Atel Capital Equipment Fund Ix (ZZHJC) 10-Q 2010 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended March 31, 2010

¨ 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 000-50210

ATEL Capital Equipment Fund IX, LLC

(Exact name of registrant as specified in its charter)

California	94-3375584
(State or other jurisdiction of Incorporation or organization)	(I. R. S. Employer Identification No.)

600 California Street, 6th Floor, San Francisco, California 94108-2733

(Address of principal executive offices)

Registrant’s telephone number, including area code (415) 989-8800

Securities registered pursuant to section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act: Limited Liability Company Units

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

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  ¨    No  ¨

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  ¨ Accelerated filer  ¨ Non-accelerated filer  ¨ 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  ¨    No  x

The number of Limited Liability Company Units outstanding as of April 30, 2010 was 12,055,016.

DOCUMENTS INCORPORATED BY REFERENCE

None.

ATEL CAPITAL EQUIPMENT FUND IX, LLC

Index

Part I.	Financial Information	3
Item 1.	Financial Statements (Unaudited)	3
	Balance Sheets, March 31, 2010 and December 31, 2009	3
	Statements of Income for the three months ended March 31, 2010 and 2009	4
	Statements of Changes in Members’ Capital for the year ended December 31, 2009 and for the three months ended March 31, 2010	5
	Statements of Cash Flows for the three months ended March 31, 2010 and 2009	6
	Notes to the Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 4T.	Controls and Procedures	24
Part II.	Other Information	25
Item 1.	Legal Proceedings	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	[Reserved]	25
Item 5.	Other Information	25
Item 6.	Exhibits	25

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

ATEL CAPITAL EQUIPMENT FUND IX, LLC

BALANCE SHEETS

MARCH 31, 2010 AND DECEMBER 31, 2009

(in thousands)

(Unaudited)

	March 31, 2010		December 31, 2009
ASSETS
Cash and cash equivalents	$	4,934	$	10,189
Accounts receivable, net of allowance for doubtful accounts of $236 at March 31, 2010 and $275 at December 31, 2009		1,313		814
Notes receivable, net of unearned interest income of $576 at March 31, 2010 and $653 at December 31, 2009		2,477		2,628
Prepaid expenses and other assets		39		46
Investment in securities, at cost		70		70
Investments in equipment and leases, net of accumulated depreciation of $44,574 at March 31, 2010 and $45,823 at December 31, 2009		43,513		45,466
Total assets	$	52,346	$	59,213
LIABILITIES AND MEMBERS’ CAPITAL
Accounts payable and accrued liabilities:
Managing Member	$	81	$	325
Due to affiliates		—		3,595
Accrued distributions to Other Members		—		1,209
Other		1,302		1,340
Deposits due lessees		90		90
Non-recourse debt		27,891		28,663
Interest rate swap contracts		33		53
Receivables funding program obligation		1,858		2,405
Unearned operating lease income		780		585
Total liabilities		32,035		38,265
Commitments and contingencies
Members’ capital:
Managing Member		—		—
Other Members		20,311		20,948
Total Members’ capital		20,311		20,948
Total liabilities and Members’ capital	$	52,346	$	59,213

See accompanying notes.

3

ATEL CAPITAL EQUIPMENT FUND IX, LLC

STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED

MARCH 31, 2010 AND 2009

(in thousands, except per unit data)

(Unaudited)

	Three months ended March 31,
	2010			2009
Revenues:
Leasing activities:
Operating leases	$	2,594		$	3,728
Direct financing leases		1,269			362
Interest on notes receivable		69			88
Gain on sales of assets		3			287
Other revenue		12			10
Total revenues		3,947			4,475
Expenses:
Depreciation of operating lease assets		1,695			2,468
Asset management fees to Managing Member		210			258
Acquisition expense		21			—
Cost reimbursements to Managing Member		171			159
Reversal of provision for credit losses		(38	)		(23	)
Impairment losses		58			—
Amortization of initial direct costs		29			41
Interest expense		490			232
Professional fees		83			99
Outside services		21			18
Insurance		34			36
Marine vessel maintenance and other operating costs		177			165
Other		57			112
Total operating expenses		3,008			3,565
Other income, net		53			5
	��
Net income	$	992		$	915
Net income:
Managing Member	$	122		$	220
Other Members		870			695
	$	992		$	915
Net income per Limited Liability Company Unit (Other Members)	$	0.07		$	0.06
Weighted average number of Units outstanding		12,055,016			12,055,016

See accompanying notes.

4

ATEL CAPITAL EQUIPMENT FUND IX, LLC

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2009

AND FOR THE

THREE MONTHS ENDED

MARCH 31, 2010

(in thousands, except per unit data)

(Unaudited)

	Other Members				Managing
	Units	Amount			Member			Total
Balance December 31, 2008	12,055,016	$	30,060		$	—		$	30,060
Distributions to Other Members ($0.90 per Unit)	—		(10,849	)		—			(10,849	)
Distributions to Managing Member	—		—			(880	)		(880	)
Net income	—		1,737			880			2,617
Balance December 31, 2009	12,055,016		20,948			—			20,948
Distributions to Other Members ($0.13 per Unit)	—		(1,507	)		—			(1,507	)
Distributions to Managing Member	—		—			(122	)		(122	)
Net income	—		870			122			992
Balance March 31, 2010	12,055,016	$	20,311		$	—		$	20,311

See accompanying notes.

5

ATEL CAPITAL EQUIPMENT FUND IX, LLC

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED

MARCH 31, 2010 AND 2009

(in thousands)

(Unaudited)

	Three months ended March 31,
	2010			2009
Operating activities:
Net income	$	992		$	915
Adjustment to reconcile net income to cash provided by operating activities:
Gain on sales of lease assets		(3	)		(287	)
Depreciation of operating lease assets		1,695			2,468
Amortization of initial direct costs		29			41
Amortization of unearned income on direct finance leases		(1,269	)		(362	)
Amortization of unearned income on notes receivable		(69	)		(88	)
Reversal of provision for credit losses		(38	)		(23	)
Impairment losses		58			—
Gain on interest rate swap contracts		(20	)		(58	)
Changes in operating assets and liabilities:
Due to affiliates		79			1
Accounts receivable		(461	)		137
Prepaid and other assets		7			8
Accounts payable, Managing Member		(147	)		58
Accounts payable, other		(38	)		566
Unearned operating lease income		158			342
Net cash provided by operating activities		973			3,718
Investing activities:
Purchases and improvements to operating leases		(874	)		(364	)
Proceeds from sales of lease assets		460			734
Payments of initial direct costs		9			—
Payments received on direct finance leases		1,881			1,085
Payments received on notes receivable		224			210
Net cash provided by investing activities		1,700			1,665
Financing activities:
Borrowings under acquisition facility		—			1,000
Repayments under acquisition facility		—			(1,500	)
Repayments under receivables funding program		(547	)		(1,143	)
Repayments of non-recourse debt		(772	)		(165	)
Repayments of amount due to affiliates		(3,674	)		—
Distributions to Other Members		(2,715	)		(2,712	)
Distributions to Managing Member		(220	)		(220	)
Net cash used in financing activities		(7,928	)		(4,740	)
Net (decrease) increase in cash and cash equivalents		(5,255	)		643
Cash and cash equivalents at beginning of period		10,189			2,142
Cash and cash equivalents at end of period	$	4,934		$	2,785
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	434		$	235
Schedule of non-cash transactions:
Distributions payable to Other Members at period-end	$	—		$	1,209

See accompanying notes.

6

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

1. Organization and Limited Liability Company matters:

ATEL Capital Equipment Fund IX, LLC (the “Company”) was formed under the laws of the State of California on September 27, 2000 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 of the Company is ATEL Financial Services, LLC (“AFS”), a California limited liability company. The Company may continue until December 31, 2020. Contributions in the amount of $600 were received as of December 31, 2000, $100 of which represented AFS’s continuing interest, and $500 of which represented the Initial Member’s capital investment.

The Company conducted a public offering of 15,000,000 Limited Liability Company Units (“Units”), at a price of $10 per Unit. On February 21, 2001, 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 April 3, 2001, the Company had received subscriptions for 753,050 Units ($7.5 million), thus exceeding the $7.5 million minimum requirement for Pennsylvania, and AFS requested that the remaining funds in escrow (from Pennsylvania investors) be released to the Company.

As of January 15, 2003, the offering was terminated. As of that date, the Company had received subscriptions for 12,065,266 Units ($120.7 million). Subsequent to January 15, 2003, units totaling 10,250 were rescinded or repurchased and funds returned to investors. As of March 31, 2010, 12,055,016 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, 2009 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, 2010, 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 (Note 5). The Company is required to maintain reasonable cash reserves for working capital, the repurchase of Units and contingencies. The repurchase of Units is solely at the discretion of AFS.

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, 2009, 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. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions in the financial statements and accompanying notes. Therefore, actual results could differ from those estimates. Operating results for the three months ended March 31, 2010 are not necessarily indicative of the results to be expected for the full year.

7

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued):

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on equity or net income.

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, 2010, up until the issuance of the financial statements. No events were noted which would require disclosure in the footnotes to the financial statements.

Use of estimates:

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

Segment reporting:

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

The Company’s principal decision makers are the Managing Member’s Chief Executive Officer and its Chief Financial Officer and Chief Operating Officer. The Company believes that its equipment leasing business operates as one reportable segment because: a) the Company measures profit and loss at the equipment portfolio level as a whole; b) the principal decision makers do not review information based on any operating segment other than the equipment leasing transaction portfolio; c) the Company does not maintain discrete financial information on any specific segment other than its equipment financing operations; d) the Company has not chosen to organize its business around different products and services other than equipment lease financing; and e) the Company has not chosen to organize its business around geographic areas.

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 three months ended March 31, 2010 and 2009 and long-lived tangible assets as of March 31, 2010 and December 31, 2009 (in thousands):

	For the three months ended March 31,
	2010		% of Total		2009		% of Total
Revenue
United States	$	3,651	93	%	$	4,088	91	%
United Kingdom		187	4	%		338	8	%
Canada		109	3	%		49	1	%
Total International		296	7	%		387	9	%
Total	$	3,947	100	%	$	4,475	100	%

8

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued):

	As of March 31,				As of December 31,
	2010		% of Total		2009		% of Total
Long-lived assets
United States	$	40,874	94	%	$	42,552	94	%
United Kingdom		1,365	3	%		1,532	3	%
Canada		1,274	3	%		1,382	3	%
Total International		2,639	6	%		2,914	6	%
Total	$	43,513	100	%	$	45,466	100	%

Investment in securities

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

Purchased securities

Purchased securities are generally not registered for public sale and are carried at cost. Such securities are adjusted to fair value if the fair value is less than the carrying value and such impairment is deemed by the Managing Member to be other than temporary. Factors considered by the Managing Member in determining fair value include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital. Management has concluded that there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the instruments and that it is not practicable to estimate the fair value of the investment because of its illiquidity. Accordingly, such investment is stated at cost at March 31, 2010 and December 31, 2009.

Warrants

Warrants owned by the Company are not registered for public sale, but are considered derivatives and are carried at an estimated fair value on the balance sheet at the end of the period, as determined by the Managing Member. At March 31, 2010 and December 31, 2009, the Managing Member estimated the fair value of the warrants to be nominal in amount.

Other income, net:

Other income, net consists of gains and losses on interest rate swap contracts, and gains and losses on foreign exchange transactions. The table below details the Company’s other income, net for the three months ended March 31, 2010 and 2009 (in thousands):

	Three Months Ended March  31,
	2010		2009
Foreign currency gain (loss)	$	33	$	(53	)
Change in fair value of interest rate swap contracts		20		58
	$	53	$	5

Per Unit data:

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

9

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued):

Recent accounting pronouncements:

In February 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-09 “Subsequent Events—Amendments to Certain Recognition and Disclosure Requirements” (“ASU 2010-09”),which amends FASB ASC Topic 855, Subsequent Events, so that SEC filers no longer are required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. ASU No. 2010-09 was effective immediately and was adopted by the Company for its yearend 2009 reporting period with no impact on its financial position, results of operations or cash flows.

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosure about Fair Value Measurement” (“ASU 2010-06”). ASU 2010-06 requires additional disclosures related to recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair-value measurements, and information on purchases, sales, issuances, and settlements in a rollforward reconciliation of Level 3 fair-value measurements. Except for the Level 3 reconciliation disclosures, which will be effective for fiscal years beginning after December 15, 2010, the guidance became effective for the Company beginning January 1, 2010 and was adopted during the first quarter of 2010 with no impact on the Company’s financial position, results of operations or cash flows.

3. Notes receivable, net:

The Company has various notes receivable from borrowers who have financed the purchase of equipment through the Company. At March 31, 2010, the original terms of the notes receivable are 36 to 120 months and bear interest rates ranging from 9% to 16%. The notes are secured by the equipment financed. The notes mature from 2013 through 2016. There were neither impaired notes nor notes placed in non-accrual status as of March 31, 2010 and December 31, 2009.

As of March 31, 2010, the minimum future payments receivable are as follows (in thousands):

Nine months ending December 31, 2010	$	596
Year ending December 31, 2011		795
2012		761
2013		320
2014		221
2015		166
Thereafter		187
		3,046
Less: portion representing unearned interest income		(576	)
		2,470
Unamortized indirect costs		7
Notes receivable, net	$	2,477

Initial direct costs (“IDC”) amortization expense related to the notes receivable and the Company’s operating and direct financing leases for the three months ended March 31, 2010 and 2009 are as follows (in thousands):

	Three Months ended March 31,
	2010		2009
IDC amortization - notes receivable	$	1	$	1
IDC amortization - lease assets		28		40
Total	$	29	$	41

10

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

4. Investment in equipment and leases, net:

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

	Balance December 31, 2009		Reclassifications, Additions / Dispositions and Impairment Losses			Depreciation/ Amortization Expense or Amortization of Leases			Balance March 31, 2010
Net investment in operating leases	$	25,997	$	(885	)	$	(1,677	)	$	23,435
Net investment in direct financing leases		18,444		(10	)		(611	)		17,823
Assets held for sale or lease, net		862		1,290			(18	)		2,134
Initial direct costs, net of accumulated amortization of $236 at March 31, 2010 and $467 at December 31, 2009		163		(14	)		(28	)		121
Total	$	45,466	$	381		$	(2,334	)	$	43,513

IDC amortization expense related to operating leases and direct financing leases totaled $28 thousand and $40 thousand for the respective three-month periods ended March 31, 2010 and 2009.

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

Management periodically reviews the carrying values of its assets on leases and assets held for lease or sale. Impairment losses are recorded as an adjustment to the net investment in operating leases. During the three months ended March 31, 2010, the Company deemed certain off-lease assets to be impaired and, accordingly, the Company recorded an adjustment of $58 thousand to the cost basis of such assets. No impairment losses were recorded for the three months ended March 31, 2009.

Depreciation expense on property subject to operating leases and held for lease or sale totaled $1.7 million and $2.5 million for the three months ended March 31, 2010 and 2009, respectively.

All of the leased property was acquired in years beginning with 2002 through 2010.

On April 30, 2009, a major lessee, Chrysler Corporation filed for bankruptcy protection under Chapter 11. Under a pre-package agreement, a new company was formed to purchase the assets of old Chrysler – its plants, brands, land, equipment, as well as its contracts with the union, dealers and suppliers – from the bankruptcy court. Under this agreement, the Company had its leases with the old, bankrupt Chrysler assumed by the new Chrysler, Chrysler Group, LLC, which is 35% owned by Fiat. The new Chrysler has remitted payments relative to the affirmed leases. However, at March 31, 2010, payments on certain operating leases still remained delinquent. The Company, in accordance with its accounting policy for delinquent operating leases, has reversed the billed but not yet paid amounts, and placed these respective operating leases on a non-accrual and cash bases pending resumption of recurring payment activity. The Company also considered the equipment underlying the lease contracts for impairment and believes that such equipment is not impaired as of March 31, 2010.

At March 31, 2010, net investment in equipment underlying all lease contracts placed on a cash basis approximated $473 thousand, all of which were related to Chrysler. The related accounts receivable from such contracts approximated $40 thousand. At December 31, 2009, such investment totaled $557 thousand with a related accounts receivable of approximately $251 thousand.

11

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

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

Operating leases:

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

	Balance December 31, 2009			Additions			Reclassifications or Dispositions			Balance March  31, 2010
Transportation, other	$	18,161		$	—		$	(1,359	)	$	16,802
Transportation, rail		13,300			—			—			13,300
Materials handling		12,234			90			(799	)		11,525
Manufacturing		6,824			—			(270	)		6,554
Marine vessels		10,116			—			(4,900	)		5,216
Construction		1,076			700			268			2,044
Natural gas compressors		1,671			—			—			1,671
Office furniture		560			—			(63	)		497
Other		—			84			—			84
		63,942			874			(7,123	)		57,693
Less accumulated depreciation		(37,945	)		(1,677	)		5,364			(34,258	)
Total	$	25,997		$	(803	)	$	(1,759	)	$	23,435

The average estimated residual value for assets on operating leases was 21% and 23% of the assets’ original cost at March 31, 2010 and December 31, 2009, respectively. Operating leases in non-accrual status totaled $448 thousand and $509 thousand at March 31, 2010 and December 31, 2009, respectively.

The Company earns revenues from its marine vessel based on utilization of the vessel. Such contingent rentals (i.e., short-term, operating charter hire payments) and the associated expenses are recorded when earned and/or incurred. The revenues associated with these rentals are included as a component of Operating Lease Revenues. There were no revenues from contingent rentals during the three months ended March 31, 2010. During the prior year period, such revenues totaled $37 thousand.

Direct financing leases:

As of March 31, 2010, investment in direct financing leases consists of mining, materials handling equipment and office furniture. The following lists the components of the Company’s investment in direct financing leases as of March 31, 2010 and December 31, 2009 (in thousands):

	March 31, 2010			December 31, 2009
Total minimum lease payments receivable	$	33,350		$	35,093
Estimated residual values of leased equipment (unguaranteed)		3,799			3,864
Investment in direct financing leases		37,149			38,957
Less unearned income		(19,326	)		(20,513	)
Net investment in direct financing leases	$	17,823		$	18,444
Net investment in direct financing leases placed in non-accrual status	$	25		$	48

12

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

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

At March 31, 2010, the aggregate amounts of future minimum lease payments receivable are as follows (in thousands):

	Operating Leases		Direct Financing Leases		Total
Nine months ending December 31, 2010	$	5,031	$	4,234	$	9,265
Year ending December 31, 2011		3,909		5,855		9,764
2012		2,697		6,227		8,924
2013		1,937		4,450		6,387
2014		1,056		4,450		5,506
2015		730		4,450		5,180
Thereafter		12		3,684		3,696
	$	15,372	$	33,350	$	48,722

The Company utilizes a straight line depreciation method for equipment in all of the categories currently in its portfolio of lease transactions. The useful lives for investment in leases by category are as follows (in years):

Equipment category	Useful Life
Mining	30 - 40
Transportation, rail	30 - 35
Marine vessels	20 - 30
Manufacturing	10 - 20
Materials handling	7 - 10
Construction	7 - 10
Office furniture	7 - 10
Transportation, other	7 - 10
Natural gas compressors	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 for providing administrative services to the Company. Administrative services provided include Company accounting, finance/treasury, investor relations, legal counsel and lease and equipment documentation. AFS is not reimbursed for services whereby it is entitled to receive a separate fee as compensation for such services, such as management of equipment. 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 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 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, 2010, the Company has not exceeded the annual and/or cumulative limitations discussed above.

13

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

5. Related party transactions (continued):

During the three months ended March 31, 2010 and 2009, AFS and/or affiliates earned fees, commissions and reimbursements, pursuant to the Operating Agreement as follows (in thousands):

	Three Months Ended March 31,
	2010		2009
Costs reimbursed to Managing Member and/or affiliates	$	171	$	159
Asset management fees to Managing Member and/or affiliates		210		258
Acquisition and initial direct costs paid to Managing Member		26		—
	$	407	$	417

During December 2009, operating lease assets with an original cost of $2.7 million and investments in notes receivable totaling $1.0 million were transferred to the Company by certain affiliates, resulting in an amount due to affiliates equivalent to the original cost of the assets. Such amounts were paid in January 2010.

6. Non-recourse debt:

At March 31, 2010, non-recourse debt consists of notes payable to financial institutions. The notes are due in varying quarterly and semi-annual installments. Interest on the notes is at fixed rates ranging from 6.07% to 6.66%. The notes are secured by assignments of lease payments and pledges of assets. At March 31, 2010, gross operating lease rentals and future payments on direct financing leases totaled approximately $34.0 million over the remaining lease terms; and the carrying value of the pledged assets is $19.3 million. The notes mature at various dates from 2010 through 2017.

The non-recourse note payable does not contain any material financial covenant. The note is secured by a lien granted by the Company to the non-recourse lender on (and only on) the discounted lease transaction. The lender has recourse only to the following collateral: the specific leased equipment; the related lease chattel paper; the lease receivables; and proceeds of the foregoing items. The non-recourse obligation is payable solely out of this specific security and the Company does not guarantee (nor is the Company otherwise contractually responsible for) the payment of non-recourse note as a general obligation or liability of the Company. Although the Company does not have any direct general liability in connection with the non-recourse note apart from the security granted, the Company is directly and generally liable and responsible for certain representations, warranties, and covenants made to the lender, such as warranties as to genuineness of the transaction parties’ signatures, as to the genuineness of the 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 a non-recourse discount financing obligation. Accordingly, as there are no financial covenants or ratios imposed on the Company in connection with this non-recourse obligation, the Company has determined that there are no material covenants with respect to the non-recourse note that warrant footnote disclosure.

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

	Principal		Interest		Total
Nine months ending December 31, 2010	$	2,742	$	1,312	$	4,054
Year ending December 31, 2011		3,756		1,538		5,294
2012		4,009		1,285		5,294
2013		4,279		1,015		5,294
2014		4,568		726		5,294
2015		4,616		420		5,036
Thereafter		3,921		133		4,054
	$	27,891	$	6,429	$	34,320

14

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

7. Borrowing facilities

On December 30, 2009, the Company’s participation in a revolving credit facility (the “Credit Facility”) with AFS and certain of its affiliates was terminated. The Company had no related balances outstanding at the time.

Prior to December 30, 2009, the Company participated with AFS and certain of its affiliates in the Credit Facility including an acquisition facility and a warehouse facility to the Company and affiliates, with a syndicate of financial institutions. The Credit Facility is for an amount up to $75 million and includes certain financial covenants. The interest rate on the Credit Facility is based on either the LIBOR/Eurocurrency rate of 1-, 2-, 3- or 6-month maturity plus a lender designated spread, or the bank’s Prime rate, which re-prices daily. Principal amounts of loans made under the Credit Facility that are prepaid may be re-borrowed on the terms and subject to the conditions set forth under the Credit Facility.

During the third quarter of 2009, the Company repaid all outstanding borrowings under the Credit Facility. As of March 31, 2009, approximately $1.5 million was outstanding under the acquisition facility. The effective rate on borrowings was 2.46% at March 31, 2009; and, the weighted average interest rate was 2.51% during the three months ended March 31, 2009.

8. Receivable funding program:

As of March 31, 2010, the Company had amounts outstanding under a $60 million receivables funding program (the “RF Program”) with a receivables financing company that issued commercial paper rated A1 from Standard and Poor’s and P1 from Moody’s Investors Service. Under the RF Program, the lender holds liens against the Company’s assets. The lender is in a first position against certain specified assets and is in either a subordinated or shared position against the remaining assets. The RF Program does not contain any credit risk related default contingencies and is scheduled to mature in August 2011 at which time advances under the RF Program are to be repaid in full.

The RF Program provides for borrowing at a variable interest rate and the Company, to enter into interest rate swap agreements with certain hedge counterparties (also rated A1/P1) to mitigate the interest rate risk associated with a variable interest rate note. The RF Program allows the Company to have a more cost effective means of obtaining debt financing than available for individual non-recourse debt transactions.

The Company had approximately $1.9 million and $2.4 million outstanding under the RF Program at March 31, 2010 and December 31, 2009, respectively. During the three months ended March 31, 2010 and 2009, the Company paid program fees, as defined in the receivables funding agreement, totaling $2 thousand and $7 thousand, respectively. The RF Program fees are included in interest expense in the Company’s statements of income.

As of March 31, 2010, the Company has entered into interest rate swap agreements to receive or pay interest on a notional principal of $1.9 million based on the difference between nominal rates ranging from 3.75% to 4.81% and variable rates that ranged from 0.23% to 0.24%. As of December 31, 2009, the Company has entered into interest rate swap agreements to receive or pay interest on a notional principal of $2.4 million based on the difference between the same nominal rates and variable rates that ranged from 0.24% to 0.55%. No actual borrowing or lending is involved. The termination of the swaps coincides with the maturity of the debt. Through the swap agreements, the interest rates have been effectively fixed. The differential to be paid or received is accrued as interest rates change and is recognized currently as an adjustment to interest expense related to the debt. The interest rate swaps are not designated as hedging instruments and are carried at fair value on the balance sheet with unrealized gain/loss included in the statements of income in other income (expense), net.

15

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

8. Receivable funding program (continued):

At March 31, 2010 and December 31, 2009, borrowings and interest rate swap agreements under the RF Program are as follows (in thousands):

Date Borrowed	Original Amount Borrowed		Balance March 31, 2010		Notional Balance March 31, 2010		Swap Value March 31, 2010			Payment Rate On Interest Swap Agreement
February 14, 2005	$	20,000	$	284	$	284	$	(5	)	3.75	%
March 22, 2005		9,892		572		572		(16	)	4.31	%
December 15, 2005		13,047		730		730		(6	)	4.80	%
January 9, 2006		2,500		272		272		(6	)	4.81	%
	$	45,439	$	1,858	$	1,858	$	(33	)
Date Borrowed	Original Amount Borrowed		Balance December 31, 2009		Notional Balance December 31, 2009		Swap Value December 31, 2009			Payment Rate On Interest Swap Agreement
February 14, 2005	$	20,000	$	466	$	466	$	(8	)	3.75	%
March 22, 2005		9,892		762		762		(21	)	4.31	%
December 15, 2005		13,047		827		827		(15	)	4.80	%
January 9, 2006		2,500		350		350		(9	)	4.81	%
	$	45,439	$	2,405	$	2,405	$	(53	)

At March 31, 2010, the minimum repayment schedule under the RF Program is as follows (in thousands):

Nine months ending December 31, 2010	$	1,443
Year ending December 31, 2011		415
	$	1,858

At March 31, 2010, there are specific leases that are identified as collateral under the Program with expected future lease receivables of approximately $2.1 million at their discounted present value.

The weighted average interest rates on the RF Program were 1.05% and 2.74% during the three months ended March 31, 2010 and 2009, respectively. The RF Program discussed above includes certain financial and non-financial covenants applicable to the Company as borrower. The Company was in compliance with all covenants as of March 31, 2010.

9. Commitments:

At March 31, 2010, the Company had commitments to purchase lease assets totaling approximately $2.3 million. This amount represents contract awards which may be canceled by the prospective lessee or not be accepted by the Company.

10. 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.

16

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

10. Guarantees (continued):

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.

11. Member’s capital:

As of March 31, 2010 and December 31, 2009, 12,055,016 Units were issued and outstanding. The Company was authorized to issue up to 15,000,000 Units in addition to the Units issued to the initial members (50 Units).

The Company has the right, exercisable in the Manager’s discretion, but not the obligation, to repurchase Units of a Unit holder 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 unit-holder 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 Members and 7.5% to AFS. In accordance with the terms of the Operating Agreement, additional allocations of income were made to AFS during the three months ended months ended March 31, 2010 and 2009. The amounts allocated were determined to bring AFS’s ending capital account balance to zero at the end of each period.

Distributions to the Other Members were as follows (in thousands, except as to Units and per Unit data):

	Three Months Ended March 31,
	2010		2009
Distributions declared	$	1,507	$	2,712
Weighted average number of Units outstanding		12,055,016		12,055,016
Weighted average distributions per Unit	$	0.13	$	0.22

12. 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.

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.

17

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

12. Fair value measurements (continued):

At March 31, 2010 and December 31, 2009, only the Company’s interest rate swap contracts were measured on a recurring basis. In addition, at March 31, 2010 and December 31, 2009, the Company measured the fair value of impaired operating lease and/or off-lease equipment on a non-recurring basis. Such estimate of measurement methodology is as follows:

Interest rate swaps

The fair value of interest rate swaps is estimated using a valuation method (discounted cash flow) with inputs that are defined or that can be corroborated by observable market data. The discounted cash flow approach utilizes each swap’s notional amount, payment and termination dates, swap coupon, and the prevailing market rate and pricing data to determine the present value of the future swap payments. Accordingly, such swap contracts are classified within Level 2 of the valuation hierarchy.

Impaired operating lease and off-lease equipment

During the first quarter of 2010, the Company deemed certain off-lease equipment (assets) to be impaired. Accordingly, the Company recorded fair value adjustments of approximately $58 thousand which reduced the cost basis of the assets. Such fair value adjustments are non-recurring. Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the fair value of impaired operating lease assets are 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 inputs reflect the sales price of similar assets sold by affiliates and/or information from third party remarketing agent not available in the market.

The following table presents the fair value measurement of assets and liabilities measured at fair value on a recurring and non-recurring basis and the level within the hierarchy in which the fair value measurements fall at March 31, 2010 and December 31, 2009 (in thousands):

	March 31, 2010		Level 1 Estimated Fair Value		Level 2 Estimated Fair Value		Level 3 Estimated Fair Value
Assets measured at fair value on a non-recurring basis:
Impaired off-lease assets	$	88	$	—	$	—	$	88
Liabilities measured at fair value on a recurring basis:
Interest rate swaps	$	33	$	—	$	33	$	—
	December 31, 2009		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 operating lease and off-lease assets	$	860	$	—	$	—	$	860
Liabilities measured at fair value on a recurring basis:
Interest rate swaps	$	53	$	—	$	53	$	—

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. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize or has realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

18

ATEL CAPITAL EQUIPMENT FUND IX, LLC

NOTES TO FINANCIAL STATEMENTS

12. 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.

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 estimated using discounted cash flow analyses, based upon current market rates for similar types of lending arrangements.

Investment in securities

The Company’s investment securities are not registered for public sale and are carried at cost. The investment securities are adjusted for impairment, if any, based upon factors which include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations and indications of the issuer’s subsequent ability to raise capital. Management has concluded that there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the instruments and that it is not practicable to estimate the fair value of the investment because of its illiquidity. Accordingly, such investment is stated at cost.

Borrowings

Borrowings include the outstanding amounts on the Company’s receivables funding program. The carrying amount of these variable rate obligations approximate fair value based on current borrowing rates for similar types of borrowings.

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.

Limitations

The fair value estimates presented herein were based on pertinent information available to the Company as of March 31, 2010 and December 31, 2009. Although the Company is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since those dates and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

The following table presents estimated fair values of the Company’s financial instruments in accordance with the guidance provided by the Financial Instruments Topic of the FASB Accounting Standards Codification at March 31, 2010 and December 31, 2009 (in thousands):

	March 31, 2010				December 31, 2009
	Carrying Amount		Estimated Fair  Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	4,934	$	4,934	$	10,189	$	10,189
Notes receivable		2,477		2,477		2,628		2,628
Financial liabilities:
Non-recourse debt		27,891		27,987		28,663		28,662
Borrowings		1,858		1,858		2,405		2,405
Interest rate swap contracts		33		33		53		53

19

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements contained in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Form 10-Q, which are not historical facts, may be forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. In particular, the economic recession and changes in general economic conditions, including, fluctuations in demand for equipment, lease rates, and interest rates, may result in delays in investment and reinvestment, delays in leasing, 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 IX, LLC (the “Company”) is a California limited liability company that was formed in September 2000 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 January 2003. During early 2003, 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, 2020. 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, 2009. Periodic distributions will be paid at the discretion of the Managing Member.

Results of Operations

The three months ended March 31, 2010 versus the three months ended March 31, 2009

The Company had net income of $992 thousand and $915 thousand for the first quarters of 2010 and 2009, respectively. The period over period change reflects decreases in both total revenues and total operating expenses.

Revenues

Total revenues for the first quarter of 2010 decreased by $528 thousand, or 12%, as compared to the prior year period. The net decline in total revenues was primarily a result of reductions in revenues from operating leases and gain on sales of assets partially offset by an increase in revenues from direct financing leases.

The decrease in operating lease revenues totaled $1.1 million and was attributable to runoff of the lease portfolio and subsequent sales of lease assets; and, the decrease in gain on sales of lease assets totaled $284 thousand and was mainly a result of a period over period decline in the number of assets and the change in the mix of assets sold.

Partially offsetting the aforementioned decreases in revenues was a $907 thousand increase in revenues from direct financing leases. Such increase represents revenues derived from new leases which commenced during the latter half of 2009.

20

Expenses

Total operating expenses for the first quarter of 2010 decreased by $557 thousand, or 16%, as compared to the prior year period. The net decline in expenses was primarily due to decreases in depreciation expense, other expense and asset management fees paid to AFS offset, in part, by increases in interest expense and impairment losses.

The decrease in depreciation expense, totaling $773 thousand, was primarily attributable to run-off and lease asset sales since March 31, 2009. The net decrease in other expense totaled $55 thousand and was mostly due to lower tax related accruals partially offset by an incentive fee paid to a third party broker. Such incentive fee was related to lease renewals. In addition, asset management fees paid to AFS decreased by $48 thousand largely as a result of a period over period decline in managed assets and related rents.

As a partial offset, interest expense increased by $258 thousand largely as a result of higher non-recourse debt balances. Approximately $24.9 million of new non-recourse debt was utilized during the latter half of 2009 to refurbish certain existing lease assets which were subsequently re-leased as direct financing leases. In addition, impairment losses increased by $58 thousand as the Company deemed certain inventoried equipment to be impaired at March 31, 2010.

Other

The Company recorded other income, net totaling $53 thousand and $5 thousand for the three months ended March 31, 2010 and 2009, respectively. The increase in other income, net was a result of an $86 thousand favorable change in foreign currency transaction gains and losses recognized during the first quarter of 2010 as compared to the prior year period, coupled with a $38 thousand unfavorable change in the fair value of the Company’s interest rate swap contracts.

The increase in foreign currency gains was largely due to the quarter over quarter weakness of the U.S. currency against the British pound at the time of the transactions. The Company’s foreign currency transactions are primarily denominated in British pounds. The decline in the value of the interest rate swaps was mostly driven by the lower interest rate environment, which adversely impacts the Company as the fixed rate payer in the swap contracts.

Capital Resources and Liquidity

The liquidity of the Company varies, increasing to the extent cash flows from leases and proceeds of asset sales exceed expenses and decreasing as lease assets are acquired, as distributions are made to the Other Members and to the extent expenses exceed cash flows from leases and proceeds from asset sales.

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

The changes in the Company’s cash flow for the three months ended March 31, 2010 as compared to the prior year period are as follows:

• Operating Activities

Cash provided by operating activities during the first quarter of 2010 decreased by $2.7 million as compared to prior year period. The net reduction in cash flow was primarily due to the following: 1) a decrease in net operating results, as adjusted for non-cash items such as gains on sales of assets and depreciation, 2) an unfavorable year over year three-month change in accounts payable and accrued liabilities activities, 3) an unfavorable year over year three-month change in accounts receivable activities, and 4) a decline in unearned lease income.

The period over period decline in net operating results, as adjusted for non-cash items, reduced cash flow by $1.2 million and was largely due to the decrease in operating lease revenues and the increase in interest expense.

The change in accounts payable and accrued liabilities reduced cash flow by $809 thousand and was primarily due to higher amounts of quarter-end accruals during the first quarter of 2009, which included refurbishment costs associated with the Company’s marine vessel and higher amounts of administrative costs payable to AFS. Likewise, the change in accounts receivable reduced cash flow by $598 thousand and was a result of higher level of billings accrued at March 31, 2010, combined with a lower amount of prior year accruals collected in the current quarter as compared to

21

the prior year period. Finally, the unfavorable change in unearned lease income reduced cash flow by $184 thousand and was attributable to a period over period reduction in prepaid rents and increased amortization of prepayments received in prior periods.

• Investing Activities

Net cash provided by investing activities during the first quarter of 2010 increased by $35 thousand as compared to the prior year period. The net increase in cash flow reflects a $796 thousand increase in payments received on direct financing leases as the Company realized cash flow from new leases which commenced during the second half of 2009.

The aforementioned increase in cash flow was partially offset by a $510 thousand period over period increase in cash used to purchase lease assets and/or refurbish existing lease assets. During the first quarter of 2010, the Company used an approximate $874 thousand to purchase equipment relative to new operating leases. By comparison, there were no lease assets purchased during the first quarter of 2009. Instead, $364 thousand was used to refurbish the Company’s marine vessel during that period.

In addition, cash flow decreased by $274 thousand due to a period over period reduction in proceeds from sales of lease assets. The decrease was attributable to a decline in the number of assets and the change in the mix of assets sold.

• Financing Activities

Net cash used in financing activities during the first quarter of 2010 increased by $3.2 million as compared to the prior year period. The increased use of cash (decrease in cash flow) was primarily due to the payment of an approximate $3.7 million settlement related to a December 31, 2009 reassignment of operating lease assets and investments in notes receivables from certain affiliates.

The aforementioned period over period decrease in cash flow was partially offset by a $489 thousand favorable change in financing, as the absence of borrowings during the current quarter was more than offset by the decrease in cash used to repay outstanding borrowings.

In a normal economy, if inflation in the general economy becomes significant, it may affect the Company in as much as the residual (resale) values and rates on re-leases of the Company’s leased assets may increase as the costs of similar assets increase. However, the Company’s revenues from existing leases would not increase; as such rates are generally fixed for the terms of the leases without adjustment for inflation. In addition, if interest rates increase significantly under such circumstances, the lease rates that the Company can obtain on future leases will be expected to increase as the cost of capital is a significant factor in the pricing of lease financing. Leases already in place, for the most part, would not be affected by changes in interest rates.

The Company currently has available adequate reserves to meet its immediate cash requirements and those of the next twelve months, but in the event those reserves were found to be inadequate, the Company would likely be in a position to borrow against its current portfolio to meet such requirements. AFS envisions no such requirements for operating purposes.

Revolving credit facility

On December 30, 2009, the Company’s participation in a revolving credit facility with AFS and certain of its affiliates was terminated. The Company had no related balances outstanding at the time.

Prior to December 30, 2009, the Company participated with AFS and certain of its affiliates in a revolving credit facility comprised of a working capital facility to AFS, an acquisition facility and a warehouse facility to AFS, the Company and affiliates, and a venture facility available to an affiliate, with a syndicate of financial institutions.

Receivable funding program

As of March 31, 2010, the Company had amounts outstanding under a $60 million receivables funding program (the “RF Program”) with a receivables financing company that issued commercial paper rated A1 from Standard

22

and Poor’s and P1 from Moody’s Investor Services. Under the RF Program, the lender holds liens against the Company’s assets. The lender is in a first position against certain specified assets and is in either a subordinated or shared position against the remaining assets. The ability to draw down on the RF Program terminated on July 31, 2008, and the RF Program matures in August 2011 at which time advances under the RF Program are to be repaid in full.

Compliance with covenants

The RF Program includes certain financial and non-financial covenants applicable to the Company as borrower. Such covenants include covenants typically found in credit facilities of the size and nature of the RF Program, such as accuracy of representations, good standing, absence of liens and material litigation, etc. The Company was in compliance with all covenants under the RF Program as of March 31, 2010. The Company considers certain financial covenants to be material to its ongoing use of the RF Program and these covenants are described below.

Material financial covenants

Under the RF Program, the Company is required to maintain a specific tangible net worth and leverage ratio, and to comply with other terms expressed in the RF Program, including limitation on the incurrence of additional debt and guaranties, defaults, and delinquencies. The material financial covenants are summarized as follows:

Minimum Tangible Net Worth: $15 million

Leverage Ratio (leverage to Tangible Net Worth): not to exceed 2.00 to 1

“Tangible Net Worth” is defined as, as of the date of determination, (i) the net worth of the Company, after deducting therefrom (without duplication of deductions) the net book amount of all assets of the Company, after deducting any reserves and other amounts for assets which would be treated as intangibles under GAAP, and after certain other adjustments permitted under the agreements.

The financial covenants referred to above are applicable to the Company only to the extent that the Company has borrowings outstanding under the RF Program. As of March 31, 2010, the Company’s Tangible Net Worth requirement was $15 million, and the permitted maximum leverage ratio under the RF Program was 2.00 to 1. The Company was in compliance with each of these financial covenants with a minimum Tangible Net Worth and leverage ratio of $20.3 million and 1.46 to 1, respectively, as of March 31, 2010. As such, as of March 31, 2010, the Company was in compliance with all such material financial covenants.

Events of default, cross-defaults, recourse and security

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

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

The Operating Agreement limits aggregate borrowings to 50% of the total cost of equipment. For detailed information on the Company’s debt obligations, see Notes 6 to 8 in Item 1. Financial Statements.

Due to the April 2009 bankruptcy of a major lessee, Chrysler Corporation, the Company, in accordance with its accounting policy for allowance for doubtful accounts, has placed all operating leases with Chrysler on non-accrual status pending resumption of recurring payment activity. As a result, the Company, in accordance with its accounting policy for

23

delinquent operating leases, has reversed the billed but not yet paid amounts, and placed each of these respective operating leases on a non-accrual and cash basis pending resumption of recurring payment activity. The Company also considered the equipment underlying the lease contracts for impairment and believes that such equipment is not impaired as of March 31, 2010. At March 31, 2010, the net book value of such equipment was approximately $473 thousand. Such investment in Chrysler represents the total net investment in equipment underlying lease contracts placed on a cash basis as of March 31, 2010. As of the same date, management has concluded that the status of these leases will not have a material impact on either of the Company’s capital resources or liquidity. At December 31, 2009, such investment totaled $557 thousand.

The Company commenced periodic distributions, based on cash flows from operations, beginning with the month of February 2001.

At March 31, 2010, the Company had commitments to purchase lease assets and fund investments in notes receivable (see Note 9, Commitments, as set forth in Item 1. Financial Statements).

Item 4T. Controls and procedures.

Evaluation of disclosure controls and procedures

The Company’s Managing Member’s President and Chief Executive Officer, and Executive Vice President and Chief Financial Officer and Chief Operating Officer (“Management”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based on the evaluation of the Company’s disclosure controls and procedures, Management concluded that as of the end of the period covered by this report, the design and operation of these disclosure controls and procedures were effective.

The Company does not control the financial reporting process, and is solely dependent on the Management of the Managing Member, which is responsible for providing the Company with financial statements in accordance with generally accepted accounting principles in the United States. The Managing Member’s disclosure controls and procedures, as it is applicable to the Company, were effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Changes in internal control

There were no changes in the Managing Member’s internal control over financial reporting, as it is applicable to the Company, during the quarter ended March 31, 2010 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.

24

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. [Reserved].

Item 5. Other Information.

None.

Item 6. Exhibits.

Documents filed as a part of this report:

1. Financial Statement Schedules

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

2. Other Exhibits

31.1    Certification of Dean L. Cash

31.2    Certification of Paritosh K. Choksi

32.1    Certification Pursuant to 18 U.S.C. section 1350 of Dean L. Cash

32.2    Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K. Choksi

25

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 12, 2010

		ATEL CAPITAL EQUIPMENT FUND IX, 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)

26