-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GIjPBA4BDiM76MYQZHlhnWmu5tVdYIgkt4h4xYrkl3B8DJHgBS87pDO+Rqbvw3ul 0ikxOdrVwmk8qKersrp1kg== 0000950134-94-000993.txt : 20040504 0000950134-94-000993.hdr.sgml : 20040504 19940812181500 ACCESSION NUMBER: 0000950134-94-000993 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 DATE AS OF CHANGE: 19990831 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDS JONES GROWTH PARTNERS 89-B LTD CENTRAL INDEX KEY: 0000849978 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 841060546 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17734 FILM NUMBER: 94543868 BUSINESS ADDRESS: STREET 1: 9697 E MINERAL AVE PO BOX 3309 STREET 2: C/O JONES INTERCABLE INC CITY: ENGLEWOOD STATE: CO ZIP: 80155-3309 BUSINESS PHONE: 3037923111 MAIL ADDRESS: STREET 1: C/O JONES INTERCABLE INC STREET 2: 9697 E MINERAL AVE PO BOX 3309 CITY: ENGLEWOOD STATE: CO ZIP: 80155-3309 10-Q 1 FORM 10-Q (FOR THE PERIOD ENDED JUNE 30, 1994) 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 ----- ----- 2 IDS/JONES GROWTH PARTNERS 89-B, LTD. (A Limited Partnership) UNAUDITED BALANCE SHEETS
June 30, December 31, 1994 1993 ------------ ------------ 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 ============ ===========
The accompanying notes to unaudited financial statements are an integral part of these balance sheets. 2 3 IDS/JONES GROWTH PARTNERS 89-B, LTD. (A Limited Partnership) UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Six Months Ended June 30, June 30, ---------------------------- ----------------------------- 1994 1993 1994 1993 ----------- --------- ----------- ---------- 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 =========== ========= =========== ==========
The accompanying notes to unaudited financial statements are an integral part of these statements. 3 4 IDS/JONES GROWTH PARTNERS 89-B, LTD. (A Limited Partnership) UNAUDITED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, --------------------------- 1994 1993 ----------- --------- 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 $ - $ - =========== =========
The accompanying notes to unaudited financial statements are an integral part of these statements. 4 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. 5 6 (3) Financial information regarding the Venture is presented below. UNAUDITED BALANCE SHEETS
June 30, 1994 December 31, 1993 ------------- ----------------- 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 ============ ============
6 7 UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Six Months Ended June 30, June 30, ---------------------------- --------------------------- 1994 1993 1994 1993 ----------- ----------- ----------- ----------- 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) ============ =========== =========== ===========
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 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 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. 9 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 10 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 11 12 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 13 Part II - OTHER INFORMATION NONE 13 14 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 -----END PRIVACY-ENHANCED MESSAGE-----