<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, 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: 0-14906
JONES CABLE INCOME FUND 1-B, LTD.
- --------------------------------------------------------------------------------
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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JONES CABLE INCOME FUND 1-B, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1995 1994
------ ------------- ------------
<S> <C> <C>
CASH $ 97,850 $ 116,839
RECEIVABLES:
Trade receivables, less allowance for doubtful receivables
of $19,902 and $14,323 at September 30, 1995 and
December 31, 1994, respectively 206,590 167,587
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 11,751,536 10,801,551
Less- accumulated depreciation (5,643,729) (4,948,058)
------------ ------------
6,107,807 5,853,493
Subscriber lists, net of accumulated amortization of $3,304,868 and
$3,024,266 at September 30, 1995 and December 31, 1994, respectively 1,247,132 1,527,734
Favorable leaseholds, net of accumulated amortization of $105,788
and $96,806 at September 30, 1995 and December 31, 1994, respectively 51,912 60,894
Cost in excess of interests in net assets purchased, net of accumulated
amortization of $10,812 and $9,894 at September 30, 1995
and December 31, 1994, respectively 38,088 39,006
Investment in cable television joint venture 2,687,337 4,086,463
------------ ------------
Total investment in cable television properties 10,132,276 11,567,590
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 62,341 22,362
------------ ------------
Total assets $ 10,499,057 $ 11,874,378
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
<PAGE> 3
JONES CABLE INCOME FUND 1-B, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
------------------------------------------- ------------- ------------
<S> <C> <C>
LIABILITIES:
Debt $ 6,673,153 $ 3,544,000
Accounts payable-
Trade 3,839 5,046
General Partner 1,876 2,162,870
Accrued liabilities 451,095 433,865
Accrued distribution to
limited partners 250,000 -
Subscriber prepayments 44,459 42,814
------------ ------------
Total liabilities 7,424,422 6,188,595
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (196,189) (177,653)
Distributions (107,694) (100,119)
------------ ------------
(302,883) (276,772)
------------ ------------
Limited Partners-
Net contributed capital
(83,884 units outstanding at
September 30, 1995 and December 31, 1994) 34,449,671 34,449,671
Accumulated deficit (19,304,447) (17,469,410)
Distributions (11,767,706) (11,017,706)
------------ ------------
3,377,518 5,962,555
------------ ------------
Total liabilities and partners'
capital (deficit) $ 10,499,057 $ 11,874,378
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
<PAGE> 4
JONES CABLE INCOME FUND 1-B, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
1995 1994 1995 1994
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES $1,260,839 $1,126,675 $ 3,672,304 $ 3,316,359
COSTS AND EXPENSES:
Operating expense 743,325 693,242 2,285,461 2,007,928
Management fees and allocated
overhead from General Partner 150,797 135,910 446,380 414,481
Depreciation and amortization 331,527 319,320 1,001,334 1,054,469
---------- ---------- ----------- -----------
OPERATING INCOME (LOSS) 35,190 (21,797) (60,871) (160,519)
---------- ---------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (140,172) (68,695) (393,684) (256,159)
Other, net 313 (13,333) 108 (60,077)
---------- ---------- ----------- -----------
Total other income (expense), net (139,859) (82,028) (393,576) (316,236)
---------- ---------- ----------- -----------
LOSS BEFORE EQUITY
IN NET LOSS OF CABLE
TELEVISION JOINT VENTURE (104,669) (103,825) (454,447) (476,755)
EQUITY IN NET LOSS OF
CABLE TELEVISION JOINT
VENTURE (357,153) (450,178) (1,399,126) (1,383,243)
---------- ---------- ----------- -----------
NET LOSS $ (461,822) $ (554,003) $(1,853,573) $(1,859,998)
========== ========== =========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (4,618) $ (5,540) $ (18,536) $ (18,600)
========== ========== =========== ===========
Limited Partners $ (457,204) $ (548,463) $(1,835,037) $(1,841,398)
========== ========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (5.44) $ (6.54) $ (21.87) $ (21.95)
========== ========== =========== ===========
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 unaudited statements.
4
<PAGE> 5
JONES CABLE INCOME FUND 1-B, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
----------------------------------
1995 1994
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,853,573) $(1,859,998)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 1,001,334 1,054,469
Equity in net loss of cable television
joint venture 1,399,126 1,383,243
Increase in trade receivables (39,003) (34,481)
Increase in deposits, prepaid expenses
and deferred charges (55,140) (28,160)
Increase (decrease) in accounts payable,
accrued liabilities and subscriber prepayments 10,093 (17,275)
------------ -----------
Net cash provided by operating activities 462,837 497,798
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (949,985) (711,794)
------------ -----------
Net cash used in investing activities (949,985) (711,794)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 6,652,072 16,830
Repayment of debt (3,522,919) (15,357)
Distributions to limited partners (750,000) -
Accrued distributions 250,000 -
Increase (decrease) in advances from General Partner (2,160,994) 209,601
----------- -----------
Net cash provided by financing activities 468,159 211,074
------------ -----------
Decrease in cash (18,989) (2,922)
Cash, beginning of period 116,839 44,489
------------ -----------
Cash, end of period $ 97,850 $ 41,567
============ ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 339,705 $ 254,452
============ ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
<PAGE> 6
JONES CABLE INCOME FUND 1-B, 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-B, Ltd. (the "Partnership") at September 30, 1995 and December 31, 1994 and
its Statements of Operations for the three and nine month periods ended
September 30, 1995 and 1994 and its Statements of Cash Flows for the nine month
periods ended September 30, 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 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 and
Broomfield, Colorado; Lake County, California; Myrtle Creek, Oregon; 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 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, 1995 (exclusive of the
Partnership's approximate 40 percent interest in the Venture) were $63,042 and
$183,615, compared to $56,334 and $165,818, respectively, for the similar 1994
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 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 charged the Partnership by the General Partner for
allocated overhead and administrative expenses for the three and nine month
periods ending September 30, 1995 (exclusive of the Partnership's approximate
40 percent interest in the Venture) were $87,755 and $262,765, compared to
$79,576 and $248,663, respectively, for the similar 1994 periods.
(3) In August 1995, the Partnership entered into a purchase and sales
agreement with the General Partner, providing for the sale by the Partnership
to the General Partner of the Orangeburg System. The sales price is
$18,347,667, which is the average of three separate, independent appraisals of
the fair market value of the Orangeburg System. The General Partner has
assigned its rights and obligations under the purchase and sale agreement to
Jones Cable Holdings, Inc., a wholly owned subsidiary of the General Partner.
Closing is expected to occur in the first half of 1996. Proceeds from the sale
of the Orangeburg System will be used to repay Partnership debt of
approximately $6,600,000 with the remainder distributed to limited partners
pursuant to the partnership agreement. It is anticipated that such
distribution to limited partners will total approximately $11,290,000, or $278
per $1,000 invested in the Partnership. This amount is in addition to the $322
per $1,000 invested in the Partnership already returned to the limited partners
through prior distributions. The Partnership will retain its interest in the
Venture. No vote of the limited partners of the Partnership is required in
connection with this transaction because the assets of the Orangeburg System do
not constitute all or substantially all of the Partnership's assets. Jones
Cable Holdings, Inc. expects to acquire and then to transfer the Orangeburg
System, along with certain other properties that it will acquire from other
managed partnerships, to an unaffiliated cable television system operator
during the first half of 1996, as discussed below.
On August 11, 1995, the General Partner entered into an asset exchange
agreement (the "TWEAN Exchange Agreement") with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), an unaffiliated cable
6
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television system operator. Pursuant to the TWEAN Exchange Agreement, Jones
Cable Holdings, Inc. will convey to TWEAN the Orangeburg System along with
certain other properties and cash in the amount of $3,500,000, subject to
normal closing adjustments. In return, Jones Cable Holdings, Inc. will receive
from TWEAN the cable television systems serving Andrews Air Force Base, Capitol
Heights, Cheltenham, District Heights, Fairmount Heights, Forest Heights,
Morningside, Seat Pleasant, Upper Marlboro, and portions of Prince George's
County, all in Maryland, and portions of Fairfax County, Virginia. The closing
of the Orangeburg System sale, however, is not contingent upon the closing of
the Time Warner exchange.
The pro forma effect of the sale of the Orangeburg System on the
results of the Partnership's operations for the nine month periods ended
September 30, 1995 and 1994, assuming the transaction had occurred at the
beginning of the periods, is presented in the following unaudited tabulation:
<TABLE>
<CAPTION>
For the Nine Months Ended September 30, 1995
--------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
Revenues $ 3,672,304 $(3,672,304) $ -
=========== =========== ===========
Operating Income (Loss) $ (60,871) $ 60,871 $ -
=========== =========== ===========
Net Income (Loss) $(1,853,573) $ 454,447 $(1,399,126)
=========== =========== ===========
<CAPTION>
For the Nine Months Ended September 30, 1994
--------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
Revenues $ 3,316,359 $(3,316,359) $ -
=========== =========== ===========
Operating Income (Loss) $ (160,519) $ 160,519 $ -
=========== =========== ===========
Net Income (Loss) $(1,859,998) $ 476,755 $(1,383,243)
=========== =========== ===========
</TABLE>
7
<PAGE> 8
(4) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS September 30, 1995 December 31, 1994
------ ------------------ -----------------
<S> <C> <C>
Cash and accounts receivable $ 1,090,285 $ 769,260
Investment in cable television properties 49,915,281 53,281,053
Other assets 485,235 495,461
------------ ------------
Total assets $ 51,490,801 $ 54,545,774
============ ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Debt $ 43,115,968 $ 42,383,339
Payables and accrued liabilities 1,606,730 1,876,289
Partners' contributed capital 39,504,008 39,504,008
Accumulated deficit (32,735,905) (29,217,862)
------------ ------------
Total liabilities and partners' capital $ 51,490,801 $ 54,545,774
============ ============
</TABLE>
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------- ------------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 5,823,421 $ 5,330,688 $17,027,038 $15,822,865
Operating expenses (3,080,335) (3,007,731) (9,340,225) (8,940,861)
Management fees and allocated overhead from
Jones Intercable, Inc. (691,096) (646,464) (2,058,394) (1,993,259)
Depreciation and amortization (2,306,633) (2,144,074) (6,749,845) (6,462,837)
----------- ----------- ----------- -----------
Operating loss (254,643) (467,581) (1,121,426) (1,574,092)
Interest expense (783,925) (757,247) (2,559,041) (1,967,464)
Other, net 140,522 92,874 162,424 63,448
----------- ----------- ----------- -----------
Net loss $ (898,046) $(1,131,954) $(3,518,043) $(3,478,108)
=========== =========== =========== ===========
</TABLE>
Management fees paid to the General Partner by the Venture totaled
$291,171 and $851,352, respectively, for the three and nine months ended
September 30, 1995 compared to $266,534 and $791,143, respectively, for the
similar 1994 periods. Reimbursements for overhead and administrative expenses
totaled $399,925 and $1,207,042, respectively, for the three and nine months
ended September 30, 1995 compared to $379,930 and $1,202,116, respectively, for
the similar 1994 periods. Management fees paid by the Venture and attributable
to the Partnership totaled $115,799 and $338,583, respectively, for the three
and nine months ended September 30, 1995 compared to $106,001 and $314,638,
respectively, for the similar 1994 periods. Reimbursements for overhead and
administrative expenses attributable to the Partnership totaled $159,050 and
$480,040, respectively, for the three and nine months ended September 30, 1995
compared to $151,098 and $478,082, respectively, for the similar 1994 periods.
8
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JONES CABLE INCOME FUND 1-B, LTD.
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Partnership
For the nine months ended September 30, 1995, the Partnership
generated cash from operating activities totaling $462,837, which is available
to fund distributions and the capital requirements of the Partnership. During
the first nine months of 1995, approximately $950,000 was expended for capital
improvements within the Partnership's Orangeburg System. Construction of cable
television plant extensions accounted for approximately 34 percent of the
expenditures. Approximately 22 percent of these expenditures related to
service drops to homes. Approximately 18 percent of these expenditures related
to the purchase of converters. The remainder of the expenditures were for
various enhancements in the Orangeburg System. These expenditures were funded
by cash generated from operations and advances from the General Partner.
Anticipated capital expenditures for the remainder of 1995 are approximately
$110,000. The remainder of the expenditures is expected to relate to cable
plant extensions. Funding for these expenditures is expected to be provided by
cash generated from operations and, in its discretion, advances from the
General Partner.
In January 1995, the General Partner completed negotiations for a new
revolving credit facility with a maximum amount available of $8,500,000. The
partnership borrowed $5,800,000 to repay the then-outstanding balance of
$3,500,000 under the prior credit facility and to repay the General Partner its
advances. At September 30, 1995, $6,600,000 was outstanding, leaving
$1,900,000 of borrowings available. The revolving credit facility converts to
a term loan on December 31, 1997 at which time the then-outstanding loan
balance will be due in 20 consecutive quarterly installments beginning March
31, 1998. Interest on the revolving credit facility is at the Partnership's
option of the Prime rate plus 1/4 percent or the London Interbank Offered Rate
plus 1-1/2 percent. The effective interest rates on outstanding obligations
were 7.46 percent and 5.56 percent, respectively, at September 30, 1995 and
1994. The outstanding balance will be paid in full upon the sale of the
Orangeburg System.
In August 1995, the Partnership entered into a purchase and sales
agreement with the General Partner, providing for the sale by the Partnership
to the General Partner of the Orangeburg System. The sales price is
$18,347,667, which is the average of three separate, independent appraisals of
the fair market value of the Orangeburg System. The General Partner has
assigned its rights and obligations under the purchase and sale agreement to
Jones Cable Holdings, Inc., a wholly owned subsidiary of the General Partner.
Closing is expected to occur in the first half of 1996. Proceeds from the sale
of the Orangeburg System will be used to repay Partnership debt of
approximately $6,600,000 with the remainder distributed to limited partners
pursuant to the partnership agreement. It is anticipated that such
distribution to limited partners will total approximately $11,290,000, or $278
per $1,000 invested in the Partnership. This amount is in addition to the $322
per $1,000 invested in the Partnership already returned to the limited partners
through prior distributions. The Partnership will retain its interest in the
Venture. No vote of the limited partners of the Partnership is required in
connection with this transaction because the assets of the Orangeburg System do
not constitute all or substantially all of the Partnership's assets. Jones
Cable Holdings, Inc. expects to acquire and then to transfer the Orangeburg
System, along with certain other properties that it will acquire from other
managed partnerships, to an unaffiliated cable television system operator
during the first half of 1996, as discussed below.
On August 11, 1995, the General Partner entered into an asset exchange
agreement (the "TWEAN Exchange Agreement") with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), an unaffiliated cable
television system operator. Pursuant to the TWEAN Exchange Agreement, Jones
Cable Holdings, Inc. will convey to TWEAN the Orangeburg System along with
certain other properties and cash in the amount of $3,500,000, subject to
normal closing adjustments. In return, Jones Cable Holdings, Inc. will receive
from TWEAN the cable television systems serving Andrews Air Force Base, Capitol
Heights, Cheltenham, District Heights, Fairmount Heights, Forest Heights,
Morningside, Seat Pleasant, Upper Marlboro, and portions of Prince George's
County, all in Maryland, and portions of Fairfax County, Virginia. The closing
of the Orangeburg System sale, however, is not contingent upon the closing of
the Time Warner exchange. Refer to Note 3 of the Notes to Unaudited Financial
Statements for the pro forma effect of the
9
<PAGE> 10
sale of the Orangeburg System on the results of the Partnership's operations
for the nine month periods ended September 30, 1995 and 1994, assuming the
transaction had occurred at the beginning of the periods.
For the nine months ended September 30, 1995, the Partnership
generated cash from operating activities totaling $462,837. One of the primary
objectives of the Partnership is to provide quarterly distributions from cash
flow. In January 1995, the Partnership completed negotiations for a new
revolving credit agreement that is providing liquidity to fund capital
expenditures. The Partnership declared $250,000 in distributions for each of
the first three quarters of 1995. The Partnership will continue to provide
some level of distributions from cash generated from operations until the
Orangeburg System is sold. Subsequent to the sale of the Orangeburg System,
distributions will be limited to only the distributions received by the
Partnership from the Venture. The Venture is not making distributions
currently and does not anticipate the resumption of distributions in the near
term. No determination has been made regarding the level of the future
distributions. The level of distributions, if any, will be determined on a
quarter-by-quarter basis.
The General Partner believes that the Partnership has sufficient
sources of capital available from cash generated from operations and borrowings
available under its credit facility to meet its presently anticipated needs
until the closing of the sale of the Orangeburg System.
The Venture
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, 1994 balance, this investment has decreased by
$1,399,126. This decrease represents the Partnership's proportionate share of
losses generated by the Venture during the first nine months of 1995. The
Venture's losses, which are principally the result of depreciation and
amortization charges, are expected to continue throughout the remainder of
1995.
For the nine months ended September 30, 1995, the Venture generated
net cash from operating activities totaling $2,866,523, which is available to
fund capital expenditures and non-operating costs. During the first nine
months of 1995, capital improvements within the Venture's systems totaled
approximately $3,266,000. Approximately 22 percent of these expenditures were
for service drops to homes, approximately 16 percent were for pay security and
approximately 10 percent were for the rebuild and upgrade of the Venture's
Systems. The remainder of these expenditures related to various enhancements
in all of the Venture's systems. Funding for these expenditures was provided
by cash generated from operations and borrowings under the Venture's credit
facility. Anticipated capital expenditures for the remainder of 1995 are
approximately $1,819,000. System upgrades and rebuilds are expected to account
for approximately 37 percent of the expenditures, and service drops to homes
are expected to account for approximately 23 percent of the anticipated
expenditures. The remainder of the expenditures will be for various
enhancements in the Venture's systems. Funding for these expenditures is
expected to be provided by cash generated from operations and available
borrowings from the Venture's credit facility.
At September 30, 1995, the Venture's $45,000,000 credit facility had
$42,700,000 outstanding, leaving $2,300,000 of available borrowings. The
revolving credit facility matures on June 30, 1997, at which time the
outstanding balance is payable in full. 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, 1995 and 1994 were 7.38 percent and 6.45 percent, respectively.
In January 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 for LIBOR interest
rates that exceed 7 percent for three years from the date of the agreement.
One of the primary objectives of the Venture is to provide quarterly
cash distributions to the Venture's partners, primarily from cash generated
through operating activities of the Venture. The Venture's partners in turn
seek to provide quarterly cash distributions to their limited partners. The
Venture's credit facility has a maximum amount available of $45,000,000, of
which $42,700,000 was outstanding on September 30, 1995. This limits the
amount of borrowing available to the Venture to fund capital expenditures;
therefore, the Venture used cash generated from operations to fund capital
expenditures and did not declare any distributions during the first, second and
third quarters of 1995. Due to these borrowing limitations, the Venture will
need to use cash generated from operations to fund capital expenditures and the
Venture does not anticipate the resumption of distributions to the Venture's
partners in the near term.
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<PAGE> 11
The General Partner believes that the Venture has sufficient sources
of capital available from cash generated from operations and from borrowings
available under its credit facility to meet its presently anticipated needs so
long as the Venture does not resume cash distributions.
Regulatory Matters
The FCC's rate regulations related to the 1992 Cable Act contain
provisions for increasing rates for added channels, external costs and
inflation. The Partnership and the Venture have been able to adjust rates
recently under such provisions. Such adjustments, together with a reduction in
the cost of implementing the 1992 Cable Act compared to such costs in prior
periods, are expected to cause the Partnership's and the Venture's revenue and
cash flow to increase in fiscal 1996.
Currently, there is legislation before Congress which, if enacted,
would significantly change the regulatory environment in which the cable
industry operates. Such legislation may eliminate rate regulation and allow
telephone companies and others much broader entry into the cable television
business and, in turn, may allow cable operators into the telephone and other
telecommunications businesses. While the General Partner is encouraged by
provisions of the legislation, it is too early to assess the impact such
legislation, if enacted, would have on the Partnership and the Venture.
RESULTS OF OPERATIONS
The Partnership
Revenues of the Partnership's Orangeburg System increased $134,164, or
approximately 12 percent, to $1,260,839 for the three months ended at September
30, 1995 from $1,126,675 at September 30, 1994. For the nine month periods,
revenues increased $355,945, or approximately 11 percent, to $3,672,304 at
September 30, 1995 from $3,316,359 at September 30, 1994. An increase in the
number of basic subscribers combined with basic service rate adjustments
implemented in the Orangeburg System primarily accounted for the increases in
revenues. The increase in the number of basic subscribers accounted for
approximately 24 percent of the increase in revenues for the three and nine
months ended September 30, 1995 and the basic service rate adjustments
accounted for approximately 30 percent and 25 percent of the increase in
revenues for the similar periods. Since September 30, 1994, the Partnership
has added 482 basic subscribers, representing an increase of approximately 4
percent. The number of basic subscribers increased to 12,309 at September 30,
1995 from 11,827 at September 30, 1994. No other individual factor was
significant to the change 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 $50,083, or approximately 7 percent, to
$743,325 for the three months ended September 30, 1995 from $693,242 at
September 30, 1994. For the nine month periods ended September 30, 1995 and
1994, operating expenses increased $277,533, or approximately 14 percent, to
$2,285,461 at September 30, 1995 from $2,007,928 at September 30, 1994.
Operating expenses represented 59 percent and 62 percent of revenues for the
three and nine month periods of 1995 compared to 62 percent and 61 percent,
respectively, for the three and nine months ended September 30, 1994. The
increases in operating expenses were primarily due to increases in personnel
costs and programming expenses. No other individual factor significantly
affected the increases in expenses.
Management fees and allocated overhead from the General Partner
increased $14,887, or approximately 11 percent, to $150,797 at September 30,
1995 from $135,910 at September 30, 1994. For the nine months ended September
30, 1995 and 1994, management fees and allocated overhead from the General
Partner increased $31,899, or approximately 8 percent, to $446,380 in 1995 from
$414,481 in 1994. These increases were due to increases in revenues, upon
which such fees are based, as well as increases in allocated expenses from the
General Partner. The General Partner has experienced increases in expenses, a
portion of which is allocated to the Partnership.
11
<PAGE> 12
Depreciation and amortization expense increased $12,207, or
approximately 4 percent, to $331,527 for the three months ended September 30,
1995 from $319,320 at September 30, 1994. This increase was due to capital
additions and amortization of loan fees. For the nine months ended September
30, 1995 and 1994, depreciation and amortization expense decreased $53,135, or
approximately 5 percent, to $1,001,334 in 1995 from $1,054,469 in 1994. This
decrease was due to the maturation of the intangible asset base.
The Partnership recognized operating income of $35,190 for the three
month period ended September 30, 1995 as compared to an operating loss of
$21,797 at September 30, 1994. This change in income was due to the increases
in revenue exceeding the increases in operating expenses, management fees and
allocated overhead from the General Partner and depreciation and amortization
expense. Operating loss decreased $99,648, or approximately 62 percent to
$60,871 for the nine months ended September 30, 1995 from $160,519 at September
30, 1994. This decrease was the result of the increases in revenue and
decreases in depreciation and amortization exceeding the increases in operating
expenses, management fees and allocated overhead from the General Partner.
The cable television industry generally measures the 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 $69,194, or approximately 23
percent, to $366,717 for the three months ended September 30, 1995 from
$297,523 at September 30, 1994. For the nine months ended September 30, 1995
and 1994, operating income before depreciation and amortization increased
$46,513, or approximately 5 percent, to $940,463 in 1995 from $893,950 in 1994.
These increases were a result of the increases in revenue exceeding the
increases in operating expenses and management fees and allocated overhead from
the General Partner.
Interest expense increased $71,477 to $140,172 for the three months
ended September 30, 1995 from $68,695 at September 30, 1994. For the nine
months ended September 30, 1995 and 1994, interest expense increased $137,525,
or approximately 54 percent, to $393,684 from $256,159, respectively. These
increases were due primarily to higher effective rates on interest bearing
obligations.
Loss before equity in net loss of cable television joint venture
decreased $844, or less than 1 percent, to $104,669 for the three months ended
September 30, 1995 from $103,825 at September 30, 1994 . For the nine months
ended September 30, 1994 and 1995, loss before equity in net loss of cable
television joint venture decreased $22,308, or approximately 5 percent, to
$454,447 at September 30, 1995 from $476,755 at September 30, 1994 . These
decreases were due primarily to the factors discussed above.
The Venture
In addition to its Orangeburg System, the Partnership owns an
approximate 40 percent interest in the Venture.
Revenues of the Venture increased $492,733, or approximately 9
percent, to $5,823,421 from $5,330,688 for the three months ended September 30,
1995 compared to 1994. For the nine month periods ended September 30, 1995 and
1994, revenues increased $1,204,173, or approximately 8 percent, to $17,027,038
at September 30, 1995 from $15,822,865 at September 30, 1994. An increase in
the number of basic subscribers combined with basic service rate adjustments
implemented in the Venture's systems primarily accounted for the increase in
revenues. The increase in the number of basic subscribers accounted for
approximately 31 percent and 45 percent of the increase in revenues for the
three and nine months ended September 30, 1995 and the basic service rate
adjustments accounted for approximately 38 percent and 31 percent of the
increase in revenues for the similar periods. Since September 30, 1994, the
Venture has added 2,065 basic subscribers representing an increase of
approximately 3 percent. Basic subscribers increased to 64,130 at September
30, 1995 from 62,065 at September 30, 1994. Increases in pay per view revenue
accounted for approximately 11 percent and 5 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 expenses consist primarily of costs associated with the
administration of the Venture'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.
12
<PAGE> 13
Operating expenses increased $72,604, or approximately 2 percent, to
$3,080,335 from $3,007,731 for the three months ended September 30, 1995
compared to 1994. For the nine months ended September 30, 1995 and 1994,
operating expenses increased $399,364, or approximately 4 percent, to
$9,340,225 at September 30, 1995 from $8,940,861 at September 30, 1994.
Operating expenses represented 53 percent and 55 percent, respectively, of
revenue for the three and nine month periods ended September 30, 1995 compared
to 56 percent for both the three and nine month periods ended September 30,
1994. For the three month periods ended September 30, 1995, increased
programming costs primarily accounted for the increases in operating expenses,
which were partially offset by decreases in personnel and plant related
expenses. For the nine month period ended September 30, 1995, increased
programming costs primarily accounted for the increases in operating expenses,
which were partially offset by decreases in personnel, office and advertising
expenses. No other individual factors were significant to the increases in
operating expenses.
Management fees and allocated overhead from the General Partner
increased $44,632, or approximately 7 percent, to $691,096 from $646,464 for
the three months ended September 30, 1995 compared to 1994. For the nine
months ended September 30, 1995 and 1994, management fees and allocated
overhead from the General Partner increased $65,135, or approximately 3
percent, to $2,058,394 at September 30, 1995 from $1,993,259 at September 30,
1994. These increases are due to the increases in revenues, upon which such
management fees are based, as well as increases in allocated expenses from the
General Partner. The General Partner has experienced increases in expenses, a
portion of which is allocated to the Venture.
Depreciation and amortization expense increased $162,559, or
approximately 8 percent, to $2,306,633 for the three months ended September 30,
1995 from $2,144,074, compared to 1994. For the nine months ended September
30, 1995 and 1994, depreciation and amortization expense increased $287,008, or
approximately 4 percent, to $6,749,845 at September 30, 1995 from $6,462,837 at
September 30, 1994. These increases were due to the increase in the Venture's
depreciable asset base.
Operating loss decreased $212,938, or approximately 46 percent, to
$254,643 from $467,581 for the three months ended September 30, 1995 compared
to 1994. Operating loss decreased $452,666, or approximately 29 percent, to
$1,121,426, from $1,574,092 for the nine months ended September 30, 1995 as
compared to 1994. These decreases were a result of the increase in revenues
exceeding the increases in operating expenses, management fees and allocated
overhead from the General Partner and depreciation and amortization expense.
The cable television industry generally measures the 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 $375,497, or approximately 22
percent, to $2,051,990 for the three months ended September 30, 1995 from
$1,676,493 for the three months ended September 30, 1994. For the nine month
periods, operating income before depreciation and amortization increased
$739,674, or approximately 15 percent, to $5,628,419 in 1995 from $4,888,745 in
1994. These increases were due to the increase in revenues exceeding the
increases in operating expense and management fees and allocated overhead from
the General Partner.
Interest expense increased $26,678, or approximately 4 percent, to
$783,925 from $757,247 for the three months ended September 30, 1995 as
compared to 1994. For the nine months ended September 30, 1995 and 1994,
interest expense increased $591,577, or approximately 30 percent, to $2,559,041
in 1995 from $1,967,464 in 1994. A higher balance on outstanding obligations
and higher effective interest rates were responsible for the increase in
interest expense.
Net loss decreased $140,883, or approximately 21 percent for the three
month periods ended September 30, 1995 and 1994, to $540,893 in 1995 from
$681,776 in 1994. This decrease was due to the factors discussed above. For
the nine month periods ended September 30, 1995 and 1994, net loss increased
$24,052, or approximately 1 percent, to $2,118,917 in 1995 from $2,094,865 in
1994. This increase was due to the factors discussed above and the 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, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
-----------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: November 14, 1995
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT 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-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 97,850
<SECURITIES> 0
<RECEIVABLES> 226,492
<ALLOWANCES> (19,902)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,751,536
<DEPRECIATION> (5,643,729)
<TOTAL-ASSETS> 10,499,057
<CURRENT-LIABILITIES> 751,269
<BONDS> 6,673,153
<COMMON> 0
0
0
<OTHER-SE> 3,074,635
<TOTAL-LIABILITY-AND-EQUITY> 10,499,057
<SALES> 0
<TOTAL-REVENUES> 3,672,304
<CGS> 0
<TOTAL-COSTS> 3,733,175
<OTHER-EXPENSES> (108)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 393,684
<INCOME-PRETAX> (1,853,573)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,853,573)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,853,573)
<EPS-PRIMARY> (21.87)
<EPS-DILUTED> 0
</TABLE>
