AMERICAN CABLE TV INVESTORS 5 LTD - 10-Q Quarterly Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED JUNE 30, 2003

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NO. 0-16784

AMERICAN CABLE TV INVESTORS 5, LTD.
(Exact name of Registrant as specified in its charter)

STATE OF COLORADO 84-1048934
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

C/O COMCAST CORPORATION 19102
1500 MARKET STREET (Zip Code)
PHILADELPHIA, PA
(Address of principal executive offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
215-665-1700

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 whether the registrant is an accelerated filer (as
defined in Rule 12-b2 of the Exchange Act). Yes [ ] No [X]

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AMERICAN CABLE TV INVESTORS 5, LTD.
FORM 10-Q
QUARTER ENDED JUNE 30, 2003
TABLE OF CONTENTS

AMERICAN CABLE TV INVESTORS 5, LTD.
(A COLORADO LIMITED PARTNERSHIP)

PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BALANCE SHEETS
(UNAUDITED)

See accompanying notes to financial statements.

1

AMERICAN CABLE TV INVESTORS 5, LTD.
(A COLORADO LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS
(UNAUDITED)

See accompanying notes to financial statements.

2

AMERICAN CABLE TV INVESTORS 5, LTD.
(A COLORADO LIMITED PARTNERSHIP)

STATEMENTS OF CASH FLOWS
(UNAUDITED)

See accompanying notes to financial statements.

3

AMERICAN CABLE TV INVESTORS 5, LTD.
(A COLORADO LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)

(1) BASIS OF FINANCIAL STATEMENT PREPARATION

The accompanying financial statements of American Cable TV Investors 5,
Ltd. ("ACT 5" or the "Partnership") are unaudited. In the opinion of management,
all adjustments (consisting only of normal recurring accruals) have been made
which are necessary to present fairly the financial position of the Partnership
as of June 30, 2003 and its results of operations for the three and six months
ended June 30, 2003 and 2002. The results of operations for the interim periods
are not necessarily indicative of the results for the entire year.

These financial statements should be read in conjunction with the financial
statements and related notes thereto included in the Partnership's December 31,
2002 Annual Report on Form 10-K.

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. ("Ventures Five"), 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").

(2) 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 three and six months ended
June 30, 2003 and 2002, general and administrative expenses in the Partnership's
statement of operations includes $9,000, $9,000, $18,000 and $18,000,
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.

(3) 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 of ACT
5. The lawsuit also names certain affiliates of the General Partner as
defendants. The lawsuit alleges that the defendants violated disclosure
requirements under the Securities Exchange Act of 1934 in connection with
soliciting limited partner approval of the sale of the Partnership's cable
television system located in and around Riverside, California (the "Riverside
Sale") 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. On May 18, 2001, the Court denied the Defendants' motion to dismiss the
complaint. A trial date has been set for March 2004. Based upon the limited
facts available, management believes that, although no assurance can be given as
to the outcome of this action, the ultimate disposition should not have a
material adverse effect upon the financial condition of the Partnership.

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

4

AMERICAN CABLE TV INVESTORS 5, LTD.
(A COLORADO LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONCLUDED)

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 expenses incurred as a result of
its rendering of services in connection with the fairness opinion. The General
Partner and its affiliates and Lehman each have submitted a demand for
indemnification. Consequently, legal fees 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 three and six months ended
June 30, 2003 and 2002, legal fees related to the above lawsuit of $16,000,
$639,000, $41,000 and $764,000, respectively, have been included in general and
administrative expenses in the accompanying statements of operations.

On August 1, 2002, the plaintiff in the above lawsuit filed a motion to bar
defendants from recovering indemnification for attorneys' fees and costs during
the pendency of the lawsuit. On September 16, 2002, plaintiff and the General
Partner, Ventures Five, and Comcast (the "TCI Defendants") filed with the court
a stipulation by which the TCI Defendants agreed that ACT 5 would not reimburse
Comcast for legal fees or expenses of the TCI Defendants unless, at the
conclusion of the case, the court authorizes the indemnification payment. The
plaintiff withdrew its motion without prejudice.

On October 7, 2002, the TCI Defendants and plaintiff filed motions for
partial summary judgment with respect to certain of the plaintiff's claims in
the above lawsuit. The court has not yet ruled on these motions and they remain
pending.

On January 31, 2003, the court denied plaintiff's motion seeking to bar
Lehman from recovering indemnification of attorney's fees and costs during the
pendency of this lawsuit. As a result, Lehman is entitled to indemnification
pursuant to the terms of its engagement agreement and Comcast is entitled to
reimbursement by ACT 5 for such indemnification payments.

Although no assurance can be given as to the outcome of the remaining
indemnification matters, based on information currently available to management,
ACT 5 believes that the TCI Defendants are entitled to indemnification pursuant
to the terms of the Partnership Agreement. Accordingly, management of ACT 5
intends to continue to reflect covered expenses in general and administrative
expenses. From the inception of the lawsuit through June 30, 2003, claims for
indemnification have been submitted to ACT 5 totaling approximately $2.1
million. Such amounts are reflected in amounts due to related parties in the
accompanying balance sheet at June 30, 2003.

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.

The claim against the Southern Tennessee Escrow and the lawsuit described
above have had and will continue to have the effect of delaying any final
liquidating distributions of the Partnership.

5

AMERICAN CABLE TV INVESTORS 5, LTD.
(A COLORADO LIMITED PARTNERSHIP)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion and analysis should be read in conjunction with
the Partnership's Management's Discussion and Analysis of Financial Condition
and Results of Operations included in the Partnership's Annual Report on Form
10-K for the year ended December 31, 2002.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

The Partnership has sold all of its cable television assets and, therefore,
is no longer actively engaged in the cable television business. Pending the
resolution of the contingencies described in note 3 to the accompanying
financial statements, the Partnership will seek to make a final determination of
its liabilities so that liquidating distributions can be made in connection with
its dissolution. The Partnership's results of operations for the three and six
months ended June 30, 2003 and 2002 include general and administrative ("G&A")
expenses and interest income. The Partnership's G&A expenses are primarily
comprised of legal fees and costs associated with the administration of the
Partnership. G&A expenses decreased $673,000 and $760,000 during the three and
six months ended June 30, 2003, as compared to the corresponding prior year
periods. Such decreases are due to legal fees associated with the litigation
described in note 3 to the accompanying financial statements. Interest income
relates to interest earned on the Partnership's cash and cash equivalents.
Interest income decreased $19,000 and $34,000 during the three and six months
ended June 30, 2003, as compared to the corresponding prior year periods. Such
decreases are due to decreases in interest rates.

ITEM 4. CONTROLS AND PROCEDURES

Our principal executive officer and our co-chief financial officers, after
evaluating the effectiveness of our disclosure controls and procedures (as
defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as
of the end of the period covered by this quarterly report, have concluded, based
on the evaluation of these controls and procedures required by paragraph (b) of
Exchange Act Rules 13a-15 or 15d-15, that our disclosure controls and procedures
were adequate and designed to ensure that material information relating to us
and our consolidated subsidiaries would be made known to them by others within
those entities.

Changes in internal control over financial reporting. There were no changes
in our internal control over financial reporting identified in connection with
the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15
that occurred during our last fiscal quarter that have materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.

6

AMERICAN CABLE TV INVESTORS 5, LTD.
(A COLORADO LIMITED PARTNERSHIP)

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Note 3 to our financial statements included in Item 1 for a
discussion of recent developments related to our legal proceedings.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits required to be filed by Item 601 of Regulation S-K:

31 Certifications of Principal Executive Officer and Co-Chief
Financial Officers pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

32 Certification of Principal Executive Officer and Co-Chief
Financial Officers pursuant to Section 906 of the Sarbanes
Oxley Act of 2002.

(b) Reports 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.

AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)

By: IR-TCI PARTNERS V, L.P.,
Its General Partner

By: TCI VENTURES FIVE, INC.
A General Partner

By: /s/ LAWRENCE J. SALVA
------------------------------------
Lawrence J. Salva
Senior Vice President
(Principal Accounting Officer)

Date: August 5, 2003

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