1
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, 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: 0-11911
Cable TV Fund 11-B, Ltd.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-0908730
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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
------------------------------------------------------------------------
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
----- -----
2
CABLE TV FUND 11-B, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
September 30, December 31,
ASSETS 1995 1994
------ ------------- ------------
CASH $ 175,898 $ 139,532
TRADE RECEIVABLES, less allowance for doubtful
receivables of $65,842 and $72,936 at
September 30, 1995 and December 31, 1994,
respectively 413,460 472,417
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 44,586,881 41,410,669
Less- accumulated depreciation (18,527,187) (16,361,119)
------------- ------------
26,059,694 25,049,550
Investment in cable television joint venture 574,458 550,483
------------- ------------
Total investment in cable television
properties 26,634,152 25,600,033
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 447,149 302,713
------------- ------------
Total assets $ 27,670,659 $ 26,514,695
============= ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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3
CABLE TV FUND 11-B, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL 1995 1994
--------------------------------- ------------- ------------
LIABILITIES:
Debt $ 23,751,285 $ 20,221,732
Accounts payable-
Trade 118,568 368,624
General Partner - 1,305,421
Accrued liabilities 918,165 1,653,704
Subscriber prepayments 50,732 50,293
------------ ------------
Total liabilities 24,838,750 23,599,774
------------ ------------
PARTNERS' CAPITAL:
General Partner-
Contributed capital 1,000 1,000
Accumulated earnings 52,980 53,810
------------ ------------
53,980 54,810
------------ ------------
Limited Partners-
Net contributed capital
(38,026 units outstanding at September 30, 1995
and December 31, 1994) 15,661,049 15,661,049
Distributions (19,013,121) (19,013,121)
Accumulated earnings 6,130,001 6,212,183
------------ ------------
2,777,929 2,860,111
------------ ------------
Total liabilities and
partners' capital $ 27,670,659 $ 26,514,695
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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4
CABLE TV FUND 11-B, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
1995 1994 1995 1994
---------- ---------- ----------- -----------
REVENUES $3,616,482 $3,201,789 $10,592,184 $ 9,431,304
COSTS AND EXPENSES:
Operating expenses 2,110,590 1,882,886 5,998,062 5,491,457
Management fees and
allocated overhead
from General Partner 423,050 381,823 1,275,876 1,181,624
Depreciation and
amortization 732,393 586,413 2,197,401 1,772,063
---------- ---------- ----------- -----------
OPERATING INCOME 350,449 350,667 1,120,845 986,160
---------- ---------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (463,205) (306,085) (1,350,904) (744,667)
Other, net 53,878 720 123,072 (13,579)
---------- ---------- ----------- -----------
Total other income
(expense), net (409,327) (305,365) (1,227,832) (758,246)
---------- ---------- ----------- -----------
INCOME (LOSS) BEFORE EQUITY
IN NET INCOME OF CABLE
TELEVISION JOINT VENTURE (58,878) 45,302 (106,987) 227,914
EQUITY IN NET INCOME OF
CABLE TELEVISION JOINT
VENTURE 12,902 6,823 23,975 21,784
---------- ---------- ----------- -----------
NET INCOME (LOSS) $ (45,976) $ 52,125 $ (83,012) $ 249,698
========== ========== =========== ===========
ALLOCATION OF NET
INCOME (LOSS):
General Partner $ (460) $ 521 $ (830) $ 2,497
========== ========== =========== ===========
Limited Partners $ (45,516) $ 51,604 $ (82,182) $ 247,201
========== ========== =========== ===========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (1.20) $ 1.36 $ (2.16) $ 6.50
========== ========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 38,026 38,026 38,026 38,026
========== ========== =========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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5
CABLE TV FUND 11-B, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Nine Months Ended
September 30,
--------------------------------
1995 1994
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (83,012) $ 249,698
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 2,197,401 1,772,063
Equity in net income of cable television joint venture (23,975) (21,784)
Decrease in amount due General Partner (1,305,421) (42,288)
Decrease in trade receivables 58,957 44,453
Decrease (increase) in deposits, prepaid expenses and
deferred charges (175,769) (656,064)
Decrease in accounts payable, accrued
liabilities and subscriber prepayments (985,156) (108,562)
------------ ------------
Net cash provided by (used in) operating activities (316,975) 2,549,644
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,176,212) (5,724,230)
------------ ------------
Net cash used in investing activities (3,176,212) (5,724,230)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 3,900,000 2,750,000
Repayment of debt (370,447) (649,795)
------------ ------------
Net cash provided by financing activities 3,529,553 2,100,205
------------ ------------
Increase (decrease) in cash 36,366 (1,074,381)
Cash, beginning of period 139,532 1,171,764
------------ ------------
Cash, end of period $ 175,898 $ 97,383
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,423,995 $ 521,761
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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CABLE TV FUND 11-B, LTD.
(A Limited Partnership)
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 Cable TV Fund 11-B, Ltd.
(the "Partnership") at September 30, 1995 and December 31, 1994 and its
Statements of Operations for the three and nine month periods ended September
30, 1995 and 1994, and its Statements of Cash Flows for the nine month periods
ended September 30, 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 cable television system serving areas in and
around Lancaster, New York (the "New York Systems") owned directly by the
Partnership and the Manitowoc, Wisconsin cable television system (the
"Manitowoc System") owned by Cable TV Joint Fund 11 ("the Venture"), in which
the Partnership owns an approximate 8 percent interest. The General Partner
receives a fee for its services equal to 5 percent of the gross revenues of the
Partnership and the Venture, excluding revenues from the sale of cable
television systems or franchises. Management fees for the three and nine month
periods ended September 30, 1995 (excluding Fund 11-B's approximate 8 percent
interest in the Venture) were $180,824 and $529,609, respectively, compared to
$160,089 and $471,565, respectively, for the similar 1994 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 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 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 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 by the Partnership
to the General Partner for allocated overhead and administrative expenses for
the three and nine month periods ending September 30, 1995 (excluding Fund
11-B's approximate 8 percent interest in the Venture) were $242,226 and
$746,267, respectively, compared to $221,734 and $710,059, respectively, for
the similar 1994 periods.
(3) On October 6, 1995, the Partnership entered into an asset purchase
agreement pursuant to which it agreed to sell the New York Systems to an
unaffiliated cable television system operator for a sales price of $84,000,000.
The closing of the sale of the New York Systems is subject to a number of
conditions, including approval of the transaction by the holders of a majority
of the Partnership's limited partnership interests in a vote to be conducted in
early 1996 and the successful transfer of the New York Systems' franchises.
Closing of this sale is expected to occur during the first half of 1996.
If the sale of the New York Systems is closed, the Partnership will
pay all of its indebtedness, which totaled approximately $23,751,000 at
September 30, 1995, and then the Partnership will distribute the net sale
proceeds to its partners and it is estimated that the limited partners of the
Partnership will receive $2,291 for each $1,000 invested in the Partnership.
As a result of the New York Systems' sale, the limited partners of the
Partnership, as a group, will receive approximately $43,573,318 and the General
Partner will receive approximately $14,524,439. Once the distribution of the
net proceeds from the sale of the New York System has been made, limited
partners of the Partnership will have received a total of $3,291 for each
$1,000 invested in the Partnership, taking into account the prior distributions
to limited partners made in July 1990 and July 1992. The Partnership will
continue to own its approximate 8 percent interest in the Venture, until the
Manitowoc System also is sold, as discussed below. Upon the closing of the
sale of the Partnership's New York Systems and the Venture's Manitowoc System,
the Partnership will be liquidated and dissolved.
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7
As permitted by Section 2.2(n)(i) of the Partnership's limited
partnership agreement, the Partnership will pay The Jones Group, Ltd., a
subsidiary of the General Partner, a $2,100,000 fee upon the completion of the
sale of the New York Systems as compensation to The Jones Group, Ltd. for
acting as the Partnership's broker and financial advisor in connection with the
sale of the New York Systems. This fee represents 2.5 percent of the
$84,000,000 sales price.
(4) On September 5, 1995, the Venture entered into an asset purchase
agreement pursuant to which it agreed to sell the Manitowoc System to the
General Partner for a sales price of $15,735,667. This sales price is the
average of three separate independent appraisals of the fair market value of
the Manitowoc System and it was the only bid tendered in a public bidding
process for the Manitowoc System. The General Partner has assigned its rights
and obligations under the asset purchase agreement to Jones Cable Holdings,
Inc., a Colorado corporation that is a wholly-owned subsidiary of the General
Partner. After its acquisition of the Manitowoc System, Jones Cable Holdings,
Inc. intends to convey the Manitowoc System, together with other cable
television systems that it owns and/or will acquire, to Time Warner
Entertainment Company, L.P. ("Time Warner"), an unaffiliated cable television
system operator, in return for which Time Warner will convey to Jones Cable
Holdings, Inc. the cable television systems serving communities in and around
Savannah, Georgia. The closing of the Manitowoc System sale, however, is not
contingent upon the closing of the Time Warner exchange.
The closing of the sale of the Manitowoc System is subject to a number
of conditions, including the approval of the holders of a majority of the
limited partnership interests in each of the four partnerships that comprise
the Venture in votes to be conducted in early 1996 and the successful renewal
and transfer of the Manitowoc System's franchise. There can be no assurance
tht these closing conditions will be satisfied. Closing of this sale is
expected to occur during the first half of 1996. The Venture intends to
distribute approximately $905,300 of the sale proceeds to the Partnership,
which the Partnership will in turn distribute to its limited partners, giving
the Partnership's limited partners an approximate return of $48 per $1,000
invested in the Partnership. The Partnership will continue to own and operate
the New York Systems until they are sold.
Negotiations relating to the renewal and transfer of the City of
Manitowoc franchise are continuing. The term of the current franchise will
expire, unless extended, on November 20, 1995. The General Partner cannot
predict whether or when the renewal of the franchise will be concluded, but the
General Partner is hopeful that renewal will be accomplished by the end of
1995. If the current franchise terminates and is not extended as renewed, the
General Partner, on the Venture's behalf, will avail itself of all remedies and
recourse granted to cable operators under federal and applicable state and
local laws in order to preserve the Venture's right to provide cable services
in the City of Manitowoc.
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(5) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
September 30, December 31,
1995 1994
-------------- --------------
ASSETS
------
Cash and accounts receivable $ 3,708,668 $ 2,521,713
Investment in cable television properties 2,553,654 2,724,042
Other assets 1,911,260 1,853,355
-------------- --------------
Total assets $ 8,173,582 $ 7,099,110
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Debt $ 12,451 $ 26,385
Payables and accrued liabilities 1,255,122 474,880
Partners' contributed capital 45,000,000 45,000,000
Distributions (118,914,493) (118,914,493)
Accumulated earnings 80,820,502 80,512,338
-------------- --------------
Total liabilities and partners' capital $ 8,173,582 $ 7,099,110
============== ==============
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UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
----------------------------- ----------------------------
1995 1994 1995 1994
--------- --------- ---------- ----------
Revenues $ 929,672 $ 816,871 $2,684,022 $2,451,528
Operating expenses (560,668) (513,846) (1,735,366) (1,496,536)
Management fees and
allocated overhead from
Jones Intercable, Inc. (115,317) (103,112) (339,444) (320,042)
Depreciation and amortization (139,565) (129,611) (418,694) (389,667)
--------- --------- ---------- ----------
Operating Income 114,122 70,302 190,518 245,283
Interest expense (511) (1,186) (9,212) (11,652)
Interest income 52,013 18,408 125,834 53,970
Other, net 209 172 1,024 (7,604)
--------- --------- ---------- ----------
Net income $ 165,833 $ 87,696 $ 308,164 $ 279,997
========= ========= ========== ==========
Management fees paid to Jones Intercable, Inc. by the Venture totaled
$46,483 and $134,201, respectively, for the three and nine month periods ended
September 30, 1995 and $40,843 and $122,576, respectively, for the three and
nine month periods ended September 30, 1994. Reimbursements for overhead and
administrative expenses paid to Jones Intercable, Inc. by the Venture totaled
$68,834 and $205,243, respectively, for the three and nine month periods ended
September 30, 1995, and $62,269 and $197,466, respectively, for the three and
nine month periods ended September 30, 1994.
Management fees paid by the Venture and attributable to the
Partnership's interest totaled $3,616 and $10,441, respectively, for the three
and nine month periods ended September 30, 1995 and $3,178 and $9,537,
respectively, for the three and nine month periods ended September 30, 1994.
Reimbursements for overhead and administrative expenses paid by the Venture and
attributable to the Partnership's interest totaled $5,355 and $15,968,
respectively, for the three and nine month periods ended September 30, 1995 and
$4,845 and $15,363, respectively, for the three and nine month periods ended
September 30, 1994.
(6) Certain prior year amounts have been reclassified to conform to the
1995 presentation.
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10
CABLE TV FUND 11-B, LTD.
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
During the first nine months of 1995, the Partnership expended
approximately $3,176,000 on capital improvements. The continuation of the
rebuild and upgrade of the New York Systems accounted for approximately 46
percent of capital expenditures. Plant extensions and service drops to
subscriber homes accounted for approximately 19 percent of the capital
expenditures. Converters accounted for approximately 12 percent of capital
expenditures. The remainder of capital expenditures were for various other
enhancements in the New York Systems. Funding for these expenditures was
provided primarily by borrowings under the Partnership's credit facility. The
Partnership expects to expend approximately $620,000 during the fourth quarter
of 1995. The rebuild and upgrade of the New York Systems will account for
approximately 35 percent of expected capital expenditures. Plant extensions
and service drops to subscriber homes will account for approximately 12 percent
of expected capital expenditures. Converters will account for approximately 10
percent of expected capital expenditures. The remainder of capital
expenditures will be used for various other enhancements in the New York
Systems. Funding for these expenditures is expected to be provided from cash
generated from operations and available borrowings from the Partnership's
credit facility.
On February 28, 1995, the Partnership entered into a $25,000,000
revolving credit and term loan agreement. The revolving credit period expires
January 1, 1997, at which time the outstanding balance converts to a term loan
payable in 24 consecutive quarterly installments commencing March 31, 1997.
Proceeds from this credit facility were used to repay amounts outstanding under
the Partnership's previous credit facility, repay amounts due the General
Partner and fund capital expenditures. As of September 30, 1995, $23,600,000
was outstanding under this agreement, leaving $1,400,000 available for future
needs of the Partnership. Interest payable on outstanding amounts is at the
Partnership's option of the base rate plus 1/4 percent or the London InterBank
Offered Rate plus 1-1/8 percent. The effective interest rates on outstanding
obligations as of September 30, 1995 and 1994 were 7.30 percent and 6.04
percent, respectively. This loan is expected to be paid in full upon closing
of the sales of the New York Systems as discussed below.
On October 6, 1995, the Partnership entered into an asset purchase
agreement pursuant to which it agreed to sell the New York Systems to an
unaffiliated cable television system operator for a sales price of $84,000,000.
The closing of the sale of the New York Systems is subject to a number of
conditions, including approval of the transaction by the holders of a majority
of the Partnership's limited partnership interests in a vote to be conducted in
early 1996 and the successful transfer of the New York Systems' franchises.
Closing of this sale is expected to occur during the first half of 1996.
If the sale of the New York Systems is closed, the Partnership will
pay all of its indebtedness, which totaled approximately $23,751,000 at
September 30, 1995, and then the Partnership will distribute the net sale
proceeds to its partners and it is estimated that the limited partners of the
Partnership will receive $2,291 for each $1,000 invested in the Partnership.
As a result of the New York Systems' sale, the limited partners of the
Partnership, as a group, will receive approximately $43,573,318 and the General
Partner will receive approximately $14,524,439. Once the distribution of the
net proceeds from the sale of the New York System has been made, limited
partners of the Partnership will have received a total of $3,291 for each
$1,000 invested in the Partnership, taking into account the prior distributions
to limited partners made in July 1990 and July 1992. The Partnership will
continue to own its approximate 8 percent interest in the Venture, until the
Manitowoc System also is sold, as discussed below. Upon the closing of the
sale of the Partnership's New York Systems and the Venture's Manitowoc System,
the Partnership will be liquidated and dissolved.
As permitted by Section 2.2(n)(i) of the Partnership's limited
partnership agreement, the Partnership will pay The Jones Group, Ltd., a
subsidiary of the General Partner, a $2,100,000 fee upon the completion of the
sale of the New York Systems as compensation to The Jones Group, Ltd. for
acting as the Partnership's broker and financial advisor in connection with the
sale of the New York Systems. This fee represents 2.5 percent of the
$84,000,000 sales price.
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The Partnership has sufficient sources of capital available to meet
its presently anticipated needs from its ability to generate cash from
operations and from borrowings available under its credit facility.
In addition to the systems owned by it directly, the Partnership owns
an approximate 8 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 increased by $23,975, from $550,483 at December 31, 1994 to $574,458
at September 30, 1995. This increase represents the Partnership's
proportionate share of income generated by the Venture during the first nine
months of 1995.
On September 5, 1995, the Venture entered into an asset purchase
agreement pursuant to which it agreed to sell the Manitowoc System to the
General Partner for a sales price of $15,735,667. This sales price is the
average of three separate independent appraisals of the fair market value of
the Manitowoc System and it was the only bid tendered in a public bidding
process for the Manitowoc System. The General Partner has assigned its rights
and obligations under the asset purchase agreement to Jones Cable Holdings,
Inc., a Colorado corporation that is a wholly-owned subsidiary of the General
Partner. After its acquisition of the Manitowoc System, Jones Cable Holdings,
Inc. intends to convey the Manitowoc System, together with other cable
television systems that it owns and/or will acquire, to Time Warner
Entertainment Company, L.P. ("Time Warner"), an unaffiliated cable television
system operator, in return for which Time Warner will convey to Jones Cable
Holdings, Inc. the cable television systems serving communities in and around
Savannah, Georgia. The closing of the Manitowoc System sale, however, is not
contingent upon the closing of the Time Warner exchange.
The closing of the sale of the Manitowoc System is subject to a number
of conditions, including the approval of the holders of a majority of the
limited partnership interests in each of the four partnerships that comprise
the Venture in votes to be conducted in early 1996 and the successful renewal
and transfer of the Manitowoc System's franchise. There can be no assurance
that these closing conditions will be satisfied. Closing of this sale is
expected to occur during the first half of 1996. The Venture intends to
distribute approximately $905,300 of the sale proceeds to the Partnership,
which the Partnership will in turn distribute to its limited partners, giving
the Partnership's limited partners an approximate return of $48 per $1,000
invested in the Partnership. The Partnership will continue to own and operate
the New York Systems until they are sold.
Negotiations relating to the renewal and transfer of the City of
Manitowoc franchise are continuing. The term of the current franchise will
expire, unless extended, on November 20, 1995. The General Partner cannot
predict whether or when the renewal of the franchise will be concluded, but the
General Partner is hopeful that renewal will be accomplished by the end of
1995. If the current franchise terminates and is not extended as renewed, the
General Partner, on the Venture's behalf, will avail itself of all remedies and
recourse granted to cable operators under federal and applicable state and
local laws in order to preserve the Venture's right to provide cable services
in the City of Manitowoc.
For the nine months ended September 30, 1995, the Venture generated
net cash from operating activities totaling approximately $1,441,600, which is
available to fund capital expenditures and non-operating costs. During the
first nine months of 1995, the Venture expended approximately $221,000 for
capital expenditures in the Manitowoc System. These capital improvements were
used for various enhancements to maintain the value of the system. These
expenditures were funded from cash generated from operations. Anticipated
capital expenditures for the remainder of 1995 are approximately $52,000.
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 September 30, 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 future needs.
Regulatory Matters
The FCC's rate regulations related to the 1992 Cable Act contain
provisions for increasing rates for added channels, external costs and
inflation. The Partnership has been able to adjust rates recently under such
provisions.
11
12
Such adjustments, together with a reduction in the cost of implementing the
1992 Cable Act compared to such costs in prior periods, are expected to cause
the Partnership's revenue and cash flow to increase in fiscal 1996.
Currently, there is legislation before Congress which, if enacted,
would significantly change the regulatory environment in which the cable
industry operates. Such legislation may eliminate rate regulation and allow
telephone companies and others much broader entry into the cable television
business and, in turn, may allow cable operators into the telephone and other
telecommunications businesses. While the General Partner is encouraged by
provisions of the legislation, it is too early to assess the impact such
legislation, if enacted, would have on the Partnership.
12
13
RESULTS OF OPERATIONS
The Partnership
Revenues of the New York Systems totaled $3,616,482 for the three
month period ended September 30, 1995 compared to $3,201,789 for the comparable
1994 period, an increase of $414,693, or approximately 13 percent. Revenues
totaled $10,592,184 for the nine months ended September 30, 1995 compared to
$9,431,304 for the comparable 1994 period, an increase of $1,160,880, or
approximately 12 percent. Basic rate increases resulted in approximately 67
percent and 63 percent, respectively, of the increase in revenues for the three
and nine month periods ended September 30, 1995. An increase in the subscriber
base in the New York Systems accounted for approximately 29 percent and 31
percent, respectively, of the increase in revenues for the three and nine month
periods ended September 30, 1995. The number of basic subscribers increased by
1,921 subscribers, or approximately 5 percent, to 39,311 at September 30, 1995
from 37,390 at September 30, 1994. No other factors individually were
significant 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 expenses totaled $2,110,590 for the three month period ended
September 30, 1995 compared to $1,882,886 for the comparable 1994 period, an
increase of $227,704, or approximately 12 percent. Operating expenses totaled
$5,998,062 for the nine month period ended September 30, 1995 compared to
$5,491,457 for the comparable 1994 period, an increase of $506,605, or
approximately 9 percent. Operating expenses represented approximately 58
percent and 57 percent, respectively, of revenues for the three and nine month
periods of 1995 compared to approximately 59 percent and 58 percent,
respectively, of revenues for the comparable 1994 periods. The increases in
operating expenses for the three and nine month periods were due primarily to
increases in programming fees and system maintenance costs. No other factors
individually were significant to the increase in the Partnership's operating
expenses.
Management fees and allocated overhead from the General Partner
totaled $423,050 for the three month period ended September 30, 1995 compared
to $381,823 for the comparable 1994 period, an increase of $41,227, or
approximately 11 percent. The increase for the three month period was due to
the increase in revenues, upon which such fees and allocations are based.
Management fees and allocated overhead from the General Partner totaled
$1,275,876 for the nine months ended September 30, 1995 compared to $1,181,624
for the comparable 1994 period, an increase of $94,252, or approximately 8
percent. The increase for the nine month period was due to the increase in
revenues, upon which such management fees are based, as well as an increase in
expenses allocated from the General Partner. The General Partner has
experienced increases in expenses, a portion of which is allocated to the
Partnership.
Depreciation and amortization expense totaled $732,393 for the three
month period ended September 30, 1995 compared to $586,413 for the comparable
1994 period, an increase of $145,980, or approximately 25 percent.
Depreciation and amortization expense totaled $2,197,401 for the nine months
ended September 30, 1995 compared to $1,772,063 for the comparable 1994 period,
an increase of $425,338, or approximately 24 percent. The increases for the
three and nine month periods were due to capital additions in 1994.
Operating income totaled $350,449 for the three month period ended
September 30, 1995 compared to $350,667 for the comparable 1994 period, a
decrease of $218, or less than one percent. Operating income totaled $1,120,845
for the nine months ended September 30, 1995 compared to $986,160 for the
comparable 1994 period, an increase of $134,685, or approximately 14 percent.
The increase for the nine month period was due to the increase in revenues
exceeding the increases in operating expenses, management fees and allocated
overhead from the General Partner and depreciation and amortization expense.
The cable television industry generally measures the performance of a
cable television system in terms of cash flow or operating income before
depreciation and amortization. The value of a cable television system is often
determined using multiples of cash flow. This measure is not intended to be a
substitute or improvement upon the items disclosed on the financial statements,
rather it is included because it is an industry standard. Operating income
before depreciation and amortization totaled $1,082,842 for the three month
period ended September 30, 1995
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compared to $937,080 for the comparable 1994 period, an increase of $145,762,
or approximately 16 percent. Operating income before depreciation and
amortization totaled $3,318,246 for the nine months ended September 30, 1995
compared to $2,758,223 for comparable 1994 period, an increase of $560,023, or
approximately 20 percent. The increases were due to the increase in revenues
exceeding the increases in operating expenses and management fees and allocated
overhead from the General Partner.
Interest expense totaled $463,205 for the three month period ended
September 30, 1995 compared to $306,085 for the comparable 1994 period, an
increase of $157,120, or approximately 51 percent. Interest expense totaled
$1,350,904 for the nine months ended September 30, 1995 compared to $744,667
for the comparable 1994 period, an increase of $606,237, or approximately 81
percent. These increases were due to higher balances on interest bearing
obligations and higher effective interest rates.
The Partnership recognized net loss before equity in net income of
cable television joint venture of $58,878 for the three month period ended
September 30, 1995 compared to income before equity in net income of cable
television joint venture of $45,302 for the comparable 1994 period. The
Partnership recognized net loss before equity in net income of cable television
joint venture of $106,987 for the nine month periods ended September 30, 1995
compared to income before equity in net income of cable television joint
venture of $227,914 for the comparable 1994 period, a decrease of $334,901.
The changes for the three and nine month periods were due primarily to the
increases in interest expense.
The Venture-
In addition to the New York Systems owned by it directly, the
Partnership owns an approximate 8 percent interest in the Venture. Revenues of
the Venture totaled $929,672 for the three month period ended September 30,
1995 compared to $816,871 for the comparable 1994 period, an increase of
$112,801, or approximately 14 percent. Revenues of the Venture totaled
$2,684,022 for the nine months ended September 30, 1995 compared to $2,451,528
for the comparable 1994 period, an increase of $232,494, or approximately 9
percent. An increase in the subscriber base accounted for approximately 47
percent and 79 percent, respectively, of the increase in revenues for the three
and nine month periods ended September 30, 1995. The number of basic
subscribers increased by 802 subscribers, or approximately 8 percent, from
10,300 at September 30, 1994 to 11,102 at September 30, 1995. Premium service
subscriptions increased 1,122, or approximately 18 percent, from 6,218 at
September 30, 1994 to 7,340 at September 30, 1995. Rate adjustments during the
second quarter of 1995 resulted in approximately 22 percent and 21 percent,
respectively, of the increase in revenues for the three and nine month periods.
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 expenses in the Manitowoc System totaled $560,668 for the
three month period ended September 30, 1995 compared to $513,846 for the
comparable 1994 period, an increase of $46,822, or approximately 9 percent.
Operating expenses in the Manitowoc System totaled $1,735,366 for the nine
months ended September 30, 1995 compared to $1,496,536 for the comparable 1994
period, an increase of $238,830, or approximately 16 percent. Operating
expenses represented 60 percent and 65 percent, respectively, of revenues for
the three and nine months periods of 1995 and 63 percent and 61 percent,
respectively, for the comparable 1994 periods. The increases in operating
expenses for the three and nine month periods were due to increases in
programming fees and marketing related costs, which were due, in part, to the
increase in the subscriber base, and increases in property taxes. No other
individual factor significantly affected the increases in operating expenses.
Management fees and allocated overhead from the General Partner
totaled $115,317 for the three month period ended September 30, 1995 compared
to $103,112 for the comparable 1994 period, an increase of $12,205, or
approximately 12 percent. Management fees and allocated overhead from the
General Partner totaled $339,444 for the nine months ended September 30, 1995
compared to $320,042 for the comparable 1994 period, an increase of $19,402, or
approximately 6 percent. The increases for the three and nine month periods
were due to the increase in revenues, upon which such management fees are
based, as well as an increase in expenses allocated from the General Partner.
The General Partner has experienced increases in expenses, a portion of which
is allocated to the Venture.
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Depreciation and amortization expense totaled $139,565 for the three
month period ended September 30, 1995 compared to $129,611 for the comparable
1994 period, an increase of $9,954, or approximately 8 percent. Depreciation
and amortization expense totaled $418,694 for the nine months ended September
30, 1995 compared to $389,667 for the comparable 1994 period, an increase of
$29,027, or approximately 7 percent. The increases for the three and nine
month periods were due to capital additions in 1994.
Operating income totaled $114,122 for the three month period ended
September 30, 1995 compared to $70,302 for the comparable 1994 period, an
increase of $43,820, or approximately 62 percent. The increase for the three
month period was due to the increase in revenues exceeding the increases in
operating expenses, management fees and allocated overhead from the General
Partner, and depreciation and amortization expense. Operating income totaled
$190,518 for the nine months ended September 30, 1995 compared to $245,283 for
the comparable 1994 period, a decrease of $54,765, or approximately 22 percent.
The decrease for the nine month period was due to the increases in operating
expenses, management fees and allocated overhead from the General Partner and
depreciation and amortization expense exceeding the increase in revenues.
The cable television industry generally measures the performance of a
cable television system in terms of cash flow or operating income before
depreciation and amortization. The value of a cable television system is often
determined using multiples of cash flow. This measure is not intended to be a
substitute or improvement upon the items disclosed on the financial statements,
rather it is included because it is an industry standard. Operating income
before depreciation and amortization totaled $253,687 for the three month
period ended September 30, 1995 compared to $199,913 for the comparable 1994
period, an increase of $53,774, or approximately 27 percent. The increase for
the three month period was due to the increase in revenues exceeding the
increases in operating expenses and management fees and allocated overhead from
the General Partner. Operating income before depreciation and amortization
totaled $609,212 for the nine months ended September 30, 1995 compared to
$634,950 for the comparable 1994 period, a decrease of $25,738, or
approximately 4 percent. The decrease for the nine month period was due to the
increases in operating expenses and management fees and allocated overhead from
the General Partner exceeding the increase in revenues.
Interest expense for the Venture totaled $511 for the three month period
ended September 30, 1995 compared to $1,186 for the comparable 1994 period, a
decrease of $675, or approximately 57 percent. Interest expense for the
Venture totaled $9,212 for the nine months ended September 30, 1995 compared to
$11,652 for the comparable 1994 period, a decrease of $2,440, or approximately
21 percent. The decreases for the three and nine month periods were due to
lower outstanding balances on capital lease obligations.
Net income of the Venture totaled $165,833 for the three month period
ended September 30, 1995 compared to $87,696 for the comparable 1994 period, an
increase of $78,137, or approximately 89 percent. Net income of the Venture
totaled $308,164 for the nine months ended September 30, 1995 compared to
$279,997 for the comparable 1994 period, an increase of $28,167, or
approximately 10 percent. The increase for the three and nine month periods
was primarily 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
1. Report on Form 8-K dated September 5, 1995 reported that on
September 5, 1995, Cable TV Joint Fund 11, a joint venture
among Cable TV Fund 11-A, Ltd., Cable TV Fund 11-B, Ltd.,
Cable TV Fund 11-C, Ltd. and Cable TV Fund 11-D, Ltd.,
Colorado limited partnerships, entered into an asset purchase
agreement pursuant to which it agreed to sell the cable
television system serving the City of Manitowoc, Wisconsin to
Jones Intercable, Inc. for a sales price of $15,735,667.
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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-B, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
-----------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: November 14, 1995
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EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
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27 Financial Data Schedule