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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
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Commission File Number 0-14093
CENCOM CABLE INCOME PARTNERS, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 43-1415278
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
12444 Powerscourt Drive - Suite 400
St. Louis, Missouri 63131
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(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
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CENCOM CABLE INCOME PARTNERS, L.P.
FORM 10-Q - FOR THE QUARTER ENDED SEPTEMBER 30, 1997
INDEX
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<TABLE>
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Page
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<S> <C>
Part I. Financial Information
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Item 1. Financial Statements
a. Statements of Assets and Liabilities in Liquidation - As of September 30, 1997 and
December 31, 1996 3
b. Statements of Changes in Assets and Liabilities in Liquidation - For the three months
ended September 30, 1997 and 1996 4
c. Statements of Changes in Assets and Liabilities in Liquidation - For the nine months
ended September 30, 1997 and for the period from March 29, 1996 to September 30,
1996 5
d. Statement of Operations - For the Period From January 1, 1996 through
March 28, 1996 6
e. Statement of Cash Flows - For the Period From January 1, 1996 through
March 28, 1996 7
f. Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
Part II. Other Information
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Item 1. Legal Proceedings - None -
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 11
Signature Page 12
</TABLE>
2
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CENCOM CABLE INCOME PARTNERS, L.P.
STATEMENTS OF ASSETS AND LIABILITIES IN LIQUIDATION
<TABLE>
<CAPTION>
September 30, December 31, 1997
1997 1996
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<S> <C> <C>
(Unaudited)
ASSETS, at estimated realizable values:
Cash and cash equivalents $5,347,094 $7,049,771
Insurance receivable, net 536,287 428,000
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Total assets 5,883,381 7,477,771
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LIABILITIES, at estimated settlement amounts:
Accrued costs of liquidation 847,059 1,453,388
Income taxes withheld on behalf of Limited Partners -- 1,140,664
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Total liabilities 847,059 2,594,052
NET ASSETS IN LIQUIDATION $5,036,322 $4,883,719
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
3
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CENCOM CABLE INCOME PARTNERS, L.P.
STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES IN LIQUIDATION
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended September 30,
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1997 1996
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<S> <C> <C>
CHANGE IN ASSETS AND LIABILITIES IN LIQUIDATION:
Interest income generated from investments $ 75,437 $ 317,928
Increase in accrued costs of liquidation (109,672) (1,000,000)
Increase in insurance receivable, net 31,787 --
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Net change in assets and liabilities (2,448) (682,072)
NET ASSETS IN LIQUIDATION, beginning of period 5,038,770 14,372,875
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NET ASSETS IN LIQUIDATION, end of period $5,036,322 $13,690,803
========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
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CENCOM CABLE INCOME PARTNERS, L.P.
STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES IN LIQUIDATION
(Unaudited)
<TABLE>
<CAPTION>
For the Nine For the Period from
Months Ended March 29, 1996 to
September 30, 1997 September 30, 1996
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<S> <C> <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 --- (3,504,678)
Accounts receivable, net --- (795,144)
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)
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Gain on sale of assets --- 162,659,505
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Interest paid by Purchasing Affiliates --- 5,202,207
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CHANGE IN ASSETS AND LIABILITIES IN LIQUIDATION:
Interest income generated from investments 256,538 966,437
Distribution to General Partner --- (2,350,894)
Decrease in long-term debt --- 74,000,000
Increase in accrued costs of liquidation 221,222) (1,546,494)
Cash distribution to Limited Partners --- (120,142,045)
Increase in insurance receivable, net 108,287 ---
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152,603 (49,072,996)
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REPAYMENT OF LONG-TERM DEBT (74,000,000)
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Net change in assets and liabilities 152,603 44,788,716
PARTNERS' CAPITAL (DEFICIT):
General Partner --- 905,039
Limited Partners --- (32,002,952)
NET ASSETS IN LIQUIDATION, beginning of period 4,883,719 (31,097,913)
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NET ASSETS IN LIQUIDATION, end of period $5,036,322 $ 13,690,803
========== =============
</TABLE>
The accompanying notes are an integral part of these statements.
5
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CENCOM CABLE INCOME PARTNERS, L.P.
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Period from
January 1, 1996 through
March 28, 1996*
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<S> <C>
SERVICE REVENUES $ 11,878,555
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OPERATING EXPENSES:
Operating, general and administrative 6,004,464
Depreciation and amortization 2,816,999
Management fees - related party 594,268
Liquidation costs 157,147
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9,572,878
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Income from operations 2,305,677
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INTEREST INCOME (EXPENSE):
Interest income 42,351
Interest expense (1,290,734)
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(1,248,383)
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Net income $ 1,057,294
============
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 7.09
============
AVERAGE NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 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 this statement.
6
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CENCOM CABLE INCOME PARTNERS, L.P.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Period from
January 1, 1996
through March 28,
1996*
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<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,057,294
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Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 2,816,999
Changes in assets and liabilities-
Accounts receivable, net 122,963
Prepaid expenses and other 26,143
Accounts payable and accrued expenses (1,063,219)
Payable to General Partner and affiliate 9,375
Subscriber deposits and prepayments (19,055)
Deferred revenue (4,913)
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Net cash provided by operating activities 2,945,587
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net (1,402,127)
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Net cash used in investing activities (1,402,127)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on long-term debt (2,500,000)
------------
Net cash used in financing activities (2,500,000)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (956,540)
CASH AND CASH EQUIVALENTS, beginning of period 4,461,218
------------
CASH AND CASH EQUIVALENTS, end of period $ 3,504,678
============
</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.
7
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CENCOM CABLE INCOME PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION:
The accompanying unaudited financial statements of Cencom Cable Income
Partners, L.P. (the "Partnership") 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 (the "Sale Transaction"). 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, 1997,
and December 31, 1996 have been stated at estimated realizable values and the
liabilities have been reflected at estimated settlement amounts. Proceeds
ultimately received by the partners upon liquidation could differ from the
amounts recorded in the accompanying financial statements.
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.
2. 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, 1996. Interim results are not necessarily indicative of results
for a full year.
3. RECLASSIFICATIONS
Certain reclassifications have been made to the September 30, 1996 financial
statements to conform with the September 30, 1997 presentation.
8
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4. LITIGATION:
Certain limited partners of the Partnership (the "Limited Partners") have
instituted litigation in the Chancery Court of New Castle County, Delaware,
which has been consolidated under the name and style, In re: Cencom Cable
Income Partners, L.P. Litigation Civil Action No. 14634 (the "Action"). This
class action litigation was purportedly filed by the plaintiff on his own
behalf and on behalf of the Limited Partners. The Action names as defendants
the general partner, Purchasing Affiliates identified in the disclosure
statement (the "Disclosure Statement") distributed to Limited Partners in
connection with the solicitation of consents to the Sale Transaction, Charter
Communications, Inc. and certain individuals, including the directors and
executive officers of the General Partner.
The Action alleges, among other things, that the Disclosure Statement is false
and misleading, wrongfully seeks to induce the consent of the Limited Partners
to the Sale Transaction in breach of the defendants' fiduciary duties, and is
the product and culmination of a course of wrongful conduct designed to enrich
the defendants at the expense of the Limited Partners in breach of the
partnership agreement and the defendants' fiduciary duties. On February 15,
1996, the court refused to issue an injunction precluding the Sale Transaction
and granted Defendant's motion to dismiss all claims for injunctive relief,
including claims seeking to require the Partnership to attempt to market the
systems to other parties. The remaining causes of action seek compensation for
plaintiff and other Limited Partners for damages related to the alleged
wrongdoing.
In October 1996, the plaintiff filed a Consolidated Amended Class Action
Complaint (the "Amended Complaint"). In connection with the filing of the
Amended Complaint, the defendants informed the court that portions of the
Amended Complaint were legally inadequate. In January 1997, the defendants
filed a Motion for Summary Judgment to dismiss all remaining claims as to all
parties in the Action. In October 1997, an order was issued granting in part
and denying in part the defendants' Motion for Summary Judgment. Based upon,
among other things, the advice of counsel, the General Partner believes that
the remaining portions of the Amended Complaint are legally inadequate and
intend to contest them vigorously. There can be no assurance, however, that
the plaintiff will not be awarded damages in connection with the Action.
As of September 30, 1997, the Partnership has recorded a receivable (net of the
deductible) from its insurance company for reimbursement of litigation costs
through September 30, 1997, incurred in connection with the Action. The
receivable of $536,000 represents all litigation costs less the deductible of
$100,000.
9
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CENCOM CABLE INCOME PARTNERS, L.P.
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
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.
Operating results for the period ended March 28, 1996, are included herein;
however, no discussion of the operating results for this period is provided as
such analysis was previously provided in the Form 10-K dated December 31, 1996.
Changes in Assets and Liabilities in Liquidation
Net assets in liquidation at September 30, 1997 were approximately $5.0
million, consisting of cash and cash equivalents of approximately $5.3 million
and an insurance receivable of $0.5 million, offset by accrued liquidation
costs of approximately $0.8 million. The net change in assets and liabilities
during the nine months ended September 30, 1997 was approximately $153,000,
which is primarily the result of the increase in the cash and cash equivalents
balance due to interest income earned by the Partnership. The increase in the
cash and cash equivalents balance was partially offset by an increase in
accrued costs of liquidation of approximately $221,000 for legal and accounting
services, insurance costs, and investor relations costs. In addition, the
Partnership increased the balance of its net receivable from an insurance
company by approximately $108,000 as a result of additional litigation costs
paid by the Partnership.
Final dissolution of the Partnership and related cash distributions to the
Limited Partners and General Partner will occur upon final resolution of all
liquidation issues, including all pending litigation and insurance receivable
matters. Based upon net assets in liquidation of approximately $5.0 million as
of September 30, 1997, estimated proceeds to be distributed to the general
partner are approximately $100,000. Proceeds ultimately received by the
partners upon liquidation could differ from the amounts recorded in the
September 30, 1997 financial statements.
At September 30, 1997, cash and cash equivalents consisted primarily of
investments in a money market account and commercial paper with original
maturities of 90 days or less. These investments are carried at cost, which
approximates market value.
10
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Part II. Other Information
Item 1. Legal Proceedings - None
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
Exhibits:
Exhibit 27 Financial Data Schedule
Reports on Form 8-K - None
11
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CENCOM CABLE INCOME PARTNERS, L.P.
FOR QUARTER ENDED SEPTEMBER 30, 1997
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.
its General Partner
/s/ Jerald L. Kent
----------------------------
Jerald L. Kent
Executive Vice President and
Chief Financial Officer
By: /s/Jerald L. Kent November 13, 1997
----------------------------
Jerald L. Kent
Executive Vice President and
Chief Financial Officer
By: /s/Ralph G. Kelly November 13, 1997
----------------------------
Ralph G. Kelly
Treasurer
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 5,347,094
<SECURITIES> 0
<RECEIVABLES> 536,287
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,883,381
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,883,381
<CURRENT-LIABILITIES> 847,059
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,036,322
<TOTAL-LIABILITY-AND-EQUITY> 5,883,381
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
