<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 September 30, 1996
------------------
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________________ to ____________________
Commission File Number 0-17916
JONES GROWTH PARTNERS L.P.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1143409
- --------------------------------------------------------------------------------
State of organization IRS employer I.D. #
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
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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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<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1996 1995
------ ------------- ------------
<S> <C> <C>
CASH $ 243,932 $ 45,490
TRADE RECEIVABLES, less allowance for doubtful
receivables of $28,555 and $19,111 at September 30,
1996 and December 31, 1995, respectively 248,942 286,891
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 50,242,612 47,200,274
Less- accumulated depreciation (26,081,948) (23,414,677)
------------ ------------
24,160,664 23,785,597
Franchise costs and other intangible assets, net of
accumulated amortization of $57,695,196 and
$51,513,474 at September 30, 1996 and December 31, 1995,
respectively 19,507,089 25,688,811
------------ ------------
Total investment in cable
television properties 43,667,753 49,474,408
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 450,914 665,612
------------ ------------
Total assets $ 44,611,541 $ 50,472,401
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
- ------------------------------------------- ------------- ------------
<S> <C> <C>
LIABILITIES:
Credit facility and other debt $ 36,277,458 $ 35,431,966
Trade accounts payable and accrued liabilities 841,140 1,322,658
Accrued interest 401,147 407,032
Subscriber prepayments 70,607 50,265
------------ ------------
Total liabilities 37,590,352 37,211,921
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (676,184) (613,791)
------------ ------------
(675,184) (612,791)
------------ ------------
Limited Partners-
Net contributed capital (85,740 units outstanding at
September 30, 1996 and December 31, 1995) 73,790,065 73,790,065
Accumulated deficit (66,093,692) (59,916,794)
------------ ------------
7,696,373 13,873,271
------------ ------------
Total partners' capital (deficit) 7,021,189 13,260,480
------------ ------------
Total liabilities and partners' capital (deficit) $ 44,611,541 $ 50,472,401
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- --------------------------------
1996 1995 1996 1995
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
REVENUES $ 5,851,973 $ 5,309,508 $17,101,435 $15,761,824
COSTS AND EXPENSES:
Operating expenses 3,487,636 3,201,939 10,357,172 9,617,643
Management and supervisory fees to the
General Partners and allocated administrative
costs from the Managing General Partner 684,796 678,144 2,100,829 2,039,553
Depreciation and amortization 2,981,728 2,933,919 8,924,450 8,806,106
----------- ----------- ----------- -----------
OPERATING LOSS (1,302,187) (1,504,494) (4,281,016) (4,701,478)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (649,114) (667,974) (1,898,110) (2,078,211)
Interest income 895 6,052 3,895 17,697
Other, net (44,342) 63,472 (64,060) (3,301)
----------- ----------- ----------- -----------
NET LOSS $(1,994,748) $(2,102,944) $(6,239,291) $(6,765,293)
=========== =========== =========== ===========
ALLOCATION OF NET LOSS:
Managing General Partner $ (19,948) $ (21,029) $ (62,393) $ (67,653)
=========== =========== ============ ===========
Limited Partners $(1,974,800) $(2,081,915) $(6,176,898) $(6,697,640)
=========== =========== =========== ===========
NET LOSS PER LIMITED PARTNERSHIP
UNIT $ (23.03) $ (24.28) $ (72.04) $ (78.12)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNERSHIP UNITS
OUTSTANDING 85,740 85,740 85,740 85,740
=========== =========== =========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
-----------------------------------
1996 1995
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(6,239,291) $(6,765,293)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 8,924,450 8,806,106
Amortization of interest rate protection contract - 48,501
Decrease (increase) in trade receivables 37,949 (17,726)
Decrease in deposits, prepaid expenses
and other assets 139,241 99,968
Increase (decrease) in trade accounts payable,
accrued liabilities, accrued interest and
subscriber prepayments (467,061) 532,047
----------- -----------
Net cash provided by operating activities 2,395,288 2,703,603
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,042,338) (3,025,757)
----------- -----------
Net cash used in investing activities (3,042,338) (3,025,757)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 938,048 336,474
Repayment of borrowings (92,556) (80,066)
----------- -----------
Net cash provided by financing activities 845,492 256,408
----------- -----------
INCREASE (DECREASE) IN CASH 198,442 (65,746)
CASH, BEGINNING OF PERIOD 45,490 170,648
----------- -----------
CASH, END OF PERIOD $ 243,932 $ 104,902
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,903,995 $ 1,651,419
=========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data includes
all adjustments, consisting of normal recurring accruals, necessary to present
fairly the financial position of Jones Growth Partners L.P. (the "Partnership")
at September 30, 1996 and December 31, 1995, its results of operations for the
three and nine month periods ended September 30, 1996 and 1995, and its cash
flows for the nine month periods ended September 30, 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 Managing General Partner
receives a fee for its services equal to 5 percent of the gross revenues of the
Partnership, excluding revenues from the sale of cable television systems or
franchises. Management fees paid to the Managing General Partner by the
Partnership for the three and nine month periods ended September 30, 1996 were
$292,599 and $855,072, respectively, compared to $265,475 and $788,091,
respectively, for the three and nine month periods ended September 30, 1995.
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 1 percent of the gross revenues of the Partnership, excluding
revenues from the sale of cable television systems or franchises, or $200,000,
accrued quarterly and payable annually. Supervisory fees accrued to the
Associate General Partner by the Partnership for the three and nine month
periods ended September 30, 1996 were $50,000 and $150,000, respectively,
compared to $50,000 and $150,000, respectively, for the three and nine month
periods ended September 30, 1995.
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 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 and nine month periods ended September 30, 1996
were $333,677 and $1,074,743, respectively, as compared to $359,574 and
$1,093,844, respectively, for the three and nine month periods ended September
30, 1995.
(3) Certain prior year amounts were reclassified to conform to the 1996
presentation.
6
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
It is Intercable's publicly announced policy that it intends to liquidate
its managed limited partnerships, including the Partnership, as opportunities
for sales of partnership cable television systems arise in the marketplace over
the next several years. In accordance with Intercable's policy, the Wheaton
System, along with other Chicago-area systems owned or managed by Intercable and
its affiliates, was recently marketed for sale. The deadline set by Intercable
for receipt of indications of interest for the Wheaton System from prospective
buyers was October 15, 1996. Intercable did not receive any offer for the
Wheaton System. The Managing General Partner will continue to explore other
alternatives for sale; however, no specific plans have yet been determined.
There is no assurance as to the timing or terms of any sale.
For the nine months ended September 30, 1996, the Partnership generated net
cash from operating activities totaling approximately $2,395,000, which was
available to fund capital expenditures and non-operating costs. During the first
nine months of 1996, the Partnership expended approximately $3,042,000 for
capital expenditures for the Wheaton System. Approximately 39 percent of these
expenditures related to cable, hardware and labor for new subscriber
installations, and approximately 28 percent of these expenditures related to the
extension of cable plant to serve additional customers. Approximately 14 percent
of these expenditures 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 and borrowings under the Partnership's credit
facility. Capital expenditures for the remainder of 1996 are expected to be
approximately $1,305,000 and are expected to be financed from available cash
balances, cash flow from operations and, at its discretion, advances from the
Managing General Partner. For the remainder of 1996, approximately 46 percent of
the capital expenditures will relate to the extension of cable plant and
approximately 20 percent will relate to cable, hardware and labor for additional
subscriber installations in the Wheaton System. The remainder of the capital
expenditures will be for various other enhancements. These capital expenditures
are necessary to maintain the value of the Partnership's system.
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; however, the General Partner
hopes to amend the date on which the facility converts to a term loan to
December 31, 1997 or later. At September 30, 1996, $36,000,000 was outstanding
under the revolving credit facility. 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 September 30, 1996 and 1995 were 6.81 percent and 7.15
percent, respectively.
The Managing General Partner believes cash flow from operations and, at its
discretion, advances from the Managing General Partner will be sufficient to
fund capital expenditures and other liquidity needs of the Partnership.
RESULTS OF OPERATIONS
- ---------------------
Revenues increased $542,465, or approximately 10 percent, to $5,851,973 for
the three months ended September 30, 1996 from $5,309,508 for the comparable
period in 1995. Revenues increased $1,339,611, or approximately 9 percent, to
$17,101,435 for the nine months ended September 30, 1996 from $15,761,824 for
the comparable period in 1995. An increase in basic service revenues primarily
accounted for these increases in revenues. Basic service rate increases
accounted for approximately 51 percent and 52 percent, respectively, of the
increases in basic service revenues for the three and nine month periods ended
September 30, 1996. Increases in the number of basic service subscribers
accounted for approximately 49 percent and 48 percent, respectively, of the
increases in basic service revenues for the three and nine month periods ended
September 30, 1996. The number of basic service subscribers increased by 2,567,
or approximately 5 percent, to 53,983 at September 30, 1996 from 51,416 at
September 30, 1995. No other individual factor contributed significantly to the
increases in revenues.
7
<PAGE>
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 $285,697, or approximately 9 percent, to
$3,487,636 for the three months ended September 30, 1996 from $3,201,939 for the
comparable period in 1995. Operating expenses increased $739,529, or
approximately 8 percent, to $10,357,172 for the nine months ended September 30,
1996 from $9,617,643 for the comparable period in 1995. These increases in
operating expenses were due primarily to increases in programming fees and
personnel expenses. For the three month periods ended September 30, 1996 and
1995, operating expenses represented approximately 60 percent of revenues.
Operating expenses represented approximately 61 percent of revenues for each of
the nine month periods ended September 30, 1996 and 1995. No other individual
factor significantly affected the increases in operating expenses.
Management and supervisory fees to the general partners and allocated
administrative costs from the Managing General Partner increased $6,652, or
approximately 1 percent, to $684,796 for the three months ended September 30,
1996 from $678,144 for the comparable period in 1995. Management and supervisory
fees to the general partners and allocated administrative costs from the
Managing General Partner increased $61,276, or approximately 3 percent, to
$2,100,829 for the nine month period ended September 30, 1996 from $2,039,553
for the nine month period ended September 30, 1995. These increases were
primarily the result of the increases in management fees due to the increases in
revenues, upon which management fees are based.
Depreciation and amortization expense increased $47,809, or approximately 2
percent, to $2,981,728 for the three months ended September 30, 1996 compared to
$2,933,919 for the comparable period in 1995. Depreciation and amortization
expense increased $118,344, or approximately 1 percent, to $8,924,450 for the
nine months ended September 30, 1996 compared to $8,806,106 for the comparable
period in 1995. These increases were the result of capital additions in 1996.
Operating loss decreased $202,307, or approximately 13 percent, to
$1,302,187 for the three months ended September 30, 1996 from $1,504,494 for the
comparable period in 1995. Operating loss decreased $420,462, or approximately 9
percent, to $4,281,016 for the nine months ended September 30, 1996 from
$4,701,478 for the comparable period in 1995. These decreases were due to the
increases in revenues exceeding increases in operating expenses, management and
supervisory fees to the general partners and allocated administrative costs from
the Managing General Partner and depreciation and amortization expenses.
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 $250,116, or
approximately 18 percent, to $1,679,541 for the three months ended September 30,
1996 from $1,429,425 for the comparable period in 1995. Operating income before
depreciation and amortization expense increased $538,806, or approximately 13
percent, to $4,643,434 for the nine months ended September 30, 1996 from
$4,104,628 for the comparable period in 1995. These increases were 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 $18,860, or approximately 3 percent, to $649,114
for the three months ended September 30, 1996 from $667,974 for the comparable
period in 1995. Interest expense decreased $180,101, or approximately 9 percent,
to $1,898,110 for the nine months ended September 30, 1996 from $2,078,211 for
the comparable period in 1995. These decreases in interest expense were
primarily due to lower effective interest rates on interest-bearing obligations.
Net loss decreased $108,196, or approximately 5 percent, to $1,994,748 for
the three months ended September 30, 1996 from $2,102,944 for the comparable
period in 1995. Net loss decreased $526,002, or approximately 8 percent, to
$6,239,291 for the nine months ended September 30, 1996 from $6,765,293 for the
comparable period in 1995. These decreases were the result of the factors
discussed above, and are expected to continue in the future.
8
<PAGE>
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: November 14, 1996
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 243,932
<SECURITIES> 0
<RECEIVABLES> 248,942
<ALLOWANCES> (28,555)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 50,242,612
<DEPRECIATION> (26,081,948)
<TOTAL-ASSETS> 44,611,541
<CURRENT-LIABILITIES> 1,312,894
<BONDS> 36,227,458
0
0
<COMMON> 0
<OTHER-SE> 7,021,189
<TOTAL-LIABILITY-AND-EQUITY> 44,611,541
<SALES> 0
<TOTAL-REVENUES> 17,101,435
<CGS> 0
<TOTAL-COSTS> 21,382,451
<OTHER-EXPENSES> 60,165
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,898,110
<INCOME-PRETAX> (6,239,291)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,239,291)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,239,291)
<EPS-PRIMARY> (72.04)
<EPS-DILUTED> (72.04)
</TABLE>
