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, 1997
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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 __________.
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 1997 1996
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CASH $ 42,045 $ 345,480
TRADE RECEIVABLES, less allowance for doubtful
receivables of $24,446 and $28,082 at June 30, 1997
and December 31, 1996, respectively 66,574 108,117
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 53,973,887 52,055,721
Less- accumulated depreciation (29,277,605) (27,366,242)
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24,696,282 24,689,479
Franchise costs and other intangible assets, net of
accumulated amortization of $62,869,318 and
$59,419,903 at June 30, 1997 and December 31, 1996,
respectively 14,332,967 17,782,382
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Total investment in cable
television properties 39,029,249 42,471,861
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 495,795 394,429
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Total assets $ 39,633,663 $ 43,319,887
============ ============
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
------------------------
June 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1997 1996
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LIABILITIES:
Credit facility and other debt $ 36,260,366 $ 36,243,429
Accounts payable and accrued liabilities 1,213,620 1,418,976
Accrued interest 123,286 272,892
Subscriber prepayments 64,939 51,872
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Total liabilities 37,662,211 37,987,169
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PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (726,682) (693,069)
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(725,682) (692,069)
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Limited Partners-
Net contributed capital (85,740 units outstanding at
June 30, 1997 and December 31, 1996) 73,790,065 73,790,065
Accumulated deficit (71,092,931) (67,765,278)
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2,697,134 6,024,787
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Total partners' capital (deficit) 1,971,452 5,332,718
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Total liabilities and partners' capital (deficit) $ 39,633,663 $ 43,319,887
============ ============
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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1997 1996 1997 1996
----------- ----------- ----------- -----------
REVENUES $ 6,061,978 $ 5,738,788 $11,935,270 $11,249,462
COSTS AND EXPENSES:
Operating expenses 3,695,709 3,445,984 7,240,803 6,869,536
Management and supervisory fees to the
General Partners and allocated administrative
costs from the Managing General Partner 654,619 765,774 1,403,960 1,416,033
Depreciation and amortization 2,765,504 2,974,661 5,476,439 5,942,722
----------- ----------- ----------- -----------
OPERATING LOSS (1,053,854) (1,447,631) (2,185,932) (2,978,829)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (627,517) (613,941) (1,201,865) (1,248,996)
Interest income 757 1,056 1,680 3,000
Other, net 10,601 75 24,851 (19,718)
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NET LOSS $(1,670,013) $(2,060,441) $(3,361,266) $(4,244,543)
=========== =========== =========== ===========
ALLOCATION OF NET LOSS:
Managing General Partner $ (16,700) $ (20,604) $ (33,613) $ (42,445)
=========== =========== =========== ===========
Limited Partners $(1,653,313) $(2,039,837) $(3,327,653) $(4,202,098)
=========== =========== =========== ===========
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (19.28) $ (23.79) $ (38.81) $ (49.01)
=========== =========== =========== ===========
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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1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,361,266) $(4,244,542)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 5,476,439 5,942,722
Decrease in trade receivables 41,543 164,633
Decrease (increase) in deposits, prepaid expenses
and other assets (217,027) 125,427
Decrease in accounts payable, accrued liabilities,
accrued interest and subscriber prepayments (341,895) (588,905)
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Net cash provided by operating activities 1,597,794 1,399,335
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,918,166) (2,015,666)
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Net cash used in investing activities (1,918,166) (2,015,666)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 79,243 861,023
Repayment of borrowings (62,306) (56,111)
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Net cash provided by financing activities 16,937 804,912
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INCREASE (DECREASE) IN CASH (303,435) 188,581
CASH, BEGINNING OF PERIOD 345,480 45,490
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CASH, END OF PERIOD $ 42,045 $ 234,071
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SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,052,259 $ 1,267,990
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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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(A Limited Partnership)
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, 1997 and December 31, 1996, and its results of operations for the
three and six month periods ended June 30, 1997 and 1996, and its cash flows for
the six month periods ended June 30, 1997 and 1996. 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, 1997 were
$303,099 and $596,764, respectively, compared to $286,939 and $562,473,
respectively, for the three and six month periods ended June 30, 1996.
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, 1997 were $50,000 and $100,000, respectively, compared to $57,388
and $112,495, respectively, for the three and six month periods ended June 30,
1996.
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. Such services, and their
related costs, are necessary to the operations of the Partnership and would have
been incurred by the Partnership if it was a stand alone entity. 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,
1997 were $301,520 and $707,196, respectively, compared to $421,447 and
$741,065, respectively, for the three and six month periods ended June 30, 1996.
6
JONES GROWTH PARTNERS L.P.
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(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 the Managing General Partner's publicly announced policy that it
intends to liquidate its managed 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 Managing
General Partner's policy, the Wheaton System is being marketed for sale. There
is no assurance as to the timing or terms of any sale.
For the six months ended June 30, 1997, the Partnership generated net cash
from operating activities totaling approximately $1,598,000, which is available
to fund capital expenditures and non-operating costs. During the first six
months of 1997, the Partnership expended approximately $1,918,000 for capital
expenditures for the Wheaton System. Approximately 44 percent of these
expenditures related to cable, hardware and labor for new subscriber
installations, and approximately 27 percent of these expenditures related to the
extension of cable plant to serve additional customers. The remainder of these
expenditures was for various system enhancements. Such expenditures were
financed from cash on hand and cash from operations. Capital expenditures for
the remainder of 1997 are expected to be approximately $2,466,000 and are
expected to be financed from available cash balances and cash flow from
operations. For the remainder of 1997, approximately 29 percent of these
expenditures will relate to cable, hardware and labor for additional subscriber
installations and approximately 28 percent of the capital expenditures will
relate to the extension of cable plant. The remainder of the capital
expenditures will be for the replacement and repair of converters and for
various other enhancements. These capital expenditures are necessary to
maintain the value of the Wheaton System.
Ameritech, which provides telephone service in a multi-state region,
including Illinois, has begun providing cable television service in a portion of
the Wheaton System. This competition could have a negative effect on the
Wheaton System's revenues, cash flow and fair market value. It could also have
a negative impact on the Partnership's ability to sell the Wheaton System. The
Managing General Partner is taking prudent steps necessary to meet this
competition from Ameritech, and to the extent possible, to safeguard the value
of the Wheaton System.
The Partnership has a $36,000,000 revolving credit facility that expires on
March 31, 1999, at which time the commitment will be reduced quarterly until
December 31, 1999 when the commitment will reduce to zero and all principal and
interest amounts outstanding will be due and payable in full. At June 30, 1997,
the maximum of $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,
1997 and 1996 were 6.80 percent and 6.79 percent, respectively.
The Managing General Partner presently believes cash on hand, cash
generated from operations and, if necessary and in its discretion, advances from
the Managing General Partner will be sufficient to fund remaining 1997 capital
expenditures and current liquidity needs of the Partnership.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership increased $323,190, or approximately 6 percent,
to $6,061,978 for the three months ended June 30, 1997 compared to $5,738,788
for the comparable period in 1996. Revenues increased $685,808, or
approximately 6 percent, to $11,935,270 for the six months ended June 30, 1997
compared to $11,249,462 for the comparable period in 1996. Increases in basic
service revenues primarily accounted for the increases in revenues. Basic
service rate increases accounted for approximately 57 percent and 61 percent,
respectively, of the increases in revenues for the three and six month periods.
Increases in the number of basic service subscribers accounted for approximately
34 percent and 39 percent, respectively, of the increases in revenues for the
three and six month periods. The number of basic service subscribers increased
by 902 subscribers, or approximately 2 percent, to 54,812 at June 30, 1997 from
53,910 at June 30, 1996. No other individual factor contributed significantly
to the increases 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 marketing expenses.
Operating expenses increased $249,725, or approximately 7 percent, to
$3,695,709 for the three months ended June 30, 1997 from $3,445,984 for the
comparable period in 1996. For the three month periods ended June 30, 1997 and
1996, operating expenses represented approximately 61 percent and 60 percent of
revenues, respectively. This increase in operating expenses was due primarily
to increases in programming fees and marketing expenses, which accounted for
approximately 56 percent and 23 percent, respectively, of the increase.
Operating expenses increased $371,267, or approximately 5 percent, to $7,240,803
for the six months ended June 30, 1997 from $6,869,536 for the comparable period
in 1996. Operating expenses represented approximately 61 percent of revenues
for each of the six month periods ended June 30, 1997 and 1996. This increase
was due primarily to increases in programming fees, which accounted for
approximately 71 percent of the increase. No other individual factor
significantly affected the increases in operating expenses for these periods.
The cable television industry generally measures the financial performance
of a cable television system in terms of operating cash flow (revenues less
operating expenses). 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 cash flow increased
$73,465, or approximately 3 percent, to $2,366,269 for the three months ended
June 30, 1997 from $2,292,804 for the comparable period in 1996. Operating cash
flow increased $314,541, or approximately 7 percent, to $4,694,467 for the six
months ended June 30, 1997 from $4,379,926 for the comparable period in 1996.
These increases were due to the increases in revenues exceeding the increases in
operating expenses.
Management and supervisory fees to the Managing and Associate General
Partners and allocated administrative costs from the Managing General Partner
decreased $111,155, or approximately 15 percent, to $654,619 for the three
months ended June 30, 1997 from $765,774 for the comparable period in 1996.
Management and supervisory fees to the Managing and Associate General Partners
and allocated administrative costs from the Managing General Partner decreased
$12,073, or approximately 1 percent, to $1,403,960 for the six month period
ended June 30, 1997 from $1,416,033 for the six month period ended June 30,
1996. These decreases were due to decreases in allocated administrative costs
from the Managing General Partner.
Depreciation and amortization expense decreased $209,157, or approximately
7 percent, to $2,765,504 for the three months ended June 30, 1997 compared to
$2,974,661 for the comparable period in 1996. Depreciation and amortization
expense decreased $466,283, or approximately 8 percent, to $5,476,439 for the
six months ended June 30, 1997 compared to $5,942,722 for the comparable period
in 1996. These decreases were primarily due to the maturation of a portion of
the asset base.
Operating loss decreased $393,777, or approximately 27 percent, to
$1,053,854 for the three months ended June 30, 1997 from $1,447,631 for the
comparable period in 1996. Operating loss decreased $792,897, or approximately
27 percent, to $2,185,932 for the six months ended June 30, 1997 from $2,978,829
for the comparable period in 1996. These decreases were due to the increases in
revenues and decreases in management and supervisory fees to the general
partners and allocated administrative costs from the Managing General Partner
and depreciation and amortization expense exceeding the increases in operating
expenses.
Interest expense increased $13,576, or approximately 2 percent, to $627,517
for the three months ended June 30, 1997 from $613,941 for the comparable period
in 1996. This increase was primarily due to higher interest rates on interest
bearing obligations in 1997. Interest expense decreased $47,131, or
approximately 4 percent, to $1,201,865 for the six months ended June 30, 1997
from $1,248,996 for the six months ended June 30, 1996. This decrease in
interest expense was primarily due to lower outstanding balances on interest-
bearing obligations during the first quarter of 1997.
Net loss decreased $390,428, or approximately 19 percent, to $1,670,013 for
the three months ended June 30, 1997 from $2,060,441 for the comparable period
in 1996. Net loss decreased $883,277, or approximately 21 percent, to
$3,361,266 for the six month period ended June 30, 1997 from $4,244,543 for the
comparable period in 1996. These decreases were the result of the factors
discussed above.
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
------------------------------------
Kevin P. Coyle
Vice President/Finance
(Principal Financial Officer)
Dated: August 13, 1997
10