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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 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: 0-14689
JONES CABLE INCOME FUND 1-A, LTD.
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Exact name of registrant as specified in charter
Colorado 84-1010416
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State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, Englewood, Colorado 80112
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Address of principal executive office
(303) 792-3111
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Registrant's telephone number
Indicate by check mark whether the registrant (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-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
September 30, December 31,
ASSETS 1995 1994
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CASH $ 111,732 $ 78,286
TRADE RECEIVABLES, less allowance for doubtful
receivables of $5,885 and $748 at September 30, 1995
and December 31, 1994, respectively 69,034 70,273
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 10,016,914 9,561,181
Less-accumulated depreciation (5,826,321) (5,291,706)
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4,190,593 4,269,475
Franchise costs, net of accumulated amortization
of $594,558 and $545,913 at September 30, 1995
and December 31, 1994, respectively 132,442 181,087
Costs in excess of interests in net assets
purchased, net of accumulated amortization
of $42,238 and $38,782 at September 30, 1995
and December 31, 1994, respectively 141,762 145,218
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Total investment in cable television properties 4,645,563 4,595,780
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 39,625 10,906
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Total assets $ 4,685,188 $ 4,755,245
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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JONES CABLE INCOME FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
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LIABILITIES:
Debt $ 4,573,255 $ 3,584,706
Accounts payable-
Trade 5,626 7,285
General Partner - 483,487
Accrued liabilities 242,100 262,401
Accrued distribution to limited partners 200,000 235,000
Subscriber prepayments 44,627 54,895
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Total liabilities 5,065,608 4,627,774
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PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (4,914) (5,896)
Distributions (72,209) (66,149)
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(76,123) (71,045)
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Limited Partners-
Net contributed capital (17,000 units outstanding
at September 30, 1995 and December 31, 1994) 7,288,694 7,288,694
Accumulated deficit (443,991) (541,178)
Distributions (7,149,000) (6,549,000)
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(304,297) 198,516
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Total liabilities and partners'
capital (deficit) $ 4,685,188 $ 4,755,245
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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JONES CABLE INCOME FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
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1995 1994 1995 1994
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REVENUES $1,159,976 $1,056,430 $3,410,205 $3,215,812
COSTS AND EXPENSES:
Operating expense 675,964 613,487 2,053,901 1,886,871
Management fees and
allocated overhead from
General Partner 141,303 133,329 424,183 420,054
Depreciation and
amortization 195,820 202,612 587,015 634,940
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OPERATING INCOME 146,889 107,002 345,106 273,947
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OTHER INCOME (EXPENSE):
Interest expense (80,496) (57,486) (247,513) (143,510)
Other, net 251 9,566 576 3,351
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Total other expense, net (80,245) (47,920) (246,937) (140,159)
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NET INCOME $ 66,644 $ 59,082 $ 98,169 $ 133,788
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ALLOCATION OF NET INCOME:
General Partner $ 667 $ 591 $ 982 $ 1,338
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Limited Partners $ 65,977 $ 58,491 $ 97,187 $ 132,450
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NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 3.88 $ 3.44 $ 5.72 $ 7.79
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 17,000 17,000 17,000 17,000
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES CABLE INCOME FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Nine Months Ended
September 30,
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1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 98,169 $ 133,788
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 587,015 634,940
Decrease in trade receivables 1,239 12,177
Decrease (increase) in deposits, prepaid expenses and
deferred charges (29,018) 7,850
Decrease in trade accounts payable,
accrued liabilities and subscriber prepayments (38,288) (60,461)
Increase (decrease) in advances from General Partner (483,487) 243,686
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Net cash provided by operating activities 135,630 971,980
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (455,733) (461,278)
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Net cash used in investing activities (455,733) (461,278)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 1,018,435 250,000
Repayment of debt (29,886) (24,536)
Accrued distributions to limited partners (35,000) -
Cash flow distributions to limited partners (600,000) (745,000)
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Net cash provided by (used in) financing activities 353,549 (519,536)
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Increase (decrease) in cash 33,446 (8,834)
Cash, beginning of period 78,286 61,322
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Cash, end of period $ 111,732 $ 52,488
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SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 236,427 $ 149,461
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES CABLE INCOME FUND 1-A, LTD.
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) This Form 10-Q is being filed in conformity with the SEC requirements
for unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data
includes all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the financial position of Jones Cable Income Fund
1-A, Ltd. ("the Partnership") at 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.
The Partnership owns and operates the cable television systems serving
certain areas in and around Owatonna and Glencoe, Minnesota (the
"Owatonna/Glencoe System") and Milwaukie, Oregon (the "Milwaukie System").
(2) Jones Intercable, Inc. (the "General Partner"), a publicly held
Colorado corporation, manages the Partnership and receives a fee for its
services equal to five percent of the gross revenues of the Partnership,
excluding revenues from the sale of cable television systems or franchises.
Management fees for the three and nine month periods ended September 30, 1995
were $57,999 and $170,510, respectively, compared to $52,822 and $160,791
respectively, for the similar 1994 periods.
The Partnership reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses represent salaries and
related benefits paid for corporate personnel, rent, data processing services
and other corporate facilities costs. Such personnel provide engineering,
marketing, administrative, accounting, legal and investor relations services to
the Partnership. Allocations of personnel costs are based primarily on actual
time spent by employees of the General Partner with respect to each Partnership
managed. Remaining 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. Amounts allocated to the Partnership by the General Partner for
allocated overhead and administrative expenses for the three and nine month
periods ended September 30, 1995 were $83,304 and $253,673, respectively,
compared to $80,507 and $259,263, respectively, for the similar 1994 periods.
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JONES CABLE INCOME FUND 1-A
(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 $456,000 in capital improvements. Approximately 38 percent
related to service drops to subscribers' homes, and approximately 21 percent
related to the purchase of converters. The remainder of the expenditures were
for various enhancements in the Partnership's systems. These expenditures were
funded by borrowings under the Partnership's credit facility. Anticipated
capital expenditures for the remainder of 1995 are approximately $196,000. Of
these expenditures, approximately 21 percent relates to purchase of vehicles,
approximately 15 percent relates to new plant construction, approximately 12
percent relates to the purchase of converters and approximately 9 percent
relates to plant upgrade and relocations. The remainder of the expenditures
are for various enhancements in the Partnership's systems. Funding for these
expenditures is expected to be provided by borrowings under the Partnership's
new revolving credit facility.
On July 21, 1995, the Partnership entered into a new $6,500,000
revolving credit facility. The revolving credit period expires December 31,
1997, at which time the outstanding balance converts to a term loan with a
final maturity of December 31, 2003. The balance outstanding on the
Partnership's credit facility at September 30, 1995 was $4,500,000 and the
balance of $2,000,000 will be available to fund capital expenditures. Interest
on outstanding principal amounts on the renegotiated credit facility is
computed at the Partnership's option of London Interbank Offered Rate plus
1-1/4 percent or the Prime rate plus 1/4 percent. The effective interest rates
on amounts outstanding as of September 30, 1995 and 1994 were 7.17 percent and
6.13 percent, respectively.
A primary objective of the Partnership is to provide quarterly cash
distributions from operating cash flow to the limited partners. The
Partnership declared a $200,000 distribution, or approximately $235 per $10,000
invested, to the limited partners during the third quarter of 1995, which was
principally from third quarter operating cash flow of the Partnership. Future
distributions will be announced on a quarter-by-quarter basis. The payment of
quarterly operating cash flow distributions may reduce the financial
flexibility of the Partnership.
The General Partner presently believes that the Partnership has
sufficient sources of capital available from cash generated from operations and
borrowings under the new credit facility to meet its presently anticipated
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. 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.
RESULTS OF OPERATIONS
Revenues of the Partnership increased $103,546, or approximately 10
percent, to $1,159,976 for the three months ended September 30, 1995 from
$1,056,430 for the similar period in 1994. This increase in revenues was
primarily due to an increase in the number of basic subscribers, which
accounted for 32 percent of the increase and an increase in basic rate
adjustments, which accounted for 27 percent of the increase for the three month
periods. For the nine month periods ended September 30, 1995 and 1994,
revenues increased $194,393, or approximately 6 percent, to $3,410,205 at
September 30, 1995 from $3,215,812 for the similar period in 1994. This
increase in revenues was primarily due to
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increases in the number of basic subscribers, which accounted for 56 percent of
the increase in revenues for the nine month periods. Since September 30, 1994,
the Partnership's cable system added 577 basic subscribers, increasing to
13,184 basic subscribers at September 30, 1995 from 12,607 for the similar
period in 1994.
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 $62,477, or approximately 10 percent, to
$675,964 for the three month period ended September 30, 1995 from $613,487 for
the similar 1994 period. Operating expenses increased $167,030, or
approximately 9 percent, to $2,053,901 for the nine month period ended
September 30, 1995 from $1,886,871 for the similar 1994 period. These
increases were primarily due to increases in programming costs. Operating
expense represented 58 percent and 60 percent of revenue for the three and nine
month periods ended September 30, 1995, respectively, and represented 58
percent and 59 percent for the three and nine month periods ended September 30,
1994, respectively. No other individual factor contributed significantly to
the increases in operating expenses.
Management fees and allocated overhead from the General Partner
increased $7,974, or approximately 6 percent, to $141,303 for the three month
period ended September 30, 1995 from $133,329 for the similar 1994 period. This
increase was due to the increase in revenues, upon which such management fees
are based, as well as increases in allocated expenses from the General Partner.
The General Partner has experienced increases in expenses, a portion of which is
allocated to the Partnership. Management fees and allocated overhead from the
General Partner increased $4,129, or approximately 1 percent, to $424,183 for
the nine months ended September 30, 1995 from $420,054 for the similar 1994
period. This increase was due to the increases in revenues, upon which such
management fees are based.
Depreciation and amortization expense decreased $6,792, or
approximately 3 percent, to $195,820 for the three months ended September 30,
1995 from $202,612 for the similar 1994 period. Depreciation and amortization
expense decreased $47,925, or approximately 8 percent, to $587,015 for the nine
months ended September 30, 1995 from $634,940 for the similar 1994 period.
These decreases were due to the maturation of the Partnership's intangible
asset base.
Operating income increased $39,887, or approximately 37 percent, to
$146,889 for the three months ended September 30, 1995 from $107,002 for the
similar 1994 period. Operating income increased $71,159, or approximately 26
percent, to $345,106 for the nine months ended September 30, 1995 from $273,947
for the similar 1994 period. These increases were due to the increases in
revenues and the decreases in depreciation and amortization expense exceeding
the increases in operating expenses and management fees and allocated overhead
from the General Partner.
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 increased $33,095, or approximately 11
percent, to $342,709 for the three months ended September 30, 1995 from
$309,614 for the similar 1994 period. Operating income before depreciation and
amortization increased $23,234, or approximately 3 percent, to $932,121 for the
nine months ended September 30, 1995 from $908,887 for the similar 1994 period.
These increases were due to the increases in revenues exceeding the increases
in operating expenses and management fees and allocated overhead from the
General Partner.
Interest expense increased $23,010, or approximately 40 percent, to
$80,496 for the three months ended September 30, 1995 from $57,486 for the
similar 1994 period. Interest expense increased $104,003, or approximately 72
percent, to $247,513 for the nine month period ended September 30, 1995 from
$143,510 for the similar 1994 period. These increases were due to higher
effective interest rates and higher outstanding balances on interest bearing
obligations.
Net income increased $7,562, or approximately 13 percent, to $66,644
for the three month period ended September 30, 1995 from $59,082 for the
similar 1994 period, due primarily to the increase in operating income
exceeding the increase in interest expense. Net income decreased $35,619, or
approximately 27 percent, to $98,169 for the nine month period ended September
30, 1995 from $133,788 for the similar 1994 period. This decrease was
primarily due to the increase in interest expense exceeding the increase 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.
JONES CABLE INCOME FUND 1-A, 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