10-Q 1 a10-q.txt FORM 10-Q 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 0-20944 Jones Programming Partners 2-A, Ltd. -------------------------------------------------------------------------------- Exact name of registrant as specified in charter Colorado #84-1088819 -------------------------------------------------------------------------------- State of organization I.R.S. employer I.D.# 9697 East Mineral Avenue, Englewood, Colorado 80112 --------------------------------------------------- Address of principal executive office (303) 792-3111 ----------------------------- Registrant's telephone number 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, 1999 and June 30, 2000 3 Unaudited Statements of Operations for the Three and Six Months Ended June 30, 1999 and 2000 4 Unaudited Statements of Cash Flows for the Six Months Ended June 30, 1999 and 2000 5 Notes to Unaudited Financial Statements as of 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
2 JONES PROGRAMMING PARTNERS 2-A, LTD. (A Limited Partnership) UNAUDITED STATEMENTS OF FINANCIAL POSITION
December 31, June 30, ASSETS 1999 2000 ----------- ----------- CASH AND CASH EQUIVALENTS $ 128,458 $ 187,555 ACCOUNTS RECEIVABLE 51,112 -- INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION, net of accumulated amortization of $4,023,368 and $4,023,655 as of December 31, 1999 and June 30, 2000, respectively (Note 3) 7,883 7,596 ----------- ----------- Total assets $ 187,453 $ 195,151 =========== =========== LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) LIABILITIES: Accounts payable to affiliates $ 836 $ 18,581 Accrued liabilities 8,193 4,550 Accrued distributions payable to partners -- 141,781 ----------- ----------- Total liabilities 9,029 164,912 ----------- ----------- PARTNERS' CAPITAL (deficit): General partner- Contributed capital 1,000 1,000 Distributions (34,685) (36,103) Accumulated deficit (11,781) (11,845) ----------- ----------- Total general partner's deficit (45,466) (46,948) ----------- ----------- Limited partners - Contributed capital, net of offering costs (11,229 units outstanding as of December 31, 1999 and June 30, 2000) 4,823,980 4,823,980 Distributions (3,433,691) (3,574,054) Accumulated deficit (1,166,399) (1,172,739) ----------- ----------- Total limited partners' capital 223,890 77,187 ----------- ----------- Total partners' capital (deficit) 178,424 30,239 ----------- ----------- Total liabilities and partners' capital (deficit) $ 187,453 $ 195,151 =========== ===========
The accompanying notes to these unaudited financial statements are an integral part of these unaudited financial statements. 3 JONES PROGRAMMING PARTNERS 2-A, LTD. (A Limited Partnership) UNAUDITED STATEMENTS OF OPERATIONS
For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------------- ------------------------- 1999 2000 1999 2000 -------- -------- -------- -------- GROSS REVENUES $130,579 $ 12,968 $131,585 $ 13,255 COSTS AND EXPENSES: Costs of filmed entertainment 623 -- 1,628 287 Distribution fees and expenses 39,703 6,484 39,704 6,484 Operating, general and administrative expenses 10,658 8,803 16,533 16,823 -------- -------- -------- -------- Total costs and expenses 50,984 15,287 57,865 23,594 -------- -------- -------- -------- OPERATING INCOME (LOSS) 79,595 (2,319) 73,720 (10,339) -------- -------- -------- -------- OTHER INCOME: Interest income 1,088 2,400 1,873 3,935 -------- -------- -------- -------- Total other income 1,088 2,400 1,873 3,935 -------- -------- -------- -------- NET INCOME (LOSS) $ 80,683 $ 81 $ 75,593 $ (6,404) ======== ======== ======== ======== ALLOCATION OF NET INCOME (LOSS): General partner $ 807 $ 1 $ 756 $ (64) ======== ======== ======== ======== Limited partners $ 79,876 $ 80 $ 74,837 $ (6,340) ======== ======== ======== ======== NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ 7.11 $ .01 $ 6.66 $ (.56) ======== ======== ======== ======== WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING 11,229 11,229 11,229 11,229 ======== ======== ======== ========
The accompanying notes to these unaudited financial statements are an integral part of these unaudited financial statements. 4 JONES PROGRAMMING PARTNERS 2-A, LTD. (A Limited Partnership) UNAUDITED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, ---------------------------- 1999 2000 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 75,593 $ (6,404) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Amortization of filmed entertainment costs 1,628 287 Net change in assets and liabilities: Decrease (increase) in accounts receivable (27,780) 51,112 Increase in accounts payable to affiliates 11,820 17,745 Decrease in accrued liabilities (3,850) (3,643) --------- --------- Net cash provided by operating activities 57,411 59,097 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to partners (141,781) -- --------- --------- Net cash used in financing activities (141,781) -- --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (84,370) 59,097 CASH AND CASH EQUIVALENTS, beginning of period 128,275 128,458 --------- --------- CASH AND CASH EQUIVALENTS, end of period $ 43,905 $ 187,555 ========= ========= SUPPLEMENTAL NON-CASH DISCLOSURE Accrued distributions payable to partners $ -- $ 141,781 ========= =========
The accompanying notes to the unaudited financial statements are an integral part of these unaudited 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 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 2-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 $1,213 and $1,266 to the Partnership for direct expenses to the Partnership for the three months ended June 30, 1999 and 2000, respectively. For the six month periods ended June 30, 1999 and 2000, $3,375 and $4,976, respectively, of direct expenses were charged to the Partnership. (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 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 June 30, 2000, the Partnership has recognized $2,022,493 of revenue from this film, of which $895,205 was retained by the distributors of the film for their fees and marketing costs and $1,127,288 was received by the Partnership as of June 30, 2000. "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 June 30, 2000, 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 June 30, 2000, the Partnership has recognized $2,276,669 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 $176,669, $8,497 has been retained by the distributors of the film for their fees and 6 marketing costs and $168,172 has been received by the Partnership as of June 30, 2000. The Partnership's net investment in the film, after consideration of amortization and writedowns, was $7,596 as of June 30, 2000. The Partnership plans to amortize its remaining investment in this film from net revenues generated from domestic and international home video and television markets or recover its remaining investment from the sale of the Partnership's interests 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 June 30, 2000, the Partnership had approximately $188,000 in cash. Cash generated from operations for the six months ended June 30, 2000 was approximately $59,000. The Partnership will not invest in any additional programming projects, but instead will focus on the distribution and sale of its two existing films. Given the near completion of the second cycle 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 quarterly cash flow distribution totaling $141,781 was declared for the three months ended March 31, 1999, and was paid in May 1999. In 2000, upon further evaluation by the General Partner of the cash reserves and cash operating needs of the Partnership, an additional quarterly cash flow distribution totaling $141,781 was declared for the three months ended June 30, 2000, and will be 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 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 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 on one basis, in the judgment 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. 8 RESULTS OF OPERATIONS Revenues of the Partnership decreased $117,611, from $130,579 to $12,968 for the three months ended June 30, 1999 and 2000, respectively. Revenues of the Partnership decreased $118,330, from $131,585 to $13,255 for the six months ended June 30, 1999 and 2000, respectively. These decreases were primarily the result of a decrease in royalty revenue received from the distribution of the Bible Programs for the three and six month periods ended June 30, 2000 as compared to the same periods in 1999. Filmed entertainment costs decreased $623, from $623 to $0 for the three months ended June 30, 1999 and 2000, respectively. Filmed entertainment costs decreased $1,341, from $1,628 to $287 for the six months ended June 30, 1999 and 2000, respectively. These decreases were the result of decreased revenues from the Partnership's programming as discussed above. Filmed entertainment costs are amortized over the life of the film in the ratio that current gross revenues bear to anticipated total gross revenues. Distribution fees and expenses decreased $33,219, from $39,703 to $6,484 for the three months ended June 30, 1999 and 2000, respectively. Distribution fees and expenses decreased $33,220, from $39,704 to $6,484 for the six months ended June 30, 1999 and 2000, respectively. The decrease was primarily the result of the reduction of distribution fees and expenses for the Bible Programs. 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 the distribution fees and expenses vary depending upon the individual market in which programming is distributed. Operating, general and administrative expenses decreased $1,855, from $10,658 to $8,803 for the three months ended June 30, 1999 and 2000, respectively. Operating, general and administrative expenses increased $290, from $16,533 to $16,823 for the six months ended June 30, 1999 and 2000, respectively. The decrease for the three month period ended June 30, 2000, compared to the same period in 1999, was due primarily to a decrease in printing charges. The increase for the six months ended June 30, 2000, compared to the same period in 1999, resulted primarily from the increase in direct costs allocable to the Partnership's operations that were charged to the Partnership by the General Partner and its affiliates for direct time spent on the accounting function of the Partnership and on preparation of the sale of the Partnership's assets. Interest income increased $1,312, from $1,088 to $2,400 for the three months ended June 30, 1999 and 2000, respectively. Interest income increased $2,062, from $1,873 to $3,935 for the six months ended June 30, 1999 and 2000, respectively. These increases were the result of higher levels of invested cash balances in the three and six month periods ended June 30, 2000 as compared to the same periods in 1999. Limited Partners' net income per partnership unit changed $(7.10), from $7.11 to $.01 for the three months ended June 30, 1999 and 2000, respectively. Limited Partners' net income (loss) per partnership unit changed $(7.22), from $6.66 to $(.56) for the six months ended June 30, 1999 and 2000, respectively. These changes were 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 2-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