<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 June 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 (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
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CABLE TV FUND 14-A
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
------
CASH $ 274,494 $ 476,782
TRADE RECEIVABLES, less allowance for doubtful receivables
of $65,310 and $72,862 at June 30, 1994 and December 31, 1993,
respectively 849,737 938,470
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 111,338,652 108,455,632
Less- accumulated depreciation (52,106,416) (47,132,923)
------------ ------------
59,232,236 61,322,709
Franchise costs, net of accumulated amortization of $20,611,717 and
$18,607,312 at June 30, 1994 and December 31, 1993, respectively 13,526,945 15,531,350
Subscriber lists, net of accumulated amortization of $7,981,288 and
$7,510,999 at June 30, 1994 and December 31, 1993, respectively 1,675,062 2,145,351
Costs in excess of interests in net assets purchased, net of accumulated
amortization of $718,238 and $660,057 at June 30, 1994
and December 31, 1993, respectively 6,075,020 6,133,201
Investment in cable television joint venture 6,694,497 7,351,293
------------ ------------
Total investment in cable television properties 87,203,760 92,483,904
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 276,809 207,770
------------ ------------
Total assets $ 88,604,800 $ 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>
June 30, December 31,
1994 1993
------------ ------------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
LIABILITIES:
Debt $ 74,237,308 $ 75,601,829
Accounts payable-
Trade 186,745 106,674
General Partner 837,527 58,974
Accrued liabilities 1,509,623 1,849,282
Subscriber prepayments 113,205 101,933
------------ ------------
Total liabilities 76,884,408 77,718,692
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit ( 570,027) (523,349)
------------ ------------
(569,027) (522,349)
------------ ------------
Limited Partners-
Net contributed capital (160,000 units outstanding at
June 30, 1994 and December 31, 1993) 68,722,000 68,722,000
Accumulated deficit (56,432,581) (51,811,417)
------------ ------------
12,289,419 16,910,583
------------ ------------
Total liabilities and partners' capital (deficit) $ 88,604,800 $ 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 Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES $10,058,002 $ 9,826,039 $19,776,763 $19,324,188
COSTS AND EXPENSES:
Operating, general and administrative 5,883,175 5,547,576 11,789,051 11,209,796
Management fees and allocated
overhead from General Partner 1,247,203 1,136,745 2,497,920 2,246,595
Depreciation and amortization 3,722,572 3,786,862 7,506,369 7,562,956
----------- ----------- ----------- -----------
OPERATING LOSS (794,948) (645,144) (2,016,577) (1,695,159)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (996,403) (928,716) (1,881,710) (1,889,924)
Other, net (99,073) 27,362 (112,759) 4,548
----------- ----------- ----------- -----------
Total other income (expense), net (1,095,476) (901,354) (1,994,469) (1,885,376)
----------- ----------- ----------- -----------
LOSS BEFORE EQUITY IN NET
LOSS OF CABLE TELEVISION
JOINT VENTURE (1,890,424) (1,546,498) (4,011,046) (3,580,535)
EQUITY IN NET LOSS OF CABLE
TELEVISION JOINT VENTURE (350,075) (261,698) (656,796) (648,818)
----------- ----------- ----------- -----------
NET LOSS $(2,240,499) $(1,808,196) $(4,667,842) $(4,229,353)
=========== =========== =========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (22,405) $ (18,082) $ (46,678) $ (42,294)
=========== =========== =========== ===========
Limited Partners $(2,218,094) $(1,790,114) $(4,621,164) $(4,187,059)
=========== =========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (13.86) $ (11.19) $ (28.88) $ (26.17)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 160,000 160,000 160,000 160,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these statements.
4
<PAGE> 5
CABLE TV FUND 14-A
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
-------------------------------
1994 1993
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,667,842) $(4,229,353)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 7,506,369 7,612,628
Equity in net loss of cable television joint venture 656,796 648,818
Amortization of interest rate protection contract 8,334 51,697
Increase (decrease) in advances from General Partner 778,553 (457,354)
Decrease in trade receivables 88,733 108,882
Increase in deposits, prepaid expenses and other assets (77,374) (220,428)
Decrease in accounts payable, accrued liabilities and
subscriber prepayments (248,316) (379,140)
------------ -----------
Net cash provided by operating activities 4,045,253 3,135,750
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (2,883,020) (3,436,374)
------------ -----------
Net cash used in investing activities (2,883,020) (3,436,374)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 40,912 19,269
Repayment of debt (1,405,433) (1,960,119)
------------ -----------
Net cash used in financing activities (1,364,521) (1,940,850)
------------ -----------
Decreases in cash (202,288) (2,241,474)
Cash, beginning of period 476,782 3,833,407
------------ -----------
Cash, end of period $ 274,782 $ 1,591,933
============ ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,847,028 $ 1,953,258
============ ===========
</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 June 30, 1994 and December 31, 1993 and its Statements of
Operations and Cash Flows for the three and six month periods ended June 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 for
the three and six month periods ended June 30, 1994 (excluding the
Partnership's interest in the Venture) were $502,900 and $988,838,
respectively, as compared to $491,302 and $966,209, respectively, for the
similar 1993 periods.
The Partnership reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses represent salaries and
related 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 are 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 six month periods ended June 30, 1994 (excluding the
Partnership's interest in the Venture) were $744,303 and $1,509,082,
respectively, as compared to $645,443 and $1,280,386, respectively, for the
similar 1993 periods.
6
<PAGE> 7
(3) Financial information regarding the Venture is presented below:
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1994 December 31, 1993
------------- -----------------
<S> <C> <C>
ASSETS
------
Cash and accounts receivable $ 1,141,627 $ 1,140,477
Investment in cable television properties 67,948,800 70,822,864
Other assets 518,795 352,475
------------ ------------
Total assets $ 69,609,222 $ 72,315,816
============ ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Debt $ 43,021,190 $ 43,461,730
Payables and accrued liabilities 1,529,893 1,372,344
Partners' contributed capital 70,000,000 70,000,000
Accumulated deficit (44,941,861) (42,518,258)
------------ ------------
Total liabilities and partners' capital $ 69,609,222 $ 72,315,816
============ ============
</TABLE>
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 5,478,181 $ 5,639,679 $10,973,921 $11,145,602
Operating, general and administrative expense (3,136,788) (3,108,203) (6,197,201) (6,154,479)
Management fees and allocated overhead
from General Partner (674,876) (677,430) (1,363,167) (1,326,516)
Depreciation and amortization (2,286,350) (2,253,311) (4,590,370) (4,804,047)
----------- ----------- ----------- -----------
Operating loss (619,833) (399,265) (1,176,817) (1,139,440)
Interest expense (639,272) (584,442) (1,215,522) (1,285,600)
Other, net (32,687) 18,037 (31,264) 30,881
----------- ----------- ----------- -----------
Net loss $(1,291,792) $ (965,670) $(2,423,603) $(2,394,159)
=========== =========== =========== ===========
</TABLE>
Management fees paid to the General Partner by the Venture totalled
$273,909 and $548,696 respectively, for the three and six month periods ended
June 30, 1994, as compared to $281,984 and $557,280, respectively, for the
similar 1993 periods. Reimbursements for overhead and administrative expenses
paid to the General Partner by the Venture totalled $400,967 and $814,471,
respectively, for the three and six month periods ended June 30, 1994, as
compared to $395,446 and $769,236 for the similar 1993 periods. Management
fees paid by the Venture and attributable to the Partnership totalled $74,249
and $148,697, respectively, for the three and six months ended June 30, 1994,
as compared to $76,418 and $151,023, respectively, for the similar 1993
periods. Reimbursements paid by the Venture and attributable to the
Partnership totalled $108,662 and $220,722, respectively, for the three and six
months ended June 30, 1994, as compared to $107,166 and $208,463, respectively,
for the similar 1993 periods.
7
<PAGE> 8
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 $2,883,000 during the first six months of 1994.
Approximately 33 percent of the expenditures related to construction of service
drops to subscriber's homes. Approximately 21 percent of the expenditures
related to new plant construction. Approximately 13 percent of the
expenditures related to system upgrades and rebuilds in all of the
Partnership's operating 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. Subject to the
regulatory matters discussed below, estimated capital expenditures for the
remainder of 1994 are approximately $6,458,000. Approximately 35 percent of
the expenditures is for new plant construction. Approximately 19 percent is
for system upgrades and rebuilds. Approximately 19 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 negotiated credit facility discussed below.
At December 31, 1992, the then-outstanding balance of $79,000,000 on
the Partnership's revolving credit facility converted to a term loan. The term
loan is payable in 26 consecutive quarterly installments which began March 31,
1993. The Partnership repaid $1,311,400 during the first six months of 1994.
At June 30, 1994, $74,023,000 was outstanding under this agreement. Such
repayments were funded from cash on hand, cash generated from operations and
advances from the General Partner. In July 1994, the Partnership completed
negotiation of a new $80,000,000 credit facility. The revolving credit
facility expires on September 30, 1996, at which time the outstanding balance
is payable in quarterly installments through March 31, 2002. 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. The effective interest rates on
outstanding obligations as of June 30, 1993 and 1994 were 4.50 percent and 5.64
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 for this coverage. 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 regulatory matters 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 $656,796 compared to the December 31, 1993 balance. This decrease
represents the Partnership's portion of the Venture's loss for the first six
months of 1994. These losses and the losses of the Partnership are anticipated
to continue.
During the first six months of 1994, capital expenditures of the
Venture-owned Broward County System totalled approximately $1,665,000. The
construction of service drops to homes and plant extensions accounted for
approximately 24 percent and 19 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 $1,200,000. Of this total, 33
percent is for cable television
8
<PAGE> 9
plant extensions, 32 percent is for the construction of service drops to homes.
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.
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 June 30, 1994 was $42,900,156. 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
negotiation to adjust the level of principal payments in order to provide
liquidity for capital expenditures. The Venture repaid principal of $389,844
on June 30, 1994. Principal payments for the remainder of 1994 total $779,688.
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 June 30, 1994 and 1993 were 5.74 percent and 4.79 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 for this coverage. The agreement protects the Venture
from interest rates that exceeded 7 percent for three years from the date of
the agreement.
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 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 has undertaken 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, 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
credit 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. The FCC also proposed adopting a productivity factor to be offset
against future inflation increases to be applied regardless of which form of
regulation is used, cost of service or benchmark regulation. 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.
9
<PAGE> 10
The Partnership has elected to file cost-of-service showings in the
Buffalo, Minnesota, Naperville, Illinois and Calvert County, Maryland systems.
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. The Partnership will continue its efforts to mitigate the
effect of such rate reduction.
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.
The 1992 Cable Act contains new broadcast signal carriage
requirements, and the FCC has adopted regulations implementing the statutory
requirements. These new rules allow a local commercial broadcast television
station to elect whether to demand that a cable system carry its signal or to
require the cable system to negotiate with the station for "retransmission
consent." A cable system is generally required to devote up to one-third of
its activated channel capacity for the mandatory carriage of local commercial
broadcast television stations, and non-commercial television stations are also
given mandatory carriage rights, although such stations are not given the
option to negotiate retransmission consent for the carriage of their signals by
cable systems. Additionally, cable systems also are required to obtain
retransmission consent from all commercial television stations (except for
commercial satellite-delivered independent "superstations"), which do not elect
mandatory carriage, commercial radio stations and, in some instances, low-power
television stations carried by cable systems.
The retransmission consent rules went into effect on October 6, 1993.
Throughout the cable television systems owned by the Partnership and the
Venture no television stations withheld their consent to retransmission of
their signal. Certain broadcast signals are being carried pursuant to
extensions, and the General Partner expects to finally conclude retransmission
consent negotiations with those remaining stations without having to terminate
the distribution of any of those signals. However, there can be no assurance
that such will occur. If any broadcast station currently being carried
pursuant to an extension is dropped, there could be a negative effect on the
system in which it is dropped if a significant number of subscribers in such
system were to disconnect their service. However, in most cases, only one
broadcaster in any market is being carried pursuant to an extension
arrangement, and the dropping of such broadcaster, were that to occur, is not
expected to have a negative effect on the system.
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.
10
<PAGE> 11
RESULTS OF OPERATIONS
Revenues of the Partnership increased $231,963, or approximately 2
percent, from $9,826,039 for the three months ended June 30, 1993 to
$10,058,002 for the comparable 1994 period. Revenues increased $452,575, or
approximately 2 percent, from $19,324,188 in the first six months of 1993 to
$19,776,763 in the comparable 1994 period. An increase in the subscriber base
primarily accounted for the increase in revenues for the three and six month
periods. Basic subscribers increased 5,321, or approximately 6 percent from
88,657 at June 30, 1993 to 93,978 at June 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 May 1993 with which the Partnership
complied effective September 1, 1993. In addition, on February 22, 1994, the
FCC announced a further rulemaking which, when implemented, July 14, 1994,
reduced certain rates further. See regulation and legislation discussion
above. No other individual factor was significant to the increase in revenues.
Operating, general and administrative expenses increased $335,599, or
approximately 6 percent, from $5,547,576 for the three months ended June 30,
1993 to $5,883,175 for the comparable 1994 period. For the six months ended
June 30, 1994 and 1993, operating, general and administrative expenses
increased $579,255, or approximately 5 percent, from $11,209,796 in 1993 to
$11,789,051 in 1994. Operating, general and administrative expense represented
56 percent and 58 percent, respectively, of revenues for the three and six
month periods of 1993 compared to 58 percent and 60 percent, respectively, for
the comparable 1994 periods. Increases in programming fees primarily accounted
for the increase for the three and six 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 $110,458, or approximately 10 percent, from
$1,136,745 for the three months ended June 30, 1993, to $1,247,203 for the
comparable 1994 period. For the six months ended June 30, 1994 and 1993,
management fees and allocated overhead from the General Partner increased
$251,325, or approximately 11 percent, from $2,246,595 in 1993 to $2,497,920 in
1994. The increase is due to the increase in revenues, upon which management
fees and allocated overhead are based, and an increase 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 $64,290, or
approximately 2 percent, from $3,786,862 for the three months ended June 30,
1993 to $3,722,572 for the comparable 1994 period. For the six month periods
ended June 30, 1994 and 1993, depreciation and amortization expense decreased
$56,587, or approximately 1 percent, from $7,562,956 in 1993 to $7,506,369 in
1994. The decreases are primarily due to the maturation of a portion of the
tangible asset base.
Operating loss increased $149,804, or approximately 23 percent, from
$645,144 for the three month period ended June 30, 1993 to $794,948 for the
comparable 1994 period. For the six month periods ended June 30, 1994 and
1993, operating loss increased $321,418, or approximately 19 percent, from
$1,695,159 at June 30, 1993 to $2,016,577 at June 30, 1994. These increases
were due to the increases in operating, general and administrative expenses and
management fees and allocated overhead from the General Partner exceeding the
increases in revenues and the decreases in depreciation and amortization
expense. Operating income before depreciation and amortization decreased
$214,094, or approximately 7 percent, from $3,141,718 for the three months
ended June 30, 1993 to $2,927,624 in 1994. Operating income before
depreciation and amortization decreased $378,005, or approximately 6 percent
from $5,867,797 for the six months ended June 30, 1993 to $5,489,792 in 1994.
These decreases are 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. 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 increase more slowly than in prior
years. In turn, this has caused certain expenses which are a function of
revenue, such as franchise fees, copyright fees and management fees to increase
more slowly than in prior years. However, other operating costs such as
programming fees, salaries and benefits, and marketing costs as well as certain
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, programming fees, 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) targeted non-subscriber
acquisition marketing.
11
<PAGE> 12
Interest expense increased $67,687, or approximately 7 percent, from
$928,716 for the three month period ended June 30, 1993 to $996,403 for the
comparable 1994 period. The increase in interest expense was due to a higher
effective interest rate. For the six month periods ended June 30, 1994 and
1993, interest expense decreased $8,214, or less than 1 percent, from
$1,889,924 at June 30, 1993 to $1,881,710 at June 30, 1994. This decrease in
expense was due to lower outstanding balances on interest bearing obligations.
Loss before equity in net loss of cable television joint venture increased
$343,926 or approximately 22 percent, from $1,546,498 for the three months
ended June 30, 1993 to $1,890,424 for the comparable 1994 period. For the six
months ended June 30, 1994 and 1993, loss before equity in net loss of cable
television joint venture increased $430,511, or approximately 12 percent, from
$3,580,535 to $4,011,046. These increases were primarily due to the increases
in operating loss.
In addition to the systems owned exclusively, by the Partnership,
Cable TV Fund 14-A owns an approximate 27 percent interest in the Venture.
The Venture's revenues decreased $161,498, or approximately 3 percent,
from $5,639,679 to $5,478,181 for the three month period ended June 30, 1994 as
compared to 1993. Revenues for the six month periods ended June 30, 1993 and
1994 decreased $171,681, or approximately 2 percent, from $11,145,602 in 1993
to $10,973,921 in 1994. These decreases in revenue are due to the reduction in
basic rates due to basic rate regulations issued by the FCC in May 1993, with
which the Venture complied effective September 1, 1993. In addition, on
February 22, 1994, the FCC announced a further rulemaking which, when
implemented on July 14, 1994 reduced rates further. 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 2,242 basic subscribers since June
30, 1993, an increase of 5 percent. Basic subscribers totalled 45,324 at June
30, 1994 compared to 43,082 at June 30, 1993. Pay units totalled 38,691 at
June 30, 1994 compared to 35,169 at June 30 1993, an approximate increase of 10
percent. No other individual factor significantly affected the decrease in
revenues.
Operating, general and administrative expense increased $28,585, or
approximately 1 percent, from $3,108,203 to $3,136,788 for the three month
period ended June 30, 1994 as compared to 1993. For the six month periods
ended June 30, 1994 and 1993, operating, general and administrative expense
increased $42,722, or approximately 1 percent, from $6,154,479 at June 30, 1993
to $6,197,201 at June 30, 1994. Operating, general and administrative expense
represented 57 percent of revenue for both the three and six month periods
ended June 30, 1994 compared to 55 percent for both the three and six month
periods ended June 30, 1993. These increases in operating, general and
administrative expense are due to increases in personnel related costs and
programming fees which are offset by decreases in franchise fee expense and
copyright expense caused by the decreases in revenues. No other individual
factor significantly affected the increases. Management fees and allocated
overhead from the General Partner decreased $2,554, or less than 1 percent,
from $677,430 to $674,876 for the three month periods ended June 30, 1994 and
1993. For the six month periods ended June 30, 1994 and 1993, management fees
and allocated overhead from the General Partner increased $36,651 or
approximately 3 percent, from $1,326,516 at June 30, 1993 to $1,363,167 at June
30, 1994 due to an increase in expenses allocated from the General Partner.
Depreciation and amortization expense increased $33,039, or approximately 1
percent, from $2,253,311 in 1993 to $2,286,350 for the three month period ended
June 30, 1994, due to capital additions in 1993. For the six month periods
ended June 30, 1994 and 1993, depreciation and amortization expense decreased
$213,677, or approximately 4 percent, from $4,804,047 at June 30, 1993 to
$4,590,370 at June 30, 1994. This decrease in depreciation and amortization
expense are attributable to the maturation of the Venture's asset base.
In the Broward County System, operating loss for the three month
period increased $220,568 or approximately 55 percent, from $399,265 at June
30, 1993 to $619,833 at June 30, 1994, due primarily to the decrease in revenue
and the increase in operating, general and administrative expense. For the six
month periods ended June 30, 1994 and 1993, operating loss increased $37,377 or
approximately 3 percent from $1,139,440 at June 30, 1993 to $1,176,817 at June
30, 1994. This increase is due to the increases in operating, general and
administrative expense and the decrease in revenues exceeding the decrease in
depreciation and amortization expense.
12
<PAGE> 13
Interest expense increased $54,830, or approximately 9 percent, from
$584,442 to $639,272 for the three month periods ended June 30, 1994 and 1993.
This increase is due to higher effective interest rates on interest-bearing
obligations. For the six month periods ended June 30, 1994 and 1993, interest
expense decreased $70,078, or approximately 5 percent, from $1,285,600 at June
30, 1993 to $1,215,522 at June 30, 1994, due to lower outstanding balances on
interest-bearing obligations. Net loss increased $326,122, or approximately 34
percent, from $965,670 to $1,291,792 for the three month periods ended June 30,
1994 and 1993. For the six month periods ended June 30, 1994 and 1993, net
loss increased $29,444, or approximately 1 percent, from $2,394,159 at June 30,
1993 to $2,423,603 at June 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
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: August 11, 1994
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