SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended
March 31, 1998 Commission file number 0-17699
IDS/JMB BALANCED INCOME GROWTH, LTD.
(Exact name of registrant as specified in its charter)
Illinois 36-3498972
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
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 [ ]
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . 9
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 10
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 1,297,299 3,501,979
Interest, rents and other receivables . . . . . . . . . . . . . . . . 17,177 22,033
----------- -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . 1,314,476 3,524,012
----------- -----------
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,313 22,313
----------- -----------
$ 1,336,789 3,546,325
=========== ===========
<PAGE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
MARCH 31, DECEMBER 31,
1998 1997
------------- -----------
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 55,019 54,760
----------- -----------
Total current liabilities . . . . . . . . . . . . . . . . . . 55,019 54,760
----------- -----------
Commitments and contingencies
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (280,006) (272,930)
----------- -----------
(260,006) (252,930)
----------- -----------
Limited partners (47,534 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . 10,284,207 10,284,207
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (1,983,687) (1,919,998)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (6,758,744) (4,619,714)
----------- -----------
1,541,776 3,744,495
----------- -----------
Total partners' capital accounts. . . . . . . . . . . . . . . 1,281,770 3,491,565
----------- -----------
$ 1,336,789 3,546,325
=========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 408,380
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,454 22,216
----------- ----------
28,454 430,596
----------- ----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . . -- 86,097
Property operating expenses. . . . . . . . . . . . . . . . . . . . . . . 24,204 203,052
Professional services. . . . . . . . . . . . . . . . . . . . . . . . . . 30,739 17,000
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . -- 13,816
General and administrative . . . . . . . . . . . . . . . . . . . . . . . 44,276 24,941
----------- ----------
99,219 344,906
----------- ----------
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . $ (70,765) 85,690
=========== ==========
Net earnings (loss) per limited
partnership interest. . . . . . . . . . . . . . . . . . . . . . $ (1.34) 1.62
=========== ==========
Cash distributions per limited
partnership interest. . . . . . . . . . . . . . . . . . . . . . $ 45.00 --
=========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (70,765) 85,690
Items not requiring (providing) cash or cash equivalents:
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . -- 13,816
Changes in:
Interest, rents and other receivables. . . . . . . . . . . . . . . . . . 4,856 62,634
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 26,896
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 (5,808)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (4,863)
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . -- (135,055)
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (55,678)
---------- ----------
Net cash provided by (used in) operating activities . . . . . . . (65,650) (12,368)
---------- ----------
Cash flows from investing activities:
Additions to investment property. . . . . . . . . . . . . . . . . . . . . -- (100,000)
---------- ----------
Net cash provided by (used in) investing activities . . . . . . . -- (100,000)
---------- ----------
Cash flows from financing activities:
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . (2,139,030) --
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (103,808)
---------- ----------
Net cash provided by (used in) financing activities . . . . . . . (2,139,030) (103,808)
---------- ----------
Net increase (decrease) in cash and cash equivalents. . . . . . . (2,204,680) (216,176)
Cash and cash equivalents, beginning of year. . . . . . . . . . . 3,501,979 847,356
---------- ----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . $1,297,299 631,180
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ -- 68,647
========== ==========
Non-cash investing and financing activities . . . . . . . . . . . . . . . $ -- --
========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998 AND 1997
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1997
which are included in the Partnership's 1997 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
Capitalized terms used herein, but not defined, have the same meanings as
used in such Annual Report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of March 31, 1998 and for the three months ended
March 31, 1998 and 1997 were as follows:
Unpaid at
March 31,
1998 1997 1998
------- ------ -------------
Property management
and leasing fees . . . . . . $ -- 8,857 --
Reimbursement (at cost)
for out-of-pocket salary
and salary-related
expenses related to
the on-site and other
costs for the Partner-
ship and its investment
property . . . . . . . . . . 6,286 9,722 11,897
------- ------- ------
$ 6,286 18,579 11,897
======= ======= ======
According to the terms of the Partnership Agreement, the General
Partners have deferred payment of their distributions of net cash flow from
the Partnership. As the Limited Partners will receive significantly less
than their original investment, approximately $306,000 of cash otherwise
distributable to the General Partners, to the extent not needed for other
Partnership obligations, will be paid to the Limited Partners.
<PAGE>
FASHION SQUARE SHOPPING CENTER
The Partnership sold the Fashion Square Shopping Center on
December 30, 1997. The sale resulted in no significant gain or loss to the
Partnership for financial reporting purposes, primarily as a result of
value impairment provisions totaling $4,100,000 recorded by the Partnership
in 1995 and 1997. In addition, the Partnership recognized a loss on sale
of approximately $3,919,000 for Federal income tax reporting purposes in
1997.
In connection with the sale of this property, as is customary in such
transactions, the Partnership agreed to certain representations and
warranties, with a stipulated survival period which expires May 15, 1998.
Although it is not expected, the Partnership may ultimately have some
liability under such representations and warranties which is not to exceed
$400,000, pursuant to the terms of the agreement.
Based upon local market conditions and uncertainty concerning the
ability to recover the carrying value of the property through a proposed
sale, the Partnership, as a matter of prudent accounting practice, recorded
a provision for value impairment of $600,000 for this property at
September 30, 1997. Such provision was recorded to reflect the estimated
fair value, less costs to sell as applicable, of the property. In response
to the uncertainty relating to the Partnership's ability to recover the net
carrying value of the Fashion Square Shopping Center investment property
through future operations or sale, and since the Partnership had fixed its
intended holding period for this investment to not later than 1999, the
Partnership, as a matter of prudent accounting practice and for financial
reporting purposes, recorded a provision for value impairment at
September 30, 1995 in the amount of $3,500,000. Such provision was
recorded to reduce the net basis of the investment property to its then
estimated fair value.
The property was classified as held for sale or disposition as of
December 31, 1996 and, therefore, was not subject to continued
depreciation.
The shopping center was managed by an affiliate of the Corporate
General Partner for a fee calculated at 4% of the gross income (as defined)
of the property.
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of March 31,
1998 and for the three months ended March 31, 1998 and 1997.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning certain of the
Partnership's investments.
The Partnership had been made aware that in early 1998 an unaffiliated
third party made an unsolicited tender offer to some of the Holders of
Interests. These offers each sought to purchase up to 4.9% of the
Interests in the Partnership for $40 per Interest. These offers both
expired in the latter part of February 1998 (with no Interests being
purchased). The Partnership recommended against acceptance of these offers
on the basis that, among other things, the offer prices were inadequate.
As the Partnership's last remaining real estate investment was sold in
December 1997, the remaining funds will be held to pay for the
Partnership's remaining expenses and liabilities with any remaining amounts
expected to be distributed in late 1998 to the Limited Partners upon
liquidation of the Partnership pursuant to the provisions of the
Partnership Agreement. In connection with this sale and as is customary in
such transactions, certain representations and warranties were made to the
buyer of the Fashion Square Shopping Center (in the maximum amount of
$400,000). Distributions to the General Partners have been deferred and
will not be paid due to the subordination requirements of the Partnership
Agreement as discussed in the Notes.
The affairs of the Partnership are expected to be wound up in late
1998, barring unforeseen economic developments. However, the Partnership's
goal of capital appreciation will not be achieved, as the Limited Partners
will receive significantly less than their original investment.
RESULTS OF OPERATIONS
The decrease in cash and cash equivalents at March 31, 1998 as
compared to December 31, 1997 is due primarily to the distributions of
approximately $2,139,000 ($45.00 per Interest) made to the Limited Partners
in February 1998, which represented nearly all of the sale proceeds from
the December 1997 sale of the Fashion Square Shopping Center. The General
Partners will not receive their share of any distributions, as discussed
above.
The decrease in rental income, property operating expenses, mortgage
and other interest and amortization of deferred expenses for the three
months ended March 31, 1998 as compared to the three months ended March 31,
1997 is due primarily to the December 1997 sale of the Fashion Square
Shopping Center.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3-A. As filed with the Commission pursuant to Rules 424(b) and
424(c), the Prospectus of the Partnership dated August 6, 1987 as
supplemented is hereby incorporated herein by reference to Exhibit 3-A to
the Partnership's report for December 31, 1992 on Form 10-K (File No. 0-
17699) dated March 19, 1993.
3-B. Amended and Restated Agreement of Limited Partnership is
hereby incorporated herein by reference to the Partnership's report for
December 31, 1992 on Form 10-K (File No. 0-17699) dated March 19, 1993.
4-A. Assignment Agreement set forth as Exhibit B to the
Prospectus is hereby incorporated herein by reference to Exhibit 4-A to the
Partnership's report for December 31, 1992 on Form 10-K (File No. 0-17699)
dated March 19, 1993.
10-A. Real Property Purchase Agreement between IDS/JMB Balanced
Income Growth, Ltd. and Inland Real Estate Acquisitions, Inc., dated
December 5, 1997.*
10-B. Letter Agreement between IDS/JMB Balanced Income Growth,
Ltd. and Inland Real Estate Acquisition, Inc., dated December 26, 1997.*
27. Financial Data Schedule.
----------------
* Hereby incorporated herein by reference to the Partnership's
Report on Form 8-K (File No. 0-17699) for December 5, 1997.
(b) No reports on Form 8-K have been filed during the last quarter of
the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IDS/JMB BALANCED INCOME GROWTH, LTD.
BY: Income Growth Managers, Inc.
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Vice President
Date: May 13, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
By: GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: May 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED
IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,297,299
<SECURITIES> 0
<RECEIVABLES> 17,177
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,314,476
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,336,789
<CURRENT-LIABILITIES> 55,019
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,281,770
<TOTAL-LIABILITY-AND-EQUITY> 1,336,789
<SALES> 0
<TOTAL-REVENUES> 28,454
<CGS> 0
<TOTAL-COSTS> 24,204
<OTHER-EXPENSES> 75,015
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (70,765)
<INCOME-TAX> 0
<INCOME-CONTINUING> (70,765)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (70,765)
<EPS-PRIMARY> (1.34)
<EPS-DILUTED> (1.34)
</TABLE>
