<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1996
[ ] 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: 0-15714
JONES CABLE INCOME FUND 1-C, LTD.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1010419
- --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
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Address of principal executive office
(303) 792-3111
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _______
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<PAGE>
JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
-------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
------ ------------- -------------
<S> <C> <C>
CASH $ 633,311 $ 880,728
TRADE RECEIVABLES, less allowance for
doubtful receivables of $70,286 and $65,022
at March 31, 1996 and December 31, 1995,
respectively 406,733 524,740
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 63,019,086 62,220,451
Less - accumulated depreciation (30,174,207) (29,056,927)
------------ ------------
32,844,879 33,163,524
Franchise costs and other intangible assets, net of
accumulated amortization of $36,533,877 at
March 31, 1996 and $35,608,812 at
December 31, 1995, respectively 14,964,393 15,889,458
------------ ------------
Total investment in cable television properties 47,809,272 49,052,982
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 419,454 385,587
------------ ------------
Total assets $ 49,268,770 $ 50,844,037
============ ============
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
2
<PAGE>
JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
-------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
- ------------------------------------------- ------------ ------------
<S> <C> <C>
LIABILITIES:
Debt $ 43,060,211 $ 43,104,090
Accounts payable -- General Partner -- 109,893
Trade accounts payable and accrued liabilities 1,139,806 1,564,715
Subscriber prepayments 287,326 265,446
------------ ------------
Total liabilities 44,487,343 45,044,144
------------ ------------
MINORITY INTEREST IN JOINT VENTURE 1,943,015 2,348,059
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner--
Contributed capital 1,000 1,000
Accumulated deficit (213,631) (207,497)
Distributions (113,443) (113,443)
------------ ------------
(326,074) (319,940)
------------ ------------
Limited Partners--
Net contributed capital (85,059 units
outstanding at March 31, 1996 and
December 31, 1995) 34,909,262 34,909,262
Accumulated deficit (19,377,130) (18,769,842)
Distributions (12,367,646) (12,367,646)
------------ ------------
3,164,486 3,771,774
------------ ------------
Total liabilities and partners'
capital (deficit) $ 49,268,770 $ 50,844,037
============ ============
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
3
<PAGE>
JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
REVENUES $ 5,957,396 $ 5,442,911
COSTS AND EXPENSES:
Operating 3,376,126 3,282,012
Management fees and allocated overhead from
General Partner 702,973 696,965
Depreciation and amortization 2,103,678 2,221,797
----------- -----------
OPERATING LOSS (225,381) (757,863)
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (797,403) (868,493)
Other, net 4,318 (5,108)
----------- -----------
Total other income (expense) (793,085) (873,601)
----------- -----------
CONSOLIDATED LOSS (1,018,466) (1,631,464)
MINORITY INTEREST IN CONSOLIDATED LOSS 405,044 648,833
----------- -----------
NET LOSS $ (613,422) $ (982,631)
=========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (6,134) $ (9,826)
=========== ===========
Limited Partners $ (607,288) $ (972,805)
=========== ===========
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (7.14) $ (11.44)
=========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 85,059 85,059
=========== ===========
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
4
<PAGE>
JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (613,422) $ (982,631)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 2,103,678 2,221,797
Minority interest in consolidated loss (405,044) (648,833)
Amortization of interest rate protection contract - 12,125
Decrease in trade receivables 118,007 97,567
Decrease (increase) in deposits and prepaid expenses
and deferred charges (95,200) 58,865
Decrease in accounts payable, accrued
liabilities and subscriber prepayments (403,029) (150,488)
Increase (decrease) in advances from General Partner (109,893) (35,976)
---------- ----------
Net cash provided by operating activities 595,097 572,426
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (798,635) (684,942)
---------- ----------
Net cash used in investing activities (798,635) (684,942)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 360,211 498,405
Repayment of debt (404,090) (41,221)
---------- ----------
Net cash provided by (used in) financing activities (43,879) 457,184
---------- ----------
Increase (decrease) in cash (247,417) 344,668
Cash, beginning of period 880,728 309,848
---------- ----------
Cash, end of period $ 633,311 $ 654,516
========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 818,443 $ 901,544
========== ==========
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
5
<PAGE>
JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(1) This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data includes
all adjustments, consisting only of normal recurring accruals, necessary to
present fairly the financial position of Jones Cable Income Fund 1-C, Ltd. (the
"Partnership") at March 31, 1996 and December 31, 1995 and its Statements of
Operations and Cash Flows for the three month periods ended March 31, 1996 and
1995. Results of operations for these periods are not necessarily indicative of
results to be expected for the full year.
The accompanying financial statements include 100 percent of the accounts
of the Partnership and those of the Brighton, Broomfield and Boulder County,
Colorado; Myrtle Creek, Oregon; Lake County, California; South Sioux City,
Nebraska; and Three Rivers and Watervliet, Michigan cable television systems
reduced by the 40 percent minority interest in Jones Cable Income Fund 1-B/C
Venture (the "Venture"). All interpartnership accounts and transactions have
been eliminated.
(2) Jones Intercable Inc. (the "General Partner"), a publicly held Colorado
corporation, manages the Partnership and the Venture and receives a fee for its
services equal to 5 percent of the gross revenues of the Venture, excluding
revenues from the sale of cable television systems or franchises. Management
fees for the three month periods ended March 31, 1996 and 1995 were $297,870 and
$272,145, respectively.
The Venture 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 facilities costs. Such personnel provide engineering, marketing,
administrative, accounting, legal and investor relations services to the
Venture. Allocations of personnel costs are based primarily on actual time spent
by employees of the General Partner with respect to each partnership managed.
Remaining expenses are allocated based on the pro rata relationship of the
Partnership's revenues to the total revenues of all systems owned or managed by
the General Partner and certain of its subsidiaries. Systems owned by the
General Partner and all other systems owned by partnerships for which 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. Overhead and
administrative expenses allocated to the Venture by the General Partner for the
three month periods ended March 31, 1996 and 1995 were $405,103 and $424,820,
respectively.
6
<PAGE>
JONES CABLE INCOME FUND 1-C, LTD.
---------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
The Partnership owns a 60 percent interest in the Venture. The accompanying
financial statements include 100 percent of the accounts of the Partnership and
those of the Venture systems reduced by the 40 percent minority interest in the
Venture.
For the three months ended March 31, 1996, the Venture generated net cash
from operating activities totaling $595,097, which is available to fund capital
expenditures and non-operating costs. During the first three months of 1996,
capital improvements within the Venture's systems totaled approximately
$799,000. Approximately 53 percent of these expenditures were for plant
construction in the Venture's Systems and approximately 15 percent were for
service drops to homes. The remainder of these expenditures related to various
enhancements in all of the Venture's systems. Funding for these expenditures was
provided by cash generated from operations and borrowings under the Venture's
credit facility. Anticipated capital expenditures for the remainder of 1996 are
approximately $3,700,000. Service drops to homes are expected to account for
approximately 46 percent of the anticipated expenditures and new plant
construction is expected to account for approximately 17 percent of the
expenditures. The remainder of the expenditures will be for various enhancements
in the Venture's systems. Funding for these expenditures is expected to be
provided by cash generated from operations and available borrowings from the
Venture's credit facility.
At March 31, 1996, the Venture's $45,000,000 credit facility had
$42,700,000 outstanding, leaving $2,300,000 of available borrowings. The
revolving credit facility matures on June 30, 1997, at which time the
outstanding balance is payable in full. Interest on outstanding principal is
calculated at the Venture's option of the Prime Rate plus 1/2 percent or the
London Interbank Offered Rate plus 1-1/2 percent. The effective interest rates
on amounts outstanding as of March 31, 1996 and 1995 were 7.06 percent and 7.93
percent, respectively.
One of the primary objectives of the Venture is to provide quarterly cash
distributions to the Venture partners, primarily from cash generated through
operating activities of the Venture. The Venture's partners in turn seek to
provide quarterly cash distributions to their partners. The Venture's credit
facility has a maximum amount available of $45,000,000, of which $42,700,000 was
outstanding on March 31, 1996. This limits the amount of borrowing available to
the Venture to fund capital expenditures; therefore, the Venture used cash
generated from operations to fund capital expenditures and did not declare any
distributions during the first quarter of 1996. Due to the borrowing
limitations, the Venture will need to use cash generated from operations to fund
capital expenditures and the Venture does not anticipate the resumption of
distributions to the Venture partners in the near term.
The General Partner believes that the Partnership and the Venture have
sufficient sources of capital available from cash generated from operations and
from borrowings available under its credit facility to meet its presently
anticipated needs so long as the Venture does not resume cash distributions to
the Venture partners.
7
<PAGE>
REGULATION AND LEGISLATION
- --------------------------
The Telecommunications Act of 1996 (the "1996 Act"), which became law on
February 8, 1996, substantially revised the Communications Act of 1934, as
amended, including the Cable Communications Policy Act of 1984 and the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act"), and has been described as one of the most significant changes in
communications regulation since the original Communications Act of 1934. The
1996 Act is intended, in part, to promote substantial competition in the
telephone local exchange and in the delivery of video and other services. As a
result of the 1996 Act, local telephone companies (also known as local exchange
carriers or "LECs") and other service providers are permitted to provide video
programming, and cable television operators are permitted entry into the
telephone local exchange market. The FCC is required to conduct rulemaking
proceedings over the next several months to implement various provisions of the
1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
effective March 31, 1999 and the cable programming service tier of "small" cable
operators in systems providing service to 50,000 or fewer subscribers effective
immediately. The 1996 Act also revised the procedures for filing cable
programming service tier rate complaints and adds a new effective competition
test.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Venture in particular. The FCC will be
undertaking numerous rulemaking proceedings to interpret and implement the 1996
Act. It is not possible at this time to predict the outcome of those proceedings
or their effect on the Venture.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Venture increased $514,485, or approximately 9 percent, to
$5,957,396 for the three months ended March 31, 1996 from $5,442,911 for the
comparable 1995 period. Basic service rate adjustments accounted for
approximately 46 percent of the increase in revenues. An increase in subscribers
accounted for approximately 28 percent of the increase in revenues. The number
of basic subscribers totaled 64,759 at March 31, 1996 compared to 62,663 at
March 31, 1995, an increase of 2,096, or approximately 3 percent. No other
single factor significantly affected the increase in revenues.
Operating expenses consist primarily of costs associated with the
administration of the Venture'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 consumer marketing expenses.
Operating expenses increased $94,114, or approximately 3 percent, to
$3,376,126 for the quarter ended March 31, 1996 from $3,282,012 for the
comparable 1995 period. Operating expenses represented 57 percent of revenue for
the first quarter of 1996 compared to 60 percent for the similar period in 1995.
Increases in programming costs and advertising expenses, which were partially
offset by a decrease in personnel costs, were primarily responsible for the
increase in operating expenses. No other individual factors were significant to
the increase in operating expenses.
Management fees and allocated overhead from the General Partner increased
$6,008, or approximately 1 percent, to $702,973 for the quarter ended March 31,
1996 from $696,965 for the comparable 1995 period due to the increase in
revenues, upon which such fees are based.
Depreciation and amortization expense decreased $118,119, or approximately
5 percent, to $2,103,678 for the three months ended March 31, 1996 from
$2,221,797 for the comparable 1995 period. This decrease was due to the
decrease in the Venture's depreciable asset base.
8
<PAGE>
Operating loss decreased $532,482, or approximately 70 percent, to $225,381
for the quarter ended March 31, 1996 from $757,863 for the comparable 1995
period as a result of the increase in revenues and decrease in depreciation and
amortization expense exceeding the increases in operating expenses and
management fees and allocated overhead from the General Partner.
The cable television industry generally measures the financial performance
of a cable television system in terms of cash flow or operating income before
depreciation and amortization. The value of a cable television system is often
determined using multiples of cash flow. This measure is not intended to be a
substitute or improvement upon the items disclosed on the financial statements,
rather it is included because it is an industry standard. Operating income
before depreciation and amortization increased $414,363, or approximately 28
percent, to $1,878,297 for the three months ended March 31, 1996 from $1,463,934
for the comparable 1995 period. This increase was due to the increase in
revenues exceeding the increases in operating expenses and management fees and
allocated overhead from the General Partner.
Interest expense decreased $71,090, or approximately 8 percent, to $797,403
for the quarter ended March 31, 1996 from $868,493 for the comparable 1995
period. This decrease was due to lower effective interest rates on interest
bearing obligations.
Net loss decreased $369,209, or approximately 37 percent, to $613,422 for
the quarter ended March 31, 1996 from $982,631 for the comparable 1995 period.
This decrease was due to the factors discussed above.
9
<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
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JONES CABLE INCOME FUND 1-C, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/ Kevin P. Coyle
---------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 13, 1996
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 633,311
<SECURITIES> 0
<RECEIVABLES> 406,733
<ALLOWANCES> (70,286)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 63,019,086
<DEPRECIATION> (30,174,207)
<TOTAL-ASSETS> 49,268,770
<CURRENT-LIABILITIES> 1,427,132
<BONDS> 43,060,211
<COMMON> 0
0
0
<OTHER-SE> 4,781,427
<TOTAL-LIABILITY-AND-EQUITY> 49,268,770
<SALES> 0
<TOTAL-REVENUES> 5,957,396
<CGS> 0
<TOTAL-COSTS> 6,182,777
<OTHER-EXPENSES> (4,318)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 797,403
<INCOME-PRETAX> (613,422)
<INCOME-TAX> 0
<INCOME-CONTINUING> (613,422)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (613,422)
<EPS-PRIMARY> (7.14)
<EPS-DILUTED> (7.14)
</TABLE>
