<PAGE>
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 March 31, 1997
( ) 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. 2-90004
AMERICAN CABLE TV INVESTORS 3
-----------------------------
(Exact name of Registrant as specified in its charter)
State of California 84-0939576
------------------------------- -------------------
(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
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<PAGE>
PART I - FINANCIAL INFORMATION
AMERICAN CABLE TV INVESTORS 3
(A Limited Partnership)
Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- -------------
Assets amounts in thousands
- ------
<S> <C> <C>
Cash and cash equivalents $ 4,819 $ 4,967
======= =======
Liabilities and Partners' Equity
- --------------------------------
Accounts payable and accrued expenses $ 56 67
Amounts due to related parties (note 4) 31 205
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Total liabilities 87 272
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Partners' equity (deficit):
General partners (2,153) (2,162)
Limited partners 6,885 6,857
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Total partners' equity 4,732 4,695
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Contingency (note 5)
$ 4,819 4,967
======= =======
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
AMERICAN CABLE TV INVESTORS 3
(A Limited Partnership)
Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
-----------------------
1997 1996
--------- --------
amounts in thousands,
except unit amounts
<S> <C> <C>
Selling, general and administrative
expenses (note 5) $ (37) (124)
Interest income 74 69
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Net earnings (loss) $ 37 (55)
======= ======
Earnings (loss) per limited partnership
unit (note 2) $ 0.40 (0.59)
======= ======
Limited partnership units outstanding 70,005 70,005
======= ======
</TABLE>
See accompanying notes to financial statements.
I-2
<PAGE>
AMERICAN CABLE TV INVESTORS 3
(A Limited Partnership)
Statement of Partners' Equity
Three months ended March 31, 1997
(unaudited)
<TABLE>
<CAPTION>
General Limited
partners partners Total
--------- -------- -----
amounts in thousands
<S> <C> <C> <C>
Balance at January 1, 1997 $(2,162) 6,857 4,695
Net earnings 9 28 37
------- ----- -----
Balance at March 31, 1997 $(2,153) 6,885 4,732
======= ===== =====
</TABLE>
See accompanying notes to financial statements.
I-3
<PAGE>
AMERICAN CABLE TV INVESTORS 3
(A Limited Partnership)
Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
----------------------
1997 1996
----------- ---------
amounts in thousands
(see note 3)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 37 (55)
Adjustments to reconcile net earnings
(loss) to net cash provided by (used
in) operating activities:
Change in receivables -- 29
Change in accounts payable, accrued
expenses and amounts due to related
parties (185) 95
------ -----
Net cash provided by (used in)
operating activities (148) 69
------ -----
Cash flows from investing activities -
Distribution from American Cable TV of
Redlands Joint Venture ("Redlands") -- 210
------ -----
Cash flows from financing activities -- --
------ -----
Net increase (decrease) in cash
and cash equivalents (148) 279
Cash and cash equivalents:
Beginning of period 4,967 5,057
------ -----
End of period $4,819 5,336
====== =====
</TABLE>
See accompanying notes to financial statements.
I-4
<PAGE>
AMERICAN CABLE TV INVESTORS 3
(A Limited Partnership)
Notes to Financial Statements
March 31, 1997
(unaudited)
(1) Basis of Financial Statement Preparation
----------------------------------------
American Cable TV Investors 3 (the "Partnership" or "ACT 3") and American
Cable TV Investors 2 ("ACT 2") owned 35% and 65%, respectively, of
Redlands, a joint venture which was formed to acquire, develop and operate
cable television systems in and around Redlands, California. 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 the
Partnership.
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 revenue
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 March 31, 1997, and the
results of its operations for the three months ended March 31, 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 the Partnership's limited partnership agreement, net earnings
and net losses of the Partnership are allocated 1% to the general partners
and 99% 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 and 75% to the limited partners.
Net earnings (loss) per limited partnership unit is calculated by dividing
net earnings (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 net
earnings (loss) for the three months ended March 31, 1997 and 1996 have
been allocated using the post-Payback percentages set forth above.
(continued)
I-5
<PAGE>
AMERICAN CABLE TV INVESTORS 3
(A Limited Partnership)
Notes to Financial Statements
(3) Supplemental Disclosure of Cash Flow Information
------------------------------------------------
The Partnership considers investments with initial maturities of six months
or less to be cash equivalents. At March 31, 1997, $4,779,000 of money
market funds was included in cash and cash equivalents. The Partnership is
exposed to credit loss in the event of non-performance by the other parties
to such financial instruments. However, the Partnership does not
anticipate non-performance by the other parties.
(4) Transactions with Related Parties
---------------------------------
The Partnership reimburses Cablevision for direct out-of-pocket and
indirect expenses allocable to the Partnership and for certain personnel
employed on a full- or part-time basis to perform accounting or other
services. Such reimbursements amounted to $9,000 for both of the three
month periods ended March 31, 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 the Partnership filed suit in
United States District Court for the District of Colorado (the "District
Court") against the managing general partner of ACT 3. A similar suit was
filed against the managing general partner of ACT 2. The lawsuit, as
amended, also names certain affiliates of the Partnership's managing
general partner as defendants. The lawsuit alleges that the defendants
violated disclosure requirements under the Securities Exchange Act of 1934
and that certain defendants breached a fiduciary duty to the plaintiff in
connection with the sale of the Redlands, California cable television
system. The defendants believe that the claims asserted are without merit
and intend to vigorously defend the actions. The defendants moved to
dismiss various claims asserted in the complaint and the plaintiff opposed
such motions. The defendants' motion was denied by the District Court on
March 24, 1995.
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 3 as of the close
of business on October 1, 1993, excluding, however, the defendants, their
parent corporations, subsidiaries, and affiliates. On August 5, 1996, the
defendants filed a motion for summary judgment on all of the plaintiff's
claims, as well as separate partial summary judgment motions with respect
to certain of the plaintiff's claims. The plaintiff filed a cross-motion
for partial summary judgment on one aspect of the case. The motions have
been fully briefed, however, the District Court has not yet ruled on such
motions. 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 2 (the "Consolidated Cases"). The Consolidated
Cases have been set for a four week jury trial beginning September 29,
1997.
(continued)
I-6
<PAGE>
AMERICAN CABLE TV INVESTORS 3
(A Limited Partnership)
Notes to Financial Statements
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 3,
provided that the General Partners determine, in good faith, that such
course of conduct was in the best interests of ACT 3 and did not constitute
proven fraud, negligence, breach of fiduciary duty or misconduct.
Through March 31, 1997, ACT 3 and ACT 2 have received requests from the
General Partners and certain affiliates for the advancement of legal and
other fees and expenses associated with the above-described lawsuit
totaling $1.9 million. Consistent with the terms of the Partnership
Agreement, this amount has been advanced by ACT 3 and ACT 2. ACT 3's 50%
share of such fees and expenses for the three months ended March 31, 1997
and 1996 which total $12,000 and $102,000, respectively, has been included
in selling, general, and administrative expenses in the accompanying
financial statements. Fees and expenses incurred by the defendants will
continue to be paid in equal shares by ACT 3 and ACT 2 as they are incurred
and approved.
The litigation will have the effect of delaying the Partnership's final
cash distributions. In addition, any successful indemnification claims by
the defendants would have the effect of reducing the amount of such final
cash distributions.
I-7
<PAGE>
AMERICAN CABLE TV INVESTORS 3
(A Limited Partnership)
Management's Discussion and Analysis of
- ---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Material Changes in Results of Operations
-----------------------------------------
The Partnership 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 month periods
ended March 31, 1997 and 1996 include (i) $12,000 and $102,000, respectively for
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.
Material Changes in Financial Condition
---------------------------------------
The Partnership anticipates that it will make liquidating distributions in
connection with its dissolution as soon as possible following the final
determination and satisfaction of its liabilities. However, the Partnership
currently is unable to predict the timing or amount of such final cash
distributions due primarily to the existence of the litigation described in note
5 to the accompanying financial statements.
I-8
<PAGE>
AMERICAN CABLE TV INVESTORS 3
(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 March 31, 1997
- none
II-1
<PAGE>
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 3
(A Limited Partnership)
By: IR-TCI PARTNERS III,
Its Managing General Partner
By: TCI VENTURES, INC.,
A General Partner
Date: May 13, 1997 By: /s/ Gary K. Bracken
------------------------------
Gary K. Bracken
Vice President and Controller
(Principal Accounting Officer)
II-2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,819
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,819
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,732
<TOTAL-LIABILITY-AND-EQUITY> 4,819
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 37
<INCOME-TAX> 0
<INCOME-CONTINUING> 37
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37
<EPS-PRIMARY> .40<F1>
<EPS-DILUTED> 0
<FN>
<F1>
EPS PRIMARY REPRESENTS NET EARNINGS PER LIMITED PARTNERSHIP UNIT
</FN>
</TABLE>
