<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 March 31, 2000
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 No. 0-16784
AMERICAN CABLE TV INVESTORS 5, LTD.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
State of Colorado 84-1048934
- ----------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9197 South Peoria Street
Englewood, Colorado 80112
- ----------------------------------------- ------------------------------------
(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
----- -----
<PAGE> 2
PART I - FINANCIAL INFORMATION
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
Balance Sheet
(unaudited)
(see note 2)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ ------------
Assets amounts in thousands
<S> <C> <C>
Cash and cash equivalents (note 4) $ 49,064 49,067
Receivables 828 396
Funds held in escrow (notes 2 and 6) 1,994 1,994
------------ ------------
$ 51,886 51,457
============ ============
Liabilities and Partners' Equity
Accounts payable and accrued liabilities $ 57 303
Unclaimed limited partner distribution checks 612 613
Amounts due to related parties (note 5) 1,279 1,235
------------ ------------
Total liabilities 1,948 2,151
------------ ------------
Partners' equity (deficit):
General partner (2,802) (2,808)
Limited partners 52,740 52,114
------------ ------------
Total partners' equity 49,938 49,306
------------ ------------
Commitments and contingencies (notes 2 and 6)
$ 51,886 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
March 31,
------------------------------
2000 1999
------------ ------------
amounts in thousands,
except unit amounts
<S> <C> <C>
Revenue $ -- 2,527
Operating costs and expenses:
Programming (primarily from related parties - note 5)
-- 611
Operating (including allocations
from related parties - note 5) -- 283
Selling, general and administrative (including charges from related
parties - note 5) 68 1,057
Depreciation and amortization -- 944
------------ ------------
Total operating expenses 68 2,895
------------ ------------
Operating loss (68) (368)
Interest income 700 189
------------ ------------
Net earnings (loss) $ 632 (179)
============ ============
Net earnings (loss) per limited partnership unit ("Unit") (note 3)
$ 3.13 (0.89)
============ ============
Limited partnership units outstanding 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
Three months ended March 31, 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
Net earnings 6 626 632
------------ ------------ ------------
Balance at March 31, 2000 $ (2,802) 52,740 49,938
============ ============ ============
</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>
Three months ended
March 31,
------------------------------
2000 1999
------------ ------------
amounts in thousands
(see note 4)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 632 $ (179)
Adjustments to reconcile net earnings (loss) to net cash used in operating
activities:
Depreciation and amortization -- 944
Changes in operating assets and liabilities:
Net change in receivables and other assets (432) (74)
Net change in accounts payable, accrued liabilities and amounts due
to related parties (203) (796)
------------ ------------
Net cash used in operating activities (3) (105)
------------ ------------
Cash flows from investing activities -
capital expended for property and equipment -- (300)
------------ ------------
Cash flows from financing activities -- --
------------ ------------
Net change in cash and cash
equivalents (3) (405)
Cash and cash equivalents:
Beginning of period 49,067 16,134
------------ ------------
End of period $ 49,064 15,729
============ ============
</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
March 31, 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 March 31, 2000 and its
results of operations for the three months ended March 31, 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 unadjusted sales price of $33 million (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 has been placed in
escrow for 180 days in order to satisfy any indemnifiable claims which
may be made by Century. 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 to be 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 and pending the
transfer of the Moreno Valley Franchise Agreement will seek to make a
final determination of its liabilities so that liquidating
distributions can be made in connection with its dissolution.
(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
certain of its cable television systems allowed Limited Partners to
achieve Payback, distributions from the Riverside Sale will 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 three
months or less to be cash equivalents. At March 31, 2000, $48,592,000
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 $609,000 for the three months ended March 31,
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 $152,000 for the three months ended March 31,
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
$9,000 and $67,000 for the three months ended March 31, 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 three months ended
March 31, 1999, Riverside's operating and administrative salaries and
expenses amounted to $600,000.
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.
(6) Commitments and 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 February 10, 2000, the
Defendants filed motions to dismiss Plaintiff's complaint. The Court
has not yet ruled on such motions. No Defendant to date has filed an
answer to the Complaint, and a statutory stay of discovery is in effect
pending the Court's determination of the pending motions. 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. Such
claim may have the effect of reducing the amount of the Southern
Tennessee Escrow ultimately released to ACT 5.
The claim against the Southern Tennessee Escrow and the lawsuit
described above may 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 and pending the transfer of
the Moreno Valley Franchise Agreement will seek to make a final determination of
its liabilities so that liquidating distributions can be made in connection with
its dissolution. Accordingly, the Partnership's results of operations for the
three months ended March 31, 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.
Interest income relates to interest earned on the Partnership's cash and cash
equivalents. Interest income increased $511,000 during the three months ended
March 31, 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 and an increase in the average interest rate.
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.
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 may be made by Century.
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. Such claim may have the effect of reducing the amount of
the Southern Tennessee Escrow ultimately 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.
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 and the above described
lawsuit may have the effect of delaying any final liquidating distributions of
the Partnership.
At March 31, 2000, the Partnership had $612,000 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 March 31,
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: May 15, 2000 By: /s/ Leo Stegman
-----------------------------
Leo Stegman
Vice President and Controller
(Chief Accounting Officer)
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 49,064
<SECURITIES> 0
<RECEIVABLES> 828
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 51,886
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 49,938
<TOTAL-LIABILITY-AND-EQUITY> 51,886
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 632
<INCOME-TAX> 0
<INCOME-CONTINUING> 632
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 632
<EPS-BASIC> 3.13<F1>
<EPS-DILUTED> 0
<FN>
<F1>EPS-PRIMARY REPRESENTS NET LOSS PER LIMITED PARTNERSHIP UNIT
</FN>
</TABLE>
