<PAGE> 1
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 September 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 0-17916
JONES GROWTH PARTNERS L.P.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1143409
- --------------------------------------------------------------------------------
State of Organization IRS 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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<PAGE> 2
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1995 1994
------ ------------- ------------
<S> <C> <C>
CASH $ 104,902 $ 170,648
TRADE RECEIVABLES, less allowance for doubtful
receivables of $26,784 and $21,597 at
September 30, 1995 and December 31, 1994,
respectively 84,555 66,829
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 46,236,128 43,210,371
Less-accumulated depreciation (22,545,667) (20,003,575)
------------ ------------
23,690,461 23,206,796
Franchise costs, net of accumulated amortization
of $40,199,728 and $35,174,652 at September 30, 1995
and December 31, 1994, respectively 19,657,220 24,682,296
Subscriber lists, net of accumulated amortization
of $8,060,814 and $7,053,212 at September 30, 1995
and December 31, 1994, respectively 1,343,468 2,351,070
Costs in excess of interests in net assets purchased,
net of accumulated amortization of $1,192,358 and
$1,043,313 at September 30, 1995 and December 31,
1994, respectively 6,748,697 6,897,742
------------ ------------
Total investment in cable
television properties 51,439,846 57,137,904
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 712,014 942,774
------------ ------------
Total assets $ 52,341,317 $ 58,318,155
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
<PAGE> 3
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
------------------------------------------- ------------- ------------
<S> <C> <C>
LIABILITIES:
Credit facility and other debt $ 35,502,107 $ 35,245,699
Trade accounts payable and accrued liabilities 1,141,871 989,457
Accrued interest 395,072 16,780
Subscriber prepayments 51,642 50,301
------------ ------------
Total liabilities 37,090,692 36,302,237
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (593,890) (526,237)
------------ ------------
(592,890) (525,237)
------------ ------------
Limited Partners-
Net contributed capital (85,740 units
outstanding at September 30, 1995 and
December 31, 1994) 73,790,065 73,790,065
Accumulated deficit (57,946,550) (51,248,910)
------------ ------------
15,843,515 22,541,155
------------ ------------
Total partners' capital (deficit) 15,250,625 22,015,918
------------ ------------
Total liabilities and partners' capital (deficit) $ 52,341,317 $ 58,318,155
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
<PAGE> 4
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------- -----------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES $ 5,309,508 $ 4,913,878 $15,761,824 $14,581,300
COSTS AND EXPENSES:
Operating expenses 3,201,939 2,812,320 9,617,643 8,570,473
Management and supervisory fees to the
General Partner and allocated administrative
costs from the Managing General Partner 678,144 628,207 2,039,553 1,933,923
Depreciation and amortization 2,933,919 3,245,001 8,806,106 9,735,002
----------- ----------- ----------- -----------
OPERATING LOSS (1,504,494) (1,771,650) (4,701,478) (5,658,098)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (667,974) (563,394) (2,078,211) (1,510,907)
Interest income 6,052 5,754 17,697 26,968
Other, net 63,472 (90,173) (3,301) (208,088)
----------- ----------- ----------- -----------
NET LOSS $(2,102,944) $(2,419,463) $(6,765,293) $(7,350,125)
=========== =========== =========== ===========
ALLOCATION OF NET LOSS:
Managing General Partner $ (21,029) $ (24,194) $ (67,653) $ (73,501)
=========== =========== =========== ===========
Limited Partners $(2,081,915) $(2,395,269) $(6,697,640) $(7,276,624)
=========== =========== =========== ===========
NET LOSS PER LIMITED PARTNERSHIP
UNIT $ (24.28) $ (27.93) $ (78.12) $ (84.86)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNERSHIP UNITS
OUTSTANDING 85,740 85,740 85,740 85,740
=========== =========== =========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
<PAGE> 5
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
------------------------------------
1995 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (6,765,293) $ (7,350,125)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 8,806,106 9,735,002
Amortization of interest rate protection contract 48,501 48,501
Decrease (increase) in trade receivables (17,726) 187,046
Decrease in deposits, prepaid expenses and other assets 99,968 101,171
Increase in accrued liabilities, accrued interest and
subscriber prepayments 532,047 279,138
------------ ------------
Net cash provided by operating activities 2,703,603 3,000,733
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,025,757) (2,799,631)
------------ ------------
Net cash used in investing activities (3,025,757) (2,799,631)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 336,474 1,223,957
Repayment of borrowings (80,066) (2,250,522)
------------ ------------
Net cash provided by (used in) financing activities 256,408 (1,026,565)
------------ ------------
DECREASE IN CASH (65,746) (825,463)
CASH, BEGINNING OF PERIOD 170,648 1,646,850
------------ ------------
CASH, END OF PERIOD $ 104,902 $ 821,387
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,651,419 $ 1,414,775
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
<PAGE> 6
JONES GROWTH PARTNERS L.P.
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 L.P. (the
"Partnership") at September 30, 1995 and December 31, 1994, and its results of
operations for the three month periods ended September 30, 1995 and 1994, its
cash flows for the nine month periods ended September 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 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").
(2) The Partnership was formed pursuant to a public offering of limited
partnership interests sponsored by Jones Spacelink Cable Corporation (the
"Managing General Partner"). The Managing 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 Managing General Partner. The
Managing General Partner is thus now a wholly owned subsidiary of Intercable.
The Managing General Partner 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 Managing General Partner 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 nine month periods ended September 30, 1995 were $265,475 and
$788,091, respectively, compared to $245,694 and $729,065, respectively, for
the three and nine month periods ended September 30, 1994. Growth Partners
Inc. (the "Associate General Partner"), an affiliate of Lehman Brothers Inc.,
participates with the Managing General Partner in certain management decisions
affecting the Partnership and receives a supervisory fee of the lesser of one
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 and nine month periods ended September
30, 1995 were $53,095 and $157,618, respectively, compared to $49,139 and
$145,813, respectively, for the three and nine month periods ended September
30, 1994.
The Partnership reimburses the Managing 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 Managing 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 Managing General Partner believes
that the methodology used in allocating general and administrative costs is
reasonable. Reimbursements by the Partnership to the Managing General Partner
for allocated general and administrative costs for three and nine month periods
ended September 30, 1995 were $359,574 and $1,093,844, respectively, compared
to $333,374 and $1,059,045, respectively, for the three and nine month periods
ended September 30, 1994.
6
<PAGE> 7
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
For the nine months ended September 30, 1995, the Partnership
generated net cash from operating activities totaling approximately $2,704,000,
which is available to fund capital expenditures and non-operating costs.
During the first nine months of 1995, the Partnership expended approximately
$3,026,000 for capital expenditures for the Wheaton System. Approximately 65
percent of these expenditures related to cable, hardware and labor for new
subscriber installations, to extend the cable plant to serve additional
customers and to replace equipment. Approximately 8 percent was for the
purchase of pay security equipment and the remainder of these expenditures was
for various system enhancements. Such expenditures were financed from cash
from operations. Capital expenditures for the remainder of 1995 are expected
to be approximately $352,000 and are expected to be financed from available
cash balances and cash flow from operations. For the remainder of 1995,
approximately 59 percent will relate to cable, hardware and labor to extend the
cable plant, to make additional subscriber installations and to replace
equipment in the Wheaton System. The remainder of the expected capital
expenditures will be for the replacement and repair of converters and for
various other enhancements.
In December 1994, the Partnership entered into a new $36,000,000
revolving credit facility. The revolving credit facility converts to a term
loan on December 31, 1996, at which time the then-outstanding balance is
payable in quarterly installments through December 30, 2002. At September 30,
1995, $35,300,000 was outstanding under the new agreement, leaving $700,000
available for future needs of the Partnership. Interest on the outstanding
principal balance is at the Partnership's option of Prime plus 1/4 percent or
the London Interbank Offered Rate ("LIBOR") plus 1- 1/4 percent. A fee of 3/8
of one percent per annum on the unused portion of the commitment is also
required. The effective interest rates on amounts outstanding as of September
30, 1995 and 1994 were 7.15 percent and 6.3 percent, respectively.
On January 12, 1993, the Partnership entered into an interest rate cap
agreement covering outstanding debt obligations of $20,000,000. The
Partnership paid a fee of $194,000 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.
The Managing General Partner presently believes cash flow from
operations and available borrowings under the Partnership's revolving credit
facility will be sufficient to fund capital expenditures and other liquidity
needs of the Partnership.
Regulatory Matters
The FCC's rate regulations related to the 1992 Cable Act contain
provisions for increasing rates for added channels, external costs and
inflation. The Partnership has been able to adjust rates recently under such
provisions. Such adjustments, together with a reduction in the cost of
implementing the 1992 Cable Act compared to such costs in prior periods, are
expected to cause the Partnership's revenue and cash flow to increase in fiscal
1996.
Currently, there is legislation before Congress which, if enacted,
would significantly change the regulatory environment in which the cable
industry operates. Such legislation may eliminate rate regulation and allow
telephone companies and others much broader entry into the cable television
business and, in turn, may allow cable operators into the telephone and other
telecommunications businesses. While the General Partner is encouraged by
provisions of the legislation, it is too early to assess the impact such
legislation, if enacted, would have on the Partnership.
RESULTS OF OPERATIONS
Revenues of the Partnership for the three months ended September 30,
1995 totaled $5,309,508, compared to $4,913,878 for the comparable 1994 period,
an increase of $395,630, or approximately 8 percent. For the nine months ended
September 30, 1995, revenues totaled $15,761,824 compared to $14,581,300 for
the same period one year ago, an
7
<PAGE> 8
increase of $1,180,524, or approximately 8 percent. Increases in basic
subscribers accounted for approximately 50 percent and 59 percent,
respectively, of the increases in revenue for the three and nine month periods.
Basic subscribers increased by 3,114 subscribers, or approximately 6 percent,
to 51,416 at September 30, 1995 from 48,302 at September 30, 1994. Basic
service rate adjustments primarily accounted for the remainder of the increases
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 $389,619, or approximately 14 percent, to
$3,201,939 for the three months ended September 30, 1995 from $2,812,320 for
the comparable period in 1994. Operating expenses represented approximately 60
percent and 57 percent, respectively, of revenues for the three months ended
September 30, 1995 and 1994. This increase in operating expenses was primarily
due to increases in programming expenses and personnel expenses, which
accounted for 43 percent and 15 percent, respectively, of the total increase.
Operating expenses increased $1,047,170, or approximately 12 percent, to
$9,617,643 for the nine months ended September 30, 1995 from $8,570,473 for the
comparable period in 1994. This increase was due primarily to increases in
programming expenses and personnel expenses, which accounted for approximately
43 percent and 17 percent, respectively, of the total increase. No other
individual factor significantly affected the increase in operating expenses for
the periods discussed.
Management and supervisory fees paid to the Managing and Associate
General Partners and allocated administrative costs from the Managing General
Partner increased $49,937, or approximately 8 percent, to $678,144 for the
three month period ended September 30, 1995 from $628,207 for the three month
period ended September 30, 1994. Management and supervisory fees paid to the
Managing and Associate General Partners and allocated administrative costs from
the Managing General Partner increased $105,630, or approximately 5 percent, to
$2,039,553 for the nine month period ended September 30, 1995 from $1,933,923
for the nine month period ended September 30, 1994. These increases were
primarily the result of the increase in revenues, upon which such management
fees are based, as well as increases in allocated administrative costs from the
Managing General Partner. The change of ownership of the Managing General
Partner did not have any material effect on the management fees and allocated
administrative costs to the Partnership.
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 expense decreased $43,926, or
approximately 3 percent, to $1,429,425 for the three month period ended
September 30, 1995 from $1,473,351 for the comparable period in 1994. This
decrease in operating income before depreciation and amortization expense was a
result of the increase in operating expenses and management and supervisory
fees and allocated administrative costs exceeding the increase in revenues.
Operating income before depreciation and amortization expense increased
$27,724, or less than 1 percent, to $4,104,628 for the nine months ended
September 30, 1995 from $4,076,904 for the comparable period in 1994. This
increase was due to the increase in revenues exceeding the increase in
operating expenses described above.
Interest expense increased $104,580, or approximately 19 percent, to
$667,974 for the three months ended September 30, 1995 from $563,394 for the
similar period in 1994. Interest expense increased $567,304, or approximately
38 percent, to $2,078,211 for the nine months ended September 30, 1995 from
$1,510,907 for the nine months ended September 30, 1994. These increases in
interest expense were primarily due to higher interest rates and higher
outstanding balances on interest bearing obligations during the three and nine
month periods of 1995 as compared to the similar periods one year ago.
Net loss decreased $316,519, or approximately 13 percent, to
$2,102,944 for the three month period ended September 30, 1995 from $2,419,463
for the comparable period in 1994. Net loss decreased $584,832, or
approximately 8 percent, to $6,765,293 for the nine month period ended
September 30, 1995 from $7,350,125 for the comparable period in 1994. These
losses were the result of the factors discussed above, and are expected to
continue in the future.
8
<PAGE> 9
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
9
<PAGE> 10
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/ Kevin P. Coyle
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: November 13, 1995
10
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------ ------------------- ----
<S> <C> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 104,902
<SECURITIES> 0
<RECEIVABLES> 111,339
<ALLOWANCES> (26,784)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 46,236,128
<DEPRECIATION> (22,545,667)
<TOTAL-ASSETS> 52,341,317
<CURRENT-LIABILITIES> 1,588,585
<BONDS> 35,502,107
<COMMON> 0
0
0
<OTHER-SE> 15,250,625
<TOTAL-LIABILITY-AND-EQUITY> 52,341,317
<SALES> 0
<TOTAL-REVENUES> 15,761,824
<CGS> 0
<TOTAL-COSTS> 20,463,302
<OTHER-EXPENSES> (14,396)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,078,211
<INCOME-PRETAX> (6,765,293)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,765,293)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,765,293)
<EPS-PRIMARY> (78.12)
<EPS-DILUTED> 0
</TABLE>
