<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[x] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1998.
------------------
or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to _____________.
Commission File Number 0-15378
CABLE TV FUND 14-A, LTD.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-1024657
- --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D. #
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
------------------------------------------------------------------------
Address of principal executive office
(303) 792-3111
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1998 1997
------ ------------- ------------
<S> <C> <C>
CASH $ 329,891 $ 363,032
TRADE RECEIVABLES, less allowance for doubtful receivables of
$108,410 and $85,436 at September 30, 1998 and December 31, 1997,
respectively 444,931 931,372
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 90,996,162 86,431,357
Less- accumulated depreciation (55,666,661) (50,186,043)
------------- ------------
35,329,501 36,245,314
Franchise costs and other intangible assets, net of accumulated
amortization of $12,610,211 and $11,920,332 at September 30, 1998
and December 31, 1997, respectively 1,771,163 2,461,042
Investment in cable television joint venture - 3,337,731
------------- ------------
Total investment in cable television properties 37,100,664 42,044,087
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 1,692,926 1,644,310
------------- ------------
Total assets $ 39,568,412 $ 44,982,801
============= ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1998 1997
------------------------------------------- ------------- -------------
<S> <C> <C>
LIABILITIES:
Debt $ 24,345,178 $ 22,773,095
General Partner advances - 489,313
Trade accounts payable and accrued liabilities 1,995,420 2,440,724
Subscriber prepayments 123,154 84,154
------------ ------------
Total liabilities 26,463,752 25,787,286
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (13,839) (73,389)
------------ ------------
(12,839) (72,389)
------------ ------------
Limited Partners-
Net contributed capital (160,000 units outstanding
at September 30, 1998 and December 31, 1997) 68,722,000 68,722,000
Accumulated earnings (deficit) 4,427,568 (14,906,596)
Distributions (60,032,069) (34,547,500)
------------ ------------
13,117,499 19,267,904
------------ ------------
Total liabilities and partners' capital (deficit) $ 39,568,412 $ 44,982,801
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- ---------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES $ 5,922,874 $ 5,819,961 $17,433,880 $21,013,064
COSTS AND EXPENSES:
Operating expenses 3,854,489 3,810,457 11,152,221 12,838,309
Management fees and allocated
overhead from General Partner 635,408 604,970 1,895,792 2,268,749
Depreciation and amortization 2,236,992 1,961,052 6,354,958 7,864,181
----------- ----------- ----------- -----------
OPERATING LOSS (804,015) (556,518) (1,969,091) (1,958,175)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (420,551) (371,624) (1,250,737) (1,546,461)
Gain on sale of cable television
systems - - - 69,973,972
Other, net (155,711) (217,924) 14,271 (1,579,081)
----------- ----------- ----------- -----------
Total other income (expense), net (576,262) (589,548) (1,236,466) 66,848,430
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE EQUITY IN
NET INCOME (LOSS) OF CABLE
TELEVISION JOINT VENTURE (1,380,277) (1,146,066) (3,205,557) 64,890,255
EQUITY IN NET INCOME (LOSS) OF
CABLE TELEVISION JOINT VENTURE - (146,037) 22,599,271 (462,936)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $(1,380,277) $(1,292,103) $19,393,714 $64,427,319
=========== =========== =========== ===========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ (13,803) $ (12,921) $ 59,550 $ 720,685
=========== =========== =========== ===========
Limited Partners $(1,366,474) $(1,279,182) $19,334,164 $63,706,634
=========== =========== =========== ===========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (8.54) $ (7.99) $ 120.84 $ 398.17
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 160,000 160,000 160,000 160,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
----------------------------
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,393,714 $ 64,427,319
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,354,958 7,864,181
Equity in net (income) loss of cable television joint venture (22,599,271) 462,936
Gain on sale of cable television systems - (69,973,972)
Decrease in trade receivables 486,441 483,461
Increase in deposits, prepaid expenses and
deferred charges (233,077) (1,601,598)
Decrease in trade accounts payable, accrued liabilities
and subscriber prepayments (406,304) (546,380)
Decrease in General Partner advances (489,313) (184,412)
------------ ------------
Net cash provided by operating activities 2,507,148 931,535
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (4,564,805) (5,287,544)
Proceeds from sale of cable television systems, net
of brokerage fees - 101,890,280
Distribution from Joint Venture 25,937,002 -
------------ ------------
Net cash provided by investing activities 21,372,197 96,602,736
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 1,673,264 35,849,621
Repayment of debt (101,181) (99,514,212)
Distributions to limited partners (25,484,569) (34,547,500)
------------ ------------
Net cash used in financing activities (23,912,486) (98,212,091)
------------ ------------
Decrease in cash (33,141) (677,820)
Cash, beginning of period 363,032 1,257,022
------------ ------------
Cash, end of period $ 329,891 $ 579,202
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,494,107 $ 2,126,279
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a complete presentation of the Balance Sheets
and Statements of Operations and Cash Flows in conformity with generally
accepted accounting principles. However, in the opinion of management, this data
includes all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the financial position of Cable TV Fund 14-A, Ltd.
(the "Partnership") at September 30, 1998 and December 31, 1997, its results of
operations for the three and nine month periods ended September 30, 1998 and
1997 and its cash flows for the nine month periods ended September 30, 1998 and
1997. Results of operations for these periods are not necessarily indicative of
results to be expected for the full year.
The Partnership owns and operates the cable television systems serving the
areas in and around Buffalo, Minnesota (the "Buffalo System"), Naperville,
Illinois (the "Naperville System") and Calvert County, Maryland (the "Calvert
County System"), all of which are in various stages of being sold. See Note 4.
In addition, the Partnership owned a 27 percent interest in Cable TV Fund 14-A/B
Venture (the "Venture") until it was liquidated and dissolved in October 1998.
The Venture owned and operated the cable television system serving certain areas
in Broward County, Florida (the "Broward System") until its sale on March 31,
1998. See Note 3.
(2) Jones Intercable, Inc., a publicly held Colorado corporation, is the
"General Partner" and manages the Partnership and receives a fee for its
services equal to 5 percent of the gross revenues of the Partnership, excluding
revenues from the sale of cable television systems or franchises. Management
fees for the three and nine month periods ended September 30, 1998 (excluding
the Partnership's interest in the Venture) were $296,144 and $871,694,
respectively, compared to $290,998 and $1,050,653, respectively, for the similar
1997 periods.
The Partnership reimburses the General Partner for certain allocated
overhead and administrative expenses. These expenses represent the salaries and
related benefits paid for corporate personnel, rent, data processing services
and other corporate related facilities costs. Such personnel provide
engineering, marketing, administrative, accounting, legal and investor relations
services to the Partnership. Such services, and their related costs, are
necessary to the operation of the Partnership and would have been incurred by
the Partnership if it was a stand alone entity. Allocations of personnel costs
are based primarily on actual time spent by employees of the General Partner
with respect to each partnership managed. Remaining expenses are allocated
based on the pro rata relationship of the Partnership's total revenues of all
systems owned or managed by the General Partner and certain of its subsidiaries.
Systems owned by the General Partner and all other systems owned by partnerships
for which Jones Intercable, Inc. is the general partner are also allocated a
proportionate share of these expenses. The General Partner believes that the
methodology used in allocating overhead and administrative expenses is
reasonable. Reimbursements made to the General Partner by the Partnership for
allocated overhead and administrative expenses for the three and nine month
periods ended September 30, 1998 (excluding the Partnership's interest in the
Venture) were $339,264 and $1,024,098, respectively, compared to $313,972 and
$1,218,096, respectively, for the similar 1997 periods.
(3) On March 31, 1998, the Venture sold the Broward System to an unaffiliated
third party for $140,000,000. The agreement provides that the contract sales
price of $140,000,000 would be reduced $2,472 for each of the Broward System's
equivalent basic subscribers less than 56,637 at closing. At March 31, 1998, the
Broward System had 55,346 equivalent basic subscribers, which reduced the sales
price by $3,191,352. When final closing adjustments were completed on June 30,
1998, however, additional equivalent basic subscribers that were not able to be
counted as basic subscribers of the Broward System at the March 31, 1998 closing
(because they were relatively recent subscribers at such date) were able to be
counted as equivalent basic subscribers of the Broward System. These basic
subscribers brought the equivalent basic subscriber count up to 56,637 and the
sales price accordingly was adjusted upward by $3,191,352 to $140,000,000.
From the initial proceeds of the Broward System sale at initial closing,
the Venture settled working capital adjustments, repaid the outstanding balance
on its credit facility, which totaled $39,902,968, and paid a 2.5 percent
brokerage fee of $3,420,216 to The Jones Group, Ltd., a subsidiary of the
General Partner ("The Jones Group"), for acting as a broker in this transaction.
The Venture then distributed the remaining net sale proceeds, or $94,039,000, to
the two constituent partnerships of the Venture in proportion to their ownership
interests in the Venture. Accordingly, the Partnership received 27 percent of
the net sale proceeds, or $25,484,569. In April 1998, the Partnership
distributed its net
6
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sale proceeds to its limited partners of record as of March 31, 1998. Such
distribution represented approximately $159 for each $500 limited partnership
interest, or $318 for each $1,000 invested in the Partnership.
From the additional proceeds of the Broward System sale at final closing,
the Venture settled final working capital adjustments and paid a 2.5 percent
brokerage fee of $79,784 to The Jones Group. The Venture then distributed the
remaining additional net sale proceeds, or $1,669,056, to the two constituent
partnerships of the Venture in proportion to their ownership interests in the
Venture. Accordingly, the Partnership received 27 percent of the additional net
sale proceeds, or $452,433. The Partnership will retain the $452,433 for
working capital purposes. Because the distributions to the limited partners
from the sale of the Broward System, together with all prior distributions, did
not return to the limited partners 125 percent of the capital initially
contributed to the Partnership by the limited partners, the General Partner did
not receive any general partner distribution from the Broward System's sale.
Because the Broward System represented the only asset of the Venture, the
Venture was liquidated and dissolved in October 1998.
(4) The Partnership is in various stages of selling its three remaining cable
television systems. These transactions are discussed below in the order of
anticipated sale closing date.
Calvert County System
---------------------
On June 29, 1998, the Partnership entered into a purchase and sale
agreement to sell the Calvert County System to Jones Communications of Maryland,
Inc., a Colorado corporation, which is a wholly owned subsidiary of Jones Cable
Holdings, Inc., which in turn is a wholly owned subsidiary of the General
Partner, for a sales price of $39,388,667, subject to customary closing
adjustments. The purchase price was determined by the average of three separate
independent appraisals of the fair market value of the Calvert County System.
Closing of the sale, 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 vote to be conducted by the General Partner
in the first quarter of 1999. Upon the proposed sale of the Calvert County
System, based upon financial information as of September 30, 1998, the
Partnership will repay $19,695,000 outstanding on its revolving credit facility,
pay certain fees and expenses of the transaction and distribute the remaining
net sale proceeds of approximately $19,500,000 to the Partnership's limited
partners of record as of the closing date of the sale of the Calvert County
System. Based upon financial information as of September 30, 1998, this
distribution will give the Partnership's limited partners an approximate return
of $122 for each $500 limited partnership interest, or $244 for each $1,000
invested in the Partnership. Because the distribution to the limited partners
from the sale of the Calvert County System, together with all prior
distributions, will not return to the limited partners 125 percent of the
capital initially contributed to the Partnership by the limited partners, the
General Partner will not receive a general partner distribution from the sale of
the Calvert County System.
Buffalo System
--------------
On November 10, 1998, the Partnership entered into a purchase and sale
agreement to sell the Buffalo System to an unaffiliated party for a sales price
of $27,000,000, subject to customary closing adjustments. Closing of the sale,
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 vote to be conducted by the General Partner in the
first quarter of 1999. Upon the proposed sale of the Buffalo System, based upon
financial information as of September 30, 1998, the Partnership will repay the
balance outstanding on its revolving credit facility, estimated to total
$4,255,000, pay a brokerage fee to The Jones Group totaling $675,000,
representing 2.5 percent of the sales price, for acting as a broker in this
transaction, settle working capital adjustments and deposit $1,200,000 into an
indemnity escrow account. The remaining net sale proceeds of approximately
$20,600,000 will be distributed 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 all
prior distributions, will return to the limited partners more than 125 percent
of the capital initially contributed to the Partnership by the limited partners,
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 $20,567,000, or approximately $129 for each
$500 limited partnership interest, or $258 for each $1,000 invested in the
Partnership, and the General Partner will receive a general partner distribution
of $33,000 from the net sale proceeds.
For a period of 90 days following the closing date, $1,200,000 of the sale
proceeds will remain in escrow as security for the Partnership's agreement to
indemnify the purchaser under the asset purchase agreement. The Partnership's
7
<PAGE>
primary exposure, if any, will relate to the representations and warranties made
about the Buffalo System in the asset purchase agreement. Any amounts remaining
from this indemnity escrow account that are not claimed by the purchaser at the
end of the 90-day period will be distributed to the partners of the Partnership
at that time. If the entire $1,200,000 escrow amount is distributed to the
partners, of which there can be no assurance, the limited partners as a group
would receive 75 percent ($900,000) and the General Partner would receive 25
percent ($300,000) of the net escrow proceeds; thus, the limited partners would
receive approximately $6 for each $500 limited partnership interest, or $12 for
each $1,000 invested in the Partnership from this portion of the sale proceeds.
Naperville System
-----------------
On August 7, 1998, the Partnership signed an asset purchase agreement to
sell its Naperville System to an unaffiliated party for a sales price of
$23,000,000, subject to customary closing adjustments. Closing of the sale,
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 vote being conducted by the General Partner in the
fourth quarter of 1998. Upon the proposed sale of the Naperville System, based
upon financial information as of September 30, 1998, the Partnership will pay a
brokerage fee to The Jones Group totaling $575,000, representing 2.5 percent of
the sales price, for acting as a broker in this transaction, settle working
capital adjustments, and then deposit $696,000 into an indemnity escrow account.
The remaining net sale proceeds of approximately $20,800,000 will be distributed
to the Partnership's partners of record as of the closing date of the sale of
the Naperville System. The limited partners, as a group, will receive 75
percent ($15,600,000), and the General Partner will receive a 25 percent
($5,200,000) general partner distribution from the net sale proceeds; thus, the
limited partners would receive approximately $97.50 for each $500 limited
partnership interest, or $195 for each $1,000 invested in the Partnership from
the sale of the Naperville System.
The $696,000 of sale proceeds to be placed in the indemnity escrow account
will remain in escrow from the closing date until November 15, 1999 as security
for the Partnership's agreement to indemnify the buyer under the asset purchase
agreement. The Partnership's primary exposure, if any, will relate to the
representations and warranties to be made about the Naperville System in the
asset purchase agreement. Any amounts remaining from this indemnity escrow
account and not claimed by the buyer at the end of the escrow period will be
distributed to the Partnership's partners. If the entire $696,000 escrow amount
is distributed to the partners, of which there can be no assurance, the limited
partners as a group would receive 75 percent ($522,000) and the General Partner
would receive 25 percent ($174,000) of the net escrow proceeds; thus, the
limited partners would receive 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. Since the
Naperville System will represent the only asset of the Partnership at the time
of its sale, the Partnership will be liquidated and dissolved upon the final
distribution of any amounts remaining from the Naperville System's indemnity
escrow account. 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.
Anticipated Total Distributions
-------------------------------
Taking into account the distribution of the Partnership's portion of the
net proceeds from the sale of the Venture's Broward System in April 1998 and the
anticipated distributions of the net proceeds from the proposed sales of the
Partnership's remaining systems (excluding escrowed proceeds) in 1999, together
with the distributions from system sales made in 1997, the General Partner
expects that the limited partners of the Partnership will have received
approximately $723 for each $500 limited partnership interest, or $1,446 for
each $1,000 invested in the Partnership.
8
<PAGE>
(5) Financial information regarding the Venture is presented below:
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
September 30, 1998 December 31, 1997
------------------ -----------------
<S> <C> <C>
ASSETS
------
Cash and accounts receivable $ - $ 1,688,123
Investment in cable television properties - 51,847,372
Other assets - 620,522
------------------ -----------------
Total assets $ - $ 54,156,017
================== =================
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Debt $ - $ 39,597,617
Payables and accrued liabilities - 1,886,849
Partners' contributed capital 70,000,000 70,000,000
Distributions to joint venture partners (95,708,056) -
Accumulated capital (deficit) 25,708,056 (57,328,449)
------------------ -----------------
Total liabilities and partners' capital $ - $ 54,156,017
================== =================
</TABLE>
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
1998 1997 1998 1997
-------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ - $6,817,075 $ 7,064,891 $20,596,170
Operating expenses - 3,685,786 3,981,015 11,396,740
Management fees and allocated overhead
from General Partner - 716,563 760,650 2,250,567
Depreciation and amortization - 2,211,708 2,249,219 6,515,963
-------- ---------- ----------- -----------
Operating income - 203,018 74,007 432,900
Interest expense - (746,619) (705,440) (2,169,648)
Gain on sale of cable television system - - 85,576,722 -
Other, net - 4,722 (1,908,784) 28,498
-------- ---------- ----------- -----------
Net income (loss) $ - $ (538,879) $83,036,505 $(1,708,250)
======== ========== =========== ===========
</TABLE>
Management fees paid to the General Partner by the Venture totaled $-0- and
$353,245, respectively, for the three and nine month periods ended September 30,
1998, compared to $340,854 and $1,029,808, respectively, for the similar
9
<PAGE>
1997 periods. Reimbursements for overhead and administrative expenses paid to
the General Partner by the Venture totaled $-0- and $407,405, respectively, for
the three and nine month periods ended September 30, 1998, compared to $375,709
and $1,220,759 for the similar 1997 periods. Management fees paid by the Venture
and attributable to the Partnership totaled $-0- and $95,729, respectively, for
the three and nine months ended September 30, 1998, compared to $92,371 and
$279,078, respectively, for the similar 1997 periods. Reimbursements paid by the
Venture and attributable to the Partnership totaled $-0- and $110,406,
respectively, for the three and nine months ended September 30, 1998, compared
to $101,817 and $330,826, respectively, for the similar 1997 periods.
10
<PAGE>
CABLE TV FUND 14-A, LTD.
------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
It is the General Partner's publicly announced policy that it intends to
liquidate its managed partnerships, including the Partnership. In accordance
with this policy, the Partnership sold two of its systems in 1997 and the
Venture sold the Broward System in March 1998. The Partnership also has entered
into agreements to sell its Calvert County System and its Naperville System and
the Partnership has signed a letter of intent to sell its Buffalo System, all of
which are expected to close in the first quarter of 1999. There is no assurance
as to the timing or terms of any sales.
On March 31, 1998, the Venture sold the Broward System to an unaffiliated
third party for $140,000,000. The agreement provides that the contract sales
price of $140,000,000 would be reduced $2,472 for each of the Broward System's
equivalent basic subscribers less than 56,637 at closing. At March 31, 1998,
the Broward System had 55,346 equivalent basic subscribers, which reduced the
sales price by $3,191,352. When final closing adjustments were completed on
June 30, 1998, however, additional equivalent basic subscribers that were not
able to be counted as basic subscribers of the Broward System at the March 31,
1998 closing (because they were relatively recent subscribers at such date) were
able to be counted as equivalent basic subscribers of the Broward System. These
basic subscribers brought the equivalent basic subscriber count up to 56,637 and
the sales price accordingly was adjusted upward by $3,191,352 to $140,000,000.
From the initial proceeds of the Broward System sale at initial closing,
the Venture settled working capital adjustments, repaid the outstanding balance
on its credit facility, which totaled $39,902,968, and paid a 2.5 percent
brokerage fee of $3,420,216 to The Jones Group. The Venture then distributed
the remaining net sale proceeds, or $94,039,000, to the two constituent
partnerships of the Venture in proportion to their ownership interests in the
Venture. Accordingly, the Partnership received 27 percent of the net sale
proceeds, or $25,484,569. In April 1998, the Partnership distributed its net
sale proceeds to its limited partners of record as of March 31, 1998. Such
distribution represented approximately $159 for each $500 limited partnership
interest, or $318 for each $1,000 invested in the Partnership.
From the additional proceeds of the Broward System sale at final closing,
the Venture settled final working capital adjustments and paid a 2.5 percent
brokerage fee of $79,784 to The Jones Group. The Venture then distributed the
remaining additional net sale proceeds, or $1,669,056, to the two constituent
partnerships of the Venture in proportion to their ownership interests in the
Venture. Accordingly, the Partnership received 27 percent of the additional net
sale proceeds, or $452,433. The Partnership will retain the $452,433 for
working capital purposes. Because the distributions to the limited partners
from the sale of the Broward System, together with all prior distributions, did
not return to the limited partners 125 percent of the capital initially
contributed to the Partnership by the limited partners, the General Partner did
not receive any general partner distribution from the Broward System's sale.
Because the Broward System represented the only asset of the Venture, the
Venture was liquidated and dissolved in October 1998.
The Partnership is in various stages of selling its three remaining cable
television systems. These transactions are discussed below in the order of
anticipated sale closing date.
On June 29, 1998, the Partnership entered into a purchase and sale
agreement to sell the Calvert County System to Jones Communications of Maryland,
Inc., a Colorado corporation, which is a wholly owned subsidiary of Jones Cable
Holdings, Inc., which in turn is a wholly owned subsidiary of the General
Partner, for a sales price of $39,388,667, subject to customary closing
adjustments. The purchase price was determined by the average of three separate
independent appraisals of the fair market value of the Calvert County System.
Closing of the sale, 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 vote to be conducted by the General Partner
in the first quarter of 1999. Upon the proposed sale of the Calvert County
System, based upon financial information as of September 30, 1998, the
Partnership will repay $19,695,000 outstanding on its revolving credit facility,
pay certain fees and expenses of the transaction and distribute the remaining
net sale proceeds of approximately $19,500,000 to the Partnership's limited
partners of record as of the closing date of the sale of the Calvert County
System.
11
<PAGE>
Based upon financial information as of September 30, 1998, this distribution
will give the Partnership's limited partners an approximate return of $122 for
each $500 limited partnership interest, or $244 for each $1,000 invested in the
Partnership. Because the distribution to the limited partners from the sale of
the Calvert County System, together with all prior distributions, will not
return to the limited partners 125 percent of the capital initially contributed
to the Partnership by the limited partners, the General Partner will not receive
a general partner distribution from the sale of the Calvert County System.
On November 10, 1998, the Partnership entered into a purchase and sale
agreement to sell the Buffalo System to an unaffiliated party for a sales price
of $27,000,000, subject to customary closing adjustments. Closing of the sale,
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 vote to be conducted by the General Partner in the
first quarter of 1999. Upon the proposed sale of the Buffalo System, based upon
financial information as of September 30, 1998, the Partnership will repay the
balance outstanding on its revolving credit facility, estimated to total
$4,255,000, pay a brokerage fee to The Jones Group totaling $675,000,
representing 2.5 percent of the sales price, for acting as a broker in this
transaction, settle working capital adjustments and deposit $1,200,000 into an
indemnity escrow account. The remaining net sale proceeds of approximately
$20,600,000 will be distributed 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 all
prior distributions, will return to the limited partners more than 125 percent
of the capital initially contributed to the Partnership by the limited partners,
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 $20,567,000, or approximately $129 for each
$500 limited partnership interest, or $258 for each $1,000 invested in the
Partnership, and the General Partner will receive a general partner distribution
of $33,000 from the net sale proceeds.
For a period of 90 days following the closing date, $1,200,000 of the sale
proceeds will remain in escrow as security for the Partnership's agreement to
indemnify the purchaser under the asset purchase agreement. The Partnership's
primary exposure, if any, will relate to the representations and warranties made
about the Buffalo System in the asset purchase agreement. Any amounts remaining
from this indemnity escrow account that are not claimed by the purchaser at the
end of the 90-day period will be distributed to the partners of the Partnership
at that time. If the entire $1,200,000 escrow amount is distributed to the
partners, of which there can be no assurance, the limited partners as a group
would receive 75 percent ($900,000) and the General Partner would receive 25
percent ($300,000) of the net escrow proceeds; thus, the limited partners would
receive approximately $6 for each $500 limited partnership interest, or $12 for
each $1,000 invested in the Partnership from this portion of the sale proceeds.
On August 7, 1998, the Partnership signed an asset purchase agreement to
sell its Naperville System to an unaffiliated party for a sales price of
$23,000,000, subject to customary closing adjustments. Closing of the sale,
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 vote being conducted by the General Partner in the
fourth quarter of 1998. Upon the proposed sale of the Naperville System, based
upon financial information as of September 30, 1998, the Partnership will pay a
brokerage fee to The Jones Group totaling $575,000, representing 2.5 percent of
the sales price, for acting as a broker in this transaction, settle working
capital adjustments, and then deposit $696,000 into an indemnity escrow account.
The remaining net sale proceeds of approximately $20,800,000 will be distributed
to the Partnership's partners of record as of the closing date of the sale of
the Naperville System. The limited partners, as a group, will receive 75
percent ($15,600,000), and the General Partner will receive a 25 percent
($5,200,000) general partner distribution from the net sale proceeds; thus, the
limited partners would receive approximately $97.50 for each $500 limited
partnership interest, or $195 for each $1,000 invested in the Partnership from
the sale of the Naperville System.
The $696,000 of sale proceeds to be placed in the indemnity escrow account
will remain in escrow from the closing date until November 15, 1999 as security
for the Partnership's agreement to indemnify the buyer under the asset purchase
agreement. The Partnership's primary exposure, if any, will relate to the
representations and warranties to be made about the Naperville System in the
asset purchase agreement. Any amounts remaining from this indemnity escrow
account and not claimed by the buyer at the end of the escrow period will be
distributed to the Partnership's partners. If the entire $696,000 escrow amount
is distributed to the partners, of which there can be no assurance, the limited
partners as a group would receive 75 percent ($522,000) and the General Partner
would receive 25 percent ($174,000) of the net escrow proceeds; thus, the
limited partners would receive 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.
12
<PAGE>
The Partnership will continue in existence at least until any amounts
remaining from the indemnity escrow account have been distributed. Since the
Naperville System will represent the only asset of the Partnership at the time
of its sale, the Partnership will be liquidated and dissolved upon the final
distribution of any amounts remaining from the Naperville System's indemnity
escrow account. 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.
Taking into account the distribution of the Partnership's portion of the
net proceeds from the sale of the Venture's Broward System in April 1998 and the
anticipated distributions of the net proceeds from the proposed sales of the
Partnership's remaining systems (excluding escrowed proceeds) in 1999, together
with the prior distributions from system sales made in 1997, the General Partner
expects that the limited partners of the Partnership will have received
approximately $723 for each $500 limited partnership interest, or $1,446 for
each $1,000 invested in the Partnership.
For the nine month period ended September 30, 1998, the Partnership
generated net cash from operating activities totaling $2,507,148, which is
available to fund capital expenditures and non-operating costs. For the nine
months ended September 30, 1998, capital expenditures totaled approximately
$4,565,000 for all of the Partnership's systems. Approximately 39 percent of
the expenditures related to new plant construction associated with new homes
passed in all of the Partnership's systems. Approximately 35 percent of the
expenditures related to construction of service drops to subscriber's homes.
The remainder was for other capital expenditures to maintain the value of the
Partnership's systems. These expenditures were funded by cash generated from
operations, borrowings under the Partnership's credit facility and cash on hand.
Budgeted capital expenditures for all of the Partnership's systems for the
remainder of 1998 are approximately $1,690,000. Approximately 42 percent of the
expenditures will be used for new plant construction associated with new homes
passed in all of the Partnership's systems. Approximately 34 percent will
relate to construction of service drops to subscribers' homes. The remainder is
for other capital expenditures to maintain the value of the Partnership's
remaining systems until they are sold. Funding for the improvements is expected
to come from cash on hand, cash generated from operations and, if necessary,
borrowings under its credit facility. The Partnership is obligated to conduct
its business in the ordinary course until its systems are sold.
The Partnership is a party to a $27,700,000 revolving credit facility, of
which $23,950,000 was outstanding at September 30, 1998, leaving $3,750,000
available for future borrowings. The revolving credit facility expires on
September 30, 2000, at which time the then-outstanding balance is payable in
full. The revolving credit facility requires that one-half of the proceeds from
the next Partnership system sale be used to reduce amounts outstanding and that
the credit facility be repaid in full on the second system sale. Based on the
current expected order of system sale closings, the Partnership will repay
approximately $19,695,000 upon the closing of the sale of the Calvert County
System, which is expected to occur in the first quarter of 1999, and the maximum
amount of borrowings available under the revolving credit facility will be
reduced to $8,000,000. The remaining balance will be repaid upon the sale of
the Buffalo System, which also is expected to occur in the first quarter of
1999. Interest on the revolving credit facility's outstanding balance is at the
Partnership's option of the London Interbank Offered Rate plus 1.125 percent,
the Certificate of Deposit Rate plus 1.25 percent or the Base Rate plus .125
percent. The effective interest rates on amounts outstanding as of September
30, 1998 and 1997 were 6.67 percent and 7.15 percent, respectively.
Ameritech, which provides telephone service in a multi-state region
including Illinois, is providing cable television service in Naperville,
Illinois, the community served by the Partnership's Naperville System. This
competition has had an adverse effect on the Naperville System's revenues and
cash flow. The General Partner is taking prudent steps necessary to meet this
competition from Ameritech and, to the extent possible, to safeguard the value
of the Naperville System until it is sold. These steps include a judicial
challenge to the terms on which a franchise was issued to Ameritech. The City
of Naperville has filed a countersuit against the Partnership declaring that the
Partnership has breached its franchise agreement by withholding franchise
payments and seeks to impose liquidated damages on the Partnership for such
breach. Litigation is currently pending in federal court against both the City
of Naperville and Ameritech and includes claims made by the City of Naperville
against the Partnership. A trial date has not yet been set.
The Partnership has sufficient sources of capital available from cash on
hand, cash generated from operations and borrowings available under its
revolving credit facility to meet its needs until its systems are sold.
13
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
As a result of the sales of the cable television systems serving the areas
in and around the communities of Turnersville, New Jersey (the "Turnersville
System") and Central Illinois (the "Central Illinois System") on January 10,
1997 and June 30, 1997, respectively, the following discussion of the
Partnership's results of operations, through operating loss, pertains only to
the results of operations of the Buffalo, Naperville and Calvert County Systems
for all periods discussed.
The Partnership-
Revenues of the Partnership increased $241,654, or approximately 4 percent,
to $5,922,874 for the three month period ended September 30, 1998 compared to
$5,681,220 for the comparable 1997 period. This increase was primarily due to
increases in the number of basic subscribers and basic rates in the
Partnership's Buffalo and Calvert County Systems. Revenues decreased $221,432,
or approximately 1 percent, to $17,433,880 for the nine months ended September
30, 1998 compared to $17,655,312 for the comparable 1997 period. This decrease
was primarily a result of the reduction in subscribers in the Naperville System
due to competition from Ameritech, which was partially offset by increases in
subscribers and rates in the Buffalo and Calvert County Systems.
Operating expenses consist primarily of costs associated with the operation
and administration of the Partnership's cable television systems. The principal
cost components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and marketing expenses.
Operating expenses increased $256,392, or approximately 7 percent, to
$3,854,489 for the three month period ended September 30, 1998 compared to
$3,598,097 for the comparable 1997 period. Operating expenses increased
$303,263, or approximately 3 percent, to $11,152,221 for the nine months ended
September 30, 1998 compared to $10,848,958 for the comparable 1997 period.
These increases were primarily a result of increases in programming costs.
Management fees and allocated overhead from the General Partner increased
$43,343, or approximately 7 percent, to $635,408 for the three month period
ended September 30, 1998 compared to $592,065 for the comparable 1997 period.
This increase was primarily due to the increase in revenues, upon which such
fees and allocations are based, and an increase in expenses allocated from the
General Partner. Management fees and allocated overhead from the General
Partner decreased $15,807, or approximately 1 percent, to $1,895,792 for the
nine month period ended September 30, 1998 compared to $1,911,599 for the
comparable 1997 period. This decrease was primarily a result of a decrease in
allocated costs from the General Partner.
Depreciation and amortization expense increased $276,525, or approximately
14 percent, to $2,236,992 for the three month period ended September 30, 1998
compared to $1,960,467 for the comparable 1997 period. Depreciation and
amortization expense increased $224,592, or approximately 4 percent, to
$6,354,958 for the nine months ended September 30, 1998 compared to $6,130,366
for the comparable 1997 period. These increases were due to capital additions
in 1998.
Operating loss increased $334,606, or approximately 71 percent, to $804,015
for the three month period ended September 30, 1998 compared to $469,409 for the
comparable 1997 period. This increase was due to the increases in operating
expenses, management fees and allocated overhead from the General Partner and
depreciation and amortization exceeding the increase in revenues. Operating
loss increased $733,480, or approximately 59 percent, to $1,969,091 for the nine
month period ended September 30, 1998 compared to $1,235,611 for the comparable
1997 period. This increase was a result of the decrease in revenues and the
increases in operating expenses and depreciation and amortization expense.
Interest expense increased $48,927, or approximately 13 percent, to
$420,551 for the three month period ended September 30, 1998 compared to
$371,624 for the comparable 1997 period. This increase was due to higher
outstanding balances on interest bearing obligations during the third quarter of
1998 compared to the similar 1997 period. Interest expense decreased $295,724,
or approximately 19 percent, to $1,250,737 for the nine months ended September
30, 1998 compared to $1,546,461 for the comparable 1997 period. This decrease
was primarily due to lower outstanding balances on interest bearing obligations
during the first six months of 1998. A portion of the proceeds from the sales
of the Turnersville System and Central Illinois System was used to reduce the
Partnership's debt.
14
<PAGE>
The Partnership recognized a gain on the sale of the Turnersville System of
$62,923,951 and a gain on the sale of the Central Illinois System of $7,050,021
during the nine month period ended September 30, 1997. No similar gains were
recognized during the comparable 1998 period.
The Partnership reported a loss before equity in net income of cable
television joint venture of $1,380,277 for the three month period ended
September 30, 1998 compared to loss before equity in net loss of cable
television joint venture of $1,146,066 for the comparable 1997 period. This
change was primarily a result of the factors discussed above. Loss before
equity in net income of cable television joint venture totaled $3,205,557 for
the nine month period ended September 30, 1998 compared to income before equity
in net loss of cable television joint venture of $64,890,255 for the comparable
1997 period. This change was primarily a result of the gains on the sale of the
Turnersville System and Central Illinois System.
Equity in net loss of cable television joint venture was $-0- for the three
months ended September 30, 1998 compared to $146,037 for the comparable 1997
period. This change was due to the sale of the Broward System in March 1998.
The Partnership reported equity in net income of cable television joint venture
of $22,599,271 for the nine months ended September 30, 1998 compared to equity
in net loss of cable television joint venture of $462,936 for the comparable
1997 period. This change was due to the gain on the sale of the Broward System
in March 1998.
The Partnership's net loss increased $88,174, or approximately 7 percent,
to $1,380,277 for the three months ended September 30, 1998 compared to
$1,292,103 for the comparable 1997 period. This increase was due to the factors
discussed above. The Partnership reported net income of $19,393,714 for the
nine months ended September 30, 1998 compared to $64,427,319 for the comparable
1997 period. This change was primarily due to the Venture's sale of the Broward
System in March 1998 and the Partnership's sale of the Turnersville System and
Central Illinois System in 1997.
The Venture-
The Venture's only asset was the Broward System which was sold on March 31,
1998. The Venture was liquidated and dissolved in October 1998.
15
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CABLE TV FUND 14-A, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
----------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: November 13, 1998
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 329,891
<SECURITIES> 0
<RECEIVABLES> 444,931
<ALLOWANCES> (108,410)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 90,996,162
<DEPRECIATION> (55,666,661)
<TOTAL-ASSETS> 39,568,412
<CURRENT-LIABILITIES> 2,118,574
<BONDS> 24,345,178
0
0
<COMMON> 0
<OTHER-SE> 13,104,660
<TOTAL-LIABILITY-AND-EQUITY> 39,568,412
<SALES> 0
<TOTAL-REVENUES> 17,433,880
<CGS> 0
<TOTAL-COSTS> 19,402,971
<OTHER-EXPENSES> (14,271)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,250,737
<INCOME-PRETAX> 19,393,714
<INCOME-TAX> 0
<INCOME-CONTINUING> 19,393,714
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,393,714
<EPS-PRIMARY> 120.84
<EPS-DILUTED> 120.84
</TABLE>
