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, 2000
[ ] 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.
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(Exact name of registrant as specified in charter)
Colorado 84-1088820
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(State of organization) (I.R.S. Employer Identification No.)
9697 E. Mineral Avenue, Englewood, Colorado 80112
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(Address of principal executive office and Zip Code)
(303) 792-3111
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(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 Interest
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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JONES PROGRAMMING PARTNERS 1-A, LTD.
INDEX
Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Statements of Financial Position
December 31, 1999 and June 30, 2000 3
Unaudited Statements of Operations
Three and Six Months Ended June 30, 1999 and 2000 4
Unaudited Statements of Cash Flows
Six Months Ended June 30, 1999 and 2000 5
Notes to Unaudited Financial Statements
June 30, 2000 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II. OTHER INFORMATION 10
JONES PROGRAMMING PARTNERS 1-A, LTD.
(A LIMITED PARTNERSHIP)
UNAUDITED STATEMENTS OF FINANCIAL POSITION
December 31, June 30,
1999 2000
----------- -----------
ASSETS
CASH AND CASH EQUIVALENTS $ 86,626 $ 134,082
RECEIVABLES:
Foreign income receivable 156 --
Domestic income receivable 3,472 --
INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION,
net of accumulated amortization of $8,887,206 and $8,887,206
as of December 31, 1999 and June 30, 2000, respectively (Note 3) -- --
----------- -----------
Total assets $ 90,254 $ 134,082
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
LIABILITIES:
Accounts payable to affiliates $ 10,273 $ 57,162
Accrued liabilities 181,727 177,871
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Total liabilities 192,000 235,033
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PARTNERS' CAPITAL (DEFICIT):
General partner -
Contributed capital 1,000 1,000
Distributions (42,440) (42,440)
Accumulated deficit (13,543) (13,535)
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Total general partner's deficit (54,983) (54,975)
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Limited partners -
Contributed capital, net of offering costs
(12,743 units outstanding as of December 31, 1999
and June 30, 2000) 5,459,327 5,459,327
Distributions (4,201,502) (4,201,502)
Accumulated deficit (1,304,588) (1,303,801)
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Total limited partners' deficit (46,763) (45,976)
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Total partners' capital (deficit) (101,746) (100,951)
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Total liabilities and partners' capital (deficit) $ 90,254 $ 134,082
=========== ===========
The accompanying notes to these unaudited financial statements
are an integral part of these unaudited financial statements.
3
JONES PROGRAMMING PARTNERS 1-A, LTD.
(A LIMITED PARTNERSHIP)
UNAUDITIED STATEMENTS OF OPERATIONS
For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------------- --------------------------
1999 2000 1999 2000
-------- ------- -------- --------
GROSS REVENUES $ 515 $26,804 $ 4,791 $ 26,804
COSTS AND EXPENSES:
Costs of filmed entertainment 133 -- 2,437 --
Distribution fees and expenses -- 41 23 41
Operating, general and administrative expenses 9,570 14,660 15,278 28,567
-------- ------- -------- --------
Total costs and expenses 9,703 14,701 17,738 28,608
-------- ------- -------- --------
OPERATING INCOME (LOSS) (9,188) 12,103 (12,947) (1,804)
-------- ------- -------- --------
OTHER INCOME (EXPENSE):
Interest income 654 1,456 975 2,599
Other expense, net (57) -- (77) --
-------- ------- -------- --------
Other income, net 597 1,456 898 2,599
-------- ------- -------- --------
NET INCOME (LOSS) $ (8,591) $13,559 $(12,049) $ 795
======== ======= ======== ========
ALLOCATION OF NET INCOME (LOSS):
General partner $ (86) $ 136 $ (120) $ 8
======== ======= ======== ========
Limited partners $ (8,505) $13,423 $(11,929) $ 787
======== ======= ======== ========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (.66) $ 1.05 $ (.94) $ .06
======== ======= ======== ========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNERSHIP UNITS
OUTSTANDING 12,743 12,743 12,743 12,743
======== ======= ======== ========
The accompanying notes to these unaudited financial statements
are an integral part of these unaudited financial statements.
4
JONES PROGRAMMING PARTNERS 1-A, LTD.
(A LIMITED PARTNERSHIP)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Six Months
Ended June 30,
----------------------------
1999 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (12,049) $ 795
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Amortization of filmed entertainment costs 2,437 --
Net change in assets and liabilities:
Decrease in domestic income receivable 10,275 3,472
Decrease in foreign income receivable 56,283 156
Increase in accounts payable trade 55,758 --
Net change in amounts due to affiliates 50,999 46,889
Decrease in accrued liabilities (111,710) (3,856)
Decrease in unearned revenue (3,889) --
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Net cash provided by operating activities 48,104 47,456
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INCREASE IN CASH AND CASH EQUIVALENTS 48,104 47,456
CASH AND CASH EQUIVALENTS, beginning of period 90,672 86,626
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CASH AND CASH EQUIVALENTS, end of period $ 138,776 $ 134,082
========= =========
The accompanying notes to these unaudited financial statements
are an integral part of these unaudited financial statements.
5
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 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 Jones Programming Partners 1-A, Ltd. (the "Partnership") as of
December 31, 1999 and June 30, 2000, its results of operations for the
three and six month periods ended June 30, 1999 and 2000, and its cash
flows for the six month periods ended June 30, 1999 and 2000. 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 $1,922
and $1,676, to the Partnership for the three month periods ended June 30,
1999 and 2000, respectively. For the six month periods ended June 30, 1999
and 2000, $4,948 and $6,357, respectively, were charged to the Partnership
for direct expenses.
(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 ("Maple Leaf") 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 June 30, 2000, the Partnership has recognized approximately
$3,002,000 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.
"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 June 30, 2000, the Partnership has recognized approximately
$2,299,000 of revenue from this film.
The Partnership has an agreement with NBCP to distribute "The Story Lady"
in foreign markets. Under this agreement, the Partnership paid $1,000,000
for all the distribution rights to "The Story Lady" except for NBC network
exhibition and certain other rights. The Partnership licensed back the
foreign rights to NBCP for an eight year term (which expired at the end of
1999 and has been extended) and the Partnership retained domestic
distribution rights, principally home video, non-network free television,
pay television, and non-theatrical.
6
The Partnership and NBCP revenues are pooled and are to be paid to the
parties until each receives its original investment plus interest (the
"unrecouped amount"). The Partnership is fully recouped. 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 $200,000. The Partnership does not believe that NBCP is
entitled to the distribution fees that it claims.
As of December 31, 1999, NBCP reported that it has not recouped
approximately $475,000 of its original investment, plus interest. NBCP is
entitled to recover its unrecouped amount under the agreement, which makes
it unlikely that the Partnership will receive any income from this film in
the near future, or at all. The Partnership has also received approximately
$175,000 from distributors, which was not applied to NBCP's unrecouped
amount. If so applied, NBCP's unrecouped amount would lower accordingly. As
of June 30, 2000, the Partnership has reported this amount as an accrued
liability, but believes a basis exists to deny some or all of such
liability. There is no assurance regarding the favorable resolution of this
matter. The Partnership does not have the funds to make such payments, nor
is it likely that the Partnership could borrow the necessary funds.
In December 1995, the Partnership fully amortized its net investment in
this film.
"CURACAO"
In October 1992, the General Partner, on behalf of the Partnership, entered
into an agreement with Showtime Networks, Inc. ("Showtime") 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 June
30, 2000, the Partnership has recognized approximately $4,062,000 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.
In December 1999, after consideration of amortization and write-downs, the
Partnership fully amortized its net investment in this film.
7
JONES PROGRAMMING PARTNERS 1-A, LTD.
(A LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
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 approximately $134,000 in cash as of June 30,
2000. The Partnership will not invest in any additional programming projects,
but instead will focus on the distribution and/or sale of its three existing
films.
The Partnership will retain a certain level of working capital, including any
necessary reserves, to fund its operating activities. It is anticipated that any
future distributions 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 any future distributions.
The General Partner, on behalf of the Partnership, is currently considering the
sale of the Partnership's interests in its programming projects. If the General
Partner or one of its affiliates exercises its right to purchase the
Partnership's interests in a programming project, however, the sales price for
such a transaction will be at least equal to the average of three independent
appraisals of the programming project's fair market value. The General Partner
believes that proceeds from future sales and distributions of the Partnership
films will equal or exceed the current liability, although there can be no
assurance to that effect in the absence of any actual sales transactions. The
General Partner has no obligation to purchase any assets of the Partnership, nor
is it anticipated that the General Partner will purchase such assets.
The General Partner cannot predict at this time when or at what price the
Partnership's interests in its programming projects ultimately will be sold, but
has initiated sales efforts in the second quarter 2000. The projects may be sold
as a group or on a one by one basis, in the judgement of the General Partner.
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
programming projects will be charged to the Partnership. It is anticipated that
the net proceeds from the sale, or sales, of the Partnership's interests in its
programming, after payment of outstanding obligations, will be distributed to
the partners after such sale. It is probable that the distributions of the
proceeds from the sales of the Partnership's programming projects, together with
all prior distributions paid to the limited partners, will return to the limited
partners less than 75% of their initial capital contributions to the
Partnership.
The General Partner believes that the Partnership has, and will continue to
have, sufficient liquidity to fund its operations and to meet its obligations so
long as quarterly distributions are suspended and the Partnership is able to
reach a satisfactory resolution with respect to contingent claims by NBCP.
However, there can be no assurance that such resolution can be achieved. The
General Partner does not anticipate cash flow from the films to increase
significantly in the future.
RESULTS OF OPERATIONS
Revenues of the Partnership increased $26,289, from $515 to $26,804 for the
three months ended June 30, 1999 and 2000, respectively. Revenues of the
Partnership increased $22,013, from $4,791 to $26,804 for the six months ended
June 30, 1999 and 2000, respectively. The increase was due primarily to an
increase in the revenue received from international sales of "Curacao".
Filmed entertainment costs decreased $133, from $133 to $0 for the three months
ended June 30, 1999 and 2000, respectively. Filmed entertainment costs decreased
$2,437, from $2,437 to $0 for the six months ended June 30, 1999 and 2000,
respectively. The decrease was the result of the full amortization of the
capitalized production costs relating to "The Little Kidnappers" in March 1999
and to "Curacao" in December 1999. Filmed entertainment costs are amortized over
the life of the film in the ratio that current gross revenues bear to
anticipated total gross revenues.
8
Distribution fees and expenses increased $41, from $0 to $41 for the three
months ended June 30, 1999 and 2000, respectively. Distribution fees and
expenses increased $18, from $23 to $41 for the six months ended June 30, 1999
and 2000, respectively. The increase primarily resulted from the payment of
royalties in 2000 of $41 to artisan guilds for "The Little Kidnappers". These
distribution fees and expenses relate to the compensation due and costs incurred
by distributors 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 $5,090, from $9,570 to
$14,660 for the three months ended June 30, 1999 and 2000, respectively.
Operating, general and administrative expenses increased $13,289, from $15,278
to $28,567 for the six months ended June 30, 1999 and 2000, respectively. The
increase was due to an increase in legal expenses related to the potential sale
or sales of the Partnership's assets during the three and six month periods
ended June 30, 2000 as compared to the same periods in 1999. The increase was
also due to an increase in the direct costs allocable to the operations of the
Partnership that were charged to the Partnership by affiliates of the General
Partner during the six month period ended June 30, 2000 as compared to the same
period in 1999. This increase in direct costs allocable to the Partnership's
operations resulted mainly from the increase in direct time spent by the
affiliates of the General Partner on the accounting function of the Partnership
and on preparation of the sale of the Partnership's assets.
Interest income increased $802, from $654 to $1,456 for the three months ended
June 30, 1999 and 2000, respectively. Interest income increased $1,624, from
$975 to $2,599 for the six months ended June 30, 1999 and 2000, respectively.
The increase in interest income was the result of above average levels of
invested cash balances existing during the three and six month periods ended
June 30, 2000 as compared to the same periods in 1999.
Limited Partners' net income (loss) per partnership unit changed $1.71, from
$(.66) to $1.05 for the three months ended June 30, 1999 and 2000, respectively.
Limited Partners' net income (loss) per partnership unit changed $1.00, from
$(.94) to $.06 for the six months ended June 30, 1999 and 2000, respectively.
This change was due to the results of operations as discussed above.
9
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
10
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
By: /s/ Barbara K. Gutierrez
--------------------------------
Barbara K. Gutierrez
Chief Accounting Officer
(Principal Accounting Officer)
Dated: August 14, 2000
11