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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1995
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 ________
Commission file number: 0-16939
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
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(Exact name of registrant as specified in its charter)
Colorado 84-1069504
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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 (Registrant's telephone no.
office and Zip Code) 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 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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State the 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 (Section 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.
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DOCUMENTS INCORPORATED BY REFERENCE: None
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PART I.
ITEM 1. BUSINESS
THE PARTNERSHIP. Jones Spacelink Income/Growth Fund 1-A, Ltd. (the
"Partnership") is a Colorado limited partnership that was formed pursuant to
the public offering of limited partnership interests in the Jones Spacelink
Income/Growth Fund 1 Limited Partnership Program (the "Program"). Jones
Intercable, Inc., a Colorado corporation, is the general partner of the
Partnership (the "General Partner"). The Partnership was formed for the
purpose of acquiring and operating cable television systems. The Partnership
owns the cable television systems serving the areas in and around the
communities of Bluffton, Decatur, Monroe, Auburn, Butler, Uniondale, Waterloo
and Garrett and certain unincorporated areas of Wells, Allen, Noble, Adams and
DeKalb Counties, all in the State of Indiana (the "Bluffton System"), the
community of Ripon and adjacent areas of Fond-du-Lac County, Wisconsin (the
"Ripon System"); and the community of Lake Geneva and adjacent areas of
Walworth County, Wisconsin (the "Lake Geneva System"). The Bluffton System,
the Ripon System and the Lake Geneva System may collectively hereinafter be
referred to as the "Systems."
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
declared and paid a distribution of $1,250,000 in 1995. The Partnership had
suspended quarterly distributions to the partners in 1994 because the
Paratnership had no borrowing capacity under its previous credit facility and
needed funds from cash flow to pay for capital expenditures. Future
distributions will be announced on a quarter-by-quarter basis and no
determination has been made regarding any specific level of future
distributions.
PROPOSED DISPOSITIONS OF CABLE TELEVISION SYSTEMS. On September 5,
1995, the Partnership entered into two asset purchase agreements pursuant to
which it agreed to sell the Lake Geneva System and the Ripon System to the
General Partner for a sales price of $6,345,667 for the Lake Geneva System and a
sales price of $3,712,667 for the Ripon System. The sales prices for each of
the Lake Geneva System and the Ripon System represent the average of three
separate independent appraisals of the fair market value of the Lake Geneva
System and the Ripon System, respectively. The General Partner has assigned its
rights and obligations under the asset purchase agreements to Jones Cable
Holdings, Inc. ("JCH"), a wholly owned subsidiary of the General Partner. The
closings of the sales of the Lake Geneva System and the Ripon System are
expected to occur in April 1996. No vote of limited partners is required in
connection with these transactions because the Lake Geneva System and the Ripon
System individually and collectively do not represent the sale of all or
substantially all of the Partnership's assets. Pursuant to the terms of an
amendment to the Partnership's credit agreement, the Partnership will be
entitled to distribute $5,000,000 of the proceeds from the sales of the Lake
Geneva System and the Ripon System to the limited partners, and the balance of
the sale proceeds, approximately $5,058,000, will be applied to reducing the
Partnership's outstanding indebtedness, which at December 31, 1995 totaled
$11,605,582. As a result of the sales of the Lake Geneva System and the Ripon
System and the amendment to the Partnership's credit agreement, the limited
partners of the Partnership will receive $98 per unit or $195 for each $1,000
invested in the Partnership approximately one month after the closings of the
sales. Once the Partnership has completed the distribution of the net proceeds
from these pending sales, limited partners of the Partnership will have received
a total of $550 for each $1,000 invested in the Partnership, taking into account
the prior distributions to limited partners. Because the limited partners have
not yet received distributions in an amount equal to 100 percent of the capital
initially contributed to the Partnership by them plus the 12 percent
preferential return, the entire portion of the Partnership's distribution will
be distributed to the limited partners.
After its acquisition of the Lake Geneva System and the Ripon System,
JCH intends to convey these systems, together with other cable television
systems that it owns and/or will acquire, to Time Warner Entertainment Company,
L.P. ("Time Warner"), an unaffiliated cable television system operator, in
return for which Time Warner will convey to JCH the cable television systems
serving communities in and around Savannah, Georgia. The closings of the Lake
Geneva System and the Ripon System sales are not contingent upon the closing of
the Time Warner exchange.
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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.
REVENUES. Monthly service fees for basic, tier and premium services
constitute the major source of revenue for the Systems. At December 31, 1995,
the Systems' monthly basic service rates ranged from $7.76 to $11.00, monthly
basic and tier ("basic plus") service rates ranged from $19.80 to $21.77 and
monthly premium services ranged from $3.95 to $10.00 per premium service. In
addition, the Partnership earns revenues from the Systems' pay-per-view
programs and advertising fees. Related charges may include a nonrecurring
installation fee that ranges from $4.66 to $40.00; 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, 1995, of the total fees
received by the Systems, basic service and tier service fees accounted for
approximately 74.8% of total revenues, premium service fees accounted for
approximately 14% of total revenues, pay-per-view fees were approximately .2%
of total revenues, advertising fees were approximately 3% of total revenues and
the remaining 8% of total revenues came principally from equipment rentals,
installation fees and program guide sales. The Partnership is 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.
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The Partnership holds 22 franchises for the Systems. 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.
The Partnership has never had a franchise revoked. The Partnership's
franchise expiration dates currently range from November 1996 to December 2005.
Because the Partnership intends to sell the Ripon System (see Item 1, Proposed
Dispositions of Cable Television Systems), the Partnership does not intend to
renew the City of Ripon franchise that will expire in December 1996. The
renewal of this franchise will be the responsibility of the new owner. The
Partnership is currently negotiating the renewal of the one franchise in the
Bluffton System that will expire prior to December 31, 1996, and the General
Partner has no reason to believe that such franchise will not be renewed in due
course. The General Partner recently has experienced lengthy negotiations with
some franchising authorities for the granting of franchise renewals. Some of
the issues involved in recent renewal negotiations include rate regulation,
customer service standards, cable plant upgrade or replacement and shorter
terms of franchise agreements.
COMPETITION. Cable television systems currently experience
competition from several sources. A potential source of significant
competition is Direct Broadcast Satellite ("DBS") services that use video
compression technology to increase channel capacity and provide packages of
movies, network and other program services that are competitive with those of
cable television systems. Two companies offering DBS services began operations
in 1994, and two other companies offering DBS service recently began
operations. In addition, a joint venture has won the right to provide a DBS
service through a FCC spectrum auction. Not all subscribers terminate cable
television service upon acquiring a DBS system. The General Partner has
observed that a number of DBS subscribers also elect to subscribe to cable
television service in order to obtain the greatest variety of programming on
multiple television sets, including local video services programming not
available through DBS service.
Although neither the Partnership nor the General Partner has yet
encountered competition from a telephone company providing video services as a
cable operator or video dialtone operator, it is anticipated that the cable
television systems owned or managed by the General Partner will face such
competition in the near future. Legislation recently enacted into law will
make it possible for companies with considerable resources to enter the
business. For example, in February 1996, one of the regional Bell operating
companies entered into an agreement to acquire the nation's third largest cable
television company. In addition, several telephone companies have begun
seeking cable television franchises from local governmental authorities as a
consequence of litigation that successfully challenged the constitutionality of
the cable television/telephone company cross-ownership rules. The General
Partner cannot predict at this time when and to what extent telephone companies
will provide cable television service within service areas in competition with
cable television systems owned or managed by the General Partner.
The General Partner is aware of the following imminent competition
from telephone companies: Ameritech, one of the seven regional Bell operating
companies, which provides telephone service in a multi-state region including
Illinois, has just obtained a franchise that will allow it to provide cable
television service in Naperville, Illinois, a community currently served by a
cable system owned by another one of the public limited partnerships managed by
the General Partner. Ameritech also provides telephone service in the areas
served by the Systems. Chesapeake and Potomac Telephone Company of Virginia
and Bell Atlantic Video Service Company, both subsidiaries of Bell Atlantic,
another of the regional Bell operating companies, have announced their
intention to build a cable television system in Alexandria, Virginia in
competition with a cable television system owned by the General Partner. Bell
Atlantic is preparing for the operation of a telecommunications and video
business in northern Virginia, including the Alexandria metropolitan area. The
FCC has granted GTE Virginia's application for authority to construct, operate,
own and maintain video dialtone facilities in northern Virginia, including in
the service area of a cable television system owned by the General Partner. To
date, GTE has not begun construction of a video distribution system. The entry
of telephone companies as direct competitors could adversely affect the
profitability and market value of the General Partner's owned and managed
systems.
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Additional competition is present from several sources, including the
following: Master Antenna Television and Satellite Master Antenna Television
systems that serve multi-unit dwellings such as condominiums, apartment
complexes, motels, hotels and private residential communities; private cable
television/telephonic companies that have secured exclusive contracts to
provide video and telephony services to multi-unit dwellings and similar
complexes; and multichannel, multipoint distribution service ("MMDS") systems,
commonly called wireless cable which generally focus on providing service to
residents of rural areas. In addition, the FCC has established a new wireless
telecommunications service known as Personal Communications Service ("PCS")
that would provide portable non-vehicular mobile communications services
similar to that available from cellular telephone companies, but at a lower
cost. Several cable television multiple system operators hold or have
requested experimental licenses from the FCC to test PCS technology.
REGULATION AND LEGISLATION. The cable industry is regulated under the
Telecommunications Act of 1996 (the "1996 Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act") and the Cable
Communications Policy Act of 1984 (the "1984 Cable Act") and the regulations
implementing these statutes. The Federal Communications Commission (the "FCC")
has promulgated regulations covering such areas as the registration of cable
television systems and other communications businesses, carriage of television
broadcast programming, consumer education and lockbox enforcement, origination
cablecasting and sponsorship identification, children's programming, the
regulation of basic cable and cable programming service rates in areas where
cable television systems are not subject to effective competition, signal
leakage and frequency use, technical performance, maintenance of various
records, equal employment opportunity, and antenna structure notification,
marking and lighting. In addition, cable operators periodically are required
to file various informational reports with the FCC. The FCC has the authority
to enforce these regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of administrative
sanctions, such as the revocation of FCC licenses needed to operate certain
transmission facilities often used in connection with cable operations. State
or local franchising authorities, as applicable, also have the right to enforce
various regulations, impose fines or sanctions, issue orders or seek revocation
subject to the limitations imposed upon such franchising authorities by
federal, state and local laws and regulations. Several states have assumed
regulatory jurisdiction of the cable television industry, and it is anticipated
that other states will do so in the future. To the extent the cable television
industry begins providing telephone service, additional state regulations will
be applied to the cable television industry. Cable television operations are
subject to local regulation insofar as systems operate under franchises granted
by local authorities.
The following is a summary of federal laws and regulations materially
affecting the cable television industry, and a description of state and local
laws with which the cable industry must comply.
Telecommunications Act of 1996. The 1996 Act, which became law on
February 28, 1996, substantially revised the Communications Act of 1934, as
amended, including the 1984 Cable Act and the 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934. The 1996 Act is intended, in
part, to promote substantial competition in the telephone local exchange and in
the delivery of video and other services. As a result of the 1996 Act, local
telephone companies (also known as local exchange carriers or "LECs") and other
service providers are permitted to provide video programming, and cable
television operators are permitted entry into the telephone local exchange
market. The FCC is required to conduct rulemaking proceedings over the next
several months to implement various provisions of the 1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
effective March 31, 1999 and the cable programming service tier of small cable
operators (those that provide service to 50,000 or fewer subscribers) effective
immediately. The 1996 Act also revised the procedures for filing a cable
programming service tier rate complaint and adds a new effective competition
test.
The most far-reaching changes in the communications business will
result from the telephony provisions of the 1996 Act. The statute expressly
preempts any legal barriers to competition in the local telephone business
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that previously existed in state and local laws and regulations. Many of these
barriers had been lifted by state actions over the last few years, but the 1996
Act completes the task. The 1996 Act also establishes new requirements for
maintaining and enhancing universal telephone service and new obligations for
telecommunications providers to maintain privacy of customer information. The
1996 Act establishes uniform requirements and standards for entry, competitive
carrier interconnection and unbundling of LEC monopoly services. Due to
limitations in the Partnership's limited partnership agreement relating to the
types of business in which the Partnership can be engaged, the Partnership will
not likely provide telephone local exchange services in its cable systems.
The 1996 Act repealed the cable television/telephone cross-ownership
ban adopted in the 1984 Cable Act. The federal cross-ownership ban was
particularly important to the cable industry because telephone companies
already own certain facilities such as poles, ducts and associated rights of
way. While this ban had been overturned by several courts, formal removal of
the ban ended the last legal constraints on telephone company plans to enter
the cable market. Under the 1996 Act, telephone companies in their capacity as
common carriers now may lease capacity to others to provide cable television
service. Telephone companies have the option of providing video service as
cable operators or through "open video systems" ("OVS"), a regulatory regime
that may provide more flexibility than traditional cable service. The 1996 Act
exempts OVS operators from many of the regulatory obligations that currently
apply to cable operators, such as rate regulation and franchise fees, although
other requirements are still applicable. OVS operators, although not subject
to franchise fees as defined by the 1992 Cable Act, are subject to fees charged
by local franchising authorities or other governmental entities in lieu of
franchise fees. (Under certain circumstances, cable operators also will be
able to offer service through open video systems.) In addition, the 1996 Act
eliminated the requirement that telephone companies file Section 214
applications (applications to provide video dialtone services) with the FCC
before providing video service. This limits the opportunity of cable operators
to mount challenges at the FCC regarding telephone company entry into the video
market. The 1996 Act also contains restrictions on buying out incumbent cable
operators in a telephone company's service area, especially in suburban and
urban markets.
Other parts of the 1996 Act also will affect cable operators. Under
the 1996 Act, the FCC is required to revise the current pole attachment rate
formula. This revision will result in an increase in the rates paid by
entities, including cable operators, that provide telecommunication services.
The rates will be phased in after a five-year period. (Cable operators that
provide only cable services will be unaffected.) Under the V-chip provisions
of the 1996 Act, cable operators and other video providers are required to pass
along any program rating information that programmers include in video signals.
Cable operators also are subject to new scrambling requirements for sexually
explicit programming, and cable operators that provide Internet access or other
online services are subject to the new indecency limitations for computer
services. In addition, cable operators that provide Internet access or other
online services are subject to the new indecency limitations for computer
services, although these provisions already have been challenged in court, and
the courts have preliminarily enjoined the enforcement of these content-based
provisions.
Under the 1996 Act, a franchising authority may not require a cable
operator to provide telecommunications services or facilities, other than an
institutional network, as a condition to a grant, renewal or transfer of a
cable franchise, and franchising authorities are preempted from regulating
telecommunications services provided by cable operators and from requiring
cable operators to obtain a franchise to provide such services. The 1996 Act
also repealed the 1992 Cable Act's anti-trafficking provision, which generally
required the holding of cable television systems for three years.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Partnership in particular. The FCC shortly
will be undertaking numerous rulemaking proceedings to interpret and implement
the 1996 Act. It is not possible at this time to predict the outcome of those
proceedings or their effect on the Partnership.
Cable Television Consumer Protection and Competition Act of 1992. The
1992 Cable Act, which became effective on December 4, 1992, caused significant
changes to the regulatory environment in which the cable television industry
operates. The 1992 Cable Act generally mandated a greater degree of regulation
of the
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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 and managed by the General Partner, became subject to
rate regulation of basic cable services. In addition, the 1992 Cable Act
allowed 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 General Partner on behalf of the
Partnership reduced rates charged for certain regulated services in the
Partnership's cable systems effective September 1, 1993. These reductions
resulted in some decrease in Partnership revenues and operating income before
depreciation and amortization; however, the decrease was not as severe as
originally anticipated. The General Partner has undertaken actions to mitigate
a portion of these reductions primarily through (a) new service offerings in
some systems, (b) product re-marketing and re-packaging and (c) marketing
efforts directed at non-subscribers.
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. The FCC's new regulations generally required rate
reductions, absent a successful cost-of-service showing, of 17 percent of
September 30, 1992 rates, adjusted for inflation, channel modifications,
equipment costs, and increases in programming costs. Further rate reductions
for cable systems whose rates are below the revised benchmark levels, as well
as reductions that would require operators to reduce rates below benchmark
levels in order to achieve a 17 percent rate reduction, were held in abeyance
pending completion of cable system cost studies. The FCC recently requested
some of these "low price" systems to complete cost study questionnaires. After
review of these questionnaires, the FCC could decide to permanently defer any
further rate reductions, or require the additional 7 percent rate roll back for
some or all of these systems. The FCC has also adopted its proposed upgrade
methodology by which operators would be permitted to recover the costs of
upgrading their plant.
After analyzing the effects of the two methods of rate regulation, the
Partnership elected to file cost-of-service showings in the Bluffton System.
The General Partner thus anticipates no further reduction in revenues or
operating income before depreciation and amortization in this system resulting
from the FCC's rate regulations. At this time, however, the regulatory
authorities have not approved the cost-of-service showings, and there can be no
assurance that the Partnership's cost-of-service showings will prevent further
rate reductions in this system until such final approval is received. The
Partnership complied with the benchmark regulations and further reduced rates
in the Lake Geneva and Ripon Systems.
On November 10, 1994, the FCC also announced a revision to its
regulations governing the manner in which cable operators may charge
subscribers for new cable programming services. In addition to the present
formula for calculating the permissible rate for new services, the FCC
instituted a three-year flat fee mark-up plan for charges relating to new
channels of cable programming services. Commencing on January 1, 1995, cable
system operators may charge for new channels of cable programming services
added after May 14, 1994 at a rate of up to 20 cents per channel, but may not
make adjustments to monthly rates totaling more than $1.20 plus an additional
30 cents for programming license fees per subscriber over the first two years
of the three-year period for these new services. Operators may charge an
additional 20 cents in the third year only for channels added in that year plus
the costs for the programming. Operators electing to use the 20 cent per
channel adjustment may not also take a 7.5 percent mark-up on programming cost
increases, which is permitted under the FCC's current rate regulations. The
FCC has requested further comment as to whether cable operators should continue
to receive the 7.5 percent mark-up on increases in license fees on existing
programming services.
The FCC also announced that it will permit operators to offer a "new
product tier" ("NPT"). Operators will be able to price the NPT as they elect
so long as, among other conditions, other channels that are subject to rate
regulation are priced in conformity with applicable regulations and operators
do not remove programming services from existing tiers and offer them on the
NPT.
In September 1995, the FCC authorized a new, alternative method of
implementing rate adjustments which will allow cable operators to increase
rates for programming annually on the basis of projected increases in
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external costs (inflation, costs for programming, franchise-related obligations
and changes in the number of regulated channels) rather than on the basis of
cost increases incurred in the preceding calendar quarter. Operators that
elect not to recover all of their accrued external costs and inflation
pass-throughs each year may recover them (with interest) in subsequent years.
In December 1995, the FCC adopted final cost-of-service rate
regulations requiring, among other things, cable operators to exclude 34
percent of system acquisition costs related to intangible and tangible assets
used to provide regulated services. The FCC also reaffirmed the industry-wide
11.25 percent after tax rate of return on an operator's allowable rate base,
but initiated a further rulemaking in which it proposes to use an operator's
actual debt cost and capital structure to determine an operator's cost of
capital or rate of return. After a rate has been set pursuant to a
cost-of-service showing, rate increases for regulated services are indexed for
inflation, and operators are permitted to increase rates in response to
increases in costs beyond their control, such as taxes and increased
programming costs.
The United States Court of Appeals for the District of Columbia
Circuit recently upheld the FCC's rate regulations implemented pursuant to the
1992 Cable Act, but ruled that the FCC impermissibly failed to permit cable
operators to adjust rates for certain cost increases incurred during the period
between the date the 1992 Cable Act was passed through the initial date of rate
regulation. The FCC has not yet implemented the court's ruling.
There have been several lawsuits filed by cable operators and
programmers in federal court challenging various aspects of the 1992 Cable Act
including its provisions relating to mandatory broadcast signal carriage,
retransmission consent, access to cable programming, rate regulations,
commercial leased channels and public access channels. On April 8, 1993, a
three-judge federal district court panel issued a decision upholding the
constitutionality of the mandatory signal carriage requirements of the 1992
Cable Act. That decision was appealed directly to the United States Supreme
Court. The United States Supreme Court vacated the lower court decision on
June 27, 1994 and remanded the case to the district court for further
development of a factual record. On December 12, 1995, the three-judge federal
district court again upheld the must-carry rules' validity. This decision has
been appealed to the United States Supreme Court.
In 1993, a federal district court upheld provisions of the 1992 Cable
Act concerning rate regulation, retransmission consent, restrictions on
vertically integrated cable television operators and programmers, mandatory
carriage of programming on commercial leased channels and public, educational
and governmental access channels and the exemption for municipalities from
civil damage liability arising out of local regulation of cable services. The
1992 Cable Act's provisions providing for multiple ownership limits for cable
operators and advance notice of free previews for certain programming services
have been found unconstitutional and these decisions have been appealed. The
FCC's regulations relating to the carriage of indecent programming, which were
recently upheld by the United States Court of Appeals for the District of
Columbia, have been appealed to the United States Supreme Court.
Franchising. The responsibility for franchising or other
authorization of cable television systems is left to state and local
authorities. There are, however, several provisions in the 1984 Cable Act that
govern the terms and conditions under which cable television systems provide
service. These include uniform standards and policies that are applicable to
cable television operators seeking renewal of a cable television franchise.
The procedures established provide for a formal renewal process should the
franchising authority and the cable television operator decline to use an
informal procedure. A franchising authority unable to make a preliminary
determination to renew a franchise is required to hold a hearing in which the
operator has the right to participate. In the event a determination is made
not to renew the franchise at the conclusion of the hearing, the franchising
authority must provide the operator with a written decision stating the
specific reasons for non-renewal. Generally, the franchising authority can
finally decide not to renew a franchise only if it finds that the cable
operator has not substantially complied with the material terms of the present
franchise, has not provided reasonable service in light of the community's
needs, does not have the financial, legal or technical ability to provide the
services being proposed for the future, or has not presented a reasonable
proposal for future service. A final decision of non-renewal by the
franchising authority is appealable in court.
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A provision of the 1996 Act preempts franchising authorities from
regulating telecommunications services provided by cable operators and from
requiring cable operators to obtain a franchise to provide such services. A
franchising authority may not require a cable operator to provide
telecommunications services or facilities, other than an institutional network,
as a condition to a grant, renewal or transfer of a cable franchise.
GENERAL. The Partnership'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 business. Each of the
Systems has 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 General Partner's policy with
regard to past due accounts is basically one of disconnecting service before a
past due account becomes material.
The Partnership does not depend 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. The Partnership has no
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 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.
ITEM 2. PROPERTIES
The cable television systems owned by the Partnership are described
below:
System Acquisition Date
------ ----------------
Bluffton System November 1988
Ripon System March 1991
Lake Geneva System March 1991
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, 1995, the Bluffton System operated cable
plant passing approximately 21,000 homes, representing an approximate 66%
penetration rate, the Lake Geneva System operated cable plant passing
approximately 5,300 homes, representing an approximate 69% penetration rate and
the Ripon System operated cable plant passing approximately 2,500 homes,
representing an approximate 97% penetration rate. Figures for numbers of
subscribers and homes passed are compiled from the General Partner's records
and may be subject to adjustments.
<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------
BLUFFTON SYSTEM 1995 1994 1993
--------------- ---- ---- ----
<S> <C> <C> <C>
Monthly basic plus service rate $ 21.77 $ 21.77 $ 21.77
Basic subscribers 13,926 13,084 12,775
Pay units 8,413 7,136 7,710
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
At December 31,
-------------------------------------------
LAKE GENEVA SYSTEM 1995 1994 1993
------------------ ------ ------ ------
<S> <C> <C> <C>
Monthly basic plus service rate $ 19.90 $ 20.70 $ 21.13
Basic subscribers 3,641 3,344 2,972
Pay units 1,701 1,568 1,490
</TABLE>
<TABLE>
<CAPTION>
At December 31,
------------------------------------------
RIPON SYSTEM 1995 1994 1993
------------ ------ ------ ------
<S> <C> <C> <C>
Monthly basic plus service rate $ 20.90 $ 19.50 $ 21.73
Basic subscribers 2,447 2,423 2,318
Pay units 752 730 736
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is a defendant in an action filed in September 1995 in
the Circuit Court, Winnebago County, Wisconsin (95-CV-813BR1), by Midwest
Dimensions, Inc. In such action, plaintiff has alleged that the Partnership
falsely stated that the radio signals of plaintiff caused interference in the
reception of cable television service received by subscribers to the cable
system of the Partnership in the City of Ripon, Wisconsin. Plaintiff seeks
damages, costs and disbursements in an unspecified amount, together with such
further relief as the Court may find just and equitable, for the injuries
allegedly incurred by the plaintiff by reason of such statements. The
Partnership has filed an answer denying the material allegations of plaintiff's
complaint. The matter is currently in discovery.
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. As of February 15, 1996, the number of equity security
holders in the Partnership was 2,314.
10
<PAGE> 11
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------------------------------------------
1995 1994 1993 1992 1991
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues $ 6,838,837 $ 6,440,941 $ 6,214,322 $ 5,797,797 $ 4,776,786
Depreciation and Amortization 3,161,861 3,074,711 3,161,687 3,069,420 2,750,778
Operating Loss (630,272) (714,065) (681,473) (747,624) (750,863)
Net Loss (1,495,469) (1,459,114) (1,328,059) (1,356,392) (1,154,431)
Net Loss per
Limited Partnership Unit (28.87) (28.17) (25.64) (26.19) (22.29)
Weighted average number of
Limited Partner units outstanding 51,276 51,276 51,276 51,276 51,276
General Partner's Deficit (161,832) (134,377) (119,786) (88,533) (57,101)
Limited Partners' Capital 5,992,398 8,710,412 10,154,935 13,248,990 16,360,840
Total Assets 18,237,340 19,865,099 21,435,720 23,527,282 25,631,213
Credit Facility and Capitalized
Lease Obligations 11,605,582 10,787,551 10,058,100 9,386,632 8,421,101
General Partner Advances - 44,786 584,196 101,372 67,840
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
1995 Compared to 1994
Revenues of the Partnership for the year ended December 31, 1995
totaled $6,838,837 compared to $6,440,941 in 1994, an increase of $397,896, or
approximately 6 percent, over the amount reported in 1994. These increases in
revenue were primarily the result of increases in the number of basic
subscribers, which accounted for approximately 70 percent of the increase in
revenues. The number of basic subscribers totaled 20,014 at December 31, 1995
compared to 18,851 at December 31, 1994, an increase of 1,163, or approximately
6 percent. Increases in advertising revenue accounted for approximately 20
percent of the increase in revenue. No other individual factor was significant
to the increase in revenues.
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 $200,930, or approximately 6 percent, to
$3,426,527 in 1995 from $3,225,597 in 1994. Operating expenses represented
approximately 50 percent of revenues in each of 1995 and 1994, respectively.
Of the total net increase in operating expenses, subscriber related costs
increased approximately $143,000 representing approximately 71 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 $26,023, or approximately 3 percent, to $880,721 in 1995 from
$854,698 in 1994. This increase was primarily the result of increased
revenues, upon which such management fees are based, as well as increases in
allocated expenses from the General Partner.
Depreciation and amortization expense increased $87,150, or
approximately 3 percent, to $3,161,861 in 1995 from $3,074,711 in 1994. The
increase was a result of capital additions during 1995.
11
<PAGE> 12
Operating loss decreased $83,793, or approximately 12 percent, to
$630,272 in 1995 from $714,065 in 1994. This decrease was a result of the
increases in revenues exceeding the increases in operating expenses, management
fees and allocated administrative expenses from the General Partner and
depreciation and amortization expense.
The cable television industry generally measures the financial
performance of a cable television system in terms of cash flow or operating
income before depreciation and amortization. The value of a cable television
system is often determined using multiples of cash flow. This measure is not
intended to be a substitute or improvement upon the items disclosed on the
financial statements, rather it is included because it is an industry standard.
Operating income before depreciation and amortization increased $170,943, or
approximately 7 percent, to $2,531,589 in 1995 from $2,360,646 in 1994. The
increase was due to the increase in revenues exceeding the increases in
operating expenses and management fees and allocated administrative expenses
from the General Partner.
Interest expense increased $135,126, or approximately 18 percent, to
$870,843 in 1995 from $735,717 in 1994. This increase was primarily the result
of higher outstanding balances and higher effective interest rates on interest
bearing obligations during 1995.
Net loss increased $36,355, or approximately 2 percent, to $1,495,469
in 1995 from $1,459,114 in 1994. This increase was primarily a result of the
factors discussed above.
1994 Compared to 1993
Revenues of the Partnership for the year ended December 31, 1994
totaled $6,440,941, an increase of $226,619, or approximately 4 percent, over
the amount reported in 1993. An increase in advertising revenues accounted for
approximately 29 percent of the increase. Increases in premium channel revenue
accounted for approximately 28 percent. 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 April 1993 and February 1994, with which the
Partnership complied, effective September 1993 and July 1994. No other
individual factor was significant to the increase in revenues.
Operating expenses increased $299,247, or approximately 10 percent, to
$3,225,597 in 1994 from $2,926,350 in 1993. Operating expenses represented
approximately 50 and 47 percent of revenues in 1994 and 1993, respectively. Of
the total net increase in operating expenses, personnel costs increased
approximately $127,000 representing approximately 42 percent of the total
increase, and programming fees increased approximately $89,000, representing
approximately 30 percent of the total increase. No other individual factor
significantly affected the increase in operating expense for the periods
discussed.
Management fees and allocated administrative costs from the General
Partner increased $46,940, or approximately 6 percent, to $854,698 in 1994 from
$807,758 in 1993. This increase was primarily the result of increased
revenues, upon which such management fees are based and an increase in
allocated expenses from the General Partner in 1994.
Depreciation and amortization expense decreased $86,976, or
approximately 3 percent, to $3,074,711 in 1994 from $3,161,687 in 1993. The
decrease was a result of maturation of a portion of the Partnership's tangible
asset base.
Operating loss increased $32,592, or approximately 5 percent, to
$714,065 in 1994 from $681,473 in 1993. This increase was a result of the
increases in operating expenses and management fees and allocated
administrative costs from the General Partner exceeding the increase in
revenues and decrease in depreciation and amortization.
Operating income before depreciation and amortization decreased
$119,568, or approximately 5 percent, to $2,360,646 in 1994 from $2,480,214 in
1993. The decrease was due to the increase in operating expenses and
management fees and allocated administrative expenses from the General Partner
exceeding the increases in revenues.
Interest expense increased $106,811, or approximately 16 percent, to
$735,717 in 1994 from $628,906 in 1993. This increase was primarily the result
of higher effective interest rates on interest bearing obligations.
12
<PAGE> 13
Net loss increased $131,055, or approximately 10 percent, to
$1,459,114 in 1994 from $1,328,059 in 1993. These losses were primarily a
result of the factors discussed above.
FINANCIAL CONDITION
During 1995, the Partnership generated cash from operating activities
totaling $1,536,195, which is available to fund capital expenditures and
non-operating costs. During 1995, the Partnership purchased plant and
equipment for its cable television systems totaling approximately $1,275,000.
Approximately 32 percent of these expenditures were for service drops to homes.
Approximately 29 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 and borrowings from the Partnership's revolving
credit facility. Anticipated capital expenditures for 1996 are estimated to be
approximately $957,800, and will be financed primarily from cash flow from
operations and borrowings from the Partnership's credit facility. It is
estimated that approximately 74 percent of these expenditures will be for
upgrades to cable television plant and approximately 14 percent for service
drops to homes.
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. In March 1996, the Partnership amended its
credit facility such that, on the date of the sale of the Lake Geneva System
and Ripon System, the amount of the credit facility will decrease to $8,000,000
and will have a final maturity date of December 31, 1997. At December 31,
1995, $11,500,000 was outstanding; however, upon the sale of the Lake Geneva
System and Ripon System, approximately $5,058,000 of the sale proceeds will be
used to reduce the amount outstanding to approximately $6,442,000.
Interest on the outstanding principal balance is at the Partnership's option of
Prime plus 1/4 percent or the London Interbank Offered Rate plus 1-1/4 percent.
The effective interest rates on outstanding obligations as of December 31, 1995
and 1994 were 7.1 percent and 7.0 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
declared such distributions totaling $1,262,626 and $1,797,249 in 1995 and
1993, respectively. 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. No determination has been made regarding the level of future
quarterly cash distributions. The level of quarterly cash distributions, if
any, will be determined on a quarter-by-quarter basis. As described below, the
Partnership will distribute $5,000,000 of the proceeds from the sales of the
Lake Geneva System and the Ripon System in the second quarter of 1996.
The General Partner presently believes cash flow from operations and
available borrowings from the Partnership's revolving credit facility will be
sufficient to fund capital expenditures and other liquidity needs of the
Partnership over the near-term.
On September 5, 1995, the Partnership entered into two asset purchase
agreements pursuant to which it agreed to sell the Lake Geneva System and the
Ripon System to Intercable for a sales price of $6,345,667 for the Lake Geneva
System and a sales price of $3,712,667 for the Ripon System. The sales prices
for each of the Lake Geneva System and the Ripon System represent the average
of three separate independent appraisals of the fair market value of the Lake
Geneva System and the Ripon System, respectively. Intercable has assigned its
rights and obligations under the asset purchase agreements to Jones Cable
Holdings, Inc., a wholly owned subsidiary of Intercable. The closings of the
sales of the Lake Geneva System and the Ripon System are expected to occur in
April 1996. No vote of limited partners is required in connection with these
transactions because the Lake Geneva System and the Ripon System individually
and collectively do not represent the sale of all or substantially all of the
Partnership's assets. Pursuant to the terms of an amendment to the
Partnership's credit agreement, the Partnership will be entitled to distribute
$5,000,000 of the proceeds from the sales of the Lake Geneva System and the
Ripon System to the limited partners, and the balance of the sale proceeds,
approximately $5,058,000, will be applied to reducing the Partnership's
outstanding indebtedness, which at December 31, 1995 totaled $11,605,582. As a
result of the sales of the Lake Geneva System and the Ripon System and the
amendment to the Partnership's credit agreement, the limited partners of the
Partnership will receive approximately $98 per unit or $195 for each $1,000
invested in the Partnership approximately one month after the closings of the
sales. Once the Partnership has completed the distribution of the net proceeds
from these pending sales, limited partners of the
13
<PAGE> 14
Partnership will have received a total of $550 for each $1,000 invested in the
Partnership, taking into account the prior distributions to limited partners.
Because these distributions have not yet returned to limited partners 100
percent of the capital contributed by them to the Partnership plus their
preferred return, the General Partner is not entitled to receive a distribution
on the sales of the Lake Geneva System and the Ripon System. Refer to Note 1
of the Notes to Financial Statements for the pro forma effect of the sale of
the Lake Geneva System and the Ripon System on the results of the Partnership's
operations for the years ended December 31, 1995 and 1994, assuming the
transaction had occurred at the beginning of the periods.
REGULATION AND LEGISLATION
The Telecommunications Act of 1996 (the "1996 Act"), which became law
on February 8, 1996, substantially revised the Communications Act of 1934, as
amended, including the 1984 Cable Act and the 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934. The 1996 Act is intended, in
part, to promote substantial competition in the telephone local exchange and in
the delivery of video and other services. As a result of the 1996 Act, local
telephone companies (also known as local exchange carriers or "LECs") and other
service providers are permitted to provide video programming, and cable
television operators are permitted entry into the telephone local exchange
market. The FCC is required to conduct rulemaking proceedings over the next
several months to implement various provisions of the 1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
including the Partnership effective March 31, 1999 and the cable programming
service tier of "small" cable operators in systems providing service to 50,000
or fewer subscribers effective immediately. The 1996 Act also revised the
procedures for filing cable programming service tier rate complaints and adds a
new effective competition test.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Partnership in particular. The FCC will be
undertaking numerous rulemaking proceedings to interpret and implement the 1996
Act. It is not possible at this time to predict the outcome of those
proceedings or their effect on the Partnership. See Item 1.
14
<PAGE> 15
Item 8. Financial Statements
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND 1994
AND FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
INDEX
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Report of Independent Public Accountants 16
Balance Sheets 17
Statements of Operations 19
Statements of Partners' Capital (Deficit) 20
Statements of Cash Flows 21
Notes to Financial Statements 22
</TABLE>
15
<PAGE> 16
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Jones Spacelink Income/Growth Fund 1-A, Ltd.:
We have audited the accompanying balance sheets of Jones
Spacelink Income/Growth Fund 1-A, Ltd. (a Colorado limited partnership) as of
December 31, 1995 and 1994, and the related statements of operations, partners'
capital (deficit) and cash flows for each of the three years in the period
ended December 31, 1995. 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 Jones
Spacelink Income/Growth Fund 1-A, Ltd. as of December 31, 1995 and 1994, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
April 1, 1996.
16
<PAGE> 17
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
----------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
CASH $ 313,553 $ 171,944
TRADE RECEIVABLES, less allowance for doubtful
receivables of $14,206 and $9,238 at December 31, 1995
and 1994, respectively 226,616 130,642
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 15,532,204 14,257,087
Less- accumulated depreciation (6,366,025) (5,220,117)
---------- ----------
9,166,179 9,036,970
Franchise costs, net of accumulated amortization
of $7,992,420 and $6,667,352 at December 31, 1995
and 1994, respectively 6,375,781 7,700,849
Subscriber lists, net of accumulated amortization
of $2,911,398 and $2,485,523 at December 31, 1995
and 1994, respectively 355,951 781,826
Noncompete agreements, net of accumulated amortization
of $749,069 and $592,741 at December 31, 1995
and 1994, respectively 31,499 187,827
Costs in excess of interests in net assets purchased,
net of accumulated amortization of $312,227 and $262,527
at December 31, 1995 and 1994, respectively 1,714,215 1,763,915
---------- ----------
Total investment in cable
television properties 17,643,625 19,471,387
DEBT PLACEMENT COSTS, net of accumulated
amortization of $126,053 and $98,540 at
December 31, 1995 and 1994, respectively 2,391 29,904
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 51,155 61,222
---------- ----------
Total assets $18,237,340 $19,865,099
========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
17
<PAGE> 18
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
BALANCE SHEETS
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
December 31,
-----------------------------
1995 1994
------------- ------------
<S> <C> <C>
LIABILITIES:
Credit facility and capitalized lease
obligations $11,605,582 $10,787,551
Accounts payable to Jones Intercable, Inc. - 44,786
Trade accounts payable and accrued liabilities 446,688 403,916
Accrued distributions to partners 315,657 -
Subscriber prepayments and deposits 51,473 52,811
---------- ----------
Total liabilities 12,419,400 11,289,064
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 8)
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Distributions (91,324) (78,698)
Accumulated deficit (71,634) (56,679)
---------- ----------
(161,958) (134,377)
---------- ----------
Limited Partners-
Contributed capital, net of
related commissions, syndication
costs and interest (51,276 units
outstanding at December 31, 1995
and 1994) 21,875,852 21,875,852
Distributions (9,041,180) (7,791,180)
Accumulated deficit (6,854,774) (5,374,260)
---------- ----------
5,979,898 8,710,412
---------- ----------
Total partners' capital (deficit) 5,817,940 8,576,035
---------- ----------
Total liabilities and partners'
capital (deficit) $18,237,340 $19,865,099
========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
18
<PAGE> 19
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
--------------------------------------------------------
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUES $ 6,838,837 $ 6,440,941 $ 6,214,322
COSTS AND EXPENSES:
Operating expenses 3,426,527 3,225,597 2,926,350
Management fees and allocated administrative
costs from the General Partner 880,721 854,698 807,758
Depreciation and amortization 3,161,861 3,074,711 3,161,687
---------- ---------- ----------
OPERATING LOSS (630,272) (714,065) (681,473)
OTHER INCOME (EXPENSE):
Interest expense (870,843) (735,717) (628,906)
Other, net 5,646 (9,332) (17,680)
---------- ---------- ----------
NET LOSS $(1,495,469) $(1,459,114) $(1,328,059)
=========== =========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (14,955) $ (14,591) $ (13,281)
=========== =========== ===========
Limited Partners $(1,480,514) $(1,444,523) $(1,314,778)
=========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (28.87) $ (28.17) $ (25.64)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNER UNITS
OUTSTANDING 51,276 51,276 51,276
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
19
<PAGE> 20
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
For the Year Ended
December 31,
----------------------------------------------------
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of year $ (134,377) $ (119,786) $ (88,533)
Distributions (12,626) - (17,972)
Net loss for the year (14,955) (14,591) (13,281)
------------ ------------ -------------
Balance, end of year $ (161,958) $ (134,377) $ (119,786)
============ ============ =============
LIMITED PARTNERS:
Balance, beginning of year $ 8,710,412 $ 10,154,935 $ 13,248,990
Distributions (1,250,000) - (1,779,277)
Net loss for the year (1,480,514) (1,444,523) (1,314,778)
------------ ------------ -------------
Balance, end of year $ 5,979,898 $ 8,710,412 $ 10,154,935
============ ============ =============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
20
<PAGE> 21
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
--------------------------------------------------------
1995 1994 1993
---------------- ---------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,495,469) $(1,459,114) $(1,328,059)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 3,161,861 3,074,711 3,161,687
Decrease (increase) in trade accounts receivable, net (95,974) (17,228) 18,384
Decrease (increase) in deposits, prepaid expenses
and other assets (21,402) (42,484) 2,531
Increase (decrease) in trade accounts payable and
accrued liabilities and subscriber prepayments
and deposits 41,434 71,368 (27,317)
Increase (decrease) in advances from Jones Intercable, Inc. (44,786) (539,410) 482,824
----------- ---------- ----------
Net cash provided by operating activities 1,545,664 1,087,843 2,310,050
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (1,275,117) (1,360,406) (1,098,158)
----------- ---------- ----------
Net cash used in investing activities (1,275,117) (1,360,406) (1,098,158)
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in accrued distributions 315,657 (372,916) (93,229)
Distributions to partners (1,262,626) - (1,797,249)
Repayment of borrowings (52,220) (183,194) (19,314)
Proceeds from borrowings 870,251 912,645 690,782
----------- ---------- ----------
Net cash provided by (used in) financing activities (128,938) 356,535 (1,219,010)
----------- ---------- ----------
INCREASE (DECREASE) IN CASH 141,609 83,972 (7,118)
CASH, BEGINNING OF YEAR 171,944 87,972 95,090
----------- ---------- ----------
CASH, END OF YEAR $ 313,553 $ 171,944 $ 87,972
=========== ========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 875,993 $ 666,291 $ 648,668
=========== ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
21
<PAGE> 22
JONES SPACELINK INCOME/GROWTH FUND 1-A, LTD.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS:
Formation and Business
Jones Spacelink Income/Growth Fund 1-A, Ltd. (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"). The Partnership was formed to acquire, construct, develop and
operate cable television systems. 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.
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. The General Partner
purchased its general partner interest in the Partnership by contributing
$1,000 to partnership capital.
All profits and losses of the Partnership will be allocated 99 percent
to the limited partners and one percent to the General Partner, 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 agreement, and interest income earned prior to the first
acquisition by the Partnership of a cable television system, which was
allocated 100 percent to the limited partners.
Cable Television System Acquisitions
In November 1988, the Partnership purchased the cable television
systems serving the areas in and around the communities of Bluffton, Decatur,
Monroe, Auburn, Butler, Uniondale, Waterloo and Garrett, and the unincorporated
areas of Wells, Allen, Noble, Adams and Dekalb Counties, all in the State of
Indiana (the "Bluffton Systems").
In March 1991, the Partnership purchased 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").
Proposed Cable Television System Sales
On September 5, 1995, the Partnership entered into two asset purchase
agreements pursuant to which it agreed to sell the Lake Geneva System and the
Ripon System to Intercable for a sales price of $6,345,667 for the Lake Geneva
System and a sales price of $3,712,667 for the Ripon System. The sales prices
for each of the Lake Geneva System and the Ripon System represent the average
of three separate independent appraisals of the fair market value of the Lake
Geneva System and the Ripon System, respectively. Intercable has assigned its
rights and obligations under the asset purchase agreements to Jones Cable
Holdings, Inc., a wholly owned subsidiary of Intercable. The closings of the
sales of the Lake Geneva System and the Ripon System are expected to occur in
April 1996. No vote of limited partners is required in connection with these
transactions because the Lake Geneva System and the Ripon System individually
and collectively do not represent the sale of all or substantially all of the
Partnership's assets. Pursuant to the terms of an amendment to the
Partnership's credit agreement, the Partnership will be entitled to distribute
$5,000,000 of the proceeds from the sales of the Lake Geneva System and the
Ripon System to the limited partners, and the balance of the sale
22
<PAGE> 23
proceeds, approximately $5,058,000, will be applied to reducing the
Partnership's outstanding indebtedness, which at December 31, 1995 totaled
$11,605,582. As a result of the sales of the Lake Geneva System and the Ripon
System and the amendment to the Partnership's credit agreement, the limited
partners of the Partnership will receive approximately $98 per unit or $195 for
each $1,000 invested in the Partnership approximately one month after the
closings of the sales. Once the Partnership has completed the distribution of
the net proceeds from these pending sales, limited partners of the Partnership
will have received a total of $550 for each $1,000 invested in the Partnership,
taking into account the prior distributions to limited partners. Because these
distributions have not yet returned to limited partners 100 percent of the
capital contributed by them to the Partnership plus their preferred return, the
General Partner is not entitled to receive a distribution on the sales of the
Lake Geneva and the Ripon System.
The pro forma effect of the sale of the Lake Geneva System and the
Ripon System on the results of the Partnership's operations for the years ended
December 31, 1995 and 1994, assuming the transaction had occurred at the
beginning of the year, is presented in the following unaudited tabulation:
<TABLE>
<CAPTION>
For the Year Ended December 31, 1995
--------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- ----------
<S> <C> <C> <C>
Revenues $ 6,838,837 $ (2,040,590) $ 4,798,247
=========== =========== ==========
Operating Income (Loss) $ (630,272) $ 631,609 $ 1,337
=========== =========== ==========
Net Loss $ (1,459,469) $ 983,771 $ (511,698)
=========== =========== ==========
<CAPTION>
For the Year Ended December 31, 1994
--------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- ----------
<S> <C> <C> <C>
Revenues $ 6,440,941 $ (1,936,958) $ 4,503,983
========== =========== ==========
Operating Loss $ (714,065) $ 574,811 $ (139,254)
========== =========== ==========
Net Loss $ (1,459,114) $ 930,885 $ (528,229)
========== =========== ==========
</TABLE>
(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 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.
23
<PAGE> 24
Property, Plant and Equipment
Depreciation of property, plant and equipment is provided using the
straight-line method over the following estimated service lives:
<TABLE>
<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.
Allocation of Cost of Purchased Cable Television Systems
Based on independent appraisals, the Partnership allocated the total
purchase price of the cable television systems acquired as follows: first, to
the fair value of net tangible assets acquired; second, to franchise costs in
an amount equal to the estimated value of franchise agreements; third, to
subscriber lists; fourth, to noncompete agreements; and fifth, to costs in
excess of interests in net assets purchased. The brokerage fees paid to The
Jones Group, Ltd. upon acquisition of the systems and other acquisition costs
were capitalized and charged to investment in cable television properties in
the accompanying balance sheets.
Intangible Assets
Costs assigned to intangible assets are being amortized using the
straight-line method over the following estimated useful lives:
<TABLE>
<S> <C>
Franchise costs 4 -15 years
Subscriber lists 6 - 7 years
Noncompete agreements 4 years
Costs in excess of interests in net assets purchased 35 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
1995 presentation.
24
<PAGE> 25
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31, 1995 and 1994,
consisted of the following:
<TABLE>
<CAPTION>
1995 1994
----------- ------------
<S> <C> <C>
Cable distribution systems $14,239,443 $13,094,377
Equipment and tools 553,762 496,075
Office furniture and equipment 188,054 186,435
Buildings 23,574 22,572
Vehicles 469,371 399,628
Land 58,000 58,000
---------- ---------
15,532,204 14,257,087
---------- ---------
Less- accumulated depreciation (6,366,025) (5,220,117)
---------- ---------
$ 9,166,179 $ 9,036,970
========== ==========
</TABLE>
(4) DEBT:
At December 31, 1995 and 1994, debt consisted of the following:
<TABLE>
<CAPTION>
1995 1994
------------- ------------
<S> <C> <C>
Revolving credit and term loan facility $11,500,000 $10,700,000
Capital lease obligations 105,582 87,551
---------- ----------
$11,605,582 $10,787,551
========== ==========
</TABLE>
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. In March 1996, the Partnership amended its
credit facility such that, on the date of the sale of the Lake Geneva System
and Ripon System, the amount of the credit facility will decrease to $8,000,000
and will have a final maturity date of December 31, 1997. At December 31,
1995, $11,500,000 was outstanding; however, upon the sale of the Lake Geneva
System and Ripon System, approximately $5,058,000 of the sale proceeds will be
used to reduce the amount outstanding to approximately $6,442,000.
Interest on the outstanding principal balance is at the Partnership's option of
Prime plus 1/4 percent or the London Interbank Offered Rate plus 1-1/4 percent.
The effective interest rates on outstanding obligations as of December 31, 1995
and 1994 were 7.1 percent and 7.0 percent, respectively.
Estimated maturities of the term loan and capital lease obligations
for the five years in the period ended December 31, 2000 and thereafter are as
follows:
1996 $ 31,675
1997 606,675
1998 1,181,675
1999 9,785,557
2000 -
Thereafter -
----------
$11,605,582
==========
At December 31, 1995, 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.
25
<PAGE> 26
(5) SIGNIFICANT TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES:
Management Fees, Distribution Ratios and Reimbursements
The General Partner 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 years
ended December 31, 1995, 1994 and 1993 were $341,942, $322,047 and $310,716,
respectively.
Any partnership distributions made from cash flow (defined as cash
receipts derived from routine operations and interest income, less debt
principal and interest payments and cash expenses) are allocated 99 percent to
the limited partners and one percent to the General Partner. The Partnership
may distribute any proceeds from the sale or refinancing of a cable television
system generally as follows: first, to the Partners until they have received
an amount equal to their initial capital contributions (as reduced by all prior
distributions other than distributions from cash flow); second, to the limited
partners until they have received a liquidation preference equal to 12 percent
per annum, cumulative and noncompounded, on an amount equal to their initial
capital contributions, less any portion of such capital contributions which has
been returned to the limited partners from prior sale or refinancing proceeds,
as determined for any particular year; provided that such cumulative return
will be reduced by all prior distributions of cash flow from operations and
prior distributions of proceeds of sales or refinancings of the Partnership's
cable television systems. The balance will be allocated 75 percent to the
limited partners' and 25 percent to the General Partner. See Note 6 for
discussion of cash flow distributions.
The General Partner presently believes cash flow from operations and
available borrowings from the Partnership's revolving credit facility will be
sufficient to fund capital expenditures and other liquidity needs of the
Partnership over the near-term.
The Partnership reimburses the General Partner and certain of its
subsidiaries 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 relation services to the
Partnership. Allocations of personnel costs are based primarily on actual time
spent by employees of the General Partner with respect to each partnership
managed. Remaining expenses are allocated based on the pro rata relationship
of the Partnership's revenues to the total revenues of all systems owned or
managed by the General Partner and certain of its subsidiaries. Systems owned
by the General Partner and all other systems owned by partnerships for which
Intercable is the general partner are also allocated a proportionate share of
these expenses. 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 $538,779, $532,651 and $497,042 for the years ended December 31, 1995,
1994 and 1993, respectively.
The Partnership was charged interest during 1995, 1994 and 1993 at
average interest rates of approximately 10.5 percent, 10 percent and 5 percent,
respectively, per annum on the amounts due the General Partner, which
approximated the General Partner's weighted average cost of borrowing. Total
interest charged to the Partnership by the General Partner was $9,243, $24,392
and $3,167 for the years ended December 31, 1995, 1994 and 1993, respectively.
Payments to/from Affiliates for Programming Services
The Partnership receives programming from Product Information Network,
Superaudio, Mind Extension University and Jones Computer Network, all of which
are affiliates of the General Partner.
Payments to Superaudio by the Partnership for the years ended December
31, 1995, 1994 and 1993 totaled $11,632, $11,575 and $11,098, respectively.
Payments to Mind Extension University, for the years ended December 31, 1995,
1994 and 1993 totaled $12,439, $10,339 and $6,649, respectively. Payments to
Jones Computer Network, which initiated service in 1994, for the years ended
December 31, 1995 and 1994 totaled $4,868 and $310, respectively.
26
<PAGE> 27
The Partnership receives a commission from Product Information
Network, based on a percentage of advertising revenue and number of
subscribers. Product Information Network, which initiated service in 1994,
paid commissions to the Partnership for the years ended December 31, 1995 and
1994 totaling $1,871 and $461, respectively.
(6) DISTRIBUTIONS FROM CASH FLOW:
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
declared such distributions totaling $1,262,626 and $1,797,249 in 1995 and
1993, respectively. 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. No determination has been made regarding the level of future
quarterly cash distributions. The level of quarterly cash distributions, if
any, will be determined on a quarter-by-quarter basis.
(7) INCOME TAXES:
Income taxes have not been recorded in the accompanying financial
statements because they accrue directly to the partners. The federal and state
income tax returns of the Partnership are prepared and filed by the General
Partner.
The Partnership's tax returns, the qualification of the Partnership as
such for tax purposes, and the amount of distributable 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.
Taxable income (loss) 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 income
(loss) and the net loss reported in the statements of operations.
(8) COMMITMENTS AND CONTINGENCIES
The Partnership rents office and other facilities under various
long-term lease arrangements. Rent paid under such lease arrangements totaled
$73,344, $71,355 and $59,241, respectively, for the years ended December 31,
1995, 1994 and 1993. Future minimum lease payments as of December 31, 1995,
under noncancelable operating leases for each of the five years in the period
ending December 31, 2000, and thereafter are as follows:
1996 $ 64,830
1997 57,180
1998 47,180
1999 41,694
2000 22,798
Thereafter 18,433
-------
$252,115
=======
27
<PAGE> 28
(9) SUPPLEMENTARY PROFIT AND LOSS INFORMATION:
Supplementary profit and loss information for the respective years are
presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Maintenance and repairs $ 55,247 $ 42,864 $ 50,567
========== ========= =========
Taxes, other than income and payroll taxes $ 99,201 $ 108,962 $ 93,457
========== ========= =========
Advertising $ 76,683 $ 65,492 $ 81,798
========== ========= =========
Depreciation of property, plant and equipment $ 1,164,194 $1,061,624 $1,148,601
========== ========= =========
Amortization of intangible assets $ 1,997,667 $2,013,087 $2,013,086
========== ========= =========
</TABLE>
28
<PAGE> 29
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.
<TABLE>
<S> <C> <C>
Glenn R. Jones 66 Chairman of the Board and Chief Executive Officer
Derek H. Burney 56 Vice Chairman of the Board
James B. O'Brien 46 President and Director
Ruth E. Warren 46 Group Vice President/Operations
Kevin P. Coyle 44 Group Vice President/Finance
Christopher J. Bowick 40 Group Vice President/Technology
George H. Newton 61 Group Vice President/Telecommunications
Timothy J. Burke 45 Group Vice President/Taxation/Administration
Raymond L. Vigil 49 Group Vice President/Human Resources and Director
Cynthia A. Winning 44 Group Vice President/Marketing
Elizabeth M. Steele 44 Vice President/General Counsel/Secretary
Larry W. Kaschinske 36 Controller
Robert E. Cole 63 Director
William E. Frenzel 67 Director
Donald L. Jacobs 57 Director
James J. Krejci 54 Director
John A. MacDonald 42 Director
Raphael M. Solot 62 Director
Daniel E. Somers 48 Director
Howard O. Thrall 48 Director
Robert B. Zoellick 42 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 past and present member of the Board of
Directors and the Executive Committee of the National Cable Television
Association. He also is on the Executive Committee of Cable in the Classroom,
an organization dedicated to education via cable. Additionally, in March 1991,
Mr. Jones was appointed to the Board of Governors for the American Society for
Training and Development, and in November 1992 to 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 is a
past director and member of the Executive Committee of C-Span. 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 Chairman's Award from the Investment Partnership Association, which is an
association of sponsors of public syndications; the cable television industry's
Public Affairs Association President's Award in 1990, the Donald G. McGannon
award for the advancement of minorities and women in cable; 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 Women in Cable
Accolade in 1990 in recognition of support of this organization; the Most
Outstanding Corporate
29
<PAGE> 30
Individual Achievement award from the International Distance Learning
Conference; the Golden Plate Award from the 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 on
December 20, 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
chairman of Bell Cablemedia plc. He is a director of Mercury Communications
Limited, Videotron Holdings plc, Tele-Direct (Publications) Inc., Teleglobe
Inc., Bimcor Inc., Maritime Telegraph and Telephone Company, Limited, Moore
Corporation Limited and Northbridge Programming Inc.
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 a director of the Cable Television Administration and Marketing
Association and as a director 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. Timothy J. Burke joined the General Partner in August 1982 as
corporate tax manager, was elected Vice President/Taxation in November 1986 and
Group Vice President/Taxation/Administration in October 1990.
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
30
<PAGE> 31
USWest. Prior to USWest, Mr. Vigil worked in various human resources posts
over a 14-year term with the IBM Corporation.
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 and named Controller in August 1994.
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. licensed 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
on April 11, 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
on April 11, 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 Jones Futurex, Inc., a
subsidiary of the General Partner engaged in manufacturing and marketing data
encryption devices, Jones Interactive, Inc., a subsidiary of Jones
International, Ltd. providing computer data and billing processing facilities
and Jones Lightwave, Ltd., a company owned by Jones International, Ltd. and Mr.
Jones, and several of its subsidiaries engaged in the provision of
telecommunications
31
<PAGE> 32
services until leaving the General Partner in May 1994. Mr. Krejci has been a
Director of the General Partner since August 1987.
Mr. John A. MacDonald was appointed a Director of the General Partner
on November 8, 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 licensed to practice law in the State
of Colorado. Mr. Solot has practiced law in the State of Colorado as a sole
practitioner since obtaining his Juris Doctor degree from the University of
Colorado in 1964.
Mr. Daniel E. Somers was initially appointed a Director of the General
Partner on December 20, 1994. Mr. Somers resigned as a Director on December
31, 1995, at the time he was elected Chief Executive Officer of Bell
Cablemedia. Mr. Somers was reinstated as a Director of the General Partner on
February 2, 1996. From January 1992 to January 1995, Mr. Somers worked as
senior Vice President and Chief Financial Officer of Bell Canada International
Inc. and was appointed Executive Vice President and Chief Financial Officer on
February 1, 1995. He is also a Director of certain of its affiliates. Mr.
Somers currently serves as Chief Executive Officer of Bell Cablemedia. Prior
to joining Bell Canada International Inc. and since January 1989, Mr. Somers
was the President and Chief Executive Officer of Radio Atlantic Holdings
Limited. Mr. Somers is a member of the North American Society of Corporate
Planning, the Financial Executives Institution and the Financial Analysts
Federation.
Mr. Howard O. Thrall was appointed a Director of the General Partner
on March 6, 1996. Mr. Thrall had previously served as a Director of the
General Partner from December 1988 to December 1994. Since September 1993, Mr.
Thrall has served as Vice President of Sales, Asian Region, for World Airways,
Inc. 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 a
management and international marketing consultant, having completed assignments
with First National Net, Inc., Cheong Kang Associated (Korea), Aero Investment
Alliance, Inc. and Western Real Estate Partners.
Mr. Robert B. Zoellick was appointed a Director of the General Partner
on April 11, 1995. Mr. Zoellick is Executive Vice President, General Counsel
and Corporate Secretary 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 Economic and Agricultural Affairs and as Counselor of
the Department of State, a post he assumed in March 1989. From 1985 to 1988,
Mr. Zoellick served at the Department of Treasury in a number of capacities,
including Counselor to the Secretary. Mr. Zoellick received the Alexander
Hamilton and Distinguished Service Awards, highest honors of the Departments of
Treasury and State, respectively. The German Government awarded him the Knight
Commanders Cross for his work on Germany unification. Mr. Zoellick currently
serves on the boards of 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 and the
Overseas Development Council.
32
<PAGE> 33
Derek H. Burney, John A. MacDonald and Daniel E. Somers are directors
of the General Partner. Reports by these persons with respect to the ownership
of limited partnership interests in the Partnership required by Section 16(a)
of the Securities Exchange Act of 1934, as amended, were not filed within the
required time. None of these individuals own any limited partnership interests
in the Partnership.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no employees; however, various personnel are
required to operate the cable television systems owned by the Partnership.
Such personnel are employed by the General Partner and, pursuant to the terms
of the limited partnership agreement of the Partnership, the cost of such
employment is charged by the General Partner to the Partnership as a direct
reimbursement item. See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
No person or entity owns 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 as contemplated by the limited partnership agreement of
the Partnership. The General Partner believes that the terms of such
transactions are generally as favorable as could be obtained by the Partnership
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 from unaffiliated parties.
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 Partnership. Allocations of personnel costs
are based primarily on actual time spent by employees of the General Partner
with respect to each partnership managed. Remaining expenses are allocated
based on the pro rata relationship of the Partnership's revenues to the total
revenues of all systems owned or managed by the General Partner and certain of
its subsidiaries. Systems owned by the General Partner and all other systems
owned by partnerships for which Jones Intercable, Inc. is the general partner,
are also allocated a proportionate share of these expenses.
The General Partner also advances funds and charges interest on the
balance payable from the Partnership. The interest rate charged the
Partnership approximates the General Partner's weighted average cost of
borrowing.
The Systems receive stereo audio programming from Superaudio, a joint
venture owned 50% by an affiliate of the General Partner and 50% by an
unaffiliated party, educational video programming from Mind Extension
University, Inc., an affiliate of the General Partner, and computer video
programming from Jones Computer Network, Ltd., an affiliate of the General
Partner, for fees based upon the number of subscribers receiving the
programming.
Product Information Network ("PIN"), an affiliate of the General
Partner, provides advertising time for third parties on the Systems. In
consideration, the revenues generated from the third parties are shared
two-thirds and one-third between PIN and the Partnership. During the year
ended December 31, 1995, the Partnership received revenues from PIN of $1,871.
33
<PAGE> 34
The charges to the Partnership for related party transactions are as
follows for the periods indicated:
<TABLE>
<CAPTION>
Jones Spacelink Income/Growth Fund 1-A, Ltd. At December 31,
- -------------------------------------------- -------------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Management fees $ 341,942 $ 322,047 $ 310,716
Allocation of expenses 538,779 532,657 497,042
Interest expense 9,243 24,392 3,167
Amount of advances outstanding -0- 44,786 584,196
Highest amount of advances outstanding 30,144 816,671 984,476
Programming fees:
Superaudio 11,632 11,575 11,098
Mind Extension University 12,439 10,339 6,649
Jones Computer Network 4,868 310 -0-
</TABLE>
34
<PAGE> 35
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)1. See index to financial statements for a 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 Jones Spacelink
Income/Growth Fund 1-A, Ltd. (1)
10.1.1 Copy of franchise and related documents granting a
cable television system franchise for the County of
Adams, Indiana. (1)
10.1.2 Copy of franchise and related documents granting a
cable television system franchise for the County of
Allen, Indiana. (1)
10.1.3 Copy of franchise and related documents granting a
cable television system franchise for the City of
Auburn, Indiana. (1)
10.1.4 Copy of franchise and related documents granting a
cable television system franchise for the City of
Bluffton, Indiana. (1)
10.1.5 Copy of franchise and related documents granting a
cable television system franchise for the City of
Butler, Indiana. (1)
10.1.6 Copy of franchise and related documents granting a
cable television system franchise for the City of
Decatur, Indiana. (1)
10.1.7 Copy of franchise and related documents granting a
cable television system franchise for the County of
DeKalb, Indiana. (1)
10.1.8 Copy of franchise and related documents granting a
cable television system franchise for the City of
Garrett, Indiana. (1)
10.1.9 Copy of franchise and related documents granting a
cable television system franchise for the County of
Adams, Indiana. (1)
10.1.10 Copy of franchise and related documents granting a
cable television system franchise for the Town of
Monroe, Indiana. (1)
10.1.11 Copy of franchise and related documents granting a
cable television system franchise for the County of
Noble, Indiana. (1)
10.1.12 Copy of franchise and related documents granting a
cable television system franchise for the Town of
Poneto, Indiana. (1)
10.1.13 Copy of franchise and related documents granting a
cable television system franchise for the Town of
Uniondale, Indiana. (1)
10.1.14 Copy of franchise and related documents granting a
cable television system franchise for the Town of
Vera Cruz, Indiana. (1)
35
<PAGE> 36
10.1.15 Copy of franchise and related documents granting a
cable television system franchise for the Town of
Waterloo, Indiana. (1)
10.1.16 Copy of franchise and related documents granting a
cable television system franchise for the County of
Wells, Indiana. (1)
10.1.17 Copy of franchise and related documents granting a
cable television system franchise for the Town of
Bloomfield, Wisconsin. (2)
10.1.18 Copy of franchise and related documents granting a
cable television system franchise for the Town of
Geneva, Wisconsin. (2)
10.1.19 Copy of franchise and related documents granting a
cable television system franchise for the City of
Lake Geneva, Wisconsin. (2)
10.1.20 Copy of franchise and related documents granting a
cable television system franchise for the Town of
Linn, Wisconsin. (2)
10.1.21 Copy of franchise and related documents granting a
cable television system franchise for the Town of
Lyons, Wisconsin. (2)
10.1.22 Copy of franchise and related documents granting a
cable television system franchise for the City of
Ripon, Wisconsin. (2)
10.1.23 Copy of franchise and related documents granting a
cable television system franchise for the Town of
Ripon, Wisconsin. (2)
10.2.1 Credit and Security Agreement dated as of March 6,
1991 among Jones Spacelink Income/Growth Fund 1-A,
Ltd. and Credit Lyonnais New York Branch, as agent
for various lenders. (3)
10.2.2 Amendment No. 2 dated as of September 30, 1994 to
the Credit and Security Agreement dated as of March
6, 1991 among Jones Spacelink Income/Growth Fund
1-A, Ltd. and Credit Lyonnais New York Branch, as
agent for various lenders. (6)
10.2.3 Amendment No. 3 dated as of December 16, 1994 to the
Credit and Security Agreement dated as of March 6,
1991 among Jones Spacelink Income/Growth Fund 1-A,
Ltd. and Credit Lyonnais New York Branch, as agent
for various lenders. (6)
10.2.4 Amendment No. 4 dated as of March 28, 1996 to the
Credit and Security Agreement dated as of March 6,
1991 among Jones Spacelink Income/Growth Fund 1-A,
Ltd. and Credit Lyonnais New York Branch, as agent
for various lender.
10.3.1 Asset Purchase Agreement dated September 5, 1995
between Jones Spacelink Income/Growth Fund 1-A, Ltd.
and Jones Intercable, Inc. relating to the Ripon
System. (5)
10.3.2 Asset Purchase Agreement dated September 5, 1995
between Jones Spacelink Income/Growth Fund 1-A, Ltd.
and Jones Intercable, Inc. relating to the Lake
Geneva System. (5)
27 Financial Data Schedule
__________
(1) Incorporated by reference from the Partnership's
Annual Report on Form 10-K for fiscal year ended
12/31/88.
(2) Incorporated by reference from the Partnership's
Annual Report on Form 10-K for fiscal year ended
12/31/90.
36
<PAGE> 37
(3) Incorporated by reference from the Partnership's
Annual Report on Form 10-K for fiscal year ended
12/31/91.
(4) Incorporated by reference from the Partnership's
Current Report on Form 8-K dated January 11, 1991.
(5) Incorporated by reference from the Partnership's
Current Report on Form 8-K dated September 11, 1995.
(6) Incorporated by reference from the Partnership's
Annual Report on Form 10-K for fiscal year ended
12/31/94.
(b) Reports on Form 8-K
None.
37
<PAGE> 38
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.
JONES SPACELINK INCOME/
GROWTH FUND 1-A, 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 25, 1996 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.
<TABLE>
<S> <C> <C>
By: /s/ GLENN R. JONES
----------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 25, 1996 (Principal Executive Officer)
By: /s/ KEVIN P. COYLE
----------------------------------
Kevin P. Coyle
Group Vice President/Finance
Dated: March 25, 1996 (Principal Financial Officer)
By: /s/ LARRY KASCHINSKE
----------------------------------
Larry Kaschinske
Controller
Dated: March 25, 1996 (Principal Accounting Officer)
By: /s/ JAMES B. O'BRIEN
----------------------------------
James B. O'Brien
Dated: March 25, 1996 President and Director
By: /s/ RAYMOND L. VIGIL
----------------------------------
Raymond L. Vigil
Dated: March 25, 1996 Group Vice President and Director
By: /s/ DEREK H. BURNEY
----------------------------------
Derek H. Burney
Dated: March 25, 1996 Director
</TABLE>
38
<PAGE> 39
<TABLE>
<S> <C> <C>
By:
----------------------------------
Robert E. Cole
Dated: Director
By: /s/ WILLIAM E. FRENZEL
----------------------------------
William E. Frenzel
Dated: March 25, 1996 Director
By: /s/ DONALD L. JACOBS
----------------------------------
Donald L. Jacobs
Dated: March 25, 1996 Director
By: /s/ JAMES J. KREJCI
----------------------------------
James J. Krejci
Dated: March 25, 1996 Director
By: /s/ JOHN A. MACDONALD
----------------------------------
John A. MacDonald
Dated: March 25, 1996 Director
By:
----------------------------------
Raphael M. Solot
Dated: Director
By: /s/ DANIEL E. SOMERS
----------------------------------
Daniel E. Somers
Dated: March 25, 1996 Director
By: /s/ HOWARD O. THRALL
----------------------------------
Howard O. Thrall
Dated: March 25, 1996 Director
By: /s/ ROBERT B. ZOELLICK
----------------------------------
Robert B. Zoellick
Dated: March 25, 1996 Director
</TABLE>
39
<PAGE> 40
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description Page
- ------- ------------------- ----
<S> <C> <C>
4.1 Limited Partnership Agreement for Jones Spacelink
Income/Growth Fund 1-A, Ltd. (1)
10.1.1 Copy of franchise and related documents granting a cable
television system franchise for the County of Adams,
Indiana. (1)
10.1.2 Copy of franchise and related documents granting a cable
television system franchise for the County of Allen,
Indiana. (1)
10.1.3 Copy of franchise and related documents granting a cable
television system franchise for the City of Auburn,
Indiana. (1)
10.1.4 Copy of franchise and related documents granting a cable
television system franchise for the City of Bluffton,
Indiana. (1)
10.1.5 Copy of franchise and related documents granting a cable
television system franchise for the City of Butler,
Indiana. (1)
10.1.6 Copy of franchise and related documents granting a cable
television system franchise for the City of Decatur,
Indiana. (1)
10.1.7 Copy of franchise and related documents granting a cable
television system franchise for the County of DeKalb,
Indiana. (1)
10.1.8 Copy of franchise and related documents granting a cable
television system franchise for the City of Garrett,
Indiana. (1)
10.1.9 Copy of franchise and related documents granting a cable
television system franchise for the County of Adams,
Indiana. (1)
10.1.10 Copy of franchise and related documents granting a cable
television system franchise for the Town of Monroe,
Indiana. (1)
10.1.11 Copy of franchise and related documents granting a cable
television system franchise for the County of Noble,
Indiana. (1)
10.1.12 Copy of franchise and related documents granting a cable
television system franchise for the Town of Poneto,
Indiana. (1)
10.1.13 Copy of franchise and related documents granting a cable
television system franchise for the Town of Uniondale,
Indiana. (1)
10.1.14 Copy of franchise and related documents granting a cable
television system franchise for the Town of Vera Cruz,
Indiana. (1)
</TABLE>
<PAGE> 41
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description Page
- ------- ------------------- ----
<S> <C> <C>
10.1.15 Copy of franchise and related documents granting a cable
television system franchise for the Town of Waterloo,
Indiana. (1)
10.1.16 Copy of franchise and related documents granting a cable
television system franchise for the County of Wells,
Indiana. (1)
10.1.17 Copy of franchise and related documents granting a cable
television system franchise for the Town of Bloomfield,
Wisconsin. (2)
10.1.18 Copy of franchise and related documents granting a cable
television system franchise for the Town of Geneva,
Wisconsin. (2)
10.1.19 Copy of franchise and related documents granting a cable
television system franchise for the City of Lake Geneva,
Wisconsin. (2)
10.1.20 Copy of franchise and related documents granting a cable
television system franchise for the Town of Linn,
Wisconsin. (2)
10.1.21 Copy of franchise and related documents granting a cable
television system franchise for the Town of Lyons,
Wisconsin. (2)
10.1.22 Copy of franchise and related documents granting a cable
television system franchise for the City of Ripon,
Wisconsin. (2)
10.1.23 Copy of franchise and related documents granting a cable
television system franchise for the Town of Ripon,
Wisconsin. (2)
10.2.1 Credit and Security Agreement dated as of March 6, 1991
among Jones Spacelink Income/Growth Fund 1-A, Ltd. and
Credit Lyonnais New York Branch, as agent for various
lenders. (3)
10.2.2 Amendment No. 2 dated as of September 30, 1994 to the
Credit and Security Agreement dated as of March 6, 1991
among Jones Spacelink Income/Growth Fund 1-A, Ltd. and
Credit Lyonnais New York Branch, as agent for various
lenders. (6)
10.2.3 Amendment No. 3 dated as of December 16, 1994 to the Credit
and Security Agreement dated as of March 6, 1991 among
Jones Spacelink Income/Growth Fund 1-A, Ltd. and Credit
Lyonnais New York Branch, as agent for various lenders.
(6)
10.2.4 Amendment No. 4 dated as of March 28, 1996 to the Credit and
Security Agreement dated as of March 6, 1991 among Jones
Spacelink Income/Growth Fund 1-A, Ltd. and Credit Lyonnais
New York Branch, as agent for various lender.
10.3.1 Asset Purchase Agreement dated September 5, 1995 between
Jones Spacelink Income/Growth Fund 1-A, Ltd. and Jones
Intercable, Inc. relating to the Ripon System. (5)
10.3.2 Asset Purchase Agreement dated September 5, 1995 between
Jones Spacelink Income/Growth Fund 1-A, Ltd. and Jones
Intercable, Inc. relating to the Lake Geneva System. (5)
27 Financial Data Schedule
</TABLE>
__________
(1) Incorporated by reference from the Partnership's Annual
Report on Form 10-K for fiscal year ended 12/31/88.
(2) Incorporated by reference from the Partnership's Annual
Report on Form 10-K for fiscal year ended 12/31/90.
<PAGE> 42
(3) Incorporated by reference from the Partnership's Annual
Report on Form 10-K for fiscal year ended 12/31/91.
(4) Incorporated by reference from the Partnership's Current
Report on Form 8-K dated January 11, 1991.
(5) Incorporated by reference from the Partnership's Current
Report on Form 8-K dated September 11, 1995.
(6) Incorporated by reference from the Partnership's Annual
Report on Form 10-K for fiscal year ended 12/31/94.
<PAGE> 1
AMENDMENT NO. 4 (the "Amendment") dated as of
March 28, 1996 to the Credit and Security Agreement
dated as of March 6, 1991, as amended by Amendment No.
1 thereto dated as of March 30, 1994, Amendment No. 2
thereto dated as of September 30, 1994 and Amendment
No. 3 thereto dated as of December 16, 1994 (the
"Agreement"), among JONES SPACELINK INCOME/GROWTH FUND
1-A, LTD., a Colorado limited partnership (the
"Borrower"), THE LENDERS REFERRED TO THEREIN (the
"Lenders") and CREDIT LYONNAIS NEW YORK BRANCH, as
agent for the Lenders (the "Agent").
INTRODUCTORY STATEMENT
All capitalized terms not otherwise defined in this Amendment are used
herein as defined in the Agreement.
The Borrower has requested that the Agreement be amended to modify
certain provisions of the Agreement as hereinafter set forth.
In consideration of the mutual agreements contained herein and other
good and valuable consideration, the parties hereto hereby agree as follows:
SECTION 1. Amendment to the Agreement. Subject to the provisions
of Section 2 hereof, the Agreement is hereby amended effective as of the
Effective Date (such term being used herein as defined in Section 2 hereof) as
follows:
(A) The definition of "Commitments" appearing in Article 1 of the
Agreement is hereby amended by deleting the words "the Term Loan Commitment
and" appearing therein.
(B) The definition of "Fixed Charges" appearing in Article 1 of
the Agreement is hereby amended by (i) inserting the words "Capital
Expenditures," immediately preceding the words "Management Fees" appearing in
the first sentence of such definition and (ii) deleting the second sentence of
such definition in its entirety.
(C) Clause (ii) of the definition of "Interest Period" appearing
in Article 1 of the Agreement is hereby amended in its entirety to read as
follows:
"(ii) no Interest Period may be selected which would end later
than December 31, 1997."
<PAGE> 2
(D) The definition of "Loans" appearing in Article 1 of the
Agreement is hereby amended by deleting the words "Term Loans and" appearing
therein.
(E) The definition of "Revolving Credit Commitment Termination
Date" appearing in Article 1 of the Agreement is hereby amended in its entirety
to read as follows:
"'Revolving Credit Commitment Termination Date' shall mean
December 31, 1997 or such earlier date on which the Commitments shall
terminate in accordance with Section 2.07 or Article 7 hereof."
(F) The following definitions are hereby deleted from Article 1 of
the Agreement:
"Applicable Margin"
"Conversion Date"
"Term Loans"
"Term Loan Commitment"
(G) Section 2.02 of the Agreement is hereby amended in its
entirety to read as follows:
"SECTION 2.02. [Intentionally left blank]"
(H) Section 2.04 (a) of the Agreement is hereby amended by
deleting the second and third sentences of such Section and inserting the
following sentence in lieu thereof:
"The outstanding principal balance of the Loans shall be payable in
full on the Revolving Credit Commitment Termination Date, subject to
any mandatory prepayment as provided in Section 2.10 hereof and
acceleration as provided in Article 7 hereof."
(I) The first sentence of Section 2.05 (a) of the Agreement is
hereby amended by deleting the words "the Applicable Margin" appearing therein
and inserting "1-1/4%" in lieu thereof.
(J) The first sentence of Section 2.05 (b) of the Agreement is
hereby amended by deleting the words "the Applicable Margin" appearing therein
and inserting "1/4 of 1%" in lieu thereof.
(K) Section 2.05 (c) of the Agreement is hereby deleted in its
entirety.
(L) The heading of Section 2.07 of the Agreement is hereby amended
in its entirety to read as follows:
-2-
<PAGE> 3
"SECTION 2.07. Optional and Mandatory Termination or
Reduction of Commitments."
(M) Section 2.07(b) of the Agreement is hereby amended by
deleting the phrase "pursuant to Section 2.07(a)," appearing therein and
inserting the phrase "pursuant to this Section 2.07," in lieu thereof.
(N) Section 2.07 of the Agreement is hereby further amended by
adding the following additional paragraphs (d) and (e):
"(d) Simultaneously with the consummation of the sale or
other disposition of the Wisconsin System (as contemplated and
permitted by Section 6.04(d) hereof), the Revolving Credit
Commitments shall be automatically and permanently reduced to
$8,000,000 in the aggregate.
(e) Simultaneously with the consummation of the sale or
other disposition of the Indiana System (as contemplated and permitted
by Section 6.04(e) hereof), the Revolving Credit Commitments shall be
automatically and permanently terminated in their entirety."
(O) The heading of Section 2.10 of the Agreement is hereby amended
in its entirety to read as follows:
"SECTION 2.10. Optional and Mandatory Prepayment of Loans;
Reimbursement of Lenders."
(P) Section 2.10(a) of the Agreement is hereby amended by deleting
the third sentence appearing therein.
(Q) Section 2.10 of the Agreement is hereby amended by adding the
following additional paragraphs (f) and (g):
"(f) Simultaneously with the consummation of the sale or
other disposition of the Wisconsin System (as contemplated and
permitted by Section 6.04(d) hereof), the Borrower shall pay to the
Agent for the pro rata account of each Lender as a mandatory
prepayment of the Loans, an amount equal to the greater of (i)
$5,000,000 and (ii) fifty percent (50%) of the net cash proceeds
received by the Borrower form the sale or other disposition of the
Wisconsin System.
(g) Simultaneously with the consummation of the sale or
other disposition of the Indiana System (as contemplated and permitted
by Section 6.04(e) hereof), the Borrower shall repay all outstanding
Loans and other Obligations hereunder in full."
-3-
<PAGE> 4
(R) the introductory paragraph of Section 4.02 of the Agreement is
hereby amended by deleting the words "and the Term Loan" from the parenthetical
phrase appearing therein.
(S) Section 5.01(d) of the Agreement is hereby amended by deleting
the words "beginning prior to the final maturity of the Term Loans" appearing
therein.
(T) Section 5.06(b) of the Agreement is hereby deleted in its
entirety.
(U) Section 6.04 of the Agreement is hereby amended by adding the
following additional paragraphs (d) and (e):
"(d) the sale or other disposition of the Wisconsin System
provided that (i) the Borrower complies with Section 2.10(f) hereof
and (ii) at least five (5) Business Days prior to the consummation of
such sale or other disposition, the Agent shall have received written
notice thereof.
(e) the sale or other disposition of the Indiana System
provided (i) that the Borrower complies with Section 2.10(g) hereof
and (ii) at least five (5) Business Days prior to the consummation of
such sale or other disposition, the Agent shall have received written
notice thereof."
(V) Section 6.14 of the Agreement is hereby amended in its
entirety to read as follows:
"SECTION 6.14. Total Debt to Cash Flow Ratio of the
Borrower.
Permit the ratio of the Total Debt of the Borrower to
Annualized Operating Cash Flow of the Borrower to exceed 3.50:1.00 at
any time."
(W) Section 6.17 of the Agreement is hereby amended in its
entirety to read as follows:
"SECTION 6.17. Restricted Payments.
Declare, make or incur any liability to make any Restricted
Payments except: (A) (i) payment (but not prepayment) of current
Management Fees, but only to the extent such payment with respect to
any fiscal quarter does not exceed 5.0% of consolidated gross revenues
of the Borrower for that fiscal quarter, (ii) payment (but not
prepayment) of current Home Office Allocations, (iii) payment of
deferred Management Fees and deferred Home Office Allocations,
together with interest thereon
-4-
<PAGE> 5
(not to exceed Jones Intercable, Inc.'s weighted average cost of
funds) and (iv) distributions to limited partners in accordance with
the terms of the Partnership Agreement, provided, however, that the
aggregate amount of all Restricted Payments permitted by clauses (i),
(ii), (iii) and (iv) above, made in any one quarter may not exceed
Operating Cash Flow for the preceding quarter plus the amount of
Revolving Credit Loan proceeds still available pursuant to Section
5.06(a)(iv) on the date of the Restricted Payment, and (B)
distributions to limited partners made from the net cash proceeds
which are received by the Borrower form the sale or other disposition
of the Wisconsin System and which have not been used to prepay the
Loans hereunder in accordance with Section 2.10(f) hereof; provided,
that on the date of any such Restricted Payment described in clause
(A) or (B) of this Section 6.17 and after giving effect to such
payment, no Default or Event of Default would result hereunder."
(X) Clause (y) of Section 10.03(b) of the Agreement is hereby
amended in its entirety to read as follows:
"(y) after any reduction in such Lender's Revolving Credit
Commitment, a pro rata amount of such assigning Lender's Revolving
Credit Commitment as of such date or, if less, the entire remaining
balance of such assigning Lender's Revolving Credit Commitment on such
date, and"
(Y) Schedule 1 to the Agreement is hereby amended by deleting the
column entitled "Term Loan Commitment" in its entirety.
(Z) Schedule 2, Schedule 3.06, Schedule 3.24A and Schedule 3.24B
to the Agreement are hereby amended in their entirety by replacing them with
the Schedules which are annexed hereto.
SECTION 2. Conditions to Effectiveness. The effectiveness of
this Amendment is subject to the satisfaction in full of the following
conditions precedent (the first date on which all such conditions have been
satisfied being herein referred to as the "Effective Date"):
(A) The Agent shall have received executed counterparts of this
Amendment, which, when taken together, bear the signatures of the Borrower and
those Lenders required by Section 10.09 of the Agreement;
(B) the Agent shall have received a fee of $40,000 which fee (i)
shall be paid by the Borrower in immediately
-5-
<PAGE> 6
available funds and (ii) once paid, shall not be refundable under any
circumstances and (iii) shall be distributed by the Agent pro rata among the
Lenders (including the Agent) in accordance with such Lender's Commitment under
the Agreement; and
(C) all legal matters in connection with this Amendment shall be
reasonably satisfactory to Morgan, Lewis & Bockius LLP, counsel for the Agent.
SECTION 3. Representations and Warranties. The Borrower
represents and warrants to the Lenders that:
(A) As of the date hereof, there are no deferred Management Fees or
deferred Home Office Allocations payable by the Borrower to the General
Partner;
(B) the representations and warranties contained in the Agreement
and in the other Fundamental Documents are true and correct in all material
respects on and as of the date hereof as if such representations and warranties
had been made on and as of the date hereof (except to the extent such
representations and warranties expressly relate to an earlier date); and
(C) the Borrower is in compliance with all the terms and
provisions set forth in the Agreement and no Default or Event of Default has
occurred and is continuing under the Agreement.
SECTION 4. Full Force and Effect.
Except as expressly set forth herein, this Amendment does not
constitute a waiver or modification of any provision of the Agreement or a
waiver of any Default or Event of Default Agent. Except as expressly amended
hereby, the Agreement shall continue in full force and effect in accordance
with the provisions thereof in the date hereof. As used in the Agreement, the
terms "Credit Agreement", "this Agreement", "herein", "hereafter", "hereto",
"hereof", and words of similar import, shall, unless the context otherwise
requires, mean the Agreement as amended by this Amendment. References to the
terms "Agreement" or "Credit Agreement" appearing in the Exhibits or Schedules
to the Agreement, shall unless the context otherwise requires, mean the
Agreement as amended by this Amendment.
SECTION 5. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
SECTION 6. Counterparts. This Amendment may be executed in two
or more counterparts, each of which shall
-6-
<PAGE> 7
constitute an original, but all of which when taken together shall constitute
but on instrument.
SECTION 7. Expenses. The Borrower agrees to pay all reasonable
out-of-pocket expenses incurred by the Agent in Amendment and any other
documentation contemplated hereby, including, but not limited to, the
reasonable fees and disbursements of counsel for the Agents.
SECTION 8. Headings. The headings of this Amendment are for the
purposes of reference only and shall not affect the construction of, or be
taken into consideration in interpreting, this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their duly authorized officers, all as of the date and year
first written above.
BORROWER:
JONES SPACELINK INCOME/
GROWTH FUND 1-A, LTD.
By: Jones Intercable, Inc.,
its General Partner
By:
----------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
individually and as Agent
By:
------------------------------------
Name: James E. Morris
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH, individually
By:
------------------------------------
Name: James E. Morris
Title: Authorized Signature
-7-
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