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 March 31, 2018

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
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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 April 30, 2018 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, March 31, 2018 and December 31, 2017			3
Statements of Income for the three months ended March 31, 2018 and 2017			4
Statements of Changes in Members’ Capital for the year ended December 31, 2017 and for the three months ended March 31, 2018			5
Statements of Cash Flows for the three months ended March 31, 2018 and 2017			6
Notes to the Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 4. Controls and Procedures			19
Part II. Other Information			20
Item 1. Legal Proceedings			20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			20
Item 3. Defaults Upon Senior Securities			20
Item 4. Mine Safety Disclosures			20
Item 5. Other Information			20
Item 6. Exhibits			20

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL CAPITAL EQUIPMENT FUND X, LLC
 
BALANCE SHEETS
 
MARCH 31, 2018 AND DECEMBER 31, 2017
(in thousands)

		March 31, 2018				December 31, 2017
		(Unaudited)
ASSETS
Cash and cash equivalents		$	790			$	4,035
Accounts receivable, net			228				156
Investment in securities			55				55
Investments in equipment and leases, net			6,637				6,875
Prepaid expenses and other assets			109				118
Total assets		$	7,819			$	11,239
LIABILITIES AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities:
Managing Member		$	23			$	11
Due to affiliates			52				38
Other			1,151				1,267
Deposits due lessees			6				6
Non-recourse debt			—				83
Unearned operating lease income			62				58
Total liabilities			1,294				1,463
Commitments and contingencies
Members’ capital:
Managing Member			—				—
Other Members			6,525				9,776
Total Members’ capital			6,525				9,776
Total liabilities and Members’ capital		$	7,819			$	11,239

See accompanying notes.

3

ATEL CAPITAL EQUIPMENT FUND X, LLC
 
STATEMENTS OF INCOME
 
FOR THE THREE MONTHS ENDED
MARCH 31, 2018 AND 2017
(in thousands, except for units and per unit data)
(Unaudited)

		Three Months Ended March 31,
		2018				2017
Revenues:
Leasing and lending activities:
Operating leases		$	638			$	633
Direct financing leases			—				7
Gain on sales of lease assets			144				218
Other			1				9
Total revenues			783				867
Expenses:
Depreciation of operating lease assets			190				277
Asset management fees to Managing Member and/or affiliates			28				28
Costs reimbursed to Managing Member and/or affiliates			149				150
Amortization of initial direct costs			1				—
Other management fees			5				7
Interest expense			—				2
Railcar maintenance			22				37
(Reversal of) provision for credit losses			(5	)			3
Professional fees			69				66
Franchise fees and taxes			(68	)			40
Outside services			44				38
Insurance			10				10
Printing and photocopying			6				9
Storage fees			16				18
Other			18				29
Total operating expenses			485				714
Net income		$	298			$	153
Net income (loss):
Managing Member		$	266			$	283
Other Members			32				(130	)
		$	298			$	153
Net loss per Limited Liability Company Unit (Other Members)		$	—			$	(0.01	)
Weighted average number of Units outstanding			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, 2017
AND FOR THE THREE MONTHS ENDED MARCH 31, 2018
(in thousands, except for units and per unit data)

						Amount
		Units				Other Members				Managing Member				Total
Balance December 31, 2016			13,971,486			$	15,792			$	—			$	15,792
Distributions to Other Members ($0.45 per Unit)			—				(6,287	)			—				(6,287	)
Distributions to Managing Member			—				—				(510	)			(510	)
Net income			—				271				510				781
Balance December 31, 2017			13,971,486				9,776				—				9,776
Distributions to Other Members ($0.23 per Unit)			—				(3,283	)			—				(3,283	)
Distributions to Managing Member			—				—				(266	)			(266	)
Net income			—				32				266				298
Balance March 31, 2018 (unaudited)			13,971,486			$	6,525			$	—			$	6,525

See accompanying notes.

5

ATEL CAPITAL EQUIPMENT FUND X, LLC
 
STATEMENTS OF CASH FLOWS
 
FOR THE THREE MONTHS ENDED
MARCH 31, 2018 AND 2017
(in thousands)
(Unaudited)

		Three Months Ended March 31,
		2018				2017
Operating activities:
Net income		$	298			$	153
Adjustments to reconcile net income to cash provided by operating activities:
Gain on sales of lease assets			(144	)			(218	)
Depreciation of operating lease assets			190				277
Amortization of initial direct costs			1				—
(Reversal of) provision for credit losses			(5	)			3
Changes in operating assets and liabilities:
Accounts receivable			(67	)			63
Prepaid expenses and other assets			9				10
Accounts payable, Managing Member and affiliates			26				62
Accounts payable, other			(116	)			(87	)
Unearned operating lease income			4				31
Net cash provided by operating activities			196				294
Investing activities:
Proceeds from sales of lease assets			191				596
Principal payments received on direct financing leases			—				7
Net cash provided by investing activities			191				603
Financing activities:
Repayments under non-recourse debt			(83	)			(61	)
Distributions to Other Members			(3,283	)			(3,493	)
Distributions to Managing Member			(266	)			(283	)
Net cash used in financing activities			(3,632	)			(3,837	)
Net decrease in cash and cash equivalents			(3,245	)			(2,940	)
Cash and cash equivalents at beginning of period			4,035				8,680
Cash and cash equivalents at end of period		$	790			$	5,740
Supplemental disclosures of cash flow information:
Cash paid during the period for interest		$	—			$	2
Cash paid during the period for taxes		$	4			$	56

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.

As of March 11, 2005, subscriptions for 14,059,136 Units ($140.6 million) had been received, of which 87,650 Units ($720 thousand) were subsequently rescinded or repurchased (net of distributions paid and allocated syndication costs, as applicable) by the Company through March 31, 2018. As of March 31, 2018, 13,971,486 Units remain issued and outstanding.

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 5). The Company is required to maintain reasonable cash reserves for working capital, for the repurchase of Units and for 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, 2017, 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 months ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year.

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 March 31, 2018, 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 determination of the allowances for doubtful accounts and notes receivable.

7

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

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

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 region in which the Company sought leasing opportunities was North America. The table below summarizes geographic information relating to the sources, by nation, of the Company’s total revenues for the three months ended March 31, 2018 and 2017, and long-lived tangible assets as of March 31, 2018 and December 31, 2017 (dollars in thousands):

		Three Months Ended March 31,
		2018				% of Total				2017				% of Total
Revenue
United States		$	764				98	%		$	856				99	%
Canada			19				2	%			11				1	%
Total		$	783				100	%		$	867				100	%

		As of March 31,								As of December 31,
		2018				% of Total				2017				% of Total
Long-lived assets
United States		$	6,546				99	%		$	6,784				99	%
Canada			91				1	%			91				1	%
Total		$	6,637				100	%		$	6,875				100	%

Investment in securities:

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

Purchased securities

Purchased securities are generally not registered for public sale and are carried at fair value. Such securities with readily determinable fair values are measured at fair value with any changes in fair value recognized in the Company's results of operations. The Company's investment securities that do not have readily determinable fair values are measured at cost minus impairment, and adjusted for changes in observable prices. 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 was deemed nominal for the three months ended March 31, 2018, and no fair value adjustment was recorded for the three months ended March 31, 2017. There were no investment securities sold or disposed of during the three months ended March 31, 2018 and 2017.

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. The fair value of the warrants were nominal at March 31, 2018 and December 31, 2017. There were no unrealized gains or losses during the three months ended March 31, 2018 and 2017. There were no exercises of warrants, net or otherwise, during the three months ended March 31, 2018 and 2017.

8

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

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

Per Unit data:

The Company issues only one class of Units, none of which are considered dilutive. Net income and distributions per Unit are based upon the weighted average number of Other Members’ Units outstanding during the period.

Fair value:

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.

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.

Recent accounting pronouncements:

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-15 — Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 addresses specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this Update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. This guidance is effective for the Company beginning on January 1, 2018. The adoption of ASU 2016-15 did not have a material impact on its financial statements and disclosures.

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016-13”). The main objective of this Update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments affect entities holding financial

9

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

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

assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018. Management is currently evaluating the standard and expects the Update may potentially result in an increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) (“ASU 2016-02”). The new standard will require lessees to recognize lease assets and lease liabilities arising from operating leases with lease terms greater than 12 months in the statement of financial position. Lessor accounting per ASU 2016-02 is mostly unchanged from the previous lease accounting under GAAP. Certain changes were made to the lessor accounting guidance in order to align the lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. Similar to the previous guidance, lessors will classify leases as operating, direct financing, or sales-type. Lessors in operating leases will continue to recognize the underlying asset and recognize income on a straight-line basis. Lessors determine whether a lease is a sale of the underlying asset based on whether the lessee effectively obtains control of the underlying assets. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. While early adoption is permitted, the Company does not expect to elect that option. The Company expects to adopt the guidance in the first quarter 2019 using the modified retrospective method. Management is currently evaluating the impact of this standard on the financial statements and its operational and related disclosure requirements, including the impact on the Company’s current lease portfolio from a lessor perspective. Given the limited changes to lessor accounting, Management does not expect material changes to recognition or measurement, but the Company is early in the implementation process and will continue to evaluate the impact.

In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The new standard provides guidance related to accounting for equity investments and financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, and (v) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance is effective for the Company beginning on January 1, 2018. The adoption of ASU 2016-01 did have an impact on its financial statements and disclosures. The Company’s investment securities registered for public sale with readily determinable fair values are measured at fair value with any changes in fair value recognized in the Company's results of operations. These investments are valued based on their quoted market prices. The Company elected to record equity investments without readily determinable fair values at cost, less impairment, and adjusted for changes in observable prices. Any changes in the basis of these equity investments are reported in current earnings.

10

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

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

In May 2014, the FASB issued Accounting Standards Update 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 with 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. This guidance is effective for the Company beginning on January 1, 2018. Management’s evaluation of the impact of such adoption on the financial statements of the Company indicated that such impact was immaterial as the new revenue guideline does not affect revenues from leases and loans, which comprise the majority of the Company’s revenues since leases are not included within the scope of Topic 825.

3. Allowance for credit losses:

The Company’s allowance for credit losses totaled $12 thousand and $16 thousand at March 31, 2018 and December 31, 2017, respectively. All of such allowance were related to delinquent operating lease receivables.

4. Investment in equipment and leases, net:

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

		Balance December 31, 2017				Reclassifications, Additions/ Dispositions				Depreciation/ Amortization Expense or Amortization of Leases				Balance March 31, 2018
Net investment in operating leases		$	4,372			$	(52	)		$	(190	)		$	4,130
Assets held for sale or lease, net			2,494				5				—				2,499
Initial direct costs, net of accumulated amortization of $4 at March 31, 2018 and $5 at December 31, 2017			9				—				(1	)			8
Total		$	6,875			$	(47	)		$	(191	)		$	6,637

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, if any. 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

11

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

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

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 months ended March 31, 2018 and 2017.

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 $190 thousand and $277 thousand for the respective three months ended March 31, 2018 and 2017. Initial direct costs amortization expense related to the Company’s operating leases totaled $1 thousand and $0 for the three months ended March 31, 2018 and 2017, respectively.

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

Operating leases:

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

		Balance December 31, 2017				Additions				Reclassifications or Dispositions				Balance March 31, 2018
Transportation, rail		$	13,719			$	—			$	(618	)		$	13,101
Transportation, other			3,491				—				(72	)			3,419
Aircraft			1,988				—				—				1,988
Construction			799				—				—				799
Manufacturing			624				—				—				624
Petro/natural gas			470				—				—				470
Materials handling			402				—				—				402
			21,493				—				(690	)			20,803
Less accumulated depreciation			(17,121	)			(190	)			638				(16,673	)
Total		$	4,372			$	(190	)		$	(52	)		$	4,130

The average estimated residual value for assets on operating leases was 23% of the assets’ original cost at March 31, 2018 and December 31, 2017. There were no operating leases placed in non-accrual status as of the same dates.

At March 31, 2018, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):

		Operating Leases
Nine months ending December 31, 2018		$	931
Twelve months ending December 31, 2019			565
2020			284
2021			74
2022			25
		$	1,879

12

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

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

The useful lives for each category of leases is reviewed at a minimum of once per quarter. As of March 31, 2018, 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
Aircraft			20 – 30
Manufacturing			10 – 15
Petro/natural gas			10 – 15
Construction			7 – 10
Materials handling			7 – 10
Transportation, other			7 – 10

5. 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.

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 March 31, 2018, the Company has not exceeded the annual and/or cumulative limitations discussed above.

During the three months ended March 31, 2018 and 2017, 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 March 31,
		2018				2017
Costs reimbursed to Managing Member and/or affiliates		$	149			$	150
Asset management fees to Managing Member and/or affiliates			28				28
		$	177			$	178

13

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

6. Non-recourse debt:

At March 31, 2018, all of the Company’s outstanding non-recourse debt had been fully paid. At December 31, 2017, non-recourse debt consisted of a note payable to a financial institution, maturing in 2018. The note was due in monthly installments. Interest on the note was at a fixed rate of 1.97%. The note was secured by assignments of lease payments and pledges of assets. As of December 31, 2017, gross operating lease rentals totaled approximately $83 thousand over the remaining lease terms; and the carrying value of the pledged assets was $417 thousand.

The non-recourse debt did not contain any material financial covenants. The debt was secured by a specific lien granted by the Company to the non-recourse lenders on (and only on) the discounted lease transactions. The lenders had 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 was payable solely out of the respective specific security and the Company did not guarantee (nor was 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 did not have any direct or general liability in connection with the non-recourse debt apart from the security granted, the Company was 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 were viewed by such industry as being consistent with non-recourse discount financing obligations. Accordingly, as there were no financial covenants or ratios imposed on the Company in connection with the non-recourse debt, the Company had determined that there were no material covenants with respect to the non-recourse debt that warrant footnote disclosure.

7. Commitments:

At March 31, 2018, there were no commitments to purchase lease assets or fund investments in notes receivable.

8. Members’ capital:

Units issued and outstanding were 13,971,486 at both March 31, 2018 and December 31, 2017. 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.

Distributions to the Other Members for the three months ended March 31, 2018 and 2017 were as follows (in thousands except Units and per Unit data):

		Three Months Ended March 31,
		2018				2017
Distributions declared		$	3,283			$	3,493
Weighted average number of Units outstanding			13,971,486				13,971,486
Weighted average distributions per Unit		$	0.23			$	0.25

14

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

9. Fair value measurements:

Under applicable accounting standards, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

At March 31, 2018, the Company’s warrants and investment securities were measured on a recurring basis.

At December 31, 2017, only the Company’s warrants were measured on a recurring basis.

The fair value measurement methodologies are as follows:

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 March 31, 2018 and December 31, 2017, the calculated fair values of the Fund’s warrant portfolio were deemed nominal.

Investment in securities (recurring)

The Company’s investment in securities registered for public sale that have readily determinable fair values are measured at fair value with any changes in fair value recognized in the Company's results of operations. The Company’s investments in publicly traded investment securities are valued based on their quoted market prices. At March 31, 2018, the calculated fair value of these investments in securities were deemed nominal.

Impaired lease and/or off-lease equipment (non-recurring)

During the three months ended March 31, 2018 and 2017, the Company determined there were no impairment adjustments to lease equipment. When the Company deems certain lease equipment (assets) to be impaired, the Company will record a fair value adjustment to reduce the cost basis of the equipment.

When fair value adjustments are implemented, they are on a non-recurring basis. Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of impaired lease assets were classified within Level 3 of the valuation hierarchy as the data sources utilized for the valuation of such assets reflect significant inputs that are unobservable in the market. Such valuation utilizes a market approach technique and uses inputs that reflect the sales price of similar assets sold by affiliates and/or information from third party remarketing agents not readily available in the market.

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.

15

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

9. Fair value measurements: - (continued)

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.

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 March 31, 2018 and December 31, 2017 (in thousands):

		Fair Value Measurements at March 31, 2018
		Carrying Value				Level 1				Level 2				Level 3				Total
Financial assets:
Cash and cash equivalents		$	790			$	790			$	—			$	—			$	790

		Fair Value Measurements at December 31, 2017
		Carrying Value				Level 1				Level 2				Level 3				Total
Financial assets:
Cash and cash equivalents		$	4,035			$	4,035			$	—			$	—			$	4,035
Investment in securities			55				—				—				55			$	55
Financial liabilities:
Non-recourse debt			83				—				—				83			$	83

16

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 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 March 31, 2018 versus the three months ended March 31, 2017

The Company had a net income of $298 thousand and $153 thousand for the three months ended March 31, 2018 and 2017, respectively. The net results for the first quarter of 2018 reflect decreases in both total revenues and total operating expenses when compared to the prior year period.

Revenues

Total revenues for the three months ended March 31, 2018 decreased by $84 thousand or 10%, as compared to the prior year period. Such decrease was largely due to a $74 thousand, or 34%, decrease in gain on sales of lease assets the result of a change in the mix of assets sold; and a $7 thousand, or 100%, reduction in revenues from direct financing leases, largely due to run-off of the portfolio, as well as the sale of certain lease assets.

Expenses

Total expenses for the three months ended March 31, 2018 decreased by $229 thousand or 32%, as compared to the prior year period. Such decrease was mainly attributed to a $108 thousand, or 270%, reduction in franchise fees and taxes, primarily due to a decrease in estimated tax liability in the current period; an $87 thousand, or 31%, decrease in depreciation expense, the result of portfolio run-off and sales of leases assets; and a $15 thousand, or 41%, decrease in railcar maintenance expense, a result of portfolio run-off and change in the mix of assets sold. Partially offsetting these, and other reductions in expense, was a $6 thousand, or 16%, increase in outside services, indicative of additional efforts required to comply with certain regulatory requirements.

17

Capital Resources and Liquidity

At March 31, 2018 and December 31, 2017, the Company’s cash and cash equivalents totaled $790 thousand and $4.0 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 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 March 31,
		2018				2017
Net cash provided by (used in):
Operating activities		$	196			$	294
Investing activities			191				603
Financing activities			(3,632	)			(3,837	)
Net decrease in cash and cash equivalents		$	(3,245	)		$	(2,940	)

The three months ended March 31, 2018 versus the three months ended March 31, 2017

During the three months ended March 31, 2018 and 2017, the Company’s primary sources of liquidity were cash flows from its portfolio of operating and direct financing lease contracts. In addition, the Company realized $191 thousand and $596 thousand of proceeds from sales or dispositions of equipment during the respective three months ended March 31, 2018 and 2017.

The primary uses of cash during the same comparative periods were to pay distributions to both the Other Members and the Managing Member, and to pay down debt. Total distributions paid to Members totaled $3.5 million and $3.8 million for the three months ended March 31, 2018 and 2017, respectively, while total debt repaid amounted to $83 thousand and $61 thousand for the same respective periods. In addition, cash was also used to pay invoices related to management fees and expenses, and other payables.

Distributions

Beginning with the month of April 2003, the Company commenced periodic distributions based on cash flows from operations. 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 March 31, 2018, there were no commitments to purchase lease assets or fund investments in notes receivable.

Off-Balance Sheet Transactions

None.

18

Recent Accounting Pronouncements

For detailed information on recent accounting pronouncements, see Note 2, Summary of significant accounting policies.

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, 2017. There have been no material changes to the Company’s critical accounting policies since December 31, 2017.

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 March 31, 2018 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.

19

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

20

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: May 14, 2018

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 Senior Vice President and Chief Accounting Officer of ATEL Financial Services, LLC (Managing Member)

21