<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: July 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File No.: 0-11478
TCA CABLE TV, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-1798185
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
3015 SSE Loop 323, Tyler, Texas 75701
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 903/595-3701
-----------------
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
--------------- ---------------
The number of shares outstanding of each of the registrant's classes of common
stock as of September 11, 1996 was:
24,875,427 shares of common stock
---------------
1
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TCA CABLE TV, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page No.
--------
<S> <C>
Consolidated Balance Sheets - July 31, 1996 and October 31, 1995 3
Consolidated Statements of Operations -
Three and nine months ended July 31, 1996 and 1995 4
Consolidated Statement of Shareholders' Equity -
Nine months ended July 31, 1996 5
Consolidated Statements of Cash Flows -
Nine months ended July 31, 1996 and 1995 6-7
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - OTHER INFORMATION 9
SIGNATURES 10
</TABLE>
2
<PAGE> 3
TCA CABLE TV, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 31, October 31,
ASSETS 1996 1995
------------- -------------
(Unaudited)
<S> <C> <C>
Cash $ 1,948,307 $ 1,260,274
------------- -------------
Accounts receivable, subscribers 8,665,227 7,973,959
------------- -------------
Accounts receivable, other 44,080 879,268
------------- -------------
Income tax receivable 2,470,116 932,306
------------- -------------
Notes receivable, affiliates 80,000 2,500,000
------------- -------------
Investments, at cost 4,745,871 1,680,163
------------- -------------
Property, plant and equipment, at cost:
Land 2,939,416 2,888,678
Distribution systems 349,055,566 293,134,397
Transportation equipment 9,225,578 7,800,092
Other 30,054,797 26,668,443
------------- -------------
391,275,357 330,491,610
Less accumulated depreciation (197,248,430) (178,722,319)
------------- -------------
194,026,927 151,769,291
------------- -------------
Other assets:
Intangibles, net of accumulated
amortization of $80,890,593 and
$72,601,115, respectively 430,987,912 285,521,922
Prepaid expenses 1,853,071 1,571,753
------------- -------------
432,840,983 287,093,675
------------- -------------
$ 644,821,510 $ 454,088,936
============= =============
<CAPTION>
July 31, October 31,
LIABILITIES 1996 1995
------------- -------------
(Unaudited)
<S> <C> <C>
Accounts payable $ 7,556,776 $ 6,496,407
Accrued expenses 16,244,986 15,195,324
Subscriber advance payments 2,747,856 3,856,362
Deferred income taxes 56,280,000 48,180,000
Term debt 310,824,385 262,213,055
------------- -------------
393,654,003 335,941,148
------------- -------------
Reedemable minority interest 108,667,646
SHAREHOLDERS' EQUITY
Preferred stock, $1.00 par value,
5,000,000 shares authorized; none
issued
Common stock, $.10 par value, 60,000,000
shares authorized; 25,079,095 and
24,782,121 shares issued, respectively 2,507,910 2,478,212
Additional paid-in capital 52,332,663 43,704,988
Retained earnings 91,463,042 75,768,342
------------- -------------
146,303,615 121,951,542
Less treasury stock, at cost,
209,828 shares (3,803,754) (3,803,754)
------------- -------------
142,499,862 118,147,788
------------- -------------
$ 644,821,510 $ 454,088,936
============= =============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
3
<PAGE> 4
TCA CABLE TV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
----------------------------- ------------------------------
1996 1995 1996 1995
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
CATV revenues $ 69,399,627 $ 49,525,693 $ 181,977,540 $ 137,418,357
------------- ------------- -------------- -------------
Operating expenses:
Salaries, wages and benefits 11,844,494 8,225,263 30,880,070 23,485,915
Programming costs 17,195,454 11,870,717 43,934,398 31,763,534
Other operating expenses 2,166,123 1,655,180 5,748,175 4,679,205
Selling, general and administrative 6,592,252 3,658,880 13,964,820 9,723,286
Depreciation and amortization 9,845,417 8,239,630 26,890,507 21,083,383
------------- ------------- -------------- -------------
47,643,740 33,249,541 121,417,970 89,700,609
------------- ------------- -------------- -------------
Operating income 21,755,887 15,876,023 60,559,570 46,683,034
Other income (550,903) (136,928) 196,676 165,376
Interest expense (5,528,025) (3,984,583) (16,430,613) (8,868,776)
Minority interest (1,567,646) (1,567,646)
------------- ------------- -------------- -------------
Income before income taxes 14,109,313 11,754,512 42,757,987 37,979,634
------------- ------------- -------------- -------------
Provision for income taxes:
Current 2,800,000 1,730,000 8,600,000 9,600,000
Deferred 2,700,000 2,500,000 8,100,000 5,400,000
------------- ------------- -------------- -------------
5,500,000 4,230,000 16,700,000 15,000,000
------------- ------------- -------------- -------------
Net income $ 8,609,313 $ 7,524,512 $ 26,057,987 $ 22,979,634
============= ============= ============== =============
Earnings per common share $ 0.35 $ 0.31 $ 1.05 $ 0.93
============= ============= ============== =============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
4
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TCA CABLE TV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Issued Additional
------------------------- Paid-In Retained Treasury
Shares Amount Capital Earnings Stock
---------- ----------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, October 31, 1995 24,782,121 $ 2,478,212 $ 43,704,988 $ 75,768,342 $ (3,803,754)
Net income for the nine months 26,057,987
ended July 31, 1996
Issuance of common stock 272,881 28,382 8,473,676
Stock options exercised 13,162 1,316 107,049
Financial advisory services 46,950
Cash dividends at $.42 a share (10,363,287)
---------- ----------- ------------ -------------- -------------
Balance, July 31, 1996 25,068,164 $ 2,507,910 $ 52,332,663 $ 91,463,042 $ (3,803,754)
========== =========== ============ ============== =============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
5
<PAGE> 6
TCA CABLE TV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
July 31,
------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 181,012,954 $ 132,949,148
Cash paid to suppliers and employees (92,373,934) (65,985,498)
Other revenue received 558,756 516,078
Interest paid (16,206,422) (8,482,542)
Income taxes paid (10,137,810) (11,360,517)
------------- -------------
Net cash provided by operating activities 62,853,544 47,636,669
------------- -------------
Cash flows from investing activities:
Payments for purchases of companies
and CATV systems (66,287,996) (131,819,265)
Capital expenditures (31,583,924) (29,049,498)
Loan to affiliate (1,000,000) (2,500,000)
Proceeds from sale of assets 0 785,331
------------- -------------
Net cash used in investing activities (98,871,920) (162,583,432)
------------- -------------
Cash flows from financing activities:
Borrowings of term debt 120,650,000 277,884,990
Repayments of term debt (72,038,670) (153,304,927)
Treasury stock purchased (1,100,000)
Proceeds from stock options exercised 108,366 146,141
Partnership distributions (1,650,000)
Dividends paid (10,363,287) (8,839,130)
------------- -------------
Net cash provided by (used in) financing activities 36,706,409 114,787,074
------------- -------------
Net increase (decrease) in cash 688,033 (159,689)
Cash at beginning of period 1,260,274 2,445,112
------------- -------------
Cash at end of period $ 1,948,307 $ 2,285,423
============= =============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
6
<PAGE> 7
TCA CABLE TV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
July 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 26,057,987 $ 22,979,634
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation expense 18,601,029 15,557,846
Amortization expense 8,289,478 5,525,537
Deferred income taxes 8,100,000 5,400,000
Contribution of common stock to retirement plan 363,307 357,477
Employee stock bonus 138,750
Financial advisory services 46,950
(Gain) loss on sale of assets 7,788 (164,225)
Share of (earnings) losses of affiliates 354,292 514,927
Minority interest in earnings 1,567,646
(Increase) decrease in other assets (281,318) (1,312,400)
(Increase) decrease in accounts receivable, subscribers (691,268) (2,281,771)
(Increase) decrease in accounts receivable, other 835,188 (806,977)
(Increase) decrease in income taxes receivable (1,537,810)
Increase (decrease) in subscriber advance payments (1,108,506) (345,747)
Increase (decrease) in accrued expenses 1,049,662 1,846,092
Increase (decrease) in income taxes payable (1,760,517)
Increase (decrease) in accounts payable 1,060,369 2,126,793
------------ ------------
Net cash provided by operating activities $ 62,853,544 $ 47,636,669
============ ============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
7
<PAGE> 8
TCA CABLE TV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. Pursuant to the rules and regulations of the Securities and Exchange
Commission, certain financial information has been condensed and certain
footnote disclosures have been omitted. Such information and disclosures are
normally included in financial statements prepared in accordance with generally
accepted accounting principles.
These condensed financial statements should be read in conjunction with the
financial statements and notes thereto in the Company's latest report on Form
10-K.
The financial statements as of July 31, 1996 and for the nine-month period then
ended are unaudited; however, in the opinion of management, such statements
include all adjustments (consisting solely of normal and recurring adjustments)
necessary to present fairly the financial information included therein.
B. The consolidated statements of operations for the nine months ended July 31,
1996, are not necessarily indicative of the operating results to be expected
for the full year.
C. Earnings per common share are computed based upon the weighted average
common shares outstanding during the period, including common stock
equivalents, of 24,886,753 shares and 24,573,796 shares for 1996 and 1995,
respectively.
D. On May 1, 1996, the Company assumed operations in five additional cable
television markets through a partnership with Donrey Media Group ("Donrey"), a
division of Stephens Group, Inc. of Little Rock, Arkansas. The partnership, TCA
Cable Partners, is comprised of 22 of the Company's systems in Arkansas and
Mississippi, and five Donrey systems in Arkansas, Oklahoma and California. The
partnership is owned 75 percent by the Company and 25 percent by Donrey. The
partnership serves approximately 224,000 subscribers.
E. On May 1, 1996, the Company also entered into a ten-year financial advisory
services agreement in exchange for a warrant to purchase 300,000 shares of the
Company's stock. 150,000 shares are exercisable May 1, 2001 and 150,000 shares
are exercisable May 1, 2006. The value of the warrant is amortized on a
staight-line basis over the ten-year life, $187,800 per year, or $46,950 per
quarter.
F. On May 1, 1996 the Company acquired Cable One Corporation, a cable
television advertising company based in Williamsport, Pennsylvania. Cable One
sells advertising in cable markets serving approximately 1.2 million
subscribers. The acquisition was financed by the issuance of 266,666 shares of
the Company's stock and $2 million in cash obtained from operations.
G. On June 20, 1996, the Company signed an agreement with TCI Communications,
Inc. ("TCI") to trade the assets of the Vallejo, California cable operation for
the assets of TCI's Ft. Smith, Arkansas and Sallisaw, Oklahoma cable systems.
8
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TCA CABLE TV, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Comparison of the three-month period ended July 31,
1996 with the same three-month period of the prior year reveals increases in
revenues, operating income and net income. Revenues, operating income, and net
income increased by approximately 40%, 37% and 14%, respectively.
Approximately 78% of the revenue increase was from acquisitions and 22% from
internal growth. The Company's basic accounts increased from 526,142 at July
31, 1995 to 627,179 at July 31, 1996 or approximately 19%. Approximately 95% of
the increase in basic acounts was from acquisitions. Average revenue per
account increased from $31.50 to $36.70, or approximately 17%. Average revenue
per account includes $2.99 and $5.62 in advertising revenue per account for
1995 and 1996, respectively.
Operating expenses increased approximately 42% during the third quarter of
fiscal 1996 as compared to the third quarter of fiscal 1995. Salaries, wages
and benefits increased 44%. Programming costs and other operating expenses
increased increased 45% and 31%, respectively. Selling, general and
administrative expenses increased 80%. Depreciation and amortization increased
19%. Approximately 75% of the increases were from acquisitions.
Interest expense increased by approximately $1.5 million or 39%. The increase
was attributable to an increase in term debt to fund acquisitions.
LIQUIDITY AND CAPITAL RESOURCES - The Company's capital expenditures have been
primarily for cable system construction, upgrading and rebuilding, acquisition
of other cable systems and purchases of converters to be furnished to
subscribers.
Expenditures for rebuilding, upgrading and maintaining the Company's cable
systems and for converter purchases have been financed principally with cash
flow from operations. Acquisitions of cable systems have generally been
financed with cash flow from operations and through bank borrowings.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibit A - none
B. The following reports on Form 8-K have been filed during the quarter
for which this report is filed:
1. Report on Form 8-K/A, filed July 15, 1996, subsequent to the TCA
Cable Partners acquisition.
C. Exhibit 27 - Financial Data Schedule
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
TCA CABLE TV, INC.
Date: September 13, 1996 /s/ Robert M. Rogers
------------------ ---------------------------------
Robert M. Rogers, Chairman and
Chief Executive Officer
Date: September 13, 1996 /s/ Jimmie F. Taylor
------------------ ---------------------------------
Jimmie F. Taylor, Vice President,
CFO and Treasurer
10
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> JUL-31-1996
<CASH> 1,948,307
<SECURITIES> 0
<RECEIVABLES> 8,665,227
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 391,275,357
<DEPRECIATION> (197,248,430)
<TOTAL-ASSETS> 644,821,510
<CURRENT-LIABILITIES> 0
<BONDS> 310,824,385
<COMMON> 2,507,910
0
0
<OTHER-SE> 139,991,951
<TOTAL-LIABILITY-AND-EQUITY> 644,821,510
<SALES> 0
<TOTAL-REVENUES> 69,399,627
<CGS> 0
<TOTAL-COSTS> 17,195,454
<OTHER-EXPENSES> 30,448,286
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,528,025
<INCOME-PRETAX> 14,109,313
<INCOME-TAX> 5,500,000
<INCOME-CONTINUING> 8,609,313
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,609,313
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
