<PAGE> 1
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, 1995
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 Employer Identification No.)
P.O. Box 3309, Englewood,
Colorado 80155-3309 (303) 792-3111
- ------------------------------- --------------
(Address of principal executive (Registrant's telephone no.
office and Zip Code) 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 (Section 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.
-----
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE> 2
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, is the general partner of the Partnership (the "General Partner").
The Partnership was formed to acquire, develop, produce and distribute original
programming ("Programming") to be owned by the Partnership. During 1995, the
Partnership had three Programming projects: "Charlton Heston Presents: The
Bible," "Household Saints" and "The Whipping Boy." 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 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 and its net investment, after consideration of amortization, was
$369,873 as of December 31, 1995. From inception to December 31, 1995, the
Partnership has recognized $1,094,960 of revenue from this film, of which
$431,438 has been retained by the distributors of the film for their fees and
marketing costs. Of the remaining $663,522, the Partnership has received
$611,342 as of December 31, 1995. The remaining $52,180 was received in March
1996. The Partnership plans to recover its remaining investment in this film
from net revenues generated from domestic and international home video markets.
Household Saints. In February 1993, the Partnership acquired a
one-third ownership interest in a film scheduled for world-wide theatrical
release entitled "Household Saints." The budgeted production costs of
"Household Saints" were approximately $5,000,000, and the final production
costs were approximately $5,300,000. For a one-third ownership interest in the
film, the Partnership contributed one-third of the budgeted production costs,
or $1,666,667. Two unaffiliated entities contributed similar amounts. Prior
to June 30, 1995, the Partnership had invested approximately $1,913,918 in the
film, which included a production and overhead fee of $100,000 paid to the
General Partner by the Partnership. Prior to June 30, 1995, the Partnership's
net investment in the film, after consideration of amortization, was
$1,389,166. From inception to June 30, 1995, the Partnership had recognized
$603,198 of revenue from this film.
In January 1995, the General Partner's Board of Directors agreed in
principle to purchase the Partnership's interest in "Household Saints" from the
Partnership at a price equal to the Partnership's net investment in the film of
$1,389,166. The Partnership's limited partnership agreement allows the General
Partner to purchase completed programming projects from the Partnership so long
as the purchase price is an amount no less than the average of three separate
independent appraisals of the fair market value. The General Partner
subsequently obtained three separate independent appraisals of the fair market
value of the Partnership's interest in "Household Saints." Sunrise Capital of
Bainbridge Island, Washington appraised the Partnership's interest in the film
at $141,495 as of March 15, 1995. GB Investment Corporation of New York, New
York appraised the Partnership's interest in the film at $310,856 as of April
10, 1995. Kagan Media Appraisals Inc. of Carmel, California appraised the
Partnership's interest in the film at $443,000 as of April 27, 1995. The
average of the three independent appraisals of the fair market value of the
Partnership's interest in "Household Saints" was approximately $300,000.
Closing of the sale occurred on June 30, 1995. The purchase price was paid
$500,000 in cash at closing, $500,000 in the form of a non-interest bearing
promissory note payable in full 12 months from the closing date and $389,166 in
the form of a non-interest bearing promissory note payable in full 24 months
from the closing date. Because both promissory notes were non-interest
bearing, the Partnership recognized imputed interest of $122,860, thereby
reducing the notes' carrying value to $766,306 and incurring a loss on sale of
the film of $122,860. This loss will be offset by the Partnership in the form
of interest income recognized as
2
<PAGE> 3
the related discount on the promissory notes is amortized to interest income
over the next 24 months. For the year ended December 31, 1995, interest income
of $43,125 has been recognized from amortization of the related discount.
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, 1995, 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. The
Partnership's net investment in the film, after consideration of amortization,
was $1,051,213 as of December 31, 1995. From inception to December 31, 1995,
the Partnership has recognized $2,111,931 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 $11,931,
$2,808 has been retained by the distributors of the film for their fees and
marketing costs and $699 has been received by the Partnership as of December
31, 1995. The remaining $8,424 was received in March 1996.
The General Partner on behalf of the Partnership, continues to seek
additional licensing agreements for the distribution of the Partnership's
filmed entertainment. The Partnership will seek to recover its investment in
filmed entertainment by relicensing its assets through international sales,
domestic cable or syndication, home video and ancillary markets. It is not
anticipated that the Partnership will invest in any additional programming
projects, but instead will focus on the distribution of its existing 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.
The Partnership has encountered and will continue to encounter
intense competition in connection with its attempts to distribute the
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 will encounter additional risks, such as foreign currency rate
fluctuations, compliance and regulatory requirements, differences in tax laws,
and economic and political environments. Profitability of the Partnership
will depend largely on the Programming's acceptance in various domestic and
international television markets, on the level of distribution of the
Programming in such markets and the license fees and library values generated
thereby, which are outside the control of the Partnership. 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 sufficient to recover the Partnership's investment or
produce profits for the Partnership.
ITEM 2. PROPERTIES
See Item 1.
ITEM 3. LEGAL PROCEEDINGS
None.
3
<PAGE> 4
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, 1996, the number of equity
security holders in the Partnership was 539.
4
<PAGE> 5
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------------------- From Inception to
1995 1994 1993 December 31, 1992
------------- ------------- ------------ -----------------
<S> <C> <C> <C> <C>
Gross Revenues $ 324,489 $2,673,557 $ 612,042 $ 200,000
Costs of Filmed Entertainment 303,817 2,123,180 534,611 173,309
Distribution Fees and Expenses 159,045 285,043 594,557 9,000
Loss on Sale of Film Production 122,860 - - -
Operating, General and Administrative
Expenses 19,296 23,135 6,999 9,427
Operating Income (Loss) (280,529) 242,199 (524,125) 8,264
Net Income (Loss) (220,238) 247,629 (485,458) 61,799
Net Income ( Loss) per Limited
Partnership Unit (19.42) 21.83 (44.08) 10.40
Weighted Average Number of Limited
Partnership Units Outstanding 11,229 11,229 10,903 5,884
General Partner's Deficit (22,050) (14,177) (10,982) (456)
Limited Partners' Capital 2,541,978 3,321,467 3,640,300 3,838,831
Total Assets 2,670,155 3,456,501 5,389,794 3,963,703
Debt - - - -
General Partner Advances 2,446 - 168,028 -
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
1995 Compared to 1994
Revenues of the Partnership decreased $2,349,068, from $2,673,557 in 1994 to
$324,489 in 1995. This decrease was mainly due to the recognition of a
$2,100,000 license fee received by the Partnership for "The Whipping Boy" in
1994 as compared to revenues from the film in 1995 of $11,931. In addition,
revenues from "Charlton Heston Presents: The Bible" and "Household Saints"
decreased $219,844 and $41,155, respectively, from 1994 to 1995.
Filmed entertainment costs decreased $1,819,363, from $2,123,180 in 1994 to
$303,817 in 1995. This decrease resulted primarily from the overall decrease
in film revenues 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 $125,998, from $285,043 in 1994 to
$159,045 in 1995. This decrease was the result of the decreased sales of the
Partnership's programming in 1995 as discussed above. Distribution fees and
expenses relate to the compensation due and cost incurred by distributors in
selling the Partnership's programming in the domestic and international
markets.
Loss on sale of film production increased $122,860, from $-0- in 1994 to
$122,860 in 1995. This increase was the result of the sale of "Household
Saints" to the General Partner on June 30, 1995. The loss resulted from the
Partnership's recognition of imputed interest on two non-interest-bearing
promissory notes received from the General Partner as part of the sale
agreement.
Interest income increased $54,861, from $5,430 in 1994 to $60,291 in 1995.
This increase in interest income was primarily the result of $43,125 in
interest income recognized during 1995 relating to the amortization of the
5
<PAGE> 6
discount on the two promissory notes received from the General Partner as part
of the "Household Saints" sale agreement. In addition, higher average levels
of invested cash balances existing during 1995 as compared to 1994 also
contributed to the increase in interest income.
The Partnership incurred a net loss of $220,238 in 1995 as compared to a net
income of $247,629 in 1994. This decrease was primarily the result of the
overall decrease in film gross margin of $403,707 during 1995 as compared to
1994. In addition, the $122,860 loss on sale of film production recognized
during 1995, which was partially offset by an increase in interest income
recognized from amortization of the discount on the two promissory notes
received as part of the "Household Saint" sale, also contributed to the net
loss incurred in 1995.
1994 Compared to 1993
Revenues of the Partnership increased $2,061,515, from $612,042 in 1993 to
$2,673,557 in 1994. This increase was primarily the result of license fee
revenue received by the Partnership for "The Whipping Boy" totaling $2,100,000
in 1994. No such license fee was received in 1993. The Partnership also
received revenues of $532,402 in 1994 as compared to $50,000 in 1993 for
"Charlton Heston Presents: The Bible" (the "Bible Programs"). These increases
in revenues were partially offset by a decrease in revenues from "Household
Saints," which totaled $41,155 in 1994 compared to $562,042 in 1993.
Filmed entertainment costs increased $1,588,569, from $534,611 in 1993 to
$2,123,180 in 1994. This increase was the result of the increased revenues as
mentioned above. 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 $309,514, from $594,557 in 1993 to
$285,043 in 1994. This decrease was the result of the recognition of prints
and advertising costs of approximately $406,000 in 1993, compared to no such
costs in 1994, and also to a decrease in international sales of "Household
Saints" in 1994. Distribution fees and expenses relate to the compensation due
and costs incurred by distribution companies in licensing the Partnership's
film productions in the international theatrical, television and home video
markets. Although revenues increased in 1994 as compared to 1993, the primary
reason for the decrease in distribution fees and expenses in 1994 was due to
the recognition in 1994 of license fee revenue for "The Whipping Boy" which had
no distribution costs associated with it.
Interest income decreased $33,237, from $38,667 in 1993 to $5,430 in 1994.
This decrease in interest income was the result of lower average cash balances
invested during 1994 as compared to average balances invested in 1993.
The Partnership recognized a net loss of $485,458 in 1993 compared to net
income of $247,629 in 1994. This change was primarily the result of an
increase in revenue relating to "The Whipping Boy," a decrease in distribution
fees and expenses relating to "Household Saints" and the fact that there were
no distribution fees and expenses for "The Whipping Boy."
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, 1995, the Partnership had $377,368 in cash. It is not
anticipated that the Partnership will invest in any additional programming
projects, but instead will focus on the distribution of its existing projects.
The Partnership had outstanding amount receivable totaling $60,604 as of
December 31, 1995. These amounts were received by the Partnership in early
1996.
On June 30, 1995, the Partnership sold its interest in "Household Saints" to
the General Partner for $1,389,166. The purchase price was paid $500,000 in
cash at closing, $500,000 in the form of a non-interest bearing
6
<PAGE> 7
promissory note payable in full 12 months from the closing date and $389,166 in
the form of a non-interest bearing promissory note payable in full 24 months
from the closing date. The General Partner has determined that the sale
proceeds from "Household Saints" will contribute to the liquidity and capital
resources of the Partnership, allowing the Partnership to fund its operating
needs and enabling the Partnership to fund future distributions to the limited
partners.
For the year ending December 31, 1995, the Partnership declared distributions
to partners totaling $567,124, of which $141,781 was paid in May 1995, $141,781
in August 1995 and $141,781 in November 1995, with the remaining $141,781 paid
in February 1996. These distributions were made using cash on hand, interest
income, initial proceeds received from the sale of "Household Saints" and cash
provided by operating activities. Distributions are expected to continue
during 1996, although no determination has been made regarding any specific
level of distributions. Distributions reduce the financial flexibility of 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.
Cash flow from operating activities will be generated primarily from the
Partnership's programming projects as follows:
"Charlton Heston Presents: The Bible"
In 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") for Arts and Entertainment Network ("A&E"). The production
costs of the Bible Programs were approximately $2,370,000, which included a
$240,000 production and overhead fee 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.
In order to reduce the Partnership's financial exposure, the General Partner,
on behalf of the Partnership, assigned one-half of the Partnership's interest
in the Bible Programs to GoodTimes Home Video Corporation ("GoodTimes"), an
unaffiliated entity directly involved in the specialty home video and
international television distribution business, for an investment by GoodTimes
of $1,000,000. The Partnership and GoodTimes funded Jones Documentary Film
Corporation ("JDFC"), which in turn contracted with Agamemnon Films for the
production of the Bible Programs. JDFC was formed to insulate the Partnership
and GoodTimes from certain risks and potential liabilities associated with the
production of programming in foreign countries because the Bible Programs were
filmed on location in the Holy Lands.
The Partnership and 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 entered into an agreement to form J/G Distribution
Company to distribute the Bible Programs. J/G Distribution Company was formed
as of June 24, 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). J/G Distribution
Company is currently distributing the Bible Programs in the retail home video
market. As of December 31, 1995, gross sales made by J/G Distribution Company
totaled $1,689,752, of which $844,876 has been retained by J/G Distribution
Company for its fees and marketing costs, with the remaining $844,876 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, 1995, the Partnership had received
$370,258 from J/G Distribution and the $250,000 from A&E. The remaining
$52,180 due from J/G Distribution was received in 1996.
In 1994, J/G Distribution Company, an affiliate of the General Partner, and
Jones Interactive, Inc. ("JII"), also an affiliate of the General Partner,
entered into an agreement to produce a CD-ROM version of the Bible Programs.
No Partnership funds have been or will be utilized in the production of the
CD-ROM version; however, after production costs, distribution fees and costs
associated with distribution are recovered, five percent of net revenues (as
defined in the agreement) will flow to the Partnership. Revenue proceeds to be
received by the
7
<PAGE> 8
Partnership under this agreement, if any, are not anticipated to be
significant. The production is being done on two separate discs, one for the
New Testament, which was completed in the third quarter of 1995, and a second
disc for the Old Testament, which is expected to be completed in the first
quarter of 1996. Distribution of the CD-ROM version will be done in the United
States and Canada by affiliates of J/G Distribution Company. The Partnership
plans to recover its remaining net investment in the Bible Programs of $369,873
from net revenues generated from domestic and international home video markets.
"The Whipping Boy"
In August 1993, the Partnership acquired the rights to the Newbury
Award-winning book "The Whipping Boy." The project was co-developed by the
Partnership and The Disney Channel and produced by the General Partner and
German and French co- production partners. The completed telefilm was
delivered to The Disney Channel in the second quarter of 1994 and premiered in
the North American television market in July 1994. As of December 31, 1995,
the Partnership had invested $2,661,487 in the film, which included a $468,000
production and overhead fee payable to the General Partner. The Partnership
has received approximately $2,100,000 from The Disney Channel for licensing
certain rights to the film to The Disney Channel.
The Partnership was responsible for approximately one-half of the $4,100,000
production cost, with the balance of the production budget funded by Gemini
Films and other co-production partners and/or territorial advances from the
film's international distributors. The amount contributed to the production
budget by the Partnership was partially reimbursed by the license advances
totaling $2,100,000 received from the Disney Channel.
Gemini Films will have, in perpetuity, the copyright and all exploitation
rights to the film in German language territories (defined as Germany, Austria,
German-speaking Switzerland and German-speaking Luxembourg). Although these
exploitation rights will remain the sole property of Gemini Films, Gemini Films
will account to the Partnership for any revenue therefrom.
The Partnership will own the worldwide copyright, excluding German language
territories, in perpetuity. Although the Partnership will own all exploitation
rights in all media in North America, which is defined as the United States,
Canada and their respective territories and possessions, the Partnership will
account to Gemini Films for any revenue generated therefrom.
From the movie's North American revenues, the Partnership will first be
entitled to recover its investment plus interest. Thereafter, the Partnership
will receive 90 percent of all North American revenues and Gemini Films will
receive 10 percent of such revenues. With respect to international revenues
from the movie's distribution, after Gemini Films recovers $250,000 of its
investment in the movie's production budget, any funded overages and interest
out of net international revenues, the Partnership will receive 20 percent of
net international revenues and Gemini Films will receive 80 percent.
The General Partner and Gemini Films have selected Canal Plus Distribution as
the company that will distribute and exploit the movie outside of North
America. Canal Plus Distribution will earn distribution fees of 15 percent of
the film's gross receipts outside of North America, and it will be reimbursed
for its expenses capped at 10 percent of the film's gross receipts outside of
North America (excluding dubbing costs). Canal Plus Distribution will be
responsible for accounting and remitting to Gemini Films the net revenues from
the film's distribution in all markets and in all media outside of North
America. Gemini Films will be responsible for forwarding the Partnership's
share of such revenues within 10 days of receipt of such funds from Canal Plus.
The Partnership plans to recover its remaining net investment in this film of
$1,051,213 primarily from net revenues generated from domestic home video and
television distribution.
8
<PAGE> 9
Item 8. Financial Statements
JONES PROGRAMMING PARTNERS 2-A, LTD.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND 1994
INDEX
<TABLE>
<CAPTION>
Page
----------------
<S> <C>
Report of Independent Public Accountants 10
Balance Sheets 11
Statements of Operations 12
Statements of Partners' Capital (Deficit) 13
Statements of Cash Flows 14
Notes to Financial Statements 15
</TABLE>
9
<PAGE> 10
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Jones Programming Partners 2-A, Ltd.:
We have audited the accompanying balance sheets of Jones Programming
Partners 2-A, Ltd. (a Colorado limited Partnership) as of December 31, 1995 and
1994, and the related statements of operations, partners' capital (deficit) and
cash flows for the years ended December 31, 1995, 1994 and 1993. 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. 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, 1995 and 1994 and the results of its
operations and its cash flows for the years ended December 31, 1995, 1994 and
1993 in conformity with generally accepted accounting principles.
/s/ ARHTUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 20, 1996.
10
<PAGE> 11
JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------------
ASSETS 1995 1994
------ ------------- ------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS (Note 2) $ 377,368 $ 160,888
ACCOUNTS RECEIVABLE (Note 5) 60,604 174,363
INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION,
net of accumulated amortization of $2,610,165 and $2,831,100
at December 31, 1995 and 1994, respectively (Notes 2, 4 and 5) 1,421,086 3,121,250
NOTE RECEIVABLE FROM GENERAL PARTNER,
net of unamortized discount of $79,735 and $-0- as of
December 31, 1995 and 1994, respectively (Note 5) 809,431 -
OTHER ASSETS 1,666 -
----------- -----------
Total assets $ 2,670,155 $ 3,456,501
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
LIABILITIES:
Accounts payable to affiliates $ 2,446 $ -
Accrued distributions to partners 141,781 141,781
Accrued liabilities 6,000 7,430
----------- ------------
Total liabilities 150,227 149,211
----------- ------------
PARTNERS' CAPITAL (DEFICIT) (Note 3):
General Partner-
Contributed capital 1,000 1,000
Distributions (19,088) (13,417)
Accumulated deficit (3,962) (1,760)
----------- ------------
Total general partner's deficit (22,050) (14,177)
----------- ------------
Limited Partners -
Net contributed capital (11,229 units
outstanding at December 31, 1995 and 1994) 4,823,980 4,823,980
Distributions (1,889,697) (1,328,244)
Accumulated deficit (392,305) (174,269)
----------- ------------
Total limited partners' capital 2,541,978 3,321,467
----------- ------------
Total partners' capital (deficit) 2,519,928 3,307,290
----------- ------------
Total liabilities and partners' capital (deficit) $ 2,670,155 $ 3,456,501
=========== ===========
</TABLE>
The accompanying notes to the financial statements
are an integral part of these financial statements.
11
<PAGE> 12
JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended December 31,
------------------------------------------------
1995 1994 1993
------------- ---------- -----------
<S> <C> <C> <C>
GROSS REVENUES (Notes 2 and 5) $ 324,489 $2,673,557 $ 612,042
COSTS AND EXPENSES:
Costs of filmed entertainment (Note 2) 303,817 2,123,180 534,611
Distribution fees and expenses (Notes 2 and 5) 159,045 285,043 594,557
Loss on sale of film production (Note 5) 122,860 - -
Operating, general and administrative expenses (Note 4) 19,296 23,135 6,999
--------- --------- ----------
Total costs and expenses 605,018 2,431,358 1,136,167
--------- --------- ----------
OPERATING INCOME (LOSS) (280,529) 242,199 (524,125)
--------- --------- ----------
OTHER INCOME:
Interest income 60,291 5,430 38,667
--------- --------- ----------
Total other income 60,291 5,430 38,667
--------- --------- ----------
NET INCOME (LOSS) $ (220,238) $ 247,629 $ (485,458)
========= ========= ==========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ (2,202) $ 2,476 $ (4,855)
========= ========= ==========
Limited Partners $ (218,036) $ 245,153 $ (480,603)
========= ========= ==========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (19.42) $ 21.83 $ (44.08)
========= ========= ==========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP UNITS
OUTSTANDING 11,229 11,229 10,903
========= ========= ==========
</TABLE>
The accompanying notes to the financial statements
are an integral part of these financial statements.
12
<PAGE> 13
JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------
1995 1994 1993
------------- ------------- ------------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of period $ (14,177) $ (10,982) $ (456)
Distributions (5,671) (5,671) (5,671)
Net income (loss) for period (2,202) 2,476 (4,855)
----------- --------- ---------
Balance, end of period $ (22,050) $ (14,177) $ (10,982)
=========== ========= =========
LIMITED PARTNERS:
Balance, beginning of period $ 3,321,467 $3,640,300 $3,838,831
Net contributed capital - (2,534) 843,525
Distributions (561,453) (561,452) (561,453)
Net income (loss) for period (218,036) 245,153 (480,603)
----------- --------- ---------
Balance, end of period $ 2,541,978 $3,321,467 $3,640,300
=========== ========= =========
TOTAL PARTNERS' CAPITAL $ 2,519,928 $3,307,290 $3,629,318
=========== ========= =========
</TABLE>
The accompanying notes to the financial statements
are an integral part of these financial statements.
13
<PAGE> 14
JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------
1995 1994 1993
------------- ------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (220,238) $ 247,629 $ (485,458)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Amortization of filmed entertainment costs 303,817 2,123,180 534,611
Amortization of discount (43,125) - -
Loss on sale of film production 122,860 - -
Decrease (increase) accounts receivable 113,759 99,975 (274,338)
Decrease (increase) in interest receivable - - 20,345
Decrease (increase) in other assets (1,666) - 32,075
Increase (decrease) in accrued liabilities (1,430) 4,930 (5,000)
Increase (decrease) in accounts payable to affiliates 2,446 (168,028) 168,028
Increase (decrease) in deferred revenue - (980,167) 980,167
---------- --------- ----------
Net cash provided by operating activities 276,423 1,327,519 970,430
---------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of film production 500,000 - -
Net (increase) decrease in production advances 7,181 (382,732) (4,269,799)
Increase (decrease) in production and overhead fee - (468,000) 468,000
---------- --------- ----------
Net cash provided by (used in) investing activities 507,181 (850,732) (3,801,799)
---------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributed capital, net of commissions and
syndication costs - - 843,525
Increase in accrued distributions to partners - - 23,953
Distributions to partners (567,124) (567,123) (567,124)
Interest distribution to limited partners - (2,534) -
---------- --------- ----------
Net cash provided by (used in) financing activities (567,124) (569,657) 300,354
---------- --------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 216,480 $ (92,870) (2,531,015)
CASH AND CASH EQUIVALENTS, beginning of period 160,888 253,758 2,784,773
---------- --------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 377,368 $ 160,888 $ 253,758
========== ========= ==========
SUPPLEMENTAL SCHEDULE OF NON-CASH
ACTIVITIES:
Note receivable from sale of film production,
net of discount $ 766,306 - -
========== ========= ==========
</TABLE>
The accompanying notes to the financial statements
are an integral part of these financial statements.
14
<PAGE> 15
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 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.
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.
Reclassifications - Certain prior year amounts have been reclassified
to conform to the 1995 presentation.
(3) PARTNERS' CAPITAL:
The capitalization of the Partnership is set forth in the accompanying
Statements of Partners' Capital (Deficit). Currently, no existing
limited partner is 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.
15
<PAGE> 16
An affiliate of the General Partner, Jones International Securities,
Ltd., received a commission of 10 percent of capital contributions of
the limited partners, from which the affiliate paid all commissions of
participating broker- dealers which sold the Partnership's interests.
The General Partner was reimbursed for all offering costs up to 3.75
percent of gross offering proceeds. Commission costs and
reimbursements to the General Partner for costs for raising Partnership
capital were charged to limited partners' 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.
(4) TRANSACTIONS WITH AFFILIATES:
The General Partner receives a production and overhead fee for
administering the affairs of the Partnership equal to 12 percent of
the lower of actual or budgeted direct costs of each of the
Partnership's programming projects. This fee was calculated and
payable at the time principal photography commences on each particular
project and, in the case of a series, is payable on a per episode
basis. The Partnership paid a $240,000 production and overhead fee in
1992 for the production of "Charlton Heston Presents: The Bible."
The Partnership also paid a $100,000 production and overhead fee in
March 1993 for the production of "Household Saints." In addition, the
Partnership paid a $468,000 production and overhead fee to the General
Partner in June 1994 for the production of "The Whipping Boy." As of
December 31, 1995, the General Partner, on behalf of the Partnership,
has incurred home video and telecast distribution costs totaling
$57,279 relating to "The Whipping Boy". The General Partner generally
will be entitled to reimbursement of these costs from the Partnership
contingent on the receipt of proceeds from future home video and
telecast distribution of the film.
The General Partner is also entitled to reimbursement from the
Partnership for its direct and indirect expenses allocable to the
operations of the Partnership, which include, but are not limited to,
rent, supplies, telephone, travel, legal expenses, accounting
expenses, preparing and distributing reports to investors and salaries
of any full or part-time employees. The General Partner allocated
$10,865, $3,899 and $1,182 of such expenses to the Partnership for the
years ended December 31, 1995, 1994 and 1993, respectively.
In 1994, J/G Distribution Company, an affiliate of the General
Partner, and Jones Interactive, Inc. ("JII"), also an affiliate of the
General Partner, entered into an agreement to produce a CD-ROM version
of the Bible Programs. No Partnership funds have been or will be
utilized in the production of the CD-ROM version; however, after
production costs, distribution fees and costs associated with
distribution are recovered, five percent of net revenues (as defined
in the agreement) will flow to the Partnership. Revenue proceeds to
be received by the Partnership under this agreement, if any, are not
anticipated to be significant. The production is being done on two
separate discs, one for the New Testament, which was completed in the
third quarter of 1995, and a second disc for the Old Testament, which
is expected to be completed in the first quarter of 1996.
Distribution of the CD-ROM version will be done in the United States
and Canada by affiliates of J/G Distribution Company.
16
<PAGE> 17
(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 $2,130,000. In
addition, the Partnership paid a $240,000 production and overhead fee
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 and its net investment, after
consideration of amortization, was $369,873 as of December 31, 1995.
From inception to December 31, 1995, the Partnership has recognized
$1,094,960 of revenue from this film, of which $431,438 has been
retained by the distributors of the film for their fees and marketing
costs. Of the remaining $663,522, the Partnership has received
$611,342 as of December 31, 1995. The remaining $52,180 was received
in March 1996.
"Household Saints"
In February 1993, the Partnership acquired a one-third ownership
interest in a film scheduled for world-wide theatrical release
entitled "Household Saints." The budgeted production costs of
"Household Saints" were approximately $5,000,000, and the final
production costs were approximately $5,300,000. For a one-third
ownership interest in the film, the Partnership contributed one-third
of the budgeted production costs, or $1,666,667. Two unaffiliated
entities contributed similar amounts. Prior to June 30, 1995, the
Partnership had invested $1,913,918 in the film, which included a
production and overhead fee of $100,000 paid to the General Partner by
the Partnership. Prior to June 30, 1995, the Partnership's net
investment in the film, after consideration of amortization, was
$1,389,166. From inception to June 30, 1995, the Partnership had
recognized $603,198 of revenue from this film.
In January 1995, the General Partner's Board of Directors agreed in
principle to purchase the Partnership's interest in "Household Saints"
from the Partnership at a price equal to the Partnership's net
investment in the film of $1,389,166. The Partnership's limited
partnership agreement allows the General Partner to purchase completed
programming projects from the Partnership so long as the purchase
price is an amount no less than the average of three separate
independent appraisals of the project's fair market value. The
General Partner subsequently obtained three separate independent
appraisals of the fair market value of the Partnership's interest in
"Household Saints". Sunrise Capital of Bainbridge Island, Washington
appraised the Partnership's interest in the film at $141,495 as of
March 15, 1995. GB Investment Corporation of New York, New York
appraised the Partnership's interest in the film at $310,856 as of
April 10, 1995. Kagan Media Appraisals Inc. of Carmel, California
appraised the Partnership's interest in the film at $443,000 as of
April 27, 1995. The average of the three independent appraisals of
the fair market value of the Partnership's interest in "Household
Saints" was approximately $300,000. Closing of the sale occurred on
June 30, 1995. The purchase price was paid $500,000 in cash at
closing, $500,000 in the form of a non-interest bearing promissory
note payable in full 12 months from the closing date and $389,166 in
the form of a non-interest bearing promissory note payable in full 24
months from the closing date. Because both promissory notes were
non-interest bearing, the Partnership recognized imputed interest of
$122,860, thereby reducing the notes' carrying value to $766,306 and
incurring a loss on sale of the film of $122,860. This loss will be
offset by the Partnership in the form of interest income recognized as
the related discount on the promissory notes is amortized to interest
income over the next 24 months. For the year
17
<PAGE> 18
ended December 31, 1995, interest income of $43,125 has been
recognized from amortization of the related discount.
"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, 1995, 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. The Partnership's net investment in the film,
after consideration of amortization, was $1,051,213 as of December 31,
1995. From inception to December 31, 1995, the Partnership has
recognized $2,111,931 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 $11,931,
$2,808 has been retained by the distributors of the film for their
fees and marketing costs and $699 has been received by the Partnership
as of December 31, 1995. The remaining $8,424 was received in March
1996.
(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 recognized under generally accepted accounting
principles and the amount of expense allowed for tax purposes.
18
<PAGE> 19
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.
<TABLE>
<CAPTION>
Name Age Positions with the General Partner
---- --- ----------------------------------
<S> <C> <C>
Glenn R. Jones 66 Chairman of the Board and
Chief Executive Officer
Richard K. Rosenberg 51 Executive Vice President and Director
Elizabeth M. Steele 44 Secretary
Jay B. Lewis 37 Treasurer
Derek H. Burney 56 Director
Wilfred N. Cooper, Sr. 65 Director
J. Rodney Dyer 60 Director
William C. Nestel 47 Director
David K. Zonker 42 Director
</TABLE>
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. Mr. Jones has served as Chairman of the Board of
Directors and Chief Executive Officer of Jones Intercable, Inc., one of the
nation's largest cable television companies, since its formation in 1970, and
he was President of that company from June 1984 until April 1988. Mr. Jones is
the sole shareholder, President and Chairman of the Board of Directors of Jones
International, Ltd. He is also Chairman of the Board of Directors of other
affiliates of the General Partner. He is a member of the Board of Directors
and the Executive Committee of the National Cable Television Association. He
also is on the Executive Committee of Cable in the Classroom, an organization
dedicated to education via cable. Additionally, in March 1991, Mr. Jones was
appointed to the Board of Governors for the American Society for Training and
Development, and in November 1992 to the Board of Education Council of the
National Alliance of Business. Mr. Jones is also a founding member of the
James Madison Council of the Library of Congress and is on the Board of
Governors of the American Society of Training and Development. Mr. Jones is a
past director and member of the Executive Committee of C-Span. Mr. Jones has
been the recipient of several awards including the Grand Tam Award in 1989, the
highest award from the Cable Television Administration and Marketing Society;
the Chairman's Award from the Investment Partnership Association, which is an
association of sponsors of public syndications; the cable television industry's
Public Affairs Association President's Award in 1990, the Donald G. McGannon
award for the advancement of minorities and women in cable; the STAR Award from
American Women in Radio and Television, Inc. for exhibition of a commitment to
the issues and concerns of women in television and radio; the Women in Cable
Accolade in 1990 in recognition of support of this organization; the Most
Outstanding Corporate Individual Achievement award from the International
Distance Learning Conference; the Golden Plate Award from the American Academy
of Achievement for his advances in distance education; the Man of the Year
named by the Denver chapter of the Achievement Rewards for College Scientists;
and in 1994 Mr. Jones was inducted into Broadcasting and Cable's Hall of Fame.
Mr. Rosenberg was appointed a director of the General Partner in March
1996 and was elected Executive Vice President of the General Partner in
February 1996. Mr. Rosenberg joined Jones Digital Century, Inc., an
19
<PAGE> 20
affiliate of the General Partner, in October 1995 as Vice President of Business
Affairs. Mr. Rosenberg has been involved in business affairs for the
entertainment industry for 23 years. Prior to joining Jones Digital Century,
Inc., Mr. Rosenberg was executive vice president and chief operating officer of
Spencer Entertainment, a diversified multimedia entertainment company. He also
served as vice president of legal and business affairs at Cinetel Films. Mr.
Rosenberg has operated his own entertainment and software businesses, including
RKR Pictures, inc., an independent production and distribution company, where
he financed, produced and distributed six motion pictures, including Alice
Sweet Alice, starring Brooke Shields and The Wild Duck with Liv Ullman and
Jeremy Irons. Mr. Rosenberg is the author of Entertainment Industry Contracts
- - Negotiating and Drafting Guide. He is a member of the editorial board for
the Entertainment Law and Finance Journal, the California, New York, New Jersey
and Florida Bar Associations, ASCAP and BMI, and currently serves as an
arbitrator for both the American Film Marketing Association and the American
Arbitration Association's Entertainment Industry Panel.
Ms. Elizabeth M. Steele is Secretary of the General Partner. She is
also Vice President/General Counsel and Secretary of Jones Intercable, Inc.
From August 1980 until joining Jones Intercable, Inc., Ms. Steele was an
associate and then a partner at the Denver law firm of Davis, Graham & Stubbs,
which serves as counsel to the General Partner.
Mr. Jay B. Lewis was elected Treasurer of the General Partner in
February 1996. Mr. Lewis is Vice President/Finance and Treasurer for Jones
International, Ltd., an affiliate of the General Partner, and certain of its
subsidiaries. Mr. Lewis joined Jones Spacelink, Ltd., a former affiliate of
the General Partner, in February 1986 as Assistant Controller, was promoted to
Controller in June 1987 and was elected its Treasurer in June 1994.
Substantially all of the assets of Jones Spacelink, Ltd. were acquired by Jones
Intercable, Inc., an affiliate of the General Partner, in December 1994. Prior
to joining Jones Spacelink, Ltd., Mr. Lewis was employed by Arthur Young &
Company, a public accounting firm.
Mr. Derek H. Burney was appointed a director of the General Partner in
December 1994. Mr. Burney is also a director and Vice Chairman of the Board of
Directors of Jones Intercable, Inc., an affiliate of the General Partner. Mr.
Burney joined BCE Inc., Canada's largest telecommunications company, in January
1993 as Executive Vice President, International. He has been the Chairman of
Bell Canada International Inc., a subsidiary of BCE, since January 1993 and, in
addition, has been Chief Executive Officer of BCI since July 1993. Prior to
joining BCE, Mr. Burney served as Canada's ambassador to the United States from
1989 to 1992. Mr. Burney also served as chief of staff to the Prime Minister
of Canada from March 1987 to January 1989 where he was directly involved with
the negotiation of the U.S. - Canada Free Trade Agreement. In July 1993, he
was named an Officer of the Order of Canada. Mr. Burney is chairman of Bell
Cablemedia plc. He is a director of Mercury Communications Limited, Videotron
Holdings plc, Tele-Direct (Publications) Inc., Teleglobe Inc., Bimcor Inc.,
Maritime Telegraph and Telephone Company, Limited, Moore Corporation Limited
and Northbridge Programming Inc.
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 and sole shareholder of Rod
Dyer Group, Inc. since its formation in 1967. Rod Dyer Group, Inc. specializes
in advertising, marketing and promotion. Rod Dyer Group, Inc. filed for
protection under Chapter 11 of the Federal Bankruptcy Act in December 1991 and
was released in March 1994.
Mr. William C. Nestel was elected a director of the General Partner in
July 1995. Mr. Nestel has been an employee of affiliates of the General
Partner since June 1995. From 1994 until joining the Jones organization, Mr.
Nestel was a partner with Abracadabra Interactive Entertainment, where he was
involved in the design of several interactive projects. During the same time
period, Mr. Nestel was also involved in establishing a strategic relationship
with Electronic Arts and UnderProd, a major independent production company
affiliated with Sony
20
<PAGE> 21
Entertainment. During the period 1992 to 1993, Mr. Nestel was a consultant to
Rastar Productions. From 1987 to 1992, Mr. Nestel was Vice Chairman of Rastar
Productions where his responsibilities included administration of production,
business, legal and all other company operations. Prior to joining Rastar
Productions, Mr. Nestel was an attorney at the Los Angeles law firm of Wood,
Lucksinger and Epstein from 1982 until 1987. In the early 1980s, Mr. Nestel
was Vice President/Business Affairs of CBS Theatrical Films and during the late
1970s he was Vice President of Paramount Pictures.
Mr. David K. Zonker became a director of the General Partner in
December 1994. Mr. Zonker has been the President of Jones International
Securities, Ltd. since January 1984 and he has been its Chief Executive Officer
since January 1988. Mr. Zonker is a member of the Board of Directors of
various Jones companies. Mr. Zonker is licensed by the National Association of
Securities Dealers, Inc. and he is the immediate past chairman of the
Investment Program Association, a trade organization based in Washington, D.C.
that promotes direct investments.
Derek H. Burney and William C. Nestel are directors of the General
Partner. Reports by Messrs. Burney and Nestel with respect to the ownership of
limited partnership interests in the Partnership required by Section 16(a) of
the Securities Exchange Act of 1934, as amended, were not filed within the
required time. Neither Mr. Burney nor Mr. Nestel own any limited partnership
interests in the Partnership.
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
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.
The General Partner receives a production and overhead fee for
administering the affairs of the Partnership equal to 12 percent of the lower
of direct costs or budgeted direct costs of each programming project. This fee
is calculated and payable at the time principal photography commences on each
particular project and, in the case of a series, is payable on a per episode
basis. The Partnership paid a $468,000 production and overhead fee to the
General Partner in June 1994 for the production of "The Whipping Boy."
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, 1995,
gross sales made by J/G Distribution Company totaled $1,689,752, of which
$844,876 has been retained by J/G Distribution Company for its fees and
marketing costs, with the
21
<PAGE> 22
remaining $844,876 belonging 50 percent to the Partnership and 50 percent to
Goodtimes. As of December 31, 1995, the Partnership had received both $370,258
from J/G Distribution. The remaining balance of $52,180 was received in March
1996.
In 1994, J/G Distribution Company and Jones Interactive, Inc., also an
affiliate of the General Partner, entered into an agreement to produce a CD-ROM
version of the Bible Programs. No Partnership funds have been or will be
utilized in the production of the CD-ROM version; however, after production
costs, distribution fees and costs associated with distribution are recovered,
5 percent of net revenues (as defined in the agreement) will flow to the
Partnership. Revenue proceeds to be received by the Partnership under this
agreement, if any, are not anticipated to be significant. The production is
being done on two separate discs, one for the New Testament, which was
completed in the third quarter of 1995, and a second disc for the Old
Testament, which is expected to be completed in the first quarter of 1996.
Distribution of the CD-ROM version will be done in the United States and Canada
by affiliates of J/G Distribution Company.
The General Partner is entitled to reimbursement from the Partnership
for certain allocated general and administrative expenses in accordance with
the terms of the limited partnership agreement of the Partnership. These
expenses consist primarily of salaries and benefits paid to corporate
personnel, rent, data processing services and other facilities costs. Such
personnel provide administrative, accounting and legal services to the
Partnership. Allocations of personnel costs are based primarily on actual time
spent by employees of the General Partner with respect to the Partnership. In
1995, the General Partner allocated $10,865 of such expenses to the
Partnership.
The General Partner may also advance funds and charge interest on the
balance payable from the Partnership. The interest rate charged the
Partnership approximates the published prime rate plus 2 percent. No advances
were made in 1995, and thus no interest was paid to the General Partner by the
Partnership in 1995.
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 - None.
3. The following exhibits are filed herewith:
4.1 Limited Partnership Agreement.(1)
27 Financial Data Schedule
__________
(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.
22
<PAGE> 23
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 and
Dated: March 29, 1996 Chief Executive Officer
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
and Chief Executive Officer
Dated: March 29, 1996 (Principal Executive Officer)
By: /s/ JAY B. LEWIS
-----------------------------------
Jay B. Lewis
Treasurer
(Principal Financial and
Dated: March 29, 1996 Accounting Officer)
By: /s/ RICHARD K. ROSENBERG
-----------------------------------
Richard K. Rosenberg
Dated: March 29, 1996 Executive Vice President and
Director
By: /s/ DEREK H. BURNEY
-----------------------------------
Derek H. Burney
Dated: March 29, 1996 Director
By:
-----------------------------------
Wilfred N. Cooper, Sr.
Dated: March , 1996 Director
By: /s/ J. RODNEY DYER
-----------------------------------
J. Rodney Dyer
Dated: March 29, 1996 Director
23
<PAGE> 24
By:
-----------------------------------
William C. Nestel
Dated: March 29, 1996 Director
By:
-----------------------------------
David K. Zonker
Dated: March 29, 1996 Director
24
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Index Description Number
- ------- ----------- ------
<S> <C> <C>
4.1 Limited Partnership Agreement.(1)
27 Financial Data Schedule
- ----------
(1) Incorporated by reference from the Partnership's Annual Report on
Form 10-K for year ended December 31, 1989.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 377,368
<SECURITIES> 0
<RECEIVABLES> 870,035
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,670,155
<CURRENT-LIABILITIES> 150,227
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,519,928
<TOTAL-LIABILITY-AND-EQUITY> 2,670,155
<SALES> 0
<TOTAL-REVENUES> 324,489
<CGS> 0
<TOTAL-COSTS> 605,018
<OTHER-EXPENSES> (60,291)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (220,238)
<INCOME-TAX> 0
<INCOME-CONTINUING> (220,238)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (220,238)
<EPS-PRIMARY> (19.42)
<EPS-DILUTED> (19.42)
</TABLE>
