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, 1998.
--------------
or
[_] 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 0-15378
CABLE TV FUND 14-A, LTD.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-1024657
- --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D. #
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
------------------------------------------------------------------------
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
----- -----
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
March 31, December 31,
ASSETS 1998 1997
------ ------------- -------------
CASH $ 167,649 $ 363,032
TRADE RECEIVABLES, less allowance for doubtful receivables of
$76,198 and $85,436 at March 31, 1998 and December 31, 1997,
respectively 1,180,061 931,372
DISTRIBUTION RECEIVABLE FROM JOINT VENTURE 25,484,569 -
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 87,433,172 86,431,357
Less- accumulated depreciation (51,860,389) (50,186,043)
------------ ------------
35,572,783 36,245,314
Franchise costs and other intangible assets, net of accumulated
amortization of $12,150,291 and $11,920,332 at March 31, 1998
and December 31, 1997, respectively 2,231,083 2,461,042
Investment in cable television joint venture - 3,337,731
------------ ------------
Total investment in cable television properties 37,803,866 42,044,087
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 1,599,732 1,644,310
------------ ------------
Total assets $ 66,235,877 $ 44,982,801
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1998 1997
------------------------------------------ ------------- -------------
LIABILITIES:
Debt $ 23,488,050 $ 22,773,095
General Partner advances - 489,313
Accrued distributions to limited partners 25,484,569 -
Trade accounts payable and accrued liabilities 2,024,572 2,440,724
Subscriber prepayments 89,266 84,154
Loss in excess of investment in cable television joint venture 130,051 -
------------ ------------
Total liabilities 51,216,508 25,787,286
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (1,000) (73,389)
------------ ------------
- (72,389)
------------ ------------
Limited Partners-
Net contributed capital (160,000 units outstanding
at March 31, 1998 and December 31, 1997) 68,722,000 68,722,000
Accumulated earnings (deficit) 6,329,438 (14,906,596)
Distributions (60,032,069) (34,547,500)
------------ ------------
15,019,369 19,267,904
------------ ------------
Total liabilities and partners' capital (deficit) $ 66,235,877 $ 44,982,801
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended
March 31,
-----------------------------
1998 1997
-------------- -------------
REVENUES $ 5,636,706 $ 7,770,411
COSTS AND EXPENSES:
Operating expenses 3,531,408 4,525,488
Management fees and allocated overhead from General Partner 608,211 915,785
Depreciation and amortization 1,957,957 2,822,180
----------- -----------
OPERATING LOSS (460,870) (493,042)
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (415,412) (617,003)
Gain on sale of cable television system - 62,923,951
Other, net 167,918 (1,205,647)
----------- -----------
Total other income (expense) (247,494) 61,101,301
----------- -----------
INCOME (LOSS) BEFORE EQUITY IN NET INCOME (LOSS)
OF CABLE TELEVISION JOINT VENTURE (708,364) 60,608,259
EQUITY IN NET INCOME (LOSS) OF CABLE TELEVISION
JOINT VENTURE 22,016,787 (161,132)
----------- -----------
NET INCOME $21,308,423 $60,447,127
=========== ===========
ALLOCATION OF NET INCOME:
General Partner $ 72,389 $ 751,384
=========== ===========
Limited Partners $21,236,034 $59,695,743
=========== ===========
NET INCOME PER LIMITED PARTNERSHIP UNIT $132.73 $373.10
=========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 160,000 160,000
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
For the Three Months Ended
March 31,
----------------------------
1998 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 21,308,423 $ 60,447,127
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 1,957,957 2,822,180
Gain on sale of cable television system - (62,923,951)
Equity in net loss (income) of cable television joint venture (22,016,787) 161,132
Decrease (increase) in trade receivables (248,689) 603,452
Increase in deposits, prepaid expenses and deferred charges (9,074) (252,447)
Decrease in trade accounts payable and accrued liabilities and
subscriber prepayments (411,040) (903,674)
Decrease in General Partner advances (489,313) (352,232)
------------ ------------
Net cash provided by (used in) operating activities 91,477 (398,413)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (1,001,815) (1,116,691)
Proceeds from sale of cable television system, net of brokerage fee - 82,387,500
Increase in distribution receivable from Joint Venture (25,484,569) -
Distribution from Joint Venture 25,484,569 -
------------ ------------
Net cash provided by (used in) investing activities (1,001,815) 81,270,809
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 750,000 32,300,000
Repayment of debt (35,045) (84,922,157)
Distributions to limited partners (25,484,569) (25,000,000)
Increase in accrued distributions to limited partners 25,484,569 -
------------ ------------
Net cash provided by (used in) financing activities 714,955 (77,622,157)
------------ ------------
Increase (decrease) in cash (195,383) 3,250,239
Cash, beginning of period 363,032 1,257,022
------------ ------------
Cash, end of period $ 167,649 $ 4,507,261
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 404,407 $ 1,276,471
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
CABLE TV FUND 14-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 complete 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 14-A, Ltd.
(the "Partnership") at March 31, 1998 and December 31, 1997 and its results of
operations and cash flows for the three month periods ended March 31, 1998 and
1997. Results of operations for these periods are not necessarily indicative of
results to be expected for the full year.
The Partnership owns and operates the cable television systems serving the
areas in and around Buffalo, Minnesota, Naperville, Illinois and Calvert County,
Maryland. In addition, the Partnership owns a 27 percent interest in the Cable
TV Fund 14-A/B Venture (the "Venture"). The Venture owned and operated the
cable television system serving certain areas in Broward County, Florida (the
"Broward System") until its sale on March 31, 1998. See Note 3.
(2) Jones Intercable, Inc., a publicly held Colorado corporation, is the
"General Partner" and 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 for the three month periods ended March 31, 1998 and 1997 (excluding the
Partnership's interest in the Venture) were $281,835 and $388,521, respectively.
The Partnership 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 related facilities costs. 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 operation 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 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. Reimbursements made to the General Partner by the Partnership for
allocated overhead and administrative expenses for the three month periods ended
March 31, 1998 and 1997 (excluding the Partnership's interest in the Venture)
were $326,376 and $527,264, respectively.
(3) On March 31, 1998, the Venture sold the Broward System to an unaffiliated
third party for $136,808,648. The initial sales price of $140,000,000 was
reduced $2,472 for each of the Broward System's equivalent basic subscribers
less than 56,637 at closing. At March 31, 1998, the Broward System had 55,346
equivalent basic subscribers, which reduced the initial sales price by
$3,191,352. The General Partner expects that when final closing adjustments are
done approximately sixty days after closing, additional equivalent basic
subscribers that were not able to be counted at closing because they were
relatively recent subscribers at March 31, 1998 will be counted as equivalent
basic subscribers and the sales price will be adjusted upward. If the sales
price is adjusted upward, the Venture would make an additional distribution to
the two constituent partnerships of the Venture in proportion to their ownership
interests in the Venture.
From the proceeds of the Broward System sale, the Venture settled working
capital adjustments, repaid the outstanding balance on its credit facility,
which totaled $39,902,968 at March 31, 1998 and paid a 2.5 percent brokerage fee
of $3,420,216 to The Jones Group, Ltd., a subsidiary of the General Partner
("The Jones Group"), for acting as a broker in this transaction. The Venture
then distributed the remaining net sale proceeds, or $94,039,000, to the two
constituent partnerships of the Venture in proportion to their ownership
interests in the Venture. Accordingly, the Partnership received 27 percent of
the net sale proceeds, or $25,484,569. In April 1998, the Partnership
distributed its net sale proceeds to its limited partners of record as of March
31, 1998. Such distribution represented approximately $159 for each $500
limited partnership interest or $318 for each $1,000 invested in the
Partnership. Because the distribution to the limited partners from the sale of
the Broward System, together with all prior distributions, did not return 125
percent of the capital initially contributed to the Partnership by the limited
partners, the General Partner did not receive any
6
general partner distribution from the Broward System's sale. Because the Broward
System represented the only asset of the Venture, the Venture will be liquidated
and dissolved before the end of 1998.
(4) On April 8, 1998, the Partnership signed a letter of intent to sell its
Naperville System to an unaffiliated party for a sales price of $23,000,000,
subject to customary closing adjustments. The sale of the Naperville System is
contingent upon the Partnership and the prospective buyer negotiating a
definitive asset purchase agreement. Closing of the sale, which is expected to
occur in the first quarter of 1999, will be subject to several conditions,
including necessary governmental and other third party consents. In addition,
because the Naperville System may constitute all or substantially all of the
assets of the Partnership at the time the Partnership enters into a definitive
asset purchase agreement, the sale may be subject to the approval of the owners
of a majority of the interests of the Partnership. Upon the proposed sale of the
Naperville System, the Partnership will repay a portion of its revolving credit
facility, pay a brokerage fee to The Jones Group totaling $575,000, representing
2.5 percent of the sales price, for acting as a broker in this transaction,
settle working capital adjustments, and then deposit $696,000 into an indemnity
escrow account. The remaining net sale proceeds of approximately $9,800,000 will
be distributed to the Partnership's limited partners of record as of the closing
date of the sale of the Naperville System. Because the distribution to the
limited partners from the sale of the Naperville System, together with all prior
distributions, will not return 125 percent of the capital initially contributed
to the Partnership by the limited partners, the General Partner will not receive
a general partner distribution from the sale of the Naperville System. Based
upon financial information as of March 31, 1998, this distribution will give the
Partnership's limited partners an approximate return of $61 for each $500
limited partnership interest, or $122 for each $1,000 invested in the
Partnership.
The $696,000 of the sale proceeds to be placed in the indemnity escrow
account will remain in escrow until the fourth quarter of 1999 as security for
the Partnership's agreement to indemnify the buyer under the asset purchase
agreement. The Partnership's primary exposure, if any, will relate to the
representations and warranties to be made about the Naperville System in the
asset purchase agreement. Any amounts remaining from this indemnity escrow
account and not claimed by the buyer at the end of the escrow period will be
distributed to the Partnership's limited partners. If the entire $696,000
escrow amount is available, the Partnership would then distribute the $696,000
to the limited partners, which would represent $4 for each $500 limited
partnership interest, or $8 for each $1,000 invested in the Partnership.
Taking into account the distribution from the sale of the Venture's
Broward System and the anticipated distribution from the proposed sale of the
Naperville System, together with all prior distributions, the General Partner
expects that limited partners of the Partnership will have received $441 for
each $500 limited partnership interest, or $882 for each $1,000 invested in the
Partnership, after the sale of the Naperville System.
7
(5) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
------------------------
March 31, 1998 December 31, 1997
--------------- ------------------
ASSETS
------
Cash and accounts receivable $ 94,638,668 $ 1,688,123
Investment in cable television properties - 51,847,372
Other assets 24,430 620,522
------------ ------------
Total assets $ 94,663,098 $ 54,156,017
============ ============
LIABILITIES AND PARTNERS' CAPITAL
- ----------------------------------------------
Debt $ - $ 39,597,617
Payables and accrued liabilities 94,787,789 1,886,849
Partners' contributed capital 70,000,000 70,000,000
Distributions to joint venture partners (94,039,000) -
Accumulated capital (deficit) 23,914,309 (57,328,449)
------------ ------------
Total liabilities and partners' capital $ 94,663,098 $ 54,156,017
============ ============
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended
March 31,
-----------------------------
1998 1997
------------- -------------
Revenues $ 7,064,891 $6,844,105
Operating expenses 3,981,015 3,833,754
Management fees and allocated overhead from General Partner 760,650 813,632
Depreciation and amortization 2,249,219 2,121,717
----------- ----------
Operating income 74,007 75,002
Interest expense (705,440) (703,657)
Gain on sale of cable television system 82,465,154 -
Other, net (590,963) 34,071
----------- ----------
Net income (loss) $81,242,758 $ (594,584)
=========== ==========
8
Management fees and reimbursements for overhead and administrative expenses
paid to Jones Intercable, Inc. by the Venture totaled $353,245 and $407,405,
respectively, for the three month period ended March 31, 1998, and $342,205 and
$471,427, respectively, for the three month period ended March 31, 1997.
9
CABLE TV FUND 14-A, 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. In
accordance with this policy, the Partnership sold two of its systems in 1997,
the Venture sold the Broward System in March 1998 and the Partnership has signed
a letter of intent to sell its Naperville System. The General Partner continues
to seek opportunities for the sale of the remaining systems. There is no
assurance as to the timing or terms of any sales.
The Partnership-
On March 31, 1998, the Venture sold the Broward System to an unaffiliated
party for a sales price of $136,808,648. The Partnership received 27 percent of
the net sale proceeds, or $25,484,569. The Partnership distributed its net sale
proceeds to its limited partners of record as of March 31, 1998. Such
distribution represented approximately $159 for each $500 limited partnership
interest or $318 for each $1,000 invested in the Partnership. Because the
distribution to the limited partners from the sale of the Broward System did not
return 125 percent of the capital initially contributed to the Partnership by
the limited partners, the General Partner did not receive any general partner
distribution from the Broward System's sale.
On April 8, 1998, the Partnership signed a letter of intent to sell its
Naperville System to an unaffiliated party for a sales price of $23,000,000,
subject to customary closing adjustments. The sale of the Naperville System is
contingent upon the Partnership and the prospective buyer negotiating a
definitive asset purchase agreement. Closing of the sale, which is expected to
occur in the first quarter of 1999, will be subject to several conditions,
including necessary governmental and other third party consents. In addition,
because the Naperville System may constitute all or substantially all of the
assets of the Partnership at the time the Partnership enters into a definitive
asset purchase agreement, the sale may be subject to the approval of the owners
of a majority of the interests of the Partnership. Upon the proposed sale of the
Naperville System, the Partnership will repay a portion of its revolving credit
facility, pay a brokerage fee to The Jones Group totaling $575,000, representing
2.5 percent of the sales price, for acting as a broker in this transaction,
settle working capital adjustments, and then deposit $696,000 into an indemnity
escrow account. The remaining net sale proceeds of approximately $9,800,000
will be distributed to the Partnership's limited partners of record as of the
closing date of the sale of the Naperville System. Because the distribution to
the limited partners from the sale of the Naperville System, together with all
prior distributions, will not return 125 percent of the capital initially
contributed to the Partnership by the limited partners, the General Partner will
not receive a general partner distribution from the sale of the Naperville
System. Based upon financial information as of March 31, 1998, this distribution
will give the Partnership's limited partners an approximate return of $61 for
each $500 limited partnership interest, or $122 for each $1,000 invested in the
Partnership.
The $696,000 of the sale proceeds to be placed in the indemnity escrow
account will remain in escrow until the fourth quarter of 1999 as security for
the Partnership's agreement to indemnify the buyer under the asset purchase
agreement. The Partnership's primary exposure, if any, will relate to the
representations and warranties to be made about the Naperville System in the
asset purchase agreement. Any amounts remaining from this indemnity escrow
account and not claimed by the buyer at the end of the escrow period will be
distributed to the Partnership's limited partners. If the entire $696,000
escrow amount is available, the Partnership would then distribute the $696,000
to the limited partners, which would represent $4 for each $500 limited
partnership interest, or $8 for each $1,000 invested in the Partnership.
Taking into account the distribution from the sale of the Venture's
Broward System and the anticipated distribution from the proposed sale of the
Naperville System, together with all prior distributions, the General Partner
expects that the limited partners of the Partnership will have received $441 for
each $500 limited partner interest, or $882 for each $1,000 invested in the
Partnership, after the sale of the Naperville System.
10
For the three months ended March 31, 1998, capital expenditures totaled
approximately $1,002,000 for all of the Partnership's systems. Approximately 50
percent of the expenditures related to construction of service drops to
subscriber's homes. Approximately 38 percent of the expenditures related to new
plant construction associated with new homes passed in all of the Partnership's
systems. The remainder was for other expenditures to maintain the value of the
Partnership's systems. These expenditures were funded by cash generated from
operations, borrowings under the Partnership's credit facility and cash on hand.
Budgeted capital expenditures for all of the Partnership's systems for the
remainder of 1998 are approximately $5,126,000. Approximately 41 percent of the
expenditures will be used for new plant construction associated with new homes
passed in all of the Partnership's systems. Approximately 32 percent will relate
to construction of service drops to subscribers' homes. The remainder is for
other expenditures to maintain the value of the Partnership's remaining systems
until they are sold. Funding for the improvements is expected to come from cash
on hand, cash generated from operations and, if necessary, borrowings under its
credit facility.
The Partnership is a party to a $27,700,000 revolving credit facility, of
which $23,050,000 was outstanding at March 31, 1998, leaving $4,650,000
available for future borrowings. The revolving credit facility expires on
September 30, 2000, at which time the then-outstanding balance is payable in
full. The Partnership will repay approximately $11,500,000 upon the closing of
the sale of the Naperville System. Interest on the revolving credit facility's
outstanding balance is at the Partnership's option of the London Interbank
Offered Rate ("LIBOR") plus 1.125 percent, the Certificate of Deposit Rate (the
"CD Rate") plus 1.25 percent or the Base Rate plus .125 percent. The effective
interest rates on amounts outstanding as of March 31, 1998 and 1997 were 6.83
percent and 7.14 percent, respectively.
Ameritech, which provides telephone service in a multi-state region
including Illinois, is providing cable television service in Naperville,
Illinois, the community served by the Partnership's Naperville System. This
competition has had an adverse effect on the Naperville System's revenues and
cash flow. This competition had an adverse effect on the sales price that the
Partnership was able to obtain from the prospective buyer of the Naperville
System. The General Partner is taking prudent steps necessary to meet this
competition from Ameritech and, to the extent possible, to safeguard the value
of the Naperville System until it is sold. These steps include a judicial
challenge to the terms on which a franchise was issued to Ameritech. Litigation
is currently pending in federal court against both the City of Naperville and
Ameritech and includes claims made by the City of Naperville against the
Partnership.
The Partnership has sufficient sources of capital available from cash on
hand, cash generated from operations and borrowings available under its
revolving credit facility to meet its presently anticipated needs.
The Venture-
In addition to those systems owned directly by it, the Partnership owns a
27 percent interest in the Venture. The Partnership's investment in the Venture,
accounted for under the equity method, decreased by $3,467,782 compared to the
December 31, 1997 balance. This decrease represents the Partnership's
proportionate share of income generated by the Venture during the first quarter
of 1998 less the distribution from the sale of the Broward System.
On March 31, 1998, the Venture sold the Broward System to an unaffiliated
third party for $136,808,648. The initial sales price of $140,000,000 was
reduced $2,472 for each of the Broward System's equivalent basic subscribers
less than 56,637 at closing. At March 31, 1998, the Broward System had 55,346
equivalent basic subscribers, which reduced the initial sales price by
$3,191,352. The General Partner expects that when final closing adjustments are
done approximately sixty days after closing, additional equivalent basic
subscribers that were not able to be counted at closing because they were
relatively recent subscribers at March 31, 1998 will be counted as equivalent
basic subscribers and the sales price will be adjusted upward. If the sales
price is adjusted upward, the Venture would make an additional distribution to
the two constituent partnerships of the Venture in proportion to their ownership
interests in the Venture.
From the proceeds of the Broward System sale, the Venture settled working
capital adjustments, repaid the outstanding balance on its credit facility,
which totaled $39,902,968 at March 31, 1998 and paid a 2.5 percent brokerage fee
of $3,420,216 to The Jones Group. The Venture distributed the remaining net sale
proceeds, or $94,039,000, to the two constituent partnerships of the Venture in
proportion to their ownership interests in the Venture. Because the Broward
System represented the only asset of the Venture, the Venture will be liquidated
and dissolved before the end of 1998.
For the three months ended March 31, 1998, the Venture generated net cash
from operating activities totaling $1,284,584 which is available to fund capital
expenditures and non-operating costs. The Venture expended approximately
$937,000 on capital additions during the first quarter of 1998. The construction
of service drops to homes accounted for
11
approximately 49 percent of the expenditures. Cable television plant extensions
related to new homes passed accounted for approximately 38 percent of these
expenditures. The remainder of these expenditures was to maintain the value of
the Broward System until it was sold on March 31, 1998. These capital
expenditures were funded primarily from cash on hand and cash generated from
operations.
RESULTS OF OPERATIONS
- ---------------------
The Partnership-
Revenues of the Partnership decreased $2,133,705, or approximately 27
percent, to $5,636,706 for the first quarter of 1998 from $7,770,411 for the
first quarter of 1997. This decrease was primarily a result of the sales of the
cable television systems serving the areas in and around the communities of
Turnersville, New Jersey (the "Turnersville System") and Central Illinois (the
"Central Illinois System") on January 10, 1997 and June 30, 1997, respectively.
Disregarding the effect of the sales of the Turnersville System and Central
Illinois System, revenues would have decreased $317,095, or approximately 5
percent, to $5,636,706 for the three months ended March 31, 1998 from $5,953,801
for the comparable 1997 period. This decrease in revenues was due to the
Naperville System's loss of subscribers due to competition from Ameritech.
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 $994,080, or approximately 22 percent, to
$3,531,408 for the quarter ended March 31, 1998 from $4,525,488 for the quarter
ended March 31, 1997. This decrease was primarily a result of the sales of the
Turnersville System and Central Illinois System. Disregarding the effect of the
sales of the Turnersville System and Central Illinois System, operating expenses
would have decreased $52,501, or approximately 1 percent, to $3,531,408 for the
three months ended March 31, 1998 from $3,583,909 for the comparable 1997
period. Operating expenses represented 63 percent of revenue in the first
quarter of 1998 compared to 60 percent of revenue in the first quarter of 1997.
Management fees and allocated overhead from the General Partner decreased
$307,574, or approximately 34 percent, to $608,211 for the three month period
ended March 31, 1998 from $915,785 for the three month period ended March 31,
1997. This decrease was a result of the sales of the Turnersville System and
Central Illinois System. Disregarding the effect of the sales of the
Turnersville System and Central Illinois System, management fees and allocated
overhead from the General Partner would have decreased $100,983, or
approximately 14 percent, to $608,211 in 1998 from $709,194 in 1997. This
decrease was due to the decrease in revenues, upon which such management fees
and allocations are based, and a decrease in costs allocated from the General
Partner.
Depreciation and amortization expense decreased $864,223, or approximately
31 percent, to $1,957,957 for the three month period ended March 31, 1998 from
$2,822,180 for the three month period ended March 31, 1997. This decrease was a
result of the sales of the Turnersville System and Central Illinois System.
Disregarding the effect of the sales of the Turnersville System and Central
Illinois System, depreciation and amortization expense would have increased
$89,901, or approximately 5 percent, to $1,957,957 in 1998 from $1,868,056 in
1997. This increase was due to capital additions in the Partnership's remaining
systems.
Operating loss decreased $32,172, or approximately 7 percent, to $460,870
for the three month period ended March 31, 1998 from $493,042 for the three
month period ended March 31, 1997. Disregarding the effect of the sales of the
Turnersville System and Central Illinois System, operating loss would have
increased $253,512 to $460,870 in 1998 from $207,358 in 1997 primarily due to
the decrease in revenues exceeding the decreases in operating expenses and
management fees and allocated overhead from the General Partner.
Interest expense decreased $201,591, or approximately 33 percent, to
$415,412 for the three months ended March 31, 1998 from $617,003 for the
comparable 1997 period. This decrease was primarily due to lower outstanding
balances on interest bearing obligations in 1998. A portion of the proceeds
from the sale of the Turnersville System and the Central Illinois System was
used to reduce the Partnership's debt in 1997.
12
The Partnership recognized a gain of $62,923,951 related to the sale of
the Turnersville System in January 1997. No similar gain was recognized in the
first quarter of 1998.
The Partnership reported loss before equity in net income of cable
television joint venture of $708,364 in 1998 compared to income of $60,608,259
in 1997. This change was primarily due to the gain on the sale of the
Turnersville System in the first quarter of 1997.
The Venture-
Revenues of the Venture's Broward County System increased $220,786, or
approximately 3 percent, to $7,064,891 for the three months ended March 31, 1998
from $6,844,105 for the comparable 1997 period. Basic service rate increases
accounted for approximately 84 percent of the increase in revenues. The number
of basic subscribers totaled 52,302 at March 31, 1998 compared to 52,042 at
March 31, 1997, an increase of 260 subscribers. This increase in basic
subscribers accounted for approximately 14 percent of the increase in revenues.
No other individual factor significantly affected the increase in revenues.
Operating expenses increased $147,261, or approximately 4 percent, to
$3,981,015 for the three months ended March 31, 1998 from $3,833,754 for the
comparable 1997 period. This increase in operating expenses was due primarily
to increases in programming fees. No other individual factor significantly
affected the increase in operating expenses. Operating expenses represented
approximately 56 percent of revenue for both 1998 and 1997.
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
$73,525, or approximately 2 percent, to $3,083,876 for the three months ended
March 31, 1998 from $3,010,351 for the comparable 1997 period due to the
increase in revenues exceeding the increase in operating expenses.
Management fees and allocated overhead from Jones Intercable, Inc.
decreased $52,982, or approximately 7 percent, to $760,650 for the three months
ended March 31, 1998 from $813,632 for the comparable 1997 period. This
decrease was primarily due to a decrease in allocated overhead from Jones
Intercable, Inc.
Depreciation and amortization expense increased $127,502, or approximately
6 percent, to $2,249,219 for the three months ended March 31, 1998 from
$2,121,717 for the comparable 1997 period. This increase was attributable to
capital additions to the Venture's asset base.
Operating income decreased $995, or approximately 1 percent, to $74,007
for the three months ended March 31, 1998 from $75,002 for the comparable 1997
period. This decrease was due to the increase in depreciation and amortization
exceeding the increase in operating cash flow.
Interest expense increased $1,783, or less than 1 percent, to $705,440 for
the three months ended March 31, 1998 from $703,657 for the comparable 1997
period due to higher effective interest rates on interest bearing obligations
during the period.
For the three months ended March 31, 1998, the Venture reported a gain
from the sale of the Broward System of $82,465,154. No similar gain was
reported for the comparable 1997 period.
The Venture reported net income of $81,242,758 for the three months ended
March 31, 1998 compared to a net loss of $594,584 for the comparable period in
1997. This change was due to the gain on the sale of the Broward System in
March 1998.
13
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
Report on Form 8-K dated April 8, 1998, reported that on April
8, 1998, Jones Intercable, Inc., the general partner of the
Partnership, executed a letter of intent on behalf of the
Partnership to sell the Naperville System to an unaffiliated third
party.
14
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 14-A, LTD.
BY: JONES INTERCABLE, INC., LTD.
General Partner
By: /S/ Kevin P. Coyle
----------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 13, 1998
15