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 000-50687

ATEL Capital Equipment Fund X, LLC

(Exact name of registrant as specified in its charter)

California		68-0517690
(State or other jurisdiction of Incorporation or organization)		(I. R. S. Employer Identification No.)

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 13,971,486.

DOCUMENTS INCORPORATED BY REFERENCE

None.

ATEL CAPITAL EQUIPMENT FUND X, 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			23
Item 4. Controls and Procedures			27
Part II. Other Information			28
Item 1. Legal Proceedings			28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			28
Item 3. Defaults Upon Senior Securities			28
Item 4. Mine Safety Disclosures			28
Item 5. Other Information			28
Item 6. Exhibits			28

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

ATEL CAPITAL EQUIPMENT FUND X, LLC
 
BALANCE SHEETS
 
SEPTEMBER 30, 2015 AND DECEMBER 31, 2014

(in thousands)

		September 30, 2015				December 31, 2014
		(Unaudited)
ASSETS
Cash and cash equivalents		$	2,526			$	4,647
Accounts receivable, net of allowance for doubtful accounts of $2 at September 30, 2015 and $59 at December 31, 2014			499				565
Notes receivable, net of unearned interest income of $4 as of September 30, 2015 and $22 as of December 31, 2014			225				332
Prepaid expenses and other assets			120				115
Investment in securities			86				85
Investments in equipment and leases, net of accumulated depreciation of $37,937 at September 30, 2015 and $39,462 at December 31, 2014			20,187				24,420
Total assets		$	23,643			$	30,164
LIABILITIES AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities:
Managing Member		$	21			$	499
Accrued distributions to Other Members			—				3,842
Other			349				501
Accrued interest payable			26				42
Non-recourse debt			5,630				9,000
Unearned operating lease income			176				375
Total liabilities			6,202				14,259
Commitments and contingencies
Members’ capital:
Managing Member			—				—
Other Members			17,441				15,905
Total Members’ capital			17,441				15,905
Total liabilities and Members’ capital		$	23,643			$	30,164

See accompanying notes.

3

ATEL CAPITAL EQUIPMENT FUND X, 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		$	1,524			$	1,732			$	4,876			$	5,518
Direct financing leases			463				626				1,520				1,982
Interest on notes receivable			5				8				17				28
Gain on sales of lease assets and early termination of notes			263				214				848				1,466
Gain on sales or dispositions of investment in securities			—				1				—				74
Other			102				4				286				47
Total revenues			2,357				2,585				7,547				9,115
Expenses:
Depreciation of operating lease assets			375				881				1,567				2,848
Asset management fees to Managing Member and/or affiliates			76				118				332				369
Costs reimbursed to Managing Member and/or affiliates			173				205				584				802
Amortization of initial direct costs			4				7				16				25
Interest expense			92				163				329				539
Impairment losses on equipment			—				—				345				4
Railcar maintenance			26				108				170				457
(Reversal of) provision for credit losses			(11	)			7				(57	)			(126	)
Provision for losses on investment in securities			2				—				2				—
Professional fees			13				12				111				106
Franchise fees and taxes			37				55				112				147
Outside services			19				13				58				53
Other			57				56				176				195
Total operating expenses			863				1,625				3,745				5,419
Other (expense) income, net			(1	)			1				—				2
Net income		$	1,493			$	961			$	3,802			$	3,698
Net income:
Managing Member		$	—			$	—			$	170			$	453
Other Members			1,493				961				3,632				3,245
		$	1,493			$	961			$	3,802			$	3,698
Net income per Limited Liability Company Unit (Other Members)		$	0.11			$	0.07			$	0.26			$	0.23
Weighted average number of Units outstanding			13,971,486				13,971,486				13,971,486				13,971,486

See accompanying notes.

4

ATEL CAPITAL EQUIPMENT FUND X, 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			13,971,486			$	21,456			$	—			$	21,456
Distributions to Other Members ($0.68 per Unit)			—				(9,431	)			—				(9,431	)
Distributions to Managing Member			—				—				(765	)			(765	)
Net income			—				3,880				765				4,645
Balance December 31, 2014			13,971,486				15,905				—				15,905
Distributions to Other Members ($0.15 per Unit)			—				(2,096	)			—				(2,096	)
Distributions to Managing Member			—				—				(170	)			(170	)
Net income			—				3,632				170				3,802
Balance September 30, 2015 (Unaudited)			13,971,486			$	17,441			$	—			$	17,441

See accompanying notes.

5

ATEL CAPITAL EQUIPMENT FUND X, 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		$	1,493			$	961			$	3,802			$	3,698
Adjustments to reconcile net income to cash provided by operating activities:
Gain on sales of lease assets and early termination of notes			(263	)			(214	)			(848	)			(1,466	)
Gain on sales or dispositions of investment in securities			—				(1	)			—				(74	)
Depreciation of operating lease assets			375				881				1,567				2,848
Amortization of initial direct costs			4				7				16				25
Impairment losses on equipment			—				—				345				4
(Reversal of) provision for credit losses			(11	)			7				(57	)			(126	)
Provision for losses on investment in securities			2				—				2				—
Changes in operating assets and liabilities:
Accounts receivable			34				15				123				227
Prepaid expenses and other assets			(22	)			(21	)			(5	)			(3	)
Accounts payable, Managing Member			(73	)			(81	)			(166	)			(209	)
Accounts payable, other			7				21				(152	)			(224	)
Accrued interest payable			(6	)			(5	)			(16	)			(15	)
Unearned operating lease income			(157	)			(18	)			(199	)			(176	)
Net cash provided by operating activities			1,383				1,552				4,412				4,509
Investing activities:
Purchase of securities			—				—				(3	)			—
Proceeds from sales of lease assets and early termination of notes			341				508				1,194				4,029
Proceeds from sales or dispositions of investment in securities			—				74				—				74
Principal payments received on direct financing leases			683				567				1,959				1,705
Principal payments received on notes receivable			36				47				107				138
Net cash provided by investing activities			1,060				1,196				3,257				5,946
Financing activities:
Repayments under non-recourse debt			(1,120	)			(1,249	)			(3,370	)			(3,747	)
Distributions to Other Members			(2,096	)			(5,589	)			(5,938	)			(11,178	)
Distributions to Managing Member			(170	)			(453	)			(482	)			(906	)
Net cash used in financing activities			(3,386	)			(7,291	)			(9,790	)			(15,831	)
Net decrease in cash and cash equivalents			(943	)			(4,543	)			(2,121	)			(5,376	)
Cash and cash equivalents at beginning of period			3,469				7,645				4,647				8,478
Cash and cash equivalents at end of period		$	2,526			$	3,102			$	2,526			$	3,102
Supplemental disclosures of cash flow information:
Cash paid during the period for interest		$	98			$	168			$	345			$	554
Cash paid during the period for taxes		$	1			$	8			$	141			$	161

See accompanying notes.

6

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

1. Organization and Limited Liability Company matters:

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

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. On April 9, 2003, subscriptions for the minimum number of Units (120,000, representing $1.2 million) had been received (excluding subscriptions from Pennsylvania investors) and AFS requested that the subscriptions be released to the Company. On that date, the Company commenced operations in its primary business. As of March 11, 2005, the offering was terminated. As of that date, subscriptions for 14,059,136 Units ($140.6 million) had been received, of which 87,650 Units ($720 thousand) were subsequently rescinded or repurchased (net of distributions paid and allocated syndication costs, as applicable) by the Company through September 30, 2015. As of September 30, 2015, 13,971,486 Units remain issued and outstanding.

The Company’s principal objectives are to invest in a diversified portfolio of equipment that (i) preserves, protects and returns the Company’s invested capital; (ii) generates regular distributions to the members of cash from operations and cash from sales or refinancing, with any balance remaining after certain minimum distributions to be used to purchase additional equipment during the reinvestment period (“Reinvestment Period”) (defined as six full years following the year the offering was terminated) which ended on December 31, 2011 and (iii) provides additional distributions following the Reinvestment Period and until all equipment has been sold. The Company is governed by the Limited Liability Company Operating Agreement (“Operating Agreement”), as amended. On January 1, 2012, the Company commenced liquidation phase activities pursuant to the guidelines of the Operating Agreement.

Pursuant to the terms of the Operating Agreement, AFS receives compensation and reimbursements for services rendered on behalf of the Company (See Note 6). The Company is required to maintain reasonable cash reserves for working capital, the repurchase of Units and contingencies. The repurchase of Units is solely at the discretion of AFS.

These unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto contained in the report on Form 10-K for the year ended December 31, 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 X, 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 Managing Member has reviewed 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, and adjustments thereto.

Use of estimates:

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

Segment reporting:

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

The primary geographic regions in which the Company seeks leasing opportunities are North America and Europe. The table below summarizes geographic information relating to the sources, by nation, of the Company’s total revenues for the nine months ended September 30, 2015 and 2014 and long-lived tangible assets as of September 30, 2015 and December 31, 2014 (dollars in thousands):

		Nine Months Ended September 30,
		2015				% of Total				2014				% of Total
Revenue
United States		$	7,547				100	%		$	9,041				99	%
United Kingdom			—				0	%			74				1	%
Total International			—				0	%			74				1	%
Total		$	7,547				100	%		$	9,115				100	%

		As of September 30,								As of December 31,
		2015				% of Total				2014				% of Total
Long-lived assets
United States		$	20,187				100	%		$	24,420				100	%
United Kingdom			—				0	%			—				0	%
Total International			—				0	%			—				0	%
Total		$	20,187				100	%		$	24,420				100	%

8

ATEL CAPITAL EQUIPMENT FUND X, 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, a fair value adjustment of $2 thousand was recorded for both the three and nine months ended September 30, 2015 to reduce the recorded value of certain securities to market. No fair value adjustment was deemed necessary for the three and nine months ended September 30, 2014. Likewise, there were no investment securities sold or disposed of 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 September 30, 2015 and December 31, 2014, the Managing Member estimated the fair value of the warrants to be nominal in amount. There were no exercises of warrants, net or otherwise, during the three and nine months ended September 30, 2015. By comparison, during the respective three and nine months ended September 30, 2014, the Company realized gains of $1 thousand and $74 thousand on the net exercise of warrants.

Other (expense) income, net:

Other (expense) income, net consisted solely of net gains and losses on foreign exchange transactions.

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 X, 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 bears 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.

As of September 30, 2015, the minimum future payments receivable 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 Company’s allowance for credit losses are as follows (in thousands):

		Accounts Receivable Allowance for Doubtful Accounts												Valuation Adjustments on Financing Receivables								Total Allowance for Credit Losses
		Notes Receivable				Finance Leases				Operating Leases				Notes Receivable				Finance Leases
Balance December 31, 2013		$	—			$	10			$	128			$	—			$	—			$	138
Provision (reversal of provision)			—				3				(82	)			—				—				(79	)
Balance December 31, 2014			—				13				46				—				—				59
Reversal of provision			—				(13	)			(44	)			—				—				(57	)
Balance September 30, 2015		$	—			$	—			$	2			$	—			$	—			$	2

Accounts receivable

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

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

10

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

4. Allowance for credit losses: - (continued)

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

Financing receivables

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

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

The asset underlying a direct financing lease contract is considered impaired if the estimated undiscounted future cash flows of the asset are less than its net book value. The estimated undiscounted future cash flows are the sum of the estimated residual value of the asset at the end of the asset’s expected holding period and estimates of undiscounted future rents. The residual value assumes, among other things, that the asset is utilized normally in an open, unrestricted and stable market. Short-term fluctuations in the 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.

As of September 30, 2015 and December 31, 2014, the Company’s allowance for credit losses (related solely to financing receivables) and its recorded investment in financing receivables were as follows (in thousands):

September 30, 2015		Notes Receivable				Finance Leases				Total
Allowance for credit losses:
Ending balance		$	—			$	—			$	—
Ending balance: individually evaluated for impairment		$	—			$	—			$	—
Ending balance: collectively evaluated for impairment		$	—			$	—			$	—
Ending balance: loans acquired with deteriorated credit quality		$	—			$	—			$	—
Financing receivables:
Ending balance		$	225			$	7,044	1		$	7,269
Ending balance: individually evaluated for impairment		$	225			$	7,044			$	7,269
Ending balance: collectively evaluated for impairment		$	—			$	—			$	—
Ending balance: loans acquired with deteriorated credit quality		$	—			$	—			$	—

¹ Includes $2 of unamortized initial direct costs.

11

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

4. Allowance for credit losses: - (continued)

December 31, 2014		Notes Receivable				Finance Leases				Total
Allowance for credit losses:
Ending balance		$	—			$	—			$	—
Ending balance: individually evaluated for impairment		$	—			$	—			$	—
Ending balance: collectively evaluated for impairment		$	—			$	—			$	—
Ending balance: loans acquired with deteriorated credit quality		$	—			$	—			$	—
Financing receivables:
Ending balance		$	332			$	9,030	2		$	9,362
Ending balance: individually evaluated for impairment		$	332			$	9,030			$	9,362
Ending balance: collectively evaluated for impairment		$	—			$	—			$	—
Ending balance: loans acquired with deteriorated credit quality		$	—			$	—			$	—

² Includes $5 of unamortized initial direct costs.

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

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

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

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

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

12

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

4. Allowance for credit losses: - (continued)

At September 30, 2015 and December 31, 2014, the Company’s financing receivables by credit quality indicator and by class of financing receivables are as follows (excludes initial direct costs) (in thousands):

		Notes Receivable								Finance Leases
		September 30, 2015				December 31, 2014				September 30, 2015				December 31, 2014
Pass		$	225			$	332			$	7,042			$	9,025
Special mention			—				—				—				—
Substandard			—				—				—				—
Doubtful			—				—				—				—
Total		$	225			$	332			$	7,042			$	9,025

At September 30, 2015 and December 31, 2014, the investment in financing receivables is aged as follows (in thousands):

September 30, 2015		31 – 60 Days Past Due				61 – 90 Days Past Due				Greater Than 90 Days				Total Past Due				Current				Total Financing Receivables				Recorded Investment > 90 Days and Accruing
Notes receivable		$	—			$	—			$	—			$	—			$	225			$	225			$	—
Finance leases			—				—				—				—				7,042				7,042				—
Total		$	—			$	—			$	—			$	—			$	7,267			$	7,267			$	—

December 31, 2014		31 – 60 Days Past Due				61 – 90 Days Past Due				Greater Than 90 Days				Total Past Due				Current				Total Financing Receivables				Recorded Investment > 90 Days and Accruing
Notes receivable		$	—			$	—			$	—			$	—			$	332			$	332			$	—
Finance leases			—				—				3				3				9,022				9,025				3
Total		$	—			$	—			$	3			$	3			$	9,354			$	9,357			$	3

No financing receivables were impaired or in non-accrual status as of September 30, 2015 and December 31, 2014.

As of September 30, 2015, there were no investments in financing receivables with related accounts receivable past due more than 90 days which were still on an accrual basis. As of December 31, 2014, certain investments in financing receivables with related accounts receivable past due more than 90 days were still on an accrual basis based on management’s assessment of the collectability of such receivables. However, these accounts receivable were fully reserved and included in the allowance for doubtful accounts presented above.

13

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

5. Investment in equipment and leases, net:

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

		Balance December 31, 2014				Reclassifications, Additions/ Dispositions and Impairment Losses				Depreciation/ Amortization Expense or Amortization of Leases				Balance September 30, 2015
Net investment in operating leases		$	14,079			$	(957	)		$	(1,567	)		$	11,555
Net investment in direct financing leases			9,025				(24	)			(1,959	)			7,042
Assets held for sale or lease, net			1,295				290				—				1,585
Initial direct costs, net of accumulated amortization of $128 at September 30, 2015 and $190 at December 31, 2014			21				—				(16	)			5
Total		$	24,420			$	(691	)		$	(3,542	)		$	20,187

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, the Company recorded $345 thousand of fair value adjustments to reduce the cost basis of certain impaired lease equipment during the first nine months of 2015, all of which was recorded during the first quarter. By comparison, the Company recorded $4 thousand of fair value adjustments relative to impaired off-lease equipment during the first nine months of 2014, none of which was recorded during the third quarter of 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 $375 thousand and $881 thousand for the respective three months ended September 30, 2015 and 2014, and $1.6 million and $2.8 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 totaled $4 thousand and $7 thousand for the respective three months ended September 30, 2015 and 2014, and $16 thousand and $25 thousand for the respective nine months ended September 30, 2015 and 2014.

All of the remaining property on lease was acquired during the years 2005 through 2011.

As of September 30, 2015 and December 31, 2014, there were no lease contracts placed in non-accrual status. At December 31, 2014, the Company had certain leases that have related accounts receivable aged 90 days or

14

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

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

more that were not placed on non-accrual status. In accordance with Company policy, such receivables are fully reserved. Management continues to closely monitor these leases, and all other lease contracts, for any actual change in collectability status and indication of necessary valuation adjustments. As of September 30, 2015, the Company had no accounts receivable aged 90 days or more that have not been placed on non-accrual status.

Operating leases:

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

		Balance December 31, 2014				Additions				Reclassifications, Dispositions or Impairment Losses				Balance September 30, 2015
Transportation, rail		$	25,210			$	—			$	(1,031	)		$	24,179
Transportation, other			14,982				—				(709	)			14,273
Aircraft			3,026				—				—				3,026
Petro/natural gas			2,446				—				(345	)			2,101
Materials handling			3,440				—				(1,850	)			1,590
Construction			1,392				—				(39	)			1,353
Manufacturing			624				—				—				624
Agriculture			350				—				—				350
			51,470				—				(3,974	)			47,496
Less accumulated depreciation			(37,391	)			(1,567	)			3,017				(35,941	)
Total		$	14,079			$	(1,567	)		$	(957	)		$	11,555

The average estimated residual value for assets on operating leases was 23% of the assets’ original cost at both September 30, 2015 and December 31, 2014.

Direct financing leases:

As of September 30, 2015 and December 31, 2014, investment in direct financing leases generally consists of materials handling, mining, construction and agriculture 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		$	4,970			$	8,465
Estimated residual values of leased equipment (unguaranteed)			3,557				3,576
Investment in direct financing leases			8,527				12,041
Less unearned income			(1,485	)			(3,016	)
Net investment in direct financing leases		$	7,042			$	9,025

There were no direct financing leases placed in non-accrual status as of September 30, 2015 and December 31, 2014.

15

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

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

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

		Operating Leases				Direct Financing Leases				Total
Three months ending December 31, 2015		$	456			$	1,147			$	1,603
Year ending December 31, 2016			1,363				3,797				5,160
2017			1,035				26				1,061
2018			560				—				560
2019			306				—				306
2020			78				—				78
Thereafter			1				—				1
		$	3,799			$	4,970			$	8,769

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
Mining			30 – 40
Aircraft			20 – 30
Manufacturing			10 – 15
Petro/natural gas			10 – 15
Agriculture			7 – 10
Construction			7 – 10
Materials handling			7 – 10
Transportation, other			7 – 10

6. Related party transactions:

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

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

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

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

16

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

6. Related party transactions: - (continued)

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

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

		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Costs reimbursed to Managing Member and/or affiliates		$	173			$	205			$	584			$	802
Asset management fees to Managing Member and/or affiliates			76				118				332				369
		$	249			$	323			$	916			$	1,171

7. Non-recourse debt:

At September 30, 2015, non-recourse debt consists of notes payable to financial institutions. The notes are due in monthly installments. Interest on the notes is at fixed rates ranging from 1.97% to 6.66%. The notes are secured by assignments of lease payments and pledges of assets. At September 30, 2015, gross operating lease rentals and future payments on direct financing leases totaled approximately $5.5 million over the remaining lease terms; and the carrying value of the pledged assets is $8.1 million. The notes mature at various dates from 2015 through 2018.

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

17

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

7. Non-recourse debt: - (continued)

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

		Principal				Interest				Total
Three months ending December 31, 2015		$	1,138			$	80			$	1,218
Year ending December 31, 2016			3,984				142				4,126
2017			425				5				430
2018			83				—				83
		$	5,630			$	227			$	5,857

8. Commitments:

At September 30, 2015, there were no commitments to purchase lease assets or fund investments in notes receivable.

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:

Units issued and outstanding were 13,971,486 at both September 30, 2015 and December 31, 2014. The Company was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial Members (50 Units). The Company ceased offering Units on March 11, 2005.

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

As defined in the Operating Agreement, the Company’s Net Income, Net Losses, and Distributions, are to be allocated 92.5% to the Other Members and 7.5% to AFS.

18

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

10. Members’ capital: - (continued)

Distributions to the Other Members for the three and nine months ended September 30, 2015 and 2014 were as follows (in thousands except Units and per Unit data):

		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Distributions declared		$	—			$	—			$	2,096			$	5,589
Weighted average number of Units outstanding			13,971,486				13,971,486				13,971,486				13,971,486
Weighted average distributions per Unit		$	—			$	—			$	0.15			$	0.40

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 also recorded non-recurring adjustments to reflect the fair values of certain impaired lease assets during the first nine months of 2015, and those of impaired off-lease assets during 2014. Amounts at September 30, 2015 reflect the fair value of the then existing impaired assets. All assets impaired during 2014 had been disposed by December 31, 2014.

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.

19

ATEL CAPITAL EQUIPMENT FUND X, 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 lease and/or off-lease equipment

During the first nine months of 2015, the Company deemed certain off-contract month-to-month revenue generating petroleum/natural gas equipment to be impaired; and, recorded fair value adjustments of $345 thousand to reduce the cost basis of the equipment in order to reflect an appropriate residual value. Such fair value adjustments were all recorded during the first quarter. By comparison, the Company recorded fair value adjustments totaling $4 thousand relative to impaired off-lease equipment during the first nine months of 2014, none of which were recorded during the third quarter. The aforementioned adjustments were non-recurring. Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair values of such impaired equipment are classified within Level 3 of the valuation hierarchy as the data sources utilized for the valuation of the assets reflect significant inputs that are unobservable in the market. Such valuation utilizes a market approach technique and uses inputs that reflect the sales price of similar assets sold by affiliates and/or information from third party remarketing agents not readily available in the market.

As of December 31, 2014, the off-lease equipment impaired during 2014 were all disposed of. The table below presents the fair value measurement of assets measured at fair value on a non-recurring basis and the level within the hierarchy in which the fair value measurements fall at September 30, 2015 (in thousands):

		September 30, 2015				Level 1 Estimated Fair Value				Level 2 Estimated Fair Value				Level 3 Estimated Fair Value
Assets measured at fair value on a non-recurring basis:
Impaired lease equipment		$	100			$	—			$	—			$	100

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 September 30, 2015:

September 30, 2015
Name		Valuation Frequency		Valuation Technique		Unobservable Inputs		Range of Input Values
Lease Equipment		Non-recurring		Market Approach		Third Party Agents' Pricing  Quotes – per equipment		$100,000 (total of $100,000)
						Equipment Condition		Poor to Average

20

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

11. Fair value measurements: - (continued)

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

The Company has determined the estimated fair value amounts by using market information and valuation methodologies that it considers appropriate and consistent with the fair value accounting guidance. Considerable judgment is required to interpret market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and cash equivalents

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

Notes receivable

The fair value of the Company’s notes receivable is 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 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.

21

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

11. Fair value measurements: - (continued)

The following tables present a summary of the carrying value and fair value by level of financial instruments on the Company’s balance sheets 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		$	2,526			$	2,526			$	—			$	—			$	2,526
Notes receivable, net			225				—				—				225				225
Investment in securities			86				—				—				86				86
Financial liabilities:
Non-recourse debt			5,630				—				—				5,719				5,719

		Fair Value Measurements at December 31, 2014
		Carrying Value				Level 1				Level 2				Level 3				Total
Financial assets:
Cash and cash equivalents		$	4,647			$	4,647			$	—			$	—			$	4,647
Notes receivable, net			332				—				—				332				332
Investment in securities			85				—				—				85				85
Financial liabilities:
Non-recourse debt			9,000				—				—				9,196				9,196

22

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 defaults and the creditworthiness of its lessees. The Company’s performance is also subject to risks relating to the value of its equipment at the end of its leases, which may be affected by the condition of the equipment, technological obsolescence and the market for new and used equipment at the end of lease terms. Investors are cautioned not to attribute undue certainty to these forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, other than as required by law.

Overview

ATEL Capital Equipment Fund X, LLC (the “Company” or the “Fund”) is a California limited liability company that was formed in August 2002 for the purpose of engaging in the sale of limited liability company investment units and acquiring equipment to generate revenues from equipment leasing and sales activities, primarily in the United States. The Managing Member of the Company is ATEL Financial Services, LLC (“AFS”), a California limited liability company.

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. The offering was terminated in March 2005. During 2005, the Company completed its initial acquisition stage with the investment of the net proceeds from the public offering of Units. Subsequently, during the reinvestment period (“Reinvestment Period”) (defined as six full years following the year the offering was terminated), the Company has utilized its credit facilities and reinvested cash flow in excess of certain amounts required to be distributed to the Other Members to acquire additional equipment.

The Company may continue until December 31, 2022. 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, 2011. Periodic distributions will be 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 $1.5 million and $961 thousand for the three months ended September 30, 2015 and 2014, respectively. The 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 $228 thousand, or 9%, as compared to the prior year period. The net reduction in total revenues was primarily a result of decreases in operating lease revenues and direct financing lease revenues offset, in part, by increases in other revenue and gain on sales of lease assets and early termination of notes.

Operating lease revenues declined by $208 thousand primarily as a result of continued run-off and dispositions of lease assets; while direct financing lease revenues decreased by $163 thousand mainly due to run-off of the portfolio.

Partially offsetting the aforementioned decreases in revenues was a $98 thousand increase in other revenue and a $49 thousand increase in gain on sales of lease and early termination of notes. The growth in other revenue was primarily due to a one-time cash receipt from litigation; while the increase in gain on sales of lease assets and early termination of notes was attributable to a change in the mix of assets sold.

23

Expenses

Total operating expenses for the third quarter of 2015 decreased by $762 thousand, or 47%, as compared to the prior year period. The net decline in operating expenses was primarily due to decreases in depreciation expense, railcar maintenance costs, interest expense, asset management fees paid to AFS and costs reimbursed to AFS and/or affiliates.

The decrease in depreciation expense totaled $506 thousand and was primarily a result of run-off and dispositions of lease assets. Railcar maintenance costs declined by $82 thousand largely due to prior year period costs incurred in preparing certain railcars for re-leasing; and, interest expense decreased by $71 thousand as a result of a $4.6 million reduction in outstanding debt since September 30, 2014.

Moreover, asset management fees paid to AFS declined by $42 thousand due to the continued decrease in managed assets and related rents; while costs reimbursed to AFS and/or affiliates decreased by $32 thousand due to lower allocated costs resulting from the Fund’s continued liquidation.

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

The Company had net income of $3.8 million and $3.7 million for the nine months ended September 30, 2015 and 2014, respectively. The 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 decreased by $1.6 million, or 17%, as compared to the prior year period. The net reduction in total revenues was primarily a result of decreases in operating lease revenues, gain on sales of lease assets and early termination of notes, and direct financing lease revenues offset, in part, by an increase in other revenue.

Operating lease revenues declined by $642 thousand primarily as a result of continued run-off and dispositions of lease assets. Gain on sales of lease assets and early termination of notes decreased by $618 thousand largely due to the lower volume and change in the mix of assets sold; and, direct financing lease revenues decreased by $462 thousand mainly due to run-off of the portfolio.

Partially offsetting the aforementioned decreases in revenues was a $239 thousand increase in other revenue. The growth in other revenue was largely due to an increase in deferred maintenance fees charged for excess wear and tear on returned equipment as well as a one-time cash receipt from litigation.

Expenses

Total operating expenses for the first nine months of 2015 decreased by $1.7 million, or 31%, as compared to the prior year period. Such decline in operating expenses was primarily due to decreases in depreciation expense, railcar maintenance costs, cost reimbursements to AFS and interest expense offset, in part, by an increase in impairment losses on equipment and a lower amount of provision for credit losses reversed during the current year period.

The decrease in depreciation expense totaled $1.3 million and was primarily a result of run-off and dispositions of lease assets; while railcar maintenance costs declined by $287 thousand as additional costs were incurred during the prior year period in preparing certain railcars for re-leasing.

Moreover, cost reimbursements to AFS declined by $218 thousand largely due to lower costs allocated by the Manager based on the Company’s continued liquidation; and, interest expense decreased by $210 thousand as a result of a $4.6 million reduction in outstanding debt since September 30, 2014.

Partially offsetting the aforementioned decreases in expenses was a $341 thousand increase in impairment losses on equipment and a $69 thousand unfavorable change in the provision for credit losses resulting from a lesser amount of provision reversed due to collections during the current year period.

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The increase in impairment losses on equipment was largely attributable to off-contract month-to-month revenue generating petroleum/natural gas equipment deemed impaired. The fair value of such equipment was adjusted in order to reflect an appropriate residual value based on information and/or pricing quotes from third party remarketing agents. In addition, the lower amount provision reversed was primarily a result of a decline in collections of delinquent amounts previously reserved.

Capital Resources and Liquidity

At September 30, 2015 and December 31, 2014, the Company’s cash and cash equivalents totaled $2.5 million and $4.6 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 Other Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

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

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 September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Net cash provided by (used in):
Operating activities		$	1,383			$	1,552			$	4,412			$	4,509
Investing activities			1,060				1,196				3,257				5,946
Financing activities			(3,386	)			(7,291	)			(9,790	)			(15,831	)
Net decrease in cash and cash equivalents		$	(943	)		$	(4,543	)		$	(2,121	)		$	(5,376	)

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 $341 thousand and $508 thousand of proceeds from the sale or disposition of equipment and early termination of certain notes during the respective three months ended September 30, 2015 and 2014, and $74 thousand of proceeds from the disposition of certain investment in securities during the third quarter of 2014.

During the same comparative periods, cash was primarily used to pay distributions to both the Other Members and the Managing Member, and to pay down debt. Total distributions paid amounted to $2.3 million and $6.0 million for the respective third quarters of 2015 and 2014, while total debt repaid amounted to $1.1 million and $1.2 million, respectively. In addition, cash was also used to pay invoices related to management fees and expenses, and other payables.

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 $1.2 million and $4.0 million of proceeds from the sale or disposition of equipment and early termination of certain notes during the respective nine months ended September 30, 2015 and 2014, and $74 thousand of proceeds from the disposition of certain investment in securities during the first nine months of 2014.

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During the same comparative periods, cash was primarily used to pay distributions to both the Other Members and the Managing Member, and to pay down debt. Total distributions paid amounted to $6.4 million and $12.1 million for the first nine months of 2015 and 2014, respectively; while total debt repaid amounted to $3.4 million and $3.7 million, respectively. In addition, cash was also used 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 $5.6 million and $9.0 million, respectively. Such non-recourse notes payable do not contain any material financial covenants. The notes are secured by a specific 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 leased equipment; the related lease chattel paper; the lease receivables; and proceeds of the foregoing items.

The Operating Agreement limits aggregate borrowings to 50% of the total cost of equipment. For detailed information on the Company’s debt obligations, see Note 7 in Item 1. Financial Statements (Unaudited).

Distributions

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

Commitments and Contingencies and Off-Balance Sheet Transactions

Commitments and Contingencies

At September 30, 2015, there were no commitments to purchase lease assets or fund investments in notes receivable.

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 (“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

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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.

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. 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 inapplicable, and therefore have been omitted.

31.1		Certification of Dean L. Cash
31.2		Certification of Paritosh K. Choksi
32.1		Certification Pursuant to 18 U.S.C. section 1350 of Dean L. Cash
32.2		Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K. Choksi
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

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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 X, 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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