SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
o 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: 0-19075
JONES PROGRAMMING PARTNERS 1-A, LTD.
(Exact name of registrant as specified in charter)
Colorado | | 84-1088820 |
(State of organization) | | (I.R.S. Employer Identification No.) |
| | |
9697 E. Mineral Avenue, Englewood, Colorado 80112 | | (303) 792-3111 |
(Address of principal executive office and Zip Code) | | (Registrant’s telephone no, including area code) |
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests
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 ý &# 160; No o
JONES PROGRAMMING PARTNERS 1-A, LTD.
INDEX
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JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
| | December 31, | | March 31, | |
| | 2001 | | 2002 | |
ASSETS | | | | | |
| | | | | |
CASH AND CASH EQUIVALENTS | | $ | 9,060 | | $ | 9,188 | |
| | | | | |
ACCOUNTS RECEIVABLE | | 25,125 | | 25,125 | |
| | | | | |
INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION, net of accumulated amortization of $8,887,206 as of December 31, 2001 and March 31, 2002, respectively | | — | | — | |
| | | | | |
Total assets | | $ | 34,185 | | $ | 34,313 | |
| | | | | |
LIABILITIES AND PARTNERS’ DEFICIT | | | | | |
| | | | | |
LIABILITIES: | | | | | |
Accounts payable to affiliates | | $ | 45,700 | | $ | 64,736 | |
Accrued liabilities | | 186,128 | | 179,834 | |
| | | | | |
Total liabilities | | 231,828 | | 244,570 | |
| | | | | |
PARTNERS’ DEFICIT: | | | | | |
General partner — | | | | | |
Contributed capital | | 1,000 | | 1,000 | |
Distributions | | (42,440 | ) | (42,440 | ) |
Accumulated deficit | | (14,502 | ) | (14,628 | ) |
| | | | | |
Total general partner’s deficit | | (55,942 | ) | (56,068 | ) |
| | | | | |
Limited partners — | | | | | |
Contributed capital, net of offering costs (12,743 units outstanding as of December 31, 2001 and March 31, 2002) | | 5,459,327 | | 5,459,327 | |
Distributions | | (4,201,502 | ) | (4,201,502 | ) |
Accumulated deficit | | (1,399,526 | ) | (1,412,014 | ) |
| | | | | |
Total limited partners’ deficit | | (141,701 | ) | (154,189 | ) |
| | | | | |
Total partners’ deficit | | (197,643 | ) | (210,257 | ) |
| | | | | |
Total liabilities and partners’ deficit | | $ | 34,185 | | $ | 34,313 | |
The accompanying notes are an integral part of these financial statements.
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JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
| | For the Three Months | |
| | Ended March 31, | |
| | 2001 | | 2002 | |
| | | | | |
REVENUES | | $ | 34,695 | | $ | 98 | |
| | | | | |
COSTS AND EXPENSES: | | | | | |
Distribution fees and expenses | | 8,079 | | — | |
Operating, general and administrative expenses | | 11,284 | | 12,742 | |
| | | | | |
Total costs and expenses | | 19,363 | | 12,742 | |
| | | | | |
OPERATING INCOME (LOSS) | | 15,332 | | (12,644 | ) |
| | | | | |
INTEREST INCOME | | 674 | | 30 | |
| | | | | |
NET INCOME (LOSS) | | $ | 16,006 | | $ | (12,614 | ) |
| | | | | |
ALLOCATION OF NET INCOME (LOSS): | | | | | |
General Partner | | $ | 160 | | $ | (126 | ) |
| | | | | |
Limited Partners | | $ | 15,846 | | $ | (12,488 | ) |
| | | | | |
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT | | $ | 1.24 | | $ | (.98 | ) |
| | | | | |
WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING | | 12,743 | | 12,743 | |
The accompanying notes are an integral part of these financial statements.
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JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
| | For the Three Months | |
| | Ended March 31, | |
| | 2001 | | 2002 | |
| | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |
Net income (loss) | | $ | 16,006 | | $ | (12,614 | ) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities — | | | | | |
Net change in assets and liabilities: | | | | | |
Increase in accounts receivable | | (33,500 | ) | — | |
Net change in amounts due to affiliates | | 29,929 | | 19,036 | |
Decrease in accrued liabilities | | (22,565 | ) | (6,294 | ) |
| | | | | |
Net cash provided by (used in) operating activities | | (10,130 | ) | 128 | |
| | | | | |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | (10,130 | ) | 128 | |
| | | | | |
CASH AND CASH EQUIVALENTS, beginning of period | | 72,725 | | 9,060 | |
| | | | | |
CASH AND CASH EQUIVALENTS, end of period | | $ | 62,595 | | $ | 9,188 | |
The accompanying notes are an integral part of these financial statements.
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JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
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 Statements of Financial Position and Statements of Operations and Cash Flows in conformity with accounting principles generally accepted in the United States. However, in the opinion of management, this data includes all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of Jones Programming Partners 1-A, Ltd. (the “Partnership”) as of December 31, 2001 and March 31, 2002 and its results of operations and its cash flows for the three month periods ended March 31, 2001 and 2002. Results of operations for these periods are not necessarily indicative of results to be expected for the full year.
(2) TRANSACTIONS WITH AFFILIATED ENTITIES
Jones Entertainment Group, Ltd. (“General Partner”) is entitled to reimbursement from the Partnership for its direct and indirect expenses allocable to the operations of the Partnership, which shall include, but not be limited to, rent, supplies, telephone, travel, legal expenses, accounting expenses, preparation and distribution of reports to investors and salaries of any full or part-time employees. Because the indirect expenses incurred by the General Partner on behalf of the Partnership are immaterial, the General Partner generally does not charge indirect expenses to the Partnership. The General Partner charged direct expenses of $5,847 and $10,008, to the Partnership for the three-month periods ended March 31, 2001 and 2002, respectively.
(3) INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION
“The Little Kidnappers”
In January 1990, the General Partner, on behalf of the Partnership, entered into an agreement with Jones Maple Leaf Productions to produce a full-length feature film for television entitled “The Little Kidnappers.” The total film cost was approximately $3,200,000. Of this amount, the Partnership invested approximately $2,794,000, which includes a production and overhead fee of $300,000 paid to the General Partner. From inception to March 31, 2002, the Partnership has recognized approximately $3,036,000 of revenue from this film, which includes the initial license fees of approximately $1,365,000 from The Disney Channel and the Canadian Broadcasting Corporation, which were used to finance the film’s production. In March 1999, the Partnership fully amortized its net investment in this film. As of March 31, 2002, the Partnership had a $25,125 receivable from the distribution of this film. In April 2002, the Partnership collected $24,644 of this receivable. During April 2002, the General Partner assessed the remaining $481 receivable and determined it was uncollectible. The remaining receivable will be written off during the second quarter of 2002.
“The Story Lady”
In April 1991, the General Partner, on behalf of the Partnership, entered into an agreement with NBC Productions, Inc. (“NBCP”) for the production of a full-length made-for-television film entitled “The Story Lady.” The total cost of the film was approximately $4,300,000. Of this amount, the Partnership invested approximately $1,183,000 in return for worldwide distribution rights to this film, excluding United States and Canadian broadcast television rights. Included in the total amount invested is a production and overhead fee of $120,000 paid to the General Partner. From inception to March 31, 2002, the Partnership has recognized approximately $2,299,000 of revenue from this film. In December 1995, the Partnership fully amortized its net investment in this film.
The Partnership and NBCP revenues are pooled and are to be paid to the parties until each recoups its original investment plus interest. The Partnership has fully recouped, while NBCP has not fully recouped. From the time of the Partnership recoupment through March 31, 2002, the Partnership has received approximately $175,000 from distributors which has not been applied to NBCP’s unrecouped amount. As of March 31, 2002, the Partnership has reported this amount as an accrued liability, but believes there is a basis to deny some or all of such liability.
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In September 1999, NBCP first claimed that it had mistakenly not taken the full amount of its distribution fees, and was entitled to an additional amount of approximately $192,500. The Partnership does not believe that NBCP is entitled to the distribution fees that it claims.
Litigation could result because of the disputes with NBCP. Such litigation would be costly and time consuming. There is no assurance regarding the favorable resolution of this matter. The Partnership does not have the funds to make any such payments to NBCP, nor is it likely that the Partnership could borrow the necessary funds.
“Curacao”
In October 1992, the General Partner, on behalf of the Partnership, entered into an agreement with Showtime Networks, Inc. for the production of a full-length, made-for-television film entitled “Curacao.” The total production cost of the film incurred by the Partnership was approximately $4,410,000. In addition to the costs of production, the Partnership paid the General Partner $500,000 as a production and overhead fee for services rendered in connection with arranging the Showtime pre-sale and supervising production of this picture. From inception to March 31, 2002, the Partnership has recognized approximately $4,064,000 of revenue from this film, which includes the initial license fee and home video advance from Showtime of $2,650,000, which was used to finance the film’s production.
The Partnership fully amortized its net investment in this film December 1999, after consideration of approximately $3,450,000 in amortization and approximately $960,000 in write-downs.
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Liquidity and Capital Resources
The Partnership’s principal sources of liquidity are cash on hand and amounts received from the domestic and international distribution of the Partnership’s programming. The Partnership had $9,188 in cash as of March 31, 2002. As of March 31, 2002, the Partnership had a $25,125 receivable from “The Little Kidnappers” of which $24,644 was collected in April 2002. Net cash provided by operations for the three months ended March 31, 2002 was $128. In addition, the General Partner paid approximately $19,000 of expenses on behalf of the Partnership. This brought the accounts payable to affiliates balance to approximately $65,000 as of March 31, 2002. The Partnership will not invest in any additional programming projects, but instead will focus on the sale of its three existing films.
It is anticipated that future distributions, if any, will only be made from proceeds received from the sale of the Partnership’s assets. There is no assurance regarding the timing or amount of future distributions. The General Partner will be reimbursed for all amounts advanced to the Partnership before any distribution is made to the limited partners. As of March 31, 2002, such advances totaled approximately $65,000.
The sale of the Partnership’s assets was approved by a vote of the limited partners on December 21, 2001. Any direct costs incurred by the General Partner on behalf of the Partnership in soliciting and arranging for the sale, or sales, of the Partnership’s assets will be charged to the Partnership. The General Partner believes that the distribution of the proceeds from the sales of the Partnership’s assets, if any, together with all prior distributions paid to the limited partners, will return to the limited partners less than 75 percent of their initial capital contributions to the Partnership. The Partnership has retained the services of a broker to assist in the sale of the Partnership’s films. To date, the broker has been paid $6,643 for film evaluation services and expenses. Pursuant to the services agreement, the broker will also receive a 10 percent commission for arranging the sale, or sales, of the Partnership’s films.
Revenues currently being generated by the Partnership’s films are insufficient to fund the Partnership’s operations. The Partnership will have to rely on the General Partner to fund its operations. However, the General Partner is under no obligation to fund the operations of the Partnership, and on a quarterly basis, will evaluate whether to provide funding to the Partnership. The General Partner does not anticipate cash flow from the films to increase significantly.
Current Status of Sales Efforts
The General Partner, on behalf of the Partnership, is pursuing the sale of the Partnership’s assets. The Partnership has obtained the services of a broker to assist in the sale of the Partnership’s films. Pursuant to the services agreement, the broker will receive a 10 percent commission for arranging the sale, or sales, of the Partnership’s films.
The General Partner, with the assistance of the broker, has reached tentative agreements to sell, transfer, or license the Partnership’s programming assets to unaffiliated parties. Until the agreements are finalized and the sales are closed, there is no assurance that the transactions will be completed as described below, or completed at all.
The Partnership has tentatively agreed to sell all of its rights in “The Little Kidnappers,” “Curacao” and license certain distribution rights in the “The Story Lady” to a film distributor. As consideration for selling such rights, the Partnership would potentially receive approximately $50,000, $200,000 and $100,000, respectively. If the sales agreement is finalized, of which there is no assurance, it is anticipated that the transaction will be completed in the second quarter 2002. It is anticipated 25 percent of the sales proceeds will be escrowed until the end of November 2002.
The Partnership has also agreed (in principle) to transfer its remaining distribution rights in “The Story Lady” to NBCP. As consideration for transferring such rights, NBCP would release the Partnership from all past and future claims and obligations
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(including the Partnership’s approximately $175,000 accrued liability). If the agreement between the Partnership and NBCP is finalized, of which there is no assurance, it is anticipated the transaction will be completed in the second quarter 2002.
RESULTS OF OPERATIONS
Revenues of the Partnership decreased $34,597, from $34,695 to $98 for the three months ended March 31, 2001 and 2002, respectively. This decrease was primarily due to a lack of distribution revenue from “The Little Kidnappers” in the first quarter 2002 compared to approximately $34,000 in revenue from this film in the first quarter of 2001.
Distribution fees and expenses decreased $8,079, from $8,079 to $0 for the three months ended March 31, 2001 and 2002, respectively. This decrease was primarily the result of an $8,000 payment made during the first quarter of 2001 related to the distribution of “The Little Kidnappers” compared to $0 distribution fees for the first quarter of 2002. Distribution fees and expenses typically relate to the compensation due and costs incurred in connection with selling the Partnership’s programming in the domestic and international markets. The timing and amount of distribution fees and expenses vary depending upon the individual market in which programming is distributed.
Operating, general and administrative expenses increased $1,458, from $11,284 to $12,742 for the three months ended
March 31, 2001 and 2002, respectively. This increase was primarily due to an increase in legal and accounting expenses during the three months ended March 31, 2002 compared to the same period in 2001. The Partnership has and will continue to have significant legal, accounting and professional service expenses related to efforts to sell the Partnership’s programming assets.
Interest income decreased $644, from $674 to $30 for the three months ended March 31, 2001 and 2002, respectively. This decrease in interest income was primarily the result of lower average levels of invested cash balances during the first three months of 2002 compared to the same period in 2001.
Limited Partners’ net income (loss) per partnership unit changed $(2.22), from $1.24 to $(.98) for the three months ended March 31, 2001 and 2002, respectively. This change was due to the result of the operations as discussed above.
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Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
1) Exhibits
None
2) Reports on Form 8-K
(a) Form 8-K, Item 5. Other Events, filed on January 2, 2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | JONES PROGRAMMING PARTNERS 1-A, LTD. |
| | BY: | JONES ENTERTAINMENT GROUP, LTD. |
| | | General Partner |
| | | |
| | By: | /s/ Timothy J. Burke | |
| | | Timothy J. Burke |
| | | Vice President |
| | | |
| | | |
Dated: May 9, 2002 | | | |
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