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 March 31, 1998
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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: 0-16183
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 (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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IDS/JONES GROWTH PARTNERS 87-A, LTD.
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(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
March 31, December 31,
ASSETS 1998 1997
------ ------------ -------------
CASH $ 493,384 $ 612,953
TRADE RECEIVABLES, less allowance for
doubtful receivables of $54,364 and $31,154
at March 31, 1998 and December 31, 1997, respectively 219,108 359,817
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 18,064,300 17,704,957
Less- accumulated depreciation (8,923,619) (8,630,093)
----------- -----------
9,140,681 9,074,864
Franchise costs and other intangible assets, net of
accumulated amortization of $12,679,752 and
$12,654,022 at March 31, 1998 and December 31, 1997,
respectively 2,521,797 2,547,527
----------- -----------
Total investment in cable television properties 11,662,478 11,622,391
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 178,046 184,684
----------- -----------
Total assets $12,553,016 $12,779,845
=========== ===========
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
------------------------
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1998 1997
------------------------------------------- ------------- -------------
LIABILITIES:
Debt $ 10,020,204 $ 10,000,000
Managing General Partner advances 47,055 235,536
Trade accounts payable and accrued liabilities 373,573 530,967
Subscriber prepayments 38,986 30,665
------------ ------------
Total liabilities 10,479,818 10,797,168
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PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 500 500
Accumulated deficit (7,734) (8,639)
------------ ------------
(7,234) (8,139)
------------ ------------
Limited Partners-
Net contributed capital (164,178 units
outstanding at March 31, 1998 and
December 31, 1997) 35,824,200 35,824,200
Accumulated deficit (3,743,768) (3,833,384)
Distributions (30,000,000) (30,000,000)
------------ ------------
2,080,432 1,990,816
------------ ------------
Total liabilities and partners' capital (deficit) $ 12,553,016 $ 12,779,845
============ ============
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
March 31,
--------------------------
1998 1997
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REVENUES $2,031,874 $1,852,179
COSTS AND EXPENSES:
Operating expenses 1,188,584 1,165,244
Management fees and allocated overhead from
General Partners 232,323 245,155
Depreciation and amortization 336,198 319,977
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OPERATING INCOME 274,769 121,803
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OTHER INCOME (EXPENSE):
Interest expense (176,735) (165,912)
Other, net (7,513) (1,306)
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Total other income (expense) (184,248) (167,218)
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NET INCOME (LOSS) $ 90,521 $ (45,415)
========== ==========
ALLOCATION OF NET INCOME (LOSS):
General Partners $ 905 $ (454)
========== ==========
Limited Partners $ 89,616 $ (44,961)
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NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ .55 $ (.27)
========== ==========
WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 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
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For the Three Months Ended
March 31,
----------------------------
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 90,521 $ (45,415)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 336,198 319,977
Decrease in trade receivables 140,709 77,729
Decrease (increase) in deposits, prepaid expenses
and other assets (10,304) 13,312
Increase (decrease) in trade accounts payable and accrued
liabilities and subscriber prepayments (149,073) 97,818
Decrease in Managing General Partner advances (188,481) (9,130)
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Net cash provided by operating activities 219,570 454,291
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (359,343) (493,502)
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Net cash used in investing activities (359,343) (493,502)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 20,204 -
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Net cash provided by financing activities 20,204 -
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Decrease in cash (119,569) (39,211)
Cash, beginning of period 612,953 478,797
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Cash, end of period $ 493,384 $ 439,586
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 236,763 $ 167,625
========= =========
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 complete 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 March 31, 1998 and December 31, 1997 and its
Statements of Operations and Cash Flows for the three month periods ended March
31, 1998 and 1997. Results of operations for these periods are not necessarily
indicative of results to be expected for the full year.
The Partnership owns and operates the cable television system serving the
areas in and around Roseville, California (the "Roseville System").
(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 month periods ended March 31, 1998 and 1997 were
$101,594 and $92,609, respectively.
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 month periods ended March 31, 1998 and 1997 were $10,159 and $9,261,
respectively.
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. 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 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 month periods ended March
31, 1998 and 1997 were $120,570 and $143,285, respectively.
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 month periods ended March 31, 1998 and
1997.
(3) In October 1996, the Partnership entered into an asset purchase agreement
pursuant to which it agreed to sell the Roseville System to an unaffiliated
party. The sale was approved by the holders of a majority of the limited
partnership interests in the Partnership. Closing of the sale was subject to a
number of material closing conditions, one of which was never satisfied. Because
the prospective purchaser was affiliated with the company that provides
telephone services in the geographical area in which the Roseville System
provides cable television services, a waiver from the Federal Communications
Commission (the "FCC") of Section 652 of the Telecommunications Act of 1996,
which prohibits the acquisition by a telephone company and its affiliates of
cable systems in the telephone company's service area, was necessary to permit
the prospective purchaser to consummate its purchase of the Roseville System.
The prospective purchaser, with the support and assistance of Intercable,
actively sought this waiver from the FCC, but in February 1998, the FCC denied
the request for the waiver. As a result of the FCC's denial of the waiver, the
asset purchase agreement between the Partnership and the prospective purchaser
was terminated in February 1998.
6
In April 1998, the Partnership signed a letter of intent to sell its
Roseville System to another unaffiliated party for a sales price of $40,000,000,
subject to customary closing adjustments. The sale of the Roseville System is
contingent upon the Partnership and the prospective buyer negotiating a
definitive asset purchase agreement and the Partnership obtaining the consent of
the Supervising General Partner, neither of which can be assured. Closing of the
sale, which is expected to occur in the second half of 1998, will be subject to
several conditions, including necessary governmental and other third party
consents. In addition, because the Roseville System constitutes all of the
assets of the Partnership, the sale must be approved by the owners of a majority
of the interests of the Partnership. Upon the proposed sale of the Roseville
System, the Partnership will repay all of its indebtedness, which totaled
$10,067,259 at March 31, 1998 (including $10,000,000 borrowed under its credit
facility, $47,055 in advances from the Managing General Partner and capital
lease obligations of $20,204), leaving the Partnership with no debt outstanding,
pay brokerage fees to The Jones Group, Ltd. ("The Jones Group"), a subsidiary of
Intercable, and IDS Management Corporation, an affiliate of the Supervising
General Partner, totaling $1,000,000, representing 2.5 percent of the sales
price, for acting as brokers and financial advisors in this transaction, settle
working capital adjustments and then the approximate $29,410,720 of net sale
proceeds will be distributed to the Partnership's partners of record as of the
date of the sale of the Roseville System. Because distributions to be made on
the sale of the Roseville System together with the April 1996 distribution from
the sale of the Partnership's cable television system serving the communities in
and around Carmel, Indiana will exceed 125 percent of the amounts originally
contributed to the Partnership by the limited partners, the general partners
will receive general partner distributions on the sale of the Roseville System.
Based upon financial information as of March 31, 1998, the limited partners as a
group will receive $27,384,446, the Managing General Partner will receive
$1,013,137, and the Supervising General Partner will receive $1,013,137 of the
net sale proceeds from the sale of the Roseville System. This distribution will
give the Partnership's limited partners an approximate return of $167 for each
$250 limited partnership interest, or $668 for each $1,000 invested in the
Partnership.
Taking into account the April 1996 distribution from the sale of the
Partnership's cable television system serving the communities in and around
Carmel, Indiana and the anticipated distribution from the sale of the Roseville
System, the limited partners of the Partnership can expect to receive a total of
$350 for each $250 limited partnership interest, or $1,400 for each $1,000
invested in the Partnership.
Since the Roseville System represents the only asset of the Partnership,
the Partnership will be liquidated and dissolved upon the distribution of the
net sale proceeds from the sale of the Roseville System.
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
- -------------------
In October 1996, the Partnership entered into an asset purchase agreement
pursuant to which it agreed to sell the Roseville System to an unaffiliated
party. The sale was approved by the holders of a majority of the limited
partnership interests in the Partnership. Closing of the sale was subject to a
number of material closing conditions, one of which was never satisfied.
Because the prospective purchaser was affiliated with the company that provides
telephone services in the geographical area in which the Roseville System
provides cable television services, a waiver from the Federal Communications
Commission (the "FCC") of Section 652 of the Telecommunications Act of 1996,
which prohibits the acquisition by a telephone company and its affiliates of
cable systems in the telephone company's service area, was necessary to permit
the prospective purchaser to consummate its purchase of the Roseville System.
The prospective purchaser, with the support and assistance of Intercable,
actively sought this waiver from the FCC, but in February 1998, the FCC denied
the request for the waiver. As a result of the FCC's denial of the waiver, the
asset purchase agreement between the Partnership and the prospective purchaser
was terminated in February 1998.
In April 1998, the Partnership signed a letter of intent to sell its
Roseville System to another unaffiliated party for a sales price of $40,000,000,
subject to customary closing adjustments. The sale of the Roseville System is
contingent upon the Partnership and the prospective buyer negotiating a
definitive asset purchase agreement and the Partnership obtaining the consent of
the Supervising General Partner, neither of which can be assured. Closing of the
sale, which is expected to occur in the second half of 1998, will be subject to
several conditions, including necessary governmental and other third party
consents. In addition, because the Roseville System constitutes all of the
assets of the Partnership, the sale must be approved by the owners of a majority
of the interests of the Partnership. Upon the proposed sale of the Roseville
System, the Partnership will repay all of its indebtedness, which totaled
$10,067,259 at March 31, 1998 (including $10,000,000 borrowed under its credit
facility, $47,055 in advances from the Managing General Partner and capital
lease obligations of $20,204), leaving the Partnership with no debt outstanding,
pay brokerage fees to The Jones Group, Ltd. ("The Jones Group"), a subsidiary of
Intercable, and IDS Management Corporation, an affiliate of the Supervising
General Partner, totaling $1,000,000, representing 2.5 percent of the sales
price, for acting as brokers and financial advisors in this transaction, settle
working capital adjustments and then the approximate $29,410,720 of net sale
proceeds will be distributed to the Partnership's partners of record as of the
date of the sale of the Roseville System. Because distributions to be made on
the sale of the Roseville System together with the April 1996 distribution from
the sale of the Partnership's cable television system serving the communities in
and around Carmel, Indiana will exceed 125 percent of the amounts originally
contributed to the Partnership by the limited partners, the general partners
will receive general partner distributions on the sale of the Roseville System.
Based upon financial information as of March 31, 1998, the limited partners as a
group will receive $27,384,446, the Mananging General Partner will receive
$1,013,137, and the Supervising General Partner will receive $1,013,137 of the
net sale proceeds from the sale of the Roseville System. This distribution will
give the Partnership's limited partners an approximate return of $167 for each
$250 limited partnership interest, or $668 for each $1,000 invested in the
Partnership.
Taking into account the April 1996 distribution from the sale of the
Partnership's cable television system serving the communities in and around
Carmel, Indiana and the anticipated distribution from the sale of the Roseville
System, the limited partners of the Partnership can expect to receive a total of
$350 for each $250 limited partnership interest, or $1,400 for each $1,000
invested in the Partnership.
Since the Roseville System represents the only asset of the Partnership,
the Partnership will be liquidated and dissolved upon the distribution of the
net sale proceeds from the sale of the Roseville System.
For the three months ended March 31, 1998, the Partnership generated net
cash from operating activities totaling $219,570. The Partnership expended
approximately $359,000 in capital improvements during the first quarter of 1998.
Of these improvements, approximately 47 percent related to the construction of
cable television plant related to new homes passed. Approximately 36 percent
related to service drops to homes. The remainder was for other capital
expenditures to maintain the value of the Roseville System. Funding for these
expenditures was provided by cash on hand and cash generated from operations.
Budgeted capital expenditures for the remainder of 1998 in the Partnership's
Roseville System
8
are approximately $1,059,000. Construction of system extensions related to new
homes passed will account for approximately 47 percent of these expenditures.
Service drops to homes will account for approximately 31 percent of the
anticipated expenditures. The remainder is for other capital expenditures to
maintain the value of the Roseville System until it is sold. Depending upon the
timing of the closing of the sale of the Roseville System, the Partnership will
make only the portion of the budgeted capital expenditures scheduled to be made
during the Partnership's continued ownership of the Roseville System. Funding
for these expenditures is expected to be provided by cash on hand and cash
generated from operations.
At March 31, 1998, the outstanding balance on the Partnership's reducing
revolving credit agreement was $10,000,000, the maximum amount available. The
commitment amount reduces quarterly beginning March 31, 1999 through December
31, 2003, when all outstanding amounts are due. The entire remaining
outstanding balance at the time of the sale of the Roseville System will be
repaid upon the closing of the sale. Interest on the 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 7.01
percent and 6.78 percent at March 31, 1998 and 1997, respectively.
The Partnership has sufficient cash on hand, cash generated from operations
and, if necessary and in its discretion, advances from the Managing General
Partner to fund capital expenditures and other liquidity needs of the
Partnership until the Roseville System is sold.
9
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership increased $179,695, or approximately 10
percent, to $2,031,874 for the three months ended March 31, 1998 from $1,852,179
for the similar 1997 period. Increases in the number of basic subscribers in
the Partnership's Roseville System accounted for approximately 59 percent of the
increase in revenues. Basic subscribers increased 1,395, or approximately 8
percent, to 19,511 at March 31, 1998 compared to 18,116 at March 31, 1997.
Basic service rate increases accounted for approximately 41 percent of the
increase in revenues. No other single factor significantly contributed to the
increase in revenues.
Operating expenses consist primarily of costs associated with the operation
and administration of the Partnership's Roseville System. The principal cost
components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and marketing expenses.
Operating expenses increased $23,340, or approximately 2 percent, to
$1,188,584 for the three months ended March 31, 1998 from $1,165,244 for the
similar 1997 period. This increase was primarily due to an increase in
programming fees which was due in part to the increase in subscriber base. No
other individual factor contributed significantly to the increase in operating
expenses. Operating expenses represented approximately 58 and 63 percent,
respectively, of revenues for the three month periods ended March 31, 1998 and
1997.
The cable television industry generally measures the 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 $156,355, or
approximately 23 percent, to $843,290 for the three months ended March 31, 1998
compared to $686,935 for the similar 1997 period. This increase was the result
of the increase in revenues exceeding the increase in operating expenses.
Management fees and allocated overhead from the General Partners decreased
$12,832, or approximately 5 percent, to $232,323 for the quarter ended March 31,
1998 from $245,155 for the similar 1997 period. This decrease was due to a
decrease in allocated overhead from Intercable.
Depreciation and amortization expense increased $16,221, or approximately 5
percent, to $336,198 for the quarter ended March 31, 1998 from $319,977 for the
similar 1997 period. This increase was due to an increase in the Partnership's
depreciable asset base.
Operating income increased $152,966 to $274,769 for the three months ended
March 31, 1998 compared to $121,803 for the similar 1997 period. This increase
was due to the increase in operating cash flow and the decrease in allocated
overhead from Intercable exceeding the increases in depreciation and
amortization expense and management fees from the General Partners.
Interest expense increased $10,823, or approximately 7 percent, to $176,735
for the three months ended March 31, 1998 from $165,912 for the comparable 1997
period. This increase was primarily due to the higher effective interest rates
on interest bearing obligations.
The Partnership reported net income of $90,521 for the three months ended
March 31, 1998 compared to net loss of $45,415 for the similar 1997 period.
This change was 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
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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: May 13, 1998
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