<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1995
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to ______________
Commission File Number: 0-16939
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-1069504
- --------------------------------------------------------------------------------
State of Organization IRS employer I.D. #
9697 East Mineral Avenue, P. O. Box 3309, Englewood, Colorado 80155-3309
------------------------------------------------------------------------
Address of principal executive office
(303) 792-9191
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE> 2
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- ------------
<S> <C> <C>
CASH $ 198,864 $ 171,944
TRADE ACCOUNTS RECEIVABLE, less allowance for
doubtful receivables of $1,181 and $9,238 at
March 31, 1995 and December 31, 1994, respectively 122,271 130,642
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 14,457,761 14,257,087
Less - accumulated depreciation (5,509,697) (5,220,117)
----------- -----------
8,948,064 9,036,970
Franchise costs, net of accumulated amortization
of $6,998,619 and $6,667,352 at March 31, 1995 and
December 31, 1994, respectively 7,369,582 7,700,849
Subscriber lists, net of accumulated amortization
of $2,599,143 and $2,485,523 at March 31, 1995 and
December 31, 1994, respectively 668,206 781,826
Noncompete agreements, net of accumulated amortization
of $631,823 and $592,741 at March 31, 1995 and
December 31, 1994, respectively 148,745 187,827
Costs in excess of interests in net assets
purchased, net of accumulated amortization of
$274,952 and $262,527 at March 31, 1995 and
December 31, 1994, respectively 1,751,490 1,763,915
----------- -----------
Total investment in cable
television properties 18,886,087 19,471,387
DEBT PLACEMENT COSTS, net of accumulated
amortization of $105,418 and $98,540 at March 31, 1995
and December 31, 1994, respectively 23,026 29,904
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 55,372 61,222
----------- -----------
Total assets $19,285,620 $19,865,099
=========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
<PAGE> 3
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- ------------
<S> <C> <C>
LIABILITIES:
Credit facility and capitalized lease
obligations $10,770,610 $10,787,551
Accounts payable to Jones Intercable, Inc. 30,144 44,786
Trade accounts payable and accrued liabilities 300,635 403,916
Accrued distributions to partners 312,500 -
Subscriber prepayments and deposits 54,292 52,811
----------- -----------
Total liabilities 11,468,181 11,289,064
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partner -
Contributed capital 1,000 1,000
Distributions (81,823) (78,698)
Accumulated deficit (61,140) (56,679)
----------- -----------
(141,963) (134,377)
----------- -----------
Limited Partners -
Contributed capital, net of related commissions, syndication
costs and interest (51,276 units outstanding at
March 31, 1995 and December 31, 1994) 21,875,852 21,875,852
Distributions (8,100,555) (7,791,180)
Accumulated deficit (5,815,895) (5,374,260)
----------- -----------
7,959,402 8,710,412
----------- -----------
Total partners' capital (deficit) 7,817,439 8,576,035
----------- -----------
Total liabilities and partners'
capital (deficit) $19,285,620 $19,865,099
=========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
<PAGE> 4
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
------------------------------
1995 1994
----------- ----------
<S> <C> <C>
REVENUES $ 1,652,465 $1,564,772
COSTS AND EXPENSES:
Operating expenses 869,322 810,429
Management fees and allocated administrative
costs from the General Partner 222,673 211,536
Depreciation and amortization 796,148 767,923
----------- ----------
OPERATING LOSS (235,678) (225,116)
----------- ----------
OTHER INCOME (EXPENSE):
Interest expense (211,483) (178,596)
Other, net 1,065 710
----------- ----------
NET LOSS $ (446,096) $ (403,002)
=========== ==========
ALLOCATION OF NET LOSS:
General Partner $ (4,461) $ (4,030)
=========== ==========
Limited Partners $ (441,635) $ (398,972)
=========== ==========
NET LOSS PER LIMITED
PARTNER UNIT $ (8.61) $ (7.78)
=========== ==========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNER UNITS
OUTSTANDING 51,276 51,276
=========== ==========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
<PAGE> 5
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
-----------------------------
1995 1994
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (446,096) $ (403,002)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 792,852 767,923
Amortization of capitalized loan fees 3,296 -
Decrease (increase) in trade accounts receivable, net 8,371 10,186
Decrease (increase) in deposits, prepaid expenses and
other assets 2,554 (4,277)
Decrease in trade accounts payable and accrued
liabilities and subscriber prepayments
and deposits (101,800) (24,992)
Increase (decrease) in advances from Jones Intercable, Inc. (14,642) 221,069
---------- ----------
Net cash provided by operating activities 244,535 566,907
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (200,674) (238,071)
---------- ----------
Net cash used in investing activities (200,674) (238,071)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in accrued distributions 312,500 (372,916)
Distributions to partners (312,500) -
Repayment of borrowings (16,941) (5,445)
---------- ----------
Net cash used in financing activities (16,941) (378,361)
---------- ----------
INCREASE (DECREASE (INCREASE) IN CASH 26,920 (49,525)
CASH, AT BEGINNING OF PERIOD 171,944 87,972
---------- ----------
CASH, AT END OF PERIOD $ 198,864 $ 38,447
========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest Paid $ 231,431 $ 174,826
========== ==========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
<PAGE> 6
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) This Form 10-Q is being filed in conformity with the Securities and
Exchange Commission requirements for unaudited financial statements and does
not contain all of the necessary footnote disclosures required for a fair
presentation of the Balance Sheets and Statements of Operations and Cash Flows
in conformity with generally accepted accounting principles. However, in the
opinion of management, this data includes all adjustments, consisting only of
normal recurring accruals, necessary to present fairly the financial position
of Jones Spacelink Income/Growth Fund 1-A, Ltd. (the "Partnership") at March
31, 1995 and December 31, 1994, and its results of operations and cash flows
for the three month periods ended March 31, 1995 and 1994. Results of
operations for these periods are not necessarily indicative of results to be
expected for the full year.
The Partnership, a Colorado limited partnership, was formed on May
12, 1988, pursuant to a public offering of limited partner interests sponsored
by Jones Spacelink, Ltd. ("Spacelink"). On December 20, 1994, Jones
Intercable, Inc. ("Intercable"), a Colorado corporation that was a subsidiary
of Spacelink, acquired substantially all of the assets of Spacelink, including
Spacelink's general partner interest in the Partnership. Intercable now is the
general partner and manager of the Partnership. All references herein to the
"General Partner" relating to matters prior to December 20, 1994 are to
Spacelink, and all references to the "General Partner" relating to matters
after that date are to Intercable. Intercable and certain of its subsidiaries
also own and operate cable television systems for their own account and for the
account of other managed limited partnerships.
The Partnership owns and operates the cable television systems serving
the areas in and around the communities of Bluffton, Decatur, Monroe, Auburn,
Butler, Uniondale, Waterloo and Garett, and the unincorporated areas of Wells,
Allen, Noble, Adams and DeKalb Counties, all in the State of Indiana (the
"Bluffton systems"). In addition, the Partnership owns the cable television
system serving the communities of Lake Geneva and areas of Walworth County, all
in the State of Wisconsin (the "Lake Geneva system") and the cable television
system serving the communities of Ripon and areas of Fond-du-Lac County, all in
the State of Wisconsin (the "Ripon system").
(2) Intercable manages the Partnership and receives a fee for its
services equal to five percent of the gross revenues of the Partnership,
excluding revenues from the sale of cable television systems or franchises.
Management fees paid to the General Partner by the Partnership for the three
month periods ended March 31, 1995 and 1994 were $82,608 and $78,239,
respectively.
The Partnership reimburses the General Partner for certain allocated
general and administrative expenses. These expenses include salaries and
benefits paid to corporate personnel, office rent and related facilities
expense. Such personnel provide engineering, marketing, administrative,
accounting, legal and investor relations services to the Partnership.
Allocations of personnel costs are based primarily on actual time spent by
employees of the General Partner and certain of its subsidiaries with respect
to each partnership managed. Remaining expenses were allocated based on the
pro rata relationship of the Partnership's revenues to the total revenues of
all systems owned or managed by the General Partner and certain of its
subsidiaries. Included in the costs allocated from the General Partner and
certain of its subsidiaries are expenses allocated to the General Partner from
affiliated entities for information processing and certain other administrative
services. The General Partner believes that the methodology used in allocating
general and administrative costs is reasonable. General and administrative
expenses allocated to the Partnership by the General Partner were $140,065 and
$133,297 for the three month periods ended March 31, 1995 and 1994,
respectively.
(3) A primary objective of the Partnership is to provide quarterly cash
distributions to the partners, principally from cash flow from operations
remaining after principal and interest payments and the creation of any
reserves necessary for the operation of the Partnership. The Partnership
suspended quarterly distributions to the partners in 1994 because the
Partnership had no borrowing capacity under its previous credit facility and
needed funds from cash flow to pay for capital additions. Because the
Partnership has successfully renegotiated its credit facility, it can to some
extent use borrowings to fund capital expenditures and the Partnership will
attempt to provide some level of distributions to the partners in 1995.
Accordingly, in March 1995, the Partnership declared a distribution to be paid
to the partners in the amount of $312,500.
6
<PAGE> 7
The distribution was primarily from first quarter 1995 cash flow. This
distribution will be paid in May 1995 as follows: $3,125 to the General
Partner and $309,375 to the limited partners.
(4) Certain prior year amounts have been reclassified to conform to the
1995 presentation.
7
<PAGE> 8
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
For the three months ended March 31, 1995, the Partnership generated
cash from operating activities totaling $244,535, which is available to fund
capital expenditures and non-operating costs. During the first three months of
1995, the Partnership purchased plant and equipment for its cable television
systems totalling approximately $201,000. Approximately 50 percent of these
expenditures were for service drops to homes. Approximately 18 percent were
for plant extensions. The remainder of these expenditures were for various
enhancements throughout all of the Partnership's cable television systems. The
capital expenditures were funded primarily from cash flow from operations.
Anticipated capital expenditures for the remainder of 1995 are estimated to be
approximately $943,000, and will be financed primarily from borrowings from the
Partnership's credit facility. It is estimated that approximately 28 percent
of these expenditures will be for service drops to homes, approximately 24
percent for plant extensions and approximately 13 percent for the upgrade of
cable television plant.
In September 1994, the Partnership renegotiated the terms of its
credit facility to extend the revolving credit period and to increase the
amount available to $14,000,000 to provide the Partnership with a source of
funding for capital expenditures. The then-outstanding principal balance on the
revolving credit facility will convert on December 31, 1996 to a term loan with
a final maturity date of December 31, 1999. At March 31, 1995, $10,700,000 was
outstanding, leaving $3,300,000 for future borrowings. Interest on the
outstanding principal balance is at the Partnership's option of Prime plus 3/8
percent or LIBOR plus 1-3/8 percent. The effective interest rates on
outstanding obligations as of March 31, 1995 and 1994 were 7.57 percent and
4.85 percent, respectively.
A primary objective of the Partnership is to provide quarterly cash
distributions to the partners, principally from cash flow from operations
remaining after principal and interest payments and the creation of any
reserves necessary for the operation of the Partnership. The Partnership
suspended quarterly distributions to the partners in 1994 because the
Partnership had no borrowing capacity under its previous credit facility and
needed funds from cash flow to pay for capital additions. Because the
Partnership has successfully renegotiated its credit facility, it can to some
extent use borrowings to fund capital expenditures and the Partnership will
attempt to provide some level of distributions to the partners in 1995.
Accordingly, in March 1995, the Partnership declared a distribution to be paid
to the partners in the amount of $312,500. The distribution was primarily from
first quarter 1995 cash flow. This distribution will be paid in May 1995 as
follows: $3,125 to the General Partner and $309,375 to the limited partners.
The General Partner presently believes cash flow from operations and
available borrowings from the revolving credit facility will be sufficient to
fund capital expenditures and other liquidity needs of the Partnership over the
near-term.
Regulatory Matters
Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which became effective on
December 4, 1992. This legislation has caused significant changes to the
regulatory environment in which the cable television industry operates. The
1992 Cable Act generally imposes a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable television systems in the United States,
including those owned by the Partnership, are subject to rate regulation of
basic cable services. In addition, the 1992 Cable Act allows the FCC to
regulate rates for non-basic service tiers other than premium services in
response to complaints filed by franchising authorities and/or cable
subscribers. In April 1993, the FCC adopted regulations governing rates for
basic and non-basic services. The FCC's rules became effective on September 1,
1993. In compliance with these rules, the Partnership reduced rates charged
for certain regulated services effective September 1, 1993.
On February 22, 1994, however, the FCC adopted several additional rate
orders including an order which revised its earlier-announced regulatory scheme
with respect to rates and established interim cost-of-service regulations. The
FCC's February 22, 1994 regulations will generally require rate reductions,
absent a successful cost-of-service showing, of
8
<PAGE> 9
17 percent of September 30, 1992 rates, adjusted for inflation, channel
modifications, equipment costs, and increases in programming costs. The new
regulations became effective on May 15, 1994, but operators could elect to
defer rate reductions to July 14, 1994, so long as they made no changes in
their rates and did not restructure service offerings between May 15, 1994 and
July 14, 1994.
The Partnership has filed a cost-of-service showing for the Bluffton
System and thus anticipates no further reductions in rates in that system. The
cost-of-service showing has not yet received final approval from franchising
authorities, however, and there can be no assurance that the Partnership's
cost-of-service showing will prevent further rate reductions in that system
until such final approval is received. The Partnership complied with the
February 1994 benchmark regulations and further reduced rates in the Lake
Geneva and Ripon systems effective July 1994.
RESULTS OF OPERATIONS
Revenues of the Partnership increased $87,693, or approximately 6
percent, from $1,564,772 for the three months ended March 31, 1994 to
$1,652,465 for the three months ended March 31, 1995. This increase in
revenues was primarily the result of increases in basic service revenues and
advertising revenues. An increase in basic service revenues accounted for
approximately 60 percent of the increase and an increase in advertising
revenues accounted for approximately 32 percent of the increase. The increase
in revenues would have been greater if not for the reduction in basic rates due
to basic rate regulations issued by the FCC in February 1994, with which the
Partnership complied, effective July 1994. No other individual factor was
significant to the increase in revenues. See Regulation and Legislation above.
Operating expenses consist primarily of costs associated with the
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 consumer marketing expenses.
Operating expenses increased $58,893, or approximately 7 percent, from
$810,429 for the three months ended March 31, 1994 to $869,322 for the three
months ended March 31, 1995. Operating expenses represented approximately 51
percent and 52 percent, respectively, of revenues for the three month periods
ended March 31, 1994 and 1995. Of the total increase in operating expenses,
advertising related costs increased approximately $24,000, representing
approximately 41 percent of the total increase. No other individual factor
significantly affected the increase in operating expenses for the periods
discussed.
Management fees and allocated administrative costs from the General
Partner increased $11,137, or approximately 5 percent, from $211,536 for the
quarter ended March 31, 1994 to $222,673 for the similar period in 1995. This
increase was primarily the result of an increase in allocated expenses from the
General Partner. The General Partner has experienced increases in expenses,
including personnel costs, a portion of which is allocated to the Partnership.
Depreciation and amortization expense increased $28,225, or
approximately 4 percent from $767,923 for the quarter ended March 31, 1994 to
$796,148 for the comparable 1995 period. The increase was a result of capital
additions during 1995.
Operating loss increased $10,562, or approximately 5 percent, from
$225,116 for the three months ended March 31, 1994 to $235,678 for the
comparable 1995 period. The increase is the result of the increases in
operating expenses, management fees and allocated administrative expenses and
depreciation and amortization expense exceeding the increase in revenues.
Operating income before depreciation and amortization expense increased
$17,663, or approximately 3 percent from $542,807 for the three month period
ended March 31, 1994 to $560,470 for the similar 1995 period. The increase was
due to the increases in operating expenses and management fees and allocated
administrative expenses from the General Partner exceeding the increase in
revenues.
Interest expense increased $32,887, or approximately 18 percent, from
$178,596 for the three month period ended March 31, 1994 to $211,483 for the
three month period ended March 31, 1995. This increase was primarily the
result of higher effective interest rates on interest bearing obligations.
9
<PAGE> 10
Net loss increased $43,094, or approximately 11 percent from $403,002
for the three month period ended March 31, 1994 to $446,096 for the three month
period ended March 31, 1995. These losses were the result of the factors
discussed above and are expected to continue in the future.
10
<PAGE> 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
BY: JONES INTERCABLE, INC.
General Partner
By: /S/Kevin P. Coyle
--------------------------------
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 12, 1995
12
<PAGE> 13
INDEX TO EXHIBITS
Exhibit Description Page
- ------- ----------- ----
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 198,864
<SECURITIES> 0
<RECEIVABLES> 122,271
<ALLOWANCES> (1,181)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 14,457,761
<DEPRECIATION> (5,509,697)
<TOTAL-ASSETS> 19,285,620
<CURRENT-LIABILITIES> 697,571
<BONDS> 10,770,610
<COMMON> 0
0
0
<OTHER-SE> 7,817,439
<TOTAL-LIABILITY-AND-EQUITY> 19,285,620
<SALES> 0
<TOTAL-REVENUES> 1,652,465
<CGS> 0
<TOTAL-COSTS> 1,888,143
<OTHER-EXPENSES> (1,065)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 211,483
<INCOME-PRETAX> (446,096)
<INCOME-TAX> 0
<INCOME-CONTINUING> (446,096)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (446,096)
<EPS-PRIMARY> (8.61)
<EPS-DILUTED> (8.61)
</TABLE>
