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
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[ ] 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: 0-14689
JONES CABLE INCOME FUND 1-A, LTD.
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Exact name of registrant as specified in charter
Colorado 84-1010416
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State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, Englewood, Colorado 80112
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Address of principal executive office
(303) 792-3111
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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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JONES CABLE INCOME FUND 1-A, LTD.
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(A Limited Partnership)
UNAUDITED BALANCE SHEETS
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June 30, December 31,
ASSETS 1996 1995
- ------ ------------ -------------
CASH $ 67,347 $ 28,199
TRADE RECEIVABLES, less allowance for doubtful
receivables of $8,466 and $5,875 at June 30, 1996
and December 31, 1995, respectively 92,815 128,240
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 10,556,897 10,237,855
Less- accumulated depreciation (6,359,346) (5,995,702)
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4,197,551 4,242,153
Franchise costs and other intangible assets, net of
accumulated amortization of $688,897 at
June 30, 1996 and $654,163 at
December 31, 1995 222,103 256,837
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Total investment in cable television properties 4,419,654 4,498,990
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 36,275 36,394
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Total assets $ 4,616,091 $ 4,691,823
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
JONES CABLE INCOME FUND 1-A, LTD.
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(A Limited Partnership)
UNAUDITED BALANCE SHEETS
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June 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
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LIABILITIES:
Debt $ 5,182,639 $ 4,606,827
Accounts payable - General Partner - 45,944
Trade accounts payable and accrued liabilities 114,193 341,617
Accrued distribution to limited partners 200,000 200,000
Subscriber prepayments 46,331 46,562
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Total liabilities 5,543,163 5,240,950
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PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (4,320) (4,581)
Distributions (78,269) (74,229)
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(81,589) (77,810)
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Limited Partners-
Net contributed capital
(17,000 units outstanding at
June 30, 1996 and December 31, 1995) 7,288,694 7,288,694
Accumulated deficit (385,177) (411,011)
Distributions (7,749,000) (7,349,000)
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(845,483) (471,317)
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Total liabilities and partners'
capital (deficit) $ 4,616,091 $ 4,691,823
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
JONES CABLE INCOME FUND 1-A, LTD.
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(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
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For the Three Months Ended For the Six Months Ended
June 30, June 30,
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1996 1995 1996 1995
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REVENUES $1,240,486 $1,146,939 $2,438,858 $2,250,229
COSTS AND EXPENSES:
Operating expense 756,537 703,930 1,535,488 1,377,937
Management fees and
allocated overhead from
General Partner 151,929 137,428 293,337 282,880
Depreciation and
amortization 205,197 195,492 410,051 391,195
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OPERATING INCOME 126,823 110,089 199,982 198,217
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OTHER INCOME (EXPENSE):
Interest expense (86,955) (85,500) (171,954) (167,017)
Other, net (981) 129 (1,933) 325
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Total other income (expense), net (87,936) (85,371) (173,887) (166,692)
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NET INCOME $ 38,887 $ 24,718 $ 26,095 $ 31,525
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ALLOCATION OF NET INCOME:
General Partner $ 389 $ 247 $ 261 $ 315
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Limited Partners $ 38,498 $ 24,471 $ 25,834 $ 31,210
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NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 2.26 $ 1.44 $ 1.52 $ 1.84
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 17,000 17,000 17,000 17,000
========== ========== ========== ==========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES CABLE INCOME FUND 1-A, LTD.
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(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
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For the Six Months Ended
June 30,
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1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 26,095 $ 31,525
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 410,051 391,195
Decrease in trade receivables 35,425 17,390
Increase in deposits, prepaid expenses and
deferred charges (15,594) (9,158)
Decrease in trade accounts payable and accrued
liabilities and subscriber prepayments (227,655) (39,753)
Increase (decrease) in advances from General Partner (45,944) 292,804
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Net cash provided by operating activities 182,378 684,003
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (319,042) (323,742)
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Net cash used in investing activities (319,042) (323,742)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 600,000 18,435
Repayment of debt (24,188) (19,984)
Cash flow distributions to limited partners (400,000) (400,000)
Decrease in accrued distributions to limited partners - (35,000)
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Net cash provided by (used in) financing activities 175,812 (436,549)
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Increase (decrease) in cash 39,148 (76,288)
Cash, beginning of period 28,199 78,286
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Cash, end of period $ 67,347 $ 1,998
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SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 176,901 $ 166,785
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES CABLE INCOME FUND 1-A, LTD.
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(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
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(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-A, 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 and
1995. Results of operations for these periods are not necessarily indicative of
results to be expected for the full year.
The Partnership owns the cable television systems serving the communities
of Milwaukie, Oregon (the "Milwaukie System") and Owatonna and Glencoe,
Minnesota (the "Owatonna/Glencoe 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 five percent of the gross revenues of the Partnership, 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 $62,024 and $121,943,
respectively, compared to $57,348 and $112,512, respectively, for the similar
1995 periods.
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. Amounts
allocated to the Partnership by the General Partner for allocated overhead and
administrative expenses for the three and six month periods ended June 30, 1996
were $89,905 and $171,394, respectively, compared to $80,080 and $170,368,
respectively, for the similar 1995 periods.
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JONES CABLE INCOME FUND 1-A, LTD.
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(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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FINANCIAL CONDITION
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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 dates or terms have
yet been set for the sale of the Partnership's systems.
For the six months ended June 30, 1996, the Partnership generated
operating income before depreciation and amortization totaling $610,033, which
is available to fund distributions, capital expenditures and non-operating
costs. During the first six months of 1996, the Partnership expended
approximately $340,000 for capital improvements. Approximately 44 percent
related to service drops to subscribers' homes and approximately 23 percent of
these expenditures related to the upgrade of equipment within the Partnership's
systems. Funding for these expenditures was provided by cash generated from
operations and borrowings under the Partnership's credit facility. Anticipated
capital expenditures for the remainder of 1996 are approximately $319,000. Of
these expenditures, approximately 37 percent relates to service drops,
approximately 11 percent relates to the upgrade of equipment and approximately
10 percent relates to the purchase of converters. The remainder of the
expenditures are for the various enhancements in the Partnership's systems.
These capital expenditures are necessary to maintain the value of the
Partnership's systems. Funding for these expenditures is expected to be provided
by cash generated from operations and borrowings under its credit facility.
The Partnership is a party to a $6,500,000 revolving credit facility. The
revolving credit period expires December 31, 1997, at which time the outstanding
balance converts to a term loan with a final maturity of December 31, 2003. The
balance outstanding on the Partnership's credit facility at June 30, 1996 was
$5,100,000, leaving $1,400,000 available to fund capital expenditures. Interest
on outstanding principal amounts on the credit facility is computed at the
Partnership's option of the London Interbank Offered Rate plus 1-1/4 percent or
the Prime Rate plus 1/4 percent. The effective interest rates on amounts
outstanding as of June 30, 1996 and 1995 were 6.83 percent and 7.0 percent,
respectively.
A primary objective of the Partnership is to provide quarterly cash
distributions from operating cash flow to the limited partners. The Partnership
declared a $200,000 distribution to limited partners during the second quarter
of 1996, which was principally from second quarter operating cash flow of the
Partnership. Future distributions will be announced on a quarter-by-quarter
basis and no determination has been made regarding the level of future
distributions. The payment of quarterly operating cash flow distributions may
reduce the financial flexibility of the Partnership.
The General Partner presently believes that the Partnership has sufficient
sources of capital available from cash generated from operations and available
borrowings under its credit facility to meet its presently anticipated needs.
RESULTS OF OPERATIONS
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Revenues of the Partnership increased $93,547, or approximately 8 percent,
to $1,240,486 for the three months ended June 30, 1996 from $1,146,939 for the
similar period in 1995. For the six month periods ended June 30, 1996 and 1995,
revenues increased $188,629, or approximately 8 percent, to $2,438,858 at June
30, 1996 from $2,250,229 for the similar period in 1995. These increases in
revenues were primarily due to increases in the number of basic subscribers and
basic rate adjustments. Basic subscribers increased approximately 5 percent to
13,718 basic subscribers at June 30, 1996 from 13,043 for the similar period in
1995. This increase in basic subscribers accounted for approximately 51 percent
and 41 percent, respectively, of the increase in revenues for the three and six
month periods ended June 30, 1996. Basic rate adjustments accounted for
approximately 47 percent and 45 percent, respectively, of the increase in
revenues for the three and six month periods ended June 30, 1996. No other
individual factor significantly affected the increases 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.
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Operating expenses increased $52,607, or approximately 7 percent, to
$756,537 for the three month period ended June 30, 1996 from $703,930 for the
similar 1995 period. Operating expenses increased $157,551, or approximately 11
percent, to $1,535,488 for the six month period ended June 30, 1996 from
$1,377,937 for the similar 1995 period. These increases were primarily due to
increases in programming costs. Operating expense represented 61 percent of
revenue for both the three month periods ended June 30, 1996 and 1995,
respectively, and represented 63 percent and 61 percent for the six month
periods ended June 30, 1996 and 1995, respectively. No other individual factor
contributed significantly to the increases in operating expenses.
Management fees and allocated overhead from the General Partner
increased $14,501, or approximately 11 percent, to $151,929 for the three month
period ended June 30, 1996 from $137,428 for the similar 1995 period.
Management fees and allocated overhead from the General Partner increased
$10,457, or approximately 4 percent, to $293,337 for the six months ended June
30, 1996 from $282,880 for the similar 1995 period. These increases were due to
an increase in revenues upon which such fees are based.
Depreciation and amortization expense increased $9,705, or approximately 5
percent, to $205,197 for the three months ended June 30, 1996 from $195,492 for
the similar 1995 period. Depreciation and amortization expense increased
$18,856, or approximately 5 percent, to $410,051 for the six months ended June
30, 1996 from $391,195 for the similar 1995 period. These increases were due to
capital additions in 1996.
Operating income increased $16,734, or approximately 15 percent, to
$126,823 for the three months ended June 30, 1996 from $110,089 for the similar
1995 period. Operating income increased $1,765, or less than 1 percent, to
$199,982 for the six months ended June 30, 1996 from $198,217 for the similar
1995 period. These increases were due to the increases in revenues exceeding the
increases in operating expenses, management fees and allocated overhead from the
general partner and depreciation and amortization.
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 $26,439, or approximately 9
percent, to $332,020 for the three months ended June 30, 1996 from $305,581 for
the similar 1995 period. Operating income before depreciation and amortization
increased $20,621, or approximately 4 percent, to $610,033 for the six months
ended June 30, 1996 from $589,412 for the similar 1995 period. 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 increased $1,455, or approximately 2 percent, to $86,955
for the three months ended June 30, 1996 from $85,500 for the similar 1995
period. Interest expense increased $4,937, or approximately 3 percent, to
$171,954 for the six month period ended June 30, 1996 from $167,017 for the
similar 1995 period. These increases were due to higher outstanding balances on
interest bearing obligations.
Net income increased $14,169, or approximately 57 percent to $38,887 for
the three months ended June 30, 1996 from $24,718 for the similar 1995 period.
Net income decreased $5,430, or approximately 17 percent, to $26,095 for the six
month period ended June 30, 1996 from $31,525 for the similar 1995 period. These
changes were due to the factors discussed above.
8
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
9
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-A, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
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Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: August 14, 1996
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