<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, 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
<PAGE>
JONES INTERCABLE INVESTORS, L.P.
--------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1996 1995
------ ------------- ------------
<S> <C> <C>
CASH $ 395,611 $ 91,518
TRADE RECEIVABLES, less allowance for doubtful
receivables of $68,134 and $82,938 at
September 30, 1996 and December 31, 1995,
respectively 1,147,184 1,378,312
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 72,900,061 67,139,530
Less- accumulated depreciation (33,201,279) (29,510,807)
------------ ------------
39,698,782 37,628,723
Franchise costs and other intangible assets,
net of accumulated amortization of $41,852,378
and $39,276,038 at September 30, 1996 and
December 31, 1995, respectively 6,248,932 8,825,272
------------ ------------
Total investment in cable
television properties 45,947,714 46,453,995
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 354,349 151,688
------------ ------------
Total assets $ 47,844,858 $ 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
------------------------
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
------------------------------------------- ------------- ------------
<S> <C> <C>
LIABILITIES:
Credit facility $ 29,000,000 $ 26,450,000
Capital lease obligations 355,519 311,696
Accrued distributions to Class A Unitholders 1,248,395 1,248,395
Accounts payable and accrued liabilities 1,620,599 2,146,992
Subscriber prepayments 139,233 118,157
------------- ------------
Total liabilities 32,363,746 30,275,240
------------- ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated earnings (deficit) 4,516 (9,744)
------------- ------------
5,516 (8,744)
------------- ------------
Class A Unitholders-
Net contributed capital
(8,322,632 units outstanding at
September 30, 1996 and December 31, 1995) 116,433,492 116,433,492
Accumulated earnings (deficit) 447,072 (964,692)
Distributions to Unitholders (101,404,968) (97,659,783)
------------- ------------
15,475,596 17,809,017
------------- ------------
Total liabilities and
partners' capital (deficit) $ 47,844,858 $ 48,075,513
============= ============
</TABLE>
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 Nine Months Ended
September 30, September 30,
-------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES $8,092,507 $7,522,301 $23,908,825 $22,246,502
COSTS AND EXPENSES:
Operating expenses 3,962,585 3,687,080 11,783,791 11,039,398
Management fees and allocated overhead
from General Partner 882,657 881,784 2,749,787 2,659,482
Depreciation and amortization 2,100,804 1,957,932 6,315,405 5,873,782
---------- ---------- ----------- -----------
OPERATING INCOME 1,146,461 995,505 3,059,842 2,673,840
---------- ---------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (507,170) (485,023) (1,531,124) (1,433,465)
Other, net (107,974) (67,873) (102,694) (67,265)
---------- ---------- ----------- -----------
Total other income (expense) (615,144) (552,896) (1,633,818) (1,500,730)
---------- ---------- ----------- -----------
NET INCOME $ 531,317 $ 442,609 $ 1,426,024 $ 1,173,110
========== ========== =========== ===========
ALLOCATION OF NET INCOME:
General Partner $ 5,313 $ 4,426 $ 14,260 $ 11,731
========== ========== =========== ===========
Class A Unitholders $ 526,004 $ 438,183 $ 1,411,764 $ 1,161,379
========== ========== =========== ===========
NET INCOME PER CLASS A UNIT $ .06 $ .05 $ .17 $ .14
========== ========== =========== ===========
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
----------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,426,024 $ 1,173,110
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,315,405 5,873,782
Decrease (increase) in trade receivables 231,128 (128,343)
Increase in deposits, prepaid expenses
and deferred charges (251,254) (170,860)
Decrease in accounts payable, accrued
liabilities and subscriber prepayments (505,317) (255,282)
----------- -----------
Net cash provided by operating activities 7,215,986 6,492,407
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (5,760,531) (4,704,400)
----------- -----------
Net cash used in investing activities (5,760,531) (4,704,400)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 2,798,452 3,365,970
Repayment of debt (204,629) (1,526,776)
Distributions to unitholders (3,745,185) (3,745,185)
----------- -----------
Net cash used in financing activities (1,151,362) (1,905,991)
----------- -----------
Increase (decrease) in cash 304,093 (117,984)
Cash, beginning of period 91,518 607,422
----------- -----------
Cash, end of period $ 395,611 $ 489,438
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,584,777 $ 1,528,262
=========== ===========
</TABLE>
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 September 30, 1996 and December 31, 1995, its Statements of
Operations for the three and nine month periods ended September 30, 1996 and
1995 and its Statements of Cash Flows for the nine month periods ended September
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 nine month periods ended September
30, 1996 were $404,625 and $1,195,441, respectively, compared to $376,115 and
$1,112,325, 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 and nine month periods ended September 30, 1996 were
$478,032 and $1,554,346, respectively, compared to $505,669 and $1,547,157,
respectively, for the similar 1995 periods.
(3) In connection with that certain litigation entitled Luva Vaughan et al v.
---------------------
Jones Intercable, Inc. et al, Case No. CV 94-3652, filed in the Circuit Court
- ----------------------------
for Jackson County, Missouri previously reported, a trial to the Court was held
in April and May 1996. On September 20, 1996, the Court entered judgment in
favor of the General Partner and taxed costs to the plaintiffs. In the Judgment,
the Court (a) denied plaintiffs' motion for reconsideration of the Court's prior
decision granting summary judgment in favor of the General Partner on the claim
in the litigation relating to the payment by the Partnership of a brokerage
commission; (b) held that plaintiffs did not establish that demand was made on
the General Partner for the relief sought or that such a demand would have been
futile; and (c) advised that the proper procedure for the selection of
appraisers under the Limited Partnership Agreement of the Partnership is that
the General Partner selects one appraiser on its own behalf and one appraiser on
behalf of the Partnership and that these two appraisers select the third
appraiser. The time for filing motions for a new trial and for filing an appeal
has not yet expired.
(4) Certain prior year amounts have been reclassified to conform to the 1996
presentation.
6
<PAGE>
JONES INTERCABLE INVESTORS, L.P.
--------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
For the nine months ended September 30, 1996, the Partnership generated net
cash from operating activities totaling $7,215,986, which is available to fund
distributions, capital expenditures and non-operating costs. Capital
expenditures for the Partnership's Independence System totaled approximately
$5,761,000 during the first nine months of 1996. Approximately 38 percent of
these expenditures were for the construction of service drops to subscriber
homes. Approximately 34 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. Anticipated
capital expenditures for the remainder of 1996 are approximately $1,511,000.
The rebuild of a portion of the Independence System and plant extension is
expected to account for approximately 72 percent of the anticipated remaining
capital expenditures. The remainder of the expenditures will be to maintain the
value of the Independence System until it is sold. 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
September 30, 1996, $29,000,000 was outstanding, leaving $6,000,000 of available
borrowings for future needs. Under the terms of the credit agreement, the
revolving credit facility will expire on December 31, 1996; however, prior to
such date the General Partner expects to negotiate a one year extension of the
facility. 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 September 30, 1996 and 1995 were 6.82 percent and
7.15 percent, respectively.
The Partnership has declared a $.15 per unit distribution for the third
quarter of 1996, which will be paid in November 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. Once the
Independence System is sold, the Partnership will be liquidated and no further
distributions will be made.
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 until the Independence System is sold and the Partnership is
liquidated.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership increased $570,206, or approximately 8 percent,
to $8,092,507 for the three months ended September 30, 1996 from $7,522,301 for
the three months ended September 30, 1995. Revenues of the Partnership
increased $1,662,323, or approximately 7 percent, to $23,908,825 for the nine
months ended September 30, 1996 from $22,246,502 for the nine months ended
September 30, 1995. These increases in revenues 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 62
percent and 56 percent, respectively, of the increase in basic service revenues
for the three and nine month periods ended September 30, 1996. An increase in
the number of basic service subscribers accounted for approximately 36 percent
and 41 percent, respectively, of the increase in basic service revenues for the
three and nine month periods ended September 30, 1996. The number of basic
subscribers increased by 2,407 subscribers, or approximately 3 percent, to
84,932 at September 30, 1996 from 82,525 at September 30, 1995. No other
individual factor was significant to the increase in revenues.
7
<PAGE>
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 $275,505, or approximately 7 percent, to
$3,962,585 for the three months ended September 30, 1996 from $3,687,080 for the
three months ended September 30, 1995. Operating expenses represented
approximately 49 percent of revenues for each of the three month periods ended
September 30, 1996 and 1995. Operating expenses increased $744,393, or
approximately 7 percent, to $11,783,791 for the nine months ended September 30,
1996 from $11,039,398 for the nine months ended September 30, 1995. Operating
expenses represented approximately 49 percent and 50 percent of revenues for the
nine month periods ended September 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
$873, or less than 1 percent, to $882,657 for the third quarter of 1996 from
$881,784 for the comparable 1995 period. Management fees and allocated overhead
from the General Partner increased $90,305, or approximately 3 percent, to
$2,749,787 for the nine months ended September 30, 1996 from $2,659,482 for 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 $142,872, or approximately
7 percent, to $2,100,804 for the three months ended September 30, 1996 from
$1,957,932 for the comparable 1995 period. Depreciation and amortization
expense increased $441,623, or approximately 8 percent, to $6,315,405 for the
nine months ended September 30, 1996 from $5,873,782 for the comparable 1995
period. These increases were due to capital additions in 1996.
Operating income increased $150,956, or approximately 15 percent, to
$1,146,461 for the three months ended September 30, 1996 compared to $995,505
for the comparable 1995 period. Operating income increased $386,002, or
approximately 14 percent, to $3,059,842 for the nine months ended September 30,
1996 compared to $2,673,840 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 $293,828, or approximately 10
percent, to $3,247,265 for the three months ended September 30, 1996 from
$2,953,437 for the similar period in 1995. Operating income before depreciation
and amortization increased $827,625, or approximately 10 percent, to $9,375,247
for the nine months ended September 30, 1996 from $8,547,622 for the similar
period in 1995. These increases were due to the increases in revenues exceeding
the increases in operating expenses and management fees and allocated overhead
from the General Partner.
Interest expense increased $22,147, or approximately 5 percent, to $507,170
for the three month period ended September 30, 1996 from $485,023 for the
comparable 1995 period. Interest expense increased $97,659, or approximately 7
percent, to $1,531,124 for the nine month period ended September 30, 1996 from
$1,433,465 for the comparable 1995 period. These increases were due to higher
outstanding balances on interest-bearing obligations.
Net income increased $88,708, or approximately 20 percent, to $531,317 in
the third quarter of 1996 compared to $442,609 in the third quarter of 1995.
Net income increased $252,914, or approximately 22 percent, to $1,426,024 for
the nine month period ended September 30, 1996 compared to $1,173,110 for the
similar 1995 period. These increases were due to the factors discussed above.
8
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In connection with that certain litigation entitled Luva Vaughan et al
------------------
v. Jones Intercable, Inc. et al, Case No. CV 94-3652, filed in the Circuit Court
- -------------------------------
for Jackson County, Missouri previously reported, a trial to the Court was held
in April and May 1996. On September 20, 1996, the Court entered judgment in
favor of Jones Intercable, Inc. (the "General Partner") and taxed costs to the
plaintiffs. In the Judgment, the Court (a) denied plaintiffs' motion for
reconsideration of the Court's prior decision granting summary judgment in favor
of the General Partner on the claim in the litigation relating to the payment by
the Partnership of a brokerage commission; (b) held that plaintiffs did not
establish that demand was made on the General Partner for the relief sought or
that such a demand would have been futile; and (c) advised that the proper
procedure for the selection of appraisers under the Limited Partnership
Agreement of the Partnership is that the General Partner selects one appraiser
on its own behalf and one appraiser on behalf of the Partnership and that these
two appraisers select the third appraiser. The time for filing motions for a new
trial and for filing an appeal has not yet expired.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
9
<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: November 8, 1996
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 395,611
<SECURITIES> 0
<RECEIVABLES> 1,147,184
<ALLOWANCES> (68,134)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 72,900,061
<DEPRECIATION> (33,201,279)
<TOTAL-ASSETS> 47,844,858
<CURRENT-LIABILITIES> 3,363,746
<BONDS> 29,000,000
0
0
<COMMON> 0
<OTHER-SE> 15,481,112
<TOTAL-LIABILITY-AND-EQUITY> 47,844,858
<SALES> 0
<TOTAL-REVENUES> 23,908,825
<CGS> 0
<TOTAL-COSTS> 20,848,983
<OTHER-EXPENSES> 102,694
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,531,124
<INCOME-PRETAX> 1,426,024
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,426,024
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,426,024
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
