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 0-16200
CABLE TV FUND 14-B, LTD.
- -------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-1024658
- -------------------------------------------------------------------------------
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-B, LTD.
------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
-------------------------------------
March 31, December 31,
ASSETS 1998 1997
------ ------------- -------------
CASH $ 95,044,345 $ 173,628
TRADE RECEIVABLES, less allowance for doubtful receivables of
$26,884 and $133,188 at March 31, 1998 and December 31, 1997,
respectively 568,156 1,470,293
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 46,919,590 105,933,977
Less- accumulated depreciation (25,081,238) (55,360,283)
------------ ------------
21,838,352 50,573,694
Franchise costs and other intangible assets, net of accumulated
amortization of $27,742,717 and $84,913,605 at March 31, 1998
and December 31, 1997, respectively 22,310,615 46,126,693
------------ ------------
Total investment in cable television properties 44,148,967 96,700,387
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 360,594 789,427
------------ ------------
Total assets $140,122,062 $ 99,133,735
============ ============
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
2
CABLE TV FUND 14-B, LTD.
------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
-------------------------------------
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1998 1997
------------------------------------------- ------------- -------------
LIABILITIES:
Debt $ 15,974,535 $ 54,185,513
General Partner advances 891,877 835,015
Deferred brokerage fee 920,000 920,000
Accrued distributions to limited partners 68,554,431 -
Accrued distribution to joint venture partner 25,484,569 -
Trade accounts payable and accrued liabilities 576,850 1,617,666
Subscriber prepayments 103,032 569,308
------------ ------------
Total liabilities 112,505,294 58,127,502
------------ ------------
MINORITY INTEREST IN CABLE TELEVISION
JOINT VENTURE (130,051) 3,337,731
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (1,000) (750,411)
------------ ------------
- (749,411)
------------ ------------
Limited Partners-
Net contributed capital (261,353 units
outstanding at March 31, 1998 and
December 31, 1997) 112,127,301 112,127,301
Accumulated deficit (15,826,051) (73,709,388)
Distributions (68,554,431) -
------------ ------------
27,746,819 38,417,913
------------ ------------
Total liabilities and partners' capital (deficit) $140,122,062 $ 99,133,735
============ ============
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
3
CABLE TV FUND 14-B, LTD.
------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
For the Three Months Ended
March 31,
---------------------------
1998 1997
------------ -----------
REVENUES $ 10,536,074 $10,065,778
COSTS AND EXPENSES:
Operating expenses 5,985,741 5,707,802
Management fees and allocated overhead from General Partner 1,135,996 1,191,176
Depreciation and amortization 3,670,505 3,391,164
------------ -----------
OPERATING LOSS (256,168) (224,364)
------------ -----------
OTHER INCOME (EXPENSE):
Interest expense (971,605) (953,184)
Gain on sale of cable television system 82,465,154 -
Other, net (587,846) 50,717
------------ -----------
Total other income (expense), net 80,905,703 (902,467)
------------ -----------
CONSOLIDATED INCOME (LOSS) BEFORE MINORITY INTEREST 80,649,535 (1,126,831)
MINORITY INTEREST IN CONSOLIDATED (INCOME) LOSS (22,016,787) 161,132
------------ -----------
NET INCOME (LOSS) $ 58,632,748 $ (965,699)
============ ===========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ 749,411 $ (9,657)
============ ===========
Limited Partners $ 57,883,337 $ (956,042)
============ ===========
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ 221.48 $ (3.66)
============ ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 261,353 261,353
============ ===========
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
4
CABLE TV FUND 14-B, LTD.
------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
For the Three Months Ended
March 31,
--------------------------
1998 1997
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 58,632,748 $ (965,699)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 3,670,505 3,391,164
Gain on sale of cable television system (82,465,154) -
Minority interest in consolidated income (loss) 22,016,787 (161,132)
Amortization of interest rate protection contract - 3,789
Decrease in trade receivables 902,137 1,044,397
Decrease (increase) in deposits, prepaid expenses and
deferred charges 13,026 (286,607)
Increase (decrease) in General Partner advances 56,862 (349,422)
Decrease in trade accounts payable and accrued
liabilities and subscriber prepayments (1,507,092) (590,331)
------------ -----------
Net cash provided by operating activities 1,319,819 2,086,159
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (1,626,556) (1,444,879)
Proceeds from sale of cable television system, net of brokerage fee 133,388,432 -
------------ -----------
Net cash provided by (used in) investing activities 131,761,876 (1,444,879)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 1,900,000 400,000
Repayment of debt (40,110,978) (630,505)
Distributions to limited partners (68,554,431) -
Increase in accrued distributions to limited partners 68,554,431 -
Distribution to joint venture partner (25,484,569) -
Increase in accrued distribution to joint venture partner 25,484,569 -
------------ -----------
Net cash used in financing activities (38,210,978) (230,505)
------------ -----------
Increase in cash 94,870,717 410,775
Cash, beginning of period 173,628 840,309
------------ -----------
Cash, end of period $ 95,044,345 $ 1,251,084
============ ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,379,302 $ 1,237,731
============ ===========
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
5
CABLE TV FUND 14-B, LTD.
------------------------
(A Limited Partnership)
NOTES TO UNAUDITED CONSOLIDATED 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-B, Ltd.
(the "Partnership") at March 31, 1998 and December 31, 1997 and its Statements
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 is a Colorado limited partnership that was formed pursuant
to the public offering of limited partnership interests in the Cable TV Fund 14
Limited Partnership Program (the "Program"), which was sponsored by Jones
Intercable, Inc. (the "General Partner"), to acquire, own and operate cable
television systems in the United States. Cable TV Fund 14-A, Ltd. ("Fund 14-A")
is the other partnership that was formed pursuant to the Program. The
Partnership and Fund 14-A formed a general partnership known as Cable TV Fund
14-A/B Venture (the "Venture"), in which the Partnership owns a 73 percent
interest and Fund 14-A owns a 27 percent interest. The Partnership directly
owns the cable television systems serving Surfside, South Carolina (the
"Surfside System") and Littlerock, California (the "Littlerock System"). The
Partnership has entered into separate agreements to sell the Surfside System
(see Note 3) and the Littlerock System (see Note 4). The Venture owned the
cable television system serving certain areas in Broward County, Florida (the
"Broward System"). As discussed in Note 2 below, the Venture sold the Broward
System on March 31, 1998. Because of the Partnership's majority ownership
interest in the Venture, the accompanying financial statements present the
Partnership's and the Venture's financial condition and results of operations on
a consolidated basis, with the ownership interest of Fund 14-A in the Venture
shown as a minority interest. All interpartnership accounts and transactions
have been eliminated.
(2) 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. The sale has been approved by the holders of a
majority of the limited partnership interests of the Partnership.
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. ("The Jones Group"), a subsidiary of the
General Partner, 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 73 percent of
the net sale proceeds, or $68,554,431. 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 $262 for each $500
limited partnership interest or $524 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.
Because the Broward System represented the only asset of the Venture, the
Venture will be liquidated and dissolved before the end of 1998.
The pro forma effect of the sale of the Broward System on the results of
the Partnership's operations for the three months ended March 31, 1998 and the
year ended December 31, 1997, assuming the transaction had occurred on January
1, 1997, are presented in the following tabulations. As a result of the Broward
System sale on March 31, 1998, the pro forma balance sheet effect as of March
31, 1998 is presented in the Unaudited Consolidated Balance Sheets.
6
For the Three Months Ended March 31, 1998
-----------------------------------------------
Unaudited
Pro Forma Pro Forma
As Reported Adjustments Balance
--------------- --------------- -------------
REVENUES $10,536,074 $ (7,064,891) $3,471,183
COSTS AND EXPENSES:
Operating expenses 5,985,741 (3,981,015) 2,004,726
Management fees and allocated overhead
from General Partner 1,135,996 (760,650) 375,346
Depreciation and amortization 3,670,505 (2,249,219) 1,421,286
----------- ----------- ---------
OPERATING LOSS (256,168) (74,007) (330,175)
OTHER INCOME (EXPENSE):
Interest expense (971,605) 705,440 (266,165)
Gain on sale of cable television system 82,465,154 (82,465,154) -
Other, net (587,846) 590,963 3,117
----------- ----------- ---------
Total other income (expense), net 80,905,703 (81,168,751) (263,048)
----------- ----------- ---------
CONSOLIDATED INCOME BEFORE
MINORITY INTEREST 80,649,535 (81,242,758) (593,223)
MINORITY INTEREST IN CONSOLIDATED INCOME (22,016,787) 22,016,787 -
----------- ----------- ---------
NET INCOME $58,632,748 $(59,225,971) $ (593,223)
=========== =========== =========
For the Year Ended December 31, 1998
-----------------------------------------------
Unaudited
Pro Forma Pro Forma
As Reported Adjustments Balance
--------------- --------------- -------------
REVENUES $40,929,333 $(27,504,735) $13,424,598
COSTS AND EXPENSES:
Operating expenses 22,717,178 (15,185,319) 7,531,859
Management fees and allocated overhead
from General Partner 4,399,838 (2,976,883) 1,422,955
Depreciation and amortization 14,070,460 (8,775,019) 5,295,441
---------- ----------- ----------
OPERATING LOSS (258,143) (567,514) (825,657)
OTHER INCOME (EXPENSE):
Interest expense (3,903,254) 2,877,337 (1,025,917)
Other, net (8,561) 470 (8,091)
---------- ----------- ----------
Total other income (expense), net (3,911,815) 2,877,807 (1,034,008)
---------- ----------- ----------
CONSOLIDATED LOSS BEFORE
MINORITY INTEREST (4,169,958) 2,310,293 (1,859,665)
MINORITY INTEREST IN CONSOLIDATED LOSS 626,089 (626,089) -
---------- ----------- ----------
NET LOSS $(3,543,869) $ 1,684,204 $(1,859,665)
========== =========== ==========
7
(3) On November 4, 1997, the Partnership entered into an asset purchase
agreement to sell the Surfside System to an unaffiliated party for a sales price
of $51,500,000, subject to customary closing adjustments. Closing of the sale,
which is anticipated to occur on June 30, 1998, is subject to several
conditions, including necessary governmental and other third party consents. The
sale has been approved by the holders of a majority of the limited partnership
interests of the Partnership.
Upon the consummation of the proposed sale of the Surfside System, the
Partnership will retain approximately $443,000 of the sale proceeds for working
capital purposes, repay all of its indebtedness (including $15,800,000 borrowed
under its credit facility, $143,000 in advances from the General Partner and
capital lease obligations of $143,900), pay a 2.5 percent brokerage fee totaling
$1,287,500 to The Jones Group, pay a deferred acquisition fee of $920,000 to The
Jones Group and then the approximate $32,800,000 of net sale proceeds will be
distributed to the Partnership's limited partners of record as of the closing
date of the sale of the Surfside System. Based upon financial information as of
March 31, 1998, this distribution will give the Partnership's limited partners a
return of $125 for each $500 limited partnership interest, or $250 for each
$1,000 invested in the Partnership.
Once the Partnership has completed the distribution of its portion of the
net proceeds from the sale of the Broward System and the anticipated
distribution of the net proceeds from the sale of the Surfside System, limited
partners of the Partnership will have received a total of $387 for each $500
limited partnership interest, or $774 for each $1,000 invested in the
Partnership. Because the distributions to the limited partners from the sale of
the Surfside System and the Broward System will not return 125 percent of the
capital initially contributed by the limited partners to the Partnership, the
General Partner will not receive a general partner distribution from the
Surfside System's sale proceeds.
(4) On March 10, 1998, the Partnership entered into an agreement with the
General Partner to sell the Littlerock System to the General Partner or one of
its subsidiaries for a sales price of $10,720,400, subject to customary closing
adjustments. The sales price represents the average of three independent
appraisals of the fair market value of the Littlerock System. The closing of
this transaction is expected to occur in the fourth quarter of 1998. The closing
is subject to a number of conditions including the approval of the transaction
by the holders of a majority of the limited partnership interests of the
Partnership, the expiration or termination of all waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 applicable to the
agreement or the transactions contemplated thereby, and the consents of
governmental authorities and other third parties. The General Partner expects to
conduct a vote of the limited partners on the Littlerock System sale during the
third quarter of 1998.
Upon the consummation of the proposed sale of the Littlerock System, the
Partnership will distribute the net sale proceeds of approximately $10,838,000
to the limited partners of the Partnership. This distribution will give the
Partnership's limited partners a return of $41 for each $500 limited partner
interest, or $82 for each $1,000 invested in the Partnership.
Taking into account the distribution from the sale of the Broward System,
the anticipated distribution from the sale of the Surfside System, and the
anticipated distribution from the sale of the Littlerock System, the limited
partners of the Partnership can expect to receive a total of $428 for each $500
limited partnership interest, or $856 for each $1,000 invested in the
Partnership. Because the distributions to the limited partners from the sales
of the Littlerock System, the Surfside System and the Broward System will not
return 125 percent of the capital initially contributed by the limited partners
to the Partnership, the General Partner will not receive a general partner
distribution from the Littlerock System sale proceeds.
The Partnership will be liquidated and dissolved after the sale of the
Littlerock System, which will be the Partnership's last remaining asset at the
time of its sale.
(5) The General Partner manages the Partnership and the Venture and receives a
fee for its services equal to 5 percent of the gross revenues of the Partnership
and the Venture, excluding revenues from the sale of cable television systems or
franchises. Management fees paid to the General Partner by the Partnership and
the Venture for the three month periods ended March 31, 1998 and 1997 were
$526,804 and $503,289, respectively.
The Partnership and the Venture reimburse 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, accounting, administrative, legal and investor
relations services to the Partnership and to the Venture. Such services, and
their related costs, are necessary to the operation of the Partnership and the
Venture and would have been incurred by the Partnership and the Venture if they
were stand alone entities. 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
8
the pro rata relationship of the Partnership's and 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. Reimbursements made to the General
Partner for allocated overhead and administrative expenses for the three month
periods ended March 31, 1998 and 1997 were $609,192 and $687,887, respectively.
9
(6) 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)
=========== ==========
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.
10
CABLE TV FUND 14-B, LTD.
------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
----------------------
FINANCIAL CONDITION
- -------------------
The Partnership owns the Surfside System and the Littlerock System and the
Partnership owns a 73 percent interest in the Venture. The accompanying
financial statements include 100 percent of the accounts of the Partnership and
those of the Venture, reduced by the 27 percent minority interest in the Venture
owned by Fund 14-A.
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 has distributed its
portion ($68,554,431, or approximately $524 for each $1,000 invested in the
Partnership) of the net sale proceeds to its limited partners of record as of
March 31, 1998. Refer to the Venture's portion of this Management's Discussion
and Analysis of Financial Condition for information pertinent to the sale of the
Broward System.
On November 4, 1997, the Partnership entered into an asset purchase
agreement to sell the Surfside System to an unaffiliated party for a sales price
of $51,500,000, subject to customary closing adjustments. Closing of the sale,
which is anticipated to occur on June 30, 1998, is subject to several
conditions, including necessary governmental and other third party consents.
The sale has been approved by the holders of a majority of the limited
partnership interests of the Partnership.
Upon the consummation of the proposed sale of the Surfside System, the
Partnership will retain $443,000 of the sale proceeds for working capital
purposes, repay all of its indebtedness (including $15,800,000 borrowed under
its credit facility, $143,000 in advances from the General Partner and capital
lease obligations of $143,900), pay a 2.5 percent brokerage fee totaling
$1,287,500 to The Jones Group, pay a deferred acquisition fee of $920,000 to The
Jones Group and then the approximate $32,800,000 of net sale proceeds will be
distributed to the Partnership's limited partners of record as of the closing
date of the sale of the Surfside System. Based upon financial information as of
March 31, 1998, this distribution will give the Partnership's limited partners a
return of $125 for each $500 limited partnership interest, or $250 for each
$1,000 invested in the Partnership.
Once the Partnership has completed the distribution of its portion of the
net proceeds from the sale of the Broward System and the anticipated
distribution of the net proceeds from the sale of the Surfside System, limited
partners of the Partnership will have received a total of $387 for each $500
limited partnership interest, or $774 for each $1,000 invested in the
Partnership. Because the distributions to the limited partners from the sale of
the Surfside System and the Broward System will not return 125 percent of the
capital initially contributed by the limited partners to the Partnership, the
General Partner will not receive a general partner distribution from the
Surfside System's sale proceeds.
On March 10, 1998, the Partnership entered into an agreement with the
General Partner to sell the Littlerock System to the General Partner or one of
its subsidiaries for a sales price of $10,720,400, subject to customary closing
adjustments. The sales price represents the average of three independent
appraisals of the fair market value of the Littlerock System. The closing of
this transaction is expected to occur in the fourth quarter of 1998. The
closing is subject to a number of conditions including the approval of the
transaction by the holders of a majority of the limited partnership interests of
the Partnership, the expiration or termination of all waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 applicable to the agreement
or the transactions contemplated thereby, and the consents of governmental
authorities and other third parties. The General Partner expects to conduct a
vote of the limited partners on the Littlerock System sale during the third
quarter of 1998.
Upon the consummation of the proposed sale of the Littlerock System, the
Partnership will distribute the net sale proceeds of approximately $10,838,000
to the limited partners of the Partnership. This distribution will give the
Partnership's limited partners a return of $41 for each $500 limited partner
interest, or $82 for each $1,000 invested in the Partnership.
Taking into account the distribution from the sale of the Broward System,
the distribution from the sale of the Surfside System, and the anticipated
distribution from the sale of the Littlerock System, the limited partners of the
Partnership can expect to receive a total of $428 for each $500 limited partner
interest, or $856 for each $1,000 invested in
11
the Partnership. Because the distributions to the limited partners from the
sales of the Littlerock System, the Surfside System and the Broward System will
not return 125 percent of the capital initially contributed by the limited
partners to the Partnership, the General Partner will not receive a general
partner distribution from the Littlerock System sale proceeds.
The Partnership will be liquidated and dissolved after the sale of the
Littlerock System, which will be the Partnership's last remaining asset at the
time of its sale.
For the three months ended March 31, 1998, the Surfside System and
Littlerock System generated net cash from operating activities totaling $35,235,
which is available to fund capital expenditures and non-operating costs. The
Partnership expended approximately $690,000 on capital additions during the
first quarter of 1998 in its Surfside System and Littlerock System.
Approximately 40 percent of the expenditures was for the construction of drops
to subscribers' homes. Approximately 36 percent of these expenditures was for
the construction of cable plant extensions related to new homes passed. The
remainder of the expenditures was for other capital expenditures to maintain the
value of the Partnership's cable television systems until they are sold.
Funding for these expenditures was provided by cash generated from operations
and borrowings from the Partnership's credit facility. Budgeted capital
expenditures for the remainder of 1998 are approximately $1,068,000.
Approximately 49 percent of these expenditures are expected to be used for the
construction of plant extensions related to new homes passed in the
Partnership's systems. Approximately 35 percent are expected to be used for
service drops to homes. The remainder of these expenditures is for other
capital expenditures to maintain the value of the Partnership's systems until
they are sold. Depending upon the timing of the closing of the sale of the
Partnership's systems, the Partnership will make only the portion of the 1998
budgeted capital expenditures scheduled to be made during the Partnership's
continued ownership of its systems. Funding for these improvements will be
provided by cash generated from operations and borrowings under the
Partnership's credit facility.
The Partnership has a reducing revolving credit facility with an
available commitment of $18,000,000. At March 31, 1998, the balance outstanding
was $15,800,000, leaving $2,200,000 available for future borrowings. On
September 30, 1998, the maximum amount available begins to reduce quarterly
until December 31, 2003 when the amount available will be zero. This credit
facility will be paid in full upon the sale of the Surfside System. Interest on
the reducing revolving credit facility is at the Partnership's option of the
Base Rate, the London Interbank Offered Rate ("LIBOR") plus 1 percent, or the
Certificate of Deposit Rate ("CD Rate") plus 1-1/8 percent. The effective
interest rates on amounts outstanding as of March 31, 1998 and 1997 were 6.72
percent and 6.66 percent, respectively.
The Partnership has sufficient sources of capital from cash on hand, cash
generated from operations and borrowings available under the reducing revolving
credit facility to meet its presently anticipated needs.
The Venture-
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 for acting as a broker in this transaction.
he 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.
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 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 for other capital expenditures 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.
12
RESULTS OF OPERATIONS
- ---------------------
The results of operations for the Partnership are summarized in the selected
financial data below:
For the Three Months Ended March 31, 1998
------------------------------------------
Partnership Venture
Owned Owned Consolidated
------------ ------------- -------------
Revenues $3,471,183 $ 7,064,891 $ 10,536,074
Operating expenses 2,004,726 3,981,015 5,985,741
Management fees and allocated
overhead from General Partner 375,346 760,650 1,135,996
Depreciation and amortization 1,421,286 2,249,219 3,670,505
---------- ------------ ------------
Operating income (loss) (330,175) 74,007 (256,168)
Interest expense (266,165) (705,440) (971,605)
Gain on sale of cable television system - 82,465,154 82,465,154
Other, net 3,117 (590,963) (587,846)
---------- ------------ ------------
Consolidated income (loss) before minority interest (593,223) 81,242,758 80,649,535
Minority interest in consolidated (income) loss - (22,016,787) (22,016,787)
---------- ------------ ------------
Net income (loss) $ (593,223) $ 59,225,971 $ 58,632,748
========== ============ ============
For the Three Months Ended March 31, 1997
-----------------------------------------
Partnership Venture
Owned Owned Consolidated
----------- ------------ ------------
Revenues $3,221,673 $ 6,844,105 $ 10,065,778
Operating expenses 1,874,048 3,833,754 5,707,802
Management fees and allocated
overhead from General Partner 377,544 813,632 1,191,176
Depreciation and amortization 1,269,447 2,121,717 3,391,164
---------- ------------ ------------
Operating income (loss) (299,366) 75,002 (224,364)
Interest expense (249,527) (703,657) (953,184)
Other, net 16,646 34,071 50,717
---------- ------------ ------------
Consolidated loss before minority interest (532,247) (594,584) (1,126,831)
Minority interest in consolidated loss - 161,132 161,132
---------- ------------ ------------
Net loss $ (532,247) $ (433,452) $ (965,699)
========== ============ ============
13
Partnership owned -
- -----------------
Revenues of the Partnership's Surfside System and Littlerock System
increased $249,510, or approximately 8 percent, to $3,471,183 for the three
months ended March 31, 1998 from $3,221,673 for the comparable 1997 period.
Basic service rate increases accounted for approximately 40 percent of the
increase in revenues. The number of basic subscribers totaled 28,001 at March
31, 1998 compared to 26,856 at March 31, 1997, an increase of 1,145, or
approximately 4 percent. This increase in basic subscribers accounted for
approximately 33 percent of the increase in revenues. Increases in advertising
activity accounted for approximately 8 percent of the increase in revenues. No
other individual factor significantly affected the increase in revenues.
Operating expenses consist primarily of costs associated with the operation
and administration of the Partnership's cable television systems. The principal
cost components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and marketing expenses.
Operating expenses increased $130,678, or approximately 7 percent, to
$2,004,726 for the three months ended March 31, 1998 from $1,874,048 for the
comparable 1997 period. This increase in operating expenses was primarily due
to increases in programming fees and advertising expenses. No other individual
factor significantly affected the increase in operating expenses. Operating
expenses represented approximately 58 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
$118,832, or approximately 9 percent, to $1,466,457 for the three months ended
March 31, 1998 from $1,347,625 for the comparable 1997 period due to the
increase in revenues exceeding the increase in operating expenses.
Management fees and allocated overhead from the General Partner decreased
$2,198, or less than 1 percent, to $375,346 for the three months ended March 31,
1998 from $377,544 for the comparable 1997 period. This decrease was primarily
due to a decrease in allocated overhead from the General Partner.
Depreciation and amortization expense increased $151,839, or approximately
12 percent, to $1,421,286 for the three months ended March 31, 1998 from
$1,269,447 for the comparable 1997 period. This increase was due to capital
additions to the Partnership's asset base.
Operating loss increased $30,809, or approximately 10 percent, to $330,175
for the three months ended March 31, 1998 from $299,366 for the comparable 1997
period. This increase was due to the increase in depreciation and amortization
exceeding the increase in operating cash flow.
Interest expense increased $16,638, or approximately 7 percent, to
$266,165 for the three months ended March 31, 1998 from $249,527 for the
comparable 1997 period. This increase was due to higher effective interest
rates and higher outstanding balances on interest bearing obligations.
Net loss increased $60,976, or approximately 11 percent, to $593,223 for
the three months ended March 31, 1998 from $532,247 for the comparable 1997
period. These losses were primarily the result of the factors discussed above.
Venture owned -
- -------------
In addition to its ownership of the Surfside System and the Littlerock
System, the Partnership owns a 73 percent interest in 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 basic 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
14
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.
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.
15
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The sales of the Broward System and the Surfside System were subject to the
approval of the holders of a majority of the limited partnership interests of
the Partnership. Limited partners of record at the close of business on January
1, 1998 were entitled to notice of, and to participate in, this vote of limited
partners. Following are the results of the vote of the limited partners for
each of the system sales:
No. of
Interests Approved Against Abstained Did Not Vote
Entitled to ------------------ --------------- ------------ --------------
Vote No. % No. % No. % No. %
----------- ------- --------- ----- -------- ----- ----- ------ -----
Broward System Sale 261,353 160,374 61.4 2,813 1.0 4,301 1.6 93,865 36.0
Surfside System Sale 261,353 159,569 61.0 3,334 1.3 4,473 1.7 93,977 36.0
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
16
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-B, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By:/S/ Kevin P. Coyle
----------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 13, 1998
17