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 March 31, 1996.
--------------
[ ] 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 0-17733
CABLE TV FUND 15-A, LTD.
- ------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-1091413
- ------------------------------------------------------------------------------
State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
------------------------------------------------------------------------
Address of principal executive office
(303) 792-3111
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 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
----- -----
CABLE TV FUND 15-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
March 31, December 31,
ASSETS 1996 1995
- ----------------------------------------------------------- ------------- -------------
CASH $ 267,683 $ 58,719
TRADE RECEIVABLES, less allowance for doubtful
receivables of $132,431 at March 31, 1996
and December 31, 1995 690,327 965,495
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 75,626,343 74,582,334
Less- accumulated depreciation (33,961,752) (32,507,403)
------------ ------------
41,664,591 42,074,931
Franchise costs and other intangible assets, net of
accumulated amortization of $90,873,539 at
March 31, 1996 and $87,030,946 at
December 31, 1995, respectively 28,939,433 32,782,026
------------ ------------
Total investment in cable television properties 70,604,024 74,856,957
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 1,458,206 1,246,638
------------ ------------
Total assets $ 73,020,240 $ 77,127,809
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
CABLE TV FUND 15-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
- ----------------------------------------------------------- -------------- -------------
LIABILITIES:
Debt $ 83,776,528 $ 78,818,284
Accounts payable - General Partner 338,890 4,782,507
Trade accounts payable and accrued liabilities 1,334,276 1,825,707
Subscriber prepayments 108,854 96,991
------------- ------------
Total liabilities 85,558,548 85,523,489
------------- ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (1,045,018) (1,003,592)
------------- ------------
(1,044,018) (1,002,592)
------------- ------------
Limited Partners-
Net contributed capital (213,174 units
outstanding at March 31, 1996
and December 31, 1995) 90,575,991 90,575,991
Accumulated deficit (102,070,281) (97,969,079)
------------- ------------
(11,494,290) (7,393,088)
------------- ------------
Total liabilities and partners' capital (deficit) $ 73,020,240 $ 77,127,809
============= ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
CABLE TV FUND 15-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended
March 31,
------------------------
1996 1995
----------- -----------
REVENUES $ 8,886,111 $ 8,115,730
COSTS AND EXPENSES:
Operating expenses 5,061,318 4,799,932
Management fees and allocated overhead
from General Partner 1,048,561 1,032,247
Depreciation and amortization 5,315,886 5,628,124
----------- -----------
OPERATING LOSS (2,539,654) (3,344,573)
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (1,538,836) (1,726,637)
Other, net (64,138) (3,735)
----------- -----------
Total other income (expense) (1,602,974) (1,730,372)
----------- -----------
NET LOSS $(4,142,628) $(5,074,945)
=========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (41,426) $ (50,749)
=========== ===========
Limited Partners $(4,101,202) $(5,024,196)
=========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $(19.24) $(23.57)
=========== ===========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 213,174 213,174
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
CABLE TV FUND 15-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
For the Three Months Ended
March 31,
-------------------------
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(4,142,628) $(5,074,945)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 5,315,886 5,628,124
Amortization of interest rate protection contract 18,843 18,849
Decrease in trade receivables 275,168 227,531
Decrease (increase) in deposits, prepaid
expenses and deferred charges (249,355) 68,198
Decrease in trade accounts payable, accrued
liabilities and subscriber prepayments (479,568) (236,189)
----------- -----------
Net cash provided by operating activities 738,346 631,568
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (1,044,009) (1,211,636)
----------- -----------
Net cash used in investing activities (1,044,009) (1,211,636)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 5,000,000 38,358
Repayment of debt (41,756) (36,768)
Purchase of interest rate protection contract - (150,750)
Increase (decrease) in advances from General Partner (4,443,617) 941,554
----------- -----------
Net cash provided by financing activities 514,627 792,394
----------- -----------
Increase in cash 208,964 212,326
Cash, beginning of period 58,719 26,010
----------- -----------
Cash, end of period $ 267,683 $ 238,336
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,648,999 $ 1,653,675
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
CABLE TV FUND 15-A, LTD.
------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data includes
all adjustments, consisting only of normal recurring accruals, necessary to
present fairly the financial position of Cable TV Fund 15-A, Ltd. (the
"Partnership") at March 31, 1996 and December 31, 1995 and its Statements of
Operations and Cash Flows for the three month periods ended March 31, 1996 and
1995. Results of operations for these periods are not necessarily indicative of
results to be expected for the full year.
The Partnership owns and operates the cable television systems serving the
areas in and around Barrington, Elgin, South Elgin, Hawthorn Woods, Kildeer,
Lake Zurich, Indian Creek, Vernon Hills and certain unincorporated areas of Kane
and Lake Counties, all in the State of Illinois (the "Barrington System") and
the cable television system serving the areas in and around Flossmoor, La
Grange, La Grange Park, Riverside, Indianhead Park, Hazel Crest, Thornton,
Lansing, Matteson, Richton Park, University Park, Crete, Olympia Fields and
Western Springs, all in the State of Illinois (the "South Suburban System").
(2) Jones Intercable, Inc. (the "General Partner"), a publicly held Colorado
corporation, manages the Partnership and receives a fee for its services equal
to 5 percent of the gross revenues of the Partnership, excluding revenues from
the sale of cable television systems or franchises. Management fees paid to the
General Partner by the Partnership for the three month periods ended March 31,
1996 and 1995 were $444,306 and $405,787, respectively.
The Partnership reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses represent the salaries and
related benefits paid for corporate personnel, rent, data processing services
and other corporate facilities costs. Such personnel provide engineering,
marketing, administrative, accounting, legal and investor relations services to
the Partnership. Allocations of personnel costs are based primarily on actual
time spent by employees of the General Partner with respect to each partnership
managed. Remaining expenses are allocated based on the pro rata relationship of
the Partnership's revenues to the total revenues of all systems owned or managed
by the General Partner and certain of its subsidiaries. Systems owned by the
General Partner and all other systems owned by partnerships for which Jones
Intercable, Inc. is the general partner are also allocated a proportionate share
of these expenses. The General Partner believes that the methodology used in
allocating overhead and administrative expenses is reasonable. Reimbursements
by the Partnership to the General Partner for allocated overhead and
administrative expenses for the three month periods ended March 31, 1996 and
1995 were $604,255 and $626,460, respectively.
6
CABLE TV FUND 15-A, LTD.
------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
For the three months ended March 31, 1996, the Partnership generated net
cash from operating activities totaling approximately $738,000, which is
available to fund capital expenditures and non-operating costs. Capital
expenditures totaled approximately $1,044,000 during the first three months of
1996. Approximately 63 percent of these expenditures were for service drops to
homes. New plant construction accounted for approximately 14 percent and
approximately 7 percent related to the rebuild and upgrade of portions of the
Partnership's systems. The remaining expenditures were for various enhancements
in the Partnership's systems. Funding for these expenditures was provided by
cash generated from operations and borrowings from the Partnership's revolving
credit facility. Budgeted capital expenditures for the remainder of 1996 are
approximately $5,438,000. Approximately 36 percent of the remaining capital
expenditures will be for service drops to homes. Approximately 23 percent of
these remaining capital expenditures will be for new plant construction, and
approximately 14 percent will be to continue the rebuild and upgrade of portions
of the Partnership's systems. The remainder of the anticipated expenditures are
for various enhancements in the Partnership's systems. Funding for these
expenditures is expected to be provided by cash generated from operations and
borrowings available under the Partnership's revolving credit facility.
On March 28, 1996, the Partnership amended its revolving credit facility to
provide for a maximum of $90,000,000 in available borrowings and to extend the
revolving credit period such that it now is scheduled to expire September 30,
1997. Also, on March 29, 1996, the Partnership borrowed $5,000,000 to repay
substantially all advances then outstanding to the General Partner. At March
31, 1996, $83,500,000 was outstanding under the Partnership's revolving credit
facility, leaving $6,500,000 of available borrowings, subject to certain
financial covenants. Interest is at the Partnership's option of Prime plus 1/2
percent, the London Interbank Offered Rate plus 1-1/2 percent or the Certificate
of Deposit Rate plus 1-5/8 percent. Additional borrowings will be used to
provide funding for capital expenditures. The effective interest rates on
outstanding obligations as of March 31, 1996 and 1995 were 6.93 percent and 7.77
percent, respectively.
The Partnership has sufficient sources of capital in the form of borrowings
available under the amended revolving credit facility and cash generated from
operations to meet its presently anticipated liquidity and capital needs.
REGULATION AND LEGISLATION
- --------------------------
The Partnership has filed cost-of-service showings in response to
rulemakings concerning the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act") for the Barrington System and the South
Suburban System and thus anticipates no further reductions in rates in these
systems. The cost-of-service showings have not yet received final approvals
from regulatory authorities, however, and there can be no assurance that the
Partnership's cost-of-service showings will prevent further rate reductions in
these systems until such final approvals are received.
The Telecommunications Act of 1996 (the "1996 Act"), which became law on
February 8, 1996, substantially revised the Communications Act of 1934, as
amended, including the Cable Communications Policy Act of 1984 and the 1992
Cable Act, and has been described as one of the most significant changes in
communications regulation since the original Communications Act of 1934. The
1996 Act is intended, in part, to promote substantial competition in the
telephone local exchange and in the delivery of video and other services. As a
result of the 1996 Act, local telephone companies (also known as local exchange
carriers or "LECs") and other service providers are permitted to provide video
programming, and cable television operators are permitted entry into the
telephone local exchange market. The FCC is required to conduct rulemaking
proceedings over the next several months to implement various provisions of the
1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
effective March 31, 1999 and the cable programming service tier of "small" cable
operators in systems providing service to 50,000 or fewer subscribers effective
immediately. The 1996 Act also revised the procedures for filing cable
programming service tier rate complaints and adds a new effective competition
test.
7
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Partnership in particular. The FCC will be
undertaking numerous rulemaking proceedings to interpret and implement the 1996
Act. It is not possible at this time to predict the outcome of those
proceedings or their effect on the Partnership.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership increased $770,381, or approximately 9
percent, to $8,886,111 for the three month period ended March 31, 1996 from
$8,115,730 for the comparable 1995 period. An increase in the number of basic
subscribers combined with basic service rate increases implemented in the
Partnership's system accounted for the increase in revenues. The increase in
the number of basic subscribers accounted for approximately 46 percent of the
increase in revenues for the three months ended March 31, 1996. The Partnership
has added approximately 4,586 basic subscribers since March 31, 1996. At March
31, 1996, the Partnership's systems had 79,897 basic subscribers compared to
75,311 basic subscribers at March 31, 1995, an increase of approximately 6
percent. The basic service rate increases accounted for approximately 36
percent of the increase in revenues. No other individual factors were
significant to the increase in revenues.
Operating expenses consist primarily of costs associated with the
administration of the Partnership's cable television systems. The principal
cost components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and consumer marketing expenses.
Operating expenses increased $261,386, or approximately 5 percent, to
$5,061,318 for the three month period ended March 31, 1996 compared to
$4,799,932 for the comparable 1995 period. Operating expenses represented
approximately 57 percent of revenue for the three month period ended March 31,
1996 as compared to approximately 59 percent for the comparable 1995 period. An
increase in programming fees, which were due, in part, to the increase in the
subscriber base, primarily accounted for the increase in operating expenses. No
other factor contributed significantly to the increase in operating expenses.
Management fees and allocated overhead from the General Partner increased
$16,314, or approximately 2 percent, to $1,048,561 for the three month period
ended March 31, 1996 compared to $1,032,247 for the comparable 1995 period.
This increase was due to an increase in revenues, upon which such management
fees are based.
Depreciation and amortization expense decreased $312,238, or approximately
6 percent, to $5,315,886 for the three month period ended March 31, 1996
compared to $5,628,124 for the comparable 1995 period. This decrease was due to
the maturation of the Partnership's depreciable asset base.
Operating loss decreased $804,919, or approximately 24 percent, to
$2,539,654 for the three month period ended March 31, 1996 compared to
$3,344,573 for the comparable 1995 period. This decrease was the result of the
increase in revenues and decrease in depreciation and amortization expense
exceeding the increases in operating expenses and management fees and allocated
overhead from the General Partner.
The cable television industry generally measures the financial performance
of a cable television system in terms of cash flow or operating income before
depreciation and amortization. The value of a cable television system is often
determined using multiples of cash flow. This measure is not intended to be a
substitute or improvement upon the items disclosed on the financial statements,
rather it is included because it is an industry standard. Operating income
before depreciation and amortization increased $492,681, or approximately 22
percent, to $2,776,232 for the three month period ended March 31, 1996 compared
to $2,283,551 for the comparable 1995 period. This increase was due to the
increase in revenues exceeding the increases in operating expenses and
management fees and allocated overhead from the General Partner.
Interest expense decreased $187,801, or approximately 11 percent, to
$1,538,836 for the three month period ended March 31, 1996 compared to
$1,726,637 for the comparable 1995 period. This decrease was due to lower
effective interest rates on interest bearing obligations.
8
Net loss decreased $932,317, or approximately 18 percent, to $4,142,628 for
the three month period ended March 31, 1996 from $5,074,945 for the comparable
1995 period. This decrease was due to the factors discussed above. These
losses are expected to continue in the future.
9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
10
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.
CABLE TV FUND 15-A, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
--------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 13, 1996
11