In this video we take a look at the process for securely wiping the hard drive and factory resetting an Apple Airport Time Capsule. We define a factory reset as returning the Apple Airport Time Capsule to the same system state as it was in when it left the manufacturer. However, as with all factory resets this does not include restoring an older version of the devices firmware.
Please note that when you perform a secure wipe of the hard drive you will be deleting all data stored on that Time Capsule. You would perform a factory reset if you intend to sell, give away or dispose of your Time Capsule.
While the Time Capsule used in this video is an older model of Apple Airport Time Capsule. The exact same principles and processes should be used to factory reset the newer models of Time Capsules.