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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 March 31, 1995.
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
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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 (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
March 31, December 31,
ASSETS 1995 1994
------ ------------ ------------
INVESTMENT IN CABLE TELEVISION JOINT VENTURE $ 226,701 $ 888,039
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LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
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LIABILITIES:
Accounts payable - affiliate $ 102,393 $ 102,393
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Total liabilities 102,393 102,393
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PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 500 500
Accumulated deficit (137,989) (131,376)
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(137,489) (130,876)
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Limited Partners-
Net contributed capital (63,383 units outstanding at
March 31, 1995 and December 31, 1994) 12,623,901 12,623,901
Accumulated deficit (12,362,104) (11,707,379)
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261,797 916,522
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Total liabilities and partners' capital (deficit) $ 226,701 $ 888,039
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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
March 31,
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1995 1994
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EQUITY IN NET LOSS OF CABLE TELEVISION JOINT VENTURE $ (661,338) $ (536,364)
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NET LOSS $ (661,338) $ (536,364)
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ALLOCATION OF NET LOSS:
General Partners $ (6,613) $ (5,364)
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Limited Partners $ (654,725) $ (531,000)
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NET LOSS PER LIMITED PARTNERSHIP UNIT $ (10.33) $ (8.38)
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WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 63,383 63,383
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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IDS/JONES GROWTH PARTNERS 89-B, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31,
-------------------------------
1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (661,338) $ (536,364)
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in net loss of Cable Television Joint Venture 661,338 536,364
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Net cash provided by operating activities - -
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Cash, beginning of period - -
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Cash, end of period $ - $ -
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SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ - $ -
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The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
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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, 1995
and December 31, 1994 and its Statements of Operations and Cash Flows for the
three months ended March 31, 1995 and 1994. 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 an approximate
24 percent interest in the Venture. The Venture acquired the cable television
systems serving areas in and around Aurora, Illinois on May 31, 1990.
(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, 1995 and 1994 (reflecting the Partnership's
approximate 24 percent interest in the Venture) were $49,001 and $45,974,
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 one-half 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, 1995 and 1994 (reflecting the Partnership's approximate 24
percent interest in the Venture) were $4,900 and $4,597, 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 primarily on actual time
spent by employees of JIC with respect to each partnership managed. Remaining
overhead costs are allocated based on revenues of the Partnership as a
percentage of total revenues of owned and managed partnerships of JIC. Systems
owned by JIC and all other systems owned by partnerships for which JIC is
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 expenses is reasonable. Reimbursements made to JIC
by the Partnership for allocated overhead and administrative expenses during
the three month periods ended March 31, 1995 and 1994 (reflecting the
Partnership's approximate 24 percent interest in the Venture) were $77,234 and
$71,420, 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, 1995 and 1994.
Management fees paid to the Managing General Partner by the Venture
totaled $200,825 and $188,417, respectively, for the three months ended March
31, 1995 and 1994. Supervision fees paid to the Supervising General Partner
were $20,082 and $18,842, respectively, for the three months ended March 31,
1995 and 1994. Reimbursements for overhead and administrative expenses paid to
JIC totaled $316,534 and $292,706, respectively, for the three months ended
March 31, 1995 and 1994.
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(3) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
March 31, 1995 December 31, 1994
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ASSETS
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Cash and accounts receivable $ 425,577 $ 460,712
Investment in cable television properties 54,804,838 56,983,830
Other assets 428,715 307,504
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Total assets $ 55,659,130 $ 57,752,046
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LIABILITIES AND PARTNERS' CAPITAL
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Debt $ 45,048,736 $ 43,566,064
Accounts payable and accrued liabilities 1,319,519 2,184,705
Partners' contributed capital 57,344,709 57,344,709
Accumulated deficit (48,053,834) (45,343,432)
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Total liabilities and partners'
capital $ 55,659,130 $ 57,752,046
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UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31,
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1995 1994
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Revenues $ 4,016,495 $ 3,768,333
Operating expenses (2,345,384) (2,163,815)
Management fees and allocated overhead
from General Partners (537,441) (499,965)
Depreciation and amortization (2,820,010) (2,701,871)
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Operating loss (1,686,340) (1,597,318)
Interest expense (1,020,491) (556,571)
Other, net (3,571) (44,324)
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Net loss $ (2,710,402) $(2,198,213)
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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 an approximate 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 accounted for under the
equity method, decreased by $661,338 compared to the December 31, 1994 balance.
This decrease represents the Partnership's share of losses generated by the
Venture during the first three months of 1995. These losses are anticipated to
continue.
During the first three months of 1995, the Venture expended
approximately $633,000 on capital expenditures. Approximately 42 percent of
the expenditures related to construction of service drops to subscriber homes.
Approximately 29 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 1995 are approximately $2,622,000.
Approximately 62 percent of the anticipated capital expenditures are for plant
extensions. Approximately 28 percent of the expenditures are for construction
of service drops to subscriber homes. Funding for the expenditures is expected
to be provided by cash on hand, cash generated from operations and borrowings
under a renegotiated credit facility, as discussed below.
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. A portion of the $1,800,000 loan from IDS Management
Corporation was repaid in November 1994. See discussion below. The loans from
JIC and IDS Management Corporation are subordinate to the Venture's new
revolving credit and term loan. These loans matured in the fourth quarter of
1994. IDS Management Corporation extended its loan until December 5, 1995 and,
although JIC has not formally extended its loan, it has not demanded repayment.
In the first quarter of 1994, JIC agreed to subordinate to all other Venture
debt, the $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 on the Venture's then-outstanding term loan.
In the second quarter of 1994, JIC made a loan of $1,000,000 to the Venture to
fund principal repayments due on the Venture's then-outstanding term loan.
This loan was repaid with interest in November 1994. 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 new revolving credit and term loan, as discussed below. If
the December 5, 1991 loans are not repaid, JIC and IDS Management Corporation
will have the right, among other rights, to convert these loans to equity in
the Venture.
In November 1994, the Venture entered into a new revolving credit and
term loan agreement with a commercial bank. The new credit facility had a
maximum amount available of $40,000,000 through March 31, 1995, at which time
the maximum amount available increased to $45,000,000. At March 31, 1995,
$39,300,000 was outstanding under this agreement. Borrowings from this new
credit facility were used to repay the balance of the Venture's previous term
loan of $36,000,000, to repay to JIC the $1,000,000 advanced by JIC to fund the
Venture's second quarter debt repayment plus interest, to repay to IDS
Management Corporation $880,000 of principal plus interest on the $1,800,000
loan from IDS Management Corporation dated December 5, 1991, to pay certain
fees incurred in obtaining the new credit facility and to provide liquidity for
capital expenditures. The revolving credit period expires December 31, 1996,
at which time the then-outstanding balance converts to a term loan payable in
28 consecutive quarterly installments. Interest on the new credit facility is
at the Venture's option of the Base Rate plus .75 percent, the London Interbank
Offered Rate ("LIBOR") plus 1.75 percent or the CD rate plus 1.875 percent.
The effective interest rates on outstanding obligations to third parties as of
March 31, 1995 and 1994 were 7.84 percent and 4.65 percent, respectively. The
Venture anticipates repaying the remaining notes outstanding to related parties
with borrowings from this new 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 $920,000 of the $1,800,000 note dated December 5,
1991;
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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 outstanding advance.
In January 1995, the Venture entered into an interest rate protection
contract covering outstanding debt obligations of $25,000,000. The Venture
paid a fee of $105,000. The agreement protects the Venture from LIBOR interest
rates that exceed 9 percent for two years from the date of the agreement. The
fee is being charged to interest expense over the life of the agreement using
the straight-line method.
As a result of their equity contributions to the Venture, IDS
Management Corporation and JIC each have an approximate 5 percent equity
interest in the Venture, IDS/Jones Growth Partners II, L.P. has an approximate
66 percent interest and the Partnership has an approximate 24 percent interest.
If the December 5, 1991 subordinated loans are converted to equity, the
ownership percentages will be adjusted accordingly.
Regulation and Legislation
Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which became effective on
December 4, 1992. This legislation has caused significant changes to the
regulatory environment in which the cable television industry operates. The
1992 Cable Act generally imposes a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable television systems in the United States,
including the Aurora System, are subject to rate regulation of basic cable
services. In addition, the 1992 Cable Act allows the FCC to regulate rates for
non-basic service tiers other than premium services in response to complaints
filed by franchising authorities and/or cable subscribers. In April 1993, the
FCC adopted regulations governing rates for basic and non-basic services. The
FCC's rules became effective on September 1, 1993. In compliance with these
rules, the Venture reduced rates charged for certain regulated services
effective September 1, 1993.
On February 22, 1994, however, the FCC adopted several additional rate
orders including an order which revised its earlier-announced regulatory scheme
with respect to rates and established interim cost-of-service regulations. The
FCC's February 22, 1994 regulations will generally require rate reductions,
absent a successful cost-of-service showing, of 17 percent of September 30,
1992 rates, adjusted for inflation, channel modifications, equipment costs and
increases in programming costs. The new regulations became effective on May
15, 1994, but operators could elect to defer rate reductions to July 14, 1994,
so long as they made no changes in their rates and did not restructure service
offerings between May 15, 1994 and July 14, 1994.
The Venture has filed a cost-of-service showing for its Aurora System
and thus anticipates no further reductions in rates. The cost-of-service
showing has not yet received final approval from franchising authorities,
however, and there can be no assurance that the Venture's cost-of-service
showing will prevent further rate reductions until such final approval is
received.
RESULTS OF OPERATIONS
Revenues of the Venture's Aurora System increased $248,162, or
approximately 7 percent, from $3,768,333 for the first quarter of 1994 to
$4,016,495 for the comparable 1995 period. An increase in the subscriber base
primarily accounted for the increase in revenues. The number of basic
subscribers increased 3,171, or approximately 8 percent, from 38,496 at March
31, 1994 to 41,667 at March 31, 1995. Premium service subscriptions increased
2,388, or approximately 9 percent, from 25,650 at March 31, 1994 to 28,038 at
March 31, 1995. No other individual factor was significant to the increase in
revenues.
Operating expenses consist primarily of costs associated with the
administration of the Venture's cable television systems. The principal cost
components are salaries paid to system personnel, programming expenses,
professional fees, subscriber billing costs, rent for leased facilities, cable
system maintenance expenses and consumer marketing expenses.
Operating expenses increased $181,569, or approximately 8 percent,
from $2,163,815 for the first quarter of 1994 to $2,345,384 for the comparable
1994 period. Operating expenses represented 57 percent of revenues in 1994 and
58 percent of revenues in 1995. Increases in programming fees and personnel
related expenses, due in part to the increase in the subscriber base, primarily
accounted for the increase in operating expenses. No other individual factors
contributed significantly to the increase. Management fees and allocated
overhead from the General Partners increased $37,476, or approximately 8
percent, from $499,965 for the first three months of 1994 to $537,441 for the
comparable 1995 period
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due to an increase in allocated expenses from the Managing General Partner and
the increase in revenues, upon which management and supervision fees and
allocated overhead are based. The Managing General Partner has experienced
increases in expenses, including personnel costs, a portion of which is
allocated to the Venture. Depreciation and amortization expense increased
$118,139, or approximately 4 percent, from $2,701,871 at March 31, 1994 to
$2,820,010 at March 31, 1995 primarily due to capital additions in 1994.
Operating loss increased $89,022, or approximately 6 percent, from
$1,597,318 for the first three months of 1994 to $1,686,340 for the comparable
1995 period due to the increases in operating expense, management fees and
allocated overhead from the General Partners and depreciation and amortization
expense exceeding the increase in revenues. Operating income before
depreciation and amortizaton increased $29,117, or approximately 3 percent,
from $1,104,553 for the three months ended March 31, 1994 to $1,133,670 for the
similar period in 1995. This increase was due to the increase in revenues
exceeding the increases in operating expenses and management fees and allocated
overhead from the General Partner.
Interest expense increased $463,920, or approximately 83 percent, from
$556,571 for the first quarter of 1994 to $1,020,491 for the comparable 1995
period. This increase was due to higher effective interest rates and higher
outstanding balances on interest bearing obligations. Consolidated loss
increased $512,189, or approximately 23 percent, from $2,198,213 for the first
quarter of 1994 to $2,710,402 for the comparable 1995 period due to the factors
discussed above. Such losses are expected to continue in the future.
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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: May 12, 1995
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INDEX TO EXHIBITS
Exhibit Description Page
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27 Financial Data Schedule