ITEM 1. BUSINESS -----------------
THE PARTNERSHIP. IDS/Jones Growth Partners 89-B, Ltd. (the "Partnership") is a Colorado limited partnership that was formed to acquire, own and operate cable television systems in the United States. Jones Cable Corporation, a Colorado corporation, is the managing general partner (the "Managing General Partner") and IDS Cable Corporation, a Minnesota corporation, is the supervising general partner (the "Supervising General Partner") of the Partnership. The Managing General Partner is a wholly owned subsidiary of Jones Intercable, Inc. ("Intercable"), which is also a Colorado corporation and one of the largest cable television system operators in the nation. The Supervising General Partner is a wholly owned subsidiary of IDS Management Corporation, a Minnesota corporation, which in turn is a wholly owned subsidiary of American Express Financial Corporation, a Delaware corporation.
The Partnership and IDS/Jones Growth Partners II, L.P., an affiliated Colorado limited partnership ("Growth Partners II"), formed a Colorado general partnership known as IDS/Jones Joint Venture Partners (the "Venture") for the purpose of acquiring cable television systems. IDS Cable II Corporation, a wholly owned subsidiary of IDS Management Corporation, which is a wholly owned subsidiary of American Express Financial Corporation, acts as supervising general partner of Growth Partners II. IDS Management Corporation and Intercable each have an approximate 5 percent equity interest in the Venture, Growth Partners II has a 66 percent interest in the Venture, and the Partnership has a 24 percent interest in the Venture.
The Partnership does not directly own any cable television system. The Venture owns the cable television systems serving the communities of Aurora, North Aurora, Montgomery, Plano, Oswego, Sandwich, Yorkville and certain unincorporated areas of Kendall and Kane Counties, all in the State of Illinois (the "Aurora System"). See Item 2.
ITEM 2. PROPERTIES -------------------
The Aurora System was acquired by the Venture in May 1990. The following sets forth (i) the monthly basic plus service rates charged to subscribers, (ii) the number of basic subscribers and pay units and (iii) the range of franchise expiration dates for the Aurora System. The monthly basic service rates set forth herein represent, with respect to systems with multiple headends, the basic service rate charged to the majority of the subscribers within the system. In cable television systems, basic subscribers can subscribe to more than one pay TV service. Thus, the total number of pay services subscribed to by basic subscribers are called pay units. As of December 31, 1996, the Aurora System operated cable plant, passing approximately 74,529 homes, with an approximate 63% penetration rate. Figures for numbers of subscribers, miles of cable plant and homes passed are compiled from the Managing General Partner's records and may be subject to adjustments.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS --------------------------
None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ------------------------------------------------------------
None.
PART II. --------
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK ------------------------------------------------- AND RELATED SECURITY HOLDER MATTERS -----------------------------------
While the Partnership is publicly held, there is no public market for the limited partnership interests, and it is not expected that a market will develop in the future. During 1996, several partners of the Partnership conducted "limited tender offers" for interests in the Partnership at prices ranging from $50 to $53 per interest. As of February 14, 1997, the number of equity security holders in the Partnership was 2,886.
Item 6.
Item 6. Selected Financial Data - -------------------------------
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations - -------------
The following discussion of the financial condition and results of operations of IDS/Jones Growth Partners 89-B, Ltd. (the "Partnership" and IDS/Jones Joint Venture Partners (the "Venture") contains, in addition to historical information, forward-looking statements that are based upon certain assumptions and are subject to a number of risks and uncertainties. The Partnership's and Venture's actual results may differ significantly from the results predicted in such forward-looking statements.
FINANCIAL CONDITION - -------------------
IDS/Jones Growth Partners 89-B, Ltd. - - ------------------------------------
The Partnership owns a 24 percent interest in the Venture. The Partnership's investment in this cable television joint venture, accounted for under the equity method, decreased by $2,044,291 compared to the December 31, 1995 balance. This decrease represents the Partnership's share of losses generated by the Venture during 1996. These losses are anticipated to continue. Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations for the Venture for details pertaining to its financial condition.
IDS/Jones Joint Venture Partners - - --------------------------------
It is Intercable'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 Intercable's policy, the cable television system serving the communities of Aurora, North Aurora, Montgomery, Plano, Oswego, Sandwich, Yorkville and certain unincorporated areas of Kendall and Kane Counties, all in the State of Illinois (the "Aurora System"), along with other Chicago-area systems owned or managed by Intercable and its affiliates, were marketed for sale in 1996. The deadline set by Intercable for receipt of indications of interest for such systems from prospective buyers was October 15, 1996. Intercable did not receive any offer for the Aurora System. Intercable will continue to explore other alternatives for sale. There is no assurance as to the timing or terms of any sales.
For the year ended December 31, 1996, the Venture generated net cash from operating activities totaling $1,850,720, which is available to fund capital expenditures and non-operating costs. During 1996, the Venture expended approximately $4,602,000 on capital expenditures. Approximately 46 percent of the expenditures related to plant extensions. Approximately 43 percent of the expenditures related to construction of service drops to subscriber homes. The remainder of the expenditures was used for various enhancements in the Aurora System. Funding for these expenditures was provided by cash generated from operations and borrowings under the Venture's credit facility. Budgeted capital expenditures for 1997 are approximately $4,090,000. Approximately 38 percent of the expenditures is for plant extensions. Approximately 36 percent of the expenditures is for service drops. 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, if available, borrowings from the Venture's credit facility.
On December 5, 1991, IDS Management Corporation made a $1,800,000 loan to the Venture, which had been repaid at December 31, 1996. Also on December 5, 1991, Intercable made a $1,800,000 loan to the Venture of which $1,200,000 had been repaid at December 31, 1996. Any amounts not repaid to Intercable are convertible into equity in the Venture. In the first quarter of 1994, Intercable 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 an additional 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 loans, are at its cost of borrowing, and, with respect to Intercable'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 Intercable 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 Intercable 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, Intercable 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 December 31, 1996, $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 .625 percent, the London Interbank Offered Rate plus 1.625 percent or the Certificate of Deposit Rate plus 1.75 percent. The effective interest rates on outstanding obligations to non-affiliates as of December 31, 1996 and 1995 were 7.38 percent and 7.83 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 interest in the Venture, the Partnership has a 24 percent interest and IDS/Jones Growth Partners II, L.P. has a 66 percent interest. If the remaining portion of Intercable's December 5, 1991 loan is converted to equity, the ownership percentages will be adjusted accordingly.
RESULTS OF OPERATIONS - ---------------------
IDS/Jones Growth Partners 89-B, Ltd. - - ------------------------------------
All of the operations of the Partnership are represented exclusively by its 24 percent interest in the Venture. Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations for the Venture for details pertaining to its operations.
IDS/Jones Joint Venture Partners - - --------------------------------
Revenues of the Venture's Aurora System increased $1,533,551, or approximately 9 percent, to $18,394,451 in 1996 compared to $16,860,900 in 1995. The increase in revenues was primarily due to an increase in the number of basic subscribers and basic service rate increases. An increase in the number of basic service subscribers accounted for approximately 50 percent of the increase in revenues. The number of basic service subscribers increased 3,036, or approximately 7 percent, to 47,018 at December 31, 1996 compared to 43,982 at December 31, 1995. Basic service rate increases accounted for approximately 45 percent of the increase in revenues. No other individual factor was significant to the increases 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 $924,679, or approximately 9 percent, to $10,733,857 in 1996 compared to $9,809,178 for the comparable 1995 period. Operating expenses represented approximately 58 percent of revenues in 1996 and 1995, respectively. Increases in programming fees, due in part to the increase in the subscriber base, primarily accounted for the increase in operating expenses. No other individual factors contributed significantly to the increase.
Management and supervision fees and allocated overhead from the General Partners increased $80,970, or approximately 4 percent, to $2,226,811 in 1996 compared to $2,145,841 in 1995. The increase was due to the increase in revenues, upon which management and supervision fees are based.
Depreciation and amortization expense decreased $390,847, or approximately 4 percent, to $9,926,847 in 1996 compared to $10,317,694 in 1995. The decrease was due to the maturation of a portion of the tangible asset base.
Operating loss decreased $918,749, or approximately 17 percent, to $4,493,064 in 1996 compared to $5,411,813 in 1995. The decrease was due to the increase in revenues and the decrease in depreciation and amortization expense exceeding the increase in operating expenses and management and supervision fees and allocated overhead from the General Partners.
The cable television industry generally measures the financial performance of a cable television system in terms of operating income before depreciation and amortization. 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
income before depreciation and amortization expense increased $527,902, or approximately 11 percent, to $5,433,783 in 1996 compared to $4,905,881 in 1995. The increase was due to the increase in revenues exceeding the increases in operating expenses and management and supervision fees and allocated overhead from the General Partners.
Interest expense decreased $9,899, or less than one percent, to $3,757,477 in 1996 compared to $3,767,376 in 1995. This decrease was due to lower effective interest rates on interest bearing obligations during 1996.
Consolidated loss decreased $792,959, or approximately 9 percent, to $8,378,240 in 1996 compared to $9,171,199 in 1995. This decrease was due to the factors discussed above. Such losses are expected to continue.
1995 Compared to 1994 ---------------------
Revenues of the Venture increased $1,472,411, or approximately 10 percent, to $16,860,900 in 1995 compared to $15,388,489 in 1994. An increase in the number of basic subscribers accounted for approximately 57 percent of the increase in revenues. The number of basic subscribers increased 3,316, or approximately 8 percent, to 43,982 at December 31, 1995 compared to 40,666 at December 31, 1994. Basic service rate increases accounted for approximately 40 percent of the increase in revenues. The increase in revenues was partially offset by a decrease in premium service subscriptions. The number of premium service subscriptions decreased 1,918, or approximately 7 percent, to 25,938 at December 31, 1995 from 27,856 at December 31, 1994. No other individual factor was significant to the increase in revenues.
Operating expenses increased $1,154,174, or approximately 13 percent, to $9,809,178 in 1995 compared to $8,655,004 in 1994. Operating expenses represented 58 percent of revenues in 1995 and 56 percent of revenues in 1994. Increases in programming fees, personnel expenses and office related expenses primarily accounted for the increase in operating expenses in 1995. No other individual factor contributed significantly to the increase.
Management and supervision fees and allocated overhead from the General Partners increased $125,671, or approximately 6 percent, to $2,145,841 in 1995 compared to $2,020,170 in 1994. The increase was primarily due to the increase in revenues, upon which such management and supervision fees are based.
Depreciation and amortization expense decreased $283,807, or approximately 3 percent, to $10,317,694 in 1995 compared to $10,601,501 in 1994. The decrease was due to the maturation of a portion of the tangible asset base.
Operating loss decreased $476,373, or approximately 8 percent, to $5,411,813 in 1995 compared to $5,888,186 in 1994. The 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.
Operating income before depreciation and amortization increased $192,566, or approximately 4 percent, to $4,905,881 in 1995 compared to $4,713,315 in 1994. The increase was due to the increase in revenues exceeding the increases in operating expenses and management and supervision fees and allocated overhead from the General Partners.
Interest expense increased $910,698, or approximately 32 percent, to $3,767,376 in 1995 compared to $2,856,678 in 1994. The increase was due to higher effective interest rates and higher outstanding balances on interest bearing obligations.
Consolidated loss increased $271,307, or approximately 3 percent, to $9,171,199 in 1995 compared to $8,899,892 in 1994. This increase was due to the factors discussed above.
Item 8.
Item 8. Financial Statements - -----------------------------
IDS/JONES GROWTH PARTNERS 89-B, LTD. ------------------------------------
FINANCIAL STATEMENTS --------------------
AS OF DECEMBER 31, 1996 AND 1995 --------------------------------
INDEX -----
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------
To the Partners of IDS/Jones Growth Partners 89-B, Ltd.:
We have audited the accompanying balance sheets of IDS/JONES GROWTH PARTNERS 89-B, LTD. (a Colorado limited partnership) as of December 31, 1996 and 1995, and the related statements of operations, partners' capital (deficit) and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Managing General Partner's management. 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 management, 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/Jones Growth Partners 89-B, Ltd. as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado, March 7, 1997.
IDS/JONES GROWTH PARTNERS 89-B, LTD. ------------------------------------ (A Limited Partnership)
BALANCE SHEETS --------------
The accompanying notes to financial statements are an integral part of these balance sheets.
IDS/JONES GROWTH PARTNERS 89-B, LTD. ------------------------------------ (A Limited Partnership)
STATEMENTS OF OPERATIONS ------------------------
The accompanying notes to financial statements are an integral part of these statements.
IDS/JONES GROWTH PARTNERS 89-B, LTD. ------------------------------------ (A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT) -----------------------------------------
The accompanying notes to financial statements are an integral part of these statements.
IDS/JONES GROWTH PARTNERS 89-B, LTD. ------------------------------------ (A Limited Partnership)
STATEMENTS OF CASH FLOWS ------------------------
The accompanying notes to financial statements are an integral part of these statements.
IDS/JONES GROWTH PARTNERS 89-B, LTD. ------------------------------------ (A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS -----------------------------
(1) ORGANIZATION AND PARTNERS' INTERESTS ------------------------------------
Formation and Business ----------------------
IDS/Jones Growth Partners 89-B, Ltd. (the "Partnership"), a Colorado limited partnership, was formed on March 7, 1989, pursuant to a public offering. The Partnership was formed to acquire, develop and operate cable television systems. Jones Cable Corporation, a Colorado corporation, is the "Managing General Partner." IDS Cable Corporation, a Minnesota corporation, is the "Supervising General Partner." Jones Intercable, Inc. ("Intercable"), the parent of the Managing General Partner, manages the Partnership. Intercable and its subsidiaries also own and operate cable television systems as well as manage cable television systems for other limited partnerships for which it is general partner and, also, for affiliated entities.
Contributed Capital -------------------
The capitalization of the Partnership is set forth in the accompanying statements of partners' capital (deficit). No limited partner is obligated to make any additional contributions to partnership capital.
The Managing General Partner and the Supervising General Partner purchased their interests in the Partnership by contributing $250 each to partnership capital.
All profits and losses of the Partnership are allocated 99 percent to the limited partners, 1/2 percent to the Managing General Partner and 1/2 percent to the Supervising General Partner, except for income or gain from the sale or disposition of cable television properties, which will be allocated to the partners based upon the formula set forth in the Partnership Agreement and interest income earned prior to the first acquisition by the Partnership of a cable television system, which was allocated 100 percent to the limited partners.
Formation of Joint Venture --------------------------
On May 30, 1990, the Partnership and IDS/Jones Growth Partners II, L.P. ("Growth Partners II"), an affiliated Colorado limited partnership, formed a Colorado general partnership known as IDS/Jones Joint Venture Partners (the "Venture"). The Venture was formed for the purpose of acquiring the cable television system serving the communities of Aurora, North Aurora, Montgomery, Plano, Oswego, Sandwich, Yorkville and certain unincorporated areas of Kendall and Kane Counties, all in the state of Illinois (the "Aurora System"). Under the joint venture agreement between the joint venture partners, profits, losses and distributions of the Venture will be shared in proportion to total capital contributions made by the individual venture partners. Final Venture capitalization was accomplished through contributions by Growth Partners II of $37,592,709, the Partnership of $14,008,000, Intercable of $2,872,000 and IDS Management Corporation 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 interest in the Venture, Growth Partners II has a 66 percent interest and the Partnership has a 24 percent interest.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------
Accounting Records ------------------
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. The Partnership's tax returns are also prepared on the accrual basis.
The preparation of financial statements in conformity with generally accepted accounting principles requires the General Partner's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Investment in Cable Television Joint Venture --------------------------------------------
The investment in the Venture is accounted for under the equity method. The Venture incurred losses of $8,378,240, $9,171,199 and $8,899,892 in 1996, 1995 and 1994, respectively, of which $2,044,291, $2,237,773 and $2,171,573, respectively, were allocated to the Partnership. The operations of the Venture are significant to the Partnership and should be reviewed in conjunction with these financial statements. Reference is made to the accompanying financial statements of the Venture on pages 25 to 35.
(3) TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES -----------------------------------------------------
Management Fees, Supervision Fees, Distribution Ratios and Reimbursements -------------------------------------------------------------------------
Intercable 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 by the Venture to Intercable during the years ended December 31, 1996, 1995 and 1994 (reflecting the Partnership's 24 percent interest in the Venture) were $224,412, $205,703 and $187,739, respectively.
The Supervising General Partner participates in certain management decisions of the Partnership and receives a fee for their services equal to 1/2 percent of the gross revenues of the Venture, excluding revenues from the sale of cable television systems or franchises. Supervision fees paid by the Venture to the Supervising General Partner during the years ended December 31, 1996, 1995 and 1994 (reflecting the Partnership's 24 percent interest in the Venture) were $22,441, $20,570 and $18,774, respectively.
Any Partnership distributions made from cash flow (defined as cash receipts derived from routine operations, less debt principal and interest payments and cash expenses) are allocated 99 percent to the limited partners, 1/2 percent to the Managing General Partner and 1/2 percent to the Supervising General Partner. Any distributions other than interest income on limited partner subscriptions earned prior to the acquisition of the Partnership's first cable television system or from cash flow, such as from the sale or refinancing of a system or upon dissolution of the Partnership, will be made as follows: first, to the limited partners in an amount which, together with all prior distributions, will equal 125 percent of the amount initially contributed to the Partnership capital by the limited partners; the balance, 75 percent to the limited partners, 12-1/2 percent to the Managing General Partner and 12-1/2 percent to the Supervising General Partner. As of December 31, 1996, the Partnership had made no such distributions.
The Partnership reimburses Intercable 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 Partnership. 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 Intercable 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 Intercable and certain of its affiliates. Systems owned by Intercable and all other systems owned by partnerships for which Intercable 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 Intercable by the Partnership for allocated overhead and administrative expenses during the years ended December 31, 1996, 1995 and 1994 (reflecting the Partnership's 24 percent interest in the Venture) were $296,488, $297,312 and $286,408, respectively. The Supervising General Partners may also be reimbursed for
certain expenses incurred on behalf of the Partnership. There were no reimbursements made to the Supervising General Partner by the Venture for allocated overhead and administrative expenses during the years ended December 31, 1996, 1995 and 1994.
(4) INCOME TAXES ------------
Income taxes have not been recorded in the accompanying financial statements because they accrue directly to the partners. The federal and state income tax returns of the Partnership are prepared and filed by the Managing General Partner.
The Partnership's tax returns, the qualification of the Partnership as such for tax purposes, and the amount of distributable partnership income or loss are subject to examination by federal and state taxing authorities. If such examinations result in changes with respect to the Partnership's qualification as such, or in changes with respect to the Partnership's recorded income or loss, the tax liability of the general and limited partners would likely be changed accordingly.
Taxable loss reported by the partners is different from that reported in the statements of operations due to the difference in depreciation allowed under generally accepted accounting principles and the expense allowed for tax purposes under the Modified Accelerated Cost Recovery System (MACRS). There are no other significant differences between taxable loss and the net loss reported in the statements of operations.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------
To the Partners of IDS/Jones Joint Venture Partners:
We have audited the accompanying balance sheets of IDS/JONES JOINT VENTURE PARTNERS (a Colorado general partnership) as of December 31, 1996 and 1995, and the related statements of operations, partners' capital (deficit) and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Managing General Partner's management. 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 management, 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/Jones Joint Venture Partners as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado, March 7, 1997.
IDS/JONES JOINT VENTURE PARTNERS -------------------------------- (A General Partnership)
BALANCE SHEETS --------------
The accompanying notes to financial statements are an integral part of these balance sheets.
IDS/JONES JOINT VENTURE PARTNERS -------------------------------- (A General Partnership)
BALANCE SHEETS --------------
The accompanying notes to financial statements are an integral part of these balance sheets.
IDS/JONES JOINT VENTURE PARTNERS -------------------------------- (A General Partnership)
STATEMENTS OF OPERATIONS ------------------------
The accompanying notes to financial statements are an integral part of these statements.
IDS/JONES JOINT VENTURE PARTNERS -------------------------------- (A General Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT) -----------------------------------------
The accompanying notes to financial statements are an integral part of these statements.
IDS/JONES JOINT VENTURE PARTNERS -------------------------------- (A General Partnership)
STATEMENTS OF CASH FLOWS ------------------------
The accompanying notes to financial statements are an integral part of these statements.
IDS/JONES JOINT VENTURE PARTNERS -------------------------------- (A General Partnership)
NOTES TO FINANCIAL STATEMENTS -----------------------------
(1) ORGANIZATION AND PARTNERS' INTERESTS ------------------------------------
Formation and Business ----------------------
On May 30, 1990, IDS/Jones Growth Partners 89-B, Ltd. ("IDS/Jones 89-B") and IDS/Jones Growth Partners II, L.P. ("IDS/Jones II") formed a Colorado general partnership known as IDS/Jones Joint Venture Partners (the "Venture"). The Venture was formed for the purpose of acquiring the cable television system serving the communities of Aurora, North Aurora, Montgomery, Plano, Oswego, Sandwich, Yorkville and certain unincorporated areas of Kendall and Kane Counties, all in the state of Illinois (the "Aurora System"). Under the joint venture agreement between the joint venture partners, profits, losses and distributions of the Venture will be shared in proportion to total capital contributions made by the individual venture partners. Initial Venture capitalization was accomplished through partner contributions by IDS/Jones II of $15,992,000 and IDS/Jones 89-B of $14,008,000. On September 30, 1991, IDS/Jones II's offering closed with limited partner subscriptions totaling $43,585,750, of which $37,592,709 was contributed to the Venture.
On December 5, 1991, IDS Management Corporation made a $1,800,000 loan to the Venture, which had been repaid at December 31, 1996. Also on December 5, 1991, Intercable made a $1,800,000 loan to the Venture of which $1,200,000 had been repaid at December 31, 1996. Any amounts not repaid to Intercable are convertible into equity in the Venture. In the first quarter of 1994, Intercable 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 an additional 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 loans, are at its cost of borrowing, and, with respect to Intercable'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 Intercable 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 Intercable the $1,406,647 subordinated advance.
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 interest in the Venture, IDS/Jones II has a 66 percent interest and IDS/Jones 89-B has a 24 percent interest. If the remaining portion of Intercable's December 5, 1991 loan is converted to equity, the ownership percentages will be adjusted accordingly.
Jones Cable Corporation, a Colorado corporation, is the "Managing General Partner" and manager of IDS/Jones 89-B and IDS/Jones II. IDS Cable Corporation, a Minnesota corporation, is the "Supervising General Partner" of IDS/Jones 89-B. IDS Cable II Corporation, a Minnesota corporation, is the "Supervising General Partner" of IDS/Jones II. Intercable manages the Aurora System. Intercable and its subsidiaries also own and operate cable television systems as well as manage cable television systems for other limited partnerships for which it is general partner and, also, for affiliated entities.
Contributed Capital -------------------
The capitalization of the Venture is set forth in the accompanying statements of partners' capital.
All Venture distributions, including those made from cash flow, from the sale or refinancing of Venture property and on dissolution of the Venture, shall be made to the Venture partners in proportion to their respective interests in the Venture.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------
Accounting Records ------------------
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. The Venture's tax returns are also prepared on the accrual basis.
The preparation of financial statements in conformity with generally accepted accounting principles requires the General Partner's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Allocation of Cost of Purchased Cable Television System -------------------------------------------------------
The total purchase price of the Aurora System purchased by the Venture was allocated as follows: first, to the fair value of net tangible assets acquired; second, to the value of subscriber lists; third, to franchise costs; and fourth, to costs in excess of interests in net assets purchased. Acquisition fees paid to affiliates of the Managing General Partner and Supervising General Partner and other acquisition costs were capitalized and charged to intangible assets.
Property, Plant and Equipment -----------------------------
Depreciation of property, plant and equipment is provided primarily using the straight-line method over the following estimated service lives:
Replacements, renewals and improvements are capitalized and maintenance and repairs are charged to expense as incurred.
Property, plant and equipment and the corresponding accumulated depreciation are written off as certain assets become fully depreciated and are no longer in service.
Intangible Assets -----------------
Costs assigned to franchises, subscriber lists and costs in excess of interests in net assets purchased will be amortized using the straight-line method over their remaining estimated useful lives.
Revenue Recognition -------------------
Subscriber prepayments are initially deferred and recognized as revenue when earned.
Reclassification ----------------
Certain prior year amounts have been reclassified to conform to the 1996 presentation.
(3) TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES -----------------------------------------------------
Management Fees, Supervision Fees, Distribution Ratios and Reimbursements -------------------------------------------------------------------------
Intercable manages 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 by the Venture to Intercable during the years ended December 31, 1996, 1995 and 1994 were $919,723, $843,045 and $769,424, respectively.
The Supervising General Partners participate in certain management decisions of the Venture and receives a fee for their services equal to 1/2 percent of the gross revenues of the Venture, excluding revenues from the sale of cable television systems or franchises. Supervision fees paid by the Venture to the Supervising General Partners during the years ended December 31, 1996, 1995 and 1994 were $91,972, $84,305 and $76,942, respectively.
The Venture reimburses Intercable 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 Intercable 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 Intercable and certain of its affiliates. Systems owned by Intercable and all other systems owned by partnerships for which Intercable or affiliates are the general partners are also allocated a proportionate share of these expenses. Intercable believes that the methodology used in allocating overhead and administrative expenses is reasonable. Reimbursements made to Intercable by the Venture for allocated overhead and administrative expenses during the years ended December 31, 1996, 1995 and 1994 were $1,215,116, $1,218,491 and $1,173,804, respectively.
The Supervising General Partners may also be reimbursed for certain expenses incurred on behalf of the Venture. There were no reimbursements made to the Supervising General Partners by the Venture for allocated overhead and administrative expenses during the years ended December 31, 1996, 1995 and 1994.
During 1996, the Venture was charged interest by Intercable at an average interest rate of 8.58 percent on amounts due Intercable and on the subordinated loans from Intercable, which approximated Intercable's weighted average cost of borrowing. Total interest charged to the Venture by Intercable during the years ended December 31, 1996, 1995 and 1994 was $382,725, $481,211 and $386,257, respectively.
The Venture was charged interest on the subordinated loans from IDS Management Corporation at an average interest rate of 6.08 percent, which approximated IDS Management Corporation's cost of borrowing. Total interest charged to the Venture by IDS Management Corporation during 1996, 1995 and 1994 was $111,741, $120,970 and $113,458, respectively.
Any Partnership distributions made from cash flow (defined as cash receipts derived from routine operations, less debt principal and interest payments and cash expenses) are allocated 99 percent to the limited partners, 1/2 percent to the Managing General Partner and 1/2 percent to the Supervising General Partner. Any distributions other than interest income on limited partner subscriptions earned prior to the acquisition of the Partnership's first cable television system or from cash flow, such as from the sale or refinancing of a system or upon dissolution of the Partnership, will be made as follows: first, to the limited partners in an amount which, together with all prior distributions, will equal 100 percent of the amount initially contributed to the Partnership by the limited partners; second, to the General Partners in an amount which, together with all prior distributions, will equal the amount contributed to the capital of the partnership by the General Partners; third, to the limited partners in an amount which, together with all prior distributions, will equal a 6 percent per annum cumulative and noncompounded return on the capital contributions of the limited partners; the balance, 75 percent to the limited partners, 12-1/2 percent to the Managing General Partner and 12-1/2 percent to the Supervising General Partner.
Payments to/from Affiliates for Programming Services ----------------------------------------------------
The Venture receives programming from Superaudio, Jones Education Company and Product Information Network, all of which are affiliates of Intercable.
Payments to Superaudio totaled $27,973, $23,928 and $23,558, respectively, in 1996, 1995 and 1994. Payments to Jones Education Company totaled $90,418, $76,741 and $33,768, respectively, in 1996, 1995 and 1994.
The Venture receives a commission from Product Information Network based on a percentage of advertising revenue and number of subscribers. Product Information Network paid commissions to the Venture totaling $46,841, $29,347 and $11,442 in 1996, 1995 and 1994, respectively.
(4) PROPERTY, PLANT AND EQUIPMENT -----------------------------
Property, plant and equipment as of December 31, 1996 and 1995, consisted of the following:
On December 5, 1991, IDS Management Corporation made a $1,800,000 loan to the Venture, which had been repaid at December 31, 1996. Also on December 5, 1991, Intercable made a $1,800,000 loan to the Venture of which $1,200,000 had been repaid at December 31, 1996. Any amounts not repaid to Intercable are convertible into equity in the Venture. In the first quarter of 1994, Intercable 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 an additional 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 loans, are at its cost of borrowing, and, with respect to Intercable'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 Intercable 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 Intercable 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 December 31, 1996, $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 .625 percent, the London Interbank Offered Rate plus 1.625 percent or the Certificate of Deposit Rate plus 1.75 percent. The effective interest rates on outstanding obligations to non-affiliates as of December 31, 1996 and 1995 were 7.38 percent and 7.83 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 interest in the Venture, IDS/Jones II has a 66 percent interest and IDS/Jones 89-B has a 24 percent interest. If the remaining portion of Intercable's December 5, 1991 loan is converted to equity, the ownership percentages will be adjusted accordingly.
In January 1995, the Venture entered into an interest rate protection contract covering outstanding debt obligations of $25,000,000. The Venture paid a fee of $105,000. The agreement protects the Venture from LIBOR interest rates that exceed 9 percent for two years from the date of the agreement. The fee is being charged to interest expense over the life of the agreement using the straight-line method.
Installments due on debt principal for each of the five years in the period ending December 31, 2001 and thereafter, respectively, are: $3,032,593, $25,946, $45,625,946, $8,649, $-0- and $-0-.
At December 31, 1996, the carrying amount of the Venture's long-term debt did not differ significantly from the estimated fair value of the financial instruments. The fair value of the Venture's long-term debt is estimated based on the discounted amount of future debt service payments using rates of borrowing for a liability of similar risk.
(6) INCOME TAXES ------------
Income taxes have not been recorded in the accompanying financial statements because they accrue directly to the partners. The federal and state income tax returns of the Venture are prepared and filed by the Managing General Partner.
The Venture's tax returns, the qualification of the Venture as a partnership for tax purposes, and the amount of distributable Partnership income or loss are subject to examination by federal and state taxing authorities. If such examinations result in changes with respect to the Venture qualification as a partnership, or in changes with respect to the Venture's recorded income or loss, the tax liability of the general and limited partners would likely be changed accordingly.
Taxable income or loss reported by the partners is different from that reported in the statements of operations due to the difference in depreciation recognized under generally accepted accounting principles and the expense allowed for tax purposes under the Modified Accelerated Cost Recovery System (MACRS). There are no other significant differences between taxable loss and the net loss reported in the statements of operations.
(7) COMMITMENTS AND CONTINGENCIES -----------------------------
The Venture rents office and other facilities under various long-term lease arrangements. Rent paid under such lease arrangements totaled $106,722, $105,400 and $60,313, respectively, for the years ended December 31, 1996, 1995 and 1994. Minimum commitments under operating leases for each of the five years in the period ending December 31, 2001, and thereafter are as follows:
(8) SUPPLEMENTARY PROFIT AND LOSS INFORMATION -----------------------------------------
Supplementary profit and loss information for the respective years is presented below:
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON --------------------------------------------------------- ACCOUNTING AND FINANCIAL DISCLOSURE -----------------------------------
None.
PART III. ---------
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ------------------------------------------------------------
The Partnership itself has no officers or directors. Certain information concerning the directors and executive officers of the Managing General Partner is set forth below. Directors of the Managing General Partner serve until the next annual meeting of the Managing General Partner and until their successors shall be elected and qualified.
Mr. Glenn R. Jones has been Chairman of the Board of the Managing General Partner since its formation in October 1986. Mr. Jones served as President of the Managing General Partner until September of 1990 at which time he was elected Chief Executive Officer. Mr. Jones has served as Chairman of the Board of Directors and Chief Executive Officer of Jones Intercable, Inc. since its formation in 1970, and he was President from June 1984 until April 1988. Mr. Jones is the sole shareholder, President and Chairman of the Board of Directors of Jones International, Ltd. He is also Chairman of the Board of Directors of several affiliates of the Managing General Partner. Mr. Jones has been involved in the cable television business in various capacities since 1961, is a member of the Board of Directors and the Executive Committee of the National Cable Television Association. Additionally, Mr. Jones is a member of the Board of Governors for the American Society for Training and Development, and a member of the Board of Education Council of the National Alliance of Business. Mr. Jones is also a founding member of the James Madison Council of the Library of Congress. Mr. Jones has been the recipient of several awards including the Grand Tam Award in 1989, the highest award from the Cable Television Administration and Marketing Society; the President's Award from the Cable Television Public Affairs Association in recognition of Jones International's educational efforts through Mind Extension University (now Knowledge TV); the Donald G. McGannon Award for the advancement of minorities and women in cable from the United Church of Christ Office of Communications; the STAR Award from American Women in Radio and Television, Inc. for exhibition of a commitment to the issues and concerns of women in television and radio; the Cableforce 2000 Accolade awarded by Women in Cable in recognition of Jones Intercable, Inc.'s innovative employee programs; the Most Outstanding Corporate Individual Achievement Award from the International Distance Learning Conference for his contributions to distance education; the Golden Plate Award from the American Academy of Achievement for his advances in distance education; the Man of the Year named by the Denver chapter of the Achievement Rewards for College Scientists; and in 1994 Mr. Jones was inducted into Broadcasting and Cable's Hall of Fame.
Mr. James B. O'Brien was elected President of the Managing General Partner in September of 1990. Mr. O'Brien joined Jones Intercable, Inc. in January 1982. Mr. O'Brien was elected President and a Director of Jones Intercable, Inc. in December 1989. Prior to being elected President and a Director of Jones Intercable, Inc., Mr. O'Brien served as a Division Manager, Director of Operations Planning/Assistant to the CEO, Fund Vice President and Group Vice President/Operations. As President, he is responsible for the day-to-day operations of the cable television systems managed and owned by Jones Intercable, Inc. Mr. O'Brien is a board member of Cable Labs, Inc., the research arm of the cable television industry. He also serves as Vice Chairman and a director of the Cable Television Administration and Marketing Association and as a director and a member of the Executive Committee of the Walter Kaitz Foundation, a
foundation that places people of any ethnic minority group in positions with cable television systems, networks and vendor companies.
Mr. Kevin P. Coyle was elected Vice President of Finance of the Managing General Partner in February 1989. Mr. Coyle is the principal financial and accounting officer of the Managing General Partner. Mr. Coyle joined The Jones Group, Ltd. in July 1981 as Vice President/Financial Services. He was elected Treasurer of Jones Intercable, Inc. in August 1987, Vice President/Treasurer in April 1988 and Group Vice President/Finance in October 1990.
Ms. Elizabeth M. Steele has served as Secretary of the Managing General Partner since August 1987 and Vice President since February 1989. Ms. Steele joined Jones Intercable, Inc. in August 1987 as Vice President/General Counsel and Secretary. From August 1980 until joining Jones Intercable, Inc., Ms. Steele was an associate and then a partner at the Denver law firm of Davis, Graham & Stubbs, which serves as counsel to Jones Intercable, Inc.
Certain information concerning directors and executive officers of the Supervising General Partner is set forth below:
Ms. Lori J. Larson has been employed by American Express Financial Corporation since 1981 and currently holds the title of President. Since August 1988, she has been responsible for day-to-day management of vendor relationships, due diligence review, and operational aspects for various limited partnerships distributed by American Express Financial Advisors Inc. In addition, Ms. Larson is responsible for product development of the publicly offered mutual funds in the IDS Mutual Fund Group.
Mr. Morris Goodwin, Jr. has served as Vice President and Treasurer of American Express Financial Corporation since July 1989. From January 1988 to July 1989, he had been the Chief Financial Officer and Treasurer of IDS Bank & Trust Company. From January 1980 to January 1988, he was a Vice President with Morgan Stanley, an investment banking business headquartered in New York.
Mr. Bradley C. Nelson joined American Express Financial Corporation in 1991 as an Investment Department analyst following his graduation from Cornell University's Johnson Graduate School of Management where he earned an MBA with a concentration in finance.
Mr. Ronald W. Powell has held the position of Vice President and Assistant General Counsel with American Express Financial Corporation since November 1985. He has been a member of the American Express Financial Corporation law department since 1975.
Mr. Knight joined American Express Financial Corporation in July 1975. He is currently Controller-Variable Assets and charged with the overall finance responsibilities for Mutual Funds, Limited
Partnerships, Variable Annuities and Wealth Management Services. From 1981 to March 1994, he held a number of positions in the IDS Certificate Company, leading to Controller of that organization.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION --------------------------------
The Partnership has no employees; however, various personnel are required to operate cable television systems owned by the Venture. Such personnel are employed by Intercable and, pursuant to the terms of the Partnership's limited partnership agreement, the cost of such employment is charged by the Managing General Partner to the Partnership as a direct reimbursement item. See Item 13.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS ----------------------------------------------------------------------
As of March 4, 1997, no person or entity owned more than 5 percent of the limited partnership interests of the Partnership.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS --------------------------------------------------------
The Managing General Partner and its affiliates engage in certain transactions with the Partnership as contemplated by the limited partnership agreement of the Partnership. The Managing General Partner believes that the terms of such transactions are generally as favorable as could be obtained by the Partnership from unaffiliated parties. This determination has been made by the Managing General Partner in good faith, but none of the terms were or will be negotiated at arm's-length and there can be no assurance that the terms of such transactions have been or will be as favorable as those that could have been obtained by the Partnership from unaffiliated parties.
The Supervising General Partner and its affiliates engage in certain transactions with the Partnership as contemplated by the limited partnership agreement of the Partnership. The Supervising General Partner believes that the terms of such transactions, which are set forth in the Partnership's limited partnership agreement, are generally as favorable as could be obtained by the Partnership from unaffiliated parties. This determination has been made by the Supervising General Partner in good faith, but none of the terms were or will be negotiated at arm's-length and there can be no assurance that the terms of such transactions have been or will be as favorable as those that could have been obtained by the Partnership from unaffiliated parties.
TRANSACTIONS WITH THE MANAGING GENERAL PARTNER AND THE SUPERVISING GENERAL PARTNER
The Managing General Partner charges the Partnership a management fee, and the Partnership reimburses Intercable, the parent of the Managing General Partner, for certain allocated overhead and administrative expenses. These expenses represent the salaries and benefits paid to corporate personnel, rent, data processing services and other facilities costs. Such personnel provide engineering, marketing, administrative, accounting, legal and investor relations services to the Partnership. Allocations of personnel costs are based primarily on actual time spent by employees with respect to each partnership managed. Remaining expenses are allocated based on the pro rata relationship of the Partnership's revenues to the total revenues of all systems owned or managed by Intercable or its affiliates. Systems owned by Intercable and all other systems owned by partnerships for which Intercable serves as general partner are also allocated a proportionate share of these expenses. The Supervising General Partner, IDS Cable Corporation, charges the Partnership for supervision fees in accordance with the limited partnership agreement of the Partnership.
Intercable, the parent of the Managing General Partner, also advances funds and charges interest on the balance payable. The interest rate charged approximates Intercable's weighted average cost of borrowing.
TRANSACTIONS WITH AFFILIATES
Jones Education Company ("JEC") is owned 63% by Jones International, Ltd. ("International"), an affiliate of the General Partner, 9% by Glenn R. Jones, 12% by Bell Canada International Inc. ("BCI") and 16% by the General Partner. JEC operates two television networks, JEC Knowledge TV and Jones Computer Network. JEC Knowledge TV provides programming related to computers and technology; business, careers and finance; health and wellness; and global culture and languages. Jones Computer Network provides programming focused primarily on computers and technology. JEC sells its programming to certain cable television systems owned or managed by Intercable.
The Great American Country network provides country music video programming to certain cable television systems owned or managed by Intercable. This network is owned and operated by Great American Country, Inc., a subsidiary of Jones International Networks, Ltd., an affiliate of International.
Jones Galactic Radio, Inc. is a company now owned by Jones International Networks, Ltd., an affiliate of International. Superaudio, a joint venture between Jones Galactic Radio, Inc. and an unaffiliated entity, provides satellite programming to certain cable television systems owned or managed by Intercable.
The Product Information Network Venture (the "PIN Venture") is a venture among a subsidiary of Jones International Networks, Ltd., an affiliate of International, and two unaffiliated cable system operators. The PIN Venture operates the Product Information Network ("PIN"), which is a 24-hour network that airs long-form advertising generally known as "infomercials." The PIN Venture generally makes incentive payments of approximately 60% of its net advertising revenue to the cable systems that carry its programming. Most of Intercable's owned and managed systems carry PIN for all or part of each day. Revenues received by the Venture from the PIN Venture relating to the Aurora System totaled approximately $46,841 for the year ended December 31, 1996.
The activities of the Partnership are limited to its equity ownership in the Venture. The charges to the Venture for related party transactions are as follows for the periods indicated:
PART IV. --------
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K -------------------------------------------------------------------------
__________
(1) Incorporated by reference from the Annual Report on Form 10-K of IDS/Jones Growth Partners II (Commission File No. 0-18133) for fiscal year ended December 31, 1990.
(2) Incorporated by reference from the Annual Report on Form 10-K of IDS/Jones Growth Partners II (Commission File No. 0-18133) for fiscal year ended December 31, 1992.
(3) Incorporated by reference from the Annual Report on Form 10-K of IDS/Jones Growth Partners II (Commission File No. 0-18133) for fiscal year ended December 31, 1991.
(4) Incorporated by reference from the Annual Report on Form 10-K of IDS/Jones Growth Partners 89-B, Ltd. (Commission File No. 0-17734) for fiscal year ended December 31, 1994
(b) Reports on Form 8-K -------------------
None.
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/JONES GROWTH PARTNERS 89-B, LTD. a Colorado limited partnerships By Jones Cable Corporation, their Managing General Partner
By:________________________________________ Glenn R. Jones Chairman of the Board and Dated: March 24, 1997 Chief Executive Officer
By IDS Cable Corporation, their Supervising General Partner
By:________________________________________ Lori J. Larson Dated: March 24, 1997 President and Director
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.
OFFICERS AND DIRECTORS OF JONES CABLE CORPORATION:
By:________________________________________ Glenn R. Jones Chairman of the Board and Chief Executive Officer Dated: March 24, 1997 (Principal Executive Officer)
By:________________________________________ Kevin P. Coyle Vice President/Finance (Principal Financial and Dated: March 24, 1997 Accounting Officer)
OFFICERS AND DIRECTORS OF IDS CABLE CORPORATION:
By:________________________________________ Lori J. Larson President and Director Dated: March 24, 1997 (Principal Executive Officer)
By:________________________________________ Morris Goodwin, Jr. Vice President, Treasurer and Director (Principal Financial and Dated: March 24, 1997 Accounting Officer)
By:________________________________________ Bradley C. Nelson Dated: March 24, 1997 Vice President and Director