ITEM 1. BUSINESS -----------------
The Partnership. Cable TV Fund 14-B, Ltd. (the "Partnership") is a Colorado limited partnership that was formed pursuant to the public offering of limited partnership interests in the Cable TV Fund 14 Limited Partnership Program (the "Program"), which was sponsored by Jones Intercable, Inc. (the "General Partner"). Cable TV Fund 14-A, Ltd. ("Fund 14-A") is the other partnership that was formed pursuant to the Program. The Partnership and Fund 14-A formed a general partnership known as Cable TV Fund 14-A/B Venture (the "Venture"), in which the Partnership owns a 73 percent interest and Fund 14-A owns a 27 percent interest. The Partnership and the Venture were formed for the purpose of acquiring and operating cable television systems.
The Partnership directly owns cable television systems serving the areas in and around Surfside, South Carolina (the "Surfside System") and Little Rock, California (the "Little Rock System"). The Venture owns the cable television system serving certain areas in Broward County, Florida (the "Broward County System"). See Item 2.
ITEM 2. PROPERTIES -------------------
The cable television systems owned by the Partnership and the Venture are described below:
The following sets forth (i) the monthly basic plus service rates charged to subscribers and (ii) the number of basic subscribers and pay units for the Systems. The monthly basic service rates set forth herein represent, with respect to systems with multiple headends, the basic service rate charged to the majority of the subscribers within the system. In cable television systems, basic subscribers can subscribe to more than one pay TV service. Thus, the total number of pay services subscribed to by basic subscribers are called pay units. As of December 31, 1996, the Little Rock System operated cable plant passing approximately 7,800 homes, with an approximate 74% penetration rate; the Surfside System operated cable plant passing approximately 26,200 homes, with an approximate 79% penetration rate; and the Broward County System operated cable plant passing approximately 89,100 homes, with an approximate 57% penetration rate. Figures for numbers of subscribers and homes passed are compiled from the General Partner's records and may be subject to adjustments.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS --------------------------
None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ------------------------------------------------------------
None.
PART II. --------
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK ------------------------------------------------- AND RELATED SECURITY HOLDER MATTERS -----------------------------------
While the Partnership is publicly held, there is no public market for the limited partnership interests, and it is not expected that a market will develop in the future. During 1996, several partners of the Partnership conducted "limited tender offers" for interests in the Partnership at prices ranging from $140 to $190 per interest. As of February 14, 1997, the number of equity security holders in the Partnership was 16,060.
Item 6.
Item 6. Selected Financial Data - --------------------------------
(a) Cable TV Fund 14-B, Ltd.'s. selected financial data includes 100 percent of the accounts of Cable TV Fund 14-A/B Venture on a consolidated basis.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations - -------------
The following discussion of the financial condition and results of operations of Cable TV Fund 14-B, Ltd. (the "Partnership") and Cable TV Fund 14- A/B Venture (the "Venture") contains, in addition to historical information, forward-looking statements that are based upon certain assumptions and are subject to a number of risks and uncertainties. The Partnership's and Venture's actual results may differ significantly from the results predicted in such forward-looking statements.
FINANCIAL CONDITION - -------------------
In addition to the Surfside System and the Little Rock System, the Partnership owns a 73 percent interest in the Venture. The accompanying consolidated financial statements include 100 percent of the accounts of the Partnership and those of the Venture reduced by Cable TV Fund 14-A, Ltd.'s 27 percent minority interest in the Venture.
Cable TV Fund 14-B, Ltd. - - ------------------------
For the twelve months ended December 31, 1996, the Surfside System and Little Rock System generated net cash from operating activities totaling $1,428,482 which is available to fund capital expenditures and non-operating costs. The Partnership expended approximately $2,802,000 on capital additions during 1996 in its Surfside System and Little Rock System. Approximately 46 percent of the expenditures was for the construction of drops to subscribers homes. Approximately 35 percent of these expenditures was for the construction of cable plant extensions. The remainder of the expenditures was for various enhancements in the Partnership's cable television systems. Funding for these expenditures was provided by cash generated by operations. Anticipated capital expenditures for 1997 are approximately $2,362,000. Approximately 39 percent are expected to be used for service drops to homes. Approximately 33 percent of these expenditures are expected to be used for new plant construction in the Partnership's systems. The remainder of these expenditures are for various enhancements in each of the Partnership's systems. Funding for these improvements will be provided by cash generated from operations and borrowings under the Partnership's credit facility.
In December 1995, the Partnership entered into a reducing revolving credit facility with an available commitment of $18,000,000. At December 31, 1996, the balance outstanding was $15,300,000, leaving $2,700,000 available for future borrowings. On September 30, 1998, the maximum available on the reducing revolving credit facility begins to reduce quarterly until March 31, 2003 when the amount available will be zero. Interest on the reducing revolving credit facility is at the Partnership's option of the Base Rate plus 1/8 percent, the London Interbank Offered Rate ("LIBOR") plus 1-1/8 percent, or the Certificate of Deposit Rate plus 1-1/4 percent. The effective interest rates on amounts outstanding as of December 31, 1996 and 1995 were 6.69 percent and 8.90 percent, respectively.
The General Partner believes that the Partnership's wholly owned systems have sufficient sources of capital from cash generated from operations and borrowings available under the reducing revolving credit facility to service their presently anticipated needs.
Cable TV Fund 14-A/B Venture - - ----------------------------
For the twelve months ended December 31, 1996, the Venture generated net cash from operating activities totaling $5,204,336 which is available to fund capital expenditures and non-operating costs. The Venture expended approximately $3,880,000 on capital additions during 1996. Cable television plant extensions accounted for approximately 43 percent of these expenditures. The construction of service drops to homes accounted for approximately 37 percent of the expenditures. The remainder of these expenditures related to various enhancements in the Broward County System. These capital expenditures were funded primarily from cash generated from operations. The Venture plans to expend approximately $3,916,000 for capital additions in 1997. Of this total, approximately 35 percent will relate to the construction of service drops to homes and approximately 34 percent is for cable television plant extensions. The remainder of the anticipated expenditures are for various enhancements in the Broward County System. These capital expenditures are expected to be funded from cash on hand, cash generated from operations and borrowings under its credit facility.
In June 1996, the Venture amended its existing term loan providing for a reducing revolving credit facility with an available commitment of $42,500,000. The entire $42,500,000 commitment is available through December 31, 1998, at which time the commitment will be repaid in twenty quarterly installments with a final maturity of December 31, 2003. At December 31, 1996, the balance outstanding was $41,102,968, leaving $1,397,032 available for future borrowings. Interest is at the Venture's option of Prime plus 1/4 percent, LIBOR plus 1-1/4 percent or the Certificate of Deposit Rate plus 1-3/8 percent. The effective interest rates on amounts outstanding as of December 31, 1996 and 1995 were 6.79 percent and 7.17 percent, respectively.
The General Partner believes that the Venture has sufficient sources of capital from cash on hand, cash generated from operations and borrowings under its credit facility to service its current needs.
RESULTS OF OPERATIONS - ---------------------
Cable TV Fund 14-B, Ltd. - - ------------------------
The results of operations for the Partnership are summarized below:
1996 Compared to 1995 -
Revenues of the Partnership's Surfside System and Little Rock System increased $1,275,564, or approximately 12 percent, to $12,249,819 in 1996 from $10,974,255 in 1995. This increase was primarily the result of basic service rate increases and an increase in the number of basic subscribers. Basic service rate increases accounted for approximately 37 percent of the increase in revenues. The number of basic subscribers totaled 26,595 at December 31, 1996 compared to 25,728 at December 31, 1995, an increase of 867 or approximately 3 percent. This increase in basic subscribers accounted for approximately 24 percent of the increase in revenues. Increases in advertising sales and premium service revenue accounted for approximately 13 percent and 8 percent, respectively, of the increase in revenues. No other individual factor contributed significantly to the increase in revenues.
Operating expenses consist primarily of costs associated with the operation and administration of the Partnership's cable television systems. The principal cost components are salaries paid to system personnel, programming expenses, professional fees, subscriber billing costs, rent for leased facilities, cable system maintenance expenses and marketing expenses.
Operating expenses increased $856,592, or approximately 14 percent, to $6,918,196 in 1996 from $6,061,604 in 1995. Operating expenses represented approximately 56 percent and 55 percent of revenue for 1996 and 1995, respectively. Increases in programming fees, advertising expenses and marketing expenses were primarily responsible for the increase in operating expenses. No other individual factor significantly affected the increase in operating expenses.
Management fees and allocated overhead from the General Partner increased $58,322, or approximately 4 percent, to $1,411,780 in 1996 from $1,353,458 in 1995. This increase was due to the increase in revenues, upon which such fees are based.
Depreciation and amortization expense decreased $446,938, or approximately 8 percent, to $5,043,651 in 1996 from $5,490,589 in 1995. This decrease was due to the maturation of the Partnership's asset base.
Operating loss decreased $807,588, or approximately 42 percent, to $1,123,808 in 1996 from $1,931,396 in 1995. This decrease was due to the increase in revenues and the decrease in depreciation and amortization expense exceeding the increases in operating expenses and management fees and allocated overhead from the General Partner.
The cable television industry generally measures the financial performance of a cable television system in terms of operating income before depreciation and amortization. This measure is not intended to be a substitute or improvement upon the items disclosed on the financial statements, rather it is included because it is an industry standard. Operating income before depreciation and amortization expense increased $360,650, or approximately 10 percent, to $3,919,843 in 1996 from $3,559,193 in 1995. This increase was due to the increase in revenues exceeding the increases in operating expenses and management fees and allocated overhead from the General Partner.
Interest expense decreased $107,573, or approximately 9 percent, to $1,082,104 in 1996 from $1,189,677 in 1995. This decrease was due to lower effective interest rates on interest bearing obligations during 1996.
Net loss decreased $862,158, or approximately 27 percent, to $2,276,986 in 1996 from $3,139,144 in 1995. These losses were primarily the result of the factors discussed above.
1995 Compared to 1994 -
Revenues of the Partnership's Surfside System and Little Rock System increased $1,073,500, or approximately 11 percent, to $10,974,255 in 1995 from $9,900,755 in 1994. The number of basic subscribers totaled 25,728 at December 31, 1995 compared to 24,304 at December 31, 1994, an increase of 1,423 or approximately 6 percent. This increase in basic subscribers accounted for approximately 37 percent of the increase in revenues. Basic service rate adjustments accounted for approximately 31 percent and increases in advertising sales and premium service revenue accounted for approximately 15 percent and 9 percent, respectively, of the increase in revenues.
Operating expenses increased $265,144, or approximately 5 percent, to $6,061,604 in 1995 from $5,796,460 in 1994. Operating expenses represented approximately 55 percent and 59 percent of revenue for 1995 and 1994, respectively. Increases in programming fees, advertising expenses and marketing expenses were primarily responsible for the increase in operating expense. No other individual factor significantly affected the increase in operating expenses.
Management fees and allocated overhead from the General Partner increased $81,750, or approximately 6 percent, to $1,353,458 in 1995 from $1,271,708 in 1994 due to the increase in revenues, upon which such fees and allocations are based and increases in allocated expenses from the General Partner.
Depreciation and amortization expense decreased $357,971, or approximately 6 percent, to $5,490,589 in 1995 from $5,848,560 in 1994. This decrease was due to the maturation of the Partnership's asset base.
Operating loss decreased $1,084,577, or approximately 36 percent, to $1,931,396 in 1995 from $3,015,973 in 1994. This decrease was due to the increase in revenues and the decrease in depreciation and amortization exceeding the increases in operating expense and management fees and allocated overhead from the General Partner.
Operating income before depreciation and amortization expense increased $726,606, or approximately 26 percent, to $3,559,193 in 1995 from $2,832,587 in 1994 due to the increase in revenues exceeding the increases in operating expenses and management fees and allocated overhead from the General Partner.
Interest expense increased $253,751, or approximately 27 percent, to $1,189,677 in 1995 from $935,926 in 1994. This increase was due to higher effective interest rates and higher outstanding balances on interest bearing obligations in 1995.
Net loss decreased $814,300, or approximately 21 percent, to $3,139,144 in 1995 from $3,953,444 in 1994. These losses were primarily the result of the factors discussed above.
Cable TV Fund 14-A/B Venture - - ----------------------------
In addition to its ownership of the Surfside System and the Little Rock System, the Partnership owns a 73 percent interest in the Venture.
Revenues of the Venture's Broward County System increased $2,049,600, or approximately 9 percent, to $25,519,105 in 1996 from $23,469,505 in 1995. Basic service rate increases accounted for approximately 35 percent of the increase in revenue. An increase in the number of basic subscribers accounted for approximately 27 percent of the increases in revenue. The number of basic subscribers totaled 50,957 at December 31, 1996 compared to 49,654 at December 31, 1995, an increase of 1,303, or approximately 3 percent. Increases in premium service revenue accounted for approximately 16 percent of the increase in revenue. No other individual factor significantly affected the increase in revenues.
Operating expenses consist primarily of costs associated with the operation and administration of the Venture's cable television systems. The principal cost components are salaries paid to system personnel, programming expenses, professional fees, subscriber billing costs, rent for leased facilities, cable system maintenance expenses and marketing expenses.
Operating expense increased $1,528,324, or approximately 12 percent, to $14,148,533 in 1996 from $12,620,209 in 1995. Operating expenses represented 55 percent of revenue in 1996, compared to 54 percent in 1995. The increase in operating expenses was due primarily to increases in programming fees, which were partially offset by decreases in personnel and marketing expenses. No other individual factor significantly affected the increase in operating expenses.
Management fees and allocated overhead from Jones Intercable, Inc. increased $152,886, or approximately 5 percent, to $2,981,097 in 1996 from $2,828,211 in 1995. This increase was due primarily to the increase in revenues upon which such fees and allocations are based.
Depreciation and amortization expense decreased $413,580, or approximately 5 percent, to $8,360,927 in 1996 from $8,774,507 in 1995. The decrease in depreciation and amortization expense was attributable to the maturation of the Venture's asset base.
The Partnership reported operating income of $28,548 in 1996 compared to an operating loss of $753,422 in 1995. This change was due to the increase in revenues and the decreases in depreciation and amortization expense exceeding the increase in operating expenses and management fees and allocated overhead from Jones Intercable, Inc.
The cable television industry generally measures the financial performance of a cable television system in terms of operating income before depreciation and amortization. This measure is not intended to be a substitute or improvement upon the items disclosed on the financial statements, rather it is included because it is an industry standard. Operating income before depreciation and amortization expense increased $368,390, or approximately 5 percent, to $8,389,475 in 1996 from $8,021,085 in 1995 due to the increase in revenues exceeding the increases in operating expenses and management fees and allocated overhead from Jones Intercable, Inc.
Interest expense decreased $364,677, or approximately 11 percent, to $3,006,847 in 1996 from $3,371,524 in 1995 due to lower outstanding balances and lower effective interest rates on interest bearing obligations during 1996.
Net loss decreased $1,065,502, or approximately 26 percent, to $3,008,309 in 1996 from $4,073,811 in 1995. These losses were primarily the result of the factors discussed above.
1995 Compared to 1994-
Revenues of the Venture's Broward County System increased $1,285,981, or approximately 6 percent, to $23,469,505 in 1995 from $22,183,524 in 1994. The number of basic subscribers totaled 49,654 at December 31, 1995 compared to 47,819 at December 31, 1994, an increase of 1,835, or approximately 4 percent. This increase in basic subscribers accounted for approximately 44 percent of the increases in revenue. Increases in premium service revenue accounted for approximately 25 percent of the increases in revenue and basic service rate adjustments accounted for approximately 11 percent of the increases in revenue. No other individual factor significantly affected the increase in revenues.
Operating expenses decreased $258,229, or approximately 2 percent, to $12,620,209 in 1995 from $12,878,438 in 1994. Operating expenses represented 54 percent of revenue in 1995, compared to 58 percent in 1994. The decrease in operating expenses was due primarily to decreases in personnel and marketing expenses, which were partially offset by increases in programming fees and office related expenses. No other individual factor significantly affected the decrease in operating expense.
Management fees and allocated overhead from Jones Intercable, Inc. increased $50,921, or approximately 2 percent, to $2,828,211 in 1995 from $2,777,290 in 1994 primarily due to the increase in revenues upon which such fees and allocations are based.
Depreciation and amortization expense decreased $414,487, or approximately 5 percent, to $8,774,507 in 1995 from $9,188,994 in 1994. The decrease in depreciation and amortization expense was attributable to the maturation of the Venture's asset base.
Operating loss decreased $1,907,776, or approximately 72 percent, to $753,422 in 1995 from $2,661,198 in 1994. This decrease was due to the increase in revenues and the decreases in operating and depreciation and amortization expenses exceeding the increase in management fees and allocated overhead from Jones Intercable, Inc.
Operating income before depreciation and amortization expense increased $1,493,289, or approximately 23 percent, to $8,021,085 in 1995 from $6,527,796 in 1994 due to the increases in revenues and decreases in operating expenses exceeding the increase in management fees and allocated overhead from Jones Intercable, Inc.
Interest expense increased $643,490, or approximately 24 percent, to $3,371,524 in 1995 from $2,728,034 in 1994 due to higher effective interest rates and higher outstanding balances on interest bearing obligations.
Net loss decreased $1,343,968, or approximately 25 percent, to $4,073,811 in 1995 from $5,417,779 in 1994. These losses were primarily the result of the factors discussed above.
Item 8.
Item 8. Financial Statements - -----------------------------
CABLE TV FUND 14-B, LTD. AND ---------------------------- CABLE TV FUND 14-A/B VENTURE ----------------------------
CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------
AS OF DECEMBER 31, 1996 AND 1995 --------------------------------
INDEX -----
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------
To the Partners of Cable TV Fund 14-B, Ltd.:
We have audited the accompanying consolidated balance sheets of CABLE TV FUND 14-B, Ltd.(a Colorado limited partnership) and subsidiary as of December 31, 1996 and 1995, and the related consolidated statements of operations, partners' capital (deficit) and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the General Partner's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cable TV Fund 14-B, Ltd. and subsidiary as of December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado, March 7, 1997.
CABLE TV FUND 14-B, LTD. ------------------------ (A Limited Partnership)
CONSOLIDATED BALANCE SHEETS ---------------------------
The accompanying notes to consolidated financial statements are an integral part of these consolidated balance sheets.
CABLE TV FUND 14-B, LTD. ------------------------ (A Limited Partnership)
CONSOLIDATED BALANCE SHEETS ---------------------------
The accompanying notes to consolidated financial statements are an integral part of these consolidated balance sheets.
CABLE TV FUND 14-B, LTD. ------------------------ (A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS -------------------------------------
The accompanying notes to consolidated financial statements are an integral part of these consolidated statements.
CABLE TV FUND 14-B, LTD. ------------------------ (A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT) ------------------------------------------------------
The accompanying notes to consolidated financial statements are an integral part of these consolidated statements.
CABLE TV FUND 14-B, LTD. ------------------------ (A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS -------------------------------------
The accompanying notes to consolidated financial statements are an integral part of these consolidated statements.
CABLE TV FUND 14-B, LTD. ------------------------ (A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------
(1) ORGANIZATION AND PARTNERS' INTERESTS ------------------------------------
Formation and Business ----------------------
Cable TV Fund 14-B, Ltd. (the "Partnership"), a Colorado limited partnership, was formed on September 9, 1987, under a public program sponsored by Jones Intercable, Inc. ("Intercable"). The Partnership was formed to acquire, construct, develop and operate cable television systems. Intercable, a publicly held Colorado corporation, is the "General Partner" and manager of the Partnership. Intercable and its subsidiaries also own and operate cable television systems. In addition, Intercable manages cable television systems for other limited partnerships for which it is general partner and, also, for other affiliated entities.
Contributed Capital, Commissions and Syndication Costs ------------------------------------------------------
The capitalization of the Partnership is set forth in the accompanying Statements of Partners' Capital (Deficit). No limited partner is obligated to make any additional contribution to partnership capital.
Intercable purchased its interest in the Partnership by contributing $1,000 to partnership capital.
All profits and losses of the Partnership are allocated 99 percent to the limited partners and 1 percent to Intercable, except for income or gain from the sale or disposition of cable television properties, which will be allocated to the partners based upon the formula set forth in the Partnership's partnership agreement and interest income earned prior to the first acquisition by the Partner- ship of a cable television system, which was allocated 100 percent to the limited partners.
Formation of Joint Venture and Joint Venture Cable Television System -------------------------------------------------------------------- Acquisition - -----------
On January 8, 1988, Cable TV Fund 14-A, Ltd. and the Partnership formed Cable TV Fund 14-A/B Venture (the "Venture") to acquire the cable television system serving areas in and around Broward County, Florida (the "Broward County System"). Cable TV Fund 14-A, Ltd. contributed $18,975,000 to the capital of the Venture for a 27 percent ownership interest and the Partnership contributed $51,025,000 to the capital of the Venture for a 73 percent ownership interest.
Partnership Cable Television System Acquisitions ------------------------------------------------
The Partnership acquired the cable television system serving Surfside, South Carolina (the "Surfside System") in 1988 and the cable television system serving Little Rock, California (the "Little Rock System") in 1989.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------
Accounting Records ------------------
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. The Partnership's tax returns are also prepared on the accrual basis.
The preparation of financial statements in conformity with generally accepted accounting principles requires the General Partner's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Purchase Price Allocation -------------------------
Cable television system acquisitions were accounted for as purchases with the individual purchase prices allocated to tangible and intangible assets based upon an independent appraisal. The method of allocation of purchase price was as follows: first, to the fair value of net tangible assets acquired; second, to the value of subscriber lists and non compete agreements with previous owners; third, to franchise costs; and fourth, to costs in excess of interests in net assets purchased. Brokerage fees paid to an affiliate of Intercable (Note 3) and other system acquisition costs were capitalized and included in the cost of intangible assets.
Principles of Consolidation ---------------------------
As a result of the Partnership's ownership interest in the Venture of 73 percent, the accompanying consolidated financial statements present the Partnership's and the Venture's financial condition and results of operations on a consolidated basis with the ownership interest of Cable TV Fund 14-A, Ltd. in the Venture shown as a minority interest. The Venture does not have any ownership interest in the Surfside System or Little Rock System. These systems are owned 100 percent by the Partnership. All interpartnership accounts and transactions have been eliminated.
Property, Plant and Equipment -----------------------------
Depreciation is provided using the straight-line method over the following estimated service lives:
Replacements, renewals and improvements are capitalized and maintenance and repairs are charged to expense as incurred.
Property, plant and equipment and the corresponding accumulated depreciation are written off as certain assets become fully depreciated and are no longer in service.
Intangible Assets -----------------
Costs assigned to franchises, subscriber lists and costs in excess of interests in net assets purchased are amortized using the straight-line method over the following remaining estimated useful lives:
Revenue Recognition -------------------
Subscriber prepayments are initially deferred and recognized as revenue when earned.
Reclassifications -----------------
Certain prior year amounts have been reclassified to conform to the 1996 presentation.
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES ----------------------------------------------------
Brokerage Fees --------------
The Jones Group, Ltd., a subsidiary of Intercable, performs brokerage services for the Partnership. For brokering the acquisition of the Surfside System for the Partnership, The Jones Group, Ltd. earned a fee totaling $1,920,000, or 4 percent of the purchase price, during the year ended December 31, 1988. $920,000 of such fee has been deferred until the sale of the Surfside System.
Management Fees, Distribution Ratios and Reimbursements -------------------------------------------------------
Intercable manages the Partnership and the Venture and receives a fee for its services equal to 5 percent of the gross revenues of the Partnership and the Venture, excluding revenues from the sale of cable television systems or franchises. Management fees paid to Intercable by the Partnership and the Venture for the years ended December 31, 1996, 1995 and 1994 were $1,888,446, $1,722,188 and $1,604,214, respectively.
Any partnership distributions made from cash flow (defined as cash receipts derived from routine operations, less debt principal and interest payments and cash expenses) are allocated 99 percent to the limited partners and 1 percent to Intercable. Any distributions other than interest income on limited partner subscriptions earned prior to the acquisition of the Partnership's first
cable television system or from cash flow, such as from the sale or refinancing of a system or upon dissolution of the Partnership, will be made as follows: first, to the limited partners in an amount which, together with all prior distributions, will equal 125 percent of the amount initially contributed to the Partnership capital by the limited partners; the balance, 75 percent to the limited partners and 25 percent to Intercable.
The Partnership and the Venture reimburse Intercable for certain allocated overhead and administrative expenses. These expenses represent the salaries and related benefits paid for corporate personnel, rent, data processing services and other corporate facilities costs. Such personnel provide engineering, marketing, accounting, administrative, legal, and investor relations services to the Partnership and to the Venture. Such services, and their related costs, are necessary to the operation of the Partnership and Venture and would have been incurred by the Partnership if they were stand alone entities. Allocations of personnel costs are based primarily on actual time spent by employees of Intercable with respect to each Partnership managed. Remaining expenses are allocated based on the pro rata relationship of the Partnership's and Venture's revenues to the total revenues of all systems owned or managed by Intercable and certain of its subsidiaries. Systems owned by Intercable and all other systems owned by partnerships for which Intercable is the general partner are also allocated a proportionate share of these expenses. Intercable believes that the methodology used in allocating overhead and administrative expense is reasonable. Reimbursements made to Intercable for allocated overhead and administrative expenses during the years ended December 31, 1996, 1995 and 1994 were $2,504,431, $2,459,481 and $2,444,784, respectively.
The Partnership and the Venture were charged interest during 1996 at an average interest rate of 8.58 percent on the amounts due Intercable, which approximated Intercable's weighted average cost of borrowing. Total interest charged to the Partnership and the Venture by Intercable was $106,022, $145,929 and $960 for the years ended December 31, 1996, 1995 and 1994, respectively.
Payments to/from Affiliates for Programming Services ----------------------------------------------------
The Partnership and the Venture receive programming from Superaudio, Jones Education Company, Great American Country, Inc. and Product Information Network, all of which are affiliates of Intercable.
Payments to Superaudio by the Partnership and the Venture totaled $52,687, $46,269 and $46,768, in 1996, 1995 and 1994, respectively. Payments to Jones Education Company by the Partnership and Venture totaled $96,169, $83,895 and $57,330 in 1996, 1995 and 1994, respectively. Payments by the Partnership and Venture to Great American Country, Inc., which initiated service in 1996, totaled $71,929 in 1996.
The Partnership and the Venture received commissions from Product Information Network based on a percentage of advertising revenue and number of subscribers. Product Information Network paid commissions to the Partnership and the Venture totaling $80,474, $54,759 and $31,126 in 1996, 1995 and 1994, respectively.
(4) PROPERTY, PLANT AND EQUIPMENT -----------------------------
Property, plant and equipment as of December 31, 1996 and 1995, consisted of the following:
(5) DEBT ----
In June 1996, the Venture amended its existing term loan providing for a reducing revolving credit facility with an available commitment of $42,500,000. The entire $42,500,000 commitment is available through December 31, 1998, at which time the commitment will be repaid in twenty quarterly installments with a final maturity of December 31, 2003. At December 31, 1996, the balance outstanding was $41,102,968, leaving $1,397,032 available for future borrowings. Interest is at the Venture's option of Prime plus 1/4 percent, the London Interbank Offered Rate ("LIBOR") plus 1-1/4 percent or the Certificate of Deposit Rate plus 1-3/8 percent. The effective interest rates on amounts outstanding as of December 31, 1996 and 1995 were 6.79 percent and 7.17 percent, respectively.
In December 1995, the Partnership entered into a new reducing revolving credit facility with an available commitment of $18,000,000. At December 31, 1996, the balance outstanding was $15,300,000, leaving $2,700,000 available for future borrowings. On September 30, 1998, the maximum available on the reducing revolving credit facility begins to reduce quarterly until March 31, 2003 when the amount available will be zero. Interest on the reducing revolving credit facility is at the Partnership's option of the Base Rate plus 1/8 percent, the LIBOR plus 1-1/8 percent, or the Certificate of Deposit Rate plus 1-1/4 percent. The effective interest rates on amounts outstanding as of December 31, 1996 and 1995 were 6.69 percent and 8.90 percent, respectively.
Installments due on debt principal for each of the five years in the period ending December 31, 2001 and thereafter, respectively, are:
At December 31, 1996, substantially all of the Partnership's and the Venture's property, plant and equipment secured their respective indebtedness.
At December 31, 1996, the carrying amount of the Partnership's long- term debt did not differ significantly from the estimated fair value of the financial instruments. The fair value of the Partnership's long-term debt is estimated based on the discounted amount of future debt service payments using rates of borrowing for a liability of similar risk.
(6) INCOME TAXES ------------
Income taxes have not been recorded in the accompanying consolidated financial statements because they accrue directly to the partners. The federal and state income tax returns of the Partnership are prepared and filed by Intercable.
The Partnership's tax returns, the qualification of the Partnership as such for tax purposes, and the amount of distributable Partnership income or loss are subject to examination by federal and state taxing authorities. If such examinations result in changes with respect to the Partnership's qualification as such, or in changes with respect to the Partnership's recorded income or loss, the tax liability of the general and limited partners would likely be changed accordingly.
Taxable loss reported to the partners is different from that reported in the consolidated statements of operations due to the difference in depreciation recognized under generally accepted accounting principles and the expense allowed for tax purposes under the Modified Accelerated Cost Recovery System (MACRS). There are no other significant differences between taxable loss and the net loss reported in the consolidated statements of operations.
(7) COMMITMENTS AND CONTINGENCIES -----------------------------
Office and other facilities are rented under various long-term lease arrangements. Rent paid under such lease arrangements totaled $40,356, $62,987 and $90,993, respectively, for the years ended December 31, 1996, 1995 and 1994. Minimum commitments under operating leases for each of the five years in the period ending December 31, 2001 and thereafter are as follows:
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION -----------------------------------------
Supplementary profit and loss information is presented below:
(9) OPERATING RESULTS OF SURFSIDE AND LITTLE ROCK SYSTEMS -----------------------------------------------------
The results of operations of the Partnership's Surfside System and Little Rock System on a stand- alone basis are presented below. The Partnership's share of the Venture-owned Broward County System's operations is also presented.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------
To the Partners of Cable TV Fund 14-A/B Venture:
We have audited the accompanying balance sheets of CABLE TV FUND 14-A/B VENTURE (a Colorado general partnership) as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the General Partner's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cable TV Fund 14-A/B Venture as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado, March 7, 1997.
CABLE TV FUND 14-A/B VENTURE ---------------------------- (A General Partnership)
BALANCE SHEETS --------------
The accompanying notes to financial statements are an integral part of these balance sheets.
CABLE TV FUND 14-A/B VENTURE ---------------------------- (A General Partnership)
BALANCE SHEETS --------------
The accompanying notes to financial statements are an integral part of these balance sheets.
CABLE TV FUND 14-A/B VENTURE ---------------------------- (A General Partnership)
STATEMENTS OF OPERATIONS ------------------------
The accompanying notes to financial statements are an integral part of these statements.
CABLE TV FUND 14-A/B VENTURE ---------------------------- (A General Partnership)
STATEMENTS OF PARTNERS' CAPITAL -------------------------------
The accompanying notes to financial statements are an integral part of these statements.
CABLE TV FUND 14-A/B VENTURE ---------------------------- (A General Partnership)
STATEMENTS OF CASH FLOWS ------------------------
The accompanying notes to financial statements are an integral part of these statements.
CABLE TV FUND 14-A/B VENTURE ---------------------------- (A General Partnership)
NOTES TO FINANCIAL STATEMENTS -----------------------------
(1) ORGANIZATION AND PARTNERS' INTERESTS ------------------------------------
Formation and Business ----------------------
On January 8, 1988, Cable TV Fund 14-A, Ltd. and Cable TV Fund 14-B, Ltd. (the "Venture Partners") formed a Colorado general partnership known as Cable TV Fund 14-A/B Venture (the "Venture") by contributing $18,975,000 and $51,025,000, respectively, for 27 percent and 73 percent ownership interests, respectively. The Venture was formed for the purpose of acquiring the cable television system serving areas in and around Broward County, Florida (the "Broward County System").
Jones Intercable, Inc. ("Intercable"), general partner of each of the Venture Partners, manages the Venture. Intercable and its subsidiaries also own and operate cable television systems. In addition, Intercable manages cable television systems for other limited partnerships for which it is general partner and for other affiliated entities.
Contributed Capital -------------------
The capitalization of the Venture is set forth in the accompanying Statements of Partners' Capital.
All Venture distributions, including those made from cash flow, from the sale or refinancing of Venture property and on dissolution of the Venture, shall be made to the Venture Partners in proportion to their 27 and 73 percent interests in the Venture.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------
Accounting Records ------------------
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. The Venture's tax returns are also prepared on the accrual basis.
The preparation of financial statements in conformity with generally accepted accounting principles requires Intercable's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Purchase Price Allocation -------------------------
The Broward County System acquisition was accounted for as a purchase with the purchase price allocated to tangible and intangible assets based upon an independent appraisal. The method of allocation of purchase price was as follows: first, to the fair value of net tangible assets acquired; second, to the value of subscriber lists and noncompete agreements with previous owners; third, to franchise costs; and fourth, to costs in excess of interests in net assets purchased. Brokerage fees paid to an affiliate of Intercable and other system acquisition costs were capitalized and included in the cost of intangible assets.
Property, Plant and Equipment -----------------------------
Depreciation is provided using the straight-line method over the following estimated service lives:
Replacements, renewals and improvements are capitalized and maintenance and repairs are charged to expense as incurred.
Property, plant and equipment and the corresponding accumulated depreciation are written off as certain assets become fully depreciated and are no longer in service.
Intangible Assets -----------------
Costs assigned to franchises, subscriber lists and costs in excess of interests in net assets purchased are amortized using the straight-line method over the following remaining estimated useful lives:
Revenue Recognition -------------------
Subscriber prepayments are initially deferred and recognized as revenue when earned.
Reclassifications -----------------
Certain prior year amounts have been reclassified to conform to the 1996 presentation.
(3) TRANSACTIONS WITH AFFILIATES ----------------------------
Management Fees and Reimbursements ----------------------------------
Intercable manages the Venture and receives a fee for its services equal to 5 percent of the gross revenues of the Venture, excluding revenues from the sale of cable television systems or franchises. Management fees paid to Intercable by the Venture for the years ended December 31, 1996, 1995 and 1994 were $1,275,955, $1,173,475 and $1,109,176, respectively.
The Venture reimburses Intercable for allocated overhead and administrative expenses. These expenses represent the salaries and related benefits paid for corporate personnel, rent, data processing services and other corporate facilities costs. Such personnel provide engineering, marketing, accounting, administrative, legal, and investor relations services to the Venture. Such services, and their related costs, are necessary to the operation of the Venture and would have been incurred by the Venture, if it was a stand alone entity. Allocations of personnel costs are based primarily on actual time spent by employees of Intercable with respect to each entity managed. Remaining expenses are allocated based on the pro rata relationship of the Venture's revenues to the total revenues of all systems owned or managed by Intercable and certain of its subsidiaries. Systems owned by Intercable and all other systems owned by partnerships for which Intercable is the general partner are also allocated a proportionate share of these expenses. Intercable believes that the methodology used in allocating overhead and administrative expenses is reasonable. Reimbursements made to Intercable by the Venture for allocated overhead and administrative expenses during the years ended December 31, 1996, 1995 and 1994 were $1,705,142, $1,654,736 and $1,668,114, respectively.
The Venture was charged interest during 1996 at an average interest rate of 8.58 percent on the amounts due Intercable, which approximated Intercable's weighted average cost of borrowing. Total interest charged to the Venture by Intercable was $122,224, $155,659 and $960 for the years ended December 31, 1996, 1995 and 1994, respectively.
Payments to/from Affiliates for Programming Services ----------------------------------------------------
The Venture receives programming from Superaudio, Jones Education Company, Great American Country, Inc. and Product Information Network, all of which are affiliates of Intercable.
Payments to Superaudio totaled $34,421, $30,171 and $30,631 in 1996, 1995 and 1994, respectively. Payments to Jones Education Company totaled $37,113, $32,268 and $33,445 in 1996, 1995 and 1994, respectively. Payments to Great American Country, Inc., which initiated service in 1996, totaled $47,590 in 1996.
The Venture receives a commission from Product Information Network based on a percentage of advertising revenue and number of subscribers. Product Information Network paid commissions to the Venture totaling $49,973, $23,430 and $23,856 in 1996, 1995 and 1994, respectively.
(4) PROPERTY, PLANT AND EQUIPMENT -----------------------------
Property, plant and equipment as of December 31, 1996 and 1995, consisted of the following:
(5) DEBT ----
In June 1996, the Venture amended its existing term loan providing for a reducing revolving credit facility with an available commitment of $42,500,000. The entire $42,500,000 commitment is available through December 31, 1998, at which time the commitment will be repaid in twenty quarterly installments with a final maturity of December 31, 2003. At December 31, 1996, the balance outstanding was $41,102,968, leaving $1,397,032 available for future borrowings. Interest is at the Venture's option of Prime plus 1/4 percent, the London Interbank Offered Rate plus 1-1/4 percent or the Certificate of Deposit Rate plus 1-3/8 percent. The effective interest rates on amounts outstanding as of December 31, 1996 and 1995 were 6.79 percent and 7.17 percent, respectively.
Installments due on debt principal for each of the five years in the period ending December 31, 2001 and thereafter, respectively, are: $47,882, $47,882, $5,450,848, $6,815,949, $8,500,000 and $20,400,000. At December 31, 1996, substantially all of the Venture's property, plant and equipment secured the above indebtedness.
At December 31, 1996, the carrying amount of the Venture's long-term debt did not differ significantly from the estimated fair value of the financial instruments. The fair value of the Venture's long-term debt is estimated based on the discounted amount of future debt service payments using rates of borrowing for a liability of similar risk.
(6) INCOME TAXES ------------
Income taxes have not been recorded in the accompanying financial statements because they accrue directly to the partners of Cable TV Fund 14-A, Ltd. and Cable TV Fund 14-B, Ltd.
The Venture's tax returns, the qualification of the Venture as such for tax purposes, and the amount of distributable Venture income or loss are subject to examination by federal and state taxing authorities. If such examinations result in changes with respect to the Venture's qualification as such, or in changes with respect to the Venture's recorded income or loss, the tax liability of the Venture's general partners would likely be changed accordingly.
Taxable loss reported to the partners is different from that reported in the statements of operations due to the difference in depreciation recognized under generally accepted accounting principles and the expense allowed for tax purposes under the Modified Accelerated Cost Recovery System (MACRS). There are no other significant differences between taxable loss and the net loss reported in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES -----------------------------
Office and other facilities are rented under various long-term lease arrangements. Rent paid under such lease arrangements totaled $21,762, $22,680 and $49,856, respectively for the years ended December 31, 1996, 1995 and 1994. Minimum commitments under operating leases for each of the five years in the period ending December 31, 2001 and thereafter are as follows:
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION -----------------------------------------
Supplementary profit and loss information is presented below:
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON --------------------------------------------------------- ACCOUNTING AND FINANCIAL DISCLOSURE -----------------------------------
None.
PART III. ---------
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ------------------------------------------------------------
The Partnership itself has no officers or directors. Certain information concerning the directors and executive officers of the General Partner is set forth below. Directors of the General Partner serve until the next annual meeting of the General Partner and until their successors shall be elected and qualified.
Mr. Glenn R. Jones has served as Chairman of the Board of Directors and Chief Executive Officer of the General Partner since its formation in 1970, and he was President from June 1984 until April 1988. Mr. Jones is the sole shareholder, President and Chairman of the Board of Directors of Jones International, Ltd. He is also Chairman of the Board of Directors of the subsidiaries of the General Partner and of certain other affiliates of the General Partner. Mr. Jones has been involved in the cable television business in various capacities since 1961, is a member of the Board of Directors and the Executive Committee of the National Cable Television Association. Additionally, Mr. Jones is a member of the Board of Governors for the American Society for Training and Development, and a member of the Board of Education Council of the National Alliance of Business. Mr. Jones is also a founding member of the James Madison Council of the Library of Congress. Mr. Jones has been the recipient of several awards including the Grand Tam Award in 1989, the highest award from the Cable Television Administration and Marketing Society; the President's Award from the Cable Television Public Affairs Association in recognition of Jones International's educational efforts through Mind Extension University (now Knowledge TV); the Donald G. McGannon Award for the advancement of minorities and women in cable from the United Church of Christ Office of Communications; the STAR Award from American Women in Radio and Television, Inc. for exhibition of a commitment to the issues and concerns of women in television and radio; the Cableforce 2000 Accolade awarded by Women in Cable in recognition of the General Partner's innovative employee programs; the Most Outstanding Corporate Individual Achievement Award from the International Distance Learning Conference for his contributions to distance education; the Golden Plate Award from the
American Academy of Achievement for his advances in distance education; the Man of the Year named by the Denver chapter of the Achievement Rewards for College Scientists; and in 1994 Mr. Jones was inducted into Broadcasting and Cable's Hall of Fame.
Mr. Derek H. Burney was appointed a Director of the General Partner in December 1994 and Vice Chairman of the Board of Directors on January 31, 1995. Mr. Burney joined BCE Inc., Canada's largest telecommunications company, in January 1993 as Executive Vice President, International. He has been the Chairman of Bell Canada International Inc., a subsidiary of BCE, since January 1993 and, in addition, has been Chief Executive Officer of BCI since July 1993. Prior to joining BCE, Mr. Burney served as Canada's ambassador to the United States from 1989 to 1992. Mr. Burney also served as chief of staff to the Prime Minister of Canada from March 1987 to January 1989 where he was directly involved with the negotiation of the U.S. - Canada Free Trade Agreement. In July 1993, he was named an Officer of the Order of Canada. Mr. Burney is also a director of Bell Cablemedia plc, Mercury Communications Limited, Videotron Holdings plc, Tele-Direct (Publications) Inc., Teleglobe Inc., Bimcor Inc., Maritime Telegraph and Telephone Company, Limited, Moore Corporation Limited, Northbridge Programming Inc and certain subsidiaries of Bell Canada International.
Mr. James B. O'Brien, the General Partner's President, joined the General Partner in January 1982. Prior to being elected President and a Director of the General Partner in December 1989, Mr. O'Brien served as a Division Manager, Director of Operations Planning/Assistant to the CEO, Fund Vice President and Group Vice President/Operations. Mr. O'Brien was appointed to the General Partner's Executive Committee in August 1993. As President, he is responsible for the day-to-day operations of the cable television systems managed and owned by the General Partner. Mr. O'Brien is a board member of Cable Labs, Inc., the research arm of the U.S. cable television industry. He also serves as Vice Chairman and a director of the Cable Television Administration and Marketing Association and as a director and member of the Executive Committee of the Walter Kaitz Foundation, a foundation that places people of ethnic minority groups in positions with cable television systems, networks and vendor companies.
Ms. Ruth E. Warren joined the General Partner in August 1980 and has served in various operational capacities, including system manager and Fund Vice President, since then. Ms. Warren was elected Group Vice President/Operations of the General Partner in September 1990.
Mr. Kevin P. Coyle joined The Jones Group, Ltd. in July 1981 as Vice President/Financial Services. In September 1985, he was appointed Senior Vice President/Financial Services. He was elected Treasurer of the General Partner in August 1987, Vice President/Treasurer in April 1988 and Group Vice President/Finance and Chief Financial Officer in October 1990.
Mr. Christopher J. Bowick joined the General Partner in September 1991 as Group Vice President/Technology and Chief Technical Officer. Previous to joining the General Partner, Mr. Bowick worked for Scientific Atlanta's Transmission Systems Business Division in various technical management capacities since 1981, and as Vice President of Engineering since 1989.
Mr. George H. Newton joined the General Partner in January 1996 as Group Vice President/Telecommunications. Prior to joining the General Partner, Mr. Newton was President of his own consulting business, Clear Solutions, and since 1994 Mr. Newton has served as a Senior Advisor to Bell Canada International. From 1990 to 1993, Mr. Newton served as the founding Chief Executive Officer and Managing Director of Clear Communications, New Zealand, where he established an alternative telephone company in New Zealand. From 1964 to 1990, Mr. Newton held a wide variety of operational and business assignments with Bell Canada International.
Mr. Raymond L. Vigil joined the General Partner in June 1993 as Group Vice President/Human Resources. Previous to joining the General Partner, Mr. Vigil served as Executive Director of Learning with USWest. Prior to USWest, Mr. Vigil worked in various human resources posts over a 14-year term with the IBM Corporation.
Ms. Cynthia A. Winning joined the General Partner as Group Vice President/Marketing in December 1994. Previous to joining the General Partner, Ms. Winning served since 1994 as the President of PRS Inc., Denver, Colorado, a sports and event marketing company. From 1979 to 1981 and from 1986 to 1994, Ms. Winning served as the Vice President and Director of Marketing for Citicorp Retail Services, Inc., a provider of private-label credit cards for ten national retail department store chains. From 1981 to 1986, Ms. Winning was the Director of Marketing Services for Daniels & Associates cable television operations, as well as the Western Division Marketing Director for Capital Cities Cable. Ms. Winning also serves as a board member of Cities in Schools, a dropout intervention/prevention program.
Ms. Elizabeth M. Steele joined the General Partner in August 1987 as Vice President/General Counsel and Secretary. From August 1980 until joining the General Partner, Ms. Steele was an associate and then a partner at the Denver law firm of Davis, Graham & Stubbs, which serves as counsel to the General Partner.
Mr. Larry Kaschinske joined the General Partner in 1984 as a staff accountant in the General Partner's former Wisconsin Division, was promoted to Assistant Controller in 1990, named Controller in August 1994 and was elected Vice President/Controller in June 1996.
Mr. Robert E. Cole was appointed a Director of the General Partner in March 1996. Mr. Cole is currently self-employed as a partner of First Variable Insurance Marketing and is responsible for marketing to National Association of Securities Dealers, Inc. firms in northern California, Oregon, Washington and Alaska. From 1993 to 1995, Mr. Cole was the Director of Marketing for Lamar Life Insurance Company; from 1992 to 1993, Mr. Cole was Senior Vice President of PMI Inc., a third party lender serving the special needs of Corporate Owned Life Insurance (COLI) and from 1988 to 1992, Mr. Cole was the principal and co-founder of a specialty investment banking firm that provided services to finance the ownership and growth of emerging companies, productive assets and real property. Mr. Cole is a Certified Financial Planner and a former United States Naval Aviator.
Mr. William E. Frenzel was appointed a Director of the General Partner in April 1995. Mr. Frenzel has been a Guest Scholar since 1991 with the Brookings Institution, a research organization located in Washington D. C. Until his retirement in January 1991, Mr. Frenzel served for twenty years in the United States House of Representatives, representing the State of Minnesota, where he was a member of the House Ways and Means Committee and its Trade Subcommittee, the Congressional Representative to the General Agreement on Tariffs and Trade (GATT), the Ranking Minority Member on the House Budget Committee and a member of the National Economic Commission. Mr. Frenzel also served in the Minnesota Legislature for eight years. He is a Distinguished Fellow of the Tax Foundation, Vice Chairman of the Eurasia Foundation, a Board Member of the U.S.-Japan Foundation, the Close- Up Foundation, Sit Mutual Funds and Chairman of the Japan-America Society of Washington.
Mr. Donald L. Jacobs was appointed a Director of the General Partner in April 1995. Mr. Jacobs is a retired executive officer of TRW. Prior to his retirement, he was Vice President and Deputy Manager of the Space and Defense Sector; prior to that appointment, he was the Vice President and General Manager of the Defense Systems Group and prior to his appointment as Group General Manager, he was President of ESL, Inc., a wholly owned subsidiary of TRW. During his career, Mr. Jacobs served on several corporate, professional and civic boards.
Mr. James J. Krejci was President of the International Division of International Gaming Technology, International headquartered in Reno, Nevada, until March 1995. Prior to joining IGT in May 1994, Mr. Krejci was Group Vice President of Jones International, Ltd. and was Group Vice President of the General Partner. He also served as an officer of subsidiaries of Jones International, Ltd. until leaving the General Partner in May 1994. Mr Krajci has been a Director of the General Partner since August 1987.
Mr. John A. MacDonald was appointed a Director of the General Partner in November 1995. Mr. MacDonald is Executive Vice President of Business Development and Chief Technology Officer of Bell Canada International Inc. Prior to joining Bell Canada in November 1994, Mr. MacDonald was President and Chief Executive Officer of The New Brunswick Telephone Company, Limited, a post he had held since March of that year. Prior to March 1994, Mr. MacDonald was with NBTel for 17 years serving in various capacities, including Market Planning Manager, Corporate Planning Manager, Manager of Systems Planning and Development and General Manager, Chief Engineer and General Manager of Engineering and Information Systems and Vice President of Planning. Mr. MacDonald was the former Chairman of the New Brunswick section of the Institute of Electrical and Electronic Engineers and also served on the Federal Government's Information Highway Advisory Council. Mr. MacDonald is Chairman of MediaLinx Interactive Inc. and Stentor Canadian Network Management and is presently a Governor of the Montreal Exchange. He also serves on the Board of Directors of Tele-Direct (Publications) Inc., Bell-Northern Research, Ltd., SRCI, Bell Sygma, Canarie Inc., and is a member of the University of New Brunswick Venture Campaign Cabinet.
Mr. Raphael M. Solot was appointed a Director of the General Partner in March 1996. Mr. Solot is an attorney and has practiced law for 31 years with and emphasis on franchise, corporate and partnership law and complex litigation.
Mr. Howard O. Thrall was appointed a Director of the General Partner in March 1996. Mr. Thrall had previously served as a Director of the General Partner from December 1988 to December 1994. Mr Thrall is Senior Vice President-Corporate Development for First Naitonal Net, Inc., a leading service provider for the mortgage banking industry, and he heads First National Net's Washington, D.C. regional office. From September 1993 through July 1996, Mr. Thrall served as Vice President of Sales, Asian Region, for World Airways, Inc. headquartered at the Washington Dulles International Airport. From 1984 until August 1993, Mr. Thrall was with the McDonnell Douglas Corporation, where he concluded as a Regional Vice President, Commercial Marketing with the Douglas Aircraft Company subsidiary. Mr. Thrall is also an active management and international marketing consultant, having completed assignments with McDonnell Douglas Aerospace, JAL Trading, Inc., Technology Solutions Company, Cheong Kang Associated (Korea), Aero Investment Alliance, Inc. and Western Real Estate Partners, among others.
Mr. Siim A. Vanaselja was appointed a Director of the General Partner in August 1996. Mr. Vanaselja joined BCE Inc., Canada's largest telecommunications company, in February 1994 as Assistant Vice-President, International Taxation. In June 1994, he was appointed Assistant Vice- President and Director of Taxation, and in February 1995, Mr. Vanaselja was appointed Vice-President, Taxation. On August 1, 1996, Mr. Vanaselja was appointed the Chief Financial Officer of Bell Canada International Inc., a subsidiary of BCE Inc. Prior to joining BCE Inc. and since August 1989, Mr. Vanaselja was a partner in the Toronto office of KPMG Peat Marwick Thorne. Mr. Vanaselja has been a member of the Institute of Chartered Accountants of Ontario since 1982 and is a member of the Canadian Tax Foundation, the Tax Executives Institute and the International Fiscal Association.
Mr. Sanford Zisman was appointed a director of the General Partner in June 1996. Mr. Zisman is a member of the law firm, Zisman & Ingraham, P.C. of Denver, Colorado and has practiced law for 31 years, with an emphasis on tax, business and estate planning and probate administration. Mr. Zisman currently serves as a member of the Board of Directors of Saint Joseph Hospital, the largest hospital in Colorado, and he has served as Chairman of the Board, Chairman of the Finance Committee and Chairman of the Strategic Planning Committee of the hospital. Since 1992, he has also served on the Board of Directors of Maxim Series Fund, Inc., a subsidiary of Great-West Life Assurance Company.
Mr. Robert B. Zoellick was appointed a Director of the General Partner in April 1995. Mr. Zoellick is Executive Vice President for Housing and Law of Fannie Mae, a federally chartered and stockholder-owned corporation that is the largest housing finance investor in the United States. From August 1992 to January 1993, Mr. Zoellick served as Deputy Chief of Staff of the White House and Assistant to the President. From May 1991 to August 1992, Mr. Zoellick served concurrently as the Under Secretary of State for
Cross for his work on Germany unification. Mr. Zoellick currently serves on the boards of Alliance Capital, Said Holdings, the Council on Foreign Relations, the Congressional Institute, the German Marshall Fund of the U.S., the European Institute, the National Bureau of Asian Research, the American Council on Germany, the American Institute for Contemporary German Studies and the Overseas Development Council.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION --------------------------------
The Partnership has no employees; however, various personnel are required to operate the Systems. Such personnel are employed by the General Partner and, the cost of such employment is charged by the General Partner to the Partnership or the Venture as a direct reimbursement item. See Item 13.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS ----------------------------------------------------------------------
As of March 4, 1997, no person or entity owned more than 5 percent of the limited partnership interests of the Partnership.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS --------------------------------------------------------
The General Partner and its affiliates engage in certain transactions with the Partnership and the Venture. The General Partner believes that the terms of such transactions are generally as favorable as could be obtained by the Partnership and the Venture from unaffiliated parties. This determination has been made by the General Partner in good faith, but none of the terms were or will be negotiated at arm's-length and there can be no assurance that the terms of such transactions have been or will be as favorable as those that could have been obtained by the Partnership or the Venture from unaffiliated parties.
Transactions with the General Partner
The General Partner charges a management fee, and the General Partner is reimbursed for certain allocated overhead and administrative expenses. These expenses represent the salaries and benefits paid to corporate personnel, rent, data processing services and other corporate facilities costs. Such personnel provide engineering, marketing, administrative, accounting, legal and investor relations services to the Venture. Allocations of personnel costs are based primarily on actual time spent by employees of the General Partner with respect to each partnership managed. Remaining expenses are allocated based on the pro rata relationship of the Venture's revenues to the total revenues of all systems owned or managed by the General Partner and certain of its subsidiaries. Systems owned by the General Partner and all other systems owned by partnerships for which Jones Intercable, Inc. is the general partner are also allocated a proportionate share of these expenses.
The General Partner also advances funds and charges interest on the balance payable. The interest rate charged approximates the General Partner's weighted average cost of borrowing.
Transactions with Affiliates
Jones Education Company ("JEC") is owned 63% by Jones International, Ltd. ("International"), an affiliate of the General Partner, 9% by Glenn R. Jones, 12% by Bell Canada International Inc. ("BCI") and 16% by the General Partner. JEC operates two television networks, JEC Knowledge TV and Jones Computer Network. JEC Knowledge TV provides programming related to computers and technology; business, careers and finance; health and wellness; and global culture and languages. Jones Computer Network provides programming focused primarily on computers and technology. JEC sells its programming to certain cable television systems owned or managed by the General Partner.
The Great American Country network provides country music video programming to certain cable television systems owned or managed by the General Partner. This network is owned and operated by Great American Country, Inc., a subsidiary of Jones International Networks, Ltd., an affiliate of International.
Jones Galactic Radio, Inc. is a company now owned by Jones International Networks, Ltd., an affiliate of International. Superaudio, a joint venture between Jones Galactic Radio, Inc. and an unaffiliated entity, provides satellite programming to certain cable television systems owned or managed by the General Partner.
The Product Information Network Venture (the "PIN Venture") is a venture among a subsidiary of Jones International Networks, Ltd., an affiliate of International, and two unaffiliated cable system operators. The PIN Venture operates the Product Information Network ("PIN"), which is a 24-hour network that airs long-form advertising generally known as "infomercials." The PIN Venture generally makes incentive payments of approximately 60% of its net advertising revenue to the cable systems that carry its programming. Most of the General Partner's owned and managed systems carry PIN for all or part of each day. Revenues received by the Partnership from the PIN Venture relating to the Partnership's owned cable television systems totaled approximately $80,474 for the year ended December 31, 1996. Revenues received by the Venture from the PIN Venture relating the Venture's owned cable television systems totaled approximately $49,973 for the year ended December 31, 1996.
The charges to the Partnership and to the Venture for related party transactions are as follows for the periods indicated:
PART IV. -------
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES ------------------------------------------------- AND REPORTS ON FORM 8-K -----------------------
(a)1. See index to financial statements for the list of financial statements and exhibits thereto filed as part of this report.
3. The following exhibits are filed herewith.
4.1 Limited Partnership Agreement for Cable TV Fund 14-B, Ltd. (1)
4.2 Joint Venture Agreement of Cable TV Fund 14-A/B Venture, dated as of January 8, 1988, between Cable TV Fund 14-A, Ltd. and Cable TV Fund 14-B, Ltd. (1)
10.1.1 Copy of a franchise and related documents thereto granting a community antenna television system franchise for Little Rock, California (Fund 14-B). (2)
10.1.2 Copy of a franchise and related documents thereto granting a community antenna television system franchise for the Big Cypress Seminole Indian Reservation, Florida (Fund 14-A/B). (3)
10.1.3 Copy of a franchise and related documents thereto granting a community antenna television system franchise for the Brighton Seminole Indian Reservation, Florida (Fund 14-A/B). (3)
10.1.4 Copy of a franchise and related documents thereto granting a community antenna television system franchise for the unincorporated portions of Broward County, Florida (Fund 14-A/B). (2)
10.1.5 Copy of a franchise and related documents thereto granting a community antenna television system franchise for Cooper City, Florida (Fund 14-A/B). (10)
10.1.6 Copy of a franchise and related documents thereto granting a community antenna television system franchise for Dania, Florida (Fund 14-A/B). (2)
10.1.7 Copy of a franchise and related documents thereto granting a community antenna television system franchise for Davie, Florida (Fund 14-A/B). (2)
10.1.8 Copy of a franchise and related documents thereto granting a community antenna television system franchise for the Hollywood Seminole Indian Reservation, Florida (Fund 14-A/B). (3)
10.1.9 Copy of a franchise and related documents thereto granting a community antenna television system franchise for the Immokalee Seminole Indian Reservation, Florida (Fund 14-A/B). (3)
10.1.10 Copy of a franchise and related documents thereto granting a community antenna television system franchise for Lauderdale Lakes, Florida (Fund 14-A/B). (2)
10.1.11 Copy of Ordinance No. 1200 dated 3/5/90 relating to the City of Big Lake franchise. (4)
10.1.12 Copy of Ordinance dated 4/16/90 relating to the Buffalo franchise. (4)
10.1.13 Copy of a franchise and related documents thereto granting a community antenna television system franchise for the County of Georgetown, South Carolina (Fund 14-B). (4)
10.1.14 Copy of a franchise and related documents thereto granting a community antenna television system franchise for the County of Horry, South Carolina (Fund 14-B). (5)
10.1.15 Copy of a franchise and related documents thereto granting a community antenna television system franchise for Myrtle Beach Air Force Base, South Carolina (Fund 14-B). (5)
10.1.16 Copy of a franchise and related documents thereto granting a community antenna television system franchise for the Town of Pawley's Island, South Carolina (Fund 14-B). (5)
10.1.17 Copy of a franchise and related documents thereto granting a community antenna television system franchise for the Town of Surfside Beach, South Carolina (Fund 14-B). (4)
10.2.1 Credit Agreement dated as of December 28, 1995 among Cable TV Fund 14-B, Ltd. and Credit Lyonnais Caymand Island Branch, as agent for various lenders. (Fund 14-B) (10)
10.2.2 Credit Agreement dated as of September 30, 1988 among Cable TV Fund 14-A/B Venture and The Bank of Nova Scotia, as agent for various lenders. (Fund 14-A/B) (6)
10.2.3 First Letter Amendment dated June 11, 1990 to Credit Agreement dated as of September 30, 1988 among Cable TV Fund 14-A/B Venture and The Bank of Nova Scotia, as agent for various lenders. (Fund 14-A/B) (7)
10.2.4 Second Letter Amendment dated May 28, 1992 to Credit Agreement dated as of September 30, 1988 among Cable TV Fund 14-A/B Venture and The Bank of Nova Scotia, as agent for various lenders. (Fund 14-A/B) (7)
10.2.5 Third Letter Amendment dated June 30, 1994 to Credit Agreement dated as of September 30, 1988 among Cable TV Fund 14-A/B Venture and The Bank of Nova Scotia, as agent for various lenders. (Fund 14-A/B) (9)
10.2.6 Fourth Letter Amendment dated June 24, 1996 to Credit Agreement dated as of September 30, 1988 among Cable TV Fund 14-A/B Venture and The Bank of Nova Scotia, as agent for various lenders. (Fund 14-A/B)
10.3.1 Purchase and Sale Agreement dated as of March 31, 1988 by and between Cable TV Fund 14-A/B Venture as Buyer and Jones Intercable, Inc. as Seller. (Fund 14-A/B) (8)
27 Financial Data Schedule __________ (1) Incorporated by reference from Registrant's Annual Report on Form 10-K for fiscal year ended December 31, 1987 (Commission File Nos. 0-15378 and 0-16200)
(2) Incorporated by reference from Registrant's Annual Report on Form 10-K for fiscal year ended December 31, 1989 (Commission File Nos. 0-15378 and 0-16200)
(3) Incorporated by reference from Registrant's Annual Report on Form 10-K for fiscal year ended December 31, 1990 (Commission File Nos. 0-15378 and 0-16200)
(4) Incorporated by reference from Registrant's Annual Report on Form 10-K for fiscal year ended December 31, 1992.
(5) Incorporated by reference from Registrant's Annual Report on Form 10-K for fiscal year ended December 31, 1988 (Commission File Nos. 0-15378 and 0-16200)
(6) Incorporated by reference from Registrant's Annual Report on Form 10-K for fiscal year ended December 31, 1991 (Commission File Nos. 0-15378 and 0-16200)
(7) Incorporated by reference from Registrants' Current Reports on Form 8-K dated March 31, 1993 (Commission File Nos. 0-15378 and 0-16200)
(8) Incorporated by reference from Registrants' Current Reports on Form 8-K dated March 31, 1988 (Commission File Nos. 0-15378 and 0-16200)
(9) Incorporated by reference from Registrant's Annual Report on Form 10-K for fiscal year ended December 31, 1994
(10) Incorporated by reference from Registrant's Annual Report on Form 10-K for fiscal year ended December 31, 1995
(b) Reports on Form 8-K ------------------- None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CABLE TV FUND 14-B, LTD. a Colorado limited partnership By: Jones Intercable, Inc.
By: /s/ Glenn R. Jones -------------------------------- Glenn R. Jones Chairman of the Board and Chief Dated: March 24, 1997 Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Glenn R. Jones -------------------------------- Glenn R. Jones Chairman of the Board and Chief Executive Officer Dated: March 24, 1997 (Principal Executive Officer)
By: /s/ Kevin P. Coyle -------------------------------- Kevin P. Coyle Group Vice President/Finance Dated: March 24, 1997 (Principal Financial Officer)
By: /s/ Larry Kaschinske -------------------------------- Larry Kaschinske Vice President/Controller Dated: March 24, 1997 (Principal Accounting Officer)
By: /s/ James B. O'Brien -------------------------------- James B. O'Brien Dated: March 24, 1997 President and Director
By: /s/ Derek H. Burney -------------------------------- Derek H. Burney Dated: March 24, 1997 Director
By: /s/ Robert E. Cole -------------------------------- Robert E. Cole Dated: March 24, 1997 Director
By: /s/ William E. Frenzel -------------------------------- William E. Frenzel Dated: March 24, 1997 Director
By: /s/ Donald L. Jacobs -------------------------------- Donald L. Jacobs Dated: March 24, 1997 Director
By: /s/ James J. Krejci -------------------------------- James J. Krejci Dated: March 24, 1997 Director
By: -------------------------------- John A. MacDonald Dated: March 24, 1997 Director
By: /s/ Raphael M. Solot -------------------------------- Raphael M. Solot Dated: March 24, 1997 Director
By: -------------------------------- Howard O. Thrall Dated: March 24, 1997 Director
By: /s/ Siim A. Vanaselja -------------------------------- Siim A. Vanaselja Dated: March 24, 1997 Director
By: /s/ Sanford Zisman -------------------------------- Sanford Zisman Dated: March 24, 1997 Director
By: /s/ Robert B. Zoellick -------------------------------- Robert B. Zoellick Dated: March 24, 1997 Director