<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 September 30, 1994
( ) 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: 0-14906
JONES CABLE INCOME FUND 1-B
- - --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1010417
- - --------------------------------------------------------------------------------
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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<PAGE> 2
JONES CABLE INCOME FUND 1-B
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1994 1993
------ ----------------- -----------------
<S> <C> <C>
CASH $ 41,567 $ 44,489
RECEIVABLES:
Trade receivables, less allowance for
doubtful receivables of $14,129 and $12,624 at
September 30, 1994 and December 31, 1993, respectively 153,280 118,799
Distribution receivable from cable television joint venture - 429,500
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 10,611,893 9,900,099
Less- accumulated depreciation (4,722,552) (4,044,575)
------------- -------------
5,889,341 5,855,524
Franchise costs, net of accumulated amortization
of $4,671,000 and $4,585,011 at September 30, 1994
and December 31, 1993, respectively - 85,990
Subscriber lists, net of accumulated amortization
of $2,930,732 and $2,650,130 at September 30, 1994
and December 31, 1993, respectively 1,621,268 1,901,870
Favorable leaseholds, net of accumulated amortization
of $93,812 and $84,830 at September 30, 1994
and December 31, 1993, respectively 63,888 72,870
Cost in excess of interests in net assets
purchased, net of accumulated amortization
of $9,588 and $8,670 at September 30, 1994
and December 31, 1993, respectively 39,312 40,230
Investment in cable television joint venture 4,653,014 6,036,257
------------- -------------
Total investment in cable television properties 12,266,823 13,992,741
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 33,439 5,279
------------- -------------
Total assets $ 12,495,109 $ 14,590,808
============= =============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these balance sheets.
2
<PAGE> 3
JONES CABLE INCOME FUND 1-B
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1994 1993
------------------------------------------- ----------------- -----------------
<S> <C> <C>
LIABILITIES:
Debt $ 3,549,240 $ 3,547,767
Accounts payable-
Trade 1,111 5,101
General Partner 2,153,831 1,944,230
Accrued liabilities 330,037 340,275
Accrued distribution to limited partners - 429,500
Subscriber prepayments 42,924 45,971
------------ -------------
Total liabilities 6,077,143 6,312,844
------------ -------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (170,331) (151,731)
Distributions (100,119) (100,119)
------------ -------------
(269,450) (250,850)
------------ -------------
Limited Partners-
Net contributed capital (83,884 units
outstanding at September 30, 1994 and
December 31, 1993) 34,449,671 34,449,671
Accumulated deficit (16,744,549) (14,903,151)
Distributions (11,017,706) (11,017,706)
------------ -------------
6,687,416 8,528,814
------------ -------------
Total liabilities and partners' capital (deficit) $ 12,495,109 $ 14,590,808
============ =============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these balance sheets.
3
<PAGE> 4
JONES CABLE INCOME FUND 1-B
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
1994 1993 1994 1993
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES $1,126,675 $ 1,088,530 $ 3,316,359 $ 3,279,020
COSTS AND EXPENSES:
Operating, general and administrative 693,242 652,219 2,007,928 1,931,858
Management fees and allocated overhead
from General Partner 135,910 133,532 414,481 406,685
Depreciation and amortization 319,320 405,920 1,054,469 1,279,454
---------- ------------ ----------- -----------
OPERATING LOSS (21,797) (103,141) (160,519) (338,977)
---------- ------------ ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (68,695) (85,292) (256,159) (292,399)
Other, net (13,333) (20,375) (60,077) (44,115)
---------- ------------ ----------- -----------
Total other income (expense), net (82,028) (105,667) (316,236) (336,514)
---------- ------------ ----------- -----------
LOSS BEFORE EQUITY
IN NET LOSS OF CABLE
TELEVISION JOINT VENTURE (103,825) (208,808) (476,755) (675,491)
EQUITY IN NET LOSS OF CABLE
TELEVISION JOINT VENTURE (450,178) (406,342) (1,383,243) (1,266,764)
---------- ------------ ----------- -----------
NET LOSS $ (554,003) $ (615,150) $(1,859,998) $(1,942,255)
========== ============ =========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (5,540) $ (6,152) $ (18,600) $ (19,423)
========== ============ =========== ===========
Limited Partners $ (548,463) $ (608,998) $(1,841,398) $(1,922,832)
========== ============ =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (6.54) $ (7.26) $ (21.95) $ (22.92)
========== ============ =========== ===========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 83,884 83,884 83,884 83,884
========== ============ =========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these statements.
4
<PAGE> 5
JONES CABLE INCOME FUND 1-B
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
------------------------------
1994 1993
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,859,998) $ (1,942,255)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 1,054,469 1,279,454
Equity in net loss of cable television joint venture 1,383,243 1,266,764
Increase in trade receivables (34,481) (102,608)
Decrease (increase) in deposits, prepaid expenses,
and deferred charges (28,160) 41,857
Decrease in trade accounts payable, accrued
liabilities and subscriber prepayments (17,275) (22,874)
----------- ------------
Net cash provided by operating activities 497,798 520,338
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (711,794) (553,602)
Distributions from cable television joint venture - 1,288,500
----------- ------------
Net cash provided by (used in) investing activities (711,794) 734,898
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 16,830 30,000
Repayment of debt (15,357) (17,634)
Distributions to limited partners - (1,288,500)
Increase in advances from General Partner 209,601 16,897
----------- ------------
Net cash provided by (used in) financing activities 211,074 (1,259,237)
----------- ------------
Decrease in cash (2,922) (4,001)
Cash, beginning of period 44,489 83,631
----------- ------------
Cash, end of period $ 41,567 $ 79,630
=========== ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 254,452 $ 314,048
=========== ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these statements.
5
<PAGE> 6
JONES CABLE INCOME FUND 1-B
(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-B (the "Partnership") at September 30, 1994 and December 31, 1993 and its
Statements of Operations and Cash Flows for the three and nine month periods
ended September 30, 1994 and 1993. 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 system serving
the areas in and around Orangeburg, South Carolina (the "Orangeburg System").
In addition, the Partnership owns an approximate 40 percent interest in Jones
Cable Income Fund 1-B/C Venture (the "Venture"). The Venture owns and operates
the cable television systems serving the areas in and around Brighton,
Broomfield and Boulder County, Colorado, Myrtle Creek, Oregon, Clearlake Oaks,
California, South Sioux City, Nebraska and Three Rivers and Watervliet,
Michigan.
(2) Jones Intercable, Inc., a publicly held Colorado corporation (the
"General Partner"), 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 paid to the General Partner by the Partnership (exclusive of amounts paid
by the Venture attributable to the Partnership's 40 percent interest in the
Venture) for the three and nine month periods ended September 30, 1994 were
$56,334 and $165,818, respectively, as compared to $54,427 and $163,951,
respectively, for the similar 1993 periods.
The Partnership reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses represent salaries and
benefits paid to corporate personnel, rent, data processing 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 overhead costs are allocated based on revenues and/or the
cost of assets managed for the partnership. 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 (exclusive of amounts paid by the Venture attributable to the
Partnership's 40 percent interest in the Venture) for the three and nine month
periods ending September 30, 1994 were $79,576 and 248,663 as compared to
$79,105 and $242,734, respectively, for the similar 1993 periods.
See note (3) for disclosure of management fees and allocated overhead
and administrative expense paid by the Venture, approximately 40 percent of
which are attributable to the Partnership.
6
<PAGE> 7
(3) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS September 30, 1994 December 31, 1993
------ ------------------ -----------------
<S> <C> <C>
Cash and accounts receivable $ 657,614 $ 550,855
Investment in cable television properties 54,109,346 57,237,567
Other assets 560,116 360,412
------------ ------------
Total assets $ 55,327,076 $ 58,148,834
============ ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Debt $ 42,358,461 $ 36,298,318
Accounts payable and accrued liabilities 1,257,901 6,661,694
Partners' contributed capital 39,504,008 39,504,008
Accumulated deficit (27,793,294) (24,315,186)
------------ ------------
Total liabilities and partners' capital $ 55,327,076 $ 58,148,834
============ ============
</TABLE>
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
----------------------------- ----------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 5,330,688 $ 5,130,755 $15,822,865 $15,190,555
Operating, general and administrative (3,007,731) (2,787,400) (8,940,861) (8,415,968)
Management fees and allocated
overhead from Jones Intercable, Inc. (646,464) (651,131) (1,993,259) (1,895,596)
Depreciation and amortization (2,144,074) (2,221,056) (6,462,837) (6,604,096)
----------- ----------- ----------- -----------
Operating loss (467,581) (528,832) (1,574,092) (1,725,105)
Interest expense (757,247) (499,644) (1,967,464) (1,471,143)
Other, net 92,874 6,746 63,448 11,023
----------- ----------- ----------- -----------
Net loss $(1,131,954) $(1,021,730) $(3,478,108) $(3,185,225)
=========== =========== =========== ===========
</TABLE>
7
<PAGE> 8
Management fees paid to the General Partner by the Venture totaled
$266,534 and $791,143, respectively, for the three and nine months ended
September 30, 1994 as compared to $256,538 and $759,528, respectively, for the
similar 1993 periods. Reimbursements for overhead and administrative expenses
totalled $379,930 and $1,202,116, respectively, for the three and nine months
ended September 30, 1994 as compared to $394,593 and $1,136,068, respectively,
for the similar 1993 periods. Management fees paid by the Venture and
attributable to the Partnership $106,001 and $314,638, respectively, for the
three and nine months ended September 30, 1994 as compared to $102,046 and
$302,125, respectively, for the similar 1993 periods. Reimbursements for
overhead and administrative expenses attributable to the Partnership totaled
$151,098 and $478,082, respectively, for the three and nine months ended
September 30, 1994 as compared to $156,961 and $451,905, respectively, for the
similar 1993 periods.
8
<PAGE> 9
JONES CABLE INCOME FUND 1-B
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
During the first nine months of 1994, $712,000 was expended for
capital improvements within the Partnership's Orangeburg System. Approximately
27 percent of these expenditures related to service drops to homes.
Approximately 18 percent of these expenditures related to the purchase of
converters. These expenditures were funded by cash generated from operations.
Anticipated capital expenditures for the remainder of 1994 are approximately
$36,000. Of this total, approximately 55 percent is for the rebuild of a
portion of the Orangeburg System. The remainder of the expenditures is
expected to be used for various system enhancements. Funding for these
expenditures is expected to be provided by cash generated from operations and,
in its discretion, if necessary, advances from the General Partner. The actual
level of capital expenditures will depend, in part, upon the General Partner's
determination as to the proper scope and timing of such expenditures in light
of the 1992 Cable Act and the Partnership's liquidity position.
The Partnership's credit facility currently has the maximum amount
available of $3,500,000 outstanding. The facility expires November 30, 1994,
at which time the entire outstanding principal balance is due. The General
Partner is negotiating with a bank for a new credit facility sufficient to
repay the balance of the existing credit facility, to repay existing advances
from the General Partner and to provide liquidity to the Partnership. If the
new loan is not completed by November 30, 1994, the General Partner will
negotiate to extend the current credit facility or advance funds to the
Partnership to allow it to repay the current loan until borrowings under the
new credit facility are available. In the event that the General Partner is
unable to negotiate a new credit facility, which is not anticipated, the
General Partner would consider selling assets to repay all Partnership debt,
including the advances from the General Partner. Interest on the facility is
at the Partnership's option of the Prime rate plus 1/8 percent, the CD rate
plus 1 3/8 percent or the London Interbank Offered Rate plus 1-1/4 percent.
The effective interest rates on outstanding obligations were 5.56 percent and
4.19 percent, respectively, at September 30, 1994 and 1993.
Since the balance on the Partnership's credit facility is at the
maximum available, the General Partner has advanced funds necessary for capital
expenditures. Interest on such advances is calculated at the General Partner's
weighted average cost of borrowing. At September 30, 1994, such advances
totaled $2,153,831.
In addition to the Orangeburg System, the Partnership owns an
approximate 40 percent interest in Jones Cable Income Fund 1-B/C Venture (the
"Venture"). The investment is accounted for under the equity method. When
compared to the December 31, 1993 balance, this investment has decreased by
$1,383,243. This decrease represents the Partnership's proportionate share of
losses generated by the Venture during the first nine months of 1993. The
Venture's losses, which are principally the result of depreciation and
amortization charges, are expected to continue throughout the remainder of
1994.
During the first nine months of 1994, capital improvements within the
Venture's operating systems totaled approximately $3,260,000. Approximately 21
percent of these expenditures related to the rebuild and upgrade of two of the
Venture's cable television systems, approximately 27 percent were for service
drops to subscribers' homes and approximately 13 percent were for the
construction of new cable plant. The remainder of these expenditures related
to various enhancements in all of the Venture's systems. Funding for these
improvements was provided primarily by the Venture's credit facility as
discussed below. For the remainder of 1994, the Venture expects to expend an
additional $1,380,000 on capital improvements. Approximately 20 percent of the
anticipated expenditures is for the continued rebuild of certain of the
Venture's cable television systems, approximately 29 percent is for the
construction of new cable plant and approximately 9 percent is for the
construction of service drops to subscribers' homes. The remaining
expenditures are for various enhancements in all of the Venture's systems.
Funding for these expenditures is expected to be provided by borrowings under a
renegotiated credit facility as discussed below. The level of capital
expenditures will depend, in part, upon the General Partner's determination as
to the proper scope and timing of such expenditures in light of the 1992 Cable
Act and the Venture's liquidity position.
9
<PAGE> 10
In May 1994, the Venture completed negotiation of its credit facility
to increase the maximum amount available to $45,000,000 and to extend the
revolving credit period to June 30, 1997, at which time the outstanding balance
is payable in full. At September 30, 1994, $42,100,000 was outstanding on the
Venture's credit facility. Interest on outstanding principal is calculated at
the Venture's option of the prime rate plus 1/2 percent, or LIBOR plus 1-1/2
percent. The effective interest rates on amounts outstanding as of September
30, 1994 and 1993 were 6.45 percent and 4.43 percent, respectively. In January
of 1993, the Venture entered into an interest rate cap agreement covering
outstanding debt obligations of $15,000,000. The Venture paid a fee of
$145,500. The agreement protects the Venture from interest rates that exceed 7
percent for three years from the date of the agreement.
Due to the regulatory matters discussed below, and to the Venture's
borrowing limitation of 45 percent of the fair market value of its assets, no
distribution was declared for the third quarter of 1994. The Venture will use
cash flow from operations to fund capital expenditures. Because the Venture's
credit facility has been renegotiated, the Venture will attempt to provide some
level of distributions in the future, a determination of the level of
distributions, if any, will be made on a quarter by quarter basis.
Subject to Regulation and Legislation as discussed below, the General
Partner believes that the Venture has sufficient sources of capital to meet its
presently anticipated needs.
Regulation and Legislation
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 allows for a greater degree of regulation of 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 and managed by the Partnership and the Venture, 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 and the Venture
reduced rates charged for certain regulated services effective September 1,
1993. These initial reductions resulted in some decrease in revenues and
operating income before depreciation and amortization; however, the decrease
was not as severe as originally anticipated. The General Partner undertook
actions to mitigate a portion of these reductions primarily through (a) new
service offerings in some systems, (b) product re-marketing and re-packaging
and (c) marketing efforts directed at non-subscribers.
On February 22, 1994, however, the FCC adopted several additional rate
orders including an order which revised its earlier-announced regulatory
scheme with respect to rates. The FCC's new regulations will 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. However, the FCC held
rate reductions in abeyance in certain systems. 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 1, 1994 and July 14, 1994.
On February 22, 1994, the FCC also adopted interim cost-of-service
regulations. Rate reductions will not be required where it is successfully
demonstrated that rates for basic and other regulated programming services are
justified and reasonable using cost-of-service standards. The FCC established
an interim industry-wide 11.25 percent permitted rate of return, and requested
comments on whether this standard and other interim cost-of-service standards
should be made permanent. The FCC also established a presumption that
acquisition costs above a system's book value should be excluded from the rate
base, but the FCC will consider individual showings to rebut this presumption.
The need for special rate relief will also be considered by the FCC if an
operator demonstrates that the rates set by a cost-of-service proceeding would
constitute confiscation of investment, and that, absent a higher rate, the
return necessary to operate and to attract investment could not be maintained.
The FCC will establish a uniform system of accounts for operators that elect
cost-of-service rate regulation, and the FCC has adopted affiliate transaction
regulations. After a rate has been set pursuant to a cost-of-service showing,
rate increases for regulated services will be indexed for inflation, and
operators will also be permitted to increase rates in response to increases in
costs beyond their control, such as taxes and increased programming costs.
10
<PAGE> 11
After analyzing the effect of the two methods of rate regulation, the
General Partner concluded that the Partnership should elect to file
cost-of-service showings in its Orangeburg system, the Venture should elect to
file cost-of-service showings in its Brighton, Broomfield and Boulder County,
Colorado, Myrtle Creek, Oregon, South Sioux City, Nebraska and Three Rivers and
Watervliet, Michigan systems and the Venture should comply with the benchmark
regulations in its Clearlake Oaks, California system.
The Venture complied with the new benchmark regulations and further
reduced rates in its Clearlake Oaks, California system. The annualized
reduction of the Venture's operating income before depreciation and
amortization is $130,000, or approximately 2 percent, in that system. In the
systems electing cost-of-service, the General Partner anticipates no further
reduction in revenues or operating income before depreciation and amortization
resulting from the FCC's rate regulations.
There have been several lawsuits filed by cable operators and
programmers in Federal court challenging various aspects of the 1992 Cable Act,
including provisions relating to mandatory broadcast signal carriage,
retransmission consent, access to cable programming, rate regulations,
commercial leased channels and public access channels. On April 8, 1993, a
three-judge Federal district court panel issued a decision upholding the
constitutionality of the mandatory signal carriage requirements of the 1992
Cable Act. That decision was appealed directly to the United States Supreme
Court. The United States Supreme Court vacated the lower court decision on
June 27, 1994 and remanded the case to the district court for further
development of a factual record. The Court's majority determined that the
must-carry rules were content neutral, but that it was not yet proven that the
rules were needed to preserve the economic health of the broadcasting industry.
In the interim, the must-carry rules will remain in place during the pendency
of the proceedings in district court. In 1993, a Federal district court for
the District of Columbia upheld provisions of the 1992 Cable Act concerning
rate regulation, retransmission consent, restrictions on vertically integrated
cable television operators and programmers, mandatory carriage of programming
on commercial leased channels and public, educational and governmental access
channels and the exemption for municipalities from civil damage liability
arising out of local regulation of cable services. The 1992 Cable Act's
provisions providing for multiple ownership limits for cable operators and
advance notice of free previews for certain programming services have been
found unconstitutional, and these decisions have been appealed. In November
1993, the United States Court of Appeals for the District of Columbia held that
the FCC's regulations implemented pursuant to Section 10 of the 1992 Cable Act,
which permit cable operators to ban indecent programming on public, educational
or governmental access channels or leased access channels, were
unconstitutional, but the court has agreed to reconsider its decision. All of
these decisions construing provisions of the 1992 Cable Act and the FCC's
implementing regulations have been or are expected to be appealed.
RESULTS OF OPERATIONS
Revenues of the Partnership's Orangeburg, South Carolina System
increased $38,145, or approximately 4 percent, from $1,088,530 for the three
months ended September 30, 1993 to $1,126,675 at September 30, 1994. For the
nine month periods, revenues increased $37,339, or approximately 1 percent,
from $3,279,020 at September 30, 1993 to $3,316,359 at September 30, 1994.
These increases are due to increases in basic subscribers and would have been
greater but for the reduction in basic rates mandated by the FCC. Since
September 30, 1993, the Orangeburg System has added 274 basic subscribers, an
increase of approximately 2 percent. Basic subscribers increased from 11,553
at September 30, 1993 to 11,827 at September 30, 1994. In addition, the
Orangeburg System added approximately 427 pay units, an increase of 5 percent.
No other single factor significantly affected the increase in revenues.
Operating, general and administrative expense increased $41,023 or
approximately 6 percent, from $652,219 for the three months ended September 30,
1993 to $693,242 at September 30, 1994. For the nine month periods ended
September 30, 1993 and 1994, operating, general and administrative expenses
increased $76,070, or approximately 4 percent, from $1,931,858 at September 30,
1993 to $2,007,928 at September 30, 1994. Operating, general and
administrative expense represented 62 percent and 61 percent, respectively, of
revenues for the three and nine month periods ended September 30, 1994 and 57
percent and 59 percent, respectively, for the comparable 1993 periods. The
increases in operating, general and administrative expenses were primarily due
to increases in personnel costs and programming fees. No other individual
factor significantly affected the increases in expenses. Management fees and
allocated overhead from the General Partner increased $2,378, or approximately
2 percent, from $133,532 at September 30, 1993 to $135,910 at September 30,
1994. For the nine months ended September 30, 1993 and 1994, management fees
and allocated overhead from the General Partner increased $7,796, or
approximately 2 percent, from $406,685 in 1993 to
11
<PAGE> 12
$414,481 in 1994. These increases are due to the increases in revenues, upon
which such fees are based, and increases in allocated expenses from the General
Partner. The General Partner has experienced increases in expenses, including
personnel costs and reregulation costs. Depreciation and amortization expense
decreased $86,600, or approximately 21 percent, from $405,920 for the three
months ended September 30, 1993 to $319,320 at September 30, 1994. For the
nine months ended September 30, 1993 and 1994, depreciation and amortization
expense decreased $224,985, or approximately 18 percent, from $1,279,454 in
1993 to $1,054,469 in 1994. These decreases are due primarily to the
maturation of the intangible asset base.
Operating income before depreciation and amortization decreased
$5,256, or approximately 2 percent, from $302,779 for the three month period
ended September 30, 1993 to $297,523 for the comparable 1994 period. Operating
income before depreciation and amortization decreased $46,527, or approximately
5 percent, from $940,477 to $893,950 for the nine month periods ended September
30, 1993 and 1994, respectively. These decreases are due to the increases in
operating, general and administrative expenses and management fees and
allocated overhead from the General Partner exceeding the increase in revenues.
Operating loss decreased $81,344, or approximately 79 percent, from
$103,141 for the three months ended September 30, 1993 to $21,797 at September
30, 1994. Operating loss decreased $178,458, or approximately 53 percent from
$338,977 for the nine months ended September 30, 1993 to $160,519 at September
30, 1994. These decreases were due to the increase in revenues and the
decreases in depreciation and amortization expense exceeding the increases in
operating, general and administrative expenses and in management fees and
allocated overhead from the General Partner.
Interest expense decreased $16,597, or approximately 19 percent, from
$85,292 for the three months ended September 30, 1993 to $68,695 at September
30, 1994, due to lower outstanding balances on amounts advanced by the General
Partner. For the nine months ended September 30, 1993 and 1994, interest
expense decreased $36,240 or approximately 12 percent, from $292,399 at
September 30, 1993 to $256,159 at September 30, 1994. Loss before equity in
net loss of cable television joint venture decreased $104,983, or approximately
50 percent, from $208,808 for the three months ended September 30, 1993 to
$103,825 at September 30, 1994. For the nine months ended September 30, 1993
and 1994, loss before equity in net loss of cable television joint venture
decreased $198,736, or approximately 29 percent, from $675,491 at September 30,
1993 to $476,755, at September 30, 1994. These decreases are due primarily to
the decrease in operating loss.
In addition to its Orangeburg, South Carolina system, the Partnership
owns an approximate 40 percent interest in the Venture.
Revenues of the Venture increased $199,933, or approximately 4
percent, from $5,130,755 to $5,330,688 for the three months ended September 30,
1993 as compared to 1994. For the nine month periods ended September 30, 1994
and 1993, revenues increased $632,310, or approximately 4 percent, from
$15,190,555 at September 30, 1993 to $15,822,865 at September 30, 1994. Since
September 30, 1993, the Venture has added 4,501 basic subscribers, representing
an increase of approximately 8 percent. Basic subscribers increased from
57,564 at September 30, 1993 to 62,065 at September 30, 1994. This increase in
the subscriber base accounted for approximately 70 percent and 77 percent,
respectively, of the three and nine month increases in revenues. The increase
in basic revenues would have been greater but for the reduction in basic rates
charged due to new basic rate regulations issued by the FCC in regard to the
1992 Cable Act. Increases in advertising sales revenue accounted for
approximately 26 percent and 20 percent, respectively, of the three and nine
month increases in revenues. No other single factor significantly affected the
three and nine month increases in revenues
Operating, general and administrative expense increased $220,331, or
approximately 8 percent, from $2,787,400 to $3,007,731 for the three months
ended September 30, 1994 as compared to 1993. For the nine months ended
September 30, 1994 and 1993, operating, general and administrative expense
increased $524,893, or approximately 6 percent, from $8,415,968 at September
30, 1993 to $8,940,861 at September 30, 1994. Operating, general and
administrative expense represented 56 percent of revenue for both the three and
nine month periods ended September 30, 1994 as compared to 54 percent and 56
percent, respectively, for each of the similar periods in 1993. Increased
personnel related expenses accounted for approximately 36 percent and 44
percent, respectively, of the increase for the three and
12
<PAGE> 13
nine month periods. An increase in personnel costs and programming fees
accounted for the increases for the three and nine month periods. These
increases were partially offset by decreases in copyright fees for the three
and nine months ended September 30, 1994. No other individual factors were
significant to the increases in operating, general and administrative expenses.
Management fees and allocated overhead from the General Partner decreased
$4,667, or approximately 1 percent, from $651,131 to $646,464 for the three
months ended September 30, 1994 as compared to 1993. For the nine months ended
September 30, 1994 and 1993, management fees and allocated overhead from the
General Partner increased $97,663, or approximately 5 percent, from $1,895,596
at September 30, 1993 to $1,993,259 at September 30, 1994. This increase is
due to the increases in revenues. Depreciation and amortization expense
decreased $76,982, or approximately 3 percent, from $2,221,056 to $2,144,074
for the three months ended September 30, 1994 as compared to 1993. For the
nine months ended September 30, 1994 and 1993, depreciation and amortization
expense decreased $141,259, or approximately 2 percent, from $6,604,096 at
September 30, 1993 to $6,462,837 at September 30, 1994. These decreases are
due to the maturation of the Venture's depreciable asset base.
Operating loss decreased $61,251, or approximately 12 percent, from
$528,832 to $467,581 for the three months ended September 30, 1994 as compared
to 1993. Operating loss for the nine months ended September 30, 1994 and 1993
decreased $151,013, or approximately 9 percent, from $1,725,105 at September
30, 1993 to $1,574,092 at September 30, 1994. These decreases are a result of
the increases in operating, general and administrative expense and management
fees and allocated overhead from the General Partner exceeding the growth in
revenues and the decrease in depreciation and amortization expense.
Operating income before depreciation and amortization remained
relatively consistent for the three and nine month periods ended September 30,
1994 and 1993. Operating income before depreciation and amortization was
$1,676,493 for the three month period ended September 30, 1994 and $1,692,224
for the comparable 1993 period. Operating income before depreciation and
amortization was $4,888,745 for the nine month period ended September 30, 1994
and $4,878,991 for the comparable 1993 period. Increases in revenues were
offset by increases in operating, general and administrative expenses.
Interest expense increased $257,603, or approximately 52 percent, from
$499,644 to $757,247 for the three months ended September 30, 1994 as compared
to 1993. For the nine months ended September 30, 1994 and 1993, interest
expense increased $496,321, or approximately 34 percent, from $1,471,143 in
1993 to $1,967,464 in 1993. These increases were due to higher outstanding
balances on interest bearing obligations and increases in effective interest
rates.
Net loss increased $66,388, or approximately 11 percent, from $615,388
to $681,776 for the three months ended September 30, 1994 as compared to 1993.
For the nine month periods, net loss increased $176,404, or approximately 9
percent, from $1,918,461 in 1993 to $2,094,865 in 1994. These increases are
attributable to the factors discussed above. Such losses are expected to
continue in the future.
13
<PAGE> 14
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
14
<PAGE> 15
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-B
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: November 10, 1994
15
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- - ------- ----------- ------------
<S> <C> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 41,567
<SECURITIES> 0
<RECEIVABLES> 153,280
<ALLOWANCES> 14,129
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 10,611,893
<DEPRECIATION> 4,722,552
<TOTAL-ASSETS> 12,495,109
<CURRENT-LIABILITIES> 2,527,903
<BONDS> 3,549,240
<COMMON> 0
0
0
<OTHER-SE> 6,417,966
<TOTAL-LIABILITY-AND-EQUITY> 12,495,109
<SALES> 0
<TOTAL-REVENUES> 3,316,359
<CGS> 0
<TOTAL-COSTS> 3,476,878
<OTHER-EXPENSES> 1,443,320
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 256,159
<INCOME-PRETAX> (1,859,998)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,859,998)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,859,998)
<EPS-PRIMARY> (21.95)
<EPS-DILUTED> (21.95)
</TABLE>
