Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 2002
|_| 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 0-23842
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.)
235 Pine Street, 6th Floor, San Francisco, California 94104
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 989-8800
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 |_|
DOCUMENTS INCORPORATED BY REFERENCE
None
1
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
2
ATEL CASH DISTRIBUTION FUND V, L.P.
BALANCE SHEETS
JUNE 30, 2002 AND DECEMBER 31, 2001
(Unaudited)
ASSETS
2002 2001
---- ----
Cash and cash equivalents $930,467 $443,772
Accounts receivable, net of allowance for
doubtful accounts of $165,285 in
2002 and in 2001 633,194 1,249,403
Investments in leases 32,290,893 35,467,668
----------------- -----------------
$33,854,554 $37,160,843
================= =================
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $9,980,096 $11,663,273
Line of credit 4,000,000 6,500,000
Accounts payable
Other 114,626 156,408
General partner 591,336 146,080
Accrued interest expense 16,091 21,601
Unearned lease income 74,666 127,056
----------------- -----------------
Total liabilities 14,776,815 18,614,418
Partners' capital:
General partner 204,991 188,354
Limited partners 18,872,748 18,358,071
----------------- -----------------
Total partners' capital 19,077,739 18,546,425
----------------- -----------------
Total liabilities and partners' capital $33,854,554 $37,160,843
================= =================
See accompanying notes.
3
ATEL CASH DISTRIBUTION FUND V, L.P.
INCOME STATEMENTS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2002 AND 2001
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
Revenues:
Leasing activities:
Operating lease revenues $ 2,758,354 $ 2,923,158 $ 1,354,586 $ 1,369,719
Direct financing leases 218,710 293,896 106,153 142,506
Leveraged leases 9,950 30,753 (894) 16,510
Gain (loss) on sales of assets 96,948 213,005 11,513 (69,182)
Interest income 2,737 20,087 1,419 6,396
Other 1,959,451 1,237,683 1,957,712 1,236,518
----------------- ---------------- ----------------- -----------------
5,046,150 4,718,582 3,430,489 2,702,467
Expenses:
Depreciation and amortization 2,030,927 2,327,175 996,079 1,143,759
Interest 504,947 578,133 241,017 284,224
Cost reimbursements to General Partner 349,551 414,801 161,303 240,968
Other 216,247 156,899 155,529 84,699
Equipment and incentive management fees 121,403 315,029 60,515 212,537
Professional fees 98,415 111,942 62,093 40,206
Railcar maintenance 60,917 95,607 (7,847) 83,997
----------------- ---------------- ----------------- -----------------
3,382,407 3,999,586 1,668,689 2,090,390
----------------- ---------------- ----------------- -----------------
Net income $ 1,663,743 $ 718,996 $ 1,761,800 $ 612,077
================= ================ ================= =================
Net income:
General partner $ 16,637 $ 7,190 $ 17,618 $ 6,121
Limited partners 1,647,106 711,806 1,744,182 605,956
----------------- ---------------- ----------------- -----------------
$ 1,663,743 $ 718,996 $ 1,761,800 $ 612,077
================= ================ ================= =================
Weighted average number of units
outstanding 12,485,050 12,497,000 12,473,100 12,497,000
Net income per limited partnership unit $0.13 $0.06 $0.14 $0.05
See accompanying notes.
4
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SIX MONTH PERIOD ENDED
JUNE 30, 2002
(Unaudited)
Limited Partners General
Units Amount Partners Total
Balance December 31, 2001 12,497,000 $18,358,071 $ 188,354 $ 18,546,425
Repurchase of limited partnership units (23,900) (44,036) - (44,036)
Distributions to limited partners (1,088,393) - (1,088,393)
Net income 1,647,106 16,637 1,663,743
----------------- ---------------- ----------------- -----------------
Balance June 30, 2002 12,473,100 $18,872,748 $ 204,991 $ 19,077,739
================= ================ ================= =================
See accompanying notes.
5
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2002 AND 2001
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
Operating activities:
Net income $ 1,663,743 $ 718,996 $ 1,761,800 $ 612,077
Adjustments to reconcile net income
to net cash provided by operations
Leveraged lease income (9,950) (30,753) 894 (16,510)
Depreciation and amortization 2,030,927 2,327,175 996,079 1,143,759
(Gain) loss on sales of assets (96,948) (213,005) (11,513) 69,182
Changes in operating assets and liabilities:
Accounts receivable 616,209 678,696 541,497 430,042
Accounts payable, general partner 445,256 240,868 392,890 215,262
Accounts payable, other (41,782) (68,685) (290,699) (29,514)
Accrued interest expense (5,510) (24,067) (2,030) (9,769)
Unearned lease income (52,390) (66,855) 6,103 48,127
----------------- ---------------- ----------------- -----------------
Net cash provided by operating activities 4,549,555 3,562,370 3,395,021 2,462,656
----------------- ---------------- ----------------- -----------------
Investing activities:
Proceeds from sales of assets 458,003 2,193,637 66,153 (176,912)
Reduction in net investment in direct
financing leases 794,743 1,036,539 357,808 919,200
Payments received on notes receivable - 1,309,783 - 1,309,783
Reduction in net investment in leveraged
leases - - (21,688) (28,486)
----------------- ---------------- ----------------- -----------------
Net cash provided by investing
activities 1,252,746 4,539,959 402,273 2,023,585
----------------- ---------------- ----------------- -----------------
ATEL CASH DISTRIBUTION FUND V, L.P.
STATEMENTS OF CASH FLOWS
(Continued)
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 2002 AND 2001
(Unaudited)
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
Financing activities:
Distributions to limited partners (1,088,393) (7,497,774) - (3,749,028)
Proceeds of non-recourse debt - (759,436) -
Repayment of non-recourse debt (1,683,177) (2,907,793) (275,905) (994,072)
Borrowing under line of credit 500,000 3,000,000 - 2,000,000
Repayment of line of credit (3,000,000) (2,000,000) (2,000,000) (2,000,000)
Repurchase of limited partnership units (44,036) - (44,036) -
----------------- ---------------- ----------------- -----------------
Net cash used in financing activities (5,315,606) (9,405,567) (3,079,377) (4,743,100)
----------------- ---------------- ----------------- -----------------
Net increase (decrease) in cash and
cash equivalents 486,695 (1,303,238) 717,917 (256,859)
Cash at beginning of period 443,772 1,571,943 212,550 525,564
----------------- ---------------- ----------------- -----------------
Cash at end of period $ 930,467 $ 268,705 $ 930,467 $ 268,705
================= ================ ================= =================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 510,457 $ 602,200 $ 243,047 $ 293,993
================= ================ ================= =================
See accompanying notes.
6
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
1. Summary of significant accounting policies:
Interim financial statements:
The unaudited interim financial statements reflect all adjustments which are, in
the opinion of the general partners, 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 most recent report on Form
10K.
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 Fund 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.
3. Investment in leases:
The Partnership's investment in leases consists of the following:
Depreciation
Expense or Reclass-
December 31, Amortization ifications & June 30,
2001 of Leases Dispositions 2002
---- --------- - ------------- ----
Net investment in operating leases $ 26,533,841 $(1,990,727) $(1,707,058) $22,836,056
Net investment in direct financing leases 8,094,439 (794,743) - 7,299,696
Net investment in leveraged leases 1,073,050 9,950 (147,810) 935,190
Residual interests 835,759 - - 835,759
Reserve for losses (2,224,816) - - (2,224,816)
Assets held for sale or lease 725,609 - 1,493,813 2,219,422
Initial direct costs, net of accumulated
amortization of $1,115,605 in 2001 and
$985,594 in 2002 429,786 (40,200) - 389,586
------------------- ---------------- ----------------- -----------------
$ 35,467,668 $(2,815,720) $ (361,055) $ 32,290,893
=================== ================ ================= =================
7
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
3. Investments in leases (continued):
The Partnership's investment in property on operating leases consists of the
following:
Reclassifications
December 31, & Dispositions June 30,
2001 1st Quarter 2nd Quarter 2002
---- ----------- ----------- ----
Transportation $ 36,606,091 $ (315,905) $(2,259,619) $ 34,030,567
Construction 11,425,007 - - 11,425,007
Manufacturing 2,666,354 - - 2,666,354
Materials handling 248,749 - (138,600) 110,149
----------------- ---------------- ----------------- -----------------
50,946,201 (315,905) (2,398,219) 48,232,077
Less accumulated depreciation (24,412,360) (814,724) (168,937) (25,396,021)
----------------- ---------------- ----------------- -----------------
$ 26,533,841 $(1,130,629) $(2,567,156) $ 22,836,056
================= ================ ================= =================
All of the property on operating leases was acquired during 1993, 1994, 1995,
1996 and 1997.
At June 30, 2002, the aggregate amounts of future minimum lease payments are as
follows:
Direct
Financing Operating Total
Six months ending December 31, 2002 $ 867,839 $ 1,859,833 $ 2,727,672
Year ending December 31, 2003 428,733 1,750,230 2,178,963
2004 622,852 800,126 1,422,978
2005 496,654 815,639 1,312,293
2006 496,654 518,710 1,015,364
Thereafter 3,992,400 4,078,752 8,071,152
----------------- ---------------- -----------------
$ 6,905,132 $ 9,823,290 $ 16,728,422
================= ================ =================
8
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
4. Non-recourse debt:
Notes payable to financial institutions are due in varying monthly 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
6.33% to 10.53%.
Future minimum principal payments of non-recourse debt are as follows:
Principal Interest Total
Six months ending December 31, 2002 $ 1,041,872 $ 315,878 $ 1,357,750
Year ending December 31, 2003 709,048 553,832 1,262,880
2004 453,006 513,642 966,648
2005 481,214 485,263 966,477
2006 544,469 442,613 987,082
Thereafter 6,750,487 1,989,480 8,739,967
----------------- ---------------- -----------------
$ 9,980,096 $ 4,300,708 $ 14,280,804
================= ================ =================
5. Related party transactions:
The terms of the Agreement of Limited Partnership provide that the General
Partner and/or Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The General Partner and/or Affiliates earned the following fees and commissions,
pursuant to the Agreement of Limited Partnership during the six month periods
ended June 30, 2002 and 2001 as follows:
2002 2001
---- ----
Equipment and incentive management fees $ 121,403 $ 315,029
Reimbursement of costs 349,551 414,801
----------------- -----------------
$470,954 $729,830
================= =================
9
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
6. Partner's capital:
The Fund is authorized to issue up to 12,500,000 Units of Limited Partnership
interest in addition to the Initial Limited Partners.
The Fund's Net Profits, Net Losses and Tax Credits are to be allocated 99% to
the Limited Partners and 1% to the General Partner.
As more fully described in the Agreement of Limited Partnership, available Cash
from Operations and Cash from Sales or Refinancing shall be distributed as
follows:
First, 5% of Distributions of Cash from Operations to the General Partner as
Incentive Management Fees.
Second, the balance to the Limited Partners until the Limited Partners have
received aggregate Distributions, as defined, in an amount equal to their
Original Invested Capital, as defined, plus a 10% per annum cumulative
(compounded daily) return on their Adjusted Invested Capital, as defined.
Third, the General Partner will receive as Incentive Management Fees, the
following:
(A) 10% of remaining Cash from Operations, as defined,
(B) 15% of remaining Cash from Sales or Refinancing, as defined.
Fourth, the balance to the Limited Partners.
10
ATEL CASH DISTRIBUTION FUND V, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
7. Line of credit:
The Partnership participates with the General Partner and certain of its
affiliates in a $43,654,928 revolving line of credit with a financial
institution that includes certain financial covenants. The line of credit
expires on June 28, 2004. As of June 30, 2002, borrowings under the facility
were as follows:
Amount borrowed by the Partnership under the acquisition facility $ 4,000,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
facility 19,000,000
-----------------
Total borrowings under the acquisition facility 23,000,000
Amounts borrowed by the General Partner and its sister corporation under the warehouse facility -
-----------------
Total outstanding balance $ 23,000,000
=================
Total available under the line of credit $ 43,654,928
Total outstanding balance (23,000,000)
-----------------
Remaining availability $ 20,654,928
=================
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,
2002.
8. Other income:
During the second quarter of 2001, the Partnership recognized a gain of
$1,234,542 upon the receipt of proceeds from the bankruptcy of Schwegmann's
Giant Supermarkets, a former lessee of the Partnership. During the second
quarter of 2002, the Partnership recognized a gain of $1,954,952 upon the
receipt of additional proceeds from the bankruptcy trustee.
9. Subsequent event:
In July 2002, the Partnership sold a significant portion of its lease assets
prior to the maturity of the initial lease terms. The assets had been on lease
to Tarmac America, Inc. and Exxon/Mobil. The information below summarizes the
sales transactions.
Tarmac Exxon/Mobil Total
Original cost of equipment $ 7,197,839 $12,728,058 $ 19,925,897
Net book value of assets at date of sale $ 2,167,515 $10,389,679 $ 12,557,194
Sales price $ 2,459,454 $11,051,917 $ 13,511,371
Non-recourse debt repaid at time of sale $ 106,936 $ 8,183,110 $ 8,290,046
Net cash received from sale $ 2,352,518 $ 2,868,807 $ 5,221,325
Gain realized on sale $ 291,939 $ 662,238 $ 954,177
11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
Funds which have been received, but which have not yet been invested in leased
equipment, are invested in interest-bearing accounts or high-quality/short-term
commercial paper.
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, 2001, the Partnership had borrowed $58,317,911. The remaining
unpaid balance at that date was $9,980,096. Borrowings are to be non-recourse to
the Partnership, that is, the only recourse of the lender is to the equipment or
corresponding lease acquired or secured with the loan proceeds. The General
Partner expects that aggregate borrowings in the future will be approximately
40% of aggregate equipment cost. In any event, the Agreement of Limited
Partnership limits such borrowings to 40% of the total cost of equipment, in
aggregate.
The Partnership participates with the General Partner and certain of its
affiliates in a $43,654,928 revolving line of credit with a financial
institution that includes certain financial covenants. The line of credit
expires on June 28, 2004. As of June 30, 2002, borrowings under the facility
were as follows:
Amount borrowed by the Partnership under the acquisition facility $ 4,000,000
Amounts borrowed by affiliated partnerships and limited liability companies under the acquisition
facility 19,000,000
-----------------
Total borrowings under the acquisition facility 23,000,000
Amounts borrowed by the General Partner and its sister corporation under the warehouse facility -
-----------------
Total outstanding balance $ 23,000,000
=================
Total available under the line of credit $ 43,654,928
Total outstanding balance (23,000,000)
-----------------
Remaining availability $ 20,654,928
=================
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,
2002.
No commitments of capital have been or are expected to be made other than for
the acquisition of additional equipment. As of June 30, 2002, there were no such
commitments.
12
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
For both the three and six month periods in 2002 and 2001, the Partnership's
primary source of cash flows from operations was rents from operating leases.
In 2001, the most significant source of cash from investing activities in both
the six and three month periods was proceeds from sales of lease assets. Rents
from direct financing leases were also significant in both the three and six
month periods. In 2002, such rents were the most significant source of cash from
investing activities. In May 2001, the Partnership received payment on the
amounts carried as notes receivable ($1,309,783). There were no similar amounts
in 2002.
In 2002 and 2001, the only financing source of cash was amounts borrowed on the
line of credit, $500,000 in 2002 and $3,000,000 in 2001. Distributions to the
Limited Partners was the primary financing use of cash. Commencing in January
2002, the General Partner change the frequency of distributions to the limited
partners from monthly (for most of the partners) and quarterly distributions
(for the remainder) to an annual distribution. In 2002, the only distributions
to date are distributions from cash flows generated in the 4th quarter of 2001
and distributed in January of 2002. Cash used to repay non-recourse debt has
decreased as a result of scheduled debt reductions.
Results of operations
The primary source of revenues is operating leases and is expected to remain so
in future periods. As leases reach their scheduled terminations, the Partnership
expects to either sell the assets or to re-lease them. Revenues from succeeding
leases are usually lower than the amounts received on earlier leases. As a
result, lease rents are expected to decline in future periods until all of the
assets are sold. Operating lease revenues declined by $164,804 (from $2,923,158
in 2001 to $2,758,354 in 2002) for the six month periods and $15,133 (from
$1,369,719 in 2001 to $1,354,586 in 2002) for the three month periods.
Depreciation is the Partnership's largest expense and is related directly to
operating lease assets and revenues. Depreciation also decreased for both the
three and six month periods as a result of these lease terminations.
In 2001, sales of assets resulted in a gain of $213,005 for the six month period
and a loss of $69,182 for the three month period compared to gains of $96,948
for the six month period and $11,513 for the three month period in 2002.
Interest expense has declined for both the six and three month periods as a
result of decreased total debt balances compared to 2001. Debt balances have
been reduced as a result of scheduled debt payments.
Management fees are related to lease revenues (equipment management fees) and
the amounts of cash generated from operations which is distributed to the
limited partners (incentive management fees). Lease revenues declined compared
to 2001 as noted above. More of the distributions to the limited partners came
from the proceeds of asset sales (on which no management fees are being paid)
rather than from cash generated from operations. These gave rise to the
decreases in management fees compared to 2001.
13
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, except for
the claim by Republic Financial Corporation described below. No other material
legal proceedings are currently pending against the Partnership or against any
of its assets.
Schwegmann's Giant Supermarkets:
In October 1997, Schwegmann's Giant Supermarkets defaulted on the timely
performance of lease payments, and certain other obligations under its lease
with the Partnership, with respect to two of five locations of retail grocery
store fixtures and equipment, with a receivable balance currently totaling
approximately $1.7 million. The remaining portion of the lease payments with
respect to three of five stores was assumed by SGSM Acquisition Company (a
subsidiary of Kohlberg and Co.) ("SGSM"). Payments with respect to these leases
remained current until February 1999; however, on March 26, 1999, SGSM filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. On February 22, 2000,
and then on September 20, 2000, two of the obligors under the original lease,
Schwegmann Westside Expressway Inc. and Schwegmann Giant Supermarkets
Partnership, filed for protection under Chapter 11 of the U.S. Bankruptcy Code,
respectively.
The Partnership has liquidated all equipment leased under their lease, resulting
in net proceeds of $384,353, which represent 9.26% of original equipment cost.
The Partnership obtained and recorded a judgment against the lessee and
guarantors in the approximate amount of $2.8 million, and pursued recovery of
these liquidated damages, plus expenses, due under the lease. The lessee claimed
sufficient assets to satisfy the claims of all secured creditors of the lessee;
however, the lessee's assets are primarily relatively illiquid real property
investments. During 2001, the lessee received $15,000,000 in proceeds from a
parcel of real property sold to a large home improvement retail chain, which
amount was sufficient to pay off substantially all of the creditors, including
the Partnership's claim of $2.8 million. As of this date, the Partnership has
received in excess of $2.6 million in satisfaction of its claim, and the General
Partner believes that it has a reasonable basis for assuming recovery of its
remaining liquidated damages balance, in the approximate amount of $800,000 plus
legal fees, in full satisfaction of its claim.
Pegasus Gold Corporation:
On January 16, 1998, Pegasus Gold Corporation filed for protection under Chapter
11 of the U.S. Bankruptcy Code. The initial meeting of creditors established by
the U.S. Trustee's Office was held on March 9, 1998. The lessee's lease with the
Partnership had previously been leveraged on a non-recourse basis with The CIT
Group/Equipment Financing, Inc. ("CIT"), and all lease receivables (currently
estimated at $2,211,902 as of February 14, 2001) were assigned to the lender.
Consequently, the Partnership's exposure is no greater than the fair market
residual value of the equipment under lease, currently estimated at $1,101,803.
The reorganized lessee/debtor has assumed the Partnership's lease in the
Bankruptcy Court and cured all past due payments which are now current. The
Partnership has entered into an Escrow Agreement with CIT, wherein CIT has
agreed not to foreclose on the Partnership's interest so long as the lessee
continues to perform under the lease.
At this time, the reorganized lessee is current in its lease obligations. The
ultimate recovery under this lease is dependent on the price of gold remaining
at a level sufficient to make the lessee's operations profitable, and,
consequently, any assessment of the impact of an adverse outcome of this matter
remains uncertain. The original seven-year lease term expires on December 31,
2003.
14
Quaker Coal Company:
On December 31, 1997, Quaker Coal Company, one of the Partnership's lessees,
requested a moratorium on lease payments from January through March 1998. No
lease payments were made by the lessee through June of 1998, and as a result,
the General Partner declared the lease in default. Subsequently, the lessee
cured the outstanding payments and eventually satisfied substantially all lease
payments due under the lease; however, the General Partner refused to waive the
default and insisted on contractual damages. The General Partner filed a suit
against the lessee for its contractual damages in the U.S. District Court of
Northern California (the "Court"). On June 16, 2000, the lessee filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. The amounts of these
damages have not been included in the financial statements included in Part I,
Item 1 of this report.
The Partnership obtained a stipulation for relief from the automatic bankruptcy
stay to allow the Court to issue its ruling, and filed a request to participate
on the Official Committee of Unsecured Creditors in the bankruptcy proceedings.
The Partnership succeeded upon securing the return of its equipment, which has
been liquidated, netting approximately 17% of the original equipment cost. 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 General Partner believes the Court's
decision is erroneous, as a matter law, and has filed an appeal of the decision
in the U.S. District Court of Appeals.
The lessee filed a plan of reorganization, which has been objected to by several
large creditors, including the General Partner.
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 American Electric Power's
("AEP") Plan of Reorganization ("AEP Plan") was successful. Under the AEP Plan,
the claim of the Partnerships has been assigned to a liquidating trustee for
resolution and satisfaction from the debtor's estate.
In January 2002, ATEL attended an appellate settlement conference seeking to
resolve the outstanding disputed claim. A reserve has been set aside by the
liquidating trustee in the amount of $1.2 million in partial satisfaction of the
Partnership's claims and those of its affiliates, although this claim amount
remains in dispute. Currently, the likelihood of recovery of amounts above the
payment of the lease rent and the liquidation of the equipment already received
remains speculative and highly uncertain.
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, 2002 and December 31, 2001.
Statements of operations for the six and three month
periods ended June 30, 2002 and 2001.
Statement of changes in partners' capital for the six
months ended June 30, 2002. Statements of cash flows for
the six and three month periods ended June 30, 2002 and
2001.
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
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 10QSB of ATEL Cash Distribution
Fund V, LP, (the "Partnership") for the period ended June 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), and
pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the
Sarbanes-Oxley Act of 2002, I, Dean L. Cash, Chief Executive Officer of ATEL
Financial Services, LLC, general partner of the Partnership, hereby certify
that:
1. The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act
of 1934 ; and
2. The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.
/s/ DEAN L. CASH
- ----------------------------------
Dean L. Cash President and Chief Executive
Officer of General Partner
August 14, 2002
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 10QSB of ATEL Cash Distribution
Fund V, LP, (the "Partnership") for the period ended June 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), and
pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the
Sarbanes-Oxley Act of 2002, I, Paritosh K. Choksi, Chief Financial Officer of
ATEL Financial Services, LLC, general partner of the Partnership, hereby certify
that:
1. The Report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act
of 1934 ; and
2. The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.
/s/ PARITOSH K. CHOKSI
- ----------------------------------
Paritosh K. Choksi Executive Vice President of General
Partner, Principal financial officer of registrant
August 14, 2002
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 14, 2002
ATEL CASH DISTRIBUTION FUND V, L.P.
(Registrant)
By: ATEL Financial Services, LLC
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
Executive Vice President of
General Partner, Principal
financial officer of registrant
By: /s/ DONALD E. CARPENTER
--------------------------------------
Donald E. Carpenter,
Principal accounting officer of
registrant
17