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
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Commission File Number 0-14206
Cable TV Fund 12-D, LTD.
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Exact name of registrant as specified in charter
Colorado 84-1010423
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State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
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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
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CABLE TV FUND 12-D, LTD.
------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
-------------------------------------
March 31, December 31,
ASSETS 1996 1995
------ -------------- --------------
CASH AND CASH EQUIVALENTS $ 1,251,621 $ 1,384,794
RECEIVABLES:
Trade receivables, less allowance for doubtful receivables of $326,059
and $486,392 at March 31, 1996 and December 31, 1995, respectively 2,777,744 4,464,773
Affiliated entity - 159,137
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 202,433,100 294,472,892
Less - accumulated depreciation (100,966,220) (155,826,572)
------------- -------------
101,466,880 138,646,320
Franchise costs and other intangible assets, net of
accumulated amortization of $56,293,687 at
March 31, 1996 and $56,248,743 at
December 31, 1995, respectively 14,747,465 16,856,328
------------- -------------
Total investment in cable television properties 116,214,345 155,502,648
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 3,764,590 1,974,677
------------- -------------
Total assets $ 124,008,300 $ 163,486,029
============= =============
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
2
CABLE TV FUND 12-D, LTD.
------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
-------------------------------------
March 31, December 31,
LIABILITIES AND PARTNERS' DEFICIT 1996 1995
--------------------------------- ------------- --------------
LIABILITIES:
Debt $136,469,032 $ 180,770,267
Accounts payable - General Partner - 4,198,739
Trade accounts payable and accrued liabilities 2,926,107 7,729,433
Subscriber prepayments 458,116 517,908
------------ -------------
Total liabilities 139,853,255 193,216,347
------------ -------------
MINORITY INTEREST IN JOINT VENTURE (4,131,101) (7,527,461)
------------ -------------
PARTNERS' DEFICIT:
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (1,270,130) (1,245,562)
------------ -------------
(1,269,130) (1,244,562)
------------ -------------
Limited Partners-
Net contributed capital (237,339 units outstanding
at March 31, 1996 and December 31, 1995) 102,198,175 102,198,175
Accumulated deficit (71,095,899) (123,156,470)
Distributions (41,547,000) -
------------ -------------
(10,444,724) (20,958,295)
------------ -------------
Total liabilities and partners' deficit $124,008,300 $ 163,486,029
============ =============
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
3
CABLE TV FUND 12-D, LTD.
------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
For the Three Months Ended
March 31,
--------------------------
1996 1995
------------ -----------
REVENUES $ 23,545,320 $24,158,092
COSTS AND EXPENSES:
Operating expenses 14,741,425 14,088,828
Management fees and allocated overhead
from Jones Intercable, Inc. 2,778,348 3,033,059
Depreciation and amortization 6,117,468 6,683,999
------------ -----------
OPERATING INCOME (LOSS) (91,921) 352,206
------------ -----------
OTHER INCOME (EXPENSE):
Interest expense (3,161,193) (3,945,142)
Gain on sale of cable television system 72,137,615 -
Other, net 862 13,403
------------ -----------
Total other income (expense), net 68,977,284 (3,931,739)
------------ -----------
CONSOLIDATED INCOME (LOSS) 68,885,363 (3,579,533)
MINORITY INTEREST IN CONSOLIDATED INCOME (LOSS) (16,849,360) 875,196
------------ -----------
NET INCOME (LOSS) $ 52,036,003 $(2,704,337)
============ ===========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ (24,568) $ (27,043)
============ ===========
Limited Partners $ 52,060,571 $(2,677,294)
============ ===========
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ 219.25 $ (11.28)
============ ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 237,339 237,339
============ ===========
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
4
CABLE TV FUND 12-D, LTD.
------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
For the Three Months Ended
March 31,
---------------------------
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 52,036,003 $(2,704,337)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 6,117,468 6,673,885
Gain on sale of cable television system (72,137,615) -
Minority interest in consolidated income (loss) 16,849,360 (875,196)
Decrease in receivables 1,846,166 607,551
Decrease (increase) in deposits, prepaid expenses
and other assets (1,749,256) 131,127
Decrease in accounts payable, accrued liabilities and
subscriber prepayments (4,863,118) (3,456,250)
Increase (decrease) in amount due General Partner (4,198,739) 3,957,762
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Net cash provided by operating activities (6,099,731) 4,334,542
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (5,127,874) (4,274,054)
Proceeds from sale of cable television system 110,395,667 -
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Net cash provided by (used in) investing activities 105,267,793 (4,274,054)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 66,300,000 458,700
Repayment of debt (110,601,235) (108,658)
Distributions to Limited Partners (41,547,000) -
Distributions to Joint Venture partners (13,453,000) -
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Net cash provided by (used in) financing activities (99,301,235) 350,042
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Increase in cash and cash equivalents (133,173) 410,530
Cash and cash equivalents, beginning of period 1,384,794 4,391,602
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Cash and cash equivalents, end of period $ 1,251,621 $ 4,802,132
============= ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 6,076,065 $ 5,842,165
============= ===========
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
5
CABLE TV FUND 12-D, LTD.
------------------------
(A Limited Partnership)
NOTES TO UNAUDITED CONSOLIDATED 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 12-D, 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
March 31, 1995. Results of operations for these periods are not necessarily
indicative of results to be expected for the full year.
The accompanying consolidated financial statements include 100 percent of
the accounts of the Partnership and those of Cable TV Fund 12-BCD Venture (the
"Venture") reduced by the 24 percent minority interest in the Venture. All
interpartnership accounts and transactions have been eliminated. During the
three month period ended March 31, 1996, the Venture owned and operated the
cable television systems serving the areas in and around Palmdale, California
and Albuquerque, New Mexico. As discussed below, the Venture's cable television
system serving the areas in and around Tampa, Florida (the "Tampa System") was
sold on February 28, 1996.
(2) Jones Intercable, Inc., a publicly held Colorado corporation (the "General
Partner"), manages the Partnership and the Venture and receives a fee for its
services equal to 5 percent of the gross revenues of the Venture, excluding
revenues from the sale of cable television systems or franchises. Management
fees for the three month periods ended March 31, 1996 and 1995 were $1,177,266
and $1,207,905, respectively.
The Venture reimburses the General Partner for certain allocated overhead
and administrative expenses. These expenses represent the salaries and related
benefits paid to 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
Venture. Allocations of personnel costs are based upon 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 Venture to the General Partner for allocated overhead and administrative
expenses for the three month periods ended March 31, 1996 and 1995 were
$1,601,082 and $1,825,154, respectively.
(3) On February 28, 1996, the Venture sold the Tampa System to Jones Cable
Holdings, Inc. ("JCH"), a wholly owned subsidiary of the general partner. The
sales price of the Tampa System was $110,395,667, subject to normal working
capital closing adjustments. This price represented the average of three
separate, independent appraisals of the fair market value of the Tampa System.
In February 1996, the Venture's debt arrangements were amended to permit a
$55,000,000 distribution to the Venture's partners from the sale proceeds, and
the balance of the sale proceeds were used to reduce Venture indebtedness. Fund
12-D's portion of this distribution was approximately $41,547,000. Because the
limited partners of Fund 12-D have not yet received distributions in an amount
equal to 100 percent of the capital initially contributed to Fund 12-D by them,
the entire portion of Fund 12-D's distribution was distributed to the limited
partners in March 1996. This distribution has given Fund 12-D's limited partners
an approximate return of $350 for each $1,000 invested in Fund 12-D.
6
The pro forma effect of the sale of the Tampa System on the results of the
Venture's operations for the three month periods ended March 31, 1996 and 1995,
assuming the transaction had occurred at the beginning of the periods, is
presented in the following unaudited tabulation:
For the Three Months Ended March 31, 1996
-----------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
------------ ------------- ------------
Revenues $23,545,320 $ (4,885,391) $18,659,929
=========== ============ ===========
Operating Income (Loss) $ (91,921) $ 1,134,045 $ 1,042,124
=========== ============ ===========
Consolidated Income (Loss) $68,885,363 $(70,937,615) $(2,052,252)
=========== ============ ===========
For the Three Months Ended March 31, 1995
-----------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
------------ ------------ -------------
Revenues $24,158,092 $(6,834,750) $17,323,342
=========== =========== ===========
Operating Income (Loss) $ 352,206 $ (68,828) $ 283,378
=========== =========== ===========
Consolidated Income (Loss) $(3,579,533) $ 1,096,200 $(2,483,333)
=========== =========== ===========
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CABLE TV FUND 12-D, LTD.
------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
Capital expenditures for the Venture totaled approximately $5,128,000
during the first quarter of 1996. New plant construction accounted for
approximately 42 percent of the capital expenditures. Service drops to homes
accounted for approximately 41 percent of the capital expenditures. The
remaining expenditures related to various system enhancements. These capital
expenditures were funded primarily from cash generated from operations and
borrowings from the General Partner. Expected capital expenditures for the
remainder of 1996 are approximately $10,100,000. Service drops to homes are
anticipated to account for approximately 46 percent. Approximately 26 percent of
budgeted capital expenditures is for new plant construction. The remainder of
the expenditures are for various system enhancements in all of the Venture's
systems. Funding for these expenditures is expected to be provided by cash on
hand, cash generated from operations and borrowings from the Venture's amended
credit facility. The Venture has sufficient sources of capital available in its
ability to generate cash from operations and to borrow under its credit facility
to meet its presently anticipated needs.
On February 28, 1996, the Venture sold the cable television system serving
areas in and around Tampa, Florida (the "Tampa System") to Jones Cable Holdings,
Inc. ("JCH"), a wholly owned subsidiary of the general partner. The sales price
of the Tampa System was $110,395,667, subject to normal working capital closing
adjustments. This price represented the average of three separate, independent
appraisals of the fair market value of the Tampa System. In February 1996, the
Venture's debt arrangements were amended to permit a $55,000,000 distribution to
the Venture's partners from the sale proceeds, and the balance of the sale
proceeds were used to reduce Venture indebtedness. Fund 12-D's portion of this
distribution was approximately $41,547,000. Because the limited partners of
Fund 12-D have not yet received distributions in an amount equal to 100 percent
of the capital initially contributed to Fund 12-D by them, the entire portion of
Fund 12-D's distribution was distributed to the limited partners in March 1996.
This distribution has given Fund 12-D's limited partners an approximate return
of $350 for each $1,000 invested in Fund 12-D.
The Venture's debt arrangements at March 31, 1996 consisted of $59,350,000
of Senior Notes placed with a group of institutional lenders and a $120,000,000
credit facility with a group of commercial bank lenders.
The Senior Notes have a fixed interest rate of 8.64 percent and a final
maturity date of March 31, 2000. The Senior Notes call for payments of interest
only through March 1996, with interest and accelerating amortization of
principal payments required for the four years thereafter. In February 1996,
the Venture was required to make a principal repayment of approximately
$33,650,000 from proceeds received from the sale of the Tampa System. The
Senior Notes carry a "make-whole" payment, which is a prepayment penalty, in the
event the notes are prepaid prior to maturity. The make-whole payment protects
the lenders in the event that prepaid funds are reinvested at a rate below 8.64
percent. The Venture was required to pay a make-whole payment in February 1996
of approximately $2,217,000. Principal and interest payments due in 1996 are
expected to be funded from cash on hand, cash generated from operations and
borrowings under the Venture's new credit facility, as discussed below.
Upon the sale of the Tampa System and, as required under the Venture's
credit facility, $22,000,000 of the sales proceeds were used to reduce amounts
outstanding under its then-existing $87,000,000 credit facility. In February
1996, the Venture increased the amount available to $120,000,000 to meet the
Venture's long-term financing requirements. The balance outstanding on the
Venture's amended credit facility at March 31, 1996 was $76,430,620, leaving
$43,569,380 outstanding. The credit facility matures on December 31, 1999 or, at
the Venture's option, on December 31, 2004. In the event the Venture elects the
latter maturity date, the credit facility shall amortize in consecutive
quarterly amounts. Interest on the amended credit facility is at the Venture's
option of the London Interbank Offered Rate plus .625 percent to 1.375 percent,
the Base Rate plus 0 percent to .375 percent or the Certificate of Deposit Rate
plus .75 percent to 1.50 percent.
8
Both lending facilities are equal in standing with the other, and both are
equally secured by the assets of the Venture.
The General Partner believes that cash generated from operations and
borrowings from the Venture's amended credit facility will be sufficient to fund
capital expenditures and other liquidity needs of the Venture.
REGULATION AND LEGISLATION
- --------------------------
The Venture 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 its systems 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 Venture'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
including the Venture 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.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Venture 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 Venture.
RESULTS OF OPERATIONS
- ---------------------
Revenues in the Venture's systems totaled $23,545,320 for the three months
ended March 31, 1996 compared to $24,158,092 for the similar 1995 period, a
decrease of $612,772, or approximately 3 percent. This decrease was due to the
sale of the Tampa System. Disregarding the effect of the Tampa System sale,
revenues would have increased $1,336,588, or approximately 8 percent. Basic
service rate adjustments accounted for approximately 43 percent of the increase
in revenues. At March 31, 1996, the Venture's Albuquerque, New Mexico and
Palmdale, California cable television systems had 175,697 basic subscribers
compared to 167,940 at March 31, 1995, an increase of approximately 5 percent.
This increase in basic subscribers accounted for approximately 35 percent of the
increase in revenues. Pay television increases accounted for approximately 15
percent of the increase in revenues. No other single factor significantly
affected 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 in the Venture's systems totaled $14,741,425 for the
three months ended March 31, 1996 compared to $14,088,828 for the similar 1995
period, an increase of $652,597, or approximately 5 percent. Disregarding the
effect of the Tampa System sale, operating expenses would have increased
$563,416, or approximately 5 percent. Operating expenses for the Venture's
Albuquerque, New Mexico and Palmdale, California cable television systems
represented 58 percent of revenues for the three months ended March 31, 1996,
compared to 60 percent for the three months ended March 31, 1995. The increases
in operating expenses were due to increases in programming costs,
9
personnel costs and plant related costs. No other individual factor contributed
significantly to the increase in operating expenses.
Management fees and allocated overhead from the General Partner totaled
$2,778,348 for the quarter ended March 31, 1996 compared to $3,033,059 for the
similar 1995 period, a decrease of $254,711, or approximately 8 percent. This
decrease was due to the sale of the Tampa System. Disregarding the effect of
the Tampa System sale, management fees and allocated overhead from the General
Partner would have increased $21,706, or approximately 1 percent. This increase
was primarily due to the increase in revenues, upon which such fees are based.
Depreciation and amortization expense totaled $6,117,468 for the quarter
ended March 31, 1996 compared to $6,683,999 for the similar 1995 period, a
decrease of $566,531, or approximately 8 percent. Disregarding the effect of
the Tampa System sale, depreciation and amortization expense would have
increased $25,130, or approximately 1 percent. This was due primarily to
capital additions during 1995.
The Venture reported an operating loss of $91,921 for the quarter ended
March 31, 1996 compared to operating income of $352,206 for the similar 1995
period. Disregarding the effect of the Tampa System sale, the Venture would
have reported operating income of $525,211 for the three month period ended
March 31, 1996 compared to an operating loss of $201,122 for the similar 1995
period. This change was due to the increases in revenues in the Partnership's
Albuquerque, New Mexico and Palmdale, California cable television systems
exceeding the increases in operating expenses, management fees and allocated
overhead expenses from the General Partner and depreciation and amortization
expense.
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 totaled $6,025,547 for the three months
ended March 31, 1996 compared to $7,036,205 for the similar 1995 period, a
decrease of $1,010,658, or approximately 14 percent. If not for the sale of the
Tampa System, operating income before depreciation and amortization would have
increased $751,463, or approximately 16 percent. This increase was due to the
increase in revenues in the Partnership's Albuquerque, New Mexico and Palmdale,
California cable television systems exceeding the increases in operating
expenses and management fees and allocated overhead from the General Partner.
Interest expense totaled $3,161,193 for the three months ended March 31,
1996 compared to $3,945,142 for the similar 1995 period, a decrease of $783,949,
or approximately 20 percent. This decrease in interest expense was primarily
due to the lower outstanding balance on the Partnership's interest bearing
obligations.
The Venture recognized a gain of $72,137,615 related to the sale of the
Tampa System in February 1996. No similar gain was recognized in 1995.
The Venture reported net income of $68,885,363 for the three months ended
March 31, 1996 compared to a net loss of $3,579,533 for the similar 1995 period
due to the gain on the sale of the Tampa System.
10
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
Report on Form 8-K dated February 28, 1996 reports that:
On February 28, 1996, the Venture, a Colorado joint venture
comprised of Cable TV Fund 12-B, Ltd. ("Fund 12-B"), Cable TV Fund
12-C, Ltd. ("Fund 12-C") and Cable TV Fund 12-D, Ltd. ("Fund 12-
D"), Colorado limited partnerships, sold the cable television
system serving areas in and around Tampa, Florida (the "Tampa
System") to Jones Cable Holdings, Inc. ("JCH"), a wholly owned
subsidiary of Jones Intercable, Inc., the general partner of each
of Fund 12-B, Fund 12-C and Fund 12-D (the "General Partner"). The
sales price of the Tampa System was $110,395,667, subject to normal
working capital closing adjustments.
11
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 12-D
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
12