cash provided by financing activities			—				—				—				—
Net increase in cash and cash equivalents			738				2,307				1,304				2,800
Cash and cash equivalents at beginning of period			2,207				1,009				1,641				516
Cash and cash equivalents at end of period		$	2,945			$	3,316			$	2,945			$	3,316
Supplemental disclosures of cash flow information:
Cash paid during the period for taxes		$	15			$	15			$	15			$	17

See accompanying notes.

6

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

1. Organization and Limited Liability Company matters:

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

The Company conducted a public offering of 15,000,000 Limited Liability Company Units, at a price of $10 per Unit. On January 13, 1999, subscriptions for the minimum number of Units (120,000, representing $1.2 million) had been received (excluding subscriptions from Pennsylvania investors) and AFS requested that the subscriptions be released to the Company. On that date the Company commenced operations in its primary business (acquiring equipment to engage in equipment leasing and sales activities). Gross contributions in the amount of $135.7 million (13,570,188 units) were received as of November 30, 2000, inclusive of $500 of initial Member’s capital investment and $100 of AFS’ capital investment. The offering was terminated on November 30, 2000. As of June 30, 2014, 13,560,188 Units remain issued and outstanding.

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

Pursuant to the Operating Agreement, AFS and/or its affiliates receive compensation and reimbursements for services rendered on behalf of the Company (See Note 5). The Company is required to maintain reasonable cash reserves for working capital, the repurchase of Units and contingencies. The repurchase of Units is solely at the discretion of AFS.

As of June 30, 2014, the Company continues in the liquidation phase of its life cycle as defined in the Operating Agreement.

These unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-K for the year ended December 31, 2013, 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 six months ended June 30, 2014 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.

7

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

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

In preparing the accompanying financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after June 30, 2014, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements, or 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 relate primarily to the determination of residual values at the end of the lease term and expected future cash flows used for impairment analysis purposes and determination of the allowance for doubtful accounts.

Segment reporting:

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

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

The primary geographic region in which the Company sought leasing opportunities was North America. The table below summarizes geographic information relating to the sources, by nation, of the Company’s total revenues for the six months ended June 30, 2014 and 2013 and long-lived tangible assets as of June 30, 2014 and December 31, 2013 (dollars in thousands):

		For The Six Months Ended June 30,
		2014				% of Total				2013				% of Total
Revenue
United States		$	1,817				100	%		$	3,746				98	%
Canada			—				0	%			63				2	%
Total International			—				0	%			63				2	%
Total		$	1,817				100	%		$	3,809				100	%

		As of June 30,								As of December 31,
		2014				% of Total				2013				% of Total
Long-lived assets
United States		$	4,741				100	%		$	5,497				100	%
Canada			—				0	%			24				0	%
Total International			—				0	%			24				0	%
Total		$	4,741				100	%		$	5,521				100	%

Per Unit data:

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

8

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

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

Recent accounting pronouncements:

Recent accounting standards updates as issued by the Financial Accounting Standards Board (FASB) were evaluated and determined to be not applicable to the Company.

3. Investment in equipment and leases, net:

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

		Balance December 31, 2013				Reclassifications & Additions/ Dispositions				Depreciation/ Amortization Expense or Amortization of Leases				Balance June 30, 2014
Net investment in operating leases		$	4,231			$	(30	)		$	(258	)		$	3,943
Assets held for sale or lease, net			1,290				(492	)			—				798
Total		$	5,521			$	(522	)		$	(258	)		$	4,741

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. The fair value of the assets is determined based on the sum of the discounted estimated future cash flows of the assets. Impairment losses are recorded as an adjustment to the net investment in operating leases. There were no impairment losses recorded during the three and six months ended June 30, 2014 and 2013.

The Company utilizes a straight line depreciation method over the term of the equipment lease for equipment on operating leases currently in its portfolio. Depreciation expense on the Company’s equipment totaled $124 thousand and $162 thousand for the respective three months ended June 30, 2014 and 2013, and $258 thousand and $376 thousand for the respective six months ended June 30, 2014 and 2013.

All of the remaining property on lease was acquired during the years 1999 through 2001.

Operating leases:

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

		Balance December 31, 2013				Additions				Reclassifications or Dispositions				Balance June 30, 2014
Transportation, rail		$	11,353			$	—			$	2,827			$	14,180
Containers			15,874				—				(3,251	)			12,623
Other			640				—				—				640
			27,867				—				(424	)			27,443
Less accumulated depreciation			(23,636	)			(258	)			394				(23,500	)
Total		$	4,231			$	(258	)		$	(30	)		$	3,943

The average estimated residual value for assets on operating leases was 11% of the assets’ original cost at June 30, 2014 and December 31, 2013. There were no operating leases in non-accrual status at June 30, 2014 and December 31, 2013.

The Company may earn revenues from its containers, marine vessel and certain other assets based on utilization of such assets or through fixed term leases. Contingent rentals (i.e., short-term, operating charter hire payments) and the associated expenses are recorded when earned and/or incurred. The revenues associated with these rentals are included as a component of operating lease revenues, and totaled $325 thousand and $497 thousand for the respective three months ended June 30, 2014 and 2013, and $684 thousand and $1.0 million for the respective six months ended June 30, 2014 and 2013.

9

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

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

Direct financing leases:

As of June 30, 2014 and December 31, 2013, the Company had no investment in direct financing leases, as its remaining finance lease matured on July 1, 2013.

At June 30, 2014, the aggregate amount of future lease payments associated with operating leases is as follows (in thousands):

		Operating Leases
Six months ending December 31, 2014		$	937
Year ending December 31, 2015			1,127
2016			752
2017			462
2018			78
2019			4
Thereafter			2
		$	3,362

4. Related party transactions:

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

The Operating Agreement allows for the reimbursement of costs incurred by AFS for providing administrative services to the Company. Administrative services provided include Company accounting, 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.

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 are performed by AFS.

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

During the three and six months ended June 30, 2014 and 2013, AFS and/or affiliates earned fees and billed for reimbursements, pursuant to the Operating Agreement as follows (in thousands):

		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
Asset management fees to Managing Member		$	23			$	29			$	43			$	61
Cost reimbursements to Managing Member			64				72				127				152
		$	87			$	101			$	170			$	213

The Fund’s Operating Agreement places an annual and cumulative limit for cost reimbursements to AFS and/or its affiliates. Any reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent such amounts may be payable if within the annual and cumulative

10

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

4. Related party transactions: - (continued)

limits in such future years. The Fund is a finite life and self-liquidating entity, and AFS and its affiliates have no recourse against the Fund for the amount of any unpaid excess reimbursable administrative expenses. The Fund will continue to require administrative services from AFS and its affiliates through the end of its term, and will therefore continue to incur reimbursable administrative expenses in each year. The Fund has determined that payment of any amounts in excess of the annual and cumulative limits is not probable, and the date any portion of such amount may be paid, if ever, is uncertain. When the Fund completes its liquidation stage and terminates, any unpaid amount will expire unpaid, with no claim by AFS or its affiliates against any liquidation proceeds or any party for the unpaid balance. For the year ending December 31, 2014, it is not anticipated that any further billings to the Fund will equal or exceed the annual or cumulative reimbursable expense limitation. Such is reflective of the continued diminishing Fund asset base over which reimbursements are calculated.

5. 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.

6. Gain contingencies:

ATEL filed a claim on behalf of the Company and certain affiliated entities in Federal court in New Orleans for the under-reporting of revenue by a fleet manager of three marine vessels, seeking to recover an approximate amount of 10% of gross proceeds, which in the aggregate for all affiliated entities represents $2.8 million for the years 2005 – 2007 (of which the Company’s portion is an approximate $350 thousand). The annual allocable portion of the claim is not considered material to the Company in any given year. The trial was concluded during the first week of August 2012. In October 2012, the matter was remitted to the Federal Judge to render a decision on both the law and the facts. The decision of the Court was rendered at the end of June 2013 and the court found in favor of the defendants. The Company filed an appeal of the court’s decision and remains hopeful for a recovery of all or portion of its asserted claims. As a result of the ruling, the defendants filed a claim for legal fees and costs, however, this was denied. Oral arguments for the appeal of the case in substance were heard June 2, 2014, and on June 6, 2014, the Fifth Circuit Appellate Court rendered its decision denying the appeal.

7. Members’ capital:

As of June 30, 2014 and December 31, 2013, 13,560,188 Units were issued and outstanding. The Company was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial Members (50 Units).

The Company has the right, exercisable at the Managing Member’s discretion, but not the obligation, to repurchase Units of a 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 Managing Member on terms it determines to be appropriate under given circumstances, in the event that the Managing

11

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

7. Members’ capital: - (continued)

Member deems such repurchase to be in the best interest of the Company; provided, the Company is never required to repurchase any Units. Upon the repurchase of any Units by the Fund, the tendered Units are cancelled. Units repurchased in prior periods were repurchased at amounts representing the original investment less cumulative distributions made to the 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.

There were no distributions declared or paid during the three and six months ended June 30, 2014 and 2013.

12

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,” (“MD&A”) 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, economic recession and changes in general economic conditions, including, fluctuations in demand for equipment, lease rates, and interest rates, may result in delays in leasing, re-leasing, and disposition of equipment, and reduced returns on invested capital. The Company’s performance is subject to risks relating to lessee defaults and the creditworthiness of its lessees. The 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 markets for new and used equipment at the end of lease terms. Investors are cautioned not to attribute undue certainty to these forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, other than as required by law.

Overview

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

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

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

As of June 30, 2014, the Company continues in its liquidation phase. Accordingly, assets that mature will be returned to inventory and most likely subsequently sold, which will result in decreasing revenue as earning assets decrease. Periodic distributions are paid at the discretion of the Managing Member.

Results of Operations

The three months ended June 30, 2014 versus the three months ended June 30, 2013

The Company had net income of $429 thousand and $2.1 million for the three months ended June 30, 2014 and 2013, respectively. The results for the second quarter of 2014 primarily reflect a decrease in total revenues and an increase in total expenses when compared to the prior year period.

Revenues

Total revenues for the second quarter of 2014 decreased by $1.6 million, or 64%, as compared to the prior year period. The net reduction in total revenues was comprised of decreases in gain on sales of assets and operating lease revenues.

The decrease in gains recognized on sales of assets totaled $1.5 million and was largely a result of decreased volume and change in the mix of assets sold. During the prior year quarter, the Fund sold a group of railcars which were in high demand resulting in a significant gain on the transaction.

13

The decline in operating lease revenues totaled $159 thousand and was attributable to the decrease in usage-based rental income and the impact of continued run-off and dispositions of lease assets since June 30, 2013.

Expenses

Total expenses for the second quarter of 2014 increased by $41 thousand, or 9%, as compared to the prior year period. The net increase was primarily due to a prior year period credit adjustment relative to vessel maintenance costs and current year period increases in insurance costs, railcar storage fees and railcar maintenance costs offset, in part, by a decline in depreciation expense.

The prior year period credit adjustment to vessel maintenance costs of $28 thousand represents a final reconciliation of costs associated with the termination of the Fund’s marine vessel charter.

Insurance costs increased by $22 thousand as the prior year period amounts reflect a net reduction of $7 thousand as a result of lower renegotiated rates due to the drydock status of the marine vessel. Railcar storage fees increased by $18 thousand largely due to an increase in off-lease railcars; and railcar maintenance costs increased by $16 thousand due to the aging of the Fund’s railcar portfolio and incremental wear and tear.

Partially offsetting the aforementioned increases in expenses was a $38 thousand decrease in depreciation expense as a result of continued run-off and sales of lease assets.

The six months ended June 30, 2014 versus the six months ended June 30, 2013

The Company had net income of $846 thousand and $2.7 million for the six months ended June 30, 2014 and 2013, respectively. The results for the first half of 2014 primarily reflect decreases in total revenues and total expenses when compared to the prior year period.

Revenues

Total revenues for the first half of 2014 decreased by $2.0 million, or 52%, as compared to the prior year period. The net decline in total revenues was largely due to decreases in gains recognized on sales of assets, operating lease revenues and other revenue.

The decrease in gains recognized on sales of assets totaled $1.4 million and was largely a result of the change in the mix of assets sold. During the prior year period, the Fund sold a group of railcars which were in high demand resulting in a significant gain on the transaction.

The decline in operating lease revenues totaled $506 thousand and was attributable to the decrease in usage-based rental income and the impact of continued run-off and dispositions of lease assets since June 30, 2013; and, other revenue decreased by $108 thousand primarily due to fees realized during the prior year period relative to the termination of a marine vessel lease. There were no such fees realized during the current year period.

Expenses

Total operating expenses for the first half of 2014 decreased by $171 thousand, or 15%, as compared to the prior year period. The net decrease in total operating expenses was primarily due to reductions in depreciation expense and vessel maintenance costs partially offset by increases in professional fees and railcar storage fees.

The decrease in depreciation expense totaled $118 thousand and was attributable to continued run-off and sales of lease assets. Vessel maintenance costs decreased by $107 thousand largely due to prior year period costs of relocating the Fund’s marine vessel to a storage facility at the end of its charter in December 2012. There have been no maintenance costs relative to the Fund’s vessel since the first quarter of 2013.

Partially offsetting the aforementioned decreases in expenses were increases of $33 thousand each in professional fees and railcar storage fees. Professional fees were higher due to an increase in allocated audit fees; and, railcar storage fees increased due to the aging of the Fund’s railcar portfolio and incremental wear and tear.

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Capital Resources and Liquidity

At June 30, 2014 and December 31, 2013, the Company’s cash and cash equivalents totaled $2.9 million and $1.6 million, respectively. The liquidity of the Company varies, increasing to the extent that cash flows from leases and proceeds of asset sales exceed expenses and decreasing as distributions are made to the Other Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

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

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 adequate reserves available 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 June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
Net cash provided by:
Operating activities		$	481			$	603			$	601			$	992
Investing activities			257				1,704				703				1,808
Financing activities			—				—				—				—
Net increase in cash and cash equivalents		$	738			$	2,307			$	1,304			$	2,800

The three months ended June 30, 2014 versus the three months ended June 30, 2013

During the three months ended June 30, 2014 and 2013, the Company’s primary source of liquidity had been cash flows from its portfolio of operating lease contracts. In addition, the Fund realized $257 thousand and $1.7 million of proceeds from sales of equipment during the respective three months ended June 30, 2014 and 2013.

During the same comparative periods, cash was primarily used to pay invoices related to management fees and expenses. As the Fund is in its liquidation phase, any future financing activity is anticipated to only include distributions to Members.

The six months ended June 30, 2014 versus the six months ended June 30, 2013

During the six months ended June 30, 2014 and 2013, the Company’s primary source of liquidity had been cash flows from its portfolio of operating lease contracts. In addition, the Company realized proceeds from sales or dispositions of equipment totaling $703 thousand and $1.8 million during the six months ended June 30, 2014 and 2013, respectively.

During the same comparative periods, cash was primarily used to pay invoices related to management fees and expenses, and other payables.

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Distributions

The Company commenced periodic distributions, based on cash flows from operations, beginning with the month of January 1999. During its liquidation phase, the rates and frequency of periodic distributions paid by the Fund are solely at the discretion of the Managing Member. There were no distributions declared or paid during the three and six months ended June 30, 2014 and 2013.

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At June 30, 2014, the Company had no commitments to purchase lease assets. Pursuant to the Operating Agreement, the Company will no longer purchase any new lease assets.

Gain Contingency

ATEL filed a claim on behalf of the Company and certain affiliated entities in Federal court in New Orleans for the under-reporting of revenue by a fleet manager of three marine vessels, seeking to recover an approximate amount of 10% of gross proceeds, which in the aggregate for all affiliated entities represents $2.8 million for the years 2005 – 2007 (of which the Company’s portion is an approximate $350 thousand). The annual allocable portion of the claim is not considered material to the Company in any given year. The trial was concluded during the first week of August 2012. In October 2012, the matter was remitted to the Federal Judge to render a decision on both the law and the facts. The decision of the Court was rendered at the end of June 2013 and the court found in favor of the defendants. The Company filed an appeal of the court’s decision and remains hopeful for a recovery of all or portion of its asserted claims. As a result of the ruling, the defendants filed a claim for legal fees and costs, however, this was denied. Oral arguments for the appeal of the case in substance were heard June 2, 2014, and on June 6, 2014, the Fifth Circuit Appellate Court rendered its decision denying the appeal.

Off-Balance Sheet Transactions

None.

Recent Accounting Pronouncements

Recent accounting standards updates as issued by the Financial Accounting Standards Board (FASB) were evaluated and determined to be not applicable to the Company.

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, 2013. There have been no material changes to the Company’s critical accounting policies since December 31, 2013.

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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 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 June 30, 2014 that have materially affected, or are reasonably likely to materially affect, the Managing Member’s internal control over financial reporting, as is applicable to the Company.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

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

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Documents filed as a part of this report:

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

31.1		Rule 13a-14(a)/15d-14(a) Certification of Dean L. Cash
31.2		Rule 13a-14(a)/15d-14(a) Certification of Paritosh K. Choksi
32.1		Certification Pursuant to 18 U.S.C. section 1350 of Dean L. Cash
32.2		Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K. Choksi
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

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SIGNATURES

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

Date: August 13, 2014

ATEL CAPITAL EQUIPMENT FUND VIII, LLC
(Registrant)

		By: ATEL Financial Services, LLC Managing Member of Registrant

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

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