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
[_] 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: 0-16183
IDS/JONES GROWTH PARTNERS 87-A, LTD.
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Exact name of registrant as specified in charter
Colorado 84-1060544
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State of organization I.R.S. 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 (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 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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IDS/JONES GROWTH PARTNERS 87-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
June 30, December 31,
ASSETS 1996 1995
------ ------------ ------------
CASH $ 287,448 $ 557,506
TRADE RECEIVABLES, less allowance for doubtful
receivables of $36,369 and $24,428 at
June 30, 1996 and December 31, 1995,
respectively 261,558 623,890
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 15,716,186 35,421,532
Less- accumulated depreciation (6,850,082) (15,195,244)
----------- ------------
8,866,104 20,226,288
Franchise costs and other intangible assets, net of
accumulated amortization of $12,204,642 and $24,675,391
at June 30, 1996 and December 31, 1995, respectively 2,701,908 14,397,338
----------- ------------
Total investment in cable television properties 11,568,012 34,623,626
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 247,171 355,352
----------- ------------
Total assets $12,364,189 $ 36,160,374
=========== ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
IDS/JONES GROWTH PARTNERS 87-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
June 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
- ------------------------------------------- ------------ ------------
LIABILITIES:
Debt $ 9,600,000 $ 22,981,227
Accounts payable - Managing General Partner - 448,872
Trade accounts payable and accrued liabilities 328,629 984,610
Subscriber prepayments 31,665 45,438
------------ ------------
Total liabilities 9,960,294 24,460,147
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 500 500
Accumulated deficit (4,427) (245,844)
------------ ------------
(3,927) (245,344)
------------ ------------
Limited Partners-
Net contributed capital
(164,178 units outstanding at
June 30, 1996 and December 31, 1995) 35,824,200 35,824,200
Accumulated deficit (3,416,378) (23,878,629)
Distributions (30,000,000) -
------------ ------------
2,407,822 11,945,571
------------ ------------
Total liabilities and partners'
capital (deficit) $ 12,364,189 $ 36,160,374
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
IDS/JONES GROWTH PARTNERS 87-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- ------------------------
1996 1995 1996 1995
---------- ---------- ----------- -----------
REVENUES $1,779,087 $3,591,026 $ 4,829,803 $ 7,019,161
COSTS AND EXPENSES:
Operating expenses 1,082,147 1,947,359 3,048,776 3,926,259
Management fees and allocated overhead
from General Partners 225,986 435,823 601,224 894,169
Depreciation and amortization 286,496 1,080,930 1,191,212 2,560,393
---------- ---------- ----------- -----------
OPERATING INCOME (LOSS) 184,458 126,914 (11,409) (361,660)
---------- ---------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (158,267) (441,822) (421,629) (880,294)
Gain on sale of cable television system - - 21,096,325 -
Other, net (24,544) 555 40,381 1,095
---------- ---------- ----------- -----------
Total other income (expense) (182,811) (441,267) 20,715,077 (879,199)
---------- ---------- ----------- -----------
NET INCOME (LOSS) $ 1,647 $ (314,353) $20,703,668 $(1,240,859)
========== ========== =========== ===========
ALLOCATION OF NET INCOME (LOSS):
General Partners $ 16 $ (3,144) $ 241,417 $ (12,409)
========== ========== =========== ===========
Limited Partners $ 1,631 $ (311,209) $20,462,251 $(1,228,450)
========== ========== =========== ===========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $.01 $(1.90) $124.63 $(7.48)
========== ========== =========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 164,178 164,178 164,178 164,178
========== ========== =========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
IDS/JONES GROWTH PARTNERS 87-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
For the Six Months Ended
June 30,
---------------------------
1996 1995
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 20,703,668 $(1,240,859)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 1,191,212 2,560,393
Gain on sale of cable television system (21,096,325) -
Amortization of interest rate protection contract - 16,668
Decrease in trade receivables 362,332 107,247
Decrease (increase) in deposits, prepaid expenses and
deferred charges (116,691) 36,538
Decrease in trade accounts payable, accrued
liabilities and subscriber prepayments (669,754) (251,700)
Decrease in amount due Managing General Partner (448,872) (654,118)
------------ -----------
Net cash provided by (used in) operating activities (74,430) 574,169
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,049,734) (1,946,984)
Proceeds from sale of cable television system 44,235,333 -
------------ -----------
Net cash provided by (used in) investing activities 43,185,599 (1,946,984)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - 1,395,480
Repayment of debt (13,381,227) (36,076)
Distribution to Limited Partners (30,000,000) -
------------ -----------
Net cash provided by (used in) financing activities (43,381,227) 1,359,404
------------ -----------
Decrease in cash (270,058) (13,411)
Cash, beginning of period 557,506 407,610
------------ -----------
Cash, end of period $ 287,448 $ 394,199
============ ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 530,146 $ 912,019
============ ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
IDS/JONES GROWTH PARTNERS 87-A, LTD.
------------------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(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 only of normal recurring accruals, necessary to
present fairly the financial position of IDS/Jones Growth Partners 87-A, Ltd.
(the "Partnership") at June 30, 1996 and December 31, 1995, its Statements of
Operations for the three and six month periods ended June 30, 1996 and 1995 and
its Cash Flows for the six months 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. Certain prior year amounts have been reclassified to
conform to the 1996 presentation.
The Partnership owns and operates the cable television system serving the
areas in and around Roseville, California (the "Roseville System"). The
Partnership sold its cable television system serving the communities in and
around Carmel, Indiana (the "Carmel System") in February 1996, as discussed
below.
(2) Jones Cable Corporation (the "Managing General Partner"), a wholly owned
subsidiary of Jones Intercable, Inc. ("Intercable"), manages the Partnership and
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 $88,954
and $241,490, respectively, compared to $179,551 and $350,958, respectively, for
the three and six month periods ended June 30, 1995.
IDS Cable Corporation (the "Supervising General Partner") participates in
certain management decisions of the Partnership and receives a fee for its
services equal to one-half percent of the gross revenues of the Partnership,
excluding revenue from the sale of cable television systems or franchises.
Supervision fees paid to the Supervising General Partner by the Partnership for
the three and six month periods ended June 30, 1996 were $8,895 and $24,149,
respectively, compared to $17,955 and $35,095, respectively, for the three and
six month periods ended June 30, 1995.
The Partnership reimburses 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,
administrative, accounting, legal and investor relations services to the
Partnership. Allocations of personnel costs are based primarily on actual time
spent by employees of Intercable with respect to each partnership managed.
Remaining overhead costs are allocated based on revenues of the Partnership as a
percentage of total revenues of owned and managed partnerships of Intercable.
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 expense is reasonable.
Reimbursements made to Intercable by the Partnership for allocated overhead and
administrative expenses during the three and six month periods ended June 30,
1996 were $128,137 and $335,585, respectively, compared to $238,317 and
$508,116, respectively, for the three and six month periods ended June 30, 1995.
The Supervising General Partner also may be reimbursed for certain expenses
incurred on behalf of the Partnership. There were no reimbursements made to the
Supervising General Partner by the Partnership for allocated overhead and
administrative expenses during the three and six month periods ended June 30,
1996 and 1995.
(3) On February 28, 1996, the Partnership sold the Carmel System to Jones Cable
Holdings, Inc. ("JCH"), a wholly owned subsidiary of Intercable, for a sales
price of $44,235,333, subject to normal working capital closing adjustments.
This price represented the average of three separate, independent appraisals of
the fair market value of the Carmel System. The proceeds were used to repay the
outstanding principal balance on the Partnership's term loan of $22,655,000, and
$30,000,000 was distributed to the limited partners in April 1996. The April
1996 distribution was funded by net sale proceeds, although a portion was re-
borrowed under the Partnership's new credit facility. This distribution has
given the Partnership's limited partners an approximate return of $731 per
$1,000 invested in the Partnership. No vote of the limited partners of the
Partnership was required in connection with this transaction because the assets
of the Carmel System did not constitute all or substantially all of the
Partnership's assets. The Supervising General Partner of the Partnership
consented to the timing of the transaction and participated in the selection of
appraisers.
6
The pro forma effect of the sale of the Carmel System on the results of the
Partnership's operations for the six months ended June 30, 1996 and 1995,
assuming the transaction had occurred at the beginning of the year, is presented
in the following unaudited tabulation:
For the Six Months Ended June 30, 1996
--------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
------------ ------------- -----------
Revenues $ 4,829,803 $ (1,357,969) $3,471,834
=========== ============ ==========
Operating Income (Loss) $ (11,409) $ 191,212 $ 179,803
=========== ============ ==========
Net Income $20,703,668 $(20,779,155) $ (75,487)
=========== ============ ==========
For the Six Months Ended June 30, 1995
--------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
------------ ------------ -----------
Revenues $ 7,019,161 $(3,945,658) $3,073,503
=========== =========== ==========
Operating Loss $ (361,660) $ 34,387 $ (327,273)
=========== =========== ==========
Net Loss $(1,240,859) $ 508,927 $ (731,932)
=========== =========== ==========
7
IDS/JONES GROWTH PARTNERS 87-A, LTD.
------------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
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 Intercable's policy, the Carmel
System was sold in February 1996 and the Managing General Partner has had
preliminary discussions with potential buyers for the Roseville System. There is
no assurance as to the timing or terms of any sale of the Roseville System.
For the six months ended June 30, 1996, the Partnership reported operating
income before depreciation and amortization of approximately $1,180,000. The
Partnership expended approximately $1,050,000 in capital improvements during the
first six months of 1996. Of these improvements, approximately 58 percent
related to the construction of cable television plant. Approximately 29 percent
related to service drops to homes. The remaining expenditures related to various
system enhancements in each of the Partnership's systems. Funding for these
expenditures was provided by cash generated from operations and borrowings
available under the Partnership's credit facility. Budgeted capital expenditures
for the remainder of 1996 in the Roseville System are approximately $319,000.
Construction of system extensions will account for approximately 52 percent of
these expenditures. Service drops to homes will account for approximately 31
percent of the anticipated expenditures. The remainder of the expenditures
relate to various enhancements in the Roseville System. Funding for these
expenditures is expected to be provided by cash on hand and cash generated from
operations and, if necessary, borrowings available under the Partnership's
credit facility. These capital expenditures are necessary to maintain the value
of the Partnership's Roseville System.
On February 28, 1996, the Partnership sold the Carmel System to JCH for a
sales price of $44,235,333, subject to normal working capital closing
adjustments. This price represented the average of three separate, independent
appraisals of the fair market value of the Carmel System. The proceeds were used
to repay the outstanding principal balance of the Partnership's term loan of
$22,655,000, and $30,000,000 was distributed to the limited partners in April
1996. The April 1996 distibution was funded by net sale proceeds, although a
portion was re-borrowed under the Partnership's new credit facility. This
distribution has given the Partnership's limited partners an approximate return
of $731 per $1,000 invested in the Partnership. No vote of the limited partners
of the Partnership was required in connection with this transaction because the
assets of the Carmel System did not constitute all or substantially all of the
Partnership's assets. The Supervising General Partner of the Partnership
consented to the timing of the transaction and participated in the selection of
appraisers.
The Partnership continues to own and operate the Roseville System. The
cash from operations of the Roseville System will be sufficient to provide
liquidity to meet the anticipated needs of the Roseville System as well as
service the anticipated debt requirements, as discussed below.
When the Partnership sold its Carmel System, it used a portion of the sales
proceeds to repay its term loan's then-outstanding principal balance of
$22,655,000. Also on February 28, 1996, the Partnership entered into a new
reducing revolving credit agreement with a commitment up to $10,000,000. The
reducing revolving credit period expires December 31, 2003. The commitment
amount reduces quarterly, beginning June 30, 1999. In April 1996, the
Partnership re-borrowed approximately $9,100,000 available from the new
$10,000,000 revolving credit facility, which it used, together with cash on hand
from the sale of the Carmel System, to fund a $30,000,000 distribution to the
Partnership's limited partners in April 1996. At June 30, 1996, the Partnership
had $9,600,000 outstanding under the credit facility, leaving $400,000 available
for future borrowings. Interest on the new commitment is at the Partnership's
option of the Prime Rate or the London Interbank Offered Rate plus 1-1/4
percent. The effective interest rates on amounts outstanding were 6.82 percent
and 7.57 percent at June 30, 1996 and 1995, respectively.
RESULTS OF OPERATIONS
- ---------------------
Revenues in the Partnership's systems totaled $1,779,087 for the three
month period ended June 30, 1996 compared to $3,591,026 for the comparable 1995
period, a decrease of $1,811,939, or approximately 50 percent.
8
Revenues totaled $4,829,803 for the six months ended June 30, 1996 compared to
$7,019,161 for the comparable 1995 period, a decrease of $2,189,358, or
approximately 31 percent. These decreases were due to the sale of the Carmel
System. Disregarding the effect of the Carmel System sale, revenues totaled
$1,779,087 and $3,471,834, respectively, for the three and six month periods
ended June 30, 1996 compared to $1,587,908 and $3,073,502, respectively, for the
similar three and six month 1995 periods. Increases in the number of basic
service subscribers in the Partnership's Roseville System accounted for
approximately 71 and 70 percent, respectively, of the increase in basic service
revenues for the three and six month periods ended June 30, 1996. The number of
basic service subscribers in the Roseville System totaled 17,348 at June 30,
1996, compared to 15,589 at June 30, 1995, an increase of 1,759 subscribers, or
approximately 11 percent. Basic service rate increases accounted for
approximately 29 and 30 percent, respectively, of the increase in basic service
revenues for the three and six month periods ended June 30, 1996. No other
single factor significantly contributed to the increase in revenues.
Operating expenses consist primarily of costs associated with the
administration of the Partnership's cable television systems. The principal
cost components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and consumer marketing expenses.
Operating expenses totaled $1,082,147 for the three month period ended June
30, 1996 compared to $1,947,359 for the comparable 1995 period, a decrease of
$865,212, or approximately 44 percent. Operating expenses totaled $3,048,776
for the six months ended June 30, 1996 compared to $3,926,259 for the comparable
1995 period, a decrease of $877,483, or approximately 22 percent. Disregarding
the effect of the Carmel System sale, operating expenses totaled $1,055,274 and
$2,115,165, respectively, for the three and six month periods ended June 30,
1996 compared to $965,433 and $1,891,657, respectively, for the similar three
and six month 1995 periods. These increases were due to increases in
programming fees and advertising sales, which accounted for approximately 12
percent and 48 percent, respectively, for the three month increase and 14
percent and 44 percent, respectively, for the six month increase. No other
single factor significantly affected the increase in operating expenses.
Operating expenses represented 59 percent and 58 percent, respectively, of
revenues for the three month periods ended June 30, 1996 and 1995, and 61
percent and 62 percent, respectively, for the six month periods ended June 30,
1996 and 1995.
Management fees and allocated overhead from the General Partners totaled
$225,986 for the three month period ended June 30, 1996 compared to $435,823 for
the comparable 1995 period, a decrease of $209,837, or approximately 48 percent.
Management fees and allocated overhead from the General Partners totaled
$601,224 for the six months ended June 30, 1996 compared to $894,169 for the
comparable 1995 period, a decrease of $292,945, or approximately 33 percent.
Disregarding the effect of the Carmel System sale, management fees and allocated
overhead from the General Partners totaled $248,097 and $431,841, respectively,
for the three and six month periods ended June 30, 1996 compared to $192,763 and
$389,296, respectively, for the similar three and six month 1995 periods. These
increases were due to the increases in revenues, upon which such fees and
allocations are based.
Depreciation and amortization expense totaled $286,496 for the three month
period ended June 30, 1996 compared to $1,080,930 for the comparable 1995
period, a decrease of $794,434, or approximately 74 percent. Depreciation and
amortization expense totaled $1,191,212 for the six months ended June 30, 1996
compared to $2,560,393 for the comparable 1995 period, a decrease of $1,369,181,
or approximately 53 percent. Disregarding the effect of the Carmel System sale,
depreciation and amortization expense totaled $286,079 and $745,025,
respectively, for the three and six month periods ended June 30, 1996 compared
to $427,920 and $1,119,823, respectively, for the similar three and six month
1995 periods. These decreases were due to the maturation of the Partnership's
asset base.
The Partnership reported an operating income of $184,458 for the three
months ended June 30, 1996 compared to $126,914 for the similar 1995 period, an
increase of $57,544, or approximately 45 percent. Operating loss totaled
$11,409 for the six months ended June 30, 1996 compared to $361,660 for the
comparable 1995 period, an increase of $350,251, or approximately 97 percent.
Disregarding the effect of the Carmel System sale, operating income totaled
$189,637 for the three month period ended June 30, 1996 compared to $1,792 for
the similar three month period ended June 30, 1995, an increase of $187,845.
Operating income totaled $179,803 for the six month period ended June 30, 1996
compared to an operating loss of $327,274 for the similar six month period ended
June 30, 1995. These increases were due to the decreases in depreciation and
amortization expense in 1996.
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
9
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 totaled $470,954 for the three months ended
June 30, 1996 compared to $1,207,844 for the similar 1995 period, a decrease of
$736,890, or approximately 61 percent. Operating income before depreciation and
amortization expense totaled $1,179,803 for the six months ended June 30, 1996
compared to $2,198,733 for the comparable 1995 period, a decease of $1,018,930,
or approximately 46 percent. Disregarding the effect of the Carmel System sale,
operating income before depreciation and amortization totaled $475,716 for the
three month period ended June 30, 1996 compared to $429,712 for the similar
three months ended June 30, 1995, an increase of $46,004, or approximately 11
percent. Operating income before depreciation and amortization totaled $924,828
for the six months ended June 30, 1995 compared to $792,550, an increase of
$132,278, or approximately 17 percent. These increases were due to the
increases in revenues exceeding the increases in operating expenses and
management and supervision fees and allocated overhead from the General
Partners.
Interest expense totaled $158,283 for the three month period ended June 30,
1996 compared to $438,499 for the comparable 1995 period, a decrease of
$280,216, or approximately 64 percent. Interest expense totaled $417,109 for
the six months ended June 30, 1996 compared to $874,508 for the comparable 1995
period, a decrease of $457,399, or approximately 52 percent. These decreases in
interest expense were primarily due to the lower outstanding balance on the
Partnership's interest bearing obligations, as a result of a portion of the
proceeds from the sale of the Carmel System being used to repay the outstanding
loan principal balance of $22,655,000 on February 28, 1996.
The Partnership reported net income of $1,647 for the three months ended
June 30, 1996 compared to a net loss of $314,353 for the similar 1995 period.
Net income totaled $20,703,688 for the six months ended June 30, 1996 compared
to a net loss of $1,240,859 for the similar 1995 period. Included in net income
for the six months ended June 30, 1996 was a gain on the sale of the Carmel
System of $22,012,895. Disregarding the effect of the sale of the Carmel
System, the Partnership reported net income of $66,583 for the three months
ended June 30, 1996 compared to a net loss of $396,925 for the similar 1995
period. For the six month periods ended June 30, 1996 and 1995, the Partnership
reported net losses of $136,342 and $1,201,286, respectively. These changes
were due to the factors discussed above.
10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IDS/JONES GROWTH PARTNERS 87-A, LTD.
BY: JONES CABLE CORPORATION
Managing General Partner
By: /S/ Kevin P. Coyle
-------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: August 14, 1996
12