<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 June 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 _____
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>
June 30, December 31,
2000 1999
-------- ------------
Assets amounts in thousands
------
<S> <C> <C>
Cash and cash equivalents (note 4) $ 9,486 49,067
Receivables 61 396
Funds held in escrow (notes 2 and 6) 494 1,994
-------- --------
$ 10,041 51,457
======== ========
Liabilities and Partners' Equity
--------------------------------
Accounts payable and accrued liabilities $ 50 303
Unclaimed limited partner distribution checks 606 613
Amounts due to related parties (note 5) 95 1,235
-------- --------
Total liabilities 751 2,151
-------- --------
Partners' equity (deficit):
General partner (3,208) (2,808)
Limited partners 12,498 52,114
-------- --------
Total partners' equity 9,290 49,306
-------- --------
Commitments and contingencies (notes 2 and 6)
$ 10,041 51,457
======== ========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 3
AMERICAN CABLE TV INVESTORS 5, LTD.
(A Colorado Limited Partnership)
Statements of Operations
(unaudited)
(see note 2)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------ ------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
amounts in thousands, except unit amounts
<S> <C> <C> <C> <C>
Revenue $ -- 2,578 -- 5,009
Operating costs and expenses:
Programming (primarily from related
parties - note 5) -- 617 -- 1,228
Operating (including allocations from
related parties - note 5) -- 259 -- 571
Selling, general and administrative
(including charges from related
parties - note 5) 74 902 142 1,834
Year 2000 costs (allocated from related
parties - note 5) -- 77 -- 77
Depreciation and amortization -- 947 -- 1,891
--------- --------- --------- ---------
Total operating expenses 74 2,802 142 5,601
--------- --------- --------- ---------
Operating loss (74) (224) (142) (592)
Other income:
Interest income 371 191 1,071 380
Adjustment to gain on sale of cable
television system (note 2) 66 -- 66 --
--------- --------- --------- ---------
Net earnings (loss) $ 363 (33) 995 (212)
========= ========= ========= =========
Net earnings (loss) per limited partnership
unit ("Unit") (note 3) $ 1.80 (.16) 4.93 (1.05)
========= ========= ========= =========
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
Six months ended June 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 10 985 995
------- ------- -------
Balance at June 30, 2000 $(3,208) 12,498 9,290
======= ======= =======
</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>
Six months ended
June 30,
----------------------
2000 1999
-------- --------
amounts in thousands
(see note 4)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 995 $ (212)
Adjustments to reconcile net earnings (loss) to net cash used
in operating activities:
Depreciation and amortization -- 1,891
Adjustment to gain on sale of cable television system (66) --
Changes in operating assets and liabilities:
Net change in receivables and other assets 335 27
Net change in accounts payable, accrued liabilities and
amounts due to related parties (1,400) (878)
-------- --------
Net cash provided by (used in) operating activities (136) 828
-------- --------
Cash flows from investing activities:
Capital expended for property and equipment -- (662)
Additional proceeds from sale of cable television system 66 --
Proceeds from funds held in escrow 1,500 --
Other investing -- 1
-------- --------
Net cash provided by (used in) investing activities 1,566 (661)
-------- --------
Cash flows from financing activities -
distribution to partners (41,011) --
-------- --------
Net change in cash and cash
equivalents (39,581) 167
Cash and cash equivalents:
Beginning of period 49,067 16,134
-------- --------
End of period $ 9,486 16,301
======== ========
</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
June 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 June 30, 2000 and its results of operations for
the six months ended June 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
escrow was released to ACT 5. ACT 5 received interest of $39,000 in
conjunction with the release of the 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 can not 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 June 30, 2000, $7,455,000 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 $1,227,000 for the six months ended June 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 $301,000 for the six months ended June 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 $18,000 and
$117,000 for the six months ended June 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 six months ended June 30, 1999,
Riverside's operating and administrative salaries and expenses amounted to
$1,318,000.
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 $77,000 for the six
months ended June 30, 1999.
(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 scheduled a hearing on September 22,
2000 to rule 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, the lawsuit described
above and the transfer of the Moreno Valley Franchise Agreement described
in note 2 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. Pending the transfer of the Moreno
Valley Franchise Agreement and resolution of the contingencies described in note
2 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 six months ended June 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 six months
ended June 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 three and six months ended June 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 $691,000 during the six months ended
June 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 escrow from the Riverside Sale.
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 note 2 to
the accompanying financial statemetns.
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 escrow was released to ACT 5. ACT 5 received interest of $39,000 in
conjunction with the release of the 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. 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, the above described
lawsuit and the transfer of the Moreno Valley Franchise Agreement described in
note 2 may have the effect of delaying any final liquidating distributions of
the Partnership.
At June 30, 2000, the Partnership had $606,000 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 June 30, 2000:
None.
II-1
<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: August 14, 2000 By: /s/ Leo Stegman
---------------------------------
Leo Stegman
Vice President and Controller
(Chief Accounting Officer)
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<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
(27) Financial Data Schedule
</TABLE>
