-----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, BbeFFw69nbvE2ub/YjrKHKKNvpl7L+yjDjiKDXLpVKx9gI21zVt4vN0jCu6XYpzy AzCms6vkBIya6hyp2gQ1Yw== 0000845394-96-000003.txt : 19960805 0000845394-96-000003.hdr.sgml : 19960805 ACCESSION NUMBER: 0000845394-96-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960802 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELECOMMUNICATIONS GROWTH & INCOME FUND L P CENTRAL INDEX KEY: 0000845394 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 541482898 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-26427 FILM NUMBER: 96602715 BUSINESS ADDRESS: STREET 1: TELECOMMUNICATIONS GROWTH & INCOME FD LP STREET 2: 2201 WILSON BLVD SUITE 500 CITY: ARLINGTON STATE: VA ZIP: 22201-3323 BUSINESS PHONE: 703-243-5630 MAIL ADDRESS: STREET 1: TELECOMMUNICATIONS GROWTH & INCOME FD LP STREET 2: 2201 WILSON BLVD SUITE 500 CITY: ARLINGTON STATE: VA ZIP: 22201-3323 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD COMMISSION FILE ENDED JUNE 30, 1996 NUMBER 033-26427 TELECOMMUNICATIONS GROWTH & INCOME FUND L.P. (Name of small business issuer in its charter) Virginia 54-1482898 (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2201 Wilson Boulevard, Arlington, VA 22201 (Address of principal executive offices) (Zip Code) (703) 247-2900 (Issuer's telephone number) Securities registered pursuant to Section 12(b) of the Exchange Act: None (Title of class) Securities registered pursuant to Section 12(g) of the Act: Name of each exchange Title of each class on which registered Limited Partnership Interest None Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months and (2) has been subject to such filing requirements for the past ninety days. Yes x No TELECOMMUNICATIONS GROWTH & INCOME FUND L.P. FORM 10-QSB For the Six Month Period Ended June 30, 1996 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Page Item 1. Financial Statements 3 Item 2. Management's Discussion and Analysis or Plan of Operation 14 PART II - OTHER INFORMATION Item 1. Legal Proceedings 13 Signatures 14 Part I - Financial Information Item 1. Financial Statements Telecommunications Growth & Income Fund L.P. CONSOLIDATED FINANCIAL STATEMENTS INDEX CONSOLIDATED BALANCE SHEETS June 30, 1996 (Unaudited) and December 31, 1995 (Audited) 4-5 CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended June 30, 1996 and 1995 (Unaudited) 6 Six months ended June 30, 1996 and 1995 (Unaudited) 6 CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT) For the year ended December 31, 1995 (Audited) and for the six months ended June 30, 1996 (Unaudited) 7 CONSOLIDATED STATEMENTS OF CASH FLOWS For the six months ended June 30, 1996 and 1995 (Unaudited) 8-9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10-12 TELECOMMUNICATIONS GROWTH AND INCOME FUND L.P. CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1996 AND DECEMBER 31, 1995 ASSETS June 30,1996 Dec. 31, 1995 (Unaudited) (Audited) CASH AND CASH EQUIVALENTS $146,399 $175,561 RECEIVABLES: Customer accounts receivable 88 88 Rent 8,120 17,505 Affiliates 1,844 1,844 Other 22,667 22,667 32,719 42,104 Total current assets 179,118 217,665 LAND 74,624 74,624 BUILDINGS, net of accumulated depreciation of $91,134 and $84,465 175,611 182,280 COMMUNICATIONS TOWERS, net of accumulated depreciation of $418,048 and $386,025 813,403 845,426 INTANGIBLE ASSETS, net of accumulated amortization of $853,334 and $848,334 131,666 136,666 1,195,304 1,238,996 OTHER ASSETS: Note receivable 1,700,000 1,700,000 Additional consideration receivable 412,368 396,251 Other assets 779 37,747 2,113,147 2,133,998 Total Assets $3,487,569 $3,590,659 The accompanying notes are an integral part of these consolidated financial statements. TELECOMMUNICATIONS GROWTH AND INCOME FUND L.P. CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1996 AND DECEMBER 31, 1995 LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) June 30, 1996 Dec. 31, 1995 (Unaudited) (Audited) CURRENT LIABILITIES: Notes payable, current portion $ - $24,456 Accrued liabilities 14,802 24,047 Accounts payable-affiliates 6,232 6,238 Deferred income 15,677 19,571 Security deposits 8,625 9,625 Total current liabilities 45,336 83,937 NOTES PAYABLE, less current portion - 52,068 MINORITY INTEREST IN TOWER VENTURES LIMITED PARTNERSHIP 10,511 10,078 MINORITY INTEREST IN UNITED MOBILE NETWORKS L.P. 9,475 8,742 PARTNERS' CAPITAL (DEFICIT): General Partner (28,355) (28,218) Investor Limited Partners 3,450,602 3,464,052 3,422,247 3,435,834 Total Liabilities and Partners' Capital (Deficit) $3,487,569 $3,590,659 The accompanying notes are an integral part of these consolidated financial statements. TELECOMMUNICATIONS GROWTH AND INCOME FUND L.P. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 REVENUES: Rental income $157,651 $151,254 $316,675 $296,800 COSTS AND EXPENSES: Operating, general and administrative 37,102 36,137 73,745 84,497 Management fees - affiliates 9,213 8,984 18,517 17,774 - others 17,521 19,132 34,473 39,484 Depreciation and amortization 21,846 39,586 70,634 79,172 85,682 103,839 197,369 220,927 OPERATING INCOME 71,969 47,415 119,306 75,873 OTHER INCOME (EXPENSES): Interest income 43,404 43,134 86,372 86,119 Interest expense - (1,944) (1,274) (3,866) 43,404 41,190 85,098 82,253 INCOME BEFORE ALLOCATION TO MINORITY INTERESTS 115,373 88,605 204,404 158,126 MINORITY INTEREST IN TOWER VENTURES LIMITED PARTNERSHIP'S NET INCOME (1,011) (821) (1,742) (1,588) MINORITY INTEREST IN UNITED MOBILE NETWORKS L.P. (357) (284) (733) (421) NET INCOME $114,005 $87,500 $201,929 $156,117 ALLOCATION OF NET INCOME: General Partner $1,140 $ 875 $2,019 $1,561 Investor Limited Partners $112,865 $ 86,625 $199,910 $154,556 Net income per Investor Limited Partner Unit $21.16 $16.24 $37.48 $28.98 The accompanying notes are an integral part of these consolidated financial statements. TELECOMMUNICATIONS GROWTH AND INCOME FUND L.P. CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 1995 (AUDITED) AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) Investor General Limited Partner Partners Total BALANCE, January 1, 1995 $(28,593) $3,446,591 $3,417,998 Distributions (3,573) (373,380) (376,953) Net Income 3,948 390,841 394,789 BALANCE, December 31, 1995 (28,218) 3,464,052 3,435,834 Distributions (2,156) (213,360) (215,516) Net Income 2,019 199,910 201,929 BALANCE, June 30, 1996 $ (28,355) $3,450,602 $3,422,247 The accompanying notes are an integral part of these consolidated financial statements. TELECOMMUNICATIONS GROWTH AND INCOME FUND L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) Six Months Ended June 30, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $201,929 $156,117 Adjustments to reconcile income to net cash provided by operating activities: Depreciation and amortization 70,634 79,172 Imputed interest on additional consideration receivable (16,117) (14,882) Changes in assets and liabilities: Decrease in receivables 9,385 1,217 Decrease in accrued liabilities (9,245) (42,243) Decrease in deferred revenue (3,894) (2,854) Increase (decrease) in security deposits (1,000) 2,000 Increase in minority interests 1,165 2,009 Decrease in accounts payable-affiliates (6) (36,895) Decrease in deposits and prepaid expenses 10,026 8,902 Net cash provided by operating activities 262,877 152,543 CASH FLOWS FROM FINANCING ACTIVITIES: Distributions (215,516) (160,020) Repayment of borrowings (76,523) (9,467) Net cash used in financing activities (292,039) (169,487) DECREASE IN CASH AND CASH EQUIVALENTS (29,162) (16,944) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 175,561 173,793 CASH AND CASH EQUIVALENTS, END OF PERIOD $146,399 $156,849 The accompanying notes are an integral part of these consolidated financial statements. TELECOMMUNICATIONS GROWTH & INCOME FUND L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) Six Months Ended June 30, 1996 1995 Supplementary information: Cash paid during the period for interest $878 $3,780 The following non-cash activities resulted from the sale of of UMN L.P. assets: Imputed interest receivable $16,117 $14,882 The accompanying notes are an integral part of these consolidated financial statements. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting and include the accounts of the Partnership and its 99% owned subsidiary, Tower Ventures Limited Partnership, a Pennsylvania limited partnership ("Tower Ventures"), on a consolidated basis. The remaining 1% limited partnership interest in Tower Ventures is held by DCOA and Malarkey-Taylor in trust for the Partnership until the property is sold. On November 9, 1990, the Partnership purchased a 29.5% limited partnership interest in United Mobile Networks L.P. ("UMN L.P."), a Delaware limited partnership. On June 29, 1992, the Partnership's limited partnership interest increased to a 99% limited partnership interest, pursuant to the Third Amendment to the Limited Partnership Agreement of UMN L.P. As a result of the provisions of UMN L.P.'s partnership agreement, the Partnership was deemed to control UMN L.P. as of November 9, 1990 (date of purchase). Accordingly, the accompanying consolidated financial statements include the accounts of UMN L.P. since November 9, 1990 on a consolidated basis. All intercompany transactions have been eliminated in consolidation. Cash Equivalents For purposes of the statement of cash flows, the Partnership considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. Cash equivalents include an investment in a mutual fund investing in short-term U.S. Treasury obligations of $88,601 and $121,345 at June 30, 1996 and December 31, 1995, respectively. Income Taxes No provision has been made for Federal and state income taxes since the Partnership's profits and losses are reported by the individual partners on their respective income tax returns. Deferred Income Deferred income represents prepayments of rent by certain tenants of the communications tower owned by Tower Ventures that are recognized as revenue in subsequent months. Minority Interest in Tower Ventures Limited Partnership Minority interest in Tower Ventures Limited Partnership, as shown on the balance sheet, reflects the remaining capital account balances attributable to the 1% interest in Tower Ventures owned by DCOA and Malarkey-Taylor Associates, Inc. For the six months ended June 30, 1996 and 1995, Tower Ventures reported net income of $174,239 and $158,752, respectively. The minority interest's 1% share in this net income is $1,742 and $1,588, respectively, and is reflected on the balance sheet as Minority Interest in Tower Ventures. Minority Interest in United Mobile Networks L.P. Minority interest is reflected in consolidation and represents the 1% of UMN L.P. not owned by the Partnership. For the six months ended June 30, 1996 and 1995, UMN L.P. reported net income of $73,321 and $42,090, respectively. The minority interest's 1% share in this net income is $733 and $421, respectively, and is reflected on the balance sheet as Minority Interest in UMN L.P. Depreciation and Amortization Buildings and the communications towers are stated at cost and depreciated over estimated useful lives of 20 years using the straight-line method. Costs assigned to intangible assets are being amortized using the straight-line method over the remaining estimated useful lives of from 4 months to 20 years (see Note 4). Loan fees are amortized on a straight-line basis over the term of the loan and were fully amortized as of March 31, 1996. Income per Investor Limited Partner Unit Income per Investor Limited Partner Unit is calculated by dividing the allocation of income (loss) to Investor Limited Partners by the weighted average number of units outstanding during the six months ended June 30, 1996 and 1995 of 5,334 units. 2. RELATED PARTY TRANSACTIONS The General Partner is entitled to a management fee of 5% of the gross revenues, not including proceeds from the sale, exchange or other disposition of the businesses. Management fees for the six months ended June 30, 1996 and 1995 were $18,517 and $17,774, respectively. Item 2. Management's Discussion and Analysis or Plan of Operation Results of Operations For the six months ended June 30, 1996, Partnership operations consisted of operating the communications tower owned by Tower Ventures and managing the remaining business of UMN L.P. ("ETCLP"), consisting of collecting the interest and principal on the note receivable and additional consideration receivable from, and monitoring the operations of, East Texas Communications L.P., the purchaser of the specialized mobile radio businesses (the "SMR business") owned by UMN L.P. The SMR business was sold to ETCLP effective July 14, 1994. Rental revenues from the communications tower (Tower Ventures) increased $19,875 and costs and expenses increased $6,981 for the six months ended June 30, 1995 and 1996, respectively. For the six months ended June 30, 1996, rental revenue of $316,675 was earned from 25 tenant leases. The increase was attributable to the addition of one new tenant, consumer price index rent adjustments and increases in charges to various tenants during this six month period. Tenants are charged for utilities and for their equipment additions to the tower or building. Operating, general and administrative expense consisted of operating costs of Tower Ventures and UMN L.P. in the amount of $42,055 and $4,796, respectively, for the six months ended June 30, 1996. The remaining $26,894 represents legal and accounting fees of $22,796 and other administrative costs of $4,098. Management fees during this six month period consisted of fees incurred by Tower Ventures and UMN L.P. of $28,473 and $6,000, respectively, and management fees of $18,517 to Telecommunications Growth & Income Fund Management Limited Partnership, the general partner. Operating income increased by $43,433 from $75,873 to $119,306 for the six months ended June 30, 1995 and 1996, respectively. Depreciation and amortization decreased $8538, and operating, general and administrative expense decreased $10,752. Management fees decreased $4,268. Interest expense decreased $2,592, from $3,866 to $1,274 for the six months ended June 30, 1995 and 1996, respectively, as a result of the repayment of the Tower Ventures debt on March 18, 1996. Interest income represents income of $68,000 on the note receivable and $16,117 imputed interest income on the additional consideration receivable from the sale of the SMR business and $2,255 from cash investments. For the six months ended June 30, 1996, the Partnership had positive cash flow from operations of $262,877. During the six months ended June 30, 1996, the Partnership made distributions to investor limited partners in the amount of 4% of contributed capital. These distributions were funded from operating cash flow without considering amortization and depreciation. Future distributions will be determined by management based on operating performance and available positive cash flow. Financial Condition On November 9, 1993, Tower Ventures entered into a $1,000,000 line of credit/term agreement (the "Loan") with a commercial bank to finance repayment of advances from the Partnership, to pay certain fees and costs of obtaining the Loan in the amount of $33,500, and to provide financing for future capital expenditures. The loan was a line of credit which converted to a term loan at the end of the first year and was scheduled to mature on October 8, 1998. On March 18, 1996, Tower Ventures repaid the balance of the Loan from working capital. At the time of acquisition, the Communications Tower had twelve tenants with leases generating $34,208 per month. As of June 30, 1996, there were 25 tenant leases in effect with a current rent roll of $50,616 per month. Each lease has a cost of living adjustment resulting in annual increases ranging from 3% to 10%. Management continues to seek to acquire additional tenants for the Communications Tower and operating expenses are generally fixed and relatively low. Operating cash flow margins were 87% and 89% for the six month ended June 30, 1996 and 1995, respectively, and are expected to range from 85% to 90% in the future. Operating cash flow is determined by subtracting operating expenses, excluding management fees, depreciation and amortization, from rental revenues. The Partnership had current assets in excess of current liabilities of approximately $133,782 and $133,728 at June 30, 1996 and December 31, 1995, respectively. The Partnership expects to generate positive cash flows for 1996. The sale of UMN L.P. assets is expected to generate additional cash over the next five years of a minimum of $1,700,000. As a result, future cash flows are expected to be more than sufficient to cover the Partnership's cash flow needs. Part II - Other Information None. Pursuant to the requirements of Section 13 or 15(d) 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. TELECOMMUNICATIONS GROWTH & INCOME FUND L.P. BY: TELECOMMUNICATIONS GROWTH & INCOME FUND MANAGEMENT LIMITED PARTNERSHIP General Partner BY: TELECOMMUNICATIONS GROWTH & INCOME FUND, INC. General Partner DATE: August 14, 1996 BY: /s/ Randall N. Smith Randall N. Smith, President, Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated. DATE: August 14, 1996 BY: /s/ Randall N. Smith Randall N. Smith, President, Chief Executive Officer and Director DATE: August 14, 1996 BY: /s/ B. Eric Sivertsen B. Eric Sivertsen, Vice- President, Secretary, Director and Chief Financial and Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----