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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission file number: 0-13193
CABLE TV FUND 12-A, LTD.
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(Exact name of registrant as specified in its charter)
Colorado 84-098104
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(State of Organization) (IRS Employer Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
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(Address of principal executive office and Zip Code) (Registrant's telephone no. including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited
Partnership Interests
Indicate by check mark whether the registrants, (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days:
Yes x No
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Aggregate market value of the voting stock held by non-affiliates of the
registrant: N/A
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
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DOCUMENTS INCORPORATED BY REFERENCE: None
(21355)
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PART I.
ITEM 1. BUSINESS
THE PARTNERSHIP. Cable TV Fund 12-A, Ltd. (the "Partnership") is a
Colorado limited partnership that was formed pursuant to the public offering of
limited partnership interests in the Cable TV Fund 12 Limited Partnership
Program (the "Program"), which was sponsored by Jones Intercable, Inc. (the
"General Partner"). Cable TV Fund 12-B, Ltd. ("Fund 12-B"), Cable TV Fund 12-C,
Ltd. ("Fund 12-C") and Cable TV Fund 12-D, Ltd. ("Fund 12-D") are the other
partnerships that were formed pursuant to the Program. The Partnership was
formed for the purpose of acquiring and operating cable television systems.
The Partnership owns the cable television systems serving areas in and
around Fort Myers, Florida (the "Fort Myers System"), Lake County, Illinois (the
"Lake County System"), and Orland Park and Park Forest, Illinois (the "Northern
Illinois System"). The Fort Myers System, the Lake County System and the
Northern Illinois System may hereinafter collectively be referred to as the
"Systems."
CABLE TELEVISION SERVICES. The Systems offer to subscribers various
types of programming, which include basic service, tier service, premium
service, pay-per-view programs and packages including several of these services
at combined rates.
Basic cable television service usually consists of signals of all four
national television networks, various independent and educational television
stations (both VHF and UHF) and certain signals received from satellites. Basic
service also usually includes programs originated locally by the system, which
may consist of music, news, weather reports, stock market and financial
information and live or videotaped programs of a public service or entertainment
nature. FM radio signals are also frequently distributed to subscribers as part
of the basic service.
The Systems offer tier services on an optional basis to its
subscribers. A tier generally includes most of the cable networks such as
Entertainment and Sports Programming Network (ESPN), Cable News Network (CNN),
Turner Network Television (TNT), Family Channel, Discovery and others, and the
cable television operators buy tier programming from these networks. The Systems
also offer a package that includes the basic service channels and the tier
services.
The Systems also offer premium services to subscribers, which consist
of feature films, sporting events and other special features that are presented
without commercial interruption. The cable television operators buy premium
programming from suppliers such as HBO, Showtime, Cinemax or others at a cost
based on the number of subscribers the cable operator serves. Premium service
programming usually is significantly more expensive than the basic service or
tier service programming, and consequently cable operators price premium service
separately when sold to subscribers.
The Systems also offer to subscribers pay-per-view programming.
Pay-per-view is a service that allows subscribers to receive single programs,
frequently consisting of motion pictures that have recently completed their
theatrical exhibitions and major sporting events, and to pay for such service on
a program-by-program basis.
REVENUES. Monthly service fees for basic, tier and premium services
constitute the major source of revenue for the Systems. At December 31, 1995,
the Systems' monthly basic service rates ranged from $7.99 to $11.26, monthly
basic and tier ("basic plus") service rates ranged from $19.99 to $24.01 and
monthly premium services ranged from $2.00 to $12.95 per premium service. In
addition, the Partnership earns revenues from the Systems' pay-per-view programs
and advertising fees. Related charges may include a nonrecurring installation
fee that ranges from $1.95 to $35.73; however, from time to time the Systems
have followed the common industry practice of reducing or waiving the
installation fee during promotional periods. Commercial subscribers such as
hotels, motels and hospitals are charged a nonrecurring connection fee that
usually covers the cost of installation. Except under the terms of certain
contracts with commercial subscribers and residential apartment and condominium
complexes, the subscribers are free to discontinue the service at any time
without penalty. For
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the year ended December 31, 1995, of the total fees received by the Systems,
basic service and tier service fees accounted for approximately 68% of total
revenues, premium service fees accounted for approximately 14% of total
revenues, pay-per-view fees were approximately 2% of total revenues, advertising
fees were approximately 7% of total revenues and the remaining 9% of total
revenues came principally from equipment rentals, installation fees and program
guide sales. The Partnership is dependent upon the timely receipt of service
fees to provide for maintenance and replacement of plant and equipment, current
operating expenses and other costs of the Systems.
FRANCHISES. The Systems are constructed and operated under
non-exclusive, fixed-term franchises or other types of operating authorities
(referred to collectively herein as "franchises") granted by local governmental
authorities. These franchises typically contain many conditions, such as time
limitations on commencement and completion of construction, conditions of
service, including the number of channels, types of programming and the
provision of free service to schools and certain other public institutions, and
the maintenance of insurance and indemnity bonds. The provisions of local
franchises are subject to federal regulation.
The Partnership holds 9 franchises relating to the Systems. These
franchises provide for the payment of fees to the issuing authorities and
generally range from 3% to 5% of the gross revenues of a cable television
system. The 1984 Cable Act prohibits franchising authorities from imposing
annual franchise fees in excess of 5% of gross revenues and also permits the
cable television system operator to seek renegotiation and modification of
franchise requirements if warranted by changed circumstances.
The Partnership has never had a franchise revoked. The Partnership's
franchise expiration dates currently range from March 1996 to January 2002. The
Partnership is currently negotiating the renewal of the 7 franchises that will
expire prior to December 31, 1996, and the General Partner has no reason to
believe that such franchises will not be renewed in due course. The General
Partner recently has experienced lengthy negotiations with some franchising
authorities for the granting of franchise renewals. Some of the issues involved
in recent renewal negotiations include rate regulation, customer service
standards, cable plant upgrade or replacement and shorter terms of franchise
agreements.
COMPETITION. Cable television systems currently experience competition
from several sources. A potential source of significant competition is Direct
Broadcast Satellite ("DBS") services that use video compression technology to
increase channel capacity and provide packages of movies, network and other
program services that are competitive with those of cable television systems.
Two companies offering high-power DBS services began operations in 1994, and a
third company offering high-power DBS service is scheduled to begin operations
in the first half of 1996. In addition, a joint venture has won the right to
provide a DBS service through a FCC spectrum auction. Not all subscribers
terminate cable television service upon acquiring a DBS system. The General
Partner has observed that a number of DBS subscribers also elect to subscribe to
cable television service in order to obtain the greatest variety of programming
on multiple television sets, including local video services programming not
available through DBS service.
Although neither the Partnership nor the General Partner has yet
encountered competition from a telephone company providing video services as a
cable operator or video dialtone operator, it is anticipated that the cable
television systems owned or managed by the General Partner will face such
competition in the near future. Legislation recently enacted into law will make
it possible for companies with considerable resources to enter the business. For
example, in February 1996, one of the regional Bell operating companies entered
into an agreement to acquire the nation's third largest cable television
company, which has a significant number of cable systems in the Chicago area in
close proximity to the Northern Illinois System and the Lake County System. In
addition, several telephone companies have begun seeking cable television
franchises from local governmental authorities as a consequence of litigation
that successfully challenged the constitutionality of the cable
television/telephone company cross-ownership rules. The General Partner cannot
predict at this time when and to what extent telephone companies will provide
cable television service within service areas in competition with cable
television systems owned or managed by the General Partner. The General Partner
is aware of the following imminent competition from telephone companies:
Ameritech, one of the seven regional Bell operating companies, which provides
telephone service in a multi-state region including Illinois, has just obtained
a
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franchise that will allow it to provide cable television service in Naperville,
Illinois, a community currently served by a cable system owned by another one of
the public limited partnerships managed by the General Partner. Ameritech in the
future may seek franchises in areas served by the Northern Illinois System and
the Lake County System. Chesapeake and Potomac Telephone Company of Virginia and
Bell Atlantic Video Service Company, both subsidiaries of Bell Atlantic, another
of the regional Bell operating companies, have announced their intention to
build a cable television system in Alexandria, Virginia in competition with a
cable television system owned by the General Partner. Bell Atlantic is preparing
for the operation of a telecommunications and video business in northern
Virginia, including the Alexandria metropolitan area. The FCC has granted GTE
Virginia's application for authority to construct, operate, own and maintain
video dialtone facilities in northern Virginia, including in the service area of
a cable television system owned by the General Partner. To date, GTE has not
begun construction of a video distribution system. The entry of telephone
companies as direct competitors could adversely affect the profitability and
market value of the General Partner's owned and managed systems.
Additional competition is present from several sources, including the
following: Master Antenna Television and Satellite Master Antenna Television
systems that serve multi-unit dwellings such as condominiums, apartment
complexes, motels, hotels and private residential communities; private cable
television/telephonic companies that have secured exclusive contracts to provide
video and telephony services to multi-unit dwellings and similar complexes; and
multichannel, multipoint distribution service ("MMDS") systems, commonly called
wireless cable which generally focus on providing service to residents of rural
areas. In addition, the FCC has established a new wireless telecommunications
service known as Personal Communications Service ("PCS") that would provide
portable non-vehicular mobile communications services similar to that available
from cellular telephone companies, but at a lower cost. Several cable television
multiple system operators hold or have requested experimental licenses from the
FCC to test PCS technology.
REGULATION AND LEGISLATION. The cable industry is regulated under the
Telecommunications Act of 1996 (the "1996 Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act") and the Cable
Communications Policy Act of 1984 (the "1984 Cable Act") and the regulations
implementing these statutes. The Federal Communications Commission (the "FCC")
has promulgated regulations covering such areas as the registration of cable
television systems and other communications businesses, carriage of television
broadcast programming, consumer education and lockbox enforcement, origination
cablecasting and sponsorship identification, children's programming, the
regulation of basic cable and cable programming service rates in areas where
cable television systems are not subject to effective competition, signal
leakage and frequency use, technical performance, maintenance of various
records, equal employment opportunity, and antenna structure notification,
marking and lighting. In addition, cable operators periodically are required to
file various informational reports with the FCC. The FCC has the authority to
enforce these regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of administrative
sanctions, such as the revocation of FCC licenses needed to operate certain
transmission facilities often used in connection with cable operations. State or
local franchising authorities, as applicable, also have the right to enforce
various regulations, impose fines or sanctions, issue orders or seek revocation
subject to the limitations imposed upon such franchising authorities by federal,
state and local laws and regulations. Several states have assumed regulatory
jurisdiction of the cable television industry, and it is anticipated that other
states will do so in the future. To the extent the cable television industry
begins providing telephone service, additional state regulations will be applied
to the cable television industry. Cable television operations are subject to
local regulation insofar as systems operate under franchises granted by local
authorities.
The following is a summary of federal laws and regulations materially
affecting the cable television industry, and a description of state and local
laws with which the cable industry must comply.
Telecommunications Act of 1996. The 1996 Act, which became law on
February 28, 1996, substantially revised the Communications Act of 1934, as
amended, including the 1984 Cable Act and the 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934. The 1996 Act is intended, in
part, to promote substantial competition in the telephone local exchange and in
the delivery of video and other services. As a result of the 1996 Act, local
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telephone companies (also known as local exchange carriers or "LECs") and other
service providers are permitted to provide video programming, and cable
television operators are permitted entry into the telephone local exchange
market. The FCC is required to conduct rulemaking proceedings over the next
several months to implement various provisions of the 1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
effective March 31, 1999 and the cable programming service tier of small cable
operators (those that provide service to 50,000 or fewer subscribers) effective
immediately. The 1996 Act also revised the procedures for filing a cable
programming service tier rate complaint and adds a new effective competition
test.
The most far-reaching changes in the communications business will
result from the telephony provisions of the 1996 Act. The statute expressly
preempts any legal barriers to competition in the local telephone business that
previously existed in state and local laws and regulations. Many of these
barriers had been lifted by state actions over the last few years, but the 1996
Act completes the task. The 1996 Act also establishes new requirements for
maintaining and enhancing universal telephone service and new obligations for
telecommunications providers to maintain privacy of customer information. The
1996 Act establishes uniform requirements and standards for entry, competitive
carrier interconnection and unbundling of LEC monopoly services.
The 1996 Act repealed the cable television/telephone cross-ownership
ban adopted in the 1984 Cable Act. The federal cross-ownership ban was
particularly important to the cable industry because telephone companies already
own certain facilities such as poles, ducts and associated rights of way. While
this ban had been overturned by several courts, formal removal of the ban ended
the last legal constraints on telephone company plans to enter the cable market.
Under the 1996 Act, telephone companies in their capacity as common carriers now
may lease capacity to others to provide cable television service. Telephone
companies have the option of providing video service as cable operators or
through "open video systems" ("OVS"), a regulatory regime that may provide more
flexibility than traditional cable service. The 1996 Act exempts OVS operators
from many of the regulatory obligations that currently apply to cable operators,
such as rate regulation and franchise fees, although other requirements are
still applicable. OVS operators, although not subject to franchise fees as
defined by the 1992 Cable Act, are subject to fees charged by local franchising
authorities or other governmental entities in lieu of franchise fees. (Under
certain circumstances, cable operators also will be able to offer service
through open video systems.) In addition, the 1996 Act eliminated the
requirement that telephone companies file Section 214 applications (applications
to provide video dialtone services) with the FCC before providing video service.
This limits the opportunity of cable operators to mount challenges at the FCC
regarding telephone company entry into the video market. The 1996 Act also
contains restrictions on buying out incumbent cable operators in a telephone
company's service area, especially in suburban and urban markets.
Other parts of the 1996 Act also will affect cable operators. Under the
1996 Act, the FCC is required to revise the current pole attachment rate
formula. This revision will result in an increase in the rates paid by entities,
including cable operators, that provide telecommunication services. The rates
will be phased in after a five-year period. (Cable operators that provide only
cable services will be unaffected.) Under the V-chip provisions of the 1996 Act,
cable operators and other video providers are required to pass along any program
rating information that programmers include in video signals. Cable operators
also are subject to new scrambling requirements for sexually explicit
programming, and cable operators that provide Internet access or other online
services are subject to the new indecency limitations for computer services. In
addition, cable operators that provide Internet access or other online services
are subject to the new indecency limitations for computer services, although
these provisions already have been challenged in court, and the courts have
preliminarily enjoined the enforcement of these content-based provisions.
Under the 1996 Act, a franchising authority may not require a cable
operator to provide telecommunications services or facilities, other than an
institutional network, as a condition to a grant, renewal or
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transfer of a cable franchise, and franchising authorities are preempted from
regulating telecommunications services provided by cable operators and from
requiring cable operators to obtain a franchise to provide such services. The
1996 Act also repealed the 1992 Cable Act's anti-trafficking provision, which
generally required the holding of cable television systems for three years.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Partnership in particular. The FCC shortly will
be undertaking numerous rulemaking proceedings to interpret and implement the
1996 Act. It is not possible at this time to predict the outcome of those
proceedings or their effect on the Partnership.
Cable Television Consumer Protection and Competition Act of 1992. The
1992 Cable Act, which became effective on December 4, 1992, caused significant
changes to the regulatory environment in which the cable television industry
operates. The 1992 Cable Act generally mandated a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable television systems in the United States,
including those owned and managed by the General Partner, became subject to rate
regulation of basic cable services. In addition, the 1992 Cable Act allowed 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 General Partner on behalf of the
Partnership reduced rates charged for certain regulated services in the
Partnership's cable systems effective September 1, 1993. These reductions
resulted in some decrease in Partnership revenues and operating income before
depreciation and amortization; however, the decrease was not as severe as
originally anticipated. The General Partner has undertaken actions to mitigate a
portion of these reductions primarily through (a) new service offerings in some
systems, (b) product re-marketing and re-packaging and (c) marketing efforts
directed at non-subscribers.
On February 22, 1994, however, the FCC adopted several additional rate
orders including an order which revised its earlier-announced regulatory scheme
with respect to rates. The FCC's new regulations generally required 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. Further rate reductions for
cable systems whose rates are below the revised benchmark levels, as well as
reductions that would require operators to reduce rates below benchmark levels
in order to achieve a 17 percent rate reduction, were held in abeyance pending
completion of cable system cost studies. The FCC recently requested some of
these "low price" systems to complete cost study questionnaires. After review of
these questionnaires, the FCC could decide to permanently defer any further rate
reductions, or require the additional 7 percent rate roll back for some or all
of these systems. The FCC has also adopted its proposed upgrade methodology by
which operators would be permitted to recover the costs of upgrading their
plant.
After analyzing the effects of the two methods of rate regulation, the
Partnership elected to file cost-of-service showings in its Fort Myers System
and Northern Illinois System. The General Partner therefore anticipates no
further reductions in revenues or operating income before depreciation and
amortization of these three systems resulting from the FCC's rate regulations.
At this time, the regulatory authorities have not approved the cost-of-service
showings, and there can be no assurance that the Partnership's cost-of-service
showings will prevent further rate reductions until such final approval is
received. The Partnership complied with the benchmark regulations and further
reduced rates in the Lake County System. The Partnership will continue its
efforts to mitigate the effect of such rate reductions.
On November 10, 1994, the FCC also announced a revision to its
regulations governing the manner in which cable operators may charge subscribers
for new cable programming services. In addition to the present formula for
calculating the permissible rate for new services, the FCC instituted a
three-year flat fee mark-up plan for charges relating to new channels of cable
programming services. Commencing on January 1, 1995, cable system operators may
charge for new channels of cable programming services added after May 14, 1994
at a rate of up to 20 cents per channel, but may not make adjustments to monthly
rates totaling more than $1.20 plus an
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additional 30 cents for programming license fees per subscriber over the first
two years of the three-year period for these new services. Operators may charge
an additional 20 cents in the third year only for channels added in that year
plus the costs for the programming. Operators electing to use the 20 cent per
channel adjustment may not also take a 7.5 percent mark-up on programming cost
increases, which is permitted under the FCC's current rate regulations. The FCC
has requested further comment as to whether cable operators should continue to
receive the 7.5 percent mark-up on increases in license fees on existing
programming services.
The FCC also announced that it will permit operators to offer a "new
product tier" ("NPT"). Operators will be able to price the NPT as they elect so
long as, among other conditions, other channels that are subject to rate
regulation are priced in conformity with applicable regulations and operators do
not remove programming services from existing tiers and offer them on the NPT.
In September 1995, the FCC authorized a new, alternative method of
implementing rate adjustments which will allow cable operators to increase rates
for programming annually on the basis of projected increases in external costs
(inflation, costs for programming, franchise-related obligations and changes in
the number of regulated channels) rather than on the basis of cost increases
incurred in the preceding calendar quarter. Operators that elect not to recover
all of their accrued external costs and inflation pass-throughs each year may
recover them (with interest) in subsequent years.
In December 1995, the FCC adopted final cost-of-service rate
regulations requiring, among other things, cable operators to exclude 34 percent
of system acquisition costs related to intangible and tangible assets used to
provide regulated services. The FCC also reaffirmed the industry-wide 11.25
percent after tax rate of return on an operator's allowable rate base, but
initiated a further rulemaking in which it proposes to use an operator's actual
debt cost and capital structure to determine an operator's cost of capital or
rate of return. After a rate has been set pursuant to a cost-of-service showing,
rate increases for regulated services are indexed for inflation, and operators
are permitted to increase rates in response to increases in costs beyond their
control, such as taxes and increased programming costs.
The United States Court of Appeals for the District of Columbia Circuit
recently upheld the FCC's rate regulations implemented pursuant to the 1992
Cable Act, but ruled that the FCC impermissibly failed to permit cable operators
to adjust rates for certain cost increases incurred during the period between
the date the 1992 Cable Act was passed through the initial date of rate
regulation. The FCC has not yet implemented the court's ruling.
There have been several lawsuits filed by cable operators and
programmers in federal court challenging various aspects of the 1992 Cable Act
including its provisions relating to mandatory broadcast signal carriage,
retransmission consent, access to cable programming, rate regulations,
commercial leased channels and public access channels. On April 8, 1993, a
three-judge federal district court panel issued a decision upholding the
constitutionality of the mandatory signal carriage requirements of the 1992
Cable Act. That decision was appealed directly to the United States Supreme
Court. The United States Supreme Court vacated the lower court decision on June
27, 1994 and remanded the case to the district court for further development of
a factual record. On December 12, 1995, the three-judge federal district court
again upheld the must-carry rules' validity. This decision has been appealed to
the United States Supreme Court.
In 1993, a federal district court upheld provisions of the 1992 Cable
Act concerning rate regulation, retransmission consent, restrictions on
vertically integrated cable television operators and programmers, mandatory
carriage of programming on commercial leased channels and public, educational
and governmental access channels and the exemption for municipalities from civil
damage liability arising out of local regulation of cable services. The 1992
Cable Act's provisions providing for multiple ownership limits for cable
operators and advance notice of free previews for certain programming services
have been found unconstitutional and these decisions have been appealed. The
FCC's regulations relating to the carriage of indecent programming, which were
recently upheld by the United States Court of Appeals for the District of
Columbia, have been appealed to the United States Supreme Court.
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Franchising. The responsibility for franchising or other authorization
of cable television systems is left to state and local authorities. There are,
however, several provisions in the 1984 Cable Act that govern the terms and
conditions under which cable television systems provide service. These include
uniform standards and policies that are applicable to cable television operators
seeking renewal of a cable television franchise. The procedures established
provide for a formal renewal process should the franchising authority and the
cable television operator decline to use an informal procedure. A franchising
authority unable to make a preliminary determination to renew a franchise is
required to hold a hearing in which the operator has the right to participate.
In the event a determination is made not to renew the franchise at the
conclusion of the hearing, the franchising authority must provide the operator
with a written decision stating the specific reasons for non-renewal. Generally,
the franchising authority can finally decide not to renew a franchise only if it
finds that the cable operator has not substantially complied with the material
terms of the present franchise, has not provided reasonable service in light of
the community's needs, does not have the financial, legal or technical ability
to provide the services being proposed for the future, or has not presented a
reasonable proposal for future service. A final decision of non-renewal by the
franchising authority is appealable in court.
A provision of the 1996 Act preempts franchising authorities from
regulating telecommunications services provided by cable operators and from
requiring cable operators to obtain a franchise to provide such services. A
franchising authority may not require a cable operator to provide
telecommunications services or facilities, other than an institutional network,
as a condition to a grant, renewal or transfer of a cable franchise.
GENERAL. The Partnership's business consists of providing cable
television services to a large number of customers, the loss of any one of which
would have no material effect on the Partnership's business. Each of the Systems
has had some subscribers who later terminated the service. Terminations occur
primarily because people move to another home or to another city. In other
cases, people terminate on a seasonal basis or because they no longer can afford
or are dissatisfied with the service. The amount of past due accounts in the
Systems is not significant. The General Partner's policy with regard to past due
accounts is basically one of disconnecting service before a past due account
becomes material.
The Partnership does not depend to any material extent on the
availability of raw materials; it carries no significant amounts of inventory
and it has no material backlog of customer orders. The Partnership has no
employees because all properties are managed by employees of the General
Partner. The General Partner has engaged in research and development activities
relating to the provision of new services but the amount of the Partnership's
funds expended for such research and development has never been material.
Compliance with federal, state and local provisions that have been
enacted or adopted regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment has had no material
effect upon the capital expenditures, earnings or competitive position of the
Partnership.
ITEM 2. PROPERTIES
The cable television systems owned by the Partnership are described
below:
SYSTEM ACQUISITION DATE
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Fort Myers System May 1985
Northern Illinois System May 1985
Lake County System May 1985
The following sets forth (i) the monthly basic plus service rates
charged to subscribers and (ii) the number of basic subscribers and pay units
for the Systems. The monthly basic service rates set forth herein represent,
with respect to systems with multiple headends, the basic service rate charged
to the majority of the subscribers within the system. In cable television
systems, basic subscribers can subscribe to more than one pay
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TV service. Thus, the total number of pay services subscribed to by basic
subscribers are called pay units. As of December 31, 1995, the Lake County
System operated cable plant passing approximately 24,600 homes, representing an
approximate 75% penetration rate; the Northern Illinois System operated cable
plant passing approximately 29,500 homes, representing an approximate 66%
penetration rate; and the Fort Myers System operated cable plant passing
approximately 67,500 homes, representing an approximate 56% penetration rate.
Figures for numbers of subscribers and homes passed are compiled from the
General Partner's records and may be subject to adjustments.
At December 31,
------------------------------------------------
LAKE COUNTY SYSTEM 1995 1994 1993
- ------------------ ---- ---- ----
Monthly basic plus service rate $ 22.52 $ 21.26 $ 22.13
Basic subscribers 18,611 17,021 15,216
Pay units 12,375 11,671 12,091
At December 31,
------------------------------------------------
NORTHERN ILLINOIS SYSTEM 1995 1994 1993
- ------------------------ ---- ---- ----
Monthly basic plus service rate $ 24.01 $ 22.51 $ 22.51
Basic subscribers 19,730 18,375 16,875
Pay units 14,418 14,996 15,005
At December 31,
------------------------------------------------
FT. MYERS SYSTEM 1995 1994 1993
- ---------------- ---- ---- ----
Monthly basic plus service rate $ 20.52 $ 19.52 $ 19.52
Basic subscribers 38,306 37,144 35,284
Pay units 23,425 25,052 22,303
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS
While the Partnership is publicly held, there is no public market for
the limited partnership interests, and it is not expected that a market will
develop in the future. As of February 15, 1996, the number of equity security
holders in the Partnership was 7,785.
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Item 6. Selected Financial Data
For the Year Ended December 31,
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Cable TV Fund 12-A, Ltd. 1995 1994 1993 1992 1991
- ------------------------ -------------- -------------- -------------- -------------- ------------
Revenues $32,080,534 $29,378,010 $28,963,726 $26,693,028 $24,322,600
Depreciation and Amortization 7,134,956 7,032,177 7,840,193 7,528,805 9,042,280
Operating Income (Loss) 2,381,418 1,377,680 1,196,824 514,394 (1,263,012)
Net Income (Loss) 379,266 (492,539) (409,726) (1,583,447) (3,898,842)
Net Income (Loss) per Limited
Partnership Unit 3.61 (4.69) (3.90) (15.07) (37.11)
Weighted Average Number of Limited
Partnership Units Outstanding 104,000 104,000 104,000 104,000 104,000
General Partner's Deficit (368,340) (372,133) (367,208) (363,111) (347,277)
Limited Partners' Capital 8,285,117 7,909,644 8,397,258 8,802,887 10,370,500
Total Assets 36,825,106 36,725,141 39,297,990 43,071,609 45,479,809
Debt 26,736,382 26,402,399 29,724,530 32,813,067 34,291,172
General Partner Advances 373,311 1,305,933 220,722 261,348 -
10
11
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
CABLE TV FUND 12-A, LTD.
RESULTS OF OPERATIONS
1995 compared to 1994
Revenues of Cable TV Fund 12-A, Ltd. (the "Partnership") increased
$2,702,524, or approximately 9 percent, to $32,080,534 in 1995 from $29,378,010
in 1994. An increase in the number of basic subscribers accounted for
approximately 48 percent of the increase in revenues. The Partnership added
4,107 basic subscribers in 1995, an increase of approximately 6 percent. Basic
subscribers totaled 76,647 at December 31, 1995, compared to 72,540 at December
31, 1994. Basic service rate increases implemented in all of the Partnership's
systems accounted for approximately 32 percent of the increase in revenues. No
other individual factor was 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 increased $1,399,936, or approximately 8 percent, to
$18,648,931 in 1995 from $17,248,995 in 1994. Operating expenses represented
approximately 58 percent of revenues in 1995 compared to approximately 59
percent of revenues in 1994. An increase in programming fees accounted for
approximately 65 percent of the increase in operating expenses and was due, in
part, to the increase in the subscriber base. In addition, increases in
marketing and plant-related expenses were partially offset by a decrease in
personnel expense. No other individual factors contributed significantly to the
increase in operating expenses.
Management fees and allocated overhead from the General Partner
increased $196,071, or approximately 5 percent, to $3,915,229 in 1995 from
$3,719,158 in 1994 due primarily to the increase in revenues, upon which such
fees and allocations are based.
Depreciation and amortization expense increased $102,779, or
approximately 1 percent, to $7,134,956 in 1995 from $7,032,177 in 1994 due to
additions to the Partnership's depreciable asset base in 1995 and 1994.
Operating income increased $1,033,738, or approximately 73 percent, to
$2,381,418 in 1995 from $1,377,680 in 1994. This increase 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 increased $1,106,517, or approximately 13
percent, to $9,516,374 in 1995 from $8,409,857 in 1994. This increase was due to
the increase in revenues exceeding increases in operating expenses, management
fees and allocated overhead from the General Partner.
Interest expense increased $279,858, or approximately 16 percent, to
$2,018,852 in 1995 from $1,738,994 in 1994 due to higher outstanding balances
on interest bearing obligations.
The Partnership recognized net income of $379,266 in 1995 compared to a
net loss of $492,539 in 1994. This change was due to the factors discussed
above.
1994 compared to 1993
Revenues of the Partnership increased $414,284, or approximately 1
percent, to $29,378,010 in 1994 from $28,963,726 in 1993. Increases in basic
subscribers primarily accounted for the increase in revenues. The Partnership
11
12
added 5,165 basic subscribers in 1994, an increase of approximately 8 percent.
Basic subscribers totaled 72,540 at December 31, 1994, compared to 67,375 at
December 31, 1993. Increases in advertising and pay-per-view revenues also
contributed to the increase in revenues. The increase in revenues would have
been greater but for the reduction in basic service rates due to basic service
rate regulations issued by the FCC in April 1993 with which the Partnership
complied effective September 1, 1993. No other individual factor was significant
to the increase in revenues.
Operating expenses increased $764,364, or approximately 5 percent, to
$17,248,995 in 1994 from $16,484,631 in 1993. Operating expenses represented
approximately 59 percent of revenue in 1994 compared to approximately 57 percent
of revenue in 1993. An increase in programming fees accounted for approximately
55 percent of the increase in expense and was due, in part, to the increase in
the subscriber base. In addition, increases in personnel, marketing and
advertising expenses were partially offset by decreases in plant maintenance and
copyright expenses. No other individual factors contributed significantly to the
increase in operating expenses.
Management fees and allocated overhead from the General Partner
increased $277,080, or approximately 8 percent, to $3,719,158 in 1994 from
$3,442,078 in 1993 due primarily to an increase in allocated expenses from the
General Partner. The General Partner experienced increases in expenses in 1994.
Depreciation and amortization expense decreased $808,016, or
approximately 10 percent, to $7,032,177 in 1994 from $7,840,193 in 1993 due to
the maturation of the Partnership's asset base.
Operating income increased $180,856, or approximately 15 percent, to
$1,377,680 in 1994 from $1,196,824 in 1993. This increase was due to the
increase in revenues and the decrease in depreciation and amortization expense.
Operating income before depreciation and amortization decreased
$627,160, or approximately 7 percent, to $8,409,857 in 1994 from $9,037,017 in
1993. This decrease was due to the increase in operating expenses and management
fees and allocated overhead from the General Partner exceeding the increase in
revenues.
Interest expense increased $176,682, or approximately 11 percent, to
$1,738,994 in 1994 from $1,562,312 in 1993 due to higher effective interest
rates on interest bearing obligations in 1995.
Net loss increased $82,813, or approximately 20 percent, to $492,539 in
1994 from $409,726 in 1993 due to factors discussed above.
FINANCIAL CONDITION
For the twelve months ended December 31, 1995, the Partnership
generated net cash from operating activities totaling approximately $6,178,000,
which is available to fund capital expenditures and non-operating costs. Capital
expenditures totaled approximately $5,783,000 during 1995. Approximately 40
percent of these expenditures related to the construction of service drops to
subscribers' homes. Approximately 22 percent of these expenditures related to
the construction of new cable plant and approximately 9 percent of these
expenditures was for pay security equipment. The remaining expenditures were
used for various enhancements in the Partnership's systems. Funding for these
expenditures was provided by cash on hand, cash generated from operations and
borrowings under the Partnership's credit facility. Anticipated capital
expenditures for 1996 are approximately $6,106,000. Approximately 25 percent is
expected to be used to continue construction of new cable plant and
approximately 40 percent will be used for the construction of service drops to
subscribers' homes. The remainder of anticipated expenditures is expected to be
used for various enhancements in all of the Partnership's systems. Funding for
these expenditures is expected to be provided by cash generated from operations
and borrowings available under the Partnership's credit facility discussed
below.
On January 30, 1995, the Partnership entered into a $30,000,000
revolving credit facility and repaid the then-outstanding balance of $26,125,000
under its previous term loan. The revolving credit facility will expire on
December 31, 1996, at which time the then-outstanding balance will convert to a
term loan. The term loan will be payable in 20 consecutive quarterly
installments that will commence on March 31, 1997. At December 31, 1995,
$26,500,000 was outstanding under this credit facility, leaving $3,500,000 of
available borrowings. Generally, interest payable on amounts borrowed under the
revolving credit facility is at the Partnership's option of Prime or a fixed
rate defined as the London Interbank Offered Rate plus 1 percent. The effective
interest rates on outstanding obligations as of December 31, 1995 and 1994 were
approximately 6.94 percent and approximately 7.33 percent, respectively.
12
13
The General Partner believes that the Partnership has sufficient
sources of capital from cash on hand, cash generated from operations and
borrowings available under its credit facility to meet its presently anticipated
needs.
REGULATION AND LEGISLATION
The Partnership has filed cost-of-service showings in response to
rulemakings concerning the 1992 Cable Act for its Orland Park, Illinois and Fort
Myers, Florida systems and thus anticipates no further reductions in rates in
these systems. The cost-of-service showings have not yet received final
approvals from regulatory authorities, however, and there can be no assurance
that the Partnership's cost-of-service showings will prevent further rate
reductions in these systems until such final approvals are received.
The Telecommunications Act of 1996 (the "1996 Act"), which became law
on February 8, 1996, substantially revised the Communications Act of 1934, as
amended, including the 1984 Cable Act and the 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934. The 1996 Act is intended, in
part, to promote substantial competition in the telephone local exchange and in
the delivery of video and other services. As a result of the 1996 Act, local
telephone companies (also known as local exchange carriers or "LECs") and other
service providers are permitted to provide video programming, and cable
television operators are permitted entry into the telephone local exchange
market. The FCC is required to conduct rulemaking proceedings over the next
several months to implement various provisions of the 1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
including the Partnership effective March 31, 1999 and the cable programming
service tier of "small" cable operators in systems providing service to 50,000
or fewer subscribers effective immediately. The 1996 Act also revised the
procedures for filing cable programming service tier rate complaints and adds a
new effective competition test.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Partnership in particular. The FCC will be
undertaking numerous rulemaking proceedings to interpret and implement the 1996
Act. It is not possible at this time to predict the outcome of those proceedings
or their effect on the Partnership. See Item 1.
13
14
Item 8. Financial Statements
CABLE TV FUND 12-A, LTD.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND 1994
INDEX
Page
----
Report of Independent Public Accountants 15
Balance Sheets 16
Statements of Operations 18
Statements of Partners' Capital (Deficit) 19
Statements of Cash Flows 20
Notes to Financial Statements 21
14
15
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Cable TV Fund 12-A, Ltd.:
We have audited the accompanying balance sheets of CABLE TV
FUND 12-A, LTD. (a Colorado limited partnership) as of December 31, 1995 and
1994, and the related statements of operations, partners' capital (deficit) and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the General Partner's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Cable TV
Fund 12-A, Ltd. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 8, 1996.
15
16
CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
BALANCE SHEETS
December 31,
----------------------------
ASSETS 1995 1994
------ ------------ ------------
CASH $ 1,307,723 $ 578,657
TRADE RECEIVABLES, less allowance for doubtful receivables of $100,732
and $32,813 at December 31, 1995 and 1994, respectively 914,397 374,817
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 78,674,556 72,891,760
Less- accumulated depreciation (46,771,823) (40,728,415)
------------ ------------
31,902,733 32,163,345
Franchise costs, net of accumulated amortization of $20,980,711
and $20,131,554 at December 31, 1995 and 1994, respectively 2,371,411 3,220,568
Subscriber lists, net of accumulated amortization of $11,592,437
and $11,411,057 at December 31, 1995 and 1994, respectively 18,428 199,808
------------ ------------
Total investment in cable television properties 34,292,572 35,583,721
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 310,414 187,946
------------ ------------
Total assets $ 36,825,106 $ 36,725,141
============ ============
The accompanying notes to financial statements
are an integral part of these balance sheets.
16
17
CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
BALANCE SHEETS
December 31,
----------------------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
- ------------------------------------------- ------------ ------------
LIABILITIES:
Debt $ 26,736,382 $ 26,402,399
Accounts payable-
Trade 6,730 30,848
General Partner 373,311 1,305,933
Accrued liabilities 1,668,216 1,317,298
Subscriber prepayments 123,690 131,152
------------ ------------
Total liabilities 28,908,329 29,187,630
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (369,340) (373,133)
------------ ------------
(368,340) (372,133)
------------ ------------
Limited Partners-
Net contributed capital (104,000 units outstanding at
December 31, 1995 and 1994) 44,619,655 44,619,655
Accumulated deficit (36,334,538) (36,710,011)
------------ ------------
8,285,117 7,909,644
------------ ------------
Total liabilities and partners' capital (deficit) $ 36,825,106 $ 36,725,141
============ ============
The accompanying notes to financial statements
are an integral part of these balance sheets.
17
18
CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the Year Ended December 31,
--------------------------------------------
1995 1994 1993
--------------------------------------------
REVENUES $ 32,080,534 $ 29,378,010 $ 28,963,726
COSTS AND EXPENSES:
Operating expenses 18,648,931 17,248,995 16,484,631
Management fees and allocated overhead
from General Partner 3,915,229 3,719,158 3,442,078
Depreciation and amortization 7,134,956 7,032,177 7,840,193
------------ ------------ ------------
OPERATING INCOME 2,381,418 1,377,680 1,196,824
------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest expense (2,018,852) (1,738,994) (1,562,312)
Other, net 16,700 (131,225) (44,238)
------------ ------------ ------------
Total other income (expense), net (2,002,152) (1,870,219) (1,606,550)
------------ ------------ ------------
NET INCOME (LOSS) $ 379,266 $ (492,539) $ (409,726)
============ ============ ============
ALLOCATION OF NET INCOME (LOSS):
General Partner $ 3,793 $ (4,925) $ (4,097)
============ ============ ============
Limited Partners $ 375,473 $ (487,614) $ (405,629)
============ ============ ============
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ 3.61 $ (4.69) $ (3.90)
============ ============ ============
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 104,000 104,000 104,000
============ ============ ============
The accompanying notes to financial statements
are an integral part of these statements.
18
19
CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
For the Year Ended December 31,
-----------------------------------------
1995 1994 1993
-----------------------------------------
GENERAL PARTNER:
Balance, beginning of year $ (372,133) $ (367,208) $ (363,111)
Net income (loss) for year 3,793 (4,925) (4,097)
----------- ----------- -----------
Balance, end of year $ (368,340) $ (372,133) $ (367,208)
=========== =========== ===========
LIMITED PARTNERS:
Balance, beginning of year $ 7,909,644 $ 8,397,258 $ 8,802,887
Net income (loss) for year 375,473 (487,614) (405,629)
----------- ----------- -----------
Balance, end of year $ 8,285,117 $ 7,909,644 $ 8,397,258
=========== =========== ===========
The accompanying notes to financial statements
are an integral part of these statements.
19
20
CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Year Ended December 31,
--------------------------------------------
1995 1994 1993
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 379,266 $ (492,539) $ (409,726)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 7,134,956 7,032,177 7,840,193
Amortization of interest rate protection contract 50,004 50,004 49,991
Decrease (increase) in trade receivables (539,580) 118,079 (310,709)
Increase in deposits, prepaid expenses and deferred charges (233,483) (43,411) (6,100)
Increase (decrease) in amount due General Partner (932,622) 1,085,211 (40,626)
Increase (decrease) in trade accounts payable, accrued
liabilities and subscriber prepayments 319,338 156,610 (234,730)
------------ ------------ ------------
Net cash provided by operating activities 6,177,879 7,906,131 6,888,293
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (5,782,796) (5,615,530) (3,638,680)
------------ ------------ ------------
Net cash used in investing activities (5,782,796) (5,615,530) (3,638,680)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 28,612,825 192,155 46,448
Repayment of debt (28,278,842) (3,514,286) (3,134,985)
Purchase of interest rate protection contract -- -- (150,000)
------------ ------------ ------------
Net cash provided by (used in) financing activities 333,983 (3,322,131) (3,238,537)
------------ ------------ ------------
Increase (decrease) in cash 729,066 (1,031,530) 11,076
Cash, beginning of year 578,657 1,610,187 1,599,111
------------ ------------ ------------
Cash, end of year $ 1,307,723 $ 578,657 $ 1,610,187
============ ============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,850,342 $ 1,691,031 $ 1,583,758
============ ============ ============
The accompanying notes to financial statements
are an integral part of these statements.
20
21
CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS
Formation and Business
Cable TV Fund 12-A, Ltd. (the "Partnership"), a Colorado limited
partnership, was formed on January 2, 1985, under a public program sponsored by
Jones Intercable, Inc. ("Intercable"). The Partnership was formed to acquire,
construct, develop and operate cable television systems. The Partnership owns
and operates the cable television systems serving areas in and around Fort
Myers, Florida and Lake County, Orland Park and Park Forest, Illinois.
Intercable, a publicly held Colorado corporation, is the "General Partner" and
manages the Partnership. Intercable and its subsidiaries also own and operate
cable television systems. In addition, Intercable manages cable television
systems for other limited partnerships for which it is general partner and,
also, for affiliated entities.
Contributed Capital
The capitalization of the Partnership is set forth in the accompanying
statements of partners' capital (deficit). No limited partner is obligated to
make any additional contributions to partnership capital.
The General Partner purchased its interest in the Partnership by
contributing $1,000 to partnership capital.
All profits and losses of the Partnership are allocated 99 percent to
the limited partners and 1 percent to the General Partner, except for income or
gain from the sale or disposition of cable television properties, which will be
allocated to the partners based upon the formula set forth in the Partnership
Agreement, and interest income earned prior to the first acquisition by the
Partnership of a cable television system, which was allocated 100 percent to the
limited partners.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Records
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles.
The Partnership's tax returns are also prepared on the accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the General Partner's management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Property, Plant and Equipment
Depreciation of property, plant and equipment is provided primarily
using the straight-line method over the following estimated service lives:
Cable distribution system 5 - 15 years
Equipment and tools 3 - 5 years
Office furniture and equipment 5 years
Buildings 20 years
Vehicles 3 years
Replacements, renewals and improvements are capitalized and maintenance
and repairs are charged to expense as incurred.
21
22
Intangible Assets
Costs assigned to franchises and subscriber lists are being amortized
using the straight-line method over the following remaining estimated useful
lives:
Franchise costs 1 - 4 years
Subscriber lists 1 year
Revenue Recognition
Subscriber prepayments are initially deferred and recognized as revenue
when earned.
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
Management Fees, Distribution Ratios and Reimbursements
Intercable manages the Partnership and receives a fee for its services
equal to 5 percent of the gross revenues of the Partnership, excluding revenues
from the sale of cable television systems or franchises. Management fees for the
years ended December 31, 1995, 1994 and 1993 were $1,604,027, $1,468,900 and
$1,448,186, respectively.
Any distributions made from cash flow (defined as cash receipts derived
from routine operations, less debt principal and interest payments and cash
expenses) are allocated 99 percent to the limited partners and 1 percent to the
General Partner. Any distributions other than from cash flow, such as from the
sale or refinancing of a system or upon dissolution of the Partnership, will be
made as follows: first, to the limited partners in an amount which, together
with all prior distributions, will equal the amount initially contributed to the
partnership capital by the limited partners; the balance, 75 percent to the
limited partners and 25 percent to Intercable.
The Partnership reimburses Intercable for certain allocated overhead
and administrative expenses. These expenses consist primarily of salaries and
benefits paid to corporate personnel, rent, data processing services and other
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 Intercable 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 Intercable and
certain of its subsidiaries. Systems owned by Intercable and all other systems
owned by partnerships for which Intercable is the general partner are also
allocated a proportionate share of these expenses. Intercable believes that the
methodology used in allocating overhead and administrative expenses is
reasonable. Reimbursements by the Partnership to Intercable for allocated
overhead and administrative expenses were $2,311,202, $2,250,258 and $1,993,892
in 1995, 1994 and 1993, respectively.
The Partnership was charged interest during 1995 at an average interest
rate of 10.51 percent on the amounts due Intercable, which approximated
Intercable's weighted average cost of borrowing. Total interest charged to the
Partnership by Intercable was $16,426, $32,220 and $1,029 in 1995, 1994 and
1993, respectively.
Payments to/from Affiliates for Programming Services
The Partnership receives programming from Superaudio, Mind Extension
University, Jones Computer Network and Product Information Network, all of which
are affiliates of Intercable.
Payments to Superaudio totaled $45,536, $45,861 and $45,495 in 1995,
1994 and 1993, respectively. Payments to Mind Extension University totaled
$48,703, $41,551 and $26,411 in 1995, 1994 and 1993, respectively. Payments to
Jones Computer Network, which initiated service in 1994, totaled $53,101 and
$13,199 in 1995 and 1994, respectively.
The Partnership receives a commission from Product Information Network
based on a percentage of advertising revenue and number of subscribers. Product
Information Network, which initiated service in 1994, paid commissions to the
Partnership totaling $44,608 and $16,302 in 1995 and 1994, respectively.
22
23
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31, 1995 and 1994,
consisted of the following:
December 31,
-----------------------------------
1995 1994
----------- ------------
Cable distribution system $ 70,573,280 $ 65,152,784
Equipment and tools 2,847,574 2,721,446
Office furniture and equipment 1,646,703 1,532,613
Buildings 1,620,275 1,597,293
Vehicles 1,562,360 1,463,260
Land 424,364 424,364
------------ ------------
78,674,556 72,891,760
Less: accumulated depreciation (46,771,823) (40,728,415)
------------ -----------
$ 31,902,733 $ 32,163,345
============ ============
(5) DEBT
Debt consists of the following: December 31,
----------------------------------
1995 1994
----------- -----------
Lending institutions-
Revolving credit and term loan $26,500,000 $26,125,000
Capital lease obligations 236,382 277,399
----------- -----------
$26,736,382 $26,402,399
=========== ===========
On January 30, 1995, the Partnership entered into a $30,000,000
revolving credit facility and repaid the then-outstanding balance of $26,125,000
under its previous term loan. The revolving credit facility will expire on
December 31, 1996, at which time the then-outstanding balance will convert to a
term loan. The term loan will be payable in 20 consecutive quarterly
installments that will commence on March 31, 1997. At December 31, 1995,
$26,500,000 was outstanding under this credit facility, leaving $3,500,000 of
available borrowings. Generally, interest payable on amounts borrowed under the
revolving credit facility is at the Partnership's option of Prime or a fixed
rate defined as the London Interbank Offered Rate ("LIBOR") plus 1 percent. The
effective interest rates on outstanding obligations as of December 31, 1995 and
1994 were approximately 6.94 percent and approximately 7.33 percent,
respectively.
In January 1993, the Partnership entered into an interest rate cap
agreement covering outstanding debt obligations of $15,000,000. The Partnership
paid a fee of $150,000. The agreement protected the Partnership from a three
month LIBOR interest rate that exceeded 7 percent for three years from the date
of the agreement. The agreement expired in January 1996.
Installments due on all debt principal for each of the five years in
the period ending December 31, 2000, respectively, are: $70,914, $4,045,915,
$4,045,915, $5,323,638, $6,625,000 and $6,625,000. At December 31, 1995,
substantially all of the Partnership's property, plant and equipment secured the
above indebtedness.
At December 31, 1995, the carrying amount of the Partnership's
long-term debt did not differ significantly from the estimated fair value of the
financial instruments. The fair value of the Partnership's long-term debt is
estimated based on the discounted amount of future debt service payments using
rates of borrowing for a liability of similar risk.
23
24
(6) INCOME TAXES
Income taxes have not been recorded in the accompanying financial
statements because they accrue directly to the partners. The federal and state
income tax returns of the Partnership are prepared and filed by Intercable.
The Partnership's tax returns, the qualification of the Partnership as
such for tax purposes, and the amount of distributable partnership income or
loss are subject to examination by federal and state taxing authorities. If such
examinations result in changes with respect to the Partnership's recorded income
or loss, the tax liability of the general and limited partners would likely be
changed accordingly.
Taxable income (loss) reported to the partners is different from that
reported in the statements of operations due to the difference in depreciation
recognized under generally accepted accounting principles and the expense
allowed for tax purposes under the Modified Accelerated Cost Recovery System
(MACRS). There are no other significant differences between taxable income
(loss) and the net income (loss) reported in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES
The Partnership has filed cost-of-service showings in response to
rulemakings concerning the 1992 Cable Act for its Orland Park, Illinois and Fort
Myers, Florida systems and thus anticipates no further reductions in rates in
these systems. The cost-of-service showings have not yet received final
approvals from regulatory authorities, however, and there can be no assurance
that the Partnership's cost-of-service showings will prevent further rate
reductions in these systems until such final approvals are received.
The Partnership rents office and other facilities under various
long-term operating lease arrangements. Rent paid under such lease arrangements
totaled $74,376, $79,337 and $74,142, respectively, for the years ended December
31, 1995, 1994 and 1993. Minimum commitments for each of the five years in the
period ending December 31, 2000, and thereafter, are $49,275, which is due in
1996.
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
Supplementary profit and loss information is presented below:
For the Year Ended December 31,
-------------------------------------------------------
1995 1994 1993
----------- ----------- -----------
Maintenance and repairs $ 248,042 $ 315,149 $ 299,578
=========== =========== ===========
Taxes, other than income and payroll taxes $ 364,657 $ 306,902 $ 331,358
=========== =========== ===========
Advertising $ 520,795 $ 485,911 $ 433,250
=========== =========== ===========
Depreciation of property, plant and equipment $ 6,055,408 $ 5,636,122 $ 5,621,938
=========== =========== ===========
Amortization of intangible assets $ 1,079,548 $ 1,396,055 $ 2,218,255
=========== =========== ===========
24
25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership itself has no officers or directors. Certain
information concerning the directors and executive officers of the General
Partner is set forth below.
Glenn R. Jones 66 Chairman of the Board and Chief Executive Officer
Derek H. Burney 56 Vice Chairman of the Board
James B. O'Brien 46 President and Director
Ruth E. Warren 46 Group Vice President/Operations
Kevin P. Coyle 44 Group Vice President/Finance
Christopher J. Bowick 40 Group Vice President/Technology
George H. Newton 61 Group Vice President/Telecommunications
Timothy J. Burke 45 Group Vice President/Taxation/Administration
Raymond L. Vigil 49 Group Vice President/Human Resources and Director
Cynthia A. Winning 44 Group Vice President/Marketing
Elizabeth M. Steele 44 Vice President/General Counsel/Secretary
Larry W. Kaschinske 36 Controller
Robert E. Cole 63 Director
William E. Frenzel 67 Director
Donald L. Jacobs 57 Director
James J. Krejci 54 Director
John A. MacDonald 42 Director
Raphael M. Solot 62 Director
Daniel E. Somers 48 Director
Howard O. Thrall 48 Director
Robert B. Zoellick 42 Director
Mr. Glenn R. Jones has served as Chairman of the Board of Directors and
Chief Executive Officer of the General Partner since its formation in 1970, and
he was President from June 1984 until April 1988. Mr. Jones is the sole
shareholder, President and Chairman of the Board of Directors of Jones
International, Ltd. He is also Chairman of the Board of Directors of the
subsidiaries of the General Partner and of certain other affiliates of the
General Partner. Mr. Jones has been involved in the cable television business in
various capacities since 1961, is a past and present member of the Board of
Directors and the Executive Committee of the National Cable Television
Association. He also is on the Executive Committee of Cable in the Classroom, an
organization dedicated to education via cable. Additionally, in March 1991, Mr.
Jones was appointed to the Board of Governors for the American Society for
Training and Development, and in November 1992 to the Board of Education Council
of the National Alliance of Business. Mr. Jones is also a founding member of the
James Madison Council of the Library of Congress. Mr. Jones is a past director
and member of the Executive Committee of C-Span. Mr. Jones has been the
recipient of several awards including the Grand Tam Award in 1989, the highest
award from the Cable Television Administration and Marketing Society; the
Chairman's Award from the Investment Partnership Association, which is an
association of sponsors of public syndications; the cable television industry's
Public Affairs Association President's Award in 1990, the Donald G. McGannon
award for the advancement of minorities and women in cable; the STAR Award from
American Women in Radio and Television, Inc. for exhibition of a commitment to
the issues and concerns of women in television and radio; the Women in Cable
Accolade in 1990 in recognition of support of this organization; the Most
Outstanding Corporate Individual Achievement award from the International
Distance Learning Conference; the Golden Plate Award
25
26
from the American Academy of Achievement for his advances in distance education;
the Man of the Year named by the Denver chapter of the Achievement Rewards for
College Scientists; and in 1994 Mr. Jones was inducted into Broadcasting and
Cable's Hall of Fame.
Mr. Derek H. Burney was appointed a Director of the General Partner on
December 20, 1994 and Vice Chairman of the Board of Directors on January 31,
1995. Mr. Burney joined BCE Inc., Canada's largest telecommunications company,
in January 1993 as Executive Vice President, International. He has been the
Chairman of Bell Canada International Inc., a subsidiary of BCE, since January
1993 and, in addition, has been Chief Executive Officer of BCI since July 1993.
Prior to joining BCE, Mr. Burney served as Canada's ambassador to the United
States from 1989 to 1992. Mr. Burney also served as chief of staff to the Prime
Minister of Canada from March 1987 to January 1989 where he was directly
involved with the negotiation of the U.S. - Canada Free Trade Agreement. In July
1993, he was named an Officer of the Order of Canada. Mr. Burney is chairman of
Bell Cablemedia plc. He is a director of Mercury Communications Limited,
Videotron Holdings plc, Tele-Direct (Publications) Inc., Teleglobe Inc., Bimcor
Inc., Maritime Telegraph and Telephone Company, Limited, Moore Corporation
Limited and Northbridge Programming Inc.
Mr. James B. O'Brien, the General Partner's President, joined the
General Partner in January 1982. Prior to being elected President and a Director
of the General Partner in December 1989, Mr. O'Brien served as a Division
Manager, Director of Operations Planning/Assistant to the CEO, Fund Vice
President and Group Vice President/Operations. Mr. O'Brien was appointed to the
General Partner's Executive Committee in August 1993. As President, he is
responsible for the day-to-day operations of the cable television systems
managed and owned by the General Partner. Mr. O'Brien is a board member of Cable
Labs, Inc., the research arm of the U.S. cable television industry. He also
serves as a director of the Cable Television Administration and Marketing
Association and as a director of the Walter Kaitz Foundation, a foundation that
places people of ethnic minority groups in positions with cable television
systems, networks and vendor companies.
Ms. Ruth E. Warren joined the General Partner in August 1980 and has
served in various operational capacities, including system manager and Fund Vice
President, since then. Ms. Warren was elected Group Vice President/Operations of
the General Partner in September 1990.
Mr. Kevin P. Coyle joined The Jones Group, Ltd. in July 1981 as Vice
President/Financial Services. In September 1985, he was appointed Senior Vice
President/Financial Services. He was elected Treasurer of the General Partner in
August 1987, Vice President/Treasurer in April 1988 and Group Vice
President/Finance and Chief Financial Officer in October 1990.
Mr. Christopher J. Bowick joined the General Partner in September 1991
as Group Vice President/Technology and Chief Technical Officer. Previous to
joining the General Partner, Mr. Bowick worked for Scientific Atlanta's
Transmission Systems Business Division in various technical management
capacities since 1981, and as Vice President of Engineering since 1989.
Mr. George H. Newton joined the General Partner in January 1996 as
Group Vice President/Telecommunications. Prior to joining the General Partner,
Mr. Newton was President of his own consulting business, Clear Solutions, and
since 1994 Mr. Newton has served as a Senior Advisor to Bell Canada
International. From 1990 to 1993, Mr. Newton served as the founding Chief
Executive Officer and Managing Director of Clear Communications, New Zealand,
where he established an alternative telephone company in New Zealand. From 1964
to 1990, Mr. Newton held a wide variety of operational and business assignments
with Bell Canada International.
Mr. Timothy J. Burke joined the General Partner in August 1982 as
corporate tax manager, was elected Vice President/Taxation in November 1986 and
Group Vice President/Taxation/Administration in October 1990.
Mr. Raymond L. Vigil joined the General Partner in June 1993 as Group
Vice President/Human Resources. Previous to joining the General Partner, Mr.
Vigil served as Executive Director of Learning with
26
27
USWest. Prior to USWest, Mr. Vigil worked in various human resources posts over
a 14-year term with the IBM Corporation.
Ms. Cynthia A. Winning joined the General Partner as Group Vice
President/Marketing in December 1994. Previous to joining the General Partner,
Ms. Winning served since 1994 as the President of PRS Inc., Denver, Colorado, a
sports and event marketing company. From 1979 to 1981 and from 1986 to 1994, Ms.
Winning served as the Vice President and Director of Marketing for Citicorp
Retail Services, Inc., a provider of private-label credit cards for ten national
retail department store chains. From 1981 to 1986, Ms. Winning was the Director
of Marketing Services for Daniels & Associates cable television operations, as
well as the Western Division Marketing Director for Capital Cities Cable. Ms.
Winning also serves as a board member of Cities in Schools, a dropout
intervention/prevention program.
Ms. Elizabeth M. Steele joined the General Partner in August 1987 as
Vice President/General Counsel and Secretary. From August 1980 until joining the
General Partner, Ms. Steele was an associate and then a partner at the Denver
law firm of Davis, Graham & Stubbs, which serves as counsel to the General
Partner.
Mr. Larry Kaschinske joined the General Partner in 1984 as a staff
accountant in the General Partner's former Wisconsin Division, was promoted to
Assistant Controller in 1990 and named Controller in August 1994.
Mr. Robert E. Cole was appointed a Director of the General Partner in
March 1996. Mr. Cole is currently self-employed as a partner of First Variable
Insurance Marketing and is responsible for marketing to National Association of
Securities Dealers, Inc. firms in northern California, Oregon, Washington and
Alaska. From 1993 to 1995, Mr. Cole was the Director of Marketing for Lamar Life
Insurance Company; from 1992 to 1993, Mr. Cole was Senior Vice President of PMI
Inc., a third party lender serving the special needs of Corporate Owned Life
Insurance (COLI) and from 1988 to 1992, Mr. Cole was the principal and
co-founder of a specialty investment banking firm that provided services to
finance the ownership and growth of emerging companies, productive assets and
real property. Mr. Cole is a Certified Financial Planner and a former United
States Naval Aviator.
Mr. William E. Frenzel was appointed a Director of the General Partner
on April 11, 1995. Mr. Frenzel has been a Guest Scholar since 1991 with the
Brookings Institution, a research organization located in Washington D. C. Until
his retirement in January 1991, Mr. Frenzel served for twenty years in the
United States House of Representatives, representing the State of Minnesota,
where he was a member of the House Ways and Means Committee and its Trade
Subcommittee, the Congressional Representative to the General Agreement on
Tariffs and Trade (GATT), the Ranking Minority Member on the House Budget
Committee and a member of the National Economic Commission. Mr. Frenzel also
served in the Minnesota Legislature for eight years. He is a Distinguished
Fellow of the Tax Foundation, Vice Chairman of the Eurasia Foundation, a Board
Member of the U.S.-Japan Foundation, the Close-Up Foundation, Sit Mutual Funds
and Chairman of the Japan-America Society of Washington.
Mr. Donald L. Jacobs was appointed a Director of the General Partner on
April 11, 1995. Mr. Jacobs is a retired executive officer of TRW. Prior to his
retirement, he was Vice President and Deputy Manager of the Space and Defense
Sector; prior to that appointment, he was the Vice President and General Manager
of the Defense Systems Group and prior to his appointment as Group General
Manager, he was President of ESL, Inc., a wholly owned subsidiary of TRW. During
his career, Mr. Jacobs served on several corporate, professional and civic
boards.
Mr. James J. Krejci was President of the International Division of
International Gaming Technology, International headquartered in Reno, Nevada,
until March 1995. Prior to joining IGT in May 1994, Mr. Krejci was Group Vice
President of Jones International, Ltd. and was Group Vice President of the
General Partner. He also served as an officer of Jones Futurex, Inc., a
subsidiary of the General Partner engaged in manufacturing and marketing data
encryption devices, Jones Interactive, Inc., a subsidiary of Jones
International, Ltd. providing computer data and billing processing facilities
and Jones Lightwave, Ltd., a company owned by Jones International, Ltd. and Mr.
Jones, and several of its subsidiaries engaged in the provision of
telecommunications
27
28
services until leaving the General Partner in May 1994. Mr. Krejci has been a
Director of the General Partner since August 1987.
Mr. John A. MacDonald was appointed a Director of the General Partner
on November 8, 1995. Mr. MacDonald is Executive Vice President of Business
Development and Chief Technology Officer of Bell Canada International Inc. Prior
to joining Bell Canada in November 1994, Mr. MacDonald was President and Chief
Executive Officer of The New Brunswick Telephone Company, Limited, a post he had
held since March of that year. Prior to March 1994, Mr. MacDonald was with NBTel
for 17 years serving in various capacities, including Market Planning Manager,
Corporate Planning Manager, Manager of Systems Planning and Development and
General Manager, Chief Engineer and General Manager of Engineering and
Information Systems and Vice President of Planning. Mr. MacDonald was the former
Chairman of the New Brunswick section of the Institute of Electrical and
Electronic Engineers and also served on the Federal Government's Information
Highway Advisory Council. Mr. MacDonald is Chairman of MediaLinx Interactive
Inc. and Stentor Canadian Network Management and is presently a Governor of the
Montreal Exchange. He also serves on the Board of Directors of Tele-Direct
(Publications) Inc., Bell-Northern Research, Ltd., SRCI, Bell Sygma, Canarie
Inc., and is a member of the University of New Brunswick Venture Campaign
Cabinet.
Mr. Raphael M. Solot was appointed a Director of the General Partner in
March 1996. Mr. Solot is an attorney licensed to practice law in the State of
Colorado. Mr. Solot has practiced law in the State of Colorado as a sole
practitioner since obtaining his Juris Doctor degree from the University of
Colorado in 1964.
Mr. Daniel E. Somers was initially appointed a Director of the General
Partner on December 20, 1994. Mr. Somers resigned as a Director on December 31,
1995, at the time he was elected Chief Executive Officer of Bell Cablemedia. Mr.
Somers was reinstated as a Director of the General Partner on February 2, 1996.
From January 1992 to January 1995, Mr. Somers worked as senior Vice President
and Chief Financial Officer of Bell Canada International Inc. and was appointed
Executive Vice President and Chief Financial Officer on February 1, 1995. He is
also a Director of certain of its affiliates. Mr. Somers currently serves as
Chief Executive Officer of Bell Cablemedia. Prior to joining Bell Canada
International Inc. and since January 1989, Mr. Somers was the President and
Chief Executive Officer of Radio Atlantic Holdings Limited. Mr. Somers is a
member of the North American Society of Corporate Planning, the Financial
Executives Institution and the Financial Analysts Federation.
Mr. Howard O. Thrall was appointed a Director of the General Partner on
March 6, 1996. Mr. Thrall had previously served as a Director of the General
Partner from December 1988 to December 1994. Since September 1993, Mr. Thrall
has served as Vice President of Sales, Asian Region, for World Airways, Inc.
From 1984 until August 1993, Mr. Thrall was with the McDonnell Douglas
Corporation, where he concluded as a Regional Vice President, Commercial
Marketing with the Douglas Aircraft Company subsidiary. Mr. Thrall is also a
management and international marketing consultant, having completed assignments
with First National Net, Inc., Cheong Kang Associated (Korea), Aero Investment
Alliance, Inc. and Western Real Estate Partners.
Mr. Robert B. Zoellick was appointed a Director of the General Partner
on April 11, 1995. Mr. Zoellick is Executive Vice President, General Counsel and
Corporate Secretary of Fannie Mae, a federally chartered and stockholder-owned
corporation that is the largest housing finance investor in the United States.
From August 1992 to January 1993, Mr. Zoellick served as Deputy Chief of Staff
of the White House and Assistant to the President. From May 1991 to August 1992,
Mr. Zoellick served concurrently as the Under Secretary of State for Economic
and Agricultural Affairs and as Counselor of the Department of State, a post he
assumed in March 1989. From 1985 to 1988, Mr. Zoellick served at the Department
of Treasury in a number of capacities, including Counselor to the Secretary. Mr.
Zoellick received the Alexander Hamilton and Distinguished Service Awards,
highest honors of the Departments of Treasury and State, respectively. The
German Government awarded him the Knight Commanders Cross for his work on
Germany unification. Mr. Zoellick currently serves on the boards of the Council
on Foreign Relations, the Congressional Institute, the German Marshall Fund of
the U.S., the European Institute, the National Bureau of Asian Research, the
American Council on Germany and the Overseas Development Council.
28
29
Christopher J. Bowick, Cynthia A. Winning and Larry W. Kaschinske are
executive officers of the General Partner; Raymond L. Vigil is an executive
officer and a director of the General Partner; and Derek H. Burney, John A.
MacDonald and Daniel E. Somers are directors of the General Partner. Reports by
these persons with respect to the ownership of limited partnership interests in
the Partnership required by Section 16(a) of the Securities Exchange Act of
1934, as amended, were not filed within the required time. None of these
individuals own any limited partnership interests in the Partnership.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no employees; however, various personnel are
required to operate the Manitowoc System. Such personnel are employed by the
General Partner and, pursuant to the terms of the limited partnership agreement
of the Partnership, the cost of such employment is charged by the General
Partner to the Partnership as a direct reimbursement item. See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
No person or entity owns more than 5 percent of the limited partnership
interests of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner and its affiliates engage in certain transactions
with the Partnership. The General Partner believes that the terms of such
transactions are generally as favorable as could be obtained by the Partnership
from unaffiliated parties. This determination has been made by the General
Partner in good faith, but none of the terms were or will be negotiated at
arm's-length and there can be no assurance that the terms of such transactions
have been or will be as favorable as those that could have been obtained by the
Partnership from unaffiliated parties.
The General Partner charges a management fee, and the General Partner
is reimbursed for certain allocated overhead and administrative expenses. These
expenses represent the salaries and 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 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 also advances funds and charges interest on the
balance payable. The interest rate charged approximates the General Partner's
weighted average cost of borrowing.
The Systems receive stereo audio programming from Superaudio, a joint
venture owned 50% by an affiliate of the General Partner and 50% by an
unaffiliated party, educational video programming from Mind Extension
University, Inc., an affiliate of the General Partner, and computer video
programming from Jones Computer Network, Ltd., an affiliate of the General
Partner, for fees based upon the number of subscribers receiving the
programming.
Product Information Network ("PIN"), an affiliate of the General
Partner, provides advertising time for third parties on the Systems. In
consideration, the revenues generated from the third parties are shared between
PIN and the Partnership. During the year ended December 31, 1995, the
Partnership received revenues from PIN of $44,608.
29
30
The charges to the Partnership for related party transactions are as
follows for the periods indicated:
Cable TV Fund 12-A, Ltd. At December 31,
- ------------------------ ---------------------------------------------------------
1995 1994 1993
---- ---- ----
Management fees $ 1,604,027 $ 1,468,900 $ 1,448,186
Allocation of expenses 2,311,202 2,250,258 1,993,892
Interest expense 16,426 32,220 1,029
Amount of advances outstanding 373,311 1,305,933 188,223
Highest amount of advances outstanding 373,311 1,305,933 261,348
Programming fees:
Superaudio 45,536 45,861 45,495
Mind Extension University 48,703 41,551 26,411
Jones Computer Network 53,101 13,199 -0-
30
31
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)1. See index to financial statements for list of financial
statements and exhibits thereto filed as a part of this
report.
3. The following exhibits are filed herewith.
4.1 Limited Partnership Agreement of Cable TV Fund 12-A. (1)
10.1.1 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Fort Myers, Florida (Fund 12-A). (1)
10.1.2 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Lee County,
Florida (Fund 12-A). (1)
10.1.3 Renewal of Permit dated 3/4/92 (Fund 12-A). (2)
10.1.4 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Unincorporated portions of Cook County, Illinois (Fund 12-A).
(3)
10.1.5 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Grayslake, Illinois (Fund 12-A). (1)
10.1.6 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Unincorporated Area of Lake County, Illinois (Fund 12-A). (1)
10.1.7 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Libertyville, Illinois (Fund 12-A). (1)
10.1.8 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Mundelein, Illinois (Fund 12-A). (1)
10.1.9 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Orland Park, Illinois (Fund 12-A). (1)
10.1.10 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Park Forest, Illinois (Fund 12-A). (1)
10.1.11 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Wauconda, Illinois (Fund 12-A). (1)
10.2.1 Credit Agreement, dated as of January 30, 1995, between Cable
TV Fund 12-A, Ltd. and Toronto Dominion (Texas), Inc., for
itself and as agent for various lenders. (4)
27 Financial Data Schedule
- ----------
(1) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1985 (Commission
File No. 0-13193).
31
32
(2) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1992 (Commission
File No. 0-13193).
(3) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1987 (Commission
File Nos. 0-13192, 0-13807, 0-13964 and 0-14206).
(4) Incorporated by reference from Registration's Report on Form
10-K for the fiscal year ended December 31, 1994.
(b) Reports on Form 8-K.
None.
32
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 12-A, LTD.
a Colorado limited partnership
By: Jones Intercable, Inc.
By: /s/ Glenn R. Jones
-----------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Dated: March 25, 1996 Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Glenn R. Jones
-----------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 25, 1996 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
-----------------------
Kevin P. Coyle
Group Vice President/Finance
Dated: March 25, 1996 (Principal Financial Officer)
By: /s/ Larry Kaschinske
-----------------------
Larry Kaschinske
Controller
Dated: March 25, 1996 (Principal Accounting Officer)
By: /s/ James B. O'Brien
-----------------------
James B. O'Brien
Dated: March 25, 1996 President and Director
By: /s/ Raymond L. Vigil
-----------------------
Raymond L. Vigil
Dated: March 25, 1996 Group Vice President and Director
By: /s/ Derek H. Burney
-----------------------
Derek H. Burney
Dated: March 25, 1996 Director
33
34
By:
-----------------------
Robert E. Cole
Dated: Director
By: /s/ William E. Frenzel
-----------------------
William E. Frenzel
Dated: March 25, 1996 Director
By: /s/ Donald L. Jacobs
-----------------------
Donald L. Jacobs
Dated: March 25, 1996 Director
By: /s/ James J. Krejci
-----------------------
James J. Krejci
Dated: March 25, 1996 Director
By: /s/ John A. MacDonald
-----------------------
John A. MacDonald
Dated: March 25, 1996 Director
By:
-----------------------
Raphael M. Solot
Dated: Director
By: /s/ Daniel E. Somers
-----------------------
Daniel E. Somers
Dated: March 25, 1996 Director
By: /s/ Howard O. Thrall
-----------------------
Howard O. Thrall
Dated: March 25, 1996 Director
By: /s/ Robert B. Zoellick
-----------------------
Robert B. Zoellick
Dated: March 25, 1996 Director
(21355)
34
35
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------- ------------------- ----
4.1 Limited Partnership Agreement of Cable TV Fund 12-A. (1)
10.1.1 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City of
Fort Myers, Florida (Fund 12-A). (1)
10.1.2 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Lee County,
Florida (Fund 12-A). (1)
10.1.3 Renewal of Permit dated 3/4/92 (Fund 12-A). (2)
10.1.4 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Unincorporated portions of Cook County, Illinois (Fund 12-A).
(3)
10.1.5 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Grayslake, Illinois (Fund 12-A). (1)
10.1.6 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Unincorporated Area of Lake County, Illinois (Fund 12-A). (1)
10.1.7 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Libertyville, Illinois (Fund 12-A). (1)
10.1.8 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Mundelein, Illinois (Fund 12-A). (1)
10.1.9 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Orland Park, Illinois (Fund 12-A). (1)
10.1.10 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Park Forest, Illinois (Fund 12-A). (1)
10.1.11 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the Village
of Wauconda, Illinois (Fund 12-A). (1)
10.2.1 Credit Agreement, dated as of January 30, 1995, between Cable
TV Fund 12-A, Ltd. and Toronto Dominion (Texas), Inc., for
itself and as agent for various lenders. (4)
27 Financial Data Schedule
- ----------
(1) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1985 (Commission
File No. 0-13193).
(2) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1992 (Commission
File No. 0-13193).
(3) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1987 (Commission
File Nos. 0-13192, 0-13807, 0-13964 and 0-14206).
(4) Incorporated by reference from Registration's Report on Form
10-K for the fiscal year ended December 31, 1994.