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 September 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) 792-9191
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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
------
September 30, December 31,
1997 1996
-------------- -------------
CASH $ 283,924 $ 56,865
TRADE RECEIVABLES, less allowance for
doubtful receivables of $13,393 and $5,425 at
September 30, 1997 and December 31, 1996, respectively 110,768 122,004
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 11,865,490 11,233,310
Less - accumulated depreciation (5,822,348) (5,174,077)
----------- -----------
6,043,142 6,059,233
Franchise costs and other intangible assets, net of
accumulated amortization of $8,928,059 and $8,374,039
at September 30, 1997 and December 31, 1996, respectively 4,639,936 5,193,956
----------- -----------
Total investment in cable television properties 10,683,078 11,253,189
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 157,165 45,001
----------- -----------
Total assets $11,234,935 $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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September 30, December 31,
1997 1996
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LIABILITIES:
Credit facility and capitalized lease
obligations $ 7,825,793 $ 7,467,645
Trade accounts payable and accrued liabilities 339,363 405,742
Accrued distributions to partners - 315,657
Subscriber prepayments and deposits 29,617 21,040
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Total liabilities 8,194,773 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 86,238 88,506
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(16,712) (14,444)
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Limited Partners -
Contributed capital, net of related commissions,
syndication costs and interest (51,276 units
outstanding at September 30, 1997 and
December 31, 1996) 21,875,852 21,875,852
Distributions (15,291,180) (15,291,180)
Accumulated deficit (3,527,798) (3,303,253)
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3,056,874 3,281,419
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Total partners' capital 3,040,162 3,266,975
------------ ------------
Total liabilities and partners'
capital (deficit) $ 11,234,935 $ 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
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For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------ ------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
REVENUES $1,367,344 $1,278,536 $4,118,279 $4,377,504
COSTS AND EXPENSES:
Operating expenses 688,352 649,031 2,118,284 2,414,532
Management fees and allocated administrative
costs from the General Partner 144,977 140,534 468,630 513,279
Depreciation and amortization 427,192 382,555 1,245,222 1,522,954
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) 106,823 106,416 286,143 (73,261)
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (170,846) (178,768) (498,120) (479,424)
Gain on sale of cable television system - - - 4,550,867
Other, net (1,700) (77,872) (14,836) (142,353)
---------- ---------- ---------- ----------
Total other income (expense), net (172,546) (256,640) (512,956) 3,929,090
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (65,723) $ (150,224) $ (226,813) $3,855,829
========== ========== ========== ==========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ (657) $ (1,502) $ (2,268) $ 161,582
========== ========== ========== ==========
Limited Partners $ (65,066) $ (148,722) $ (224,545) $3,694,247
========== ========== ========== ==========
NET INCOME (LOSS) PER LIMITED
PARTNER UNIT $(1.27) $(2.90) $(4.38) $72.05
========== ========== ========== ==========
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 Nine Months
Ended September 30,
--------------------------
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (226,813) $ 3,855,829
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,245,222 1,522,954
Gain on sale of cable television system - (4,550,867)
Decrease in trade accounts receivable, net 11,236 79,752
Increase in deposits, prepaid expenses and other assets (155,095) (94,095)
Decrease in trade accounts payable and accrued
liabilities and subscriber prepayments
and deposits (57,802) (170,283)
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Net cash provided by operating activities 816,748 643,290
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (632,180) (815,845)
Proceeds from sale of cable television system - 10,058,334
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Net cash provided by (used in) investing activities (632,180) 9,242,489
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 685,068 5,830,512
Repayment of borrowings (326,920) (10,039,645)
Decrease in accrued distributions (315,657) -
Distributions to partners - (5,937,500)
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Net cash provided by (used in) financing activities 42,491 (10,146,633)
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INCREASE (DECREASE) IN CASH 227,059 (260,854)
CASH, AT BEGINNING OF PERIOD 56,865 313,553
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CASH, AT END OF PERIOD $ 283,924 $ 52,699
========== ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest Paid $ 485,227 $ 525,015
========== ============
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
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(1) This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data includes
all adjustments, consisting only of normal recurring accruals, necessary to
present fairly the financial position of Jones Spacelink Income/Growth Fund 1-A,
Ltd. (the "Partnership") at September 30, 1997 and December 31, 1996, its
results of operations for the three and nine month periods ended September 30,
1997 and 1996 and its cash flows for the nine month periods ended September 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." 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 nine month
periods ended September 30, 1997 were $68,367 and $205,914, respectively,
compared to $63,927 and $218,875, respectively, for the three and nine month
periods ended September 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 $76,610 and $262,716 for the three and nine month
periods ended September 30, 1997, respectively, compared to $76,607 and $294,404
for the three and nine month periods ended September 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 payment of quarterly
operating cash flow distributions reduces the financial flexibility of the
Partnership. The Partnership accordingly has suspended such distributions
because funds from cash flow were used to pay for necessary capital additions to
the Partnership's Bluffton Systems as a result of limited borrowing capacity
under the Partnership's credit facility. The Partnership does not plan on
resuming such distributions to the partners.
(4) Certain prior year amounts have been reclassified to conform to the 1997
presentation.
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JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
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(A Limited Partnership)
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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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
Partnership's Bluffton Systems are being marketed for sale. There is no
assurance as to the timing or terms of any sales.
For the nine months ended September 30, 1997, the Partnership generated
cash from operating activities totaling $816,748, which is available to fund
capital expenditures and non-operating costs. During the first nine months of
1997, the Partnership purchased plant and equipment for its cable television
systems totaling approximately $632,000. Approximately 42 percent of these
expenditures was for service drops to homes. Approximately 26 percent was for
plant extensions. Approximately 12 percent was for the purchase of equipment.
The remainder of these expenditures was used to maintain the value of 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 $373,000, and will be financed primarily from
cash on hand and cash flow from operations. It is estimated that approximately
35 percent will be for plant extensions and approximately 30 percent of these
expenditures will be for service drops to homes. These capital expenditures are
necessary to maintain the value of the Bluffton Systems until they are sold.
At September 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 currently has a final maturity date of
December 31, 1997, although the General Partner is amending the credit facility
to extend the final maturity date to the earlier of June 30, 1998 or the date of
sale of the Bluffton Systems. 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 September 30, 1997 and 1996 were 6.98 percent and
6.75 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 payment of quarterly
operating cash flow distributions reduces the financial flexibility of the
Partnership. The Partnership accordingly has suspended such distributions
because funds from cash flow were used to pay for necessary capital additions to
the Partnership's Bluffton Systems as a result of limited borrowing capacity
under the Partnership's credit facility. The Partnership does not plan on
resuming such distributions to the partners.
Subject to the amendment of the credit facility, the General Partner
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 results of operations, through operating
income, pertains only to the results of operations for the Bluffton Systems for
all periods discussed.
Revenues for the three months ended September 30, 1997 increased $88,808,
or approximately 7 percent, to $1,367,344 compared to $1,278,536 for the
comparable period in 1996. Revenues increased $318,059, or approximately 8
percent, to $4,118,279 for the nine month period ended September 30, 1997 from
$3,800,220 for the comparable period in 1996. Basic service rate increases
accounted for approximately 53 percent and 45 percent, respectively, of the
increases in revenues for the three and nine month periods ended September 30,
1997. Increases in the number of basic service
7
subscribers accounted for approximately 47 percent and 37 percent, respectively,
of the increases in revenues for the three and nine month periods ended
September 30, 1997. The number of basic service subscribers increased 600, or
approximately 4 percent, to 14,995 at September 30, 1997 from 14,395 at
September 30, 1996. 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, professional fees, subscriber billing costs, rent for leased
facilities, cable system maintenance expenses and marketing expenses.
Operating expenses increased $39,321, or approximately 6 percent, to
$688,352 for the three months ended September 30, 1997 from $649,031 for the
comparable period in 1996. Operating expenses increased $118,142, or
approximately 6 percent, to $2,118,284 for the nine month period ended September
30, 1997 from $2,000,142 for the comparable period in 1996. Operating expenses
represented approximately 50 percent and 51 percent, respectively, of revenues
for the three and nine month periods of 1997 and approximately 51 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 nine month periods ended September 30, 1997.
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
$49,487, or approximately 8 percent, to $678,992 for the three months ended
September 30, 1997 from $629,505 for the comparable period in 1996. Operating
cash flow increased $199,917, or approximately 11 percent, to $1,999,995 for the
nine month period ended September 30, 1997 from $1,800,078 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 $4,443, or approximately 3 percent, to $144,977 for the three months
ended September 30, 1997 from $140,534 for the comparable period in 1996.
Management fees and allocated administrative costs from the General Partner
increased $28,806, or approximately 7 percent, to $468,630 for the nine month
period ended September 30, 1997 from $439,824 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 $44,637, or approximately
12 percent, to $427,192 for the quarter ended September 30, 1997 from $382,555
for the comparable period in 1996. Depreciation and amortization expense
increased $107,077, or approximately 9 percent, to $1,245,222 for the nine month
period ended September 30, 1997 from $1,138,145 for the comparable period in
1996. These increases were due to capital additions in 1996 and 1997.
Operating income increased $407, or less than 1 percent, to $106,823 for
the three months ended September 30, 1997 from $106,416 for the comparable
period in 1996. Operating income increased $64,034, or approximately 29
percent, to $286,143 for the nine months ended September 30, 1997 from $222,109
for the similar period in 1996. These increases were the result of the
increases in operating cash flow exceeding the increases in depreciation and
amortization expense.
Interest expense of the Partnership decreased $7,922, or approximately 4
percent, to $170,846 for the three months ended September 30, 1997 from $178,768
for the comparable period in 1996. The decrease was primarily the result of
lower outstanding balances on interest bearing obligations during the three
month periods. Interest expense increased $18,696, or approximately 4 percent,
to $498,120 for the nine month period ended September 30, 1997 from $479,424 for
the nine month period ended September 30, 1996. The increase for the nine month
period was primarily the result of higher outstanding balances on interest
bearing obligations.
The Partnership recognized a gain on the sales of the Lake Geneva System
and the Ripon System of $4,550,867 during the nine month period ended September
30, 1996. No similar gain was recognized during the comparable 1997 period.
8
Net loss decreased $23,835, or approximately 27 percent, to $65,723 for
the three months ended September 30, 1997 from $150,224 for the comparable 1996
period. This decrease was a result of the factors discussed above. The
Partnership reported a net loss of $226,813 for the nine month period ended
September 30, 1997 compared to net income of $3,855,829 for the comparable
period in 1996. This change was the result of the gain on the sales of the Lake
Geneva System and the Ripon System.
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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
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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: November 13, 1997
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