<PAGE> 1
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, 1994
or
( ) 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 0-15378
CABLE TV FUND 14-A, LTD.
- - --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-1024657
- - --------------------------------------------------------------------------------
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
--- ---
<PAGE> 2
CABLE TV FUND 14-A
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1994 1993
------ -------------------- --------------------
<S> <C> <C>
CASH $ 362,778 $ 476,782
TRADE RECEIVABLES, less allowance for
doubtful receivables of $79,097 and $72,862
at September 30, 1994 and December 31, 1993,
respectively 837,990 938,470
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 114,182,942 108,455,632
Less- accumulated depreciation (54,559,776) (47,132,923)
------------- -------------
59,623,166 61,322,709
Franchise costs, net of accumulated
amortization of $21,613,920 and $18,607,312
at September 30, 1994 and December 31, 1993,
respectively 12,524,742 15,531,350
Subscriber lists, net of accumulated
amortization of $8,216,433 and $7,510,999
at September 30, 1994 and December 31, 1993,
respectively 1,439,917 2,145,351
Costs in excess of interests in net assets
purchased, net of accumulated amortization
of $747,329 and $660,057 at September 30, 1994
and December 31, 1993, respectively 6,045,929 6,133,201
Investment in cable television joint venture 6,289,168 7,351,293
------------- -------------
Total investment in cable
television properties 85,922,922 92,483,904
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 864,568 207,770
------------- -------------
Total assets $ 87,988,258 $ 94,106,926
============= =============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these balance sheets.
2
<PAGE> 3
CABLE TV FUND 14-A
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1994 1993
-------------------------------------------- --------------- ---------------
<S> <C> <C>
LIABILITIES:
Debt $ 77,394,725 $ 75,601,829
Accounts payable -
Trade 38,867 106,674
General Partner - 58,974
Accrued liabilities 1,153,384 1,849,282
Subscriber prepayments 121,463 101,933
------------ ------------
Total liabilities 78,708,439 77,718,692
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (594,433) (523,349)
------------ ------------
(593,433) (522,349)
------------ ------------
Limited Partners-
Net contributed capital (160,000 units
outstanding at September 30, 1994 and
December 31, 1993) 68,722,000 68,722,000
Accumulated deficit (58,848,748) (51,811,417)
------------ ------------
9,873,252 16,910,583
------------ ------------
Total liabilities and
partners' capital (deficit) $ 87,988,258 $ 94,106,926
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these balance sheets.
3
<PAGE> 4
CABLE TV FUND 14-A
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
----------------------------------- -----------------------------------
1994 1993 1994 993
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
REVENUES $ 10,200,526 $ 9,731,697 $ 29,977,289 $ 29,055,885
COSTS AND EXPENSES:
Operating, general and
administrative 5,872,104 5,475,250 17,661,155 16,685,046
Management fees and
allocated overhead
from General Partner 1,220,774 1,157,216 3,718,694 3,403,811
Depreciation and
amortization 3,719,799 3,802,116 11,226,168 11,365,072
------------ -------------- ------------ -------------
OPERATING LOSS (612,151) (702,885) (2,628,728) (2,398,044)
------------ -------------- ------------ -------------
OTHER INCOME (EXPENSE):
Interest expense (1,338,740) (918,419) (3,220,450) (2,808,343)
Other, net (84,353) (22,311) (197,112) (17,763)
------------ -------------- ------------ -------------
Total other income
(expense), net (1,423,093) (940,730) (3,417,562) (2,826,106)
------------ -------------- ------------ -------------
LOSS BEFORE EQUITY IN NET
LOSS OF CABLE TELEVISION
JOINT VENTURE (2,035,244) (1,643,615) (6,046,290) (5,224,150)
EQUITY IN NET LOSS OF CABLE
TELEVISION JOINT VENTURE (405,329) (298,665) (1,062,125) (947,483)
------------ -------------- ------------ -------------
NET LOSS $ (2,440,573) $ (1,942,280) $ (7,108,415) $ (6,171,633)
============ ============== ============ =============
ALLOCATION OF NET LOSS:
General Partner $ (24,406) $ (19,422) $ (71,084) $ (61,716)
============ ============== ============ =============
Limited Partners $ (2,416,167) $ (1,922,858) $ (7,037,331) $ (6,109,917)
============ ============== ============ =============
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (15.10) $ (12.02) $ (43.98) $ (38.19)
============ ============== ============ =============
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNERSHIP UNITS
OUTSTANDING 160,000 160,000 160,000 160,000
============ ============== ============ =============
</TABLE>
The accompanying notes to unaudited financial statements
4
<PAGE> 5
CABLE TV FUND 14-A
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
--------------------------------------
1994 1993
------------------ -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (7,108,415) $ (6,171,633)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 11,226,168 11,437,346
Equity in net loss of cable television
joint venture 1,062,125 947,483
Amortization of interest rate protection
contract 12,501 55,864
Decrease in advances from General Partner (58,974) (457,354)
Decrease (increase) in trade receivables 100,480 (308,301)
Increase in deposits, prepaid expenses
and deferred charges (669,300) (236,639)
Decrease in accounts payable, accrued
liabilities and subscriber prepayments (744,175) (596,515)
-------------- ------------
Net cash provided by operating activities 3,820,410 4,670,251
-------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (5,727,310) (4,741,460)
-------------- ------------
Net cash used in investing activities (5,727,310) (4,741,460)
-------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 77,267,313 78,925
Repayment of debt (75,474,417) (2,930,409)
-------------- ------------
Net cash provided by (used in) financing activities 1,792,896 (2,851,484)
-------------- ------------
Decrease in cash (114,004) (2,922,693)
Cash, beginning of period 476,782 3,833,407
-------------- ------------
Cash, end of period $ 362,778 $ 910,714
============== ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 3,045,070 $ 3,000,907
============== ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these statements.
5
<PAGE> 6
CABLE TV FUND 14-A
(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 Cable TV Fund 14-A (the
"Partnership") at September 30, 1994 and December 31, 1993 and its Statements
of Operations and Cash Flows for the three and nine month periods ended
September 30, 1994 and 1993. 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 systems
serving the areas in and around Turnersville, New Jersey, Buffalo, Minnesota,
Naperville, Illinois, Calvert County, Maryland and certain communities in
Central Illinois. In addition, the Partnership owns an approximate 27 percent
interest in Cable TV Fund 14-A/B Venture (the "Venture"). The Venture owns and
operates the cable television system serving certain areas in Broward County,
Florida (the "Broward County System").
(2) Jones Intercable, Inc., a publicly held Colorado corporation (the
"General Partner"), 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 paid
to the General Partner by the Partnership for the three and nine month periods
ended September 30, 1994 (excluding the Partnership's 27 percent interest in
the Venture) were $510,026 and $1,498,864, respectively, as compared to
$486,585 and $1,452,794, respectively, for the similar 1993 periods.
The Partnership reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses represent the salaries
and benefits paid to corporate personnel, rent, data processing services and
other corporate related facilities costs. Such personnel provide engineering,
marketing, administrative, accounting, legal and investor relations services to
the Partnership. Allocations of personnel costs are based primarily on actual
time spent by employees of the General Partner with respect to each partnership
managed. Remaining overhead costs were allocated based on total revenues and/or
the cost of partnership assets managed. Effective December 1, 1993, the
allocation method was changed to be based only on revenue, which the General
Partner believes provides a more accurate method of allocation. Systems owned
by the General Partner and all other systems owned by partnerships for which
Jones Intercable, Inc. 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. Reimbursements made to the General Partner by the Partnership for
allocated overhead and administrative expenses for the three and nine month
periods ended September 30, 1994 (excluding the Partnership's 27 percent
interest in the Venture) were $710,748 and $2,219,830, respectively, as
compared to $670,631 and $1,951,017, respectively, for the similar 1993
periods.
See note (3) for disclosure of management fees and allocated overhead
and administrative expenses paid by the Venture, 27 percent of which are
attributable to the Partnership.
6
<PAGE> 7
(3) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, 1994 December 31, 1993
------------------ -----------------
<S> <C> <C>
ASSETS
------
Cash and accounts receivable $ 823,361 $ 1,140,477
Investment in cable television properties 66,509,326 70,822,864
Other assets 500,092 352,475
--------------- --------------
Total assets $ 67,832,779 $ 72,315,816
=============== ==============
LIABILITIES AND PARTNERS' CAPITAL
----------------------------------
Debt $ 42,614,407 $ 43,461,730
Payables and accrued liabilities 1,655,911 1,372,344
Partners' contributed capital 70,000,000 70,000,000
Accumulated deficit (46,437,539) (42,518,258)
--------------- --------------
Total liabilities and
partners' capital $ 67,832,779 $ 72,315,816
=============== ==============
</TABLE>
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 5,420,180 $ 5,477,510 $16,394,101 $16,623,112
Operating, general and
administrative expense (3,260,168) (3,084,333) (9,457,369) (9,238,812)
Management fees and
allocated overhead
from General Partner (652,304) (669,797) (2,015,471) (1,996,313)
Depreciation and
amortization (2,286,349) (2,262,624) (6,876,719) (7,066,671)
----------- ----------- ----------- -----------
Operating loss (778,641) (539,244) (1,955,458) (1,678,684)
Interest expense (718,922) (576,868) (1,934,444) (1,862,468)
Other, net 1,885 14,023 (29,379) 44,904
----------- ----------- ----------- -----------
Net loss $(1,495,678) $(1,102,089) $(3,919,281) $(3,496,248)
=========== =========== =========== ===========
</TABLE>
7
<PAGE> 8
Management fees paid to the General Partner by the Venture totalled
$271,009 and $819,705 respectively, for the three and nine month periods ended
September 30, 1994, as compared to $273,876 and $831,156, respectively for the
similar 1993 periods. Reimbursements for overhead and administrative expenses
paid to the General Partner by the Venture totalled $381,295 and $1,195,766,
respectively, for the three and nine month periods ended September 30, 1994, as
compared to $395,921 and $1,165,921 respectively for the similar 1993 periods.
Management fees paid by the Venture and attributable to the
Partnership totalled $73,443 and $222,140, respectively, for the three and nine
months ended September 30, 1994, as compared to $74,220 and $225,243,
respectively, for the similar 1993 periods. Reimbursements paid by the Venture
and attributable to the Partnership totalled $103,331 and $323,840,
respectively, for the three and nine months ended September 30, 1994, as
compared to $107,295 and $315,758, respectively, for the similar 1993 periods.
8
<PAGE> 9
CABLE TV FUND 14-A
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
Capital expenditures for the Partnership's directly owned systems
totalled approximately $5,727,000 during the first nine months of 1994.
Approximately 31 percent of the expenditures related to new plant construction.
Approximately 29 percent of the expenditures related to construction of service
drops to subscribers homes. Approximately 15 percent of the expenditures
related to system upgrades and rebuilds in all of the Partnership's systems.
The remainder of the expenditures was for various enhancements in all of the
Partnership's systems. These expenditures were funded primarily from cash
generated from operations. Estimated capital expenditures for the remainder of
1994 are approximately $1,460,000. Approximately 29 percent of the
expenditures is for new plant construction. Approximately 15 percent is for
system upgrades and rebuilds. Approximately 12 percent is for construction of
service drops to subscribers' homes. The actual level of capital expenditures
will depend, in part, upon the General Partner's determination as to the proper
scope and timing of such expenditures in light of the 1992 Cable Act and the
Partnership's liquidity position. Funding for improvements is expected to come
from cash on hand, cash generated from operations and borrowings under the
Partnership's revolving credit facility.
At December 31, 1992, the Partnership's revolving credit facility
converted to a term loan. The then-outstanding balance of $74,023,000 on this
term loan was repaid in July 1994 when the Partnership completed negotiation of
a new $80,000,000 credit facility. The new revolving credit facility converts
to a term loan on September 30, 1996, at which time the outstanding balance is
payable in quarterly installments through March 31, 2002. At September 30,
1994, $77,200,000 was outstanding under this agreement leaving $2,800,000
available for future needs of the Partnership. Interest on the outstanding
principal balance is at the Partnership's option of prime plus 1/4 percent or a
fixed rate defined as the CD rate plus 1-3/8 percent or the London Interbank
Offered Rate plus 1-1/4 percent. A fee of 3/8 of one percent per annum on the
unused portion of the new commitment is also required. The effective interest
rates on outstanding obligations as of September 30, 1993 and 1994 were 4.51
percent and 6.53 percent, respectively.
On January 12, 1993, the Partnership entered into an interest rate
cap agreement covering outstanding debt obligations of $5,000,000. The
Partnership paid a fee of $50,000. The agreement protects the Partnership from
interest rates that exceed 7 percent for three years from the date of the
agreement. The fee is being charged to interest expense over the life of the
agreement using the straight-line method.
Subject to Regulation and Legislation as discussed below, the General
Partner believes that the Partnership has sufficient sources of capital to
service its presently anticipated needs.
In addition to those systems owned exclusively by the Partnership,
Cable TV Fund 14-A owns an interest of approximately 27 percent in Cable TV
Fund 14-A/B Venture (the "Venture"). The Partnership's investment in this
cable television joint venture, accounted for under the equity method,
decreased by $1,062,125 compared to the December 31, 1993 balance. This
decrease represents the Partnership's portion of the Venture's loss for the
first nine months of 1994. These losses and the losses of the Partnership are
anticipated to continue.
During the first nine months of 1994, capital expenditures of the
Venture-owned Broward County System totalled approximately $2,512,000. The
construction of service drops to homes and plant extensions accounted for
approximately 22 percent and 25 percent, respectively, of the expenditures.
Rebuild and upgrade projects accounted for approximately 11 percent of the
expenditures. The remainder of the capital expenditures were for various
enhancements in the Broward County System. Such expenditures were funded
primarily from cash generated from operations. Budgeted capital expenditures
for the remainder of 1994 are approximately $740,000. Of this total, 35
percent is for the construction of service drops to homes, 18 percent is for
cable television plant extensions, and 24 percent is for the purchase of
converters. The remainder of the expenditures is for various enhancements in
the Broward County System. Such capital expenditures are expected to be funded
from cash generated from operations and cash on hand. The actual level of
capital expenditures will depend, in part, upon the General Partner's
determination as to the proper scope and timing of such expenditures in light
of the 1992 Cable Act and the Venture's liquidity position.
9
<PAGE> 10
On December 31, 1992, the then outstanding balance of $46,800,000 on
the Venture's credit facility converted to a term loan. The balance
outstanding on the term loan at September 30, 1994 was $42,510,312. The term
loan is payable in quarterly installments which began March 31, 1993 and is
payable in full by December 31, 1999. In June 1994, the General Partner
completed negotiations to lower the level of principal payments in order to
provide liquidity for capital expenditures. The Venture repaid principal of
$389,844 on June 30, 1994 and $389,844 on September 30, 1994. Principal
payments for the remainder of 1994 total $389,844. Interest is at the
Venture's option of prime plus 1/2 percent, LIBOR plus 1-1/2 percent or CD rate
plus 1-5/8 percent. The effective interest rates on amounts outstanding as of
September 30, 1994 and 1993 were 6.4 percent and 4.7 percent, respectively. In
January 1993, the Venture entered into an interest rate cap agreement covering
outstanding debt obligations of $25,000,000. The Venture paid a fee of
$246,250. The agreement protects the Venture from interest rates that exceeded
7 percent for three years from the date of the agreement.
Subject to Regulation and Legislation as discussed below, the General
Partner believes that the Venture has sufficient sources of capital to service
its presently anticipated needs.
Regulation and Legislation
Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which became effective on
December 4, 1992. This legislation has caused significant changes to the
regulatory environment in which the cable television industry operates. The
1992 Cable Act generally allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States, including those
owned and managed by the Partnership and the Venture, are subject to rate
regulation of basic cable services. In addition, the 1992 Cable Act allows the
FCC to regulate rates for non-basic service tiers other than premium services
in response to complaints filed by franchising authorities and/or cable
subscribers. In April 1993, the FCC adopted regulations governing rates for
basic and non-basic services. The FCC's rules became effective on September 1,
1993.
In compliance with these rules, the Partnership and the Venture
reduced rates charged for certain regulated services effective September 1,
1993. These initial reductions resulted in some decrease in revenues and
operating income before depreciation and amortization, however the decrease was
not as severe as originally anticipated. The General Partner undertook actions
to mitigate a portion of these reductions primarily through (a) new service
offerings in some systems, (b) product re-marketing and re- packaging and (c)
marketing efforts directed at non-subscribers.
On February 22, 1994, however, the FCC adopted several additional rate
orders including an order which revised its earlier- announced regulatory
scheme with respect to rates. The FCC's new regulations will generally require
rate reductions, absent a successful cost-of-service showing, of 17 percent of
September 30, 1992 rates, adjusted for inflation, channel modifications,
equipment costs, and increases in programming costs. However, the FCC held
rate reductions in abeyance in certain systems. The new regulations became
effective on May 15, 1994, but operators could elect to defer rate reductions
to July 14, 1994, so long as they made no changes in their rates and did not
restructure service offerings between May 15 and July 14.
On February 22, 1994, the FCC also adopted interim cost-of-service
regulations. Rate reductions will not be required where it is successfully
demonstrated that rates for basic and other regulated programming services are
justified and reasonable using cost-of-service standards. The FCC established
an interim industry-wide 11.25 percent permitted rate of return, and requested
comments on whether this standard and other interim cost-of-service standards
should be made permanent. The FCC also established a presumption that
acquisition costs above a system's book value should be excluded from the rate
base, but the FCC will consider individual showings to rebut this presumption.
The need for special rate relief will also be considered by the FCC if an
operator demonstrates that the rates set by a cost-of-service proceeding would
constitute confiscation of investment, and that, absent a higher rate, the
return necessary to operate and to attract investment could not be maintained.
The FCC will establish a uniform system of accounts for operators that elect
cost-of-service rate regulation, and the FCC has adopted affiliate transaction
regulations. After a rate has been set pursuant to a cost-of-service showing,
rate increases for regulated services will be indexed for inflation, and
operators will also be permitted to increase rates in response to increases in
costs beyond their control, such as taxes and increased programming costs.
10
<PAGE> 11
After analyzing the effect of the two methods of rate regulation, the
General Partner concluded that the Partnership should elect to file
cost-of-service showings in the Buffalo, Minnesota, Naperville, Illinois and
Calvert County, Maryland systems and the Partnership and Venture should comply
with the benchmark regulations in the Turnersville, New Jersey and Central
Illinois systems and Broward County System, respectively. The Partnership
complied with the new benchmark regulations and reduced rates in the
Turnersville, New Jersey and Central Illinois systems, resulting in an
annualized reduction of operating income before depreciation and amortization
of $150,000, or approximately 1 percent, in such systems that have reduced
rates. In the systems electing cost-of- service, the General Partner
anticipates no reduction in revenues or operating income before depreciation
and amortization resulting from the FCC's rate regulations.
The Venture complied with the new benchmark regulation and reduced
rates in the Broward County System. The annualized reduction in operating
income before depreciation and amortization is approximately $160,000, or
approximately 2 percent. The Venture will continue its efforts to mitigate the
effect of such rate reductions.
There have been several lawsuits filed by cable operators and
programmers in Federal court challenging various aspects of the 1992 Cable Act,
including provisions relating to mandatory broadcast signal carriage,
retransmission consent, access to cable programming, rate regulations,
commercial leased channels and public access channels. On April 8, 1993, a
three-judge Federal district court panel issued a decision upholding the
constitutionality of the mandatory signal carriage requirements of the 1992
Cable Act. That decision was appealed directly to the United States Supreme
Court. The United States Supreme Court vacated the lower court decision on
June 27, 1994 and remanded the case to the district court for further
development of a factual record. The Court's majority determined that the
must-carry rules were content neutral, but that it was not yet proven that the
rules were needed to preserve the economic health of the broadcasting industry.
In the interim, the must-carry rules will remain in place during the pendency
of the proceedings in district court. In 1993, a Federal district court for
the District of Columbia upheld provisions of the 1992 Cable Act concerning
rate regulation, retransmission consent, restrictions on vertically integrated
cable television operators and programmers, mandatory carriage of programming
on commercial leased channels and public, educational and governmental access
channels and the exemption for municipalities from civil damage liability
arising out of local regulation of cable services. The 1992 Cable Act's
provisions providing for multiple ownership limits for cable operators and
advance notice of free previews for certain programming services have been
found unconstitutional, and these decisions have been appealed. In November
1993, the United States Court of Appeals for the District of Columbia held that
the FCC's regulations implemented pursuant to Section 10 of the 1992 Cable Act,
which permit cable operators to ban indecent programming on public, educational
or governmental access channels or leased access channels, were
unconstitutional, but the court has agreed to reconsider its decision. All of
these decisions construing provisions of the 1992 Cable Act and the FCC's
implementing regulations have been or are expected to be appealed.
RESULTS OF OPERATIONS
Revenues of the Partnership increased $468,829, or approximately 5
percent, from $9,731,697 for the three months ended September 30, 1993 to
$10,200,526 for the comparable 1994 period. Revenues increased $921,404, or
approximately 3 percent, from $29,055,885 in the first nine months of 1993 to
$29,977,289 in the comparable 1994 period. An increase in the subscriber base
primarily accounted for the increase in revenues for the three and nine month
periods. Basic subscribers increased 6,766, or approximately 8 percent, from
89,852 at September 30, 1993 to 96,618 at September 30, 1994. The increase in
revenues would have been greater but for the reduction in basic rates due to
new basic rate regulations issued by the FCC in regard to the 1992 Cable Act.
See Regulation and Legislation discussion above. No other individual factor
was significant to the increase in revenues.
Operating, general and administrative expenses increased $396,854, or
approximately 7 percent, from $5,475,250 for the three months ended September
30, 1993 to $5,872,104 for the comparable 1994 period. For the nine months
ended September 30, 1994 and 1993, operating, general and administrative
expenses increased $976,109, or approximately 6 percent, from $16,685,046 in
1993 to $17,661,155 in 1994. Operating, general and administrative expense
represented 56 percent and 57 percent, respectively, of revenues for the three
and nine month periods of 1993 compared to 58 percent and 59 percent,
respectively, for the comparable 1994 periods. Increases in programming fees
primarily accounted for the increases for the three and nine months periods.
The increases in programming fees were due, in part, to increases in the basic
subscriber base. No other individual factor was significant to the increases
in operating, general and administrative expenses. Management fees and
allocated overhead from the General Partner increased $63,558, or approximately
5 percent, from $1,157,216 for the three months ended September 30, 1993, to
$1,220,774 for
11
<PAGE> 12
the comparable 1994 period. For the nine months ended September 30, 1994 and
1993, management fees and allocated overhead from the General Partner increased
$314,883, or approximately 9 percent, from $3,403,811 in 1993 to $3,718,694 in
1994. These increases are due to the increases in revenues, upon which
management fees and allocated overhead are based, and increases in allocated
expense from the General Partner. The General Partner has experienced
increases in expenses, including personnel costs and reregulation costs, a
portion of which is allocated to the Partnership.
Depreciation and amortization expense decreased $82,317, or
approximately 2 percent, from $3,802,116 for the three months ended September
30, 1993 to $3,719,799 for the comparable 1994 period. For the nine month
periods ended September 30, 1994 and 1993, depreciation and amortization
expense decreased $138,904, or approximately 1 percent, from $11,365,072 in
1993 to $11,226,168 in 1994. The decreases are primarily due to the maturation
of a portion of the tangible asset base.
Operating loss decreased $90,734, or approximately 13 percent, from
$702,885 for the three month period ended September 30, 1993 to $612,151 for
the comparable 1994 period due to the increase in revenues and the decrease in
depreciation and amortization expense exceeding the increases in operating,
general and administrative expenses and management fees and allocated overhead
from the General Partner. For the nine month periods ended September 30, 1994
and 1993, operating loss increased $230,684, or approximately 10 percent, from
$2,398,044 at September 30, 1993 to $2,628,728 at September 30, 1994. The
increase was due to the increases in operating, general and administrative
expenses and management fees and allocated overhead from the General Partner
exceeding the increase in revenues and the decrease in depreciation and
amortization expense. Operating income before depreciation and amortization
increased $8,417, from $3,099,231 for the three month period in 1993 to
$3,107,648 in 1994 due to the increase in revenues exceeding the increases in
operating, general and administrative expense and management fees and allocated
overhead from the General Partner. Operating income before depreciation and
amortization decreased $369,588 or approximately 4 percent, from $8,967,028 for
the nine month period in 1993 to $8,597,440 in 1994. The decrease was due to
the increases in operating, general and administrative expense and management
fees and allocated overhead from the General Partner exceeding the increase in
revenues.
Interest expense increased $420,321, or approximately 46 percent,
from $918,419 for the three month period ended September 30, 1993 to $1,338,740
for the comparable 1994 period. For the nine month periods ended September 30,
1994 and 1993, interest expense increased $412,107, or approximately 15
percent, from $2,808,343 at September 30, 1993 to $3,220,450 at September 30,
1994. These increases in expense are due to higher effective interest rates
and higher outstanding balances on interest bearing obligations. Loss before
equity in net loss of cable television joint venture increased $391,629, or
approximately 24 percent, from $1,643,615 for the three months ended September
30, 1993 to $2,035,244 for the comparable 1994 period due to increase in
interest expense. For the nine months ended September 30, 1994 and 1993, loss
before equity in net loss of cable television joint venture increased $822,140,
or approximately 16 percent, from $5,224,150 to $6,046,290 primarily due to the
increase in operating loss and the increase in interest expense.
In addition to the systems owned exclusively by the Partnership, Cable
TV Fund 14-A owns an approximate 27 percent interest in Cable TV Fund 14-A/B
Venture.
The Venture's revenues decreased $57,330, or approximately 1 percent,
from $5,477,510 to $5,420,180 for the three month period ended September 30,
1994 as compared to 1993. Revenues for the nine month periods ended September
30, 1994 and 1993 decreased $229,011, or approximately 1 percent, from
$16,623,112 in 1993 to $16,394,101 in 1994. These decreases in revenue are due
to the reduction in basic rates due to basic rate regulations issued by the FCC
in regard to the 1992 Cable Act. The decrease in revenue due to rate
reductions was offset, in part, by increases in basic subscribers and pay
units. The Broward system has added 2,408 basic subscribers since September
30, 1993, an increase of approximately 6 percent. Basic subscribers totalled
45,842 at September 30, 1994 compared to 43,434 at September 30, 1993. No
other individual factor significantly affected the decrease in revenues.
Operating, general and administrative expense increased $175,835, or
approximately 6 percent, from $3,084,333 to $3,260,168 for the three month
period ended September 30, 1994 as compared to 1993. The three month increase
in operating, general and administrative expense is primarily due to increases
in programming costs and advertising sales expenses. For the nine month
periods ended September 30, 1994 and 1993, operating, general and
administrative expense increased 218,557, or approximately 2 percent, from
$9,238,812 at September 30, 1993 to $9,457,369 at September 30, 1994.
Operating, general and administrative expense represented 57 percent and 60
percent of revenue, respectively, for the three and nine month periods ended
September 30, 1994, compared to 56 percent for both periods in 1993. For the
nine
12
<PAGE> 13
month periods ended September 30, 1994 and 1993, increases in programming fees
and advertising sales expenses accounted for approximately 53 percent and 28
percent, respectively of the increase in operating, general and administrative
expense. No other individual factor significantly affected the increase in
operating, general and administrative expense. Management fees and allocated
overhead from the General Partner decreased $17,493, or approximately 3
percent, from $669,797 to $652,304 for the three month period ended September
30, 1994 as compared to 1993. This decrease is due to a decrease in expenses
allocated from the General Partner resulting from a change in allocation
methods effective December 1, 1993. For the nine month periods ended September
30, 1994 and 1993, management fees and allocated overhead from the General
Partner increased $19,158, or approximately 1 percent, from $1,996,313 at
September 30, 1993 to $2,015,471 at September 30, 1994 due to an increase in
expenses allocated from the General Partner. Depreciation and amortization
expense increased $23,725, or approximately 1 percent, from $2,262,624 to
$2,286,349 for the three month period ended September 30, 1994 as compared to
1993. This increase was due to capital additions in 1993. For the nine month
periods ended September 30, 1994 and 1993, depreciation and amortization
expense decreased $189,952, or approximately 3 percent, from $7,066,671 at
September 30, 1993 to $6,876,719 at September 30, 1994. This decrease is
attributable to the maturation of the Venture's asset base.
In the Broward County System, operating loss increased $239,397, or
approximately 44 percent, from $539,244 to $778,641 for the three month period
ended September 30, 1994 as compared to 1993. For the nine month periods ended
September 30, 1994 and 1993, operating loss increased $276,774, or
approximately 16 percent, from $1,678,684 at September 30, 1993 to $1,955,458
at September 30, 1994. These increases are due to the decrease in revenues and
the increases in operating, general and administrative expenses and management
fees and allocated overhead from the General Partner exceeding the decreases in
depreciation and amortization expense. Operating income before depreciation
and amortization expense decreased $215,672, or approximately 13 percent, from
$1,723,380 to $1,507,708 for the three month periods ended September 30, 1994.
For the nine month periods ended September 30, 1994 and 1993, operating income
before depreciation and amortization expense decreased $466,726, or
approximately 9 percent, from $5,387,987 at September 30, 1993 to $4,921,261 at
September 30, 1994. These decreases are due to the decrease in revenues and
the increases in operating, general and administrative expenses and management
fees and allocated overhead from the General Partner.
The decreases in operating income before depreciation and amortization
reflect the current operating environment of the cable television industry.
The FCC rate regulations under the 1992 Cable Act have caused revenues to
decrease. In turn, this has caused certain expenses which are a function of
revenue, such as franchise fees, copyright fees and management fees to
decrease. However, other operating costs such as programming fees, salaries
and benefits, and marketing costs as well as costs incurred by the General
Partner, which are allocated to the Partnership, continue to increase. This
situation has led to reductions in operating income before depreciation and
amortization as a percent of revenue ("Operating Margin"). Such reductions in
Operating Margins may continue in the near term as the Partnership and the
General Partner incur cost increases due to, among other things, increases in
programming fees, compliance costs associated with reregulation and
competition, that exceed increases in revenue. The General Partner will
attempt to mitigate a portion of these reductions through (a) rate adjustments;
(b) new service offerings; (c) product re-marketing and re-packaging and (d)
marketing efforts targeted at non-subscribers.
Interest expense increased $142,054, or approximately 25 percent, from
$576,868 to $718,922 for the three month periods ended September 30, 1994. For
the nine month periods ended September 30, 1994 and 1993, interest expense
increased $71,976, or approximately 4 percent, from $1,862,468 at September 30,
1993 to $1,934,444 at September 30, 1994. These increases are due to higher
effective interest rates on interest bearing obligations. The Venture's loss
increased $393,589, or approximately 36 percent, from $1,102,089 to $1,495,678
for the three month period ended September 30, 1994 as compared to 1993. For
the nine month periods ended September 30, 1994 and 1993, the Venture's loss
increased $423,033, or approximately 12 percent, from $3,496,248 at September
30, 1993 to $3,919,281 at September 30, 1994. These losses are the result of
the factors discussed above and are expected to continue in the future.
13
<PAGE> 14
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
14
<PAGE> 15
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.
CABLE TV FUND 14-A
BY: JONES INTERCABLE, INC.
General Partner
By: /s/ Kevin P. Coyle
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: November 10, 1994
15
<PAGE> 16
INDEX TO EXHIBITS
Exhibit Description Page
- - ------- ----------- ----
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 362,778
<SECURITIES> 0
<RECEIVABLES> 837,990
<ALLOWANCES> 79,097
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 14,182,942
<DEPRECIATION> 54,559,776
<TOTAL-ASSETS> 87,988,258
<CURRENT-LIABILITIES> 1,313,714
<BONDS> 77,394,725
<COMMON> 0
0
0
<OTHER-SE> 9,279,819
<TOTAL-LIABILITY-AND-EQUITY> 87,988,258
<SALES> 0
<TOTAL-REVENUES> 29,977,289
<CGS> 0
<TOTAL-COSTS> 32,606,017
<OTHER-EXPENSES> 197,112
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,220,450
<INCOME-PRETAX> (6,046,290)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,046,290)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,046,290)
<EPS-PRIMARY> (43.98)
<EPS-DILUTED> (43.98)
</TABLE>
