<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
--------------- ----------------------
Commission File Number 0-21309
CENCOM CABLE INCOME PARTNERS II, L.P.
(Exact name of registrant as specified in its charter)
Delaware 43-1456575
- ------------------------------- ----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
12444 Powerscourt Drive - Suite 100
St. Louis, Missouri 63131
- --------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(Registrant's telephone number, including area code) (314) 965-0555
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ----
Page 1
<PAGE> 2
CENCOM CABLE INCOME PARTNERS II, L.P.
FORM 10-Q - FOR THE QUARTER ENDED SEPTEMBER 30, 1999
INDEX
<TABLE>
<CAPTION>
Page
Part I. Financial Information
<S> <C>
Item 1. Condensed Financial Statements
a. Statement of Net Assets in Liquidation - As of September 30, 1999 3
b. Statement of Changes in Net Assets in Liquidation - Month Ended 4
September 30, 1999
c. Balance Sheets As of August 31, 1999 and December 31, 1998 5
d. Statements of Operations - Two Months Ended
August 31, 1999 and Three Months Ended September 30, 1998 6
e. Statements of Operations - Eight Months Ended August 31, 1999 and
Nine Months Ended September 30, 1998 7
f. Statement of Partners' Capital (Deficit) - Eight Months Ended
August 31, 1999 8
g. Statements of Cash flows - Eight Months Ended August 31, 1999 and
Nine Months Ended September 30, 1998 9
h. Notes to Condensed Financial Statements 11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 14
Part II. Other Information
Item 1. Legal Proceedings 19
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 19
Signature Page 20
</TABLE>
Page 2
<PAGE> 3
CENCOM CABLE INCOME PARTNERS II, L.P.
STATEMENT OF NET ASSETS IN LIQUIDATION
AS OF SEPTEMBER 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS, at estimated realizable values:
Cash and cash equivalents, including restricted cash of $1,098,500 $ 3,836,530
Note receivable from buyer of cable system 99,477
Investment in unconsolidated limited partnership 2,171,778
-----------
TOTAL ASSETS 6,107,785
-----------
LIABILITIES, at estimated settlement amounts:
Accrued costs of liquidation 523,781
Payables to General Partner and affiliate 1,316,729
-----------
TOTAL LIABILITIES 1,840,510
-----------
NET ASSETS IN LIQUIDATION $ 4,267,275
===========
</TABLE>
The accompanying notes are an integral part of these statements.
Page 3
<PAGE> 4
CENCOM CABLE INCOME PARTNERS II, L.P.
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(Unaudited)
<TABLE>
<CAPTION>
FOR THE MONTH
ENDED
SEPTEMBER 30,
1999
-------------
CHANGE IN ASSETS AND LIABILITIES IN LIQUIDATION:
<S> <C>
Decrease in deferred management fees $ 2,831,105
Equity in loss of unconsolidated limited partnership (8,554)
Provision for accrued costs of liquidation (56,139)
Interest income 17,412
Other 13,904
-------------
Net change in assets in liquidation 2,797,728
NET ASSETS IN LIQUIDATION, beginning of period 1,469,547
-------------
NET ASSETS IN LIQUIDATION, end of period $ 4,267,275
=============
</TABLE>
The accompanying notes are an integral part of these statements.
Page 4
<PAGE> 5
CENCOM CABLE INCOME PARTNERS II, L.P.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
AUGUST 31, DECEMBER 31,
1999* 1998
----------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,007,127 $ 267,002
Accounts receivable, net 99,477 52,409
Prepaid expenses and other --- 30,844
----------- -----------
Total current assets 4,106,604 350,255
----------- -----------
PROPERTY AND EQUIPMENT, net --- 4,156,583
FRANCHISE COSTS, net of accumulated amortization of $ -0-
and $1,285,846, respectively --- 10,521
DEBT ISSUANCE COSTS, net of accumulated amortization of $ -0-
and $82,545, respectively --- 208,533
INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIP 2,180,332 3,171,808
----------- -----------
$ 6,286,936 $ 7,897,700
=========== ===========
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 357,596 $ 1,310,831
Payables to General Partner and affiliates 4,918,960 6,291,552
Subscriber deposits --- 10,527
----------- -----------
Total current liabilities 5,276,556 7,612,910
----------- -----------
DEFERRED REVENUE --- 19,774
----------- -----------
LONG TERM DEBT --- 3,800,000
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partner --- ---
Limited Partners (250,000 units authorized; 90,915 units issued and
outstanding) 1,469,547 (3,075,817)
Note receivable from General Partner (459,167) (459,167)
----------- -----------
Total Partners' capital (deficit) 1,010,380 (3,534,984)
----------- -----------
$ 6,286,936 $ 7,897,700
=========== ===========
</TABLE>
*Operating activity for the eight month period from January 1, 1999
through August 31, 1999 is prior to liquidation basis adjustments.
The accompanying notes are an integral part of these statements.
Page 5
<PAGE> 6
CENCOM CABLE INCOME PARTNERS II, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE TWO FOR THE THREE
MONTHS ENDED MONTHS ENDED
AUGUST 31, SEPTEMBER 30,
1999* 1998
-------------- --------------
<S> <C> <C>
SERVICE REVENUES $ 100,414 $ 1,547,272
-------------- --------------
OPERATING EXPENSES:
Operating, general and administrative 109,383 790,473
Depreciation and amortization 7,139 179,680
Management fees - related party 4,949 77,558
-------------- --------------
121,471 1,047,711
-------------- --------------
Income (loss) from operations (21,057) 499,561
-------------- --------------
OTHER INCOME (EXPENSE):
Interest income --- 6,837
Interest expense --- (100,451)
Equity in income of unconsolidated limited partnership 7,829 69,334
Gain on sale of fixed assets --- 3,000
Gain on sale of cable television system 599,679 ---
-------------- --------------
607,508 (21,280)
-------------- --------------
Net income $ 586,451 $ 478,281
============== ==============
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 6.45 $ 5.26
============== ==============
AVERAGE NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING
90,915 90,915
============== ==============
</TABLE>
*Operating activity for the two month period from July 1, 1999 through August
31, 1999 is prior to liquidation basis adjustments.
The accompanying notes are an integral part of these statements.
Page 6
<PAGE> 7
CENCOM CABLE INCOME PARTNERS II, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE EIGHT FOR THE NINE
MONTHS ENDED MONTHS ENDED
AUGUST 31, SEPTEMBER 30,
1999* 1998
-------------- --------------
<S> <C> <C>
SERVICE REVENUES $ 1,781,774 $ 4,570,640
-------------- --------------
OPERATING EXPENSES:
Operating, general and administrative 1,109,480 2,349,930
Depreciation and amortization 133,858 464,386
Management fees - related party 89,013 228,727
-------------- --------------
1,332,351 3,043,043
-------------- --------------
Income from operations 449,423 1,527,597
-------------- --------------
OTHER INCOME (EXPENSE):
Interest income 191,536 35,128
Interest expense (108,258) (309,704)
Other expense (41,264) ---
Equity in income of unconsolidated limited partnership 7,411,528 367,583
Gain on sale of fixed assets --- 3,000
Gain on sale of cable television systems 17,298,434 ---
-------------- --------------
24,751,976 96,007
-------------- --------------
Income before extraordinary item 25,201,399 1,623,604
Extraordinary loss - early extinguishment of long-term debt (195,500) ---
-------------- --------------
Net income $ 25,005,899 $ 1,623,604
============== ==============
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 275.05 $ 17.86
============== ==============
AVERAGE NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING 90,915 90,915
============== ==============
</TABLE>
*Operating activity for the eight month period from January 1, 1999 through
August 31, 1999 is prior to liquidation basis adjustments.
The accompanying notes are an integral part of these statements.
Page 7
<PAGE> 8
CENCOM CABLE INCOME PARTNERS II, L.P.
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
FOR THE EIGHT MONTHS ENDED AUGUST 31, 1999*
(Unaudited)
<TABLE>
<CAPTION>
Note
Receivable
From
General Limited General
Partner Partners Partner Total
------------ -------------- ----------- -------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1998 $ --- $ (3,075,817) $ (459,167) $ (3,534,984)
Net income --- 25,005,899 --- 25,005,899
Distributions --- (20,455,875) --- (20,455,875)
------------ ------------- ---------- ------------
BALANCE, August 31, 1999 $ --- $ 1,474,207 $ (459,167) $ 1,015,040
============ ============= ========== ============
</TABLE>
*Operating activity for the eight month period from January 1, 1999 through
August 31, 1999 is prior to liquidation basis adjustments.
The accompanying notes are an integral part of these statements.
Page 8
<PAGE> 9
CENCOM CABLE INCOME PARTNERS II, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
EIGHT MONTHS NINE MONTHS
ENDED ENDED
AUGUST 31, SEPTEMBER 30,
1999* 1998
------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 25,005,899 $ 1,623,604
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation and amortization 133,858 464,386
Amortization of debt issuance costs 13,033 39,100
Extraordinary loss - early extinguishment of long-term debt 195,500 ---
Equity in income of unconsolidated limited partnership (7,411,528) (367,583)
Gain on sale of cable television systems (17,298,434) ---
Gain on sale of fixed assets --- (3,000)
Changes in assets and liabilities, net of effects from sales of cable television
systems-
Accounts receivable, net 226,479 68,870
Prepaid expenses and other 3,702 (6,999)
Accounts payable, accrued expenses and other current liabilities (782,343) 172,257
Accrued income taxes withheld on behalf of Limited Partners --- (2,222,157)
Payables to General Partner and affiliate (1,393,591) 980,525
Subscriber deposits --- (715)
Deferred revenue --- 2,215
------------ -------------
Net cash provided by (used in) operating activities (1,307,425) 750,503
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (261,888) (748,959)
Proceeds from sale of cable television systems, net of cash sold 21,162,314 ---
Proceeds from sale of fixed assets --- 3,000
Restricted funds held in escrow --- 750,000
Distributions from unconsolidated limited partnership 8,402,999 ---
------------ -------------
Net cash provided by investing activities 29,303,425 4,041
------------ -------------
</TABLE>
Page 9
<PAGE> 10
CENCOM CABLE INCOME PARTNERS II, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
EIGHT MONTHS NINE MONTHS
ENDED ENDED
AUGUST 31, SEPTEMBER 30,
1999* 1998
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to Limited Partners (20,372,395) ---
Income taxes withheld related to limited partners' distribution (83,480) ---
Borrowings on credit agreement 300,000 2,100,000
Repayments on credit agreement (4,100,000) (2,900,000)
-------------- -------------
Net cash used in financing activities (24,255,875) (800,000)
-------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,740,125 (45,456)
CASH AND CASH EQUIVALENTS, beginning of period 267,002 220,104
-------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 4,007,127 $ 174,648
============== =============
</TABLE>
*Operating activity for the eight month period from January 1, 1999 through
August 31, 1999 is prior to liquidation basis adjustments.
The accompanying notes are an integral part of these statements.
Page 10
<PAGE> 11
CENCOM CABLE INCOME PARTNERS II, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION:
The accompanying unaudited financial statements have been prepared in accordance
with the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted.
On August 31, 1999, the Partnership consummated the sale of all of its cable
television systems. As a result of this transaction, the Partnership changed its
basis of accounting to the liquidation basis on September 1, 1999. Accordingly,
the assets in the accompanying unaudited statement of assets and liabilities in
liquidation as of September 30, 1999 have been stated at estimated realizable
values and the liabilities have been reflected at estimated settlement amounts.
Net assets in liquidation as of September 30, 1999 in the accompanying statement
of assets and liabilities in liquidation represents the estimated distribution
to be made to the Limited Partners and the General Partner, if any. Proceeds
ultimately received by the partners upon liquidation could differ from the
amounts recorded in the accompanying statement of assets and liabilities in
liquidation.
The General Partner's intention is to terminate the Partnership as expeditiously
as possible. After all distributions from Cencom Partners, L.P. ("CPLP") (see
Note 3 for related discussion) are received, the funds have been released from
several indemnification escrow accounts pertaining to the sale of the
Partnership's cable systems, the receipt of proceeds from note receivable from
buyer of cable system, the Partnership's outstanding obligations will be paid
and the remaining proceeds less required income tax withholdings of
approximately $85,000 will be distributed in December 1999. Upon its
termination, the Partnership will cease to be a public entity and will no longer
be subject to the informational reporting requirements of the Securities
Exchange Act of 1934, as amended.
2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS:
The financial statements of Cencom Cable Income Partners II, L.P. (the
"Partnership" or "CCIP II") as of August 31, 1999 and September 30, 1998, 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, 1998. Interim results are not necessarily
indicative of results for a full year.
3. INVESTMENT IN UNCONSOLIDATED LIMITED PARTNERSHIP:
The Partnership owns limited partnership units of CPLP which provide the
Partnership an 84.03% ownership interest in CPLP. The Partnership accounts for
its investment in CPLP using the equity method. For the eight months period
ended August 31, 1999, the Partnership recorded equity in income from its
investment in CPLP totaling $7,411,528.
Page 11
<PAGE> 12
Summary financial information for the operating results of CPLP, for the two and
eight month periods ended August 31, 1999, which are not consolidated with the
operating results of the Partnership, are as follows:
<TABLE>
<CAPTION>
For the two and three months ended For the eight and nine months ended
---------------------------------- -----------------------------------
August 31, September 30, August 31, September 30,
----------- ------------- ---------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Service revenues $ --- $ 656,409 $ 660,630 $ 1,944,146
Income (loss) from operations $ --- $ 259,832 $ (246,427) $ 920,765
Gain on sale of cable television systems $ --- $ --- $ 8,985,528 $ ---
Net income $ 9,317 $ 82,538 $ 8,820,096 $ 437,442
</TABLE>
4. DISPOSITIONS:
On April 1, 1999, CCIP II sold its cable television systems serving
approximately 11,800 basic subscribers in the communities of Angleton, Aqua
Dolce, Belleville, Driscoll, Hempstead, Kingsville, and Sealy, Texas
(collectively, the "Texas Systems"). The purchaser of the Texas Systems was Etan
Industries, Inc. ("Etan"), an unaffiliated third party. The sale price was $20.8
million, subject to working capital adjustments. Net proceeds were used to repay
outstanding bank indebtedness and a payable to CPLP. CCIP II used the remaining
net proceeds, less amounts held in an indemnity escrow and required income tax
withholdings, plus the distribution received from CPLP (as described below), to
make distributions to its partners in accordance with the liquidation provisions
of the Partnership Agreement. Pursuant to the asset purchase agreement,
$1,040,000 was deposited into an indemnification escrow account. These funds
will be released to the Partnership upon mutual satisfaction of the
Partnership's representations and warranties related to the assets that were
sold.
On April 1, 1999, CPLP sold its remaining cable television systems serving
approximately 6,400 basic subscribers in the communities in and around LaGrange,
Texas (collectively, the "LaGrange Systems"). The purchaser of the cable
television systems was Etan and the sales price was $11.2 million, subject to
working capital adjustments. The sale of the LaGrange Systems completes CPLP's
dissolution of its cable television assets. CPLP used the net proceeds from the
sale, less a holdback for contingencies and amounts held in an indemnity escrow,
to satisfy the liabilities and expenses of CPLP, with the remaining funds
distributed to its partners, of which CCIP II received 84.03%.
In May 1999, the Partnership entered into an Asset Purchase Agreement with
Galaxy Telecom, L.P., an unaffiliated third party, pursuant to which the
Partnership's remaining northeast Missouri systems would be sold. Consummation
of the sale occurred on August 31, 1999. The sale price was approximately $1.2
million, subject to working capital adjustments, with approximately $58,500
deposited into an indemnification escrow account and approximately $99,500 in
the form of a promissory note due on December 15, 1999. The funds held in escrow
will be released to the Partnership upon mutual satisfaction of the
Partnership's representations and warranties related to the assets that were
sold.
5. DEBT:
On April 1, 1999, the Partnership paid off its outstanding indebtedness under
the Partnership's and CPLP's joint bank credit facility with the proceeds from
the sale of the Texas Systems. As of April 1, 1999, there was no indebtedness
outstanding under this facility and the credit facility was terminated. In
connection therewith, the Partnership recognized an extraordinary loss of
$195,500 pertaining to the write-off of unamortized debt issuance costs.
Page 12
<PAGE> 13
6. LITIGATION:
Abeles v. Cencom Cable Entertainment, Inc., et. al.
On June 17, 1998, approximately 400 limited partners in CCIP II (the "Cencom
Plaintiffs"), filed a lawsuit against the General Partner and Cencom Cable
Entertainment, Inc. ("CCE", together with the General Partner, "Cencom
Defendants"), and three brokerage firms involved in the original sale of limited
partnership units. CCE provided management services to the Partnership and also
owned all of the stock of the General Partner prior to mid-1994.
The Cencom Plaintiffs allege that the Cencom Defendants are liable for fraud,
negligent misrepresentation or omission, negligence, breach of fiduciary duty,
breach of implied covenants and violations of the Missouri Merchandising
Practices Act in connection with the sale of limited partnership interests in
CCIP II commencing in 1987. The Cencom Plaintiffs seek recision of the purchase
of the securities along with ancillary damages, actual damages, punitive
damages, costs and attorneys' fees.
On August 17, 1998, the Cencom Defendants filed a motion to dismiss. On November
5, 1998, the court heard an oral argument on that motion and a ruling has not
yet been made on this motion. Discovery has been stayed during the pendency of
the motion to dismiss.
The Partnership is not named a defendant in the above case.
Wallace v. Wood, et. al.
On June 10, 1997, four limited partners of the Partnership (the "Plaintiffs")
filed a putative class action suit on behalf of the limited partners against the
General Partner, Charter Communications, Inc. ("Charter"), certain other Charter
affiliates and four present or former officers of the General Partner. The
Plaintiffs subsequently amended their lawsuit and converted it to a Derivative
Action, thus adding the Partnership as a nominal defendant (collectively, the
"Defendants").
The Plaintiffs allege that the Defendants breached the Partnership Agreement and
their fiduciary duties of loyalty and candor in connection with the management
of the Partnership and the sale of the Partnership assets to certain purchasing
affiliates. The Plaintiffs seek a declaration that the distribution to the
Limited Partners is improper, request that defendants compensate the Partnership
for all damages suffered as a result of the actions and transactions, including
interest, costs, reasonable attorneys' fees, accountants' and experts' fees and
request an accounting for all monies earned by the properties after the
effective date of the sale to the purchasing affiliates.
On May 19, 1998, the Defendants filed a motion for judgment on the pleadings,
seeking dismissal of certain of the defendants from the lawsuit. On October 12,
1999, the court issued an order granting in part and denying in part the
Defendants' motion for judgment on the pleadings.
7. RELATED-PARTY TRANSACTIONS:
Since assumption of the responsibilities under the management services contract,
the General Partner has elected to defer payment of all such management fees.
Management fees of $4,470,894 and $4,305,023 have been deferred and are included
in Payables to General Partner and Affiliates at August 31, 1999 and September
30, 1998, respectively. In connection with the Partnership's adoption of
liquidation accounting, the payable to General Partner was reduced to $1,316,729
to reflect the estimated amounts to be paid to the General Partner, calculated
in accordance with the terms and conditions of the Partnership Agreement.
Page 13
<PAGE> 14
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The following table sets forth the approximate number of subscribers of the
Partnership as of the date indicated.
<TABLE>
<CAPTION>
August 31, December 31, September 30,
1999 1998 1998
---------- ------------ -------------
<S> <C> <C> <C>
Basic Subscribers:
Texas systems (a) --- 11,900 11,800
Northeast Missouri systems (b) --- 1,700 1,700
--------- --------- ---------
--- 13,600 13,500
========= ========= =========
Premium Subscriptions:
Texas systems (a) --- 5,850 6,400
Northeast Missouri systems (b) --- 730 700
--------- --------- ---------
--- 6,580 7,100
========= ========= =========
</TABLE>
(a) The Texas systems were sold on April 1, 1999.
(b) The Northeast Missouri systems were sold on August 31, 1999.
Page 14
<PAGE> 15
The following table sets forth certain items in dollars and as a percentage of
total revenues for the periods indicated:
<TABLE>
<CAPTION>
For the Two Months For the Three Months
Ended August 31, 1999 Ended September 30, 1998
--------------------------- --------------------------
% of % of
Amount Revenue Amount Revenue
------------- ----------- ------------- ----------
<S> <C> <C> <C> <C>
Service revenues $ 100,414 100.0% $ 1,547,272 100.0%
------------- ----------- ------------- ----------
Operating expenses:
Operating, general and administrative 109,383 108.9 790,473 51.1
Depreciation and amortization 7,139 7.1 179,680 11.6
Management fees - related party 4,949 4.9 77,558 5.0
------------- ----------- ------------- ----------
121,471 120.9 1,047,711 67.7
------------- ----------- ------------- ----------
Income (loss) from operations (21,057) (20.9) 499,561 32.3
------------- ----------- ------------- ----------
Other income (expense):
Interest income --- --- 6,837 0.4
Interest expense --- --- (100,451) (6.5)
Equity in income of unconsolidated
limited partnership 7,829 7.8 69,334 4.5
Gain on sale of cable television systems 599,679 597.2 --- ---
Gain on sale of fixed assets --- --- 3,000 0.2
------------- ----------- ------------- ----------
607,508 605.0 (21,280) (1.4)
------------- ----------- ------------- ----------
Net income $ 586,451 584.1% $ 478,281 30.9%
============= =========== ============= ==========
</TABLE>
Page 15
<PAGE> 16
The following table sets forth certain items in dollars and as a percentage of
total revenues for the periods indicated:
<TABLE>
<CAPTION>
For the Eight Months For the Nine Months
Ended August 31, 1999 Ended September 30, 1998
-------------------------- ---------------------------
% of % of
Amount Revenue Amount Revenue
------------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Service revenues $ 1,781,774 100.0% $ 4,570,640 100.0%
------------- ---------- ------------- ----------
Operating expenses:
Operating, general and administrative 1,109,480 62.3 2,349,930 51.4
Depreciation and amortization 133,858 7.5 464,386 10.2
Management fees - related party 89,013 5.0 228,727 5.0
------------- ---------- ------------- ----------
1,332,351 74.8 3,043,043 66.6
------------- ---------- ------------- ----------
Income from operations 449,423 25.2 1,527,597 33.4
------------- ---------- ------------- ----------
Other income (expense):
Interest income 191,536 10.7 35,128 0.8
Interest expense (108,258) (6.1) (309,704) (6.8)
Other expense (41,264) (2.3) --- ---
Equity in income of unconsolidated
limited partnership 7,411,528 416.0 367,583 8.0
Gain on sale of cable television systems 17,298,434 970.9 --- ---
Gain on sale of fixed assets --- --- 3,000 0.1
------------- ---------- ------------- ----------
24,751,976 1,389.2 96,007 2.1
------------- ---------- ------------- ----------
Income before extraordinary item 25,201,399 1,414.4 1,623,604 35.5
Extraordinary loss - early extinguishment of
long-term debt (195,500) (11.0) --- ---
------------- ---------- ------------- ----------
Net income $ 25,005,899 1,403.4% $ 1,623,604 35.5%
============= ========== ============= ==========
</TABLE>
Page 16
<PAGE> 17
The Registrant had no results of operations for the period subsequent to August
31, 1999, as a result of the sale of its northeast Missouri system. No
discussion of operating results for the three and nine months ended September
30, 1999 versus the three and nine months ended September 30, 1998 has been
provided as such analysis is not meaningful.
Changes in Assets and Liabilities in Liquidation
Net assets in liquidation at September 30, 1999 were approximately $4.3 million,
consisting of cash and cash equivalents of approximately $3.8 million (including
restricted cash of $1,098,500 held in indemnification escrow accounts due to
provisions contained in the asset purchase agreements) and a note receivable
from buyer of cable system of approximately $99,500, offset by accrued
liquidation costs of approximately $524,000. The net change in assets and
liabilities in liquidation during the month ended September 30, 1999 was
approximately $2.8 million, which is the result of the increase in the cash and
cash equivalents balance due to interest income earned by the Partnership and an
increase in the accrued costs of liquidation to arrive for the estimated
liability associated with winding down the Partnership's operations.
Final dissolution of the Partnership and related cash distributions to the
Limited Partners and General Partner will occur upon obtaining final resolution
of all liquidation issues, including release of funds from the indemnification
escrow account. Proceeds ultimately received by the partners upon liquidation
could differ from the amounts recorded in September 30, 1999 financial
statements.
Liquidity and Capital Resources
On April 1, 1999, CCIP II sold its cable television systems serving
approximately 11,800 basic subscribers in Texas for a sale price of $20.8
million, subject to working capital adjustments. Net proceeds were used to repay
outstanding bank indebtedness of $3.8 million and a payable to CPLP of $1.864
million. CCIP II used the remaining net proceeds, less amounts held in an
indemnity escrow, plus the distribution received from CPLP (as described below),
to make distributions to its partners in accordance with the liquidation
provisions of the Partnership Agreement.
On April 1, 1999, CPLP sold its remaining cable television systems serving
approximately 6,400 basic subscribers in the communities in and around LaGrange,
Texas for a sale price of $11.2 million, subject to working capital adjustments.
The sale of these systems completes CPLP's dissolution of its cable television
assets. CPLP used the net proceeds from the sale, less a holdback for
contingencies and amounts held in an indemnity escrow, first to satisfy the
liabilities and expenses of CPLP with the remaining funds distributed to its
partners, of which CCIP II received 84.03%.
The Partnership and CPLP both maintained a credit agreement (the "Credit
Agreement") providing for borrowings up to $8,500,000 and $7,500,000 by the
Partnership and CPLP, respectively, with each borrower jointly and severally
liable in the event of default. The debt bore interest at rates, at the
Partnership's option, based on the higher of the prime rate of the Canadian
Imperial Bank of Commerce (the agent bank) or the Federal Funds Rate plus 3/4 of
1%, or the LIBOR plus applicable margins based upon the Partnership's leverage
ratio at the time of the borrowings. At March 31, 1999, the interest rate on
this outstanding indebtedness was approximately 6.69%. On April 1, 1999, all
outstanding indebtedness under the Credit Agreement was repaid from the proceeds
of the sale of the Texas Systems and the facility was terminated.
The Partnership made capital expenditures of approximately $262,000 during the
first eight months of 1999 in connection with the improvement and upgrading of
the Partnership systems.
Pursuant to the terms of the Partnership Agreement, the Partnership is required
to distribute all cash available for distribution to the Partners within 60 days
after the end of each calendar quarter and, with respect to certain available
refinancing proceeds and certain available sales proceeds, as soon as possible
following completion of the relevant transaction. However, the Partnership
suspended regular distributions
Page 17
<PAGE> 18
to Limited Partners in the fourth quarter of 1993 to provide greater financial
flexibility in meeting its debt covenants and in making capital expenditures
necessary to maintain the Partnership's assets. No additional distributions have
been made other than a special distribution in June 1997 following the sale of
certain assets and a second special distribution in May 1998 from the remaining
net proceeds of the sale of the Texas Systems and distribution received from
CPLP.
In May 1999, the Partnership entered into an Asset Purchase Agreement with an
unaffiliated third party pursuant to which the northeast Missouri systems would
be sold. Consummation of the sale occurred on August 31, 1999, with the
Partnership receiving cash proceeds of approximately $952,000 and a note
receivable of $99,477. Following the sale of the northeast Missouri systems, the
Partnership has sold all of its cable television assets.
Net assets in liquidation as of September 30, 1999 in the statement of assets
and liabilities in liquidation represents the estimated distribution to be made
to the Limited Partners and the General Partner, if any. Proceeds ultimately
received by the partners upon liquidation could differ from the amounts recorded
in the accompanying statement of assets and liabilities in liquidation.
The General Partner's intention is to terminate the Partnership as expeditiously
as possible. After all distributions from CPLP are received, the funds have been
released from several indemnification escrow accounts pertaining to the sale of
the Partnership's cable systems, the receipt of proceeds from note receivable
from buyer of cable system, the Partnership's outstanding obligations will be
paid and the remaining proceeds will be distributed in December 1999. Upon its
termination, the Partnership will cease to be a public entity and will no longer
be subject to the informational reporting requirements of the Securities
Exchange Act of 1934, as amended.
Year 2000 Impact
Many existing computer systems and applications, and other control devices and
embedded computer chips use only two digits (rather than four) to identify a
year in the date field, failing to consider the impact of the upcoming change in
the century. As a result, such systems, applications, devices, and chips could
create erroneous results or might fail altogether unless corrected properly to
interpret data related to the year 2000 and beyond (the "Year 2000 Problem").
These errors and failures may result, not only from a date recognition problem
in the particular part of a system failing, but may also result as systems,
applications, devices and chips receive erroneous or improper data from
third-parties suffering from the Year 2000 Problem. In addition, two interacting
systems, applications, devices or chips, each of which has individually been
fixed so that it will properly handle the Year 2000 Problem, could nonetheless
suffer "integration failure" because their method of dealing with the problem is
not compatible. These problems are expected to increase in frequency and
severity as the year 2000 approaches. We have incurred only immaterial costs to
date directly related to addressing the Year 2000 Problem. Since the Partnership
is in liquidation, we do not believe the Year 2000 Problem will have a
significant impact on the Partnership.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward looking statements. Certain information included in this Form 10-Q
contains statements that are forward looking, such as statements relating to the
effects of future regulation, future capital commitments, future acquisitions
and the Partnership's success in dealing with the year 2000 issues. Such
forward-looking information involves important risks and uncertainties that
could significantly affect expected results in the future from those expressed
in any forward-looking statements made by, or on behalf of the Partnership.
These risks and uncertainties include, but are not limited to, uncertainties
relating to economic conditions, acquisitions and divestitures, government and
regulatory policies, the pricing and availability of equipment, materials,
inventories and programming, technological developments, changes in the
competitive environment in which the Partnership operates and the Partnership's
success in dealing with year 2000 issues. Investors are cautioned that all
forward-looking statements involve risks and uncertainties.
Page 18
<PAGE> 19
Part II. Other Information
Item 1. Legal Proceedings
Wallace v. Wood, et. al.
On June 10, 1997, four limited partners of the Partnership filed a putative
class action suit on behalf of the limited partners against the General Partner,
Charter Communications, Inc. (Charter), certain other Charter affiliates and
four present or former officers of the General Partner. On May 19, 1998, the
Defendants filed a motion for judgment on the pleadings, seeking dismissal of
certain of the defendants from the lawsuit. On October 12, 1999, the court
issued an order granting in part and denying in part the Defendants' motion for
judgment on the pleadings.
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
(a) Exhibits
27.1 Financial Data Schedule (supplied for the information of the
Commission)
(b) Reports on Form 8-K
On September 14, 1999, CCIP II filed a current report on Form 8-K
related to the sale of cable television systems on August 31, 1999,
reported in part I, Item 2 therein, as follows:
(a) CCIP II sold its cable television systems serving northeast
Missouri, to an unaffiliated third party for $1.2 million, subject
to working capital adjustments, with approximately $58,500 being
deposited into an indemnification escrow account and approximately
$99,500 in the form of a promissory note due on December 15, 1999.
The Form 8-K filing did not include certain unaudited pro forma
financial information related to the sale transaction pursuant to
Article 3 of Regulation S-X since the Partnership no longer has any
cable television systems subsequent to the sale.
Page 19
<PAGE> 20
CENCOM CABLE INCOME PARTNERS II, L.P.
FOR QUARTER ENDED SEPTEMBER 30, 1999
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 II, L.P.
By: Cencom Properties II, Inc.
its General Partner
By: /s/ Jerald L. Kent
----------------------------
Jerald L. Kent
Executive Vice President and
Chief Financial Officer
By: /s/Jerald L. Kent November 15, 1999
------------------------------
Jerald L. Kent
Executive Vice President and
Chief Financial Officer
By: /s/Ralph G. Kelly November 15, 1999
------------------------------
Ralph G. Kelly
Treasurer
Page 20
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<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
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