FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
[ ] 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: 0-20944
JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
(Exact name of registrant as specified in charter)
COLORADO 84-1088819
-------- ----------
(State of organization) (I.R.S. Employer
Identification No.)
9697 E. MINERAL AVENUE, ENGLEWOOD, COLORADO 80112 (303) 792-3111
- -------------------------------------------------- --------------
(Address of principal executive office) (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 X No
-------- --------
JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Statements of Financial Position as of
December 31, 2000 and March 31, 2001 3
Unaudited Statements of Operations for the
Three Months Ended March 31, 2000 and 2001 4
Unaudited Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 2001 5
Notes to Unaudited Financial Statements as of
March 31, 2001 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II. OTHER INFORMATION 10
2
JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF FINANCIAL POSITION
December 31, March 31,
ASSETS 2000 2001
------------ ------------
CASH AND CASH EQUIVALENTS $ 21,007 $ 18,273
ACCOUNTS RECEIVABLE 6,713 -
INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION,
net of accumulated amortization of $4,031,252 as of
December 31, 2000 and March 31, 2001, respectively - -
------------ ------------
Total assets $ 27,720 $ 18,273
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
LIABILITIES:
Accounts payable to affiliates $ 1,016 $ 11,282
Accrued liabilities 7,000 1,750
------------ ------------
Total liabilities 8,016 13,032
------------ ------------
PARTNERS' CAPITAL (deficit):
General partner-
Contributed capital 1,000 1,000
Distributions (36,103) (36,103)
Accumulated deficit (11,950) (12,095)
------------ ------------
Total general partner's deficit (47,053) (47,198)
------------ ------------
Limited partners -
Contributed capital, net of offering costs (11,229 units outstanding
as of December 31, 2000 and March 31, 2001) 4,823,980 4,823,980
Distributions (3,574,054) (3,574,054)
Accumulated deficit (1,183,169) (1,197,487)
------------ ------------
Total limited partners' capital 66,757 52,439
------------ ------------
Total partners' capital (deficit) 19,704 5,241
------------ ------------
Total liabilities and partners' capital (deficit) $ 27,720 $ 18,273
============ ============
The accompanying notes are an integral part of these financial statements.
3
JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months
Ended March 31,
------------------------
2000 2001
----------- ----------
REVENUES $ 287 $ 386
COSTS AND EXPENSES:
Costs of filmed entertainment 287 -
Operating, general and administrative expenses 8,020 15,016
----------- ----------
Total costs and expenses 8,307 15,016
----------- ----------
OPERATING LOSS (8,020) (14,630)
----------- ----------
INTEREST INCOME 1,535 167
----------- ----------
NET LOSS $ (6,485) $ (14,463)
=========== ==========
ALLOCATION OF NET LOSS:
General Partner $ (65) $ (145)
=========== ==========
Limited Partners $ (6,420) $ (14,318)
=========== ==========
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (.57) $ (1.28)
=========== ==========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 11,229 11,229
=========== ==========
The accompanying notes are an integral part of these financial statements.
4
JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31,
------------------------------
2000 2001
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (6,485) $ (14,463)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Amortization of filmed entertainment costs 287 -
Net change in assets and liabilities:
Decrease in accounts receivable 51,112 6,713
Decrease in accrued liabilities (3,668) (5,250)
Increase in accounts payable to affiliates 8,967 10,266
---------- -----------
Net cash provided by (used in) operating activities 50,213 (2,734)
---------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 50,213 (2,734)
CASH AND CASH EQUIVALENTS, beginning of period 128,458 21,007
---------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 178,671 $ 18,273
========== ===========
The accompanying notes are an integral part of these financial statements.
5
JONES PROGRAMMING PARTNERS 2-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 2-A, Ltd. (the "Partnership") as of December 31, 2000 and
March 31, 2001 and its results of operations and its cash flows for the
three month periods ended March 31, 2000 and 2001. 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 $3,710 and $6,833 to the Partnership for direct expenses
for the three months ended March 31, 2000 and 2001, respectively.
The Partnership and Jones Documentary Film Corporation ("JDFC") granted
the General Partner the exclusive rights to distribute four one-hour
programs for television, entitled "Charlton Heston Presents: The Bible"
(the "Bible Programs"). To accomplish this, the General Partner, on its
own behalf, and GoodTimes Home Video Corporation ("GoodTimes"), an
unaffiliated entity directly involved in the specialty home video and
international television distribution business, entered into an
agreement to form J/G Distribution Company to distribute the Bible
Programs. J/G Distribution Company was formed in June 1992 and is owned
50 percent by GoodTimes and 50 percent by the General Partner. The
Partnership granted J/G Distribution Company the sole and exclusive
right to exhibit and distribute, and to license others to exhibit and
distribute, the Bible Programs in all markets, all languages, and all
media in perpetuity. J/G Distribution Company holds the copyright for
the benefit of the Partnership (50 percent interest) and GoodTimes (50
percent interest). Once the Partnership is fully recouped, pursuant to
the Jones/Agamemnon agreement, Agamemnon Films begins to receive a
portion of the revenue generated from the distribution of the Bible
Programs. During 2000, Agamemnon Films began to participate in profit
sharing from the distribution of the Bible Programs. J/G Distribution
Company is currently distributing the Bible Programs in the retail home
video market. As of March 31, 2001, gross sales made by J/G
Distribution Company totaled $3,589,741, of which $1,794,871 has been
retained by J/G Distribution Company for its fees and marketing costs,
with the remaining $1,794,870 belonging to the Partnership, GoodTimes,
and Agamemnon Films. Additionally, $250,000 was received directly by
the Partnership as its share of the initial license fee from A & E
Television Networks ("A&E"). As of March 31, 2001, the Partnership had
received $886,134 from J/G Distribution Company and $250,000 from A&E.
(3) INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION
"CHARLTON HESTON PRESENTS: THE BIBLE"
In May 1992, the General Partner, on behalf of the Partnership, entered
into an agreement with Agamemnon Films, an unaffiliated third party, to
produce four one-hour programs for television, entitled "Charlton
Heston Presents: The Bible". The production costs of the Bible Programs
were approximately $2,370,000, which included a $240,000 production and
overhead fee paid to the General Partner. In return for agreeing to
fund these production costs, the Partnership acquired all rights to the
Bible Programs in all markets and in all media in perpetuity. The
Partnership subsequently assigned half of its ownership of the Bible
Programs to GoodTimes for
6
an investment of $1,000,000 toward the production costs for the Bible
Programs. After consideration of the reimbursement, the Partnership's
total investment in the Bible Programs was $1,369,764. In June 1998,
the Partnership fully amortized its net investment in this film. From
inception to March 31, 2001, the Partnership has recognized $2,036,811
of revenue from this film, of which $900,677 was retained by the
distributors of the film for their fees and marketing costs and
$1,136,134 was received by the Partnership as of March 31, 2001.
"THE WHIPPING BOY"
In August 1993, the Partnership acquired the film rights to the Newbury
Award-winning book "The Whipping Boy." "The Whipping Boy" was produced
as a two hour telefilm which premiered in the North American television
market on The Disney Channel. The film's final cost was approximately
$4,100,000. As of March 31, 2001, the Partnership had invested
$2,661,487 in the film, which included a $468,000 production and
overhead fee paid to the General Partner. The film was co-produced by
the General Partner and Gemini Films, a German company. The completed
picture was delivered to The Disney Channel in the second quarter of
1994. From inception to March 31, 2001, the Partnership has recognized
$2,277,930 of gross revenue from this film, of which $2,100,000
represents the initial license fee from The Disney Channel that was
used to finance the film's production. Of the remaining $177,930,
$8,497 has been retained by the distributors of the film for their fees
and marketing costs and $169,433 has been received by the Partnership
as of March 31, 2001. In December 2000, the Partnership, after
consideration of approximately $1,744,000 in amortization and
approximately $917,000 in write-downs, fully amortized its net
investment in the film.
7
JONES PROGRAMMING PARTNERS 2-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 its programming. As
of March 31, 2001, the Partnership had approximately $18,000 in cash. Cash used
in operations for the three months ended March 31, 2001 was approximately
$3,000. The Partnership will not invest in any additional programming projects,
but instead will focus on the distribution and/or sale of its two existing
films.
Regular quarterly distributions were suspended beginning with the quarter ended
September 30, 1998. However, a distribution of $141,781 was declared for the
three months ended March 31, 1999, and was paid in May 1999. A distribution of
$141,781 was declared for the three months ended June 30, 2000 and was paid in
August 2000. The Partnership will retain a certain level of working capital,
including any necessary reserves, to fund its operating activities. It is
anticipated that future distributions, if any, will only be made once proceeds
are received from the sale, or sales, of the Partnership's assets. There is no
assurance regarding any future distributions.
The General Partner, on behalf of the Partnership, is pursuing the sale of the
Partnership's interests in its programming. The General Partner has no
obligation to purchase any assets of the Partnership, nor is it anticipated that
the General Partner will purchase any of such assets. The General Partner cannot
predict when or at what price the Partnership's interests in its programming
ultimately will be sold, but has initiated sales efforts. The films may be sold
as a group or on an individual basis, in the judgement of the General Partner.
The films could also be packaged with the films of an affiliated public limited
partnership. 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 will be distributed to the partners after such
sale, or sales. It is probable that the distributions of the proceeds from the
sale or 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 70% 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. Pursuant to the services agreement, the broker will receive
a 10% commission for arranging the sale, or sales, of the Partnership's films.
In May 1992, the General Partner, on behalf of the Partnership, entered into an
agreement with Agamemnon Films ("Agamemnon") with respect to the production of
the Bible Programs. Pursuant to this agreement, Agamemnon does not participate
in profit sharing until certain revenues to the General Partner and the
Partnership from the distribution of the Bible Programs are first applied
towards the Partnership's recoupment of its production investment, its share of
production overages, and a production fee plus interest on the unrecouped
investment. In 2000, the Partnership fully recouped the requisite amount and
Agamemnon began to participate in profits from the distribution of the Bible
Programs. The Partnership will therefore receive a decreased percentage of the
net proceeds from the distribution of the Bible Programs.
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. Any cash flow from operating
activities will be primarily generated from the Bible Programs. The General
Partner does not anticipate cash flow from the films to increase significantly
in the future. The lack of significant cash flow presently being generated by
the Partnership's films may negatively effect the ultimate sales price of the
films.
8
RESULTS OF OPERATIONS
Revenues of the Partnership increased $99, from $287 to $386 for the three
months ended March 31, 2000 and 2001, respectively. This increase was the result
of an increase in revenue from the "The Whipping Boy" for the three months ended
March 31, 2001 compared to the same period in 2000.
Filmed entertainment costs decreased $287, from $287 to $0 for the three months
ended March 31, 2000 and 2001, respectively. This decrease was the result of the
Partnership's net investment in the "The Whipping Boy" becoming fully amortized
in December 2000. Filmed entertainment costs are amortized over the life of the
film in the ratio that current gross revenues bear to anticipated total gross
revenues.
Operating, general and administrative expenses increased $6,996, from $8,020 to
$15,016 for the three months ended March 31, 2000 and 2001, respectively. The
increase was primarily due to an increase in legal, tax, and investor relations
expenses during the three months ended March 31, 2001 compared to the same
period in 2000.
Interest income decreased $1,368, from $1,535 to $167 for the three months ended
March 31, 2000 and 2001, respectively. This decrease was the result of
significantly lower levels of invested cash balances during the three months
ended March 31, 2001 compared to the same period in 2000.
Limited Partners' net loss per partnership unit increased $(.71), from $(.57) to
$(1.28) for the three months ended March 31, 2000 and 2001, respectively. This
change was due to the result of operations as discussed above.
9
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
None
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 2-A, LTD.
BY: JONES ENTERTAINMENT GROUP, LTD.
General Partner
By: /s/ TIMOTHY J. BURKE
------------------------------------
Timothy J. Burke
Vice President
Dated: May 10, 2001