<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____ to _____
Commission File Number 0-15745
AMERICAN CABLE TV INVESTORS 4, LTD.
-----------------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
State of Colorado 84-1013221
- ------------------------------------------- ---------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
5619 DTC Parkway
Englewood, Colorado 80111
- ------------------------------------------------ ---------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (303) 267-5500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
120,005 Limited Partnership Units Sold to Investors at $500 per Unit
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. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the Registrant. -- N/A
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
1998 ANNUAL REPORT ON FORM 10-K
Table of Contents
Page
----
PART I
Item 1. Business.............................................. I-1
Item 2. Properties............................................ I-2
Item 3. Legal Proceedings..................................... I-2
Item 4. Submission of Matters to a Vote of Security Holders... I-2
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters.......................... II-1
Item 6. Selected Financial Data............................... II-2
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. II-3
Item 8. Financial Statements and Supplementary Data........... II-4
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................. II-4
PART III
Item 10. Directors and Executive Officers of the Registrant.... III-1
Item 11. Executive Compensation................................ III-3
Item 12. Security Ownership of Certain Beneficial Owners
and Management....................................... III-3
Item 13. Certain Relationships and Related Transactions........ III-3
PART IV
Item 14. Exhibits, Financial Statements and Financial
Statement Schedules, and Reports on Form 8-K......... IV-1
<PAGE>
PART I.
Item 1. Business.
- ------ --------
(a) General Development of Business.
-------------------------------
American Cable TV Investors 4, Ltd. ("ACT 4") is a Colorado limited
partnership that was formed in December of 1985 for the purpose of acquiring,
developing and operating cable television systems. ACT 4's general partner (the
"General Partner") is IR-TCI Partners IV, L.P. ("IR-TCI"), a Colorado limited
partnership whose general partners are Integrated Cable Corp. IV ("ICC"), an
indirect subsidiary of Presidio Capital Corp. ("Presidio"), and TCI Ventures
Four, Inc. ("TCIV 4"), a subsidiary of TCI Cablevision Associates, Inc.
("Cablevision"). The limited partner of IR-TCI is Cablevision Equities V, a
limited partnership whose partners are certain former officers and key employees
of the predecessor of Cablevision. Cablevision is an indirect subsidiary of
Tele-Communications, Inc. ("TCI") and is the managing agent of ACT 4. In its
public offering from May of 1986 to April of 1987, ACT 4 sold 120,005 limited
partnership units at a price of $500 per unit ("Unit").
TCI and AT&T have agreed to a merger (the "Merger") in which TCI will
become a wholly-owned subsidiary of AT&T. In anticipation of the Merger, TCI
announced that it will restructure certain of its subsidiaries, including the
merger of its subsidiary, TCI Communications, Inc. ("TCIC") into TCI. The
Merger is not expected to have a material effect on the Partnership's results of
operations or financial condition.
ACT 4 had a 60% ownership interest in Newport News Cablevision Associates,
L.P. and its subsidiary Newport News Cablevision, Ltd. (collectively, "Newport
News"). Through December 31, 1995, Newport News owned and operated the cable
television system servicing the area in and around Newport News, Virginia (the
"Newport News System"). American Cable TV Investors 5, Ltd. ("ACT 5"), an
affiliate, owned the 40% minority interest in Newport News. ACT 4 and Newport
News are collectively referred to herein as the "Partnership."
During 1995 ACT 4 sold all of its wholly-owned cable television systems in
three separate transactions (collectively, the "Wholly-Owned Sales"). The
wholly-owned cable television systems were located in and around (i) Chino,
California (the "Chino System"), (ii) North and South Kona and North and South
Kohala, Hawaii (collectively, the "Kona System") and (iii) Colton, California
(the "Colton System"). In addition, the Newport News System was sold on January
1, 1996 (the "Newport News Sale", and together with the Wholly-Owned Sales, the
"Sales Transactions"). The Sales Transactions were approved by the
Partnership's limited partners ("Limited Partners") at a special meeting that
occurred on June 20, 1995. See Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations - General.
- -------------------------------------------------------
As a result of the Sales Transactions, 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.
I-1
<PAGE>
(b) Financial Information about Industry Segments.
---------------------------------------------
Not applicable.
(c) Narrative Description of Business.
---------------------------------
Not applicable.
(d) Financial Information about Foreign and Domestic Operations and Export
----------------------------------------------------------------------
Sales.
-----
Not applicable.
Item 2. Properties.
- ------ ----------
Not applicable.
Item 3. Legal Proceedings.
- ------- -----------------
There are no material pending legal proceedings to which the
Partnership is a party or to which any of its property is subject.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------- ---------------------------------------------------
None.
I-2
<PAGE>
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
- ------- ---------------------------------------------------------------------
In its public offering from May of 1986 to April of 1987, ACT 4 sold
120,005 Units to the public at a price of $500 per Unit. At December 31, 1998,
there were approximately 8,100 Unit holders.
The Partnership made a cash distribution of $675 per Unit in January 1996
to holders of record as of December 1, 1995. The Partnership anticipates making
final cash distributions to its partners as soon as possible following the final
determination and satisfaction of its liabilities. However, the Partnership is
currently unable to predict the timing or amount of any such liquidating
distributions due primarily to the claim for indemnification which was filed by
the purchaser of the Chino System. For additional information see note 4 to the
accompanying financial statements and Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations - General.
- -------------------------------------------------------
Although the Units are freely transferable, no public trading market for
the Units exists. To the extent that an informal or secondary market exists,
the Limited Partners may only be able to sell Units at a substantial discount
from the Units' proportionate share of the underlying net assets of the
Partnership.
II-1
<PAGE>
Item 6. Selected Financial Data.
- ------- -----------------------
Selected financial data related to the Partnership's financial condition
and results of operations for the five years ended December 31, 1998 are
summarized as follows (such information should be read in conjunction with the
Partnership's financial statements included elsewhere herein):
SUMMARY BALANCE SHEET DATA:
--------------------------
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------------------
1998 1997 1996 /1/ 1995 /2/ 1994
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
amounts in thousands
Cash and cash equivalents $7,405 7,310 4,216 48,104 490
Property and equipment, net $ -- -- -- 17,090 40,721
Franchises costs and
other intangibles, net $ -- -- -- 1,104 10,736
Total assets $9,621 9,456 8,958 76,151 57,706
Debt $ -- -- -- 24,255 66,887
Partners' equity (deficit) $9,435 9,224 8,873 37,274 (14,150)
Outstanding Units 120 120 120 120 120
</TABLE>
SUMMARY STATEMENT OF OPERATIONS DATA:
------------------------------------
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------------------------------
1998 1997 1996 /1/ 1995 /2/ 1994
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
amounts in thousands, except per Unit data
Revenue $ -- -- -- 33,759 37,500
Operating income (loss) $(225) (230) (262) 176 1,104
Interest expense $ -- -- (10) (3,518) (4,346)
Gain on sale of cable
television systems $ -- -- 99,700 54,022 --
Earnings (loss) before
extraordinary item $ 211 351 60,208 51,775 (2,994)
Net earnings (loss) per Unit
before extraordinary item $1.32 2.19 421.90 427.13 (24.70)
Distributions per Unit $ -- -- 675 -- --
</TABLE>
_________________
/1/ The December 31, 1996 summary balance sheet data and statement of
operations data reflect the effects of the January 1, 1996 Newport
News Sale. See Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations - General.
----------------------------------------------
/2/ The December 31, 1995 summary balance sheet data and statement of
operations data reflected the effects of the Wholly-Owned Sales. As a
result of the Wholly-Owned Sales, the Partnership's statement of
operations for the year ended December 31, 1995 includes (i) six
months of operating results for the Kona and Colton Systems and (ii)
eleven months of operating results for the Chino System.
II-2
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- ------- -----------------------------------------------------------------------
of Operations.
-------------
General
-------
Sales Transactions. During 1995, the Partnership sold its wholly-owned
cable television systems in three separate sales transactions. In addition, on
January 1, 1996, the Newport News System was sold.
As a result of the Sales Transactions, which were approved by the Limited
Partners, 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.
However, ACT 4 is currently unable to predict the timing or amount of such final
cash distributions due primarily to the existence of the claim for
indemnification described in note 4 to the accompanying financial statements.
Inflation did not have a significant impact on the Partnership's financial
condition or results of operations during the three-year period ended December
31, 1998.
Results of Operations
----------------------
As the Partnership is no longer engaged in the cable television business,
its results of operations for the years ended December 31, 1998, 1997 and 1996
are primarily comprised of general and administrative ("G&A") expenses and
interest income. The Partnership's G&A expenses are primarily comprised of
costs associated with the administration of the Partnership. The Partnership's
results of operations for the years ended December 31, 1998 and 1997 also
reflect the reversal of certain amounts which were accrued in prior periods.
The 1996 results of operations include the gain from the Newport News Sale and
the minority interest's share of Newport News' net earnings. 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 was relatively consistent during the years ended December
31, 1998 and 1997. Interest income decreased $354,000 during the year ended
December 31, 1997, as compared to the corresponding prior year period. Such
decrease is primarily due to fluctuations in the average balance of the
Partnership's interest bearing assets (primarily cash and cash equivalents).
II-3
<PAGE>
Liquidity and Capital Resources
-------------------------------
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 the Partnership's liabilities, but not prior
to the release of funds held in escrow from the sale of the Chino System (the
"Chino Escrow"). In May 1996, Citizens Century Cable Television Venture
("Citizens-Century") the buyer of the Chino System, filed a claim for a breach
of warranty by ACT 4 in connection with the sale of the Chino System. The
Partnership is working with Citizens-Century to resolve such claim. However,
the Partnership is unable to determine the ultimate cost of such claim, if any,
or when such claim will be resolved. The claim for indemnification has had and
will continue to have the effect of delaying the release of 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.
Item 8. Financial Statements and Supplementary Data.
- ------- -------------------------------------------
The financial statements of the Partnership are filed under this item
beginning on page II-5. All financial statement schedules are omitted as they
are not required or are not applicable.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosure.
--------------------
None.
II-4
<PAGE>
Independent Auditors' Report
----------------------------
The Partners
American Cable TV Investors 4, Ltd.:
We have audited the accompanying balance sheets of American Cable TV Investors
4, Ltd. (a Colorado limited partnership) as of December 31, 1998 and 1997, and
the related statements of operations, partners' equity, and cash flows for each
of the years in the three-year period ended December 31, 1998. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in note 2 to the financial statements, the Partnership sold all of
its cable television assets and is currently in the process of determining its
final liabilities so liquidating distributions can be made.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Cable TV Investors 4,
Ltd. as of December 31, 1998 and 1997, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1998, in conformity with generally accepted accounting principles.
KPMG LLP
Denver, Colorado
February 12, 1999
II-5
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
Balance Sheets
December 31, 1998 and 1997
(see note 2)
<TABLE>
<CAPTION>
Assets 1998 1997
- ------ ------ ------
amounts in thousands
<S> <C> <C>
Cash and cash equivalents $ 7,405 7,310
Amounts due from related parties (note 3) 191 121
Funds held in escrow (note 4) 2,025 2,025
-------- --------
$ 9,621 9,456
======== ========
Liabilities and Partners' Equity
- --------------------------------
Accrued liabilities $ 186 232
Partners' equity:
General partner 1,963 1,910
Limited partners 7,472 7,314
-------- --------
Total partners' equity 9,435 9,224
-------- --------
Contingency (note 4)
$ 9,621 9,456
======== ========
</TABLE>
See accompanying notes to financial statements.
II-6
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
Statements of Operations
Years ended December 31, 1998, 1997 and 1996
(see note 2)
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
amounts in thousands,
except per unit amounts
<S> <C> <C> <C>
General and administrative expenses $ 225 230 262
Other income (expense):
Interest expense -- -- (10)
Interest income (note 3) 408 464 818
Gain on sale of cable television systems,
net of $510,000 of costs and expenses
in 1996 related to 1995 operations
(note 2) -- -- 99,700
Minority interest's share of earnings of Newport
News Cablevision Associates,
L.P. ("Newport News") -- -- (39,995)
Reversal of excess accrued liabilities 28 117 --
Other -- -- (43)
-------- -------- ---------
436 581 60,470
-------- -------- ---------
Net earnings $ 211 351 60,208
======== ======== =========
Net earnings per limited partnership unit
("Unit") $ 1.32 2.19 421.90
======== ======== =========
</TABLE>
See accompanying notes to financial statements.
II-7
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
Statements of Partners' Equity
Years ended December 31, 1998, 1997 and 1996
(see note 2)
<TABLE>
<CAPTION>
General Limited
partner partners Total
---------------- ---------------- ----------------
<S> <C> <C> <C>
amounts in thousands
Balance at January 1, 1996 $ (150) 37,424 37,274
Distribution (note 2) (7,606) (81,003) (88,609)
Net earnings 9,578 50,630 60,208
---------------- ---------------- ----------------
Balance at December 31, 1996 1,822 7,051 8,873
Net earnings 88 263 351
---------------- ---------------- ----------------
Balance at December 31, 1997 1,910 7,314 9,224
Net earnings 53 158 211
---------------- ---------------- ----------------
Balance at December 31, 1998 $ 1,963 7,472 9,435
================ ================ ================
</TABLE>
See accompanying notes to financial statements.
II-8
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1998, 1997 and 1996
(see note 2)
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ------------------ ----------------
amounts in thousands
(see note 1)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 211 351 60,208
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Reversal of excess accrued liabilities (28) (117) --
Gain on sale of cable television assets -- -- (100,210)
Minority interest's share of earnings of Newport
News -- -- 39,995
Changes in operating assets and liabilities, net
of effects from sale of cable television
systems:
Change in receivables and
prepaid expenses -- -- 863
Change in accrued liabilities (18) 264 (3,407)
Change in amounts due from (to)
related parties (70) 2,596 (6,920)
----------------- ------------------ ----------------
Net cash provided by (used in) operating
activities 95 3,094 (9,471)
----------------- ------------------ ----------------
Cash flows from investing activities:
Capital expended for property
and equipment -- -- (36)
Proceeds from sale of cable television assets, net
of disposition fees paid -- -- 120,718
----------------- ------------------ ----------------
Net cash provided by
investing activities $ -- -- 120,682
----------------- ------------------ ----------------
(continued)
</TABLE>
II-9
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
Statements of Cash Flows, continued
Years ended December 31, 1998, 1997 and 1996
(see note 2)
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ------------------ ---------------
amounts in thousands
(see note 1)
<S> <C> <C> <C>
Cash flows from financing activities:
Repayments of debt $ -- -- (24,255)
Distributions to partners -- -- (88,609)
Distributions to minority owner of
Newport News -- -- (35,789)
Change in cash overdraft -- -- (6,446)
----------------- ------------------ ---------------
Net cash provided by (used in)
financing activities -- -- (155,099)
----------------- ------------------ ---------------
Net increase (decrease) in
cash and cash equivalents 95 3,094 (43,888)
Cash and cash equivalents:
Beginning of year 7,310 4,216 48,104
----------------- ------------------ ---------------
End of year $ 7,405 7,310 4,216
================= ================== ===============
</TABLE>
See accompanying notes to financial statements.
II-10
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
Notes to Financial Statements
December 31, 1998, 1997 and 1996
(1) Summary of Significant Accounting Policies
------------------------------------------
Organization
------------
American Cable TV Investors 4, Ltd. ("ACT 4"), a Colorado limited
partnership, was formed in December of 1985 for the purpose of acquiring,
developing and operating cable television systems. IR-TCI Partners IV, L.P.
("IR-TCI"), a Colorado limited partnership, is the general partner of ACT 4
(the "General Partner"). The two general partners of IR-TCI are TCI
Ventures Four, Inc., a subsidiary of TCI Cablevision Associates, Inc.
("Cablevision") and Integrated Cable Corp. IV, an indirect subsidiary of
Presidio Capital Corp. ("Presidio"). The limited partner of the General
Partner is Cablevision Equities V, a limited partnership whose partners are
certain former officers and key employees of the predecessor of
Cablevision. Cablevision, an indirect subsidiary of Tele-Communications,
Inc. ("TCI"), is the managing agent of ACT 4. In its public offering from
May of 1986 to April of 1987, ACT 4 sold 120,005 limited partnership units
at a price of $500 per Unit.
TCI and AT&T have agreed to a merger (the "Merger") in which TCI will
become a wholly-owned subsidiary of AT&T. In anticipation of the Merger,
TCI announced that it will restructure certain of its subsidiaries,
including the merger of its subsidiary, TCI Communications, Inc. ("TCIC")
into TCI. The Merger is not expected to have a material effect on the
Partnership's results of operations or financial condition.
ACT 4 had a 60% ownership interest in Newport News. ACT 4 and Newport News
are collectively referred to herein as the "Partnership". American Cable
TV Investors 5, Ltd. ("ACT 5"), an affiliate, owned the 40% minority
interest in Newport News which 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").
As further described in note 2, the Partnership has sold all of its cable
television assets.
The financial statements include the accounts of ACT 4 and Newport News
(through November 1996). As a result of the sale of the Newport News
System, Newport News was liquidated during the fourth quarter of 1996. See
note 2. All significant intercompany transactions and accounts have been
eliminated.
(continued)
II-11
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
Notes to Financial Statements
Allocation of Net Earnings
--------------------------
Net earnings and distributions of Cash from Operations, Sales or
Refinancings (all as defined in the Partnership's limited partnership
agreement) shall be distributed 99% to the limited partners and 1% to the
General Partner until the limited partners receive distributions equal to
their original capital contributions ("Payback"). After the limited
partners have received distributions equal to Payback, the allocations of
net earnings, credits, and distributions of Cash from Operations, Sales or
Refinancings shall be 25% to the General Partner and 75% to the limited
partners. The Partnership's January 1996 distributions, which were funded
with proceeds from the sale of the Partnership's cable television assets,
allowed limited partners to achieve Payback. As such, Payback was deemed
to have occurred on January 1, 1996 in connection with the sale of the
Newport News System. See note 2. Accordingly, the limited partners' share
of earnings for the year ended December 31, 1996 includes $22,578,000
allocated prior to achieving Payback and $28,052,000 allocated after
achieving Payback.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents consist of investments which are readily
convertible into cash and have maturities of three months or less at the
time of acquisition.
At December 31, 1998 and 1997, all of the Partnership's cash and cash
equivalents were invested in commercial paper, discount notes or 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 in each of 1998 and
1997, and $62,000 in 1996.
Net Earnings Per Unit
---------------------
Net earnings per Unit is calculated by dividing net earnings attributable
to the limited partners by the number of Units outstanding during the
period. The number of Units outstanding for each of the years in the
three-year period ended December 31, 1998 was 120,005.
Income Taxes
------------
No provision has been made for income tax expense or benefit in the
accompanying consolidated financial statements as the income or losses of
the Partnership are reported in the respective income tax returns of the
partners.
The Partnership had taxable income (loss) of $281,000, $(116,000) and $61.9
million for the years ended December 31, 1998, 1997 and 1996, respectively.
(continued)
II-12
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
Notes to Financial Statements
Estimates
---------
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.
Reclassifications
-----------------
Certain amounts have been reclassified for comparability with the 1998
presentation.
(2) Sales Transactions
------------------
During 1995, ACT 4 sold all of its wholly-owned cable television systems in
three separate sales transactions (the "Wholly-Owned Sales"). In addition,
on January 1, 1996 the Newport News System was sold (together with the
Wholly-Owned Sales, the "Sales Transactions"). As a result of the Sales
Transactions, 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.
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"). ACT 4 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. 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 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 Partnership used proceeds from the Sales Transactions to make initial
distributors to its General and limited partners of $7,606,000 and
$81,003,000 ($675 per Unit), respectively, in January 1996.
(3) 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 and other
services. Such reimbursements amounted to $36,000 for each of the years
ended December 31, 1998, 1997 and 1996, and are included in general and
administrative expenses in the accompanying statements of operations.
(continued)
II-13
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
(A Colorado Limited Partnership)
Notes to Financial Statements
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 from related parties bear interest at variable rates (5.0% at
December 31, 1998). Interest earned on amounts due from TCI and its
affiliates was not significant for the year ended December 31, 1998.
During the year ended December 31, 1997, interest earned on amounts due
from TCI and its affiliates was $102,000. Interest earned on amounts due
from TCI and its affiliates was not significant for the year ended December
31, 1996.
(4) 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 by ACT 4 in connection with the sale of the Chino
System. The Partnership is working with Citizens-Century to resolve such
claim. However, the Partnership is unable to determine the ultimate cost
of such claim, if any, or when such claim will be resolved. 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.
II-14
<PAGE>
PART III.
Item 10. Directors and Executive Officers of the Registrant.
- -------- --------------------------------------------------
As the Partnership has no directors or officers of its own, all of the
Partnership's major decisions are made by IR-TCI, whose general partners are ICC
and TCIV 4.
The Partnership previously had entered into a management agreement with
Cablevision, pursuant to which Cablevision was responsible for the day-to-day
operations of the Partnership's cable television systems. Such agreement was
terminated in connection with the consummation of the Sales Transactions.
However, Cablevision continues to serve as the managing agent of the
Partnership.
As of February 1, 1999, the following executive officers and directors of
TCIV 4 and ICC operated IR-TCI:
<TABLE>
<CAPTION>
Name Position
----- --------
<S> <C>
William R. Fitzgerald President of TCIV 4 since November 1998. Chief Operating
- --------------------- Officer of TCIC since November 1998, Executive Vice President
Born May 20, 1957 of TCIC since December 1997 and Senior Vice President of TCIC
from March 1996 to December 1997. Serves as a Vice President
of various TCI subsidiaries; and was Senior Vice President and
Partner in Daniels & Associates, a brokerage and investment
banking company from 1988 to 1996.
Stephen M. Brett (1) Director of TCIV 4 since August 1995. Vice President and
- ----------------------- Secretary of Cablevision and TCIV 4 since March 1992. Executive
Born September 20, 1940 Vice President, General Counsel and Secretary of TCI since
January 1994. Executive Vice President of TCIC since October
1997. Secretary of TCIC since February 1994 and General Counsel
of TCIC since 1991; Senior Vice President of TCIC from December
1991 until October 1997; Assistant Secretary of TCIC from June
1992 to February 1994; and Vice President and Secretary of most
of TCI's subsidiaries.
Leo J. Hindery, Jr. (1) Director of TCIV 4 since October 1998. Director of TCI since
- ----------------------- May 1997, and President and Chief Operating Officer of TCI
Born October 31, 1947 since February 1997. Director of TCIC since March 1997,
President, and Chief Executive Officer of TCIC since November
1998 and from March 1997 to May 1998. President, Chief
Executive Officer and/or a Director of many of TCI's
subsidiaries.
Bernard W. Schotters Vice President and Treasurer of Cablevision since December 1991
- ---------------------- and TCIV 4 since August 1992. Senior Vice President and
Born November 24, 1944 Treasurer of TCI since October 1997. Executive Vice President
of TCIC since December 1997, Treasurer of TCIC since December
1991; Senior Vice President of TCIC from December 1991 to
December 1997, and Vice President and Treasurer of most of
TCI's subsidiaries.
</TABLE>
III-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Ann M. Koets Vice President and Principal Accounting Officer of TCIV 4 since
- --------------------- June 1998. Executive Vice President of TCIC since December
Born January 21, 1958 1997, Senior Vice President of TCIC from May 1997 to December
1997; and served in various other capacities with TCIC and its
subsidiaries prior to 1997.
Allan B. Rothschild (1) Director, President and General Counsel of ICC since October
- ----------------------- 1998. Executive Vice President and General Counsel of ICC from
Born June 2, 1961 December 1997 to October 1998. From 1995 through 1997, Mr.
Rothschild was the Senior Vice President and General Counsel at
Newkirk Limited Partnership. Prior to that he was associated
with the law firm of Proskauer, Rose LLP.
David King (1) Director, Executive Vice President and Assistant Treasurer of
- ------------------- ICC since November 1997. From 1990 through 1997, Mr. King was
Born April 21, 1962 Senior Vice President of Finance for Olympia & York Companies
(USA). Prior to that, Mr. King was employed with Bankers Trust
in its real estate finance group.
Lawrence Schachter Senior Vice President and Chief Financial Officer of ICC since
- ----------------------- January 1998. From 1992 through 1995, Mr. Schachter was the
Born September 18, 1956 Controller at Greenthal/ Harlan Realty Services, Inc. In
addition, he was the Controller at Goodrich Associates from
1995 through 1996. From 1996 to 1998, Mr. Schachter held the
position of Controller at CB Commercial Hampshire LLC.
W. Edward Scheetz (1) Director of ICC since July 1997. From 1993 through 1997, Mr.
- ---------------------- Scheetz was a partner at Apollo Realty, Advisors, LP. From
Born November 11, 1965 1989 through 1993, he was a principal with Trammell Crow
Ventures.
David Hamamoto (1) Director of ICC since July 1997. From 1988 through 1997, Mr.
- --------------------- Hamamoto was a Partner of the real estate principal investment
Born October 26, 1959 area at Goldman Sachs & Co.
Dallas E. Lucas (1) Director of ICC since October 1998. From 1993 to 1998, Mr.
- ------------------- Lucas was Senior Vice President and Chief Financial Officer at
Born April 9, 1962 Crescent Real Estate Equities Company. From 1984 to 1993, he
was Senior Audit Manager at Arthur Andersen LLP.
J. Peter Paganelli Senior Vice President, Secretary and Treasurer of ICC since
- -------------------- March 1998. From 1997 to March 1998, Mr. Paganelli was the
Born January 7, 1959 Director of Asset Management for Argent Ventures, LLC. From
1986 to 1994, Mr. Paganelli was an Associate Director at
Cushman & Wakefield, Inc.
</TABLE>
(1) Directors of TCIV 4 and ICC serve until their successors are duly
appointed and qualified.
There are no family relations, of first cousin or closer, among the
individuals named above, by blood, marriage or adoption.
III-2
<PAGE>
During the past five years, none of the persons named above has had any
involvement in such legal proceedings as would be material to an evaluation of
that person's ability or integrity.
Pursuant to section 16(a) of the Securities Exchange Act of 1934, as
amended, the officers and directors of the general partners are required to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Officers and directors are required by
regulation of the Commission to furnish the Partnership with copies of all
Section 16(a) forms filed.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5s were
required for those persons, the Partnership believes that, during the fiscal
year ended December 31, 1998, all applicable filing requirements were complied
with, except that Dallas E. Lucas and J. Peter Paganelli each filed one Form 3
late.
Item 11. Executive Compensation.
- -------- ----------------------
The Partnership pays no direct compensation to the individuals named above,
but instead pays for their services through fees paid to Cablevision and
Presidio. See Certain Relationships and Related Transactions below.
----------------------------------------------
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- -------- --------------------------------------------------------------
No general or limited partner of the Partnership owns more than 5% of the
Units.
None of the individuals referred to in Item 10 above own (i) any Units of
the Partnership or (ii) more than 1% of the outstanding shares of TCI, the
ultimate parent and owner, directly or indirectly, of all of the voting stock of
TCIV 4.
Cablevision owns 40 Units and Presidio owns 7 Units.
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
At December 31, 1998, TCI and its affiliates owed the Partnership $191,000.
Such amounts bear interest at variable rates (5.0% at December 31, 1998).
During the year ended December 31, 1998, interest earned on such amounts was not
material.
III-3
<PAGE>
PART IV.
Item 14. Exhibits, Financial Statements and Financial Statement Schedules
- -------- ----------------------------------------------------------------
and Reports on Form 8-K.
-----------------------
(a) (1) Financial Statements Page
-------------------- ----
Included in Part II of this Report:
Independent Auditors' Report II-5
Balance Sheets,
December 31, 1998 and 1997 II-6
Statements of Operations,
Years ended December 31, 1998, 1997 and 1996 II-7
Statements of Partners' Equity,
Years ended December 31, 1998, 1997 and 1996 II-8
Statements of Cash Flows,
December 31, 1998, 1997 and 1996 II-9
Notes to Financial Statements,
December 31, 1998, 1997 and 1996 II-11
(a) (2) Financial Statement Schedules
-----------------------------
All schedules are omitted as they are not required or are not
applicable.
IV-1
<PAGE>
(a) (3) Exhibits
--------
The following exhibits are filed herewith or incorporated by reference herein
(according to the number assigned to them in Item 601 of Regulation S-K), as
noted:
3 - Articles of Incorporation and Bylaws:
Limited Partnership Agreement, incorporated by reference from Exhibit A
to Prospectus filed as part of Post-effective Amendment No. 1 to
Registration Statement 33-2042.
Limited Partnership Agreement of General Partner, incorporated by
reference Registration Statement 33-10707.
10 - Material Contracts:
Management Agreement between Cablevision and the Partnership incorporated
by reference to the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1987 (Commission File No. 0-15745).
Acquisition and Disposition Services Agreement between Cablevision and
the Partnership, incorporated by reference to the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1987 (Commission
File No. 015745).
Consulting Agreement re: ACT 4 between Cablevision and Presidio,
incorporated by reference to the Partnership's Annual Report on Form 10-
K for the year ended December 31, 1987 (Commission File No. 0-15745).
Asset Purchase Agreement by and among American Cable TV Investors 4, Ltd.
and Century Communications Corp. and Citizens Utilities Company dated as
of February 26, 1993, incorporated by reference to the Partnership's
Current Report on Form 8-K dated March 5, 1993.
First Amendment, dated as of June 21, 1993, to Asset Purchase Agreement,
dated as of February 26, 1993 by and among American Cable TV Investors
4, Ltd. and Century Communications Corp. and Citizens Utilities Company,
incorporated by reference to the Partnership's Annual Report on Form 10-
K for the year ended December 31, 1993.
Second Amendment, dated as of November 30, 1993, to Asset Purchase
Agreement, dated as of February 26, 1993, by and among American Cable TV
Investors 4, Ltd. and Century Communications Corp. and Citizens
Utilities Company, incorporated by reference to the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1993.
Letter Agreement, dated January 24, 1995, to Asset Purchase Agreement
dated as of February 26, 1993, by and among American Cable TV Investors
4, Ltd. and Century Communications Corp. and Citizens Utilities Company,
incorporated by reference to the Partnership's Annual Report on Form 10-
K for the year ended December 31, 1994.
27 - Financial Data Schedule.
(b) Reports on Form 8-K filed during the quarter ended December 31, 1998:
None.
IV-2
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership 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
By: /s/ William R. Fitzgerald March 4, 1999
-------------------------
William R. Fitzgerald
President - TCI Ventures Four, Inc.
(Principal Executive Officer)
By: INTEGRATED CABLE CORP. IV, a General Partner
By: /s/ Allan B. Rothschild March 4, 1999
----------------------- -
Allan B. Rothschild
President - Integrated Cable Corp. IV
(Principal Executive Officer)
Pursuant to the Securities Act of 1934, this report has been signed by the
following persons on behalf of the Partnership and in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Date
--------- ----
<S> <C> <C>
/s/ William R. Fitzgerald March 4, 1999
----------------------------------------
William R. Fitzgerald
President - TCI Ventures Four, Inc.
(Principal Executive Officer)
/s/ Leo J. Hindery, Jr. March 4, 1999
----------------------------------------
Leo J. Hindery, Jr.
Director - TCI Ventures Four, Inc.
/s/ Stephen M. Brett March 4, 1999
----------------------------------------
Stephen M. Brett
Vice President and Secretary and
Director - TCI Ventures Four, Inc.
/s/ Bernard W. Schotters March 4, 1999
----------------------------------------
Bernard W. Schotters
Vice President and Treasurer - TCI Ventures Four, Inc.
(Chief Financial Officer)
</TABLE>
IV-3
<PAGE>
<TABLE>
<CAPTION>
Signature Date
--------- ----
<S> <C>
/s/ Ann M. Koets March 4, 1999
---------------------------------------
Ann M. Koets
Vice President - TCI Ventures Four, Inc.
(Principal Accounting Officer)
/s/ Allan B. Rothschild March 4, 1999
---------------------------------------
Allan B. Rothschild
President and Director - Integrated Cable Corp. IV (Principal
Executive Officer)
/s/ David King March 4, 1999
---------------------------------------
David King
Executive Vice President and Director - Integrated Cable Corp. IV
/s/ W. Edward Scheetz March 4, 1999
---------------------------------------
W. Edward Scheetz
Director - Integrated Cable Corp. IV
/s/ David Hamamoto March 4, 1999
---------------------------------------
David Hamamoto
Director - Integrated Cable Corp. IV
/s/ Dallas E. Lucas March 4, 1999
---------------------------------------
Dallas E. Lucas
Director - Integrated Cable Corp. IV
</TABLE>
IV-4
<PAGE>
AMERICAN CABLE TV INVESTORS 4, LTD.
EXHIBIT INDEX
-------------
The following exhibits are incorporated by reference herein (according to the
number assigned to them in Item 601 of Regulation S-K), as noted:
3 - Articles of Incorporation and Bylaws:
Limited Partnership Agreement, incorporated by reference from Exhibit A
to Prospectus filed as part of Post-effective Amendment No. 1 to
Registration Statement 33-2042.
Limited Partnership Agreement of General Partner, incorporated by
reference Registration Statement 33-10707.
10 - Material Contracts:
Management Agreement between Cablevision and the Partnership incorporated
by reference to the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1987 (Commission File No. 0-15745).
Acquisition and Disposition Services Agreement between Cablevision and
the Partnership, incorporated by reference to the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1987 (Commission
File No. 015745).
Consulting Agreement re: ACT 4 between Cablevision and Presidio,
incorporated by reference to the Partnership's Annual Report on Form 10-
K for the year ended December 31, 1987 (Commission File No. 0-15745).
Asset Purchase Agreement by and among American Cable TV Investors 4, Ltd.
and Century Communications Corp. and Citizens Utilities Company dated as
of February 26, 1993, incorporated by reference to the Partnership's
Current Report on Form 8-K dated March 5, 1993.
First Amendment, dated as of June 21, 1993, to Asset Purchase Agreement,
dated as of February 26, 1993 by and among American Cable TV Investors
4, Ltd. and Century Communications Corp. and Citizens Utilities Company,
incorporated by reference to the Partnership's Annual Report on Form 10-
K for the year ended December 31, 1993.
Second Amendment, dated as of November 30, 1993, to Asset Purchase
Agreement, dated as of February 26, 1993, by and among American Cable TV
Investors 4, Ltd. and Century Communications Corp. and Citizens
Utilities Company, incorporated by reference to the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1993.
Letter Agreement, dated January 24, 1995, to Asset Purchase Agreement
dated as of February 26, 1993, by and among American Cable TV Investors
4, Ltd. and Century Communications Corp. and Citizens Utilities Company,
incorporated by reference to the Partnership's Annual Report on Form 10-
K for the year ended December 31, 1994.
27 - Financial Data Schedule.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 7,405
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,621
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,435
<TOTAL-LIABILITY-AND-EQUITY> 9,621
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 211
<INCOME-TAX> 0
<INCOME-CONTINUING> 211
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 211
<EPS-PRIMARY> 1.32<F1>
<EPS-DILUTED> 0
<FN>
<F1>EPS-PRIMARY REPRESENTS NET EARNINGS PER LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
