<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 rates period ended MARCH 31, 1998
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 Number: 0-16063
NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Washington 91-1318471
- --------------------------------------------------------------------------------
(State of Organization) (IRS Employer Identification No.)
1201 Third Avenue, Suite 3600, Seattle, Washington 98101
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(206) 621-1351
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(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 [ ]
This filing contains___pages. Exhibits index appears on page____.
<PAGE> 2
PART 1 - 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,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Cash $ 1,046,068 $ 173,034
Accounts receivable 947,544 400,963
Prepaid expenses 128,584 262,758
Property and equipment, net of accumulated
depreciation of $13,796,374 and $13,328,036,
respectively 13,312,748 6,539,222
Intangible assets, net of accumulated
amortization of $12,973,579 and $12,692,683,
respectively 19,544,704 6,233,409
------------ ------------
Total assets $ 34,979,648 $ 13,609,386
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses $ 1,661,390 $ 957,085
Due to managing general partner and affiliates 202,697 154,836
Converter deposits 103,169 92,093
Subscriber prepayments 463,168 409,952
Notes payable 31,355,934 10,899,421
------------ ------------
Total liabilities 33,786,358 12,513,387
------------ ------------
Partners' equity:
General Partners:
Contributed capital, net (37,565) (37,565)
Accumulated deficit (77,557) (78,570)
------------ ------------
(115,122) (116,135)
------------ ------------
Limited Partners:
Contributed capital, net 8,986,444 8,990,444
Accumulated deficit (7,678,032) (7,778,310)
------------ ------------
1,308,412 1,212,134
------------ ------------
Total partners' equity 1,193,290 1,095,999
------------ ------------
Total liabilities and partners' equity $ 34,979,648 $ 13,609,386
============ ============
</TABLE>
The accompanying note to unaudited financial statements
is an integral part of these statements
2
<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,
------------------------------------
1998 1997
---------------- -------------
<S> <C> <C>
Service revenues $ 3,572,000 $ 2,338,860
Expenses:
Operating 277,584 204,241
General and administrative (including
$496,292 and $376,890 to affiliates
in 1998 and 1997, respectively) 840,108 568,392
Programming 984,154 561,806
Depreciation and amortization 749,232 666,955
----------- -----------
2,851,078 2,001,394
----------- -----------
Income from operations 720,922 337,466
Other income (expense):
Interest expense (620,964) (211,974)
Interest income 1,333 2,217
Other income -- --
Gain/loss on sale of assets -- 179
----------- -----------
(619,631) (209,578)
----------- -----------
Net income $ 101,291 $ 127,888
=========== ===========
Allocation of net income
General Partners $ 1,013 $ 1,279
=========== ===========
Limited Partners $ 100,278 $ 126,609
=========== ===========
Net income per limited partnership unit:
(29,792 units and 29,816 units, respectively) $ 3 $ 4
=========== ===========
Net income per $1,000 investment $ 6 $ 8
=========== ===========
</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,
-----------------------------------
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 101,291 $ 127,888
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 749,232 666,955
(Increase) decrease in operating assets:
(Gain) Loss on sale of assets -- (179)
Accounts receivable (546,581) 40,783
Prepaid expenses 134,174 (9,002)
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses 704,305 15,230
Due to managing general partner and affiliates 47,861 61,539
Converter deposits 11,077 (4,039)
Subscriber prepayments 53,216 (127,636)
------------ ------------
Net cash from operating activities 1,254,575 771,539
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (308,454) (181,208)
Acquisition of cable systems (20,500,000) --
Increase in intangibles -- (9,670)
------------ ------------
Net cash used in investing activities (20,808,454) (190,878)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on borrowings -- (593,800)
Proceeds from borrowings 20,456,513 --
Loan fees and other costs incurred (25,600) --
Repurchase of limited partner interest (4,000) --
------------ ------------
Net cash used in financing activities 20,426,913 (593,800)
------------ ------------
DECREASE IN CASH 873,034 (13,139)
CASH, beginning of period 173,034 414,975
------------ ------------
CASH, end of period $ 1,046,068 $ 401,836
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 594,367 $ 209,227
============ ============
</TABLE>
4
<PAGE> 5
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, 1998 and December 31, 1997, its Statements of
Operations for the three months ended March 31, 1998 and 1997, and its
Statements of Cash Flows for the three months ended March 31, 1998 and 1997.
Results of operations for these periods are not necessarily indicative of
results to be expected for the full year.
5
<PAGE> 6
PART I (continued)
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Revenues totaled $3,572,000 for the three months ended March 31, 1998,
representing an increase of approximately 53% over the same period in 1997. Of
these revenues, $2,611,942 (73%) was derived from basic service charges,
$402,280 (11%) from premium services, $150,235 (4%) from tier services, $77,145
(2%) from installation charges, $98,109 (3%) from service maintenance contracts,
$100,652 (3%) from advertising, and $131,637 (4%) from other sources. The
January 1998 addition of approximately 11,300 subscribers acquired in the
purchase of cable systems serving the communities of Bennettsville, Barnwell,
Bamberg and Allendale, South Carolina increased revenues 49%. The remaining 4%
of the revenue growth is attributable to rate increases placed into effect in
August of 1997.
As of March 31, 1998, the Partnership's systems served approximately 35,400
basic subscribers, 18,700 premium subscribers and 7,200 tier subscribers.
Operating expenses totaled $277,584 for the three months ended March 31, 1998,
representing an increase of approximately 36% over the same period in 1997. The
acquisition of the Bennettsville, Barnwell, Bamberg and Allendale, South
Carolina systems increased expenses 42%. The expenses for the other systems
decreased by approximately 6% primarily related to a reduction in regional
management costs.
General and administrative expenses totaled $840,108 for the three months ended
March 31, 1998, representing an increase of approximately 48% over the same
period in 1997. The acquisition of the Bennettsville, Barnwell, Bamberg and
Allendale, South Carolina systems increased expenses 56%. The expenses for the
remaining systems decreased approximately 8% due to a one time correction to
copyright fees, improved bad debt collections and reduced legal fees.
Programming expenses totaled $984,154 for the three months ended March 31, 1998,
representing an increase of approximately 75% over the same period in 1997.
Approximately 11% of the increase is due to increased costs charged by various
program suppliers, with the acquisition of the Bennettsville, Barnwell, Bamberg
and Allendale, South Carolina systems resulting in the remaining 64% increase.
Depreciation and amortization expenses totaled $749,232 for the three months
ended March 31, 1998, representing an increase of approximately 12% over the
same period in 1997. Excluding the effects of the acquisition of the
Bennettsville, Barnwell, Bamberg and Allendale, South Carolina systems,
depreciation and amortization decreased by 20% as a result of assets becoming
fully depreciated and amortized in 1997, offset by depreciation and amortization
on
6
<PAGE> 7
current year purchases of plant and equipment. The addition of assets acquired
in the purchase of the Bennettsville, Barnwell, Bamberg and Allendale, South
Carolina systems increased depreciation and amortization expense 32%.
Interest expense for the three months ended March 31, 1998 increased 193% from
the same period in 1997. The average bank debt increased from $11,920,821 during
the first quarter of 1997 to $31,372,848 during the first quarter of 1998, and
the Partnership's effective interest rate increased from 7.11% in 1997 to 7.92%
in 1998.
Liquidity and Capital Resources
The Partnership's primary sources of liquidity are cash flow provided from
operations and an $8,000,000 revolving credit line, of which approximately
$6,200,000 was outstanding as of March 31, 1998. 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 senior debt to annualized operating cash flow ratio of 5.5 to 1, a
fixed charge ratio of 1.1 to 1, and an annual operating cash flow to interest
expense ratio of less than 2.0 to 1. As of March 31, 1998, the Partnership was
in compliance with its required financial covenants.
As of the date of this filing, the balance under the credit facility is
$31,372,848. Certain fixed rate agreements expired during the first quarter of
1998. As of the date of this filing, interest rates on the credit facility were
as follows: $23,000,000 fixed at 8.02% under the terms of an interest rate swap
agreement with the Partnership's lender expiring December 31, 1999; $6,200,000
fixed at 8.00%, expiring June 30, 1998; $2,000,000 fixed at 7.94%, expiring June
30, 1998. The balance of $172,848 bears interest at prime plus 1.00% (currently
9.50%). The above includes 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 first quarter of 1998, the Partnership incurred approximately
$310,000 in capital expenditures. These expenditures included a tap audit in the
Starkville, MS system, the continuation of a system upgrade to 450 MHz in the
Kosciusko, MS system, the purchase of a trencher and production van in the
Forest, MS system, drop replacements in the Philadelphia, MS system, and the
initial phase of a 450 MHz upgrade in the Barnwell, SC system.
Planned expenditures for the balance of 1998 include line extensions in various
systems, the continuation of system upgrades to 450 MHz in the Kosciusko, MS and
Barnwell, SC systems, deployment of additional fiber in the Highlands, NC
system, and the installation of a fiber optic backbone in the Starkville, MS
system.
7
<PAGE> 8
Acquisition
On January 2, 1998, the Partnership purchased cable television systems serving
approximately 11,400 subscribers in and around the communities of Allendale,
Bamberg, Barnwell and Bennettsville, all in the state of South Carolina. The
purchase price of these systems was $20,500,000.
The Partnership borrowed $31,372,848 under an amended and restated revolving
credit and term loan agreement with its lender. The Partnership used the
proceeds to refinance existing bank debt and finance the acquisition of the
South Carolina cable systems.
Pro forma operating results of the Partnership for the quarter ending March 31,
1997, assuming the acquisition of the Allendale, Bamberg, Barnwell and
Bennettsville, South Carolina systems had been completed as of the beginning of
the period, are as follows:
<TABLE>
<CAPTION>
1997
----------
<S> <C>
Revenue $3,486,000
==========
Net income $ (222,000)
==========
Net income per limited
partnership unit $ (7)
==========
</TABLE>
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)
REPORTS ON FORM 8-K.
(i) Form 8-K dated January 2, 1998, was filed January 15, 1998
reporting the acquisition of the Allendale, Bamberg, Barnwell
and Bennettsville, SC systems.
(ii) Form 8-K/A dated January 2, 1998, was filed March 13, 1998
reporting the acquisition of the Allendale, Bamberg, Barnwell
and Bennettsville, SC systems.
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: May 11, 1998 BY: /s/ RICHARD I. CLARK
------------ --------------------------------------------
Richard I. Clark
(Vice President/Treasurer)
Dated: May 11, 1998 BY: /s/ GARY S. JONES
------------ --------------------------------------------
Gary S. Jones
(Vice President)
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,046,068
<SECURITIES> 0
<RECEIVABLES> 947,544
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 27,109,122
<DEPRECIATION> 13,796,374
<TOTAL-ASSETS> 34,979,648
<CURRENT-LIABILITIES> 33,786,358
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,193,290
<TOTAL-LIABILITY-AND-EQUITY> 34,979,648
<SALES> 3,572,000
<TOTAL-REVENUES> 3,572,000
<CGS> 0
<TOTAL-COSTS> 2,851,078
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 620,964
<INCOME-PRETAX> 101,291
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 101,291
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
