<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(x) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1994.
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to _____________.
Commission file number: 0-17734
IDS/JONES GROWTH PARTNERS 89-B, LTD.
- - --------------------------------------------------------------------------------
Exact name of registrant as specified in its charter
Colorado #84-1060546
- - --------------------------------------------------------------------------------
State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
------------------------------------------------------------------------
Address of principal executive office
(303) 792-3111
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section l3 or l5(d) of the Securities Exchange Act of
l934 during the preceding l2 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
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
------
INVESTMENT IN CABLE TELEVISION JOINT VENTURE $ 2,028,921 $ 3,059,612
============ ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
- - -------------------------------------------
LIABILITIES:
Accounts payable - Affiliates $ 102,393 $ 102,393
------------ -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners-
Contributed capital 500 500
Accumulated deficit (119,967) (109,660)
------------ -----------
(119,467) (109,160)
------------ -----------
Limited Partners-
Contributed capital (63,383 units outstanding at
June 30, 1994 and December 31, 1993) 12,623,901 12,623,901
Accumulated deficit (10,577,906) (9,557,522)
------------ -----------
2,045,995 3,066,379
------------ -----------
Total liabilities partners' capital (deficit) $ 2,028,921 $ 3,059,612
============ ===========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these balance sheets.
2
<PAGE> 3
IDS/JONES GROWTH PARTNERS 89-B, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
---------------------------- -----------------------------
1994 1993 1994 1993
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
EQUITY IN NET LOSS OF
CABLE TELEVISION
JOINT VENTURE $ (494,327) $(489,467) $(1,030,691) $ (978,675)
----------- --------- ----------- ----------
NET LOSS $ (494,327) $(489,467) $(1,030,691) $ (978,675)
=========== ========= =========== ==========
ALLOCATION OF NET LOSS:
General Partners $ (4,943) $ (4,895) $ (10,307) $ (9,787)
=========== ========= =========== ==========
Limited Partners $ (489,384) $(484,572) $(1,020,384) $ (968,888)
=========== ========= =========== ==========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (7.72) $ (7.65) $ (16.10) $ (15.29)
=========== ========= =========== ==========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 63,383 63,383 63,383 63,383
=========== ========= =========== ==========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these statements.
3
<PAGE> 4
IDS/JONES GROWTH PARTNERS 89-B, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
---------------------------
1994 1993
----------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,030,691) $(978,675)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Equity in net loss of Cable Television
Joint Venture 1,030,691 978,675
Increase in advances from affiliates - 102,393
----------- ---------
Net cash provided by operating activities - 102,393
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in syndication costs - (102,393)
----------- ---------
Net cash used in financing activities - (102,393)
----------- ---------
Cash, beginning of period - -
----------- ---------
Cash, end of period $ - $ -
=========== =========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these statements.
4
<PAGE> 5
IDS/JONES GROWTH PARTNERS 89-B, LTD.
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) This Form 10-Q is being filed in conformity with the SEC requirements
for unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Balance Sheets and
Statements of Operations and Cash Flows in conformity with generally accepted
accounting principles. However, in the opinion of management, this data
includes all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the financial position of IDS/Jones Growth Partners
89-B, Ltd. (the "Partnership") at June 30, 1994 and December 31, 1993 and its
Statements of Operations and Cash Flows for the three and six months ended June
30, 1994 and 1993. Results of operations for these periods 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 and six month periods ended June 30, 1994 (reflecting the Partnership's
approximate 24 percent interest in the Venture) were $46,591 and $92,565,
respectively, as compared to $47,714 and $94,003, respectively, for the similar
1993 periods.
IDS Cable Corporation (the "Supervising General Partner") participates
in certain management decisions of the Partnership and receives a fee for its
service 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 and six month
periods ended June 30, 1994 (reflecting the Partnership's approximate 24
percent interest in the Venture) were $4,659 and $9,256, respectively, as
compared to $4,771 and $9,400, respectively, for the similar 1993 periods.
The Venture reimburses Jones Intercable, Inc. ("JIC"), an affiliate 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 primarily based on revenues and/or the costs of
partnership assets managed. Effective December 1, 1993, the allocation method
was changed to be based only on revenue, which the Managing General Partner
believes provides a more accurate method of allocation. 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. The Supervising General Partner may
also be reimbursed for certain expenses incurred on behalf of the Venture.
Reimbursements made to JIC by the Partnership for allocated overhead and
administrative expenses during the three and six months ended June 30, 1994
(reflecting the Partnership's approximate 24 percent interest in the Venture)
were $69,190 and $140,610, respectively, as compared to $72,307 and $142,102,
respectively, for the similar 1993 periods. There were no reimbursements made
to the Supervising General Partner during the three and six month periods ended
June 30, 1994 and 1993.
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(3) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1994 December 31, 1993
------------- -----------------
<S> <C> <C>
ASSETS
------
Cash and accounts receivable $ 389,629 $ 447,506
Investment in cable television properties 60,130,323 63,992,531
Other assets 133,105 155,933
------------ ------------
Total assets $ 60,653,057 $ 64,595,970
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
Debt $ 42,052,002 $ 41,604,580
Accounts payable and accrued liabilities 1,924,030 2,090,221
Partners' contributed capital 57,344,709 57,344,709
Accumulated deficit (40,667,684) (36,443,540)
------------ ------------
Total liabilities and partners' capital $ 60,653,057 $ 64,595,970
============ ============
</TABLE>
6
<PAGE> 7
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
---------------------------- ---------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 3,818,958 $ 3,910,975 $ 7,587,291 $ 7,705,161
Operating, general and administrative 2,091,835 2,113,318 4,255,650 4,094,706
Management fees and allocated overhead
from General Partners 493,606 511,445 993,571 1,006,168
Depreciation and amortization 2,557,518 2,707,703 5,259,389 5,408,992
----------- ----------- ----------- -----------
Operating loss (1,324,001) (1,421,491) (2,921,319) (2,804,705)
Interest expense (649,011) (546,368) (1,205,582) (1,141,858)
Other, net (52,919) (38,151) (97,243) (64,399)
------------ ----------- ----------- -----------
Net loss $ (2,025,931) $(2,006,010) $(4,224,144) $(4,010,962)
============ =========== =========== ===========
</TABLE>
Management fees paid to the Managing General Partner by the Venture
totalled $190,948 and $379,365, respectively, for the three and six months
ended June 30, 1994 as compared to $195,549 and $385,258, respectively, for the
comparable 1993 periods. Supervision fees paid to the Supervising General
Partners totalled $19,094 and $37,936, respectively, for the three and six
months ended June 30, 1994 as compared to $19,555 and $38,526, respectively,
for the comparable 1993 periods. Reimbursements for overhead and
administrative expenses paid to JIC totalled $283,564 and $576,270,
respectively, for the three and six months ended June 30, 1994 as compared to
$296,341 and $582,384, respectively, for the comparable 1993 periods.
7
<PAGE> 8
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 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
$1,030,691 compared to the December 31, 1993 balance. This decrease represents
the Partnership's share of losses generated by the Venture during the first six
months of 1994. These losses are anticipated to continue.
During the first six months of 1994, the Venture expended
approximately $1,397,000 on capital expenditures. Approximately 37 percent of
the expenditures related to plant extensions. Approximately 35 percent of the
expenditures related to construction of service drops to subscriber homes.
Approximately 12 percent of the expenditures related to system rebuilds and
upgrades. The remainder of the expenditures was for various enhancements in
the Aurora System. Funding for these expenditures was provided by cash on
hand, cash generated from operations and advances from the General Partners.
Anticipated capital expenditures for the remainder of 1994 are approximately
$1,793,000. Approximately 59 percent of the expenditures are for plant
extensions. Approximately 21 percent of the expenditures are for construction
of service drops to subscriber homes. Approximately 9 percent of the
anticipated capital expenditures are for system rebuilds and upgrades. The
actual level of capital expenditures will depend, in part, upon the Managing
General Partner's determination as to the proper scope and timing of such
expenditures in light of the 1992 Cable Act and the Venture's liquidity
position. Funding for the expenditures is expected to be provided by cash on
hand, cash generated from operations and, if available, borrowings under a
renegotiated credit facility, as discussed below. Such capital expenditures
may be reduced to provide the Venture with the liquidity to fund loan
repayments due under its credit facility if the Venture is unable to refinance
such credit facility. The effect of any such reduction would be the deferral
of revenue from potential subscribers that would have been reached by plant
extensions.
The Venture's $40,000,000 revolving credit facility converted to a
term loan on January 1, 1993. The outstanding balance is payable in
installments on or before December 31, 1999. At June 30, 1994, $36,000,000 was
outstanding under the term loan. During the first six months of 1994, the
Venture repaid $2,000,000 under the term loan. Such installments were funded
by a loan from the Supervising General Partner and an advance from the Managing
General Partner. Installments for the remainder of 1994 are $2,000,000. The
Venture had intended to fund such installments with cash on hand and cash
generated from operations. Because (due, in part, to FCC-mandated rate
reductions) it now appears that cash on hand and cash generated from operations
will be insufficient to fund the loan repayments, the Managing General Partner
is seeking to refinance the credit facility to establish a revolving credit
period and increase the maximum amount available. If the Venture is not
successful in refinancing its credit facility, the Venture will have to rely on
cash generated from operations and, in their discretion, advances from the
General Partners to fund the loan repayments. There is no obligation on the
part of the General Partners to make any such advances and there is no
assurance that any would be made. The Venture's ability to refinance its
credit facility may be adversely affected by FCC mandated rate reductions and
their impact on the value of the Aurora System. In addition, the effect of the
FCC's new rate regulations on revenue and operating income has caused the
Venture to be in default of certain leverage covenants under the credit
facility. The Managing General Partner has obtained a waiver of such defaults
and will seek to obtain different covenants in the refinancing negotiations.
If the credit facility is not refinanced and payments are not made when due,
there would be a default and the lender could enforce its remedies under the
credit facitliy. Interest on amounts outstanding is at the Venture's option of
the base rate plus 1/2 percent, where the base rate is the higher of the bank's
prime rate or the Federal Funds Rate plus 1/2 percent, LIBOR plus 1-1/2 percent
or the CD rate plus 1-5/8 percent. The effective interest rates on outstanding
obligations as of June 30, 1994 and 1993 were 6.13 percent and 4.55 percent,
respectively.
8
<PAGE> 9
In the fourth quarter of 1991, due to the necessity for additional
funding for the Venture, 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. 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. Such equity investments and
loans were used to repay the balance outstanding on the Venture's bridge
facility, pay acquisition fees of $3,244,000 and the remainder of such funds
were used for Venture working capital needs. The loans are subordinate to the
revolving credit and term loan and mature in the fourth quarter of 1994. In
the first quarter of 1994, JIC made an additional loan of $1,406,647 to the
Venture and IDS Management Corporation also made an additional loan of
$1,000,000 to the Venture to provide liquidity and fund principal repayments.
The interest rates on the respective loans, which will vary from time to time,
with respect to IDS Management Corporation's loan, are at its cost of
borrowing, and, with respect to JIC's loan, are at its weighted average cost of
borrowing. If these loans are not paid, at maturity, JIC and IDS Management
Corporation will have the right, among other rights, to convert these loans to
equity in the Venture.
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 a 66 percent
interest and the Partnership has a 24 percent interest. If the subordinated
loans are converted to equity, the ownership percentages will be adjusted
accordingly.
The first appraisal of the Aurora System was conducted during the
fourth quarter of 1993. The appraised value was below the initial purchase
price. The appraised value in part reflects the depressed conditions in the
cable system marketplace caused by the new Federal regulations imposed on the
cable television industry last year. There are no present plans to sell the
Aurora System nor can the Managing General Partner predict whether market
conditions will improve in the future or whether the Aurora System will
ultimately appreciate in value.
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 allows for a greater degree of regulation of the cable
television industry. Under the 1992 Cable Act's definition of effective
competition, nearly all cable systems in the United States, including those
owned and managed by the Venture, 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 Partnership and the Venture
reduced rates charged for certain regulated services effective September 1,
1993. These reductions resulted in some decrease in revenues and operating
income before depreciation and amortization, however the decrease was not as
severe as originally anticipated. The Managing General Partner has undertaken
actions to mitigate a portion of these reductions primarily through (a) new
service offerings in some systems, (b) product re-marketing and re-packaging
and (c) marketing efforts directed at non-subscribers.
On February 22, 1994, the FCC adopted several additional rate orders
including an order which revised its earlier-announced regulatory scheme with
respect to rates. The FCC's new 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. However, the FCC held
rate reductions in abeyance in certain systems. 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 and July 14.
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<PAGE> 10
On February 22, 1994, the FCC also adopted interim cost-of-service
regulations. Rate reductions will not be required where it is successfully
demonstrated that rates for basic and other regulated programming services are
justified and reasonable using cost-of-service standards. The FCC established
an interim industry-wide 11.25 percent permitted rate of return, and requested
comments on whether this standard and other interim cost-of-service standards
should be made permanent. The FCC also established a presumption that
acquisition costs above a system's book value should be excluded from the rate
base, but the FCC will consider individual showings to rebut this presumption.
The need for special rate relief will also be considered by the FCC if an
operator demonstrates that the rates set by a cost-of-service proceeding would
constitute confiscation of investment, and that, absent a higher rate, the
credit necessary to operate and to attract investment could not be maintained.
The FCC will establish a uniform system of accounts for operators that elect
cost-of-service rate regulation, and the FCC has adopted affiliate transaction
regulations. The FCC also proposed adopting a productivity factor to be offset
against future inflation increases to be applied regardless of which form of
regulation is used, cost of service or benchmark regulation. After a rate has
been set pursuant to a cost-of-service showing, rate increases for regulated
services will be indexed for inflation, and operators will also be permitted to
increase rates in response to increases in costs beyond their control, such as
taxes and increased programming costs.
The Venture has elected to file cost-of-service showings in the Aurora
System. The General Partner anticipates no further reduction in revenues or
operating income before depreciation and amortization.
The 1992 Cable Act contains new broadcast signal carriage
requirements, and the FCC has adopted regulations implementing the statutory
requirements. These new rules allow a local commercial broadcast television
station to elect whether to demand that a cable system carry its signal or to
require the cable system to negotiate with the station for "retransmission
consent." A cable system is generally required to devote up to one-third of
its activated channel capacity for the mandatory carriage of local commercial
broadcast television stations, and non-commercial television stations are also
given mandatory carriage rights, although such stations are not given the
option to negotiate retransmission consent for the carriage of their signals by
cable systems. Additionally, cable systems also are required to obtain
retransmission consent from all commercial television stations (except for
commercial satellite-delivered independent "superstations"), commercial radio
stations and, in some instances, low-power television stations carried by cable
systems.
The retransmission consent rules went into effect on October 6, 1993.
Throughout all cable television systems owned by the Venture no television
stations withheld their consent to retransmission of their signal. Certain
broadcast signals are being carried pursuant to extensions and the Managing
General Partner expects to finally conclude retransmission consent negotiations
with those remaining stations without having to terminate the distribution of
any of those signals. However, there can be no assurance that such will occur.
If any broadcast station currently being carried pursuant to an extension is
dropped, there could be a negative effect on the system in which it is dropped
if a significant number of subscribers in such system were to disconnect their
service. However, in most cases, only one broadcaster in any market is being
carried pursuant to an extension arrangement, and the dropping of such
broadcaster, were that to occur, is not expected to have a negative effect on
the system.
There have been several lawsuits filed by cable operators and
programmers in Federal court challenging various aspects of the 1992 Cable Act,
including provisions relating to mandatory broadcast signal carriage,
retransmission consent, access to cable programming, rate regulations,
commercial leased channels and public access channels. On April 8, 1993, a
three-judge Federal district court panel issued a decision upholding the
constitutionality of the mandatory signal carriage requirements of the 1992
Cable Act. That decision was appealed directly to the United States Supreme
Court. The United States Supreme Court vacated the lower court decision on
June 27, 1994 and remanded the case to the district court for further
development of a factual record. The Court's majority determined that the
must-carry rules were content neutral, but that it was not yet proven that the
rules were needed to preserve the economic health of the broadcasting industry.
In the interim, the must-carry rules will remain in place during the pendency
of the proceedings in district court. In 1993, a Federal district court for
the District of Columbia upheld provisions of the 1992 Cable Act concerning
rate regulation, retransmission consent, restrictions on vertically integrated
cable television operators and programmers, mandatory carriage of programming
on commercial leased channels and public, educational and governmental access
channels and the exemption for municipalities from civil damage liability
arising out of local regulation of cable services. The 1992 Cable Act's
provisions providing for multiple ownership limits for cable operators
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<PAGE> 11
and advance notice of free previews for certain programming services have been
found unconstitutional, and these decisions have been appealed. In November
1993, the United States Court of Appeals for the District of Columbia held that
the FCC's regulations implemented pursuant to Section 10 of the 1992 Cable Act,
which permit cable operators to ban indecent programming on public, educational
or governmental access channels or leased access channels, were
unconstitutional, but the court has agreed to reconsider its decision. All of
these decisions construing provisions of the 1992 Cable Act and the FCC's
implementing regulations have been or are expected to be appealed.
RESULTS OF OPERATIONS
All of Partnership's operations are represented exclusively by its
approximate 24 percent interest in the Venture. Revenues of the Venture's
Aurora System decreased $92,017, or approximately 2 percent, from $3,910,975
for the three month period ended June 30, 1993 to $3,818,958 for the comparable
1994 period. Revenues of the Venture's Aurora System decreased $117,870, or
approximately 2 percent, from $7,705,161 for the first six months of 1993 to
$7,587,291 for the comparable 1994 period. Although basic subscribers
increased 3,412, or approximately 9 percent, from 35,940 at June 30, 1993 to
39,352 at June 30, 1994, revenues decreased due to the reduction in basic rates
due to new basic rate regulations issued by the FCC in May 1993 with which the
Venture complied effective September 1, 1993. No other individual factor was
significant to the decrease in revenues.
Operating, general and administrative expense decreased $21,483 or
approximately 1 percent, from $2,113,318 for the three months ended June 30,
1993 to $2,091,835 for the comparable 1994 period. The decrease for the three
month period was due to a decrease in personnel related costs and advertising
sales expense which were partially offset by increases in programming fees and
marketing related costs. Operating, general and administrative expense
increased $160,944, or approximately 4 percent, from $4,094,706 for the six
months ended June 30, 1993 to $4,255,650 for the comparable 1994 period. The
increase for the six month period was due to increases in programming fees and
marketing related costs which were partially offset by decreases in personnel
related costs, plant maintenance costs and marketing related costs. Operating,
general and administrative expense represented 54 percent and 55 percent,
respectively, of revenues for the three month periods ended June 30, 1993 and
1994 and 53 percent and 56 percent, respectively, for the six month periods
ended June 30, 1993 and 1994. No other individual factors contributed
significantly to the increase. Management fees and allocated overhead from the
General Partners decreased $17,839, or approximately 3 percent, from $511,445
for the three month period ended June 30, 1993 to $493,606 for the comparable
1994 period. Management fees and allocated overhead from the General Partners
decreased $12,597, or approximately 1 percent, from $1,006,168 for the six
month period ended June 30, 1993 to $993,571 for the comparable 1994 period.
These decreases were due to the decreases in revenues, upon which management
fees and allocated overhead are based, and decreases in allocated expenses from
the Managing General Partner, due to an adjustment in the allocation method.
Depreciation and amortization expense decreased $150,185, or
approximately 6 percent, for the three month periods from $2,707,703 in 1993 to
$2,557,518 in 1994. Depreciation and amortization expense decreased $149,603,
or approximately 3 percent, for the six month periods from $5,408,992 in 1993
to $5,259,389 in 1994. These decreases were due to the maturation of a portion
of the Venture's intangible asset base.
Operating loss decreased $97,490, or approximately 7 percent, for the
three month periods from $1,421,491 in 1993 to $1,324,001 in 1994. The
decrease was due to the decreases in operating, general and administrative
expenses, management fees and allocated overhead from the General Partners and
depreciation and amortization expense exceeding the decrease in revenues.
Operating loss increased $116,614, or approximately 4 percent, for the six
month periods from $2,804,705 in 1993 to $2,921,319 in 1994. This increase was
due to the increases in operating, general and administrative expenses
exceeding the decreases in revenues, management fees and allocated overhead
from the General Partners and depreciation and amortization expense.
Operating income before depreciation and amortization decreased
$52,695, or approximately 4 percent, for the three month periods from
$1,286,212 in 1993 to $1,233,517 in 1994. The decrease was due to the decrease
in revenues exceeding the decrease in operating, general and administrative
expense and management fees and allocated overhead from the General Partner.
Operating income before depreciation and amortization decreased $266,217, or
approximately 10 percent, for the six month periods from $2,604,287 in 1993 to
$2,338,070 in 1994. The decrease was due to the decrease in revenues and the
increase in operating, general and administrative expense. The decreases in
operating income before depreciation and amortization reflect the current
operating environment of the cable television industry. The FCC rate
regulations under the 1992 Cable Act have caused revenues to decrease. In
turn, this has caused certain expenses which
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are a function of revenue, such as franchise fees, copyright fees and
management fees to decrease. However, other operating costs such as
programming fees, salaries and benefits, and marketing costs as well as certain
costs incurred by the Managing General Partner which are allocated to the
Partnership, continue to increase. This situation has led to reductions in
operating income before depreciation and amortization as a percent of revenue
("Operating Margin"). Such reductions in Operating Margins may continue in the
near term as the Partnership and the Managing General Partner incur cost
increases (due to, among other things, programming fees, reregulation and
competition) that exceed increases in revenue. The Managing General Partner
will attempt to mitigate a portion of these reductions through (a) rate
adjustments; (b) new service offerings; (c) product re-marketing and re-
packaging and (d) targeted non-subscriber acquisition marketing.
Interest expense increased $102,643, or approximately 19 percent, from
$546,368 for the three month period ended June 30, 1993 to $649,011 for the
comparable 1994 period. Interest expense increased $63,724, or approximately
6 percent, from $1,141,858 for the six month period ended June 30, 1993 to
$1,205,582 for the comparable 1994 period. These increases are due to higher
effective interest rates and higher outstanding balances on interest bearing
obligations. Consolidated loss increased $19,921, or approximately 1 percent,
from $2,006,010 for the three month period ended June 30, 1993 to $2,025,931
for the comparable 1994 period. Consolidated loss increased $213,182, or
approximately 5 percent, from $4,010,962 for the six month period ended June
30, 1993 to $4,224,144 for the comparable 1994 period. These decreases are due
to the factors discussed above. Such losses are expected to continue.
12
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Part II - OTHER INFORMATION
NONE
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IDS/JONES GROWTH PARTNERS 89-B, LTD.
BY: JONES CABLE CORPORATION,
its Managing General Partner
By: /s/ KEVIN P. COYLE
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: August 12, 1994
14
