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 June 30, 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: 0-15714
JONES CABLE INCOME FUND 1-C, LTD.
----------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1010419
- --------------------------------------------------------------------------------
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
----- -----
JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
-------------------------------------
June 30, December 31,
ASSETS 1996 1995
------ ------------- -------------
CASH $ 269,524 $ 880,728
TRADE RECEIVABLES, less allowance for
doubtful receivables of $65,129 and $65,022
at June 30, 1996 and December 31, 1995,
respectively 546,585 524,740
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 64,134,591 62,220,451
Less- accumulated depreciation (31,214,050) (29,056,927)
------------ ------------
32,920,541 33,163,524
Franchise costs and other intangible assets, net of
accumulated amortization of $37,434,417 at
June 30, 1996 and $35,608,812 at
December 31, 1995, respectively 14,063,853 15,889,458
------------ ------------
Total investment in cable television
properties 46,984,394 49,052,982
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 272,451 385,587
------------ ------------
Total assets $ 48,072,954 $ 50,844,037
============ ============
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
2
JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
-------------------------------------
June 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
------------------------------------------- ------------- -------------
LIABILITIES:
Debt $ 43,043,057 $ 43,104,090
Accounts payable - General Partner - 109,893
Trade accounts payable and accrued liabilities 728,387 1,564,715
Subscriber prepayments 279,569 265,446
------------ ------------
Total liabilities 44,051,013 45,044,144
------------ ------------
MINORITY INTEREST IN JOINT VENTURE 1,640,967 2,348,059
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (218,206) (207,497)
Distributions (113,443) (113,443)
------------ ------------
(330,649) (319,940)
------------ ------------
Limited Partners-
Net contributed capital (85,059 units
outstanding at June 30, 1996 and
December 31, 1995) 34,909,262 34,909,262
Accumulated deficit (19,829,993) (18,769,842)
Distributions (12,367,646) (12,367,646)
------------ ------------
2,711,623 3,771,774
------------ ------------
Total liabilities and partners' capital (deficit) $ 48,072,954 $ 50,844,037
============ ============
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
3
JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
For the Three Months Ended For the Six Months Ended
June 30, June 30,
---------------------------- ---------------------------
1996 1995 1996 1995
---------- ----------- ----------- -----------
REVENUES $6,160,349 $ 5,760,706 $12,117,745 $11,203,617
COSTS AND EXPENSES:
Operating expenses 3,380,680 3,158,188 6,756,806 6,259,890
Management fees and allocated overhead
from General Partner 710,038 670,333 1,413,011 1,367,298
Depreciation and amortization 2,079,519 2,221,415 4,183,197 4,443,212
---------- ----------- ----------- -----------
OPERATING LOSS (9,888) (289,230) (235,269) (866,783)
---------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (762,094) (906,623) (1,559,497) (1,775,116)
Other, net 12,496 27,010 16,814 21,902
---------- ----------- ----------- -----------
Total other income (expense) (749,598) (879,613) (1,542,683) (1,753,214)
---------- ----------- ----------- -----------
CONSOLIDATED LOSS (759,486) (1,168,843) (1,777,952) (2,619,997)
MINORITY INTEREST IN
CONSOLIDATED LOSS 302,048 464,850 707,092 1,041,973
---------- ----------- ----------- -----------
NET LOSS $ (457,438) $ (703,993) $(1,070,860) $(1,578,024)
========== =========== =========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (4,575) $ (7,040) $ (10,709) $ (15,780)
========== =========== =========== ===========
Limited Partners $ (452,863) $ (696,953) $(1,060,151) $(1,562,244)
========== =========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $(5.32) $ (8.19) $ (12.46) $ (18.37)
========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 85,059 85,059 85,059 85,059
========== =========== =========== ===========
The accompanying notes to unaudited consolidated financial statements
are an integral part of these consolidated statements.
4
JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
For the Six Months Ended
June 30,
--------------------------
1996 1995
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,070,860) $(1,578,024)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 4,183,197 4,443,212
Minority interest in net loss (707,092) (1,041,973)
Amortization of interest rate protection contract - 24,250
Decrease (increase) in trade receivables (21,845) 74,286
Decrease (increase) in deposits, prepaid expenses
and deferred charges (87,333) 69,517
Decrease in accounts payable, accrued liabilities
and subscriber prepayments (822,205) (131,264)
Increase (decrease) in advances from General Partner (109,893) 23,919
----------- -----------
Net cash provided by operating activities 1,363,969 1,883,923
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (1,914,140) (2,198,228)
----------- -----------
Net cash used in investing activities (1,914,140) (2,198,228)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 26,202 766,530
Repayment of debt (87,235) (84,380)
----------- -----------
Net cash provided by (used in) financing activities (61,033) 682,150
----------- -----------
Increase (decrease) in cash (611,204) 367,845
Cash, beginning of period 880,728 309,848
----------- -----------
Cash, end of period $ 269,524 $ 677,693
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,577,793 $ 1,867,471
=========== ===========
The accompanying notes to unaudited consolidated financial statements
are an integral part of these consolidated statements.
5
JONES CABLE INCOME FUND 1-C, 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 Jones Cable Income Fund 1-C, Ltd. (the
"Partnership") at June 30, 1996 and December 31, 1995, its Statements of
Operations for the three and six month periods ended June 30, 1996 and 1995 and
its Statements of Cash Flows for the six month periods ended June 30, 1996.
The accompanying financial statements include 100 percent of the accounts
of the Partnership and those of the Brighton, Broomfield and Boulder County,
Colorado; Myrtle Creek, Oregon; Lake County, California; South Sioux City,
Nebraska; and Three Rivers and Watervliet, Michigan cable television systems
reduced by the 40 percent minority interest in Jones Cable Income Fund 1-B/C
Venture (the "Venture"). All interpartnership accounts and transactions have
been eliminated.
(2) Jones Intercable Inc. (the "General Partner"), a publicly held Colorado
corporation, manages 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 and six
month periods ended June 30, 1996 were $308,017 and $605,887, respectively,
compared to $288,036 and $560,181, respectively, for the similar 1995 periods.
The Venture 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
Venture. 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
Venture'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. Overhead and administrative
expenses allocated to the Venture by the General Partner for the three and six
month periods ended June 30, 1996 were $402,021 and $807,124, respectively,
compared to $382,297 and $807,117, respectively, for the similar 1995 periods.
6
JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
The Partnership owns a 60 percent interest in the Venture. The
accompanying financial statements include 100 percent of the accounts of the
Partnership and those of the Venture systems reduced by the 40 percent minority
interest in the Venture.
It is the General Partner's publicly announced policy that it intends to
liquidate its managed limited partnerships, including the Partnership, as
opportunities for sales of partnership cable television systems arise in the
marketplace over the next several years. No specific date or terms have yet been
set for the sale of the Venture's systems.
For the six months ended June 30, 1996, the Venture generated net cash from
operating activities totaling $1,363,969, which is available to fund capital
expenditures and non-operating costs. During the first six months of 1996,
capital improvements within the Venture's systems totaled approximately
$1,914,000. Approximately 42 percent of these expenditures were for service
drops to homes and approximately 20 percent were for the rebuild and upgrade of
the Venture's Systems. The remainder of these expenditures related to various
enhancements in all of the Venture's systems. Funding for these expenditures was
provided by cash generated from operations and borrowings under the Venture's
credit facility. Anticipated capital expenditures for the remainder of 1996 are
approximately $2,588,000. Service drops to homes are expected to account for
approximately 51 percent of the anticipated expenditures and system upgrades and
rebuilds are expected to account for approximately 14 percent of the
expenditures. The remainder of the expenditures will be for various enhancements
in the Venture's systems. These capital expenditures are necessary to maintain
the value of the Venture's systems. Funding for these expenditures is expected
to be provided by cash generated from operations and available borrowings from
the Venture's credit facility.
At June 30, 1996, the Venture's $45,000,000 credit facility had $42,700,000
outstanding, leaving $2,300,000 of available borrowings. The revolving credit
facility matures on June 30, 1997, at which time the outstanding balance is
payable in full. Interest on outstanding principal is calculated at the
Venture's option of the Prime Rate plus 1/2 percent, or London Interbank Offered
Rate plus 1-1/2 percent. The effective interest rates on amounts outstanding as
of June 30, 1996 and 1995 were 7.00 percent and 7.81 percent, respectively.
One of the primary objectives of the Venture is to provide quarterly cash
distributions to the Venture's partners, primarily from cash generated through
operating activities of the Venture. The Venture's partners in turn seek to
provide quarterly cash distributions to their limited partners. The Venture's
credit facility has a maximum amount available of $45,000,000, of which
$42,700,000 was outstanding on June 30, 1996. This limits the amount of
borrowing available to the Venture to fund capital expenditures; therefore, the
Venture used cash generated from operations to fund capital expenditures and did
not declare any distributions during the first and second quarters of 1996. Due
to these borrowing limitations, the Venture will need to use cash generated from
operations to fund capital expenditures and the Venture does not anticipate the
resumption of distributions to the Venture's partners in the near term.
The General Partner believes that the Venture has sufficient sources of
capital available from cash generated from operations and from borrowings
available under its credit facility to meet its presently anticipated needs so
long as the Venture does not resume cash distributions to the Venture partners.
7
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Venture increased $399,643, or approximately 7 percent, to
$6,160,349 for the three months ended June 30, 1996 from $5,760,706 for the
comparable 1995 period. Revenues increased $914,128, or approximately 8
percent, to $12,117,745 for the six months ended June 30, 1996 from $11,203,617
for the comparable 1995 period. Basic service rate increases accounted for
approximately 38 percent and 43 percent of the increase in revenues for the
three and six months ended June 30, 1996 and an increase in the number of basic
subscribers accounted for approximately 32 percent and 30 percent of the
increase in revenues for the similar periods. The number of basic subscribers
totaled 65,602 at June 30, 1996 compared to 63,804 at June 30, 1995, an increase
of approximately 3 percent. Increases in advertising activity accounted for
approximately 11 percent and 8 percent, respectively, of the increases in
revenue for the three and six month periods ended June 30, 1996. No other
single factor significantly affected the increases in revenues.
Operating expenses consist primarily of costs associated with the
administration of the Venture'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 $222,492, or approximately 7 percent, to
$3,380,680 for the three months ended June 30, 1996 from $3,158,188 for the
comparable 1995 period. Operating expenses increased $496,916, or approximately
8 percent, to $6,756,806 for the six months ended June 30, 1996 from $6,259,890
for the comparable 1995 period. Operating expenses represented 55 percent and
56 percent, respectively, of revenues for the three and six month periods ended
June 30, 1996 compared to 52 percent and 56 percent, respectively, for the
similar periods in 1995. Increases in personnel related costs and programming
costs primarily accounted for the increases in operating expenses for the three
and six month periods. No other individual factors were significant to the
increases in operating expenses.
Management fees and allocated overhead from the General Partner increased
$39,705, or approximately 6 percent, to $710,038 from $670,333 for the three
months ended June 30, 1996 compared to 1995. Management fees and allocated
overhead from the General Partner increased $45,713, or approximately 3 percent,
to $1,413,011 for the six months ended June 30, 1996 from $1,367,298 for the
comparable period. These increases were due to the increases in revenues, upon
which such fees are based.
Depreciation and amortization expense decreased $141,896, or approximately
6 percent, to $2,079,519 for the three months ended June 30, 1996 from
$2,221,415 for the comparable 1995 period. Depreciation and amortization
expense decreased $260,015, or approximately 6 percent, to $4,183,197 for the
six months ended June 30, 1996 from $4,443,212 for the comparable 1995 period.
These decreases were due to the decrease in the Venture's depreciable asset
base.
Operating loss decreased $279,342 to $9,888 for the three months ended June
30, 1996 compared to $289,230 for the comparable 1995 period. Operating loss
decreased $631,514, or approximately 73 percent, to $235,269 for the six months
ended June 30, 1996 compared to $866,783 for the comparable 1995 period. These
decreases were due to the increases in revenues and the decreases in
depreciation and amortization 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 $137,446, or approximately 7
percent, to $2,069,631 for the three months ended June 30, 1996 from $1,932,185
for the three months ended June 30, 1995. For the six month periods ended June
30, 1996, operating income before depreciation and amortization increased
$371,499, or approximately 10 percent, to $3,947,928 in 1996 from $3,576,429 in
1995.
8
These increases were due to the increases in revenues exceeding the
increases in operating expenses and management fees and allocated overhead from
the General Partner.
Interest expense decreased $144,529, or approximately 16 percent, to
$762,094 for the three months ended June 30, 1996 compared to $906,623 for the
comparable 1995 period. Interest expense decreased $215,619, or approximately
12 percent, to $1,559,497 for the six months ended June 30, 1996 from $1,775,116
for the comparable 1995 period. These decreases were due to lower effective
interest rates on interest bearing obligations.
Net loss decreased $246,555, or approximately 35 percent for the three
month periods ended June 30, 1996 and 1995, to $457,438 in 1996 from $703,993 in
1995. For the six month periods ended June 30, 1996 and 1995, net loss
decreased $507,164, or approximately 32 percent, to $1,070,860 in 1996 from
$1,578,024 in 1995. These decreases were due to the factors discussed above.
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.
JONES CABLE INCOME FUND 1-C, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /s/ Kevin P. Coyle
_____________________________
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: August 14, 1996
11