<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 June 30, 1997
--------------------------
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 Number)
10900 Wilshire Boulevard - 15th Floor
Los Angeles, California 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 mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
<PAGE> 2
PART I - FINANCIAL INFORMATION
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
CONDENSED BALANCE SHEETS
===================================================
<TABLE>
<CAPTION>
December 31, June 30,
1996* 1997
-------- --------
(Unaudited)
(Dollars in Thousands)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 7,126 $ 6,824
Receivables, less allowance of $31,000 and
$37,000 for possible losses 660 767
Prepaid expenses and other assets 1,516 1,024
Property, plant and equipment, less accumulated
depreciation and amortization of $19,128,000 and $21,028,000 30,655 30,696
Franchise cost and goodwill, less accumulated
amortization of $15,029,000 and $16,368,000 17,409 16,082
Customer lists and other intangible costs, less
accumulated amortization of $2,684,000 and $2,233,000 1,968 1,844
-------- --------
$ 59,334 $ 57,237
======== ========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
LIABILITIES:
Notes payable $ 24,300 $ 22,275
Accounts payable 542 275
Accrued expenses 2,509 2,981
Payable to general partner 1,006 272
Customer deposits and prepayments 144 163
-------- --------
TOTAL LIABILITIES 28,501 25,966
-------- --------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY:
General partner 401 405
Limited partners 30,654 31,088
Notes receivable from general partner (222) (222)
-------- --------
TOTAL PARTNERS' EQUITY 30,833 31,271
-------- --------
$ 59,334 $ 57,237
======== ========
</TABLE>
*As presented in the audited financial statements.
See accompanying notes to condensed financial statements.
-2-
<PAGE> 3
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
CONDENSED STATEMENTS OF OPERATIONS
===================================================
<TABLE>
<CAPTION>
Unaudited
--------------------------
Three months ended
June 30,
--------------------------
1996 1997
--------- --------
(Dollars in thousands
except per unit information)
<S> <C> <C>
REVENUES $ 4,812 $ 5,140
-------- --------
EXPENSES:
Service costs 1,487 1,519
General and administrative expenses 733 880
Management fees and reimbursed expenses 386 411
Depreciation and amortization 1,985 1,867
-------- --------
Total Expenses 4,591 4,677
-------- --------
Operating income 221 463
INTEREST EXPENSE, NET (399) (388)
OTHER INCOME -- 41
-------- --------
NET INCOME (LOSS) $ (178) $ 116
======== ========
Net income (loss) allocated to General Partner $ (2) $ 1
======== ========
Net income (loss) allocated to Limited Partners $ (176) $ 115
======== ========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (2.45) $ 1.60
======== ========
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
-------------------------
Six months ended
June 30,
-------------------------
1996 1997
-------- ---------
(Dollars in thousands
except per unit information)
<S> <C> <C>
REVENUES $ 9,518 $ 10,391
-------- --------
EXPENSES:
Service costs 3,037 3,142
General and administrative expenses 1,366 1,609
Management fees and reimbursed expenses 762 831
Depreciation and amortization 4,099 3,613
-------- --------
Total Expenses 9,264 9,195
-------- --------
Operating income 254 1,196
INTEREST EXPENSE, NET (939) (798)
OTHER INCOME -- 41
-------- --------
NET INCOME (LOSS) $ (685) $ 439
======== ========
Net income (loss) allocated to General Partner $ (7) $ 4
======== ========
Net income (loss) allocated to Limited Partners $ (678) $ 435
======== ========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (9.44) $ 6.04
======== ========
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.
STATEMENTS OF CASH FLOWS
===================================================
<TABLE>
<CAPTION>
Unaudited
------------------------
Six months ended
June 30,
------------------------
1996 1997
------- --------
(Dollars in Thousands)
<S> <C> <C>
Net cash provided by operating activities $ 3,293 $ 3,926
------- -------
Cash flows from investing activities:
Capital expenditures (1,695) (2,112)
Increase in intangible assets (37) (91)
------- -------
Net cash used in investing activities (1,732) (2,203)
------- -------
Cash flows from financing activities:
Repayment of borrowings (675) (2,025)
------- -------
Increase (decrease) in cash and cash equivalents 886 (302)
Cash and cash equivalents at beginning of period 6,137 7,126
------- -------
Cash and cash equivalents at end of period $ 7,023 $ 6,824
======= =======
</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 six
months ended June 30, 1997 and 1996 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 six months ended June 30, 1997 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 have been allocated 99% to the limited
partners and 1% to the general partner. The General Partner does not own units
of partnership interest in the Partnership, but rather holds a participation
interest in the income, losses and distributions of the Partnership.
NOTE 4 - RECLASSIFICATIONS
Certain 1996 amounts have been reclassified to conform to the 1997
presentation.
6
<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. 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 Federal Communications Commission (the
"FCC") rulemaking and enforcement activity in respect of the 1992 Cable Act and
the 1996 Telecom Act. There can be no assurance as to what, if any, further
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 historical 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 proposed sale of assets by, and liquidation of,
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, as discussed more fully elsewhere in this
Report. In addition to the information set forth in this Report, reference is
made to the Partnership's Annual Report on Form 10-K for the year ended December
31, 1996, its Quarterly Report on Form 10-Q for the quarter ended March 31, 1997
and its Current Reports on Form 8-K dated February 6, 1997, June 4, 1997 and
June 24, 1997 for additional information regarding such matters and the effect
thereof on the Partnership's business.
RECENT DEVELOPMENTS
Pursuant to the terms of the "Appraisal Process" provided for in the
Partnership Agreement, the Partnership may, in the sole discretion of the
General Partner, 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 at the median of appraisals
undertaken by three nationally recognized experts in the cable television field.
As previously reported, the Partnership commenced the "Appraisal Process" in
August 1996 and received the results of the related appraisals in February 1997.
The full text of these appraisals has previously been filed with the Securities
and Exchange Commission. By letter dated June 24, 1997, the General Partner
advised the Partnership that it intended to exercise its purchase right to
acquire all of the Partnership's cable systems pursuant to the Appraisal Process
for cash consideration equal to the median appraised value of $82.0 million (the
"Appraised Value"). The General Partner further advised the Partnership that, as
permitted by the Partnership Agreement, it intended that the cable systems be
acquired (the "Sale") by certain affiliates of the General Partner (the
"Purchasers"). On June 27, 1997, the General Partner caused the Partnership to
enter into an Asset Purchase Agreement with the Purchasers, and the parties
7
<PAGE> 8
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
RECENT DEVELOPMENTS (CONCLUDED)
have begun to seek the necessary regulatory and other consents. The Asset
Purchase Agreement is filed as an exhibit to the Partnership's Current Report on
Form 8-K dated June 24, 1997.
The Partnership Agreement provides that the Partnership shall be
dissolved upon the occurrence of the sale or distribution of all or
substantially all of the assets of the Partnership, which will occur upon
consummation of the Sale. The Partnership Agreement also provides that upon the
dissolution of the Partnership, the General Partner shall take such actions as
are necessary for the winding up of the affairs of the Partnership and the
distribution of its assets to the partners pursuant to the provisions of the
Partnership Agreement. Accordingly, following the consummation of the Sale, the
General Partner will wind-up the affairs of the Partnership in accordance with
the terms of the Partnership Agreement, including the liquidation of the assets
of the Partnership, the discharge of all of the liabilities of the Partnership,
and the distribution of the remaining assets of the Partnership to its partners
as appropriate.
Based upon the Appraised Value of $82.0 million and assuming a
hypothetical liquidation of the Partnership on June 30, 1997, the estimated cash
distribution to unitholders would have been approximately $877 per limited
partnership unit (the "Hypothetical Estimated Per Unit Distribution") (based
upon 71,879 units outstanding). This Hypothetical Estimated Per Unit
Distribution was calculated assuming net liabilities on the balance sheet of the
Partnership, net of current assets ("Net Liabilities"), of approximately $18.4
million (as of June 30, 1997), including the Partnership's outstanding bank
indebtedness of $22.3 million as of June 30, 1997. As with other liabilities,
the Partnership's bank indebtedness must be repaid prior to the payment of any
liquidating distribution to the partners. Such Hypothetical Estimated Per Unit
Distribution also assumes that the Net Liabilities as of June 30, 1997 represent
the only payments, other than certain reserved expenses, that would have been
required to be made by the Partnership prior to the distribution of cash to the
unitholders. Accordingly, the Hypothetical Estimated Per Unit Distribution is
presented for illustrative purposes only and does not necessarily represent
amounts the Partnership could have distributed to unitholders on June 30, 1997
or any date thereafter. The actual distribution will vary depending on, among
other things, the date of the actual dissolution and related distribution to
unitholders.
The consummation of the Sale will be conditioned upon the receipt of
the necessary regulatory approvals, principally including those required
pursuant to certain cable television system franchises and federal
communications law. There can be no assurance that the receipt of such approvals
will occur in a timely manner, if at all. The Appraisal Process and Sale are
further discussed in the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1996, its Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997 and its Current Reports on Form 8-K dated August 27, 1996,
October 17, 1996, February 6, 1997, June 4, 1997 and June 24, 1997. Unitholders
are urged to review the referenced materials carefully.
RESULTS OF OPERATIONS
The Partnership's revenues increased from $4.8 million to $5.1 million,
or by 6.8%, and from $9.5 million to $10.4 million, or by 9.2%, for the three
and six months ended June 30, 1997 as compared to the corresponding periods in
1996. Of the $328,000 increase in revenues for the three months ended June 30,
1997 as compared to 1996, approximately $276,000 was due to increases in
regulated service rates
8
<PAGE> 9
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
RESULTS OF OPERATIONS (CONTINUED)
implemented during 1996, $103,000 was due to the restructuring of The Disney
Channel from a premium channel to a tier channel on July 1, 1996 and $42,000 was
due to increases in advertising sales. The increases were partially offset by
revenue decreases of $93,000, primarily due to reductions in the number of
subscriptions for premium cable services. Of the $873,000 increase in revenues
for the six months ended June 30, 1997, approximately $739,000 was due to
increases in regulated service rates, $203,000 was due to the restructuring of
The Disney Channel, $93,000 was due to increases in advertising sales and
$54,000 was due to increases in programmer incentives. These increases were
partially offset by revenue decreases of $216,000, primarily due to reductions
in the number of subscriptions for premium cable services. As of June 30, 1997,
the Partnership had approximately 48,200 homes subscribing to cable service and
16,400 premium service units. The decrease of 3,300 premium units from June 30,
1996 was due in part to approximately 1,700 Disney premium units that became
tier subscriptions under the restructuring discussed above.
Service costs remained relatively unchanged at approximately $1.5
million and $3.1 million, respectively, for the three and six months ended June
30, 1997 as compared to the corresponding periods in 1996. Service costs
represent costs directly attributable to providing cable services to customers.
The $105,000 net increase in service costs for the six months ended June 30,
1997 as compared to 1996, was primarily due to an increase of $304,000 in
programming fees charged by program suppliers (including primary satellite
fees), which included a $69,000 increase related to the restructuring of The
Disney Channel discussed above, and increases of $81,000 in franchise fees and
$14,000 in property taxes. The increases in service costs discussed above were
partially offset by a $294,000 increase in capitalized labor, primarily due to
upgrading the cable television system in Maryland and to various projects in the
Somerset and Burke cable systems.
General and administrative expenses increased from $733,000 to
$880,000, or by 20.1%, and from $1.4 million to $1.6 million, or by 17.8%, for
the three and six months ended June 30, 1997 as compared to the corresponding
periods in 1996. Of the $147,000 increase for the three months ended June 30,
1997 as compared to the prior year period, $130,000 was due to increases in
insurance costs and $15,000 was due to increases in costs associated with
marketing activities. Of the $243,000 increase for the six months ended June 30,
1997 as compared to 1996, $176,000 was due to increases in insurance costs,
$25,000 was due to increases in costs associated with marketing activities and
$42,000 was due to increases in other expenses.
General Partner management fees and reimbursed expenses remained
constant as a percent of revenues at 8.0%, and increased from $386,000 to
$411,000, and from $762,000 to $831,000, for the three and six months ended June
30, 1997 as compared to the corresponding periods in 1996.
Operating income before income taxes, depreciation and amortization
(EBITDA) is a commonly used financial analysis tool for measuring and comparing
cable television companies in several areas, such as liquidity, operating
performance and leverage. EBITDA as a percentage of revenues decreased from
45.8% to 45.3% for the three months ended June 30, 1997 compared to 1996,
primarily due to higher insurance premiums, and increased from 45.7% to 46.3%
for the six months ended June 30, 1997 as compared to the corresponding periods
in 1996. The increase was primarily caused by increased revenues, as described
above. EBITDA increased from $2.2 million to $2.3 million, or by 5.6%, and from
$4.4 million to $4.8 million, or by 10.5%, in the three and six months ended
June 30, 1997 as compared to the corresponding
9
<PAGE> 10
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
RESULTS OF OPERATIONS (CONCLUDED)
periods in 1996. EBITDA should be considered in addition to and not as a
substitute for net income and cash flows determined in accordance with generally
accepted accounting principles as an indicator of financial performance and
liquidity.
Depreciation and amortization expenses decreased from $2.0 million to
$1.9 million, or by 5.9%, and from $4.1 million to $3.6 million, or by 11.9%,
for the three and six months ended June 30, 1997 as compared to the
corresponding periods in 1996. The decreases were due primarily to certain
assets becoming fully amortized in 1996.
Operating income increased from $221,000 to $463,000 and from $254,000
to $1.2 million for the three and six months ended June 30, 1997 as compared to
the corresponding periods in 1996. The $241,000 and $942,000 increases in
operating income for the three and six months ended June 30, 1997 as compared to
the corresponding periods in 1996, were due primarily to increased revenues and
decreases in depreciation and amortization expense as discussed above.
Net interest expense, including the effects of interest rate hedging
agreements, decreased from $399,000 to $388,000, or by 2.8%, and from $939,000
to $798,000, or by 15.0%, for the three and six months ended June 30, 1997 as
compared to the corresponding periods in 1996. The $11,000 and $142,000
decreases were due primarily to lower average debt balances and lower interest
rates. The hedging agreements resulted in higher interest expense of $38,000 and
$20,000 for the three months ended June 30, 1996 and 1997, respectively, and
$60,000 and $49,000 for the six months ended June 30, 1996 and 1997,
respectively.
Other income increased $41,000 for the three and six months ended June
30, 1997 as compared to the corresponding periods in 1996. The increase was due
primarily to the sale of an easement in Somerset, Kentucky to the Commonwealth
of Kentucky for the purpose of improving U.S. Highway 27.
Due to the factors described above, the Partnership's net loss of
$178,000 and $685,000 for the three and six months ended June 30, 1996 changed
to net income of $116,000 and $439,000 for the corresponding three and six
months of 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary objective, having invested its net offering
proceeds in cable systems, has been 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 systems. The Partnership has
relied upon the availability of cash generated from operations and possible
borrowings to fund its ongoing capital requirements. 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 delayed the majority of its
rebuild and upgrade capital expenditure programs that had been scheduled for
1994, 1995, 1996 and 1997 in order to preserve liquidity. As discussed above in
"Recent Developments,"
10
<PAGE> 11
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
certain affiliates of the General Partner have exercised their right to acquire
all of the Partnerships cable systems, and the Partnership will be liquidated
shortly after the completion of that Sale.
During 1997, capital expenditures have been and will continue to be
limited to those expenditures which management believes are necessary, in the
short term, to comply with franchise authorities and FCC technical requirements.
On December 29, 1995, the Partnership borrowed $5.6 million under its
Bank Credit Agreement because the revolving credit portion of that facility was
scheduled to convert to a term loan on December 31, 1995. The Partnership's
management believes that the Partnership's anticipated cash resources and cash
flow from operations in 1997 will be sufficient to fund its capital expenditure
requirements and the mandatory principal payments on its debt of $4.1 million
scheduled for 1997.
As of June 30, 1997, the amount outstanding under the Partnership's
amended Bank Credit Agreement was $22.3 million. As discussed above, the
Partnership had no additional borrowings available to it. At June 30, 1997, such
borrowings bore interest at an average rate of 8.1% (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 June 30, 1997. The Bank Credit Agreement mandates
principal repayments of $1.0 million on September 30, 1997 and December 31, 1997
and $5.4 million in 1998. The Partnership made its scheduled principal
repayments of $1.0 million on March 31, 1997 and June 30, 1997, and on July 11,
1997 made an additional unscheduled repayment of $3.5 million.
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 six months ended June 30, 1997 and recovered $276,000 in previously
deferred management fees.
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Cash provided by operating activities increased from $3.3 million to
$3.9 million, or by $633,000, for the six months ended June 30, 1997 as compared
to the corresponding period in 1996. The increase resulted from an increase in
net income of $1.1 million, $486,000 of which resulted from a decrease in
non-cash depreciation and amortization, and from a decrease of $4,000 in other
operating items (receivables, prepaid expenses and other assets, cable
materials, equipment and supplies, payables, accrued expenses and customer
deposits and prepayments).
11
<PAGE> 12
FALCON CLASSIC CABLE INCOME PROPERTIES, L.P.
LIQUIDITY AND CAPITAL RESOURCES (CONCLUDED)
Cash used in investing activities increased by $471,000 in the six
months ended June 30, 1997 as compared to the corresponding period in 1996,
primarily due to an increase in capital expenditures. Cash used by financing
activities increased by $1.4 million because of the increased required principal
repayment of debt in 1997 per the Bank Credit Agreement.
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.
12
<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) Exhibit 10.33 - Asset Purchase Agreement, dated as of
June 27, 1997, by and among Falcon Community Cable,
L.P., Falcon Cable Media, Falcon Cable Systems
Company II, L.P. and Falcon Classic Cable Income
Properties, L.P. (incorporated by reference from
Exhibit 1 to the Registrant's Current Report on Form
8-K dated June 24, 1997).
Exhibit 99.4 - Letter to unitholders dated June 24,
1997 (incorporated by reference from Exhibit 2 to the
Registrant's Current Report on Form 8-K dated June
24, 1997).
(b) The Registrant filed a Form 8-K dated June 4, 1997,
in which it reported under Item 5 that the General
Partner had mailed a letter to all limited partners
making them aware that an unsolicited offer by JJJ
Group, LLC to buy partnership units was, in the
opinion of the General Partner, inadequate and
advising unitholders of the recommendation of the
General Partner that they not accept the offer. The
letter also advised unitholders, among other things,
that the offer was made without the consent or
involvement of the General Partner.
The Registrant filed a Form 8-K dated June 24, 1997,
in which it reported under Item 5 that the General
Partner had mailed a letter to all limited partners
advising them that it intends to exercise its
purchase right to acquire all of the Partnership's
cable television systems as previously disclosed.
<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: August 13, 1997 By: /s/ Michael K. Menerey
-------------------------
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 JUNE 30, 1997, AND THE STATEMENTS OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,842
<SECURITIES> 0
<RECEIVABLES> 804
<ALLOWANCES> 37
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 51,724
<DEPRECIATION> 21,028
<TOTAL-ASSETS> 57,237
<CURRENT-LIABILITIES> 3,691
<BONDS> 22,275
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 57,237
<SALES> 0
<TOTAL-REVENUES> 10,391
<CGS> 0
<TOTAL-COSTS> 9,195
<OTHER-EXPENSES> (41)
<LOSS-PROVISION> 165
<INTEREST-EXPENSE> 798
<INCOME-PRETAX> 439
<INCOME-TAX> 0
<INCOME-CONTINUING> 439
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 439
<EPS-PRIMARY> 6.04
<EPS-DILUTED> 0
</TABLE>
