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.
[_] 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 0-17733
CABLE TV FUND 15-A, LTD.
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Exact name of registrant as specified in charter
Colorado #84-1091413
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State of organization I.R.S. employer I.D. #
9697 EAST MINERAL AVENUE, P.O. BOX 3309, ENGLEWOOD, COLORADO 80155-3309
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Address of principal executive office
(303) 792-3111
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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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CABLE TV FUND 15-A, LTD.
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(A Limited Partnership)
UNAUDITED BALANCE SHEETS
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March 31, December 31,
ASSETS 1998 1997
------ ------------ ------------
CASH $ 737,054 $ 771,309
TRADE RECEIVABLES, less allowance for doubtful
receivables of $93,185 and $123,823 at March 31, 1998
and December 31, 1997, respectively 918,787 351,275
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 87,513,003 86,421,520
Less- accumulated depreciation (46,194,326) (44,723,417)
------------ ------------
41,318,677 41,698,103
Franchise costs and other intangible assets, net of
accumulated amortization of $109,232,985 and
$107,855,517 at March 31, 1998 and
December 31, 1997, respectively 10,589,987 11,967,455
------------ ------------
Total investment in cable television properties 51,908,664 53,665,558
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 1,147,176 1,065,796
------------ ------------
Total assets $ 54,711,681 $ 55,853,938
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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CABLE TV FUND 15-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
March 31, December 31,
LIABILITIES AND PARTNERS' DEFICIT 1998 1997
--------------------------------- ------------- -------------
LIABILITIES:
Debt $ 83,956,463 $ 83,284,060
General Partner advances - 429,811
Trade accounts payable and accrued liabilities 1,372,970 1,772,421
Subscriber prepayments 137,298 124,470
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Total liabilities 85,466,731 85,610,762
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PARTNERS' DEFICIT:
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (1,227,186) (1,217,204)
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(1,226,186) (1,216,204)
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Limited Partners-
Net contributed capital (213,174 units
outstanding at March 31, 1998
and December 31, 1997) 90,575,991 90,575,991
Accumulated deficit (120,104,855) (119,116,611)
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(29,528,864) (28,540,620)
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Total liabilities and partners' deficit $ 54,711,681 $ 55,853,938
============= =============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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CABLE TV FUND 15-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
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For the Three Months Ended
March 31,
--------------------------
1998 1997
----------- ------------
REVENUES $10,056,669 $ 9,603,561
COSTS AND EXPENSES:
Operating expenses 5,506,102 5,418,261
Management fees and allocated
overhead from General Partner 1,080,139 1,127,779
Depreciation and amortization 2,984,446 3,101,221
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OPERATING INCOME (LOSS) 485,982 (43,700)
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (1,519,681) (1,518,641)
Other, net 35,473 20,557
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Total other income (expense) (1,484,208) (1,498,084)
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NET LOSS $ (998,226) $(1,541,784)
=========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (9,982) $ (15,418)
=========== ===========
Limited Partners $ (988,244) $(1,526,366)
=========== ===========
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (4.64) $ (7.16)
=========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 213,174 213,174
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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CABLE TV FUND 15-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
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For the Three Months Ended
March 31,
----------------------------
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (998,226) $(1,541,784)
Adjustments to reconcile
net loss to net cash provided by
operating activities:
Depreciation and amortization 2,984,446 3,101,221
Decrease (increase) in trade receivables (567,512) 461,977
Increase in deposits, prepaid expenses
and deferred charges (217,449) (57,074)
Decrease in trade accounts payable and accrued
liabilities and subscriber prepayments (386,623) (460,098)
Decrease in General Partner advances (429,811) (430,624)
----------- -----------
Net cash provided by operating activities 384,825 1,073,618
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (1,091,483) (804,324)
----------- -----------
Net cash used in investing activities (1,091,483) (804,324)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 700,000 400,000
Repayment of debt (27,597) (51,530)
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Net cash provided by financing activities 672,403 348,476
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Increase (decrease) in cash (34,255) 617,764
Cash, beginning of period 771,309 452,484
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Cash, end of period $ 737,054 $ 1,070,248
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,549,690 $ 1,584,266
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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CABLE TV FUND 15-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 15-A, 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 owns and operates the cable television systems serving the
communities of Barrington, Elgin, South Elgin, Hawthorn Woods, Kildeer, Lake
Zurich, Indian Creek, Vernon Hills and certain unincorporated areas of Kane and
Lake Counties, all in the State of Illinois (the "Barrington System") and the
cable television system serving the communities of Flossmoor, La Grange, La
Grange Park, Riverside, Indianhead Park, Hazel Crest, Thornton, Lansing,
Matteson, Richton Park, University Park, Crete, Olympia Fields and Western
Springs, all in the State of Illinois (the "South Suburban System").
(2) Jones Intercable, Inc. ("Intercable"), 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 paid to the General Partner by the Partnership for
the three month periods ended March 31, 1998 and 1997 were $502,833 and
$480,178, 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 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
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
entity 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 overhead and administrative expenses is reasonable.
Reimbursements by the Partnership to the General Partner for allocated overhead
and administrative expenses for the three month periods ended March 31, 1998 and
1997 were $577,306 and $647,601, respectively.
(3) On April 8, 1998, the Partnership signed a letter of intent to sell its
Barrington System and South Suburban System to an unaffiliated party for an
aggregate sales price of $175,000,000, subject to customary closing adjustments.
The sale of the Barrington System and South Suburban 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 Barrington
System and South Suburban System constitute all of the assets of the
Partnership, the sale must be approved by the owners of a majority of the
interests of the Partnership. Upon the proposed sale of the Barrington System
and South Suburban System, the Partnership will repay all of its indebtedness,
which totaled $83,956,463 at March 31, 1998, leaving the Partnership with no
debt outstanding, pay a brokerage fee to The Jones Group, Ltd. ("The Jones
Group"), a subsidiary of the General Partner, totaling $4,375,000, representing
2.5 percent of the sales price, for acting as a broker in this transaction,
settle working capital adjustments, and then deposit $5,298,000 into an
indemnity escrow account. The remaining net sale proceeds of approximately
$82,660,000 will be distributed to the Partnership's partners of record as of
the closing date of the sale of the Barrington System and South Suburban System.
Because limited partners will not receive distributions in an amount equal to
100 percent of the capital initially contributed to the Partnership by the
limited partners plus an amount equal to 6 percent per annum, cumulative and
noncompounded, on an amount equal to their initial capital contributions, the
General Partner will not receive a general partner distribution from the sale of
the Barrington System and the South Suburban System. Based upon financial
information as of March 31, 1998, this
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distribution will give the Partnership's limited partners an approximate return
of $388 for each $500 limited partnership interest, or $776 for each $1,000
invested in the partnership.
The $5,298,000 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 Barrington System and the
South Suburban 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 $5,298,000 escrow amount is available, the Partnership would then
distribute the $5,298,000 to the limited partners, which would represent $25 for
each $500 limited partnership interest, or $50 for each $1,000 invested in the
Partnership. The Partnership will continue in existence at least until any
amounts remaining from the indemnity escrow account have been distributed.
Since the Barrington System and the South Suburban System represent the only
assets of the Partnership, the Partnership will be liquidated and dissolved upon
the final distribution of any amounts remaining from the indemnity escrow
account. If any disputes with respect to indemnification arise, the Partnership
would not be dissolved until such disputes were resolved, which could result in
the Partnership continuing in existence beyond 1999.
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CABLE TV FUND 15-A, LTD.
------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
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FINANCIAL CONDITION
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On April 8, 1998, the Partnership signed a letter of intent to sell its
Barrington System and South Suburban System to an unaffiliated party for an
aggregate sales price of $175,000,000, subject to customary closing adjustments.
The sale of the Barrington System and South Suburban 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
Barrington System and South Suburban System constitute all of the assets of the
Partnership, the sale must be approved by the owners of a majority of the
interests of the Partnership. Upon the proposed sale of the Barrington System
and South Suburban System, the Partnership will repay all of its indebtedness,
which totaled $83,956,463 at March 31, 1998, leaving the Partnership with no
debt outstanding, pay a brokerage fee to The Jones Group totaling $4,375,000,
representing 2.5 percent of the sales price, for acting as a broker in this
transaction, settle working capital adjustments, and then deposit $5,298,000
into an indemnity escrow account. The remaining net sale proceeds of
approximately $82,660,000 will be distributed to the Partnership's partners of
record as of the closing date of the sale of the Barrington System and South
Suburban System. Because limited partners will not receive distributions in an
amount equal to 100 percent of the capital initially contributed to the
Partnership by the limited partners plus an amount equal to 6 percent per annum,
cumulative and noncompounded, on an amount equal to their initial capital
contributions, the General Partner will not receive a general partner
distribution from the sale of the Barrington System and the South Suburban
System. Based upon financial information as of March 31, 1998, this distribution
will give the Partnership's limited partners an approximate return of $388 for
each $500 limited partnership interest, or $776 for each $1,000 invested in the
partnership.
The $5,298,000 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 Barrington System and the
South Suburban 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 $5,298,000 escrow amount is available, the Partnership would then
distribute the $5,298,000 to the limited partners, which would represent $25 for
each $500 limited partnership interest, or $50 for each $1,000 invested in the
Partnership. The Partnership will continue in existence at least until any
amounts remaining from the indemnity escrow account have been distributed.
Since the Barrington System and the South Suburban System represent the only
assets of the Partnership, the Partnership will be liquidated and dissolved upon
the final distribution of any amounts remaining from the indemnity escrow
account. If any disputes with respect to indemnification arise, the Partnership
would not be dissolved until such disputes were resolved, which could result in
the Partnership continuing in existence beyond 1999.
For the three months ended March 31, 1998, the Partnership generated net
cash from operating activities totaling $384,825, which is available to fund
capital expenditures and non-operating costs. Capital expenditures totaled
approximately $1,091,500 during the first three months of 1998. Approximately
53 percent of these expenditures was for service drops to homes. New plant
construction related to new homes passed accounted for approximately 24 percent.
The remainder of the expenditures was for other capital expenditures to maintain
the value of the Partnership's systems. 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 $3,509,900. Approximately 44 percent of the remaining capital
expenditures will be for service drops to homes. Approximately 21 percent of
the remaining capital expenditures will be for new plant construction related to
new homes passed. The remainder of the anticipated expenditures is for other
capital expenditures to maintain the value of the Partnership's systems until
they are sold. Funding for these expenditures is expected to be provided by
cash on hand, cash generated from operations and borrowings from the
Partnership's credit facility.
Ameritech, which provides telephone service in a multi-state region,
including Illinois, has begun providing cable television service in a portion of
the Partnership's Barrington System. This competition has had a negative effect
on the
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revenues and cash flow of the Barrington 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 Partnership's systems until they
are sold.
The Partnership's $85,000,000 revolving credit facility allows for the
entire commitment to be available through March 31, 2000, at which time the
commitment will reduce quarterly until December 31, 2000, at which time the
commitment will reduce to zero and will be payable in full. At March 31, 1998,
$83,700,000 was outstanding under the Partnership's revolving credit facility,
leaving $1,300,000 of available borrowings. The entire outstanding balance of
the revolving credit facility will be repaid with proceeds from the proposed
sale of the Barrington System and the South Suburban System. Interest is at the
Partnership's option of Prime plus 1/2 percent, the London Interbank Offered
Rate plus 1-1/2 percent or the Certificate of Deposit Rate plus 1-5/8 percent.
The effective interest rates on outstanding obligations as of March 31, 1998 and
1997 were 7.16 percent and 7.10 percent, respectively.
The Partnership has sufficient sources of capital in the form of cash
on hand, cash generated from operations and borrowings available under its
revolving credit facility to meet its presently anticipated liquidity and
capital needs until its systems are sold.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership increased $453,108, or approximately 5
percent, to $10,056,669 for the three month period ended March 31, 1998 from
$9,603,561 for the comparable period in 1997. Basic service rate increases
implemented in the Partnership's systems combined with increases in advertising
sales revenues primarily accounted for the increase in revenues. Basic service
rate increases implemented in the Partnership's systems accounted for
approximately 66 percent of the increase in revenues. No other individual
factor was significant to 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 of the Partnership increased $87,841, or approximately 2
percent, to $5,506,102 for the three month period ended March 31, 1998 from
$5,418,261 for the comparable period in 1997. Increases in programming fees and
advertising sales expenses primarily accounted for the increase in operating
expenses. No other individual factor was significant to the increase in
operating expenses. Operating expenses represented approximately 55 percent of
revenue for the three month period ended March 31, 1998 compared to
approximately 56 percent for the comparable period in 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
$365,267, or approximately 9 percent, to $4,550,567 for the three month period
ended March 31, 1998 from $4,185,300 for the comparable period in 1997. This
increase was due to the increase in revenues exceeding the increase in operating
expenses.
Management fees and allocated overhead from the General Partner decreased
$47,640, or approximately 4 percent, to $1,080,139 for the three month period
ended March 31, 1998 from $1,127,779 for the comparable period in 1997. This
decrease was due to a decrease in allocated overhead from the General Partner.
Depreciation and amortization expense decreased $116,775, or approximately
4 percent, to $2,984,446 for the three month period ended March 31, 1998 from
$3,101,221 for the comparable period in 1997. This decrease was due to the
maturation of a portion of the Partnership's depreciable asset base.
The Partnership recognized operating income of $485,982 for the three month
period ended March 31, 1998 compared to an operating loss of $43,700 for the
comparable period in 1997. This change was the result of the increase in
operating cash flow and decreases in management fees and allocated overhead from
the General Partner and depreciation and amortization expense.
9
Interest expense increased $1,040 to $1,519,681 for the three month period
ended March 31, 1998 from $1,518,641 for the comparable period in 1997.
Net loss decreased $543,558, or approximately 35 percent, to $998,226 for
the three month period ended March 31, 1998 from $1,541,784 for the comparable
period in 1997. This decrease was due to the factors discussed above.
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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
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 to sell the Partnership's
Barrington System and South Suburban System to an unaffiliated third
party.
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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.
CABLE TV FUND 15-A, 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
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