<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended September 30, 2000
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 No. 0-16784
AMERICAN CABLE TV INVESTORS 5, LTD.
-----------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
State of Colorado 84-1048934
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9197 South Peoria Street
Englewood, Colorado 80112
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (720) 875-4000
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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<PAGE> 2
PART I - FINANCIAL INFORMATION
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
Balance Sheets
(unaudited)
(see note 2)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- -----------
Assets amounts in thousands
<S> <C> <C>
Cash and cash equivalents (note 4) $ 9,602 49,067
Receivables 61 396
Funds held in escrow (notes 2 and 6) 494 1,994
---------- ----------
$ 10,157 51,457
========== ==========
Liabilities and Partners' Equity
Accounts payable and accrued liabilities $ 88 303
Unclaimed limited partner distribution checks 587 613
Amounts due to related parties (note 5) 132 1,235
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Total liabilities 807 2,151
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Partners' equity (deficit):
General partner (3,208) (2,808)
Limited partners 12,558 52,114
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Total partners' equity 9,350 49,306
---------- ----------
Contingencies (notes 2 and 6)
$ 10,157 51,457
========== ==========
</TABLE>
See accompanying notes to financial statements.
I-1
<PAGE> 3
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
Statements of Operations
(unaudited)
(see note 2)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
----------------------------- -----------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
amounts in thousands, except unit amounts
<S> <C> <C> <C> <C>
Revenue $ -- 2,683 -- 7,692
Operating costs and expenses:
Programming (from related parties - note 5) -- 656 -- 1,883
Operating (including allocations from related
parties - note 5) -- 350 -- 963
Selling, general and administrative (including
charges from related parties - note 5) 77 830 219 2,623
Year 2000 costs (allocated from related parties -
note 5) -- 30 -- 107
Depreciation and amortization -- 915 -- 2,806
---------- ---------- ---------- ----------
Total operating expenses 77 2,781 219 8,382
---------- ---------- ---------- ----------
Operating loss (77) (98) (219) (690)
Other income:
Interest income 137 209 1,208 589
Adjustment to gain on sale of cable television
system (note 2) -- -- 66 --
---------- ---------- ---------- ----------
Net earnings (loss) $ 60 111 1,055 (101)
========== ========== ========== ==========
Net earnings (loss) per limited partnership unit
("Unit") (note 3) $ 0.30 0.55 5.22 (0.50)
========== ========== ========== ==========
Limited partnership units outstanding 200,005 200,005 200,005 200,005
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
I-2
<PAGE> 4
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
Statement of Partners' Equity
Nine months ended September 30, 2000
(unaudited)
(see note 2)
<TABLE>
<CAPTION>
General Limited
partner partners Total
--------- --------- ---------
amounts in thousands
<S> <C> <C> <C>
Balance at January 1, 2000 $ (2,808) 52,114 49,306
Distribution (410) (40,601) (41,011)
Net earnings 10 1,045 1,055
--------- --------- ---------
Balance at September 30, 2000 $ (3,208) 12,558 9,350
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
I-3
<PAGE> 5
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
Statements of Cash Flows
(unaudited)
(see note 2)
<TABLE>
<CAPTION>
Nine months ended
September 30,
-----------------------------
2000 1999
---------- ----------
amounts in thousands
(see note 4)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 1,055 (101)
Adjustments to reconcile net earnings (loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization -- 2,806
Adjustment to gain on sale of cable television system (66) --
Changes in operating assets and liabilities:
Net change in receivables and other assets 335 (199)
Net change in accounts payable, accrued liabilities and amounts due
to related parties (1,344) (216)
---------- ----------
Net cash provided by (used in) operating activities
(20) 2,290
---------- ----------
Cash flows from investing activities:
Capital expended for property and equipment -- (871)
Additional proceeds from sale of cable television system 66 --
Proceeds from release of funds held in escrow 1,500 --
---------- ----------
Net cash provided by (used in) investing activities 1,566 (871)
---------- ----------
Cash flows from financing activities -
distribution to partners (41,011) --
---------- ----------
Net change in cash and cash
equivalents (39,465) 1,419
Cash and cash equivalents:
Beginning of period 49,067 16,134
---------- ----------
End of period $ 9,602 17,553
========== ==========
</TABLE>
See accompanying notes to financial statements.
I-4
<PAGE> 6
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
Notes to Financial Statements
September 30, 2000
(unaudited)
(1) Basis of Financial Statement Preparation
The accompanying financial statements of American Cable TV Investors 5,
Ltd. ("ACT 5" or the "Partnership") are unaudited. In the opinion of
management, all adjustments (consisting only of normal recurring
accruals) have been made which are necessary to present fairly the
financial position of the Partnership as of September 30, 2000 and its
results of operations for the nine months ended September 30, 2000 and
1999. The results of operations for any interim period are not
necessarily indicative of the results for the entire year.
These financial statements should be read in conjunction with the
financial statements and related notes thereto included in the
Partnership's December 31, 1999 Annual Report on Form 10-K.
The Partnership's general partner is IR-TCI Partners V, L.P. ("IR-TCI"
or the "General Partner"), a Colorado limited partnership. The general
partner of IR-TCI is TCI Ventures Five, Inc., a subsidiary of TCI
Cablevision Associates, Inc. ("Cablevision"). The limited partner of
IR-TCI is Cablevision Equities VI, a limited partnership whose partners
are certain former officers and key employees of the predecessor of
Cablevision. Cablevision is an indirect subsidiary of AT&T Broadband,
LLC ("AT&T Broadband") and is the managing agent of the Partnership.
As further described in note 2, the Partnership has sold substantially
all of its cable television assets.
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.
(continued)
I-5
<PAGE> 7
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
Notes to Financial Statements
(2) Riverside Sale
On December 7, 1999, the Partnership consummated the sale of its
remaining cable television system serving subscribers located in and
around Riverside, California (the "Riverside System") to Century
Exchange LLC ("Century"), a subsidiary of Adelphia Communications
Corporation, for an adjusted sales price of $33,399,000 (the "Riverside
Sale"). The Riverside Sale was approved by the Limited Partners at a
special meeting that occurred on December 11, 1998. In accordance with
the terms of the asset purchase agreement relating to the Riverside
Sale, $1.5 million of the sales price was placed in escrow for 180 days
in order to satisfy any indemnifiable claims which could be made by
Century. On June 5, 2000, the funds held in escrow were released to ACT
5. ACT 5 received interest of $39,000 in conjunction with the release
of the funds held in escrow. In connection with the Riverside Sale,
Century and the Partnership waived the condition to closing that all
required consents be obtained prior to closing the Riverside Sale, as
such condition related to the transfer to Century of the franchise
agreement between the Partnership and the City of Moreno Valley that
authorizes the Partnership to provide cable television service to
subscribers located in and around Moreno Valley, California (the
"Moreno Franchise Agreement"). Accordingly, all of the Riverside
System's cable television assets other than the Moreno Franchise
Agreement were transferred to Century on December 7, 1999. Consent to
transfer the Moreno Franchise Agreement to Century has not yet been
obtained. In connection with the Riverside Sale, the Partnership
entered into a management agreement with Century pursuant to which
Century will be entitled to all net cash flows generated by the portion
of the Riverside System that is subject to the Moreno Franchise
Agreement until such time as the City of Moreno Valley approves the
transfer of the Moreno Franchise Agreement from the Partnership to
Century. Upon receipt of such approval from the City of Moreno Valley,
the Moreno Franchise Agreement will be transferred to Century and the
management agreement will be terminated.
On December 7, 1999, AT&T Broadband and Century contributed cable
television systems to a joint venture (the "Joint Venture") that
combined multiple cable television systems in Southern California.
Among those systems contributed to the Joint Venture by AT&T Broadband
was the cable television system serving customers in Redlands,
California (the "Redlands System"). The Riverside System was among
those systems that were contributed to the Joint Venture by Century.
AT&T Broadband has an approximate 25% interest in the Joint Venture,
which is managed by Century. AT&T Broadband, through certain of its
subsidiaries, owns a 100% ownership interest in IR-TCI.
In connection with the Riverside Sale, the Partnership made a
distribution to its General Partner and Limited Partners of $410,000
and $40,601,000 ($203 per Unit for Limited Partners of record as of
April 1, 2000), respectively, in April 2000.
As a result of the Riverside Sale, the Partnership is no longer
actively engaged in the cable television business. A final
determination of the Partnership's liabilities and any liquidating
distributions cannot be made in connection with the Partnership's
dissolution until the transfer of the Moreno Valley Franchise Agreement
is completed and the contingencies described in note 6 are resolved.
(continued)
I-6
<PAGE> 8
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
Notes to Financial Statements
(3) Allocation of Net Earnings and Net Losses
Net earnings and net losses shall be allocated 99% to ACT 5's limited
partners ("Limited Partners") and 1% to the General Partner 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 cumulative distributions to the Limited Partners equal the
Limited Partners' aggregate contributions ("Payback"), plus 6% per
annum. After the Limited Partners have received distributions equal to
Payback plus 6% per annum, the allocations of net earnings, net losses
and credits, and distributions of Cash from Operations, Sales or
Refinancings shall be 25% to the General Partner and 75% to the Limited
Partners. Although ACT 5's distributions of proceeds from the sales of
its cable television systems allowed Limited Partners to achieve
Payback, distributions did not allow Limited Partners to achieve a 6%
return on their aggregate contributions; therefore, amounts will
continue to be allocated 99% to the Limited Partners and 1% to the
General Partner. See note 2.
Net earnings (loss) per Unit is calculated by dividing net earnings
(loss) attributable to the Limited Partners by the number of Units
outstanding during each period.
(4) Supplemental Disclosure of Cash Flow Information
The Partnership considers investments with original maturities of six
months or less to be cash equivalents. At September 30, 2000,
$7,576,000 of the Partnership's cash and cash equivalents was invested
in money market funds.
(5) Transactions with Related Parties
The Partnership purchased programming services from affiliates of AT&T
Broadband. The charges, which generally approximated such affiliates'
cost and were based upon the number of customers served by the
Partnership, aggregated $1,883,000 for the nine months ended September
30, 1999.
The Partnership had a management agreement with Cablevision, whereby
Cablevision was responsible for performing all services necessary for
the management of the Partnership's cable television systems. As
compensation for these services, the Partnership paid a management fee
equal to 6% of gross revenue, as defined in the management agreement.
Such fees amounted to $462,000 for the nine months ended September 30,
1999.
The Partnership also 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,
marketing, technical or other services. Such reimbursements amounted to
$27,000 and $186,000 for the nine months ended September 30, 2000 and
1999, respectively.
(continued)
I-7
<PAGE> 9
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
Notes to Financial Statements
Riverside shared office facilities, personnel and certain distribution
assets with the Redlands System. As a result, the majority of
Riverside's operating and administrative salaries and expenses were
charged to Riverside based upon Riverside's estimated utilization of
such office facilities and personnel. During the nine months ended
September 30, 1999, Riverside's operating and administrative salaries
and expenses amounted to $2,078,000.
Amounts due to related parties, which represent non-interest-bearing
payables to AT&T Broadband and its affiliates, consist of the net
effect of cash advances and certain intercompany expense charges.
Costs incurred by AT&T Broadband and allocated to ACT 5 with respect to
the remediation of ACT 5's year 2000 issues aggregated $107,000 for the
nine months ended September 30, 1999.
(6) Contingencies
On November 2, 1999 a limited partner of ACT 5 filed suit in United
States District Court for the District of Colorado against the General
Partner of ACT 5. The lawsuit also names certain affiliates of the
General Partner as defendants. The lawsuit alleges that the defendants
violated disclosure requirements under the Securities Exchange Act of
1934 in connection with soliciting limited partner approval of the
Riverside Sale and that certain defendants breached their fiduciary
duty in connection with the Riverside Sale. On September 28, 2000, the
Court dismissed the Plaintiff's complaint for failing to plead the
Federal Securities Act claim properly. On October 13, 2000, the
Plaintiff served an amended complaint to the Defendants. No Defendant
to date has filed an answer to the amended complaint. Based upon the
limited facts available, management believes that, although no
assurance can be given as to the outcome of this action, the ultimate
disposition should not have a material adverse effect upon the
financial condition of the Partnership.
Section 21 of the Partnership Agreement provides that the General
Partner and its affiliates, subject to certain conditions set forth in
more detail in the Partnership Agreement, are entitled to be
indemnified for any liability or loss incurred by them by reason of any
act performed or omitted to be performed by them in connection with the
business of ACT 5, provided that the General Partner determines, in
good faith, that such course of conduct was in the best interests of
ACT 5 and did not constitute proven fraud, negligence, breach of
fiduciary duty or misconduct. In this regard, it is anticipated that
legal fees incurred by the defendants with respect to the above lawsuit
will be paid by ACT 5.
(continued)
I-8
<PAGE> 10
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
Notes to Financial Statements
On April 1, 1997, the Partnership sold its cable television system
located in and around Shelbyville and Manchester, Tennessee (the
"Southern Tennessee System") to Rifkin Acquisition Partners, L.L.L.P.
("Rifkin") for an adjusted sales price of $19,647,000. Pursuant to the
asset purchase agreement, $494,000 of such sales price was placed in
escrow (the "Southern Tennessee Escrow") and was subject to
indemnifiable claims by Rifkin through March 31, 1998. Prior to March
31, 1998, Rifkin filed a claim against the Southern Tennessee Escrow
relating to a class action lawsuit filed by a customer challenging late
fee charges with respect to the Southern Tennessee System. On September
14, 1999, Rifkin sold the Southern Tennessee System to an affiliate of
Charter Communications, Inc. ("Charter"). In connection with such sale,
Charter was assigned the rights of the indemnification claim. In
October 2000, the class action lawsuit was settled. The amount of the
Southern Tennessee Escrow due Charter as a result of terms of the
settlement agreement has not yet been determined. Upon determination of
amounts due Charter, the remaining funds in the Southern Tennessee
Escrow will be released to ACT 5.
The claim against the Southern Tennessee Escrow, the lawsuit described
above and the pending transfer of the Moreno Valley Franchise Agreement
described in note 2 have had and will continue to have the effect of
delaying any final liquidating distributions of the Partnership.
I-9
<PAGE> 11
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction
with the Partnership's Management's Discussion and Analysis of Financial
Condition and Results of Operations included in the Partnership's Annual Report
on Form 10-K for the year ended December 31, 1999.
General
As further described in note 2 to the accompanying financial
statements, the Partnership has sold substantially all of its cable television
assets.
Material Changes in Results of Operations
As a result of the Riverside Sale, the Partnership is no longer
actively engaged in the cable television business. Pending the transfer of the
Moreno Valley Franchise Agreement and resolution of the contingencies described
in notes 2 and 6 to the accompanying financial statements, the Partnership will
seek to make a final determination of its liabilities so that liquidating
distributions can be made in connection with its dissolution. The Partnership's
results of operations for the three and nine months ended September 30, 2000
include 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 G&A expenses for the three
and nine months ended September 30, 2000 include legal fees incurred in ACT 5's
efforts to resolve the lawsuit as described in note 6. The Partnership's results
of operations for the nine months ended September 30, 2000 also reflect an
adjustment to the gain on the Riverside Sale.
Interest income relates to interest earned on the Partnership's cash
and cash equivalents. Interest income increased $619,000 during the nine months
ended September 30, 2000, as compared to the corresponding prior year period.
Such increase is due to an increase in the average balance of the Partnership's
cash and cash equivalents resulting from cash proceeds received in connection
with the Riverside Sale, an increase in the average interest rate and interest
received in conjunction with the release of funds held in escrow.
Material Changes in Financial Condition
In connection with the Riverside Sale, the Partnership made a
distribution from the net cash proceeds received in connection with the
Riverside Sale to its General Partner and Limited Partners of $410,000 and
$40,601,000 ($203 per Unit for Limited Partners of record as of April 1, 2000),
respectively, in April 2000. 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. See notes 2 and 6 to the accompanying financial statements.
As further described in note 2 to the accompanying financial
statements, pursuant to the terms of the asset purchase agreement relating to
the Riverside Sale, $1.5 million of the sales price was placed in escrow for 180
days in order to satisfy any indemnifiable claims which could be made by
Century. On June 5, 2000, the funds held in escrow were released to ACT 5. ACT 5
received interest of $39,000 in conjunction with the release of the funds held
in escrow.
I-10
<PAGE> 12
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
On April 1, 1997, the Partnership sold the Southern Tennessee System to
Rifkin for an adjusted sales price of $19,647,000. Pursuant to the asset
purchase agreement, $494,000 of the sales price for the Southern Tennessee
System was placed in escrow and was subject to indemnifiable claims for up to
one year following consummation of the sale of the Southern Tennessee System.
Prior to its release, Rifkin filed a claim against the Southern Tennessee Escrow
relating to a class action lawsuit filed by a customer challenging late fee
charges with respect to the Southern Tennessee System. On September 14, 1999,
Rifkin sold the Southern Tennessee System to an affiliate of Charter. In
connection with such sale, Charter was assigned the rights to the
indemnification claim. In October 2000, the class action lawsuit was settled.
The amount of the Southern Tennessee Escrow due Charter as a result of terms of
the settlement agreement has not yet been determined. Upon determination of
amounts due Charter, the remaining funds in the Southern Tennessee Escrow will
be released to ACT 5.
On November 2, 1999 a limited partner of ACT 5 filed suit in United
States District Court for the District of Colorado against the General Partner
of ACT 5. The lawsuit also names certain affiliates of the General Partner as
defendants. The lawsuit alleges that the defendants violated disclosure
requirements under the Securities Exchange Act of 1934 in connection with
soliciting limited partner approval of the Riverside Sale and that certain
defendants breached their fiduciary duty in connection with the Riverside Sale.
On September 28, 2000, the Court dismissed the Plaintiff's complaint for failing
to plead the Federal Securities Act claim properly. On October 13, 2000, the
Plaintiff served an amended complaint to the Defendants. No Defendant to date
has filed an answer to the amended complaint. Based upon the limited facts
available, management believes that, although no assurance can be given as to
the outcome of this action, the ultimate disposition should not have a material
adverse effect upon the financial condition of the Partnership.
Section 21 of the Partnership Agreement provides that the General
Partner and its affiliates, subject to certain conditions set forth in more
detail in the Partnership Agreement, are entitled to be indemnified for any
liability or loss incurred by them by reason of any act performed or omitted to
be performed by them in connection with the business of ACT 5, provided that the
General Partner determines, in good faith, that such course of conduct was in
the best interests of ACT 5 and did not constitute proven fraud, negligence,
breach of fiduciary duty or misconduct. In this regard, it is anticipated that
legal fees incurred by the defendants with respect to the above lawsuit will be
paid by ACT 5.
The claim against the Southern Tennessee Escrow, the above described
lawsuit and the pending transfer of the Moreno Valley Franchise Agreement
described in note 2 have had and will continue to have the effect of delaying
any final liquidating distributions of the Partnership.
At September 30, 2000, the Partnership had $587,000 of unclaimed
distribution checks payable to certain Limited Partners which were written on a
bank account which was subsequently closed. Such checks will either be reissued
to such Limited Partners or released to the respective state of such Limited
Partners' last known residence upon dissolution of the Partnership.
I-11
<PAGE> 13
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter ended September
30, 2000:
None.
<PAGE> 14
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.
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
By: IR-TCI PARTNERS V, L.P.,
Its General Partner
By: TCI VENTURES FIVE, INC.,
A General Partner
Date: November 14, 2000 By: /s/ Leo Stegman
-------------------------------
Leo Stegman
Vice President and Controller
(Chief Accounting Officer)
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
27 Financial Data Schedule
</TABLE>
