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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission file number: 0-14906
JONES CABLE INCOME FUND 1-B, LTD.
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(Exact name of registrant as specified in its charter)
Colorado 84-1010417
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(State of Organization) (IRS Employer Identification No.)
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P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
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(Address of principal executive office and Zip Code) (Registrant's telephone no. including area code)
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership
Interests
Indicate by check mark whether the registrants, (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days:
Yes x No
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Aggregate market value of the voting stock held by non-affiliates of the
registrant: N/A
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (section 229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE: None
(21637)
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PART I.
ITEM 1. BUSINESS
THE PARTNERSHIP. Jones Cable Income Fund 1-B, Ltd. (the "Partnership")
is a Colorado limited partnership that was formed pursuant to the public
offering of limited partnership interests in the Jones Cable Income Fund 1
Limited Partnership Program (the "Program"), which was sponsored by Jones
Intercable, Inc. (the "General Partner"). Jones Cable Income Fund 1-A, Ltd. and
Jones Cable Income Fund 1-C, Ltd. ("Fund 1-C") are the other partnerships that
were formed pursuant to the Program. The Partnership and Fund 1-C formed a
general partnership known as Jones Cable Income Fund 1-B/C Venture (the
"Venture") in which the Partnership owns a 40 percent interest and Fund 1-C owns
a 60 percent interest. The Partnership and the Venture were formed for the
purpose of acquiring and operating cable television systems
Since the sale of the cable television system serving Orangeburg, South
Carolina (the "Orangeburg System") as described below, the Partnership does not
directly own any cable television systems. The Partnership's only asset is its
40 percent interest in the Venture. The Venture owns the cable television
systems serving the communities of Brighton and Broomfield and portions of
Boulder County, Colorado (the "Brighton/Broomfield System"), Clearlake Oaks,
California (the "Clearlake Oaks System"), Canyonville, Myrtle Creek, Riddle and
Winston, Oregon (the "Myrtle Creek System"), South Sioux City, Nebraska (the
"South Sioux City System") and Three Rivers, Schoolcraft/Vicksburg,
Constantine/White Pigeon, Dowagiac, Watervliet and Vandalia, Michigan (the
"Southwestern Michigan System"). The Brighton/Broomfield System, Clearlake Oaks
System, Myrtle Creek System, South Sioux City System and the Southwestern
Michigan System may hereinafter collectively be referred to as the "Systems."
One of the primary objectives of the Partnership is to provide
quarterly cash distributions to its partners. Such cash returns are primarily
from cash generated through the operating activities of the Partnership and from
the distributions made to the Partnership from the Venture. The distribution
declared for the year ended December 31, 1995 was $1,010,100. Distributions were
not declared in 1994 due to the Partnership's need to use cash generated from
operations to fund capital expenditures. As a result of the sale of the
Orangeburg System, the Partnership's quarterly cash distributions will be
limited to 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. The timing and level of future
distributions, if any, will be determined on a quarter-by-quarter basis. As
described below, the limited partners will receive a distribution of a portion
of the net proceeds from the Orangeburg System sale in April 1996.
DISPOSITION OF CABLE TELEVISION SYSTEM. On February 28, 1996, the
Partnership sold the Orangeburg System to Jones Cable Holdings, Inc., a wholly
owned subsidiary of the General Partner, for a sales price of $18,347,667,
subject to normal working capital closing adjustments of approximately $376,000,
which were deducted from the sale proceeds. The sales price was the average of
three separate, independent appraisals of the fair market value of the
Orangeburg System. Proceeds from the sale of the Orangeburg System were used to
repay Partnership debt of approximately $6,866,000, and the remaining
$11,105,000 will be distributed to limited partners in April 1996 pursuant to
the partnership agreement. The distribution of $11,105,000 represents a return
to each limited partner of $265 per $1,000 invested in the Partnership. This
amount is in addition to the $328 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 was required in connection with this transaction because the assets
of the Orangeburg System did not constitute all or substantially all of the
Partnership's assets.
On February 29, 1996, Jones Cable Holdings, Inc., pursuant to an asset
exchange agreement (the "TWEAN Exchange Agreement") with Time Warner
Entertainment-Advance/Newhouse Partnership ("TWEAN"), an unaffiliated cable
television system operator, conveyed to TWEAN the Orangeburg System along with
certain other properties and cash in the amount of $3,500,000, subject to normal
working capital closing adjustments. In return, Jones Cable Holdings, Inc.
received from TWEAN the cable television systems serving Andrews Air Force Base,
Capitol Heights, Cheltenham, District Heights, Fairmount Heights, Forest
Heights,
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Morningside, Seat Pleasant, Upper Marlboro, and portions of Prince George's
County, all in Maryland, and portions of Fairfax County, Virginia.
CABLE TELEVISION SERVICES. The Systems offer to their subscribers
various types of programming, which include basic service, tier service, premium
service, pay-per-view programs and packages including several of these services
at combined rates.
Basic cable television service usually consists of signals of all four
national television networks, various independent and educational television
stations (both VHF and UHF) and certain signals received from satellites. Basic
service also usually includes programs originated locally by the system, which
may consist of music, news, weather reports, stock market and financial
information and live or videotaped programs of a public service or entertainment
nature. FM radio signals are also frequently distributed to subscribers as part
of the basic service.
The Systems offer tier services on an optional basis to their
subscribers. A tier generally includes most of the cable networks such as
Entertainment and Sports Programming Network (ESPN), Cable News Network (CNN),
Turner Network Television (TNT), Family Channel, Discovery and others, and the
cable television operators buy tier programming from these networks. The Systems
also offer a package that includes the basic service channels and the tier
services.
The Systems also offer premium services to their subscribers, which
consist of feature films, sporting events and other special features that are
presented without commercial interruption. The cable television operators buy
premium programming from suppliers such as HBO, Showtime, Cinemax or others at a
cost based on the number of subscribers the cable operator serves. Premium
service programming usually is significantly more expensive than the basic
service or tier service programming, and consequently cable operators price
premium service separately when sold to subscribers.
The Systems also offer to subscribers pay-per-view programming.
Pay-per-view is a service that allows subscribers to receive single programs,
frequently consisting of motion pictures that have recently completed their
theatrical exhibitions and major sporting events, and to pay for such service on
a program-by-program basis.
REVENUES. Monthly service fees for basic, tier and premium services
constitute the major source of revenue for the Systems. At December 31, 1995,
the Systems' monthly basic service rates ranged from $5.00 to $16.50, monthly
basic and tier ("basic plus") service rates ranged from $15.25 to $23.14 and
monthly premium services ranged from $4.00 to $12.95 per premium service. In
addition, the Venture earns revenues from the Systems' pay-per-view programs and
advertising fees. Related charges may include a nonrecurring installation fee
that ranges from $5.00 to $40.00; however, from time to time the Systems have
followed the common industry practice of reducing or waiving the installation
fee during promotional periods. Commercial subscribers such as hotels, motels
and hospitals are charged a nonrecurring connection fee that usually covers the
cost of installation. Except under the terms of certain contracts with
commercial subscribers and residential apartment and condominium complexes, the
subscribers are free to discontinue the service at any time without penalty. For
the year ended December 31, 1995, of the total fees received by the Systems,
basic service and tier service fees accounted for approximately 69% of total
revenues, premium service fees accounted for approximately 17% of total
revenues, pay-per-view fees were approximately 2% of total revenues, advertising
fees were approximately 3% of total revenues and the remaining 9% of total
revenues came principally from equipment rentals, installation fees and program
guide sales. The Venture is dependent upon the timely receipt of service fees to
provide for maintenance and replacement of plant and equipment, current
operating expenses and other costs of the Systems.
FRANCHISES. The Systems are constructed and operated under
non-exclusive, fixed-term franchises or other types of operating authorities
(referred to collectively herein as "franchises") granted by local governmental
authorities. These franchises typically contain many conditions, such as time
limitations on commencement and completion of construction, conditions of
service, including the number of channels, types of programming and the
provision of free service to schools and certain other public institutions, and
the maintenance of insurance and indemnity bonds. The provisions of local
franchises are subject to federal regulation.
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The Venture holds 55 franchises relating to the Systems. These
franchises provide for the payment of fees to the issuing authorities and
generally range from 3% to 5% of the gross revenues of a cable television
system. The 1984 Cable Act prohibits franchising authorities from imposing
annual franchise fees in excess of 5% of gross revenues and also permits the
cable television system operator to seek renegotiation and modification of
franchise requirements if warranted by changed circumstances.
The Venture has never had a franchise revoked. The Venture's franchise
expiration dates range from April 1996 to August 2014. The Venture is currently
negotiating the renewal of the 2 franchises that will expire prior to December
31, 1996, and the General Partner has no reason to believe that such franchises
will not be renewed in due course. The General Partner recently has experienced
lengthy negotiations with some franchising authorities for the granting of
franchise renewals. Some of the issues involved in recent renewal negotiations
include rate regulation, customer service standards, cable plant upgrade or
replacement and shorter terms of franchise agreements.
COMPETITION. Cable television systems currently experience competition
from several sources. A potential source of significant competition is Direct
Broadcast Satellite ("DBS") services that use video compression technology to
increase channel capacity and provide packages of movies, network and other
program services that are competitive with those of cable television systems.
Two companies offering DBS services began operations in 1994, and two other
companies offering DBS service recently began operations. In addition, a joint
venture has won the right to provide a DBS service through a FCC spectrum
auction. Not all subscribers terminate cable television service upon acquiring a
DBS system. The General Partner has observed that a number of DBS subscribers
also elect to subscribe to cable television service in order to obtain the
greatest variety of programming on multiple television sets, including local
video services programming not available through DBS service.
Although neither the Venture nor the General Partner has yet
encountered competition from a telephone company providing video services as a
cable operator or video dialtone operator, it is anticipated that the cable
television systems owned or managed by the General Partner will face such
competition in the near future. Legislation recently enacted into law will make
it possible for companies with considerable resources to enter the business. For
example, in February 1996, one of the regional Bell operating companies entered
into an agreement to acquire the nation's third largest cable television
company. In addition, several telephone companies have begun seeking cable
television franchises from local governmental authorities as a consequence of
litigation that successfully challenged the constitutionality of the cable
television/telephone company cross-ownership rules. The General Partner cannot
predict at this time when and to what extent telephone companies will provide
cable television service within service areas in competition with cable
television systems owned or managed by the General Partner.
The General Partner is aware of the following imminent competition from
telephone companies: Ameritech, one of the seven regional Bell operating
companies, which provides telephone service in a multi-state region including
Illinois, has just obtained a franchise that will allow it to provide cable
television service in Naperville, Illinois, a community currently served by a
cable system owned by another one of the public limited partnerships managed by
the General Partner. Chesapeake and Potomac Telephone Company of Virginia and
Bell Atlantic Video Service Company, both subsidiaries of Bell Atlantic, another
of the regional Bell operating companies, have announced their intention to
build a cable television system in Alexandria, Virginia in competition with a
cable television system owned by the General Partner. Bell Atlantic is preparing
for the operation of a telecommunications and video business in northern
Virginia, including the Alexandria metropolitan area. The FCC has granted GTE
Virginia's application for authority to construct, operate, own and maintain
video dialtone facilities in northern Virginia, including in the service area of
a cable television system owned by the General Partner. To date, GTE has not
begun construction of a video distribution system. The entry of telephone
companies as direct competitors could adversely affect the profitability and
market value of the General Partner's owned and managed systems.
Additional competition is present from several sources, including the
following: Master Antenna Television and Satellite Master Antenna Television
systems that serve multi-unit dwellings such as condominiums,
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apartment complexes, motels, hotels and private residential communities; private
cable television/telephonic companies that have secured exclusive contracts to
provide video and telephony services to multi-unit dwellings and similar
complexes; and multichannel, multipoint distribution service ("MMDS") systems,
commonly called wireless cable which generally focus on providing service to
residents of rural areas. In addition, the FCC has established a new wireless
telecommunications service known as Personal Communications Service ("PCS") that
would provide portable non-vehicular mobile communications services similar to
that available from cellular telephone companies, but at a lower cost. Several
cable television multiple system operators hold or have requested experimental
licenses from the FCC to test PCS technology.
REGULATION AND LEGISLATION. The cable industry is regulated under the
Telecommunications Act of 1996 (the "1996 Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act") and the Cable
Communications Policy Act of 1984 (the "1984 Cable Act") and the regulations
implementing these statutes. The Federal Communications Commission (the "FCC")
has promulgated regulations covering such areas as the registration of cable
television systems and other communications businesses, carriage of television
broadcast programming, consumer education and lockbox enforcement, origination
cablecasting and sponsorship identification, children's programming, the
regulation of basic cable and cable programming service rates in areas where
cable television systems are not subject to effective competition, signal
leakage and frequency use, technical performance, maintenance of various
records, equal employment opportunity, and antenna structure notification,
marking and lighting. In addition, cable operators periodically are required to
file various informational reports with the FCC. The FCC has the authority to
enforce these regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of administrative
sanctions, such as the revocation of FCC licenses needed to operate certain
transmission facilities often used in connection with cable operations. State or
local franchising authorities, as applicable, also have the right to enforce
various regulations, impose fines or sanctions, issue orders or seek revocation
subject to the limitations imposed upon such franchising authorities by federal,
state and local laws and regulations. Several states have assumed regulatory
jurisdiction of the cable television industry, and it is anticipated that other
states will do so in the future. To the extent the cable television industry
begins providing telephone service, additional state regulations will be applied
to the cable television industry. Cable television operations are subject to
local regulation insofar as systems operate under franchises granted by local
authorities.
The following is a summary of federal laws and regulations materially
affecting the cable television industry, and a description of state and local
laws with which the cable industry must comply.
Telecommunications Act of 1996. The 1996 Act, which became law on
February 28, 1996, substantially revised the Communications Act of 1934, as
amended, including the 1984 Cable Act and the 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934. The 1996 Act is intended, in
part, to promote substantial competition in the telephone local exchange and in
the delivery of video and other services. As a result of the 1996 Act, local
telephone companies (also known as local exchange carriers or "LECs") and other
service providers are permitted to provide video programming, and cable
television operators are permitted entry into the telephone local exchange
market. The FCC is required to conduct rulemaking proceedings over the next
several months to implement various provisions of the 1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
effective March 31, 1999 and the cable programming service tier of small cable
operators (those that provide service to 50,000 or fewer subscribers) effective
immediately. The 1996 Act also revised the procedures for filing a cable
programming service tier rate complaint and adds a new effective competition
test.
The most far-reaching changes in the communications business will
result from the telephony provisions of the 1996 Act. The statute expressly
preempts any legal barriers to competition in the local telephone business that
previously existed in state and local laws and regulations. Many of these
barriers had been lifted by state actions over the last few years, but the 1996
Act completes the task. The 1996 Act also establishes new
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requirements for maintaining and enhancing universal telephone service and new
obligations for telecommunications providers to maintain privacy of customer
information. The 1996 Act establishes uniform requirements and standards for
entry, competitive carrier interconnection and unbundling of LEC monopoly
services.
The 1996 Act repealed the cable television/telephone cross-ownership
ban adopted in the 1984 Cable Act. The federal cross-ownership ban was
particularly important to the cable industry because telephone companies already
own certain facilities such as poles, ducts and associated rights of way. While
this ban had been overturned by several courts, formal removal of the ban ended
the last legal constraints on telephone company plans to enter the cable market.
Under the 1996 Act, telephone companies in their capacity as common carriers now
may lease capacity to others to provide cable television service. Telephone
companies have the option of providing video service as cable operators or
through "open video systems" ("OVS"), a regulatory regime that may provide more
flexibility than traditional cable service. The 1996 Act exempts OVS operators
from many of the regulatory obligations that currently apply to cable operators,
such as rate regulation and franchise fees, although other requirements are
still applicable. OVS operators, although not subject to franchise fees as
defined by the 1992 Cable Act, are subject to fees charged by local franchising
authorities or other governmental entities in lieu of franchise fees. (Under
certain circumstances, cable operators also will be able to offer service
through open video systems.) In addition, the 1996 Act eliminated the
requirement that telephone companies file Section 214 applications (applications
to provide video dialtone services) with the FCC before providing video service.
This limits the opportunity of cable operators to mount challenges at the FCC
regarding telephone company entry into the video market. The 1996 Act also
contains restrictions on buying out incumbent cable operators in a telephone
company's service area, especially in suburban and urban markets.
Other parts of the 1996 Act also will affect cable operators. Under the
1996 Act, the FCC is required to revise the current pole attachment rate
formula. This revision will result in an increase in the rates paid by entities,
including cable operators, that provide telecommunication services. The rates
will be phased in after a five-year period. (Cable operators that provide only
cable services will be unaffected.) Under the V-chip provisions of the 1996 Act,
cable operators and other video providers are required to pass along any program
rating information that programmers include in video signals. Cable operators
also are subject to new scrambling requirements for sexually explicit
programming, and cable operators that provide Internet access or other online
services are subject to the new indecency limitations for computer services. In
addition, cable operators that provide Internet access or other online services
are subject to the new indecency limitations for computer services, although
these provisions already have been challenged in court, and the courts have
preliminarily enjoined the enforcement of these content-based provisions.
Under the 1996 Act, a franchising authority may not require a cable
operator to provide telecommunications services or facilities, other than an
institutional network, as a condition to a grant, renewal or transfer of a cable
franchise, and franchising authorities are preempted from regulating
telecommunications services provided by cable operators and from requiring cable
operators to obtain a franchise to provide such services. The 1996 Act also
repealed the 1992 Cable Act's anti-trafficking provision, which generally
required the holding of cable television systems for three years.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Partnership in particular. The FCC shortly will
be undertaking numerous rulemaking proceedings to interpret and implement the
1996 Act. It is not possible at this time to predict the outcome of those
proceedings or their effect on the Partnership.
Cable Television Consumer Protection and Competition Act of 1992. The
1992 Cable Act, which became effective on December 4, 1992, caused significant
changes to the regulatory environment in which the cable television industry
operates. The 1992 Cable Act generally mandated a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable television systems in the United States,
including those owned and managed by the General Partner, became
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subject to rate regulation of basic cable services. In addition, the 1992 Cable
Act allowed 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 General Partner on behalf of the
Partnership reduced rates charged for certain regulated services in the
Partnership's cable systems effective September 1, 1993. These reductions
resulted in some decrease in Partnership revenues and operating income before
depreciation and amortization; however, the decrease was not as severe as
originally anticipated. The General Partner has undertaken 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 generally required 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. Further rate reductions for
cable systems whose rates are below the revised benchmark levels, as well as
reductions that would require operators to reduce rates below benchmark levels
in order to achieve a 17 percent rate reduction, were held in abeyance pending
completion of cable system cost studies. The FCC recently requested some of
these "low price" systems to complete cost study questionnaires. After review of
these questionnaires, the FCC could decide to permanently defer any further rate
reductions, or require the additional 7 percent rate roll back for some or all
of these systems. The FCC has also adopted its proposed upgrade methodology by
which operators would be permitted to recover the costs of upgrading their
plant.
After analyzing the effects of the two methods of rate regulation, the
Venture elected to file cost-of-service showings for its Brighton/Broomfield
System, Myrtle Creek System, South Sioux City System and Southwestern Michigan
System. The General Partner thus anticipates no further reduction in revenues or
operating income before depreciation and amortization in these systems resulting
from the FCC's rate regulations. At this time, however, the regulatory
authorities have not approved the cost-of-service showings, and there can be no
assurance that the Venture's cost-of-service showings will prevent further rate
reductions in these systems until such final approval is received. The Venture
complied with the new benchmark regulations and further reduced rates in its
Clearlake Oaks System in July 1994.
On November 10, 1994, the FCC also announced a revision to its
regulations governing the manner in which cable operators may charge subscribers
for new cable programming services. In addition to the present formula for
calculating the permissible rate for new services, the FCC instituted a
three-year flat fee mark-up plan for charges relating to new channels of cable
programming services. Commencing on January 1, 1995, cable system operators may
charge for new channels of cable programming services added after May 14, 1994
at a rate of up to 20 cents per channel, but may not make adjustments to monthly
rates totaling more than $1.20 plus an additional 30 cents for programming
license fees per subscriber over the first two years of the three-year period
for these new services. Operators may charge an additional 20 cents in the third
year only for channels added in that year plus the costs for the programming.
Operators electing to use the 20 cent per channel adjustment may not also take a
7.5 percent mark-up on programming cost increases, which is permitted under the
FCC's current rate regulations. The FCC has requested further comment as to
whether cable operators should continue to receive the 7.5 percent mark-up on
increases in license fees on existing programming services.
The FCC also announced that it will permit operators to offer a "new
product tier" ("NPT"). Operators will be able to price the NPT as they elect so
long as, among other conditions, other channels that are subject to rate
regulation are priced in conformity with applicable regulations and operators do
not remove programming services from existing tiers and offer them on the NPT.
In September 1995, the FCC authorized a new, alternative method of
implementing rate adjustments which will allow cable operators to increase rates
for programming annually on the basis of projected increases in external costs
(inflation, costs for programming, franchise-related obligations and changes in
the number of
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regulated channels) rather than on the basis of cost increases incurred in the
preceding calendar quarter. Operators that elect not to recover all of their
accrued external costs and inflation pass-throughs each year may recover them
(with interest) in subsequent years.
In December 1995, the FCC adopted final cost-of-service rate
regulations requiring, among other things, cable operators to exclude 34 percent
of system acquisition costs related to intangible and tangible assets used to
provide regulated services. The FCC also reaffirmed the industry-wide 11.25
percent after tax rate of return on an operator's allowable rate base, but
initiated a further rulemaking in which it proposes to use an operator's actual
debt cost and capital structure to determine an operator's cost of capital or
rate of return. After a rate has been set pursuant to a cost-of-service showing,
rate increases for regulated services are indexed for inflation, and operators
are permitted to increase rates in response to increases in costs beyond their
control, such as taxes and increased programming costs.
The United States Court of Appeals for the District of Columbia Circuit
recently upheld the FCC's rate regulations implemented pursuant to the 1992
Cable Act, but ruled that the FCC impermissibly failed to permit cable operators
to adjust rates for certain cost increases incurred during the period between
the date the 1992 Cable Act was passed through the initial date of rate
regulation. The FCC has not yet implemented the court's ruling.
There have been several lawsuits filed by cable operators and
programmers in federal court challenging various aspects of the 1992 Cable Act
including its 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. On December 12, 1995, the three-judge federal district court
again upheld the must-carry rules' validity. This decision has been appealed to
the United States Supreme Court.
In 1993, a federal district court 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. The
FCC's regulations relating to the carriage of indecent programming, which were
recently upheld by the United States Court of Appeals for the District of
Columbia, have been appealed to the United States Supreme Court.
Franchising. The responsibility for franchising or other authorization
of cable television systems is left to state and local authorities. There are,
however, several provisions in the 1984 Cable Act that govern the terms and
conditions under which cable television systems provide service. These include
uniform standards and policies that are applicable to cable television operators
seeking renewal of a cable television franchise. The procedures established
provide for a formal renewal process should the franchising authority and the
cable television operator decline to use an informal procedure. A franchising
authority unable to make a preliminary determination to renew a franchise is
required to hold a hearing in which the operator has the right to participate.
In the event a determination is made not to renew the franchise at the
conclusion of the hearing, the franchising authority must provide the operator
with a written decision stating the specific reasons for non-renewal. Generally,
the franchising authority can finally decide not to renew a franchise only if it
finds that the cable operator has not substantially complied with the material
terms of the present franchise, has not provided reasonable service in light of
the community's needs, does not have the financial, legal or technical ability
to provide the services being proposed for the future, or has not presented a
reasonable proposal for future service. A final decision of non-renewal by the
franchising authority is appealable in court.
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A provision of the 1996 Act preempts franchising authorities from
regulating telecommunications services provided by cable operators and from
requiring cable operators to obtain a franchise to provide such services. A
franchising authority may not require a cable operator to provide
telecommunications services or facilities, other than an institutional network,
as a condition to a grant, renewal or transfer of a cable franchise.
GENERAL. The Venture's business consists of providing cable television
services to a large number of customers, the loss of any one of which would have
no material effect on the Venture's business. Each of the Systems has had some
subscribers who later terminated the service. Terminations occur primarily
because people move to another home or to another city. In other cases, people
terminate on a seasonal basis or because they no longer can afford or are
dissatisfied with the service. The amount of past due accounts in the Systems is
not significant. The General Partner's policy with regard to past due accounts
is basically one of disconnecting service before a past due account becomes
material.
The Venture does not depend to any material extent on the availability
of raw materials; it carries no significant amounts of inventory and it has no
material backlog of customer orders. The Partnership has no employees because
all properties are managed by employees of the General Partner. The General
Partner has engaged in research and development activities relating to the
provision of new services but the amount of the Venture's funds expended for
such research and development has never been material.
Compliance with federal, state and local provisions that have been
enacted or adopted regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment has had no material
effect upon the capital expenditures, earnings or competitive position of the
Venture.
ITEM 2. PROPERTIES
The cable television systems owned by the Venture are described below:
<TABLE>
<CAPTION>
SYSTEM ACQUISITION DATE
------ ----------------
<S> <C>
Brighton/Broomfield System
Brighton System December 1987
Broomfield System January 1988
Myrtle Creek System December 1987
Clearlake Oaks System December 1987
South Sioux City System February 1988
Southwestern Michigan System September 1988
</TABLE>
The following sets forth (i) the monthly basic plus service rates
charged to subscribers and (ii) the number of basic subscribers and pay units
for the Systems. The monthly basic service rates set forth herein represent,
with respect to systems with multiple headends, the basic service rate charged
to the majority of the subscribers within the system. In cable television
systems, basic subscribers can subscribe to more than one pay TV service. Thus,
the total number of pay services subscribed to by basic subscribers are called
pay units. As of December 31, 1995, the Brighton/Broomfield System operated
cable plant passing approximately 23,900 homes, representing an approximate 62%
penetration rate, the Clearlake Oaks System operated cable plant passing
approximately 25,600 homes, representing an approximate 71% penetration rate,
the South Sioux City System operated cable plant passing approximately 8,900
homes, representing an approximate 66% penetration rate, the Myrtle Creek System
operated cable plant passing approximately 9,100 homes, representing an
approximate 71% penetration rate, and the Southwestern Michigan System operated
cable plant passing approximately 26,600 homes, representing an approximate 62%
penetration rate.. Figures for numbers of subscribers and homes passed are
compiled from the General Partner's records and may be subject to adjustments.
9
<PAGE> 10
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------------
Brighton/Broomfield System 1995 1994 1993
- -------------------------- ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $23.14 $22.39 $22.39
Basic subscribers 18,131 17,345 16,357
Pay units 18,862 18,106 17,973
<CAPTION>
CLEARLAKE OAKS SYSTEM At December 31,
- --------------------- --------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $21.30 $20.05 $20.73
Basic subscribers 17,446 17,267 15,566
Pay units 6,291 5,859 5,376
<CAPTION>
At December 31,
--------------------------------------------------
MYRTLE CREEK SYSTEM 1995 1994 1993
- ------------------- ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $21.23 $18.93 $19.55
Basic subscribers 6,500 6,293 6,034
Pay units 3,966 4,014 3,314
<CAPTION>
SOUTH SIOUX CITY SYSTEM At December 31,
- ----------------------- --------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $22.06 $21.56 $20.87
Basic subscribers 5,944 5,730 5,392
Pay units 4,028 3,699 3,555
<CAPTION>
SOUTHWESTERN MICHIGAN SYSTEM At December 31,
- ---------------------------- --------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $22.75 $21.69 $21.69
Basic subscribers 16,717 15,832 15,087
Pay units 11,098 10,328 9,053
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
10
<PAGE> 11
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS
While the Partnership is publicly held, there is no public market for
the limited partnership interests, and it is not expected that a market will
develop in the future. As of February 15, 1996, the number of equity security
holders in the Partnership was 4,471.
11
<PAGE> 12
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------------------
Jones Cable Income Fund 1-B, Ltd. 1995 1994 1993 1992 1991
- --------------------------------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 4,920,983 $ 4,484,892 $ 4,341,380 $ 4,163,690 $ 3,889,600
Depreciation and Amortization 1,335,945 1,367,809 1,691,043 1,931,255 1,824,402
Operating Income (Loss) 36,281 (184,959) (446,056) (696,084) (498,040)
Equity in net loss of cable television
joint venture (1,738,404) (1,949,794) (1,753,583) (1,639,873) (1,927,535)
Net Loss (2,224,727) (2,592,181) (2,623,378) (3,032,014) (3,075,861)
Net Loss per Limited Partnership Unit (26.26) (30.59) (30.96) (35.78) (36.30)
Distributions per Limited Partnership Unit - - 20.48 19.39 18.86
Weighted Average Number of
Limited Partnership Units Outstanding 83,884 83,884 83,884 83,884 83,884
General Partner's Deficit (309,119) (276,772) (250,850) (207,264) (160,516)
Limited Partners' Capital 2,760,075 5,962,555 8,528,814 12,843,958 17,472,152
Total Assets 9,994,303 11,874,378 14,590,808 19,020,685 22,831,585
Debt 6,866,146 3,544,000 3,547,767 3,525,945 3,539,282
General Partner Advances - 2,162,870 1,944,230 1,994,401 1,268,955
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------------------
Jones Cable Income Fund 1-B/C Venture 1995 1994 1993 1992 1991
- --------------------------------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $22,867,228 $21,121,787 $20,350,776 $18,848,345 $17,065,348
Depreciation and Amortization 8,951,345 8,632,481 8,787,240 9,131,442 8,666,224
Operating Loss (1,244,929) (2,243,001) (2,397,832) (2,216,442) (2,513,496)
Net Loss (4,371,145) (4,902,676) (4,409,310) (4,123,392) (4,846,706)
Partner's Capital 5,915,001 10,286,146 15,188,822 23,918,132 32,131,524
Total Assets 50,844,037 54,545,774 58,148,834 62,614,638 67,366,941
Debt 43,104,090 42,383,339 36,298,318 35,635,061 32,335,496
Advances from Jones Intercable, Inc. 109,893 66,224 4,068,472 602,765 585,943
</TABLE>
12
<PAGE> 13
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
JONES CABLE INCOME FUND 1-B, LTD.
RESULTS OF OPERATIONS
1995 Compared to 1994-
Revenues of Jones Cable Income Fund 1-B, Ltd. (the "Partnership")
increased $436,091, or approximately 10 percent, to $4,920,983 in 1995 from
$4,484,892 in 1994. The increase in revenues was primarily the result of
increases in the number of subscribers combined with basic service rate
adjustments in the Partnership's Orangeburg, South Carolina cable television
system (the "Orangeburg System"). The number of basic subscribers totaled
12,530 at December 31, 1995 compared to 11,935 at December 31, 1994, an
increase of 595 subscribers. The increase in the number of subscribers
accounted for approximately 27 percent of the increase in revenues and the
basic service rate adjustments accounted for approximately 20 percent of the
increase in revenues. An increase in premium subscriptions accounted for
approximately 20 percent of the increase in revenues. No other factor
significantly affected the increase in revenues.
Operating expenses consist primarily of costs associated with the
administration of the Partnership's cable television systems. The principal
cost components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and consumer marketing expenses.
Operating expenses increased $221,006, or approximately 8 percent, to
$2,941,756 in 1995 from $2,720,750 in 1994. Operating expenses represented 60
percent of revenue in 1995, compared to 61 percent in 1994. The increase in
operating expenses was due primarily to increases in programming fees. No
other factor significantly affected the increase in operating expenses.
Management fees and allocated overhead from the General Partner
increased $34,709, or approximately 6 percent, to $607,001 in 1995 from
$572,292 in 1994. This increase was due to the increase in revenues, upon
which such fees and allocations are based, and an increase in expenses
allocated from the General Partner.
Depreciation and amortization expense decreased $40,864, or
approximately 3 percent, to $1,335,945 in 1995 from $1,376,809 in 1994. This
decrease was due to the maturation of the intangible asset base.
The Partnership recorded operating income of $36,281 in 1995 compared
to an operating loss of $184,959 in 1994. This change in operating income was
due to the increase in revenues and decrease in depreciation and amortization
exceeding the increases in operating expenses and management fees and allocated
overhead from the General Partner.
The cable television industry generally measures the financial
performance of a cable television system in terms of cash flow or operating
income before depreciation and amortization. The value of a cable television
system is often determined using multiples of cash flow. This measure is not
intended to be a substitute or improvement upon the items disclosed on the
financial statements, rather it is included because it is an industry standard.
Operating income before depreciation and amortization increased $180,376, or
approximately 15 percent, to $1,372,226 in 1995 from $1,191,850 in 1994, due to
the increase in revenues exceeding the increases in operating expenses and
management fees and allocated overhead from the General Partner.
Interest expense increased $132,467, or approximately 34 percent, to
$524,050 in 1995 from $391,583 in 1994 due to higher outstanding balances on
interest bearing obligations.
Loss before equity in net loss of cable television joint venture
decreased $156,064, or approximately 24 percent, to $486,323 in 1995 from
$642,387 in 1994. This decrease was due to the factors discussed above.
In addition to the Orangeburg System, which was directly owned by the
Partnership in 1995, the Partnership owns a 40 percent interest in Jones Cable
Income Fund 1-B/C Venture (the "Venture"). The Partnership's share of the
Venture's loss decreased to $1,738,404 in 1995 from $1,949,794 in 1994. The
Venture's operations are significant to the
13
<PAGE> 14
Partnership and should be reviewed in conjunction with this analysis. Refer to
Management's Discussion and Analysis of Financial Condition and Results of
Operations for the Venture for details pertaining to the Venture's operations.
1994 Compared to 1993-
Revenues of the Partnership's Orangeburg System increased $143,512, or
approximately 3 percent, to $4,484,892 in 1994 from $4,341,380 in 1993. During
1994, the Orangeburg System added 472 basic subscribers, an increase of 4
percent. Such expansion of the subscriber base was primarily responsible for
the increase in revenues. The increase in revenue would have been greater but
for the reduction in certain rates charged due to basic rate regulations issued
by the FCC in April 1993 with which the Partnership complied effective
September 1993. No other individual factor significantly affected the increase
in revenues.
Operating expenses increased $170,728 or approximately 7 percent, to
$2,720,750 in 1994 from $2,550,022 in 1993. Operating expenses consumed 61
percent of revenue in 1994 compared to 59 percent in 1993. The increase in
operating expenses was due primarily to increases in programming fees. No
other factor significantly affected the increase in operating expenses.
Management fees and allocated overhead from the General Partner
increased $25,921, or approximately 5 percent, to $572,292 in 1994 from
$546,371 in 1993. This increase was due to the increase in revenues, upon
which such fees and allocations are based, and an increase in expenses
allocated from the General Partner during 1994.
Depreciation and amortization decreased $314,234, or approximately 19
percent, to $1,376,809 in 1994 from $1,691,043 in 1993. This decrease was due
to a reduction in amortization expense, due to the maturation of the
Partnership's intangible asset base and was offset, in part by an increase in
depreciation expense due to capital additions in 1993 and 1994.
Operating loss decreased $261,097, or approximately 59 percent, to
$184,959 in 1994 from $446,056 in 1993. This decrease was due to the increase
in revenues and the decreases in depreciation and amortization exceeding the
increases in operating expenses and management fees and allocated overhead from
the General Partner.
Operating income before depreciation and amortization decreased
$53,137, or approximately 4 percent, to $1,191,850 in 1994 from $1,244,987 in
1993, due to the increase in revenues exceeding the increases in operating
expenses, management fees and allocated overhead from the General Partner.
Interest expense increased $15,359, or approximately 4 percent, to
$391,583 in 1994 from $376,224 in 1993 due to higher effective rates on
interest bearing obligations.
Loss before equity in net loss of cable television joint venture
decreased $227,408, or approximately 26 percent, to $642,387 in 1994 from
$869,795 in 1993. This decrease was due to the factors discussed above.
FINANCIAL CONDITION
On August 11, 1995, the Partnership entered into a purchase and sale
agreement pursuant to which it agreed to sell the Orangeburg System to the
General Partner for a sales price of $18,347,667, subject to working capital
adjustments of $376,646, which were deducted from the sale proceeds. The
General Partner 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 of the sale occurred on February 28, 1996. The sales
price represented the average of three separate, independent appraisals of the
Orangeburg System. The Partnership used the net sales proceeds to pay all of
its indebtedness, which totaled approximately $6,866,000, and the Partnership
will distribute the remaining net sales proceeds, which totaled approximately
$11,105,000, to its limited partners pursuant to the terms of the Partnership's
partnership agreement in April 1996. This distribution will represent a return
to each limited partner of approximately $132 per unit, or approximately $265
for each $1,000 invested in the Partnership. This amount is in addition to the
$328 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 was
required in connection with this transaction because the assets of the
Orangeburg System did not constitute all or substantially all of the
Partnership's assets.
14
<PAGE> 15
During 1995, the Partnership generated cash from operating activities
totaling $660,776, which was available to fund distributions and the capital
requirements of the Partnership. The Partnership expended approximately
$1,133,000 for capital improvements within the Partnership's Orangeburg System
during 1995. Approximately 34 percent of these expenditures related to
construction of cable television plant. Approximately 23 percent of these
expenditures related to the service drops to homes and approximately 15 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.
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 Partnership's prior credit facility and to repay the
General Partner its advances. At December 31, 1995, $6,800,000 was
outstanding. As discussed above, on February 28, 1996, the Partnership sold
its Orangeburg System and used a portion of the net sales proceeds to repay the
then outstanding debt balance. The effective interest rates on outstanding
obligations were 7.56 percent and 8.63 percent, respectively, at December 31,
1995 and 1994. As of March 1996, the Partnership had no debt outstanding, and
it is unlikely that the Partnership will incur any significant debt in the
future.
One of the primary objectives of the Partnership is to provide
quarterly cash distributions to the partners. Such cash returns are primarily
from cash generated through the operating activities of the Partnership and
from the distributions made to the Partnership from the Venture. Distributions
declared for the years ended December 31, 1995 and 1993 were $1,010,100 and
$1,735,352, respectively. Distributions were not declared in 1994 due to the
Partnership's need to use cash generated from operations to fund capital
expenditures. As a result of the sale of the Orangeburg System, Partnership
quarterly cash distributions will be limited to 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. The timing and level of future distributions, if any, will be determined
on a quarter-by-quarter basis. As described above, the limited partners will
receive a distribution of a portion of the net sales proceeds from the
Orangeburg System sale of approximately $11,105,000 in April 1996.
15
<PAGE> 16
JONES CABLE INCOME FUND 1-B/C VENTURE
RESULTS OF OPERATIONS
1995 Compared to 1994-
Revenues of Jones Cable Income Fund 1-B/C Venture (the "Venture")
increased $1,745,441, or approximately 8 percent, to $22,867,228 in 1995 from
$21,121,787 in 1994. An increase in subscribers accounted for approximately 39
percent of the increase in revenues. The number of basic subscribers totaled
64,738 at December 31, 1995, compared to 62,467 at December 31, 1994, an
increase of 2,271, or approximately 4 percent. Basic service rate adjustments
accounted for approximately 35 percent of the increase in revenues. No other
individual factor contributed significantly to the increase 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.
Operating expenses increased $332,399, or approximately 3 percent, to
$12,349,907 in 1995 from $12,017,508 in 1994. Operating expenses represented
54 percent of revenue in 1995 compared to 57 percent in 1994. The increase in
operating expenses were due primarily to increases in programming fees. No
other individual factor was significant to the increase in operating expenses.
Management fees and allocated overhead from the General Partner
increased $96,106, or approximately 4 percent, to $2,810,905 in 1995 from
$2,714,799 in 1994, due primarily to the increase in revenues, upon which such
fees and allocations are based, and an increase in expenses allocated from the
General Partner.
Depreciation and amortization expense increased $318,864, or
approximately 4 percent, to $8,951,345 in 1995 from $8,632,481 in 1994. This
increase is due to capital additions in the Venture's cable television systems
in 1995.
Operating loss decreased $998,072, or approximately 45 percent, to
$1,244,929 in 1995 from $2,243,001 in 1994. This decrease is a result of the
increase in revenues exceeding the increases in operating expenses,
depreciation and amortization and management fees and allocated overhead from
the General Partner.
The cable television industry generally measures the financial
performance of a cable television system in terms of cash flow or operating
income before depreciation and amortization. The value of a cable television
system is often determined using multiples of cash flow. This measure is not
intended to be a substitute or improvement upon the items disclosed on the
financial statements, rather it is included because it is an industry standard.
Operating income before depreciation and amortization increased $1,316,936 or
approximately 21 percent, to $7,706,416 in 1995 from $6,389,480 in 1994. This
increase was the result of the increase in revenues exceeding the increases in
operating expenses and management fees and allocated overhead from the General
Partner.
Interest expense increased $629,946, or approximately 23 percent, to
$3,391,355 in 1995 from $2,761,409 in 1994. This increase was due to higher
outstanding balances on interest bearing obligations.
Net loss decreased $531,531, or approximately 11 percent, to
$4,371,145 in 1995 from $4,902,676 in 1994. These losses were due to the
factors discussed above and are expected to continue in the future.
1994 Compared to 1993-
Revenues of the Venture increased $771,011, or approximately 4
percent, to $21,121,787 in 1994 from $20,350,776 in 1993. An increase in
subscribers accounted for approximately 41 percent of the increase in revenues.
Increases in premium service revenue and advertising sales revenue accounted
for approximately 28 percent and 26 percent, respectively, of the increase in
revenues. The increase in revenues would have been greater but for the
reduction in certain rates charged due to basic rate regulations issued by the
FCC in April 1993 with which the Venture complied effective September 1, 1993.
16
<PAGE> 17
Operating expenses increased $645,813, or approximately 6 percent, to
$12,017,508 in 1994 from $11,371,695 in 1993. Operating expenses represented
57 percent of revenue in 1994 compared to 56 percent in 1993. The increase in
operating expense was due to increases in programming fees, personnel related
costs, and advertising sales costs. No other individual factor was significant
to the increase in operating expenses.
Management fees and allocated overhead from Jones Intercable, Inc.
increased $125,126, or approximately 5 percent, to $2,714,799 in 1994 from
$2,589,673 in 1993, due primarily to the increase in revenues, upon which such
fees and allocations are calculated, and an increase in expenses allocated from
Jones Intercable, Inc. The General Partner experienced increases in expenses
in 1994, including personnel costs and reregulation costs, a portion of which
are allocated to the Venture.
Depreciation and amortization expense decreased $154,759, or
approximately 2 percent, to $8,632,481 in 1994 from $8,787,240 in 1993. This
decrease was due to the maturation of the Venture's depreciable asset base.
Operating loss decreased $154,831, or approximately 7 percent, to
$2,243,001 in 1994 from $2,397,832 in 1993. This decrease was a result of the
increase in revenues and the decrease in depreciation and amortization
exceeding the increase in operating expenses and management fees and allocated
overhead from Jones Intercable, Inc.
Operating income before depreciation and amortization increased less
than 1 percent, to $6,389,480 in 1994 from $6,389,408 in 1993, as the increase
in revenues were offset by the increases in operating expenses and management
fees and allocated overhead from the General Partner.
Interest expense increased $745,019, or approximately 37 percent, to
$2,761,409 in 1994 from $2,016,390 in 1993. This increase was due to higher
effective interest rates on interest bearing obligations.
Net loss increased $434,366, or approximately 11 percent, to
$4,902,676 in 1994 from $4,409,310 in 1993. These losses were due to the
factors discussed above.
FINANCIAL CONDITION
For the year ended December 31, 1995, the Venture generated net cash
from operating activities totaling $4,363,406, which is available to fund
capital expenditures and non-operating costs. During 1995, capital
improvements within the Venture's operating systems totaled approximately
$4,500,000. Approximately 36 percent were for the construction of service
drops to subscribers' homes. Approximately 14 percent of these expenditures
were for the construction of new cable plant. Approximately 12 percent were
for pay equipment in the Venture's cable television systems. The remainder of
these expenditures related to various system enhancements and improvements 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 1996 are approximately
$4,500,000. Construction of service drops to homes and the construction of new
cable plant will account for approximately 39 percent and 17 percent,
respectively, of the anticipated expenditures. The remainder of the
expenditures will relate to other various enhancements in all of the Venture's
systems. Funding for these expenditures is expected to come from cash
generated from operations and available borrowings under the Venture's credit
facility.
At December 31, 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 the
London Interbank Offered Rate plus 1-1/2 percent. The effective interest rates
on amounts outstanding as of December 31, 1995 and 1994 were 7.38 percent and
7.36 percent, respectively.
One of the primary objectives of the Venture is to provide quarterly
cash distributions to the Venture 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 partners. The Venture's
credit facility has a maximum amount available of $45,000,000, of which
$42,700,000 was outstanding on December 31, 1995. This limits the amount of
borrowings 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 in 1995 or 1994. During 1993, the
Venture declared and paid distributions to the Venture partners totaling
$4,320,000. Due to the 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
17
<PAGE> 18
distributions to the Venture partners in the near term. The timing and level
of future distributions, if any, will be determined on a quarter-by-quarter
basis.
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 to the Venture partners.
REGULATION AND LEGISLATION
The Venture has filed cost-of-service showings in response to
rulemakings concerning the 1992 Cable Act for its Brighton, Broomfield and
Boulder County, Colorado and Three Rivers and Watervliet, Michigan systems and
thus anticipates no further reductions in rates in these systems. The
cost-of-service showings have not yet received final approvals from regulatory
authorities, however, and there can be no assurance that the Venture's
cost-of-service showings will prevent further rate reductions in these systems
until such final approvals are received.
The Telecommunications Act of 1996 (the "1996 Act"), which became law
on February 8, 1996, substantially revised the Communications Act of 1934, as
amended, including the 1984 Cable Act and the 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934. The 1996 Act is intended, in
part, to promote substantial competition in the telephone local exchange and in
the delivery of video and other services. As a result of the 1996 Act, local
telephone companies (also known as local exchange carriers or "LECs") and other
service providers are permitted to provide video programming, and cable
television operators are permitted entry into the telephone local exchange
market. The FCC is required to conduct rulemaking proceedings over the next
several months to implement various provisions of the 1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
including the Venture effective March 31, 1999 and the cable programming
service tier of "small" cable operators in systems providing service to 50,000
or fewer subscribers effective immediately. The 1996 Act also revised the
procedures for filing cable programming service tier rate complaints and adds a
new effective competition test.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Venture in particular. The FCC will be
undertaking numerous rulemaking proceedings to interpret and implement the 1996
Act. It is not possible at this time to predict the outcome of those
proceedings or their effect on the Venture. See Item 1.
18
<PAGE> 19
Item 8. Financial Statements
JONES CABLE INCOME FUND 1-B, LTD. AND
JONES CABLE INCOME FUND 1-B/C VENTURE
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND 1994
INDEX
<TABLE>
<CAPTION>
Page
-----
1-B 1-B/C
--- -----
<S> <C> <C>
Report of Independent Public Accountants 20 31
Balance Sheets 21 32
Statements of Operations 23 34
Statements of Partners' Capital (Deficit) 24 35
Statements of Cash Flows 25 36
Notes to Financial Statements 26 37
</TABLE>
19
<PAGE> 20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Jones Cable Income Fund 1-B, Ltd.:
We have audited the accompanying balance sheets of JONES CABLE INCOME
FUND 1-B, LTD. (a Colorado limited partnership) as of December 31, 1995 and
1994, and the related statements of operations, partners' capital (deficit) and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the General Partner's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Jones Cable Income
Fund 1-B, Ltd. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 8, 1996.
20
<PAGE> 21
JONES CABLE INCOME FUND 1-B, LTD.
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------------
ASSETS 1995 1994
------------ ------------
<S> <C> <C>
CASH $ 54,135 $ 116,839
RECEIVABLES:
Trade receivables, less allowance for doubtful
receivables of $17,594 and $14,323 at
December 31, 1995 and 1994, respectively 247,500 167,587
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 11,934,307 10,801,551
Less- accumulated depreciation (5,878,915) (4,948,058)
----------- ----------
6,055,392 5,853,493
Subscriber lists, net of accumulated amortization
of $3,398,402 and $3,024,266 at December 31, 1995
and 1994, respectively 1,153,598 1,527,734
Favorable leaseholds, net of accumulated amortization
of $108,782 and $96,806 at December 31, 1995
and 1994, respectively 48,918 60,894
Costs in excess of interests in net assets
purchased, net of accumulated amortization
of $11,118 and $9,894 at December 31, 1995
and 1994, respectively 37,782 39,006
Investment in cable television joint venture 2,348,059 4,086,463
------------ -----------
Total investment in cable television properties 9,643,749 11,567,590
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 48,919 22,362
------------ -----------
Total assets $ 9,994,303 $11,874,378
============ ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
21
<PAGE> 22
JONES CABLE INCOME FUND 1-B, LTD.
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
------------- ------------
<S> <C> <C>
LIABILITIES:
Debt $ 6,866,146 $ 3,544,000
Accounts payable-
Trade - 5,046
General Partner - 2,162,870
Accrued liabilities 389,119 433,865
Accrued distribution to limited partners 250,000 -
Subscriber prepayments 38,082 42,814
------------ ------------
Total liabilities 7,543,347 6,188,595
------------ ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (199,900) (177,653)
Distributions (110,219) (100,119)
------------- ------------
(309,119) (276,772)
------------- ------------
Limited Partners-
Net contributed capital (83,884 units outstanding
at December 31, 1995 and 1994) 34,449,671 34,449,671
Accumulated deficit (19,671,890) (17,469,410)
Distributions (12,017,706) (11,017,706)
------------ -----------
2,760,075 5,962,555
------------ -----------
Total liabilities and partners' capital (deficit) $ 9,994,303 $ 11,874,378
============ ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
22
<PAGE> 23
JONES CABLE INCOME FUND 1-B, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES $ 4,920,983 $ 4,484,892 $ 4,341,380
COSTS AND EXPENSES:
Operating expense 2,941,756 2,720,750 2,550,022
Management fees and allocated overhead
from General Partner 607,001 572,292 546,371
Depreciation and amortization 1,335,945 1,376,809 1,691,043
---------- ---------- ----------
OPERATING INCOME (LOSS) 36,281 (184,959) (446,056)
---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (524,050) (391,583) (376,224)
Other, net 1,446 (65,845) (47,515)
---------- ---------- ----------
Total other income (expense) (522,604) (457,428) (423,739)
---------- ---------- ----------
LOSS BEFORE EQUITY IN NET LOSS OF
CABLE TELEVISION JOINT VENTURE (486,323) (642,387) (869,795)
EQUITY IN NET LOSS OF CABLE
TELEVISION JOINT VENTURE (1,738,404) (1,949,794) (1,753,583)
---------- ---------- ----------
NET LOSS $(2,224,727) $(2,592,181) $(2,623,378)
========== ========== ==========
ALLOCATION OF NET LOSS:
General Partner $ (22,247) $ (25,922) $ (26,234)
=========== ========== ===========
Limited Partners $(2,202,480) $(2,566,259) $(2,597,144)
=========== =========== ===========
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (26.26) $ (30 .59) $ (30.96)
=========== =========== ==========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 83,884 83,884 83,884
=========== =========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
23
<PAGE> 24
JONES CABLE INCOME FUND 1-B, LTD.
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of year $ (276,772) $ (250,850) $ (207,264)
Distributions (10,100) - (17,352)
Net loss for year (22,247) (25,922) (26,234)
---------- ---------- ----------
Balance, end of year $ (309,119) $ (276,772) $ (250,850)
========== ========== ==========
LIMITED PARTNERS:
Balance, beginning of year $5,962,555 $ 8,528,814 $12,843,958
Distributions (1,000,000) - (1,718,000)
Net loss for year (2,202,480) (2,566,259) (2,597,144)
---------- ---------- ----------
Balance, end of year $ 2,760,075 $ 5,962,555 $ 8,528,814
========== ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
24
<PAGE> 25
JONES CABLE INCOME FUND 1-B, LTD.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,224,727) $(2,592,181) $(2,623,378)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,335,945 1,376,809 1,691,043
Equity in net loss of cable television joint venture 1,738,404 1,949,794 1,753,583
Increase in trade receivables (79,913) (48,788) (12,430)
Decrease (increase) in deposits, prepaid expenses and (54,409) (17,083) 47,477
deferred charges
Increase (decrease) in trade accounts payable, accrued
liabilities and subscriber prepayments (54,524) 90,378 (60,150)
---------- ---------- -----------
Net cash provided by operating activities 660,776 758,929 796,145
---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (1,132,756) (901,452) (806,938)
Distributions from cable television joint venture - - 1,718,000
Decrease in receivable from joint venture - 429,500 -
------------ ----------- -----------
Net cash provided by (used in)
investing activities (1,132,756) (471,952) 911,062
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 6,852,071 16,830 30,000
Repayment of debt (3,529,925) (20,597) (8,178)
Distributions to limited partners (1,000,000) - (1,718,000)
Increase (decrease) in accrued distributions to
limited partners 250,000 (429,500) -
Increase (decrease) in advances from General Partner (2,162,870) 218,640 (50,171)
---------- ---------- ----------
Net cash provided by (used in)
financing activities 409,276 (214,627) (1,746,349)
---------- ---------- ----------
Increase (decrease) in cash (62,704) 72,350 (39,142)
Cash, beginning of year 116,839 44,489 83,631
---------- ---------- ----------
Cash, end of year $ 54,135 $ 116,839 $ 44,489
=========== ========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 463,280 $ 360,569 $ 396,938
=========== ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
25
<PAGE> 26
JONES CABLE INCOME FUND 1-B, LTD.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS
Formation and Business
Jones Cable Income Fund 1-B, Ltd. (the "Partnership"), a Colorado
limited partnership, was formed on August 14, 1986, under a public program
sponsored by Jones Intercable, Inc. ("Intercable"). The Partnership was formed
to acquire, develop and operate cable television systems. Intercable is the
"General Partner" and manager of the Partnership. The General Partner and its
subsidiaries also own and operate cable television systems. In addition,
Intercable manages cable television systems for other limited partnerships for
which it is general partner and, also, for other affiliated entities.
Contributed Capital
The capitalization of the Partnership is set forth in the accompanying
statements of partners' capital (deficit). No limited partner is obligated to
make any additional contribution to partnership capital.
The General Partner purchased its interest in the Partnership by
contributing $1,000 to partnership capital.
All profits and losses of the Partnership are allocated 99 percent to
the limited partners and 1 percent to the General Partner, except for income or
gain from the sale or disposition of cable television properties, which will be
allocated to the partners based upon the formula set forth in the partnership
agreement.
Cable Television System Acquisition
The Partnership's acquisition of the cable television system serving
the community of Orangeburg, South Carolina (the "Orangeburg System") was
accounted for as a purchase with the purchase price allocated as follows:
first, to the fair value of net tangible assets acquired; second, to the value
of a subscriber list, franchise costs and favorable leaseholds; and third to
costs in excess of interests in net assets purchased. Brokerage fees paid to a
subsidiary of the General Partner were allocated to intangible assets based
upon the relative value of these assets at acquisition. Other system
acquisition costs were capitalized and included in the cost of distribution
systems.
At December 31, 1995, the Partnership owned the Orangeburg System and
a 40 percent interest in Jones Cable Income Fund 1-B/C Venture (the "Venture"),
through a capital contribution made to the Venture in November 1987 of
$24,220,000. The Venture acquired cable television systems in Colorado, Oregon
and California on December 31, 1987 and in Colorado, Nebraska and Michigan
during 1988. The Venture incurred losses of $4,371,145, $4,902,676 and
$4,409,310 in 1995, 1994 and 1993, respectively, of which $1,738,404,
$1,949,794 and $1,753,583, respectively, were allocated to the Partnership.
Cable Television System Sale
On August 11, 1995, the Partnership entered into a purchase and sale
agreement pursuant to which it agreed to sell the Orangeburg System to the
General Partner for a sales price of $18,347,667, subject to working capital
adjustments of $376,646, which were deducted from the sales proceeds. The
General Partner 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 of the sale occurred on February 28, 1996. The sales
price represented the average of three separate, independent appraisals of the
Orangeburg System. The Partnership used the net sales proceeds to pay all of
its indebtedness and the Partnership will distribute the remaining net sales
proceeds to its limited partners pursuant to the terms of the Partnership's
partnership agreement in April 1996. This distribution will represent a return
to each limited partner of approximately $132 per unit, or approximately $265
for each $1,000 invested in the Partnership. This amount is in addition to the
$328 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 was
required in connection with this transaction because the assets of the
Orangeburg System did not constitute all or substantially all of the
Partnership's assets.
26
<PAGE> 27
The pro forma effect of the sale of the Orangeburg System on the results of the
Partnership's operations for the years ended December 31, 1995 and 1994,
assuming the transaction had occurred at the beginning of the year, is
presented in the following unaudited tabulation:
<TABLE>
<CAPTION>
For the Year Ended December 31, 1995
------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- ---------
<S> <C>
Revenues $ 4,920,983 $(4,920,983) $ -
=========== =========== ===========
Operating Income $ 36,281 $ (36,281) $ -
=========== =========== ===========
Net Loss $(2,224,727) $ 485,901 $(1,738,404)
=========== =========== ===========
For the Year Ended December 31, 1994
------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- ---------
Revenues $ 4,484,892 $(4,484,892) $ -
=========== =========== ===========
Operating Income $ (184,959) $ 184,959 $ -
=========== =========== ===========
Net Loss $(2,592,181) $ 642,387 $(1,949,794)
=========== =========== ===========
</TABLE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Records
The accompanying financial statements have been prepared on the
accrual basis of accounting in accordance with generally accepted accounting
principles. The Partnership's tax returns are also prepared on the accrual
basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the General Partner's management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Investment in Cable Television Joint Venture
The Partnership's investment in the Venture is accounted for under the
equity method. The operations of the Venture are significant to the
Partnership and should be reviewed in conjunction with these financial
statements. Reference is made to the accompanying financial statements of the
Venture on pages 32 to 42.
Property, Plant and Equipment
Depreciation of property, plant and equipment is provided primarily
using the straight-line method over the following estimated service lives:
<TABLE>
<S> <C>
Cable distribution systems 5 - 15 years
Equipment and tools 5 years
Office furniture and equipment 5 - 15 years
Buildings 10 - 20 years
Vehicles 3 years
</TABLE>
27
<PAGE> 28
Replacements, renewals and improvements are capitalized and
maintenance and repairs are charged to expense as incurred.
Intangible Assets
Costs assigned to subscriber lists, favorable leaseholds and costs in
excess of interests in net assets purchased are being amortized using the
straight-line method over the following remaining estimated useful lives:
<TABLE>
<S> <C>
Subscriber lists 3 years
Favorable leaseholds 4 years
Costs in excess of interests in
net assets purchased 31 years
</TABLE>
Revenue Recognition
Subscriber prepayments are initially deferred and recognized as
revenue when earned.
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
Management Fees, Distribution Ratios and Reimbursements
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 charged during the years ended December 31, 1995, 1994 and 1993 (exclusive
of the Partnership's 40 percent interest in the Venture) were $246,049,
$224,245 and $217,069, respectively.
Any partnership distributions made from cash flow (defined as cash
receipts derived from routine operations, less debt principal and interest
payments and cash expenses) are allocated 99 percent to the limited partners
and 1 percent to the General Partner. Distributions resulting from the sale or
refinancing of a system or upon dissolution of the Partnership will be made as
follows: first, to the limited partners in an amount which together with all
prior distributions, other than those made regularly from cash flow, will equal
their initial capital contribution; second, payment to the limited partners of
a liquidation preference equal to a 10 percent cumulative return on their
initial capital contribution, reduced by all prior distributions from cash
flow; and the balance, 75 percent to the limited partners and 25 percent to the
General Partner.
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
Intercable 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
to the Partnership by the General Partner for allocated overhead and
administrative expenses during the years ended December 31, 1995, 1994 and 1993
(exclusive of the Partnership's 40 percent interest in the Venture) were
$360,952, $348,047 and $329,302, respectively.
The Partnership was charged interest during 1995 at an average
interest rate of 10.5 percent on the amounts due to the General Partner, which
approximated the General Partner's weighted average cost of borrowing. Total
interest charged to the Partnership by the General Partner during the years
ended December 31, 1995, 1994 and 1993 was $5,975, $176,867 and $217,249,
respectively.
Payments to/from Affiliates for Programming Services
The Partnership receives programming from Product Information Network,
Superaudio and Mind Extension University, all of which are affiliates of the
General Partner.
28
<PAGE> 29
Payments to Superaudio totaled $7,062, $7,193 and $7,243 1995, 1994
and 1993, respectively. Payments to Mind Extension University totaled $7,555,
$6,517 and $4,212 in 1995, 1994 and 1993, respectively.
The Partnership receives a commission from Product Information Network
based on a percentage of advertising revenues and number of subscribers.
Product Information Network, which initiated service in 1994, paid commissions
to the Partnership totaling $1,755 and $321 in 1995 and 1994, respectively.
(4) DISTRIBUTIONS FROM CASH FLOW
One of the primary objectives of the Partnership is to provide
quarterly cash distributions to the partners. Such cash returns are primarily
from cash generated through the operating activities of the Partnership and
from the distributions made to the Partnership from the Venture. Distributions
declared for the years ended December 31, 1995 and 1993 were $1,010,100 and
$1,735,352, respectively. Distributions were not declared in 1994 due to the
Partnership's need to use cash generated from operations to fund capital
expenditures. As a result of the sale of the Orangeburg System, Partnership
quarterly cash distributions will be limited to 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. The timing and level of future distributions, if any, will be determined
on a quarter-by-quarter basis.
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31, 1995 and 1994,
consisted of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1995 1994
---------------- -----------------
<S> <C> <C>
Cable distribution systems $11,094,696 $10,052,951
Equipment and tools 341,933 309,773
Office furniture and equipment 114,557 110,323
Buildings 36,333 36,333
Vehicles 344,156 289,539
Land 2,632 2,632
---------- ----------
11,934,307 10,801,551
Less-accumulated depreciation (5,878,915) (4,948,058)
---------- ----------
$ 6,055,392 $ 5,853,493
========== ==========
</TABLE>
(6) DEBT
<TABLE>
<CAPTION>
Debt consists of the following: December 31,
------------------------------------
1995 1994
--------------- --------------
<S> <C> <C>
Lending institutions-
Revolving credit agreement $6,800,000 $3,500,000
Capital lease obligations 66,146 44,000
--------- ---------
$6,866,146 $3,544,000
========== =========
</TABLE>
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 Partnership's prior credit facility and to repay the
General Partner its advances. At December 31, 1995, $6,800,000 was
outstanding. As discussed in Note (1), on February 28, 1996, the Partnership
sold its Orangeburg System and used a portion of the sales proceeds to repay
the then-outstanding debt balance. Accordingly, no significant maturities
exist. The effective interest rates on outstanding obligations were 7.56
percent and 8.63 percent, respectively, at December 31, 1995 and 1994.
At December 31, 1995, the carrying amount of the Partnership's
long-term debt did not differ significantly from the estimated fair value of
the financial instruments. The fair value of the Partnership's long-term debt
is estimated based on the discounted amount of future debt service payments
using rates of borrowing for a liability of similar risk.
29
<PAGE> 30
(7) INCOME TAXES
Income taxes have not been recorded in the accompanying financial
statements because they accrue directly to the partners. The federal and state
income tax returns of the Partnership are prepared and filed by the General
Partner.
The Partnership's tax returns, the qualification of the Partnership as
such for tax purposes, and the amount of distributable Partnership income or
loss are subject to examination by federal and state taxing authorities. If
such examinations result in changes with respect to the Partnership's
qualification as such, or in changes with respect to the Partnership's recorded
income or loss, the tax liability of the general and limited partners would
likely be changed accordingly.
Taxable loss reported to the partners is different from that reported
in the statements of operations due to the difference in depreciation
recognized under generally accepted accounting principles and the expense
allowed for tax purposes under the Modified Accelerated Cost Recovery System
(MACRS). There are no other significant differences between taxable loss and
the net loss reported in the statements of operations.
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
Supplementary profit and loss information for the respective years is
presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Maintenance and repairs $ 38,357 $ 45,139 $ 61,553
========== ======== ========
Taxes, other than income and payroll taxes $ 83,754 $ 57,742 $ 56,847
========== ======== ========
Advertising $ 70,108 $ 57,444 $ 51,188
========== ======== ========
Depreciation of property, plant and equipment $ 930,857 $903,483 $971,896
========== ======== ========
Amortization of intangible assets $ 405,088 $473,326 $719,147
========== ======== ========
</TABLE>
30
<PAGE> 31
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Jones Cable Income Fund 1-B/C Venture:
We have audited the accompanying balance sheets of JONES CABLE INCOME
FUND 1-B/C VENTURE (a Colorado general partnership) as of December 31, 1995 and
1994, and the related statements of operations, partners' capital and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the General Partner's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Jones Cable Income
Fund 1-B/C Venture as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 8, 1996.
31
<PAGE> 32
JONES CABLE INCOME FUND 1-B/C VENTURE
(A General Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------------
ASSETS 1995 1994
------ -------------- --------------
<S> <C> <C>
CASH $ 880,728 $ 309,848
TRADE RECEIVABLES, less allowance for doubtful
receivables of $65,022 and $37,534 at December 31, 1995
and 1994, respectively 524,740 459,412
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 62,220,451 57,707,174
Less- accumulated depreciation (29,056,927) (24,802,632)
------------ ------------
33,163,524 32,904,542
Franchise costs, net of accumulated amortization of $26,601,089
and $23,207,609 at December 31, 1995 and 1994, respectively 9,992,701 13,386,181
Subscriber lists, net of accumulated amortization of $7,349,635
and $6,464,742 at December 31, 1995 and 1994, respectively 24,525 909,418
Costs in excess of interests in net assets purchased, net of
accumulated amortization of $1,399,028 and $1,219,184 at
December 31, 1995 and 1994, respectively 5,792,992 5,972,836
Noncompete agreement, net of accumulated amortization of $259,060
and $230,224 at December 31, 1995 and 1994, respectively 79,240 108,076
------------ ------------
Total investment in cable television properties 49,052,982 53,281,053
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 385,587 495,461
------------ ------------
Total assets $ 50,844,037 $ 54,545,774
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
32
<PAGE> 33
JONES CABLE INCOME FUND 1-B/C VENTURE
(A General Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
---------------------------------
LIABILITIES AND PARTNERS' CAPITAL 1995 1994
--------------------------------- -------------- --------------
<S> <C> <C>
LIABILITIES:
Debt $ 43,104,090 $ 42,383,339
Accounts payable-
Trade 32,994 16,153
Jones Intercable, Inc. 109,893 66,224
Accrued liabilities 1,416,613 1,523,073
Subscriber prepayments 265,446 270,839
------------ ------------
Total liabilities 44,929,036 44,259,628
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 8)
PARTNERS' CAPITAL:
Contributed capital 60,036,950 60,036,950
Accumulated deficit (33,589,007) (29,217,862)
Distributions (20,532,942) (20,532,942)
----------- -----------
5,915,001 10,286,146
----------- -----------
Total liabilities and partners' capital $ 50,844,037 $ 54,545,774
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
33
<PAGE> 34
JONES CABLE INCOME FUND 1-B/C VENTURE
(A General Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------
1995 1994 1993
--------------- --------------- ---------------
<S> <C> <C> <C>
REVENUES $22,867,228 $21,121,787 $20,350,776
COSTS AND EXPENSES:
Operating expenses 12,349,907 12,017,508 11,371,695
Management fees and allocated overhead from
General Partner 2,810,905 2,714,799 2,589,673
Depreciation and amortization 8,951,345 8,632,481 8,787,240
---------- ---------- ----------
OPERATING LOSS (1,244,929) (2,243,001) (2,397,832)
---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (3,391,355) (2,761,409) (2,016,390)
Other, net 265,139 101,734 4,912
----------- ---------- -----------
Total other income (expense) (3,126,216) (2,659,675) (2,011,478)
---------- ---------- ----------
NET LOSS $(4,371,145) $(4,902,676) $(4,409,310)
========== ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
34
<PAGE> 35
JONES CABLE INCOME FUND 1-B/C VENTURE
(A General Partnership)
STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Jones Cable Income Fund 1-B, Ltd.:
Balance, beginning of year $ 4,086,463 $ 6,036,257 $ 9,507,840
Distributions - - (1,718,000)
Net loss for year (1,738,404) (1,949,794) (1,753,583)
---------- ---------- ----------
Balance, end of year $ 2,348,059 $ 4,086,463 $ 6,036,257
========== ========== ==========
Jones Cable Income Fund 1-C, Ltd.:
Balance, beginning of year $ 6,199,683 $ 9,152,565 $14,410,292
Distributions - - (2,602,000)
Net loss for year (2,632,741) (2,952,882) (2,655,727)
---------- ---------- ----------
Balance, end of year $ 3,566,942 $ 6,199,683 $ 9,152,565
========== ========== ==========
Total:
Balance, beginning of year $10,286,146 $15,188,822 $23,918,132
Distributions - - (4,320,000)
Net loss for year (4,371,145) (4,902,676) (4,409,310)
---------- ---------- ----------
Balance, end of year $ 5,915,001 $10,286,146 $15,188,822
========== ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
35
<PAGE> 36
JONES CABLE INCOME FUND 1-B/C VENTURE
(A General Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1995 1994 1993
--------------- --------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(4,371,145) $(4,902,676) $(4,409,310)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 8,951,345 8,632,481 8,787,240
Amortization of interest rate protection contract 48,500 48,500 48,500
Increase in trade receivables (65,328) (27,364) (161,826)
Increase in deposits, prepaid expenses and
deferred charges (148,623) (257,709) (53,520)
Increase (decrease) in accounts payable, accrued
liabilities and subscriber prepayments (95,012) 296,843 134,542
Increase (decrease) in amount due Jones
Intercable, Inc. 43,669 (4,002,248) 3,465,707
---------- ---------- ----------
Net cash provided by (used in)
operating activities 4,363,406 (212,173) 7,811,333
---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (4,513,277) (4,601,807) (4,125,320)
---------- ---------- -----------
Net cash used in investing activities (4,513,277) (4,601,807) (4,125,320)
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 898,199 6,552,832 794,914
Repayment of debt (177,448) (467,811) (131,657)
Distributions to general partners - - (4,320,000)
Decrease in accrued distributions to partners - (1,080,000)
Purchase of interest rate protection contract - - (145,500)
---------- ---------- -----------
Net cash provided by (used in)
financing activities 720,751 5,005,021 (3,802,243)
---------- ---------- -----------
Increase (decrease) in cash 570,880 191,041 (116,230)
Cash, beginning of year 309,848 118,807 235,037
---------- ---------- -----------
Cash, end of year $ 880,728 $ 309,848 $ 118,807
========== ========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 3,389,425 $ 2,536,991 $ 1,962,699
========== ========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
36
<PAGE> 37
JONES CABLE INCOME FUND 1-B/C VENTURE
(A General Partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS
Formation and Business
On October 21, 1987, Jones Cable Income Fund 1-B, Ltd. ("Fund 1-B")
and Jones Cable Income Fund 1-C, Ltd. ("Fund 1-C") formed a Colorado general
partnership known as Jones Cable Income Fund 1-B/C Venture (the "Venture") by
making capital contributions of $24,220,000 and $36,681,000, respectively
(approximately 40 and 60 percent, respectively). The Venture was formed to
acquire, develop and operate cable television systems. During 1988 and 1987,
the Venture acquired various cable television systems serving the areas in and
around Brighton, Broomfield and Boulder County, Colorado; Lake County,
California; Myrtle Creek, Oregon; South Sioux City, Nebraska; and Three Rivers
and Watervliet, Michigan.
Jones Intercable, Inc. ("Intercable"), the General Partner of Fund 1-B
and Fund 1-C, manages the Venture. Intercable and its subsidiaries also own
and operate cable television systems. In addition, Intercable manages cable
television systems for other limited partnerships for which it is general
partner and, also, for affiliated entities.
Contributed Capital
The capitalization of the Venture is set forth in the accompanying
statements of partners' capital.
All Venture distributions, including those made from cash flow, from
the sale or refinancing of Venture property and on dissolution of the Venture,
shall be made to Fund 1-B and Fund 1-C in proportion to their interests in the
Venture.
Cable Television System Acquisitions
Venture acquisitions were accounted for as purchases with the purchase
prices allocated as follows: first, to the fair value of net tangible assets
acquired; second, to the value of subscriber lists, franchise costs and a
noncompete agreement; and third, to cost in excess of interests in net assets
purchased. Brokerage fees paid to a subsidiary of Intercable's parent were
allocated to intangible assets based upon the relative value of these assets at
acquisition. Other system acquisition costs were capitalized and included in
the cost of distribution systems.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Records
The accompanying financial statements have been prepared on the
accrual basis of accounting in accordance with generally accepted accounting
principles. The Venture's tax returns are also prepared on the accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the General Partner's management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
37
<PAGE> 38
Property, Plant and Equipment
Depreciation of property, plant and equipment is provided primarily
using the straight-line method over the following estimated service lives:
<TABLE>
<S> <C>
Cable distribution systems 5 - 15 years
Equipment and tools 5 years
Office furniture and equipment 5 - 15 years
Buildings 10 - 20 years
Vehicles 3 years
</TABLE>
Replacements, renewals and improvements are capitalized and
maintenance and repairs are charged to expense as incurred.
Intangible Assets
Costs assigned to franchises, subscriber lists, a noncompete agreement
and costs in excess of interests in net assets purchased are amortized using
the straight-line method over the following remaining estimated useful lives:
<TABLE>
<S> <C>
Franchise costs 1 - 15 years
Subscriber lists 1 year
Noncompete agreement 1 - 3 years
Costs in excess of interests in net
assets purchased 33 years
</TABLE>
Revenue Recognition
Subscriber prepayments are initially deferred and recognized as
revenue when earned.
Reclassifications
Certain prior year amounts have been reclassified to conform to the
1995 presentation.
(3) TRANSACTIONS WITH JONES INTERCABLE, INC. AND AFFILIATES
Management Fees and Reimbursements
Intercable manages the the Venture and receives a fee for its services
equal to 5 percent of the gross revenues of the Venture, excluding revenues
from the sale of cable television systems or franchises. Management fees paid
to Intercable by the Venture during the years ended December 31, 1995, 1994 and
1993 were $1,143,361, $1,056,089 and $1,017,539, respectively.
The Venture reimburses Intercable for certain allocated overhead and
administrative expenses. These expenses represent the salaries and related
benefits paid to 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
Venture. Allocations of personnel costs are based primarily on actual time
spent by employees of Intercable with respect to each entity managed.
Remaining expenses are allocated based on the pro rata relationship of the
Venture's revenues to the total revenues of all systems owned or managed by
Intercable and certain of its subsidiaries. Systems owned by Intercable and
all other systems owned by partnerships for which Intercable is the general
partner are also allocated a proportionate share of these expenses. Intercable
believes that the methodology of allocating overhead and administrative
expenses is reasonable. Overhead and administrative expenses allocated to the
Venture by Intercable during the years ended December 31, 1995, 1994 and 1993
were $1,667,544, $1,658,710 and $1,572,134, respectively.
The Venture was charged interest during 1995 at an average interest
rate of 10.51 percent on the amounts due Intercable, which approximated
Intercable's weighted average cost of borrowing. Total interest charged to the
Venture by Intercable was $14,252, $180,316 and $187,959 during 1995, 1994 and
1993, respectively.
38
<PAGE> 39
Payments to/from Affiliates for Programming Services
The Venture receives programming from Product Information Network,
Superaudio, Mind Extension University and Jones Computer Network, all of which
are affiliates of Intercable.
Payments to Superaudio totaled $33,947, $25,189 and $26,541 in 1995,
1994 and 1993, respectively. Payments to Mind Extension University totaled
$38,592, $33,199 and $20,832 in 1995, 1994 and 1993, respectively. Payments to
Jones Computer Network, which initiated service in 1994, totaled $47,377 and
$13,218 in 1995 and 1994, respectively.
The Venture receives a commission from Product Information Network
based on a percentage of advertising revenues and number of subscribers.
Product Information Network, which initiated service in 1994, paid commissions
to the Venture totaling $80,014 and $15,283 in 1995 and 1994, respectively.
(4) DISTRIBUTIONS FROM CASH FLOW
One of the primary objectives of the Venture is to provide quarterly
cash distributions to the Venture 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 partners. The Venture's
credit facility has a maximum amount available of $45,000,000, of which
$42,700,000 was outstanding on December 31, 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 1995 or 1994. During 1993, the
Venture declared and paid distributions to the Venture partners totaling
$4,320,000. Due to the 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.
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31, 1995 and 1994,
consisted of the following:
<TABLE>
<CAPTION>
December 31,
------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Cable distribution systems $ 57,020,173 $ 52,891,529
Equipment and tools 2,198,719 2,062,435
Office furniture and equipment 783,468 673,528
Buildings 453,488 452,428
Vehicles 1,597,461 1,460,112
Land 167,142 167,142
------------ ------------
62,220,451 57,707,174
Less- accumulated depreciation (29,056,927) (24,802,632)
----------- -----------
$ 33,163,524 $ 32,904,542
=========== ===========
</TABLE>
(6) DEBT
<TABLE>
<CAPTION>
Debt consists of the following: December 31,
-----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Lending institutions -
Revolving credit agreement $42,700,000 $42,100,000
Capital lease obligations 404,090 283,339
---------- ----------
$43,104,090 $42,383,339
========== ==========
</TABLE>
At December 31, 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
39
<PAGE> 40
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 the London Interbank
Offered Rate ("LIBOR") plus 1-1/2 percent. The effective interest rates on
amounts outstanding on the Venture's credit facility as of December 31, 1995
and 1994 were 7.38 percent and 7.36 percent, respectively.
On January 12, 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 protected the Venture for LIBOR interest
rates that exceeded 7 percent for three years from the date of the agreement.
The agreement expired January 13, 1996.
Installments due on debt principal for each of the five years in the
period ending December 31, 2000, respectively, are $121,227, $42,821,227,
$121,227, $40,409 and $-0-. As of December 31, 1995, substantially all of the
Venture's assets secured the above indebtedness.
At December 31, 1995, the carrying amount of the Venture's long-term
debt did not differ significantly from the estimated fair value of the
financial instruments. The fair value of the Venture's long-term debt is
estimated based on the discounted amount of future debt service payments using
rates of borrowing for a liability of similar risk.
(7) INCOME TAXES
Income taxes have not been recorded in the accompanying financial
statements because they accrue directly to Fund 1-B and Fund 1-C. The federal
and state income tax returns of the Partnership are prepared and filed by
Intercable.
The Venture's tax returns, the qualification of the Venture as such
for tax purposes, and the amount of distributable Venture income or loss are
subject to examination by federal and state taxing authorities. If such
examinations result in changes with respect to the Venture's qualification as
such, or in changes with respect to the Venture's recorded income or loss, the
tax liability of Fund 1-B and Fund 1-C would likely be changed accordingly.
Taxable loss reported to Fund 1-B and Fund 1-C is different from that
reported in the statements of operations due to the difference in depreciation
recognized under generally accepted accounting principles and the expense
allowed for tax purposes under the Modified Accelerated Cost Recovery System
(MACRS). There are no other significant differences between taxable income or
loss and the net income or loss reported in the statements of operations.
(8) COMMITMENTS AND CONTINGENCIES
The Venture has filed cost-of-service showings in response to
rulemakings concerning the 1992 Cable Act for its Brighton, Broomfield and
Boulder County, Colorado and Three Rivers and Watervliet, Michigan systems and
thus anticipates no further reductions in rates in these systems. The
cost-of-service showings have not yet received final approvals from regulatory
authorities, however, and there can be no assurance that the Venture's
cost-of-service showings will prevent further rate reductions in these systems
until such final approvals are received.
The Venture rents office and other facilities under various long-term
lease arrangements. Rent paid under such lease arrangements totaled $93,192,
$82,204 and $78,616, respectively, for the years ended December 31, 1995, 1994
and 1993. Minimum commitments under operating leases for each of the five
years in the period ending December 31, 2000, and thereafter are as follows:
<TABLE>
<S> <C>
1996 $ 92,051
1997 74,887
1998 44,039
1999 35,856
2000 20,348
Thereafter 143,600
-------
$410,781
=======
</TABLE>
40
<PAGE> 41
(9) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
Supplementary profit and loss information for the respective years is
presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1995 1994 1993
-------------- -------------- -------------
<S> <C> <C> <C>
Maintenance and repairs $ 209,529 $ 203,987 $ 226,863
========= ========= =========
Taxes, other than income and payroll taxes $ 505,916 $ 455,044 $ 674,649
========= ========= =========
Advertising $ 327,980 $ 353,212 $ 381,096
========= ========= =========
Depreciation of property, plant and equipment $4,347,554 $4,072,061 $4,225,967
========= ========= =========
Amortization of intangible assets $4,603,791 $4,560,420 $4,561,273
========= ========= =========
</TABLE>
41
<PAGE> 42
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership itself has no officers or directors. Certain
information concerning the directors and executive officers of the General
Partner is set forth below.
<TABLE>
<S> <C> <C>
Glenn R. Jones 66 Chairman of the Board and Chief Executive Officer
Derek H. Burney 56 Vice Chairman of the Board
James B. O'Brien 46 President and Director
Ruth E. Warren 46 Group Vice President/Operations
Kevin P. Coyle 44 Group Vice President/Finance
Christopher J. Bowick 40 Group Vice President/Technology
George H. Newton 61 Group Vice President/Telecommunications
Timothy J. Burke 45 Group Vice President/Taxation/Administration
Raymond L. Vigil 49 Group Vice President/Human Resources and Director
Cynthia A. Winning 44 Group Vice President/Marketing
Elizabeth M. Steele 44 Vice President/General Counsel/Secretary
Larry W. Kaschinske 36 Controller
Robert E. Cole 63 Director
William E. Frenzel 67 Director
Donald L. Jacobs 57 Director
James J. Krejci 54 Director
John A. MacDonald 42 Director
Raphael E. Solot 62 Director
Daniel E. Somers 48 Director
Howard O. Thrall 48 Director
Robert B. Zoellick 42 Director
</TABLE>
Mr. Glenn R. Jones has served as Chairman of the Board of Directors and
Chief Executive Officer of the General Partner since its formation in 1970, and
he was President from June 1984 until April 1988. Mr. Jones is the sole
shareholder, President and Chairman of the Board of Directors of Jones
International, Ltd. He is also Chairman of the Board of Directors of the
subsidiaries of the General Partner and of certain other affiliates of the
General Partner. Mr. Jones has been involved in the cable television business in
various capacities since 1961, is a past and present member of the Board of
Directors and the Executive Committee of the National Cable Television
Association. He also is on the Executive Committee of Cable in the Classroom, an
organization dedicated to education via cable. Additionally, in March 1991, Mr.
Jones was appointed to the Board of Governors for the American Society for
Training and Development, and in November 1992 to the Board of Education Council
of the National Alliance of Business. Mr. Jones is also a founding member of the
James Madison Council of the Library of Congress. Mr. Jones is a past director
and member of the Executive Committee of C-Span. Mr. Jones has been the
recipient of several awards including the Grand Tam Award in 1989, the highest
award from the Cable Television Administration and Marketing Society; the
Chairman's Award from the Investment Partnership Association, which is an
association of sponsors of public syndications; the cable television industry's
Public Affairs Association President's Award in 1990, the Donald G. McGannon
award for the advancement of minorities and women in cable; the STAR Award from
American Women in Radio and Television, Inc. for exhibition of a commitment to
the issues and concerns of women in television and radio; the Women in Cable
Accolade in 1990 in recognition of support of this organization; the Most
Outstanding Corporate Individual Achievement award from the International
Distance Learning Conference; the Golden Plate Award
42
<PAGE> 43
from the American Academy of Achievement for his advances in distance education;
the Man of the Year named by the Denver chapter of the Achievement Rewards for
College Scientists; and in 1994 Mr. Jones was inducted into Broadcasting and
Cable's Hall of Fame.
Mr. Derek H. Burney was appointed a Director of the General Partner on
December 20, 1994 and Vice Chairman of the Board of Directors on January 31,
1995. Mr. Burney joined BCE Inc., Canada's largest telecommunications company,
in January 1993 as Executive Vice President, International. He has been the
Chairman of Bell Canada International Inc., a subsidiary of BCE, since January
1993 and, in addition, has been Chief Executive Officer of BCI since July 1993.
Prior to joining BCE, Mr. Burney served as Canada's ambassador to the United
States from 1989 to 1992. Mr. Burney also served as chief of staff to the Prime
Minister of Canada from March 1987 to January 1989 where he was directly
involved with the negotiation of the U.S. - Canada Free Trade Agreement. In July
1993, he was named an Officer of the Order of Canada. Mr. Burney is chairman of
Bell Cablemedia plc. He is a director of Mercury Communications Limited,
Videotron Holdings plc, Tele-Direct (Publications) Inc., Teleglobe Inc., Bimcor
Inc., Maritime Telegraph and Telephone Company, Limited, Moore Corporation
Limited and Northbridge Programming Inc.
Mr. James B. O'Brien, the General Partner's President, joined the
General Partner in January 1982. Prior to being elected President and a Director
of the General Partner in December 1989, Mr. O'Brien served as a Division
Manager, Director of Operations Planning/Assistant to the CEO, Fund Vice
President and Group Vice President/Operations. Mr. O'Brien was appointed to the
General Partner's Executive Committee in August 1993. As President, he is
responsible for the day-to-day operations of the cable television systems
managed and owned by the General Partner. Mr. O'Brien is a board member of Cable
Labs, Inc., the research arm of the U.S. cable television industry. He also
serves as a director of the Cable Television Administration and Marketing
Association and as a director of the Walter Kaitz Foundation, a foundation that
places people of ethnic minority groups in positions with cable television
systems, networks and vendor companies.
Ms. Ruth E. Warren joined the General Partner in August 1980 and has
served in various operational capacities, including system manager and Fund Vice
President, since then. Ms. Warren was elected Group Vice President/Operations of
the General Partner in September 1990.
Mr. Kevin P. Coyle joined The Jones Group, Ltd. in July 1981 as Vice
President/Financial Services. In September 1985, he was appointed Senior Vice
President/Financial Services. He was elected Treasurer of the General Partner in
August 1987, Vice President/Treasurer in April 1988 and Group Vice
President/Finance and Chief Financial Officer in October 1990.
Mr. Christopher J. Bowick joined the General Partner in September 1991
as Group Vice President/Technology and Chief Technical Officer. Previous to
joining the General Partner, Mr. Bowick worked for Scientific Atlanta's
Transmission Systems Business Division in various technical management
capacities since 1981, and as Vice President of Engineering since 1989.
Mr. George H. Newton joined the General Partner in January 1996 as
Group Vice President/Telecommunications. Prior to joining the General Partner,
Mr. Newton was President of his own consulting business, Clear Solutions, and
since 1994 Mr. Newton has served as a Senior Advisor to Bell Canada
International. From 1990 to 1993, Mr. Newton served as the founding Chief
Executive Officer and Managing Director of Clear Communications, New Zealand,
where he established an alternative telephone company in New Zealand. From 1964
to 1990, Mr. Newton held a wide variety of operational and business assignments
with Bell Canada International.
Mr. Timothy J. Burke joined the General Partner in August 1982 as
corporate tax manager, was elected Vice President/Taxation in November 1986 and
Group Vice President/Taxation/Administration in October 1990.
Mr. Raymond L. Vigil joined the General Partner in June 1993 as Group
Vice President/Human Resources. Previous to joining the General Partner, Mr.
Vigil served as Executive Director of Learning with
43
<PAGE> 44
USWest. Prior to USWest, Mr. Vigil worked in various human resources posts
over a 14-year term with the IBM Corporation.
Ms. Cynthia A. Winning joined the General Partner as Group Vice
President/Marketing in December 1994. Previous to joining the General Partner,
Ms. Winning served since 1994 as the President of PRS Inc., Denver, Colorado, a
sports and event marketing company. From 1979 to 1981 and from 1986 to 1994, Ms.
Winning served as the Vice President and Director of Marketing for Citicorp
Retail Services, Inc., a provider of private-label credit cards for ten national
retail department store chains. From 1981 to 1986, Ms. Winning was the Director
of Marketing Services for Daniels & Associates cable television operations, as
well as the Western Division Marketing Director for Capital Cities Cable. Ms.
Winning also serves as a board member of Cities in Schools, a dropout
intervention/prevention program.
Ms. Elizabeth M. Steele joined the General Partner in August 1987 as
Vice President/General Counsel and Secretary. From August 1980 until joining the
General Partner, Ms. Steele was an associate and then a partner at the Denver
law firm of Davis, Graham & Stubbs, which serves as counsel to the General
Partner.
Mr. Larry Kaschinske joined the General Partner in 1984 as a staff
accountant in the General Partner's former Wisconsin Division, was promoted to
Assistant Controller in 1990 and named Controller in August 1994.
Mr. Robert E. Cole was appointed a Director of the General Partner in
March 1996. Mr. Cole is currently self-employed as a partner of First Variable
Insurance Marketing and is responsible for marketing to National Association of
Securities Dealers, Inc. firms in northern California, Oregon, Washington and
Alaska. From 1993 to 1995, Mr. Cole was the Director of Marketing for Lamar Life
Insurance Company; from 1992 to 1993, Mr. Cole was Senior Vice President of PMI
Inc., a third party lender serving the special needs of Corporate Owned Life
Insurance (COLI) and from 1988 to 1992, Mr. Cole was the principal and
co-founder of a specialty investment banking firm that provided services to
finance the ownership and growth of emerging companies, productive assets and
real property. Mr. Cole is a Certified Financial Planner and a former United
States Naval Aviator.
Mr. William E. Frenzel was appointed a Director of the General Partner
on April 11, 1995. Mr. Frenzel has been a Guest Scholar since 1991 with the
Brookings Institution, a research organization located in Washington D. C. Until
his retirement in January 1991, Mr. Frenzel served for twenty years in the
United States House of Representatives, representing the State of Minnesota,
where he was a member of the House Ways and Means Committee and its Trade
Subcommittee, the Congressional Representative to the General Agreement on
Tariffs and Trade (GATT), the Ranking Minority Member on the House Budget
Committee and a member of the National Economic Commission. Mr. Frenzel also
served in the Minnesota Legislature for eight years. He is a Distinguished
Fellow of the Tax Foundation, Vice Chairman of the Eurasia Foundation, a Board
Member of the U.S.-Japan Foundation, the Close-Up Foundation, Sit Mutual Funds
and Chairman of the Japan-America Society of Washington.
Mr. Donald L. Jacobs was appointed a Director of the General Partner on
April 11, 1995. Mr. Jacobs is a retired executive officer of TRW. Prior to his
retirement, he was Vice President and Deputy Manager of the Space and Defense
Sector; prior to that appointment, he was the Vice President and General Manager
of the Defense Systems Group and prior to his appointment as Group General
Manager, he was President of ESL, Inc., a wholly owned subsidiary of TRW. During
his career, Mr. Jacobs served on several corporate, professional and civic
boards.
Mr. James J. Krejci was President of the International Division of
International Gaming Technology, International headquartered in Reno, Nevada,
until March 1995. Prior to joining IGT in May 1994, Mr. Krejci was Group Vice
President of Jones International, Ltd. and was Group Vice President of the
General Partner. He also served as an officer of Jones Futurex, Inc., a
subsidiary of the General Partner engaged in manufacturing and marketing data
encryption devices, Jones Interactive, Inc., a subsidiary of Jones
International, Ltd. providing computer data and billing processing facilities
and Jones Lightwave, Ltd., a company owned by Jones International, Ltd. and Mr.
Jones, and several of its subsidiaries engaged in the provision of
telecommunications
44
<PAGE> 45
services until leaving the General Partner in May 1994. Mr. Krejci has been a
Director of the General Partner since August 1987.
Mr. John A. MacDonald was appointed a Director of the General Partner
on November 8, 1995. Mr. MacDonald is Executive Vice President of Business
Development and Chief Technology Officer of Bell Canada International Inc. Prior
to joining Bell Canada in November 1994, Mr. MacDonald was President and Chief
Executive Officer of The New Brunswick Telephone Company, Limited, a post he had
held since March of that year. Prior to March 1994, Mr. MacDonald was with NBTel
for 17 years serving in various capacities, including Market Planning Manager,
Corporate Planning Manager, Manager of Systems Planning and Development and
General Manager, Chief Engineer and General Manager of Engineering and
Information Systems and Vice President of Planning. Mr. MacDonald was the former
Chairman of the New Brunswick section of the Institute of Electrical and
Electronic Engineers and also served on the Federal Government's Information
Highway Advisory Council. Mr. MacDonald is Chairman of MediaLinx Interactive
Inc. and Stentor Canadian Network Management and is presently a Governor of the
Montreal Exchange. He also serves on the Board of Directors of Tele-Direct
(Publications) Inc., Bell-Northern Research, Ltd., SRCI, Bell Sygma, Canarie
Inc., and is a member of the University of New Brunswick Venture Campaign
Cabinet.
Mr. Raphael M. Solot was appointed a Director of the General Partner in
March 1996. Mr. Solot is an attorney licensed to practice law in the State of
Colorado. Mr. Solot has practiced law in the State of Colorado as a sole
practitioner since obtaining his Juris Doctor degree from the University of
Colorado in 1964.
Mr. Daniel E. Somers was initially appointed a Director of the General
Partner on December 20, 1994. Mr. Somers resigned as a Director on December 31,
1995, at the time he was elected Chief Executive Officer of Bell Cablemedia. Mr.
Somers was reinstated as a Director of the General Partner on February 2, 1996.
From January 1992 to January 1995, Mr. Somers worked as senior Vice President
and Chief Financial Officer of Bell Canada International Inc. and was appointed
Executive Vice President and Chief Financial Officer on February 1, 1995. He is
also a Director of certain of its affiliates. Mr. Somers currently serves as
Chief Executive Officer of Bell Cablemedia. Prior to joining Bell Canada
International Inc. and since January 1989, Mr. Somers was the President and
Chief Executive Officer of Radio Atlantic Holdings Limited. Mr. Somers is a
member of the North American Society of Corporate Planning, the Financial
Executives Institution and the Financial Analysts Federation.
Mr. Howard O. Thrall was appointed a Director of the General Partner on
March 6, 1996. Mr. Thrall had previously served as a Director of the General
Partner from December 1988 to December 1994. Since September 1993, Mr. Thrall
has served as Vice President of Sales, Asian Region, for World Airways, Inc.
From 1984 until August 1993, Mr. Thrall was with the McDonnell Douglas
Corporation, where he concluded as a Regional Vice President, Commercial
Marketing with the Douglas Aircraft Company subsidiary. Mr. Thrall is also a
management and international marketing consultant, having completed assignments
with First National Net, Inc., Cheong Kang Associated (Korea), Aero Investment
Alliance, Inc. and Western Real Estate Partners.
Mr. Robert B. Zoellick was appointed a Director of the General Partner
on April 11, 1995. Mr. Zoellick is Executive Vice President, General Counsel and
Corporate Secretary of Fannie Mae, a federally chartered and stockholder-owned
corporation that is the largest housing finance investor in the United States.
From August 1992 to January 1993, Mr. Zoellick served as Deputy Chief of Staff
of the White House and Assistant to the President. From May 1991 to August 1992,
Mr. Zoellick served concurrently as the Under Secretary of State for Economic
and Agricultural Affairs and as Counselor of the Department of State, a post he
assumed in March 1989. From 1985 to 1988, Mr. Zoellick served at the Department
of Treasury in a number of capacities, including Counselor to the Secretary. Mr.
Zoellick received the Alexander Hamilton and Distinguished Service Awards,
highest honors of the Departments of Treasury and State, respectively. The
German Government awarded him the Knight Commanders Cross for his work on
Germany unification. Mr. Zoellick currently serves on the boards of the Council
on Foreign Relations, the Congressional Institute, the German Marshall Fund of
the U.S., the European Institute, the National Bureau of Asian Research, the
American Council on Germany and the Overseas Development Council.
45
<PAGE> 46
Christopher J. Bowick, Cynthia A. Winning and Larry W. Kaschinske are
executive officers of the General Partner; Raymond L. Vigil is an executive
officer and a director of the General Partner; and Derek H. Burney, John A.
MacDonald and Daniel E. Somers are directors of the General Partner. Reports by
these persons with respect to the ownership of limited partnership interests in
the Partnership required by Section 16(a) of the Securities Exchange Act of
1934, as amended, were not filed within the required time. None of these
individuals own any limited partnership interests in the Partnership.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no employees; however, various personnel are
required to operate the cable television systems owned by the Venture. Such
personnel are employed by the General Partner and, the cost of such employment
is charged by the General Partner to the Venture as a direct reimbursement item.
See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
No person or entity owns more than 5 percent of the limited partnership
interests of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner and its affiliates engage in certain transactions
with the Venture. During the year ended December 31, 1995, the General Partner
also engaged in certain transactions with the Partnership with respect to the
Partnership's ownership of the Orangeburg System. The General Partner believes
that the terms of such transactions are generally as favorable as could be
obtained from unaffiliated parties. This determination has been made by the
General Partner in good faith, but none of the terms were or will be negotiated
at arm's-length and there can be no assurance that the terms of such
transactions have been or will be as favorable as those that could have been
obtained from unaffiliated parties.
The General Partner charges a management fee, and the General Partner
is reimbursed for certain allocated overhead and administrative expenses. These
expenses represent the salaries and benefits paid to 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 Venture. 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 also advances funds and charges interest on the
balance payable. The interest rate charged approximates the General Partner's
weighted average cost of borrowing.
The Systems receive stereo audio programming from Superaudio, a joint
venture owned 50% by an affiliate of the General Partner and 50% by an
unaffiliated party, educational video programming from Mind Extension
University, Inc., an affiliate of the General Partner, and computer video
programming from Jones Computer Network, Ltd., an affiliate of the General
Partner, for fees based upon the number of subscribers receiving the
programming.
Product Information Network ("PIN"), an affiliate of the General
Partner, provides advertising time for third parties on the Systems. In
consideration, the revenues generated from the third parties are shared between
PIN and the Venture. During the year ended December 31, 1995, the Partnership
received revenues from PIN of $1,755, and the Venture received revenues from PIN
of $80,014.
46
<PAGE> 47
The charges to the Partnership and the Venture for related party
transactions are as follows for the periods indicated:
<TABLE>
<CAPTION>
Jones Cable Income Fund 1-B At December 31,
- --------------------------- ------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Management fees $ 246,049 $ 224,245 $ 217,069
Allocation of expenses 360,952 348,047 329,302
Interest expense 5,975 176,867 217,249
Amount of advances outstanding -0- 2,162,870 1,944,230
Highest amount of advances outstanding 219,572 2,162,870 2,037,483
Programming fees:
Superaudio 7,062 7,193 7,243
Mind Extension University 7,555 6,517 4,212
<CAPTION>
At December 31,
------------------------------------------------
Jones Cable Income Fund 1-B/C 1995 1994 1993
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Management fees $1,143,361 $1,056,089 $1,017,539
Allocation of expenses 1,667,544 1,658,710 1,572,134
Interest expense 223 180,316 187,959
Amount of advances outstanding 109,893 66,224 4,068,472
Highest amount of advances outstanding 109,893 5,126,872 4,068,472
Programming fees:
Superaudio 33,947 25,189 26,541
Mind Extension University 38,592 33,199 20,832
Jones Computer Network 47,377 13,218 -0-
</TABLE>
47
<PAGE> 48
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a)1. See index to financial statements for a list of financial
statements and exhibits thereto filed as a part of this
report.
3. The following exhibits are filed herewith:
4.1 Limited Partnership Agreement of Jones Cable Income Fund
1-B, Ltd. (1)
4.2 Joint Venture Agreement of Jones Cable Income Fund 1-B/C
Venture. (1)
10.1.1 Copy of a franchise and related documents thereto granting a
community antenna television franchise for the City of
Clearlake, California. (1)
10.1.2 Copy of a franchise and related documents thereto granting a
community antenna television franchise for Lake County,
California. (1)
10.1.3 Copy of Resolution 91-31 amending the Lake County,
California franchise. (2)
10.1.4 Copy of a franchise and related documents thereto granting a
community antenna television franchise for the City of
Lakeport, California. (1)
10.1.5 Copy of a franchise and related documents thereto granting a
community antenna television franchise for Adams County,
Colorado. (1)
10.1.6 Copies of Utility/Construction Permits for Boulder County,
Colorado. (1)
10.1.7 Copy of a franchise and related documents thereto granting a
community antenna television franchise for the City of
Brighton, Colorado. (1)
10.1.8 Copy of a franchise and related documents thereto granting a
community antenna television franchise for the City of
Broomfield, Colorado. (2)
10.1.9 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Weld
County, Colorado. (Fund 1-B/C) (1)
10.1.9 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Brady, Michigan. (3)
10.1.10 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Calvin, Michigan. (4)
10.1.11 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Centreville, Michigan. (5)
10.1.12 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Coloma, Michigan. (5)
10.1.13 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Coloma, Michigan. (2)
48
<PAGE> 49
10.1.14 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Constantine, Michigan. (5)
10.1.15 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Constantine, Michigan. (5)
10.1.16 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Dowagiac, Michigan. (5)
10.1.17 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the County
of Elkhart, Michigan. (5)
10.1.18 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Fabius, Michigan. (5)
10.1.19 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Flowerfield, Michigan. (Fund 1-B/C). (5)
10.1.20 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Hagar, Michigan. (Fund 1-B/C) (3)
10.1.21 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Hartford, Michigan. (Fund 1-B/C) (4)
10.1.22 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the County
of LaGrange, Michigan. (Fund 1-B/C) (3)
10.1.23 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Lockport, Michigan. (Fund 1-B/C) (3)
10.1.24 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Mendon, Michigan. (Fund 1-B/C) (3)
10.1.25 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Mottville, Michigan. (Fund 1-B/C) (3)
10.1.26 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Newberg, Michigan. (4)
10.1.27 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Nottawa, Michigan. (5)
10.1.28 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Park, Michigan. (5)
10.1.29 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Pavillion, Michigan. (5)
10.1.30 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Penn, Michigan. (6)
10.1.31 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Pipestone, Michigan. (4)
49
<PAGE> 50
10.1.32 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Pokagon, Michigan. (4)
10.1.33 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Porter, Michigan. (6)
10.1.34 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Schoolcraft, Michigan. (4)
10.1.35 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Sherman, Michigan. (6)
10.1.36 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Silvercreek, Michigan. (5)
10.1.37 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Three Rivers, Michigan. (5)
10.1.38 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Vandalia, Michigan. (2)
10.1.39 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Vicksburg, Michigan. (5)
10.1.40 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Watervliet, Michigan. (5)
10.1.41 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Watervliet, Michigan. (5)
10.1.42 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Wayne, Michigan. (5)
10.1.43 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of White Pigeon, Michigan. (5)
10.1.44 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of White Pigeon, Michigan. (5)
10.1.45 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Dakota
City, Nebraska. (1)
10.1.46 Copy of Service Permit granted by Dakota County, Nebraska
Board of County Commissioners. (1)
10.1.47 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Homer, Nebraska. (1)
10.1.48 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for South
Sioux City, Nebraska. (1)
10.1.49 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Walthill, Nebraska. (2)
50
<PAGE> 51
10.1.50 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Walthill, Nebraska. (1)
10.1.51 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Canyonville, Oregon. (1)
10.1.52 Copy of resolution amending the franchise for the City of
Canyonville, Oregon. (2)
10.1.53 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Myrtle Creek, Oregon. (1)
10.1.59 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Riddle, Oregon. (2)
10.1.60 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Winston, Oregon. (1)
10.2.1 Credit Agreement dated 8/5/88 between Jones Cable Income
Fund 1-B, Ltd. and First Wisconsin National Bank of
Milwaukee. (2)
10.2.2 Amendment No. 1 dated 7/21/89 to Credit Agreement dated
8/5/88 between Jones Cable Income Fund 1-B, Ltd. and First
Wisconsin National Bank of Milwaukee. (2)
10.2.3 Amendment No. 2 dated 10/15/90 to Credit Agreement dated
8/5/88 between Jones Cable Income Fund 1-B, Ltd. and First
Wisconsin National Bank of Milwaukee. (2)
10.2.3 Amendment No. 3 dated 6/30/92 to Credit Agreement dated
8/5/88 between Jones Cable Income Fund 1-B, Ltd. and First
Wisconsin National Bank of Milwaukee. (2)
10.2.4 Amended and Restated Revolving Credit Agreement dated
September 30, 1994 between Jones Cable Income Fund 1-B/C
Venture, Corestates Bank, N.A., First National Bank of
Maryland, Dresdner Bank AG and Continental Bank. (8)
10.2.5 Revolving Credit and Term Loan Agreement dated as of January
19, 1995 between Jones Cable Income Fund 1-B and Colorado
National Bank. (8)
27 Financial Data Schedule
- ----------
(1) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1987.
(2) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1992.
(3) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1993.
(4) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1990.
(5) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1988.
51
<PAGE> 52
(6) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1989.
(7) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1986.
(8) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1994.
(b) Reports on Form 8-K.
A Current Report on Form 8-K (Commission File No. 0-14906),
dated March 13. 1996. describing the sale of the Orangeburg
System was filed with the Securities and Exchange Commission
on March 14, 1996.
52
<PAGE> 53
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
a Colorado limited partnership
By: Jones Intercable, Inc.
By: /s/ Glenn R. Jones
-------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Dated: March 25, 1996 Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Glenn R. Jones
-------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 25, 1996 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
-------------------------------
Kevin P. Coyle
Group Vice President/Finance
Dated: March 25, 1996 (Principal Financial Officer)
By: /s/ Larry Kaschinske
-------------------------------
Larry Kaschinske
Controller
Dated: March 25, 1996 (Principal Accounting Officer)
By: /s/ James B. O'Brien
-------------------------------
James B. O'Brien
Dated: March 25, 1996 President and Director
By: /s/ Raymond L. Vigil
-------------------------------
Raymond L. Vigil
Dated: March 25, 1996 Group Vice President and Director
By: /s/ Derek H. Burney
-------------------------------
Derek H. Burney
Dated: March 25, 1996 Director
53
<PAGE> 54
By:
-------------------------------
Robert E. Cole
Dated: Director
By: /s/ William E. Frenzel
-------------------------------
William E. Frenzel
Dated: March 25, 1996 Director
By: /s/ Donald L. Jacobs
-------------------------------
Donald L. Jacobs
Dated: March 25, 1996 Director
By: /s/ James J. Krejci
-------------------------------
James J. Krejci
Dated: March 25, 1996 Director
By: /s/ John A. MacDonald
-------------------------------
John A. MacDonald
Dated: March 25, 1996 Director
By:
-------------------------------
Raphael M. Solot
Dated: Director
By: /s/ Daniel E. Somers
-------------------------------
Daniel E. Somers
Dated: March 25, 1996 Director
By: /s/ Howard O. Thrall
-------------------------------
Howard O. Thrall
Dated: March 25, 1996 Director
By: /s/ Robert B. Zoellick
-------------------------------
Robert B. Zoellick
Dated: March 25, 1996 Director
54
<PAGE> 55
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------ ------------------- ----
<S> <C> <C>
4.1 Limited Partnership Agreement of Jones Cable Income Fund
1-B, Ltd. (1)
4.2 Joint Venture Agreement of Jones Cable Income Fund 1-B/C
Venture. (1)
10.1.1 Copy of a franchise and related documents thereto granting a
community antenna television franchise for the City of
Clearlake, California. (1)
10.1.2 Copy of a franchise and related documents thereto granting a
community antenna television franchise for Lake County,
California. (1)
10.1.3 Copy of Resolution 91-31 amending the Lake County,
California franchise. (2)
10.1.4 Copy of a franchise and related documents thereto granting a
community antenna television franchise for the City of
Lakeport, California. (1)
10.1.5 Copy of a franchise and related documents thereto granting a
community antenna television franchise for Adams County,
Colorado. (1)
10.1.6 Copies of Utility/Construction Permits for Boulder County,
Colorado. (1)
10.1.7 Copy of a franchise and related documents thereto granting a
community antenna television franchise for the City of
Brighton, Colorado. (1)
10.1.8 Copy of a franchise and related documents thereto granting a
community antenna television franchise for the City of
Broomfield, Colorado. (2)
10.1.9 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Weld
County, Colorado. (Fund 1-B/C) (1)
10.1.9 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Brady, Michigan. (3)
10.1.10 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Calvin, Michigan. (4)
10.1.11 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Centreville, Michigan. (5)
10.1.12 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Coloma, Michigan. (5)
10.1.13 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Coloma, Michigan. (2)
</TABLE>
<PAGE> 56
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------ ------------------- ----
<S> <C> <C>
10.1.14 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Constantine, Michigan. (5)
10.1.15 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Constantine, Michigan. (5)
10.1.16 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Dowagiac, Michigan. (5)
10.1.17 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the County
of Elkhart, Michigan. (5)
10.1.18 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Fabius, Michigan. (5)
10.1.19 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Flowerfield, Michigan. (Fund 1-B/C). (5)
10.1.20 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Hagar, Michigan. (Fund 1-B/C) (3)
10.1.21 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Hartford, Michigan. (Fund 1-B/C) (4)
10.1.22 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the County
of LaGrange, Michigan. (Fund 1-B/C) (3)
10.1.23 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Lockport, Michigan. (Fund 1-B/C) (3)
10.1.24 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Mendon, Michigan. (Fund 1-B/C) (3)
10.1.25 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Mottville, Michigan. (Fund 1-B/C) (3)
10.1.26 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Newberg, Michigan. (4)
10.1.27 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Nottawa, Michigan. (5)
10.1.28 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Park, Michigan. (5)
10.1.29 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Pavillion, Michigan. (5)
10.1.30 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Penn, Michigan. (6)
10.1.31 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Pipestone, Michigan. (4)
</TABLE>
<PAGE> 57
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------ ------------------- ----
<S> <C> <C>
10.1.32 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Pokagon, Michigan. (4)
10.1.33 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Porter, Michigan. (6)
10.1.34 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Schoolcraft, Michigan. (4)
10.1.35 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Sherman, Michigan. (6)
10.1.36 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Silvercreek, Michigan. (5)
10.1.37 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Three Rivers, Michigan. (5)
10.1.38 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Vandalia, Michigan. (2)
10.1.39 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Vicksburg, Michigan. (5)
10.1.40 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Watervliet, Michigan. (5)
10.1.41 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Watervliet, Michigan. (5)
10.1.42 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of Wayne, Michigan. (5)
10.1.43 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Township of White Pigeon, Michigan. (5)
10.1.44 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of White Pigeon, Michigan. (5)
10.1.45 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for Dakota
City, Nebraska. (1)
10.1.46 Copy of Service Permit granted by Dakota County, Nebraska
Board of County Commissioners. (1)
10.1.47 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Homer, Nebraska. (1)
10.1.48 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for South
Sioux City, Nebraska. (1)
10.1.49 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Walthill, Nebraska. (2)
</TABLE>
<PAGE> 58
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------ ------------------- ----
<S> <C> <C>
10.1.50 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the
Village of Walthill, Nebraska. (1)
10.1.51 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Canyonville, Oregon. (1)
10.1.52 Copy of resolution amending the franchise for the City of
Canyonville, Oregon. (2)
10.1.53 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Myrtle Creek, Oregon. (1)
10.1.59 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Riddle, Oregon. (2)
10.1.60 Copy of a franchise and related documents thereto granting a
community antenna television system franchise for the City
of Winston, Oregon. (1)
10.2.1 Credit Agreement dated 8/5/88 between Jones Cable Income
Fund 1-B, Ltd. and First Wisconsin National Bank of
Milwaukee. (2)
10.2.2 Amendment No. 1 dated 7/21/89 to Credit Agreement dated
8/5/88 between Jones Cable Income Fund 1-B, Ltd. and First
Wisconsin National Bank of Milwaukee. (2)
10.2.3 Amendment No. 2 dated 10/15/90 to Credit Agreement dated
8/5/88 between Jones Cable Income Fund 1-B, Ltd. and First
Wisconsin National Bank of Milwaukee. (2)
10.2.3 Amendment No. 3 dated 6/30/92 to Credit Agreement dated
8/5/88 between Jones Cable Income Fund 1-B, Ltd. and First
Wisconsin National Bank of Milwaukee. (2)
10.2.4 Amended and Restated Revolving Credit Agreement dated
September 30, 1994 between Jones Cable Income Fund 1-B/C
Venture, Corestates Bank, N.A., First National Bank of
Maryland, Dresdner Bank AG and Continental Bank. (8)
10.2.5 Revolving Credit and Term Loan Agreement dated as of January
19, 1995 between Jones Cable Income Fund 1-B and Colorado
National Bank. (8)
27 Financial Data Schedule
</TABLE>
- ----------
(1) Incorporated by reference from Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1987.
(2) Incorporated by reference from Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1992.
(3) Incorporated by reference from Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1993.
(4) Incorporated by reference from Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1990.
(5) Incorporated by reference from Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1988.
<PAGE> 59
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------ ------------------- ----
<S> <C> <C>
(6) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1989.
(7) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1986.
(8) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1994.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 54,135
<SECURITIES> 0
<RECEIVABLES> 247,500
<ALLOWANCES> (17,594)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,934,307
<DEPRECIATION> (5,878,915)
<TOTAL-ASSETS> 9,994,303
<CURRENT-LIABILITIES> 677,201
<BONDS> 6,866,146
0
0
<COMMON> 0
<OTHER-SE> 2,760,075
<TOTAL-LIABILITY-AND-EQUITY> 9,994,303
<SALES> 0
<TOTAL-REVENUES> 4,920,983
<CGS> 0
<TOTAL-COSTS> 4,884,702
<OTHER-EXPENSES> (1,446)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 524,050
<INCOME-PRETAX> (2,224,727)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,224,727)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,224,727)
<EPS-PRIMARY> (26.26)
<EPS-DILUTED> (26.26)
</TABLE>
