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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 June 30, 1995
[ ] 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: 0-19259
JONES GROWTH PARTNERS II L.P.
Exact name of registrant as specified in charter
Colorado #84-1126141
State of organization I.R.S. employer I.D. #
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
Address of principal executive office
(303) 792-3111
Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ____
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JONES GROWTH PARTNERS II L.P.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
June 30, December 31,
ASSETS 1995 1994
----------- -----------
CASH $ 328,257 $ 61,131
TRADE RECEIVABLES, less allowance for doubtful
receivables of $21,327 and $4,291 at June 30, 1995
and December 31, 1994, respectively 376,951 338,891
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 15,573,732 14,011,386
Less- accumulated depreciation (3,919,169) (3,158,613)
----------- -----------
11,654,563 10,852,773
Franchise costs, net of accumulated amortization
of $3,306,392 and $2,791,240 at June 30, 1995
and December 31, 1994, respectively 6,996,608 7,511,760
Subscriber lists, net of accumulated amortization of
$1,764,124 and $1,489,195 at June 30, 1995 and
December 31, 1994, respectively 2,084,875 2,359,804
Noncompete agreement, net of accumulated amortization
of $1,404,887 and $1,185,944 at June 30, 1995 and
December 31, 1994, respectively 529,113 748,056
Costs in excess of interests in net assets purchased, net
of accumulated amortization of $144,642 and $122,089
at June 30, 1995 and December 31, 1994, respectively 1,657,247 1,679,800
----------- -----------
Total investment in cable
television properties 22,922,406 23,152,193
DEBT PLACEMENT COSTS, net of accumulated
amortization of $119,902 and $101,216 at
June 30, 1995 and December 31, 1994,
respectively 163,503 182,189
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 104,638 230,433
----------- -----------
Total assets $23,895,755 $23,964,837
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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JONES GROWTH PARTNERS II L.P.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
June 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
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LIABILITIES:
Credit facility and other debt $12,656,449 $11,247,350
Accounts payable to Jones Intercable, Inc. 137,556 71,270
Trade accounts payable and accrued liabilities 318,565 622,661
Subscriber prepayments and deposits 320,966 324,185
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Total liabilities 13,433,536 12,265,466
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PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (66,185) (53,813)
----------- -----------
(65,185) (52,813)
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Limited Partners-
Net contributed capital (19,785 units
outstanding at June 30, 1995 and
December 31, 1994) 16,746,882 16,746,882
Accumulated deficit (6,219,478) (4,994,698)
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10,527,404 11,752,184
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Total partners' capital (deficit) 10,462,219 11,699,371
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Total liabilities and partners' capital (deficit) $23,895,755 $23,964,837
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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JONES GROWTH PARTNERS II L.P.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
For The Three Months Ended For The Six Months Ended
June 30, June 30,
------------------------------ ---------------------------
1995 1994 1995 1994
---------- ---------- ----------- -----------
REVENUES $1,745,294 $1,572,913 $ 3,362,993 $ 3,119,735
COSTS AND EXPENSES:
Operating expenses 965,557 905,688 1,936,401 1,774,538
Management fees and allocated administrative
costs from General Partner 201,147 196,544 403,469 394,433
Depreciation and amortization 905,966 856,971 1,813,290 1,713,960
---------- ---------- ----------- -----------
OPERATING LOSS (327,376) (386,290) (790,167) (763,196)
---------- ---------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (247,604) (158,639) (447,097) (303,283)
Other, net (154) (11,331) 112 (9,640)
---------- ---------- ----------- -----------
NET LOSS $ (575,134) $ (556,260) $(1,237,152) $(1,076,119)
========== ========== =========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (5,752) $ (5,563) $ (12,372) $ (10,761)
========== ========== =========== ===========
Limited Partners $ (569,382) $ (550,697) $(1,224,780) $(1,065,358)
========== ========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (28.78) $ (27.83) $ (61.90) $ (53.85)
========== ========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNERSHIP UNITS
OUTSTANDING 19,785 19,785 19,785 19,785
========== ========== =========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES GROWTH PARTNERS II L.P.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Six Months Ended
June 30,
---------------------------------
1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,237,152) $(1,076,119)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 1,813,290 1,713,960
Amortization of interest rate protection contract 11,316 11,316
Decrease in trade receivables (38,060) (85,001)
Decrease in deposits, prepaid expenses and
other assets 112,008 121,726
Increase in trade accounts payable,
accrued liabilities and subscriber
prepayments and deposits (307,315) (114,601)
Increase in accounts payable to
Jones Intercable, Inc. 66,286 --
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Net cash provided by operating activities 420,373 571,281
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment (1,562,346) (614,953)
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Net cash used in investing activities (1,562,346) (614,953)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 1,437,512 --
Repayment of borrowings (28,413) (246,049)
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Net cash provided by (used in) financing activities 1,409,099 (246,049)
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INCREASE (DECREASE) IN CASH 267,126 (289,721)
CASH, BEGINNING OF PERIOD 61,131 757,270
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CASH, END OF PERIOD $ 328,257 $ 467,549
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 343,570 $ 304,764
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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JONES GROWTH PARTNERS II 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 fair presentation of the Balance
Sheets and Statements of Operations and Cash Flows in conformity with generally
accepted accounting principles. However, in the opinion of management, this
data includes all adjustments, consisting of normal recurring accruals,
necessary to present fairly the financial position of Jones Growth Partners II
L.P. (the "Partnership") at June 30, 1995 and December 31, 1994, and its
results of operations for the three and six month periods ended June 30, 1995
and 1994, and changes in its cash flows for the six month periods ended June
30, 1995 and 1994. 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 the communities of Yorba Linda, certain portions of
Anaheim Hills, and certain portions of unincorporated Orange County, all in the
state of California (the "Yorba Linda System").
(2) The Partnership was formed pursuant to a public offering of
limited partnership interests sponsored by Jones Spacelink Cable Corporation
(the "General Partner"). The General Partner was a wholly owned subsidiary of
Jones Spacelink, Ltd. ("Spacelink") until December 20, 1994. On that date,
Jones Intercable, Inc. ("Intercable"), a Colorado corporation that also was a
subsidiary of Spacelink, acquired substantially all of the assets of Spacelink
including all of the shares of the General Partner. The General Partner is now
a wholly owned subsidiary of Intercable. Intercable is one of the largest
multiple system operators in the United States. Intercable and certain of its
affiliates also own and operate cable television systems for their own account
and for the account of other managed limited partnerships. The General Partner
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 General
Partner by the Partnership for the three and six month periods ended June 30,
1995 were $87,265 and $168,150, respectively, as compared to $78,646 and
$155,987, respectively, for the comparable period in 1994.
The Partnership reimburses the General Partner and certain of its
affiliates for certain allocated general and administrative costs. These
expenses include salaries and benefits paid to corporate personnel, office rent
and related facilities expense. 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 the General Partner and certain of its affiliates with
respect to each partnership managed. Remaining expenses are allocated based on
the pro rata relationship of the Partnership's revenues to the total revenues
of all systems owned or managed by Intercable and certain of its affiliates.
Systems owned by Intercable and all other systems owned by partnerships for
which Intercable is the general partner are also allocated a proportionate
share of these expenses. The General Partner believes that the methodology
used in allocating general and administrative costs is reasonable.
Reimbursements by the Partnership to the General Partner for allocated general
and administrative costs for the three and six month periods ended June 30,
1995 were $113,882 and $235,319, respectively, as compared to $117,898 and
$238,446, respectively, for the comparable period in 1994.
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JONES GROWTH PARTNERS II L.P.
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
For the six months ended June 30, 1995, the Partnership generated net
cash from operating activities of $420,373, which is available to fund capital
expenditures and non-operating costs. During the first six months of 1995, the
Partnership purchased approximately $1,562,000 of plant and equipment for its
Yorba Linda System. Approximately 50 percent of these expenditures were for
pay-per-view equipment. Approximately 13 percent of these expenditures were
for cable, hardware and labor for new subscriber installations. Such
expenditures were funded from cash from operations and borrowings under the
Partnership's credit facility. Capital expenditures for the remainder of 1995
are expected to be approximately $1,566,000 and will be financed principally
from cash flow from operations, available borrowings under the Partnership's
credit facility and, in its discretion, advances from the General Partner.
Approximately 28 percent of the expected capital expenditures relates to
service drops and to make additional subscriber installations. Approximately
18 percent will be for pay-per-view equipment and approximately 16 percent to
replace equipment in the Yorba Linda System. The remainder of these
expenditures will be for various other enhancements throughout the Yorba Linda
System.
On September 30, 1994, an amendment was signed to extend the revolving
aspect of the Partnership's $13,000,000 credit facility to December 31, 1996,
at which time the outstanding principal balance will convert to a term loan,
payable in quarterly installments with a final maturity date of December 31,
2002. Generally, the interest on the outstanding principal balance is at the
Partnership's option of the Prime rate plus 1/4 percent to 1/2 percent or the
London Interbank Offered Rate ("LIBOR") plus 1-1/4 percent to 1-1/2 percent,
depending upon the ratio of the Partnership debt to operating cash flow. As of
June 30, 1995, $12,550,000 was outstanding under the Partnership's $13,000,000
credit facility, leaving $450,000 for future borrowings.
On January 12, 1993, the Partnership entered into an interest rate cap
agreement covering outstanding debt obligations of $7,000,000. The Partnership
paid a fee of $67,900 for the rate cap agreement. The agreement protects the
Partnership from LIBOR interest rates that exceed 7 percent for three years
from the date of the agreement. At June 30, 1995 and 1994, the Partnership was
paying an average of 7.64 percent and 6.07 percent, respectively, on the total
outstanding borrowings under its credit facility.
The General Partner presently believes cash flow from operations,
available borrowings under the Partnership's credit facility and, if necessary,
in its discretion, advances from the General Partner, will be sufficient to
fund capital expenditures and other liquidity needs of the Partnership.
RESULTS OF OPERATIONS
Revenues of the Partnership increased $172,381, or approximately 11
percent, to $1,745,294 for the three month period ended June 30, 1995 from
$1,572,913 for the comparable period in 1994. Revenues of the Partnership
increased $243,258, or approximately 8 percent, to $3,362,993 for the six month
period ended June 30, 1995, from $3,119,735 for the comparable period in 1994.
This increase in revenues was primarily due to increases in basic service
revenues, which accounted for approximately 71 percent and 73 percent,
respectively, of the increase in revenues for the three and six month periods.
The Yorba Linda System added 650 basic subscribers, increasing to 16,305 basic
subscribers at June 30, 1995 from 15,655 basic subscribers at June 30, 1994.
The increase in basic subscribers accounted for approximately 71 percent of 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 $59,869, or approximately 7 percent, to
$965,557 for the three months ended June 30, 1995 from $905,688 for the three
months ended June 30, 1994. This increase in operating expenses was primarily
due to increases in programming costs and advertising costs, which were
partially offset by a decrease in
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personnel costs. Operating expenses increased $161,863, or
approximately 9 percent, to $1,936,401 for the six months ended June 30, 1995
to $1,774,538 for the six months ended June 30, 1994. This increase in
operating expenses was due to increases in programming costs and advertising
costs, which were partially offset by decreases in personnel and allocated
costs. Operating expenses represented approximately 55 percent and 58 percent
of revenues for the three months ended June 30, 1995 and 1994, respectively,
and approximately 58 percent and 57 percent of revenues for the six months
ended June 30, 1995 and 1994, respectively. No other individual factor
significantly affected the increase in operating expenses for the periods
discussed.
Management fees and allocated administrative costs from the General
Partner increased $4,603, or approximately 2 percent, to $201,147 for the three
months ended June 30, 1995 from $196,544 for the similar period in 1994.
Management fees and allocated administrative costs from the General Partner
increased $9,036, or approximately 2 percent, to $403,469 for the six months
ended June 30, 1995 from $394,433 for the similar period in 1994. These
increases are primarily due to an increase in revenues, upon which such fees
and allocations are based, which were partially offset by a decrease in
allocated expenses from the General Partner.
Depreciation and amortization expense increased $48,995, or
approximately 6 percent, to $905,966 for the three month period ended June 30,
1995 from $856,971 for the similar period in 1994. Depreciation and
amortization expense increased $99,330, or approximately 6 percent, to
$1,813,290 for the six month period ended June 30, 1995 from $1,713,960 for the
similar period in 1994. These increases are due to increases in the
Partnership's depreciable asset base.
Operating loss decreased $58,914, or approximately 15 percent, to
$327,376 for the three months ended June 30, 1995 from $386,290 for the similar
1994 period. This decrease was due to the increase in revenues exceeding the
increases in operating expenses, management fees and allocated administrative
costs from the General Partner and depreciation and amortization costs.
Operating loss increased $26,971, or approximately 4 percent, to $790,167 for
the six months ended June 30, 1995 from $763,196 for the similar 1994 period.
This increase was due to the increase in operating expenses, management fees
and allocated administrative costs from the General Partner and depreciation
and amortization exceeding the increase in revenues.
Operating income before depreciation and amortization increased
$107,909, or approximately 23 percent, to $578,590 for the three month period
ended June 30, 1995 from $470,681 for the comparable period in 1994. Operating
income before depreciation and amortization increased $72,359, or approximately
8 percent, to $1,023,123 for the six month period ended June 30, 1995 from
$950,764 for the comparable period in 1994. These increases were due to the
increase in revenues exceeding the increases in operating expenses and
management fees and allocated administrative costs from the General Partner.
Interest expense increased $88,965, or approximately 56 percent, to
$247,604 for the three month period ended June 30, 1995 from $158,639 for the
three month period ended June 30, 1994. Interest expense increased $143,814,
or approximately 47 percent, to $447,097 for the six month period ended June
30, 1995 from $303,283 for the comparable period in 1994. These increases were
primarily the result of higher outstanding balances on interest bearing
obligations and to higher interest rates during 1995 as compared to 1994. The
effective interest rates on amounts outstanding as of June 30, 1995 and 1994
were 7.64 percent and 6.07 percent, respectively.
Net loss increased by $18,874, or approximately 3 percent, to $575,134
for the three month period ended June 30, 1995 from $556,260 for the comparable
period in 1994. Net loss increased $161,033, or approximately 15 percent, to
$1,237,152 for the six month period ended June 30, 1995 from $1,076,119 for the
comparable period in 1994. These increases were the result of the factors
discussed above.
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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.
JONES GROWTH PARTNERS II L.P.
BY: JONES SPACELINK CABLE
CORPORATION, its General Partner
By: /S/ Kevin P. Coyle
-------------------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Accounting and Financial Officer)
Dated: August 11, 1995
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EXHIBIT INDEX
Exhibit No. Exhibit Description Page
- ----------- ------------------- ----
27 Financial Data Schedule