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 September 30, 1999
[_] 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: 0-18133
IDS/JONES GROWTH PARTNERS II, L.P.
- --------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado 84-1060548
- --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D. #
c/o Comcast Corporation
1500 Market Street, Philadelphia, PA 19102-2148
-----------------------------------------------
Address of principal executive office
(215) 665-1700
-----------------------------
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 _____
_____
IDS/JONES GROWTH PARTNERS II, L.P.
----------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED BALANCE SHEETS
-------------------------------------
September 30, December 31,
ASSETS 1999 1998
------ --------------- ---------------
Proceeds from sale in interest-bearing escrow account $ 3,406,631 $ 3,283,500
--------------- ---------------
Total assets $ 3,406,631 $ 3,283,500
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
LIABILITIES:
Accounts payable and accrued liabilities $ 1,953,014 $ 1,587,562
--------------- ---------------
Total liabilities 1,953,014 1,587,562
--------------- ---------------
MINORITY INTEREST IN JOINT VENTURE 499,873 583,231
--------------- ---------------
PARTNERS' CAPITAL:
General Partners-
Contributed capital 500 500
Accumulated deficit (500) (500)
--------------- ---------------
- -
--------------- ---------------
Limited Partners-
Net contributed capital (174,343 units outstanding at
September 30, 1999 and December 31, 1998) 37,256,546 37,256,546
Distributions (33,678,970) (33,678,970)
Accumulated deficit (2,623,832) (2,464,869)
--------------- ---------------
953,744 1,112,707
--------------- ---------------
Total liabilities and partners' capital $ 3,406,631 $ 3,283,500
=============== ===============
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated balance sheets.
2
IDS/JONES GROWTH PARTNERS II, L. P.
-----------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
1999 1998 1999 1998
----------- ------------ ----------- ------------
REVENUES $ - $ 5,500,894 $ - $ 16,122,933
COSTS AND EXPENSES:
Operating expenses - 2,997,425 - 8,754,851
Management and supervision fees
and allocated overhead from
General Partners - 611,394 - 1,820,001
Depreciation and amortization - 2,207,141 - 6,313,083
----------- ------------ ----------- ------------
OPERATING LOSS - (315,066) - (765,002)
----------- ------------ ----------- ------------
OTHER INCOME (EXPENSE):
Interest expense (33,987) (891,653) (90,866) (2,786,417)
Interest income on escrowed proceeds 36,939 - 123,131 -
Other, net (12,477) (150,355) (274,586) (167,231)
----------- ------------ ----------- ------------
Total other income (expense), net (9,525) (1,042,008) (242,321) (2,953,648)
----------- ------------ ----------- ------------
CONSOLIDATED LOSS (9,525) (1,357,074) (242,321) (3,718,650)
MINORITY INTEREST IN
CONSOLIDATED LOSS 3,276 466,834 83,358 1,279,216
----------- ------------ ----------- ------------
NET LOSS $ (6,249) $ (890,240) $ (158,963) $ (2,439,434)
=========== ============ =========== ============
ALLOCATION OF NET LOSS:
General Partners $ - $ (8,902) $ - $ (24,394)
=========== ============ =========== ============
Limited Partners $ (6,249) $ (881,338) $ (158,963) $ (2,415,040)
=========== ============ =========== ============
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (.03) $ (5.05) $ (.91) $ (13.85)
=========== ============ =========== ============
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNERSHIP UNITS
OUTSTANDING 174,343 174,343 174,343 174,343
=========== ============ =========== ============
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
3
IDS/JONES GROWTH PARTNERS II, L. P.
-----------------------------------
(A Limited Partnership)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
For the Nine Months Ended
September 30,
-------------------------------------
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (158,963) $(2,439,434)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization - 6,313,083
Minority interest in consolidated loss (83,358) (1,279,216)
Decrease in trade receivables - 248,499
Increase in proceeds from sale in escrow (123,131) -
Increase in deposits, prepaid expenses and
deferred charges - (124,577)
Increase in accounts payable, accrued liabilities
and subscriber prepayments 365,452 539,601
Increase in advances from Managing General Partner - 1,716
----------- -----------
Net cash provided by operating activities - 3,259,672
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net - (3,214,899)
----------- -----------
Net cash used in investing activities - (3,214,899)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings - 47,390
Repayment of debt - (23,563)
----------- -----------
Net cash provided by financing activities - 23,827
----------- -----------
Increase in cash - 68,600
Cash, beginning of period - 124,766
----------- -----------
Cash, end of period $ - $ 193,366
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ - $ 2,653,171
=========== ===========
The accompanying notes to unaudited consolidated financial statements
are an integral part of these unaudited consolidated statements.
4
IDS/JONES GROWTH PARTNERS II, L.P.
----------------------------------
(A Limited Partnership)
NOTES TO UNAUDITED CONSOLIDATED 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 complete 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
II, L.P. (the "Partnership") at September 30, 1999 and December 31, 1998 and its
Statements of Operations for the three and nine month periods ended September
30, 1999 and 1998 and its Statements of Cash Flows for the nine month periods
ended September 30, 1999 and 1998.
The accompanying financial statements include 100 percent of the accounts
of the Partnership and those of IDS/Jones Joint Venture Partners (the
"Venture"), which owned the cable television system serving the communities of
Aurora, North Aurora, Montgomery, Plano, Oswego, Sandwich, Yorkville and certain
unincorporated areas of Kendall and Kane Counties, all in the State of Illinois
(the "Aurora System"), reduced by the 34.4 percent minority interests in the
Venture. All interpartnership accounts and transactions have been eliminated. As
discussed below, the Venture sold the Aurora System on December 4, 1998. Jones
Cable Corporation, a Colorado corporation, is the "Managing General Partner."
On April 7, 1999, Comcast Corporation ("Comcast") completed the acquisition
of a controlling interest in Jones Intercable, Inc. ("Intercable"), the parent
of the Managing General Partner, for aggregate consideration of $706.3 million.
Comcast acquired an additional 1.0 million shares of Intercable's Class A Common
Stock on June 29, 1999 for $50.0 million in a private transaction. Upon
completion of these transactions, Comcast owns approximately 13.8 million shares
of Intercable's Class A Common Stock and approximately 2.9 million shares of
Intercable's Common Stock, representing 39.6% of the economic interest and 48.3%
of the voting interest in Intercable. Comcast has contributed its shares in
Intercable to its wholly owned subsidiary, Comcast Cable Communications, Inc.
("Comcast Cable"). The approximately 2.9 million shares of Common Stock owned by
Comcast Cable represent shares having the right to elect approximately 75% of
the Board of Directors of Intercable. Intercable is now a consolidated public
company subsidiary of Comcast Cable.
In connection with Comcast's acquisition of a controlling interest in
Intercable on April 7, 1999, all of the persons who were executive officers of
Intercable as of that date terminated their employment with Intercable.
Intercable's Board of Directors has elected new executive officers, each of whom
also is an officer of Comcast. As of July 7, 1999, all persons who were employed
at Intercable's former corporate offices in Englewood, Colorado had terminated
their employment with Intercable. Intercable's corporate offices are now located
at 1500 Market Street, Philadelphia, Pennsylvania 19102-2148.
(2) On December 4, 1998, the Venture sold the Aurora System, its only operating
asset, to an unaffiliated party for a sales price of $108,500,000. The Venture
repaid all of its indebtedness, settled working capital adjustments, deposited
$3,283,500 into an interest-bearing indemnity escrow account and distributed the
remaining net sales proceeds of $51,374,610 to its four partners. The
Partnership received $33,678,970, or 65.6 percent, of the $51,374,610
distribution. The Partnership in turn distributed these funds to its limited
partners.
The $3,283,500 of the sale proceeds placed in the interest-bearing
indemnity escrow account will remain in escrow until November 15, 1999 as
security for the Venture's agreement to indemnify the buyer under the asset
purchase agreement. The Venture's primary exposure, if any, will relate to the
representations and warranties made about the Aurora System in the asset
purchase agreement. Any amounts remaining from this interest-bearing indemnity
escrow account and not claimed by the buyer at the end of the escrow period,
plus interest earned on escrowed funds, will be returned to the Venture. From
this amount, the Venture will pay its remaining liabilities, which totaled
$1,953,514 at September 30, 1999, and then the Venture will distribute the
remaining balance, if any, to its four partners. The Partnership will retain its
share of this amount to cover the administrative expenses of the Partnership.
5
Although the sale of the Aurora System represented the sale of the only
remaining operating asset of the Venture, the Venture will not be dissolved
until all proceeds from escrow have been distributed and the Partnership will
not be liquidated and dissolved until the pending litigation in which the
Partnership is a named defendant has been resolved and terminated.
(3) The Managing General Partner manages the Partnership and the Venture and
received a fee for its services equal to 5 percent of the gross revenues of the
Aurora System, excluding revenues from the sale of cable television systems or
franchises, until its sale on December 4, 1998. The Managing General Partner has
not received and will not receive a management fee after December 4, 1998.
Management fees paid to the Managing General Partner for the three and nine
month periods ended September 30, 1998 were $275,045 and $806,147, respectively.
IDS Cable II Corporation (the "Supervising General Partner") and IDS Cable
Corporation (the supervising general partner of IDS/Jones Growth Partners 89-B,
Ltd.) participated in certain management decisions of the Partnership and the
Venture and received a fee for their services equal to 1/2 percent of the gross
revenues of the Aurora System, excluding revenues from the sale of cable
television systems or franchises. The Supervising General Partner and IDS Cable
Corporation have not received and will not receive a supervision fee after
December 4, 1998. Supervision fees for the three and nine month periods ended
September 30, 1998 were $27,505 and $80,615, respectively.
The Venture will continue to reimburse Intercable for certain
administrative expenses. These expenses represent the salaries and related
benefits paid for corporate personnel. Such personnel provide administrative,
accounting, tax, legal and investor relations services to the Venture and its
constituent partnerships. Such services, and their related costs, are necessary
to the administration of the Venture and its constituent partnerships. Such
costs were charged to operating costs during the periods that the Venture
operated its cable television system. Subsequent to the sale of the Venture's
cable television system, such costs were charged to other expense.
Reimbursements made to Intercable by the Venture for overhead and administrative
expenses during the three and nine month periods ended September 30, 1999 were
$10,953 and $26,761, respectively, compared to $308,844 and $933,239,
respectively, for the three and nine month periods ended September 30, 1998.
The Supervising General Partner and IDS Cable Corporation may also be
reimbursed for certain expenses incurred on behalf of the Venture. There were no
reimbursements made to the Supervising General Partner or IDS Cable Corporation
for overhead and administrative expenses during the three and nine month periods
ended September 30, 1999 and 1998.
6
IDS/JONES GROWTH PARTNERS II, L.P.
----------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
The Partnership owns a 65.6 percent interest in the Venture. The
accompanying financial statements include the accounts of the Partnership and
the Venture, reduced by the 34.4 percent minority interests in the Venture. The
Venture owned the Aurora System until its sale on December 4, 1998.
On December 4, 1998, the Venture sold the Aurora System, its only operating
asset, to an unaffiliated party for a sales price of $108,500,000. The Venture
repaid all of its indebtedness, settled working capital adjustments, deposited
$3,283,500 into an interest-bearing indemnity escrow account and distributed the
remaining net sales proceeds of $51,374,610 to its four partners. The
Partnership received $33,678,970, or 65.6 percent, of the $51,374,610
distribution. The Partnership in turn distributed these funds to its limited
partners.
The $3,283,500 of the sale proceeds placed in the interest-bearing indemnity
escrow account will remain in escrow until November 15, 1999 as security for the
Venture's agreement to indemnify the buyer under the asset purchase agreement.
The Venture's primary exposure, if any, will relate to the representations and
warranties made about the Aurora System in the asset purchase agreement. Any
amounts remaining from this interest-bearing indemnity escrow account and not
claimed by the buyer at the end of the escrow period, plus interest earned on
escrowed funds, will be returned to the Venture. From this amount, the Venture
will pay its remaining liabilities, which totaled $1,953,514 at September 30,
1999, and then the Venture will distribute the remaining balance, if any, to its
four partners. The Partnership will retain its share of this amount to cover the
administrative expenses of the Partnership.
Although the sale of the Aurora System represented the sale of the only
remaining operating asset of the Venture, the Venture will not be dissolved
until all proceeds from escrow have been distributed and the Partnership will
not be liquidated and dissolved until the pending litigation in which the
Partnership is a named defendant has been resolved and terminated.
Because the Venture has sold all of its assets and no further distributions
are expected to be made, transfers of limited partnership interests would have
no economic or practical value. The Managing General Partner therefore has
determined, in accordance with the authority granted to it under Section 3.5 of
the Partnership's limited partnership agreement, that it will not process any
transfers of limited partnership interests in the Partnership during the
remainder of the Partnership's term.
RESULTS OF OPERATIONS
- ---------------------
The Venture sold its Aurora System on December 4, 1998 and ceased
operations as of such date. Because the Aurora System was the Venture's only
operating asset, a discussion of results of operations would not be meaningful.
Other expenses of $274,586 incurred in the first nine months of 1999 primarily
related to various costs associated with the sale of the Venture's Aurora System
and the administration of the Venture and the Partnership.
7
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
8
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 II, L.P.
BY: JONES CABLE CORPORATION
Managing General Partner
By: /S/ Lawrence S. Smith
---------------------------------
Lawrence S. Smith
Principal Accounting Officer
By: /S/ Joseph J. Euteneuer
---------------------------------
Joseph J. Euteneuer
Vice President (Authorized Officer)
Dated: November 12, 1999
9