<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the rates period ended MARCH
31, 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 333-43157
NORTHLAND CABLE TELEVISION, INC.
(Exact name of registrant as specified in its charter)
STATE OF WASHINGTON 91-1311836
(State or other jurisdiction (I.R.S. Employer
of incorporation ) Identification No.)
AND SUBSIDIARY GUARANTOR:
NORTHLAND CABLE NEWS, INC.
(Exact name of registrant as specified in its charter)
STATE OF WASHINGTON 91-1638891
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
1201 THIRD AVENUE, SUITE
3600 SEATTLE, WASHINGTON 98101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (206) 621-1351
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 _____.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
NORTHLAND CABLE TELEVISION, INC. AND SUBSIDIARY
(A wholly owned subsidiary of Northland Telecommunications Corporation)
CONSOLIDATED CONDENSED BALANCE SHEETS - (Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 2,340,178 $ 1,238,581
Due from limited partnerships 50,599 20,545
Accounts receivable 2,313,538 1,355,005
Prepaid expenses 470,636 291,566
------------- -------------
Total current assets 5,174,951 2,905,697
Investment in Cable Television Properties:
Property and equipment, net of accumulated
depreciation of $30,853,301 and $28,887,486,
respectively 56,592,435 39,382,223
Franchise agreements, net of accumulated
amortization of $32,294,689 and $29,467,711,
respectively 82,741,180 35,773,674
Goodwill, net of accumulated
amortization of $1,917,439 and $1,874,161,
respectively 5,006,994 5,050,272
Other intangible assets, net of accumulated
amortization of $2,577,628 and $2,142,891,
respectively 9,781,746 8,620,112
Fund deposited in escrow for purchase of cable
television system -- 690,000
------------- -------------
Total investment in cable television properties 154,122,355 89,516,281
------------- -------------
Total assets $ 159,297,306 $ 92,421,978
============= =============
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current Liabilities:
Accounts payable $ 198,858 $ 662,141
Accrued expenses 8,138,496 4,591,610
Converter deposits 112,040 103,393
Subscriber prepayments 768,349 1,106,327
Due to affiliates 889,931 217,426
Current portion of notes payable 800,849 1,140,292
------------- -------------
Total current liabilities 10,908,523 7,821,189
Notes payable 174,000,000 106,822,221
------------- -------------
Total liabilities 184,908,523 114,643,410
------------- -------------
Shareholder's Deficit:
Common stock (par value $1.00 per share, authorized
50,000 shares; 10,000 shares issued and outstanding)
and additional paid-in capital 11,560,527 11,560,527
Accumulated deficit (37,171,744) (33,781,959)
------------- -------------
Total shareholder's deficit (25,611,217) (22,221,432)
------------- -------------
Total liabilities and shareholder's deficit $ 159,297,306 $ 92,421,978
============= =============
</TABLE>
The accompanying notes to unaudited financial statements is an integral
part of these statements
<PAGE> 3
NORTHLAND CABLE TELEVISION, INC. AND SUBSIDIARY
(A wholly owned subsidiary of Northland Telecommunications Corporation)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS -- (Unaudited)
<TABLE>
<CAPTION>
For the three months ended March 31,
------------------------------------
1998 1997
--------------- --------------
<S> <C> <C>
Revenues:
Service revenues $ 13,924,700 $ 9,189,024
Programming and production revenues from affiliates 185,512 180,130
------------ ------------
Total Revenues 14,110,212 9,369,154
------------ ------------
Expenses:
Cable system operations (including
$33,938 and $66,101, net paid to affiliates
in 1998 and 1997, respectively) 4,748,949 3,096,334
General and administrative (including
$1,364,765 and $532,467, net paid to affiliates
in 1998 and 1997, respectively) 2,417,637 1,703,427
Management fees paid to parent 695,493 458,709
Depreciation and amortization 5,163,720 3,027,985
------------ ------------
Total operating expenses 13,025,799 8,286,455
------------ ------------
Income from operations 1,084,413 1,082,699
Other income (expense):
Interest expense (4,471,102) (2,305,663)
Interest income 14,375 475
Other expense (17,471) (12,327)
------------ ------------
(4,474,198) (2,317,515)
------------ ------------
Net loss $ (3,389,785) $ (1,234,816)
============ ============
</TABLE>
The accompanying notes to unaudited financial statements is an integral
part of these statements
<PAGE> 4
NORTHLAND CABLE TELEVISION, INC. AND SUBSIDIARY
(A wholly owned subsidiary of Northland Telecommunications Corporation)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS -- (Unaudited)
<TABLE>
<CAPTION>
For the three months ended March 31,
------------------------------------
1998 1997
-------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,389,785) $ (1,234,816)
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation and amortization 5,384,298 3,027,985
(Increase) decrease in operating assets:
Accounts receivable (958,533) 113,259
Prepaid expenses (179,070) (129,593)
Due from limited partnerships (30,054) (3,250)
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses 3,083,603 1,186,782
Due to affiliates 672,505 660,529
Converter deposits 8,647 3,714
Subscriber prepayments (337,978) (465,985)
------------ ------------
Net cash from operating activities 4,253,633 3,158,626
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of cable systems (69,381,851) (5,830,500)
Investment in cable television properties (499,242) (765,766)
Franchise fees and other intangibles (128,520) (5,835)
------------ ------------
Net cash used in investing activities (70,009,613) (6,602,101)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 68,027,779 5,000,000
Principal payments on borrowings (1,113,631) (1,353,846)
Loan fees and other costs incurred (56,571) --
------------ ------------
Net cash from financing activities 66,857,577 3,646,154
------------ ------------
INCREASE IN CASH 1,101,597 202,678
CASH, beginning of period 1,238,581 2,486,237
------------ ------------
CASH, end of period $ 2,340,178 $ 2,688,916
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 1,904,702 $ 870,317
============ ============
Cash paid during the period for state income taxes $ 17,471 $ 9,493
============ ============
</TABLE>
The accompanying notes to unaudited financial statements is an integral
part of these statements
<PAGE> 5
NORTHLAND CABLE TELEVISION, INC. AND SUBSIDIARY
(A wholly owned subsidiary of Northland Telecommunications Corporation)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
(1) BASIS OF PRESENTATION:
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 Company's financial position
at March 31, 1998 and December 31, 1997, its statements of operations
and statements of cash flows for the three months ended March 31,
1998 and 1997. Results of operations for these periods are not
necessarily indicative of results to be expected for the full year.
These financial statements and notes should be read in conjunction
with the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
(2) NORTHLAND CABLE NEWS:
Northland Cable News, Inc. ("NCN"), a wholly owned subsidiary of the
Company, was formed to develop and distribute local news, sports and
information programming to Northland Cable Television, Inc. and certain
of the Company's affiliates. The Company's payment obligations under the
$100 million of senior notes are fully and unconditionally, jointly and
severally guaranteed on a senior subordinated basis by NCN. The
guarantee of NCN is subordinated to the prior payment in full of all
senior debt of NCN (as of March 31, 1998, NCN had no senior debt
outstanding) and the amounts for which NCN will be liable under the
guarantee issued from time to time with respect to senior debt. Separate
financial statements of NCN have not been presented because management
has determined that they would not be material to financial statement
readers. Summary financial information of NCN is presented below.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
1998 1997
-------------- --------------
INCOME STATEMENT INFORMATION: (Unaudited) (Unaudited)
<S> <C> <C>
Revenues from affiliates $ 389,511 $ 371,550
Less: intercompany revenue (203,999) (191,420)
-------------- --------------
Total revenues 185,512 180,130
Operating expenses 295,133 283,260
Other, net 9,874 8,657
--------------- --------------
Net loss $ (119,495) $ (111,787)
=============== ==============
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------- -------------
(Unaudited)
<S> <C> <C>
BALANCE SHEET
INFORMATION:
Current assets $ 1,569,946 $ 1,483,466
Less: intercompany elimination (1,300,096) (1,362,693)
------------- -------------
Total current assets 269,850 120,773
Non-current assets 294 212
------------- -------------
Total Assets $ 270,144 $ 120,985
============= =============
Current liabilities $ 52,676 $ 50,619
Other liabilities -- --
------------- -------------
Total liabilities $ 52,676 $ 50,619
============= =============
</TABLE>
(3) ACQUISITION OF SYSTEMS:
On January 2, 1998 the Company acquired substantially all of the
operating assets and franchise rights of six cable television systems
serving portions of Aiken, Greenwood, McCormick, Laurens, Abbeville,
Saluda and Edgefield Counties in western South Carolina. The purchase
price of the systems was approximately $70 million, which was financed
through borrowings on the Company's revolving credit and term loan
agreement. The systems passed approximately 59,200 homes and served
approximately 35,700 basic subscribers.
Pro forma operating results of the Company for the three months ending
March 31, 1997, assuming the acquisitions described above had been
made as of the beginning of the period, follow:
<TABLE>
<CAPTION>
1997
----
<S> <C>
Service revenues $13,700,000
===========
Net loss $(2,900,000)
===========
</TABLE>
(4) DISPOSITION OF ASSETS:
On February 23, 1998 the Company entered into an agreement to sell all
of its cable operations in the state of Oregon (the "Woodburn System")
to North Willamette Telecom, Inc. The sale price of the system is
$6,875,000. The Woodburn System serves approximately 4,300 basic
subscribers and generated revenues of approximately $470,000 for the
three months ended March 31, 1998. Substantially all of the proceeds
from the sale will be utilized to reduce amounts outstanding under the
Senior Credit Facility. The sale is expected to close in the second
quarter of 1998.
<PAGE> 7
(5) SUBSEQUENT TRANSACTION:
The Company has entered into an agreement to purchase the operating
assets and franchise rights of a cable system serving Hamilton, Texas
(the "Hamilton System"). The Hamilton System serves approximately 1,100
basic subscribers from a single headend and is located in close
proximity to the Company's Stephenville, Texas system. The purchase
price is $800,000, with $600,000 due at closing and the balance due
December 31, 1998. Closing is expected to occur in the third quarter of
1998.
(6) STATEMENT OF POSITION 98-5
On April 9, 1998 the AICPA released Statement of Position 98-5, "
Reporting on the Costs of Start-Up Activities" ("SOP 98-5"). The new
standard requires that all entities expense costs of start-up
activities as those costs are incurred. SOP 98-5 defines "start-up
costs" as those costs directly related to pre-operating, pre-opening,
and organization activities. This standard must be adopted in fiscal
years beginning after December 15, 1998.
The Company currently capitalizes pre-opening costs and amortizes such
costs over a sixty month period. The unamortized balance of capitalized
pre-opening costs as of March 31, 1998 is not material. The Company
intends to adopt SOP 98-5 at the beginning of fiscal year 1999. The
Company does not believe the adoption of SOP 98-5 will have a material
adverse effect on the Company's financial position and results of
operations.
<PAGE> 8
PART I (continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
MARCH 31, 1998 AND 1997
As of March 31, 1998, the Company's cable systems served 130,327 basic
subscribers, 46,892 premium subscribers, 39,243 tier subscribers and
passed approximately 195,600 homes.
Revenues increased approximately $4.7 million or 50% from 9.4 million to
$14.1 million for the three months ended March 31, 1998. Of these
revenues, $10.2 million (72.3%) was derived from basic service charges,
$1.2 million (8.5%) from premium services, $1.0 million (7.1%) from tier
services, $300,000 (2.1%) from installation charges, $300,000 (2.1%)
from service maintenance contracts, $500,000 (3.6%) from advertising,
and $600,000 (4.3%) from other sources. The January 1998 acquisition of
cable television systems serving approximately 35,700 basic subscribers
in portions of Aiken, Greenwood, McCormick, Laurens, Abbeville, Saluda
and Edgefield Counties in western South Carolina (the "South Carolina
Acquisitions") increased revenues approximately $3.9 million or 41.5%.
The remaining 8.5% of revenue growth is attributable to: (i) rate
increases, which averaged 2.6%, implemented in systems serving an
aggregate of 42,642 basic subscribers effective August 1, 1997; and (ii)
revenue from the higher penetration of new product tiers. Average
monthly revenue per basic subscriber increased $1.57 or 41.5%, from
$34.57 to $36.14 for the three months ended March 31, 1998. Basic
revenue per average basic subscriber increased $1.69 or 6.9% from $24.43
to $26.12 for the three months ended March 31, 1998. Excluding the
impact of the South Carolina Acquisitions, revenues would have increased
approximately $800,000 or 8.5% from $9.4 million to $10.2 million and
average monthly revenue per basic subscriber would have increased $1.61
or 4.7% from $34.57 to $36.18 for the three months ended March 31, 1998.
Operating expenses, which include costs related to programming,
technical personnel, repairs and maintenance and advertising sales,
increased $1.6 million or 51.6%, from $3.1 million to $4.7 million for
the three months ended March 31, 1998. Operating expenses as a
percentage of revenues increased from 33.0% to 33.3% for the three
months ended March 31, 1998. A substantial portion of this increase was
due to the South Carolina Acquisitions. Excluding the impact of the
South Carolina Acquisitions, operating expenses would have increased
approximately $300,000 or 9.7%, from $3.1 million to $3.4 million for
the three months ended March 31, 1998. The increase is attributable to:
(i) annual wage and benefit increases; and (ii) higher programming costs
resulting from rate increases by certain programming vendors and the
launch of new programming services in various systems.
General and administrative expenses, which include on-site office and
customer service personnel costs, customer billing, postage, marketing
expenses and franchise fees increased $700,000 or 41.2%, from $1.7
million to $2.4 million for the three months ended March 31,
<PAGE> 9
1998. The increase in general and administrative expenses was
attributable primarily to the South Carolina Acquisitions. General and
administrative expenses, as a percentage of revenues, decreased from
18.1% to 17.0% for the three months ended March 31, 1998. Excluding the
impact of the South Carolina Acquisitions, general and administrative
expenses would have no significant change for the three months ended
March 31, 1998 compared to the same period in 1997.
Management fees increased approximately $236,000 or 51.4%, from $459,000
to $695,000 for the three months ended March 31, 1998. This increase was
directly attributable to the aforementioned revenue increases.
Management fees are calculated at 5.0% of gross revenues.
Depreciation and amortization expenses increased approximately $2.2
million or 73.3%, from $3.0 million to $5.2 million for the three months
ended March 31, 1998. Such increase was directly attributable to the
South Carolina Acquisitions and the Company's capital expenditures.
Interest expense increased by $2.2 million or 95.7%, from $2.3 million
to $4.5 million for the three months ended March 31, 1998. This increase
was primarily attributable to borrowings incurred in connection with the
South Carolina Acquisitions which increased average outstanding
indebtedness $71.4 million or 68.7%, from $104.0 million to $175.4
million for the three months ended March 31, 1997 and 1998,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
The cable television business generally requires substantial capital for
the construction, expansion and maintenance of the signal distribution
system. In addition, the Company has pursued, and intends to pursue, a
business strategy which includes selective acquisitions. The Company has
financed these expenditures through a combination of cash flow from
operations, borrowings under the revolving credit and term loan facility
provided by a variety of banks and the issuance of senior subordinated
notes. The Company's debt service obligations for the year ended
December 31, 1998 are expected to be $19.1 million. The Company
anticipates that cash flow from operations will be sufficient to service
its debt and to fund capital expenditures through December 31, 1998. The
Company's debt service obligations for the year ended December 31, 1999
are anticipated to be $21.9 million. The Company believes that cash flow
from operations will be adequate to meet the Company's long-term
liquidity requirements, excluding acquisitions, prior to the maturity of
its long-term indebtedness, although no assurance can be given in this
regard.
Net cash provided by operating activities was $4.3 million for the three
months ended March 31, 1998. Adjustments to the $3.4 million net loss
for the period to reconcile to net cash provided by operating activities
consisted primarily of $5.4 million of depreciation and amortization,
and an increase in accrued interest of $2.0 million due to increased
borrowing incurred in connection with the South Carolina Acquisitions.
Net cash used in investing activities was $70.0 million for the three
months ended March 31, 1998, and consisted primarily of $69.4 million
used for the South Carolina Acquisitions.
<PAGE> 10
Net cash provided by financing activities was approximately $66.9
million for the three months ended March 31, 1998. The Company had $68.0
million in additions to long term debt and made $1.1 million of
principal payments on notes payable.
Net income (loss) before charges for interest, taxes, depreciation and
amortization ("EBITDA") increased approximately $2.1 million or 51.2%,
from $4.1 million to $6.2 million for the three months ended March 31,
1998. EBITDA as a percentage of revenues ("EBITDA Margin") increased
from 43.6% to 44.0% for the three months ended March 31, 1997. These
changes were attributable primarily to the South Carolina Acquisitions,
which contributed approximately $1.7 million of EBITDA for the three
months ended March 31, 1998. The EBITDA Margin for the South Carolina
Acquisitions was 43.6% for the three months ended March 31, 1998.
Excluding the effects of the South Carolina Acquisitions, EBITDA would
have increased $400,000 or 9.8%, from $4.1 million to $4.5 million for
the three months ended March 31, 1997. Industry analysts generally
consider EBITDA to be an appropriate measure of the performance of
multi-channel television operations. EBITDA is not presented in
accordance with generally accepted accounting principles and should not
be considered an alternative to, or more meaningful than, operating
income or operating cash flow as an indication of the Company's
operating performance.
Net cash provided by operating activities was $3.2 million for the three
months ended March 31, 1997. Adjustments to the $1.2 million net loss
for such period to reconcile to net cash provided by operating
activities consisted primarily of $3.0 million of depreciation and
amortization.
Net cash used in investing activities was $6.6 million for the three
months ended March 31, 1997. Net cash used in investing activities
consisted primarily of the $5.8 million for the acquisition of cable
television systems in the communities of Marlin, Madisonville, Buffalo
and Waterwood, all located in the state of Texas. Net cash used in
investing activities also consisted of $766,000 of capital expenditures.
Net cash provided by financing activities was $3.6 million for the three
months ended March 31, 1997. Net cash provided by financing activities
consisted primarily of $5.0 million in additions to notes payable,
offset by $1.4 million of principal payments on notes payable.
The Company has a revolving credit and term loan agreement with a group
of lending banks (the "Senior Credit Facility"), providing a $75.0
million term loan (the "Term Loan") and a $25.0 million revolving credit
facility (the "Revolver"). The Senior Credit Facility contains a number
of covenants which, among other things, require the Company to comply
with specified financial ratios and tests, including continuing
maintenance, as tested on a quarterly basis, of: (A) an interest
coverage ratio (the ratio of Annualized Operating Cash Flow (as defined)
to interest expense) of at least 1.25 to 1.00 initially, increasing over
time to 2.25 to 1.00; (B) a fixed charge coverage ratio (the rate of the
Company's Annual Operating Cash Flow (as defined) to capital
expenditures and principal and interest payments) of at least 1.05 to
1.0; (C) a pro forma debt service ratio (the ratio of the Company's
current Operating Cash Flow (as defined) to the Company's debt service
obligations for the following twelve months) of 1.15 to 1 through March
31, 1999 and 1.20 to 1 thereafter; and (D) a leverage ratio (the ratio
of total Debt (as defined) to Annualized Operating Cash Flow) of not
more than 7.0 to 1.0 initially, decreasing over time to 4.00 to 1.00.
The Company expects that cash provided from operations will be
sufficient to cover its future debt service obligations.
<PAGE> 11
As of the date of this filing, the balance under the Term Loan is $74.8
million and no amounts were outstanding under the Revolver. Certain
fixed rate agreements expired during the first quarter of 1998. As of
the date of this filing, interest rates on the Senior Credit Facility
were as follows: $64.8 million fixed at 8.78% under the terms of a
self-amortizing interest rate swap agreement with the Company's lender
expiring December 31, 2000; $3.0 million at a LIBOR based rate of 8.69%
expiring June 1, 1998. The balance of $7 million bears interest at the
prime rate plus 1.75% (currently 10.25%). The above rates include a
margin paid to the lender based on overall leverage and may increase or
decrease as the Company's overall leverage fluctuates.
CAPITAL EXPENDITURES
For the three months ended March 31, 1998, the Company incurred capital
expenditures of $499,000 . Capital expenditures included: (i) expansion
and improvements of cable properties; (ii) additions to plant and
equipment; (iii) maintenance of existing equipment; and (iv) line drops,
extensions and installations of cable plant facilities.
The Company plans to invest approximately $11.5 million in capital
expenditures during 1998 and 1999. This represents anticipated
expenditures for upgrading and rebuilding certain distribution
facilities, new product launches, extensions of distribution facilities
to add new subscribers and general maintenance. It is expected that cash
flow from operations will be sufficient to fund planned capital
expenditures.
ACQUISITIONS
On January 2, 1998 the Company acquired six cable television systems
serving portions of Aiken, Greenwood, McCormick, Laurens, Abbeville,
Saluda and Edgefield Counties in western South Carolina from InterMedia
Partners of Carolina, L.P. and Robin Cable Systems, L.P. The purchase
price of the systems was approximately $70 million and was financed
through borrowings under the Senior Credit Facility. The systems passed
approximately 59,200 homes and served approximately 35,700 basic
subscribers.
Pro forma operating results of the Company for the three months ended
March 31, 1997, assuming the acquisition above had been made at the
beginning of 1997, are disclosed in Note (3) of the financial
statements.
The Company has entered into an agreement to purchase the operating
assets and franchise rights of a cable system serving Hamilton, Texas
(the "Hamilton System"). The Hamilton System serves approximately 1,100
basic subscribers from a single headend and is located in close
proximity to the Company's Stephenville, Texas system. The purchase
price is $800,000, with $600,000 due at closing and the balance due
December 31, 1998. Closing is expected to occur in the third quarter of
1998.
<PAGE> 12
DISPOSITION OF ASSETS
On February 23, 1998 the Company entered into an agreement to sell all
of its cable operations in the state of Oregon (the "Woodburn System")
to North Willamette Telecom, Inc. The sale price of the system is
$6,875,000. The Woodburn System serves approximately 4,298 basic
subscribers and generated revenues of $470,000 for the three months
ended March 31, 1998. Proceeds from the sale will be utilized to reduce
amounts outstanding under the Senior Credit Facility. The sale is
expected to close in the second quarter of 1998.
Cautionary statement for purposes of the "Safe Harbor" provisions of the
Private Litigation Reform Act of 1995. Statements contained or
incorporated by reference in this document that are not based on
historical fact are "forward-looking statements" within the meaning of
the Private Securities Reform Act of 1995. Forward-looking statements
may be identified by use of forward-looking terminology such as
"believe", "intends", "may", "will", "expect", "estimate", "anticipate",
"continue", or similar terms, variations of those terms or the negative
of those terms.
PART II - OTHER INFORMATION
ITEM 1 Legal proceedings
In 1993, North Willamette Telecom, Inc. an affiliate of Canby Telephone
Association, petitioned to obtain a franchise from the City of Woodburn,
Oregon to operate a cable system which would compete with the Company's
Woodburn system. Such franchise has not been granted. On March 20, 1996,
the Company was served with a complaint in a suit commenced in the
United States District Court for the District of Oregon by North
Willamette Telecom, Inc. and Canby Telephone Association. The suit
alleges the Company violated federal antitrust laws, intentionally
interfered with plaintiffs' prospective business relationships with
potential cable customers, and intentionally interfered with plaintiffs'
business relationships with the Canby Telephone Association's members.
The complaint seeks actual damages ranging from $1.2 million to $10.2
million, punitive damages of $10.0 million and other relief. The Company
denies the allegations of the complaint and is vigorously defending the
case. The Company has filed summary judgement motions and no trial date
has been set. On February 23, 1998 the Company entered into an agreement
to sell the Woodburn System to North Willamette Telecom, Inc. Under the
terms of the asset purchase agreement, one day after closing North
Willamette Telecom, Inc. will file a settlement, mutual release and
dismissal with prejudice of matters associated with this legal
proceeding. There can be no assurances that closing of this transaction
will occur thereby resulting in dismissal of this litigation.
In addition, the Company is a party to ordinary and routine litigation
proceedings that are incidental to the Company's business. Management
believes that the outcome of all pending legal proceedings will not,
individually or in the aggregate, have a material adverse effect on the
Company, its financial condition, prospects and debt service ability.
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
<PAGE> 13
(a) Exhibit index
27.0 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter ended
March 31, 1998.
<PAGE> 14
SIGNATURES
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 capacities and on the dates indicated.
Northland Cable Television, Inc. and Subsidiary
<TABLE>
<CAPTION>
SIGNATURES CAPACITIES DATE
---------- ---------- ----
<S> <C> <C>
/s/ Richard I. Clark Director, Vice President, Treasurer and ________
------------------------------- Assistant Secretary
Richard I. Clark
/s/ Gary S. Jones Vice President ________
------------------------------
Gary S. Jones
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,003,153
<SECURITIES> 0
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<PP&E> 87,105,266
<DEPRECIATION> 30,853,301
<TOTAL-ASSETS> 160,619,811
<CURRENT-LIABILITIES> 12,571,498
<BONDS> 100,000,000
0
0
<COMMON> 0
<OTHER-SE> (25,951,687)
<TOTAL-LIABILITY-AND-EQUITY> 160,619,811
<SALES> 0
<TOTAL-REVENUES> 14,314,211
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</TABLE>
