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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
[ ] 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: 0-15714
JONES CABLE INCOME FUND 1-C, LTD.
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Exact name of registrant as specified in charter
Colorado 84-1010419
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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
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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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JONES CABLE INCOME FUND 1-C, LTD.
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
ASSETS 1995 1994
------ ------------ -------------
CASH $ 654,516 $ 309,848
TRADE RECEIVABLES, less allowance for
doubtful receivables of $58,297 and $37,534
at March 31, 1995 and December 31, 1994,
respectively 361,845 459,412
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 58,392,116 57,707,174
Less-accumulated depreciation (25,880,656) (24,802,632)
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32,511,460 32,904,542
Franchise costs, net of accumulated amortization
of $24,055,979 and $23,207,609 at March 31, 1995
and December 31, 1994, respectively 12,537,811 13,386,181
Subscriber lists, net of accumulated amortization
of $6,704,307 and $6,464,742 at March 31, 1995
and December 31, 1994, respectively 669,853 909,418
Costs in excess of interests in net assets
purchased, net of accumulated amortization
of $1,264,145 and $1,219,184 at March 31, 1995
and December 31, 1994, respectively 5,927,875 5,972,836
Noncompete agreement, net of accumulated
amortization of $237,433 and $230,224 at
March 31, 1995 and December 31, 1994, respectively 100,867 108,076
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Total investment in cable television
properties 51,747,866 53,281,053
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 420,803 495,461
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Total assets $ 53,185,030 $ 54,545,774
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The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
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JONES CABLE INCOME FUND 1-C, LTD.
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
------------------------------------------- ------------ ------------
LIABILITIES:
Debt $ 42,840,523 $ 42,383,339
Accounts payable-
Trade 22,977 16,153
General Partner 30,248 66,224
Accrued liabilities 1,399,808 1,638,181
Subscriber prepayments 351,900 270,839
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Total liabilities 44,645,456 44,374,736
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MINORITY INTEREST IN JOINT VENTURE 3,437,630 4,086,463
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PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (190,996) (181,170)
Distributions (113,443) (113,443)
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(303,439) (293,613)
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Limited Partners-
Net contributed capital (85,059 units
outstanding at March 31, 1995 and
December 31, 1994) 34,909,262 34,909,262
Accumulated deficit (17,136,233) (16,163,428)
Distributions (12,367,646) (12,367,646)
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5,405,383 6,378,188
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Total liabilities and partners' capital (deficit) $ 53,185,030 $ 54,545,774
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The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
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JONES CABLE INCOME FUND 1-C, LTD.
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31,
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1995 1994
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REVENUES $ 5,442,911 $ 5,179,248
COSTS AND EXPENSES:
Operating 3,282,012 3,005,903
Management fees and allocated overhead from
General Partner 696,965 678,354
Depreciation and amortization 2,221,797 2,173,829
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OPERATING LOSS (757,863) (678,838)
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OTHER INCOME (EXPENSE):
Interest expense (868,493) (565,971)
Other, net (5,108) 2,378
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Total other income (expense) (873,601) (563,593)
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CONSOLIDATED LOSS (1,631,464) (1,242,431)
MINORITY INTEREST IN CONSOLIDATED LOSS 648,833 494,115
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NET LOSS $ (982,631) $ (748,316)
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ALLOCATION OF NET LOSS:
General Partner $ (9,826) $ (7,483)
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Limited Partners $ (972,805) $ (740,833)
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NET LOSS PER LIMITED PARTNERSHIP UNIT $ (11.44) $ (8.71)
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WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 85,059 85,059
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The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
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JONES CABLE INCOME FUND 1-C, LTD.
(A Limited Partnership)
UNAUDITED CONSOLIDATED 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 loss $ (982,631) $ (748,316)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 2,221,797 2,173,829
Minority interest in consolidated loss (648,833) (494,115)
Decrease in accrued distribution to Venture Partner - (429,500)
Amortization of interest rate protection contract 12,125 12,125
Decrease in trade receivables 97,567 72,245
Decrease in deposits, prepaid expenses and deferred charges 58,865 30,190
Decrease in accounts payable, accrued
liabilities and subscriber prepayments (150,488) (368,426)
Increase (decrease) in advances from General Partner (35,976) 1,058,400
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Net cash provided by operating activities 572,426 1,306,432
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (684,942) (633,758)
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Net cash used in investing activities (684,942) (633,758)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 498,405 -
Repayment of debt (41,221) (38,792)
Decrease in accrued distribution to limited partners - (650,500)
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Net cash provided by (used in) financing activities 457,184 (689,292)
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Increase (decrease) in cash 344,668 (16,618)
Cash, beginning of period 309,848 118,807
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Cash, end of period $ 654,516 $ 102,189
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SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 901,544 $ 622,214
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The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
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JONES CABLE INCOME FUND 1-C, LTD.
(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 Jones Cable Income Fund
1-C, 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 accompanying financial statements include 100 percent of the
accounts of the Partnership and those of the Brighton, Broomfield and Boulder
County, Colorado; Myrtle Creek, Oregon; Lake County, California; South Sioux
City, Nebraska; and Three Rivers and Watervliet, Michigan cable television
systems reduced by the approximate 40 percent minority interest in Jones Cable
Income Fund 1-B/C Venture (the "Venture"). 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 5 percent of the gross revenues of the Venture,
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
$272,145 and $258,962, respectively.
The Venture reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses represent the salaries
and related benefits paid to 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 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 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.
Overhead and administrative expenses allocated to the Venture by the General
Partner for the three month periods ended March 31, 1995 and 1994 were $424,820
and $419,392, respectively.
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JONES CABLE INCOME FUND 1-C, LTD.
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Partnership owns an approximate 60 percent interest in the
Venture. The accompanying financial statements include 100 percent of the
accounts of the Partnership and those of the Venture systems reduced by the 40
percent minority interest in the Venture.
For the three months ended March 31, 1995, the Venture generated net
cash from operating activities totaling $572,426, which is available to fund
capital expenditures and non-operating costs. During the first quarter of
1995, capital improvements within the Venture's systems totaled approximately
$685,000. Approximately 23 percent of these expenditures were for service
drops to homes and approximately 38 percent were for the rebuild and upgrade of
the Venture's Systems. The remainder of these expenditures related to various
enhancements in all of the Venture's systems. Funding for these expenditures
was provided by cash generated from operations and borrowings under the
Venture's credit facility. Anticipated capital expenditures for the remainder
of 1995 are approximately $4,477,000. System upgrades and rebuilds are
expected to account for approximately 21 percent of the expenditures, and
service drops to homes are expected to account for approximately 26 percent of
the anticipated expenditures. The remainder of the expenditures will be for
various enhancements in the Venture's systems. Funding for these expenditures
is expected to be provided by cash generated from operations and available
borrowings from the Venture's credit facility.
At March 31, 1995, the Venture's $45,000,000 credit facility had
$42,500,000 outstanding, leaving $2,500,000 of available borrowings. The
revolving credit facility matures on June 30, 1997, at which time the
outstanding balance is payable in full. Interest on outstanding principal is
calculated at the Venture's option of the Prime rate plus 1/2 percent, or LIBOR
plus 1-1/2 percent. The effective interest rates on amounts outstanding as of
March 31, 1995 and 1994 were 7.93 percent and 4.98 percent, respectively.
In January 1993, the Venture entered into an interest rate cap
agreement covering outstanding debt obligations of $15,000,000. The Venture
paid a fee of $145,500. The agreement protects the Venture for LIBOR interest
rates that exceed 7 percent for three years from the date of the agreement.
One of the primary objectives of the Venture is to provide quarterly
cash distributions to the Venture partners. Such cash returns are primarily
from cash generated through operating activities of the Venture. The Venture's
credit facility has a maximum amount available of $45,000,000, of which
$42,500,000 was outstanding on March 31, 1995. This limits the amount of
borrowing available to the Venture to fund capital expenditures; therefore, the
Venture used cash generated from operations to fund capital expenditures and
did not declare any distributions during the first quarter of 1995. The
Venture is not expected to reinstate distributions in the near term and thus
the Partnership will not have funds from the Venture to distribute to the
limited partners but will make cash distributions from the operations of its
Orangeburg system.
The General Partner believes that the Partnership and the Venture have
sufficient sources of capital available from cash generated from operations to
meet their 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 imposes a greater degree of regulation on the cable
television industry. Under the 1992 Cable Act's definition of effective
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competition, nearly all cable systems in the United States, including all of
those owned and managed by the General Partner, 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 Venture 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 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 Venture has filed cost-of-service showings for its Brighton,
Broomfield and Boulder County, Colorado; Myrtle Creek, Oregon; South Sioux
City, Nebraska; and Three Rivers and Watervliet, Michigan systems and thus
anticipates no further reductions in rates in these systems. The
cost-of-service showings have not yet received final approval from franchising
authorities, however, and there can be no assurance that the Venture's
cost-of-service showings will prevent further rate reductions until such final
approvals are received. The Venture complied with the February 1994 benchmark
regulations and further reduced rates in its Lake County, California system
effective July 1994.
RESULTS OF OPERATIONS
Revenues of the Venture increased $263,663, or approximately 5
percent, from $5,179,248 at March 31, 1994 to $5,442,911 at March 31, 1995.
Since March 31, 1994, the Venture added 2,975 basic subscribers and 2,258
premium subscriptions, representing increases of 5 percent and 6 percent,
respectively. The number of basic subscribers increased from 59,688 at March
31, 1994 to 62,663 at March 31, 1995. Premium subscriptions increased from
40,549 at March 31, 1994 to 42,807 at March 31, 1995. This increase in the
subscriber base accounted for approximately 72 percent of the increase in
revenues. Increases in advertising sales revenue accounted for approximately
19 percent of the increase in revenues. No other single factor significantly
affected the increase in revenues.
Operating expenses consist primarily of costs associated with the
administration of the Venture'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 $276,109, or approximately 9 percent,
from $3,005,903 at March 31, 1994 to $3,282,012 at March 31 , 1995. Operating
expenses represented 58 percent of revenue for the first quarter of 1994
compared to 60 percent for the similar period in 1995. Personnel related costs
and programming costs were primarily responsible for the increase in expenses.
No other individual factors were significant to the increase in operating
expenses. Management fees and allocated overhead from the General Partner
increased $18,611, or approximately 3 percent, from $678,354 at March 31, 1994
to $696,965 at March 31, 1995 due to the increase in revenues, upon which such
fees and allocations are based, and increases in allocated expenses from the
General Partner. The General Partner has experienced increases in expenses,
including personnel costs, a portion of which is allocated to the Venture.
Depreciation and amortization expense increased $47,968, or
approximately 2 percent, from $2,173,829 to $2,221,797 for the three months
ended March 31, 1995 as compared to 1994. This increase was due to the
increase in the Venture's depreciable asset base.
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Operating loss increased $79,025, or approximately 12 percent, from
$678,838 at March 31, 1994 to $757,863 at March 31, 1995 as a result of the
increases in operating expenses, management fees and allocated overhead from
the General Partner and depreciation and amortization expense exceeding the
increase in revenues. Operating income before depreciation and amortization
decreased $31,057, or approximately 2 percent, from $1,494,991 for the three
months ended March 31, 1994 to $1,463,934 in 1995. This decrease was due to
the increase in operating expenses and management fees and allocated overhead
from the General Partner exceeding the increase in revenue. The decrease in
operating income before depreciation and amortization reflects 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 otherwise would have been the case. In turn, this has caused
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 costs such as programming fees, salaries and benefits
and marketing costs as well as other costs incurred by the General Partner,
which are allocated to the Partnership, continue to increase at historical
rates. 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) new
service offerings, (b) product re-marketing and re-packaging and (c) marketing
efforts targeted at non- subscribers.
Interest expense increased $302,522, or approximately 53 percent, from
$565,971 at March 31, 1994 to $868,493 at March 31, 1995. Higher effective
interest rates are responsible for the increase in interest expense.
Net loss increased $234,315, or approximately 31 percent, from
$748,316 at March 31, 1994 to $982,631 at March 31, 1995. These losses are due
to the factors discussed above and are expected to continue in the future.
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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-C, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
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