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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, 1995
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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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.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
March 31, December 31,
ASSETS 1995 1994
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CASH $ 680,985 $ 407,610
TRADE RECEIVABLES, less allowance for doubtful
receivables of $26,948 and $17,015 at
March 31, 1995 and December 31, 1994,
respectively 352,754 498,516
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 32,913,140 31,848,280
Less- accumulated depreciation (13,320,527) (12,685,653)
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19,592,613 19,162,627
Franchise costs, net of accumulated
amortization of $18,388,408 and $17,671,439
at March 31, 1995 and December 31, 1994,
respectively 10,480,384 11,195,969
Subscriber lists, net of accumulated amortization
of $4,254,310 and $4,177,945 at March 31, 1995
and December 31, 1994, respectively 121,590 197,955
Costs in excess of interests in net assets purchased,
net of accumulated amortization of $965,793 and
$924,122 at March 31, 1995 and
December 31, 1994, respectively 4,862,244 4,903,915
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Total investment in cable television properties 35,056,831 35,460,466
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 325,224 317,231
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Total assets $ 36,415,794 $ 36,683,823
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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IDS/JONES GROWTH PARTNERS 87-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
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LIABILITIES:
Debt $ 23,126,158 $ 21,832,052
Accounts payable-
Trade 11,565 65,095
Managing General Partner 156,536 665,782
Accrued liabilities 745,809 828,923
Subscriber prepayments 48,942 38,681
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Total liabilities 24,089,010 23,430,533
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PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 500 500
Accumulated deficit (239,579) (230,314)
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(239,079) (229,814)
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Limited Partners-
Net contributed capital
(164,178 units outstanding at
March 31, 1995 and December 31, 1994) 35,824,200 35,824,200
Accumulated deficit (23,258,337) (22,341,096)
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12,565,863 13,483,104
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Total liabilities and partners'
capital (deficit) $ 36,415,794 $ 36,683,823
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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IDS/JONES GROWTH PARTNERS 87-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31
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1995 1994
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REVENUES $ 3,428,135 $ 3,120,037
COSTS AND EXPENSES:
Operating expenses 1,978,900 1,719,832
Management fees and allocated overhead from
General Partners 458,346 420,116
Depreciation and amortization 1,479,463 1,445,798
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OPERATING LOSS (488,574) (465,709)
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OTHER INCOME (EXPENSE):
Interest expense (438,472) (270,876)
Other, net 540 5,888
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Total other income (expense) (437,932) (264,988)
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NET LOSS $ (926,506) $ (730,697)
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ALLOCATION OF NET LOSS:
General Partners $ (9,265) $ (7,307)
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Limited Partners $ (917,241) $ (723,390)
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NET LOSS PER LIMITED PARTNERSHIP UNIT $ (5.59) $ (4.41)
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WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 164,178 164,178
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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IDS/JONES GROWTH PARTNERS 87-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31,
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1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (926,506) $ (730,697)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 1,469,879 1,441,631
Amortization of loan amendment fees 9,584 4,167
Amortization of interest rate protection contract 8,334 8,334
Decrease in trade receivables 145,762 56,274
Decrease (increase) in deposits, prepaid expenses
and deferred charges (25,911) 38,381
Decrease in trade accounts payable, accrued
liabilities and subscriber prepayments (126,383) (366,943)
Decrease in amount due Managing General Partner (509,246) -
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Net cash provided by operating activities 45,513 451,147
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,066,244) (444,159)
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Net cash used in investing activities (1,066,244) (444,159)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 1,311,499 -
Repayment of debt (17,393) (15,335)
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Net cash provided by (used in) financing activities 1,294,106 (15,335)
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Increase (decrease) in cash 273,375 (8,347)
Cash, beginning of period 407,610 969,416
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Cash, end of period $ 680,985 $ 961,069
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SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 411,997 $ 276,267
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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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 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 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, 1995 and December 31, 1994 and its
Statements of Operations and Cash Flows for the three month periods ended March
31, 1995 and 1994. Results of operations for these periods are not necessarily
indicative of results to be expected for the full year. Certain prior year
amounts have been reclassified to conform to the 1995 presentation.
The Partnership owns and operates the cable television systems serving
the areas in and around Carmel, Indiana and Roseville, California.
(2) Jones Cable Corporation (the "Managing General Partner") a wholly
owned subsidiary of Jones Intercable, Inc. ("JIC") 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, 1995 and 1994 were
$171,407 and $156,002, 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, 1995 and March 31, 1994 were $17,141
and $15,600, respectively.
The Partnership reimburses JIC 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. Allocations of personnel costs are based primarily on actual time
spent by employees of JIC 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 JIC. Systems
owned by JIC and all other systems owned by partnerships for which JIC 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 JIC
by the Partnership for allocated overhead and administrative expenses during
the three month periods ended March 31, 1995 and 1994 were $269,798 and
$248,514, respectively. The Supervising General Partner will also 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, 1995 and 1994.
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IDS/JONES GROWTH PARTNERS 87-A, LTD.
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
For the three months ended March 31, 1995, the Partnership generated
net cash from operating activities totaling $45,513, which is available to
fund capital expenditures and non-operating costs. The Partnership expended
approximately $1,066,000 for capital improvements during the first quarter of
1995. Of these improvements, approximately 48 percent related to the
construction of extensions to the cable television plant in the Partnership's
cable television systems and approximately 22 percent related to service drops
to homes. The remaining expenditures were for various system enhancements.
These additions were funded by cash generated from operations and borrowings
from the Partnership's credit facility.
Budgeted capital expenditures for the remainder of 1995 are
approximately $2,126,000. Construction of cable plant extensions is expected
to account for approximately 36 percent of these expenditures and upgrades to
the cable television plant are expected to account for approximately 34 percent
of the remaining expenditures. The balance of the expenditures are for various
enhancements in each of the Partnership's systems. Funding for these
expenditures is expected to be provided by cash on hand and cash generated from
operations.
In February 1989, the Partnership entered into a revolving credit and
term loan agreement. At December 31, 1992, the then-outstanding balance of
$23,000,000 was converted to a term loan, payable in 28 consecutive quarterly
installments which began March 31, 1993. In March 1994, the Partnership and
its lenders entered into an amendment to the credit agreement pursuant to
which, among other things, certain principal payments due under the term loan
were waived and added to the final payment due under the term loan repayment
schedule. In January 1995, the Partnership and its lenders entered into an
additional amendment to the credit agreement which, among other things,
reestablished the lenders' revolving credit commitment in an amount up to
$23,000,000. As required by the amendment, the initial advance under the new
revolving credit commitment was used to repay the then outstanding principal
balance of the term loan. The amendment also provided that term loans would be
available to the Partnership on September 30, 1995 in the amount of the then
outstanding principal amount of the new revolving credit loans. At March 31,
1995, the outstanding balance of the revolving credit loans was $23,000,000.
Interest is at the Partnership's option of the Prime Rate plus .25 percent,
London Interbank Offered Rate plus 1.25 percent or Certificate of Deposit Rate
plus 1.5 percent. The effective interest rates on amounts outstanding as of
March 31, 1995 and 1994 were 7.7 percent and 4.8 percent, respectively.
On January 12, 1993, the Partnership entered into an interest rate cap
agreement covering outstanding debt obligations of $10,000,000. The agreement
protects the Partnership for interest rates that exceed 7 percent for three
years from the date of the agreement.
The General Partners believe that the Partnership has, and will
continue to have, sufficient sources of capital available in the form of cash
on hand and its ability to create cash reserves from operations to meet its
presently anticipated obligations.
Regulation and Legislation
Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which became effective on
December 4, 1992. This legislation has caused significant changes to the
regulatory environment in which the cable television industry operates. The
1992 Cable Act generally imposes for a greater degree of regulation of the
cable television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States, including those
owned by the Partnership, are subject to rate regulation of basic cable
services. In addition, the 1992 Cable Act allows the FCC to regulate rates for
non-basic service tiers other than premium services in response to complaints
filed by franchising authorities and/or cable subscribers. In April 1993, the
FCC adopted regulations governing rates for basic and non-basic services. The
FCC's rules became effective on September 1, 1993. In compliance with these
rules, the Partnership reduced rates charged for certain regulated services
effective September 1, 1993.
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On February 22, 1994, however, the FCC adopted several additional rate
orders including an order which revised its earlier-announced regulatory scheme
with respect to rates. The FCC's new regulations will generally require rate
reductions, absent a successful cost-of-service showing, of 17 percent of
September 30, 1992 rates, adjusted for inflation, channel modifications,
equipment costs, and increases in programming costs. However, the FCC held
rate reductions in abeyance in certain systems. The new regulations became
effective on May 15, 1994, but operators could elect to defer rate reductions
to July 14, 1994, so long as they made no change in their rates and did not
restructure service offerings between May 15 and July 14. The Partnership
complied with the February 1994 benchmark regulations and further reduced rates
in its systems effective July 1994.
RESULTS OF OPERATIONS
Revenues of the Partnership increased $308,098, or approximately 10
percent, for the three months ended March 31, 1995 as compared to the
comparable 1994 period, from $3,120,037 in 1994 to $3,428,135 in 1995.
Increases in advertising sales revenue and basic subscribers accounted for
approximately 46 percent and approximately 40 percent, respectively, of the
increase in revenues. Since March 31, 1994, the Partnership has added
approximately 2,471 basic subscribers and approximately 869 pay subscriptions,
increases of approximately 8 percent and 4 percent, respectively. Basic
subscribers increased from 31,071 at March 31, 1994 to 33,542 at March 31,
1995. No other individual factor significantly affected the increase in
revenues.
Operating expenses consist primarily of costs associated with the
administration of the Partnership's cable television systems. 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 consumer marketing expenses.
Operating expenses increased $259,068, or approximately 15 percent,
from $1,719,832 in the first quarter of 1994 to $1,978,900 in the first quarter
of 1995. This increase was due to increases in programming fees and
advertising sales expense which accounted for approximately 55 percent and 27
percent of the increase, respectively. No other single factor significantly
affected the increase in operating expenses. Operating expenses represented
approximately 55 percent and 58 percent, respectively, of revenue during the
three months ended March 31, 1994 and 1995.
Management fees and allocated overhead from the General Partners
increased $38,230, or approximately 9 percent, from $420,116 for the three
months ended March 31, 1994 to $458,346 for the comparable 1995 period. This
increase was due to the increases in revenues, upon which such fees and
allocations are based, and an increase in allocated expenses from the Managing
General Partner. The Managing General Partner has experienced increases in
costs, including salaries and benefits, a portion of which is allocated to the
Partnership. Depreciation and amortization expense increased $33,665, or
approximately 2 percent, for the three months ended March 31, 1995 from
$1,445,798 in 1994 to $1,479,463 in 1995. This increase was due to capital
additions during 1994.
Operating loss increased $22,865, or approximately 5 percent, from
$465,709 to $488,574 for the three months ended March 31, 1994 as compared to
1995. This increase was a result of the increases in operating expenses,
management and supervision fees and allocated overhead from the General
Partners, and depreciation and amortization exceeding the increase in revenue.
Operating income before depreciation and amortization increased $10,800, or
approximately 1 percent, from $980,089 to $990,889 for the three months ended
March 31, 1994 as compared to 1995. This increase was the result of the
increases in operating expenses and management and supervision fees and
allocated overhead from the General Partners exceeding the increase in
revenues.
The decrease in operating income before depreciation and amortization
reflects the effect of FCC rate regulations under the 1992 Cable Act which have
caused revenues to increase more slowly than in prior years. In turn, this has
caused certain expenses which are a function of revenue, such as franchise
fees, copyright fees and management fees to increase more slowly than otherwise
would have been the case. However, other operating costs such as programming
fees, salaries and benefits, and marketing costs as well as certain costs
incurred by the Managing General Partner which are allocated to the
Partnership, continue to increase at historic rates. This situation has led to
reductions in operating income before depreciation and amortization as a
percent of revenue ("Operating Margin"). The Managing General Partner will
attempt to mitigate a portion of these reductions through (a) new service
offerings; (b) product re-marketing and re-packaging and (c) marketing efforts
targeted at non-subscribers.
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Interest expense increased $167,596, or approximately 62 percent, from
$270,876 for the three months ended March 31, 1994 to $438,472 for the three
months ended March 31, 1995. This increase in interest expense was due
primarily to higher effective interest rates on interest bearing obligations
between the periods. Net loss increased $195,809, or approximately 27 percent,
from $730,697 in 1994 to $926,506 in 1995. Such losses are expected to
continue in the future.
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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 12, 1995
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INDEX TO EXHIBITS
Exhibit Description Page
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27 Financial Data Schedule