<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 June 30, 1996.
-------------
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____ to ____.
Commission File Number: 0-18133
IDS/JONES GROWTH PARTNERS II, L.P.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-1060548
- --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
------------------------------------------------------------------------
Address of principal executive office
(303) 792-3111
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 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
--- ---
<PAGE>
IDS/JONES GROWTH PARTNERS II, L. P.
-----------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
-------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
------ ------------- -------------
<S> <C> <C>
CASH $ 101,071 $ 6,803
TRADE RECEIVABLES, less allowance for doubtful receivables
of $123,459 and $49,993 at June 30, 1996 and December 31,
1995, respectively 489,691 463,098
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 40,312,953 38,380,661
Less - accumulated depreciation (19,139,383) (17,672,119)
------------ ------------
21,173,570 20,708,542
Franchise costs and other intangible assets, net of accumulated
amortization of $47,208,919 at June 30, 1996 and $43,830,221
at December 31, 1995, respectively 26,489,076 29,867,774
------------ ------------
Total investment in cable television properties 47,662,646 50,576,316
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 319,470 402,697
------------ ------------
Total assets $ 48,572,878 $ 51,448,914
============ ============
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
2
<PAGE>
IDS/JONES GROWTH PARTNERS II, L. P.
-----------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
-------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------- -------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
<S> <C> <C>
LIABILITIES:
Debt $ 47,415,087 $ 45,909,122
Accounts payable - Managing General Partner - 331,185
Accrued liabilities 2,298,157 2,315,455
Subscriber prepayments 67,103 62,574
------------ ------------
Total liabilities 49,780,347 48,618,336
------------ ------------
MINORITY INTEREST IN JOINT VENTURE (503,296) 885,792
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 500 500
Accumulated deficit (382,974) (356,484)
------------ ------------
(382,474) (355,984)
------------ ------------
Limited Partners-
Net contributed capital (174,343 units outstanding
at June 30, 1996 and December 31, 1995) 37,256,546 37,256,546
Accumulated deficit (37,578,245) (34,955,776)
------------ ------------
(321,699) 2,300,770
------------ ------------
Total liabilities and partners' capital (deficit) $ 48,572,878 $ 51,448,914
============ ============
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
3
<PAGE>
IDS/JONES GROWTH PARTNERS II, L. P.
-----------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- ------------------------
1996 1995 1996 1995
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUES $ 4,596,553 $ 4,284,920 $ 9,042,039 $ 8,301,415
COSTS AND EXPENSES:
Operating expenses 2,656,239 2,535,660 5,255,571 4,881,044
Management fees and allocated
overhead from General Partners 567,890 514,168 1,092,457 1,051,609
Depreciation and amortization 2,373,495 2,585,899 4,888,220 5,405,909
----------- ----------- ----------- -----------
OPERATING LOSS (1,001,071) (1,350,807) (2,194,209) (3,037,147)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (916,080) (873,517) (1,829,254) (1,894,008)
Other, net (7,377) (35,732) (14,584) (39,303)
----------- ----------- ----------- -----------
Total other income (expense), net (923,457) (909,249) (1,843,838) (1,933,311)
----------- ----------- ----------- -----------
CONSOLIDATED LOSS (1,924,528) (2,260,056) (4,038,047) (4,970,458)
MINORITY INTEREST IN
CONSOLIDATED LOSS 662,037 777,460 1,389,088 1,709,838
----------- ----------- ----------- -----------
NET LOSS $(1,262,491) $(1,482,596) $(2,648,959) $(3,260,620)
=========== =========== =========== ===========
ALLOCATION OF NET LOSS:
General Partners $ (12,626) $ (14,826) $ (26,490) $ (32,606)
=========== =========== =========== ===========
Limited Partners $(1,249,865) $(1,467,770) $(2,622,469) $(3,228,014)
=========== =========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (7.17) $ (8.42) $ (15.04) $ (18.52)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNERSHIP UNITS
OUTSTANDING 174,343 174,343 174,343 174,343
=========== =========== =========== ===========
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
4
<PAGE>
IDS/JONES GROWTH PARTNERS II, L. P.
-----------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,648,959) $(3,260,620)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 4,888,220 5,405,909
Minority interest in consolidated loss (1,389,088) (1,709,838)
Amortization of interest rate protection contract 26,250 26,250
Decrease (increase) in trade receivables (26,593) 63,508
Decrease (increase) in deposits, prepaid expenses
and deferred charges 14,719 (60,444)
Increase (decrease) in accrued liabilities and
subscriber prepayments (12,769) 671,015
Decrease in advances from Managing General Partner (331,185) (785,316)
----------- -----------
Net cash provided by operating activities 520,595 350,464
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (1,932,292) (1,409,339)
----------- -----------
Net cash used in investing activities (1,932,292) (1,409,339)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 2,029,712 2,000,000
Repayment of debt (523,747) (650,587)
Purchase of interest rate protection contract - (105,000)
----------- -----------
Net cash provided by financing activities 1,505,965 1,244,413
----------- -----------
Increase in cash 94,268 185,538
Cash, beginning of period 6,803 57,284
----------- -----------
Cash, end of period $ 101,071 $ 242,822
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 1,662,544 $ 1,341,508
=========== ===========
</TABLE>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
5
<PAGE>
IDS/JONES GROWTH PARTNERS II, L. P.
-----------------------------------
(A Limited Partnership)
NOTES TO UNAUDITED CONSOLIDATED 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 only of normal recurring accruals, necessary to
present fairly the financial position of IDS/Jones Growth Partners II, L.P. (the
"Partnership") at June 30, 1996 and December 31, 1995, its Statements of
Operations for the three and six month periods ended June 30, 1996 and 1995 and
its Statements of Cash Flows for the six month periods ended June 30, 1996 and
1995. Results of operations for these periods are not necessarily indicative of
results to be expected for the full year.
The accompanying financial statements include 100 percent of the accounts
of the Partnership and those of IDS/Jones Joint Venture Partners (the "Venture")
including the cable television systems serving the areas in and around Aurora,
Illinois, reduced by the minority interest in the Venture. All interpartnership
accounts and transactions have been eliminated.
(2) Jones Cable Corporation ("the Managing General Partner") manages the
Partnership and the Venture and receives a fee for its services equal to 5
percent of the gross revenues of the Venture, excluding revenues from the sale
of cable television systems or franchises. Management fees paid to the Managing
General Partner for the three and six month periods ended June 30, 1996 were
$229,828 and $452,102, respectively, compared to $214,246 and $415,071,
respectively, for the three and six month periods ended June 30, 1995.
IDS Cable II Corporation ("the Supervising General Partner") and IDS Cable
Corporation (the supervising general partner of IDS/Jones Growth Partners 89-B,
Ltd.) participate in certain management decisions of the Venture and receive a
fee for their services equal to 1/2 percent of the gross revenues of the
Venture, excluding revenues from the sale of cable television systems or
franchises. Supervision fees for the three and six month periods ended June 30,
1996 were $22,983 and $45,210, respectively, compared to $21,425 and $41,507,
respectively, for the three and six month periods ended June 30, 1995.
The Venture reimburses Jones Intercable, Inc. ("JIC"), the parent of the
Managing General Partner, for certain allocated overhead and administrative
expenses. 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
Venture. Allocations of personnel costs are based primarily on actual time
spent by employees of JIC with respect to each partnership managed. Remaining
expenses are allocated based on the pro rata relationship of the Venture's
revenues to the total revenues of all systems owned or managed by JIC and
certain of its affiliates. Systems owned by JIC and all other systems owned by
partnerships for which JIC or affiliates of the general partners are also
allocated a proportionate share of these expenses. JIC believes that the
methodology used in allocating overhead and administrative expenses is
reasonable. Reimbursements to JIC for allocated overhead and administrative
expenses during the three and six month periods ended June 30, 1996 were
$315,079 and $595,145, respectively, compared to $278,497 and $595,031,
respectively, for the three and six month periods ended June 30, 1995. The
Supervising General Partner may also be reimbursed for certain expenses incurred
on behalf of the Partnership. There were no reimbursements made to the
Supervising General Partner for allocated overhead and administrative expenses
during the three and six month periods ended June 30, 1996 and 1995.
6
<PAGE>
IDS/JONES GROWTH PARTNERS II, L. P.
-----------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
The Partnership owns a 66 percent interest in the Venture. The
accompanying financial statements include the accounts of the Partnership and
the Venture, reduced by the 34 percent minority interest in the Venture. The
Venture owns the cable television system serving certain areas in and around
Aurora, Illinois.
It is JIC'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 JIC's policy, the Managing General
Partner has begun to solicit buyers for the Venture's Aurora System. There is no
assurance as to the timing or terms of any sale.
For the six months ended June 30, 1996, the Venture generated net cash from
operating activities totaling $520,595, which is available to fund capital
expenditures and non-operating costs. During the first six months of 1996, the
Venture expended approximately $1,932,000 on capital expenditures. Approximately
41 percent of the expenditures related to plant extensions. Approximately 40
percent of the expenditures related to construction of service drops to
subscriber homes. The remainder of the expenditures was used for various
enhancements in the Aurora System. Funding for these expenditures was provided
by borrowings from the Venture's credit facility and cash generated from
operations. Anticipated capital expenditures for the remainder of 1996 are
approximately $2,128,000. Approximately 35 percent of the expenditures are for
construction of service drops to subscriber homes. Approximately 26 percent of
the expenditures are for plant extensions. These capital expenditures are
necessary to maintain the value of the Venture's Aurora System. Funding for the
expenditures is expected to be provided by cash on hand, cash generated from
operations and borrowings from the Venture's credit facility.
On December 5, 1991, JIC made an equity investment in the Venture in the
amount of $2,872,000 and a loan of $1,800,000 to the Venture. On that date, IDS
Management Corporation also made an equity investment of $2,872,000 in the
Venture and a loan to the Venture in the amount of $1,800,000. Over half of the
$1,800,000 loan from IDS Management Corporation has been repaid. The loans from
JIC and IDS Management Corporation are subordinate to the Venture's revolving
credit and term loan. These loans have matured. Although IDS Management
Corporation and JIC have not formally extended their loans, they have not
demanded repayment. In the first quarter of 1994, JIC agreed to subordinate to
all other Venture debt its $1,406,647 advance to the Venture outstanding at
March 30, 1994 and IDS Management Corporation made an additional loan of
$1,000,000 to the Venture to fund principal repayments due at the end of March
1994 on the Venture's then-outstanding term loan. The interest rates on the
respective loans, which will vary from time to time, with respect to IDS
Management Corporation's loans, are at its cost of borrowing, and, with respect
to JIC's loans, are at its weighted average cost of borrowing. It is
anticipated that the remaining loans will be repaid over time with borrowings
from the Venture's revolving credit and term loan, as discussed below. If the
December 5, 1991 loans are not repaid, JIC and IDS Management Corporation,
respectively, will have the right, among other rights, to convert the unpaid
portion of these loans to equity in the Venture.
The Venture is a party to a revolving credit and term loan agreement with
two commercial banks. This credit facility has a maximum amount available of
$45,000,000. At June 30, 1996, $42,300,000 was outstanding under this
agreement, leaving $2,700,000 available for future needs of the Venture, subject
to certain financial covenants. The revolving credit period of the Venture's
credit facility expires January 1, 1997, at which time the then-outstanding
balance converts to a term loan payable in 28 consecutive quarterly
installments. Interest on the credit facility is at the Venture's option of the
Base Rate plus .75 percent, the London Interbank Offered Rate plus 1.75 percent
or the Certificate of Deposit Rate plus 1.875 percent. The effective interest
rates on outstanding obligations to non-affiliates as of June 30, 1996 and 1995
were 7.53 percent and 8.11 percent, respectively. The Venture anticipates
repaying the remaining notes outstanding to related parties with borrowings from
this credit facility. As borrowings become available, subject to leverage
covenants, the related parties' notes will be repaid including accrued interest
in the following order: first, to IDS
7
<PAGE>
Management Corporation the remaining $800,000 of the $1,800,000 note dated
December 5, 1991; second, to JIC the $1,800,000 note dated December 5, 1991;
third, to IDS Management Corporation the $1,000,000 note dated March 30, 1994;
and fourth, to JIC the $1,406,647 subordinated advance.
As a result of their equity contributions to the Venture, IDS Management
Corporation and JIC each have a 5 percent equity interest in the Venture, the
Partnership has a 66 percent interest and IDS/Jones Growth Partners 89-B, Ltd.
has a 24 percent interest. If the December 5, 1991 subordinated loans are
converted to equity, the ownership percentages will be adjusted accordingly.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Venture's Aurora System totaled $4,596,553 for the three
month period ended June 30, 1996 compared to $4,284,920 for the comparable 1995
period, an increase of $311,633, or approximately 7 percent. An increase in
basic service revenues primarily accounted for the increase in revenues for the
three month period ended June 30, 1996. Increases in the number of basic
service subscribers accounted for approximately 54 percent of the increase in
basic service revenues for the three months and basic service rate adjustments
accounted for approximately 46 percent of the increase in basic service
revenues. Revenues totaled $9,042,039 for the six months ended June 30, 1996
compared to $8,301,415 for the comparable 1995 period, an increase of $740,624,
or approximately 9 percent. An increase in basic service revenues primarily
accounted for the increase in revenues for the six month period. Increases in
the number of basic service subscribers accounted for approximately 53 percent
of the increase in basic service revenues for the six month periods and basic
service rate adjustments accounted for approximately 47 percent of the increase
in basic service revenues. The number of basic service subscribers totaled
45,548 at June 30, 1996 compared to 42,460 at June 30, 1995, an increase of
3,088, or approximately 7 percent. No other individual factor was significant
to the increases in revenues.
Operating expenses consist primarily of costs associated with the
administration of the Aurora System. The principal cost components are salaries
paid to system personnel, programming expenses, professional fees, subscriber
billing costs, rent for leased facilities, cable system maintenance expenses and
consumer marketing expenses.
Operating expenses totaled $2,656,239 for the three month period ended June
30, 1996 compared to $2,535,660 for the comparable 1995 period, an increase of
$120,579, or approximately 5 percent. Operating expenses totaled $5,255,571 for
the six months ended June 30, 1996 compared to $4,881,044 for the comparable
1995 period, an increase of $374,527, or approximately 8 percent. Operating
expenses represented 58 percent and 59 percent, respectively, of revenues for
the three month periods ended June 30, 1996 and 1995, and 58 percent and 59
percent, respectively, for the six month periods ended June 30, 1996 and 1995.
Increases in programming fees, due in part to the increase in the subscriber
base, primarily accounted for the increase in operating expenses for the three
and six month periods. No other individual factors contributed significantly to
the increase.
Management fees and supervision fees and allocated overhead from the
General Partners totaled $567,890 for the three month period ended June 30, 1996
compared to $514,168 for the comparable 1995 period, an increase of $53,722, or
approximately 10 percent. Management fees and supervision fees and allocated
overhead from the General Partners totaled $1,092,457 for the six months ended
June 30, 1996 compared to $1,051,609 for the comparable 1995 period, an increase
of $40,848, or approximately 4 percent. The increases for the three and six
month periods were due to the increases in revenues, upon which management fees
and supervision fees are based.
Depreciation and amortization expense totaled $2,373,495 for the three
month period ended June 30, 1996 compared to $2,585,899 for the comparable 1995
period, a decrease of $212,404, or approximately 8 percent. Depreciation and
amortization expense totaled $4,888,220 for the six months ended June 30, 1996
compared to $5,405,909 for the comparable 1995 period, a decrease of $517,689,
or approximately 10 percent. These decreases were due to the maturation of a
portion of the tangible asset base.
Operating loss totaled $1,001,071 for the three month period ended June 30,
1996 compared to $1,350,807 for the similar 1995 period, a decrease of $349,736,
or approximately 26 percent. Operating loss totaled $2,194,209 for the six
months ended June 30, 1996 compared to $3,037,147 in 1995, a decrease of
$842,938, or approximately 28 percent. The decreases for the three and six
month periods were due to the increases in revenues and the decreases in
depreciation and amortization expense exceeding the increases in operating
expenses and management fees and allocated overhead from the General Partners.
8
<PAGE>
The cable television industry generally measures the financial performance
of a cable television system in terms of cash flow or operating income before
depreciation and amortization. The value of a cable television system is often
determined using multiples of cash flow. This measure is not intended to be a
substitute or improvement upon the items disclosed on the financial statements,
rather it is included because it is an industry standard. Operating income
before depreciation and amortization expense totaled $1,372,424 for the three
month period ended June 30, 1996 compared to $1,235,092 for the comparable 1995
period, an increase of $137,332, or approximately 11 percent. Operating income
before depreciation and amortization expense totaled $2,694,011 for the six
months ended June 30, 1996 compared to $2,368,762 for the comparable 1995
period, an increase of $325,249, or approximately 14 percent. The increases for
the three and six month periods were due to the increases in revenues exceeding
the increases in operating expenses and management fees and allocated overhead
from the General Partners.
Interest expense totaled $916,080 for the three month period ended June 30,
1996 compared to $873,517 for the comparable 1995 period, an increase of
$42,563, or approximately 5 percent. The increase was due to higher outstanding
balances on interest bearing obligations. Interest expense totaled $1,829,254
for the six months ended June 30, 1996 compared to $1,894,008 for the comparable
1995 period, a decrease of $64,754, or approximately 3 percent. The decrease
was due to lower effective interest rates.
Consolidated loss totaled $1,924,528 for the three month period ended June
30, 1996 compared to $2,260,056 for the comparable 1995 period, a decrease of
$335,528, or approximately 15 percent. Consolidated loss totaled $4,038,047 for
the six months ended June 30, 1996 compared to $4,970,458 for the comparable
1995 period, a decrease of $932,411, or approximately 19 percent. The decreases
were due to the factors discussed above and such losses are expected to
continue.
9
<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
10
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
IDS/JONES GROWTH PARTNERS II, L.P.
BY: JONES CABLE CORPORATION
its Managing General Partner
By: /S/ Kevin P. Coyle
------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: August 14, 1996
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 101,071
<SECURITIES> 0
<RECEIVABLES> 489,691
<ALLOWANCES> (123,459)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 40,312,953
<DEPRECIATION> (19,139,383)
<TOTAL-ASSETS> 48,572,878
<CURRENT-LIABILITIES> 2,365,260
<BONDS> 47,415,087
0
0
<COMMON> 0
<OTHER-SE> (1,207,469)
<TOTAL-LIABILITY-AND-EQUITY> 48,572,878
<SALES> 0
<TOTAL-REVENUES> 9,042,039
<CGS> 0
<TOTAL-COSTS> 11,236,248
<OTHER-EXPENSES> 14,584
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,829,254
<INCOME-PRETAX> (2,648,959)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,648,959)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,648,959)
<EPS-PRIMARY> (15.04)
<EPS-DILUTED> (15.04)
</TABLE>
