<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 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 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) 623-1351
----------------------------------------------------
(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>
March 31, December 31,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
Cash $ 385,458 $ 316,123
Accounts receivable 120,155 111,341
Due from affiliates 5,501 2,445
Prepaid expenses 47,722 71,698
Property and equipment, net of accumulated
depreciation of $5,959,275 and $5,682,821,
respectively 6,482,413 6,683,636
Intangible assets, net of accumulated
amortization of $3,287,217 and $3,176,493,
respectively 4,748,859 4,859,583
------------ ------------
Total assets $ 11,790,108 $ 12,044,826
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses $ 393,207 $ 514,549
Due to managing general partner and affiliates 15,128 8,037
Converter deposits 7,492 7,952
Subscriber prepayments 225,662 207,590
Notes payable 10,207,082 10,272,182
------------ ------------
Total liabilities 10,848,571 11,010,310
------------ ------------
Partners' equity:
General Partners:
Contributed capital, net 1,000 1,000
Accumulated deficit (71,803) (70,873)
------------ ------------
(70,803) (69,873)
------------ ------------
Limited Partners:
Contributed capital, net 8,120,820 8,120,820
Accumulated deficit (7,108,480) (7,016,431)
------------ ------------
1,012,340 1,104,389
------------ ------------
Total partners' equity 941,537 1,034,516
------------ ------------
Total liabilities and partners' equity $ 11,790,108 $ 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 three months
ended March 31,
-----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Service revenues $ 1,267,979 $ 1,229,793
Expenses:
Operating (including $18,194
and $14,226 to affiliates in 2000
and 1999, respectively) 135,736 113,101
General and administrative (including
$160,459 and $124,323 to affiliates
in 2000 and 1999, respectively) 297,445 277,424
Programming (including $18,937
and $23,710 to affiliates in 2000
and 1999, respectively) 325,257 315,396
Depreciation and amortization 379,673 416,970
----------- -----------
1,138,111 1,122,891
----------- -----------
Income from operations 129,868 106,902
Other income (expense):
Interest expense (217,372) (217,844)
Amortization of loan fees (7,504) (13,645)
Interest income and other 2,028 3,183
----------- -----------
(222,848) (228,306)
----------- -----------
Net loss $ (92,980) $ (121,404)
=========== ===========
Allocation of net loss:
General Partners $ (930) $ (1,214)
=========== ===========
Limited Partners $ (92,050) $ (120,190)
=========== ===========
Net loss per limited partnership unit:
(19,087 units for both periods) $ (5) $ (6)
=========== ===========
Net loss per $1,000 investment $ (10) $ (12)
=========== ===========
</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 CASH FLOWS - (Unaudited)
(Prepared by the Managing General Partner)
<TABLE>
<CAPTION>
For the three months
ended March 31,
-------------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (92,980) $(121,404)
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation and amortization 379,673 416,970
Amortization of loan fees 7,504 13,645
(Increase) decrease in operating assets:
Accounts receivable (8,814) 25,000
Due from affiliates (3,056) 23,070
Prepaid expenses 23,976 8,656
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses (121,342) (341,489)
Due to managing general partner and affiliates 7,091 (46,754)
Converter deposits (460) (460)
Subscriber prepayments 18,072 27,442
--------- ---------
Net cash from operating activities 209,664 4,676
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (75,229) (123,769)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under long term debt, net 97,400 --
Principal payments on borrowings (162,500) (159,818)
--------- ---------
Net cash used in financing activities (65,100) (159,818)
--------- ---------
INCREASE (DECREASE) IN CASH 69,335 (278,911)
CASH, beginning of period 316,123 800,111
--------- ---------
CASH, end of period $ 385,458 $ 521,200
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 205,248 $ 219,563
========= =========
</TABLE>
The accompanying notes to unaudited financial statements are an integral part of
these statements
4
<PAGE> 5
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 March 31, 2000, its statements of operations and cash flows for
the three months ended March 31, 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 will become effective for the
quarter ended June 30, 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.
5
<PAGE> 6
PART I (continued)
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Revenues totaled $1,267,979 for the three months ended March 31, 2000,
representing an increase of approximately 3% as compared to the same period in
1999. Of these revenues, $963,896 (76%) was derived from basic service charges,
$104,012 (8%) from premium services, $51,556 (4%) from tier services, 29,586
(2%) from installation charges, $13,801 (1%) from service maintenance contracts
and $105,128 (9%) from other sources. The net increase in revenues is primarily
attributable to increases in basic service rates effective August 1, 1999.
Operating expenses totaled $135,736 for the three months ended March 31, 2000,
representing an increase of approximately 20% as compared to the same period in
1999. This is mainly attributable to higher system maintenance, vehicle
operating expense and pole rental expense offset by lower operating salaries.
General and administrative expenses totaled $297,445 for the three months ended
March 31, 2000, representing an increase of approximately 7% over the same
period in 1999. This is due to higher administrative salaries as well as
increased property taxes, office supplies, property insurance and telephone
expense offset by reduced bad debts and copyright fees.
Programming expenses totaled $325,257 for the three months ended March 31, 2000,
remaining consistent with 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 March 31, 2000
decreased approximately 9% 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 March 31, 2000 remained consistent
with the same period in 1999. The average bank debt outstanding decreased from
$10,615,695 during the first quarter of 1999 to $10,337,848 during the first
quarter of 2000. The Partnership's effective interest rate increased from 8.21%
during the first quarter of 1999 to 8.41% during the first 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 March 31,
2000, the Partnership was in compliance with its required financial covenants.
6
<PAGE> 7
As of the date of this filing, the balance under the credit facility is
$10,207,082. Certain fixed rate agreements in place as of December 31, 1999
expired during the first 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: $7,200,000 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 8.14%, expiring June 16, 2000, $200,000 fixed at 8.28%
expiring June 30, 2000, $279,400 fixed at 8.25% and $52,682 at prime (currently
9.25%). 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 first quarter of 2000, the Partnership incurred approximately $75,000
in capital expenditures including the continued construction of a new office
building in the LaConner, WA system; the start of a series of quality assurance
projects in the Aliceville, AL system; and line extensions in the Swainsboro, GA
system.
Planned expenditures for the balance of 2000 include an ongoing system upgrade
to a minimum of 400 MHz, a vehicle replacement and the completion of a new
office building in the LaConner, WA system; the start of a system upgrade and
continuing quality assurance projects in the Aliceville, AL system; and the
completion of a fiber backbone which will lead to a future system upgrade to 550
MHz, a vehicle replacement and various line extensions 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.
7
<PAGE> 8
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 March 31,
2000.
8
<PAGE> 9
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: BY: /s/ RICHARD I. CLARK
---------------- --------------------------------
Richard I. Clark
(Vice President/Treasurer)
Dated: BY: /s/ GARY S. JONES
---------------- --------------------------------
Gary S. Jones
(Vice President)
9
<PAGE> 10
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: BY:
---------------- --------------------------------
Richard I. Clark
(Vice President/Treasurer)
Dated: BY:
---------------- --------------------------------
Gary S. Jones
(Vice President)
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 385,458
<SECURITIES> 0
<RECEIVABLES> 120,155
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,441,688
<DEPRECIATION> 5,959,275
<TOTAL-ASSETS> 11,790,108
<CURRENT-LIABILITIES> 10,848,571
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 941,537
<TOTAL-LIABILITY-AND-EQUITY> 11,790,108
<SALES> 1,267,979
<TOTAL-REVENUES> 1,267,979
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,138,111
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 217,372
<INCOME-PRETAX> (92,980)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (92,980)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
