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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, 1994.
( ) 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: 0-13193
CABLE TV FUND 12-A, LTD.
Exact name of registrant as specified in charter
Colorado #84-0968104
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 (l) has filed all reports
required to be filed by Section l3 or l5(d) of the Securities Exchange Act of
l934 during the preceding l2 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 12-A
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
March 31, December 31,
Assets 1994 1993
------------ ------------
CASH $ 1,082,541 $ 1,610,187
TRADE RECEIVABLES, less allowance for
doubtful receivables of $37,494 and $49,157
at March 31, 1994 and December 31, 1993, respectively 495,844 492,896
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 68,253,534 67,276,230
Less- accumulated depreciation (36,564,246) (35,137,424)
------------ ------------
31,689,288 32,138,806
Franchise costs, net of accumulated amortization
of $19,424,617 and $19,132,967 at March 31, 1994
and December 31, 1993, respectively 3,927,505 4,219,155
Subscriber lists, net of accumulated amortization
of $11,115,407 and $11,013,590 at March 31, 1994
and December 31, 1993, respectively 495,458 597,275
------------ ------------
Total investment in cable television properties 36,112,251 36,955,236
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 250,861 239,671
------------ ------------
Total assets $ 37,941,497 $ 39,297,990
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these balance sheets.
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CABLE TV FUND 12-A
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1994 1993
------------ ------------
LIABILITIES:
Debt $ 28,566,512 $ 29,724,530
Accounts payable-
Trade 84,728 36,877
General Partner 197,353 220,722
Accrued liabilities 812,249 1,109,852
Subscriber prepayments 164,389 175,959
------------ ------------
Total liabilities 29,825,231 31,267,940
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PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (367,346) (368,208)
------------ ------------
(366,346) (367,208)
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Limited Partners-
Net contributed capital (104,000 units
outstanding at March 31, 1994 and
December 31, 1993) 44,619,655 44,619,655
Accumulated deficit (36,137,043) (36,222,397)
------------ ------------
8,482,612 8,397,258
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Total liabilities and partners' capital (deficit) $ 37,941,497 $ 39,297,990
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these balance sheets.
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CABLE TV FUND 12-A
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31,
----------------------------
1994 1993
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REVENUES $7,300,740 $7,281,996
COSTS AND EXPENSES:
Operating, general and administrative 4,080,260 4,081,368
Management fees and allocated overhead from
General Partner 931,063 828,715
Depreciation and amortization 1,820,290 1,974,266
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OPERATING INCOME 469,127 397,647
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OTHER INCOME (EXPENSE):
Interest expense (371,400) (426,465)
Other, net (11,511) (10,736)
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Total other income
(expense), net (382,911) (437,201)
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NET INCOME (LOSS) $ 86,216 $ (39,554)
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ALLOCATION OF NET INCOME (LOSS):
General Partner $ 862 $ (396)
========== ==========
Limited Partners $ 85,354 $ (39,158)
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NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ .82 $ (.38)
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WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 104,000 104,000
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The accompanying notes to unaudited financial statements
are an integral part of these statements.
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CABLE TV FUND 12-A
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31,
---------------------------
1994 1993
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 86,216 $ (39,554)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 1,820,290 1,974,266
Amortization of interest rate protection
contract 12,501 12,489
Decrease in amount due General Partner (23,369) (106,031)
Decrease (increase) in trade receivables (2,949) 31,228
Increase in deposits, prepaid expenses
and deferred charges (23,690) (36,311)
Decrease in trade accounts payable, accrued
liabilities and subscriber prepayments (261,323) (594,305)
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Net cash provided by operating activities 1,607,676 1,241,782
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (977,304) (692,292)
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Net cash used in investing activities (977,304) (692,292)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 46,448 -
Repayment of debt (1,204,466) (782,287)
Purchase of interest rate protection contract - (150,000)
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Net cash used in financing activities (1,158,018) (932,287)
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Decrease in cash (527,646) (382,797)
Cash, beginning of period 1,610,187 1,599,111
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Cash, end of period $ 1,082,541 $ 1,216,314
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SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 383,617 $ 562,157
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The accompanying notes to unaudited financial statements
are an integral part of these statements.
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CABLE TV FUND 12-A
(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 fair 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 12-A (the
"Partnership") at March 31, 1994 and December 31, 1993 and its Statements of
Operations and Cash Flows for the three month periods ended March 31, 1994 and
1993. 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
areas in and around Fort Myers, Florida, Lake County, Illinois, Orland Park,
Illinois and Park Forest, Illinois.
(2) Jones Intercable, Inc., a publicly held Colorado corporation (the
"General Partner"), manages the Partnership and receives a fee for its services
equal to 5 percent of the gross revenues of the Partnership, excluding revenues
from the sale of cable television systems or franchises. Management fees for
the three month periods ended March 31, 1994 and 1993 were $365,037 and
$364,100, respectively.
The Partnership reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses consist primarily of
salaries and benefits paid to corporate personnel, rent, data processing
services and other facilities costs. Such personnel provide engineering,
marketing, administrative, accounting, legal and investor relations services to
the Partnership. Allocations of personnel costs are based primarily on actual
time spent by employees of the General Partner with respect to each partnership
managed. Remaining overhead costs are allocated based on revenues and/or the
cost of assets managed for the Partnership. Effective December 1, 1993, the
allocation method was changed to be based only on revenue, which the General
Partner believes provides a more accurate method of allocation. 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. Amounts
charged the Partnership by the General Partner for allocated overhead and
administrative expenses for the three month periods ended March 31, 1994 and
1993 were $566,026 and $464,615, respectively.
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CABLE TV FUND 12-A
(A Limited Partnership)
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
Capital expenditures totalled approximately $977,000 during the first
three months of 1994. Approximately 46 percent of these expenditures related
to rebuild and upgrade projects in the Partnership's systems. Approximately 27
percent of these expenditures related to the construction of service drops to
subscribers' homes and approximately 7 percent of the expenditures related to
the construction of new cable plant. The remaining expenditures were used for
various enhancements in the Partnership's systems. Funding for these
expenditures was provided by cash generated from operations. Anticipated
capital expenditures for the remainder of 1994 are approximately $3,791,000.
Approximately 58 percent of these remaining expenditures is expected to be used
for rebuild and upgrade projects in all of the Partnership's systems.
Approximately 18 percent will be used for the construction of service drops to
subscribers' homes, and approximately 8 percent is expected to be used to
continue construction of new cable plant. The remainder of the anticipated
expenditures is expected to be used for various enhancements in all of the
Partnership's systems. Funding for these expenditures is expected to be
provided by cash flow of the Partnership. The level of capital expenditures
will depend, in part, upon the General Partner's determination as to the proper
scope and timing of such expenditures in light of the FCC's further rulemaking
regarding the 1992 Cable Act on February 22, 1994, and the Partnership's
liquidity position.
During March 1990, the General Partner renegotiated the Partnership's
$35,000,000 credit facility, extending the revolving credit period to June 30,
1992, at which time the then-outstanding balance of $34,000,000 converted to a
term loan. The term loan is payable in 20 consecutive quarterly installments
that commenced on September 30, 1992. At March 31, 1994, $28,375,000 was
outstanding under this term loan. Installments paid during the first quarter of
1994 totalled $1,125,000. Payments due for the remainder of 1994 total
$3,375,000. The General Partner is currently negotiating to reduce amortization
payments in order to provide liquidity for capital expenditures. Generally,
interest payable on amounts borrowed under the term loan is at the Partnership's
option of prime plus 1/2 percent or a fixed rate defined as the CD rate plus
1-1/4 percent or the Euro-Rate plus 1-1/4 percent. The effective interest rates
on outstanding obligations as of March 31, 1994 and 1993 were 4.69 percent and
4.5 percent, respectively. In January 1993, the Partnership entered into an
interest rate cap agreement covering outstanding debt obligations of
$15,000,000. The Partnership paid a fee of $150,000. The agreement protects the
Partnership from interest rates that exceed 7 percent for three years from the
date of the agreement. The Partnership is charging the fee to interest expense
over the life of the agreement.
Subject to regulatory matters discussed below and assuming successful
renegotiation of the credit facility, the General Partner believes that the
Partnership has sufficient sources of capital from cash on hand and cash
generated from operations to meet its presently anticipated needs.
Regulatory Matters
Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which became effective on
December 4, 1992. This legislation has caused significant changes to the
regulatory environment in which the cable television industry operates. The
1992 Cable Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States, including those
owned and managed by the Partnership, are subject to rate regulation of basic
cable services. In addition, the 1992 Cable Act allows the FCC to regulate
rates for non-basic service tiers other than premium services in response to
complaints filed by franchising authorities and/or cable subscribers. In April
1993, the FCC adopted regulations governing rates for basic and non-basic
services. The FCC's rules became effective on September 1, 1993.
Based on the General Partner's assessment of the FCC's rulemakings
concerning rate regulation under the 1992 Cable Act, the Partnership reduced
rates charged for certain regulated services effective September 1, 1993.
These reductions resulted in some decrease in revenues and operating income
before depreciation and amortization, however the decrease is not as severe as
originally anticipated. On February 22, 1994, the FCC announced a further
rulemaking which could reduce rates further. The new rate regulations, which
were released in March 1994, will be effective on May 15,
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1994. However, the rules provide for a deferral of refund liability for 60 days
under certain conditions, effectively making the rules effective on July 14,
1994. The new rate regulations will likely require further reductions in rates
in most of the Partnership's systems. The General Partner has not yet been able
to quantify the impact of the new rate regulations, but it believes that the new
rate regulations will have a negative effect on revenues and operating income
before depreciation and amortization. The General Partner has undertaken
actions to mitigate a portion of these reductions primarily through (a) new
service offerings, (b) product re-marketing and re-packaging and (c) marketing
efforts directed at non-subscribers.
The 1992 Cable Act contains new broadcast signal carriage requirements,
and the FCC has adopted regulations implementing the statutory requirements.
These new rules allow a local commercial broadcast television station to elect
whether to demand that a cable system carry its signal or to require the cable
system to negotiate with the station for "retransmission consent." A cable
system is generally required to devote up to one-third of its activated channel
capacity for the mandatory carriage of local commercial broadcast television
stations, and non-commercial television stations are also given mandatory
carriage rights, although such stations are not given the option to negotiate
retransmission consent for the carriage of their signals by cable systems.
Additionally, cable systems also are required to obtain retransmission consent
from all commercial television stations (except for commercial
satellite-delivered independent "superstations"), which do not elect mandatory
carriage, commercial radio stations and, in some instances, low-power
television stations carried by cable systems.
The retransmission consent rules went into effect on October 6, 1993.
Throughout all cable television systems owned by the Partnership no television
stations withheld their consent to retransmission of their signal. Certain
other broadcast signals are being carried pursuant to extensions, and the
General Partner expects to finally conclude retransmission consent negotiations
with those remaining stations without having to terminate the distribution of
any of those signals. However, there can be no assurance that such will occur.
If any broadcast station currently being carried pursuant to an extension is
dropped, there could be a negative effect on the system in which it is dropped
if a significant number of subscribers in such system were to disconnect their
service. However, in most cases, only one broadcaster in any market is being
carried pursuant to an extension arrangement, and the dropping of such
broadcaster, were that to occur, is not expected to have a negative effect on
the system.
There have been several lawsuits filed by cable operators and
programmers in Federal court challenging various aspects of the 1992 Cable Act,
including provisions relating to mandatory broadcast signal carriage,
retransmission consent, access to cable programming, rate regulations,
commercial leased channels and public access channels. On April 8, 1993, a
three-judge Federal district court panel issued a decision upholding the
constitutionality of the mandatory signal carriage requirements of the 1992
Cable Act. That decision has been appealed directly to the United States
Supreme Court and a decision is expected in the next several months. Appeals
have been filed in the Federal appellate court challenging the validity of the
FCC's retransmission consent rules.
RESULTS OF OPERATIONS
Revenues of the Partnership increased $18,744, or less than 1 percent,
from $7,281,996 for the first quarter of 1993 to $7,300,740 for the comparable
1994 period. Advertising sales revenue primarily accounted for the increase in
revenue. The Partnership has added approximately 2,700 basic subscribers since
March 31, 1993, an increase of 4 percent. Basic subscribers totalled 66,688
at March 31, 1993 compared to 69,426 at March 31, 1994. These increases in
revenues were offset by a reduction in revenues caused by the reduction in
basic rates due to new basic rate regulations issued by the FCC in May 1993
with which Fund 12-A complied effective September 1, 1993. In addition, on
February 22, 1994, the FCC announced a further rulemaking which could reduce
rates further.
Operating, general and administrative expenses decreased $1,108, or
less than 1 percent, from $4,081,368 for the first quarter of 1993 to
$4,080,260 for the comparable period in 1994. Operating, general and
administrative expense represented 56 percent of revenue for the first quarters
of 1994 and 1993. Increases in programming fees and advertising sales expense
were offset by decreases in copyright fees, marketing related expense, plant
related expense and bad debt expense. No other individual factor was
significant to the decrease in operating, general and administrative expense.
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Management fees and allocated overhead from the General Partner increased
$102,348, or approximately 12 percent, from $828,715 for the first three months
of 1993 to $931,063 for the comparable 1994 period. This increase was due
primarily to an increase in allocated expenses from the General Partner.
Depreciation and amortization expense decreased $153,976, or approximately 8
percent, from $1,974,266 for the first three months of 1993 to $1,820,290 for
the comparable 1994 period due to the maturation of the Partnership's asset
base.
Operating income increased $71,480, or approximately 18 percent, from
$397,647 in 1993 to $469,127 in 1994. This was due primarily to the decrease
in depreciation and amortization expense. Operating income before depreciation
and amortization decreased $82,496, or approximately 3 percent, from $2,371,913
for the three months ended March 31, 1993 to $2,289,417 for the similar period
in 1994. This decrease is due to the increases in operating, general and
administrative expense and management fees and allocated overhead from the
General Partner exceeding the increase in revenues.
Interest expense decreased $55,065, or approximately 13 percent, from
$426,465 for the first quarter of 1993 to $371,400 for the comparable 1994
period. This decrease is due to lower outstanding balances on interest bearing
obligations. The Partnership recorded net income of $86,216 for the first
quarter of 1994 compared to a net loss of $39,554 for the comparable 1993
period. The change is due primarily to the increase in operating income and
the decrease in interest expense.
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Part II - OTHER INFORMATION
NONE
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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 12-A
BY: JONES INTERCABLE, INC.
General Partner
By: /s/ KEVIN P. COYLE
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 13, 1994
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