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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission file number: 0-16200
CABLE TV FUND 14-B, LTD.
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(Exact name of registrant as specified in its charter)
Colorado 84-1024658
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(State of Organization) (IRS Employer Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
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(Address of principal executive office and Zip Code) (Registrant's telephone
no. including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership
Interests
Indicate by check mark whether the registrants, (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days:
Yes X No
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Aggregate market value of the voting stock held by non-affiliates of the
registrant: N/A
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ((S)229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. X
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DOCUMENTS INCORPORATED BY REFERENCE: None
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Information contained in this Form 10-K Report contains "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements, other than statements of historical
facts, included in this Form 10-K Report that address activities, events or
developments that the Partnership, the Venture or the General Partner
expects, believes or anticipates will or may occur in the future are
forward-looking statements. These forward-looking statements are based
upon certain assumptions and are subject to a number of risks and
uncertainties. Actual results could differ materially from the results
predicted by these forward-looking statements.
PART I.
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ITEM 1. BUSINESS
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The Partnership. Cable TV Fund 14-B, Ltd. (the "Partnership") is a
Colorado limited partnership that was formed pursuant to the public
offering of limited partnership interests in the Cable TV Fund 14 Limited
Partnership Program (the "Program"), which was sponsored by Jones
Intercable, Inc. (the "General Partner"). Cable TV Fund 14-A, Ltd. ("Fund
14-A") is the other partnership that was formed pursuant to the Program.
The Partnership and Fund 14-A formed a general partnership known as Cable
TV Fund 14-A/B Venture (the "Venture"), in which the Partnership owns a 73
percent interest and Fund 14-A owns a 27 percent interest. The Partnership
and the Venture were formed for the purpose of acquiring and operating
cable television systems.
The Partnership directly owns cable television systems serving the
areas in and around Surfside, South Carolina (the "Surfside System") and
Little Rock, California (the "Little Rock System"). The Venture owns the
cable television system serving certain areas in Broward County, Florida
(the "Broward County System"). See Item 2. The Surfside System, the
Little Rock System and the Broward County System may collectively be
referred to as the "Systems."
Cable Television Services. The Systems offer to their subscribers
various types of programming, which include basic service, tier service,
premium service, pay-per-view programs and packages including several of
these services at combined rates.
Basic cable television service usually consists of signals of all four
national television networks, various independent and educational
television stations (both VHF and UHF) and certain signals received from
satellites. Basic service also usually includes programs originated
locally by the system, which may consist of music, news, weather reports,
stock market and financial information and live or videotaped programs of a
public service or entertainment nature. FM radio signals are also
frequently distributed to subscribers as part of the basic service.
The Systems offer tier services on an optional basis to their
subscribers. A tier generally includes most of the cable networks such as
Entertainment and Sports Programming Network (ESPN), Cable News Network
(CNN), Turner Network Television (TNT), Family Channel, Discovery and
others, and the cable television operators buy tier programming from these
networks. The Systems also offer a package that includes the basic service
channels and the tier services.
The Systems also offer premium services to their subscribers, which
consist of feature films, sporting events and other special features that
are presented without commercial interruption. The cable television
operators buy premium programming from suppliers such as HBO, Showtime,
Cinemax or others at a cost based on the number of subscribers the cable
operator serves. Premium service programming usually is significantly more
expensive than the basic service or tier service programming, and
consequently cable operators price premium service separately when sold to
subscribers.
The Systems also offer to subscribers pay-per-view programming. Pay-
per-view is a service that allows subscribers to receive single programs,
frequently consisting of motion pictures that have recently completed their
theatrical exhibitions and major sporting events, and to pay for such
service on a program-by-program basis.
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Revenues. Monthly service fees for basic, tier and premium services
constitute the major source of revenue for the Systems. At December 31,
1996, the Systems' monthly basic service rates ranged from $8.50 to $12.95,
monthly basic and tier ("basic plus") service rates ranged from $17.95 to
$24.81. and monthly premium services ranged from $1.95 to $10.95 per
premium service. In addition, the Partnership and the Venture earn
revenues from the Systems' pay-per-view programs and advertising fees.
Related charges may include a nonrecurring installation fee that ranges
from $1.90 to $43.30; however, from time to time the Systems have followed
the common industry practice of reducing or waiving the installation fee
during promotional periods. Commercial subscribers such as hotels, motels
and hospitals are charged a nonrecurring connection fee that usually covers
the cost of installation. Except under the terms of certain contracts with
commercial subscribers and residential apartment and condominium complexes,
the subscribers are free to discontinue the service at any time without
penalty. For the year ended December 31, 1996, of the total fees received
by the Systems, basic service and tier service fees accounted for
approximately 66% of total revenues, premium service fees accounted for
approximately 16% of total revenues, pay-per-view fees were approximately
2% of total revenues, advertising fees were approximately 6% of total
revenues and the remaining 10% of total revenues came principally from
equipment rentals, installation fees and program guide sales. The
Partnership and the Venture are dependent upon the timely receipt of
service fees to provide for maintenance and replacement of plant and
equipment, current operating expenses and other costs of the Systems.
Franchises. The Systems are constructed and operated under non-
exclusive, fixed-term franchises or other types of operating authorities
(referred to collectively herein as "franchises") granted by local
governmental authorities. These franchises typically contain many
conditions, such as time limitations on commencement and completion of
construction, conditions of service, including the number of channels,
types of programming and the provision of free service to schools and
certain other public institutions, and the maintenance of insurance and
indemnity bonds. The provisions of local franchises are subject to federal
regulation.
The Partnership directly holds 4 franchises, and the Venture holds 9
franchises. These franchises provide for the payment of fees to the
issuing authorities and generally range from 3% to 5% of the gross revenues
of a cable television system. The 1984 Cable Act prohibits franchising
authorities from imposing annual franchise fees in excess of 5% of gross
revenues and also permits the cable television system operator to seek
renegotiation and modification of franchise requirements if warranted by
changed circumstances.
Neither the Partnership nor the Venture has ever had a franchise
revoked. Neither the Partnership nor the Venture has any franchises that
expire prior to December 31, 1997.
Competition. Cable television systems currently experience
competition from several sources.
Broadcast Television. Cable television systems have traditionally
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competed with broadcast television, which consists of television signals
that the viewer is able to receive directly on his television without
charge using an "off-air" antenna. The extent of such competition is
dependent in part upon the quality and quantity of signals available by
such antenna reception as compared to the services provided by the local
cable system. Accordingly, it has generally been less difficult for cable
operators to obtain higher penetration rates in rural areas where signals
available off-air are limited, than in metropolitan areas where numerous,
high quality off-air signals are often available without the aid of cable
television systems.
Traditional Overbuild. Cable television franchises are not exclusive,
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so that more than one cable television system may be built in the same area
(known as an "overbuild"), with potential loss of revenues to the operator
of the original cable television system. The General Partner has
experienced overbuilds in connection with certain systems that it has owned
or managed for limited partnerships, and currently there are overbuilds in
the systems owned or managed by the General Partner. Constructing and
developing a cable television system is a capital intensive process, and it
is often difficult for a new cable system operator to create a marketing
edge over the existing system. Generally, an overbuilder would be required
to obtain franchises from the local governmental authorities, although in
some instances, the overbuilder could be the local government itself. In
any
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case, an overbuilder would be required to obtain programming contracts
from entertainment programmers and, in most cases, would have to build a
complete cable system, including headends, trunk lines and drops to
individual subscribers homes, throughout the franchise areas.
DBS. High-powered direct-to-home satellites have made possible the
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wide-scale delivery of programming to individuals throughout the United
States using small roof-top or wall-mounted antennas. Several companies
began offering direct broadcast satellite ("DBS") service over the last few
years and additional entrants are expected. Companies offering DBS service
use video compression technology to increase channel capacity of their
systems to 100 or more channels and to provide packages of movies,
satellite network and other program services which are competitive to those
of cable television systems. DBS cannot currently offer its subscribers
local programming, although at least one future DBS entrant is attempting
to offer customers regional delivery of local broadcast signals. In
addition to emerging high-powered DBS competition, cable television systems
face competition from a major medium-powered satellite distribution
provider and several low-powered providers, whose service requires use of
much larger home satellite dishes. Not all subscribers terminate cable
television service upon acquiring a DBS system. The General Partner has
observed that there are DBS subscribers that also elect to subscribe to
cable television service in order to obtain the greatest variety of
programming on multiple television sets, including local programming not
available through DBS service. The ability of DBS service providers to
compete successfully with the cable television industry will depend on,
among other factors, the ability of DBS providers to overcome certain legal
and technical hurdles and the availability of equipment at reasonable
prices.
Telephone. Federal cross-ownership restrictions historically limited
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entry by local telephone companies into the cable television business. The
1996 Telecommunications Act (the "1996 Telecom Act") eliminated this cross-
ownership restriction, making it possible for companies with considerable
resources to overbuild existing cable operators and enter the business.
Several telephone companies have begun seeking cable television franchises
from local governmental authorities and constructing cable television
systems. Ameritech, one of the seven regional Bell Operating Companies
("BOCs"), which provides telephone service in a multi-state region
including Illinois, has been the most active BOC in seeking local cable
franchises within its service area. It has already begun cable service in
Naperville, Illinois and has also obtained franchises for Glen Ellyn and
Vernon Hills, Illinois, all of which are currently served by cable systems
owned by three partnerships managed by the General Partner. The General
Partner cannot predict at this time the extent of telephone company
competition that will emerge to owned or managed cable television systems.
The entry of telephone companies as direct competitors, however, is likely
to continue over the next several years and could adversely affect the
profitability and market value of the General Partner's owned and managed
systems. The entry of electric utility companies into the cable television
business, as now authorized by the 1996 Telecom Act, could have a similar
adverse effect.
Private Cable. Additional competition is provided by private cable
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television systems, known as Satellite Master Antenna Television (SMATV),
serving multi-unit dwellings such as condominiums, apartment complexes, and
private residential communities. These private cable systems may enter
into exclusive agreements with apartment owners and homeowners
associations, which may preclude operators of franchised systems from
serving residents of such private complexes. Private cable systems that do
not cross public rights of way are free from the federal, state and local
regulatory requirements imposed on franchised cable television operators.
In some cases, neither the Partnership nor the Venture has been able to
provide cable television service to buildings in which private operators
have secured exclusive contracts to provide video and telephony services.
The Partnership and the Venture are interested in providing these same
services, but expects that the market to install and provide these services
in multi-unit buildings will continue to be highly competitive.
MMDS. Cable television systems also compete with wireless program
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distribution services such as multichannel, multipoint distribution service
("MMDS") systems, commonly called wireless cable, which are
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licensed to serve specific areas. MMDS uses low-power microwave frequencies
to transmit television programming over-the-air to paying subscribers. The
MMDS industry is less capital intensive than the cable television industry,
and it is therefore more practical to construct MMDS systems in areas of
lower subscriber penetration. Wireless cable systems are now in direct
competition with cable television systems in several areas of the country,
including the system in Pima County, Arizona owned by the General Partner.
Telephone companies have recently acquired or invested in wireless
companies, and may use MMDS systems to provide services within their
service areas in lieu of wired delivery systems. Enthusiasm for MMDS has
waned in recent months, however, as Bell Atlantic and NYNEX have suspended
their investment in two major MMDS companies. To date, neither the
Partnership nor the Venture has lost a significant number of subscribers,
nor a significant amount of revenue, to MMDS operators competing with the
Partnership's or the Venture's cable television systems. A series of
actions taken by the FCC, however, including reallocating certain
frequencies to the wireless services, are intended to facilitate the
development of wireless cable television systems as an alternative means of
distributing video programming. The FCC recently held auctions for spectrum
that will be used by wireless operators to provide additional channels of
programming over larger distances. In addition, an emerging technology,
Local Multipoint Distribution services ("LMDS"), could also pose a
significant threat to the cable television industry, if and when it becomes
established. LMDS, sometimes referred to as cellular television, could have
the capability of delivering more than 100 channels of video programming to
a subscriber's home. The potential impact, however, of LMDS is difficult to
assess due to the newness of the technology and the absence of any current
fully operational LMDS systems.
Cable television systems are also in competition, in various degrees
with other communications and entertainment media, including motion
pictures and home video cassette recorders.
Regulation and Legislation
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The operation of cable television systems is extensively regulated by
the FCC, some state governments and most local governments. The new 1996
Telecom Act alters the regulatory structure governing the nation's
telecommunications providers. It removes barriers to competition in both
the cable television market and the local telephone market. Among other
things, it also reduces the scope of cable rate regulation.
The 1996 Telecom Act requires the FCC to undertake a host of
implementing rulemakings, the final outcome of which cannot yet be
determined. Moreover, Congress and the FCC have frequently revisited the
subject of cable regulation. Future legislative and regulatory changes
could adversely affect the Venture's operations. This section briefly
summarizes key laws and regulations affecting the operation of the
Venture's cable systems and does not purport to describe all present,
proposed, or possible laws and regulations affecting the Venture.
Cable Rate Regulation. The 1992 Cable Act imposed an extensive rate
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regulation regime on the cable television industry. Under that regime, all
cable systems are subject to rate regulation, unless they face "effective
competition" in their local franchise area. Federal law now defines
"effective competition" on a community-specific basis as requiring either
low penetration (less than 30%) by the incumbent cable operator,
appreciable penetration (more than 15%) by competing multichannel video
providers ("MVPs"), or the presence of a competing MVP affiliated with a
local telephone company.
Although the FCC rules control, local government units (commonly
referred to as local franchising authorities or "LFAs") are primarily
responsible for administering the regulation of the lowest level of
cable -- the basic service tier ("BST"), which typically contains local
broadcast stations and public, educational, and government ("PEG") access
channels. Before an LFA begins BST rate regulation, it must certify to the
FCC that it will follow applicable federal rules, and many LFAs have
voluntarily declined to exercise this authority. LFAs also have primary
responsibility for regulating cable equipment rates. Under federal law,
charges for various types of cable equipment must be unbundled from each
other and from monthly charges for programming services. The 1996 Telecom
Act allows operators to aggregate costs for broad categories of equipment
across geographic and functional lines. This change should facilitate the
introduction of new technology.
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The FCC itself directly administers rate regulation of any cable
programming service tiers ("CPST"), which typically contain satellite-
delivered programming. Under the 1996 Telecom Act, the FCC can regulate
CPST rates only if an LFA first receives at least two rate complaints from
local subscribers and then files a formal complaint with the FCC. When new
CPST rate complaints are filed, the FCC now considers only whether the
incremental increase is justified and will not reduce the previously
established CPST rate.
Under the FCC's rate regulations, most cable systems were required to
reduce their BST and CPST rates in 1993 and 1994, and have since had their
rate increases governed by a complicated price cap scheme that allows for
the recovery of inflation and certain increased costs, as well as providing
some incentive for expanding channel carriage. The FCC has modified its
rate adjustment regulations to allow for annual rate increases and to
minimize previous problems associated with regulatory lag. Operators also
have the opportunity of bypassing this "benchmark" regulatory scheme in
favor of traditional "cost-of-service" regulation in cases where the latter
methodology appears favorable. Premium cable services offered on a per-
channel or per-program basis remain unregulated, as do affirmatively
marketed packages consisting entirely of new programming product. Federal
law requires that the BST be offered to all cable subscribers, but limits
the ability of operators to require purchase of any CPST before purchasing
premium services offered on a per-channel or per-program basis.
The 1996 Telecom Act sunsets FCC regulation of CPST rates for all
systems (regardless of size) on March 31, 1999. It also relaxes existing
uniform rate requirements by specifying that uniform rate requirements do
not apply where the operator faces "effective competition," and by
exempting bulk discounts to multiple dwelling units, although complaints
about predatory pricing still may be made to the FCC.
Cable Entry Into Telecommunications. The 1996 Telecom Act provides
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that no state or local laws or regulations may prohibit or have the effect
of prohibiting any entity from providing any interstate or intrastate
telecommunications service. States are authorized, however, to impose
"competitively neutral" requirements regarding universal service, public
safety and welfare, service quality, and consumer protection. State and
local governments also retain their authority to manage the public rights-
of-way and may require reasonable, competitively neutral compensation for
management of the public rights-of-way when cable operators provide
telecommunications service. The favorable pole attachment rates afforded
cable operators under federal law can be gradually increased by utility
companies owning the poles (beginning in 2001) if the operator provides
telecommunications service, as well as cable service, over its plant.
Cable entry into telecommunications will be affected by the regulatory
landscape now being fashioned by the FCC and state regulators. One
critical component of the 1996 Telecom Act to facilitate the entry of new
telecommunications providers (including cable operators) is the
interconnection obligation imposed on all telecommunications carriers.
Review of the FCC's initial interconnection order is now pending before the
Eighth Circuit Court of Appeals.
Telephone Company Entry Into Cable Television. The 1996 Telecom Act
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allows telephone companies to compete directly with cable operators by
repealing the historic telephone company/cable cross-ownership ban. Local
exchange carriers ("LECs"), including the BOCs, can now compete with cable
operators both inside and outside their telephone service areas. Because
of their resources, LECs could be formidable competitors to traditional
cable operators, and certain LECs have begun offering cable service. As
described above, the General Partner is now witnessing the beginning of LEC
competition in a few of its cable communities.
Under the 1996 Telecom Act, a LEC providing video programming to
subscribers will be regulated as a traditional cable operator (subject to
local franchising and federal regulatory requirements), unless the LEC
elects to provide its programming via an "open video system" ("OVS"). To
qualify for OVS status, the LEC must reserve two-thirds of the system's
activated channels for unaffiliated entities.
Although LECs and cable operators can now expand their offerings
across traditional service boundaries, the general prohibition remains on
LEC buyouts (i.e., any ownership interest exceeding 10 percent) of co-
located
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cable systems, cable operator buyouts of co-located LEC systems, and joint
ventures between cable operators and LECs in the same market. The 1996
Telecom Act provides a few limited exceptions to this buyout prohibition,
including a carefully circumscribed "rural exemption." The 1996 Telecom Act
also provides the FCC with the limited authority to grant waivers of the
buyout prohibition (subject to LFA approval).
Electric Utility Entry Into Telecommunications/Cable Television. The
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1996 Telecom Act provides that registered utility holding companies and
subsidiaries may provide telecommunications services (including cable
television) notwithstanding the Public Utilities Holding Company Act.
Electric utilities must establish separate subsidiaries, known as "exempt
telecommunications companies" and must apply to the FCC for operating
authority. Again, because of their resources, electric utilities could be
formidable competitors to traditional cable systems.
Additional Ownership Restrictions. The 1996 Telecom Act eliminates
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statutory restrictions on broadcast/cable cross-ownership (including
broadcast network/cable restrictions), but leaves in place existing FCC
regulations prohibiting local cross-ownership between co-located television
stations and cable systems. The 1996 Telecom Act also eliminates the three
year holding period required under the 1992 Cable Act's "anti-trafficking"
provision. The 1996 Telecom Act leaves in place existing restrictions on
cable cross-ownership with SMATV and MMDS facilities, but lifts those
restrictions where the cable operator is subject to effective competition.
In January 1995, however, the FCC adopted regulations which permit cable
operators to own and operate SMATV systems within their franchise area,
provided that such operation is consistent with local cable franchise
requirements. The General Partner does not currently plan to acquire such
licenses.
Pursuant to the 1992 Cable Act, the FCC adopted rules precluding a
cable system from devoting more than 40% of its activated channel capacity
to the carriage of affiliated national program services. A companion rule
establishing a nationwide ownership cap on any cable operator equal to 30%
of all domestic cable subscribers has been stayed pending further judicial
review.
There are no federal restrictions on non-U.S. entities having an
ownership interest in cable television systems or the FCC licenses commonly
employed by such systems. Section 310(b)(4) of the Communications Act
does, however, prohibit foreign ownership of FCC broadcast and telephone
licenses, unless the FCC concludes that such foreign ownership is
consistent with the public interest. BCI's investment in the General
Partner could, therefore, adversely affect any plan to acquire FCC
broadcast or common carrier licenses. The Partnership, however, does not
currently plan to acquire such licenses.
Must Carry/Retransmission Consent. The 1992 Cable Act contains
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broadcast signal carriage requirements that allow local commercial
television broadcast stations to elect once every three years between
requiring a cable system to carry the station ("must carry") or negotiating
for payments for granting permission to the cable operator to carry the
station ("retransmission consent"). Less popular stations typically elect
"must carry," and more popular stations typically elect "retransmission
consent." Must carry requests can dilute the appeal of a cable system's
programming offerings, and retransmission consent demands may require
substantial payments or other concessions. Either option has a potentially
adverse affect on the Partnership's and the Venture's business.
Additionally, cable systems are required to obtain retransmission consent
for all "distant" commercial television stations (except for satellite-
delivered independent "superstations" such as WTBS). The constitutionality
of the must carry requirements has been challenged and is awaiting a
decision from the U.S. Supreme Court.
Access Channels. LFAs can include franchise provisions requiring
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cable operators to set aside certain channels for public, educational and
governmental access programming. Federal law also requires cable systems
to designate a portion of their channel capacity (up to 15% in some cases)
for commercial leased access by unaffiliated third parties. The FCC has
adopted rules regulating the terms, conditions and maximum rates a cable
operator may charge for use of the designated channel capacity, but use of
commercial leased access channels has been relatively limited. The FCC
released revised rules in February 1997 which mandate a modest rate
reduction and could make commercial leased access a more attractive option
to third party programmers.
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Access to Programming. To spur the development of independent cable
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programmers and competition to incumbent cable operators, the 1992 Cable
Act imposed restrictions on the dealings between cable operators and cable
programmers. Of special significance from a competitive business posture,
the 1992 Cable Act precludes video programmers affiliated with cable
companies from favoring cable operators over competitors and requires such
programmers to sell their programming to other multichannel video
distributors. This provision limits the ability of vertically integrated
cable programmers to offer exclusive programming arrangements to cable
companies.
Other FCC Regulations. In addition to the FCC regulations noted
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above, there are other FCC regulations covering such areas as equal
employment opportunity, subscriber privacy, programming practices
(including, among other things, syndicated program exclusivity, network
program nonduplication, local sports blackouts, indecent programming,
lottery programming, political programming, sponsorship identification, and
children's programming advertisements), registration of cable systems and
facilities licensing, maintenance of various records and public inspection
files, frequency usage, lockbox availability, antenna structure
notification, tower marking and lighting, consumer protection and customer
service standards, technical standards, and consumer electronics equipment
compatibility. The FCC is expected to impose new Emergency Alert System
requirements on cable operators this year. The FCC has the authority to
enforce its regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of other
administrative sanctions, such as the revocation of FCC licenses needed to
operate certain transmission facilities used in connection with cable
operations.
Two pending FCC proceedings of particular competitive concern involve
inside wiring and navigational devices. The former rulemaking is
considering ownership of cable wiring located inside multiple dwelling unit
complexes. If the FCC concludes that such wiring belongs to, or can be
unilaterally acquired by the complex owner, it will become easier for
complex owners to terminate service from the incumbent cable operator in
favor of a new entrant. The latter rulemaking is considering whether cable
customers must be allowed to purchase cable converters from third party
vendors. If the FCC concludes that such distribution is required, and does
not make appropriate allowances for signal piracy concerns, it may become
more difficult for cable operators to combat theft of service.
Copyright. Cable television systems are subject to federal copyright
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licensing covering carriage of television and radio broadcast signals. In
exchange for filing certain reports and contributing a percentage of their
revenues to a federal copyright royalty pool (that varies depending on the
size of the system and the number of distant broadcast television signals
carried), cable operators can obtain blanket permission to retransmit
copyrighted material on broadcast signals. The possible modification or
elimination of this compulsory copyright license is the subject of
continuing legislative review and could adversely affect the Partnership's
and the Venture's ability to obtain desired broadcast programming. In
addition, the cable industry pays music licensing fees to BMI and is
negotiating a similar arrangement with ASCAP. Copyright clearances for
nonbroadcast programming services are arranged through private
negotiations.
State and Local Regulation. Cable television systems generally are
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operated pursuant to nonexclusive franchises granted by a municipality or
other state or local government entity in order to cross public rights-of-
way. Federal law now prohibits franchise authorities from granting
exclusive franchises or from unreasonably refusing to award additional
franchises. Cable franchises generally are granted for fixed terms and in
many cases include monetary penalties for non-compliance and may be
terminable if the franchisee fails to comply with material provisions.
The terms and conditions of franchises vary materially from
jurisdiction to jurisdiction. Each franchise generally contains provisions
governing cable operations, service rates, franchise fees, system
construction and maintenance obligations, system channel capacity, design
and technical performance, customer service standards, and indemnification
protections. A number of states subject cable television systems to the
jurisdiction of centralized state governmental agencies, some of which
impose regulation of a character similar to that of a public utility.
Although LFAs have considerable discretion in establishing franchise terms,
there are certain federal limitations. For example, LFAs cannot insist on
franchise fees exceeding 5% of the system's gross revenues,
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cannot dictate the particular technology used by the system, and cannot
specify video programming other than identifying broad categories of
programming.
Federal law contains renewal procedures designed to protect incumbent
franchisees against arbitrary denials of renewal. Even if a franchise is
renewed, the franchise authority may seek to impose new and more onerous
requirements such as significant upgrades in facilities and services or
increased franchise fees as a condition of renewal. Similarly, if a
franchise authority's consent is required for the purchase or sale of a
cable system or franchise, such authority may attempt to impose more
burdensome or onerous franchise requirements in connection with a request
for consent. Historically, franchises have been renewed for cable
operators that have provided satisfactory services and have complied with
the terms of their franchises.
General. The Partnership's and the Venture's business consists of
providing cable television services to a large number of customers, the
loss of any one of which would have no material effect on the Partnership's
or the Venture's business. The Systems have had some subscribers who later
terminated the service. Terminations occur primarily because people move
to another home or to another city. In other cases, people terminate on a
seasonal basis or because they no longer can afford or are dissatisfied
with the service. The amount of past due accounts in the Systems is not
significant. The Venture's policy with regard to past due accounts is
basically one of disconnecting service before a past due account becomes
material.
Neither the Partnership nor the Venture depends to any material extent
on the availability of raw materials; it carries no significant amounts of
inventory and it has no material backlog of customer orders. Neither the
Venture nor the Partnership has any employees because all properties are
managed by employees of the General Partner. The General Partner has
engaged in research and development activities relating to the provision of
new services but the amount of the Partnership's or the Venture's funds
expended for such research and development has never been material.
Compliance with federal, state and local provisions that have been
enacted or adopted regulating the discharge of materials into the
environment or otherwise relating to the protection of the environment has
had no material effect upon the capital expenditures, earnings or
competitive position of the Partnership or the Venture.
ITEM 2. PROPERTIES
-------------------
The cable television systems owned by the Partnership and the Venture
are described below:
<TABLE>
<CAPTION>
Fund System Acquisition Date
---- ------ ----------------
<S> <C> <C>
Cable TV Fund 14-B, Ltd. Surfside System September 1988
Little Rock System November 1989
Cable TV Fund 14-A/B Venture Broward County System March 1988
</TABLE>
The following sets forth (i) the monthly basic plus service rates
charged to subscribers and (ii) the number of basic subscribers and pay
units for the Systems. The monthly basic service rates set forth herein
represent, with respect to systems with multiple headends, the basic
service rate charged to the majority of the subscribers within the system.
In cable television systems, basic subscribers can subscribe to more than
one pay TV service. Thus, the total number of pay services subscribed to
by basic subscribers are called pay units. As of December 31, 1996, the
Little Rock System operated cable plant passing approximately 7,800 homes,
with an approximate 74% penetration rate; the Surfside System operated
cable plant passing approximately 26,200 homes, with an approximate 79%
penetration rate; and the Broward County System operated cable plant
passing approximately 89,100 homes, with an approximate 57% penetration
rate. Figures for numbers of subscribers and homes passed are compiled from
the General Partner's records and may be subject to adjustments.
9
<PAGE>
<TABLE>
<CAPTION>
Cable TV Fund 14-B, Ltd.
- -----------------------------------
At December 31,
-------------------------
Little Rock System 1996 1995 1994
- ----------------------------------- ------- ------- -------
<S> <C> <C> <C>
Monthly basic plus service rate $ 24.77 $ 23.27 $ 21.77
Basic subscribers 5,774 5,673 5,336
Pay units 4,365 4,608 4,605
<CAPTION>
At December 31,
-------------------------
Surfside System 1996 1995 1994
- ----------------------------------- ------- ------- -------
<S> <C> <C> <C>
Monthly basic plus service rate $ 24.09 $ 22.59 $ 21.09
Basic subscribers 20,821 20,055 18,969
Pay units 18,897 14,083 12,424
<CAPTION>
Cable TV Fund 14-A/B Venture
- -----------------------------------
At December 31,
-------------------------
Broward County System 1996 1995 1994
- ----------------------------------- ------- ------- -------
<S> <C> <C> <C>
Monthly basic plus service rate $ 25.58 $ 24.16 $ 23.56
Basic subscribers 50,957 49,654 47,819
Pay units 47,286 42,167 41,270
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
--------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
None.
PART II.
--------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
-------------------------------------------------
AND RELATED SECURITY HOLDER MATTERS
-----------------------------------
While the Partnership is publicly held, there is no public market for
the limited partnership interests, and it is not expected that a market
will develop in the future. During 1996, several partners of the
Partnership conducted "limited tender offers" for interests in the
Partnership at prices ranging from $140 to $190 per interest. As of
February 14, 1997, the number of equity security holders in the Partnership
was 16,060.
10
<PAGE>
Item 6. Selected Financial Data
- --------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------------
Cable TV Fund 14-B, Ltd./(a)/ 1996 1995 1994 1993 1992
- ---------------------------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues $ 37,768,924 $ 34,443,760 $ 32,084,279 $ 31,735,048 $ 29,559,867
Depreciation and Amortization 13,404,578 14,265,096 15,037,554 15,812,869 16,645,383
Operating Loss (1,095,260) (2,684,818) (5,677,171) (5,755,811) (7,021,107)
Minority Interest in Consolidated Loss 815,252 1,104,003 1,468,218 1,277,358 1,676,435
Net Loss (4,470,043) (6,108,952) (7,903,005) (7,637,593) (9,183,119)
Net Loss per Limited Partnership Unit (16.93) (23.14) (29.94) (28.93) (34.79)
Weighted Average Number of Limited
Partnership Units Outstanding 261,353 261,353 261,353 261,353 261,353
General Partner's Deficit (713,972) (669,272) (608,182) (529,152) (452,776)
Limited Partners' Capital 41,926,343 46,351,686 52,399,548 60,223,523 67,784,740
Total Assets 105,915,409 111,850,697 118,867,757 128,779,941 141,753,537
Debt 56,656,424 56,241,715 57,376,558 58,881,755 62,752,746
General Partner Advances 449,094 1,896,049 297,956 29,182 119,337
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------------------------------
Cable TV Fund 14-A/B Venture 1996 1995 1994 1993 1992
- ---------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 25,519,105 $ 23,469,505 $ 22,183,524 $ 22,068,952 $ 20,212,867
Depreciation and Amortization 8,360,927 8,774,507 9,188,994 9,352,808 9,971,915
Operating Income (Loss) 28,548 (753,422) (2,661,198) (2,324,939) (3,293,133)
Net Loss (3,008,309) (4,073,811) (5,417,779) (4,713,500) (6,186,107)
Partners' Capital 14,981,843 17,990,152 22,063,963 27,481,742 32,195,242
Total Assets 58,277,058 62,447,556 66,597,460 72,315,816 80,404,133
Debt 41,262,561 40,530,652 42,271,921 43,461,730 46,908,409
Jones Intercable, Inc. Advances 268,256 2,206,959 354,179 57,920 125,873
</TABLE>
(a) Cable TV Fund 14-B, Ltd.'s. selected financial data includes 100 percent of
the accounts of Cable TV Fund 14-A/B Venture on a consolidated basis.
11
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
- -------------
The following discussion of the financial condition and results of
operations of Cable TV Fund 14-B, Ltd. (the "Partnership") and Cable TV Fund 14-
A/B Venture (the "Venture") contains, in addition to historical information,
forward-looking statements that are based upon certain assumptions and are
subject to a number of risks and uncertainties. The Partnership's and Venture's
actual results may differ significantly from the results predicted in such
forward-looking statements.
FINANCIAL CONDITION
- -------------------
In addition to the Surfside System and the Little Rock System, the
Partnership owns a 73 percent interest in the Venture. The accompanying
consolidated financial statements include 100 percent of the accounts of the
Partnership and those of the Venture reduced by Cable TV Fund 14-A, Ltd.'s 27
percent minority interest in the Venture.
Cable TV Fund 14-B, Ltd. -
- ------------------------
For the twelve months ended December 31, 1996, the Surfside System and
Little Rock System generated net cash from operating activities totaling
$1,428,482 which is available to fund capital expenditures and non-operating
costs. The Partnership expended approximately $2,802,000 on capital additions
during 1996 in its Surfside System and Little Rock System. Approximately 46
percent of the expenditures was for the construction of drops to subscribers
homes. Approximately 35 percent of these expenditures was for the construction
of cable plant extensions. The remainder of the expenditures was for various
enhancements in the Partnership's cable television systems. Funding for these
expenditures was provided by cash generated by operations. Anticipated capital
expenditures for 1997 are approximately $2,362,000. Approximately 39 percent are
expected to be used for service drops to homes. Approximately 33 percent of
these expenditures are expected to be used for new plant construction in the
Partnership's systems. The remainder of these expenditures are for various
enhancements in each of the Partnership's systems. Funding for these
improvements will be provided by cash generated from operations and borrowings
under the Partnership's credit facility.
In December 1995, the Partnership entered into a reducing revolving
credit facility with an available commitment of $18,000,000. At December 31,
1996, the balance outstanding was $15,300,000, leaving $2,700,000 available for
future borrowings. On September 30, 1998, the maximum available on the reducing
revolving credit facility begins to reduce quarterly until March 31, 2003 when
the amount available will be zero. Interest on the reducing revolving credit
facility is at the Partnership's option of the Base Rate plus 1/8 percent, the
London Interbank Offered Rate ("LIBOR") plus 1-1/8 percent, or the Certificate
of Deposit Rate plus 1-1/4 percent. The effective interest rates on amounts
outstanding as of December 31, 1996 and 1995 were 6.69 percent and 8.90 percent,
respectively.
The General Partner believes that the Partnership's wholly owned systems
have sufficient sources of capital from cash generated from operations and
borrowings available under the reducing revolving credit facility to service
their presently anticipated needs.
Cable TV Fund 14-A/B Venture -
- ----------------------------
For the twelve months ended December 31, 1996, the Venture generated net
cash from operating activities totaling $5,204,336 which is available to fund
capital expenditures and non-operating costs. The Venture expended
approximately $3,880,000 on capital additions during 1996. Cable television
plant extensions accounted for approximately 43 percent of these expenditures.
The construction of service drops to homes accounted for approximately 37
percent of the expenditures. The remainder of these expenditures related to
various enhancements in the Broward County System. These capital expenditures
were funded primarily from cash generated from operations. The Venture plans to
expend approximately $3,916,000 for capital additions in 1997. Of this total,
approximately 35 percent will relate to the construction of service drops to
homes and approximately 34 percent is for cable television plant extensions.
The remainder of the anticipated expenditures are for various enhancements in
the Broward County System. These capital expenditures are expected to be funded
from cash on hand, cash generated from operations and borrowings under its
credit facility.
In June 1996, the Venture amended its existing term loan providing for
a reducing revolving credit facility with an available commitment of
$42,500,000. The entire $42,500,000 commitment is available through December
31, 1998, at which time the commitment will be repaid in twenty quarterly
installments with a final maturity of December 31, 2003. At December 31, 1996,
the balance outstanding was $41,102,968, leaving $1,397,032 available for future
borrowings. Interest is at the Venture's option of Prime plus 1/4 percent, LIBOR
plus 1-1/4 percent or the Certificate of Deposit Rate plus 1-3/8 percent. The
effective interest rates on amounts outstanding as of December 31, 1996 and 1995
were 6.79 percent and 7.17 percent, respectively.
12
<PAGE>
The General Partner believes that the Venture has sufficient sources
of capital from cash on hand, cash generated from operations and borrowings
under its credit facility to service its current needs.
RESULTS OF OPERATIONS
- ---------------------
Cable TV Fund 14-B, Ltd. -
- ------------------------
The results of operations for the Partnership are summarized below:
<TABLE>
<CAPTION>
Year Ended December 31, 1996
-----------------------------------------
Partnership Venture
Owned Owned Consolidated
------------ ------------ -------------
<S> <C> <C> <C>
Revenues $12,249,819 $25,519,105 $37,768,924
Operating expenses $ 6,918,196 $14,148,533 $21,066,729
Management fees and allocated overhead from General Partner $ 1,411,780 $ 2,981,097 $ 4,392,877
Depreciation and amortization $ 5,043,651 $ 8,360,927 $13,404,578
Operating income (loss) $(1,123,808) $ 28,548 $(1,095,260)
Interest expense $(1,082,104) $(3,006,847) $(4,088,951)
Consolidated loss before minority interest $(2,276,986) $(3,008,309) $(5,285,295)
Minority interest in consolidated loss $ - $ 815,252 $ 815,252
Net loss $(2,276,986) $(2,193,057) $(4,470,043)
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1995
----------------------------------------
Partnership Venture
Owned Owned Consolidated
----------- ----------- ------------
<S> <C> <C> <C>
Revenues $10,974,255 $23,469,505 $34,443,760
Operating expenses $ 6,061,604 $12,620,209 $18,681,813
Management fees and allocated overhead from General Partner $ 1,353,458 $ 2,828,211 $ 4,181,669
Depreciation and amortization $ 5,490,589 $ 8,774,507 $14,265,096
Operating loss $(1,931,396) $ (753,422) $(2,684,818)
Interest expense $(1,189,677) $(3,371,524) $(4,561,201)
Consolidated loss before minority interest $(3,139,144) $(4,073,811) $(7,212,955)
Minority interest in consolidated loss $ - $ 1,104,003 $ 1,104,003
Net loss $(3,139,144) $(2,969,808) $(6,108,952)
</TABLE>
13
<PAGE>
1996 Compared to 1995 -
Revenues of the Partnership's Surfside System and Little Rock System
increased $1,275,564, or approximately 12 percent, to $12,249,819 in 1996 from
$10,974,255 in 1995. This increase was primarily the result of basic service
rate increases and an increase in the number of basic subscribers. Basic
service rate increases accounted for approximately 37 percent of the increase in
revenues. The number of basic subscribers totaled 26,595 at December 31, 1996
compared to 25,728 at December 31, 1995, an increase of 867 or approximately 3
percent. This increase in basic subscribers accounted for approximately 24
percent of the increase in revenues. Increases in advertising sales and premium
service revenue accounted for approximately 13 percent and 8 percent,
respectively, of the increase in revenues. No other individual factor
contributed significantly to the increase in revenues.
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 $856,592, or approximately 14 percent, to
$6,918,196 in 1996 from $6,061,604 in 1995. Operating expenses represented
approximately 56 percent and 55 percent of revenue for 1996 and 1995,
respectively. Increases in programming fees, advertising expenses and marketing
expenses were primarily responsible for the increase in operating expenses. No
other individual factor significantly affected the increase in operating
expenses.
Management fees and allocated overhead from the General Partner
increased $58,322, or approximately 4 percent, to $1,411,780 in 1996 from
$1,353,458 in 1995. This increase was due to the increase in revenues, upon
which such fees are based.
Depreciation and amortization expense decreased $446,938, or
approximately 8 percent, to $5,043,651 in 1996 from $5,490,589 in 1995. This
decrease was due to the maturation of the Partnership's asset base.
Operating loss decreased $807,588, or approximately 42 percent, to
$1,123,808 in 1996 from $1,931,396 in 1995. This decrease was due to the
increase in revenues and the 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 operating income before depreciation
and amortization. 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 expense increased $360,650, or approximately 10
percent, to $3,919,843 in 1996 from $3,559,193 in 1995. 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 $107,573, or approximately 9 percent, to
$1,082,104 in 1996 from $1,189,677 in 1995. This decrease was due to lower
effective interest rates on interest bearing obligations during 1996.
Net loss decreased $862,158, or approximately 27 percent, to $2,276,986 in
1996 from $3,139,144 in 1995. These losses were primarily the result of the
factors discussed above.
1995 Compared to 1994 -
Revenues of the Partnership's Surfside System and Little Rock System
increased $1,073,500, or approximately 11 percent, to $10,974,255 in 1995 from
$9,900,755 in 1994. The number of basic subscribers totaled 25,728 at December
31, 1995 compared to 24,304 at December 31, 1994, an increase of 1,423 or
approximately 6 percent. This increase in basic subscribers accounted for
approximately 37 percent of the increase in revenues. Basic service rate
adjustments accounted for approximately 31 percent and increases in advertising
sales and premium service revenue accounted for approximately 15 percent and 9
percent, respectively, of the increase in revenues.
Operating expenses increased $265,144, or approximately 5 percent, to
$6,061,604 in 1995 from $5,796,460 in 1994. Operating expenses represented
approximately 55 percent and 59 percent of revenue for 1995 and 1994,
respectively. Increases in programming fees, advertising expenses and marketing
expenses were primarily responsible for the increase in operating expense. No
other individual factor significantly affected the increase in operating
expenses.
Management fees and allocated overhead from the General Partner
increased $81,750, or approximately 6 percent, to $1,353,458 in 1995 from
$1,271,708 in 1994 due to the increase in revenues, upon which such fees and
allocations are based and increases in allocated expenses from the General
Partner.
14
<PAGE>
Depreciation and amortization expense decreased $357,971, or
approximately 6 percent, to $5,490,589 in 1995 from $5,848,560 in 1994. This
decrease was due to the maturation of the Partnership's asset base.
Operating loss decreased $1,084,577, or approximately 36 percent, to
$1,931,396 in 1995 from $3,015,973 in 1994. This decrease was due to the
increase in revenues and the decrease in depreciation and amortization exceeding
the increases in operating expense and management fees and allocated overhead
from the General Partner.
Operating income before depreciation and amortization expense increased
$726,606, or approximately 26 percent, to $3,559,193 in 1995 from $2,832,587 in
1994 due to the increase in revenues exceeding the increases in operating
expenses and management fees and allocated overhead from the General Partner.
Interest expense increased $253,751, or approximately 27 percent, to
$1,189,677 in 1995 from $935,926 in 1994. This increase was due to higher
effective interest rates and higher outstanding balances on interest bearing
obligations in 1995.
Net loss decreased $814,300, or approximately 21 percent, to $3,139,144 in
1995 from $3,953,444 in 1994. These losses were primarily the result of the
factors discussed above.
Cable TV Fund 14-A/B Venture -
- ----------------------------
In addition to its ownership of the Surfside System and the Little Rock
System, the Partnership owns a 73 percent interest in the Venture.
Revenues of the Venture's Broward County System increased $2,049,600, or
approximately 9 percent, to $25,519,105 in 1996 from $23,469,505 in 1995. Basic
service rate increases accounted for approximately 35 percent of the increase in
revenue. An increase in the number of basic subscribers accounted for
approximately 27 percent of the increases in revenue. The number of basic
subscribers totaled 50,957 at December 31, 1996 compared to 49,654 at December
31, 1995, an increase of 1,303, or approximately 3 percent. Increases in
premium service revenue accounted for approximately 16 percent of the increase
in revenue. No other individual factor significantly affected the increase in
revenues.
Operating expenses consist primarily of costs associated with the
operation and 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 marketing expenses.
Operating expense increased $1,528,324, or approximately 12 percent, to
$14,148,533 in 1996 from $12,620,209 in 1995. Operating expenses represented 55
percent of revenue in 1996, compared to 54 percent in 1995. The increase in
operating expenses was due primarily to increases in programming fees, which
were partially offset by decreases in personnel and marketing expenses. No
other individual factor significantly affected the increase in operating
expenses.
Management fees and allocated overhead from Jones Intercable, Inc.
increased $152,886, or approximately 5 percent, to $2,981,097 in 1996 from
$2,828,211 in 1995. This increase was due primarily to the increase in revenues
upon which such fees and allocations are based.
Depreciation and amortization expense decreased $413,580, or approximately
5 percent, to $8,360,927 in 1996 from $8,774,507 in 1995. The decrease in
depreciation and amortization expense was attributable to the maturation of the
Venture's asset base.
The Partnership reported operating income of $28,548 in 1996 compared to
an operating loss of $753,422 in 1995. This change was due to the increase in
revenues and the decreases in depreciation and amortization expense exceeding
the increase in operating expenses and management fees and allocated overhead
from Jones Intercable, Inc.
The cable television industry generally measures the financial performance
of a cable television system in terms of operating income before depreciation
and amortization. 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 expense increased $368,390, or approximately 5
percent, to $8,389,475 in 1996 from $8,021,085 in 1995 due to the increase in
revenues exceeding the increases in operating expenses and management fees and
allocated overhead from Jones Intercable, Inc.
15
<PAGE>
Interest expense decreased $364,677, or approximately 11 percent, to
$3,006,847 in 1996 from $3,371,524 in 1995 due to lower outstanding balances and
lower effective interest rates on interest bearing obligations during 1996.
Net loss decreased $1,065,502, or approximately 26 percent, to $3,008,309
in 1996 from $4,073,811 in 1995. These losses were primarily the result of the
factors discussed above.
1995 Compared to 1994-
Revenues of the Venture's Broward County System increased $1,285,981, or
approximately 6 percent, to $23,469,505 in 1995 from $22,183,524 in 1994. The
number of basic subscribers totaled 49,654 at December 31, 1995 compared to
47,819 at December 31, 1994, an increase of 1,835, or approximately 4 percent.
This increase in basic subscribers accounted for approximately 44 percent of the
increases in revenue. Increases in premium service revenue accounted for
approximately 25 percent of the increases in revenue and basic service rate
adjustments accounted for approximately 11 percent of the increases in revenue.
No other individual factor significantly affected the increase in revenues.
Operating expenses decreased $258,229, or approximately 2 percent, to
$12,620,209 in 1995 from $12,878,438 in 1994. Operating expenses represented 54
percent of revenue in 1995, compared to 58 percent in 1994. The decrease in
operating expenses was due primarily to decreases in personnel and marketing
expenses, which were partially offset by increases in programming fees and
office related expenses. No other individual factor significantly affected the
decrease in operating expense.
Management fees and allocated overhead from Jones Intercable, Inc.
increased $50,921, or approximately 2 percent, to $2,828,211 in 1995 from
$2,777,290 in 1994 primarily due to the increase in revenues upon which such
fees and allocations are based.
Depreciation and amortization expense decreased $414,487, or
approximately 5 percent, to $8,774,507 in 1995 from $9,188,994 in 1994. The
decrease in depreciation and amortization expense was attributable to the
maturation of the Venture's asset base.
Operating loss decreased $1,907,776, or approximately 72 percent, to
$753,422 in 1995 from $2,661,198 in 1994. This decrease was due to the increase
in revenues and the decreases in operating and depreciation and amortization
expenses exceeding the increase in management fees and allocated overhead from
Jones Intercable, Inc.
Operating income before depreciation and amortization expense increased
$1,493,289, or approximately 23 percent, to $8,021,085 in 1995 from $6,527,796
in 1994 due to the increases in revenues and decreases in operating expenses
exceeding the increase in management fees and allocated overhead from Jones
Intercable, Inc.
Interest expense increased $643,490, or approximately 24 percent, to
$3,371,524 in 1995 from $2,728,034 in 1994 due to higher effective interest
rates and higher outstanding balances on interest bearing obligations.
Net loss decreased $1,343,968, or approximately 25 percent, to $4,073,811
in 1995 from $5,417,779 in 1994. These losses were primarily the result of the
factors discussed above.
16
<PAGE>
Item 8. Financial Statements
- -----------------------------
CABLE TV FUND 14-B, LTD. AND
----------------------------
CABLE TV FUND 14-A/B VENTURE
----------------------------
CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------
AS OF DECEMBER 31, 1996 AND 1995
--------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page
-----------
<S> <C> <C>
14-B 14-A/B
---- ------
Report of Independent Public Accountants 18 30
Balance Sheets 19 31
Statements of Operations 21 33
Statements of Partners' Capital (Deficit) 22 34
Statements of Cash Flows 23 35
Notes to Financial Statements 24 36
</TABLE>
17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Partners of Cable TV Fund 14-B, Ltd.:
We have audited the accompanying consolidated balance sheets of CABLE TV
FUND 14-B, Ltd.(a Colorado limited partnership) and subsidiary as of December
31, 1996 and 1995, and the related consolidated statements of operations,
partners' capital (deficit) and cash flows for each of the three years in the
period ended December 31, 1996. These financial statements are the
responsibility of the General Partner's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Cable TV Fund 14-B,
Ltd. and subsidiary as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 7, 1997.
18
<PAGE>
CABLE TV FUND 14-B, LTD.
------------------------
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
December 31,
----------------------------
ASSETS 1996 1995
------ ------------ ------------
<S> <C> <C>
CASH $ 840,309 $ 474,904
TRADE RECEIVABLES, less allowance for doubtful receivables of
$140,879 and $135,202 at December 31, 1996 and 1995, respectively 2,077,493 1,739,859
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 98,093,791 92,097,232
Less- accumulated depreciation (48,820,169) (43,489,032)
------------ ------------
49,273,622 48,608,200
Franchise costs and other intangible assets, net of accumulated
amortization of $77,746,909 and $70,528,499 at December 31, 1996
and 1995, respectively 53,293,389 60,511,799
------------ ------------
Total investment in cable television properties 102,567,011 109,119,999
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 430,596 515,935
------------ ------------
Total assets $105,915,409 $111,850,697
============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
19
<PAGE>
CABLE TV FUND 14-B, LTD.
------------------------
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
December 31,
---------------------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
------------------------------------------- ------------ ------------
<S> <C> <C>
LIABILITIES:
Debt $ 56,656,424 $ 56,241,715
General Partner advances 449,094 1,896,049
Deferred brokerage fee 920,000 920,000
Trade accounts payable and accrued liabilities 2,151,254 1,763,047
Subscriber prepayments 562,446 568,400
------------ ------------
Total liabilities 60,739,218 61,389,211
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
MINORITY INTEREST IN CABLE TELEVISION
JOINT VENTURE 3,963,820 4,779,072
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (714,972) (670,272)
------------ ------------
(713,972) (669,272)
------------ ------------
Limited Partners-
Net contributed capital (261,353 units
outstanding at December 31, 1996 and 1995) 112,127,301 112,127,301
Accumulated deficit (70,200,958) (65,775,615)
------------ ------------
41,926,343 46,351,686
------------ ------------
Total liabilities and partners' capital (deficit) $105,915,409 $111,850,697
============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
20
<PAGE>
CABLE TV FUND 14-B, LTD.
------------------------
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES $37,768,924 $34,443,760 $32,084,279
COSTS AND EXPENSES:
Operating expenses 21,066,729 18,681,813 18,674,898
Management fees and allocated overhead from
General Partner 4,392,877 4,181,669 4,048,998
Depreciation and amortization 13,404,578 14,265,096 15,037,554
----------- ----------- -----------
OPERATING LOSS (1,095,260) (2,684,818) (5,677,171)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (4,088,951) (4,561,201) (3,663,960)
Other, net (101,084) 33,064 (30,092)
----------- ----------- -----------
Total other income (expense), net (4,190,035) (4,528,137) (3,694,052)
----------- -----------
CONSOLIDATED LOSS BEFORE MINORITY INTEREST (5,285,295) (7,212,955) (9,371,223)
MINORITY INTEREST IN CONSOLIDATED LOSS 815,252 1,104,003 1,468,218
----------- ----------- -----------
NET LOSS $(4,470,043) $(6,108,952) $(7,903,005)
=========== =========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (44,700) $ (61,090) $ (79,030)
=========== =========== ===========
Limited Partners $(4,425,343) $(6,047,862) $(7,823,975)
=========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $(16.93) $(23.14) $(29.94)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 261,353 261,353 261,353
=========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
21
<PAGE>
CABLE TV FUND 14-B, LTD.
------------------------
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of year $ (669,272) $ (608,182) $ (529,152)
Net loss for year (44,700) (61,090) (79,030)
----------- ----------- -----------
Balance, end of year $ (713,972) $ (669,272) $ (608,182)
=========== =========== ===========
LIMITED PARTNERS:
Balance, beginning of year $46,351,686 $52,399,548 $60,223,523
Net loss for year (4,425,343) (6,047,862) (7,823,975)
----------- ----------- -----------
Balance, end of year $41,926,343 $46,351,686 $52,399,548
=========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
22
<PAGE>
CABLE TV FUND 14-B, LTD.
------------------------
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(4,470,043) $ (6,108,952) $(7,903,005)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 13,404,578 14,265,096 15,037,554
Amortization of interest rate protection contract 10,581 106,431 108,711
Minority interest in consolidated loss (815,252) (1,104,003) (1,468,218)
Decrease (increase) in trade receivables (337,634) (795,486) 387,061
Increase in deposits, prepaid expenses and
deferred charges (94,710) (293,774) (311,234)
Increase (decrease) in advances from General Partner (1,446,955) 1,598,093 268,774
Increase (decrease) in trade accounts payable and
accrued liabilities and subscriber prepayments 382,253 (267,355) 695,462
----------- ------------ -----------
Net cash provided by operating activities 6,632,818 7,400,050 6,815,105
----------- ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (6,682,122) (6,438,682) (5,071,767)
----------- ------------ -----------
Net cash used in investing activities (6,682,122) (6,438,682) (5,071,767)
----------- ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 4,048,014 17,622,092 290,797
Repayment of debt (3,633,305) (18,756,935) (1,795,994)
----------- ------------ -----------
Net cash provided by (used in)
financing activities 414,709 (1,134,843) (1,505,197)
----------- ------------ -----------
Increase (decrease) in cash 365,405 (173,475) 238,141
Cash, beginning of year 474,904 648,379 410,238
----------- ------------ -----------
Cash, end of year $ 840,309 $ 474,904 $ 648,379
=========== ============ ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 3,788,839 $ 4,852,445 $ 3,257,869
=========== ============ ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
23
<PAGE>
CABLE TV FUND 14-B, LTD.
------------------------
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(1) ORGANIZATION AND PARTNERS' INTERESTS
------------------------------------
Formation and Business
----------------------
Cable TV Fund 14-B, Ltd. (the "Partnership"), a Colorado limited
partnership, was formed on September 9, 1987, under a public program sponsored
by Jones Intercable, Inc. ("Intercable"). The Partnership was formed to
acquire, construct, develop and operate cable television systems. Intercable, a
publicly held Colorado corporation, is the "General Partner" and manager of the
Partnership. Intercable and its subsidiaries also own and operate cable
television systems. In addition, Intercable manages cable television systems
for other limited partnerships for which it is general partner and, also, for
other affiliated entities.
Contributed Capital, Commissions and Syndication Costs
------------------------------------------------------
The capitalization of the Partnership is set forth in the accompanying
Statements of Partners' Capital (Deficit). No limited partner is obligated to
make any additional contribution to partnership capital.
Intercable purchased its interest in the Partnership by contributing
$1,000 to partnership capital.
All profits and losses of the Partnership are allocated 99 percent to
the limited partners and 1 percent to Intercable, except for income or gain
from the sale or disposition of cable television properties, which will be
allocated to the partners based upon the formula set forth in the
Partnership's partnership agreement and interest income earned prior to the
first acquisition by the Partner- ship of a cable television system, which was
allocated 100 percent to the limited partners.
Formation of Joint Venture and Joint Venture Cable Television System
--------------------------------------------------------------------
Acquisition
- -----------
On January 8, 1988, Cable TV Fund 14-A, Ltd. and the Partnership formed
Cable TV Fund 14-A/B Venture (the "Venture") to acquire the cable television
system serving areas in and around Broward County, Florida (the "Broward County
System"). Cable TV Fund 14-A, Ltd. contributed $18,975,000 to the capital of
the Venture for a 27 percent ownership interest and the Partnership contributed
$51,025,000 to the capital of the Venture for a 73 percent ownership interest.
Partnership Cable Television System Acquisitions
------------------------------------------------
The Partnership acquired the cable television system serving Surfside,
South Carolina (the "Surfside System") in 1988 and the cable television system
serving Little Rock, California (the "Little Rock System") in 1989.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Accounting Records
------------------
The accompanying consolidated financial statements have been prepared on
the accrual basis of accounting in accordance with generally accepted accounting
principles. The Partnership's tax returns are also prepared on the accrual
basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the General Partner's management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Purchase Price Allocation
-------------------------
Cable television system acquisitions were accounted for as purchases
with the individual purchase prices allocated to tangible and intangible assets
based upon an independent appraisal. The method of allocation of purchase price
was as follows: first, to the fair value of net tangible assets acquired;
second, to the value of subscriber lists and non compete agreements with
previous owners; third, to franchise costs; and fourth, to costs in excess of
interests in net assets purchased. Brokerage fees paid to an affiliate of
Intercable (Note 3) and other system acquisition costs were capitalized and
included in the cost of intangible assets.
24
<PAGE>
Principles of Consolidation
---------------------------
As a result of the Partnership's ownership interest in the Venture of 73
percent, the accompanying consolidated financial statements present the
Partnership's and the Venture's financial condition and results of operations on
a consolidated basis with the ownership interest of Cable TV Fund 14-A, Ltd. in
the Venture shown as a minority interest. The Venture does not have any
ownership interest in the Surfside System or Little Rock System. These systems
are owned 100 percent by the Partnership. All interpartnership accounts and
transactions have been eliminated.
Property, Plant and Equipment
-----------------------------
Depreciation is provided using the straight-line method over the
following estimated service lives:
<TABLE>
<CAPTION>
<S> <C>
Cable distribution systems 5 - 15 years
Equipment and tools 5 years
Office furniture and equipment 5 years
Buildings 20 years
Vehicles 3 years
</TABLE>
Replacements, renewals and improvements are capitalized and
maintenance and repairs are charged to expense as incurred.
Property, plant and equipment and the corresponding accumulated
depreciation are written off as certain assets become fully depreciated and are
no longer in service.
Intangible Assets
-----------------
Costs assigned to franchises, subscriber lists and costs in excess of
interests in net assets purchased are amortized using the straight-line method
over the following remaining estimated useful lives:
<TABLE>
<CAPTION>
<S> <C>
Franchise costs 1 - 28 years
Subscriber lists 1 year
Costs in excess of interests in net assets purchased 33 years
</TABLE>
Revenue Recognition
-------------------
Subscriber prepayments are initially deferred and recognized as
revenue when earned.
Reclassifications
-----------------
Certain prior year amounts have been reclassified to conform to the 1996
presentation.
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
----------------------------------------------------
Brokerage Fees
--------------
The Jones Group, Ltd., a subsidiary of Intercable, performs brokerage
services for the Partnership. For brokering the acquisition of the Surfside
System for the Partnership, The Jones Group, Ltd. earned a fee totaling
$1,920,000, or 4 percent of the purchase price, during the year ended December
31, 1988. $920,000 of such fee has been deferred until the sale of the Surfside
System.
Management Fees, Distribution Ratios and Reimbursements
-------------------------------------------------------
Intercable manages the Partnership and the Venture and receives a fee
for its services equal to 5 percent of the gross revenues of the Partnership and
the Venture, excluding revenues from the sale of cable television systems or
franchises. Management fees paid to Intercable by the Partnership and the
Venture for the years ended December 31, 1996, 1995 and 1994 were $1,888,446,
$1,722,188 and $1,604,214, respectively.
Any partnership distributions made from cash flow (defined as cash
receipts derived from routine operations, less debt principal and interest
payments and cash expenses) are allocated 99 percent to the limited partners and
1 percent to Intercable. Any distributions other than interest income on
limited partner subscriptions earned prior to the acquisition of the
Partnership's first
25
<PAGE>
cable television system or from cash flow, such as from the sale or refinancing
of a system or upon dissolution of the Partnership, will be made as follows:
first, to the limited partners in an amount which, together with all prior
distributions, will equal 125 percent of the amount initially contributed to the
Partnership capital by the limited partners; the balance, 75 percent to the
limited partners and 25 percent to Intercable.
The Partnership and the Venture reimburse Intercable 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, accounting, administrative, legal, and investor
relations services to the Partnership and to the Venture. Such services, and
their related costs, are necessary to the operation of the Partnership and
Venture and would have been incurred by the Partnership if they were stand
alone entities. Allocations of personnel costs are based primarily on actual
time spent by employees of Intercable with respect to each Partnership managed.
Remaining expenses are allocated based on the pro rata relationship of the
Partnership's and Venture's revenues to the total revenues of all systems owned
or managed by Intercable and certain of its subsidiaries. Systems owned by
Intercable and all other systems owned by partnerships for which Intercable is
the general partner are also allocated a proportionate share of these expenses.
Intercable believes that the methodology used in allocating overhead and
administrative expense is reasonable. Reimbursements made to Intercable for
allocated overhead and administrative expenses during the years ended December
31, 1996, 1995 and 1994 were $2,504,431, $2,459,481 and $2,444,784,
respectively.
The Partnership and the Venture were charged interest during 1996 at an
average interest rate of 8.58 percent on the amounts due Intercable, which
approximated Intercable's weighted average cost of borrowing. Total interest
charged to the Partnership and the Venture by Intercable was $106,022, $145,929
and $960 for the years ended December 31, 1996, 1995 and 1994, respectively.
Payments to/from Affiliates for Programming Services
----------------------------------------------------
The Partnership and the Venture receive programming from Superaudio,
Jones Education Company, Great American Country, Inc. and Product Information
Network, all of which are affiliates of Intercable.
Payments to Superaudio by the Partnership and the Venture totaled
$52,687, $46,269 and $46,768, in 1996, 1995 and 1994, respectively. Payments to
Jones Education Company by the Partnership and Venture totaled $96,169, $83,895
and $57,330 in 1996, 1995 and 1994, respectively. Payments by the Partnership
and Venture to Great American Country, Inc., which initiated service in 1996,
totaled $71,929 in 1996.
The Partnership and the Venture received commissions from Product
Information Network based on a percentage of advertising revenue and number of
subscribers. Product Information Network paid commissions to the Partnership
and the Venture totaling $80,474, $54,759 and $31,126 in 1996, 1995 and 1994,
respectively.
(4) PROPERTY, PLANT AND EQUIPMENT
-----------------------------
Property, plant and equipment as of December 31, 1996 and 1995, consisted
of the following:
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Cable distribution systems $ 89,190,656 $ 82,906,681
Equipment and tools 2,884,959 2,682,192
Office furniture and equipment 1,592,656 1,584,101
Buildings 2,213,590 2,202,173
Vehicles 1,025,629 1,535,784
Land 1,186,301 1,186,301
------------ ------------
98,093,791 92,097,232
Less - accumulated depreciation (48,820,169) (43,489,032)
------------ ------------
Total $ 49,273,622 $ 48,608,200
============ ============
</TABLE>
26
<PAGE>
(5) DEBT
----
<TABLE>
<CAPTION>
Debt consists of the following: December 31,
-----------------------
1996 1995
----------- -----------
<S> <C> <C>
Lending institutions-
Term loan for the Venture $41,102,968 $40,365,468
Revolving credit and term loan for the Partnership 15,300,000 15,600,000
Capital lease obligations 253,456 276,247
----------- -----------
Total $56,656,424 $56,241,715
=========== ===========
</TABLE>
In June 1996, the Venture amended its existing term loan providing for
a reducing revolving credit facility with an available commitment of
$42,500,000. The entire $42,500,000 commitment is available through December
31, 1998, at which time the commitment will be repaid in twenty quarterly
installments with a final maturity of December 31, 2003. At December 31, 1996,
the balance outstanding was $41,102,968, leaving $1,397,032 available for future
borrowings. Interest is at the Venture's option of Prime plus 1/4 percent, the
London Interbank Offered Rate ("LIBOR") plus 1-1/4 percent or the Certificate of
Deposit Rate plus 1-3/8 percent. The effective interest rates on amounts
outstanding as of December 31, 1996 and 1995 were 6.79 percent and 7.17 percent,
respectively.
In December 1995, the Partnership entered into a new reducing
revolving credit facility with an available commitment of $18,000,000. At
December 31, 1996, the balance outstanding was $15,300,000, leaving $2,700,000
available for future borrowings. On September 30, 1998, the maximum available
on the reducing revolving credit facility begins to reduce quarterly until March
31, 2003 when the amount available will be zero. Interest on the reducing
revolving credit facility is at the Partnership's option of the Base Rate plus
1/8 percent, the LIBOR plus 1-1/8 percent, or the Certificate of Deposit Rate
plus 1-1/4 percent. The effective interest rates on amounts outstanding as of
December 31, 1996 and 1995 were 6.69 percent and 8.90 percent, respectively.
Installments due on debt principal for each of the five years in the
period ending December 31, 2001 and thereafter, respectively, are:
<TABLE>
<CAPTION>
Venture Partnership Total
----------- ----------- -----------
<S> <C> <C> <C>
1997 $ 47,882 $ 28,155 $ 76,037
1998 47,882 28,155 76,037
1999 5,450,848 478,157 5,929,005
2000 6,815,949 3,159,396 9,975,345
2001 8,500,000 3,600,000 12,100,000
Thereafter 20,400,000 8,100,000 28,500,000
----------- ----------- -----------
Total $41,262,561 $15,393,863 $56,656,424
=========== =========== ===========
</TABLE>
At December 31, 1996, substantially all of the Partnership's and the
Venture's property, plant and equipment secured their respective indebtedness.
At December 31, 1996, the carrying amount of the Partnership's long-
term debt did not differ significantly from the estimated fair value of the
financial instruments. The fair value of the Partnership's long-term debt is
estimated based on the discounted amount of future debt service payments using
rates of borrowing for a liability of similar risk.
(6) INCOME TAXES
------------
Income taxes have not been recorded in the accompanying consolidated
financial statements because they accrue directly to the partners. The federal
and state income tax returns of the Partnership are prepared and filed by
Intercable.
The Partnership's tax returns, the qualification of the Partnership as
such for tax purposes, and the amount of distributable Partnership income or
loss are subject to examination by federal and state taxing authorities. If
such examinations result in changes with respect to the Partnership's
qualification as such, or in changes with respect to the Partnership's recorded
income or loss, the tax liability of the general and limited partners would
likely be changed accordingly.
27
<PAGE>
Taxable loss reported to the partners is different from that reported
in the consolidated statements of operations due to the difference in
depreciation recognized under generally accepted accounting principles and the
expense allowed for tax purposes under the Modified Accelerated Cost Recovery
System (MACRS). There are no other significant differences between taxable loss
and the net loss reported in the consolidated statements of operations.
(7) COMMITMENTS AND CONTINGENCIES
-----------------------------
Office and other facilities are rented under various long-term lease
arrangements. Rent paid under such lease arrangements totaled $40,356, $62,987
and $90,993, respectively, for the years ended December 31, 1996, 1995 and 1994.
Minimum commitments under operating leases for each of the five years in the
period ending December 31, 2001 and thereafter are as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $106,938
1998 85,478
1999 84,312
2000 83,912
2001 57,587
Thereafter 470,776
-------
$889,003
========
</TABLE>
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
-----------------------------------------
Supplementary profit and loss information is presented below:
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Maintenance and repairs $ 318,345 $ 340,354 $ 442,368
========== ========== ==========
Taxes, other than income and payroll taxes $ 584,220 $ 435,128 $ 386,906
========== ========== ==========
Advertising $ 295,082 $ 275,739 $ 228,144
========== ========== ==========
Depreciation of property, plant and equipment $6,186,168 $6,014,327 $6,000,478
========== ========== ==========
Amortization of intangible assets $7,218,410 $8,250,769 $9,037,076
========== ========== ==========
</TABLE>
28
<PAGE>
(9) OPERATING RESULTS OF SURFSIDE AND LITTLE ROCK SYSTEMS
-----------------------------------------------------
The results of operations of the Partnership's Surfside System and
Little Rock System on a stand- alone basis are presented below. The
Partnership's share of the Venture-owned Broward County System's operations is
also presented.
<TABLE>
<CAPTION>
For the Year Ended December 31,
---------------------------------------
1996 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
Revenues $12,249,819 $10,974,255 $ 9,900,755
Operating expenses (6,918,196) (6,061,604) (5,796,460)
Management fees and allocated overhead from General Partner (1,411,780) (1,353,458) (1,271,708)
Depreciation and amortization (5,043,651) (5,490,589) (5,848,560)
----------- ----------- -----------
Operating loss (1,123,808) (1,931,396) (3,015,973)
Interest expense (1,082,104) (1,189,677) (935,926)
Other, net (71,074) (18,071) (1,545)
----------- ----------- -----------
Loss of the Surfside System and the Little Rock System (2,276,986) (3,139,144) (3,953,444)
The Partnership's share of the loss of the Broward County System (2,193,057) (2,969,808) (3,949,561)
----------- ----------- -----------
Net loss $(4,470,043) $(6,108,952) $(7,903,005)
=========== =========== ===========
</TABLE>
29
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Partners of Cable TV Fund 14-A/B Venture:
We have audited the accompanying balance sheets of CABLE TV FUND 14-A/B
VENTURE (a Colorado general partnership) as of December 31, 1996 and 1995, and
the related statements of operations, partners' capital and cash flows for each
of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the General Partner's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Cable TV Fund 14-A/B
Venture as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 7, 1997.
30
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
December 31,
----------------------------
ASSETS 1996 1995
------ ------------ -------------
<S> <C> <C>
CASH $ 489,615 $ 371,870
TRADE RECEIVABLES, less allowance for doubtful receivables of
$104,005 and $102,006 at December 31, 1996 and 1995, respectively 879,267 1,093,967
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 55,892,778 52,012,981
Less- accumulated depreciation (27,437,977) (24,307,885)
------------ ------------
28,454,801 27,705,096
Franchise costs and other intangible assets, net of accumulated
amortization of $52,915,541 and $48,078,124 at December 31, 1996
and 1995, respectively 28,071,425 32,908,842
------------ ------------
Total investment in cable television properties 56,526,226 60,613,938
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 381,950 367,781
------------ ------------
Total assets $ 58,277,058 $ 62,447,556
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
31
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
December 31,
---------------------------
LIABILITIES AND PARTNERS' CAPITAL 1996 1995
--------------------------------- ------------ ------------
<S> <C> <C>
LIABILITIES:
Debt $ 41,262,561 $ 40,530,652
Jones Intercable, Inc. advances 268,256 2,206,959
Trade accounts payable and accrued liabilities 1,282,624 1,222,013
Subscriber prepayments 481,774 497,780
------------ ------------
Total liabilities 43,295,215 44,457,404
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL:
Contributed capital 70,000,000 70,000,000
Accumulated deficit (55,018,157) (52,009,848)
------------ ------------
14,981,843 17,990,152
------------ ------------
Total liabilities and partners' capital $ 58,277,058 $ 62,447,556
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
32
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES $25,519,105 $23,469,505 $22,183,524
COSTS AND EXPENSES:
Operating expenses 14,148,533 12,620,209 12,878,438
Management fees and allocated overhead from
Jones Intercable, Inc. 2,981,097 2,828,211 2,777,290
Depreciation and amortization 8,360,927 8,774,507 9,188,994
----------- ----------- -----------
OPERATING INCOME (LOSS) 28,548 (753,422) (2,661,198)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (3,006,847) (3,371,524) (2,728,034)
Other, net (30,010) 51,135 (28,547)
----------- ----------- -----------
Total other income (expense) (3,036,857) (3,320,389) (2,756,581)
----------- ----------- -----------
NET LOSS $(3,008,309) $(4,073,811) $(5,417,779)
=========== ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
33
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
STATEMENTS OF PARTNERS' CAPITAL
-------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CABLE TV FUND 14-A, LTD. (27%):
Balance, beginning of year $ 4,779,072 $ 5,883,075 $ 7,351,293
Net loss for year (815,252) (1,104,003) (1,468,218)
----------- ----------- -----------
Balance, end of year $ 3,963,820 $ 4,779,072 $ 5,883,075
=========== =========== ===========
CABLE TV FUND 14-B, LTD. (73%):
Balance, beginning of year $13,211,080 $16,180,888 $20,130,449
Net loss for year (2,193,057) (2,969,808) (3,949,561)
----------- ----------- -----------
Balance, end of year $11,018,023 $13,211,080 $16,180,888
=========== =========== ===========
TOTAL:
Balance, beginning of year $17,990,152 $22,063,963 $27,481,742
Net loss for year (3,008,309) (4,073,811) (5,417,779)
----------- ----------- -----------
Balance, end of year $14,981,843 $17,990,152 $22,063,963
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
34
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1996 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,008,309) $(4,073,811) $(5,417,779)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 8,360,927 8,774,507 9,188,994
Amortization of interest rate protection agreement 793 82,085 82,080
Decrease (increase) in trade receivables 214,700 (492,782) 225,591
Decrease (increase) in deposits, prepaid expenses
and deferred charges (408,380) (193,197) (206,491)
Increase (decrease) in accounts payable, accrued
liabilities and subscriber prepayments 44,605 (187,604) 592,973
----------- ----------- -----------
Net cash provided by operating activities 5,204,336 3,909,198 4,465,368
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (3,879,797) (3,903,813) (3,630,545)
---------- ---------- ----------
Net cash used in investing
activities (3,879,797) (3,903,813) (3,630,545)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 3,612,576 108,593 71,380
Repayment of debt (2,880,667) (1,849,862) (1,261,189)
Increase (decrease) in advances from
Jones Intercable, Inc. (1,938,703) 1,852,780 296,259
---------- ---------- ----------
Net cash provided by (used in)
financing activities (1,206,794) 111,511 (893,550)
---------- ---------- ----------
Increase (decrease) in cash 117,745 116,896 (58,727)
Cash, beginning of year 371,870 254,974 313,701
---------- ---------- ----------
Cash, end of year $ 489,615 $ 371,870 $ 254,974
=========== =========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 2,929,302 $ 3,467,008 $ 2,454,391
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
35
<PAGE>
CABLE TV FUND 14-A/B VENTURE
----------------------------
(A General Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(1) ORGANIZATION AND PARTNERS' INTERESTS
------------------------------------
Formation and Business
----------------------
On January 8, 1988, Cable TV Fund 14-A, Ltd. and Cable TV Fund 14-B,
Ltd. (the "Venture Partners") formed a Colorado general partnership known as
Cable TV Fund 14-A/B Venture (the "Venture") by contributing $18,975,000 and
$51,025,000, respectively, for 27 percent and 73 percent ownership interests,
respectively. The Venture was formed for the purpose of acquiring the cable
television system serving areas in and around Broward County, Florida (the
"Broward County System").
Jones Intercable, Inc. ("Intercable"), general partner of each of the
Venture Partners, manages the Venture. Intercable and its subsidiaries also own
and operate cable television systems. In addition, Intercable manages cable
television systems for other limited partnerships for which it is general
partner and for other affiliated entities.
Contributed Capital
-------------------
The capitalization of the Venture is set forth in the accompanying
Statements of Partners' Capital.
All Venture distributions, including those made from cash flow, from the
sale or refinancing of Venture property and on dissolution of the Venture, shall
be made to the Venture Partners in proportion to their 27 and 73 percent
interests in the Venture.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Accounting Records
------------------
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles.
The Venture's tax returns are also prepared on the accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires Intercable's management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Purchase Price Allocation
-------------------------
The Broward County System acquisition was accounted for as a purchase
with the purchase price allocated to tangible and intangible assets based upon
an independent appraisal. The method of allocation of purchase price was as
follows: first, to the fair value of net tangible assets acquired; second, to
the value of subscriber lists and noncompete agreements with previous owners;
third, to franchise costs; and fourth, to costs in excess of interests in net
assets purchased. Brokerage fees paid to an affiliate of Intercable and other
system acquisition costs were capitalized and included in the cost of intangible
assets.
Property, Plant and Equipment
-----------------------------
Depreciation is provided using the straight-line method over the
following estimated service lives:
<TABLE>
<CAPTION>
<S> <C>
Cable distribution systems 5 - 15 years
Equipment and tools 5 years
Office furniture and equipment 5 years
Buildings 10 - 20 years
Vehicles 3 years
</TABLE>
Replacements, renewals and improvements are capitalized and
maintenance and repairs are charged to expense as incurred.
36
<PAGE>
Property, plant and equipment and the corresponding accumulated
depreciation are written off as certain assets become fully depreciated and are
no longer in service.
Intangible Assets
-----------------
Costs assigned to franchises, subscriber lists and costs in excess of
interests in net assets purchased are amortized using the straight-line method
over the following remaining estimated useful lives:
<TABLE>
<CAPTION>
<S> <C>
Franchise costs 1 - 6 years
Subscriber lists 2 years
Costs in excess of interests in net assets purchased 32 years
</TABLE>
Revenue Recognition
-------------------
Subscriber prepayments are initially deferred and recognized as revenue
when earned.
Reclassifications
-----------------
Certain prior year amounts have been reclassified to conform to the 1996
presentation.
(3) TRANSACTIONS WITH AFFILIATES
----------------------------
Management Fees and Reimbursements
----------------------------------
Intercable manages 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 paid to
Intercable by the Venture for the years ended December 31, 1996, 1995 and 1994
were $1,275,955, $1,173,475 and $1,109,176, respectively.
The Venture reimburses Intercable for 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,
accounting, administrative, legal, and investor relations services to the
Venture. Such services, and their related costs, are necessary to the operation
of the Venture and would have been incurred by the Venture, if it was a stand
alone entity. Allocations of personnel costs are based primarily on actual time
spent by employees of Intercable with respect to each entity managed. Remaining
expenses are allocated based on the pro rata relationship of the Venture's
revenues to the total revenues of all systems owned or managed by Intercable and
certain of its subsidiaries. Systems owned by Intercable and all other systems
owned by partnerships for which Intercable is the general partner are also
allocated a proportionate share of these expenses. Intercable believes that the
methodology used in allocating overhead and administrative expenses is
reasonable. Reimbursements made to Intercable by the Venture for allocated
overhead and administrative expenses during the years ended December 31, 1996,
1995 and 1994 were $1,705,142, $1,654,736 and $1,668,114, respectively.
The Venture was charged interest during 1996 at an average interest rate
of 8.58 percent on the amounts due Intercable, which approximated Intercable's
weighted average cost of borrowing. Total interest charged to the Venture by
Intercable was $122,224, $155,659 and $960 for the years ended December 31,
1996, 1995 and 1994, respectively.
Payments to/from Affiliates for Programming Services
----------------------------------------------------
The Venture receives programming from Superaudio, Jones Education
Company, Great American Country, Inc. and Product Information Network, all of
which are affiliates of Intercable.
Payments to Superaudio totaled $34,421, $30,171 and $30,631 in 1996,
1995 and 1994, respectively. Payments to Jones Education Company totaled
$37,113, $32,268 and $33,445 in 1996, 1995 and 1994, respectively. Payments to
Great American Country, Inc., which initiated service in 1996, totaled $47,590
in 1996.
The Venture receives a commission from Product Information Network based
on a percentage of advertising revenue and number of subscribers. Product
Information Network paid commissions to the Venture totaling $49,973, $23,430
and $23,856 in 1996, 1995 and 1994, respectively.
37
<PAGE>
(4) PROPERTY, PLANT AND EQUIPMENT
-----------------------------
Property, plant and equipment as of December 31, 1996 and 1995, consisted
of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Cable distribution systems $ 49,591,013 $ 45,655,600
Equipment and tools 1,899,148 1,749,450
Office furniture and equipment 1,149,554 1,150,940
Buildings 1,870,430 1,869,631
Vehicles 651,766 856,493
Land 730,867 730,867
------------ ------------
55,892,778 52,012,981
Less - accumulated depreciation (27,437,977) (24,307,885)
------------ ------------
$ 28,454,801 $ 27,705,096
============ ============
</TABLE>
(5) DEBT
----
<TABLE>
<CAPTION>
Debt consists of the following: December 31,
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
Lending institutions-
Revolving credit and term loan $ 41,102,968 $ 40,365,468
Capital lease obligations 159,593 165,184
------------ ------------
$ 41,262,561 $ 40,530,652
============ ============
</TABLE>
In June 1996, the Venture amended its existing term loan providing for
a reducing revolving credit facility with an available commitment of
$42,500,000. The entire $42,500,000 commitment is available through December
31, 1998, at which time the commitment will be repaid in twenty quarterly
installments with a final maturity of December 31, 2003. At December 31, 1996,
the balance outstanding was $41,102,968, leaving $1,397,032 available for future
borrowings. Interest is at the Venture's option of Prime plus 1/4 percent, the
London Interbank Offered Rate plus 1-1/4 percent or the Certificate of Deposit
Rate plus 1-3/8 percent. The effective interest rates on amounts outstanding as
of December 31, 1996 and 1995 were 6.79 percent and 7.17 percent, respectively.
Installments due on debt principal for each of the five years in the
period ending December 31, 2001 and thereafter, respectively, are: $47,882,
$47,882, $5,450,848, $6,815,949, $8,500,000 and $20,400,000. At December 31,
1996, substantially all of the Venture's property, plant and equipment secured
the above indebtedness.
At December 31, 1996, the carrying amount of the Venture's long-term
debt did not differ significantly from the estimated fair value of the financial
instruments. The fair value of the Venture's long-term debt is estimated based
on the discounted amount of future debt service payments using rates of
borrowing for a liability of similar risk.
(6) INCOME TAXES
------------
Income taxes have not been recorded in the accompanying financial
statements because they accrue directly to the partners of Cable TV Fund 14-A,
Ltd. and Cable TV Fund 14-B, Ltd.
The Venture's tax returns, the qualification of the Venture as such for
tax purposes, and the amount of distributable Venture income or loss are subject
to examination by federal and state taxing authorities. If such examinations
result in changes with respect to the Venture's qualification as such, or in
changes with respect to the Venture's recorded income or loss, the tax liability
of the Venture's general partners would likely be changed accordingly.
38
<PAGE>
Taxable loss reported to the partners is different from that reported in
the statements of operations due to the difference in depreciation recognized
under generally accepted accounting principles and the expense allowed for tax
purposes under the Modified Accelerated Cost Recovery System (MACRS). There are
no other significant differences between taxable loss and the net loss reported
in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES
-----------------------------
Office and other facilities are rented under various long-term lease
arrangements. Rent paid under such lease arrangements totaled $21,762, $22,680
and $49,856, respectively for the years ended December 31, 1996, 1995 and 1994.
Minimum commitments under operating leases for each of the five years in the
period ending December 31, 2001 and thereafter are as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 57,708
1998 51,878
1999 50,712
2000 50,712
2001 50,712
Thereafter 462,776
--------
$724,498
=======
</TABLE>
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
-----------------------------------------
Supplementary profit and loss information
is presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Maintenance and repairs $ 163,219 $ 204,878 $ 238,893
========== ========== ==========
Taxes, other than income and payroll taxes $ 425,691 $ 268,757 $ 258,369
========== ========== ==========
Advertising $ 197,237 $ 152,727 $ 157,998
========== ========== ==========
Depreciation of property, plant and equipment $3,523,510 $3,429,925 $3,315,438
========== ========== ==========
Amortization of intangible assets $4,837,417 $5,344,582 $5,873,556
========== ========== ==========
</TABLE>
39
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
---------------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
None.
PART III.
---------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------
The Partnership itself has no officers or directors. Certain
information concerning the directors and executive officers of the General
Partner is set forth below. Directors of the General Partner serve until
the next annual meeting of the General Partner and until their successors
shall be elected and qualified.
<TABLE>
<CAPTION>
<S> <C> <C>
Glenn R. Jones 67 Chairman of the Board and Chief Executive Officer
Derek H. Burney 57 Vice Chairman of the Board
James B. O'Brien 47 President and Director
Ruth E. Warren 47 Group Vice President/Operations
Kevin P. Coyle 45 Group Vice President/Finance
Christopher J. Bowick 41 Group Vice President/Technology
George H. Newton 62 Group Vice President/Telecommunications
Raymond L. Vigil 50 Group Vice President/Human Resources
Cynthia A. Winning 45 Group Vice President/Marketing
Elizabeth M. Steele 45 Vice President/General Counsel/Secretary
Larry W. Kaschinske 37 Vice President/Controller
Robert E. Cole 64 Director
William E. Frenzel 68 Director
Donald L. Jacobs 58 Director
James J. Krejci 55 Director
John A. MacDonald 43 Director
Raphael M. Solot 63 Director
Howard O. Thrall 49 Director
Siim A. Vanaselja 40 Director
Sanford Zisman 57 Director
Robert B. Zoellick 43 Director
</TABLE>
Mr. Glenn R. Jones has served as Chairman of the Board of Directors
and Chief Executive Officer of the General Partner since its formation in
1970, and he was President from June 1984 until April 1988. Mr. Jones is
the sole shareholder, President and Chairman of the Board of Directors of
Jones International, Ltd. He is also Chairman of the Board of Directors of
the subsidiaries of the General Partner and of certain other affiliates of
the General Partner. Mr. Jones has been involved in the cable television
business in various capacities since 1961, is a member of the Board of
Directors and the Executive Committee of the National Cable Television
Association. Additionally, Mr. Jones is a member of the Board of Governors
for the American Society for Training and Development, and a member of the
Board of Education Council of the National Alliance of Business. Mr. Jones
is also a founding member of the James Madison Council of the Library of
Congress. Mr. Jones has been the recipient of several awards including the
Grand Tam Award in 1989, the highest award from the Cable Television
Administration and Marketing Society; the President's Award from the Cable
Television Public Affairs Association in recognition of Jones
International's educational efforts through Mind Extension University (now
Knowledge TV); the Donald G. McGannon Award for the advancement of
minorities and women in cable from the United Church of Christ Office of
Communications; the STAR Award from American Women in Radio and Television,
Inc. for exhibition of a commitment to the issues and concerns of women in
television and radio; the Cableforce 2000 Accolade awarded by Women in
Cable in recognition of the General Partner's innovative employee programs;
the Most Outstanding Corporate Individual Achievement Award from the
International Distance Learning Conference for his contributions to
distance education; the Golden Plate Award from the
40
<PAGE>
American Academy of Achievement for his advances in distance education; the
Man of the Year named by the Denver chapter of the Achievement Rewards for
College Scientists; and in 1994 Mr. Jones was inducted into Broadcasting
and Cable's Hall of Fame.
Mr. Derek H. Burney was appointed a Director of the General Partner in
December 1994 and Vice Chairman of the Board of Directors on January 31,
1995. Mr. Burney joined BCE Inc., Canada's largest telecommunications
company, in January 1993 as Executive Vice President, International. He has
been the Chairman of Bell Canada International Inc., a subsidiary of BCE,
since January 1993 and, in addition, has been Chief Executive Officer of
BCI since July 1993. Prior to joining BCE, Mr. Burney served as Canada's
ambassador to the United States from 1989 to 1992. Mr. Burney also served
as chief of staff to the Prime Minister of Canada from March 1987 to
January 1989 where he was directly involved with the negotiation of the
U.S. - Canada Free Trade Agreement. In July 1993, he was named an Officer
of the Order of Canada. Mr. Burney is also a director of Bell Cablemedia
plc, Mercury Communications Limited, Videotron Holdings plc, Tele-Direct
(Publications) Inc., Teleglobe Inc., Bimcor Inc., Maritime Telegraph and
Telephone Company, Limited, Moore Corporation Limited, Northbridge
Programming Inc and certain subsidiaries of Bell Canada International.
Mr. James B. O'Brien, the General Partner's President, joined the
General Partner in January 1982. Prior to being elected President and a
Director of the General Partner in December 1989, Mr. O'Brien served as a
Division Manager, Director of Operations Planning/Assistant to the CEO,
Fund Vice President and Group Vice President/Operations. Mr. O'Brien was
appointed to the General Partner's Executive Committee in August 1993. As
President, he is responsible for the day-to-day operations of the cable
television systems managed and owned by the General Partner. Mr. O'Brien
is a board member of Cable Labs, Inc., the research arm of the U.S. cable
television industry. He also serves as Vice Chairman and a director of the
Cable Television Administration and Marketing Association and as a director
and member of the Executive Committee of the Walter Kaitz Foundation, a
foundation that places people of ethnic minority groups in positions with
cable television systems, networks and vendor companies.
Ms. Ruth E. Warren joined the General Partner in August 1980 and has
served in various operational capacities, including system manager and Fund
Vice President, since then. Ms. Warren was elected Group Vice
President/Operations of the General Partner in September 1990.
Mr. Kevin P. Coyle joined The Jones Group, Ltd. in July 1981 as Vice
President/Financial Services. In September 1985, he was appointed Senior
Vice President/Financial Services. He was elected Treasurer of the General
Partner in August 1987, Vice President/Treasurer in April 1988 and Group
Vice President/Finance and Chief Financial Officer in October 1990.
Mr. Christopher J. Bowick joined the General Partner in September 1991
as Group Vice President/Technology and Chief Technical Officer. Previous
to joining the General Partner, Mr. Bowick worked for Scientific Atlanta's
Transmission Systems Business Division in various technical management
capacities since 1981, and as Vice President of Engineering since 1989.
Mr. George H. Newton joined the General Partner in January 1996 as
Group Vice President/Telecommunications. Prior to joining the General
Partner, Mr. Newton was President of his own consulting business, Clear
Solutions, and since 1994 Mr. Newton has served as a Senior Advisor to Bell
Canada International. From 1990 to 1993, Mr. Newton served as the founding
Chief Executive Officer and Managing Director of Clear Communications, New
Zealand, where he established an alternative telephone company in New
Zealand. From 1964 to 1990, Mr. Newton held a wide variety of operational
and business assignments with Bell Canada International.
Mr. Raymond L. Vigil joined the General Partner in June 1993 as Group
Vice President/Human Resources. Previous to joining the General Partner,
Mr. Vigil served as Executive Director of Learning with USWest. Prior to
USWest, Mr. Vigil worked in various human resources posts over a 14-year
term with the IBM Corporation.
41
<PAGE>
Ms. Cynthia A. Winning joined the General Partner as Group Vice
President/Marketing in December 1994. Previous to joining the General
Partner, Ms. Winning served since 1994 as the President of PRS Inc.,
Denver, Colorado, a sports and event marketing company. From 1979 to 1981
and from 1986 to 1994, Ms. Winning served as the Vice President and
Director of Marketing for Citicorp Retail Services, Inc., a provider of
private-label credit cards for ten national retail department store chains.
From 1981 to 1986, Ms. Winning was the Director of Marketing Services for
Daniels & Associates cable television operations, as well as the Western
Division Marketing Director for Capital Cities Cable. Ms. Winning also
serves as a board member of Cities in Schools, a dropout
intervention/prevention program.
Ms. Elizabeth M. Steele joined the General Partner in August 1987 as
Vice President/General Counsel and Secretary. From August 1980 until
joining the General Partner, Ms. Steele was an associate and then a partner
at the Denver law firm of Davis, Graham & Stubbs, which serves as counsel
to the General Partner.
Mr. Larry Kaschinske joined the General Partner in 1984 as a staff
accountant in the General Partner's former Wisconsin Division, was promoted
to Assistant Controller in 1990, named Controller in August 1994 and was
elected Vice President/Controller in June 1996.
Mr. Robert E. Cole was appointed a Director of the General Partner in
March 1996. Mr. Cole is currently self-employed as a partner of First
Variable Insurance Marketing and is responsible for marketing to National
Association of Securities Dealers, Inc. firms in northern California,
Oregon, Washington and Alaska. From 1993 to 1995, Mr. Cole was the
Director of Marketing for Lamar Life Insurance Company; from 1992 to 1993,
Mr. Cole was Senior Vice President of PMI Inc., a third party lender
serving the special needs of Corporate Owned Life Insurance (COLI) and from
1988 to 1992, Mr. Cole was the principal and co-founder of a specialty
investment banking firm that provided services to finance the ownership and
growth of emerging companies, productive assets and real property. Mr.
Cole is a Certified Financial Planner and a former United States Naval
Aviator.
Mr. William E. Frenzel was appointed a Director of the General Partner
in April 1995. Mr. Frenzel has been a Guest Scholar since 1991 with the
Brookings Institution, a research organization located in Washington D. C.
Until his retirement in January 1991, Mr. Frenzel served for twenty years
in the United States House of Representatives, representing the State of
Minnesota, where he was a member of the House Ways and Means Committee and
its Trade Subcommittee, the Congressional Representative to the General
Agreement on Tariffs and Trade (GATT), the Ranking Minority Member on the
House Budget Committee and a member of the National Economic Commission.
Mr. Frenzel also served in the Minnesota Legislature for eight years. He
is a Distinguished Fellow of the Tax Foundation, Vice Chairman of the
Eurasia Foundation, a Board Member of the U.S.-Japan Foundation, the Close-
Up Foundation, Sit Mutual Funds and Chairman of the Japan-America Society
of Washington.
Mr. Donald L. Jacobs was appointed a Director of the General Partner
in April 1995. Mr. Jacobs is a retired executive officer of TRW. Prior
to his retirement, he was Vice President and Deputy Manager of the Space
and Defense Sector; prior to that appointment, he was the Vice President
and General Manager of the Defense Systems Group and prior to his
appointment as Group General Manager, he was President of ESL, Inc., a
wholly owned subsidiary of TRW. During his career, Mr. Jacobs served on
several corporate, professional and civic boards.
Mr. James J. Krejci was President of the International Division of
International Gaming Technology, International headquartered in Reno,
Nevada, until March 1995. Prior to joining IGT in May 1994, Mr. Krejci was
Group Vice President of Jones International, Ltd. and was Group Vice
President of the General Partner. He also served as an officer of
subsidiaries of Jones International, Ltd. until leaving the General Partner
in May 1994. Mr Krajci has been a Director of the General Partner since
August 1987.
42
<PAGE>
Mr. John A. MacDonald was appointed a Director of the General Partner
in November 1995. Mr. MacDonald is Executive Vice President of Business
Development and Chief Technology Officer of Bell Canada International Inc.
Prior to joining Bell Canada in November 1994, Mr. MacDonald was President
and Chief Executive Officer of The New Brunswick Telephone Company,
Limited, a post he had held since March of that year. Prior to March 1994,
Mr. MacDonald was with NBTel for 17 years serving in various capacities,
including Market Planning Manager, Corporate Planning Manager, Manager of
Systems Planning and Development and General Manager, Chief Engineer and
General Manager of Engineering and Information Systems and Vice President
of Planning. Mr. MacDonald was the former Chairman of the New Brunswick
section of the Institute of Electrical and Electronic Engineers and also
served on the Federal Government's Information Highway Advisory Council.
Mr. MacDonald is Chairman of MediaLinx Interactive Inc. and Stentor
Canadian Network Management and is presently a Governor of the Montreal
Exchange. He also serves on the Board of Directors of Tele-Direct
(Publications) Inc., Bell-Northern Research, Ltd., SRCI, Bell Sygma,
Canarie Inc., and is a member of the University of New Brunswick Venture
Campaign Cabinet.
Mr. Raphael M. Solot was appointed a Director of the General Partner
in March 1996. Mr. Solot is an attorney and has practiced law for 31 years
with and emphasis on franchise, corporate and partnership law and complex
litigation.
Mr. Howard O. Thrall was appointed a Director of the General Partner
in March 1996. Mr. Thrall had previously served as a Director of the
General Partner from December 1988 to December 1994. Mr Thrall is Senior
Vice President-Corporate Development for First Naitonal Net, Inc., a
leading service provider for the mortgage banking industry, and he heads
First National Net's Washington, D.C. regional office. From September 1993
through July 1996, Mr. Thrall served as Vice President of Sales, Asian
Region, for World Airways, Inc. headquartered at the Washington Dulles
International Airport. From 1984 until August 1993, Mr. Thrall was with the
McDonnell Douglas Corporation, where he concluded as a Regional Vice
President, Commercial Marketing with the Douglas Aircraft Company
subsidiary. Mr. Thrall is also an active management and international
marketing consultant, having completed assignments with McDonnell Douglas
Aerospace, JAL Trading, Inc., Technology Solutions Company, Cheong Kang
Associated (Korea), Aero Investment Alliance, Inc. and Western Real Estate
Partners, among others.
Mr. Siim A. Vanaselja was appointed a Director of the General Partner
in August 1996. Mr. Vanaselja joined BCE Inc., Canada's largest
telecommunications company, in February 1994 as Assistant Vice-President,
International Taxation. In June 1994, he was appointed Assistant Vice-
President and Director of Taxation, and in February 1995, Mr. Vanaselja was
appointed Vice-President, Taxation. On August 1, 1996, Mr. Vanaselja was
appointed the Chief Financial Officer of Bell Canada International Inc., a
subsidiary of BCE Inc. Prior to joining BCE Inc. and since August 1989,
Mr. Vanaselja was a partner in the Toronto office of KPMG Peat Marwick
Thorne. Mr. Vanaselja has been a member of the Institute of Chartered
Accountants of Ontario since 1982 and is a member of the Canadian Tax
Foundation, the Tax Executives Institute and the International Fiscal
Association.
Mr. Sanford Zisman was appointed a director of the General Partner in
June 1996. Mr. Zisman is a member of the law firm, Zisman & Ingraham, P.C.
of Denver, Colorado and has practiced law for 31 years, with an emphasis on
tax, business and estate planning and probate administration. Mr. Zisman
currently serves as a member of the Board of Directors of Saint Joseph
Hospital, the largest hospital in Colorado, and he has served as Chairman
of the Board, Chairman of the Finance Committee and Chairman of the
Strategic Planning Committee of the hospital. Since 1992, he has also
served on the Board of Directors of Maxim Series Fund, Inc., a subsidiary
of Great-West Life Assurance Company.
Mr. Robert B. Zoellick was appointed a Director of the General Partner
in April 1995. Mr. Zoellick is Executive Vice President for Housing and
Law of Fannie Mae, a federally chartered and stockholder-owned corporation
that is the largest housing finance investor in the United States. From
August 1992 to January 1993, Mr. Zoellick served as Deputy Chief of Staff
of the White House and Assistant to the President. From May 1991 to August
1992, Mr. Zoellick served concurrently as the Under Secretary of State for
43
<PAGE>
Cross for his work on Germany unification. Mr. Zoellick currently serves on
the boards of Alliance Capital, Said Holdings, the Council on Foreign
Relations, the Congressional Institute, the German Marshall Fund of the
U.S., the European Institute, the National Bureau of Asian Research, the
American Council on Germany, the American Institute for Contemporary German
Studies and the Overseas Development Council.
ITEM 11. EXECUTIVE COMPENSATION
--------------------------------
The Partnership has no employees; however, various personnel are
required to operate the Systems. Such personnel are employed by the
General Partner and, the cost of such employment is charged by the General
Partner to the Partnership or the Venture as a direct reimbursement item.
See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
----------------------------------------------------------------------
As of March 4, 1997, no person or entity owned more than 5 percent of
the limited partnership interests of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
The General Partner and its affiliates engage in certain transactions
with the Partnership and the Venture. The General Partner believes that
the terms of such transactions are generally as favorable as could be
obtained by the Partnership and the Venture from unaffiliated parties.
This determination has been made by the General Partner in good faith, but
none of the terms were or will be negotiated at arm's-length and there can
be no assurance that the terms of such transactions have been or will be as
favorable as those that could have been obtained by the Partnership or the
Venture from unaffiliated parties.
Transactions with the General Partner
The General Partner charges a management fee, and the General Partner
is reimbursed for certain allocated overhead and administrative expenses.
These expenses represent the salaries and benefits paid to corporate
personnel, rent, data processing services and other corporate 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
Venture'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 also advances funds and charges interest on the
balance payable. The interest rate charged approximates the General
Partner's weighted average cost of borrowing.
Transactions with Affiliates
Jones Education Company ("JEC") is owned 63% by Jones International,
Ltd. ("International"), an affiliate of the General Partner, 9% by Glenn R.
Jones, 12% by Bell Canada International Inc. ("BCI") and 16% by the General
Partner. JEC operates two television networks, JEC Knowledge TV and Jones
Computer Network. JEC Knowledge TV provides programming related to
computers and technology; business, careers and finance; health and
wellness; and global culture and languages. Jones Computer Network
provides programming focused primarily on computers and technology. JEC
sells its programming to certain cable television systems owned or managed
by the General Partner.
44
<PAGE>
The Great American Country network provides country music video
programming to certain cable television systems owned or managed by the
General Partner. This network is owned and operated by Great American
Country, Inc., a subsidiary of Jones International Networks, Ltd., an
affiliate of International.
Jones Galactic Radio, Inc. is a company now owned by Jones
International Networks, Ltd., an affiliate of International. Superaudio, a
joint venture between Jones Galactic Radio, Inc. and an unaffiliated
entity, provides satellite programming to certain cable television systems
owned or managed by the General Partner.
The Product Information Network Venture (the "PIN Venture") is a
venture among a subsidiary of Jones International Networks, Ltd., an
affiliate of International, and two unaffiliated cable system operators.
The PIN Venture operates the Product Information Network ("PIN"), which is
a 24-hour network that airs long-form advertising generally known as
"infomercials." The PIN Venture generally makes incentive payments of
approximately 60% of its net advertising revenue to the cable systems that
carry its programming. Most of the General Partner's owned and managed
systems carry PIN for all or part of each day. Revenues received by the
Partnership from the PIN Venture relating to the Partnership's owned cable
television systems totaled approximately $80,474 for the year ended
December 31, 1996. Revenues received by the Venture from the PIN Venture
relating the Venture's owned cable television systems totaled approximately
$49,973 for the year ended December 31, 1996.
The charges to the Partnership and to the Venture for related party
transactions are as follows for the periods indicated:
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------
Cable TV Fund 14-B 1996 1995 1994
- ------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Management fees $1,888,466 $1,722,188 $1,604,214
Allocation of expenses 2,504,431 2,459,481 2,444,784
Interest expense 106,022 145,929 960
Amount of advances outstanding 449,094 1,896,049 297,956
Highest amount of advances outstanding 3,058,834 1,896,049 297,956
Programming fees:
Jones Education Company 96,169 83,895 57,330
Great American Country 24,339 0 0
Superaudio 52,687 46,269 46,768
<CAPTION>
For the Year Ended December 31,
------------------------------------
Cable TV Fund 14-A/B Venture 1996 1995 1994
- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Management fees $1,275,955 $1,173,475 $1,109,176
Allocation of expenses 1,705,142 1,654,736 1,668,114
Interest expense 122,224 155,659 960
Amount of advances outstanding 268,256 2,206,959 354,179
Highest amount of advances outstanding 2,206,959 2,206,959 354,179
Programming fees:
Jones Education Company 37,113 32,268 27,751
Great American Country 47,590 0 0
Superaudio 34,421 30,171 30,631
</TABLE>
45
<PAGE>
PART IV.
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
-------------------------------------------------
AND REPORTS ON FORM 8-K
-----------------------
(a)1. See index to financial statements for the list of
financial statements and exhibits thereto filed
as part of this report.
3. The following exhibits are filed herewith.
4.1 Limited Partnership Agreement for Cable TV Fund
14-B, Ltd. (1)
4.2 Joint Venture Agreement of Cable TV Fund 14-A/B
Venture, dated as of January 8, 1988, between
Cable TV Fund 14-A, Ltd. and Cable TV Fund 14-B,
Ltd. (1)
10.1.1 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for Little Rock, California (Fund 14-B).
(2)
10.1.2 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the Big Cypress Seminole Indian
Reservation, Florida (Fund 14-A/B). (3)
10.1.3 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the Brighton Seminole Indian
Reservation, Florida (Fund 14-A/B). (3)
10.1.4 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the unincorporated portions of
Broward County, Florida (Fund 14-A/B). (2)
10.1.5 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for Cooper City, Florida (Fund
14-A/B). (10)
10.1.6 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for Dania, Florida (Fund 14-A/B). (2)
10.1.7 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for Davie, Florida (Fund 14-A/B). (2)
10.1.8 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the Hollywood Seminole Indian
Reservation, Florida (Fund 14-A/B). (3)
10.1.9 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the Immokalee Seminole Indian
Reservation, Florida (Fund 14-A/B). (3)
10.1.10 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for Lauderdale Lakes, Florida (Fund
14-A/B). (2)
10.1.11 Copy of Ordinance No. 1200 dated 3/5/90 relating
to the City of Big Lake franchise. (4)
10.1.12 Copy of Ordinance dated 4/16/90 relating to the
Buffalo franchise. (4)
46
<PAGE>
10.1.13 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the County of Georgetown, South
Carolina (Fund 14-B). (4)
10.1.14 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the County of Horry, South Carolina
(Fund 14-B). (5)
10.1.15 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for Myrtle Beach Air Force Base, South
Carolina (Fund 14-B). (5)
10.1.16 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the Town of Pawley's Island, South
Carolina (Fund 14-B). (5)
10.1.17 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the Town of Surfside Beach, South
Carolina (Fund 14-B). (4)
10.2.1 Credit Agreement dated as of December 28, 1995
among Cable TV Fund 14-B, Ltd. and Credit Lyonnais
Caymand Island Branch, as agent for various
lenders. (Fund 14-B) (10)
10.2.2 Credit Agreement dated as of September 30, 1988
among Cable TV Fund 14-A/B Venture and The Bank of
Nova Scotia, as agent for various lenders. (Fund
14-A/B) (6)
10.2.3 First Letter Amendment dated June 11, 1990 to
Credit Agreement dated as of September 30, 1988
among Cable TV Fund 14-A/B Venture and The Bank of
Nova Scotia, as agent for various lenders. (Fund
14-A/B) (7)
10.2.4 Second Letter Amendment dated May 28, 1992 to
Credit Agreement dated as of September 30, 1988
among Cable TV Fund 14-A/B Venture and The Bank of
Nova Scotia, as agent for various lenders. (Fund
14-A/B) (7)
10.2.5 Third Letter Amendment dated June 30, 1994 to
Credit Agreement dated as of September 30, 1988
among Cable TV Fund 14-A/B Venture and The Bank of
Nova Scotia, as agent for various lenders. (Fund
14-A/B) (9)
10.2.6 Fourth Letter Amendment dated June 24, 1996 to
Credit Agreement dated as of September 30, 1988
among Cable TV Fund 14-A/B Venture and The Bank of
Nova Scotia, as agent for various lenders. (Fund
14-A/B)
10.3.1 Purchase and Sale Agreement dated as of March 31,
1988 by and between Cable TV Fund 14-A/B Venture
as Buyer and Jones Intercable, Inc. as Seller.
(Fund 14-A/B) (8)
27 Financial Data Schedule
__________
(1) Incorporated by reference from Registrant's Annual
Report on Form 10-K for fiscal year ended December
31, 1987 (Commission File Nos. 0-15378 and 0-16200)
(2) Incorporated by reference from Registrant's Annual
Report on Form 10-K for fiscal year ended December
31, 1989 (Commission File Nos. 0-15378 and 0-16200)
(3) Incorporated by reference from Registrant's Annual
Report on Form 10-K for fiscal year ended December
31, 1990 (Commission File Nos. 0-15378 and 0-16200)
(4) Incorporated by reference from Registrant's Annual
Report on Form 10-K for fiscal year ended December
31, 1992.
47
<PAGE>
(5) Incorporated by reference from Registrant's Annual
Report on Form 10-K for fiscal year ended December
31, 1988 (Commission File Nos. 0-15378 and 0-16200)
(6) Incorporated by reference from Registrant's Annual
Report on Form 10-K for fiscal year ended December
31, 1991 (Commission File Nos. 0-15378 and 0-16200)
(7) Incorporated by reference from Registrants'
Current Reports on Form 8-K dated March 31, 1993
(Commission File Nos. 0-15378 and 0-16200)
(8) Incorporated by reference from Registrants'
Current Reports on Form 8-K dated March 31, 1988
(Commission File Nos. 0-15378 and 0-16200)
(9) Incorporated by reference from Registrant's Annual
Report on Form 10-K for fiscal year ended December
31, 1994
(10) Incorporated by reference from Registrant's Annual
Report on Form 10-K for fiscal year ended December
31, 1995
(b) Reports on Form 8-K
-------------------
None.
48
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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-B, LTD.
a Colorado limited partnership
By: Jones Intercable, Inc.
By: /s/ Glenn R. Jones
--------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Dated: March 24, 1997 Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Glenn R. Jones
--------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 24, 1997 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
--------------------------------
Kevin P. Coyle
Group Vice President/Finance
Dated: March 24, 1997 (Principal Financial Officer)
By: /s/ Larry Kaschinske
--------------------------------
Larry Kaschinske
Vice President/Controller
Dated: March 24, 1997 (Principal Accounting Officer)
By: /s/ James B. O'Brien
--------------------------------
James B. O'Brien
Dated: March 24, 1997 President and Director
By: /s/ Derek H. Burney
--------------------------------
Derek H. Burney
Dated: March 24, 1997 Director
By: /s/ Robert E. Cole
--------------------------------
Robert E. Cole
Dated: March 24, 1997 Director
49
<PAGE>
By: /s/ William E. Frenzel
--------------------------------
William E. Frenzel
Dated: March 24, 1997 Director
By: /s/ Donald L. Jacobs
--------------------------------
Donald L. Jacobs
Dated: March 24, 1997 Director
By: /s/ James J. Krejci
--------------------------------
James J. Krejci
Dated: March 24, 1997 Director
By:
--------------------------------
John A. MacDonald
Dated: March 24, 1997 Director
By: /s/ Raphael M. Solot
--------------------------------
Raphael M. Solot
Dated: March 24, 1997 Director
By:
--------------------------------
Howard O. Thrall
Dated: March 24, 1997 Director
By: /s/ Siim A. Vanaselja
--------------------------------
Siim A. Vanaselja
Dated: March 24, 1997 Director
By: /s/ Sanford Zisman
--------------------------------
Sanford Zisman
Dated: March 24, 1997 Director
By: /s/ Robert B. Zoellick
--------------------------------
Robert B. Zoellick
Dated: March 24, 1997 Director
50
<PAGE>
June 24, 1996
Cable TV Fund 14-A/B Venture
c/o Jones Intercable, Inc.
9697 E. Mineral Avenue
Englewood, CO 80112
Attention: J. Roy Pottle
Re: Fourth Letter Amendment
-----------------------
Venture Revolving Credit
------------------------
Gentlemen:
Reference is made to that certain Revolving Credit and Term Loan Agreement,
dated as of September 30, 1988, by and among Cable TV Fund 14-A/B Venture (the
"Borrower"), The Bank of Nova Scotia and PNC Bank, National Association
(successor by merger to Provident National Bank) (the "Banks") and The Bank of
Nova Scotia, as agent for the Banks (the "Agent"), as amended by that certain
First Letter Amendment, dated June 11, 1990, that certain Second Letter
Amendment, dated May 28, 1992, and that certain Third Letter Amendment, dated
June 30, 1994 (the "Credit Agreement"). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Credit
Agreement.
The Borrower desires the Banks to extend credit in excess of the
Commitments stated in the Third Letter Amendment, allow for a new revolving
period, extend the maturity date of the Term Loans to December 31, 2003, amend
the principal amortization schedule for the Term Loans, amend the Total Debt to
Annualized Cash Flow ratio covenant, extend the Capital Expenditure limitation,
and to make certain other changes to the Credit Agreement. The Banks are
willing to amend the Credit Agreement for such purposes on the terms and
conditions stated in this Fourth Letter Amendment.
Effective upon the satisfaction (or waiver by the Banks) of all of the
conditions precedent stated below, the Credit Agreement shall be amended as
follows:
1. Section 1.1 is hereby amended:
(a) by deleting the definition of "Business Day" and replacing it with
the following language:
-1-
<PAGE>
"'Business Day' shall mean any day other than a Saturday, Sunday,
------------
public holiday under the laws of the State of New York or other day on
which banking institutions are authorized or obligated to close in New York
City, New York.";
(b) by deleting the definition of "Debt Service";
(c) by deleting the definition of "Excess Cash Flow";
(d) by deleting the definition of "Expiration Date" and replacing it with
the following language:
"'Expiration Date' shall mean December 31, 1998.";
---------------
(e) by adding the following definitions after the definition of "FCC
License":
"'Fourth Letter Amendment' shall mean that certain Fourth Letter
-----------------------
Amendment to Cable TV Fund 14-A/B Venture Revolving Credit and Term Loan
Agreement, dated as of June 24, 1996, among Borrower, Agent and the Banks.
"'Fourth Letter Amendment Closing Date' shall mean the date on which
------------------------------------
the amendments contained in the Fourth Letter Amendment become effective
pursuant to the terms thereof.";
(f) by adding the following definition after the definition of
"Indebtedness":
"'Interest Expense' shall mean for any fiscal period the sum of the
----------------
Borrower's cash interest expense paid on Total Debt for such period.";
(g) by adding the following definition after the definition of "Premium
Subscription":
"'Pro Forma Debt Service' shall mean, with respect to the Borrower for
----------------------
the twelve (12) complete calendar months immediately following the date of
calculation, the sum of (a) interest scheduled to accrue in respect of
Total Debt, plus (b) payments of principal scheduled to be paid on Total
Debt, all in accordance with the documents, instruments and agreements
evidencing such Total Debt. For purposes of calculating Pro Forma Debt
Service (i) where any item of interest on any Total Debt varies or depends
upon a
-2-
<PAGE>
variable rate of interest (including, without limitation, the Base
Rate or the Euro-Rate), such rate shall be assumed to equal the rate
in effect on the date of calculation thereof and (ii) the principal
amount outstanding under any revolving or line of credit facility
shall be assumed to be the outstanding principal balance thereunder on
the last day of the fiscal quarter immediately preceding the period in
respect of which the calculation of Pro Forma Debt Service is being
determined or, if less, the aggregate commitment under such revolving
or line of credit facility as of the date of calculation, in each case
adjusted to give effect to any mandatory commitment reductions which
are scheduled to occur during such period in respect of which the
calculation of Pro Forma Debt Service is being determined."; and
(h) by deleting the definition of "Term Loan Expiration Date" and
replacing it with the following language:
"'Term Loan Expiration Date' shall mean December 31, 2003."
-------------------------
2. Section 2.1(a) is hereby deleted in its entirety and replaced with the
following language:
"(a) The Commitments. Subject to the terms and conditions and
---------------
relying upon the representations and warranties herein set forth, each Bank
severally agrees (such agreement being herein called such Bank's
"Commitment") to make loans to the Borrower (the "Revolving Credit Loans")
at any time or from time to time on or after the Fourth Letter Amendment
Closing Date and to, but not including, the Expiration Date in an aggregate
principal amount not exceeding at any one time outstanding such Bank's
Current Commitment at such time. Each Bank's "Current Commitment" at any
given time shall be equal to the amount set forth opposite the name of such
Bank in the table below, as such amount may have been reduced under Section
2.4 hereof at such time."
<TABLE>
<CAPTION>
Percentage
"Name of Bank Current Commitment Interest
------------ ------------------ --------
<S> <C> <C>
The Bank of
Nova Scotia $25,000,000 58.82%
PNC Bank $17,500,000 41.18%
----------- ------
TOTAL $42,500,000 100.00%"
</TABLE>
-3-
<PAGE>
3. Section 2.4(a) is hereby deleted in its entirety and replaced with the
following language:
"(a) Commitment Fee. The Borrower agrees to pay to the Agent, for
--------------
the account of each Bank, as consideration for the Banks' Commitments
hereunder, a commitment fee equal to three-eighths of one percent (0.375%)
per annum (based on a year of 365 or 366 days, as the case may be) on the
unborrowed amount of the Current Commitment for each day from and including
the Fourth Letter Amendment Closing Date to and including the Expiration
Date. A commitment fee shall be due and payable for the preceding period
for which such fee has not been paid (i) on the last day of each March,
June, September and December after the date hereof, (ii) on the date of
each reduction of the Current Commitment on the amount so reduced and (iii)
on the Expiration Date."
4. Section 2.6 is hereby deleted in its entirety and replaced with the
following language:
"2.6 Term Loan Ceiling.
-----------------
"At no time shall the aggregate principal amount of Term Loans
outstanding exceed the Term Loan Ceiling at such time. The "Term Loan
Ceiling" shall mean the aggregate principal amount of the Term Loans made
on the Expiration Date as provided in Section 2.5(a) (the "Initial
Ceiling"), reduced as follows:
"(A) On each March 31, June 30, September 30 and December 31 during
each period indicated below the Term Loan Ceiling shall be reduced by
amounts equal to the following percentages of the Initial Ceiling
(regardless of whether the Term Loan Ceiling shall have been reduced
pursuant to (B) below):
January 1, 1999 - December 31, 1999 4%
January 1, 2000 - December 31, 2000 4%
January 1, 2001 - December 31, 2001 5%
January 1, 2002 - December 31, 2002 6%
January 1, 2003 - December 31, 2003 6%
On December 31, 2003 the Term Loan Ceiling shall be reduced to zero
(0)."
"(B) In addition, if at any time Term Loans are prepaid or Rollover
Loans are made in a lesser aggregate principal amount than the maturing
Term Loans being rolled over except to the extent necessary as a result of
a reduction in the Term Loan Ceiling pursuant to (A) above, the then
current Term Loan Ceiling
-4-
<PAGE>
shall on such date be reduced by the amount of the prepayment or of such
difference.
"Once reduced, the Term Loan Ceiling may not be increased. If on any
Mandatory Reduction Date the outstanding Term Loans on such date shall
exceed the Term Loan Ceiling as reduced on such date, the Borrower shall
pay or prepay (subject, among other things, to Section 2.13(b) hereof)
sufficient Loans to reduce the principal amount of the outstanding Loans to
such reduced Term Loan Ceiling."
5. Section 2.8(a)(i) (Base Rate Option) is hereby deleted in its entirety
and replaced with the following language:
"(i) Base Rate Option: A rate per annum (computed on the basis of a
----------------
year of 365 or 366 days, as the case may be) for each day equal to the Base
Rate for such day, plus the percentage set forth below that corresponds to
the Borrower's then current ratio of Total Debt to Annualized Cash Flow,
such interest rate to change automatically from time to time effective as
of the effective date of each change in the Base Rate or the date of the
Borrower's financial statements evidencing a change in such ratio, as the
case may be:
Ratio Percentage
----- ----------
2.50 to 1.00 or greater 0.250%
less than 2.50 to 1.00 0.125%."
"Base Rate," as used herein, shall mean a fluctuating interest rate per
annum equal at all times to the rate of interest announced by the Agent in
New York City, New York from time to time in its sole discretion as its
base rate.
6. Section 2.8(a)(ii) (CD Rate Option) is amended by deleting the first
sentence thereof and replacing it with the following language:
"A rate per annum (based on a year of 360 days and actual days elapsed) for
each day equal to the CD Rate for such day, plus the percentage set forth
below that corresponds to the Borrower's then current ratio of Total Debt
to Annualized Cash Flow, such percentage to change automatically from time
to time effective as of the date of the Borrower's financial statements
evidencing a change in such ratio:
-5-
<PAGE>
Ratio Percentage
----- ----------
2.50 to 1.00 or greater 1.375%
less than 2.50 to 1.00 1.250%."
7. Section 2.8(a)(iii) Euro-Rate Option is amended by deleting the first
sentence thereof and replacing it with the following language:
"A rate per annum (based on a year of 360 days and actual days
elapsed) for each day equal to the Euro-Rate for such day, plus the
percentage set forth below that corresponds to the Borrower's then current
ratio of Total Debt to Annualized Cash Flow, such percentage to change
automatically from time to time effective as of the date of the Borrower's
financial statements evidencing a change in such ratio:
Ratio Percentage
----- ----------
2.50 to 1.00 or greater 1.250%
less than 2.50 to 1.00 1.125%."
8. Section 2.11 is hereby deleted in its entirety and replaced with the
following language:
"2.11 Interest Payment Dates. Interest on each Base Rate Loan shall
----------------------
be due and payable quarterly in arrears. Interest on each CD Rate Loan
shall be due and payable on the last day of the corresponding CD Rate
Maturity Period and, if such CD Rate Maturity Period is longer than 90
days, also every 90th day during such CD Rate Maturity Period. Interest on
each Euro-Rate Loan shall be due and payable on the last day of the
corresponding Euro-Rate Maturity Period and, if such Euro-Rate Maturity
Period is longer than three months, also quarterly during such Maturity
Period. After maturity of any Loan (by acceleration or otherwise),
interest on such Loan shall be due and payable on demand."
9. Section 5.8 is hereby deleted in its entirety and replaced with the
following language:
"5.8 Use of Proceeds. Except as otherwise provided by Section 2.7
---------------
hereof or the Subordination Agreement, the Borrower shall apply the
proceeds of all Loans hereunder only to (a) repayment of the Term Loans
outstanding on the Fourth Letter Amendment Closing Date, (b) repayment to
Jones of Advances outstanding on the Fourth Letter Amendment Closing Date
in an amount not to exceed three million eight
-6-
<PAGE>
hundred twenty thousand dollars ($3,820,000), and (c) otherwise for Capital
Expenditures and other general business purposes."
10. Article V is amended by adding the following Section 5.11:
"5.11 Interest Rate Protection. On or before the date that is twelve
------------------------
months from the Fourth Letter Amendment Closing Date, the Borrower shall
enter into an interest rate protection agreement on terms and conditions
satisfactory to the Banks in their sole discretion covering not less than
fifty percent (50%) of the principal amount of the Loan outstanding at such
time for a period of not less than three (3) years."
11. Article V is amended by adding the following Section 5.12:
"5.12 Amendment Fee. The Borrower shall pay to the Agent, for the
-------------
account of each Bank in proportion to their respective Current Commitments,
as consideration for the agreement of the Banks to enter into the Fourth
Letter Amendment, an amendment fee equal to one hundred fifty-nine thousand
three hundred seventy-five dollars ($159,375), with one-half of the
amendment fee payable on the Fourth Letter Amendment Closing Date and the
remaining one-half of the amendment fee payable one year from the Fourth
Letter Amendment Closing Date if the Borrower and a seller have not signed
a binding purchase and sale agreement for the sale of all the Borrower's
Systems on terms and conditions reasonably satisfactory to the Banks. If
the Borrower and a seller have signed such a binding purchase and sale
agreement, the remaining one-half of the amendment fee will be due and
payable nineteen months from the Fourth Letter Amendment Closing Date,
unless prior to such time all amounts due hereunder, under the Notes and
any Related Document have been paid in full and the Commitment has been
terminated."
12. Section 6.1(a) is amended by deleting the last two lines of the table
of ratios of Total Debt to Annualized Cash Flow and replacing them with the
following:
"April 1, 1996 - June 30, 1997 4.00 to 1.00
July 1, 1997 - June 30, 1998 3.50 to 1.00
July 1, 1998 and thereafter 3.00 to 1.00"
13. Section 6.1(b) is hereby deleted in its entirety and replaced with the
following language:
-7-
<PAGE>
"(b) Annualized Cash Flow/Pro Forma Debt Service. The ratio of Annualized
-------------------------------------------
Cash Flow to Pro Forma Debt Service shall not be less than 1.50 to 1.00 at
all times after the Fourth Letter Amendment Closing Date."
14. Section 6.1 is further amended by adding the following Section
6.1(c)after Section 6.1(b):
"(c) Cash Flow/Interest Expense. The ratio of Cash Flow to Interest
--------------------------
Expense shall exceed 2.50 to 1.00 at all times after the Fourth Letter
Amendment Closing Date."
15. Section 6.14 is hereby deleted in its entirety and replaced with the
following language:
"6.14 Capital Expenditures. Borrower shall not make any Capital
--------------------
Expenditures which in the aggregate exceed $3,000,000 in fiscal year 1988;
$10,000,000 in fiscal year 1989; $9,000,000 in fiscal year 1990; $4,500,000
in each of fiscal years 1991 through 1998; $5,000,000 in each of fiscal
year 1999 through 2001; and $5,300,000 in any fiscal year of the Borrower
thereafter. No unused portion of Capital Expenditures permitted in any
given year may be carried forward to any subsequent year or years. The
cost of Systems purchased by Borrower pursuant to Section 6.11 shall be
included in Capital Expenditures hereunder."
16. Article VI is amended by adding the following new Section 6.18:
"6.18 Management Fees. Borrower shall not pay Management Fees which
---------------
exceed five percent (5%) of total revenue for any fiscal year of the
Borrower."
17. The Credit Agreement is hereby amended to delete each reference to
"San Francisco time" and replace it with a reference to "New York City time."
On the date upon which the amendments contained in this Fourth Letter
Amendment become effective, the Borrower shall repay all Term Loans outstanding
on such date from funds obtained from Revolving Loans made on such date,
together with all accrued and unpaid interest thereon and all other amounts owed
in connection with such repayment pursuant to the terms of the Credit Agreement.
The effectiveness of the amendments contained in this Fourth Letter
Amendment is subject to the fulfillment, in form and substance satisfactory to
the Agent, of the following conditions precedent on or before June 24, 1996:
-8-
<PAGE>
(a) The Agent shall have received three counterparts of this Fourth Letter
Amendment duly accepted and executed by the Borrower, three counterparts
executed by The Bank of Nova Scotia, as a Bank, and three counterparts executed
by PNC Bank, National Association.
(b) As amended by Exhibit A hereto, the representations and warranties
contained in Article III of the Credit Agreement and in the Related Documents
shall be true on and as of the date of execution and acceptance of this Fourth
Letter Amendment by the Borrower with the same effect as though made on and as
of such date, and no Event of Default and no Potential Default shall have
occurred and be continuing or exist or shall occur or exist after giving effect
to the amendments contained herein.
(c) The Agent shall have received three signed copies of a certificate,
dated the date of the Borrower's acceptance and execution of this Fourth Letter
Amendment, and signed on behalf of the Borrower by the President, Vice
President, Treasurer or Chief Financial Officer of Jones, to the effect that (i)
the representations and warranties described in (b) above are true and correct
on and as of such date and (ii) on such date no Event of Default or Potential
Default has occurred and is continuing or exists or will occur or exist after
giving effect to the amendments contained herein.
(d) The Agent shall have received three signed copies of certificates dated
as of the date of the Borrower's acceptance and execution of this Fourth Letter
Amendment and signed by the Secretary or Assistant Secretary of Jones, on behalf
of Jones, the Borrower, and each General Partner, certifying as to any changes
since the Closing Date, if any, in the corporate, joint venture or partnership
documents and actions referred to in section 4.2 of the Credit Agreement, of
Jones, the Borrower and each General Partner, respectively and, in the case of
Jones, (i) as to the names, true signatures and incumbency of the officer or
officers or other authorized representatives of Jones authorized to accept,
execute and deliver this Fourth Letter Amendment and the certificate referred to
in (c) above, and (ii) as to the resolution of the Board of Directors of Jones
authorizing such action.
(e) The Agent shall have received certificates (i) of the Secretary of
State of the State of Colorado certifying that Jones is a corporation in good
standing and that each General Partner is a limited
-9-
<PAGE>
partnership in good standing, and (ii) of the Secretary of State of the
State of Florida certifying that each General Partner is qualified to do
business in Florida.
(f) The Agent shall have received payment in full of the portion of
the amendment fee due on the Fourth Letter Amendment Closing Date pursuant
to Section 11 of this Fourth Letter Amendment, for distribution to the
Banks in proportion to their respective Current Commitments.
(g) Each Bank shall have received a substitute Note, in the form of
Exhibit B hereto, duly executed by the Borrower, reflecting the amendments
to the Commitment and maturity dates contained in this Fourth Letter
Amendment (and thereafter shall return the Notes issued on June 15, 1990 to
the Borrower).
(h) The Agent shall have received all amendments to the Related
Documents requested by the Banks to reflect the transactions contemplated
hereby, executed by all parties thereto.
(i) All actions necessary or desirable in the opinion of the Banks to
preserve and protect the first priority lien of Agent established by the
Security Documentation shall have been taken, including, without
limitation, recording of an amendment to the Mortgage to reflect the
transactions contemplated hereby and endorsements to all title policies
held by Agent confirming the first priority nature of the Mortgage as so
amended.
(j) The Agent shall have received legal opinions from counsel to
Borrower on such matters related to the transactions contemplated hereby as
the Banks may reasonably request.
(k) The Agent shall have received all such other instruments,
approvals or documents as the Banks may reasonably request.
Except as amended hereby, the Credit Agreement shall remain in full force
and effect and is hereby ratified and confirmed. This Fourth Letter Amendment
may be executed in two or more counterparts, each of which shall be deemed an
original.
-10-
<PAGE>
If you agree to the foregoing amendments to the Credit Agreement, execute
the enclosed counterparts of this letter in the space provided below and return
them to us prior to June 28, 1996.
THE BANK OF NOVA SCOTIA,
as Agent and as a participating
Bank
By [SIGNATURE APPEARS HERE]
---------------------------------------
Title Authorized Signatory
---------------------------------
Accepted:
CABLE TV FUND 14-A/B VENTURE, Date:
a Colorado general partnership
By Cable TV Fund 14-A, Ltd.,
Cable TV Fund 14-B, Ltd.,
both Colorado limited partnerships
By Jones Intercable, Inc.,
a Colorado corporation,
as general partner of each
By [SIGNATURE APPEARS HERE]
---------------------------------
Title VICE PRESIDENT/TREASURER
---------------------------
PNC BANK, NATIONAL ASSOCIATION,
as a participating Bank
By [SIGNATURE APPEARS HERE]
----------------------------------------
Title SVP
----------------------------------
-11-
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 840,309
<SECURITIES> 0
<RECEIVABLES> 2,218,372
<ALLOWANCES> 140,879
<INVENTORY> 0
<CURRENT-ASSETS> 2,917,802
<PP&E> 98,093,791
<DEPRECIATION> 48,820,169
<TOTAL-ASSETS> 105,915,409
<CURRENT-LIABILITIES> 60,739,218
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 41,212,312
<TOTAL-LIABILITY-AND-EQUITY> 105,915,409
<SALES> 0
<TOTAL-REVENUES> 37,768,924
<CGS> 0
<TOTAL-COSTS> 38,864,185
<OTHER-EXPENSES> 101,084
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,088,951
<INCOME-PRETAX> (4,470,102)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,470,102)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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