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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: 0-11910
Cable TV Fund 11-A, LTD.
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Exact name of registrant as specified in charter
Colorado 84-0892990
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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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CABLE TV FUND 11-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
March 31, December 31,
ASSETS 1995 1994
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INVESTMENT IN CABLE TELEVISION JOINT VENTURE $ 1,240,267 $ 1,231,800
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LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
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LIABILITIES:
Accounts payable- General Partner $ 10,781 $ 10,781
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PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Distributions (11,079,511) (11,079,511)
Accumulated earnings 10,912,581 10,912,496
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(165,930) (166,015)
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Limited Partners-
Net contributed capital (46,725 units outstanding
at March 31, 1995 and December 31, 1994) 19,516,170 19,516,170
Distributions (56,599,297) (56,599,297)
Accumulated earnings 38,478,543 38,470,161
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1,395,416 1,387,034
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Total liabilities and partners'
capital (deficit) $ 1,240,267 $ 1,231,800
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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CABLE TV FUND 11-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31,
-----------------------------------
1995 1994
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EQUITY IN NET INCOME OF CABLE
TELEVISION JOINT VENTURE $ 8,467 $18,382
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NET INCOME $ 8,467 $18,382
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ALLOCATION OF NET INCOME:
General Partner $ 85 $ 184
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Limited Partners $ 8,382 $18,198
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NET INCOME PER LIMITED PARTNERSHIP UNIT $ .18 $ .39
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WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 46,725 46,725
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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CABLE TV FUND 11-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31,
----------------------------------
1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,467 $ 18,382
Adjustments to reconcile net income to
net cash used in operating activities:
Equity in net income of cable
television joint venture (8,467) (18,382)
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Net cash used in operating activities - -
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Cash, beginning of period - -
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Cash, end of period $ - $ -
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SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ - $ -
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements
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CABLE TV FUND 11-A, LTD.
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) 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-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.
(2) Jones Intercable, Inc., (the "General Partner"), a publicly held
Colorado corporation, manages the Partnership and Cable TV Joint Fund 11 (the
"Venture"), in which the Partnership holds an approximate 18 percent interest,
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. The Partnership owns no properties directly, and it holds an
interest in a cable television system only through its investment in the
Venture. Management fees paid by the Venture and attributable to the Partnership
for the three month periods ended March 31, 1995 and 1994 (reflecting the
Partnership's approximate 18 percent interest in the Venture) were $7,777 and
$7,390, 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 primarily based upon actual time
spent by employees of the General Partner with respect to each partnership
managed. Remaining overhead costs are allocated based on revenue 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. Reimbursements to the General Partner
paid by the Venture and attributable to the Partnership for allocated overhead
and administrative expenses for the three month periods ending March 31, 1995
and 1994 (reflecting the Partnership's approximate 18 percent interest in the
Venture) were $13,417 and $12,580, respectively.
(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 during 1995.
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4) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
March 31, December 31,
1995 1994
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ASSETS
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Cash and accounts receivable $ 2,425,213 $ 2,521,713
Investment in cable television properties 2,657,774 2,724,042
Other assets 1,859,723 1,853,355
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Total assets $ 6,942,710 $ 7,099,110
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LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Debt $ 23,013 $ 26,385
Payables and accrued liabilities 275,378 474,880
Partners' contributed capital 45,000,000 45,000,000
Distributions (118,914,493) (118,914,493)
Accumulated earnings 80,558,812 80,512,338
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Total liabilities and partners' capital $ 6,942,710 $ 7,099,110
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UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31,
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1995 1994
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Revenues $ 853,728 $811,158
Operating expenses (583,736) (481,487)
Management fees and allocated overhead from
Jones Intercable, Inc. (116,322) (109,605)
Depreciation and amortization (139,565) (130,490)
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Operating income 14,105 89,576
Interest expense (6,284) (4,297)
Interest income 38,046 15,475
Other, net 607 133
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Net income $ 46,474 $100,887
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Management fees and reimbursements for general and administrative
expenses paid to Jones Intercable, Inc. by the Venture totaled $42,686 and
$73,636, respectively, for the three months ended March 31, 1995 and $40,558 and
$69,047, respectively, for the three months ended March 31, 1994.
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CABLE TV FUND 11-A, LTD.
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Partnership owns an approximate 18 percent interest in Cable TV
Joint Fund 11 (the "Venture"). The investment in this cable television joint
venture is accounted for under the equity method. When compared to the December
31, 1994 balance, this investment has increased by $8,467, from $1,231,800 at
December 31, 1994 to $1,240,267 at March 31, 1995. This increase represents the
Partnership's proportionate share of net income generated by the Venture during
the first quarter of 1995.
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 during 1995.
During the first three months of 1995, the Venture expended
approximately $48,000 for capital additions in the Manitowoc System. These
capital additions were for various enhancements to maintain the value of the
system and were funded from cash generated from operations. Anticipated capital
expenditures for the remainder of 1995 are approximately $225,000. These
expenditures will be for various enhancements to maintain the value of the
system. It is expected that these capital expenditures will be funded from cash
on hand and cash generated from operations.
The Venture had no bank debt outstanding at March 31, 1995.
The Venture has sufficient liquidity and capital resources, including
cash on hand and its ability to generate cash from operations, to meet its
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
competition, nearly all cable systems in the United States, including the
Manitowoc 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 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.
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The Partnership has complied with the February 1994 benchmark
regulations and reduced rates in its Manitowoc System in July 1994.
RESULTS OF OPERATIONS
All of the Partnership's operations are generated through its
approximate 18 percent interest in the Venture. Revenues of the Venture
increased $42,570, or approximately 5 percent, from $811,158 for the three month
period ended March 31, 1994 to $853,728 for the comparable 1995 period. An
increase in the subscriber base primarily accounted for the increase in
revenues. The number of basic subscribers increased 1,068, or approximately 11
percent, from 9,939 at March 31, 1994 to 11,007 at March 31, 1995. Premium
service subscriptions increased 1,558, or approximately 29 percent, from 5,427
at March 31, 1994 to 6,985 at March 31, 1995. No other individual factor
contributed significantly to 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 expense in the Manitowoc System increased $102,249, or
approximately 21 percent, from $481,487 for the first three months of 1994 to
$583,736 for the comparable 1995 period. Operating expense represented 68
percent of revenue for the three month period ended March 31, 1995 and 59
percent of revenue for the three month period ended March 31, 1994. The increase
in operating expense was due to the increases in programming fees and marketing
related costs, which were partially offset by decreases in advertising sales
expense and copyright fees. No other individual factor significantly affected
the increase in operating expenses. Management fees and allocated overhead from
the General Partner increased $6,717, or approximately 6 percent, from $109,605
for the first three months of 1994 to $116,322 for the comparable 1995 period.
The increase for the three month period was due to the increase in revenues,
upon which such fees and allocations are based, as well as 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 Venture. Depreciation and amortization
expense increased $9,075, or approximately 7 percent, from $130,490 for the
first three months of 1994 to $139,565 for the comparable 1995 period due
capital additions in 1994.
Operating income decreased $75,471, or approximately 84 percent, from
$89,576 for the first three months of 1994 to $14,105 for the comparable 1995
period due to increases in operating expense, 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 $66,396, or approximately 30 percent, from $220,066 for
the three months ended March 31, 1994 to $153,670 for the similar period in
1995. This decrease is due to the increases in operating expense and management
fees and allocated overhead from the General Partner exceeding the increase in
revenues. 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 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 other costs
incurred by the General Partner, which are allocated to the Venture, 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 Venture and the General Partner incur cost increases due to,
among other things, programming fees, 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 directed at non-subscribers.
Interest expense for the Venture increased $1,987, or approximately 46
percent, from $4,297 for the first three months of 1994 to $6,284 for the
comparable 1995 period due to higher outstanding balances on interest bearing
obligations. Net income of the Venture decreased $54,413, or approximately 54
percent, from $100,887 for the first three months of 1994 to $46,474 for the
comparable 1995 period primarily due to the decrease in operating income.
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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-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