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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended MARCH 31, 1999
Or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from
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Commission File Number: 0-16063
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NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP
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(Exact Name of Registrant as Specified in Charter)
Washington 91-1318471
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(State of Organization) (IRS Employer Identification No.)
1201 Third Avenue, Suite 3600, Seattle, Washington 98101
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(Address of Principal Executive Offices) (Zip Code)
(206) 621-1351
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(Registrant's telephone number, including area code)
N/A
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(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
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This filing contains pages. Exhibits index appears on page .
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PART I (continued)
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Revenues totaled $3,732,791 for the three months ended March 31, 1999,
representing an increase of approximately 5% over the same period in 1998. Of
these revenues, $2,715,098 (73%) was derived from basic service charges,
$382,584 (10%) from premium services, $203,538 (5%) from tier services, $96,406
(3%) from installation charges, $97,206 (3%) from service maintenance contracts,
$96,018 (2%) from advertising, and $141,941 (4%) from other sources. The
increase in revenue is attributable primarily to rate increases placed into
effect in August of 1998.
As of March 31, 1999, the Partnership's systems served approximately 34,400
basic subscribers, 16,700 premium subscribers and 8,500 tier subscribers.
Operating expenses totaled $339,387 for the three months ended March 31, 1999,
representing an increase of approximately 22% over the same period in 1998. This
is primarily due to the addition of technical and regional personnel, a one time
adjustment to pole rental costs in 1999 in the amount of $5,500 due to an
understatement of expense in 1998 as well as increased system maintenance.
General and administrative expenses totaled $904,103 for the three months ended
March 31, 1999, representing an increase of approximately 8% over the same
period in 1998. This is due to higher revenue based expenses such as management
fees and franchise fees as well as higher bad debt expense.
Programming expenses totaled $982,635 for the three months ended March 31, 1999,
remaining relatively unchanged from the same period in 1998.
Depreciation and amortization expenses totaled $1,204,362 for the three months
ended March 31, 1999, representing an increase of approximately 61% over the
same period in 1998. Excluding the effects of the January 2, 1998 acquisition of
the Bennettsville, Barnwell, Bamberg and Allendale, South Carolina systems,
depreciation and amortization increased by 31%. Such increase is due to
depreciation and amortization on recent purchases of plant and equipment offset
by assets becoming fully depreciated.
Interest expense for the three months ended March 31, 1999 remained relatively
unchanged from the same period in 1998. The average bank debt of $31,372,848
remained the same from the first quarter of 1998 to the first quarter of 1999,
and the Partnership's effective interest rate decreased from 7.92% in 1998 to
7.89% in 1999.
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Liquidity and Capital Resources
The Partnership's primary sources of liquidity are cash flow provided from
operations and an $8,000,000 revolving credit line, of which approximately
$6,372,848 was outstanding as of March 31, 1999. Based on management's analysis,
the Partnership's cash flow from operations and amounts available for borrowing
under the Partnership's loan agreement are sufficient to cover future operating
costs, debt service and planned capital expenditures.
Under the terms of the Partnership's loan agreement, the Partnership has agreed
to restrictive covenants which require the maintenance of certain ratios
including a senior debt to annualized operating cash flow ratio of 5.25 to 1, a
fixed charge ratio of 1.1 to 1, and an annual operating cash flow to interest
expense ratio of less than 2.0 to 1. As of March 31, 1999, the Partnership was
in compliance with its required financial covenants.
As of the date of this filing, the balance under the credit facility is
$29,277,781. Certain fixed rate agreements expired during the first quarter of
1999. As of the date of this filing, interest rates on the credit facility were
as follows: $22,687,500 fixed at 8.02% under the terms of an interest rate swap
agreement with the Partnership's lender expiring December 31, 1999; $6,200,000
fixed at 7.40813%, expiring June 30, 1999; and $390,281 fixed at 7.2%, expiring
June 30, 1999. The above includes a margin paid to the lender based on overall
leverage, and may increase or decrease as the Partnership's leverage fluctuates.
Capital Expenditures
During the first quarter of 1999, the Partnership incurred approximately
$355,000 in capital expenditures. These expenditures included a vehicle
replacement in the Starkville, MS system, completion of the system upgrade to
450 MHz in the Kosciusko, MS system, the initial design of an upgrade to 450 MHz
in the Forest, MS system, line extensions and a continued system upgrade to 450
MHz in the Philadelphia, MS system, line extensions and a vehicle replacement in
the Barnwell, SC system and a vehicle replacement in the Bennettsville, SC
system.
Planned expenditures for the balance of 1999 include the continuation of the
fiber network for data transmission and ongoing system upgrade construction to
450 MHz in the Starkville System, a continued system upgrade and a vehicle
purchase in the Philadelphia System, the continued deployment of fiber in the
Highlands System, a continued system upgrade to 450 MHz in the Barnwell System
and certain line extensions and channel additions in various systems.
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Year 2000 Issues
The efficient operation of the Partnership's business is dependent in part on
its computer software programs and operating systems (collectively, Programs and
Systems). These Programs and Systems are used in several key areas of the
Partnership's business, including subscriber billing and collections and
financial reporting. Management has evaluated the Programs and Systems utilized
in the conduct of the Partnership's business for the purpose of identifying year
2000 compliance problems. Failure to remedy these issues could impact the
ability of the Partnership to timely bill its subscribers for service provided
and properly report its financial condition and results of operations which
could have a material impact on its liquidity and capital resources.
The Programs and Systems utilized in subscriber billing and collections have
been modified to address year 2000 compliance issues. These modifications were
substantially complete at the end of 1998. Management has completed the process
of replacing Programs and Systems related to financial reporting which resolve
year 2000 compliance issues. The aggregate cost to the Partnership to address
year 2000 compliance issues is not expected to be material to its results of
operations, liquidity and capital resources.
Management is currently focusing its efforts on the impact of the year 2000
compliance issue on service delivery and has established an internal team to
address this issue. The internal team is identifying and testing all date
sensitive equipment involved in delivering service to its customers. In
addition, management will assess its options regarding repair or replacement of
affected equipment during this testing. The aggregate cost to the Partnership to
address year 2000 compliance issues is not expected to be material to its
results of operations, liquidity and capital resources.
The provision of cable television services is significantly dependent on the
Partnership's ability to adequately receive programming signals via satellite
distribution or off air reception from various programmers and broadcasters.
Management has inquired of certain significant programming vendors with respect
to their year 2000 issues and how they might impact the operations of the
Partnership. As of the date of this filing no significant programming vendor has
communicated a year 2000 issue that would affect materially the operations of
the Partnership. However, if significant programming vendors identify year 2000
issues in the future and are unable to resolve such issues in a timely manner,
it could result in a material financial risk.
Disposition
On April 30, 1999, the Partnership sold cable television systems serving
approximately 1,400 subscribers in and around the communities of Sandersville,
Heidelberg and Laurel, Mississippi. The sales price of these systems was
$1,900,000. The Partnership used net proceeds of $1,540,000 to pay down existing
bank debt.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP
BY: Northland Communications Corporation,
Managing General Partner
Dated: ________ BY: /s/ RICHARD I. CLARK
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Richard I. Clark
(Vice President/Treasurer)
Dated: ________ BY: /s/ GARY S. JONES
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Gary S. Jones
(Vice President)
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