Item 1. Business. - ------ --------
(a) General Development of Business. -------------------------------
American Cable TV Investors 4, Ltd. ("ACT 4") is a Colorado limited partnership that was formed in December of 1985 for the purpose of acquiring, developing and operating cable television systems. ACT 4's general partner (the "General Partner") is IR-TCI Partners IV, L.P. ("IR-TCI"), a Colorado limited partnership whose general partners are Integrated Cable Corp. IV ("ICC"), an indirect subsidiary of Presidio Capital Corp. ("Presidio"), and TCI Ventures Four, Inc. ("TCIV 4"), a subsidiary of TCI Cablevision Associates, Inc. ("Cablevision"). Integrated Resources, Inc. ("Integrated") transferred its interest in ICC to a subsidiary of Presidio in connection with the November 1994 conclusion of Integrated's bankruptcy proceedings The limited partner of IR-TCI is Cablevision Equities V, a limited partnership whose partners are certain former officers and key employees of the predecessor of Cablevision. Cablevision is an indirect subsidiary of Tele-Communications, Inc. ("TCI") and is the managing agent of ACT 4. In its public offering from May of 1986 to April of 1987, ACT 4 sold 120,005 limited partnership units at a price of $500 per unit ("Unit").
ACT 4 had a 60% ownership interest in Newport News Cablevision Associates, L.P. and its subsidiary Newport News Cablevision, Ltd. (collectively, "Newport News"). Through December 31, 1995, Newport News owned and operated the cable television system servicing the area in and around Newport News, Virginia (the "Newport News System"). American Cable TV Investors 5, Ltd. ("ACT 5"), an affiliate, owned the 40% minority interest in Newport News. ACT 4 and Newport News are collectively referred to herein as the "Partnership."
During 1995 ACT 4 sold all of its wholly-owned cable television systems in three separate transactions (collectively, the "Wholly-Owned Sales"). The wholly-owned cable television systems were located in and around (i) Chino, California (the "Chino System"), (ii) North and South Kona and North and South Kohala, Hawaii (collectively, the "Kona System") and (iii) Colton, California (the "Colton System"). In addition, the Newport News System was sold on January 1, 1996 (the "Newport News Sale", and together with the Wholly-Owned Sales, the "Sales Transactions"). The Sales Transactions were approved by the Partnership's limited partners at a special meeting that occurred on June 20, 1995. See "Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations - General." - -------------------------------
As a result of the Sales Transactions, the Partnership is no longer engaged in the cable television business and is currently seeking to make a final determination of its liabilities so that liquidating distributions can be made in connection with its dissolution.
I-1
(b) Financial Information about Industry Segments. ---------------------------------------------
Not applicable.
(c) Narrative Description of Business. ---------------------------------
Not applicable.
(d) Financial Information about Foreign and Domestic Operations and Export ---------------------------------------------------------------------- Sales. -----
Not applicable.
Item 2.
Item 2. Properties. - ------ ----------
Not applicable.
Item 3.
Item 3. Legal Proceedings. - ------- -----------------
There are no material pending legal proceedings to which the Partnership is a party or to which any of its property is subject.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders. - ------- ---------------------------------------------------
None.
I-2
PART II.
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. - ------- ---------------------------------------------------------------------
In its public offering from May of 1986 to April of 1987, ACT 4 sold 120,005 Units to the public at a price of $500 per Unit. At December 31, 1997, there were approximately 8,400 Unit holders.
The Partnership made a cash distribution of $675 per Unit in January 1996 to holders of record as of December 1, 1995. The Partnership anticipates making final cash distributions to its partners as soon as possible following the final determination and satisfaction of its liabilities. However, the Partnership is currently unable to predict the timing or amount of any such liquidating distributions due primarily to the claim for indemnification which was filed by the purchaser of the Chino System. For additional information see note 4 to the accompanying financial statements and "Management's Discussion and Analysis of --------------------------------------- Financial Condition and Results of Operations - General." - -------------------------------------------------------
Although the Units are freely transferable, no public trading market for the Units exists. To the extent that an informal or secondary market exists, the Partnership's limited partners may only be able to sell Units at a substantial discount from the Units' proportionate share of the underlying net assets of the Partnership.
II-1
Item 6.
Item 6. Selected Financial Data. - ------- -----------------------
Selected financial data related to the Partnership's financial condition and results of operations for the five years ended December 31, 1997 are summarized as follows (such information should be read in conjunction with the Partnership's financial statements included elsewhere herein):
SUMMARY BALANCE SHEET DATA: --------------------------
SUMMARY STATEMENT OF OPERATIONS DATA: ------------------------------------
_________________
(1) The December 31, 1996 summary balance sheet data and statement of operations data reflect the effects of the January 1, 1996 Newport News Sale. See "Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations - General." ----------------------------------------------
(2) The December 31, 1995 summary balance sheet data and statement of operations data reflect the effects of the Wholly-Owned Sales. As a result of the Wholly-Owned Sales, the Partnership's statement of operations for the year ended December 31, 1995 includes (i) six months of operating results for the Kona and Colton Systems and (ii) eleven months of operating results for the Chino System. See "Management's Discussion and Analysis of Financial Condition and ---------------------------------------------------------------- Results of Operations - General." --------------------------------
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Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results - ------- ----------------------------------------------------------------------- of Operations. -------------
General -------
Sales Transactions. During 1995, the Partnership sold its wholly-owned cable television systems in three separate sales transactions. In addition, on January 1, 1996, the Newport News System was sold. As a result of the Sales Transactions, the Partnership is no longer engaged in the cable television business and is currently seeking to make a final determination of its liabilities so that liquidating distributions can be made in connection with its dissolution.
In one transaction, the Partnership sold the Colton System on July 3, 1995 to an indirect subsidiary of TCI for net cash proceeds of $10,216,000.
In a second transaction, the Partnership sold the Kona System on July 3, 1995 to Time Warner Cable Ventures, a Division of Time Warner Entertainment Company L.P. ("Time Warner") for net proceeds of $31,119,000 of which $2,500,000 was placed in escrow (the "Kona Escrow"). The Kona Escrow was subject to any indemnifiable claims made by Time Warner through July 2, 1996. During the fourth quarter of 1996, the Kona Escrow, exclusive of $108,000 paid to Time Warner in satisfaction of a claim for indemnification, was released to ACT 4. The amount paid to Time Warner for such claim was charged to operations prior to 1996. ACT 4 received interest of $147,000 in conjunction with the release of the Kona Escrow.
In a third transaction, the Partnership sold the Chino System on December 1, 1995 to Citizens Century Cable Television Venture ("Citizens-Century"), an unaffiliated third party, for net proceeds of $40,585,000. Pursuant to the terms of the sale agreement, $2,025,000 of the sales price was placed in escrow (the "Chino Escrow") and was subject to any indemnifiable claims made by Citizens-Century through May 29, 1996. In May 1996, Citizens-Century filed a claim for a breach of warranty in connection with the sale of the Chino System. Citizens-Century has not submitted to ACT 4 an estimate of the cost associated with such claim. The claim for indemnification has had and will continue to have the effect of delaying the release of funds from the Chino Escrow. In addition, any successful indemnification claim will have the effect of reducing the amount of the Chino Escrow ultimately released to ACT 4. See notes 2 and 4 to the accompanying financial statements.
In a fourth transaction, the Newport News System was sold on January 1, 1996 to Cox Communications Rhode Island, Inc. ("Cox"), an unaffiliated third party, for net cash proceeds of $121,886,000. Pursuant to the terms of the sale agreement, $5,000,000 of the sales price was placed in escrow (the "Newport News Escrow") and was subject to any indemnifiable claims made by Cox through September 27, 1996. During the fourth quarter of 1996, such amounts held in escrow plus accrued interest of $170,000 were released to Newport News. ACT 4 had a 60% ownership interest in Newport News. Accordingly, ACT 4 received $53,684,000 of the net cash proceeds (after satisfaction of Newport News' transaction costs and liabilities) from the Newport News Sale during 1996.
II-3
In connection with the Wholly-Owned Sales, ACT 4 used most of the cash proceeds to (i) pay disposition fees of $2,454,000 ($1,840,500 to Cablevision and $613,500 to Presidio Cable IV Corp. ("PCC"), a subsidiary of Presidio) and (ii) repay debt and related accrued interest of $35,150,000. In connection with the Newport News Sale, Newport News used most of the cash proceeds to (i) pay a disposition fee of $3,668,000 ($2,751,000 to Cablevision and $917,000 to PCC), (ii) repay debt and related accrued interest of $24,306,000 and (iii) make cash distributions to ACT 4 and ACT 5 of $53,684,000 and $35,789,000, respectively. The Partnership used proceeds from the Sales Transactions to make initial distributions to its General and limited partners of $7,606,000 and $81,003,000 ($675 per Unit), respectively, in January 1996. The proceeds were distributed to General and limited partners on a 1% and 99% basis, respectively. See note 1 to the accompanying financial statements.
Inflation did not have a significant impact on the Partnership's financial condition or results of operations during the three-year period ended December 31, 1997.
Results of Operations ----------------------
As a result of the Sales Transactions, the Partnership is no longer engaged in the cable television business and is currently seeking to make a final determination of its liabilities so that liquidating distributions can be made in connection with its dissolution. Accordingly, the Partnership's results of operations for the years ended December 31, 1997 and 1996 are primarily comprised of general and administrative ("G&A") expenses and interest income. The Partnership's G&A expenses are comprised primarily of costs associated with the administration of the Partnership. The 1996 results of operations also include the gain from the Newport News Sale and the minority interest's share of Newport News' net earnings. The gain from the Newport News Sale has been reduced by $510,000 to reflect certain of Newport News' operating costs and expenses which were incurred in 1995 but which were reflected in the 1996 financial records of Newport News. See note 2 to the accompanying financial statements.
Interest income decreased $354,000 and increased $375,000 during the years ended December 31, 1997 and 1996, respectively, as compared to the corresponding prior year periods. Such changes are due primarily to changes in the average balance of the Partnership's cash and cash equivalents. In addition, interest income in 1996 includes interest earned on the Newport News Escrow and the Kona Escrow.
Liquidity and Capital Resources -------------------------------
As a result of the Sales Transactions, the Partnership is no longer engaged in the cable television business. The Partnership anticipates that it will make liquidating distributions in connection with its dissolution as soon as possible following the final determination and satisfaction of the Partnership's liabilities, but not prior to the release of funds from the Chino Escrow. In May 1996, Citizens-Century filed a claim for a breach of warranty in connection with the sale of the Chino System. Citizens-Century has not submitted to ACT 4 an estimate of the cost associated with such claim. The claim for indemnification has had and will continue to have the effect of delaying the release of funds from the Chino Escrow. In addition, any successful indemnification claim will have the effect of reducing the amount of the Chino Escrow ultimately released to ACT 4.
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During the year ended December 31, 1996, the Partnership used cash proceeds received in connection with the Sales Transactions to make distributions to its partners and the minority owner of Newport News and to fund other financing and operating activities. See the Partnership's statements of cash flows included within the accompanying financial statements.
Item 8.
Item 8. Financial Statements and Supplementary Data. - ------- -------------------------------------------
The financial statements of the Partnership are filed under this item beginning on page II-6. All financial statement schedules are omitted as they are not required or are not applicable.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and - ------- --------------------------------------------------------------- Financial Disclosure. --------------------
None.
II-5
Independent Auditors' Report ----------------------------
The Partners American Cable TV Investors 4, Ltd.:
We have audited the accompanying balance sheets of American Cable TV Investors 4, Ltd. (a Colorado limited partnership) as of December 31, 1997 and 1996, and the related statements of operations, partners' equity, and cash flows for each of the years in the three-year period ended December 31, 1997. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As discussed in note 2 to the financial statements, the Partnership sold all of its cable television assets and is currently in the process of determining its final liabilities so liquidating distributions can be made.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Cable TV Investors 4, Ltd. as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado February 27, 1998
II-6
AMERICAN CABLE TV INVESTORS 4, LTD. (A Colorado Limited Partnership)
Balance Sheets
December 31, 1997 and 1996
(see note 2)
See accompanying notes to financial statements.
II-7
AMERICAN CABLE TV INVESTORS 4, LTD. (A Colorado Limited Partnership)
Statements of Operations
Years ended December 31, 1997, 1996 and 1995
(see note 2)
See accompanying notes to financial statements.
II-8
AMERICAN CABLE TV INVESTORS 4, LTD. (A Colorado Limited Partnership)
Statements of Partners' Equity
Years ended December 31, 1997, 1996 and 1995
(see note 2)
See accompanying notes to financial statements.
II-9
AMERICAN CABLE TV INVESTORS 4, LTD. (A Colorado Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1997, 1996 and 1995
(see note 2)
(continued)
II-10
AMERICAN CABLE TV INVESTORS 4, LTD. (A Colorado Limited Partnership)
Statements of Cash Flows, Continued
Years ended December 31, 1997, 1996 and 1995
(see note 2)
See accompanying notes to financial statements.
II-11
AMERICAN CABLE TV INVESTORS 4, LTD. (A Colorado Limited Partnership)
Notes to Financial Statements
December 31, 1997, 1996 and 1995
(1) Summary of Significant Accounting Policies ------------------------------------------
Organization ------------ American Cable TV Investors 4, Ltd. ("ACT 4"), a Colorado limited partnership, was formed in December of 1985 for the purpose of acquiring, developing and operating cable television systems. IR-TCI Partners IV, L.P. ("IR-TCI"), a Colorado limited partnership, is the general partner of ACT 4 (the "General Partner"). The two general partners of IR-TCI are TCI Ventures Four, Inc., a subsidiary of TCI Cablevision Associates, Inc. ("Cablevision") and Integrated Cable Corp. IV, an indirect subsidiary of Presidio Capital Corp. ("Presidio"). The limited partner of the General Partner is Cablevision Equities V, a limited partnership whose partners are certain former officers and key employees of the predecessor of Cablevision. Cablevision, an indirect subsidiary of Tele-Communications, Inc. ("TCI"), is the managing agent of ACT 4. In its public offering from May of 1986 to April of 1987, ACT 4 sold 120,005 limited partnership units at a price of $500 per Unit.
ACT 4 had a 60% ownership interest in Newport News. ACT 4 and Newport News are collectively referred to herein as the "Partnership". American Cable TV Investors 5, Ltd. ("ACT 5"), an affiliate, owned the 40% minority interest in Newport News which was formed for the purpose of acquiring, developing and operating the cable television system located in and around Newport News, Virginia (the "Newport News System").
As further described in note 2, the Partnership has sold all of its cable television assets.
The financial statements include the accounts of ACT 4 and Newport News (through November 1996). As a result of the sale of the Newport News System, Newport News was liquidated during the fourth quarter of 1996. See note 2. All significant intercompany transactions and accounts have been eliminated.
Allocation of Net Earnings -------------------------- Net earnings are allocated 99% to the limited partners and 1% to the General Partner, and distributions of Cash from Operations, Sales or Refinancings (all as defined in the Partnership's limited partnership agreement) shall be distributed 99% to the limited partners and 1% to the General Partner until the limited partners receive distributions equal to their original capital contributions ("Payback"). After the limited partners have received distributions equal to Payback, the allocations of net earnings, credits, and distributions of Cash from Operations, Sales or Refinancings shall be 25% to the General Partner and 75% to the limited partners. The Partnership's January 1996 distributions, which were funded with proceeds from the sale of the Partnership's cable television assets, allowed limited partners to achieve Payback. As such, Payback was deemed to have occurred on January 1, 1996 in connection with the sale of the Newport News System. See note 2. Accordingly, the limited partners' share of earnings for the year ended December 31, 1996 includes $22,578,000 allocated prior to achieving Payback and $28,052,000 allocated after achieving Payback.
(continued)
II-12
AMERICAN CABLE TV INVESTORS 4, LTD. (A Colorado Limited Partnership)
Notes to Financial Statements
Statement of Cash Flows ----------------------- Cash and cash equivalents consist of investments which are readily convertible into cash and have maturities of three months or less at the time of acquisition.
At December 31, 1997 and 1996, all of the Partnership's cash and cash equivalents were invested in commercial paper, discount notes or money market funds. The Partnership is exposed to credit loss in the event of non-performance by the other parties to such financial instruments. However, the Partnership does not anticipate non-performance by the other parties.
Cash paid by the Partnership for interest was none, $62,000, and $5,518,000 in 1997, 1996 and 1995, respectively.
Property and Equipment ---------------------- Property and equipment was stated at cost, which included an allocation of the acquisition costs of cable television systems. Depreciation was computed using the straight-line method over the estimated useful lives of the assets, which ranged from 3 to 20 years.
Repairs and maintenance were charged to operations, and renewals and additions, including interest costs related to construction, were capitalized. Capitalized interest costs were not significant in any of the years presented in the accompanying financial statements.
At the time of ordinary retirements, sales, or other dispositions of part of a cable television system, the depreciated cost and cost of removal of such property were charged to accumulated depreciation, and salvage value, if any, was credited thereto. The net book value of assets retired or disposed of as a result of major rebuilds and lost converters was charged to depreciation expense in the period of disposition. Gains or losses were only recognized in connection with the disposition of properties in their entirety.
Franchise Costs --------------- Franchise costs represented the difference between the acquisition cost of the cable television systems and amounts allocated to the tangible assets. Franchise costs were amortized using the straight-line method over the remaining terms of the various franchise agreements at the time of acquisition, which ranged from 4 to 19 years.
(continued)
II-13
AMERICAN CABLE TV INVESTORS 4, LTD. (A Colorado Limited Partnership)
Notes to Financial Statements
Other Assets ------------ Other assets were amortized using the straight-line method over the estimated lives of the assets.
Estimates --------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Net Earnings Per Unit --------------------- Net earnings per Unit is calculated by dividing net earnings attributable to the limited partners by the number of Units outstanding during the period. The number of Units outstanding for each of the years in the three-year period ended December 31, 1997 was 120,005.
Income Taxes ------------ No provision has been made for income tax expense or benefit in the accompanying consolidated financial statements as the income or losses of the Partnership are reported in the respective income tax returns of the partners.
The Partnership had taxable income (loss) of $(116,000), $61.9 million and $49.8 million for the years ended December 31, 1997, 1996 and 1995, respectively.
(2) Sales Transactions ------------------
During 1995, ACT 4 sold all of its wholly-owned cable television systems in three separate sales transactions (the "Wholly-Owned Sales"). In addition, on January 1, 1996 the Newport News System was sold (together with the Wholly-Owned Sales, the "Sales Transactions"). As a result of the Sales Transactions, the Partnership is no longer engaged in the cable television business and is currently seeking to make a final determination of its liabilities so that liquidating distributions can be made in connection with its dissolution.
In one transaction, ACT 4 sold its cable television system located in and around Colton, California (the "Colton System") on July 3, 1995 to an indirect subsidiary of TCI for cash proceeds of $10,216,000.
In a second transaction, ACT 4 sold its cable television system located in and around North and South Kona and South Kohala, Hawaii on July 3, 1995 to Time Warner Cable Ventures, a Division of Time Warner Entertainment Company L.P. ("Time Warner") for cash proceeds of $31,119,000, of which $2,500,000 was placed in escrow (the "Kona Escrow"). The Kona Escrow was subject to any indemnifiable claims by Time Warner through July 2, 1996. During the fourth quarter of 1996, the Kona Escrow, exclusive of $108,000 paid to Time Warner in satisfaction of a claim for indemnification, was released to ACT 4. Such amount was charged to operations prior to 1996. ACT 4 received interest of $147,000 in conjunction with the release of the Kona Escrow.
(continued)
II-14
AMERICAN CABLE TV INVESTORS 4, LTD. (A Colorado Limited Partnership)
Notes to Financial Statements
In a third transaction, ACT 4 sold its cable television system located in and around Chino, California on December 1, 1995 to Citizens Century Cable Television Venture ("Citizens-Century"), an unaffiliated third party, for cash proceeds of $40,585,000 (the "Chino Sale"). Pursuant to the terms of the sale agreement, $2,025,000 of the sales price was placed in escrow (the "Chino Escrow") and was subject to any indemnifiable claims made by Citizens-Century through May 29, 1996. In May 1996, Citizens-Century filed a claim for a breach of warranty in connection with the Chino Sale. Citizens-Century has not submitted to ACT 4 an estimate of the cost associated with such claim. The claim for indemnification has had and will continue to have the effect of delaying the release of funds from the Chino Escrow. In addition, any successful indemnification claim will have the effect of reducing the amount of the Chino Escrow ultimately released to ACT 4.
In a fourth transaction, the Newport News System was sold on January 1, 1996 to Cox Communications Rhode Island, Inc. ("Cox"), an unaffiliated third party, for cash proceeds of $121,886,000 (the "Newport News Sale"). Pursuant to the terms of the sale agreement, $5,000,000 of the sales price was placed in escrow (the "Newport News Escrow") and was subject to any indemnifiable claims made by Cox through September 27, 1996. During the fourth quarter of 1996, the Newport News Escrow plus accrued interest of $170,000 was released to Newport News. ACT 4 had a 60% ownership interest in Newport News. Accordingly, ACT 4 received $53,684,000 of the net cash proceeds (after satisfaction of transaction costs and Newport News' liabilities) from the Newport News Sale in 1996.
The gain on the Newport News Sale has been reduced by $510,000 to reflect certain of Newport News' operating costs and expenses which were incurred in 1995 but which were reflected in the 1996 financial records of Newport News.
All of the Sales Transactions were approved by the limited partners at a special meeting that occurred on June 20, 1995.
In connection with the Wholly-Owned Sales, ACT 4 used most of the cash proceeds to (i) pay disposition fees of $2,454,000 ($1,840,500 to Cablevision and $613,500 to Presidio Cable IV Corp. ("PCC"), a subsidiary of Presidio) and (ii) repay debt and related accrued interest of $35,150,000. In connection with the Newport News Sale, Newport News used most of the cash proceeds to (i) pay a disposition fee of $3,668,000 ($2,751,000 to Cablevision and $917,000 to PCC), (ii) repay debt and related accrued interest of $24,306,000 and (iii) make cash distributions to ACT 4 and ACT 5 of $53,684,000 and $35,789,000, respectively. The Partnership used proceeds from the Sales Transactions to make initial distributions to its General and limited partners of $7,606,000 and $81,003,000 ($675 per Unit), respectively, in January 1996.
(continued)
II-15
AMERICAN CABLE TV INVESTORS 4, LTD. (A Colorado Limited Partnership)
Notes to Financial Statements
(3) Transactions with Related Parties ---------------------------------
The Partnership purchased programming services from affiliates of TCI. The charges, which approximated such TCI affiliates' cost and were based upon the number of subscribers served by the Partnership, aggregated $6,558,000 in 1995.
The Partnership had a management agreement with Cablevision whereby Cablevision was responsible for performing all services necessary for the management of the Partnership's cable television systems. As compensation for these services, the Partnership paid a management fee equal to 6% of gross revenue, as defined in the management agreement (5-1/2% to Cablevision and 1/2% to PCC). Such fees aggregated $2,073,000 for the year ended December 31, 1995. Although the management agreement was terminated in connection with the consummation of the Sales Transactions, Cablevision continues to serve as the managing agent of the Partnership.
The Partnership also reimburses Cablevision for direct out-of-pocket and indirect expenses allocable to the Partnership and for certain personnel employed on a full- or part-time basis to perform accounting, marketing, technical, or other services. Such reimbursements amounted to $36,000, $36,000 and $610,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
The Colton System shared office facilities, personnel and certain distribution assets with certain affiliated cable television systems. As a result, certain of the Colton System's operating and administrative salaries and expenses were allocated based upon the Colton System's estimated utilization of such office facilities and personnel. During the year ended December 31, 1995, the Colton System's operating and administrative salaries and expenses aggregated $515,000. The Partnership sold the Colton System to an indirect subsidiary of TCI on July 3, 1995. See note 2.
Cablevision and PCC had agreed to defer payment of certain management fees and expense reimbursements owed to them by the Partnership, which were in excess of the payment amount allowed by the terms of the Partnership's bank credit facilities. In addition, Cablevision made advances to the Partnership. Such deferred amounts and advances were evidenced by subordinated promissory notes payable to Cablevision. Total interest expense charged by Cablevision in 1995 was $388,000.
The Partnership was obligated to pay a disposition fee equal to 3% (2-1/4% to Cablevision and 3/4% to PCC) of the gross proceeds from the sale of any of its cable television systems. Such fee was due and payable at the time the cable television system was sold if the consideration received was greater than its adjusted cost, as defined in ACT 4's limited partnership agreement. During 1995, the Partnership paid disposition fees of $2,454,000, in connection with the Wholly-Owned Sales. In addition, Newport News paid disposition fees of $3,668,000 during 1996 in connection with the Newport News Sale. ACT 4's share of Newport News' aggregate disposition fee was $2,201,000. See note 2.
(continued)
II-16
AMERICAN CABLE TV INVESTORS 4, LTD. (A Colorado Limited Partnership)
Notes to Financial Statements
Amounts due from related parties bear interest at variable rates (5.7% at December 31, 1997). During the year ended December 31, 1997, interest earned on amounts due from TCI and its affiliates was $102,000. Interest earned on amounts due from TCI and its affiliates was not material during the years ended December 31, 1996 and 1995.
(4) Contingencies -------------
In May 1996, Citizens-Century filed a claim for a breach of warranty in connection with the Chino Sale. Citizens-Century has not submitted to ACT 4 an estimate of the cost associated with such claim. The claim for indemnification has had and will continue to have the effect of delaying the release of funds from the Chino Escrow. In addition, any successful indemnification claim will have the effect of reducing the amount of the Chino Escrow ultimately released to ACT 4. See note 2.
II-17
PART III.
Item 10.
Item 10. Directors and Executive Officers of the Registrant. - -------- --------------------------------------------------
As the Partnership has no directors or officers of its own, all of the Partnership's major decisions are made by IR-TCI, whose general partners are ICC and TCIV 4.
The Partnership previously had entered into a management agreement with Cablevision, pursuant to which Cablevision was responsible for the day-to-day operations of the Partnership's cable television systems. Such agreement was terminated in connection with the consummation of the Sales Transactions. However, Cablevision continues to serve as the managing agent of the Partnership.
As of January 31, 1998, the following executive officers and directors of TCIV 4 and ICC operated IR-TCI:
III-1
(1) Directors of TCIV 4 and ICC serve until their successors are duly appointed and qualified.
There are no family relations, of first cousin or closer, among the individuals named above, by blood, marriage or adoption.
During the past five years, none of the persons named above has had any involvement in such legal proceedings as would be material to an evaluation of that person's ability or integrity.
III-2
Pursuant to section 16(a) of the Securities Exchange Act of 1934, as amended, the officers and directors of the general partners are required to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the "Commission"). Officers and directors are required by regulation of the Commission to furnish the Partnership with copies of all Section 16(a) forms filed.
Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that no Form 5s were required for those persons, the Partnership believes that, during the fiscal year ended December 31, 1997, all applicable filing requirements were complied with, except that Richard Sabella, David King, Kevin Reardon, Allan Rothschild, Lawrence Schachter, W. Edward Scheetz, and David Hamamoto each filed one Form 3 late.
Item 11.
Item 11. Executive Compensation. - ------- ----------------------
The Partnership pays no direct compensation to the individuals named above, but instead pays for their services through management and other fees paid to Cablevision and Presidio. See "Certain Relationships and Related Transactions" ---------------------------------------------- below.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management. - -------- --------------------------------------------------------------
No general or limited partner of the Partnership owns more than 5% of the Units.
None of the individuals referred to in Item 10 above own (i) any Units of the Partnership or (ii) more than 1% of the outstanding shares of TCI, the ultimate parent and owner, directly or indirectly, of all of the voting stock of TCIV 4.
Cablevision owns 40 Units and Presidio owns 7 Units.
Item 13.
Item 13. Certain Relationships and Related Transactions - -------- ----------------------------------------------
At December 31, 1997, TCI and its affiliates owed the Partnership $121,000. Such amounts bear interest at variable rates (5.7% at December 31, 1997). During the year ended December 31, 1997, interest earned on such amounts was $102,000.
III-3
PART IV.
Item 14.
Item 14. Exhibits, Financial Statements and Financial Statement Schedules - ---------- ---------------------------------------------------------------- and Reports on Form 8-K. ------------------------
(a) (1) Financial Statements Page -------------------- ----
Included in Part II of this Report:
Independent Auditors' Report II-6
Balance Sheets, December 31, 1997 and 1996 II-7
Statements of Operations, Years ended December 31, 1997, 1996 and 1995 II-8
Statements of Partners' Equity, Years ended December 31, 1997, 1996 and 1995 II-9
Statements of Cash Flows, December 31, 1997, 1996 and 1995 II-10
Notes to Financial Statements, December 31, 1997, 1996 and 1995 II-12
(a) (2) Financial Statement Schedules -----------------------------
All schedules are omitted as they are not required or are not applicable.
IV-1
(a) (3) Exhibits --------
The following exhibits are filed herewith or incorporated by reference herein (according to the number assigned to them in Item 601 of Regulation S-K), as noted:
3 - Articles of Incorporation and Bylaws:
Limited Partnership Agreement, incorporated by reference from Exhibit A to Prospectus filed as part of Post-effective Amendment No. 1 to Registration Statement 33-2042.
Limited Partnership Agreement of General Partner, incorporated by reference Registration Statement 33-10707.
10 - Material Contracts:
Management Agreement between Cablevision and the Partnership incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1987 (Commission File No. 0-15745).
Acquisition and Disposition Services Agreement between Cablevision and the Partnership, incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1987 (Commission File No. 015745).
Consulting Agreement re: ACT 4 between Cablevision and Presidio, incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1987 (Commission File No. 0-15745).
Asset Purchase Agreement by and among American Cable TV Investors 4, Ltd. and Century Communications Corp. and Citizens Utilities Company dated as of February 26, 1993, incorporated by reference to the Partnership's Current Report on Form 8-K dated March 5, 1993.
First Amendment, dated as of June 21, 1993, to Asset Purchase Agreement, dated as of February 26, 1993 by and among American Cable TV Investors 4, Ltd. and Century Communications Corp. and Citizens Utilities Company, incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993.
Second Amendment, dated as of November 30, 1993, to Asset Purchase Agreement, dated as of February 26, 1993, by and among American Cable TV Investors 4, Ltd. and Century Communications Corp. and Citizens Utilities Company, incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993.
Letter Agreement, dated January 24, 1995, to Asset Purchase Agreement dated as of February 26, 1993, by and among American Cable TV Investors 4, Ltd. and Century Communications Corp. and Citizens Utilities Company, incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994.
27 - Financial Data Schedule.
(b) Reports on Form 8-K filed during the quarter ended December 31, 1997:
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN CABLE TV INVESTORS 4, LTD., A Colorado Limited Partnership By: IR-TCI PARTNERS IV, L.P., Its General Partner
By: TCI VENTURES FOUR, INC., a General Partner
By: /s/ Marvin Jones February 27, 1998 ---------------------- Marvin Jones President and Director - TCI Ventures Four, Inc. (Principal Executive Officer)
By: INTEGRATED CABLE CORP. IV, a General Partner
By: /s/ Richard Sabella February 27, 1998 ---------------------- Richard Sabella President - Integrated Cable Corp. IV (Principal Executive Officer)
Pursuant to the Securities Act of 1934, this report has been signed by the following persons on behalf of the Partnership and in the capacities and on the dates indicated:
IV-3
IV-4
AMERICAN CABLE TV INVESTORS 4, LTD.
EXHIBIT INDEX
The following exhibits are filed herewith or incorporated by reference herein (according to the number assigned to them in Item 601 of Regulation S-K), as noted:
3 - Articles of Incorporation and Bylaws:
Limited Partnership Agreement, incorporated by reference to Exhibit A to Prospectus filed as part of Post-effective Amendment No. 1 to Registration Statement 33-2042.
Limited Partnership Agreement of General Partner, incorporated by reference Registration Statement 33-10707.
10 - Material Contracts:
Management Agreement between Cablevision and the Partnership incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1987 (Commission File No. 0- 15745).
Acquisition and Diposition Services Agreement between Cablevision and the Partnership, incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1987 (Commission File No. 0-15745).
Consulting Agreement re: ACT 4 between Cablevision and Presidio, incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1987 (Commission File No. 0- 15745).
Asset Purchase Agreement by and among American Cable TV Investors 4, Ltd. and Century Communications Corp. and Citizens Utilities Company dated as of February 26, 1993, incorporated by reference to the Partnership's Current Report on Form 8-K dated March 5, 1993.
First Amendment, dated as of June 21, 1993, to Asset Purchase Agreement, dated as of February 26, 1993 by and among American Cable TV Investors 4, Ltd. and Century Communications Corp. and Citizens Utilities Company, incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993.
Second Amendment, dated as of November 30, 1993, to Asset Purchase Agreement, dated as of February 26, 1993, by and among American Cable TV Investors 4, Ltd. and Century Communications Corp. and Citizens Utilities Company, incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993.
Letter Agreement dated January 24, 1995, to Asset Purchase Agreement dated as of February 26, 1993, by and among American Cable TV Investors 4, Ltd. and Century Communications Corp. and Citizens Utilities Company, incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994.
27 - Financial Data Schedule.