-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EYUwjmNv10P226Nd8dFXFUhbB7/aRyydLa13EfGNXmX1xZkGvmpCsq9qnbBIvh0c 563WK/q2fk73gq6mmv3QWQ== 0000950109-97-006709.txt : 19971111 0000950109-97-006709.hdr.sgml : 19971111 ACCESSION NUMBER: 0000950109-97-006709 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CABLE TV INVESTORS 2 CENTRAL INDEX KEY: 0000704847 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 840904982 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12096 FILM NUMBER: 97711187 BUSINESS ADDRESS: STREET 1: 5619 DTC PKWY CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3032675500 MAIL ADDRESS: STREET 1: 5619 DTC PARKWAY CITY: ENGLEWOOD STATE: CA ZIP: 80111 10-Q 1 FORM 10-Q 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 September 30, 1997 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. 2-78751 AMERICAN CABLE TV INVESTORS 2 ------------------------------------------------------ (Exact name of Registrant as specified in its charter) State of California 84-0904982 - -------------------------------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5619 DTC Parkway Englewood, Colorado 80111 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 267-5500 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- PART I - FINANCIAL INFORMATION AMERICAN CABLE TV INVESTORS 2 (A Limited Partnership) Balance Sheets (unaudited)
September 30, December 31, 1997 1996 -------------- ------------- Assets amounts in thousands - ------ Cash and cash equivalents $2,089 2,238 ====== ===== Liabilities and Partners' Equity - -------------------------------- Accounts payable and accrued expenses $ 211 62 Amounts due to related parties (note 4) 106 181 ------ ----- Total liabilities 317 243 ------ ----- Partners' equity (deficit): General partners 1,935 1,991 Initial limited partner (276) (272) Limited partners 113 276 ------ ----- Total partners' equity 1,772 1,995 ------ ----- Contingency (note 5) $2,089 2,238 ====== =====
See accompanying notes to financial statements. I-1 AMERICAN CABLE TV INVESTORS 2 (A Limited Partnership) Statements of Operations (unaudited)
Three months Nine months ended ended September 30, September 30, ----------------- ---------------- 1997 1996 1997 1996 -------- ------- ------- ------- amounts in thousands, except unit amounts General and administrative expenses (note 5) $ (210) (98) (277) (369) Interest income 28 36 54 151 ------- ------ ------ ------ Net loss $ (182) (62) (223) (218) ======= ====== ====== ====== Loss per limited partnership unit (note 2) $ (4.32) (1.47) (5.29) (5.17) ======= ====== ====== ====== Limited partnership units outstanding 30,772 30,772 30,772 30,772 ======= ====== ====== ======
See accompanying notes to financial statements. I-2 AMERICAN CABLE TV INVESTORS 2 (A Limited Partnership) Statement of Partners' Equity Nine months ended September 30, 1997 (unaudited)
Initial General limited Limited partners partner partners Total --------- -------- --------- ------ amounts in thousands Balance at January 1, 1997 $1,991 (272) 276 1,995 Net loss (56) (4) (163) (223) ------ ------ ------ ------ Balance at September 30, 1997 $1,935 (276) 113 1,772 ====== ====== ====== ======
See accompanying notes to financial statements. I-3 AMERICAN CABLE TV INVESTORS 2 (A Limited Partnership) Statements of Cash Flows (unaudited)
Nine months ended September 30, ------------------------------ 1997 1996 ------------ ------------ amounts in thousands (see note 3) Cash flows from operating activities: Net loss $ (223) (218) Adjustments to reconcile net loss to net cash used in operating activities: Change in receivables -- (9) Change in accounts payable, accrued expenses and amounts due to related parties 74 (401) ------------ ------------ Net cash used in operating activities (149) (628) ------------ ------------ Cash flows from investing activities - Distribution to minority owner of Redlands -- (210) ------------ ------------ Cash flows from financing activities -- -- ------------ ------------ Net decrease in cash and cash equivalents (149) (838) Cash and cash equivalents: Beginning of period 2,238 3,045 ------------ ------------ End of period $ 2,089 2,207 ============ ============
See accompanying notes to financial statements. I-4 AMERICAN CABLE TV INVESTORS 2 (A Limited Partnership) Notes to Financial Statements September 30, 1997 (unaudited) (1) Basis of Financial Statement Preparation ---------------------------------------- The accompanying unaudited financial statements include the accounts of American Cable TV Investors 2 ("ACT 2" or the "Partnership"). Through December 31, 1995, ACT 2 had a 65% ownership interest in Redlands, a joint venture which was formed to acquire, develop and operate cable television systems in and around Redlands, California. American Cable TV Investors 3 ("ACT 3"), an affiliate, owned the 35% minority interest in Redlands. In connection with a dissolution, indemnification and contribution agreement (the "Dissolution Agreement"), Redlands was dissolved as of January 1, 1996. In accordance with the terms of the Dissolution Agreement, Redlands' net assets were distributed to ACT 2 and ACT 3 based on their respective ownership interests. TCI Cablevision Associates, Inc. ("Cablevision"), an indirect subsidiary of Tele-Communications, Inc. ("TCI"), is the managing agent of ACT 2. The preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying financial statements of 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 September 30, 1997 and the results of its operations for the nine months ended September 30, 1997 and 1996. The results of operations for any interim period 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, 1996 Annual Report on Form 10-K. (2) Allocation of Net Earnings and Net Losses ----------------------------------------- Pursuant to ACT 2's limited partnership agreement (the "Partnership Agreement"), net earnings and net losses of ACT 2 are to be allocated 1% to the general partners, 2% to the initial limited partner and 97% to the limited partners until the limited partners have received cumulative distributions equal to their original capital contributions ("Payback"). After the limited partners have received distributions equal to Payback, the allocations of net earnings and net losses shall be 25% to the general partners, 2% to the initial limited partner and 73% to the limited partners. (continued) I-5 AMERICAN CABLE TV INVESTORS 2 (A Limited Partnership) Notes to Financial Statements Net loss per limited partnership unit is calculated by dividing the net loss attributable to the limited partners by the number of limited partnership units outstanding during the period. The limited partners achieved Payback in 1994. Accordingly, the Partnership's losses for the nine months ended September 30, 1997 and 1996 have been allocated using the post-Payback percentages set forth above. (3) Supplemental Disclosure of Cash Flow Information ------------------------------------------------ ACT 2 considers investments with initial maturities of six months or less to be cash equivalents. At September 30, 1997, $2,056,000 of money market funds were included in cash and cash equivalents. ACT 2 is exposed to credit loss in the event of non-performance by the other parties to such financial instruments. However, ACT 2 does not anticipate non-performance by the other parties. (4) Transactions with Related Parties --------------------------------- ACT 2 reimburses Cablevision for direct out-of-pocket and indirect expenses allocable to ACT 2 and for certain personnel employed on a full- or part-time basis to perform accounting or other services. Such reimbursements amounted to $27,000 for both the nine month periods ended September 30, 1997 and 1996. Amounts due to related parties represent non-interest-bearing payables to TCI and its affiliates consisting of (i) the net effect of cash advances and certain expense allocations and (ii) the advancement of legal and other fees and expenses associated with the litigation described in note 5. (5) Litigation ---------- On September 30, 1994, a limited partner of ACT 2 filed suit in United States District Court for the District of Colorado (the "District Court") against the managing general partner of ACT 2. A similar suit was filed against the managing general partner of ACT 3. The lawsuit, as amended, also names certain affiliates of the managing general partner as defendants. The lawsuit, as amended, alleges that the defendants violated disclosure requirements under the Securities Exchange Act of 1934 and that certain defendants breached a fiduciary duty to the plaintiffs in connection with the sale of the Redlands, California cable television system. (continued) I-6 AMERICAN CABLE TV INVESTORS 2 (A Limited Partnership) Notes to Financial Statements On November 3, 1995, the District Court granted the plaintiff's motion for certification of this case as a class action. The class has been defined to include all persons who were limited partners of ACT 2 as of the close of business on October 1, 1993, excluding, however, the defendants, their parent corporations, subsidiaries, and affiliates. On January 7, 1997, the District Court issued an order consolidating this case with a similar case filed against the managing general partner of ACT 3 (the "Consolidated Cases"). On or about October 27, 1997, the defendants entered into a preliminary settlement agreement (the "Settlement Agreement") in connection with the Consolidated Cases. On November 5, 1997, the District Court approved the form of notice to be transmitted to the class members relative to the proposed settlement, and scheduled a hearing before the District Court (the "Settlement Hearing") for January 7, 1998 at 3 p.m., to determine whether the Settlement Agreement should be approved and whether a final judgment should be entered in connection with the Settlement Agreement. Counsel for the class members will endeavor to mail to class members a notice of the Settlement Hearing along with the plan for distributing the settlement amount as set forth in the Settlement Agreement. Section 21 of the Partnership Agreement provides that the general partners and their 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 2, provided that the general partners determine, in good faith, that such course of conduct was in the best interests of ACT 2 and did not constitute proven fraud, negligence, breach of fiduciary duty or misconduct. Through September 30, 1997, ACT 2 and ACT 3 have received requests from the general partners and certain of their affiliates for the advancement of legal and other fees and expenses associated with the above-described lawsuit totaling $2.3 million. Consistent with the terms of the Partnership Agreement, this amount has been advanced by ACT 2 and ACT 3. ACT 2's 50% share of such fees and expenses for the nine months ended September 30, 1997 and 1996, which total $206,000 and $313,000, respectively, has been included in general and administrative expenses in the accompanying financial statements. I-7 AMERICAN CABLE TV INVESTORS 2 (A Limited Partnership) Management's Discussion and Analysis of - --------------------------------------- Financial Condition and Results of Operations --------------------------------------------- Material Changes in Results of Operations ----------------------------------------- ACT 2 is no longer engaged in the cable television business and is currently seeking to make a final determination of its liabilities so that liquidating distributions can be made in connection with its dissolution. Accordingly, the Partnership's results of operations for the three and nine month periods ended September 30, 1997 and 1996 include (i) the advancement of legal and other fees and expenses associated with the litigation described in note 5 to the accompanying financial statements, (ii) costs associated with the administration of the Partnership and (iii) interest income earned on the Partnership's invested cash and cash equivalents. Interest income for the nine month period ended September 30, 1997, has been decreased by $28,000 to reverse the overaccrual of interest income in prior periods. Material Changes in Financial Condition --------------------------------------- ACT 2 anticipates that it will make liquidating distributions in connection with its dissolution as soon as possible following the final determination and satisfaction of ACT 2's liabilities. In this regard, as described in note 5 to the accompanying financial statements, a Settlement Agreement has been entered into in connection with the Consolidated Cases. Liquidating distributions will be made as soon as practicable upon approval of the Settlement Agreement and entry of final judgment. I-8 AMERICAN CABLE TV INVESTORS 2 (A Limited Partnership) PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K - ------- -------------------------------- (a) Exhibits: (27) Financial Data Schedule (b) Reports on Form 8-K filed during the quarter ended September 30, 1997 - none II-1 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 2 (A Limited Partnership) By: IR-TCI PARTNERS II, Its Managing General Partner By: TCI VENTURES, INC., A General Partner Date: November 10, 1997 By: /s/ Gary K. Bracken ----------------------------------- Gary K. Bracken Vice President and Controller (Principal Accounting Officer) II-2 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 2,089 0 0 0 0 0 0 0 2,089 0 0 0 0 0 1,772 2,089 0 0 0 0 0 0 0 (223) 0 (223) 0 0 0 (223) (5.29) 0 EPS-PRIMARY REPRESENTS NET EARNINGS PER LIMITED PARTNERSHIP UNIT
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