UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[x] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended
DECEMBER 31, 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: 0-16784
American Cable TV Investors 5, Ltd.
Exact name of registrant as specified in charter
Colorado 84-1048934
- ---------------------- -----------------------
State of organization I.R.S. employer I.D. #
c/o Comcast Corporation
1500 Market Street, Philadelphia, PA 19102-2148
- --------------------------------------------------------------------------------
Address of principal executive office
(215) 665-1700
- --------------------------------------------------------------------------------
Registrant's telephone number
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
200,005 Limited Partnership Units Sold to Investors at $500 per Unit
Indicate by 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 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 amendments to
this Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12-b2 of the Exchange Act).
Yes __ No X
Explanatory Note
This Amendment No. 1 to Form 10-K is filed solely to insert a conformed
signature to the Report of Independent Registered Public Accounting Firm
included in Item 8. The conformed signature inadvertently was omitted from the
original filing.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners of
American Cable TV Investors 5, Ltd.
We have audited the accompanying balance sheet of American Cable TV Investors 5,
Ltd. (a Colorado Limited Partnership) (the "Partnership") as of December 31,
2004 and 2003, and the related statements of operations, partners' equity and
cash flows for each of the three years in the period ended December 31, 2004.
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 the standards of the Public Company
Accounting Oversight Board (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. The Partnership is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Partnership's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, 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 present fairly, in all material
respects, the financial position of the Partnership as of December 31, 2004 and
2003, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2004, in conformity with accounting
principles generally accepted in the United States of America.
As described in Note 3, the Partnership is no longer actively engaged in the
cable television business. A final determination of the Partnership's
liabilities and any liquidating distribution cannot be made in connection with
the Partnership's dissolution until the contingencies described in Note 5 are
resolved.
/s/ Deloitte & Touche LLP
Philadelphia, Pennsylvania
March 23, 2005
2
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
BALANCE SHEET
December 31, December 31,
2004 2003
------------------- -----------------
(Amounts in thousands)
Assets
Cash and cash equivalents............................................ $9,300 $9,184
Funds held in escrow................................................. 494 494
------------------- -----------------
$9,794 $9,678
=================== =================
Liabilities and Partners' equity
Unclaimed limited partner distribution checks........................ $440 $440
Amounts due to related parties....................................... 1,457 1,772
------------------- -----------------
Total liabilities........................................... 1,897 2,212
------------------- -----------------
Contingencies (Note 5)
Partners' equity (deficit):
General partner................................................. (1,839) (3,227)
Limited partners................................................ 9,736 10,693
------------------- -----------------
Total partners' equity...................................... 7,897 7,466
------------------- -----------------
$9,794 $9,678
=================== =================
See accompanying notes to financial statements.
3
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
STATEMENT OF OPERATIONS
Year Ended December 31,
2004 2003 2002
-------------- --------------- --------------
(Amounts in thousands, except unit amounts)
General and administrative expenses................................... $(1,084) $(360) $(1,527)
Interest income....................................................... 117 105 168
-------------- --------------- --------------
Net loss......................................................... $(967) $(255) $(1,359)
============== =============== ==============
Allocation of Net Loss:
General Partner................................................. (10) (3) (13)
============== =============== ==============
Limited Partners................................................ (957) (252) (1,346)
============== =============== ==============
Net loss per limited partnership unit ("Unit")........................ $(4.79) $(1.26) $(6.73)
============== =============== ==============
Limited partnership units outstanding................................. 200,005 200,005 200,005
============== =============== ==============
See accompanying notes to financial statements.
4
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
STATEMENT OF CASH FLOWS
Year Ended December 31,
2004 2003 2002
-------------- -------------- --------------
(amounts in thousands)
Cash flows from operating activities:
Net loss........................................................... $(967) $(255) $(1,359)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Changes in operating assets and liabilities:
Net change in unclaimed limited partner distribution
checks and amounts due to related parties............. 1,083 (353) 1,670
-------------- -------------- --------------
Net cash (used in) provided by operating activities....... 116 (608) 311
Cash and cash equivalents:
Beginning of period....................................... 9,184 9,792 9,481
-------------- -------------- --------------
End of period............................................. $9,300 $9,184 $9,792
============== ============== ==============
See accompanying notes to financial statements.
5
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
STATEMENT OF PARTNERS' EQUITY
General Limited
Partner Partners Total
-------------- -------------- --------------
(amounts in thousands)
Balance at January 1, 2002........................................... ($3,211) $12,291 $9,080
Net loss........................................................ (13) (1,346) (1,359)
-------------- -------------- --------------
Balance at December 31, 2002......................................... (3,224) 10,945 7,721
Net loss........................................................ (3) (252) (255)
-------------- -------------- --------------
Balance at December 31, 2003......................................... ($3,227) $10,693 $7,466
Net loss........................................................ (10) (957) (967)
Capital contribution from the General Partner................... 1,398 - 1,398
-------------- -------------- --------------
Balance at December 31, 2004......................................... ($1,839) $9,736 $7,897
============== ============== ==============
See accompanying notes to financial statements.
6
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
1. ORGANIZATION
American Cable TV Investors 5, Ltd. ("ACT 5" or the "Partnership") is a
Colorado limited partnership that was formed in December of 1986 for the
purpose of acquiring, developing, and operating cable television systems.
The partnership currently has no operations and is expected to be dissolved
when the remaining litigation against it is concluded (See Note 5).
The Partnership's general partner is IR-TCI Partners V, L.P. ("IR-TCI" or
the "General Partner"), a Colorado limited partnership. The general partner
of IR-TCI is TCI Ventures Five, Inc. ("TCIV 5"), a subsidiary of TCI
Cablevision Associates, Inc. ("Cablevision"). Cablevision is an indirect
subsidiary of Comcast Cable Holdings, LLC ("Comcast Cable Holdings"), and
is the managing agent of the partnership. Comcast Cable Holdings is an
indirect subsidiary of Comcast Corporation ("Comcast").
As further described in Note 3, the Partnership has sold all of its cable
television assets.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Allocation of Net Earnings and Net Losses
Net earnings and net losses are allocated 99% to ACT 5's limited partners
("Limited Partners") and 1% to the General Partner and distributions of
Cash from Operations, Sales or Refinancings (all as defined in the
Partnership's limited partnership agreement) are distributed 99% to the
Limited Partners and 1% to the General Partner until cumulative
distributions to the Limited Partners equal the Limited Partners' aggregate
contributions ("Payback"), plus 6% per annum. After the Limited Partners
have received distributions equal to Payback plus 6% per annum, the
allocations of net earnings, net losses and credits, and distributions of
Cash from Operations, Sales or Refinancings shall be 25% to the General
Partner and 75% to the Limited Partners. Although ACT 5's distributions of
proceeds from the sales of its cable television systems allowed Limited
Partners to achieve Payback, distributions did not allow Limited Partners
to achieve a 6% return on their aggregate contributions; therefore, amounts
will continue to be allocated 99% to the Limited Partners and 1% to the
General Partner.
Cash and Cash Equivalents
Cash and cash equivalents consist of investments which are readily
convertible into cash and have maturities of three months or less at the
time of acquisition.
At December 31, 2004 and 2003, $8,925,000 and $8,810,000 of the
Partnership's cash and cash equivalents were invested in money market
funds, respectively. The Partnership is exposed to credit loss in the event
of non-performance by the other parties to such financial instruments.
However, the Partnership does not anticipate non-performance by the other
parties.
Net Earnings (Loss) Per Unit
Net earnings (loss) per Unit is calculated by dividing net earnings (loss)
attributable to the Limited Partners by the number of Units outstanding
during the period. The number of Units outstanding for each of the years in
the three-year period ended December 31, 2004 was 200,005.
7
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 (Continued)
Income Taxes
No provision has been made for income tax expense or benefit in the
accompanying financial statements as the earnings or losses of the
Partnership are reported in the respective income tax returns of the
partners.
Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
3. ASSET SALES
On December 7, 1999, the Partnership consummated the sale of its remaining
cable television system serving subscribers located in and around
Riverside, California (the "Riverside System") to Century Exchange LLC
("Century"), a subsidiary of Adelphia Communications Corporation, for an
adjusted sale price of $33,399,000 (the "Riverside Sale"). The Riverside
Sale was approved by the Limited Partners at a special meeting that
occurred on December 11, 1998. In accordance with the terms of the asset
purchase agreement relating to the Riverside Sale, $1,500,000 of the sales
price was placed in escrow for 180 days in order to satisfy any
indemnifiable claims which could be made by Century. On June 5, 2000, the
funds held in escrow were released to ACT 5. ACT 5 received interest of
$39,000 in conjunction with the release of the funds held in escrow. In
connection with the Riverside Sale, Century and the Partnership waived the
condition to closing that all required consents be obtained prior to
closing the Riverside Sale, as such condition related to the transfer to
Century of the franchise agreement between the Partnership and the City of
Moreno Valley. The franchise agreement authorizes the Partnership to
provide cable television service to subscribers located in and around
Moreno Valley, California (the "Moreno Franchise Agreement"). Accordingly,
all of the Riverside System's cable television assets other than the Moreno
Franchise Agreement were transferred to Century on December 7, 1999. In
connection with the Riverside Sale, the Partnership entered into a
management agreement with Century pursuant to which Century would be
entitled to all net cash flows generated by the portion of the Riverside
System that was subject to the Moreno Franchise Agreement until such time
as the City of Moreno Valley approved the transfer of the Moreno Franchise
Agreement from the Partnership to Century. On February 13, 2001, the City
of Moreno Valley passed a resolution indicating that the Partnership, by
entering into the management agreement, in effect, transferred the
franchise without city approval, thereby causing a material default under
the franchise agreement. On December 18, 2001, the City of Moreno Valley
approved the transfer of the Moreno Valley Franchise Agreement to Century.
The settlement and transfer required a payment of $500,000 from Century and
releases the Partnership from any liability.
As a result of the Riverside Sale, the Partnership is no longer actively
engaged in the cable television business. A final determination of the
Partnership's liabilities and any liquidating distributions cannot be made
in connection with the Partnership's dissolution until the contingencies
described in Note 5 are resolved.
4. TRANSACTIONS WITH RELATED PARTIES
The Partnership has a management agreement with an affiliate of Comcast
Cable Holdings whereby this affiliate is responsible for performing all
services necessary for the management of the Partnership. The Partnership
is charged a management fee related to these services. During the years
ended December 31, 2004, 2003 and 2002, general and administrative expenses
in the Partnership's statement of operations includes $36,000, $36,000 and
$36,000, respectively, related to this agreement.
Amounts due to related parties, which represent non-interest-bearing
payables to Comcast Cable Holdings and its affiliates, consist of the net
effect of cash advances and certain intercompany expense charges.
5. CONTINGENCIES
On November 2, 1999, a limited partner of ACT 5 filed suit in United States
District Court for the District of Colorado against the General Partner
(and certain affiliates of the General Partner) of ACT 5. The lawsuit
alleges that the defendants violated disclosure requirements under the
Securities Exchange Act of 1934 in connection with
8
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 (Continued)
soliciting limited partner approval of the sale of the Partnership's cable
television system located in and around Riverside, California and that
certain defendants breached their fiduciary duty in connection with the
Riverside Sale. Also named as a defendant is Lehman Brothers Inc.
("Lehman"), which provided to ACT 5 a fairness opinion relative to the
Riverside Sale.
Section 21 of the Partnership Agreement provides that the General Partner
and its affiliates, subject to certain conditions set forth in more detail
in the Partnership Agreement, are entitled to be indemnified for any
liability or loss incurred by them by reason of any act performed or
omitted to be performed by them in connection with the business of ACT 5,
provided that the General Partner determines, in good faith, that such
course of conduct was in the best interests of ACT 5 and did not constitute
proven fraud, negligence, breach of fiduciary duty or misconduct. The
engagement agreement between ACT 5 and Lehman provides that, subject to
certain conditions set forth in more detail in the engagement agreement,
Lehman is entitled to be indemnified for any liability or loss, and to be
reimbursed by ACT 5 for legal fees and costs incurred as a result of its
rendering of services in connection with the fairness opinion. The General
Partner and its affiliates and Lehman each submitted a demand for
indemnification. Consequently, legal fees and costs incurred by the
defendants with respect to the above lawsuit have been reflected in general
and administrative expenses in the accompanying statements of operations in
the period that such legal fees were incurred by the defendants. For the
years ended December 31, 2004, 2003 and 2002, legal fees and costs related
to the above lawsuit of $945,000, $130,000 and $1,131,000, respectively,
have been so included in general and administrative expenses.
In March 2004, plaintiff agreed in principle to a settlement of all claims
against all defendants (other than Lehman) for $3,750,000, plus the
defendants' waiver of their claims against ACT 5 for reimbursement of their
legal expenses. Through the settlement date, the three TCI Defendants
incurred approximately $1.4 million in attorneys' fees and other costs. As
a result of the settlement, the amounts incurred by the settling defendants
have been treated as a capital contribution as of May 19, 2004, decreasing
amounts due to affiliates. This transaction is considered a non-cash
financing activity in the accompanying statement of cash flows as of
December 31, 2004.
Under the settlement agreement, plaintiff could continue to pursue its
claims against Lehman, which would continue to receive reimbursement of its
legal fees and costs from ACT 5. Plaintiff would be limited in collecting
on any judgment against Lehman to an amount of not more than: (a)
$3,750,000, plus (b) the total amount previously or hereafter paid to
Lehman by ACT 5 as reimbursement for Lehman's legal fees and costs.
Further, plaintiff could not collect on any judgment against Lehman unless
the Court specifically determined that, as to the amount to be collected:
(a) Lehman's liability resulted directly from Lehman's gross negligence,
bad faith and/or willful misconduct, or (b) Lehman otherwise is not
entitled to indemnification or reimbursement under its engagement agreement
with ACT 5 or under applicable law.
On May 19, 2004, the Court entered an order approving the proposed
settlement.
On June 28, 2004, the Court awarded plaintiff's counsel $1,012,500 in
attorneys' fees, in addition to its earlier award of $271,603 in costs,
which amounts reduced the $3,750,000 settlement sum to be paid by the
settling defendants, thereby diminishing the recovery by [certain] Limited
Partners.
Plaintiff thereafter continued to pursue its separate claims against
Lehman. Under the settlement agreement as approved by the Court, as well as
Lehman's engagement agreement with ACT 5, ACT 5 continued to be responsible
to reimburse Lehman for its legal fees and costs incurred in the defense of
the litigation. From the inception of the lawsuit through December 31,
2004, ACT 5 has incurred legal fees related to Lehman totaling
approximately $1.3 million.
The trial of plaintiff's claims against Lehman was held in September 2004.
On October 27, 2004 the Court issued its judgment in favor of Lehman and
dismissed plaintiff's claims against Lehman. The Court also ordered that
plaintiff pay Lehman its court costs in an amount to be later determined by
the Court.
9
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 (Concluded)
On November 24, 2004, Plaintiff filed a notice of appeal of the judgment in
favor of Lehman to the Court. On December 16, 2004, Plaintiff and Lehman
filed a stipulated withdrawal of the appeal after Lehman and ACT 5 agreed
not to pursue a claim against the Plaintiff for costs awarded to Lehman in
the judgment. Also on December 16, 2004, the Court granted the motion and
dismissed Plaintiff's appeal.
Under the above described settlement agreement and Lehman's engagement
agreement with ACT 5, ACT 5 has incurred obligations to reimburse Lehman
for its trial related attorneys' fees. While there may be additional
obligations incurred for work accomplished in the litigation by Lehman's
counsel, the case has been dismissed and there is no further appeal.
On April 1, 1997, the Partnership sold its cable television system located
in and around Shelbyville and Manchester, Tennessee (the "Southern
Tennessee System") to Rifkin Acquisition Partners, L.L.L.P. ("Rifkin").
Pursuant to the asset purchase agreement, $494,000 of the sales price was
placed in escrow (the "Southern Tennessee Escrow") and was subject to
indemnifiable claims by Rifkin through March 31, 1998. Prior to March 31,
1998, Rifkin filed a claim against the Southern Tennessee Escrow relating
to a class action lawsuit filed by a customer challenging late fee charges
with respect to the Southern Tennessee System. On September 14, 1999,
Rifkin sold the Southern Tennessee System to an affiliate of Charter
Communications, Inc. ("Charter"). In connection with such sale, Charter was
assigned the rights of the indemnification claim. The class action lawsuit
has been settled and dismissed. The amount of the Southern Tennessee Escrow
due Charter as a result of terms of the settlement agreement has not yet
been determined. Upon determination of amounts due Charter, the remaining
funds in the Southern Tennessee Escrow will be released to ACT 5. Accrued
interest of $121,000 has not yet been recognized by ACT 5 pending final
resolution of the claims against the escrow account.
The claim in the litigation against Lehman and the claim against the
Southern Tennessee Escrow have had and will continue to have the effect of
delaying any final liquidating distributions of the Partnership.
6. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
--------- --------- --------- --------- ---------
(Net loss in thousands)
2004
Net (loss) income.......................................... $(54) $(375) $(158) $(380) $(967)
Net (loss) income per limited partnership unit............. (.27) (1.86) (.78) (1.88) (4.79)
Limited partnership units outstanding...................... 200,005 200,005 200,005 200,005 200,005
2003
Net loss................................................... $(28) $(88) $(56) $(83) $(255)
Net loss per limited partnership unit...................... (.14) (.44) (.28) (.40) (1.26)
Limited partnership units outstanding...................... 200,005 200,005 200,005 200,005 200,005
10
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 hereunto duly authorized.
AMERICAN CABLE TV INVESTORS 5, LTD.
Date: April 29, 2005 By: /s/ Arthur R. Block
-------------------------------------------
Name: Arthur R. Block
Title: Senior Vice President and Secretary