<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 1996
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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: 0-16063
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NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP
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(Exact Name of Registrant as Specified in Charter)
Washington 91-1318471
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(State of Organization) (IRS 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 I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP
BALANCE SHEETS - (Unaudited)
(Prepared by the Managing General Partner)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
ASSETS
<S> <C> <C>
Cash $ 249,027 $ 348,690
Accounts receivable 272,384 288,090
Prepaid expenses 101,181 86,771
Property and equipment, net of accumulated
depreciation of $11,573,869 and $11,168,699,
respectively 6,274,150 6,529,519
Intangible assets, net of accumulated
amortization of $10,916,505 and $10,663,726,
respectively 7,330,189 7,525,601
----------- -----------
Total assets $14,226,931 $14,778,671
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses $ 642,393 $ 627,210
Due to managing general partner and affiliates 182,488 108,344
Converter deposits 129,953 131,696
Subscriber prepayments 300,479 414,790
Notes payable 13,422,037 13,914,689
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Total liabilities 14,677,350 15,196,729
----------- -----------
Partners' equity:
General Partners:
Contributed capital, net (37,565) (36,812)
Accumulated deficit (94,115) (94,544)
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(131,680) (131,356)
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Limited Partners:
Contributed capital, net 8,998,444 9,072,984
Accumulated deficit (9,317,183) (9,359,686)
----------- -----------
(318,739) (286,702)
----------- -----------
Total partners' equity (450,419) (418,058)
----------- -----------
Total liabilities and partners' equity $14,226,931 $14,778,671
=========== ===========
</TABLE>
The accompanying note to unaudited financial statements is an integral part of
these statements
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<PAGE> 3
NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS - (Unaudited)
(Prepared by the Managing General Partner)
<TABLE>
<CAPTION>
For the three months ended March 31,
--------------------------------------
1996 1995
----------------- -----------------
<S> <C> <C>
Service revenues $2,255,270 $2,058,387
Expenses:
Operating 210,793 214,477
General and administrative (including
$360,424 and $326,365 to affiliates
in 1996 and 1995, respectively) 520,675 494,320
Programming 500,587 451,653
Depreciation and amortization 657,950 644,986
---------- ----------
1,890,005 1,805,436
---------- ----------
Income from operations 365,265 252,951
Other income (expense):
Interest expense (324,482) (261,951)
Interest income 2,149 2,641
Gain on disposal of assets - -
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(322,333) (259,310)
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Net income (loss) $ 42,932 (6,359)
========== ==========
Allocation of net income (loss):
General Partners $ 429 $ (64)
========== ==========
Limited Partners $ 42,503 $ (6,295)
========== ==========
Net income (loss) per limited partnership unit:
(29,816 units) $ 1 $ (0)
========== ==========
Net income (loss) per $1,000 investment $ 3 $ (0)
========== ==========
</TABLE>
The accompanying note to unaudited financial statements is an integral part
of these statements
3
<PAGE> 4
NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS - (Unaudited)
(Prepared by the Managing General Partner)
<TABLE>
<CAPTION>
For the three months ended March 31,
--------------------------------------
1996 1995
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 42,933 $ (6,359)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation and amortization 657,950 644,986
(Increase) decrease in operating assets:
Accounts receivable 15,706 196
Prepaid expenses (14,410) (8,997)
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses 15,183 (49,302)
Due to managing general partner and affiliates 74,144 34,059
Converter deposits (1,743) (315)
Subscriber prepayments (114,311) (112,339)
--------- ---------
Net cash from operating activities 675,452 501,929
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (149,803) (172,557)
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Net cash used in investing activities (149,803) (172,557)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on borrowings (492,652) (392,819)
Distributions to partners (75,293) (75,293)
Loan fees and other costs incurred (57,367) (3,433)
Repurchase of limited partner interest -- --
--------- ---------
Net cash used in financing activities (625,312) (471,545)
--------- ---------
DECREASE IN CASH (99,663) (142,173)
CASH, beginning of period 348,690 377,075
--------- ----------
CASH, end of period $ 249,027 $ 234,902
========= ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $308,381 $ 225,500
======== ==========
</TABLE>
The accompanying note to unaudited financial statements is an integral part
of these statements
4
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NORTHLAND CABLE PROPERTIES SIX 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, 1996 and December 31, 1995, its Statements of
Operations for three months ended March 31, 1996 and 1995, and its Statements of
Cash Flows for the three months ended March 31, 1996 and 1995. 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
Revenues totaled $2,255,270 for the three months ended March 31, 1996,
representing an increase of approximately 10% over the same period in 1995. Of
these revenues, $1,653,475 (73%) was derived from basic service charges,
$222,639 (10%) from premium services, $97,022 (4%) from tier services, $65,674
(3%) from installation charges, $81,244 (4%) from service maintenance contracts
and $135,216 (6%) from other sources. The revenue growth is due to rate
increases placed into effect during the fourth quarter 1995, and the acquisition
of 700 subscribers in December 1995.
As of March 31, 1996 , the Partnership's systems served approximately 24,400
basic subscribers, 7,500 premium subscribers and 5,100 tier subscribers.
Operating expenses totaled $210,792 for the three months ended March 31, 1996 ,
representing an decrease of approximately 2% over the same period in 1995. This
is mainly attributable to lower system maintenance costs, partially offset by
increases in salary and benefit costs.
General and administrative expenses totaled $520,675 for the three months ended
March 31, 1996 , representing an increase of 5% over the same period in 1995.
This is due to increased management, copyright and franchise fees, all of which
coincide with revenue growth noted above, and increases in certain wage and
benefit costs.
Programming expenses totaled $500,587 for the three months ended March 31,
1996, representing a 11% increase over the same period in 1995. This is due to
increases in costs charged by various program suppliers and additional fees
associated with the launch of new channels in various systems.
Depreciation and amortization expense increased 2% as compared to the same
period in 1995. This is mainly due to depreciation on new assets placed into
service during the last quarter of 1995 and the first quarter of 1996, offset by
assets becoming fully depreciated during the first quarter of 1996.
Interest expense for the three months ended March 31, 1996 increased
approximately 24% as compared to the same period in 1995. The average bank debt
decreased from $13,991,750 during the first quarter of 1995 to $13,627,071
during the first quarter of 1996, however, the Partnership's effective interest
rate increased from 7.49% in 1995 to 9.52% in 1996.
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<PAGE> 7
Liquidity and Capital Resources
The Partnership's primary sources of liquidity are cash flow provided from
operations and a $2,000,000 revolving credit line, of which approximately
$1,200,000 was outstanding as of March 31, 1996 . 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
3.25 to 1. As of March 31, 1996 the Partnership was in compliance with its
required financial covenants.
As of the date of this filing, the balance under the credit facility is
$13,383,321. Certain fixed rate agreements in effect as of December 30, 1995
expired during the first quarter of 1996 and the Partnership entered into new
agreements. As of the date of this filing, interest rates on the credit facility
were as follows: $1,400,000 fixed at 7.4375%, expiring May 29, 1996; $11,920,000
fixed at 7.61% under the terms of an interest rate swap agreement with its
lender expiring March 28, 1997. The balance of $63,321 bears interest at the
prime rate plus 1/2% (currently 8.75%). The above rates include a margin paid to
the lender based on overall leverage, and may increase or decrease as the
Partnership's leverage fluctuates.
Capital Expenditures
During the third quarter of 1995, the Partnership incurred approximately
$150,000 in capital expenditures. These expenditures included line extensions in
various systems, advertising insertion equipment in the Kosciusko, MS system, a
tier launch in the Forest, MS system and storm damage repairs in the Highlands,
NC system.
Planned expenditures for the balance of 1996 include additional line extensions
in various systems, deployment of fiber in the Starkville, MS systems and
various channel launches
Effects of Regulation
On October 5, 1992, Congress enacted the Cable Television Consumer Protection
and Competition Act of 1992 (the "1992 Act"). The 1992 Act and subsequent
revisions and rulemakings substantially re-regulated the cable television
industry. The regulatory aspects of the 1992 Act included giving the local
franchising authorities and the FCC the ability to regulate rates for basic
services, equipment charges and additional CPST's when certain conditions were
met. All of the Partnership's cable systems were potentially subject to rate
regulation. The most significant impact of rate regulation was the inability to
raise rates for regulated services as costs of operation rose during an FCC
imposed rate freeze from April 5, 1993 to May 15, 1994. This has contributed to
operating margins before depreciation and amortization declining from 48% for
the twelve months ended December 31, 1993 to 46% for the same period in 1994.
7
<PAGE> 8
On May 5, 1995, the FCC announced the adoption of a simplified set of rate
regulation rules that will apply to "small" cable systems, defined as a system
serving 15,000 or fewer subscribers, that are owned by "small" companies,
defined as a company serving 400,000 or fewer subscribers. Under the FCC's
definition, the Partnership is a "small" company and each of the Partnership's
cable systems are "small" systems. Maximum permitted rates under these revised
rules is dependent on several factors including the number of regulated channels
offered, net asset basis of plant and equipment used to deliver regulated
services, the number of subscribers served and a reasonable rate of return.
On February 8, 1996, the Telecommunications Act of 1996 (the 1996 Act) became
law. The 1996 Act will eliminate all rate controls on CPST's of small cable
systems, defined by the 1996 Act as systems serving fewer than 50,000
subscribers owned by operators serving fewer than 1% of all subscribers in the
United States (approximately 600,000 subscribers). All of the Partnership's
cable systems qualify as small cable systems. Many of the changes called for by
the 1996 Act will not take effect until the FCC issues new regulations, a
process that could take from several months to a few years depending on the
complexity of the required changes and the statutory time limits. Because of
this the full impact of the 1996 Act on the Partnership's operations cannot be
determined at this time.
As of the date of this filing, the Partnership has received notification that
local franchising authorities with jurisdiction over approximately 36% of the
Partnership's subscribers have elected to certify. Based on management's
analysis, the rates charged by these systems are within the maximum rates
allowed under FCC rate regulations.
8
<PAGE> 9
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,
1996 .
9
<PAGE> 10
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 SIX LIMITED PARTNERSHIP
BY: Northland Communications Corporation,
Managing General Partner
Dated: 5-14-96 BY: /s/ RICHARD I. CLARK
------------- -----------------------------------------
Richard I. Clark
(Vice President/Treasurer)
Dated: 5-14-96 By: /s/ GARY S. JONES
------------- -----------------------------------------
Gary S. Jones
(Vice President)
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 249027
<SECURITIES> 0
<RECEIVABLES> 272384
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 622592
<PP&E> 17848019
<DEPRECIATION> 11573869
<TOTAL-ASSETS> 14226931
<CURRENT-LIABILITIES> 1255313
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (450419)
<TOTAL-LIABILITY-AND-EQUITY> 14226931
<SALES> 0
<TOTAL-REVENUES> 2255270
<CGS> 0
<TOTAL-COSTS> 210793
<OTHER-EXPENSES> 1679212
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 324482
<INCOME-PRETAX> 42932
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42932
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
