<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/x/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1995.
--------------
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to _____________.
Commission File Number: 0-13193
CABLE TV FUND 12-A, LTD.
- - --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-0968104
- - --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
------------------------------------------------------------------------
Address of principal executive office
(303) 792-3111
----------------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1995 1994
------ ------------ -------------
<S> <C> <C>
CASH $ 883,358 $ 578,657
TRADE RECEIVABLES, less allowance for
doubtful receivables of $34,218 and $32,813
at March 31, 1995 and December 31, 1994, respectively 301,069 374,817
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 73,919,197 72,891,760
Less- accumulated depreciation (42,238,462) (40,728,415)
----------- -----------
31,680,735 32,163,345
Franchise costs, net of accumulated amortization
of $20,343,843 and $20,131,554 at March 31, 1995
and December 31, 1994, respectively 3,008,279 3,220,568
Subscriber lists, net of accumulated amortization
of $11,510,423 and $11,411,057 at March 31, 1995
and December 31, 1994, respectively 100,442 199,808
----------- -----------
Total investment in cable television properties 34,789,456 35,583,721
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 368,509 187,946
----------- -----------
Total assets $ 36,342,392 $ 36,725,141
=========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
<PAGE> 3
CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
------------------------------------------- ---------------- ---------------
<S> <C> <C>
LIABILITIES:
Debt $ 28,239,931 $ 26,402,399
Accounts payable-
Trade 56,997 30,848
General Partner - 1,305,933
Accrued liabilities 560,942 1,317,298
Subscriber prepayments 149,119 131,152
------------ ------------
Total liabilities 29,006,989 29,187,630
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (375,154) (373,133)
------------ ------------
(374,154) (372,133)
------------ ------------
Limited Partners-
Net contributed capital (104,000 units
outstanding at March 31, 1995 and
December 31, 1994) 44,619,655 44,619,655
Accumulated deficit (36,910,098) (36,710,011)
------------ ------------
7,709,557 7,909,644
------------ ------------
Total liabilities and partners' capital (deficit) $ 36,342,392 $ 36,725,141
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
<PAGE> 4
CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
---------------------------------------
1995 1994
----------------- ----------------
<S> <C> <C>
REVENUES $7,863,598 $7,300,740
COSTS AND EXPENSES:
Operating expense 4,687,708 4,080,260
Management fees and allocated overhead from
General Partner 994,806 931,063
Depreciation and amortization 1,833,974 1,820,290
---------- ----------
OPERATING INCOME 347,110 469,127
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (522,613) (371,400)
Other, net (26,605) (11,511)
---------- ----------
Total other income
(expense) (549,218) (382,911)
---------- ----------
NET INCOME (LOSS) $ (202,108) $ 86,216
========== ==========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ (2,021) $ 862
========== ==========
Limited Partners $ (200,087) $ 85,354
========== ==========
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ (1.92) $ .82
========== ==========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 104,000 104,000
========== ==========
</TABLE>
The accompanying notes to unaudited financial statements are an
integral part of these unaudited statements.
4
<PAGE> 5
CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
-------------------------------
1995 1994
------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (202,108) $ 86,216
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,821,702 1,820,290
Amortization of capitalized loan fees 12,272 -
Amortization of interest rate protection
contract 12,501 12,501
Decrease in amount due General Partner (1,305,933) (23,369)
Decrease (increase) in trade receivables 73,748 (2,949)
Increase in deposits, prepaid expenses
and deferred charges (205,336) (23,690)
Decrease in trade accounts payable, accrued
liabilities and subscriber prepayments (712,240) (261,323)
----------- -----------
Net cash provided by (used in) operating activities (505,394) 1,607,676
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,027,437) (977,304)
----------- -----------
Net cash used in investing activities (1,027,437) (977,304)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 28,015,986 46,448
Repayment of debt (26,178,454) (1,204,466)
----------- -----------
Net cash provided by (used in) financing activities 1,837,532 (1,158,018)
----------- -----------
Increase (decrease) in cash 304,701 (527,646)
Cash, beginning of period 578,657 1,610,187
----------- -----------
Cash, end of period $ 883,358 $ 1,082,541
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 453,443 $ 383,617
=========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
<PAGE> 6
CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) This Form 10-Q is being filed in conformity with the SEC requirements
for unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data
includes all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the financial position of Cable TV Fund 12-A, Ltd.
(the "Partnership") at March 31, 1995 and December 31, 1994 and its Statements
of Operations and Cash Flows for the three month periods ended March 31, 1995
and 1994. Results of operations for these periods are not necessarily
indicative of results to be expected for the full year.
The Partnership owns and operates the cable television systems serving
areas in and around Fort Myers, Florida; Lake County, Illinois; and Orland
Park/Park Forest, Illinois.
(2) Jones Intercable, Inc., (the "General Partner"), a publicly held
Colorado corporation, 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 three month periods ended March 31, 1995 and 1994 were $393,180
and $365,037, respectively.
The Partnership reimburses the General Partner 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 the General Partner with respect to each partnership
managed. Remaining overhead costs are allocated based on revenues of the
Partnership as a percentage of total revenues of owned and managed cable
television systems of the General Partner. Systems owned by the General
Partner and all other systems owned by partnerships for which Jones Intercable,
Inc. is the general partner are also allocated a proportionate share of these
expenses. The General Partner believes that the methodology used in allocating
overhead and administrative expenses is reasonable. Amounts charged the
Partnership by the General Partner for allocated overhead and administrative
expenses for the three month periods ended March 31, 1995 and 1994 were
$601,626 and $566,026, respectively.
6
<PAGE> 7
CABLE TV FUND 12-A, LTD.
(A Limited Partnership)
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
Capital expenditures totaled approximately $842,000 during the first
three months of 1995. Approximately 36 percent of these expenditures related
to the construction of service drops to subscribers' homes. Approximately 23
percent of these expenditures was for pay security equipment and approximately
17 percent of the expenditures related to the construction of new cable plant.
The remaining expenditures were used for various enhancements in the
Partnership's systems. Funding for these expenditures was provided by
borrowings under the Partnership's credit facility. Anticipated capital
expenditures for the remainder of 1995 are approximately $4,000,000.
Approximately 29 percent will be used for the construction of service drops to
subscribers' homes, and approximately 29 percent is expected to be used to
continue construction of new cable plant. The remainder of the 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 new credit facility discussed below.
On January 30, 1995, the Partnership entered into a new $30,000,000
revolving credit facility and repaid $26,125,000 outstanding under its previous
term loan. Under the terms of the new agreement, 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 March 31,
1995, $28,000,000 was outstanding under this credit facility. Generally,
interest payable on amounts borrowed under the new revolving credit facility is
at the Partnership's option of Prime or a fixed rate defined as the Euro-Rate
plus 1 percent. The effective interest rates on outstanding obligations as of
March 31, 1995 and 1994 were 7.19 percent and 4.69 percent, respectively. The
Partnership paid a one-time loan facility fee of $175,000 upon closing of the
new revolving credit facility.
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 protects the Partnership
from a three month LIBOR interest rate that exceeds 7 percent for three years
from the date of the agreement.
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 new credit facility to meet its presently
anticipated needs.
Regulatory Matters
Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which became effective on
December 4, 1992. This legislation has caused significant changes to the
regulatory environment in which the cable television industry operates. The
1992 Cable Act generally imposes a greater degree of regulation on the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States, including those
owned by the Partnership, are subject to rate regulation of basic cable
services. In addition, the 1992 Cable Act allows 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 Partnership reduced rates charged for certain regulated services
effective September 1, 1993.
On February 22, 1994, however, the FCC adopted several additional rate
orders including orders which revised its earlier-announced regulatory scheme
with respect to rates and established interim cost-of-service regulations. The
FCC's February 22, 1994 regulations generally require 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. The new regulations became effective on May 15, 1994,
but operators could elect to defer rate reductions to July 14, 1994, so long as
they made no changes in their rates and did not restructure service offerings
between May 15 and July 14.
7
<PAGE> 8
The Partnership has filed cost-of-service showings for the Fort Myers,
Florida and Orland Park/Park Forest, Illinois systems and thus anticipates no
further reductions in rates in these systems. The cost-of-service showings for
these systems have not yet received final approval from franchising
authorities, however, and there can be no assurance that the Partnership's
cost-of-service showings will prevent further rate reductions until such final
approvals are received. The Partnership complied with the February 1994
benchmark regulations and further reduced rates in the Lake County, Illinois
system effective July 1994.
RESULTS OF OPERATIONS
Revenues of the Partnership increased $562,858, or approximately 8
percent, from $7,300,740 for the first quarter of 1994 to $7,863,598 for the
comparable 1995 period. The Partnership has added approximately 5,100 basic
subscribers since March 31, 1994, an increase of approximately 7 percent. The
number of basic subscribers totaled 69,426 at March 31, 1994 compared to 74,510
at March 31, 1995. The increase in the number of basic subscribers accounted
for approximately 50 percent of the increase in revenues. Basic service rate
adjustments implemented in all of the Partnership's systems accounted for
approximately 30 percent of the increase and advertising revenues accounted for
approximately 10 percent of the increase in revenues. The increase in revenues
would have been greater but for the reduction in certain rates charged due to
basic rate regulations issued by the FCC in April 1993 and February 1994 with
which the Partnership complied effective September 1993 and July 1994. 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 $607,448, or approximately 15 percent,
from $4,080,260 for the first quarter of 1994 to $4,687,708 for the comparable
period in 1995. Operating expenses represented approximately 56 percent of
revenue for the first quarter of 1994 compared to approximately 60 percent of
revenue for the same period in 1995. Increases in programming costs and
revenue related expenses accounted for approximately 56 percent of the increase
in operating expenses and were due, in part, to the increase in the subscriber
base. Increases in personnel related expenses accounted for approximately 18
percent and increases in advertising related expenses accounted for
approximately 8 percent of the increase in operating expenses. No other
individual factor was significant to the increase in operating expenses.
Management fees and allocated overhead from the General Partner increased
$63,743, or approximately 7 percent, from $931,063 for the first three months
of 1994 to $994,806 for the comparable 1995 period. This increase was due to
an increase in revenues, upon which such fees and allocations are based, and an
increase in allocated expenses from the General Partner. The General Partner
has experienced increases in certain expenses, including personnel costs, a
portion of which is allocated to the Partnership.
Depreciation and amortization expense increased $13,684, or
approximately 1 percent, from $1,820,290 for the first three months of 1994 to
$1,833,974 for the comparable 1995 period due to additions to the Partnership's
asset base.
Operating income decreased $122,017, or approximately 26 percent, from
$469,127 in 1994 to $347,110 in 1995. This decrease was primarily due to
increases in operating expenses, management fees and allocated overhead from
the General Partner and depreciation and amortization expense exceeding the
increase in revenues. Operating income before depreciation and amortization
decreased $108,333, or approximately 5 percent, from $2,289,417 for the three
months ended March 31, 1994 to $2,181,084 for the similar period in 1995. This
decrease was due to the increases in operating expenses and management fees and
allocated overhead from the General Partner exceeding the increase in revenues.
The decrease in operating income before depreciation and amortization reflects
the effect of FCC rate regulations under the 1992 Cable Act which have caused
revenues to increase more slowly than in prior years. In turn, this has caused
certain expenses which are a function of revenue, such as franchise fees,
copyright fees and management fees to increase more slowly than otherwise would
have been the case. However, other operating costs such as programming fees,
salaries and benefits, and marketing costs as well as certain costs incurred by
the General Partner which are allocated to the Partnership, continue to
increase at historic rates. This situation has led to reductions in operating
income before depreciation and amortization as a percent of revenue ("Operating
Margin"). The General Partner will attempt to mitigate a portion of these
reductions through (a) new service offerings; (b) product re-marketing and
re-packaging and (c) marketing efforts targeted at non-subscribers.
8
<PAGE> 9
Interest expense increased $151,213, or approximately 41 percent, from
$371,400 for the first quarter of 1994 to $522,613 for the comparable 1995
period. This increase was due to higher effective interest rates on interest
bearing obligations during 1995 as compared to 1994. The Partnership recorded
a net loss of $202,108 for the first quarter of 1995 compared to net income of
$86,216 for the comparable 1994 period. This change was due to the factors
discussed above.
9
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Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CABLE TV FUND 12-A, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
--------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 12, 1995
11
<PAGE> 12
INDEX TO EXHIBITS
Exhibit Description Page
- - ------- ----------- ----
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 883,358
<SECURITIES> 0
<RECEIVABLES> 301,069
<ALLOWANCES> (34,218)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 73,919,197
<DEPRECIATION> (42,238,462)
<TOTAL-ASSETS> 36,342,392
<CURRENT-LIABILITIES> 767,058
<BONDS> 28,239,931
<COMMON> 0
0
0
<OTHER-SE> 7,335,403
<TOTAL-LIABILITY-AND-EQUITY> 36,342,392
<SALES> 0
<TOTAL-REVENUES> 7,863,598
<CGS> 0
<TOTAL-COSTS> 7,516,488
<OTHER-EXPENSES> 26,605
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 522,613
<INCOME-PRETAX> (202,108)
<INCOME-TAX> 0
<INCOME-CONTINUING> (202,108)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (202,108)
<EPS-PRIMARY> (1.92)
<EPS-DILUTED> (1.92)
</TABLE>
