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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, 1995
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/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to ______________
Commission File Number: 0-14689
JONES CABLE INCOME FUND 1-A, LTD.
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Exact name of registrant as specified in charter
Colorado 84-1010416
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State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, Englewood, Colorado 80112
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Address of principal executive office
(303) 792-3111
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Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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JONES CABLE INCOME FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
March 31, December 31,
ASSETS 1995 1994
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CASH $ 116,334 $ 78,286
TRADE RECEIVABLES, less allowance for doubtful
receivables of $4,882 and $748 at March 31, 1995 and
December 31, 1994, respectively 60,535 70,273
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 9,667,371 9,561,181
Less- accumulated depreciation (5,470,042) (5,291,706)
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4,197,329 4,269,475
Franchise costs, net of accumulated amortization
of $562,128 and $545,913 at March 31, 1995 and
December 31, 1994, respectively 164,872 181,087
Costs in excess of interests in net assets purchased,
net of accumulated amortization of $39,934 and
$38,782 at March 31, 1995 and December 31, 1994,
respectively 144,066 145,218
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Total investment in cable television properties 4,506,267 4,595,780
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 16,864 10,906
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Total assets $ 4,700,000 $ 4,755,245
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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JONES CABLE INCOME FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
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LIABILITIES:
Debt $ 3,575,267 $ 3,584,706
Accounts payable-
Trade 1,870 7,285
General Partner 752,173 483,487
Accrued liabilities 211,880 262,401
Accrued distribution to limited partners 200,000 235,000
Subscriber prepayments 48,481 54,895
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Total liabilities 4,789,671 4,627,774
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PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (6,047) (5,896)
Distributions (68,169) (66,149)
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(73,216) (71,045)
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Limited Partners-
Net contributed capital
(17,000 units outstanding at March 31, 1995
and December 31, 1994) 7,288,694 7,288,694
Accumulated deficit (556,149) (541,178)
Distributions (6,749,000) (6,549,000)
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(16,455) 198,516
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Total liabilities and partners'
capital (deficit) $ 4,700,000 $ 4,755,245
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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JONES CABLE INCOME FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31,
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1995 1994
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REVENUES $1,103,290 $1,067,583
COSTS AND EXPENSES:
Operating expense 695,936 637,276
Management fees and allocated overhead
from General Partner 145,452 144,860
Depreciation and amortization 195,703 222,146
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OPERATING INCOME 66,199 63,301
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OTHER INCOME (EXPENSE):
Interest expense (81,517) (37,495)
Other, net 196 220
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Total other income (expense) (81,321) (37,275)
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NET INCOME (LOSS) $ (15,122) $ 26,026
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ALLOCATION OF NET INCOME (LOSS):
General Partner $ (151) $ 260
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Limited Partners $ (14,971) $ 25,766
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NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (.88) $ 1.52
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WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 17,000 17,000
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES CABLE INCOME FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31,
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1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (15,122) $ 26,026
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 195,703 222,146
Decrease (increase) in trade receivables 9,738 (9,480)
Increase in deposits, prepaid expenses
and deferred charges (5,958) (3,358)
Decrease in trade accounts payable, accrued
liabilities and subscriber prepayments (64,370) (38,991)
Increase (decrease) in advances from General Partner 268,686 (20,529)
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Net cash provided by operating activities 388,677 175,814
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (106,190) (120,352)
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Net cash used in investing activities (106,190) (120,352)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - 250,000
Repayment of debt (9,439) (5,826)
Decrease in accrued distributions to limited partners (35,000) (5,000)
Cash flow distributions to limited partners (200,000) (245,000)
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Net cash used in financing activities (244,439) (5,826)
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Increase in cash 38,048 49,636
Cash, beginning of period 78,286 61,322
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Cash, end of period $ 116,334 $ 110,958
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SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 80,238 $ 43,031
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES CABLE INCOME FUND 1-A, LTD.
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 Jones Cable Income Fund
1-A, Ltd. ("the Partnership") at March 31, 1995 and December 31, 1994 and its
Statements of Operations and Cash Flows for the three month periods ended March
31, 1995 and 1994. Results of operations for these periods are not necessarily
indicative of results to be expected for the full year.
The Partnership owns the cable television systems serving the
communities of Milwaukie, Oregon (the "Milwaukie System") and Owatonna and
Glencoe, Minnesota (the "Owatonna/Glencoe System").
(2) Jones Intercable, Inc. (the "General Partner"), a publicly held
Colorado corporation, manages the Partnership and receives a fee for its
services equal to five 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, 1995 and 1994 were
$55,164 and $53,379, respectively.
The Partnership reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses represent 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. 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 of the
Partnership as a percentage of total revenues of owned and managed cable
television systems of the General Partner. 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 allocated to the
Partnership by the General Partner for allocated overhead and administrative
expenses for the three month periods ended March 31, 1995 and 1994 were $90,288
and $91,481, respectively.
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JONES CABLE INCOME FUND 1-A, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
For the three months ended March 31, 1995, the Partnership generated
net cash from operating activities totaling $388,677, which is available to
fund capital expenditures and non-operating costs. During the first three
months of 1995, the Partnership expended approximately $106,000 for capital
improvements. Approximately 31 percent related to service drops to
subscribers' homes, approximately 28 percent of these expenditures related to
the upgrade of equipment and approximately 25 percent were for the purchase of
converters within the Partnership's systems. These expenditures were funded
primarily by advances from the General Partner. Anticipated capital
expenditures for the remainder of 1995 are approximately $183,000. Of these
expenditures, approximately 25 percent relates to service drops, approximately
16 percent relates to the purchase of converters and approximately 7 percent
relates to the upgrade of equipment. The remainder of the expenditures are for
various enhancements in the Partnership's systems. Funding for these
expenditures is expected to be provided by cash generated from operations, and,
if available, borrowings under a renegotiated credit facility and, in its
discretion, advances from the General Partner.
On September 28, 1992, the Partnership entered into a $3,500,000
revolving credit facility. The revolving credit period expired March 31, 1995,
at which time the outstanding balance converted to a term loan with a maturity
of June 30, 1999. The balance outstanding on the Partnership's credit facility
at March 31, 1995 was the maximum of $3,500,000. The General Partner expects
to renegotiate the Partnership's credit facility in the second quarter of 1995
to increase the maximum amount available to repay advances from the General
Partner and to fund capital expenditures. If the General Partner is
unsuccessful in renegotiating the credit facility, which is not anticipated,
the Partnership may have to reduce the level of capital expenditures and/or
cash distributions to limited partners. Interest on outstanding principal
amounts is computed at the Partnership's option of LIBOR plus 1 percent or the
Prime rate plus 1/4 percent. The effective interest rates on amounts
outstanding as of March 31, 1995 and 1994 were 7.13 percent and 4.82 percent,
respectively.
A primary objective of the Partnership is to provide quarterly cash
distributions from operating cash flow to the limited partners. The
Partnership declared a $200,000 distribution to limited partners during the
first quarter of 1995, which was principally from first quarter operating cash
flow of the Partnership. Future distributions will be announced on a
quarter-by-quarter basis and no determination has been made regarding the level
of future distributions. The payment of quarterly operating cash flow
distributions may reduce the financial flexibility of the Partnership.
The General Partner presently believes that the Partnership has
sufficient sources of capital available from cash generated from operations,
and, if available, borrowings under a renegotiated credit facility to meet its
presently anticipated needs.
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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 imposes a greater degree of regulation on the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States, including the
Milwaukie System and the Owatonna/Glencoe System, 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 reduced rates charged
for certain regulated services effective September 1, 1993.
On February 22, 1994, however, the FCC adopted several additional rate
orders including orders which revised its earlier-announced regulatory scheme
with respect to rates and established interim cost-of-service regulations. The
FCC's February 22, 1994 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. 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 and July 14. The Partnership complied with the
February 1994 benchmark regulations and reduced rates further in the Milwaukie
System and the Owatonna/Glencoe System effective July 1994.
RESULTS OF OPERATIONS
Revenues of the Partnership increased $35,707, or approximately 3
percent, from $1,067,583 at March 31, 1994 to $1,103,290 at March 31, 1995.
The increase in revenues was primarily the result of increases in the number of
basic subscribers. Since March 31, 1994, the Partnership's cable systems added
668 basic subscribers, increasing from 12,304 basic subscribers at March 31,
1994 to 12,972 basic subscribers at March 31, 1995. The increase in revenues
would have been greater but for the reduction in certain rates charged due to
basic rate regulations issued by the FCC in February 1994 with which the
Partnership complied effective July 1994. No other individual factor
significantly affected the increase in revenues.
Operating expenses consist primarily of costs associated with the
administration of the Partnership's cable television systems. The principal
cost components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and consumer marketing expenses.
Operating expenses increased $58,660, or approximately 9 percent,
from $637,276 at March 31, 1994 to $695,936 at March 31, 1995. Operating
expenses represented 60 percent of revenue for the three months ended March 31,
1994 compared to 63 percent for the similar period in 1995. Increases in
programming costs which accounted for approximately 55 percent of the increase,
was primarily responsible for this increase. No other individual factor
contributed significantly to the increase in operating expenses. Management
fees and allocated overhead from the General Partner increased $592 or less
than 1 percent, from $144,860 at March 31, 1994 to $145,452 at March 31, 1995.
This increase is due to the increase in revenues, upon which such fees and
allocations are based. The General Partner has experienced increases in
expenses, including personnel costs, a portion of which is allocated to the
Partnership.
Depreciation and amortization expense decreased $26,443, or
approximately 12 percent, from $222,146 at March 31, 1994 to $195,703 at March
31, 1995. This decrease was due to the maturation of the Partnership's
intangible asset base.
Operating income increased $2,898, or approximately 5 percent, from
$63,301 at March 31, 1994 to $66,199 at March 31, 1995. This increase is
due to the increase in revenue and the decrease in depreciation and
amortization exceeding the increase in operating expenses. Operating income
before depreciation and amortization decreased $23,544, or approximately 8
percent, from $285,447 for the three months ended March 31, 1994 to $261,903
for the similar 1995 period. This decrease is due to the increase in operating
expenses and management fees and allocated overhead from the General Partner
exceeding the increase in revenues. The decrease in operating income before
depreciation and
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amortization reflects the effect of FCC rate regulations under the 1992
Cable Act which 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 otherwise would have been the case. However, other operating
costs such as programming fees, salaries and benefits, and marketing costs as
well as certain costs incurred by the General Partner which are allocated to the
Partnership, continue to increase at historic rates. This situation has led to
reductions in operating income before depreciation and amortization as a percent
of revenue ("Operating Margin"). The General Partner will attempt to mitigate a
portion of these reductions through (a) new service offerings; (b) product
re-marketing and re-packaging; and (c) marketing efforts targeted at
non-subscribers.
Interest expense increased from $37,495 at March 31, 1994 to $81,517
at March 31, 1995. This increase was primarily due to higher interest rates.
The effective interest rates on amounts outstanding as of March 31, 1995 and
1994 were 7.13 percent and 4.82 percent, respectively. The Partnership
recorded a net loss of $15,122 for the three month period ended March 31, 1995
compared to net income of $26,026 for the similar period in 1994, due to the
factors 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.
JONES CABLE INCOME FUND 1-A, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
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Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 12, 1995
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INDEX TO EXHIBITS
Exhibit Description Page
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27 Financial Data Schedule