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, 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) 792-3111
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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
------------------------
June 30, December 31,
ASSETS 1997 1996
------ ------------ ------------
CASH $ 109,135 $ 56,865
TRADE RECEIVABLES, less allowance for
doubtful receivables of $9,745 and $5,425 at
June 30, 1997 and December 31, 1996, respectively 125,199 122,004
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 11,674,592 11,233,310
Less - accumulated depreciation (5,595,383) (5,174,077)
----------- -----------
6,079,209 6,059,233
Franchise costs and other intangible assets, net of
accumulated amortization of $8,743,386 and $8,374,039
at June 30, 1997 and December 31, 1996, respectively 4,824,609 5,193,956
----------- -----------
Total investment in cable
television properties 10,903,818 11,253,189
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 102,890 45,001
----------- -----------
Total assets $11,241,042 $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.
--------------------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
June 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1997 1996
------------------------------------------- ------------ ------------
LIABILITIES:
Credit facility and capitalized lease
obligations $ 7,815,803 $ 7,467,645
Trade accounts payable and accrued liabilities 289,545 405,742
Accrued distributions to partners - 315,657
Subscriber prepayments and deposits 29,809 21,040
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Total liabilities 8,135,157 8,210,084
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PARTNERS' CAPITAL (DEFICIT):
General Partner -
Contributed capital 1,000 1,000
Distributions (103,950) (103,950)
Accumulated earnings 86,895 88,506
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(16,055) (14,444)
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Limited Partners -
Contributed capital, net of related commissions, syndication
costs and interest (51,276 units outstanding at
June 30, 1997 and December 31, 1996) 21,875,852 21,875,852
Distributions (15,291,180) (15,291,180)
Accumulated deficit (3,462,732) (3,303,253)
------------ ------------
3,121,940 3,281,419
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Total partners' capital (deficit) 3,105,885 3,266,975
------------ ------------
Total liabilities and partners'
capital (deficit) $ 11,241,042 $ 11,477,059
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
--------------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------------ -----------------------
1997 1996 1997 1996
----------- ----------- ----------- ----------
REVENUES $1,406,280 $1,345,478 $2,750,935 $3,098,968
COSTS AND EXPENSES:
Operating expenses 738,394 847,840 1,429,932 1,765,501
Management fees and allocated administrative
costs from the General Partner 177,625 165,833 323,653 372,745
Depreciation and amortization 411,921 422,817 818,030 1,140,399
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) 78,340 (91,012) 179,320 (179,677)
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (166,543) (47,698) (327,274) (300,656)
Gain on sale of cable television system - 4,550,867 - 4,550,867
Other, net (7,644) (64,422) (13,136) (64,481)
---------- ---------- ---------- ----------
Total other income (expense), net (174,187) 4,438,747 (340,410) 4,185,730
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (95,847) $4,347,735 $ (161,090) $4,006,053
========== ========== ========== ==========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ (959) $ 166,501 $ (1,611) $ 163,084
========== ========== ========== ==========
Limited Partners $ (94,888) $4,181,234 $ (159,479) $3,842,969
========== ========== ========== ==========
NET INCOME (LOSS) PER LIMITED
PARTNER UNIT $ (1.85) $ 81.55 $ (3.11) $ 74.95
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNER UNITS
OUTSTANDING 51,276 51,276 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 Six Months
Ended June 30,
-----------------------
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(161,090) $ 4,006,053
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 818,030 1,140,399
Gain on sale of cable television system - (4,550,867)
Decrease (increase) in trade receivables, net (3,195) 89,781
Increase in deposits, prepaid expenses and other assets (85,266) (61,666)
Decrease in trade accounts payable, accrued
liabilities and subscriber prepayments
and deposits (107,428) (125,053)
Increase in advances from Jones Intercable, Inc. - 32,860
--------- ------------
Net cash provided by operating activities 461,051 531,507
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (441,282) (655,774)
Proceeds from sale of cable television system - 10,058,334
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Net cash provided by (used in) investing activities (441,282) 9,402,560
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 666,717 5,530,512
Repayment of borrowings (318,559) (10,031,644)
Decrease in accrued distributions (315,657) -
Distributions to partners - (5,631,314)
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Net cash provided by (used in) financing activities 32,501 (10,132,446)
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INCREASE (DECREASE) IN CASH 52,270 (198,379)
CASH, BEGINNING OF PERIOD 56,865 313,553
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CASH, END OF PERIOD $ 109,135 $ 115,174
========= ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 318,493 $ 345,853
========= ============
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)
NOTES TO UNAUDITED 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 Spacelink Income/Growth Fund 1-A,
Ltd. (the "Partnership") at June 30, 1997 and December 31, 1996, its results of
operations for the three and six month periods ended June 30, 1997 and 1996 and
its cash flows for the six month periods ended June 30, 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. ("Intercable"), a Colorado corporation, is the "General
Partner" and manages 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 5 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 and six month
periods ended June 30, 1997 were $70,314 and $137,547, respectively, compared to
$67,273 and $154,948, respectively, for the three and six month periods ended
June 30, 1996.
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 $107,311 and $186,106 for the three and six month
periods ended June 30, 1997, respectively, compared to $98,560 and $217,797 for
the three and six month periods ended June 30, 1996, respectively.
(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 and second quarters of 1997 because
the Partnership needed funds from cash flow to pay for capital additions. The
Partnership does not plan on resuming distributions in the near future. 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
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
FINANCIAL CONDITION
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For the six months ended June 30, 1997, the Partnership generated cash from
operating activities totaling $461,051, which is available to fund capital
expenditures and non-operating costs. During the first six months of 1997, the
Partnership purchased plant and equipment for its cable television systems
totaling approximately $441,000. Approximately 41 percent of these expenditures
was for service drops to homes. Approximately 22 percent was for plant
extensions. Approximately 16 percent was for the purchase of equipment. The
remainder of these expenditures was for various enhancements throughout the
Bluffton Systems. These capital expenditures were funded primarily from cash
flow from operations. Anticipated capital expenditures for the remainder of
1997 are estimated to be approximately $564,000, and will be financed primarily
from cash on hand and cash flow from operations. It is estimated that
approximately 35 percent of these expenditures will be for service drops to
homes and approximately 35 percent will be for plant extensions. These capital
expenditures are necessary to maintain the value of the Bluffton Systems.
At June 30, 1997, $7,700,000 was outstanding under the Partnership's
$8,000,000 credit facility, leaving $300,000 available for future needs of the
Partnership. 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 June 30, 1997 and 1996 were 7.06 percent and 6.77
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 and second quarter of 1997 because
the Partnership 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 as long as cash distributions are not resumed.
RESULTS OF OPERATIONS
- ---------------------
As a result of the sale of the Lake Geneva System and the Ripon System in
April 1996, the following discussion of the Partnership's results of operations,
through operating income, pertains only to the results of operations for the
Bluffton Systems for all periods discussed.
Revenues of the Partnership for the three months ended June 30, 1997
increased $128,141, or approximately 10 percent, to $1,406,281 compared to
$1,278,140 for the comparable period in 1996. Revenues of the Partnership
increased $229,252, or approximately 9 percent, to $2,750,936 for the six month
period ended June 30, 1997 from $2,521,684 for the comparable period in 1996.
Basic service rate increases accounted for approximately 36 percent and 42
percent, respectively, of the increases in revenues for the three and six month
periods ended June 30, 1997. Increases in the number of basic service
subscribers accounted for approximately 28 percent and 32 percent, respectively,
of the increases in revenues for the three and six month periods ended June 30,
1997. The number of basic service subscribers increased 645, or approximately 5
percent, to 14,963 at June 30, 1997 from 14,318 at June 30, 1996. Increases in
advertising revenues accounted for approximately 22 percent and 23 percent,
respectively, of the increase in revenues for the three and six month periods
ended June 30, 1997. No other individual factor had a significant effect on the
increases 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,
7
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and marketing expenses.
Operating expenses increased $48,641, or approximately 7 percent, to
$738,395 for the three months ended June 30, 1997 from $689,754 for the
comparable period in 1996. Operating expenses increased $96,888, or
approximately 7 percent, to $1,429,933 for the six month period ended June 30,
1997 from $1,333,045 for the comparable period in 1996. Operating expenses
represented approximately 53 percent and 52 percent, respectively, of revenues
for the three and six month periods of 1997 and approximately 54 percent and 53
percent, respectively, for the comparable 1996 periods. These increases were
primarily the result of increases in programming costs and advertising sales
related expenses for the three and six month periods ended June 30, 1997.
Increases in programming costs were primarily due to the increase in the number
of basic subscribers. No other individual factor significantly affected the
increases 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 increased
$79,500, or approximately 14 percent, to $667,886 for the three months ended
June 30, 1997 from $588,386 for the comparable period in 1996. Operating cash
flow increased $132,364, or approximately 11 percent, to $1,321,003 for the six
month period ended June 30, 1997 from $1,188,639 for the similar 1996 period.
These increases were due to the increases in revenues exceeding the increases in
operating expenses.
Management fees and allocated administrative costs from the General Partner
increased $14,008, or approximately 9 percent, to $177,625 for the three months
ended June 30, 1997 from $163,617 for the comparable period in 1996. Management
fees and allocated administrative costs from the General Partner increased
$24,363, or approximately 8 percent, to $323,653 for the six month period ended
June 30, 1997 from $299,290 for the similar period in 1996. These increases
were due to the 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 increased $32,312, or approximately 9
percent, to $411,921 for the quarter ended June 30, 1997 from $379,609 for the
comparable period in 1996. Depreciation and amortization expense increased
$62,408, or approximately 8 percent, to $818,030 for the six month period ended
June 30, 1997 from $755,622 for the comparable period in 1996. These increases
were due to capital additions in 1996 and 1997.
Operating income increased $33,180, or approximately 73 percent, to $78,340
for the three months ended June 30, 1997 from $45,160 for the comparable period
in 1996. Operating income increased $45,593, or approximately 34 percent, to
$179,320 for the six months ended June 30, 1997 from $133,727 for the similar
period in 1996. These increases were the result of the increases in revenues
exceeding the increases in operating expenses, management fees and allocated
administrative expenses from the General Partner and depreciation and
amortization.
Interest expense increased $130,107 to $166,543 for the three months ended
June 30, 1997 from $36,436 for the comparable period in 1996. Interest expense
increased $38,719, or approximately 13 percent, to $327,274 for the six month
period ended June 30, 1997 from $288,555 for the six month period ended June 30,
1996. These increases were primarily the result of higher outstanding balances
on interest bearing obligations and higher effective interest rates.
The Partnership recorded a net loss of $95,847 for the three months ended
June 30, 1997 compared to net income of $14,649 for the comparable 1996 period.
Net loss increased $5,492, or approximately 4 percent, to $161,090 for the six
month period ended June 30, 1997 from $155,598 for the comparable period in
1996. These changes were the result of 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
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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: August 12, 1997
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