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, 1999
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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. #
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
_____ _____
JONES GROWTH PARTNERS L.P.
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(A Limited Partnership)
UNAUDITED BALANCE SHEETS
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ASSETS
------
March 31, December 31,
1999 1998
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CASH $ - $ 331,708
PROCEEDS FROM SALE IN ESCROW 3,130,194 -
TRADE RECEIVABLES, less allowance for doubtful
receivables of $-0- and $38,122 at March 31, 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)
------------- -------------
- 25,872,267
Franchise costs and other intangible assets, net of
accumulated amortization of $-0- and $68,389,364
at March 31, 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
Total assets $ 3,130,194 $ 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)
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March 31, December 31,
1999 1998
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LIABILITIES:
Credit facility and capital lease obligations $ - $ 36,198,498
Accounts payable and accrued liabilities 1,627,531 3,867,487
Accrued interest - 355,568
Subscriber prepayments - 77,089
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Total liabilities 1,627,531 40,498,642
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PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (1,000) (791,746)
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- (790,746)
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Limited Partners-
Net contributed capital (85,740 units outstanding at
March 31, 1999 and December 31, 1998) 73,790,065 73,790,065
Distribution (60,721,037) -
Accumulated deficit (11,566,365) (77,534,217)
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1,502,663 (3,744,152)
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Total partners' capital (deficit) 1,502,663 (4,534,898)
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Total liabilities and partners' capital (deficit) $ 3,130,194 $ 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
March 31,
------------------------------------------
1999 1998
----------------- ----------------
REVENUES $ 3,917,788 $ 6,035,005
COSTS AND EXPENSES:
Operating expenses 2,789,496 3,664,093
Management and supervisory fees to the General
Partners and allocated administrative costs
from the Managing General Partner 526,712 699,921
Depreciation and amortization 1,300,323 1,580,169
----------------- ----------------
OPERATING INCOME (LOSS) (698,743) 90,822
----------------- ----------------
OTHER INCOME (EXPENSE):
Interest expense (378,708) (655,569)
Interest income 263,567 853
Gain on sale of cable television system 68,379,767 -
Other, net (807,285) (749)
----------------- ----------------
Total other income (expense), net 67,457,341 (655,465)
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NET INCOME (LOSS) $ 66,758,598 $ (564,643)
================= ================
ALLOCATION OF NET INCOME (LOSS):
Managing General Partner $ 790,746 $ (5,646)
================= ================
Limited Partners $ 65,967,852 (558,997)
================= ================
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ 769.39 $ (6.52)
================= ================
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 85,740 85,740
================= ================
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
4
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended
March 31,
------------------------------------------
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 66,758,598 $ (564,643)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,300,322 1,580,169
Gain on sale of cable television system (68,379,767) -
Decrease (increase) in trade receivables, net 482,555 (233,139)
Decrease (increase) in deposits, prepaid expenses
and other assets 66,386 (296,572)
Increase (decrease) in accounts payable and
accrued liabilities, accrued interest and
subscriber prepayments (2,672,613) 323,622
----------------- ----------------
Net cash provided by (used in) operating activities (2,444,519) 809,437
----------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (640,404) (893,486)
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 (893,486)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - 42,005
Repayment of borrowings (36,198,498) (20,035)
Distribution to limited partners (60,721,037) -
----------------- ----------------
Net cash provided by (used in) financing activities (96,919,535) 21,970
----------------- ----------------
Decrease in cash (331,708) (62,079)
Cash, beginning of period 331,708 109,356
----------------- ----------------
Cash, end of period $ - $ 47,277
================= =================
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 734,276 $ 680,656
================= =================
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 March 31, 1999 and December 31, 1998, and its results of
operations and cash flows for the three month periods ended March 31, 1999 and
1998.
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. Comcast now owns
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, subject to customary
closing adjustments. 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
6
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 to be 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 $1,627,531 at
March 31, 1999, and it will then distribute the balance 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. Since
the Wheaton System represented the only operating asset of the Partnership, the
Partnership will be liquidated and dissolved upon the final distribution of any
amounts remaining from the indemnity escrow account, most likely in the fourth
quarter of 1999. If any disputes with respect to the indemnification arise, the
Partnership would not be dissolved until such disputes were resolved, which
could result in the Partnership continuing in existence beyond 1999.
(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 Partnership for the
three month periods ended March 31, 1999 and 1998 were $195,889 and $301,750,
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 March 31, 1999 and 1998 were
$39,178 and $50,000, 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 March 31, 1999 and 1998 were $291,645
and $348,171, respectively.
7
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
On February 25, 1999, the Partnership sold its Wheaton System to an
unaffiliated party for a sales price of $103,000,000, subject to customary
closing adjustments. The Associate General Partner 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 to be 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 $1,627,531 at
March 31, 1999, and it will then distribute the balance 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. Since
the Wheaton System represented the only operating asset of the Partnership, the
Partnership will be liquidated and dissolved upon the final distribution of any
amounts remaining from the indemnity escrow account, most likely in the fourth
quarter of 1999. If any disputes with respect to the indemnification arise, the
Partnership would not be dissolved until such disputes were resolved, which
could result in the Partnership continuing in existence beyond 1999.
The then-outstanding balance of the Partnership's $36,000,000 revolving
credit facility was repaid in full on February 25, 1999 with proceeds from the
sale of the Wheaton System. Interest on the outstanding principal balance was at
the Partnership's option of the Prime Rate plus 1/8 percent or the London
Interbank Offered Rate plus 1 percent.
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 March 31, 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 $66,758,598, or $769.39 per limited
partnership unit during the three months ended March 31, 1999.
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
Report on Form 8-K dated February 25, 1999, filed in March
1999, reported that on February 25, 1999, the Partnership sold its
Wheaton System to an unaffiliated party for a sales price of
$103,000,000, subject to customary closing adjustments.
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: May 14, 1999
10