<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1999
------------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from _________to_________
Commission File Number: 0-14906
JONES CABLE INCOME FUND 1-B, LTD.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1010417
- --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D. #
c/o Comcast Corporation
1500 Market Street, Philadelphia, PA 19102-2148
-----------------------------------------------
Address of principal executive office
(215) 665-1700
----------------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _______
-----
<PAGE>
JONES CABLE INCOME FUND 1-B, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1999 1998
- ------ ------------- -------------
<S> <C> <C>
INVESTMENT IN CABLE TELEVISION JOINT VENTURE $ 2,750,185 $ 83,879
------------ ------------
Total assets $ 2,750,185 $ 83,879
============ ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
LIABILITIES:
Accounts payable and accrued liabilities $ 101,637 $ 53,197
------------ ------------
Total liabilities 101,637 53,197
------------ ------------
PARTNERS' CAPITAL:
General Partner-
Contributed capital 1,000 1,000
Accumulated earnings 109,219 109,219
Distributions (110,219) (110,219)
------------ ------------
- -
------------ ------------
Limited Partners-
Net contributed capital (83,884 units outstanding
at September 30, 1999 and December 31, 1998) 34,449,671 34,449,671
Accumulated earnings 12,987,099 10,369,233
Distributions (44,788,222) (44,788,222)
------------ ------------
2,648,548 30,682
------------ ------------
Total liabilities and partners' capital $ 2,750,185 $ 83,879
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
<PAGE>
JONES CABLE INCOME FUND 1-B, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
----------------------- ---------------------------
1999 1998 1999 1998
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OTHER INCOME (EXPENSE), net $ (42,627) $ 1,128 $ (48,440) $ (51,783)
EQUITY IN NET INCOME OF
CABLE TELEVISION JOINT
VENTURE 2,507,294 9,037,678 2,666,306 13,772,395
----------- ----------- ------------ -----------
NET INCOME $ 2,464,667 $ 9,038,806 $2,617,866 $13,720,612
=========== =========== ========== ===========
ALLOCATION OF NET INCOME:
General Partner $ (1,532) $ 3,445 $ - $ 4,258
=========== =========== ========== ===========
Limited Partners $ 2,466,199 $ 9,035,361 $2,617,866 $13,716,354
=========== =========== ========== ===========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ 29.40 $ 107.72 $ 31.21 $ 163.52
=========== =========== ========== ===========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 83,884 83,884 83,884 83,884
=========== =========== ========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
3
<PAGE>
JONES CABLE INCOME FUND 1-B, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
--------------------------
<S> <C> <C>
1999 1998
----------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,617,866 $ 13,720,612
Adjustments to reconcile net income to net
cash used in operating activities:
Equity in net income of cable television
joint venture (2,666,306) (13,772,395)
Increase in accrued liabilities 48,440 51,638
----------- ------------
Net cash used in operating activities - (145)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from cable television joint venture - 15,700,281
----------- ------------
Net cash provided by investing activities - 15,700,281
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to limited partners - (15,700,281)
----------- ------------
Net cash used in financing activities - (15,700,281)
----------- ------------
Decrease in cash - (145)
Cash, beginning of period - 145
----------- ------------
Cash, end of period $ - $ -
=========== =============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ - $ -
=========== =============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
<PAGE>
JONES CABLE INCOME FUND 1-B, LTD.
---------------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a complete presentation of the Balance Sheets
and Statements of Operations and Cash Flows in conformity with generally
accepted accounting principles. However, in the opinion of management, this data
includes all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the financial position of Jones Cable Income Fund 1-
B, Ltd. (the "Partnership") at September 30, 1999 and December 31, 1998 and its
Statements of Operations for the three and nine month periods ended September
30, 1999 and 1998 and its Statements of Cash Flows for the nine month periods
ended September 30, 1999 and 1998.
The Partnership owns a 40 percent interest in Jones Cable Income Fund 1-B/C
Venture (the "Venture"). The Venture owned and operated the cable television
system serving Myrtle Creek, Oregon (the "Myrtle Creek System") until its sale
on July 30, 1999. Jones Cable Income Fund 1-C, Ltd. ("Fund 1-C") owns a 60
percent interest in the Venture. Jones Intercable, Inc., a publicly held
Colorado corporation, is the "General Partner" and manages the Partnership and
the Venture.
On April 7, 1999, Comcast Corporation ("Comcast") completed the acquisition
of a controlling interest in the General Partner for aggregate consideration of
$706.3 million. Comcast acquired an additional 1.0 million shares of the General
Partner's Class A Common Stock on June 29, 1999 for $50.0 million in a private
transaction. Upon completion of these transactions, Comcast owns approximately
13.8 million shares of the General Partner's Class A Common Stock and
approximately 2.9 million shares of the General Partner's Common Stock,
representing 39.6% of the economic interest and 48.3% of the voting interest in
the General Partner. Comcast has contributed its shares in the General Partner
to its wholly owned subsidiary, Comcast Cable Communications, Inc. ("Comcast
Cable"). The approximately 2.9 million shares of Common Stock owned by Comcast
Cable represent shares having the right to elect approximately 75% of the Board
of Directors of the General Partner. The General Partner is now a consolidated
public company subsidiary of Comcast Cable.
In connection with Comcast's acquisition of a controlling interest in the
General Partner on April 7, 1999, all of the persons who were executive officers
of the General Partner as of that date terminated their employment with the
General Partner. The General Partner's Board of Directors has elected new
executive officers, each of whom also is an officer of Comcast. As of July 7,
1999, all persons who were employed at the General Partner's former corporate
offices in Englewood, Colorado had terminated their employment with the General
Partner. The General Partner's corporate offices are now located at 1500 Market
Street, Philadelphia, Pennsylvania 19102-2148.
(2) On July 30, 1999, the Venture sold the Myrtle Creek System to an
unaffiliated party for a sales price of $9,535,844, subject to customary closing
adjustments. The initial sales price of $10,000,000 was reduced $1,507 for each
of the Myrtle Creek System's equivalent basic subscribers less than 6,650 at
closing. At July 30, 1999, the Myrtle Creek System had 6,342 equivalent basic
subscribers, which reduced the initial sales price by $464,156. When final
closing adjustments are done approximately ninety days after closing, the
equivalent basic subscribers will be recounted and the sales price will be
adjusted accordingly. From the sale proceeds, the Venture paid a $238,396
brokerage fee to The Intercable Group, Ltd. ("The Intercable Group"), a
subsidiary of the General Partner, representing 2.5 percent of the sales price,
for acting as a broker in the transaction, repaid the outstanding balance on the
Venture's credit facility of $2,400,000, and deposited $500,000 into an
interest-bearing indemnity escrow account. The Venture will settle working
capital adjustments and, based upon financial information as of September 30,
1999, the remaining net sale proceeds will be distributed 40 percent to the
Partnership and 60 percent to Fund 1-C. The Partnership, in turn, will create a
reserve to cover the administrative expenses of the Partnership and then it
plans to distribute the balance to the limited partners of the Partnership.
Because this distribution to the limited partners of the Partnership together
with all prior distributions will not return the amount initially contributed by
the limited partners to the Partnership plus the limited partners' liquidation
preference provided by the Partnership's limited partnership agreement, the
General Partner of the Partnership will not receive a general partner
distribution from the Myrtle Creek System's sale proceeds.
5
<PAGE>
For a period of one year following the closing date, $500,000 of the sale
proceeds will remain in escrow as security for the Venture's agreement to
indemnify the purchaser under the asset purchase agreement. The Venture's
primary exposure, if any, will relate to the representations and warranties made
about the Myrtle Creek System in the asset purchase agreement. Any amounts
remaining from this indemnity escrow account and not claimed by the buyer at the
end of the one-year escrow period plus interest earned on the escrowed funds
will be returned to the Venture. From this amount, the Venture will pay any
remaining liabilities and the Venture then plans to distribute the balance, if
any, to its partners. From its share of this distribution, the Partnership will
retain funds necessary to cover the administrative expenses of the Partnership
and it plans to distribute the balance, if any, to the limited partners.
Although the sale of the Myrtle Creek System represented the sale of the
only remaining operating asset of the Venture, and the Partnership's interest in
the Venture represents its only asset, the Venture and the Partnership will not
be dissolved until all proceeds from escrow have been distributed and the
Partnership will not be dissolved and liquidated until the pending litigation in
which the Partnership is a named defendant has been resolved and terminated.
(3) On January 9, 1998, the Venture sold the cable television system serving
Clearlake and Lakeport, California (the "Clearlake System") to an unaffiliated
party. The Venture repaid a portion of its indebtedness, settled working capital
adjustments, deposited $300,000 into an indemnity escrow account and distributed
the remaining net sale proceeds to the Partnership and Fund 1-C. The indemnity
escrow period expired on January 9, 1999, and all of the $300,000 indemnity
escrow amount plus $14,977 of interest was returned to the Venture. The Venture
has distributed these funds 40 percent to the Partnership and 60 percent to Fund
1-C. The Partnership used its portion of these proceeds to repay a portion of
its remaining liabilities, therefore no distribution of these funds was made to
the limited partners.
(4) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
ASSETS September 30, 1999 December 31, 1998
------ ------------------ -----------------
<S> <C> <C>
Cash and accounts receivable $ 6,714,752 $ 127,614
Investment in cable television properties - 3,265,432
Other assets 503,750 450,504
------------ ------------
Total assets $ 7,218,502 $ 3,843,550
============ ============
LIABILITIES AND PARTNERS' CAPITAL
----------------------------------
Debt $ - $ 2,417,756
Accounts payable and accrued liabilities 292,725 1,204,333
Partners' contributed capital, net (14,973,692) (14,973,692)
Accumulated earnings 21,899,469 15,195,153
------------ ------------
Total liabilities and partners' capital $ 7,218,502 $ 3,843,550
============ ============
</TABLE>
6
<PAGE>
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- ---------------------------
1999 1998 1999 1998
------------ -------------- ------------- ------------
<S> <C> <C> <C> <C>
Revenues $ 188,993 $ 1,689,051 $ 1,384,006 $ 7,935,981
Operating expenses 184,450 1,317,367 909,868 4,931,092
Management fees and allocated overhead
from Jones Intercable, Inc. 17,843 186,371 146,326 883,373
Depreciation and amortization 64,186 572,488 461,230 2,745,937
---------- ----------- ----------- -----------
Operating loss (77,486) (387,175) (133,418) (624,421)
---------- ----------- ----------- -----------
Interest expense (3,514) (152,863) (84,280) (555,149)
Interest income on escrowed proceeds 3,750 - 3,750 -
Gain on sale of cable television system 6,350,069 23,191,974 6,350,069 35,830,323
Other, net 31,663 72,925 568,195 (20,643)
---------- ----------- ----------- -----------
Net income $6,304,482 $22,724,861 $ 6,704,316 $34,630,110
========== =========== ========== ===========
</TABLE>
(5) The General Partner manages the Partnership and 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. The
General Partner has not received and will not receive a management fee after
July 30, 1999. Management fees paid to the General Partner by the Venture for
the three and nine month periods ended September 30, 1999 were $9,449 and
$69,200, respectively, compared to $84,452 and $396,799, respectively, for the
similar 1998 periods.
The Venture will continue to reimburse the General Partner for certain
administrative expenses. These expenses represent the salaries and related
benefits paid for corporate personnel. Such personnel provide administrative,
accounting, tax, legal and investor relations services to the Venture and its
constituent partnerships. Such services, and their related costs, are
necessary to the administration of the Venture and its constituent partnerships
until they are dissolved. Such costs were charged to operating costs during the
periods that the Venture operated its cable telvision systems. Subsequent to
the sale of the Venture's final cable television system, such costs were charged
to other expense. Reimbursements made to the Venture by the General Partner for
overhead and administrative expenses during the three and nine month periods
ended September 30, 1999 were $8,394 and $77,126, respectively, compared to
$101,919 and $486,574, respectively, for the similar 1998 periods.
7
<PAGE>
JONES CABLE INCOME FUND 1-B, LTD.
---------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
The Partnership owns a 40 percent interest in the Venture. This investment
is accounted for under the equity method. When compared to the December 31,
1998 balance, this investment has increased by $2,666,306. This increase
represents the Partnership's proportionate share of income during 1999.
On July 30, 1999, the Venture sold the Myrtle Creek System to an
unaffiliated party for a sales price of $9,535,844, subject to customary closing
adjustments. The initial sales price of $10,000,000 was reduced $1,507 for each
of the Myrtle Creek System's equivalent basic subscribers less than 6,650 at
closing. At July 30, 1999, the Myrtle Creek System had 6,342 equivalent basic
subscribers, which reduced the initial sales price by $464,156. When final
closing adjustments are done approximately ninety days after closing, the
equivalent basic subscribers will be recounted and the sales price will be
adjusted accordingly. From the sale proceeds, the Venture paid a $238,396
brokerage fee to The Intercable Group, a subsidiary of the General Partner,
representing 2.5 percent of the sales price, for acting as a broker in the
transaction, repaid the outstanding balance on the Venture's credit facility of
$2,400,000, and deposited $500,000 into an interest-bearing indemnity escrow
account. The Venture will settle working capital adjustments and, based upon
financial information as of September 30, 1999, the remaining net sale proceeds
will be distributed 40 percent to the Partnership and 60 percent to Fund 1-C.
The Partnership, in turn, will create a reserve to cover the administrative
expenses of the Partnership and then plans to distribute the balance to the
limited partners of the Partnership. Because this distribution to the limited
partners of the Partnership together with all prior distributions will not
return the amount initially contributed by the limited partners to the
Partnership plus the limited partners' liquidation preference provided by the
Partnership's limited partnership agreement, the General Partner of the
Partnership will not receive a general partner distribution from the Myrtle
Creek System's sale proceeds.
For a period of one year following the closing date, $500,000 of the sale
proceeds will remain in escrow as security for the Venture's agreement to
indemnify the purchaser under the asset purchase agreement. The Venture's
primary exposure, if any, will relate to the representations and warranties made
about the Myrtle Creek System in the asset purchase agreement. Any amounts
remaining from this indemnity escrow account and not claimed by the buyer at the
end of the one-year escrow period plus interest earned on the escrowed funds
will be returned to the Venture. From this amount, the Venture will pay any
remaining liabilities and the Venture plans to distribute the balance, if any,
to its partners. From its share of this distribution, the Partnership will
retain funds necessary to cover the administrative expenses of the Partnership
and it plans to distribute the balance, if any, to the limited partners.
Although the sale of the Myrtle Creek System represented the sale of the
only remaining operating asset of the Venture, and the Partnership's interest in
the Venture represents its only asset, the Venture and the Partnership will not
be dissolved until all proceeds from escrow have been distributed and the
Partnership will not be dissolved and liquidated until the pending litigation in
which the Partnership is a named defendant has been resolved and terminated.
On January 9, 1998, the Venture sold the Clearlake System to an
unaffiliated party. The Venture repaid a portion of its indebtedness, settled
working capital adjustments, deposited $300,000 into an indemnity escrow account
and distributed the remaining net sale proceeds to the Partnership and Fund 1-C.
The indemnity escrow period expired on January 9, 1999, and all of the $300,000
indemnity escrow amount plus $14,977 of interest was returned to the Venture.
The Venture has distributed these funds 40 percent to the Partnership and 60
percent to Fund 1-C. The Partnership used it's portion of these proceeds to
repay a portion of its remaining liabilities, therefore no distribution of these
funds was made to the limited partners.
Because the Venture has sold all of its assets and further distributions,
if any, will be made to the limited partners of record as of the closing date of
the sale of the Venture's last remaining cable television system, new limited
partners would not be entitled to any distributions from the Partnership and
transfers of limited partnership interests would have no economic or practical
value. The General Partner therefore has determined, in accordance with the
authority granted to it under Section 3.5 of the Partnership's limited
partnership agreement, that it will not process any transfers of limited
partnership interests in the Partnership during the remainder of the
Partnership's term.
8
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Due to the Myrtle Creek System sale on July 30, 1999, which was the
Venture's last remaining operating asset, a discussion of results of operations
would not be meaningful. For the period ended September 30, 1999, the Venture
had total revenues of $1,384,006 and generated an operating loss of $133,418.
Because of the gain of $6,350,069 on the sale of the Myrtle Creek System, the
Venture realized net income of $6,704,316 during the nine months ended September
30, 1999.
9
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
Report on Form 8-K dated July 30, 1999, filed August 16, 1999,
reported that on July 30, 1999, the Venture sold the Myrtle Creek
System to an unaffiliated party for a sales price of $10,000,000,
subject to customary closing adjustments.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JONES CABLE INCOME FUND 1-B, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Lawrence S. Smith
------------------------------------
Lawrence S. Smith
Principal Accounting Officer
By: /S/ Joseph J. Euteneuer
------------------------------------
Joseph J. Euteneuer
Vice President (Authorized Officer)
Dated: November 12, 1999
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,750,185
<CURRENT-LIABILITIES> 101,637
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,648,548
<TOTAL-LIABILITY-AND-EQUITY> 2,750,185
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (2,617,866)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,617,866
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,617,866
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,617,866
<EPS-BASIC> 31.21
<EPS-DILUTED> 31.21
</TABLE>
