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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended November 30, 1994 Commission File Number 0-10040
-------
Jones Spacelink, Ltd.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado #84-0835095
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 3309, Englewood, Colorado 80155-3309
---------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (303) 792-9191
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Number of shares outstanding of each of the issuers' classes of common stock,
as of December 20, 1994:
Class A Common Stock, par value $.01 per share: 79,660,197
Class B Common Stock, par value $.01 per share: 415,000
<PAGE> 2
JONES SPACELINK, LTD. AND SUBSIDIARIES
I N D E X
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Unaudited Consolidated Balance Sheets
November 30, 1994 and May 31, 1994 3-4
Unaudited Consolidated Statements of Operations
Three and Six Months Ended November 30, 1994 and 1993 5
Unaudited Consolidated Statements of Cash Flows
Six Months Ended November 30, 1994 and 1993 6
Notes to Unaudited Consolidated Financial Statements
November 30, 1994 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 9
</TABLE>
2
<PAGE> 3
JONES SPACELINK, LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
As of November 30, 1994 and May 31, 1994
<TABLE>
<CAPTION>
November 30, May 31,
ASSETS 1994 1994
------------ -------
(In Thousands)
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 3,185 $4,892
RECEIVABLES:
Trade receivables, net of allowance for doubtful
accounts of $770,000 and $694,000 8,349 8,837
Affiliated entities, net of allowance for doubtful
accounts of $1,756,000 and $1,580,000 22,887 20,936
Other 736 715
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost, net of
accumulated depreciation of $143,204,000
and $138,908,000 194,714 201,735
Franchise costs, net of accumulated amortization
of $97,659,000 and $93,466,000 82,696 91,802
Subscriber lists, net of accumulated
amortization of $36,364,000 and $34,922,000 16,917 21,531
Costs in excess of interests in net assets
purchased, net of accumulated amortization
of $6,141,000 and $6,511,000 37,481 43,525
Noncompete agreements, net of accumulated
amortization of $1,180,000 and $1,079,000 465 566
Investments in domestic cable television managed
partnerships and corporate stock 41,770 38,717
Investment in foreign cable/telephony properties 60,977 57,752
---------- -------
Total Investment in Cable
Television Properties 435,020 455,628
---------- -------
DEFERRED TAX ASSET, net of valuation allowance
of $37,301,000 and $37,785,000 8,903 7,948
DEPOSITS, PREPAID EXPENSES AND OTHER 31,364 27,671
---------- -------
Total Assets $ 510,444 $526,627
========== =======
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these consolidated balance sheets.
3
<PAGE> 4
JONES SPACELINK, LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
As of November 30, 1994 and May 31, 1994
<TABLE>
<CAPTION>
November 30, May 31,
LIABILITES AND SHAREHOLDERS' INVESTMENT 1994 1994
------------ -------
(In Thousands)
<S> <C> <C>
LIABILITIES:
Accounts payable and accrued liabilities $ 52,783 $46,334
Subscriber prepayments and deposits 5,956 5,709
Credit facility and other debt of
Jones Spacelink, Ltd. 75,839 74,886
Credit facility of Jones Intercable, Inc. 38,000 63,000
Subordinated debentures and other debt of
Jones Intercable, Inc. 280,918 280,907
---------- -------
Total Liabilities 453,496 470,836
DEFERRED REVENUE AND INCOME 2,828 3,053
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES 52,775 48,106
SHAREHOLDERS' INVESTMENT:
Class A Common Stock, $.01 par value, 220,000,000
shares authorized; 77,665,200 and 77,632,700 shares
issued and outstanding at November 30, 1994
and May 31, 1994, respectively 777 776
Class B Common Stock, $.01 par value, 415,000
shares authorized, issued and outstanding 4 4
Additional paid-in capital 50,677 50,569
Accumulated deficit (50,113) (46,717)
---------- -------
Total Shareholders' Investment 1,345 4,632
---------- -------
Total Liabilities and Shareholders'
Investment $ 510,444 $526,627
========== =======
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these consolidated balance sheets.
4
<PAGE> 5
JONES SPACELINK, LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
November 30, November 30,
------------------------------ -------------------------------
1994 1993 1994 1993
---------- ---------- ----------- ----------
(In Thousands, except Per Share Data)
<S> <C> <C> <C> <C>
REVENUES:
Subscriber service fees $ 35,290 $ 33,327 $ 70,303 $ 66,571
Management fees 5,100 4,784 10,134 9,672
Encryption sales and manufacturing services 1,726 1,603 3,681 2,958
Radio programming services 740 881 1,455 1,717
Brokerage fees 112 77 1,138 155
Uplinking fees, partnership fees,
distributions and other 495 484 1,095 912
---------- ---------- ----------- ----------
Total Revenues 43,463 41,156 87,806 81,985
COSTS AND EXPENSES:
Operating expenses (25,669) (21,749) (50,542) (43,299)
General and administrative expenses (including
amounts allocated from Jones International,
Ltd. of $869,000 and $511,000, for the three
months ended November 30, 1994 and 1993,
respectively, and $1,782,000 and $997,000
for the six months ended November 30, 1994
and 1993, respectively) (2,834) (3,675) (5,800) (6,641)
Depreciation and amortization (12,830) (12,751) (26,286) (25,674)
---------- ---------- ----------- ----------
Operating Income 2,130 2,981 5,178 6,371
OTHER INCOME (EXPENSE):
Interest expense (10,680) (9,889) (21,438) (19,579)
Equity in losses of partnerships and
affiliated companies (742) (1,444) (1,552) (2,631)
Interest income 1,049 1,027 2,222 1,844
Gain on sale of assets - - 15,496 -
Other, net (156) 245 393 (400)
---------- ---------- ----------- ----------
Income (Loss) Before Income Taxes and
Minority Interests (8,399) (7,080) 299 (14,395)
INCOME TAX BENEFIT (PROVISION) (43) 561 880 1,046
---------- ---------- ----------- ----------
Income (Loss) Before Minority Interests (8,442) (6,519) 1,179 (13,349)
MINORITY INTERESTS IN NET (INCOME) LOSS OF
CONSOLIDATED SUBSIDIARIES 4,453 4,778 (4,561) 9,605
---------- ---------- ----------- ----------
NET LOSS $ (3,989) $ (1,741) $ (3,382) $ (3,744)
========== ========== =========== ==========
NET LOSS PER COMMON SHARE $ (.05) $ (.02) $ (.04) $ (.05)
========== ========== =========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 78,080 77,988 78,071 77,988
=========== =========== ============ ===========
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these consolidated statements.
5
<PAGE> 6
JONES SPACELINK, LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months Ended
November 30,
------------------------------
1994 1993
--------- ----------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,382) $ (3,744)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Minority interests in net income (loss) of
consolidated subsidiaries 4,561 (9,605)
Gain on sale of assets (15,496) -
Depreciation and amortization 26,286 25,674
Deferred income tax benefit (955) -
Recognition of deferred revenue and income (225) (155)
Equity in losses of limited partnerships and
affiliated companies 1,552 2,631
Decrease (increase) in trade accounts receivable 488 (1,888)
Decrease (increase) in other receivables, deposits,
prepaid expenses and other assets (1,303) (3,990)
Decrease in accounts payable and accrued
liabilities and subscriber prepayments
and deposits 3,459 960
--------- ----------
Net cash provided by operating activities 14,985 9,883
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of cable television system
by Jones Intercable, Inc. 35,587 -
Purchases of property, plant and equipment, net (19,316) (10,826)
Investments in cable television partnerships and affiliates (3,349) (8,219)
Investment in Mind Extension University, Inc.
by Jones Intercable, Inc. (4,242) (8,451)
Deferred acquisition costs (2,696) -
Other, net 1,142 1,909
--------- ----------
Net cash provided by (used in) investing activities 7,126 (25,587)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of borrowings by Jones Spacelink, Ltd. 1,069 2,019
Repayment of borrowings by Jones Spacelink, Ltd. (116) (56)
Proceeds from borrowings by Jones Intercable, Inc. 16,500 17,000
Repayment of borrowings by Jones Intercable, Inc. (41,500) -
Decrease in advances to affiliated entities 479 (2,166)
Decrease in minority interests in consolidated subsidiaries 108 262
Other, net (358) (252)
--------- ----------
Net cash provided by (used in) financing activities (23,818) 16,807
--------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,707) 1,103
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD 4,892 1,348
--------- ----------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 3,185 $ 2,451
========= ==========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest Paid $ 21,225 $ 18,960
========= ==========
Income Taxes Paid - 90
========= ==========
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these consolidated statements.
6
<PAGE> 7
JONES SPACELINK, LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
November 30, 1994
(1) Basis of Presentation:
This Form 10-Q is being filed in conformity with the Securities and
Exchange Commission's requirements for unaudited financial statements
and does not contain all of the necessary footnote disclosures
required for a fair presentation of Jones Spacelink, Ltd.
("Spacelink") and subsidiaries' financial position, results of
operations and cash flows in conformity with generally accepted
accounting principles. In the opinion of management, this data does
include all adjustments, consisting of normal recurring accruals,
necessary to present fairly the financial position of Spacelink and
its subsidiaries at November 30, 1994 and May 31, 1994, and the
results of their operations and their cash flows for the three and six
months ended November 30, 1994 and 1993. Results of operations for
these periods are not necessarily indicative of results to be expected
for the full year.
(2) Sale of Spacelink's Assets and Liquidation:
On December 19, 1994, the shareholders of Spacelink approved an
Exchange Agreement and Plan of Reorganization and Liquidation dated
May 31, 1994, as amended, between Spacelink and Jones Intercable, Inc.
("Intercable") providing for the sale of substantially all of the
assets of Spacelink to Intercable and the assumption of all of the
liabilities of Spacelink by Intercable. On December 20, 1994,
Intercable acquired all of the assets of Spacelink (except for the
2,859,240 shares of Intercable's Common Stock owned by Spacelink) and
assumed all of the liabilities of Spacelink (other than liabilities
with respect to shareholders exercising dissenters' rights) in
exchange for 3,900,000 shares of Intercable's Class A Common Stock.
Spacelink will effect its complete liquidation and distribute the
aforesaid shares of Intercable's Class A Common Stock and Common Stock
to its shareholders, other than to any dissenting shareholders.
Intercable incurred costs related to this transaction totalling
$3,255,000 at November 30, 1994, which have been deferred by
Intercable and were considered part of the purchase price of
Spacelink's assets.
(3) Treasury Stock:
Due to an amendment to the Colorado Business Corporation Act,
effective July 1, 1994, Spacelink changed its accounting for treasury
stock. Intercable shares held in treasury have been retired and
classified as authorized but unissued shares.
(4) Reclassifications:
Certain prior period amounts have been reclassified to conform to the
current period presentation.
7
<PAGE> 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations
On December 19, 1994, the shareholders of Spacelink approved an
Exchange Agreement and Plan of Reorganization and Liquidation dated May 31,
1994, as amended, between Spacelink and Jones Intercable, Inc. ("Intercable")
providing for the sale of substantially all of the assets of Spacelink to
Intercable and the assumption of all of the liabilities of Spacelink by
Intercable. On December 20, 1994, Intercable acquired all of the assets of
Spacelink (except for the 2,859,240 shares of Intercable's Common Stock owned
by Spacelink) and assumed all of the liabilities of Spacelink (other than
liabilities with respect to shareholders exercising dissenters' rights) in
exchange for 3,900,000 shares of Intercable's Class A Common Stock. Spacelink
will effect its complete liquidation and distribute the aforesaid shares of
Intercable's Class A Common Stock and Common Stock to its shareholders, other
than to any dissenting shareholders. Intercable incurred costs related to this
transaction totalling $3,255,000 at November 30, 1994, which have been deferred
by Intercable and were considered part of the purchase price of Spacelink's
assets.
8
<PAGE> 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27) Financial Data Schedule.
(b) Reports on Form 8-K.
Current Report on Form 8-K dated December 20, 1994 reporting
(i) shareholder approval of an Exchange Agreement and Plan of
Reorganization and Liquidation dated May 31, 1994, as amended,
between Spacelink and Intercable providing for the issuance by
Intercable of shares of its Class A Common Stock for
substantially all of the assets of Spacelink and the
assumption by Intercable of all of the liabilities of
Spacelink and subsequent closing on December 20, 1994.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JONES SPACELINK, LTD.,
a Colorado corporation
By: /s/ Gregory J. Liptak
---------------------------------
Gregory J. Liptak
President
By: /s/ Jay B. Lewis
---------------------------------
Jay B. Lewis, Treasurer
(Principal Accounting Officer)
Date: January 13, 1995
10
<PAGE> 11
Exhibit Index
<TABLE>
<CAPTION>
Exhibits Page
- -------- ----
<S> <C> <C>
27) Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> NOV-01-1994
<EXCHANGE-RATE> 1
<CASH> 3,185
<SECURITIES> 0
<RECEIVABLES> 8,349
<ALLOWANCES> 770
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 337,918
<DEPRECIATION> (143,204)
<TOTAL-ASSETS> 510,444
<CURRENT-LIABILITIES> 0
<BONDS> 394,757
<COMMON> 0
0
0
<OTHER-SE> 1,345
<TOTAL-LIABILITY-AND-EQUITY> 510,444
<SALES> 0
<TOTAL-REVENUES> 87,806
<CGS> 0
<TOTAL-COSTS> 50,542
<OTHER-EXPENSES> 15,826
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,438
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,382)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> 0
</TABLE>
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