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 June 30, 1999.
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[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from to .
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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. #
c/o Comcast Corporation
1500 Market Street, Philadelphia, PA 19102-2148
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Address of principal executive office
(215) 665-1700
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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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June 30, December 31,
ASSETS 1999 1998
------ ---------------- ----------------
CASH $ - $ 727,885
PROCEEDS FROM SALE IN ESCROW 5,487,028 -
TRADE RECEIVABLES, less allowance for doubtful
receivables of $-0- and $74,628 at June 30, 1999
and December 31, 1998, respectively - 495,906
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost - 93,060,892
Less- accumulated depreciation - (51,571,515)
---------------- ----------------
- 41,489,377
Franchise costs and other intangible assets, net of
accumulated amortization of $-0- and $111,175,846
at June 30, 1999 and December 31, 1998, respectively - 8,677,126
---------------- ----------------
Total investment in cable television properties - 50,166,503
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES - 893,318
---------------- ----------------
Total assets $ 5,487,028 $ 52,283,612
================ ================
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
CABLE TV FUND 15-A, LTD.
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(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
June 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1999 1998
------------------------------------------- ---------------- ----------------
LIABILITIES:
Debt $ - $ 84,097,996
Accounts payable and accrued liabilities 2,783,674 1,635,222
Subscriber prepayments - 153,037
---------------- ----------------
Total liabilities 2,783,674 85,886,255
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PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (1,000) (1,255,662)
---------------- ----------------
- (1,254,662)
---------------- ----------------
Limited Partners-
Net contributed capital (213,174 units
outstanding at June 30, 1999
and December 31, 1998) 90,575,991 90,575,991
Distributions (82,551,081) -
Accumulated deficit (5,321,556) (122,923,972)
---------------- ----------------
2,703,354 (32,347,981)
---------------- ----------------
Total liabilities and partners' capital (deficit) $ 5,487,028 $ 52,283,612
================ ================
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
CABLE TV FUND 15-A, LTD.
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(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
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For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------------- --------------------------------
1999 1998 1999 1998
--------------- -------------- --------------- --------------
REVENUES $ - $ 10,124,073 $ 6,320,196 $ 20,180,742
COSTS AND EXPENSES:
Operating expenses - 5,839,081 4,042,268 11,345,183
Management fees and allocated overhead
from General Partner - 1,116,609 703,302 2,196,748
Depreciation and amortization - 3,257,823 1,813,974 6,242,269
--------------- -------------- --------------- --------------
OPERATING INCOME (LOSS) - (89,440) (239,348) 396,542
--------------- -------------- --------------- --------------
OTHER INCOME (EXPENSE):
Interest expense (44,404) (1,518,747) (955,839) (3,038,428)
Interest income on escrowed proceeds 59,826 - 79,693 -
Gain on sale of cable television system - - 120,634,133 -
Other, net (397,977) (2,884) (661,561) 32,589
--------------- -------------- --------------- --------------
Total other income (expense) (382,555) (1,521,631) 119,096,426 (3,005,839)
--------------- -------------- --------------- --------------
NET INCOME (LOSS) $ (382,555) $ (1,611,071) $ 118,857,078 $ (2,609,297)
=============== ============== =============== ==============
ALLOCATION OF NET INCOME (LOSS):
General Partner $ - $ (16,111) $ 1,254,662 $ (26,093)
=============== ============== =============== ==============
Limited Partners $ (382,555) $ (1,594,960) $ 117,602,416 $ (2,583,204)
=============== ============== =============== ==============
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (1.80) $ (7.48) $ 551.67 $ (12.12)
=============== ============== =============== ==============
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 213,174 213,174 213,174 213,174
=============== ============== =============== ==============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
CABLE TV FUND 15-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
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For the Six Months Ended
June 30,
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1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 118,857,078 $ (2,609,297)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 1,813,974 6,242,269
Gain on sale of cable television systems (120,634,133) -
Decrease (increase) in trade receivables, net 495,906 (68,411)
Increase in deposits, prepaid expenses and
deferred charges (81,804) (221,398)
Increase (decrease) in accounts payable and accrued
liabilities and subscriber prepayments 995,415 (458,367)
Decrease in General Partner advances - (429,811)
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Net cash provided by operating activities 1,446,436 2,454,985
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (822,360) (2,788,326)
Franchise costs (9,750) -
Proceeds from sale of cable television system, net
of brokerage fees and escrow 165,306,866 -
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Net cash provided by (used in) investing activities 164,474,756 (2,788,326)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - 700,000
Repayment of debt (84,097,996) (54,932)
Distribution to Limited Partners (82,551,081) -
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Net cash provided by (used in) financing activities (166,649,077) 645,068
--------------- ---------------
Increase (decrease) in cash (727,885) 311,727
Cash, beginning of period 727,885 771,309
--------------- ---------------
Cash, end of period $ - $ 1,083,036
=============== ===============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,557,344 $ 3,066,333
=============== ===============
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 June 30, 1999 and December 31, 1998 and its Statements of
Operations for the three and six month periods ended June 30, 1999 and 1998 and
its Cash Flows for the six month periods ended June 30, 1999 and 1998.
The Partnership owned and operated 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"), until they
were sold on February 26, 1999. Jones Intercable, Inc. ("Intercable"), a
publicly held Colorado corporation, is the "General Partner" and manages the
Partnership.
On April 7, 1999, Comcast Corporation ("Comcast") completed the acquisition
of a controlling interest in the General Partner. As of April 7, 1999, Comcast
owned approximately 12.8 million shares of the General Partner's Class A Common
Stock and approximately 2.9 million shares of the General Partner's Common
Stock, representing approximately 37% of the economic interest and 47% of the
voting interest in the General Partner. Also on that date, Comcast contributed
its shares in the General Partner to Comcast's wholly owned subsidiary, Comcast
Cable Communications, Inc. ("Comcast Cable"). The approximately 2.9 million
shares of Common Stock of the General Partner owned by Comcast represents
approximately 57% of the outstanding Common Stock, which class of stock is
entitled to elect 75% of the Board of Directors of the General Partner. As a
result of this transaction, the General Partner is now a consolidated public
company subsidiary of Comcast Cable.
Also on April 7, 1999, the bylaws of the General Partner were amended to
establish the size of the General Partner's Board of Directors as a range from
eight to thirteen directors and the board was reconstituted so as to have eight
directors and the following directors of the General Partner resigned: Robert E.
Cole, Josef J. Fridman, James J. Krejci, James B. O'Brien, Raphael M. Solot,
Robert Kearney, Howard O. Thrall, Siim Vanaselja, Sanford Zisman and Glenn R.
Jones. In addition, Donald L. Jacobs resigned as a director elected by the
holders of Class A Common Stock and was elected by the remaining directors as a
director elected by the holders of Common Stock. The remaining directors elected
the following persons to fill the vacancies on the board created by such
resignations: Ralph J. Roberts, Brian L. Roberts, John R. Alchin, Stanley Wang
and Lawrence S. Smith. All of the newly elected directors, with the exception of
Mr. Jacobs, are officers of Comcast. Also on April 7, 1999, the following
executive officers of the General Partner resigned: Glenn R. Jones, James B.
O'Brien, Ruth E. Warren, Kevin P. Coyle, Cynthia A. Winning, Elizabeth M.
Steele, Wayne H. Davis and Larry W. Kaschinske. The following persons were
appointed as executive officers of the General Partner on April 7, 1999: Ralph
J. Roberts, Brian L. Roberts, Lawrence S. Smith, John R. Alchin and Stanley
Wang.
Comcast is principally engaged in the development, management and operation
of broadband cable networks and in the provision of content through programming
investments. Comcast Cable is principally engaged in the development, management
and operation of broadband cable networks. The address of Comcast's principal
office is 1500 Market Street, Philadelphia, Pennsylvania 19102-2148, which is
also now the address of the General Partner's principal office. The address of
Comcast Cable's principal office is 1201 Market Street, Suite 2201, Wilmington,
Delaware 19801.
(2) On February 26, 1999, the Partnership sold its Barrington System and South
Suburban System to an unaffiliated party for $174,979,350. Upon the closing of
the sale of the Barrington System and the South Suburban System, the Partnership
repaid all of its indebtedness, which totaled $84,079,773, paid a brokerage fee
to The Intercable Group, Ltd. ("The Intercable Group"), a wholly owned
subsidiary of Intercable, totaling approximately $4,374,484, representing 2.5
percent of the $174,979,350 sales price, for acting as a broker in this
transaction, settled working capital adjustments, and then deposited $5,298,000
into an interest-bearing indemnity escrow account. The remaining net sale
proceeds totaling $82,551,081 were distributed to the Partnership's limited
partners of record as of February 26, 1999. This distribution was made in March
1999. Such distribution represented an approximate return of $387 for each $500
limited partnership interest, or $774 for each $1,000 invested in the
Partnership. Because limited partners did 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 did not receive a general partner distribution from the sale of
the Barrington System and the South Suburban System.
The $5,298,000 of the sale proceeds placed in the interest-bearing
indemnity escrow account will remain in escrow until November 15, 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 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 plus interest earned on the escrowed funds will be returned to
the Partnership. From this amount, the Partnership will pay its remaining
liabilities, which totaled $2,783,674 at June 30, 1999, it will retain funds
necessary to cover the administrative expenses of the Partnership and it will
then distribute the balance, if any, to the Partnership's limited partners. The
Partnership will continue in existence at least until any amounts remaining from
the indemnity escrow account have been distributed.
Although the sale of the Barrington System and the South Suburban System
represented the sale of the only remaining operating assets of the Partnership,
the Partnership will not be dissolved until all proceeds from escrow have been
distributed and the pending litigation in which the Partnership is a named
defendant has been resolved and terminated. (See Part II, Item 1)
(3) The General Partner manages the Partnership and received 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 June 30, 1999 and 1998 were $-0- and $506,204, respectively. Management
fees paid to the General Partner by the Partnership for the six month periods
ended
6
June 30, 1999 and 1998 were $316,010 and $1,009,037, respectively. The General
Partner has not received and will not receive a management fee after February
26, 1999.
The Partnership will continue to reimburse the General Partner for certain
administrative expenses. These expenses represent the salaries and related
benefits paid for corporate personnel. Such personnel provide administrative,
accounting, tax, legal and investor relations services to the Partnership. Such
services, and their related costs, are necessary to the administration of the
Partnership. Reimbursements by the Partnership to the General Partner for
overhead and administrative expenses for the three month periods ended June 30,
1999 and 1998 were $10,760 and $610,405, respectively. Reimbursements by the
Partnership to the General Partner for overhead and administrative expenses for
the six month periods ended June 30, 1999 and 1998 were $318,804 and $1,187,711,
respectively.
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CABLE TV FUND 15-A, LTD.
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(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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FINANCIAL CONDITION
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On February 26, 1999, the Partnership sold its Barrington System and
South Suburban System to an unaffiliated party for $174,979,350. Upon the
closing of the sale of the Barrington System and the South Suburban System, the
Partnership repaid all of its indebtedness, which totaled $84,079,773, paid a
brokerage fee to The Intercable Group totaling approximately $4,374,484,
representing 2.5 percent of the $174,979,350 sales price, for acting as a broker
in this transaction, settled working capital adjustments, and then deposited
$5,298,000 into an interest-bearing indemnity escrow account. The remaining net
sale proceeds totaling $82,551,081 were distributed to the Partnership's limited
partners of record as of February 26, 1999. This distribution was made in March
1999. Such distribution represented an approximate return of $387 for each $500
limited partnership interest, or $774 for each $1,000 invested in the
Partnership. Because limited partners did 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 did not receive a general partner distribution from the sale of
the Barrington System and the South Suburban System.
The $5,298,000 of the sale proceeds placed in the interest-bearing
indemnity escrow account will remain in escrow until November 15, 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 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 plus interest earned on the escrowed funds will be returned to
the Partnership. From this amount, the Partnership will pay its remaining
liabilities, which totaled $2,783,674 at June 30, 1999, it will retain funds
necessary to cover the administrative expenses of the Partnership and it will
then distribute the balance, if any, to the Partnership's limited partners. The
Partnership will continue in existence at least until any amounts remaining from
the indemnity escrow account have been distributed.
Although the sale of the Barrington System and the South Suburban
System represented the sale of the only remaining operating assets of the
Partnership, the Partnership will not be dissolved until all proceeds from
escrow have been distributed and the pending litigation in which the Partnership
is a named defendant has been resolved and terminated. (See Part II, Item 1)
Because the Partnership has sold all of its assets and further
distributions, if any, will be made to the limited partners of record as of the
closing date of the sale of the Partnership's last remaining cable television
system, new limited partners would not be entitled to any distributions from the
Partnership and transfers of limited partnership interests would have no
economic or practical value. The General Partner therefore has determined, in
accordance with the authority granted to it under Section 3.5 of the
Partnership's limited partnership agreement, that it will not process any
transfers of limited partnership interests in the Partnership during the
remainder of the Partnership's term.
8
RESULTS OF OPERATIONS
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Due to the sale of the Barrington System and the South Suburban System on
February 26, 1999, which were the Partnership's only operating assets, a full
discussion of results of operations would not be meaningful. The Partnership had
total revenues of $6,320,196 and generated an operating loss of $239,348 for the
six months ended June 30, 1999. Other expense of $661,561 incurred through the
second quarter of 1999 related to various costs associated with the sale of the
Partnership's systems. Because of the gain of $120,634,133 on the sale of the
systems, the Partnership realized net income of $118,857,078. The limited
partners' net income allocation totaled $117,602,416, or $551.67 per limited
partnership unit, for the six months ended June 30, 1999.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In July 1999, Jones Intercable, Inc., each of its subsidiaries that
serve as general partners of managed public partnerships and most of its managed
public partnerships, including the Partnership, were named defendants in a case
styled Everest Cable Investors, LLC, Everest Properties, LLC, Everest Properties
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II, LLC and KM Investments, LLC, plaintiffs v. Jones Intercable, Inc., et al.,
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defendants (Superior Court, Los Angeles County, State of California, Case No.
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C213638). Plaintiffs, all of which are affiliated with each other, are in the
business of, among other things, investing in limited partnerships that own and
operate cable television systems. Plaintiffs allege that one of the plaintiffs
has been a limited partner or has obtained a valid power-of-attorney from a
limited partner in each of Jones Intercable, Inc.'s managed public partnerships
and that they had formed a coordinated plan amongst themselves to acquire up to
4.9% of the limited partnership interests in each of Jones Intercable, Inc.'s
managed public partnerships during the latter half of 1996. Plaintiffs'
complaint alleges that they were frustrated in this purpose by Jones Intercable,
Inc.'s refusal to provide plaintiffs with lists of the names and addresses of
the limited partners of Jones Intercable, Inc.'s managed public partnerships.
The complaint alleges that Jones Intercable Inc.'s actions constituted a breach
of contract, a breach of Jones Intercable, Inc.'s implied covenant of good faith
and fair dealing owed to the plaintiffs as limited partners, a breach of Jones
Intercable, Inc.'s fiduciary duty owed to the plaintiffs as limited partners and
tortious interference with prospective economic advantage. Plaintiffs allege
that Jones Intercable, Inc.'s failure to provide them with the partnership lists
prevented them from making their tender offers and the plaintiffs claim that
they have been injured by such action in an amount to be proved at trial, but
not less than $17 million. Given the fact that this case was only recently filed
and that the time for Jones Intercable, Inc.'s response to the complaint has not
yet expired, Jones Intercable, Inc. has not yet responded to this complaint.
Jones Intercable, Inc. believes, however, that it and the defendant subsidiaries
and managed public partnerships have defenses to the plaintiffs' claims for
relief, and Jones Intercable, Inc. intends to defend this lawsuit vigorously
both on its own behalf and on behalf of its subsidiaries and its managed public
partnerships.
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 7, 1999, filed on April 15,
1999, reported that on April 7, 1999, Comcast Corporation
completed the acquisition of a controlling interest in the General
Partner.
10
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/ Lawrence S. Smith
-----------------------------------
Lawrence S. Smith
Principal Accounting Officer
By: /S/ Joseph J. Euteneuer
-----------------------------------
Joseph J. Euteneuer
Vice President (Authorized Officer)
Dated: August 16, 1999
11