<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 September 30, 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)
September 30, December 31,
1997 1996
------------- ------------
Assets amounts in thousands
- ------
Cash and cash equivalents (note 4) $7,032 4,216
Amounts due from related parties (note 5) 214 2,717
Funds held in escrow (note 6) 2,025 2,025
------ -----
$9,271 8,958
====== =====
Liabilities and Partners' Equity
- --------------------------------
Cash overdraft $ 61 --
Accounts payable -- 9
Accrued expenses 29 76
------ -----
Total liabilities 90 85
------ -----
Partners' equity:
General partner 1,899 1,822
Limited partners 7,282 7,051
------ -----
Total partners' equity 9,181 8,873
------ -----
Contingency (note 6)
$9,271 8,958
====== =====
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 Nine months ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
amounts in thousands,
except unit amounts
<S> <C> <C> <C> <C>
General and administrative expenses $ (51) (93) (176) (225)
Gain on sale of cable television
system, net of $510,000 of costs
and expenses related to 1995
operations (note 2) -- -- -- 99,700
Interest expense -- -- -- (10)
Interest income 98 325 367 749
Reversal of excess accrued liabilities 117 -- 117 --
Minority interest's share of losses of
Newport News Cablevision, Ltd.
("Newport News") -- (61) -- (39,976)
-------- -------- -------- ---------
Net earnings $ 164 171 308 60,238
======== ======== ======== ==========
Net earnings per limited partnership
unit ("Unit") $ 1.02 1.07 1.92 422.08
======== ======== ======== =========
Limited partnership units
outstanding 120,005 120,005 120,005 120,005
======== ======== ======== =========
</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
Nine months ended September 30, 1997
(unaudited)
(see note 1)
General Limited
partner partners Total
------- -------- -----
amounts in thousands
Balance at January 1, 1997 $ 1,822 7,051 8,873
Net earnings 77 231 308
------- ----- -----
Balance at September 30, 1997 $ 1,899 7,282 9,181
======= ===== =====
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)
Nine months ended
September 30,
---------------------
1997 1996
------- -------
amounts in thousands
(see note 4)
Cash flows from operating activities:
Net earnings $ 308 60,238
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Gain on sale of cable television system -- (100,210)
Minority interest's share of earnings of Newport
News -- 39,976
Reversal of excess accrued liabilities (117) --
Changes in operating assets and liabilities, net of
effects from sale of cable television system:
Net change in receivables, prepaid expenses,
and other assets -- 555
Net change in accounts payable, accrued
expenses, subscriber advance payments
and converter deposits, and amounts due
to/from related parties 2,564 (7,346)
------- -------
Net cash provided by (used in) operating
activities 2,755 (6,787)
------- -------
Cash flows from investing activities:
Capital expended for property and equipment -- (36)
Proceeds from sale of cable television system, 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 61 (6,043)
------- -------
Net cash provided by (used in) financing
activities 61 (152,603)
------- -------
Net increase (decrease) in cash and cash
equivalents 2,816 (46,208)
Cash and cash equivalents:
Beginning of period 4,216 48,104
------- -------
End of period $ 7,032 1,896
======= =======
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
September 30, 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 September 30, 1997 and its results of operations
for the nine months ended September 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 ACT 4's December 31, 1996
Annual Report on Form 10-K.
(continued)
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 of ACT 4 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 Presidio Cable IV Corp. ("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.
(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 Unit is calculated by dividing the net earnings attributable
to the limited partners by the number of 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 nine months ended September
30, 1997 have been allocated using the post-Payback percentages set forth
above. The limited partners' share of earnings for the nine months ended
September 30, 1996 includes $22,578,000 allocated prior to achieving
Payback and $28,074,000 allocated after achieving Payback.
(continued)
I-6
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Notes to Financial Statements
(4) Supplemental Disclosure of Cash Flow Information
------------------------------------------------
The Partnership considers investments with initial maturities of six months
or less to be cash equivalents. At September 30, 1997, $7,032,000 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
nine months ended September 30, 1997 and 1996, respectively.
(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 $27,000 for
each of the nine months ended September 30, 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 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 from related parties bear interest at variable rates (5.4% at
September 30, 1997). During the nine months ended September 30, 1997 and
1996, interest earned on amounts due from TCI and its affiliates was
$163,000 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-7
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Notes to Financial Statements
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. For
additional information, see notes 2 and 6 to the accompanying financial
statements. The Partnership's results of operations for the nine months ended
September 30, 1997 and 1996 include (i) general and administrative ("G&A")
expenses, (ii) interest income and (iii) 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. The
Partnership's results of operations for the nine months ended September 30, 1997
also reflect the reversal of certain expenses which were accrued in prior
periods. In addition, the Partnership's results of operations for the nine
months ended September 30, 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 $382,000 during the nine months ended September
30, 1997 as compared to the corresponding prior year period. Such decrease is
primarily due to a decrease in the average balance of the Partnership's
interest-earning assets (primarily 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-8
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
AND SUBSIDIARIES
Notes to Financial Statements
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 September 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 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: November 7, 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 SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 7,032
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,271
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,181
<TOTAL-LIABILITY-AND-EQUITY> 9,271
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 308
<INCOME-TAX> 0
<INCOME-CONTINUING> 308
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 308
<EPS-PRIMARY> 1.92
<EPS-DILUTED> 0
</TABLE>
