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 June 30, 1996
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[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number 0-17916
JONES GROWTH PARTNERS L.P.
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Exact name of registrant as specified in charter
Colorado 84-1143409
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State of organization IRS employer I.D. #
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
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Address of principal executive office
(303) 792-3111
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Registrant's telephone number
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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JONES GROWTH PARTNERS L.P.
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(A Limited Partnership)
UNAUDITED BALANCE SHEETS
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June 30, December 31,
ASSETS 1996 1995
- ------ ------------ -------------
CASH $ 234,071 $ 45,490
TRADE RECEIVABLES, less allowance for
doubtful receivables of $34,754 and $19,111
at June 30, 1996 and December 31, 1995,
respectively 122,258 286,891
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 49,215,940 47,200,274
Less- accumulated depreciation (25,192,858) (23,414,677)
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24,023,082 23,785,597
Franchise costs and other intangible assets,
net of accumulated amortization of
$55,634,623 and $51,513,474 at June 30, 1996
and December 31, 1995, respectively 21,567,662 25,688,811
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Total investment in cable
television properties 45,590,744 49,474,408
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 496,793 665,612
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Total assets $ 46,443,866 $ 50,472,401
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
JONES GROWTH PARTNERS L.P.
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(A Limited Partnership)
UNAUDITED BALANCE SHEETS
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June 30, December 31,
1996 1995
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LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
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LIABILITIES:
Credit facility and other debt $36,236,878 $35,431,966
Trade accounts payable and accrued liabilities 750,736 1,322,658
Accrued interest 388,038 407,032
Subscriber prepayments 52,276 50,265
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Total liabilities 37,427,928 37,211,921
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PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (656,236) (613,791)
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(655,236) (612,791)
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Limited Partners-
Net contributed capital (85,740 units outstanding
at June 30, 1996 and December 31, 1995) 73,790,065 73,790,065
Accumulated deficit (64,118,891) (59,916,794)
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9,671,174 13,873,271
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Total partners' capital (deficit) 9,015,938 13,260,480
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Total liabilities and partners'
capital (deficit) $ 46,443,866 $ 50,472,401
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
JONES GROWTH PARTNERS L.P.
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(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
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For the Three Months Ended For the Six Months Ended
June 30, June 30,
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1996 1995 1996 1995
----------- ----------- ----------- -----------
REVENUES $ 5,738,788 $ 5,407,135 $11,249,462 $10,452,316
COSTS AND EXPENSES:
Operating expenses 3,445,984 3,321,705 6,869,536 6,415,704
Management and supervisory fees to the
General Partners and allocated
administrative costs from the
Managing General Partner 765,774 673,089 1,416,033 1,361,409
Depreciation and amortization 2,974,661 2,933,919 5,942,722 5,872,187
----------- ----------- ----------- -----------
OPERATING LOSS (1,447,631) (1,521,578) (2,978,829) (3,196,984)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (613,941) (701,407) (1,248,996) (1,410,237)
Interest income 1,056 4,533 3,000 11,645
Other, net 75 (61,805) (19,718) (66,773)
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NET LOSS $(2,060,441) $(2,280,257) $(4,244,543) $(4,662,349)
=========== =========== =========== ===========
ALLOCATION OF NET LOSS:
Managing General Partner $ (20,604) $ (22,803) $ (42,445) $ (46,623)
=========== =========== =========== ===========
Limited Partners $(2,039,837) $(2,257,454) $(4,202,098) $(4,615,726)
=========== =========== =========== ===========
NET LOSS PER LIMITED PARTNERSHIP
UNIT $ (23.79) $ (26.33) $ (49.01) $ (53.83)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNERSHIP UNITS
OUTSTANDING 85,740 85,740 85,740 85,740
=========== =========== =========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
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For the Six Months Ended
June 30,
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1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(4,244,542) $(4,662,349)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 5,942,722 5,872,187
Amortization of interest rate protection contract - 32,334
Decrease (increase) in trade receivables 164,633 (13,356)
Decrease in deposits, prepaid expenses
and other assets 125,427 37,730
Decrease in accounts payable to Jones Intercable, Inc. - (28,239)
Increase (decrease) in accrued liabilities, accrued
interest and subscriber prepayments (588,905) 977,948
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Net cash provided by operating activities 1,399,335 2,216,255
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,015,666) (1,883,886)
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Net cash used in investing activities (2,015,666) (1,883,886)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 861,023 36,474
Repayment of borrowings (56,111) (52,181)
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Net cash provided by (used in) financing activities 804,912 (15,707)
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INCREASE IN CASH 188,581 316,662
CASH, BEGINNING OF PERIOD 45,490 170,648
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CASH, END OF PERIOD $ 234,071 $ 487,310
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SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,267,990 $ 1,089,199
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
JONES GROWTH PARTNERS L.P.
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NOTES TO UNAUDITED FINANCIAL STATEMENTS
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(1) 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 Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data includes
all adjustments, consisting of normal recurring accruals, necessary to present
fairly the financial position of Jones Growth Partners L.P. (the "Partnership")
at June 30, 1996 and December 31, 1995, and its results of operations for the
three and six month periods ended June 30, 1996 and 1995, and its cash flows for
the six month periods ended June 30, 1996 and 1995. Results of operations for
these periods are not necessarily indicative of results to be expected for the
full year.
The Partnership owns the cable television system serving the municipalities
of Addison, Glen Ellyn, St. Charles, Warrenville, West Chicago, Wheaton,
Winfield and Geneva, and certain portions of unincorporated areas of Du Page and
Kane counties, all in the State of Illinois (the "Wheaton System").
(2) Jones Spacelink Cable Corporation, a wholly owned subsidiary of Jones
Intercable, Inc. ("Intercable"), a Colorado corporation, is the "Managing
General Partner." The Managing General Partner and certain of its affiliates
also own and operate cable television systems for their own account and for the
account of other managed limited partnerships. The Managing General Partner
receives a fee for its services equal to 5 percent of the gross revenues of the
Partnership, excluding revenues from the sale of cable television systems or
franchises. Management fees paid to the Managing General Partner by the
Partnership for the three and six month periods ended June 30, 1996 were
$286,939 and $562,473, respectively, as compared to $270,357 and $522,616,
respectively, for the three and six month periods ended June 30, 1995. Growth
Partners Inc. (the "Associate General Partner"), an affiliate of Lehman Brothers
Inc., participates with the Managing General Partner in certain management
decisions affecting the Partnership and receives a supervisory fee of the lesser
of 1 percent of the gross revenues of the Partnership, excluding revenues from
the sale of cable television systems or franchises, or $200,000, accrued
quarterly and payable annually. Supervisory fees accrued to the Associate
General Partner by the Partnership for the three and six month periods ended
June 30, 1996 were $57,388 and $112,495, respectively, as compared to $54,071
and $104,523, respectively, for the three and six month periods ended June 30,
1995.
The Partnership reimburses the Managing General Partner and certain of its
affiliates for certain allocated overhead and administrative costs. 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, administrative, accounting, legal
and investor relations services to the Partnership. Allocations of personnel
costs are primarily based upon actual time spent by employees of the Managing
General Partner and certain of its affiliates with respect to each partnership
managed. Remaining expenses are allocated based on the pro rata relationship of
the Partnership's revenues to the total revenues of all cable television systems
owned or managed by Intercable and certain of its affiliates. 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.
The Managing General Partner believes that the methodology used in allocating
overhead and administrative costs is reasonable. Reimbursements by the
Partnership to the Managing General Partner for allocated overhead and
administrative costs for three and six month periods ended June 30, 1996 were
$421,447 and $741,065, respectively, as compared to $348,661 and $734,270,
respectively, for the three and six month periods ended June 30, 1995.
6
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
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FINANCIAL CONDITION
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It is Intercable's publicly announced policy that it intends to liquidate
its managed limited partnerships, including the Partnership, as opportunities
for sales of partnership cable television systems arise in the marketplace over
the next several years. In accordance with the General Partner's policy, the
Managing General Partner has begun to solicit buyers for the Partnership's
Wheaton System. There is no assurance as to the timing or terms of any sale.
For the six months ended June 30, 1996, the Partnership generated net cash
from operating activities totaling approximately $1,399,000, which is available
to fund capital expenditures and non-operating costs. During the first six
months of 1996, the Partnership expended approximately $2,016,000 for capital
expenditures for the Wheaton System. Approximately 38 percent of these
expenditures related to cable, hardware and labor for new subscriber
installations, and approximately 26 percent of these expenditures related to the
extension of cable plant to serve additional customers. Approximately 18 percent
of these expenditures was for the purchase of converters and the remainder of
these expenditures was for various system enhancements. Such expenditures were
financed from cash from operations and borrowings under the Partnership's credit
facility. Capital expenditures for the remainder of 1996 are expected to be
approximately $2,194,000 and are expected to be financed from available cash
balances, cash flow from operations and, in its discretion, advances from the
General Partner. For the remainder of 1996, approximately 42 percent of the
capital expenditures will relate to the extension of cable plant and
approximately 31 percent will relate to cable, hardware and labor for additional
subscriber installations in the Wheaton System. The remainder of the capital
expenditures will be for various other enhancements. These capital expenditures
are necessary to maintain the value of the Partnership's system.
In December 1994, the Partnership entered into a $36,000,000 revolving
credit facility. The revolving credit facility converts to a term loan on
December 31, 1996, at which time the then-outstanding balance is payable in
quarterly installments through December 30, 2002. At June 30, 1996, $36,000,000
was outstanding under the revolving credit facility. Interest on the
outstanding principal balance is at the Partnership's option of the Prime Rate
plus 1/8 percent or the London Interbank Offered Rate plus 1 percent. The
effective interest rates on amounts outstanding as of June 30, 1996 and 1995
were 6.79 percent and 7.44 percent, respectively.
The Managing General Partner presently believes cash flow from operations
and, in its discretion, advances from the Managing General Partner will be
sufficient to fund capital expenditures and other liquidity needs of the
Partnership.
RESULTS OF OPERATIONS
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Revenues of the Partnership for the three months ended June 30, 1996
totaled $5,738,788 compared to $5,407,135 in 1995, an increase of $331,653, or
approximately 6 percent. An increase in basic service revenues primarily
accounted for the increase in revenues for the three month periods ended June
30. Basic service rate increases accounted for approximately 51 percent of the
increase in basic service revenues and increases in the number of basic service
subscribers accounted for approximately 49 percent of the increase in basic
service revenues for the three month periods. For the six months ended June 30,
1996, revenues totaled $11,249,462 compared to $10,452,316 for the same period
one year ago, an increase of $797,146, or approximately 8 percent. An increase
in basic service revenues accounted for approximately 96 percent of the total
increase in revenues for this period. Basic service rate increases accounted
for approximately 52 percent of the increase in basic service revenues and
increases in the number of basic service subscribers accounted for approximately
48 percent of the increase in basic service revenues for the six month periods.
The number of basic service subscribers increased by 2,799 subscribers, or
approximately 5 percent, to 53,910 at June 30, 1996 from 51,111 at June 30,
1995. No other individual factor contributed significantly to the increase in
revenues.
7
Operating expenses consist primarily of costs associated with the
administration of the Partnership's cable television system. The principal cost
components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
maintenance expenses and consumer marketing expenses.
Operating expenses increased $124,279, or approximately 4 percent, to
$3,445,984 for the three months ended June 30, 1996 from $3,321,705 for the
comparable period in 1995. For the three month periods ended June 30, 1996 and
1995, operating expenses represented approximately 60 percent and 61 percent of
revenues, respectively. This increase in operating expenses was due primarily
to increases in programming fees and advertising expenses, which accounted for
approximately 75 percent and 13 percent, respectively, of the increase.
Operating expenses increased $453,832, or approximately 7 percent, to $6,869,536
for the six months ended June 30, 1996 from $6,415,704 for the comparable period
in 1995. Operating expenses represented approximately 61 percent of revenues
for each of the six month periods ended June 30, 1996 and 1995. This increase
was due primarily to increases in programming fees, which accounted for
approximately 75 percent of the increase. No other individual factor
significantly affected the increase in operating expenses for the period.
Management and supervisory fees to the Managing and Associate General
Partners and allocated administrative costs from the Managing General Partner
increased $92,685, or approximately 14 percent, to $765,774 for the three months
ended June 30, 1996 from $673,089 for the comparable period in 1995. Management
and supervisory fees to the Managing and Associate General Partners and
allocated administrative costs from the Managing General Partner increased
$54,624, or approximately 4 percent, to $1,416,033 for the six month period
ended June 30, 1996 from $1,361,409 for the six month period ended June 30,
1995. These increases were primarily the result of the increase in revenues,
upon which such fees and allocations are based.
Depreciation and amortization expense increased $40,742, or approximately 1
percent, to $2,974,661 for the three months ended June 30, 1996 compared to
$2,933,919 for the comparable period in 1995. Depreciation and amortization
expense increased $70,535, or approximately 1 percent, to $5,942,722 for the six
months ended June 30, 1996 compared to $5,872,187 for the comparable period in
1995. This increase was the result of capital additions in 1995.
Operating loss decreased $73,947, or approximately 5 percent, to $1,447,631
for the three months ended June 30, 1996 from $1,521,578 for the comparable
period in 1995. Operating loss decreased $218,155, or approximately 7 percent,
to $2,978,829 for the six months ended June 30, 1996 from $3,196,984 for the
comparable period in 1995. These decreases were due to the increase in revenues
exceeding increases in operating expenses and management and supervisory fees to
the general partners and allocated administrative costs from the Managing
General Partner.
The cable television industry generally measures the financial performance
of a cable television system in terms of cash flow or operating income before
depreciation and amortization. The value of a cable television system is often
determined using multiples of cash flow. This measure is not intended to be a
substitute or improvement upon the items disclosed on the financial statements,
rather it is included because it is an industry standard. Operating income
before depreciation and amortization expense increased $114,689, or
approximately 8 percent, to $1,527,030 for the three months ended June 30, 1996
from $1,412,341 for the comparable period in 1995. This increase was due to the
increase in revenues exceeding the increases in the expenses described above.
Operating income before depreciation and amortization expense increased
$288,690, or approximately 11 percent, to $2,963,893 for the six months ended
June 30, 1996 from $2,675,203 for the comparable period in 1995. This increase
was due to the increase in revenues exceeding the increase in the expenses
described above.
Interest expense decreased $87,466, or approximately 12 percent, to
$613,941 for the three months ended June 30, 1996 from $701,407 for the
comparable period in 1995. Interest expense decreased $161,241, or
approximately 11 percent, to $1,248,996 for the six months ended June 30, 1996
from $1,410,237 for the six months ended June 30, 1995. This decrease in
interest expense was primarily due to lower effective interest rates on
interest-bearing obligations.
Net loss decreased $219,816, or approximately 7 percent, to $2,060,441 for
the three months ended June 30, 1996 from $2,280,257 for the comparable period
in 1995. Net loss decreased $417,806, or approximately 9 percent to $4,224,543
for the six month period ended June 30, 1996 from $4,662,349 for the comparable
period in 1995. This decrease was the result of the factors discussed above,
and are expected to continue in the future.
8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JONES GROWTH PARTNERS L.P.
a Colorado limited partnership
BY: Jones Spacelink Cable Corporation
By: /S/ Kevin P. Coyle
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Kevin P. Coyle
Vice President/Finance
(Principal Financial Officer)
Dated: August 14, 1996
10