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FORM 10-K
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, 1996
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 office and Zip Code (Registrant's telephone no.
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 ((S)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
(28576)
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Information contained in this Form 10-K Report contains "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements, other than statements of historical facts,
included in this Form 10-K Report that address activities, events or
developments that the Partnership or the Managing General Partner expects,
believes or anticipates will or may occur in the future are forward-looking
statements. These forward-looking statements are based upon certain assumptions
and are subject to a number of risks and uncertainties. Actual results could
differ materially from the results predicted by these forward-looking
statements.
PART I.
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ITEM 1. BUSINESS
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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.
It is the General Partner'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 the General
Partner's policy, the Wheaton System, along with other Chicago-area systems
owned or managed by the General Partner and its affiliates, were marketed for
sale in 1996. The deadline set by the General Partner for receipt of
indications of interest for such systems from prospective buyers was October 15,
1996. The General Partner did not receive any offer for the Wheaton System.
The General Partner will continue to explore other alternatives for sale. There
is no assurance as to the timing or terms of any sales.
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
Wheaton System also offers 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
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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,
1996, the Wheaton System's monthly basic service rates ranged from $9.68 to
$11.39, monthly basic and tier ("basic plus") service rates ranged from $19.95
to $24.95 and monthly premium services ranged from $4.95 to $10.95 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 service
at any time without penalty. For the year ended December 31, 1996, of the total
fees received by the Wheaton System, basic service and tier service fees
accounted for approximately 66% of total revenues, premium service fees
accounted for approximately 15% of total revenues, pay-per-view fees were
approximately 3% of total revenues, advertising fees were approximately 7% 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 is
currently negotiating the renewal of three franchises that are either operating
under extensions or will expire prior to December 31, 1997, and the Managing
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.
Broadcast Television. Cable television systems have traditionally
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competed with broadcast television, which consists of television signals that
the viewer is able to receive directly on his television without charge using an
"off-air" antenna. The extent of such competition is dependent in part upon the
quality and quantity of signals available by such antenna reception as compared
to the services provided by the local cable system. Accordingly, it has
generally been less difficult for cable operators to obtain higher penetration
rates in rural areas where
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signals available off-air are limited, than in metropolitan areas where
numerous, high quality off-air signals are often available without the aid of
cable television systems.
Traditional Overbuild. Cable television franchises are not exclusive,
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so that more than one cable television system may be built in the same area
(known as an "overbuild"), with potential loss of revenues to the operator of
the original cable television system. Intercable has experienced overbuilds in
connection with certain systems that it has owned or managed for limited
partnerships, and currently there are overbuilds in the systems owned or managed
by Intercable. Constructing and developing a cable television system is a
capital intensive process, and it is often difficult for a new cable system
operator to create a marketing edge over the existing system. Generally, an
overbuilder would be required to obtain franchises from the local governmental
authorities, although in some instances, the overbuilder could be the local
government itself. In any case, an overbuilder would be required to obtain
programming contracts from entertainment programmers and, in most cases, would
have to build a complete cable system, including headends, trunk lines and drops
to individual subscribers homes, throughout the franchise areas.
DBS. High-powered direct-to-home satellites have made possible the
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wide-scale delivery of programming to individuals throughout the United States
using small roof-top or wall-mounted antennas. Several companies began offering
direct broadcast satellite ("DBS") service over the last few years and
additional entrants are expected. Companies offering DBS service use video
compression technology to increase channel capacity of their systems to 100 or
more channels and to provide packages of movies, satellite network and other
program services which are competitive to those of cable television systems.
DBS cannot currently offer its subscribers local programming, although at least
one future DBS entrant is attempting to offer customers regional delivery of
local broadcast signals. In addition to emerging high-powered DBS competition,
cable television systems face competition from a major medium-powered satellite
distribution provider and several low-powered providers, whose service requires
use of much larger home satellite dishes. Not all subscribers terminate cable
television service upon acquiring a DBS system. The Managing General Partner
has observed that there are DBS subscribers that also elect to subscribe to
cable television service in order to obtain the greatest variety of programming
on multiple television sets, including local programming not available through
DBS service. The ability of DBS service providers to compete successfully with
the cable television industry will depend on, among other factors, the ability
of DBS providers to overcome certain legal and technical hurdles and the
availability of equipment at reasonable prices.
Telephone. Federal cross-ownership restrictions historically limited
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entry by local telephone companies into the cable television business. The 1996
Telecommunications Act (the "1996 Telecom Act") eliminated this cross-ownership
restriction, making it possible for companies with considerable resources to
overbuild existing cable operators and enter the business. Several telephone
companies have begun seeking cable television franchises from local governmental
authorities and constructing cable television systems. Ameritech, one of the
seven regional Bell Operating Companies ("BOCs"), which provides telephone
service in a multi-state region including Illinois, has been the most active BOC
in seeking local cable franchises within its service area. Ameritech has been
granted a franchise by the community of Glen Ellyn which is located in the
Partnership's Wheaton System. Ameritech has completed approximately 70 percent
of its construction of its cable television system in the Glen Ellyn franchise
area and is aggressively marketing its services in this community. The
Partnership has lost approximately 350 subscribers in the Glen Ellyn franchise
area to Ameritech. The Partnership provides service to approximately 8,860
basic subscribers in Glen Ellyn which represents approximately 16 percent of the
Partnership's approximate 54,700 basic subscribers in the Wheaton System.
Ameritech has also begun cable service in Naperville, Illinois and has obtained
a franchise for Vernon Hills, Illinois, both of which are currently served by
cable systems owned by two partnerships managed by Intercable. The Managing
General Partner cannot predict at this time the extent of telephone company
competition that will emerge to owned or managed cable television systems. The
entry of telephone companies as direct competitors, however, is likely to
continue over the next several years and could adversely affect the
profitability and market value of Intercable's owned and managed systems. The
entry of electric utility companies into the cable television business, as now
authorized by the 1996 Telecom Act, could have a similar adverse effect.
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Private Cable. Additional competition is provided by private cable
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television systems, known as Satellite Master Antenna Television (SMATV),
serving multi-unit dwellings such as condominiums, apartment complexes, and
private residential communities. These private cable systems may enter into
exclusive agreements with apartment owners and homeowners associations, which
may preclude operators of franchised systems from serving residents of such
private complexes. Private cable systems that do not cross public rights of way
are free from the federal, state and local regulatory requirements imposed on
franchised cable television operators. In some cases, the Partnership has been
unable to provide cable television service to buildings in which private
operators have secured exclusive contracts to provide video and telephony
services. The Partnership is interested in providing these same services, but
expects that the market to install and provide these services in multi-unit
buildings will continue to be highly competitive. In late 1995, Intercable
launched a competitive telephone service in selected apartments and condominium
units in its Alexandria, Virginia System, and anticipates providing such
service, commencing in the first half of 1997, in Maryland as well. Intercable
faces considerable competition in providing telephony service from incumbent
local exchange carriers and a host of alternative carriers.
MMDS. Cable television systems also compete with wireless program
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distribution services such as multichannel, multipoint distribution service
("MMDS") systems, commonly called wireless cable, which are licensed to serve
specific areas. MMDS uses low-power microwave frequencies to transmit
television programming over-the-air to paying subscribers. The MMDS industry is
less capital intensive than the cable television industry, and it is therefore
more practical to construct MMDS systems in areas of lower subscriber
penetration. Wireless cable systems are now in direct competition with cable
television systems in several areas of the country, including the system in Pima
County, Arizona owned by Intercable. Telephone companies have recently acquired
or invested in wireless companies, and may use MMDS systems to provide services
within their service areas in lieu of wired delivery systems. Enthusiasm for
MMDS has waned in recent months, however, as Bell Atlantic and NYNEX have
suspended their investment in two major MMDS companies. To date, the
Partnership has not lost a significant number of subscribers, nor a significant
amount of revenue, to MMDS operators competing with the Partnership's cable
television systems. A series of actions taken by the FCC, however, including
reallocating certain frequencies to the wireless services, are intended to
facilitate the development of wireless cable television systems as an
alternative means of distributing video programming. The FCC recently held
auctions for spectrum that will be used by wireless operators to provide
additional channels of programming over larger distances. In addition, an
emerging technology, Local Multipoint Distribution services ("LMDS"), could also
pose a significant threat to the cable television industry, if and when it
becomes established. LMDS, sometimes referred to as cellular television, could
have the capability of delivering more than 100 channels of video programming to
a subscriber's home. The potential impact, however, of LMDS is difficult to
assess due to the newness of the technology and the absence of any current fully
operational LMDS systems.
Cable television systems are also in competition, in various degrees
with other communications and entertainment media, including motion pictures and
home video cassette recorders.
REGULATION AND LEGISLATION
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The operation of cable television systems is extensively regulated by
the FCC, some state governments and most local governments. The new 1996
Telecom Act alters the regulatory structure governing the nation's
telecommunications providers. It removes barriers to competition in both the
cable television market and the local telephone market. Among other things, it
also reduces the scope of cable rate regulation.
The 1996 Telecom Act requires the FCC to undertake a host of
implementing rulemakings, the final outcome of which cannot yet be determined.
Moreover, Congress and the FCC have frequently revisited the subject of cable
regulation. Future legislative and regulatory changes could adversely affect
the Partnership's operations. This section briefly summarizes key laws and
regulations affecting the operation of the Partnership's cable systems and does
not purport to describe all present, proposed, or possible laws and regulations
affecting the Partnership.
Cable Rate Regulation. The 1992 Cable Act imposed an extensive rate
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regulation regime on the cable television industry. Under that regime, all
cable systems are subject to rate regulation, unless they face "effective
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competition" in their local franchise area. Federal law now defines "effective
competition" on a community-specific basis as requiring either low penetration
(less than 30%) by the incumbent cable operator, appreciable penetration (more
than 15%) by competing multichannel video providers ("MVPs"), or the presence of
a competing MVP affiliated with a local telephone company.
Although the FCC rules control, local government units (commonly
referred to as local franchising authorities or "LFAs") are primarily
responsible for administering the regulation of the lowest level of cable -- the
basic service tier ("BST"), which typically contains local broadcast stations
and public, educational, and government ("PEG") access channels. Before an LFA
begins BST rate regulation, it must certify to the FCC that it will follow
applicable federal rules, and many LFAs have voluntarily declined to exercise
this authority. LFAs also have primary responsibility for regulating cable
equipment rates. Under federal law, charges for various types of cable
equipment must be unbundled from each other and from monthly charges for
programming services. The 1996 Telecom Act allows operators to aggregate costs
for broad categories of equipment across geographic and functional lines. This
change should facilitate the introduction of new technology.
The FCC itself directly administers rate regulation of any cable
programming service tiers ("CPST"), which typically contain satellite-delivered
programming. Under the 1996 Telecom Act, the FCC can regulate CPST rates only
if an LFA first receives at least two rate complaints from local subscribers and
then files a formal complaint with the FCC. When new CPST rate complaints are
filed, the FCC now considers only whether the incremental increase is justified
and will not reduce the previously established CPST rate.
Under the FCC's rate regulations, most cable systems were required to
reduce their BST and CPST rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price cap scheme that allows for the
recovery of inflation and certain increased costs, as well as providing some
incentive for expanding channel carriage. The FCC has modified its rate
adjustment regulations to allow for annual rate increases and to minimize
previous problems associated with regulatory lag. Operators also have the
opportunity of bypassing this "benchmark" regulatory scheme in favor of
traditional "cost-of-service" regulation in cases where the latter methodology
appears favorable. Premium cable services offered on a per-channel or per-
program basis remain unregulated, as do affirmatively marketed packages
consisting entirely of new programming product. Federal law requires that the
BST be offered to all cable subscribers, but limits the ability of operators to
require purchase of any CPST before purchasing premium services offered on a
per-channel or per-program basis.
The 1996 Telecom Act sunsets FCC regulation of CPST rates for all
systems (regardless of size) on March 31, 1999. It also relaxes existing
uniform rate requirements by specifying that uniform rate requirements do not
apply where the operator faces "effective competition," and by exempting bulk
discounts to multiple dwelling units, although complaints about predatory
pricing still may be made to the FCC.
Cable Entry Into Telecommunications. The 1996 Telecom Act provides
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that no state or local laws or regulations may prohibit or have the effect of
prohibiting any entity from providing any interstate or intrastate
telecommunications service. States are authorized, however, to impose
"competitively neutral" requirements regarding universal service, public safety
and welfare, service quality, and consumer protection. State and local
governments also retain their authority to manage the public rights-of-way and
may require reasonable, competitively neutral compensation for management of the
public rights-of-way when cable operators provide telecommunications service.
The favorable pole attachment rates afforded cable operators under federal law
can be gradually increased by utility companies owning the poles (beginning in
2001) if the operator provides telecommunications service, as well as cable
service, over its plant.
Cable entry into telecommunications will be affected by the regulatory
landscape now being fashioned by the FCC and state regulators. One critical
component of the 1996 Telecom Act to facilitate the entry of new
telecommunications providers (including cable operators) is the interconnection
obligation imposed on all telecommunications carriers. Review of the FCC's
initial interconnection order is now pending before the Eighth Circuit Court of
Appeals. Intercable has already secured authorization to provide local exchange
service in Maryland and portions of Virginia and has begun offering some
telecommunications services to customers in both jurisdictions.
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Telephone Company Entry Into Cable Television. The 1996 Telecom Act
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allows telephone companies to compete directly with cable operators by repealing
the historic telephone company/cable cross-ownership ban. Local exchange
carriers ("LECs"), including the BOCs, can now compete with cable operators both
inside and outside their telephone service areas. Because of their resources,
LECs could be formidable competitors to traditional cable operators, and certain
LECs have begun offering cable service. As described above, Intercable is now
witnessing the beginning of LEC competition in a few of its cable communities.
Under the 1996 Telecom Act, a LEC providing video programming to
subscribers will be regulated as a traditional cable operator (subject to local
franchising and federal regulatory requirements), unless the LEC elects to
provide its programming via an "open video system" ("OVS"). To qualify for OVS
status, the LEC must reserve two-thirds of the system's activated channels for
unaffiliated entities.
Although LECs and cable operators can now expand their offerings
across traditional service boundaries, the general prohibition remains on LEC
buyouts (i.e., any ownership interest exceeding 10 percent) of co-located cable
systems, cable operator buyouts of co-located LEC systems, and joint ventures
between cable operators and LECs in the same market. The 1996 Telecom Act
provides a few limited exceptions to this buyout prohibition, including a
carefully circumscribed "rural exemption." The 1996 Telecom Act also provides
the FCC with the limited authority to grant waivers of the buyout prohibition
(subject to LFA approval).
Electric Utility Entry Into Telecommunications/Cable Television. The
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1996 Telecom Act provides that registered utility holding companies and
subsidiaries may provide telecommunications services (including cable
television) notwithstanding the Public Utilities Holding Company Act. Electric
utilities must establish separate subsidiaries, known as "exempt
telecommunications companies" and must apply to the FCC for operating authority.
Again, because of their resources, electric utilities could be formidable
competitors to traditional cable systems.
Additional Ownership Restrictions. The 1996 Telecom Act eliminates
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statutory restrictions on broadcast/cable cross-ownership (including broadcast
network/cable restrictions), but leaves in place existing FCC regulations
prohibiting local cross-ownership between co-located television stations and
cable systems. The 1996 Telecom Act also eliminates the three year holding
period required under the 1992 Cable Act's "anti-trafficking" provision. The
1996 Telecom Act leaves in place existing restrictions on cable cross-ownership
with SMATV and MMDS facilities, but lifts those restrictions where the cable
operator is subject to effective competition. In January 1995, however, the FCC
adopted regulations which permit cable operators to own and operate SMATV
systems within their franchise area, provided that such operation is consistent
with local cable franchise requirements.
Pursuant to the 1992 Cable Act, the FCC adopted rules precluding a
cable system from devoting more than 40% of its activated channel capacity to
the carriage of affiliated national program services. A companion rule
establishing a nationwide ownership cap on any cable operator equal to 30% of
all domestic cable subscribers has been stayed pending further judicial review.
There are no federal restrictions on non-U.S. entities having an
ownership interest in cable television systems or the FCC licenses commonly
employed by such systems. Section 310(b)(4) of the Communications Act does,
however, prohibit foreign ownership of FCC broadcast and telephone licenses,
unless the FCC concludes that such foreign ownership is consistent with the
public interest. BCI's investment in Intercable could, therefore, adversely
affect any plan to acquire FCC broadcast or common carrier licenses. The
Partnership, however, does not currently plan to acquire such licenses.
Must Carry/Retransmission Consent. The 1992 Cable Act contains
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broadcast signal carriage requirements that allow local commercial television
broadcast stations to elect once every three years between requiring a cable
system to carry the station ("must carry") or negotiating for payments for
granting permission to the cable operator to carry the station ("retransmission
consent"). Less popular stations typically elect "must carry," and more popular
stations typically elect "retransmission consent." Must carry requests can
dilute the
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appeal of a cable system's programming offerings, and retransmission consent
demands may require substantial payments or other concessions. Either option has
a potentially adverse affect on the Partnership's business. Additionally, cable
systems are required to obtain retransmission consent for all "distant"
commercial television stations (except for satellite-delivered independent
"superstations" such as WTBS). The constitutionality of the must carry
requirements has been challenged and is awaiting a decision from the U.S.
Supreme Court.
Access Channels. LFAs can include franchise provisions requiring
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cable operators to set aside certain channels for public, educational and
governmental access programming. Federal law also requires cable systems to
designate a portion of their channel capacity (up to 15% in some cases) for
commercial leased access by unaffiliated third parties. The FCC has adopted
rules regulating the terms, conditions and maximum rates a cable operator may
charge for use of the designated channel capacity, but use of commercial leased
access channels has been relatively limited. The FCC released revised rules in
February 1997 which mandate a modest rate reduction and could make commercial
leased access a more attractive option to third party programmers.
Access to Programming. To spur the development of independent cable
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programmers and competition to incumbent cable operators, the 1992 Cable Act
imposed restrictions on the dealings between cable operators and cable
programmers. Of special significance from a competitive business posture, the
1992 Cable Act precludes video programmers affiliated with cable companies from
favoring cable operators over competitors and requires such programmers to sell
their programming to other multichannel video distributors. This provision
limits the ability of vertically integrated cable programmers to offer exclusive
programming arrangements to cable companies.
Other FCC Regulations. In addition to the FCC regulations noted
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above, there are other FCC regulations covering such areas as equal employment
opportunity, subscriber privacy, programming practices (including, among other
things, syndicated program exclusivity, network program nonduplication, local
sports blackouts, indecent programming, lottery programming, political
programming, sponsorship identification, and children's programming
advertisements), registration of cable systems and facilities licensing,
maintenance of various records and public inspection files, frequency usage,
lockbox availability, antenna structure notification, tower marking and
lighting, consumer protection and customer service standards, technical
standards, and consumer electronics equipment compatibility. The FCC is
expected to impose new Emergency Alert System requirements on cable operators
this year. The FCC has the authority to enforce its regulations through the
imposition of substantial fines, the issuance of cease and desist orders and/or
the imposition of other administrative sanctions, such as the revocation of FCC
licenses needed to operate certain transmission facilities used in connection
with cable operations.
Two pending FCC proceedings of particular competitive concern involve
inside wiring and navigational devices. The former rulemaking is considering
ownership of cable wiring located inside multiple dwelling unit complexes. If
the FCC concludes that such wiring belongs to, or can be unilaterally acquired
by the complex owner, it will become easier for complex owners to terminate
service from the incumbent cable operator in favor of a new entrant. The latter
rulemaking is considering whether cable customers must be allowed to purchase
cable converters from third party vendors. If the FCC concludes that such
distribution is required, and does not make appropriate allowances for signal
piracy concerns, it may become more difficult for cable operators to combat
theft of service.
Copyright. Cable television systems are subject to federal copyright
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licensing covering carriage of television and radio broadcast signals. In
exchange for filing certain reports and contributing a percentage of their
revenues to a federal copyright royalty pool (that varies depending on the size
of the system and the number of distant broadcast television signals carried),
cable operators can obtain blanket permission to retransmit copyrighted material
on broadcast signals. The possible modification or elimination of this
compulsory copyright license is the subject of continuing legislative review and
could adversely affect the Partnership's ability to obtain desired broadcast
programming. In addition, the cable industry pays music licensing fees to BMI
and is negotiating a similar arrangement with ASCAP. Copyright clearances for
nonbroadcast programming services are arranged through private negotiations.
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State and Local Regulation. Cable television systems generally are
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operated pursuant to nonexclusive franchises granted by a municipality or other
state or local government entity in order to cross public rights-of-way.
Federal law now prohibits franchise authorities from granting exclusive
franchises or from unreasonably refusing to award additional franchises. Cable
franchises generally are granted for fixed terms and in many cases include
monetary penalties for non-compliance and may be terminable if the franchisee
fails to comply with material provisions.
The terms and conditions of franchises vary materially from
jurisdiction to jurisdiction. Each franchise generally contains provisions
governing cable operations, service rates, franchise fees, system construction
and maintenance obligations, system channel capacity, design and technical
performance, customer service standards, and indemnification protections. A
number of states subject cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. Although LFAs have considerable
discretion in establishing franchise terms, there are certain federal
limitations. For example, LFAs cannot insist on franchise fees exceeding 5% of
the system's gross revenues, cannot dictate the particular technology used by
the system, and cannot specify video programming other than identifying broad
categories of programming.
Federal law contains renewal procedures designed to protect incumbent
franchisees against arbitrary denials of renewal. Even if a franchise is
renewed, the franchise authority may seek to impose new and more onerous
requirements such as significant upgrades in facilities and services or
increased franchise fees as a condition of renewal. Similarly, if a franchise
authority's consent is required for the purchase or sale of a cable system or
franchise, such authority may attempt to impose more burdensome or onerous
franchise requirements in connection with a request for consent. Historically,
franchises have been renewed for cable operators that have provided satisfactory
services and have complied with the terms of their franchises.
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 Partnership'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 does not have
any 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, 1996, the Wheaton System operated cable plant
passing approximately 81,700 homes, with an approximate 66% penetration rate.
9
<PAGE>
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.
<TABLE>
<CAPTION>
At December 31,
-------------------------
WHEATON SYSTEM 1996 1995 1994
- -------------- ------- ------- -------
<S> <C> <C> <C>
Monthly basic plus service rate $ 24.95 $ 23.61 $ 22.11
Basic subscribers 54,693 52,457 49,415
Pay units 38,692 39,691 40,065
</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. During 1996, several partners of the
Partnership conducted a "limited tender offer" for interests in the Partnership
at a price of $300 per interest. As of February 14, 1997, the number of equity
security holders in the Partnership was 8,870.
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
- -------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $23,163,018 $21,248,133 $19,615,180 $19,354,715 $18,276,938
Depreciation and
Amortization 11,702,503 11,742,487 12,583,108 12,737,314 12,396,480
Operating Loss (5,346,233) (6,103,218) (7,334,009) (7,047,610) (7,461,060)
Net Loss (7,927,762) (8,755,438) (9,644,492) (8,926,720) (9,538,943)
Weighted average
number of Limited
Partner Units
Outstanding 85,740 85,740 85,740 85,740 85,740
General Partners'
Deficit (692,069) (612,791) (525,237) (428,792) (339,525)
Limited Partners'
Capital 6,024,787 13,873,271 22,541,155 32,089,202 40,926,655
Total Assets 43,319,887 50,472,401 58,318,155 69,055,535 78,108,627
Credit Facility
and Other Debt 36,243,429 35,431,966 35,245,699 35,944,662 35,825,369
Managing General
Partner Advances - - - - 166,931
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- -------------------------------------------------------------------------------
OF OPERATIONS
- -------------
The following discussion of Jones Growth Partners L.P.'s (the
"Partnership") financial condition and results of operations contains, in
addition to historical information, forward-looking statements that are based
upon certain assumptions and are subject to a number of risks and uncertainties.
The Partnership's actual results may differ significantly from the results
predicted in such forward-looking statements.
FINANCIAL CONDITION
- -------------------
It is the General Partner'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 the General
Partner's policy, the Wheaton System, along with other Chicago-area systems
owned or managed by the General Partner and its affiliates, were marketed for
sale in 1996. The deadline set by the General Partner for receipt of
indications of interest for such systems from prospective buyers was October 15,
1996. The General Partner did not receive any offer for the Wheaton System.
The General Partner will continue to explore other alternatives for sale. There
is no assurance as to the timing or terms of any sales.
For the year ended December 31, 1996, the Partnership generated net cash
from operating activities totaling $4,343,974, which is available to fund
capital expenditures and non-operating costs. During 1996, the Partnership
expended approximately $4,855,400 for capital expenditures for the Wheaton
System. Approximately 33 percent of these expenditures related to the extension
of cable plant to serve additional customers, and approximately 29 percent of
these expenditures related to cable, hardware and labor for new subscriber
installations. Approximately 9 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 on hand and
cash from operations. Capital expenditures for 1997 are expected to be
approximately $4,035,100 and are expected to be financed by cash on hand and
cash generated from operations. Approximately 50 percent will be for service
drops to homes. Approximately 30 percent will relate to cable, hardware and
labor to extend the cable plant and to pass additional homes in the Wheaton
System. The remainder of the expected capital expenditures will be for the
replacement and repair of converters and for various other enhancements. These
capital expenditures are necessary to maintain the value of the Wheaton System.
In December 1994, the Partnership entered into a $36,000,000 revolving
credit facility. The revolving credit facility expires on March 31, 1999, at
which time the commitment will reduce quarterly until December 31, 1999 when the
commitment will reduce to zero and all principal and interest amounts
outstanding will be due and payable in full. At
11
<PAGE>
December 31, 1996, the maximum commitment of $36,000,000 was outstanding under
the revolving credit agreement. Interest on the outstanding principal balance is
at the Partnership's option of Prime plus 1/8 percent or the London Interbank
Offered Rate plus 1 percent. The effective interest rates on amounts outstanding
as of December 31, 1996 and 1995 were 6.50 percent and 7.16 percent,
respectively.
The Managing General Partner presently believes cash on hand and cash
generated from operations will be sufficient to fund capital expenditures and
other liquidity needs of the Partnership.
RESULTS OF OPERATIONS
- ---------------------
1996 Compared to 1995 -
Revenues of the Partnership increased $1,914,885, or approximately 9
percent, to $23,163,018 in 1996, compared to $21,248,133 in 1995. An increase
in the number of basic subscribers accounted for approximately 39 percent of the
increase in revenues. The number of basic subscribers increased by 2,236
subscribers, or approximately 4 percent, to 54,693 at December 31, 1996 from
52,457 at December 31, 1995. Basic service rate increases accounted for
approximately 44 percent of the increase in revenues. No other individual
factor significantly affected the increase in revenues for the period.
Operating expenses consist primarily of costs associated with the operation
and 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 marketing expenses.
Operating expenses increased $1,115,983, or approximately 9 percent, to
$13,938,189 in 1996 from $12,822,206 in 1995. Operating expenses represented
approximately 60 percent of revenues in 1996 and 1995, respectively. The
increase in operating expenses was primarily the result of increases in
programming fees, which accounted for approximately 73 percent of the increase.
The increase in programming fees was primarily due to the increase in basic
subscribers and higher programming fees. 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 $81,901, or approximately 3 percent, to $2,868,559 in 1996 from
$2,786,658 in 1995. This increase was primarily the result of the increase in
revenues, upon which such management and supervisory fees are based.
Depreciation and amortization expense decreased $39,984, or less than one
percent, to $11,702,503 in 1996 compared to $11,742,487 in 1995. This decrease
was the result of the maturation of the Partnership's tangible asset base.
Operating loss decreased $756,985, or approximately 12 percent, to
$5,346,233 in 1996 from $6,103,218 in 1995. This decrease was a result of the
increase in revenues and decrease in depreciation and amortization expense
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 operating income before depreciation
and amortization. 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 $717,001, or approximately 13
percent, to $6,356,270 in 1996 from $5,639,269 in 1995 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 decreased $261,506, or approximately 9 percent, to
$2,501,029 in 1996 from $2,762,535 in 1995. This decrease in interest expense
was primarily due to lower effective interest rates on interest bearing
obligations during 1996.
Net loss decreased $827,676, or approximately 9 percent, to $7,927,762 in
1996 from $8,755,438 in 1995. The decrease was a result of the factors
discussed above.
12
<PAGE>
1995 Compared to 1994 -
Revenues of the Partnership increased $1,632,953, or approximately 8
percent, to $21,248,133 in 1995, compared to $19,615,180 in 1994. Increases in
the number of basic subscribers accounted for approximately 59 percent of the
increase in revenues. The number of 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 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 expenses 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. This increase was primarily the result of the increase in
revenues, upon which such management and supervisory fees are based, as well as
an increase 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
exceeding the increases in operating expenses and management and supervisory
fees to the general partners and allocated administrative costs from the
Managing General Partner.
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 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.
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
was 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 a result of the factors
discussed above.
13
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
FINANCIAL STATEMENTS
--------------------
AS OF DECEMBER 31, 1996 AND 1995
--------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants 15
Balance Sheets 16
Statements of Operations 18
Statements of Partners' Capital (Deficit) 19
Statements of Cash Flows 20
Notes to Financial Statements 21
</TABLE>
14
<PAGE>
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, 1996 and 1995, and the
related statements of operations, partners' capital (deficit) and cash flows for
each of the three years in the period ended December 31, 1996. 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, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 7, 1997.
15
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
BALANCE SHEETS
--------------
ASSETS
------
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1995
------------- -------------
<S> <C> <C>
CASH $ 345,480 $ 45,490
TRADE RECEIVABLES, less allowance for doubtful
receivables of $28,082 and $19,111 at
December 31, 1996 and 1995, respectively 108,117 286,891
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 52,055,721 47,200,274
Less- accumulated depreciation (27,366,242) (23,414,677)
------------ ------------
24,689,479 23,785,597
Franchise costs and other intangible assets, net of
accumulated amortization of $59,419,903 and $51,513,474
at December 31, 1996 and 1995, respectively 17,782,382 25,688,811
------------ ------------
Total investment in cable
television properties 42,471,861 49,474,408
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 394,429 665,612
------------ ------------
Total assets $ 43,319,887 $ 50,472,401
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
16
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1995
------------- -------------
<S> <C> <C>
LIABILITIES:
Credit facility and other debt $ 36,243,429 $ 35,431,966
Trade accounts payable and accrued liabilities 1,418,976 1,322,658
Accrued interest 272,892 407,032
Subscriber prepayments 51,872 50,265
------------ ------------
Total liabilities 37,987,169 37,211,921
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (693,069) (613,791)
------------ ------------
(692,069) (612,791)
------------ ------------
Limited Partners-
Net contributed capital (85,740 units
outstanding at December 31, 1996 and 1995) 73,790,065 73,790,065
Accumulated deficit (67,765,278) (59,916,794)
------------ ------------
6,024,787 13,873,271
------------ ------------
Total partners' capital (deficit) 5,332,718 13,260,480
------------ ------------
Total liabilities and partners' capital (deficit) $ 43,319,887 $ 50,472,401
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
17
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
For the Year Ended
December 31,
-----------------------------------------------
1996 1995 1994
------------ ------------ -------------------
<S> <C> <C> <C>
REVENUES $23,163,018 $21,248,133 $19,615,180
COSTS AND EXPENSES:
Operating expenses 13,938,189 12,822,206 11,713,245
Management and supervisory fees to the
General Partners and allocated administrative
costs from the Managing General Partner 2,868,559 2,786,658 2,652,836
Depreciation and amortization 11,702,503 11,742,487 12,583,108
----------- ----------- -----------
OPERATING LOSS (5,346,233) (6,103,218) (7,334,009)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (2,501,029) (2,762,535) (2,150,785)
Interest income 4,581 18,010 31,884
Other, net (85,081) 92,305 (191,582)
----------- ----------- -----------
NET LOSS $(7,927,762) $(8,755,438) $(9,644,492)
=========== =========== ===========
ALLOCATION OF NET LOSS:
Managing General Partner $ (79,278) $ (87,554) $ (96,445)
=========== =========== ===========
Limited Partners $(7,848,484) $(8,667,884) $(9,548,047)
=========== =========== ===========
NET LOSS PER LIMITED PARTNERSHIP UNIT $(91.53) $(101.09) $(111.36)
=========== =========== ===========
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.
18
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
-----------------------------------------
For the Year Ended
December 31,
---------------------------------------
1996 1995 1994
----------- ----------- -----------
GENERAL PARTNERS:
Balance, beginning of year $ (612,791) $ (525,237) $ (428,792)
Net loss for the year (79,278) (87,554) (96,445)
----------- ----------- -----------
Balance, end of year $ (692,069) $ (612,791) $ (525,237)
=========== =========== ===========
LIMITED PARTNERS:
Balance, beginning of year $13,873,271 $22,541,155 $32,089,202
Net loss for the year (7,848,484) (8,667,884) (9,548,047)
----------- ----------- -----------
Balance, end of year $ 6,024,787 $13,873,271 $22,541,155
=========== =========== ===========
The accompanying notes to financial statements
are an integral part of these statements.
19
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
For the Year Ended
December 31,
-----------------------------------------------
1996 1995 1994
------------ ------------ -------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(7,927,762) $(8,755,438) $ (9,644,492)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 11,702,503 11,742,487 12,583,108
Amortization of interest rate protection contract - 64,664 64,668
Decrease (increase) in trade receivables 178,774 (220,062) 164,524
Decrease (increase) in deposits, prepaid expenses
and other assets 426,674 123,410 (76,583)
Increase (decrease) in trade accounts payable and
accrued liabilities, accrued interest and subscriber
prepayments (36,215) 723,417 (393,925)
----------- ----------- ------------
Net cash provided by operating activities 4,343,974 3,678,478 2,697,300
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (4,855,447) (3,989,903) (3,474,539)
----------- ----------- ------------
Net cash used in investing activities (4,855,447) (3,989,903) (3,474,539)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 938,049 598,379 36,155,437
Repayments of borrowings (126,586) (412,112) (36,854,400)
----------- ----------- ------------
Net cash provided by (used in) financing
activities 811,463 186,267 (698,963)
----------- ----------- ------------
INCREASE (DECREASE) IN CASH 299,990 (125,158) (1,476,202)
CASH, BEGINNING OF YEAR 45,490 170,648 1,646,850
----------- ----------- ------------
CASH, END OF YEAR $ 345,480 $ 45,490 $ 170,648
=========== =========== ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 2,635,169 $ 2,307,619 $ 2,266,213
=========== =========== ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
20
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(1) ORGANIZATION AND PARTNERS' INTERESTS:
------------------------------------
Formation and Business
----------------------
Jones Growth Partners L.P. (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 a wholly owned subsidiary of Jones Intercable, Inc. ("Intercable"),
a Colorado corporation. 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.
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.
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").
(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 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.
21
<PAGE>
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
Replacements, renewals and improvements are capitalized and maintenance
and repairs are charged to expense as incurred.
Property, plant and equipment and the corresponding accumulated
depreciation are written off as certain assets become fully depreciated and are
no longer in service.
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 10 years
Subscriber lists 1 years
Costs in excess of interests in net assets purchased 34 years
Revenue Recognition
-------------------
Subscriber prepayments are initially deferred and recognized as revenue
when earned.
Reclassifications
-----------------
Certain prior year amounts have been reclassified to conform to the 1996
presentation.
(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, 1996, 1995 and 1994 were $1,158,151, $1,062,407 and
$980,759, 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, 1996 were $200,000. Such fees were paid in March 1997.
Supervisory fees paid to the Associate General Partner by the Partnership for
the years ended December 31, 1995 and 1994 were $200,000 and $196,152,
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
22
<PAGE>
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 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. Such services, and
their related costs, are necessary to the operation of the Partnership and would
have been incurred by the Partnership, if it was a stand alone entity.
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 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 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,
1996, 1995 and 1994 were $1,510,408, $1,524,251 and $1,475,925, respectively.
Payments to/from Affiliates for Programming Services
----------------------------------------------------
The Partnership receives programming from Superaudio, Jones Education
Company and Product Information Network, all of which are affiliates of the
Managing General Partner.
Payments to Superaudio by the Partnership for the years ended December 31,
1996, 1995 and 1994 totaled $32,920, $28,639 and $28,415, respectively.
Payments to Jones Education Company for the years ended December 31, 1996, 1995
and 1994 totaled $96,249, $82,982 and $36,431, 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, 1996, 1995 and 1994 totaled $63,904, $59,858 and $32,863,
respectively.
23
<PAGE>
(4) PROPERTY, PLANT AND EQUIPMENT:
-----------------------------
Property, plant and equipment as of December 31, 1996 and 1995, consisted
of the following:
December 31,
----------------------------
1996 1995
------------ ------------
Cable distribution systems $ 46,097,654 $ 41,392,026
Equipment and tools 2,769,930 2,601,296
Office furniture and equipment 2,382,372 2,444,845
Buildings 20,058 19,823
Vehicles 680,707 637,284
Land 105,000 105,000
------------ ------------
$ 52,055,721 $ 47,200,274
Less: accumulated depreciation $(27,366,242) $(23,414,677)
------------ ------------
$ 24,689,479 $ 23,785,597
============ ============
(5) DEBT:
----
In December 1994, the Partnership entered into a $36,000,000 revolving
credit facility. The revolving credit facility expires on March 31, 1999, at
which time the commitment will reduce quarterly until December 31, 1999 when the
commitment will reduce to zero and all principal and interest amounts
outstanding will be due and payable in full. At December 31, 1996, the maximum
commitment of $36,000,000 was outstanding under the revolving credit agreement.
Interest on the outstanding principal balance is at the Partnership's option of
Prime plus 1/8 percent or the London Interbank Offered Rate plus 1 percent. The
effective interest rates on amounts outstanding as of December 31, 1996 and 1995
were 6.50 percent and 7.16 percent, respectively.
Total Partnership debt consists of the following:
December 31,
------------------------
1996 1995
----------- -----------
Lending institutions-
Revolving credit and term loan facility $36,000,000 $35,200,000
Capital lease obligations 243,429 231,966
----------- -----------
$36,243,429 $35,431,966
=========== ===========
Installments due on all debt principal for the five years in the period
ending December 31, 2001 and thereafter, respectively, are: $73,029, $73,029,
$36,073,029, $24,342, $-0- and $-0-.
At December 31, 1996, 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
24
<PAGE>
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
$228,818, $222,005 and $319,495 for the years ended December 31, 1996, 1995 and
1994, respectively. Future minimum lease payments, as of December 31, 1996,
under noncancelable operating leases for the five years in the period ending
December 31, 2001, and thereafter are as follows:
1997 $237,299
1998 200,133
1999 98,175
2000 -
2001 -
Thereafter -
--------
Total future minimum lease payments $535,607
========
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION:
-----------------------------------------
Supplementary profit and loss information for the respective periods
is presented below:
Year Ended December 31,
--------------------------------------
1996 1995 1994
---------- ---------- ----------
Maintenance and repairs $ 274,968 $ 251,620 $ 269,565
========== ========== ==========
Taxes, other than income and
payroll taxes $ 69,048 $ 82,174 $ 76,239
========== ========== ==========
Advertising $ 302,772 $ 470,562 $ 515,701
========== ========== ==========
Depreciation of property,
plant and equipment $3,796,074 $3,468,654 $4,340,811
========== ========== ==========
Amortization of intangible assets $7,906,429 $8,273,833 $8,242,297
========== ========== ==========
25
<PAGE>
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. Directors of the Managing General Partner
serve until the next annual meeting of the Managing General Partner and until
their successors shall be elected and qualified.
<TABLE>
<CAPTION>
Name Age Positions with the Managing General Partner
- ---- --- ----------------------------------------------
<C> <C> <S>
Glenn R. Jones 67 Chairman of the Board and Chief Executive Officer
James B. O'Brien 47 President
Ruth E. Warren 47 Vice President/Operations
Elizabeth M. Steele 45 Vice President and Secretary
Kevin P. Coyle 45 Vice President/Finance
Larry W. Kaschinske 37 Controller
</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 member of the Board of Directors
and the Executive Committee of the National Cable Television Association.
Additionally, Mr. Jones is a member of the Board of Governors for the American
Society for Training and Development, and a member of 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 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 President's Award from the Cable Television Public Affairs Association in
recognition of Jones International's educational efforts through Mind Extension
University (now Knowledge TV); the Donald G. McGannon Award for the advancement
of minorities and women in cable from the United Church of Christ Office of
Communications; 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 Cableforce 2000 Accolade awarded by Women in Cable in recognition
of the General Partner's innovative employee programs; the Most Outstanding
Corporate Individual Achievement Award from the International Distance Learning
Conference for his contributions to distance education; 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
television systems managed and owned by Intercable. Mr. O'Brien is a board
member of Cable Labs, Inc., the
26
<PAGE>
research arm of the U.S. cable television industry. He also serves as Vice
Chairman and a director of the Cable Television Administration and Marketing
Association and as a director and a member of the Executive Committee of the
Walter Kaitz Foundation, a foundation that places people of ethnic minority
groups 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.
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
- ---- --- --------------------------------------------
<C> <C> <S>
Rocco F. Andriola 38 President and Chief Executive Officer
John H. Ng 46 Vice President
Mark J. Marcucci 34 Vice President
</TABLE>
Mr. Rocco F. Andriola serves as a Managing Director of Lehman Brothers
Inc. in its Diversified Asset Group and has held such position since October
1996. From June 1991 through September 1996, Mr. Andriola held the position of
Senior Vice President in Lehman's Diversified Asset Group.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. Mark J. 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.
27
<PAGE>
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
----------------------------------------------------------------------
As of March 4, 1997, no person or entity owned 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.
TRANSACTIONS WITH THE MANAGING GENERAL PARTNER
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.
TRANSACTIONS WITH AFFILIATES
Jones Education Company ("JEC") is owned 63% by Jones International,
Ltd. ("International"), an affiliate of the General Partner, 9% by Glenn R.
Jones, 12% by Bell Canada International Inc. ("BCI") and 16% by the General
Partner. JEC operates two television networks, JEC Knowledge TV and Jones
Computer Network. JEC Knowledge TV provides programming related to computers
and technology; business, careers and finance; health and wellness; and global
culture and languages. Jones Computer Network provides programming focused
primarily on computers and technology. JEC sells its programming to certain
cable television systems owned or managed by Intercable.
28
<PAGE>
The Great American Country network provides country music video
programming to certain cable television systems owned or managed by Intercable.
This network is owned and operated by Great American Country, Inc., a subsidiary
of Jones International Networks, Ltd., an affiliate of International.
Jones Galactic Radio, Inc. is a company now owned by Jones
International Networks, Ltd., an affiliate of International. Superaudio, a
joint venture between Jones Galactic Radio, Inc. and an unaffiliated entity,
provides satellite programming to certain cable television systems owned or
managed by Intercable.
The Product Information Network Venture (the "PIN Venture") is a
venture among a subsidiary of Jones International Networks, Ltd., an affiliate
of International, and two unaffiliated cable system operators. The PIN Venture
operates the Product Information Network ("PIN"), which is a 24-hour network
that airs long-form advertising generally known as "infomercials." The PIN
Venture generally makes incentive payments of approximately 60% of its net
advertising revenue to the cable systems that carry its programming. Most of
Intercable's owned and managed systems carry PIN for all or part of each day.
Revenues received by the Partnership from the PIN Venture relating to the
Wheaton System totaled approximately $63,904 for the year ended December 31,
1996.
The charges to the Partnership for related party transactions are as
follows for the periods indicated:
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Management fee, Managing General Partner $1,158,151 $1,062,407 $ 980,759
Supervisory fee, Associate General Partner 200,000 200,000 196,152
Allocation of expenses 1,510,408 1,511,770 1,475,925
Amount of advances outstanding 0 0 0
Highest amount of notes and advances outstanding 0 0 0
Programming fees:
Jones Education Company 96,249 82,982 36,431
Superaudio 32,920 28,639 28,415
</TABLE>
29
<PAGE>
PART IV.
--------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
-------------------------------------------------------------------------
<TABLE>
<C> <C> <S>
(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 of Jones Growth
Partners L.P.. (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.
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>
30
<PAGE>
___________________
(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.
31
<PAGE>
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 24, 1997 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 24, 1997 (Principal Executive Officer)
By: /s/ Kevin P. Coyle
_________________________________
Kevin P. Coyle
Vice President/Finance
Dated: March 24, 1997 (Principal Financial Officer)
By: /s/ Larry Kaschinske
_________________________________
Larry Kaschinske
Controller
Dated: March 24, 1997 (Principal Accounting Officer)
32
<PAGE>
Exhibit 10.1.7
CITY OF WARRENVILLE
DU PAGE COUNTY, ILLINOIS
ORDINANCE NO. 1468
ORDINANCE AMENDMENT CERTAIN PROVISIONS OF TITLE 7,
CHAPTER 5 OF THE CITY CODE (CABLE TELEVISION FRANCHISE)
-------------------------------------------------------
WHEREAS, the City of Warrenville, has previously awarded a cable television
franchise, and the current franchise is Jones Growth Partners, Ltd. (the
"Company"); and
WHEREAS, the City has previously enacted rules and regulations governing
the franchise, which rules and regulations are set forth in Title 7, Chapter 5
of the City Code; and
WHEREAS, the Mayor and City Council find and hereby declare that it is in
the best interests of the City to amend certain provisions of the City Code
setting forth said rules and regulations, as hereinafter set forth;
NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF
WARRENVILLE, DU PAGE COUNTY, ILLINOIS, AS FOLLOWS:
SECTION ONE: The foregoing recitals shall be, and they are hereby,
------------
incorporated within this Section One as findings of fact as if said recitals
were fully set forth herein.
SECTION TWO: Subsection B of Section 7-5-3 of Title 7, Chapter 5 of the
------------
City Code of the City of Warrenville shall be and is hereby amended in its
entirety so that said Subsection 7-5-3.B shall hereafter be and read as follows:
B. The term of the grant shall be for twenty (20) years. The term shall begin
on April 20, 1981 and shall terminate April 20, 2001.
SECTION THREE: Subsection F of Section 7-5-10 of Title 7, Chapter 5 of the
--------------
City Code of the City of Warrenville shall be and is hereby amended in its
entirety so that said Subsection 7-5-10.F shall hereafter be and read as
follows:
<PAGE>
F. The system shall carry at least one channel for each of the following
purposes ("Public Service Channels"):
1. Municipal access.
2. Educational access.
3. Public access.
4. Upon request of the Municipality and provided all of the above channels
are in use, the Company shall provide additional Public Service Channels.
5. Notwithstanding the foregoing, the Municipality and the Company may
mutually agree to consolidate all or part of the functions of the Public
Service Channels and, as part of the consolidation, to reduce the number of
Public Service Channels from three (3) to one (1). Either the Municipality
or the Company may, in its sole discretion, cancel the aforesaid
consolidation agreement upon sixty (60) days' prior written notice to the
other party, in which case up to three (3) separate Public Service Channels
shall thereupon be restored by the Company.
6. The Company shall, at its own expense, provide and maintain in good
working order a character generator at City Hall for the Municipality's use
on the municipal access channel.
7. Commencing January 1, 1996, the Company shall, following consultation
with the corporate authorities, provide Two Thousand Dollars ($2,000)
annually to the corporate authorities for educational college scholarships,
to be apportioned among those applicants with Warrenville mailing addresses
who meet the criteria established by the corporate authorities for
graduating high school seniors or college students. In the event, in a
given fiscal year, all of the Company's annual college scholarship
contribution is not expended for college scholarships, the corporate
authorities may put any monies not expended in an endowment fund to be used
solely for college scholarships in subsequent fiscal years.
SECTION FOUR: The Mayor and City Clerk are hereby authorized and directed
-------------
to enter into a consolidation agreement with the Company whereby (1) the
municipal access channel will be retained and (2) the second and third Public
2
<PAGE>
Service Channels will be transferred temporarily to the Company for commercial
broadcast use pursuant to Section 7-5-10.F of the City Code.
SECTION FIVE: Any policy, resolution or ordinance of the City which
-------------
conflicts with the provisions of this ordinance shall be and is hereby repealed
to the extent of such conflict.
SECTION SIX: Except as expressly amended herein, the remaining portions of
------------
Title 7, Chapter 5 of the City Code which are not expressly amended herein shall
be and are hereby ratified and affirmed and shall remain in full force and
effect.
SECTION SEVEN: Any and all policies, resolutions or ordinances of the City
--------------
of Warrenville which are in conflict with the provisions of this ordinance shall
be, and they are hereby repealed.
SECTION EIGHT: This ordinance shall be in full force and effect from and
--------------
after its passage, approval and publication in the manner provided by law.
PASSED THIS 15th day of January, 1996.
AYES: Ald, Carroll, Siebert, Marzano, Brogie, Molnar, Ulery,
Johnston and Skinner
NAYS: None
ABSENT: None
APPROVED THIS 17th day of January 1996.
/s/ Vivian M. Lund
------------------
ATTEST:
/s/ Rosemary D. Tierney
- -----------------------
Published in Pamphlet Form by Authority of the
City Council of the City of Warrenville,
Dupage County, Illinois, this 17th day of Jan.
1996
/s/ Rosemary D. Tierney
-----------------------
City Clerk
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 345,480
<SECURITIES> 0
<RECEIVABLES> 108,117
<ALLOWANCES> (28,082)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 52,055,721
<DEPRECIATION> (27,366,242)
<TOTAL-ASSETS> 43,319,887
<CURRENT-LIABILITIES> 1,743,740
<BONDS> 36,243,429
0
0
<COMMON> 0
<OTHER-SE> 5,332,718
<TOTAL-LIABILITY-AND-EQUITY> 43,319,887
<SALES> 0
<TOTAL-REVENUES> 23,163,018
<CGS> 0
<TOTAL-COSTS> 28,509,251
<OTHER-EXPENSES> 80,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,501,029
<INCOME-PRETAX> (7,927,762)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,927,762)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,927,762)
<EPS-PRIMARY> (91.53)
<EPS-DILUTED> (91.53)
</TABLE>
