FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1997.
[ ] 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.
- --------------------------------------------------------------------------------
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 (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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IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
June 30, December 31,
1997 1996
------------- -------------
ASSETS $ - $ -
------ ============ ============
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
LIABILITIES:
Loss in excess of investment in cable television
joint venture $ 4,244,631 $ 3,394,025
Accounts payable - affiliate 102,393 102,393
------------ ------------
Total liabilities 4,347,024 3,496,418
------------ ------------
PARTNERS' DEFICIT:
General Partners-
Contributed capital 500 500
Accumulated deficit (182,703) (174,197)
------------ ------------
(182,203) (173,697)
------------ ------------
Limited Partners-
Net contributed capital (63,383 units outstanding at
June 30, 1997 and December 31, 1996) 12,623,901 12,623,901
Accumulated deficit (16,788,722) (15,946,622)
------------ ------------
(4,164,821) (3,322,721)
------------ ------------
Total liabilities and partners' deficit $ - $ -
============ ============
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
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IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- ------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
EQUITY IN NET LOSS OF
CABLE TELEVISION
JOINT VENTURE $(383,669) $(469,586) $(850,606) $(985,284)
--------- --------- --------- ---------
NET LOSS $(383,669) $(469,586) $(850,606) $(985,284)
========= ========= ========= =========
ALLOCATION OF NET LOSS:
General Partners $ (3,837) $ (4,696) $ (8,506) $ (9,853)
========= ========= ========= =========
Limited Partners $(379,832) $(464,890) $(842,100) $(975,431)
========= ========= ========= =========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $(6.00) $(7.34) $(13.29) $ (15.39)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 63,383 63,383 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
----------------------------------
For the Six Months Ended
June 30,
--------------------------
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(850,606) $(985,284)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Equity in net loss of Cable Television
Joint Venture 850,606 985,284
--------- ---------
Net cash provided by operating activities - -
--------- ---------
Net change in cash - -
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 SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data includes
all adjustments, consisting only of normal recurring accruals, necessary to
present fairly the financial position of IDS/Jones Growth Partners 89-B, Ltd.
(the "Partnership") at June 30, 1997 and December 31, 1996, its Statements of
Operations for the three and six month periods ended June 30, 1997 and 1996 and
its Statements of Cash Flows for the six month periods ended June 30, 1997 and
1996. Results of operations for these periods are not necessarily indicative of
results to be expected for the full year.
The Partnership owns a 24 percent interest in IDS/Jones Joint Venture
Partners (the "Venture") through a capital contribution of $14,008,000 made in
1990. The Venture acquired the cable television systems serving areas in and
around Aurora, Illinois (the "Aurora System") on May 31, 1990.
The Partnership's investment in the Venture is accounted for using the
equity method. At June 30, 1997, the Partnership had recorded equity losses in
excess of its investment in the Venture, resulting in a liability of $4,244,631.
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
and six month periods ended June 30, 1997 (reflecting the Partnership's 24
percent interest in the Venture) were $60,135 and $117,627, respectively, as
compared to $56,078 and $110,313, respectively, for the similar 1996 periods.
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 and six month periods ended
June 30, 1997 (reflecting the Partnership's 24 percent interest in the Venture)
were $6,014 and $11,763, respectively, as compared to $5,608 and $11,031,
respectively, for the similar 1996 periods.
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. Such services, and their related costs, are necessary to the
operations of the Venture and would have been incurred by the Venture if it was
a stand alone entity. 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 Venture for allocated
overhead and administrative expenses during the three and six months ended June
30, 1997 (reflecting the Partnership's 24 percent interest in the Venture) were
$60,517 and $136,578, respectively, as compared to $76,879 and $145,215,
respectively, for the similar 1996 periods.
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 and six month periods ended June
30, 1997 and 1996.
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(3) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
------------------------
June 30, 1997 December 31, 1996
-------------- ------------------
ASSETS
------
Cash and trade receivables $ 326,203 $ 525,514
Investment in cable television properties 42,376,278 45,335,476
Other assets 479,953 397,014
------------ ------------
Total assets $ 43,182,434 $ 46,258,004
============ ============
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Debt $ 48,708,185 $ 48,693,134
Accounts payable and accrued liabilities 3,508,502 3,113,032
Partners' contributed capital 57,344,709 57,344,709
Accumulated deficit (66,378,962) (62,892,871)
------------ ------------
Total liabilities and partners' deficit $ 43,182,434 $ 46,258,004
============ ============
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UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
For the Three Months Ended For the Six Months Ended
June 30, June 30,
---------------------------- -------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
Revenues $ 4,929,109 $ 4,596,553 $ 9,641,555 $ 9,042,039
Operating expenses 2,694,604 2,656,239 5,400,456 5,255,571
Management fees and allocated overhead
from General Partners 519,121 567,890 1,090,031 1,092,457
Depreciation and amortization 2,349,158 2,386,034 4,798,663 4,906,982
----------- ----------- ----------- -----------
Operating loss (633,774) (1,013,610) (1,647,595) (2,212,971)
----------- ----------- ----------- -----------
Interest expense (917,103) (916,080) (1,825,055) (1,829,254)
Other, net (21,537) 5,162 (13,441) 4,178
----------- ----------- ----------- -----------
Net loss $(1,572,414) $(1,924,528) $(3,486,091) $(4,038,047)
=========== =========== =========== ===========
Management fees paid to the Managing General Partner by the Venture totaled
$246,456 and $482,078, respectively, for the three and six months ended June 30,
1997 compared to $229,828 and $452,102, respectively, for the comparable 1996
periods. Supervision fees paid to the Supervising General Partner totaled
$24,646 and $48,208, respectively, for the three and six months ended June 30,
1997 compared to $22,983 and $45,210, respectively, for the comparable 1996
periods. Reimbursements for overhead and administrative expenses paid to JIC
totaled $248,019 and $559,745, respectively, for the three and six months ended
June 30, 1997 compared to $315,079 and $595,145, respectively, for the
comparable 1996 periods.
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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 the Venture. The Venture
owns the Aurora System. The Partnership's investment in the 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 $850,606, which represents the Partnership's share of
losses generated by the Venture during the six months ended June 30, 1997.
It is JIC's publicly announced policy that it intends to liquidate its
managed partnerships, including the Partnership, as opportunities for sales of
partnership cable television systems arise in the marketplace over the next
several years. In accordance with JIC's policy, the Aurora System is being
marketed for sale. There is no assurance as to the timing or terms of any
sales.
For the six months ended June 30, 1997, the Venture generated net cash from
operating activities totaling $1,801,606, which is available to fund capital
expenditures and non-operating costs. During the first six months of 1997, the
Venture expended approximately $1,736,000 on capital expenditures.
Approximately 46 percent of the expenditures related to construction of service
drops to subscriber homes. Approximately 36 percent of the expenditures related
to plant extensions. The remainder of the expenditures was used for various
enhancements in the Aurora System. Funding for these expenditures was provided
by cash generated from operations. Anticipated capital expenditures for the
remainder of 1997 are approximately $2,354,000. Approximately 39 percent of the
anticipated capital expenditures is for plant extensions. Approximately 28
percent of the expenditures is for construction of service drops to subscriber
homes. These capital expenditures are necessary to maintain the value of the
Aurora System. Funding for these expenditures is expected to be provided by
cash generated from operations and, if necessary, borrowings from the Venture's
credit facility.
On December 5, 1991, JIC made a $1,800,000 loan to the Venture, of which
$1,200,000 had been repaid as of June 30, 1997. Any amounts not repaid to JIC
are convertible into equity in the Venture. 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 31, 1994 and IDS Management Corporation made a loan
of $1,000,000 to the Venture to fund principal repayments due on March 31, 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 loan is 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 cash generated from
operations and borrowings from the Venture's revolving credit and term loan. The
related parties' notes will be repaid including accrued interest in the
following order: first, to JIC the remaining $600,000 of the $1,800,000 note
dated December 5, 1991; second, to IDS Management Corporation the $1,000,000
note dated March 30, 1994; and third, to JIC the $1,406,647 subordinated
advance.
The Venture is a party to a revolving credit and term loan agreement with
commercial banks. In the fourth quarter of 1996, the General Partner amended the
credit facility to extend the revolving credit period and increase the
commitment to $47,000,000. The amended agreement allows for a reducing revolving
commitment that will begin to reduce quarterly on June 30, 1999 until December
31, 1999, at which time the commitment will reduce to zero and all principal and
interest amounts will be due and payable in full. At June 30, 1997, $45,600,000
was outstanding under this agreement, leaving $1,400,000 available for future
needs of the Venture, subject to certain financial covenants that may limit
borrowing. Interest on the credit facility is at the Venture's option of the
Prime Rate plus .75 percent, the London Interbank Offered Rate plus 1.75 percent
or the Certificate of Deposit Rate plus 1.875 percent. The effective interest
rates on outstanding obligations to non-affiliates as of June 30, 1997 and 1996
were 7.32 percent and 7.53 percent, respectively.
On December 5, 1991, Intercable made an equity investment in the Venture in
the amount of $2,872,000. Also on December 5, 1991, IDS Management Corporation
made an equity investment in the Venture of $2,872,000. As a result of their
equity contributions to the Venture, IDS Management Corporation and Intercable
each have a 5 percent equity
8
interest in the Venture, the Partnership has a 24 percent interest and IDS/Jones
Growth Partners II, L.P. has a 66 percent interest.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Venture's Aurora System increased $332,556, or
approximately 7 percent, to $4,929,109 for the three month period ended June 30,
1997 compared to $4,596,553 for the comparable 1996 period. Revenues increased
$599,516, or approximately 7 percent, to $9,641,555 for the six months ended
June 30, 1997 compared to $9,042,039 for the comparable 1996 period. Increases
in basic service revenues primarily accounted for the increases in revenues for
the three and six month periods ended June 30, 1997. Increases in the number of
basic service subscribers accounted for approximately 62 percent and 67 percent,
respectively, of the increases in revenues for the three and six month periods.
The number of basic service subscribers increased 2,578, or approximately 6
percent, to 48,126 at June 30, 1997 compared to 45,548 at June 30, 1996. No
other individual factor was significant to the increases in revenues.
Operating expenses consist primarily of costs associated with the operation
and 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 marketing expenses.
Operating expenses increased $38,365, or approximately 1 percent, to
$2,694,604 for the three month period ended June 30, 1997 compared to $2,656,239
for the comparable 1996 period. Operating expenses increased $144,885, or
approximately 3 percent, to $5,400,456 for the six months ended June 30, 1997
compared to $5,255,571 for the comparable 1996 period. Operating expenses
represented 55 percent and 58 percent, respectively, of revenues for the three
month periods ended June 30, 1997 and 1996, and 56 percent and 58 percent,
respectively, for the six month periods ended June 30, 1997 and 1996. Increases
in programming fees primarily accounted for the increases in operating expenses
for the three and six month periods. No other individual factor contributed
significantly to the increases in operating expenses.
The cable television industry generally measures the financial performance
of a cable television system in terms of operating cash flow (revenues less
operating expenses). 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 cash flow increased
$294,191, or approximately 15 percent, to $2,234,505 for the three month period
ended June 30, 1997 compared to $1,940,314 for the comparable 1996 period.
Operating cash flow increased $454,631, or approximately 12 percent, to
$4,241,099 for the six months ended June 30, 1997 compared to $3,786,468 for the
comparable 1996 period. These increases were due to the increases in revenues
exceeding the increases in operating expenses.
Management and supervision fees and allocated overhead from the General
Partners decreased $48,769, or approximately 9 percent, to $519,121 for the
three month period ended June 30, 1997 compared to $567,890 for the comparable
1996 period. Management and supervision fees and allocated overhead from the
General Partners decreased $2,426, or less than 1 percent, to $1,090,031 for the
six months ended June 30, 1997 compared to $1,092,457 for the comparable 1996
period. Although management and supervision fees increased, due primarily to
the increase in revenues upon which management and supervision fees are based,
allocated overhead from the General Partners decreased, which was primarily due
to the timing of certain expenses allocated from the General Partners.
Depreciation and amortization expense decreased $36,876, or approximately 2
percent, to $2,349,158 for the three month period ended June 30, 1997 compared
to $2,386,034 for the comparable 1996 period. Depreciation and amortization
expense decreased $108,319, or approximately 2 percent, to $4,798,663 for the
six months ended June 30, 1997 compared to $4,906,982 for the comparable 1996
period. These decreases were due to the maturation of a portion of the
intangible asset base.
Operating loss decreased $379,836, or approximately 37 percent, to $633,774
for the three month period ended June 30, 1997 compared to $1,013,610 for the
similar 1996 period. Operating loss decreased $565,376, or approximately 26
percent, to $1,647,595 for the six months ended June 30, 1997 compared to
$2,212,971 in 1996. The decreases for the three and six month periods were due
to the increases 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.
9
Interest expense increased $1,023, or less than 1 percent, to $917,103 for
the three month period ended June 30, 1997 compared to $916,080 for the
comparable 1996 period. This increase was due to higher outstanding balances on
interest bearing obligations. Interest expense decreased $4,199, or less than 1
percent, to $1,825,055 for the six months ended June 30, 1997 compared to
$1,829,254 for the comparable 1996 period. This decrease was due to lower
effective interest rates in 1997.
Consolidated loss decreased $352,114, or approximately 18 percent, to
$1,572,414 for the three month period ended June 30, 1997 compared to $1,924,528
for the comparable 1996 period. Consolidated loss decreased $551,956, or
approximately 14 percent, to $3,486,091 for the six months ended June 30, 1997
compared to $4,038,047 for the comparable 1996 period. These decreases were due
to the factors discussed above.
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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
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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: August 12, 1997
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