SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996.
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____________ to ____________.
Commission file number: 0-17734
IDS/JONES GROWTH PARTNERS 89-B, LTD.
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Exact name of registrant as specified in its charter
Colorado #84-1060546
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State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
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Address of principal executive office
(303) 792-3111
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Registrant's telephone number
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
March 31, December 31,
1996 1995
------------ ------------
ASSETS $ - $ -
------ ============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
LIABILITIES:
Loss in excess of investment in cable television
joint venture $ 1,865,432 $ 1,349,734
Accounts payable - affiliate 102,393 102,393
------------ ------------
Total liabilities 1,967,825 1,452,127
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 500 500
Accumulated deficit (158,911) (153,754)
------------ ------------
(158,411) (153,254)
------------ ------------
Limited Partners-
Net contributed capital (63,383 units outstanding
at March 31, 1996 and December 31, 1995) 12,623,901 12,623,901
Accumulated deficit (14,433,315) (13,922,774)
------------ ------------
(1,809,414) (1,298,873)
------------ ------------
Total liabilities and partners' capital
(deficit) $ - $ -
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
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For the Three Months Ended
March 31,
--------------------------
1996 1995
---------- ----------
EQUITY IN NET LOSS OF CABLE TELEVISION JOINT VENTURE $(515,698) $(661,338)
--------- ---------
NET LOSS $(515,698) $(661,338)
========= =========
ALLOCATION OF NET LOSS:
General Partners $ (5,157) $ (6,613)
========= =========
Limited Partners $(510,541) $(654,725)
========= =========
NET LOSS PER LIMITED PARTNERSHIP UNIT $(8.05) $ (10.33)
========= =========
WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 63,383 63,383
========= =========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
3
IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
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For the Three Months Ended
March 31,
--------------------------
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(515,698) $(661,338)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Equity in net loss of Cable Television Joint Venture 515,698 661,338
--------- ---------
Net cash provided by operating activities - -
--------- ---------
Cash, beginning of period - -
--------- ---------
Cash, end of period $ - $ -
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ - $ -
========= =========
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) This Form 10-Q is being filed in conformity with the Securities and
Exchange Commission requirements for unaudited financial statements and does not
contain all of the necessary footnote disclosures required for a fair
presentation of the Balance Sheets and Statements of Operations and Cash Flows
in conformity with generally accepted accounting principles. However, in the
opinion of management, this data includes all adjustments, consisting only of
normal recurring accruals, necessary to present fairly the financial position of
IDS/Jones Growth Partners 89-B, Ltd. (the "Partnership") at March 31, 1996 and
December 31, 1995 and its Statements of Operations and Cash Flows for the three
months ended March 31, 1996 and 1995. Results of operations for this period are
not necessarily indicative of results to be expected for the full year.
The Partnership owns an interest in IDS/Jones Joint Venture Partners (the
"Venture") through a capital contribution of $14,008,000 made in 1990. Upon
final capitalization of the Venture, the Partnership owns a 24 percent interest
in the Venture. The Venture acquired the cable television systems serving areas
in and around Aurora, Illinois on May 31, 1990.
The Partnership's investment in the Venture is accounted for using the
equity method. At March 31, 1996, the Partnership had recorded equity losses in
excess of its investment in the Venture, resulting in a liability of $1,865,432.
The Partnership will continue to record equity losses because the Venture is a
general partnership. It is anticipated that the Venture will continue to
generate cash from operations; however, the net losses will result from
depreciation and amortization of the Venture's asset base. The Partnership
anticipates recovering the losses in excess of its investment in the Venture
upon the eventual sale of the Venture's Aurora System.
(2) Jones Cable Corporation (the "Managing General Partner") manages the
Partnership and the Venture and receives a fee for its services equal to 5
percent of the gross revenues of the Venture, excluding revenues from the sale
of cable television systems or franchises. Management fees paid during the three
month periods ended March 31, 1996 and 1995 (reflecting the Partnership's 24
percent interest in the Venture) were $54,235 and $49,001, respectively.
IDS Cable Corporation (the "Supervising General Partner") participates in
certain management decisions of the Partnership and receives a fee for its
services equal to 1/2 percent of the Partnership's portion of the gross revenues
of the Venture, excluding revenues from the sale of cable television systems or
franchises. Supervision fees paid during the three month periods ended March 31,
1996 and 1995 (reflecting the Partnership's 24 percent interest in the Venture)
were $5,423 and $4,900, respectively.
The Venture reimburses Jones Intercable, Inc. ("JIC"), the parent of the
Managing General Partner, for certain allocated overhead and administrative
expenses. These expenses represent the salaries and related benefits paid for
corporate personnel, rent, data processing services and other corporate
facilities costs. Such personnel provide engineering, marketing,
administrative, accounting, legal and investor relations services to the
Venture. Allocations of personnel costs are based on actual time spent by
employees of JIC with respect to each partnership managed. Remaining expenses
are allocated based on the pro rata relationship of the Venture's revenues to
the total revenues of all systems owned or managed by JIC and certain of its
affiliates. Systems owned by JIC and all other systems owned by partnerships
for which JIC or affiliates are the general partners are also allocated a
proportionate share of these expenses. The Managing General Partner believes
that the methodology used in allocating overhead and administrative expenses is
reasonable. Reimbursements made to JIC by the Partnership for allocated
overhead and administrative expenses during the three month periods ended March
31, 1996 and 1995 (reflecting the Partnership's 24 percent interest in the
Venture) were $68,336 and $77,234, respectively. The Supervising General
Partner may also be reimbursed for certain expenses incurred on behalf of the
Venture. There were no reimbursements made to the Supervising General Partner
during the three month periods ended March 31, 1996 and 1995.
5
(3) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
------------------------
March 31, 1996 December 31, 1995
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ASSETS
------
Cash and accounts receivable $ 533,915 $ 469,901
Investment in cable television properties 48,926,396 50,576,316
Other assets 444,208 402,697
------------ ------------
Total assets $ 49,904,519 $ 51,448,914
============ ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Debt $ 45,398,028 $ 45,909,122
Accounts payable and accrued liabilities 3,789,932 2,709,714
Partners' contributed capital 57,344,709 57,344,709
Accumulated deficit (56,628,150) (54,514,631)
------------ ------------
Total liabilities and partners'
capital $ 49,904,519 $ 51,448,914
============ ============
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended
March 31,
----------------------------
1996 1995
------------- -------------
Revenues $ 4,445,486 $ 4,016,495
Operating expenses (2,599,332) (2,345,384)
Management fees and allocated overhead
from General Partners (524,567) (537,441)
Depreciation and amortization (2,514,725) (2,820,010)
----------- -----------
Operating loss (1,193,138) (1,686,340)
Interest expense (913,174) (1,020,491)
Other, net (7,207) (3,571)
----------- -----------
Net loss $(2,113,519) $(2,710,402)
=========== ===========
Management fees paid to the Managing General Partner by the Venture totaled
$222,274 and $200,825, respectively, for the three months ended March 31, 1996
and 1995. Supervision fees paid to the Supervising General Partner were $22,227
and $20,082, respectively, for the three months ended March 31, 1996 and 1995.
Reimbursements for overhead and administrative expenses paid to JIC totaled
$280,066 and $316,534, respectively, for the three months ended March 31, 1996
and 1995.
6
IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
The Partnership owns a 24 percent interest in IDS/Jones Joint Venture
Partners (the "Venture"). The Venture owns the cable television system serving
certain areas in and around Aurora, Illinois. The Partnership's investment in
this cable television joint venture is accounted for under the equity method.
The Partnership's share of losses generated by the Venture have exceeded the
Partnership's initial investment in the Venture; therefore, the investment is
classified as a liability. This liability increased by $515,698, which
represents the Partnership's share of losses generated by the Venture during the
three months ended March 31, 1996. These losses are anticipated to continue.
For the three months ended March 31, 1996, the Venture generated net cash
from operating activities totaling $1,434,823, which is available to fund
capital expenditures and non-operating costs. During the first three months of
1996, the Venture expended approximately $844,000 on capital expenditures.
Approximately 45 percent of the expenditures related to construction of service
drops to subscriber homes. Approximately 35 percent of the expenditures related
to plant extensions. The remainder of the expenditures were used for various
enhancements in the Aurora System. Funding for these expenditures was provided
by borrowings from the Venture's credit facility and cash generated from
operations. Anticipated capital expenditures for the remainder of 1996 are
approximately $3,216,000. Approximately 36 percent of the expenditures are for
construction of service drops to subscriber homes. Approximately 33 percent of
the anticipated capital expenditures are for plant extensions. Funding for the
expenditures is expected to be provided by cash on hand, cash generated from
operations and borrowings from the Venture's credit facility.
On December 5, 1991, Jones Intercable, Inc. ("JIC") made an equity
investment in the Venture in the amount of $2,872,000 and a loan of $1,800,000
to the Venture. On that date, IDS Management Corporation also made an equity
investment of $2,872,000 in the Venture and a loan to the Venture in the amount
of $1,800,000. Over half of the $1,800,000 loan from IDS Management Corporation
has been repaid. The loans from JIC and IDS Management Corporation are
subordinate to the Venture's revolving credit and term loan. These loans have
matured. Although IDS Management Corporation and JIC have not formally extended
their loans, they have not demanded repayment. In the first quarter of 1994,
JIC agreed to subordinate to all other Venture debt its $1,406,647 advance to
the Venture outstanding at March 30, 1994 and IDS Management Corporation made an
additional loan of $1,000,000 to the Venture to fund principal repayments due at
the end of March 1994 on the Venture's then-outstanding term loan. The interest
rates on the respective loans, which will vary from time to time, with respect
to IDS Management Corporation's loans, are at its cost of borrowing, and, with
respect to JIC's loans, are at its weighted average cost of borrowing. It is
anticipated that the remaining loans will be repaid over time with borrowings
from the Venture's revolving credit and term loan, as discussed below. If the
December 5, 1991 loans are not repaid, JIC and IDS Management Corporation,
respectively, will have the right, among other rights, to convert the unpaid
portion of these loans to equity in the Venture.
The Venture is a party to a revolving credit and term loan agreement with a
commercial bank. This credit facility has a maximum amount available of
$45,000,000. At March 31, 1996, $40,300,000 was outstanding under this
agreement, leaving $4,700,000 available for future needs of the Venture subject
to certain financial covenants. The revolving credit period of the Venture's
credit facility expires January 1, 1997, at which time the then-outstanding
balance converts to a term loan payable in 28 consecutive quarterly
installments. Interest on the credit facility is at the Venture's option of the
Base Rate plus .75 percent, the London Interbank Offered Rate plus 1.75 percent
or the Certificate of Deposit Rate plus 1.875 percent. The effective interest
rates on outstanding obligations to non-affiliates as of March 31, 1996 and 1995
were 7.52 percent and 8.11 percent, respectively. The Venture anticipates
repaying the remaining notes outstanding to related parties with borrowings from
this credit facility. As borrowings become available, subject to leverage
covenants, the related parties' notes will be repaid including accrued interest
in the following order: first, to IDS Management Corporation the remaining
$800,000 of the $1,800,000 note dated December 5, 1991; second, to JIC the
$1,800,000 note dated December 5, 1991; third, to IDS Management Corporation the
$1,000,000 note dated March 30, 1994; and fourth, to JIC the $1,406,647
subordinated advance.
7
As a result of their equity contributions to the Venture, IDS Management
Corporation and JIC each have a 5 percent equity interest in the Venture, the
Partnership has a 24 percent interest and IDS/Jones Growth Partners II, L.P. has
a 66 percent interest. If the December 5, 1991 subordinated loans are converted
to equity, the ownership percentages will be adjusted accordingly.
REGULATION AND LEGISLATION
- --------------------------
The Venture has filed cost-of-service showings in response to rulemakings
concerning the 1992 Cable Act for its Aurora System and thus anticipates no
further reductions in rates in these systems. The cost-of-service showings have
not yet received final approvals from regulatory authorities, however, and there
can be no assurance that the Partnership's cost-of-service showings will prevent
further rate reductions in these systems until such final approvals are
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
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 Venture 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 Venture.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Venture's Aurora System totaled $4,445,486 in the first
quarter of 1996 compared to $4,016,495 in the first quarter of 1995, an increase
of $428,991, or approximately 11 percent. An increase in the number of basic
subscribers accounted for approximately 49 percent of the increase in revenues.
The number of basic subscribers totaled 44,737 at March 31, 1996 compared to
41,667 at March 31, 1995, an increase of 3,070, or approximately 7 percent.
Basic service rate adjustments accounted for approximately 29 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 Aurora System. The principal cost components are salaries
paid to system personnel, programming expenses, professional fees, subscriber
billing costs, rent for leased facilities, cable system maintenance expenses and
consumer marketing expenses.
Operating expenses totaled $2,599,332 for the three month period ended
March 31, 1996 compared to $2,345,384 for the similar 1995 period, an increase
of $253,948, or approximately 11 percent. Operating expenses represented 58
percent of revenues for the three month periods ended March 31, 1996 and 1995,
respectively. Increases in programming fees accounted for approximately 69
percent of the increase in operating expenses and were due in part to the
increase in the subscriber base. No other individual factor contributed
significantly to the increase.
Management and supervision fees and allocated overhead from the General
Partners totaled $524,567 for the three month period ended March 31, 1996
compared to $537,441 for the similar 1995 period, a decrease of $12,874, or
approximately 2 percent. The decrease was due to a decrease in allocated
expenses from JIC.
Depreciation and amortization expense totaled $2,514,725 for the first
three months of 1996 compared to $2,820,010 for the first three months of 1995,
a decrease of $305,285, or approximately 11 percent. The decrease was due to
the maturation of a portion of the tangible asset base.
8
Operating loss totaled $1,193,138 for the three month period ended March
31, 1996 compared to $1,686,340 for the similar 1995 period, a decrease of
$493,202, or approximately 29 percent. The decrease was due to the increase in
revenues and the decreases in depreciation and amortization expense and
management and supervision fees and allocated overhead from the General Partners
exceeding the increases in operating expenses.
The cable television industry generally measures the financial performance
of a cable television system in terms of cash flow or operating income before
depreciation and amortization. The value of a cable television system is often
determined using multiples of cash flow. This measure is not intended to be a
substitute or improvement upon the items disclosed on the financial statements,
rather it is included because it is an industry standard. Operating income
before depreciation and amortization totaled $1,321,587 at March 31, 1996
compared to $1,133,670 in 1995, an increase of $187,917, or approximately 17
percent. The increase was due to the increase in revenues and the decrease in
management and supervision fees and allocated overhead from the General Partners
exceeding the increases in operating expenses.
Interest expense totaled $913,174 for the three months ended March 31, 1996
compared to $1,020,491 for the comparable 1995 period, a decrease of $107,317,
or approximately 11 percent. The decrease was due to lower effective interest
rates on interest bearing obligations.
Net loss totaled $2,113,519 for the three months ended March 31, 1996
compared to $2,710,402 for the comparable 1995 period, a decrease of $596,883,
or approximately 22 percent. This decrease was due to the factors discussed
above and the losses are expected to continue.
9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IDS/JONES GROWTH PARTNERS 89-B, LTD.
BY: JONES CABLE CORPORATION,
its Managing General Partner
By: /S/ Kevin P. Coyle
----------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 13, 1996
11