<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(x) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1994.
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
Commission File Number 0-19889
Jones United Kingdom Fund, Ltd.
- - --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-1145140
- - --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D.#
1B Portland Place, London England W1N3AA
----------------------------------------
Address of principal executive office
011-44-71-291-3135
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
l934 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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JONES UNITED KINGDOM FUND, LTD.
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------- -----------
<S> <C> <C>
ASSETS
------
CASH AND CASH EQUIVALENTS $ 3,873,606 $ 9,940,929
RECEIVABLES:
Subscriptions receivable, net of related syndication
costs and sales commissions of $-0- and $84,700
at September 30, 1994 and December 31, 1993,
respectively - 531,300
Other receivables 2,540,962 1,932,198
INVESTMENT IN CABLE TELEVISION AND
TELECOMMUNICATIONS PROPERTIES, net
of accumulated depreciation and amortization of
$5,210,173 and $2,368,403, at September 30, 1994
and December 31, 1993, respectively 68,271,171 36,117,963
PREPAID EXPENSES AND OTHER ASSETS 165,163 118,069
----------- -----------
Total Assets $74,850,902 $48,640,459
=========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
<PAGE> 3
JONES UNITED KINGDOM FUND, LTD.
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------- ------------
<S> <C> <C>
LIABILITIES:
Accounts payable to affiliates $ 3,078,659 $ 2,368,948
Trade accounts payable 4,945,526 3,766,176
Accrued liabilities 10,639,769 3,752,100
Accrued loss on forward contracts - 60,725
Note payable 3,906,816 4,055,520
------------ -----------
Total liabilities 22,570,770 14,003,469
------------ -----------
MINORITY INTERESTS 14,502,804 8,061,163
------------ -----------
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (111,675) (63,497)
------------ -----------
(110,675) (62,497)
------------ -----------
Limited Partners-
Net contributed capital (56,935 and 42,170 units
outstanding at September 30, 1994 and
December 31, 1993, respectively) 48,817,997 36,083,185
Accumulated deficit (10,774,609) (6,004,957)
------------ -----------
38,043,388 30,078,228
------------ -----------
Currency translation adjustment (155,385) (3,439,904)
------------ -----------
Total partners' capital (deficit) 37,777,328 26,575,827
------------ -----------
Total liabilities and partners' capital (deficit) $ 74,850,902 $48,640,459
============ ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
<PAGE> 4
JONES UNITED KINGDOM FUND, LTD.
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1994 1993 1994 1993
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
REVENUES $ 2,298,873 $ 760,198 $ 5,887,823 $ 1,406,247
COSTS AND EXPENSES:
Operating, general and administrative 3,938,301 1,110,056 9,325,099 2,418,779
Management fees and allocated
overhead from the General Partner 393,968 195,658 1,137,589 609,404
Depreciation and amortization 918,838 441,659 2,437,389 1,086,700
----------- ----------- ----------- -----------
OPERATING LOSS (2,952,234) (987,175) (7,012,254) (2,708,636)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (5,950) (26,300) (337,718) (74,349)
Interest income 53,426 6,920 176,592 15,711
----------- ----------- ----------- -----------
LOSS BEFORE MINORITY INTERESTS (2,904,758) (1,006,555) (7,173,380) (2,767,274)
----------- ----------- ----------- -----------
Minority interests 1,319,987 - 2,355,550 -
----------- ----------- ----------- -----------
NET LOSS $(1,584,771) $(1,006,555) $(4,817,830) $(2,767,274)
=========== =========== =========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (15,848) $ (10,066) $ (48,178) $ (27,673)
=========== =========== =========== ===========
Limited Partners $(1,568,923) $ (996,489) $(4,769,652) $(2,739,601)
=========== =========== =========== ===========
NET LOSS PER LIMITED PARTNERSHIP
UNIT $ (27.56) $ (31.86) $ (88.31) $ (113.82)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 56,935 31,277 54,012 24,069
=========== =========== =========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
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JONES UNITED KINGDOM FUND, LTD.
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
----------------------------------------
1994 1993
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,817,830) $ (2,767,274)
Adjustments to reconcile net loss to net cash used in
operating activities:
Minority interests (2,355,550) -
Depreciation and amortization 2,437,389 1,086,700
Decrease (increase) in other receivables (608,764) 16,728
Increase in interest receivable - (6,998)
Increase in prepaid expenses and other assets (47,094) (267,585)
Increase in trade accounts payable and accrued liabilities 2,420,339 1,369,371
------------ ------------
Net cash used in operating activities (2,971,510) (569,058)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction costs for cable television/telephony system (34,651,322) (12,358,455)
Increase in construction accounts payable 5,646,680 662,390
------------ ------------
Net cash used in investing activities (29,004,642) (11,696,065)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributed capital, net of syndication costs and sales
commissions 12,734,812 12,285,450
Proceeds from sale of common stock by subsidiary 8,797,191 -
Decrease in note payable (148,704) (10,880)
Decrease (increase) in net subscriptions receivable 531,300 (680,513)
Increase in accounts payable to affiliates 709,711 3,219,806
------------ ------------
Net cash provided by financing activities 22,624,310 14,813,863
------------ ------------
Effect of currency exchange rate changes 3,284,519 (1,022,329)
------------ ------------
Increase (decrease) in cash and cash equivalents (6,067,323) 1,526,411
Cash and cash equivalents, beginning of period 9,940,929 1,273,381
------------ ------------
Cash and cash equivalents, end of period $ 3,873,606 $ 2,799,792
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 322,995 $ 75,972
============ ============
Loss on forward contracts $ - $ 495,863
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
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JONES UNITED KINGDOM FUND, LTD.
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Consolidated
Balance Sheets and Consolidated Statements of Operations and Cash Flows in
conformity with generally accepted accounting principles. However, in the
opinion of management, this data includes all adjustments, consisting only of
normal recurring accruals, necessary to present fairly the financial position
of Jones United Kingdom Fund, Ltd. (the "Partnership") at September 30, 1994
and December 31, 1993 and its results of operations and cash flows for the
three and nine month periods ended September 30, 1994 and 1993. Results of
operations for these periods are not necessarily indicative of results to be
expected for the full year. Certain prior year amounts were reclassified to
conform to the 1994 presentation. As a result of the Partnership's ownership of
66.7 percent of the shares of Jones Cable Group of South Hertfordshire Limited
("Jones South Hertfordshire"), for accounting purposes it has been consolidated
with the Partnership's operations.
(2) INVESTMENT IN SUBSIDIARY
Jones South Hertfordshire is a United Kingdom corporation that owns
and operates a cable television/telephony system in the South Hertfordshire
franchise area, located in the northwestern suburbs of London, England (the
"South Herts System"). There are approximately 95,000 homes in the franchise
area, of which approximately 85,000 will be passed by the South Herts System's
cable television/telephony plant when construction in the franchise area is
completed. At September 30, 1994, the network under construction consisted of
approximately 455 miles of cable plant, which passed approximately 66,000
homes. At September 30, 1994, the South Herts System's cable television
subscribers totalled approximately 11,691 and the South Herts System's
residential telephone customers totalled approximately 11,525. In addition,
the South Herts System provided telephony services to 280 businesses in its
franchise area.
On February 20, 1992, upon receipt of approval from United Kingdom
regulatory authorities, the Partnership acquired the beneficial ownership of
100 percent of the shares of Jones South Hertfordshire. The acquisition by the
Partnership of all of the shares of Jones South Hertfordshire resulted in the
Partnership acquiring beneficial ownership of the South Herts System. Through
September 30, 1994, the total amount invested by the Partnership to fund the
South Herts System's construction and development was approximately
$46,000,000.
In order to provide additional funding for the construction of the
South Herts System, two additional participants invested in Jones South
Hertfordshire in 1993 and 1994. Jones Intercable of South Hertfordshire, Inc.
invested L.3,400,000 in Jones South Hertfordshire in exchange for 34,000 Class
A shares in November 1993. Also in November 1993, affiliates of Sandler
Capital Management (the "Sandler Group") committed to invest L.6,800,000 in
Jones South Hertfordshire, of which L.2,266,600 was funded in November 1993 for
22,666 Class B shares and the same amount was funded in April 1994 for an
additional 22,666 Class B shares. The Sandler Group invested L.1,006,566 for
10,066 Class B shares in May 1994 and Jones Intercable of South Hertfordshire,
Inc. invested L.503,283 for 5,033 Class A shares in May 1994. In July 1994, the
Sandler Group invested L.1,800,000 for 18,000 Class B shares and Jones
Intercable of South Hertfordshire, Inc. invested L.466,800 for 4,668 Class A
shares.
On June 10, 1994, Jones Global Group, Inc. ("Global Group"), Jones
Intercable, Inc. and certain of their subsidiaries (collectively, "Jones") and
the Sandler Group entered into agreements to transfer all of their interests in
their United Kingdom cable/telephony operations and franchises, including Jones
Intercable of South Hertfordshire, Inc.'s interest in Jones South
Hertfordshire, Jones Global Funds, Inc.'s general partner interest in the
Partnership and the Sandler Group's interest in Jones South Hertfordshire to
Bell Cablemedia plc ("BCM") in exchange for American Depository Shares ("ADSs")
to be issued by BCM in connection with a planned public offering of ADSs by
BCM. At that date, BCM was then indirectly owned 80 percent by Bell Canada
International Inc. ("BCI") and 20 percent by Cable & Wireless plc ("C&W").
On July 22, 1994, in connection with the closing of the public
offering by BCM, Jones and the Sandler Group completed the exchange of their
interests in United Kingdom cable/telephony operations and franchises for ADSs
issued by
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BCM. At closing, BCM acquired Jones Intercable of South Hertfordshire, Inc.'s
interest in Jones South Hertfordshire, the Sandler Group's interest in Jones
South Hertfordshire and Jones Global Funds, Inc.'s general partner interest in
the Partnership. In October 1994, the Partnership invested L.5,108,900 in
Jones South Hertfordshire for 51,089 Class A shares and BCM invested
L.2,554,600 in Jones South Hertfordshire for 25,546 Class A shares. As a
result of these transactions, Jones South Hertfordshire is now owned 66.7
percent by the Partnership and 33.3 percent by BCM, and the general partner of
the Partnership is now Fawnspring Limited, a wholly owned subsidiary of BCM
(the "General Partner").
BCM, through its majority-owned subsidiaries and the companies in
which it holds minority interests, including Videotron Holdings Plc, in which
BCM owns a 30.8 percent equity interest, holds exclusive cable television
licenses and related nonexclusive telecommunications licenses covering over one
million equity homes in the Greater London and adjacent areas. In addition to
its London franchises, BCM holds cable television and telecommunications
licenses covering franchise areas in other regions of the United Kingdom. BCM
has over two million equity homes in its franchise areas and, in terms of
equity homes, BCM is the third largest holder of cable television and
telecommunications licenses in the United Kingdom.
(3) TRANSACTIONS WITH AFFILIATED ENTITIES
Pursuant to the provisions of the Partnership's limited partnership
agreement, the general partner of the Partnership is entitled to be paid a
consulting fee by the Partnership. During the construction phases of the South
Herts System, this consulting fee is 2 percent of construction costs. After
completion of construction of each portion of the system, the consulting fee
for the completed portion is 5 percent of the gross revenues, excluding
revenues from the disposal of cable television/telephony systems. The
consulting fee is calculated and payable monthly. Consulting fees paid or
payable by the Partnership for the three months ended September 30, 1994 and
1993 were $208,023 and $146,560, respectively. Of these amounts, $-0- and
$108,706 were capitalized in the investment in cable television and
telecommunications properties on the Consolidated Balance Sheets and $208,023
and $37,854 were expensed on the Consolidated Statements of Operations for the
three months ended September 30, 1994 and 1993, respectively. Consulting fees
paid or payable by the Partnership for the nine months ended September 30, 1994
and 1993 were $423,401 and $302,030, respectively. Of these amounts, $-0- and
$231,621 were capitalized in the investment in cable television and
telecommunications properties on the Consolidated Balance Sheets and $423,401
and $70,409 were expensed on the Consolidated Statements of Operations for the
nine months ended September 30, 1994 and 1993, respectively.
The General Partner and its affiliates are entitled to reimbursement
from the Partnership for direct and indirect expenses allocable to the
operation of the Partnership and the South Herts System, which includes, but is
not limited to, rent, supplies, telephone, travel, copying charges and salaries
of any full or part-time employees. The General Partner believes that the
methodology used in allocating these expenses is reasonable. During the three
months ended September 30, 1994 and 1993, reimbursements made by the
Partnership to the General Partner for any allocable direct and indirect
expenses totalled $185,945 and $157,804, respectively. During the nine months
ended September 30, 1994 and 1993, reimbursements made to the General Partner
and its affiliates for expenses totalled $714,188 and $538,995, respectively.
The General Partner and its affiliates may make advances to, and defer
collection of fees and allocated expenses owed by, the Partnership, although
they are not required to do so. The Partnership will be charged interest on
such advances and deferred amounts at a rate equal to the General Partner's or
certain affiliates' weighted average cost of all debt financing from
unaffiliated entities. For both the three and nine months ended September 30,
1994 and 1993, no such interest had been charged to the Partnership by the
General Partner or its affiliates.
(4) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Currency Exchange Rate
The costs incurred by Jones South Hertfordshire are converted from
United Kingdom pounds sterling to United States dollars pursuant to Statement
of Financial Accounting Standard No. 52 ("SFAS 52"). Since pounds sterling
represent Jones South Hertfordshire's functional currency, translation
adjustments related to recording assets and liabilities in U.S. dollars at
current exchange rates are charged or credited directly to cumulative
translation adjustment in shareholder's equity. In the discretion of the
General Partner, funds of the Partnership being held in United States dollars
will be converted from United States dollars to United Kingdom pounds sterling.
Likewise, net proceeds from the sale or
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refinancing of the Partnership's cable television/telephony properties will be
converted from United Kingdom pounds sterling to United States dollars in order
to make any distributions to the partners.
Through December 1993, the Partnership purchased United Kingdom pounds
sterling through forward foreign exchange contracts negotiated by an affiliate
of the Partnership's former general partner for the benefit of the Partnership
to hedge its identifiable foreign currency construction commitments and for the
benefit of other affiliates. The blended average exchange rate under these
contracts was U.S. $1.68 per United Kingdom pound sterling. At December 31,
1993, the Partnership had incurred a loss of $275,432 on these contracts, which
has been capitalized in the investment in cable television and
telecommunications properties on the Consolidated Balance Sheets. From January
1, 1994 through July 22, 1994, the Partnership purchased United Kingdom pounds
sterling through new forward foreign exchange contracts negotiated by the
affiliate of the Partnership's former general partner. The blended average
exchange rate under these contracts was U.S. $1.46 per United Kingdom pound
sterling. At September 30, 1994, the Partnership had incurred a loss of
$59,548 on these contracts, which has been capitalized in the investment in
cable television and telecommunications properties on the Consolidated Balance
Sheets. There were no forward foreign exchange contracts available to the
Partnership at September 30, 1994.
Property, Plant and Equipment
Prior to receiving the first revenues from subscribers of a cable
television/telephony system constructed by the Partnership, all construction
costs, operating expenses and interest related to the system were capitalized.
The Partnership's former general partner had estimated a prematurity period of
3 years for the South Herts System based upon its urban location, housing
density and requirement for mostly underground cable. The portions capitalized
are decreased as progress is made toward obtaining the subscriber level
expected at the end of the prematurity period, after which no further expenses
are capitalized. In addition, costs (including labor, overhead and other costs
of completion) associated with installation in homes not previously served by
cable television/telephony are capitalized and included as a component of the
investment in cable television and telecommunications properties. From
inception to September 30, 1994, the South Herts System had received $8,821,525
of revenue from operations and had capitalized approximately $2,784,526 of
expenses.
(5) FINANCINGS
In July 1992, Jones South Hertfordshire entered into an agreement with
a bank to refinance its primary office/headend building for L.800,000. This
loan is to be repaid over 10 years with quarterly principal and interest
payments due July 1993 through July 2002. Interest is calculated at the London
InterBank Offered Rate ("LIBOR") plus 2 percent. For the three months ended
September 30, 1994 and 1993, Jones South Hertfordshire had recorded interest
expense of $34,152 and $26,300, respectively. For the nine months ended
September 30, 1994 and 1993, Jones South Hertfordshire had recorded interest
expense of $74,886 and $74,349, respectively. For the interest period December
30, 1993 to March 30, 1994, the effective interest rate was fixed at 7.50
percent. For the interest period March 31, 1994 to July 24, 1994 , the
effective interest rate was fixed at 7.3125 percent. For the interest period
July 25, 1994 to October 24, 1994, the effective interest rate is fixed at
7.375 percent. At September 30, 1994, the three-month LIBOR rate was 5.87
percent. At September 30, 1994, the amount outstanding on this loan totalled
$1,050,669 when converted to U.S. dollars at the exchange rate between U.S.
dollars and U.K. pounds sterling effective at such date.
Jones South Hertfordshire is currently negotiating, based upon
commitments received from two banks, a facility agreement (the "proposed South
Herts credit agreement"), which will provide for a L.28,000,000 revolving and
term loan credit facility. The facility commitments are subject to negotiation
of final terms and documentation and no assurance can be given that definitive
documentation for the proposed South Herts credit agreement will be agreed.
The credit facility offered by the banks would be a revolving facility
through December 31, 1997, at which time the facility would be converted into a
term loan. The term loan portion would require repayment of outstanding
principal amounts beginning in 1998, with the final 50 percent of such amounts
being repaid in 2001 and 2002. The facility is expected to be divided into two
tranches and the aggregate amount drawn down under both tranches may not exceed
L.28,000,000. The availability of tranche A of L.16,000,000 would be subject
to certain conditions which have not currently been satisfied and amounts drawn
down under tranche A would bear interest at sterling LIBOR plus a margin of
3.75 percent. The availability of tranche B of L.28,000,000 would be subject
to certain conditions which have not currently been satisfied and amounts drawn
down under tranche B would bear interest at sterling LIBOR plus margin ranging
from 2.5 percent to 1.75 percent depending on the bank debt to operating cash
flow ratio of Jones South Hertfordshire. The
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maximum amount that can be borrowed under both tranches is L.28,000,000. The
proposed South Herts credit agreement is expected to contain various covenants,
including financial covenants, and events of default, including a restriction
on the payment of dividends.
The proposed South Herts credit agreement is expected to be secured by
all of the assets of Jones South Hertfordshire. In addition, there will be a
pledge of all of the shares of Jones South Hertfordshire as additional security
for the facility. Such debt financing, if completed, coupled with the equity
investments discussed in Note 2 and temporary loans from BCM are expected to be
sufficient to enable Jones South Hertfordshire to complete the construction of
the South Herts System within the timetable set forth in the modified license.
(6) COMMITMENTS
In October 1992, Jones South Hertfordshire entered into a short-term
interconnection agreement with British Telecommunications plc so that it can
provide both long-distance national and international telephone services. This
agreement has a major review on April 1, 1997. Also, in May 1994, Jones South
Hertfordshire entered into an interconnection agreement with Mercury
Communications Limited to provide both long-distance national and international
telephone services. This agreement expires April 16, 1996. A telephony switch
was purchased pursuant to a financing arrangement with the seller for
L.2,712,730. At September 30, 1994, Jones South Hertfordshire had capitalized
U.S. $3,525,347 for the telephony equipment, which is the cost of the equipment
that has been delivered and is fully operational. As additional equipment is
delivered and becomes operational, the related costs will be capitalized.
As of September 30, 1994, approximately 78 percent of the South Herts
System had been constructed. Because Jones South Hertfordshire did not meet
the construction timetable set forth in the original license issued for the
South Hertfordshire franchise area, Jones South Hertfordshire requested an
amendment of the construction timetable from OFTEL, the United Kingdom
regulatory authority that issued the license. On February 28, 1994, OFTEL
modified the South Herts System's license. The license, as modified, requires
that the South Herts System pass 60,000 homes with cable by December 31, 1994
and that it be completed (by passing 85,000 homes) by December 31, 1995. At
September 30, 1994, the network under construction consisted of approximately
455 miles of cable plant, passing approximately 66,000 homes.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Partnership was formed on December 23, 1991 to acquire, construct,
develop, own and operate cable television/telephony systems in the United
Kingdom. As of September 30, 1994, the Partnership had received limited
partner subscriptions of $56,935,000, or $49,106,438 net of sales commissions
and other organizational and offering costs. Sales of limited partnership
interests ended in April 1994.
In connection with and subsequent to the Partnership's acquisition of
Jones South Hertfordshire, the Partnership has invested its net offering
proceeds in Jones South Hertfordshire for construction and development costs.
Through September 30, 1994, the total amount invested by the Partnership to
fund the South Herts System's construction and development was approximately
$46,000,000.
Jones South Hertfordshire provides local telephone service using
telephone switching equipment that it owns, and it has entered into
interconnection agreements with British Telecommunications plc and Mercury
Communications Limited so that it can provide local, long-distance, national
and international telephone services. Jones South Hertfordshire purchased a
telephony switch for the South Herts System in August 1992. This switch
enables Jones South Hertfordshire to provide local telephony and related
value-added services. The switch was purchased pursuant to a financing
arrangement with the seller for L.2,712,730. At September 30, 1994, Jones
South Hertfordshire had capitalized U.S. $3,525,347 for the telephony switch,
which is the cost of the equipment that had been delivered at September 30,
1994, and is fully operational. As additional equipment is delivered and
becomes operational, the related costs will be capitalized. The
interconnection agreement with British Telecommunications plc has a major
review on April 1, 1997. The interconnection agreement with Mercury
Communications Limited expires April 16, 1996. Testing of the telephony
service started in November 1992, and the service was first offered to the
South Herts System's subscribers in February 1993.
In order to provide additional funding for the construction of the
South Herts System, two additional participants invested in Jones South
Hertfordshire in 1993 and 1994. Jones Intercable of South Hertfordshire, Inc.
invested L.3,400,000 in Jones South Hertfordshire in exchange for 34,000 Class
A shares in November 1993. Also in November 1993, affiliates of Sandler
Capital Management (the "Sandler Group") committed to invest L.6,800,000 in
Jones South Hertfordshire, of which L.2,266,600 was funded in November 1993
for 22,666 Class B shares and the same amount was funded in April 1994 for an
additional 22,666 Class B shares. The Sandler Group invested L.1,006,566 for
10,066 Class B shares in May 1994 and Jones Intercable of South Hertfordshire,
Inc. invested L.503,283 for 5,033 Class A shares in May 1994. In July 1994,
the Sandler Group invested L.1,800,000 for 18,000 Class B shares and Jones
Intercable of South Hertfordshire, Inc. invested L.466,800 for 4,668 Class A
shares.
On June 10, 1994, Jones Global Group, Inc. ("Global Group"), Jones
Intercable, Inc. and certain of their subsidiaries (collectively, "Jones") and
the Sandler Group entered into agreements to transfer all of their interests in
their United Kingdom cable/telephony operations and franchises, including Jones
Intercable of South Hertfordshire, Inc.'s interest in Jones South
Hertfordshire, Jones Global Funds, Inc.'s general partner interest in the
Partnership and the Sandler Group's interest in Jones South Hertfordshire to
Bell Cablemedia plc ("BCM") in exchange for American Depository Shares ("ADSs")
to be issued by BCM in connection with a planned public offering of ADSs by
BCM. At that date, BCM was then indirectly owned 80 percent by Bell Canada
International Inc. ("BCI") and 20 percent by Cable & Wireless plc ("C&W").
On July 22, 1994, in connection with the closing of the public
offering by BCM, Jones and the Sandler Group completed the exchange of their
interests in United Kingdom cable/telephony operations and franchises for ADSs
issued by BCM. At closing, BCM acquired Jones Intercable of South
Hertfordshire, Inc.'s interest in Jones South Hertfordshire, the Sandler
Group's interest in Jones South Hertfordshire and Jones Global Funds, Inc.'s
general partner interest in the Partnership. In October 1994, the Partnership
invested L.5,108,900 in Jones South Hertfordshire for 51,089 Class A shares and
BCM invest L.2,554,600 in Jones South Hertfordshire for 25,546 Class A shares.
As a result of these transactions, Jones South Hertfordshire is now owned 66.7
percent by the Partnership and 33.3 percent by BCM, and the general partner of
the Partnership is now Fawnspring Limited, a wholly owned subsidiary of BCM
(the "General Partner").
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BCM, through its majority-owned subsidiaries and the companies in
which it holds minority interests, including Videotron Holdings Plc, in which
BCM owns a 30.8 percent equity interest, holds exclusive cable television
licenses and related nonexclusive telecommunications licenses covering over one
million equity homes in the Greater London and adjacent areas. In addition to
its London franchises, BCM holds cable television and telecommunications
licenses covering franchise areas in other regions of the United Kingdom. BCM
has over two million equity homes in its franchise areas and, in terms of
equity homes, BCM is the third largest holder of cable television and
telecommunications licenses in the United Kingdom.
During the first nine months of 1994, Jones South Hertfordshire had
approximately $34,463,136 of capital expenditures. Approximately 95 percent of
these expenditures were for the construction of the South Herts System and were
funded by equity contributions made by the Partnership and the other
shareholders of Jones South Hertfordshire and by advances from affiliates.
Additional capital expenditures totalling approximately $7,832,000 will be
required through 1994 to continue construction of the South Herts System. Such
expenditures are expected to be funded through debt financing, if available,
equity contributions and temporary loans from BCM, if necessary.
In July 1992, Jones South Hertfordshire entered into an agreement with
a bank to refinance its primary office/headend building for L.800,000. This
loan is to be repaid over 10 years with quarterly principal and interest
payments due July 1993 through July 2002. Interest is calculated at the London
InterBank Offered Rate ("LIBOR") plus 2 percent. For the interest period
December 30, 1993 to March 30, 1994, the effective interest rate was fixed at
7.50 percent. For the interest period March 31, 1994 to July 24, 1994 , the
effective interest rate was fixed at 7.312 percent. For the interest period
July 25, 1994 to October 24, 1994, the effective interest rate is 7.375
percent. At September 30, 1994, the three-month LIBOR rate was 5.87 percent.
At September 30, 1994, the amount outstanding on this loan totalled $1,050,669
when converted to U.S. dollars at the exchange rate between U.S. dollars and
U.K. pounds sterling effective at such date.
Jones South Hertfordshire is currently negotiating, based upon
commitments received from two banks, a facility agreement (the "proposed South
Herts credit agreement"), which will provide for a L.28,000,000 revolving and
term loan credit facility. The facility commitments are subject to negotiation
of final terms and documentation and no assurance can be given that definitive
documentation for the proposed South Herts credit agreement will be agreed.
The credit facility offered by the banks would be a revolving facility through
December 31, 1997, at which time the facility would be converted into a term
loan. The term loan portion would require repayment of outstanding principal
amounts beginning in 1998, with the final 50 percent of such amounts being
repaid in 2001 and 2002. The facility is expected to be divided into two
tranches and the aggregate amount drawn down under both tranches may not exceed
L.28,000,000. The availability of tranche A of L.16,000,000 would be subject
to certain conditions which have not currently been satisfied and amounts drawn
down under tranche A would bear interest at sterling LIBOR plus a margin of
3.75 percent. The availability of tranche B of L.28,000,000 would be subject
to certain conditions which have not currently been satisfied and amounts drawn
down under tranche B would bear interest at sterling LIBOR plus margin ranging
from 2.5 percent to 1.75 percent depending on the bank debt to operating cash
flow ratio of Jones South Hertfordshire. The maximum amount that can be
borrowed under both tranches is L.28,000,000. Such debt financing, if
completed, coupled with the equity investments discussed in Note 2 and
temporary loans from BCM, if necessary, are expected to be sufficient to enable
Jones South Hertfordshire to complete the construction of the South Herts
System within the timetable set forth in the modified license.
11
<PAGE> 12
RESULTS OF OPERATIONS
Revenues of the Partnership increased $1,538,675 for the three months
ended September 30, 1994, over the similar period in 1993 from $760,198 in 1993
to $2,298,873 in 1994. Revenues of the Partnership increased $4,481,576 for
the nine months ended September 30, 1994, over the similar period in 1993 going
from $1,406,247 in 1993 to $5,887,823 in 1994. These increases were the result
of increases in the South Herts System's customer subscriber base due primarily
to additional activated plant in 1994. The South Herts System served
approximately 5,500 cable television subscribers and 4,000 telephony
subscribers at September 30, 1993 as compared to approximately 11,691 cable
television subscribers and 11,805 telephony subscribers at September 30, 1994.
Operating, general and administrative expenses increased $2,828,245
for the three months ended September 30, 1994 over the similar period in 1993
from $1,110,056 in 1993 to $3,938,301 in 1994. Operating, general and
administrative expenses increased $6,906,320 for the nine months ended
September 30, 1994, over the similar period in 1993 from $2,418,779 in 1993 to
$9,325,099 in 1994. These increases were primarily due to increases in
personnel costs, programming costs and marketing costs during 1994 as compared
to 1993. Such increases are related to the growth in the South Herts System's
size and subscriber base.
Management fees and allocated overhead from the General Partner
increased $198,310 for the three months ended September 30, 1994, over the
similar period in 1993 from $195,658 in 1993 to $393,968 in 1994. Management
fees and allocated overhead from the General Partner increased $528,185 for the
nine months ended September 30, 1994, over the similar period in 1993 from
$609,404 in 1993 to $1,137,589 in 1994. These increases were generally due to
the increases in revenues, upon which such fees and allocations are based.
Depreciation and amortization expense increased $477,179 for the three
months ended September 30, 1994, over the similar period in 1993 from $441,659
in 1993 to $918,838 in 1994. Depreciation and amortization expense increased
$1,350,689 for the nine months ended September 30, 1994, over the similar
period in 1993 from $1,086,700 in 1993 to $2,437,389 in 1994. These increases
were due to increases in the Partnership's depreciable asset base.
Interest expense decreased $20,350 for the three months ended
September 30, 1994, over the similar period in 1993 from $26,300 in 1993 to
$5,950 in 1994. Interest expense increased $263,369 for the nine months ended
September 30, 1994, over the similar period in 1993 from $74,349 in 1993 to
$337,718 in 1994. These increases were generally due to interest costs
relating to equipment leases that the Partnership entered into in the third
quarter of 1993.
Interest income increased $46,506 for the three months ended September
30, 1994, over the similar period in 1993 from $6,920 in 1993 to $53,426 in
1994. Interest income increased $160,881 for the nine months ended September
30, 1994, over the similar period in 1993 from $15,711 in 1993 to $176,592 in
1994. These increases in interest income were the result of higher average
cash balances invested during 1994 as compared to average balances invested
during 1993.
Net loss increased $578,216 for the three months ended September 30,
1994, over the similar period in 1993 from $1,006,555 in 1993 to $1,584,771 in
1994. Net loss increased $2,050,556 for the nine months ended September 30,
1994, over the similar period in 1993 from $2,767,274 in 1993 to $4,817,830 in
1994. These increases in net loss are due to the increases in the expenses
discussed above exceeding the increases in revenues.
12
<PAGE> 13
PART 2. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JONES UNITED KINGDOM FUND, LTD.
a Colorado limited partnership
BY: FAWNSPRING LIMITED,
its General Partner
By: /s/William D. Anderson
William D. Anderson
Director
Dated: November 11, 1994
14
<PAGE> 15
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 3,873,606
<SECURITIES> 0
<RECEIVABLES> 2,540,962
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 74,850,902
<CURRENT-LIABILITIES> 18,663,954
<BONDS> 3,906,816
<COMMON> 0
0
0
<OTHER-SE> 37,932,713
<TOTAL-LIABILITY-AND-EQUITY> 74,850,902
<SALES> 0
<TOTAL-REVENUES> 5,887,823
<CGS> 0
<TOTAL-COSTS> 12,900,077
<OTHER-EXPENSES> (2,532,142)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 337,718
<INCOME-PRETAX> (4,817,830)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,817,830)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,817,830)
<EPS-PRIMARY> (88.31)
<EPS-DILUTED> (88.31)
</TABLE>
