<PAGE>
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, 1996
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 0-14689
JONES CABLE INCOME FUND 1-A, LTD.
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Exact name of registrant as specified in charter
Colorado 84-1010416
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State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, Englewood, Colorado 80112
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Address of principal executive office
(303) 792-3111
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Registrant's telephone number
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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1
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JONES CABLE INCOME FUND 1-A, LTD.
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(A Limited Partnership)
UNAUDITED BALANCE SHEETS
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<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
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<S> <C> <C>
CASH $ 125,970 $ 28,199
TRADE RECEIVABLES, less allowance for doubtful
receivables of $5,050 and $5,875 at March 31, 1996
and December 31, 1995, respectively 67,442 128,240
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 10,388,839 10,237,855
Less - accumulated depreciation (6,171,966) (5,995,702)
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4,216,873 4,242,153
Franchise costs and other intangible assets, net of
accumulated amortization of $671,530 at
March 31, 1996 and $654,163 at
December 31, 1995, respectively 239,470 256,837
----------- -----------
Total investment in cable television properties 4,456,343 4,498,990
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 67,178 36,394
----------- -----------
Total assets $ 4,716,933 $ 4,691,823
=========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
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JONES CABLE INCOME FUND 1-A, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
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<S> <C> <C>
LIABILITIES:
Debt $ 4,995,034 $ 4,606,827
Accounts payable - General Partner 1,515 45,944
Trade accounts payable and accrued liabilities 236,860 341,617
Accrued distribution to limited partners 200,000 200,000
Subscriber prepayments 47,463 46,562
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Total liabilities 5,480,872 5,240,950
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PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (4,709) (4,581)
Distributions (76,249) (74,229)
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(79,958) (77,810)
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Limited Partners-
Net contributed capital
(17,000 units outstanding at
March 31, 1996 and December 31, 1995) 7,288,694 7,288,694
Accumulated deficit (423,675) (411,011)
Distributions (7,549,000) (7,349,000)
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(683,981) (471,317)
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Total liabilities and partners'
capital (deficit) $ 4,716,933 $ 4,691,823
=========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
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JONES CABLE INCOME FUND 1-A, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
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<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
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1996 1995
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<S> <C> <C>
REVENUES $1,198,372 $1,103,290
COSTS AND EXPENSES:
Operating expense 778,951 695,936
Management fees and allocated overhead
from General Partner 141,408 145,452
Depreciation and amortization 204,854 195,703
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OPERATING INCOME 73,159 66,199
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OTHER INCOME (EXPENSE):
Interest expense (84,999) (81,517)
Other, net (952) 196
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Total other income (expense) (85,951) (81,321)
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NET LOSS $ (12,792) $ (15,122)
========== ==========
ALLOCATION OF NET LOSS:
General Partner $ (128) $ (151)
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Limited Partners $ (12,664) $ (14,971)
========== ==========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (.74) $ (.88)
========== ==========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 17,000 17,000
========== ==========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
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JONES CABLE INCOME FUND 1-A, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (12,792) $ (15,122)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 204,854 195,703
Decrease in trade receivables 60,798 9,738
Increase in deposits, prepaid expenses
and deferred charges (44,027) (5,958)
Decrease in trade accounts payable and accrued
liabilities and subscriber prepayments (103,856) (64,370)
Increase (decrease) in advances from General Partner (44,429) 268,686
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Net cash provided by operating activities 60,548 388,677
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (150,984) (106,190)
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Net cash used in investing activities (150,984) (106,190)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 400,000 -
Repayment of debt (11,793) (9,439)
Cash flow distributions to limited partners (200,000) (200,000)
Decrease in accrued distributions to limited partners - (35,000)
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Net cash provided by (used in) financing activities 188,207 (244,439)
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Increase in cash 97,771 38,048
Cash, beginning of period 28,199 78,286
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Cash, end of period $ 125,970 $ 116,334
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 99,227 $ 80,238
========= =========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
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JONES CABLE INCOME FUND 1-A, LTD.
---------------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data
includes all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the financial position of Jones Cable Income Fund
1-A, Ltd. ("the Partnership") at March 31, 1996 and December 31, 1995 and its
Statements of Operations and Cash Flows for the three month periods ended March
31, 1996 and 1995. Results of operations for these periods are not necessarily
indicative of results to be expected for the full year.
The Partnership owns the cable television systems serving the communities
of Milwaukie, Oregon (the "Milwaukie System") and Owatonna and Glencoe,
Minnesota (the "Owatonna/Glencoe System").
(2) Jones Intercable, Inc. (the "General Partner"), a publicly held Colorado
corporation, manages the Partnership and receives a fee for its services equal
to five percent of the gross revenues of the Partnership, excluding revenues
from the sale of cable television systems or franchises. Management fees for
the three month periods ended March 31, 1996 and 1995 were $59,919 and $55,164,
respectively.
The Partnership reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses represent the salaries and
related benefits paid for corporate personnel, rent, data processing services
and other corporate facilities costs. Such personnel provide engineering,
marketing, administrative, accounting, legal and investor relations services to
the Partnership. Allocations of personnel costs are based primarily on actual
time spent by employees of the General Partner with respect to each Partnership
managed. Remaining expenses are allocated based on the pro rata relationship of
the Partnership's revenues to the total revenues of all systems owned or managed
by the General Partner and certain of its subsidiaries. Systems owned by the
General Partner and all other systems owned by partnerships for which Jones
Intercable, Inc. is the general partner are also allocated a proportionate share
of these expenses. The General Partner believes that the methodology used in
allocating overhead and administrative expenses is reasonable. Amounts
allocated to the Partnership by the General Partner for allocated overhead and
administrative expenses for the three month periods ended March 31, 1996 and
1995 were $81,489 and $90,288, respectively.
6
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JONES CABLE INCOME FUND 1-A, LTD.
---------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
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For the three months ended March 31, 1996, the Partnership generated net
cash from operating activities totaling $60,548, which is available to fund
distributions, capital expenditures and non-operating costs. During the first
three months of 1996, the Partnership expended approximately $151,000 for
capital improvements. Approximately 38 percent related to service drops to
subscribers' homes, approximately 24 percent of these expenditures related to
the upgrade of equipment and approximately 5 percent were for the purchase of
converters within the Partnership's systems. Funding for these expenditures was
provided by cash generated from operations and borrowings under the
Partnership's credit facility. Anticipated capital expenditures for the
remainder of 1996 are approximately $507,000. Of these expenditures,
approximately 42 percent relates to service drops, approximately 11 percent
relates to the construction of new plant, approximately 8 percent relates to the
purchase of converters and approximately 8 percent relates to the upgrade of
equipment. The remainder of the expenditures are for various enhancements in
the Partnership's systems. Funding for these expenditures is expected to be
provided by cash generated from operations and borrowings under its credit
facility.
The Partnership is a party to a $6,500,000 revolving credit facility. The
revolving credit period expires December 31, 1997, at which time the outstanding
balance converts to a term loan with a final maturity of December 31, 2003. The
balance outstanding on the Partnership's credit facility at March 31, 1996 was
$4,900,000, leaving $1,600,000 available to fund capital expenditures. Interest
on outstanding principal amounts on the new credit facility is computed at the
Partnership's option of the London Interbank Offered Rate plus 1-1/4 percent or
the Prime Rate plus 1/4 percent. The effective interest rates on amounts
outstanding as of March 31, 1996 and 1995 were 6.75 percent and 7.13 percent,
respectively.
A primary objective of the Partnership is to provide quarterly cash
distributions from operating cash flow to the limited partners. The Partnership
declared a $200,000 distribution to limited partners during the first quarter of
1996, which was principally from first quarter operating cash flow of the
Partnership. Future distributions will be announced on a quarter-by-quarter
basis and no determination has been made regarding the level of future
distributions. The payment of quarterly operating cash flow distributions may
reduce the financial flexibility of the Partnership.
The General Partner presently believes that the Partnership has sufficient
sources of capital available from cash generated from operations and available
borrowings under its credit facility to meet its presently anticipated needs.
REGULATION AND LEGISLATION
- --------------------------
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 Cable Communications Policy Act of 1984 and the Cable
Television Consumer Protection and Competition Act of 1992 (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
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.
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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.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership increased $95,082, or approximately 9 percent,
to $1,198,372 for the three months ended March 31, 1996 from $1,103,290 for the
comparable 1995 period. Basic service rate adjustments accounted for
approximately 42 percent of the increase in revenues. The number of basic
subscribers totaled 13,476 at March 31, 1996 compared to 12,972 at March 31,
1995, an increase of 504, or approximately 4 percent. This increase in the
number of basic subscribers accounted for approximately 32 percent of the
increase in revenues. Increases in premium service revenue accounted for
approximately 16 percent of the increase in revenue. No other individual factor
significantly affected 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 $83,015, or approximately 12 percent, to
$778,951 for the three months ended March 31, 1996 from $695,936 for the
comparable 1995 period. Operating expense represented 65 percent and 63 percent
of the revenues in 1996 and 1995, respectively. The increase in operating
expenses was primarily the result of increases in programming costs and
marketing related costs. No other individual factor significantly affected the
increase in operating expenses.
Management fees and allocated overhead from the General Partner decreased
$4,044, or approximately 3 percent, to $141,408 for the three months ended March
31, 1996 from $145,452 for the comparable 1995 period due to decreases in
expenses allocated from the General Partner.
Depreciation and amortization expense increased $9,151, or approximately 5
percent, to $204,854 for the three months ended March 31, 1996 from $195,703 for
the comparable 1995 period. This increase was due to capital additions in 1995.
Operating income increased $6,960, or approximately 10 percent, to $73,159
for the three months ended March 31, 1996 from $66,199 for the comparable 1995
period. This increase was due to the increase in revenues and decrease in
management fees and allocated overhead from the General Partner exceeding the
increases in operating expenses and depreciation and amortization expense.
The cable television industry generally measures the financial 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 $16,111, or approximately 6
percent, to $278,013 for the three months ended March 31, 1996 from $261,902 for
the comparable 1995 period. This increase was due to the increase in revenues
and decrease in management fees and allocated overhead from the General Partner
exceeding the increase in operating expenses.
Interest expense increased $3,482, or approximately 4 percent, to $84,999
for the three months ended March 31, 1996 from $81,517 for the comparable 1995
period due to higher outstanding balances on interest bearing obligations.
Net loss decreased $2,330 to $12,792 for the three months ended March 31,
1996 from $15,122 for the comparable 1995 period due to the factors discussed
above.
8
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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
9
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JONES CABLE INCOME FUND 1-A, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
--------------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 13, 1996
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 125,970
<SECURITIES> 0
<RECEIVABLES> 67,442
<ALLOWANCES> (5,050)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 10,388,839
<DEPRECIATION> (6,171,966)
<TOTAL-ASSETS> 4,716,933
<CURRENT-LIABILITIES> 485,838
<BONDS> 4,995,034
<COMMON> 0
0
0
<OTHER-SE> 763,939
<TOTAL-LIABILITY-AND-EQUITY> 4,716,933
<SALES> 0
<TOTAL-REVENUES> 1,198,372
<CGS> 0
<TOTAL-COSTS> 1,125,213
<OTHER-EXPENSES> 952
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84,999
<INCOME-PRETAX> (12,792)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,792)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,792)
<EPS-PRIMARY> (.74)
<EPS-DILUTED> (.74)
</TABLE>
