<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, 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>
March 31, December 31,
ASSETS 1997 1996
------ ------------- -------------
<S> <C> <C>
CASH $ 762,488 $ 616,013
TRADE RECEIVABLES, less allowance for doubtful
receivables of $35,385 and $116,097 at
March 31, 1997 and December 31, 1996, respectively 1,227,305 1,309,354
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 79,756,241 76,071,150
Less- accumulated depreciation (35,639,894) (34,144,942)
------------ ------------
44,116,347 41,926,208
Franchise costs and other intangible assets, net of
accumulated amortization of $43,569,938 and
$42,711,158 at March 31, 1997 and December 31, 1996,
respectively 4,531,372 5,390,152
------------ ------------
Total investment in cable
television properties 48,647,719 47,316,360
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 331,636 308,253
------------ ------------
Total assets $ 50,969,148 $ 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>
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL 1997 1996
--------------------------------- -------------- --------------
<S> <C> <C>
LIABILITIES:
Credit facility $ 33,700,000 $ 30,700,000
Capital lease obligations 246,093 296,647
Accrued distributions to Class A Unitholders 1,248,395 1,248,395
Accounts payable and accrued liabilities 1,477,824 2,637,438
Subscriber prepayments 137,304 114,398
------------- -------------
Total liabilities 36,809,616 34,996,878
------------- -------------
PARTNERS' CAPITAL:
General Partner-
Contributed capital 1,000 1,000
Accumulated earnings 16,268 7,720
------------- -------------
17,268 8,720
------------- -------------
Class A Unitholders-
Net contributed capital (8,322,632 units
outstanding at March 31, 1997 and
December 31, 1996) 116,433,492 116,433,492
Accumulated earnings 1,610,529 764,252
Distributions to Unitholders (103,901,757) (102,653,362)
------------- -------------
14,142,264 14,544,382
------------- -------------
Total liabilities and partners' capital $ 50,969,148 $ 49,549,980
============= =============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
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JONES INTERCABLE INVESTORS, L. P.
---------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
REVENUES $8,239,366 $7,777,617
COSTS AND EXPENSES:
Operating expenses 4,046,687 3,953,347
Management fees and allocated overhead
from General Partner 974,948 915,569
Depreciation and amortization 2,409,553 2,107,431
---------- ----------
OPERATING INCOME 808,178 801,270
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (559,718) (529,268)
Other, net 606,365 (104,115)
---------- ----------
Total other income (expense), net 46,647 (633,383)
---------- ----------
NET INCOME $ 854,825 $ 167,887
========== ==========
ALLOCATION OF NET INCOME:
General Partner $ 8,548 $ 1,679
========== ==========
Class A Unitholders $ 846,277 $ 166,208
========== ==========
NET INCOME PER CLASS A UNIT $.10 $.02
========== ==========
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
<PAGE>
JONES INTERCABLE INVESTORS, L. P.
---------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 854,825 $ 167,887
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,409,553 2,107,431
Decrease in trade receivables 82,049 532,690
Increase in deposits, prepaid expenses
and deferred charges (79,204) (186,429)
Decrease in accounts payable, accrued
liabilities and subscriber prepayments (1,136,708) (1,448,446)
----------- -----------
Net cash provided by operating activities 2,130,515 1,173,133
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,685,091) (1,169,232)
----------- -----------
Net cash used in investing activities (3,685,091) (1,169,232)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 3,000,000 1,400,000
Repayment of debt (50,554) (72,796)
Distributions to unitholders (1,248,395) (1,248,395)
----------- -----------
Net cash provided by financing activities 1,701,051 78,809
----------- -----------
Increase in cash 146,475 82,710
Cash, beginning of period 616,013 91,518
----------- -----------
Cash, end of period $ 762,488 $ 174,228
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 600,778 $ 540,223
=========== ===========
</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, 1997 and December 31, 1996, and its Statements of
Operations and Cash Flows for the three month periods ended March 31, 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").
(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 second half of 1997.
(3) 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, 1997 and
1996 were $411,968 and $388,881, 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 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 month periods ended March 31, 1997 and
1996 were $562,980 and $526,688, respectively.
(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 second half of 1997.
For the three months ended March 31, 1997, the Partnership generated net
cash from operating activities totaling $2,130,515, which was available to fund
distributions, capital expenditures and non-operating costs. The Partnership's
capital expenditures totaled approximately $3,685,000 during the first quarter
of 1997. Approximately 53 percent of these expenditures related to the rebuild
of cable plant required by one of the Partnership's franchise agreements.
Service drops to homes accounted for approximately 19 percent of such
expenditures. Approximately 16 percent of these expenditures related to the
extension of cable plant. 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 $5,920,000 and are necessary to
maintain the Independence System until it is sold. Approximately 31 percent of
the budgeted expenditures is expected to be used for service drops to homes and
approximately 27 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 and, if necessary,
borrowings from the Partnership's revolving credit facility. 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 March 31, 1997, $33,700,000 was outstanding,
leaving $1,300,000 of available borrowings for future needs. 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 March 31, 1997 and 1996
were 6.78 percent and 6.77 percent, respectively.
The Partnership declared a $.15 per unit distribution for the first quarter
of 1997. The Partnership expects that cash distributions will continue to be
paid quarterly until the sale of the Independence System is closed; however, the
level of such distributions will be determined on a quarter-by-quarter basis.
The General Partner believes that the Partnership has sufficient sources of
capital to service its anticipated needs from cash on hand, cash generated from
operations and borrowings available under its revolving credit facility until
the Independence System is sold.
7
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership increased $461,749, or approximately 6 percent,
to $8,239,366 for the three months ended March 31, 1997 from $7,777,617 for the
three months ended March 31, 1996. The increase in revenues in the Independence
System was primarily a result of increases in the number of basic service
subscribers and basic service rate increases. An increase in the number of
basic service subscribers accounted for approximately 28 percent of the increase
in revenues. Basic subscribers increased 1,618, or approximately 2 percent, to
85,358 at March 31, 1997 from 83,740 at March 31, 1996. Basic service rate
increases accounted for approximately 72 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 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 $93,340, or approximately 2 percent, to
$4,046,687 for the three months ended March 31, 1997 from $3,953,347 for the
three months ended March 31, 1996. Operating expenses represented approximately
49 percent and 51 percent of revenues for the three month periods ended March
31, 1997 and 1996, respectively. This increase in operating expenses was
primarily due to increases in programming-related costs and marketing costs. No
other individual factor was significant to the increase in operating expenses.
The cable television industry generally measures the financial performance
of a cable television system in terms of operating cash flow (revenues less
operating expenses). 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 cash flow increased
$368,409, or approximately 10 percent, to $4,192,679 for the three months ended
March 31, 1997 from $3,824,270 for the similar period in 1996. This increase
was due to the increase in revenues exceeding the increase in operating
expenses.
Management fees and allocated overhead from the General Partner increased
$59,379, or 6 percent, to $974,948 for the first three months of 1997 from
$915,569 for 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 $302,122, or approximately
14 percent, to $2,409,553 in 1997 from $2,107,431 in 1996. This increase was
due to capital additions in 1996.
Operating income increased $6,908, or approximately 1 percent, to $808,178
in 1997 compared to $801,270 in 1996. 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.
Interest expense increased $30,450, or approximately 6 percent, to $559,718
in 1997 from $529,268 in 1996 due to higher outstanding balances on interest-
bearing obligations.
The Partnership reported other income of $606,365 in 1997 compared to other
expense of $104,115 in 1996. This change was primarily due to a litigation
settlement received in 1997.
Net income increased $686,938 to $854,825 in the first quarter of 1997
compared to $167,887 in the first quarter of 1996. This increase was due to the
factors discussed above.
8
<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
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: May 12, 1997
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 762,488
<SECURITIES> 0
<RECEIVABLES> 1,227,305
<ALLOWANCES> (35,385)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 79,756,241
<DEPRECIATION> (35,639,894)
<TOTAL-ASSETS> 50,969,148
<CURRENT-LIABILITIES> 3,109,616
<BONDS> 33,700,000
0
0
<COMMON> 0
<OTHER-SE> 14,159,532
<TOTAL-LIABILITY-AND-EQUITY> 50,969,148
<SALES> 0
<TOTAL-REVENUES> 8,239,366
<CGS> 0
<TOTAL-COSTS> 7,431,188
<OTHER-EXPENSES> (606,365)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 559,718
<INCOME-PRETAX> 854,825
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 854,825
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
