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, 2015

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 000-51858

ATEL Capital Equipment Fund XI, LLC

(Exact name of registrant as specified in its charter)

California		20-1357935
(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 October 31, 2015 was 5,209,307.

DOCUMENTS INCORPORATED BY REFERENCE

None.

ATEL CAPITAL EQUIPMENT FUND XI, LLC

Index

Part I. Financial Information			3
Item 1. Financial Statements (Unaudited)			3
Balance Sheets, September 30, 2015 and December 31, 2014			3
Statements of Income for the three and nine months ended September 30, 2015 and 2014			4
Statements of Changes in Members’ Capital for the year ended December 31, 2014 and for the nine months ended September 30, 2015			5
Statements of Cash Flows for the three and nine months ended September 30, 2015 and 2014			6
Notes to the Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
Item 4. Controls and Procedures			22
Part II. Other Information			23
Item 1. Legal Proceedings			23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			23
Item 3. Defaults Upon Senior Securities			23
Item 4. Mine Safety Disclosures			23
Item 5. Other Information			23
Item 6. Exhibits			23

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL CAPITAL EQUIPMENT FUND XI, LLC
  
BALANCE SHEETS
 
SEPTEMBER 30, 2015 AND DECEMBER 31, 2014
(In Thousands)

		September 30, 2015				December 31, 2014
		(Unaudited)
ASSETS
Cash and cash equivalents		$	2,690			$	4,794
Accounts receivable, net of allowance for doubtful accounts of $7 as of September 30, 2015 and $0 as of December 31, 2014			187				126
Notes receivable, net of unearned interest income of $4 as of September 30, 2015 and $22 as of December 31, 2014			225				332
Investment in securities			44				41
Investments in equipment and leases, net of accumulated depreciation of $13,418 as of September 30, 2015 and $14,032 as of December 31, 2014			2,879				3,795
Prepaid expenses and other assets			34				32
Total assets		$	6,059			$	9,120
LIABILITIES AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities:
Managing Member		$	12			$	67
Accrued distributions to Other Members			—				781
Other			103				289
Non-recourse debt			47				639
Unearned operating lease income			163				83
Total liabilities			325				1,859
Commitments and contingencies
Members’ capital:
Managing Member			—				—
Other Members			5,734				7,261
Total Members’ capital			5,734				7,261
Total liabilities and Members’ capital		$	6,059			$	9,120

See accompanying notes.

3

ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
STATEMENTS OF INCOME
 
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2015 AND 2014
(In Thousands Except for Units and Per Unit Data)
(Unaudited)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Revenues:
Leasing and lending activities:
Operating leases		$	440			$	780			$	1,468			$	2,414
Direct financing leases			2				5				9				23
Interest on notes receivable			5				8				17				28
Gain on sales of lease assets and early termination of notes			148				481				591				625
Gain on sales or dispositions of investment in securities			—				1				—				30
Other			38				15				166				85
Total revenues			633				1,290				2,251				3,205
Expenses:
Depreciation of operating lease assets			213				353				732				1,094
Asset management fees to Managing Member			42				45				93				121
Cost reimbursements to Managing Member and/or affiliates			42				53				142				170
Provision for (reversal of) credit losses			3				(1	)			7				(2	)
Amortization of initial direct costs			2				3				7				12
Interest expense			1				14				13				56
Professional fees			13				11				100				96
Outside services			7				5				26				26
Taxes on income and franchise fees			10				8				92				19
Other			13				11				34				38
Total operating expenses			346				502				1,246				1,630
Other income (loss), net			—				—				2				(2	)
Net income		$	287			$	788			$	1,007			$	1,573
Net income:
Managing Member		$	—			$	—			$	190			$	64
Other Members			287				788				817				1,509
		$	287			$	788			$	1,007			$	1,573
Net income per Limited Liability Company Unit (Other Members)		$	0.06			$	0.15			$	0.16			$	0.29
Weighted average number of Units outstanding			5,209,307				5,209,307				5,209,307				5,209,307

See accompanying notes.

4

ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL
 
FOR THE YEAR ENDED DECEMBER 31, 2014
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(In Thousands Except for Units and Per Unit Data)

		Other Members								Managing Member				Total
		Units				Amount
Balance December 31, 2013			5,209,307			$	7,224			$	—			$	7,224
Distributions to Other Members ($0.30 per Unit)			—				(1,563	)			—				(1,563	)
Distributions to Managing Member			—				—				(127	)			(127	)
Net income			—				1,600				127				1,727
Balance December 31, 2014			5,209,307				7,261				—				7,261
Distributions to Other Members ($0.45 per Unit)			—				(2,344	)			—				(2,344	)
Distributions to Managing Member			—				—				(190	)			(190	)
Net income			—				817				190				1,007
Balance September 30, 2015 (Unaudited)			5,209,307			$	5,734			$	—			$	5,734

See accompanying notes.

5

ATEL CAPITAL EQUIPMENT FUND XI, LLC
 
STATEMENTS OF CASH FLOWS
 
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2015 AND 2014
(In Thousands)
(Unaudited)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Operating activities:
Net income		$	287			$	788			$	1,007			$	1,573
Adjustments to reconcile net income to cash provided by operating activities:
Gain on sales of lease assets and early termination of notes			(148	)			(481	)			(591	)			(625	)
Depreciation of operating lease assets			213				353				732				1,094
Amortization of initial direct costs			2				3				7				12
Provision for (reversal of) credit losses			3				(1	)			7				(2	)
Gain on sales or dispositions of investment in securities			—				(1	)			—				(30	)
Changes in operating assets and liabilities:
Accounts receivable			(52	)			(61	)			(68	)			(68	)
Prepaid expenses and other assets			(8	)			(7	)			(2	)			(3	)
Accounts payable, Managing Member			7				19				9				—
Accounts payable, other			—				69				(186	)			32
Unearned operating lease income			144				146				80				54
Net cash provided by operating activities			448				827				995				2,037
Investing activities:
Purchase of securities			—				—				(3	)			—
Proceeds from sales of lease assets and early termination of notes			177				94				735				1,424
Proceeds from sales or dispositions of investment in securities			—				30				—				30
Principal payments received on direct financing leases			6				12				33				56
Principal payments received on notes receivable			36				47				107				138
Net cash provided by investing activities			219				183				872				1,648
Financing activities:
Repayments under non-recourse debt			(184	)			(363	)			(592	)			(1,113	)
Distributions to Other Members			(2,344	)			(781	)			(3,125	)			(1,562	)
Distributions to Managing Member			(190	)			(64	)			(254	)			(128	)
Net cash used in financing activities			(2,718	)			(1,208	)			(3,971	)			(2,803	)
Net (decrease) increase in cash and cash equivalents			(2,051	)			(198	)			(2,104	)			882
Cash and cash equivalents at beginning of period			4,741				2,499				4,794				1,419
Cash and cash equivalents at end of period		$	2,690			$	2,301			$	2,690			$	2,301
Supplemental disclosures of cash flow information:
Cash paid during the period for interest		$	2			$	15			$	16			$	61
Cash paid during the period for taxes		$	—			$	5			$	85			$	34
Schedule of non-cash transactions:
Amount due from sale of lease assets		$	—			$	1,908			$	—			$	1,908

See accompanying notes.

6

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

1. Organization and Limited Liability Company matters:

ATEL Capital Equipment Fund XI, LLC (the “Company” or the “Fund”) was formed under the laws of the State of California on June 25, 2004. The Company was formed for the purpose of acquiring equipment to engage in equipment leasing, lending and sales activities. Also, from time to time, the Company may purchase securities of its borrowers or receive warrants to purchase securities in connection with its lending arrangements. 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, 2025. Each Member’s personal liability for obligations of the Company generally will be limited to the amount of their respective contributions and rights to undistributed profits and assets of the Company.

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. On May 31, 2005, subscriptions for the minimum number of Units (120,000, representing $1.2 million) had been received 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, lending and sales activities). As of July 13, 2005, the Company had received subscriptions for 958,274 Units ($9.6 million), thus exceeding the $7.5 million minimum requirement for Pennsylvania, and AFS requested that the remaining funds in escrow (from Pennsylvania investors) be released to the Company. The Company terminated sales of Units effective April 30, 2006. Life-to-date net contributions through September 30, 2015 totaled $52.2 million, consisting of approximately $52.8 million in gross contributions from Other Members purchasing Units under the public offering less rescissions and repurchases (net of distributions paid and allocated syndication costs, as applicable) of $636 thousand. As of September 30, 2015, 5,209,307 Units were 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 ended December 31, 2012, 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. On January 1, 2013, the Company commenced liquidation phase activities pursuant to the guidelines of the Operating Agreement.

Pursuant to the terms of the Operating Agreement, AFS and its affiliates 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.

The Company’s 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, 2014, 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, 2015 are not necessarily indicative of the results to be expected for the full year.

7

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

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

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

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

In preparing the accompanying unaudited financial statements, the Company has reviewed, as determined necessary by the Managing Member, events that have occurred after September 30, 2015 up until the issuance of the financial statements. No events were noted which would require additional 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 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 for determination of the allowance for doubtful accounts and reserve for credit losses on 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, 2015 and 2014 and long-lived assets as of September 30, 2015 and December 31, 2014 (dollars in thousands):

		For The Nine Months Ended September 30,
		2015				% of Total				2014				% of Total
Revenue
United States		$	2,230				99	%		$	3,168				99	%
United Kingdom			21				1	%			37				1	%
Total International			21				1	%			37				1	%
Total		$	2,251				100	%		$	3,205				100	%

		As of September 30,								As of December 31,
		2015				% of Total				2014				% of Total
Long-lived assets
United States		$	2,876				100	%		$	3,792				100	%
United Kingdom			3				0	%			3				0	%
Total International			3				0	%			3				0	%
Total		$	2,879				100	%		$	3,795				100	%

8

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

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

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. Based upon the Company’s review of its portfolio, no fair value adjustment was deemed necessary for the three and nine months ended September 30, 2015 and 2014. There were no sales or dispositions of securities during the three and nine months ended September 30, 2015 and 2014.

Warrants

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are reflected at an estimated fair value on the balance sheet as determined by the Managing Member. At both September 30, 2015 and December 31, 2014, the Managing Member estimated the fair value of the warrants to be nominal in amount. The Company realized gains of $1 thousand and $30 thousand on the net exercise of certain warrants during the respective three and nine months ended September 30, 2014. There were no exercises of warrants, net or otherwise, during the three and nine months ended September 30, 2015.

Foreign currency transactions:

Foreign currency transaction gains and losses are reported in the results of operations as “other income” or “other loss” in the period in which they occur. Currently, the Company does not use derivative instruments to hedge its economic exposure with respect to assets, liabilities and firm commitments as the foreign currency transactions risks to date have not been significant.

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 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year and in August 2015, issued Revenue from Contracts from Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting period. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company evaluated the impact of the new standard on its financial statements and has determined that such impact is virtually non-existent as the new revenue guideline does not affect revenues from leases and loans, which comprise the majority of the Company’s revenues.

9

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

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

In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements — Going Concern (subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU-2014-15”). The new standard provides guidance relative to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. Management does not expect the adoption of ASU 2014-15 to have a material impact on the Company’s financial statements or related disclosures.

3. Notes receivable, net:

The Company has had various notes receivable from borrowers who have financed the purchase of equipment through the Company. The notes were secured by the equipment financed. As of September 30, 2015 and December 31, 2014, only one note receivable remained unsettled with a net outstanding balance of $225 thousand and $332 thousand, respectively. Such note has an annual interest rate of 8.51% and matures in 2016.

The Company’s remaining note receivable was not deemed impaired or in non-accrual status as of September 30, 2015 and December 31, 2014.

The minimum future payments receivable as of September 30, 2015 are as follows (in thousands):

Three months ending December 31, 2015		$	41
Year ending December 31, 2016			188
			229
Less: portion representing unearned interest income			(4	)
Notes receivable, net		$	225

4. Allowance for credit losses:

The allowance for credit losses at September 30, 2015 totaled $7 thousand and was solely related to delinquent operating lease receivables. There was no such allowance as of December 31, 2014. As of the same dates, the Fund had no impaired or delinquent financing receivables.

5. Investment in equipment and leases, net:

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

		Balance December 31, 2014				Reclassifications, Additions/ Dispositions				Depreciation/ Amortization Expense or Amortization of Leases				Balance September 30, 2015
Net investment in operating leases		$	3,720			$	(141	)		$	(732	)		$	2,847
Net investment in direct financing leases			50				(5	)			(33	)			12
Assets held for sale or lease, net			1				2				—				3
Initial direct costs, net of accumulated amortization of $32 at September 30, 2015 and $29 at December 31, 2014			24				—				(7	)			17
Total		$	3,795			$	(144	)		$	(772	)		$	2,879

10

ATEL CAPITAL EQUIPMENT FUND XI, 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:

Recorded values of the Company’s leased asset portfolio are reviewed each quarter to confirm the reasonableness of established residual values and to determine whether there is indication that an asset impairment might have taken place. The Company uses a variety of sources and considers many factors in evaluating whether the respective book values of its assets are appropriate. In addition, the company may direct a residual value review at any time if it becomes aware of issues regarding the ability of a lessee to continue to make payments on its lease contract. An impairment loss is measured and recognized only if the estimated undiscounted future cash flows of the asset are less than their net book value. The estimated undiscounted future cash flows are the sum of the residual value of the asset at the end of the asset’s lease contract and undiscounted future rents from the existing lease contract. 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 marketplace are disregarded and it is assumed that there is no necessity either to dispose of a significant number of the assets, if held in quantity, simultaneously or to dispose of the asset quickly. Impairment is measured as the difference between the fair value (as determined by a valuation method using discounted estimated future cash flows, third party appraisals or comparable sales of similar assets as applicable based on asset type) of the asset and its carrying value on the measurement date. Upward adjustments for impairments recognized in prior periods are not made in any circumstances. As a result of these reviews, management determined that no impairment losses existed during the three and nine months ended September 30, 2015 and 2014.

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 totaled $213 thousand and $353 thousand for the respective three months ended September 30, 2015 and 2014, and $732 thousand and $1.1 million for the respective nine months ended September 30, 2015 and 2014.

Initial direct costs amortization expense related to the Company’s operating and direct financing leases amounted to $2 thousand and $3 thousand for the respective three-month periods ended September 30, 2015 and 2014, and $7 thousand and $12 thousand for the respective nine-month periods ended September 30, 2015 and 2014.

All of the leased property was acquired during the years 2005 through 2011.

Operating leases:

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

		Balance December 31, 2014				Additions				Reclassifications or Dispositions				Balance September 30, 2015
Transportation, rail		$	10,907			$	—			$	(336	)		$	10,571
Aviation			1,658				—				—				1,658
Transportation, other			1,543				—				—				1,543
Marine vessels			1,415				—				—				1,415
Manufacturing			467				—				—				467
Materials handling			1,252				—				(849	)			403
Construction			498				—				(350	)			148
Other			11				—				(11	)			—
			17,751				—				(1,546	)			16,205
Less accumulated depreciation			(14,031	)			(732	)			1,405				(13,358	)
Total		$	3,720			$	(732	)		$	(141	)		$	2,847

11

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

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

The average estimated residual value for assets on operating leases was 14% and 15% of the assets’ original cost at September 30, 2015 and December 31, 2014, respectively. There were no operating lease contracts placed in non-accrual status at September 30, 2015 and December 31, 2014.

Direct financing leases:

As of September 30, 2015 and December 31, 2014, investment in direct financing leases consists of construction equipment. The components of the Company’s investment in direct financing leases as of September 30, 2015 and December 31, 2014 are as follows (in thousands):

		September 30, 2015				December 31, 2014
Total minimum lease payments receivable		$	15			$	57
Estimated residual values of leased equipment (unguaranteed)			1				6
Investment in direct financing leases			16				63
Less unearned income			(4	)			(13	)
Net investment in direct financing leases		$	12			$	50

There were no investments in direct financing lease assets in non-accrual status at September 30, 2015 and December 31, 2014.

At September 30, 2015, the aggregate amounts of future minimum lease payments to be received are as follows (in thousands):

		Operating Leases				Direct Financing Leases				Total
Three months ending December 31, 2015		$	300			$	4			$	304
Year ending December 31, 2016			700				11				711
2017			596				—				596
2018			129				—				129
2019			23				—				23
2020			1				—				1
		$	1,749			$	15			$	1,764

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of September 30, 2015, the respective useful lives of each category of lease assets in the Company’s portfolio are as follows (in years):

Equipment category		Useful Life
Transportation, rail			35 – 40
Marine vessels			20 – 30
Aviation			15 – 20
Manufacturing			10 – 15
Construction			7 – 10
Materials handling			7 – 10
Transportation, other			7 – 10

12

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

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.

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; and 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 managed assets, number of investors or contributed capital based upon the type of cost incurred.

The Operating Agreement places an annual limit and a cumulative limit for cost reimbursements to AFS and/or affiliates. Any reimbursable costs incurred by AFS and/or affiliates during the year exceeding the annual and/or cumulative limits cannot be reimbursed in the current year, though such costs may be reimbursable in future years to the extent of the cumulative limit. As of September 30, 2015, the Company has not exceeded the annual and/or cumulative limitations discussed above.

AFS and/or affiliates earned fees and billed for reimbursements of costs and expenses pursuant to the Operating Agreement as follows during the three and nine months ended September 30, 2015 and 2014 (in thousands):

		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Costs reimbursed to Managing Member and/or affiliates		$	42			$	53			$	142			$	170
Asset management fees to Managing Member			42				45				93				121
		$	84			$	98			$	235			$	291

7. Non-recourse debt:

At September 30, 2015, the Company had one remaining non-recourse debt obligation which consists of a note payable to a financial institution. The note is due in monthly installments. Interest on the note is at a fixed rate of 5.95%. The note is secured by assignments of lease payments and pledges of assets. At September 30, 2015, gross lease rentals totaled approximately $44 thousand over the remaining lease term; and the carrying value of the pledged assets is approximately $816 thousand. The note matures in October 2015.

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

13

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

7. Non-recourse debt: - (continued)

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.

The remaining future minimum payment of non-recourse debt totals $47 thousand, all of which is due and payable in October 2015. The payment is comprised of principal totaling $47 thousand and a nominal amount of interest. The future minimum payment of non-recourse debt is in excess of the gross lease rentals at September 30, 2015 by $3 thousand due to casualties relative to the pledged assets. This is fully mitigated by the stipulated loss proceeds received to date on such casualty units.

8. Commitments:

At September 30, 2015, the Company had no commitments to either purchase lease assets or fund loans.

9. 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.

10. Members’ capital:

A total of 5,209,307 Units were issued and outstanding as of September 30, 2015 and December 31, 2014. The Fund was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial members (50 Units). The Company terminated sales of Units effective April 30, 2006.

The Company has the right, exercisable at 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.

14

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

10. Members’ capital: - (continued)

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,
		2015				2014				2015				2014
Distributions		$	—			$	—			$	2,344			$	781
Weighted average number of Units outstanding			5,209,307				5,209,307				5,209,307				5,209,307
Weighted average distributions per Unit		$	—			$	—			$	0.45			$	0.15

The monthly distributions were discontinued in 2013 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.

11. 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, 2015 and December 31, 2014, only the Company’s warrants were measured on a recurring basis. The Company had no assets or liabilities requiring measurement at fair value on a non-recurring basis at September 30, 2015. During 2014, the Company recorded non-recurring adjustments to reduce the cost basis of an impaired security to zero.

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.

15

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

11. Fair value measurements: - (continued)

Such fair value adjustments utilized the following methodology:

Warrants (recurring)

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried on the balance sheet at an estimated fair value at the end of the period. The valuation of the warrants was determined using a Black-Scholes formulation of value based upon the stock price(s), the exercise price(s), the volatility of comparable venture companies, and a risk free interest rate for the term(s) of the warrant exercise(s). As of September 30, 2015 and December 31, 2014, the Company estimated the fair value of the warrants to be nominal in amount. Such valuations are classified within Level 3 of the valuation hierarchy.

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. There were no fair value adjustments relative to impaired investment securities during 2015.

During 2014, the Company recorded a fair value adjustment of $178 thousand to reduce the cost basis of an impaired investment security. The 100% reduction in value was based on a market approach technique and uses inputs that reflect qualitative and quantitative information provided by the management of the investee. Such information indicated significantly reduced operating cash flows and revenues, and, to date, an unsuccessful attempt to sell the investee. 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.

There were no non-recurring fair value adjustments at September 30, 2015. The following table summarizes the valuation techniques and significant unobservable inputs used for the Company’s non-recurring fair value adjustments categorized as Level 3 in the fair value hierarchy at December 31, 2014:

December 31, 2014
Name		Valuation Frequency		Valuation Technique		Unobservable Inputs		Range of Input Values
Investment Securities		Non-recurring		Market Approach		Qualitative and quantitative information (Investee Management)		Not Applicable

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.

16

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

11. Fair value measurements: - (continued)

Notes receivable

The fair value of the Company’s notes receivable is generally estimated based upon various methodologies deployed by financial and credit management including, but not limited to, credit analysis, third party appraisal and/or discounted cash flow analysis based upon current market valuation techniques and market rates for similar types of lending arrangements, which may consider adjustments for impaired loans as deemed necessary.

Investment in securities

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

Non-recourse debt

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

Commitments and Contingencies

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

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

The following tables present estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at September 30, 2015 and December 31, 2014 (in thousands):

		Fair Value Measurements at September 30, 2015
		Carrying Value				Level 1				Level 2				Level 3				Total
Financial assets:
Cash and cash equivalents		$	2,690			$	2,690			$	—			$	—			$	2,690
Notes receivable, net			225				—				—				225				225
Investment in securities			44				—				—				44				44
Financial liabilities:
Non-recourse debt			47				—				—				47				47

		Fair Value Measurements at December 31, 2014
		Carrying Value				Level 1				Level 2				Level 3				Total
Financial assets:
Cash and cash equivalents		$	4,794			$	4,794			$	—			$	—			$	4,794
Notes receivable, net			332				—				—				332				332
Investment in securities			41				—				—				41				41
Financial liabilities:
Non-recourse debt			639				—				—				652				652

17

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, 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, re-leasing, and disposition of equipment, and reduced returns on invested capital. The Company’s performance is subject to risks relating to lessee and borrower defaults and the creditworthiness of its lessees and borrowers. 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 XI, LLC (the “Company” or the “Fund”) is a California limited liability company that was formed in June 2004 for the purpose of engaging in the sale of limited liability company investment units and acquiring equipment to generate revenues from equipment leasing, lending and sales activities, primarily in the United States.

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. The offering was terminated in April 2006. During 2006, 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 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, 2025. However, pursuant to the guidelines of the Limited Liability Company Operating Agreement (“Operating Agreement”), the Company commenced liquidation phase activities subsequent to the end of the Reinvestment Period which ended on December 31, 2012. Periodic distributions are paid at the discretion of the Managing Member.

Results of Operations

The three months ended September 30, 2015 versus the three months ended September 30, 2014

The Company had net income of $287 thousand and $788 thousand for the three months ended September 30, 2015 and 2014, respectively. Results for the third quarter of 2015 reflect decreases in both total revenues and total operating expenses when compared to the prior year period.

Revenues

Total revenues for the third quarter of 2015 decreased by $657 thousand, or 51%, as compared to the prior year period. The net decrease in total revenues was largely attributable to decreases in operating lease revenues and gains recognized on the sale of lease assets and early termination of notes partially offset by an increase in other revenue.

Operating lease revenues declined by $340 thousand primarily as a result of continued run-off and sales of lease assets. The decrease in gains recognized on the sales of lease assets and early termination of notes totaled $333 thousand and was attributable to a change in mix of assets sold.

Partially offsetting the aforementioned decreases in revenues was a $23 thousand increase in other revenue, which was attributable to a recovery of certain property taxes during the current three-month period.

18

Expenses

Total operating expenses for the third quarter of 2015 decreased by $156 thousand, or 31%, as compared to the prior year period. The net reduction in total operating expenses was primarily due to decreases in depreciation expense and interest expense.

The decrease in depreciation expense totaled $140 thousand and was largely due to continued run-off and sales of lease assets. Interest expense decreased by $13 thousand mainly due to a $792 thousand decline in outstanding borrowings since September 30, 2014.

The nine months ended September 30, 2015 versus the nine months ended September 30, 2014

The Company had net income of $1.0 million and $1.6 million for the nine months ended September 30, 2015 and 2014, respectively. Results for the first nine months of 2015 reflect decreases in both total revenues and total operating expenses when compared to the prior year period.

Revenues

Total revenues for the first nine months of 2015 declined by $954 thousand, or 30%, as compared to the prior year period. The net reduction in total revenues was largely attributable to decreases in operating lease revenues, gains on sales of lease assets and early termination of notes, and gain on sales or dispositions of investment in securities, partially offset by an increase in other revenue.

The decrease in operating lease revenues totaled $946 thousand and was primarily a result of continued run-off and sales of lease assets. The decline in gains on sales of lease assets and early termination of notes totaled $34 thousand and was attributable to a reduction in volume and change in mix of assets sold. Gains on sales or dispositions of investment in securities decreased by $30 thousand due to prior year period gains realized on the net exercise of certain warrants; no such gain was realized during current year period.

Partially offsetting the aforementioned decreases in revenues was an $81 thousand increase in other revenue, which was attributable to additional billing for excess wear and tear on certain returned equipment and a recovery of certain property taxes during the current year period.

Expenses

Total expenses for the first nine months of 2015 decreased by $384 thousand, or 24%, as compared to the prior year period. The net reduction in total expenses was primarily due to decreases in depreciation expense and interest expense offset, in part, by an increase in taxes on income and franchise fees.

The decrease in depreciation expense totaled $362 thousand and was primarily a result of continued run-off and sales of lease assets. Interest expense decreased by $43 thousand mainly due to a $792 thousand decline in outstanding borrowings since September 30, 2014.

Partially offsetting the aforementioned decreases in expenses was a $73 thousand increase in taxes on income and franchise fees. Such increase was attributable to a higher estimated tax liability associated with an increase in gains on sales of lease assets.

Capital Resources and Liquidity

At September 30, 2015 and December 31, 2014, the Company’s cash and cash equivalents totaled $2.7 million and $4.8 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 distributions are made to the 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.

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.

19

Cash Flows

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

		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Net cash provided by (used in):
Operating activities		$	448			$	827			$	995			$	2,037
Investing activities			219				183				872				1,648
Financing activities			(2,718	)			(1,208	)			(3,971	)			(2,803	)
Net (decrease) increase in cash and cash equivalents		$	(2,051	)		$	(198	)		$	(2,104	)		$	882

The three months ended September 30, 2015 versus the three months ended September 30, 2014

During the three months ended September 30, 2015 and 2014, 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 $177 thousand and $124 thousand of cash flows from the sale or disposition of equipment and early termination of certain notes, and the disposition of investment in securities during the respective three months ended September 30, 2015 and 2014.

During the same respective periods, cash was primarily used to pay distributions to both Other Members and the Managing Member and to pay down debt. Total distributions paid to Members amounted to $2.5 million and $845 thousand for the respective three months ended September 30, 2015 and 2014; while cash used to pay down debt totaled $184 thousand and $363 thousand, respectively. In addition, cash was used to pay invoices related to management fees and expenses, and other payables during both three-month periods ended September 30, 2015 and 2014.

The nine months ended September 30, 2015 versus the nine months ended September 30, 2014

During the nine months ended September 30, 2015 and 2014, 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 $735 thousand and $1.5 million of cash flows from the sale or disposition of equipment and early termination of certain notes, and the disposition of investment in securities during the respective nine months ended September 30, 2015 and 2014.

During the same respective periods, cash was primarily used to pay distributions to both the Other Members and the Managing Member. Total distributions paid to Members amounted to $3.4 million and $1.7 million for the respective nine months ended September 30, 2015 and 2014. In addition, cash was also used to pay down $592 thousand and $1.1 million of debt, respectively, and to pay invoices related to management fees and expenses, and other payables.

Non-Recourse Long-Term Debt

As of September 30, 2015 and December 31, 2014, the Company had non-recourse long-term debt totaling $47 thousand and $639 thousand, 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.

For detailed information on the Company’s debt obligations, see Note 7 to the financial statements as set forth in Part I, Item 1, Financial Statements (Unaudited).

20

Distributions

The Company commenced periodic distributions, based on cash flows from operations, beginning with the month of June 2005. The monthly distributions were discontinued in 2013 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, 2015, the Company had no commitments to purchase lease assets or fund loans.

Off-Balance Sheet Transactions

None.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year and in August 2015, issued Revenue from Contracts from Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting period. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company evaluated the impact of the new standard on its financial statements and has determined that such impact is virtually non-existent as the new revenue guideline does not affect revenues from leases and loans, which comprise the majority of the Company’s revenues.

In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements — Going Concern (subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard provides guidance relative to management`s responsibility to evaluate whether there is substantial doubt about an entity`s ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. Management does not expect the adoption of ASU 2014-15 to have a material impact on the Company’s financial statements or related disclosures.

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, 2014. There have been no material changes to the Company’s critical accounting policies since December 31, 2014.

21

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) and 15d-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, who 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 they are applicable to the Company, means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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, 2015 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.

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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.

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.

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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: November 12, 2015

ATEL CAPITAL EQUIPMENT FUND XI, 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)

24