-----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, KLoXVT3B6apXDLz31fls2qQjgjP/sX68idSE2chCNuLMIn8jz2P2NajouYY2bpFG 9IRM0sK5kCmrjJ07EPOtNg== 0000891020-98-001282.txt : 19980814 0000891020-98-001282.hdr.sgml : 19980814 ACCESSION NUMBER: 0000891020-98-001282 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHLAND CABLE PROPERTIES SIX LTD PARTNERSHIP CENTRAL INDEX KEY: 0000788736 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 911318471 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16063 FILM NUMBER: 98686360 BUSINESS ADDRESS: STREET 1: 1201 THIRD AVE STE 3600 CITY: SEATTLE STATE: WA ZIP: 98101 BUSINESS PHONE: 2066211351 MAIL ADDRESS: STREET 1: 1201 THIRD AVE STE 3600 CITY: SEATTLE STATE: WA ZIP: 98103 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1998 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1998 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 Number: 0-16063 --------------- NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP (Exact Name of Registrant as Specified in Charter) Washington 91-1318471 (State of Organization) (IRS Employer Identification No.) 1201 Third Avenue, Suite 3600, Seattle, Washington 98101 (Address of Principal Executive Offices) (Zip Code) (206) 621-1351 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) N/A - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 [ ] This filing contains _____ pages. Exhibits index appears on page _____. 2 PART 1 - FINANCIAL INFORMATION ITEM 1. Financial Statements NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP BALANCE SHEETS - (Unaudited) (Prepared by the Managing General Partner)
June 30, December 31, 1998 1997 ------------ ------------ ASSETS Cash $ 874,174 $ 173,034 Accounts receivable 988,855 400,963 Prepaid expenses 150,598 262,758 Property and equipment, net of accumulated depreciation of $14,252,603 and $13,328,036, respectively 13,776,136 6,539,222 Intangible assets, net of accumulated amortization of $10,249,849 and $12,692,683, respectively 18,908,608 6,233,409 ------------ ------------ Total assets $ 34,698,371 $ 13,609,386 ============ ============ LIABILITIES AND PARTNERS' EQUITY Accounts payable and accrued expenses $ 1,781,677 $ 957,085 Due to managing general partner and affiliates 208,271 154,836 Converter deposits 94,724 92,093 Subscriber prepayments 462,649 409,952 Notes payable 31,372,848 10,899,421 ------------ ------------ Total liabilities 33,920,169 12,513,387 ------------ ------------ Partners' equity: General Partners: Contributed capital, net (37,565) (37,565) Accumulated deficit (81,708) (78,570) ------------ ------------ (119,273) (116,135) ------------ ------------ Limited Partners: Contributed capital, net 8,986,444 8,990,444 Accumulated deficit (8,088,969) (7,778,310) ------------ ------------ 897,475 1,212,134 ------------ ------------ Total partners' equity 778,202 1,095,999 ------------ ------------ Total liabilities and partners' equity $ 34,698,371 $ 13,609,386 ============ ============
The accompanying notes to unaudited financial statements are an integral part of these statements 2 3 NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS - (Unaudited) (Prepared by the Managing General Partner)
For the six months ended June 30, ----------------------------- 1998 1997 ----------- ----------- Service revenues $ 7,287,515 $ 4,739,021 Expenses: Operating 609,386 437,915 General and administrative (including $973,617 and $721,796 to affiliates in 1997 and 1996, respectively) 1,787,400 1,173,562 Programming 1,938,934 1,128,542 Depreciation and amortization 1,884,687 1,032,507 ----------- ----------- 6,220,407 3,772,526 ----------- ----------- Income from operations 1,067,108 966,495 Other income (expense): Interest expense (1,295,584) (424,039) Interest income 7,009 5,241 Other income (92,330) 180 ----------- ----------- (1,380,905) (418,618) ----------- ----------- Net income (loss) $ (313,797) 547,877 =========== =========== Allocation of net income (loss): General Partners $ (3,138) $ 5,479 =========== =========== Limited Partners $ (310,659) $ 542,398 =========== =========== Net income (loss) per limited partnership unit: (29,792 units and 29,812 units, respectively) $ (10) $ 18 =========== =========== Net income (loss) per $1,000 investment $ (20) $ 36 =========== ===========
The accompanying notes to unaudited financial statements are an integral part of these statements 3 4 NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS - (Unaudited) (Prepared by the Managing General Partner)
For the three months ended June 30, ----------------------------- 1998 1997 ----------- ----------- Service revenues $ 3,715,515 $ 2,400,161 Expenses: Operating 331,801 233,673 General and administrative (including $477,325 and $344,907 to affiliates in 1998 and 1997, respectively) 947,291 605,170 Programming 954,781 566,735 Depreciation and amortization 1,135,454 365,552 ----------- ----------- 3,369,327 1,771,130 ----------- ----------- Income from operations 346,188 629,031 Other income (expense): Interest expense (674,620) (212,065) Interest income 5,675 3,023 Other income -- -- Gain/loss on sale of assets (92,330) -- ----------- ----------- (761,275) (209,042) ----------- ----------- Net income (loss) $ (415,087) $ 419,989 =========== =========== Allocation of net income (loss) General Partners $ (4,151) $ 4,200 =========== =========== Limited Partners $ (410,936) $ 415,789 =========== =========== Net income (loss) per limited partnership unit: (29,792 units and 29,812 units, respectively) $ (14) $ 14 =========== =========== Net income (loss) per $1,000 investment $ (28) $ 28 =========== ===========
The accompanying notes to unaudited financial statements are an integral part of these statements 4 5 NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS - (Unaudited) (Prepared by the Managing General Partner)
For the six months ended June 30, ------------------------------- 1998 1997 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ (313,797) $ 547,877 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 1,884,687 1,032,507 (Increase) decrease in operating assets: Loss on sale of assets 92,330 -- Accounts receivable (587,892) 24,853 Insurance receivable -- -- Prepaid expenses 112,160 15,035 Increase (decrease) in operating liabilities Accounts payable and accrued expenses 824,592 239,686 Due to managing general partner and affiliates 53,435 (58,645) Converter deposits 2,631 (8,631) Subscriber prepayments 52,697 (156,823) ------------ ------------ Net cash from operating activities 2,120,843 1,635,859 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net (1,338,001) (532,082) Acquisition of cable systems (20,500,000) -- Increase in intangibles (25,529) ------------ ------------ Net cash used in investing activities (21,863,530) (532,082) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on borrowings -- (1,219,100) Proceeds from borrowings 20,473,427 -- Loan fees and other costs incurred (25,600) (11,172) Repurchase of limited partner interest (4,000) (2,000) ------------ ------------ Net cash used in financing activities 20,443,827 (1,232,272) ------------ ------------ INCREASE (DECREASE) IN CASH 701,140 (128,495) CASH, beginning of period 173,034 414,975 ------------ ------------ CASH, end of period $ 874,174 $ 286,480 ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest $ 596,002 $ 222,094 ============ ============
The accompanying notes to unaudited financial statements are an integral part of these statements 5 6 NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP NOTE TO UNAUDITED FINANCIAL STATEMENTS (1) These unaudited financial statements are being filed in conformity with Rule 10-01 of Regulation S-X regarding interim financial statement disclosure and do not contain all of the necessary footnote disclosures required for a fair presentation of the Balance Sheets, Statements of Operations and Statements of Cash Flows in conformity with generally accepted accounting principles. However, in the opinion of management, this data includes all adjustments, consisting only of normal recurring accruals, necessary to present fairly the Partnership's financial position at June 30, 1998 and December 31, 1997, its Statements of Operations for the six and three months ended June 30, 1998 and 1997, and its Statements of Cash Flows for the six months ended June 30, 1998 and 1997. Results of operations for these periods are not necessarily indicative of results to be expected for the full year. (2) In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities. The Statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The Statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. Statement 133 is effective for fiscal years beginning after June 15, 1999. A company may also implement the Statement as of the beginning of any fiscal quarter after issuance (that is, fiscal quarters beginning June 16, 1998 and thereafter). Statement 133 cannot be applied retroactively. Statement 133 must be applied to (a) derivative instruments and (b) certain derivative instruments embedded in hybrid contracts that were issued, acquired, or substantively modified after December 31, 1997 (and, at the company's election, before January 1, 1998). The Partnership has not yet quantified the impacts of adopting Statement 133 on its financial statements and has not determined the timing of or method of adoption of Statement 133. However, the Statement could increase volatility in earnings and other comprehensive income. 6 7 PART I (continued) ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Revenues totaled $3,715,515 for the three months ended June 30, 1998, representing an increase of approximately 55% over the same period in 1997. Of these revenues, $2,693,770 (72%) was derived from basic service charges, $404,401 (11%) from premium services, $158,938 (4%) from tier services, $98,433 (3%) from installation charges, $101,192 (3%) from service maintenance contracts, $120,402 (3%) from advertising, and $138,379 (4%) from other sources. The January 1998 addition of approximately 11,300 subscribers acquired in the purchase of cable systems serving the communities of Bennettsville, Barnwell, Bamberg and Allendale, South Carolina increased revenues 50%. The remaining 5% of the revenue growth is attributable to an increase in the number of basic and tier subscribers of .5% and 29%, respectively, as well as rate increases placed into effect in August of 1997. As of June 30, 1998, the Partnership's systems served approximately 34,800 basic subscribers, 17,900 premium subscribers and 7,400 tier subscribers. Operating expenses totaled $331,801 for the three months ended June 30, 1998, representing an increase of approximately 42% over the same period in 1997. The acquisition of the Bennettsville, Barnwell, Bamberg and Allendale, South Carolina systems increased expenses 52%. The expenses for the other systems decreased by approximately 10% primarily related to a reduction in regional management costs. General and administrative expenses totaled $947,291 for the three months ended June 30, 1998, representing an increase of approximately 57% over the same period in 1997. The acquisition of the Bennettsville, Barnwell, Bamberg and Allendale, South Carolina systems increased expenses 59%. The expenses for the remaining systems decreased approximately 2% due to a one time correction to copyright fees and reduced legal fees. Programming expenses totaled $954,781 for the three months ended June 30, 1998, representing an increase of approximately 68% over the same period in 1997. Approximately 11% of the increase is due to increased costs charged by various program suppliers, with the acquisition of the Bennettsville, Barnwell, Bamberg and Allendale, South Carolina systems resulting in the remaining 57% increase. Depreciation and amortization expenses totaled $1,135,454 for the three months ended June 30, 1998, representing an increase of approximately 211% over the same period in 1997. Excluding the effects of the acquisition of the Bennettsville, Barnwell, Bamberg and Allendale, South Carolina systems, depreciation and amortization increased by 66%. Such increase is due to depreciation and amortization on current year purchases of plant and equipment, and a one time 7 8 adjustment which reduced depreciation expense in 1997. The addition of assets acquired in the purchase of the Bennettsville, Barnwell, Bamberg and Allendale, South Carolina systems increased depreciation and amortization expense 145%. Interest expense for the three months ended June 30, 1998 increased 218% from the same period in 1997. The average bank debt increased from $11,327,021 during the second quarter of 1997 to $31,372,848 during the second quarter of 1998, and the Partnership's effective interest rate increased from 7.49% in 1997 to 8.60% in 1998. Liquidity and Capital Resources The Partnership's primary sources of liquidity are cash flow provided from operations and an $8,000,000 revolving credit line, of which approximately $6,200,000 was outstanding as of June 30, 1998. Based on management's analysis, the Partnership's cash flow from operations is sufficient to cover future operating costs, debt service and planned capital expenditures. Under the terms of the Partnership's loan agreement, the Partnership has agreed to restrictive covenants which require the maintenance of certain ratios including a senior debt to annualized operating cash flow ratio of 5.5 to 1, a fixed charge ratio of 1.1 to 1, and an annual operating cash flow to interest expense ratio of less than 2.0 to 1. As of June 30, 1998, the Partnership was in compliance with its required financial covenants. As of the date of this filing, the balance under the credit facility is $31,372,848. Certain fixed rate agreements expired during the first quarter of 1998. As of the date of this filing, interest rates on the credit facility were as follows: $23,000,000 fixed at 8.02% under the terms of an interest rate swap agreement with the Partnership's lender expiring December 31, 1999; $6,200,000 fixed at 7.94%, expiring September 30, 1998; $2,000,000 fixed at 7.94%, expiring September 30, 1998. The balance of $172,848 bears interest at prime plus 1.00% (currently 9.50%). The above includes a margin paid to the lender based on overall leverage, and may increase or decrease as the Partnership's leverage fluctuates. Capital Expenditures During the second quarter of 1998, the Partnership incurred approximately $1,049,000 in capital expenditures. These expenditures included the installation of a fiber optic backbone in the Starkville, MS system, the continuation of a system upgrade to 450 MHz and a tap audit in the Kosciusko, MS system, the purchase of a bucket truck in the Forest, MS system, drop replacements in the Philadelphia, MS system, the purchase of a new office building and the initial phase of a 450 MHz upgrade in the Barnwell, SC system. Planned expenditures for the balance of 1998 include line extensions in various systems, the continuation of system upgrades to 450 MHz in the Kosciusko, MS and Barnwell, SC systems, and the deployment of additional fiber in the Highlands, NC and Philadelphia, MS systems. 8 9 Acquisition On January 2, 1998, the Partnership purchased cable television systems serving approximately 11,400 subscribers in and around the communities of Allendale, Bamberg, Barnwell and Bennettsville, all in the state of South Carolina. The purchase price of these systems was $20,500,000. The Partnership borrowed $31,372,848 under an amended and restated revolving credit and term loan agreement with its lender. The Partnership used the proceeds to refinance existing bank debt and finance the acquisition of the South Carolina cable systems. Pro forma operating results of the Partnership for the six and three months ending June 30, 1997, assuming the acquisition of the Allendale, Bamberg, Barnwell and Bennettsville, South Carolina systems had been completed as of the beginning of the period, are as follows:
Six months ending Three months ending June 30, 1997 June 30, 1997 ----------------- ------------------- Revenue $ 3,598,174 $ 7,087,612 =========== =========== Net income $ (857,974) $(1,204,419) =========== =========== Net loss per limited partnership unit $ (29) $ (34) =========== ===========
9 10 PART II - OTHER INFORMATION ITEM 1 Legal proceedings None ITEM 2 Changes in securities None ITEM 3 Defaults upon senior securities None ITEM 4 Submission of matters to a vote of security holders None ITEM 5 Other information None ITEM 6 Exhibits and Reports on Form 8-K (a) Exhibit index 27.0 Financial Data Schedule (b) No reports on Form 8-K have been filed during the quarter ended June 30, 1998. 10 11 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. NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP BY: Northland Communications Corporation, Managing General Partner Dated: August 13, 1998 BY: /s/ RICHARD I. CLARK ------------------ ----------------------------------- Richard I. Clark (Vice President/Treasurer) Dated: August 13, 1998 BY: /s/ GARY S. JONES ------------------ ----------------------------------- Gary S. Jones (Vice President) 11
EX-27.0 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 874,174 0 988,855 0 0 0 28,028,739 14,252,603 34,698,371 2,547,321 0 0 0 0 778,202 34,698,371 7,287,515 7,287,515 0 6,220,407 0 0 1,295,584 (313,797) 0 0 0 0 0 (313,797) 0 0
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