ITEM 1. BUSINESS
THE PARTNERSHIP. IDS/Jones Growth Partners 87-A, Ltd. (the "Partnership") is a Colorado limited partnership that was formed to acquire, own and operate cable television systems in the United States. Jones Cable Corporation, a Colorado corporation, is the managing general partner (the "Managing General Partner") and IDS Cable Corporation, a Minnesota corporation, is the supervising general partner (the "Supervising General Partner") of the Partnership. The Managing General Partner is a wholly owned subsidiary of Jones Intercable, Inc. ("Intercable"), which is also a Colorado corporation and one of the largest cable television system operators in the nation. The Supervising General Partner is a wholly owned subsidiary of IDS Management Corporation, a Minnesota corporation, which in turn is a wholly owned subsidiary of American Express Financial Corporation, a Delaware corporation.
The Partnership was formed for the purpose of acquiring and operating cable television systems. The Partnership owns the cable television systems serving the areas in and around the City of Roseville and neighboring portions of unincorporated Placer County, all in the State of California (the "Roseville System"), and the cable television systems serving the communities of Carmel, Ingalls, Fortville and Zionsville, and certain unincorporated areas of Hancock, Hamilton, Boone and Madison Counties, all in the State of Indiana (the "Carmel System"). See Item 2.
ITEM 2. PROPERTIES
The cable television systems owned by the Partnership at December 31, 1994 are described below:
The following sets forth (i) the monthly basic plus service rates charged to subscribers, (ii) the number of basic subscribers and pay units and (iii) the range of franchise expiration dates for the Systems. 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 system. While the charge for basic plus service may have increased in 1993 in some cases as a result of the FCC's rate regulations, overall revenues may have decreased due to the elimination of charges for additional outlets and certain equipment. 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, 1994, the Systems operated approximately 800 miles of cable plant, passing approximately 46,000 homes, representing an approximate 75% penetration rate. Figures for numbers of subscribers, miles of cable plant and homes passed are compiled from the Managing General Partner's records and may be subject to adjustments.
Franchise expiration dates range from December 1999 to December 2000.
Franchise expiration dates range from July 1997 to December 2007.
PROGRAMMING SERVICES
Programming services provided by the Systems include local affiliates of the national broadcast networks, local independent broadcast channels, the traditional satellite services (e.g., American Movie Classics, Arts & Entertainment, Black Entertainment Network, C-SPAN, The Discovery Channel, Lifetime, Entertainment Sports Network, Home Shopping Network, Mind Extension University, Music Television, Nickelodeon, Turner Network Television, The Nashville Network, Video Hits One, and superstations WOR, WGN and TBS. The Partnership's Systems also provide a selection, which varies by system, of premium channel programming (e.g., Cinemax, Encore, Home Box Office, Showtime and The Movie Channel).
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II.
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
While the Partnership is publicly held, there is no public market for the limited partnership interests, and it is not expected that a market will develop in the future. As of February 15, 1995, the approximate number of equity security holders in the Partnership was 6,359.
Item 6.
Item 6. Selected Financial Data
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
1994 Compared to 1993
Revenues of IDS/Jones Growth Partners 87-A, Ltd. (the "Partnership") increased $830,330, or approximately 7 percent, from $12,251,764 in 1993 to $13,082,094 in 1994. Advertising revenues accounted for approximately 60 percent of the increase in revenues. An increase in basic subscribers accounted for approximately 21 percent of the increase in revenues. The increase in revenues would have been greater but for the reduction in basic rates due to basic rate regulations issued by the FCC in April 1993 and February 1994 with which the Partnership complied effective September 1993 and July 1994, respectively.
Operating, general and administrative expenses increased $821,822, or approximately 13 percent, from $6,476,534 in 1993 to $7,298,356 in 1994. Operating, general and administrative expense consumed 53 percent and 56 percent of revenue during the years ended December 31, 1993 and 1994, respectively. Increases in programming fees, due in part to the expansion of the subscriber base, accounted for approximately 31 percent of the increase in such expenses. Advertising expenses accounted for approximately 27 percent of the increase in operating, general and administrative expenses. No other individual factor significantly affected the increase in operating, general and administrative expenses. Management and supervision fees and allocated overhead from the General Partners increased $146,368, or approximately 9 percent, from $1,590,738 in 1993 to $1,737,106 in 1994. This increase was due to the increase in revenues, upon which such fees and allocations are based, and an increase in allocated expenses from the Managing General Partner. The Managing General Partner has experienced increases in expenses, including personnel costs and reregulation costs, a portion of which are allocated to the Partnership. Depreciation and amortization decreased $361,852, or approximately 6 percent, from $6,007,116 in 1993 to $5,645,264 in 1994. This decrease is due to the maturation of the Partnership's depreciable asset base.
Operating loss decreased $223,992, or approximately 12 percent, from $1,822,624 in 1993 to $1,598,632 in 1994. This decrease is due to the increase in revenues and the decrease in depreciation and amortization expense exceeding the increases in operating, general and administrative expense, management and supervision fees and allocated overhead from the General Partners. Operating income before depreciation and amortization expense decreased $137,860, or approximately 3 percent, from $4,184,492 in 1993 to $4,046,632 in 1994 due to the increase in operating, general and administrative expense and management and supervision fees and allocated overhead from the General Partners exceeding the increase in revenues. The decrease in operating income before depreciation and amortization reflects the current operating environment of the cable television industry. The FCC rate regulations under the 1992 Cable Act have caused revenues to increase more slowly than otherwise would have been the case. In turn, this has caused certain expenses which are a function of revenue, such as franchise fees, copyright fees and management fees, to increase more slowly than in prior years. However, other operating costs such as programming fees, salaries and benefits, and marketing costs as well as other costs incurred by the General Partner, which are allocated to the Partnership, continue to increase at historical rates. This situation has led to reductions in operating income before depreciation and amortization as a percent of revenue ("Operating Margin"). Such reductions in Operating Margins may continue in the near term as the Partnership and the General Partner incur cost increases due to, among other things, increases in programming fees, compliance costs associated with reregulation and competition, that exceed increases in revenue. The General Partner will attempt to mitigate a portion of these reductions through (a) new service offerings, (b) product re-marketing and re-packaging and (c) marketing efforts targeted at non-subscribers.
Interest expense increased $291,476, or approximately 27 percent, from $1,082,480 in 1993 to $1,373,956 in 1994. This increase is due primarily to higher effective interest rates on outstanding interest bearing obligations during 1994.
Net loss increased $114,880, or approximately 4 percent, from $2,879,606 in 1993 to $2,994,486 in 1994 due primarily to the increase in interest expense exceeding the decrease in operating loss. These losses, which are primarily the result of the factors discussed above, are expected to continue in the future.
1993 Compared to 1992
Revenues of the Partnership increased $1,090,802, or approximately 10 percent, from $11,160,962 in 1992 to $12,251,764 in 1993. An increase in basic subscribers and basic service rate adjustments accounted for approximately 40
percent and 34 percent, respectively, of the increase in revenues. Advertising revenues accounted for approximately 26 percent of the increase in revenues. The increase in revenues would have been greater but for the reduction in basic rates due to new basic rate regulations issued by the FCC in April 1993 with which the Partnership complied effective September 1993.
Operating, general and administrative expenses increased $749,859, or approximately 13 percent, from $5,726,675 in 1992 to $6,476,534 in 1993. Operating, general and administrative expense consumed 51 percent and 53 percent of revenue during the years ended December 31, 1992 and 1993, respectively. Increases in programming fees, due in part to the expansion of the subscriber base, accounted for approximately 33 percent of the increase in such expenses. Plant related expenses and advertising expenses accounted for approximately 25 percent and 20 percent, respectively, of the increase in operating, general, and administrative expenses. No other individual factor significantly affected the increase in operating, general and administrative expenses. Management and supervision fees and allocated overhead from the General Partners increased $138,417, or approximately 10 percent, from $1,452,321 in 1992 to $1,590,738 in 1993. This increase was due to the increase in revenues, upon which such fees and allocations are based, and an increase in allocated expenses. Depreciation and amortization increased $25,507, or less than one percent, from $5,981,609 in 1992 to $6,007,116 in 1993. This increase was due to capital additions during 1992 and 1993, which was offset, in part, by a reduction in amortization expense due to the maturation of certain intangible assets.
Operating loss decreased $177,019, or approximately 9 percent, from $1,999,643 in 1992 to $1,822,624 in 1993. This decrease is due to the increase in revenues exceeding the increases in operating, general and administrative expense, management and supervision fees and allocated overhead from the General Partners and depreciation and amortization expense. Operating income before depreciation and amortization expense increased $202,526, or approximately 5 percent, from $3,981,966 in 1992 to $4,184,492 in 1993 due to the increase in revenues exceeding the increases in operating, general and administrative expense and management and supervision fees and allocated overhead from the General Partners.
Interest expense decreased $117,910, or approximately 10 percent, from $1,200,390 in 1992 to $1,082,480 in 1993. This decrease was due primarily to lower effective interest rates and lower outstanding balances on outstanding interest bearing obligations during 1993.
Net loss decreased $316,238, or approximately 10 percent, from $3,195,844 in 1992 to $2,879,606 in 1993 due primarily to the decrease in operating loss and the decrease in interest expense. These losses were primarily the result of the factors discussed above.
Financial Condition
The Partnership expended approximately $3,175,000 in capital improvements during 1994. Of these improvements, approximately 38 percent related to the construction of cable television plant and approximately 10 percent related to rebuilds and upgrades of the Partnership's cable television systems. Approximately 17 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 on hand and cash generated from operations.
Anticipated capital expenditures for 1995 are approximately $2,800,000. Construction of system extensions will account for approximately 41 percent of these expenditures. Service drops to home will account for approximately 23 percent of the anticipated expenditures. The remainder of the expenditures relate to various enhancements in each of the Partnership's systems. Funding for these expenditures is expected to be provided by cash on hand and cash generated from operations and, if available, borrowings available under a renegotiated credit facility, as discussed below.
In February 1989, the Partnership entered into a revolving credit and term loan agreement. At December 31, 1992, the then-outstanding balance of $23,000,000 was converted to a term loan, payable in 28 consecutive quarterly installments which began March 31, 1993. The Managing General Partner obtained waivers of the scheduled March 31, 1994 and June 30, 1994 principal payments to provide liquidity for capital expenditures. The Partnership paid $345,000 in loan repayment installments during 1994. At December 31, 1994, the outstanding balance on the term loan was $21,735,000. The Managing General Partner renegotiated with the Partnership's lenders to establish a revolving credit facility with a maximum amount available of $23,000,000. The new revolving credit facility converts to a term loan on September 30, 1995, payable in 18 consecutive quarterly installments with the final installment due December 31, 1999. Interest is at the Partnership's option of the Prime rate plus .25 percent, the London Interbank Offered Rate plus 1.25
percent or the CD rate plus 1.5 percent.
On January 12, 1993, the Partnership entered into an interest rate cap agreement covering outstanding debt obligations of $10,000,000. The agreement protects the Partnership for LIBOR interest rates that exceed 7 percent for three years from the date of the agreement.
The General Partners believe that the Partnership has, and will continue to have, sufficient sources of capital available in the form of cash on hand, borrowings from the new revolving credit facility and its ability to create cash reserves from operations to meet its presently anticipated obligations.
Regulation and Legislation
On October 5, 1992, Congress enacted the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act"), which became effective on December 4, 1992. The 1992 Cable Act generally allows for a greater degree of regulation of the cable television industry. In April 1993, the FCC adopted regulations governing rates for basic and non-basic services. These regulations became effective on September 1, 1993. Such regulations caused reductions in rates for certain regulated services. On February 22, 1994, the FCC adopted several additional rate orders including an order which revised its earlier-announced regulatory scheme with respect to rates. The Partnership complied with the February 1994 benchmark regulations and further reduced rates in its systems effective July 1994. See Item 1 for further discussion of the provisions of the 1992 Cable Act and the FCC regulations promulgated thereunder.
Item 8.
Item 8. Financial Statements
IDS/JONES GROWTH PARTNERS 87-A, LTD.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1994 AND 1993
INDEX
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of IDS/Jones Growth Partners 87-A, Ltd.:
We have audited the accompanying balance sheets of IDS/JONES GROWTH PARTNERS 87-A, LTD. (a Colorado limited partnership) as of December 31, 1994 and 1993, and the related statements of operations, partners' capital (deficit) and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the General Partners' 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 IDS/Jones Growth Partners 87-A, Ltd. as of December 31, 1994, and 1993, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado, March 8, 1995.
IDS/JONES GROWTH PARTNERS 87-A, LTD. (A Limited Partnership)
BALANCE SHEETS
The accompanying notes to financial statements are an integral part of these balance sheets.
IDS/JONES GROWTH PARTNERS 87-A, LTD. (A Limited Partnership)
BALANCE SHEETS
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
The accompanying notes to financial statements are an integral part of these balance sheets.
IDS/JONES GROWTH PARTNERS 87-A, LTD. (A Limited Partnership)
STATEMENTS OF OPERATIONS
The accompanying notes to financial statements are an integral part of these statements.
IDS/JONES GROWTH PARTNERS 87-A, LTD. (A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
The accompanying notes to financial statements are an integral part of these statements.
IDS/JONES GROWTH PARTNERS 87-A, LTD. (A Limited Partnership)
STATEMENTS OF CASH FLOWS
The accompanying notes to financial statements are an integral part of these statements.
IDS/JONES GROWTH PARTNERS 87-A, LTD. (A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND PARTNERS' INTERESTS
Formation and Business
IDS/Jones Growth Partners 87-A, Ltd. (the "Partnership"), a Colorado limited partnership, was formed on September 15, 1987, pursuant to a public offering. The Partnership was formed to acquire, develop and operate cable television systems. Jones Cable Corporation, a Colorado corporation, is the "Managing General Partner" and manager of the Partnership. IDS Cable Corporation, a Minnesota corporation, is the "Supervising General Partner". Jones Intercable, Inc. ("Intercable"), the parent of Jones Cable Corporation, manages the cable television systems owned by the Partnership. Intercable and its subsidiaries also own and operate cable television systems as well as manage cable television systems for other limited partnerships for which it is general partner and, also, for affiliated entities.
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 contribution to partnership capital.
The Managing General Partner and the Supervising General Partner purchased their interests in the Partnership by contributing $250 each to partnership capital.
All profits and losses of the Partnership are allocated 99 percent to the limited partners, 1/2 percent to the Managing General Partner and 1/2 percent to the Supervising 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 Agreement and interest income earned prior to the first acquisition by the Partnership of a cable television system, which was allocated 100 percent to the limited partners.
Cable Television System Acquisition
In 1988, the Partnership acquired the cable television system serving the communities in and around Roseville, California (the "Roseville System") and, in 1989, the Partnership acquired the cable television system serving the communities in and around Carmel, Indiana (the "Carmel System").
The above-described acquisitions were accounted for as purchases with the purchase price allocated to tangible and intangible assets based upon an independent appraisal. The method of allocation of the purchase price was as follows: first, to the fair value of the net tangible assets acquired; second to the value of subscriber lists and any non-compete agreements; third, to franchise costs; and fourth, to costs in excess of interests in net assets purchased. Acquisition fees paid to affiliates of the General Partners and other system acquisition costs were capitalized and included in the costs of intangible assets.
(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.
Property, Plant and Equipment
Depreciation is provided using the straight-line method over the following estimated service lives:
Replacements, renewals and improvements are capitalized and maintenance and repairs are charged to expense as incurred.
Intangible Assets
Costs assigned to franchises, subscriber lists and costs in excess of interests in net assets purchased are amortized using the straight-line method over the following remaining estimated useful lives:
Revenue Recognition
Subscriber prepayments are initially deferred and recognized as revenue when earned.
(3) TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
Acquisition Fees
Affiliates of the Managing General Partner and the Supervising General Partner performed services for the Partnership in connection with acquisitions of systems. For such services, The Jones Group, Ltd., an affiliate of the Managing General Partner, and IDS Management Corporation, an affiliate of the Supervising General Partner, received a fee of 4 percent of the original purchase prices of the systems acquired. During 1992, aggregate fees of $9,600 were paid to such affiliates by the Partnership. No acquisition fees were paid to such affiliates by the Partnership during 1993 or 1994.
Management Fees, Supervision Fees, Distribution Ratios and Reimbursements
The Managing General Partner manages the Partnership and receives a fee for its services equal to 5 percent of the gross revenues of the Partnership, excluding revenues from the sale of cable television systems or franchises. Management fees paid to the Managing General Partner were $654,105, $612,588 and $558,048 during 1994, 1993 and 1992, respectively.
The Supervising General Partner participates in certain management decisions of the Partnership and receives a fee for its services equal to 1/2 percent of the gross revenues of the Partnership, excluding revenues from the sale of cable television systems or franchises. Supervision fees paid to the Supervising General Partner during the years ended December 31, 1994, 1993 and 1992 were $65,410, $61,259 and $55,805, 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 allocated 99 percent to the limited partners, 1/2 percent to the Managing General Partner and 1/2 percent to the Supervising General Partner. Any distributions other than interest income on limited partner subscriptions earned prior to the acquisition of the Partnership's first cable television system or from cash flow, such as from the sale or refinancing of a system or upon dissolution of the Partnership, will be made as follows: first, to the limited partners in an amount which, together with all prior distributions, will equal 125 percent of the amount initially contributed to partnership capital by the limited partners; the balance, 75 percent to the limited
partners, 12-1/2 percent to the Managing General Partner and 12-1/2 percent to the Supervising General Partner. As of December 31, 1994, the Partnership had made no such distributions.
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. Other overhead costs are allocated primarily based on revenues and/or the cost of partnership assets managed. Effective December 1, 1993, the allocation method was changed to be based only on revenue, which the Managing General Partner believes provides a more accurate method of allocation. 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 were $1,017,591, $916,891 and $838,468 for 1994, 1993 and 1992, respectively. The Supervising General Partner may also be reimbursed for certain expenses incurred on behalf of the Partnership. There were no reimbursements made to the Supervising General Partner by the Partnership for allocated overhead and administrative expenses during the years ended December 31, 1994, 1993 and 1992.
The Partnership was charged interest by Intercable during 1994 at an average interest rate of 10 percent on amounts due to the Managing General Partner, which approximated Intercable's weighted average cost of borrowing. Total interest charged to the Partnership by Intercable was $19,296, $1,705 and $4,379 in 1994, 1993 and 1992, respectively.
Payments to Affiliates for Programming Services
The Partnership receives programming from Product Information Network, Superaudio, The Mind Extension University and Jones Computer Network, all affiliates of the Managing General Partner. Payments to Superaudio totaled approximately $19,257, $19,030 and $18,299 in 1994, 1993 and 1992, respectively. Payments to The Mind Extension University totaled $17,449, $11,074 and $10,484 in 1994, 1993 and 1992, respectively. Payments to Jones Computer Network, which initiated service in 1994, totaled $4,568 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 $12,236 in 1994.
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31, 1994 and 1993, consists of the following:
(5) DEBT
In February 1989, the Partnership entered into a revolving credit and term loan agreement. At December 31, 1992, the then- outstanding balance of $23,000,000 was converted to a term loan payable in 28 consecutive quarterly installments which began March 31, 1993. The Managing General Partner obtained waivers of the scheduled March 31, 1994 and June 30, 1994 principal payments to provide liquidity for capital expenditures. The Partnership paid $345,000 in loan repayment installments during 1994. At December 31, 1994, the outstanding balance on the term loan was $21,735,000. The Managing General Partner renegotiated with the Partnership's lenders to establish a revolving credit facility with a maximum amount available of $23,000,000. The new revolving credit facility converts to a term loan on September 30, 1995, payable in 18 consecutive quarterly installments with the final installment due December 31, 1999. Interest is at the Partnership's option of the Prime rate plus .25 percent, the London Interbank Offered Rate plus 1.25 percent or the CD rate plus 1.5 percent. The effective interest rates on amounts outstanding as of December 31, 1994 and 1993 were 7.19 percent and 4.75 percent, respectively.
On January 12, 1993, the Partnership entered into an interest rate cap agreement covering outstanding debt obligations of $10,000,000. The agreement protects the Partnership for LIBOR interest rates that exceed 7 percent for three years from the date of the agreement. The fee of $100,000 is being charged to interest expense over the life of the agreement.
Installments due on debt principal for each of the five years in the period ending December 31, 1999 and thereafter, respectively, are $355,141, $898,516, $1,333,216, $1,748,505, $17,496,674 and $-0-. At December 31, 1994, substantially all of the Partnership's property, plant and equipment secured the above indebtedness.
(6) INCOME TAXES
Income taxes have not been recorded in the accompanying financial statements because they accrue directly to the partners. The Federal and state income tax returns of the Partnership are prepared and filed by the Managing General Partner.
The Partnership's tax returns, the qualification of the Partnership as such for tax purposes, and the amount of distributable Partnership 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 and limited partners would likely be changed accordingly.
Taxable losses reported to the partners is different from that reported in the statements of operations due to the difference in depreciation allowed under generally accepted accounting principles and the expense allowed for tax purposes under the Modified Accelerated Cost Recovery System (MACRS). There are no other significant differences between taxable loss and the net loss reported in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES
Office and other facilities are rented under various long-term lease arrangements. Rent paid under such lease arrangements totalled $152,323, $145,620 and $112,304, respectively, for the years ended December 31, 1994, 1993 and 1992. Minimum commitments under operating leases for each of the five years in the period ended December 31, 1999 and thereafter are as follows:
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION
Supplementary profit and loss information is presented below:
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership itself has no officers or directors. Certain information concerning the directors and executive officers of the Managing General Partner is set forth below.
Mr. Glenn R. Jones has been Chairman of the Board of the Managing General Partner since its formation in October 1986. Mr. Jones served as President of the Managing General Partner until September of 1990 at which time he was elected Chief Executive Officer. Mr. Glenn R. Jones has served as Chairman of the Board of Directors and Chief Executive Officer of Jones Intercable, Inc. 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 Jones Intercable, Inc. and of certain other affiliates of Jones Intercable, Inc. 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 of the National Cable Television Association, and is a former member of its Executive Committee. 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; and the Women in Cable Accolade in 1990 in recognition of support of this organization. Mr. Jones is also a founding member of the James Madison Council of the Library of Congress and is on the Board of Governors of the American Society of Training and Development.
Mr. James B. O'Brien was elected President of the Managing General Partner in September of 1990. Mr. O'Brien joined Jones Intercable, Inc. in January 1982. Mr. O'Brien was elected President and a Director of Jones Intercable, Inc. in December 1989. Prior to being elected President and a Director of Jones Intercable, Inc., 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 is a board member of Cable Labs, Inc., the research arm of the 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.
Mr. Kevin P. Coyle was elected Vice President of Finance of the Managing General Partner in February 1989. Mr. Coyle is the principal financial and accounting officer of the Managing General Partner. Mr. Coyle joined The Jones Group, Ltd. in July 1981 as Vice President/Financial Services. He was elected Treasurer of Jones Intercable, Inc. in August 1987, Vice President/Treasurer in April 1988 and Group Vice President/Finance in October 1990.
Ms. Elizabeth M. Steele has served as Secretary of the Managing General Partner since August 1987 and Vice President since February 1989. Ms. Steele joined Jones Intercable, Inc. in August 1987 as Vice President/General Counsel and Secretary. From August 1980 until joining Jones Intercable, Inc., Ms. Steele was an associate and then a partner at the Denver law firm of Davis, Graham & Stubbs, which serves as counsel to Jones Intercable, Inc.
Certain information concerning directors and executive officers of the Supervising General Partner is set forth below:
Ms. Janis E. Miller has served as Vice President of Variable Assets of American Express Financial Corporation since December 1993. From June 1990 to November 1993, Ms. Miller held the position of Vice President of Mutual Funds/Limited Partnership Product Development and Marketing with American Express Financial Corporation.
Mr. Morris Goodwin, Jr. has served as Vice President and Treasurer of American Express Financial Corporation since July 1989. From January 1988 to July 1989, he had been the Chief Financial Officer and Treasurer of IDS Bank & Trust Company. From January 1980 to January 1988, he was a Vice President with Morgan Stanley, an investment banking business headquartered in New York.
Ms. Lori J. Larson has been employed by American Express Financial Corporation since 1981 and currently holds the title of Vice President. Since August 1988, she has been responsible for day-to-day management of vendor relationships, due diligence review, and operational aspects for various limited partnerships distributed by American Express Financial Advisors Inc. In addition, Ms. Larson is responsible for product development of the publicly offered mutual funds in the IDS Mutual Fund Group.
Mr. Ronald W. Powell has held the position of Vice President and Assistant General Counsel with American Express Financial Corporation since November 1985. He has been a member of the IDS law department since 1975.
Ms. Juanita M. Costa has served as Director of Financial Education Services ("FES") for American Express Financial Corporation since January 1994. She is responsible for marketing FES programs to corporate clients. Ms. Costa has served as Vice President of Investment Services with IDS Trust Company since October 1991. From April 1987 to mid-1991, Ms. Costa was Vice President-Limited Partnership Operations. From June 1984 to April 1987, she was a Vice President of L.F. Rothschild and, from January 1980 to June 1984, she was an Assistant Vice President at Prudential Bache Securities.
Mr. Bradley C. Nelson joined American Express Financial Corporation in 1991 as an Investment Department analyst following his graduation from Cornell University's Johnson Graduate School of Management where he earned an MBA with a concentration in finance.
Mr. Louis C. Fornetti has been employed with American Express Financial Corporation since 1985 as Corporate Controller. He has been on the board of directors of American Express Financial Corporation since 1988 and assumed the role of Chief Financial Officer and Senior Vice President in 1993.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no employees; however, various personnel are required to operate cable television systems owned by the Partnership. Such personnel are employed by Intercable and, pursuant to the terms of the Partnership's limited partnership agreement, the cost of such employment is charged by the Managing General Partner to the Partnership as a direct reimbursement item. See Item 13.
ITEM 12.
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.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Managing General Partner and its affiliates engage in certain transactions with the Partnership as contemplated by the limited partnership agreement of the Partnership. The Managing General Partner believes that the terms of such transactions are generally as favorable as could be obtained by the Partnership from unaffiliated parties. This determination has been made by the Managing General Partner in good faith, but none of the terms were or will be negotiated at arm's-length and there can be no assurance that the terms of such transactions have been or will be as favorable as those that could have been obtained by the Partnership from unaffiliated parties.
The Supervising General Partner and its affiliates engage in certain transactions with the Partnership as contemplated by the limited partnership agreement of the Partnership. The Supervising General Partner believes that the terms of such transactions, which are set forth in the Partnership's limited partnership agreement, are generally as favorable as could be obtained by the Partnership from unaffiliated parties. This determination has been made by the Supervising General Partner in good faith, but none of the terms were or will be negotiated at arm's-length and there can be no assurance that the terms of such transactions have been or will be as favorable as those that could have been obtained by the Partnership from unaffiliated parties.
The Managing General Partner charges the Partnership a management fee, and the Partnership reimburses Intercable, the parent of the Managing 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 Partnerships. Allocations of personnel costs are based primarily on actual time spent by employees with respect to each partnership managed. Remaining overhead costs are allocated based on revenues and/or the costs of assets managed for the Partnerships. Systems owned by Intercable and all other systems owned by partnerships for which Intercable serves as general partner, are also allocated a proportionate share of these expenses. The Supervising General Partner, IDS Cable Corporation, charges the Partnership for supervision fees in accordance with the limited partnership agreement of the Partnership.
Intercable, the parent of the Managing General Partner, also advances funds and charges interest on the balance payable from the Partnership. The interest rate charged the Partnership approximates Intercable's weighted average cost of borrowing.
The Systems receive stereo audio programming from Superaudio, a joint venture owned 50% by an affiliate of the Managing General Partner and 50% by an unaffiliated party, educational video programming from Mind Extension University, Inc., an affiliate of the Managing General Partner, and computer video programming from Jones Computer Network, Ltd., an affiliate of the Managing General Partner, for fees based upon the number of subscribers receiving the programming.
Product Information Network ("PIN"), an affiliate of the Managing General Partner, provides advertising time for third parties on the Systems. 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, 1994, the Partnership received revenues from PIN of $12,236.
The charges to the Partnership for related party transactions are as follows for the periods indicated:
PART IV.
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)1. See index to financial statements for list of financial statements and exhibits thereto filed as part of this report.
3. The following exhibits are filed herewith:
4.1 Limited Partnership Agreement for IDS/Jones Growth Partners 87-A, Ltd. (1)
10.1.1 Copy of franchise and related documents granting a cable television system franchise for the County of Placer, California (IDS/Jones 87-A). (1)
10.1.2 Copy of franchise and related documents granting a cable television system franchise for the City of Roseville, California (IDS/Jones 87-A). (1)
10.1.3 Copy of franchise and related documents granting a cable television system franchise for the County of Placer, California (IDS/Jones 87-A). (1)
10.1.4 Copy of franchise and related documents granting a cable television system franchise for Boone County, Indiana (IDS/Jones 87-A). (1)
10.1.5 Copy of franchise and related documents granting a cable television system franchise for the City of Carmel, Indiana (IDS/Jones 87-A). (1)
10.1.6 Copy of franchise and related documents granting a cable television system franchise for the Town of Fortville, Indiana (IDS/Jones 87-A). (1)
10.1.7 Copy of franchise and related documents granting a cable television system franchise for the Town of Zionsville, Indiana (IDS/Jones 87-A). (1)
10.1.8 Copy of franchise and related documents granting a cable television system franchise for Hamilton County (Carmel), Indiana (IDS/Jones 87-A). (1)
10.1.9 Copy of franchise and related documents granting a cable television system franchise for Hamilton County (Fortville), Indiana (IDS/Jones 87-A). (1)
10.1.10 Copy of franchise and related documents granting a cable television system franchise for Hamilton County (Zionsville), Indiana (IDS/Jones 87-A). (1)
10.1.11 Copy of franchise and related documents granting a cable television system franchise for Hancock County, Indiana (IDS/Jones 87-A). (1)
10.1.12 Copy of franchise and related documents granting a cable television system franchise for the Town of Ingalls, Indiana (IDS/Jones 87-A). (1)
10.1.13 Copy of franchise and related documents granting a cable television system franchise for Madison County, Indiana (IDS/Jones 87-A). (1)
10.2.1 Revolving Credit and Term Loan Agreement dated February 6, 1989 between IDS/Jones Growth Partners 87-A, Ltd. and Provident National Bank. (1)
10.2.2 Amendment No. 1 dated May 29, 1992 to Revolving Credit and Term Loan Agreement dated February 6, 1989 between IDS/Jones Growth Partners 87-A, Ltd. and Provident National Bank. (5)
10.2.3 Amendment No. 2 dated March 31, 1994 to Revolving Credit and Term Loan Agreement dated February 6, 1989 between IDS/Jones Growth Partners 87-A, Ltd. and Provident National Bank.
27 Financial Data Schedule
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(1) Incorporated by reference from the Form 10-K of IDS/Jones Growth Partners (Commission File Nos. 0-16183 and 0-17734) for fiscal year ended December 31, 1988.
(2) Incorporated by reference from the Annual Report on Form 10-K of IDS/Jones Growth Partners II (Commission File No. 0-18133) for fiscal year ended December 31, 1992.
(b) Reports on Form 8-K None.
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.
IDS/JONES GROWTH PARTNERS 87-A, LTD. a Colorado limited partnerships By Jones Cable Corporation, their Managing General Partner
By: /s/ Glenn R. Jones --------------------------------- Glenn R. Jones Chairman of the Board and Dated: March 27, 1995 Chief Executive Officer
By IDS Cable Corporation, their Supervising General Partner
By: /s/ Janis E. Miller -------------------------------- Janis E. Miller Dated: March 27, 1995 President and Director
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.
OFFICERS AND DIRECTORS OF JONES CABLE CORPORATION:
By: /s/ Glenn R. Jones ------------------------------- Glenn R. Jones Chairman of the Board and Chief Executive Officer Dated: March 27, 1995 (Principal Executive Officer)
By: /s/ Kevin P. Coyle ------------------------------- Kevin P. Coyle Vice President/Finance (Principal Financial and Dated: March 27, 1995 Accounting Officer)
OFFICERS AND DIRECTORS OF IDS CABLE CORPORATION:
By: /s/ Janis E. Miller -------------------------------- Janis E. Miller President and Director Dated: March 27, 1995 (Principal Executive Officer)
By: /s/ Morris Goodwin, Jr. -------------------------------- Morris Goodwin, Jr. Vice President and Treasurer (Principal Financial and Dated: March 27, 1995 Accounting Officer)
By: /s/ Lori J. Larson -------------------------------- Lori J. Larson Dated: March 27, 1995 Vice President and Director
By: /s/ Juanita M. Costa -------------------------------- Juanita M. Costa Dated: March 27, 1995 Vice President and Director
By: /s/ Louis C. Fornetti -------------------------------- Dated: March 27, 1995 Louis C. Fornetti, Director
EXHIBIT INDEX
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(1) Incorporated by reference from the Form 10-K of IDS/Jones Growth Partners (Commission File Nos. 0-16183 and 0-17734) for fiscal year ended December 31, 1988.
(2) Incorporated by reference from the Annual Report on Form 10-K of IDS/Jones Growth Partners II (Commission File No. 0-18133) for fiscal year ended December 31, 1992.