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FORM 10-K 405
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________
Commission file number: 0-17916
JONES GROWTH PARTNERS L.P.
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(Exact name of registrant as specified in its charter)
Colorado 84-1143409
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State of Organization (IRS Employer
Identification No.)
P.O. Box 3309, Englewood,
Colorado 80155-3309 (303) 792-3111
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(Address of principal executive (Registrant's telephone no.
office and Zip Code including area code)
Securities registered pursuant to Section
12(b) of the Act: None
Securities registered pursuant to Section
12(g) of the Act: Limited Partnership Interests
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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State the aggregate market value of the voting stock held by non-affiliates of
the registrant: N/A
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x
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DOCUMENTS INCORPORATED BY REFERENCE: None
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PART I.
ITEM 1. BUSINESS
THE PARTNERSHIP. Jones Growth Partners L.P. (the "Partnership") is a
Colorado limited partnership that was formed to acquire, own and operate cable
television systems in the United States. Jones Spacelink Cable Corporation, a
Colorado corporation, is the managing general partner (the "Managing General
Partner") and Growth Partners Inc., a Delaware corporation, is the associate
general partner (the "Associate General Partner") of the Partnership. The
Managing General Partner is a wholly-owned subsidiary of Jones Intercable, Inc.
("Intercable"). Intercable is a Colorado corporation engaged in the business
of owning and operating cable television systems. The Associate General
Partner is an affiliate of Lehman Brothers Inc. The Partnership owns the cable
television systems serving the communities of Addison, Glen Ellyn, Warrenville,
West Chicago, Wheaton, St. Charles, Geneva, Winfield and certain portions of
unincorporated DuPage and Kane Counties, all in the State of Illinois (the
"Wheaton System"). See Item 2.
CABLE TELEVISION SERVICES. The Wheaton System offers to its
subscribers various types of programming, which include basic service, tier
service, premium service, pay-per-view programs and packages including several
of these services at combined rates.
Basic cable television service usually consists of signals of all four
national television networks, various independent and educational television
stations (both VHF and UHF) and certain signals received from satellites.
Basic service also usually includes programs originated locally by the system,
which may consist of music, news, weather reports, stock market and financial
information and live or videotaped programs of a public service or
entertainment nature. FM radio signals are also frequently distributed to
subscribers as part of the basic service.
The Wheaton System offers tier services on an optional basis to their
subscribers. A tier generally includes most of the cable networks such as
Entertainment and Sports Programming Network (ESPN), Cable News Network (CNN),
Turner Network Television (TNT), Family Channel, Discovery and others, and the
cable television operators buy tier programming from these networks. The
Systems also offer a package that includes the basic service channels and the
tier services.
The Wheaton System also offers premium services to its subscribers,
which consist of feature films, sporting events and other special features that
are presented without commercial interruption. The cable television operators
buy premium programming from suppliers such as HBO, Showtime, Cinemax or others
at a cost based on the number of subscribers the cable operator serves.
Premium service programming usually is significantly more expensive than the
basic service or tier service programming, and consequently cable operators
price premium service separately when sold to subscribers.
The Wheaton System also offers to subscribers pay-per-view
programming. Pay-per-view is a service that allows subscribers to receive
single programs, frequently consisting of motion pictures that have recently
completed their theatrical exhibitions and major sporting events, and to pay
for such service on a program-by-program basis.
REVENUES. Monthly service fees for basic, tier and premium services
constitute the major source of revenue for the Wheaton System. At December 31,
1995, the Wheaton System's monthly basic service rates ranged from $9.60 to
$11.29, monthly basic and tier ("basic plus") service rates ranged from $19.95
to $23.62 and monthly premium services ranged from $4.95 to $12.95 per premium
service. In addition, the Partnership earns revenues from the Wheaton System's
pay-per-view programs and advertising fees. Related charges may include a
nonrecurring installation fee that ranges from $4.95 to $42.46; however, from
time to time the Wheaton System has followed the common industry practice of
reducing or waiving the installation fee during promotional periods.
Commercial subscribers such as hotels, motels and hospitals are charged a
nonrecurring connection fee that usually covers the cost of installation.
Except under the terms of certain contracts with commercial subscribers and
residential apartment and condominium complexes, the subscribers are free to
discontinue the
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service at any time without penalty. For the year ended December 31, 1995, of
the total fees received by the Wheaton System, basic service and tier service
fees accounted for approximately 65% of total revenues, premium service fees
accounted for approximately 17% of total revenues, pay-per-view fees were
approximately 3% of total revenues, advertising fees were approximately 6% of
total revenues and the remaining 9% of total revenues came principally from
equipment rentals, installation fees and program guide sales. The Partnership
is dependent upon the timely receipt of service fees to provide for maintenance
and replacement of plant and equipment, current operating expenses and other
costs of the Wheaton System.
FRANCHISES. The Wheaton System is constructed and operated under
non-exclusive, fixed-term franchises or other types of operating authorities
(referred to collectively herein as "franchises") granted by local governmental
authorities. The Wheaton System's franchises require that franchise fees
generally based on gross revenues of the cable system be paid to the
governmental authority that granted the franchise, that certain channels be
dedicated to municipal use, that municipal facilities, hospitals and schools be
provided cable service free of charge and that any new cable plant be
substantially constructed within specific periods.
The Partnership holds 10 franchises for the Wheaton System. These
franchises provide for the payment of fees to the issuing authorities and
generally range from 3% to 5% of the gross revenues of a cable television
system. The 1984 Cable Act prohibits franchising authorities from imposing
annual franchise fees in excess of 5% of gross revenues and also permits the
cable television system operator to seek renegotiation and modification of
franchise requirements if warranted by changed circumstances.
The Partnership has never had a franchise revoked. The Partnership's
franchise expiration dates range from April 1996 to October 2004. The
Partnership is currently negotiating the renewal of the one franchise that
will expire prior to December 31, 1996, and the General Partner has no
reason to believe that such franchise will not be renewed in due course.
Intercable recently has experienced lengthy negotiations with some franchising
authorities for the granting of franchise renewals. Some of the issues
involved in recent renewal negotiations include rate regulation, customer
service standards, cable plant upgrade or replacement and shorter terms of
franchise agreements.
COMPETITION. Cable television systems currently experience
competition from several sources. A potential source of significant
competition is Direct Broadcast Satellite ("DBS") services that use video
compression technology to increase channel capacity and provide packages of
movies, network and other program services that are competitive with those of
cable television systems. Two companies offering DBS services began operations
in 1994, and two other companies offering DBS service recently began
operations. In addition, a joint venture has won the right to provide a DBS
service through a FCC spectrum auction. Not all subscribers terminate cable
television service upon acquiring a DBS system. The Managing General Partner
has observed that a number of DBS subscribers also elect to subscribe to cable
television service in order to obtain the greatest variety of programming on
multiple television sets, including local video services programming not
available through DBS service.
Although neither the Partnership, the Managing General Partner nor
Intercable has yet encountered competition from a telephone company providing
video services as a cable operator or video dialtone operator, it is
anticipated that the cable television systems owned or managed by Intercable
will face such competition in the near future. Legislation recently enacted
into law will make it possible for companies with considerable resources to
enter the business. For example, in February 1996, one of the regional Bell
operating companies entered into an agreement to acquire the nation's third
largest cable television company. In addition, several telephone companies
have begun seeking cable television franchises from local governmental
authorities as a consequence of litigation that successfully challenged the
constitutionality of the cable television/telephone company cross-ownership
rules. The Managing General Partner cannot predict at this time when and to
what extent telephone companies will provide cable television service within
service areas in competition with cable television systems owned or managed by
Intercable.
The Managing General Partner is aware of the following imminent
competition from telephone companies: Ameritech, one of the seven regional
Bell operating companies, which provides telephone service in a multi-state
region including Illinois, has just obtained a franchise that will allow it to
provide cable television service in Naperville, Illinois, a community currently
served by a cable system owned
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by another one of the public limited partnerships managed by Intercable.
Ameritech has also sought and in the future may seek franchises in areas served
by the Wheaton System. Chesapeake and Potomac Telephone Company of Virginia
and Bell Atlantic Video Service Company, both subsidiaries of Bell Atlantic,
another of the regional Bell operating companies, have announced their
intention to build a cable television system in Alexandria, Virginia in
competition with a cable television system owned by Intercable. Bell Atlantic
is preparing for the operation of a telecommunications and video business in
northern Virginia, including the Alexandria metropolitan area. The FCC has
granted GTE Virginia's application for authority to construct, operate, own and
maintain video dialtone facilities in northern Virginia, including in the
service area of a cable television system owned by Intercable. To date, GTE
has not begun construction of a video distribution system. The entry of
telephone companies as direct competitors could adversely affect the
profitability and market value of Intercable's owned and managed systems.
Additional competition is present from several sources, including the
following: Master Antenna Television and Satellite Master Antenna Television
systems that serve multi-unit dwellings such as condominiums, apartment
complexes, motels, hotels and private residential communities; private cable
television/telephonic companies that have secured exclusive contracts to
provide video and telephony services to multi-unit dwellings and similar
complexes; and multichannel, multipoint distribution service ("MMDS") systems,
commonly called wireless cable which generally focus on providing service to
residents of rural areas. In addition, the FCC has established a new wireless
telecommunications service known as Personal Communications Service ("PCS")
that would provide portable non-vehicular mobile communications services
similar to that available from cellular telephone companies, but at a lower
cost. Several cable television multiple system operators hold or have
requested experimental licenses from the FCC to test PCS technology.
REGULATION AND LEGISLATION. The cable industry is regulated under the
Telecommunications Act of 1996 (the "1996 Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act") and the Cable
Communications Policy Act of 1984 (the "1984 Cable Act") and the regulations
implementing these statutes. The Federal Communications Commission (the "FCC")
has promulgated regulations covering such areas as the registration of cable
television systems and other communications businesses, carriage of television
broadcast programming, consumer education and lockbox enforcement, origination
cablecasting and sponsorship identification, children's programming, the
regulation of basic cable and cable programming service rates in areas where
cable television systems are not subject to effective competition, signal
leakage and frequency use, technical performance, maintenance of various
records, equal employment opportunity, and antenna structure notification,
marking and lighting. In addition, cable operators periodically are required
to file various informational reports with the FCC. The FCC has the authority
to enforce these regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of administrative
sanctions, such as the revocation of FCC licenses needed to operate certain
transmission facilities often used in connection with cable operations. State
or local franchising authorities, as applicable, also have the right to enforce
various regulations, impose fines or sanctions, issue orders or seek revocation
subject to the limitations imposed upon such franchising authorities by
federal, state and local laws and regulations. Several states have assumed
regulatory jurisdiction of the cable television industry, and it is anticipated
that other states will do so in the future. To the extent the cable television
industry begins providing telephone service, additional state regulations will
be applied to the cable television industry. Cable television operations are
subject to local regulation insofar as systems operate under franchises granted
by local authorities.
The following is a summary of federal laws and regulations materially
affecting the cable television industry, and a description of state and local
laws with which the cable industry must comply.
Telecommunications Act of 1996. The 1996 Act, which became law on
February 28, 1996, substantially revised the Communications Act of 1934, as
amended, including the 1984 Cable Act and the 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934. The 1996 Act is intended, in
part, to promote substantial competition in the telephone local exchange and in
the delivery of video and other services. As a result of the 1996 Act, local
telephone companies (also known as local exchange carriers or "LECs") and other
service providers are permitted
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to provide video programming, and cable television operators are permitted
entry into the telephone local exchange market. The FCC is required to conduct
rulemaking proceedings over the next several months to implement various
provisions of the 1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
effective March 31, 1999 and the cable programming service tier of small cable
operators (those that provide service to 50,000 or fewer subscribers) effective
immediately. The 1996 Act also revised the procedures for filing a cable
programming service tier rate complaint and adds a new effective competition
test.
The most far-reaching changes in the communications business will
result from the telephony provisions of the 1996 Act. The statute expressly
preempts any legal barriers to competition in the local telephone business that
previously existed in state and local laws and regulations. Many of these
barriers had been lifted by state actions over the last few years, but the 1996
Act completes the task. The 1996 Act also establishes new requirements for
maintaining and enhancing universal telephone service and new obligations for
telecommunications providers to maintain privacy of customer information. The
1996 Act establishes uniform requirements and standards for entry, competitive
carrier interconnection and unbundling of LEC monopoly services. Due to
limitations in the Partnership's limited partnership agreement relating to the
types of business in which the Partnership can be engaged, the Partnership will
not likely provide telephone local exchange services in its cable systems.
The 1996 Act repealed the cable television/telephone cross-ownership
ban adopted in the 1984 Cable Act. The federal cross-ownership ban was
particularly important to the cable industry because telephone companies
already own certain facilities such as poles, ducts and associated rights of
way. While this ban had been overturned by several courts, formal removal of
the ban ended the last legal constraints on telephone company plans to enter
the cable market. Under the 1996 Act, telephone companies in their capacity as
common carriers now may lease capacity to others to provide cable television
service. Telephone companies have the option of providing video service as
cable operators or through "open video systems" ("OVS"), a regulatory regime
that may provide more flexibility than traditional cable service. The 1996 Act
exempts OVS operators from many of the regulatory obligations that currently
apply to cable operators, such as rate regulation and franchise fees, although
other requirements are still applicable. OVS operators, although not subject
to franchise fees as defined by the 1992 Cable Act, are subject to fees charged
by local franchising authorities or other governmental entities in lieu of
franchise fees. (Under certain circumstances, cable operators also will be
able to offer service through open video systems.) In addition, the 1996 Act
eliminated the requirement that telephone companies file Section 214
applications (applications to provide video dialtone services) with the FCC
before providing video service. This limits the opportunity of cable operators
to mount challenges at the FCC regarding telephone company entry into the video
market. The 1996 Act also contains restrictions on buying out incumbent cable
operators in a telephone company's service area, especially in suburban and
urban markets.
Other parts of the 1996 Act also will affect cable operators. Under
the 1996 Act, the FCC is required to revise the current pole attachment rate
formula. This revision will result in an increase in the rates paid by
entities, including cable operators, that provide telecommunication services.
The rates will be phased in after a five-year period. (Cable operators that
provide only cable services will be unaffected.) Under the V-chip provisions
of the 1996 Act, cable operators and other video providers are required to pass
along any program rating information that programmers include in video signals.
Cable operators also are subject to new scrambling requirements for sexually
explicit programming, and cable operators that provide Internet access or other
online services are subject to the new indecency limitations for computer
services. In addition, cable operators that provide Internet access or other
online services are subject to the new indecency limitations for computer
services, although these provisions already have been challenged in court, and
the courts have preliminarily enjoined the enforcement of these content-based
provisions.
Under the 1996 Act, a franchising authority may not require a cable
operator to provide telecommunications services or facilities, other than an
institutional network, as a condition to a grant, renewal or transfer of a
cable franchise, and franchising authorities are preempted from regulating
telecommunications
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services provided by cable operators and from requiring cable operators to
obtain a franchise to provide such services. The 1996 Act also repealed the
1992 Cable Act's anti-trafficking provision, which generally required the
holding of cable television systems for three years.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Partnership in particular. The FCC shortly
will be undertaking numerous rulemaking proceedings to interpret and implement
the 1996 Act. It is not possible at this time to predict the outcome of those
proceedings or their effect on the Partnership.
Cable Television Consumer Protection and Competition Act of 1992. The
1992 Cable Act, which became effective on December 4, 1992, caused significant
changes to the regulatory environment in which the cable television industry
operates. The 1992 Cable Act generally mandated a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable television systems in the United
States, including those owned and managed by the General Partner, became
subject to rate regulation of basic cable services. In addition, the 1992
Cable Act allowed 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 General Partner on behalf of the
Partnership reduced rates charged for certain regulated services in the
Partnership's cable systems effective September 1, 1993. These reductions
resulted in some decrease in Partnership revenues and operating income before
depreciation and amortization; however, the decrease was not as severe as
originally anticipated. The General Partner has undertaken actions to mitigate
a portion of these reductions primarily through (a) new service offerings in
some systems, (b) product re-marketing and re-packaging and (c) marketing
efforts directed at non-subscribers.
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 generally required 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. Further rate reductions
for cable systems whose rates are below the revised benchmark levels, as well
as reductions that would require operators to reduce rates below benchmark
levels in order to achieve a 17 percent rate reduction, were held in abeyance
pending completion of cable system cost studies. The FCC recently requested
some of these "low price" systems to complete cost study questionnaires. After
review of these questionnaires, the FCC could decide to permanently defer any
further rate reductions, or require the additional 7 percent rate roll back for
some or all of these systems. The FCC has also adopted its proposed upgrade
methodology by which operators would be permitted to recover the costs of
upgrading their plant.
After analyzing the effects of the two methods of rate regulation, the
Partnership elected to file cost-of-service showings for the Wheaton System.
The Managing General Partner thus anticipates no further reduction in revenues
or operating income before depreciation and amortization resulting from the
FCC's rate regulations. At this time, however, the regulatory authorities have
not approved the cost-of-service showings, and there can be no assurance that
the Partnership's cost-of-service showings will prevent further rate reductions
in the Wheaton System until such final approvals are received.
On November 10, 1994, the FCC also announced a revision to its
regulations governing the manner in which cable operators may charge
subscribers for new cable programming services. In addition to the present
formula for calculating the permissible rate for new services, the FCC
instituted a three-year flat fee mark-up plan for charges relating to new
channels of cable programming services. Commencing on January 1, 1995, cable
system operators may charge for new channels of cable programming services
added after May 14, 1994 at a rate of up to 20 cents per channel, but may not
make adjustments to monthly rates totaling more than $1.20 plus an additional
30 cents for programming license fees per subscriber over the first two years
of the three-year period for these new services. Operators may charge an
additional 20 cents in the third year only for channels added in that year plus
the costs for the programming. Operators electing to use the 20 cent per
channel adjustment may
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not also take a 7.5 percent mark-up on programming cost increases, which is
permitted under the FCC's current rate regulations. The FCC has requested
further comment as to whether cable operators should continue to receive the
7.5 percent mark-up on increases in license fees on existing programming
services.
The FCC also announced that it will permit operators to offer a "new
product tier" ("NPT"). Operators will be able to price the NPT as they elect
so long as, among other conditions, other channels that are subject to rate
regulation are priced in conformity with applicable regulations and operators
do not remove programming services from existing tiers and offer them on the
NPT.
In September 1995, the FCC authorized a new, alternative method of
implementing rate adjustments which will allow cable operators to increase
rates for programming annually on the basis of projected increases in external
costs (inflation, costs for programming, franchise-related obligations and
changes in the number of regulated channels) rather than on the basis of cost
increases incurred in the preceding calendar quarter. Operators that elect not
to recover all of their accrued external costs and inflation pass-throughs each
year may recover them (with interest) in subsequent years.
In December 1995, the FCC adopted final cost-of-service rate
regulations requiring, among other things, cable operators to exclude 34
percent of system acquisition costs related to intangible and tangible assets
used to provide regulated services. The FCC also reaffirmed the industry-wide
11.25 percent after tax rate of return on an operator's allowable rate base,
but initiated a further rulemaking in which it proposes to use an operator's
actual debt cost and capital structure to determine an operator's cost of
capital or rate of return. After a rate has been set pursuant to a
cost-of-service showing, rate increases for regulated services are indexed for
inflation, and operators are permitted to increase rates in response to
increases in costs beyond their control, such as taxes and increased
programming costs.
The United States Court of Appeals for the District of Columbia
Circuit recently upheld the FCC's rate regulations implemented pursuant to the
1992 Cable Act, but ruled that the FCC impermissibly failed to permit cable
operators to adjust rates for certain cost increases incurred during the period
between the date the 1992 Cable Act was passed through the initial date of rate
regulation. The FCC has not yet implemented the court's ruling.
There have been several lawsuits filed by cable operators and
programmers in federal court challenging various aspects of the 1992 Cable Act
including its provisions relating to mandatory broadcast signal carriage,
retransmission consent, access to cable programming, rate regulations,
commercial leased channels and public access channels. On April 8, 1993, a
three-judge federal district court panel issued a decision upholding the
constitutionality of the mandatory signal carriage requirements of the 1992
Cable Act. That decision was appealed directly to the United States Supreme
Court. The United States Supreme Court vacated the lower court decision on
June 27, 1994 and remanded the case to the district court for further
development of a factual record. On December 12, 1995, the three-judge federal
district court again upheld the must-carry rules' validity. This decision has
been appealed to the United States Supreme Court.
In 1993, a federal district court upheld provisions of the 1992 Cable
Act concerning rate regulation, retransmission consent, restrictions on
vertically integrated cable television operators and programmers, mandatory
carriage of programming on commercial leased channels and public, educational
and governmental access channels and the exemption for municipalities from
civil damage liability arising out of local regulation of cable services. The
1992 Cable Act's provisions providing for multiple ownership limits for cable
operators and advance notice of free previews for certain programming services
have been found unconstitutional and these decisions have been appealed. The
FCC's regulations relating to the carriage of indecent programming, which were
recently upheld by the United States Court of Appeals for the District of
Columbia, have been appealed to the United States Supreme Court.
Franchising. The responsibility for franchising or other
authorization of cable television systems is left to state and local
authorities. There are, however, several provisions in the 1984 Cable Act that
govern the terms and conditions under which cable television systems provide
service. These include uniform standards and
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policies that are applicable to cable television operators seeking renewal of a
cable television franchise. The procedures established provide for a formal
renewal process should the franchising authority and the cable television
operator decline to use an informal procedure. A franchising authority unable
to make a preliminary determination to renew a franchise is required to hold a
hearing in which the operator has the right to participate. In the event a
determination is made not to renew the franchise at the conclusion of the
hearing, the franchising authority must provide the operator with a written
decision stating the specific reasons for non-renewal. Generally, the
franchising authority can finally decide not to renew a franchise only if it
finds that the cable operator has not substantially complied with the material
terms of the present franchise, has not provided reasonable service in light of
the community's needs, does not have the financial, legal or technical ability
to provide the services being proposed for the future, or has not presented a
reasonable proposal for future service. A final decision of non-renewal by the
franchising authority is appealable in court.
A provision of the 1996 Act preempts franchising authorities from
regulating telecommunications services provided by cable operators and from
requiring cable operators to obtain a franchise to provide such services. A
franchising authority may not require a cable operator to provide
telecommunications services or facilities, other than an institutional network,
as a condition to a grant, renewal or transfer of a cable franchise.
GENERAL. The Partnership's business consists of providing cable
television services to a large number of customers, the loss of any one of
which would have no material effect on the Partnership's business. The Wheaton
System has had some subscribers who later terminated the service. Terminations
occur primarily because people move to another home or to another city. In
other cases, people terminate on a seasonal basis or because they no longer can
afford or are dissatisfied with the service. The amount of past due accounts
in the Wheaton System is not significant. The Managing General Partner's
policy with regard to past due accounts is basically one of disconnecting
service before a past due account becomes material.
The Partnership does not depend to any material extent on the
availability of raw materials; it carries no significant amounts of inventory
and it has no material backlog of customer orders. The Partnership has no
employees because all properties are managed by employees of Intercable.
Intercable has engaged in research and development activities relating to the
provision of new services but the amount of the Partnership's funds expended
for such research and development has never been material.
Compliance with federal, state and local provisions that have been
enacted or adopted regulating the discharge of materials into the environment
or otherwise relating to the protection of the environment has had no material
effect upon the capital expenditures, earnings or competitive position of the
Partnership.
ITEM 2. PROPERTIES
The Partnership acquired the Wheaton System in October 1989. The
following sets forth (i) the monthly basic plus service rates charged to
subscribers and (ii) the number of basic subscribers and pay units for the
Wheaton System. The monthly basic service rates set forth herein represent,
with respect to systems with multiple headends, the basic service rate charged
to the majority of the subscribers within the Wheaton System. In cable
television systems, basic subscribers can subscribe to more than one pay TV
service. Thus, the total number of pay services subscribed to by basic
subscribers are called pay units. As of December 31, 1995, the Wheaton System
operated cable plant passing approximately 80,000 homes, representing an
approximate 60% penetration rate. Figures for numbers of subscribers, miles of
cable plant and homes passed are compiled from the Managing General Partner's
records and may be subject to adjustments.
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<TABLE>
<CAPTION>
At December 31,
---------------------------------------
WHEATON SYSTEM 1995 1994 1993
-------------- ------ ------ ------
<S> <C> <C> <C>
Monthly basic plus service rate $ 23.61 $ 22.11 $ 22.11
Basic subscribers 52,457 49,415 45,884
Pay units 39,691 40,065 39,984
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS
While the Partnership's interests are publicly held, there is no
established public market for the interests, and it is not expected that such a
market will develop in the future. As of February 15, 1996, the number of
equity security holders in the Partnership was 9,153.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenues $21,248,133 $19,615,180 $19,354,715 $18,276,938 $16,342,326
Depreciation and
Amortization 11,742,487 12,583,108 12,737,314 12,396,480 11,771,912
Operating Loss (6,103,218) (7,334,009) (7,047,610) (7,461,060) (7,912,013)
Net Loss (8,755,438) (9,644,492) (8,926,720) (9,538,943) (10,686,715)
Weighted average
number of Limited
Partner Units
Outstanding 85,740 85,740 85,740 85,740 85,740
General Partners'
Deficit (612,791) (525,237) (428,792) (339,525) (244,136)
Limited Partners'
Capital 13,873,271 22,541,155 32,089,202 40,926,655 50,370,209
Total Assets 50,472,401 58,318,155 69,055,535 78,108,627 87,242,993
Credit Facility
and Other Debt 35,431,966 35,245,699 35,944,662 35,825,369 35,402,830
Managing General
Partner Advances - - - 166,931 38,854
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
1995 Compared to 1994 -
Revenues of the Partnership for the year ended December 31, 1995 totaled
$21,248,133, compared to $19,615,180 in 1994, an increase of $1,632,953, or
approximately 8 percent. Increases in basic subscribers accounted for
approximately 59 percent of the increase in revenues. Basic subscribers
increased by 3,042 subscribers, or approximately 6 percent, to 52,457 at
December 31, 1995 from 49,415 at December 31, 1994. Basic service rate
adjustments accounted for approximately 41 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
maintenance expenses and consumer marketing expenses.
Operating expenses increased $1,108,961, or approximately 9 percent, to
$12,822,206 in 1995 from $11,713,245 in 1994. Operating expenses represented
approximately 60 percent and 59 percent, respectively, of revenues in 1995 and
1994. The increase in operating expenses was primarily the result of increases
in programming fees, which accounted for approximately 41 percent of the
increase, and franchise fees, which accounted for approximately 13 percent of
the increase. No other individual factor significantly affected the increase
in operating expense for the period.
Management and supervisory fees to the Managing and Associate General
Partners and allocated administrative costs from the Managing General Partner
increased $133,822, or approximately 5 percent, to $2,786,658 in 1995 from
$2,652,836 in 1994. These increases were primarily the result of increases in
revenues, upon which such management and supervisory fees are based, as well as
increases in allocated administrative costs from the Managing General Partner.
Depreciation and amortization expense decreased $840,621, or approximately 7
percent, to $11,742,487 in 1995 compared to $12,583,108 in 1994. This decrease
was the result of the maturation of the Partnership's tangible asset base.
Operating loss decreased $1,230,791, or approximately 17 percent, to
$6,103,218 in 1995 from $7,334,009 in 1994. This decrease was a result of the
increase in revenues and decrease in depreciation and amortization expense
10
<PAGE> 11
exceeding the increases in operating expenses and management and supervisory
fees to the general partners and allocated administrative costs from the
Managing General Partner.
The cable television industry generally measures the financial 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 increased $390,170, or
approximately 7 percent, to $5,639,269 in 1995 from $5,249,099 in 1994 as a
result of the increases in revenues exceeding the increases in operating
expenses and management and supervisory fees to the general partners and
allocated administrative costs from the Managing General Partner.
Interest expense increased $611,750, or approximately 28 percent, to
$2,762,535 in 1995 from $2,150,785 in 1994. This increase in interest expense
is primarily due to higher outstanding balances on interest bearing obligations
during 1995.
Net loss decreased $889,054, or approximately 9 percent, to $8,755,438 in
1995 from $9,644,492 in 1994. The decrease was the result of the factors
discussed above.
1994 Compared to 1993 -
Revenues of the Partnership for the year ended December 31, 1994 totaled
$19,615,180, compared to $19,354,715 in 1993, an increase of $260,465, or
approximately 1 percent. Increases in basic subscribers primarily accounted
for the increase in revenues. The Partnership added 3,531 basic subscribers in
1994, an increase of approximately 8 percent. Basic subscribers totaled 49,415
at December 31, 1994 compared to 45,884 at December 31, 1993. Increases in
advertising revenue also contributed to the increase in revenue. The increase
in revenues would have been greater if not for the reduction in basic rates due
to basic rate regulations issued by the FCC in April 1993 and February 1994,
with which the Partnership complied effective September 1993 and July 1994,
respectively.
Operating expenses increased $830,868, or approximately 8 percent, to
$11,713,245 in 1994 from $10,882,377 in 1993. Operating expenses represented
approximately 59 percent and 56 percent, respectively, of revenues in 1994 and
1993. The total increase in operating expenses for the year ended December 31,
1994 as compared to the prior year was the result of increases in programming
fees, system office costs and advertising sales related costs and was partially
offset by a decrease in copyright related costs. No other individual factor
significantly affected the increase in operating expense for the period.
Management and supervisory fees to the Managing and Associate General
Partners and allocated administrative costs from the Managing General Partner
decreased $129,798, or approximately 4 percent, to $2,652,836 in 1994 from
$2,782,634 in 1993. This decrease is primarily the result of a decrease in the
allocated administrative costs, which was the result of a change in the
Managing General Partner's allocation methodology.
Depreciation and amortization expense increased $154,206, or approximately 1
percent, to $12,583,108 in 1994 from $12,737,314 in 1993. The increase was a
result of capital additions during 1994.
Operating income before depreciation and amortization expense decreased
$440,605, or approximately 8 percent, to $5,249,099 in 1994 from $5,689,704 in
1993 as a result of the increases in operating expenses exceeding the increases
in revenues and the decreases in management and supervisory fees to the
Managing and Associate General Partners and allocated administrative costs from
the Managing General Partner.
Interest expense increased $347,558, or approximately 19 percent, to
$2,150,785 in 1994 from $1,803,227 in 1993. This increase in interest expense
is primarily due to higher average interest rates charged on interest bearing
obligations and was partially offset by lower average outstanding balances on
interest bearing obligations during 1994 as compared to 1993.
Net loss increased $717,772, or approximately eight percent, to $9,644,492 in
1994 from $8,926,720 in 1993. These losses are the result of the factors
discussed above, and are expected to continue.
11
<PAGE> 12
FINANCIAL CONDITION
For the year ended December 31, 1995, the Partnership generated net
cash from operating activities totaling approximately $3,678,500, which is
available to fund capital expenditures and non-operating costs. During 1995,
the Partnership expended approximately $3,990,000 for capital expenditures for
the Wheaton System. Approximately 51 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 14
percent was for the purchase of pay security equipment and the remainder of
these expenditures was for various system enhancements. Such expenditures were
primarily financed by cash from operations. Capital expenditures for 1996 are
expected to be approximately $4,339,000 and are expected to be financed by
available cash balances and cash flow from operations. Approximately 39
percent will relate to cable, hardware and labor to extend the cable plant and
to make additional subscriber installations in the Wheaton System.
Approximately 14 percent will be for service drops to homes. 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 $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 December 31, 1995,
$35,200,000 was outstanding under the revolving credit agreement, leaving
$800,000 available for liquidity needs of the Partnership in 1996. 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.
The effective interest rates on amounts outstanding as of December 31, 1995 and
1994 were 7.16 percent and 7.22 percent, respectively.
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 Partnership has filed a cost of service showing in response to rulemakings
concerning the 1992 Cable Act for the Wheaton System and thus anticipates no
further reductions in rates. The cost-of-service showing has not yet received
final approval from regulatory authorities, however, and there can be no
assurance that the Partnership's cost-of- service showing will prevent further
rate reductions until such final approval is received.
The Telecommunications Act of 1996 (the "1996 Act"), which became law
on February 8, 1996, substantially revised the Communications Act of 1934, as
amended, including the 1984 Cable Act and the 1992 Cable Act, and has been
described as one of the most significant changes in communications regulation
since the original Communications Act of 1934. The 1996 Act is intended, in
part, to promote substantial competition in the telephone local exchange and in
the delivery of video and other services. As a result of the 1996 Act, local
telephone companies (also known as local exchange carriers or "LECs") and other
service providers are permitted to provide video programming, and cable
television operators are permitted entry into the telephone local exchange
market. The FCC is required to conduct rulemaking proceedings over the next
several months to implement various provisions of the 1996 Act.
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
including the Partnership effective March 31, 1999 and the cable programming
service tier of "small" cable operators in systems providing service to 50,000
or fewer subscribers effective immediately. The 1996 Act also revised the
procedures for filing cable programming service tier rate complaints and adds a
new effective competition test.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Partnership in particular. The FCC will be
undertaking numerous rulemaking proceedings to interpret and implement the 1996
Act. It is not possible at this time to predict the outcome of those
proceedings or their effect on the Partnership. See Item 1.
12
<PAGE> 13
JONES GROWTH PARTNERS L.P.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND 1994
INDEX
Page
--------
Report of Independent Public Accountants 14
Balance Sheets 15
Statements of Operations 17
Statements of Partners' Capital (Deficit) 18
Statements of Cash Flows 19
Notes to Financial Statements 20
13
<PAGE> 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Jones Growth Partners L.P.:
We have audited the accompanying balance sheets of Jones Growth Partners L.P.
(a Colorado limited partnership) as of December 31, 1995 and 1994, and the
related statements of operations, partners' capital (deficit) and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Managing General Partner's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Jones Growth Partners L.P. as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 8, 1996.
14
<PAGE> 15
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
-------------------------------------------
1995 1994
--------------- --------------
<S> <C> <C>
CASH $ 45,490 $ 170,648
TRADE RECEIVABLES, less allowance for doubtful
receivables of $19,111 and $21,597 at
December 31, 1995 and 1994, respectively 286,891 66,829
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 47,200,274 43,210,371
Less- accumulated depreciation (23,414,677) (20,003,575)
------------- -------------
23,785,597 23,206,796
Franchise costs, net of accumulated amortization of
$41,874,753 and $35,174,652 at December 31, 1995
and 1994, respectively 17,982,195 24,682,296
Subscriber lists, net of accumulated amortization
of $8,396,681 and $7,053,212 at December 31, 1995
and 1994, respectively 1,007,601 2,351,070
Costs in excess of interests in net assets purchased, net of
accumulated amortization of $1,242,040 and $1,043,313
at December 31, 1995 and 1994, respectively 6,699,015 6,897,742
------------- -------------
Total investment in cable
television properties 49,474,408 57,137,904
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 665,612 942,774
------------- -------------
Total assets $ 50,472,401 $ 58,318,155
============= =============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
15
<PAGE> 16
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
LIABILITIES:
Credit facility and other debt $ 35,431,966 $ 35,245,699
Trade accounts payable and accrued liabilities 1,322,658 989,457
Accrued interest 407,032 16,780
Subscriber prepayments 50,265 50,301
----------- -----------
Total liabilities 37,211,921 36,302,237
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (613,791) (526,237)
----------- -----------
(612,791) (525,237)
----------- -----------
Limited Partners-
Net contributed capital (85,740 units
outstanding at December 31, 1995 and 1994) 73,790,065 73,790,065
Accumulated deficit (59,916,794) (51,248,910)
----------- -----------
13,873,271 22,541,155
----------- -----------
Total partners' capital (deficit) 13,260,480 22,015,918
----------- -----------
Total liabilities and partners' capital (deficit) $ 50,472,401 $ 58,318,155
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
16
<PAGE> 17
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
--------------------------------------------------------
1995 1994 1993
--------------- -------------- --------------
<S> <C> <C> <C>
REVENUES $ 21,248,133 $ 19,615,180 $ 19,354,715
COSTS AND EXPENSES:
Operating expenses 12,822,206 11,713,245 10,882,377
Management and supervisory fees to the
General Partners and allocated administrative
costs from the Managing General Partner 2,786,658 2,652,836 2,782,634
Depreciation and amortization 11,742,487 12,583,108 12,737,314
------------ ----------- -----------
OPERATING LOSS (6,103,218) (7,334,009) (7,047,610)
------------ ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (2,762,535) (2,150,785) (1,803,227)
Interest income 18,010 31,884 27,385
Other, net 92,305 (191,582) (103,268)
------------ ----------- -----------
NET LOSS $ (8,755,438) $ (9,644,492) $ (8,926,720)
============ =========== ===========
ALLOCATION OF NET LOSS:
Managing General Partner $ (87,554) $ (96,445) $ (89,267)
============ =========== ===========
Limited Partners $ (8,667,884) $ (9,548,047) $ (8,837,453)
============ =========== ===========
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (101.09) $ (111.36) $ (103.07)
============ =========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNER UNITS OUTSTANDING 85,740 85,740 85,740
============ =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
17
<PAGE> 18
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
For the Year Ended
December 31,
--------------------------------------------------------
1995 1994 1993
-------------- -------------- -------------
<S> <C> <C> <C>
GENERAL PARTNERS:
Balance, beginning of year $ (525,237) $ (428,792) $ (339,525)
Net loss for the year (87,554) (96,445) (89,267)
----------- ----------- -----------
Balance, end of year $ (612,791) $ (525,237) $ (428,792)
=========== =========== ===========
LIMITED PARTNERS:
Balance, beginning of year $ 22,541,155 $ 32,089,202 $ 40,926,655
Net loss for the year (8,667,884) (9,548,047) (8,837,453)
----------- ----------- -----------
Balance, end of year $ 13,873,271 $ 22,541,155 $ 32,089,202
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
18
<PAGE> 19
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
------------------------------------------------------
1995 1994 1993
--------------- --------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (8,755,438) $ (9,644,492) $ (8,926,720)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 11,742,487 12,583,108 12,737,314
Amortization of interest rate protection contract 64,664 64,668 64,668
Decrease (increase) in trade receivables (220,062) 164,524 (38,882)
Decrease (increase) in deposits, prepaid expenses
and other assets 123,410 (76,583) (34,891)
Increase (decrease) in accrued liabilities, accrued
interest and subscriber prepayments 723,417 (393,925) (78,734)
Decrease in accounts payable to Jones Intercable, Inc. - - (166,931)
------------ ------------ ------------
Net cash provided by operating activities 3,678,478 2,697,300 3,555,824
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (3,989,903) (3,474,539) (2,530,983)
------------ ------------ ------------
Net cash used in investing activities (3,989,903) (3,474,539) (2,530,983)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 598,379 36,155,437 1,142,586
Repayments of borrowings (412,112) (36,854,400) (1,023,293)
------------ ------------ ------------
Net cash provided by (used in) financing
activities 186,267 (698,963) 119,293
------------ ------------ ------------
INCREASE (DECREASE) IN CASH (125,158) (1,476,202) 1,144,134
CASH, BEGINNING OF YEAR 170,648 1,646,850 502,716
------------ ------------ ------------
CASH, END OF YEAR $ 45,490 $ 170,648 $ 1,646,850
============ ============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 2,307,619 $ 2,266,213 $ 1,755,670
============ ============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
19
<PAGE> 20
JONES GROWTH PARTNERS L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS:
Formation and Business
Jones Growth (the "Partnership"), a Colorado limited partnership, was
formed on June 14, 1989, pursuant to a public offering of limited partnership
interests sponsored by Jones Spacelink Cable Corporation. The Partnership was
formed to acquire, construct, develop and operate cable television systems.
Jones Spacelink Cable Corporation is the "Managing General Partner" and, until
December 20, 1994, was a wholly owned subsidiary of Jones Spacelink, Ltd.
("Spacelink"). On December 20, 1994, Jones Intercable, Inc. ("Intercable"), a
Colorado corporation that was a subsidiary of Spacelink, acquired substantially
all of the assets of Spacelink, including all of the shares of Jones Spacelink
Cable Corporation, which as a result on that date became 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. Growth Partners
Inc. is the "Associate General Partner" and is an affiliate of Lehman Brothers
Inc.
Contributed Capital
The capitalization of the Partnership is set forth in the accompanying
Statements of Partners' Capital (Deficit). No limited partner is obligated to
make any additional contributions to partnership capital.
The Managing General Partner and the Associate General Partner purchased their
general partner interests in the Partnership by contributing $500 each to
partnership capital. Also, in March 1990, the Managing General Partner
purchased approximately one percent of the limited partner interests sold.
Cable Television System Owned by the Partnership
On October 4, 1989, the Partnership purchased the cable television systems
serving the municipalities of Addison, Glen Ellyn, St. Charles, Warrenville,
West Chicago, Wheaton, Winfield and Geneva, and certain portions of
unincorporated areas of DuPage and Kane counties, all in the State of Illinois
(the "Wheaton System").
All profits and losses of the Partnership are allocated 99 percent to the
limited partners and 1 percent to the General Partners, except for income or
gain from the sale or disposition of cable television properties, which will be
allocated to the partners based upon the formula set forth in the Partnership's
agreement and interest income earned prior to the first acquisition by the
Partnership of a cable television system, which was allocated 100 percent to
the limited partners.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Accounting Records
The accompanying financial statements have been prepared on the accrual basis
of accounting in accordance with generally accepted accounting principles. The
Partnership's tax returns are also prepared on the accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Managing General Partner's
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
Property, Plant and Equipment
Depreciation of property, plant and equipment is provided primarily using the
straight-line method over the following estimated service lives:
Cable distribution systems 5-15 years
Equipment and tools 5 years
Office furniture and equipment 5 years
Buildings 10-20 years
Vehicles 3 years
20
<PAGE> 21
Replacements, renewals and improvements are capitalized and maintenance and
repairs are charged to expense as incurred.
Allocation of Cost of Purchased Cable Television Systems
Based on an independent appraisal, the Partnership allocated the total
purchase price of the Wheaton System acquired as follows: first, to the fair
value of net tangible assets acquired; second, to franchise costs in an amount
equal to the estimated value of franchise agreements; third, to subscriber
lists; and fourth, to costs in excess of interests in net assets purchased.
Other acquisition costs were capitalized and charged to investment in cable
television properties in the accompanying balance sheets.
Intangible Assets
Costs assigned to intangible assets are being amortized using the
straight-line method over the following estimated useful lives:
Franchise costs 11 years
Subscriber lists 2 years
Costs in excess of interests in net assets purchased 35 years
Revenue Recognition
Subscriber prepayments are initially deferred and recognized as
revenue when earned.
(3) TRANSACTIONS WITH THE ASSOCIATE GENERAL PARTNER, MANAGING GENERAL
PARTNER AND CERTAIN OF ITS AFFILIATES:
Management Fees, Distribution Ratios and Reimbursements
The Managing 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 Managing General Partner by the
Partnership for the years ended December 31, 1995, 1994 and 1993 were
$1,062,407, $980,759 and $967,736, respectively. The Associate General Partner
is entitled to participate 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, payable annually. Supervisory fees accrued to the Associate General
Partner by the Partnership for the year ended December 31, 1995 were $200,000.
Such fees were paid in March 1996. Supervisory fees paid to the Associate
General Partner by the Partnership for the years ended December 31, 1994 and
1993 were $196,152 and $193,547, respectively.
Any Partnership distributions made from cash flow (defined as cash
receipts derived from operations, less debt principal and interest payments and
cash expenses) are allocated 99 percent to the limited partners and one percent
to the Managing General Partner. Distributions from cash flow have not been
made and are not anticipated. Proceeds from the sale or refinancing of a cable
television system would be distributed generally as follows: first, to the
partners until they have received an amount equal to their initial capital
contributions (as reduced by all prior distributions other than distributions
from cash flow); second, to the limited partners until they have received a
liquidation preference equal to 8 percent per annum, cumulative and
noncompounded, on an amount equal to their initial capital contributions, less
any portion of such capital contributions which has been returned to the
limited partners from prior sale or refinancing proceeds, as determined for any
particular year; provided that such cumulative return will be reduced by all
prior distributions of cash flow from operations and prior distributions of
proceeds of sales or refinancings of the cable television systems. The balance
will be allocated 75 percent to the limited partners, 15 percent to the
Managing General Partner and 10 percent to the Associate General Partner. No
such distributions have yet been made.
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
21
<PAGE> 22
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 the
years ended December 31, 1995, 1994 and 1993 were $1,524,251, $1,475,925 and
$1,465,872, respectively.
Payments to/from Affiliates for Programming Services
The Partnership receives programming from Product Information Network,
Superaudio, Mind Extension University and Jones Computer Network, all of which
are affiliates of the Managing General Partner.
Payments to Superaudio by the Partnership for the years ended December
31, 1995, 1994 and 1993 totaled $28,639, $28,415 and $27,910, respectively.
Payments to Mind Extension University for the years ended December 31, 1995,
1994 and 1993 totaled $30,636, $25,748 and $16,242, respectively. Payments to
Jones Computer Network for the years ended December 31, 1995 and 1994 totaled
$52,346 and $10,683, respectively.
The Partnership receives a commission from Product Information Network
based on a percentage of advertising revenue and number of subscribers.
Product Information Network paid commissions to the Partnership for the years
ended December 31, 1995 and 1994 totaled $59,858 and $32,863, respectively.
(4) PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment as of December 31, 1995 and 1994,
consisted of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1995 1994
------------- -------------
<S> <C> <C>
Cable distribution systems $ 41,392,026 $ 37,566,836
Equipment and tools 2,601,296 2,497,923
Office furniture and equipment 2,444,845 2,444,845
Buildings 19,823 19,823
Vehicles 637,284 575,944
Land 105,000 105,000
------------- -------------
$ 47,200,274 $ 43,210,371
Less: accumulated depreciation $ (23,414,677) $ (20,003,575)
------------- -------------
$ 23,785,597 $ 23,206,796
============= =============
</TABLE>
(5) DEBT:
In December 1994, the Partnership entered into a $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 December 31, 1995,
$35,200,000 was outstanding under the revolving credit agreement, leaving
$800,000 available for liquidity 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. The
effective interest rates on amounts outstanding as of December 31, 1995 and
1994 were 7.16 percent and 7.22 percent, respectively.
22
<PAGE> 23
Total Partnership debt consists of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------------
1995 1994
------------- ------------
<S> <C> <C>
Lending institutions-
Revolving credit and term loan facility $35,200,000 $35,000,000
Capital lease obligations 231,966 245,699
----------- -----------
$35,431,966 $35,245,699
=========== ===========
</TABLE>
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
protected the Partnership from LIBOR interest rates that exceeded 7 percent for
three years from the date of the agreement. This agreement expired January 12,
1996.
Installments due on all debt principal for the five years in the
period ending December 31, 2000 and thereafter, respectively, are: $69,590,
$3,589,590, $4,293,590, $5,303,196, $7,040,000 and $15,136,000.
At December 31, 1995, the carrying amount of the Partnership's
long-term debt did not differ significantly from the estimated fair value of
the financial instruments. The fair value of the Partnership's long-term debt
is estimated based on the discounted amount of future debt service payments
using rates of borrowing for a liability of similar risk.
(6) INCOME TAXES:
Income taxes have not been recorded in the accompanying financial
statements because they accrue directly to the partners. The federal and
state income tax returns of the Partnership are prepared and filed by the
Managing General Partner.
The Partnership's tax returns, the qualification of the Partnership
as such for tax purposes, and the amount of distributable income or loss are
subject to examination by federal and state taxing authorities. If such
examinations result in changes with respect to the Partnership's qualification
as such, or in changes with respect to the Partnership's recorded income or
loss, the tax liability of the general partners and limited partners would
likely be changed accordingly.
Taxable loss to the Partners is different from that reported in the
statements of operations due to the difference in depreciation recognized under
generally accepted accounting principles and the expense allowed for tax
purposes under the Modified Accelerated Cost Recovery System (MACRS). There
are no other significant differences between taxable loss and the net loss
reported in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES:
The Partnership rents office and other facilities under various
long-term lease arrangements. Rent paid under such lease arrangements totaled
$222,005, $319,495 and $310,788, forthe years ended December 31, 1995, 1994
and 1993, respectively. Future minimum lease payments, as of December 31,
1995, under noncancelable operating leases for the five years in the period
ending December 31, 2000, and thereafter are as follows:
1996 $231,882
1997 237,299
1998 200,133
1999 98,175
2000 -
Thereafter -
--------
Total future minimum lease payments $767,489
========
23
<PAGE> 24
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION:
Supplementary profit and loss information for the respective periods is
presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------
1995 1994 1993
------------ ------------- --------------
<S> <C> <C> <C>
Maintenance and repairs $ 251,620 $ 269,565 $ 357,386
=========== ============= ==============
Taxes, other than income and
payroll taxes $ 82,174 $ 76,239 $ 73,114
=========== ============= ==============
Advertising $ 470,562 $ 515,701 $ 449,517
=========== ============= ==============
Depreciation of property,
plant and equipment $ 3,468,654 $ 4,340,811 $ 4,495,018
=========== ============= ==============
Amortization of intangible assets $ 8,273,833 $ 8,242,297 $ 8,242,296
=========== ============= ==============
</TABLE>
24
<PAGE> 25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership itself has no officers or directors. Certain
information concerning the directors and executive officers of the Managing
General Partner is set forth below.
<TABLE>
<CAPTION>
Name Age Positions with the Managing General Partner
---- --- -------------------------------------------
<S> <C> <C>
Glenn R. Jones 66 Chairman of the Board and Chief Executive Officer
James B. O'Brien 46 President
Ruth E. Warren 46 Vice President/Operations
Elizabeth M. Steele 44 Vice President and Secretary
Kevin P. Coyle 44 Vice President/Finance
Larry W. Kaschinske 36 Controller
Timothy J. Burke 45 Director
</TABLE>
Mr. Glenn R. Jones has served as Chief Executive Officer of the
Managing General Partner since its inception in November 1988. Mr. Jones has
served as Chairman of the Board of Directors and Chief Executive Officer of
Intercable since its formation in 1970, and he was President from June 1984
until April 1988. Mr. Jones is the sole shareholder, President and Chairman of
the Board of Directors of Jones International, Ltd. He is also Chairman of the
Board of Directors of the subsidiaries of Intercable and of certain other
affiliates of Intercable. Mr. Jones has been involved in the cable television
business in various capacities since 1961, is a past and present member of the
Board of Directors and the Executive Committee of the National Cable Television
Association. He also is on the Executive Committee of Cable in the Classroom,
an organization dedicated to education via cable. Additionally, in March 1991,
Mr. Jones was appointed to the Board of Governors for the American Society for
Training and Development, and in November 1992 to the Board of Education
Council of the National Alliance of Business. Mr. Jones is also a founding
member of the James Madison Council of the Library of Congress. Mr. Jones is a
past director and member of the Executive Committee of C-Span. Mr. Jones has
been the recipient of several awards including the Grand Tam Award in 1989, the
highest award from the Cable Television Administration and Marketing Society;
the Chairman's Award from the Investment Partnership Association, which is an
association of sponsors of public syndications; the cable television industry's
Public Affairs Association President's Award in 1990, the Donald G. McGannon
award for the advancement of minorities and women in cable; the STAR Award from
American Women in Radio and Television, Inc. for exhibition of a commitment to
the issues and concerns of women in television and radio; the Women in Cable
Accolade in 1990 in recognition of support of this organization; the Most
Outstanding Corporate Individual Achievement award from the International
Distance Learning Conference; the Golden Plate Award from the American Academy
of Achievement for his advances in distance education; the Man of the Year
named by the Denver chapter of the Achievement Rewards for College Scientists;
and in 1994 Mr. Jones was inducted into Broadcasting and Cable's Hall of Fame.
Mr. James B. O'Brien was appointed President of the Managing General
Partner in January 1995. Mr. O'Brien joined Intercable in January 1982. Prior
to being elected President and a Director of Intercable in December 1989, Mr.
O'Brien served as a Division Manager, Director of Operations Planning/Assistant
to the CEO, Fund Vice President and Group Vice President/Operations. Mr.
O'Brien was appointed to Intercable's Executive Committee in August 1993. As
President, he is responsible for the day-to-day operations of the cable
25
<PAGE> 26
television systems managed and owned by Intercable. Mr. O'Brien is a board
member of Cable Labs, Inc., the research arm of the U.S. cable television
industry. He also serves as a director of the Cable Television Administration
and Marketing Association and as a director of the Walter Kaitz Foundation, a
foundation that places people of any ethnic minority group in positions with
cable television systems, networks and vendor companies.
Ms. Ruth E. Warren, the Managing General Partner's Vice
President/Operations, joined Intercable in August 1980 and has served in
various operational capacities, including system manager and Fund Vice
President, since then. Ms. Warren was elected Group Vice President/Operations
of Intercable in September 1990.
Ms. Elizabeth M. Steele, the Managing General Partner's Vice President
and Secretary, joined Intercable in August 1987 as Vice President/General
Counsel and Secretary. From August 1980 until joining Intercable, Ms. Steele
was an associate and then a partner at the Denver law firm of Davis, Graham &
Stubbs, which serves as counsel to Intercable.
Mr. Kevin P. Coyle was appointed Vice President/Finance of the
Managing General Partner in March 1995. Mr. Coyle joined The Jones Group,
Ltd. in July 1981 as Vice President/Financial Services. In September 1985, he
was appointed Senior Vice President/Financial Services. He was elected
Treasurer of Intercable in August 1987, Vice President/Treasurer in April 1988
and Group Vice President/Finance and Chief Financial Officer in October 1990.
Mr. Larry Kaschinske was appointed Controller of the Managing General
Partner in March 1995. Mr. Kaschinske joined Intercable in 1984 as a staff
accountant in Intercable's former Wisconsin Division; was promoted to Assistant
Controller in 1990 and named Controller in August 1994.
Mr. Timothy J. Burke joined Intercable in August 1982 as corporate tax
manager, was elected Vice President/Taxation in November 1986 and Group Vice
President/Taxation/Administration in October 1990.
Certain information concerning the directors and executive officers of
the Associate General Partner is set forth below.
<TABLE>
<CAPTION>
Name Age Positions with the Associate General Partner
---- --- --------------------------------------------
<S> <C> <C>
Rocco F. Andriola 37 President and Chief Executive Officer
John H. Ng 45 Vice President
Mark J. Marcucci 33 Vice President
</TABLE>
Mr. Rocco F. Andriola serves as Senior Vice President of Lehman
Brothers Inc. in its Diversified Asset Group and has held such position since
June 1991. From June 1989 though May 1991, Mr. Andriola held the position of
First Vice President in Lehman's Capital Preservation and Restructuring Group.
From November 1986 through May 1989, Mr. Andriola held the position of Vice
President in the Corporate Transactions Group within the General Counsel's
Office of Lehman. From September 1982 through October 1986, Mr. Andriola was
employed by the law firm of Donovan Leisure Newton & Irvine as a corporate and
securities attorney.
Mr. John H. Ng is a Vice President of Lehman Brothers Inc. and has
been employed by Lehman since November 1977. He is an asset manager in the
Diversified Asset Group and has held such position since 1985. From 1980 to
1985, Mr. Ng served as Senior Financial Analyst in the Corporate Planning and
Development Department, and from 1977 to 1980 he was an analyst in the
Controller's Department.
Mr. Marcucci is a Vice President of Lehman Brothers in its Diversified
Asset Group. Since joining Lehman Brothers in 1988, Mr. Marcucci's
responsibilities have been concentrated in the restructuring, asset management,
leasing, financing, refinancing and disposition of commercial office and
residential real estate. Prior to joining Lehman Brothers, Mr. Marcucci was
employed in a corporate lending capacity at Republic National Bank of New York.
26
<PAGE> 27
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no employees; however, various personnel are
required to operate the Wheaton System. Such personnel are employed by the
Managing General Partner and, pursuant to the terms of the limited partnership
agreement of the Partnership, the cost of such employment is charged by the
Managing General Partner to the Partnership as a direct reimbursement item.
See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
No person or entity owns more than 5 percent of the limited
partnership interests of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Managing General Partner and its affiliates engage in certain
transactions with the Partnership as contemplated by the limited partnership
agreement of the Partnership. The Managing General Partner believes that the
terms of such transactions are generally as favorable as could be obtained by
the Partnership from unaffiliated parties. This determination has been made by
the Managing General Partner in good faith, but none of the terms were or will
be negotiated at arm's-length and there can be no assurance that the terms of
such transactions have been or will be as favorable as those that could have
been obtained by the Partnership from unaffiliated parties.
The Managing General Partner charges the Partnership a management fee,
and the Associate General Partner charges the Partnership a supervision fee in
accordance with the limited partnership agreement of the Partnership.
The Partnership also reimburses Intercable, the parent of the Managing
General Partner, for certain allocated overhead and administrative expenses.
These expenses represent the salaries and benefits paid to corporate personnel,
rent, data processing services and other 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 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 or its affiliates. Systems owned by Intercable
and all other systems owned by partnerships for which Intercable serves as
general partner, are also allocated a proportionate share of these expenses.
The Managing General Partner also advances funds and charges interest
on the balance payable from the Partnership. The interest rate charged the
Partnership approximates Intercable's weighted average cost of borrowing.
The Wheaton System receives stereo audio programming from Superaudio,
a joint venture owned 50% by an affiliate of the Managing General Partner and
50% by an unaffiliated party, educational video programming from Mind Extension
University, Inc., an affiliate of the Managing General Partner, and computer
video programming from Jones Computer Network, Ltd., an affiliate of the
Managing General Partner, for fees based upon the number of subscribers
receiving the programming.
Product Information Network ("PIN"), an affiliate of the Managing
General Partner, provides advertising time for third parties on the Wheaton
System. In consideration, the revenues generated from the third parties are
shared two-thirds and one-third between PIN and the Partnership. During the
year ended December 31, 1995, the Partnership received revenues from PIN of
$59,858.
27
<PAGE> 28
The charges to the Partnership for related party transactions are as
follows for the periods indicated:
<TABLE>
<CAPTION>
At December 31,
----------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Management fee, Managing General Partner $1,062,407 $980,759 $967,736
Supervisory fee, Associate General Partner 200,000 196,152 193,547
Allocation of expenses 1,511,770 1,475,925 1,465,782
Amount of advances outstanding -0- -0- -0-
Highest amount of advances outstanding -0- -0- 419,620
Programming fees:
Superaudio 28,639 28,415 27,910
Mind Extension University 30,636 25,748 16,242
Jones Computer Network 52,346 10,683 -0-
</TABLE>
28
<PAGE> 29
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)1. See index to financial statements for the list of
financial statements and exhibits thereto filed as
part of this report.
3. The following exhibits are filed herewith.
4.1 Limited Partnership Agreement. (1)
10.1.1 Copy of a franchise and related documents thereto
granting a community antenna franchise for the
Village of Addison, Illinois. (1)
10.1.2 Ordinance No. 0-90-88 dated April 16, 1990 amending
the franchise. (3)
10.1.3 Copy of a franchise and related documents thereto
granting a community antenna franchise for DuPage
County, Illinois. (1)
10.1.4 Copy of a franchise and related documents thereto
granting a community antenna franchise for Kane
County (Geneva), Illinois. (3)
10.1.5 Copy of a franchise and related documents thereto
granting a community antenna franchise for Glen
Ellyn, Illinois. (1)
10.1.6 Copy of a franchise and related documents thereto
granting a community antenna franchise for St.
Charles, Illinois. (1)
10.1.7 Copy of a franchise and related documents thereto
granting a community antenna franchise for
Warrenville, Illinois. (1)
10.1.8 Copy of a franchise and related documents thereto
granting a community antenna franchise for Wheaton,
Illinois. (1)
10.1.9 Amendment dated September 5, 1990 to the franchise
agreement. (3)
10.1.10 Amendment dated August 12, 1991 to the franchise
agreement. (3)
10.1.11 Copy of a franchise and related documents thereto
granting a community antenna franchise for West
Chicago, Illinois. (1)
10.1.12 Resolution 1070 dated February 1, 1993 relating to
a rate increase. (3)
10.1.13 Copy of a franchise and related documents thereto
granting a community antenna franchise for Winfield,
Illinois. (1)
10.2.1 Credit Agreement dated December 30, 1994 among Jones
Growth Partners L.P. and Nationsbank of Texas, N.A.,
as agent for various lenders. (4)
27 Financial Data Schedule
___________
(1) Incorporated by reference from the Registrant's
Annual Report on Form 10-K for fiscal year ended
December 31, 1989.
29
<PAGE> 30
(2) Incorporated by reference from the Registrant's
Annual Report on Form 10-K for fiscal year ended
December 31, 1991.
(3) Incorporated by reference from the Registrant's
Annual Report on Form 10-K for fiscal year ended
December 31, 1992.
(4) Incorporated by reference from the Registrant's
Annual Report on Form 10-K for fiscal year ended
December 31, 1994.
(b) Reports on Form 8-K
None.
30
<PAGE> 31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 L.P.
a Colorado limited partnership
By: Jones Spacelink Cable Corporation
By: /s/ GLENN R. JONES
-----------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Dated: March 25, 1996 Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ GLENN R. JONES
-----------------------------------
Glenn R. Jones
Chairman of the Board and Chief
Executive Officer
Dated: March 25, 1996 (Principal Executive Officer)
By: /s/ KEVIN P. COYLE
-----------------------------------
Kevin P. Coyle
Vice President/Finance
Dated: March 25, 1996 (Principal Financial Officer)
By: /s/ LARRY KASCHINSKE
-----------------------------------
Larry Kaschinske
Controller
Dated: March 25, 1996 (Principal Accounting Officer)
By: /s/ TIMOTHY J. BURKE
-----------------------------------
Timothy J. Burke
Dated: March 25, 1996 Director
31
<PAGE> 32
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description Page
- ------- ------------------- ----
<S> <C> <C>
4.1 Limited Partnership Agreement. (1)
10.1.1 Copy of a franchise and related documents thereto
granting a community antenna franchise for the
Village of Addison, Illinois. (1)
10.1.2 Ordinance No. 0-90-88 dated April 16, 1990 amending
the franchise. (3)
10.1.3 Copy of a franchise and related documents thereto
granting a community antenna franchise for DuPage
County, Illinois. (1)
10.1.4 Copy of a franchise and related documents thereto
granting a community antenna franchise for Kane
County (Geneva), Illinois. (3)
10.1.5 Copy of a franchise and related documents thereto
granting a community antenna franchise for Glen
Ellyn, Illinois. (1)
10.1.6 Copy of a franchise and related documents thereto
granting a community antenna franchise for St.
Charles, Illinois. (1)
10.1.7 Copy of a franchise and related documents thereto
granting a community antenna franchise for
Warrenville, Illinois. (1)
10.1.8 Copy of a franchise and related documents thereto
granting a community antenna franchise for Wheaton,
Illinois. (1)
10.1.9 Amendment dated September 5, 1990 to the franchise
agreement. (3)
10.1.10 Amendment dated August 12, 1991 to the franchise
agreement. (3)
10.1.11 Copy of a franchise and related documents thereto
granting a community antenna franchise for West
Chicago, Illinois. (1)
10.1.12 Resolution 1070 dated February 1, 1993 relating to
a rate increase. (3)
10.1.13 Copy of a franchise and related documents thereto
granting a community antenna franchise for Winfield,
Illinois. (1)
10.2.1 Credit Agreement dated December 30, 1994 among Jones
Growth Partners L.P. and Nationsbank of Texas, N.A.,
as agent for various lenders. (4)
27 Financial Data Schedule
- --------------
(1) Incorporated by reference from the Registrant's
Annual Report on Form 10-K for fiscal year ended
December 31, 1989.
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description Page
- ------- ------------------- ----
<S> <C> <C>
(2) Incorporated by reference from the Registrant's
Annual Report on Form 10-K for fiscal year ended
December 31, 1991.
(3) Incorporated by reference from the Registrant's
Annual Report on Form 10-K for fiscal year ended
December 31, 1992.
(4) Incorporated by reference from the Registrant's
Annual Report on Form 10-K for fiscal year ended
December 31, 1994.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 45,490
<SECURITIES> 0
<RECEIVABLES> 286,891
<ALLOWANCES> (19,111)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 47,200,274
<DEPRECIATION> (23,414,677)
<TOTAL-ASSETS> 50,472,401
<CURRENT-LIABILITIES> 1,779,955
<BONDS> 35,431,966
<COMMON> 0
0
0
<OTHER-SE> 13,260,480
<TOTAL-LIABILITY-AND-EQUITY> 50,472,401
<SALES> 0
<TOTAL-REVENUES> 21,248,133
<CGS> 0
<TOTAL-COSTS> 27,351,351
<OTHER-EXPENSES> 110,315
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,762,535
<INCOME-PRETAX> (8,755,438)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,755,438)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,755,438)
<EPS-PRIMARY> (101.10)
<EPS-DILUTED> (101.10)
</TABLE>
