<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, 1996
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 0-18266
Falcon Classic Cable Income Properties, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
California 95-4200409
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10900 Wilshire Boulevard, 15th Floor, Los Angeles, CA 90024
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (310) 824-9990
_______________________________________________________________________________
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT.
Indicate by check X 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
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
1995* 1996
------------- -------------
(unaudited)
(Dollars in Thousands)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 6,137 $ 7,062
Receivables, less allowance of $40,000
and $37,000 for possible losses 657 564
Prepaid expenses and other 713 493
Cable materials, equipment and supplies 740 546
Property, plant and equipment, less
accumulated depreciation and amortization
of $15,357,000 and $18,112,000 31,986 31,161
Franchise cost and goodwill, less accumulated
amortization of $12,358,000 and $14,361,000 20,056 18,073
Customer lists and other intangible
costs, less accumulated amortization
of $5,928,000 and $3,011,000 2,670 2,068
------- -------
$62,959 $59,967
======= =======
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Note payable $27,000 $24,975
Accounts payable 499 369
Accrued expenses 3,062 2,741
Payable to general partner 1,401 1,461
Customer deposits and prepayments 149 150
------- -------
TOTAL LIABILITIES 32,111 29,696
------- -------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY:
General partner 401 395
Limited partners 30,669 30,098
Notes receivable from general partner (222) (222)
------- -------
TOTAL PARTNERS' EQUITY 30,848 30,271
------- -------
$62,959 $59,967
======= =======
</TABLE>
*As presented in the audited financial statements.
See accompanying notes to condensed financial statements
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<PAGE> 3
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Unaudited
-----------------------------
Three months ended
September 30,
-----------------------------
1995 1996
------- -------
(Dollars in thousands
except per unit information)
<S> <C> <C>
REVENUES $ 4,663 $ 4,918
------- -------
OPERATING EXPENSES:
Service costs 1,442 1,510
General and administrative expenses 670 676
Management fees and
reimbursed expenses 373 393
Depreciation and amortization 2,120 1,789
------- -------
4,605 4,368
------- -------
OPERATING INCOME 58 550
INTEREST EXPENSE, NET (509) (442)
------- -------
NET INCOME (LOSS) $ (451) $ 108
======= =======
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ (6.21) $ 1.49
======= =======
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 71,879 71,879
======= =======
</TABLE>
See accompanying notes to condensed financial statements.
-3-
<PAGE> 4
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Unaudited
-----------------------------
Nine months ended
September 30,
-----------------------------
1995 1996
------- -------
(Dollars in thousands
except per unit information)
<S> <C> <C>
REVENUES $13,657 $14,436
------- -------
OPERATING EXPENSES:
Service costs 4,514 4,547
General and administrative expenses 1,915 2,042
Management fees and
reimbursed expenses 1,093 1,155
Depreciation and amortization 6,376 5,888
------- -------
13,898 13,632
------- -------
OPERATING INCOME (LOSS) (241) 804
INTEREST EXPENSE, NET (1,493) (1,381)
------- -------
NET LOSS $(1,734) $ (577)
======= =======
NET LOSS PER LIMITED PARTNERSHIP UNIT $(23.88) $ (7.95)
======= =======
AVERAGE LIMITED PARTNERSHIP
UNITS OUTSTANDING DURING PERIOD 71,879 71,879
======= =======
</TABLE>
See accompanying notes to condensed financial statements.
-4-
<PAGE> 5
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Unaudited
--------------------------------
Nine months ended
September 30,
--------------------------------
1995 1996
-------- -------
(Dollars in Thousands)
<S> <C> <C>
Net cash provided by operating activities $ 4,498 $ 5,449
-------- -------
Cash flows from investing activities:
Capital expenditures (4,477) (2,498)
Other intangibles (118) (55)
Proceeds on sale of property, plant and equipment - 54
-------- -------
Net cash used in investing activities (4,595) (2,499)
-------- -------
Cash flows from financing activities:
Repayment of borrowings (11,200) (2,025)
Borrowings 12,700 -
-------- -------
Net cash provided by (used in) financing activities 1,500 (2,025)
-------- -------
Increase in cash and cash equivalents 1,403 925
Cash and cash equivalents at
beginning of period 1,031 6,137
-------- -------
Cash and cash equivalents at
end of period $ 2,434 $ 7,062
======== =======
</TABLE>
See accompanying notes to condensed financial statements
-5-
<PAGE> 6
FALCON CLASSIC CABLE INCOME PROPERTIES, L. P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 - INTERIM FINANCIAL STATEMENTS
The interim condensed financial statements for the three and nine
months ended September 30, 1996 and 1995 are unaudited. In the opinion of
management, such statements reflect all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the results of such
periods. It is suggested that these condensed interim financial statements be
read in conjunction with the audited financial statements and notes thereto
included in the Partnership's latest Annual Report on Form 10-K. The results
of operations for the three and nine months ended September 30, 1996 are not
necessarily indicative of the results for the entire year.
NOTE 2 - NOTES RECEIVABLE
In accordance with the Partnership Agreement, the capital contribution
of the General Partner was contributed one-half in cash and one- half in
General Partner's notes. The notes are non-interest bearing and are payable on
demand of the holder.
NOTE 3 - EARNINGS PER EQUIVALENT UNIT
Earnings per equivalent limited partnership unit are based on the
average number of limited partnership units outstanding during the periods
presented. For this purpose, earnings are allocated 99% to the limited
partners and 1% to the general partner.
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<PAGE> 7
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
INTRODUCTION
On February 8, 1996, President Clinton signed into law the
Telecommunications Act of 1996 (the "1996 Telecom Act"). This statute
substantially changed the competitive and regulatory environment for
telecommunications providers by significantly amending the Communications Act
of 1934, including certain of the rate regulation provisions previously imposed
by the Cable Television Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act"). Compliance with those rate regulations has had a negative
impact on the Partnership's revenues and cash flow. However, in accordance
with policy decisions by the Federal Communications Commission (the "FCC"), the
Partnership will increase regulated service rates in the future in response to
specified historical and anticipated future cost increases, although certain
costs may continue to rise at a rate in excess of that which the Partnership
will be permitted to pass on to its customers. The 1996 Telecom Act provides
that certain of the rate regulations will be phased-out altogether in 1999.
Further, the regulatory environment will continue to change pending, among
other things, the outcome of legal challenges and FCC rulemaking and
enforcement activity in respect of the 1992 Cable Act and the completion of a
significant number of FCC rulemakings under the 1996 Telecom Act. There can be
no assurance as to what, if any, future action may be taken by the FCC,
Congress or any other regulatory authority or court, or the effect thereof on
the Partnership's business. Accordingly, the Partnership's historic interim
financial results as described below are not necessarily indicative of future
performance.
This Report includes certain forward looking statements regarding,
among other things, future results of operations, regulatory requirements,
competition, capital needs, the possible sale of assets by the Partnership and
general business conditions applicable to the Partnership. Such forward
looking statements involve risks and uncertainties including, without
limitation, the uncertainty of legislative and regulatory changes and the rapid
developments in the competitive environment facing cable television operators
such as the Partnership. In addition to the information provided herein,
reference is made to the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1995 and its Current Reports on Form 8-K dated August 27,
1996 and October 17, 1996 for additional information regarding such matters and
the effect thereof on the Partnership's business.
RESULTS OF OPERATIONS
The Partnership's revenues increased from $4.7 million to $4.9
million, or by 5.5%, and from $13.7 million to $14.4 million, or by 5.7%,
respectively, for the three and nine months ended September 30, 1996 compared
with the corresponding periods for 1995. Of the $255,000 increase in revenues
for the three months ended September 30, 1996 as compared to 1995,
approximately $219,000 was due to increases in regulated service rates
implemented during the second and third quarters of 1996, $110,000 due to
the restructuring of The Disney Channel from a premium channel to a tier
channel on July 1, 1996, $14,000 was due to increases in advertising sales and
$26,000 was due to increases in other revenues, partially offset by decreases
of $114,000 due primarily to reductions in the number of subscriptions for
premium cable services. Of the $779,000 increase in revenues for the nine
months ended September 30, 1996 as compared to 1995, approximately $622,000 was
due to increases in regulated service rates implemented in the second quarter
of 1995 and the second and third quarters of 1996,
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<PAGE> 8
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
RESULTS OF OPERATIONS (CONTINUED)
$110,000 due to the restructuring of The Disney Channel discussed above,
$52,000 was due to increases in advertising sales, $34,000 was due to
commissions earned from shopping networks and $85,000 was due to increases in
other revenues, partially offset by decreases of $124,000 primarily due to
reductions in the number of subscriptions for premium cable services. As of
September 30, 1996, the Partnership had approximately 47,760 homes subscribing
to cable service and 18,525 premium service units. The decrease of 1,200
premium units from June 30, 1996 was due to approximately 1,700 Disney premium
units that became tier subscriptions under the restructuring discussed above.
Service costs increased from $1.4 million to $1.5 million, or by 4.7%,
for the three months ended September 30, 1996, compared with the corresponding
period for 1995, and remained relatively unchanged at approximately $4.5
million for the nine months ended September 30, 1996 compared with the
corresponding period for 1995. Service costs represent costs directly
attributable to providing cable services to customers. The $68,000 increase in
service cost for the three months ended September 30, 1996 as compared to 1995
was primarily related to an increase of $73,000 in programming fees charged by
program suppliers (including primary satellite fees), which included a $30,000
increase related to the restructuring of The Disney Channel discussed above.
General and administrative expenses increased from $670,000 to
$676,000, or by 1.0%, and from $1.9 million to $2.0 million, or by 6.6%,
respectively, for the three and nine months ended September 30, 1996 compared
with the corresponding periods for 1995. Of the $6,000 increase for the three
months ended September 30, 1996 as compared to 1995, $38,000 was due to
increases in insurance cost and $4,000 was due to increases in costs associated
with re-regulation by the FCC. These increases were partially offset by a
decrease of $38,000 in the write off of bad debts. Of the $127,000 increase
for the nine months ended September 30, 1996 as compared to 1995, $41,000 was
due to increases in insurance cost, $28,000 was due to increases in costs
associated with re-regulation by the FCC, $8,000 was due to increases in costs
associated with advertising sales and $50,000 was due to increases in other
expenses.
General Partner management fees and reimbursed expenses remained
constant as a percent of revenue at 8.0%, and increased from $373,000 to
$393,000, and from $1.1 million to $1.2 million, respectively, for the three
and nine months ended September 30, 1996 compared to the corresponding periods
for 1995. See "Liquidity and Capital Resources."
Depreciation and amortization expenses decreased from $2.1 million to
$1.8 million, or by 15.6%, and from $6.4 million to $5.9 million, or by 7.7%,
respectively, for the three and nine months ended September 30, 1996 compared
with the corresponding periods for 1995. The three months' $331,000 decrease
and the nine months' $488,000 decrease were due primarily to certain assets
becoming fully amortized in 1996.
Operating income increased from $58,000 to $550,000 for the three
months ended September 30, 1996 compared to the corresponding period for 1995.
Operating losses of $241,000 for the nine months ended September 30, 1995
became operating income of $804,000 for the nine months ended September 30,
1996. The $492,000 and $1.0 million increases in operating income for the
three and nine months ended September 30, 1996 compared with the corresponding
periods for 1995 were due primarily to increased revenues and decreases in
depreciation and amortization expense.
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<PAGE> 9
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
RESULTS OF OPERATIONS (CONCLUDED)
Net interest expense, including the effects of interest rate hedging
agreements, decreased from $509,000 to $442,000, or by 13.2%, and from $1.5
million to $1.4 million, or by 7.5%, respectively, for the three and nine
months ended September 30, 1996 compared to the corresponding periods for 1995.
The $67,000 and $112,000 decreases were due primarily to interest income earned
on higher cash balances offset by an increase in interest expense due to higher
debt balances. The hedging agreements resulted in higher interest expense of
$9,000 and $28,000, respectively, for the three months ended September 30, 1995
and 1996, and of $6,000 and $88,000, respectively, for the nine months ended
September 30, 1995 and 1996.
Due to the factors described above, the Partnership's net loss of
$451,000 changed to net income of $108,000 and changed from a net loss of $1.7
million to a net loss of $577,000, respectively, for the three and nine months
ended September 30, 1996 compared to the corresponding periods for 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary objective, having invested its net offering
proceeds in cable systems, is to distribute to its partners all available cash
flow generated from operations and proceeds from the sale of cable systems, if
any, after providing for expenses, debt service and capital requirements
relating to possible improvement and upgrade of its cable systems. The
Partnership relies upon the availability of cash generated from operations and
possible borrowings to fund its ongoing capital requirements. In general,
these requirements involve expansion, improvement and upgrade of the
Partnership's existing cable television systems. The Partnership has
encountered liquidity difficulties due in part to the adverse effects of the
1992 Cable Act and new competitive pressures resulting from both technological
advances as well as from the 1996 Telecom Act which will require that material
amounts of capital be invested in the Partnership's cable systems. As
previously reported, in response to the FCC's amended rate regulation rules,
distributions to Unitholders were discontinued subsequent to the April 15, 1994
payment in order to preserve cash resources. The Partnership also suspended the
majority of its rebuild and upgrade capital expenditure programs that had been
scheduled for 1994, 1995 and 1996 in order to preserve liquidity.
The Partnership's access to capital remains severely constrained
primarily due to the limitation on indebtedness imposed by the Partnership
Agreement. This limitation, which is discussed below, is at odds with the need
to increase leverage and to spend approximately $35 million to rebuild and
upgrade substantially all of the Partnership's systems and has caused the
Partnership to limit its 1996 rebuild and upgrade plans. Current plans are to
expend an aggregate of approximately $3.0 million in 1996 for all capital
expenditures, including approximately $500,000 to begin the $1.6 million
upgrade of a portion of one system, which represents the minimum level of
expenditures that management believes are necessary, in the short term, to
comply with franchise authority and FCC technical requirements. As a result,
the Partnership's systems will be significantly less technically advanced than
had been expected prior to the implementation of re-regulation. The
Partnership believes that the delays in upgrading many of its systems will,
under present market conditions, most likely have an adverse affect on the
value of those systems compared to systems that have been rebuilt to a higher
technical standard.
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<PAGE> 10
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
On December 29, 1995, the Partnership borrowed $5.6 million under its
Bank Credit Agreement because the revolver portion of that credit was scheduled
to convert to a term loan on December 31, 1995. The Partnership's management
believes that the Partnership's anticipated cash flow from operations in 1996
will be sufficient to fund its capital expenditure plans (as adjusted) and to
repay required 1996 principal payments of $2.7 million on its debt.
As of September 30, 1996, the amount outstanding under the
Partnership's amended Bank Credit Agreement was $25.0 million. As discussed
above, the Partnership had no additional borrowings available to it. At
September 30, 1996, the Partnership's borrowings bore interest at an average
rate of 7.7% (including the effect of interest rate swap transactions). The
Bank Credit Agreement also contains various restrictions relating to, among
other things, mergers and acquisitions, investments, capital expenditures, a
change in control and the incurrence of additional indebtedness and also
requires compliance with certain financial covenants. Management believes that
the Partnership was in compliance with all such requirements as of September
30, 1996. The Bank Credit Agreement requires a principal repayment of $675,000
on December 31, 1996, and payments of $4.1 million in 1997 and $5.4 million in
1998. The Partnership made its scheduled principal repayments of $675,000 on
April 1, 1996, July 1, 1996 and September 30, 1996.
The Partnership Agreement provides that without the approval of a
majority of interests of limited partners, the Partnership may not incur any
borrowings unless the amount of such borrowings together with all outstanding
borrowings (less cash and cash equivalents) does not exceed 30% of the greater
of the aggregate cost or current fair market value of the Partnership's assets
as determined by the General Partner. As discussed above, in order to spend
the appropriate amount of capital to rebuild and upgrade the Partnership's
systems, this provision of the Partnership Agreement would need to be amended
to significantly increase the Partnership's leverage.
The Partnership's management agreement with the General Partner
requires deferral of the payment of up to 50% of the management fees, without
interest, unless Adjusted Operating Cash (as defined) for such month exceeds a
10% annualized return calculated with respect to outstanding Partnership Units.
To the extent that Adjusted Operating Cash exceeds such amount, the General
Partner may recover previously deferred fees, without interest. In compliance
with these provisions, the General Partner received its standard management fee
for the nine months ended September 30, 1996 and recovered $_________ in
previously deferred management fees. At September 30, 1996, however,
approximately $1.0 million of deferred management fees remained payable to the
General Partner. Unless the Payback to the Unitholders is achieved, the
Partnership will not be required to pay the deferred fees to the General
Partner. "Payback" means, with respect to any limited partner, aggregate cash
distributions to the limited partner equal to such limited partner's capital
contributions plus the 11% Preferred Return per year computed on such limited
partner's Adjusted Capital Contribution (as defined). The term "11% Preferred
Return" means an 11% per annum (cumulative but not compounded) cash return based
on each limited partner's Adjusted Capital Contribution and calculated with
respect to any Units from the date of the closing in which such Units were first
issued by the Partnership.
The Partnership Agreement also limits borrowings incurred to make
distributions to partners to not more than 10% of Gross Proceeds from the
public offering of the Units (approximately $7.2 million). As of September 30,
1996, the Partnership had incurred an aggregate of approximately $5.4 million
in
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<PAGE> 11
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
borrowings to make distributions to partners. The Partnership discontinued
distributions subsequent to the April 15, 1994 payments.
Subject to certain restrictions set forth in the Partnership
Agreement, the Partnership, in the General Partner's sole discretion, may sell
individual cable systems and may also sell all or substantially all of the
Partnership's assets to the General Partner or its affiliates. Any such sale
must be made in cash pursuant to the "Appraisal Process." "Appraisal Process"
means an appraisal undertaken by three independent nationally recognized
experts in the cable television field to determine the fair market value of the
cable systems to be appraised. One such appraiser shall be appointed by the
General Partner, one by the Partnership's Conflicts Committee and the third by
the first two appraisers acting jointly. The appraised value pursuant to the
Appraisal Process will be deemed to be the median of the three appraised values
and, if any appraised value is expressed as a range, then in calculating the
median, the mean amount of the range of such appraised value shall be used. No
appraisals arising in affiliated transactions may be conducted at the
Partnership's expense. Appraisers selected pursuant to the Appraisal Process
may not have any interest in, nor any material business or professional
relationship with, the Partnership, the General Partner or any of its
affiliates, except as otherwise permitted by the Partnership Agreement. Except
under certain circumstances, sales of assets by the Partnership to the General
Partner or its affiliates prior to January 1, 1997 will require an affirmative
vote of a majority of limited partner interests outstanding and not owned by
the General Partner or its affiliates. No such vote will be required or sought
thereafter. Although the General Partner is not required to purchase any of
the Partnership's cable systems, it or one of its affiliates may determine to
do so subject to the foregoing restrictions. Limited partners will not be
entitled to share in any profits of the General Partner or its affiliates from
the operation or sale of any cable systems subsequent to the sale of such cable
systems to the General Partner or any affiliate.
In a meeting held in Los Angeles on August 27, 1996, the General
Partner formally advised the Partnership's Advisory Committee and Conflicts
Committee that it desired to explore on a preliminary basis the possibility of
exercising the purchase rights contained in the Partnership Agreement and
summarized above. Accordingly, the General Partner requested that the
Appraisal Process be commenced and that, in compliance therewith, the Conflicts
Committee select an independent nationally recognized expert in the cable
television field to determine the fair market value of each of the
Partnership's cable systems. Pursuant to the Partnership Agreement, the sole
obligation of the Conflicts Committee in connection with the Appraisal Process
is to select one of the three appraisers. The Conflicts Committee has selected
Arthur Andersen, LLP; the General Partner has selected Kane Reece Associates,
Inc.; and those two appraisers have selected Communications Equity Associates.
In commencing the Appraisal Process, the General Partner advised the
Conflicts Committee that it had made no decision whether to purchase any or all
of the Partnership's five cable television systems. Any decision by the
General Partner will, as permitted by the Partnership Agreement, be made on a
system-by-system basis once the Appraisal Process has been completed. Further,
should the General Partner or its affiliates elect to acquire any of the
Partnership's cable systems, such acquisition will not be completed until on or
after January 1, 1997. Although the foregoing reflects activities which the
General Partner and certain of its affiliates are currently exploring with
respect to the Partnership, the foregoing is subject to change at any time.
Accordingly, there can be no assurance that the sale of cable television
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<PAGE> 12
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONCLUDED)
systems of the Partnership in accordance with the rights of the General Partner
and its affiliates under the terms of the Partnership Agreement as described
above or otherwise will be pursued, or if pursued, when and if any of them will
be successfully consummated. The foregoing description of the Appraisal
Process is qualified by reference to the more complete information and the
related qualifications provided or referred to in the Partnership's Current
Reports on Form 8-K dated August 27, 1996 and October 17, 1996.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Cash provided by operating activities increased by $951,000 from $4.5
million to $5.4 million for the nine months ended September 30, 1996 compared
to the corresponding period for 1995. The increase resulted from an increase of
$282,000 in other operating items (receivables, prepaid expenses and other
assets, cable materials, equipment and supplies, payables, accrued expenses and
customer deposits and prepayments) and a decrease in the net loss of $1.2
million, $488,000 of which resulted from a decrease in non-cash depreciation
and amortization.
Cash used in investing activities decreased by $2.1 million during the
first nine months of 1996 compared to the corresponding period for 1995,
primarily due to a decrease in capital expenditures. Cash used by financing
activities increased $3.5 million because of increased net repayment of debt of
$2.0 million during the nine months ended September 30, 1996 compared to net
borrowings of $1.5 million during the corresponding 1995 period.
Operating income before depreciation and amortization (EBITDA) as a
percentage of revenues increased from 46.7% to 47.6% and from 44.9% to 46.4%
during the three and nine months ended September 30, 1996 compared to the
corresponding periods in 1995. The increases in the three months and nine
months were primarily caused by increased revenues, as described above. EBITDA
increased from $2.2 million to $2.3 million, or by 7.4%, and from $6.1 million
to $6.7 million, or by 9.1%, respectively, for the three and nine months ended
September 30, 1996 compared to the corresponding periods in 1995.
INFLATION
Certain of the Partnership's expenses, such as those for wages and
benefits, equipment repair and replacement, and billing and marketing generally
increase with inflation. However, the Partnership does not believe that its
financial results have been, or will be, adversely affected by inflation in a
material way, provided that it is able to increase its service rates
periodically, of which there can be no assurance.
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<PAGE> 13
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
PART II. OTHER INFORMATION
ITEMS 1-5. Not Applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) None.
(b) The Registrant filed a Form 8-K dated August 27,
1996, in which it reported under Item 5 the General
Partner's desire to explore the possibility of
exercising the General Partner's purchase rights
contained in the Partnership Agreement.
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<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.
FALCON CLASSIC CABLE INCOME PROPERTIES, L. P.
a CALIFORNIA LIMITED PARTNERSHIP
(Registrant)
By: Falcon Classic Cable Investors, L.P.
Managing General Partner
By: Falcon Holding Group, L.P.
General Partner
By: Falcon Holding Group, Inc.
General Partner
Date: _________, 1996 By: /s/Michael K. Menerey
---------------------------------
Michael K. Menerey, Secretary
and Chief Financial Officer
<PAGE> 15
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.
FALCON CLASSIC CABLE INCOME PROPERTIES, L. P.
a CALIFORNIA LIMITED PARTNERSHIP
(Registrant)
By: Falcon Classic Cable Investors, L.P.
Managing General Partner
By: Falcon Holding Group, L.P.
General Partner
By: Falcon Holding Group, Inc.
General Partner
Date: _________, 1996 By:
---------------------------------
Michael K. Menerey, Secretary
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT SEPTEMBER 30, 1996, AND THE STATEMENTS OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
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