10-Q 1 w87588e10vq.txt AMERICAN CABLE TV INVESTORS 5, LTD. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 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] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 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.

7 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 8

AMERICAN CABLE TV INVESTORS 5 LTD 10-Q