<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 March 31, 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>
March 31, December 31,
ASSETS 1996 1995
- --------------------------------------------------------- ------------- -------------
<S> <C> <C>
CASH $ 174,228 $ 91,518
TRADE RECEIVABLES, less allowance for doubtful
receivables of $132,266 and $82,938 at March 31, 1996
and December 31, 1995, respectively 845,622 1,378,312
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 68,308,762 67,139,530
Less- accumulated depreciation (30,718,944) (29,510,807)
------------ ------------
37,589,818 37,628,723
Franchise costs and other intangible assets, net of
accumulated amortization of $40,134,818 at
March 31, 1996 and $39,276,038 at
December 31, 1995, respectively 7,966,492 8,465,272
------------ ------------
Total investment in cable
television properties 45,556,310 46,453,995
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 297,603 151,688
------------ ------------
Total assets $ 46,873,763 $ 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>
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
- ------------------------------------------------ ------------- -------------
<S> <C> <C>
LIABILITIES:
Credit facility $ 27,850,000 $ 26,450,000
Capital lease obligations 238,900 311,696
Accrued distributions to Class A Unitholders 1,248,395 1,248,395
Accounts payable and accrued liabilities 678,724 2,146,992
Subscriber prepayments 137,979 118,157
------------ ------------
Total liabilities 30,153,998 30,275,240
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (8,065) (9,744)
------------ ------------
(7,065) (8,744)
------------ ------------
Class A Unitholders-
Net contributed capital
(8,322,632 units outstanding at
March 31, 1996 and December 31, 1995) 116,433,492 116,433,492
Accumulated deficit (798,484) (964,692)
Distributions to Unitholders (98,908,178) (97,659,783)
------------ ------------
16,726,830 17,809,017
------------ ------------
Total liabilities and
partners' capital (deficit) $ 46,873,763 $ 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
March 31,
--------------------------
1996 1995
------------ ----------
<S> <C> <C>
REVENUES $7,777,617 $7,239,990
COSTS AND EXPENSES:
Operating expenses 3,953,347 3,684,931
Management fees and allocated overhead
from General Partner 915,569 912,632
Depreciation and amortization 2,107,301 1,957,919
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OPERATING INCOME 801,400 684,508
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (529,268) (464,796)
Other, net (104,245) 1,715
---------- ----------
Total other income (expense), net (633,513) (463,081)
---------- ----------
NET INCOME $ 167,887 $ 221,427
========== ==========
ALLOCATION OF NET INCOME:
General Partner $ 1,679 $ 2,214
========== ==========
Class A Unitholders $ 166,208 $ 219,213
========== ==========
NET INCOME PER CLASS A UNIT $.02 $.03
========== ==========
WEIGHTED AVERAGE NUMBER OF CLASS A
UNITS OUTSTANDING 8,322,632 8,322,632
========== ==========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
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JONES INTERCABLE INVESTORS, L. P.
---------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 167,887 $ 221,427
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,107,301 1,957,919
Decrease in trade receivables 532,690 135,540
Decrease (increase) in deposits, prepaid expenses
and deferred charges (186,299) 32,621
Decrease in accounts payable, accrued
liabilities and subscriber prepayments (1,448,446) (1,121,829)
----------- -----------
Net cash provided by operating activities 1,173,133 1,225,678
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,169,232) (1,005,994)
----------- -----------
Net cash used in investing activities (1,169,232) (1,005,994)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 1,400,000 1,600,000
Repayment of debt (72,796) (573,426)
Distributions to unitholders (1,248,395) (1,248,395)
----------- -----------
Net cash used in financing activities 78,809 (221,821)
----------- -----------
Increase (decrease) in cash 82,710 (2,137)
Cash, beginning of period 91,518 607,422
----------- -----------
Cash, end of period $ 174,228 $ 605,285
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 540,223 $ 570,123
=========== ===========
</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 March 31, 1996 and December 31, 1995, and its Statements of
Operations and Cash Flows for the three month periods ended March 31, 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 month periods ended March 31, 1996 and
1995 were $388,881 and $362,000, respectively.
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 March 31, 1996 and 1995 were $526,688
and $550,632, respectively.
(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
- -------------------
For the three months ended March 31, 1996, Jones Intercable Investors, L.P.
(the "Partnership") generated net cash from operating activities totaling
$1,173,133, which is available to fund distributions, capital expenditures and
non-operating costs. Capital expenditures for the Partnership's Independence
System totaled approximately $1,095,000 during the first quarter of 1996.
Approximately 55 percent of these expenditures were for the construction of
service drops to subscriber homes. Approximately 41 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 $8,277,000. The rebuild of a portion of the Independence System
is expected to account for approximately 56 percent of the anticipated remaining
capital expenditures. Service drops connecting new subscribers are expected to
account for approximately 25 percent. The remainder of the expenditures will
relate to various enhancements in the Independence System. 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 March
31, 1996, $27,850,000 was outstanding, leaving $7,150,000 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 March 31, 1996 and 1995 were 6.77 percent and 7.73 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 first
quarter of 1996 which will be paid in May 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.
REGULATION AND LEGISLATION
- --------------------------
The Partnership has filed a cost-of-service showing in response to
rulemakings concerning the 1992 Cable Act for its Independence System and thus
anticipates no further reductions in rates in this system. The cost-of-service
showing has not yet received final approvals from regulatory authorities,
however, and there can be no assurance that the Partnership's cost-of-service
showing will prevent further rate reductions in the Independence System until
such final approval is received.
7
<PAGE>
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
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 Partnership 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 Partnership.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership increased $537,627, or approximately 7 percent,
to $7,777,617 for the three months ended March 31, 1996 from $7,239,990 for the
three months ended March 31, 1995. This increase in revenues in the
Independence System is primarily a result of increases in the number of basic
service subscribers and basic service rate increases. An increase in the
subscriber base accounted for approximately 45 percent of the increase in
revenues. Basic subscribers increased 2,926, or approximately 4 percent, to
83,740 at March 31, 1996 from 80,814 at March 31, 1995. Basic service rate
increases accounted for approximately 55 percent of the increase in revenues for
the period. 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 $268,416, or approximately 7 percent, to
$3,953,347 for the three months ended March 31, 1996 from $3,684,931 for the
three months ended March 31, 1995. Operating expenses represented approximately
51 percent of revenues for each of the three month periods ended March 31, 1996
and 1995, respectively. This increase in operating expenses in the
Partnership's Independence System was primarily due to an increase in
programming-related costs, which accounted for approximately 70 percent of the
total increase in operating expenses. 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
$2,937, or less than 1 percent, to $915,569 for the first three months of 1996
from $912,632 for the comparable 1995 period. This increase was due to the
increase in revenues, upon which such management fees are based.
Depreciation and amortization expense increased $149,382, or approximately
8 percent, to $2,107,301 in 1996 from $1,957,919 in 1995. This increase was due
to capital additions in 1995.
Operating income increased $116,892, or approximately 17 percent, to
$801,400 in 1996 compared to $684,508 in 1995. This increase was due to the
increase in revenues exceeding the increases in operating expenses, management
fees and allocated overhead from the General Partner and depreciation and
amortization expense.
The cable television industry generally measures the 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
8
<PAGE>
depreciation and amortization increased $266,274, or approximately 10
percent, to $2,908,701 for the three months ended March 31, 1996 from $2,642,427
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.
Interest expense increased $64,472, or approximately 14 percent, to
$529,268 in 1996 from $464,796 in 1995 due to higher outstanding balances on
interest-bearing obligations. The effective interest rates on amounts
outstanding as of March 31, 1996 and 1995 were 6.77 percent and 7.73 percent,
respectively.
Net income decreased $53,540, or approximately 24 percent, to $167,887 in
the first quarter of 1996 compared to $221,427 in the first quarter of 1995.
This decrease was due to the factors discussed above.
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
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: May 13, 1996
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<MULTIPLIER> 1
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 174,228
<SECURITIES> 0
<RECEIVABLES> 845,622
<ALLOWANCES> (132,266)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 68,308,762
<DEPRECIATION> (30,718,944)
<TOTAL-ASSETS> 46,873,763
<CURRENT-LIABILITIES> 2,303,998
<BONDS> 27,850,000
0
0
<COMMON> 0
<OTHER-SE> 16,719,765
<TOTAL-LIABILITY-AND-EQUITY> 46,873,763
<SALES> 0
<TOTAL-REVENUES> 7,777,617
<CGS> 0
<TOTAL-COSTS> 6,976,217
<OTHER-EXPENSES> 104,245
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 529,268
<INCOME-PRETAX> 167,887
<INCOME-TAX> 0
<INCOME-CONTINUING> 167,887
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 167,887
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
