<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
---------------- ---------------
Commission File Number 0-14093
CENCOM CABLE INCOME PARTNERS, L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1415278
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
12444 Powerscourt Drive #400
St. Louis, Missouri 63131
---------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(Registrant's telephone number, including area code) (314) 965-0555
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
--- ---
<PAGE> 2
CENCOM CABLE INCOME PARTNERS, L.P.
FORM 10-Q - FOR THE QUARTER ENDED SEPTEMBER 30, 1996
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
a. Statement of Assets and Liabilities in Liquidation - September 30, 1996 3
b. Statement of Changes in Assets and Liabilities in liquidation -
For the Three Months Ended September 30, 1996 4
c. Statement of Changes in Assets and Liabilities in Liquidation -
For the Period From March 29, 1996 to September 30, 1996 5
d. Balance Sheets - March 28, 1996 and December 31, 1995 6
e. Statements of Operations - For the Periods From January 1, 1996
through March 28, 1996, and Three and Nine Months Ended September 30, 1995 7
f. Statement of Partners' Capital (Deficit) - For the Period From
January 1, 1996 through March 28, 1996 8
g. Statements of Cash flows - For the Periods From January 1, 1996
through March 28, 1996, and Nine Months Ended September 30, 1995 9
h. Notes to Financial Statements 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 12
Part II. Other Information
Item 1. Legal Proceedings 16
Item 2. Change 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 - None -
Signature Page 17
</TABLE>
Page 2
<PAGE> 3
CENCOM CABLE INCOME PARTNERS, L.P.
STATEMENT OF ASSETS AND LIABILITIES IN LIQUIDATION
AS OF SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS, at estimated realizable values:
Cash and cash equivalents $ 15,073,624
------------
LIABILITIES, at estimated settlement amounts:
Payable to Purchasing Affiliates, net 11,467
Accrued costs of liquidation 1,371,354
------------
Total liabilities 1,382,821
------------
NET ASSETS IN LIQUIDATION AS OF SEPTEMBER 30, 1996 $ 13,690,803
============
</TABLE>
The accompanying notes are an integral part of this statement.
Page 3
<PAGE> 4
CENCOM CABLE INCOME PARTNERS, L.P.
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES IN LIQUIDATION
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Payable to
Purchasing
Cash and Affiliates, Accrued Costs Net Assets
Cash Equivalents net of Liquidation in Liquidation
---------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
BALANCE, MARCH 31, 1996 $ 140,088,844 $(2,767,084) $ (904,455) $ 136,417,305
Cash distributions to Limited Partner (120,142,045) -- -- (120,142,045)
Cash distributions to General Partner (1,597,338) -- -- (1,597,338)
Cash transferred to Purchasing Affiliates (2,350,315) 2,350,315 -- 0
Payment of liquidation costs (351,258) -- 351,258 0
Transfer of General Partner note to
Purchasing Affiliates -- (753,556) -- (753,556)
Payment of management fees on behalf of
Purchasing Affiliates (742,089) 742,089 -- 0
Increase in liquidation costs (provision) -- -- (200,000) (200,000)
Interest income 648,509 -- -- 648,509
------------- ----------- ----------- -------------
BALANCE, JUNE 30, 1996 $ 15,554,308 $ (428,236) $ (753,197) $ 14,372,875
Cash transferred to Purchasing Affiliates (416,769) 416,769 -- 0
Payment of liquidation costs (381,843) -- 381,843 0
Increase in liquidation costs (provision) -- -- (1,000,000) (1,000,000)
Interest income 317,928 -- -- 317,928
------------- ----------- ----------- -------------
BALANCE, SEPTEMBER 30, 1996 $ 15,073,624 $ (11,467) $(1,371,354) $ 13,690,803
============= =========== =========== =============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
Page 4
<PAGE> 5
CENCOM CABLE INCOME PARTNERS, L.P.
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
FOR THE PERIOD FROM MARCH 29, 1996 TO SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<S> <C>
NET PROCEEDS FROM PURCHASING AFFILIATES $ 211,321,760
Less - proceeds representing interest to partners (5,202,207)
ASSETS SOLD TO AND LIABILITIES ASSUMED BY THE PURCHASING
AFFILIATES AS OF THE CLOSING DATE:
Cash and cash equivalents (3,351,678)
Accounts receivable, net (948,144)
Prepaid expenses and other (161,771)
Note receivable from General Partner (753,556)
Property and equipment, net (39,506,499)
Franchise costs, net (2,983,401)
Accounts payable and accrued expenses 3,052,296
Payables to General Partner and affiliate 727,882
Subscriber deposits and prepayments 281,779
Deferred revenue 183,044
--------------
Net assets sold (43,460,048)
--------------
Gain on Sale of Assets 162,659,505
--------------
Interest paid by the Purchasing Affiliates 5,202,207
--------------
CHANGE IN ASSETS AND LIABILITIES IN LIQUIDATION:
Decrease in long-term debt 74,000,000
Cash distribution to Limited Partners (120,142,045)
Distribution to General Partner (2,350,894)
Cash received from investments 966,437
Increase in accrued costs of liquidation (1,546,494)
--------------
(49,072,996)
--------------
REPAYMENT OF LONG-TERM DEBT (74,000,000)
--------------
Net change in assets and liabilities between March 29,
1996, and September 30, 1996 44,788,716
PARTNERS' CAPITAL (DEFICIT) AS OF MARCH 29, 1996:
General Partner 905,039
Limited Partners (32,002,952)
--------------
NET ASSETS IN LIQUIDATION AS OF SEPTEMBER 30, 1996 $ 13,690,803
==============
</TABLE>
The accompanying notes are an integral part of this statement.
Page 5
<PAGE> 6
CENCOM CABLE INCOME PARTNERS, L.P.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 28, December 31,
1996* 1995
---------------- ----------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,351,678 $ 4,461,218
Accounts receivable, net 948,144 918,107
Prepaid expenses and other 161,771 187,914
---------------- ----------------
Total current assets 4,461,593 5,567,239
PROPERTY AND EQUIPMENT 39,506,499 40,588,953
FRANCHISE COSTS 2,983,401 3,315,819
---------------- ----------------
$ 46,951,493 $ 49,472,011
================ ================
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 74,000,000 $ 76,500,000
Accounts payable and accrued expenses 3,052,296 4,115,515
Payable to General Partner and affiliate 727,882 718,507
Accrued costs of liquidation 557,961 557,961
Subscriber deposits and prepayments 281,779 300,834
---------------- ----------------
Total current liabilities 78,619,918 82,192,817
---------------- ----------------
DEFERRED REVENUE 183,044 187,957
---------------- ----------------
PARTNERS' CAPITAL (DEFICIT):
General Partner 905,039 905,039
Limited Partners (150,000 units
authorized; 149,204 units issued and
outstanding) (32,002,952) (33,060,246)
Note receivable from General Partner (753,556) (753,556)
---------------- ----------------
Total Partners' capital (deficit) (31,851,469) (32,908,763)
---------------- ----------------
$ 46,951,493 $ 49,472,011
================ ================
</TABLE>
*Prior to liquidation basis adjustments.
The accompanying notes are an integral part of these balance sheets.
Page 6
<PAGE> 7
CENCOM CABLE INCOME PARTNERS, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Period from
January 1, 1996 For the Three For the Nine
through March 28, Months Ended Months Ended
1996* September 30, 1995 September 30, 1995
------------------- ------------------ ------------------
<S> <C> <C> <C>
SERVICE REVENUES $ 11,878,555 $11,375,803 $33,537,549
------------- ----------- -----------
OPERATING EXPENSES:
Operating, general and administrative 6,004,464 5,551,175 16,317,650
Liquidation costs 157,147 431,617 750,322
Depreciation and amortization 2,816,999 2,838,800 8,645,141
Management Fees - Related Party 594,268 568,777 1,676,873
------------- ----------- -----------
9,572,878 9,390,369 27,389,986
------------- ----------- -----------
Income from operations 2,305,677 1,985,434 6,147,563
------------- ----------- -----------
INTEREST INCOME (EXPENSE):
Interest income 42,351 31,276 104,642
Interest expense (1,290,734) (1,360,949) (3,978,536)
------------- ----------- -----------
(1,248,383) (1,329,673) (3,873,894)
------------- ----------- -----------
Net income $ 1,057,294 $ 655,761 $ 2,273,669
============= =========== ===========
NET INCOME PER LIMITED PARTNERSHIP
UNIT $ 7.09 $ 4.40 $ 15.24
============= =========== ===========
AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 149,204 149,204 149,204
============= =========== ===========
</TABLE>
* Operating activity for the period from January 1, 1996, through March 28,
1996, is prior to liquidation basis adjustments.
The accompanying notes are an integral part of these statements
Page 7
<PAGE> 8
CENCOM CABLE INCOME PARTNERS, L.P.
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
FOR THE PERIOD FROM JANUARY 1, 1996 THROUGH MARCH 28, 1996
(Unaudited)
<TABLE>
<CAPTION>
Note
Receivable
From
General Limited General
Partner Partners Partner Total
------- -------- ---------- -----
<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 $905,039 $ (33,060,246) $(753,556) $ (32,908,763)
Net income -- 1,057,294 -- 1,057,294
-------- ------------- ---------- -------------
BALANCE, MARCH 28, 1996* $905,039 $ (32,002,952) $(753,556) $ (31,851,469)
======== ============= ========== =============
</TABLE>
* Operating activity for the period from January 1, 1996, through March 28,
1996, is prior to liquidation basis adjustments.
The accompanying notes are an integral part of this statement.
Page 8
<PAGE> 9
CENCOM CABLE INCOME PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Period from For the Nine
January 1, 1996 through Months Ended
March 28, 1996* September 30, 1995
----------------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,057,294 $ 2,273,669
----------- -----------
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 2,816,999 8,645,141
Gain on sale of property and equipment -- (2,500)
Changes in assets and liabilities-
Accounts receivable, net (30,037) (250,259)
Prepaid expenses and other 26,143 256,348
Accounts payable and accrued expenses (1,063,219) (833,155)
Payable to General Partner and affiliate 9,375 688,681
Subscriber deposits and prepayments (19,055) (57,713)
Deferred revenue (4,913) 163,812
----------- -----------
Net cash provided by operating activities 2,792,587 10,884,024
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net (1,402,127) (6,082,716)
Proceeds from sale of property and equipment -- 2,500
Other -- (44,200)
----------- -----------
Net cash used in investing activities (1,402,127) (6,124,416)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Limited Partners' distributions -- (11,190,300)
Borrowings of long-term debt -- 4,700,000
Repayments on long-term debt (2,500,000) (500,000)
----------- -----------
Net cash used in financing activities (2,500,000) (6,990,300)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,109,540) (2,230,692)
CASH AND CASH EQUIVALENTS, beginning of
period 4,461,218 4,542,754
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 3,351,678 $ 2,312,062
=========== ===========
</TABLE>
* Operating activity for the period from January 1, 1996, through March 28,
1996, is prior to liquidation basis adjustments.
The accompanying notes are an integral part of these statements.
Page 9
<PAGE> 10
CENCOM CABLE INCOME PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION:
Cencom Cable Income Partners, L.P., a Delaware limited partnership (the
"Partnership"), was formed on July 25, 1986, for the purpose of acquiring and
operating existing cable television systems. The General Partner, Cencom
Properties, Inc., purchased the General Partner interest from Cencom Holdings,
Inc. in July 1994. Cencom Properties, Inc. is an indirect, wholly-owned
subsidiary of Charter Communications, Inc. (Charter).
2. BASIS OF PRESENTATION:
The accompanying unaudited financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.
On March 29, 1996, the Partnership consummated the sale of all of its cable
television systems (see Note 4). As a result of this transaction, the
Partnership changed its basis of accounting to the liquidation basis on March
29, 1996. Accordingly, the assets in the accompanying unaudited statement of
assets and liabilities in liquidation as of September 30, 1996, have been
stated at estimated realizable values and the liabilities have been reflected
at estimated settlement amounts. The Payable to Purchasing Affiliates, net
represents the cash balance in cash accounts which were not transferred to
Purchasing Affiliates at the date of closing. Net assets in liquidation as of
September 30, 1996, in the accompanying unaudited statement of assets and
liabilities in liquidation, represents the estimated distribution to be made to
the Limited Partners and the General Partner. On April 15, 1996, the
Partnership made a pro rata distribution of approximately $122.5 million to the
Limited Partners and the General Partner. The amount remaining after this
partial distribution represents a holdback reserve from which the Partnership
will pay any remaining obligations and contingencies. At September 30, 1996,
such estimated amounts are reported as accrued costs of liquidation. All
amounts held back but not applied to pay Partnership liabilities will be
distributed to the Partners, net of required income tax withholding.
The accompanying unaudited balance sheet as of March 28, 1996, and the
unaudited statement of operations and cash flows for the period from January 1,
1996, through March 28, 1996, report the Partnership's financial position and
results of operations using accounting principles applicable to an entity under
the "going concern" basis of accounting prior to the adoption of the
liquidation basis of accounting.
3. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS:
The accompanying financial statements are unaudited; however, in the opinion of
management, such statements include all adjustments necessary for a fair
presentation of the results for the periods presented. The interim financial
statements should be read in conjunction with the financial statements and
notes thereto contained in the Partnership's Form 10-K for the year ended
December 31, 1995. Interim results are not necessarily indicative of results
for a full year.
Page 10
<PAGE> 11
4. SALE TRANSACTION:
On March 29, 1996, the Partnership consummated the sale of all of its cable
television systems to certain affiliates (the "Purchasing Affiliates") of the
General Partner. The sale was approved by a majority of the Limited Partners,
following the distribution of a Disclosure Statement dated October 3, 1995, as
supplemented on November 1, 1995, and on December 18, 1995 (collectively
referred to as the "Disclosure Statement"). The purchase price, as outlined in
the Disclosure Statement, was $211,050,000 less working capital items through
July 1, 1995 and liquidation costs paid by the Partnership through the date of
closing, and increased for interest paid by the Purchasing Affiliates to the
Partnership. The interest paid by the Purchasing Affiliates was computed on
the purchase price less the outstanding long-term debt on June 30, 1995, at an
annual rate of 5.25%, from July 1, 1995, to March 29, 1996. Net proceeds from
the sale of the cable television systems was approximately $211.3 million.
5. LITIGATION:
In November, 1995, a class action lawsuit (the "Action") was filed on behalf of
the Limited Partners which sought, among other things, to permanently enjoin
the sale of the Partnership's systems to the Purchasing Affiliates (see Note
4). On February 15, 1996, the court dismissed all of the plaintiff's claims for
injunctive relief, including that which sought to prevent the consummation of
the sale of the Partnership's systems. The plaintiff's claims for an
unspecified amount of monetary damages which resulted from the sale by the
Partnership of its asset remain pending.
In October, 1996, the plaintiffs petitioned the court to file a Consolidated
Amended Class Action Complaint (the "Amended Complaint"). At that time, the
General Partner informed the court of its position that portions of the Amended
Complaint were legally inadequate and, second, of its intention to file a
dispositive motion as to all remaining claims. The defendants named in the
Amended Complaint are the same as those named in the Action.
Based upon various factors, including the advice of counsel, each of the
defendants to the Action and the Amended Complaint believes the claims to be
without merit and is contesting the claims vigorously.
6. RECLASSIFICATIONS:
Certain reclassifications have been made to the 1995 financial statements to
conform with the current period presentation.
Page 11
<PAGE> 12
CENCOM CABLE INCOME PARTNERS, L.P.
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The following table sets forth the approximate number of subscribers of the
Partnership at various dates prior to the sale of all of its cable television
systems:
<TABLE>
<CAPTION>
March 28, December 31, September 30,
1996 1995 1995
----------- ------------ -------------
<S> <C> <C> <C>
Basic Subscribers:
Illinois Systems 44,300 43,600 43,300
Base Systems 22,700 22,500 22,000
Clarksville Systems 41,600 40,800 40,200
Tryon System 2,100 2,100 2,100
----------- ------------ -------------
110,700 109,000 107,600
=========== ============ =============
Premium Subscriptions:
Illinois Systems 25,000 26,200 25,000
Base Systems 19,700 20,200 19,000
Clarksville Systems 24,200 21,800 19,900
Tryon System 700 700 700
----------- ------------ -------------
69,600 68,900 64,600
=========== ============ =============
</TABLE>
The following table sets forth certain items as a percentage of total revenues
for the periods indicated:
<TABLE>
<CAPTION>
For the Period For the Three For the Nine
January 1, 1996 to Months Ended Months Ended
March 28, 1996 September 30, 1995 September 30, 1995
------------------ ------------------ ------------------
<S> <C> <C> <C>
Service Revenues 100.0% 100.0% 100.0%
------ ------ ------
Operating Expenses:
Operating, General and Administrative 50.6 48.8 48.7
Liquidation Costs 1.3 3.8 2.2
Depreciation and Amortization 23.7 25.0 25.8
Management Fees - Related Party 5.0 5.0 5.0
------ ------ ------
80.6 82.6 81.7
------ ------ ------
Income From Operations 19.4 17.4 18.3
------ ------ ------
Interest Income (Expense):
Interest Income 0.4 0.3 0.3
Interest Expense (10.9) (12.0) (11.9)
------ ------ ------
(10.5) (11.7) (11.6)
------ ------ ------
Net Income 8.9% 5.7% 6.7%
====== ====== ======
</TABLE>
Page 12
<PAGE> 13
The Registrant had no results of operations for the period subsequent to March
28, 1996, as a result of the sale of all of its cable television systems.
Results of operations for the period ended March 28, 1996 have been compared to
the quarter ended March 31, 1995. No discussion of operating results for the
three or nine months ended September 30, 1996 versus the three or nine months
ended September 30, 1995 has been provided as such analysis is not meaningful.
Changes in Assets and Liabilities in Liquidation
Net assets in liquidation at March 31, 1996 were approximately $136.4 million,
consisting of cash and cash equivalents of approximately $140.1 million reduced
by liabilities to the Purchasing Affiliates of approximately $2.8 million and
accrued liquidation costs of $0.9 million. During the six months ended
September 30, 1996, the Partnership made disbursements to the Limited Partners
and General Partner of $121.7 million, paid $2.8 million to reduce the
liability to Purchasing Affiliates, paid approximately $733,000 of accrued
liquidation costs, and earned interest income of approximately $966,000. The
Partnership increased the accrual for liquidation costs by $1,200,000 during
the six month period ending September 30, 1996, which included $400,000 for
additional legal, insurance and other costs expected to be incurred during the
liquidation period and an accrual of $800,000 for a Partnership income tax
liability to the state of Illinois. This tax liability is based upon the
apportionment to Illinois for the Partnership's gain on the sale of the cable
systems.
At September 30, 1996, the Partnership had approximately $15.1 million in cash
and cash equivalents, consisting primarily of repurchase agreements and
commercial paper with original maturities of 90 days or less. These
investments are carried at cost, which approximates market value.
Net assets in liquidation at September 30, 1996, were approximately $13.7
million, which will be available for distribution to the General Partner and
Limited Partners upon final dissolution of the Partnership. Of this amount
available for distribution, the Partnership will be required under the income
tax regulations of certain states to withhold approximately $1,200,000 from
future distributions to the limited partners. The General Partner anticipates
that a partial distribution of proceeds to the partners will occur prior to
December 31, 1996. The amount of this pending distribution has not been
determined. The General Partner anticipates the final dissolution of the
Partnership to occur during 1997, pending final resolution of all liquidation
issues, including all pending litigation.
Operations Prior to Sale of Cable Systems on March 29, 1996
Service Revenues
The Partnership earns substantially all of its revenues from monthly
subscription fees for basic tier, expanded tier, premium channels, equipment
rental and ancillary services provided by its cable television systems (the
"Systems"). Service revenues increased by 8.8% to $11,879,000 for the period
from January 1, 1996, to March 28, 1996, when compared to the three months
ended March 31, 1995. These increases in 1996 are primarily due to an increase
in subscribers for the basic tier of cable service offered by the Systems. In
addition, revenue increases between the comparative periods reflect certain
allowable retail and ancillary rate increases implemented in certain franchise
areas. Rate increases have been limited because federal rate regulation
implemented in 1993 and 1994 rolled back cable rates and authorized only
limited rate increases for the pass-through of certain external costs for those
systems which rolled back rates to the full extent required by law (up to 17%).
Basic subscribers at March 28, 1996 increased by 3.9% over March 31, 1995.
This reflects management's marketing efforts to add new customers and retain
existing customers, as well as improved customer service. It also reflects an
industry-wide increase in cable subscribers as a result of increased
advertising during 1995 by wireless cable television and direct broadcast
service providers; these broad-based marketing campaigns appear to have
enhanced overall consumer awareness and desire for alternative programming
options, with a "spill-over" benefit for cable providers. In addition, a
limited amount of new-build construction increased the coverage of the Systems.
Premium service subscriptions increased 8.4% from March 28, 1995 to March 31,
1996. The ratio of premium service subscriptions per basic subscriber
increased from 60.3% at March 31, 1995 to 62.9% at March 28, 1996. This
increase was the result of the Partnership offering premium services to
subscribers in a packaged format, providing subscribers with a discount from
the combined retail rates of these packaged services in an effort to maintain
premium subscription levels and attract additional subscriptions.
Page 13
<PAGE> 14
Operating Expenses
Operating, general and administrative expenses increased by $665,000 or 12.5%
during the period from January 1, 1996 to March 28, 1996, when compared to the
first quarter of 1995. The majority of this increase, approximately $478,000,
related to increases in the license fees paid for programming. In addition,
there were increases in wages, bad debts, marketing and advertising.
Liquidation costs in the amount of approximately $157,000 were incurred by the
Partnership during the period from January 1, 1996, to March 28, 1996, related
to the process of selling the assets of the Partnership. Such sale of the
assets occurred on March 29, 1996.
Depreciation and amortization decreased by 7.3% from $3,039,000 for the three
months ended March 31, 1995, to $2,817,000 for the period from January 1, 1996,
to March 28, 1996. Although the Partnership had increased depreciation as a
result of capital expenditures made to the Systems, this was offset by a
decrease in amortization due to the completion of amortization periods for
certain franchises.
Interest Income and Expenses
Interest expense decreased by 4.1% from $1,346,000 during the first quarter of
1995 to $1,291,000 for the period from January 1, 1996, to March 28, 1996.
This decrease was primarily due to the decrease in the effective weighted
average interest rates between the periods.
Net Income
Net income increased by 55.8% from $679,000 during the first quarter of 1995 to
$1,057,000 for the period from January 1, 1996, to March 28, 1996. In 1996,
the increase in income from operations and the decrease in interest expense
were significant factors versus the prior year.
Liquidity and Capital Resources
On March 29, 1996, the Partnership consummated the sale of all of its cable
television systems to certain affiliates (the "Purchasing Affiliates") of the
General Partner. The sale was approved by a majority of the Limited Partners,
following the distribution of a Disclosure Statement dated October 3, 1995, as
supplemented on November 1, 1995, and on December 18, 1995 (collectively
referred to as the "Disclosure Statement"). The net proceeds from the sale of
approximately $211.3 million were comprised of the purchase price plus
interest, as defined in the Asset Purchase Agreement, dated as of July 1, 1995,
entered into by the General Partner and the Purchasing Affiliates. The
purchase price, as outlined in the Disclosure Statement, was approximately $211
million less working capital items through July 1, 1995, and liquidation costs
paid by the Partnership through the date of closing. The interest paid by the
Purchasing Affiliates was computed on the purchase price less the outstanding
long-term debt on June 30, 1995, at an annual rate of 5.25%, from July 1, 1995,
to March 29, 1996.
On April 15, 1996, the Partnership made a partial distribution of approximately
$122.4 million to the Limited Partners and the General Partner. The amount
remaining after this partial distribution represents a holdback reserve from
which the Partnership will pay any remaining obligations and contingencies. At
September 30, 1996, such estimated amounts are reported as accrued costs of
liquidation. All amounts held back but not applied to pay Partnership
liabilities will be distributed to the Partners, including interest earned
thereon.
The Partnership had an outstanding credit facility with a consortium of banks,
for which The Toronto-Dominion Bank was the agent bank. Such credit facility
bore interest at a rate selected by the Partnership equal to Eurodollar, or
Toronto Dominion's prime rate, or certificate of deposit rate, as the case may
be, plus a spread (1%). This credit facility allowed for borrowings up to $80
million. Outstanding indebtedness of the Partnership at December 31, 1995, was
$76,500,000 borrowed under the credit facility. The net decrease to long-term
obligations during the period from January 1, 1996 to March 28, 1996 was
$2,500,000. At March 29, 1996, the outstanding balance under
Page 14
<PAGE> 15
the Partnership's credit facility was $74,000,000, which was repaid on March
29, 1996 from the proceeds of the sale of assets. The Partnership's credit
facility was terminated March 29, 1996.
The Partnership made capital expenditures of approximately $1,402,000 during
the period from January 1, 1996, to March 28, 1996, in connection with the
improvement and upgrading of its cable television systems. The Partnership has
incurred no capital expenditures subsequent to March 28, 1996.
Page 15
<PAGE> 16
Part II. Other Information
Item 1. Legal Proceedings -
In November, 1995, a class action lawsuit (the "Action") was filed on behalf of
the Limited Partners which sought, among other things, to permanently enjoin
the sale of the Partnership's systems to the Purchasing Affiliates (see Note
4). On February 15, 1996, the court dismissed all of the plaintiff's claims for
injunctive relief, including that which sought to prevent the consummation of
the sale of the Partnership's systems. The plaintiff's claims for an
unspecified amount of monetary damages which resulted from the sale by the
Partnership of its asset remain pending.
In October, 1996, the plaintiffs petitioned the court to file a Consolidated
Amended Class Action Complaint (the "Amended Complaint"). At that time, the
General Partner informed the court of its position that portions of the Amended
Complaint were legally inadequate and, second, of its intention to file a
dispositive motion as to all remaining claims. The defendants named in the
Amended Complaint are the same as those named in the Action.
Based upon various factors, including the advice of counsel, each of the
defendants to the Action and the Amended Complaint believes the claims to be
without merit and is contesting the claims vigorously.
Item 2. Change 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 - None
Page 16
<PAGE> 17
CENCOM CABLE INCOME PARTNERS, L.P.
FOR QUARTER ENDED SEPTEMBER 30, 1996
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.
CENCOM CABLE INCOME PARTNERS, L.P.
By: Cencom Properties, Inc.
General Partner
-------------------------------------
Jerald L. Kent
Executive Vice President and
Chief Financial Officer
By: /s/Jerald L. Kent November 13, 1996
----------------------------
Jerald L. Kent
Executive Vice President and
Chief Financial Officer
By: /s/Ralph G. Kelly November 13, 1996
----------------------------
Ralph G. Kelly
Treasurer
Page 17
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<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
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