Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 2003
|_| Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the transition period from _______ to _______
Commission File Number 000-23842
ATEL Cash Distribution Fund V, L.P.
(Exact name of registrant as specified in its charter)
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 94108-2733
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 989-8800
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Limited 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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes |_| No |X|
The number of Limited Partnership Units outstanding as of June 30, 2003 was
12,471,600
DOCUMENTS INCORPORATED BY REFERENCE
None
1
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited).
2
ATEL CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEETS
JUNE 30, 2003 AND DECEMBER 31, 2002
(Unaudited)
ASSETS
2003 2002
Cash and cash equivalents $ 1,079,281 $ 3,806,560
Accounts receivable, net of allowance for
doubtful accounts of $115,285 in
2003 and $75,285 in 2002 614,965 420,737
Investments in leases 13,825,003 15,647,718
----------------- ----------------
Total assets $15,519,249 $19,875,015
================= ================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $ 398,914 $ 667,460
Accounts payable:
General Partner 53,027 115,390
Other 234,257 195,877
Accrued interest expense 2,360 3,603
Unearned operating lease income 74,140 27,680
----------------- ----------------
Total liabilities 762,698 1,010,010
Partners' capital:
General Partner 196,197 202,907
Limited Partners 14,560,354 18,662,098
----------------- ----------------
Total partners' capital 14,756,551 18,865,005
----------------- ----------------
Total liabilities and partners' capital $15,519,249 $19,875,015
================= ================
See accompanying notes.
3
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF OPERATIONS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2003 AND 2002
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
Revenues: 2003 2002 2003 2002
Leasing activities:
Operating leases $ 1,381,010 $ 2,758,354 $ 785,766 $ 1,354,586
Direct financing leases 166,586 218,710 78,401 106,153
Gain on sales of assets 93,987 96,948 29,852 11,513
Leverage leases 2,356 9,950 - (894)
Interest income 12,844 2,737 5,901 1,419
Bankruptcy settlement - 1,954,952 - 1,954,952
Other 10,299 4,499 9,296 2,760
----------------- ---------------- ----------------- ----------------
1,667,082 5,046,150 909,216 3,430,489
Expenses:
Depreciation and amortization 753,256 2,030,927 356,355 996,079
Impairment losses 543,426 - - -
Cost reimbursements to General Partner 357,723 349,551 210,283 161,303
Railcar maintenance 276,029 60,917 119,774 (7,847)
Equipment and incentive management fees
to General Partner 64,041 121,403 31,545 60,515
Professional fees 63,001 98,415 42,369 62,093
Provision for doubtful accounts 40,000 - 30,000 -
Interest expense 16,921 504,947 7,288 241,017
Other 223,640 216,247 146,941 155,529
----------------- ---------------- ----------------- ----------------
2,338,037 3,382,407 944,555 1,668,689
----------------- ---------------- ----------------- ----------------
Net (loss) income $ (670,955) $ 1,663,743 $ (35,339) $ 1,761,800
================= ================ ================= ================
Net (loss) income:
General Partner $ (6,710) $ 16,637 $ (353) $ 17,618
Limited Partners (664,245) 1,647,106 (34,986) 1,744,182
----------------- ---------------- ----------------- ----------------
$ (670,955) $ 1,663,743 $ (35,339) $ 1,761,800
================= ================ ================= ================
Net (loss) income per Limited Partnership Unit ($0.05) $0.13 ($0.00) $0.14
Weighted average number of Units outstanding 12,471,600 12,485,050 12,471,600 12,473,100
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SIX MONTH PERIOD
ENDED JUNE 30, 2003
(Unaudited)
Limited Partners General
Units Amount Partner Total
Balance December 31, 2002 12,471,600 $18,662,098 $ 202,907 $18,865,005
Distributions to limited partners - (3,437,499) - (3,437,499)
Net loss - (664,245) (6,710) (670,955)
----------------- ---------------- ----------------- ----------------
Balance June 30, 2003 12,471,600 $14,560,354 $ 196,197 $14,756,551
================= ================ ================= ================
See accompanying notes.
4
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2003 AND 2002
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
Operating activities:
Net loss $ (670,955) $ 1,663,743 $ (35,339) $ 1,761,800
Adjustment to reconcile net loss to cash
provided by operating activities:
Impairment losses 543,426 - - -
Provision for doubtful accounts 40,000 - 30,000 -
Depreciation and amortization 753,256 2,030,927 356,355 996,079
Gain on sales of lease assets (93,987) (96,948) (29,852) (11,513)
Leveraged lease income (2,356) (9,950) - 894
Changes in operating assets and liabilities:
Accounts receivable (234,228) 616,209 (112,972) 541,497
Accounts payable, General Partner (62,363) 445,256 31,545 392,890
Accounts payable, other 38,380 (41,782) 50,899 (290,699)
Accrued interest expense (1,243) (5,510) (207) (2,030)
Unearned operating lease income 46,460 (52,390) 46,012 6,103
----------------- ---------------- ----------------- ----------------
Net cash provided by operations 356,390 4,549,555 336,441 3,395,021
----------------- ---------------- ----------------- ----------------
Investing activities:
Proceeds from sales of lease assets 358,877 458,003 208,328 66,153
Reduction of net investment in direct
financing leases 217,131 794,743 109,099 357,808
Reduction of net investment in leveraged leases 46,368 - - (21,688)
----------------- ---------------- ----------------- ----------------
Net cash provided by investing activities 622,376 1,252,746 317,427 402,273
----------------- ---------------- ----------------- ----------------
Financing activities:
Distributions to Limited Partners (3,437,499) (1,088,393) (1,562,495) -
Repayments of non-recourse debt (268,546) (1,683,177) (94,462) (275,905)
Repayments of borrowings under line of credit - (3,000,000) - (2,000,000)
Proceeds of non-recourse debt - - - (759,436)
Repurchase of limited partnership units - (44,036) - (44,036)
Borrowings under line of credit - 500,000 - -
----------------- ---------------- ----------------- ----------------
Net cash used in financing activities (3,706,045) (5,315,606) (1,656,957) (3,079,377)
----------------- ---------------- ----------------- ----------------
Net (decrease) increase in cash and
cash equivalents (2,727,279) 486,695 (1,003,089) 717,917
Cash and cash equivalents at
beginning of period 3,806,560 443,772 2,082,370 212,550
----------------- ---------------- ----------------- ----------------
Cash and cash equivalents at
end of period $ 1,079,281 $ 930,467 $ 1,079,281 $ 930,467
================= ================ ================= ================
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 16,921 $ 510,457 $ 6,252 $ 243,047
================= ================ ================= ================
See accompanying notes.
5
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
(Unaudited)
1. Summary of significant accounting policies:
Basis of presentation:
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The
unaudited interim financial statements reflect all adjustments which are, in the
opinion of the General Partner, necessary to a fair statement of financial
position and results of operations for the interim periods presented. All such
adjustments are of a normal recurring nature. These unaudited interim financial
statements should be read in conjunction with the financial statements and notes
thereto contained in the report on Form 10-K for the year ended December 31,
2002, filed with the Securities and Exchange Commission.
2. Organization and partnership matters:
ATEL Cash Distribution Fund V, L.P. (the Partnership) was formed under the laws
of the state of California on September 23, 1992, for the purpose of acquiring
equipment to engage in equipment leasing and sales activities.
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 Partnership does not make a provision for income taxes since all income and
losses will be allocated to the Partners for inclusion in their individual tax
returns.
ATEL Financial Services, LLC, an affiliated entity, acts as the General Partner
of the Partnership.
3. Investment in leases:
The Partnership's investment in leases consists of the following:
Depreciation
Balance Expense and Balance
December 31, Impairment Amortization Reclassifications June 30,
2002 Losses of Leases & Dispositions 2003
Net investment in operating
leases $ 13,484,449 $ (543,426) $ (738,686) $ (558,754) $11,643,583
Net investment in direct
financing lease 1,180,081 - (217,131) (69,998) 892,952
Net investment in leveraged
leases 140,012 - (44,012) - 96,000
Assets held for sale or lease 3,523,627 - - (2,348,826) 1,174,801
Reserve for losses (2,712,688) - - 2,712,688 -
Initial direct costs, net of
accumulated amortization of
$208,807 in 2003 and $544,354 in
2002 32,237 - (14,570) - 17,667
------------------ ----------------- ---------------- ----------------- ----------------
$ 15,647,718 $ (543,426) $(1,014,399) $ (264,890) $13,825,003
================== ================= ================ ================= ================
6
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
(Unaudited)
3. Investment in leases (continued):
Operating leases:
Property subject to operating leases consists of the following:
Balance Reclassifications & Balance
December 31, Impairment Dispositions June 30,
2002 Losses 1st Quarter 2nd Quarter 2003
Transportation $ 20,593,171 $ - $ 4,474,108 $(1,820,536) $23,246,743
Manufacturing 2,666,354 - - (1,046,404) 1,619,950
Construction 2,172,807 - - (594,719) 1,578,088
Materials handling 49,550 - (49,550) - -
------------------ ----------------- ---------------- ----------------- ----------------
25,481,882 - 4,424,558 (3,461,659) 26,444,781
Less accumulated depreciation (11,997,433) (543,426) (5,354,347) 3,094,008 (14,801,198)
------------------ ----------------- ---------------- ----------------- ----------------
$ 13,484,449 $ (543,426) $ (929,789) $ (367,651) $11,643,583
================== ================= ================ ================= ================
In 2003, there were charges to net income for impairments of operating lease
assets in the amount of $543,426. The charges related to covered grain hopper
cars on lease to various lessees. The impairment resulted from decreased
estimated cash flows expected to be generated by the assets over their remaining
lives.
All of the property on leases was acquired in 1993, 1994, 1995, 1996 and 1997.
Direct financing leases:
As of June 30, 2003, investment in direct financing leases consists of mining
equipment. The following lists the components of the Company's investment in
direct financing leases as of June 30, 2003:
Total minimum lease payments receivable $ 1,125,000
Estimated residual values of leased equipment (unguaranteed) 401
-------------
Investment in direct financing leases 1,125,401
Less unearned income (232,449)
-------------
Net investment in direct financing leases $ 892,952
=============
At June 30, 2003, the aggregate amounts of future minimum lease payments are as
follows:
Direct
Operating Financing
Leases Leases Total
Six months ending December 31, 2003 $ 868,256 $ 375,000 $ 1,243,256
Year ending December 31, 2004 791,398 750,000 1,541,398
2005 224,987 - 224,987
2006 14,122 - 14,122
---------------- ----------------- ----------------
$ 1,898,763 $ 1,125,000 $ 3,023,763
================ ================= ================
7
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
(Unaudited)
4. Non-recourse debt:
Notes payable to financial institutions are due in varying monthly, quarterly
and semi-annual installments of principal and interest. The notes are secured by
assignments of lease payments and pledges of the assets which were purchased
with the proceeds of the particular notes. Interest rates on the notes vary from
6.5% to 10.5%.
Future minimum principal payments of non-recourse debt are as follows:
Principal Interest Total
Six months ending December 31, 2003 $ 71,624 $ 13,109 $ 84,733
Year ending December 31, 2004 151,084 18,384 169,468
2005 162,167 7,301 169,468
2006 14,039 83 14,122
---------------- ----------------- ----------------
$ 398,914 $ 38,877 $ 437,791
================ ================= ================
5. Related party transactions:
The terms of the Limited Partnership Agreement provide that the General Partner
and/its 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 services to the Partnership. Services
provided include Partnership accounting, investor relations, legal counsel and
lease and equipment documentation. The General Partner is not reimbursed for
services where it is entitled to receive a separate fee as compensation for such
services, such as acquisition and management 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.
Substantially all employees of the General Partner record time incurred in
performing 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 services
in the same geographic location and are reimbursable in accordance with the
Limited Partnership Agreement.
8
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
(Unaudited)
5. Related party transactions (continued):
During the six months ended June 30, 2003 and 2002, the General Partner and/its
affiliates earned fees, commissions and reimbursements, pursuant to the Limited
Partnership Agreement, as follows:
Six Months Three Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
Costs reimbursed to General Partner $ 276,029 $ 60,917 $ 128,589 $ (127,331)
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) 64,041 121,403 31,545 60,515
----------------- ---------------- ----------------- ----------------
$ 340,070 $ 182,320 $ 340,070 $ 182,320
================= ================ ================= ================
6. Line of credit:
The Partnership participates with the General Partner and certain of its
affiliated partnerships and limited liability companies in a $56,736,746
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 June 30, 2003,
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 26,500,000
----------------
Total borrowings under the acquisition facility 26,500,000
Amounts borrowed by the General Partner and its sister corporation under the warehouse facility -
----------------
Total outstanding balance $ 26,500,000
================
Total available under the line of credit $ 56,736,746
Total outstanding balance (26,500,000)
----------------
Remaining availability $ 30,236,746
================
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.
The credit agreement includes certain financial covenants applicable to each
borrower. The Partnership was in compliance with its covenants as of June 30,
2003.
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Statements contained in this Item 2, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and elsewhere in this Form 10-Q,
which are not historical facts, may be forward-looking statements. Such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. Investors are cautioned not
to attribute undue certainty to these forward-looking statements, which speak
only as of the date of this Form 10-Q. We undertake no obligation to publicly
release any revisions to these forward-looking statements to reflect events or
circumstances after the date of this Form 10-Q or to reflect the occurrence of
unanticipated events, other than as required by law.
Capital Resources and Liquidity
In 2003 and 2002, the Partnership's primary source of cash was operating lease
rents. 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 sales of assets.
As another source of liquidity, the Partnership has contractual obligations with
a diversified group of lessees for fixed lease terms at fixed rental amounts. As
the initial lease terms expire, the Partnership will re-lease or sell the
equipment. The future liquidity beyond the contractual minimum rentals will
depend on the General Partner's success in re-leasing or selling the equipment
as it comes off lease.
The Partnership participates with the General Partner and certain of its
affiliated partnerships and limited liability companies in a $56,736,746
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 June 30, 2003,
borrowing 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 26,500,000
----------------
Total borrowings under the acquisition facility 26,500,000
Amounts borrowed by the General Partner and its sister corporation under the warehouse facility -
----------------
Total outstanding balance $ 26,500,000
================
Total available under the line of credit $ 56,736,746
Total outstanding balance (26,500,000)
----------------
Remaining availability $ 30,236,746
================
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.
The Partnership currently has available adequate reserves to meet contingencies,
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.
As of June 30, 2003, the Partnership had borrowed $56,736,746 on a non-recourse
basis with remaining unpaid balances of $398,914. Borrowings are to be generally
non-recourse to the Partnership, that is, the only recourse of the lender upon a
default by the lessee on the underlying lease will be to the equipment or
corresponding lease acquired with the loan proceeds. The General Partner does
not anticipate any future non-recourse borrowings.
If inflation in the general economy becomes significant, it may affect the
Partnership inasmuch as the residual (resale) values and rates on re-leases 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.
If interest rates increase significantly, the lease rates that the Partnership
can obtain on future leases will be expected to increase as the cost of capital
is a significant factor in the pricing of lease financing. Leases already in
place, for the most part, would not be affected by changes in interest rates.
10
Cash Flows
In 2003 and 2002, the Partnership's primary operating source of cash was
operating lease rents. Operating lease revenues decreased by $1,377,344 for the
six month period and by $568,820 for the three month period, primarily as a
result of sales of operating lease assets over the last year.
In 2003, the Partnership's primary source of cash flows from investing
activities was proceeds from sales of lease assets. Such sales proceeds are not
expected to be consistent from one period to another. In the second quarter of
2002, the primary source of cash flows from investing activities was direct
finance lease rents.
The largest financing uses of cash were distributions to limited partners and
repayment of non-recourse debt for the six and three month periods ended June
30. 2003. Comparatively, the largest financing use of cash in 2002 was
repayments of borrowings under the line of credit.
Results of operations
In 2003, operations resulted in a net loss of $670,955 for the six month period
and a net loss of $35,399 for the three month period. In 2002, operations
resulted in net income of $1,663,743 for the six month period, compared to net
income of $1,761,800 for the three month period. The Partnership's primary
source of revenue is from operating leases. Other income decreased by $1,949,152
and $1,948,416 for the six month and three month periods ending June 30, 2003.
This decrease was a result of the Partnership recognizing $1,954,952 in gain in
the second quarter of 2002 for proceeds from the bankruptcy trustee.
Operating lease revenues (and the related depreciation expense) have decreased
as a result of sales of lease assets over the last year. The original cost of
assets on operating leases has declined from $48,232,077 at June 30, 2002 to
$26,444,781 at June 30, 2003. Direct financing lease revenues have decreased due
to the same cause.
As scheduled debt payments have been made, debt balances have been reduced. This
decrease in indebtedness for 2003 caused interest expense to decrease by
$488,026 in the six month period compared to the same period in 2002 and by
$8,588 for the three month periods ended June 30, 2003 and 2002.
In 2003, there were charges to net income for impairments of operating lease
assets in the amount of $543,426. The charges related to covered grain hopper
cars on lease to various lessees. The impairment resulted from decreased
estimated cash flows expected to be generated by the assets over their remaining
lives.
Item 3. Quantitative and Qualitative Disclosures of 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.
Item 4. Controls and procedures.
Internal Controls
As of June 30, 2003, 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 June 30, 2003. There have been no significant changes in the
Partnership's internal controls or in other factors that could significantly
affect internal controls subsequent to June 30, 2003.
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.
11
Evaluation of disclosure controls and procedures
Under the supervision and with the participation of our management, including
the CEO and CFO, 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
quarterly report. Based upon this evaluation, the CEO and CFO of the General
Partner 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.
PART II. OTHER INFORMATION
Item 1. 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.
This matter involves litigation over the enforceability of a liquidated damages
clause in a lease, and a combined claim of the Partnership and some affiliates
of the Partnership, of approximately $4,000,000. The General Partner has brought
a suit in San Francisco Superior Court on behalf of the Partnership. The suit
was removed to Federal District Court in San Francisco. The lessee, Quaker Coal
Company, leases mining equipment from the Partnership. On December 31, 1997, the
lessee requested a forbearance and relief on lease payments for a period of
three months. By May 1998, the lessee was past due for five months.
On or about May 12, 1998, the General Partner declared the lessee to be in
default of the lease and demanded the acceleration of all lease receivables, or
alternatively, a modification of the lease obligation. On or about June 1998,
the Lessee made itself current on substantially all outstanding amounts. The
Partnership 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 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 in securing the return of its
equipment, which equipment has been since liquidated
The Court issued a ruling on March 4, 2001, denying the Partnership's claim for
damages. The lessee subsequently filed a claim against the Partnership, for
reimbursement of its legal expenses. The Partnership believed the Court's
decision is erroneous as a matter law, and filed an appeal of the decision in
the U.S. District Court of Appeals
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 ("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.
The lessee filed a plan of reorganization in the Bankruptcy Court, which plan
was objected to by several large creditors, including the Partnership. These
creditors were also seeking a formal role on the creditors committee or
formation of their own committee.
In January 2002, ATEL attended an appellate settlement conference seeking to
resolve the outstanding disputed claim. A reserve had 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 appellate decision, handed down in
March of 2003, was adverse to ATEL's position. Currently, the Partnership is not
expected to recover any amounts above the payment of the lease rent and the
proceeds of the liquidation of the equipment already received. In addition,
Funds III, IV, V, and VI may be compelled to pay approximately $125,000 of the
defendant's legal expenses in the aggregate.
Item 2. Changes In Securities.
Inapplicable.
Item 3. Defaults Upon Senior Securities.
Inapplicable.
Item 4. Submission Of Matters To A Vote Of Security Holders.
Inapplicable.
Item 5. Other Information.
Inapplicable.
12
Item 6. Exhibits And Reports On Form 8-K.
(a) Documents filed as a part of this report
1. Financial Statements
Included in Part I of this report:
Balance Sheets, June 30, 2003 and December 31, 2002.
Statements of Operations for the six and three month periods
ended June 30, 2003 and 2002.
Statement of Changes in Partners' Capital for the six month
period ended June 30, 2003.
Statements of Cash Flows for the six and three month periods
ended June 30, 2003 and 2002.
Notes to the Financial Statements
2. Financial Statement Schedules
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are not required under the related instructions or are
inapplicable, and therefore have been omitted.
(b) Report on Form 8-K
None
13
CERTIFICATIONS
I, Paritosh K. Choksi, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ATEL Cash Distribution
Fund V, LP;
2. Based on my knowledge, this quarterly 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:
August 12, 2003
/s/ Paritosh K. Choksi
- --------------------------------------
Paritosh K. Choksi
Principal Financial Officer of Registrant, Executive
Vice President of General Partner
14
CERTIFICATIONS
I, Dean L. Cash, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ATEL Cash Distribution
Fund V, LP;
2. Based on my knowledge, this quarterly 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:
August 12, 2003
/s/ Dean L. Cash
- --------------------------------------
Dean L. Cash
President and Chief Executive
Officer of General Partner
15
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 Quarterly report on Form 10-Q of ATEL Cash Distribution
Fund V, LP, (the "Partnership") for the period ended June 30, 2003 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:
August 12, 2003
/s/ Dean L. 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 Quarterly report on Form 10-Q of ATEL Cash Distribution
Fund V, LP, (the "Partnership") for the period ended June 30, 2003 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:
August 12, 2003
/s/ Paritosh K. Choksi
- --------------------------------------------------------
Paritosh K. Choksi
Executive Vice President of General
Partner, Principal Financial Officer of Registrant
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date:
August 12, 2003
ATEL CASH DISTRIBUTION FUND V, L.P.
(Registrant)
ATEL Financial Corporation By:
General Partner of Registrant
By: /s/ Dean L. Cash
--------------------------------------------------
Dean L. Cash
President and Chief Executive Officer
of General Partner
By: /s/ Paritosh K. Choksi
--------------------------------------------------
Paritosh K. Choksi
Principal Financial Officer
of Registrant
By: /s/ Donald E. Carpenter
--------------------------------------------------
Donald E. Carpenter
Principal Accounting
Officer of Registrant
17