<PAGE> 1
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 period ended MARCH 31, 1998
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
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Commission File Number: 0-16065
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NORTHLAND CABLE PROPERTIES FIVE LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Washington 91-1302403
(State of Organization) (I.R.S. Employer Identification No.)
1201 Third Avenue, Suite 3600, Seattle, Washington 98101
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(Address of Principal Executive Offices) (Zip Code)
(206) 621-1351
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(Registrant's telephone number, including area code)
N/A
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(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 [ ]
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This filing contains pages. Exhibits index appears on page .
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PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
NORTHLAND CABLE PROPERTIES FIVE LIMITED PARTNERSHIP
BALANCE SHEETS - (Unaudited)
(Prepared by the Managing General Partner)
<TABLE>
<CAPTION>
March 31 December 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Cash $ 860,664 $ 236,449
Accounts receivable 356,089 427,836
Prepaid expenses 205,693 129,716
Property and equipment, net of accumulated
depreciation of $6,226,371 and $5,868,755,
respectively 9,310,182 9,641,861
Intangible assets, net of accumulated
amortization of $3,392,055 and $3,186,539,
respectively 4,762,528 4,942,877
------------ ------------
Total assets $ 15,495,156 $ 15,378,739
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses $ 1,202,504 $ 721,740
Due to managing general partner and affiliates 273,990 48,484
Converter deposits 16,754 17,578
Subscriber prepayments 175,406 253,927
Notes payable 19,779,766 20,154,766
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Total liabilities 21,448,420 21,196,495
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Partners' equity:
General Partners:
Contributed capital, net (56,075) (56,075)
Accumulated deficit (105,365) (104,010)
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(161,440) (160,085)
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Limited Partners:
Contributed capital, net 591,327 591,327
Accumulated deficit (6,383,151) (6,248,998)
------------ ------------
(5,791,824) (5,657,671)
------------ ------------
Total partners' equity (5,953,264) (5,817,756)
------------ ------------
Total liabilities and partners' equity $ 15,495,156 $ 15,378,739
============ ============
</TABLE>
The accompanying note to unaudited financial statements is an integral part of
these statements
2
<PAGE> 3
NORTHLAND CABLE PROPERTIES FIVE LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS - (Unaudited)
(Prepared by the Managing General Partner)
<TABLE>
<CAPTION>
For the three months ended March 31,
------------------------------------
1998 1997
------------- --------------
<S> <C> <C>
Service revenues $ 2,433,918 $ 2,315,549
Expenses:
Operating 190,067 195,889
General and administrative (including
$354,985 and $357,415 to affiliates
in 1998 and 1997, respectively) 568,463 540,615
Programming 682,960 642,546
Depreciation and amortization 563,133 591,244
----------- -----------
2,004,623 1,970,294
----------- -----------
Income from operations 429,295 345,255
Other income (expense):
Interest expense (430,250) (419,594)
Interest income 1,999 1,160
Other income -- 50
Gain/loss on sale of assets (136,552) --
----------- -----------
(564,803) (418,384)
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Net income $ (135,508) $ (73,129)
=========== ===========
Allocation of net income
General Partners $ (1,355) $ (731)
=========== ===========
Limited Partners $ (134,153) $ (72,398)
=========== ===========
Net income per limited partnership unit:
(14,735 units and 14,739 units, respectively) $ (9) $ (5)
=========== ===========
Net income per $1,000 investment $ (18) $ (10)
=========== ===========
</TABLE>
The accompanying note to unaudited financial statements is an integral part of
these statements
3
<PAGE> 4
NORTHLAND CABLE PROPERTIES FIVE LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS - (Unaudited)
(Prepared by the Managing General Partner)
<TABLE>
<CAPTION>
For the three months ended March 31,
------------------------------------
1998 1997
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ (135,508) $ (73,129)
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 563,133 591,244
(Increase) decrease in operating assets:
(Gain) Loss on sale of assets 136,552 --
Accounts receivable 71,747 (12,873)
Prepaid expenses (75,977) 66,386
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses 480,766 193,304
Due to managing general partner and affiliates 225,506 51,971
Converter deposits (825) (1,465)
Subscriber prepayments (78,521) (75,209)
----------- -----------
Net cash from operating activities 1,186,873 740,229
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (162,490) (128,108)
Hold-back note payable -- --
Proceeds from sale of assets -- --
Insurance recovery -- --
Increase in intangibles (25,168) --
----------- -----------
Net cash used in investing activities (187,658) (128,108)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on borrowings (375,000) (262,500)
Proceeds from borrowings -- --
Distributions to partners -- --
Loan fees and other costs incurred -- --
Repurchase of limited partner interest -- --
----------- -----------
Net cash used in financing activities (375,000) (262,500)
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DECREASE IN CASH 624,215 349,621
CASH, beginning of period 236,449 414,811
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CASH, end of period $ 860,664 $ 764,432
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 111,068 $ 94,308
=========== ===========
</TABLE>
4
<PAGE> 5
NORTHLAND CABLE PROPERTIES FIVE 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 March 31, 1998 and December 31, 1997, its Statements of
Operations for the three months ended March 31, 1998 and 1997, and its
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.
5
<PAGE> 6
PART I (continued)
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Cable television revenues totaled $2,377,913 for the three months ended March
31, 1998, representing an increase of 6% over the same period in 1997. Of these
revenues, $1,674,787 (70%) was derived from basic service charges, $236,371
(10%) from premium services, $263,345 (11%) from tier services, $34,451 (2%)
from installation charges, $48,896 (2%) from service maintenance contracts and
$120,063 (5%) from other sources. The net increase in revenues is primarily
attributable to increases in basic service rates effective August 1, 1997.
As of March 31, 1998, the Partnership's systems served approximately 23,000
basic subscribers, 9,800 premium subscribers and 11,300 tier subscribers.
Cable television operating expenses totaled $188,095 for the three months ended
March 31, 1998, a decrease of approximately 4% over the same period in 1997.
This is mainly due to decreased operating personnel costs.
Cable television general and administrative expenses totaled $544,293 for the
three months ended March 31, 1998, representing an increase of 6% over the same
period in 1997. This is mainly due to increased expenses related to personnel
and increased revenue based expenses such as management fees.
Cable television programming expenses totaled $651,071 for the three months
ended March 31, 1998, reflecting an increase of approximately 7% over the same
period in 1997. This is mainly due to higher costs charged by program suppliers
and additional salary and benefit costs related to local programming and
advertising support.
The radio station operations for the three months ended March 31, 1998 included
revenues of $56,005 derived primarily from advertising sales. Radio operation
expenses are primarily comprised of programming and salary and benefit costs.
Depreciation and amortization expense decreased approximately 5% as compared to
the same period in 1997. This is mainly due to assets becoming fully depreciated
during 1998 and the last three quarters of 1997.
Interest expense for the three months ended March 31, 1998 increased
approximately 3% as compared to the same period in 1997. The average bank debt
outstanding decreased from $20,806,554 during the first quarter of 1997 to
$20,154,766 during the first quarter of 1998 due to required principal payments
being made. The Partnership's effective interest rate increased from
approximately 8.07% during the first quarter of 1997 to 8.54% during the first
quarter of 1998.
6
<PAGE> 7
Liquidity and Capital Resources
The Partnership's primary source of liquidity is cash flow provided from
operations. 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 maximum ratio of senior debt to annualized operating cash flow of
5.00 to 1 (Leverage Ratio) and a minimum ratio of annualized operating cash flow
to fixed charges of 1.00 to 1 (Fixed Charge Ratio). As of March 31, 1998 the
Partnership was in compliance with its required financial covenants.
As of the date of this filing, the balance outstanding under the credit facility
is $19,779,766. Interest rates on the credit facility were as follows:
$14,423,212 fixed at 8.3125%, expiring June 30, 1998; and $5,131,554 fixed at
8.34375%, expiring June 30, 1998. The balance of $225,000 bears interest at the
prime rate plus 1 3/8% (currently 9.875%). The above rates include a margin paid
to the lender based on overall leverage, and may decrease if the Partnership's
leverage decreases.
Capital Expenditures
During the first quarter of 1998, the Partnership incurred approximately
$193,000 in capital expenditures including channel additions in the Corsicana,
TX system; a trunk fiber deployment in the Cedar Creek, TX system; and a
continued system upgrade to 400 MHz in the Forest City, NC system.
Planned expenditures for the balance of 1998 include a system upgrade to 330 MHz
and channel additions in Cedar Creek, TX; new headend equipment and a tap audit
in Lamesa, TX; vehicle replacements in the Forest City, NC system and the
Corsicana, TX system; and small line extensions in various systems.
7
<PAGE> 8
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 March 31,
1998.
8
<PAGE> 9
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 FIVE LIMITED PARTNERSHIP
BY: Northland Communications Corporation,
Managing General Partner
Dated: May 11, 1998 BY: /s/ RICHARD I. CLARK
--------------- --------------------------------------
Richard I. Clark
(Vice President/Treasurer)
Dated: May 11, 1998 BY: /s/ GARY S. JONES
-------------- ---------------------------------------
Gary S. Jones
(Vice President)
9
<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> 860,664
<SECURITIES> 0
<RECEIVABLES> 356,089
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 15,536,553
<DEPRECIATION> 6,226,371
<TOTAL-ASSETS> 15,495,156
<CURRENT-LIABILITIES> 1,202,504
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (5,953,264)
<TOTAL-LIABILITY-AND-EQUITY> 15,495,156
<SALES> 2,433,918
<TOTAL-REVENUES> 2,433,918
<CGS> 0
<TOTAL-COSTS> 2,004,623
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 430,250
<INCOME-PRETAX> (135,508)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (135,508)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
