Form 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Annual report pursuant to section 13
or 15(d) of the Securities Exchange
Act of 1934 (no fee required) For the
Year Ended December 31, 2002
OR
|_| Transition report pursuant to section
13 or 15(d) of the Securities Exchange
Act of 1934 (no fee required) For the
transition period from ____ to ____
Commission File number 0-23842
ATEL Cash Distribution Fund V, L.P.
California 94-3165807
---------- ----------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
600 California Street, 6th Floor, San Francisco, California 94108
-----------------------------------------------------------------
(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
Partnership 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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss.229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. |X|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes |_| No |X|
State the aggregate market value of voting stock held by non-affiliates of
the registrant. Inapplicable
DOCUMENTS INCORPORATED BY REFERENCE
Prospectus dated February 22, 1993, filed pursuant to Rule 424(b)
(Commission File No. 33-53162) is hereby incorporated by reference into Part IV
hereof.
1
PART I
Item 1: BUSINESS
General Development of Business
ATEL Cash Distribution Fund V, L.P. (the Partnership) was formed under the
laws of the state of California in September 1992. The Partnership was formed
for the purpose of acquiring equipment to engage in equipment leasing and sales
activities.
The Partnership conducted a public offering of 12,500,000 units of Limited
Partnership interest (Units) at a price of $10 per Unit. As of November 15,
1994, the Partnership had received and accepted subscriptions for 12,500,000
($125,000,000) Limited Partnership Units in addition to the Initial Limited
Partners' Units and the offering was terminated. Of those Units, 12,497,000 were
issued and outstanding as of December 31, 2002. Of the proceeds received,
$11,875,000 was paid to ATEL Securities Corporation, a wholly-owned subsidiary
of ATEL Financial Services LLC (ATEL) (the General Partner), as sales
commissions, $5,738,415 was paid to the General Partner as reimbursements of
organization and other syndication costs, $1,875,000 was reserved for
repurchases of Units and working capital and $105,511,585 has been used to
acquire leased equipment, including acquisition fees paid or to be paid to the
General Partner. Prior to converting to a limited liability company structure,
the General Partner was formerly known as ATEL Financial Corporation.
The Partnership's principal objectives are to invest in a diversified
portfolio of equipment that will (i) preserve, protect and return the
Partnership's invested capital; (ii) generate substantial distributions to the
partners 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, which ended December 31,
2000 and (iii) provide significant distributions following the reinvestment
period and until all equipment has been sold. The Partnership is governed by its
Limited Partnership Agreement.
Narrative Description of Business
The Partnership has acquired and intends to acquire various types of
equipment and to lease such equipment pursuant to "Operating" leases and "Full
Payout" leases, whereby "Operating" leases are defined as being leases in which
the minimum lease payments during the initial lease term do not recover the full
cost of the equipment and "Full Payout" leases recover such cost. It is the
intention of the General Partner that no more than 25% of the aggregate purchase
price of equipment will be subject to "Operating" leases upon final investment
of the Net Proceeds of the Offering and that no more than 20% of the aggregate
purchase price of equipment will be invested in equipment acquired from a single
manufacturer.
The Partnership only purchased equipment for which a lease existed or for
which a lease would be entered into at the time of the purchase. The Partnership
has completed its initial acquisition stage with the investment of the net
proceeds from the public offering of Units.
As of December 31, 2002, the Partnership had purchased equipment with a
total acquisition price of $186,995,157.
The Partnership's objective is to lease a minimum of 75% of the equipment
acquired with the net proceeds of the offering to lessees that (i) have an
aggregate credit rating by Moody's Investor Service, Inc. of Baa or better, or
the credit equivalent as determined by the General Partner, with the aggregate
rating weighted to account for the original equipment cost for each item leased
or (ii) are established hospitals with histories of profitability or
municipalities. The balance of the original equipment portfolio may include
equipment leased to lessees, which although deemed creditworthy by the General
Partner, would not satisfy the general credit rating criteria for the portfolio.
In excess of 75% of the equipment acquired with the net proceeds of the offering
(based on original purchase cost) had been leased to lessees with an aggregate
credit rating of Baa or better or to such hospitals or municipalities.
The General Partner sought to limit the amount invested in equipment to any
single lessee to not more than 20% of the aggregate purchase price of equipment
owned at any time during the reinvestment period.
As set forth below, during 2002, 2001 and 2000, certain lessees generated
significant portions of the Partnership's total lease revenues as follows:
Percentage of Total Lease Revenues
Lessee Type of Equipment 2002 2001 2000
- ------ ----------------- ---- ---- ----
Burlington Northern Railroad Locomotives 19% 13% 11%
Florida Canyon Mining Mining 18% 13% 11%
Tarmac America Construction 14% 16% *
Union Carbide Corporation Rail tank cars 10% * *
* Less than 10%
These percentages are not expected to be comparable in future periods.
2
The equipment leasing industry is highly competitive. Equipment
manufacturers, corporations, partnerships and others offer users an alternative
to the purchase of most types of equipment with payment terms that vary widely
depending on the lease term and type of equipment. The ability of the
Partnership to keep the equipment leased and/or operating and the terms of the
acquisitions, leases and dispositions of equipment depends on various factors
(many of which are not in the control of the General Partner or the
Partnership), such as general economic conditions, including the effects of
inflation or recession, and fluctuations in supply and demand for various types
of equipment resulting from, among other things, technological and economic
obsolescence.
The business of the Partnership is not seasonal.
The Partnership has no full time employees.
Equipment Leasing Activities
Through December 31, 2002, the Partnership has disposed of certain leased
assets as set forth below:
Original
Equipment Cost, Excess of
Type of Excluding Rents Over
Equipment Acquisition Fees Sales Price Expenses *
- --------- ---------------- ----------- ----------
Transportation $58,505,231 $32,139,280 $ 44,988,131
Furniture, fixtures and office
equipment 22,209,670 8,314,618 18,925,245
Mining equipment 20,108,685 7,735,973 15,842,296
Materials handling 13,108,989 2,570,725 13,977,788
Office automation 4,593,822 970,163 4,813,683
Other 18,022,102 6,773,390 19,430,999
--------------- --------------- ---------------
$136,548,499 $58,504,149 $ 117,978,142
=============== =============== ===============
* Includes only those expenses directly related to the production of the related
rents.
The Partnership has acquired a diversified portfolio of equipment. The
equipment has been leased to lessees in various industries. The following tables
set forth the types of equipment acquired by the Partnership through December
31, 2002 and the industries to which the assets have been leased.
Purchase Price Excluding Percentage of Total
Asset Types Acquisition Fees Acquisitions
- ----------- ---------------- ------------
Transportation, over-the-road tractors and trailers $34,546,518 18.47%
Furniture and fixtures 24,145,180 12.91%
Transportation, other 18,454,853 9.87%
Mining 15,986,308 8.55%
Transportation, intermodal containers 15,484,688 8.28%
Construction 15,335,327 8.20%
Materials handling 14,469,358 7.74%
Railroad locomotives 12,350,000 6.60%
Earth moving 11,943,745 6.39%
Transportation, rail cars 7,180,000 3.84%
Printing 4,707,508 2.52%
Other * 12,391,672 6.63%
---------------- ----------------
$186,995,157 100.00%
================ ================
Purchase Price Excluding Percentage of Total
Industry of Lessee Acquisition Fees Acquisitions
- ------------------ ---------------- ------------
Transportation, rail $45,670,556 24.42%
Mining 29,823,055 15.95%
Oil & gas 21,301,523 11.39%
Retail, foods 11,215,586 6.00%
Food processing 9,828,623 5.26%
Construction 9,410,789 5.03%
Chemicals 9,075,487 4.85%
Retail, restaurant 8,528,067 4.56%
Transportation, other 8,311,346 4.44%
Primary metals 7,526,037 4.02%
Manufacturing, other 6,815,862 3.64%
Manufacturing, auto/truck 6,690,185 3.58%
Printing 4,707,508 2.52%
Other * 8,090,533 4.34%
---------------- ----------------
$186,995,157 100.00%
================ ================
* Individual amounts included in "Other" represent less than 2.5% of the total.
3
For further information regarding the Partnership's equipment lease
portfolio as of December 31, 2002, see Note 3 to the financial statements,
Investments in equipment and leases, as set forth in Part II, Item 8, Financial
Statements and Supplementary Data.
Item 2. PROPERTIES
The Partnership does not own or lease any real property, plant or material
physical properties other than the equipment held for lease as set forth in Item
1.
Item 3. LEGAL PROCEEDINGS
The following is a discussion of legal matters involving the Partnership
but which do not represent claims against the Partnership or its assets. No
other material legal proceedings are currently pending against the Partnership
or against any of its assets.
Quaker Coal Company:
On December 31, 1997, Quaker Coal Company (the Debtor), one of the
Partnership's lessees, requested a moratorium on lease payments from January
through March 1998. No lease payments were made by the lessee through June 1998,
and as a result, the General Partner declared the lease in default.
Subsequently, the lessee cured the outstanding payments and eventually satisfied
substantially all lease payments due under the lease; however, the General
Partner refused to waive the default and insisted on contractual damages. The
General Partner filed a suit against the lessee for its contractual damages in
the U.S. District Court of Northern California (the "Court"). On June 16, 2000,
the lessee filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
The amounts of these damages have not been included in the financial statements
included in Part II, Item 8 of this report.
The Partnership obtained a stipulation for relief from the automatic
bankruptcy stay to allow the Court to issue its ruling, and filed a request to
participate on the Official Committee of Unsecured Creditors in the bankruptcy
proceedings. The Partnership succeeded upon securing the return of its
equipment, which has been liquidated. The Court issued a ruling on March 4,
2001, denying the Partnership's claim for damages. The Debtor subsequently filed
a claim against the Partnership, for reimbursement of its legal expenses. The
General Partner believes the Court's decision is erroneous as a matter law, and
has filed an appeal of the decision in the U.S. District Court of Appeals. (See
discussion below).
The Debtor filed a plan of reorganization, which was objected to by several
large creditors, including the General Partner. These creditors were also
seeking a formal role on the creditors committee or formation of their own
committee.
Upon the termination of the Debtor's exclusivity period, competing plans
were filed by other creditors to the plan, and voting on the competing plans
occurred October 8, 2001. The results of the vote were that another of the
creditor's, (i.e. American Electric Power's ("AEP"), Plan of Reorganization
("AEP Plan") was successful. Under the AEP Plan, the claim of the Partnership
has been assigned to a liquidating trustee for resolution and satisfaction from
the Debtor's estate.
In January 2002, the Partnership attended an appellate settlement
conference seeking to resolve the outstanding disputed claim. A reserve has been
set aside by the Debtor's liquidating trustee in the amount of $1.2 million in
partial satisfaction of the Partnership's claim, although this claim amount
remains in dispute. In January 2003, the Federal Appellate Court in San
Francisco heard an appeal of the lower Court's decision. The results of that
appellate decision was handed down in March of 2003 and was adverse to the
Partnership's position. The Partnership is currently considering requesting a
rehearing of that decision. Currently, the likelihood of recovery of amounts
above the payment of the lease rent and the liquidation of the equipment already
received remains speculative and highly uncertain.
Ingersoll International:
At December 31, 2002 the Partnership had commenced action against Ingersoll
International (the "Lessee") as the Partnership had declared them in default for
making an unauthorized assignment of part of the leased equipment. Subsequent to
December 31, 2002, the Partnership, the Lessee and the unauthorized party
reached an agreement in principal to have the unauthorized party assume a
portion of the lease. Documents have been prepared by the Partnership and sent
to the other parties for signature and the Partnership expects all documents to
be signed and this matter to be resolved by March 31, 2003.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
4
PART II
Item 5. MARKET FOR REGISTRANT'S LIMITED PARTNERSHIP UNITS AND RELATED
MATTERS
Market Information
The Units are transferable subject to restrictions on transfers that have
been imposed under the securities laws of certain states. However, as a result
of such restrictions, the size of the Partnership and its investment objectives,
to the General Partner's knowledge, no established public secondary trading
market has developed and it is unlikely that a public trading market will
develop in the future. As a result, there is no currently ascertainable market
value for the Units.
Holders
As of December 31, 2002, a total of 7,154 investors were record holders of
Units in the Partnership.
ERISA Valuation
In order to permit ERISA fiduciaries who hold Units to satisfy their annual
reporting requirements, the General Partner estimated the value per Unit of the
Partnership's assets as of September 30, 2002. The General Partner calculated
the estimated liquidation proceeds that would be realized by the Partnership,
assuming an orderly disposition of all of the Partnership's assets as of January
1, 2003. The estimates were based on the amount of remaining lease payments on
existing Partnership leases, and the estimated residual values of the equipment
held by the Partnership upon the termination of those leases. This valuation was
based solely on the General Partner's perception of market conditions and the
types and amounts of the Partnership's assets. No independent valuation was
sought.
After calculating the aggregate estimated disposition proceeds, the General
Partner then calculated the portion of the aggregate estimated value of the
Partnership assets that would be distributed to Unit holders on liquidation of
the Partnership, and divided the total so distributable by the number of
outstanding Units. As of September 30, 2002, the value of the Partnership's
assets, calculated on this basis, was approximately $1.71 per Unit. The
foregoing valuation was performed solely for the ERISA purposes described above.
There is no market for the Units, and, accordingly, this value does not
represent an estimate of the amount a Unit holder would receive if he were to
seek to sell his Units. Furthermore, there can be no assurance as to the amount
the Partnership may actually receive if and when it seeks to liquidate its
assets, or the amount of lease payments and equipment disposition proceeds it
will actually receive over the remaining term of the Partnership.
Dividends
The Partnership does not make dividend distributions. However, the Limited
Partners of the Partnership are entitled to certain distributions as provided
under the Limited Partnership Agreement.
The General Partner has sole discretion in determining the amount of
distributions; provided, however, that the General Partner will not reinvest in
equipment, but will distribute, subject to payment of any obligations of the
Partnership, such available cash from operations and cash from sales or
refinancing as may be necessary to cause total distributions to the Limited
Partners for each year during the reinvestment period to equal the following
amounts per unit: $1.05 in 1995 and 1996; $1.10 in 1997 and 1998; and $1.20 in
1999 and 2000.
A single distribution was paid from 2002 operations. The distribution was
paid in January 2003 and the rate was $0.15 per Unit.
The rate for monthly distributions from 2001 operations was $0.10 per Unit
for distributions paid in February through July 2001 and $0.0667 for
distributions paid in August through December 2001 and in January 2002. For
quarterly distributions, the rate was $0.30 per Unit for distributions paid in
April and July 2001 and $0.20 per Unit for distributions paid in October 2001
and in January 2002. Distributions were from 2001 cash flows from operations.
The amounts paid to holders of Units were adjusted based on the length of time
within the previous calendar month or quarter that the Units were outstanding.
The rate for monthly distributions from 2000 operations was $0.10 per Unit.
The distributions were paid in February 2000 through December 2000 and in
January 2001. For each quarterly distribution (paid in April, July and October
2000 and in January 2001) the rate was $0.30 per Unit. Distributions were from
2000 cash flows from operations. The amounts paid to holders of Units were
adjusted based on the length of time within the previous calendar month or
quarter that the Units were outstanding.
5
The following table presents summarized information regarding distributions
to Limited Partners:
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Distributions of net income $ 0.09 $ 0.01 $ 0.13 $ 0.41 $ 0.39
Return of investment - 1.03 1.08 0.79 0.80
--------------- ---------------- -------------------------------- ----------------
Distributions per unit 0.09 1.04 1.21 1.20 1.19
Differences due to timing of
distributions 0.06 (0.04) (0.01) - 0.01
--------------- ---------------- -------------------------------- ----------------
Nominal distribution rates from
above $ 0.15 $ 1.00 $ 1.20 $ 1.20 $ 1.20
=============== ================ ================================ ================
Owners of 1,000 or more units may make the election without charge to
receive distributions on a monthly basis. Owners of less than 1,000 units may
make the election upon payment of a $20.00 annual fee.
Item 6. SELECTED FINANCIAL DATA
The following table presents selected financial data of the Partnership for
the years ended December 31, 2002, 2001, 2000, 1999 and 1998 and for the years
then ended. This financial data should be read in conjunction with the financial
statements and related notes included under Part II, Item 8.
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Gross Revenues $ 7,541,282 $ 7,939,473 $11,138,639 $17,064,600 $ 22,011,168
Net income $ 1,455,267 $ 170,758 $ 1,682,730 $ 5,198,570 $ 4,861,233
Weighted average Units 12,478,700 12,497,000 12,497,000 12,497,000 12,497,000
Net income per Unit, based on
weighted average Units outstanding $ 0.12 $ 0.01 $ 0.13 $ 0.41 $ 0.39
Distributions per Unit, based on
weighted average Units outstanding $ 0.09 $ 1.04 $ 1.21 $ 1.20 $ 1.19
Total Assets $19,875,015 $37,160,843 $50,000,894 $67,961,144 $ 86,671,855
Non-recourse Debt $ 667,460 $11,663,273 $16,389,312 $22,138,639 $ 29,331,123
Total Partners' Capital $18,865,005 $18,546,425 $31,416,576 $44,820,397 $ 54,621,053
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Statements contained in this Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and elsewhere in this Form
10-K, 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. Investors are cautioned not
to attribute undue certainty to these forward-looking statements, which speak
only as of the date of this Form 10-K. 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-K or to reflect the occurrence of
unanticipated events, other than as required by law.
Capital Resources and Liquidity
The Partnership's public offering provided for a total maximum
capitalization of $125,000,000.
The liquidity of the Partnership will vary in the future, increasing to the
extent cash flows from leases and proceeds from asset sales exceed expenses, and
decreasing as distributions are made to the limited partners and to the extent
expenses exceed cash flows from leases and proceeds from asset sales.
6
The Partnership participates with the General Partner and certain of its
affiliates in a $55,645,837 revolving line of credit (comprised of an
acquisition facility and a warehouse facility) with a financial institution that
includes certain financial covenants. The line of credit expires on June 28,
2004. As of December 31, 2002, borrowings under the facility were as follows:
Amount borrowed by the Partnership under the acquisition facility $ -
Amounts borrowed by affiliated partnerships and limited liability companies under the
acquisition facility 29,000,000
----------------
Total borrowings under the acquisition facility 29,000,000
Amounts borrowed by the General Partner and its sister corporation under the warehouse facility -
----------------
Total outstanding balance $ 29,000,000
================
Total available under the line of credit $ 55,645,837
Total outstanding balance (29,000,000)
----------------
Remaining availability $ 26,645,837
================
Draws on the acquisition facility by any individual borrower are secured
only by that borrower's assets, including equipment and related leases.
Borrowings on the warehouse facility are recourse jointly to certain of the
affiliated partnerships and limited liability companies, the Partnership and the
General Partner.
Through December 31, 2000, the Partnership anticipated reinvesting a
portion of lease payments from assets owned in new leasing transactions. Such
reinvestment would occur only after the payment of all obligations, including
debt service (both principal and interest), the payment of management and
acquisition fees to the General Partner and providing for cash distributions to
the Limited Partners.
As of December 31, 2002, cash balances consisted of working capital and
amounts reserved for distributions in January 2003, generated from operations in
2002.
The Partnership 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 Partnership would likely
be in a position to borrow against its current portfolio to meet such
requirements. The General Partner envisions no such requirements for operating
purposes.
Through the term of the Partnership, the Partnership had borrowed
$58,317,911 of non-recourse debt. As of December 31, 2002, the remaining unpaid
balance as of that date was $667,460. The Partnership's long-term borrowings are
non-recourse to the Partnership, that is, the only recourse of the lender is to
the equipment or corresponding lease acquired with the loan proceeds.
See Note 4 to the financial statements, Non-recourse debt, as set forth in
Part II, Item 8, Financial Statements and Supplementary Data, for additional
information regarding non-recourse debt.
The Partnership commenced regular distributions, based on cash flows from
operations, beginning with the second quarter of 1993. See Items 5 and 6 for
additional information regarding the distributions.
If inflation in the general economy becomes significant, it may affect the
Partnership inasmuch as the residual (resale) values of the Partnership's leased
assets may increase as the costs of similar assets increase. However, the
Partnership'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 future periods, cash flows from operating leases are expected to be the
Partnership's primary source of cash flows from operations.
Cash Flows
2002 vs. 2001:
In 2002 and 2001, operating lease rents were the Partnership's primary
source of cash flows from operating activities. Cash flows from operations
decreased from $5,779,190 in 2001 to $5,133,621 in 2002, a decrease of $645,569.
This decrease was primarily due to decreases in operating lease revenues from
$5,850,367 in 2001 to $4,254,501 in 2002, a decrease of $1,595,866.
Sources of cash from investing activities consisted of rents from direct
financing leases and proceeds from sales of lease assets. Financing lease rents
decreased from $1,625,595 in 2001 to $1,402,177 in 2002, a decrease of $223,418.
Proceeds from the sales of lease assets are not expected to be consistent from
one period to another as the sales of lease assets is subject to various factors
such as the timing of lease terminations, the timing of market demand and the
condition and uniqueness of the assets subject to sale. Proceeds from sales of
lease assets increased from $3,733,992 in 2001 to $15,519,490 in 2002, an
increase of $11,785,498. Approximately $8,300,000 of the sales proceeds was used
to repay non-recourse debt associated with assets that were sold in 2002.
7
In 2002 and 2001, the only source of cash flows from financing activities
was the amounts borrowed on the line of credit. Repayments of debt increased as
a result of additional debt payments noted above.
2001 vs. 2000:
In 2001 and 2000, operating lease rents were the Partnership's primary
source of cash flows from operating activities. Cash flows from operations
decreased from $8,302,775 in 2000 to $5,779,190 in 2001, a decrease of
$2,523,585. This decrease was primarily due to decreases in operating lease
revenues from $9,296,456 in 2000 to $5,850,367 in 2001, a decrease of
$3,446,089.
Sources of cash from investing activities consisted of rents from direct
financing leases and proceeds from sales of lease assets. Financing lease rents
decreased from $2,243,051 in 2000 to $1,625,595 in 2001, a decrease of $617,456.
Proceeds from the sales of lease assets are not expected to be consistent from
one period to another as the sales of lease assets is subject to various factors
such as the timing of lease terminations, the timing of market demand and the
condition and uniqueness of the assets subject to sale. Proceeds from sales of
lease assets decreased from $7,531,930 in 2000 to $3,733,992 in 2001, a decrease
of $3,797,938.
In 2001 and 2000, the only source of cash flows from financing activities
was the amounts borrowed on the line of credit. Repayments of debt decreased as
a result of scheduled debt payments.
Results of Operations
As of March 19, 1993, subscriptions for the minimum amount of the offering
($1,200,000) had been received and accepted by the Partnership. As of that date,
the Partnership commenced operations in its primary business (leasing
activities).
As of December 31, 2002, 2001 and 2000, significant amounts of the
Partnership's assets were leased to lessees in certain industries as follows.
2002 2001 2000
---- ---- ----
Rail transportation 53% 41% 35%
Mining 21% 10% *
Manufacturing, other 15% 26% 29%
Construction * 13% 11%
* Less than 10%.
2002 vs. 2001:
Operations in 2002 resulted in net income of $1,455,267 compared to
$170,758 in 2001. The increase is primarily due to an increase in other revenues
related to the amounts received from the settlement of the bankruptcy of
Schwegmann's Giant Supermarkets (a former lessee of the partnership). Such
amounts increased from $1,234,542 in 2001 to $1,954,952 in 2002. Operating lease
revenues decreased as a result of the maturing of operating leases, the
subsequent sales of the related lease assets and lower lease rates realized on
lease renewals. This resulted in decreased operating lease rents in 2002
compared to 2001. Such rents decreased from $5,850,367 in 2001 to $4,254,501 in
2002. Assets sales also resulted in decreased depreciation expense in 2002.
Depreciation decreased by $1,113,516 compared to 2001.
Proceeds from the sales of lease assets are not expected to be consistent
from one period to another as the sales of lease assets is subject to various
factors such as the timing of lease terminations, the timing of market demand
and the condition and uniqueness of the assets subject to sale. As a result,
gains and losses recognized on the sales of these lease assets are not expected
to be consistent from one year to another, however, such gains increased by
$551,961 compared to 2001. This also contributed to the increase in net income.
Interest expense has decreased as a result of scheduled debt payments and
the early repayments of non-recourse debt noted above and the related reductions
of the outstanding balances.
Equipment management fees are based on the revenues of the Partnership. As
those revenues have declined, the management fees have decreased as well.
Management periodically reviews the carrying values of its assets on leases
and assets held for lease or sale. As a result of that review, management
determined that the value of a fleet of jumbo covered hopper cars had declined
in value to the extent that the carrying values had become impaired. This
decline is the result of decreased long-term demand for these types of assets
and a corresponding reduction in the amounts of rental payments that these
assets currently command. Management has recorded a provision for the decline in
value of those assets in the amount of $397,872 for the year ended December 31,
2002.
8
2001 vs. 2000:
Operations in 2001 resulted in net income of $170,758 compared to
$1,682,730 in 2000. The decrease is primarily due to the maturing of operating
leases and the subsequent sales of the related lease assets. This resulted in
decreased operating lease rents in 2001 compared to 2000. Such rents decreased
from $9,296,456 in 2000 to $5,850,367 in 2001. Assets sales also resulted in
decreased depreciation expense in 2001. Depreciation decreased by $1,852,011
compared to 2000.
Proceeds from the sales of lease assets are not expected to be consistent
from one period to another as the sales of lease assets is subject to various
factors such as the timing of lease terminations, the timing of market demand
and the condition and uniqueness of the assets subject to sale. As a result,
gains and losses recognized on the sales of lease assets are not expected to be
consistent from one year to another, however, such gains increased by $59,302
compared to 2000.
Interest expense has decreased as a result of scheduled debt payments and
the consequent reductions of the outstanding balances.
Equipment management fees are based on the revenues of the Partnership. As
those revenues have declined, the management fees have decreased as well.
Cost reimbursements to the General Partner increased as a result of a
revised analysis of the costs incurred by the General Partners and allocated to
the Partnership.
Recent Accounting Pronouncement
In August 2001, the Financial Accounting Standards Board issued SFAS No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144),
which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, and
the accounting and reporting provisions of APB Opinion No. 30, Reporting the
Results of Operations, for a disposal of a segment of a business. SFAS 144 is
effective for fiscal years beginning after December 15, 2001, with earlier
application encouraged. The Partnership adopted SFAS 144 as of January 1, 2002.
The adoption of the Statement did not have a significant impact on the
Partnership's financial position and results of operations.
Internal Controls
As of December 31, 2002, an evaluation was performed under the supervision
and with the participation of the Partnership's management, including the CEO
and CFO of the General Partner, of the effectiveness of the design and operation
of the Partnership's disclosure controls and procedures. Based on that
evaluation, the Partnership's management, including the CEO and CFO of the
General Partner, concluded that the Partnership's disclosure controls and
procedures were effective as of December 31, 2002. There have been no
significant changes in the Partnership's internal controls or in other factors
that could significantly affect internal controls subsequent to December 31,
2002.
Critical Accounting Policies
The policies discussed below are considered by management of the
Partnership to be critical to an understanding of the Partnership's financial
statements because their application requires significant complex or subjective
judgments, decisions, or assessments, with financial reporting results relying
on estimation about the effect of matters that are inherently uncertain.
Specific risks for these critical accounting policies are described in the
following paragraphs. The Partnership also states these accounting policies in
the notes to the financial statements and in relevant sections in this
discussion and analysis. For all of these policies, management cautions that
future events rarely develop exactly as forecast, and the best estimates
routinely require adjustment.
Use of Estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.
9
Asset Valuation:
Recorded values of the Company's asset portfolio are periodically reviewed
for impairment in accordance with Statement of Financial Accounting Standards
(SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
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 estimated residual value of
the asset at the end of the asset's expected holding period and estimates of
undiscounted future rents. The residual value assumes, among other things, that
the asset is utilized normally in an open, unrestricted and stable market.
Short-term fluctuations in the market place 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 the discounted estimated future cash flows) of the assets and its carrying
value on the measurement date.
Item 7a. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership, like most other companies, is exposed to certain market
risks, including primarily changes in interest rates. The Partnership believes
its exposure to other market risks including foreign currency exchange rate
risk, commodity risk and equity price risk are insignificant to both its
financial position and results of operations.
In general, the Partnership manages its exposure to interest rate risk by
obtaining fixed rate debt. The fixed rate debt is structured so as to match the
cash flows required to service the debt to the payment streams under fixed rate
lease receivables. The payments under the leases are assigned to the lenders in
satisfaction of the debt. Furthermore, the Partnership has historically been
able to maintain a stable spread between its cost of funds and lease yields in
both periods of rising and falling rates. Nevertheless, the Partnership
frequently funds leases with its floating rate line of credit and is, therefore,
exposed to interest rate risk until fixed rate financing is arranged, or the
floating rate line of credit is repaid. As of December 31, 2002, the outstanding
balance on the floating rate line of credit was zero.
To hedge its interest rate risk related to this variable rate debt, the
Partnership may enter into interest rate swaps. As of December 31, 2002, no
swaps or other derivative financial instruments were held by the Partnership.
The Partnership does not hold or issue derivative financial instruments for
speculative purposes.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the Report of Independent Auditors, Financial Statements and Notes to
Financial Statements attached hereto at pages 10 through 24.
10
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Partners
ATEL Cash Distribution Fund V, L.P.
We have audited the accompanying balance sheets of ATEL Cash Distribution
Fund V, L.P. (Partnership) as of December 31, 2002 and 2001, and the related
statements of income, changes in partners' capital, and cash flows for each of
the three years in the period ended December 31, 2002. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ATEL Cash Distribution Fund
V, L.P. at December 31, 2002 and 2001, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2002, in
conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
San Francisco, California
February 7, 2003
11
ATEL CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
ASSETS
2002 2001
---- ----
Cash and cash equivalents $ 3,806,560 $ 443,772
Accounts receivable, net of allowance for
doubtful accounts of $75,285 in 2002
and $165,285 in 2001 420,737 1,249,403
Investments in equipment and leases 15,647,718 35,467,668
---------------- ----------------
Total assets $19,875,015 $ 37,160,843
================ ================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $ 667,460 $ 11,663,273
Line of credit - 6,500,000
Accounts payable:
General Partner 115,390 146,080
Other 195,877 156,408
Accrued interest payable 3,603 21,601
Unearned lease income 27,680 127,056
---------------- ----------------
Total liabilities 1,010,010 18,614,418
Partners' capital:
General Partner 202,907 188,354
Limited Partners 18,662,098 18,358,071
---------------- ----------------
Total partners' capital 18,865,005 18,546,425
---------------- ----------------
Total liabilities and partners' capital $19,875,015 $ 37,160,843
================ ================
See accompanying notes.
12
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
2002 2001 2000
---- ---- ----
Revenues:
Leasing activities:
Operating leases $ 4,254,501 $ 5,850,367 $ 9,296,456
Direct financing leases 307,915 384,516 1,276,509
Leveraged leases 11,387 51,029 78,575
Gain on sales of assets 940,473 388,512 329,210
Interest income 15,392 23,678 128,713
Other 2,011,614 1,241,371 29,176
---------------- --------------- ----------------
7,541,282 7,939,473 11,138,639
Expenses:
Depreciation and amortization 3,512,271 4,432,146 6,361,613
Cost reimbursements to General Partner 688,441 845,318 476,128
Interest expense 583,106 1,144,360 1,393,719
Equipment and incentive management fees to General Partner 301,303 485,965 605,066
Railcar maintenance 230,683 233,989 155,281
Professional fees 115,178 260,007 59,208
Provision for losses and impairments 487,872 - -
Provision for (recovery of) doubtful accounts (90,000) 64,680 -
Other 257,161 302,250 404,894
---------------- --------------- ----------------
6,086,015 7,768,715 9,455,909
---------------- --------------- ----------------
Net income $ 1,455,267 $ 170,758 $ 1,682,730
================ =============== ================
Net income:
General Partner $ 14,553 $ 1,708 $ 16,827
Limited Partners 1,440,714 169,050 1,665,903
---------------- --------------- ----------------
$ 1,455,267 $ 170,758 $ 1,682,730
================ =============== ================
Net income per Limited Partnership unit $ 0.12 $ 0.01 $ 0.13
Weighted average number of units outstanding 12,478,700 12,497,000 12,497,000
See accompanying notes.
13
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
Limited Partners General
Units Amount Partner Total
----- ------ ------- -----
Balance December 31, 1999 12,497,000 $44,650,578 $ 169,819 $ 44,820,397
Distributions to Limited Partners ($1.21 per Unit) (15,086,551) - (15,086,551)
Net income 1,665,903 16,827 1,682,730
---------------- ----------------- -------------- ----------------
Balance December 31, 2000 12,497,000 31,229,930 186,646 31,416,576
Distributions to Limited Partners ($1.04 per Unit) (13,040,909) - (13,040,909)
Net income 169,050 1,708 170,758
---------------- ----------------- -------------- ----------------
Balance December 31, 2001 12,497,000 18,358,071 188,354 18,546,425
Distributions to Limited Partners ($0.09 per Unit) (1,088,393) - (1,088,393)
Units repurchased (25,400) (48,294) - (48,294)
Net income 1,440,714 14,553 1,455,267
---------------- ----------------- -------------- ----------------
Balance December 31, 2002 12,471,600 $18,662,098 $ 202,907 $ 18,865,005
================ ================= ============== ================
See accompanying notes.
14
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
Operating activities: 2002 2001 2000
---- ---- ----
Net income $ 1,455,267 $ 170,758 $ 1,682,730
Adjustment to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 3,512,271 4,432,146 6,361,613
Leveraged lease income (11,387) (51,029) (78,575)
Gain on sales of assets (940,473) (388,512) (329,210)
Provision for losses and impairments 487,872 - -
Provision for (recovery of) doubtful accounts (90,000) 64,680 -
Changes in operating assets and liabilities:
Accounts receivable 918,666 985,225 473,319
Other receivables - 1,309,783 -
Accounts payable, General Partner (30,690) 67,842 (40,203)
Accounts payable, other 39,469 (704,241) 500,818
Accrued interest payable (17,998) (40,265) (45,316)
Unearned lease income (99,376) (67,197) (222,401)
Net cash provided by operating activities 5,223,621 5,779,190 8,302,775
Investing activities:
Proceeds from sales of assets 15,369,490 3,733,992 7,531,930
Reduction of net investment in direct financing leases 1,402,177 1,625,595 2,243,051
----------------- -------------- ----------------
Net cash provided by investing activities 16,771,667 5,359,587 9,774,981
Financing activities:
Repayments of non-recourse debt (10,995,813) (4,726,039) (5,749,327)
Repayments of borrowings under line of credit (7,000,000) (2,700,000) -
Distributions to Limited Partners (1,088,393) (13,040,909) (15,086,551)
Borrowings under line of credit 500,000 8,200,000 1,000,000
Repurchases of limited partnership units (48,294) - -
----------------- -------------- ----------------
Net cash used in financing activities (18,632,500) (12,266,948) (19,835,878)
----------------- -------------- ----------------
Net increase (decrease) in cash and cash equivalents 3,362,788 (1,128,171) (1,758,122)
Cash and cash equivalents at beginning of year 443,772 1,571,943 3,330,065
----------------- -------------- ----------------
Cash and cash equivalents at end of year $ 3,806,560 $ 443,772 $ 1,571,943
================= ============== ================
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 601,104 $ 1,184,625 $ 1,439,035
================ =============== ================
See accompanying notes.
15
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
1. Organization and Partnership matters:
ATEL Cash Distribution Fund V, L.P. (the Partnership) was formed under the
laws of the state of California in September 1992 for the purpose of acquiring
equipment to engage in equipment leasing and sales activities, primarily in the
United States.
Upon the sale of the minimum amount of Units of Limited Partnership
interest (Units) of $1,200,000 and the receipt of the proceeds thereof on March
19, 1993, the Partnership commenced operations.
The General Partner of the Partnership is ATEL Financial Services LLC
(ATEL). Prior to converting to a limited liability company structure, the
General Partner was formerly known as ATEL Financial Corporation.
The Partnership's business consists of leasing various types of equipment.
As of
December 31, 2002, the original terms of the leases ranged from two months to
twenty years.
Pursuant to the Limited Partnership Agreement, the General Partner receives
compensation and reimbursements for services rendered on behalf of the
Partnership (See Notes 5 and 6). The General Partner is required to maintain in
the Partnership reasonable cash reserves for working capital, the repurchase of
Units and contingencies.
2. Summary of significant accounting policies:
Equipment on operating leases:
Equipment on operating leases is stated at cost. Depreciation is being
provided by use of the straight-line method over the terms of the related leases
to the equipment's estimated residual values at the end of the leases.
Revenues from operating leases are recognized evenly over the lives of the
related leases.
Direct financing leases:
Income from direct financing lease transactions is reported using the
financing method of accounting, in which the Partnership's investment in the
leased property is reported as a receivable from the lessee to be recovered
through future rentals. The income portion of each rental payment is calculated
so as to generate a constant rate of return on the net receivable outstanding.
Investment in leveraged leases:
Leases that are financed principally with non-recourse debt at lease
inception and that meet certain other criteria are accounted for as leveraged
leases. Leveraged lease contracts receivable are stated net of the related
non-recourse debt service (which includes unpaid principal and aggregate
interest on such debt) plus estimated residual values. Unearned income
represents the excess of anticipated cash flows (after taking into account the
related debt service and residual values) over the investment in the lease and
is amortized using a constant rate of return applied to the net investment when
such investment is positive.
16
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
2. Summary of significant accounting policies (continued):
Asset valuation:
Recorded values of the Company's asset portfolio are periodically reviewed
for impairment in accordance with Statement of Financial Accounting Standards
(SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
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 estimated residual value of
the asset at the end of the asset's expected holding period and estimates of
undiscounted future rents. The residual value assumes, among other things, that
the asset is utilized normally in an open, unrestricted and stable market.
Short-term fluctuations in the market place 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 the discounted estimated future cash flows) of the assets and its carrying
value on the measurement date.
Statements of cash flows:
For purposes of the Statements of Cash Flows, cash and cash equivalents
include cash in banks and cash equivalent investments with original maturities
of ninety days or less.
Income taxes:
The Partnership does not provide for income taxes since all income and
losses are the liability of the individual partners and are allocated to the
partners for inclusion in their individual tax returns.
The tax basis of the Partnership's net assets and liabilities varies from
the amounts presented in these financial statements (unaudited):
2002 2001
---- ----
Financial statement basis of net assets $18,865,005 $ 18,546,425
Tax basis of net assets 23,293,593 16,617,377
---------------- ----------------
Difference $ 4,428,588 $ 1,929,048
================ ================
The primary differences between the tax basis of net assets and the amounts
recorded in the financial statements are the result of differences in accounting
for syndication costs and differences between the depreciation methods used in
the financial statements and the Partnership's tax returns.
The following reconciles the net income reported in these financial
statements to the loss reported on the Partnership's federal tax return
(unaudited):
2002 2001 2000
---- ---- ----
Net income per financial statements $ 1,455,267 $ 170,758 $ 1,682,730
Adjustment to depreciation expense 2,160,483 (379,786) (491,694)
Provisions for losses and doubtful accounts 487,872 64,680 -
Adjustments to revenues 3,631,306 4,963,156 8,201,164
---------------- --------------- ----------------
Net income per federal tax return $ 7,734,928 $ 4,818,808 $ 9,392,200
================ =============== ================
17
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
2. Summary of significant accounting policies (continued):
Credit risk:
Financial instruments that potentially subject the Partnership to
concentrations of credit risk include cash and cash equivalents, accounts
receivable, direct finance lease receivables and other receivables. The
Partnership places its cash deposits and temporary cash investments with
creditworthy, high quality financial institutions. The concentration of such
deposits and temporary cash investments is not deemed to create a significant
risk to the Partnership. Accounts receivable represent amounts due from lessees
in various industries, related to equipment on operating and direct financing
leases. See Note 7 for a description of lessees by industry as of December 31,
2002.
Basis of presentation:
The accompanying financial statements as of December 31, 2002 and 2001 and
for the three years ended December 31, 2002 have been prepared in accordance
with accounting principles generally accepted in the United States. Certain
prior year amounts have been reclassified to conform to the current year
presentation.
Use of estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.
Per unit data:
Net income and distributions per unit are based upon the weighted average
number of units outstanding during the period.
Derivative financial instruments:
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, which established new accounting
and reporting standards for derivative instruments. SFAS No. 133 has been
amended by SFAS No. 137, issued in June 1999, and by SFAS No. 138, issued in
June 2000.
SFAS No. 133, as amended, requires the Partnership to recognize all derivatives
as either assets or liabilities in the balance sheet and measure those
instruments at fair value. It further provides criteria for derivative
instruments to be designated as fair value, cash flow, or foreign currency
hedges, and establishes accounting standards for reporting changes in the fair
value of the derivative instruments.
The Partnership does not utilize derivative financial instruments.
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
2. Summary of significant accounting policies (continued):
Recent accounting pronouncement:
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets (SFAS 144), which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of, and the accounting and reporting
provisions of APB Opinion No. 30, Reporting the Results of Operations, for a
disposal of a segment of a business. SFAS 144 is effective for fiscal years
beginning after December 15, 2001, with earlier application encouraged. The
Partnership adopted SFAS 144 as of January 1, 2002. The adoption of the
Statement did not have a significant impact on the Partnership's financial
position and results of operations.
Initial direct costs:
The Partnership capitalizes initial direct costs associated with the
acquisition of lease assets. The costs are amortized over a five year period
using a straight line method.
Accounts receivable:
Accounts receivable represent the amounts billed under lease contracts and
currently due to the Partnership. Allowances for doubtful accounts are typically
established based on historical charge offs and collection experience and are
usually determined by specifically identified lessees and invoiced amounts.
3. Investments in equipment and leases:
As of December 31, 2002, the Partnership's investments in equipment and
leases consist of the following:
Depreciation
Expense or Reclass-
December 31, Amortization ifications or December 31,
2001 of Leases Dispositions 2002
---- --------- -------------- ----
Net investment in operating leases $26,533,841 $(3,114,722) $(9,934,670) $13,484,449
Net investment in direct financing leases 8,094,439 (1,402,177) (5,512,181) 1,180,081
Net investment in leveraged leases 1,073,050 11,387 (944,425) 140,012
Assets held for sale or lease 725,609 - 2,798,018 3,523,627
Residual value interests 835,759 - (835,759) -
Reserve for losses and impairments (2,224,816) (487,872) - (2,712,688)
Initial direct costs, net of accumulated amortization
of $544,354 in 2002 and $1,115,605 in 2001 429,786 (397,549) - 32,237
---------------- ----------------- -------------- ----------------
$35,467,668 $(5,390,933) $(14,429,017) $15,647,718
================ ================= ============== ================
18
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
3. Investments in equipment and leases (continued):
Management periodically reviews the carrying values of its assets on leases
and assets held for lease or sale. As a result of that review, management
determined that the value of a fleet of jumbo covered hopper cars had declined
in value to the extent that the carrying values had become impaired. This
decline is the result of decreased long-term demand for these types of assets
and a corresponding reduction in the amounts of rental payments that these
assets currently command. Management has recorded a provision for the decline in
value of those assets in the amount of $487,872 for the year ended December 31,
2002.
Operating leases:
Property on operating leases consists of the following:
Reclass-
December 31, ifications or December 31,
2001 Additions Dispositions 2002
---- --------- -------------- ----
Transportation $36,606,091 $ - $(16,012,920) $ 20,593,171
Manufacturing 2,666,354 - - 2,666,354
Construction 11,425,007 - (9,252,200) 2,172,807
Materials handling 248,749 - (199,199) 49,550
---------------- ---------------- --------------- ----------------
50,946,201 - (25,464,319) 25,481,882
Less accumulated depreciation (24,412,360) (3,114,722) 15,529,649 (11,997,433)
---------------- ---------------- --------------- ----------------
$26,533,841 $(3,114,722) $(9,934,670) $ 13,484,449
================ ================ =============== ================
Direct financing leases:
As of December 31, 2002, investment in direct financing leases consists of
railroad auto racks, railroad tank cars and retail store fixtures. The following
lists the components of the Partnership's investment in direct financing leases
as of December 31, 2002 and 2001:
2002 2001
---- ----
Total minimum lease payments receivable $ 33,510 $ 7,918,584
Estimated residual values of leased equipment (unguaranteed) 1,148,968 2,857,964
---------------- ---------------
Investment in direct financing leases 1,182,478 10,776,548
Less unearned income (2,397) (2,682,109)
---------------- ---------------
Net investment in direct financing leases $ 1,180,081 $ 8,094,439
================ ===============
All of the property on leases was acquired in the years 1993 through 1997.
19
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
3. Investments in equipment and leases (continued):
Direct financing leases (continued):
At December 31, 2002, the aggregate amounts of future minimum lease payments
under operating and direct financing leases are as follows:
Direct
Year ending Operating Financing
December 31, Leases Leases Total
------------ ------ ------ -----
2003 $ 1,393,953 $ 33,510 $ 1,427,463
2004 572,253 - 572,253
2005 24,987 - 24,987
2006 14,122 - 14,122
--------------- ---------------- ----------------
$ 2,005,315 $ 33,510 $ 2,038,825
=============== ================ ================
Leveraged leases:
As of December 31, 2002, investment in leveraged leases consists of
materials handling equipment. The following lists the components of the
Partnership's investment in leveraged leases as of December 31, 2002 and 2001:
2002 2001
---- ----
Aggregate rentals receivable $ 46,368 $ 252,721
Less aggregate principal and interest payable on non-recourse loans - (45,097)
Estimated residual value of leased assets 96,000 880,781
Less unearned income (2,356) (15,355)
----------------- --------------
Net investment in leveraged leases $ 140,012 $ 1,073,050
================= ==============
Reserve for losses and impairments and allowances for doubtful accounts:
Allowance for Allowance for
doubtful doubtful
Reserve for accounts - accounts -
losses and Other Accounts
impairments Receivables Receivables
Balance December 31, 1999 $ 2,254,809 $ 100,605 $ -
Charge offs (29,993)
Provision - - -
---------------- ---------------- ---------------
Balance December 31, 2000 2,224,816 100,605 -
Reclassification (100,605) 100,605
Provision - - 64,680
---------------- ---------------- ---------------
Balance December 31, 2001 2,224,816 - 165,285
Provision (recovery) 487,872 - (90,000)
---------------- ---------------- ---------------
Balance December 31, 2002 $ 2,712,688 $ - $ 75,285
================ ================ ===============
20
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
4. Non-recourse debt:
At December 31, 2002, non-recourse debt consists of notes payable to
financial institutions. The notes are due in varying monthly and quarterly
payments. Interest on the notes is at fixed rates from 5.5% to 8.644%. The notes
are secured by assignments of lease payments and pledges of assets. At December
31, 2002, the carrying value of the pledged assets is approximately $1,298,455.
The notes mature from 2003 through 2006.
As of December 31, 2002, future minimum payments of non-recourse debt are
as follows:
Year ending
December 31, Principal Interest Total
2003 $ 340,171 $ 30,455 $ 370,626
2004 151,083 18,384 169,467
2005 162,167 7,301 169,468
2006 14,039 83 14,122
--------------- ---------------- ----------------
$ 667,460 $ 56,223 $ 723,683
=============== ================ ================
5. Related party transactions:
The terms of the Limited Partnership Agreement provide that the General
Partner and/or affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The Limited Partnership Agreement allows for the reimbursement of costs
incurred by the General Partner in providing administrative services to the
Partnership. Administrative services provided include Partnership accounting,
investor relations, legal counsel and lease and equipment documentation. The
General Partner is not reimbursed for services whereby it is entitled to receive
a separate fee as compensation for such services, such as acquisition and
disposition of equipment. Reimbursable costs incurred by the General Partner are
allocated to the Partnership based upon actual time incurred by employees
working on Partnership business and an allocation of rent and other costs based
on utilization studies.
Each of ATEL Leasing Corporation ("ALC"), ATEL Equipment Corporation
("AEC"), ATEL Investor Services ("AIS") and ATEL Financial Services LLC is a
wholly-owned subsidiary of ATEL Capital Group and performs services for the
Partnership. Acquisition services are performed for the Partnership by ALC,
equipment management, lease administration and asset disposition services are
performed by AEC, investor relations and communications services are performed
by AIS and general administrative services for the Partnership are performed by
ATEL Financial Services LLC.
Substantially all employees of the General Partner record time incurred in
performing administrative services on behalf of all of the Partnerships serviced
by the General Partner. The General Partner believes that the costs reimbursed
are the lower of (i) actual costs incurred on behalf of the Partnership or (ii)
the amount the Partnership would be required to pay independent parties for
comparable administrative services in the same geographic location and are
reimbursable in accordance with the Limited Partnership Agreement.
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
5. Related party transactions (continued):
The General Partner and/or affiliates earned fees, commissions and
reimbursements pursuant to the Limited Partnership Agreement as follows during
2002, 2001 and 2000:
2002 2001 2000
---- ---- ----
Costs reimbursed to General Partner $ 688,441 $ 845,318 $ 476,128
Incentive management fees (computed as 5% of distributions
of cash from operations, as defined in the Limited
Partnership Agreement) and equipment management fees
(computed as 5% of gross revenues from operating leases, as
defined in the Limited Partnership Agreement plus 2% of
gross revenues from full payout leases, as defined in the
Limited Partnership Agreement) 301,303 485,965 605,066
------------- --------------- ----------------
$ 989,744 $ 1,331,283 $ 1,081,194
============= =============== ================
6. Partners' capital:
As of December 31, 2002, 12,471,600 Units were issued and outstanding (in
addition to the Units issued to the Initial Limited Partners). As of December
31, 2001, 12,497,000 Units were issued and outstanding (in addition to the Units
issued to the Initial Limited Partners). The Partnership is authorized to issue
up to 12,500,000 Units of Limited Partnership interest in addition to those
issued to the initial Limited Partners.
As defined in the Limited Partnership Agreement, the Partnership's Net
Profits, Net Losses, and Tax Credits are to be allocated 99% to the Limited
Partners and 1% to the General Partner.
Available Cash from Operations and Cash from Sales and Refinancing are to
be distributed as follows:
First, 5% of Distributions of Cash from Operations to the General Partner
as Incentive Management Fee.
Second, the balance to the Limited Partners until the Limited Partners have
received Aggregate Distributions in an amount equal to their Original Invested
Capital, as defined, plus a 10% per annum cumulative (compounded daily) return
on their Adjusted Invested Capital.
Third, the General Partner will receive as Incentive Management
Compensation, the following:
(A) 10% of remaining Cash from Operations and
(B) 15% of remaining Cash from Sales or Refinancing.
Fourth, the balance to the Limited Partners.
21
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
7. Concentration of credit risk and major customers:
The Partnership leases equipment to lessees in diversified industries.
Leases are subject to the General Partner's credit committee review. The leases
provide for the return of the equipment upon default.
As of December 31, 2002, 2001 and 2000, there were concentrations (defined
as greater than 10%) of equipment leased to lessees in certain industries (as a
percentage of total equipment cost) as follows:
2002 2001 2000
---- ---- ----
Rail transportation 53% 41% 35%
Mining 21% 10% *
Manufacturing, other 15% 26% 29%
Construction * 13% 11%
* Less than 10%.
During 2002, four customers each comprised 19%, 18%, 14% and 10% of the
Partnership's revenues from leases. During 2001, three customers each comprised
16%, 13% and 13% of the Partnership's revenues from leases. During 2000, two
customers each comprised 11% of the Partnership's revenues from leases.
8. Line of credit:
The Partnership participates with the General Partner and certain of its
affiliates in a $55,645,837 revolving line of credit (comprised of an
acquisition facility and a warehouse facility) with a financial institution that
includes certain financial covenants. The line of credit expires on June 28,
2004. As of December 31, 2002, borrowings under the facility were as follows:
Amount borrowed by the Partnership under the acquisition facility $ -
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
facility 29,000,000
----------------
Total borrowings under the acquisition facility 29,000,000
Amounts borrowed by the General Partner and its sister corporation under the warehouse facility -
----------------
Total outstanding balance $ 29,000,000
================
Total available under the line of credit $ 55,645,837
Total outstanding balance (29,000,000)
----------------
Remaining availability $ 26,645,837
================
Draws on the acquisition facility by any individual borrower are secured
only by that borrower's assets, including equipment and related leases.
Borrowings on the warehouse facility are recourse jointly to certain of the
affiliated partnerships and limited liability companies, the Partnership and the
General Partner.
22
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
8. Line of credit (continued):
During 2002, 2001 and 2000, the Partnership borrowed $500,000, $8,200,000
and $1,000,000, respectively, under the line of credit. The Partnership repaid
$7,000,000 and $2,700,000 under the line of credit in 2002 and 2001,
respectively. There were no repayments on the line of credit during 2000.
Interest on the line of credit is based on either the thirty day LIBOR rate or
the bank's prime rate.
The credit agreement includes certain financial covenants applicable to
each borrower. The Partnership was in compliance with its covenants as of
December 31, 2002.
9. Fair value of financial instruments:
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument for which it is practicable to estimate
that value.
Cash and cash equivalents:
The carrying amount of cash and cash equivalents approximates fair value
because of the short-term maturity of these instruments.
Non-recourse debt:
The fair value of the Partnership's non-recourse debt is estimated using
discounted cash flow analyses, based on the Partnership's current incremental
borrowing rates for similar types of borrowing arrangements. The estimated fair
value of the Partnership's non-recourse debt at December 31, 2002 is $626,340.
10. Contingencies:
On September 11, 2000, Republic Transportation Finance, Inc. and its
parent, Republic Financial Corporation (collectively, "Republic"), filed suit
against the Partnership, claiming relief in the amount of $1,110,770,
representing Republic's interpretation of their share of the proceeds to a
residual sharing arrangement. The Partnership did not dispute that sums were
owed to Republic, merely the amount. The Partnership believed that Republic was
only entitled to $587,317 (which amount was included in accounts payable in the
Partnership's financial statements at December 31, 2000), based upon the
Partnership's interpretation of the underlying contract. Although the
Partnership believed it had a reasonable basis for prevailing, it settled this
matter for a total of $750,000 in 2001. The additional $162,683 is included in
other expenses in 2001.
23
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
11. Selected quarterly data (unaudited):
March 31, June 30, September 30, December 31,
Quarter ended 2001 2001 2001 2001
---- ---- ---- ----
Total revenues $ 2,016,115 $ 2,402,467 $ 1,604,069 $ 1,916,822
Net Income (loss) $ 106,919 $ 612,077 $ (363,187) $ (185,051)
Net income (loss) per limited partnership unit $ 0.01 $ 0.05 $ (0.03) $ (0.02)
March 31, June 30, September 30, December 31,
Quarter ended 2002 2002 2002 2002
---- ---- ---- ----
Total revenues $ 1,615,661 $ 3,430,489 $ 1,814,699 $ 680,433
Net Income (loss) $ (98,057) $ 1,761,800 $ 410,056 $ (618,532)
Net income (loss) per limited partnership unit $ (0.01) $ 0.14 $ 0.03 $ (0.04)
24
Item 9. CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
The registrant is a Limited Partnership and, therefore, has no officers or
directors.
All of the outstanding capital stock of ATEL Financial Services LLC (the
General Partner) is held by ATEL Capital Group ("ACG"), a holding company formed
to control ATEL and affiliated companies. The outstanding voting capital stock
of ATEL Capital Group is owned 5% by A. J. Batt and 95% by Dean Cash.
Each of ATEL Leasing Corporation ("ALC"), ATEL Equipment Corporation
("AEC"), ATEL Investor Services ("AIS") and ATEL Financial Services LLC ("AFS")
is a wholly-owned subsidiary of ATEL Capital Group and performs services for the
Company. Acquisition services are performed for the Company by ALC, equipment
management, lease administration and asset disposition services are performed by
AEC, investor relations and communications services are performed by AIS and
general administrative services for the Company are performed by AFS. ATEL
Securities Corporation ("ASC") is a wholly-owned subsidiary of AFS.
The officers and directors of ATEL Capital Group and its affiliates are as
follows:
Dean L. Cash Chairman of the Board of Directors of ACG, AFS, ALC, AEC,
AIS and ASC; President and Chief Executive Officer of
ACG, AFS and AEC
Paritosh K. Choksi Director, Executive Vice President, Chief Operating Officer
and Chief Financial Officer of ACG, AFS, ALC, AEC and
AIS
Donald E. Carpenter Vice President and Controller of ACG, AFS, ALC, AEC and
AIS; Chief Financial Officer of ASC
Vasco H. Morais Senior Vice President, Secretary and General Counsel for
ACG, AFS, ALC, AIS and AEC
Dean L. Cash, age 52, joined ATEL as director of marketing in 1980 and has been
a vice president since 1981, executive vice president since 1983 and a director
since 1984. He has been President and CEO since April 2001. Prior to joining
ATEL, Mr. Cash was a senior marketing representative for Martin Marietta
Corporation, data systems division, from 1979 to 1980. From 1977 to 1979, he was
employed by General Electric Corporation, where he was an applications
specialist in the medical systems division and a marketing representative in the
information services division. Mr. Cash was a systems engineer with Electronic
Data Systems from 1975 to 1977, and was involved in maintaining and developing
software for commercial applications. Mr. Cash received a B.S. degree in
psychology and mathematics in 1972 and an M.B.A. degree with a concentration in
finance in 1975 from Florida State University. Mr. Cash is an arbitrator with
the American Arbitration Association.
Paritosh K. Choksi, age 49, joined ATEL in 1999 as a director, senior vice
president and its chief financial officer. He became its executive vice
president and COO in April 2001. Prior to joining ATEL, Mr. Choksi was chief
financial officer at Wink Communications, Inc. from 1997 to 1999. From 1977 to
1997, Mr. Choksi was with Phoenix American Incorporated, a financial services
and management company, where he held various positions during his tenure, and
was senior vice president, chief financial officer and director when he left the
company. Mr. Choksi was involved in all corporate matters at Phoenix and was
responsible for Phoenix's capital market needs. He also served on the credit
committee overseeing all corporate investments, including its venture lease
portfolio. Mr. Choksi was a part of the executive management team which caused
Phoenix's portfolio to increase from $50 million in assets to over $2 billion.
Mr. Choksi received a bachelor of technology degree in mechanical engineering
from the Indian Institute of Technology, Bombay; and an M.B.A. degree from the
University of California, Berkeley.
Donald E. Carpenter, age 54, joined ATEL in 1986 as controller. Prior to
joining ATEL, Mr. Carpenter was an audit supervisor with Laventhol & Horwath,
certified public accountants in San Francisco, California, from 1983 to 1986.
From 1979 to 1983, Mr. Carpenter was an audit senior with Deloitte, Haskins &
Sells, certified public accountants, in San Jose, California. From 1971 to 1975,
Mr. Carpenter was a Supply Corp officer in the U. S. Navy. Mr. Carpenter
received a B.S. degree in mathematics (magna cum laude) from California State
University, Fresno in 1971 and completed a second major in accounting in 1978.
Mr. Carpenter has been a California certified public accountant since 1981.
25
Vasco H. Morais, age 44, joined ATEL in 1989 as general counsel to provide
legal support in the drafting and reviewing of lease documentation, advising on
general corporate law matters, and assisting on securities law issues. From 1986
to 1989, Mr. Morais was employed by the BankAmeriLease Companies, Bank of
America's equipment leasing subsidiaries, providing in-house legal support on
the documentation of tax-oriented and non-tax oriented direct and leveraged
lease transactions, vendor leasing programs and general corporate matters. Prior
to the BankAmeriLease Companies, Mr. Morais was with the Consolidated Capital
Companies in the corporate and securities legal department involved in drafting
and reviewing contracts, advising on corporate law matters and securities law
issues. Mr. Morais received a B.A. degree in 1982 from the University of
California in Berkeley, a J.D. degree in 1986 from Golden Gate University Law
School and an M.B.A. (Finance) in 1997 from Golden Gate University. Mr. Morais
has been an active member of the State Bar of California since 1986.
Item 11. EXECUTIVE COMPENSATION
The registrant is a Limited Partnership and, therefore, has no officers or
directors.
Set forth hereinafter is a description of the nature of remuneration paid
and to be paid to the General Partner and its Affiliates. The amount of such
remuneration paid for the years ended December 31, 2002, 2001 and 2000 is set
forth in Item 8 of this report under the caption "Financial Statements and
Supplementary Data - Notes to the Financial Statements - Related party
transactions," at Note 5 thereof, which information is hereby incorporated by
reference.
Selling Commissions
The Partnership paid selling commissions in the amount of 9.5% of Gross
Proceeds, as defined, ($11,875,000) to ATEL Securities Corporation, an affiliate
of the General Partner. Of this amount, $10,170,534 was reallowed to other
broker/dealers. None have been paid since 1994, nor will any additional amounts
be paid in future periods.
Acquisition Fees
Acquisition fees are to be paid to the General Partner for services
rendered in finding, reviewing and evaluating equipment to be purchased by the
Partnership and rejecting equipment not to be purchased by the Partnership. The
total amount of acquisition fees to be paid to the General Partner or their
Affiliates is not to exceed 3.5% of the aggregate purchase piece of equipment
acquired, not to exceed approximately 4.75% of the Gross Proceeds of the
Offering.
The maximum amount of such fees to be paid is $5,929,583, all of which had
been paid as of December 31, 1996. No such fees have been paid subsequent to
that date.
Equipment Management Fees
As compensation for its services rendered generally in managing or
supervising the management of the Partnership's equipment and in supervising
other ongoing services and activities including, among others, arranging for
necessary maintenance and repair of equipment, collecting revenue, paying
operating expenses, determining the equipment is being used in accordance with
all operative contractual arrangements, property and sales tax monitoring and
preparation of financial data, the General Partner or its affiliates are
entitled to receive management fees which are payable for each fiscal quarter
and are to be in an amount equal to (i) 5% of the gross lease revenues from
"operating" leases and (ii) 2% of gross lease revenues from "full payout" leases
which contain net lease provisions. See Note 5 to the financial statements
included at Item 8 of this report for amounts paid.
Incentive Management Fees
As compensation for its services rendered in establishing and maintaining
the composition of the Partnership's equipment portfolio and its acquisition and
debt strategies and supervising fund administration including supervising the
preparation of reports and maintenance of financial and operating data of the
Partnership, Securities and Exchange Commission and Internal Revenue Service
filings, returns and reports, the General Partner is entitled to receive the
Partnership management fee which shall be payable for each fiscal quarter and
shall be an amount equal to 5% of distributions of cash from operations until
such time as the Limited Partners have received aggregate distributions of cash
from operations in an amount equal to their original invested capital plus a 10%
per annum return on their average adjusted invested capital (as defined in the
Limited Partnership Agreement). Thereafter, the incentive management fee shall
be 15% of all distributions of cash from operations, sales or refinancing. See
Notes 5 and 6 to the financial statements included at Item 8 of this report for
amounts paid.
Equipment Resale Fees
26
As compensation for services rendered in connection with the sale of
equipment, the General Partner is entitled to receive an amount equal to the
lesser of (i) 3% of the sales price of the equipment, or (ii) one-half the
normal competitive equipment sales commission charged by unaffiliated parties
for such services. Such fee is payable only after the Limited Partners have
received a return of their adjusted invested capital (as defined in the Limited
Partnership Agreement) plus 10% of their adjusted invested capital per annum
calculated on a cumulative basis, compounded daily, commencing the last day of
the quarter in which the limited partner was admitted to the Partnership. To
date, none have been accrued or paid.
Equipment Re-lease Fee
As compensation for providing re-leasing services, the General Partner is
entitled to receive fees equal to 2% of the gross rentals or the comparable
competitive rate for such services relating to comparable equipment, whichever
is less, derived from the re-lease provided that (i) the General Partner or
their affiliates have and will maintain adequate staff to render such services
to the Partnership, (ii) no such re-lease fee is payable in connection with the
re-lease of equipment to a previous lessee or its affiliates, (iii) the General
Partner or its affiliates have rendered substantial re-leasing services in
connection with such re-lease and (iv) the General Partner or its affiliates are
compensated for rendering equipment management services. To date, none have been
accrued or paid.
General Partner's Interest in Operating Proceeds
Net income, net loss and investment tax credits are allocated 99% to the
Limited Partners and 1% to the General Partner. See the statements of income
included in Item 8 of this report for the amounts allocated to the General and
Limited Partners in 2002, 2001 and 2000.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security Ownership of Certain Beneficial Owners
At December 31, 2002, no investor is known to the Partnership to hold
beneficially more than 5% of the issued and outstanding Units.
Security Ownership of Management
The shareholders of the General Partner are beneficial owners of Limited
Partnership Units as follows:
(1) (2) (3) (4)
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- ---------------- -------------------- --------
Limited Partnership Units A. J. Batt Initial Limited Partner Units 0.0002%
600 California Street, 6th Floor 25 Units ($250)
San Francisco, CA 94108 (owned by wife)
Limited Partnership Units Dean Cash Initial Limited Partner Units 0.0002%
600 California Street, 6th Floor 25 Units ($250)
San Francisco, CA 94108 (owned by wife)
Changes in Control
The Limited Partners have the right, by vote of the Limited Partners owning
more than 50% of the outstanding limited Partnership units, to remove a General
Partner.
The General Partner may at any time call a meeting of the Limited Partners
or a vote of the Limited Partners without a meeting, on matters on which they
are entitled to vote, and shall call such meeting or for vote without a meeting
following receipt of a written request therefore of Limited Partners holding 10%
or more of the total outstanding Limited Partnership units.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The responses to Item 1 of this report under the caption "Equipment Leasing
Activities," Item 8 of this report under the caption "Financial Statements and
Supplemental Data - Notes to the Financial Statements - Related party
transactions" at Note 5 thereof, and Item 11 of this report under the caption
"Executive Compensation," are hereby incorporated by reference.
27
Item 14. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
Under the supervision and with the participation of our management (ATEL
Financial Services, LLC as General Partner of the registrant, including the
chief executive officer and chief financial officer), an evaluation of the
effectiveness of the design and operation of the Partnership's disclosure
controls and procedures [as defined in Rules 240.13a-14(c) and 15d-14(c) under
the Securities Exchange Act of 1934] was performed as of a date within ninety
days before the filing date of this annual report. Based upon this evaluation,
the chief executive officer and chief financial officer concluded that, as of
the evaluation date, our disclosure controls and procedures were effective for
the purposes of recording, processing, summarizing and timely reporting
information required to be disclosed by us in the reports that we file under the
Securities Exchange Act of 1934 and that such information is accumulated and
communicated to our management in order to allow timely decisions regarding
required disclosure.
Changes in internal controls
There have been no significant changes in our internal controls or in other
factors that could significantly affect our disclosure controls and procedures
subsequent to the evaluation date, nor were there any significant deficiencies
or material weaknesses in our internal controls.
PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) Financial Statements and Schedules
1. Financial Statements
Included in Part II of this report:
Report of Independent Auditors
Balance Sheets at December 31, 2002 and 2001
Statements of Income for the years ended December 31, 2002, 2001 and
2000 Statements of Changes in Partners' Capital for the years ended
December 31, 2002, 2001
and 2000
Statements of Cash Flows for the years ended December 31, 2002, 2001
and 2000 Notes to Financial Statements
2. Financial Statement Schedules
All 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.
(b) Reports on Form 8-K for the fourth quarter of 2002 None
(c) Exhibits (3) and (4) Agreement of Limited Partnership, included as
Exhibit B to Prospectus (Exhibit 28.1), is incorporated herein by
reference to the Report on Form 10K for the period ended December 31,
1993 (File No. 33-53162) SIGNATURES
28
Pursuant to the requirements of Section 13 or 15(d) 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: 3/26/03
ATEL Cash Distribution Fund V, L.P.
(Registrant)
By: ATEL Financial Services, LLC
General Partner of Registrant
By: /s/ Dean Cash
-------------------------------------------------
Dean Cash,
President and Chief Executive Officer of
ATEL Financial Services, LLC (General
Partner)
By: /s/ Paritosh K. Choksi
-------------------------------------------------
Paritosh K. Choksi,
Executive Vice President of ATEL
Financial Services, LLC (General Partner)
29
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the persons in the capacities and on the dates
indicated.
SIGNATURE CAPACITIES DATE
/s/ Dean Cash President, Chairman and Chief 3/26/03
- -------------------------- Executive Officer of ATEL Financial
Dean Cash Services, LLC
/s/ Paritosh K. Choksi Executive Vice President and 3/26/03
- -------------------------- director of ATEL Financial Services, LLC,
Paritosh K. Choksi Principal financial officer of registrant;
principal financial officer and director
of ATEL Financial Services, LLC
/s/ Donald E. Carpenter Principal accounting officer of registrant; 3/26/03
- -------------------------- principal accounting officer of ATEL
Donald E. Carpenter Financial Services, LLC
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act:
No proxy materials have been or will be sent to security holders. An annual
report will be furnished to security holders subsequent to the filing of this
report on Form 10-K, and copies thereof will be furnished supplementally to the
Commission when forwarded to the security holders.
30
CERTIFICATIONS
I, Paritosh K. Choksi, certify that:
1. I have reviewed this annual report on Form 10-K of ATEL Cash Distribution
Fund V, LP;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: 3/26/03
/s/ Paritosh K. Choksi
- ----------------------------------------------------------
Paritosh K. Choksi
Principal financial officer of registrant, Executive
Vice President of General Partner
31
CERTIFICATIONS
I, Dean L. Cash, certify that:
1. I have reviewed this annual report on Form 10-K of ATEL Cash Distribution
Fund V, LP;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: 3/26/03
/s/ Dean Cash
- ----------------------------------------------------------
Dean L. Cash
President and Chief Executive
Officer of General Partner
32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual report on Form 10K of ATEL Cash Distribution
Fund V, LP, (the "Partnership") for the period ended December 31, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
and pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the
Sarbanes-Oxley Act of 2002, I, Dean L. Cash, Chief Executive Officer of ATEL
Financial Services, LLC, general partner of the Partnership, hereby certify
that:
1. The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934 ; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Partnership.
Date: 3/26/03
/s/ Dean Cash
- ------------------------------------------
Dean L. Cash
President and Chief Executive
Officer of General Partner
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual report on Form 10K of ATEL Cash Distribution
Fund V, LP, (the "Partnership") for the period ended December 31, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
and pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the
Sarbanes-Oxley Act of 2002, I, Paritosh K. Choksi, Chief Financial Officer of
ATEL Financial Services, LLC, general partner of the Partnership, hereby certify
that:
1. The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934 ; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Partnership.
Date: 3/26/03
/s/ Paritosh K. Choksi
- ------------------------------------------
Paritosh K. Choksi
Executive Vice President of General
Partner, Principal financial officer of registrant
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