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FORM 10-K 405
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, 1995
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: 0-19259
JONES GROWTH PARTNERS II L.P.
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(Exact name of registrant as specified in its charter)
Colorado 84-1126141
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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 (Registrant's telephone no.
office and Zip Code 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 (Section 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
-----
DOCUMENTS INCORPORATED BY REFERENCE: None
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PART I.
ITEM 1. BUSINESS
THE PARTNERSHIP. Jones Growth Partners II 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 general partner (the "General
Partner") of the Partnership. The 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
Partnership owns the cable television systems serving Yorba Linda and certain
portions of Anaheim Hills, all in the State of California (the "Yorba Linda
System"). See Item 2.
CABLE TELEVISION SERVICES. The Yorba Linda 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 Yorba Linda 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 Systems also offer a package that includes the basic service channels and
the tier services.
The Yorba Linda 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
more expensive than the basic service or tier service programming, and
consequently cable operators price premium service separately when sold to
subscribers.
The Yorba Linda 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 Yorba Linda System. At December
31, 1995, the Yorba Linda System's monthly basic service rates ranged from
$10.00 to $14.75, monthly basic and tier ("basic plus") service rates ranged
from $23.75 to $24.77 and monthly premium services ranged from $4.70 to $11.95
per premium service. In addition, the Partnership earns revenues from the
Yorba Linda System's pay-per-view programs and advertising fees. Related
charges may include a nonrecurring installation fee that ranges from $4.95 to
$35.00; however, from time to time the Yorba Linda 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, 1995, of the total fees received by the Yorba
Linda System, basic service and tier service fees accounted for approximately
67% of total revenues, premium service fees accounted for approximately 13% of
total revenues, pay-per-view fees were
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approximately 2% of total revenues, advertising fees were approximately 6% of
total revenues and the remaining 12% 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 Yorba Linda System.
FRANCHISES. The Yorba Linda 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 Yorba Linda 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 4 franchises for the Yorba Linda 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's
franchise expiration dates range from October 2001 to October 2005. During the
next three to five years, the renewal process must commence for a significant
number of the franchises for cable television systems owned or managed by
Intercable. 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. A potential source of significant
competition is Direct Broadcast Satellite ("DBS") services that use video
compression technology to increase channel capacity and provide packages of
movies, network and other program services that are competitive with those of
cable television systems. Two companies offering DBS services began operations
in 1994, and two other companies offering DBS service recently began
operations. In addition, a joint venture has won the right to provide a DBS
service through a FCC spectrum auction. Not all subscribers terminate cable
television service upon acquiring a DBS system. The General Partner has
observed that a number of DBS subscribers also elect to subscribe to cable
television service in order to obtain the greatest variety of programming on
multiple television sets, including local video services programming not
available through DBS service.
Although neither the Partnership, the General Partner nor Intercable
has yet encountered competition from a telephone company providing video
services as a cable operator or video dialtone operator, it is anticipated that
Yorba Linda System and the cable television systems owned or managed by
Intercable will face such competition in the near future. Legislation recently
enacted into law will make it possible for companies with considerable
resources to enter the business. For example, in February 1996, one of the
regional Bell operating companies entered into an agreement to acquire the
nation's third largest cable television company. In addition, several
telephone companies have begun seeking cable television franchises from local
governmental authorities as a consequence of litigation that successfully
challenged the constitutionality of the cable television/telephone company
cross-ownership rules. The General Partner cannot predict at this time when
and to what extent telephone companies will provide cable television service
within service areas in competition with the Yorba Linda System or with cable
television systems owned or managed by Intercable.
The General Partner is aware of the following imminent competition
from telephone companies: Ameritech, one of the seven regional Bell operating
companies, which provides telephone service in a multi-state region including
Illinois, has just obtained a franchise that will allow it to provide cable
television service in Naperville, Illinois, a community currently served by a
cable system owned by another one of the public limited partnerships managed by
Intercable. Chesapeake and Potomac Telephone Company of Virginia and Bell
Atlantic Video Service Company, both subsidiaries of Bell Atlantic, another of
the regional Bell operating companies, have announced their intention to build
a cable television system in Alexandria, Virginia in competition with a cable
television system owned by
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Intercable. Bell Atlantic is preparing for the operation of a
telecommunications and video business in northern Virginia, including the
Alexandria metropolitan area. The FCC has granted GTE Virginia's application
for authority to construct, operate, own and maintain video dialtone facilities
in northern Virginia, including in the service area of a cable television
system owned by Intercable. To date, GTE has not begun construction of a video
distribution system. The entry of telephone companies as direct competitors
could adversely affect the profitability and market value of the Yorba Linda
System and Intercable's owned and managed systems.
Additional competition is present from several sources, including the
following: Master Antenna Television and Satellite Master Antenna Television
systems that serve multi-unit dwellings such as condominiums, apartment
complexes, motels, hotels and private residential communities; private cable
television/telephonic companies that have secured exclusive contracts to
provide video and telephony services to multi-unit dwellings and similar
complexes; and multichannel, multipoint distribution service ("MMDS") systems,
commonly called wireless cable which generally focus on providing service to
residents of rural areas. In addition, the FCC has established a new wireless
telecommunications service known as Personal Communications Service ("PCS")
that would provide portable non-vehicular mobile communications services
similar to that available from cellular telephone companies, but at a lower
cost. Several cable television multiple system operators hold or have
requested experimental licenses from the FCC to test PCS technology.
REGULATION AND LEGISLATION. The cable industry is regulated under the
Telecommunications Act of 1996 (the "1996 Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act") and the Cable
Communications Policy Act of 1984 (the "1984 Cable Act") and the regulations
implementing these statutes. The Federal Communications Commission (the "FCC")
has promulgated regulations covering such areas as the registration of cable
television systems and other communications businesses, carriage of television
broadcast programming, consumer education and lockbox enforcement, origination
cablecasting and sponsorship identification, children's programming, the
regulation of basic cable and cable programming service rates in areas where
cable television systems are not subject to effective competition, signal
leakage and frequency use, technical performance, maintenance of various
records, equal employment opportunity, and antenna structure notification,
marking and lighting. In addition, cable operators periodically are required
to file various informational reports with the FCC. The FCC has the authority
to enforce these regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of administrative
sanctions, such as the revocation of FCC licenses needed to operate certain
transmission facilities often used in connection with cable operations. State
or local franchising authorities, as applicable, also have the right to enforce
various regulations, impose fines or sanctions, issue orders or seek revocation
subject to the limitations imposed upon such franchising authorities by
federal, state and local laws and regulations. Several states have assumed
regulatory jurisdiction of the cable television industry, and it is anticipated
that other states will do so in the future. To the extent the cable television
industry begins providing telephone service, additional state regulations will
be applied to the cable television industry. Cable television operations are
subject to local regulation insofar as systems operate under franchises granted
by local authorities.
The following is a summary of federal laws and regulations materially
affecting the cable television industry, and a description of state and local
laws with which the cable industry must comply.
Telecommunications Act of 1996. The 1996 Act, which became law on
February 28, 1996, substantially revised the Communications Act of 1934, as
amended, including the 1984 Cable Act and 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.
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Among other provisions, the 1996 Act modified the 1992 Cable Act
by deregulating the cable programming service tier of large cable operators
effective March 31, 1999 and the cable programming service tier of small cable
operators (those that provide service to 50,000 or fewer subscribers) effective
immediately. The 1996 Act also revised the procedures for filing a cable
programming service tier rate complaint and adds a new effective competition
test.
The most far-reaching changes in the communications business will
result from the telephony provisions of the 1996 Act. The statute
expressly preempts any legal barriers to competition in the local telephone
business that previously existed in state and local laws and regulations. Many
of these barriers had been lifted by state actions over the last few years, but
the 1996 Cable Act completes the task. The 1996 Act also establishes new
requirements for maintaining and enhancing universal telephone service and new
obligations for telecommunications providers to maintain privacy of customer
information. The 1996 Act establishes uniform requirements and standards
for entry, competitive carrier interconnection and unbundling of LEC monopoly
services. Due to limitations in the Partnership's limited partnership
agreement relating to the types of business in which the Partnership can be
engaged, the Partnership will not likely provide telephone local exchange
services in its cable systems.
The 1996 Act repealed the cable television/telephone
cross-ownership ban adopted in the 1984 Cable Act. The federal cross-ownership
ban was particularly important to the cable industry because telephone
companies already own certain facilities such as poles, ducts and associated
rights of way. While this ban had been overturned by several courts, formal
removal of the ban ended the last legal constraints on telephone company plans
to enter the cable market. Under the 1996 Act, telephone companies in
their capacity as common carriers now may lease capacity to others to provide
cable television service. Telephone companies have the option of providing
video service as cable operators or through "open video systems" ("OVS"), a
regulatory regime that may provide more flexibility than traditional cable
service. The 1996 Act exempts OVS operators from many of the regulatory
obligations that currently apply to cable operators, such as rate regulation
and franchise fees, although other requirements are still applicable. OVS
operators, although not subject to franchise fees as defined by the 1992 Cable
Act, are subject to fees charged by local franchising authorities or other
governmental entities in lieu of franchise fees. (Under certain circumstances,
cable operators also will be able to offer service through open video systems.)
In addition, the 1996 Act eliminated the requirement that telephone
companies file Section 214 applications (applications to provide video dialtone
services) with the FCC before providing video service. This limits the
opportunity of cable operators to mount challenges at the FCC regarding
telephone company entry into the video market. The 1996 Act also
contains restrictions on buying out incumbent cable operators in a telephone
company's service area, especially in suburban and urban markets.
Other parts of the 1996 Act also will affect cable operators. Under
the 1996 Act, the FCC is required to revise the current pole attachment rate
formula. This revision will result in an increase in the rates paid by
entities, including cable operators, that provide telecommunication services.
The rates will be phased in after a five-year period. (Cable operators that
provide only cable services will be unaffected.) Under the V-chip provisions
of the 1996 Act, cable operators and other video providers are required to pass
along any program rating information that programmers include in video signals.
Cable operators also are subject to new scrambling requirements for sexually
explicit programming, and cable operators that provide Internet access or other
online services are subject to the new indecency limitations for computer
services. In addition, cable operators that provide Internet access or other
online services are subject to the new indecency limitations for computer
services, although these provisions already have been challenged in court, and
the courts have preliminarily enjoined the enforcement of these content-based
provisions.
Under the 1996 Act, a franchising authority may not require a cable
operator to provide telecommunications services or facilities, other than an
institutional network, as a condition to a grant, renewal or transfer of a
cable franchise, and franchising authorities are preempted from regulating
telecommunications services provided by cable operators and from requiring
cable operators to obtain a franchise to provide such
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services. The 1996 Act also repealed the 1992 Cable Act's anti-trafficking
provision, which generally required the holding of cable television systems for
three years.
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
shortly 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.
Cable Television Consumer Protection and Competition Act of 1992. The
1992 Cable Act, which became effective on December 4, 1992, caused significant
changes to the regulatory environment in which the cable television industry
operates. The 1992 Cable Act generally mandated a greater degree of regulation
of the cable television industry. Under the 1992 Cable Act's definition of
effective competition, nearly all cable television systems in the United
States, including those owned and managed by the General Partner, became
subject to rate regulation of basic cable services. In addition, the 1992
Cable Act allowed the FCC to regulate rates for non-basic service tiers other
than premium services in response to complaints filed by franchising
authorities and/or cable subscribers. In April 1993, the FCC adopted
regulations governing rates for basic and non-basic services. The FCC's rules
became effective on September 1, 1993.
In compliance with these rules, the General Partner on behalf of the
Partnership reduced rates charged for certain regulated services in the
Partnership's cable systems effective September 1, 1993. These reductions
resulted in some decrease in Partnership revenues and operating income before
depreciation and amortization; however, the decrease was not as severe as
originally anticipated. The General Partner has undertaken actions to mitigate
a portion of these reductions primarily through (a) new service offerings in
some systems, (b) product re-marketing and re-packaging and (c) marketing
efforts directed at non-subscribers.
On February 22, 1994, however, the FCC adopted several additional rate
orders including an order which revised its earlier-announced regulatory scheme
with respect to rates. The FCC's new regulations generally required rate
reductions, absent a successful cost-of-service showing, of 17 percent of
September 30, 1992 rates, adjusted for inflation, channel modifications,
equipment costs, and increases in programming costs. Further rate reductions
for cable systems whose rates are below the revised benchmark levels, as well
as reductions that would require operators to reduce rates below benchmark
levels in order to achieve a 17 percent rate reduction, were held in abeyance
pending completion of cable system cost studies. The FCC recently requested
some of these "low price" systems to complete cost study questionnaires. After
review of these questionnaires, the FCC could decide to permanently defer any
further rate reductions, or require the additional 7 percent rate roll back for
some or all of these systems. The FCC has also adopted its proposed upgrade
methodology by which operators would be permitted to recover the costs of
upgrading their plant.
After analyzing the effect of the two methods of rate regulation, the
Partnership elected to file cost-of-service showings for the Yorba Linda
System. The General Partner thus anticipates no further reduction in revenues
or operating income before depreciation and amortization resulting from the
FCC's rate regulations. At this time, however, the regulatory authorities have
not yet approved the cost-of-service showings, and there can be no assurance
that the Partnership's cost-of-service showings will prevent further rate
reductions by the Yorba Linda System until such final approval is received.
On November 10, 1994, the FCC also announced a revision to its
regulations governing the manner in which cable operators may charge
subscribers for new cable programming services. In addition to the present
formula for calculating the permissible rate for new services, the FCC
instituted a three-year flat fee mark-up plan for charges relating to new
channels of cable programming services. Commencing on January 1, 1995, cable
system operators may charge for new channels of cable programming services
added after May 14, 1994 at a rate of up to 20 cents per channel, but may not
make adjustments to monthly rates totaling more than $1.20 plus an additional
30 cents for programming license fees per subscriber over the first two years
of the three-year period for these new services. Operators may charge an
additional 20 cents in the third year only for channels added in that year plus
the costs for the programming. Operators electing to use the 20 cent per
channel adjustment may not also take a 7.5 percent mark-up on programming cost
increases, which is permitted under the FCC's current
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rate regulations. The FCC has requested further comment as to whether cable
operators should continue to receive the 7.5 percent mark-up on increases in
license fees on existing programming services.
The FCC also announced that it will permit operators to offer a "new
product tier" ("NPT"). Operators will be able to price the NPT as they elect
so long as, among other conditions, other channels that are subject to rate
regulation are priced in conformity with applicable regulations and operators
do not remove programming services from existing tiers and offer them on the
NPT.
In September 1995, the FCC authorized a new, alternative method of
implementing rate adjustments which will allow cable operators to increase
rates for programming annually on the basis of projected increases in external
costs (inflation, costs for programming, franchise-related obligations and
changes in the number of regulated channels) rather than on the basis of cost
increases incurred in the preceding calendar quarter. Operators that elect not
to recover all of their accrued external costs and inflation pass-throughs each
year may recover them (with interest) in subsequent years.
In December 1995, the FCC adopted final cost-of-service rate
regulations requiring, among other things, cable operators to exclude 34
percent of system acquisition costs related to intangible and tangible assets
used to provide regulated services. The FCC also reaffirmed the industry-wide
11.25 percent after tax rate of return on an operator's allowable rate base,
but initiated a further rulemaking in which it proposes to use an operator's
actual debt cost and capital structure to determine an operator's cost of
capital or rate of return. After a rate has been set pursuant to a
cost-of-service showing, rate increases for regulated services are indexed for
inflation, and operators are permitted to increase rates in response to
increases in costs beyond their control, such as taxes and increased
programming costs.
The United States Court of Appeals for the District of Columbia
Circuit recently upheld the FCC's rate regulations implemented pursuant to the
1992 Cable Act, but ruled that the FCC impermissibly failed to permit cable
operators to adjust rates for certain cost increases incurred during the period
between the date the 1992 Cable Act was passed through the initial date of rate
regulation. The FCC has not yet implemented the court's ruling.
There have been several lawsuits filed by cable operators and
programmers in federal court challenging various aspects of the 1992 Cable Act
including its provisions relating to mandatory broadcast signal carriage,
retransmission consent, access to cable programming, rate regulations,
commercial leased channels and public access channels. On April 8, 1993, a
three-judge federal district court panel issued a decision upholding the
constitutionality of the mandatory signal carriage requirements of the 1992
Cable Act. That decision was appealed directly to the United States Supreme
Court. The United States Supreme Court vacated the lower court decision on
June 27, 1994 and remanded the case to the district court for further
development of a factual record. On December 12, 1995, the three-judge federal
district court again upheld the must-carry rules' validity. This decision has
been appealed to the United States Supreme Court.
In 1993, a federal district court upheld provisions of the 1992 Cable
Act concerning rate regulation, retransmission consent, restrictions on
vertically integrated cable television operators and programmers, mandatory
carriage of programming on commercial leased channels and public, educational
and governmental access channels and the exemption for municipalities from
civil damage liability arising out of local regulation of cable services. The
1992 Cable Act's provisions providing for multiple ownership limits for cable
operators and advance notice of free previews for certain programming services
have been found unconstitutional and these decisions have been appealed. The
FCC's regulations relating to the carriage of indecent programming, which were
recently upheld by the United States Court of Appeals for the District of
Columbia, have been appealed to the United States Supreme Court.
Franchising. The responsibility for franchising or other
authorization of cable television systems is left to state and local
authorities. There are, however, several provisions in the 1984 Cable Act that
govern the terms and conditions under which cable television systems provide
service. These include uniform standards and policies that are applicable to
cable television operators seeking renewal of a cable television franchise.
The
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procedures established provide for a formal renewal process should the
franchising authority and the cable television operator decline to use an
informal procedure. A franchising authority unable to make a preliminary
determination to renew a franchise is required to hold a hearing in which the
operator has the right to participate. In the event a determination is made
not to renew the franchise at the conclusion of the hearing, the franchising
authority must provide the operator with a written decision stating the
specific reasons for non-renewal. Generally, the franchising authority can
finally decide not to renew a franchise only if it finds that the cable
operator has not substantially complied with the material terms of the present
franchise, has not provided reasonable service in light of the community's
needs, does not have the financial, legal or technical ability to provide the
services being proposed for the future, or has not presented a reasonable
proposal for future service. A final decision of non-renewal by the
franchising authority is appealable in court.
A provision of the 1996 Act preempts franchising authorities from
regulating telecommunications services provided by cable operators and from
requiring cable operators to obtain a franchise to provide such services. A
franchising authority may not require a cable operator to provide
telecommunications services or facilities, other than an institutional network,
as a condition to a grant, renewal or transfer of a cable franchise.
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 Yorba
Linda 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 Yorba Linda System is not significant. The General Partner'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 has no
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 Yorba Linda System in April 1992. 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
Yorba Linda 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 Yorba Linda 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, 1995, the Yorba Linda
System operated cable plant passing approximately 23,000 homes, representing an
approximate 72% penetration rate. Figures for numbers of subscribers, miles of
cable plant and homes passed are compiled from the General Partner's records
and may be subject to adjustments.
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<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------
YORBA LINDA SYSTEM 1995 1994 1993
------------------ ------ ------ ------
<S> <C> <C> <C>
Monthly basic plus service rate $ 24.77 $ 22.25 $ 22.25
Basic subscribers 16,611 15,961 15,472
Pay units 10,295 9,414 9,688
</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. As of February 15, 1995, the number of
equity security holders in the Partnership was 2,307.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
From Inception
(March 27, 1991)
For the Year Ended December 31, to December 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
-------------- -------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues $ 6,903,528 $ 6,345,871 $ 6,198,092 $ 4,293,195 $ -
Depreciation and Amortization 3,652,676 3,444,027 3,287,050 2,122,103 -
Operating Loss (1,594,133) (1,538,783) (1,316,141) (686,403) -
Net Loss (2,553,640) (2,264,142) (1,912,873) (1,089,275) 217,779
Net Income (Loss) per Limited
Partnership Unit (127.78) (113.29) (95.72) (62.24) 34.23
Weighted Average Number of
Limited Partner Units
Outstanding 19,785 19,785 19,785 17,309 6,363
General Partner's Capital (Deficit) (78,349) (52,813) (30,172) (11,043) 1,000
Limited Partners' Capital 9,224,080 11,752,184 13,993,685 15,887,429 8,742,739
Total Assets 22,683,846 23,964,837 26,502,620 27,812,155 8,794,334
Credit Facility and Other Debt 12,754,960 11,247,350 11,547,919 10,516,485 -
General Partner Advances - 71,270 - 141,435 -
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
1995 Compared to 1994-
Revenues of the Partnership for the year ended December 31, 1995 totaled
$6,903,528 compared to $6,345,871 in 1994, an increase of $557,657, or
approximately 9 percent. Increases in equipment rental revenue accounted for
approximately 30 percent of the increase in revenues. The number of basic
subscribers increased to 16,611 at December 31, 1995, compared to 15,961 at
December 31, 1994, an increase of 650 basic subscribers, or approximately 4
percent. This increase in basic subscribers accounted for approximately 28
percent of the increase in revenues. Basic service rate adjustments accounted
for approximately 21 percent of the increase in revenues. No other individual
factor was significant to the increase in revenues.
Operating expenses consist primarily of costs associated with the
administration of the Yorba Linda 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 increased $370,068, or approximately 10 percent, to
$4,008,167 in 1995 from $3,638,099 in 1994. Operating expenses represented
approximately 58 percent and 57 percent of revenues in 1995 and 1994,
respectively. The increase in operating expenses was primarily due to
increases in programming costs which were due, in part, to the increases in
subscribers. No other individual factor significantly affected the increase in
operating expense.
Management fees to the General Partner and allocated administrative costs
from Jones Intercable, Inc. ("Intercable") increased $34,290, or approximately
4 percent, to $836,818 in 1995 from $802,528 in 1994. This increase was
primarily the result of increases in revenues upon which such management fees
are based.
Depreciation and amortization expense increased $208,649, or approximately 6
percent, to $3,652,676 in 1995 from $3,444,027 in 1994. This increase in
depreciation and amortization expense was attributable to additions to the
Partnership's depreciable asset base.
Operating loss increased $55,350, or approximately 4 percent, to $1,594,133
in 1995 from $1,538,783 in 1994. This increase was due to the increases in
operating expenses, management fees to the General Partner and allocated
administrative expenses from Intercable and depreciation and amortization
exceeding the increase in revenues.
10
<PAGE> 11
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 increased $153,299, or approximately 8
percent, to $2,058,543 in 1995 from $1,905,244 in 1994. The increase was due
to the increases in revenues exceeding the increase in operating expenses and
management fees to the General Partner and allocated administrative expenses
from Intercable.
Interest expense increased $239,372, or approximately 33 percent, to $959,284
in 1995 from $719,912 in 1994. The increase was primarily due to higher
outstanding balances on interest bearing obligations during 1995.
Net loss increased $289,498, or approximately 13 percent, to $2,553,640 in
1995 from $2,264,142 in 1994. The increase was a result of the factors
discussed above.
1994 Compared to 1993-
Revenues of the Partnership for the year ended December 31, 1994 totaled
$6,345,871, compared to $6,198,092 in 1993, an increase of $147,779, or
approximately 2 percent. This increase is primarily the result of increases in
advertising revenues, which were offset by decreases in equipment rental and
additional outlet revenue. The increase in revenues would have been greater if
not for the reduction in basic rates due to basic rate regulations issued by
the FCC in April 1993, with which the Partnership complied effective September
1, 1993. No other individual factor was significant to the increase in
revenues.
Operating expenses increased $177,926, or approximately 5 percent, to
$3,638,099 in 1994 from $3,460,174 in 1993. Operating expenses represented
approximately 57 percent and 56 percent of revenues in 1994 and 1993,
respectively. Of the total net increase in operating expenses, advertising
related costs increased $158,613, representing approximately 89 percent of the
total increase. No other individual factor significantly affected the increase
in operating expense for the periods discussed.
Management fees to the General Partner and allocated administrative costs
from Intercable increased $35,519, or approximately 5 percent, to $802,528 in
1994 from $767,009 in 1993. This increase was primarily the result of
increases in allocated expenses from the General Partner. The General Partner
has experienced increases in expenses during 1994, including personnel costs
and reregulation costs, a portion of which are allocated to the Partnership.
Operating loss increased $222,642, or approximately 17 percent, to
$1,538,783 in 1994 from $1,316,141 in 1993. This increase was due to the
increases in operating expenses, management fees to the General Partner and
allocated administrative expenses from Intercable and depreciation and
amortization exceeding the increase in revenues.
Operating income before depreciation and amortization decreased
$65,665, or approximately 3 percent, to $1,905,244 in 1994 from $1,970,909 in
1993. The decrease was due to the increases in operating expenses and
management fees to the General Partner and allocated administrative expenses
from Intercable exceeding the increase in revenues.
Interest expense increased $128,337, or approximately 22 percent, to
$719,912 in 1994 from $591,575 in 1993. The increase was primarily due to
higher average interest rates and increased amounts due to the General Partner.
Net loss increased $351,269, or approximately 18 percent, to
$2,264,142 in 1994 from $1,912,873 in 1993. The increase was a result of the
factors discussed above.
FINANCIAL CONDITION
For the year ended December 31, 1995, the Partnership generated net
cash from operating activities totaling $988,176 which is available to fund
capital expenditures and non-operating costs. During 1995, the Partnership
purchased approximately $2,500,000 of plant and equipment for the Yorba Linda
System. Approximately 76 percent of these expenditures was for cable plant
extensions, cable, hardware and labor for new subscriber installations and to
replace equipment in the Yorba Linda System. The remainder of the capital
expenditures was for enhancements to the Yorba
11
<PAGE> 12
Linda System. Capital expenditures for 1996 are expected to be approximately
$2,300,000 and will be financed principally from cash flow from operations and
borrowings under the Partnership's credit facility. For 1996, approximately 72
percent of the expected capital expenditures will be for cable, hardware and
labor to extend the cable plant and to make additional subscriber installations
in the Yorba Linda System, and the remainder of these expenditures will be for
various other enhancements throughout the Yorba Linda System.
As of December 31, 1995, $12,650,000 was outstanding under the
Partnership's $13,000,000 revolving credit facility, leaving $350,000 for
borrowings during 1996. At December 31, 1996, the revolving credit facility's
outstanding principal balance will convert to a term loan, payable in quarterly
installments with a final maturity date of December 31, 2002. Generally, the
interest on the outstanding principal balance is at the Partnership's option of
the Prime rate plus 1/4 percent to 1/2 percent or the London Interbank Offered
Rate plus 1-1/4 percent to 1-1/2 percent, depending upon the ratio of the
Partnership debt to operating cash flow. The effective interest rates on
amounts outstanding as of December 31, 1995 and 1994 were 7.45 percent and 7.51
percent, respectively.
The General Partner presently believes cash flow from operations and
available borrowings under the credit facility and, if necessary and in its
discretion, advances from the General Partner will be sufficient to fund
capital expenditures and other liquidity needs of the Partnership in 1996.
REGULATION AND LEGISLATION
The Partnership has filed a cost-of-service showing in response to
rulemakings concerning the 1992 Cable Act for the Yorba Linda System and thus
anticipates no further reductions in rates. The cost-of-service showing has
not yet received final approval from regulatory authorities, however, and there
can be no assurance that the Partnership's cost-of-service showing will
prevent further rate reductions until such final approval is received.
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 1984 Cable Act and 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.
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" cable 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. See Item 1.
12
<PAGE> 13
Item 8. Financial Statements
JONES GROWTH PARTNERS II L.P.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND 1994
AND FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
INDEX
Report of Independent Public Accountants 14
Balance Sheets 15
Statements of Operations 17
Statements of Partners' Capital (Deficit) 18
Statements of Cash Flows 19
Notes to Financial Statements 20
13
<PAGE> 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Jones Growth Partners II L.P.:
We have audited the accompanying balance sheets of Jones Growth Partners II
L.P. (a Colorado limited partnership) as of December 31, 1995 and 1994, and the
related statements of operations, partners' capital (deficit) and cash flows
for the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the 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 II L.P.
as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 8, 1996.
14
<PAGE> 15
JONES GROWTH PARTNERS II L.P.
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------------
ASSETS 1995 1994
------ -------------- -------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 60,263 $ 61,131
TRADE RECEIVABLES, less allowance
for doubtful receivables of $27,667 and $4,291 at
December 31, 1995 and 1994, respectively 235,967 338,891
INVESTMENT IN CABLE TELEVISION PROPERTIES:
Property, plant and equipment, at cost 16,508,040 14,011,386
Less - accumulated depreciation (4,705,821) (3,158,613)
----------- -----------
11,802,219 10,852,773
Franchise costs, net of accumulated amortization of $3,821,544
and $2,791,240 at December 31, 1995 and 1994, respectively 6,481,456 7,511,760
Subscriber lists, net of accumulated amortization of $2,039,053
and $1,489,195 at December 31, 1995 and 1994, respectively 1,809,946 2,359,804
Noncompete agreement, net of accumulated amortization of
$1,623,830 and $1,185,944 at December 31, 1995 and 1994,
respectively 310,170 748,056
Costs in excess of interests in net assets purchased,
net of accumulated amortization of $167,194 and $122,089 at
December 31, 1995 and 1994, respectively 1,634,695 1,679,800
----------- -----------
Total investment in cable television properties 22,038,486 23,152,193
DEBT PLACEMENT COSTS, net of accumulated amortization
of $138,588 and $101,216 at December 31, 1995 and 1994, respectively 144,817 182,189
DEPOSITS, PREPAID EXPENSES AND OTHER 204,313 230,433
----------- -----------
Total assets $22,683,846 $23,964,837
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
15
<PAGE> 16
JONES GROWTH PARTNERS II L.P.
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) 1995 1994
------------------------------------------ ------------- ------------
<S> <C> <C>
LIABILITIES:
Credit facility and other debt $12,754,960 $11,247,350
Accounts payable to Jones Intercable, Inc. - 71,270
Trade accounts payable and accrued liabilities 489,853 622,661
Subscriber prepayments and deposits 293,302 324,185
----------- -----------
Total liabilities 13,538,115 12,265,466
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (DEFICIT):
General Partner-
Contributed capital 1,000 1,000
Accumulated deficit (79,349) (53,813)
----------- -----------
(78,349) (52,813)
----------- -----------
Limited Partners-
Contributed capital, net of related
commissions, syndication costs and
interest distribution (19,785 units outstanding
at December 31, 1995 and 1994, respectively) 16,746,882 16,746,882
Accumulated deficit (7,522,802) (4,994,698)
----------- -----------
9,224,080 11,752,184
----------- -----------
Total partners' capital (deficit) 9,145,731 11,699,371
----------- -----------
Total liabilities and
partners' capital (deficit) $22,683,846 $23,964,837
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
16
<PAGE> 17
JONES GROWTH PARTNERS II L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
-------------------------------------------------------
1995 1994 1993
------------- ------------ -------------
<S> <C> <C> <C>
REVENUES $ 6,903,528 $ 6,345,871 $ 6,198,092
COSTS AND EXPENSES:
Operating expense 4,008,167 3,638,099 3,460,174
Management fees to the General Partner
and allocated administrative costs
from Jones Intercable, Inc. 836,818 802,528 767,009
Depreciation and amortization 3,652,676 3,444,027 3,287,050
----------- ----------- -----------
OPERATING LOSS (1,594,133) (1,538,783) (1,316,141)
OTHER INCOME (EXPENSE):
Interest expense (959,284) (719,912) (591,575)
Interest income 2,099 10,023 2,646
Other, net (2,322) (15,470) (7,803)
----------- ----------- -----------
NET LOSS $(2,553,640) $(2,264,142) $(1,912,873)
=========== =========== ===========
ALLOCATION OF NET LOSS:
General Partner $ (25,536) $ (22,641) $ (19,129)
=========== =========== ===========
Limited Partners $(2,528,104) $(2,241,501) $(1,893,744)
=========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (127.78) $ (113.29) $ (95.72)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 19,785 19,785 19,785
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
17
<PAGE> 18
JONES GROWTH PARTNERS II L.P.
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
For the Year Ended
December 31,
------------------------------------------------
1995 1994 1993
------------- ------------ ------------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of year $ (52,813) $ (30,172) $ (11,043)
Net loss for the year (25,536) (22,641) (19,129)
------------ ------------ ------------
Balance, end of year $ (78,349) $ (52,813) $ (30,172)
============ ============ ============
LIMITED PARTNERS:
Balance, beginning of year $11,752,184 $13,993,685 $15,887,429
Net loss for the year (2,528,104) (2,241,501) (1,893,744)
---------- ---------- ----------
Balance, end of year $9,224,080 $11,752,184 $13,993,685
========== ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
18
<PAGE> 19
JONES GROWTH PARTNERS II L.P.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
--------------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,553,640) $(2,264,142) $(1,912,873)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization 3,652,676 3,444,027 3,287,050
Amortization of interest rate protection contract 22,628 22,636 22,636
Decrease (increase) in trade accounts receivable 102,924 (254,379) (16,694)
Increase in deposits, prepaid expenses and other (1,451) (44,324) (142,337)
Decrease in trade accounts payable, accrued
liabilities and subscriber prepayments and deposits (163,691) (44,342) (286,661)
Increase (decrease) in accounts payable to
Jones Intercable, Inc. (71,270) 71,270 (141,435)
----------- ----------- -----------
Net cash provided by operating activities 988,176 930,746 809,686
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (2,496,654) (1,326,316) (1,195,106)
----------- ----------- -----------
Net cash used in investing activities (2,496,654) (1,326,316) (1,195,106)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 2,196,455 55,108 1,344,031
Repayment of borrowings (688,845) (355,677) (312,597)
Purchase of interest rate protection contract - - (67,900)
----------- ----------- -----------
Net cash provided by (used in) financing activities 1,507,610 (300,569) 963,534
----------- ----------- -----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (868) (696,139) 578,114
CASH AND CASH EQUIVALENTS,
AT BEGINNING OF YEAR 61,131 757,270 179,156
----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
AT END OF YEAR $ 60,263 $ 61,131 $ 757,270
=========== =========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 927,817 $ 675,892 $ 588,174
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
19
<PAGE> 20
JONES GROWTH PARTNERS II L.P.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS:
Formation and Business
Jones Growth Partners II L.P. (the "Partnership"), a Colorado limited
partnership, was formed on March 27, 1991, pursuant to a public offering of
limited partnership interests sponsored by Jones Spacelink Cable Corporation
(the "General Partner"). The Partnership was formed to acquire, construct,
develop and operate cable television systems. The General Partner was a wholly
owned subsidiary of Jones Spacelink, Ltd. ("Spacelink") until December 20,
1994. On that date, Jones Intercable, Inc. ("Intercable"), a Colorado
corporation that was a subsidiary of Spacelink, acquired substantially all of
the assets of Spacelink, including all of the shares of the General Partner.
The General Partner is thus now a wholly owned subsidiary of Intercable. The
General Partner and certain of its affiliates also owned and operated cable
television systems for their own account and for the account of other managed
limited partnerships.
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 General Partner
purchased its general partner interest in the Partnership by contributing
$1,000 to Partnership capital.
Cable Television System Acquisition
On April 17, 1992, the Partnership purchased the cable television
systems serving the areas in and around the communities of Yorba Linda, certain
portions of Anaheim Hills, and certain portions of unincorporated Orange
County, all in the State of California (the "Yorba Linda System").
All profits and losses of the Partnership are allocated 99 percent to
the limited partners and 1 percent to the General Partner, 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.
(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.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, amounts held in banks
and highly liquid investments with a maturity at purchase of three months or
less.
Property, Plant and Equipment
Depreciation of property, plant and equipment is provided 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
20
<PAGE> 21
Replacements, renewals and improvements are capitalized and
maintenance and repairs are charged to expense as incurred.
Allocation of Cost of Purchased Cable Television Systems
Based on an independent appraisal, the Partnership allocated the total
purchase price of the Yorba Linda 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; fourth, to the noncompete agreement; and fifth, to costs in
excess of interests in net assets purchased. The brokerage fee paid to an
affiliate of the General Partner upon acquisition of the Yorba Linda System and
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 3-6 years
Subscriber lists 3 years
Noncompete agreement 1 year
Costs in excess of interests in net assets purchased 36 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
1995 presentation.
(3) TRANSACTIONS WITH THE GENERAL PARTNER AND CERTAIN OF ITS AFFILIATES:
Management Fees, Distribution Ratios and Reimbursements
The General Partner manages the Partnership and receives a fee for its
services equal to five percent of the gross revenues of the Partnership,
excluding revenues from the sale of cable television systems or franchises.
Management fees paid to the General Partner by the Partnership for the years
ended December 31, 1995, 1994 and 1993 were $345,176, $317,294 and $309,905,
respectively.
Any partnership distributions made from cash flow (defined as cash
receipts derived from routine operations, less debt principal and interest
payments and cash expenses) are generally allocated 99 percent to the limited
partners and one percent to the General Partner. Any distributions other than
from cash flow are generally made as follows: first, to the limited partners in
an amount which, together with all prior distributions made from sources other
than cash flow, will equal the amount initially contributed to partnership
capital by the limited partners; second, to the limited partners an amount
equal to eight percent per annum, cumulative and noncompounded, on an amount
equal to their initial capital contributions (less any portion of such initial
capital contributions returned by the distribution to limited partners from
prior sale or refinancing proceeds) provided, however, that the eight percent
return will be reduced by all prior distributions of cash flow from the
partnership and prior distributions of proceeds of sales or refinancings that
exceed an amount equal to the limited partner's initial capital contributions;
third, any remaining distribution shall be allocated 80 percent to the limited
partners and 20 percent to the General Partner until the limited partners have
received 250 percent of their initial capital contribution, after which any
remaining distribution shall be allocated 75 percent to the limited partners
and 25 percent to the General Partner.
The Partnership reimburses the General Partner and certain of its
affiliates for certain allocated general and administrative costs. These
expenses include salaries and benefits paid to corporate personnel, office rent
and related facilities expense. Such personnel provide engineering, marketing,
administrative, accounting, legal, and investor
21
<PAGE> 22
relations services to the Partnership. Allocations of personnel costs are
based primarily on actual time spent by employees of the General Partner and
certain of its affiliates with respect to each partnership managed. Remaining
expenses are allocated based upon the pro rata relationship of the
Partnership's revenues to the total revenues of all cable television systems
owned or managed by the General Partner and certain of its affiliates. All
cable television systems owned or managed by the General Partner and certain of
its affiliates are allocated a proportionate share of these expenses. Included
in the costs allocated from Intercable and certain of its affiliates are
expenses allocated to the General Partner and certain of its affiliates from
affiliated entities for information processing and administrative services.
The General Partner believes that the methodology used in allocating general
and administrative costs is reasonable. Reimbursements by the Partnership to
the General Partner for allocated general and administrative costs for the
years ended December 31, 1995, 1994 and 1993 were $491,642, $485,234 and
$457,104, respectively.
The Partnership was charged interest during 1995 at an average rate of
10.51 percent on the amounts due to the General Partner, which approximated the
General Partner's weighted average cost of borrowing. Interest charged to the
Partnership by the General Partner totaled $10,802, $10,276 and $-0- during
1995, 1994 and 1993, respectively.
Payments to/from Affiliates for Programming Services
The Partnership receives programming from Product Information Network,
Mind Extension University and Jones Computer Network, all of which are
affiliates of Intercable.
Payments to Mind Extension University for the years ended December 31,
1995, 1994 and 1993 totaled $10,072, $8,770 and $5,578, respectively. Payments
to Jones Computer Network, which initiated service in 1994, totaled $20,037 in
1995 and $5,771 in 1994.
The Partnership receives a commission from Product Information Network
based on a percentage of advertising revenue and number of subscribers.
Product Information Network, which initiated service in 1994, paid commissions
to the Partnership totaling $14,601 in 1995 and $2,389 in 1994.
(4) PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment as of December 31, 1995 and 1994,
consisted of the following:
<TABLE>
<CAPTION>
1995 1994
---------------- ----------------
<S> <C> <C>
Cable distribution systems $15,204,625 $13,187,501
Equipment and tools 834,580 466,638
Office furniture and equipment 196,545 157,131
Buildings 6,468 6,468
Vehicles 265,822 193,648
----------- -----------
$16,508,040 $14,011,386
Less: accumulated depreciation $(4,705,821) $(3,158,613)
----------- -----------
$11,802,219 $10,852,773
=========== ===========
</TABLE>
(5) 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 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 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 Partner and limited partners would
likely be changed accordingly.
22
<PAGE> 23
Taxable income or 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 income or
loss and the net income or loss reported in the statements of operations.
(6) DEBT:
As of December 31, 1995, $12,650,000 was outstanding under the
Partnership's $13,000,000 revolving credit facility, leaving $350,000 for
borrowings during 1996. At December 31, 1996, the revolving credit facility's
outstanding principal balance will convert to a term loan, payable in quarterly
installments with a final maturity date of December 31, 2002. Generally, the
interest on the outstanding principal balance is at the Partnership's option of
the Prime rate plus 1/4 percent to 1/2 percent or the London Interbank Offered
Rate ("LIBOR") plus 1-1/4 percent to 1- 1/2 percent, depending upon the ratio
of the Partnership debt to operating cash flow. The effective interest rates on
amounts outstanding as of December 31, 1995 and 1994 were 7.45 percent and 7.51
percent, respectively.
On January 12, 1993, the Partnership entered into an interest rate cap
agreement covering outstanding debt obligations of $7,000,000. The Partnership
paid a fee of $67,900 for the rate cap agreement. The agreement protected the
Partnership from LIBOR interest rates that exceeded 7 percent for three years
from the date of the agreement. The agreement expired in January 1996.
The Partnership's debt consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1995 1994
-------------- ----------------
<S> <C> <C>
Lending institutions-
Revolving credit and
term loan facility $ 12,650,000 $ 11,161,375
Capitalized lease obligations 104,960 85,975
------------ ------------
$ 12,754,960 $ 11,247,350
============ ============
</TABLE>
Maturities of the revolving credit and term loan facility and capital
lease obligations for the five years in the period ended December 31, 2000 and
thereafter are as follows:
<TABLE>
<S> <C>
1996 $ 31,488
1997 663,988
1998 1,296,488
1999 1,907,996
2000 2,530,000
Thereafter 6,325,000
-------------
$ 12,754,960
=============
</TABLE>
At December 31, 1995, 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.
23
<PAGE> 24
(7) COMMITMENTS AND CONTINGENCIES:
The Partnership has filed a cost-of-service showing in response to
rulemakings covering the 1992 Cable Act for the Yorba Linda System and thus
anticipates no further reductions in rates. The cost-of-service showing has
not yet received final approval from regulatory authorities, however, and there
can be no assurance that the Partnership's cost- of-service showing will
prevent further rate reductions until such final approval is received.
The Partnership rents office and other facilities under various
long-term lease arrangements. Rent paid under such lease arrangements totaled
$67,319, $84,194 and $74,079 for the years ended December 31, 1995, 1994 and
1993, respectively. Future minimum lease payments, as of December 31, 1995,
under noncancelable operating leases for the five years in the period ending
December 31, 2000, and thereafter are as follows:
1996 $ 74,223
1997 74,223
1998 51,575
1999 51,575
2000 51,575
Thereafter 39,806
--------
Total future minimum
lease payments $342,977
========
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION:
Supplementary profit and loss information is presented below:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1995 1994 1993
------------ ----------- ----------
<S> <C> <C> <C>
Maintenance and repairs $ 56,020 $ 45,174 $ 106,270
=========== =========== ==========
Taxes, other than income and
payroll taxes $ 377,866 $ 316,193 $ 322,227
=========== =========== ==========
Advertising costs $ 65,335 $ 44,800 $ 92,304
=========== =========== ==========
Depreciation of property,
plant and equipment $ 1,547,208 $ 1,343,502 $1,186,524
=========== =========== ==========
Amortization of intangible assets $ 2,105,468 $ 2,100,525 $2,100,526
=========== =========== ==========
</TABLE>
24
<PAGE> 25
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 General
Partner is set forth below.
<TABLE>
<CAPTION>
Name Age Positions with the General Partner
---- --- ----------------------------------
<S> <C> <C>
Glenn R. Jones 66 Chairman of the Board and Chief Executive Officer
James B. O'Brien 46 President
Ruth E. Warren 46 Vice President/Operations
Elizabeth M. Steele 44 Vice President and Secretary
Kevin P. Coyle 44 Vice President/Finance
Larry W. Kaschinske 36 Controller
Timothy J. Burke 45 Director
</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 past and present member of the
Board of Directors and the Executive Committee of the National Cable Television
Association. He also is on the Executive Committee of Cable in the Classroom,
an organization dedicated to education via cable. Additionally, in March 1991,
Mr. Jones was appointed to the Board of Governors for the American Society for
Training and Development, and in November 1992 to 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 is a
past director and member of the Executive Committee of C-Span. 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 Chairman's Award from the Investment Partnership Association, which is an
association of sponsors of public syndications; the cable television industry's
Public Affairs Association President's Award in 1990, the Donald G. McGannon
award for the advancement of minorities and women in cable; 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 Women in Cable
Accolade in 1990 in recognition of support of this organization; the Most
Outstanding Corporate Individual Achievement award from the International
Distance Learning Conference; 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 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 research
25
<PAGE> 26
arm of the U.S. cable television industry. He also serves as a director of the
Cable Television Administration and Marketing Association and as a director of
the Walter Kaitz Foundation, a foundation that places people of any ethnic
minority group in positions with cable television systems, networks and vendor
companies.
Ms. Ruth E. Warren, the 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 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 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 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.
Mr. Timothy J. Burke joined Intercable in August 1982 as corporate tax
manager, was elected Vice President/Taxation in November 1986 and Group Vice
President/Taxation/Administration in October 1990.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no employees; however, various personnel are
required to operate the Yorba Linda System. Such personnel are employed by the
General Partner and, pursuant to the terms of the limited partnership agreement
of the Partnership, the cost of such employment is charged by the General
Partner to the Partnership as a direct reimbursement item. See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
No person or entity owns more than 5 percent of the limited
partnership interests of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner and its affiliates engage in certain transactions
with the Partnership as contemplated by the limited partnership agreement of
the Partnership. The 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 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 General Partner charges the Partnership a management fee, and the
Partnership reimburses the General Partner for certain allocated overhead and
administrative expenses in accordance with the terms of the limited partnership
agreement of the Partnership. These expenses consist primarily of 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 of the General Partner with respect to the
26
<PAGE> 27
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 and certain of its subsidiaries. Systems
owned by Intercable and all other systems owned by partnerships for which
Intercable and its affiliates are the general partner, are also allocated a
proportionate share of these expenses.
The General Partner also advances funds and charges interest on the
balance payable from the Partnership. The interest rate charged the
Partnership approximates the General Partner's weighted average cost of
borrowing.
The Yorba Linda System receives educational video programming from
Mind Extension University, Inc., an affiliate of the General Partner, and
computer video programming from Jones Computer Network, Ltd., an affiliate of
the General Partner, for fees based upon the number of subscribers receiving
the programming.
Product Information Network ("PIN"), an affiliate of the General
Partner, provides advertising time for third parties on the Yorba Linda System.
In consideration, the revenues generated from the third parties are shared
two-thirds and one-third between PIN and the Partnership. During the year
ended December 31, 1995, the Partnership received revenues from PIN of $14,601.
The charges to the Partnership for related party transactions are as
follows for the periods indicated:
<TABLE>
<CAPTION>
At December 31,
----------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Management fees $345,176 $317,294 $309,905
Allocation of expenses 491,642 485,235 457,104
Interest expense -0- -0- 591,575
Amount of advances outstanding -0- 71,270 -0-
Highest amount of advances outstanding 266,281 75,414 257,160
Programming fees:
Mind Extension University 10,072 8,770 5,578
Jones Computer Network 20,037 3,771 -0-
</TABLE>
27
<PAGE> 28
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(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 Agreement of Limited Partnership. (1)
10.1.1 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the City of Anaheim, California. (3)
10.1.2 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the County of Orange, California. (3)
10.1.3 Copy of a franchise and related documents thereto
granting a community antenna television system
franchise for the City of Yorba Linda, California.
(3)
10.2.1 Credit and Security Agreement dated as of April 15,
1992 among the Partnership and Credit Lyonnais New
York Branch, as agent for various lenders. (3)
10.2.2 Amendment No. 1 dated as of September 30, 1994 to
the Credit and Security Agreement dated as of April
15, 1992 among Jones Growth Partners II L.P. and
Credit Lyonnais New York Branch, as agent for
various lenders. (4)
10.3.1 Purchase and Sale Agreement dated August 24, 1990,
by and among Empire Partners, a California general
partnership, Empire Cable Television, Inc., a
California corporation, Yorba Linda Television Co.,
Inc., a California corporation, and Crown Valley
Cable Television, Inc., a California corporation, as
sellers, and Jones Spacelink, Ltd., a Colorado
corporation, as buyer. (2)
10.3.2 Letter Agreement dated October 16, 1990, amending
Purchase and Sale Agreement. (2)
10.3.3 Second Amendment to Purchase and Sale Agreement
dated May 31, 1991. (2)
10.3.4 Third Amendment to Purchase and Sale Agreement dated
June 14, 1991. (2)
10.3.5 Fourth Amendment to Purchase and Sale Agreement
dated August 9, 1991. (2)
27 Financial Data Schedule.
__________
(1) Incorporated by reference from the Form 8-A
Registration Statement of Jones Growth Partners II
L.P. filed with the Securities and Exchange
Commission on May 6, 1991 (Commission File No.
0-19259).
(2) Incorporated by reference from the Form S-1
Registration Statement of Jones Growth Partners II
L.P. filed with the Securities and Exchange
Commission (Registration No. 33- 32169).
28
<PAGE> 29
(3) Incorporated by reference from Registrant's Report
on Form 10-K for the fiscal year ended December 31,
1992.
(4) Incorporated by reference from Registrant's Report
on Form 10-K for the fiscal year ended December 31,
1994.
(b) Reports on Form 8-K
None.
29
<PAGE> 30
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 II 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 25, 1996 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 25, 1996 (Principal Executive Officer)
By: /s/ KEVIN P. COYLE
-----------------------------------
Kevin P. Coyle
Vice President/Finance
Dated: March 25, 1996 (Principal Financial Officer)
By: /s/ LARRY KASCHINSKE
-----------------------------------
Larry Kaschinske
Controller
Dated: March 25, 1996 (Principal Accounting Officer)
By: /s/ TIMOTHY J. BURKE
-----------------------------------
Timothy J. Burke
Dated: March 25, 1996 Director
30
<PAGE> 31
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description Page
- ------- ------------------- ----
<S> <C> <C>
4.1 Agreement of Limited Partnership. (1)
10.1.1 Copy of a franchise and related documents thereto granting
a community antenna television system franchise for the
City of Anaheim, California. (3)
10.1.2 Copy of a franchise and related documents thereto granting
a community antenna television system franchise for the
County of Orange, California. (3)
10.1.3 Copy of a franchise and related documents thereto granting
a community antenna television system franchise for the
City of Yorba Linda, California. (3)
10.2.1 Credit and Security Agreement dated as of April 15, 1992
among the Partnership and Credit Lyonnais New York Branch,
as agent for various lenders. (3)
10.2.2 Amendment No. 1 dated as of September 30, 1994 to the
Credit and Security Agreement dated as of April 15, 1992
among Jones Growth Partners II L.P. and Credit Lyonnais New
York Branch, as agent for various lenders. (4)
10.3.1 Purchase and Sale Agreement dated August 24, 1990, by and
among Empire Partners, a California general partnership,
Empire Cable Television, Inc., a California corporation,
Yorba Linda Television Co., Inc., a California corporation,
and Crown Valley Cable Television, Inc., a California
corporation, as sellers, and Jones Spacelink, Ltd., a
Colorado corporation, as buyer. (2)
10.3.2 Letter Agreement dated October 16, 1990, amending Purchase
and Sale Agreement. (2)
10.3.3 Second Amendment to Purchase and Sale Agreement dated May 31,
1991. (2)
10.3.4 Third Amendment to Purchase and Sale Agreement dated June 14,
1991. (2)
10.3.5 Fourth Amendment to Purchase and Sale Agreement dated August 9,
1991. (2)
27 Financial Data Schedule.
</TABLE>
__________
(1) Incorporated by reference from the Form 8-A Registration
Statement of Jones Growth Partners II L.P. filed with the
Securities and Exchange Commission on May 6, 1991
(Commission File No. 0-19259).
(2) Incorporated by reference from the Form S-1 Registration
Statement of Jones Growth Partners II L.P. filed with the
Securities and Exchange Commission (Registration No. 33-
32169).
<PAGE> 32
(3) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1992.
(4) Incorporated by reference from Registrant's Report on Form
10-K for the fiscal year ended December 31, 1994.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 60,263
<SECURITIES> 0
<RECEIVABLES> 263,634
<ALLOWANCES> (27,667)
<INVENTORY> 0
<CURRENT-ASSETS> 204,313
<PP&E> 16,508,040
<DEPRECIATION> (4,705,821)
<TOTAL-ASSETS> 22,683,846
<CURRENT-LIABILITIES> 783,155
<BONDS> 12,754,960
0
0
<COMMON> 0
<OTHER-SE> 9,145,731
<TOTAL-LIABILITY-AND-EQUITY> 22,683,846
<SALES> 0
<TOTAL-REVENUES> 6,903,528
<CGS> 0
<TOTAL-COSTS> 8,497,661
<OTHER-EXPENSES> 223
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 959,284
<INCOME-PRETAX> (2,553,640)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,553,640)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,553,640)
<EPS-PRIMARY> (127.78)
<EPS-DILUTED> (127.78)
</TABLE>
