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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 September 30, 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: 0-11911
Cable TV Fund 11-B, Ltd.
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Exact name of registrant as specified in charter
Colorado 84-0908730
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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
-----------------------------
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 11-B
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
September 30, December 31,
1994 1993
------------- ------------
ASSETS
------
CASH $ 97,383 $ 1,171,764
TRADE RECEIVABLES, less allowance for doubtful
receivables of $83,175 and $79,607 at
September 30, 1994 and December 31, 1993,
respectively 347,666 392,119
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 38,261,093 33,288,508
Less- accumulated depreciation (15,778,630) (14,068,966)
------------ ------------
22,482,463 19,219,542
Investment in cable television joint venture 543,234 521,450
------------ ------------
Total investment in cable television
properties 23,025,697 19,740,992
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 1,026,351 993,169
------------ ------------
Total assets $ 24,497,097 $ 22,298,044
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these balance sheets.
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CABLE TV FUND 11-B
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
September 30, December 31,
1994 1993
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
LIABILITIES:
Debt $ 20,758,152 $ 18,089,150
Accounts payable-
Trade 118,216 284,471
General Partner - 42,288
Accrued liabilities 548,351 1,051,821
Subscriber prepayments 44,712 52,346
------------ ------------
Total liabilities 21,469,431 19,520,076
------------ ------------
PARTNERS' CAPITAL:
General Partner-
Contributed capital 1,000 1,000
Accumulated earnings 54,937 52,440
------------ ------------
55,937 53,440
------------ ------------
Limited Partners-
Net contributed capital
(38,026 units outstanding at
September 30, 1994 and December
31, 1993) 15,661,049 15,661,049
Distributions (19,013,121) (19,013,121)
Accumulated earnings 6,323,801 6,076,600
------------ ------------
2,971,729 2,724,528
------------ ------------
Total liabilities and
partners' capital $ 24,497,097 $ 22,298,044
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these balance sheets.
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CABLE TV FUND 11-B
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
1994 1993 1994 1993
----------- ------------ ----------- -----------
REVENUES $ 3,201,789 $ 2,852,021 $ 9,431,304 $ 8,736,735
COSTS AND EXPENSES:
Operating, general and
administrative 1,882,886 2,003,024 5,491,457 5,490,248
Management fees and
allocated overhead
from General Partner 381,823 337,162 1,181,624 1,014,128
Depreciation and
amortization 581,412 453,334 1,757,060 1,361,668
----------- ------------ ----------- -----------
OPERATING INCOME 355,668 58,501 1,001,163 870,691
----------- ------------ ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (311,086) (162,338) (759,670) (416,021)
Other, net 720 5,615 (13,579) (32,186)
----------- ------------ ----------- -----------
Total other income
(expense), net (310,366) (156,723) (773,249) (448,207)
----------- ------------ ----------- -----------
INCOME (LOSS) BEFORE EQUITY
IN NET INCOME OF CABLE
TELEVISION JOINT VENTURE 45,302 (98,222) 227,914 422,484
EQUITY IN NET INCOME OF
CABLE TELEVISION JOINT VENTURE 6,823 6,254 21,784 13,076
----------- ------------ ----------- -----------
NET INCOME (LOSS) $ 52,125 $ (91,968) $ 249,698 $ 435,560
=========== ============ =========== ===========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ 521 $ (919) $ 2,497 $ 4,356
=========== ============ =========== ===========
Limited Partners $ 51,604 $ (91,049) $ 247,201 $ 431,204
=========== ============ =========== ===========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ 1.36 $ (2.39) $ 6.50 $ 11.34
=========== ============ =========== ===========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 38,026 38,026 38,026 38,026
=========== ============ =========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these statements.
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CABLE TV FUND 11-B
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Nine Months Ended
September 30,
-------------------------------------
1994 1993
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 249,698 $ 435,560
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,757,060 1,361,668
Amortization of interest rate protection contract 15,003 18,783
Equity in net income of cable television joint venture (21,784) (13,076)
Decrease in amount due General Partner (42,288) (177,673)
Decrease (increase) in trade receivables 44,453 (114,521)
Decrease (increase) in deposits, prepaid expenses and
deferred charges (95,581) 26,179
Decrease in accounts payable, accrued
liabilities and subscriber prepayments (677,359) (881,195)
------------ ------------
Net cash provided by operating activities 1,229,202 655,725
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (4,972,585) (5,969,221)
------------ ------------
Net cash used in investing activities (4,972,585) (5,969,221)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 2,750,000 5,315,201
Repayment of debt (80,998) (51,763)
------------ ------------
Net cash provided by financing activities 2,669,002 5,263,438
------------ ------------
Decrease in cash (1,074,381) (50,058)
Cash, beginning of period 1,171,764 187,901
------------ ------------
Cash, end of period $ 97,383 $ 137,843
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 536,764 $ 487,921
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these statements.
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CABLE TV FUND 11-B
(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 11-B (the
"Partnership") at September 30, 1994 and December 31, 1993 and its Statements
of Operations and Cash Flows for the three and nine month periods ended
September 30, 1994 and 1993. Results of operations for these periods are not
necessarily indicative of results to be expected for the full year.
(2) Jones Intercable, Inc., a publicly held Colorado corporation (the
"General Partner"), manages the cable television system serving areas in and
around Lancaster, New York (the "New York Systems") owned directly by the
Partnership and the cable television system owned by Cable TV Joint Fund 11
(the "Venture"), in which the Partnership owns an approximate 8 percent
interest, 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 for the three and
nine month periods ended September 30, 1994 (excluding the Partnership's 8
percent interest in the Venture) were $160,089 and $471,565, respectively, as
compared to $142,601 and $436,837, respectively, for the similar 1993 periods.
The Partnership and the Venture reimburse the General Partner for
certain allocated overhead and administrative expenses. These expenses
represent the salaries and related benefits paid for corporate personnel, rent,
data processing services and other corporate facilities costs. Such personnel
provide engineering, marketing, administrative, accounting, legal and investor
relations services to the Partnership and the Venture. Allocations of
personnel costs are primarily based upon actual time spent by employees of the
General Partner with respect to each partnership managed. Remaining overhead
costs were allocated based upon revenues and/or 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. Reimbursements by the Partnership
to the General Partner for allocated overhead and administrative expenses for
the three and nine month periods ended September 30, 1994 (excluding the
Partnership's 8 percent interest in the Venture) were $221,734 and $710,059,
respectively, as compared to $194,561 and $577,291, respectively, for the
similar 1993 periods.
(3) On June 29, 1990, the Venture completed the sale of all of its
Wisconsin cable television systems, except for the system serving the City of
Manitowoc (the "Manitowoc System"). The Manitowoc System was not sold because
the City of Manitowoc (the "City") did not consent to the transfer of the
franchise. The City of Manitowoc franchise contains a provision that the City
claimed allowed the City to acquire the Manitowoc System upon expiration of the
franchise. On April 9, 1991, the Venture took legal action, seeking a
declaration as to whether the buy-out right was enforceable under Federal law.
In October 1993, the City and the Venture settled the legal action. In the
settlement, the City conceded that its buy-out right was not applicable in the
event the franchise is renewed, and represented to the Venture that it knew of
no reason for non-renewal of the franchise. The City also agreed that the term
of the renewal franchise would be 12 years and that the applicable franchise
fee would be 5 percent. The Venture paid the City $1,850,000, which will be
returned, with interest, in the event that the City does not renew the
franchise. If the franchise is renewed, the $1,850,000 will be amortized over
the life of the franchise. The franchise renewal process has begun and the
General Partner expects that it will be completed by early 1995. Upon
completion of the franchise renewal process, the Venture will consider selling
the Manitowoc System. Otherwise, the Venture will continue to own and operate
the Manitowoc System for the foreseeable future.
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(4) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
September 30, December 31,
1994 1993
------------- ------------
ASSETS
------
Cash and accounts receivable $ 2,535,874 $ 1,891,454
Investment in cable television properties 2,749,050 2,866,705
Other assets 1,853,073 1,851,983
------------- -------------
Total assets $ 7,137,997 $ 6,610,142
============= =============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Debt $ 11,494 $ 20,129
Payables and accrued liabilities 621,842 365,349
Partners' contributed capital 45,000,000 45,000,000
Distributions (118,914,493) (118,914,493)
Accumulated earnings 80,419,154 80,139,157
------------- -------------
Total liabilities and partners' capital $ 7,137,997 $ 6,610,142
============= =============
UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
----------------------------- --------------------------------
1994 1993 1994 1993
--------- --------- ----------- -----------
Revenues $ 816,871 $ 823,842 $ 2,451,528 $ 2,470,303
Operating, general and
administrative expenses (513,846) (489,256) (1,496,536) (1,452,750)
Management fees and
allocated overhead from
Jones Intercable, Inc. (103,112) (97,408) (320,042) (303,149)
Depreciation and amortization (129,611) (130,505) (389,667) (386,654)
--------- --------- ----------- -----------
Operating Income 70,302 106,673 245,283 327,750
Interest expense (1,186) (2,478) (11,652) (6,223)
Interest income 18,408 26,969 53,970 82,866
Other, net 172 (50,773) (7,604) (236,319)
--------- --------- ----------- -----------
Net income $ 87,696 $ 80,391 $ 279,997 $ 168,074
========= ========= =========== ===========
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Management fees paid to the General Partner by the Venture totalled
$40,843 and $122,576, respectively, for the three and nine month periods ended
September 30, 1994 and $41,192 and $123,515, respectively, for the three and
nine month periods ended September 30, 1993. Reimbursements for overhead and
administrative expenses paid to the General Partner by the Venture totalled
$62,269 and $197,466, respectively, for the three and nine month periods ended
September 30, 1994, and $56,216 and $179,634, respectively, for the three and
nine month periods ended September 30, 1993.
Management fees paid by the Venture and attributable to the
Partnership's approximate 8 percent interest totalled $3,178 and $9,537,
respectively, for the three and nine month periods ended September 30, 1994 and
$3,205 and $9,609, respectively, for the three and nine month periods ended
September 30, 1993. Reimbursements for overhead and administrative expense
paid by the Venture and attributable to the Partnership's interest totalled
$4,845 and $15,363, respectively, for the three and nine month periods ended
September 30, 1994 and $4,374 and $13,976, respectively, for the three and nine
month periods ended September 30, 1993.
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CABLE TV FUND 11-B
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Partnership expended approximately $4,973,000 on capital
improvements during the nine months ended September 30, 1994. Of this total,
approximately 83 percent related to the continuation of the rebuild and upgrade
of the New York Systems and the construction of a new operations facility. The
remainder of the capital expenditures were for plant extensions and various
other enhancements in the New York Systems. Funding for these expenditures was
provided by cash generated from operations and borrowings under the
Partnership's credit facility. Subject to the regulatory matters discussed
below, budgeted capital additions for the remainder of 1994 are approximately
$1,200,000. The rebuild and upgrade of the New York Systems and the
construction of a new operations facility will account for approximately 70
percent of the expected capital expenditures. The remainder of the capital
expenditures will be used for plant extensions as well as for various other
enhancements in the New York Systems. The actual 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 rulemaking
regarding the 1992 Cable Act, and the Partnership's liquidity position.
Funding for these expenditures is expected to be provided by cash generated
from operations, borrowings under a renegotiated credit facility, and, at its
discretion, advances from the General Partner.
During March 1992, the Partnership entered into a $25,000,000 revolving
credit and term loan agreement. As a result of the subsequent sale of the cable
television system serving Grand Island, New York (the "Grand Island System"),
the maximum amount available was reduced to $20,000,000 in July 1992. The
revolving credit period expires December 31, 1994, at which time the outstanding
balance converts to a term loan payable in 24 consecutive quarterly installments
commencing March 31, 1995. As of September 30, 1994, $20,000,000 was
outstanding under this agreement. The General Partner currently anticipates
renegotiating the credit facility in the fourth quarter of 1994 to increase the
commitment and extend the revolving credit period. If the credit facility is
not renegotiated, the Partnership will need to rely on cash generated from
operations and advances from the General Partner to fund capital expenditures.
Such advances will be made in the General Partner's discretion and the General
Partner has no obligation to make any advances to the Partnership. Interest
payable on outstanding amounts under the credit facility is at the Partnership's
option of the Prime Rate or a fixed rate of LIBOR plus 1.125 percent. The
effective interest rates on outstanding obligations as of September 30, 1994 and
1993 were 6.04 percent and 4.33 percent, respectively.
Subject to regulatory matters discussed below and assuming successful
renegotiation of the credit facility of which there can be no assurance, the
Partnership has sufficient sources of capital available to meet its presently
anticipated needs.
In addition to the systems owned by it directly, the Partnership owns
an approximate 8 percent interest in the Venture. The investment in this cable
television joint venture is accounted for under the equity method. When
compared to the December 31, 1993 balance, this investment increased by
$21,784. This increase represents the Partnership's proportionate share of
income generated by the Venture during the first nine months of 1994.
On June 29, 1990, the Venture completed the sale of all of its
Wisconsin cable television systems, except for the system serving the City of
Manitowoc (the "Manitowoc System"). The Manitowoc System was not sold because
the City of Manitowoc (the "City") did not consent to the transfer of the
franchise. The City of Manitowoc franchise contains a provision that the City
claimed allowed the City to acquire the Manitowoc System upon expiration of the
franchise. On April 9, 1991, the Venture took legal action, seeking a
declaration as to whether the buy-out right was enforceable under Federal law.
In October 1993, the City and the Venture settled the legal action. In the
settlement, the City conceded that its buy-out right was not applicable in the
event the franchise is renewed, and represented to the Venture that it knew of
no reason for non-renewal of the franchise. The City also agreed that the term
of the renewal franchise would be 12 years and that the applicable franchise
fee would be 5 percent. The Venture paid the City $1,850,000, which will be
returned, with interest, in the event that the City does not renew the
franchise. If the
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franchise is renewed, the $1,850,000 will be amortized over the life of the
franchise. The franchise renewal process has begun and the General Partner
expects that it will be completed by early 1995. Upon completion of the
franchise renewal process, the Venture will consider selling the Manitowoc
System. Otherwise, the Venture will continue to own and operate the Manitowoc
System for the foreseeable future.
During the first nine months of 1994, the Venture expended
approximately $272,000 for capital expenditures in the Manitowoc System,
consisting of various projects to maintain the value of the system. These
expenditures were funded by cash generated from operations. Anticipated
capital expenditures for the remainder of 1994 are approximately $78,000.
These expenditures will be for various projects to maintain the value of the
system. It is expected that these capital expenditures will be funded by cash
on hand and cash generated from operations.
The Venture had no bank debt outstanding at September 30, 1994.
Subject to regulatory matters discussed below, the Venture has
sufficient liquidity and capital resources, including cash on hand and its
ability to generate cash from operations, to meet its presently anticipated
needs.
Regulation and Legislation
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 and the Venture, 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.
In compliance with these rules, the Partnership and the Venture
reduced rates charged for certain regulated services effective September 1,
1993. These initial reductions resulted in some decrease in revenues and
operating income before depreciation and amortization; however the decrease was
not as severe as originally anticipated. The General Partner undertook actions
to mitigate these reductions primarily through (a) new service offerings in
some systems, (b) product re-marketing and re-packaging and (c) marketing
efforts directed at non-subscribers.
On February 22, 1994, however, the FCC adopted several additional rate
orders including an order which revised its earlier-announced regulatory
scheme with respect to rates. The FCC's new regulations will generally require
rate reductions, absent a successful cost-of-service showing, of 17 percent of
September 30, 1992 rates, adjusted for inflation, channel modifications,
equipment costs, and increases in programming costs. However, the FCC held
rate reductions in abeyance in certain systems. The new regulations became
effective on May 15, 1994, but operators could elect to defer rate reductions
to July 14, 1994, so long as they made no changes in their rates and did not
restructure service offerings between May 15, 1994 and July 14, 1994.
On February 22, 1994, the FCC also adopted interim cost-of-service
regulations. Rate reductions will not be required where it is successfully
demonstrated that rates for basic and other regulated programming services are
justified and reasonable using cost-of-service standards. The FCC established
an interim industry-wide 11.25 percent permitted rate of return, and requested
comments on whether this standard and other interim cost-of-service standards
should be made permanent. The FCC also established a presumption that
acquisition costs above a system's book value should be excluded from the rate
base, but the FCC will consider individual showings to rebut this presumption.
The need for special rate relief will also be considered by the FCC if an
operator demonstrates that the rates set by a cost-of-service proceeding would
constitute confiscation of investment, and that, absent a higher rate, the
return necessary to operate and to attract investment could not be maintained.
The FCC will establish a uniform system of accounts for operators that elect
cost-of-service rate regulation, and the FCC has adopted affiliate transaction
regulations. After a rate has been set pursuant to a cost-of-service showing,
rate increases for regulated services will be indexed for inflation, and
operators will also be permitted to increase rates in response to increases in
costs beyond their control, such as taxes and increased programming costs.
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After analyzing the effect of the two methods of rate regulation, the
General Partner concluded that the Partnership should elect to file
cost-of-service showings for the New York Systems and the Venture should comply
with the benchmark regulations for the Manitowoc System. For the New York
Systems, the General Partner anticipates no further reduction in revenues or
operating income before depreciation and amortization resulting from the FCC's
rate regulations. The Venture complied with the new benchmark regulations and
further reduced rates in the Manitowoc System. The annualized reduction of
operating income before depreciation and amortization is approximately
$250,000, or 10 percent. The Venture will continue its efforts to mitigate the
effect of such rate reductions. To the extent such reductions are not
mitigated, the value of the Manitowoc System, which is calculated based on cash
flow, could be adversely impacted.
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 was appealed directly to the United States Supreme
Court. The United States Supreme Court vacated the lower court decision on
June 27, 1994 and remanded the case to the district court for further
development of a factual record. The Court's majority determined that the
must-carry rules were content neutral, but that it was not yet proven that the
rules were needed to preserve the economic health of the broadcasting industry.
In the interim, the must-carry rules will remain in place during the pendency
of the proceedings in district court. In 1993, a Federal district court for
the District of Columbia upheld provisions of the 1992 Cable Act concerning
rate regulation, retransmission consent, restrictions on vertically integrated
cable television operators and programmers, mandatory carriage of programming
on commercial leased channels and public, educational and governmental access
channels and the exemption for municipalities from civil damage liability
arising out of local regulation of cable services. The 1992 Cable Act's
provisions providing for multiple ownership limits for cable operators and
advance notice of free previews for certain programming services have been
found unconstitutional, and these decisions have been appealed. In November
1993, the United States Court of Appeals for the District of Columbia held that
the FCC's regulations implemented pursuant to Section 10 of the 1992 Cable Act,
which permit cable operators to ban indecent programming on public, educational
or governmental access channels or leased access channels, were
unconstitutional, but the court has agreed to reconsider its decision. All of
these decisions construing provisions of the 1992 Cable Act and the FCC's
implementing regulations have been or are expected to be appealed.
RESULTS OF OPERATIONS
Revenues of the New York Systems increased $349,768, or approximately
12 percent, from $2,852,021 for the three month period ended September 30, 1993
to $3,201,789 for the comparable 1994 period. Revenues increased $694,569, or
approximately 8 percent, from $8,736,735 for the nine month period ended
September 30, 1993 to $9,431,304 for the comparable 1994 period. An increase
in basic subscribers in the New York systems primarily accounted for the
increase in revenues. Basic subscribers increased 1,645, or approximately 5
percent, from 35,745 at September 30, 1993 to 37,390 at September 30, 1994. The
increase in revenues would have been greater but for the reduction in basic
rates due to new basic rate regulations issued by the FCC in May 1993 with
which the Partnership complied effective September 1, 1993. No other factors
individually were significant to the increase in revenues.
Operating, general and administrative expenses decreased $120,138, or
approximately 6 percent, from $2,003,024 for the three months ended September
30, 1993 to $1,882,886 for the comparable 1994 period. The decrease for the
three month period was due to decreases in marketing related expenses and
personnel expenses which were offset, in part, by increases in programming
expenses and advertising sales related expenses. For the nine month periods
ended September 30, 1993 and 1994, operating, general and administrative
expenses increased $1,209, or less than 1 percent, from $5,490,248 in 1993 to
$5,491,457 for the comparable 1994 period. The increase for the nine month
periods was due primarily to increases in programming expenses, copyright fees,
franchise fees and advertising sales related expense which were offset by
decreases in personnel expenses and marketing related expenses. Operating,
general and administrative expense represented 70 percent and 63 percent,
respectively, of revenues for the three and nine months periods of 1993 and 59
percent and 58 percent, respectively, of revenues for the comparable 1994
periods. No other factors individually were significant to the increase in the
Partnership's operating, general and administrative expenses. Management fees
and allocated overhead from the General Partner increased $44,661, or
approximately 13 percent, from $337,162 for the three months ended September
30, 1993 to
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$381,823 for the comparable 1994 period. For the nine months ended September
30, 1994, management fees and allocated overhead increased $167,496, or
approximately 17 percent, from $1,014,128 in 1993 to $1,181,624 in 1994. The
increases for the three and nine months was due to the increase in revenues,
upon which such fees and allocations are based, and an increase in expenses
allocated from the General Partner. The General Partner has experienced
increases in expenses, including personnel costs and reregulation costs, a
portion of which is allocated to the Partnership.
Depreciation and amortization increased $128,078, or approximately 28
percent, from $453,334 for the three month period ended September 30, 1993 to
$581,412 for the similar 1994 period. For the nine month periods, depreciation
and amortization increased $395,392, or approximately 29 percent, from
$1,361,668 to $1,757,060. These increases were due to capital additions during
1993.
Operating income increased $297,167, from $58,501 for the three month
periods ended September 30, 1993 to $355,668 for the comparable 1994 period due
to the increase in revenues exceeding the increases in management fees and
allocated overhead from the General Partner and depreciation and amortization
expense and the decrease in operating, general and administrative expense. For
the nine month periods, operating income increased $130,472, or approximately
15 percent, from $870,691 in 1993 to $1,001,163 in 1994 due primarily to the
increase in revenues exceeding the increases in operating, general and
administrative expenses and depreciation and amortization expense. Operating
income before depreciation and amortization increased $425,245, or
approximately 83 percent, from $511,835 for the three months ended September
30, 1993 to $937,080 at September 30, 1994 due to the increase in revenues and
the decrease in operating, general and administrative expenses. Operating
income before depreciation and amortization increased $525,864, or
approximately 24 percent, from $2,232,359 for the nine months ended September
30, 1993 to $2,758,223 at September 30, 1994 due to the increase in revenues
exceeding the increases in operating, general and administrative expense and
management fees and allocated overhead from the General Partner.
Interest expense increased $148,748 or approximately 92 percent, from
$162,338 for the three months ended September 30, 1993 to $311,086 at September
30, 1994. Interest expense increased for the nine months ended September 30,
1994 as compared to 1993 by $343,649, or approximately 83 percent, from
$416,021 in 1993 to $759,670 in 1994. These increases were due to higher
outstanding balances on interest bearing obligations and higher effective
interest rates. The Partnership recognized loss before equity in net income of
cable television venture of $98,222 for the three month period ending September
30, 1993 compared to income before equity in net income of cable television
venture of $45,302 for the comparable 1994 period. The increase for the three
month period was due to the increase in operating income. Income before equity
in net income of cable television joint venture decreased $194,570, or
approximately 46 percent, from $422,484 for the nine month period ending
September 30, 1993 compared to $227,914 for the comparable 1994 period. The
decrease for the nine month period was due to the increase in interest expense
exceeding the increase in operating income.
In addition to the New York Systems owned by it directly, the
Partnership owns an approximate 8 percent interest in the Venture. Revenues in
the Manitowoc System decreased $6,971, or approximately 1 percent, from
$823,842 for the three month period ended September 30, 1993 to $816,871 for
the comparable 1994 period. Revenues in the Manitowoc System decreased $18,775
or approximately 1 percent, from $2,470,303 for the nine month period ended
September 30, 1993 to $2,451,528 for the comparable 1994 period. Revenues
decreased due to the reduction in basic rates due to new basic rate regulations
issued by the FCC in regard to the 1992 Cable Act. See Regulation and
Legislation discussion above. The decrease in revenues was offset, in part, by
an increase in basic subscribers of approximately 7 percent and an increase in
pay subscribers of approximately 25 percent. Basic subscribers totalled 10,300
at September 30, 1994 compared to 9,668 at September 30, 1993 and pay
subscribers totalled 6,218 at September 30, 1994 compared to 4,985 at September
30, 1993. No other individual factor contributed significantly to the decrease
in revenues.
Operating, general and administrative expense in the Manitowoc System
increased $24,590, or approximately 5 percent, from $489,256 for the three
month period ended September 30, 1993 to $513,846 for the comparable 1994
period. Operating, general and administrative expense in the Manitowoc System
increased $43,786, or approximately 3 percent, from $1,452,750 for the nine
month period ended September 30, 1993 to $1,496,536 for the comparable 1994
period. The increase in expense for the three and nine month periods was due
primarily to increases in programming fees, personnel related costs and office
related costs due to the increases in basic and pay subscribers. The increases
in operating, general and administrative expenses were offset by decreases in
copyright fees and system maintenance costs. No other individual factors
contributed significantly to the increase
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in expense. Operating, general and administrative expense represented 59
percent of revenues for the three and nine month periods of 1993 compared to 63
percent and 61 percent, respectively, for the 1994 periods. Management fees
and allocated overhead from the General Partner increased $5,704, or
approximately 6 percent, from $97,408 for the three month period ended
September 30, 1993 to $103,112 for the comparable 1994 period. Management fees
and allocated overhead from the General Partner increased $16,893, or
approximately 6 percent, from $303,149 for the nine month period ended
September 30, 1993 to $320,042 for the comparable 1994 period. The increases
for the three and nine month periods are due to increases in allocated expenses
from the General Partner. The General Partner has experienced increases in
expenses, including personnel costs and reregulation costs, a portion of which
is allocated to the Venture.
Depreciation and amortization expense in the Manitowoc System remained
relatively constant for the three month periods ended September 30, 1993 and
1994. Depreciation and amortization expense in the Manitowoc System increased
$3,013, or approximately 1 percent, from $386,654 for the nine month period
ended September 30, 1993 to $389,667 for the comparable 1994 period. The
increase for the nine month period was due to capital additions in 1993.
Operating income decreased $36,371, or approximately 34 percent, from
$106,673 for the three month period ended September 30, 1993 to $70,302 for the
comparable 1994 period. Operating income decreased $82,467, or approximately
25 percent, from $327,750 for the nine month period ended September 30, 1993 to
$245,283 for the comparable 1994 period. The decrease for the three and nine
month periods was primarily due to the increase in operating, general and
administrative expenses and allocated overhead from the General Partner and the
decrease in revenues. Operating income before depreciation and amortization
decreased $37,265, or approximately 16 percent, from $237,178 for the three
month period ended September 30, 1993 compared to $199,913 for the comparable
1994 period. Operating income before depreciation and amortization decreased
$79,454, or approximately 11 percent, from $714,404 for the nine month period
ended September 30, 1993 compared to $634,950 for the comparable 1994 period.
The decreases for both periods were due to the decrease in revenues as
well as the increases in operating, general and administrative expense and
management fees and allocated overhead from the General Partner. The decreases
in operating income before depreciation and amortization reflect the current
operating environment of the cable television industry. The FCC rate
regulations under the 1992 Cable Act have caused revenues to decrease. In
turn, this has caused certain expenses which are a function of revenue, such as
franchise fees, copyright fees and management fees to decrease. However, other
operating costs such as programming fees, salaries and benefits, and marketing
costs as well as costs incurred by the General Partner, which are allocated to
the Venture, continue to increase. This situation has led to reductions in
operating income before depreciation and amortization as a percent of revenue
("Operating Margin"). Such reductions in Operating Margins may continue in the
near term as the Venture and the General Partner incur cost increases due to,
among other things, increases in programming fees, compliance costs associated
with reregulation and competition, that exceed increases in revenue. The
General Partner will attempt to mitigate a portion of these reductions through
(a) rate adjustments; (b) new service offerings; (c) product re-marketing and
re-packaging and (d) marketing efforts targeted at non-subscribers.
Interest expense for the Venture decreased $1,292, or approximately 52
percent, from $2,478 for the three month period ended September 30, 1993 to
$1,186 for the comparable 1994 period. The decrease for the three month period
was due to a lower outstanding balance on interest bearing obligations.
Interest expense for the Venture increased $5,429, or approximately 87 percent,
from $6,223 for the nine month period ended September 30, 1993 to $11,652 for
the comparable 1994 period. The increase for the nine month period was due to
higher outstanding balances on interest bearing obligations. The Venture
incurred no costs associated with the litigation with the City of Manitowoc
during the three nine month periods ended September 30, 1994 compared to
$50,000 and $236,000 for the three and nine month periods ended September 30,
1993. Net income for the Venture increased $7,305, or approximately 9 percent,
from $80,391 for the three month period ended September 30, 1993 to $87,696 for
the comparable 1994 period. Net income for the Venture increased $111,923, or
approximately 67 percent, from $168,074 for the nine month period ended
September 30, 1993 to $279,997 for the comparable 1994 period. The increases
for the three and nine month periods were due primarily to the decrease in
litigation costs 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
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 11-B
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: November 9, 1994
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INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- - ------- ----------- ------------
27 Financial Data Schedule