FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 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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September 30, December 31,
ASSETS 1997 1996
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CASH $ 75,220 $ 345,480
TRADE RECEIVABLES, less allowance for doubtful
receivables of $26,508 and $28,082 at September 30,
1997 and December 31, 1996, respectively 82,147 108,117
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 55,443,989 52,055,721
Less- accumulated depreciation (30,301,482) (27,366,242)
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25,142,507 24,689,479
Franchise costs and other intangible assets, net of
accumulated amortization of $64,594,024 and
$59,419,903 at September 30, 1997 and
December 31, 1996, respectively 12,633,261 17,782,382
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Total investment in cable
television properties 37,775,768 42,471,861
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 481,447 394,429
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Total assets $ 38,414,582 $ 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
------------------------
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1997 1996
- ------------------------------------------- ------------- ------------
LIABILITIES:
Credit facility and other debt $ 36,239,946 $ 36,243,429
Accounts payable and accrued liabilities 1,779,849 1,418,976
Accrued interest 162,880 272,892
Subscriber prepayments 60,754 51,872
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Total liabilities 38,243,429 37,987,169
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PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (744,685) (693,069)
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(743,685) (692,069)
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Limited Partners-
Net contributed capital (85,740 units outstanding at
September 30, 1997 and December 31, 1996) 73,790,065 73,790,065
Accumulated deficit (72,875,227) (67,765,278)
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914,838 6,024,787
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Total partners' capital (deficit) 171,153 5,332,718
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Total liabilities and partners' capital (deficit) $ 38,414,582 $ 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 Nine Months Ended
September 30, September 30,
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1997 1996 1997 1996
----------- ----------- ----------- -----------
REVENUES $ 5,826,658 $ 5,851,973 $17,761,928 $17,101,435
COSTS AND EXPENSES:
Operating expenses 3,491,230 3,487,636 10,732,033 10,357,172
Management and supervisory fees to the
General Partners and allocated administrative
costs from the Managing General Partner 654,607 684,796 2,058,567 2,100,829
Depreciation and amortization 2,802,310 3,002,395 8,278,749 8,964,516
----------- ----------- ----------- -----------
OPERATING LOSS (1,121,489) (1,322,854) (3,307,421) (4,321,082)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (688,732) (649,114) (1,890,597) (1,898,110)
Interest income - 895 1,679 3,895
Other, net 9,922 (23,675) 34,774 (23,994)
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Total other income (expense), net (678,810) (671,894) (1,854,144) (1,918,209)
----------- ----------- ----------- -----------
NET LOSS $(1,800,299) $(1,994,748) $(5,161,565) $(6,239,291)
=========== =========== =========== ===========
ALLOCATION OF NET LOSS:
Managing General Partner $ (18,003) $ (19,948) $ (51,616) $ (62,393)
=========== =========== =========== ===========
Limited Partners $(1,782,296) $(1,974,800) $(5,109,949) $(6,176,898)
=========== =========== =========== ===========
NET LOSS PER LIMITED PARTNERSHIP
UNIT $ (20.79) $ (23.03) $ (59.60) $ (72.04)
=========== =========== =========== ===========
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.
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(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
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For the Nine Months Ended
September 30,
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1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(5,161,565) $(6,239,291)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 8,278,749 8,964,516
Decrease in trade receivables 25,970 37,949
Decrease (increase) in deposits, prepaid expenses
and other assets (256,405) 99,175
Increase (decrease) in accounts payable, accrued
liabilities, accrued interest and subscriber prepayments 259,743 (467,061)
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Net cash provided by operating activities 3,146,492 2,395,288
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,388,269) (3,042,338)
Franchise renewal (25,000) -
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Net cash used in investing activities (3,413,269) (3,042,338)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 79,242 938,048
Repayment of borrowings (82,725) (92,556)
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Net cash provided by (used in) financing activities (3,483) 845,492
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INCREASE (DECREASE) IN CASH (270,260) 198,442
CASH, BEGINNING OF PERIOD 345,480 45,490
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CASH, END OF PERIOD $ 75,220 $ 243,932
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SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 2,000,609 $ 1,903,995
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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 September 30, 1997 and December 31, 1996, its results of operations for the
three and nine month periods ended September 30, 1997 and 1996, and its cash
flows for the nine month periods ended September 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 nine month periods ended September 30, 1997 were
$291,333 and $888,096, respectively, compared to $292,599 and $855,072,
respectively, for the three and nine month periods ended September 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 nine month
periods ended September 30, 1997 were $50,000 and $150,000, respectively,
compared to $50,000 and $150,000, respectively, for the three and nine month
periods ended September 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 nine month periods ended
September 30, 1997 were $313,274 and $1,020,471, respectively, as compared to
$333,677 and $1,074,743, respectively, for the three and nine month periods
ended September 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 Intercable'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 this policy, the Wheaton System has been
marketed for sale and Intercable is continuing to seek out opportunities to sell
the Wheaton System. There is no assurance as to the timing or terms of any sale.
For the nine months ended September 30, 1997, the Partnership generated net
cash from operating activities totaling approximately $3,146,000, which is
available to fund capital expenditures and non-operating costs. During the
first nine months of 1997, the Partnership expended approximately $3,388,000 for
capital expenditures for the Wheaton System. Approximately 39 percent of these
expenditures related to cable, hardware and labor for new subscriber
installations, and approximately 25 percent of these expenditures related to the
extension of cable plant to serve additional customers. The remaining
expenditures were used to maintain the value of the Wheaton System. Such
expenditures were financed from cash on hand and cash from operations. Capital
expenditures for the remainder of 1997 are expected to be approximately
$1,001,000 and are expected to be financed from available cash balances and cash
flow from operations. For the remainder of 1997, approximately 37 percent of
these expenditures will relate to the extension of cable plant, approximately 24
percent of the capital expenditures will relate to cable, hardware and labor for
additional subscriber installations and approximately 20 percent of these
expenditures will be for the replacement of converters. The remainder of the
anticipated capital expenditures is necessary to maintain the value of the
Wheaton System until it is sold.
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 is having 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 September 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
September 30, 1997 and 1996 were 6.70 percent and 6.81 percent, respectively.
The Managing General Partner 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 decreased $25,315, or less than 1 percent, to
$5,826,658 for the three months ended September 30, 1997 compared to $5,851,973
for the comparable period in 1996. A decrease in premium revenues, partially
offset by an increase in basic service revenues primarily accounted for the
decrease in revenues. This decrease was partially due to competition from
Ameritech. Revenues increased $660,493, or approximately 4 percent, to
$17,761,928 for the nine months ended September 30, 1997 compared to $17,101,435
for the comparable period in 1996. An increase in basic service rate increases
primarily accounted for the increase in revenues. Basic service rate increases
accounted for approximately 62 percent of the increase in revenues for the nine
month period ended September 30, 1997. 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 $3,594, or less than 1 percent, to $3,491,230
for the three months ended September 30, 1997 from $3,487,636 for the comparable
period in 1996. For the three month periods ended September 30, 1997 and 1996,
operating expenses represented approximately 60 percent of revenues. Operating
expenses increased $374,861, or approximately 4 percent, to $10,732,033 for the
nine months ended September 30, 1997 from $10,357,172 for the comparable period
in 1996. Operating expenses represented approximately 60 percent and 61 percent
of revenues, respectively, for each of the nine month periods ended September
30, 1997 and 1996. This increase was due primarily to increases in programming
fees. 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 decreased
$28,909, or approximately 1 percent, to $2,335,428 for the three months ended
September 30, 1997 from $2,364,337 for the comparable period in 1996. This
decrease was due to a decrease in revenues and an increase in operating
expenses. Operating cash flow increased $285,632, or approximately 4 percent,
to $7,029,895 for the nine months ended September 30, 1997 from $6,744,263 for
the comparable period in 1996. This increase was due to the increase in
revenues exceeding the increase in operating expenses.
Management and supervisory fees to the Managing and Associate General
Partners and allocated administrative costs from the Managing General Partner
decreased $30,189, or approximately 4 percent, to $654,607 for the three months
ended September 30, 1997 from $684,796 for the comparable period in 1996. This
decrease was due to the decrease in revenues, upon which such management fees
are based, and a decrease in allocated administrative costs from the Managing
General Partner. Management and supervisory fees to the Managing and Associate
General Partners and allocated administrative costs from the Managing General
Partner decreased $42,262, or approximately 2 percent, to $2,058,567 for the
nine month period ended September 30, 1997 from $2,100,829 for the nine month
period ended September 30, 1996. This decrease was due to decreases in
allocated administrative costs from the Managing General Partner.
Depreciation and amortization expense decreased $200,085, or approximately
7 percent, to $2,802,310 for the three months ended September 30, 1997 compared
to $3,002,395 for the comparable period in 1996. Depreciation and amortization
expense decreased $685,767, or approximately 8 percent, to $8,278,749 for the
nine months ended September 30, 1997 compared to $8,964,516 for the comparable
period in 1996. These decreases were primarily due to the maturation of a
portion of the asset base.
Operating loss decreased $201,365, or approximately 15 percent, to
$1,121,489 for the three months ended September 30, 1997 from $1,322,854 for the
comparable period in 1996. This decrease was due to the decrease in
depreciation and amortization expense exceeding the decrease in operating cash
flow. Operating loss decreased $1,013,661, or approximately 23 percent, to
$3,307,421 for the nine months ended September 30, 1997 from $4,321,082 for the
comparable period in 1996. This decrease was due to the increase in operating
cash flow and the decrease in depreciation and amortization expense.
Interest expense increased $39,618, or approximately 6 percent, to $688,732
for the three months ended September 30, 1997 from $649,114 for the comparable
period in 1996. This increase in interest expense was primarily due to higher
outstanding balances on interest-bearing obligations during 1997. Interest
expense decreased $7,513, or less than 1 percent, to $1,890,597 for the nine
months ended September 30, 1997 from $1,898,110 for the nine months ended
September 30, 1997. This increase in interest expense was primarily due to
lower outstanding balances on interest-bearing obligations during 1997.
Net loss decreased $194,449, or approximately 10 percent, to $1,800,299 for
the three months ended September 30, 1997 from $1,994,748 for the comparable
period in 1996. Net loss decreased $1,077,726, or approximately 17 percent, to
$5,161,565 for the nine months ended September 30, 1997 from $6,239,291 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
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Kevin P. Coyle
Vice President/Finance
(Principal Financial Officer)
Dated: November 13, 1997
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