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.
-------------------
[ ] 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: 0-13807
CABLE TV FUND 12-B, LTD.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-0969999
- --------------------------------------------------------------------------------
State of organization I.R.S. 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
-----------------------------
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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CABLE TV FUND 12-B, LTD.
------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
June 30, December 31,
ASSETS 1997 1996
------ ------------ ------------
CASH $ 55,348 $ 55,348
------------ ------------
Total assets $ 55,348 $ 55,348
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
LIABILITIES:
Loss in excess of investment in cable
television joint venture $ 2,297,917 $ 2,151,657
------------ ------------
Total liabilities 2,297,917 2,151,657
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Distributions (14,782,875) (14,782,875)
Accumulated earnings 14,591,084 14,592,547
------------ ------------
(190,791) (189,328)
------------ ------------
Limited Partners-
Net contributed capital (111,035 units
outstanding at June 30, 1997 and
December 31, 1996) 47,645,060 47,645,060
Distributions (99,879,837) (99,879,837)
Accumulated earnings 50,182,999 50,327,796
------------ ------------
(2,051,778) (1,906,981)
------------ ------------
Total liabilities and
partners' capital (deficit) $ 55,348 $ 55,348
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
CABLE TV FUND 12-B, LTD.
------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- ------------------------
1997 1996 1997 1996
-------- --------- --------- ----------
EQUITY IN NET INCOME (LOSS) OF CABLE
TELEVISION JOINT VENTURE $(58,072) $(229,122) $(146,260) $5,890,592
-------- --------- --------- ----------
NET INCOME (LOSS) $(58,072) $(229,122) $(146,260) $5,890,592
======== ========= ========= ==========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ (581) $ 63,932 $ (1,463) $ 58,906
======== ========= ========= ==========
Limited Partners $(57,491) $(293,054) $(144,797) $5,831,686
======== ========= ========= ==========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (.51) $ (2.64) $ (1.30) $ 52.52
======== ========= ========= ==========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 111,035 111,035 111,035 111,035
======== ========= ========= ==========
The accompanying notes to unaudited financial statements
are an integral part of these statements.
3
CABLE TV FUND 12-B, LTD.
------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
For the Six Months Ended
June 30,
--------------------------
1997 1996
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(146,260) $ 6,323,677
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Decrease in closing adjustment receivable - 1,064,238
Equity in net (income) loss of cable television
joint venture 146,260 (6,323,677)
---------- -----------
Net cash provided by operating activities - 1,064,238
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distribution from cable television venture - 5,049,000
---------- -----------
Net cash provided by investing activities - 5,049,000
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Limited Partners - (4,700,462)
Distribution to General Partner - (1,562,250)
---------- -----------
Net cash used in financing activities - (6,262,712)
---------- -----------
Decrease in cash - (149,474)
Cash, beginning of period 55,348 204,822
---------- -----------
Cash, end of period $ 55,348 $ 55,348
========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ - $ -
========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
CABLE TV FUND 12-B, 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 Cable TV Fund 12-B, Ltd. (the
"Partnership") at June 30, 1997 and December 31, 1996, its results of operations
for the three and six months 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 owns no properties directly. The Partnership owns a 9
percent interest in Cable TV Fund 12-BCD Venture (the "Venture"). The Venture
owns and operates the cable television systems serving certain areas in and
around Albuquerque, New Mexico (the "Albuquerque System") and Palmdale,
California (the "Palmdale System"). The Venture sold the cable television
system serving the areas in and around Tampa, Florida (the "Tampa System") on
February 28, 1996.
(2) On July 28, 1997, the Venture entered into a purchase and sale agreement to
sell the Albuquerque System to the General Partner for a sales price of
$222,963,267, which price represents the average of three separate independent
appraisals of the fair market value of the Albuquerque System. The closing of
this sale is subject to a number of conditions, including the approval of the
holders of a majority of the limited partnership interests in each of the three
partnerships that comprise the Venture and necessary governmental and other
third party consents. Closing is expected to occur during the first quarter of
1998. Upon the consummation of the sale of the Albuquerque System, the Venture
must repay its outstanding Senior Notes balance of $51,436,531 plus a make whole
premium and, subject to an amendment to the Venture's credit facility, it will
repay approximately $40,000,000 of the then outstanding balance of its credit
facility. The Venture then anticipates, again subject to an amendment to the
Venture's credit facility, making a distribution of approximately $125,000,000
to the Venture's partners. The Partnership's portion of this distribution would
be approximately $11,474,475, of which approximately $8,605,856 would be
distributed to the limited partners and approximately $2,868,619 would be
distributed to the General Partner. This distribution of the Albuquerque
System's sale proceeds will give the Partnership's limited partners an
approximate return of $155 for each $1,000 invested in the Partnership. Taking
into account the 1995 distribution made on the sale of the Augusta System, the
1996 distribution made on the sale of the Tampa System and the anticipated
distribution to be made on the sale of the Albuquerque System in 1998, the
limited partners will have received a total of $1,954 for each $1,000 invested
in the Partnership.
(3) Jones Intercable, Inc., a publicly held Colorado corporation (the "General
Partner"), 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 paid by the Venture
to the General Partner during the three and six month periods ended June 30,
1997 attributable to the Partnership's 9 percent interest in the Venture were
$97,027 and $187,501, respectively, compared to $89,200 and $197,273,
respectively, for the comparable periods in 1996.
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. Such services, and their related costs, are necessary to the operation
of the Venture and would have been incurred by the Venture if it was a stand
alone entity. Allocations of personnel costs are primarily based on actual time
spent by employees of the General Partner with respect to each partnership
managed. Remaining overhead costs 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. Amounts charged the Venture by the General Partner for allocated
overhead and administrative expenses during the three and six month periods
ended June 30, 1997 attributable to the Partnership's 9 percent interest in the
Venture were $96,664 and $218,804, respectively, compared to $122,102 and
$269,081, respectively, for the comparable periods in 1996.
5
See Note 4 for disclosure of the total management fees and allocated
overhead and administrative expenses paid by the Venture.
(4) Summarized financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
------------------------
ASSETS June 30, 1997 December 31, 1996
------ -------------- ------------------
Cash and accounts receivable $ 6,273,875 $ 4,191,019
Investment in cable television properties 113,043,796 113,671,437
Other assets 4,833,665 3,036,880
------------- -------------
Total assets $ 124,151,336 $ 120,899,336
============= =============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Debt $ 142,024,854 $ 138,345,878
Payables and accrued liabilities 6,111,212 4,944,940
Partners' contributed capital 135,490,944 135,490,944
Accumulated deficit (104,475,674) (102,882,426)
Distributions (55,000,000) (55,000,000)
------------- -------------
Total liabilities and partners' capital $ 124,151,336 $ 120,899,336
============= =============
6
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended For the Six Months Ended
June 30, June 30,
----------------------------- ----------------------------
1997 1996 1997 1996
-------------- ------------- ------------- -------------
Revenues $ 21,138,684 $ 19,433,518 $ 40,849,909 $ 42,978,838
Operating expenses (11,733,343) (11,682,207) (22,687,208) (26,423,632)
Management fees and
allocated overhead
from General Partner (2,109,915) (2,301,759) (4,425,981) (5,080,107)
Depreciation and
amortization (4,866,372) (5,141,927) (9,664,919) (11,260,963)
------------ ------------ ------------ ------------
Operating income 2,429,054 307,625 4,071,801 214,136
Interest expense, net (2,729,243) (2,713,581) (5,420,505) (5,874,774)
Gain on sale of cable
television system - - - 71,914,391
Other, net (332,410) (94,909) (244,544) 130,745
------------ ------------ ------------ ------------
Net income (loss) $ (632,599) $ (2,500,865) $ (1,593,248) $ 66,170,362
============ ============ ============ ============
Management fees paid to Jones Intercable, Inc. by the Venture totaled
$1,056,934 and $2,042,495, respectively, for the three and six month periods
ended June 30, 1997, and $971,676 and $2,148,942, respectively, for the
comparable periods in 1996. Reimbursements for overhead and administrative
expenses paid to Jones Intercable, Inc. by the Venture totaled $1,052,981 and
$2,383,486, respectively, for the three and six month periods ended June 30,
1997, and $1,330,083 and $2,931,165, respectively, for the comparable periods in
1996.
7
CABLE TV FUND 12-B, LTD.
------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
It is the General Partner's publicly announced policy that it intends to
liquidate its managed partnerships, including the Partnership, as opportunities
for sales of partnership cable television systems arise in the marketplace over
the next several years. In accordance with the General Partner's policy, the
Venture has entered into a purchase and sale agreement to sell the Albuquerque
System. No specific dates or terms have yet been set for the sale of the
Palmdale System.
On July 28, 1997, the Venture entered into a purchase and sale agreement to
sell the Albuquerque System to the General Partner for a sales price of
$222,963,267, which price represents the average of three separate independent
appraisals of the fair market value of the Albuquerque System. The closing of
this sale is subject to a number of conditions, including the approval of the
holders of a majority of the limited partnership interests in each of the three
partnerships that comprise the Venture and necessary governmental and other
third party consents. Closing is expected to occur during the first quarter of
1998. Upon the consummation of the sale of the Albuquerque System, the Venture
must repay its outstanding Senior Notes balance of $51,436,531 plus a make whole
premium and, subject to an amendment to the Venture's credit facility, it will
repay approximately $40,000,000 of the then outstanding balance of its credit
facility. The Venture then anticipates, again subject to an amendment to the
Venture's credit facility, making a distribution of approximately $125,000,000
to the Venture's partners. The Partnership's portion of this distribution would
be approximately $11,474,475, of which approximately $8,605,856 would be
distributed to the limited partners and approximately $2,868,619 would be
distributed to the General Partner. This distribution of the Albuquerque
System's sale proceeds will give the Partnership's limited partners an
approximate return of $155 for each $1,000 invested in the Partnership. Taking
into account the 1995 distribution made on the sale of the Augusta System, the
1996 distribution made on the sale of the Tampa System and the anticipated
distribution to be made on the sale of the Albuquerque System in 1998, the
limited partners will have received a total of $1,954 for each $1,000 invested
in the Partnership.
The Partnership owns a 9 percent interest in the Venture. The
Partnership's investment in the Venture is accounted for under the equity
method. The Partnership's share of losses generated by the Venture have
exceeded the Partnership's initial investment in the Venture; therefore, the
investment is classified as a liability. The Partnership expects to recover
such losses upon the sale of the Albuquerque System and the Palmdale System.
This liability increased by $146,260, which represents the Partnership's share
of losses generated by the Venture for the six months ended June 30, 1997.
For the six months ended June 30, 1997, the Venture generated net cash from
operating activities totaling $6,209,233, which was available to fund capital
expenditures and non-operating costs. Capital expenditures for the Venture
totaled approximately $8,633,000 during the first six months of 1997. Service
drops to homes accounted for approximately 40 percent of the capital
expenditures. New plant construction accounted for approximately 31 percent of
the capital expenditures. The purchase of converters accounted for
approximately 11 percent of the capital expenditures. The remaining
expenditures related to various system enhancements. These capital expenditures
were funded primarily from cash on hand, cash generated from operations and
borrowings from the Venture's credit facility. Expected capital expenditures
for the remainder of 1997 are approximately $11,656,000. Service drops to homes
are anticipated to account for approximately 56 percent. Plant rebuild is
anticipated to account for approximately 15 percent. Approximately 7 percent of
budgeted capital expenditures is for new plant construction. The remainder of
the expenditures is for various system enhancements in all of the Venture's
systems. Funding for these expenditures is expected to be provided by cash on
hand, cash generated from operations and borrowings from the Venture's credit
facility. As a result of the pending sale of the Albuquerque System, remaining
budgeted capital expenditures for the Albuquerque System for 1997 will be only
for various enhancements necessary to maintain the value of the Albuquerque
System until it is sold.
The Venture's debt arrangements at June 30, 1997 consisted of $51,436,531
of Senior Notes placed with a group of institutional lenders and a $120,000,000
credit facility with a group of commercial bank lenders. The Senior Notes and
the credit facility are equal in standing with the other, and both are equally
secured by the assets of the Venture.
8
The Senior Notes have a fixed interest rate of 8.64 percent and a final
maturity date of March 31, 2000. The Senior Notes require payments of interest
and accelerating principal through maturity, payable semi-annually in March and
September. A principal payment of $3,956,656 was made in March 1997. A
principal payment of approximately $3,956,656 is due in September 1997 and is
expected to be funded from cash on hand, cash generated from operations and
borrowings from the Venture's credit facility. Upon the sale of the Albuquerque
System, the Senior Notes will be repaid in full together with a make whole
premium.
The balance outstanding on the Venture's $120,000,000 credit facility at
June 30, 1997 was $89,630,620, leaving $30,369,380 available for future needs.
Upon the sale of the Albuquerque System and subject to an amendment to the
Venture's credit facility, the Venture anticipates repaying approximately
$40,000,000 of the then outstanding balance of the credit facility and that
there will be a reduction in the maximum amount available for borrowing. At the
Venture's option, the credit facility will be payable in full on December 31,
1999 or will convert to a term loan that matures on December 31, 2004 payable in
consecutive quarterly amounts. Interest on the credit facility is at the
Venture's option of the London Interbank Offered Rate plus 1.125 percent, the
Prime Rate plus .125 percent or the Certificate of Deposit Rate plus 1.25
percent. The effective interest rates on amounts outstanding on the Venture's
credit facility as of June 30, 1997 and 1996 were 7.61 percent and 7.62 percent,
respectively.
The Venture has sufficient sources of capital available through its ability
to generate cash from operations and borrowings under its credit facility to
meet its presently anticipated needs.
RESULTS OF OPERATIONS
- ---------------------
As a result of the sale of the Tampa System in February 1996, the following
discussion of the Venture's results of operations, through operating income,
pertains only to the results of operations of the Albuquerque System and the
Palmdale System for all periods discussed.
Revenues in the Albuquerque System and the Palmdale System increased
$1,705,166, or approximately 9 percent, to $21,138,684 for the three months
ended June 30, 1997 from $19,433,518 for the comparable period in 1996.
Revenues increased $2,756,262, or approximately 7 percent, to $40,849,909 for
the six months ended June 30, 1997 from $38,093,647 for the comparable period in
1996. These increases in revenues were due primarily to basic service rate
increases, an increase in basic subscribers and an increase in pay per view
revenues. Basic service rate increases accounted for approximately 46 percent
and 51 percent of the increase in revenues for the three and six months ended
June 30, 1997. The increase in the number of basic subscribers accounted for
approximately 12 percent and 20 percent of the increases in revenues for the
three and six months ended June 30, 1997. The increase in pay per view revenues
accounted for approximately 26 percent and 18 percent of the increase in
revenues for the three and six months ended June 30, 1997. No other individual
factor significantly affected the increase in revenues.
Operating expenses consist primarily of costs associated with the operation
and 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 marketing expenses.
Operating expenses in the Albuquerque System and the Palmdale System
increased $51,136, or less than 1 percent, to $11,733,343 for the three months
ended June 30, 1997 from $11,682,207 for the comparable period in 1996.
Operating expenses increased $632,040, or approximately 3 percent, to
$22,687,208 for the six months ended June 30, 1997 from $22,055,168 for the
comparable period in 1996. Operating expenses represented 56 percent of
revenues for the three and six months ended June 30, 1997 and 59 percent and 58
percent, respectively, of revenues for the three and six months ended June 30,
1996. The increases in operating expenses were primarily due to increases in
programming costs. No other individual factor contributed significantly to the
increase in operating expenses.
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
$1,654,030, or approximately 21 percent, to $9,405,341 for the three months
ended June 30, 1997 from $7,751,311 for the comparable period in 1996.
Operating cash flow increased $2,124,222, or approximately 13 percent,
9
to $18,162,701 for the six months ended June 30, 1997 from $16,038,479 for the
comparable period in 1996. These increases were due to the increases in revenues
exceeding the increases in operating expenses.
Management fees and allocated overhead from the General Partner decreased
$191,844, or approximately 8 percent, to $2,109,915 for the three months ended
June 30, 1997 from $2,301,759 for the comparable period in 1996. Management
fees and allocated overhead from the General Partner decreased $77,269, or
approximately 2 percent, to $4,425,981 for the six months ended June 30, 1997
from $4,503,250 for the comparable period in 1996. These decreases were
primarily due to decreases in allocated overhead from the General Partner, which
was partially offset by an increase in management fees.
Depreciation and amortization expense decreased $275,555, or approximately
5 percent, to $4,866,372 for the three months ended June 30, 1997 from
$5,141,927 for the comparable period in 1996. Depreciation and amortization
expense decreased $604,306, or approximately 6 percent, to $9,664,919 for the
six months ended June 30, 1997 from $10,269,225 for the comparable period in
1996. These decreases were due to the maturation of the Venture's asset base.
The Venture recognized operating income of $2,429,054 for the three months
ended June 30, 1997 compared to $307,625 for the comparable period in 1996. The
Venture recognized operating income of $4,071,801 for the six months ended June
30, 1997 compared to $1,266,004 for the comparable period in 1996. These
increases were due to the increases in revenues and the decreases in
depreciation and amortization expense and management fees and allocated overhead
from the General Partner exceeding the increases in operating expenses.
Interest expense increased $15,662, or less than 1 percent, to $2,729,243
for the three months ended June 30, 1997 from $2,713,581 for the comparable
period in 1996. Interest expense decreased $454,269, or approximately 8
percent, to $5,420,505 for the six months ended June 30, 1997 from $5,874,774
for the comparable period in 1996. This decrease was primarily due to lower
outstanding balances on the Venture's interest bearing obligations.
The Venture recognized a gain of $71,914,391 related to the sale of the
Tampa System in February 1996. No similar gain was recognized in the first six
months of 1997.
The Venture reported a net loss of $477,878 for the three months ended June
30, 1997 compared to $1,889,153 for the comparable period in 1996. This change
was a result of the factors discussed above. The Venture reported a net loss of
$1,203,571 for the six months ended June 30, 1997 compared to net income of
$50,146,850 for the comparable period in 1996. This change was due to the
Venture reporting a gain on the sale of the Tampa System during the six months
ended June 30, 1996, while no similar gain was recognized for the comparable
1997 period.
10
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
11
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.
CABLE TV FUND 12-B, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
-----------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: August 13, 1997
12