<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 June 30, 1996
-------------
[ ] 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: 1-9287
JONES INTERCABLE INVESTORS, L.P.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 36-3468573
- --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
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Address of principal executive office
(303) 792-3111
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 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
----- -----
Units outstanding as of the close of the period covered by this report:
8,322,632 Class A Units
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JONES INTERCABLE INVESTORS, L.P.
--------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
------ ---------- -------------
<S> <C> <C>
CASH $ 610,843 $ 91,518
TRADE RECEIVABLES, less allowance for doubtful
receivables of $129,501 and $82,938 at June 30, 1996
and December 31, 1995, respectively 959,273 1,378,312
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 70,260,583 67,139,530
Less- accumulated depreciation (31,963,360) (29,510,807)
------------ ------------
38,297,223 37,628,723
Franchise costs and other intangible assets, net of
accumulated amortization of $40,993,598 and
$39,276,038 at June 30, 1996 and December 31, 1995,
respectively 7,107,712 8,825,272
------------ ------------
Total investment in cable
television properties 45,404,935 46,453,995
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 211,950 151,688
------------ ------------
Total assets $ 47,187,001 $ 48,075,513
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
<PAGE>
JONES INTERCABLE INVESTORS, L.P.
--------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
June 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
------------------------------------------- -------------- -------------
LIABILITIES:
Credit facility $ 28,250,000 $ 26,450,000
Capital lease obligations 178,525 311,696
Accrued distributions to Class A Unitholders 1,248,395 1,248,395
Accounts payable and accrued liabilities 1,177,192 2,146,992
Subscriber prepayments 134,698 118,157
------------- ------------
Total liabilities 30,988,810 30,275,240
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PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (797) (9,744)
------------- ------------
203 (8,744)
------------- ------------
Class A Unitholders-
Net contributed capital
(8,322,632 units outstanding at
June 30, 1996 and December 31, 1995) 116,433,492 116,433,492
Accumulated deficit (78,932) (964,692)
Distributions to Unitholders (100,156,572) (97,659,783)
------------- ------------
16,197,988 17,809,017
------------- ------------
Total liabilities and
partners' capital (deficit) $ 47,187,001 $ 48,075,513
============= ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
<PAGE>
JONES INTERCABLE INVESTORS, L. P.
---------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
--------------------------- --------------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---------- ---------- ----------- -----------
REVENUES $8,038,701 $7,484,211 $15,816,318 $14,724,201
COSTS AND EXPENSES:
Operating expenses 3,867,859 3,667,387 7,821,206 7,352,318
Management fees and allocated overhead
from General Partner 951,561 865,066 1,867,130 1,777,698
Depreciation and amortization 2,107,300 1,957,931 4,214,601 3,915,850
---------- ---------- ----------- -----------
OPERATING INCOME 1,111,981 993,827 1,913,381 1,678,335
---------- ---------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (494,686) (483,646) (1,023,954) (948,442)
Other, net 109,525 (1,107) 5,280 608
---------- ---------- ----------- -----------
Total other income (expense) (385,161) (484,753) (1,018,674) (947,834)
---------- ---------- ----------- -----------
NET INCOME $ 726,820 $ 509,074 $ 894,707 $ 730,501
========== ========== =========== ===========
ALLOCATION OF NET INCOME:
General Partner $ 7,268 $ 5,091 $ 8,947 $ 7,305
========== ========== =========== ===========
Class A Unitholders $ 719,552 $ 503,983 $ 885,760 $ 723,196
========== ========== =========== ===========
NET INCOME PER CLASS A UNIT $.09 $.07 $.11 $.10
========== ========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
CLASS A UNITS OUTSTANDING 8,322,632 8,322,632 8,322,632 8,322,632
========== ========== =========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
<PAGE>
JONES INTERCABLE INVESTORS, L. P.
---------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
For the Six Months Ended
June 30,
--------------------------
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 894,707 $ 730,501
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,214,601 3,915,850
Decrease in trade receivables 419,039 219,381
Increase in deposits, prepaid expenses
and deferred charges (104,749) (53,957)
Decrease in trade accounts payable, accrued
liabilities and subscriber prepayments (953,259) (185,593)
----------- -----------
Net cash provided by operating activities 4,470,339 4,626,182
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (3,121,053) (2,335,293)
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Net cash used in investing activities (3,121,053) (2,335,293)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 1,800,000 1,715,969
Repayment of debt (133,171) (1,447,088)
Distributions to unitholders (2,496,790) (2,496,790)
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Net cash used in financing activities (829,961) (2,227,909)
----------- -----------
Increase in cash 519,325 62,980
Cash, beginning of period 91,518 607,422
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Cash, end of period $ 610,843 $ 670,402
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 948,728 $ 1,058,132
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
<PAGE>
JONES INTERCABLE INVESTORS, L.P.
--------------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data includes
all adjustments, consisting only of normal recurring accruals, necessary to
present fairly the financial position of Jones Intercable Investors, L.P. (the
"Partnership") at June 30, 1996 and December 31, 1995, its Statements of
Operations for the three and six month periods ended June 30, 1996 and 1995 and
its Statements of Cash Flows for the six month periods ended June 30, 1996 and
1995. Results of operations for these periods are not necessarily indicative of
results to be expected for the full year.
The Partnership owns and operates the cable television system serving areas
in and around Independence, Missouri.
(2) Jones Intercable, Inc. ("Intercable"), a publicly held Colorado
corporation, is the "General Partner" and manages the Partnership and receives a
fee for its services equal to 5 percent of the gross revenues of the
Partnership, excluding revenues from the sale of cable television systems or
franchises. Management fees for the three and six month periods ended June 30,
1996 were $401,007 and $789,888, respectively, compared to $374,211 and
$736,210, respectively, for the similar 1995 periods.
The Partnership reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses represent the salaries and
related benefits paid for corporate personnel, rent, data processing services
and other corporate facilities costs. Such personnel provide engineering,
marketing, administrative, accounting, legal and investor relations services to
the Partnership. Allocations of personnel costs are primarily based upon 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 the
Partnership by the General Partner for allocated overhead and administrative
expenses for the three month periods ended June 30, 1996 and 1995 were $550,554
and $1,077,242, respectively, compared to $490,855 and $1,041,488, respectively,
for the similar 1995 periods.
(3) Certain prior year amounts have been reclassified to conform to the 1996
presentation.
6
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JONES INTERCABLE INVESTORS, L.P.
---------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
It is the General Partner's publicly announced policy that it intends to
liquidate its managed limited partnerships, including the Partnership, as
opportunities for sales of partnership cable television systems arise in the
marketplace over the next several years. No specific date or terms have yet
been set for the sale of the Partnership's remaining cable system.
For the six months ended June 30, 1996, the Partnership generated net cash
from operating activities totaling $4,470,338, which is available to fund
distributions, capital expenditures and non-operating costs. Capital
expenditures for the Partnership's Independence System totaled approximately
$3,121,000 during the first half of 1996. Approximately 46 percent of these
expenditures were for the construction of service drops to subscriber homes.
Approximately 38 percent of these expenditures were for the extension and
rebuild of cable plant. The remaining expenditures were for various enhancements
in the Partnership's Independence System. Funding for these expenditures was
provided by cash generated from operations. Budgeted capital expenditures for
the remainder of 1996 are approximately $4,733,000. The rebuild of a portion of
the Independence System and plant extension is expected to account for
approximately 85 percent of the anticipated remaining capital expenditures. The
remainder of the expenditures will relate to various enhancements in the
Independence System. The Partnership is required to maintain a certain level of
capital expenditures to rebuild and enhance the Independence System pursuant to
its franchise agreements. Funding for these capital improvements is expected to
be provided by cash generated from operations and borrowings from the
Partnership's credit facility.
The maximum amount available under the Partnership's revolving credit
facility is subject to the terms of the credit agreement and the partnership
agreement's leverage limitations discussed below. The maximum amount available
under the Partnership's revolving credit facility is $35,000,000. As of June
30, 1996, $28,250,000 was outstanding, leaving $6,750,000 of available
borrowings for future needs. Under the terms of the agreement, the revolving
credit facility will expire on December 31, 1996. However, the General Partner
expects to negotiate an extension of the revolving credit period. Interest on
outstanding principal balances is at the Partnership's option of the Prime Rate
plus .25 percent, the Certificate of Deposit Rate plus 1.25 percent or the Euro-
rate plus 1.25 percent. The effective interest rates on amounts outstanding as
of June 30, 1996 and 1995 were 6.87 percent and 7.69 percent, respectively.
The level of borrowings allowed by the Partnership's limited partnership
agreement is 25 percent of the fair market value of the Partnership's assets at
the time of borrowing or 25 percent of the cost of the Partnership's assets at
the time of borrowing, whichever is higher. This limitation may restrict the
Partnership's ability to borrow funds for capital expenditures and to make
distributions. In addition, such limitation may reduce the financial
flexibility and liquidity of the Partnership. Further, the payment of the
principal and interest on outstanding debt obligations will diminish the level
of funds available to the Partnership and reduce the financial flexibility of
the Partnership. The Partnership's most recent appraisal of the Independence
System was $167,065,000. Based upon this appraised value, the Partnership has a
borrowing capacity of approximately $41,000,000, which would allow the
Partnership to borrow the maximum amount ($35,000,000) currently available under
its credit facility.
The Partnership has declared a $.15 per unit distribution for the second
quarter of 1996, which will be paid in August 1996. The Partnership intends to
distribute all cash flow from operations after payment of expenses, capital
additions and creation of cash reserves deemed reasonably necessary to preserve
and enhance the value of the Partnership's cable television system.
The General Partner believes that cash generated from operations and
borrowings available under the Partnership's revolving credit facility will be
sufficient to fund distributions, capital expenditures and other liquidity needs
of the Partnership.
7
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership increased $554,490, or approximately 7 percent,
to $8,038,701 for the three months ended June 30, 1996 from $7,484,211 for the
three months ended June 30, 1995. Revenues of the Partnership increased
$1,092,117, or approximately 7 percent, to $15,816,318 for the six months ended
June 30, 1996 from $14,724,201 for the six months ended June 30, 1995. These
increases in revenues in the Independence System were primarily a result of
basic service rate increases and increases in the number of basic service
subscribers. Basic service rate increases accounted for approximately 58
percent and 29 percent, respectively, of the increase in revenues for the three
and six month periods ended June 30, 1996 and 1995. Basic subscribers increased
3,093, or approximately 4 percent, to 84,542 at June 30, 1996 from 81,449 at
June 30, 1995. No other individual factor was significant to the increase in
revenues.
Operating expenses consist primarily of costs associated with the
administration of the partnership's cable television system. 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 $200,472, or approximately 5 percent, to
$3,867,859 for the three months ended June 30, 1996 from $3,667,387 for the
three months ended June 30, 1995. Operating expense for the three month periods
represented approximately 48 percent and 49 percent of revenue in 1996 and 1995,
respectively. Operating expenses increased $468,888, or approximately 6
percent, to $7,821,206 for the six months ended June 30, 1996 from $7,352,318
for the six months ended June 30, 1995. Operating expenses represented
approximately 49 percent and 50 percent of revenues for the six month periods
ended June 30, 1996 and 1995, respectively. These increases in operating
expenses in the Partnership's Independence System were primarily due to an
increase in programming related costs. No other individual factor was
significant to the increase in operating expenses in the Partnership's
Independence System.
Management fees and allocated overhead from the General Partner increased
$86,495, or approximately 10 percent, to $951,561 for the second quarter of 1996
from $865,066 for the comparable 1995 period. Management fees and allocated
overhead from the General Partner increased $89,432, or approximately 5 percent
to $1,867,130 for the six months ended June 30, 1996 from $1,777,698 in the
comparable 1995 period. These increases were due to the increases in revenues,
upon which such management fees are based.
Depreciation and amortization expense increased $149,369, or approximately
8 percent, to $2,107,300 for the three months ended June 30, 1996 from
$1,957,931 for the comparable 1995 period. Depreciation and amortization
expense increased $298,751, or approximately 8 percent, to $4,214,601 for the
six months ended June 30, 1996 from $3,915,850 for the comparable 1995 period.
These increases were due to capital additions in 1996.
Operating income increased $118,154, or approximately 12 percent, to
$1,111,981 for the three months ended June 30, 1996 compared to $993,827 for the
comparable 1995 period. Operating income increased $235,046, or approximately
14 percent, to $1,913,381 for the six months ended June 30, 1996 compared to
$1,678,335 for the comparable 1995 period. These increases were due to the
increases in revenues exceeding the increases in operating expenses, management
fees and allocated overhead from the General Partner and depreciation and
amortization expense.
The cable television industry generally measures the 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 $267,523, or approximately 9
percent, to $3,219,281 for the three months ended June 30, 1996 from $2,951,758
for the similar period in 1995. This increase was due to the increase in
revenues exceeding the increase in operating expenses and management fees and
allocated overhead from the General Partner. Operating income before
depreciation and amortization increased $533,797, or approximately 10 percent,
to $6,127,982 for the six months ended June 30, 1996 from $5,594,185 for the
similar period in 1995. This increase was due to the increase in revenues
exceeding the increases in operating expenses and management fees and allocated
overhead from the General Partner.
8
<PAGE>
Interest expense increased $11,040, or approximately 2 percent, to $494,686
for the three month period ended June 30, 1996 from $483,646 in the comparable
1995 period. Interest expense increased $75,512, or approximately 8 percent, to
$1,023,954 for the six month period ended June 30, 1996 from $948,442 in the
comparable 1995 period. These increases were due to higher outstanding balances
on interest-bearing obligations.
Net income increased $217,746, or approximately 43 percent, to $726,820 in
the second quarter of 1996 compared to $509,074 in the second quarter of 1995.
Net income increased $164,206, or approximately 22 percent, to $894,707 for the
six months period ended June 30, 1996, compared to $730,501 for the similar 1995
period. These increases were due to the factors discussed above.
9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The General Partner is a defendant in a lawsuit brought by three
individuals who are Class A Unitholders in the Partnership. The litigation,
entitled Luva Vaughan et al v. Jones Intercable, Inc., et al, Case No. CV
---------------------------------------------------
94-3652, was filed in 1994 in the Circuit Court for Jackson County, Missouri,
and purports to be "for the use and benefit of" the Partnership. The trial of
this case occurred in late April and early May 1996 on the plaintiffs' remaining
breach of contract claim. The parties are awaiting a ruling and judgment of the
court.
Item 6. Exhibits and Reports on Form 8-k
a) Exhibits
27) Financial Data Schedule
b) Reports on form 8-k
None
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 INTERCABLE INVESTORS, L.P.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
----------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: August 14, 1996
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 610,843
<SECURITIES> 0
<RECEIVABLES> 959,273
<ALLOWANCES> (129,501)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 70,260,583
<DEPRECIATION> (31,963,360)
<TOTAL-ASSETS> 47,187,001
<CURRENT-LIABILITIES> 2,738,810
<BONDS> 28,250,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 47,187,001
<SALES> 0
<TOTAL-REVENUES> 15,816,318
<CGS> 0
<TOTAL-COSTS> 13,902,937
<OTHER-EXPENSES> 5,280
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,023,954
<INCOME-PRETAX> 894,707
<INCOME-TAX> 0
<INCOME-CONTINUING> 894,707
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 894,707
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
