1
FORM 10-Q/A No. 2
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: 1-16183
IDS/JONES GROWTH PARTNERS 87-A, LTD.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1060544
- --------------------------------------------------------------------------------
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 (l) has filed all reports
required to be filed by Section l3 or l5(d) of the Securities Exchange Act of
l934 during the preceding l2 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
------- ------
2
IDS/JONES GROWTH PARTNERS 87-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
June 30, December 31,
ASSETS 1995 1994
------ ------------- --------------
CASH $ 394,199 $ 407,610
TRADE RECEIVABLES, less allowance for doubtful
receivables of $16,369 and $17,015 at
June 30, 1995 and December 31, 1994,
respectively 391,269 498,516
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 33,793,880 31,848,280
Less- accumulated depreciation (13,950,040) (12,685,653)
------------- --------------
19,843,840 19,162,627
Franchise costs, net of accumulated
amortization of $18,765,756 and $17,671,439
at June 30, 1995 and December 31, 1994,
respectively 10,103,034 11,195,969
Subscriber lists, net of accumulated amortization
of $4,282,369 and $4,177,945 at June 30, 1995
and December 31, 1994, respectively 93,531 197,955
Costs in excess of interests in net assets purchased,
net of accumulated amortization of $1,002,219 and
$924,122 at June 30, 1995 and
December 31, 1994, respectively 4,825,819 4,903,915
------------- --------------
Total investment in cable television properties 34,866,224 35,460,466
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 244,858 317,231
------------- --------------
Total assets $ 35,896,550 $ 36,683,823
============= ==============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
3
IDS/JONES GROWTH PARTNERS 87-A, LTD.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
June 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
------------------------------------------- ------------ ------------
LIABILITIES:
Debt $ 23,191,456 $ 21,832,052
Accounts payable-
Trade - 65,095
Managing General Partner 11,664 665,782
Accrued liabilities 634,142 828,923
Subscriber prepayments 46,857 38,681
------------ ------------
Total liabilities 23,884,119 23,430,533
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 500 500
Accumulated deficit (242,723) (230,314)
------------ ------------
(242,223) (229,814)
------------ ------------
Limited Partners-
Net contributed capital
(164,178 units outstanding at
June 30, 1995 and December 31, 1994) 35,824,200 35,824,200
Accumulated deficit (23,569,546) (22,341,096)
------------ ------------
12,254,654 13,483,104
------------ ------------
Total liabilities and partners'
capital (deficit) $ 35,896,550 $ 36,683,823
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
4
IDS/JONES GROWTH PARTNERS 87-A, LTD.
(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 $ 3,591,026 $ 3,300,443 $ 7,019,161 $ 6,420,480
COSTS AND EXPENSES:
Operating expenses 1,947,359 1,774,420 3,926,259 3,494,252
Management fees and
allocated overhead
from General Partners 435,823 427,167 894,169 847,283
Depreciation and
amortization 1,080,930 1,393,998 2,560,393 2,835,629
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) 126,914 (295,142) (361,660) (756,684)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (441,822) (310,101) (880,294) (585,144)
Other, net 555 (23,194) 1,095 (17,306)
----------- ----------- ----------- -----------
Total other income,
(expense), net (441,267) (333,295) (879,199) (602,450)
----------- ----------- ----------- -----------
NET LOSS $ (314,353) $ (628,437) $(1,240,859) $(1,359,134)
=========== =========== =========== ===========
ALLOCATION OF NET LOSS:
General Partners $ (3,144) $ (6,284) $ (12,409) $ (13,591)
=========== =========== =========== ===========
Limited Partners $ (311,209) $ (622,153) $(1,228,450) $(1,345,543)
=========== =========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (1.90) $ (3.79) $ (7.48) $ (8.20)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 164,178 164,178 164,178 164,178
=========== =========== =========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these statements.
4
5
IDS/JONES GROWTH PARTNERS 87-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Six Months Ended
June 30,
----------------------------------
1995 1994
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,240,859) $(1,359,134)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 2,560,393 2,835,629
Amortization of interest rate protection contract 16,668 16,668
Decrease (increase) in trade receivables 107,247 (42,231)
Decrease in deposits, prepaid expenses and deferred charges 36,538 86,572
Decrease in accounts payable, accrued liabilities and
subscriber prepayments (251,700) (167,636)
Increase (decrease) in amount due Managing General Partner (654,118) 12,029
----------- -----------
Net cash provided by operating activities 574,169 1,381,897
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,946,984) (1,471,400)
----------- -----------
Net cash used in investing activities (1,946,984) (1,471,400)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 1,395,480 -
Repayment of debt (36,076) (30,668)
----------- -----------
Net cash provided by (used in) financing activities 1,359,404 (30,668)
----------- -----------
Decrease in cash (13,411) (120,171)
Cash, beginning of period 407,610 969,416
----------- -----------
Cash, end of period $ 394,199 $ 849,245
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 912,019 $ 536,902
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these statements.
5
6
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 June 30, 1995 and December 31, 1994 and its
Statements of Operations and Cash Flows for the three and 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. 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(the "Carmel System") and Roseville,
California (the "Roseville System").
(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 and six month periods ended June 30, 1995 were
$179,551 and $350,958, respectively, compared to $165,022 and $321,024,
respectively, for the three and six month periods ended June 30, 1994.
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 and six month periods ended June 30, 1995 were $17,955 and $35,095,
respectively, compared to $16,502 and $32,102, respectively, for the three and
six month periods ended June 30, 1994.
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 and six month periods ended June 30, 1995 were $238,317 and $508,116,
respectively, compared to $245,643 and $494,157, respectively, for the three
and six month periods ended June 30, 1994. The Supervising General Partner may
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
and six month periods ended June 30, 1995 and 1994.
(3) In August 1995, the Partnership entered into a purchase and sale
agreement pursuant to which it agreed to sell the Carmel, Indiana system (the
"Carmel System") to JIC for a sales price of $44,235,333. This price is the
average of three separate, independent appraisals of the fair market value of
the Carmel System. Based on the net book value of the Carmel System of
approximately $23,500,000 at June 30, 1995, the Partnership will recognize a
gain of approximately $20,700,000 on this transaction. Closing of this sale is
expected to occur before the end of 1995. It is anticipated that a portion of
the sale proceeds will be used to reduce Partnership debt to approximately
$9,000,000, with the remainder of the proceeds distributed to the limited
partners pursuant to the partnership agreement. Such distribution will total
approximately $30,000,000, or $730 per $1,000 invested in the Partnership. No
vote of the limited partners of the Partnership is required in connection with
this transaction because the assets of the Carmel System do not constitute all
or substantially all of the Partnership's assets. The Supervising General
Partner consented to the timing of the transaction and participated in the
selection of appraisers.
6
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
For the six months ended June 30, 1995, the Partnership generated net
cash from operating activities totaling $574,169, which is available to fund
capital expenditures and non-operating costs. The Partnership expended
approximately $1,900,000 for capital improvements during the first six months
of 1995. Of these improvements, approximately 42 percent related to the
construction of extensions to the cable television plant in the Partnership's
cable television systems and approximately 24 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 $1,000,000. Construction of cable plant
extensions is expected to account for approximately 40 percent of these
expenditures and service drops to homes are expected to account for
approximately 33 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 August 1995, the Partnership entered into a purchase and sale
agreement pursuant to which it agreed to sell the Carmel System to JIC for a
sales price of $44,235,333. This price is the average of three separate,
independent appraisals of the fair market value of the Carmel System. Closing
of this sale is expected to occur before the end of 1995. Based on the net
book value of the Carmel System of approximately $23,500,000 at June 30, 1995,
the Partnership will recognize a gain of approximately $20,700,000 on this
transaction. It is anticipated that a portion of the sale proceeds will be
used to reduce Partnership debt to approximately $9,000,000, with the remainder
of the proceeds distributed to the limited partners pursuant to the partnership
agreement. Such distribution will total approximately $30,000,000, or $730 per
$1,000 invested in the Partnership. No vote of the limited partners of the
Partnership is required in connection with this transaction because the assets
of the Carmel System do not constitute all or substantially all of the
Partnership's assets. The Supervising General Partner consented to the timing
of the transaction and participated in the selection of appraisers.
The Partnership will continue to own and operate the Roseville System
after the sale of the Carmel System. The Partnership will have sufficient
sources of liquidity from borrowings available from the credit facility and
cash generated from operations to meet its anticipated needs after the sale of
the Carmel System. The pro forma effect of the sale of the Carmel System on
the results of the Partnership's operations for the six months ended June 30,
1995 and 1994, assuming the transaction had occurred at the beginning of the
period, is presented in the following unaudited tabulation:
For the Six Months Ended June 30, 1995
--------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- ---------
Revenues $ 7,019,161 $(3,945,658) $3,073,503
=========== =========== ==========
Operating Income (Loss) $ (361,660) $ 5,918 $ (355,742)
=========== =========== ==========
Net Income (Loss) $(1,240,859) $ 658,204 $ (582,655)
=========== =========== ==========
For the Six Months Ended June 30, 1994
--------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- ---------
Revenues $ 6,420,480 $(3,622,690) $2,797,790
=========== =========== ==========
Operating Income (Loss) $ (756,684) $ 161,413 $ (595,271)
=========== =========== ==========
Net Income (Loss) $(1,359,134) $ 604,919 $ (754,215)
=========== =========== ==========
In January 1995, the Partnership and its lenders entered into an
amendment to its 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 under the credit agreement. 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
June 30, 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 June 30, 1995 and 1994 were 7.57 percent and 5.77 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, its ability to create cash reserves from operations and borrowings
under the Partnership's credit facility.
7
8
RESULTS OF OPERATIONS
Revenues of the Partnership increased $290,583, or approximately 9
percent, for the three months ended June 30, 1995 as compared to the comparable
1994 period, to $3,591,026 in 1995 from $3,300,443 in 1994. Increases in basic
subscribers and advertising sales revenue accounted for approximately 60
percent and 28 percent, respectively, of the three month increase in revenues.
For the six month periods ended June 30, 1995 and 1994, revenues increased
$598,681, or approximately 9 percent, to $7,019,161 in 1995 from $6,420,480 in
1994. Increases in advertising sales revenue and basic subscribers accounted
for approximately 37 percent and 56 percent, respectively, of the increase in
revenues for the six months ended June 30, 1995. Since June 30, 1994, the
Partnership has added approximately 2,396 basic subscribers and approximately
1,938 pay subscriptions, increases of approximately 8 percent and 6 percent,
respectively. Basic subscribers increased to 34,119 at June 30, 1995 from
31,723 at June 30, 1994. 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 $172,939, or approximately 10 percent, to
$1,947,359 in the second quarter of 1995 from $1,774,420 in the second quarter
of 1994. Increases in programming fees and advertising sales expenses
accounted for approximately 74 percent and 24 percent, respectively, of the
three month increase in operating expenses. For the six month periods ended
June 30, 1995 and 1994, operating expenses increased $432,007, or approximately
12 percent, to $3,926,259 in 1995 from $3,494,252 in 1994. This increase was
due to increases in programming fees and advertising sales expense which
accounted for approximately 63 percent and 26 percent of the increase,
respectively. No other single factor significantly affected the increase in
operating expenses. Operating expenses represented approximately 54 percent of
revenue during each of the three months ended June 30, 1995 and 1994 and 56
percent and 54 percent, respectively, of revenue during each of the six months
ended June 30, 1995 and 1994.
Management fees and allocated overhead from the General Partners
increased $8,656, or approximately 2 percent, to $435,823 for the three months
ended June 30, 1995 from $427,167 for the comparable 1994 period. For the six
month periods ended June 30, 1995 and 1994, management fees and allocated
overhead from the General Partners increased $46,886, or approximately 6
percent, to $894,169 in 1995 from $847,283 in 1994. These increases are due to
the increases in revenues, upon which such fees and allocations are based.
Depreciation and amortization expense decreased $313,068, or
approximately 22 percent, for the three months ended June 30, 1995 to
$1,080,930 from $1,393,998 in 1994. For the six month periods ended June 30,
1995 and 1994, depreciation and amortization expense decreased $275,236, or
approximately 10 percent, to $2,560,393 in 1995 from $2,835,629 in 1994. This
decrease was due to the maturation of the Partnership's intangible asset base.
The Partnership recorded operating income of $126,914 for the three
months ended June 30, 1995, compared to an operating loss of $295,142 for the
three months ended June 30, 1994. This change is a result of the increase in
revenues and the decrease in depreciation and amortization expense exceeding
the increase in operating expenses, management and supervision fees and
allocated overhead from the General Partners. For the six month periods,
operating loss decreased $395,024, or approximately 52 percent, to $361,660 in
1995 from $756,684 in 1994. This decrease was a result of the increases in
revenues and the decrease in depreciation and amortization expense exceeding
the increase in operating expenses and management and supervision fees and
allocated overhead from the General Partners.
The cable television industry generally measures the performance of a
cable television system in terms of cash flow or operating income before
depreciation and amortization. The value of a cable television system is often
determined using multiples of cash flow. 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 income
before depreciation and amortization increased $108,988, or approximately 10
percent, to $1,207,844 from $1,098,856 for the three months ended June 30, 1995
as compared to 1994. This increase was the result of the increase in revenues
exceeding the increases in operating expenses, management and supervision fees
and allocated overhead from the General Partners. For the six month periods
ended June 30, 1995 and 1994, operating income before depreciation and
amortization increased $119,788, or approximately 6 percent, to $2,198,733 in
1995 from $2,078,945 in 1994. This increase was a result of the increase in
8
9
revenues exceeding the increases in operating expenses, management and
supervision fees and allocated overhead from the General Partners.
Interest expense increased $131,721, or approximately 42 percent, to
$441,822 for the three months ended June 30, 1995 from $310,101 for the three
months ended June 30, 1994. Interest expense increased $295,150, or
approximately 50 percent, to $880,294 for the six months ended June 30, 1995
from $585,144 for the six months ended June 30, 1994. These increases in
interest expense are due to higher effective interest rates on interest bearing
obligations between the periods. Net loss decreased $314,084, or approximately
50 percent, to $314,353 for the three month period ended June 30, 1995 from
$628,437 for the three month period ended June 30, 1994. Net loss decreased
$118,275, or approximately 9 percent, to $1,240,859 for the six month period
ended June 30, 1995 from $1,359,134 for the six months ended June 30, 1994.
Such losses are expected to continue in the future.
9
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
10
11
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: November 7, 1995
11
12
EXHIBIT INDEX
Exhibit
Number Exhibit Description Page
- ------- ------------------- ----
27 Financial Data Schedule