FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1999.
[ ] 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: 0-19889
SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
---------------------------------------------
Exact name of registrant as specified in charter
COLORADO 84-1145140
- --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D.#
CAXTON WAY, WATFORD BUSINESS PARK, WATFORD, HERTFORDSHIRE WD1 8XH
-----------------------------------------------------------------
Address of principal executive office
+ 44 1923 435000
----------------
Registrant's telephone number
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>
SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
Unaudited
September 30, December 31,
1999 1998
---- ----
ASSETS:
<S> <C> <C>
CASH AND CASH EQUIVALENTS $75,757 $76,337
----------------- -----------------
CURRENT ASSETS 75,757 76,337
INVESTMENT IN CABLE TELEVISION AND
TELECOMMUNICATIONS PROPERTIES, net of accumulated
Depreciation and amortization of $35,844,642 and $32,586,193 at 74,282,758 77,249,082
September 30, 1999 and December 31, 1998, respectively
OTHER ASSETS 411,725 489,553
----------------- -----------------
Total assets $74,770,240 $77,814,972
----------------- -----------------
LIABILITIES:
Accounts payable to affiliates and related parties $1,437,116 $1,114,592
Accrued liabilities 172,125 175,779
----------------- -----------------
Current liabilities of the Partnership 1,609,241 1,290,371
Accounts payable to affiliates and related parties 18,493,040 18,037,089
Current installments due on loan facility 4,847,238 2,241,985
Short term obligations under capital leases 54,348 288,753
----------------- -----------------
Current liabilities of the Partnership & Company 25,003,867 21,858,198
Long term debt 25,269,623 29,786,365
Long term obligations under capital leases - 36,509
----------------- -----------------
Total liabilities 50,273,490 51,681,072
MINORITY INTERESTS 8,483,642 8,912,532
General Partner
Contributed capital 1,000 1,000
Accumulated deficit (346,748) (336,158)
----------------- -----------------
(345,748) (335,158)
Limited Partners
Net contributed capital (56,935 units outstanding at
September 30, 1999 and December 31, 1998 respectively) 48,817,997 48,817,997
Accumulated deficit (34,046,804) (32,998,411)
----------------- -----------------
14,771,193 15,819,586
Accumulated comprehensive income 1,587,663 1,736,940
----------------- -----------------
Total partners' capital 16,013,108 17,221,368
----------------- -----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $74,770,240 $77,814,972
----------------- -----------------
</TABLE>
The accompanying notes to unaudited financial
statements are an integral part of these
unaudited balance sheets.
<PAGE>
SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
<TABLE>
<CAPTION>
For the three months For the nine months
ended SEPTEMBER 30, ended SEPTEMBER 30,
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $7,027,768 $6,928,913 $21,351,916 $21,239,558
COSTS AND EXPENSES:
Operating (2,650,132) (2,910,256) (7,992,229) (9,017,589)
Selling, general and administrative (215,748) (54,720) (240,191) (161,159)
Management fees and allocated
Overhead from the General Partner (2,449,670) (1,944,738) (7,506,273) (6,238,168)
Depreciation and amortization (1,420,278) (953,114) (4,534,895) (3,317,033)
---------------- ---------------- ----------------- ----------------
OPERATING PROFIT 291,940 1,066,085 1,078,328 2,505,609
OTHER INCOME (EXPENSE):
Interest expense (773,158) (1,150,337) (2,418,902) (2,912,132)
Interest income - - - 39,703
Other (24,195) - (72,686) -
---------------- ---------------- ----------------- ----------------
(LOSS) BEFORE MINORITY INTERESTS (505,413) (84,252) (1,413,260) (366,820)
---------------- ---------------- ----------------- ----------------
Minority interests 83,265 (1,713) 354,277 35,291
---------------- ---------------- ----------------- ----------------
NET (LOSS) $(422,148) $(85,965) $(1,058,983) $(331,529)
---------------- ---------------- ----------------- ----------------
ALLOCATION OF NET (LOSS) :
General Partner $(4,221) $(860) $(10,590) $(3,315)
Limited Partners $(417,927) $(85,105) $(1,048,393) $(328,214)
NET (LOSS) PER LIMITED
PARTNERSHIP UNIT $(7.34) $(1.49) $(18.41) $(5.76)
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP 56,935 56,935 56,935 56,935
UNITS OUTSTANDING
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
----------------------------------------------------------------
For the three months ended For the nine months ended
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
NET (LOSS) PROFIT $(422,148) $(85,965) $(1,058,983) $(331,529)
Foreign currency translation adjustments 744,499 296,230 (149,277) 536,875
------------------ --------------- ---------------- ---------------
TOTAL COMPREHENSIVE INCOME / (LOSS) $322,351 $210,265 $(1,208,260) $205,346
------------------ --------------- ---------------- ---------------
</TABLE>
The accompanying notes to unaudited financial
statements are an integral part of these
unaudited statements.
<PAGE>
SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
<TABLE>
<CAPTION>
For the nine months ended
September 30,
-------------
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(1,058,983) $(331,529)
Adjustments to reconcile net loss to net cash
generated in operating activities:
- ---------------------------------------------
Minority interests (354,277) (35,291)
Depreciation and amortization 4,534,895 3,317,033
CHANGE IN OPERATING ASSETS AND LIABILITIES
Decrease in other assets
72,686 94,341
Increase in accounts payable to related parties
903,977 1,794,156
Decrease in trade accounts payable and accrued liabilities
(3,654) (6,500)
------------------- --------------------
Net cash generated in operating activities 4,094,644 4,832,210
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction payments for cable television/telephony system
(2,195,117) (4,246,588)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of borrowings (1,636,242)
-
Principal payments under capital leases
(263,285) (669,992)
------------------- --------------------
Net cash used in financing activities (1,899,527) (669,992)
Increase/ (decrease) in cash and cash equivalents before exchange rate changes - (84,370)
Effect of currency exchange rate changes 11,145
(580)
------------------- --------------------
(Decrease) in cash and cash equivalents (580) (72,925)
------------------- --------------------
Cash and cash equivalents, beginning of period 76,337 434,386
------------------- --------------------
Cash and cash equivalents, end of period $75,757 $361,461
------------------- --------------------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $1,766,003 $2,380,647
</TABLE>
The accompanying notes to unaudited financial
statements are an integral part of these
unaudited statements.
<PAGE>
SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) BASIS OF PRESENTATION
---------------------
The accompanying financial information should be read in conjunction with
the financial statements of the South Hertfordshire United Kingdom Fund, Ltd.
(the "Partnership"), including the notes thereto, for the year ended December
31, 1998 filed on form 10-K.The financial information as of and for the periods
ended September 30, 1999 and 1998 included herein is unaudited. However, in the
opinion of management, such information reflects all adjustments, consisting
only of normal recurring adjustments, necessary to present fairly the financial
position of the Partnership at September 30, 1999 and its results of operations
and cash flows for the periods presented herein. Results of operations for these
periods are not necessarily indicative of results to be expected for the full
year. As a result of the Partnership's ownership of 66.7 percent of the shares
of Cable and Wireless Communications (South Hertfordshire) Limited (formerly
Bell Cablemedia (South Hertfordshire) Limited) (the "Company"), that entity has
been consolidated in these financial statements.
(2) INVESTMENT IN SUBSIDIARY
------------------------
The Company is a United Kingdom corporation that owns and operates a cable
television/telephony system in the South Hertfordshire franchise area, located
adjacent to the northwest perimeter of Greater London, England (the "South Herts
System"). At September 30, 1999, the network consisted of approximately 570
miles of cable plant and included approximately 91,300 homes released to
operations. At September 30, 1999 the South Herts System's cable television
customers totaled approximately 23,900 and the South Herts System's residential
telephony lines totaled approximately 30,600.
The Company is now owned 66.7 percent by the Partnership and 33.3 percent
by Fawnspring Limited (the "General Partner"), a wholly owned subsidiary of
Cable & Wireless Communications plc. The General Partner provides consulting
services to the Partnership. The General Partner may delegate some or all of the
consulting services to Cable & Wireless Communications plc or to other
affiliates.
Cable and Wireless plc and Bell Atlantic presently own, directly or
indirectly, approximately 53% and 19% respectively, of the issued share capital
of Cable & Wireless Communications plc. Public shareholders hold the remaining
28%.
Cable & Wireless Communications plc, through its subsidiaries and its
interest in the Company, holds exclusive cable television licenses and related
non-exclusive telecommunications licenses covering more than six million
potential residential customers, representing approximately 25% of all homes in
the United Kingdom (including 59% of all homes in Greater London), and
substantially all small-to-medium sized business customers within its 47 cable
franchise areas.
On July 26, 1999 Cable and Wireless plc, NTL Incorporated and Cable &
Wireless Communications plc announced that they have agreed to propose a
restructuring of Cable & Wireless Communications plc.
Under this proposal, Cable & Wireless Communications plc (a 53 per cent
owned subsidiary of Cable and Wireless plc) will be separated into its
corporate, business, Internet Protocol and wholesale operations ("CWC DataCo")
and its consumer cable telephone, Internet and television operations ("CWC
ConsumerCo"). Cable and Wireless plc then proposes to acquire the outstanding
economic interest in CWC DataCo (thus achieving 100% ownership) and NTL
Incorporated proposes to acquire CWC ConsumerCo.
Under the transaction, it is proposed that Cable & Wireless Communications
plc shareholders will be entitled to receive a combination of new Cable and
Wireless plc shares, new NTL Incorporated common stock and cash in return for
their interests in Cable & Wireless Communications plc.
There are a number of pre-conditions to be satisfied before any proposals
are put to Cable & Wireless Communications plc shareholders and a number of
further conditions to be satisfied before completion. It is expected that the
pre-conditions will be satisfied within the next six months when public
documents will then be issued to Cable & Wireless Communications plc
shareholders.
(3) TRANSACTIONS WITH AFFILIATED ENTITIES
-------------------------------------
The General Partner of the Partnership or its affiliates are entitled to be
paid a consulting fee by the Company. During the construction phases of the
South Herts System, this consulting fee was 2 percent of construction costs.
After completion of construction of each portion of the system, the consulting
fee for the completed portion is 5 percent of the gross revenues, excluding
revenues from the disposal of cable television/telephony systems. The consulting
fee is calculated and payable monthly. Consulting fees paid or payable by the
Company for the three months ended September 30, 1999 and 1998 were $356,473 and
$402,958 respectively. All of these amounts were expensed in the Unaudited
Consolidated Statements of Operations for the three months ended September 30,
1999 and 1998 respectively. Consulting fees paid or payable by the Company for
the nine months ended September 30, 1999 and 1998 were $1,069,292 and $1,170,103
respectively. All of these amounts were expensed in the Unaudited Consolidated
Statements of Operations for the nine months ended September 30, 1999 and 1998
respectively.
The General Partner and its affiliates are entitled to reimbursement from
the Company for direct and indirect expenses allocable to the operation of the
South Herts System, and from the Partnership for direct and indirect expenses
allocable to the operation of the Partnership, which include, but are not
limited to, rent, supplies, telephone, travel, copying charges and salaries of
any full or part-time employees. The General Partner believes that the
methodology used in allocating these expenses is reasonable. During the three
months ended September 30, 1999 and 1998, reimbursements made by the Company and
the Partnership to the General Partner or its affiliates for any allocable
direct and indirect expenses totaled $2,093,197 and $1,541,780 respectively.
During the nine months ended September 30, 1999 and 1998, reimbursements made by
the Company and the Partnership to the General Partner or its affiliates for any
allocable direct and indirect expenses totaled $6,436,981 and $5,068,065
respectively. These increases were due to an increase in the provision of
services by the General Partner in 1999 as compared to 1998.
The General Partner and its affiliates may make advances to, and defer
collection of fees and allocated expenses owed by the Partnership, although they
are not required to do so. The Partnership will be charged interest on such
advances and deferred amounts at a rate equal to the General Partner's or
certain affiliates' weighted average cost of all debt financing from
unaffiliated entities. For the three months ended September 30, 1999 and 1998,
this interest charge was $206,491 and $280,371 respectively. For the nine months
ended September 30, 1999 and 1998, this interest charge was $582,735 and
$524,368, respectively.
(4) FINANCINGS
----------
On April 18, 1995 the Company entered into an agreement with two major
banks to provide a (pound)25,000,000 revolving and term loan credit facility
agreement maturing on December 31, 2003 (the "South Herts Credit Agreement"). On
October 18, 1996, (pound)5,000,000 was canceled and the facility reduced to
(pound)20,000,000.
The credit facility was structured as a revolving facility through December
31, 1997, at which time the facility was converted into a term loan. The term
loan will require repayment of outstanding principal amounts beginning on March
31 1999 with payments being made quarterly, with the final 50% of such amounts
being repaid in 2002 and 2003. The facility is divided into two tranches,
denoted Facility A and Facility B, and the aggregate amount drawn down under
both tranches may not exceed (pound)20,000,000. Amounts drawn down under
Facility A bear interest at sterling LIBOR plus a margin of 2.5%. The
availability of Facility B of (pound)20,000,000 is subject to certain conditions
which have now been satisfied and amounts drawn down under Facility B bear
interest at sterling LIBOR plus a margin ranging from 0.75% to 2.0% depending on
the bank debt ratio (the ratio of bank debt to annualized operating cash flow)
of the Company.
The South Herts Credit Agreement contains various covenants including
financial covenants such as a cumulative revenue test, bank debt ratio, interest
cover ratio, a fixed charges ratio and a pro-forma debt service ratio and other
covenants such as restrictions on disposals and on the creation of indebtedness
and encumbrances. The Company is in compliance with all covenants as of
September 30, 1999. The South Herts Credit Agreement also includes a restriction
on the payment of dividends which provides that dividends or distributions in
respect of its issued share capital and payments in respect of certain
intercompany loans are permitted only if the bank debt ratio for the previous
two accounting quarters is less than 5.5:1 and no event of default or potential
event of default has occurred and is continuing at such time and the payment of
such dividend or distribution will not give rise to an event of default or
potential default.
The South Herts Credit Agreement contains certain events of default,
including non-payment of amounts due under the South Herts Credit Agreement,
breaches of representations and covenants (including financial ratios) contained
in the South Herts Credit Agreement, cross-default to certain other indebtedness
of the Company, certain bankruptcy and insolvency events and certain changes of
ownership.
The obligations of the Company under the South Herts Credit Agreement are
secured by a charge over all of the assets of the Company. In addition, there is
a pledge of all of the share capital of the Company given by Cable & Wireless
Communications plc and the Partnership as additional security for the facility.
The General Partner believes that the South Herts Credit Agreement will be
sufficient to fund the completion of construction and operation of the South
Herts System. The amount outstanding under the facility at September 30, 1999
was (pound)18,287,000 ($30,116,860) and this amount was all drawn under Facility
B.
<PAGE>
SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership. The Partnership's source of cash has been the net proceeds
of its offerings of limited partnership interests. Historically, the
Partnership's principal uses of cash have been capital contributions to the
Company in order to fund the Partnership's proportionate share of the
construction costs of the South Herts System. As discussed below, the General
Partner believes that no additional capital contributions will be required to
fund the completion of construction and operations of the South Herts System.
Accordingly, in the future, the Partnership's uses of cash will be restricted to
covering its administration costs (principally insurance premiums, legal and
accounting costs associated with the Partnership's annual audit and periodic
regulatory filings and general administration). As of September 30, 1999 the
Partnership had current liabilities of $1,609,241 most of which were payable to
the General Partner.
The Company. On April 18, 1995 the Company entered into an agreement with
two major banks to provide a (pound)25,000,000 revolving and term loan credit
facility agreement maturing on December 31, 2003 (the "South Herts Credit
Agreement"). On October 18, 1996, (pound)5,000,000 was canceled and the facility
reduced to (pound)20,000,000.
The General Partner believes that the South Herts Credit Agreement and
ongoing cash flows from operations will be sufficient to fund the completion of
construction and operation of the South Herts System. The amount outstanding
under the facility at September 30, 1999 was (pound)18,287,000 ($30,116,860) and
this amount was all drawn under Facility B.
YEAR 2000 ISSUE
- ---------------
The year 2000 problem results from the use of two digits rather than four
to define the year in computer hardware and software and in electronic
equipment. When electronic systems process dates before and after January 1,
2000, they may recognize a date represented by "00" as indicating the year 1900,
instead of 2000. Unless steps are taken to re-programme affected equipment and
re-write software, this may create processing ambiguities that can cause errors
and system failures, the effects of which may be limited or pervasive depending
on the computer chip, system or software, and its location and function. By
definition, the precise effects of the problem can only be estimated in advance
and will not be known with certainty until into and even after the year 2000
itself.
The Company's operations are highly dependent upon equipment with embedded
computer technology (network, switches etc), the widespread failure of which
would have a material adverse impact on its results of operations. The problem
may be exacerbated because of the interdependence of computer and
telecommunications systems throughout the world: the operation of our business
depends not only on our own computer systems and equipment, but also on those of
our customers, suppliers and the other telecommunications operators with whom we
inter-connect to deliver traffic. In particular, we are dependent on the timely
completion by suppliers (particularly providers of IT) of corrective work on IT
hardware, software and systems, and on embedded chip equipment. Furthermore, we
have no direct influence over the actions taken by our customers to address
their own year 2000 problems, with the result that the functionality of fully
compliant customer premises equipment may be compromised by failures in a
customer's own systems.
Given the complexity of the problem, it is not possible for any
organization to guarantee that no problems will occur as a result of the year
2000 issue. However the Board is aware of the critical issues as they affect
Cable & Wireless Communications plc, including the Company, and is fully
involved in ensuring that steps are taken to ensure that an acceptable state of
readiness is achieved. To address the year 2000 issue, a Year 2000 Programme has
been set up which includes a comprehensive review to identify systems and
equipment (both in the Company and in third party vendors) that could be
affected by the year 2000 issue. The overall objective of the Programme is to
ensure that Cable & Wireless Communications plc maintains continuity of business
and service to its customers, before, during and after the roll-over into year
2000. The team steering the Programme is chaired by the Chief Executive Officer,
and also contains other senior management members such as the directors
responsible for operations, finance and risk. The steering team receives a
formal report on the Programme monthly, and the Audit Committee has a standing
agenda item on the Programme's progress.
In addition, the Group is a member of the Telecommunications Operators'
Forum, a group of over 40 of the UK's principal telecommunication providers
which has been working for two years to ensure that adequate processes are in
place to address the year 2000 issue as it affects the industry. The Forum
recently instigated a process of peer audit to review the adequacy of members'
millennium programmes. The Group's Year 2000 Programme has been audited by two
other UK operators under the auspices of OFTEL, and was deemed to be well
managed with a strong control element.
Cable & Wireless Communications plc also benefits from the Year 2000
Programme of Cable and Wireless plc which has a strong international element and
through which the Group participates in testing of international interconnect.
The key elements of Cable & Wireless Communications plc's Year 2000 Programme
are as follows:
o Preparation of a Millennium Inventory Database containing details of all
the hardware, software and equipment potentially affected by the year 2000
issue;
o Assessment of the likely impact of the year 2000 issue on each type of
hardware, software and equipment in the database, and identification of the
knock-on effect on service provision of any resultant loss of
functionality;
o Review of supplier compliance, and formulation of strategies to safeguard
supply, including detailed health checks on our critical suppliers;
o Remediation of the issues identified in the Assessment and Supplier Review
phases by conversion, replacement or isolation of non-compliant elements of
hardware, software and equipment;
o Verification testing to check the effectiveness of remediation measures;
o Contingency planning to ensure that we can meet our primary objective of
maintaining service continuity; and
o Ongoing communication with customers, suppliers and regulatory authorities.
In accordance with our Programme policies we have completed testing and
implementation for all material elements of our core standard products and
services. Cable & Wireless Communications plc will continually review its
progress against its year 2000 plans and conclude on appropriate and feasible
contingency plans to reduce its exposure to the year 2000 issue. Further details
of Cable & Wireless Communications plc's Year 2000 Programme are published in
Cable & Wireless Communications plc's Form 20F.
Accounting rules require that year 2000 compliance costs are expensed as
incurred. The Company's costs of year 2000 compliance are included within those
for Cable & Wireless Communications plc as a whole. The Company will continue to
contribute its share of such costs, estimated to be approximately $66,000 for
the three months ended September 30, 1999, and approximately $228,000 for the
nine months ended September 30, 1999. The company's share of Cable & Wireless
Communications plc's total year 2000 compliance costs are expected to be
$717,000.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership increased by $98,855 for the three months ended
September 30, 1999, from $6,928,913 over the corresponding period in 1998 to
$7,027,768 in 1999. Overall revenues of the Partnership increased by $112,358
for the nine months ended September 30, 1999, from $21,239,558 over the
corresponding period in 1998 to $21,351,916 in 1999. The South Herts System
served approximately 23,900 basic cable television customers and 30,600
residential telephony lines at September 30, 1999 as compared to approximately
22,600 basic cable television customers and 29,500 residential telephony lines
at September 30, 1998.
Operating expenses decreased $260,124 for the three months ended September
30, 1999, from $2,910,256 over the corresponding period in 1998 to $2,650,132 in
1999. Operating expenses decreased $1,025,360 for the nine months ended
September 30, 1999, from $9,017,589 over the corresponding period in 1998 to
$7,992,229 in 1999. These reductions reflect ongoing efforts by Cable & Wireless
Communications plc to control costs by taking advantage of economies of scale
within the Cable & Wireless Communications plc Group.
Selling, general and administrative expenses increased $161,028 for the
three months ended September 30, 1999, from $54,720 over the corresponding
period in 1998 to $215,748 in 1999. Selling, general and administrative expenses
increased $79,032 for the nine months ended September 30, 1999, from $161,159
over the corresponding period in 1998 to $240,191 in 1999. This is due to an
increase in liability insurance incurred.
Management fees and allocated overhead from the General Partner increased
by $504,932 for the three months ended September 30, 1999, from $1,944,738 over
the corresponding period in 1998 to $2,449,670 in 1999. Management fees and
allocated overhead from the General Partner increased by $1,268,105 for the nine
months ended September 30, 1999, from $6,238,168 over the corresponding period
in 1998 to $7,506,273 in 1999. This increase is due to an increase in various
expenses including bad debt charges, wages and computing costs.
Depreciation and amortization expense increased $467,164 for the three
months ended September 30, 1999, from $953,114 over the corresponding period in
1998 to $1,420,278 in 1999. Depreciation and amortization expense increased
$1,217,862 for the nine months ended September 30, 1999, from $3,317,033 over
the corresponding period in 1998 to $4,534,895 in 1999.
Interest expense decreased by $377,179 for the three months ended September
30, 1999, from $1,150,337 over the corresponding period in 1998 to $773,158 in
1999. Interest expense decreased by $493,230 for the nine months ended September
30, 1999, from $2,912,132 over the corresponding period in 1998 to $2,418,902 in
1999. These decreases were due to repayments of the principal on the loan and a
reduction in U.K. interest rates.
There was no interest income in either the three months ended September 30
1998 or September 30 1999. Interest income decreased by $39,703 for the nine
months ended September 30, 1999, from $39,703 over the corresponding period in
1998 to $nil in 1999.
Net loss increased by $336,183 for the three months ended September 30,
1999, from a loss of $85,965 over the corresponding period in 1998 to a loss of
$422,148 in 1999. Net loss increased by $727,454 for the nine months ended
September 30, 1999, from a loss of $331,529 over the corresponding period in
1998 to a loss of $1,058,983 in 1999. The increases in net loss were due to
lower than expected revenue growth.
MARKET RISK DISCLOSURES
- -----------------------
Interest rate risk: At September 30 1999, the Company had (pound)18,287,000
($30,116,860) drawn under Facility B of the South Herts Credit Agreement. This
bears interest at LIBOR plus a margin from 0.75% to 2.0% depending on the bank
debt ratio of the Company.
Foreign exchange risk: As operations are UK based where revenues and expenses
are denominated in Sterling pounds, the consolidated balance sheet is affected
by movements in the US dollar/Sterling exchange rate. For details of the
foreign currency translation adjustments during the period see the unaudited
consolidated statements of comprehensive income/(loss) on page 3.
<PAGE>
PART II. OTHER INFORMATION
Items 1 - 5. There are no matters which require disclosure.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27 Financial Data Schedule
b) Reports on Form 8-K
None
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.
SOUTH HERTFORDSHIRE UNITED
KINGDOM FUND, LTD.
a Colorado limited partnership
BY: FAWNSPRING LIMITED
Its General Partner
BY: /s/ Robert Drolet
-----------------
Director
15 November, 1999.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 75,757
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 75,757
<PP&E> 110,127,400
<DEPRECIATION> 35,844,642
<TOTAL-ASSETS> 74,770,240
<CURRENT-LIABILITIES> 25,003,867
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 16,013,108<F1>
<TOTAL-LIABILITY-AND-EQUITY> 74,770,240
<SALES> 21,351,916
<TOTAL-REVENUES> 21,351,916
<CGS> 7,992,229
<TOTAL-COSTS> 7,992,229
<OTHER-EXPENSES> 12,354,045
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,418,902
<INCOME-PRETAX> (1,058,983)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,058,983)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,058,983)
<EPS-BASIC> (18.41)
<EPS-DILUTED> (18.41)
<FN>
- -------------------------
(F1) Comprised of Partners' contributed capital of $48,818,997 less accumulated
losses of $32,805,889
</FN>
</TABLE>
