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, 1999
[ ] 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. #
c/o Comcast Corporation
1500 Market Street, Philadelphia, PA 19102-2148
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Address of principal executive office
(215) 665-1700
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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 ___
1
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
ASSETS
------
June 30, December 31,
1999 1998
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CASH $ - $ 331,708
PROCEEDS FROM SALE IN ESCROW 3,165,410 -
TRADE RECEIVABLES, less allowance for doubtful
receivables of $-0- and $38,122 at June 30, 1999
and December 31, 1998, respectively - 482,555
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost - 62,054,545
Less- accumulated depreciation - (36,182,278)
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- 25,872,267
Franchise costs and other intangible assets, net of
accumulated amortization of $-0- and $68,389,364
at June 30, 1999 and December 31, 1998, respectively - 8,866,447
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Total investment in cable
television properties - 34,738,714
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS - 410,767
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Total assets $3,165,410 $ 35,963,744
========== ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
June 30, December 31,
1999 1998
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LIABILITIES:
Credit facility and capital lease obligations $ - $ 36,198,498
Accounts payable and accrued liabilities 1,832,300 3,867,487
Accrued interest - 355,568
Subscriber prepayments - 77,089
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Total liabilities 1,832,300 40,498,642
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PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (1,000) (791,746)
------------ ------------
- (790,746)
------------ ------------
Limited Partners-
Net contributed capital (85,740 units outstanding at
June 30, 1999 and December 31, 1998) 73,790,065 73,790,065
Distribution (60,721,037) -
Accumulated deficit (11,735,918) (77,534,217)
------------ -----------
1,333,110 (3,744,152)
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Total partners' capital (deficit) 1,333,110 (4,534,898)
------------ ------------
Total liabilities and partners' capital (deficit) $ 3,165,410 $ 35,963,744
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
JONES GROWTH PARTNERS L.P.
--------------------------
(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,
------------------------------ -------------------------------
1999 1998 1999 1998
---------- ----------- ----------- -----------
REVENUES $ - $ 6,236,863 $ 3,917,788 $12,271,868
COSTS AND EXPENSES:
Operating expenses - 3,773,308 2,789,496 7,437,401
Management and supervisory fees to the
General Partners and allocated administrative
costs from the Managing General Partner - 733,720 526,712 1,433,641
Depreciation and amortization - 1,797,861 1,300,323 3,378,030
---------- ----------- ----------- -----------
OPERATING INCOME (LOSS) - (68,026) (698,743) 22,796
---------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (20,338) (629,661) (399,046) (1,285,230)
Interest income on escrowed proceeds 35,215 - 46,909 -
Gain on sale of cable television system - - 68,379,767 -
Other, net (184,430) 3,193 (739,842) 3,297
---------- ----------- ----------- -----------
Total other income (expense), net (169,553) (626,468) 67,287,788 (1,281,933)
---------- ----------- ----------- -----------
NET INCOME (LOSS) $ (169,553) $ (694,494) $66,589,045 $(1,259,137)
========== =========== =========== ===========
ALLOCATION OF NET INCOME (LOSS):
Managing General Partner $ - $ (6,945) $ 790,746 $ (12,591)
========== =========== =========== ===========
Limited Partners $ (169,553) $ (687,549) $65,798,299 $(1,246,546)
========== =========== =========== ===========
NET INCOME (LOSS) PER
LIMITED PARTNERSHIP UNIT $ (1.97) $ (8.02) $ 767.42 $ (14.54)
========== =========== =========== ===========
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,
---------------------------------
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $66,589,045 $(1,259,137)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,300,323 3,378,030
Gain on sale of cable television system (68,379,767) -
Decrease (increase) in trade receivables 482,555 (291,712)
Decrease (increase) in deposits, prepaid expenses and
other assets 31,169 (554,703)
Increase (decrease) in accounts payable, accrued
liabilities, accrued interest and subscriber prepayments (2,467,844) 699,668
----------- -----------
Net cash provided by (used in) operating activities (2,444,519) 1,972,146
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (640,404) (2,039,903)
Franchise costs (208,750) -
Proceeds from sale of cable television system, net of escrow 99,881,500 -
----------- -----------
Net cash provided by (used in) investing activities 99,032,346 (2,039,903)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - 68,558
Repayment of borrowings (36,198,498) (44,214)
Distribution to Limited Partners (60,721,037) -
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Net cash provided by (used in) financing activities (96,919,535) 24,344
----------- -----------
Decrease in cash (331,708) (43,413)
Cash, beginning of period 331,708 109,356
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Cash, end of period $ - $ 65,943
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 754,614 $ 1,325,944
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
JONES GROWTH PARTNERS L.P.
--------------------------
(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 of normal recurring accruals, necessary to
present fairly the financial position of Jones Growth Partners L.P. (the
"Partnership") at June 30, 1999 and December 31, 1998, its results of operations
for the three and six month periods ended June 30, 1999 and 1998 and its cash
flows for the six month periods ended June 30, 1999 and 1998. Certain prior
period amounts have been reclassified to conform to the current period
presentation.
The Partnership owned 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"),
until it was sold on February 25, 1999. Jones Spacelink Cable Corporation, a
wholly owned subsidiary of Jones Intercable, Inc. ("Intercable"), a Colorado
corporation, is the "Managing General Partner."
On April 7, 1999, Comcast Corporation ("Comcast") completed the acquisition
of a controlling interest in Intercable. As of April 7, 1999, Comcast owned
approximately 12.8 million shares of Intercable's Class A Common Stock and
approximately 2.9 million shares of Intercable's Common Stock, representing
approximately 37% of the economic interest and 47% of the voting interest in
Intercable. Also on that date, Comcast contributed its shares in Intercable to
Comcast's wholly owned subsidiary, Comcast Cable Communications, Inc. ("Comcast
Cable"). The approximately 2.9 million shares of Common Stock of Intercable
owned by Comcast represents approximately 57% of the outstanding Common Stock,
which class of stock is entitled to elect 75% of the Board of Directors of
Intercable. As a result of this transaction, Intercable is now a consolidated
public company subsidiary of Comcast Cable.
Also on April 7, 1999, the bylaws of Intercable were amended to
establish the size of Intercable's Board of Directors as a range from eight to
thirteen directors and the board was reconstituted so as to have eight directors
and the following directors of Intercable resigned: Robert E. Cole, Josef J.
Fridman, James J. Krejci, James B. O'Brien, Raphael M. Solot, Robert Kearney,
Howard O. Thrall, Siim Vanaselja, Sanford Zisman and Glenn R. Jones. In
addition, Donald L. Jacobs resigned as a director elected by the holders of
Class A Common Stock and was elected by the remaining directors as a director
elected by the holders of Common Stock. The remaining directors elected the
following persons to fill the vacancies on the board created by such
resignations: Ralph J. Roberts, Brian L. Roberts, John R. Alchin, Stanley Wang
and Lawrence S. Smith. All of the newly elected directors, with the exception of
Mr. Jacobs, are officers of Comcast. Also on April 7, 1999, the following
executive officers of Intercable resigned: Glenn R. Jones, James B. O'Brien,
Ruth E. Warren, Kevin P. Coyle, Cynthia A. Winning, Elizabeth M. Steele, Wayne
H. Davis and Larry W. Kaschinske. The following persons were appointed as
executive officers of Intercable on April 7, 1999: Ralph J. Roberts, Brian L.
Roberts, Lawrence S. Smith, John R. Alchin and Stanley Wang.
Comcast is principally engaged in the development, management and
operation of broadband cable networks and in the provision of content through
programming investments. Comcast Cable is principally engaged in the
development, management and operation of broadband cable networks. The address
of Comcast's principal office is 1500 Market Street, Philadelphia, Pennsylvania
19102-2148, which is also now the address of the principal office of Intercable
and of the Managing General Partner. The address of Comcast Cable's principal
office is 1201 Market Street, Suite 2201, Wilmington, Delaware 19801.
(2) On February 25, 1999, the Partnership sold its Wheaton System to an
unaffiliated party for a sales price of $103,000,000. Growth Partners Inc. (the
"Associate General Partner"), an affiliate of Lehman Brothers, Inc., consented
to the sale in October 1998. The Managing General Partner conducted a vote of
the limited partners on the proposed sale of the Wheaton System in the fourth
quarter of 1998. The sale was approved by the owners of a majority of the
interests of the Partnership.
Upon the closing of the sale of the Wheaton System, the Partnership
repaid all of its indebtedness, which totaled $36,183,396, settled working
capital adjustments, and then deposited $3,118,500 into an interest-bearing
indemnity escrow account. The remaining net sale proceeds, which totaled
$60,721,037, were distributed to the Partnership's limited partners of record as
of February 25, 1999. This distribution was made in March 1999. Such
distribution represented an approximate return of $708 for each $1,000 limited
partnership interest. Because limited partners did not receive distributions in
an amount equal to 100 percent of the capital initially contributed to the
Partnership by the limited partners plus an amount equal to 8 percent per annum,
cumulative and noncompounded, on an amount equal to their initial capital
contributions, the Managing General Partner and the Associate General Partner
did not receive general partner distributions from the proceeds of the sale of
the Wheaton System and they will not be paid disposition fees for their services
as brokers and financial advisors in this transaction.
The $3,118,500 of the sale proceeds placed in the indemnity escrow
account will remain in escrow until November 15, 1999 as security for the
Partnership's agreement to indemnify the buyer under the asset purchase
agreement. The Partnership's primary exposure, if any, will relate to the
representations and warranties made about the Wheaton System in the asset
purchase agreement. Any amounts remaining from this indemnity escrow account and
not claimed by the buyer at the end of the escrow period plus interest earned on
the escrowed funds will be returned to the Partnership. From this amount, the
Partnership will pay its remaining liabilities, which totaled $1,832,300 at June
30, 1999, it will retain funds necessary to cover the administrative expenses of
the Partnership and it will then distribute the balance, if any, to the
Partnership's limited partners. The Partnership will continue in existence at
least until any amounts remaining from the indemnity escrow account have been
distributed.
Although the sale of the Wheaton System represented the sale of the
only remaining operating asset of the Partnership, the Partnership will not be
dissolved until all proceeds from escrow have been distributed and the pending
litigation in which the Partnership is a named defendant has been resolved and
terminated. (See Part II, Item 1).
(3) The Managing General Partner manages the Partnership and received 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
6
Partnership for the three month periods ended June 30, 1999 and 1998 were $-0-
and $311,843, respectively. Management fees paid to the Managing General Partner
by the Partnership for the six month periods ended June 30, 1999 and 1998 were
$195,889 and $613,593, respectively. The Managing General Partner has not
received and will not receive a management fee after February 25, 1999.
The Associate General Partner has been entitled to participate with the
Managing General Partner in certain management decisions affecting the
Partnership and has received 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 monthly and payable
annually. Supervisory fees accrued to the Associate General Partner by the
Partnership for the three month periods ended June 30, 1999 and 1998 were $-0-
and $50,000, respectively. Supervisory fees accrued to the Associate General
Partner by the Partnership for the six month periods ended June 30, 1999 and
1998 were $39,178 and $100,000, respectively. The Associate General Partner has
not received and will not receive a supervisory fee after February 25, 1999.
The Partnership will continue to reimburse the Managing General Partner
and certain of its affiliates for certain administrative costs. These expenses
represent the salaries and related benefits paid for corporate personnel. Such
personnel provide administrative, accounting, tax, legal and investor relations
services to the Partnership. Such services, and their related costs, are
necessary to the administration of the Partnership. Reimbursements by the
Partnership to the Managing General Partner for overhead and administrative
costs for the three month periods ended June 30, 1999 and 1998 were $8,401 and
$371,877, respectively. Reimbursements by the Partnership to the Managing
General Partner for overhead and administrative costs for the six month periods
ended June 30, 1999 and 1998 were $300,046 and $720,048, respectively.
7
JONES GROWTH PARTNERS L.P.
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(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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FINANCIAL CONDITION
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On February 25, 1999, the Partnership sold its Wheaton System to an
unaffiliated party for a sales price of $103,000,000. Upon the closing of the
sale of the Wheaton System, the Partnership repaid all of its indebtedness,
which totaled $36,183,396, settled working capital adjustments, and then
deposited $3,118,500 into an interest-bearing indemnity escrow account. The
remaining net sale proceeds, which totaled $60,721,037, were distributed to the
Partnership's limited partners of record as of February 25, 1999. This
distribution was made in March 1999. Such distribution represented an
approximate return of $708 for each $1,000 limited partnership interest. Because
limited partners did not receive distributions in an amount equal to 100 percent
of the capital initially contributed to the Partnership by the limited partners
plus an amount equal to 8 percent per annum, cumulative and noncompounded, on an
amount equal to their initial capital contributions, the Managing General
Partner and the Associate General Partner did not receive general partner
distributions from the proceeds of the sale of the Wheaton System and they will
not be paid disposition fees for their services as brokers and financial
advisors in this transaction.
The $3,118,500 of the sale proceeds placed in the indemnity escrow
account will remain in escrow until November 15, 1999 as security for the
Partnership's agreement to indemnify the buyer under the asset purchase
agreement. The Partnership's primary exposure, if any, will relate to the
representations and warranties made about the Wheaton System in the asset
purchase agreement. Any amounts remaining from this indemnity escrow account and
not claimed by the buyer at the end of the escrow period plus interest earned on
the escrowed funds will be returned to the Partnership. From this amount, the
Partnership will pay its remaining liabilities, which totaled $1,832,300 at June
30, 1999, it will retain funds necessary to cover the administrative expenses of
the Partnership and it will then distribute the balance, if any, to the
Partnership's limited partners. The Partnership will continue in existence at
least until any amounts remaining from the indemnity escrow account have been
distributed.
Although the sale of the Wheaton System represented the sale of the
only remaining operating asset of the Partnership, the Partnership will not be
dissolved until all proceeds from escrow have been distributed and the pending
litigation in which the Partnership is a named defendant has been resolved and
terminated. (See Part II, Item 1).
Because the Partnership has sold all of its assets and further
distributions, if any, will be made to the limited partners of record as of the
closing date of the sale of the Partnership's last remaining cable television
system, new limited partners would not be entitled to any distributions from the
Partnership and transfers of limited partnership interests would have no
economic or practical value. The Managing General Partner therefore has
determined, in accordance with the authority granted to it under Section 3.5 of
the Partnership's limited partnership agreement, that it will not process any
transfers of limited partnership interests in the Partnership during the
remainder of the Partnership's term.
RESULTS OF OPERATIONS
- ---------------------
Due to the Wheaton System sale on February 25, 1999, which was the
Partnership's only operating asset, a full discussion of results of operations
would not be meaningful. For the period ended June 30, 1999, the Partnership had
total revenues of $3,917,788 and generated an operating loss of $698,743.
Because of the gain of $68,379,767 on the sale of the Wheaton System, the
Partnership realized net income of $66,589,045, or $767.42 per limited
partnership unit during the six months ended June 30, 1999.
8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In July 1999, Jones Intercable, Inc., each of its subsidiaries that serve as
general partners of managed public partnerships and most of its managed public
partnerships, including the Partnership, were named defendants in a case styled
Everest Cable Investors, LLC, Everest Properties, LLC, Everest Properties II,
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LLC and KM Investments, LLC, plaintiffs v. Jones Intercable, Inc., et al.,
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defendants (Superior Court, Los Angeles County, State of California, Case No.
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C213638). Plaintiffs, all of which are affiliated with each other, are in the
business of, among other things, investing in limited partnerships that own and
operate cable television systems. Plaintiffs allege that one of the plaintiffs
has been a limited partner or has obtained a valid power-of-attorney from a
limited partner in each of Jones Intercable, Inc.'s managed public partnerships
and that they had formed a coordinated plan amongst themselves to acquire up to
4.9% of the limited partnership interests in each of Jones Intercable, Inc.'s
managed public partnerships during the latter half of 1996. Plaintiffs'
complaint alleges that they were frustrated in this purpose by Jones Intercable,
Inc.'s refusal to provide plaintiffs with lists of the names and addresses of
the limited partners of Jones Intercable, Inc.'s managed public partnerships.
The complaint alleges that Jones Intercable Inc.'s actions constituted a breach
of contract, a breach of Jones Intercable, Inc.'s implied covenant of good faith
and fair dealing owed to the plaintiffs as limited partners, a breach of Jones
Intercable, Inc.'s fiduciary duty owed to the plaintiffs as limited partners and
tortious interference with prospective economic advantage. Plaintiffs allege
that Jones Intercable, Inc.'s failure to provide them with the partnership lists
prevented them from making their tender offers and the plaintiffs claim that
they have been injured by such action in an amount to be proved at trial, but
not less than $17 million. Given the fact that this case was only recently filed
and that the time for Jones Intercable, Inc.'s response to the complaint has not
yet expired, Jones Intercable, Inc. has not yet responded to this complaint.
Jones Intercable, Inc. believes, however, that it and the defendant subsidiaries
and managed public partnerships have defenses to the plaintiffs' claims for
relief, and Jones Intercable, Inc. intends to defend this lawsuit vigorously
both on its own behalf and on behalf of its subsidiaries and its managed public
partnerships.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
Report on Form 8-K dated April 7, 1999, filed on April 15,
1999, reported that on April 7, 1999, Comcast Corporation completed
the acquisition of a controlling interest in Jones Intercable,
Inc., the parent of the Managing General Partner.
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/ Lawrence S. Smith
-----------------------------------
Lawrence S. Smith
Principal Accounting Officer
By: /S/ Joseph J. Euteneuer
-----------------------------------
Joseph J. Euteneuer
Vice President (Authorized Officer)
Dated: August 16, 1999
10