-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CZjOqFaJ1+xFPQZsnyg0MSJFcHMkplH7qULcIF+oU2aqsGSZGTSlOfb3/euWxCmo pyrd3Zr0t31KZ8zAsjpw0Q== 0000912057-00-014508.txt : 20000411 0000912057-00-014508.hdr.sgml : 20000411 ACCESSION NUMBER: 0000912057-00-014508 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JONES PROGRAMMING PARTNERS 2-A LTD CENTRAL INDEX KEY: 0000868610 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 841088829 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-20944 FILM NUMBER: 583805 BUSINESS ADDRESS: STREET 1: 9697 E MINERAL AVE STREET 2: C/O JONES ENTERTAINMENT GROUP LTD CITY: ENGLEWOOD STATE: CO ZIP: 80155-3309 BUSINESS PHONE: 3037923111 MAIL ADDRESS: STREET 1: P O BOX 3309 STREET 2: 9697 E MINERAL AVE CITY: ENGLEWOOD STATE: CO ZIP: 80155 FORMER COMPANY: FORMER CONFORMED NAME: JONES PROGRAMMING PARTNERS 2 DATE OF NAME CHANGE: 19600201 10-K405 1 FORM 10-K405 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ______ to ______ Commission file number: 0-20944 JONES PROGRAMMING PARTNERS 2-A, LTD. (Exact name of registrant as specified in its charter) COLORADO 84-1088819 (State of Organization) (IRS Identification No.) 9697 EAST 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, (1) has filed all reports required to be filed by Section 13 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 ----- ----- Aggregate market value of the voting stock held by non-affiliates of the registrant: N/A Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss.229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X ----- DOCUMENTS INCORPORATED BY REFERENCE: None Information contained in this Form 10-K Report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this Form 10-K Report that address activities, events or developments that the General Partner or the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These forward-looking statements are based upon certain assumptions and are subject to a number of risks and uncertainties. Actual results could differ materially from the results predicted by these forward-looking statements. PART I. ITEM 1. BUSINESS Jones Programming Partners 2-A, Ltd. (the "Partnership") is a Colorado limited partnership that was formed in March 1992 pursuant to the public offering of limited partnership interests in the Jones Programming Partners Limited Partnership Program. Jones Entertainment Group, Ltd., a Colorado corporation engaged in the development, production, acquisition and distribution of its original entertainment programming, is the general partner of the Partnership (the "General Partner"). The Partnership was formed to acquire, develop, produce and distribute original programming to be owned by the Partnership. The Partnership generates revenues from the licensing of its programming. All the Partnership's films are subject to a variety of license agreements for various markets. Some of these agreements will last beyond the year 2000. The General Partner charges the Partnership for direct costs incurred on the Partnership's behalf. See further discussion of such costs charged to the Partnership by the General Partner in ITEM 8, FINANCIAL STATEMENTS, NOTE 4. During 1999, the Partnership had two programming projects: "Charlton Heston Presents: The Bible" and "The Whipping Boy." It is not anticipated that the Partnership will invest in any additional programming, but instead will focus on the distribution and/or sale of its existing programming projects. Following is a description of these programming projects. 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 party, to produce four one-hour programs for television, entitled "Charlton Heston Presents: The Bible" (the "Bible Programs"). 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 an unaffiliated party for 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 December 31, 1999, the Partnership has recognized $2,009,525 of revenue from this film, of which $888,720 was retained by the distributors of the film for their fees and marketing costs and $1,069,693 was received by the Partnership as of December 31, 1999. The remaining $51,112 was received by the Partnership in February 2000. THE WHIPPING BOY In August 1993, the Partnership acquired the 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 December 31, 1999, 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 December 31, 1999, the Partnership has recognized $2,276,382 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 $176,382, $8,497 was retained by the distributors of the film for their fees and marketing costs and $167,885 was received by the Partnership as of December 31, 1999. 2 During the fourth quarter 1999, the General Partner reassessed the anticipated gross revenues remaining from the distribution of "The Whipping Boy" based on revised estimated television sales projections and actual results of the film's distribution in comparison to the film's prior projections. A determination was made by the General Partner that the Partnership's net investment in "The Whipping Boy" of $147,883 exceeded the film's estimated net realizable value of $7,883 as of December 31, 1999, resulting in a write-down of $140,000. The film's estimated net realizable value was calculated based on an estimate of anticipated revenues remaining over the life of the film from international and domestic television distribution, net of estimated distribution fees and costs, as of December 31, 1999. As of December 31, 1999, the Partnership's net investment in the film, after consideration of amortization and write-downs, was $7,883. The Partnership plans to amortize its remaining investment in this film from net revenues generated from domestic and international television markets or recover its remaining investment from sale of the Partnership's interests in the film. GENERAL MATTERS The Partnership will seek to recover its investment in programming by relicensing its assets through international sales, domestic cable or syndication, home video and ancillary markets or by selling its interests in its programming. The General Partner, on behalf of the Partnership, is planning the sale of the Partnership's interests in its programming projects. See further discussion of the Partnership's distribution efforts concerning its film projects in ITEM 7, MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. There is no assurance that the Partnership will be successful in obtaining a buyer or buyers for the assets of the Partnership or that the terms or conditions of any sale will be favorable to the Partnership. Many of the factors set forth below which affect the distribution of the films will also affect the salability of the films themselves. If efforts to sell the Partnership's assets are not successful, the Partnership will continue to seek distribution for its films. The Partnership has encountered and will continue to encounter intense competition in connection with its attempts to distribute its programming. There is competition within the television programming industry for exhibition time on cable television networks, broadcast networks and independent television stations. In most cases, potential customers of the Partnership's programming also produce their own competitive programs. In recent years, the number of television production companies and the volume of programming being distributed have increased, thereby intensifying this competition. Acceptance of the programming in certain distribution media may be limited and the programming will compete with other types of television programming in all domestic and international distribution media and markets. The success of programming is also dependent in part on public taste, which is unpredictable and susceptible to change. In international markets, the Partnership has and will encounter additional risks, such as foreign currency rate fluctuations, compliance and regulatory requirements, differences in tax laws, and economic and political environments. The Partnership's films have been distributed in a number of markets. It is not known whether the Partnership can successfully exploit any of its films in these or other markets in the future. Any distribution revenues from the Partnership's programming will rely heavily on the existence and size of remaining distribution markets and media, if any, that have not been exploited by the Partnership in its previous distribution efforts in the domestic and international theatrical, home video, television, and ancillary markets. There can be no assurance that the distribution efforts made by the Partnership, the General Partner or unaffiliated parties on behalf of the Partnership for the programming will be successful. ITEM 2. PROPERTIES See ITEM 1. 3 ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None PART II. 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 such a market will develop in the future. As of February 15, 2000, the number of equity security holders in the Partnership was 555. 4 ITEM 6. SELECTED FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31, ----------------------------------------------------------------------- 1995 1996 1997 1998 1999 ----------- ----------- ----------- ----------- ----------- Gross revenues $ 324,489 $ 329,875 $ 215,834 $ 292,569 $ 240,736 Costs of filmed entertainment 303,817 281,451 199,899 19,829 2,117 Distribution fees and expenses 159,045 105,707 92,702 146,077 80,037 Loss on write-down of film production cost -- 575,000 -- 194,907 140,000 Operating, general and administrative expenses 19,296 31,701 78,965 30,720 27,549 Operating income (loss) (157,669) (663,984) (155,732) (98,964) (8,967) Net income (loss) (220,238) (575,789) (118,640) (82,162) (5,322) Net income (loss) per limited partnership unit (19.42) (50.76) (10.46) (7.24) (.47) Weighted average number of limited partnership units outstanding 11,229 11,229 11,229 11,229 11,229 General partner's deficit (22,050) (33,479) (40,337) (43,995) (45,466) Limited partners' capital 2,541,978 1,410,494 731,588 369,522 223,890 Total assets 2,670,155 1,555,607 965,564 340,863 187,453 General partner advances 2,446 29,106 8,622 7,511 836
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the Partnership's financial condition and results of operations 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 actual results may differ significantly from the results predicted in such forward-looking statements. RESULTS OF OPERATIONS 1999 COMPARED TO 1998 Revenues of the Partnership decreased $51,833, from $292,569 in 1998 to $240,736 in 1999. This decrease in revenues was primarily related to a $53,421 decrease in the sales of "The Bible Programs," from $292,040 in 1998 to $238,619 in 1999. Filmed entertainment costs decreased $17,712, from $19,829 in 1998 to $2,117 in 1999. This decrease was the result of the full amortization of the capitalized production costs relating to "The Bible Programs" during 1998. Filmed entertainment costs are amortized over the life of each film in the ratio that current gross revenues bear to anticipated total gross revenues. Distribution fees and expenses decreased $66,040, from $146,077 in 1998 to $80,037 in 1999. This decrease was the result of decreased home video sales of the "Bible Programs" under the Partnership's distribution agreement with J/G Distribution Company, an affiliate of the General Partner. Distribution fees and expenses relate to the compensation due and costs incurred by unaffiliated parties in 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. 5 Loss on write-down of film production was $194,907 in 1998, and an additional $140,000 was written down in 1999. The 1999 write down resulted in a remaining net investment in "The Whipping Boy" of $7,883 as of December 31, 1999. Operating, general and administrative expenses decreased $3,171, from $30,720 in 1998 to $27,549 in 1999. This decrease was due primarily to decreased direct costs allocable to the operations of the Partnership that were charged to the Partnership by the General Partner and its affiliates in 1999 as compared to 1998. The decrease in direct costs allocable to the Partnership's operations resulted mainly from the decrease in direct time spent by the affiliates of the General Partner on the accounting and legal functions of the Partnership. Interest income decreased $13,199, from $16,782 in 1998 to $3,583 in 1999. This decrease was due primarily to lower levels of invested cash balances existing during 1999 as compared to 1998. Limited Partners' net loss per partnership unit changed $6.77, from $(7.24) in 1998 to $(.47) in 1999. This change was due to the results of operations as discussed above. 1998 COMPARED TO 1997 Revenues of the Partnership increased $76,735, from $215,834 in 1997 to $292,569 in 1998. This increase in revenues was primarily related to a $108,502 increase in the sales of "The Bible Programs," from $183,538 in 1997 to $292,040 in 1998. This increase was partially offset by a decrease in domestic home video and non-theatrical sales of "The Whipping Boy", which totaled $32,296 in 1997 as compared to $529 in 1998. Filmed entertainment costs decreased $180,070, from $199,899 in 1997 to $19,829 in 1998. This decrease was the result of the decrease in film revenues from the "The Whipping Boy" as discussed above. In addition, this decrease was the result of the full amortization of the capitalized production costs relating to "The Bible Programs" during 1998. Filmed entertainment costs are amortized over the life of each film in the ratio that current gross revenues bear to anticipated total gross revenues. Distribution fees and expenses increased $53,375, from $92,702 in 1997 to $146,077 in 1998. This increase was the result of increased home video sales of the "Bible Programs" under the Partnership's distribution agreement with J/G Distribution Company, an affiliate of the General Partner. Distribution fees and expenses relate to the compensation due and costs incurred by unaffiliated parties in 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. Loss on write-down of film production increased from $0 in 1997 to $194,907 in 1998. This increase was the result of a write-down of the Partnership's net investment in "The Whipping Boy" to the film's net realizable value of approximately $150,000 as of December 31, 1998. Operating, general and administrative expenses decreased $48,245, from $78,965 in 1997 to $30,720 in 1998. This decrease was due primarily to decreased direct costs allocable to the operations of the Partnership that were charged to the Partnership by the General Partner and its affiliates in 1998 as compared to 1997. The decrease in direct costs allocable to the Partnership's operations resulted mainly from the decrease in General Partner personnel expenses and the decrease in direct time spent by the affiliates of the General Partner on the accounting and legal functions of the Partnership. Interest income decreased $20,310, from $37,092 in 1997 to $16,782 in 1998. This decrease was due primarily to $14,207 in interest income recognized during 1997 related to the amortization of the discount on the promissory notes receivable from the General Partner due to the Partnership's June 1995 sale of the film "Household Saints" to the General Partner as compared to $0 in interest income recognized during 1998 related to the promissory notes receivable. This decrease was also due to lower levels of invested cash balances existing during 1998 as compared to 1997. 6 Limited Partners' net loss per partnership unit changed $3.22, from $(10.46) in 1997 to $(7.24) in 1998. This change was due to the results of operations as discussed above. 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 December 31, 1999, the Partnership had approximately $128,000 in cash. Cash generated from operations for the year ended December 31, 1999, was approximately 142,000. The Partnership will not invest in any additional programming projects, but instead will focus on the distribution and sale of its two existing films. The Partnership had outstanding amounts receivable totaling approximately $51,000 as of December 31, 1999. These amounts were received by the Partnership in the first quarter of 2000. Given the near completion of the second cycle of distribution of the Partnership's programming, as previously announced, regular quarterly distributions were suspended beginning with the quarter ended September 30, 1998. However, upon further evaluation by the General Partner of the cash reserves and cash operating needs of the Partnership, an additional distribution of $141,782 was declared for the three months ended March 31, 1999, and was paid in May 1999. 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, if any, will only be made once proceeds are received from the sale of the Partnership's assets, although the General Partner will continue to make quarterly evaluations of the Partnership's working capital position and needs. There is no assurance regarding the current timing 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 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 at this time when or at what price the Partnership's interests in its programming projects ultimately will be sold, but will initiate sales efforts in 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 will be distributed to the partners after such sale. 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 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. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Partnership does not hold any financial instruments which present significant interest or market risk. 7 ITEM 8. FINANCIAL STATEMENTS JONES PROGRAMMING PARTNERS 2-A, LTD. FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND 1999 INDEX
PAGE Report of Independent Public Accountants 9 Statements of Financial Position 10 Statements of Operations 11 Statements of Partners' Capital (Deficit) 12 Statements of Cash Flows 13 Notes to Financial Statements 14
8 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Jones Programming Partners 2-A, Ltd.: We have audited the accompanying statements of financial position of Jones Programming Partners 2-A, Ltd. (a Colorado limited partnership) as of December 31, 1998 and 1999, and the related statements of operations, partners' capital (deficit) and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the 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 in the United States. 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 Jones Programming Partners 2-A, Ltd. as of December 31, 1998 and 1999, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles in the United States. ARTHUR ANDERSEN LLP Denver, Colorado, March 17, 2000 9 JONES PROGRAMMING PARTNERS 2-A, LTD. (A LIMITED PARTNERSHIP) STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, -------------------------- ASSETS 1998 1999 ----------- ----------- CASH AND CASH EQUIVALENTS (Note 2) $ 128,275 $ 128,458 ACCOUNTS receivable (Note 5) 62,588 51,112 INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION, net of accumulated amortization of $3,881,251 and $4,023,368 as of December 31, 1998 and 1999, respectively (Notes 2, 4 and 5) 150,000 7,883 ----------- ----------- Total assets $ 340,863 $ 187,453 =========== =========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) LIABILITIES: Accounts payable to affiliates $ 7,511 $ 836 Accrued liabilities 7,825 8,193 ----------- ----------- Total liabilities 15,336 9,029 ----------- ----------- PARTNERS' CAPITAL (deficit) (Note 3): General partner - Contributed capital 1,000 1,000 Distributions (33,267) (34,685) Accumulated deficit (11,728) (11,781) ----------- ----------- Total general partner's deficit (43,995) (45,466) Limited partners - Net contributed capital (11,229 units outstanding as of December 31, 1998 and 1999) 4,823,980 4,823,980 Distributions (3,293,328) (3,433,691) Accumulated deficit (1,161,130) (1,166,399) ----------- ----------- Total limited partners' capital 369,522 223,890 ----------- ----------- Total partners' capital (deficit) 325,527 178,424 ----------- ----------- Total liabilities and partners' capital (deficit) $ 340,863 $ 187,453 =========== ===========
The accompanying notes to these financial statements are an integral part of these financial statements. 10 JONES PROGRAMMING PARTNERS 2-A, LTD. (A LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, ----------------------------------- 1997 1998 1999 --------- --------- --------- GROSS REVENUES (Notes 2 and 5) $ 215,834 $ 292,569 $ 240,736 COSTS AND EXPENSES: Costs of filmed entertainment (Note 2) 199,899 19,829 2,117 Distribution fees and expenses (Notes 2 and 5) 92,702 146,077 80,037 Loss on write-down of film production cost (Note 5) -- 194,907 140,000 Operating, general and administrative expenses (Note 4) 78,965 30,720 27,549 --------- --------- --------- Total costs and expenses 371,566 391,533 249,703 --------- --------- --------- OPERATING LOSS (155,732) (98,964) (8,967) --------- --------- --------- OTHER INCOME: Interest income 37,092 16,782 3,583 Other income -- 20 62 --------- --------- --------- Total other income 37,092 16,802 3,645 --------- --------- --------- NET LOSS $(118,640) $ (82,162) $ (5,322) ========= ========= ========= ALLOCATION OF NET LOSS: General partner $ (1,186) $ (822) $ (53) ========= ========= ========= Limited partners $(117,454) $ (81,340) $ (5,269) ========= ========= ========= NET LOSS PER LIMITED PARTNERSHIP UNIT $ (10.46) $ (7.24) $ (.47) ========= ========= ========= WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING 11,229 11,229 11,229 ========= ========= =========
The accompanying notes to these financial statements are an integral part of these financial statements. 11 JONES PROGRAMMING PARTNERS 2-A, LTD. (A LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, ------------------------------------- 1997 1998 1999 ----------- --------- --------- GENERAL PARTNER: Balance, beginning of period $ (33,479) $ (40,337) $ (43,995) Distributions (5,672) (2,836) (1,418) Net loss (1,186) (822) (53) ----------- --------- --------- Balance, end of period $ (40,337) $ (43,995) $ (45,466) =========== ========= ========= LIMITED PARTNERS: Balance, beginning of period $ 1,410,494 $ 731,588 $ 369,522 Distributions (561,452) (280,726) (140,363) Net loss (117,454) (81,340) (5,269) ----------- --------- --------- Balance, end of period $ 731,588 $ 369,522 $ 223,890 =========== ========= ========= TOTAL PARTNERS' CAPITAL (DEFICIT) $ 691,251 $ 325,527 $ 178,424 =========== ========= =========
The accompanying notes to these financial statements are an integral part of these financial statements. 12 JONES PROGRAMMING PARTNERS 2-A, LTD. (A LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, ----------------------------------- 1997 1998 1999 --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(118,640) $ (82,162) $ (5,322) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Amortization of filmed entertainment costs 199,899 19,829 2,117 Amortization of discount (14,207) -- -- Loss on write-down of film production cost -- 194,907 140,000 Decrease in accounts receivable 1,267 12,235 11,476 Decrease in other assets 2,285 -- -- Increase (decrease) in accrued liabilities 116,205 (116,085) 368 Decrease in accounts payable to affiliates (20,484) (1,111) (6,675) --------- --------- --------- Net cash provided by operating activities 166,325 27,613 141,964 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from note receivable from General Partner 389,166 -- -- --------- --------- --------- Net cash provided by investing activities 389,166 -- -- --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to partners (567,124) (425,343) (141,781) --------- --------- --------- Net cash used in financing activities (567,124) (425,343) (141,781) --------- --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (11,633) $(397,730) $ 183 CASH AND CASH EQUIVALENTS, beginning of period 537,638 526,005 128,275 --------- --------- --------- CASH AND CASH EQUIVALENTS, end of period $ 526,005 $ 128,275 $ 128,458 ========= ========= =========
The accompanying notes to these financial statements are an integral part of these financial statements. 13 JONES PROGRAMMING PARTNERS 2-A, LTD. (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (1) ORGANIZATION AND BUSINESS In March 1992, Jones Programming Partners 2-A, Ltd. (the "Partnership"), was formed as a limited partnership pursuant to the laws of the State of Colorado to engage in the acquisition, development, production, licensing and distribution of original entertainment programming. Jones Entertainment Group, Ltd. is the "General Partner" of the Partnership. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS - The Partnership considers all highly-liquid investments with a maturity when purchased of three months or less to be cash equivalents. FILM REVENUE RECOGNITION - The Partnership recognizes revenue in accordance with the provisions of Statement of Financial Accounting Standards No. 53 ("SFAS No. 53"). Pursuant to SFAS No. 53, revenues from domestic and international licensing agreements for programming are recognized when such amounts are known and the film is available for exhibition or telecast, and when certain other SFAS No. 53 criteria are met. Advances received for licensing or other purposes prior to exhibition or telecast are deferred and recognized as revenue when the above conditions are met. INVESTMENT IN AND ADVANCES FOR FILM PRODUCTIONS - Investment in and advances for film production consists of advances to production entities for story rights, production, and film completion costs, and is stated at the lower of cost or estimated net realizable value. In addition, film production and overhead fees payable to the General Partner have been capitalized and included as investment in film production. Film production costs are amortized based upon the individual-film-forecast method. Estimated losses, if any, will be provided for in full when determined by the General Partner (see Note 5.) DISTRIBUTION COSTS - Commissions, distribution expenses and marketing costs incurred in connection with domestic and international distribution are recorded at the time that the related license fees are recorded as revenue by the Partnership. USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires 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. (3) PARTNERS' CAPITAL (DEFICIT) The capitalization of the Partnership is set forth in the accompanying Statements of Partners' Capital (Deficit). No limited partner is or will be obligated to make any additional contributions to the Partnership. The General Partner purchased its interest in the Partnership by contributing $1,000 to Partnership capital. Profits, losses and distributions of the Partnership are allocated 99 percent to the limited partners and 1 percent to the General Partner until the limited partners have received distributions equal to 100 14 percent of their capital contributions plus an annual return thereon of 12 percent, cumulative and non-compounded. Thereafter, profits/losses and distributions will generally be allocated 80 percent to the limited partners and 20 percent to the General Partner. (4) TRANSACTIONS WITH AFFILIATES As of December 31, 1999, the General Partner, on behalf of the Partnership, has incurred home video and telecast distribution costs totaling $61,939 relating to "The Whipping Boy," of which $20,907 was reimbursed by the Partnership out of film distribution proceeds earned during 1996. The General Partner generally will be entitled to reimbursement of these remaining costs from the Partnership contingent on the receipt of proceeds from future home video and telecast distribution of the film. Future proceeds received from the distribution of "The Whipping Boy" will be recognized as revenue by the Partnership, net of any remaining distribution costs reimbursed to the General Partner. The Partnership reimburses affiliates of the General Partner for certain allocated administrative personnel expenses. These expenses generally consist of salaries and related benefits. Allocations of personnel costs are generally based on actual time spent by affiliated associates with respect to the Partnership. Such allocated expenses totaled $35,028, $0, and $0 for the years ended December 31, 1997, 1998 and 1999, respectively. The Partnership and Jones Documentary Film Corporation ("JDFC") granted the General Partner the exclusive rights to distribute 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 the Partnership granted it 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 begins to receive part of the revenue. The General Partner believes that Agamemnon will begin to participate in the Partnership's interest sometime during 2000. J/G Distribution Company is currently distributing the Bible Programs in the retail home video market. As of December 31, 1999, gross sales made by J/G Distribution Company totaled $3,518,880, of which $1,759,440 has been retained by J/G Distribution Company for its fees and marketing costs, with the remaining $1,759,440 belonging 50 percent to the Partnership and 50 percent to Goodtimes. Additionally, $250,000 was received directly by the Partnership as its share of the initial license fee from A&E. As of December 31, 1999, the Partnership had received both the $828,608 due from J/G Distribution and the $250,000 from A&E. The remaining $51,112 due from J/G Distribution was received in February 2000. (5) 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 party, to produce four one-hour programs for television, entitled "Charlton Heston Presents: The Bible" (the "Bible Programs"). 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 an unaffiliated party for 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 is $1,369,764. From 15 inception to December 31, 1999, the Partnership has recognized $2,009,525 of revenue from this film, of which $888,720 was retained by the distributors of the film for their fees and marketing costs and $1,069,693 was received by the Partnership as of December 31,1999. The remaining $51,112 was received by the Partnership in February 2000. In June 1998, the Partnership fully amortized its net investment in this film. "THE WHIPPING BOY" In August 1993, the Partnership acquired the 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 December 31, 1997, 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 December 31, 1999, the Partnership has recognized $2,276,382 of 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 $176,382, $8,497 was retained by the distributors of the film for their fees and marketing costs and the remaining $167,885 was received by the Partnership as of December 31, 1999. In the fourth quarter of 1998, the General Partner again reassessed the anticipated gross revenue remaining from the distribution of the "The Whipping Boy" based on revised estimated television sales projections and actual results of the film's distribution in comparison to the film's prior projections. A determination was made by the General Partner that the Partnership's net investment in "The Whipping Boy" of $344,907 exceeded the film's estimated net realizable value of $150,000 as of December 31, 1998, resulting in a writedown of $194,907. The film's estimated net realizable value was calculated based on an estimate of anticipated revenues remaining over the life of the film from international and domestic television distribution, net of estimated distribution fees and costs, as of December 31, 1998. During the fourth quarter of 1999, the General Partner reassessed the anticipated gross revenue remaining from the distribution of the "The Whipping Boy" based on revised estimated television sales projections and actual results of the film's distribution in comparison to the film's prior projections. A determination was made by the General Partner that the Partnership's net investment in "The Whipping Boy" of $147,883 exceeded the film's estimated net realizable value of $7,883 as of December 31, 1999, resulting in a write-down of $140,000. The film's estimated net realizable value was calculated based on an estimate of anticipated revenues remaining over the life of the film from international and domestic television distribution, net of estimated distribution fees and costs, as of December 31, 1999. These revenue projections were estimated by the General Partner and the film's distributor based on the film's prior distribution history, the remaining international and domestic territories available to the film for future television, and the General Partner's and the distributor's previous distribution experience with other films. As of December 31, 1999 the Partnership's net investment in the film, after consideration of amortization and write-downs, was $7,883. (6) INCOME TAXES Income taxes are not reflected in the accompanying financial statements as such amounts accrue directly to the partners. The Federal and state income tax returns of the Partnership will be prepared and filed by the General Partner. The Partnership's tax returns, the qualification of the Partnership as a limited 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 Partnership's tax status, or the Partnership's recorded income or loss, the tax liability of the General and limited partners would be adjusted accordingly. The Partnership's only significant book-tax difference between the financial reporting and tax bases of the Partnership's assets and liabilities is associated with the difference between film production cost amortization and loss from write-down of film production cost recognized under generally accepted accounting principles and the amount of expense allowed for tax purposes. Film production cost 16 recognized under generally accepted accounting principles exceeded the amount of expense recognized for tax purposes by approximately $174,000, $214,000, and $99,000 for the years ended December 31, 1997, 1998, and 1999, respectively. 17 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Partnership itself has no officers or directors. Certain information concerning directors and executive officers of the General Partner of the Registrant is set forth below. Each of the directors serves until the next annual meeting of the shareholders of the General Partner and until their successors shall be elected and qualified.
NAME AGE POSITIONS WITH THE GENERAL PARTNER - ---- --- ---------------------------------- Glenn R. Jones 70 Chairman of the Board, Chief Executive Officer, and President Heather O'Mara 33 Executive Vice President Thom Anema 36 Vice President/Finance and Treasurer and Chief Accounting Officer Wilfred N. Cooper, Sr. 69 Director J. Rodney Dyer 64 Director
Mr. Glenn R. Jones has served as Chairman of the Board of Directors and Chief Executive Officer of the General Partner since its inception and he has served as President of the General Partner since April 1994. Mr. Jones is also the Chairman of the Board of Directors and Chief Executive Officer of the General Partner's principal shareholder, Jones 21st Century, Inc., a subsidiary of Jones International, Ltd. He is also an officer and director of a number of subsidiaries for Jones International Networks. For more than five years, until April 1999, Mr. Jones was Chairman of the Board of Directors and Chief Executive Officer of Jones Intercable, Inc., a multiple system cable television operator. In addition, Mr. Jones is a member of the Board and Education Council of the National Alliance of Business. In 1994, Mr. Jones was inducted into Broadcasting and Cable's Hall of Fame. Mr. Jones received a B.S. in Economics from Allegheny College and a J.D. from the University of Colorado School of Law. Ms. Heather O'Mara is the Executive Vice President of the General Partner. Ms. O'Mara has more than 13 years of experience in new technologies and entertainment and has filled various roles for the Jones companies since June 1996. Ms. O'Mara holds a Bachelor of Science in Accounting and International Business from New York University. A Certified Public Accountant, Ms. O'Mara is a member of both the American and the New York societies of Certified Public Accountants. Mr. Thom Anema is the Vice President of Finance and the Treasurer and Chief Accounting Officer of the General Partner. Mr. Anema has over ten years of experience in the telecommunications industry and has filled various roles for Jones companies since November 1988. Prior to joining Jones, Mr. Anema practiced public accounting with Touche Ross and Company. Mr. Anema holds a Bachelor of Science in Accounting from Calvin College. Mr. Wilfred N. Cooper, Sr. became a director of the General Partner in December 1994. Mr. Cooper has been the principal shareholder and a Director of WNC & Associates, Inc. since its organization in 1971, of Shelter Resource Corporation since its organization in 1981 and of WNC Resources, Inc. from its organization in 1988 through its acquisition by WNC & Associates, Inc. in 1991, serving as President of those companies through June 1992 and as Chief Executive Officer since June 1992. Mr. J. Rodney Dyer became a director of the General Partner in December 1994. Mr. Dyer has been the President of Total Creative, Inc. since its formation in 1967. Rod Dyer Group, Inc. specializes in advertising, marketing and promotion. 18 ITEM 11. EXECUTIVE COMPENSATION The Partnership has no employees; however, various personnel are required to operate its business. Such personnel are employed by the General Partner and, pursuant to the terms of the Partnership's limited partnership agreement, the cost of such employment can be charged by the General Partner to the Partnership as a reimbursement item. See ITEM 13. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of March 7, 2000, no person or entity owns more than 5 percent of the limited partnership interests in the Partnership. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The General Partner and its affiliates engage in certain transactions with the Partnership as contemplated by the limited partnership agreement of the Partnership. The 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 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. As of December 31, 1999, the General Partner, on behalf of the Partnership, has incurred home video and telecast distribution costs totaling $61,939 relating to "The Whipping Boy," of which $20,907 has been reimbursed by the Partnership out of film distribution proceeds. The General Partner generally will be entitled to reimbursement of these remaining costs from the Partnership contingent on the receipt of proceeds from future home video and telecast distribution of the film. Future proceeds received from the distribution of "The Whipping Boy" will be recognized as revenue by the Partnership, net of any remaining distribution costs reimbursed to the General Partner. In connection with the distribution of "Charlton Heston Presents: The Bible," J/G Distribution Company, an affiliate of the General Partner, is entitled to certain distribution rights and fees. See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for a description of these distribution rights and fees. As of December 31, 1999, gross sales made by J/G Distribution Company totaled $3,518,880, of which $1,759,440 has been retained by J/G Distribution Company for its fees and marketing costs, with the remaining $1,759,440 belonging 50 percent to the Partnership and 50 percent to Goodtimes. As of December 31, 1999, the Partnership had received $828,608 due from J/G Distribution, with the remaining $51,112 received in the first quarter of 2000. 19 PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT: 1. Financial statements 2. Schedules - Financial Data Schedule. 3. The following exhibits are filed herewith: 4.1 Limited Partnership Agreement. (1) (1) Incorporated by reference from the Partnership's Annual Report on Form 10-K for year ended December 31, 1989. (b) REPORTS ON FORM 8-K: None. 20 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. JONES PROGRAMMING PARTNERS 2-A, LTD., a Colorado limited partnership By Jones Entertainment Group, Ltd., its General Partner By: /s/ Glenn R. Jones ---------------------------- Glenn R. Jones Chairman of the Board, Chief Executive Dated: March 23, 2000 Officer and President 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. By: /s/ Glenn R. Jones ---------------------------- Glenn R. Jones Chairman of the Board, Chief Executive Officer and President Dated: March 23, 2000 (Principal Executive Officer) By: /s/ Heather O'Mara ---------------------------- Heather O'Mara Dated: March 23, 2000 Executive Vice President By: /s/ Thom Anema ---------------------------- Thom Anema Vice President/Finance and Treasurer Dated: March 23, 2000 Chief Accounting Officer By: /s/ Wilfred N. Cooper, Sr. ---------------------------- Wilfred N. Cooper, Sr. Dated: March 23, 2000 Director By: /s/ J. Rodney Dyer ---------------------------- J. Rodney Dyer Dated: March 23, 2000 Director 21 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. JONES PROGRAMMING PARTNERS 2-A, LTD., a Colorado limited partnership By Jones Entertainment Group, Ltd., its General Partner By: ---------------------------- Glenn R. Jones Chairman of the Board, Chief Dated: March 23, 2000 Executive Officer and President 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. By: ---------------------------- Glenn R. Jones Chairman of the Board, Chief Executive Officer and President Dated: March 23, 2000 (Principal Executive Officer) By: ---------------------------- Heather O'Mara Dated: March 23, 2000 Executive Vice President By: ---------------------------- Thom Anema Vice President/Finance and Treasurer Dated: March 23, 2000 Chief Accounting Officer By: ---------------------------- Wilfred N. Cooper, Sr. Dated: March 23, 2000 Director By: ---------------------------- J. Rodney Dyer Dated: March 23, 2000 Director 22 EX-27 2 EXHIBIT 27
5 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 128,458 0 51,112 0 0 0 0 0 187,453 9,029 0 0 0 0 178,424 187,453 0 240,736 0 (249,703) 62 0 3,645 (5,322) 0 (5,322) 0 0 0 (5,322) (.47) (.47)
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