<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 June 30, 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
----- ------
<PAGE>
PART I - FINANCIAL INFORMATION
AMERICAN CABLE TV INVESTORS 3
(A Limited Partnership)
Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------- ------------
Assets amounts in thousands
- ------
<S> <C> <C>
Cash and cash equivalents $ 4,839 4,967
======= =======
Liabilities and Partners' Equity
- --------------------------------
Accounts payable and accrued expenses $ 52 67
Amounts due to related parties (note 4) 65 205
------- -------
Total liabilities 117 272
------- -------
Partners' equity (deficit):
General partners (2,155) (2,162)
Limited partners 6,877 6,857
------- -------
Total partners' equity 4,722 4,695
------- -------
Contingency (note 5)
$ 4,839 4,967
======= =======
</TABLE>
See accompanying notes to financial statements.
I-1
<PAGE>
AMERICAN CABLE TV INVESTORS 3
(A Limited Partnership)
Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three months Six months
ended ended
June 30, June 30,
------------------ -----------------
1997 1996 1997 1996
------- ------- ------- -------
amounts in thousands,
except unit amounts
<S> <C> <C> <C> <C>
General and administrative expenses
(note 5) $ (30) (155) (67) (279)
Interest income 20 133 94 202
------- ------- ------- -------
Net earnings (loss) $ (10) (22) 27 (77)
======= ======= ======= =======
Earnings (loss) per limited
partnership unit (note 2) $ (.11) (.24) .29 (.82)
======= ======= ======= =======
Limited partnership units
outstanding 70,005 70,005 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
Six months ended June 30, 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 7 20 27
-------- -------- ------
Balance at June 30, 1997 $ (2,155) 6,877 4,722
======== ======== ======
</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>
Six months ended
June 30,
--------------------
1997 1996
-------- --------
amounts in thousands
(see note 3)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 27 (77)
Adjustments to reconcile net earnings
(loss) to net cash used in operating
activities:
Change in receivables -- 29
Change in accounts payable, accrued
expenses and amounts due to related
parties (155) (25)
-------- --------
Net cash used in operating activities (128) (73)
-------- --------
Cash flows from investing activities -
Distribution from Redlands -- 210
-------- --------
Cash flows from financing activities -- --
-------- --------
Net increase (decrease) in cash and
cash equivalents (128) 137
Cash and cash equivalents:
Beginning of period 4,967 5,057
-------- --------
End of period $ 4,839 5,194
======== ========
</TABLE>
See accompanying notes to financial statements.
I-4
<PAGE>
AMERICAN CABLE TV INVESTORS 3
(A Limited Partnership)
Notes to Financial Statements
June 30, 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 in 1984 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 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 June 30, 1997, and the
results of its operations for the six months ended June 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 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 (losses) for the six months ended June 30, 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
June 30, 1997, $4,839,000 of money market funds were
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 $18,000 for both of the six month
periods ended June 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 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 June 30, 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 six
months ended June 30, 1997 and 1996, which total $15,000 and
$236,000, respectively, has been included in 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 and six month
periods ended June 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 three and six month periods ended June 30, 1997,
has been decreased by $44,000 and $34,000, respectively, to
reverse the overaccrual of interest income in prior periods.
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
June 30, 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: August 13, 1997 By: /s/ Gary K. Bracken
----------------------------------
Gary K. Bracken
Vice President and Controller
(Principal Accounting Officer)
II-2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,839
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,839
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,722
<TOTAL-LIABILITY-AND-EQUITY> 4,839
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 27
<INCOME-TAX> 0
<INCOME-CONTINUING> 27
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27
<EPS-PRIMARY> .29<F1>
<EPS-DILUTED> 0
<FN>
<F1>EPS PRIMARY REPRESENTS NET EARNINGS PER LIMITED PARTNERSHIP UNIT
</FN>
</TABLE>
