<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 period 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 Number: 0-18307
NORTHLAND CABLE PROPERTIES EIGHT LIMITED PARTNERSHIP
----------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Washington 91-1423516
----------------------- ------------------------------------
(State of Organization) (I.R.S. Employer Identification No.)
1201 Third Avenue, Suite 3600, Seattle, Washington 98101
-------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(206) 621-1351
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 [ ]
This filing contains __ pages. Exhibits index appears on page __.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
NORTHLAND CABLE PROPERTIES EIGHT LIMITED PARTNERSHIP BALANCE SHEETS -
(Unaudited)
(Prepared by the Managing General Partner)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
Cash $ 336,745 $ 316,123
Accounts receivable 105,616 111,341
Due from affiliates 4,879 2,445
Prepaid expenses 48,414 71,698
Property and equipment, net of accumulated
depreciation of $6,241,014 and $5,682,821,
respectively 6,403,218 6,683,636
Intangible assets, net of accumulated
amortization of $3,401,377 and $3,176,493,
respectively 4,640,187 4,859,583
------------ ------------
Total assets $ 11,539,059 $ 12,044,826
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses $ 405,751 $ 514,549
Due to managing general partner and affiliates 33,431 8,037
Converter deposits 4,982 7,952
Subscriber prepayments 225,377 207,590
Notes payable 10,024,539 10,272,182
------------ ------------
Total liabilities 10,694,080 11,010,310
------------ ------------
Partners' equity:
General Partners:
Contributed capital, net 1,000 1,000
Accumulated deficit (72,768) (70,873)
------------ ------------
(71,768) (69,873)
------------ ------------
Limited Partners:
Contributed capital, net 8,120,820 8,120,820
Accumulated deficit (7,204,073) (7,016,431)
------------ ------------
916,747 1,104,389
------------ ------------
Total partners' equity 844,979 1,034,516
------------ ------------
Total liabilities and partners' equity $ 11,539,059 $ 12,044,826
============ ============
</TABLE>
The accompanying notes to unaudited financial
statements are an integral part of these statements
2
<PAGE> 3
NORTHLAND CABLE PROPERTIES EIGHT LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS - (Unaudited)
(Prepared by the Managing General Partner)
<TABLE>
<CAPTION>
For the six months
ended June 30,
-----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Service revenues $ 2,550,923 $ 2,474,332
Expenses:
Operating (including $36,992
and $32,734 to affiliates in 2000
and 1999, respectively) 266,637 223,887
General and administrative (including
$323,348 and $284,579 to affiliates
in 2000 and 1999, respectively) 611,749 567,963
Programming (including $36,937
and $41,417 to affiliates in 2000
and 1999, respectively) 664,475 637,101
Depreciation and amortization 768,187 816,506
----------- -----------
2,311,048 2,245,457
----------- -----------
Income from operations 239,875 228,875
Other income (expense):
Interest expense (432,500) (424,454)
Amortization of loan fees (14,890) (27,290)
Interest income and other 5,477 8,199
Gain on disposal of assets 12,500 -
----------- -----------
(429,413) (443,545)
----------- -----------
Net loss $ (189,538) $ (214,670)
=========== ===========
Allocation of net loss:
General Partners $ (1,895) $ (2,147)
=========== ===========
Limited Partners $ (187,643) $ (212,523)
=========== ===========
Net loss per limited partnership unit:
(19,087 units for both time periods) $ (10) $ (11)
=========== ===========
Net loss per $1,000 investment $ (20) $ (22)
=========== ===========
</TABLE>
The accompanying notes to unaudited financial
statements are an integral part of these statements
3
<PAGE> 4
NORTHLAND CABLE PROPERTIES EIGHT LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS - (Unaudited)
(Prepared by the Managing General Partner)
<TABLE>
<CAPTION>
For the three months
ended June 30,
-------------------------------
2000 1999
----------- -----------
<S> <C> <C>
Service revenues $ 1,282,944 $ 1,244,539
Expenses:
Operating (including $18,799
and $18,508 to affiliates in 2000
and 1999, respectively) 130,901 110,786
General and administrative (including
$160,890 and $160,256 to affiliates
in 2000 and 1999, respectively) 314,304 290,539
Programming (including $18,000
and $17,707 to affiliates in 2000
and 1999, respectively) 339,218 321,705
Depreciation and amortization 388,514 399,536
----------- -----------
1,172,937 1,122,566
----------- -----------
Income from operations 110,007 121,973
Other income (expense):
Interest expense (215,128) (206,610)
Amortization of loan fees (7,386) (13,645)
Interest income and other 3,449 5,016
Gain on disposal of assets 12,500 -
----------- -----------
(206,565) (215,239)
----------- -----------
Net loss $ (96,558) (93,266)
=========== ===========
Allocation of net loss:
General Partners $ (966) $ (933)
=========== ===========
Limited Partners $ (95,592) $ (92,333)
=========== ===========
Net loss per limited partnership unit:
(19,087 units for both time periods) $ (5) $ (5)
=========== ===========
Net loss per $1,000 investment $ (10) $ (10)
=========== ===========
</TABLE>
The accompanying notes to unaudited financial
statements are an integral part of these statements
4
<PAGE> 5
NORTHLAND CABLE PROPERTIES EIGHT LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS - (Unaudited)
(Prepared by the Managing General Partner)
<TABLE>
<CAPTION>
For the six months
ended June 30,
---------------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(189,538) $(214,670)
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation and amortization 768,187 816,506
Amortization of loan costs 14,890 27,290
Gain on sale of assets (12,500) -
(Increase) decrease in operating assets:
Accounts receivable 5,725 2,236
Due from affiliates (2,434) 23,209
Prepaid expenses 23,284 24,280
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses (108,798) (352,157)
Due to managing general partner and affiliates 25,394 (68,668)
Converter deposits (2,970) (580)
Subscriber prepayments 17,787 11,372
--------- ---------
Net cash from operating activities 539,027 268,818
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (277,774) (232,176)
Proceeds from sale of property 12,500 -
Franchise fees and other intangibles (5,488) -
--------- ---------
Net cash used in investing activities (270,762) (232,176)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under long term debt, net 77,357 -
Principal payments on borrowings (325,000) (284,818)
--------- ---------
Net cash used in financing activities (247,643) (284,818)
--------- ---------
(DECREASE) INCREASE IN CASH 20,622 (248,176)
CASH, beginning of period 316,123 800,111
--------- ---------
CASH, end of period $ 336,745 $ 551,935
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 420,326 $ 432,332
========= =========
</TABLE>
The accompanying notes to unaudited financial
statements are an integral part of these statements
5
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NORTHLAND CABLE PROPERTIES EIGHT LIMITED PARTNERSHIP
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) These unaudited financial statements are being filed in conformity with
Rule 10-01 of Regulation S-X regarding interim financial statement
disclosure and do not contain all of the necessary footnote disclosures
required for a fair presentation of the balance sheets, statements of
operations and statements of cash flows in conformity with generally
accepted accounting principles. However, in the opinion of management,
this data includes all adjustments, consisting only of normal recurring
accruals, necessary to present fairly the Partnership's financial
position at June 30, 2000, its statements of operations for the six and
three months ended June 30, 2000 and 1999 and its statements of cash
flows for the six months ended June 30, 2000 and 1999. Results of
operations for these periods are not necessarily indicative of results
to be expected for the full year. These financial statements and notes
should be read in conjunction with the Partnership's Annual Report on
Form 10-K for the year ended December 31, 1999.
(2) In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." The
statement establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either
an asset or liability measured at its fair value. The statement requires
that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the statement of
operations, and requires that a company must formally document,
designate, and assess the effectiveness of transactions that are subject
to hedge accounting.
Pursuant to SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB No. 133 - an
Amendment to FASB Statement No. 133" the effective date of SFAS No. 133
has been deferred until fiscal years beginning after January 15, 2000.
SFAS No. 133 cannot be applied retroactively. SFAS No. 133 must be
applied to (a) derivative instruments and (b) certain derivative
instruments embedded in hybrid contracts that were issued, acquired, or
substantively modified after December 31, 1998 (and, at the company's
election, before January 1, 1999).
The Partnership has not yet quantified the impacts of adopting SFAS No.
133 on the financial statements and has not determined the timing or
method of adoption of SFAS No. 133. However, the statement could
increase volatility in earnings and other comprehensive income.
(3) In November of 1999, the SEC released SAB No. 101 "Revenue Recognition
in Financial Statements." This bulletin become effective for the quarter
ended December 31, 2000. This bulletin establishes more clearly defined
revenue recognition criteria, than previously existing accounting
pronouncements, and specifically addresses revenue recognition
requirements for nonrefundable fees, such as installation fees,
collected by a company upon entering into an arrangement with a
customer. The Partnership believes that the effects of this bulletin
will not have a material impact on the Partnership's financial position
or results of operations.
(4) Certain reclassifications have been made to conform prior years'
financial statements with the current year presentation.
6
<PAGE> 7
PART I (continued)
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Revenues totaled $2,550,923 for the six months ended June 30, 2000, representing
an increase of approximately 3% as compared to the same period in 1999. Of these
revenues, $1,948,135 (77%) was derived from basic service charges, $205,490 (8%)
from premium services, $103,664 (4%) from tier services, $56,583 (2%) from
installation charges, $28,078 (1%) from service maintenance contracts and
$208,973 (8%) from other sources. The net increase in revenues is primarily
attributable to increases in basic service rates effective August 1, 1999.
Operating expenses totaled $266,637 for the six months ended June 30, 2000,
representing an increase of approximately 19% as compared to the same period in
1999. This is mainly attributable to higher system maintenance, vehicle
operating expense and pole rental expense.
General and administrative expenses totaled $611,749 for the six months ended
June 30, 2000, representing an increase of approximately 8% over the same period
in 1999. This is due to higher administrative salaries as well as increased
property taxes, office supplies and telephone expense.
Programming expenses totaled $664,475 for the six months ended June 30, 2000,
representing an increase of approximately 4% over the same period in 1999. This
is mainly due to higher costs charged by various program suppliers offset by
reductions to advertising expenses and local programming expense.
Depreciation and amortization expense for the six months ended June 30, 2000
decreased approximately 6% over the same period in 1999. This is mainly due to
assets becoming fully depreciated offset by depreciation on plant and equipment
acquired during the last year.
Interest expense for the six months ended June 30, 2000 increased 2% over the
same period in 1999. The average bank debt outstanding decreased from
$10,540,438 during the first half of 1999 to $10,265,307 during the first half
of 2000. The Partnership's effective interest rate increased from 8.05% during
the first half of 1999 to 8.43% during the first half of 2000.
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
Revenues totaled $1,282,944 for the three months ended June 30, 2000,
representing an increase of approximately 3% as compared to the same period in
1999. Of these revenues, $984,239 (77%) was derived from basic service charges,
$101,478 (8%) from premium services, $52,108 (4%) from tier services, 26,997
(2%) from installation charges, $14,277 (1%) from service maintenance contracts
and $103,845 (8%) from other sources. The net increase in revenues is primarily
attributable to increases in basic service rates effective August 1, 1999.
7
<PAGE> 8
Operating expenses totaled $130,901 for the three months ended June 30, 2000,
representing an increase of approximately 18% as compared to the same period in
1999. This is mainly attributable to higher system maintenance, vehicle
operating expense and pole rental expense.
General and administrative expenses totaled $314,304 for the three months ended
June 30, 2000, representing an increase of approximately 8% over the same period
in 1999. This is due to higher administrative salaries as well as increased bad
debt expense.
Programming expenses totaled $339,218 for the three months ended June 30, 2000,
representing an increase of approximately 5% over the same period in 1999. This
is mainly due to higher costs charged by various program suppliers offset by
reductions to advertising expenses and local programming expense.
Depreciation and amortization expense for the three months ended June 30, 2000
decreased approximately 3% over the same period in 1999. This is mainly due to
assets becoming fully depreciated offset by depreciation on plant and equipment
acquired during the last year.
Interest expense for the three months ended June 30, 2000 increased 4% over the
same period in 1999. The average bank debt outstanding decreased from
$10,465,182 during the second quarter of 1999 to $10,191,082 during the second
quarter of 2000. The Partnership's effective interest rate increased from 7.9%
during the second quarter of 1999 to 8.44% during the second quarter of 2000.
Liquidity and Capital Resources
The Partnership's primary source of liquidity is cash flow provided from
operations. Based on management's analysis, the Partnership's cash flow from
operations is sufficient to cover future operating costs, debt service and
planned capital expenditures.
Under the terms of the Partnership's loan agreement, the Partnership has agreed
to restrictive covenants including a funded debt to annualized cash flow ratio
of 5.00 to 1 and a cash flow to debt service ratio of 1.25 to 1. At June 30,
2000, the Partnership was in compliance with its required financial covenants.
As of the date of this filing, the balance under the credit facility is
$10,024,539. Certain fixed rate agreements in place as of March 31, 2000 expired
during the second quarter of 2000, and the Partnership entered into new fixed
rate agreements. As of the date of this filing, interest rates on the credit
facility were as follows: $7,100,000 fixed at 7.74% under the terms of an
interest rate swap agreement with its lender expiring December 31, 2000,
$2,475,000 fixed at 8.81%, expiring September 16, 2000, $150,000 fixed at 8.67%
expiring July 31, 2000, $279,400 fixed at 8.25% and $40,182 at prime (currently
9.75%). The above rates include a margin paid to the lender based on overall
leverage, and may increase or decrease as the Partnership's leverage fluctuates.
Capital Expenditures
During the second quarter of 2000, the Partnership incurred approximately
$203,000 in capital expenditures including the final phases of construction of a
new office building and a vehicle replacement in the LaConner, WA system; the
start of a series of quality assurance projects and the repair of fire damage to
the office in the Aliceville, AL system; and the purchase of fiber optic cable
in the Swainsboro, GA system.
8
<PAGE> 9
Planned expenditures for the balance of 2000 include an ongoing system upgrade
to a minimum of 400 MHz in the LaConner, WA system; continuing quality assurance
projects in the Aliceville, AL system; and the initial phase of a system upgrade
to 550 MHz in the Swainsboro, GA system.
Cautionary statement for purposes of the "Safe Harbor" provisions of the Private
Litigation Reform Act of 1995. Statements contained or incorporated by reference
in this document that are not based on historical fact are "forward-looking
statements" within the meaning of the Private Securities Reform Act of 1995.
Forward-looking statements may be identified by use of forward-looking
terminology such as "believe", "intends", "may", "will", "expect", "estimate",
"anticipate", "continue", or similar terms, variations of those terms or the
negative of those terms.
9
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PART II - OTHER INFORMATION
ITEM 1 Legal proceedings
None
ITEM 2 Changes 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) Exhibit index
27.0 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter ended June 30,
2000.
10
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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.
NORTHLAND CABLE PROPERTIES EIGHT LIMITED PARTNERSHIP
BY: Northland Communications Corporation,
Managing General Partner
Dated: 8/11/00 BY: /s/ RICHARD I. CLARK
---------------------------------
Richard I. Clark
(Vice President/Treasurer)
Dated: 8/11/00 BY: /s/ GARY S. JONES
---------------------------------
Gary S. Jones
(Vice President)
11
