-----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, AlgCnRJCq8FGqdNy8IEXheu+Q2ih77uO47Z01xY1dW8Q832Hc31i8fpdajPJZ+Hs jejOEo83t7HrDQ2q1bUVvg== 0000912057-01-008688.txt : 20010330 0000912057-01-008688.hdr.sgml : 20010330 ACCESSION NUMBER: 0000912057-01-008688 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JONES PROGRAMMING PARTNERS 1-A LTD CENTRAL INDEX KEY: 0000873800 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 841088820 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 033-21970-02 FILM NUMBER: 1584357 BUSINESS ADDRESS: STREET 1: 9697 E MINERAL AVE STREET 2: P O BOX 3309 CITY: ENGLEWOOD STATE: CO ZIP: 80155 BUSINESS PHONE: 3037923111 MAIL ADDRESS: STREET 1: C/O JONES INTERCABLE INC STREET 2: 9697 E MINERAL AVE PO BOX 3309 CITY: ENGLEWOOD STATE: CO ZIP: 80155-3309 10-K405 1 a2043537z10-k405.txt 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, 2000 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: 0-19075 JONES PROGRAMMING PARTNERS 1-A, LTD. ------------------------------------ (Exact name of registrant as specified in its charter) COLORADO 84-1088820 - -------------------------- --------------------------------- (State of Organization) (IRS Employer Identification No.) 9697 E. MINERAL AVENUE, ENGLEWOOD, COLORADO 80112 (303) 792-3111 - ------------------------------------------------- -------------- (Address of principal executive office and Zip Code) (Registrant's telephone no. including area code)
Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests Indicate by check mark whether the registrant, (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 1-A, Ltd. (the "Partnership") is a Colorado limited partnership that was formed in April 1989 pursuant to the public offering of limited partnership interests in the Jones Programming Partners Limited Partnership Program. Jones Entertainment Group, Ltd. is the general partner of the Partnership (the "General Partner"). The Partnership was formed to acquire, develop and own rights to produce and license original 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 2001. The General Partner charges the Partnership for certain 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. As of December 31, 2000, the Partnership had three programming properties: "The Little Kidnappers," "The Story Lady" and "Curacao." 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. Following is a description of the Partnership's programming. THE LITTLE KIDNAPPERS In January 1990, the General Partner, on behalf of the Partnership, entered into an agreement with Jones Maple Leaf Productions to produce a full-length made-for-television film entitled "The Little Kidnappers." The total film cost was approximately $3,200,000. Of this amount, the Partnership invested approximately $2,794,000, which included a production and overhead fee of $300,000 paid to the General Partner. In March 1999, the Partnership fully amortized its net investment in this film. From inception to December 31, 2000, the Partnership has recognized approximately $3,003,000 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 help finance the film's production. 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 certain distribution rights to this film. Included in the total amount invested is a production and overhead fee of $120,000 paid to the General Partner. In December 1995, the Partnership fully amortized its net investment in this film. From inception to December 31, 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 on a month to month basis) and the Partnership retained domestic distribution rights, principally home video, non-network free television, pay television, and non-theatrical. 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. 2 As of December 31, 2000, NBCP reported that it had not recouped approximately $469,000 of its original investment, plus interest. While the Partnership disputes whether NBCP is entitled to recover its entire claimed unrecouped amount under the agreement, an unfavorable outcome to the Partnership would make it unlikely that the Partnership will receive income from this film in the near future, or at all. Through December 31, 2000, the Partnership had received approximately $190,000 from distributors which was not applied to NBCP's unrecouped amount. As of December 31, 2000, the Partnership had reported this amount as an accrued liability. There is no assurance regarding the favorable resolution of this matter. The Partnership does not have the funds to make such payment, nor is it likely that the Partnership could borrow the necessary funds. Any proceeds from the sale of the Partnership's programming interests will likely have to be applied to some or all of the amounts claimed by NBCP. 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 presale and supervising production of this picture. In December 1999, the Partnership fully amortized its net investment in this film. From inception to December 31, 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. GENERAL MATTERS The General Partner, on behalf of the Partnership, is pursuing the sale of the Partnership's interests in its programming. See further discussion of the Partnership's distribution efforts concerning these films in ITEM 7, MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. None of the Partnership's films are presently generating any significant revenue. 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 saleability 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 obtained the services of a broker to assist in the sale of the Partnership's films. Pursuant to the services agreement, the broker will receive a 10% commission for arranging the sale, or sales, of the Partnership's films. The Partnership has encountered 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. 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 age and technical specifications of the Partnership's programming may also limit distribution in certain international and domestic 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, in the past, and may again 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. 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 its programming will be successful. 3 ITEM 2. PROPERTIES SEE ITEM 1. 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 28, 2001, the number of equity security holders in the Partnership was 832. 4 ITEM 6. SELECTED FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31, --------------------------------------------------------------------------- 1996 1997 1998 1999 2000 -------------- -------------- ---------------------------- --------------- Gross revenues $ 211,669 $ 222,714 $ 195,717 $ 9,077 $ 27,273 Costs of filmed entertainment 107,418 93,983 11,546 6,027 - Distribution fees and expenses 58,229 98,471 196,695 119,104 15,463 Loss from write-down of film production cost 656,744 - - 58,946 - Operating, general and administrative expenses 62,499 94,162 115,247 61,810 43,239 Operating loss (673,221) (63,902) (127,771) (236,810) (31,429) Net loss (654,916) (54,372) (117,496) (237,119) (25,626) Net loss per limited partnership unit (50.88) (4.22) (9.13) (18.42) (1.99) Weighted average number of limited partnership units outstanding 12,743 12,743 12,743 12,743 12,743 General partner's deficit (49,284) (49,828) (52,612) (54,983) (55,239) Limited partners' capital (deficit) 517,422 463,594 187,985 (46,763) (72,133) Total assets 657,221 442,164 265,317 90,254 72,725 General partner advances 15,600 8,303 11,045 10,273 1,973
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 2000 COMPARED TO 1999 Revenues of the Partnership increased $18,196, from $9,077 in 1999 to $27,273 in 2000. This increase was primarily the result of revenue collection efforts made by the General Partner with respect to "Curacao". Revenue from "Curacao" was $3,703 in 1999 as compared to $26,807 in 2000. International and domestic sales of "The Little Kidnappers" and "The Story Lady" decreased, resulting in Partnership revenue of $4,455 and $919, respectively, in 1999 compared to $469 and $0, respectively, in 2000. "The Story Lady" was actively being distributed in 2000, however, due to the unrecouped position of NBCP, the Partnership was not entitled to any of the revenue generated by the film. Filmed entertainment costs decreased $6,027, from $6,027 in 1999 to $0 in 2000. This 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 gross revenues. Distribution fees and expenses decreased $103,641, from $119,104 in 1999 to $15,463 in 2000. This decrease was due primarily to the Partnership recording $119,081 in royalties owed NBCP for the "Story Lady" in 1999 compared to $15,000 in 2000. These distribution fees and expenses relate to the compensation due and costs incurred by distributors 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. The Partnership did not have a loss on write-down of film production in 2000. The loss from the write-down of film production of $58,946 in 1999, was the result of a full write-down of the Partnership's net investment in 5 "Curacao", as of December 31, 1999. As of December 31, 1999, the Partnership had expensed all costs related to the production of each of its three films. Operating, general and administrative expenses decreased $18,571, from $61,810 in 1999 to $43,239 in 2000. This decrease was due primarily to the Partnership writing off an outstanding receivable of $26,129 in 1999. A similar write off did not occur in 2000. This decrease was partially offset by an increase in legal expenses related to the potential sale of the Partnership's assets. Interest income increased $2,466, from $3,337 in 1999 to $5,803 in 2000. This increase in interest income was the result of higher interest rates and higher levels of invested cash balances during 2000 compared to 1999. Limited Partners' net loss per partnership unit decreased $16.43, from $(18.42) in 1999 to $(1.99) in 2000. This change was due to the results of operations as discussed above. 1999 COMPARED TO 1998 Revenues of the Partnership decreased $186,640, from $195,717 in 1998 to $9,077 in 1999. This decrease was due primarily to a decrease in domestic and international sales of "The Little Kidnappers" and "The Story Lady," which were $12,354 and $183,324, respectively, for 1998 as compared to $4,455 and $919, respectively, in 1999. International sales of "Curacao" increased $3,664, from $39 in 1998 to $3,703 in 1999. Filmed entertainment costs decreased $5,519, from $11,546 in 1998 to $6,027 in 1999. This decrease resulted primarily from the decrease in Partnership revenues and the full amortization in March 1999 of the "Little Kidnappers". Filmed entertainment costs are amortized over the life of the film in the ratio that current gross revenues bear to anticipated gross revenues. Distribution fees and expenses decreased $77,591, from $196,695 in 1998 to $119,104 in 1999. This decrease was due primarily to royalties that became due to artisan guilds in 1998 related to "Story Lady" and the decrease in revenues received from the three films. These distribution fees and expenses relate to the compensation due and costs incurred by distributors 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 of $58,946 in 1999, was the result of a full write-down of the Partnership's net investment in "Curacao", as of December 31, 1999. No such write-down was taken in 1998. As of December 31, 1999, the Partnership had expensed all costs related to the production of films. Operating, general and administrative expenses decreased $53,437, from $115,247 in 1998 to $61,810 in 1999. This decrease was due primarily to an allowance of $80,300 made during 1998 related to the potential uncollectibility of an outstanding international income receivable. Interest income decreased $6,198, from $9,535 in 1998 to $3,337 in 1999. This decrease in interest income was the result of lower average levels of invested cash balances existing during 1999 as compared to 1998. Limited Partners' net income per partnership unit changed $(9.29), from $(9.13) in 1998 to $(18.42) in 1999. 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 the Partnership's programming. The Partnership had approximately $73,000 in cash as of December 31, 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. 6 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 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 has initiated sales efforts but cannot predict at this time when or at what price the Partnership's interests in its programming ultimately will be sold. The films 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. The Partnership does not have the funds necessary to pay NBCP its claimed unrecouped costs involved with "The Story Lady" and even if the Partnership is successful in finding a buyer or buyers for all of its property, the proceeds may not be sufficient to allow for any distributions to the Partners. It is probable that the distributions of the proceeds from the sales of the Partnership's programming projects, if any, 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 Partnership has obtained the services of a broker to assist in the sale of the Partnership's films. Pursuant to the services agreement, the broker will receive a 10% commission for arranging the sale, or sales, of the Partnership's films. The General Partner believes that the Partnership has, and will continue to have, sufficient liquidity to fund its ongoing operations and to meet its obligations so long as quarterly distributions are suspended and provided the Partnership is able to reach a satisfactory resolution with respect to the claims made by NBCP. However, there can be no assurance that such a resolution can be achieved. 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. 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 1-A, LTD. FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 2000 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 1-A, Ltd.: We have audited the accompanying statements of financial position of Jones Programming Partners 1-A, Ltd. (a Colorado limited partnership) as of December 31, 1999 and 2000, and the related statements of operations, partners' capital (deficit) and cash flows for each of the three years in the period ended December 31, 2000. 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 auditing standards generally accepted 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 1-A, Ltd. as of December 31, 1999 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP Denver, Colorado, March 2, 2001. 9 JONES PROGRAMMING PARTNERS 1-A, LTD. (A LIMITED PARTNERSHIP) STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, ------------------------------------- 1999 2000 ------------ ------------ ASSETS CASH AND CASH EQUIVALENTS (Note 2) $ 86,626 $ 72,725 RECEIVABLES: International 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 2000, respectively (Notes 2 and 5) - - ------------ ------------ Total assets $ 90,254 $ 72,725 =========== =========== LIABILITIES AND PARTNERS' DEFICIT LIABILITIES: Accounts payable to affiliates $ 10,273 $ 1,973 Accrued liabilities 181,727 198,124 ----------- ----------- Total liabilities 192,000 200,097 ----------- ----------- PARTNERS' CAPITAL (DEFICIT) (Note 3): General partner - Contributed capital 1,000 1,000 Distributions (42,440) (42,440) Accumulated deficit (13,543) (13,799) ------------ ----------- Total general partner's deficit (54,983) (55,239) ----------- ----------- Limited partners - Contributed capital (12,743 units outstanding as of December 31, 1999 and 2000) 5,459,327 5,459,327 Distributions (4,201,502) (4,201,502) Accumulated deficit (1,304,588) (1,329,958) ------------ ----------- Total limited partners' deficit (46,763) (72,133) ------------ ------------ Total partners' deficit (101,746) (127,372) ------------ ------------ Total liabilities and partners' deficit $ 90,254 $ 72,725 =========== ===========
The accompanying notes are an integral part of these financial statements. 10 JONES PROGRAMMING PARTNERS 1-A, LTD. (A LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, ----------------------------------- 1998 1999 2000 --------- --------- --------- REVENUES (Notes 2 and 5) $ 195,717 $ 9,077 $ 27,273 COSTS AND EXPENSES: Costs of filmed entertainment (Notes 2 and 5) 11,546 6,027 -- Distribution fees and expenses (Note 2) 196,695 119,104 15,463 Loss from write-down of film production cost (Notes 2 and 5) -- 58,946 -- Operating, general and administrative expenses (Note 4) 115,247 61,810 43,239 --------- --------- --------- Total costs and expenses 323,488 245,887 58,702 --------- --------- --------- OPERATING LOSS (127,771) (236,810) (31,429) --------- --------- --------- OTHER INCOME (EXPENSE): Interest income 9,535 3,337 5,803 Other income (expense), net 740 (3,646) -- --------- --------- --------- Total other income (expense), net 10,275 (309) 5,803 --------- --------- --------- NET LOSS $(117,496) $(237,119) $ (25,626) ========= ========= ========= ALLOCATION OF NET LOSS: General partner $ (1,175) $ (2,371) $ (256) ========= ========= ========= Limited partners $(116,321) $(234,748) $ (25,370) ========= ========= ========= NET LOSS PER LIMITED PARTNERSHIP UNIT $ (9.13) $ (18.42) $ (1.99) ========= ========= ========= WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING 12,743 12,743 12,743 ========= ========= =========
The accompanying notes are an integral part of these financial statements. 11 JONES PROGRAMMING PARTNERS 1-A, LTD. (A LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, -------------------------------------------------------- 1998 1999 2000 -------------- -------------- ------------- GENERAL PARTNER: Balance, beginning of year $ (49,828) $ (52,612) $ (54,983) Distributions (1,609) - - Net loss (1,175) (2,371) (256) ----------- ----------- ----------- Balance, end of year $ (52,612) $ (54,983) $ (55,239) =========== =========== =========== LIMITED PARTNERS: Balance, beginning of year $ 463,594 $ 187,985 $ (46,763) Distributions (159,288) - - Net loss (116,321) (234,748) (25,370) ----------- ----------- ----------- Balance, end of year $ 187,985 $ (46,763) $ (72,133) =========== =========== =========== TOTAL PARTNERS' CAPITAL (DEFICIT) $ 135,373 $ (101,746) $ (127,372) =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 12 JONES PROGRAMMING PARTNERS 1-A, LTD. (A LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, ------------------------------------------------- 1998 1999 2000 --------------- ------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (117,496) $ (237,119) $ (25,626) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Amortization of filmed entertainment costs 11,546 6,027 - Loss from write-down of film production cost - 58,946 - Decrease in international income receivable 97,253 25,119 156 Decrease (increase) in domestic income receivable (76,122) 77,650 3,472 Decrease in other assets - 3,275 - Net change in amounts due to/from affiliates 2,742 (772) (8,300) Increase in accrued liabilities 98,804 62,828 16,397 ---------- ------------ ----------- Net cash provided by (used in) operating activities 16,727 (4,046) (13,901) ---------- ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to partners (160,897) - - ---------- ------------ ----------- Net cash used in financing activities (160,897) - - ---------- ------------ ----------- DECREASE IN CASH AND CASH EQUIVALENTS (144,170) (4,046) (13,901) CASH AND CASH EQUIVALENTS, beginning of year 234,842 90,672 86,626 ---------- ------------ ----------- CASH AND CASH EQUIVALENTS, end of year $ 90,672 $ 86,626 $ 72,725 =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 13 JONES PROGRAMMING PARTNERS 1-A, LTD. (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (1) ORGANIZATION AND BUSINESS Organized in April 1989, Jones Programming Partners 1-A, Ltd. (the "Partnership") is a limited partnership formed pursuant to the laws of the State of Colorado to engage in the development, production, acquisition, 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. 139 ("SFAS No. 139") and AICPA Statement of Position No. 00-2 ("SOP 00-2"). Pursuant to SFAS No. 139 and SOP 00-2, 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 criteria set forth in SFAS No. 139 and SOP 00-2 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. The adoption of SFAS No. 139 and SOP 00-2 in 2000 did not materially effect the manner in which the Partnership recognizes revenue. INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION - 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 - Distribution fees and expenses incurred in connection with domestic and international film distribution are recorded at the time that the related licensing fees are recognized as revenue by the Partnership. Similarly, the Partnership expenses film advertising costs related to distribution when the advertising takes place. USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 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. Interest income earned prior to the start of the Partnership's first production was allocated 100 percent to the limited partners. It is probable that the 14 distributions of the proceeds from the sales of the Partnership's programming, if any, 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. (4) TRANSACTIONS WITH AFFILIATES The 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 $15,442, $10,856, and $9,680 to the Partnership for direct expenses for the years ended December 31, 1998, 1999, and 2000, respectively. (5) INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION "THE LITTLE KIDNAPPERS" In January 1990, the General Partner, on behalf of the Partnership, entered into an agreement with Jones Maple Leaf Productions to produce a full-length feature film for television entitled "The Little Kidnappers." The total film cost was approximately $3,200,000. Of this amount, the Partnership invested approximately $2,794,000, which included a production and overhead fee of $300,000 paid to the General Partner. From inception to December 31, 2000, the Partnership has recognized approximately $3,003,000 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 December 31, 2000, the Partnership has recognized approximately $2,299,000 of revenue from this film. In December 1999, the Partnership wrote off the outstanding receivable of $26,129. This write off is reflected in operating, general and administrative expenses in the accompanying statement of operations. In December 1995, the Partnership fully amortized its net investment in 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 on a month to month basis) and the Partnership retained domestic distribution rights, principally home video, non-network free television, pay television, and non-theatrical. 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, 2000, NBCP reported that it had not recouped approximately $469,000 of its original investment, plus interest. Through December 31, 2000, the Partnership had received approximately 15 $190,000 from distributors, which was not applied to NBCP's unrecouped amount. As of December 31, 2000, the Partnership had reported this amount as an accrued 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. "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 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 December 31, 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. During the fourth quarter 1999, the General Partner reassessed the anticipated gross revenue remaining from the distribution of "Curacao" 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 "Curacao" exceeded the film's estimated net realizable value as of December 31, 1999, resulting in a write down of $58,946. These revenue projections were estimated by the General Partner based on the film's prior distribution history, the remaining international and domestic territories available to the film for future television distribution and the General Partner's previous distribution experience with other films. In December 1999, after consideration of amortization and write-downs, the Partnership fully amortized its net investment in this film. (6) INCOME TAXES Income tax provision (benefit) resulting from the Partnership's operations 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 are 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 to 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 differences between the financial reporting and tax bases of the Partnership's assets and liabilities are associated with: 1) the difference between the amount of 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; and 2) the allowance for doubtful accounts which is not yet deductible for tax purposes. Film production cost recognized under accounting principles generally accepted in the United States exceeded (was less than) the amount of expense recognized for tax purposes by approximately $91,300, ($472,400) and $0 for the years ended December 31, 1998, 1999 and 2000, respectively. 16 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 71 Chairman of the Board, Chief Executive Officer and President Timothy J. Burke 50 Vice President and 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 Media Networks, Ltd. (formerly known as Jones International Networks, Ltd.). 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. Mr. Timothy J. Burke is Vice President and Director of the General Partner. Mr. Burke is a Group Vice President of Jones International, Ltd. and an officer and/or director of many other Jones International, Ltd. affiliated companies. He has over 24 years of financial experience, and has been employed with Jones for 18 years. Prior to the Jones companies, Mr. Burke was a Tax Manager with Arthur Andersen & Co. He received a B.A. in Accounting and a J.D from the University of Iowa. 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 or an affiliate of 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 February 28, 2001, no person or entity owns more than 5 percent of the limited partnership interests in the Partnership, except for Herbert Borbe. Mr. Borbe owns 800 of the 12,743 partnership interests outstanding as of December 31, 2000. Mr. Borbe's address is 1709 134th Avenue S.E., Unit 21, Bellview, Washington 98005. Mr. Borbe is not a director, officer or employee of the General Partner or any of its affiliates. 17 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 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. 18 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. 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. 19 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 1-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 Officer Dated: March 21, 2001 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 21, 2001 (Principal Executive Officer) By: /s/ TIMOTHY J. BURKE ---------------------------------- Dated: March 21, 2001 Timothy J. Burke 20 -----END PRIVACY-ENHANCED MESSAGE-----