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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1996.
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from -------------- to ------------.
Commission File Number 0-20944
Jones Programming Partners 2-A, Ltd.
- -------------------------------------------------------------------------------
Exact name of registrant as specified in charter
Colorado #84-1088819
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State of organization I.R.S. employer I.D.#
9697 East Mineral Avenue, P.O. Box 3309, Englewood, Colorado 80155-3309
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Address of principal executive office
(303) 792-3111
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during
the preceding l2 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No
---- ----
1
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JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
INDEX
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Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Statements of Financial Position
March 31, 1996 and December 31, 1995 3
Unaudited Statements of Operations
Three Months Ended March 31, 1996 and 1995 4
Unaudited Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995 5
Notes to Unaudited Financial Statements
March 31, 1996 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-9
PART II. OTHER INFORMATION 10
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2
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JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF FINANCIAL POSITION
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<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
------ ------------ ------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 242,376 $ 377,368
ACCOUNTS RECEIVABLE 52,180 60,604
INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION,
net of accumulated amortization of $2,610,165 as of March 31, 1996
and December 31, 1995, respectively (See note 3) 1,421,086 1,421,086
NOTE RECEIVABLE FROM GENERAL PARTNER,
net of unamortized discount of $57,271 and $79,735 as of
March 31, 1996 and December 31, 1995, respectively 831,895 809,431
OTHER ASSETS - 1,666
----------- -----------
Total assets $ 2,547,537 $ 2,670,155
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
LIABILITIES:
Accounts payable to affiliates $ 2,794 $ 2,446
Accrued distributions to partners 141,781 141,781
Accrued liabilities 7,500 6,000
----------- -----------
Total liabilities 152,075 150,227
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General partner-
Contributed capital 1,000 1,000
Distributions (20,506) (19,088)
Accumulated deficit (3,789) (3,962)
----------- -----------
Total general partner's deficit (23,295) (22,050)
----------- -----------
Limited partners -
Contributed capital, net of offering costs (11,229 units outstanding
as of March 31, 1996 and December 31, 1995) 4,823,980 4,823,980
Distributions (2,030,060) (1,889,697)
Accumulated deficit (375,163) (392,305)
----------- -----------
Total limited partners' capital 2,418,757 2,541,978
----------- -----------
Total partners' capital 2,395,462 2,519,928
----------- -----------
Total liabilities and partners' capital $ 2,547,537 $ 2,670,155
=========== ===========
</TABLE>
The accompanying notes to the unaudited financial statements
are an integral part of these unaudited financial statements.
3
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JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
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<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
---------------------------
1996 1995
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<S> <C> <C>
GROSS REVENUES $ - $ 1,150
COSTS AND EXPENSES:
Costs of filmed entertainment - 1,050
Distribution fees and expenses - 575
Operating, general and administrative expenses 8,960 7,965
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Total costs and expenses 8,960 9,590
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OPERATING LOSS (8,960) (8,440)
------- -------
OTHER INCOME (EXPENSE):
Interest income 26,275 2,203
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Other income, net 26,275 2,203
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NET INCOME (LOSS) $17,315 $(6,237)
======= =======
ALLOCATION OF NET INCOME (LOSS):
General partner $ 173 $ (62)
======= =======
Limited partners $17,142 $(6,175)
======= =======
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ 1.53 $ (.55)
======= =======
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 11,229 11,229
======= =======
</TABLE>
The accompanying notes to the unaudited financial statements
are an integral part of these unaudited financial statements.
4
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JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
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<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
---------------------------
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 17,315 $ (6,237)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Amortization of filmed entertainment costs - 1,050
Amortization of discount (22,464) -
Net change in assets and liabilities:
Decrease in accounts receivable 8,424 174,363
Increase in accrued liabilities 1,500 3,883
Increase in accounts payable to affiliates 348 3,734
Decrease in other assets 1,666 -
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Net cash provided by operating activities 6,789 176,793
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in production advances - 7,181
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Net cash provided by investing activities - 7,181
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (141,781) (141,781)
--------- ---------
Net cash used in financing activities (141,781) (141,781)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (134,992) 42,193
CASH AND CASH EQUIVALENTS, beginning of period 377,368 160,888
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 242,376 $ 203,081
========= =========
</TABLE>
The accompanying notes to the unaudited financial statements
are an integral part of these unaudited financial statements.
5
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JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
(A Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
(1) BASIS OF PRESENTATION
---------------------
This Form 10-Q is being filed in conformity with the SEC requirements for
unaudited financial statements and does not contain all of the necessary
footnote disclosures required for a fair presentation of the Statements of
Financial Position and Statements of Operations and Cash Flows in
conformity with generally accepted accounting principles. However, in the
opinion of management, this data includes all adjustments, consisting only
of normal recurring accruals, necessary to present fairly the financial
position of Jones Programming Partners 2-A, Ltd. (the "Partnership") as of
March 31, 1996 and December 31, 1995 and its results of operations and its
cash flows for the three month periods ended March 31, 1996 and 1995.
Results of operations for these periods are not necessarily indicative of
results to be expected for the full year.
(2) TRANSACTIONS WITH AFFILIATED ENTITIES
-------------------------------------
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. Although the General Partner is entitled to reimbursement for
all direct and indirect expenses allocable to the Partnership, the
Partnership was charged $6,429 and $1,630 for direct expenses only for the
three month periods ended March 31, 1996 and 1995, respectively.
(3) INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION
----------------------------------------------
"Charlton Heston Presents: The Bible"
-----------------------------------
In May 1992, the General Partner, on behalf of the Partnership, entered
into an agreement with Agamemnon Films, an unaffiliated party, to produce
four one-hour programs for television, entitled "Charlton Heston Presents:
The Bible" (the "Bible Programs"). The production costs of the Bible
Programs were approximately $2,130,000. 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 March 31, 1996. From inception to March 31, 1996, the
Partnership has recognized $1,094,960 of gross 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 had
received $611,342 as of March 31, 1996, with the remaining $52,180 being
received in May 1996.
"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 March 31, 1996, 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 March
31, 1996. From inception to March 31, 1996, 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 the
remaining $9,123 has been received by the Partnership as of March 31, 1996.
6
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JONES PROGRAMMING PARTNERS 2-A, LTD.
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(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
FINANCIAL CONDITION
-------------------
Liquidity and Capital Resources
- -------------------------------
The Partnership's principal sources of liquidity are cash on hand, amounts to be
received from the General Partner in payment of the promissory notes discussed
below and amounts received from the domestic and international distribution of
the Partnership's programming. As of March 31, 1996, the Partnership had
$242,376 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 amounts receivable
totaling $52,180 as of March 31, 1996. These amounts were received by the
Partnership in May 1996.
On June 30, 1995, the Partnership sold its interest in the film "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
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 sale proceeds from "Household Saints" will contribute
to the liquidity and capital resources of the Partnership, enabling the
Partnership to fund its operating needs and future distributions to the limited
partners.
For the three months ended March 31, 1996, the Partnership declared
distributions to partners totaling $141,781, which will be paid in May 1996.
These distributions will be made using cash on hand, interest income and cash
provided by operating activities. Distributions are expected to continue,
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
7
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Company is currently distributing the Bible Programs in the retail home video
market. As of March 31, 1996, 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 March 31, 1996, 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 May 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
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 was 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 March 31, 1996, 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
8
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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.
RESULTS OF OPERATIONS
---------------------
Revenues of the Partnership decreased $1,150, from $1,150 for the three month
period ended March 31, 1995 to $0 for the similar period in 1996. This decrease
was the result of decreased revenue from the distribution of the Bible Programs
during the first three months of 1996, which was $0 for the three months ended
March 31, 1996 as compared to $1,150 for the same period in 1995.
Filmed entertainment costs decreased $1,050, from $1,050 for the three months
ended March 31, 1995 to $0 for the three months ended March 31, 1996. This
decrease was the result of decreased revenues from the Bible Programs 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.
Operating, general and administrative expenses increased $995 for the three
months ended March 31, 1996 as compared to the same period in 1995. This
increase was primarily due to an increase in direct costs allocable to the
operations of the Partnership that were charged to the Partnership by the
General Partner in 1996 as compared to 1995.
Interest income increased $24,072, from $2,203 for the three months ended March
31, 1995 to $26,275 for the similar period in 1996. This increase in interest
income was mainly the result of $22,464 in interest income recognized during the
first quarter of 1996 relating to the amortization of the discount on the two
promissory notes received from the General Partner as part of the June 1995 sale
of the film "Household Saints."
9
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Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
27) Financial Data Schedule
b) Reports on Form 8-K
None
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JONES PROGRAMMING PARTNERS 2-A, LTD.
BY: JONES ENTERTAINMENT GROUP, LTD.
General Partner
By: /S/ Jay B. Lewis
----------------------------------
Jay B. Lewis
Principal Financial and
Accounting Officer
Dated: May 14, 1996
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 242,376
<SECURITIES> 0
<RECEIVABLES> 884,075
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,547,537
<CURRENT-LIABILITIES> 152,075
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,395,462
<TOTAL-LIABILITY-AND-EQUITY> 2,547,537
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 8,960
<OTHER-EXPENSES> (26,275)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 17,315
<INCOME-TAX> 0
<INCOME-CONTINUING> 17,315
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,315
<EPS-PRIMARY> 1.53
<EPS-DILUTED> 1.53
</TABLE>
