<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1996
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[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____ to _____
Commission File Number 0-17916
JONES GROWTH PARTNERS L.P.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1143409
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State of Organization IRS employer I.D. #
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
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Address of principal executive office
(303) 792-3111
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Registrant's telephone number
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
- ------------------------------------------------------------ ------------- -------------
<S> <C> <C>
CASH $ 27,363 $ 45,490
TRADE RECEIVABLES, less allowance for
doubtful receivables of $24,867 and $19,111 at March 31,
1996 and December 31, 1995, respectively 210,386 286,891
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 48,140,752 47,200,274
Less- accumulated depreciation (24,303,767) (23,414,677)
------------ ------------
23,836,985 23,785,597
Franchise costs and other intangible assets, net of
accumulated amortization of $53,574,048 at
March 31, 1996 and $51,513,474 at
December 31, 1995, respectively 23,628,237 25,688,811
------------ ------------
Total investment in cable
television properties 47,465,222 49,474,408
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 651,322 665,612
------------ ------------
Total assets $ 48,354,293 $ 50,472,401
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
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JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------- -------------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
- -------------------------------------------
LIABILITIES:
Credit facility and other debt $ 35,439,537 $ 35,431,966
Trade accounts payable and accrued liabilities 1,487,019 1,322,658
Accrued interest 291,599 407,032
Subscriber prepayments 59,760 50,265
------------ ------------
Total liabilities 37,277,915 37,211,921
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (635,632) (613,791)
------------ ------------
(634,632) (612,791)
------------ ------------
Limited Partners-
Net contributed capital (85,740 units outstanding at
March 31, 1996 and December 31, 1995) 73,790,065 73,790,065
Accumulated deficit (62,079,055) (59,916,794)
------------ ------------
11,711,010 13,873,271
------------ ------------
Total partners' capital (deficit) 11,076,378 13,260,480
------------ ------------
Total liabilities and partners' capital (deficit) $ 48,354,293 $ 50,472,401
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
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JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended
March 31,
---------------------------
1996 1995
----------- -----------
REVENUES $ 5,510,674 $ 5,045,181
COSTS AND EXPENSES:
Operating expenses 3,423,552 3,093,999
Management and supervisory fees to
the General
Partners and allocated administrative
costs from the Managing General Partner 650,259 688,320
Depreciation and amortization 2,968,061 2,938,268
----------- -----------
OPERATING LOSS (1,531,198) (1,675,406)
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OTHER INCOME (EXPENSE):
Interest expense (635,055) (708,830)
Other, net (17,849) 2,144
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NET LOSS $(2,184,102) $(2,382,092)
=========== ===========
ALLOCATION OF NET LOSS:
Managing General Partner $ (21,841) $ (23,821)
=========== ===========
Limited Partners $(2,162,261) $(2,358,271)
=========== ===========
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (25.22) $ (27.50)
=========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 85,740 85,740
=========== ===========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
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JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(2,184,102) $(2,382,092)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 2,968,061 2,938,268
Amortization of interest rate protection contract - 16,167
Decrease in trade receivables 76,505 37,015
Increase in deposits, prepaid expenses
and other assets (4,107) (6,692)
Increase in accrued liabilities, accrued interest
and subscriber prepayments 58,423 655,378
----------- -----------
Net cash provided by operating activities 914,780 1,258,044
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (940,478) (1,105,795)
----------- -----------
Net cash used in investing activities (940,478) (1,105,795)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 40,552 -
Repayment of borrowings (32,981) (23,911)
----------- -----------
Net cash provided by (used in) financing activities 7,571 (23,911)
----------- -----------
INCREASE (DECREASE) IN CASH (18,127) 128,338
CASH, BEGINNING OF PERIOD 45,490 170,648
----------- -----------
CASH, END OF PERIOD $ 27,363 $ 298,986
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 750,488 $ 394,963
=========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
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JONES GROWTH PARTNERS L.P.
--------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data includes
all adjustments, consisting of normal recurring accruals, necessary to present
fairly the financial position of Jones Growth Partners L.P. (the "Partnership")
at March 31, 1996 and December 31, 1995, and its results of operations and cash
flows for the three month periods ended March 31, 1996 and 1995. Results of
operations for these periods are not necessarily indicative of results to be
expected for the full year.
The Partnership owns the cable television system serving the municipalities
of Addison, Glen Ellyn, St. Charles, Warrenville, West Chicago, Wheaton,
Winfield and Geneva, and certain portions of unincorporated areas of Du Page and
Kane counties, all in the State of Illinois (the "Wheaton System").
(2) Jones Spacelink Cable Corporation, a wholly owned subsidiary of Jones
Intercable, Inc. ("Intercable"), a Colorado corporation, is the "Managing
General Partner." The Managing General Partner and certain of its affiliates
also own and operate cable television systems for their own account and for the
account of other managed limited partnerships. The Partnership receives a fee
for its services equal to 5 percent of the gross revenues of the Partnership,
excluding revenues from the sale of cable television systems or franchises.
Management fees paid to the Managing General Partner by the Partnership for the
three month periods ended March 31, 1996 and 1995 were $275,534 and $252,259,
respectively. Growth Partners Inc. (the "Associate General Partner"), an
affiliate of Lehman Brothers Inc., participates with the Managing General
Partner in certain management decisions affecting the Partnership and receives a
supervisory fee of the lesser of one percent of the gross revenues of the
Partnership, excluding revenues from the sale of cable television systems or
franchises, or $200,000, accrued monthly and payable annually. Supervisory fees
accrued to the Associate General Partner by the Partnership for the three month
periods ended March 31, 1996 and 1995 were $55,107 and $50,452, respectively.
The Partnership reimburses the Managing General Partner and certain of its
affiliates for certain allocated overhead and administrative costs. These
expenses represent the salaries and related benefits paid for corporate
personnel, rent, data processing services and other corporate facilities costs.
Such personnel provide engineering, marketing, administrative, accounting, legal
and investor relations services to the Partnership. Allocations of personnel
costs are primarily based upon 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 cable television systems
owned or managed by Intercable and certain of its affiliates. Systems owned by
Intercable and all 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 overhead and administrative costs is reasonable. Reimbursements by
the Partnership to the Managing General Partner for allocated overhead and
administrative costs for three month periods ended March 31, 1996 and 1995 were
$319,618 and $385,609, respectively.
(3) Certain prior year amounts have been reclassified to conform to the 1996
presentation.
6
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JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
For the three months ended March 31, 1996, Jones Growth Partners L.P. (the
"Partnership") generated net cash from operating activities totaling $914,780,
which is available to fund capital expenditures and non-operating costs. During
the first three months of 1996, the Partnership expended approximately $940,000
for capital expenditures for the Wheaton System. Approximately 65 percent of
these expenditures related to cable, hardware and labor for new subscriber
installations, to extend the cable plant to serve additional customers and to
replace equipment. Approximately 18 percent was for the purchase of converters
and the remainder of these expenditures was for various system enhancements.
Such expenditures were financed from cash from operations. Capital expenditures
for the remainder of 1996 are expected to be approximately $3,209,000 which is
expected to be financed from available cash balances and cash flow from
operations. For the remainder of 1996, approximately 71 percent of the capital
expenditures will relate to cable, hardware and labor to extend the cable plant,
to make additional subscriber installations and to replace equipment in the
Wheaton System. The remainder of the capital expenditures will be 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 March 31, 1996,
$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 the Prime Rate
plus 1/8 percent or the London Interbank Offered Rate plus 1 percent. The
effective interest rates on amounts outstanding as of March 31, 1996 and 1995
were 6.76 percent and 7.55 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.
REGULATION AND LEGISLATION
- --------------------------
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
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.
7
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RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership for the three months ended March 31, 1996
totaled $5,510,674, compared to $5,045,181 in 1995, an increase of $465,493, or
approximately 9 percent. Increases in the number of basic service subscribers
accounted for approximately 42 percent of the increase in revenues. The number
of basic service subscribers increased by 2,731 subscribers, or approximately 5
percent, to 52,965 at March 31, 1996 from 50,234 at March 31, 1995. Basic
service rate increases accounted for approximately 47 percent of the increase in
revenues. No other individual factor contributed significantly to the increase
in revenues.
Operating expenses consist primarily of costs associated with the
administration of the Partnership's cable television system. 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 $329,553, or approximately 11 percent, to
$3,423,552 for the three months ended March 31, 1996 from $3,093,999 in 1995.
Operating expenses represented approximately 62 percent and 61 percent,
respectively, of revenues in 1996 and 1995. The increase in operating expenses
was primarily the result of increases in programming fees, which accounted for
approximately 55 percent of the increase, and franchise fees, which accounted
for approximately 12 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
decreased $38,061, or approximately 6 percent, to $650,259 for the three months
ended March 31, 1996 from $688,320 for the comparable period in 1995. This
decrease was primarily the result of decreases in allocated administrative costs
from the Managing General Partner.
Depreciation and amortization expense increased $29,793, or approximately 1
percent, to $2,968,061 for the three months ended March 31, 1996 compared to
$2,938,268 for the comparable period in 1995. This increase was the result of
capital additions in 1995.
Operating loss decreased $144,208, or approximately 9 percent, to
$1,531,198 for the three months ended March 31, 1996 from $1,675,406 for the
comparable period in 1995. This decrease was due to the increase 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 and the increase in depreciation and amortization
expense.
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 $174,001, or
approximately 14 percent, to $1,436,863 for the three months ended March 31,
1996 from $1,262,862 for the comparable period in 1995. This increase was due
to 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 decreased $73,775, or approximately 10 percent, to
$635,055 for the three months ended March 31, 1996 from $708,830 for the
comparable period in 1995. This decrease in interest expense was primarily due
to lower effective interest rates on interest-bearing obligations.
Net loss decreased $197,990, or approximately 8 percent, to $2,184,102 for
the three months ended March 31, 1996 from $2,382,092 for the comparable period
in 1995. This decrease was the result of the factors discussed above and the
losses are expected to continue.
8
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JONES GROWTH PARTNERS L.P.
a Colorado limited partnership
BY: Jones Spacelink Cable Corporation
By: /s/ KEVIN P. COYLE
---------------------------
Kevin P. Coyle
Vice President/Finance
(Principal Financial Officer)
Dated: May 13, 1996
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 27,363
<SECURITIES> 0
<RECEIVABLES> 210,386
<ALLOWANCES> (24,867)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 48,140,752
<DEPRECIATION> (24,303,767)
<TOTAL-ASSETS> 48,354,293
<CURRENT-LIABILITIES> 1,838,378
<BONDS> 35,439,537
0
0
<COMMON> 0
<OTHER-SE> 11,076,378
<TOTAL-LIABILITY-AND-EQUITY> 48,354,293
<SALES> 0
<TOTAL-REVENUES> 5,510,674
<CGS> 0
<TOTAL-COSTS> 7,041,872
<OTHER-EXPENSES> 17,849
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 635,055
<INCOME-PRETAX> (2,184,102)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,184,102)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,184,102)
<EPS-PRIMARY> (25.22)
<EPS-DILUTED> (25.22)
</TABLE>
