SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the period from January 1, 1998 to
November 30, 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) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-915-1987
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each Class which registered
- ------------------- ------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ X ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
Documents incorporated by reference: None
<PAGE>
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . 3
Item 3. Legal Proceedings. . . . . . . . . . . . . . . 4
Item 4. Submission of Matters to a
Vote of Security Holders . . . . . . . . . . . 4
PART II
Item 5. Market for the Partnership's Limited
Partnership Interests and Related
Security Holder Matters. . . . . . . . . . . . 4
Item 6. Selected Financial Data. . . . . . . . . . . . 5
Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . 7
Item 7A. Quantitative and Qualitative
Disclosure About Market Risk . . . . . . . . . 8
Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . . 9
Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . 25
PART III
Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . . 25
Item 11. Executive Compensation . . . . . . . . . . . . 27
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . 28
Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . . 29
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K. . . . . . . . . . . . 29
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . 31
i
<PAGE>
PART I
ITEM 1. BUSINESS
Unless otherwise indicated, all references herein to "Notes" are to
Notes to Financial Statements contained in this annual report. Capitalized
terms used herein, but not defined, have the same meanings as used in the
Notes.
The registrant, IDS/JMB Balanced Income Growth, Ltd. (the "Partner-
ship"), was a limited partnership formed in 1987 and governed by the
Revised Uniform Limited Partnership Act of the State of Illinois to invest
in income-producing properties, primarily existing commercial real
properties. On August 6, 1987, the Partnership commenced an offering to
the public of $50,000,000 in Limited Partnership Interests (the
"Interests") pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933 (Registration No. 33-12561). A total of 47,514
Interests were sold to the public at $250 per Interest. The offering
terminated on August 5, 1989. No holder of Interests (hereinafter a
"Limited Partner") has made any additional capital contribution after such
date. The Limited Partners of the Partnership shared in their portion of
the benefits of ownership of the Partnership's real property investments
according to the number of Interests held.
The Partnership was engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments had been held by fee title and/or through joint venture
partnership interests. All of the Partnership's investments in real estate
have been sold. The Partnership's real estate investments were located in
Skokie (Chicago), Illinois and Miami, Florida, and it had no real estate
investments located outside of the United States. A presentation of
information about industry segments, geographic regions, raw materials or
seasonality was not applicable and would not have been material to an
understanding of the Partnership's business taken as a whole. Upon the
sale of a particular property, the net proceeds, if any, were held for
working capital, distributed or reinvested in existing properties rather
than invested in acquiring additional properties. The Partnership made a
final liquidating cash distribution to its holders of Interests, wound up
its affairs and dissolved effective November 30, 1998. Reference is also
made to Item 7.
The Partnership made real property investments set forth in the
following table:
<PAGE>
<TABLE>
<CAPTION>
SALE OR
NAME, TYPE OF PROPERTY DATE OF DISPOSITION
AND LOCATION SIZE PURCHASE DATE TYPE OF OWNERSHIP
- ---------------------- ---------- -------- --------------- -----------------
<S> <C> <C> <C> <C>
1. Fashion Square
Shopping Center
Skokie, Illinois . 84,600 2/14/89 12/30/97 fee ownership of land and
sq.ft. g.l.a. improvements (b)
2. Miami International
Mall
Miami, Florida . . 967,300 2/28/89 4/8/96 fee ownership of land and
sq.ft. g.l.a. improvements (through joint
venture partnerships)
(a)(b)
<FN>
(a) Reference is made to the Notes for a description of the joint venture partnership through which the
Partnership made this real property investment.
(b) This property has been sold. Reference is made to the Notes for a description of the sale of such
real property investment.
</TABLE>
<PAGE>
The Partnership's real property investments were subject to competi-
tion from similar types of properties (including, in certain areas,
properties owned by affiliates of the General Partners) in the respective
vicinities in which they were located. Such competition was generally for
the retention of existing tenants and for securing new tenants in markets
where significant vacancies were present.
The terms of transactions between the Partnership, the General
Partners of the Partnership and their affiliates are set forth in Items 10
and 11 below to which reference is hereby made for a description of such
terms and transactions.
ITEM 2. PROPERTIES
The Partnership owned directly or through a joint venture partnership
the properties or interest in properties referred to under Item 1.
Reference is made to Item 1 and to the Notes for a description of such
properties.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
1997 and 1998.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
Immediately prior to the dissolution of the Partnership, there were
1,121 record holders of Interests in the Partnership. The Partnership made
a final liquidating cash distribution to its holders of Interests, wound up
its affairs and dissolved effective November 30, 1998. There had been no
public market for Interests and it had not been anticipated that a public
market for Interests would develop. Upon request, the Corporate General
Partner provided information relating to a prospective transfer of
Interests to an investor desiring to transfer his Interests. The price
paid for the Interests, as well as any other economic aspects of the
transaction, was subject to negotiation by the investor.
Reference is made to Item 6 for a discussion of cash distributions to
the Limited Partners.
Reference is made to Item 7 for a discussion of unsolicited tender
offers received from unaffiliated third parties.
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1998
(IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION)
AND YEARS ENDED DECEMBER 31, 1997, 1996, 1995 and 1994
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1998 1997 1996 1995 1994
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . . $ 117,790 1,533,032 1,604,356 1,735,312 1,895,928
=========== ========== ========== ========== ==========
Earnings (loss) before
gains on sales of
investment properties. . . $ (140,893) (373,448) (88,091) (3,524,346) 310,769
Gain on sale of
investment property. . . . -- 23,973 -- -- --
Gain on sale of land by
and interest in uncon-
solidated venture. . . . . -- -- 805,241 -- 30,454
----------- ---------- ---------- ---------- ----------
Net earnings
(loss) . . . . . . . . $ (140,893) (349,475) 717,150 (3,524,346) 341,223
=========== ========== ========== ========== ==========
Net earnings (loss) per
Interest (b):
Earnings (loss) before
gains on sales of
investment properties . $ (7.18) (7.07) (1.67) (66.73) 5.88
Gain on sale of
investment property. . -- -- -- -- --
Gain on sale of land by
and interest in uncon-
solidated venture. . . -- -- 16.77 -- .63
----------- ---------- ---------- ---------- ----------
Net earnings (loss)
per Interest. . . . . $ (7.18) (7.07) 15.10 (66.73) 6.51
=========== ========== ========== ========== ==========
<PAGE>
1998 1997 1996 1995 1994
----------- ---------- ---------- ---------- ----------
Total assets. . . . . . . . $ 1,264,405 3,546,325 11,447,604 11,711,899 15,567,889
Long-term debt. . . . . . . $ -- -- 6,800,000 6,800,000 6,800,000
Cash distributions
per Interest (c) . . . . . $ 45.00 -- 23.00 5.00 10.00
=========== ========== ========== ========== ==========
<FN>
(a) The above selected financial data should be read in conjunction with the financial statements and the
related notes appearing elsewhere in this annual report.
(b) The net earnings (loss) per Interest is based on the number of Interests outstanding at the end of each
period (47,534) and the specified profit and loss allocations (as discussed in the Notes) between the Limited and
General Partners.
(c) Cash distributions from the Partnership were generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes. Each partner's taxable income (loss) from the Partnership in
each year was equal to his allocable share of the taxable income (loss) of the Partnership, without regard to the
cash generated or distributed by the Partnership. Accordingly, cash distributions to the Limited Partners since the
inception of the Partnership have not resulted in taxable income to such Limited Partners and have therefore
represented a return of capital.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As a result of the public offering of Interests as described in
Item 1, the Partnership had approximately $10,284,000 (after deducting
selling expenses and other offering costs) with which to make investments
in income-producing commercial real property, to pay legal fees and other
costs (including acquisition fees) related to such investments, and to
satisfy working capital requirements. A portion of such proceeds was
utilized to acquire the properties described in Item 1 above.
The Partnership had been made aware that in early 1998 an unaffiliated
third party made unsolicited tender offers 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.
In February 1998, approximately $2,139,000 ($45 per Interest) was
distributed to the Limited Partners, representing nearly all of the sale
proceeds from the December 1997 sale of the Fashion Square Shopping Center,
the Partnership's last remaining real estate investment. 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 expired, with no liability to the
Partnership, as scheduled on May 15, 1998. No portion of the sale
distributions to the General Partners was paid due to the subordination
requirements of the Partnership Agreement as discussed in the Notes.
A former tenant at the Fashion Square Shopping Center, Bruegger's
Bagels, defaulted on its lease obligations in June 1997. The Partnership
filed a lawsuit in July 1997 to protect its legal rights under the lease
for damages resulting from non-payment of rent and other charges. The
Partnership reached an agreement in principle with this tenant in October
1998 and received a financial settlement of $47,500 in November 1998.
Pursuant to the terms of the Partnership Agreement, the Associate
General Partner of the Partnership was required to contribute $62,341 to
the Partnership upon liquidation of the Partnership, such amount
representing the restoration of the deficit balance in the Associate
General Partner's tax basis capital account. Also pursuant to the
Partnership Agreement, the Corporate General Partner received a
distribution of $9,578, representing the balance of its tax basis capital
account, with the remainder of the $62,341 contribution by the Associate
General Partner available for distribution to the Limited Partners.
The Partnership made a final liquidating cash distribution of
$1,264,405 ($26.60 per Interest) to its holders of Interests and wound up
its affairs and dissolved effective November 30, 1998. However, the
Partnership's goal of capital appreciation was not achieved. The Limited
Partners received significantly less aggregate distributions over the
entire term of the Partnership than their original investment.
RESULTS OF OPERATIONS
Reference is made to the Notes for a description of the real estate
investments made by the Partnership.
The decrease in cash and cash equivalents at November 30, 1998 as
compared to December 31, 1997 is due primarily to the distribution of
approximately $2,139,000 ($45.00 per Interest) made to the Limited Partners
in February 1998, which represented nearly all of the proceeds from the
December 1997 sale of the Fashion Square Shopping Center. The General
Partners did not receive any portion of their share of any sale
distributions, as discussed above.
<PAGE>
The decrease in rental income, property operating expenses and
mortgage and other interest expense for the eleven months ended
November 30, 1998 as compared to the years ended December 31, 1997 and 1996
is due primarily to the December 1997 sale of the Fashion Square Shopping
Center. Rental income of $47,500 in 1998 reflects a financial settlement
with a former tenant at the Fashion Square Shopping Center, as discussed
above. The decrease in rental income for the year ended December 31, 1997
as compared to the year ended December 31, 1996 is due primarily to lower
average occupancy at the Fashion Square Shopping Center in 1997, due to
substantial re-tenanting of the center. Such decrease was substantially
offset by the receipt in 1997 of lease termination fees from certain
tenants at the Fashion Square Shopping Center.
The decrease in depreciation expense for the year ended December 31,
1997 as compared to the year ended December 31, 1996 is due to the
classification of the Partnership's investment in the Fashion Square
Shopping Center as held for sale or disposition at December 31, 1996 and
the corresponding suspension of depreciation in 1997. This property was
sold in December 1997.
Fees for professional services for the eleven months ended
November 30, 1998 includes legal fees incurred in 1998 in connection with
the Partnership's lawsuit against a former tenant at the Fashion Square
Shopping Center, as discussed above.
Amortization of deferred expenses for the year ended December 31, 1997
includes the amortization in 1997 of the remaining costs associated with
the Partnership's replacement letter of credit obtained for the Fashion
Square Shopping Center, as discussed more fully in the Notes.
A provision for value impairment of $600,000 was recorded at
September 30, 1997 for the Fashion Square Shopping Center investment
property due to the uncertainty relating to the Partnership's ability to
recover the net carrying value of this property through a proposed sale.
The decrease in Partnership's share of income from operations of
unconsolidated venture for the year ended December 31, 1997 as compared to
the year ended December 31, 1996 is due to the sale of the Partnership's
interest in the Miami International Mall in April 1996.
The gain on sale of investment property for the year ended
December 31, 1997 is due to the sale of the Fashion Square Shopping Center
in December 1997.
The Partnership's gain on sale of interest in unconsolidated venture
for the year ended December 31, 1996 is due to the sale of the
Partnership's interest in the Miami International Mall in April 1996.
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on the operations of the
Partnership. Inflation in future periods is not applicable since the
Partnership wound up its affairs and dissolved effective November 30, 1998.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Partnership wound up its affairs and dissolved in 1998. As a
result, there is no meaningful disclosure for this item.
YEAR 2000
The Partnership wound up its affairs and dissolved in 1998.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
INDEX
Independent Auditors' Report
Balance Sheets, November 30, 1998 (Immediately prior to final liquidating
distribution) and December 31, 1997
Statements of Operations, eleven months ended November 30, 1998
(Immediately prior to final liquidating distribution)
and years ended December 31, 1997 and 1996
Statements of Partners' Capital Accounts (Deficits),
eleven months ended November 30, 1998 (Immediately prior
to final liquidating distribution) and years ended
December 31, 1997 and 1996
Statements of Cash Flows, eleven months ended November 30, 1998
(Immediately prior to final liquidating distribution)
and years ended December 31, 1997 and 1996
Notes to Financial Statements
SCHEDULES NOT FILED:
All schedules have been omitted as the required information is
inapplicable or the information is presented in the financial statements or
related notes.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
IDS/JMB BALANCED INCOME GROWTH, LTD.:
We have audited the financial statements of IDS/JMB Balanced Income
Growth, Ltd. (a limited partnership) as listed in the accompanying index.
These financial statements are the responsibility of the General Partners
of the Partnership. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of IDS/JMB
Balanced Income Growth, Ltd. as of November 30, 1998 (immediately prior to
final liquidating distribution) and December 31, 1997, and the results of
its operations and its cash flows for the eleven months ended November 30,
1998 (immediately prior to final liquidating distribution) and the years
ended December 31, 1997 and 1996, in conformity with generally accepted
accounting principles.
As discussed in the Notes to the financial statements, in 1996 the
Partnership changed its method of accounting for long-lived assets and
long-lived assets to be disposed of to conform with Statement of Financial
Accounting Standards No. 121.
KPMG LLP
Chicago, Illinois
February 9, 1999
<PAGE>
<TABLE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
NOVEMBER 30, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION)
AND DECEMBER 31, 1997
ASSETS
------
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 1,264,405 3,501,979
Interest, rents and other receivables . . . . . . . . . . . . . . . -- 22,033
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . 1,264,405 3,524,012
------------ ------------
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . -- 22,313
------------ ------------
$ 1,264,405 3,546,325
============ ============
<PAGE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1998 1997
------------ -----------
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 54,760
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . -- 54,760
------------ ------------
Commitments and contingencies
Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . 82,341 20,000
Cumulative net earnings (losses) . . . . . . . . . . . . . . . (72,763) (272,930)
Cumulative cash distributions. . . . . . . . . . . . . . . . . (9,578) --
------------ ------------
-- (252,930)
------------ ------------
Limited partners (47,534 Interests):
Capital contributions, net of offering costs . . . . . . . . . 10,284,207 10,284,207
Cumulative net earnings (losses) . . . . . . . . . . . . . . . (2,261,058) (1,919,998)
Cumulative cash distributions. . . . . . . . . . . . . . . . . (6,758,744) (4,619,714)
------------ ------------
1,264,405 3,744,495
------------ ------------
Total partners' capital accounts (deficits) . . . . . . . . 1,264,405 3,491,565
------------ ------------
$ 1,264,405 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
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1998
(IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION)
AND YEARS ENDED DECEMBER 31, 1997 AND 1996
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Rental income . . . . . . . . . . . . . . . . . . . $ 47,500 1,456,654 1,499,883
Interest income . . . . . . . . . . . . . . . . . . 70,290 76,378 104,473
------------ ------------ ------------
117,790 1,533,032 1,604,356
------------ ------------ ------------
Expenses:
Mortgage and other interest . . . . . . . . . . . . -- 374,664 365,676
Depreciation. . . . . . . . . . . . . . . . . . . . -- -- 290,690
Property operating expenses . . . . . . . . . . . . 24,204 634,117 797,083
Professional services . . . . . . . . . . . . . . . 86,088 53,519 65,208
Amortization of deferred expenses . . . . . . . . . 22,313 146,535 55,024
General and administrative. . . . . . . . . . . . . 126,078 97,645 134,531
Provision for value impairment. . . . . . . . . . . -- 600,000 --
------------ ------------ ------------
258,683 1,906,480 1,708,212
------------ ------------ ------------
(140,893) (373,448) (103,856)
Partnership's share of operations of
unconsolidated venture. . . . . . . . . . . . . . . -- -- 15,765
------------ ------------ ------------
Earnings (loss) before gain on
sale. . . . . . . . . . . . . . . . . . . (140,893) (373,448) (88,091)
Gain on sale of investment property . . . . . . . . . -- 23,973 --
Gain on sale of interest in unconsolidated
venture . . . . . . . . . . . . . . . . . . . . . . -- -- 805,241
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . . . $ (140,893) (349,475) 717,150
============ ============ ============
Net earnings per limited partnership interest:
Earnings (loss) before gain on sale . . . . . . . $ (7.18) (7.07) (1.67)
Gain on sale of investment property . . . . . . . -- -- --
Gain on sale of interest in unconsolidated
venture . . . . . . . . . . . . . . . . . . . . -- -- 16.77
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . . . $ (7.18) (7.07) 15.10
============ ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
ELEVEN MONTHS ENDED NOVEMBER 30, 1998
(IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION)
AND YEARS ENDED DECEMBER 31, 1997 AND 1996
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (47,534 INTERESTS)
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1995 . . . .$20,000 (258,802) -- (238,802) 10,284,207 (2,301,801) (3,526,432) 4,455,974
Net earn-
ings (loss). -- (756) -- (756) -- 717,906 -- 717,906
Cash distri-
butions
($23.00 per
Interest). . -- -- -- -- -- -- (1,093,282) (1,093,282)
------- ----------- ---------- ----------- ----------- ------------ ----------- -----------
Balance at
December 31,
1996 . . . . 20,000 (259,558) -- (239,558) 10,284,207 (1,583,895) (4,619,714) 4,080,598
Net earn-
ings (loss). -- (13,372) -- (13,372) -- (336,103) -- (336,103)
Cash distri-
butions . . -- -- -- -- -- -- -- --
------ ----------- ---------- ----------- ----------- ------------ ----------- -----------
Balance at
December 31,
1997 . . . . 20,000 (272,930) -- (252,930) 10,284,207 (1,919,998) (4,619,714) 3,744,495
<PAGE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS (47,534 INTERESTS)
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
Capital con-
tributions .62,341 -- -- 62,341 -- -- -- --
Net earn-
ings (loss). -- 200,167 -- 200,167 -- (341,060) -- (341,060)
Cash distri-
butions
($45.00 per
Interest). . -- -- (9,578) (9,578) -- -- (2,139,030) (2,139,030)
------ ----------- ---------- ----------- ----------- ------------ ----------- -----------
Balance at
November 30,
1998 . . . .$82,341 (72,763) (9,578) -- 10,284,207 (2,261,058) (6,758,744) 1,264,405
======= =========== ========== =========== =========== ============ =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1998
(IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION)
AND YEARS ENDED DECEMBER 31, 1997 AND 1996
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . $ (140,893) (349,475) 717,150
Items not requiring (providing) cash or
cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . -- -- 290,690
Amortization of deferred expenses . . . . . . . . 22,313 146,535 55,024
Partnership's share of operations of
unconsolidated venture. . . . . . . . . . . . . -- -- (15,765)
Gain on sale of investment property . . . . . . . -- (23,973) --
Gain on sale of interest in unconsolidated
venture . . . . . . . . . . . . . . . . . . . . -- -- (805,241)
Provision for value impairment. . . . . . . . . . -- 600,000 --
Changes in:
Interest, rents and other receivables . . . . . . 22,033 82,596 (43,212)
Prepaid expenses. . . . . . . . . . . . . . . . . -- 7,642 5,332
Accounts payable . . . . . . . . . . . . . . . . (54,760) (4,020) 2,233
Due to affiliates . . . . . . . . . . . . . . . . -- -- 18,898
Accrued interest. . . . . . . . . . . . . . . . . -- (26,508) (1,744)
Accrued real estate taxes . . . . . . . . . . . . -- (592,656) --
Unearned rents. . . . . . . . . . . . . . . . . . -- (116,246) 92,450
Security deposits . . . . . . . . . . . . . . . . -- (12,374) --
------------ ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . . (151,307) (288,479) 315,815
------------ ----------- -----------
Cash flows from investing activities:
Cash proceeds from sale of interest in uncon-
solidated venture, net of selling expenses. . . . -- -- 1,368,408
Additions to investment property. . . . . . . . . . -- (793,141) --
Partnership's distributions from
unconsolidated venture. . . . . . . . . . . . . . -- -- 58,470
Cash proceeds from sale of investment
property. . . . . . . . . . . . . . . . . . . . . -- 2,241,718 --
Payment of deferred expenses. . . . . . . . . . . . -- (55,686) (7,830)
------------ ----------- -----------
Net cash provided by (used in)
investing activities. . . . . . . . . . . -- 1,392,891 1,419,048
------------ ----------- -----------
<PAGE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
1998 1997 1996
----------- ----------- -----------
Cash flows from financing activities:
Escrow deposits, net of reimbursements. . . . . . . -- 1,550,211 (413,648)
Contribution from general partners. . . . . . . . . 62,341 -- --
Distributions to limited partners . . . . . . . . . (2,139,030) -- (1,093,282)
Distributions to general partners . . . . . . . . . (9,578) -- --
------------ ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . . (2,086,267) 1,550,211 (1,506,930)
------------ ----------- -----------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . (2,237,574) 2,654,623 227,933
Cash and cash equivalents,
beginning of year . . . . . . . . . . . . 3,501,979 847,356 619,423
------------ ----------- -----------
Cash and cash equivalents,
end of year . . . . . . . . . . . . . . . $ 1,264,405 3,501,979 847,356
============ =========== ===========
Supplemental disclosure of cash
flow information:
Cash paid for mortgage and
other interest. . . . . . . . . . . . . . . . . . $ -- 401,172 367,420
============ =========== ===========
Non-cash investing and financing
activities:
Sale proceeds from sale of investment
property, net of selling expenses . . . . . . . $ -- 9,041,718 --
Assumption of long-term debt. . . . . . . . . . . -- (6,800,000) --
------------ ----------- -----------
Cash proceeds from sale of
investment property . . . . . . . . . . . $ -- 2,241,718 --
============ =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
ELEVEN MONTHS ENDED NOVEMBER 30, 1998
(IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION)
AND YEARS ENDED DECEMBER 31, 1997 AND 1996
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The Partnership owned a shopping center located in Skokie, Illinois.
Business activities consisted of rentals to a variety of retail companies,
and the ultimate sale of such real estate.
The equity method of accounting had been applied in the accompanying
financial statements with respect to the Partnership's former interest in
JMB/Miami International Associates ("JMB/Miami").
The Partnership's records were maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying financial statements have been prepared from such records
after making appropriate adjustments to reflect the Partnership's accounts
in accordance with generally accepted accounting principles ("GAAP"). Such
adjustments were not recorded on the records of the Partnership. The net
effect of these items for the eleven months ended November 30, 1998
(immediately prior to final liquidating distribution) and the year ended
December 31, 1997 is summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
1998 1997
-------------------------------------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . $ 1,264,405 1,264,405 3,546,325 5,143,405
Partners' capital
accounts (deficits):
General partners. . . . . . . . . -- -- (252,930) (51,863)
Limited partners. . . . . . . . . 1,264,405 1,264,405 3,744,495 5,151,763
Net earnings (loss):
General partners. . . . . . . . . 200,167 (900) (13,372) (64,498)
Limited partners. . . . . . . . . (341,060) (151,248) (336,103) (4,107,717)
Net earnings (loss) per
limited partner-
ship interest. . . . . . . . . . . (7.18) (3.18) (7.07) (86.42)
=========== =========== =========== ===========
</TABLE>
<PAGE>
The net earnings (loss) per limited partnership interest ("Interest")
is based on the number of Interests outstanding at the end of each period
(47,534). Also, because net earnings (loss) was computed immediately prior
to dissolution, holders of Interests may have an additional capital gain or
loss on dissolution depending on the holders' basis for Federal income tax
purposes.
The preparation of financial statements in accordance with GAAP
required the Partnership to make estimates and assumptions that affected
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 have differed from those
estimates.
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies cash receipts and
payments according to whether they stem from operating, investing or
financing activities. The required information has been segregated and
accumulated according to the classifications specified in the
pronouncement. Partnership distributions from its unconsolidated venture
were considered cash flow from operating activities only to the extent of
the Partnership's cumulative share of net earnings. In addition, the
Partnership recorded amounts held in U.S. Government obligations at cost,
which approximated market. For the purposes of these financial statements,
the Partnership's policy was to consider all such amounts held with
original maturities of three months or less (none and $3,069,308 at
November 30, 1998 and December 31, 1997, respectively) as cash equivalents,
which included investments in an institutional mutual fund which held
United States Government obligations, with any remaining amounts (generally
with original maturities of one year or less) reflected as short-term
investments being held to maturity.
Deferred expenses consisted primarily of deferred lease commissions
and letter of credit fees which were amortized over their respective terms
using the straight-line method.
Although certain leases at the Partnership's property provided for
tenant occupancy during periods for which no rent was due and/or increases
in minimum lease payments over the term of the lease, the Partnership
accrued rental income for the full period of occupancy on a straight-line
basis.
No provision for state or Federal income taxes has been made as the
liability for such taxes is that of the Partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to Partners.
The Partnership had acquired, either directly or through a joint
venture, two shopping centers.
Depreciation on the Partnership's property had been provided over the
estimated useful lives of the various components as follows:
YEARS
-----
Building and improvements
-- straight-line . . . . . . . . . . 30
Personal property
-- straight-line . . . . . . . . . . 5
==
Maintenance and repairs were charged to operations as incurred.
Significant betterments and improvements were capitalized and depreciated
over their estimated useful lives.
<PAGE>
The Partnership adopted Statement of Financial Accounting Standards
No. 121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" as required in the first
quarter of 1996. SFAS 121 required that the Partnership record an
impairment loss on its properties to be held for investment whenever their
carrying value could not be fully recovered through estimated undiscounted
future cash flows from their operations and sale. The amount of the
impairment loss to be recognized would have been the difference between the
property's carrying value and the property's estimated fair value. The
Partnership's policy was to consider a property to be held for sale when
the Partnership committed to a plan to sell such property and active
marketing activity had commenced or was expected to commence in the near
term. As of December 31, 1996, the Partnership's remaining investment
property (Fashion Square Shopping Center) had been classified as held for
sale. In accordance with SFAS 121, any properties identified as "held for
sale or disposition" were no longer depreciated. Adjustments for
impairment loss for such properties (subsequent to the date of adoption of
SFAS 121) were made in each period as necessary to report these properties
at the lower of carrying value or fair value less costs to sell. The
adoption of SFAS 121 did not have any significant effect on the
Partnership's financial position, results of operations or liquidity.
The results of operations for properties classified as held for sale
or sold during 1997 and 1996 were ($222,784) and $95,047, respectively, for
the years ended December 31, 1997 and 1996. In addition, the accompanying
financial statements include $15,765 of the Partnership's share of total
property operations of $309,476 of unconsolidated properties held for sale
or sold in 1996.
During the second quarter of 1997, Statements of Financial Accounting
Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of
Information about Capital Structure") were issued. As the Partnership's
capital structure only had general and limited partnership interests, the
Partnership did not experience any significant impact on its financial
statements upon adoption of these standards when required at the end of
1997.
INVESTMENT PROPERTIES
FASHION SQUARE SHOPPING CENTER
In February 1989, the Partnership acquired substantially all of the
Fashion Square Shopping Center located in Skokie, Illinois. The
Partnership purchased the shopping center for $13,800,000, including the
assumption of municipal bonds of $6,800,000. On December 5, 1997, the
Partnership entered into an agreement (which was modified December 17, 1997
and December 26, 1997) to sell the Property for a sale price of $9,255,000,
which was received by the Partnership at closing on December 30, 1997 as
follows: $2,455,000 cash at closing (before selling costs of approximately
$256,000, net operating prorations of approximately $595,000 and a tenant
allowance of $325,000) and the assumption by the purchaser of existing
municipal bond mortgage indebtedness totaling $6,800,000. 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 expired, with no
liability to the Partnership, as scheduled on May 15, 1998.
<PAGE>
The municipal bonds assumed at the Partnership's original purchase of
the property were supported by a letter of credit with an original
expiration date of December 15, 1994, which was extended through June 15,
1995. In March 1995, the Partnership obtained a replacement irrevocable
direct pay letter of credit with a major institutional lender in the amount
of $7,140,000. The Partnership paid a commitment fee equal to 1% of the
letter of credit amount at closing and paid an annual commission fee of
1.25% of the letter of credit amount. The replacement letter of credit
required the Partnership to fund an interest-bearing cash collateral
account with an initial deposit of $840,000 at closing and required monthly
deposits of $30,000 thereafter until the December 1, 1999 expiration.
Amounts were allowed to be drawn by the Partnership under certain
circumstances (as defined) from the collateral account for tenant
improvements and leasing costs at the Fashion Square Shopping Center. Upon
the sale of the property and the assumption by the purchaser of the
property's existing mortgage debt, such collateral account with a balance
of approximately $1,781,000 at December 31, 1997 was released to the
Partnership (pursuant to the letter of credit agreement). The bonds bore
interest, payable quarterly, at a floating rate (4.525% and 4.375% per
annum at December 30, 1997 and at December 31, 1996, respectively). The
Partnership had the right, at any time, to convert the bonds through their
maturity date to the fixed prevailing market rate, subject to certain
restrictions. The bonds were scheduled to mature on December 1, 2014.
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 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.
A former tenant at the Fashion Square Shopping Center, Bruegger's
Bagels, defaulted on its lease obligations in June 1997. The Partnership
filed a lawsuit in July 1997 to protect its legal rights under the lease
for damages resulting from non-payment of rent and other charges. The
Partnership reached an agreement in principle with this tenant in October
1998 and received a financial settlement of $47,500 in November 1998.
JMB/MIAMI - MIAMI INTERNATIONAL MALL
In 1989, the Partnership acquired an interest in a partnership known
as JMB/Miami International Associates ("JMB/Miami"), with two other
partnerships, JMB Income Properties, Ltd.-XIII and JMB/Miami Investors,
L.P., both sponsored by affiliates of the Corporate General Partner.
During October 1993, JMB/Miami Investors, L.P. transferred its interest in
JMB/Miami to Urban Shopping Centers, L.P., a partnership controlled by
Urban Shopping Centers, Inc. (a public corporation organized by an
affiliate of the Corporate General Partner of the Partnership). The
Partnership's investment in JMB/Miami was approximately $1,048,000. The
terms of the JMB/Miami partnership agreement, as amended, provided that
annual cash flow, net sale or refinancing proceeds, and tax items were to
be distributed or allocated to the Partnership in proportion to its 5.094%
ownership interest.
<PAGE>
JMB/Miami owned an interest in a partnership ("West Dade") with an
affiliate of the developer (the "Venture Partner") which owned an enclosed
regional mall in Miami, Florida known as Miami International Mall.
JMB/Miami had invested $17,678,694 for a 50% interest in West Dade and
$1,126,306 as a contribution for initial working capital requirements of
West Dade. The West Dade venture agreement provided that JMB/Miami and the
Venture Partner generally were each entitled to receive 50% of profits and
losses, net cash flow and net sale or refinancing proceeds of West Dade and
were each obligated to advance 50% of any additional funds required under
the terms of the West Dade venture agreement.
In April 1996, DeBartolo Realty Partnership, L.P. ("DeBartolo"), the
unaffiliated venture partner in West Dade, purchased 100% of the
Partnership's interest (i.e., a 2.547% interest) in West Dade for
$1,368,888 (paid in cash at closing), subject to proration. DeBartolo also
assumed the Partnership's proportionate share of obligations and
liabilities of West Dade from and after March 31, 1996, the effective date
of the transaction. The terms of the sale were determined by arm's-length
negotiations.
In addition, West Dade agreed to indemnify the Partnership generally
from and against claims and liabilities incurred by the Partnership in
connection with West Dade or its property after the effective date of the
sale. As a result of the sale, the Partnership recognized a gain of
approximately $1,002,000 for Federal income tax purposes and a gain of
approximately $805,000 for financial reporting purposes in 1996. In
addition, the Partnership made a distribution of sale proceeds related to
this transaction of $20 per Interest in August 1996.
The shopping center was managed by an affiliate of the venture
partner. The manager was paid an annual fee equal to 4-1/2% of the net
operating income of the shopping center.
PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, profits or losses
of the Partnership from operations generally were allocated 90% to the
Limited Partners and 10% to the General Partners. However, during 1998, a
reallocation of prior years' operating losses was made among the partners
for financial reporting purposes only. Such reallocation did not have an
effect on total assets, total partners' capital or net earnings. Profits
or losses for Federal income tax purposes from the sale or refinancing of
properties generally were allocated 99% to the Limited Partners and 1% to
the General Partners, except that net profits from the sale of properties
were additionally allocated to the General Partners (i) to the extent that
cash distributions to the General Partners of sale proceeds from such sale
(as described below) exceeded the aforesaid 1% of such profits and (ii) in
order to reduce deficits, if any, in the General Partners' capital accounts
to a level consistent with the gain anticipated to be realized from the
sale of properties. Such provision was applied in 1997 to allocate the
entire gain on the sale of the Fashion Square Shopping Center to the
General Partners for financial reporting purposes only.
The General Partners made initial capital contributions of $20,000.
Pursuant to the terms of the Partnership Agreement, the Associate General
Partner of the Partnership was also required to contribute $62,341 to the
Partnership upon liquidation of the Partnership, such amount representing
the restoration of the deficit balance in the Associate General Partner's
tax basis capital account. Also pursuant to the Partnership Agreement, the
Corporate General Partner received a distribution of $9,578, representing
the balance of its tax basis capital account, with the remainder of the
$62,341 contribution by the Associate General Partner available for
distribution to the Limited Partners. Distributable cash (as defined) from
operations was to be allocated 90% to the Limited Partners and 10% to the
General Partners, however distributions to the General Partners were
subject to receipt by the Limited Partners of a stipulated return on their
average adjusted capital contribution. Sale or refinancing proceeds were
<PAGE>
to be distributed 99% to the Limited Partners until the Limited Partners
had received their contributed capital plus a stipulated return thereon.
The General Partners then were to receive 100% of the sale or refinancing
proceeds until they received amounts equal to (i) the cumulative deferral
of their 10% distribution of disbursable cash and (ii) 3% of the selling
prices of all properties which had been sold, subject to certain
limitations. Any remaining sale or refinancing proceeds then were to be
distributed 85% to the Limited Partners and 15% to the General Partners;
however, the General Partners receipt of any amounts under (i) and (ii)
above and their receipt of 15% of such sale and refinancing proceeds were
subject to the receipt by the Limited Partners of an additional stipulated
return on the average adjusted capital contribution of holders of Interests
for such period. As the Limited Partners received significantly less
distributions than their original investment, approximately $306,000 of the
General Partners' share of operating distributions previously deferred was
paid to the Limited Partners (or used for other Partnership obligations);
furthermore, the General Partners did not receive any distributions of sale
or refinancing proceeds.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, was 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 for the eleven months ended November 30, 1998 (immediately
prior to final liquidating distribution) and for the years ended
December 31, 1997 and 1996 were as follows:
UNPAID AT
NOVEMBER 30,
1998 1997 1996 1998
------- ------- ------- ------------
Property management
and leasing fees . . . . $ -- 41,496 39,116 --
Insurance commissions . . -- 1,541 2,749 --
Reimbursement (at cost)
for accounting
services . . . . . . . . 17,443 6,954 4,825 --
Reimbursement (at cost)
for portfolio manage-
ment services. . . . . . 6,828 13,303 7,981 --
Reimbursement (at cost)
for legal services . . . 1,107 2,114 3,752 --
Reimbursement (at cost)
for administrative
charges and other
out-of-pocket
expenses . . . . . . . . 4,134 3,344 22,328 --
Partnership winding
up fee . . . . . . . . . 5,121 -- -- --
------- ------- ------- ------
$34,633 68,752 80,751 --
======= ======= ======= ======
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes in, or disagreements with, accountants during
the eleven months ended November 30, 1998 (immediately prior to final
liquidating distribution) and the fiscal year 1997.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Corporate General Partner of the Partnership, Income Growth
Managers, Inc., an Illinois corporation, is wholly-owned by Northbrook
Corporation, a Delaware Corporation, substantially all of the outstanding
shares of which are owned by JMB Realty Corporation, a Delaware corporation
("JMB"), and certain of its officers, directors, members of their families
and affiliates. Substantially all of the shares of JMB are owned by its
officers, directors, members of their families and affiliates. The
Corporate General Partner had responsibility for all aspects of the
Partnership's operations, subject to the requirement that purchases and
sales of real property investments were required to be approved by the
Associate General Partner of the Partnership, Realty Income Associates,
L.P., a Delaware limited partnership, which approval required the consent
of its partners, Realty Income Partners, L.P. (an affiliate of JMB) and IDS
Realty Corporation.
The Partnership was subject to certain conflicts of interest arising
out of its relationships with the General Partners and their affiliates as
well as the fact that the General Partners and their affiliates are engaged
in a range of real estate activities. Certain services were provided to
the Partnership or its investment properties by affiliates of the General
Partners, including property management services and insurance brokerage
services. In general, such services were provided on terms no less
favorable to the Partnership than could have been obtained from independent
third parties and have been otherwise subject to conditions and
restrictions contained in the Partnership Agreement. The Partnership
Agreement permitted the General Partners and their affiliates to provide
services to, and otherwise deal and do business with, persons who may have
been engaged in transactions with the Partnership, and permitted the
Partnership to borrow from, purchase goods and services from, and otherwise
to do business with, persons doing business with the General Partners or
their affiliates. The General Partners and their affiliates may have been
in competition with the Partnership under certain circumstances, including,
in certain geographical markets, for tenants and/or for the sale of
properties. Because the timing and amount of cash distributions and
profits and losses of the Partnership may have been affected by various
determinations by the General Partners under the Partnership Agreement,
including the establishment and maintenance of reasonable reserves and the
determination of the source of such reserves (i.e., offering proceeds, cash
generated from operations or sale proceeds), the timing of expenditures and
the allocation of certain tax items under the Partnership Agreement, the
General Partners may have had a conflict of interest with respect to such
determinations.
<PAGE>
The director and the executive and certain other officers of the
Corporate General Partner of the Partnership are as follows:
SERVED IN
NAME OFFICE OFFICE SINCE
- ---- ------ ------------
Judd D. Malkin Chairman 2/19/87
Neil G. Bluhm President 2/19/87
H. Rigel Barber Vice President 8/09/88
Gailen J. Hull Vice President 1/01/90
Howard Kogen Vice President 2/19/87
Treasurer 1/01/91
Controller 1/01/91
Gary Nickele Vice President 2/19/87
General Counsel 2/19/87
Director 12/18/90
There is no family relationship among any of the foregoing director or
officers. The foregoing director was elected to serve a one-year term
until the annual meeting of the Corporate General Partner to be held on
August 10, 1999. All of the foregoing officers were elected to serve one-
year terms until the first meeting of the Board of Directors held after the
annual meeting of the Corporate General Partner to be held on August 10,
1999. There are no arrangements or understandings between or among any of
said director or officers and any other person pursuant to which any
director or officer was elected as such.
The foregoing director and officers are also officers and/or directors
of various affiliated companies including JMB, which is the corporate
general partner of Carlyle Real Estate Limited Partnership-XI
("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XIII
("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV
("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"),
Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB
Income Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties,
Ltd.-X ("JMB Income-X"), JMB Income Properties, Ltd.-XI, ("JMB Income-XI"),
and Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB Partners,
L.P. ("Arvida")). JMB is also the sole general partner of the associate
general partner of most of the foregoing partnerships. Most of such
director and officers are also partners, directly or indirectly, of certain
partnerships which are or were associate general partners in the following
real estate limited partnerships, among others: the Partnership,
Carlyle-XI, Carlyle-XIII, Carlyle-XIV, Carlyle-XV, JMB Income-VII, JMB
Income-X, JMB Income-XI, and Carlyle Income Plus-II.
The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:
Judd D. Malkin (age 61) is Chairman of the Board and a director of
JMB. He is also an individual general partner of JMB Income-V. Mr. Malkin
has been associated with JMB since October 1969. Mr. Malkin is also a
director of Urban Shopping Centers, Inc., an affiliate of JMB that is a
real estate investment trust in the business of owning, managing and
developing shopping centers. He is a Certified Public Accountant.
Neil G. Bluhm (age 61) is President and a director of JMB. He is also
an individual general partner of JMB Income-V. Mr. Bluhm has been
associated with JMB since August 1970. Mr. Bluhm is also a principal of
Walton Street Capital, L.L.C., which sponsors real estate investment funds,
and a director of Urban Shopping Centers, Inc. He is a member of the Bar of
the State of Illinois and a Certified Public Accountant.
<PAGE>
H. Rigel Barber (age 50) is Executive Vice President and Chief
Executive Officer of JMB. Mr. Barber has been associated with JMB since
March 1982. He holds a J.D. degree from the Northwestern Law School and is
a member of the Bar of the State of Illinois.
Gailen J. Hull (age 50) is Senior Vice President of JMB. Mr. Hull has
been associated with JMB since March 1982. He holds a Master's degree in
Business Administration from Northern Illinois University and is a
Certified Public Accountant.
Howard Kogen (age 63) is Senior Vice President and Treasurer of JMB.
Mr. Kogen has been associated with JMB since March 1973. He is a Certified
Public Accountant.
Gary Nickele (age 46) is Executive Vice President and General Counsel
of JMB. Mr. Nickele has been associated with JMB since February 1984. He
holds a J.D. degree from the University of Michigan Law School and is a
member of the Bar of the State of Illinois.
ITEM 11. EXECUTIVE COMPENSATION
The officers and director of the Corporate General Partner received no
direct remuneration in such capacities. The General Partners of the
Partnership were entitled to receive a share of cash distributions, when
and as cash distributions were made to the holders of Interests, and a
share of profits or losses. Reference is also made to the Notes for a
description of such distributions and allocations. Pursuant to the terms
of the Partnership Agreement, the Associate General Partner of the
Partnership was required to contribute $62,341 to the Partnership upon the
liquidation of the Partnership at November 30, 1998, such amount
representing the restoration of the deficit balance in the Associate
General Partner's tax basis capital account. Also pursuant to the
Partnership Agreement, the Corporate General Partner received a
distribution of $9,578, representing the balance of its tax basis capital
account, with the remainder of the $62,341 contribution by the Associate
General Partner available for distribution to the Limited Partners. The
General Partners received a share of the Partnership net loss for tax
purposes aggregating $900 in 1998.
The Corporate General Partner and its affiliates were entitled to
reimbursement (at cost) in 1998 for accounting services, portfolio
management services, legal services and for administrative charges and
other out-of-pocket expenses of $17,443, $6,828, $1,107 and $4,134,
respectively, all of which was paid at November 30, 1998.
The Corporate General Partner also was entitled to and received a fee
of $5,121 in 1998, pursuant to a winding up agreement between the
Partnership and the Corporate General Partner, in consideration of the
Corporate General Partner's assumption of the obligation of potential
Partnership liabilities (as defined).
The Partnership, pursuant to the Partnership Agreement was 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. The relationship of the
Corporate General Partner (and its director and officers) to its affiliates
is set forth in Item 10 above.
<PAGE>
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group was known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership immediately prior to the liquidation of the Partnership.
(b) The Corporate General Partner, its officers and director and the Associate General Partner owned the
following Interests of the Partnership immediately prior to its liquidation:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership
Interests Corporate General -- --
Partner, its
officers and director,
and the Associate
General Partner as
a group
<FN>
No officer or director of the Corporate General Partner of the Partnership possessed the right to acquire
beneficial ownership of Interests of the Partnership.
Reference is made to Item 10 for information concerning ownership of the Corporate General Partner.
(c) There existed no arrangement known to the Partnership the operation of which would have resulted in a
change in control of the Partnership.
</TABLE>
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Corporate General Partner, its affiliates or their management other
than those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements
filed with this annual report).
(2) 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 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 set
forth as Exhibit A to the Prospectus, is incorporated herein by reference
to Exhibit 3-B 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 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.
4-B. Documents relating to the loan agreement and letter of
credit agreement secured by a non-recourse mortgage on Fashion Square
Shopping Center are incorporated by reference to the Partnership's
Registration Statement on Form S-11 dated August 6, 1987 (as amended) (File
no. 33-12561).
4-C. Letter of credit agreement extension document secured by a
non-recourse mortgage on the Fashion Square Shopping Center are hereby
incorporated by reference to the Partnership's report on Form 10-K (File
No. 0-17699) for December 31, 1994 dated March 21, 1995.
4-D. Documents relating to the replacement Irrevocable Direct
Pay Letter of Credit and exhibits thereto and the Reimbursement Agreement
and exhibits thereto dated March 30, 1995, are hereby incorporated by
reference to the Partnership's report on Form 10-Q (File No. 0-17699) for
March 31, 1995 dated May 11, 1995.
10-A. Acquisition documents relating to the purchase by the
Partnership of the Fashion Square Shopping Center in Skokie, Illinois (a
suburb north of Chicago) are incorporated by reference to the Partnership's
Registration Statement on Form S-11 dated August 6, 1987 (as amended) (File
No. 33-12561).
10-B. Real Property Purchase Agreement between IDS/JMB Balanced
Income Growth, Ltd. and Inland Real Estate Acquisitions, Inc., dated
December 5, 1997.*
<PAGE>
10-C. Letter Agreement between IDS/JMB Balanced Income Growth,
Ltd. and Inland Real Estate Acquisition, Inc., dated December 26, 1997.*
27. Financial Data Schedule
(b) The following report on Form 8-K was filed since the beginning of
the last quarter of the period covered by this report.
The Partnership's report on Form 8-K for November 19, 1998
(File No. 0-17699) describing the Partnership's final liquidating
distribution and dissolution and change in fiscal year was filed. No
financial statements were required to be filed therewith.
- --------------------
* Hereby incorporated herein by reference to the Partnership's
Report on Form 8-K (File No. 0-17699) for December 5, 1997.
No annual report for eleven months ended November 30, 1998
(immediately prior to final liquidating distribution) or proxy material has
been sent to the Partners of the Partnership. An annual report will be
sent to the Partners subsequent to this filing.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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/JMB BALANCED INCOME GROWTH, LTD.
By: Income Growth Managers, Inc.
Corporate General Partner
GAILEN J. HULL
By: Gailen J. Hull
Vice President
Date: February 26, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: Income Growth Managers, Inc.
Corporate General Partner
JUDD D. MALKIN
By: Judd D. Malkin, Chairman
Principal Financial Officer
Date: February 26, 1999
NEIL G. BLUHM
By: Neil G. Bluhm, President
Principal Executive Officer
Date: February 26, 1999
GARY NICKELE
By: Gary Nickele, Vice President, General Counsel
and Director
Date: February 26, 1999
GAILEN J. HULL
By: Gailen J. Hull, Vice President
Principal Accounting Officer
Date: February 26, 1999
<PAGE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
EXHIBIT INDEX
DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------ ----
3-A. The Prospectus of the Partnership
dated August 6, 1987 as
supplemented. Yes
3-B. Amended and Restated Agreement of
Limited Partnership Yes
4-A. Assignment Agreement Yes
4-B. Documents relating to loan
agreement and letter of credit
agreement Yes
4-C. Document relating to the
letter of credit agreement
extension Yes
4-D. Documents relating to the
replacement Irrevocable Direct
Pay Letter of Credit and
Reimbursement Agreement Yes
10-A. Acquisition documents relating
to the purchase by the
Partnership of the Fashion
Square Shopping Center in
Skokie, Illinois (a suburb
north of Chicago) are
incorporated by reference
to the Partnership's Registration
Statement on Form S-11 dated
August 6, 1987 (as amended)
(File No. 33-12561) Yes
10-B. Real Property Purchase Agreement
regarding the Partnership's sale
of the Fashion Square Shopping Center Yes
10-C. Letter Agreement regarding the
Partnership's sale of the
Fashion Square Shopping Center Yes
27. Financial Data Schedule No
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1998
(IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION) AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH
REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<CASH> 1,264,405
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,264,405
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,264,405
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,264,405
<TOTAL-LIABILITY-AND-EQUITY> 1,264,405
<SALES> 47,500
<TOTAL-REVENUES> 117,790
<CGS> 0
<TOTAL-COSTS> 46,517
<OTHER-EXPENSES> 212,166
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (140,893)
<INCOME-TAX> 0
<INCOME-CONTINUING> (140,893)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (140,893)
<EPS-PRIMARY> (7.18)
<EPS-DILUTED> (7.18)
</TABLE>
