<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1997
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[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _________ to __________
Commission File Number 0-17916
JONES GROWTH PARTNERS L.P.
- -------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1143409
- -------------------------------------------------------------------------------
State of Organization IRS employer I.D. #
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
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Address of principal executive office
(303) 792-3111
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Registrant's telephone number
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
------ ------------- -------------
<S> <C> <C>
CASH $ 275,635 $ 345,480
TRADE RECEIVABLES, less allowance for doubtful
receivables of $23,274 and $28,082 at March 31, 1997
and December 31, 1996, respectively 86,417 108,117
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 52,767,710 52,055,721
Less- accumulated depreciation (28,303,632) (27,366,242)
------------ ------------
24,464,078 24,689,479
Franchise costs and other intangible assets, net of
accumulated amortization of $61,144,611 and $59,419,903
at March 31, 1997 and December 31, 1996, respectively 16,057,674 17,782,382
------------ ------------
Total investment in cable
television properties 40,521,752 42,471,861
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS 627,401 394,429
------------ ------------
Total assets $ 41,511,205 $ 43,319,887
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
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JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- -------------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
- -------------------------------------------
LIABILITIES:
Credit facility and other debt $ 36,209,399 $ 36,243,429
Trade accounts payable and accrued liabilities 1,472,196 1,418,976
Accrued interest 129,644 272,892
Subscriber prepayments 58,501 51,872
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Total liabilities 37,869,740 37,987,169
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PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 1,000 1,000
Accumulated deficit (709,982) (693,069)
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(708,982) (692,069)
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Limited Partners-
Net contributed capital (85,740 units outstanding at
March 31, 1997 and December 31, 1996) 73,790,065 73,790,065
Accumulated deficit (69,439,618) (67,765,278)
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4,350,447 6,024,787
------------ ------------
Total partners' capital (deficit) 3,641,465 5,332,718
------------ ------------
Total liabilities and partners' capital (deficit) $ 41,511,205 $ 43,319,887
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
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JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
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<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------
1997 1996
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<S> <C> <C>
REVENUES $ 5,873,292 $ 5,510,674
COSTS AND EXPENSES:
Operating expenses 3,545,094 3,423,552
Management and supervisory fees to the General
Partners and allocated administrative costs
from the Managing General Partner 749,341 650,259
Depreciation and amortization 2,710,935 2,968,061
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OPERATING LOSS (1,132,078) (1,531,198)
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OTHER INCOME (EXPENSE):
Interest expense (574,348) (635,055)
Interest income 923 1,944
Other, net 14,250 (19,793)
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NET LOSS $(1,691,253) $(2,184,102)
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ALLOCATION OF NET LOSS:
Managing General Partner $ (16,913) $ (21,841)
=========== ===========
Limited Partners $(1,674,340) $(2,162,261)
=========== ===========
NET LOSS PER LIMITED PARTNERSHIP UNIT $(19.53) $(25.22)
=========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 85,740 85,740
=========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,691,253) $(2,184,102)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 2,710,935 2,968,061
Decrease in trade receivables 21,700 76,505
Increase in deposits, prepaid expenses
and other assets (281,809) (4,107)
Increase (decrease) in trade accounts payable,
accrued liabilities, accrued interest and
subscriber prepayments (83,399) 58,423
----------- -----------
Net cash provided by operating activities 676,174 914,780
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (711,989) (940,478)
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Net cash used in investing activities (711,989) (940,478)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - 40,552
Repayment of borrowings (34,030) (32,981)
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Net cash provided by (used in) financing activities (34,030) 7,571
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DECREASE IN CASH (69,845) (18,127)
CASH, BEGINNING OF PERIOD 345,480 45,490
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CASH, END OF PERIOD $ 275,635 $ 27,363
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 837,069 $ 750,488
=========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
<PAGE>
JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data includes
all adjustments, consisting of normal recurring accruals, necessary to present
fairly the financial position of Jones Growth Partners L.P. (the "Partnership")
at March 31, 1997 and December 31, 1996, and its results of operations and cash
flows for the three month periods ended March 31, 1997 and 1996. Results of
operations for these periods are not necessarily indicative of results to be
expected for the full year.
The Partnership owns the cable television system serving the municipalities
of Addison, Glen Ellyn, St. Charles, Warrenville, West Chicago, Wheaton,
Winfield and Geneva, and certain portions of unincorporated areas of Du Page and
Kane counties, all in the State of Illinois (the "Wheaton System").
(2) Jones Spacelink Cable Corporation, a wholly owned subsidiary of Jones
Intercable, Inc. ("Intercable"), a Colorado corporation, is the "Managing
General Partner." The Managing General Partner and certain of its affiliates
also own and operate cable television systems for their own account and for the
account of other managed limited partnerships. The Managing General Partner
receives a fee for its services equal to 5 percent of the gross revenues of the
Partnership, excluding revenues from the sale of cable television systems or
franchises. Management fees paid to the Managing General Partner by the
Partnership for the three month periods ended March 31, 1997 and 1996 were
$293,665 and $275,534, respectively. Growth Partners Inc. (the "Associate
General Partner"), an affiliate of Lehman Brothers Inc., participates with the
Managing General Partner in certain management decisions affecting the
Partnership and receives a supervisory fee of the lesser of one percent of the
gross revenues of the Partnership, excluding revenues from the sale of cable
television systems or franchises, or $200,000, accrued monthly and payable
annually. Supervisory fees accrued to the Associate General Partner by the
Partnership for the three month periods ended March 31, 1997 and 1996 were
$50,000 and $55,107, respectively.
The Partnership reimburses the Managing General Partner and certain of its
affiliates for certain allocated overhead and administrative costs. These
expenses represent the salaries and related benefits paid for corporate
personnel, rent, data processing services and other corporate facilities costs.
Such personnel provide engineering, marketing, administrative, accounting, legal
and investor relations services to the Partnership. Such services, and their
related costs, are necessary to the operations of the Partnership and would have
been incurred by the Partnership if it was a stand alone entity. Allocations of
personnel costs are primarily based upon actual time spent by employees of the
Managing General Partner and certain of its affiliates with respect to each
partnership managed. Remaining expenses are allocated based on the pro rata
relationship of the Partnership's revenues to the total revenues of all cable
television systems owned or managed by Intercable and certain of its affiliates.
Systems owned by Intercable and all other systems owned by partnerships for
which Intercable is the general partner are also allocated a proportionate share
of these expenses. The Managing General Partner believes that the methodology
used in allocating overhead and administrative costs is reasonable.
Reimbursements by the Partnership to the Managing General Partner for allocated
overhead and administrative costs for three month periods ended March 31, 1997
and 1996 were $405,676 and $319,618, respectively.
6
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JONES GROWTH PARTNERS L.P.
--------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
It is the Managing 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
Managing General Partner's policy, the Wheaton System, along with other Chicago
area systems owned or managed by the Managing General Partner and its
affiliates, are being marketed for sale. There is no assurance as to the timing
or terms of any sales.
For the three months ended March 31, 1997, the Partnership generated net
cash from operating activities totaling $676,174, which is available to fund
capital expenditures and non-operating costs. During the first three months of
1997, the Partnership expended approximately $712,000 for capital expenditures
for the Wheaton System. Approximately 72 percent of these expenditures related
to the extension of cable plant to serve additional customers, and approximately
18 percent of these expenditures related to cable, hardware and labor for new
subscriber installations. Approximately 8 percent was for the purchase of
converters and the remainder of these expenditures was for various system
enhancements. Such expenditures were financed from cash on hand and cash from
operations. Capital expenditures for the remainder of 1997 are expected to be
approximately $3,545,000 which is expected to be financed from available cash
balances and cash flow from operations. For the remainder of 1997,
approximately 60 percent of these expenditures will be used to extend the cable
plant, to make additional subscriber installations and to replace equipment in
the Wheaton System. Approximately 31 percent of the capital expenditures will
relate to cable, hardware and labor for new subscriber installations. The
remainder of the 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.
Ameritech, which provides telephone service in a multi-state region,
including Illinois, has obtained a franchise that allows it to provide cable
television service in a portion of the Wheaton System. This competition could
have a negative effect on the Wheaton System's revenues, cash flow and fair
market value. It could also have a negative impact on the Partnership's ability
to sell the Wheaton System. The Managing General Partner is taking prudent
steps necessary to meet this competition from Ameritech, and to the extent
possible, to safeguard 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 be reduced 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 March 31, 1997, the maximum of
$36,000,000 was outstanding under the revolving credit agreement. Interest on
the outstanding principal balance is at the Partnership's option of the Prime
Rate plus 1/8 percent or the London Interbank Offered Rate plus 1 percent. The
effective interest rates on amounts outstanding as of March 31, 1997 and 1996
were 6.57 percent and 6.76 percent, respectively.
The Managing General Partner presently believes cash on hand, cash
generated from operations and, if necessary and in its discretion, advances
from the Managing General Partner will be sufficient to fund remaining 1997
capital expenditures and other liquidity needs of the Partnership.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Partnership for the three months ended March 31, 1997
increased $362,618, or approximately 7 percent, to $5,873,292 for the three
months ended March 31, 1997 compared to $5,510,674 in 1996. Basic service rate
increases accounted for approximately 55 percent of the increase in revenues.
An increase in the number of basic subscribers accounted for approximately 45
percent of the increase in revenues. The number of basic subscribers increased
by 2,037 subscribers, or approximately 4 percent, to 55,002 at March 31, 1997
from 52,965 at March 31, 1996. No other individual factor significantly
affected the increase in revenues for the period.
7
<PAGE>
Operating expenses consist primarily of costs associated with the operation
and administration of the Partnership's cable television system. The principal
cost components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
maintenance expenses and marketing expenses.
Operating expenses increased $121,542, or approximately 4 percent, to
$3,545,094 for the three months ended March 31, 1997 from $3,423,552 in 1996.
Operating expenses represented approximately 60 percent and 62 percent,
respectively, of revenues in 1997 and 1996. The increase in operating expenses
was primarily the result of increases in programming fees, which accounted for
approximately 70 percent of the increase, and franchise fees, which accounted
for approximately 21 percent of the increase. No other individual factor
significantly affected the increase in operating expenses for the period.
The cable television industry generally measures the financial performance
of a cable television system in terms of operating cash flow (revenues less
operating expenses). 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 cash flow increased
$241,076, or approximately 12 percent, to $2,328,198 for the three months ended
March 31, 1997 from $2,087,122 for the comparable period in 1996. This increase
was a result of the increase in revenues exceeding the increase in operating
expenses.
Management and supervisory fees to the Managing and Associate General
Partners and allocated administrative costs from the Managing General Partner
increased $99,082, or approximately 15 percent, to $749,341 for the three months
ended March 31, 1997 from $650,259 for the comparable period in 1996. This
increase was primarily the result of the increase in revenues, upon which such
management and supervisory fees and allocations are based, and the timing of
certain expenses allocated from the Managing General Partner.
Depreciation and amortization expense decreased $257,126, or approximately
9 percent, to $2,710,935 for the three months ended March 31, 1997 compared to
$2,968,061 for the comparable period in 1996. This decrease was the result of
the maturation of a portion of the asset base.
Operating loss decreased $399,120, or approximately 26 percent, to
$1,132,078 for the three months ended March 31, 1997 from $1,531,198 for the
comparable period in 1996. 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.
Interest expense decreased $60,707, or approximately 10 percent, to
$574,348 for the three months ended March 31, 1997 from $635,055 for the
comparable period in 1996. This decrease in interest expense was primarily due
to lower effective interest rates on interest-bearing obligations.
Net loss decreased $492,849, or approximately 23 percent, to $1,691,253 for
the three months ended March 31, 1997 from $2,184,102 for the comparable period
in 1996. This decrease was the result of the factors discussed above.
8
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JONES GROWTH PARTNERS L.P.
a Colorado limited partnership
BY: Jones Spacelink Cable Corporation
By: /S/ Kevin P. Coyle
--------------------------------------
Kevin P. Coyle
Vice President/Finance
(Principal Financial Officer)
Dated: May 13, 1997
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 275,635
<SECURITIES> 0
<RECEIVABLES> 86,417
<ALLOWANCES> (23,274)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 52,767,710
<DEPRECIATION> (28,303,632)
<TOTAL-ASSETS> 41,511,205
<CURRENT-LIABILITIES> 1,660,341
<BONDS> 36,209,399
0
0
<COMMON> 0
<OTHER-SE> 3,641,465
<TOTAL-LIABILITY-AND-EQUITY> 41,511,205
<SALES> 0
<TOTAL-REVENUES> 5,873,292
<CGS> 0
<TOTAL-COSTS> 7,005,370
<OTHER-EXPENSES> (15,173)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 574,348
<INCOME-PRETAX> (1,691,253)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,691,253)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,691,253)
<EPS-PRIMARY> (19.53)
<EPS-DILUTED> (19.53)
</TABLE>
