<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
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 No. 0-15745
AMERICAN CABLE TV INVESTORS 4, LTD.
-----------------------------------
(Exact name of Registrant as specified in its charter)
State of Colorado 84-1013221
--------------------------- ------------------
(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 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Balance Sheets
(unaudited)
(see note 1)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
Assets amounts in thousands
- ------
<S> <C> <C>
Cash and cash equivalents (note 4) $1,498 4,216
Amounts due from related parties (note 5) 5,451 2,717
Funds held in escrow (note 6) 2,025 2,025
------ -----
$8,974 8,958
====== =====
Liabilities and Partners' Equity
- ---------------------------------
Accounts payable $ 9 9
Accrued expenses 39 76
------ -----
Total liabilities 48 85
------ -----
Partners' equity:
General partner 1,835 1,822
Limited partners 7,091 7,051
------ -----
Total partners' equity 8,926 8,873
------ -----
Contingency (note 6)
$8,974 8,958
====== =====
</TABLE>
See accompanying notes to financial statements.
I-1
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Statements of Operations
(unaudited)
(see note 1)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
1997 1996
--------- --------
amounts in thousands,
except unit amounts
<S> <C> <C>
General and administrative expenses $ (88) (125)
Gain on sale of cable television
system, net of $510,000 of costs and
expenses in 1996 related to 1995
operations (note 2) -- 99,700
Interest expense -- (10)
Interest income 141 253
Minority interest's share of earnings
of Newport News Cablevision, Ltd.
("Newport News") -- (39,907)
-------- -------
Net earnings $ 53 59,911
======== =======
Earnings per limited
partnership unit $ 0.33 420.04
======== =======
Limited partnership units outstanding 120,005 120,005
======== =======
</TABLE>
See accompanying notes to financial statements.
I-2
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Statement of Partners' Equity
Three months ended March 31, 1997
(unaudited)
(see note 1)
<TABLE>
<CAPTION>
General Limited
partner partners Total
------- -------- -----
amounts in thousands
<S> <C> <C> <C>
Balance at January 1, 1997 $1,822 7,051 8,873
Net earnings 13 40 53
------ ----- -----
Balance at March 31, 1997 $1,835 7,091 8,926
====== ===== =====
</TABLE>
See accompanying notes to financial statements.
I-3
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Statements of Cash Flows
(unaudited)
(see note 1)
<TABLE>
<CAPTION>
Three months ended
March 31,
----------------------
1997 1996
---------- ----------
amounts in thousands
(see note 4)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 53 59,911
Adjustments to reconcile net
earnings to net cash used in
operating activities:
Gain on sale of cable television
system -- (100,210)
Minority interest's share of
earnings of Newport News -- 39,907
Changes in operating assets and
liabilities, net of effects
from sale of cable television system:
Net change in receivables,
prepaid expenses, and other assets -- 863
Net change in accounts payable,
accrued expenses, subscriber advance
payments and converter deposits, and
amounts due from (to) related
parties (2,771) (1,259)
-------- -------
Net cash used in operating
activities (2,718) (788)
-------- -------
Cash flows from investing activities:
Capital expended for property and
equipment -- (36)
Proceeds from sale of cable
television systems, net of disposition
fees paid -- 113,218
--------- --------
Net cash provided by investing
activities -- 113,182
--------- --------
Cash flows from financing activities:
Repayments of debt -- (24,255)
Distributions to partners -- (88,609)
Distribution to minority owners of
Newport News -- (33,696)
Change in cash overdraft -- (4,922)
--------- --------
Net cash used in financing
activities -- (151,482)
--------- --------
Net decrease in cash and cash
equivalents (2,718) (39,088)
Cash and cash equivalents:
Beginning of period 4,216 48,104
--------- --------
End of period $ 1,498 9,016
========= ========
</TABLE>
See accompanying notes to financial statements.
I-4
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Notes to Financial Statements
March 31, 1997
(unaudited)
(1) Basis of Financial Statement Preparation
----------------------------------------
The accompanying unaudited financial statements include the accounts of
American Cable TV Investors 4, Ltd. ("ACT 4") and Newport News prior to its
liquidation. Newport News was formed for the purpose of acquiring,
developing and operating the cable television system located in and around
Newport News, Virginia (the "Newport News System"). ACT 4 and Newport News
are collectively referred to herein as the Partnership. As a result of the
sale of the Newport News System, Newport News was liquidated during the
fourth quarter of 1996. ACT 4 had a 60% ownership interest in Newport
News. American Cable TV Investors 5, Ltd. ("ACT 5"), an affiliate, owned
the 40% minority interest in Newport News.
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. See notes 2 and 6.
TCI Cablevision Associates, Inc. ("Cablevision") is the managing agent of
the Partnership and owns 100% of the common stock of a general partner of
the general partner of ACT 4. Cablevision is an indirect majority-owned
subsidiary of Tele-Communications, Inc. ("TCI").
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 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 its results of 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 ACT 4's December 31, 1996
Annual Report on Form 10-K.
I-5
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Notes to Financial Statements
(2) Sales Transaction
-----------------
The Newport News System was sold on January 1, 1996 to Cox Communications
Rhode Island, Inc. ("Cox"), an unaffiliated third party, for cash proceeds
of $121,886,000 (the "Newport News Sale"). Pursuant to the terms of the
sale agreement, $5,000,000 of the sales price was placed in escrow (the
"Newport News Escrow") and was subject to any indemnifiable claims made by
Cox through September 27, 1996. During the fourth quarter of 1996, the
Newport News Escrow plus accrued interest of $170,000 was released to
Newport News. The Partnership had a 60% ownership interest in Newport News.
Accordingly, ACT 4 received $53,684,000 of the net cash proceeds (after
satisfaction of transaction costs and Newport News' liabilities) from the
Newport News Sale in 1996.
The gain on the Newport News Sale has been reduced by $510,000 to reflect
certain of Newport News' operating costs and expenses which were incurred
in 1995 but which were reflected in the 1996 financial records of Newport
News.
The Newport News Sale was approved by the Limited Partners at a special
meeting that occurred on June 20, 1995.
In connection with the Newport News Sale, Newport News used most of the
cash proceeds to (i) pay a disposition fee of $3,668,000 ($2,751,000 to
Cablevision and $917,000 to PCC), (ii) repay debt and related accrued
interest of $24,306,000 and (iii) make cash distributions to ACT 4 and ACT
5 of $53,684,000 and $35,789,000, respectively. The Partnership used
proceeds from the Newport News Sale and previous sales transactions to make
initial distributions to its general and limited partners of $7,606,000 and
$81,003,000 ($675 per Unit), respectively, in January 1996.
(continued)
I-6
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Notes to Financial Statements
(3) Allocation of Net Earnings and Net Losses
-----------------------------------------
Pursuant to ACT 4's limited partnership agreement, net earnings and net
losses of ACT 4 are to be 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
partner and 75% to the limited partners.
Earnings per limited partnership unit is calculated by dividing the net
earnings attributable to the limited partners by the number of limited
partnership units outstanding during the period. ACT 4's aforementioned
January 1996 distributions, allowed limited partners to achieve Payback.
As such, Payback was deemed to have occurred in connection with the
consummation of the Newport News Sale. Accordingly, the limited partners'
share of earnings for the three months ended March 31, 1996 includes
$22,578,000 allocated prior to achieving Payback and $27,829,000 allocated
after achieving Payback.
(4) 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, $1,498,000 of the
Partnership's cash and cash equivalents was invested in money market funds.
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.
Cash paid by the Partnership for interest was none and $62,000 during the
three months ended March 31, 1997 and 1996, respectively.
(continued)
I-7
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Notes to Financial Statements
(5) 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, marketing,
technical or other services. Such reimbursements amounted to $9,000 for
each of the three month periods ended March 31, 1997 and 1996.
The Partnership was obligated to pay a disposition fee equal to 3% (2-1/4%
to Cablevision and 3/4% to PCC) of the gross proceeds from the sale of any
of its cable television systems. Such fee was due and payable at the time
the cable television system was sold if the consideration received was
greater than its adjusted cost, as defined in ACT 4's limited partnership
agreement. Newport News paid disposition fees of $3,668,000 during 1996 in
connection with the Newport News Sale. ACT 4's share of Newport News'
aggregate disposition fee was $2,201,000. See note 2.
Amounts due to related parties, which represent non-interest-bearing
payables to TCI and its affiliates, consist of the net effect of cash
advances and certain intercompany expense allocations.
Amounts due from related parties bear interest at variable rates (5.3% at
March 31, 1997). During the three months ended March 31, 1997 and 1996
interest earned on amounts due from TCI and its affiliates was $139,000 and
none, respectively.
(6) Contingency
-----------
In May 1996, Citizens Century Cable Television Venture ("Citizens-
Century"), the buyer of the Partnership's cable television system which was
located in and around Chino, California (the "Chino System"), filed a claim
for a breach of warranty in connection with the sale of the Chino System by
ACT 4. Citizens-Century has not submitted to ACT 4 an estimate of the cost
associated with such claim. The claim for indemnification has had and will
continue to have the effect of delaying the release of funds held in escrow
from the sale of the Chino System (the "Chino Escrow"). In addition, any
successful indemnification claim will have the effect of reducing the
amount of the Chino Escrow ultimately released to ACT 4.
I-8
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Management's Discussion and Analysis of
- ---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
The following discussion should be read in conjunction with the
accompanying statements and ACT 4's December 31, 1996 Annual Report on Form
10-K.
General
-------
Sales Transaction. On January 1, 1996 the Newport News System was sold.
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. For
additional information, see notes 2 and 6 to the accompanying financial
statements.
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 months ended
March 31, 1997 and 1996 are primarily comprised of general and administrative
("G&A") expenses, interest income and the minority interest's share of Newport
News' net earnings. The Partnership's G&A expenses are comprised primarily of
costs associated with the administration of the Partnership. In addition, the
Partnership's results of operations for the three months ended March 31, 1996
reflect the gain from the Newport News Sale. The gain from the Newport News
Sale has been reduced by $510,000 to reflect certain of Newport News' operating
costs and expenses which were incurred in 1995 but which were reflected in the
1996 financial records of Newport News. See note 2 to the accompanying
financial statements.
Interest income decreased $112,000 during the three months ended March 31,
1997, as compared to the corresponding prior year period. Such decrease is due
to a decrease in the average balance of the Partnership's cash and cash
equivalents.
Material Changes in Financial Condition
---------------------------------------
ACT 4 anticipates that it will make liquidating distributions in connection
with its dissolution as soon as possible following the final determination and
satisfaction of the Partnership's liabilities, but not prior to the release of
funds from the Chino Escrow. In May 1996, Citizens-Century filed a claim for a
breach of warranty in connection with the sale of the Chino System. Citizens-
Century has not submitted to ACT 4 an estimate of the cost associated with such
claim. The claim for indemnification has had and will continue to have the
effect of delaying the release of funds from the Chino Escrow. In addition, any
successful indemnification claim will have the effect of reducing the amount of
the Chino Escrow ultimately released to ACT 4.
I-9
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
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 4, LTD.
(A Colorado Limited Partnership)
By: IR-TCI PARTNERS IV, L.P.,
Its General Partner
By: TCI VENTURES FOUR, INC.,
A General Partner
Date: May 14, 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> 1,498
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,974
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,926
<TOTAL-LIABILITY-AND-EQUITY> 8,974
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 53
<INCOME-TAX> 0
<INCOME-CONTINUING> 53
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53
<EPS-PRIMARY> .33<F1>
<EPS-DILUTED> 0
<FN>
<F1>EPS-PRIMARY REPRESENTS NET EARNINGS PER LIMITED PARTNERSHIP UNIT
</FN>
</TABLE>
