<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x]Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1996
--------------
[ ]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: 0-16183
IDS/JONES GROWTH PARTNERS 87-A LTD.
- -------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1060544
- -------------------------------------------------------------------------------
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 87-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
------ ------------ ------------
<S> <C> <C>
CASH $ 21,190,225 $ 557,506
TRADE RECEIVABLES, less allowance for doubtful
receivables of $46,072 and $24,428 at
March 31, 1996 and December 31, 1995,
respectively 208,789 623,890
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 15,314,796 35,421,532
Less- accumulated depreciation (5,354,783) (15,195,244)
----------- ------------
9,960,013 20,226,288
Franchise costs and other intangible assets, net of
accumulated amortization of $12,464,557 at
March 31, 1996 and $24,675,391 at
December 31, 1995, respectively 2,735,608 14,397,338
----------- ------------
Total investment in cable television properties 12,695,621 34,623,626
DEPOSITS, PREPAID EXPENSES AND DEFERRED CHARGES 215,619 355,352
----------- ------------
Total assets $34,310,254 $ 36,160,374
=========== ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets
2
<PAGE>
IDS/JONES GROWTH PARTNERS 87-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
March 31, December 31,
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1996 1995
------------------------------------------- ----------- ------------
<S> <C> <C>
LIABILITIES:
Debt $ 28,381 $ 22,981,227
Accounts payable - Managing General Partner 647,012 448,872
Trade accounts payable and accrued liabilities 259,375 984,610
Subscriber prepayments 27,545 45,438
Closing adjustments payable 29,193 -
Accrued distributions to Limited Partners 30,000,000 -
---------- -----------
Total liabilities 30,991,506 24,460,147
---------- ----------
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 500 500
Accumulated deficit (249,787) (245,844)
---------- -----------
(249,287) (245,344)
---------- -----------
Limited Partners-
Net contributed capital
(164,178 units outstanding at
March 31, 1996 and December 31, 1995) 35,824,200 35,824,200
Accumulated deficit (2,256,165) (23,878,699)
Distributions (30,000,000) -
---------- -----------
3,568,035 11,945,571
---------- -----------
Total liabilities and partners'
capital (deficit) $ 34,310,254 $ 36,160,374
========== ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
3
<PAGE>
IDS/JONES GROWTH PARTNERS 87-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
REVENUES $ 3,050,716 $3,428,135
COSTS AND EXPENSES:
Operating expenses 1,966,629 1,978,900
Management fees and allocated overhead from
General Partners 375,238 458,346
Depreciation and amortization 904,716 1,479,463
---------- ---------
OPERATING LOSS (195,867) (488,574)
---------- ---------
OTHER INCOME (EXPENSE):
Interest expense (263,362) (438,472)
Gain on sale of cable television system 22,012,895 -
Other, net 64,925 540
---------- ---------
Total other income (expense) 21,814,458 (437,932)
NET INCOME (LOSS) $21,618,591 $(926,506)
========== ========
ALLOCATION OF NET INCOME (LOSS):
General Partners$ (3,943) $ (9,265)
========== ========
Limited Partners $21,622,534 $(917,241)
========== ========
NET LOSS PER LIMITED PARTNERSHIP UNIT $ 131.70 $ (5.59)
========== ========
WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 164,178 164,178
========== ========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
<PAGE>
IDS/JONES GROWTH PARTNERS 87-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------
1996 1995
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 21,618,591 $ (926,506)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 904,716 1,479,463
Gain on sale of cable television system (22,012,895) -
Amortization of interest rate protection contract 8,334 8,334
Decrease in trade receivables 415,101 145,762
Increase in deposits, prepaid expenses
and deferred charges (381,475) (25,911)
Decrease in trade accounts payable, accrued
liabilities and subscriber prepayments (743,128) (126,383)
Increase (decrease) in amount due Managing
General Partner 198,140 (509,246)
------------ ------------
Net cash provided by operating activities 7,384 45,513
============ ============
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (657,152) (1,066,244)
Proceeds from sale of cable television system 44,235,333 -
------------- -----------
Net cash provided by (used in) investing activities 43,578,181 (1,066,244)
============= ===========
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - 1,311,499
Repayment of debt (22,952,846) (17,393)
Distribution to Limited Partners (30,000,000) -
Increase in accrued distributions
to Limited Partners 30,000,000 -
------------- -----------
Net cash provided by (used in) financing activities (22,952,846) 1,294,106
============= ===========
Increase in cash 20,632,719 273,375
Cash, beginning of period 557,506 407,610
------------- -----------
Cash, end of period $ 21,190,225 $ 680,985
============= ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 438,897 $ 411,997
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
5
<PAGE>
IDS/JONES GROWTH PARTNERS 87-A, LTD.
------------------------------------
(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 only of normal recurring accruals, necessary to
present fairly the financial position of IDS/Jones Growth Partners 87-A, Ltd.
(the "Partnership") at March 31, 1996 and December 31, 1995 and its Statements
of Operations and Cash Flows for the three month periods ended March 31, 1996
and 1995. Results of operations for these periods are not necessarily indicative
of results to be expected for the full year. Certain prior year amounts have
been reclassified to conform to the 1996 presentation.
The Partnership owns and operates the cable television system serving
the areas in and around and Roseville, California (the "Roseville System").
(2) Jones Cable Corporation (the "Managing General Partner") a wholly owned
subsidiary of Jones Intercable, Inc. ("Intercable") 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 three month periods ended March 31, 1996 and 1995 were
$152,536 and $171,407, respectively.
IDS Cable Corporation (the "Supervising General Partner") participates
in certain management decisions of the Partnership and receives a fee for its
services equal to one-half percent of the gross revenues of the Partnership,
excluding revenue from the sale of cable television systems or franchises.
Supervision fees paid to the Supervising General Partner by the Partnership for
the three month periods ended March 31, 1996 and 1995 were $15,254 and $17,141,
respectively.
The Partnership reimburses Intercable 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
Partnership. Allocations of personnel costs are based primarily on actual time
spent by employees of Intercable with respect to each partnership managed.
Remaining overhead costs are allocated based on revenues of the Partnership as a
percentage of total revenues of owned and managed partnerships of Intercable.
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 expense is reasonable.
Reimbursements made to Intercable by the Partnership for allocated overhead and
administrative expenses during the three month periods ended March 31, 1996 and
1995 were $207,448 and $269,798, respectively. The Supervising General Partner
also may be reimbursed for certain expenses incurred on behalf of the
Partnership. There were no reimbursements made to the Supervising General
Partner by the Partnership for allocated overhead and administrative expenses
during the three month periods ended March 31, 1996 and 1995.
(3) On February 28, 1996, the Partnership sold the cable television system
serving the areas in and around Carmel, Indiana (the "Carmel System") to Jones
Cable Holdings, Inc. ("JCH"), a wholly owned subsidiary of Intercable for a
sales price of $44,235,333, subject to normal working capital closing
adjustments. This price represented the average of three separate, independent
appraisals of the fair market value of the Carmel System. A portion of the
proceeds, $14,235,333, was used to reduce Partnership debt, and the remainder of
the proceeds, $30,000,000, was distributed to the limited partners in April
1996. This distribution has given the Partnership's limited partners an return
of $731 per $1,000 invested in the Partnership. No vote of the limited partners
of the Partnership was required in connection with this transaction because the
assets of the Carmel System did not constitute all or substantially all of the
Partnership's assets. The Supervising General Partner of the Partnership
consented to the timing of the transaction and participated in the selection of
appraisers.
6
<PAGE>
The pro forma effect of the sale of the Carmel System on the results of
the Partnership's operations for the three months ended March 31, 1996 and 1995,
assuming the transaction had occurred at the beginning of the year, is presented
in the following unaudited tabulation:
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1996
-------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- ---------
<S> <C> <C> <C>
Revenues $ 3,050,716 $ (1,357,968) $1,692,748
=========== =========== =========
Operating Income (Loss) $ (195,867) $ 162,029 $ (33,838)
=========== =========== =========
Net Income $ 21,618,591 $(21,912,895) $ (294,304)
=========== =========== =========
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1995
-----------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
----------- ----------- ---------
<S> <C> <C> <C>
Revenues $ 3,428,135 $ (1,942,540) $1,485,595
=========== =========== =========
Operating Loss $ (488,574) $ 146,341 $ (415,863)
=========== =========== =========
Net Loss $ (926,506) $ 183,333 $ (743,173)
=========== =========== =========
</TABLE>
7
<PAGE>
IDS/JONES GROWTH PARTNERS 87-A, LTD.
------------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
For the three months ended March 31, 1995, the Partnership reported
operating income before depreciation and amortization of $708,849. The
Partnership expended approximately $657,000 in capital improvements during the
first quarter of 1996. Of these improvements, approximately 63 percent related
to the construction of cable television plant. Approximately 33 percent related
to service drops to homes. The remaining expenditures related to various system
enhancements in each of the Partnership's systems. Funding for these
expenditures was provided by cash generated from operations and borrowings
available under the Partnership's credit facility. Budgeted capital expenditures
for the remainder of 1996 in the Partnership's Roseville System are
approximately $1,013,000. Construction of system extensions will account for
approximately 55 percent of these expenditures. Service drops to homes will
account for approximately 30 percent of the anticipated expenditures. The
remainder of the expenditures relate to various enhancements in the
Partnership's Roseville System. Funding for these expenditures is expected to be
provided by cash on hand and cash generated from operations and, if necessary,
borrowings available under the Partnership's new credit facility, as discussed
below.
On February 28, 1996, the Partnership sold the Carmel System to JCH for
a sales price of $44,235,333, subject to normal working capital closing
adjustments. This price represented the average of three separate, independent
appraisals of the fair market value of the Carmel System. A portion of the
proceeds, $14,235,333, was used to reduce Partnership debt, and the rem ainder
of the proceeds, $30,000,000, was distributed to the limited partners in April
1996. This distribution has given the Partnership's limited partners an
approximate return of $731 per $1,000 invested in the Partnership. No vote of
the limited partners of the Partnership was required in connection with this
transaction because the assets of the Carmel System did not constitute all or
substantially all of the Partnership's assets. The Supervising General Partner
of the Partnership consented to the timing of the transaction and participated
in the selection of appraisers.
The Partnership continues to own and operate the Roseville System. The
cash from operations of the Roseville System will be sufficient to provide
liquidity to meet the anticipated needs of the Roseville System as well as
service the anticipated debt requirements, as discussed below.
As discussed above, on February 28, 1996, the Partnership sold its
Carmel System and used a portion of the sales proceeds to repay its term loan's
then-outstanding principal balance of $22,655,000. Also, on February 28, 1996,
the Partnership entered into a new reducing revolving credit agreement with a
commitment up to $10,000,000. The reducing revolving credit period expires
December 31, 2003. The commitment amount reduces quarterly, beginning March 31,
1999. In April 1996, the Partnership re-borrowed approximately $9,100,000
available from the new $10,000,000 revolving credit facility, which it used,
together with cash on hand from the sale of the Carmel System, to fund a
$30,000,000 distribution to the Partnership's limited partners in April 1996. At
March 31, 1996, the Partnership had not yet made any borrowings under the new
revolving credit facility. Interest on the new commitment is at the
Partnership's option of the Prime Rate or, the London Interbank Offered Rate
plus 1-1/4 percent or the Certificate of Deposit Rate plus 1-1/4 percent. The
effective interest rate on amounts outstanding was 7.7 percent at March 31,
1995.
REGULATION AND LEGISLATION
- --------------------------
The Telecommunications Act of 1996 (the "1996 Act"), which became law on
February 8, 1996, substantially revised the Communications Act of 1934, as
amended, including the Cable Communications Policy Act of 1984 and the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act"), and has been described as one of the most significant changes in
communications regulation since the original Communications Act of 1934. The
1996 Act is intended, in part, to promote substantial competition in the
telephone local exchange and in the delivery of video and other services. As a
result of the 1996 Act, local telephone companies (also known as local exchange
carriers or "LECs") and other service providers are permitted to provide video
programming, and cable television operators are permitted entry into the
telephone local exchange market. The FCC is required to conduct rulemaking
proceedings over the next several months to implement various provisions of the
1996 Act.
8
<PAGE>
Among other provisions, the 1996 Act modified the 1992 Cable Act by
deregulating the cable programming service tier of large cable operators
including the Partnership effective March 31, 1999 and the cable programming
service tier of "small" ca ble operators in systems providing service to 50,000
or fewer subscribers effective immediately. The 1996 Act also revised the
procedures for filing cable programming service tier rate complaints and adds a
new effective competition test.
It is premature to predict the specific effects of the 1996 Act on the
cable industry in general or the Partnership in particular. The FCC will be
undertaking numerous rulemaking proceedings to interpret and implement the 1996
Act. It is not possible at this time to predict the outcome of those proceedings
or their effect on the Partnership.
RESULTS OF OPERATIONS
- ---------------------
Revenues in the Partnership's systems totaled $3,050,716 for the three
months ended March 31, 1996 compared to $3,428,135 for the similar 1995 period,
a decrease of $377,419, or approximately 11 percent. This decrease was due to
the sale of the Carmel System. Disregarding the effect of the Carmel System
sale, revenues would have increased $207,153, or approximately 14 percent.
Increases in the number of basic subscribers in the Partnership's Roseville
System accounted for approximately 52 percent of the increase in revenues. The
number of basic subscribers in the Roseville System totaled 16,693 at March 31,
1996, compared to 15,188 at March 31, 1995, an increase of 1,505 subscribers, or
approximately 10 percent. Basic service rate increases accounted for
approximately 23 percent of the increase in revenues. No other single factor
significantly contributed to the increase in revenues.
Operating expenses consist primarily of costs associated with the
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
system maintenance expenses and consumer marketing expenses.
Operating expenses in the Partnership's systems totaled $1,966,629 for
the three months ended March 31, 1996 compared to $1,978,900 for the similar
1995 period, a decrease of $12,271, or approximately 1 percent. Disregarding the
effect of the Carmel System sale, operating expenses increased $24,350,
or approximately 13 percent. This increase was due to increases in programming
fees and advertising sales, which accounted for approximately 55 percent and 14
percent of the increase, respectively. No other single factor significantly
affected the increase in operating expenses. Operating expenses represented
approximately 61 percent and 67 percent, respectively, of revenue for each of
the three month periods ended March 31, 1996 and 1995.
Management fees and allocated overhead from the General Partner totaled
$375,238 for the quarter ended March 31, 1996 compared to $458,346 for the
similar 1995 period, a decrease of $83,108, or approximately 18 percent.
Disregarding the effect of the Carmel System sale, management fees and allocated
overhead from the General Partners increased $11,675, or approximately 3
percent. This increase was due to the increase in revenues, upon which such
management fees are based.
Depreciation and amortization expense totaled $904,716 for the quarter
ended March 31, 1996 compared to $1,479,463 for the similar 1995 period, a
decrease of $574,747, or approximately 39 percent. Disregarding the effect of
the Carmel Sysem sale, depreciation and amortization expense decreased $377,231,
or approximately 55 percent. This decrease was due to the maturation of the
Partnership's asset base.
The Partnership reported an operating loss of $195,867 for the quarter
ended March 31, 1996 compared to $488,574 for the similar 1995 period, a
decrease of $292,707, or approximately 60 percent. Disregarding the effect of
the Carmel System sale, the Partnership reported operating income of $ 153,481
for the three months ended March 31, 1996 compared to an operating loss of
$394,877 for the similar 1995 period. This change was due to the increase in
revenues and the decreases in depreciation and amortization expense and
management fees and allocated overhead from the General Partn er exceeding the
increases in operating expenses and management fees and allocated overhead from
the General Partner.
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 totaled $708,849 for the
three months ended March 31, 1996 compared to $990,889 for the
9
<PAGE>
similar 1995 period, a decrease of $282,040, or approximately 28 percent.
Disregarding the effect of the Carmel System sale, operating income before
depreciation and amortization increased $171,127, or approximately 60 percent.
This increase was the result of the increase in revenues exceeding the increases
in operating expenses and management and supervision fees and allocated overhead
from the General Partners.
Interest expense decreased $177,182, or approximately 41 percent, to
$25,882 for the three months ended March 31, 1996 from $436,009 for the
comparable 1995 period. This decrease in interest expense was primarily due to
the lower outstanding balance on the Partnership's interest bearing obligations,
as a result of a portion of the proceeds from the sale of the Carmel System
being used to repay the outstanding loan principal balance of $22,655,000 on
February 28, 1996.
The Partnership reported net income of $21,618,591 for the three months
ended March 31, 1996 compared to a net loss of $926,506 for the similar 1995
period. Included in net income for the three months ended March 31, 1996 was a
gain on the sale of the Carmel System of $22,012,895. Disregarding the effect of
the sale of the Carmel System, net loss decreased $530,004, or approximately 68
percent, to $247,525 for the three months ended March 31, 1996 from $777,530 for
the comparable 1995 period. This loss was due to the factors discussed above.
10
<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
Report on Form 8-K dated February 28, 1996 report that on February
28, 1996, IDS/Jones Growth Partners 87-A, Ltd. (the "Partnership")
sold the cable television system serving areas in and around
Carmel, Indiana (the "Carmel System") to Jones Cable Holdings, Inc.
("JCH"), a wholly owned subsidiary of Jones Intercable, Inc., the
parent corporation of the managing general partner of the
Partnership, for a sales price of $44,235,333, subject to normal
working capital closing adjustments.
11
<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 87-A, LTD.
BY:JONES CABLE CORPORATION
Managing General Partner
By:/s/ KEVIN P. COYLE
----------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 14, 1996
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 21,190,225
<SECURITIES> 0
<RECEIVABLES> 208,789
<ALLOWANCES> (46,072)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 15,314,796
<DEPRECIATION> (5,354,783)
<TOTAL-ASSETS> 34,310,254
<CURRENT-LIABILITIES> 30,963,125
<BONDS> 28,381
<COMMON> 0
0
0
<OTHER-SE> 3,318,748
<TOTAL-LIABILITY-AND-EQUITY> 34,310,254
<SALES> 0
<TOTAL-REVENUES> 3,050,716
<CGS> 0
<TOTAL-COSTS> 3,246,583
<OTHER-EXPENSES> (22,077,820)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 263,362
<INCOME-PRETAX> 21,618,591
<INCOME-TAX> 0
<INCOME-CONTINUING> 21,618,591
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,618,591
<EPS-PRIMARY> 131.70
<EPS-DILUTED> 131.70
</TABLE>
