<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 September 30, 1998
[ ] 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.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1010416
- --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D. #
9697 East Mineral Avenue, Englewood, Colorado 80112
----------------------------------------------------
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
_______ _______
<PAGE>
JONES CABLE INCOME FUND 1-A, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1998 1997
------ ------------- -------------
<S> <C> <C>
CASH $ 87,017 $ 788,679
TRADE RECEIVABLES, less allowance for doubtful
receivables of $-0- and $5,628 at September 30, 1998
and December 31, 1997, respectively - 59,963
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost - 6,701,483
Less- accumulated depreciation - (3,778,933)
------------- -----------
- 2,922,550
Franchise costs and other intangible assets, net of
accumulated amortization of $-0- and $465,203 at
September 30, 1998 and December 31, 1997, respectively - 12,797
------------- -----------
Total investment in cable television properties - 2,935,347
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 600,000 148,561
------------- -----------
Total assets $687,017 $ 3,932,550
============= ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
<PAGE>
JONES CABLE INCOME FUND 1-A, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL 1998 1997
- ----------------------------------------------------------- -------------- -------------
<S> <C> <C>
LIABILITIES:
Debt $ - $ 3,390,507
Trade accounts payable and accrued liabilities - 204,802
Accrued distribution to limited partners - 75,000
Subscriber prepayments - 31,254
------------ ------------
Total liabilities - 3,701,563
------------ ------------
PARTNERS' CAPITAL:
General Partner-
Contributed capital 1,000 1,000
Accumulated earnings 2,233,891 162,031
Distributions (2,064,267) (87,867)
------------ ------------
170,624 75,164
------------ ------------
Limited Partners-
Net contributed capital
(17,000 units outstanding at
September 30, 1998 and December 31, 1997) 7,288,694 7,288,694
Accumulated earnings 12,619,209 6,071,129
Distributions (19,391,510) (13,204,000)
------------ ------------
516,393 155,823
------------ ------------
Total partner's capital 687,017 230,987
------------ ------------
Total liabilities and partners' capital $ 687,017 $ 3,932,550
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
<PAGE>
JONES CABLE INCOME FUND 1-A, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------- -----------------------
1998 1997 1998 1997
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES $ 808,929 $ 798,755 $2,500,552 $2,783,498
COSTS AND EXPENSES:
Operating expenses 506,341 470,828 1,479,085 1,754,095
Management fees and
allocated overhead from
General Partner 91,608 87,520 287,617 331,160
Depreciation and
amortization 157,559 154,126 455,292 528,928
---------- --------- ---------- ----------
OPERATING INCOME 53,421 86,281 278,558 169,315
---------- --------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (42,719) (47,578) (159,588) (166,272)
Gain on sale of cable television
system 8,537,415 - 8,537,415 6,684,781
Other, net (38,921) (139,280) (36,445) (202,233)
---------- --------- ---------- ----------
Total other income (expense), net 8,455,775 (186,858) 8,341,382 6,316,276
---------- --------- ---------- ----------
NET INCOME (LOSS) $8,509,196 $(100,577) $8,619,940 $6,485,591
========== ========= ========== ==========
ALLOCATION OF NET INCOME (LOSS):
General Partner $2,070,753 $ (1,006) $2,071,860 $ 164,980
========== ========= ========== ==========
Limited Partners $6,438,443 $ (99,571) $6,548,080 $6,320,611
========== ========= ========== ==========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ 378.73 $ (5.86) $ 385.18 $ 371.80
========== ========= ========== ==========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 17,000 17,000 17,000 17,000
========== ========= ========== ==========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
<PAGE>
JONES CABLE INCOME FUND 1-A, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
----------------------------
1998 1997
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,619,940 $ 6,485,591
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 455,292 528,928
Gain on sale of cable television system (8,537,415) (6,684,781)
Decrease in trade receivables, net 59,963 15,518
Decrease (increase) in deposits, prepaid expenses and
deferred charges 63,672 (115,254)
Decrease in trade accounts payable and accrued
liabilities and subscriber prepayments (236,056) (202,311)
------------ -----------
Net cash provided by operating activities 425,396 27,691
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (353,891) (387,451)
Proceeds from sale of cable television system, net of
brokerage fee and escrow 10,856,250 7,995,000
------------ -----------
Net cash provided by investing activities 10,502,359 7,607,549
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - 925,035
Repayment of borrowings (3,390,507) (3,426,678)
Distribution to limited partners (6,187,510) (4,980,000)
Distribution to General Partner (1,976,400) -
Decrease in accrued distribution to limited partners (75,000) (125,000)
------------ -----------
Net cash used in financing activities (11,629,417) (7,606,643)
------------ -----------
Increase (decrease) in cash (701,662) 28,597
Cash, beginning of period 788,679 42,929
------------ -----------
Cash, end of period $ 87,017 $ 71,526
============ ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 176,125 $ 210,493
============ ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
<PAGE>
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 complete 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 September 30, 1998 and December 31, 1997, its
Statements of Operations for the three and nine month periods ended September
30, 1998 and 1997 and its Statements of Cash Flows for the nine month periods
ended September 30, 1998 and 1997. Results of operations for these periods are
not necessarily indicative of results to be expected for the full year.
The Partnership owned and operated the cable television systems serving the
communities of Owatonna and Glencoe, Minnesota (the "Owatonna/Glencoe System")
until they were sold on September 18, 1998. See Note 2. Jones Intercable,
Inc., a publicly held Colorado corporation, is the General Partner.
(2) On September 18, 1998, the Partnership sold its Owatonna/Glencoe System to
an unaffiliated party for a sales price of $11,750,000, subject to customary
closing adjustments. From the sale proceeds, the Partnership paid a brokerage
fee of 2.5 percent of the sales price, or $293,750, to The Jones Group, Ltd.
("The Jones Group"), a subsidiary of the General Partner, for acting as a broker
in this transaction, repaid all of its indebtedness, including the $3,300,000
borrowed under its term loan agreement and capital lease obligations totaling
$90,507, paid the General Partner deferred cash flow distributions totaling
$87,867, settled working capital adjustments, and deposited $600,000 into an
indemnity escrow account. The remaining net sale proceeds of approximately
$8,163,910 were distributed in September 1998 to the Partnership's limited
partners of record as of September 18, 1998 and to the General Partner. Because
distributions made on the sale of the Owatonna/Glencoe System together with all
prior distributions made by the Partnership exceeded the amounts originally
contributed to the Partnership by the limited partners plus the limited
partners' liquidation preference as set forth in the partnership agreement, the
General Partner received a general partner distribution on the sale of the
Owatonna/Glencoe System. The limited partners as a group received $6,187,510 and
the General Partner received $1,976,400 of the net sale proceeds. This
distribution provided the Partnership's limited partners an approximate return
of $364 for each $500 limited partnership interest, or $728 for each $1,000
invested in the Partnership. The sale of the Owatonna/Glencoe System was
approved by the holders of a majority of the limited partnership interests in
the Partnership.
Taking into account the prior distributions to limited partners from the
Partnership's operating cash flow, from the net proceeds from the sale of the
cable television system serving the community of Milwaukie, Oregon (the
"Milwaukie System") and the distribution from the net proceeds (excluding
escrowed proceeds) from the sale of the Owatonna/Glencoe System, the limited
partners of the Partnership have received a total return of $1,141 for each $500
limited partnership interest, or $2,282 for each $1,000 invested in the
Partnership.
For a period of ninety days following the closing date of September 18,
1998, $600,000 of the sale proceeds will remain in escrow as security for the
Partnership's agreement to indemnify the buyer under the asset purchase
agreement. The Partnership's primary exposure, if any, will relate to the
representations and warranties made about the Owatonna/Glencoe System in the
asset purchase agreement. Any amounts remaining from this indemnity escrow
account and not claimed by the buyer at the end of the ninety-day escrow period
will be returned to and distributed by the Partnership. If the entire $600,000
escrow amount is distributed to the partners, of which there can be no
assurance, the limited partners as a group would receive 75 percent ($450,000)
and the General Partner would receive 25 percent ($150,000) of the net escrow
proceeds; thus, the limited partners would receive $26 for each $500 limited
partnership interest, or $52 for each $1,000 invested in the Partnership from
this portion of the sale proceeds. The Partnership will continue in existence
at least until any amounts remaining from the indemnity escrow account have been
distributed. Since the Owatonna/Glencoe System represented the only asset of
the Partnership, the Partnership will be liquidated and dissolved upon the final
distribution of any amounts remaining from the indemnity escrow account, most
likely in the first quarter of 1999. If any disputes with respect to
indemnification arise, the Partnership would not be dissolved until such
disputes were resolved, which would result in the Partnership continuing in
existence for a longer period.
6
<PAGE>
(3) The General Partner 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 and nine month periods ended September 30, 1998 were $40,447
and $125,028, respectively, compared to $39,938 and $139,175, respectively, for
the similar 1997 periods. The General Partner will receive no management fees
beyond September 18, 1998.
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. Such services, and their related costs, are necessary to the
operations of the Partnership and would have been incurred by the Partnership if
it was a stand alone entity. Allocations of personnel costs are based 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 and nine month periods ended September 30,
1998 were $51,161 and $162,589, respectively, compared to $47,582 and $191,985,
respectively, for the similar 1997 periods. The Partnership will continue to
reimburse the General Partner for actual expenses of the Partnership until the
Partnership is liquidated and dissolved, but the Partnership will not bear an
allocation of overhead and administrative expenses beyond September 18, 1998.
7
<PAGE>
JONES CABLE INCOME FUND 1-A, LTD.
---------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
On September 18, 1998, the Partnership sold its Owatonna/Glencoe System to
an unaffiliated party for a sales price of $11,750,000, subject to customary
closing adjustments. From the sale proceeds, the Partnership paid a brokerage
fee of 2.5 percent of the sales price, or $293,750, to The Jones Group for
acting as a broker in this transaction, repaid all of its indebtedness,
including the $3,300,000 borrowed under its term loan agreement and capital
lease obligations totaling $90,507, paid the General Partner deferred cash flow
distributions totaling $87,867, settled working capital adjustments, and
deposited $600,000 into an indemnity escrow account. The remaining net sale
proceeds of approximately $8,163,910 were distributed in September 1998 to the
Partnership's limited partners of record as of September 18, 1998 and to the
General Partner. Because distributions made on the sale of the Owatonna/Glencoe
System together with all prior distributions made by the Partnership exceeded
the amounts originally contributed to the Partnership by the limited partners
plus the limited partners' liquidation preference as set forth in the
partnership agreement, the General Partner received a general partner
distribution on the sale of the Owatonna/Glencoe System. The limited partners
as a group received $6,187,510 and the General Partner received $1,976,400 of
the net sale proceeds. This distribution provided the Partnership's limited
partners an approximate return of $364 for each $500 limited partnership
interest, or $728 for each $1,000 invested in the Partnership. The sale of the
Owatonna/Glencoe System was approved by the holders of a majority of the limited
partnership interests in the Partnership.
Taking into account the prior distributions to limited partners from the
Partnership's operating cash flow, from the net proceeds from the sale of the
Milwaukie System and the distribution from the net proceeds (excluding escrowed
proceeds) from the sale of the Owatonna/Glencoe System, the limited partners of
the Partnership have received a total return of $1,141 for each $500 limited
partnership interest, or $2,282 for each $1,000 invested in the Partnership.
For a period of ninety days following the closing date of September 18,
1998, $600,000 of the sale proceeds will remain in escrow as security for the
Partnership's agreement to indemnify the buyer under the asset purchase
agreement. The Partnership's primary exposure, if any, will relate to the
representations and warranties made about the Owatonna/Glencoe System in the
asset purchase agreement. Any amounts remaining from this indemnity escrow
account and not claimed by the buyer at the end of the ninety-day escrow period
will be returned to and distributed by the Partnership. If the entire $600,000
escrow amount is distributed to the partners, of which there can be no
assurance, the limited partners as a group would receive 75 percent ($450,000)
and the General Partner would receive 25 percent ($150,000) of the net escrow
proceeds; thus, the limited partners would receive $26 for each $500 limited
partnership interest, or $52 for each $1,000 invested in the Partnership from
this portion of the sale proceeds. The Partnership will continue in existence
at least until any amounts remaining from the indemnity escrow account have been
distributed. Since the Owatonna/Glencoe System represented the only asset of
the Partnership, the Partnership will be liquidated and dissolved upon the final
distribution of any amounts remaining from the indemnity escrow account, most
likely in the first quarter of 1999. If any disputes with respect to
indemnification arise, the Partnership would not be dissolved until such
disputes were resolved, which would result in the Partnership continuing in
existence for a longer period.
RESULTS OF OPERATIONS
- ---------------------
The Partnership sold its Owatonna/Glencoe System on September 18, 1998 and
ceased operations as of such date. The Partnership will be liquidated and
dissolved upon the final distribution of any amounts remaining from the
indemnity escrow account referred to above, most likely in the first quarter of
1999.
8
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The sale of the Partnership's Owatonna/Glencoe System was subject to the
approval of the holders of a majority of the limited partnership interests of
the Partnership. A vote of the limited partners was conducted by the General
Partner by mail in August and September 1998. Limited partners of record at the
close of business on July 31, 1998 were entitled to notice of, and to
participate in, this vote of limited partners. Following are the results of the
vote of the limited partners for the system sale:
<TABLE>
<CAPTION>
No. of
Interests Approved Against Abstained Did Not Vote
Entitled to ------------- ------- --------- ------------
Vote No. % No. % No. % No. %
-------------- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Owatonna/Glencoe System 17,000 10,855 63.85 118 .69 70 .41 5,957 35.05
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
Report on Form 8-K dated September 18, 1998, reported that on
September 18, 1998, the Partnership sold its Owatonna/Glencoe System to
an unaffiliated party for an aggregate sales price of $11,750,000,
subject to customary closing adjustments.
9
<PAGE>
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: November 13, 1998
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 87,017
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 687,017
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 687,017
<TOTAL-LIABILITY-AND-EQUITY> 687,017
<SALES> 0
<TOTAL-REVENUES> 2,500,552
<CGS> 0
<TOTAL-COSTS> 2,221,994
<OTHER-EXPENSES> (8,500,970)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 159,588
<INCOME-PRETAX> 8,619,940
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,619,940
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,619,940
<EPS-PRIMARY> 385.18
<EPS-DILUTED> 385.18
</TABLE>
