<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CABLE TV FUND 14-A, LTD.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: Limited
Partnership Interests
(2) Aggregate number of securities to which transaction applies: 160,000
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): Pursuant to
Rule 0-11(c)(2), the transaction valuation is based upon the $23,000,000
sales price that is to be paid to Cable TV Fund 14-A, Ltd. in connection
with the transaction that is the subject of the proxy solicitation.
(4) Proposed maximum aggregate value of the transaction to the Registrant:
$23,000,000
(5) Total fee paid: $4,600
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[JONES INTERCABLE, INC. LOGO]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
NOTICE OF VOTE OF THE LIMITED PARTNERS OF CABLE TV FUND 14-A, LTD.
To the Limited Partners of Cable TV Fund 14-A, Ltd.:
A special vote of the limited partners of Cable TV Fund 14-A, Ltd. (the
"Partnership") is being conducted through the mails on behalf of the
Partnership by Jones Intercable, Inc., the general partner of the Partnership
(the "General Partner"), for the purpose of obtaining limited partner approval
of the sale, to TCI Communications, Inc. or one of its affiliates, of the
cable television system serving areas in and around Naperville, Illinois (the
"Naperville System") owned by the Partnership for $23,000,000 in cash, subject
to customary working capital closing adjustments that may have the effect of
increasing or decreasing the sales price by a non-material amount. Information
relating to this matter is set forth in the accompanying Proxy Statement.
If the limited partners approve the proposed sale of the Naperville System
and if the transaction is closed, the Partnership will pay a brokerage fee
totaling $575,000 (representing 2.5 percent of the sales price) to The Jones
Group, Ltd., a subsidiary of the General Partner, for acting as a broker in
this transaction, settle working capital adjustments and deposit $696,000 into
an indemnity escrow account, and then the Partnership will distribute the
approximate $21,000,000 of net sale proceeds to the partners of record as of
the closing date of the sale of the Naperville System. Because at the time of
the Naperville System's sale the distributions made to the limited partners
from the prior sales of other cable television systems owned by the
Partnership will have returned to limited partners more than 125 percent of
the amounts originally contributed to the Partnership by the limited partners,
the net proceeds from the sale of the Naperville System will be allocated 75
percent to the limited partners ($15,750,000) and 25 percent to the General
Partner ($5,250,000). The $15,750,000 distribution to the limited partners
will give the limited partners a return of $98 for each $500 limited
partnership interest, or $196 for each $1,000 invested in the Partnership.
Distribution checks will be issued to limited partners' account registration
or payment instruction of record.
In addition to the Naperville System, the Partnership owns and operates the
cable television system serving areas in and around Buffalo, Minnesota (the
"Buffalo System") and the cable television system serving areas in and around
Calvert County, Maryland (the "Calvert County System"), both of which also are
in various stages of being sold. The General Partner currently anticipates
that the Buffalo System and the Calvert County System will be sold prior to
the closing of the sale of the Naperville System, but the actual order of the
various closings may change depending upon a variety of timing factors not in
the General Partner's control. The Partnership also has owned a 27 percent
interest in the Cable TV Fund 14-A/B Venture (the "Venture"). The Venture
owned and operated the cable television system serving certain areas in
Broward County, Florida (the "Broward System") until its sale in March 1998.
From the Venture's sale of the Broward System, the Partnership received
$25,484,569, representing 27 percent of the net sale proceeds. In April 1998,
the Partnership distributed this amount to its limited partners of record as
of March 31, 1998. This distribution represented $159 for each $500 limited
partnership interest or $318 for each $1,000 invested in the Partnership.
<PAGE>
The Partnership has agreed to sell the Calvert County System to a subsidiary
of the General Partner for a sales price of $39,388,667. The closing of the
sale of the Calvert County System, which is expected to occur in the first
quarter of 1999, will be subject to several conditions, including necessary
governmental and other third party consents and the approval of the holders of
a majority of the limited partnership interests in a separate proxy vote to be
conducted by the General Partner later this year. Upon the sale of the Calvert
County System, the Partnership intends to distribute approximately $19,300,000
of the net sale proceeds to the Partnership's limited partners of record as of
the closing date of the sale of the Calvert County System. This distribution
will represent $121 for each $500 limited partnership interest or $242 for
each $1,000 invested in the Partnership.
The Partnership has also agreed to sell its Buffalo System to an
unaffiliated party for a sales price of $27,000,000. The closing of the sale
of Buffalo System, which is expected to occur in the first quarter of 1999,
also will be subject to several conditions, including the Partnership and the
prospective buyer negotiating a definitive asset purchase agreement, necessary
governmental and other third party consents and the approval of the holders of
a majority of the limited partnership interests of the Partnership in a
separate proxy vote to be conducted by the General Partner later this year.
Upon the sale of the Buffalo System, which is expected to follow the sale of
the Calvert County System and precede the sale of the Naperville System, the
Partnership expects to distribute the net sale proceeds of $21,600,000 to the
Partnership's partners of record as of the closing date of the sale of the
Buffalo System. Because the distribution to the limited partners from the sale
of the Buffalo System, together with the distributions that have been or will
be made to the limited partners of the Partnership from the prior cable
television system sales, will return to the limited partners more than 125
percent of the capital they initially contributed to the Partnership, the
General Partner will receive a general partner distribution from the proceeds
of the sale of the Buffalo System. It is estimated that the limited partners,
as a group, will receive $21,367,000 from the sale of the Buffalo System and
that the General Partner will receive a general partner distribution of
$233,000 from the net sale proceeds. The limited partner distribution from the
sale of the Buffalo System will represent $134 for each $500 limited
partnership interest or $268 for each $1,000 invested in the Partnership.
Portions of the proceeds from the Buffalo System sale and the Naperville
System sale will be held in indemnity escrow accounts for varying periods in
1999 following the closings of the sales. After the distribution of the
amounts, if any, remaining in the indemnity escrow accounts, the Partnership
will be liquidated and dissolved, most likely in the fourth quarter of 1999.
Taking into account the distributions that have been or will be made to the
limited partners of the Partnership from all of the prior and pending cable
television system sales (excluding escrowed proceeds), the General Partner
estimates that the limited partners of the Partnership will have received a
total return of $728 for each $500 limited partnership interest or $1,456 for
each $1,000 invested in the Partnership at the time that the Partnership is
liquidated and dissolved.
Only limited partners of record at the close of business on October 15, 1998
are entitled to notice of, and to participate in, this vote of limited
partners. It is very important that all limited partners participate in the
voting. The Partnership's ability to complete the transaction discussed in the
Proxy Statement and the Partnership's ability to make a distribution to its
partners of the net proceeds of the sale of the Naperville System are
dependent upon the approval of the transaction by the holders of a majority of
the Partnership's limited partnership interests.
<PAGE>
The proposal that is the subject of this proxy solicitation will be adopted
only if approved by the holders of a majority of the limited partnership
interests. Each limited partnership interest entitles the holder thereof to
one vote on the proposal. Because the Partnership Agreement requires that the
proposal to sell the Naperville System be approved by the holders of a
majority of the limited partnership interests, abstentions and non-votes will
be treated as votes against the proposal. A properly executed consent returned
to the General Partner on which a limited partner does not mark a vote will be
counted as a vote for the proposed sale of the Naperville System. Because
limited partners do not have dissenters' or appraisal rights in connection
with the proposed sale of the Naperville System, if the holders of a majority
of the limited partnership interests approve the proposal, all limited
partners will receive a distribution of the net sale proceeds in accordance
with the procedures prescribed by the Partnership Agreement regardless of how
or whether they vote on the proposal.
Jones Intercable, Inc., as general partner of the Partnership, urges you to
sign and return the enclosed proxy as promptly as possible. The proxy should
be returned in the enclosed envelope.
JONES INTERCABLE, INC.
General Partner
/s/ Elizabeth M. Steele
Elizabeth M. Steele
Secretary
Dated: October 30, 1998
<PAGE>
[JONES INTERCABLE, INC. LOGO]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
PROXY STATEMENT
VOTE OF THE LIMITED PARTNERS
OF CABLE TV FUND 14-A, LTD.
This Proxy Statement is being furnished in connection with the solicitation
of the written consents of the limited partners of Cable TV Fund 14-A, Ltd.
(the "Partnership") by Jones Intercable, Inc., the general partner of the
Partnership (the "General Partner"), on behalf of the Partnership, for the
purpose of obtaining limited partner approval of the sale of the cable
television system serving areas in and around Naperville, Illinois (the
"Naperville System") owned by the Partnership for $23,000,000 in cash, subject
to normal working capital closing adjustments, to TCI Communications, Inc. or
one of its affiliates ("TCI"). TCI is not an affiliate of the Partnership or
of the General Partner.
Proxies in the form enclosed, properly executed and duly returned, will be
voted in accordance with the instructions thereon. Limited partners are urged
to sign and return the enclosed proxy as promptly as possible. Proxies cannot
be revoked except by delivery of a proxy dated as of a later date. Officers
and other employees of the General Partner may solicit proxies by mail, by
fax, by telephone or by personal interview. The deadline for the receipt of
proxy votes is December 15, 1998, unless extended, but the vote of the
Partnership's limited partners will be deemed to be concluded on the date, at
least 20 business days from the date the proxy materials are sent to limited
partners, that the General Partner, on behalf of the Partnership, is in
receipt of proxies executed by the holders of a majority of the limited
partnership interests either consenting to or disapproving of the proposed
transaction. The General Partner may extend the deadline for receipt of proxy
votes if a majority of the limited partners fail to express an opinion on the
transaction by December 15, 1998. If the General Partner extends the deadline
for receipt of proxy votes, the limited partners will be informed by mail of
the reason for the extension and the new deadline. The cost of the proxy
solicitation will be paid by the Partnership.
The Partnership has only one class of limited partners and no limited
partner has a right of priority over any other limited partner. The
participation of the limited partners is divided into limited partnership
interests and each limited partner owns one limited partnership interest for
each $500 of capital contributed to the Partnership.
As of September 18, 1998, the Partnership had 160,000 limited partnership
interests outstanding, held by 11,221 persons. There is no established trading
market for such interests. To the best of the General Partner's knowledge, no
person or group of persons beneficially own more than five percent of the
limited partnership interests. During the past several years, Smithtown Bay,
LLC and Madison Partnership Liquidity Investors 46, LLC, two firms
unaffiliated with the Partnership, the General Partner and each other, have
conducted tender
<PAGE>
offers for interests in the Partnership. As of September 18, 1998, Smithtown
Bay, LLC and its affiliates owned 935 limited partnership interests, or 0.6
percent of the limited partnership interests. As of such date, Madison
Partnership Liquidity Investors 46, LLC and its affiliates owned 7,838 limited
partnership interests, or 4.9 percent of the limited partnership interests.
Pursuant to the terms of agreements between the Partnership and the General
Partner and such firms, all of the limited partnership interests held by these
firms will be voted in the same manner as the majority of all limited partners
who vote on the sale of the Naperville System. Thus, for example, if the
limited partnership interests voted in favor of the transaction constitute a
majority of all limited partnership interests voted but not a majority of all
limited partnership interests, these firms will be required to vote their
limited partnership interests in favor of the transaction, and in such event
the votes of these firms could be sufficient to cause the transaction to be
approved by a majority of all limited partnership interests, which is the vote
necessary to cause the transaction to be approved. The General Partner owns
240 limited partnership interests. The limited partnership interests owned by
the General Partner will be voted in favor of the sale of the Naperville
System to TCI. The officers and directors of the General Partner do not own
any limited partnership interests. Only limited partners of record at the
close of business on October 15, 1998 will be entitled to notice of, and to
participate in, the vote.
Upon the consummation of the proposed sale of the Naperville System, the
Partnership will pay a brokerage fee totaling $575,000 (representing 2.5
percent of the sales price) to The Jones Group, Ltd., a subsidiary of the
General Partner, for acting as a broker in this transaction, settle working
capital adjustments and deposit $696,000 into an indemnity escrow account, and
then the Partnership will distribute the approximate $21,000,000 of net sale
proceeds to its partners of record as of the closing date of the sale of the
Naperville System. Because at the time of the Naperville System's sale in the
first quarter of 1999 the distributions made to the limited partners from the
prior sales of other cable television systems owned by the Partnership will
have returned to the limited partners more than 125 percent of the amounts
originally contributed to the Partnership by the limited partners, the net
proceeds from the sale of the Naperville System will be allocated 75 percent
to the limited partners ($15,750,000) and 25 percent to the General Partner
($5,250,000). As a result of the Naperville System's sale, the limited
partners of the Partnership will receive a $15,750,000 distribution, or $98
for each $500 limited partnership interest, or $196 for each $1,000 invested
in the Partnership. Distribution checks will be issued to limited partners'
account registration or payment instruction of record.
In addition to the Naperville System, the Partnership owns and operates the
cable television system serving areas in and around Buffalo, Minnesota (the
"Buffalo System") and the cable television system serving areas in and around
Calvert County, Maryland (the "Calvert County System"), both of which also are
in various stages of being sold. The General Partner currently anticipates
that the Buffalo System and the Calvert County System will be sold prior to
the closing of the sale of the Naperville System, but the actual order of the
various closings may change depending upon a variety of timing factors not in
the General Partner's control. The Partnership also has owned a 27 percent
interest in the Cable TV Fund 14-A/B Venture (the "Venture"). The Venture
owned and operated the cable television system serving certain areas in
Broward County, Florida (the "Broward System") until its sale in March 1998.
From the Venture's sale of the Broward System, the Partnership received
$25,484,569, representing 27 percent of the net sale proceeds. In April 1998,
the Partnership distributed this amount to its limited partners of record as
of March 31, 1998. This distribution represented $159 for each $500 limited
partnership interest or $318 for each $1,000 invested in the Partnership.
The Partnership has agreed to sell the Calvert County System to a subsidiary
of the General Partner for a sales price of $39,388,667. The closing of the
sale of the Calvert County System, which is expected to occur in the first
quarter of 1999, will be subject to several conditions, including necessary
governmental and other third party consents and the approval of the holders of
a majority of the limited partnership interests in a separate proxy vote to be
conducted by the General Partner later this year. Upon the sale of the Calvert
County System, the Partnership intends to distribute approximately $19,300,000
of the net sale proceeds to the Partnership's limited partners of record as of
the closing date of the sale of the Calvert County System. This distribution
will represent $121 for each $500 limited partnership interest or $242 for
each $1,000 invested in the Partnership.
2
<PAGE>
The Partnership has also agreed to sell its Buffalo System to an
unaffiliated party for a sales price of $27,000,000. The closing of the sale
of Buffalo System, which is expected to occur in the first quarter of 1999,
also will be subject to several conditions, including the Partnership and the
prospective buyer negotiating a definitive asset purchase agreement, necessary
governmental and other third party consents and the approval of the holders of
a majority of the limited partnership interests of the Partnership in a
separate proxy vote to be conducted by the General Partner later this year.
Upon the sale of the Buffalo System, which is expected to follow the sale of
the Calvert County System and precede the sale of the Naperville System, the
Partnership expects to distribute the net sale proceeds of $21,600,000 to the
Partnership's partners of record as of the closing date of the sale of the
Buffalo System. Because the distribution to the limited partners from the sale
of the Buffalo System, together with the distributions that have been or will
be made to the limited partners of the Partnership from the prior cable
television system sales, will return to the limited partners more than 125
percent of the capital they initially contributed to the Partnership, the
General Partner will receive a general partner distribution from the proceeds
of the sale of the Buffalo System. It is estimated that the limited partners,
as a group, will receive $21,367,000 from the sale of the Buffalo System and
that the General Partner will receive a general partner distribution of
$233,000 from the net sale proceeds. The limited partner distribution from the
sale of the Buffalo System will represent $134 for each $500 limited
partnership interest or $268 for each $1,000 invested in the Partnership.
Portions of the proceeds from the Buffalo System sale and the Naperville
System sale will be held in indemnity escrow accounts for varying periods in
1999 following the closings of the sales. After the distribution of the
amounts, if any, remaining in the indemnity escrow accounts, the Partnership
will be liquidated and dissolved, most likely in the fourth quarter of 1999.
Taking into account the distributions that have been or will be made to the
limited partners of the Partnership from all of the prior and pending cable
television system sales (excluding escrowed proceeds), the General Partner
estimates that the limited partners of the Partnership will have received a
total return of $728 for each $500 limited partnership interest or $1,456 for
each $1,000 invested in the Partnership at the time that the Partnership is
liquidated and dissolved.
It is anticipated that, at the time of its sale, the Naperville System will
be the Partnership's only asset. After the sale of the Naperville System and
after the termination of the indemnity escrow period on November 15, 1999, the
Partnership will be liquidated and dissolved. The Partnership will cease to be
a public entity subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), when the
Partnership is liquidated and dissolved, most likely before the end of 1999.
The proposal that is the subject of this proxy solicitation will be adopted
only if approved by the holders of a majority of the limited partnership
interests. Each limited partnership interest entitles the holder thereof to
one vote on the proposal. Because the Partnership's limited partnership
agreement (the "Partnership Agreement") requires that the proposal to sell the
Naperville System be approved by the holders of a majority of the limited
partnership interests, abstentions and non-votes will be treated as votes
against the proposal. A properly executed consent returned to the General
Partner on which a limited partner does not mark a vote will be counted as a
vote for the proposed sale of the Naperville System. Because limited partners
do not have dissenters' or appraisal rights in connection with the proposed
sale of the Naperville System, if the holders of a majority of the limited
partnership interests approve the proposal, all limited partners will receive
a distribution of the net sale proceeds in accordance with the procedures
prescribed by the Partnership Agreement regardless of how or whether they vote
on the proposal.
The Board of Directors of the General Partner approved the proposed sale of
the Naperville System and the General Partner therefore recommends approval of
the transaction by the holders of the Partnership's limited partnership
interests.
The approximate date on which this Proxy Statement and Form of Proxy are
being sent to limited partners is October 30, 1998.
3
<PAGE>
PARTNERSHIP INFORMATION
THE PARTNERSHIP'S INVESTMENT OBJECTIVES
The Partnership was formed to acquire, develop, operate and, ultimately,
sell cable television systems. The primary objectives of the Partnership have
been to obtain capital appreciation in the value of the Partnership's cable
television properties; to obtain equity build-up through debt reduction; and
to generate tax losses that could be utilized to offset passive income. It was
contemplated from the outset of the Partnership's existence that capital
appreciation in Partnership cable television properties would be converted to
cash by a sale of such properties at such time as the General Partner
determined that the Partnership's investment objectives had substantially been
achieved and after a holding period of five to seven years.
The Partnership was formed in February 1987 as a Colorado limited
partnership in connection with a public offering of its limited partnership
interests. Sales of limited partnership interests in the Partnership commenced
on December 3, 1986 and closed on August 14, 1987. The Partnership raised
gross offering proceeds of $80,000,000. The Partnership acquired the
Naperville System in September 1987.
Based upon the track record of prior public partnerships sponsored by the
General Partner that had liquidated or were in the process of liquidating
their assets during the period that limited partnership interests in the
Partnership were being sold, and based upon disclosures made to prospective
investors about the Partnership's investment objectives in the Cable TV Fund
14 Limited Partnership Program prospectus and in the accompanying sales
brochure, investors in the Partnership reasonably could have anticipated that
the Partnership's investment objectives would be achieved and its assets
liquidated after a holding period of approximately five to seven years. Due to
the uncertain and then adverse regulatory environment that developed in the
mid 1990s for the cable television industry, the resulting decline in the
prices for cable television systems and the subsequent inactivity in the cable
television system marketplace, the General Partner determined that it would be
prudent to delay the sale of the Naperville System until market conditions
improved and, as a result, the Naperville System has been held by the
Partnership for over 11 years.
The purpose of the sale of the Naperville System, from the Partnership's
perspective, is to attain the Partnership's primary investment objective with
respect to the Naperville System, i.e., to convert the Partnership's capital
appreciation in the Naperville System to cash. The sale proceeds will be used
to pay certain fees and expenses of the transaction, settle working capital
adjustments and deposit funds into an indemnity escrow account, and then the
remaining sale proceeds will be distributed to the partners of the Partnership
of record as of the closing date of the sale of the Naperville System in
accordance with the distribution procedures established by the Partnership
Agreement. The sale of the Naperville System is thus the necessary final step
in the Partnership's accomplishment of its investment objectives with respect
to the Naperville System.
All distributions of the Partnership from the proceeds of the sales of cable
television systems are to be distributed 100 percent to the limited partners
until the limited partners receive amounts equal to 125 percent of their
initial capital contributions, and thereafter all such distributions are to be
shared 75 percent to the limited partners and 25 percent to the General
Partner. Because the limited partners of the Partnership already will have
received distributions in an amount in excess of 125 percent of their initial
capital contributions by the time the Naperville System is sold, the sharing
arrangement between the limited partners and the General Partner will be
triggered. The limited partners, as a group, will receive $15,750,000 of the
Naperville System's net sale proceeds and the General Partner will receive
$5,250,000 of the Naperville System's net sale proceeds. The distribution to
limited partners will provide the limited partners with a return of $98 for
each $500 limited partnership interest or $196 for each $1,000 invested in the
Partnership.
VOTING PROVISION OF THE PARTNERSHIP AGREEMENT
Section 2.2(k) of the Partnership Agreement provides that the sale of all or
substantially all of the Partnership's assets is subject to the approval of
the holders of a majority of the Partnership's limited partnership interests.
Because the Naperville System should be the Partnership's sole remaining asset
at the time of its sale, the proposed sale of the Naperville System to TCI is
being submitted for limited partner approval.
4
<PAGE>
PROPOSED SALE OF ASSETS
GENERAL
Pursuant to the terms and conditions of an asset purchase agreement dated as
of August 7, 1998 (the "Asset Purchase Agreement") by and between the
Partnership and TCI, the Partnership has agreed to sell the Naperville System
to TCI for a sales price of $23,000,000, subject to customary working capital
closing adjustments. TCI is a Delaware corporation headquartered at 5619 DTC
Parkway, Englewood, Colorado 80111. TCI is not an affiliate of the Partnership
or of the General Partner. The Partnership has been informed that TCI intends
to finance its acquisition of the Naperville System through cash on hand and
borrowings.
THE CLOSING
The closing of the sale of the Naperville System is scheduled to occur
during the first quarter of 1999 after the closings of the sales of the
Calvert County System and the Buffalo System. Because the closing is
conditioned upon, among other things, the approval of the limited partners of
the Partnership and the receipt of material third party consents necessary for
the transfer of the Naperville System to TCI, there can be no assurance that
the proposed sale will occur. See "Proposed Sale of Assets, Conditions to
Closing" for a description of the material consents necessary for the transfer
of the Naperville System to TCI.
THE NAPERVILLE SYSTEM
The assets to be acquired by TCI consist primarily of the tangible and
intangible assets of the Naperville System. The Naperville System was
purchased by the Partnership from the General Partner in September 1987 for a
purchase price of $24,585,000, the purchase price that the General Partner
paid an unaffiliated third party to acquire the Naperville System for the
Partnership's account in May 1987, and the Partnership reimbursed the General
Partner for the costs incurred by the General Partner for capital expenditures
made by the General Partner during the period that it held these systems for
the Partnership's account and the amount of operating and interest expenses in
excess of operating receipts incurred by the General Partner from the date of
its acquisition of the Naperville System for the Partnership's account in May
1987 through the end of September 1987, when the Naperville System was
transferred to the Partnership. The Partnership also paid an acquisition fee
of $983,400 (representing 4 percent of the purchase price) to The Jones Group,
Ltd. as compensation to it for acting as the broker in the transaction. At
acquisition in September 1987, the Naperville System served approximately
10,875 basic equivalent subscribers and had 12,695 premium units using 253
miles of cable plant passing approximately 19,030 homes.
The Naperville System currently is operated from one headend, with
approximately 90 percent of the system at 450 MHz and the remaining 10 percent
of the system at 550 MHz. The Naperville System has a total of 476 miles of
cable plant (with 375 miles underground and 101 miles aerial) passing
approximately 45,000 homes. At closing, the Naperville System is expected to
have approximately 19,000 basic equivalent subscribers and 9,700 premium
units. The Naperville System's basic penetration rate at closing is expected
to be 42.7 percent. These statistics reflect the overbuild of the Naperville
System by Ameritech and the resulting loss of subscribers to the competing
Ameritech cable system. The Naperville System had annual revenues in 1997 of
$9,372,000 and annual cash flow of $2,688,000. The Naperville System is
projected to have annual revenues in 1998 of $8,770,000 and annual cash flow
of $2,335,000. Declining revenues and cash flow are the result of the intense
competition the Naperville System is facing from the overbuilder Ameritech.
The $23,000,000 sale price therefore represents 8.6 times 1997 cash flow and
9.9 times projected 1998 cash flow, and it also represents a sales price of
$1,211 per subscriber. The most recent independent appraisal of the Naperville
System's fair market value, which was completed at the direction of the
General Partner in July 1997, valued the Naperville System at $24,747,000. The
proposed sales price of $23,000,000 is less than this most recent independent
fair market value appraisal. The General Partner attributes this difference to
the increased threat of competition from Ameritech since the date of the most
recent appraisal.
5
<PAGE>
TCI will purchase all of the tangible assets of the system that are leased
or owned by the Partnership and used in the operation of the system, including
the system's real estate, vehicles, headend equipment, underground and
aboveground cable distribution systems, towers, earth satellite receive
stations and furniture and fixtures. TCI also will acquire certain of the
intangible assets of the system, including all of the franchises, leases,
agreements, permits, licenses and other contracts and contract rights
necessary for the operation of the system. Also included in the sale are the
subscriber accounts receivable of the system and all of the system's records,
files, schematics, maps, reports, promotional graphics, marketing materials
and reports filed with federal, state and local regulatory agencies. The
foregoing notwithstanding, certain of the system's assets will be retained by
the Partnership, including cash or cash equivalents on hand and in banks,
insurance policies, and any federal, state or local income or other tax
refunds to which the Partnership may be entitled.
SALES PRICE
Subject to the closing adjustments described below, the sales price for the
Naperville System is $23,000,000. The Asset Purchase Agreement provides for
closing adjustments that may increase or reduce the sales price by a non-
material amount.
Adjustments on a pro rata basis as of the closing date will be made for all
prepaid expenses (to the extent the full benefit thereof will be realized by
TCI within twelve months after the closing date), accrued expenses (including
real and personal property taxes and the economic value of all accrued
vacation time permitted by TCI's policies to be taken after the closing date
by the employees of the Naperville System hired by TCI), prepaid income,
subscriber prepayments and accounts receivable related to the Naperville
System, all as determined in accordance with GAAP consistently applied and to
reflect the principle that all expenses and income attributable to the
Naperville System for the period prior to the closing date are for the account
of the Partnership and all expenses and income attributable to the Naperville
System for the period on and after the closing date are for the account of
TCI.
The Partnership will receive no credit for any accounts receivable resulting
from (a) cable service sales any portion of which is 60 days or more past due
as of the closing date, (b) subscribers whose accounts are inactive or whose
services are pending disconnection for any reason as of the closing date or
(c) advertising sales any portion of which is 120 days or more past due as of
the closing date. TCI's account will be credited for the amount of all advance
payments to, or funds of third parties on deposit with, the Partnership as of
the closing date, relating to the Naperville System, including advance
payments and deposits by subscribers served by the Naperville System for
converters, encoders, decoders, cable television service and related sales,
and the liability therefore will be assumed by TCI.
If the number of basic equivalent subscribers delivered to TCI at closing is
less than 19,000, the sales price will be reduced by an amount equal to $1,211
multiplied by the number by which the number of basic equivalent subscribers
is less than 19,000. The Partnership will not have an obligation to close the
sale if the sales price would be reduced pursuant to this adjustment by an
amount greater than $1,816,500. TCI will not have an obligation to close if
the number of basic equivalent subscribers at closing is less than 17,500.
The General Partner believes that these closing adjustments will neither
increase nor decrease the sales price by a material amount. Please see the
Notes to Unaudited Pro Forma Financial Statements for a detailed accounting of
the General Partner's current best estimate of the anticipated closing
adjustments.
CONDITIONS TO THE CLOSING OF THE SALE
The obligations of both the Partnership and TCI to consummate the closing
are subject to the satisfaction or waiver of the following conditions: (a) any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act") relating to the transactions contemplated by the
Asset Purchase Agreement shall have expired or been terminated; (b) no action,
suit or proceeding is pending or threatened by or before any governmental
authority and no legal requirement has been enacted, promulgated or issued or
6
<PAGE>
become or deemed applicable to any of the transactions contemplated by the
Asset Purchase Agreement by any governmental authority that would (i) prohibit
TCI's ownership or operation of all or a material portion of the Naperville
System, its business or its assets, (ii) compel TCI to dispose of or hold
separate all or a material portion of the Naperville System, its business or
its assets as a result of any of the transactions contemplated by the Asset
Purchase Agreement, (iii) if determined adversely to TCI's interest,
materially impair the ability of TCI to realize the benefits of the
transactions contemplated by the Asset Purchase Agreement or have a material
adverse effect on the right of TCI to exercise full rights of ownership of the
Naperville System or (iv) prevent or make illegal the consummation of any of
the transactions contemplated by the Asset Purchase Agreement; and (c) the
holders of a majority of the limited partnership interests of the Partnership
shall have voted to approve the Partnership's sale of the Naperville System to
TCI.
The obligation of TCI to consummate the closing is further subject to the
satisfaction or waiver of other customary conditions, including the following
conditions: (a) all of the representations and warranties of the Partnership
in the Asset Purchase Agreement and any related document are, if specifically
qualified by materiality, true and correct in all respects and, if not so
qualified, are true and correct in all material respects, in each case on and
as of the closing date with the same effect as if made at and as of the
closing date, except for changes permitted or contemplated by the Asset
Purchase Agreement; (b) the Partnership has performed in all material respects
all obligations and agreements and complied in all material respects with all
covenants and conditions in the Asset Purchase Agreement and any related
document to be performed or complied with by the Partnership at or before the
closing; (c) the Partnership has delivered to TCI a bill of sale, a special
warranty deed related to the Naperville System's real estate, an assignment
and assumption of contracts, assignments of leases, a guarantee signed by the
General Partner, motor vehicle title certificates and such other transfer
instruments as TCI may deem necessary or advisable to transfer the assets of
the Naperville System to TCI and to perfect TCI's rights in such assets, a
legal opinion of the General Partner's general counsel, evidence satisfactory
to TCI that all encumbrances affecting any of the Naperville System's assets
have been terminated and released, title insurance commitments, the indemnity
escrow agreement and such other closing agreements as TCI may reasonably
request in connection with the transactions contemplated by the Asset Purchase
Agreement; (d) the Partnership has delivered to TCI evidence, in form and
substance satisfactory to TCI, that all of the required consents to the
transaction, including without limitation, all consents of franchising
authorities, have been obtained or given (or deemed to have been given) and
are in full force and effect; (e) the environmental reports prepared by the
Partnership and delivered to TCI and any other environmental audits or
assessments conducted with respect to the Naperville System's assets do not
indicate the existence of any conditions that could reasonably be expected to
give rise to any material risk of liability; (f) there has not been any
material adverse change in the business or the assets of the Naperville System
since the date of the Asset Purchase Agreement other than any material adverse
change caused by or arising from other multiple channel distribution services
or any material adverse change affecting the United States cable television
industry as a whole, including any change arising from legislation,
litigation, rulemaking, regulation or competition; (g) as of the closing date
the Naperville System has no fewer than 17,500 basic equivalent subscribers;
(h) the cable television franchise of the Naperville System granted by the
City of Naperville shall be renewed on terms and conditions reasonably
satisfactory to TCI and the Partnership; and (i) the closing of TCI's sale of
certain systems in a separate transaction to permit TCI to accomplish a like-
kind exchange under Section 1031 of the Internal Revenue Code shall have
occurred; provided, however, if this last condition shall not have occurred on
or before the day that is nine months after the date of the Asset Purchase
Agreement, this condition shall no longer be a condition to the obligations of
TCI to consummate the transactions contemplated by the Asset Purchase
Agreement. To the extent that the Partnership must obtain a renewal of the
Naperville cable television franchise, any such renewal shall be on terms and
conditions reasonably satisfactory to TCI and the Partnership evaluated in the
context of similarly situated franchises in the greater Chicago metropolitan
area, including the franchise granted by the City of Naperville to Ameritech,
the overbuilder and operator of the cable system competing with the Naperville
System in the City of Naperville. The Partnership and TCI will allocate the
costs associated with obtaining such renewal between them. The Partnership is
obligated, however, to bear all costs required to remedy any item of
noncompliance with the terms of the Naperville franchise or to meet any
current obligation under the terms of the Naperville franchise in connection
with obtaining the renewal, including any costs associated
7
<PAGE>
with the litigation involving the Partnership and the City of Naperville
relating to the Partnership's claims against the City of Naperville in
connection with its grant of a cable television franchise to Ameritech and the
City of Naperville's counterclaims against the Partnership.
The obligation of the Partnership to consummate the closing is further
subject to the satisfaction or waiver of other customary conditions, including
the following conditions: (a) all of the representations and warranties of TCI
contained in the Asset Purchase Agreement and any related document are, if
specifically qualified by materiality, true and correct in all respects and,
if not so qualified, are true and correct in all material respects, in each
case on and as of the closing date with the same effect as if made on and as
of the closing date, except for changes permitted or contemplated by the Asset
Purchase Agreement; (b) TCI has performed in all material respects all
obligations and agreements and has complied in all material respects with all
covenants and conditions in the Asset Purchase Agreement and any related
document to be performed or complied with by TCI at or before the closing; (c)
TCI has delivered to the Partnership the purchase price for the Naperville
System a bill of sale, an assignment and assumption of contracts, a legal
opinion of TCI's counsel, the indemnity escrow agreement and such other
documents as the Partnership may reasonably request in connection with the
transactions contemplated by the Asset Purchase Agreement; and (d) as of the
closing date, either the Naperville System shall have no fewer than 17,500
basic equivalent subscribers or TCI shall agree to limit the sales price
reduction due to a basic equivalent subscriber shortfall to $1,816,500.
GUARANTEE AND COVENANTS TO TCI
In order to induce TCI to enter into the Asset Purchase Agreement, the
General Partner will execute and deliver to TCI a guarantee by which the
General Partner will guarantee all of the liabilities and obligations of the
Partnership to TCI under the Asset Purchase Agreement. TCI informed the
General Partner that it would be unwilling to enter into the Asset Purchase
Agreement without having received the General Partner's guarantee. The General
Partner received no payment from the Partnership in return for giving this
guarantee.
The parties have agreed that neither the Partnership, nor the General
Partner, nor any of their respective affiliates, nor any of their respective
representatives or agents shall, directly or indirectly, solicit or initiate
discussions or negotiations with or provide any information to, any entity
concerning the sale of the Naperville System so long as the Asset Purchase
Agreement is in effect. The General Partner agreed with TCI that the General
Partner would prepare and, as soon as practicable, and in any event within 60
days after the date of the Asset Purchase Agreement, file with the Securities
and Exchange Commission a preliminary proxy statement comprising preliminary
proxy materials of the Partnership under the Exchange Act with respect to the
transactions contemplated by the Asset Purchase Agreement.
In addition, the Partnership has agreed with TCI that the Partnership will
perform certain customary covenants, including the following covenants: (a)
the Partnership has agreed to give TCI and its counsel, accountants and other
representatives full access during normal business hours upon reasonable
notice to all of the premises and books and records of the business and assets
of the Naperville System and to the Naperville System's personnel and the
Partnership has agreed to furnish to TCI and its representatives all
documents, financial information and other information regarding the business
and assets of the Naperville System as TCI may reasonably request; (b) the
Partnership has agreed to conduct the business and operations of the
Naperville System in the usual, regular and ordinary course consistent with
past practices and in material compliance with the Naperville System's 1998
operating and capital budgets; (c) the Partnership has agreed to maintain the
assets of the Naperville System in good repair, order and condition and to
maintain equipment and inventory at historical levels consistent with past
practices (and will have at least a 30-day supply of inventory on hand for the
Naperville System at closing) and to maintain in full force and effect
insurance policies with respect to the Naperville System in such amounts and
with respect to such risks as is customarily maintained by operators of cable
television systems of the size and geographic location as the Naperville
System and to continue to implement its procedures for disconnection and
discontinuance of service to subscribers whose accounts are delinquent in
accordance with those procedures in effect on the date of the Asset Purchase
Agreement; (d) the
8
<PAGE>
Partnership has agreed that without the prior approval of TCI, the Partnership
will not (i) change the rates charged for its cable television services or
add, delete, re-tier or repackage any programming services except to the
extent required by law, (ii) make any cost of service elections with respect
to the Naperville System, (iii) sell, transfer or assign any portion of the
assets other than sales in the ordinary course of business or permit the
creation of any encumbrance on any asset of the Naperville System other than
an encumbrance that will be released at or prior to closing, (iv) modify in
any material respect, terminate, suspend or abrogate any governmental permits
or any other contract or agreement with respect to the Naperville System, (v)
enter into any contract or commitment or incur any indebtedness or other
liability or obligation of any kind relating to the Naperville System
involving an expenditure in excess of $25,000 under a single contract or
commitment, or $50,000 in the aggregate under all such contracts and
commitments, other than contracts or commitments that are cancelable on 30
days' notice or less without penalty, (vi) take or omit to take any action
that would result in any of its representations or warranties in the Asset
Purchase Agreement or in any related document not being true and correct when
made or as of the closing date, (vii) engage in any marketing, subscriber
installation or collection practices that are inconsistent with past practices
other than marketing and/or installation practices that are reasonably
necessary to match offers being made by any competitor of the Naperville
System or (viii) enter into any agreement with or commitment to any
competitive access providers with respect to the Naperville System; (e) the
Partnership has agreed with TCI that it will duly and timely file a valid
notice of renewal with the appropriate governmental authorities with respect
to all cable television franchises of the Naperville System that will expire
within 36 months after any date between the date of the Asset Purchase
Agreement and the closing date; (f) the Partnership has agreed to pay the
remaining balances on any leases for vehicles or capital leases on equipment
to be included in the equipment to be delivered at closing and the Partnership
has agreed to deliver title to such vehicles and equipment free and clear of
all encumbrances to TCI at the closing; (g) the Partnership has agreed that it
will use commercially reasonable efforts to obtain in writing as promptly as
possible and at its expense, all consents, authorizations and approvals
required to be obtained by the Partnership in connection with the sale of the
Naperville System to TCI, in form and substance reasonably satisfactory to
TCI, and the Partnership has agreed to deliver to TCI copies of such consents,
authorizations and approvals promptly after they are obtained by the
Partnership; (h) the Partnership has agreed to work with TCI to deliver, no
later than 30 days after the date of the Asset Purchase Agreement, to the
appropriate governmental authority requests for the necessary consents to
transfer the Naperville System's governmental permits to operate the cable
television systems; (i) the Partnership has agreed that it will use
commercially reasonable efforts and TCI has agreed that it will cooperate with
and assist the Partnership in all reasonable respects (including attendance at
meetings and hearings before local franchising authorities) to have the
Naperville cable television franchise renewed on terms and conditions
reasonably satisfactory to TCI and the Partnership, which terms and conditions
shall be evaluated by TCI and the Partnership in the context of extensions and
renewals of similarly situated franchises in the greater Chicago metropolitan
area, including the franchise granted by the City of Naperville to Ameritech,
and the Partnership has agreed to bear all costs required to remedy any item
of noncompliance with the terms of any franchise or to meet current
obligations under the terms of any franchise in connection with obtaining such
extension or renewal, including any costs associated with the litigation
between the Partnership and the City of Naperville, and TCI has agreed to bear
all costs associated with commitments made for capital expenditures to be made
after the closing date related to obtaining an extension or renewal; (j) the
Partnership has agreed that, within 60 days after the date of the Asset
Purchase Agreement, it will, at its expense, obtain and deliver to TCI for
each parcel of real property owned by the Partnership, an environmental site
assessment report prepared by a nationally known environmental engineering
firm reasonably satisfactory to TCI; and (k) the Partnership and TCI have
agreed that they will cooperate with each other in order that the transactions
contemplated by the Asset Purchase Agreement may be accomplished as part of a
deferred exchange pursuant to Section 1031 of the Internal Revenue Code and
applicable Treasury Regulations.
INDEMNITY ESCROW
From the closing date until November 15, 1999, $696,000 of the sale proceeds
will remain in escrow as security for the Partnership's agreement to indemnify
TCI under the Asset Purchase Agreement. Pursuant to the terms of the Asset
Purchase Agreement, the Partnership has agreed to indemnify and hold TCI
harmless from all
9
<PAGE>
losses resulting from or arising out of (i) any breach of any representation
or warranty made by the Partnership in the Asset Purchase Agreement or in the
related documents delivered by the Partnership to TCI in connection with the
closing of the sale of the Naperville System, (ii) any breach of any covenant,
agreement or obligation of the Partnership contained in the Asset Purchase
Agreement or in any of the related documents delivered by the Partnership to
TCI in connection with the closing of the sale of the Naperville System, (iii)
any act or omission of the Partnership with respect to, or any event or
circumstance related to, the ownership or operation of the Naperville System
or the conduct of their business, which act, omission, event or circumstance
occurred or existed prior to or at the closing date, without regard to whether
a claim with respect to such matter is asserted before or after the closing
date, (iv) any liability or obligation relating to the Naperville System not
specifically assumed by TCI, (v) any title defect that the Partnership fails
to eliminate as an exception from the title insurance commitment required to
be provided to TCI at closing, (vi) any claim that the transactions
contemplated by the Asset Purchase Agreement violate the Workers Adjustment
Retraining and Notification Act or any similar state or local law or any bulk
transfer or fraudulent conveyance laws of any jurisdiction, (vii) the
presence, generation, removal or transportation of a hazardous substance on or
from any of the real property relating to the Naperville System, including the
costs of removal or cleanup of such hazardous substance and other compliance
with the provisions of any environmental laws (whether before or after
closing) or (viii) any rate refund ordered to be made by the Naperville System
by any governmental authority for periods prior to the closing date. In
addition, the Partnership has agreed to indemnify TCI from and against all
claims, actions, suits, proceedings, demands, judgments, assessments, fines,
interest, penalties, costs and expenses (including settlement costs and
reasonable legal, accounting, experts and other fees, costs and expenses)
incident or relating to or resulting from any of the foregoing matters.
The Partnership's primary exposure, if any, will arise from the
representations and warranties made about the Naperville System in the Asset
Purchase Agreement. The Partnership will not be liable for any claim for a
breach of a representation or warranty unless and until the aggregate amount
of all claims is at least $250,000. TCI will have the right to make claims
against the indemnity escrow account and TCI must notify the Partnership of
such claims. If the Partnership objects to the payment of any claims by the
escrow agent, and if TCI and the Partnership are unable to agree on how the
escrowed funds should be distributed, the escrow agent will be authorized to
submit the dispute to arbitration.
Any amounts remaining from this indemnity escrow account at the end of the
escrow period and not subject to a claim by TCI will be returned to the
Partnership and distributed to the partners of the Partnership. If the entire
$696,000 escrow amount ultimately is distributed to Partnership's partners, of
which there can be no assurance, the $696,000 would be allocated 75 percent to
the limited partners ($522,000) and 25 percent to the General Partner
($174,000). The $522,000 distribution to the limited partners would represent
approximately $3 for each $500 limited partnership interest, or $6 for each
$1,000 invested in the Partnership, from this portion of the sale proceeds.
The Partnership will continue in existence at least until any amounts
remaining from the indemnity escrow account have been distributed. If any
disputes with respect to indemnification arise, the Partnership would not be
dissolved until such disputes were resolved, which could result in the
Partnership continuing in existence beyond 1999.
REASONS FOR THE TIMING OF THE SALE
The General Partner, through The Jones Group, Ltd., a subsidiary of the
General Partner, first marketed the Naperville System for sale in 1996. The
Jones Group, Ltd. prepared information books on the Naperville System in June
1996 and delivered them to six unaffiliated cable television system operators
that the General Partner and The Jones Group, Ltd. deemed to be the most
likely potential buyers of the Naperville System. One of the prospective
purchasers was TCI. The Jones Group, Ltd. communicated to each of the
recipients of the information books that due diligence visits could be
scheduled in August or September 1996 and that bids for the Naperville System
would be accepted and were due by October 15, 1996. Of the prospective
purchasers, only TCI made a due diligence visit to the Naperville System,
which visit occurred in August 1996. The October 15, 1996 deadline passed,
however, without a bid from any of the parties, including TCI.
10
<PAGE>
During 1996, Ameritech, the regional telephone service provider in Illinois
and neighboring states, began construction of cable television systems in
certain suburban Chicago communities including Naperville. The competition
from Ameritech was a major factor in the lack of interest in the Naperville
System by other cable television system operators. During the remainder of
1996 and throughout 1997, The Jones Group, Ltd. continued to attempt to
stimulate potential buyers' interest in the Naperville System. During most of
this period, however, the cable television industry was facing developing
competition from direct broadcast satellite providers, and Wall Street
investors generally were bearish on the industry. The growing competition from
Ameritech made the market for cable television properties in the Chicago
metropolitan area very soft. Throughout this period, Ameritech continued to
acquire cable franchises in suburban Chicago communities and it began
constructing 750 MHz cable systems in certain of those communities.
In November 1997, The Jones Group, Ltd. began a second serious dialogue with
TCI about the Naperville System. Through the end of 1997 and the first quarter
of 1998, The Jones Group, Ltd. provided TCI with additional information about
the Naperville System, including information specifically requested by TCI to
enable it to evaluate the Naperville System. By that time, TCI had agreed in
principle to acquire the other major cable television systems in the Chicago
area that it did not already own, making the Chicago area a more attractive
potential acquisition market for TCI and diminishing the onus of the Ameritech
competition in Naperville. In February 1998, The Jones Group, Ltd. provided
information about the Naperville System to three other potential purchasers of
the Naperville System. While these three companies indicated an interest in an
investment in the suburban Chicago cable system market, they expressed serious
reservations about acquiring the Naperville System due to the Ameritech
competition. One of these three potential purchasers made a verbal offer to
the General Partner to purchase all of the Chicago-area systems operated by
the General Partner for $400,000,000. Because this bidder did not make an
offer for such Chicago-area systems individually, the General Partner does not
know what this potential purchaser would have offered for the Naperville
System itself. Because this offer was significantly lower than the cumulative
offer being negotiated with TCI for all of the Chicago-area systems operated
by the General Partner, The Jones Group, Ltd. did not pursue it.
TCI made its initial formal bid for all of the Chicago-area systems managed
by the General Partner on March 3, 1998. TCI offered to purchase the
Naperville System for $23,000,000 conditioned upon the Naperville System
having 19,000 basic equivalent subscribers at closing. This offer equated to a
sales price of $1,211 per subscriber and represented 8.6 times 1997 cash flow
and 9.9 times 1998 budgeted cash flow. The Jones Group, Ltd. presented this
offer to the General Partner on March 11, 1998. While the General Partner
concluded that this offer was not unreasonable, it instructed The Jones Group,
Ltd. to attempt to negotiate a better price for the Naperville System. After a
series of further negotiations, TCI stood firm in its offer for the Naperville
System. The General Partner ultimately concluded that TCI's offer was
sufficient and fair, particularly in light of the competitive situation in
Naperville with Ameritech. The General Partner accepted TCI's offer on the
Partnership's behalf on April 10, 1998.
The Partnership has a finite legal existence of 17 years, over 11 of which
have passed. It was not intended or expected, however, that the Partnership
would hold its cable systems for as long as 17 years. Although it was not
possible at the outset of the Partnership to determine precisely how quickly
the investment objectives with respect to any particular system would be
achieved, investors were informed that past experience with prior partnerships
had shown that five to seven years was the average length of time from the
acquisition of a cable system to its sale. Investors in the Partnership also
were able to examine the track record of prior partnerships because such track
record was set forth in the prospectus delivered in connection with the
Partnership's initial public offering. At the time of the formation of the
Partnership, the track record showed that prior partnerships had rarely held
their cable systems for any longer than six years.
When investing in the Partnership, by virtue of the provisions of the
Partnership Agreement, the limited partners vested in the General Partner the
right and the responsibility to determine when the Partnership's investment
objectives had been achieved. The Naperville System was acquired because, in
the opinion of the General Partner at the time of its acquisition, it had the
potential for capital appreciation within a reasonable
11
<PAGE>
period of time. Due to the developing competition from Ameritech, the rate re-
regulation of the cable television industry during the early 1990s and the
general decline in the values of cable television systems since the Naperville
System was acquired in September 1987, the Naperville System has not
appreciated in value during the holding period. The General Partner determined
nevertheless that now rather than later was the appropriate time for the
Partnership to sell. The General Partner used no specific benchmarks or
measurement tools in determining that now was the time for the Partnership to
sell. The General Partner conducted a subjective evaluation of a variety of
factors including the length of the holding period and the prospects for
future growth as compared to the potential risks of a further decline in the
size and/or value of the Naperville System.
The General Partner generally considered the benefits to the limited
partners that might be derived by holding the Naperville System for an
additional period of time. On the one hand, the General Partner assumed that
the Naperville System might appreciate in value and that as a result the
Naperville System might be able to be sold for a greater sales price in the
future. The General Partner weighed these assumptions against the potential
risks to investors from a longer holding period, i.e., the risk that
regulatory, technology and/or competitive developments could cause the
Naperville System to decline in value, which would result in a lesser sales
price in the future, and the risk that, if the offer from TCI were not
accepted, no other potential buyer of the Naperville System could be found or
no other offer would be at such a fair price. A longer holding period would
expose investors to the risk that competition from direct broadcast satellite
companies, telephone companies, especially Ameritech, and/or neighboring cable
companies could diminish the number of subscribers to the Naperville System's
basic and premium services, thereby decreasing the value of the Naperville
System. A longer holding period also would expose investors to the risk that
changes in the regulations promulgated by the governmental agencies that
oversee cable operations could make cable systems a less desirable investment,
thereby decreasing the value of the Naperville System. Weighing all of these
factors, the General Partner concluded that now rather than later was the time
to sell the Naperville System.
RECOMMENDATION OF THE GENERAL PARTNER AND FAIRNESS OF THE PROPOSED SALE OF
ASSETS
The General Partner believes that the proposed sale of the Naperville System
and the distribution of the net proceeds therefrom are fair to all partners of
the Partnership, and it recommends that the limited partners approve the
transaction. In determining the fairness of the proposed transaction, the
General Partner considered each of the following factors, all of which had a
positive effect on its fairness determination:
(i) The limited partnership interests are at present illiquid and the
cash to be distributed to limited partners as a result of the proposed sale
of the Naperville System will provide limited partners with liquidity:
(ii) The sales price represents the fair market value of the Naperville
System because the sales price was determined in an arm's-length
negotiation between the General Partner, representing the Partnership, and
TCI;
(iii) The Partnership has held the Naperville System for 11 years, a
holding period beyond that originally anticipated;
(iv) The conditions and prospects of the cable television industry in
which the Partnership is engaged, including the overbuild of the Naperville
System by Ameritech and the developing threat of competition from DBS
services, and the working capital and other financial needs of the
Partnership if it were to continue to operate and upgrade the Naperville
System, portions of which may need to be upgraded to compete with
Ameritech's state of the art cable system and portions of which may need to
be rebuilt as a condition to the renewal of the Naperville System's cable
franchise; and
(v) The terms and conditions of the Asset Purchase Agreement by and
between the Partnership and TCI, including the fact that the sales price
will be paid in cash and the fact that TCI's obligation to close is not
contingent upon its ability to obtain financing.
The General Partner negotiated the terms of the Asset Purchase Agreement and
the sales price and, based on its general knowledge of cable television system
transactions undertaken by cable television companies, the General Partner has
concluded that the sales price and other transaction terms were fair and were
within industry norms for comparable transactions.
12
<PAGE>
CERTAIN EFFECTS OF THE SALE
Upon the consummation of the proposed sale of the Naperville System, the
proceeds of the sale will be used to pay a brokerage fee totaling $575,000
(representing 2.5 percent of the sales price) to The Jones Group, Ltd., a
subsidiary of the General Partner, for acting as a broker in this transaction,
settle working capital adjustments and deposit $696,000 into an indemnity
escrow account, and then the Partnership will distribute the approximate
$21,000,000 of net sale proceeds to its partners of record as of the closing
date of the sale of the Naperville System. Because at the time of the
Naperville System's sale in the first quarter of 1999 the distributions made
to the limited partners from the prior sales of other cable television systems
owned by the Partnership will have returned to the limited partners more than
125 percent of the amounts originally contributed to the Partnership by the
limited partners, the net proceeds from the sale of the Naperville System will
be allocated 75 percent to the limited partners ($15,750,000) and 25 percent
to the General Partner ($5,520,000). As a result of the sale of the Naperville
System, the limited partners of the Partnership will receive a $15,750,000
distribution. The limited partners will be subject to federal income tax on
the income resulting from the sale of the Naperville System. See the detailed
information below under the caption "Federal Income Tax Consequences."
It is anticipated that, at the time of its sale, the Naperville System will
be the Partnership's only asset. After the sale of the Naperville System and
the distribution of the net proceeds therefrom and after the termination of
the indemnity escrow period on November 15, 1999, the Partnership will be
liquidated and dissolved, most likely in 1999. Neither Colorado law nor the
Partnership Agreement afford dissenters' or appraisal rights to limited
partners in connection with the proposed sale of the Naperville System. If the
proposed transaction is approved by the holders of a majority of limited
partnership interests, all limited partners will receive a distribution in
accordance with the procedures prescribed by the Partnership Agreement
regardless of how or whether they vote on the proposal. It is anticipated that
if the proposed transaction is not consummated, the General Partner's current
management team will continue to manage the Naperville System on behalf of the
Partnership until such time as the Naperville System can be sold.
All distributions to limited partners of the Partnership from the proceeds
of the sale of the Naperville System will be made to the Partnership's limited
partners of record as of the closing date of the sale of the Naperville
System. This includes the distribution of the Partnership's portion of the net
sale proceeds to be made shortly following the closing of the sale and the
distribution of the amounts remaining, if any, from the indemnity escrow
account to be made late in 1999. Because transferees of limited partnership
interests following the closing date of the sale of the Naperville System
would not be entitled to any distributions from the Partnership, a transfer of
limited partnership interests following the closing date of the sale of the
Naperville System would have no economic value. The General Partner therefore
has determined that, pursuant to the authority granted to it by Section 3.5 of
the Partnership Agreement, it will not approve any transfers of limited
partnership interests following the closing of the sale of the Naperville
System. Sales of limited partnership interests pursuant to limited tender
offers, in the secondary market or otherwise will not be possible following
the closing of the sale of the Naperville System.
13
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The purpose of the following discussion of the income tax consequences of
the proposed transaction is to inform the limited partners of the Partnership
of the federal income tax consequences to the Partnership and to its partners
arising from the sale of the Naperville System, which is expected to close in
the first quarter of 1999. The tax information included herein was prepared by
the tax department of the General Partner. The tax information is taken from
tax data compiled by the General Partner in its role as the Partnership's tax
administrator and is not based upon the advice or formal opinion of counsel.
The tax discussion that follows is merely intended to inform the limited
partners of factual information and should not be considered tax advice.
PROJECTED 1999 TAX RESULTS
The proposed sale of the Naperville System is anticipated to generate
taxable income allocated to the limited partners of approximately $17,581,748
($220 per $1,000 invested). The General Partner estimates that all of this
gain will be treated as ordinary income. The ordinary income characterization
results from the recapture of depreciation expense under Internal Revenue Code
("IRC") Section 1245. The General Partner estimates that no income from the
sale will be characterized as long term capital gain.
The General Partner does not anticipate that the 1999 allocable income can
be offset by Partnership generated passive loss carryforwards. Historically,
the limited partners have been allocated ordinary losses of approximately
$166,152,835 ($2,077 per $1,000 invested). These losses were currently
deductible in prior years a result of allowances under the passive loss rules
or against partnership allocable income in 1997 and 1998. Accordingly, no
losses are available to offset allocable income in 1999.
Assuming the 31 percent rate applies to ordinary income, the limited partner
will be subject to federal income taxes of $68 per $1,000 invested in the
Partnership as a result of the sale of the Naperville System. The taxable
income will be recognized in the year of the closing of the sale, which is
expected to be 1999.
FEDERAL TAX WITHHOLDING ON FOREIGN LIMITED PARTNERS
Limited partners who are non-resident aliens or foreign corporations
("foreign persons") are subject to a withholding tax on their share of the
Partnership's income from the sale of the Naperville System without
consideration of loss carryforwards. The withholding rates are 39.6 percent
for individual partners and 35 percent for corporate partners. The tax
withheld will be remitted to the Internal Revenue Service and the foreign
person will receive a credit on their U.S. tax return for the amount of the
tax withheld by the Partnership. The tax withheld will be treated as a
distribution to the limited partner.
SECONDARY MARKET PURCHASERS
Limited partners that have recently acquired their partnership interests in
the limited partnership secondary market or through tender offers will have
allocable income from the sale of the Naperville System in the amounts
reported above. Because the Partnership does not have an IRC Section 754
election in effect, the purchase of a limited partnership interest in the
Partnership places the new investor in the same position as the limited
partner from whom the interest was purchased. The new investor will not have
the old investor's passive loss carryforwards or tax basis in the Partnership.
Newer investors in the Partnership will not have the above-calculated
passive loss carryforwards and will likely have a greater reportable net
taxable income from the sale of the Naperville System than investors who have
held their partnership interests for a longer period of time. Newer investors
in the Partnership also will not have their net tax basis in their partnership
interests reflected on their annual Schedule K-1. Such limited partners must
track their tax basis by adjusting their original cost by allocable income or
loss and partnership distributions. Their adjusted tax basis will be
deductible as a long term capital loss under IRC Section 731 in a manner
similar to the Partnership syndication costs discussed below.
14
<PAGE>
FEDERAL REPORTING BY TAX EXEMPT ENTITIES
The sale of the Naperville System will generate Unrelated Business Taxable
Income (UBTI) to tax exempt entities, which will require the filing of Form
990-T. Although many trust administrators complete the required tax returns,
responsibility for completion of the Form 990-T ultimately rests with the
beneficiaries of trusts, IRAs and other tax exempt entities. Because this is an
area in which there is a variance of policy among trust administrators, each
limited partner who is a beneficiary is advised to confirm with his or her
trust administrator how this filing requirement will be fulfilled.
The General Partner has learned that some trust administrators will file a
Form 990-T without consideration of prior year loss carryforwards. If your plan
administrator employs this methodology, your tax exempt plan will be subject to
significant tax liabilities that would not be incurred if prior year losses
were reported. Each limited partner who is a beneficiary of a tax exempt entity
is advised to inquire about the reporting methodology employed by his or her
trust administrator if the trust administrator is filing the Form 990-T for
1999.
PROJECTED TAX CONSEQUENCES
As previously discussed, a portion of the proceeds from the sale of the
Naperville System will remain in an indemnity escrow account from the closing
date until November 15, 1999. At that time, the balance of the escrow account
will be distributed to the partners in liquidation of the Partnership. The
final capital account balance reported on the 1999 Schedule K-1 of each limited
partner is anticipated to reflect a positive ending capital account balance
that is projected to equal $138 per $1,000 invested. This amount represents
partnership syndication costs that may be deducted on the limited partners' tax
return as a long-term capital loss under IRC Section 731. The deduction of
long-term capital losses may be limited depending on each partners' specific
income tax situation.
15
<PAGE>
CERTAIN INFORMATION ABOUT THE PARTNERSHIP, THE GENERAL
PARTNER AND THE PURCHASER OF THE NAPERVILLE SYSTEM
The principal executive offices of the Partnership and the General Partner
are located at 9697 East Mineral Avenue, Englewood, Colorado 80112, and their
telephone number is (303) 792-3111. The principal executive offices of TCI are
located at 5619 DTC Parkway, Englewood, Colorado 80111.
The limited partnership interests of the Partnership are registered pursuant
to Section 12(g) of the Exchange Act. As such, the Partnership currently is
subject to the informational reporting requirements of the Exchange Act and,
in accordance therewith, is obligated to file periodic reports, proxy
statements and other information with the Securities and Exchange Commission
relating to its business, financial condition and other matters. Reports and
other information filed by the Partnership can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the following regional offices
of the Commission: 7 World Trade Center, Suite 1300, New York, New York 10048
and Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The SEC also maintains a World Wide Web site on the Internet
that contains reports, proxy statements and other information of registrants
(including the Partnership and the General Partner) that file electronically
with the SEC at http://www.sec.gov. After the net proceeds from the sale of
the Naperville System, including amounts to be held in an indemnity escrow
account until November 15, 1999, finally are distributed to the Partnership's
limited partners of record as of the closing date of the sale of the
Naperville System, the Partnership will be liquidated and dissolved. The
Partnership's registration and reporting requirements under the Exchange Act
will be terminated upon the dissolution of the Partnership, most likely before
the end of 1999.
16
<PAGE>
USE OF PROCEEDS FROM THE SALE OF THE NAPERVILLE SYSTEM
The following is a brief summary of the Partnership's estimated use of the
proceeds from the sale of the Naperville System. All of the following selected
financial information is based upon amounts as of June 30, 1998 and certain
estimates of liabilities at closing. Final results may differ from these
estimates. A more detailed discussion of the financial consequences of the
sale of the Naperville System is set forth below under the caption "Unaudited
Pro Forma Financial Information." All limited partners are encouraged to
review carefully the unaudited pro forma financial statements and notes
thereto.
If the holders of a majority of limited partnership interests of the
Partnership approve the proposed sale of the Naperville System and the
transaction is closed, the Partnership will pay certain fees and expenses of
the transaction, settle working capital adjustments, deposit funds into an
indemnity escrow account and then the remaining sale proceeds will be
distributed to the Partnership's partners of record as of the closing date of
the sale of the Naperville System pursuant to the terms of the Partnership
Agreement. The estimated uses of the sale proceeds are as follows:
<TABLE>
<S> <C>
Contract Sales Price of the Naperville System................... $23,000,000
Less:Estimated Net Closing Adjustments.......................... (674,089)
Outstanding Debt to Third Parties............................ (54,911)
Brokerage Fee................................................ (575,000)
Portion of Proceeds to be Held in Indemnity Escrow........... (696,000)
-----------
Cash Available for Distribution by the Partnership......... $21,000,000
===========
Limited Partners' Share (75%).............................. $15,750,000
===========
General Partner's Share (25%).............................. $ 5,250,000
===========
</TABLE>
Based upon financial information available at June 30, 1998, below is an
estimate of all cash distributions (excluding escrowed proceeds) that will
have been made to limited partners after the distribution of the proceeds from
the sale of the Naperville System is completed:
Summary of Estimated Cash Distributions to Limited Partners:
<TABLE>
<S> <C>
Partial Return of 125 percent of the Limited Partners' Initial
Capital on the 1997 Sale of the Partnership's Turnersville,
New Jersey System............................................. $ 25,000,000
Partial Return of 125 percent of the Limited Partners' Initial
Capital on the 1997 Sale of the Partnership's Central Illinois
System ....................................................... 9,547,500
Partial Return of 125 percent of the Limited Partners' Initial
Capital on the 1998 Sale of the Venture's Broward System ..... 25,484,569
Partial Return of 125 percent of the Limited Partners' Initial
Capital on the 1999 Sale of the Partnership's Calvert County
System ....................................................... 19,300,000
Return of 125 percent of the Limited Partners' Initial Capital
on the 1999 Sale of the Partnership's Buffalo System.......... 20,667,931
Limited Partners' Share of Residual Proceeds on the 1999 Sale
of the Partnership's Buffalo System........................... 699,052
Limited Partners' Share of Proceeds on the 1999 Sale of the Na-
perville System............................................... 15,750,000
------------
Total Estimated Cash Received by Limited Partners.............. $116,449,052
============
Total Cash Received per $1,000 of Limited Partnership Capital.. $ 1,456
============
Total Cash Received per $500 Limited Partnership Interest...... $ 728
============
</TABLE>
17
<PAGE>
Based on financial information available at June 30, 1998, the following
table presents the estimated results of the Partnership when it has completed
the sale of the Naperville System:
<TABLE>
<S> <C>
Dollar Amount Raised.......................................... $80,000,000
Number of Cable Television Systems Purchased.................. Six
Date of Closing of Offering................................... August 1987
Tax and Distribution Data per $1,000 of Limited Partnership
Capital:
Federal Income Tax Results
Ordinary Income (Loss)
--from operations......................................... $ (2,077)
--from recapture.......................................... $ 2,671
Capital Gain (Loss)....................................... $ (138)
Cash Distributions to Investors
Source (on GAAP basis)
--investment income....................................... $ 456
--return of capital....................................... $ 1,000
Source (on cash basis)
--sales................................................... $ 1,456
</TABLE>
18
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF CABLE TV FUND 14-A, LTD.
The following unaudited pro forma balance sheet assumes that as of June 30,
1998, the Partnership had sold the Calvert County System for $39,388,667, the
Buffalo System for $27,000,000 and the Naperville System for $23,000,000. The
funds available to the Partnership from the Naperville System's sale,
adjusting for the estimated net closing adjustments of the Naperville System,
are expected to total approximately $22,325,911. Such funds will be used to
pay certain fees and expenses of the transaction, settle working capital
adjustments and deposit funds into an indemnity escrow account, and then the
balance remaining will be distributed to the Partnership's partners of record
as of the closing date of the sale of the Naperville System. As a result of
the sale of the Calvert County System, the limited partners of the Partnership
will receive $121 for each $500 limited partnership interest or $242 for each
$1,000 invested in the Partnership. As a result of the sale of the Buffalo
System, the limited partners of the Partnership will receive $134 for each
$500 limited partnership interest or $268 for each $1,000 invested in the
Partnership. As a result of the sale of the Naperville System, the limited
partners of the Partnership will receive $98 for each $500 limited partnership
interest or $196 for each $1,000 invested in the Partnership. Taking into
account the distributions to the limited partners of the Partnership that have
been or will be made from all of the prior and pending cable television system
sales by the Venture and the Partnership and the anticipated distribution to
limited partners from the sale of the Naperville System (excluding escrowed
proceeds), the General Partner expects that the Partnership's limited partners
will have received a total return of $728 for each $500 limited partnership
interest or $1,456 for each $1,000 invested in the Partnership, at the time
the Partnership is liquidated and dissolved.
The unaudited pro forma balance sheet should be read in conjunction with the
appropriate notes to the unaudited pro forma balance sheet.
ALL OF THE FOLLOWING UNAUDITED PRO FORMA FINANCIAL INFORMATION IS BASED UPON
AMOUNTS AS OF JUNE 30, 1998 AND CERTAIN ESTIMATES OF LIABILITIES AT CLOSING.
FINAL RESULTS MAY DIFFER FROM SUCH INFORMATION.
19
<PAGE>
CABLE TV FUND 14-A, LTD.
UNAUDITED PRO FORMA BALANCE SHEET
JUNE 30, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
AS REPORTED ADJUSTMENTS BALANCE
----------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Cash and Cash Equivalents................ $ 158,328 $ 21,537,672 $21,696,000
Trade Receivables, net................... 851,142 (851,142) --
Investment in Cable Television Proper-
ties:
Property, plant and equipment, net..... 35,460,192 (35,460,192) --
Franchise costs and other intangibles,
net................................... 2,001,124 (2,001,124) --
Investment in cable television joint
venture............................... 356,055 (356,055) --
----------- ------------ -----------
Total investment in cable television
properties.......................... 37,817,371 (37,817,371) --
Deposits, Prepaid Expenses and Deferred
Charges................................. 1,628,453 (1,628,453) --
----------- ------------ -----------
Total Assets............................. $40,455,294 $(18,759,294) $21,696,000
=========== ============ ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Debt................................... $23,455,629 $(23,455,629) $ --
General Partner advances............... 235,908 (235,908) --
Trade accounts payable and accrued lia-
bilities.............................. 2,206,623 (2,206,623) --
Subscriber prepayments................. 168,575 (168,575) --
Accrued distribution to limited part-
ners.................................. -- 15,750,000 15,750,000
Accrued distribution to General Part-
ner................................... -- 5,250,000 5,250,000
----------- ------------ -----------
Total Liabilities.................... 26,066,735 (5,066,735) 21,000,000
----------- ------------ -----------
Partners' Capital:
General Partner........................ -- 174,000 174,000
Limited Partners....................... 14,388,559 (13,866,559) 522,000
----------- ------------ -----------
Total Partners' Capital.............. 14,388,559 (13,692,559) 696,000
----------- ------------ -----------
Total Liabilities and Partners' Capi-
tal................................... $40,455,294 $(18,759,294) $21,696,000
=========== ============ ===========
</TABLE>
The accompanying notes to unaudited pro forma financial statements are an
integral part of this unaudited balance sheet.
20
<PAGE>
CABLE TV FUND 14-A, LTD.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
AS REPORTED ADJUSTMENTS BALANCE
----------- ------------ -----------
<S> <C> <C> <C>
REVENUES............................... $26,642,247 $(26,642,247) $ --
COSTS AND EXPENSES:
Operating expenses................... 16,385,590 (16,385,590) --
Management fees and allocated over-
head from
the General Partner................. 2,858,405 (2,858,405) --
Depreciation and amortization........ 10,111,635 (10,111,635) --
----------- ------------ -----------
OPERATING INCOME....................... (2,713,383) 2,713,383 --
----------- ------------ -----------
OTHER INCOME (EXPENSE):
Interest expense..................... (1,923,226) 1,923,226 --
Gain on sale of cable television sys-
tems................................ 69,973,972 (69,973,972) --
Other, net........................... (1,976,233) 1,976,233 --
----------- ------------ -----------
Total other income (expense), net.. 66,074,513 (66,074,513) --
----------- ------------ -----------
INCOME BEFORE EQUITY IN NET LOSS OF
CABLE TELEVISION JOINT VENTURE........ 63,361,130 (63,361,130) --
EQUITY IN NET LOSS OF CABLE TELEVISION
JOINT VENTURE......................... (626,089) 626,089 --
----------- ------------ -----------
NET INCOME............................. $62,735,041 $(62,735,041) $ --
=========== ============ ===========
NET INCOME PER LIMITED PARTNERSHIP IN-
TEREST................................ $ 387.70 $ --
=========== ===========
</TABLE>
The accompanying notes to unaudited pro forma financial statements are an
integral part of this unaudited statement.
21
<PAGE>
CABLE TV FUND 14-A, LTD.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
AS REPORTED ADJUSTMENTS BALANCE
----------- ------------ -----------
<S> <C> <C> <C>
REVENUES............................... $11,511,006 $(11,511,006) $ --
COSTS AND EXPENSES:
Operating expenses................... 7,297,732 (7,297,732) --
Management fees and allocated
overhead from
the General Partner................. 1,260,384 (1,260,384) --
Depreciation and amortization........ 4,117,966 (4,117,966) --
----------- ------------ -----------
OPERATING INCOME....................... (1,165,076) 1,165,076 --
----------- ------------ -----------
OTHER INCOME (EXPENSE):
Interest expense..................... (830,186) 830,186 --
Other, net........................... 169,982 (169,982) --
----------- ------------ -----------
Total other income (expense), net.. (660,204) 660,204 --
----------- ------------ -----------
LOSS BEFORE EQUITY IN NET INCOME OF
CABLE TELEVISION JOINT VENTURE........ (1,825,280) 1,825,280 --
EQUITY IN NET INCOME OF CABLE TELEVI-
SION JOINT VENTURE.................... 22,502,893 (22,502,893) --
----------- ------------ -----------
NET INCOME............................. $20,677,613 $(20,677,613) $ --
=========== ============ ===========
NET INCOME PER LIMITED PARTNERSHIP
INTEREST.............................. $ 128.79 $ --
=========== ===========
</TABLE>
The accompanying notes to unaudited pro forma financial statements are an
integral part of this unaudited statement.
22
<PAGE>
CABLE TV FUND 14-A, LTD.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1) The following calculations present the sale of the Naperville System and
the resulting estimated proceeds expected to be received by the Partnership.
2) The unaudited pro forma balance sheet of the Partnership assumes that the
Partnership had sold the Calvert County System, the Buffalo System and the
Naperville System as of June 30, 1998. The unaudited pro forma statements of
operations of the Partnership assume that the Venture had sold the Broward
System and the Partnership had sold its Central Illinois system, its
Turnersville, New Jersey system, the Calvert County System, the Buffalo System
and the Naperville System as of January 1, 1997.
3) The net proceeds from the sale of the Naperville System will be
distributed 75 percent to the limited partners and 25 percent to the General
Partner. The limited partners' distribution of $15,750,000 represents $98 for
each $500 limited partnership interest or $196 for each $1,000 invested in the
Partnership.
4) The estimated gain recognized from the sale of the Naperville System and
corresponding estimated distribution to limited partners as of June 30, 1998
has been computed as follows:
GAIN ON SALE OF ASSETS:
<TABLE>
<S> <C>
Contract sales price............................................. $ 23,000,000
Less: Net book value of investment in cable television properties
at June 30, 1998........................................... (15,475,892)
Brokerage fee to The Jones Group, Ltd. .......................... (575,000)
------------
Gain on sale of assets........................................... $ 6,949,108
============
DISTRIBUTION TO PARTNERS:
Contract sales price............................................. $ 23,000,000
Working Capital Adjustment:
Add: Trade receivables, net..................................... 373,642
Prepaid expenses........................................... 504,412
Less: Accrued liabilities........................................ (1,508,218)
Subscriber prepayments..................................... (43,925)
------------
Adjusted cash received........................................... 22,325,911
Less: Outstanding debt to third parties.......................... (54,911)
Brokerage fee.............................................. (575,000)
------------
Cash available from sale proceeds.......................... 21,696,000
------------
Portion of sale proceeds to be held in indemnity escrow.... (696,000)
------------
Cash available for distribution by the Partnership............... $ 21,000,000
============
Limited partners' share (75%).................................... $ 15,750,000
============
General Partner's share (25%).................................... $ 5,250,000
============
</TABLE>
23
<PAGE>
AVAILABLE INFORMATION
The Partnership's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and the Partnership's Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1998 and June 30, 1998 are being mailed to the
limited partners of the Partnership together with this Proxy Statement.
INCORPORATION BY REFERENCE
The Partnership's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and the Partnership's Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1998 and June 30, 1998 are incorporated by
reference in their entirety in this Proxy Statement.
24
<PAGE>
[JONES INTERCABLE, INC. LOGO]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE PARTNERSHIP BY THE GENERAL PARTNER
The undersigned Limited Partner of Cable TV Fund 14-A, Ltd., a Colorado
limited partnership, hereby votes on the sale of the Partnership's Naperville,
Illinois cable television system to TCI Communications, Inc. or one of its
affiliates for a sales price of $23,000,000 in cash, subject to normal closing
adjustments, pursuant to the terms and conditions of that certain Asset
Purchase Agreement dated as of August 7, 1998, as follows:
[_] CONSENTS [_] WITHHOLDS CONSENT [_] ABSTAINS
(You must sign on the reverse side of this proxy card for your vote to count.)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED LIMITED PARTNER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSED SALE TRANSACTION.
All owners must sign exactly as
name(s) appear on label.
When limited partnership inter-
ests are held by more than one
person, all owners must sign.
When signing as attorney, as ex-
ecutor, administrator, trustee or
guardian, please give full title
as such. If a corporation, please
sign in full corporation name by
authorized officer. If a partner-
ship, please sign in partnership
name by authorized person.
DATED: _____________________, 1998
__________________________________
Signature--Investor 1
__________________________________
Signature--Investor 2
__________________________________
Signature--Investor 3
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
[JONES INTERCABLE, INC. LOGO]
9697 EAST MINERAL AVENUE
ENGLEWOOD, COLORADO 80112
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE PARTNERSHIP BY THE GENERAL PARTNER
The undersigned Limited Partner of Cable TV Fund 14-A, Ltd., a Colorado
limited partnership, hereby votes on the sale of the Partnership's Naperville,
Illinois cable television system to TCI Communications, Inc. or one of its
affiliates for a sales price of $23,000,000 in cash, subject to normal closing
adjustments, pursuant to the terms and conditions of that certain Asset
Purchase Agreement dated as of August 7, 1998, as follows:
[_] CONSENTS [_] WITHHOLDS CONSENT [_] ABSTAINS
(You must sign on the reverse side of this proxy card for your vote to count.)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED LIMITED PARTNER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSED SALE TRANSACTION.
PLEASE SIGN EXACTLY AS NAME
APPEARS.
DATED: _____________________, 1998
__________________________________
Beneficial Owner Signature
(Investor)
__________________________________
Authorized Trustee/Custodian
Signature
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
