<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, 1997
[ ] 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
------------------------------------------------------------------------
Address of principal executive office
(303) 792-3111
-----------------------------
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
_______ ______
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>
June 30, December 31,
ASSETS 1997 1996
------ ------------- ------------
<S> <C> <C>
CASH $ 1,551,992 $ 616,013
TRADE RECEIVABLES, less allowance for doubtful
receivables of $49,782 and $116,097 at
June 30, 1997 and December 31, 1996, respectively 1,123,814 1,309,354
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 81,257,843 76,071,150
Less- accumulated depreciation (37,259,292) (34,144,942)
------------ ------------
43,998,551 41,926,208
Franchise costs and other intangible assets, net of
accumulated amortization of $44,428,718 and
$42,711,158 at June 30, 1997 and December 31, 1996,
respectively 3,672,592 5,390,152
------------ ------------
Total investment in cable
television properties 47,671,143 47,316,360
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 487,450 308,253
------------ ------------
Total assets $ 50,834,399 $ 49,549,980
============ ============
</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>
June 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL 1997 1996
--------------------------------- ------------- -------------
<S> <C> <C>
LIABILITIES:
Credit facility $ 35,000,000 $ 30,700,000
Capital lease obligations 299,794 296,647
Accrued distributions to Class A Unitholders 1,248,395 1,248,395
Accounts payable and accrued liabilities 878,800 2,637,438
Subscriber prepayments 114,809 114,398
------------- -------------
Total liabilities 37,541,798 34,996,878
------------- -------------
PARTNERS' CAPITAL:
General Partner-
Contributed capital 1,000 1,000
Accumulated earnings 20,083 7,720
------------- -------------
21,083 8,720
------------- -------------
Class A Unitholders-
Net contributed capital (8,322,632 units
outstanding at June 30, 1997 and
December 31, 1996) 116,433,492 116,433,492
Accumulated earnings 1,988,178 764,252
Distributions to Unitholders (105,150,152) (102,653,362)
------------- -------------
13,271,518 14,544,382
------------- -------------
Total liabilities and partners' capital $ 50,834,399 $ 49,549,980
============= =============
</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 Six Months Ended
June 30, June 30,
------------------------- -------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---------- ---------- ----------- -----------
REVENUES $8,869,548 $8,038,701 $17,108,914 $15,816,318
COSTS AND EXPENSES:
Operating expenses 4,363,463 3,867,859 8,410,150 7,821,206
Management fees and allocated overhead
from General Partner 909,435 951,561 1,884,383 1,867,130
Depreciation and amortization 2,512,231 2,107,401 4,921,784 4,214,832
---------- ---------- ----------- -----------
OPERATING INCOME 1,084,419 1,111,880 1,892,597 1,913,150
---------- ---------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (613,878) (494,686) (1,173,596) (1,023,954)
Other, net (89,077) 109,626 517,288 5,511
---------- ---------- ----------- -----------
Total other income (expense), net (702,955) (385,060) (656,308) (1,018,443)
---------- ---------- ----------- -----------
NET INCOME $ 381,464 $ 726,820 $ 1,236,289 $ 894,707
========== ========== =========== ===========
ALLOCATION OF NET INCOME:
General Partner $ 3,815 $ 7,268 $ 12,363 $ 8,947
========== ========== =========== ===========
Class A Unitholders $ 377,649 $ 719,552 $ 1,223,926 $ 885,760
========== ========== =========== ===========
NET INCOME PER CLASS A UNIT $.05 $.09 $.15 $.11
========== ========== =========== ===========
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 Six Months Ended
June 30,
--------------------------
<S> <C> <C>
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,236,289 $ 894,707
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,921,784 4,214,832
Decrease in trade receivables 185,540 419,039
Increase in deposits, prepaid expenses
and deferred charges (269,071) (104,980)
Decrease in accounts payable, accrued
liabilities and subscriber prepayments (1,758,227) (953,259)
----------- -----------
Net cash provided by operating activities 4,316,315 4,470,339
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (5,186,693) (3,121,053)
----------- -----------
Net cash used in investing activities (5,186,693) (3,121,053)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 4,393,012 1,800,000
Repayment of debt (89,865) (133,171)
Distributions to unitholders (2,496,790) (2,496,790)
----------- -----------
Net cash provided by (used in) financing activities 1,806,357 (829,961)
----------- -----------
Increase in cash 935,979 519,325
Cash, beginning of period 616,013 91,518
----------- -----------
Cash, end of period $ 1,551,992 $ 610,843
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,104,216 $ 948,728
=========== ===========
</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 June 30, 1997 and December 31, 1996, its results of operations
for the three and six month periods ended June 30, 1997 and 1996 and its cash
flows for the six month periods ended June 30, 1997 and 1996. 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 (the "Independence System"). Jones
Intercable, Inc. ("Intercable"), a publicly held Colorado corporation, is the
"General Partner."
(2) On February 28, 1997, the Partnership entered into an asset purchase
agreement to sell the Independence System to Jones Cable Holdings II, Inc., a
wholly owned subsidiary of the General Partner, for a sales price of
$171,213,667, which represents the average of three independent appraisals of
the fair market value of the Independence System. Upon the closing of the sale
of the Independence System, the Partnership will repay the then-outstanding
balance on its credit facility, pay a brokerage fee of $4,280,342 to The Jones
Group, Ltd., a subsidiary of the General Partner, and then the Partnership will
distribute the net proceeds to the Class A Unitholders. Such distribution is
expected to be approximately $16.12 for each Class A Unit held. Because this
distribution plus previous distributions made to Class A Unitholders will not
equal the preferred return to the limited partners set forth in the Partnership
Agreement, there will be no General Partner distribution related to this
transaction; however, the General Partner will receive a distribution as a Class
A Unitholder. The Independence System is the Partnership's only remaining asset.
Upon the successful completion of the sale of the Independence System, the
Partnership will be liquidated and dissolved. The closing of this sale is
expected to occur in the third quarter of 1997.
(3) Intercable 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, 1997 were $443,477 and $855,446,
respectively, compared to $401,935 and $790,816, respectively, for the similar
1996 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 facilities costs. Such personnel provide engineering, marketing,
administrative, accounting, legal and investor relations services to the
Partnership. Such services, and their related costs, are necessary to the
operation of the Partnership and would have been incurred by the Partnership, if
it was a stand alone entity. Allocations of personnel costs are based primarily
on actual time spent by employees of the General Partner with respect to each
partnership managed. Remaining expenses are allocated based on the pro rata
relationship of the Partnership's revenues to the total revenues of all systems
owned or managed by the General Partner and certain of its subsidiaries.
Systems owned by the General Partner and all other systems owned by partnerships
for which Intercable is the general partner are also allocated a proportionate
share of these expenses. The General Partner believes that the methodology used
in allocating overhead and administrative expenses is reasonable. Amounts
charged the Partnership by the General Partner for allocated overhead and
administrative expenses for the three and six month periods ended June 30, 1997
were $465,958 and $1,028,937, respectively, compared to $549,626 and $1,076,314,
respectively, for the similar 1996 periods.
(4) Certain prior year amounts have been reclassified to conform to the 1997
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
- -------------------
On February 28, 1997, the Partnership entered into an asset purchase
agreement to sell the Independence System to Jones Cable Holdings II, Inc., a
wholly owned subsidiary of the General Partner, for a sales price of
$171,213,667, which represents the average of three independent appraisals of
the fair market value of the Independence System. Upon the closing of the sale
of the Independence System, the Partnership will repay the then-outstanding
balance on its credit facility, pay a brokerage fee of $4,280,342 to The Jones
Group, Ltd., a subsidiary of the General Partner, and then the Partnership will
distribute the net proceeds to the Class A Unitholders. Such distribution is
expected to be approximately $16.12 for each Class A Unit held. Because this
distribution plus previous distributions made to Class A Unitholders will not
equal the preferred return to the limited partners set forth in the Partnership
Agreement, there will be no General Partner distribution related to this
transaction; however, the General Partner will receive a distribution as a Class
A Unitholder. The Independence System is the Partnership's only remaining
asset. Upon the successful completion of the sale of the Independence System,
the Partnership will be liquidated and dissolved. The closing of this sale is
expected to occur in the third quarter of 1997.
For the six months ended June 30, 1997, the Partnership generated net cash
from operating activities totaling $4,316,315, which was available to fund
distributions, capital expenditures and non-operating costs. The Partnership's
capital expenditures totaled approximately $5,187,000 during the first six
months of 1997. Approximately 45 percent of these expenditures related to the
rebuild of cable plant required by one of the Partnership's franchise
agreements. Approximately 22 percent of these expenditures related to the
extension of cable plant. Service drops to homes accounted for approximately 19
percent of such expenditures. The remainder of the capital expenditures related
to various enhancements in the Independence System. Funding for these
expenditures was provided primarily by cash generated from operations and
borrowings from the Partnership's revolving credit facility. Anticipated
capital expenditures for the remainder of 1997 total approximately $4,905,000
and are necessary to maintain the Independence System until it is sold.
Approximately 23 percent of the budgeted expenditures is expected to be used for
service drops to homes and approximately 20 percent is expected to be used for
the extension of cable plant. The remainder of the anticipated expenditures is
for various enhancements in the Independence System. Funding for these capital
improvements is expected to be provided by cash generated from operations.
Depending upon the timing of the closing of the sale of the Independence System
as discussed above, the Partnership will make only the portion of the budgeted
capital expenditures scheduled to be made during the Partnership's continued
ownership of the Independence System.
The maximum amount available under the Partnership's revolving credit
facility is $35,000,000. As of June 30, 1997, $35,000,000 was outstanding.
Under the terms of the credit agreement as amended, the revolving credit
facility expires on December 31, 1998. The credit facility will be repaid in
full upon the sale of the Independence System. 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, 1997 and 1996 were 7.06 percent and 6.87 percent, respectively.
The Partnership declared a $.15 per unit distribution for both the first
and second quarters of 1997. The Partnership expects no further cash
distributions due to the timing of the sale of the Independence System. The
General Partner believes that the Partnership has sufficient sources of capital
to service its anticipated needs from cash on hand and cash generated from
operations until the Independence System is sold.
7
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership increased $830,847, or approximately 10
percent, to $8,869,548 for the three months ended June 30, 1997 from $8,038,701
for the three months ended June 30, 1996. Revenues of the Partnership increased
$1,292,596, or approximately 8 percent, to $17,108,914 for the six months ended
June 30, 1997 from $15,816,318 for the six months ended June 30, 1996. 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 57
percent and 63 percent, respectively, of the increase in revenues for the three
and six month periods ended June 30, 1997 and 1996. Basic subscribers increased
1,356, or approximately 2 percent, to 85,898 at June 30, 1997 from 84,542 at
June 30, 1996. No other individual factor was significant to the increase in
revenues.
Operating expenses consist primarily of costs associated with the operation
and 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 marketing expenses.
Operating expenses increased $495,604, or approximately 13 percent, to
$4,363,463 for the three months ended June 30, 1997 from $3,867,859 for the
three months ended June 30, 1996. Operating expenses for the three month
periods represented approximately 49 percent and 48 percent of revenue in 1997
and 1996, respectively. Operating expenses increased $588,944, or approximately
8 percent, to $8,410,150 for the six months ended June 30, 1997 from $7,821,206
for the six months ended June 30, 1996. Operating expenses represented
approximately 49 percent of revenues for both of the six month periods ended
June 30, 1997 and 1996. 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 decreased
$42,126, or approximately 4 percent, to $909,435 for the second quarter of 1997
from $951,561 for the comparable 1996 period. This decrease was due to the
timing of certain expenses allocated from the General Partner. Management fees
and allocated overhead from the General Partner increased $17,253, or
approximately 1 percent, to $1,884,383 for the six months ended June 30, 1997
from $1,867,130 in the comparable 1996 period. This increase was due to the
increase in revenues, upon which such management fees and allocations are based
and the timing of certain expenses allocated from the General Partner.
Depreciation and amortization expense increased $404,830, or approximately
19 percent, to $2,512,231 for the three months ended June 30, 1997 from
$2,107,401 for the comparable 1996 period. Depreciation and amortization
expense increased $706,952, or approximately 17 percent, to $4,921,784 for the
six months ended June 30, 1997 from $4,214,832 for the comparable 1996 period.
These increases were due to capital additions in 1997.
Operating income decreased $27,461, or approximately 2 percent, to
$1,084,419 for the three months ended June 30, 1997 compared to $1,111,880 for
the comparable 1996 period. This decrease was due to the increases in operating
expenses and depreciation and amortization expense exceeding the increase in
revenues and the decrease in management fees and allocated overhead from the
General Partner. Operating income decreased $20,553, or approximately 1
percent, to $1,892,597 for the six months ended June 30, 1997 compared to
$1,913,150 for the comparable 1996 period. This decrease was due to the
increases in operating expenses, management fees and allocated overhead from the
General Partner and depreciation and amortization expense exceeding the increase
in revenues.
Interest expense increased $119,192, or approximately 24 percent, to
$613,878 for the three month period ended June 30, 1997 from $494,686 in the
comparable 1996 period. Interest expense increased $149,642, or approximately
15 percent, to $1,173,596 for the six month period ended June 30, 1997 from
$1,023,954 in the comparable 1996 period. These increases were primarily due to
higher outstanding balances on interest-bearing obligations.
8
<PAGE>
For the three months ended June 30, 1997, the Partnership reported other
expense of $89,077 compared to other income of $109,626 for the comparable 1996
period. This change was primarily due to the timing of certain administrative
costs. For the six months ended June 30, 1997, the Partnership reported other
income of $517,288 compared to $5,511 for the comparable 1996 period. This
increase was primarily due to a litigation settlement received in 1997.
Net income decreased $345,356, or approximately 48 percent, to $381,464 in
the second quarter of 1997 compared to $726,820 in the second quarter of 1996.
Net income increased $341,582, or approximately 38 percent, to $1,236,289 for
the six months ended June 30, 1997, compared to $894,707 for the similar 1996
period. These changes were 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: August 5, 1997
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,551,992
<SECURITIES> 0
<RECEIVABLES> 1,123,814
<ALLOWANCES> (49,782)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 81,257,843
<DEPRECIATION> (37,259,292)
<TOTAL-ASSETS> 50,834,399
<CURRENT-LIABILITIES> 2,541,798
<BONDS> 35,000,000
0
0
<COMMON> 0
<OTHER-SE> 13,292,601
<TOTAL-LIABILITY-AND-EQUITY> 50,834,399
<SALES> 0
<TOTAL-REVENUES> 17,108,914
<CGS> 0
<TOTAL-COSTS> 15,216,317
<OTHER-EXPENSES> (517,288)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,173,596
<INCOME-PRETAX> 1,236,289
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,236,289
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
