Form 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the quarterly period ended September 30, 2004
|_| 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|
State issuer's revenues for its most recent fiscal year: $3,019,440.
The number of Limited Partnership Units outstanding as of September 30, 2004 was
12,471,600.
DOCUMENTS INCORPORATED BY REFERENCE
None
1
ATEL CASH DISTRIBUTION FUND V, L.P.
Index
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Balance Sheet, September 30, 2004.
Statements of Operations for the nine and three month periods ended September
30, 2004 and 2003.
Statements of Changes in Partners' Capital for the year ended December 31, 2003
and for the nine month period ended September 30, 2004.
Statements of Cash Flows for the nine and three month periods ended September
30, 2004 and 2003.
Notes to Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits
2
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited).
ATEL CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEET
SEPTEMBER 30, 2004
(Unaudited)
ASSETS
Cash and cash equivalents $ 3,057,262
Accounts receivable, net of allowance for doubtful
accounts of $113,285 176,248
Investments in leases 12,494,206
----------------
Total assets $15,727,716
================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $ 4,267,540
Accounts payable:
General Partner 52,119
Other 382,053
Accrued interest expense 18,320
Unearned operating lease income 384
----------------
Total liabilities 4,720,416
Partners' capital:
General Partner 193,041
Limited Partners 10,814,259
----------------
Total partners' capital 11,007,300
----------------
Total liabilities and partners' capital $15,727,716
================
See accompanying notes.
3
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF OPERATIONS
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 2004 AND 2003
(Unaudited)
Nine Months Three Months
Ended September 30, Ended September 30,
Revenues: 2004 2003 2004 2003
Leasing activities:
Operating leases $ 2,061,236 $ 2,043,925 $ 686,352 $ 662,915
Direct financing leases 100,535 235,244 20,167 68,658
Gain (loss) on sales of assets 45,741 46,809 42,005 (47,178)
Leverage leases - 2,356 - -
Interest income 16,799 17,071 10,302 4,227
Other 1,106 10,413 87 114
----------------- ---------------- ---------------- ----------------
2,225,417 2,355,818 758,913 688,736
Expenses:
Depreciation of operating lease assets 797,481 1,107,322 192,865 368,636
Cost reimbursements to General Partner 437,782 465,684 159,009 107,961
Remarketing fees 250,000 - - -
Railcar maintenance 216,407 375,862 82,014 99,833
Equipment and incentive management fees
to General Partner 138,327 90,731 75,415 26,690
Other management fees 109,842 89,872 24,377 45,146
Interest expense 92,365 23,949 55,694 7,028
Professional fees 53,606 78,282 12,648 15,281
Provision for (recovery of) doubtful accounts 8,393 19,000 5,000 (21,000)
Amortization of initial direct costs 3,859 20,232 1,286 5,662
Impairment losses - 543,426 - -
Other 187,480 239,865 118,287 60,951
----------------- ---------------- ---------------- ----------------
2,295,542 3,054,225 726,595 716,188
----------------- ---------------- ---------------- ----------------
Net (loss) income $ (70,125) $ (698,407) $ 32,318 $ (27,452)
================= ================ ================ ================
Net (loss) income:
General Partner $ (701) $ (6,984) $ 323 $ (274)
Limited Partners (69,424) (691,423) 31,995 (27,178)
----------------- ---------------- ---------------- ----------------
$ (70,125) $ (698,407) $ 32,318 $ (27,452)
================= ================ ================ ================
Net (loss) income per Limited Partnership Unit ($0.01) ($0.06) $0.00 ($0.00)
Weighted average number of Units outstanding 12,471,600 12,471,600 12,471,600 12,471,600
See accompanying notes.
4
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2003
AND FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30, 2004
(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 - (907,339) (9,165) (916,504)
----------------- ---------------- ---------------- ----------------
Balance December 31, 2003 12,471,600 14,317,260 193,742 14,511,002
Distributions to limited partners - (3,433,577) - (3,433,577)
Net loss - (69,424) (701) (70,125)
----------------- ---------------- ---------------- ----------------
Balance September 30, 2004 12,471,600 $10,814,259 $ 193,041 $11,007,300
================= ================ ================ ================
See accompanying notes.
5
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 2004 AND 2003
(Unaudited)
Nine Months Three Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
Operating activities:
Net (loss) income $ (70,125) $ (698,407) $ 32,318 $ (27,452)
Adjustment to reconcile net (loss) income to
cash provided by operating activities:
(Gain) loss on sales of lease assets (45,741) (46,809) (42,005) 47,178
Leveraged lease income - (2,356) - -
Depreciation of operating lease assets 797,481 1,107,322 192,865 368,636
Provision for (recovery of) doubtful accounts 8,393 19,000 5,000 (21,000)
Amortization of initial direct costs 3,859 20,232 1,286 5,662
Impairment losses - 543,426 - -
Changes in operating assets and liabilities:
Accounts receivable 194,079 (73,847) 24,388 160,381
Accounts payable, General Partner (119,833) (88,699) (19,699) (26,336)
Accounts payable, other 215,427 5,750 26,525 (32,630)
Accrued interest expense 15,759 (1,087) 6,857 156
Unearned operating lease income (23,155) (3,576) (59,451) (50,036)
----------------- ---------------- ---------------- ----------------
Net cash provided by operating activities 976,144 780,949 168,084 424,559
----------------- ---------------- ---------------- ----------------
Investing activities:
Investments in operating leases (1,541,216) - (798,935) -
Reduction of net investment in direct
financing leases 462,364 335,973 167,333 118,842
Proceeds from sales of lease assets 348,818 604,338 94,368 245,461
Reduction of net investment in leveraged leases - 46,368 - -
----------------- ---------------- ---------------- ----------------
Net cash (used in) provided by investing activities (730,034) 986,679 (537,234) 364,303
----------------- ---------------- ---------------- ----------------
Financing activities:
Proceeds of non-recourse debt 4,180,667 217,596 - 217,596
Distributions to Limited Partners (3,433,577) (3,437,499) (1,558,577) -
Repayments of non-recourse debt (376,741) (304,041) (166,211) (35,495)
----------------- ---------------- ---------------- ----------------
Net cash provided by (used in) financing activities 370,349 (3,523,944) (1,724,788) 182,101
----------------- ---------------- ---------------- ----------------
Net increase (decrease) in cash and
cash equivalents 616,459 (1,756,316) (2,093,938) 970,963
Cash and cash equivalents at
beginning of period 2,440,803 3,806,560 5,151,200 1,079,281
----------------- ---------------- ---------------- ----------------
Cash and cash equivalents at
end of period $ 3,057,262 $ 2,050,244 $ 3,057,262 $ 2,050,244
================= ================ ================ ================
Supplemental disclosures of cash flow
information:
Cash paid during the period for interest $ 76,606 $ 25,036 $ 48,837 $ 8,115
================= ================ ================ ================
See accompanying notes.
6
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004
(Unaudited)
1. Summary of significant accounting policies:
Basis of presentation:
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States (GAAP) for
interim financial information and with instructions to Form 10-QSB 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. The
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that effect reported amounts in the financial
statements and accompanying notes. Therefore, actual results could differ from
those estimates. Operating results for the nine and three month periods ended
September 30, 2004 are not necessarily indicative of the results for the year
ending December 31, 2004.
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, 2003, 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. The Partnership
may continue until December 31, 2013.
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 (AFS), an affiliated entity, acts as the General
Partner of the Partnership.
Certain prior year balances have been reclassified to conform to the current
period presentation.
The Partnership is in the final stage of its liquidation and is making
distributions on an annual basis.
7
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004
(Unaudited)
3. Investment in leases:
The Partnership's investment in leases consists of the following:
Depreciation /
Amortization
Expense or
Balance Amortization of Reclass- Balance
December 31, Direct Financing ifications September 30,
2003 Additions Leases & Dispositions 2004
Net investment in operating leases $ 11,027,461 $ 1,541,216 $ (797,481) $ (264,552) $11,506,644
Net investment in direct financing
lease 644,651 - (462,364) - 182,287
Assets held for sale or lease, net
of accumulated depreciation of
$147,851 in 2004 and $719,138
in 2003 836,940 - - (38,525) 798,415
Initial direct costs, net of
accumulated amortization of
$219,614 in 2004 and $215,755 in
2003 10,719 - (3,859) - 6,860
------------------- ----------------- ---------------- ---------------- ----------------
$ 12,519,771 $ 1,541,216 $(1,263,704) $ (303,077) $12,494,206
=================== ================= ================ ================ ================
Management periodically reviews the carrying values of its assets on leases and
assets held for lease or sale. As a result of the review for the three month
period ended March 31, 2003, management determined that the value of a fleet of
jumbo covered hopper rail cars had declined in value to the extent that the
carrying values had become impaired. This decline was 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 commanded. Management recorded a
provision for the declines in value of those assets in the amount of $539,000
for the three months ended March 31, 2003. There have been no such impairments
recognized to date in 2004.
The provision of $539,000 recorded for the three months ended March 31, 2003
corrected for an understatement of the provision recorded for the year ended
December 31, 2002 related to jumbo covered hopper rail cars. The Partnership
does not believe that this amount is material to the period in which it should
have been recorded, nor that it is material to the Partnership's operating
results for the nine months ended September 30, 2003 or year ended December 31,
2003. The effect of the additional provision recorded in the three months ended
March 31, 2003 was to increase the loss in the nine months ended September 30,
2003 and year ended December 31, 2003 by $0.04 per Unit.
Impairment losses are recorded as an addition to accumulated depreciation of the
impaired assets. Depreciation expense and impairment losses on property subject
to operating leases and assets held for lease or sale consist of the following
for the three and nine month periods ended September 30:
Nine Months Three Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
Depreciation of operating lease assets $ 797,481 $ 1,107,322 $ 192,865 $ 368,636
Impairment losses - 543,426 - -
----------------- ---------------- ---------------- ----------------
$ 797,481 $ 1,650,748 $ 192,865 $ 368,636
================= ================ ================ ================
8
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004
(Unaudited)
3. Investment in leases (continued):
Net investment in operating leases:
Property subject to operating leases consists of the following:
Balance Reclass- Balance
December 31, Depreciation ifications September 30,
2003 Additions Expense & Dispositions 2004
Transportation $ 22,978,415 $ 1,541,216 $ - $ (812,657) $23,706,974
Manufacturing 1,470,000 - - 1,470,000
Materials handling 35,624 - - 400 36,024
Construction 1,578,088 - - (1,578,088) -
------------------- ----------------- ---------------- ---------------- ----------------
26,062,127 1,541,216 - (2,390,345) 25,212,998
Less accumulated depreciation (15,034,666) - (797,481) 2,125,793 (13,706,354)
------------------- ----------------- ---------------- ---------------- ----------------
$ 11,027,461 $ 1,541,216 $ (797,481) $ (264,552) $11,506,644
=================== ================= ================ ================ ================
Net investment in direct financing leases:
As of September 30, 2004, net investment in direct financing leases consists of
mining equipment. The following lists the components of the Company's net
investment in direct financing leases as of September 30, 2004:
Total minimum lease payments receivable $ 187,500
Estimated residual values of leased equipment (unguaranteed) 1
----------------
Investment in direct financing leases 187,501
Less unearned income (5,214)
----------------
Net investment in direct financing leases $ 182,287
================
At September 30, 2004, the aggregate amounts of future minimum lease payments
are as follows:
Direct
Operating Financing
Leases Leases Total
Three months ending December 31, 2004 $ 420,850 $ 187,500 $ 608,350
Year ending December 31, 2005 1,691,658 - 1,691,658
2006 1,437,541 - 1,437,541
2007 1,124,629 - 1,124,629
2008 1,108,099 - 1,108,099
2009 1,108,099 - 1,108,099
2010 483,698 - 483,698
---------------- ---------------- ----------------
$ 7,374,574 $ 187,500 $ 7,562,074
================ ================ ================
All of the property on leases was acquired in 1993, 1994, 1995, 1996, 1997 and
2004.
9
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004
(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
5.048% to 7.1%.
Future minimum principal payments of non-recourse debt are as follows:
Principal Interest Total
Three months ending December 31, 2004 $ 160,831 $ 54,219 $ 215,050
Year ending December 31, 2005 756,709 193,024 949,733
2006 705,716 152,625 858,341
2007 727,412 116,807 844,219
2008 764,994 79,226 844,220
2009 804,517 39,702 844,219
Thereafter 347,361 4,396 351,757
---------------- ---------------- ----------------
$ 4,267,540 $ 639,999 $ 4,907,539
================ ================ ================
5. Related party transactions:
The terms of the Limited Partnership Agreement provide that AFS and/or 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 AFS in providing services to the Partnership. Services provided include
Partnership accounting, investor relations, legal counsel and lease and
equipment documentation. AFS is not reimbursed for services where it is entitled
to receive a separate fee as compensation for such services. Reimbursable costs
incurred by AFS are allocated to the Partnership based upon an estimate of
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 AFS record time incurred in performing services
on behalf of all of the Partnerships serviced by AFS. AFS 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.
10
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004
(Unaudited)
5. Related party transactions (continued):
AFS is entitled to receive 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).
During the nine months ended September 30, 2004 and 2003, AFS and/or its
affiliates earned fees, commissions and reimbursements, pursuant to the Limited
Partnership Agreement, as follows:
Nine Months Three Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
Costs reimbursed to AFS $ 437,782 $ 465,684 $ 159,009 $ 107,961
Equipment and incentive management fees to AFS 138,327 90,731 75,415 26,690
Reimbursements of other payments made by
AFS on behalf of the Company 184,654 347,970 96,720 64,035
----------------- ---------------- ---------------- ----------------
$ 760,763 $ 904,385 $ 331,144 $ 198,686
================= ================ ================ ================
6. Partners' Capital:
As of September 30, 2004, 12,471,600 Units ($124,716,000) were issued and
outstanding (including the 50 Units issued to the Initial Limited Partners).
The Partnership's Net Income, Net Losses, and Distributions, as defined, are to
be allocated 99% to the Limited Partners and 1% to AFS.
Distributions to the Limited Partners were as follows:
Nine Months Three Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
Distributions $ 3,433,577 $ 3,437,499 $ 1,558,577 $ -
Weighted average number of Units outstanding 12,471,600 12,471,600 12,471,600 12,471,600
Weighted average distributions per Unit $ 0.28 $ 0.28 $ 0.12 $ -
11
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-QSB, 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-QSB. 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-QSB or to reflect the occurrence of
unanticipated events, other than as required by law.
Capital Resources and Liquidity
In 2004, the Partnership's primary source of cash was the proceeds of a new
non-recourse note payable. In 2003, 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 AFS's success in re-leasing or selling the equipment as it comes off
lease.
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 September 30, 2004, the Partnership had cumulatively borrowed $62,498,578
on a non-recourse basis with a remaining unpaid balance of $4,267,540.
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.
Cash Flows
In 2004 and 2003, the Partnership's primary operating source of cash was
operating lease rents. Operating lease revenues increased by $17,311 for the
nine month period and by $23,436 for the three month period ending September 30,
primarily as a result of investment in operating lease assets over the last
three quarters of 2004.
Sources of cash from investing activities in the three and nine month periods
ended September 30, 2004 consisted of proceeds from sales of lease assets and
direct financing lease payments. In 2003, there was also $46,368 provided by
reductions of investments in leveraged leases. Proceeds from the sales of lease
assets are not expected to be consistent from one period to another. Asset sales
are made as leases expire, as purchasers can be found and as the sales can be
negotiated and completed. Cash flows from direct financing leases increased
$126,391 and $48,491 for the nine and three month periods ended September 30
over the comparable periods for 2003. The single direct financing lease is
nearing its maturity and as a result, a larger portion of the gross lease
payment is accounted for as a reduction of the net investment in direct
financing leases.
The financing uses of cash consisted of distributions to limited partners and
repayment of non-recourse debt for the nine and three month periods ended
September 30. 2004. During the nine month period ended September 30, 2004, the
Partnership borrowed an additional $4,180,667 on a non-recourse note payable.
The Partnership entered into a long-term lease renewal for certain rail car
assets in the second quarter. As the Partnership is in its liquidation phase,
the Partnership borrowed on a non-recourse basis against the renewal rents in
order to be able to distribute the cash to the limited partners in the near term
rather than over a period of up to six years. There were no similar borrowings
in 2003.
12
Results of operations
In 2003, operations resulted in a net loss of $698,407 for the nine month period
and a net loss of $27,452 for the three month period. In 2004, operations
resulted in a net loss of $70,125 for the nine month period and net income of
$32,318 for the three month period. The Partnership's primary source of revenue
is from operating leases. Operating lease revenues in 2004 were largely
unchanged from the same periods in 2003. Direct financing lease revenues for
nine and three month periods ending September 30, 2004 decreased $134,709 and
$48,490, respectively, compared to the same periods of the prior year. There is
a single direct financing lease at September 30, 2004 and as it reaches
maturity, a decreasing portion of the gross rents are recognized as income.
Operating lease revenues did not change significantly for either the nine or
three month periods.
During the second quarter of 2004, the Partnership borrowed an additional
$4,180,667 on a non-recourse basis. As a result of the new debt, interest
expense increased $48,666 and $68,416 for the three and nine month periods ended
September 30, 2004 as compared with the same periods in 2003.
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. There have been no similar charges recognized in 2004.
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.
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) under the Securities
Exchange Act of 1934] was performed as of the date of this report. Based upon
this evaluation, the chief executive officer and the chief financial officer
concluded that, as of the evaluation date, except as noted below, 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.
As disclosed in the Form 10-K for the year ended December 31, 2003, the chief
executive and chief financial officer of the General Partner of the Partnership
had identified certain enhanced controls needed to facilitate a more effective
closing of the Partnership's financial statements. During the first quarter of
2004 and since the end of the quarter, the General Partner hired a new
controller, added additional accounting staff personnel, and has instituted or
revised existing procedures in order to ensure that the Partnership's ability to
execute internal controls in accounting and reconciliation in the closing
process is adequate in all respects. The General Partner will continue to review
its accounting procedures and practices to determine their effectiveness and
adequacy and will take such steps as deemed necessary in the opinion of the
General Partner's chief executive and chief financial officers to ensure the
adequacy of the Partnership's accounting controls and procedures.
The General Partner's chief executive officer and chief financial officer have
determined that no weakness in financial and accounting controls and procedures
had any material effect on the accuracy and completeness of the Partnership's
financial reporting and disclosure included in this report.
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, except as described in the prior
paragraphs.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In the ordinary course of conducting business, there may be certain claims,
suits, and complaints filed against the Partnership. In the opinion of
management, the outcome of such matters, if any, will not have a material impact
on the Partnership's financial position or results of operations. No material
legal proceedings are currently pending against the Partnership or against any
of its assets, except as noted below.
Railroad Technology Corporation:
Railroad Technology Corporation ("RTC") was engaged by the Partnership to
perform remarketing of certain rail car assets. The dispute involves the amount
that is due under the contract and how that amount is to be determined. RTC has
filed a claim for $1,131,254. The General Partner believes that the amount owed
under the contract is approximately $250,000 and has recorded a liability for
that amount in the financial statements of the Partnership as of September 30,
2004.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
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.
Item 6. Exhibits.
(a) Documents filed as a part of this report
1. Financial Statement Schedules
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable, and
therefore have been omitted.
2. Other Exhibits
31.1 Certification of Paritosh K. Choksi
31.2 Certification of Dean L. Cash
32.1 Certification Pursuant to 18 U.S.C. section 1350 of Dean L. Cash
32.2 Certification Pursuant to 18 U.S.C. section 1350 of Paritosh K.
Choksi
(b) Report on Form 8-K
None
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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:
November 11, 2004
ATEL CASH DISTRIBUTION FUND V, L.P.
(Registrant)
ATEL Financial Services, LLC
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
15