Exhibit (b)(1)
[LOGO OF MTA-EMCI APPEARS HERE]
November 11, 1996
Mr. Timothy J. Burke
Jones Financial Group
9697 East Mineral Avenue
Englewood, CO 80112
Dear Mr. Burke:
PURPOSE OF APPRAISAL
Malarkey-Taylor Associates, Inc., ("MTA") was retained by Jones
Intercable, Inc. ("Jones") to update a fair market appraisal of the Cable TV
Joint Fund 11-ABCD cable television system (the "System") serving Manitowoc,
Wisconsin as of August 31, 1996. This updated appraisal will be used by Jones
as an independent estimate of the fair market value of the System with the
resulting value to be used in conjunction with the purchase of the System by
Jones.
FAIR MARKET VALUE
MTA has determined the overall fair market value of the System to be
$15,567,000 as of August 31, 1996. Fair market value is the cash price a
willing buyer would give a willing seller in an arm's length transaction in
order to complete the sale. It is assumed that both buyer and seller have been
informed of all relevant facts and neither is under any compulsion to conclude
the transaction.
FAIR MARKET VALUE METHODOLOGY
MTA used five generally accepted cable television valuation methods in
establishing the range of total fair market values of the System as a going
concern. The first method used a multiple of the past year's operating income
derived from comparable asset values of privately-held and publicly-traded cable
companies. The second method
Mr. Timothy J. Burke
November 11, 1996
Page 2
used a lower multiple of the annualized current month's operating income. The
third method applied a slightly lower multiple of next year's projected
operating income. The fourth method was a discounted net cash flow analysis to
achieve a target after-tax return of equity, given particular operating and
financing assumptions unique to the System's assets. The fifth method was a
discounted cash flow method that measured the net present value of the projected
pre-tax operating cash flows (less capital expenditures, plus the residual value
of the System) that represent the return on the total investment.
CONTINGENCIES AND LIMITING CONDITIONS
Our conclusions as to the fair market value of the System are based
upon the following, which to the best of our knowledge, are reliable and sound:
1. MTA's appraisal as of April 30, 1995 dated July 11, 1995, which included an
onsite inspection of a representative portion of the System and communities
served.
2. Unaudited financial statements for the 12-month period ending December 31,
1995, and for the 8-month period ending August 31, 1996.
3. Homes passed and subscriber data as of August 31, 1996, provided by Jones.
4. Miscellaneous management data as to the current subscriber rates,
construction schedules, etc., as of the appraisal date.
MTA has not revisited the System since the 1995 valuation. The amount of
current information gathered and used in this update, in conjunction with
management interviews and data collected for previous valuations, provides
adequate support for this updated valuation. This data results in an accurate
valuation given the preceding conditions.
Mr. Timothy J. Burke
November 11, 1996
Page 3
STATEMENT OF VALUE
MTA certifies that, to the best of our knowledge, the statements contained
in this appraisal are correct and that the opinions stated are based on a
consideration of the relevant factors. Furthermore, neither MTA nor any of its
representatives have any current interest or contemplated future interest in the
assets appraised.
Based on the various analyses, computations, and consideration discussed in
this report, it is our professional judgment, subject to the assumptions and
limitations stated herein, that the overall fair market value of the System is
$15,567,000.
Sincerely,
/s/ Andrew R. Gefen
Andrew R. Gefen
Vice President, Financial Services
ARG/ban
Enclosure
CABLE TV JOINT FUND 11-ABCD EXHIBIT A
MANITOWOC, WISCONSIN ---------
AS OF AUGUST 31, 1996
VALUATION METHODS
- -----------------
LOW HIGH
----------- -----------
I. MULTIPLE OF PAST YEAR'S OPERATING INCOME
OPERATING INCOME, PER BOOKS (8/31/96, LESS CROWN ALLOCATION) $1,593,681 $1,593,681
VALUATION MULTIPLE 9.5 10.5
----------- -----------
ESTIMATED FAIR MARKET VALUE $15,139,970 $16,733,651
----------- -----------
II. MULTIPLE OF "RUNNING RATE" OPERATING INCOME
ESTIMATED OPERATING INCOME
TOTAL CURRENT YEAR'S REVENUE $3,963,860 $3,963,860
OPERATING MARGIN, PER BOOKS (8/31/96) 42.5% 42.5%
----------- -----------
"RUNNING RATE" OPERATING INCOME LESS CROWN ALLOCATION 1,617,927 1,617,927
VALUATION MULTIPLE 9.0 10.0
----------- -----------
ESTIMATED FAIR MARKET VALUE $14,561,343 $16,179,270
----------- -----------
III. MULTIPLE OF NEXT YEAR'S OPERATING INCOME
OPERATING INCOME $1,744,182 $1,744,182
VALUATION MULTIPLE 8.5 9.5
ESTIMATED FAIR MARKET VALUE $14,825,545 $16,569,726
----------- -----------
IV. DISCOUNTED CASH FLOW RETURN ON EQUITY
TARGET RETURN ON EQUITY 14.0% 12.0%
ESTIMATED FAIR MARKET VALUE $15,018,836 $16,161,365
----------- -----------
V. DISCOUNTED CASH FLOW RETURN ON INVESTMENT
TARGET RETURN ON INVSTMT 16.5% 15.0%
ESTIMATED FAIR MARKET VALUE $14,941,776 $16,046,984
----------- -----------
SUMMARY OF VALUES
I. MULTIPLE OF PAST YEAR'S OPERATING INCOME $15,139,970 $16,733,651
II. MULTIPLE OF "RUNNING RATE" OPERATING INCOME 14,561,343 16,179,270
III. MULTIPLE OF NEXT YEAR'S OPERATING INCOME 14,825,545 16,569,726
IV. DISCOUNTED CASH FLOW RETURN ON EQUITY 15,018,836 16,161,365
V. DISCOUNTED CASH FLOW RETURN ON INVESTMENT 14,941,776 16,046,984
----------- -----------
RANGE OF ESTIMATED FAIR MARKET VALUES $14,894,000 $16,240,000
ESTIMATED FAIR MARKET VALUE $15,567,000
-----------
CABLE TV JOINT FUND 11-ABCD EXHIBIT B
MANITOWOC, WISCONSIN LOW ANALYSIS
AS OF AUGUST 31, 1996 ------------
RETURN ON EQUITY METHOD
PROFIT AND LOSS - LOW VALUE
- ---------------------------
YEAR ENDING AUGUST 31, 1997 1998 1999 2000 2001 2002 2003 TOTAL
----------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
REVENUES $4,142,168 $4,415,090 $4,672,419 $4,950,666 $5,251,272 $5,575,182 $5,919,768 $34,926,564
OPERATING EXPENSES 2,397,986 2,533,523 2,675,738 2,829,678 2,996,236 3,175,756 3,366,640 19,975,557
----------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
OPERATING INCOME $1,744,182 $1,881,567 $1,996,681 $2,120,988 $2,255,036 $2,399,426 $2,553,128 $14,951,007
OPERATING MARGIN 0.42 0.43 0.43 0.43 0.43 0.43 0.43
PARENT SERVICES/MGT FEE (5%) 207,108 220,754 233,621 247,533 262,564 278,759 295,988 1,746,328
FRANCHISE AMORTIZATION (15) 673,800 673,800 673,800 673,800 673,800 673,800 673,800 4,716,600
SUBSCRIBER LIST (8) 269,625 269,625 269,625 269,625 269,625 269,625 269,625 1,887,375
NON-COMPETE COVENANTS (0) 0 0 0 0 0 0 0 0
DEPRECIATION 385,249 699,818 580,610 498,139 443,040 476,378 511,564 3,594,797
INTEREST 708,278 708,278 708,278 663,301 613,939 559,764 500,307 4,462,143
----------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
PRE-TAX INCOME ($499,879) ($690,708) ($469,253) ($231,410) ($7,931) $141,100 $301,844 ($1,456,237)
INCOME TAX (EXPENSE)/BENEFIT 169,959 234,841 159,546 78,679 2,697 (47,974) (102,627) 495,121
----------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
NET INCOME ($329,920) ($455,868) ($309,707) ($152,731) ($5,235) $93,126 $199,217 ($961,117)
SOURCES AND USES OF CASH
SOURCES OF CASH -
PRE TAX INCOME ($499,879) ($690,708) ($469,253) ($231,410) ($7,931) $141,100 $301,844 ($1,456,237)
FRANCHISE AMORTIZATION (15) 673,800 673,800 673,800 673,800 673,800 673,800 673,800 4,716,600
SUBSCRIBER LIST (8) 269,625 269,625 269,625 269,625 269,625 269,625 269,625 1,887,375
NON-COMPETE COVENANTS (0) 0 0 0 0 0 0 0 0
DEPRECIATION 385,249 699,818 580,610 498,139 443,040 476,378 511,564 3,594,797
EQUITY 7,264,385 7,264,385
DEBT 7,264,385 0 0 0 0 0 0 7,264,385
RESIDUAL VALUE IN YEAR 7 22,978,150 22,978,150
----------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
TOTAL SOURCES OF CASH $15,357,567 $952,535 $1,054,782 $1,210,154 $1,378,534 $1,560,903 $24,734,982 $46,249,456
USES OF CASH -
PURCHASE PRICE - CURRENT $15,018,836 $15,018,836
CAPITAL EXPENDITURES 238,531 277,001 288,682 295,805 313,243 326,512 340,335 2,080,109
DEBT RETIREMENT 0 0 461,301 506,277 555,639 609,814 5,131,354 7,264,385
TAXES PAID ON NET INCOME 0 0 0 0 0 0 0 0
TAXES PAID ON SALE (RESIDUAL) 4,971,392 4,971,392
----------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
TOTAL USES OF CASH $15,257,367 $277,001 $749,983 $802,082 $868,882 $936,326 $10,443,081 $29,334,722
ANNUAL CASH INCREASE/(DECREASE) $100,200 $675,534 $304,799 $408,072 $509,651 $624,577 $14,291,901 $16,914,734
CUMULATIVE CASH 100,200 775,734 1,080,533 1,488,605 1,998,256 2,622,833 16,914,734
CABLE TV JOINT FUND 11-ABCD EXHIBIT B
MANITOWOC, WISCONSIN HIGH ANALYSIS
AS OF AUGUST 31, 1996 -------------
RETURN ON EQUITY METHOD
PROFIT AND LOSS - HIGH VALUE
- ----------------------------
YEAR ENDING AUGUST 31, 1997 1998 1999 2000 2001 2002 2003 TOTAL
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
REVENUES $4,142,168 $4,415,090 $4,672,419 $4,950,666 $5,251,272 $5,575,182 $5,919,768 $34,926,564
OPERATING EXPENSES 2,397,986 2,533,523 2,675,738 2,829,678 2,996,236 3,175,756 3,366,640 19,975,557
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
OPERATING INCOME $1,744,182 $1,881,567 $1,996,681 $2,120,988 $2,255,036 $2,399,426 $2,553,128 $14,951,007
OPERATING MARGIN 0.42 0.43 0.43 0.43 0.43 0.43 0.43
PARENT SERVICES/MGT FEE (5%) 207,108 220,754 233,621 247,533 262,564 278,759 295,988 1,746,328
FRANCHISE AMORTIZATION (15) 673,800 673,800 673,800 673,800 673,800 673,800 673,800 4,716,600
SUBSCRIBER LIST (8) 269,625 269,625 269,625 269,625 269,625 269,625 269,625 1,887,375
NON-COMPETE COVENANTS (0) 0 0 0 0 0 0 0 0
DEPRECIATION 385,249 699,818 580,610 498,139 443,040 476,378 511,564 3,594,797
INTEREST 766,831 766,831 766,831 718,136 664,693 606,039 541,667 4,831,026
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
PRE-TAX INCOME ($558,431) ($749,261) ($527,805) ($286,245) ($58,685) $94,825 $260,484 ($1,825,120)
INCOME TAX (EXPENSE)/BENEFIT 189,867 254,749 179,454 97,323 19,953 (32,240) (88,564) 620,541
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
NET INCOME ($368,565) ($494,513) ($348,352) ($188,921) ($38,732) $62,584 $171,919 ($1,204,579)
SOURCES AND USES OF CASH
SOURCES OF CASH -
PRE TAX INCOME ($558,431) ($749,261) ($527,805) ($286,245) ($58,685) $94,825 $260,484 ($1,825,120)
FRANCHISE AMORTIZATION (15) 673,800 673,800 673,800 673,800 673,800 673,800 673,800 4,716,600
SUBSCRIBER LIST (8) 269,625 269,625 269,625 269,625 269,625 269,625 269,625 1,887,375
NON-COMPETE COVENANTS (0) 0 0 0 0 0 0 0 0
DEPRECIATION 385,249 699,818 580,610 498,139 443,040 476,378 511,564 3,594,797
EQUITY 7,864,928 7,864,928
DEBT 7,864,928 0 0 0 0 0 0 7,864,928
RESIDUAL VALUE IN YEAR 7 22,978,150 22,978,150
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
TOTAL SOURCES OF CASH $16,500,099 $893,982 $996,229 $1,155,319 $1,327,780 $1,514,628 $24,693,622 $47,081,659
USES OF CASH -
PURCHASE PRICE - CURRENT $16,161,365 $16,161,365
CAPITAL EXPENDITURES 238,531 277,001 288,682 295,805 313,243 326,512 340,335 2,080,109
DEBT RETIREMENT 0 0 499,436 548,131 601,574 660,227 5,555,560 7,864,928
TAXES PAID ON NET INCOME 0 0 0 0 0 0 0 0
TAXES PAID ON SALE (RESIDUAL) 4,457,511 4,457,511
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
TOTAL USES OF CASH $16,399,896 $277,001 $788,118 $843,936 $914,817 $986,739 $10,353,407 $30,563,914
ANNUAL CASH INCREASE/(DECREASE) $100,203 $616,981 $208,111 $311,384 $412,963 $527,889 $14,340,215 $16,517,745
CUMULATIVE CASH 100,203 717,184 925,295 1,236,678 1,649,641 2,177,530 16,517,745
CABLE TV JOINT FUND 11-ABCD EXHIBIT C
MANITOWOC, WISCONSIN LOW ANALYSIS
AS OF AUGUST 31, 1996 ------------
RETURN ON EQUITY METHOD
DEBT AMORTIZATION - LOW VALUE
- -----------------------------
TOTAL YEAR 1 CASH REQUIREMENTS $14,528,771
YEAR 1 DEBT REQUIREMENTS 7,264,385
YEAR 1 EQUITY REQUIREMENTS 7,264,385
FINANCING AVAILABLE $10,358,927 $11,337,181 $12,230,184 $12,978,423 $13,786,422 $14,657,733 $15,596,270
UNUSED LEVERAGE 3,094,541 4,072,796 5,427,099 6,681,616 8,045,253 9,526,379 11,134,187
SENIOR DEBT: 1997 1998 1999 2000 2001 2002 2003 TOTAL
----------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
BEGINNING DEBT $0 $7,264,385 $7,264,385 $6,803,085 $6,296,808 $5,741,168 $5,131,354
DEBT ADDED 7,264,385 0 0 0 0 0 0 7,264,385
TOTAL ANNUAL PAYMENTS 708,278 708,278 1,169,578 1,169,578 1,169,578 1,169,578 1,169,578 7,264,446
INTEREST 708,278 708,278 708,278 663,301 613,939 559,764 500,307 4,462,143
PRINCIPAL REPAYMENT 0 0 461,301 506,277 555,639 609,814 669,271 2,802,302
ENDING BALANCE 7,264,385 7,264,385 6,803,085 6,296,808 5,741,168 5,131,354 4,462,083
LINE OF CREDIT:
BEGINNING DEBT $0 $0 $0 $0 $0 $0 $0 $0
BORROWINGS 0 0 0 0 0 0 0 0
PRINCIPAL PAYMENTS 0 0 0 0 0 0 0 0
INTEREST 0 0 0 0 0 0 0 0
SENIOR DEBT COVERAGE 4.2 3.9 3.4 3.0 2.5 2.1 1.7
LOC DEBT COVERAGE 0.0 0.0 0.0 0.0 0.0 0.0 0.0
TOTAL DEBT COVERAGE 4.2 3.9 3.4 3.0 2.5 2.1 1.7
CABLE TV JOINT FUND 11-ABCD EXHIBIT C
MANITOWOC, WISCONSIN HIGH ANALYSIS
AS OF AUGUST 31, 1996 -------------
RETURN ON EQUITY METHOD
DEBT AMORTIZATION - HIGH VALUE
- ------------------------------
TOTAL YEAR 1 CASH REQUIREMENTS $15,729,857
YEAR 1 DEBT REQUIREMENTS 7,864,928
YEAR 1 EQUITY REQUIREMENTS 7,864,928
FINANCING AVAILABLE $11,952,608 $13,081,363 $14,111,751 $14,975,104 $15,907,409 $16,912,769 $17,995,697
UNUSED LEVERAGE 4,087,679 5,216,434 6,746,259 8,157,742 9,691,622 11,357,209 13,164,736
SENIOR: 1997 1998 1999 2000 2001 2002 2003 TOTAL
--------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
BEGINNING DEBT $0 $7,864,928 $7,864,928 $7,365,492 $6,817,361 $6,215,788 $5,555,560
DEBT ADDED 7,864,928 0 0 0 0 0 0 $7,864,928
TOTAL ANNUAL PAYMENTS 766,831 766,831 1,266,266 1,266,266 1,266,266 1,266,266 1,266,266 7,864,993
INTEREST 766,831 766,831 766,831 718,136 664,693 606,039 541,667 4,831,026
PRINCIPAL REPAYMENT 0 0 499,436 548,131 601,574 660,227 724,599 3,033,967
ENDING BALANCE 7,864,928 7,864,928 7,365,492 6,817,361 6,215,788 5,555,560 4,830,961
LINE OF CREDIT:
BEGINNING DEBT $0 $0 $0 $0 $0 $0 $0 $0
BORROWINGS 0 0 0 0 0 0 0 0
PRINCIPAL PAYMENTS 0 0 0 0 0 0 0 0
INTEREST 0 0 0 0 0 0 0 0
SENIOR DEBT COVERAGE 4.5 4.2 3.7 3.2 2.8 2.3 1.9
LOC DEBT COVERAGE 0.0 0.0 0.0 0.0 0.0 0.0 0.0
TOTAL DEBT COVERAGE 4.5 4.2 3.7 3.2 2.8 2.3 1.9
CABLE TV JOINT FUND 11-ABCD EXHIBIT D
MANITOWOC, WISCONSIN ---------
AS OF AUGUST 31, 1996
RETURN ON INVESTMENT METHOD
PROFIT AND LOSS
- ---------------
YEAR ENDING AUGUST 31, 1997 1998 1999 2000 2001 2002 2003 TOTAL
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
REVENUES $4,142,168 $4,415,090 $4,672,419 $4,950,666 $5,251,272 $5,575,182 $5,919,768 $34,926,564
OPERATING EXPENSES 2,397,986 2,533,523 2,675,738 2,829,678 2,996,236 3,175,756 3,366,640 19,975,557
OPERATING INCOME 1,744,182 1,881,567 1,996,681 2,120,988 2,255,036 2,399,426 2,553,128 14,951,007
PLUS: RESIDUAL VALUE 22,978,150 22,978,150
LESS: CAPITAL EXPENDITURES 238,531 277,001 288,682 295,805 313,243 326,512 340,335 2,080,109
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
TOTAL CASH FLOW $1,505,651 $1,604,566 $1,707,998 $1,825,183 $1,941,793 $2,072,915 $25,190,942 $35,849,047
NET PRESENT VALUE @ 16.5% $14,941,776
-----------
NET PRESENT VALUE @ 15.0% $16,046,984
-----------
CABLE TV JOINT FUND 11-ABCD EXHIBIT E
MANITOWOC, WISCONSIN ---------
AS OF AUGUST 31, 1996
CABLE TELEVISION SUBSCRIBERS
- ----------------------------
YEAR ENDING AUGUST 31, 1997 1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ---- ----
BEGINNING MILES 170.5
MILES ADDED 0.9 2.5 2.5 2.3 2.3 2.3 2.4
CUMULATIVE MILES 171.3 173.8 176.3 178.6 180.9 183.2 185.6
DENSITY OF ADDITIONAL PLANT
HOMES PASSED - BEGINNING 16,481
NEW HOMES & EXTENSIONS 165 183 185 170 172 174 175
HOMES PASSED - ENDING 16,646 16,829 17,014 17,184 17,356 17,530 17,705
GROWTH IN HOMES 1.0% 1.1% 1.1% 1.0% 1.0% 1.0% 1.0%
BASIC - BEGINNING SUBSCRIBERS 11,523 11,721 11,935 12,151 12,358 12,569 12,782
AVERAGE SUBSCRIBERS 11,622 11,828 12,043 12,255 12,464 12,675 12,890
ENDING SUBSCRIBERS 11,721 11,935 12,151 12,358 12,569 12,782 12,998
PENETRATION 70.4% 70.9% 71.4% 71.9% 72.4% 72.9% 73.4%
EXPANDED BASIC - BEGINNING 11,244 11,438 11,646 11,857 12,059 12,264 12,473
AVERAGE SUBSCRIBERS 11,341 11,542 11,751 11,958 12,162 12,368 12,578
ENDING SUBSCRIBERS 11,438 11,646 11,857 12,059 12,264 12,473 12,684
PENETRATION 97.6% 97.6% 97.6% 97.6% 97.6% 97.6% 97.6%
PAY TV - BEGINNING UNITS 7,337 7,463 7,599 7,737 7,869 8,003 8,139
AVERAGE UNITS 7,400 7,531 7,668 7,803 7,936 8,071 8,208
ENDING UNITS 7,463 7,599 7,737 7,869 8,003 8,139 8,276
PENETRATION 63.7% 63.7% 63.7% 63.7% 63.7% 63.7% 63.7%
PAY PER VIEW - BEGINING UNITS/ 396 597 816 1,124 1,444 1,861 2,317
AVERAGE UNITS 497 706 970 1,284 1,652 2,089 2,566
ENDING UNITS 597 816 1,124 1,444 1,861 2,317 2,815
AVERAGE BUY RATE/MO 11.7% 14.7% 18.7% 22.7% 27.7% 32.7% 37.7%
CONVERTER RENTALS - BEGINNING 2,440 2,716 3,005 3,302 3,606 3,918 4,240
AVERAGE SUBSCRIBERS 2,578 2,860 3,153 3,454 3,762 4,079 4,406
ENDING SUBSCRIBERS 2,716 3,005 3,302 3,606 3,918 4,240 4,572
PENETRATION 23.2% 25.2% 27.2% 29.2% 31.2% 33.2% 35.2%
ADDRESSABLE HOMES 4,539 5,086 5,537 6,001 6,351 6,711 7,080
AVERAGE HOMES 4,813 5,311 5,769 6,176 6,531 6,895 7,270
ENDING HOMES 5,086 5,537 6,001 6,351 6,711 7,080 7,460
PENETRATION 43.4% 46.4% 49.4% 51.4% 53.4% 55.4% 57.4%
BASIC CHURN RATE 24% 24% 24% 24% 24% 24% 24%
CABLE TV JOINT FUND 11-ABCD EXHIBIT F
MANITOWOC, WISCONSIN ---------
AS OF AUGUST 31, 1996
SERVICE RATES
- -------------
CURRENT RATES
- -------------
BASIC $11.08
EXPANDED BASIC 9.58
PAY 7.45
PAY PER VIEW 10.32
CONVERTER RENTALS 1.45
INSTALLATIONS-NEW 35.00
INSTALLATIONS-CHURN 17.50
YEAR ENDING AUGUST 31, 1997 1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ---- ----
PERCENTAGE RATE INCREASES
- -------------------------
BASIC 3% 3% 3% 3% 3% 3% 3%
EXPANDED BASIC 7% 5% 3% 3% 3% 3% 3%
PAY 0% 1% 1% 1% 1% 1% 1%
PAY PER VIEW -6% -6% -6% 0% 3% 3% 3%
CONVERTER RENTALS 0% 3% 3% 3% 3% 3% 3%
INSTALLATIONS-NEW 0% 3% 3% 3% 3% 3% 3%
INSTALLATIONS-CHURN 0% 3% 3% 3% 3% 3% 3%
AVERAGE RATES
- -------------
BASIC $11.41 $11.81 $12.16 $12.53 $12.90 $13.29 $13.69
EXPANDED BASIC 10.25 10.75 11.07 11.41 11.75 12.10 12.46
PAY 7.45 7.53 7.60 7.68 7.75 7.83 7.91
PAY PER VIEW 9.70 9.12 8.57 8.57 8.83 9.09 9.36
CONVERTERS RENTALS 1.45 1.49 1.54 1.58 1.63 1.68 1.73
INSTALLATIONS-NEW 35.00 36.05 37.13 38.25 39.39 40.57 41.79
INSTALLATIONS-CHURN 17.50 18.03 18.57 19.12 19.70 20.29 20.90
CABLE TV JOINT FUND 11-ABCD EXHIBIT G
MANITOWOC, WISCONSIN ---------
AS OF AUGUST 31, 1996
YEAR ENDING AUGUST 31, 1997 1998 1999 2000 2001 2002 2003 TOTAL
---- ---- ---- ---- ---- ---- ---- -----
REVENUES:
BASIC $1,591,781 $1,676,018 $1,757,636 $1,842,219 $1,929,830 $2,021,512 $2,117,448 $12,936,444
EXPANDED BASIC 1,394,468 1,488,987 1,561,498 1,636,641 1,714,476 1,795,927 1,881,158 11,473,155
PAY TV 661,649 680,097 699,367 718,789 738,353 758,412 778,979 5,035,647
PAY PER VIEW 57,786 77,253 99,739 132,032 175,010 227,919 288,343 1,058,081
CONVERTER RENTALS 44,861 51,266 58,208 65,668 73,673 82,286 91,548 467,510
INSTALLATIONS 38,989 41,150 43,138 44,873 46,991 49,206 51,524 315,871
COMMERCIAL 55,002 56,652 58,352 60,102 61,905 63,762 65,675 421,451
ADVERTISING 238,140 281,005 328,776 381,380 438,587 499,990 564,988 2,732,867
MISCELLANEOUS 59,492 62,661 65,704 68,961 72,446 76,169 80,105 485,539
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
TOTAL REVENUES $4,142,168 $4,415,090 $4,672,419 $4,950,666 $5,251,272 $5,575,182 $5,919,768 $34,926,564
OPERATING EXPENSES:
OPERATIONS $604,561 $638,050 $671,235 $706,218 $743,351 $782,808 $824,442 $4,970,665
GENERAL & ADMINISTRATIVE 587,429 613,584 640,306 668,239 697,437 728,101 760,207 4,695,303
SALES & MARKETING 217,562 244,577 274,362 306,798 341,920 379,486 419,185 2,183,890
PROGRAMMING 988,434 1,037,312 1,089,836 1,148,423 1,213,528 1,285,361 1,362,806 8,125,699
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
TOTAL OPERATING EXPENSES $2,397,986 $2,533,523 $2,675,738 $2,829,678 $2,996,236 $3,175,756 $3,366,640 $19,975,557
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
OPERATING INCOME $1,744,182 $1,881,567 $1,996,681 $2,120,988 $2,255,036 $2,399,426 $2,553,128 $14,951,007
OPERATING MARGIN 42.1% 42.6% 42.7% 42.8% 42.9% 43.0% 43.1%
TOTAL REVENUE/BASIC SUB/MONTH $29.70 $31.11 $32.33 $33.67 $35.11 $36.65 $38.27
CASH FLOW/BASIC SUB/MONTH $12.51 $13.26 $13.82 $14.42 $15.08 $15.77 $16.51
OPERATIONS % OF REVENUE 15% 14% 14% 14% 14% 14% 14%
G & A PERCENTAGE OF REVENUE 14% 14% 14% 13% 13% 13% 13%
SALES & MARKETING % OF REVENUE 5% 6% 6% 6% 7% 7% 7%
PROGRAMMING % OF REVENUE 24% 23% 23% 23% 23% 23% 23%
EXHIBIT H
CABLE TV JOINT FUND 11-ABCD ---------
MANITOWOC, WISCONSIN
AS OF AUGUST 31, 1996
CAPITAL EXPENDITURES
- --------------------
YEAR ENDING AUGUST 31, 1997 1998 1999 2000 2001 2002 2003 TOTAL
---- ---- ---- ---- ---- ---- ---- -----
ASSUMPTIONS AND INPUTS:
- ----------------------
BV OF EXISTING PLANT $2,457,405
ADDITIONAL MILES OF PLANT 0.9 2.5 2.5 2.3 2.3 2.3 2.4
AERIAL PLANT PER MILE $14,000 $14,280 $14,566 $14,857 $15,154 $15,457 $15,766
UNDERGROUND PLANT PER MILE $17,000 $17,340 $17,687 $18,041 $18,401 $18,769 $19,145
PERCENTAGE OF PLANT AERIAL 5% 5% 5% 5% 5% 5% 5%
PERCENTAGE OF PLANT UNDERGROUND 95% 95% 95% 95% 95% 95% 95%
AVERAGE COST PER CONVERTER $125 $128 $130 $133 $135 $138 $141
PERCENTAGE CONVERTER USE 23% 25% 27% 29% 31% 33% 35%
PERCENTAGE REPLACEMENT 5% 5% 5% 5% 6% 6% 6%
INSTALLATION COST PER SUBSCRIBER * $35 $36 $36 $37 $38 $39 $39
MISC. CAPITAL PER SUBSCRIBER $5 $5 $5 $5 $5 $6 $6
INFLATION FACTOR FOR CAPITALS 0% 2% 2% 2% 2% 2% 2% 113%
ANNUAL COSTS:
- ------------
PLANT ADDITIONS - AERIAL $597 $1,758 $1,813 $1,699 $1,751 $1,804 $1,858 $11,279
-UNDERGROUND 13,765 40,558 41,824 39,209 40,393 41,613 42,870 260,234
PLANT REBUILD/UPGRADE 40,000 40,800 41,616 42,448 43,297 44,163 45,046 297,371
AVERAGE COST OF NEW CONVERTERS 5,749 6,839 7,646 8,028 8,873 9,768 10,713 57,616
CONVERTER REPLACEMENT 16,690 18,812 21,089 23,513 31,277 34,527 37,975 183,883
INSTALLATION COSTS 103,618 107,911 112,048 115,884 120,196 124,664 129,291 813,612
MISC. CAPITAL EXPENDITURES 58,111 60,323 62,646 65,023 67,454 69,973 72,582 456,113
------ ------ ------ ------ ------ ------ ------ -------
TOTAL CAPITAL EXPENDITURES $238,531 $277,001 $288,682 $295,805 $313,243 $326,512 $340,335 $2,080,109
AS A % OF OPERATING INCOME 13.7% 14.7% 14.5% 13.9% 13.9% 13.6% 13.3%
CABLE TV JOINT FUND 11-ABCD EXHIBIT I
MANITOWOC, WISCONSIN ---------
AS OF AUGUST 31, 1996
DEPRECIATION
- ------------
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7
------ ------ ------ ------ ------ ------ ------
ESTIMATED DEPRECIATION RATES 14.3% 24.5% 17.5% 12.5% 8.9% 8.9% 8.9%
DEPRECIATION - BEG. & ADTNS. 1997 1998 1999 2000 2001 2002 2003 TOTAL
---- ---- ---- ---- ---- ---- ---- -----
YEAR 1 $385,249 $660,235 $471,519 $336,722 $240,747 $240,477 $240,747 2,575,697
YEAR 2 39,583 67,838 48,448 34,597 24,736 24,709 239,911
YEAR 3 41,253 70,698 50,491 36,056 25,779 224,277
YEAR 4 42,270 72,443 51,736 36,946 203,395
YEAR 5 44,762 76,713 54,786 176,262
YEAR 6 46,659 79,963 126,621
YEAR 7 48,634 48,634
------ ------ ------ ------ ------ ------ ------ ------
TOTAL DEPRECIATION $385,249 $699,818 $580,610 $498,139 $443,040 $476,378 $511,564 $3,594,797
CABLE TV JOINT FUND 11-ABCD EXHIBIT J
MANITOWOC, WISCONSIN ---------
AS OF AUGUST 31, 1996
ASSUMPTIONS AND INPUTS
- ----------------------
REMAINING LIFE OF FRANCHISES (YEARS) 5
AVERAGE SUBSCRIBER LIFE (YEARS) 8
INCOME TAX RATE 34%
CAPITAL GAIN RATE 34%
NET FMV OF EXISTING ASSETS $2,457,405
SUBSCRIBERS IN FRANCHISES 100%
LOW HIGH
ANALYSIS ANALYSIS
-------- --------
DEBT PERCENTAGE 50% 50%
EQUITY PERCENTAGE 50% 50%
RESIDUAL MULTIPLE (ROE & ROI) 9.0 9.0
MULT OF PAST YEAR'S OPERATING INCOME 9.5 10.5
MULT OF CURRENT YEAR'S OPERATING INCOME 9.0 10.0
MULT OF NEXT YEAR'S OPERATING INCOME 8.5 9.5
TARGET RETURN ON EQUITY 14.0% 12.0%
TARGET RETURN ON INVESTMENT 16.5% 15.0%