FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[x] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 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
-------------------------------------
September 30, December 31,
ASSETS 1998 1997
------ -------------- -------------
CASH $ 842,083 $ 173,628
TRADE RECEIVABLES, less allowance for doubtful receivables of
$14,073 and $133,188 at September 30, 1998 and December 31, 1997,
respectively 573,608 1,470,293
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 8,891,065 105,933,977
Less- accumulated depreciation (4,294,838) (55,360,283)
----------- ------------
4,596,227 50,573,694
Franchise costs and other intangible assets, net of accumulated
amortization of $1,937,626 and $84,913,605 at September 30, 1998
and December 31, 1997, respectively 694,934 46,126,693
----------- ------------
Total investment in cable television properties 5,291,161 96,700,387
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 49,330 789,427
----------- ------------
Total assets $ 6,756,182 $ 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
-------------------------------------
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1998 1997
------------------------------------------- -------------- -------------
LIABILITIES:
Debt $ 27,737 $ 54,185,513
General Partner advances 217,525 835,015
Deferred brokerage fee - 920,000
Trade accounts payable and accrued liabilities 1,071,450 1,617,666
Subscriber prepayments 4,313 569,308
------------- ------------
Total liabilities 1,321,025 58,127,502
------------- ------------
MINORITY INTEREST IN CABLE TELEVISION
JOINT VENTURE - 3,337,731
------------- ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (6,028) (750,411)
------------- ------------
(5,028) (749,411)
------------- ------------
Limited Partners-
Net contributed capital (261,353 units
outstanding at September 30, 1998 and
December 31, 1997) 112,127,301 112,127,301
Accumulated deficit (3,819,110) (73,709,388)
Distributions (102,868,006) -
------------- ------------
5,440,185 38,417,913
------------- ------------
Total liabilities and partners' capital (deficit) $ 6,756,182 $ 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 For the Nine Months Ended
September 30, September 30,
---------------------------- ---------------------------
1998 1997 1998 1997
--------- ----------- ------------ -----------
REVENUES $ 664,551 $10,219,629 $ 14,823,684 $30,635,555
COSTS AND EXPENSES:
Operating expenses 365,465 5,566,487 8,305,285 17,066,669
Management fees and allocated overhead
from General Partner 74,137 1,067,426 1,606,824 3,318,269
Depreciation and amortization 218,562 3,535,390 5,344,698 10,389,159
--------- ----------- ------------ -----------
OPERATING INCOME (LOSS) 6,387 50,326 (433,123) (138,542)
--------- ----------- ------------ -----------
OTHER INCOME (EXPENSE):
Interest expense (933) (1,008,237) (1,249,873) (2,939,157)
Gain on sale of cable television systems - - 97,500,303 -
Other, net (411,864) (16,383) (2,583,375) 20,137
--------- ----------- ------------ -----------
Total other income (expense), net (412,797) (1,024,620) 93,667,055 (2,919,020)
--------- ----------- ------------ -----------
CONSOLIDATED INCOME (LOSS)
BEFORE MINORITY INTEREST (406,410) (974,294) 93,233,932 (3,057,562)
MINORITY INTEREST IN
CONSOLIDATED (INCOME) LOSS - 146,037 (22,599,271) 462,936
--------- ----------- ------------ -----------
NET INCOME (LOSS) $(406,410) $ (828,257) $ 70,634,661 $(2,594,626)
========= =========== ============ ===========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ (4,064) $ (8,282) $ 744,383 $ (25,946)
========= =========== ============ ===========
Limited Partners $(402,346) $ (819,975) $ 69,890,278 $(2,568,680)
========= =========== ============ ===========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (1.54) $ (3.14) $ 267.42 $ (9.83)
========= =========== ============ ===========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 261,353 261,353 261,353 261,353
========= =========== ============ ===========
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 Nine Months Ended
September 30,
----------------------------
1998 1997
------------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 70,634,661 $(2,594,626)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 5,344,698 10,389,159
Gain on sale of cable television systems (97,500,303) -
Minority interest in consolidated income (loss) 22,599,271 (462,936)
Decrease in trade receivables 896,685 626,609
Decrease (increase) in deposits, prepaid expenses and
deferred charges 185,798 (630,044)
Increase (decrease) in General Partner advances (617,490) 26,068
Increase (decrease) in trade accounts payable and accrued
liabilities and subscriber prepayments (1,111,211) 36,770
------------- -----------
Net cash provided by operating activities 432,109 7,391,000
------------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (2,593,370) (5,194,286)
Payment of deferred brokerage fee (920,000) -
Proceeds from sales of cable television systems, net of brokerage fees 186,712,500 -
------------- -----------
Net cash provided by (used in) investing activities 183,199,130 (5,194,286)
------------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 2,010,948 1,452,055
Repayment of debt (56,168,724) (3,999,766)
Distributions to limited partners (102,868,006) -
Distribution to joint venture partner (25,937,002) -
------------- -----------
Net cash used in financing activities (182,962,784) (2,547,711)
------------- -----------
Increase (decrease) in cash 668,455 (350,997)
Cash, beginning of period 173,628 840,309
------------- -----------
Cash, end of period $ 842,083 $ 489,312
============= ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,752,692 $ 3,228,868
============= ===========
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 September 30, 1998 and December 31, 1997, its results of
operations for the three and nine month periods ended September 30, 1998 and
1997 and its cash flows for the nine month periods ended September 30, 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 owned a 73 percent
interest and Fund 14-A owned a 27 percent interest. The Venture's only asset
was the cable television system serving certain areas in Broward County, Florida
(the "Broward System"). The Venture sold the Broward System on March 31, 1998
and the Venture was liquidated and dissolved in October 1998 (see Note 2).
Because of the Partnership's majority ownership interest in the Venture, the
accompanying financial statements historically 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.
The Partnership directly owns the cable television system serving Littlerock,
California (the "Littlerock System"). The Partnership sold the cable television
system serving Surfside, South Carolina (the "Surfside System") on June 30, 1998
(see Note 3) and has entered into an agreement to sell the Littlerock System
(see Note 4).
(2) On March 31, 1998, the Venture sold the Broward System to an unaffiliated
third party for $140,000,000. The agreement provides that the contract sales
price of $140,000,000 would be 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 sales
price by $3,191,352. When final closing adjustments were completed on June 30,
1998, however, additional equivalent basic subscribers that were not able to be
counted as basic subscribers of the Broward System at the March 31, 1998 closing
(because they were relatively recent subscribers at such date) were able to be
counted as equivalent basic subscribers of the Broward System. These basic
subscribers brought the equivalent basic subscriber count up to 56,637 and the
sales price accordingly was adjusted upward by $3,191,352 to $140,000,000.
From the proceeds of the Broward System sale at the initial closing, 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
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.
From the additional proceeds of the Broward System sale at final closing,
the Venture settled final working capital adjustments and paid a 2.5 percent
brokerage fee of $79,784 to The Jones Group. The Venture then distributed the
remaining additional net sale proceeds, or $1,669,056, 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 additional net
sale proceeds, or $1,216,623. In August 1998, the Partnership distributed the
$1,216,623 to its limited partners, together with the distribution to the
limited partners from the net sales proceeds from the sale of the Surfside
System (see Note 3). Because the distributions to the limited partners from the
sale of the Broward System did not return to the limited partners 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 was liquidated and dissolved in October 1998.
6
(3) On June 30, 1998, the Partnership sold the Surfside System to an
unaffiliated third party for $51,500,000, subject to customary closing
adjustments. Upon the closing of the sale of the Surfside System, the
Partnership retained approximately $240,000 of the sale proceeds for working
capital purposes, repaid all of its indebtedness (including $15,800,000 borrowed
under its credit facility, $658,490 in advances from the General Partner and
capital lease obligations of $143,870), paid a 2.5 percent brokerage fee
totaling $1,287,500 to The Jones Group, paid a deferred acquisition fee of
$920,000 to The Jones Group and then distributed the net sale proceeds of
approximately $33,096,952 to the Partnership's limited partners of record as of
June 30, 1998. This distribution was made in August 1998. Such distribution
represented approximately $127 for each $500 limited partnership interest, or
$254 for each $1,000 invested in the Partnership.
Taking into account the distribution of the net proceeds from the sale of
the Broward System and the sale of the Surfside System, limited partners of the
Partnership have received a total of $394 for each $500 limited partnership
interest, or $788 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 did not return to the limited partners 125 percent of the
capital initially contributed by the limited partners to the Partnership, the
General Partner did not receive a general partner distribution from the Surfside
System's sale proceeds.
The pro forma effect of the sales of the Surfside System and the Broward
System on the results of the Partnership's operations for the nine month periods
ended September 30, 1998 and 1997, assuming the transactions had occurred at the
beginning of the year, are presented in the following unaudited tabulations.
For the Nine Months Ended September 30, 1998
--------------------------------------------
Unaudited
Pro Forma Pro Forma
As Reported Adjustments Balance
------------ ------------- -----------
REVENUES $14,823,684 $(12,870,390) $1,953,294
=========== ============ ==========
OPERATING INCOME (LOSS) $ (433,123) $ 439,630 $ 6,507
=========== ============ ==========
NET INCOME (LOSS) $70,634,661 $(70,645,991) $ (11,330)
=========== ============ ==========
For the Nine Months Ended September 30, 1997
--------------------------------------------
Unaudited
Pro Forma Pro Forma
As Reported Adjustments Balance
------------ ------------- ----------
REVENUES $30,635,555 $(28,742,763) $1,892,792
=========== ============ ==========
OPERATING INCOME (LOSS) $ (138,542) $ 252,341 $ 113,799
=========== ============ ==========
NET INCOME (LOSS) $(2,594,626) $ 2,699,743 $ 105,117
=========== ============ ==========
(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 December 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 General Partner expects to conduct a vote of the limited partners on the
Littlerock System sale during November and December 1998.
Upon the consummation of the proposed sale of the Littlerock System, based
upon financial information as of September 30, 1998, the Partnership will settle
working capital adjustments, repay capital lease obligations of $27,737 and then
the Partnership will distribute the net sale proceeds of approximately
$10,259,235 to the limited partners of the
7
Partnership. This distribution will give the Partnership's limited partners a
return of $39 for each $500 limited partner interest, or $78 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 $433 for each $500 limited
partnership interest, or $866 for each $1,000 invested in the Partnership.
Because the distributions to the limited partners from the sales of the Surfside
System, the Broward System and the anticipated distribution from the sale of the
Littlerock System will not return to the limited partners 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's 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. The General Partner anticipates that the Partnership will be
liquidated and dissolved in the first quarter of 1999.
(5) The General Partner manages the Partnership 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 and nine month periods ended September 30, 1998 were
$33,227 and $741,184, respectively, compared to $510,982 and $1,531,778,
respectively, for the similar 1997 periods.
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, 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 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 and nine month periods ended September
30, 1998 were $40,910 and $865,640, respectively, compared to $556,444 and
$1,786,491, respectively, for the similar 1997 periods.
8
(6) Financial information regarding the Venture is presented below:
UNAUDITED BALANCE SHEETS
------------------------
September 30, 1998 December 31, 1997
------------------- ------------------
ASSETS
------
Cash and accounts receivable $ - $ 1,688,123
Investment in cable television properties - 51,847,372
Other assets - 620,522
------------------ ------------
Total assets $ - $ 54,156,017
================== ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Debt $ - $ 39,597,617
Payables and accrued liabilities - 1,886,849
Partners' contributed capital 70,000,000 70,000,000
Distributions to joint venture partners (95,708,056) -
Accumulated capital (deficit) 25,708,056 (57,328,449)
------------------ ------------
Total liabilities and partners' capital $ - $ 54,156,017
================== ============
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
1998 1997 1998 1997
-------- ---------- ----------- -----------
Revenues $ - $6,817,075 $ 7,064,891 $20,596,170
Operating expenses - 3,685,786 3,981,015 11,396,740
Management fees and allocated overhead
from General Partner - 716,563 760,650 2,250,567
Depreciation and amortization - 2,211,708 2,249,219 6,515,963
-------- ---------- ----------- -----------
Operating income - 203,018 74,007 432,900
Interest expense - (746,619) (705,440) (2,169,648)
Gain on sale of cable television system - - 85,576,722 -
Other, net - 4,722 (1,908,784) 28,498
-------- ---------- ----------- -----------
Net income (loss) $ - $ (538,879) $83,036,505 $(1,708,250)
======== ========== =========== ===========
9
Management fees paid to the General Partner by the Venture totaled $-0- and
$353,245, respectively, for the three and nine month periods ended September 30,
1998, compared to $340,854 and $1,029,808, respectively, for the similar 1997
periods. Reimbursements for overhead and administrative expenses paid to the
General Partner by the Venture totaled $-0- and $407,405, respectively, for the
three and nine month periods ended September 30, 1998, compared to $375,709 and
$1,220,759 for the similar 1997 periods.
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 Littlerock System and it owned the Surfside System
until its sale on June 30, 1998. The Partnership also owned a 73 percent
interest in the Venture. The Venture sold its only asset, the Broward System,
on March 31, 1998, and was liquidated and dissolved in October 1998. The
accompanying financial statements historically 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.
On March 31, 1998, the Venture sold the Broward System to an unaffiliated
third party for $140,000,000. The agreement provides that the contract sales
price of $140,000,000 would be 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
sales price by $3,191,352. When final closing adjustments were completed on
June 30, 1998, however, additional equivalent basic subscribers that were not
able to be counted as basic subscribers of the Broward System at the March 31,
1998 closing (because they were relatively recent subscribers at such date) were
able to be counted as equivalent basic subscribers of the Broward System. These
basic subscribers brought the equivalent basic subscriber count up to 56,637 and
the sales price accordingly was adjusted upward by $3,191,352 to $140,000,000.
From the proceeds of the Broward System sale at the initial closing, 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. 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.
From the additional proceeds of the Broward System sale at final closing,
the Venture settled final working capital adjustments and paid a 2.5 percent
brokerage fee of $79,784 to The Jones Group. The Venture then distributed the
remaining additional net sale proceeds, or $1,669,056, 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 additional net
sale proceeds, or $1,216,623. In August 1998, the Partnership distributed the
$1,216,623 to its limited partners, together with the distribution to the
limited partners from the net sales proceeds from the sale of the Surfside
System (see Note 3). Because the distributions to the limited partners from the
sale of the Broward System did not return to the limited partners 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 was liquidated and dissolved in October 1998.
On June 30, 1998, the Partnership sold the Surfside System to an
unaffiliated third party for $51,500,000, subject to customary closing
adjustments. Upon the closing of the sale of the Surfside System, the
Partnership retained approximately $240,000 of the sale proceeds for working
capital purposes, repaid all of its indebtedness (including $15,800,000 borrowed
under its credit facility, $658,490 in advances from the General Partner and
capital lease obligations of $143,870), paid a 2.5 percent brokerage fee
totaling $1,287,500 to The Jones Group, paid a deferred acquisition fee of
$920,000 to The Jones Group and then distributed the net sale proceeds of
approximately $33,096,952 to the Partnership's limited partners of record as of
June 30, 1998. This distribution was made in August 1998. Such distribution
represented approximately $127 for each $500 limited partnership interest, or
$254 for each $1,000 invested in the Partnership.
Taking into account the distribution of the net proceeds from the sale of
the Broward System and the sale of the Surfside System, limited partners of the
Partnership have received a total of $394 for each $500 limited partnership
interest, or $788 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 did not return to the limited partners 125 percent of the
capital initially contributed
11
by the limited partners to the Partnership, the General Partner did 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 December 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 General Partner expects to conduct a vote of the limited partners on the
Littlerock System sale during November and December 1998.
Upon the consummation of the proposed sale of the Littlerock System, based
upon financial information as of September 30, 1998, the Partnership will settle
working capital adjustments, repay capital lease obligations of $27,737 and then
the Partnership will distribute the net sale proceeds of approximately
$10,259,235 to the limited partners of the Partnership. This distribution will
give the Partnership's limited partners a return of $39 for each $500 limited
partner interest, or $78 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 $433 for each $500 limited
partnership interest, or $866 for each $1,000 invested in the Partnership.
Because the distributions to the limited partners from the sales of the Surfside
System, the Broward System and the anticipated distribution from the sale of the
Littlerock 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's 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. The General Partner anticipates that the Partnership will be
liquidated and dissolved in the first quarter of 1999.
For the nine months ended September 30, 1998, the Partnership expended
approximately $1,657,000 on capital additions in its Surfside System and
Littlerock System. Approximately 40 percent of these expenditures was for the
construction of cable plant extensions related to new homes passed.
Approximately 38 percent of the expenditures was for the construction of drops
to subscribers' homes. 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, borrowings from the Partnership's credit facility and
cash on hand. Budgeted capital expenditures in the Littlerock System for the
remainder of 1998 are approximately $285,000. Approximately 39 percent of these
expenditures are expected to be used for the construction of plant extensions
related to new homes passed. Approximately 26 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 Littlerock
System until it is sold. Funding for these improvements will be provided by
cash generated from operations and cash on hand. The Partnership is obligated
to conduct its business in the ordinary course until the Littlerock System is
sold.
The Partnership repaid the outstanding balance of its reducing revolving
credit facility, which totaled $15,800,000, from the proceeds of the sale of the
Surfside System on June 30, 1998. The Partnership therefore has no material debt
outstanding.
The Partnership has sufficient sources of capital from cash on hand and
cash generated from operations to meet its presently anticipated needs until the
Littlerock System is sold.
RESULTS OF OPERATIONS
- ---------------------
Partnership Owned -
- -----------------
As a result of the Surfside System sale in June 1998, the following
discussion of the Partnership's results of operations, through operating income,
pertains only to the results of operations of the Littlerock System for all
periods discussed.
12
Revenues of the Partnership's Littlerock System increased $33,101, or
approximately 5 percent, to $664,551 for the three months ended September 30,
1998 from $631,450 for the three months ended September 30, 1997. For the nine
months ended September 30, 1998 and 1997, revenues increased $60,502, or
approximately 3 percent, to $1,953,294 in 1998 from $1,892,792 in 1997. The
increases in revenues were due primarily to basic rate increases and increases
in the number of basic subscribers. Basic rate increases accounted for
approximately 46 percent and 75 percent, respectively, of the increase in
revenues for the three and nine month periods ended September 30, 1998. The
number of basic subscribers increased approximately 3 percent to 5,818 at
September 30, 1998 from 5,636 at September 30, 1997. The increases in the
number of basic subscribers accounted for approximately 46 percent and 25
percent, respectively, of the increases in revenues for the three and nine month
periods ended September 30, 1998. A decrease in pay per view and premium
services partially offset the increase in revenues for the nine month period
ended September 30, 1998. No other individual factor was significant to the
increases in revenues.
Operating expenses consist primarily of costs associated with the operation
and administration of the Partnership's cable television systems. The principal
cost components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and marketing expenses.
Operating expenses decreased $1,077, or less than 1 percent, to $365,465
for the three months ended September 30, 1998 from $366,542 for the three months
ended September 30, 1997. This decrease was primarily due to decreases in
marketing and plant related expenses. For the nine month periods ended
September 30, operating expenses increased $37,514, or approximately 4 percent,
to $1,089,717 in 1998 from $1,052,203 in 1997. This increase was primarily due
to increases in programming fees. Operating expenses represented 55 percent and
56 percent, respectively, of revenues for the three and nine month periods ended
September 30, 1998. Operating expenses represented 58 percent and 56 percent,
respectively, of revenues for the three and nine month periods ended September
30, 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
$34,178, or approximately 13 percent, to $299,086 for the three months ended
September 30, 1998 from $264,908 for the three months ended September 30, 1997.
This increase was due to the increase in revenues and the decrease in operating
expenses. For the nine month periods ended September 30, operating cash flow
increased $22,988, or approximately 3 percent, to $863,577 in 1998 from $840,589
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 increased
$9,091, or approximately 14 percent, to $74,137 for the three months ended
September 30, 1998 from $65,046 for the comparable 1997 period. This increase
was due to the increase in revenues, upon which such management fees and
allocations are based. For the nine month periods ended September 30,
management fees and allocated overhead from the General Partner increased
$15,286, or approximately 8 percent, to $218,025 in 1998 from $202,739 in 1997.
This increase was due to the increase in revenues, upon which such management
fees are based. This increase was partially offset by a decrease in expenses
allocated from Jones Intercable, Inc.
Depreciation and amortization expense for the three month periods increased
$35,991, or approximately 20 percent, to $218,562 at September 30, 1998 from
$182,571 at September 30, 1997. For the nine month periods ended September 30,
depreciation and amortization expense increased $114,994, or approximately 22
percent, to $639,045 in 1998 from $524,051 in 1997. These increases were due to
capital additions in the Partnership's Littlerock System during 1998.
Operating income decreased $10,904, or approximately 63 percent, to $6,387
for the three months ended September 30, 1998 from $17,291 for the three months
ended September 30, 1997. For the nine month periods ended September 30,
operating income decreased $107,292, or approximately 94 percent, to $6,507 in
1998 from $113,799 in 1997. These decreases were due to the increases in
management fees and allocated overhead from the General Partner and depreciation
and amortization expense exceeding the increases in operating cash flow.
Interest expense decreased $1,007,304 to $933 for the three months ended
September 30, 1998 from $1,008,237 for the three months ended September 30,
1997. For the nine month periods ended September 30, interest expense
13
decreased $1,689,284, or approximately 57 percent, to $1,249,873 in 1998 from
$2,939,157 in 1997. A portion of the proceeds from the Partnership's sale of the
Surfside System was used to repay the Partnership's indebtedness under its
credit facility and a portion of the proceeds from the sale of the Broward
System was used to repay the Venture's indebtedness under its credit facility.
The Partnership recognized a gain on the sale of the Surfside System of
$11,923,581 and a gain on the sale of the Broward System of $85,576,722 during
the nine month period ended September 30, 1998. No similar gains were
recognized during the comparable 1997 period.
Consolidated loss decreased $568,519, or approximately 58 percent, to
$406,410 for the three months ended September 30, 1998 from $974,929 for the
three months ended September 30, 1997. For the nine month period ended
September 30, 1998, the Partnership reported consolidated income of $93,233,932
compared to a consolidated loss of $3,057,562 for the similar period in 1997.
These changes were primarily due to the Partnership's gain on the sale of the
Surfside System in June 1998, and the Venture's gain on the sale of the Broward
System in March 1998.
14
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
15
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: November 13, 1998
16