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, 1997
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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 __________.
Commission File Number: 0-16939
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
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Exact name of registrant as specified in charter
Colorado #84-1069504
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State of Organization IRS 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) 792-9191
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Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 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 SPACELINK INCOME/GROWTH FUND 1-A, LTD.
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(A Limited Partnership)
UNAUDITED BALANCE SHEETS
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ASSETS
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March 31, December 31,
1997 1996
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CASH $ 344,808 $ 56,865
TRADE RECEIVABLES, less allowance for
doubtful receivables of $3,871 and $5,425 at
March 31, 1997 and December 31, 1996, respectively 133,990 122,004
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 11,468,665 11,233,310
Less - accumulated depreciation (5,379,781) (5,174,077)
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6,088,884 6,059,233
Franchise costs and other intangible assets, net of
accumulated amortization of $8,558,712 and $8,374,039
at March 31, 1997 and December 31, 1996, respectively 5,009,283 5,193,956
----------- -----------
Total investment in cable television properties 11,098,167 11,253,189
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 63,546 45,001
----------- -----------
Total assets $11,640,511 $11,477,059
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
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(A Limited Partnership)
UNAUDITED BALANCE SHEETS
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LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
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March 31, December 31,
1997 1996
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LIABILITIES:
Credit facility and capitalized lease
obligations $ 8,059,644 $ 7,467,645
Trade accounts payable and accrued liabilities 350,224 405,742
Accrued distributions to partners - 315,657
Subscriber prepayments and deposits 28,911 21,040
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Total liabilities 8,438,779 8,210,084
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PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Distributions (103,950) (103,950)
Accumulated deficit (35,169) (34,517)
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(138,119) (137,467)
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Limited Partners-
Contributed capital, net of
related commissions, syndication
costs and interest (51,276 units
outstanding at March 31, 1997
and December 31, 1996) 21,875,852 21,875,852
Distributions (15,291,180) (15,291,180)
Accumulated deficit (3,244,821) (3,180,230)
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3,339,851 3,404,442
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Total partners' capital (deficit) 3,201,732 3,266,975
------------ ------------
Total liabilities and partners'
capital (deficit) $ 11,640,511 $ 11,477,059
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
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(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
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For The Three Months
Ended March 31,
-----------------------
1997 1996
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REVENUES $1,344,655 $1,753,490
COSTS AND EXPENSES:
Operating expenses 691,538 917,661
Management fees and allocated administrative
costs from the General Partner 146,028 206,912
Depreciation and amortization 406,109 717,582
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OPERATING INCOME (LOSS) 100,980 (88,665)
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OTHER INCOME (EXPENSE):
Interest expense (160,731) (252,958)
Other, net (5,492) (59)
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NET LOSS $ (65,243) $ (341,682)
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ALLOCATION OF NET LOSS:
General Partner $ (652) $ (3,417)
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Limited Partners $ (64,591) $ (338,265)
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NET LOSS PER LIMITED
PARTNER UNIT $(1.26) $(6.60)
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WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNER UNITS
OUTSTANDING 51,276 51,276
========== ==========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
--------------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
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For The Three Months
Ended March 31,
-------------------------
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (65,243) $(341,682)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 406,109 717,582
Decrease (increase) in trade accounts
receivable, net (11,986) 66,167
Increase in deposits, prepaid expenses and
other assets (34,277) (60,495)
Decrease in trade accounts payable and accrued
liabilities and subscriber prepayments
and deposits (47,647) (62,149)
Increase in advances from Jones Intercable, Inc. - 111,692
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Net cash provided by operating activities 246,956 431,115
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (235,355) (340,767)
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Net cash used in investing activities (235,355) (340,767)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 600,000 -
Repayment of borrowings (8,001) (11,138)
Decrease in accrued distributions (315,657) -
Distributions to partners - (315,657)
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Net cash provided by (used in) financing activities 276,342 (326,795)
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INCREASE (DECREASE) IN CASH 287,943 (236,447)
CASH, AT BEGINNING OF PERIOD 56,865 313,553
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CASH, AT END OF PERIOD $ 344,808 $ 77,106
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest Paid $ 158,595 $ 246,668
========= =========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES SPACELINK INCOME/GROWTH 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 Securities and
Exchange Commission 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 Spacelink Income/Growth Fund 1-A, Ltd. (the "Partnership") at March 31,
1997 and December 31, 1996 and its results of operations and cash flows for the
three month periods ended March 31, 1997 and 1996. Results of operations for
these periods are not necessarily indicative of results to be expected for the
full year.
The Partnership, a Colorado limited partnership, was formed on May 12,
1988, pursuant to a public offering of limited partner interests. Jones
Intercable, Inc. (the "General Partner"), a Colorado corporation, is the general
partner and manager of the Partnership. Intercable and certain of its
subsidiaries also own and operate cable television systems for their own account
and for the account of other managed limited partnerships.
The Partnership owns and operates the cable television systems serving
the areas in and around the communities of Bluffton, Decatur, Monroe, Auburn,
Butler, Uniondale, Waterloo and Garett, and the unincorporated areas of Wells,
Allen, Noble, Adams and DeKalb Counties, all in the State of Indiana (the
"Bluffton Systems"). The Partnership owned the cable television system serving
the communities of Lake Geneva and areas of Walworth County (the "Lake Geneva
System"), and the cable television system serving the communities of Ripon and
areas of Fond-du-Lac County (the "Ripon System"), all in the State of Wisconsin,
until their sale on April 11, 1996.
(2) The General Partner 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 paid to the General Partner by the Partnership for the three
month periods ended March 31, 1997 and 1996 were $67,233 and $87,675,
respectively.
The Partnership reimburses the General Partner and certain of its
subsidiaries for certain allocated general and administrative expenses. These
expenses represent the salaries and related benefits paid for corporate
personnel, office rent and related facilities expense. Such personnel provide
engineering, marketing, administrative, accounting, legal and investor relations
services to the Partnership. Such services, and their related costs, are
necessary to the operations of the Partnership and would have been incurred by
the Partnership if it was a stand alone entity. 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 Intercable is the general partner are also
allocated a proportionate share of these expenses. The General Partner believes
that the methodology used in allocating general and administrative costs is
reasonable. General and administrative expenses allocated to the Partnership by
the General Partner were $78,795 and $119,237 for the three month periods ended
March 31, 1997 and 1996.
(3) A primary objective of the Partnership is to provide quarterly cash
distributions to the partners, principally from cash flow from operations
remaining after principal and interest payments and the creation of any reserves
necessary for the operation of the Partnership. The Partnership suspended such
distributions to the partners in the first quarter of 1997 because the
Partnership had no borrowing capacity under its credit facility and needed funds
from cash flow to pay for capital additions. 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 reduce the financial flexibility of the Partnership.
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JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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FINANCIAL CONDITION
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For the three months ended March 31, 1997, the Partnership generated cash
from operating activities totaling $246,956, which is available to fund capital
expenditures and non-operating costs. During the first three months of 1997,
the Partnership purchased plant and equipment for its cable television systems
totaling approximately $235,000. Approximately 42 percent of these expenditures
was for service drops to homes. Approximately 31 percent was for the purchase
of equipment. Approximately 15 percent was for plant extensions. The remainder
of these expenditures was for various enhancements throughout the Bluffton
Systems. The capital expenditures were funded primarily from cash flow from
operations. Anticipated capital expenditures for the remainder of 1997 are
estimated to be approximately $770,000, and will be financed primarily from cash
on hand and cash flow from operations. It is estimated that approximately 36
percent of these expenditures will be for service drops to homes and
approximately 33 percent will be for plant extensions. These capital
expenditures are necessary to maintain the value of the Bluffton Systems.
At March 31, 1997, the Partnership had the maximum of $8,000,000
outstanding under its credit facility. This credit facility has a final
maturity date of December 31, 1997. The Partnership anticipates renegotiating
the credit facility prior to the final maturity date. Interest on the
outstanding principal balance is at the Partnership's option of the Prime Rate
plus 1/4 percent or the London Interbank Offered Rate plus 1-1/4 percent. The
effective interest rates on outstanding obligations as of March 31, 1997 and
1996 were 6.98 percent and 6.53 percent, respectively.
A primary objective of the Partnership is to provide quarterly cash
distributions to the partners, principally from cash flow from operations
remaining after principal and interest payments and the creation of any reserves
necessary for the operation of the Partnership. The Partnership suspended such
distributions to the partners in the first quarter of 1997 because the
Partnership had no borrowing capacity under its credit facility and needed funds
from cash flow to pay for capital additions. 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 reduces the financial flexibility of the Partnership.
The General Partner presently believes cash on hand and cash flow from
operations will be sufficient to fund capital expenditures and other liquidity
needs of the Partnership.
RESULTS OF OPERATIONS
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Revenues of the Partnership for the three months ended March 31, 1997
decreased $408,835, or approximately 23 percent, to $1,344,655 for the three
months ended March 31, 1997 from $1,753,490 for the similar period in 1996.
This decrease was due to the sale of the Lake Geneva and Ripon systems.
Disregarding the effect of the Lake Geneva and Ripon systems sale, revenues
would have increased $101,111, or approximately 8 percent, to $1,344,655 in 1997
from $1,243,544 in 1996. Basic service rate increases accounted for
approximately 52 percent of the increase in revenues for the three month period
ended March 31, 1997. Increases in the number of basic subscribers in the
Bluffton Systems accounted for approximately 37 percent of the increase in
revenues for the three month period ended March 31, 1997. The number of basic
subscribers in the Bluffton Systems totaled 14,471 at March 31, 1997 compared to
14,069 at March 31, 1996, an increase of 402, or approximately 3 percent. No
other individual factor significantly affected the increase in revenues.
Operating expenses consist primarily of costs associated with the
operation and 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 marketing expenses.
Operating expenses decreased $226,123, or approximately 25 percent, to
$691,538 for the three months ended March 31, 1997 from $917,661 for the
comparable period in 1996. This decrease was due to the sale of the Lake Geneva
7
and Ripon systems. Disregarding the effect of the Lake Geneva and Ripon systems
sale, operating expenses would have increased $48,247, or approximately 7
percent, to $691,538 in 1997 from $643,291 in 1996. This increase was primarily
the result of increases in programming costs. No other individual factor
significantly affected the increase in operating expenses for the periods
discussed.
The cable television industry generally measures the financial
performance of a cable television system in terms of operating cash flow
(revenues less operating expenses). 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 cash flow
decreased $182,712, or approximately 22 percent, to $653,117 for the three
months ended March 31, 1997 from $835,829 for the comparable period in 1996.
This decrease was due to the sale of the Lake Geneva and Ripon systems.
Disregarding the effect of the Lake Geneva and Ripon systems sale, operating
cash flow would have increased $52,863, or approximately 9 percent, to $653,117
for the three months ended March 31, 1997 from $600,253 for the comparable
period in 1996. This increase was due to the increase in revenues exceeding the
increase in operating expenses.
Management fees and allocated administrative costs from the General
Partner decreased $60,884, or approximately 29 percent, to $146,028 for the
quarter ended March 31, 1997 from $206,912 for the comparable period in 1996.
This decrease was due to the sale of the Lake Geneva and Ripon systems.
Disregarding the effect of the Lake Geneva and Ripon systems sale, management
fees and allocated administrative costs from the General Partner would have
increased $10,355, or approximately 8 percent, to $146,028 in 1997 from $135,673
in 1996. This increase was due to an increase in revenues, upon which such
management fees and allocations are based, and the timing of certain expenses
allocated from the General Partner.
Depreciation and amortization expense decreased $311,473, or
approximately 43 percent, to $406,109 for the quarter ended March 31, 1997 from
$717,582 for the comparable period in 1996. This decrease was due to the sale
of the Lake Geneva and Ripon systems. Disregarding the effect of the Lake
Geneva and Ripon systems sale, depreciation and amortization expense would have
increased $30,096, or approximately 8 percent, to $406,109 in 1997 from $376,013
in 1996. This increase was due to capital additions in 1997.
The Partnership reported operating income of $100,980 for the three
months ended March 31, 1997 compared to an operating loss of $88,665 for the
comparable period in 1996. Disregarding the effect of the Lake Geneva and Ripon
systems sale, the Partnership would have reported operating income of $100,980
in 1997 compared to $88,567 in 1996. This increase was due to the increase in
revenues exceeding the increases in operating expenses, management fees and
allocated administrative costs from the General Partner and depreciation and
amortization.
Interest expense decreased $92,227, or approximately 36 percent, to
$160,731 for the three months ended March 31, 1997 from $252,958 for the
comparable period in 1996. This decrease was primarily the result of lower
outstanding balances on interest bearing obligations. A portion of the proceeds
from the sale of the Lake Geneva and Ripon systems sale was used to repay a
portion of the outstanding loan balance.
Net loss decreased $276,439, or approximately 81 percent, to $65,243 for
the three months ended March 31, 1997 from $341,682 for the similar 1996 period.
This decrease was the result of the factors discussed above.
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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 SPACELINK INCOME/GROWTH FUND 1-A, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/Kevin P. Coyle
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Group Vice President/Finance
(Principal Financial Officer)
Dated: May 13, 1997
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