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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1997.
______________
[ ] 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
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Address of principal executive office
(303) 792-3111
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- -------------
<S> <C> <C>
ASSETS $ - $ -
------ ============ ============
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
LIABILITIES:
Loss in excess of investment in cable television joint venture $ 3,860,962 $ 3,394,025
Accounts payable - affiliate 102,393 102,393
------------ ------------
Total liabilities 3,963,355 3,496,418
------------ ------------
PARTNERS' DEFICIT:
General Partners-
Contributed capital 500 500
Accumulated deficit (178,866) (174,197)
------------ ------------
(178,366) (173,697)
------------ ------------
Limited Partners-
Net contributed capital (63,383 units outstanding at
March 31, 1997 and December 31, 1996) 12,623,901 12,623,901
Accumulated deficit (16,408,890) (15,946,622)
------------ ------------
(3,784,989) (3,322,721)
------------ ------------
Total liabilities and partners' deficit $ - $ -
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited balance sheets.
2
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IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
EQUITY IN NET LOSS OF CABLE TELEVISION JOINT VENTURE $(466,937) $(515,698)
--------- ---------
NET LOSS $(466,937) $(515,698)
========= =========
ALLOCATION OF NET LOSS:
General Partners $ (4,669) $ (5,157)
========= =========
Limited Partners $(462,268) $(510,541)
========= =========
NET LOSS PER LIMITED PARTNERSHIP UNIT $(7.29) $ (8.05)
========= =========
WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 63,383 63,383
========= =========
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
3
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IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(466,937) $(515,698)
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in net loss of Cable Television Joint Venture 466,937 515,698
------------ ------------
Net cash provided by operating activities - -
------------ ------------
Net change in cash - -
Cash, beginning of period - -
------------ ------------
Cash, end of period $ - $ -
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ - $ -
============ ============
</TABLE>
The accompanying notes to unaudited financial statements
are an integral part of these unaudited statements.
4
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IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) This Form 10-Q is being filed in conformity with the 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 March 31, 1997 and December 31, 1996 and its Statements
of Operations and Cash Flows for the three months ended March 31, 1997 and 1996.
Results of operations for this period are not necessarily indicative of results
to be expected for the full year.
The Partnership owns a 24 percent interest in IDS/Jones Joint Venture
Partners (the "Venture") through a capital contribution of $14,008,000 made in
1990. The Venture acquired the cable television systems serving areas in and
around Aurora, Illinois (the "Aurora System") on May 31, 1990.
The Partnership's investment in the Venture is accounted for using the
equity method. At March 31, 1997, the Partnership had recorded equity losses in
excess of its investment in the Venture, resulting in a liability of $3,860,962.
The Partnership will continue to record equity losses because the Venture is a
general partnership. It is anticipated that the Venture will continue to
generate cash from operations; however, the net losses will result from
depreciation and amortization of the Venture's asset base. The Partnership
anticipates recovering the losses in excess of its investment in the Venture
upon the eventual sale of the Venture's Aurora System.
(2) Jones Cable Corporation (the "Managing General Partner") manages the
Partnership and the Venture and receives a fee for its services equal to 5
percent of the gross revenues of the Venture, excluding revenues from the sale
of cable television systems or franchises. Management fees paid during the three
month periods ended March 31, 1997 and 1996 (reflecting the Partnership's 24
percent interest in the Venture) were $57,492 and $54,235, respectively.
IDS Cable Corporation (the "Supervising General Partner") participates in
certain management decisions of the Partnership and receives a fee for its
services equal to 1/2 percent of the Partnership's portion of the gross revenues
of the Venture, excluding revenues from the sale of cable television systems or
franchises. Supervision fees paid during the three month periods ended March
31, 1997 and 1996 (reflecting the Partnership's 24 percent interest in the
Venture) were $5,749 and $5,423, respectively.
The Venture reimburses Jones Intercable, Inc. ("JIC"), the parent of the
Managing General Partner, for certain allocated overhead and administrative
expenses. These expenses represent the salaries and related benefits paid for
corporate personnel, rent, data processing services and other corporate
facilities costs. Such personnel provide engineering, marketing,
administrative, accounting, legal and investor relations services to the
Venture. Such services, and their related costs, are necessary to the
operations of the Venture and would have been incurred by the Venture if it was
a stand alone entity. Allocations of personnel costs are based on actual time
spent by employees of JIC with respect to each partnership managed. Remaining
expenses are allocated based on the pro rata relationship of the Venture's
revenues to the total revenues of all systems owned or managed by JIC and
certain of its affiliates. Systems owned by JIC and all other systems owned by
partnerships for which JIC or affiliates are the general partners are also
allocated a proportionate share of these expenses. The Managing General Partner
believes that the methodology used in allocating overhead and administrative
expenses is reasonable. Reimbursements made to JIC by the Venture for allocated
overhead and administrative expenses during the three month periods ended March
31, 1997 and 1996 (reflecting the Partnership's 24 percent interest in the
Venture) were $76,061 and $68,336, respectively. The Supervising General
Partner may also be reimbursed for certain expenses incurred on behalf of the
Venture. There were no reimbursements made to the Supervising General Partner
during the three month periods ended March 31, 1997 and 1996.
5
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(3) Financial information regarding the Venture is presented below.
UNAUDITED BALANCE SHEETS
------------------------
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
--------------- ------------------
<S> <C> <C>
ASSETS
------
Cash and accounts receivable $ 476,018 $ 525,514
Investment in cable television properties 43,657,860 45,335,476
Other assets 526,010 397,014
------------ ------------
Total assets $ 44,659,888 $ 46,258,004
============ ============
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Debt $ 48,686,226 $ 48,693,134
Accounts payable and accrued liabilities 3,435,501 3,113,032
Partners' contributed capital 57,344,709 57,344,709
Accumulated deficit (64,806,548) (62,892,871)
------------ ------------
Total liabilities and partners' deficit $ 44,659,888 $ 46,258,004
============ ============
</TABLE>
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
---------------------------
1997 1996
------------- -------------
<S> <C> <C>
Revenues $ 4,712,446 $ 4,445,486
Operating expenses 2,705,852 2,599,332
Management fees and allocated overhead
from General Partners 570,910 524,567
Depreciation and amortization 2,449,505 2,520,948
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Operating loss (1,013,821) (1,199,361)
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Interest expense (907,952) (913,174)
Other, net 8,096 (984)
----------- -----------
Net loss $(1,913,677) $(2,113,519)
=========== ===========
</TABLE>
Management fees paid to the Managing General Partner by the Venture totaled
$235,622 and $222,274, respectively, for the three months ended March 31, 1997
and 1996. Supervision fees paid to the Supervising General Partner totaled
$23,562 and $22,227, respectively, for the three months ended March 31, 1997 and
1996. Reimbursements for overhead and administrative expenses paid to JIC
totaled $311,726 and $280,066, respectively, for the three months ended March
31, 1997 and 1996.
6
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IDS/JONES GROWTH PARTNERS 89-B, LTD.
------------------------------------
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
The Partnership owns a 24 percent interest in the Venture. The Venture
owns the Aurora System. The Partnership's investment in the Venture is
accounted for under the equity method. The Partnership's share of losses
generated by the Venture have exceeded the Partnership's initial investment in
the Venture; therefore, the investment is classified as a liability. This
liability increased by $466,937, which represents the Partnership's share of
losses generated by the Venture during the three months ended March 31, 1997.
It is JIC's publicly announced policy that it intends to liquidate its
managed limited partnerships, including the Partnership, as opportunities for
sales of partnership cable television systems arise in the marketplace over the
next several years. In accordance with JIC's policy, the Aurora System, along
with other Chicago-area systems owned or managed by JIC and its affiliates, are
being marketed for sale. There is no assurance as to the timing or terms of any
sales.
For the three months ended March 31, 1997, the Venture generated net cash
from operating activities totaling $696,444, which is available to fund capital
expenditures and non-operating costs. During the first three months of 1997,
the Venture expended approximately $704,000 on capital expenditures.
Approximately 57 percent of the expenditures related to construction of service
drops to subscriber homes. Approximately 29 percent of the expenditures related
to plant extensions. The remainder of the expenditures were used for various
enhancements in the Aurora System. Funding for these expenditures was provided
by cash generated from operations. Anticipated capital expenditures for the
remainder of 1997 are approximately $3,386,000. Approximately 40 percent of the
anticipated capital expenditures is for plant extensions. Approximately 32
percent of the expenditures is for construction of service drops to subscriber
homes. These capital expenditures are necessary to maintain the value of the
Aurora System. Funding for the expenditures is expected to be provided by cash
generated from operations and borrowings from the Venture's credit facility.
On December 5, 1991, JIC made a $1,800,000 loan to the Venture, of which
$1,200,000 had been repaid as of March 31, 1997. Any amounts not repaid to JIC
are convertible into equity in the Venture. In the first quarter of 1994, JIC
agreed to subordinate to all other Venture debt its $1,406,647 advance to the
Venture outstanding at March 31, 1994 and IDS Management Corporation made a loan
of $1,000,000 to the Venture to fund principal repayments due at the end of
March 1994 on the Venture's then-outstanding term loan. The interest rates on
the respective loans, which will vary from time to time, with respect to IDS
Management Corporation's loan is at its cost of borrowing, and, with respect to
JIC's loans, are at its weighted average cost of borrowing. It is anticipated
that the remaining loans will be repaid over time with cash generated from
operations and borrowings from the Venture's revolving credit and term loan.
The related parties' notes will be repaid including accrued interest in the
following order: first, to JIC the remaining $600,000 of the $1,800,000 note
dated December 5, 1991; second, to IDS Management Corporation the $1,000,000
note dated March 30, 1994; and third, to JIC the $1,406,647 subordinated
advance.
The Venture is a party to a revolving credit and term loan agreement with
two commercial banks. In the fourth quarter of 1996, the General Partner
amended the credit facility to extend the revolving credit period and increase
the commitment to $47,000,000. The amended agreement allows for a reducing
revolving commitment that will begin to reduce quarterly on June 30, 1999 until
December 31, 1999, at which time the commitment will reduce to zero and all
principal and interest amounts will be due and payable in full. At March 31,
1997, $45,600,000 was outstanding under this agreement, leaving $1,400,000
available for future needs of the Venture, subject to certain financial
covenants that may limit borrowing. Interest on the credit facility is at the
Venture's option of the Prime Rate plus .75 percent, the London Interbank
Offered Rate plus 1.75 percent or the Certificate of Deposit Rate plus 1.875
percent. The effective interest rates on outstanding obligations to non-
affiliates as of March 31, 1997 and 1996 were 7.17 percent and 7.38 percent,
respectively.
On December 5, 1991, Intercable made an equity investment in the Venture in
the amount of $2,872,000. Also on December 5, 1991, IDS Management Corporation
made an equity investment in the Venture of $2,872,000. As a result of their
equity contributions to the Venture, IDS Management Corporation and Intercable
each have a 5 percent equity
7
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interest in the Venture, the Partnership has a 24 percent interest and IDS/Jones
Growth Partners II, L.P. has a 66 percent interest.
RESULTS OF OPERATIONS
- ---------------------
Revenues of the Venture's Aurora System increased $266,960, or
approximately 6 percent, to $4,712,446 in the first quarter of 1997 compared to
$4,445,486 in the first quarter of 1996. An increase in the number of basic
subscribers accounted for approximately 73 percent of the increase in revenues.
The number of basic subscribers increased 2,493, or approximately 6 percent, to
47,230 at March 31, 1997 compared to 44,737 at March 31, 1996. Basic service
rate increases accounted for the remainder of the increase in revenues. No
other individual factor was significant to the increase in revenues.
Operating expenses consist primarily of costs associated with the operation
and administration of the Aurora System. The principal cost components are
salaries paid to system personnel, programming expenses, professional fees,
subscriber billing costs, rent for leased facilities, cable system maintenance
expenses and marketing expenses.
Operating expenses increased $106,520, or approximately 4 percent, to
$2,705,852 for the three month period ended March 31, 1997 compared to
$2,599,332 for the similar 1996 period. Operating expenses represented
approximately 57 percent and 58 percent of revenues for the three month periods
ended March 31, 1997 and 1996, respectively. Increases in programming fees
primarily accounted for the increase in operating expenses. No other individual
factors contributed significantly to the increase.
The cable television industry generally measures the financial performance
of a cable television system in terms of operating cash flow (revenues less
operating expenses). This measure is not intended to be a substitute or
improvement upon the items disclosed on the financial statements, rather it is
included because it is an industry standard. Operating cash flow increased
$160,440, or approximately 9 percent, to $2,006,594 at March 31, 1997 compared
to $1,846,154 in 1996. This increase was due to the increase in revenues
exceeding the increases in operating expenses.
Management and supervision fees and allocated overhead from the General
Partners increased $46,343, or approximately 9 percent, to $570,910 for the
three month period ended March 31, 1997 compared to $524,567 for the similar
1996 period. This increase was primarily due to the increase in revenues, upon
which such management fees and allocations are based and the timing of certain
expenses allocated from the General Partner.
Depreciation and amortization expense decreased $71,443, or approximately 3
percent, to $2,449,505 for the first three months of 1997 compared to $2,520,948
for the first three months of 1996. This decrease was due to the maturation of
a portion of the tangible asset base.
Operating loss decreased $185,540, or approximately 15 percent, to
$1,013,821 for the three month period ended March 31, 1997 compared to
$1,199,361 for the similar 1996 period. This decrease was due to the increase
in revenues and the decrease in depreciation and amortization expense exceeding
the increases in operating expenses and management and supervision fees and
allocated overhead from the General Partners.
Interest expense decreased $5,222, or less than 1 percent, to $907,952 for
the three months ended March 31, 1997 compared to $913,174 for the comparable
1996 period. This decrease was due to lower effective interest rates on
interest bearing obligations.
Net loss decreased $199,842, or approximately 9 percent, to $1,913,677 for
the three months ended March 31, 1997 compared to $2,113,519 for the comparable
1996 period. This decrease was due to the factors discussed above.
8
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
9
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IDS/JONES GROWTH PARTNERS 89-B, LTD.
BY: JONES CABLE CORPORATION,
its Managing General Partner
By: /S/ Kevin P. Coyle
-----------------------------------
Kevin P. Coyle
Group Vice President/Finance
(Principal Financial Officer)
Dated: May 13, 1997
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (3,963,355)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 466,937
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (466,937)
<INCOME-TAX> 0
<INCOME-CONTINUING> (466,937)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (466,397)
<EPS-PRIMARY> (7.29)
<EPS-DILUTED> (7.29)
</TABLE>
