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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
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
--- ---
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CABLE TV FUND 14-B
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
ASSETS 1994 1993
------ ------------ ---------------
CASH $ 643,041 $ 410,238
TRADE RECEIVABLES, less allowance for
doubtful receivables of $117,065 and $90,753
at September 30, 1994 and December 31, 1993,
respectively 848,248 1,331,434
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 84,078,517 80,586,783
Less- accumulated depreciation (36,063,694) (31,708,982)
------------ ---------------
48,014,823 48,877,801
Franchise costs, net of accumulated amortization of
$42,191,799 and $37,174,465 at September 30, 1994
and December 31, 1993, respectively 43,738,998 48,756,332
Subscriber lists, net of accumulated amortization of
$13,501,988 and $12,258,896 at September 30, 1994
and December 31, 1993, respectively 4,020,952 5,264,044
Costs in excess of interests in net assets
purchased, net of accumulated amortization of
$4,400,095 and $3,882,714 at September 30, 1994
and December 31, 1993, respectively 23,186,466 23,703,847
------------ ---------------
Total investment in cable television properties 118,961,239 126,602,024
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 559,051 436,245
------------ ---------------
Total assets $121,011,579 $ 128,779,941
============ ===============
The accompanying notes to unaudited consolidated financial statements
are an integral part of these consolidated balance sheets.
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CABLE TV FUND 14-B
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1994 1993
------------------------------------------- ------------- ------------
LIABILITIES:
Debt $ 57,834,071 $ 58,881,755
Accounts payable-
General Partner - 32,339
Trade 77,252 29,182
Deferred brokerage fee 920,000 920,000
Accrued liabilities 1,431,956 1,314,361
Subscriber prepayments 552,258 556,640
------------ ------------
Total liabilities 60,815,537 61,734,277
------------ ------------
MINORITY INTEREST IN CABLE TELEVISION
JOINT VENTURE 6,289,168 7,351,293
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (588,027) (530,152)
------------ ------------
(587,027) (529,152)
------------ ------------
Limited Partners-
Net contributed capital (261,353 units
outstanding at September 30, 1994 and
December 31, 1993) 112,127,301 112,127,301
Accumulated deficit (57,633,400) (51,903,778)
------------ ------------
54,493,901 60,223,523
------------ ------------
Total liabilities and
partners' capital (deficit) $121,011,579 $128,779,941
============ ============
The accompanying notes to unaudited consolidated financial statements
are an integral part of these consolidated balance sheets.
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CABLE TV FUND 14-B
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------ --------------------------------
1994 1993 1994 1993
----------- ------------ ----------- ------------
REVENUES $ 7,892,371 $ 7,917,171 $23,751,012 $ 23,806,024
COSTS AND EXPENSES:
Operating, general and administrative 4,733,863 4,417,007 13,740,984 13,184,224
Management fees and allocated
overhead from General Partner 954,786 1,001,165 2,943,386 2,981,056
Depreciation and amortization 3,746,710 3,931,787 11,272,978 12,050,855
----------- ------------ ----------- ------------
OPERATING LOSS (1,542,988) (1,432,788) (4,206,336) (4,410,111)
----------- ------------ ----------- ------------
OTHER INCOME (EXPENSE):
Interest expense (982,194) (756,073) (2,610,214) (2,434,690)
Other, net 4,558 15,326 (33,072) 55,863
----------- ------------ ----------- ------------
Total other income
(expense), net (977,636) (740,747) (2,643,286) (2,378,827)
----------- ------------ ----------- ------------
CONSOLIDATED LOSS (2,520,624) (2,173,535) (6,849,622) (6,788,938)
MINORITY INTEREST IN
CONSOLIDATED LOSS 405,329 298,665 1,062,125 947,483
----------- ------------ ----------- ------------
NET LOSS $(2,115,295) $ (1,874,870) $(5,787,497) $ (5,841,455)
=========== ============ =========== ============
ALLOCATION OF NET LOSS:
General Partner $ (21,153) $ (18,749) $ (57,875) $ (58,415)
=========== ============ =========== ============
Limited Partners $(2,094,142) $ (1,856,121) $(5,729,622) $ (5,783,040)
=========== ============ =========== ============
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (8.01) $ (7.10) $ (21.92) $ (22.13)
=========== ============ =========== ============
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 consolidated statements.
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CABLE TV FUND 14-B
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended
September 30,
------------------------------
1994 1993
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(5,787,497) $(5,841,455)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 11,272,978 12,050,855
Amortization of interest rate protection contract 81,534 81,466
Minority interest in consolidated net loss (1,062,125) (947,483)
Decrease (increase) in trade receivables 483,186 (102,279)
Increase in deposits, prepaid expenses and
deferred charges (344,799) (277,928)
Decrease in advances from General Partner (29,182) (119,337)
Increase (decrease) in accounts payable, accrued liabilities
and subscriber prepayments 158,126 (94,903)
----------- -----------
Net cash provided by operating activities 4,772,221 4,748,936
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (3,491,734) (3,412,864)
----------- -----------
Net cash used in investing activities (3,491,734) (3,412,864)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 200,000 212,906
Repayment of debt (1,247,684) (3,210,197)
----------- -----------
Net cash used in financing activities (1,047,684) (2,997,291)
----------- -----------
Increase (decrease) in cash 232,803 (1,661,219)
Cash, beginning of period 410,238 2,946,329
----------- -----------
Cash, end of period $ 643,041 $ 1,285,110
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 2,288,133 $ 2,467,015
=========== ===========
The accompanying notes to unaudited consolidated financial statements
are an integral part of these consolidated statements.
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CABLE TV FUND 14-B
(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 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 14-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.
As a result of the Partnership's ownership interest in Cable TV Fund
14-A/B Venture (the "Venture") of approximately 73 percent, the accompanying
financial statements present the Partnership's and the Venture's financial
condition and results of operations on a consolidated basis, with the ownership
interest of Cable TV Fund 14-A in the Venture shown as a minority interest.
The Venture owns and operates the cable television system serving certain areas
in Broward County, Florida. The Venture does not have any ownership interest
in the cable television systems serving Surfside, South Carolina (the "Surfside
System") or Little Rock, California (the "Little Rock System"). These systems
are owned 100 percent by the Partnership. All interpartnership accounts and
transactions have been eliminated.
(2) Jones Intercable Inc., a publicly held Colorado corporation (the
"General Partner"), manages the Partnership and the Venture and receives a fee
for its services equal to five 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 by the Partnership and the Venture to the
General Partner for the three and nine month periods ended September 30, 1994
were $394,619 and $1,187,550, respectively, as compared to $395,859 and
$1,190,301, 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 to the Venture. 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 were 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. Reimbursements made to the General
Partner by the Partnership and the Venture for allocated overhead and
administrative expenses for the three and nine month periods ended September
30, 1994 were $560,167 and $1,755,836, respectively, as compared to $605,306
and $1,790,755, respectively, for the similar 1993 periods.
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(3) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
September 30, 1994 December 31, 1993
------------------ -----------------
ASSETS
------
Cash and accounts receivable $ 823,361 $ 1,140,477
Investment in cable television properties 66,509,326 70,822,864
Other assets 500,092 352,475
------------- -------------
Total assets $ 67,832,779 $ 72,315,816
============= =============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Debt $ 42,614,407 $ 43,461,730
Payables and accrued liabilities 1,655,911 1,372,344
Partners' contributed capital 70,000,000 70,000,000
Accumulated deficit (46,437,539) (42,518,258)
------------- -------------
Total liabilities and partners' capital $ 67,832,779 $ 72,315,816
============= =============
UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- ------------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
Revenues $ 5,420,180 $ 5,477,510 $16,394,101 $16,623,112
Operating, general and
administrative expense (3,260,168) (3,084,333) (9,457,369) (9,238,812)
Management fees and allocated
overhead from General Partner (652,304) (669,797) (2,015,471) (1,996,313)
Depreciation and amortization (2,286,349) (2,262,624) (6,876,719) (7,066,671)
----------- ----------- ----------- -----------
Operating loss (778,641) (539,244) (1,955,458) (1,678,684)
Interest expense (718,922) (576,868) (1,934,444) (1,862,468)
Other, net 1,885 14,023 (29,379) 44,904
------------ ------------ ----------- ------------
Net loss $(1,495,678) $(1,102,089) $(3,919,281) $(3,496,248)
=========== =========== =========== ===========
Management fees paid to the General Partner by the Venture totalled
$271,009 and $819,705, respectively, for the three and nine month periods ended
September 30, 1994, as compared to $273,876 and $831,156, respectively, for the
similar 1993 periods. Reimbursements for overhead and administrative expenses
paid to the General Partner by the Venture totalled $381,295 and $1,195,766,
respectively, for the three and nine month periods ended September 30, 1994, as
compared to $395,921 and $1,165,157 for the similar 1993 periods.
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CABLE TV FUND 14-B
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Partnership owns an approximate 73 percent interest in the
Venture. The accompanying financial statements include 100 percent of the
accounts of the Partnership and of the Venture, with Cable TV Fund 14-B's 27
percent interest in the Venture reflected as minority interest.
During the first nine months of 1994, capital expenditures of the
Venture-owned Broward County System totalled approximately $2,512,000. The
construction of service drops to homes and plant extensions accounted for
approximately 22 percent and 25 percent, respectively, of the expenditures.
Rebuild and upgrade projects accounted for approximately 11 percent of the
expenditures. The remainder of the capital expenditures were for various
enhancements in the Broward County System. Such expenditures were funded
primarily from cash generated from operations. Budgeted capital expenditures
for the remainder of 1994 are approximately $740,000. Of this total, 35
percent is for the construction of service drops to homes, 18 percent is for
cable television plant extensions, and 24 percent is for the purchase of
converters. The remainder of the expenditures is for various enhancements in
the Broward County System. Such capital expenditures are expected to be funded
from cash generated from operations and cash on hand. 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 1992 Cable Act and the Venture's liquidity position.
On December 31, 1992, the then outstanding balance of $46,800,000 on
the Venture's credit facility converted to a term loan. The balance
outstanding on the term loan at September 30, 1994 was $42,510,312. The term
loan is payable in quarterly installments which began March 31, 1993 and is
payable in full by December 31, 1999. In June 1994, the General Partner
completed negotiations to lower the level of principal payments in order to
provide liquidity for capital expenditures. The Venture repaid principal of
$389,844 on June 30, 1994 and $389,844 on September 30, 1994. Principal
payments for the remainder of 1994 total $389,844. Interest is at the
Venture's option of prime plus 1/2 percent, LIBOR plus 1-1/2 percent or CD rate
plus 1-5/8 percent. The effective interest rates on amounts outstanding as of
September 30, 1994 and 1993 were 6.4 percent and 4.7 percent, respectively. In
January 1993, the Venture entered into an interest rate cap agreement covering
outstanding debt obligations of $25,000,000. The Venture paid a fee of
$246,250. The agreement protects the Venture from interest rates that exceeded
7 percent for three years from the date of the agreement.
Subject to Regulation and Legislation as discussed below, the General
Partner believes that the Venture has sufficient sources of capital to service
its presently anticipated needs.
The Partnership's wholly-owned Surfside and Little Rock systems
expended approximately $980,000 on capital additions during the first nine
months of 1994. System plant extensions accounted for approximately 41 percent
of these expenditures. Service drops to homes of the Partnership's systems
accounted for approximately 28 percent of these expenditures. Funding for
these expenditures was provided by cash on hand and cash generated from
operations. Anticipated capital expenditures for the remainder of 1994 are
approximately $500,000. Of this total, approximately 29 percent is designated
for plant construction in both of the Partnership's systems. Approximately 14
percent is for the purchase of equipment and approximately 10 percent is for
the construction of service drops to homes. The remainder of these
expenditures will be for various enhancements in each of the Partnership's
systems. Funding for these improvements will be provided by cash generated
from operations and borrowings under the Partnership's credit facility. 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 1992 Cable Act and the Partnership's liquidity position.
The Partnership's credit agreement had an original commitment of
$20,000,000. Such commitment consisted of a $10,000,000 reducing revolving
credit facility and a $10,000,000 term loan. The revolving credit commitment
reduced to $9,500,000 on December 31, 1993, reduces to $8,500,000 on December
31, 1994 and is payable in full at December 31, 1995. At September 30, 1994,
$5,800,000 was outstanding under this revolving credit agreement leaving
$3,700,000 available until year end for the needs of the Partnership. The
$10,000,000 term loan is payable is quarterly installments which began March
31, 1993 and the term loan matures on December 31, 1995. As of September 30,
1994, $9,375,000 was outstanding on this term loan. Installment payments made
in the first nine months of 1994 totalled
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$375,000. Installments due for the remainder of 1994 total $125,000.
Currently, interest on the outstanding principal balance on each loan is at the
Partnership's option of prime plus .20 percent, LIBOR plus 1.20 percent or CD
rate plus 1.325 percent. The effective interest rates on amounts outstanding
as of September 30, 1994 and 1993 were 6.1 percent and 4.4 percent,
respectively. In January 1993, the Partnership entered into an interest rate
cap agreement covering outstanding debt obligations of $8,000,000 for a fee of
$77,600. The agreement protects the Partnership from interest rates that
exceed 7 percent for three years from the date of the agreement.
Subject to Regulation and Legislation as discussed below, the General
Partner believes that the Partnership has sufficient sources of capital to
service 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 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 the rates charged for certain regulated services on 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 a portion of 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 change in their rates and did not
restructure service offerings between May 15 and July 14.
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.
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 in its Surfside and Littlerock systems and the Venture
should comply with the benchmark regulations. In the systems electing
cost-of-service, the General Partner anticipates no reduction in revenues or
operating income before depreciation and amortization resulting from the FCC's
rate regulations.
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The Venture complied with the new benchmark regulations and reduced rates in
the Broward County System. The annualized reduction in operating income before
depreciation and amortization in the Broward Country System is approximately
$160,000, or approximately 2 percent. The Venture will continue its efforts
to mitigate the effect of such rate reductions.
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. 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.
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RESULTS OF OPERATIONS
The results of operations for the Partnership are summarized below:
For the Three Months Ended September 30, 1994
----------------------------------------------
Partnership Venture
Owned Owned Consolidated
------------- ------------- ------------
Revenues $ 2,472,191 $ 5,420,180 $ 7,892,371
Operating, general and administrative expense $ 1,473,695 $ 3,260,168 $ 4,733,863
Management fees and allocated
overhead from General Partner $ 302,482 $ 652,304 $ 954,786
Depreciation and amortization $ 1,460,361 $ 2,286,349 $ 3,746,710
----------- ------------ -----------
Operating loss $ (764,347) $ (778,641) $(1,542,988)
----------- ------------ -----------
Interest expense $ (263,272) $ (718,922) $ (982,194)
Consolidated loss $(1,024,946) $ (1,495,678) $(2,520,624)
Minority interest in consolidated loss $ - $ 405,329 $ 405,329
Net loss $(1,024,946) $ (1,090,349) $(2,115,295)
For the Three Months Ended September 30, 1993
----------------------------------------------
Partnership Venture
Owned Owned Consolidated
------------- -------------- ------------
Revenues $ 2,439,661 $ 5,477,510 $ 7,917,171
Operating, general and administrative expense $ 1,332,674 $ 3,084,333 $ 4,417,007
Management fees and allocated $ 331,368 $ 669,797 $ 1,001,165
Depreciation and amortization $ 1,669,163 $ 2,262,624 $ 3,931,787
----------- ------------ -----------
Operating loss $ (893,544) $ (539,244) $(1,432,788)
----------- ------------ -----------
Interest expense $ (179,205) $ (576,868) $ (756,073)
Consolidated loss $ (1,071,446) $ (1,102,089) $(2,173,535)
Minority interest in consolidated loss $ - $ 298,665 $ 298,665
Net loss $ (1,071,446) $ (803,424) $(1,874,870)
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For the Nine Months Ended September 30, 1994
----------------------------------------------
Partnership Venture
Owned Owned Consolidated
------------- ------------- ------------
Revenues $ 7,356,911 $16,394,101 $23,751,012
Operating, general and administrative expense $ 4,283,615 $ 9,457,369 $13,740,984
Management fees and allocated
overhead from General Partner $ 927,915 $ 2,015,471 $ 2,943,386
Depreciation and amortization $ 4,396,259 $ 6,876,719 $11,272,978
----------- ----------- -----------
Operating loss $(2,250,878) $(1,955,458) $(4,206,336)
----------- ----------- -----------
Interest expense $ (675,770) $(1,934,444) $(2,610,214)
Consolidated loss $(2,930,341) $(3,919,281) $(6,849,622)
Minority interest in consolidated loss $ - $ 1,062,125 $ 1,062,125
Net loss $(2,930,341) $(2,857,156) $(5,787,497)
For the Nine Months Ended September 30, 1993
-----------------------------------------------
Partnership Venture
Owned Owned Consolidated
------------- ------------- ------------
Revenues $ 7,182,912 $ 16,623,112 $ 23,806,024
Operating, general and administrative expense $ 3,945,412 $ 9,238,812 $ 13,184,224
Management fees and allocated
overhead from General Partner $ 984,743 $ 1,996,313 $ 2,981,056
Depreciation and amortization $ 4,984,184 $ 7,066,671 $ 12,050,855
------------- ------------- ------------
Operating loss $ (2,731,427) $ (1,678,684) $ (4,410,111)
------------- ------------- ------------
Interest expense $ (572,222) $ (1,862,468) $ (2,434,690)
Consolidated loss $ (3,292,690) $ (3,496,248) $ (6,788,938)
Minority interest in consolidated loss $ - $ 947,483 $ 947,483
Net loss $ (3,292,690) $ (2,548,765) $ (5,841,455)
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Revenues in the Partnership's wholly owned cable television systems
increased $32,530, or approximately 1 percent, from $2,439,661 to $2,472,191
for the three months ended September 30, 1994. For the nine months ended
September 30, 1994 and 1993, revenues increased $173,999, or approximately 2
percent, from $7,182,912 in 1993 to $7,356,911 in 1994. Such increases in
revenue are due primarily to increases in the subscriber base. Basic
subscribers increased 1,518, or approximately 7 percent, from 22,645 at
September 30, 1993 to 24,163 at September 30, 1994. Pay units increased 2,647,
or approximately 20 percent, from 13,177 at September 30, 1993 to 15,824 at
September 30, 1994. The increase in revenue 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. See Regulation and Legislation as discussed above.
Operating, general and administrative expense increased $141,021, or
approximately 11 percent, from $1,332,674 to $1,473,695 for the three months
ended September 30, 1994. This increase was due to increases in personnel
costs and programming fees. For the nine month periods ended September 30,
1994 and 1993, operating, general and administrative expense increased
$338,203, or approximately 9 percent, from $3,945,412 at September 30, 1993 to
$4,283,615 at September 30, 1994. This increase in operating, general and
administrative expense was due primarily to increases in programming costs. No
other individual factor significantly affected the increase in operating,
general and administrative expense. Operating, general and administrative
expense represented 59 and 58 percent, respectively, of revenue for the three
and nine months ended September 30, 1994. Operating, general and
administrative expense represented 54 percent of revenue for each of the three
and nine month periods ended September 30, 1993. Management fees and allocated
overhead from the General Partner decreased $28,886 or approximately 9 percent,
from $331,368 to $302,482 for the three month period ended September 30, 1994,
as compared to 1993. For the nine month periods ended September 30, 1994 and
1993, management fees and allocated overhead from the General Partner decreased
$56,828, or approximately 6 percent, from $984,743 at September 30, 1993 to
$927,915 at September 30, 1994. These decreases are due to a reduction in
allocated costs from the General Partner resulting from a change in allocation
methods effective December 1, 1993.
Depreciation and amortization decreased $208,802, or approximately 13
percent from $1,669,163 to $1,460,361 for the three month period ended
September 30, 1994 as compared to 1993. For the nine month periods ended
September 30, 1994 and 1993, depreciation and amortization expense decreased
$587,925, or approximately 12 percent, from $4,984,184 at September 30, 1993 to
$4,396,259 at September 30, 1994. This decrease is attributable to the
maturation of the Partnership's intangible asset base.
Operating loss decreased $129,197, or approximately 14 percent, from
$893,544 to $764,347 for the three month period ended September 30, 1994 as
compared to 1993. For the nine month periods ended September 30, 1994 and
1993, operating loss decreased $480,549, or approximately 18 percent, from
$2,731,427 at September 30, 1993 to $2,250,878 at September 30, 1994. These
decreases are due to the increases in revenues and the decreases in
depreciation and amortization expense and management fees and allocated
overhead from the General Partner exceeding the increase in operating, general
and administrative expense. Operating income before depreciation and
amortization expense decreased $79,605, or approximately 10 percent, from
$775,619 to $696,014 for the three month period ended September 30, 1994 as
compared to 1993. For the nine month periods ended September 30, 1994 and
1993, operating income before depreciation and amortization expense decreased
$107,376, or approximately 5 percent, from $2,252,757 in 1993 to $2,145,381 in
1994. These decreases are due to the increase in operating, general and
administrative expense exceeding the increases in revenues and the decrease in
management fees and allocated overhead from the General Partner. These
increases are due to the increases in revenue exceeding 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
increase more slowly than in prior years. In turn, this has caused certain
expenses which are a function of revenue, such as franchise fees, copyright
fees and management fees to increase more slowly than in prior years. However,
other operating certain 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 Partnership, 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 Partnership 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.
13
14
Interest expense increased $84,067, or approximately 47 percent, from
$179,205 to $263,272 for the three month period ended September 30, 1994 as
compared to 1993. For the nine month periods ended September 30, 1994 and
1993, interest expense increased $103,548, or approximately 18 percent, from
$572,222 at September 30, 1993 to $675,770 at September 30, 1994. These
increases are due to higher effective interest rates on interest bearing
obligations. Net loss decreased $46,500, or approximately 4 percent, from
$1,071,446 to $1,024,946 for the three month period ended September 30, 1994 as
compared to 1993. For the nine month periods ended September 30, 1994 and
1993, net loss decreased $362,349, or approximately 11 percent, from $3,292,690
at September 30, 1993 to $2,930,341 at September 30, 1994. These losses are
the result of the factors discussed above and are expected to continue in the
future.
In addition to its wholly owned systems, the Partnership owns an
approximate 73 percent interest in the Venture.
The Venture's revenues decreased $57,330, or approximately 1 percent,
from $5,477,510 to $5,420,180 for the three month period ended September 30,
1994 as compared to 1993. Revenues for the nine month periods ended September
30, 1994 and 1993 decreased $229,011, or approximately 1 percent, from
$16,623,112 in 1993 to $16,394,101 in 1994. These decreases in revenue are due
to the reduction in basic rates due to basic rate regulations issued by the FCC
in regard to the 1992 Cable Act. The decrease in revenue due to rate
reductions was offset, in part, by increases in basic subscribers and pay
units. The Broward system has added 2,408 basic subscribers since September
30, 1993, an increase of approximately 6 percent. Basic subscribers totalled
45,842 at September 30, 1994 compared to 43,434 at September 30, 1993. No
other individual factor significantly affected the decrease in revenues.
Operating, general and administrative expense increased $175,835, or
approximately 6 percent, from $3,084,333 to $3,260,168 for the three month
period ended September 30, 1994 as compared to 1993. The three month increase
in operating, general and administrative expense is primarily due to increases
in programming costs and advertising sales expenses. For the nine month
periods ended September 30, 1994 and 1993, operating, general and
administrative expense increased 218,557, or approximately 2 percent, from
$9,238,812 at September 30, 1993 to $9,457,369 at September 30, 1994.
Operating, general and administrative expense represented 57 percent and 60
percent of revenue, respectively, for the three and nine month periods ended
September 30, 1994, compared to 56 percent for both periods in 1993. For the
nine month periods ended September 30, 1994 and 1993, increases in programming
fees and advertising sales expenses accounted for approximately 53 percent and
28 percent, respectively of the increase in operating, general and
administrative expense. No other individual factor significantly affected the
increase in operating, general and administrative expense. Management fees and
allocated overhead from the General Partner decreased $17,493, or approximately
3 percent, from $669,797 to $652,304 for the three month period ended September
30, 1994 as compared to 1993. This decrease is due to a decrease in expenses
allocated from the General Partner resulting from a change in allocation
methods effective December 1, 1993. For the nine month periods ended September
30, 1994 and 1993, management fees and allocated overhead from the General
Partner increased $19,158, or approximately 1 percent, from $1,996,313 at
September 30, 1993 to $2,015,471 at September 30, 1994 due to an increase in
expenses allocated from the General Partner. Depreciation and amortization
expense increased $23,725, or approximately 1 percent, from $2,262,624 to
$2,286,349 for the three month period ended September 30, 1994 as compared to
1993. This increase was due to capital additions in 1993. For the nine month
periods ended September 30, 1994 and 1993, depreciation and amortization
expense decreased $189,952, or approximately 3 percent, from $7,066,671 at
September 30, 1993 to $6,876,719 at September 30, 1994. This decrease is
attributable to the maturation of the Venture's asset base.
In the Broward County System, operating loss increased $239,397, or
approximately 44 percent, from $539,244 to $778,641 for the three month period
ended September 30, 1994 as compared to 1993. For the nine month periods ended
September 30, 1994 and 1993, operating loss increased $276,774, or
approximately 16 percent, from $1,678,684 at September 30, 1993 to $1,955,458
at September 30, 1994. These increases are due to the decrease in revenues and
the increases in operating, general and administrative expenses and management
fees and allocated overhead from the General Partner exceeding the decreases in
depreciation and amortization expense. Operating income before depreciation
and amortization expense decreased $215,672, or approximately 13 percent, from
$1,723,380 to $1,507,708 for the three month periods ended September 30, 1994.
For the nine month periods ended September 30, 1994 and 1993, operating income
before depreciation and amortization expense decreased $466,726, or
approximately 9 percent, from $5,387,987 at September 30, 1993 to $4,921,261 at
September 30, 1994. These decreases are due to the decrease in revenues and
the increases in operating, general and administrative expenses and management
fees and allocated overhead from the General Partner.
14
15
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 Partnership, 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 Partnership 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 increased $142,054, or approximately 25 percent, from
$576,868 to $718,922 for the three month periods ended September 30, 1994. For
the nine month periods ended September 30, 1994 and 1993, interest expense
increased $71,976, or approximately 4 percent, from $1,862,468 at September 30,
1993 to $1,934,444 at September 30, 1994. These increases are due to higher
effective interest rates on interest bearing obligations. The Venture's loss
increased $393,589, or approximately 36 percent, from $1,102,089 to $1,495,678
for the three month period ended September 30, 1994 as compared to 1993. For
the nine month periods ended September 30, 1994 and 1993, the Venture's loss
increased $423,033, or approximately 12 percent, from $3,496,248 at September
30, 1993 to $3,919,281 at September 30, 1994. These losses are the result of
the factors discussed above and are expected to continue in the future.
15
16
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
16
17
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
BY: JONES INTERCABLE, INC.
General Partner
By:/S/ Kevin P. Coyle
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: November 10, 1994
17
18
INDEX TO EXHIBITS
Exhibit Description Page
- - ------- ----------- ----
27 Financial Data Schedule