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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 June 30, 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: 0-16939
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
Exact name of registrant as specified in charter
Colorado #84-1069504
State of Organization IRS employer I.D. #
9697 East Mineral Avenue, P. O. Box 3309, Englewood, Colorado 80155-3309
Address of principal executive office
(303) 792-9191
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 SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
ASSETS
June 30, December 31,
1995 1994
----------- -----------
CASH $ 142,894 $ 171,944
TRADE ACCOUNTS RECEIVABLE, less allowance for
doubtful receivables of $6,769 and $9,238 at
June 30, 1995 and December 31, 1994, respectively 156,466 130,642
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 14,886,730 14,257,087
Less - accumulated depreciation (5,791,749) (5,220,117)
----------- -----------
9,094,981 9,036,970
Franchise costs, net of accumulated amortization
of $7,329,886 and $6,667,352 at June 30, 1995 and
December 31, 1994, respectively 7,038,315 7,700,849
Subscriber lists, net of accumulated amortization
of $2,712,763 and $2,485,523 at June 30, 1995 and
December 31, 1994, respectively 554,586 781,826
Noncompete agreements, net of accumulated amortization
of $670,905 and $592,741 at June 30, 1995 and
December 31, 1994, respectively 109,663 187,827
Costs in excess of interests in net assets
purchased, net of accumulated amortization of
$287,377 and $262,527 at June 30, 1995 and
December 31, 1994, respectively 1,739,065 1,763,915
----------- -----------
Total investment in cable
television properties 18,536,610 19,471,387
DEBT PLACEMENT COSTS, net of accumulated
amortization of $112,296 and $98,540 at June 30, 1995
and December 31, 1994, respectively 16,148 29,904
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 48,916 61,222
----------- -----------
Total assets $18,901,034 $19,865,099
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
June 30, December 31,
1995 1994
----------- -----------
LIABILITIES:
Credit facility and capitalized lease
obligations $11,014,004 $10,787,551
Accounts payable to Jones Intercable, Inc. 14,526 44,786
Trade accounts payable and accrued liabilities 318,435 403,916
Accrued distributions to partners 312,500 --
Subscriber prepayments and deposits 53,219 52,811
----------- -----------
Total liabilities 11,712,684 11,289,064
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partner -
Contributed capital 1,000 1,000
Distributions (84,948) (78,698)
Accumulated deficit (64,306) (56,679)
----------- -----------
(148,254) (134,377)
----------- -----------
Limited Partners -
Contributed capital, net of related commissions, syndication
costs and interest (51,276 units outstanding at
June 30, 1995 and December 31, 1994) 21,875,852 21,875,852
Distributions (8,409,930) (7,791,180)
Accumulated deficit (6,129,318) (5,374,260)
----------- -----------
7,336,604 8,710,412
----------- -----------
Total partners' capital (deficit) 7,188,350 8,576,035
----------- -----------
Total liabilities and partners'
capital (deficit) $18,901,034 $19,865,099
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
For The Three Months For The Six Months
Ended June 30, Ended June 30,
---------------------------- -------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
REVENUES $1,721,473 $1,595,331 $3,373,938 $3,160,103
COSTS AND EXPENSES:
Operating expenses 795,688 745,652 1,665,010 1,556,081
Management fees and allocated administrative
costs from the General Partner 205,294 208,688 427,967 420,224
Depreciation and amortization 795,271 765,812 1,591,419 1,533,735
---------- ---------- ---------- ----------
OPERATING LOSS (74,780) (124,821) (310,458) (349,937)
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (235,940) (184,211) (447,423) (362,807)
Other, net (5,869) (11,330) (4,804) (10,620)
---------- ---------- ---------- ----------
NET LOSS $ (316,589) $ (320,362) $ (762,685) $ (723,364)
---------- ---------- ---------- ----------
ALLOCATION OF NET LOSS:
General Partner $ (3,166) $ (3,204) $ (7,627) $ (7,234)
========== ========== ========== ==========
Limited Partners $ (313,423) $ (317,158) $ (755,058) $ (716,130)
========== ========== ========== ==========
NET LOSS PER LIMITED
PARTNER UNIT $ (6.11) $ (6.19) $ (14.73) $ (13.97)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNER UNITS
OUTSTANDING 51,276 51,276 51,276 51,276
========== ========== ========== ==========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For The Six Months
Ended June 30,
-----------------------------
1995 1994
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (762,685) $ (723,364)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,591,419 1,533,735
Decrease (increase) in trade accounts receivable, net (25,824) 5,464
Decrease (increase) in deposits, prepaid expenses and
other assets 12,306 (25,804)
Decrease in trade accounts payable and accrued
liabilities and subscriber prepayments
and deposits (98,316) (18,689)
Increase (decrease) in advances from Jones Intercable, Inc. (30,260) 232,475
---------- ----------
Net cash provided by operating activities 686,640 1,003,817
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (629,643) (657,647)
---------- ----------
Net cash used in investing activities (629,643) (657,647)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in accrued distributions 312,500 (372,916)
Distributions to partners (625,000) --
Repayment of borrowings (28,546) (14,460)
Proceeds from borrowings 254,999 --
---------- ----------
Net cash used in financing activities (86,047) (387,376)
---------- ----------
INCREASE (DECREASE) IN CASH (29,050) (41,206)
CASH, AT BEGINNING OF PERIOD 171,944 87,972
---------- ----------
CASH, AT END OF PERIOD $ 142,894 $ 46,766
========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest Paid $ 465,037 $ 324,279
========== ==========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) This Form 10-Q is being filed in conformity with the
Securities and Exchange Commission 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 Spacelink Income/Growth Fund 1-A, Ltd.
(the "Partnership") at June 30, 1995 and December 31, 1994, and its results of
operations and cash flows for the three and six month periods ended June 30,
1995 and 1994. Results of operations for these periods are not necessarily
indicative of results to be expected for the full year.
The Partnership, a Colorado limited partnership, was formed on May 12,
1988, pursuant to a public offering of limited partner interests sponsored by
Jones Spacelink, Ltd. ("Spacelink"). On December 20, 1994, Jones Intercable,
Inc. ("Intercable"), a Colorado corporation that was a subsidiary of Spacelink,
acquired substantially all of the assets of Spacelink, including Spacelink's
general partner interest in the Partnership. Intercable now is the general
partner and manager of the Partnership. All references herein to the "General
Partner" relating to matters prior to December 20, 1994 are to Spacelink, and
all references to the "General Partner" relating to matters after that date are
to Intercable. Intercable and certain of its subsidiaries also own and operate
cable television systems for their own account and for the account of other
managed limited partnerships.
The Partnership owns and operates the cable television systems serving
the areas in and around the communities of Bluffton, Decatur, Monroe, Auburn,
Butler, Uniondale, Waterloo and Garett, and the unincorporated areas of Wells,
Allen, Noble, Adams and DeKalb Counties, all in the State of Indiana (the
"Bluffton systems"). In addition, the Partnership owns the cable television
system serving the communities of Lake Geneva and areas of Walworth County, all
in the State of Wisconsin (the "Lake Geneva system") and the cable television
system serving the communities of Ripon and areas of Fond-du-Lac County, all in
the State of Wisconsin (the "Ripon system").
(2) Intercable 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 paid to the General Partner by the Partnership for the three
and six month periods ended June 30, 1995 were $86,073 and $168,697,
respectively, as compared to $79,767 and $158,005, respectively, for the three
and six month periods ended June 30, 1994.
The Partnership reimburses the General Partner for certain allocated
general and administrative expenses. These expenses include salaries and
benefits paid to corporate personnel, office rent and related facilities
expense. 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 expenses are allocated based on the pro rata relationship of the
Partnership's revenues to the total revenues of all systems owned or managed by
the General Partner and certain of its subsidiaries. Systems owned by the
General Partner and all other systems owned by partnerships for which
Intercable is the general partner are also allocated a proportionate share of
these expenses. The General Partner believes that the methodology used in
allocating general and administrative costs is reasonable. General and
administrative expenses allocated to the Partnership by the General Partner
were $119,221 and $259,270 for the three and six month periods ended June 30,
1995, respectively, as compared to $128,921 and $262,219 for the three and six
month periods ended June 30, 1994, respectively.
(3) A primary objective of the Partnership is to provide quarterly
cash distributions to the partners, principally from cash flow from operations
remaining after principal and interest payments and the creation of any
reserves necessary for the operation of the Partnership. The Partnership
suspended quarterly distributions to the partners in 1994 because the
Partnership had no borrowing capacity under its previous credit facility and
needed funds from cash flow to pay for capital additions. Because the
Partnership renegotiated its credit facility in late 1994, it can to some
extent use borrowings to fund capital expenditures and the Partnership will
attempt to provide some level of distributions to the partners in the future.
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The Partnership declared distributions to be paid to the partners in
the amount of $312,500 for each of the three month periods ended March 31, 1995
and June 30, 1995. The distributions were primarily from first and second
quarter 1995 cash flows. The first quarter distribution was paid in May 1995
and the second quarter distribution will be paid in August 1995.
(4) Certain prior year amounts have been reclassified to conform
to the 1995 presentation.
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JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
For the six months ended June 30, 1995, the Partnership generated cash
from operating activities totaling $686,640, which is available to fund capital
expenditures and non-operating costs. During the first six months of 1995, the
Partnership purchased plant and equipment for its cable television systems
totaling approximately $630,000. Approximately 36 percent of these
expenditures were for service drops to homes. Approximately 30 percent were
for plant extensions. The remainder of these expenditures were for various
enhancements throughout all of the Partnership's cable television systems. The
capital expenditures were funded primarily from cash flow from operations and
borrowings from the Partnership's revolving credit facility. Anticipated
capital expenditures for the remainder of 1995 are estimated to be
approximately $514,000, and will be financed primarily from cash flow from
operations and borrowings from the Partnership's credit facility. It is
estimated that approximately 56 percent of these expenditures will be for
upgrades to cable television plant, approximately 33 percent for service drops
to homes and approximately 11 percent for plant extensions.
In September 1994, the Partnership renegotiated the terms of its credit
facility to extend the revolving credit period and to increase the amount
available to $14,000,000 to provide the Partnership with a source of funding
for capital expenditures. The then-outstanding principal balance on the
revolving credit facility will convert on December 31, 1996 to a term loan with
a final maturity date of December 31, 1999. At June 30, 1995, $10,900,000 was
outstanding, leaving $3,100,000 for future borrowings. Interest on the
outstanding principal balance is at the Partnership's option of Prime plus 3/8
percent or London Interbank Offered Rate plus 1-3/8 percent. The effective
interest rates on outstanding obligations as of June 30, 1995 and 1994 were 7.4
percent and 5.6 percent, respectively.
A primary objective of the Partnership is to provide quarterly cash
distributions to the partners, principally from cash flow from operations
remaining after principal and interest payments and the creation of any
reserves necessary for the operation of the Partnership. The Partnership
suspended quarterly distributions to the partners in 1994 because the
Partnership had no borrowing capacity under its previous credit facility and
needed funds from cash flow to pay for capital additions. Because the
Partnership renegotiated its credit facility in late 1994, it can to some
extent use borrowings to fund capital expenditures and the Partnership will
attempt to provide some level of distributions to the partners in the future.
The Partnership declared distributions to be paid to the partners in the amount
of $312,500 for each of the three month periods ended March 31, 1995 and June
30, 1995. The distributions were primarily from first and second quarter 1995
cash flows. The first quarter distribution was paid in May 1995 and the second
quarter distribution will be paid in August 1995.
The General Partner presently believes cash flow from operations and
available borrowings from the Partnership's revolving credit facility will be
sufficient to fund capital expenditures and other liquidity needs of the
Partnership over the near-term.
RESULTS OF OPERATIONS
Revenues of the Partnership increased $126,142, or approximately 8
percent, to $1,721,473 for the three months ended June 30, 1995 from $1,595,331
for the three months ended June 30, 1994. Revenues of the Partnership
increased $213,835, or approximately 7 percent, to $3,373,938 for the six month
period ended June 30, 1995 from $3,160,103 for the comparable period in 1994.
These increases in revenue were primarily the result of increases in the number
of basic subscribers and advertising revenues. An increase in the number of
basic subscribers accounted for approximately 52 and 56 percent, respectively,
of the increase and an increase in advertising revenues accounted for
approximately 29 and 30 percent, respectively, of the increase for the three
and six month periods ended June 30, 1995.
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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 $50,036, or approximately 7 percent, to
$795,688 for the three months ended June 30, 1995 to $745,652 for the three
months ended June 30, 1994. Operating expenses represented approximately 46
percent and 47 percent, respectively, of revenues for the three month periods
ended June 30, 1995 and 1994. Of this total increase in operating expenses,
programming costs increased approximately $39,000, representing approximately
78 percent of the total increase. Operating expenses increased $108,929, or
approximately 7 percent, to $1,665,010 for the six month period ended June 30,
1995 to $1,556,081 for the comparable period in 1994. Of this total increase
in operating expenses, programming costs increased approximately $77,000,
representing approximately 70 percent of the total increase. No other
individual factor significantly affected the increase in operating expenses for
the periods discussed.
Management fees and allocated administrative costs from the General
Partner decreased $3,394, or approximately 2 percent, to $205,294 for the
quarter ended June 30, 1995 from $208,688 for the similar period in 1994. This
decrease was primarily due to a decrease in allocated expenses from the General
Partner. Management fees and allocated administrative costs from the General
Partner increased $7,743, or approximately 2 percent from $427,967 for the six
month period ended June 30, 1995 to $420,224 for the similar period in 1994.
This increase was primarily due to an increase in revenues, upon which such
fees and allocations are based, which was partially offset by a decrease in
allocated expenses from the General Partner.
Depreciation and amortization expense increased $29,459, or
approximately 4 percent, to $795,271 for the quarter ended June 30, 1995 from
$765,812 for the comparable 1994 period. Depreciation and amortization expense
increased $57,684, or approximately 4 percent, to $1,591,419 for the six month
period ended June 30, 1995 from $1,533,735 for the comparable period in 1994.
The increase was a result of capital additions during 1995.
Operating loss decreased $50,041, or approximately 40 percent, to
$74,780 for the three months ended June 30, 1995 from $124,821 for the
comparable 1994 period. Operating loss decreased $39,479, or approximately 11
percent, to $310,458 for the six months ended June 30, 1995 from $349,937 for
the similar period in 1994. The decreases were the result of the increases in
revenues exceeding the increases in operating expenses, management fees and
allocated administrative expenses from the General Partner and depreciation and
amortization expense. Operating income before depreciation and amortization
expense increased $79,500, or approximately 12 percent, to $720,491 for the
three months ended June 30, 1995, from $640,991 for the three months ended June
30, 1994. Operating income before depreciation and amortization expense
increased $97,163, or approximately 8 percent to $1,280,961 for the six month
period ended June 30, 1995 from $1,183,798 for the similar 1994 period. These
increases were due to the increases in revenues, operating expenses and
management fees and allocated administrative expenses from the General Partner.
Interest expense increased $51,729, or approximately 28 percent, to
$235,940 for the three month period ended June 30, 1995 from $184,211 for the
three month period ended June 30, 1994. Interest expense increased $84,616, or
approximately 23 percent, to $447,423 for the six month period ended June 30,
1995 from $362,807 for the three month period ended June 30, 1994. This
increase was primarily the result of higher effective interest rates on
interest bearing obligations.
Net loss increased $3,773, or approximately 1 percent to $316,589 for
the three month period ended June 30, 1995 from $320,362 for the three month
period ended June 30, 1994. Net loss increased $39,321, or approximately 5
percent to $762,685 for the six month period ended June 30, 1995 from $723,364
for the six month period ended June 30, 1994. These losses were the result of
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 SPACELINK INCOME/GROWTH FUND 1-A, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
---------------------------------------
Group Vice President/Finance
(Principal Financial Officer)
Dated: August 11, 1995
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EXHIBIT INDEX
Exhibit No. Exhibit Description Page
- ----------- ------------------- ----
27 Financial Data Schedule